Yearly Archives: 2014

Edwin Sutherland: The 75th Anniversary of His Coining The Term White-Collar Crime

Posted on February 10, 2014 by Devin Smith | 1 comment

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

Introduction

This year is the 75^th anniversary of Edwin Sutherland’s presidential address to the annual meeting of the American Sociological Association in 1939. In the course of beginning to write a book from a white-collar criminological perspective about our modern financial crises I decided to reread Sutherland’s address (which was published as an article in 1940) to see how it stands up in light of modern white-collar criminological research and theory. It reads exceptionally well today. It is not even archaic in tone. Sutherland begins by listing eleven (there were two van Sweringen brothers involved in their scam) examples of the kind of criminals he was referring to.

Continue reading →

1 Comment

Posted in William K. Black

Tagged white-collar criminology

The Debt Crisis in Puerto Rico: Why Is It Not More Newsworthy?

Posted on February 9, 2014 by Devin Smith | 8 comments

By Robert E. Prasch

Anyone who follows the news periodically, if not more often, wonders about the criteria making certain issues or persons “newsworthy,” and others substantially less so. One reliable indicator of newsworthiness is that the story happens in Washington, D.C. A second is an unusual or counter-intuitive event (“Man bites dog”). A third is the prospect of large losses. This last quality, however, renders the relative neglect of Puerto Rico’s debt crisis an interesting anomaly.

Continue reading →

8 Comments

Posted in robert e. prasch

Tagged debt crisis, puerto rico

The Troika and the New York Times Bury the Issues, not just the Lead

Posted on February 7, 2014 by Devin Smith | 7 comments

By William K. Black

On February 6, 2014, Mario Draghi, the head of the ECB said a series of contradictory things each of which indicated a failure to understand economics – and the BBC article about his policies failed to point out or analyze this failure. Draghi’s primary message, in response to news that “Eurozone inflation slowed to 0.7% in January from 0.8% in December” was:

“We have to dispense with this idea of deflation. The question is – is there deflation? The answer is no.

We have to treat the recovery with extreme caution. It is very fragile. It is starting from very low levels but it is proceeding.”

Continue reading →

7 Comments

Posted in William K. Black

Tagged deflation, Rehn, spain, troika

Wisse’s World: Where Feminists are Neo-Marxists and Inequality Critics are anti-Semites

Posted on February 7, 2014 by Devin Smith | 6 comments

By William K. Black

I chose not to respond to Thomas Perkins’ original letter to the Wall Street Journal claiming that the opponents of income inequality are “progressives” on the road to holding Kristallnacht on Wall Street. He was too obvious a troll and the general rule is not to feed trolls.

The WSJ has decided, however, to make this claim its meme. It is not clear to me why efforts to reduce our record levels of income inequality would be limited to “progressives.” Surveys show that proposals such as providing jobs to everyone willing and able to work and providing a livable minimum wage have majority support among Republicans. The WSJ, of course, is appalled that the “Occupy Wall Street” movement (a) generated a huge upsurge in the recognition of how severe inequality has become and (b) led the Democrats (finally) to pushing proposals such as the minimum wage that are favored by strong majorities of Americans. They have three responses. They repeat the economic claim that minimum wages can only damage lower-income workers. The economic literature is increasingly dubious of that claim, and it does not convince many Americans. The second response is that it is a Marxist interference with free markets. That convinces a tiny percentage of Americans, and they were already convinced by the neo-classical economic dogma.

Continue reading →

6 Comments

Posted in William K. Black

Tagged feminism, feminists

Finance Refuses to Take Akerlof and Romer Seriously about Looting

Posted on February 3, 2014 by Devin Smith | 4 comments

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

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.

Continue reading →

4 Comments

Posted in William K. Black

Tagged accounting control fraud, ackerlof and romer, Control Fraud, looting

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

Posted on February 1, 2014 by Devin Smith | 6 comments

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!”

Continue reading →

6 Comments

Posted in William K. Black

Tagged jamie dimon, JPM, JPM Chase

Introducing Modern Money Monopoly (MMM)

Posted on February 1, 2014 by Devin Smith | 16 comments

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).

Continue reading →

16 Comments

Posted in Guest Blogger

Tagged MMM, Modern Monetary Monopoly

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

Posted on February 1, 2014 by Devin Smith | 22 comments

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.

Continue reading →

22 Comments

Posted in Michael Hoexter

Tagged climate change, Keystone XL

The Eurozone’s “Nascent” Recovery

Posted on January 31, 2014 by Devin Smith | 4 comments

By William K. Black

On January 19, 2014 I posted a column entitled “Deflation: The Failed Macroeconomic Paradigm Plumbs New Depths of Self-Parody” that discussed the insanity of the Eurozone’s approach to “the threat of deflation.” The EU’s troika cannot understand that deflation is produced by inadequate demand and that the way to prevent it is to use fiscal policy to fill the gap in demand rather than waiting for deflation to hit and then trying to check it through “quantitative easing (QE).”

My January 25, 2014 column (“Spain Rains on Rehn’s Austerity Victory Parade: Unemployment Rises to 26%”) explained how a few weeks after the troika cited Spain as its success story proving the wisdom of austerity, unemployment in Spain – already above Great Depression levels – increased to 26%.

Continue reading →

4 Comments

Posted in William K. Black

Tagged deflation, ECB, Eurozone, troika

Does the Debt Ceiling Have to Be Raised?

Posted on January 30, 2014 by Joe Firestone | 9 comments

By Joe Firestone

Lately, the word out of Washington, DC from the plugged in people is that there will be no debt ceiling crisis coming up before the election. Politico says so, and so does the National Journal. MSNBC also agrees.
But not so fast, says the Washington Post, echoing the Wall Street Journal provided the House Republicans can agree on “. . . an extortion demand.” If they can, then we wll have another debt ceiling crisis.

Continue reading →