Joanne Knight

March 25, 2013

Captain, my Captain

The failure of the US economy in 2008 led to its fall as the dominant power. So is there potential for a more even distribution of power globally or will it simply lead to a Hobbesian war of all against all? People talk about ‘leadership’ but what do they mean. The US no longer leads the world. The President no longer leads the country. We have a crisis of ‘leadership’.

Joseph Stiglitz warns of the dangers of a leaderless world:

“In the last 25 years, we have moved from a world dominated by two superpowers to one dominated by one, and now to a leaderless, multi-polar world. While we may talk about the G-7, or G-8, or G-20, the more apt description is G-0. We will have to learn how to live, and thrive, in this new world.”

When we talk about leadership, we seem to mean whoever has the power to make others fall into line with their interests. After WWII the US situated itself to dominate the globe, politically and economically. The collapse of the Berlin Wall in 1989 ushered in a new era of increased US dominance which led to the current World Recession. The behavior of our leaders leaves little hope for the future.

Corporate leaders are so autistically-focused on short term profits, they cannot begin to imagine a world working towards a common goal. Their rhetoric of ‘vision’ and ‘leadership’ do not match their actions based in greed and ruthless competition.

Leaders of the financial world (or Masters of the Universe as they used to be known) like hedge fund billionaires, William A. Ackman, Daniel S. Loeb and Carl C. Icahn, have indulged in some dubious practices (to say the least) in regard to Herbalife. Hedge funds, in the course of normal behavior, try to stack the deck in their favour through manipulative media behavior in order to influence the stock price of a company up or down. Their standard business practice demonstrates the worst excesses of corporations.

These hedge fund managers acquired large interests in Herbalife. In December last year, William Ackman made a presentation at an investor conference, claiming that Herbalife was a pyramid scheme, even though no one appears to be doing an actual investigation. In February, Mr. Icahn and Mr. Ackman appeared on CNBC. Mr. Icahn noted that if someone tried to acquire Herbalife, it would spell trouble for Mr. Ackman because “if that happens, that stock could rush to $100.” Daniel Loeb then sold a portion of his 8.9 million shares.

William D. Cohan, in Bloomberg, speculated whether Loeb’s action, while perfectly legal under current law, could be characterized as “pump and dump”, whereby an investor publicly announces a large stake in a company, the market moves up on the announcement, and then the investor sells the position, or a portion of it after the market moves. None of these people give a damn about the company or its employees. If the company crashes and they make a profit, well that’s just market forces at work. In 2008, hedge funds were also responsible for crashing Northern Rock, a major British bank.

World leaders flounder around in the trough. The world is governed by an elite so profoundly cut off from the experiences of most people’s everyday lives that they are too complacent to deal with the real problems facing us. We’ve just watched as Congress and the White House allowed billions of dollars be removed from federally-funded government programs. Nobody really seemed to care that this would be detrimental for many people.

A member of the US elite, Mary Jo White, has just been appointed the head of the US Securities and Exchange Commission. White has alternated between Debevoise & Plimpton and the federal government for three decades. At Debevoise, she has defended nearly every big bank on Wall Street. Her clients included JP Morgan Chase, UBS and Michael Geoghegan, the former head of HSBC.

White defended the fraudulent lending practices of JP Morgan Chase. After the 2008 subprime loan meltdown, a free-for-all of foreclosures occurred where banks frenziedly tried to recover their losses by foreclosing on as many homes as possible. In August 2010 alone, lenders took possession of a record 95,364 U.S. homes and issued foreclosure filings to 338,836 homeowners, or one of every 381 U.S. households.

An investigation by all 50 state attorneys general and state banking regulators of foreclosure practices found widespread fraudulent activity, such as using falsified documents to foreclose on homes, foreclosing on properties on which banks did not hold titles, use of false affidavits, and deceptive practices in the loan modification process (such as telling borrowers that a loan modification was imminent while simultaneously foreclosing).

Mary Jo White now heads up the major securities regulator. This is more than a revolving door, there is no door between Wall Street and the government regulator. The regulator is just providing cover for corporate criminals. My prediction is that White will be dismissed or it will be revealed at the end of her tenure that there was a major cover up of illegal corporate practices. Things can only get worse. This is the sort of leadership we are investing in. People with no moral compass.

Barack Obama is closely implicated in the facilitation, at least, of this type of rampant corruption. The self-style ‘community activist’ has simply revealed himself to be the leader of the corporate mafia.

So what does this behavior tell us about the leaders of today. Their values seem to revolve around actions which will serve their personal short term material interest, regardless of the damage it does, not only to other people’s lives, but to the operation of the system itself.


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