The S&L Regulatory Conspiracy Against Italian-Americans

Posted on January 21, 2014 by | 2 comments

By William K. Black

In my recent column I tried to convey a bit of courage, competence, and craziness that Jim Cirona displayed and had to deal with as a top regional regulator during the savings and loan crisis.

I failed, however, to discuss an episode that epitomizes all these elements.  The incident also eventually led to Cirona hiring me as the SVP and General Counsel of the Federal Home Loan Bank of San Francisco (FHLBSF).  I will draw heavily on Bartlett Naylor’s “The Legend of Wild Bill and Black Bart” in recalling the tale.  

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The TPP: A Dangerous Proposal Whose Time Has Gone

Posted on January 21, 2014 by | 12 comments

By Joe Firestone

A recent, very good post at Naked Capitalism by Clive, suggests:

. . . Dear readers, you may think that writing to your elected representative, commenting negatively on articles you read in the mainstream media about the TPP and generally kicking up a bit of a fuss, making some noise, is a waste of effort. That is not so. The world does watch what goes on in the US. If popular sentiment is against something, the US government has a much harder job of convincing foreigners that it’s just them being awkward and reactionary and not getting the big, progressive, reform-minded, modernising picture.

I agree that this is a good proposal for one way the American public could register its objections to the Trans-Pacific Partnership (TPP) with foreign leaders. But, I think that such letters ought also to point out that even if the TPP were railroaded successfully in the next few months, then it is unlikely to stick. After all, it is only a Treaty. Wouldn’t an electoral victory here by a movement dedicated to overturning corporate control of the political system, result in withdrawal from the TPP before any concrete legislation likely to conflict with it was passed by Congress?

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JOBS FOR ALL: THE MISSING BUT ESSENTIAL ELEMENT OF DR. KING’S MARCH ON WASHINGTON

Posted on January 20, 2014 by | 13 comments

By L. Randall Wray

“It was obdurate government callousness to misery that first stoked the flames of rage and frustration. With unemployment a scourge in Negro ghettoes, the government still tinkers with half-hearted measures, refuses still to become an employer of last resort. It asks the business community to solve the problems as though its past failures qualified it for success.” –Rev. Dr. Martin Luther King, Jr., in his last letter requesting support for the “March on Washington for Jobs and Freedom”

In recent days, the Job Guarantee has been thrust into public discussion, thanks in large part to Jesse Myerson’s Rolling Stone article—see here.

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James M. Cirona: In Memoriam

Posted on January 20, 2014 by | 2 comments

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

The death of a successful banker and regulator

James M. Cirona died January 4, 2014.  I doubt that many readers know of Jim’s work even if they follow finance.  That is a shame for Jim was one of the most important reasons the savings and loan debacle did not cause a financial crisis and a Great Recession.  The reason Jim was so effective was that he understood that the factor driving the debacle was a surging epidemic of accounting control fraud and he had the leadership abilities and the courage to expand and focus the resources of the Federal Home Loan Bank of San Francisco (FHLBSF) to stop that epidemic.

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Deflation: The Failed Macroeconomic Paradigm Plumbs New Depths of Self-Parody

Posted on January 19, 2014 by | 16 comments

By William K. Black

Patient bleeding out?  Don’t treat the bleed; keep the crash cart nearby

Imagine you were a doctor in the ER when a patient was brought in presenting symptoms indicating a likely internal bleed.  Here are the two critical questions you face.

  1. Would you (a) find and stop the bleed or (b) wheel the patient off to a “recovery” room with instructions to alert the crash cart to be ready to try to revive the patient should he go into cardiac arrest due to the continued, untreated bleed?
  2. If you chose option (b) in response to the first question, would you tell them to (a) use the crash cart that is known to be most effective, or (b) use the experimental prototype crash cart that has never been used successfully to revive a patient suffering from a cardiac arrest triggered by an untreated bleed and that most physicians think employs a methodology that is inherently incapable of reviving such patients?

If you picked option (b) in response to both questions, congratulations!  Your patient may have died and your career in medicine may be over but you have demonstrated that you are the very model of the modern chief economist of the IMF, OECD, and ECB.  Your initial salary in those positions may not dwarf your income as an incompetent physician, but the financial industry loves to make wealthy the “useful idiots” of the IMF, OECD, and the ECB and similar entities as soon as they leave what is termed “public service” (rather than “servicing the banksters”).

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Ecuador and the Media’s Selective “Victim” Memes

Posted on January 18, 2014 by | 4 comments

By William K. Black

In my prior column I discussed the U.S. media frenzy that arose when a leaked emails revealed that Martha Roldos, a leading politician in Ecuador who (very badly) lost an election contest with President Correa, was trying to obtain funding from an infamous United States group that goes by the Orwellian name National Endowment for Democracy (NED).  The U.S. media responded with three memes.  Roldos is the “victim” first of a theft of her emails by someone unknown (but with the U.S. media presenting a fact-free assertion that it was Correa’s administration followed by a “take back” sentence using the magic “if”).  See my first column for the full context.

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What is the U.S. Media up to in its Coverage of Ecuador?

Posted on January 17, 2014 by | 6 comments

By William K. Black

If the Obama administration wanted to improve relations with Latin America the most obvious move would be to seek closer ties with Ecuador.  Ecuador has been transformed into a nation with a stable political system, a head of state reelected by enormous margins in free elections, substantial economic progress, and a pragmatic development program.  That program embraces policies that even the Washington Consensus praised that focus government expenditures on health, education, and infrastructure.  The policies also champion an idea most identified with the conservative economist Hernando de Soto – making it far easier for entrepreneurs to start new businesses.  President Correa is the leader who continues to surprise his friends and foes by taking steps that make economic sense even if they are identified with the “right” while keeping a relentless focus on the needs of the poor.  That focus on the poor comes from Correa’s Catholic social justice beliefs that the Pope has recently been returning to centrality.

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What Would It Take To Get Andrew Ross Sorkin To Call For Jamie Dimon To Resign?

Posted on January 17, 2014 by | 10 comments

By William K. Black

I have concluded that the journalists who write for the New York Times’ “Deal Book” are incapable of embarrassment or introspection.  I have waited in vain for Andrew Ross Sorkin to make a New Year’s resolution to make 2014 a fresh start.  There are scores of Deal Book article that drive a white-collar criminologist and a (real) financial regulator to despair.  I focus here on one article by Sorkin on October 14, 2013 entitled “The Bloodlust of Pundits Swirls Around Jamie Dimon” that exemplifies how much harm Deal Book does because of its pandering to the elite financial CEOs who became wealthy from the frauds that drove the crisis, its ethics-free approach to financial fraud, and its analytical ennui.  Deal Book could be a national asset, but it is a net liability.  This first installment discussing their “Bloodlust” article analyzes Sorkin’s use of the world “bloodlust.”

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GROWING RECOGNITION OF THE NEED FOR THE JOB GUARANTEE

Posted on January 16, 2014 by | 13 comments

By L. Randall Wray

In recent weeks the Job Guarantee proposal has gained supporters, and the arguments for an increased government role in ensuring full employment have become stronger. (See here, here, and here.)

In this piece, I examine why. Bear with me because I will tie together four threads. First, we have the return of the stagnation thesis; Second there’s growing evidence that the US labor market is not recovering, and many are arguing that this is the “new normal”; Third, the Fed has (re)discovered what many of us have known all along: low interest rate policy does not stimulate investment; and Fourth, our “thought leaders” are finally discovering that Americans want government to do something about involuntary unemployment. All of these threads strengthen the case for the Job Guarantee.

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16 Reasons Matt Yglesias is Wrong about the Job Guarantee vs. Basic Income

Posted on January 16, 2014 by | 43 comments

By Pavlina Tcherneva

Slate’s Matt Yglesias is out with another caricature of post on the Job Guarantee (JG) and, guess what?  He still doesn’t like what he sees. He’s all for guaranteeing income to people who can’t find jobs, but he’s opposed to making receipt of that money “conditional on performing make-work labor for the government.”  As one of the leading proponents of the JG, let me say this for the nth time: THE JOB GUARANTEE IS NOT ‘MAKE-WORK.’  This is not a reaction to Yglesias but a core principle of the earliest literature on the Job Guarantee (e.g., here, here and here).  There is no way that anyone familiar with even a sliver of the vast collection of books, articles, essays, working papers, policy briefs and blog posts on the JG could, in good faith, continue to claim that the JG is “make-work.”

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