Author Archives: William Black

William K. Black
December 18, 2018     Bloomington, MN

On December 13, 2018, the Wall Street Journal published an interesting op ed by Jesse M. Fried, a famous law professor in multiple areas of corporate law, and Matthew Schoenfeld, who works at a hedge fund that is the leading funder of civil lawsuits, primarily fraud and tort suits.  The title is “Will China Cheat American Investors?  The answer, of course, is yes – it will continue to cheat American (and non-American) investors.  Fried also has a strong background in economics, which is relevant to his op ed and my blog article.

The op ed is interesting in part because it was published just after a documentary on Chinese stock fraud (“The China Hustle”) had its general video release.  The China Hustle explores the pervasive defrauding of primarily U.S. investors by those that control Chinese corporations.  Though the documentary does not make the point, it is describing “accounting control fraud.”  A ‘control fraud’ is a seemingly legitimate entity used by the person that controls it as a “weapon” to defraud or predate.  For the sake of brevity, I use “CEO” rather than “the person that controls the corporation.”

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William K. Black
December 13, 2018     Bloomington, MN

The Wall Street Journal published an article on December 12, 2018 that should warn us of coming disaster:  “Banks Get Kinder, Gentler Treatment Under Trump.”  The last time a regulatory head lamented that regulators were not “kinder and gentler” promptly ushered in the Enron-era fraud epidemic.  President Bush made Harvey Pitt his Securities and Exchange Commission (SEC) Chair in August 2001 and, in one of his early major addresses, he spoke on October 22, 2001 to a group of accounting leaders.

Pitt, as a private counsel, represented all the top tier audit firms, and they had successfully pushed Bush to appoint him to run the SEC.  The second sentence of Pitt’s speech bemoaned the fact that the SEC had not been “a kinder and gentler place for accountants.”  He concluded his first paragraph with the statement that the SEC and the auditors needed to work “in partnership.”  He soon reiterated that point:  “we view the accounting profession as our partner” and amped it up by calling accountants the SEC’s “critical partner.”

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William K. Black
December 8, 2018      Bloomington, MN

The funeral services for President George HW Bush triggered Ross Douthat’s nostalgia for the “aristocratic virtues of the old WASP establishment, and a disappointment with the meritocracy that has risen in its place.”  This column ignores his nostalgia and alleged virtues and discusses briefly his bizarre assumption that a “meritocracy” runs America.  Given the 2008 Great Financial Crisis (GFC) and President Trump, I thought that the meritocracy fantasy was dead.  We are far closer to anti-meritocracy (a kakistocracy).    Continue reading →

By William K. Black
August 2, 2018     Bloomington, MN

Peter Suderman, the managing editor at Reason.com (hard right) has published an op ed in the New York Times entitled “How Republican Hypocrisy Lifts Social Democrats.”  His subtitle is “By its astoundingly cynical approach to deficits and debt, the G.O.P. has opened the door to an expansive left.”  What is actually astounding is that Suderman never mentions, much less discusses; the situations in which a Nation with a sovereign currency should run deficits.

Stephanie Kelton and I have been trying hard to keep Democrats from, again, rushing into the trap of denouncing Republicans for running federal deficits.  Yes, Republicans are hypocrites about debt and deficits.  That does not mean that Democrats should repeat Clinton and Obama’s embrace of the Republican’s economically illiterate, harmful, and fake hysteria about debt and deficits.  Suderman makes an acute observation about why Republicans pretend to embrace deficit hysteria.

Through their actions, [Republicans] have proven that they cared about the deficit primarily for its usefulness as a political cudgel, an easy way to curtail Democratic policy goals.

My ‘friendly amendment’ would remove the word “primarily” from that sentence.

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By William K. Black
July 22, 2018     Bloomington, MN

Trump’s language problems do not end with his double negatives and his endless contradictions of what he has just said or tweeted about Putin’s assault on our democracy.  Trump lies about everything, all the time.  His lies, however, frequently reveal the greater truth – he lives to betray America, his responsibilities as President, and his base.  One classic example is the illegal abuse of monopoly power used against Americans and people globally.  Trump has managed to embrace, contemporaneously, polar views on monopoly power – and both views are wrong.  That takes some doing.  One would think that taking opposite views would help you be right half the time.

Under United States law, the intentional abuse of monopoly power is both illegal and criminal.  Our Department of Justice (DOJ) and Federal Trade Commission (FTC) can bring civil suits to stop the abuse and penalize it – including treble damages and orders to reduce greatly the monopoly power.  DOJ can also bring a criminal prosecution.  In the European Union (EU), such monopoly power abuses are generally only subject to civil sanctions and orders to reduce monopoly power.  (Some EU nations criminalize “hardcore” cartel actions.)  DOJ can prosecute either, or both, the firm and the officers involved in abusing the monopoly power.  EU nations often do not permit prosecutions of the firm even for cartels.

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By William K. Black
July 19, 2018     Bloomington, MN

The Republican Party, for over 70 years, did not simply oppose the Soviet Union; it demonized Democrats as ‘soft’ on Russia.  This history makes the Republican Party’s increasing embrace of Putin’s Russia particularly bizarre.

Forty percent of Republican’s now consider Russia “friendly” or an “ally” of the United States.  That percentage is nearly twice as large as in 2014 despite a large number of Russian attacks on the U.S. and the West (and Russians) since 2014.  Seventy-nine percent of Republicans had a positive response to Trump and Putin’s infamous (to most Americans) Helsinki press conference.

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By William K. Black
June 20, 2018     Kansas City, MO

The House Speaker is the answer to the trick question:  “Who is the second most powerful elected official in the United States.”  The importance of the Speaker is obvious to anyone with even a modestly sophisticated understanding of U.S. politics and government.

One of the reasons for this astonishing level of sycophancy of Republican House candidates that run for office by presenting themselves as moderate conservatives is the ‘Hastert rule.’  They run as moderates, but they vote consistently in favor of legislation that creates the most radically right policies in modern American history.  If you have never heard of the Hastert rule or do not know what it is, blame the Democrats (and the media).  The fact that the Hastert rule is not infamous with the public proves (again) the ineptness of Democrats as politicians (and the failure of most of the media as journalists).  The rule bears the name of then-Speaker of the House Dennis Hastert, who decreed and implemented the rule.  If you do not know that Hastert is infamous, and why he is infamous, blame the Democrats (and the media).

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