Monthly Archives: June 2014

The Criminology of the “Sure Thing” Portrayed as “Risk”

Posted on June 9, 2014 by William Black | 4 comments

John Coates, a former derivatives trader at Goldman Sachs is now a researcher. He wrote a column in the New York Times entitled “The Biology of Risk” that I hope will be widely read.

In this column I explain why his most important conclusions cannot follow logically from his own description of his research finding. While he relies on blood tests, his account of trading when it goes horribly wrong is curiously bloodless and disingenuous. As a Goldman and Deutsche Bank refugee he knows better, but he presents a sanitized version of the crisis portraying the controlling officers and traders at the largest banks as helpless victims of raging hormones rather than fraud perpetrators and facilitators.

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4 Comments

Posted in William K. Black

Tagged accounting control fraud, criminogenic environment, John Coates, risk, white-collar criminology

Required: A Complete Pivot on Climate and Energy

Posted on June 9, 2014 by Michael Hoexter | 5 comments

By Michael Hoexter

With the release of Obama’s much heralded EPA regulations on coal fired power plants we are encountering once again the ongoing tragedy of low expectations with regard to climate action. While compared to other Presidents, and there have been only three in the era of pressure for climate action, Obama’s proposal that coal-fired power plants reduce their carbon dioxide emissions by 30% from 2005 levels by 2030 is the most ambitious climate rule to be implemented, even the relative journalistic “friend” of the Obama Administration, Ezra Klein pointed out, this is a less ambitious path to cut carbon than that proposed by the Republican McCain/Palin candidacy in 2008. Of course, there is a difference between campaign proposals and a President setting into motion energy and climate regulations but the degree to which expectations have been lowered even in the course of 6 years (despite the appearance of obvious changes in the climate itself) is frightening. In the best case scenario, the ruling establishes a precedent that may be reinforced in the future.

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5 Comments

Posted in Michael Hoexter

Tagged carbon emissions, climate change, climate policy

An Offer of Assistance to Senator Claire McCaskill in her Investigation of GM

Posted on June 9, 2014 by William Black | 2 comments

By William K. Black

“‘I won’t be letting G.M. leadership, or federal regulators, escape accountability for these tragedies,’ Senator Claire McCaskill, the Missouri Democrat who is chairwoman of a Senate subcommittee on consumer protection, said in a statement.”

Senator McCaskill’s statement makes the correct points. GM’s leadership and the federal regulators have, to date, “escape[d] accountability.” I want to extend an offer of assistance to Senator McCaskill. The key to understanding GM’s otherwise incomprehensible actions is to understand the perverse effects of the compensation system that GM’s leadership designed. This is one of our areas of expertise.

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2 Comments

Posted in William K. Black

Tagged GM, McCaskill, Valukas, white-collar criminology

GM’s Cartoon Version of von Hayek’s “Road to Serfdom” – on the 70th Anniversary of D-Day

Posted on June 7, 2014 by William Black | 4 comments

By William K. Black

The web has provided another proof of our family rule that it is impossible to compete with unintentional self-parody. The day after GM’s preposterous congressional testimony and its release of the unintentionally hilarious Valukas report detailing GM’s criminal indifference to human health and life a libertarian blogger featured GM’s cartoon version of von Hayek’s “Road to Serfdom” to warn us of the fact that democratic government invariably leads to serfdom.

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Posted in William K. Black

Tagged criminogenic, GM, Road to Serfdom, von Hayek

The Reactionary University Critiqued by a Reactionary who Ignores Reactionary Economists

Posted on June 6, 2014 by Devin Smith | 4 comments

By William K. Black

Victor Davis Hanson begins an article with an interesting title: “America’s Medieval Universities.” His fundamental critique of the universities is:

“Employment rates for college graduates are dismal. Aggregate student debt is staggering. But university administrative salaries are soaring. The campus climate of tolerance has utterly disappeared. Only the hard sciences and graduate schools have salvaged American universities’ international reputations.

For over two centuries, our superb system of American public and private higher education kept pace with radically changing times and so ensured our prosperity and reinforced democratic pluralism.

But a funny thing has happened on the way to the 21st century. Colleges that were once our most enlightened and tolerant institutions became America’s dinosaurs.

Start with ossified institutions. Tenure may have been a good idea in the last century to ensure faculty members free expression. But such a spoils system now encourages the opposite result of protecting monotonies of thought.”

Some of these statements are accurate, though Hanson (a recovering classicist at Hoover) provides no logical basis for blaming the universities and tenure for the faults.

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4 Comments

Posted in William K. Black

Tagged higher education, reactionary economics, Victor Hanson

Wall Street Crime and Misdeeds

Posted on June 6, 2014 by William Black | 1 comment

NEP’s Bill Black appeared at the Unstoppable Right/Left Convergence event in Washington D.C. on May 27, 2014. He talked about Wall Street Crime and Misdeeds.

1 Comment

Posted in William K. Black

Tagged accounting control fraud, banksters, criminogenic environment

Valukas Assumes GM’s Reported Quality Was Real despite 13.8 Million Recalls in Five Months

Posted on June 6, 2014 by William Black | 6 comments

By William K. Black

I just posted an article about the ludicrous excuse that Mary Barra, GM’s CEO, offered in her congressional testimony for GM’s lengthy refusal to correct a design defect it knew was killing and maiming people.

The defective design caused GM cars, without warning, to suddenly lose electrical power essential to the driver’s ability to control the car and for the air bags to function. The car became an unguided missile and simultaneously lost the protective device that was most critical to safety in such circumstances. The design defect, therefore, endangered not only GM customers but also anyone in the vicinity when the GM car lost electrical power.

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6 Comments

Posted in William K. Black

Tagged Barra, criminogenic, GM, Valukas

How Institutional Defects Get Ignored: The GM – and Lehman Reports by Valukas

Posted on June 5, 2014 by William Black | 4 comments

By William K. Black

The beleaguered profession of law has one lucrative growth area – preparing reports for a corporation on the misdeeds of the corporation. One of the leaders in this burgeoning field is one of the Nation’s top white-collar defense firms – Jenner & Black. Its head, Anton Valukas, is now famous for the “Valukas” reports for Lehman and GM. I testified at the same House hearing on Lehman’s failure with Valukas. Valukas famously suggested there could be grounds for criminal prosecutions of Lehman’s use of an accounting device designed to deceive investors and creditors about the (crippling) extent of its debt. Attorney General Holder and a senior SEC (anti) enforcement leader combined to allow Lehman’s officers commit this variant of accounting control fraud with impunity. (This is one the events that sparked the recent long-time SEC enforcement attorney’s evisceration of the SEC at his retirement dinner.)

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4 Comments

Posted in William K. Black

Tagged Barra, GM, Valukas

The Tories Refuse to Take Responsibility for the EU “Fault Lines” They Decry

Posted on June 5, 2014 by William Black | 1 comment

By William K. Black

The Tory insider and journalist Matthew D’Ancona has written a remarkably disingenuous op ed in the New York Times entitled “Europe’s Dangerous New Fault Line.”

The setting for the op ed is three related crises that D’Ancona’s dogmas have helped create (and a fourth one that is likely in the process of being created). D’Ancona, of course, ignores causation and his responsibility for the policies that caused each of the crises. The three crises are the Great Recession, the gratuitous second recession (Second Great Depression in the case of Spain, Greece, and Italy), and the rise of fascist and racist parties in the EU. The fourth crisis that may be developing is the troika’s austerity policies forcing several EU nations back into a third recession.

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Posted in William K. Black

Tagged austerity, D'Ancona, tories, troika

Where Do the Troika, WSJ & NYT Think Deflation Comes From?

Posted on June 4, 2014 by William Black | 5 comments

By William K. Black

If the troika (the European Commission, ECB, and IMF) taught sex education students would believe that storks brought children, that sex had nothing to do with pregnancy, that confident women never got pregnant, and that women should be forced to lose weight when they became pregnant. The Wall Street Journal and the New York Times would repeat these myths as science. The NYT would employ one of the world’s top gynecologists (Dr. Krugman). Dr. Krugman would debunk these myths nearly every week – and neither the troika nor the reporters for the NYT and the WSJ would ever listen to him.

The last several days have led to a flurry of WSJ and NYT stories about “deflation.” I just posted critiques of some of the earlier stories here and here.

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