Daily Archives: July 10, 2012

A Public Policy School Professor Glorifies Lies, Murder, and Crony Capitalism

By William K. Black

“When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” ~ Frederic Bastiat

Up with Chris Hayes is a remarkable show in which Chris Hayes and his guests have a two-hour discussion on a handful of issues.  This allows in-depth discussions instead of sound bites.  On Saturday, July 7, 2012, Hayes framed a discussion of Libor (London Inter-Bank Offered Rate).  The segment was prompted by Barclays’ settlement with U.S. and UK authorities of claims based on the banks’ submitting false data to the British Bankers trade association so that they would announce manipulated Libor rates.  Hayes used two similes for Libor to try to explain the fraud to an U.S. audience.  He said it would be as if the gauge on the gas pump was tampered with by the seller so that he could over charge consumers.  Let me add a few facts from my perspective as a white-collar criminologist.  This is a very old problem.  The bible and Talmud contain injunctions designed to forbid fraud in weights and measures.  Those religious provisions are supplemented now with state inspections of gasoline pump meters.  One common, sophisticated way that gasoline sellers continue to defraud their customers is a twist on something the ancient texts understood millennia ago – the actual quantity of fluids that are sold by volume is determined by their weight, not their volume.  The ancients forbade pouring wine from a significant height because the admixture with air allowed the merchant to fill a glass with only two-thirds of a glass of frothy wine.  A modern variant leads gasoline stations to sell their product without adjusting the fuel gages to reflect the actual (higher) temperature of the gasoline in their tanks.  The higher temperature expands the fuel’s volume but not its weight or energy content.  In the trade, this is known as “hot gas” or “hot fuel.”  Continue reading

A Communication from Your Central Bank

By Dan Kervick

Nick Rowe recently argued that there can be certain types of products for which the market might allow multiple equilibria.  This can happen because the willingness of an individual to buy some product might depend on how many other people buy that product.  The upshot, Rowe suggests, is an unusual, non-functional shape to the demand curve characterizing the market for the product in question, resulting in two distinct equilibrium demand quantities corresponding to the same price.

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