Since we so seldom have positive news to report on NC, we thought it was important to highlight a promising development. Senator Richard Durbin has introduced legislation that would considerably complicate the effort of Wall Street players to pillage privatize state and government assets for fun and profit.
It is key to understand what a bad deal these transactions are for ordinary citizens
Read more...Yves here. I’ve been looking for simple, practical ideas on what can be done to stem what seems to be a hopeless slide downward in our standards of conduct. I’d be interested to get reader reactions, particularly if any of you were in organizations that had sanctions that were implemented along these lines.
By James Andreoni, Professor of Economics, University of California, San Diego and Laura Katherine Gee, graduate student in Economics, University of California San Diego. Cross posted from VoxEU
How should a small organisation – a firm, a university, a sports team – encourage good behaviour? While punishment can often make things worse, this column proposes and tests a method the authors call the “hired gun”. By punishing only the worst offender, everyone is given an incentive to be the second-worst offender. If everyone follows that strategy, good behaviour soon follows.
Read more...Matt Stoller, the former senior policy aide to Alan Grayson, wrote an op ed for Politico, “Public pays price for privatization,” on infrastructure transactions. We’ve depicted this troubling trend as “tantamount to selling the family china only to have to rent it back in order to eat dinner.”
Stoller looks at the political consensus that in an earlier era was gung ho to build major public assets and now would rather rip fees from them by hocking them to investors:
Read more...This INET video focuses on how Ireland got into its mess as well as the domestic and international political dynamics as to how it is being resolved. There is an interesting tension between the cool talking head style and some of the coded descriptions of the stresses and the stark choices at hand.
Read more...I’m surprised that my post, “Bribes Work: How Peterson, the Enemy of Social Security, Bought the Roosevelt Name” has created a bit of a firestorm within what passes for the left wing political blogosphere. It has elicited responses from Andy Rich of the Roosevelt Institute, Roosevelt Institute fellow Mike Konczal, as well as two groups only mentioned in passing in the piece, the Economic Policy Institute and the Center on Budget and Policy Priorities.
They all illustrate the famed Upton Sinclair quote, “It is difficult to get a man to understand something when his job depends on not understanding it.” And so it is not surprising that all of them engaged in straw man attacks and failed to engage the simple point of the post: if you have a clear purpose and vision, you do not engage in activities that represent the polar opposite of what you stand for.
These “the lady doth protest too much” reactions reveal how naked careerism has eroded what little remains of the liberal cause in the US.
Read more...So much for the idea that the legal profession cares about integrity. While there are no doubt many upstanding attorneys, state bar associations seem vastly more concerned about trying protect the industry’s meal ticket than policing questionable conduct. It’s well known in the profession that to the extent lawyers are ever sanctioned, it’s almost without exception small firm operators. The big boys pay a lot in dues and often have partners in their firms that hold offices in the state bar organization.
One damning illustration: even though Florida has been a virtual cesspool of legal malfeasance, with its biggest foreclosure mill having shuttered its doors and impermissibly not passed open cases on to other lawyers and all of the other big players on the ropes, not a single lawyer has been sanctioned. Yet two lawyers in the state were threatened because they’ve dared to say a candid word or two about the mortgage mess.
Read more...By Douglas K. Smith, author of On Value and Values: Thinking Differently About We In An Age Of Me
In “Economics In Crisis”, professor Brad DeLong notes:
The most interesting moment at a recent conference held in Bretton Woods … came when Financial Times columnist Martin Wolf (asked) Larry Summers, “[Doesn’t] what has happened in the past few years simply suggest that [academic] economists did not understand what was going on?”
DeLong agreed with Summers’ response: “the problem is that there is so much that is “distracting, confusing, and problem-denying in…the first year course in most PhD programs.” As a result, even though “economics knows a fair amount,” it “has forgotten a fair amount that is relevant, and it has been distracted by an enormous amount.” DeLong then goes on to call for serious change in what economics departments do and teach.
In Part 2 of this post, I’m going to address the realities of ‘serious change’; and, in that context, what is troubling for INET about Summers’ presence at the recent Bretton Woods gathering. I’ll do this from my experience in leading and guiding real change as well as by contrasting INET with another, smaller, and more nascent effort called Econ4.
For now, though, let’s put aside the serious lack of self-respect in paying any attention at all to a world historical failure like Summers (Why is this arrogant sophist even on anyone’s C list, let alone A list? Why isn’t Summers wearing sack cloth and rolling in ashes?). Instead, let’s respond to DeLong’s ‘fessing up to the crisis in economics:
Read more...Was the US Treasury Secretary’s deep sixing of a plan by the seldom-charitable IMF to give the Irish some debt relief Versailles redux? By that I mean the Treaty of Versailles, the agreement at the end of World War I devised by the victors to dismember the German economy. Bear with me as I tease out this conceit.
Read more...Cross posted from MacroBusiness
Ok, we all know that anyone who says “this time it is different” is to be treated at best as misinformed, at worst as a fool. “They are the five most dangerous words in the English language” etc. etc. But, to repeat my question: “Are things always the same?” Mostly, yes. Modern housing bubbles are not unlike 17th century Holland’s Tulipmania, government debt crises have not changed all that much since Henry VIII reduced the gold in coinage, greed, profligacy, irresponsible plutocracies are always with us.
But in global finance there are some things happening that are genuinely different. Dangerously so.
Read more...I’m sick of the free pass given the libertarian blather, “The state is the only source of coercive power.” I doubt that many non-libertarians buy that assetion, but they too often remain silent because most libertarians are rabid on that issue and arguing with them is like talking to a wall. But since that bogus assertion has been showing up increasingly in comments here as right-wing plants are becoming more common, I might as well do a quick shred, since it does not take much effort to show this claim is nonsense.
Let’s look at some simple empirical examples of why this pet argument just ain’t so.
Read more...Economics of Contempt is aptly named. While his stand alone pieces on various aspects of regulation are informative, if too often skewed towards officialdom cheerleading (he too often comes off as an unpaid PR service for Geithner), his manner of engaging with third parties leaves a lot be desired. He often resorts to the blogosphere version of a withering look rather than dealing with an argument in a fair minded manner. This then puts the target in a funny position: do you deal with these drive-by shootings which have either not engaged or misrepresented your argument, by cherry picking and selective omission? If you do, you can look overly zealous or argumentative. But if you do nothing, particularly if it’s in an important area of regulatory debate, you’ve let disinformation, at the expense of your reputation, stand.
Read more...A funny thing happened at the INET conference. First, I got to ask Larry Summers a question because Martin Wolf, who was moderating the session, is a good sport. Normally, at this sort of event, only At Least Semi Big Names get to interact with Big Names. Yours truly is a minimum of a rank or two below At Least Semi Big Names.
You will find our question at 55:40.
Read more...Political scientist Tom Ferguson prepared a short but important paper for the INET conference last weekend on how Congress got to be as polarized as it is today. His answer: it was redesigned quite deliberately by conservative Republican followers of Newt Gingrich starting in the mid 1980s and their methods were copied by the Democrats. Their changes resulted in firmer control by leadership (ie, less autonomy of individual Congressmen) and much greater importance of fundraising (which increased the power of corporate interests).
The extent of corruption may surprise even jaundiced readers.
Read more...Louise Story at the NYT has this: In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move […]
Read more...Contingent Convertible bonds (“CoCos”) are supposed to address this nonsensical phenomenon: During the financial crisis a number of distressed banks were rescued by the public sector injecting funds in the form of common equity and other forms of Tier 1 capital. While this had the effect of supporting depositors it also meant that Tier 2 capital […]
Read more...