Tag: ek Politics

So I happen to have a very old, very fast car that I rarely use.  It’s unreliable and can leave you inconveniently stranded at your destination, unable to return home.  It’s hard to drive because of the performance suspension and to get in and out of because of the configuration (it’s nickname is ‘The Flying Penis’).  While the mileage doesn’t suck it’s nothing to brag about and there is no cargo space at all.

On the other hand it still goes like stink and provided you’ve assured yourself a suitable stretch of road is enforcement free it’s a blast at high speeds.

These are not uncommon traits in a vehicle like this, mine is in fact relatively civilized.

What’s surprising about a piece like John Broder’s is that someone who should know better about the inherent unruliness of this type of automobile complains with particular pettiness and spite about the Tesla Model S.

Now I happen to think the computer logs prove Broder a pants on fire prevaricating liar and his apologists credulous fools grasping at straws (to say nothing of his own feeble attempts to avoid Judith Millerdom), but this is not the first time.

So what motivates this vitriol against electric cars?

Well, range is a problem.  Until I read up on this I had no idea it was so limited- around 40 miles for the Volt in pure electric mode, 73 for the Leaf.  Perfectly fine for errands, not so much for trips.

But I think that more fundamentally it’s God, Guns, and Gays.

Gasoline is a dinosaur in more ways than one.  Either it disappears or we do.  Turn Left Racing is the most popular spectator sport in the U.S. (Throwball has better TV ratings).  It feeds the populist fantasy that with a little more practice or firepower you too can be a hero for people so down and out their solace is the fact that at least they’re not a ____ and there will be pie in the sky by and by, by and by, on the big rock candy mountain.  Were your life that miserable and you a little less cynical you’d cling to it too.

But it’s all an illusion, magical thinking and distractions.  The big stories today are Danica Patrick’s love life and Daytona Pole.

More measured accounts-

• The Guardian
• Washington Post
• Time Magazine

Can you handle the truth?  How about a good story?

If you are a regular reader you may know that I was State Co-ordinator of my meatspace club.  You may not know I was engaged.

Yes I know, hard to believe anyone can stand ek for 5 minutes in a row, let alone want to spend the rest of their life with me.  But it was true.  She loved me.  A lot.

When we met I told her I was a practicing politician on the make, and what I wanted more than anything was to be King.  And then I was.

The National club was having a little get together in Vegas and as Incoming King I had to get there a day early for my special super secret training.  There was training for spouses too, not that we would have traveled separately anyway.

Part of being ek is procrastinating to the very last second, and then packing everything- kitchen sink included.  By the time we reached the airport for our evening red eye I had already been up for 24 hours.  It was a great disappointment to me that all the restaurants, bars, and gift shops were closed.  And our flight was delayed so I was really looking forward to my bag of peanuts on the plane.

Three cramped hours later in Vegas it is still midnight, my love was dragging and so was I, but-

When you’re on the make, you make things happen.  My political handlers were there to greet me in the lobby.  They had super, super secret training which I found out basically consisted of adjourning early and heading for the bar to trade lies.  They wanted me to circulate and make contacts.

Well, you have to make your marks.

I checked in, took my sweetie to our room and said goodnight.  Not the best goodnight I’ve ever given, but I was still a little cranky.  When I got all respectable again, I went back down to meet and greet.

Just as I was calling the whole thing a stupid waste of time, the delegation from my largest local rolls in.  I had to be nice to them, and they had to be nice to me.  Even so I was genuinely flattered that they invited me out to $1.99 breakfast with them.  It was Vegas, it was a good breakfast.

The sun comes up early on my birthday and I had all that super secret training to get through (mostly meeting the club’s corporate sponsors) so I went back to my room and got respectable yet again, woke up my honey and we went off to get trained.

I’ve already told you the valuable information I got.  My fiance got 4 hours of “you will never see him again” and totally embarrassed me (or so people say) by not sucking it up stoically but wailing “I love him so much”.  And she did, even when we broke up.

We had an awkward lunch together that consisted mostly of salad.  Two more hours of propaganda and we were free.

Well kind of.  In one of those coincidences that happens only in real life, her brother from California was also in Vegas, finishing up a business meeting.  We had about an hour of overlap before he had to jet out.

Wait, it gets better.  When we got back to the room there was a cake from room service.  Emily, my mom, didn’t forget my birthday (even though I was born in the age of epidurals) and had sent me the most expensive cake she never got to eat.  It was good, chocolate with chocolate icing and raspberry filling and some fresh raspberries on top.

Did I say I was wicked?  No rest for.  The one thing my sweetheart wanted to see in Vegas was the Hard Rock Hotel.  Now.  My problem was the incoming chief of the whole shebang was holding a party at 6 pm.  Attendance mandatory.

Incoming chief?  It was a contested race, the other guy could have won.  Who says this isn’t about politics?

Sure honey, we have an hour.  Let’s go.

Got my Hard Rock pin to go in my collection, got my complimentary shot glass.  Put a whole buck of slots on my Hard Rock card which still sits in my wallet to remind me of my misspent youth.  Let’s go.

She was not happy, being hustled around.  I was not happy to do it, but you make your marks.   The chosen one had rented the Grand Ballroom at the top of the Hotel and we arrived breathless and cranky at 5:59.  The line was not long and at 6:05 the other couple left.

At 6:06 the doors opened on this ballroom that occupied the entire floor.  The view was spectacular, all up and down the Strip.  There were 2 Champagne Fountains and 2 Chocolate Dippers.  There were buffet tables and carving stations.  THERE WAS AN OPEN BAR!  Four of them, it’s a fun club.

So basically there were 20 people there.  And me.  And my sweetheart.  All sweaty and flushed and tired, our credentials flopping around our necks.

Remember the scene in the Wizard of Oz where Dorothy and company go down the hall?  It was kind of like that, only bigger and longer.  At the end of (no kidding) about a quarter of a mile was the DJ.  We wandered up and said hi and he said- “So is there anything you want to hear?”  I let her pick the song.  It was slow and sappy and we grabbed each other and spun around, alone on acres of dance floor, on top of the world.

After a while some other people showed up so we could ditch, can’t leave a party before it’s started- that would be rude.  We went back to our room and said goodnight again.  I was much better this time, and after an hour or 2 I got respectable, this time in my tux (I own one, cheaper than real clothes) so I could go back to the party and kiss the ring.

It’s all about kissing the ring.

This was a totally different scene.  Though the opposition candidate would come as close as anyone in the previous 10 years to defeating the chosen one, he had totally moved his lame ass party to one corner of the ballroom at the invitation of the magnanimous eventual victor and everyone was doing group shots to ease the sting of their inevitable defeat.  The rest of the place was crowded with people looking for free booze and food (did I mention it’s a fun club?).

I kissed both rings.  It was easy, they were both standing together, the one who would be King and the one who would get a paid staff position as his consolation prize.  No more phoney they than my wishing them both good luck even though I had my marching orders.  And when the time came to convince my delegation to vote for the chosen one, my eloquence changed 60/40 challenger to 80/20 chosen, invoking our block vote rule and sparing us any loss of face as a state.

I was grabbed by a fellow classmate, a state King on the make for the top and dragooned into a conga line of Incoming Kings that he led from bar to bar in the ballroom, bullying his way to the front of the line and buying us all free drinks.

But enough of that is certainly enough and besides I had work to do.  One of the things they teach you in super secret training is to cultivate your base.  In this case that meant post cards to every local officer who was not able to attend.  I stopped at the gift shop in the lobby and picked up the post cards (an assortment, can’t have people comparing notes) and a bottle of Champagne (how do you avoid a hangover for 7 days?  Stay drunk for 6).  You can’t wait to do this because they have to arrive before you return.

When I went in the room my sweetheart woke up, saw the Champagne and said, “Oh, is that for us?”  Sure darling.  I opened it, poured us both a glass.  She took one sip, we kissed, and then she mumbled, “G’night” and rolled away.

So my plan worked perfectly.  About 4 am I was out of cards and out of Champagne so I headed to the lobby again, mostly hoping I could hook up with my breakfast buddies from the day before.  And I did.

Nothing like a good breakfast to energize you.  All the basic food groups, grease and salt and sugar and caffeine, and a mutual game of ring kissing with new friends was a great way to pass the time.  Soon I had to let them pick up my tab and move on.  I went back to my room, showered, changed, wrote my honey a note (because I was in training all day and she was done and had no agenda), and gently shook her awake.  We had a nice chat and then it was time for me to go.

Gotta make your marks.

Now I know what you’re saying- ek you’ve been up for 72 hours.  You should be dead.  Not true, I had a whole 2 hours of sleep on the plane.  And I had meetings, close your eyes, pretend to pay attention, and you can snooze 15 minutes out of every 20.  In great need of chemical stimulation, at the break I bummed my very last cigarette so far- a Merit Light King.

At 3 pm the torture was over and I didn’t have a mark to make until 6.  I went back to my room, hooked up with my sweetie (she had rolled out around 10 and spent a few hours shopping and having lunch with friends), and loosened my tie and napped.  She got many, many ‘candid’ snapshots.

And at 6 we loaded up on the bus for ‘Old Las Vegas’ where there was a big street party.  Thank goodness for busses, I was able to get a half hour head start on my nap on the way home.

When I woke up at 4 am I was hungry.  My fiance was immovable.  I wrote her a note and snuck off to have breakfast.

So that was Las Vegas for a micro-politician on the make.

…

It went on for a week like that, we actually spent a fair amount of time together after the initial 3 days, shows, restaurants, endless meetings at the Convention Center.

I pause here to pass along a great lesson she gave me.  The most important I took away from Las Vegas.

The food at the Convention Center was terrible.  The first day we got 2 Plastic Pizzas for lunch.  They were about the size of hockey pucks and tasted about the same too.  The second day the Outgoing King gave me a wink and a nod and we joined the Kool Kidz across the street for a lunch that was at least edible.

Afterwards at the light she held my arm and while everyone else went ahead we missed it.  When she turned to me she was as angry as I’ve ever seen her and she said- “Don’t you ever do that again!”

What?

“How do you think those people feel?”, and she pointed at the Convention Center.

She was absolutely right.

You can be King or you can lead.

Lead- be the first and have people follow you.

If you want to be a leader, you have to lead.  You have to be the first.  The first person to pick up a sack and clean up the garbage.  The first person to volunteer to make the phone calls.  The first person to have a hot dog and quip- “What, no Rat?  Only Glue?”

We never crossed the street again, making polite excuses and throwing away styrofoam boxes filled with styrofoam at the same table as everyone else.  As time progressed there were more and more ‘Puffs’ and less Paris Gellers, but we stayed to the bitter end.

Thank you darling, I will never forget.

…

Some of you may be curious about our break up at this point, but it’s really very simple.  I was a Captain, but she was not the Enterprise and that was what she desperately wanted.  She loved me with a single minded focus I did not share. She was unhappy when I spoke with another woman, or another man, or spent any time away from her.  For my part I couldn’t live up to her expectations- I am after all shallow and one dimensional, I’ve never pushed a noun against a verb except to blow something up.

Since then I’ve never been with anyone else, not that I’ve worried about it- my ego is self sustaining.  I understand she is marrying her 2nd grade crush this summer.  Good for her.  I hope he makes her happy, she deserves it.

I will always remember dancing alone with her in a ballroom in the sky over Vegas.

Except, you know, to call it stupid is a catgory error.

Yglesias Pours the Geithner, Holder, Breuer (GHB) Banksters Immunity Doctrine in our Drinks

Bill Black, Naked Capitalism

Friday, February 1, 2013

It’s early, but Salon has published on January 30, 2013 either the funniest or saddest column of the year to date: “Are Banks Too Big To Prosecute?”

The column is attributed to Matthew Yglesias, a blogger who studied philosophy as an undergraduate. It could be a brilliantly ironic satire of the Geithner, Holder and Breuer doctrine of immunity for banksters (which I am dubbing “GHB” for short). GHB is the “roofie” that the Obama administration gave us so the banksters could screw us repeatedly with impunity. Alternatively, and far more likely, Yglesias has written the saddest and most immoral apologia for elite white-collar crime that has yet made it into electronic bits. It takes a rerouted beginning student of philosophy, posing as a commentator on finance, to replace what should be a discussion that includes virtue ethics with a virtue-free, criminology-free, and economics-free apologia for the felons who became wealthy by costing the Nation $20 trillion and 10 million jobs.

Matthew Yglesias wrote a similar column on April 14, 2011 embracing the Geithner immunity doctrine. He titled it: “The Fraud Free Financial Crisis” – and it proves our family’s rule that it is impossible to compete with unintentional self-parody. In 2011, Yglesias thought we might be experiencing the first “Virgin Financial Crisis” – conceived without sin.

…

I find it strange that neither of Yglesias’ columns on a subject that has a vital ethical component discusses the ethics of his support for giving elite bank frauds immunity from the criminal laws. Yglesias’ relevant expertise on this subject was in ethics.

…

Riggs’ actions were beyond “serious.” They were criminal and they helped murderous national leaders commit murder, loot their Nations, and hide their crimes and the money they looted from U.S. and international prosecutors. Were there “serious investigations”? Not so much according to the article Yglesias relies on. The Office of the Comptroller of the Currency (OCC) failed to investigate competently for many years. Its examiner-in-chief of examining Riggs left the government and took a job with Riggs.

There were no “serious penalties” – in large part due to the weakness of the investigations. The senior officers who directed and were enriched by Riggs’ crimes were not prosecuted. Riggs became richer and more powerful through its crimes and its senior managers’ reputations were made by those illegal profits. Joseph Allbritton was inducted into the Washington Business Hall of Fame in 2002. A lower level Riggs officer was criminally investigated – but he was alleged to have embezzled from the bank.

The so-called “serious penalties” were a $25 million OCC penalty and a $16 million penalty for money laundering. At those low levels of penalties crime paid. It paid very well. The amount of funds Riggs was able to manage because it aided the looting of Equatorial Guinea was massive: $360 million. Riggs had $6.4 billion in total assets.

…

I don’t expect Yglesias to understand regulation or regulators, but even without relevant expertise about regulation he should have been able to see the total lack of integrity his preferred system of immunity for elite bankster frauds would create. I cannot think of any philosophical basis for believing that the senior officers of a large bank should be allowed to become wealthy by causing their bank, unlawfully, to aid murderous Dictators loot “their” Nations. The senior officers’ actions are profoundly unethical and they set the “tone at the top” that determine a bank’s ethical culture.

…

Fraud is a dynamic process and elite frauds are not random. Control frauds beget other control frauds. They are strongly criminogenic. Control frauds exist in all three major sectors – private enterprise, NGOs, and government. Government control frauds (“kleptocrats”) loot “their” Nations. Kleptocrats create and seek out other control frauds, such as Riggs Bank, that will aid their looting. Riggs Bank’s aid to the Dictators of Chile and Equatorial Guinea helped them murder and torture thousands of people. Control frauds are weapons of mass economic destruction, but many control frauds also maim and kill large numbers of people. Yglesias thinks a $46 million penalty assessed to a bank with $6.4 billion in assets – not the controlling officers – represents a “serious penalty” for hundreds of crimes that continued for over a decade and produced considerably greater income for the bank than the penalties and helped make the controlling officers wealthy.

…

Yglesias does not understand that as long as you leave the fraudulent senior officers in control they have an overwhelming interest in continuing to lie about the SDIs’ financial condition. It is absolutely essential to find the true facts about the SDIs losses – an action that the Bush and Obama administration prevented at every key stage. The stress tests, for example, are carefully designed not to find existing losses on bad assets. Two factors are essential to determine the real losses. First, one must ensure that the controlling officers have strong incentives to identify the losses instead of covering them up. “Pass through” receiverships do this superbly well. Second, one must investigate problem assets. Vigorous criminal investigations greatly aid in the detection of losses that were being covered up by the fraudulent managers. Our mantra in criminology with respect to sophisticated financial frauds is that if you don’t look; you don’t find.

Yglesias writes as if “insolvency” were some purely scientific measurement that was conducted by the regulators and that we know that the SDIs were insolvent in 2008 but are solvent now. We know no such thing. Yglesias has no concept of how to conduct a rigorous financial investigation. Think about Geithner’s incentives under Yglesias’ take on “solvency.” If Geithner ordered a rigorous investigation of the SDIs’ solvency and found that several SDIs were insolvent or even badly undercapitalized, then he (1) would be transformed into a failure and (2) he would “cause” a global crisis by triggering a “catastrophe.” Under Yglesias’ own framing of Geithner’s incentives we can only conclude that Geithner’s (and the regulators’) claims that all is well at the SDIs have no credibility because of a powerful bias by the SDIs and the regulators to hide losses.

…

Yglesias ends his attempt at logic by repeating his false framing of the policy options and employing euphemisms: “if saving the banks was the right thing to do, then curtailing prosecutions was the only way to execute the strategy.” I begin with the euphemism – GHB’s doctrine did not “curtail prosecutions” of SDIs and their managers for the frauds that drove the financial crisis. They prevented virtually all prosecutions of elite bank fraudsters and fraudulent banks. Indeed, they prevented virtually all prosecutions of senior officers of even non-elite banks. Worse, as we have been saying for years and as “The Untouchables” confirmed – GHB’s immunity doctrine prevented even vigorous criminal investigations of the SDIs. That denied us the facts about fraud, including how much the senior officers gained in wealth through fraud, how large were the losses their frauds caused, and how deeply did the losses drive the SDIs into insolvency. The failure to investigate and prosecute also minimized any reputational injury to the frauds – maximizing their ability to defraud us in the future. I’ve already pointed the deliberate abuse of logic exemplified by Yglesias’ false claim that preventing “prosecutions” was “the only way” of “saving the banks.” We can prosecute the SDI officers who directed the control frauds and grew wealthy through those frauds without having to prosecute the banks.

But perhaps I am being too fair to Yglesias. Perhaps he is saying that if we successfully prosecuted the SDIs’ controlling officers for using the SDIs as “weapons” to defraud the SDIs’ customers, creditors, and shareholders then we would inherently establish that the SDIs were liable through civil suits for the massive damages their frauds caused. (A corporation is normally liable for the wrongs of its officers committed in their capacity as officers.) Indeed, successful prosecutions and guilty pleas could establish “collateral estoppel” and allow the victims to easily win their civil cases against the SDIs. The damages in these civil suits should be extraordinary because fraud allows the recovery of punitive damages and the SDIs committed so many crimes that treble damages are available against the SDIs through civil RICO suits. Perhaps Yglesias, like GHB, believes that it is essential that we not be allowed to hold the officers accountable criminally and that we must act to prevent the victims of the SDIs’ frauds from receiving more than token recompense from the SDIs lest we fail to “save the banks” (by which he really means “save the SDIs”). Does Yglesias want the U.S. to add to the injury to the victims and to provide further aid and comfort to the elite fraudsters by declaring immunity from prosecution for the officers who grew rich through fraud?

TURKEY TROTS TO WATER GG FROM CINCPAC ACTION COM THIRD FLEET INFO COMINCH CTF SEVENTY-SEVEN X WHERE IS RPT WHERE IS TASK FORCE THIRTY FOUR RR THE WORLD WONDERS

Now you probably know him better as letsgetitdone from corrente and Firedog Lake and he’s started a series which, if you have any interest in economics and the economy at all, I think you should pay attention to.

It’s called Framing Platinum Coin Seigniorage and is available in source form from New Economic Perspectives (you might want to  bookmark that).

The precis-

Framing Platinum Coin Seigniorage: Part One, Basics

Joe Firestone

Posted on January 31, 2013

How come nobody asks why, since Congress has the unlimited authority to create coins and currency, it doesn’t just create money when it deficit spends? The short answer is that Congress in 1913, constrained the Executive Branch from creating currency or bank reserves, delegated its power to do that to the Federal Reserve System, and never looked back when we went off the gold standard in 1971, even though this removed the danger of money-creation outrunning gold reserves, and also created a new monetary system based on fiat currency.

But coins, it turns out are different from currency and bank reserves. They’re the province of the Executive. And Congress provided the authority, in legislation passed in 1996, for the US Mint to create one oz. platinum bullion or proof platinum coins with arbitrary fiat face value, having no relationship to the market value of the platinum used in the coins. These coins are legal tender. When the Mint deposits them in its Public Enterprise Fund (PEF) account, the Fed must credit it with the face value of these coins. The difference between the Mint’s costs in producing the coins, and the reserves provided by the Fed is the US Mint’s “coin seigniorage” or profit from the transaction.

…

Platinum coins with huge face values such as $60 T, can produce seigniorage closing the revenue gap and technically end deficit spending, while still retaining the gap between tax revenues and spending that can add to aggregate demand and produce full employment. Platinum Coin Seigniorage (PCS) is also a way for the Executive to end debt ceiling crises, since the profits could be used to repay debt instruments when they fall due, without the need to issue any more debt.

The seigniorage from a $60 T platinum coin would serve as a potent symbol of the truth that the Federal Government can never involuntarily run out of money. This is one of the central ideas of MMT that the public needs to accept routinely, to understand that the Government’s budget isn’t like their household budget. The presence of the $60 T in the public purse would be a positive enabler of progressive legislation creating benefits that people want now, but austerians say we can’t pass because “we can’t afford it.”

If all debt instruments are re-paid by using PCS, then, eventually the US would have no debt subject to the limit, or presence in the bond market, and would pay no interest to bond holders. No one would worry about the public debt, or use its size to justify blocking legislation that fulfills public purpose and promotes the general welfare.

So, PCS-based elimination of debt can end the whole austerity mind set that provides our current budgetary process with its constraining conservative cast, focused on narrow monetary cost considerations, rather than on a broader progressive framework that weighs the real costs and benefits of proposed fiscal activities of the Federal Government.

…

It must be done now! If it doesn’t, then people who are against the use of PCS will have time to organize against it and get it repealed by the Congress. Now that the PCS capability is widely known, the FIRE (Finance, Insurance, Real Estate) Sector will be gunning for it with all the financial, political and propaganda power it can bring to bear. It will do that because using PCS, especially the $30 T or greater coin, High Value Platinum Coin Seigniorage (HVPCS) I propose, strikes at the domination of the financial and political systems by Wall Street and the big banks

…

HVPCS threatens the banks’ domination of the Fed, and also their role in money creation, and with it some of their income. The more time that passes without using HVPCS, the more likely it is that the Executive Branch will lose this capability to Wall Street’s persistent political efforts at repeal, and become the actual, rather than only the pretended (kabuki) prisoner of debt instruments and austerity once again.

available in orange

The shame prize award was made in Davos during the World Economic Forum as a counter-WEF event.  Shell also “won” a shame prize, but I spoke on Goldman Sachs, the role of epidemics of accounting control fraud, and the WEF’s anti-regulatory and pro-executive compensation policies.  I explained that the anti-regulatory policies were intended to fuel the destructive regulatory “race to the bottom” and why the executive and professional compensation policies maximized the incentives to defraud.  I also explained that WEF was a fraud denier.  Collectively, these three WEF policies contributed to creating the intensely criminogenic environments that produce the epidemics of accounting control fraud driving our worst financial crises.

Goldman Sachs Proof that God hates its Customers

By William K. Black, New Economic Perspectives

Posted on January 26, 2013

Goldman Sachs is a fitting recipient of the “Public Eye” shame prize, but it is vital to remember that Goldman is not a singular rotten apple in a healthy bushel.  It is characteristic of the abuses that become endemic when powerful plutocrats achieve de facto immunity from the criminal laws.

…

Indeed, this discussion understates Goldman’s culpability because Goldman’s executives were principal architects of the crisis.  Its former CEO, Robert Rubin, led the disastrous deregulation in the Clinton administration and was a leader in pushing Citicorp to become a major contributor to the hyper-inflation of the bubble.  Henry Paulson, when he was Goldman’s CEO, made Goldman a leading “vector” spreading fraudulent mortgages through the global financial system (and creating Goldman’s holdings of toxic mortgages that produced huge, fictional, accounting income in the short-term – making Paulson’s already large compensation massive).

Goldman Sachs: Doing "God’s Work" by inflicting the Wages of Sin Globally

By William K. Black, New Economic Perspectives

Posted on January 26, 2013

The central point that I want to stress as a white-collar criminologist and effective financial regulator is that Goldman Sachs is not a singular “rotten apple” in a healthy bushel of banks.  Goldman Sachs is the norm for systemically dangerous institutions (SDIs) (the so-called “too big to fail” banks).  Impunity from the laws, crony capitalism that degrades democracy, and massive national subsidies produce exceptionally criminogenic environments.  Those environments are so perverse that they produce epidemics of “control fraud.”  Control fraud occurs when the persons who control a seemingly legitimate entity use it as a “weapon” to defraud.  In finance, accounting is the “weapon of choice.”  It is important to remember, however, that other forms of control fraud maim and kill thousands.

Large, individual accounting control frauds cause greater financial losses than all other forms of property crime – combined.  Accounting control frauds are weapons of mass financial destruction.  One of the crippling flaws of the World Economic Forum (WEF) is ignoring private sector control frauds.  Control fraud makes a mockery of “stakeholder” theory.  Accounting control fraud, for example, aims its stake at the heart of its stakeholders.  The principal intended victims are the shareholders and the creditors (which includes the workers).  Other forms of control fraud primarily target the customers.  If the WEF wishes to effectively protect stakeholders it is imperative that they undertake a sea change and make the detection, prevention, and sanctioning of control fraud one of their central priorities.  WEF does the opposite, it wishes away fraud with propaganda because the alternative is to admit that many of its dominant participants are the central problem – they are degrading the state of the world.

…

WEF has been acting for decades to make banking criminogenic.  They have pushed the three “de’s” – deregulation, desupervision, and de facto decriminalization.  They have favored executive compensation systems.  They have pushed for ease of entry.  And they have spread the myth that fraud by corporate elites is “rare.”  WEF has optimized the intensely criminogenic environments that produce recurrent, intensifying fraud epidemics, bubbles, and financial crises.

WEF’s complacency about accounting control fraud has led to its embarrassing failures in finance.  It’s “competitiveness” scales and “financial market development” scales have praised the most criminogenic financial systems – Iceland, Ireland, the UK, the U.S., and Spain – even as the largest banks in those Nations were (in reality) destroyed along with the much of the national economy.  Similarly, the WEF’s “global risks” series has proven unable to identify the major financial risks until the hurricane has roared through the system.  The central problems are the same – the WEF “stakeholder” premise and the WEF’s domination by powerful corporations is an elaborate propaganda apparatus that assumes away the reality of how CEOs running control frauds use compensation (and the power to hire, promote, and fire) and political power to deliberately create the perverse incentives that produce widespread fraud.  The irony is that the WEF’s dogmas have encouraged elite frauds to drive stakes through the stakeholders.

a modus operandi.

Krugman On Morning Joe: How Many Times Do I Have To Be Right?

By Susie Madrak, Crooks and Liars

January 28, 2013 10:00 AM

“Have you been living in the same country I’m in these past five years?” Krugman retorted, saying the deficit is far down on his list of things to worry about.

In response, Mika gasped and said, “I feel like we’re talking about climate change! My God!” (What a dope.) Krugman said that was a destructive comparison, and explained why. But I doubt she listened.*

I especially liked it when he responded to Joe Scarborough: “How many times do people like these have to be wrong and people like me have to be right?”

Remember, Paul: Ignorance can be fixed. Stupidity is forever.

This is what lambert strether calls a “category error.”  They are not stupid.

My brother sent me a postcard the other day with this big sattelite photo of the entire earth on it. On the back it said: ‘Wish you were here.’ — Steven Wright

At Davos, Is the Party Over?

By ANDREW ROSS SORKIN, The New York Times

January 22, 2013, 9:52 pm

In previous years, the Friday night of the World Economic Forum was always filled with big dinners and blowout parties.

Certain bashes were among the most coveted. Google held a standing-room only party at Steigenberger Belvedere Hotel, complete with bands flown in from New York and beyond. Across the street, Accel Partners, the venture capital firm behind Facebook, held a wine tasting at the Kirchner Museum, often flying in cases of vintage wine from California. And Nike held a huge dinner with the slogan, “No Speeches. No Powerpoint. And no ties.”

This Friday, however, the operative slogan could be “No dinner. No parties.”

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Have those companies given up on Davos for good? Is there something bigger here at play than just parties? Those are some of the questions being asked, however, answers have been forthcoming – at least not yet.

Oxfam says world’s rich could end poverty

Al Jazeera

20 Jan 2013 07:49

The world’s 100 richest people earned enough money last year to end world extreme poverty four times over, according to a new report released by international rights group and charity Oxfam.

The $240 billion net income of the world’s 100 richest billionaires would have ended poverty four times over, according to the London-based group’s report released on Saturday.

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(Jeremy) Hobbs (executive director at Oxfam) said that “a global new deal” is required, encompassing a wide array of issues, from tax havens to employment laws, in order to address income inequality.

Closing tax havens, the group said, could yield an additional $189bn in additional tax revenues. According to Oxfam’s figures, as much as $32 trillion is currently stored in tax havens.

In a statement, Oxfam warned that “extreme wealth and income is not only unethical it is also economically inefficient, politically corrosive, socially divisive and environmentally destructive.”

Can we fight poverty by ending extreme wealth?

by Olga Khazan, Washington Post

January 20, 2013 at 8:00 am

In a sign that the “Occupy” and “99 percent” movements that swept the United States in recent years have taken on increased global relevance, Oxfam International this week called (.pdf) for “a new global goal to end extreme wealth by 2025,” as a way to stem income inequality and continue the fight against poverty.

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Oxfam does have a point. The movement against income inequality has been gaining momentum as the world’s rich have continued to amass larger shares of their countries’ fortunes. In the United States, according to the group, the share of national income going to the top 1 percent of the population has increased to 20 percent, from 10 percent in 1980.

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The World Economic Forum (Davos) also recently rated “severe income disparity” as one of its top global risks for 2013.

Oxfam’s idea is basically the opposite of the trickle-down theory: Rather than creating jobs and lifting others out of poverty, the group says, super-rich minorities cause social unrest and depress demand for goods and services, limiting growth and innovation as a result. It’s an argument that’s also been echoed recently by several vocal billionaires.

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The group also suggested some measures that have been at the center of some of the fiercest policy battles in the United States and elsewhere:

“Limits to bonuses, or to how much people can earn as a multiple of the earnings of the lowest paid, limits to interest rates, limits to capital accumulation are all only recently-abandoned policy instruments that can be revived. Progressive taxation that redistributes wealth from the rich to the poor is essential,” Oxfam continued.

Those tactics sound good, but they’d require something else that unfortunately the most unequal countries also lack: governments willing to risk angering their wealthiest citizens in order to improve life for the poorest.

I wouldn’t hold my breath.

Fed official alleges Geithner may have alerted banks to rate cut

By Alister Bull, Reuters

Sat Jan 19, 2013 1:28am EST

In the summer of 2007, as storm clouds gathered over the world’s financial system, then-New York Federal Reserve President Timothy Geithner allegedly informed the Bank of America and other banks about the possibility the U.S. central bank would lower one of its critical interest rates, according to a senior Fed official.

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According to transcripts of the call released by the Fed on Friday, Geithner at the time denied that banks knew the Fed was considering cutting the discount rate.

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Private disclosure of confidential, market-sensitive information by the central bank would be highly unusual, but it was not immediately clear if it would be illegal. It also was not clear if strict Fed internal rules governing confidential information would have been breached, or whether any internal or external investigation was mounted.

Not that I expect an orange jumpsuit, but clearly there should be (h/t Atrios).

Crossposted from The Stars Hollow Gazette

When Real Interest Rates Are Negative, Taxing Is More Costly Than Borrowing

By Matthew Yglesias, Slate

Posted Friday, Jan. 18, 2013, at 1:15 PM ET

A good article about public policy ought to be making some kind of non-obvious point about the world in order to get people to think about things differently. Simply responding by saying that the suggestion sounds funny is absurd.

You don’t say.

Let’s break this down. You’re the mayor of a city. A storm strikes and ruins a whole bunch of your police cars. Now you need to buy new ones. You have two options for paying for the cars-you can borrow the money and pay the bill ten years from now, or you can raise taxes and pay right now. The case for paying later is pretty clear. In ten years’ time your city’s overall economic output will be higher so the burden of paying off the loan then will be lessened. On the other hand, the case for paying now is also pretty clear-lenders generally expect interest payments in exchange for their loans so the total cost of the debt option is higher. But wait! The city’s accountants show up and point out that it’s currently possible for the city to borrow at a negative real rate. Suddenly the interest costs are off the table as a reason to prefer paying sooner.

So what’s left? Nothing. The city will be richer in ten years, so pay then. The logic becomes especially compelling when you recognize that the city’s income will grow more rapidly under the lower-tax regime that encourages more investment in residential and commercial property and more business activity.

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Perhaps Linker and I disagree about what kind of reductions in Medicare and Medicaid spending would be optimal, but I have no disagreement that they should be reduced to below their currently projected levels. That said, under any scenario the government is going to be spending money in 2013. The question on the table was should we finance that spending with taxes or should be finance it with borrowing. My view is that with real interest rates below zero, it makes sense to tax less and borrow more. This has literally no relationship to my view about the appropriate level of future government spending.

Moron.

Hat tip Dr. Duncan Black formerly of the London School of Economics, the Université catholique de Louvain, the University of California, Irvine, and, most recently, Bryn Mawr College.

Grown-Ups

It’s funny how the issues changes but the language stays the same. Liberals, in being perfectly right about many things, are silly and irresponsible children.

Dallas, we have a problem.

How to Cut Megabanks Down to Size

By GRETCHEN MORGENSON

Published: January 19, 2013

On Wednesday, in a speech in Washington, Mr. (Richard W.) Fisher (the president of the Federal Reserve Bank of Dallas) laid out a compelling proposal for shrinking financial giants in order to protect taxpayers. He suggested that megabanks be chopped into pieces, so that no one of them could endanger the financial system if it ran into trouble.

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Why? Mr. Fisher argued that megabanks not only threaten taxpayers with bailouts, but that their continuing failure to lend is also thwarting the Fed’s efforts to jump-start the economy by keeping interest rates low. “I submit that these institutions, as a result of their privileged status, exact an unfair tax upon the American people,” he told his audience. “Moreover, they interfere with the transmission of monetary policy and inhibit the advancement of our nation’s economic prosperity.”

Smaller institutions, by contrast, have continued to lend in the post-crisis years, especially to the kinds of modest-size businesses that create so many jobs across the country. According to figures compiled by Mr. Fisher’s colleagues at the Dallas Fed, community banks – defined as those with no more than $10 billion in assets – hold less than one-fifth of the nation’s banking assets. Nevertheless, they hold more than half of the industry’s small-business loans.

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There are roughly 5,600 commercial banking institutions in the country, Mr. Fisher noted. Some 5,500 of them are community banks. While these organizations account for 98.6 percent of all banks, they hold only 12 percent of total industry assets. They are routinely allowed to fail if they get into trouble. Few of them did during the crisis.

Contrast these figures with those of the nation’s 12 largest banks, whose assets range from $250 billion to $2.3 trillion. They account for 0.2 percent of all banks but hold 69 percent of industry assets. These are the banks that enjoy all the perquisites of the federal safety net: significantly lower borrowing costs and a taxpayer backstop, for example.

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Understanding that it will be a tough battle to break up the megabanks, Mr. Fisher suggests that in the meantime, only commercial banking operations receive protection from the federal safety net in the form of federal deposit insurance. An institution’s other activities – securities trading, insurance operations and real estate, for example – should fall outside any backstop. Furthermore, he recommends that these banks require customers and trading partners to sign an agreement stating that they understand the business they are conducting is not covered by any federal protection or guarantees. That would begin to reduce the perception that all of these institutions’ counterparties would be protected in a disaster.