Gangster's Paradise

Mon, Oct 28, 2013 - 8:29am

In 1998 Los Angeles rapper Coolio recorded the legendary paean to the streets of LA titled “Gangsters Paradise”, an ode the particular combination of lawlessness and opportunity for crime of his hometown. To Coolio, the conditions of overwhelming criminality and undermanned law enforcement situated within a wealthy city combined to create a perfect storm of juicy prospects for a young man living the “thug life”.

But with all due respect to Coolio, he and Tupac and NWA and the rest could never have imagined that the gangster ethos they espoused would eventually be realized in its fullest incarnation by middle-aged bankers, pillaging their way through the wealth of an entire nation. As strange as it may sound, today’s Wall Street is the pure embodiment of Coolio’s vision of a Gangster’s Paradise.

“To a kid lookin’ up to me?

Life ain’t nothing but Bitchez and Money.”

- Easy E, Straight outta Compton

Don’t believe me? Think this is just internet hyperbole? Take a look at this gangland-style pattern of behavior and you tell me where ethics or the rule of law applies in any of this:

Bank of America has been laundering enormous sums of drug money for international cartels: (Link). B of A was also caught hiding $5.8 billion in bonuses from shareholders as part of its takeover of Merrill Lynch. The fine for this, levied by the SEC, was so ridiculously low (33 million dollars) that the Judge in the case was literally too embarrassed to sign off on it, calling a "facade of enforcement.” Ultimately, B of A paid a larger fine, one that still represented just 2% of the 5.8 billion. (Link)

All the big banks manipulated the London Inter-Bank Offer Rate (a foundational rate that affects virtually every other interest rate) but Citigroup was the biggest Libor manipulator of all. (Link)

Goldman Sachs has been busy. Between getting themselves fined for illicitly leaking trading information to its biggest clients, (Link), manipulating the Aluminum market, selling Collateralized Debt Obligations to investors that they knew were dogs then taking the other side of the trade and making billions from the housing collapse, it is shocking that they found the time to 1. Set up AIG to go bankrupt primarily because Goldman sold them rancid Credit Default Swaps, then 2. Taking for themselves the billions in taxpayer dollars used to bailout AIG when AIG went bankrupt thanks mostly to Goldman’s actions (Link). Tupac would have understood:

Maaan, I don't worry about the Five-O

If they start, It’s all about survival

Stay smart

Keep your mind on your bank roll

Thug life. Y’all know the rule:

Do what ya gotta do.

-Tupac Shakur, Stay True

JP Morgan has been even busier. Their criminality has been so blatant that the authorities are temporarily being forced to pretend to reign them in on multiple fronts, just to put on a decent show for the public. JPM is currently facing scrutiny by at least seven federal agencies, several state regulators, and at least two foreign countries. They have agreed, to date, to pay a total of 21 billion in fines for transgressions ranging from the London Whale manipulations to Mortgage fraud (Link).

“I’m doped-out, gangsta. As set-trippin Banker

And my Homies are down, so don’t arise my anger.”

-Coolio, Gangsters Paradise

It is not a surprise that rampant and widespread criminality is the norm. Most people don’t realize that this was essentially announced as official policy by no less than the Enforcement Director of the SEC, Robert Khuzami. In 2009 at a financial industry conference in New York, Khazami spoke to a room filled with 1,500 people from all of the top Wall Street financial institutions. Amazingly, in this speech he described the process that the government would use to give Wall Street a free pass to commit crime on a massive scale:

Khuzami, the SEC's director of enforcement, talked about a new "cooperation initiative" the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.

"We are going to try to get those individuals answers," Khuzami announced, as to "whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client."

Aguirre, listening in the crowd, couldn't believe Khuzami's brazenness. The SEC's enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. "First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC," Aguirre says. "Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department." (Link)

Now do you understand why an outfit like JPM can seemingly do what they do and only wind up paying fines?

Please note that there is a very good reason for all of the above: This is precisely how central planners assert and maintain control over a large and complex economy while maintaining the public fiction that the system is still a “free market”. If you get all the major players engaged in lucrative but illegal behavior, and if the Fed and their minions are the ultimate arbiters of who goes to jail and who get a pass, you then have the power to control everything those entities do. You can have those firms buy or sell to lower interest rates, prop-up stocks on command, control inflation in commodities, and pretty much anything and everything you want them to do. In short, this is how you impose a regime of central planning under the guise of a system that is supposed to be a free market economy.

Welcome to Wall Street, Comrade.

That this is the case- that we now live and work in an economy where the actions of the dominant companies are just as centrally controlled by the government as Mussolini’s Italia ca. 1938- was proven once and for all by one Mr. Timothy Geithner. In 2009, the Fed and Treasury were bailing out Wall Street firms left and right, and he made it crystal clear how the rights of ownership and control would work henceforth. Geithner stated publicly that he was prepared to oust any CEO who did not run his bank in accordance to the wishes of the Fed and Treasury, implying the right of the government to dictate policy, investments, and anything else they wished, regardless of the desires of the shareholders, board members, or the duly elected CEOs (Link). Think about the implications of this: If you do not do exactly as we say, we will replace you with someone who will.

What are the Banksters going to do, suddenly complain that the Government has no right to control their businesses? Are these crony capitalists suddenly going to go misty-eyed and complain to the press about the destruction of the free market? Why would they, when they are otherwise given such exceptional opportunities for graft and profit as insiders and a marker-makers? The formula is simple: do what Central Command dictates, and the law doesn’t apply to you. A Gangster’s Paradise indeed.

In Gold and Silver investing, we often tend to get tunnel vision. We all see the manipulation on a regular basis but we keep hoping that something or someone will come along and it will all be fixed. Maybe if the COMEX breaks it will all be fixed. Maybe if the LBMA goes under, it will all be fixed. Maybe if a whistleblower comes forward, or maybe if Chilton resigns and goes to the press, it will all get better.

It won’t. We are not “one USA Today article away” from genuine price discovery. PM manipulation is merely one tiny part of an enormous machine that is trying to centrally plan EVERY market- and at this point in time, is largely succeeding. Mortgages, business loans, property values, stock prices, the value of the dollar… ALL OF THESE are either mostly controlled or are set outright by the machinations of central planning.

There are no free markets now, only varying degrees of control within specific markets. But you know what always happens in a centrally planned economy? The laws of supply and demand cannot be cheated. Items whose price is artificially suppressed become scarce, and ultimately become very, very valuable.

You should prepare accordingly.

About the Author


Oct 28, 2013 - 8:45am

Another excellent post

Complete with great graphics. Well done, Pining!

This great piece from Jon Stewart fits right in. I'm not a big fan of Stewart but this 10 minutes makes me very angry. Extremely well done and really shows what we're up against. The stuff exposing CNBS is brilliant.

Oct 28, 2013 - 8:50am

European Parliament to probe bailout troikas

Berlin - MEPs dealing with economic affairs are to launch an inquiry into the "non-transparent" work of EU Commission, European Central Bank and International Monetary Fund officials overseeing spending cuts in bailout countries. After more than three years since the first 'troikas' were sent to Greece and Ireland to "advise" the governments and oversee implementation of promised budget cuts, the European Parliament is seeking to shed some light on the work of these non-elected officials. The coordinators of the main groups in the European Parliament's economics committee on Monday (28 October) agreed to launch an inquiry into the work of the troika in Greece, Portugal, Ireland and Cyprus. "The troikas of ECB, EU commission and IMF are playing a key role in the eurocrisis. Their work continues to be non-transparent to a large extent," said German Green MEP Sven Giegold, the main force behind the initiative. He explained that the inquiry would consist of hearings of troika officials as well as independent economic studies challenging the assumptions of the troika - assumptions that were proved to be wrong in all bailed-out countries. Unemployment turned out to be higher, the economy shrunk more dramatically and public debt rose more than predicted by the troika in the four countries. "That is why many European citizens are expecting a comprehensive probe into why these dramatic results came about. We need to look carefully at potential breaches of law or abuses," Giegold added. The political groups are still negotiating the exact scope of the inquiry, which needs the overall approval of group leaders and committee chairs. One area likely to come under scrutiny is the work of private consultancies involved with the troika. The role of consultancies The most recent bailed-out country, Cyprus, is currently in turmoil after leaked documents showed that the central bank governor approved a "success fee" of 0.10 percent for the New York-based private consultancy Alvarez and Marsal out of the entire recapitalisation sum for the Cypriot banking sector. The consultancy is advising the central bank on restructuring the Bank of Cyprus. The fee, almost €5 million, would have included private deposits above €100,000 from the defunct Laiki bank and the Bank of Cyprus. These deposits were seized as part of the "bail-in" required by the troika in return for the €10 billion worth of loans from the EU and IMF. Members of the central bank's board said they were unaware of the fee, agreed by the governor, Panicos Demetriades. For his part, Demetriades claimed he was forced into agreeing to it. He said the consultancy threatened to quit one day before Cypriot banks re-opened after a week of bailout negotiations. The Cypriot authorities have launched criminal proceedings into the matter. The US consultancy meanwhile has said it is up to the Cypriot central bank to decide if and how much to pay as a "success fee." "Alvarez and Marsal has also informed the Central Bank of Cyprus that, in their opinion, the events that have arisen during the past few days concerning the recapitalisation fee are unfortunate," the firm, who is also involved in the Spanish bank restructuring, said in a press release.

Oct 28, 2013 - 9:17am

Truer words

We are not “one USA Today article away” from genuine price discovery. PM manipulation is merely one tiny part of an enormous machine that is trying to centrally plan EVERY market- and at this point in time, is largely succeeding. Mortgages, business loans, property values, stock prices, the value of the dollar… ALL OF THESE are either mostly controlled or are set outright by the machinations of central planning.

There are no free markets now, only varying degrees of control within specific markets. But you know what always happens in a centrally planned economy? The laws of supply and demand cannot be cheated. Items whose price is artificially suppressed become scarce, and ultimately become very, very valuable.

I watched the Jon Stewart clip that Turd posted last night, and it was truly disgusting.

But, you have to remember who is paying the bills for CNBC and FOX services. The old saying "don't bite the hand that feeds you" comes to mind. That is where I wish Stewart would have gone in that clip, as its the logical conclusion of why the business press would so vehemently defend the "best CEO" on the planet, Jamie Dimon.

Great post again. Although I would have preferred to see the Bernank with a splif in the other hand whilst pouring out liquor for his dead homies.

Mussolini would be so envious of the state of affairs in America. We have the perfect merger of business and government.

Oct 28, 2013 - 9:19am

Devil's advocate

I hate playing the devil's advocate, but if everything is manipulated, why bother stacking?

Oct 28, 2013 - 9:21am

Bye bye, Miss American Pie

Sadly the US of A has been whittled down to nothing more than a glorified chop shop with a few flashy salesmen manning the storefront. Bye bye, Miss American Pie.

Only one question remains to be answered:

What day will this bankster music finally die?


Mr. Fix
Oct 28, 2013 - 9:24am

Excellent! "Gangsters Paradise" is the only rap song I ever really liked.

Time to go to work,

and learn how to be a better gangster!

Oct 28, 2013 - 9:31am

silverwhere said >>What day

silverwhere said >>What day will this bankster music finally die?<<

When the money is gone, or people do something because they are beginning to starve, whichever comes first.

Oct 28, 2013 - 9:32am

I'm calling BS on some of the splish-slash

People tend to congregate on the most recent post, so my take on Argentus is being placed accordingly.

Argentus, your intellectual calisthenics often focus on a narrow premise, while ignoring other major factors ~ and in today's chaotic and unstable soup, lesser intellects reading your pieces might get the impression gold and silver are higher risk plays than in reality. You constantly question them with a negative bent, IMO. "The case for physical metal investing at the moment relies upon the thesis that there is a financial bubble which when it ends will present those in charge with two choices." You're implying there's only one thesis. We have the ever-growing trillion per year US debt and probable expansion of QE, the growing "de-Americanize" movement by the BRICS, the massive ocean of unregulated derivative largesse, the draining of COMEX and GLD, the multiple threats articulated and future scenarios provided by Paul Craig Roberts in his latest piece, the Total Credit Market Debt issues currently highlighted at Peak Prosperity, the corruption inertia infecting all of the US political-financial system and total collapse in the rule of law (Gangsta Paradise), the possibly soon Saudi petrodollar break, Bail-in plans and municipal bankruptcies... an eventual dethroning of the US dollar virtually set in stone, with global gold trade settlements galore, possibly combined with major gold-backed currencies (holdings absolutely verified, not assumed). "It bothers me that there is public evidence and news of Central Bank buying of gold. This bothers me a lot, because I would expect the CBs to make that announcement on the day that they end their buying!" In today's world the buying of gold cannot be hidden like an accumulation pump and dump stock play. "Take an inflation rate of 8% per annum. That's 4% each 6 months. So after 6 months 100% debt is reduced by 4% to 96% debt in present value." Except more debt has been accumulating during those 6 month periods, and deteriorating economic conditions are bringing less revenue into the IRS as well, and when more theft occurs to make up for that, things break down even further. "...inflation running constantly about 6%-10%, and brief surges of 9%- 12%, and the switching between the two..." Such precision from TPTB, like their website, or the recent rate swings on the 10 year that Bernanke was so confused about.
Oct 28, 2013 - 9:36am

Devil's Advocate

Why should you keep stacking? Because you know that every ounce you have is 50 ounces of paper they have to create, and if you fold and succumb to their directions... Well that's your choice.

Good work, Pining. Thanks for all you do on this site.


Oct 28, 2013 - 9:40am

cartel is vicious

all gov't numbers are BS. they are still printing fiat.

STACK within your means they are trying to inflate away your stack. you will have to fight to keep it intact.

Lou Reed - Vicious

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