Daily Archives: November 4, 2013

The Crippling Politics of Public Investment

Posted on November 4, 2013 by Dan Kervick | 7 comments

The Financial Times called attention this weekend to one of my favorite themes: the precipitous collapse of US public investment.

Public investment in the US has hit its lowest level since demobilisation after the second world war because of Republican success in stymieing President Barack Obama’s push for more spending on infrastructure, science and education.

Gross capital investment by the public sector has dropped to just 3.6 per cent of US output compared with a postwar average of 5 per cent, according to figures compiled by the Financial Times, as austerity bites in the world’s largest economy.

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Posted in Dan Kervick

DID SCOTT SUMNER FIND MMT’S ACHILLES’ HEEL?*

Posted on November 4, 2013 by Devin Smith | 63 comments

By L. Randall Wray

*The title of this post was inspired from a post by Mike Sax.

First an admission. I’m not really a blogger. I occasionally write pieces that somehow find their way onto blogs, but I rarely read or respond to blogs. I have no idea who is who in the blogosphere. For example, I do not know someone named Scott Sumner, who is apparently a Very Important Person in blogoland.

I note that he’s associated with the proposal that the Fed target nominal GDP. When I first heard about this, I thought it was a joke. Yeah, right, might as well have the Fed target the Earth’s Wobble. Gee, I’d really like the Fed to stabilize the tilt, to achieve San Diego’s invariantly moderate climate in upstate NY where I spend much of my time!

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Posted in L. Randall Wray

Tagged Achilles Heel, MMT, Modern Monetary Theory, scott sumner

The U.S. Attorney Who Prosecutes JPMorgan Will Be Its First Witness

Posted on November 4, 2013 by Devin Smith | 3 comments

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

The U.S. Attorney for the Eastern District of California is Benjamin Wagner.

“Once the U.S. government built a case against J.P. Morgan and settlement talks began, the Justice Department made several threats that it would file its civil lawsuit, and each time J.P. Morgan responded by offering to talk more or increase the amount of money it might pay, the people familiar with the discussions said.

One critical moment came as the department set an internal deadline, Sept. 24, to file a suit against the bank.

The day before the deadline, the bank offered to pay $3 billion to settle a case tied to mortgage-backed securities—an offer the attorney general rejected. That same day, Ben Wagner, the U.S. attorney from Sacramento, Calif., flew to Washington with two large charts he meant to display at a news conference describing the bank’s alleged misconduct. A criminal and civil investigation into J.P. Morgan’s past sale of mortgages bonds had been handled by Mr. Wagner’s office.”

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Posted in William K. Black

Tagged accounting control fraud, Benjamin Wagner, jp morgan, too big to fail

Texas is the New Jerusalem of Free Market Fundamentalism, but how’s that working out for the Lone Star State’s great unwashed?

Posted on November 4, 2013 by Devin Smith | 4 comments

By Glenn Stehle

Texas is the De Civitate Dei, the new holy city of free market fundamentalism, and Ted Cruz, the upstart Tea Party senator from Texas, has been quick to canonize himself as its patron saint. In case you haven’t heard it yet, Texas is now “the light and the way,” and if you don’t believe it, just ask Ted Cruz or Rick Perry, or better yet ALEC:

The Texas growth narrative is well-known by now. Texas’ population grew by 11 million people (79 percent) between 1980 and 2011, more than double the rate of growth of the nation as a whole. With that population growth came job growth. Since the 1990s, the rate of Texas job growth has been a full percentage point or more above the national average most years.

The American Legislative Exchange Council, among others, has suggested that other states should adopt policies that will make them more like Texas in order to grow their economies. One example from the introduction to ALEC’s recent Rich States, Poor States report: “[M]any governors are looking at Texas, which has led the nation in job growth over the past three years, as the state with the best policy to emulate.” In particular, ALEC notes the state’s tax policy as a plus.

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