Curried Wealth Building
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December 11, 2011
Issue 177  -  Rule of Law....Haha!
 
 
 
 
The rule of law is the binding "glue" that keeps a society functioning and healthy.  Without strict adherence to it there is chaos as the elites and wealthy extract more and more assets through nefarious and in fact illegal means.  Without enforcement of the law there can be no confidence in any asset or business.  At present, we have devolved into a society where the laws are only for the little guy.  When ZERO indictments have been written for the 2008 debacle, one clearly knows that there is a problem.  There is no possible chance that there isn't sufficient evidence to prosecute SOMEONE.  It just doesn't pass the laugh test.
 
The mortgage systemic fraud and deception of the mid 2000s is only the largest example of the problem.  Now we have Jon Corzine, former CEO and Senator saying he has "no idea" how customers CASH accounts were moved elsewhere.  He should go to jail.  More from the Ticker Guy:
   

It's simply gone.

"I simply do not know where the money is, or why the accounts have not been reconciled to date," Corzine's prepared testimony read. "I do not know which accounts are unreconciled or whether the unreconciled accounts were or were not subject to the segregation rules."

Sarbanes-Oxley requires him as the CEO of a company to (1) guarantee that effective risk controls and rules are in place and (2) monitor their compliance.  It renders failure to do so -- that is, the old-fashioned "I didn't know" defense that was routinely used after 2000-era failures in the Internet space -- a felony.

Now of course Mr. Corzine is entitled to the presumption of innocence and he is entitled to a trial before being pronounced guilty, but the law on this point is clear: Executives, the CEO and CFO in particular, are required under Sarbanes-Oxley to factually know about matters such as this and they are required to attest to that knowledge -- and the presence of appropriate and sufficient risk controls under penalty of felony indictment.

It appears that Mr. Corzine has admitted in front of a Congressional Committee that he does not know, and therefore this appears to be a prima-facie admission that he is in direct violation of this law.

If this is not dealt with on an expeditious fashion and the law is not enforced you have just seen proof on national television that there is no longer a rule of law in this nation of any substance.

You must, therefore, presume that there is no longer any Constitutional protection afforded to you and you thus have no rights and no recourse to the law of any sort.  Your "rights" have just been downgraded to only that which you are willing and able to personally enforce at any instant in time.

This in turn means that it is impossible for you to engage in any sort of commercial transaction where performance cannot be verified before you hand over payment in full, because you have no means of compelling the other party to perform and no recourse of any sort to the law, nor do you have any expectation that someone who violates the law, irrespective of who it is, will be held to account.

This sucks, to be blunt, but it is the world we live in as of today and if you have any hint of intelligence it is the operative assumption you must make here, now, today and forward until there is evidence otherwise.

 
Revising History: Why There Have Been No Prosecutions

They still write fluff pieces in the WSJ trying to convince you that an admission of criminal conduct isn't actually an admission and thus couldn't be prosecuted....

A former top U.S. official in charge of investigating the financial crisis said the government has concluded that many inquiries of wrongdoing by financial executives can't succeed as criminal prosecutions.

"There's been a realization and a more deliberate targeting by the Department of Justice before we launch criminally on some of these cases'' said David Cardona, who was a deputy assistant director at the Federal Bureau of Investigation until he left last month for a job at the Securities and Exchange Commission. The Justice Department has decided it is "better left to regulators" to take civil-enforcement action on those cases, he said.

Uh huh.  Let's remember that Citi's former chief risk officer testified under oath before the FCIC, presenting written documentation, that the firm -- all the way into the executive suite -- was fully aware that 80% of the loans it was writing and selling on in 2007 did not meet quality standards.

Yet they sold them anyway without disclosing this fact to the buyers.

Were this a food quality case where 80% of the meat sold by a slaughterhouse was known to contain contaminants and led to the death and/or sickness of thousands of people, or a steel quality case where 80% of the steel was known to contain imperfections that led to the collapse of a building and the death of thousands, the executives in question would be sitting in the graybar motel and the firm involved would be out of business.

This is not a singular example.  Wachovia, for example, entered a deferred prosecution agreement -- a guilty plea, in effect -- for money laundering to the tune of hundreds of millions of dollars of funds laundered for Mexican Drug gangs.  Then there's the Jefferson County Alabama case in which municipal officials and related parties were actually convicted and went to prison and yet nobody from any of the financial firms involved was criminally prosecuted, nor were the firms themselves.

The latter is especially galling since in order to receive a bribe (the base allegation of corruption that was proved to a criminal standard and led to imprisonment) someone else must offer said bribe and the victims of this scheme were the entirety of the citizens of the county who are stilling paying for the corrupt practices involved and have received no restitution nor do they have any hope of it in the future. 

While the apologists say that these cases are "hard to prove" this assertion does not pass the smell test -- in many of these cases that I have bird-dogged for years now we have sworn testimony as evidence, in others (e.g. the cases outlined in the 60 Minutes piece that I covered the other day) there are actual whistleblowers who have and will testify and in still others there are actual prosecutions of people on the "other side" of the transactions in question that have led to convictions -- that is, cases where the required standard of proof has been met!

You are free to come to whatever conclusion you'd like as to the reason for the lack of prosecution of financial firms and the executives running them, but the "mainstream media" apologist game does not stand up to even the most-cursory level of inquiry.

 
I agree with Karl on this one.  If this guy is allowed to walk away and live a normal and free life, then we might as well just throw in the towel.  This man signed off on the financial filings of the company which claimed that the accounts were right where they were supposed to be.  Now the accounts are missing.  See the problem?  If Sarbanes Oxley is enforced, he goes to jail.  "I have no idea," isn't an excuse that gets you out of your fiduciary responsibilities.  Just like telling the police that you "didn't know it was illegal," is not good enough, Corzine's weak deflections should have no bearing on putting him away.
 
This country has become one of two classes.  Those with and those without.  The rules apply forcibly to those without but not so much to those with.  How does this happen?  How can they get away with it.  Remember this chart:
 
 
This is on purpose.  It's not an accident.  Dumb down the public and then get away with murder.  Distract them with cell phones and goofy tv shows.  If I'm wrong, how in the world can people allow nonsense like this:

US boy suspended for sexual harassment after calling teaching 'cute'

London, Dec 5 (ANI): A nine-year-old boy in the US was suspended by his school, when he told a friend that he thought his teacher was 'cute'.

Fourth grader Emanyea Lockett was accused of 'sexual harassment', after a substitute teacher at School overheard the remark, told the principal, who then suspended the boy for two days.

"I was talking to my friend and I said Miss Taylor was cute," the Daily Mail quoted Emanyea as telling local WSOC news.

"That's all I said," he said.

Meanwhile, Emanyea's mother, Chiquita Lockett, thinks that the punishment meted out to her son is far more severe than the crime.

"It's not like he went up to the woman and tried to grab her in a sexual way,"

"Why would he be suspended for two days?" she said. (ANI)

Zero tolerance.  That's what these policies are called.  That is another goal of the elites.  Cut off thought.  Make things black and white.  NO THINKING ALLOWED!Dull the processing and reasoning capabilities of the populace.  Then you can get away with anything.  These clowns are all laughing at us.  They are stealing the world's assets and no one even knows it.  Here is a story that I will be writing about more next week:
 

I recently had a conversation with an individual (we'll call him Bob) who had three MFG accounts. He, like many other customers, smelled a rat with MFG as the stock price plunged and the FINRA issues with the Euro bond positions became known.

Bob voted with his feet. He closed off all open positions. He got back to cash. Then he requested a wire transfer for the balance(s). He left a small operating balance in the accounts in order to keep them open. This fellow was small potatoes. Two of the accounts were under $20k. The other was $215k.

Wire transfers to a bank were requested.

According to Bob, the wires went out on Wednesday, October 26 (four days before BK). All three wire transfers were received on Thursday October 27.

But on Friday, October 28, the bank that had received the funds reversed the wire transfer for the larger amount. The transfers for the two smaller amounts were not reversed.

This is highly unusual. It is extremely difficult to reverse a wire transfer. Wire transfers are considered to be Immediately Available Funds or “Good Funds”. Absent a court order, the only way to reverse a wire transfer is when the remitting bank provides a letter of indemnity ("LOI") to the receiving bank. I’ve written these letters. They would look something like this:

To: ABC Bank
 

From: XYZ Bank

Reference:Wire Transfer #123456 date 10/26/2011 for $215,000 for further credit to "Bob", Account #AB3355


 

We hereby request that you immediately debt the account of (Bob) for the full amount of the transfer and return the funds to us.


 

If you comply with this request we hereby agree to hold you free and harmless of any consequences that may arise as a result of this request.



XYZ Bank


Basically XYZ has to give ABC a blanket guarantee that they will not get hurt by the request.

Here’s the rub. I’m told that in the matter at hand, the "XYZ" bank operating on behalf of MFG was JPM.

If I’m right that a LOI was required to claw back a wire transfer, then - assuming my information is correct, and I think it is - it had to have been JPM that wrote the indemnity letter.  (No one would have acted on a LOI from MFG on 10/28).

I'm speculating quite a bit. But it’s still worth considering. At this point, anything is worth considering. We are six weeks past the BK. As Corzine and all the others said today, they have no clue where the missing money is. There has been any army of forensic accountants (FBI & KPMG) toiling night and day. No one has found the money. That's crazy to me.

A possible daisy chain:

(1) MFG orders XYZ Bank to make a money transfer.

(2) XYZ makes the transfer.

(3) After the transfer has been made (or during the same day) XYZ issues a letter of indemnity (“LOI”) and obtains a refund of the transfer.

(4) The initial wire transfer is accounted for (correctly) at MFG as a reduction of the customer account liabilities (Segregated account).

(5) When the money comes back into XYZ (pursuant to the LOI) it is not credited back to the Seg./customer account. (The fog of war factor? Deliberate?)

(6) After the money has been returned to XYZ bank, it appears to be "unrestricted funds" of MFG. It gets commingled. Someone grabs the money to offset a claim. The Chinese Wall between the Seg. account and MFG corporate account has been broached. Once the money is commingled, it is impossible to figure out who owes what to whom.

This is a big danger in the coming months.  The MF Global bankruptcy is going to have large ramifications and there is no escaping this if you are in the mainstream system.  Some people are realizing this and are pulling their money out.  The general populace RARELY pulls money out of the stock market when it is up.  People are pulling out of the system even on up trends:
 
In Past Week Americans Pull The Most Money From Stock Market Farce Since US Downgrade, Despite Market Surge

As if we needed another confirmation that the sad joke of a market has now succeeded in driving virtually everyone out courtesy of precisely the kind of bullshit we saw in the last 30 minutes of trading today, here comes ICI with the latest weekly fund flow data. It will not surprise anyone that in the week in which the S&P rose by a whopping 8 points on absolutely nothing but more lies, rumors and innuendo, US retail investors pulled a whopping $6.7 billion from domestic equity funds: the most since the week after US downgrade when a near record $23 billion was withdrawn. Only unlike then when the market bombed, this time it simply kept rising, and rising, and rising. In other words, every ES point higher serves no other purpose than to provide an even more attractive point for the bulk of that now extinct class known as investors to call it a day, and pull their cash out of this unprecedented shitshow that central planning has converted the market into. And for those keeping score, a total of $123 billion has now been pulled from stocks in 2011, well over the $98 billion withdrawn in 2010.

I believe there are two reasons the money is leaving:  Distrust of the system and for living expenses.  People are hurting and they NEED the funds.  Here is a chart of the outflows:
 
 
 
The money is being pulled out at a crazy pace.  Who is buying the stocks?  It's all electronic.  Hedge funds trading against other hedge funds.  Of course this makes the case for gold better and better.  Gold and silver in your possession are your only true protection.  I've argued (along with many bloggers) that the authorities intervene in the metal markets.  Many of the "Experts" have pooh poohed this.  Guess who was right?
 
 
 MNI Reports Coordinated Central Bank Intervention Sends Gold Lower Intraday

Submitted by Tyler Durden on 12/08/2011 12:35 -0500

It is one thing for conspiracy websites to indicate that the Fed or the global central bank cartel are doing everything in their power to manipulate the price of gold lower. It is something different when the 'reputable', Deutsche Boerse owned Market News does just that.

  • MARKET SOURCES REPORT BIS, BOE & FEDERAL RESERVE WERE SELLING GOLD AFTER IT POPPED TO SESSION HIGH AT GMT 1335 -MNI NEWS via BLOOMBERG

So much for all those sworn testimony claims that the central bankers do not manipulate the price of gold.

-END-

Gold is THE enemy of the banks.  It is nobody's liability.  (unless you hold it with a storage firm)  THEY are controlling the rise of the metals.  How do they control the price?  How about PAYING people to borrow it:
 

The interest rate for lending gold in exchange for dollars plunged to the lowest on record this week as European banks sought ways to secure the U.S. currency amid the region’s debt crisis.

The one-monthlease rate on gold fell to minus 0.57 percent on Dec. 6, the lowest according to Bloomberg data going back to January 1998. The rate, derived by subtracting the gold forward offered rate from the London Interbank Offered Rate, was at minus 0.56 percent today and compares with minus 0.23 percent at the start of this year. A negative reading means banks have to pay to have their gold deposits lent.

The rate at which London-based banks say they can borrow for three months in dollars rose to the highest level in almost 2 1/2 years yesterday, even after the Federal Reserveand five other central banks agreed on Nov. 30 to cut the cost of providing dollar funding. Gold has climbed 21 percent in Londonthis year and reached a record $1,921.15 an ounce on Sept. 6 as investors and central banks boosted holdings to protect wealth.

“European banks especially are having liquidity funding problems, which does see a lot of lending of gold and that’s putting downward pressure on lease rates,” Walter de Wet, head of commodities research at Standard Bank Plc in London, said today by phone. “Funding problems will continue for a while.”

The European Central Bank today cut interest ratesby a quarter percentage point to 1 percent, matching a record low, in a bid to avoid a recession. It pledged for the first time to offer banks unlimited cash for three years and loosened the collateral rules it imposes when lending to financial institutions.

This is hard to wrap your head around.  Paying someone .57% to borrow gold?  There is no reason in the world that anyone who had an asset, which they hoped was going to rise, and what other reason do you own an asset, would PAY someone to borrow it.  The only reason is to drive the price down.  Wouldn't you take an asset from someone if they paid you to do it?  Of course you would.  Then you would sell it and use the money to buy something you really want.  That is exactly what is happening.  What to do?  Here is a very reasoned plan:
 
 There is nothing we can do - unless we do something collectively that goes well beyond voting - to change this. If you want to give yourself the best shot at surviving what is coming financially, then the ONLY way to achieve this is by moving as much of your wealth as you can into physical gold and silver. As von Grayerz puts it:
In order to preserve wealth and keep capital intact, it is critical to keep a major part of investment assets in precious metals held outside the banking system. But for investors who continue to follow conventional wisdom, they will sadly find that their investment strategy was merely conventional and contained no wisdom.

But be prepared to hold your gold for the long haul and expect that there will be vicious corrections (like the current one):

Governments are creating credit and paper money and consequently through their fraudulent actions "stealing" from the people whilst at the same time increasing the people’s dependence on the state. And the people does not understand that the value of paper money is declining continuously. But gold reveals the deceitful destruction of paper money. This is why governments do not like gold and try to suppress the gold price.

Use these corrections to move even more paper fiat currency into physical metal. And don't listen to your idiotic investment advisor when tries to tell you that gold is risky and is in a bubble. That is utter bullshit. Ironically, gold is the safest thing you can hold on to right now. Want proof? If gold was risky and at the top of a bubble, why aren't the European countries who are in a state of collapse selling their gold to raise money? Italy is one of the larger sovereign holders of gold in the world...As von Grayerz states:

Gold is money and reflects the total destruction of paper money. But most investors do not understand gold. Common arguments I hear is that "you can’t eat gold" or that "gold pays no return." It seems that these investors prefer to eat paper money. And as to the argument that there is no yield on gold, who needs yield on an asset that has massively outperformed all major asset classes in the last 11 years.
So the ultimate "insurance" is gold and silver in your possession.  I know that sounds a little extreme, but these are extreme times.  There will be a time when you will be glad that you do have a private "stash," away from the system.  I predict that at some time in the future this will be almost impossible to achieve.  Make sure you take advantage of the rules while you can.
 
Positions
GORO (closed $20.79, up $.59, average price paid $6)
Mexus Gold (closed $.07, flat, average price paid, $.22)
AXU (closed $7.25, up $.37, recommended at $7.90)
 
MBIA (closed $11.26, up $.68, recommended at $10.58)
Stocks (Current status, out)
I have no stocks in any of my retirement accounts, all cash.
Physical Gold (Closed $1709, down $38, average price paid $395)
 
Physical Silver (Closed $32.00, down $1.15, average price paid $5.31)
I'll close this week with a video that is a little odd (not unusual for this space) and warn you that the language is not G rated.  This is a video of a "grandpa" who isn't receiving a grandparent of the year award anytime soon.  All I can say is, "what an idiot."  Have a great week!