Posts filed under “Really, really bad calls”
Speaking of costly wastes of money: This colorful graphic via Perceptual Edge, shows the outrageous costs of war in Iraq:
Whenever I hear a a congress critter discussing deficit spending, the first thing I do is check their vote on the Iraq war to see if they are legitimately concerned about deficits, or not.
Deficit hawk or Hypocrite? You decide:
You will find most of these born again deficit hawks are hypocritical partisan hacks . . .
Back in 2009, I published a list of causal factors of the financial crisis: Who is to Blame, 1-25. It was culled from Chapter 19 of Bailout Nation. For this morning’s exercise lets see where the FCIC and BN differ in emphasis and causal factor. 1. Federal Reserve Chairman Alan Greenspan: We each agree that…Read More
Bill Black is an Associate Professor of Economics and Law at the University of Missouri – Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.
The new mantra of the Republican Party is the old mantra — regulation is a “job killer.” It is certainly possible to have regulations kill jobs, and when I was a financial regulator I was a leader in cutting away many dumb requirements. But we have just experienced the epic ability of the anti-regulators to kill well over ten million jobs. Why then is there not a single word from the new House leadership about investigations to determine how the anti-regulators did their damage? Why is there no plan to investigate the fields in which inadequate regulation most endangers jobs? While we’re at it, why not investigate the areas in which inadequate regulation allows firms to maim and kill. This column addresses only financial regulation.
Deregulation, desupervision, and de facto decriminalization (the three “des”) created the criminogenic environment that drove the modern U.S. financial crises. The three “des” were essential to create the epidemics of accounting control fraud that hyper-inflated the bubble that triggered the Great Recession. “Job killing” is a combination of two factors — increased job losses and decreased job creation. I’ll focus solely on private sector jobs — but the recession has also been devastating in terms of the loss of state and local governmental jobs.
From 1996-2000, for example, annual private sector gross job increases rose from roughly 14 million to 16 million while annual private sector gross job losses increased from 12 to 13 million. The annual net job increases in those years, therefore, rose from two million to three million. Over that five year period, the net increase in private sector jobs was over 10 million. One common rule of thumb is that the economy needs to produce an annual net increase of about 1.5 million jobs to employ new entrants to our workforce, so the growth rate in this era was large enough to make the unemployment and poverty rates fall significantly.
The Great Recession (which officially began in the third quarter of 2007) shows why the anti-regulators are the premier job killers in America. Annual private sector gross job losses rose from roughly 12.5 to a peak of 16 million and gross private sector job gains fell from approximately 13 to 10 million. As late as March 2010, after the official end of the Great Recession, the annualized net job loss in the private sector was approximately three million (that job loss has now turned around, but the increases are far too small).
Again, we need net gains of roughly 1.5 million jobs to accommodate new workers, so the total net job losses plus the loss of essential job growth was well over 10 million during the Great Recession. These numbers, again, do not include the large job losses of state and local government workers, the dramatic rise in underemployment, the sharp rise in far longer-term unemployment, and the salary/wage (and job satisfaction) losses that many workers had to take to find a new, typically inferior, job after they lost their job. It also ignores the rise in poverty, particularly the scandalous increase in children living in poverty.
The Great Recession was triggered by the collapse of the real estate bubble epidemic of mortgage fraud by lenders that hyper-inflated that bubble. That epidemic could not have happened without the appointment of anti-regulators to key leadership positions. The epidemic of mortgage fraud was centered on loans that the lending industry (behind closed doors) referred to as “liar’s” loans — so any regulatory leader who was not an anti-regulatory ideologue would (as we did in the early 1990s during the first wave of liar’s loans in California) have ordered banks not to make these pervasively fraudulent loans.
I keep hearing people erroneously claim that China is funding US deficit spending. It seems that every eejit with a fundamental misunderstanding of mathematics (and access to Xtranormal‘s animated talking bears) has been pushing this concept. It turns out to be only partially true — and by partially, I mean 7.5% true. But that means…Read More
Virtually All Independent Financial Experts Say that the Size of the Big Banks Is Hurting the Economy
Washington’s Blog strives to provide real-time, well-researched and actionable information. George – the head writer at Washington’s Blog – is a busy professional and a former adjunct professor. ~~~ Here’s my updated list of top financial experts saying that the giant banks are too big, and that their very size is hurting the economy: Nobel…Read More
In yesterday’s afternoon reads, I mentioned a Boston Globe story “That guy who called the big one? Don’t listen to him.” While it ostensibly looks at the track record of Nouriel Roubini, it isn’t really about him –its really about outliers and mean reversion in forecasting. “How can someone with the insight to be so…Read More
Category: Really, really bad calls
This is the original map with the rifle crosshairs from Sarah Palin’s site is below — don’t look for it on her site, as it was pulled down today. The Examiner criticized it back in March 2010: Sarah Palin posts political hit list on Facebook: taking a stand or suggesting violence? March 25th, 2010 3:20…Read More
More shocking news about the inept rating agencies: “The agencies rated billions of dollars worth of these bonds, mostly in the last two years. With shocking rapidity, even some of those triple A-rated bonds have defaulted. Of the more than $85 billion of re-remics issued since 2009, an estimated $30 billion may be under review…Read More
“The only thing we learn from history is that we learn nothing from history.” -Friedrich Hegel quotes (German Philosopher (1770-1831) > Representative Darrell Issa of California recently sent letters to more than 150 companies, trade groups and research organizations asking them to identify federal regulations that they wanted to see repealed or rewritten. This is…Read More