The Chicago Sun-Times recently reported (“SEC hits Illinois with securities fraud charges, says Blagojevich budget office ‘misled investors’ on pension risks”) that,
“Illinois broke federal securities laws and “misled investors” in misstating [that means “lying about”—and that means fraud—a criminal offense] the true health of the state’s depleted pension funds between 2005 and early 2009, the Securities and Exchange Commission announced Monday.
“The finding of securities fraud doesn’t subject Illinois to any fines or penalties, but it amounts to another fiscal black eye for a state burdened by the worst bond rating in the country and completely underwater by inaction in solving its $96 billion pension crisis.”
Ooo—a “fiscal black eye”. Boy, I’ll bet Illinois is sorry now, huh? I’ll bet they cross their hearts and hope to die if they ever, ever do it again, hmm?
On the other hand, the fact that (other than Blagojevich) Illinois won’t suffer any criminal penalties or even criminal charges, might encourage the gov-co gangsters to do it again.
In truth, virtually all of the gangsters responsible for Illinois’“fiscal black eye” are laughing and high-fiving each other. They got away with it. And they probably kept a fat chunk of the proceeds of their fraud for themselves. The gov-co/gangster culture is as much a part of Illinois as it is of Mexico City and that “culture” is economically debilitating.
Do you really want to invest your wealth in a city, state or nation that has an immoral culture?
Neither does anyone else.
That’s why corruption degrades an economy.
“The SEC finding, the second such action against a state, focuses mostly on misstatements [lies] linked to $2.2 billion worth of bond offerings issued during impeached ex-Gov. Rod Blagojevich’s administration. New Jersey [another state with a rich history of organized crime] was cited in 2010 for similar disclosure failures regarding pension underfunding in its bond offerings.
“The Blagojevich administration also neglected to outline for investors how a 1995 pension-funding law created “systemic underfunding (that) imposed significant stress on the pension systems and the state’s ability to meet its competing obligations.”
“Time after time, Illinois failed to inform [that means lying by omission] its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system,” said George S. Canellos, acting director of the SEC’s Division of Enforcement in a prepared statement.
“Municipal investors are no less entitled to truthful risk disclosures than other investors,” said Canellos.
Illinois, the “Land of Lincoln” (and also of Al Capone and Mayor Richard J. Daley) lied in order to deceive unwitting Americans into investing billions of dollars in Illinois bonds. That’s fraud.
If I defrauded Americans out of billions of dollars, I’d be rooming with Bernie Madoff.
However, Illinois got its wrists slapped; nothing more.
New Jersey—again, another State with a rich history of organized crime—was also wrist-slapped by the SEC. Is it a mere coincidence that states with significant histories of organized crime also have a high probability of fostering government crime?
• In any case—even if the SEC is only handing out wrist-slaps, what about the federal government? Who makes more “misstatements” (lies) about the national economy than the feds? Is the real unemployment rate closer to 7.7% (as claimed by Obama) or 14% (as suggested by Shadowstats.com)? Is the real inflation rate 1.7% (as claimed by Obama) or 6% as claimed by Shadowstats.com? Is the national debt only $16 trillion (as claimed by Obama) or over $200 billion (as claimed by the Congressional Budget Office)?
The SEC has declared that states (like Illinois and New Jersey) must honestly inform municipal investors of the financial “risks” associated with their true financial conditions. Then, why shouldn’t the federal government be similarly obligated to tell the truth when it reports economic indicators? Aren’t the federal government’s false economic statistics intended to conceal the true “risk” associated with investing in US Treasuries (and other US investments) just as Illinois falsified their own economic data to conceal the “risk” associated with investing in Illinois bonds? Aren’t Obama’s false reports of inflation, unemployment and debt are every bit as fraudulent and criminal as those of former Illinois governor Blagojevich. If so, why isn’t Obama in the slammer with “Blago”?
Why doesn’t the SEC impose the same ethical standards on the federal gov-co as they do on the states? If it’s fraud for Illinois and New Jersey to lie about their financial conditions to borrow billions, isn’t it also fraud for the feds to lie about the inflation, unemployment rates and the size of the national debt to borrow trillions?
• Knowing that the feds rely on fraud to sustain the economy, do you feel more—or less—inclined to trust the federal government?
In an economic system that’s extraordinarily dependent on public confidence, how can government dare to openly and overtly falsify fundamental economic indicators?
Is that kind of fraud inherent and even necessary for any economic system based on a fiat currency? Or is that kind of overt fraud evidence that the fiat-currency Ponzi-scheme is so close to collapse that only overt lies can keep it afloat for a while longer?
• The Washington Post reported in “Jury convicts ex-Detroit Mayor Kwame Kilpatrick of corruption; sent to jail until sentence” that,
“capping a five-month trial that exposed a brazen pay-to-play culture during his years in office while the distressed city lost jobs and people and veered toward insolvency. Kilpatrick could face more than 10 years in prison for two dozen convictions, from racketeering conspiracy to bribery to tax crimes. Once hailed as a hip, young big-city leader, he was portrayed at trial as an unscrupulous politician who took kickbacks, rigged contracts and lived far beyond his means. . . . ‘Kwame Kilpatrick didn’t lead the city. He looted the city,’ U.S. Attorney Barbara McQuade said in victory.”
Apparently, when it comes to governmental corruption, the City of Detroit—another community with lots of “gangsta” culture—is not about to be outdone by Illinois and New Jersey.
Mayors loot cities; governors and presidents defraud citizens and investors; Americans “wink” or shrug.
But can a city, a state or a nation that winks at government corruption be expected to survive as a prosperous social structure?
As Supreme Court Justice Louis D. Brandeis once observed, “Our government teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law. It invites every man to be a law unto himself. It invites anarchy.”
• Morals matter. People claim that this country needs some sort of economic stimulus to restore our economic strength and prosperity. But can such stimulus even hope to succeed unless we first have a moral revival?
Can we sustain a prosperous American society where the government is corrupt and generally immune from significant charges for criminal acts? So long as the government is corrupt, can you and I afford to be honest? Can we survive if we allow many, perhaps most government criminals to get away with only wrist slaps?
And if We the People are predisposed to merely “wink” when we see government corruption, do we really deserve to prosper?
We talk about economics as if it were the foundation for our society. We forget that economics is finally a sort of statistical expression of our national morality. Economics is built on the foundation of national morality. To the extent we are honest, our economy can prosper. To the extent that we’ve become amoral and liars, our economy will tend to decline.
• Insofar as a nation is inclined to lie about economic indicators so as to deceive its investors, rob its people with inflation, and generally excuse crimes committed by government—is that nation headed for prosperity or austerity? Boom or bust?
We dare not tolerate government lies or corruption. Yes, telling the truth about the economy might hurt the economy just now. But it has to be done because, in the end, government lies will kill the economy.
Again, do you really want to invest your wealth in a city, state or nation that has an immoral culture? Will foreigners want to invest in a nation dominated by an increasingly corrupt government and amoral people?
Can there be a true economic recovery for America before there’s a moral recovery?
I can’t see how.