Karl Denninger, "Thou Shalt Steal"

"Thou Shalt Steal"

by Karl Denninger

"Well, well, well... Tim Jones, parish priest of St Lawrence and St Hilda, told his congregation in York, northern England: "My advice, as a Christian priest, is to shoplift." Jones, who according to the church Web site previously worked in Corinth, Mississippi, made his comments about what he regarded as acceptable behavior by those in need when they were desperate. In a transcript of his sermon published in the local newspaper, "The Press," Jones said: "I do not offer such advice because I think that stealing is a good thing, or because I think it is harmless, for it is neither. I would ask that they do not steal from small family businesses, but from large national businesses, knowing that the costs are ultimately passed on to the rest of us in the form of higher prices."

That sounds rather un-Christian. Or is it? Let's examine this a bit.

We have a society that allegedly has laws that we all must follow. They include the general premise of not screwing people: honest and fair dealing, disclosure of material facts you know would influence another's decision to do business with you - and certainly, an expectation that you would not intentionally misrepresent the truth. So what has happened over the last 20 or 30 years when it comes to business, banking and credit?

The Federal Reserve has intentionally held liquidity - that is, "excess cash" in the system, too high for extended periods, even though this was intended to and did produce multiple asset bubbles.

Officials from The Fed (and others) made statements that were reckless in their disregard for the truth. Claims that housing prices reflected "sound fundamentals" where homes were selling for two or even three times sustainable prices are just one of many examples - even when prices were taking on 20, 30, or even 50% gains in a year.

Greenspan claimed there was "irrational exuberance" in the stock market but then did absolutely nothing about it for the succeeding four years! The result was a huge stock market bubble in Nasdaq stocks that subsequently burst.

Investment and Commercial Banks willfully and intentionally made loans to people who they either knew could not pay (other than by refinancing into another loan) or worse, simply didn't give a damn if you could pay or not - because they assumed they would simply steal the house!

This wasn't limited to houses - it was found in literally every sort of lending and commercial activity. PIK/Toggle bonds, "covenant light" loans, leveraged buyout money, all of it was the same basic scam - we don't care if you can pay because we will unload this garbage on some other bagholder before it all blows up! Some borrowers got involved in the fraud machine too. Why tell the truth when you can "state" that you make $200,000 a year - cutting hair! Why if you want that million dollar house and can get an OptionARM at 2% interest-only (against a real rate of 6%) for the first two years, go for it! You can always refinance before the "teaser" expires, right?

Now if this was just some banks screwing each other, so what? If it was just speculators in the markets playing with one another, who cares? All consenting adults playing "stick that hand grenade down the other guy's pants before the fuse runs out", right?

Wrong. What happened to the price of houses? Milk? Gasoline? Steak? Health insurance? What happened to the prices that people who had no hand in the fraud had to pay - as a consequence of the fraud? What happened to all the good jobs? All these asset bubble games forced profit margins inward, which in turn created the incentives to offshore production. And offshored it was - to China, where virtual slave working conditions were and are the rule, destroying white and blue-collar jobs alike - including most especially those who had nothing to do with the frauds during these years!

So now we find ourselves with a situation where the wealth of entire nations have been looted. This wasn't an accident, it wasn't an oversight, it wasn't happenstance. It was a series of intentional acts, and along the way a literal million felonies and other improprieties occurred. From the "homeowner" who lied about incomes to the Real Estate "professional" who leaned on an appraiser to "hit a number" to the seller and buyer who colluded to kick back money and inflate a purchase to the lender who "helped" a buyer fraudulently overstate their income to the "securitizer" who had 1003s for their loans but failed to verify tax returns (and couldn't have possibly believed that a Greeter at WalMart made $200,000 a year!) to the ratings agencies that ran no scenarios in which home prices would ever decline.

Let's just take one example: AIG. How does a company write literally hundreds of billions of dollars in "credit protection" while having almost literally ZERO capital to back up those bets? Who knew that, when, and why was that "business" (of making legally binding promises they knew they could not keep) allowed to proceed? There are and were hundreds of AIGs.

NOT ONE OF THESE ACTS IS CURRENTLY UNDER INDICTMENT, NOT ONE DOLLAR HAS BEEN CLAWED BACK AND NOT ONE OF THE PEOPLE RESPONSIBLE FOR THIS IS IN PRISON.

So now as a consequence the common man loses his house, his job, and 30% or more of his retirement account. In addition the price of gasoline has doubled, his health insurance costs have gone up by 500% in the last 20 years and the food bill has gone from $100/month to $250. What is this person supposed to do?

The entire premise of a polite and law-abiding society is that while not every crime can possibly be punished vast, pervasive fraud and robbery will not stand. The government's job is, if nothing else, to prosecute such wrong-doing and put a stop to it, clawing back what can be recovered so the victims receive whatever compensation is possible and the wrong-doers are punished.

YET THEY HAVE REFUSED.

So is it, under such conditions, REALLY wrong to go take what one needs to avoid outright privation - or worse, starvation? Does the government understand the risk they are running by willfully refusing to act as the law demands?

To remove people from office, to prosecute wrong-doing, to lock these crooks up?

If the people cannot find justice within the government's apparatus, are they to sit quietly and ask "Please Sir, may I have another (beating, rape, robbery, take your pick)?" Or should we expect that at some point - perhaps not now, but perhaps not far down the road either, the people will have had enough. They will rise and take care of these matters in their own way - and there won't be much in the way of a "fair trial." I've yet to see boiled rope or guillotine blade futures listed by the CME, but is this sort of redress for grievances really that far in our future?

There are times I wonder.

Perhaps the reason we have not seen a massive uprising - and the institution of "citizen trials" - is that the American People simply don't get it. They never learned compound interest and earnings in school, as it is simply not taught. Tout TV never talks about the total systemic debt load and how it has grown (as I posted in The Ticker a few days ago) .vs. GDP. The truth about The Fed basically paying people to borrow (we have real negative interest rates right now!) as a means of trying to intentionally inflate bubbles is never discussed.

Intentional? Probably. For how long will The People remain in the dark? Are they ignorant - or stupid? Ignorance can change in a day, or a week - with catastrophic results.

To both State and Federal Government Officials: I know I have said this before, but I will repeat it - The lawless actions of the past 20 years must not be allowed to stand - you must not allow The People to discern that you are a felon rather than a cop.

To Father Jones: While I cannot square your advice with The Ten Commandments, I am reminded that The Bible tells us that even Jesus had his limits when it came to those Commandments, and the one time he exceeded those limits was with THE MONEYCHANGERS in The Temple. The very same robber barons - of the time - who were cheating the people. My, how similar the situation seems to be.

To The People: Wake the hell up. Demand prosecution. Back that demand up with your vote, and while you're at it, pray that this is enough, for if it is not, where your neighbor or countryman who has lost everything may turn is a dark place neither you or I wish to see our nation descend to."

- Karl Denninger, http://market-ticker.denninger.net/

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