Some news days it’s hard to know what’s the sideshow and what’s the truly big story. I guess, this is such a day.
Inflation came in lower. So that’s good, but now we have a new financial super-crook and that’s not good. I’m going to go with inflation as the really big story because presumably all Americans benefited, right? Inflation is the cruelest tax of all and it did come down a bit and real wages did go up for a change after falling for 18 straight months.
Now, even though 7.1% inflation is still a big problem and the Fed’s tight money is going to continue and the recession threat looms large, at least folks got some relief on prices. Nonetheless, I think that’s probably the positive story.
On the other hand, a lot of people lost a lot of money because of a crook named Sam Bankman-Fried, who was supposed to testify before the House today, but instead got busted with 8 counts of fraud and conspiracy and was taken into custody by the authorities in the Bahamas.
SAM BANKMAN-FRIED, FTX FOUNDER, CHARGED WITH FRAUD, MONEY LAUNDERING
By the way, there’s a hint of why this is a terrible story right there — the Bahamas. Not that I have anything against the Bahamas, mind you, but these crypto funds should be based in the U.S., where they might be subjected to some kind of intelligent regulation — some kind.
We will talk to SEC commissioner Hester Peirce a bit later in the show about that side of the story, but the kid was a crook. He’s sort of a junior Bernard Madoff. He will be extradited to the U.S. in order to face all these charges — like conspiracy to defraud the U.S., wire fraud, securities fraud, money laundering and various other conspiracies.
And, by the way, it was a family criminal enterprise because his parents, both of whom taught at the fancy Stanford Law School — isn’t that always the case nowadays — well they were in on all of his crooked dealings and apparently helped him set up a political fundraising operation that would somehow leverage contributions from various Silicon Valley fat cats and then channel them into various lobbying efforts to Washington politicians, essentially in order to avoid regulation.
The bulk of the money went to progressive Democrats. This wasn’t even an old-fashioned pump and dump fraud. This was a simple case of raising money in order to bribe Washington not to regulate SBF’s crypto exchange, which was nothing more than a front group for his hedge fund — which donated to Democrats and Republicans alike. I mean, most of the money went to left-wing Dems, but to be sure, some pretty decent sums went to Republicans and now, the question is whether the authorities will claw back this bribery money.
Criminal lawsuits brought by the U.S. attorney in the southern district of New York and then civil charges brought by the SEC and the Commodity Futures Trading Commission. I may add, neither of which those two know anything about crypto, but that’s a subject of yet another riff.
So, in summary, this SBF kid is a crook. So are his parents. So are his lieutenants and they basically took other people’s money and tried to bribe politicians to look the other way.
Am I being too hard here? Too blunt? Well, maybe! Time will tell. But I think I’ve fairly presented you with at least the outline of this story.
But you know what? From what I gather, most of the so-called victims here were very wealthy and famous people. Now, not everyone, I know there were some middle-class folks who got killed, I get that—but back to the improving inflation news, really, all Americans did better. If only the politicians could figure out a way to keep inflation coming down and that’s a very big question, isn’t it?
Now Wall Street obsesses about the Federal Reserve and the Fed’s big-time money printing and zero interest rates, which have recently turned into big-time money crunching and interest rate hiking, the Fed is certainly culpable.
Then we have the Congress and the White House and the threat of a bunch of lame-ducks running amok with your taxpayer money.
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The two biggest ducks are retirees Richard Shelby and Patrick Leahy and they want to spend their keisters off. They’re talking about $1.9 trillion of spending in an omnibus bill ginned up by a few people in a dark smoky room, where no one will really know what hit them until the committee print is published and even then we may not know.
And they might spend another couple of hundred billion dollars more. Now, unfortunately this kind of rancid behavior is legal. Because, after all, they’re lawmakers. Unlike the horrible behavior of SBF, who is not a lawmaker and he is going to jail for a very, very, long time.
So, folks, I’ll just end where I began: I’m not really sure what the sideshow is or the real story here. I kind of hate to say it, but that’s life.
This article is adapted from Larry Kudlow’s opening commentary on the December 13, 2022, edition of “Kudlow.”