This morning's key headlines from GenerationalDynamics.com

• Kofi Annan asks for Iran's help in Syria
• Jordan opens new refugee camps for Syrians
• Lebanon sends troop reinforcements to the border with Syria
• Eurozone approves bank bailout for Spain
• Peregrine Financial Group -- Another case of massive fraud
• John Kenneth Galbraith and Embezzlement

Kofi Annan asks for Iran's help in Syria

Kofi Annan, left, shakes hands with secretary of Iran's Supreme National Security Council, Saeed Jalili, on Tuesday (AP)

Like Cain, the homeless wanderer of the Old Testament, Kofi Annan travels from country to country, trying to find a home for one hopeless "Syria Peace Plan" after another, but always failing. According to Annan, after speaking to Iran's Foreign Minister Ali Akbar Salehi:

"Iran has a role to play. And my presence here explains that I believe in that. I have received encouragement and cooperation with the minister and the [Iranian] government."

As one commentator has pointed out, Annan was UN's director of peacekeeping operations in 1994, and did nothing with respect to the Rwandan genocide except talk. When the Darfur genocide broke out in 2003, Annan was U.N. Secretary-General, but did nothing but talk. With regard to the current situation in Syria, Annan says one inane thing after another. As I've pointed out many times, he's actually responsible increasing the violence in Syria, because his inanities provide a cover for Syria's Bashar al-Assad regime, with the full cooperation and enthusiatic support of Iran and Russia, to massacre, maim, and slaughter innocent Sunni Arabs.

Now Annan is in Iran, saying he's received "encouragement and cooperation" from the government. I mean really, is this guy for real? But it's good news for al-Assad, who can continue his extermination policy another day, with the world's attention focused not on him, but on the moronic statements of Kofi Annan. Daily Star (Beirut) and Jerusalem Post

Jordan opens new refugee camps for Syrians

Because of a quadrupling in size in recent weeks of the stream of refugees from Syria and pouring into Jordan, Jordan has opened a new refugee camp, and is preparing two new camps, if they become necessary. Jordan has been reluctant to open refugee camps for Syrians, for fear of incurring the wrath of Bashar al-Assad, and up till now has used housing compounds in border communities. But with the flow of refugees growing into a flood, the pressure has increased. AP and Jordan Times

Lebanon sends troop reinforcements to the border with Syria

As we've been reporting, residents of northern Lebanon are fleeing their villages "in a state of panic and fear" because of artillery shells being fired from Syria, killing people. As a result, Lebanon is sending troop reinforcements to the border with Syria, and expects the operation to take 7-10 days to complete. Hurriyet (Turkey)

Eurozone approves bank bailout for Spain

The EuroGroup of eurozone finance ministers, working into the wee hours of Tuesday morning, approved a package of up to €100 billion for Spanish banks, with €30 billion of urgent funding approved for the end of the month. Yesterday we referenced a Reuters article that quoted an European Commission official who said that even though the bailout money was being loaned to Spain's banks, the government of Spain would have to provide a "sovereign guarnatee" that the money would be repaid, effectively putting the loan on Spain's books. However, on Tuesday, Eurogroup chairman Jean-Claude Juncker, who is not always known for his veracity, denied that there was any sovereign guarantee requirement. So this question is still open. The new bailout is supposed to give Spain's economy a chance to grow, but with Spain's huge real estate bubble having years of collapse ahead, the economy will not grow. Telegraph

Peregrine Financial Group -- Another case of massive fraud

Some $200 million dollars in customer funds cannot be found among the assets of futures brokerage Peregrine Financial Group Inc., according to an investigation that was triggered when the firm's found, Russell Wasendorf Sr., attempted suicide. According to the investigation, Peregrine "may have falsified bank records." Bloomberg

John Kenneth Galbraith and Embezzlement

As these stories keep pouring out, one after the other, of fraud and embezzlement, I'd like to repeat something that I first quoted in 2007. Here, John Kenneth Galbraith described what happened -- and what will happen again -- in his 1954 book, The Great Crash - 1929, as follows:

"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in -- or more precisely not in -- the country's businesses and banks. This inventory -- it should perhaps be called the bezzle -- amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.

The stock market boom and the ensuing crash caused a traumatic exaggeration of these normal relationships. To the normal needs for money, for home, family and dissipation, was added, during the boom, the new and overwhelming requirement for funds to play the market or to meet margin calls. Money was exceptionally plentiful. People were also exceptionally trusting. A bank president who was himself trusting Kreuger, Hopson, and Insull was obviously unlikely to suspect his lifelong friend the cashier. In the late twenties the bezzle grew apace.

Just as the boom accelerated the rate of growth, so the crash enormously advanced the rate of discovery. Within a few days, something close to universal trust turned into something akin to universal suspicion. Audits were ordered. Strained or preoccupied behavior was noticed. Most important, the collapse in stock values made irredeemable the position of the employee who had embezzled to play the market. He now confessed.

After the first week or so of the crash, reports of defaulting employees were a daily occurrence. They were far more common than the suicides. On some days comparatively brief accounts occupied a column or more in the Times. The amounts were large and small, and they were reported from far and wide. ...

Each week during the autumn more such unfortunates were reveled in their misery. Most of them were small men who had taken a flier in the market and then become more deeply involved. Later they had more impressive companions. It was the crash, and the subsequent ruthless contraction of values which, in the end, exposed the speculation by Kreuger, Hopson, and Insull with the moey of other people. Should the American economy ever achieve permanent full employment and prosperity, firms should look well to their auditors. One of the uses of depression is the exposure of what auditors fail to find. Bagehot once observed: "Every great crisis reveals the excessive speculations of many houses which no one before suspected." [pp. 132-35]

Galbraith's point was that there were many criminal activities going on before the 1929 crash, but nobody cared, as long as everyone was making money. But once the crash occurred, any irregularity was viewed with suspicion and led to an investigation. These investigations turned up many cases of embezzlement -- people who had "temporarily borrowed" money that wasn't theirs to invest in the stock market, and then got caught in the crash.

That's exactly what's happening today, and it's far from over.