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US soldiers investigated over ‘fraud’ bigger than Madoff
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In what could turn out to be the greatest fraud in US history, American authorities have started to investigate the alleged role of senior military officers in the misuse of $125bn (£88bn) in a US -directed effort to reconstruct Iraq after the fall of Saddam Hussein.
The exact sum missing may never be clear, but a report by the US Special Inspector General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn, making it an even bigger theft than Bernard Madoff’s notorious Ponzi scheme.
“I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad,” said one US businessman active in Iraq since 2003.
In one case, auditors working for SIGIR discovered that $57.8m was sent in “pallet upon pallet of hundred-dollar bills” to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.
Pilots boycott gov ID cards
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Airline pilots have warned the government that they will not take part in their security theatre trial of ID cards at Manchester and City of London airports.
The Home Office wants to trial the cards for airside workers at the two airports. Several UK airlines have already pointed out the dumbness of the dumb idea.
The British Airline Pilots’ Association (BALPA) has now written to management at both airports to inform them that pilots would not carry the cards.
Balpa said the cards would add nothing to security and that promises from the Home Office that carrying the cards would be voluntary had already been broken.
And the caption of the year award goes to…..
Save banking, not the bankers or the banks; the case of ING
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So the Dutch state’s ING guarantee got it 100 percent wrong. It does very little to stimulate new lending to the real economy. Instead it subsidises/bails out the owners and unsecured creditors of a bank that holds large stocks of (bad) assets, that is, those who in the past have (carelessly/unwisely) extended credit to the bank. This maximises moral hazard for very little gain in systemic financial stability and for very little direct stimulus to new lending. It also incentivises the bank to hoard capital and liquidity to enable it to pay off its obligations to the state and regain its operational independence as soon as possible. Finally, it exacerbates the tendency to restrict cross-border banking, quite possibly to a degree that could harm the efficient diversification of asset and funding risk. This deeply defective bail-out should not be repeated, in the Netherlands or elsewhere.
Space Shuttle STS-98 Landing from Cockpit View
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I am not a proponent of state sponsering, but in this case, I feel I have to point out that the author makes some valid points against, but misses the all overwriting point in favor of taking out the bad-assets. The main goal of the Dutch gouvernament was to save the ING from a savingsrun. This is the nightmare of every bank. No bank, nomatter its rating (including the AAA rated Rabobank) can give back all the money the loaned over the period of, say, a week. This is because they used the money to lend it to others and they can not (be made to) payback on short term. Currently, any bank the people don’t trust, will be confronted with a savingsrun. Like Fortis, like IceSave, etc. Since ING-Direct has grown tremendesly in the online-market, the whole ING could be pulled under if even a wisper of insolvability were noticable (online-banking is even more voilatile). It was the one, the only, the all consuming concern of the ING. They are a solid bank, they always have been, however, when emotions run high, it’s not enough. Since the sentiment was concentrating soley on bad-loans, and since ING had some deriviatives that had some sub-primes in it, they feared a savingsrun. They revalued their deriviates on the conservative side, but the public was distrustful. Probably exactly because the ING had so little, and people expected more. So they sold off 90% of all their mortage derivatives, way below the marked value, and the Dutch gouvernament will make billions off off it. They had a hard time estimating what the effect would be of keeping as much as possible, they thought about 50/50, but they did not dare take the risk. So they settled for 10%. The reason this works is because the Dutch gouvernement is not steared by emotions like the millions of customers of ING-Direct and recognized a good deal when they saw it, plus they probably also did not like a savingsrun (understatement).
So the author is right in that it does nothing to situmulate “new lending.” However, it does wonders for stabilizing the financial marked. There is virtually no (un prised) risk in the assets the Dutch gouvernament bought. I usually don’t agree with all ING and other big financial institutions do, but I think ING is one of the better lead banks. They took a huge hit on their asset values, to make absolutely sure there would not be a savingsrun. I think the deal showed good bank-man-ship of the ING and good-gouvernence of the Dutch gouvernament.