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Saturday, September 26, 2009

Another SEC and Madoff Fnord

There have been a lot of Congressional hearings regarding "The SEC failed to properly investigate Madoff."

The evil fnord is "The insiders at the SEC should be replaced with different insiders. The regulations need to be made stricter." rather than "The SEC monopoly for investigating investment fraud is immoral! All the people who participated directly or indirectly in the scam owe compensation to the victims."

Bernard Madoff had the parasitic personality type. He emotionally intimidated the SEC investigators. If an SEC investigator was too persistent, Madoff complained to their boss and the investigator was ordered to be lenient.

Bernard Madoff said to the SEC investigators "I'm Bernard Madoff! I'm an awesome guy! How dare you question my authority?" Via parasitic mind control tricks, plus his political connections, Madoff prevented the SEC auditors from doing an honest investigation. For example, one frequently-quoted story is how Madoff got angry when SEC auditors asked him to provide detailed statements. This behavior, combined with his political connections, enabled Madoff to dodge accountability.

That is the "Captured Regulators" problem. Bernard Madoff had sufficient political connections that he could get any SEC investigator fired. This made it impossible for an SEC investigator to do an honest audit.

The SEC has an explicit State-granted monopoly, regarding prosecuting investment fraud. Even though the SEC did a lousy job, there are no negative consequences for SEC insiders. They get to keep their jobs and their monopoly. Some people will probably be scapegoated as part of the Congressional investigation, but that's part of the scam. The important part is that the scam is preserved and the real insiders keep looting and pillaging.

Congressional hearings are evil fnrods designed to distract attention from the real issue, which is "The State violence and justice monopoly is immoral." The blame is always focused on corrupt/incompetent individuals or bad bureaucratic procedures, rather than on a fundamentally corrupt system. The evil fnord is "The State should be reformed!" or "Corrupt/incompetent individuals should be replaced!" rather than "A State justice/violence/regulatory monopoly is a bad idea!"

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