Category Archives: William K. Black

Boehner’s Trophy

Posted on October 16, 2013 by Devin Smith | 10 comments

This article is inspired by David Firestone’s article in the New York Times entitled “Boehner’s Last Stand.” Firestone’s lead is the key:

“The nature of Speaker John Boehner’s final battle with the White House on the budget crisis is now clear: It doesn’t matter what House Republicans win in exchange for raising the debt ceiling and re-opening government, as long as they win something.”

I write to propose an award a grateful nation should immediately bestow on Boehner in a national ceremony broadcast live on every media outlet from the White House’s Rose Garden – The Winner’s Trophy. It should be in the form of a Boehner-sized weeping angel bearing the following inscription:

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Tagged boehner, Cruz, ryan

Arnold Kling’s Cunning Hairdresser Theory of the Financial Crisis

Posted on October 14, 2013 by Devin Smith | 4 comments

By William K. Black

Arnold Kling is a libertarian economist who once worked for Freddie Mac. This article discusses a blog and an article he wrote about the causes of the crisis. Both (unintentionally) illustrate key theoclassical economic positions critical to understanding the origins of the crisis. Kling’s blog was in response to a January 29, 2013 post by Thomas J. Sugrue. Sugrue provided data demonstrating that blacks and Latino homeowners suffered far greater wealth losses in the crisis than did whites. This upset Kling, who responded:

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Posted in William K. Black

Tagged Arnold Kling, Financial crisis, liars loans, mortgage fraud

UPI Treats Monetary Fiction as Fact: Sows the Seeds of the GOP’s Efforts to Cause a Recession

Posted on October 9, 2013 by Devin Smith | 6 comments

By William K. Black

In the course of researching yesterday’s column that explains why Tyler Cowen’s faux “hyper-meritocracy” endangers our world I read a number of articles discussing the Northwestern University study on the public policy views of the wealthy. One of those columns was published by UPI on February 24, 2013.

One of the central points that the scholars who conducted the study made was that the wealthy use their political clout to try to cause the American public to adopt the belief of the wealthy that reducing the federal budget deficit, in response to the Great Recession, was the most important problem facing America. In my column yesterday I noted that the scholars pointed out the logical incoherence of that position given the wealthy’s strong support for the policy view that the federal government should run budget deficits as a counter-cyclical fiscal policy to a recession.

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Tagged debt, Deficit Hysteria, UPI

The Faux Hyper-Meritocracy that Threatens to Destroy Us

Posted on October 8, 2013 by Devin Smith | 7 comments

By William K. Black

I have written two prior columns about Tyler Cowen’s praise of the faux “hyper-meritocracy.” Cowen assumes that productivity determines personal wealth and is measured by wealth. He celebrates financial managers as the exemplars of this hyper-meritocracy. In my first column I explained that it should have given Cowen pause that his meritocratic vanguard caused the greatest loss of wealth to society and that so many financial CEOs not only destroyed societal wealth, but also became wealthy through accounting control fraud. I explained how the bank CEOs that led the accounting control frauds also created the Gresham’s dynamics that suborned other professions (e.g., appraisers, loan brokers, and auditors) that cause bad ethics to drive good ethics out of the professions. Cowen could not have picked a less meritocratic group as his heroes than the financial CEOs running the systemically dangerous institutions (SDIs).

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Tagged accounting control fraud, hyper-metitrocracy

Bank Failures are “Inconceivable” under the Latest Neoclassical Fantasy

Posted on October 6, 2013 by Devin Smith | 8 comments

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

Only theoclassical economics constantly recycles variants of its worst ideas that have proven disastrous when they have influenced policy. Other fields advance because they embrace the scientific method. Theoclassical economists repeat their worst errors because they embrace anti-governmental dogmas that blind them to the inherent weaknesses of the corporate form and limited liability. This represents a dramatic regression in understanding from over 200 years ago when classical scholars like Adam Smith were warning that corporations were inherently criminogenic and likely to produce what we now label “control frauds.”

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Posted in William K. Black

Tagged bank failures, banksters, the great financial crisis, theoclassical economists, too big to prosecute, Tyler Cowen

The “Hyper-meritocracy” – an Oxymoron Led by Criminal Morons

Posted on October 4, 2013 by Devin Smith | 34 comments

By William K. Black

This column was prompted by William Galston’s review of Tyler Cowen’s new book Average is Over. Galston’s column worries about the huge, permanent underclass that Cowen envisions will grow in the United States. I write to challenge Cowen’s assumption that winners will prevail through a process of “hyper-meritocracy.” Cowen’s embrace of Social Darwinism assumes that the winners have a selective advantage that arises from “merit” – which Cowen conflates with the ability to create wealth. This is passing strange as we are still suffering from an orgy of wealth destruction led by the “winners.” The people who grew wealthiest were often the people must responsible for the largest destruction of wealth in history. In this first column I show that it is the most anti-meritocratic system. We do not live in a “winner-take-all” Nation. We increasingly live in a “cheater-take-all” system.

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34 Comments

Posted in William K. Black

Tagged hyper-meritocracy

Sorkin’s Paradox: Elite Bank Officers are “Worse” than “Repugnant” but Never Criminal

Posted on October 3, 2013 by Devin Smith | 9 comments

By William K. Black

This is the third installment in my Sorkin Saga. The saga was prompted by Andrew Ross Sorkin’s (ARS) video in which he “outed” himself as the leader of an undercover effort by the journalists of the New York Time’s “Dealbook” and CNBC to discover and “out” the “criminal element” among the elite bankers. Here is the key passage from his video.

“If there’s one question that I get just about more than any other, ‘So why didn’t anybody go to jail, and did nobody try?’ And there’s an answer to that too.

A lot of people had an incentive to try to find a way to bring not justice, but to put people away. Prosecutors, law enforcement, journalists; it would have been a better story. But for the last five years we’ve tried, all of us have tried, to find that criminal element. And while things happened that were upsetting and frustrating and unethical and immoral sadly, it may not have been criminal.”

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9 Comments

Posted in William K. Black

Tagged Andrew Ross Sorkin, banksters, Great Financial Crisis, occupy wall street

The Divine Right of Bankers: Sorkin Proves Baroness Orczy Correct

Posted on October 2, 2013 by Devin Smith | 7 comments

By William K. Black

In yesterday’s column I discussed the fact that Andrew Ross Sorkin (ARS) of the New York Times and CNBC has unmasked himself in a video entitled “Two Myths and One Reality” as the scourge of Wall Street who had worked tirelessly for five years to find the “criminal element” that caused the financial crisis.

“If there’s one question that I get just about more than any other, ‘So why didn’t anybody go to jail, and did nobody try?’ And there’s an answer to that too.

A lot of people had an incentive to try to find a way to bring not justice, but to put people away. Prosecutors, law enforcement, journalists; it would have been a better story. But for the last five years we’ve tried, all of us have tried, to find that criminal element.”

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7 Comments

Posted in William K. Black

Tagged Andrew Ross Sorkin, banksters, Great Financial Crisis, occupy wall street

Andrew Ross Sorkin Unmasks as Leading Occupy Wall Street’s (Three Star Restaurants)

Posted on October 1, 2013 by Devin Smith | 17 comments

By William K. Black

Andrew Ross Sorkin (ARS), long believed to be the sycophants’ sycophant who composes his odes to elite bank CEOs from his perch at the New York Times and CNBC has unmasked himself in a video entitled “Two Myths and One Reality.”

“If there’s one question that I get just about more than any other, ‘So why didn’t anybody go to jail, and did nobody try?’ And there’s an answer to that too.

A lot of people had an incentive to try to find a way to bring not justice, but to put people away. Prosecutors, law enforcement, journalists; it would have been a better story. But for the last five years we’ve tried, all of us have tried, to find that criminal element.”

ARS revealed in his video that he has posed as the modern-day leader of the League of the Scarlet Pimpernel, the undercover group of English aristocrats, led by an English baronet (“one to command, and nineteen to obey”) who saved French aristocrats from the Great Terror. The twist is that ARS’ League is composed of financial journalists who pose as sycophants and that the modern-day French aristocrats are the elite bankers whose misconduct caused the Great Recession. The purpose of ARS’ deception was to lure the elite bankers into admitting their misconduct so that they could be held accountable rather than aiding French aristocrats’ efforts to escape accountability. ARS was the anti-Scarlet Pimpernel, the aristocrat posing as the friend of the aristocrats in order to “find that criminal element.”

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17 Comments

Posted in William K. Black

Tagged Andrew Ross Sorkin, banksters, occupy wall street, the great financial crisis

Why do Conservatives Oppose Prosecuting Elite Corporate Frauds?

Posted on September 30, 2013 by Devin Smith | 10 comments

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

There are at least four principles that virtually all conservatives purport to support – except when the potential defendant is socially elite. I have written previously about two of these principles on several occasions – the need for accountability and “broken windows” theory that calls for the prosecutors to make the prosecution of even minor street crimes a high priority if they have, even indirectly, a material effect on the community.

The third principle is that it is vital to punish in order to deter crime. Gary Becker, the very conservative Nobel laureate in economics, emphasized this point (again, in the context of street crime). Under Becker’s theory of crime our current practices of allowing elite banksters to become wealthy through leading the “sure thing” of accounting control fraud with immunity from the criminal laws will predictably lead to new, larger epidemics of fraud that will continue to cause our recurrent, intensifying financial crises. It is rare, however, to find a prominent conservative who is demanding a priority effort to prosecute the elite bank officers who ran those frauds. I know of no conservative member of Congress publicly making that demand today. Senator Chuck Grassley has previously criticized the Obama administration’s failure to prosecute elite bankers.

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