Daily Archives: December 2, 2014

The Answer to the Unemployment Problem Is More Jobs

By L. Randall Wray

Dean Baker, everyone’s favorite progressive economist (mine, too), has an interesting take on our unemployment problem.

Give more paid vacations.

The idea is that if all the employed work less, employers will need to hire the unemployed to produce what the already employed won’t be producing while sunning themselves on Florida’s beaches.

Look, I’m all for shorter work weeks. It is ridiculous that labor’s push somehow got stuck a century ago at the 40 hour work week in the USA. Employed Americans work more hours per year than just about any other workforce on the planet.

Continue reading

Enough Money

By J.D. Alt

Money causes labor to do useful things, and goods and services to be exchanged between people, thereby enabling people in general—both individually and collectively—to obtain what they need. In order for this process to occur in an optimal way—that is, in order for the maximum number of people to obtain what they need, individually and collectively, it seems clear that two basic conditions must be met: (1) there needs to be enough money to pay people to create all the goods and services they need, and (2) this adequate supply of money needs to be in the hands of people who are actually able and motivated to spend it for that purpose.

By “enough money” I mean this: Is there enough money to pay people to build all the things and provide all the services they need both individually and collectively—without there being too MUCH money (which could cause prices to escalate)? If there isn’t enough money, it is likely there will be things we need but which we cannot have—not for the lack of available and willing labor to provide those things, but for lack of money with which to pay that labor. In this case that labor not only remains wastefully unemployed, but we, collectively and individually, go without something which we otherwise could have, and might possibly—even desperately—need. (It is also possible, of course, that we cannot have the things we need because the required natural resources—energy, materials, chemicals and minerals etc.—are not available. This, however, is not a “money problem” but a resource problem.)

Continue reading

The Wall Street Journal Still Refuses to Grasp Accounting Control Fraud via Appraisal Fraud

By William K. Black
Kansas City, MO: December 2, 2014

The Financial Crisis Inquiry Commission (FCIC) report described one of three epidemics of accounting control fraud that drove the financial crisis in these terms.

“Some real estate appraisers had also been expressing concerns for years. From 2000 to 2007, a coalition of appraisal organizations circulated and ultimately delivered to Washington officials a public petition; signed by 11,000 appraisers and including the name and address of each, it charged that lenders were pressuring appraisers to place artificially high prices on properties. According to the petition, lenders were ‘blacklisting honest appraisers’ and instead assigning business only to appraisers who would hit the desired price targets” [FCIC 2011: 18].

The FCIC Report then documents scale of this epidemic of loan origination fraud.

“One 2003 survey found that 55% of the appraisers had felt pressed to inflate the value of homes; by 2006, this had climbed to 90%. The pressure came most frequently from the mortgage brokers, but appraisers reported it from real estate agents, lenders, and in many cases borrowers themselves. Most often, refusal to raise the appraisal meant losing the client” [FCIC 2011: 91].

Continue reading