Monthly Archives: February 2014

Finance Refuses to Take Akerlof and Romer Seriously about Looting

By William K. Black
(Cross posted at

I have often written and spoken of my frustration that economists refuse to read George Akerlof and Paul Romer’s classic 1993 article (“Looting: The Economic Underworld of Bankruptcy for Profit”) and apply it to an analysis of the current financial crisis.   Note that their title expresses the paradox they were reporting – the best way to loot the bank is for its controlling officer to cause it to make extraordinary amounts of terrible loans that will typically cause the bank to fail.

In my fantasy world I am even frustrated that they refuse to read the white-collar criminology literature that my colleagues and I have spent decades developing about “accounting control fraud” (what Akerlof and Romer called “looting”).  Economists do not study fraud and in my flights of fantasy I imagine a world in which they would read the work of those who specialize in that field.  Silly, I know, though that is exactly what Akerlof and Romer did, see their beginning note*, because they wanted to get the facts correct.  If you think that is the obvious approach that any scientist examining an issue would take – congratulations – you just might be a scientist, but you’re almost certainly not an economist.

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Jamie Dimon’s $10 Million Raise is a “Common Sense” Fraud Reward

By William K. Black

Andrew Ross Sorkin (and his “Deal Book” team at the New York Times) seemed to have built an insurmountable lead in the race to be declared the most unctuous panderer to the financial plutocrats who grew wealthy by leading the frauds that blew up our economy.  As I wrote recently, Politico became my instant dark horse candidate for the Street’s sycophant-in-chief with Ben White’s fantasy that “In 2009, Washington went to war against big Wall Street banks.”  I noted that the “war” consisted of the Treasury and the Fed dumping trillions of dollars on the biggest Wall Street banks and evoked Tevye in Fiddler on the Roof: “May the Lord smite me with [such a “war”]. And may I never recover!”

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Introducing Modern Money Monopoly (MMM)

By Alex Hofmann

Coming back to Stephanie Kelton’s “A Contest: MMT for Eighth Graders” from last May, we have yet to find a good way of explaining basic modern money concepts to children. I followed the blog thread with much interest, but it seems that the initiative has got stuck on the fundamental challenge of finding child-like analogies for concepts that are too abstract even for well-educated grown-ups. As has been pointed out many times, didactics or ‘framing’ is perhaps MMT’s biggest strategic challenge. 

Looking at my own children, a lot if not most of their learning happens not by chewing on concepts but through play, often enough by integrating recent experiences into their favourite games. Hence, what might work better than verbal explanations is an adaptation of the popular ‘Monopoly’ board game: Modern Money Monopoly (MMM).

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President Obama, Are You Going to Detonate the World’s Largest “Carbon Bomb”?

By Michael Hoexter

January 31, 2014

Dear President Obama,

I campaigned for you in the primaries and general election of 2008, write about the economics of climate change, work in the area of energy efficiency and renewable energy, and am a climate activist in Northern California.  I am writing you to appeal to your highest ethical values and best understanding of scientific reality to deny approval to the Keystone XL pipeline project as well as deny approval to retrofits and new construction of other cross-border pipelines, such as the Alberta Clipper line which will enable more economical exploitation of the Albertan tar sands oil deposits.  The Albertan tar sands were described by the climate scientist James Hansen as the largest “carbon bomb” still untapped by the fossil fuel industry, which if exploited mean “game over” for a climate hospitable to human beings and our civilization.

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