Monthly Archives: August 2014

Another Reason to Retire Sam Brownback: The Senate Subprime Car Loan Sleaze

Posted on August 21, 2014 by William Black | 1 comment

When Sam Brownback was a Senator he carried water for the sleaziest of auto lenders – the subprime lenders that specialize in making “liar’s” loans. His successful mission was to carve out an exemption from the Dodd-Frank bill’s protection for borrowers. We had just seen the CEOs controlling similar home lending specialists lead the three mortgage fraud epidemics that blew up the global financial system. The bill’s drafters and President Obama strongly opposed the Brownback carve out, but Brownback’s brigade of auto lobbyists made road kill of their opponents.

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Posted in William K. Black

Tagged Brownback, kansas

Italian’s Apology for German Austerity Diktats Lasts 24 Hours

Posted on August 20, 2014 by William Black | 1 comment

By William K. Black

On August 13, 2014, the International New York Times printed an op ed by Beppe Severgnini attacking Matteo Renzi, Italy’s Prime Minister. Severgnini offered readers this classic question and answer.

“So why is Italy’s economy, the eurozone’s third largest, the only major one in Europe currently flatlining? Last week Istat, the national statistics bureau, reported that it had contracted in two successive quarters for the third time since 2007, plunging us into a triple-dip recession.

How did we pull that one off? Plenty of plausible explanations blame the feckless government of Silvio Berlusconi, or the acquiescent administrations of Mario Monti and Enrico Letta that followed, the latter two having imposed the European Union’s — or rather, Berlin’s — belt-tightening on a country needing to boost consumption and investment.

But blaming Brussels, or anyone else abroad, is wrong. The rest of Europe followed the German diktat, and yet Italy is the only one suffering.”

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Posted in William K. Black

Tagged Austerians, austerity

The WSJ’s Editorial Posing as “News” about Ecuador

Posted on August 19, 2014 by William Black | 4 comments

By William K. Black

Greetings from Bogota where I’m participating in an economic conference and teaching two class sessions.

Under the banner “Latin America News” the Wall Street Journal has poured out its pain that the people of Ecuador might reelect President Rafael Correa. The article is actually an editorial attacking Correa and the people of Ecuador for potentially voting to reelect Ecuador’s most successful President in the modern era.

The issue is term limits. I have always opposed term limits as an obstruction to democracy and competence. The U.S. had no presidential term limits for most of its history and the only president the population chose to elect to more than two terms was Franklin Delano Roosevelt – one of our greatest presidents. I am deeply thankful that our Nation had the great good sense to reelect FDR to four terms in office.

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Posted in William K. Black

Tagged correa, ecuador, WSJ

The Real Fiscal Responsibility Talk Show Pilot Project

Posted on August 15, 2014 by Joe Firestone | 21 comments

By Joe Firestone

This pilot project and the radio/video shows it will produce and place on the web is for everyone tired of hearing economic commentary from those who got everything wrong. For decades, the doctrine of “Fiscal Responsibility” interpreted as long-term deficit reduction and Government austerity has had a secure place in American politics. This doctrine is the economic equivalent of the medieval notion that patients must be bled to cure them of disease. And this truth is reflected in the economic history of the United States at least since 1976, when we first began to practice ideology-based austerity in its modern form by planning for deficit reduction and balanced budgets in order to decrease the debt-to-GDP ratio.

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Posted in Joe Firestone

Tagged Austerians, austerity, debt and deficits, expanded policy space, MMT, modern money theory, public purpose, REAL fiscal responsibility

WORLD without BANKS

Posted on August 12, 2014 by J.D. Alt | 37 comments

By J.D. Alt

Sometimes it helps, if you want to see and understand something more clearly, to imagine the world without it. I just finished a book (“Rethinking Money” by Benard Lietaer and Jacqui Dunne) that was so thoroughly confused—and confusing—about how the U.S. private banking system “creates our money” (but perversely refuses to create enough of it) that I felt an overwhelming need to try to clarify, in my own mind, what the private banking system actually is. That’s when I got the idea of imagining a world without private banks at all—and trying to see at what point, and for what purpose, they become useful or, perhaps, even necessary.

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Posted in J. D. Alt

Tagged banks

A New Demand for the US Climate Movement: One Million (Frequent) Electric Buses with Wifi plus Protected Bikeways, “Everywhere”

Posted on August 11, 2014 by Michael Hoexter | 8 comments

By Michael Hoexter

The US climate movement, in which I am active, has not to date been effective enough in getting serious climate action on the agenda of government leaders, especially on the federal level. This weakness is in part shared with the international climate movement more generally, though the level of climate denial both among political elites and among the general population in the US is unmatched in the world. With that denial comes resistance to climate action, though for a variety of reasons, no actions commensurate to the climate challenge have really been attempted by governments in the world, whatever the local level of resistance offered.

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Posted in Michael Hoexter

Tagged climate change, envrionment

Why Money Matters

Posted on August 7, 2014 by L. Randall Wray | 25 comments

By L. Randall Wray*

Our Mission Oriented Finance conference explores how to direct funding toward what Hyman Minsky called “the capital development of the economy”, broadly defined to include private investment, public infrastructure, and human development. (See more here.)

But to understand how, we need to understand what money is and why it matters. After all, finance is the process of getting money into the hands of those who will spend it.

The dominant narrative is that money “greases” the wheels of commerce. Sure, you could run the commercial machine without money, but it runs better with lubricant.

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25 Comments

Posted in L. Randall Wray

Tagged MMT, Modern Monetary Theory

UPDATE: Bank of America Fined Another $16 Billion for Fraud

Posted on August 7, 2014 by L. Randall Wray | 9 comments

By L. Randall Wray

Bank of America just agreed to pay another $16 Billion fine for one of its frauds—selling trashy securities to its investors. Another day, another fraud exposed. No surprises there. This is so routine it barely deserves a headline.

According to Bloomberg, that raises the total it has agreed to pay for its mortgage lending frauds to $70 billion. Most of this is related to its purchase of Countrywide, where Mairone oversaw much of the fraud. See here.

BofA rewarded Mairone for creating Countrywide’s “Hustle” fraud by hiring her. So far that woman’s criminal expertise contributed toward mounting costs to BofA of $70 billion. Quite an accomplishment!

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9 Comments

Posted in L. Randall Wray

Tagged accounting control fraud, banksters, fraud

IT’S OFFICIAL: TOO BIG TO FAIL IS ALIVE AND WELL

Posted on August 6, 2014 by L. Randall Wray | 16 comments

By L. Randall Wray

Thank heaven for Tom Hoenig, the only proven-honest central banker we’ve got. Yes, I know he’s moved on from the KC Fed to serve as Vice Chairman of the FDIC. He actually might do a lot more good over there, anyway.

In recent months, we’ve heard how Wall Street’s Blood-sucking Vampire Squids have reformed themselves. They no longer pose any danger to our economy. They’ve written “living wills” that describe how they’ll safely bury themselves without Uncle Sam’s help next time they implode.

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16 Comments

Posted in L. Randall Wray

Tagged banksters, Control Fraud, Modern Monetary Theory, too big to fail

Setting the Record Straight One More Time: BofA’s Rebecca Mairone Fined $1Million; BofA Must Pay $1.3Billion

Posted on August 2, 2014 by L. Randall Wray | 15 comments

By L. Randall Wray

Now here’s Déjà vu all over again. You might remember the name Rebecca Mairone from a few years ago. She’s back in the news:

“Rebecca Mairone, formerly a top official at Countrywide Financial, has been named in an amended complaint filed earlier this month by Preet Bharara, the U.S. Attorney for the Southern District of New York, against Countrywide and its parent Bank of America. The suit alleges that Mairone, as chief operating officer for Countrywide’s Full Spectrum Lending division in 2007, set up a program dubbed the “High Speed Swim Lane,” or “HSSL,” or “Hustle,” to speed up the origination of mortgage loans, including increasingly shady subprime loans. The government claims the alleged Hustle ultimately cost its sponsored entities Fannie Mae and Freddie Mac more than $1 billion in losses.

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