“The rotten heart of finance”
- The Economist
“There is a degree of cynicism and greed which is really quite shocking”
- Lord Turner Bank of England, Financial Service Authority
in the history of the United States have we witnessed crimes committed
on the scale and scope of the present day by both private and state
economist of impeccable credentials, James Henry, former chief economist
at the prestigious consulting firm McKinsey & Company, has researched
and documented tax evasion. He found that the super-wealthy and
their families have as much as $32 trillion (USD) of hidden assets in
offshore tax havens, representing up to $280 billion in lost income
tax revenue! This study excluded such non-financial assets as
real estate, precious metals, jewels, yachts, race horses, luxury vehicles
and so on. Of the $32 trillion in hidden assets, $23 trillion
is held by the super-rich of North America and Europe.
recent report by a United Nations Special Committee on Money Laundering
found that US and European banks laundered over $300 billion a year,
including $30 billion just from the Mexican drug cartels.
reports on the multi-billion dollar financial swindles involving the
major banks in the US and Europe are published each week. England’s
leading banks, including Barclay’s and a host of others, have been identified
as having rigged the LIBOR, or inter-bank lending rate, for years in
order to maximize profits. The Bank of New York, JP Morgan, HSBC,
Wachovia and Citibank are among scores of banks, which have been charged
with laundering drug money and other illicit funds according to investigations
from the US Senate Banking Committees. Multi-national corporations
receive federal bailout funds and tax exemptions and then, in violation
of publicized agreements with the government, relocate plants and jobs
in Asia and Mexico.
investment houses, like Goldman Sachs, have conned investors for years
to invest in ‘garbage’ equities while the brokers pumped and dumped
the worthless stocks. Jon Corzine, CEO of MF Global (as
well as a former CEO of Goldman Sachs, former US Senator and Governor
of New Jersey) claimed that he “cannot account” for $1.6 billion in
lost client investors funds from the collapse of MF Global in 2011.
the growth of an enormous police state apparatus, the proliferation
of investigatory agencies, Congressional hearings and over 400,000 employees
at the Department of Homeland Security, not a single banker has gone
to jail. In the most egregious cases, a bank like Barclay’s will
pay a minor fine for having facilitated tax evasion and engaging in
speculative swindles. At the same time, the principle ‘miscreant’
in the LIBOR swindle, Chief Operating Officer (COO) of Barclay’s Bank,
Jerry Del Missier, will receive a severance payout of $13 million dollars.
contrast to the ‘lax’ law enforcement practiced by the burgeoning police
state with regard to the swindles of the banking, corporate and billionaire
elites, it has intensified political repression of citizens and immigrants
who have not committed any crime against public safety and order.
of immigrants have been seized from their homes and work-places, jailed,
beaten and deported. Hundreds of Hispanic and Afro-American neighborhoods
have been the target of police raids, shootouts and killings.
In such neighborhoods, the local and federal police operate with impunity
as was illustrated by shocking videos of the police shootings and
brutality against unarmed civilians in Anaheim, California. Muslims,
South Asians, Arabs, Iranians and others are racially profiled, arbitrarily
arrested and prosecuted for participating in charities and humanitarian
foundations or simply for attending religious institutions. Over
40 million Americans engaged in lawful political activity are currently
under surveillance, spied upon and frequently harassed.
The Two Faces of the US Government: Impunity and Repression
documentation supports the notion that the US police and judicial system
has totally broken down when it comes to enforcing the law of the land
regarding crimes among the financial, banking, corporate elite.
tax-evaders, billionaire financial swindlers and multi-billionaire money
launderers are almost never sent to jail. While some may pay a
fine, none have their illicit earnings seized even though many are repeat
criminals. Recidivism among financial criminals is rife because
the penalties are so light, the profit are so high and the investigations
are infrequent, superficial and inconsequential. The United Nations
Office on Drugs and Crime (UNODC) reported that $1.6 trillion was laundered,
mostly in Western banks, in 2009, one fifth coming directly from the
drug trade. The bulk of income from the cocaine trade was generated
in North America ($35 billion), two-thirds of which were laundered in
North American banks.
The failure to
prosecute bankers engaged in a critical link of the drug trade is not
due to ‘lack of information’, nor is it due to the ‘laxness’ on the
part of regulators and law enforcement. The reason is that the
banks are too big to prosecute and the bankers are too rich to jail.
Effective law-enforcement would lead to the prosecution of all the leading
banks and bankers, which would sharply reduce profits.
Jailing the top bankers would
close the ‘revolving door’, the golden portal through which government
regulators secure their own wealth and fortune by joining private investment
houses after leaving ‘public’ service. The assets of the ten biggest
banks in the US form a sizeable share of the US economy. The boards
of directors of the biggest banks inter-lock with all major corporate
sectors. The top and middle financial officials and their counterparts
in the corporate sector, as well as their principle stockholders and
bondholders, are among the country’s biggest tax evaders.
the Security and Exchange Commission, the Treasury Department and the
Senate Banking Committee all make a public pretense of investigating
high financial crimes, their real function is to protect these institutions
from any efforts to transform their structure, operations and
role in the US economy. The fines, which were recently levied,
are high by previous standards but still only amount to, at most, a
couple of weeks’ profits.
lack of ‘judicial will’, the breakdown of the entire regulatory system
and the flaunting of financial power is manifested in the ‘golden parachutes’
routinely awarded to criminal CEOs following their exposure and ‘resignation’.
This is due to the enormous political power the financial elite exercise
over the state, judiciary and the economy.
Political Power and the Demise of ‘Law and Order’
regard to financial crimes, the doctrine guiding state policy is ‘too
rich for jail, too big to fail’ , which translates into multi-trillion
dollar treasury bailouts of bankrupt kleptocratic financial institutions
and a high level of state tolerance for billionaire tax-evaders, swindlers
and money launderers. Because of the total breakdown of law enforcement
toward financial crimes, there are high levels of repeat offenders in
what one British financial official describes as ‘cynical (and cyclical)
current ‘banner’ under which the financial elite have seized total control
over the state, the budget and the economy has been ‘change’.
This refers to the deregulation of the financial system, the massive
expansion of tax loopholes, the free flight of profits to overseas tax
havens and the dramatic shift of ‘law enforcement’ from prosecuting
the banks laundering the illicit earnings of drug and criminal
cartels to pursuing so-called ‘terrorist states’.
‘state of law’ has become a lawless state. Financial ‘changes’
have permitted and even promoted repeated swindles, which have defrauded
millions and impoverished hundreds of millions. There are 20 million
mortgage holders who have lost their homes or have been unable to maintain
payments; tens of millions of middle class and working class taxpayers
who were forced to pay higher taxes and lose vital social services because
of upper class and corporate tax evasion. The laundering
of billions of dollars in drug cartel and criminal wealth by the
biggest banks has led to the deterioration of neighborhoods and rising
crime, which has destabilized middle and working class family life.
ascendancy of a criminal financial elite and its complicit, accommodating
state has led to the breakdown of law and order, the degradation and
discrediting of the entire regulatory network and judicial system.
This has led to a national system of ‘unequal injustice’ where critical
citizens are prosecuted for exercising their constitutional rights while
criminal elites operate with impunity. The harshest enforcement
of police state fiats are applied against hundreds of thousands of immigrants,
Muslims and human rights activists, while financial swindlers are courted
at Presidential campaign fund raisers.
is not surprising today that many workers and middle class citizens
consider themselves to be ‘conservative’ and ‘against change’.
Indeed, the majority wants to ‘conserve’ Social Security, pubic education,
pensions, job stability, and federal medical plans, such as MEDICARE
and MEDICAID against ‘radical’ elite advocates of ‘change’ who want
to privatize Social Security and education, end MEDICARE, and slash
MEDICAID. Workers and the middle class demand stability of jobs
and neighborhoods and stable prices against run-away inflation of medical
care and education. Wage and salaried citizens support law and
order, especially when it means the prosecution of billionaire tax evaders,
criminal money-launderering bankers and swindlers, who, at most, pay
a minor fine, issue an excuse or ‘apology’ and then proceed to repeat
radical ‘changes’ promoted by the elite, have devastated life for millions
of Americans in every region, occupation and age group. They have
destabilized family life by undermining job security while undermining
neighborhoods by laundering drug profits. Above all they have
totally perverted the entire system of justice where the ‘criminals
are made respectable and the respectable treated as criminals’.
first defense of the majority is to resist ‘elite change’ and to conserve
the remnants of the welfare state. The goal of ‘conservative’
resistance will be to transform the entire corrupt legal system of ‘functional
criminality’ into a system of ‘equality before the law’. That
will require a fundamental shift in political power, at the local and
regional level, from the bankers’ boardrooms to neighborhood and workplace
councils, from compliant elite-appointed judges and regulators to real
representatives elected by the majority groaning under our current system