Time For The New Untouchables? Cyprus Bank Losses

I always liked the Untouchables.  The acting was wooden and it was easy for my young mind to spot the good guys.  Elliot Ness was the good guy, fighting illegal booze and the likes of Frank Nitty’s numbers rackets (now our government run lotteries) and the awful Al Capone.  Of course, the real Elliot Ness was an accountant and wrote his own legend.  As a cop, I spent plenty of time in speakeasies under our own licensing laws. and was part of such mega Untouchable raids as the one on illegal bingo playing in my local Labour club – strangely the raid, planned by a future ACPO and involving 40 hairy-arsed coppers, took place on a night with no bingo and with only a few grandmothers having the odd legal milk stout.  The hideous offence thought to be committed was selling 10 bingo cards for the price of 9.  All was not lost as said future ACPO fell off the stage on which the not-in-use bingo wheel was situated and I was able to practice my first-aid skills to such effect he was off sick for months.  Life was briefly sweet.  The two grandmothers he instructed me to arrest for the offence of laughing at his indignity received my personal caution.  This involved them being bought several drinks at a local pub by grateful officers.

Imagine yourself running a bank in Cyprus.  A Russian ‘oligarch’ (Lev Caponisz) comes in with several bin bags of cash – say a billion.  You take the money and wire it into the UK-hubbed offshore system.  Lev is not the kind of bloke whose money you would want to lose.  You soon have about £30 billion of money ‘belonging’ to such people.  Which man or woman amongst you wants to tell the various Levs you have lost the lot?  I doubt many of us would even be comfortable living in another sun-drenched paradise far away looking over our shoulder, let alone having to meet Lev and tell him we invested it in Greek Cuckoo-spit bonds now worth exactly a  weight of rocking horse droppings.  Few of us want to die in severe pain sometime after the rest of our family has been slaughtered in front of us.

The two biggest banks in Cyprus are now worth $30 billion less than a bag of rocking horse droppings.  Much of this is rumoured to be Russian mafia money.  Several Levs are thought to be unhappy about this.  That this much money has been lost is probably true, though whether this is really Russian suitcase money I’m not so sure.  If I’m not happy at the thought of having to explain this plight to Lev and the big guy with the thumb-screw, I can’t imagine those who actually run banks with their PhDs in knee-trembling likely to want to either.

The money has had it away on its toes for sure.  In light of the above, where is it likely to have gone?  If it was really Russian mafia money where are the mangled corpses of dead Cypriot bankers?  Don’t think they just haven’t been found yet – they would be left in the open as warnings.  Th banksters can fob me and you off with excuses like buying into Greek junk bonds, but not Lev and his mates.  It’s much more likely that the smart criminal money is already in US and Mayfair real estate or sloshing around the Caribbean offshore and Middle Eastern private equity investment.

The question for us in the Untouchable Squad (formerly the Fast Action Response Team) is how the offshore investment was obtained from genuine depositor money once and no longer in the Cyprus banks.  If the government in Nicosia had to stump up after the main banks.were allowed to go tits-up, it would be paying £30 billion it hasn’t got to fund the deposit insurance (hence the crazy EU bail-in by taxing existing deposits to reduce the ECB contribution – I doubt any of Lev’s money is at risk – this is just a blind or sop for public consumption).

If you take my point of none of us wanting to be holding the empty bag that once contained Lev’s cash, is it not reasonable to think this money is already secure elsewhere and Lev comfortable with the 5% laundering fee we have extracted?  The mug punters losing their 6.75% and 9.99% and the balance to be stumped up (tax payers) don’t carry knuckle-dusters and scrotum smashers.

Now, if Lev’s money is off somewhere safe, why has the rest of the cash been lost?  We will no doubt be told that the bankers just lost it in ill-advised purchases of non-English Law Greek doughnut holes (whatever).  These brilliant investments can be loosely described as $100 in to get a debt of $110 back (the $10 is how banksters pay themselves bonuses).  All perfectly legit.

Bankers are either super-intelligent (as they claim) or crooks.  It’s hard to believe the super-intelligent would keep investing in doughnut holes and rocking horse shit futures – but it seems they do.  So it makes more sense to think they are crooks who lie to us about being super-intelligent.  Even mugs like us could transfer Lev’s black bags of cash to sensible investments – knowing just what would be at stake if we lost it.  We also know the correct financial terminology to use when someone asks us to buy Greek rocking horse shit futures.  It’s fuck off squared.  This is never the offer.

What gets offered is this:

1. I have several sacks of rocking horse shit valued at $30 billion in a mark-to-market scheme of impenetrable complexity.  The contents are as promised and the loss, once a bureaucrat with an abacus sets to belated work on them, matches the contents once the magic Gaussian copula is waved over them, turning a big fat, invisible zero to a big negative number.

2. Why should I buy $30 billion of rocking horse droppings from you?

3. Firstly to keep your gonads where God intended them.

4. Secondly, because you will benefit more than to the tune of the status quo ante concerning your gonads.

5. We can sell you the rocking horse dropping futures, suitably leveraged and insured so you can make a personal profit and leave other mugs holding the bag when the music stops.  All the real money comes into our pot and goes off with Lev’s money offshore.  That money becomes ours and we guarantee you a huge slice so you can run off with your mistress beyond jurisdiction to live the good life.

6.  No way.  I’ll be left here carrying the can.

7. Don’t be stupid.  Tax payers and small depositors will carry the can.  No one gives a monkey’s toss about them and the law protects you and your fortune from them.  The law states no bankers inside.

8.  My fortune?

9. The $5 million we are about to lodge in Allcoppedout (Cayman Offshore) for you should you and your extremities take the rational course of action we are putting to you.  Our offers you can’t refuse come with delicious dessert.  Much more sensible than allowing parts precious to you to be served as sweetmeats on the table of our Arab confederates.

10.  Why would you sell me $30 billion in bags of rocking horse droppings for only $30 billion?

11.  You take the fees on the $30 billion sale.  Looks like a good deal and you can pay bonuses with the fee money.  We package the rocking horse and doughnut hole droppings in securitized CDO and multiple hypothecated collateral substitute repos that will take three years to untangle.  By the time the authorities realise the package is only worth what we would have paid for it had we any intention of actually taking up our future options on the shit, we are away with $25 billion of real money with no links to the celebration I am inviting you to on Turks and Caicos before Miss Zaplova takes you round the world.

By this time the banker realises he is talking to Lev.  I have not seen any news reporting even suggest we should go looking for where the real money went and start getting it back.  If bankers are so stupid they really invest in Greek and other peripheral bonds losing billions we should close the banks.  Does anyone sane believe the money has really disappeared – say being used to light fires to keep bankers’ families warm?  Its been nicked.  A squad made up of bobbies made redundant by this government, given global carte blanche to follow the money, could sort it all out.  There are only 92,000 filthy rich suspects in the world.  They have it.  We need to stop the bailouts and form a New Untouchables.

Our secret services must know where the money is going and who is getting it.  One can tell from economics – it all slides to the already super-rich.  Snatching bank deposits from ordinary people is just a continuation of what has been happening through global wage arbitrage (forcing wages to Chinese serf levels – except for the rich who get more), asset-stripping and internal CEO looting and the involvement of organised crime in nearly all businesses and government.  Has anyone told you where any of the money lost by banks has gone?  It can’t really be ‘lost’ as our governments keep ‘printing’ more and more of it.  It’s being redistributed and somewhere, it is being hoarded in Ali Baba’s cave.  The explanations we do get are as likely as that Mervin King is running his central heating system with paper money from the Mint.

That the banksters are organised crime is evidenced by clown claims like those of Stephen Hester that he has to pay big bonuses despite losses to keep the best staff.  Would be really fall for crap like that unless we were in fear of shouting out the truth?  In terms of agriculture, tourism and natural resources Cyprus is a ‘goldmine’ – so why is it riddled with debt?  We have to shape up to the facts and among these is criminality at the top.  I really do think we are now living in fear of organised crime.

 

The Greek Solution Isn’t (it is quantitative shysterism)

The real deadline in Greek debt is this afternoon when a private organisation, largely of banksters, decides whether insurance on this debt (collateral dervative swaps) has been trigger by the so-called credit event.  A number of vulture funds have bought Greek bonds very cheap in the hope of being either to cash in on the insurance or sue the Greek Government for the full price.  So the matter isn’t settled.  Argentina defaulted in 2002 and is still facing court action – a New York court has just ruled against a similar settlement by them.

The banks have sold us generally useless PPI that wouldn’t pay out anyway to people who needed it, we have ‘whiplash’ and other dodgy insurance claims putting our premiums up in the increasing compensation culture and all kinds of finance supposedly guaranteed by derivatives when it isn’t.  This Greek swap does mean some private interests have lost money, but the bonds in question were often held by banks, pension funds and such oddities at the French Post Office.  If the muck was ever really insured the insurer should pay – and the real insurer is us and we are paying by shifting it to public sector (i.e. taxpayer) debt.  All this quantitative shysterism is based on issuing insurance in order to take the fees involved, knowing the ultimate insurer (us) gave no permission.  I’d say this is the equivalent of TWOC or joy riding without a car and people should be going to jail.  There is no need for an intent to permanently deprive (though we have been) – insurance has been sold without there ever being any collateral to pay out, and guilty knowledge of who would have to pay out.  Our money was used (including our future money) to make bets until the point no wins were there to be trousered.

The quantitative shysters are borrowing money from us to make the same bets all over again.  The are shysters because we never get to know what bets they placed, who got paid out and where any of the money is.  Quantitative seems to fit because their excuses are expressed in complicated numbers that actually preclude us knowing the money trail.

Goldman Sachs did the quantitative shystering that hid real Greek debt in foreign currency exchange dealing.  They must have known what they were doing.  And where else has this process taken place?  What is the state of real value of any bonds sold under CDS insurance – the same as the 20 cents on the dollar Greek muck?  This even extends to stuff like student loans (thought to be 20% in default in the US) – loans dependent on future earnings in economies getting crappier.  These are about the same  in total as the sub-prime exposures allegedly behind 2008.

Greece is a pimple in current liabilities.  Even if it has been squeezed, expect an outbreak of acne.  Of CDS is triggered this afternoon, will it be just for the amount of bonds left outside the ‘settlement’ (mostly held under British Law), or have the hedge funds been in multi insuring for a much bigger sum through naked CDS and who might have been dumb enough to sell this for a few quid knowing the bill would be footed by taxpayers?

No solution has been attempted because there is no police investigation into how much money was taken and where that is.  The thieves not only don’t face criminal liability – they have also been in the position, through insider knowledge, to lay bets on the collapse they have caused.  It’s like a burglar being able not only to ransack your house, but also claim the insurance payout.  The Keiser Report may have elements of Radio Moscow about it, but I’m afraid it leaves BBC (Bimbo Broadcasting Corp) dead in the water on what goes on.

When you consider what must now be disclosed to the defence in criminal trials, the lack of disclosure required of banks, hedge funds and the rest so we can defend ourselves against them is Soviet.

 

 

 

The docile body-politic

One of the problems with the way we argue is summed up in this post – http://www.zerohedge.com/news/guest-post-comfortably-numb

Most people really don’t want to engage with the world and the consequence for argument is that full facts hardly ever become the issue.  All rhetoric needs to do is engage a numb-skull mentality of people rendered docile.  The zerohedge post complains that US government has been taken over by a few evil people.  I agree and suspect the historical truth is worse.

The excuse for not being able to provide decent education and modern living conditions for all people is essentially that this is a dirty old world and we have to put up with gross inequalities or else end up in the doom of ash-grey uniformity and dictatorship.

Nearly all argument, in my view, is crippled by this kind of foreboding – from questions on arming police officers to whether we should teach real history in schools.  The conundrum is that if we are to settle matters and direction through argument we need a populace that is skilled in argument and, of course, don’t have one – unless we place faith in some unconscious processing.  Plato’s answer (in theory) was to plough vast resources into his Guardians (including husbandry) in education and life-style to create  an elite that would not be corrupted (though he admitted this was inevitable in comments on human nature).

My own view is that education is a failure other than in technical areas, child-minding and soldiering.  The neglected element from Plato is his communism of the free table – the taking away of the temptation of power accumulated through personal wealth.  I see almost no discussion of this that does not start with some Mumbo Jumbo on the role of vast personal fortune in motivating “our best people”.  This turns anything said on the issue to total bollox.  Thieves have similar motivation.  I would say people motivated by money in this sense are unlikely to be trusted in other human endeavours.  Our societies have been gerrymandered to bring about fealty to wealth and the desire to grab it.  I do not believe this is human nature at all.

Key terms in what passes as argument in the general public domain are wrong.  Work is one of them – most people avoid the real thing here, as surely as pompous Greeks believed it scarred the soul and barely even bother to justify slavery for all their show of intellect.  Much of what is discussed is as hopeless as speaking of ‘life-force’ rather than in the language of genetics or using Descartes’ (hapless) physics rather than the lines developed from Galileo, Newton and Einstein.  We talk in ideologies and myths, not about reality.

This reality is dire.  Think about what goes on in the world in 30 minutes.  A child dies unnecessarily in each four seconds, an Indian farmer commits suicide and a whole load else.  We like to keep our comfort by calling anyone revealing this doomsayers and by denials anything we do is responsible.  How welcome it is to have high-level theories telling us such matters are just the unfortunate consequences of ‘free trade’ (now there’s another term that is never true) and things would be much worse if we organised from the eradication of such problems up.

I spent a decade of my life trying to teach British industry to plan. Even in this kind of work heads are buried in the sand.  Many of our industries simply could not compete with the massive structural change to mass production and away from skilled,almost artisan work in many of our industries (shipbuilding was the classic).  Work has primarily been redefined by it being taken away as a means of making a living in my adult life.  We have coped better than rural India, but that’s about  it.

We can grow stuff, build stuff and provide a basic standard of living for all better than the existing one in the UK with no world trade.  Most of us wouldn’t miss the trinkets.  So what is all this international finance about, really?  The really gloomy answer is war.