“If it’s too good to be true, it probably is.” This old adage came to mind on December 11, 2012 when the U.S. Treasury made the announcement, reiterated unthinkingly by the press, that the AIG bailout was coming to an end with American taxpayers making a tidy profit on the deal. In an effort to capitalize on the news, AIG has spent millions of dollars on a primetime ad campaign thanking America for the bailout, highlighting its success: “We’ve repaid every dollar America lent us. Everything, plus a profit of more than 22 billion.” Unfortunately, this cleverly designed public relations maneuver deceives the taxpayer by distorting the perception of what has been a contentious use of government funds.
When the financial bubble burst in September 2008, U.S. and European governments responded by shifting bank losses onto their own balance sheets. The pretense is that real growth cannot resume until the banks and speculators are “made whole.” To cover the cost of bailing out the banks, governments now are trying to run budget surpluses. This adds fiscal deflation to the debt deflation left in the bubble’s wake, shrinking the economy at large. Governments are raise taxes (or simply print new debt to swap for the financial sector’s bad loans and gambles) to reimburse financial institutions whose lending and outright gambling (not to mention the excursion into financial fraud) caused the crisis. Continue reading →
By William K. Black
(Cross posted at Benzinga.com)
I began writing this article while returning from presenting at a conference on Modern Monetary Theory (MMT) in Reggio di Calabria, Italy arranged by Francesco Toscano and supported by the Regione Calabria and the Provincia di Reggio Calabria. MMT has sparked considerable interest in Italy because it puts the lie to the constant claim that there is no alternative (TINA) to austerity and deepening recessions in the Eurozone. Continue reading →
This column discusses one of the more subtle issues raised by the Department of Justice’s (DOJ’s) civil fraud action against Bank of America (B of A). The issue was so subtle that of the three articles about the lawsuit that I choose to review the night after the suit was filed, only the NYT article mentioned one of the most important aspects of the suit – the key role that the whistleblower played in making the action possible. The AP and the WSJ articles ignored the fact.
On 10/24/12, William Black appeared on WBAI’s Pacifica Radio with Linda Perry discussing the Government’s billion dollar civil lawsuit against Bank of America / Countrywide. You can listen to the program here.
Here’s the central thesis of the far right about Fannie Mae and Freddie Mac. It is taken from the web site: The Neville Awards (as in Neville Chamberlain), which gives “awards” to Democrats for their cowardice and other mortal and venal sins. This particular article claims that the damnably clever Democrats, while the Republicans controlled the Presidency, House, Senate, Supreme Court, and all the regulatory agencies, pulled off a deliberate plan to destroy the economy in order to elect Obama. “Obama, Fannie Mae & Freddie Mac – How the Democrats Brought Down the Economy in Time to Elect Obama.”
Jeff Connaughton has just authored a major insider account revealing and explaining the failure of the politicians and regulators to hold the banksters who drove the financial crisis accountable and to remove the most obvious risks of future crises. On Sunday, October 21, 2012, UMKC’s Bill Black hosted a book salon on Firedoglake with Jeff Connaughton. With Connaughton’s permission, we are cross-posting his introductory post (which explains how he came to write the book) and Bill Black’s review of his book.
The central questions for a theorist are whether his theory showed strong explanatory power and to what extent it proved useful in diverse settings. A distinguished economist, Dr. Jayati Ghosh, has addressed those questions in an article in which she was explaining to Indian readers that a large fraud, Satyam, was not the product of unique defects in Indian regulation.