By Stephanie Kelton
I knew my colleague had been in Sacramento this summer, and I knew he was there to testify in a federal case involving mortgage fraud. But I didn’t know the details of the case. I didn’t know the defendants had been the homebuyers or that they were on trial for mortgage fraud. This morning, I learned these details and more in this story from the Sacramento Bee. The whole thing is astonishing, and I doubt anyone but Bill could have helped to persuade a jury that, in spite of all the evidence, the real fraudsters were the elite bankers who looked the other way, even as borrowers falsified loan applications.
The jurors heard shocking testimony from ‘control fraud’ expert William Black that regular people who got loans they were unable to pay back did not (defraud) the banks. The elite bankers commit the fraud while prosecutors look the other way and prosecute the wrong people.”
By William K. Black
Makovsky is a PR group that specializes in representing banks. Because of that dual specialization they should be the most skilled shills for fraudulent bankers that money can buy. This fact makes their annual “reputation” survey delectable. Each year, the survey unintentionally documents how depraved senior bankers are as a group. They come to praise Caesar, but end up burying him in a garbage dump.
Here are key findings of their 2014 survey:
By J.D. Alt
1. Why we can afford it—2. Why we need it—3. How we can build it
3. How we can build it.
Cohousing, as briefly explained in Part 1, offers a uniquely supportive context for retired living. Cohousing communities consist of between 10 and 30 privately occupied and maintained dwelling units which share certain common facilities, amenities and, in some cases, social responsibilities and activities. It is this “commons” sharing that can potentially provide a retired person with benefits they otherwise could not afford to have, or have easily. For example, the shared facility might include an apartment for a live-in nurse-assistant/care giver who would provide assistance, in each of the private dwellings, as needed. Or, the “commons” might include a small exercise pool that individual retirees can utilize for a daily work-out. “Traditional” cohousing projects typically include a common cooking and dining facility where at least one meal a week is a shared community event—(individual dwellings have their own small kitchens as well.) In general, the goal is to create a comfortable balance between private autonomy and community activities.
By William K. Black
The New York Times headline was dominated by a seemingly strong word: “G.M. Is Fined Over Safety and Called a Lawbreaker.”
As I will explain, however, the seeming strength of the label “lawbreaker” is undercut by the rest of the title, the text of the article, and the reality of the Justice Department’s refusal to apply the rule of law to powerful domestic corporations and their controlling officers.
The first discordant note is the word “safety.” The article reports that GM, for the purposes of avoiding the expense of repairing a design defect that endangered the lives of its customers, covered up the defect and caused the death and injury of a number of those customers. The article does not report the (minor) cost of GM fixing its design defect. The article does not report on the number of people who were injured and killed because GM designed a defective ignition system, knowingly hid the defect from its customers and the government, and once it knew that its defective design was injuring and killing its customers GM deliberately covered up the existence of the defect and the cause of the easily avoidable injuries and deaths. The article states that GM was finally required to recall 2.6 million vehicles due to the defective design of the ignition switches.
By J.D. Alt
The commentary on one my recent posts included the following statement: “It’s a fallacy of composition to imagine that what we can’t afford individually is affordable collectively.”
I cannot get this sentence out of my mind. It seems to pinpoint a central cognitive dissonance that enshrouds our thinking about money. The common-sense logic of the phrase seems to say, at first glance, that if each citizen of a nation cannot afford to pay for, say, a road from village A to village B, then collectively they cannot afford to pay for it either. However, if they pooled their money, with each citizen putting in a little bit, it seems clear they might be able to collectively cover the cost. So the person who wrote the comment cannot have intended to mean what, at first glance, the sentence seems to say. They must have meant something deeper.
American economist Hyman Minsky died in 1996, but his theories offer one of the most compelling explanations of the 2008 financial crisis. His key idea is simple enough to be a t-shirt slogan: “Stability is destabilising”.
BBC Radio 4’s Analysis program has an episode on Minsky and looks at topics such as:
- In the aftermath of the financial crisis, why did Minsky die an outsider?
- What do his ideas say about the response to the 2008 crisis and current policies like Help to Buy?
- And has mainstream economics done enough to respond to its own failure to predict the crisis and the challenge posed by Minsky’s ideas?
By Stephanie Kelton
It’s been a long time, but I finally carved out enough time to record a new podcast. Although they’re my colleagues, Bill Black, Randy Wray and I see surprisingly little of one another these days. I did manage to catch up with Bill in Minneapolis last week, where I happened to be giving a talk (more on that in the coming days), but for the most part we’re all just trying to keep up with requests, which is a good problem to have when you think about it.
It was nice to slow down and talk with Randy this afternoon. We promised one another we’d do it more often. Anyway, here is today’s podcast. We hope you enjoy it.
A big MMT thanks to Donna D’Souza aka Trixie aka @HaikuCharlatan. She has done an awesome job of animating J.D. Alt’s wonderful new ebook Diagrams & Dollars: Modern Money Illustrated. For your viewing enjoyment, Donna’s video is below.
Conference dates have been announced for September 25-28, 2014 in Kansas City MO
By Dan Kervick
I recently joined Tom O’Brien as a guest on his terrific podcast From Alpha to Omega, and the interview is now available online. We discuss many of my favorite topics: the central banking system and the role of reserves, fiscal vs. monetary policy, capital requirements, differences between the US and European systems, and the need for healthy deficits and engaged government action to promote full employment and drive transformative change. Here is the link to the podcast:
Oh So Reserved – Dan Kervick on From Alpha to Omega
Cross-posted from Rugged Egalitarianism