When Bad Government Policy Leads to Bad Results, the Government Manipulates the Data … Instead of Changing Policy

Bad government policy has created a years-long unemployment problem. But instead of fixing the problem, the government is trying to paper over it. We’ve known for a long time that the Bureau of Labor Statistics fudges the numbers to make unemployment look lower than it is really is. BLS itself has admitted that its “adjustments” skew unemployment data during recessions. Indeed, the former head of the BLS recently said BLS statistics are B.S. … and that unemployment is much higher than the government is letting on.

The Bureau of Economic Analysis is revising 84 years of economic history … which will make the economy magically look better.

The U.S. and British governments encouraged interest rate manipulation. And central banks have been directly manipulating interest rates for hundreds of years.

Government agencies have helped banks manipulate commodities prices for decades.

The government twisted statistics and intentionally lied when it pretended that the banks it was bailing out were solvent

The government has long ignored energy and food prices when reporting on inflation.

Fraud is Wall Street’s business model, which is – unfortunately – being supported by the government.

The government helped cover up the crimes of the big banks, used claims of national security to keep everything in the dark, and changed basic rules and definitions to allow the game to continue. See this, this, this and this.

It is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud.Here are just a few of many potential examples:

The SEC has shredded financial documents for decades, to help cover up financial shenanigans

The government-sponsored rating agencies committed massive fraud (and see this)

The Treasury department allowed banks to “cook their books”

Business Week wrote on May 23, 2006:

“President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.”

Regulators knew of and allowed the use of debt-hiding accounting tricks by the big banks

Tim Geithner was complicit in Lehman’s accounting fraud, (and see this), and pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: “Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth”

The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted

Freddie and Fannie helped to create the epidemic of mortgage fraud

The government knew about mortgage fraud a long time ago. For example, the FBI warned of an “epidemic” of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud. Indeed, Alan Greenspan took the position that fraud could never happen

Bernanke might have broken the law by letting unemployment rise in order to keep inflation low

Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not

Arguably, both the Bush and Obama administrations broke the law by refusing to close insolvent banks

Congress may have covered up illegal tax breaks for the big banks

Of course, deregulation by Larry Summers, Robert Rubin, Phil Gramm and many other high-level politicians and regulators also helped to grease the skids for fraud

Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith’s, definitive study of the Great Depression, The Great Crash, 1929:

The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases, the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the whole economy. In 2004, the FBI warned publicly of “an epidemic of mortgage fraud.” But the government did nothing, and less than nothing, delivering instead low interest rates, deregulation and clear signals that laws would not be enforced. The signals were not subtle: on one occasion the director of the Office of Thrift Supervision came to a conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting …. This was fraud, perpetrated in the first instance by the government on the population, and by the rich on the poor. *** The government that permits this to happen is complicit in a vast crime.

Manipulating Bad Nuclear Facts

When the Fukushima nuclear plant melted down, the government didn’t announce that these antiquated nuclear designs which were common throughout the United States were dangerous and needed to be scrapped. Instead, American (and Canadian) authorities virtually stopped monitoring airborn radiation, and are not testing fish for radiation.

The U.S. government increased allowable radiation levels so that we could be exposed to radiation.

The U.S. government pressured the Japanese government to re-start its nuclear program, and is allowing Fukushima seafood to be sold in the U.S.

And U.S. nuclear regulators actually weakened safety standards for U.S. nuclear reactors after the Fukushima disaster.

And the U.S. government has been covering up nuclear meltdowns for 50 years.

Manipulating Oil Spill Info

When BP – through criminal negligence – blew out the Deepwater Horizon oil well, the government helped cover it up (and here).

As just one example, the government approved the massive use of a highly-toxic dispersant to temporarily hide the oil.

The government also changed the testing standards for seafood to pretend that higher levels of toxic PAHs in our food was business-as-usual.

Manipulating Data on Other Environmental Issues

The Bush administration covered up the health risks to New Orleans residents associated with polluted water from hurricane Katrina, and FEMA covered up the cancer risk from the toxic trailers which it provided to refugees of the hurricane.

The Centers for Disease Control – the lead agency tasked with addressing disease in America – covered up lead poisoning in children in the Washington, D.C. area.

The government also underplayed the huge Tennessee coal ash spill. As the New York Times noted in 2008:

A coal ash spill in eastern Tennessee that experts were already calling the largest environmental disaster of its kind in the United States is more than three times as large as initially estimated, according to an updated survey by the Tennessee Valley Authority.*** The amount now said to have been spilled is larger than the amount the authority initially said was in the pond, 2.6 million cubic yards.

(The former head of the National Mine Health and Safety Academy says that the government whitewashed the whole coal ash investigation.)

And the government allegedly ordered Manhattan Project scientists to whitewash the toxicity of flouride (flouride is a byproduct in the production of weapons-grade plutonium and uranium). As Project Censored noted in 1999:

Recently declassified government documents have shed new light on the decades-old debate over the fluoridation of drinking water, and have added to a growing body of scientific evidence concerning the health effects of fluoride. Much of the original evidence about fluoride, which suggested it was safe for human consumption in low doses, was actually generated by “Manhattan Project” scientists in the 1940s. As it turns out, these officials were ordered by government powers to provide information that would be “useful in litigation” and that would obfuscate its improper handling and disposal. The once top-secret documents, say the authors, reveal that vast quantities of fluoride, one of the most toxic substances known, were required for the production of weapons-grade plutonium and uranium. As a result, fluoride soon became the leading health hazard to bomb program workers and surrounding communities. Studies commissioned after chemical mishaps by the medical division of the “Manhattan Project” document highly controversial findings. For instance, toxic accidents in the vicinity of fluoride-producing facilities like the one near Lower Penns Neck, New Jersey, left crops poisoned or blighted, and humans and livestock sick. Symptoms noted in the findings included extreme joint stiffness, uncontrollable vomiting and diarrhea, severe headaches, and death. These and other facts from the secret documents directly contradict the findings concurrently published in scientific journals which praised the positive effects of fluoride. Regional environmental fluoride releases in the northeast United States also resulted in several legal suits against the government by farmers after the end of World War II, according to Griffiths and Bryson. Military and public health officials feared legal victories would snowball, opening the door to further suits which might have kept the bomb program from continuing to use fluoride. With the Cold War underway, the New Jersey lawsuits proved to be a roadblock to America’s already full-scale production of atomic weapons. Officials were subsequently ordered to protect the interests of the government. After the war, … the dissemination of misinformation continued.

Manipulating Food Safety Data

The government’s response to the outbreak of mad cow disease was simple: it stopped testing for mad cow, and prevented cattle ranchers and meat processors from voluntarily testing their own cows (and see this and this)

The EPA just raised the allowable amount of a dangerous pesticide by 3,000% … pretending that it won’t have adverse health effects.

In response to new studies showing the substantial dangers of genetically modified foods, the government passed legislation more or less pushing it onto our plates.

Manipulating Health Safety Data

When one of the most respected radiologists in America – the former head of the radiology department at Yale University – attempted to blow the whistle on the fact that the FDA had approved a medical device manufactured by General Electric because it put out massive amounts of radiation, the FDA installed spyware to record his private emails and surfing activities (including installing cameras to snap pictures of his screen), and then used the information to smear him and other whistleblowers.

After drug companies were busted for using fraudulent data for drug approval, the FDA allowed the potentially dangerous drugs to stay on the market.

Manipulating Metrics for War

The U.S. has drastically underestimated the amount of innocent civilians killed by drone, and repeatedly announces that it has just killed some terrorist that it had previously reported killing.

When USA Today reporters busted the Pentagon for illegally targeting Americans with propaganda, the Pentagon launched a smear campaign against the reporters.

When the American government got caught assassinating innocent civilians, it changed its definition of “enemy combatants” to include all young men – between the ages of say 15 and 35 – who happen to be in battle zones.

When it got busted killing kids with drones, it changed the definition again to include kids as “enemy combatants”.

After the U.S. congratulated the government of Yemen for killing Al Qaeda terrorists within its country – but a Yemeni journalist photographed the scene, discovering that the U.S. had fired a cruise missile to make the kill, and that children and other shepards will killed, instead of Al Qaeda – president Obama insisted that the journalist be indefinitely detained to shut him up (he was also tortured).

Al Qaeda was labeled as the main enemy in the War on Terror. But now Al Qaeda and other terrorist groups have somehow become our close allies. They have somehow become the “good terrorists” which we are using to fight our enemies.

Indeed, groups are listed as official “terrorist” organizations and then de-listed to suit the convenience and ambitions of particular U.S. political leaders.

Indeed, the U.S. literally labels others as terrorists when they do exactly what we do (although no one does it to the extent we do).

The Core Problem

Corruption at the top leads to lawlessness by the people.

But – while conservatives blame the government for our problems, and liberals blame big corporations – the core problem is the malignant, synergistic intertwining between the two.