Loot (1845) 1 a: to plunder... b: to rob especially on a large scale and usually by... corruption 2: to seize and carry away... to engage in robbing or plundering...
When Bernie Madoff realized the jig was up last November, he tried to quickly distribute the last of the till to his friends and family. There was about $300 million left at the time.
When Merrill Lynch went down last year they rushed through bonuses to the executives so that money would not flow through to Bank of America, Merrill's soon-to-be-owner.
When AIG realized there would be no way around going back to the government for more bailout money, they eased up on the negotiations with CDS counterparties, paying out more tax-payer dollars than necessary simply "to make friends and influence people".
The list of recent looting goes on and on. The basic idea is that when "the collective group" is in distress, individuals without morals will steal from "the group" for the benefit of themselves and their friends and family members.
There is no difference from a moral perspective between this and the looting during the LA riots in South Central LA.
Let's say I am the trusted manager of a Circuit City store that is going out of business in one month. I have received a liquidation plan from corporate headquarters that authorizes me to mark down all the inventory by 10% for the first week, 25% for the second week, 50% for the third week, and anything that is left can be marked down 75% for the final week of liquidation. So as the manager, I move a few 52" LCD TV's off the showroom floor and put them back in the warehouse. I keep them there until the final week when my friends come down and buy them at 75% off. I did not do anything I was not technically authorized to do. But did I do something wrong? Am I somehow less of a criminal than the South Central looters?
A Central Bank is the printer and controller of that countries' currency. And that priveledge is given by the confidence of the people of that country or group of countries. The gold held by a CB is the treasure of the people that gave that bank the right to print currency. In the case of the ECB (which recently sold some gold), the gold it holds was deposited by the countries which joined the union. And in the case of the IMF (which is planning a sale), the gold it holds was also deposited by member countries.
In the old days of the gold standard, when a certain currency was convertible to gold, that CB's gold could leave the vaults in exchange for the currency by anyone who held that currency. This kept the CB's honest and it kept their printing in check.
Today there is no such control and even though gold is still held by the CB's, it is also traded as a commodity on the open market. Under this setup, gold should flow INTO the CB's on behalf of the people. The CB's can actually print money to buy gold as a commodity on the open market now. There should be inflow, to protect that CB (and its people) against an unknown future. So why the outflow?
When CB's like the ECB or the BOE sell gold now, they say they are doing so "to raise funds". But why? They are the priveleged few who can actually PRINT new funds. So they say they are selling the gold to raise "foreign funds". But that is what currency swaps are for. If I am Argentina doing a currency swap with China, we both print the funds and exchange them at the current exchange rate. So with the ability to print unlimited paper, why would I part with the one FINITE asset that I hold? Is it an admission of the weakness of the paper I make? As a central banker, I am like that Circuit City manager, only my store is the CB. So am I distributing "the good stuff" to friends? Why? What's going on here?
Please give me your thoughts in the comments.