Mika Brzezinski

I saw Mika Brzezinski as a guest on the Colbert Report. She's the co-host of "Morning Joe" on MSNBC. She was a really lousy guest.

How did someone unqualified like Mika Brzezinski get a mainstream media job? Does it have to do with the fact that her father is National Security Advisor Zbigniew Brzezinski?

This leads to the obvious conflict of interest, when State insiders get jobs in the mainstream media.

In the case of Mika Brzezinksi, the abuse of State connections is obvious due to her name. How many mainstream media "journalists" only got their job due to a connection with insiders?

Gay Marriage is the New Abortion

State parasites need issues to distract the masses. This allows the average slave to think "I have an opinion on politics!", when they're really debating irrelevant issues.

For example, in the early 20th century, "Should alcohol be legal?" was a political issue everyone understood. Alcohol Prohibition was a great distraction. This coincided with the creation of the Federal Reserve, income tax, and Welfare State. People were debating alcohol Prohibition, while all their other freedoms were taken away.

This illustrates the brilliance of the Roe v. Wade decision. Previously, each individual State got to decide if abortion is legal or not. After Roe v. Wade, regulating abortion became the Federal government's power. Every politician and potential Supreme Court judge is now expected to have an opinion on abortion.

Discussion of abortion replaced discussion of more important issues, such as gradually expanding State power. Time spent grilling statists on abortion is time not spent on important issues.

Over time, abortion loses its effectiveness. The slaves get tired of discussing it. A new issue must be invented. It needs to be an issue that both sides will get excited about, and the population will be nearly evenly divided.

Gay marriage suits this discussion perfectly. The are valid points on both sides. If you're anti-gay marriage, you'll say "Why should I pay higher taxes to pay for the State perks a homosexual married couple gets?" If you're married, you can inherit your spouse's property without paying estate taxes. If one partner works and the other doesn't, you pay lower income taxes filing a joint return.

If you're pro-gay marriage, you'll say "Homosexuals should get the same rights as everyone else."

The correct answer is "Marriage contracts are none of the government's business. If people want a homosexual or polygamous marriage contract, that should be legal."

For political issues, "It's none of the government's business!" is usually/always the correct answer.

Issues like alcohol Prohibition, marijuana Prohibition, abortion, and gay marriage are a distraction for the slaves. They allow people to think they have an opinion about important issues, when they're really debating irrelevant nonsense.

There are important issues that are not discussed in the mainstream media. These fake issues serve as a substitute. Most people know indirectly that government is a scam, but they don't consciously explicitly realize it. These fake issues are a way to vent their frustration.

Important issues are not discussed. Issues like "Taxation is theft!" or "The USA has an unfair monetary system! The Federal Reserve is a scam!" are displaced by nonsense. People need to debate something, and they shouldn't be allowed to think about important subjects.

Other issues must be invented as a distraction. Abortion is no longer effective, so a new issue like gay marriage must be promoted. When people get tired of debating gay marriage, another new pointless issue will be invented.

Terrorists at Work?

Yesterday at work, I saw something that made me think "ZOMFG! Did someone actually just do that?"

I work on the ground floor of a large financial building. There's a big one-way window. People inside can look out, but on the other side people can't look in. Tourists walk by all the time. I should walk around and look at the one-way window; my coworkers told me it was a one-way window.

I saw something *REALLY* suspicious. A woman was taking pictures *OF THE INSIDE OF THE BUILDING*. She had a camera. She put it up against the window, and was taking pictures.

Would that even work? Wouldn't you need a special camera, to take pictures through a one-way window?

That's the sort of thing State propaganda artists warn people about. I never thought I'd actually see it.

I think the woman saw that I saw her. She probably got scared and ran away. She had black skin. I think she had her hair covered, like an Islamic woman.

I'm reluctant to support the State. However, "Terrorists are checking out my workplace!" is where I draw the line. I told the building's security guards. It's their problem now. I wonder if they took me seriously? I wonder if they were able to look at the security tapes and figure out who I was talking about? I told them half an hour afterwards, so they shouldn't have overwritten the tapes yet.

This incident bothered me. I have good body language awareness now, and it's obvious that woman had hostile intentions. I also have good peripheral vision now. That's probably why I noticed the woman acting weird.

I guess being paranoid is another word for being alert.

I wonder if the building security guards investigated? They have security cameras, presumably with tapes. It's the sort of thing they'd publish on the news as a headline, if they had good video evidence.

There really isn't anything interesting worth seeing. I'm working on meaningless financial reports, as are all my coworkers. Someone clueless about finance wouldn't understand that.

That incident was weird and disturbing. I never thought I'd actually see something like that.

"Deem and Pass" or "Self-Executing Rule"

Democrats in the House of Representatives are using a parliamentary trick for the healthcare "reform" law. It is called "deem and pass" or a "self-executing rule".

The Senate already passed a version of the stupid law, before Brown's victory in Massachusetts. Now, Democrats in the Senate no longer have a filibuster-proof supermajority. They can't get a new healthcare reform law through the Senate *BUT* the House can vote on the law the Senate already passed. The House must pass the Senate law without changing a single word.

The plan is for the House to pass the Senate law with zero changes, and then have a "reconciliation" law to fix the discrepancies. The reconciliation law is not subject to filibuster, due to a technicality. (Technically, the Senate can change the filibuster rule at any time via a simple majority vote. However, that would be a precedent and Republicans can do the same thing when they're a majority. The filibuster rule can be changed at anytime, but nobody wants to be the first to do it. This is the so-called "nuclear option".)

There's one obvious flaw in this method. The Senate won't vote on the reconciliation law until Obama signs the original law. There's no guarantee that the Senate won't make modifications to the reconciliation bill. There's no guarantee they would pass it at all.

Instead of voting on the original law and then the reconciliation law, the votes are bundled together. There will only be one vote.

Some Representatives object to this trick. They won't have the opportunity to vote no on the reform bill, but later vote yes on the reconciliation part.

Any Representative who objects has a simple solution. He can merely vote no. What's the big deal?

A handful of Representatives are on the fence. The reconciliation bill might have a pork project for their district, enticing them to vote for it.

This is a common parliamentary trick. Each law has some favors for each Representative, to entice them to vote for it. That illustrates the problem with representative democracy. That's the reason unrelated riders get stuffed into laws.

Any Representative who falls for this trick is an idiot. Suppose there is something favorable in the reconciliation part of the bill. The Senate could take that out when they vote on it.

The actual healthcare "reform" law is thinly disguised corporate welfare. It's a tax hike, with the profits going to insiders. The real problem is not publicly discussed. The real problem is the State/AMA licensing cartel for doctors, combined with other damaging regulations.

The supply of doctors is restricted, driving up prices. Other regulations also increase costs. For example, there's a law requiring insurance corporations to cover X. The cost of X is passed on to customers as higher prices.

The healthcare "reform" law has a "Cadillac Plan" tax. The Senate version had a 40% tax on plans with a premium over $8500/year, with the profits paying for health insurance for people who can't afford it.

The fallacy is that the $8500 threshold is not properly indexed for inflation. After a few years, almost every plan will be affected.

My current health insurance plan, via my pimp, is barely not a "Cadillac Plan", and I have a cheap plan. My premium is just under the threshold. In a few years, inflation will bring the cost well over $8500/year. The "Cadillac Plan" tax threshold is based on the CPI, which severely understates true inflation. Due to the AMA licensing cartel, health insurance costs rise *FASTER* than true inflation; the rate of increase in the supply of doctor licenses is less than the rate of increase in the population. The number of seats in State-licensed medical schools is capped by Congress.

"Health insurance is too expensive! Let's place a huge tax on it!" is obviously stupid. Only a State parasite and pro-State troll would come up with such a stupid idea. Only a brainwashed zombie would be fooled into supporting such a law.

The healthcare "reform" law is obviously bad. Via "Problem! Reaction! Solution!", State parasites make a government-created problem worse.

It's amusing how stubborn State parasites are. Obama and Pelosi can't admit "This isn't working. Let's focus on something else." That's a form of State brainwashing. A State parasite can't admit they screwed up.

Similarly, Lehman executives and accountants can't say "We admit that Repo 105 was wrong." They have to deny their crimes. They have to spin their crime so that it seems like an honest mistake.

Should I root for healthcare "reform" or against it? Stupid laws are always annoying. However, the more stupid laws are passed, the sooner the whole scam collapses. Approximately 50% of the people don't like the current proposal. Those people will be angry at a government that no longer represents them. If the "reform" law fails, then the people who were brainwashed into supporting it will be disappointed. No matter what happens, a large percentage of people will be very angry.

There will be a 40% tax on health insurance, with the profits purchasing health insurance for people who can't afford it. There also will be a law requiring you to own health insurance or enroll in the State plan. This places an agorist in an awkward position.

What should an agorist with little/no on-the-books income do? Do you enroll in the State plan? Do you take the risk of being uninsured? (Technically, there's a fine for not owning insurance. It might be cheaper to just pay it.) Do you buy a useless health insurance policy?

This would be an obstacle to the creation of an agorist healthcare system, but simultaneously a potential boon. The State system might be so lousy that people are forced to purchase health insurance in the counter-economy. However, an agorist probably should enroll in the State plan and then not use it.

Lousy health care "reform" might be a good idea! It will decrease support for a corrupt government. People might be forced to purchase medical care in the counter-economy, if they want decent service.

I'm considering starting an agorist drug-free mental health treatment business. I don't have a State license, so I can't file claims in the State insurance scam. It would have to be 100% off-the-books. I would get customers, because I would give *MUCH* better service than a State-licensed psychiatrist or therapist. Without licensing overhead and other overhead/taxes, I could offer really cheap prices. My therapist billed my insurance $100-$200 for a half-hour visit. My psychiatrist billed my insurance $200+ for a 5 minute visit. An agorist doctor can't make an insurance claim, but the price would be low and the quality would be high.

Medical care is an excellent agorist business opportunity, due to the high State-imposed overhead. Paradoxically, I might want State parasites to further ruin the State healthcare system, to force the creation of a grey/black market in medical care.

Paradoxically, an agorist might want more bad laws. Temporarily, bad laws restrict freedom. Bad laws also undermine the legitimacy of the government. More bad laws accelerate the collapse of the State. The tricky part is "At what rate should new bad laws be passed? How can the collapse of the current corrupt system be organized so it occurs at a reasonable rate?"

What is "ad hominem"?

Some pro-State trolls are confused, regarding the definition of "ad hominem". This is a variation of "debating idiots is a waste of time".

If I write "You are stupid!", that is ad hominem. If I write "You believe 'Taxation is not theft!' Therefore, you are stupid.", that is not ad hominem, especially if I give detailed reasons.

This is an important pro-State troll point. "You should never say that someone is stupid." That is false. Some ideas really are stupid. If I give a careful detailed argument, and the other person ignores my points, then they really are stupid. They are a waste of my time.

If you say "I logically refuted 'Taxation is theft!'", and then you ignore my points, then there's no point talking to you anymore. We're literally speaking different languages. At that point, there's nothing left to do but resort to name-calling.

It is important to call out stupid ideas as stupid. If I point out that your idea is stupid, and you ignore my points, then you've successfully convinced me that you are a fool. You've failed a "Turing Test". You've successfully convinced me that you are not an intelligent lifeform.

I shouldn't waste time on people that are less than human. I have too many other potentially useful things to do, rather than wasting time on fools.

Eric Massa

This story is interesting. Eric Massa resigned from the House of Representatives.

You know when Saturday Night Live is making fun of Eric Massa, that he's really the hero.

Superficially, it's a scandal about inappropriately touching a male staff member. That makes no sense at all. That's at most a minor offense.

BTW, I don't have that problem anymore. For example, if someone gives an aggressive handshake, my body language makes it obvious that it's unpleasant. Before I cracked my pro-State brainwashing, I would feel uncomfortable, but my body language wouldn't show it. Now that I give negative feedback, the parasite knows he offended me.

"Inappropriate touching" is only a problem when someone is pro-State brainwashed. The victim doesn't give emotional feedback that it's unpleasant. Most "abused productive" people learn to not show emotions. The parasite is just trying to be friendly. A suppressed emotion of digust makes it seem like the victim enjoys it.

Any politician has to do dishonest things to get elected. That's the way government works. If you wiretap a Congressman, you'll almost definitely find evidence of misconduct.

The President has the power to spy on anyone without a search warrant. Eric Massa was opposed to Obama's healthcare "reform" plan.

"I inappropriately touched a staffer!" is the public excuse. Maybe State thugs discovered other evidence of corruption against Eric Massa. They made a deal. Eric Massa would resign, and they wouldn't pursue corruption charges.

Consider former Congressman James Traficant. He was a highly outspoken critic of the Federal Reserve. He went to jail for corruption charges. Was that fabricated, as punishment for criticizing the Federal Reserve?

Almost every Congressman has to do dishonest things, in order to get elected. The law is so vague that anyone can be accused of a crime, if State thugs want to strictly enforce the law. If you wiretap any politician, you'll almost definitely uncover evidence of corruption.

That's the reason privacy is important. The law is so vague that if you spy on someone 24x7, you'll almost definitely uncover evidence of a "crime".

It seems that Eric Massa was unfairly scapegoated for criticizing the healthcare "reform" law. People who deviate from State propaganda are punished. Other politicians learn by example. They obey the unwritten rules.

Whenever I see a politician publicly disgraced, my reaction now is "What honest thing did they do?" With a mainstream media information monopoly, it's very easy to trash someone's reputation. SNL does a sketch trashing Eric Massa, but they don't discuss the serious problems with the heathcare "reform" law.

State politicians/journalists/comedians must be careful at all times. If they accidentally say a suppressed truth, then an excuse will be fabricated to ruin their career.

The story of Eric Massa has an important evil fnord. If a politician contradicts State propaganda, then his career will be ruined.

The actual healthcare "reform" proposal is thinly disguised corporate welfare. The real problem is the AMA/State licensing cartel for doctors. This restricts supply and guarantees high prices. There are other damaging regulations.

It's the usual "Problem! Reaction! Solution!" model. Government regulations cause a problem. Politicians and the mainstream media hype the problem. The solution is more government regulations. This further restricts freedom and makes things worse.

The correct healthcare reform idea is never publicly mentioned. The State licensing cartel for doctors is evil and should be eliminated. Alternatively, increase the supply of doctor licenses. Currently, there's a Congress-imposed cap on medical school slots. Other damaging laws and regulations should also be repealed.

The only people who benefit from a State licensing cartel are the license holders. They can always profitably lobby to block reform. Most laws/regulations benefit a handful of people. They can always block reform.

That is the problem with the US economy. Stealing is more profitable than working and doing something useful. Why make a high-quality product cheaply, when you can bribe State thugs to declare competition illegal?

This is the virtuous positive feedback cycle of complete economic collapse.

Repo 105

In Lehman's bankruptcy trial, the creditors and judge hired a lawyer to write a report on Lehman's bankruptcy. The report was published here. In particular, the section on "Repo 105" was very interesting.

The US financial system is one big scam. Repo 105 is a scam, even if you believe that the financial system is legitimate. This post explains the Repo 105 scam in a way that even a pro-State troll should understand.

The report was in mostly plain English, rather than legal jargon. The lawyer preparing the report probably did a good job. It wasn't that hard to read.

Before getting into details, here's a one sentence summary of Repo 105. "Repo 105 is an accounting loophole very similar to the one Enron used." Lehman executives used Repo 105 to falsely report their leverage ratio.

Repurchase agreements were reported as sales instead of as loans. One leg of the repo was at the end of the quarter, and the other leg was at the start of the next quarter. This made the end-of-quarter balance sheet snapshot fraudulent.

One of the accounting rules is "Don't look for loopholes in the accounting rules." An accountant has an obligation to follow the intention of the rules in addition to the actual rules. By that standard, Lehman's use of Repo 105 is clear accounting fraud. The Repo 105 trades had no other purpose than to manipulate the leverage ratio published in the earnings statement.

The purpose of the lawyers' report was "Who might be liable, if Lehman's creditors want to sue for fraud/negligence?" Lehman's management might be sued by the bankruptcy creditors. Lehman's auditors Ernst & Young might be sued. They probably will get off with at most a slap on the wrist, unlike Arthur Anderson.

Ernst & Young executives will probably use "We're stupid!" as a defense. That might be accepted. If you're a professional, "I'm stupid!" should never be a valid defense. Unfortunately, that isn't the way corrupt State law works.

Ironically, Lehman's board of directors gets off scot free. Lehman's management never told them about Repo 105! Also, Delaware law gives the Board of Directors nearly absolute immunity!

That's the reason most corporations incorporate in Delaware. Delaware law is very favorable to the corporation's management. Due to some bizarre legal loophole, Delaware law protects the executives, even when the corporation does business in other states. As another example, Delaware law favors executives, when they enact a "poison pill" provision to protect themselves from a hostile takeover.

The Repo 105 transactions were conducted through a UK subsidiary. An accountant in the UK had previously issued an opinion allowing this Repo 105 treatment, albeit not on this large a scale.

Lehman executives hired several law firms to discuss Repo 105. All of them refused to issue an opinion letter, saying that Repo 105 is legal in the USA. That is surprising, since lawyers will usually do anything for a paycheck.

Let me review this point for emphasis. LEHMAN'S EXECUTIVES HIRED THE MOST DISHONEST LAWYERS IN THE USA, REGARDING REPO 105. THE MOST DISHONEST LAWYERS IN THE USA ALL SAID "SORRY, REPO 105 IS ILLEGAL!"

Thus, Lehman executives did all their Repo 105 trades through a UK subsidiary. Assets were shifted to UK, solely for the purpose of Repo 105-ing them.

Repo trades do have a bona fide purpose. Suppose a bank needs to borrow a lot of money for a short period of time. Suppose you're buying mortgages, packaging them as bonds, and then selling them. You need to borrow a lot of money for a short period of time, between when you buy the mortgages and when you sell them as bonds.

A repo trade enables the bank to borrow a lot of money briefly, putting other assets as collateral without selling them.

Here's how an honest repo trade works (ignoring the fact that the US financial system is one big scam). Suppose you want to borrow $1B for a week. You have $1B of assets on your books. You don't want to sell them, because that would lead to transaction costs and capital gains taxes. (Alternatively, the assets aren't really worth $1B, but you're carrying them on your books for $1B.)

You sell the bonds for $1B and agree to buy them back in a week for $1.001B. This transaction has an implied interest rate of approximately 5.3%. Effectively, you have borrowed $1B for a week. The lender is willing to lend you the money, because he has $1B of bonds as collateral.

There's one further refinement. The bonds are usually worth more than the amount borrowed. If you borrow $1B, you need to put up $1.02B in collateral. This can be called "Repo 102". The collateral is 102% of the amount borrowed.

For a "Repo 105" trade, you put up $1.05B of collateral instead of $1.02B. Also, you pay a higher interest rate compared to a regular repo. The collateral rate is 105% for bonds, 108% for equities.

If you make a "Repo 105" (bonds) or "Repo 108" (equities) trade, then the UK accounting rule says you may count it as a sale instead of as a repo. This means the trade is reported as a sale instead of as a repo (borrowing). This creates the false impression that Lehman had deleveraged. The obligation to repurchase the bond in a week is not disclosed.

Lehman had sold $1.05B of bonds for $1B. Instead of claiming the $50M loss, they created a phony derivative asset of $50M, representing the obligation to repurchase the $1.05B of bonds for $1B in a week.

There was not even a footnote mentioning the use of Repo 105. Someone who read Lehman's financial statements would have been totally fooled. There was no evidence of the Repo 105 gimmick.

Would a Lehman investor/creditor have wanted to know about Repo 105? Would a bank regulator have wanted to know about Repo 105? Definitely. Therefore, Lehman executives committed accounting fraud.

Lehman used $50B of "Repo 105" trades to fudge their leverage ratio. Someone else said "That's the same amount that Bernard Madoff stole!" Lehman executives committed accounting fraud on the same scale as Bernard Madoff! Because Lehman executives lied about their leverage ratio, they kept their high credit rating. They were able to borrow more money than they would have otherwise.

For a bank, keeping a high credit rating is *VERY* important. Suppose you have 30x leverage and you borrow at 4% to buy bonds yielding 5%. This is profitable. Suppose your credit rating is lowered, and now you have to pay 5% when you borrow. Your business is no longer profitable. The Federal Reserve credit monopoly and negative real interest rates encourage accounting fraud.

Lehman executives knew they were committing fraud. Lehman's COO Bart McDade said:

I am very aware . . . it is another drug we r on. (p. 742)

There are a whole bunch of quotes in that report by Lehman executives. They knew they were doing something dishonest.

For Repo 105/108, there is a rule that says the underlying bonds/equities must be liquid. Lehman almost definitely ignored that rule. If the underlying bonds were liquid, then Lehman could have sold the bonds outright and genuinely deleveraged.

Suppose a bond has a book value of $1B but a fair market value of only $50M. If Lehman executives sell it via a Repo 105 trade, it looks like they sold the $50M bond for $1B. Repo 105 trades were used to move illiquid assets off Lehman's balance sheet, at a phony sale price.

The traders at Lehman who executed the Repo 105 trades knew it was a fraud. The Repo 105 trades were a worse deal for Lehman than regular repos. The traders were annoyed that they were forced to make money-losing trades.

Anyone at Lehman who did a Repo 105 trade knew it was a fraud. More people than just the executives knew about the scam. Via limited liability incorporation, most of those people are protected from personal accountability. Without limited liability incorporation, everyone at Lehman who handled a Repo 105 trade would be partially responsible for the fraud. Limited liability incorporation encourages dishonest behavior.

If you have a job, and your boss demands you commit fraud, you should be partially responsible. That isn't the way insane State law works. According to natural law, everyone is individually responsible for what they do.

Limited liability incorporation gave Lehman executives an incentive to commit fraud. They loaded up on leverage, gambling that the recession would be short and mild. If that occurred, they would have made huge profits. Via limited liability incorporation, Lehman executives had a free put option to declare bankruptcy and cheat their creditors. If their gamble was right, Lehman executives would keep the profits. When they were wrong, they merely declared bankruptcy.

LBHI’s Global Consolidated Balance Sheet, for example, showed securities inventory levels pre‐Repo 105 usage and with Repo 105, and contained columns for “Repo 105/108 added back” as well as balance sheet targets. (p. 864)

That's hilarious. Lehman was keeping two sets of books! There was a "with Repo 105" and a "without Repo 105" column in their statements. That's a clear tipoff that you're committing accounting fraud. You have one set of books that you disclose to the public. You have another set of books that you keep internally that show your real earnings.

Who were the counterparties for the Repo 105 trades? Anyone who did a Repo 105 trade with Lehman, should have figured out that someone at Lehman was committing accounting fraud.

For example, suppose a trader at Goldman Sachs did a Repo 105 trade with Lehman. This would be a tipoff to Goldman Sachs that Lehman was committing fraud. After making the Repo 105 trade, then other traders at Goldman Sachs could make bets that Lehman would go bankrupt soon.

If you make a trade whose sole purpose is fraudulent, *BOTH* parties of the trade should be held legally responsible. Whoever made the Repo 105 trades with Lehman should also be held partially accountable.

Even though the Repo 105 trades were fraudulent, as long as Lehman doesn't go broke within the next week, the Repo 105 counterparty makes a profit. The money market fund that famously "broke the buck" probably was stuck with a bunch of Lehman repos or short-term debt.

This Repo 105 gimmick shows one problem with traditional financial reporting. It would be more honest to require executives to provide a cashflow statement every day, rather than just a quarter-end snapshot. With computers, such disclosure is easily organized. Even then, there still would be loopholes.

Reform will not occur. Insiders make too much money off the way things are now. Insiders like the fact that they can play games with accounting statements. Almost everyone does it. Lehman and Enron crossed the line too far, got too greedy, and got caught.

No matter what rules you create, there will always be loopholes. The big problem is the Federal Reserve credit monopoly and limited liability incorporation.

The Federal Reserve keeps interest rates negative. The Fed Funds Rate is currently 0.25%, while true inflation is 20%-30% or more. This provides executives an incentive to borrow as much money as they can. Insiders have an incentive to lie on their accounting statements, so they can borrow more money.

Inflation makes borrowing profitable. Lehman executives made a big bet that the recession would be short and mild. If they were right, then they would have made huge profits, salaries, and bonuses. When they were wrong, they just declared bankruptcy.

Right now, banks are making huge profits via inflation and bailouts, while the rest of the economy is still stuck in a recession/depression. If Lehman could have survived until the next inflationary boom, they would have made huge profits.

Limited liability incorporation encourages fraud. It gives insiders a free put option to declare bankruptcy and cheat their creditors. It makes no difference if you go bankrupt with a net worth of -$1B or -$200B. If an executive sees that the corporation is almost broke, then the incentive is to load up on leverage rather than deleverage.

The two main evils are the central bank credit monopoly combined with limited liability incorporation. No matter what other reforms State comedians implement, those two lynchpins of fraud will not be touched.

There was another interesting bit. Lehman executives were asking "Are other banks doing this Repo 105 trick?" The presumption was that, if other banks were doing it, then it was OK. They knew that they were the only one abusing Repo 105.

Lehman went broke just before the Federal Reserve opened up its policy, regarding how banks can borrow. Some people say that Lehman was forced into bankruptcy just before the Federal Reserve changed its policy, so they wouldn't benefit.

Now, banks can move assets off-balance-sheet to the Federal Reserve. Instead of doing a Repo 105 trade via a UK subsidiary, banks can do a repo trade with the Federal Reserve. That's the reason there's a fuss about "the growing Federal Reserve balance sheet" or "The Federal Reserve should disclose how much it lent to whom!"

Large banks can now do, completely legally, what Lehman did with Repo 105. Large banks can repo assets to the Federal Reserve.

There were two big questions that report left unanswered:

• What bonds were the actual collateral for the Repo 105 trades? Were they really liquid? Were they illiquid bonds with book value much greater than fair market value?
  
• Who were the counterparties to the Repo 105 trades?

The main points of "Repo 105" are:

• Repo 105 is an accounting gimmick that Lehman executives used.
• Repo 105 fraud is the same as Enron's fraud. Sarbanes-Oxley and other reforms were completely useless.
• Lehman executives did $50B of Repo 105 trades. That's the same amount that Bernard Madoff stole.
• Because Lehman executives committed Repo 105 fraud, they were able to borrow more money than they would have otherwise.
• Lehman asked several law firms for a Repo 105 opinion letter. No lawyer in the USA was willing to give an opinion letter, certifying that Repo 105 was legal. Not even for a huge paycheck, was a US lawyer willing to write such a letter.
  
• All Repo 105 trades were done through a UK subsidiary.
• Repo 105 demands that the assets are liquid. Lehman executives almost definitely ignored this rule. If the underlying Repo 105 bonds were liquid, then Lehman could have sold them and genuinely deleveraged.
• Repo 105 trades had a higher collateral requirement and higher interest rate compared to a regular repo.
  
• Whoever did the Repo 105 trade with Lehman, knew that the trade was fraudulent.
• Everyone at Lehman who was involved with Repo 105 knew it was a fraud. A lot of people, and not just high-ranking executives, were in on the scam.
• Lehman kept two sets of books internally, one "with Repo 105" and one "without Repo 105".
• It is pointless to have bank regulators when executives can lie to the regulators.
• One of the accounting rules is "Don't look for loopholes."
• Lehman executives did not mention Repo 105 anywhere on their financial statements, not even in a footnote.
  
• The insiders who committed fraud at Lehman will probably get away with it.
• The Federal Reserve credit monopoly and negative real interest rates provide an incentive to borrow as much money as you can.
• Lehman executives bet that the recession would be mild. If they were right, they would have made huge salaries and bonuses. When they were wrong, they cheated their creditors by filing for bankruptcy.
• Limited liability incorporation gives an incentive to lie about earnings. You can always declare bankruptcy and cheat your creditors.
• Due to recent Federal Reserve policy changes, banks can now repo underwater or underperforming assets to the Federal Reserve, rather than doing the Repo 105 trick.
• Inflation fuels illegitimate bank profits. Inflation enables the banksters to earn huge profits, without doing any real work.
  
• The US financial system is one big scam.

As long as the Federal Reserve and limited liability incorporation exist, fraud like this will occur. It's very predictable! There's a huge accounting scandal every few years!

The negative hype regarding Lehman is itself an evil fnord. Lehman executives were dishonest and got caught. Therefore, everyone who is dishonest gets caught. That is false. Lehman was an extreme example of abuse. Other insiders do the same thing, albeit on a smaller scale.

There are no loopholes or laws to patch a fundamentally corrupt system. No matter what new rule you make, there always will be a loophole.

The only way to protect people from fraud is a really free market.

Even if you had no relationship with Lehman, you still paid the cost of the bankruptcy. The cost of Lehman's bailout was paid by everyone else via inflation. For example, AIG/Goldman were bailed out due to bad bets on Lehman credit default swaps. Creditors with good connections, like Goldman Sachs, made a bundle. Other creditors may have been cheated.

The only way to protect yourself from theft via inflation is to buy gold and silver and take physical delivery. In order to fully boycott the Federal Reserve, you must also boycott income taxes. Agorism is the best strategy for fighting evil like Lehman's executives.

Don't bother writing your Congressman. They don't care what you think. The financial industry bailout passed even though a vast majority opposed it. The system is completely broken and must be replaced.

I'm not just whining, because I'm also proposing a reasonable alternative and how to get there from the current mess. Agorism and really free markets are the only philosophy of economics and politics that makes sense, once you really think about it. It's a hard mental shift for most people, due to their pro-State brainwashing.