Kleptocracy

Kleptocracy / klĕp-tŏk′rə-sē / noun: A government characterized by rampant greed and corruption. A corrupt and dishonest government characterised by greed.

Follow the Money

In the middle of the movie Watergate, Bob Woodward is told by his contact Deep Throat to “follow the money”. It was good advice. So much so, the whole of human history might be investigated by “following the money”.

Let’s look at an example. Take a moment and review what happened in the UK after the Brexit vote. Once the referendum passed in 2016, the incumbent Prime Minister David Cameron resigned. Having initiated the worst political decision in history, he didn’t want to bother with the heavy lifting of implementing it. Theresa May struggled to gain consensus within her party and lost the leadership to Boris Johnson. Johnson’s mishandling of Covid led to his resignation and Liz Truss stepped in. It is here we should pause and examine things a little more closely, because it is relevant to what is going on in America in the first few months of Trump’s second term.

National Truss

liz-truss-meets-queen-elizabeth-1

Liz Truss was appointed Prime Minister by Queen Elizabeth on September 08, 2022. The Queen died two days later.

Truss, a former accountant, appointed Kwasi Kwarteng as Chancellor of the Exchequer. Together they proposed a mini-budget on September 23, 2022. Among its provisions included a series of permanent tax cuts for corporations and the wealthy. The tax cuts were intended to ‘stimulate growth’ and would be funded by short-term borrowing.[i]

In effect the budget was a version of Ronald Reagan’s ‘trickle down’ economics from the 1980s. The idea was by making the rich richer, they would invest more and that would increase overall growth. It didn’t work then, and the International Monetary Fund and currency traders didn’t believe it would work in 2022, either. In days, the British Pound hit its lowest level ever against the US dollar. Truss fired Kwarteng on October 14, then she quit a week later. At 45 days, her term set a record for being Britain’s shortest ever.

The Great British Grift Off

Prior to becoming Chancellor of the Exchequer, Kwarteng had worked for the hedge fund company Odey Asset Management. Founder Crispin Odey[ii] famously made 220 million pounds profit when he shorted the UK pound immediately after the Brexit vote in 2016. In 2022 Odey’s main fund rose by 145% when the pound fell again after the Truss/Kwarteng mini-budget.

To date there have been no investigations or accusations of insider trading levelled against either Truss, Kwarteng, or Odey. Even if there were no skullduggery, only stupidity associated with Truss’ government, the optics are still lousy. Moreover, the business of politicians short-selling currency and stocks isn’t new. Google the words, “politician insider trading” and enjoy ploughing through 2,790,000 results. If there were a kernel of truth, however, such blatancy by the top echelons of the UK’s government might serve as inspiration for a party of power-crazed grifters like Trump’s MAGA Republicans.

Breadcrumbs

DJIA-last-5-years

Punditry has been defined[iii] as, “the job or activity of giving your opinion about a subject because you know a lot about it:” Therefore, pundits may overlook the obvious in favour of appearing intelligent. However, if we apply the premise that history is a trail of breadcrumbs that invariably lead to the answer “money”, then what Trump and his minions are up to is clear: they are in the business of making themselves rich [at everyone else’s expense].

Given the extraordinary growth of America’s stock markets over the past four years, upside growth by traditional stock-valuation metrics, would be slow at best and correcting at worst. What should the world’s wealthiest people do to continue consolidating money? What should the world’s most powerful politician do to enrich himself when he has almost unfettered authority? Why, take lessons from history and advice from the pros, of course!

Falling Short

Buy low and sell high is the traditional way to make money in stocks. That advice is still sound, but today there are many more ways of making money than waiting for your shares to grow. You can bet on the movement of markets. Options traders can make money when they think stocks might go up in the future (calls). They can also make money when they think stocks might go down (puts). Traders can borrow money to place bets (margin trading), although doing so might bankrupt your business (see Lehman Brothers). Short selling[iv][v] is a strategy often employed by hedge fund managers and currency traders. Briefly, a trader bets that a stock or currency will drop in price. Borrowing as much stock as they can, they sell them. When the price drops, they buy the stock back, return them, and pocket the difference.

Short selling requires nerves of steel, deep research, discipline and confidence. Unless of course you run the economy. Then you can print money. Which is why there are (or were) so many checks on what Federal employees can and cannot do with their knowledge and power.

Tariffs

Tariffs are unpopular with economists. Uncertainty is a drag on financial markets. By fuelling uncertainty through executive actions on tariffs, Trump has succeeded in driving stock and currency markets down dramatically in a few short weeks. Far from appearing concerned, Trump announced on Truth Social[vi] that “To the many investors coming into the United States and investing massive amounts of money, my policies will never change. This is a great time to get rich, richer than ever before!!!” We should assume Trump is talking to himself as much as he is to others.

Pundits on the left confess they don’t understand what Trump is doing. For once they are being honest. They can’t understand Trump isn’t interested in established economic theory. He is not interested in actually making America great. He is interested in one thing and one thing only: making himself as rich as he can. His competition is not China or the EU. His competition is the web of regulations designed to prevent Federal employees, including the president, from profiting from their offices.

Corruption? What Corruption?

doge-elon-musk

If pundits followed the money instead of relying on their expertise, they might see through the smokescreens that Trump and his flunkies are throwing up. When you are breaking the law in plain sight, it is helpful if people are looking the other way when you are doing it. Who better than the world’s richest man to provide the necessary distractions? Musk’s Department of Government Efficiency is busy firing federal employees, many of whom are directly responsible for keeping corruption out of government. That includes auditors, IRS staff, accountability lawyers, the list goes on. Key among America’s anti-corruption laws is the FCPA, or Foreign Corrupt Practices Act. One of Trump’s first moves in his second administration was to order the US Attorney-General Pam Bondi to pause enforcement of the FCPA.

Then there are policy smokescreens. Take “Liberation Day” tariffs. (Please!) The question is not why a deserted island near Antarctica was slapped with tariffs. The question is: why weren’t Russia, Belarus, North Korea, Cuba, the Seychelles, Somalia and the Vatican City[vii]?[viii] These countries are either notoriously corrupt kleptocracies or maintain fiendishly opaque banking practices. Russia’s incumbent dictator is an expert at banking cash taken directly out of the hands of his citizens. Who better to coach an aspiring kleptocrat than the current King of Klepto?

Underhanded Oversight

With broad immunity granted to the president by the Supreme Court, the ability to move stock and currency markets comes at the stroke of a pen. With help from some of the world’s most corrupt countries, everything is set for a global short sell. If for a moment you thought Trump’s billions in financial transactions would be flagged by the US Treasury through normal bank reporting procedures, again you’re looking in the wrong place. Follow the money. In this case you need to examine Trump’s eponymous “shitcoin”, his personal cryptocurrency, Trump[ix]. By loosening rules on cryptocurrency regulations and hobbling financial oversight, he can in effect move billions around the world at will.

Why isn’t Congress doing something? Follow the money! MAGA’s spokesman in chief is a grifter. Even the best grifters need help when the scam gets big enough. In the absence of auditors, opportunities for insider trading on White House policies stand to make five hundred or so people extremely wealthy. Otherwise, what would be the point of abasing yourself and swearing fealty at the feet of King Don? Even the most sanctimonious hillbilly born into abject poverty immediately falls prey to the twin drugs of wealth and power. If you can make your family and friends richer along the way, so much the better.

Magnificent Plunder

There is no grand strategy for re-industrializing America. No plan for making America more competitive in the future. And no goal of making the world safer for Americans and American companies. The plan is to use the office of the president to transfer trillions of dollars in savings from American citizens into the hands of a few hundred people who are executing the greatest scam in history.

If I haven’t convinced you, please feel free to pick an adage from the list below:

  • You can fool all of the people some of the time.
  • Bullshit baffles brains.
  • In the absence of other evidence, the simplest answer is the correct one.
  • If you really want to conceal something, leave it lying about in plain sight.
  • Follow the money…
Endnotes

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