Barry Eichengreen’s and Tim Hatton’s January 1988 paper entitled “Interwar Unemployment in International Perspective” is a useful starting point for any effort to compare unemployment during the Great Depression and the Great Recession.
It is useful to begin by recognizing three related cautions that the authors make in that paper. First, the modern sense of the term “unemployment” (willing and able to work, but unable to find a job commensurate with the worker’s skills) was not common until the decades before the Great Depression. The prior assumption was that people were unemployed because they were lazy. There was little understanding of business cycles or inadequate demand, little sympathy for the unemployed, and no sense that business or government were primarily responsible for the the level of unemployment. This meant that keeping data on unemployment was rarely a concern of government. Data on unemployment in Europe was largely collected through industrial trade unions.
Some lies will not die. As I have demonstrated repeatedly, Third Way is Wall Street on the Potomac. It is funded secretly by Wall Street (it refuses to reveal its donors), it is openly run by Wall Street, and it lobbies endlessly for Wall Street. Third Way, like every Pete Peterson front group, is dedicated to shredding the safety net as its highest priority and throwing the Nation back into a gratuitous recession through self-destructive austerity. Continue reading →
Slate’s Matthew Yglesias writes columns about economics and finance. Yglesias has been writing about Cyprus, and my critiques of the policies he has been proposing are the subject of this column. The short version of the background one needs to understand the issues is that Cyprus is in a crisis and the EU is willing to bail out its collapsing banks only if Cyprus raises revenues. The EU is unwilling to make the banks’ sophisticated creditors – the bondholders – take any losses. The EU wanted the banks’ least sophisticated creditors – the depositors – to take losses, even if their deposits were small enough to be within the deposit insurance limit. The reality, which the EU wishes to obscure by calling its proposal a tax, is that that the EU was insisting that depositors no longer be fully protected from loss by government deposit insurance. The EU demand was made shortly after the EU and Cyprus’ government pledged that depositors under the insurance limit would suffer no losses. Continue reading →
On March 18, 2013, Lawrence O’Donnell stated that John Boehner’s admission that the U.S. faces no current debt crisis vindicated Paul Krugman, who O’Donnell described as “a lonely voice opposing austerity.” It is true that Krugman has been a strong opponent of austerity and has been proven correct. It is also true that MSNBC has frequently portrayed Krugman as an isolated, virtually sole opponent of austerity. Continue reading →
Many readers doubtless shared my doubt that the SEC was capable of exercising the critical self-examination and sense of humor about itself as a flawed institution that would make it capable of deliberate irony. When I accessed the Wall Street Journal’s home page I found the most delicious example of SEC (and WSJ) irony. The WSJ synopsis of its article on the SEC reads: “The SEC is filing significantly fewer civil fraud cases this year, as its efforts to punish misconduct related to the financial crisis start to ebb.”
“Start to ebb?” Is it only me, or have other readers missed the tidal bore of SEC enforcement cases “punishing” the “misconduct” of the most culpable, elite perpetrators of what, even conservative, finance scholars describe as “pervasive” accounting control fraud by our “most reputable banks”? Continue reading →
Everyone involved in financial regulation in modern times with any broad knowledge of the field will know of Bill Seidman, Chairman of the FDIC and the RTC. In 1989, the newly elected President Bush (the First) had a very good idea that became the Financial Institution Reform, Recovery and Enforcement Act of 1989 (FIRREA). FIRREA was one of the very unusual cases of enhancing financial regulation. It was prompted by the lessons we had learned in containing the Savings and Loan (S&L) Debacle. The original administration bill, however, had a very bad idea associated with the President’s chief of staff, John H. Sununu. Sununu is a brilliant guy – who wants you to know how much smarter he is than everybody else. His wiki biography page informs the reader that: Continue reading →
Slate’s John Dickerson leads its (and CBS’) political reportage so his specialty is in examining what is actually driving politicians’ policies and their efforts to “spin” those policies. Dickerson authored an article entitled “Why Obama’s Outreach to Republicans is All About Obama” (March 12, 2013).
Dickerson’s theme is one I have long emphasized: Obama is driven by concerns for his “legacy.” In more human terms, he is intensely vain about how history will perceive him. That is common, particularly in politicians’ final terms, and it can be a positive influence on policy. Dickerson also agrees with my warnings that Obama sees inflicting the “Grand Bargain” on the Nation as his means of achieving his legacy. Here is Dickerson’s introduction to his article. Continue reading →
By William K. Black
(Cross posted at Benzinga.com)
On March 11, 2013 the Los Angeles Times published a revealing article by E. Scott Reckard entitled: “In major policy shift, scores of FDIC settlements go unannounced.”
The article’s summary statement captures the theme nicely. “Since the mortgage meltdown, the FDIC has opted to settle cases while helping banks avoid bad press, rather than trumpeting punitive actions as a deterrent to others.” Continue reading →
REAL NEWS NETWORK — “Welcome back to the Real News Network. I’m Paul Jay in Baltimore. And welcome to this week’s edition of The Bill Black Financial and Fraud Report. [Professor] Black now joins us from Kansas City, Missouri. Bill’s an Associate Professor of Economics & Law at the University of Missouri-Kansas City. He’s a white-collar criminologist, a former financial regulator. He is the author of the book, The Best Way to Rob a Bank Is to Own One.
The latest effort to blame the Community Reinvestment Act (CRA) for the epidemic of accounting control fraud that drove the crisis is an econometric study by Sumit Agarwal, Efraim Benmelech, Nittai Bergman, and Amit Seru (“the authors”) (“ABBS 2012”). The study does not prove its thesis. The fact that the authors claim it proves causality makes obvious their controlling biases. Their title is “Did the Community Reinvestment Act (CRA) Lead to Risky Lending?” Their abstract answers: “Yes, it did.” They claim that their econometric study proves causality – which is impossible given their methodology. The authors were taught from their freshman years that an econometric study of this nature could not prove causality. Errors this basic and embarrassing demonstrate the crippling grip of the authors’ biases.