Systemic failure – The exponential rise of Fraud & Abuse

I have never understood how or why people celebrated the success of Donald Trump. Especially for someone who has lied, cheated, and conned his way through life. Abusing his power every opportunity he gets.

To me, he is the poster child for the myriad of societal issues we face today. The fact our institutions, such as Government, Church, and Corporations are all dealing with systemic abuse is extremely telling of society’s path.

Society erroneously made celebrities out of false idols like Trump and others.

Conversely, it wasn’t too long ago that Americans witnessed a glaring example of fraud and abuse. In my opinion, based on the foregoing. It’s safe to ascertain that correlation can equal causation as we try to discern the undeniable facts of same.

Moreover, it is my belief that fraud and abuse have been the catalyst to and the very reason why we as a society – especially the working class – are experiencing a plethora of issues.

I belief we have a dual causality to blame for our woes. I say this because we are living in the information age, where information – get this – is readily available.

The information age, coupled with the Dunning-Kruger effect creates what I believe to be an information conundrum. With so much information at our fingertips, how can we keep track, let alone retain things long enough to recognize a pattern? Furthermore, if we don’t understand complex issues, what motivates us to attempt to understand same?

Notwithstanding, if we add the “social media” variable to causality – we are now presented with an even greater dynamic – since it perpetuates modern day “echo chambers.”

I’ll digress as to not get into the weeds. What I find difficult to comprehend is how quickly society has forgotten how we ushered in the millennium. So let me remind you of what cannot and should not be forgotten.

In the early 2000s, one of the largest accounting frauds was taking shape. And by 2002 the SEC began its investigation into what would ultimately be the largest accounting fraud in American history. Later to be usurped by an even larger racket.

WorldCom, under the direction of its CEO, CFO, and its Controller – by the end of 2003 – used fraudulent accounting practices to inflate its value by an estimated $11 billion dollars. What is more, is the fact that one of the “Big Five accounting firms” involved in auditing WorldCom, was also perpetuating other accounting frauds.

In 2002 Arthur Anderson voluntarily surrendered its licenses to practice as Certified Public Accountants. They did so, after being found guilty of criminal charges relating to the firms auditing of another company.

In 2001 it was revealed that through an institutionalized, systemic accounting fraud by its accounting firm. A company once named by Fortune “America’s Most Innovative Company” not one year, but for six (6) consecutive years had liquidity concerns.

On December 3, 2001, Enron who had sustained its business much like a “Ponzi scheme” with their unscrupulous actions, declared bankruptcy.

Ladies and gentlemen, these were the events that America witnessed at the start of the Millennium. Lest not we forget, that right before this economic nightmare. President George W. Bush – under the control of V.P Dick Cheney – fabricated evidence to substantiate their claims that Iraq had “Weapons of Mass Destruction(WMD.) Therefore, with an overwhelming majority of support from Congress. The President was given the go-ahead for one of America’s longest and costliest wars by fraudulent claims and an abuse of power.

Not long afterward, and only eight years into the millennium. America’s economy would be dealt another severe and catastrophic blow – ultimately causing a Great Recession. Much to the chagrin of corporate America. Once again, systematic, accounting fraud – had crippled the economy and decimated the housing market. Yet again another example of fraud and abuse.

It all comes crashing down

In July of 2008 IndyMac failed and that was just the beginning, of what was to come. Soon after, financial giants like Bear Stearns, Lehman Brothers and the insurance company for their securities – AIG, went down faster than the Global Financial Market thought was possible. (2008 Financial Crisis Timeline)

The Federal Reserve’s Chair Ben Bernanke assisted with the bailout of Bear Stearns. The Federal Reserve Bank of New York – provided $29 Billion and J.PMorgan Chase – provided a junior loan of $1 Billion – with no recourse. Meaning the Government could not seize the assets from the mortgage debt if it became insufficient to repay the loan.

With the help of the working class, better known as the majority of money behind Taxes. We unwittingly helped foot the bill for the Troubled Asset Relief Progam. Which originally authorized expenditures of $700 Billion to purchase “toxic assets.

I challenge anyone reading this, to walk into your local bank – ask to see a loan officer – and then explain you need to borrow money to purchase toxic assets. (please record a video of the event and post it to social media. We can call it the #ToxicChallenge)

Before we move forward, it’s important that we realize. One of the largest financial decision made by American consumers is – the purchase of a home. Thanks to the fraud and abuse by the people in charge of our lending institutions and regulatory bodies created to govern them. The majority of homeowners were underwater. Not to be left behind, in late 2008 – November to be exact – the Automobile industry crashes and once again the American middle class is obliged to bail them out.

To recap, the number one and number two financial decisions you make as an adult, have now become toxic. Automobiles have always been considered a liability but homeownership was not. And more importantly, serves as a gauge of consumer confidence in the market with a tremendous effect on the economy. So much for the American Dream.

Take note, this is all before the first decade of the millennium. Luckily for us common folks, once in a while Politicians step up and do what we elected them to do, represent our best interest. In 2010 the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law.

This lowered our commitment of $700 Billion to only $475 Billion, which was later lowered again by the Congressional Budget Office in October of 2012 to $431 Billion, with an estimated $24 Billion for grants and mortgage programs that had not been made.

Rules and Regulations were added to prevent crisis, and abuse of power from happening again. Ironically, it was deregulation that created the nightmare to begin with. You see, after the Great Depression, Congress enacted the 1933 Banking Act, better known as the Glass-Steagall Act. Which created the Federal Deposit Insurance Corporation (FDIC). This insured deposits, which allowed depository banks to be heavily regulated.

This worked well for us until the 90’s, after decades of challenges to the Act, starting in early 1960’s; when federal banking regulators interpretation of the Act – afforded commercial banks and their affiliates new business models to engage in – which expanded the securities activities.

It all came to fruition in 1999 courtesy of the Gramm-Leach-Bliley Act (GLBA) also known as the Financial Services Modernization Act of 1999, signed into law by none other than – President Bill Clinton. Is your mind blown yet?

For the record, I am not, have not, or will ever be an advocate for deregulation. There is too much empirical evidence to support – it is an appetite for destruction. Let me put it this way. Since a good majority of America considers itself a “Christian Nation.” Riddle me this Batman;

What was the first test God, gave mankind?

You’ll have to forgive my memory, I am a bad Catholic so I cannot spit out the Gospel verbatim. From what I recall, Adam and Eve were given a very simple instruction to follow. Do not eat from the tree – of the knowledge of Good and Evil – correct?

So how did that work out for them? Seems to me, they failed miserably. The temptation for a forbidden fruit, created grave consequences for both and God ultimately banished them from the Garden. Moral of the story – in my opinion – is to human is to err, especially when tempted.

In modern day that fruit has become power. And in the infamous words of Tony Montana -“ In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the women.” Greed is a very powerful drug, especially when stacked with money. America’s obsession with all things materialistic is a detriment to its people.

The rat race, cleverly disguised as the “pursuit of happiness.” Has the majority trying to keep up with the proverbial Joneses. As the cost of living increases, and the population. Competition is not only fierce but cutthroat. Like another episode of National Geographic’s “Mutual of Omaha.” It’s definitely a wild kingdom, where it’s players will do just about anything for survival – power by any means necessary. And as one of my favorite quotes says;

“Power corrupts, absolute power corrupts absolutely.”

– Lord Acton

History tells us, that when we find a gross abuse of power, we create rules and regulations to prevent it from happening and more importantly for “the greater good of society.” Caveat, it takes great pain and suffering for us to do so. So much is under the radar, that most of society has blinders on, and until it becomes a catastrophic event society doesn’t pay attention.

What I consider to be the “Titanic Effect.” You see it took the Titanic to sink, for there to finally be enough lifeboats for every person on the ship. Fact is, don’t think too hard, pretty confident you have only learned after pain and suffering. Whether it was financial pain, or personal pain, the minute it hurts the wallet or hurts in general. We come to our senses, after all we are mammals.

I don’t believe there is anything that we as a society can do to stop greed. There will always be a bad apple in the group. Eventually the greedy, find ways to upend the checks and balances, ultimately lobbying to change regulations – claiming it needs modernization.

Fast forward to 2009 and the Great Recession comes to an end in July. Wow, we made it, we survived and now comes prosperity for all. Slow your roll there jerky not so fast. (Homeowners Still Under Water on Mortgages)

For the following 8 years after the first decade, the U.S experiences “economic expansion.”

Notwithstanding, although there was record job growth in 2018. Wages, accounted for inflation had fallen. What makes matter worse? The cost of living had increased at its fastest rate in 10 years. And, vehicle residency was up 46% from 2017. Homelessness rose in 2017 for the first time since 2010. Inflation suggests the obvious, Americans are earning less than a year ago. 

Wherefore, life expectancy has dropped each year since 2016 and suicide rates are the highest in decades. If we are to believe the powers that be, unemployment is at a record low ending 2018 at 3.4%.

Caveat, this does not take into consideration the underemployed better known as U-6. Which is a broader definition than what is currently reported U-3. Underemployed (U-6) includes visible and invisible;  which equates to a bigger issue than one might think. 

Millennials are affected the hardest, and considering they are the second largest demographic – if we don’t address the myriad of issues the workforce faces – the future isn’t so bright. So what got us to the present day? For one, the internet’s availability is responsible for an underlying problem. 

Social Media has exacerbated delusions of grandeur, as everyone feverishly seeks to elevate their status quo. 

Coupled with the “fake it till you make it” mantra and what you see is what you get. The ire of celebrity has come front and center, moreover to a place, Americans once held to the highest regard. Especially since the country’s alleged moral majority, labels the U.S as a “Conservative Christian Nation.”

One cannot lose the irony of such an assertion, especially with the man in the Whitehouse. In my opinion a known heathen, who has violated several commandments, which serve as a mantra for many Christians. A simple set of rules that make you a decent human being, according to the gospel.

Things like;

  • You shall not have other Gods but me
  • You shall not worship false idols
  • You must not steal
  • You must not commit adultery
  • You must not give false evidence

These are all things that Trump has violated. Ladies and Gentlemen, that’s 60% of the commandments. Yet Evangelical Christians are some of his strongest and ardent supporters? Talk about wallowing in the miry pits.

Now before you flame me, or castigate me for being bias. In full disclosure, I am an ardent supporter of rules and regulations. Something that Trump flouts constantly. And there is plenty of proof in prior dealings – of his abuse of power. Nonetheless, here is what Newsweek discovered about our President.

Donald Trump’s Companies Destroyed Emails in Defiance of Court Orders”

“Over the course of decades, Donald Trump’s companies have systematically destroyed or hidden thousands of emails, digital records, and paper documents demanded in official proceedings, often in defiance of court orders.

These tactics—exposed by a Newsweek review of thousands of pages of court filings, judicial orders, and affidavits from an array of court cases—have enraged judges, prosecutors, opposing lawyers and the many ordinary citizens entangled in litigation with Trump.

In each instance, Trump and entities he controlled also erected numerous hurdles that made lawsuits drag on for years, forcing courtroom opponents to spend huge sums of money in legal fees as they struggled—sometimes in vain—to obtain records. “


BY KURT EICHENWALD  ON 10/31/16 read more here…

Keep in mind, this is the same individual who lambasted Hillary Clinton over her emails. Fact is, he made it a bigly talking point throughout his campaign. Even urged Russia to hack her emails. But don’t take it from me, see it for yourself in the following video.

So I ask time and time again, are people really surprised that Trump made it to become President of U.S? I ask this question because it is undeniable that his Presidency comes at the hands of Fraud and Abuse. I should say, American society’s willingness to forget the fraud and abuse perpetrated on them through the hands of the few.

The few, like Donald Trump, who control the corporations, the banks, our institutions and now our Government. All while, majority of Americans ignore the news, because no news is good news. This shouldn’t be surprise at all, it should be in the infamous words of Trump.

Hugely tremendous, best wake up call in history. Of course, courtesy of DJT et al, responsible for the machinations which continue the greatest fleecing of America’s middle class.

I remain hopeful as we watch the greatest American shipwreck. That more and more of society will come to the harsh realization his Presidency is a result of “self-inflicted” wounds – as the see no evil, hear no evil, speak no evil mantra – continues to decimate our ethical fiber.

Carpe Diem!

About Carlos Barberena
Just a guy trying to contribute to society.
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