William Black’s five fatal flaws of finance

William Black is a white-collar criminologist who has written a compelling account of how the bloated parasitic financial sector is ruining America in his recent post at Huffpo. These are Black's five "fatal flaws" of finance:

1. The financial sector harms the real economy. Even when not in crisis, the financial sector harms the real economy. First, it is vastly too large.

2. The financial sector produces recurrent, intensifying economic crises here and abroad.

3. The financial sector's predation is so extraordinary that it now drives the upper one percent of our nation's income distribution and has driven much of the increase in our grotesque income inequality.

4. The financial sector's predation and its leading role in committing and aiding and abetting accounting control fraud combine to: A) Corrupt financial elites and professionals, and B) Spur a rise in Social Darwinism in an attempt to justify the elites' power and wealth.

5. The CEOs of the largest financial firms are so powerful that they pose a critical risk to the financial sector, the real economy, and our democracy.

The Solution: Fix the real economy, if you can find it. "The real economy came off the rails at least three decades ago for the great majority of Americans." I was highly impressed with William Black after seeing him interviewed by Bill Moyers. And now, after reading this detailed by accessible analysis, I'm even more impressed. We can't begin to fix the economy unless we begin to implement basic principles we can actually understand. Fixing the real economy and making sure that finance is merely the servant of the real economy are clearly steps one and two, for each of the reasons listed by Black.

Continue ReadingWilliam Black’s five fatal flaws of finance

Fixing health care under the table

At Common Dreams, Bill Moyers and Michael Winslip explain that you won't see the way the health care debate is being resolved if you only spent time on Capitol Hill. No, it's much slimier than that:

Katharine Weymouth, the publisher of The Washington Post -- one of the most powerful people in DC -- invited top officials from the White House, the Cabinet and Congress to her home for an intimate, off-the-record dinner to discuss health care reform with some of her reporters and editors covering the story.

But CEO's and lobbyists from the health care industry were invited, too, provided they forked over $25,000 a head -- or up to a quarter of a million if they want to sponsor a whole series of these cozy get-togethers. And what is the inducement offered? Nothing less, the invitation read, than "an exclusive opportunity to participate in the health-care reform debate among the select few who will get it done."

If you are not one of the highly-monied invitees or the "select few," forget about the debate because, politically speaking, you amount to nothing at all. That's the process. Go tell that to all the grade school students who are being taught lies in their civics classes. They are being taught that this is a democracy, and that our government is ultimately responsible to all of those people who were not invited to that fancy dinner. As the authors, explain, this particular dinner was canceled only after a copy of the invite was leaked to the web site Politico.com. It was, after all, a big misunderstanding. This peak at how important bills are passed is not an isolated case. It reminds you that when Congress passed the Helping Families Save Their Homes Act, "the select few made sure it no longer contained the cramdown provision that would have allowed judges to readjust mortgages." Here's another example:

Everyone knows the credit ratings agencies were co-conspirators with Wall Street in the shameful wilding that brought on the financial meltdown. But when the Obama administration came up with new reforms to prevent another crisis, the credit ratings agencies were given a pass. They'd been excused by "the select few who actually get it done."

Shame on us. Shame on our leaders for following big business instead of leading.

Continue ReadingFixing health care under the table

Robert Reich explains the “public option” re health insurance reform.

In this video at Bill Moyers' Journal, Bill Moyers and and former Secretary of Labor Robert Reich rolled up their sleeves to discuss Barack Obama's objectives regarding national health care reform, including the (potentially feasible) "public option" and (not unlikely option of) "single payor." The bottom line: Barack Obama has an uphill struggle against some extremely powerful (monied) interests, including the private insurers, pharmaceutical manufacturers and other profit-driven corporations that have each hired fleets of lobbyists yelling "socialism." At the 14-minute mark, listen to Reich describe how the financial sector has "pulled the wool over the eyes" of the Obama Administration. He warns that the lobbyists are enormously powerful, and that we need Obama and average citizens to start standing up to the lobbyists. As things are, nothing has fundamentally changed regarding the financial system, other than the financial sector's new ability to paper over its scandalous practices and its ever-increasing massive transfer of wealth from America's middle class to the financial sector. In 1980, the top 1% of the country took home 9% of the total national income. By 2007, the top 1% was taking home 21% of the national purchasing power. Reich explains that the middle class has been drained of financial and government power. What has happened is that "capitalism has swallowed democracy." Reich explains that when the government fails to set boundaries, we have the law of the jungle, and we then have super-capitalism, which is capitalism without democracy. The culprits were the lobbyists who made sure that there was no effective regulation of the financial sector.

Continue ReadingRobert Reich explains the “public option” re health insurance reform.

Bank Regulator William K. Black: The best way to rob a bank is to own one.

I’ve often had the thought that our massive meltdown could be figured out if we could only recruit some intelligent and well-motivated people to gather and analyze the evidence. But who would those people be? Who could serve as the template the type of character we seek out in such people? Too bad we don't have 1,000 people like William K. Black. Black is the former senior regulator who cracked down on financial institutions during the savings and loan crisis of the 1980s, pointing fingers at five congressmen including John McCain. Black went about his work with such vigor that he even drew a death threat from Charles Keating. Have you ever gotten excited listening to anyone talking about the economy? In this breath-taking interview with Bill Moyers, Black offers his own carefully studied analysis regarding the "bailout." This is not the intentionally abstruse financial jargon that you usually hear when pundits discuss the meltdown. The theme of the Black’s interview is this: "The best way to rob a bank is to own one," which is also the title to a book he wrote in 2005. Black teaches 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. This video is required viewing for anyone who is convinced that we are not getting the straight scoop from the corporate media or from our government.

Continue ReadingBank Regulator William K. Black: The best way to rob a bank is to own one.

The problem isn’t that John McCain is too old.

Sam Donaldson recently argued that the problem with 72-year old John McCain (referring to McCain's confusion and his erratic unfocused ways) is due to his "age." I vehemently disagree with Donaldson (who, at 74, is two years older than McCain).  Blaming mental incoherence on "age" is a form of bigotry.…

Continue ReadingThe problem isn’t that John McCain is too old.