29 Years and Not a Day Closer to Accountability

We didn’t wake up.  Neither did 3,787 officially.  They didn’t because they were dead.  We didn’t wake up because we don’t want to.  And just a little reality check.  The combined death toll from the World Trade Center, Pentagon, and Pennsylvania conspiracy of terror was 2,996.  Under the guise of seeking justice, we have prosecuted a series of wars which have cost Iraqis and Afghanis over 1 million lives and have cost the U.S. and its allies more than double the lives lost on 9-11.  But the reason why most of you are scratching your heads wondering what mass casualty event took place 29 years ago this week is because the terror gas attack wasn’t a radical Muslim gundamentalist (a term coined by my dear friend Moustapha Sarhank).  It wasn’t a born-again, pro-life Evangelical listening to voices in his head tell him of the depravity of civilization and his god-given role in bringing judgment on sinners.  No, this act of terror was perpetrated by an organization that was founded in 1917 with the union of two organizations which were launched in 1898 and 1886 at the birth of the industrial movement. 

No stranger to death, this organization killed 476 of its own between 1927 and 1932.  Foreshadowing their deadly attack in 1984, this mass killing was also done with an aerosolized agent.  Untold thousands died from other airborne toxins unleashed by this organization silently killing workers and consumers alike.  From 1976 until 1984, insiders and external observers reported deaths and disabilities but the lure of the organization’s ideology was so intoxicating that these were neglected.  And, according to the official inquest following the December 2-3, 1984 mass killing, safeguards installed by the organization were switched off to “save money”. 

And as we see mind-controlled, sedated Americans stampede into the temples built by Sam Walton to worship the same golden calf of “saving money”, it dawns on me how few of the Citizens of the World will actually bother to read this blog post or share it.  Why?  Because taking on this religion (and yes, even religion owes its existence to the same pagan, blood-lusting idolatry) is a heresy too great to stomach.  And 29 years later, no war has been waged by those who were attacked.  No reprisals have been prosecuted.  In fact, the architect of the attack was flown out of the country he attacked in the government’s own plane.  How’s that for a twist?  And in their Deloitte & Touche LLP audited financial statements, they callously footnote that they probably have liabilities for breathing-related illness and death that may be about $2.2 billion.  This figure eclipses the total out-of-court settlement the organization reached with those attacked of $470 million including generous payments to victims with permanent life-altering health effects the stunning sum of $380 and the families of the dead the whopping sum of $950.

If you’ve ever enjoyed a fresh garden vegetable on a tossed salad, you’ve probably ingested a non-lethal dose of Sevin®, the Garden Insect Killer.   This lovely little toxin is now proudly distributed by the “Science For A Better Life” company, Bayer.  And to produce this compound which thankfully is illegal in the United Kingdom, Austria, Denmark, Sweden, Iran, Germany (how’s that for a paradox?) and Angola, you can use a very complicated sounding word (for those of you who think my blog is too difficult to read and understand, I’m warning you… Big Word Coming!) methyl isocynate (MIC).  This little organic compound - CH₃NCO – can be highly unstable in the presence of a lot of things, including water.   And MIC was the toxin of choice used by the organization that elected to kill its neighbors – neighbors in the city we all breathlessly read about 29 years ago this week – Bhopal.

The reason why 3,787 people had to die three weeks before Christmas was because Union Carbide needed to save money to boost shareholder profits.  The reason why miners in West Virginia died of silica poisoning was to boost profits.  The reason why audited financials describe “potential” liability is because the actual liability exists and the question is whether they’ll be held accountable.  And the reason why we collectively don’t care is because we want to have our tomatoes and garden vegetables untouched by insects so bad that we’ll kill for it!

Just the cost of industrial economies, right?  Twenty thousand dead in Bougainville courtesy of the abuses of Rio Tinto and, to this day, the world turns a blind eye while Bougainville Copper Limited seeks to pass a mining law illegally so they can do it all over again.  Nearly all of my ‘socially conscious’ friends compose their rants about morality on Apple computers and tablets while the 40,000 workers in China continue to suffer from “numerous labor abuses” including those egregious enough to lead to another 4 documented suicides this year.  Apple, in the spirit of the holidays, agreed to cap workers’ hours to 60 hours per week (wow, really generous of them!).  And their apologists rail against the most recent report of labor abuses by lauding the nearly $500 a month salaries generously paid to workers so that Apple can not return profits to shareholders but rather pump helium into its already bloated stock price.

Next week we celebrate the 72^nd anniversary of Hitler’s declaration of war on the United States.  But eight years earlier (80 years ago) another industrial power decided that the lives of its own and others were expendable for ideologies of supremacy and “exceptionalism” (thanks, B.O. for bringing that wonderful term back for us after GW gave us the SS Homeland Security reprise).  Turning a complicit blind eye towards injustice, a great culture and people allowed their inertia to be hijacked into tyranny.  As then, we now have evidence that we could care less about the lives that have been rented, purchased, or killed so that we can consume at a discount.  Twenty-nine years later, we still out-source our consciences to lands remote enough to avoid confronting the cost of our consumption.  And one day, history will ask, where were those who actually had a conscience?  It’s a chilly night.  It’s the night before cyber-Monday!  See if you can actually put your credit card down long enough to find out what your products really cost before you decide that they’d make the perfect gift!  And stop B.S.ing yourself into believing that the dollar you saved didn’t come at a cost!

Hugs and Kisses – Scrooge

Duty of Candor

I was speaking with a group of investors this week regarding the patents held by one of the world’s most recognizable mobile telephony companies.  As this company has navigated its way, with varying degrees of success, through a tangled maze of consumer expectations, technical improvements and feature modifications they have hastily trodden on the intellectual property rights of others.  They, together with their industry cohorts have filed thousands of patents on everything from the shape of a phone to the resolution of images on diminutive screens – few of which represent actual fundamental innovation but rather hollow impediments to use in an effort to modulate the severity of infringement assertions made by competitors or would-be trolls.

In this particular case, nearly 75% of the patents owned by this firm not only fail to represent bona fide innovation but, in many instances, are clearly direct adaptations (plagiarisms or the more politically correct term I coined years ago “conceptual annexations”) of the developments made by others.  That is not to say, by any stretch of the imagination, that the company does not have some amazingly valuable innovations.  Among their assets include some patents on mobile device payment systems, geo-location, and power management that may be of greater value to others than the entire market capitalization of the firm. 

For years, this firm has been audited by one of the world’s top 4 accounting firms.  When they were taken public, their Initial Public Offering (IPO) was underwritten in the U.S. by investment banking firms that no longer exist having collapsed during the financial crisis of 2008.  Neither their auditors nor their bankers ever asked the question of whether the firm actually had valuable intellectual property assets.  Rather, they asked the question: “Does this company have patents?”

On the eve of this past week’s miscarriage of justice in California (the erroneous jury damages award to Apple assessed against Samsung), the United States Patent and Trademark Office (USPTO) found U.S. Patent No. 7,844,915 (‘915) invalid.  What this means is that when Apple filed for patent protection for the idea of zooming an image on a mobile phone by pinching fingers on the surface of the screen, they actually hadn’t “invented” anything.  In fact, Andrew Platzer and Scott Herz in partnership with the law firm of Blakely, Sokoloff, Taylor & Zafman LLP, had breached the Constitutional intent of the U.S. patent system by cutely describing the movement of fingers to expand or contract an image as “scrolling” “gestures”.  Setting aside the absurdity of presuming that one could “invent” in 2007 what had been in Hollywood movies for two decades already, Andrew, Scott and Apple’s legal eagles misled the USPTO and confused Patent Examiner Xiomara Bautista into awarding a patent on a feature that was neither novel nor non-obvious (two of the three standards which must be met for a patent to be issued).  Quite correctly, the USPTO found this grant to be in error and unfortunately did so in such close proximity to Judge Koh’s schedule for a decision that Samsung wound up having to pay for use of an “asset” that did not actually exist.  Apple knew it.  Samsung knew it.  Even the judge knew it.  But expediency and injustice were more powerful than upholding the law and Samsung has to pay.

Now what’s relevant in these two stories is the fact that the telecommunications company referenced at the top of this post has over 12,000 patents which would, if challenged, likely be found invalid just like the thousands of faux patents held by Apple.  They know it.  Their competitors know it.  But tragically, neither the media nor agents of accountability (auditors, ‘expert’ advisors, the SEC) are willing to inform the public about this giant fraud being conducted under the aegis of “innovation”. 

Under what is referred to as Rule 56, there is a “Duty of Candor” which requires all persons involved in applying for a patent to disclose all of the information they know which could adversely affect the grant of a patent for the invention they seek to protect.  This rule is similar to the accounting principle of what’s known as the “Duty of Care”.  Both of these Duties suggest that the potential for harm arises when a person knowingly fails to fully inform himself or herself with knowable information which could contradict assumptions being made carelessly.  The line between careless ignorance and negligence is one that is frequently gray due to the hurdle of effort (and cost). 

In the U.S. we have laws that are supposed to protect the public consumer from abuses like Apple’s enforcement of a wrongfully procured patent.  When parties knowingly prosecute legal cases against one another with dubious or invalid patents, they both thwart these laws and harm the public.  This will be the case with the telecommunications company’s patents referenced above.  By failing to separate the “wheat from the chaff”, investors and the market will presume that tens of thousands of patents exist in legal enforceability and have value.  This is not the case.  And when those patents are licensed or sold, they will be a real cost involving real money flowing between real parties.  Billions of dollars later, the public will wind up paying inflated prices for a fraudulent conveyance that was knowable (and known) today and the harm will be done.

It is time for the investing public to discontinue their benign neglect of the Duty of Candor and start paying attention to the abuses of law that are going unchecked.  It’s time that companies and the service providers they engage are held to standards that don’t seek camouflage in the ignorance of the public to the systems of proprietary market controls.  True innovation will not be put in jeopardy and consumers will stand a chance to actually see innovative solutions to substantive and meaningful challenges.

 For more, check this out.

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November 17 and the Last 1479 Years

Happy 99^th Birthday, Federal Reserve Bank.  And Happy 1,479^th Birthday Codex Justinianus (Civil Law).  In her Congressional testimony this week, Fed Chairwoman-in-waiting Janet Yellen said, “I don’t think that the Fed even can be or should be a prisoner of the markets.”  In this comment she probably truly stated an imaginary desire for an alternative bank in an alternative universe.  However, in this comment, both she and her Congressional inquisitors failed to recall the founding history and practical reality of the very institution she’s being nominated to head.   

Benjamin Strong, the first Governor of the Federal Reserve Bank of New York who opened the august institution 99 years ago on this day stated that the bank was not only created, “to serve the banker, the farmer, the manufacturer, the merchant or the Treasury of the United States… but to serve them all.”  When Strong opened the bank on this day, he had seven bank officers, 85 clerks and $99,611,670 in deposits from member institutions.   In his early tenure, his mission, together with his warnings and admonitions are as eerie as the dense fog that shrouds this morning in Charlottesville, Virginia.  It’s as though he was looking across the future that lay before him and anticipating the moment we’re now embracing.  He wrote:

“And a seventh and last difficulty, although this may not indeed be all of them, is the one which I regard as more serious than any of the others – the exercise of the powers conferred by the Reserve Act upon the Reserve Banks by this rule of personal discretion, I fear, would develop inevitably in time a bureaucratic attitude of mind on the part of the managers of the Reserve banks which would be unfortunate indeed for the welfare of the whole banking System.  Power excites appetite for more power.   Bankers in time would rebel and the public would rebel.”

“Its future depends upon its own good behavior and upon its success in winning and holding the confidence of the public.”

Strong was running a well-funded start-up.  Ms. Yellen is inheriting a bloated balance sheet, obese, unwieldy, diabetic, and Alzheimer’s-afflicted institution.  Strong, by education or intuition, was acutely aware of the Justinian Codex which preceded his leadership which, in its second title, subsection 11, states that, “the laws of nature… are established by divine providence… but the municipal laws… are subject to frequent change, either by the tacit consent of the people, or by the subsequent enactment of another statute.”  Congress and Ms. Yellen would be well-served to read Title 14 of the Codex in which the Romans were good enough to recognize that civil society depends on real contracts and obligations to insure that those who take on obligations understand the nature of their obligations and are bound to restitution in the event that those obligations are unfulfilled. 

Ms. Yellen’s aspiration for the Fed to be emancipated is going to take more than a Lincoln proclamation.  If the markets have told us one thing over the past 5 years it is simple:  the Fed’s lofty goals of employment and inflation management have been weighed in the balance and found wanting.  Employment has not improved and the record number of employment-eligible people who are without adequate compensation is growing at an alarming pace.  And inflation control is an illusion supported by a mutual-assured destruction currency cold war that is allowing manipulation to override the markets that would be evidenced if Free Trade was Free.  While the U.S. has barely returned to 2008 levels in critical areas like Gross Fixed Capital Formation (still well below 2007 levels), the GDP effect of this fixed capital utilization is nowhere near where we were in the mid 2000s.  So, despite pumping trillions of dollars into balance sheet expansion, the desired effect has not manifest.

Moving the goal posts doesn’t win the game if the players know the rules and are paying attention.  Like the Affordable Care Act and the Administration’s response thereto, failed policy is not ethically managed by stating that the rules no longer apply.  The Roman Civil Code clearly recognized that The People will either have “confidence” or they will “rebel”.  If an emperor figured that out fifteen centuries ago, is it reasonable for us to ask for at least equivalent accountability?

It’s time for each of us to realize that our persistent neglect to holding public officials accountable for lack of oversight and integrity is not their failure but our own.  The impulse to criticize is nearly universal.  The integrity to accountably operate evidencing a better path is the road less traveled.  And on this day, in the yellow wood, I, delighted not to travel both, am not standing long and looking down both.  The one well-worn, fair and heavily trodden is one that has led to massive asymmetries of wealth and inhumanity.  The one whose leaves are untouched and overgrown for want of wear is a different path, one less traveled by, and traversing that path has, for me, made all the difference.

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Starting From Scratch

I’ve spent a considerable amount of time this week reviewing the creative writing of Australia National University’s Fellow of State, Society & Government in Melanesia Program Mr. Anthony Regan.  Having “specialized in constitutional development” in Papua New Guinea, Sri Lanka, East Timor and Uganda, Mr. Regan has recently submitted a proposed “transitional mining act” to the Parliament of the Autonomous Region of Bougainville. 

And, for those of you who are not familiar with Bougainville, a little history lesson is in order.  Under a dubious entitlement mandate from the United Nations following the Second World War, the Australian government decided that it needed to take possession of the massive metal reserves in the island at the end of the Solomon chain and, in 1967, confiscated Bougainville for their exploitation while ‘facilitating’ independence for the state of Papua New Guinea.  Over the well-documented opposition of many local communities, the Australian Administration and their appointees in the Papuan Administration, the 1967 Bougainville Copper Agreement Act became a supra-Constitutional Agreement between a territorial administration and Bougainville Copper Limited.  As if to prove that they knew that they were violating international legal standards, clause 4 of the amended Act states that “no other law of Papua New Guinea, affects this Act or the Agreement.”  In clause 5 of the amended Act, the Prime Minister (remember, the State had not yet been established) is granted the power to exclusively administer the Act without any consent, approval, or any other law.  In other words, the Australians, in what amounts to unlawful territorial seizure, enacted a law above ANY sovereign law directly expropriating land for their exclusive economic exploitation.  Oh, and for their $5 million trouble of exploring the mineral reserves, the Company (BCL) had to pay the extraordinary sum of 1.25% of ‘applicable revenue’ from the mine! 

In an elaborate scheme reminiscent of the first theft of Bougainville’s assets, Mr. Regan has complied with the wishes of his paymasters and drafted a new mining bill that preserves nearly all the abuses embodied in the 1967 Act.  To add insult to injury, his proposed bill reinforces the corruption quotient by burying in Clause 26 the nullification of the over 200 provisions with the simple empowerment of the Autonomous Bougainville Government to act unilaterally and without consideration of any law as it wishes.  Using his “constitutional” expertise, he’s taken to the U.S. government’s definition of Constitutional Law – if it is expedient, do it and tread on the Constitution to get what you want (thanks GW and BO!). 

Now Mr. Regan and BCL (along with Rio Tinto – the 54% owner of BCL) want to take advantage of the pro-autonomy movement in Bougainville and pull off another heist of gargantuan proportion.  But they forget that the world is more interconnected.  And while they and the BCL shareholders desperately want to take another malevolent trip around their merry-go-round of abuse, they are ignoring the simple fact that their “advice” and extra-governmental manipulation are now available for the world to see.  

Whether the Panguna Mine opens or not is an issue that should be decided by the citizens of Bougainville – including those who participated in the armed uprising in 1989.  But more fundamentally, we should examine what it would take to run an ethical, transparent operation – one that doesn’t require Australian academics to serve as advisory mercenaries to launder unethical behavior in the name of progress.  If the citizens of Bougainville determine that they would like to see their land utilized for mineral extraction, that’s a call that they should make fully informed of all the facts.  They should be informed of the state-of-the-art in development, mining, environmental management, power generation, and market participation at all capital levels.  If Rio Tinto and BCL want to be candidates as future operators, they should step up to the damage that they’ve already done and evidence their candidacy for action not by manipulating the law but by being responsible citizens accountable for past harm. 

This week, Australia has a chance to amend a blight on its post-War legacy in the Pacific.  It can intervene in this miscarriage of due process.  Together with the citizens of Bougainville, Australia can start from scratch and see if it can win in the full light of day rather than in the veiled obscurity of manipulation and corruption.  We’ll see.

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I Believe I Can Fly

Despite his age and plenty of free time for thoughtful inquiry, former Fed Chairman Alan Greenspan still doesn’t get it.  Like Daedalus, the famed designer of the Labyrinth in Crete into which the Minotaur was imprisoned, Greenspan and his off-spring have failed to recall that the maze includes Ariadne’s thread which, if followed, can unravel the mystery that isn’t.  During his interview with Charlie Rose, Greenspan evidenced the same myopia that blinded him for over 18 years – cataracts that are alive and well in the eyes of Janet Yellen.  Spoiler alert:  It’s not the housing, stupid.

He was a man learned for those times, of ripe old age, and in his early youth hazarded a deed of remarkable boldness.  He had by some means, I scarcely know what, fastened wings to his hands and feet so that, mistaking fable for truth, he might fly like Daedalus, and collecting the breeze on the summit of a tower he flew for more than the distance of a furlong.  But agitated by the violence of the wind and the swirling of air, as well as by awareness of his rashness, he fell, broke his legs and was lame ever after.  He himself used to say that the cause of his failure was his forgetting to put a tail on the back part.   – Eilmer of Malmesbury recounted by Geoffrey of Monmouth

Eilmer, the flying monk of Malmesbury was not sponsored by Red Bull but, had the chalice been caffeinated back in 1020 CE, he would have been.  There’s a lot that’s cool about Eilmer (or EFM as I imagine his hip, rad Red Bull sponsored code name would be today).  Historians suggest that he may have been one of the few millennials in the 11^th century to actually see Halley ’s Comet twice – first in 989 and second in 1066.  But EFM’s 200 meter flight, like the Icarian myth from which it was inspired, actually set in motion innovation that is alive and well today.  Well, let’s pause for a moment.  Popular culture suggests that between 1930 and 1961, 71 of the 75 people working on perfecting the design for the wingsuit paid for their efforts with their lives making this one of the most lethal innovations when measured by mortality rates (much higher than Skydiving 3.3/1000 or summiting K2 104/1000) so we need to be careful with the “alive” part of “alive and well”.

Now what do Greenspan, EFM, and flying squirrel suits have to do with the economy, you ask?  Greenspan and my all-time favorite Fox News demigod Vice President Dick Cheney (who stated that, “I don’t think anybody saw it coming”) continue to recite their conviction that “no one” could have seen the fiscal house of cards collapse risk despite mountains of published evidence (including my own from 2006) that is available to contradict their assertions.  Why would these pilots of policy fail to update their self-evident imbecilic statements?

Well the answer is really quite simple and has four degrees of freedom: Lift, Drag, Thrust and Weight.  These four variables are what makes something fly or, conversely, hang in the air the way bricks don’t (thanks Douglas Adams!).  In this metaphor, I seek to explain economic ideals through the understanding of what it takes to fly.  And the reason for this is really quite simple.  In all human endeavors, lateralized thinking – the ability to apply observed principles from one discipline to another – is helpful in assessing where we might need to go to solve for what seem to be intractable obstacles in the consensus view.

If one aspires to take-off or remain in flight, a fluid dynamic conspiracy must be engaged.  If one seeks to keep an economy going, a fluid dynamic conspiracy must be engaged.  For the purposes of our conversation, let’s unpack the analogy a bit.

For flight, lift is the aerodynamic force that is created when contour creates differential pressures perpendicular to the flow of the wind above and below the wing.  For economics, lift can be understood as the momentum of flow of transactions through the wind of trade.

For flight, drag is the mechanical form that interacts with fluid resistance.  For economics, drag is the expansiveness and complex contour of all types of transactions in trade and exchange. 

For flight, thrust is the acceleration of mass to propel an object into the flow of the fluid.  For economics, thrust is the animation and stimulus of activity in the market.

For flight, weight is the force of gravity opposing lift and creating the higher pressure on the lower surface of the wing to stimulate lift.  In the economy, weight is the carrying cost of the system that includes the entire utilitarian expectations of all things dependent on money.

Our current economic theorists, regrettably, are attempting to fly with only two variables – thrust and drag.  For over 5 years, the Federal Reserve has mistakenly increased the thrust using a variety of ill-conceived stimuli that have added viscosity to the flow.  At the same time, they continue to insist that housing is the wing that will lift the economy back into flight.  They’ve done nothing to alter the momentum of flow – which would require massive expansion of domestic production and consumption rebalancing as the flow is relevant at the surface of the wing – not in bi-lateral or multi-lateral trade agreements far from home.  And they’ve added weight by increasing the number of areas where the economy must serve humanity – more public employment, more indirect government expenditure dependency – relative to all previous periods.  At this time in our economic evolution, we need greater contour and adaptability on the upper surfaces of our wings – more agile businesses and business models; more adaptation at the margins (attack and flaps) – and we need weight reduction (less monetary dependency) if we expect to soar. 

Housing does not a flightworthy wing make.  The financing for housing still requires government intervention (Freddie and Fannie) to sustain what has become an orgy of over-consumption.  Far from shelter, our mini-palace definition of home has seen our houses grow in size 69% from 1973 to 2010.  Like our waistlines (60% of Americans are now overweight and obese), our gluttony has made our capacity to soar diminish.  Now as we blubbered our way into bigger homes, did we actually achieve a more stable economy?  Absolutely not.  Did any of our ‘growth’ actually come organically?  Absolutely not.  We grew our economy by adding weight and increasing drag.  We ignored lift and attempted to make up for our design failures by adding throttle.  The bad news is that this formula works for landing – not for taking off.

We need to regain the svelte attitude of flight.  Highly adaptable models that can respond to flight conditions at the wing.  Highly distributed transactions – more and smaller.  Lower viscosity of the fluids through which we move.  And less dependency on monetary intermediation of all of our transactions.   If we want to fly, we can.  And like EFM, we don’t need to wait for our drunken pilots to climb into the cockpit to crash all over again.  We The People can actually start living on the wing and before long, we can realize that we don’t need Daedalus anymore.  Climb up on the tower (or the face of a giant, Red Bull sponsored cliff), feel the wind on your wings..., breathe, then go ahead, jump with a tail on the back part!

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Go Jump in a River

I suppose that I was in one of those ‘been-in-the-air-too-long hazes’ flying over Ur or Sumer en route to the Kingdom of Bahrain when I finished reading the Wall Street Journal, the Financial Times, and the Gulf News.  The monotony of the media’s coverage of troubled banks, EU protestations over U.S. spying, and, pompous morality policing (and scandals) overwhelmingly drowned out all other voices.  Loss of trust, inhumane treatment between citizens of the globe, and deceit are epidemic and, unlike the avian influenza, there’s no quarantine underway.

For the reason I cited above, I decided to break out my favorite cuneiform reference – the Code of Hammurabi – to see whether a journey over the same globe 4,000 years ago would have been much different.  For those of you who don’t have it handy, a quick refresher.  In the slightly over 280 laws, the “wise king Hammurabi” (that’s what he called himself) set forth laws that were to remain unaltered for all time.  The general themes of the law cover topics like Justice (5%), Human Trafficking (3%), Property Rights (8%), Agroeconomics (8%), Money (21%), Marriage and Prostitution (24%), and Civil Penalties (28%).  But one of the more curious elements of the Code of Hammurabi is introduced right at the beginning: Law 2 to be exact.

“If anyone bring an accusation against a man, and the accused go to the river and leap into the river, if he sink in the river his accuser shall take possession of his house. But if the river prove that the accused is not guilty, and he escape unhurt, then he who had brought the accusation shall be put to death, while he who leaped into the river shall take possession of the house that had belonged to his accuser.”

It turns out that the Jump-In-A-River test was actually pretty common in Ur and Sumer and is, by no means, the comedic basis for the Monty Python Holy Grail witchcraft mob logic.  Which begs the question of whether or not the first club fitness program for ne’er do wells would have been advisably swimming lessons.  To prove one’s innocence, cast yourself into the river and, if you don’t drown, whatever allegation has been made against you is proven to be false with grave harm befalling the accuser.

Now what on earth does this have to do with the headlines that graced my interminable night of flying 1/3 of the way around the world?  Well really, it’s quite simple.  In the past 4,000 years we’ve not seemed to learn much about human behavior, integrity, or accountability.  And it may be because, like Hammurabi, we’ve been focused on a rather profane and diminished view of humanity.  Personal injury, gender-biased faux morality defined for the benefit of domineering males, and money – the preponderance of Hammurabi’s obsessions – are still prevailing themes today.  And, as was the case 4,000 years ago, life (or the indenture and extermination thereof) and monetary penalties (fines for indiscretion and abuse) are the only two tools we can concoct to mete out a wretched form of justice.  In a world in which we label those who disclose egregious violations of international law “traitors” (despite the justifiable global condemnation for the acts they are unveiling) while in the same moment extract less than 25% of JP Morgan’s 2012 net income in a settlement for massive fraud, can we really continue to suggest that the 4,000 year old system of justice is working?  I think not.

Edward Lee Thorndike is credited with the modern conception of “behavior modification”.  In his dissertation, Animal Intelligence: An Experimental Study of the Associative Processes in Animals (which happened to credential him just in time to become a psychological testing expert to qualify soldiers about to be sent to their deaths in World War I based on their measured proclivity to accept orders), Thorndike reinforced the illusion of stimulus-dependent enculturation and responsivity.  Thorndike and Hammurabi both assumed a linear view of humanity that sought to distinguish ‘man’ from savage or beast.  Thus aspiring to something just above savagery as the laudable trajectory for humanity, is it any wonder that we still find ourselves deceiving, philandering, injuring, and pillaging?

Why does a mercenary NSA spy for its paymasters?  If you seriously buy the “war on terrorism” malarkey, you’ve been watching too much Fox News.  There’s never been a war on terror; rather a war on liberty.  There has been an assault on humanity for the preservation of an unsustainable dichotomy of power dominating the masses.  The U.S. is not sorry that it spies any more than it’s sorry that it maintains power and wealth imbalance across the globe.  It has abused its technology, reputation and power and has acted without consideration of consequence.  Wrapping lies and subterfuge in the American flag does not ameliorate the abrogation of the humanist ideals of liberty and morality once celebrated as the grand experiment of the United States.    It has, in fact, proved one of Thorndike’s assertions – action precedes interaction and association.  Thorndike was credible enough to supplant his own argument about ‘connectionism’ in recognizing that behavior first happens and then is judged with pleasure or aversion. 

“I wish to also say that whoever thinks that, going along with the current which parallels the association, there is an accompanying minor current, which parallels the pleasure and which stamps the first current when present with it, flies directly in the face of the facts.  There is no pleasure along with association.  The pleasure does not come until after the association is done and gone.”

The U.S. is sorry that it got caught.  It’s ‘investigating’ how it found itself, um, … with its hand in the cookie jar (or in Angela’s cell phone as the case may be).  Which begs the fundamental question.  If 100 years ago Thorndike was able to successfully conclude that behaviorism failed a prima facie neurological and logical argument, why are his observations ignored when it comes to our current memes?  Why are we still focused on attributing blame, seeking justice, and penalizing those who violate social order and laws?  We know that this has been ineffective for 4,000 years yet we still persist in the illusion that it preserves order.  We spy to gain an unfair advantage to the detriment of all others.  We perpetually prop up and vilify the global banking system with oversight and then accommodation with such frenetic convulsions so as to insure that no one can have faith and confidence in money or its purveyors.  We abuse one another in ecstatic intimacy and benign neglect.  We are who we’ve been.

How about a different path?  How about living a life in voyeuristic transparency?  By this I mean living in such a way as to celebrate the essential best of humanity so that you see and can be seen not for the façade you deem suitable but for the essence of yourself.  What if you welcomed surveillance to demonstrate the potential of a life unencumbered?  What if you conducted your affairs in such a manner as to proudly take attribution for your successes and failures?  What if you actually lived within your means and strove to insure that others could equivalently do so?  Rather than falling into the ancient social reflex of causality, could you actually see yourself living accountably?  And by this I don’t mean seeking attribution for egoic benefit.  Rather I mean taking full responsibility for the fact that you are, in fact, the perpetrator of your life – not a helpless victim of carnality or causality.  In such a world, NSAs, banks, social conventions, and the like become impotent in the face of a human with nothing to hide. 

So here’s a swimming lesson.  Survey the river to find out where the stones are.  This is important for two reasons.  First, if you choose to dive in, you may want to avoid hitting your head on the way in.  But equally important, once in the water, you may need to display your innocence and, if your arms fail you, you may need to know where to stand.  Strip off your tired clothes and come on in.  The water’s cool and refreshing.

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Selling Souls for $13 Billion

Word on the street is that the price of justice has just been auctioned at $13 billion.  Reportedly this past Friday afternoon, JPMorgan Chase Chairman, President, and CEO (can anyone say too many titles?) Jamie Dimon connected with the indulgences-minting Attorney General Eric Holder to see what the going rate for crime is these days.  There’s no question that JPMorgan defrauded investors.  There’s no question that they were not acting in isolation.  There’s no question that the actions they initiated were in violation of numerous laws designed to protect investors and the general public from misdeeds that triggered the Great Depression.  And there’s no question that the U.S. government has sold integrity before and has every intention of selling it again.  The part of the about-to-be-settled complaint that I find priceless is claim 686 on page 260 where the government alleges that, “GSEs justifiably relied on false representations and misleading omissions of J.P. Morgan Acquisition,” (et al) and Claim 687 on the following page, “would not have purchased the GSE certificates,” had they been exposed to the true facts.

Now grab your box of tissues because, according to the civil and criminal complaint, the “immediate victims” were Fannie Mae and Freddie Mac – two dignified, upstanding government sponsored entities whose mission is to provide “affordable housing to millions of Americans.”  The SHAME!  These poor, helpless co-conspirators (oops, how did that get in there?) were too dull minded to know that they were being duped and they – not the ignorant public – were the victims.  The Federal Housing Finance Agency’s (FHFA) September 2, 2011 complaint identifies over $30 billion in securitizations that were subject to the alleged frauds enumerated in the over 260 pages of Quinn Emanuel billable hours.  Over 50 persons and corporations listed as defendants created over 100 “investments” that turned out to be gross misrepresentations of Americans’ ability to live within their means.  Uh oh!  Who is the victim now?  Oh, and the Securities and Exchange Commission (not named as a co-defendant) reviewed the Prospectus for each of the securities and no one there is culpable?  Seriously?

Just when you thought the criminality of the system couldn’t get more outlandish, Warren Buffett dismissed crimes against investors with the pandering statement that, “If a cop follows you for 500 miles, you’re going to get a ticket.”  Well Oracle of Omaha, thank you for punctuating the indictment on the market and any sense of propriety.  “You can’t be active in a big business without making some mistakes, and sometimes they may be big ones,” he clarified. 

Mistakes?  Getting a ticket?  Warren, get a grip, man!  These are not misdemeanors and accidental oversights.  These are crimes perpetrated against millions of people for billions of dollars of damage.  And when the public is told to just look the other way courtesy of $100 million here and $13 billion there, the contempt for justice and the rule of law actually goes up.

In his testimony in January 2010, Jamie Dimon blamed most of his firm’s troubles on “some unscrupulous mortgage salesmen and mortgage brokers.”  He also stated that, “you know, that home prices don’t go up forever and that it’s not sufficient to have stated income in home [loans].”

Now before you go off and conclude that I find Jamie and the JPMorgan gang unique in their behavior, think again.  The one place where I agree with Warren Buffett is in his observation that everybody is doing it.  And there’s no question that when the government was trying to staunch the bleeding in the ’08 meltdown, Jamie was asked to pull a whale of a task in swallowing the toxic Jonahs – WaMu and Bear Sterns – and refer to both as ‘strategic business combination transactions’.  So, while we’re throwing criminals under the bus, let’s think about who was in the White House, the Treasury and the Fed and add them to our perp walk.  He played ball with the cover-up of government endorsed fraud and, in a warped moral contortion, could actually blame the government for a chunk of his problems.  Oh, that’s right, he has!

If the U.S. wants to gain a modicum of credibility for the rule of law, Attorney General Eric Holder and New York Attorney General Eric Schneiderman should walk away from the $13 billion and actually take the real list of defendants to court.  But that would actually demonstrate that the victims weren’t; that the public harm was actually the public’s economic indiscretion orgy coming back to bite all of us; and, that the system hasn’t gotten one bit better since 2008.  There will be no justice in this case because there cannot be any.  In his A Theory of Justice, John Rawls postulates that people determine their perception of justice behind a “veil of ignorance.”  Worse still is a public where justice is ignored in cold, sterile contempt for the rule of law.  Our recent debt drama in Washington, our neglect for our own accountability, and the collective cataracts that blind us to what is being done in our name for our own ‘benefit’ are all symptoms of our incapacity to apprehend morality.  We have, in fact, sold our souls.

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