William Black is an associate professor of economics and law at UMKC. He has held many prestigious positions, including executive director for Fraud Prevention. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae’s former senior management. He is a criminologist and former financial regulator.
Tag: Bill Black
Mar 14 2014
Mar 04 2013
Thanks to Bill Black via ek hornbeck and Yves Smith at Naked Capitalism, I fell off my horse and saw the light after hitting my head.
Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly posted with Benzinga
We are in the midst of the blame game about the “Sequester.” I wrote last year about the fact that President Obama had twice blocked Republican efforts to remove the Sequester. President Obama went so far as to issue a veto threat to block the second effort. I found contemporaneous reportage on the President’s efforts to preserve the Sequester – and the articles were not critical of those efforts. I found no contemporaneous rebuttal by the administration of these reports.
In fairness, the Republicans did “start it” by threatening to cause the U.S. to default on its debts in 2011. Their actions were grotesquely irresponsible and anti-American. It is also true that the Republicans often supported the Sequester.
The point I was making was not who should be blamed for the insanity of the Sequester. The answer was always both political parties. I raised the President’s efforts to save the Sequester because they revealed his real preferences.
It wasn’t much like the time I was kicked off a real horse when I was about 8. Had Eleanor, a cranky little mare who was intelligent enough to hate everything and everybody, connected a mite lower I would have been a girl instead of a boy. Truth be told, Eleanor was aiming at my horse but her aim was as horrendous as when Bill Clinton shot a missile at the House Judiciary Committee and hit an aspirin factory in The Sudan. All I learned that time was that Eleanor probably was part Shetland as rumored, that I didn’t want to be a girl and to watch out for girls even though they appear smaller and weaker.
This time I saw the ancient Canons of Dort still firing from ancient times as I had known from my own childhood they still do but from an unexpected source.
You see my mother was a Lutheran like my wife. Neither were ever good Lutherans, praise the Lord [snark], but the mark of understanding how the heretical Arminians could differ from Calvinists, even though never voiced, would never occur naturally to one raised in the faith of the Whore of Babylon (Catholics).
A man is visiting from the old country [Finland], our mother told us young ‘uns, and you should be very careful not to raise your voices or run and jump and laugh and smile. He is a real Lutheran and thinks people must only look grim and think about their sins.
Irish Catholics spend an enormous time thinking and talking about their sins but seldom grimly.
From the handy but often inaccurate Wikipedia, here are the Five Points of Calvinism fired by the Canons of Dort:
Read them if it gives you pleasure but simply stated the elite (the rich and middle classes in today’s parlance) only for whom the Redeemer died are allowed because they are instruments of the Lord while the working classes are sinners who must be forever controlled and punished.
Thus it is absolutely mandatory that Obama must leave as his legacy the path to final destruction of the primary elements of the safety net (Social Security and Medicare). Who knew Obama was a true Calvinist like the Republicans.
The sequester is a fine start and was the Obama Administration’s idea despite denials.
Nov 13 2012
As soon as Barack Obama was reelected the austerians were already clamoring for him to enter into the so-called “Grand Bargain” as the only option to keeping the fragile US economy from going over the mythical “fiscal cliff.” Exit polls showed that voters were most concerned about the economy and jobs. They also indicated that raising taxes on the wealthiest was popular, as was preserving Social Security and Medicare as they currently exist. The debt/deficit was at the bottom of the list of voter interests. There has been much talk from Pres. Obama and the Democratic leadership that they now have a mandate to raise taxes on the 1% and they are willing to “bargain” with the Republicans. The problem is the “bargain” they want to cut would increase the burden on the elderly and those most in need of these programs now and in the future by raising the age requirements and tying cost of living increases to a metric that would decrease the ability of social security recipients to stay above the poverty line.
In an interview with economist Bill Black by Paul Jay at RT News, Prof. Black discusses how the “grand betrayal” and the role of the president and “Third Way” Democrats in the destruction of the social safety net:
At FDL News Desk, David Dayen has two important pieces on the “fiscal cliff” and the “grand bargain” and how our politicians are using them as an excuse to cut the social safety net.
Cutting the deficit has been discussed in terms of a moral imperative for the past two-plus years. But now we’ve arrived at a situation where the deficit would get cut a significant amount, and budget analysts make the obvious, inconvenient case that this would throw the economy back into recession. All the alternative explanations from the deficit scolds – a lack of confidence, the threat of higher interest rates – have nothing to do with the fiscal slope. It’s just that it would pull back on federal spending and raise taxes to such a degree that the economy would suffer. [..]
In the hands of someone who didn’t want a bargain on the deficit, this would be the ultimate teachable moment. “All those people telling us for years we have to cut the deficit, suddenly don’t want to cut the deficit,” that leader would say. “They’re warning people of the dangers of cutting the deficit, and saying we have to put a deficit plan together to avoid cutting the deficit!” But Obama wants this deal for his legacy. So he’s not going to disabuse anyone of the confusion over the fiscal slope.
Bob Woodward leaked the deal memo from the proposed 2011 grand bargain, which didn’t happen for a number of reasons, none of them being Barack Obama’s reticence to cut a deal. [..]
This was what the President signed off on, before the Gang of Six embarrassed him by calling for more revenue. He was perfectly willing to not only endorse this deal, but force the Democratic leadership to swallow it as well. And this is why Ryan Grim can be so sure that the next set of talks will include reductions in benefits to the elderly, the poor and the middle class. That’s what happened before, after all. [..]
Any sane observer of economic reality understands that the biggest concern in the near term is that the deficit will end up to small, not too large. We don’t have a deficit problem but a health care cost problem, and it’s not entirely clear we even have that as much as we have a CBO which over-hypes the health care cost problem in their models (the fact that CBO wanted to talk with Naked Capitalism’s Yves Smith for daring to question their model is quite telling). We have countless examples of counter-productive austerity in a time of a slowly recovering economy. [..]
At any rate, we cannot depend on the intransigence of the right this time around. Bill Kristol floated acceptance of higher taxes on the wealthy, following David Koch from a couple months ago. And John Boehner reportedly brought the hammer down with his caucus [..]
Senate Majority Leader Harry Reid has repeatedly stated that “we are not going to mess with Social Security.” The problem Sen. Reid has with keeping Social Security out of any bargain is President Barack Obama who is all to willing to bargain it away for a deal with the Republicans. The argument over the debt/deficit has never been whether taxes will be raised in any bargain, the goal of the right has been to destroy Social Security and cripple Medicare and Medicaid.
President Obama is still pursuing a “grander bargain” that would betray the trust of the people who returned him to office with the hope that he would change.
Apr 04 2012
Anytime that Congress passes a bill with a cute acronym, you should be very suspicious. ~ Chris Hayes
Last week Congress passed the Jump Start Our Business Startups Act (pdf), the JOBS Act, which is set to be signed into law with much fanfare by President Obama despite the fact that it will in all probability create an explosion of financial fraud. The act rolls back many of the regulations that were passed under Sarbanes-Oxley in 2002. Professor of economics and law at the University of Missouri-Kansas City, Bill Black wrote an outstanding article for the New Economic Perspectives that was cross posted at naked capitalism, explaining with clarity how the jumpstart Obama’s Bucket Shops Act is just another in a long series of fraud-promoting legislation. He closed with this analysis:
We have trashed a regulatory system that was the envy of the world. It helped bring us prosperity, far greater economic stability, fewer and less severe recessions, and reduced income inequality. It made freer enterprise possible because the regulatory cops on the beat helped limit the Gresham’s dynamic in which bad ethics drives good ethics out of the marketplace. When frauds prosper honest businesses are among the victims. The three de’s have brought us recurrent, intensifying financial crises, the end of any material gains by the middle class, losses for the working class, the expansion of poverty and extreme inequality, and the domination of our political system by crony capitalism. Elite fraud and corruption are now common in America.
The entire article is a must read.
During a panel discussion on Up with Chris Hayes, Prof. Black and Alexis Goldstein of Occupy the SEC “educated” Democratic Representative Carolyn Maloney, who represents the the Upper East Side constituency of top Wall Street earners, on just how bad this bill is. As Yves Smith observes, “it is pretty hard to imagine that Carolyn Maloney would do anything that would seriously inconvenience her constituency”:
You need to watch the full segment to get the effect, but Maloney starts out by saying that the JOBS Act probably won’t create many jobs, but she was nevertheless getting complaints about how costly it was for “small” businesses to hire auditors (earth to base, if they are public, they would not qualify as “small” in most people’s book). Goldsmith devastates Maloney with her command of the bill, pointing out that it covers companies of up to $1 billion in revenues, that the tech companies its backers keep invoking have VC firms ready and willing to invest, and the new format well be used by PE firms flipping companies they had taken private back to public investors. By the end, Maloney is telling Goldsmith to send her suggestions for improved legislation and she’ll put it forward (I’ll believe her sincerity when I see action).
Yves is right, Alexis shreds Carolyn. Watch this segment, it is a thing of beauty.
Prof. Black also explains “stump & dump” scams and “cloud financing” that can cause devastating losses and won’t create any jobs.