Monthly Archives: September 2014

A “Perfectly Legal” Scam is Perfectly Unacceptable to Real Bank Supervisors

By William K. Black

Whatever else comes out of the release of the audio tapes by Carmen Segarra, they have harmed the reputation of Mike Silva, the long-term senior supervisor at the Federal Reserve Bank of New York (FRBNY). The (lengthy) excerpts below are taken from the This American Life program and are necessary to understand the context.

Mike Silva I have to tell you that night that the reserve fund broke the buck and we got that word…

Jake Bernstein It was a moment when it looked like the financial system was going to come crashing down. Big firms were frantically calling the Fed, terrified that economic

Armageddon had arrived. When this happened, Silva was chief of staff for Tim Geithner who, at the time, was president of the New York Fed.

Mike Silva And when I realized that nobody had any idea how to respond to that, I went into the bathroom and threw up. Because I realized this is it, it’s just this small group of people, and right now at this moment we have no clue. I never want to get close to that moment again.

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The Re-invent Democracy Platform and MMT

The MMT Uptake Problem

Proponents of the Modern Monetary Theory (MMT) approach to macroeconomics have had many successes since the approach was first synthesized in coherent form by Warren Mosler. There have been successful predictions of economic conditions: much work showing that the historical record accords with the MMT point of view, rather than the views of other approaches and paradigms, and also many instances where representatives of other approaches to economics have suddenly begun to use economic views first put forward by MMT economists.

So, it’s surely true that MMT has been making progress in its quest to become the dominant economic paradigm guiding macroeconomic and fiscal policy in nations. But for some of us writing about issues relating to MMT progress seems painfully slow. A big part of the reason for slow progress is the difficulty of getting MMT views into the mass media consistently, which is seen as a necessary step in getting them popular currency.

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Bordier — A Bottom-Up Solution to Cross-Border Conflicts: The Case of the Middle East and ISIL

By Nancy Bordier
(reposted by Joe Firestone with permission of the author)

Introduction

The outbreak of another Western-led military conflict in the Middle East is widely viewed as unwinnable. It is also viewed as counterproductive because of its potential to help its target, ISIL, the anti-Western fanatical social movement, recruit new volunteers in its crusade to topple Middle East regimes.

My view, as a political scientist, is that none of the players currently involved can bring peace or stability to the region. The “perpetual war” the protagonists appear to be unleashing is more likely to cause even more human suffering and displacement in the region on a scale previously unimaginable.

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The New York Times Claims that Opposing EU Austerity Leads to Anti-Semitism

By William K. Black

I have written a series of columns describing the New York Times’ horrific coverage of austerity and the Great Recessions and Great Depressions that it has gratuitously inflicted on the people of the eurozone.  I thought I was safe from such coverage, however, reading a NYT column entitled “Europe’s Anti-Semitism Comes Out of the Shadows.”  Silly me.

It turns out that opposition to austerity is a key cause of Anti-Semitism – at least in the imagination of NYT reporters.

“With Europe still shaking from a populist backlash against fiscal austerity, some Jews speak of feeling politically isolated, without an ideological home.”

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Live Streams from the 12th Post Keynesian Conference

UMKC is providing live video streaming of some of the key sessions of the 12th International Post Keynesian Conference.

Here is a list of the events they are streaming (all times Central):

  • Wednesday, 6:00-8:00pm: Bruce Greenwald lecture in Royall 111
  • Thursday, 5:45-7:30pm: “What Should We Have Learned from the GFC?”
  • Friday, 5:45-7:15pm: Jamie Galbraith Keynote
  • Saturday, 11:45-1:00pm: Lord Robert Skidelsky Keynote
  • Saturday, 7:00pm: Lord Robert Skidelsky “Economics After The Crash”

To view any of the events, click here to go to the UMKC Streaming Video page and then click on the link at the bottom of the page for the platform you are using to view the stream.

Streams start approximately 15 minutes before the event.

UMKC’s Streaming page is located at: http://www.umkc.edu/ia/streaming/live-streams.cfm

Note to New York Times: EU Austerity is the Problem

By William K. Black

In the latest example of the New York Times’ reporters’ inability to read Paul Krugman, we have an article claiming that the “Growing Imbalance Between Germany and France Strains Their Relationship.”  The article begins with Merkel’s major myth accepted as if it were unquestionable reality.

“It was a clear illustration of the dysfunction of the French-German partnership, the axis that for decades kept Europe on a united and dynamic track.

In Berlin this month, Chancellor Angela Merkel, riding high after nine years in power, delivered a strident defense in Parliament of austerity, which she has been pushing on Europe ever since a debt crisis broke out in 2009.”

No, not true on multiple grounds.  First, the so-called “debt crisis” was a symptom rather than a cause.  The reader will note that the year 2008, when the Great Recession became terrifying, has somehow been removed from the narrative because it would expose the misapprehension in Merkel’s myth.  Prior to 2008, only Greece had debt levels given its abandonment of a sovereign currency that posed a material risk.  The EU nations had unusually low budgetary deficits leading into the Great Recession.  Indeed, that along with the extremely low budgetary deficits of the Clinton administration (the budget went into surplus near the end of his term) is likely one of the triggers for the Great Recession.

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Roger Cohen’s Ode to Colonialism and Imperialism: Why is it “Insidious” to Want Justice for Banksters?

By William K. Black

In another proof of our family rule that it is impossible to compete with unintentional self-parody, Roger Cohen has penned “The Great Unraveling.”  What makes the article perfect is that it brings together Cohen’s worst traits – and ends with praise for Rudyard Kipling, who set the bar for those traits.  Cohen is distressed about many things, but the first one that I focus on is his claim that the Scots’ response to the City of London’s elite financial criminals is “insidious.”  In the passage that he makes this claim Cohen denounces the Scots as childish Celts.

“The northernmost citizens were bored. They were disgruntled. They were irked, in some insidious way, by the south and its moneyed capital, an emblem to them of globalization and inequality.”

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A Bottom-Up Solution to the Global Democracy Crisis

Before the “no” vote on Scotland’s independence, The New York Times, carried a post by Neil Irwin in the Upshot making the point that the then upcoming vote “shows a global crisis of the elites.” He argues that the independence drive reflects “. . . a conviction — one not ungrounded in reality — that the British ruling class has blundered through the last couple of decades.” He also thinks that this applies to the Eurozone and the United States to varying degrees, and is “. . . a defining feature of our time.”

Irwin then updated his first post last night, expanding it and recognizing the victory of the “no” votes in the referendum. His new post did not add anything essential to his “global crisis of the elites” diagnosis, so the references and quotations below come solely from his pre-vote post. But the points made apply equally well to his update.

To summarize his argument, for decades now, the elites in major modern, industrial nations have committed leadership blunders and created great discontent among the citizens of their nations, to the point where their polices have contributed to damaging their economies seriously, and the rise of popular resistance embodied in extremist parties and independence movements. Elites have had vast power, but have not lived up to their responsibilities to serve the people of their nations. Discontent with their actions and results is so high that many are questioning the legitimacy of the very governing institutions that claim to serve them, and are exhibiting a greater and greater willingness to do something about these institutions and the policies that they and the elites are generating. Scotland is but one example of that, and his implication is that more examples are in the offing.

It’s significant, some might say even remarkable, that Irwin’s article appeared in The New York Times, since it is a flat out criticism of elite leadership over a number of decades and a warning to elites to improve their performance or deal with the consequences. But I think it still misses the most important question. That question is whether there is a global crisis of elites or a global crisis of democracies? I’m afraid I think that the crisis of elite leadership is only a symptom of the underlying cause of a broader global crisis of democracy. Continue reading

The Economy: Does More Government Help or Hurt?

Video of public debate on the role of Government in the economy presented at the Kansas City Public Library, Plaza Branch on September 16, 2014. This excerpt only contains Dr. Stephanie Kelton’s presentation. Her slides are available below the video. The full version of the debate including the Q&A session at the end is available on our YouTube channel.

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Pericles and the Socialization of Economics – Part I

By Tadit Anderson

[Part I]

Introduction 

There is an interesting provenance between the defaming of the democracy of Pericles’s Athens as dysfunctional and the use of this fiction to support an “aristocratic” form of governance in opposition to democracy, even two thousand years later. The life of this misrepresentation was then extended in fabrication of creation myths about the peculiar nature of allegedly modern “democracy.” By the end of the 19th century a more reliable analysis of the Golden age of Athenian democracy was available. This new narrative should have replaced the misrepresentation by Plato and his lineage, but propaganda, if repeated often enough will begin to seem true. Making a distinction between a form of oligarchy and a functional democracy seems to be difficult when gaining unearned wealth is such a disincentive.

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