Edited and redacted article from Karl Denninger-The Market Ticker.
On honesty, in Schools, Governments, and Enterprises
Posted 2011-02-27 12:07
~ Karl Denninger
I had an interesting conversation Friday evening with the representative from my district board. In my opinion, she has an attitude problem – as does the School. Underlying the entire issue is dishonesty. It is in fact pervasive in both the private and public sectors.
It’s unacceptable throughout society, but especially when it comes to our children’s education.
The problem is that a school official attempted to enlist me as a parent in supporting conduct under false pretense. That’s what I believe happened here, and it is why I refuse to let this issue go.
When the original call took place I questioned the validity of [a] rule. That’s a policy disagreement and had it ended there that would be that. But it didn’t. Upon reaching an impasse on its reasonableness, [a] claim of representative process was put forward as a means of attempting to salvage what was, at that time, a blown negotiation.
The reason for this, and my continued persistence in this matter is simple: The lesson that was taught that day is that it is acceptable to attempt to rescue a failed negotiation by distorting the truth or worse.
Let’s boil it down to one simple sentence: The School attempted to teach my daughter that it is acceptable to cheat whenever you are about to lose a debate on the merits of an issue.
The school destroyed their credibility with their actions. Is it incompetence or laziness? It doesn’t matter, really.
This destruction of credibility is unfortunate but it is pervasive. A few examples from our society at large will illustrate the point.
We were told during the financial crisis that various actions were taken with the best interests of the taxpayers and shareholders in mind. We have discovered that in fact this is a clear violation of securities law in that an 8-K is required to be filed on all material definitive agreements. That is, at the highest levels of our government and banking system – intentional deception and manipulation took place.
Citibank’s former Chief Underwriter testified before the FCIC under oath that by 2007 eighty percent of their loan volume did not meet the standards they were publishing. Citibank was one of the largest home loan lenders in the United States at the time, processing hundreds of billions of dollars of lending transactions and making billions of dollars through this deception. Number of indictments as a result of these events? Zero.
Major banks have admitted to filing over 150,000 affidavits in which personal knowledge was claimed of the facts contained within them. But the affidavits were not read by the person signing them.
Obviously you cannot have factual knowledge of what is contained in a document you have not read. That’s perjury, and in most states it’s a felony. Number of indictments issued? Zero.
In Washington State there is a bill pending, SB 5275, which has buried in the text of the bill the following:
7 (a) A declaration by the beneficiary (bank) made under penalty of perjury stating that the beneficiary (bank) is the actual holder of the promissory note or other obligation secured by the deed of trust shall be sufficient proof as required under this subsection.
What’s the significance of this section? Simple: No proof need be offered that the bank actually holds the note or obligation. A simple declaration that they are in possession is sufficient. If you’re in possession of something as simple as a piece of paper, why would not present the actual paper to the court? There’s only one reason to “declare” rather than “prove” – you don’t have it.
This bill before the Washington State Legislature explicitly permits the filing of perjured documents. One can only assume that lying about having the loan document will be prosecuted just as often as lying about reading the papers one submits to the court. That is, never.
Pfizer was caught twice committing a felony through off-label marketing of drugs. They were fined about 1% of their market cap for the second offense – and that’s all. No time in prison. Oh, and it gets better – the individual who was Pfizer’s general counsel and then CEO at the time of these offenses? He was elected by The Fed to the NY Federal Reserve
Britain’s Climate Lab was hacked into and their data and software (which they had refused to release in response to Official Information Requests) became available to the public.
I and thousands of other skilled computer programmers examined the software and documentation in detail. We discovered that the original, unfiltered and unaltered data was destroyed and thus we cannot replicate any of the original filtering studies. We also found when we examined the software, that there are intentional “fudge factors” inserted into the calculations for the express purpose of making the desired conclusions show up – and that when those “adjustments” are removed and the calculations run again, the alleged warming that has been reported didn’t really take place.
A trillion-dollar industry in the trading of carbon credits (which has now been scuttled in the United States) was being established, and you were going to have that trillion dollars stolen from you predicated on an international and intentional scientific scam.
Oh yeah, and while we’re on that subject our local schools have not yet bothered to tell the students they were “teaching” about Global Warming that these facts have been uncovered and that they (in their adult life) were going to be robbed by this scam. In fact, our educators were (perhaps unintentionally, perhaps not) complicit in trying to enlist our kids in supporting this!
Last year the Okaloosa County School District attempted to dishonestly plunder the public with a proposal for a one cent sales tax surcharge, the alleged purpose was to repair roofs, replace refrigeration equipment in the schools and similar uses. Sounds good, right?
Well, no. Every piece of capital equipment has a known and expected lifetime. It therefore is expected to break at some point in the future when it is installed. Honest budgeting requires that you create an impound account in which you deposit funds over the useful life of that item so you can repair or replace it when it wears out.
The school district did not do this. They instead either raided that capital account and blew the money elsewhere, or never set it aside in the first place. Then having done so they whined to the taxpayer and asked that we give them the same money again that they stole the first time for other purposes.
What likely happened in previous years is that the board’s budget committee attempted to use “tricky accounting” and expectations of permanent exponential growth (a claim that is mathematically impossible) to cover for the lack of an impound account. Bluntly, they ran a budget predicated on a Ponzi Scheme and it blew up in their face, as all such schemes eventually do. When the lack of a proper impound account for these depreciating assets was discovered the members of the budget committee responsible should have been indicted, tried and imprisoned for their malfeasance and willful mismanagement of the taxpayer’s funds!
Several of the School Board members have served for a long enough that they should have been held personally to account for these actions and/or their failure to blow the whistle on the lack of proper reserves. They were not and did not.
At least the taxpayers refused to reward the district’s blatant mismanagement and dishonest budgetary practice – they said “NO!”
Let’s face the facts: Our entire society has degenerated into one of theft, lies, deceptions and dishonest dealing.
I believe Ms. Tibbetts, Superintendent of Okaloosa County Schools, has thus far refused to deal with the underlying issue of honest and fair dealing even though it was on parade right under her nose for the simple reason that our entire society has become one gigantic fraud.
I should not be surprised.
But I am outraged.
In particular I am outraged that our school system would ever impart to a student (through any means) that it is acceptable to twist the truth in an attempt to get what you want. That road leads straight to Hell and it is a damn short trip.
Our nation can only recover from this pernicious and outrageous series of scams and lies when we refuse to tolerate it.
Our corporate culture has grown to make ripping people off part and parcel of the daily bailiwick – losing years ago the drive to succeed predicated only on honest acts and fair dealing.
In a world where stealing, lying, deceiving and outright fraud must be expected from everyone and anyone you come in contact with, from the Janitor in the hallway to the School Board to the CEO of major pharmaceutical manufacturers; what is someone to do?
We cannot obtain justice through the law, because the prosecutors are in on the scams and won’t bring charges. Our Treasury, which supposedly regulates the banks, was actively conspiring to evade securities laws while the banks were intentionally writing bad loans throughout the nation.
A small group of people are indicted (properly) for lying about loans but the biggest financial institutions in the United States admit under oath to doing the same thing and robbing the people, directly and indirectly, of trillions of dollars and not one indictment is issued.
We, the people, have only two choices: We either descend into absolute anarchy where the only rules are “don’t get caught” and “destroy the evidence so they can’t prove it”, where nobody’s word can be accepted,
or we stand up and say “NO MORE DAMN IT!”
I’m sure it would have been easier to find some white-collar way to steal my way to wealth, power and influence, but I couldn’t live with myself if I did it and I damn sure am not going to allow a government school to instruct my daughter that this is acceptable and even expected conduct.
We must take this country back one person at a time. We must impose a fair conduct standard one government employee or private company CEO at a time. We must say “No.” We must demand honesty and accountability. We must not accept anything less than formal apologies for the small transgressions, firings for the moderate or repeated ones and prosecutions for those that rise to grand larceny – and there are plenty of them in all three categories.
If we cannot obtain this through petition and conversation we must do so through direct action. We must eject any and all liars, scammers and frauds and all who cover for them from our political scene.
To those who we cannot remove immediately by political process or who have no political process associated with them at all, we must refuse to deal with them. To cut their hair. To sell them gasoline or groceries. To sit in the pew in Church with them. To shake their hand. To do their taxes. To represent them in a court of law. To fix their broken leg, treat their diabetes or crown their broken tooth. To sell them Internet service. To print their T-shirt run. To buy their Girl Scout cookies. To look at them and say “Hello” on the street.
When these people call us and ask for our financial or political support, we must refuse.
When they call us, we must look at their claims as if they’re liars and cheats – because so long as those same people are holding offices who have in the past lied and cheated, or allowed those who report to them to do so, that’s the standard they set for themselves.
We must choose as a society.
We must choose between good and evil.
Between honesty and lies.
Between fair dealing and scams.
For the good of our children and our nation we must make the right choices – not the easy ones.
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