The Greatest Debt Doping Scandal in History

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The Games of the XXXI Olympiad commence in three days’ time.

As a sporting tragic, there was a time when I’d look forward to the Olympics…could not wait for them.

The lead up to the Rio Games has left me somewhat lukewarm. The enthusiasm of yesteryear is just not there.

Apparently the good citizens of Brazil are even less enthusiastic about the games.

According to the New York Times: ‘Two weeks from the Olympics, nearly two out of three Brazilians believe that hosting the Games will do the country more harm than good, according to an opinion poll released Tuesday as worries over crime and budget cuts in the country continued to grow.

The same article made mention of protesting police officers greeting visitors at the airport with signs that read ‘Welcome to Hell’.

As if the multitude of local problems — the Zika virus, raw sewage, unfinished works, rampant crime, and corrupt officials — were not enough to contend with, there is the Russian doping scandal:

The independent investigation helmed by Canadian professor Richard McLaren focuses on Russian athletes and their test samples from the 2014 Winter Olympics in Sochi. The report was commissioned after a CBS “60 Minutes” expose in which Russian athletes Vitaly Stepanova and his wife Yuliyana admitted to taking performance enhancing drugs (PEDs).

The report alleges the Moscow laboratory operated within a state-dictated failsafe system and that the Sochi laboratory was guilty of sample-swapping to allow doping athletes to compete at the Sochi Games. This was all spearheaded by the Ministry of Sport, which worked with the Russian Federal Security Service (FSB) to protect Russia’s best athletes.

The findings were not limited to the Russian track and field team, which was already banned from competing at the Rio Games. There were positive tests in every sport, including wrestling, weightlifting, cycling, and swimming. According to the report, 54 percent of athletes had a positive sample replaced by order of the Russian Ministry of Sport. This in sharp contrast to only 12 percent of foreign athletes.

— FloTrack, 18 July 2016

When faced with the overwhelming evidence of systemic abuse by the Russians, what did the IOC do? Not our problem. We’ll let the individual sports decide.

Social media lit up. Sports people — past and present — blasted the IOC for lacking the courage to take decisive action by banning the entire Russian Olympic team and delegation.

The outrage in the UK media has been palpable. People are disappointed, angry, peed off at the failure of officialdom to show leadership and discipline.

Brazil is corrupt. The IOC is corrupt. Sport is corrupt.

This is the message — consciously or subconsciously — that’s being fed into society. The perceived purity of the John Landy, Herb Elliot, Dawn Fraser, Shane Gould, and Kieren Perkins eras has long gone.

Tokyo is hosting the 2020 Olympics. The Japan Times on 31 July 2016: ‘Tokyo residents were voting Sunday for a new governor, who will have to manage problem-plagued preparations for the 2020 Olympics after financial scandals forced the last two incumbents to quit.

The results are in. Tokyo elected Yuriko Koike — the first female governor — to clean up the mess.

Good luck with that.


My view is this: Different city, same s**t.

By the way, why is it that two flat-broke countries (and getting more indebted by the day) have been awarded with the rights to host the most extravagant and expensive sporting event in the world? Surely IOC officials are not receiving any financial inducements to sway their votes? (He asks with tongue firmly planted in cheek.)

In reality, the Olympics are a reflection of how far society has drifted from the relative innocence of a generation or two ago.

Lord Acton (1834–1902) famously said, ‘Power tends to corrupt and absolute power corrupts absolutely.

Money buys power. Control the money, and you control the power.

The financial behemoths are well aware of this fact.

Mervyn King, former governor of the Bank of England, has quietly become senior adviser to Citigroup.

Tony Blair — Former British Prime Minister (1997–2007). Now senior adviser, JP Morgan. Mr Blair’s £2m-a-year deal involves giving the bank “global strategic advice.

Philipp Hildebrand. Formerly head of Swiss central bank the SNB (2010–2012). Now vice-chairman at BlackRock, a full-time role.

Gordon Brown. Former British Prime Minister (2007-2010). Now advisory board member, Pimco.

Financial Times, 30 July 2016

The list of ‘financial jobs for the political boys’ goes on and on — Bernanke, Greenspan, Geithner (former US Treasury Secretary) et al.

Having former high profile political insiders on the payroll keeps the power in the control of those with the money.

In 1971, Richard Nixon cut the system free from its moorings with the removal of the gold standard. From what I’ve read, Nixon may have ‘fired the bullet’, but the ‘bullet’ was put in the gun at the urging of his ‘advisers’. Were these ‘advisers’ banking insiders and/or Federal Reserve officials with delusions of grandeur on how to fashion an economy?

Whatever the background, the abolition of the gold standard heralded in the era of the investment banks and unfettered greed.

The sure and steady virtuous cycle of savings, investment, production, income and consumption was replaced with a much shorter and faster route to consumption…debt accumulation, and plenty of it.

The injection of debt into the system created gold medal winning economic performances. Year after year (albeit with the occasional yearly setback) the global economy was expected to punch out at least 4% growth. Anything less…and the call went up for an injection of more ‘juice’.

The central bank scientists in cahoots with the money drug dealers have rigged the economic game for decades. They’ve turned the global economy into a steroidal freak in need of more and more debt just to remain upright. Growth performances are now a distant memory. The economy’s internal organs are so badly damaged that standing still these days is in itself an accomplishment.

Desperate to feed the addiction to rekindle the economy’s glory days, central banks are plumbing the depths of dependency with negative interest rates… we’ll pay you to take the drugs.

While we shake our heads over the audacity of Russia’s state sponsored doping scandal, we should also take a few steps back and look at the officially sanctioned systemic use of the economic performance-enhancing drug of debt.

The sustained and increasing use of this drug has endangered the health of both the global economy and our financial system. Yet, the drug abuse continues with the endorsement of every official monetary and economic agency. Why is that?

While we may lampoon the so-called economic stewards as clueless, in my opinion, their decisions are based on corruption and greed.

When, not if, the system suffers some form of cardiac arrest from its decades-long habit, who will really suffer?

The people who believed the economic scientists and financial drug pushers, that’s who.

When the system implodes, those who built their future on the promises of the past may well carry placards declaring ‘Welcome to Hell’.

This is the greatest doping scandal in history, and there’s hardly a peep about it in the press.

IOC is an appropriate acronym for the society that’s been created over the past 40-years: Indebted, Overvalued, Corrupt.


Vern Gowdie,
For The Daily Reckoning

The injection of debt into the system created gold medal winning economic performances. Year after year (albeit with the occasional yearly setback) the global economy was expected to punch out at least 4% growth.

Vern Gowdie

Vern Gowdie

Vern Gowdie has been involved in financial planning in Australia since 1986. In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners. His previous firm, Gowdie Financial Planning, was recognized in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top 5 financial planning firms in Australia. He is a feature contributing editor to The Daily Reckoning and is Founder and Chairman of the Gowdie Family Wealth advisory service and editor of the Gowdie Letter To follow Vern's financial world view more closely you can you can subscribe to The Daily Reckoning for free here.

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