[macro-economic delusions] part six – rank dishonesty

The Future of Money:
Creating New Wealth, Work, and a Wiser World

by Bernard Lietaer

Your money's value is determined by a global casino of unprecedented proportions: $2 trillion are traded per day in foreign exchange markets, 100 times more than the trading volume of all the stockmarkets of the world combined. Only 2% of these foreign exchange transactions relate to the "real" economy reflecting movements of real goods and services in the world, and 98% are purely speculative.

This global casino is triggering the foreign exchange crises which shook Mexico in 1994-5, Asia in 1997 and Russia in 1998. These emergencies are the dislocation symptoms of the old Industrial Age money system. Unless some precautions are taken soon, there is at least a 50-50 chance that the next five to ten years will see a global money meltdown, the only plausible way for a global depression.

Yves Smith at NakedCapitalism.com points out:

Let's see, the CEO of AIG was recently a board member of Goldman and still owns $3 million of Goldman stock. Goldman CEO Lloyd Blankfein was the only Wall Street representative asked to confer with Treasury Secretary Hank Paulson when the AIG crisis broke. AIG paid out all its counterparties in full on their exposures at each downgrade, a move that has since been questioned, and Goldman was far and away the biggest recipient of these payments.

Viniar's defense is that the payments netted to zero, which is technically correct but more than a tad misleading---why should Goldman be made whole on a bad business decision? Since when is the taxpayer in the business of propping up Goldman, particularly since the firm paid large bonuses in 2008? And, unlike AIG, where the bonuses are mere chicken feed, we are talking bonuses easily in excess of $10 billion.

IMF Country Report, UK, July 2009, p36:

In other words, they don't trust the UK approach to fiscal and monetary policy.

David Kelly

A group of doctors have produced a report arguing that the Hutton Inquiry's finding of suicide was flawed and have handed it to lawyers preparing a legal challenge.Dr Kelly's body was found six years ago on Friday in woods near his Oxfordshire home after he was exposed as the source of a BBC report on the grounds for going to war in Iraq.

Instead of a coroner's inquest, Lord Hutton was asked by then Prime Minister Tony Blair to conduct an investigation. His inquiry concluded the 59-year-old died from blood loss as a result of cutting his wrist with a blunt gardening knife.

According to the team of 13 specialist medics, however, a cut to the ulnar artery was "highly unlikely" to have caused enough bleeding to kill Dr Kelly.

Gold scamming

1p ET Saturday, July 11, 2009

Dear Friend of GATA and Gold:

GATA board member Adrian Douglas discloses in the report below, titled "The Alchemists," that the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.

Thus it is likely that the paper claims to the world's supply of gold are greater than even GATA has suspected -- that the gold supply is even more oversubscribed and that "paper gold" is being created at an ever more frantic rate to suppress gold's price.

The ability to offload futures contract gold obligations to the ETFs could become the principal mechanism of the gold price suppression scheme. GATA asks its supporters to call Douglas' report to the attention of financial journalists, market regulators, and elected officials everywhere.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Market Ticker:

Hmmm.... where have I seen that before?

Oh yeah, right here:

English: We still have banks that are engaged in what amounts to accounting fraud when looked at through any sort of objective lens, but its all "ok" because we have "accounting rules" that say you can claim something is worth more than it really is.

Sheesh. Such a revelation. NOT!

I've been pounding the table on this for over two years.

I appreciate that Bloomberg is finally picking up on it, but am dismayed that this shows up under "Opinion" and not hard news, which is, of course, the correct category.

The final straw

We are seeing rank dishonesty in dealings at all levels of society and the upper echelons, where politicians reside, I don't think are any more dishonest than what they've ever been but now the whole thing is coming out into the open and nobody cares, nobody resigns, people just grin in response to the revelations.

This one has to take the biscuit:

The Bar Council report that Brunel University and the British Science Association are calling for a review of the test for dishonesty.

The current test for dishonesty is the two-stage objective/subjective test set out by the Court of Appeal in R v Ghosh [1982] EWCA Crim:

“In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did.”

Dr Stefan Fafinski and Dr Emily Finch, criminal lawyers and social scientists at Brunel Law School, believe that the Ghosh test is flawed because it is based on an unattainable common standard of ‘dishonesty’.

To discover how public perceptions of dishonesty can vary (and therefore affect the outcome of criminal trials), Brunel University and the British Science Association announce the start of an international scientific study into dishonesty.

We don't even know what's dishonest anymore.