It has long been whispered in stock-brokerage circles in Washington DC and on Wall Street that the failure of the Bay of Pigs invasion in April of 1961 was the work of the Allan Dulles, head of the CIA, and brother of former Secretary of State John Foster Dulles, whom President Kennedy replaced with John McCone, marking the very contentious end of Dulles's reign. On the day of the Bay of Pigs invasion Allan Dulles mysteriously abruptly went on vacation and flew off to Puerto Rico to make a speech to a CIA proprietary called the Young Presidents Organization, on the weekend of April 15 and 16, 1961, ignoring his prior plan to authorize the vital air attack at the Cuban military air base.
With no air support the Bay of Pigs operation failed. Did Dulles prefer to have the Bay of Pigs fail to embarrass the new President? The real reason for the bumbling of the Bay of Pigs, brokers claimed, was that Dulles and other operatives "in the know" had huge short positions on the Cuban-American Sugar Company, Domino Sugar stock. At the time Cuban-American Sugar owned the majority of sugar plantations in Cuba. The stock price collapsed, and Cuban-American Sugar was nationalized by Castro. America Sugar eventually moved on to South America, where the CIA overthrow of native sugar farmers insured American Sugar's success, and soaring stock price.
In 1789, Alexander Hamilton, the first U.S. Secretary of the Treasury, planned to pay off both the Federal Revolutionary War debt and the debt obligations of the individual states, at 100%. The announced deal was preceded by huge insider trading in federal and state government bonds. Congressmen were among the chief speculators who traded the bonds, having advanced knowledge of the intent of the Treasury. Speculators sent people in stagecoaches all over the country to buy up all the federal and state bonds at a fraction of their face value.
Crony capitalism is of course not new, but it has become the dominant cancerous force in Washington DC.
Ben Franklin, always a practical observer of human nature, expressed his worry to the Constitutional Convention in 1787. He warned that when you give politicians the opportunity to "do good and do well," you are asking for trouble. He stated, "There are two passions which have a powerful influence in the affairs of men. These are ambition and avarice; the love of power and the love of money. Place before the eyes of such men a post of honor that shall at the same time be a place of profit, and they will move heaven and earth to obtain the profit."
Politicians learned very early on that they could not grant themselves rich salaries. In the spring of 1816, Congress voted themselves a compensation bill that doubled their salary. There was a massive populist revolt like the "great Leviathan bursting into action." There was outrage throughout the country. As a result more than half of the members of Congress refused to run for reelection and only 15 who voted for a raise and who did run for reelection managed to maintain their seats. When the new Congress convened, it quickly repealed the act.
Crony capitalism has long ago united politicians with businessmen who function as political entrepreneurs. Political contacts, inside information, financial connections, and influence have replaced fair and open competition. Instead, access to government officials who hand out grants, special tax breaks, and subsidies have become the corrupt path to wealth creation.
In 1966 Henry Manner made public in his classic book, Insider Trading and the Stock Market, that "the federal government is the largest producer of information capable of having a substantial effect on stock market prices."
Secretary of Defense and former congressman from Illinois, Donald Rumsfeld, in the Bush administration was the largest shareholder and sat on the board of Gilead Science and made more than 18 million in royalties and rising stock prices in 2004, when Gilead was "awarded" with the Tamiflu vaccine, the only vaccine in the world that could cure the H5N1 avian flu scare.
Gilead Science, most likely one of many CIA proprietary "cut outs," is today being considered as a company that can produce a vaccine for the coronavirus, as the world population scrambles in fear to find a drug with the capacity to cure.
This treasonous and traitorous phenomenon is a parallel with the corruption of Halliburton Corporation, whose former CEO and majority stockholder was former congressman, Vice-President Dick Cheney. Cheney's Halliburton received billions of dollars worth of US construction contracts in the illegal war in Iraq and elsewhere.
Once a congressman establishes a blind trust, the rules of the Senate do not require you to disclose your assets each year. It creates less transparency than before. The SEC insider-trading antifraud laws under Rule 10b-5 of the Securities Exchange Act have been unjustly interpreted in such a way that the laws don't apply to Congress, because legislators are not fiduciaries or client representatives and therefore not required to keep secret information in the sale of securities secret. The SEC is after all funded by Congress.
Britain's Financial Services Act of 1986 extended the scope of the Insider Dealing Act to include all public servants, including political or government information received by all royal and civil servants, and by all outside individuals receiving information from these servants.
We must apply these standards to the United States, and make it criminally clear to hedge funds that if they receive information from government employees and trade on it, they will be liable and imprisoned.
The STOCK ACT of April 4, 2012, the Stop Trading on Congressional Knowledge legislation, was to finally put an end to congressional insider trading. Soon after the legislation was passed and signed by President Obama, on a Friday night, the STOCK ACT was quietly amended. The amended STOCK ACT would exempt the 28,000 staff members of Congress from insider trading. The members of the Senate voted for its passage in 10 seconds, and members of the House approved it in 14 seconds. The rationale for the amendment allowing staffers to trade was for "reasons of National security."
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