Exclusive: The Pentagon’s Massive Accounting Fraud Exposed

The Nation has the article Exclusive: The Pentagon’s Massive Accounting Fraud Exposed.

Here is what Bernie Sanders had to say about the situation.

The Defense Department remains the only federal agency in America that hasn’t been able to pass an independent audit – 28 years after Congress required it to do so. Why is this issue so important? According to a recent report from Michigan State University, between 1998 and 2015, the Pentagon has been unable to trace, document or explain, are you ready for this, $21 trillion in financial transactions. Yes, that’s trillion with a “T.”

Over and over again, our Republican friends tell us that we cannot possibly afford to join the rest of the industrialized world and guarantee health care as a right to every man, woman and child through a Medicare for all program.

We have been told that we cannot afford to make public colleges and universities tuition-free, or make sure that everyone in America has access to affordable housing, childcare, or a good job that pays a living wage with good benefits.

But when it comes to spending $716 billion a year on the military – more than the next ten countries combined – all of a sudden there is a deafening silence from my Republican colleagues about the deficit.

That is unacceptable. The time is long overdue for us to take a hard look at the enormous amount of waste, at the cost overruns, at the fraud, and at the financial mismanagement that has plagued the Pentagon for decades.

I have been avoiding reading stories like this. The $21 Trillion seemed like such a ridiculous number. This has been going on so long, that it cannot be attributed to Republicans alone. Moreover, given the need for top secret programs in the Department of Defense, there is some justification for obfuscation in the books. (I onetime read a story where even reporting the amount of money used to buy peanut butter was classified. The premise was that reporting such a number would give clues to the enemy about staffing levels.)

I have no idea what the remedy is.

The Doomsday Machine: The Big Lie of the Cold War – Daniel Ellsberg on RAI (1/12)

The Real News Network has the video The Doomsday Machine: The Big Lie of the Cold War – Daniel Ellsberg on RAI (1/12).

On Reality Asserts Itself, Daniel Ellsberg tells host Paul Jay that US intelligence agencies knew that Stalin was not planning to invade Western Europe or seek world domination, but based on the myth, the world came close to nuclear war – and it’s all happening again

The above video is only the first episode of a 12 part series. Below are the links to the first eleven episodes. I’ll put in the 12th as soon as it is published.

The Doomsday Machine: The Big Lie of the Cold War – Daniel Ellsberg on RAI (1/12)

Hitler Wouldn’t Risk Doomsday, But The United States Did – Daniel Ellsberg on RAI (2/12)

Truman Delayed End of WWII to Demonstrate Nuclear Weapons – Daniel Ellsberg on RAI (3/12)

The Largest Act of Terrorism in Human History – Daniel Ellsberg on RAI (4/12)

Russian “Doomsday Machine” an Answer to U.S. Decapitation Strategy – Daniel Ellsberg on RAI (5/12)

U.S. Planned Nuclear First Strike to Destroy Soviets and China – Daniel Ellsberg on RAI (6/12)

U.S. Refuses to Adopt a Nuclear Weapon No First Use Pledge – Daniel Ellsberg on RAI (7/12)

Once Fired, There’s No Calling a Nuke Back – Daniel Ellsberg on RAI (8/12)

The Discovery That Should Have Changed the Cold War – Daniel Ellsberg on RAI (9/12)

A Strategy of War Crimes, Killing Civilians to Win a War – Daniel Ellsberg on RAI (10/12)

The Doomsday Machine and Nuclear Winter – Daniel Ellsberg on RAI (11/12)

Edward Snowden Explains Blockchain to His Lawyer — and the Rest of Us

ACLU has the article Edward Snowden Explains Blockchain to His Lawyer — and the Rest of Us.

…the important concepts to understand are that blocks in the chain are meant to be verifiable, strictly ordered by chronology, and immutable. Each new block created, which in the case of Bitcoin happens every ten minutes, effectively testifies about the precise contents of all the ones that came before it, making older blocks harder and harder to change without breaking the chain completely.

I basically already understood the mechanics of blockshains, but I think this article helped me a little to understand how it might be applied to things other than money.

How Fraud Corrodes Weak Market Regulations Governed by Market Fundamentalism

The Real News Network has the video How Fraud Corrodes Weak Market Regulations Governed by Market Fundamentalism.

Prof. Bill Black’s talk at the forum, “Destroying the Myths of Market Fundamentalism,” held in Washington DC, on October 19, 2018

Despite the wide publication of this information and the constant exposure to this on my blog, there are too many people who are religiously unable to admit this truth exists. Why are people so committed to disbelieving what is right in front of their eyes?

Stephanie Kelton Explains It All

ABC Australia has the interview Bernie 2020?

Stephanie Kelton is such a great teacher. Her explanations are so easy to understand, any adult should have no trouble getting what she is explaining.

The only thing standing in the way of more people understanding this is the little recording in their heads that will be repeating, “No, this can’t be true” as she explains for 20 minutes. If you can temporarily shut that recording off, and listen to what she says, then you will have something to think about later when you let that recording play again.

The interviewers are your standins, because they pose all those questions of how could this possibly be true. Kelton has great answers to all of their questions.

I particularly like Stephanie Kelton’s response when the interviewers asked about the problem of interest payments on US bonds growing too large. She said, just stop paying interest. She did not mean that we should default on the interest we have promised to pay. She meant stop issuing bonds that pay interest. We don’t need to borrow our own money back. The money that the government created and put into the hands of the public doesn’t need to be borrowed back so that we can use it for other purposes. Just use it for those other purposes in the first place.

We have created a system where

  1. the federal government creates money
  2. the federal government gives out the money to the public
  3. the federal government borrows the money back with the promise to pay interest
  4. the federal government spends the money on things the country needs

We don’t need the second and third steps, It was our choice to create the four step process. We can change how we operate.

Maybe it would help to see the diagram that I explained in my previous post When Will the White House and OMB Ever Learn About Sector Financial Balances?

Three Pots

The Global Financial Crime Wave Is No Accident

Naked Capitalism has the article The Global Financial Crime Wave Is No Accident by Nat Dyer.

Top of my list of neglected economic superstars is Professor Susan Strange of the London School of Economics, one of the founders of the field of international political economy. In a series of ground-breaking books – States and Markets, The Retreat of the State and Mad Money – Strange showed how epidemic levels of financial crime were a consequence of specific political decisions.

Dyer goes through four ways that Strange “showed how politics and the financial crime epidemic were intimately connected.” I’ll quote the first item in the list.

There was nothing inevitable about financial globalisation, Strange said. It was born out of a series of political decisions. It means that global money can skip freely across borders beyond the reach of national laws and supervision. For smart operators tax, regulations, and compliance become a choice, not an obligation. Strange argued that international organisations lack the power to control global money, only coordination between the world’s major economies can rein it in.

I have recognized for a long time that no single country can control the problem. It will require coordination among the major players around the world to get a grip on what is happening. There were efforts being made along these lines, but George W. Bush put a stop to the participation of the USA in the talks to rein in the tax havens. Now global “trade” talks are all about making it easier for the corruption to continue.

Sears Bankruptcy Engineered to Benefit Executives and Stiff Workers

The Real News Network has the video Sears Bankruptcy Engineered to Benefit Executives and Stiff Workers.

BILL BLACK: Oh, this is absolutely the norm. And again, strategic bankruptcies where you don’t necessarily have to go into bankruptcy, but you do so to screw the workers and benefit the executives, are extremely common among the wealthy. And that’s being done in this case, and Toys R Us is a good example. What kind of bonuses – remember, in 2005, Congress changes the law to say you’re only supposed to be able to get a bonus for really extraordinary efforts. Well, Toys R Us just died. It wasn’t brought back to life as some wonderful, efficient entity through brilliance of the management team under bankruptcy. So under the very logic of the 2005 Reform Act, they should have gotten zero in the way of bonuses. So you can see that’s yet another area where, in practice, the bankruptcy judges tend to be extremely generous to the senior management that have looted and destroyed the place, and extremely hostile to the workers. It’s an outrageous, utterly stacked system, and it’s getting worse, and it should be a major area where the House of Representatives, under the new majority, should be acting to reform the law.

If you don’t know this, then you probably don’t understand what we mean when we say the system is rigged for the wealthy.

If you call yourself a capitalist, is this the sort of capitalism you envision? Nancy Pelosi says that she is a capitalist, and that’s just the way it is. She didn’t add the “So there”. Joe Biden is also one of the great Democrats who tightened up the bankruptcy laws for the ordinary people in order to protect the credit card companies incorporated in his state. Is this why some people are rooting for Biden as a Presidential candidate in 2020? Are voters aware of what is going on? This is the kind of capitalism that the Clintons seem to prefer.

IMF, Warren Sound Alarm on Leveraged Lending

Naked Capitalism has the article IMF, Warren Sound Alarm on Leveraged Lending.

All the warning signs are there. Last time around, it was clear that the problem was in the mortgage market, so it was a lot easier to know which investments to avoid. Now the danger is spread out into unnamed companies (except for naming GE). I use various figures of merit to weed out companies on the brink. I hope that caution will give me some protection in the coming crash. Also, I am letting my dividends accumulate. I am in no hurry to reinvest them in the stock market. What are you doing to protect yourself?

The Genius Neuroscientist Who Might Hold the Key to True AI

Wired magazine has the article with click bait headline The Genius Neuroscientist Who Might Hold the Key to True AI.

Friston’s free energy principle says that all life, at every scale of organization—from single cells to the human brain, with its billions of neurons—is driven by the same universal imperative, which can be reduced to a mathematical function. To be alive, he says, is to act in ways that reduce the gulf between your expectations and your sensory inputs. Or, in Fristonian terms, it is to minimize free energy.

I found the article rather fascinating to read. I had feelings of getting close to understanding something important, with the realization that I had a lot of research to do to understanding what was new in AI which was a subject I only barely understood in the first place.