Tag Archives: crony capitalism

Democratizing Government Spending in an Era of Climate Change: Decision Criteria and Spending Priority Lists – Pt 1

By Michael Hoexter

The surprise Republican primary victory of libertarian economic fantasist and teacher of economics Prof. David Brat in Virginia’s conservative 7th District has highlighted a point of agreement between the progressive left and far right/libertarians like Brat: both say they are against “crony capitalism”.  While Brat came across to voters and most of the press as a “true believer” in a religiously-tinged libertarian-style economics that decries subsidies and state involvement in industry, the actual sordid history of libertarianism is that it has functioned as an effective cover for corporate lobbying and government’s regulatory and economic support of the interests of the wealthy and large corporations, i.e. crony capitalism. “Libertarianism,” largely a politicized strain of the social philosophy called Austrian economics, was invented after WWII as a lobbying instrument for the interests of corporations like General Motors, at the time amply boosted by federal government spending during the war yet apparently wanting to, in the public eye, disassociate itself from that help after the war.

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The New Joke Defining the Supercharged Version of Chutzpah

By William K. Black

The old joke about how to answer the question: “what does chutzpah mean?” – has been rendered woefully inadequate by events. The old answer was: “Chutzpah is when a son kills his mother and father and asks the court at sentencing to show him mercy because he is an orphan.” The two variants of the new answer to the question of what chutzpah means are: Continue reading

Those who the gods wish to destroy: Bernanke’s Triumphal Pride

By William K. Black

Greetings form Guayaquil, Ecuador where I’m teaching a mini-course at ESPOL.  The course introduces students to the great economic debates of theory that shaped our dominant fiscal, monetary, and anti-regulatory policies in the decades before the financial crisis.  Memory can be a tricky and misleading guide, so I went back to what the key decision makers and theorists were saying in the years before the crisis.  My focus is on Ben Bernanke and Alan Greenspan, but I also discuss extensively John Williamson, who coined the phrase “the Washington Consensus.”  (My readers know that I attribute many of the most damaging anti-regulatory policies to the Clinton-Gore administration and its evisceration of effective regulation through its “Reinventing Government” program.)  I wanted readers to see what was being said by the Fed’s leadership (which would soon transition from Greenspan to Bernanke) as the financial world was exploding into an orgy of “accounting control fraud” (the most destructive in history) that was hyper-inflating the largest financial bubble in history, and about to cause a global financial crisis that produced the Great Recession and (if Bernanke is to be believed) would have produced another Great Depression but for the largest financial bailout in history.

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The Wall Street Journal Pines for the Return of Liar’s Loans

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

The Wall Street Journal’s editorial staff (WSJ) criticizes the Dodd-Frank Act and the leadership of the financial regulatory agencies.  I share many of those criticisms, but I parted company when the WSJ expressed its horror that: “The regulation micromanages bank decisions down to the kind and quality of loan.”  The Dodd-Frank Act bans a “kind” of loan based on the inherently fraudulent “quality of [the] loan.”  The Act bans liar’s loans.  The WSJ considers this ban so appalling, so obvious a violation of the divine right of banks, that it labels it “micromanage[ment]” and assumes that the label proves the absurdity of banning liar’s loans.

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The Mystery of Cannibal Capitalists and Ecuadorian Entrepreneurs

By William K. Black

This column was prompted by an unusual source for me.  Cuenca High Life is a site for ex pats living in Ecuador.  It often discusses serious issues of national importance.  The three issues a recent volume discussed are all important economic issues and they have prompted a fourth economic issue I will discuss in this column.

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The Banksters Master Irony: Push Summers & Geithner for Fed due to their Regulatory Zeal

By William K. Black

The big banks are desperate to prevent Janet Yellen from being appointed as Bernanke’s successor to run the Fed.  Their sexist attacks have backfired.  On August 1, 2013, Deutsche Bank launched the single most absurd assertion to block Yellen’s appointment.  Deutsche Bank wants Larry Summers, or better yet Timothy Geithner, to (not) regulate them because not being regulated effectively is its highest priority.

“To the extent that the job has become much more international and with more regulation and supervision within the new financial world order, that makes people such as Summers and former Treasury Secretary Tim Geithner compelling candidates,” says Deutsche Bank economist Joseph Lavorgna.

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The FBI’s 2010 Mortgage Fraud Report Reveals Why the Banksters Love Holder

By William K. Black

The Obama administration’s continuation of the Bush administration’s refusal to prosecute the elite banksters (or even the vastly lower status CEOs of the fraudulent mortgage bank) that drove the crisis has made it clear that the rule of law no longer applies to wide ranges of life and that crony capitalism will continue to reign.

One of the difficulties we have is that because the last two administrations have fanatical devotees of the cult of the Virgin Crisis – the myth that the ongoing crisis was the first in modern times conceived without sin (control fraud) – that it is exceptionally difficult to know what their creed is.  DOJ has refused to prosecute any elite banker for mortgage loan origination fraud.  The rare prosecutions it has brought against senior officials of fraudulent loan originator (a large, but obscure regional mortgage bank: Taylor Bean) did not prosecute the officials for their fraudulent origination (or sale) of loans.  The Taylor Bean officials were only prosecuted for their fraud against the TARP program – and only because Neil Barofsky (SIGTARP) made the criminal referral about that fraud and pushed relentlessly to force the Department of Justice to prosecute.  With zero prosecutions of the massively fraudulent home lenders that drove the crisis to we are left with no information on why committing hundreds of thousands of frauds via the twin epidemics of loan origination fraud (inflating appraisals and making endemically fraudulent “liar’s” loans) is no longer a crime that the FBI investigates and DOJ prosecutes.  No senior DOJ or FBI official, of course, is stupid enough to state openly why we no longer prosecute even the CEOs of long-bankrupt mortgage banks that led these accounting control frauds.  The U.S. Attorney for Sacramento, one of the epicenters of accounting control fraud, was foolish enough to attempt to explain why he did not investigate or prosecute the banksters:

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The Game Theoretical CEO: An Inexplicable Lawful Agent

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

Introduction

This is the sixth (and final) of my series of articles on the work of Roger Myerson, a 2007 Laureate in Economics.  Myerson’s work on CEOs is typical of the game theoretical approach to explaining the behavior of CEOs and firms, so I am discussing an exemplar rather than an outlier.  This installment discusses some of the fatal flaws that I argue characterize the game theoretical work on CEOs by the Laureates.  I will urge that they are weakest where they believe they are strongest – their models.  The article explains why the models are specified incorrectly because the models have no coherent theory (or understanding) of fraud or ethics.  The game theoretical Laureates (Laureates) make unsupportable implicit assumptions that are belied by the data and internally inconsistent with their explicit assumptions.

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Myerson’s Ode to Crony Capitalism

By William K. Black

This is the fifth installment in my series of article about the predictive and policy failures of Roger Myerson, Nobel Laureate in economics in 2007.  My first two articles critiqued his claim that capitalism’s unique advantage over communism is plutocracy because only exceptionally wealthy CEOs can be successfully bribed by their shareholders to “imitate” “good” CEOs who will not cheat the shareholders.

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The New York Times Butchers the Story of How Treasury Got NPR to Censor My Criticism of It

By William K. Black

We have further proof about how thin-skinned Treasury Secretary Geithner was, but we have it in the form of a weird May 29, 2013 story by Ben Protess in the New York Times.  The story is in part about me, though it doesn’t mention me, because it is a story that notes that Treasury was able to convince NPR to remove from its December 13, 2013 broadcast a statement I made criticizing Geithner – an action that NPR took and noted, but without naming me as the source of the criticism.  The weird part of the NYT story is that while it confirms the accuracy of the statement I made about Geithner it asserts that the statement by the unidentified “academic” criticizing Geithner was false.  Continue reading