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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Monday, November 21, 2011

"The Doctrine of Odious Debt" Should Include Goldman Sachs

I came across an interesting idea while reading The Globe and Mail and it occurred to me that if the idea of "The Doctrine of Odious Debt" could be applied judiciously to the likes of Goldman Sachs, there would be a great deal of satisfaction in that. Debt created by corruption, accounting control fraud and toxic securities should not be recognized as true debt and it is the bank that deserves to feel the effects of its own vile corruption and not the taxpayers who bailed them out!

We already have the evidence of the fraud perpetrated by Goldman Sachs in the Levine/Coburn report and to a lesser extent in the Financial Crisis Inquiry Commission (FCIC) report.

There are certainly some ugly ramifications for reneging on debt but if the bankruptcy of the TBTF banks cannot be (or won't be) undertaken, then it would be nice if Odious Debt could be put into place. If neither bankruptcy nor odious debt can be applied, then the banks will either receive their money through austerity that hurts vulnerable populations or through the use of rentier capitalism when the people are forced to sell public property to satisfy the banks' credit demands.

All the choices are ugly and made uglier by the fact that the banks caused the crisis initially, benefited from the crisis in a big way and will continue to benefit from the crisis until all the blood is squeezed from the stone.

What are odious debts?
By Patricia Adams - Excerpt from The Doctrine of Odious Debts, Chapter 17 of the book Odious Debts: Loose Lending, Corruption, and the Third World's Environmental Legacy

"Odious" debts, incurred and used for ends which, to the knowledge of the creditors, are contrary to the interests of the nation, do not compromise the latter — in the case that the nation succeeds in getting rid of the government which incurs them — except to the extent that real advantages were obtained from these debts. The creditors have committed a hostile act with regard to the people; they can't therefore expect that a nation freed from a despotic power assume the "odious" debts, which are personal debts of that power.

Even when a despotic power is replaced by another, no less despotic or any more responsive to the will of the people, the "odious" debts of the eliminated power are not any less their personal debts and are not obligations for the new power....

One could also include in this category of debts the loans incurred by members of the government or by persons or groups associated with the government to serve interests manifestly personal — interests that are unrelated to the interests of the State.

Read more about Odious Debts here


ODIOUS, TOO! said...

Police State Watch: Curling Up In a Ball to
Avoid Police Violence May Be Considered “Active Resistance” …
Justifying the Use of MORE FORCE, Including Baton Strikes

So in today’s “standard” police state procedure, curling into a ball
to avoid violence from police is considered “active resistance” which
warrants more force, including baton strikes?

The real problem, of course, is that the criminal class that
defrauded our country out of prosperity is now sending in the
mercenaries to keep the peasants in line.

Don't bend over said...

It says a lot about a society where customers can be openly robbed, and markets can be blatantly rigged, and even more about the people who defend it and hold it up as an ideal for the rest of the world.

This is what the average American mind cannot yet grasp, but those outside the system see it clearly. And it is puzzling to them. How can a reasonably educated and well off people act as such willing fools for those who take such shameless advantage of them?

MF Global Revelations Keep Getting Worse

 Shortfall estimated at $1.2 billion or more (up from $600 million)
 “Repo-to-Maturity” is a “Total Return Swap-to-Maturity,” a Type of Credit Derivative
 Probable Shortfalls Throughout 2011
 Regulators Waive Required Tests for Jon Corzine
 Jon Corzine to Credit Derivatives Head: Next Time “Double Up”
 Questions About How MF Global Became a Primary Dealer
 MF Global Wrote Rubber Checks for some Electronic Checks for Others
 Tip-Offs for Some Customers?
 CFTC’s Gary Gensler Didn’t Act
 MF Global Debacle Damages a Key Global Market

Picked off said...

The Goldman Rule: Don't Let This Puppet Master Pull Your Strings
November 21, 2011
By Shah Gilani, Capital Waves Strategist, Money Morning
 Goldman Sachs Group Inc. (NYSE: GS) Chief Executive Officer Lloyd Blankfein was really on a roll speaking at an investment conference in New York last week.

Among other things, he said there's no way we can conclude that a slowdown in banking and trading businesses is "secular, rather than cyclical."

That alone was enough to make me laugh. But then he went on to address concerns about pending regulations that are coming as a result of the Dodd-Frank Financial Reform Act.

"In our conversations with clients, they have expressed several concerns on the impact to their businesses," Blankfein said, making it clear that his firm will make client interests a theme of its arguments against the regulations. "What Goldman Sachs does for our clients is even more relevant and important."

Now that should make you laugh - if, of course, you're not too afraid.

The truth is that Goldman Sachs and the rest of the big banks on Wall Street - in the inimitable words of author Michael Lewis from his seminal book Liar's Poker - invariably "blow up" customers to make money for themselves.

Customers screwed said...

New Peril MF Global Trustee

The MF Global Trustee (on alleged-rumored urging by the Department of Justice and the SIPC) seeks via court motions to exclude customers from representation in the Bankruptcy Process. Customers, in the form of the customer coalition want to cross balance sheets towards the entities who stole their money (including the CME, Corzine, JPM, Bank of America et al) while the establishment wants to wind this thing down by creating a firewall.

Yash Bhuptani said...

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Joyce said...

Thank you for all the excellent comments and links.  The Report by Janet Tavakoli is especially important in tying up all the loose ends of the MF Global debacle.

Paul Broderick said...

One area that has been overlooked in the application of the principles of odious debt is at the micro level & personal debt. The US & UK cannot recover properly due to the levels of personal debt in these consumer economies, yet most of the money lent by the banks in the credit boom was not in the interests of the people and can be viewed as a hostile act on the part of the lenders as they also knew many people could not repay it.

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