Tag: corpocracy

This time it isn’t different

The astonishing story of a thrice-failed Spanish bank:

Consider the story of Bankia.

Bankia was formed by merging seven bankrupt regional Spanish banks in 2010. The new bank was funded by Spain’s Government rescue fund… which received “preference shares” in return for over €4 billion (from taxpayers). These preference shares were shares that a) yielded 7.75% and b) would get paid before ordinary investors if Bankia failed again.

So right away, the Spanish Government was taking taxpayer money to give itself preferential treatment over ordinary investors. Indeed, those investors who owned shares in the seven banks that merged to form Bankia lost their shirts. They were wiped out and lost everything.

Bankia was then taken public in 2011. Spanish investment bankers convinced the Spanish public that the bank was a fantastic investment. Over 98% of the shares were sold to Spanish investors.

One year later, Bankia was bankrupt again, and required the single largest bailout in Spain’s history: €19 billion. Spain took over the bank and Bankia shares were frozen on the market (meaning you couldn’t sell them if you wanted to). When the bailout took place, Bankia shareholders were all but wiped out, forced to take huge losses as part of the deal. The vast majority of them were individual investors (the bank currently faces a lawsuit for over 140,000 claims of mis-selling shares).

So that’s two wipeouts in as many years.

The bank was taken public a year a second time later in May 2013. Once again Bankia shares promptly collapsed, losing 80% of their value in a matter of days. And once again, it was ordinary investors who got destroyed. Indeed, things were so awful that a police officer stabbed a Bankia banker who sold him over €300,000 worth of shares (the banker had convinced him it was a great investment).

Which brings us to today.

Bankia remains completely bankrupt. But its executives and the Spanish Government continue to claim that things are improving and that the bank is on the up and up. Indeed, just a few weeks ago, the Wall Street Journal wrote an article titled “Investors Show Interest in Bankia.” The story featured a quote from Spain’s Finance Minister that, “… it is logical. The perception of Spain has improved and Banki has improved a lot.”

Bear in mind, this is a bank that has wiped out investors THREE times in the last THREE YEARS. So that’s three different rounds of individual investors being told that Bankia was a great investment and losing everything. Every single one of these wipeouts was preceded by both bankers and Spanish Government officials claiming that “everything had been fixed” and that Bankia was a success story.

And now the Spanish Government is trying to convince them to line up for a fourth round.

Keep this in mind when you read the reassurances that this time, the green shoots really have been spotted, that the economy is growing at more than 4 percent per quarter, and stocks are cheap at their all-time highs if you only look at them in just the right way.

Diversity and collapse

Most people who have paid any attention to the financial crisis know the Bush administration’s pathological fixation on expanding homeownership among Hispanics played a contributing role in blowing the housing bubble, but I didn’t realize that diversity dogma also played a part in the collapse of Lehman Bros. Steve Sailer quotes from A Colossal Failure of Common Sense, a book by an ex-Lehman executive, describing how the president of Lehman was more interested in diversity and inclusion than in risk management.

One of these was our corporate president, Joe Gregory, the right-hand
man of the reclusive CEO, Dick Fuld. … But Joe Gregory was a regular,
run-of-the-mill, ho-hum financial sycophant, devoted to his master,
Richard Fuld, … Joe’s fixation was a subject called diversity. He was
consumed with it. His aim was the mission of inclusion. He had an entire
department devoted to it, headed up by a managing director. Great
rallies were staged in New York’s auditoriums, with free cocktails and
hors d’oeuvres served for up to six hundred people, all listening to Joe
or one of his henchmen pontificating. “Inclusion! That must be our
aim!” he would yell, as if we were running a friggin’ prayer meeting.
… Which was all very well, but down in the trenches, where a trader
 might sweat blood to make a couple of million dollars, most of us were a
bit tetchy about Joe Gregory going off and spending it on a cocktail
party for six hundred people..

… Especially when it emerged that the top dog in diversity was earning
well over $2 million a year and that the diversity division had a
bigger budget and more people than risk management!

Joe’s mission for diversity drove [Christine Daley, head of
distressed-debt research] mad. She had no time for any of it, but Joe
Gregory had us all over a barrel: he had major control over our bonus
compensation, and he made it clear there would be extra money for those
who rallied to his cause. Most of us did not care about the cause, but
the prospect of this thirty-first-floor sycophant lopping a couple of
hundred thousand off our annual check because we weren’t in there
pitching for the cause of the day was seriously irritating. Harsher
judges than I considered Joe hid behind his unusual fixation,
appearing to fight the world’s woes while staying well clear of the
gundeck.

As go corporations, so go nations. The ongoing fixation of the USA’s politicians and body politic on diversity and inclusion means that the country is unlikely to sustain itself any more successfully than Lehman Bros. did.

A casino called Dow Jones

This announcement demonstrates why it is the height of stupidity to imagine that it is meaningful to compare the Dow Jones Industrial Average from one year to the next as anything but a measure of social mood:

The Dow Jones industrial average is getting a new look, with one of Wall Street’s oldest and modest venerable names getting added to the mix. While the Dow tinkers with its 30 components periodically, often with only modest fanfare, this one will be noticed.

Gone are Alcoa (AA), the company that traditionally kicks off earnings season, along with Bank of America (BAC), which is the second-largest financial institution in the U.S., and Hewlett-Packard (HPQ), which has been in the blue chip index for 16 years.

In their place will be Goldman Sachs (GS), Nike (NKE) and Visa (NYSE:V). The changes take effect after the close of trading Sept. 20. The changes will cause alterations to the why the index is weighted. Visa and Goldman Sachs will have the second- and third-highest respective weightings, according to Bespoke Investment Group.

In addition to not accounting for inflation, the DJIAA simply doesn’t always measure the same thing from one year to the next.  It is like claiming the New England Patriots beat the Bills 58-21 last week because the NFL tinkered with the Patriots roster and replaced Tom Brady with Peyton Manning.

Notice that the unhealthy and dying companies are being replaced with much healthier companies that are being given much higher weightings than their importance to the economy would appear to indicate.  Don’t be fooled. It’s all a giant casino designed specifically to separate most common investors from their savings.

Can you win from time to time? Sure. That’s an integral part of the draw. But as the rejiggering proves, the odds aren’t what you think they are and the house always wins in the end.

Worker unrest at Walmart

I’m considerably less unsympathetic to this labor action than my natural hostility to unions might indicate.

Walmart workers and their supporters are planning to launch protests in stores in 15 cities across the US on Thursday, as part of a small but vociferous movement to raise wages and improve conditions for some of the nation’s lowest paid workers.

The action follows strikes last week by fast food workers demanding a higher minimum wage and a civil disobedience action in Washington DC in August, where a coalition of Walmart workers and unions called for a minimum annual wage of $25,000 and the reinstatement of 20 employees they claim were illegally fired by the company after strikes in early June.

OurWalmart, a union-backed members group, says it has filed more than 100 unfair labour practice charges against Walmart with the National Labor Relations Board, including 20 illegal terminations and 80 disciplinary actions. The board said it was looking into “several cases”.

I’ve seen some commentators pointing out that the Walmart workers don’t seem to realize that their wage demands would eliminate the corporation’s operating profits. Whether that is true or not, I think it is totally insane to expect low-income workers to demonstrate more concern for the health of the corporation than the vast majority of Fortune 500 executives do.

We’ve spent the last five years watching bank executives rape their banks of more than FIFTY PERCENT of the profits, then pay themselves bonuses as the federal government hands them trillions to prevent them from going under.  Why on Earth shouldn’t the Walmart workers feel justified in demanding a mere $25k annual minimum wage?  It’s a lot more affordable than bailing out the banks again.

Facebook, free speech, and the FBI

Yes, American, you are now officially living in a police state possessed of an all-seeing eye the likes of which even the Soviets and East Germans never managed to achieve:

A
man says that within hours of making an impassioned post on Facebook,
he was being interrogated by police and the FBI. Blaine Cooper, 33,
contacted policestateusa.com with a concerning story about how his
sentiments posted on Facebook had drawn the attention of the federal
government.  He showed me the comment and told me that within 24-hours
of posting it, he was being contacted by the police and FBI.

His
colorful comment was in reference to what he believes is an “American
Police State,” in which the power of the federal government is growing
in a direction which may one day lead people to fight back.

Cooper,
who is training to be a wild land fire fighter, said that on August 23,
he was contacted by Officer Jason Kuafman of the Prescott Valley Police
Department and was told that he needed to come to the police station
for an interview with the FBI.

He complied with the
request for an interview, which lasted 45 minutes with federal agents
present.  He was released after apparently being determined to not be a
threat.

“They had every Facebook post I had ever made
in a huge file, along with all my wife’s information, and parent’s
information,” Cooper told policestateusa.com.

I
sometimes feel as if I should take requests from the federal agents
charged with monitoring this blog.  I mean, if I knew the usual guy was a
Jets fan or particularly into Asian women, I’d feel obliged to
occasionally surf through a few Jets sites or hit up Hot Asian Babes
every now and then. While I’m obviously opposed to the universal spying
system and I think it is the very definition of the sort of fragile
system that predictably ends in chaos and tears, the actual individuals
are basically the Internet equivalent of the late-night security guard.

What
is there to do?  Either go entirely dark or flood them with
information.  Those are your two options.  Nothing else is even remotely
viable.

Privatizing the State Department

Never forget that corporations are creations of government:

Back in 2011 I had a meeting with Eric Schmidt, the then Chairman of
Google, who came out to see me with three other people while I was under
house arrest. You might suppose that coming to see me was gesture that
he and the other big boys at Google were secretly on our side: that they
support what we at WikiLeaks are struggling for: justice, government
transparency, and privacy for individuals.

But that would be a false
supposition. Their agenda was much more complex, and as we found out,
was inextricable from that of the US State Department. The full
transcript of our meeting is available online through the WikiLeaks
website. The pretext for their visit was that Schmidt was then researching a new book, a banal tome which has since come out as The New Digital Age.
My less than enthusiastic review of this book was published in the New
York Times in late May of this year. On the back of that book are a
series of pre-publication endorsements: Henry Kissinger, Bill Clinton,
Madeleine Albright, Michael Hayden (former head of the CIA and NSA) and
Tony Blair. Inside the book Henry Kissinger appears once again, this
time given pride of place in the acknowledgements.

Schmidt’s book is not about communicating with the public. He is
worth $6.1 billion and does not need to sell books. Rather, this book is
a mechanism by which Google seeks to project itself into Washington. It
shows Washington that Google can be its partner, its geopolitical
visionary, who will help Washington see further about America’s
interests. And by tying itself to the US state, Google thereby cements
its own security, at the expense of all competitors.

Two months after my meeting with Eric Schmidt, WikiLeaks had a legal
reason to call Hilary Clinton and to document that we were calling her.
It’s interesting that if you call the front desk of the State Department
and ask for Hillary Clinton, you can actually get pretty close, and
we’ve become quite good at this. Anyone who has seen Doctor Strangelove
may remember the fantastic scene when Peter Sellers calls the White
House from a payphone on the army base and is put on hold as his call
gradually moves through the levels. Well WikiLeaks journalist Sarah
Harrison, pretending to be my PA, put through our call to the State
Department, and like Peter Sellers we started moving through the levels,
and eventually we got up to Hillary Clinton’s senior legal advisor, who
said that we would be called back.

Shortly afterwards another one of our people, WikiLeaks’ ambassador
Joseph Farrell, received a call back, not from the State Department, but
from Lisa Shields, the then girlfriend of Eric Schmidt, who does not
formally work for the US State Department. So let’s reprise this
situation: The Chairman of Google’s girlfriend was being used as a back
channel for Hillary Clinton. This is illustrative. It shows that at this
level of US society, as in other corporate states, it is all musical
chairs.

That visit from Google while I was under house arrest was, as it
turns out, an unofficial visit from the State Department. Just consider
the people who accompanied Schmidt on that visit: his girlfriend Lisa
Shields, Vice President for Communications at the CFR; Scott Malcolmson,
former senior State Department advisor; and Jared Cohen,  advisor to
both Hillary Clinton and Condoleezza Rice, a kind of Generation Y
Kissinger figure — a noisy Quiet American as the author Graham Greene
might have put it.

So, whatever happened to Don’t Be Evil?  Or, as I’ve previously thought, perhaps we should have all viewed Google with the same wariness that one views a kindergarten teacher who is constantly gritting his teeth and reminding himself: “Don’t touch the merchandise… don’t touch the merchandise.”

Fukushima: the truth leaks out

The story of the still-ongoing disaster in Japan that has been regularly reported on Zerohedge and other alt-right sites is finally beginning to leak out into the mainstream media:

A nuclear expert has told
the BBC that he believes the current water leaks at Fukushima are much
worse than the authorities have stated. Mycle Schneider is an independent consultant who has previously advised the French and German governments.He says water is leaking out all over the site and there are no accurate figures for radiation levels.

Meanwhile the chairman of Japan’s nuclear authority said that he feared there would be further leaks. The ongoing problems at the Fukushima plant increased in
recent days when the Tokyo Electric Power Company (Tepco) admitted that
around 300 tonnes of highly radioactive water had leaked from a storage
tank on the site….

“It is much worse than we have been led to believe, much worse,” said
Mr Schneider, who is lead author for the World Nuclear Industry status
reports.

At news conference, the head of Japan’s nuclear regulation
authority Shunichi Tanaka appeared to give credence to Mr Schneider’s
concerns, saying that he feared there would be further leaks. “We should assume that what has happened once could happen
again, and prepare for more. We are in a situation where there is no
time to waste,” he told reporters.

This is of no surprise to anyone with any experience of Japan.  The Japanese NEVER tell the truth about anything if the truth is expected to create conflict or drama. Everyone in the game industry who has ever worked with Nintendo, Sega, or Konami knows that they won’t even give you a straightforward “no” when a yes/no decision is scheduled.  You’re just supposed to figure it out on the basis of not receiving a “yes” and ignore all of the perfectly legitimate-sounding explanations.

Don’t be surprised when another “unexpected” emergency is announced once Tepco can’t keep a lid on the situation anymore.  This is potentially an extraordinarily ugly situation and it absolutely dwarfs Chernobyl.

Putin is unimpressed by US threats

Snowden is granted at least one year of Russian asylum:

The U.S. is “extremely disappointed” in the move by Russia to grant ‘temporary asylum’ to Edward Snowden, White House spokesman Jay Carney told reporters this morning. Carney appeared to add a threat, as the WSJ reports, he added that the Russian decision undermines law-enforcement cooperation between Moscow and Washington. Russia’s decision also threatens to derail a planned September summit in Moscow between Obama and Putin, as Carney advised “we are evaluating the utility of a summit in light of this.”

These are strange days indeed, when Americans are fleeing abroad and seeking political asylum.  Especially when they’re fleeing to Russia.  In not entirely unrelated news, the international business magazines are finally beginning to figure out that USG’s use of corporate America as NSA spy vehicles is not likely to enhance American Internet technology exports.

Big government is big business

Those who still see politics as business vs government don’t understand how the world actually works:

A group of businessmen and retired mandarins are waging a behind-the-scenes propaganda war aimed at derailing moves to take Britain out of the EU. Appalled by the prospect of a vote to withdraw, they have formed ‘Business For New Europe’ to fight a public and private campaign to keep Britain in the union.

They are raising a multi-million-pound war chest to secure support from international leaders in the run-up to the vote which they now suspect is inevitable. Campaign: A group of businessmen and retired mandarins are waging a propaganda war aimed at derailing moves to take Britain out of the EU.  They are lobbying world leaders to go public with warnings that Britain will become isolated economically and politically if it votes to quit the EU. They hope if enough of them speak out British voters will take fright and vote to stay shackled to Brussels.

Fear, Uncertainty and Doubt.  Sounds familiar, doesn’t it.  And notice that the greater part of the conquest of Britain by the EU has been done entire undemocratically.


“It will be the first national vote on Britain’s membership of the EU since 1975, with the latest YouGov poll suggesting the number who want to leave comfortably outnumber those who want to stay by 43 per cent to 35 per cent.”

If the lessons of Greece and Italy mean anything, it is that the British will lose their right to vote before they will be permitted to leave the Eurofascist union.  The first step was to try to avoid the referendum.  The second step is to try to see it fails. The third step will be to try to call it off for one reason or another.  And the fourth step will be to abandon all pretense of obeying the will of the people.

The best hope for the British is that the economy continues to worsen, causing the corporate elite to become more focused on survival, golden parachutes, and bailouts than imposing their political vision on the nation.