Tag Archives: Control Fraud

Discrediting Regulation: from George Stigler to Tyson’s Fraud-Free Carbon Tax Fantasy

Posted on July 8, 2013 by Devin Smith | 3 comments

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

Laura D’Andrea Tyson (President Clinton’s principal economist) has written an ode to a “carbon tax” that does not acknowledge a single disadvantage or substantive (as opposed to political) concern with such a tax. A carbon tax can have advantages, but her article oversells the idea and ignores the severe concerns about such a tax. Her article demonstrates why the Clinton administration’s anti-regulatory and fiscal policies helped sow the seeds of ongoing financial disaster. (The Bush administration watered and fertilized those seeds and we all reaped the whirlwind.)

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Posted in William K. Black

Tagged accounting control fraud, Coase, Control Fraud, regulation, Stigler, Tyson

Revealed Biases: Why MMT Critics Continue to Rely on Strawman Arguments

Posted on July 6, 2013 by Stephanie Kelton | 39 comments

By William K. Black

Economists of nearly every flavor believe in the concept of “revealed preferences.” What matters is not what people say they will do in a hypothetical situation, but what they actually do. Their actions speak more credibly than their words. In this column I announce a related concept: “revealed biases.”

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39 Comments

Posted in William K. Black

Tagged Control Fraud, krugman, Lowrey, MMT, Modern Monetary Theory, Thoma

The Game Theoretical CEO: An Inexplicable Lawful Agent

Posted on June 24, 2013 by Devin Smith | 1 comment

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

Introduction

This is the sixth (and final) of my series of articles on the work of Roger Myerson, a 2007 Laureate in Economics. Myerson’s work on CEOs is typical of the game theoretical approach to explaining the behavior of CEOs and firms, so I am discussing an exemplar rather than an outlier. This installment discusses some of the fatal flaws that I argue characterize the game theoretical work on CEOs by the Laureates. I will urge that they are weakest where they believe they are strongest – their models. The article explains why the models are specified incorrectly because the models have no coherent theory (or understanding) of fraud or ethics. The game theoretical Laureates (Laureates) make unsupportable implicit assumptions that are belied by the data and internally inconsistent with their explicit assumptions.

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Posted in William K. Black

Tagged accounting control fraud, bankster, Control Fraud, crony capitalism, Myerson, plutocracy, plutocrats

Myerson’s Ode to Crony Capitalism

Posted on June 18, 2013 by Devin Smith | 7 comments

By William K. Black

This is the fifth installment in my series of article about the predictive and policy failures of Roger Myerson, Nobel Laureate in economics in 2007. My first two articles critiqued his claim that capitalism’s unique advantage over communism is plutocracy because only exceptionally wealthy CEOs can be successfully bribed by their shareholders to “imitate” “good” CEOs who will not cheat the shareholders.

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7 Comments

Posted in William K. Black

Tagged accounting control fraud, bankster, Control Fraud, crony capitalism, Myerson, plutocracy, plutocrats

Myerson’s misses the Miasma that is Modern Executive Compensation

Posted on June 17, 2013 by Devin Smith | 5 comments

By William K. Black

This is the fourth installment of my exploration of the work of Roger Myerson, Nobel Laureate in economics in 2007. It is part of what will be a broader series of articles exploring why economics is unique among the sciences in awarding the Prize to scholars whose predictive work proves profoundly wrong and leads to public policies that cause great harm. The first installment used Myerson’s Prize lecture to explore his paean to plutocracy as the purported unique advantage of capitalism.

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5 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, Control Fraud, executive compensation, Myerson, plutocracy, plutocrats

Myerson’s newest model: “tax poor workers to subsidize rich bankers”

Posted on June 13, 2013 by Devin Smith | 10 comments

By William K. Black

Roger Myerson has recently updated an article on his purported mechanism for explaining why our supposedly efficient markets are producing growing crises.

A MODEL OF MORAL-HAZARD CREDIT CYCLES (March 2010, revised September 2012)

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10 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, Control Fraud, plutocracy, plutocrats

Roger Myerson Updated Paean to Plutocrats as Capitalism’s Greatest Treasure

Posted on June 13, 2013 by Devin Smith | 4 comments

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

In my first article on the Nobel Laureate Roger Myerson’s failed policies that helped make finance so criminogenic that it drove the ongoing financial crisis I began the exploration of Myerson’s claim that plutocrats constituted the unique advantage of capitalism over a system that forbade privately-owned firms. Myerson calls a system that forbids privately-owned firms “socialism.” He asserts that plutocrats demonstrate the accuracy of Friedrich von Hayek’s assertion of the inherent advantage of “capitalism.” My first article used Myerson’s Prize lecture to explore why his methodology, theories, and recommended policies failed so spectacularly. This article expands on that theme by citing other work by Myerson.

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4 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, Control Fraud, plutocracy, plutocrats

Roger Myerson’s Paean to Plutocracy

Posted on June 5, 2013 by Devin Smith | 11 comments

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

Introduction

This article begins a project to critique the work by economists concerning regulation that has led to the award of Nobel prizes. The prize in economics in honor of Alfred Nobel is unique. It is not part of the formal Nobel Prize system. It was created by a large Swedish bank and it is the only “science” prize frequently given to those who proved incorrect. The theme of my series is how poorly the work has stood the test of predictive accuracy. Worse, it has led to policies in the private and public sector that are criminogenic and explain our recurrent, intensifying financial crises.

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11 Comments

Posted in William K. Black

Tagged accounting control fraud, Control Fraud, plutocracy, Riksbank, Roger Myerson

How Dare DOJ Insult HSBC’s Crooks as Less “Professional” than Liberty Reserve’s Crooks?

Posted on May 30, 2013 by Devin Smith | 3 comments

By William K. Black

Standard Chartered and HSBC’s leaders must be doubly humiliated by the description by Mythili Raman, the acting head of the U.S. Department of Justice’s (DOJ) Criminal Division, of Liberty Reserve’s money laundering operation. UK laws are, of course, very congenial to those suing for libel and I am sure that these banking titans are meeting with their solicitors to demand a retraction and apology from Raman. In the very first clause of her May 28, 2013 statement to the media on the actions against Liberty Reserve’s controlling officers, Raman emphasized how “professional” they were as money launderers: “Today, we strike a severe blow against a professional money laundering enterprise charged with laundering over $6 billion in criminal proceeds.” In four paragraphs, she used the word “professional” three times and “sophisticated” once to describe Liberty Reserve’s money laundering. Continue reading →

3 Comments

Posted in William K. Black

Tagged accounting control fraud, Control Fraud, DOJ, HSBC, Liberty Reserve, Standard Chartered

Why Do the Folks Who Make Booze Care More about their Reputations than the Bankers?

Posted on May 28, 2013 by Devin Smith | 4 comments

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

There are many forms of control fraud. I have written primarily about accounting control frauds because they drive our recurrent, intensifying financial crises and we are in the midst of the worst such crisis in modern history. I wrote recently about the intersection of anti-purchaser and anti-employee control fraud in Bangladesh that killed 1,127 employees (and injured roughly twice that number) and made the point that control frauds kill and maim more people than traditional blue collar crimes and cause greater financial losses than all other forms of property crime combined. Control frauds also cause a greater number of crimes than do traditional blue collar crimes. Think for example of the number of victims of the Libor scams, measuring in the hundreds of thousands and the foreclosure frauds.

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