100 replies to this topic

[August1991]

I am starting to wonder if the ethics of the financial sector only extend to questions like "what can we get away with?" and "will we get caught?" It might be some comfort that no Canadian banks have been named yet, but given the potential scale of the LIBOR scandal, "yet" is a key word there.

There are several differences between English Canada and the United States, and one of the differences concerns attitudes toward money.

The monetary histories of the two countries, Canada and the US, are remarkably different.

Edited by August1991, 29 July 2012 - 04:41 PM.

[eyeball]

People tend to get more emotional about personal dangers, about the fear of someone invading their space, their home, stealing from them, hurting them physically, etc.

If you say so. The last thing I'm worried about is being jumped on the way from parking my car to my oft-left-unlocked house. I know I'm far far more vulnerable to the effects of all the unresolved crimes of the - "high hanging fruit" like the banksters.

Nevertheless, I've written about the lack of prosecution for criminals and the lack of enforcement for laws against corporate fraud and misbehaviour before, as well.

Just nowhere near as much or as often as you do about the sort of crime which is still falling faster than ever before.

The mere fact that the police will not even investigate the "low hanging fruit" of the fraud tree, in things like auto repair shops which lie, cheat and steal by exaggerating repairs, pretending to make repairs, or making unnecessary repairs, or that it will not bother with contractors who use substandard material, or do a deliberately shoddy job, or don't even finish the work, tells me that fraud is not something the authorities care much about. And if they won't go after the easy and obvious cases they're sure not going to be spend a lot of time on the ones they need to call in forensic accountants for.

As far as I'm concerned, immense fines should be levied on the organizations involved, driving them into bankruptcy if behavior is repeated, and the individuals involved should be jailed. But we don't see how this hurts us as individuals because no one establishes a price tag in the sense of how much extra we pay each year for repairs and insurance, etc.

These are the sorts of thing that are easily corrected by simple competition and consumer choice. Since when did doing a shitty job have to be treated as a crime? Why someone like you should be the last person in charge of reforming our prison system is even more obvious.

Likewise, how much did the price fixing among banks cost individuals? No one has worked that out so few really care.

It's probably how much it earned certain individuals that should have been our first clue that some sort of nefarious fix was in but it seems everyone was too busy celebrating how rapidly the income gap was expanding to notice.

For what it's worth, I care to the extent that I think banksters should be treated, well, like me for example. I'm not allowed to pursue my livelihood as a commercial fisherman without cameras and black boxes recording and verifying everything I do because I might hurt the interests of Canadians. Note that preventing harm to the public's economic interests via video monitoring of industries capable of doing real harm to the economy is something I've cared enough about to have spent years writing about.

It works too, just ask Conrad Black.

[Argus]

If you say so. The last thing I'm worried about is being jumped on the way from parking my car to my oft-left-unlocked house.

I don't think our judicial system should be based on naivety.

These are the sorts of thing that are easily corrected by simple competition and consumer choice. Since when did doing a shitty job have to be treated as a crime? Why someone like you should be the last person in charge of reforming our prison system is even more obvious.

Why doing a shitty job should be treated as a crime? You promise to install twenty five year shingles but you use a much cheaper brand and the roof leaks in three years. That's not a shitty job. That's fraud. You tell someone that their transmission needs replacing, and charge them a lot of money to do it, when it was perfectly fine. That's not an error or poor job performance. It's theft and fraud. Mike Holmes famously said that 90% of all contractors are either crooks, incompetents, or both. So far that has been my experience. From substandard asphalt used to pave driveways, to substandard concrete used to pour stairs, to vastly overcharging for plumbing and sewage, to deliberately underestimating costs to win a job, then pausing halfway through to demand more money. I've seen a lot of it around here. Which is why I, like everyone else I know, never hires anyone unless someone they trust recommends them.

But it shouldn't be that way. You shouldn't assume that mechanics and contractors are crooks. The reason it's gotten that bad is lack of enforcement of laws. And the same can be said about corporate fraud and theft. You let things go, and fraud and theft become endemic, a normal way of doing business.

[GostHacked]

Kimmy, also check out Max Keiser's bits on RT's youtube channel. The name simple is 'The Keiser Report'. He has been on the LIBOR thing for a couple months now. Should have most of his stuff over at http://maxkeiser.com/

Hang em high indeed.

[Bonam]

I disagree with the premise of the the OP: both LIBOR and HSBC have gotten tons of attention. Both were on front pages, headlines, news shows, radio, etc.

I do, however, agree with the general sentiment in this thread that the financial industry is much larger and more powerful than it needs to be to provide the products and services that actually need to be provided. A lot of what they do creates no additional value.

I disagree with the generalization that "most" contractors are crooks. Maybe I've had good experiences, or maybe it's just a matter of doing a bit of research and reading reviews about companies before hiring them (which I do), but I've generally had good experiences.

[GostHacked]

Well, the Italians are going to be doing something about it it seems.

http://news.sky.com/story/967142/italian-police-raid-barclays-over-rate-fixing

Italian police have taken documents from a Barclays office in Milan as part of a probe into possible Euribor rate manipulation, according to Reuters.

It said the raid occurred as regulators investigated fixing fears of the eurozone equivalent of the scandal-hit, London-based Libor inter-bank lending rate.

The search was ordered by prosecutors in the southern city of Trani, who have opened a criminal probe into the possible manipulation of the Euribor rate.

The move comes after complaints were filed by two consumer groups, Adusbef and Federconsumatori.

Two judicial sources also confirmed the raid occurred last week, according to Reuters.

Documents, computer material and emails were seized, the consumer groups said in a joint statement.

They said the Milan raid occurred "with the aim of looking for evidence that Barclays also manipulated Euribor, as it did with Libor, with a negative impact on mortgage rates paid by Italians".

Sure looks like the crooks are running the global financial market. Financial terrorism.

[Wild Bill]

Why doing a shitty job should be treated as a crime? You promise to install twenty five year shingles but you use a much cheaper brand and the roof leaks in three years. That's not a shitty job. That's fraud.

Sorry Argus. I'm going to pick apart one of your models, which of course is irrelevant to your point!

I have some roofer friends. There's more to the problem with shingles you describe. For the past decade, roofers have been installing 25 year shingles in good faith, only to have them fail prematurely. At that point, the manufacturer starts dodging and the installer gets caught in the middle.

You see, we had shingles for decades and decades that would last 25 years. A bit less than 25 years ago, the eco-warriors began to attack shingle manufacturers for some of the ingredients used in their making. There was a lot of petrochemical thingies and some <gasp!> chemicals!

So some of those ingredients got banned! As is the norm in these situations, the eco-warriors and the politicians who backed them took it for granted that there were substitutes. Perhaps there are, but the shingle manufacturers had to provide shingles IMMEDIATELY!

The biggest problem is that there was no time to do lifetime real world durability tests. They had to do accelerated simulated testing in their labs. These are always a poor correlation to actually letting products age for the actual number of years.

Guess what? A lot of shingles didn't last as long as they thought! So we have a lot of upset customers. They go for the installer first because he is the most visible but the installer has no control over the product - he didn' make it! He has to take the manufacturer's word. The manufacturer of course has more expensive lawyers!

Once the whole process was so reliable that the few times they had failures the shingle company would cover the entire cost of replacement. Those days are long gone. Modern warranties are ONLY on the actual cost of the shingles and are pro-rated against how many years they were on the roof. With most failures, the actual refund to the roof-owner is only a small portion of the total cost.

Most fraud with roofers is much simpler than what you describe. The scoundrels simply ask for half the money up front and then disappear!

[Argus]

Yet another breaking banking scandal. Standard Chartered bank, one of Britain's biggest, has been accused by New York State Financial regulators of deliberately laundering $250 billion for Iran through it's New York branch. Unlike with HSBC, which had such lax oversight it was laundering drug money for the Mexican drug cartels, SCs efforts were deliberate, and the highest levels of the bank were fully aware of what was going on, and made extensive efforts to hide what they were doing from regulators. Now it could lose its license to operate in the US.


Standard Chartered

[kimmy]

Well that's certainly appalling.

However, what strikes me about this article is that it seems to illustrate a disconnect between what the regulators find unforgivable and what you and I find unforgivable.

Big penalties for dealing with Iran. Big penalties for dealing with Cuba. Big penalties for dealing with drug-lords. It appears that the regulators take it very seriously when banks help the government's enemies, but they don't take it nearly as seriously when banks rip off regular people.

-k

[cybercoma]

Well that's certainly appalling.

However, what strikes me about this article is that it seems to illustrate a disconnect between what the regulators find unforgivable and what you and I find unforgivable.

Big penalties for dealing with Iran. Big penalties for dealing with Cuba. Big penalties for dealing with drug-lords. It appears that the regulators take it very seriously when banks help the government's enemies, but they don't take it nearly as seriously when banks rip off regular people.

-k

The banks are an apparatus of the government and the government is an apparatus of industry. Screwing over regular people is their raison d'etre.

[Bonam]

The banks are an apparatus of the government and the government is an apparatus of industry. Screwing over regular people is their raison d'etre.

What an ignorant statement. Industry cares nothing about "screwing over people", it exists to create wealth. It is the job of government to create a society where the most effective ways to generate wealth also happen to help (or at least not "screw over") "regular people".

And, for the most part, our society is actually very effective at that. Capitalism is specifically designed to optimize this: the best way to make money is by selling things that other people want, and a certain level of taxation is imposed to provide services that should not or cannot be effectively delivered via a profit motive (national defense, law enforcement, justice, some types of infrastructure, basic scientific research, social safety nets, etc).

[Wild Bill]

What an ignorant statement. Industry cares nothing about "screwing over people", it exists to create wealth. It is the job of government to create a society where the most effective ways to generate wealth also happen to help (or at least not "screw over") "regular people".

And, for the most part, our society is actually very effective at that. Capitalism is specifically designed to optimize this: the best way to make money is by selling things that other people want, and a certain level of taxation is imposed to provide services that should not or cannot be effectively delivered via a profit motive (national defense, law enforcement, justice, some types of infrastructure, basic scientific research, social safety nets, etc).

I wonder if CC and others here have ever read "Atlas Shrugged". It doesn't matter if you agree with Ayn Rand's philosophy. The book is a great portrayal of what happens when the capitalists and the people of ability go on strike.

It brings home how dangerous it is to take them for granted.

[Michael Hardner]

The book is a great portrayal of what happens when the capitalists and the people of ability go on strike.

It brings home how dangerous it is to take them for granted.

Right. But it's fiction, and supposition. There are lots of systems of political economic power, and the mixed capitalist-socialist system we have now is just the current best one... Easter Island worked well too, for awhile...

[Bonam]

I wonder if CC and others here have ever read "Atlas Shrugged". It doesn't matter if you agree with Ayn Rand's philosophy. The book is a great portrayal of what happens when the capitalists and the people of ability go on strike.

It takes a lot for such people to literally go on strike, however. They love too much the work of their hands and their minds to abandon it. Even in the hopeless gray tyranny of the Soviet Union under Stalin, people of ability (those who were not sent to die in extermination camps, murdered, or tortured to death) struggled on, trying to succeed and excel, and by their labor prevented the whole monstrous curse of a nation from collapsing.

Edited by Bonam, 07 August 2012 - 10:54 AM.

[Canuckistani]

It takes a lot for such people to literally go on strike, however. They love too much the work of their hands and their minds to abandon it. Even in the hopeless gray tyranny of the Soviet Union under Stalin, people of ability (those who were not sent to die in extermination camps, murdered, or tortured to death) struggled on, trying to succeed and excel, and by their labor prevented the whole monstrous curse of a nation from collapsing.

And the elite were given a better life in the USSR, same as everywhere. The rich didn't go on strike in the US when top marginal tax rates were 70%, just kept on striving to earn that 30%. For the last two decades, the bulk of the increase in wealth has gone to the top 20%. It's only right then they pay the most in taxes. There is obviously an optimum zone where enough wealth is left to the wealthy to make it worth their while to strive, while not so little is taken from them that the state can't function properly. IMO we'e moving too close to the bottom of that zone, should raise taxes to bring us more in the middle of it.

But this topic is about banking - which in the US has become a corrupt con game. It's one thing for Bill Gates to earn his billions, (and even there of course there's predatory behavior) but people who are just creating scams to get wealthy - that will collapse society real fast, as everybody tries to play the game in one fashion or another, instead of actually creating something to build their wealth.