When do the prosecutions begin?

In the St. Louis alternative newspaper, The Riverfront Times, James Lieber sizes up the prosecutions now underway for the economic collapse. Oh, wait. There aren't any prosecutions:

As it stands now, there is only one federal prosecution related to the credit crash and bailout cycle, and it was begun by the Bush administration's Justice Department in June 2008. Not that there aren't culprits. Bernie Madoff and other accused Ponzi schemers like Allen Stanford are mere pickpockets compared with Wall Street's institutional buccaneers, who so far have carted off up to $12.7 trillion — that's nearly equal to the entire gross domestic product. They've multiplied their booty with billions in subsidies and a flood of derivatives — some of them merely old soured wine in new bottles. Today's pirates are sailing away from the light regulatory scrutiny that apparently will continue in our benighted, weakened, financially top-heavy and bubble-addicted economy. [Former regulator William] Black says Obama's current efforts are doomed to fail — and, in a twist, it's for lack of trying. "There is not a single successful regulator giving him advice," Black notes.
I've posted about William Black previously. Lieber describes him as follows: "a Ph.D. criminologist and lead lawyer at the Office of Thrift Supervision, who helped steer the brilliant federal effort that cleaned up the S&L industry and won more than 1,000 felony convictions of senior insiders while recovering millions of their ill-gotten dollars." Black is someone to whom Obama should be listening. He states that there are two reasons why there aren't vigorous ongoing prosecutions resulting from this collapse 1) "It's difficult to prosecute others for securities fraud if you condoned the deals to begin with," and
2) Obama administration lacks the will. Obama was the candidate most preferred by Wall Street and he has surrounded himself with lackeys for big finance, including not only Lawrence Summers and Tim Geithner, but also Attorney General Eric Holder, who has made it clear that white collar crime is something which he'd rather not prosecute. Keep in mind that "Wall Street's institutional buccaneers [have] so far have carted off up to $12.7 trillion, and that in 2008, In 2008 American households lost 18 percent of their wealth. Why aren't there more prosecutions? There's no good reason. This is an excellent in-depth article. The title: "No Justice: We've bailed out the banks. When do we go after the crooks behind our financial collapse?"

Continue ReadingWhen do the prosecutions begin?

More to the peak oil story

A few weeks ago, I wrote a post entitled "The Unspoken Reality of 'Peak Oil'", in which I tried to convey the scale of the problem we face. "My main motto never changes, the era of low oil prices is over," said Dr. Fatih Birol who is the Chief Economist for the International Energy Agency (IEA). Now we have even more confirmation that peak oil has arrived. Today, the IEA released their 2009 version of the annual World Energy Outlook, in which they attempt to forecast supply and demand through 2030. And once again, the IEA continues to forecast that there will be plenty of supply, if only we can muster the needed capital investments. Unfortunately, the needed capital investments are enormous:

The capital required to meet projected energy demand through to 2030 in the Reference Scenario is huge, amounting in cumulative terms to $26 trillion (in year-2008 dollars) — equal to $1.1 trillion (or 1.4% of global gross domestic product [GDP]) per year on average. (p.43)
As if that weren't bad enough, the release of the report has been almost completely overshadowed by yesterday's Guardian which has alarming allegations from two different whistleblowers within the IEA

Continue ReadingMore to the peak oil story

Bond raters hiding behind First Amendment

This is insanity: The bond raters, those three big Wall Street companies that rated crappy mortgages to be great investments, thereby plunging the country into economic chaos, are hiding behind the First Amendment. They are claiming that they can't be sued for the financial equivalent of calling a mouse an elephant, because their work product is just an "opinion." We charge millions of dollars for giving you a rating, and you can't hold us accountable because it's an "opinion." I'll tell you this: I work as a lawyer. If a screw up someone's case because I give him bad advice (in return for charging her a fee), she could (rightfully) sue me for malpractice. If I raised the defense that I can't be sued for terrible advice because it was merely "an opinion," I'd be laughed out of court with an adverse judgment tattooed onto my forehead. That the courts aren't letting these ratings firms get hammered makes you wonder whether the unspoken defense is "too big to fail." If they didn't have this ridiculous "First Amendment" defense, the smug and irresponsible raters would be ripped apart by millions of justifiably irate plaintiffs. And, of course, Congress is in no hurry to beat back the ratings firms' lobbyists and hold these jokers accountable for all of the 401K's they've trashed.

Continue ReadingBond raters hiding behind First Amendment

What’s up with economic reform? Not enough.

At Alternet, you can read Art Levine's detailed account of legal corruption of the economic "reform." It's not pretty, and the good guys are losing many of the important battles. Here's a passage, but go read the whole thing--it's well written and critically important:

So, the sleek, blond J.P Morgan lobbyist in a smart gray suit set off by a brightly colored scarf was able to saunter in shortly before the doors opened for the hearing to see just how many more loopholes could be added. (She declined to identify herself.) Like the evicted family in Michael Moore's new film being hired by the bank to clean out their own home, the banking-industry lobbyists in Washington have at long last created the ultimate trickle-down effect from the bailouts: hiring the jobless ( for $11 to $35 an hour) to hold their places in line to make sure there's no effective federal crackdown preventing more job-destroying speculation in credit default swaps and other derivatives.

Continue ReadingWhat’s up with economic reform? Not enough.

Elizabeth Warren: Nothing much has changed

Elizabeth Warren has lots of bad news, the "stabilized" economy and the huge Wall Street bonuses notwithstanding. Warren is the Chair of the Congressional TARP Oversight Panel. Good for her, hammering on Henry Paulson's enormous bait and switch. Most of that TARP money was supposed to be used for loans for small businesses, not more gambling and bonuses, which is where it appears to have gone. Yet, according to Warren, there will "never" be a meaningful accounting of that money.

Continue ReadingElizabeth Warren: Nothing much has changed