Trump is Goldman’s Golden Goose

By William K. Black
August 23, 2016     Kansas City, MO

The reporting of Susanne Craig of the New York Times and David Cay Johnston, who won a Pulitzer Prize for his reporting when he was with that paper, and has recently published The Making of Donald Trump, combine to allow us to draw a critical insight about Trump and Goldman Sachs.  From Susanne Craig, we learn:

[A]n office building on Avenue of the Americas in Manhattan, of which Mr. Trump is part owner, carries a $950 million loan. Among the lenders: the Bank of China, one of the largest banks in a country that Mr. Trump has railed against as an economic foe of the United States, and Goldman Sachs, a financial institution he has said controls Hillary Clinton, the Democratic nominee, after it paid her $675,000 in speaking fees.

Goldman Sachs is infamous for two things, both of them relevant here.  Its senior managers encourage the most incestuous of relationships between the government and the firm.  The revolving door is an exclusive penthouse elevator that rockets Goldman executives back and forth from positions of immense power in government and the firm.  As the then President of the Federal Reserve Bank of Kansas City (now, Deputy Chair of the FDIC) told a small group of us several years ago: “For the last 20 years we’ve been holding an auction to fill the position of U.S. Treasury Secretary – and of late Goldman Sachs has been winning.”

Continue reading

Minsky Meets Brazil Part II

By Felipe Rezende

This series will discuss at length the underlying forces behind Brazil’s current crisis.

Building on Keynes’ investment theory of the cycle, Minsky’s work suggests that the structure the economy becomes more fragile over a period of tranquility and prosperity. That is, endogenous processes breed financial and economic instability. While Minsky adopted Keynes’ “investment theory of the cycle”, he added a financial theory of investment, with a detailed exposition of the theory in his book John Maynard Keynes (1975), which put at the forefront the interrelation between investment decisions and the financial structure designed to allow economic units to take positions in assets by issuing debt. In this regard, debt accumulation is at the core of Minsky’s instability theory. His financial theory of investment incorporated Kalecki’s approach in which aggregate profits are created, mostly, by the autonomous components of demand (Minsky 1986, 1989). One can add to this analysis Godley’s three balances approach, which explores the interlinkages between the government sector, the private sector, and the external sector. This means that a surplus must be matched by an equal deficit and flows accumulate to stocks.

Continue reading

Covering Up Whistleblowers’ Disclosures Should Be Illegal

By William K. Black
August 22, 2016     Kansas City, MO

James Stewart has written a column about Roger Ailes’ alleged sexual predation on female Fox News personnel over the course of many years.  He entitled it “Secrecy of Settlements at Fox News Hid Bad Behavior.”  Ailes was the CEO of Fox News.  I write to show how two concepts Stewart did not employ would aid the analysis and to suggest a fundamental change in the law that would make the world a far better place.

The two concepts I add to Stewart’s analysis are “control fraud” and whistleblowing.  Stewart’s column applies as its sole lens sexual harassment.  That is the obvious lens to employ and it is helpful.  By supplementing this lens, however, we can provide additional useful insights and frame generalized policies of broader applicability.

Continue reading

NEP’s Pavlina Tcherneva on RT’s Boom and Bust

NEP’s Pavlina Tcherneva appears on RT’s Boom and Bust with Ameera David and continues her conversation with RT-TV explaining how the Job Guarantee program delivers the economic benefits that the Basic Income proposal only promises. She appears at 12 min and 55 seconds. 

The CEO’s Great Advice About Whistleblowers Never Mentions Them

By William K. Black
August 22, 2016     Kansas City, MO

The New York Times has a columnist who interviews business leaders.  He interviewed, Bracken Darrell, Logitech’s CEO in a column entitled “Be Sure to Tell the Boss What’s Wrong.”  When we, the co-founders of Bank Whistleblowers United, here a phrase like that our ears perk up.  It is exactly the right message the CEO should send.  The people who most obviously take that message to heart, in the most difficult circumstances for the employee and where following the CEO’s advice is most vital to the firm, are whistleblowers.  Despite the title of the article, and the famous role that whistleblowers played in disclosing the frauds that drove the most recent financial crisis, however, the CEO never mentioned whistleblowers.  The entirety of the discussion of basis for the title of the article is shown below.

Continue reading

JMK Writings Project

jmkpProfessor Rod O”Donnell is currently engaged in preparing a major edition of the remaining unpublished writings of JM Keynes, of which there remains a HUGE quantity of valuable material scattered across many archives in several countries. Since standard sources of funds for this kind of research have dried up, he has turned to crowdfunding.

The CROWDFUNDING CAMPAIGN begins 11 OCTOBER 2016 on INDIEGOGO.

OVERALL AIM:  To complete the publication of ALL of Keynes’s unpublished writings of academic significance. Only about ONE THIRD were published in the Royal Economic Society edition. Continue reading

WSJ’s Top Reason to Defeat Hillary: She’s Against Rape

By William K. Black
August 15, 2016     Bloomington, MN

The Wall Street Journal’s Deputy Editor, Daniel Henninger, wrote an op ed dated August 10, 2016 designed to convince Republicans to hold their noses and vote for Donald Trump.  His means of attempting to convince them was conventional – play on their hate of Hillary Clinton.  Op eds need to be brief, so Henninger picked as his argument the single policy he felt would be most compelling to the paper’s readers.

It is a testament to how bizarre the WSJ editorial writers are and how bizarre they believe their readers are that Henninger chose as his most dreadful policy supported by Hillary that should enrage the paper’s readership – her opposition to rape.  The specific context was that she opposes the rape of coeds.

Continue reading

Is the euro a foreign currency for peripheral Eurozone (EZ) countries? – Part 2

By Ignacio Ramirez Cisneros

Some considerations on the IMF’s Independent Evaluation Office (IEO) latest assessment on the handling of the euro crisis.

Part II

If decisive large scale interventions on the part of the Eurosystem would have been enough to quell financial panic –along with the strategic functioning of the EZ large transactions payment platform, Target2, allowing capital repatriation by core EZ financial agents- the IMF should not have had a role in the crisis resolution process to begin with. The IMF is brought in when a country is in need of foreign reserves to bridge temporary difficulties in the balance of payments or when debt restructuring is imperative. The first case does not apply to any of the main three EZ countries that turned to the IMF for assistance, since the large majority of capital outflows were to EZ partners, and in any case almost all liabilities were euro denominated.  Continue reading

Is the euro a foreign currency for peripheral Eurozone (EZ) countries?

By Ignacio Ramirez Cisneros

Some considerations on the IMF’s Independent Evaluation Office (IEO) latest assessment on the handling of the euro crisis.

Part I

The most recent IEO assessment of the IMF’s role in the lending and structural adjustment programs in Greece, Ireland and Portugal (and Cyprus) makes reference to a past held belief within the IMF ‘that large current account imbalances were little cause for concern [for the IMF], and sudden stops could not happen within a currency union that issues a reserve currency’ (IEO 2016, 46). In the document, it is made clear that this understanding of EZ financial realities was mistaken given all the financial and economic turmoil since 2010.

Continue reading

Thomas Friedman Worships Lifetime Learning but Refuses to Learn

(4th column in my series on Friedman advising Hillary to Move Hard Right)
William K. Black
August 10, 2016     Bloomington, MN

Thomas Friedman has written two columns advising Hillary Clinton to win the election by adopting traditional Republican economic dogmas.  Friedman despairs that Hillary Clinton refrains from:

[T]elling people the hardest truth: that to be in the middle class, just working hard and playing by the rules doesn’t cut it anymore. To have a lifelong job, you need to be a lifelong learner, constantly raising your game.

Friedman has two big pieces of economic advice for Hillary – financial deregulation and ratifying the Trans-Pacific Partnership (TPP).  Friedman treats TPP as if the issue were “trade,” but as I explained earlier in this series, TPP is actually crafted by corporate elites to eviscerate effective financial, health, and safety regulation.  Trade is simply the pretext for TPP’s passage.

Continue reading