StickWithANose

Since the president is expected to announce proposals for further economic stimulus that are too small and are unlikely to make it out of congress, it is important to remember that the looting of public treasuries by the same economic elite that created our current disaster in the first place continues unabated, and the usual suspects continue their attempts to hide the looting from the folks who are covering the bill. From Dr. Bill Black at Naked Capitalism

Kabul Bank is a typical example of a crude variant of control fraud at a major bank. Systems of crony capitalism, such as Afghanistan, inherently create an intensely “criminogenic” environment that produces epidemics of control fraud in the public, private, and non-profit sectors. Kabul Bank, like the (originally Pakistani) Bank of Credit and Commerce International (BCCI) – better known to regulators as the “Bank of Crooks and Criminals International” is reported to have helped everyone – corrupt Afghani government officials, corrupt business leaders, and the Taliban laundering its drug profits to, in part, buy weapons. Like BCCI, Kabul Bank’s managers’ reported frauds and self-dealing blew up the bank by causing massive losses. (If you believe that Kabul Bank is the only bank like this in Afghanistan you are consuming too much of Afghanistan’s leading export.)

The CIA tells us that Afghanistan raised roughly $1 billion in revenues last year and expended $3.3 billion. The shortfall, of course, was funded by us (the West, principally the U.S.). Indeed, that understates the case because Afghanistan raised the $1 billion in revenues primarily through customs duties and the U.S. and other Western nations indirectly or directly funded most of those customs duties.

We know certain facts. Afghanistan has no deposit insurance system. Its government has no financial responsibility for bailing out Kabul Bank’s depositors. Nevertheless, Afghanistan’s government has announced it will bail out the depositors. The funds to bail out the depositors will come – indirectly, but surely – largely from the United States Treasury. The New York Times’ initial article correctly stated that the U.S. will bail out Kabul Bank’s depositors. Someone obviously demanded a “correction.” Whoever that person was lied to the New York Times with the goal of getting the newspaper to lie to its readers. That lie succeeded. It is time for the New York Times to correct its correction and defeat this effort to mislead the public. The U.S. taxpayers are about to bail out the depositors of a fraudulent Afghan bank.