Yearly Archives: 2013

Bhide: Pick a “Boring” Fed Chair because Supervision is the Key and it requires “Dullness”

Posted on August 23, 2013 by | 4 comments

By William K. Black

This is my second column discussing Federal Reserve (Fed) regulation in the context of the question of who President Obama should appoint to be Ben Bernanke’s successor.  This column focuses on the sudden discovery by economists (and, purportedly, Obama) that the Fed Chair’s most important function is to regulate.  (If that sounds like common sense to you, (1) you are not an orthodox economist and (2) you do not understand the Fed’s culture.)  This column begins the process of explaining why most of the economists and finance scholars (Robert Prasch is the exception) writing to urge that the new Fed Chair be chosen based on their regulatory skills demonstrate that they lack any understanding of the fundamentals of financial crises and supervision (and aiding prosecutions).  This column begins my response to Amar Bhide’s op ed entitled “Wanted: A Boring Leader for the Fed.”

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Stick Figure Economics

Posted on August 23, 2013 by | 4 comments

By Matthew Berg

If you have ever taken an introductory economics course – or any economics course* – then you have experienced the wonder and the majesty of stick figure economics.

Stick figure economics treats mankind as a representative homo oeconomicus – a person (and an economy) neatly stripped of all flesh, blood, and pesky three-dimensional idiosyncrasies.

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Government Spending and the Government’s Money

Posted on August 22, 2013 by | 29 comments

By Dan Kervick

Warren Mosler has made an interesting proposal concerning how we should think about Treasury securities:

… with today’s floating fx/non convertible currency tsy secs (held outside of govt) are logically additions to ‘base money’, as the notion of a reduction of govt reserves (again, gold, fx, etc) is inapplicable to non convertible currency.

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NEP’s William Black appears on HuffPost Live

Posted on August 22, 2013 by | 3 comments

The legal culture of big-time settlements can short-circuit the law, protecting wrongdoers from punishment, trial or even an admission of guilt. That’s just what the government has done for the major banks implicated in sweeping mortgage fraud. Is it too late to rectify the big banks role in the housing and financial crisis? Bill and other panelists speak with Alyona Minkovski on this subject.

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Mosler on Treasury Rates and Fed Policy

Posted on August 21, 2013 by | 22 comments

By Dan Kervick

It’s starting to look like QE might be indirectly responsible for a dangerously volatile situation in US financial markets.  And 10-year Treasury notes hit a 2-year high following today’s Fed statement.

But, in my opinion, it’s not the intrinsic nature of the policy itself that has created the danger, but all of the ridiculous and misleading hullabaloo and punditry that has surrounded it. I don’t blame the Fed for using asset purchases to hold down long-term interest rates. But I do blame all of the market pundits and neo-monetarist theorists out there who have grossly misrepresented these asset purchases as something they are not: an all-embracing attempt to manage aggregate demand, gross spending and employment by “pumping money into the economy.”

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Think Global, Act Local: the SacBee Needs to Write about its U.S. Attorney

Posted on August 21, 2013 by | 2 comments

By William K. Black

The Sacramento Bee is a paper with a fine pedigree that just wrote a powerful editorial entitled: “Wall Street needs to be schooled in the rule of law.”

 “When the president feels the need to call out his own people for not moving fast enough on new rules for Wall Street, you know that things have really bogged down.

That’s what Barack Obama did Monday, urging top financial regulators to get going on enforcing the Dodd-Frank law, passed by Congress three years ago but still adamantly opposed by big banks.

Wall Street’s freewheeling ways and outright fraud worsened the worst financial crisis this nation has faced since the Great Depression. Nearly five years later, many large financial institutions are making big profits again, but relatively few wrongdoers have seen the inside of a prison cell.

Precious little has truly changed.

Who gets the short end of the foot-dragging? The vast majority of Americans, of course, those who aren’t favored clients of Wall Street firms. You can bet we’re the ones who will be left holding the bag if there’s another crash because proper safeguards aren’t in place.”

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

Posted on August 21, 2013 by | 5 comments

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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“Makers and Takers:” They’re Projecting Again!

Posted on August 20, 2013 by | 28 comments

By Joe Firestone

I found a segment on MCNBC’s Up With Steve Kornacke show revealing for what it did not say. The segment started off with a clip from a Recent Town Hall of John McCain’s. Senator McCain took a question from a woman who said, with more than a little emotion.

Visit NBCNews.com for breaking news, world news, and news about the economy

Woman: “It kills me every time i hear senators, especially republicans, talk about those takers. they’re just taken. the takers. i paid taxes for over 30 years and i have a rare illness and now i’m disabled. the state of arizona raised the eligibility for a program that was paying $100 a month for my medicaid to 3.4%. consequently, i was cut off. $100 a month, which meant (breaks down) i could no longer go to physical therapy. do it intentionally to cut as many people as they can for as long as they can from benefits that are desperately needed and it’s just not right. we’re the takers.”

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Public Enterprise, National Development and Unemployment

Posted on August 19, 2013 by | 19 comments

By Dan Kervick

Bill Mitchell has a really great piece up today at his wonderful blog, billyblog.  After briefly discussing the Modern Monetary Theory (MMT) emphasis on the operational realities of the monetary system, and asking whether or not it is important to situate those discussions of operations and macroeconomics in broader debates about ethics and morality, Bill lays out his own view:

The “operational reality” is factual and sufficient is one view. Just the massive loss of national income is a sufficient political motivation to do everything possible to avoid mass unemployment.

According to this narrow view, no further discussion about the other personal and societal costs (damage to physical and mental health; family breakdown; increased incidence of alcohol and substance abuse; increase crime rates; skill loss, and the rest of it) is needed and only leads to the accusation that MMT is mired in a contest of values rather than being about the cold, hard operational reality.

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Obama’s FBI Channels the Tea Party: Partner with the Banks and Blame the Poor for the Crisis

Posted on August 19, 2013 by | 1 comment

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

Introduction

This is the third column in my series discussing why the FBI and the Department of Justice (DOJ) have failed to investigate and prosecute successfully the largest and most destructive financial fraud epidemic in history.  The series uses the FBI’s 2010 Mortgage Fraud report to tease out how the FBI and DOJ suffered such a defeat.

The MBA conned the FBI into a “partnership” with the trade association of the “perps.”  In my prior column I showed the first product of the partnership – a poster warning customers not to defraud banks but ignoring banks defrauding customers.  This column discusses the more consequential and damaging product of the FBI/MBA partnership.  The MBA presented a definition of “mortgage fraud” under which the bank is always the innocent victim and never a perpetrator.  Because the FBI and DOJ did not draw on the banking regulators’ expertise due to the death of criminal referrals by the agencies the FBI fell for the MBA con.

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