Geithner: “The End of Capitalism as We Know It”

By William K. Black
Bloomington, MN: February 10, 2015

Timothy Geithner’s penchant for speaking about things he does not care enough about to get right has led to him uttering many of the most cringe-worthy phrases about the economic crisis. The latest example is in David Axelrod’s new book about the Obama administration’s response to the financial crisis. This column was prompted by Sam Stein’s piece in the Huffington Post about Axelrod’s key points.

“Axelrod was ‘livid’ when he found out that Geithner and [Larry] Summers ‘had quietly lobbied’ against an amendment to the stimulus that would have restricted the payment of bonuses at firms that received bailout funds. Those bonuses had become a huge political sore point for the administration, but the finance guys argued that retroactive steps to claw back the money would have violated existing contracts.

‘This would be the end of capitalism as we know it’ Geithner told Axelrod, to which Axelrod says he responded: ‘I hate to break the news, Mr. Secretary, but capitalism isn’t trading very high right now.’”

Continue reading

Hensarling Loves Clinton’s Worst Deregulatory Blunders

By William K. Black
Bloomington, MN: February 9, 2015

This the second in a series of columns about Jeb Hensarling and Peter Wallison – the Nation’s chief myth makers about the causes of our financial crisis. Hensarling is the Chairman of the House Financial Services Committee and a leader in the effort to gut the Dodd-Frank Act’s few effective provisions. Wallison is one of the primary architects of the three “de’s” (deregulation, desupervision, and de facto decriminalization) that made the banking environment so criminogenic that it caused the fraud epidemics that hyper-inflated the bubble and drove the financial crisis.

In this second column I focus on Hensarling’s embrace of Bill Clinton and Al Gore’s worst anti-regulatory blunders. Their overall blunder was “Reinventing Government,” a broad assault on regulation and government effectiveness. In the financial sphere, Clinton and Gore embraced a fatal concept (the regulatory “race to the bottom”), two specific legislative acts of deregulation, and the growth of systemically dangerous institutions (SDIs) that were “too big to fail.” Each of these blunders contributed to the most recent crisis and unless corrected will contribute to future crises. Hensarling celebrates each of these anti-regulatory blunders as superb policies.

Continue reading

Hensarling: Regulations (and Condoms) Don’t Work if You Don’t Use Them

By William K. Black
Bloomington, MN: February 8, 2015

I am writing a series of columns about the Republican fantasy team of apologists for the elite banksters. Jeb Hensarling (R, TX), chair of the House banking committee that is taking the lead in trying to further deregulate banking and Peter Wallison, one of the chief architects of the most recent banking crisis, are teaming up to flog Wallison’s book. The book attempts to convince its readers that Wallison’s leadership of the effort to push the three “de’s” – deregulation, desupervision, and de facto decriminalization – played no role in creating the criminogenic environment that produced the three most destructive epidemics of financial fraud in history. Hensarling is hosting Wallison’s book unveiling.

They are the perfect fantasy team because they inhabit a fantasy world of their own construction that rests on a foundation of non-facts with appalling logical leaps. This first column begins with a brief introduction to how crazy Hensarling is – and recall that he is the Republican Party’s leader on financial issues. George Akerlof and Paul Romer, in their classic 1993 article “Looting: The Economic Underworld of Bankruptcy for Profit,” explained that the 1982 federal deregulation law was “bound to produce looting.”

Continue reading

Overcoming Systemic Voter Disempowerment with a System Changing Technology

By Nancy Bordier and Joseph M. Firestone

Most governments claim they are democracies because they hold popular elections. A large majority of their citizens who cast votes also think their governments are democracies.

But there are other criteria besides elections for determining whether or not a country has a functioning democracy — or a failing democracy.

A major criterion, possibly the most important one, is whether voters actually control elections and their legislative consequences.

– Can voters decide who runs for office and set the priorities for the legislation their elected representatives pass if they are elected?

– Can voters freely run their own candidates? Or must they vote for candidates run by intermediaries like political parties or special interests?

– Do institutions like the U.S. electoral college and election authorities place limitations on voters’ ability to run their own candidates by imposing requirements voters find it difficult or impossible to fulfill, such as collecting massive numbers of signatures, paying unaffordable fees, etc.?

Continue reading

Oral Testimony of William K. Black

Note: This oral testimony was delivered on February 5, 2015 in Dublin, Ireland before the Oireachtas’ Joint Committee of Inquiry into the Banking Crisis.  These are my prepared remarks.  My actual oral testimony differed considerably.  A transcript is available from the Inquiry, as is complete video.

To:       Joint Committee of Inquiry into the Banking Crisis
From:   William K. Black
Date:     February 3, 2015

Oral Testimony of William K. Black


Thank you for the invitation to assist Ireland as you face among the most important questions Ireland and many other nations must answer correctly if we are to put a stop to our recurrent, intensifying financial crises. I am William K. Black and I come to you wearing four disciplinary and three institutional “hats.” My primary appointment is in economics with a joint appointment in law at the University of Missouri-Kansas City. I am a white-collar criminologist and a former senior financial regulator. My research specialties include elite white-collar crime and corruption, regulation, and financial crises. I am the Distinguished Scholar in Residence for Financial Regulation at the University of Minnesota’s Law School. I am a professor at the Instituto de Altos Estudios Nacionales es la Universidad de Posgrado del Estado in Quito, Ecuador. My testimony, of course, is solely my personal views rather than the official position of any of these universities.

Continue reading

The Modern Money Primer: Spanish Language Edition

By L. Randall Wray

For our Spanish speaking followers, my Modern Money Primer has just been released in Spanish and is available.


Continue reading

Moyers and Company: America Is a Horror Show

This week on Moyers & Company, David Simon, journalist and creator of the TV series The Wire and Treme, talks with Bill about the crisis of capitalism in America. After President Barack Obama’s annual State of the Union address, it’s a reality check from someone who artfully uses television drama to report on the state of America from an entirely different perspective — the bottom up. You can watch online here.

“The horror show is we are going to be slaves to profit. Some of us are going to be higher on the pyramid and we’ll count ourselves lucky and many many more will be marginalized and destroyed,” Simon tells Moyers. He blames a “purchased” Congress for failing America’s citizens, leading many of them to give up on politics altogether.

Jobs for Greeks and for Americans, Too

By L. Randall Wray

Here’s a nice piece:

The Workers’ Think Tank: With an eye on the United States and Greece, scholars at the Levy Economics Institute are developing plans to ensure full employment, by Sasha Abramsky, February 2, 2015, The Nation.

As Sasha notes, the Levy Institute has a novel approach to fighting unemployment: JOBS! Hardly anyone ever thinks about that–that the cause of unemployment is lack of jobs.

For some reason, virtually all policy-makers and economists (including progressives) think that jobs will magically appear. True, some suggest that US unemployment is created because China ( “steals” jobs that are rightfully due to America. Hence, the solution is to steal them back.

Continue reading

Senator Bernie Sanders presents Tcherneva’s research to Show How Reagan Helped Destroy the Middle Class

By Michael McAuliff
(cross posted from Huff Post)

WASHINGTON — President Ronald Reagan remains a venerated figure in American politics, even as folks on the left have been taking a more critical look at his economic legacy in recent years.

So perhaps it’s not a surprise that Vermont independent Sen. Bernie Sanders would not think well of the Gipper. But when Sanders took to the Senate floor Thursday evening to offer a broad vision for how to do something to help the declining middle class, he offered a stunning chart that showed just how poorly most Americans have fared during economic recoveries since the advent of Reaganomics.

The chart starts by showing that in the decades after World War II, the bottom 90 percent of the country captured most of the growth in income during rebounds from tough times. But then came the Reagan era, and what George H. W. Bush once dubbed “voodoo economics.” After Reagan implemented his policies, the top 10 percent grabbed nearly 80 percent of the growth in incomes coming out of the oil crises of the late ‘70s.

Continue reading

Bill Black appears on The Real News Network discussing Greece

NEP’s Bill Black appeared on The Real News Network (TRNN) discussing the Syriza victory in Greece despite what WSJ and NYT would like us to think. The video is below. I you would like to see the video and transcript, it is here.