Wednesday, July 01, 2020

Even German regulators are useless

Following the discovery of fraud at the German payments processor Wirecard, the media are asking how German regulators can be so clueless. That is the wrong question. If anybody can make regulation work Germans, precise, efficient, un-corrupt and indomitable can do so. So, the problem must be, not that German regulators are inept, but that regulation as a whole cannot catch fraud. As 2008 proved, it cannot catch sophisticated cutting-edge scams, either. So wouldn’t we be better off without it?

Wirecard is a large German payments processor, founded around 2002 by Markus Braun, which went public in 2004 by reverse merger with a relic of the dot-com bubble. In the late 2000s it expanded into the Asia-Pacific region, developing a prepaid virtual credit card and later receiving investment from Softbank. With its combination of whizzy software and globalized payment, it appeared a typical product of the new millennium.

Then in June 2020 it was discovered that around $2 billion of cash stated on Wirecard’s balance sheet did not in fact exist. Banking relationships with Philippine banks that had been used to satisfy the auditors also did not exist, and documentation relating thereto appeared to have been forged. Braun has been arrested, and commentators are blaming German regulators for not spotting there was a problem. The blame game is made worse by the fact that German regulators had during 2019 investigated a short-seller of Wirecard shares and banned the practice – a common occurrence in that speculation-hostile jurisdiction.

On the whole, this is unfair. Regulation is largely a matter of ticking boxes, and German regulators are thus very good at it. If I were a consumer worried about the behavior of local companies (but not so much about the cost of their products and services), German regulators are the ones I would want to keep those companies in line. So, if even German regulators failed, the problem is likely to lie in the activities being regulated, not in the quality of the regulators.

This is not surprising. Auditors are happy to point out that they can rarely catch outright fraud and given that regulators rely on auditors for much of their information, it is unrealistic to expect regulators to catch it either. As the Wirecard case showed, fraudsters can design real-looking pieces of paper that justify claims of assets that do not in fact exist, and neither auditors nor regulators have the capability to detect forgeries in cases where no wrong-doing is initially alleged.

The same is also true of “financial engineering” scams, which were all too prevalent in 2006-07, and came to light in 2008-09. Regulators by and large are not the best and brightest in the financial arena – they are not paid to be. Hence traders and “quants” generally move much faster and can design novel products such as (in the 2000s) credit default swaps (CDS) and collateralized debt obligations (CDOs) the full characteristics of which are not apparent to regulators.

As became painfully obvious during the financial crisis, the full characteristics of many of those new products were not apparent to the people designing them, nor to their bosses who “signed off” on the transactions concerned. Wall Street’s risk management methodologies were completely inadequate to deal with the pathological risk profiles of the new products. The products’ inventors and their superiors were naturally drawn in by the products’ potential profits and incentivized through bonus systems not to worry too much about the risks. Thereby stemmed disaster, which regulators were unable to prevent – how could they have prevented it, when even internal bank executives were not aware of the perilous risk chasms involved?

In principle, I am thus prepared to claim that regulation of financial markets is futile, and should be removed, since no significant protection of consumers or business counterparties is achieved by it. That does not however mean that I rejoice in a return to the law of the jungle. Far from it. There are however policy and cultural changes that can be made that will civilize the market, reducing the level of fraud and malfeasance far more effectively than mere regulation.


Don't Give Up on SCOTUS 

After a couple of disappointing rulings — and punting nearly a dozen Second Amendment cases — some are wondering if it’s time to give up on the Supreme Court. This would be a huge mistake. The very nature of the High Court, designed by the Founders to be largely independent of political trends, means it takes a lot of time to turn things around.

Let’s review the state of the Court. We have four justices who can reliably be counted on to vote for a leftist outcome, four who can reliably be considered textualist and/or originalist (Neil Gorsuch’s recent travesty notwithstanding), and Chief Justice Roberts in the middle (though Roberts is more conservative as a swing vote than was Anthony Kennedy). Roberts, though, as chief justice, also tends to be very defensive of the Supreme Court as an institution. That has, ironically, frequently led to ill-conceived rulings that ended up damaging the Court’s reputation rather than strengthening it.

The fact is, the Supreme Court is one of many institutions unmoored from the Founders’ intent. The Left has consistently used it as a combination of a super-legislature and a quasi-constitutional convention. Reversing that has taken time, largely because nominees like Sandra Day O'Connor, David Souter, and Anthony Kennedy didn’t turn out so well for the Republican presidents who nominated them. They ended up as swing votes at best. Souter, a George H.W. Bush appointee, was a horrendous mistake.

Worse yet, a lot of talented textualists have thought twice about seeking a seat on the Court ever since Senate Democrats began turning Republican confirmations into a blood sport. Robert Bork, of course, is the foremost example of a superb jurist being defeated by grotesque and utterly dishonest leftist attacks. Even those who managed to weather the storm have ended up vilified and slandered. Ask Brett Kavanaugh.

One thing President Donald Trump has delivered on is his commitment to appoint good judges. But just as leftists escalated their attacks against past nominees, they have done so with many of Trump’s. Today, many leftists are open about their desire to pack the Court, supposedly in response to “politicization” of the Court. Of course, such a successful packing — which could be perpetrated only by a Democrat president and Senate — could reverse decisions like Citizens United, NIFLA v. Becerra, and Heller.

When it comes down to it, the real problem America faces isn’t that the conservative legal movement has failed. The problem is that its job remains half-done. The fact is, we need more originalist and textualist judges and justices on the bench. Over the short term, two such justices could replace Ruth Bader Ginsburg and Stephen Breyer, but to have a good chance of accomplishing that, President Trump must be reelected, and the Republicans need to hold the Senate.


YouTube Weaponizes ‘Hate Speech’ Policy to Censor Heritage Foundation Video

On Oct. 9, Walt Heyer took the stage at a Heritage Foundation event called the Summit on Protecting Children from Sexualization. His powerful testimony captivated the audience. It was so powerful, in fact, that YouTube, a subsidiary of Google, is now censoring his words.

The event, co-sponsored with the Family Policy Alliance, was a half-day of public panel discussions featuring a wide range of speakers. Parental rights groups from across the country attended. Their underlying goal: How to protect children from sexualization in culture, education, and health care.

Like all of its public programs, The Heritage Foundation posted the three-hour event video on YouTube (as well as on other video platforms). Months later, YouTube notified Heritage that it had removed the entire video for violating YouTube’s “hate speech” policy.

Heritage appealed the decision, spoke to Google and YouTube staff, and the video remains censored.

We vehemently disagree with YouTube’s decision to suppress valid medical information.

Not only is this decision anti-science, but it’s also part of an alarming trend of YouTube removing or blocking content that it doesn’t like.

Now Heritage has released a new video from Heyer, who speaks about YouTube’s censorship and why he stands by his words.

This isn’t our first encounter with YouTube censorship. In November, The Daily Signal revealed that YouTube was blocking a video of Dr. Michelle Cretella, a pediatrician who warned about giving puberty blockers to young children.

In the case of Heyer, his comments at the Summit on Protecting Children from Sexualization were meant to raise awareness about the harms of transgender ideology and the push for “gender-affirming treatments,” including hormones and surgeries.

Heyer, who formerly identified as transgender, has spoken at a number of Heritage events and is a well-known authority on the issue of gender dysphoria and transgender ideology.

During the panel, Heyer cited his study of psychology and stated, “This is a childhood development disorder.” He was referring to the phenomenon of gender dysphoria.

Heyer used the term “gender identity disorder,” which is a pre-2013 term for the classification of gender dysphoria as a mental disorder in the “Diagnostic and Statistical Manual of Mental Disorders” (DSM).

Heyer’s six words were about three seconds from an event video that ran more than three hours. YouTube censored all of it.

Google and YouTube representatives told us that Heyer’s words violated YouTube’s “hate speech” policy, which states:

Hate speech is not allowed on YouTube. We remove content promoting violence or hatred against individuals or groups based on any of the following attributes: Age, Caste, Disability, Ethnicity, Gender Identity and Expression, Nationality, Race, Immigration Status, Religion, Sex/Gender, Sexual Orientation, Victims of a major violent event and their kin, Veteran Status.” (Emphasis added.)

According to YouTube, Heyer’s words violate this part of the “hate speech” policy:

Claims that individuals or groups are physically or mentally inferior, deficient, or diseased based on any of the attributes noted above. This includes statements that one group is less than another, calling them less intelligent, less capable, or damaged.

My colleague Emilie Kao, who hosted the summit, told Google and YouTube representatives that gender dysphoria is classified in the 2013 “Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition,” as a mental disorder. The DSM-5 is “the taxonomic and diagnostic tool published by the American Psychiatric Association.”

Heyer’s comments about gender dysphoria also aren’t unique. This objective characterization of gender dysphoria has been used by the National Institutes of Health, the British Psychological Society, and many scientific and medical journals.

YouTube even has an uncensored video on its platform with a transgender activist doctor who gives a TED Talk about gender dysphoria using similar language. And YouTube hosts a video of someone who identifies as transgender saying the same thing.

“For an issue as complex as gender dysphoria, patients deserve to have viewpoints from all sides,” said Kao, who directs The Heritage Foundation’s DeVos Center for Religion and Civil Society. “YouTube continues to host videos that use the same terms that Walt Heyer did for gender dysphoria, but happen to support hormonal and surgical treatments. They have weaponized their ‘hate speech’ policy to shut out viewpoints they don’t agree with, and the biggest loser in all of this are patients suffering from gender dysphoria.”

As with Cretella’s video that was censored by YouTube, the video of Heyer is not hateful and simply tells the truth about a medical diagnosis of a mental disorder. The video provides both scientific and educational information to YouTube users who might be seeking commonsense responses to a culture that promotes radical and life-altering decisions for young children.

Unfortunately, this is yet another case of YouTube discriminating against an individual and organization because of a particular viewpoint on a subject, rather than because of the content itself. Heyer’s description of gender dysphoria or gender identity disorder is commonly used by medical professionals and organizations around the world.

Even though we presented YouTube with this information and made the case that there was no reason to remove this video, YouTube has chosen to censor it instead.


7 Statues the Left Really Should Want to Tear Down if They Don’t Want to Be Hypocrites

1. Che Guevara’s statue in Central Park
Sure, you’ve seen his likeness on t-shirts on the privileged youth of America, but did you know that there’s a statue of Che Guevara in Central Park? Allegedly, this statue is actually depicting a street performer portraying the mass murderer, but I’m personally skeptical of this explanation. Aside from the fact that Che Guevara was a racist and a mass murderer who put homosexuals in labor camps, Guevara literally wanted to bomb New York City with nuclear missiles. “If the missiles had remained (in Cuba), we would have used them against the very heart of the U.S., including New York City,” Guevara wrote in November 1962, in the aftermath of the Cuban Missile Crisis. “The victory of socialism is well worth millions of atomic victims,” he added.

2. Margaret Sanger’s bronze bust at the Smithsonian
Margaret Sanger, the founder of Planned Parenthood, might be the fairy godmother of the modern abortion movement, but her affiliation with the Ku Klux Klan, her support for the Nazis’ forced sterilization programs, and the racist motivations behind her abortion agenda should disqualify her from being revered by anybody. Yet, a bronze bust of Sanger remains on display at the Smithsonian in Washington, D.C. But don’t expect the statue to be taken down soon, as a past attempt by African American pastors to have the bust removed was denied. Sanger is the polar opposite of what black lives matter stands for.

3. Harvey Milk’s bust at San Francisco City Hall
Harvey Milk is a gay rights icon and one of the first openly gay elected officials in this country, but what the radical left doesn’t want you to know is that he was a sexual predator who liked to have sex with underage boys. Milk had a “relationship” with a 16-year-old runaway who had looked to Milk as a father figure. Milk’s biographer, Randy Shilts, bizarrely wrote of many of his encounters with teenagers as though there was nothing wrong with them: “Harvey always had a penchant for young waifs with substance abuse problems.”

Yet, he has a memorial bust standing in San Francisco’s city hall. Figure that out.

4. The Franklin Delano Roosevelt Memorial in D.C.
Another man whose mythical status has concealed the grim details of his presidency is Franklin Delano Roosevelt. His legacy somehow manages to remain unblemished in the eyes of the Democratic Party, despite his signing of Executive Order 9066, which resulted in the unconstitutional incarceration of Japanese, German, and Italian Americans into internment camps. The Franklin Delano Roosevelt Memorial was dedicated by President Clinton in 1997, and features a bronze statue of FDR. It seems way past time to take down the statue and repurpose this memorial.

5. Barack Obama’s statue in Puerto Rico
As celebrated as Barack Obama is by the left, Obama was a notorious race-baiting demagogue who relied on racial and class-based rhetoric to justify most of his actions, and whose presidency was horrible for minorities.

By the time his presidency was over, an overwhelming majority of Americans believed that race relations got worse after his election. Black Americans were hit hard by the recession that defined the early months of his first term, but were mostly left behind in the economic recovery that followed. In 2012, there were more young black Americans living in poverty than before his election. Yet, that same year, a statue was erected in Puerto Rico in his honor.

Then of course there’s the fact that Obama’s presidency was plagued by over thirty scandals—many of which would have seen another president impeached.

6. J. William Fulbright’s statue at the University of Arkansas
William Fulbright was a longtime U.S. senator whose name and likeness are practically synonymous with the University of Arkansas. A 7-foot tall statue on a huge granite base stands like a small tower at the university’s Old Main courtyard. Fulbright was a segregationist who signed the Southern Manifesto in opposition to the Supreme Court’s ruling in Brown v. Board of Education in 1954. He participated in the southern Democrats’ filibuster of the Civil Rights Act of 1964, and voted against the 1965 Voting Rights Act.

What’s his statue still doing there? 

7. Robert Byrd’s statue in the U.S. Capitol
The late Democratic Senator from West Virginia was an “exalted cyclops” in the Ku Klux Klan, yet remains a celebrated figure in the Democratic Party. Even after he allegedly renounced the Klan, he, like Fulbright, filibustered the Civil Rights Act of 1964, and voted against the confirmations of African American Supreme Court justices Thurgood Marshall and Clarence Thomas.

Nancy Pelosi made a big thing out of removing the paintings of three Democrat Confederate House Speakers, but a bronze statue of Robert Byrd still stands at the U.S. Capitol for some reason. In addition to the statue, there are many buildings, roads, and bridges named after the former Klansman.



Political correctness is most pervasive in universities and colleges but I rarely report the  incidents concerned here as I have a separate blog for educational matters.

American "liberals" often deny being Leftists and say that they are very different from the Communist rulers of  other countries.  The only real difference, however, is how much power they have.  In America, their power is limited by democracy.  To see what they WOULD be like with more power, look at where they ARE already  very powerful: in America's educational system -- particularly in the universities and colleges.  They show there the same respect for free-speech and political diversity that Stalin did:  None.  So look to the colleges to see  what the whole country would be like if "liberals" had their way.  It would be a dictatorship.

For more postings from me, see TONGUE-TIED, GREENIE WATCH,   EDUCATION WATCH INTERNATIONAL, AUSTRALIAN POLITICS and  DISSECTING LEFTISM.   My Home Pages are here or   here or   here.  Email me (John Ray) here.  Email me (John Ray) here

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