The Null Device

Dispatches from the American kleptocracy: In 2008 and 2009, the US Government distributed trillions of dollars in bank bailout funds. These funds were authorised as a matter of urgency to prevent the imminent collapse of the financial system and get the banks lending money to the little people again; the distribution was done in secrecy. Now, thanks to an act of Congress, the destinations of these funds have been revealed, and it's not pretty.

Among the beneficiaries of the US taxpayer's largesse: financial firms run by bank executives' wives, themselves having little financial experience to show other than having invested in racehorses, random billionaires with Cayman Islands addresses, funds for investing specifically in foreign countries, and carmakers in Germany and Japan. Oh, and a bank majority-owned by the Gaddafi regime. If you made this stuff up, nobody would believe it:

It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."

Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.

And then there are the bailout deals that make no sense at all. Republicans go mad over spending on health care and school for Mexican illegals. So why aren't they flipping out over the $9.6 billion in loans the Fed made to the Central Bank of Mexico? How do we explain the $2.2 billion in loans that went to the Korea Development Bank, the biggest state bank of South Korea, whose sole purpose is to promote development in South Korea? And at a time when America is borrowing from the Middle East at interest rates of three percent, why did the Fed extend $35 billion in loans to the Arab Banking Corporation of Bahrain at interest rates as low as one quarter of one point?

it's like the salad days of the Iraq occupation, only those in the loop don't need to actually fly to Baghdad to pick up a pallet or two of greenbacks. Of course, it's the long-suffering US taxpayer who's stuck holding the bill for this party, but they've been well trained to believe that it's their fault for having it too good for too long. (Isn't Calvinism, with its attendant self-loathing, a wonderful ideology for keeping the masses from rebelling?) So no, America can't afford a public health care system, or decent public schools, high-speed trains or non-crumbling bridges, because the cupboard's bare, and it's your fault. That money over there? Well, that's not yours, and you can't take it because that'd be socialism, and socialism is always absolutely wrong. So when they're given the choice of a 50% pay cut and unpaid overtime or losing their job, and are struggling to keep their homes from beign foreclosed, they flagellate themselves for having the temerity to have bought a PlayStation and a plasma screen, and then turn their rage on the trade unionists whom they see as trying to take their few crumbs of the pie.

Though at least America's luxury goods dealerships will survive another day.

(via MeFi) ¶ economy fraud kleptocracy scams usa wd2 0

The latest bounty from Wikileaks: an exposé of the Saudi royal welfare system, a system of government finely tuned for meeting certain criteria (i.e., keeping an ever-expanding ruling class in caviar and luxury cars, and maximising the number of palaces per capita; they even have palace-building grants). Alas, even the generous stipends bestowed upon Saudi princelings sometimes fall short when it comes to maintaining a lifestyle worthy of one of such stature, but the beauty of living in the top tier of an absolute monarchy is that there's always more for the taking:

Then there was the apparently common practice for royals to borrow money from commercial banks and simply not repay their loans. As a result, the 12 commercial banks in the country were "generally leary of lending to royals."

Another popular money-making scheme saw some "greedy princes" expropriate land from commoners. "Generally, the intent is to resell quickly at huge markup to the government for an upcoming project." By the mid-1990s, a government program to grant land to commoners had dwindled. "Against this backdrop, royal land scams increasingly have become a point of public contention."

The confiscation of land extends to businesses as well, the cable notes. A prominent and wealthy Saudi businessman told the embassy that one reason rich Saudis keep so much money outside the country was to lessen the risk of 'royal expropriation.'"

Meanwhile, in Equatorial Guinea, an oil-rich West African country most of whose children don't live to their fifth birthday, it emerges that the son of the President had commissioned the world's second most expensive yacht, costing $380m, or three times the country's combined health and education budgets.

And in Belgium, Prince Laurent has incurred the wrath of the parliament (does Belgium have a parliament now?) for attempting to fly business-class whilst only having an economy-class ticket. The prince and his wife were asked to move back to cattle class, and apparently kicked up a disgraceful tantrum for being treated like commoners, refusing to pay for drinks.

It's somewhat heartening to see that Belgium, whilst nominally being a monarchy, is a Northern European "bicycle monarchy", in which rank hath little if any privilege, and monarchy is tolerated as a constitutional eccentricity and little more; certainly, it doesn't entitle one to demanding free travel benefits from local airlines, and any princeling who thinks otherwise won't get treated any differently than a drunken footballer would. I wonder what would happen in the UK if, say, some minor baronet occupied a first-class seat on a train or aeroplane without the appropriate ticket. Would they be told to move on as Prince Laurent was, or would the (privatised, of course, as per Anglocapitalist values) carrier swallow the cost or invoice the public purse?

¶ africa belgium corruption equatorial guinea injustice kleptocracy monarchy saudi arabia 2