By William K. Black
Bloomington, MN: August 8, 2015
I have often noted the existence of a primitive tribal taboo shared by virtually all economists against using the “f” word – “fraud.” I have found a new example that sums up many of the pathologies of economics and economists. It is an article entitled “Going for Broke: New Century Financial Corporation, 2004-2006.” Given that New Century was a classic accounting control fraud, the use of the long-discredited gambling metaphor (our “autopsies” of S&L failures refuted it in 1984) demonstrates the crippling power of the taboo. The three economists who authored the September 2010 article are Augustin Landier (Toulouse School of Economics) David Sraer (Princeton University) David Thesmar (HEC & CEPR) (collectively, “LST”).
