Another Benefit of Being Too Big to Fail

If nothing else, these WikiLeaks cables give you pause. Yesterday afternoon, we learned the government’s been up to no good in the “front that shall not be named” across the US’s southern border with Mexico.

After the president claimed on April 16, 2009, that “more than 90% of the guns recovered in Mexico come from the United States,” we find out now how true that statement was.

But rather than coming “from gun shops that line our border,” as the president had characterized the transactions, it turned out the Mexican government bought $177 million in US-made weapons in 2009 – more than was the total purchases made by Iraq or Afghanistan.

Mexican cops and soldiers then sold or gave the weapons to the drug gangs they are supposed to be used against. “US law enforcement has fair reason to worry a number of weapons simply ‘disappear,’” reads one of cables, dated November 2009.

“The violence has been exported to Mexico,” was a common refrain we heard on last month’s exploratory mission to Colombia.

Some US weapons follow a more direct route from the US government to the drug gangs.

In February, it emerged that the Bureau of Alcohol, Tobacco, Firearms, and Explosives was funneling weapons through US gun dealers to the drug gangs in Mexico – a sting operation. Roughly 2,500 weapons made their way into Mexico as part of “Project Gunrunner.”

The sting backfired.

Two of the guns were used in a shootout on the Arizona border last December, killing a US Border Patrol agent. Serial numbers reveal the guns used were from the Project Gunrunner crop.

Word comes too, that back when Wachovia was still an independent bank, it was laundering money for the Mexican drug gangs – $378 billion worth moved through Mexican currency exchanges.

The transactions were made public last year when Wells Fargo – which ended up hitched to Wachovia in one of Hank Paulson’s shotgun marriages during the Panic of 2008 – was hauled into federal court.

“Wachovia’s blatant disregard for our banking laws,” said federal prosecutor Jeffrey Sloman, “gave international cocaine cartels a virtual carte blanche to finance their operations.”

So the Feds threw the book at Wells and its directors went to jail like regular drug users… right? Not so much. The case was dismissed after Wachovia paid $160 million in fines and penalties. Must be nice to belong to the “too big to fail” club. Membership has its privileges.

We suspect there’s much more to this story worth keeping an eye on. By the grace of WikiLeaks and other leveling technologies, the unraveling of the security apparatus of the empire…and the financial chicanery therein…will likely be a recurring theme of these pages in the near and distant future.

Just a guess…

Addison Wiggin
for The Daily Reckoning