Category Archives: William K. Black

Deflation Dementia

By William K. Black

There must be some café in Brussels where all the most inept U.S. financial journalists meet with the troika-trolls to get their take on eurozone deflation.  Regular readers know that I am a strong critic of much of what passes for financial journalism, but there are special qualities to the U.S. coverage of the topic of eurozone deflation.  It is so homogenous and its logic is so internally inconsistent that it is breathtaking that so many journalists can repeat the same demented “logic” no matter how many times we explain that it is facially nonsensical.

The latest example of this genre is an AP story that has already been reproduced by elite media without even a scintilla of scrutiny.  Here’s how the AP begins its tale.

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An Economist in Ecuador Gives “William Blake” (sic) a Quiz

By William K. Black

Dr. Pablo Lucio Paredes, an economist from Ecuador who served as Planning Minister implementing the Washington Consensus in the disastrous run-up to Ecuador’s 1999 financial crisis has responded to a presentation I made at FLACSO in Quito, Ecuador by publicly announcing a quiz about economics he would like to administer to “William Blake.”  It is easy to spell foreign names incorrectly.  I am happy that the quality of my presentation reminded Paredes of William Blake.  Here is the link to my talk.

Paredes plans to be the grader of his quiz.  The tone of his “letter” to “Blake” makes it clear that he will declare I have failed his test.  He has already provided his conclusion: that I only presented because of my desire to issue “propaganda.”

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Hoy, a Newspaper in Ecuador, Wants Us to Know How Much It Despises the People of Ecuador

By William K. Black

One of the many pleasures that life offers is seeing your critics prove your point.  I got to see this dynamic first hand in Ecuador when I was interviewed by Roberto Aguilar, described as the “Content Editor” of HoyAguilar’s column, which seethes with hostility and disdain, unintentionally proves the thesis of my talk.

This first installment responding to Aguilar will discuss only the most important points.  I was confused by Aguilar’s column the first few times I read it.  His column is so angry that I wondered what terrible thing I said that caused him such pain.  I focused too much in these early readings on his ad hominem attacks on my looks, my inability to speak Spanish, and my non-elite nature because I teach in “Kansas” (sic) (“profesor de Kansas”).  Aguilar is unable to speak English and does not understand the U.S. system of federalism or he would not write that the University of Missouri is in the state of Kansas rather than the state of Missouri.

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NEP’s Bill Black speaks at FLACSO about Ecuador’s Miracle

For our Spanish speaking friends. While Bill Black speaks in English, the Spanish language translator tends to swamp Bill’s audio.

NEP’s Bill Black on GamaTV in Ecuador

NEP’s Bill Black is interviewed on GamaTV in Ecuador, 3/18/2014. Note: Interviewer speaks Spanish but a translator translates all questions to English.

The Most Dishonest Number in the World: LIBOR

By William K. Black

The FDIC has sued 16 of the largest banks in the world plus the British Bankers Association (BBA) alleging that they engaged in fraud and collusion to manipulate the London Inter-bank Offered Rate (LIBOR).  BBA called LIBOR “The most important number in the world.”

LIBOR is actually many numbers that depend on the currency and term (maturity) of the loan.  The collusion involved manipulating most of these rates.  A vast number of loans and derivatives are priced off of these “numbers.”  Estimates of the notional dollar amount of deals affected by the collusion range from $300-550 trillion in deals manipulated at any given time.  The LIBOR frauds began no later than 2005 and continued through 2011.

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Risk managers should learn from the mistakes of others

Bill Black has just received unsolicited praise for his book about control fraud theory from one of the most credible sources possible.  Vincent Kaminski was Enron’s (honest and exceptionally skilled) top risk officer.  His positive, but ultimately futile, role at Enron is discussed in all the best books about that classic example of an accounting control fraud.  Kaminski has just written that:

“There is one particular book I wish I had read in the early days of my business career, which would have saved me and the firms I worked for a lot of money.

The book, entitled The best way to rob a bank is to own one: how corporate executives and politicians looted the S&L industry, was written by William Black, associate professor of economics and law at the University of Missouri-Kansas City. It is based on his experience as a regulator of savings and loans (S&L) institutions during the S&L crisis of the 1980s and early 1990s. Within its pages, Black introduces the concept of ‘control fraud’ – effectively, a very simple recipe for great riches and limited civil and criminal liability.”

NEP thanks Energy.net and Risk.net for their kind permission to reprint the excerpt of Mr. Kaminksy’s post that was originally posted on 12 March 2014.

NEP’s Bill Black’s Presentation at UMKC’s TedX

In the spirit of ideas worth spreading, TEDx is a program of local, self-organized events that bring people together to share a TED-like experience. At a TEDx event, TEDTalks video and live speakers combine to spark deep discussion and connection in a small group. These local, self-organized events are branded TEDx, where x = independently organized TED event. The TED Conference provides general guidance for the TEDx program, but individual TEDx events are self-organized.* (*Subject to certain rules and regulations)

Trying to Hold a Serious Discussion about Ethics and Control Fraud with Deal Book via Twitter

By William K. Black

Twitter allows one to spread certain concise statements exceptionally quickly, but it is a vain effort to hold a serious and nuanced discussion via Twitter.  I offer my twitter exchanges with two of Deal Book’s financial reporters on the subject of the New York Times story discussing the Manhattan DA’s indictment of the former leaders of the failed Wall Street law firm Dewey & LeBoeuf as an example.

The indictment alleges facts that if true would demonstrate that they were running the firm as an accounting control fraud for several years before it collapsed.

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Deal Book Thinks Lawyers’ “Cardinal Rule” is to Advise CEOs how to Defraud with Impunity

By William K. Black
(Cross posted at Benzinga.com)

Overview and Background

The New York Times’ “Deal Book” continues its ethics-free treatment of the ethical collapse of the leaders of many of our most elite firms related to finance. Matthew Goldstein’s*  March 6, 2014 article is entitled “4 Accused in Law Firm Fraud Ignored a Maxim: Don’t Email.”

The article is about the indictment charging the leaders of one of finance’s leading law firms – Dewey & LeBoeuf – with securities fraud and larceny.

“The indictment paints a portrait of a law firm being run like a criminal enterprise. Mr. Vance said his office had already secured guilty pleas from seven other people who once worked for Dewey.”

Deal Book refuses to recognize control fraud even when the indictment describes a control fraud.  The indictment does not “paint a portrait of a law firm being run like a criminal enterprise.”  The indictment describes a criminal enterprise led by the partners controlling Dewey & LeBouef.  Deal Book still can’t bend its mind around the fact that seemingly legitimate firms make the best “weapons” for fraud.

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