By Michael Hoexter, Ph.D.
A spectre is haunting Europe, the United States, and the world, the spectre of social science unmoored from reality. Economics, under the influence of an alliance of otherworldly academics and short-sighted businesspeople has lost touch with the reality of a functioning economy, the reality of ordinary people, and the on-rushing challenge of overburdened planetary systems, in particular human-caused changes in the chemical composition of the atmosphere and oceans.
Posted in Uncategorized
By Stephanie Kelton
I’ve grown increasingly frustrated by the near universal cry for more action from the Fed. My friend and fellow blogger Marshall Auerback has quipped that it’s as if every mainstream progressive received the same White House memo. I imagine it looked something like this:
On June 13, 2011, the New York Times wrote an exasperated editorial entitled “Nearly a Year After Dodd-Frank.” It began by warning that:
Without strong leaders at the top of the nation’s financial regulatory agencies, the Dodd-Frank financial reform doesn’t have a chance. Whether it is protecting consumers against abusive lending, reforming the mortgage market or reining in too-big-to-fail banks, all require tough and experienced regulators.
The editorial ended with this sentence: “It’s past time for President Obama to take off the gloves.”
By Michael Hudson and Jeffrey Sommers
(Cross-posted from FT)
Austerity’s advocates depict Latvia as a plucky country that can show Europe the way out of its financial dilemma – by “internal devaluation”, or slashing wages. Yet few of the enthusiastic commentators have spent enough time in Latvia to understand what happened. Its government has chosen austerity, its people have not. Finding no acceptable alternative, much of the labour force has elected to emigrate. This is a major factor holding down its unemployment rate to “just” 15 per cent today. Continue reading
The ongoing U.S. crisis was driven largely by financial derivatives. Nine of America’s systemically dangerous institutions (SDIs) failed or had to be bailed out – Bear Stearns, Lehman, Merrill Lynch, Fannie, Freddie, AIG, Countrywide, Wachovia, and Washington Mutual (WaMu). The SDI failures were primarily due to losses caused or aided by the sale and purchase of enormous amounts of fraudulent derivatives, and deregulation, desupervision, and de facto decriminalization proved exceptionally criminogenic. The Commodities Futures Modernization Act of 2000 and the Gramm, Leach, Bliley Act of 1999, respectively, made credit default swaps (CDS) into a regulatory black hole and repealed the Glass-Steagall Act’s prohibition against banks mixing commercial and investment banking. Continue reading
Posted in William K. Black
Tagged commodity futures modernization act, derivatives, dodd-frank, fraud, jamie dimon, jp morgan
Jamie Dimon is the smartest U.S. banker – as he, the Senate banking committee, the media, and President Obama told us. They told us this in the context of Dimon’s bank, JPMorgan, suffering a huge loss due to (if Dimon is to be believed) his top lieutenants’ stupidity. We are told that Dimon is the smartest banker because he ordered JPMorgan to sell its collateralized debt obligations (CDOs) (“green slime” “backed” primarily by endemically fraudulent “liar’s” loans) at the end of 2006 and close its special investment vehicle (SIV). Continue reading
So for the short term, it appears we won’t have a “Grexit”, which has led many commentators to suggest (laughably) that a crisis has been averted. Typical of this sentiment is a headline in Bloomberg today “Greece avoids chaos; Big Hurdles Loom”. To paraphrase Pete Townsend, meet the new chaos, same as the old chaos. It is worth pondering how acceptance of the Troika’s program (even if cosmetic adjustments are made) will help hospitals get access to essential medical supplies (see here), whilst the government persists in enforcing a program which is killing its private sector by cutting spending and not paying legitimate bills, and an unemployment rate creeps towards 25 per cent and 50 per cent for youth. Continue reading
The aphorism is by Jamie Dimon. I took it from his March 30, 2012 Letter to shareholders (p. 8). The immediately preceding sentence was: “Low-quality revenue is easy to produce, particularly in financial services.” Continue reading
Posted in William K. Black
The main objection to MMT is the belief that adoption of a fiat money necessarily leads to high inflation if not to hyperinflation. Those who adopt this critique usually see MMT as a proposal, although some (like Paul Samuelson) recognize that MMT actually describes the system we already have. The latter group fears that if we tell the truth about the existing monetary system, then elected officials will “run the printing presses” to create high inflation. Hence, best to adopt what Samuelson described as the “old time religion” of lies about the fiscal options open to sovereign government to keep the inflation goblins at bay. Continue reading
Posted in L. Randall Wray, MMP
By Marshall Auerback
Hans-Werner Sinn, President of Germany’s Ifo Institute and the Director of the Center for Economic Studies at the University of Munich, has taken to the pages of the NY Times to explain why Berlin is balking on a further bailout for Europe. Amongst the points that Sinn makes against German sharing in the debt of the euro zone’s southern nations is a legal one: “For one thing, such a bailout is illegal under the Maastricht Treaty, which governs the euro zone. Because the treaty is law in each member state, a bailout would be rejected by Germany’s Constitutional Court.”
Posted in Uncategorized
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