Readers may have seen the movie Inside Job (if you haven’t, you really need to) or a clip from the movie that got quite a bit of attention on finance blogs, that of director Charles Ferguson grilling former Federal Reserve vice chairman Frederic Mishkin on some dubious work he did touting Iceland as a well run banking center not long before its implosion.
The film’s director Charles Ferguson speaks with Rob Johnson, director of the Institute for New Economic Thinking, and former chief economist for the Senate Banking Committee and senior economist for the Senate Budget Committee (hat tip reader Hubert). Enjoy!
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Ahhhh I’ve been waiting for this and will share widely. Merry xmas Yves and fellow readers.
90,000 local council workers – “Social workers, school dinner ladies, meals on wheels providers, refuse collectors, youth workers, and home helps” – in the UK recieved letter notifying them that their jobs were at risk today (http://www.bbc.co.uk/news/business-12066537) – several hundred thousand christmases runined, and that’s just the start. While on the surface having little to do with the clip attached, it in fact is very strongly linked with the financial structures academic economists allowed to prosper without a whisper of christisism.
I do hope the new kithen in the 2nd holiday home, or whatever Mishkin spent his $$$ on, was worth it, and I hope he has a good think about what he’s done and what he’s been apart of and quite probably lead.
Great stuff.
BTW- I believe it is Rob “Johnson”, not Rob “Ferguson” from INET
Correct, I’ve even worse on typo laxity with names than normal text!
Now that you admitted to a typo, do you think you could introduce typos into some CVs at Columbia Business School?
I recall several of the blogs, Mish and Karl Denninger, and one or two others pointing out the obvious conflict that Frederic Mishkin had been paid $124,000 to write a glowing report on Iceland just before it collapsed, yet his report made no mention of having been paid to write it.
And he was a former Fed governor, the kind of person they love to invite as a guest for 2 or 3 hours in the morning on CNBC. But unlike Charles Ferguson, the pathetic corporate shills and government stenographers who work for CNBC would never dream of asking Mishkin any question that’s even remotely difficult. What they like to do instead is let him talk while they emphatically agree with every single word.
Just in case anyone is still wondering or still in any doubt as far as what kind of corrupt scum are running our financial system.
They are creating a large population with little or nothing to lose. Is that wise, for purely selfish reasons?
It’s not wise, but from the the viewpoint of the transnational wealthy who actually run the USA via K-Street and a group of useful idiots commonly known as “congress,” the USA’s population has been easily controlled via MSM, cheap entertainment, cheap food and ubiquitous psychoactive drugs. Moreover, they look at the examples of other third world countries. In most of these countries, with conditions much worse than the USA, few are revolting.
The USA, however, will be guaranteed and outsize portion of the world’s wealth for some time. A country with as many nukes as we possess is nothing to mess with. An angry, hungry populace in withdrawal with a plentiful supply of engineers is not beyond securing and firing (or otherwise transporting) a nuke or 12 despite the safeguards. If that happens, there is no safe place – for anyone.
“the USA’s population has been easily controlled via MSM, cheap entertainment, cheap food and ubiquitous psychoactive drugs”
Exactly. What the ruling elites want is a population that is controlled, dumbed down, and utterly passive. In this way they can be certain the vast majority will always accept, without questioning, whatever trumped-up narrative they decide to give us, no matter how ludicrous.
John Pilger, one of the rare left-leaning journalists who focuses much of his criticism on the mainstream media, put it this way: “As for journalists, our task is to censor by omission and make the crime seem normal for you, the public. For it is your understanding and your awakening that are feared, above all.”
And he continues: “…if we refuse to question and probe the hidden agendas and unaccountable secret power structures at the heart of “democratic” governments…we surrender both democracy and humanity.”
Hmm. In most of those third world countries, there are routine revolutions, actually. Every 10-20 years.
In most of the more stable ones (India?), the underclass is seeing that they’re getting ahead; even if the overclass is doing better, they’re at last not doing worse.
The least stable ones have eventually ended up with actual *populist* revolutions (Bolivia?)
Now that I have learned that two of President Obama’s most favorite columnists are none other than Thomas Friedman and David Brooks — two of the biggest brown-nosers for the TBTF banking industry that you’ll find in the mainstream media (see link below), it seems pretty clear to me that the global financial crisis was an inside job. I wouldn’t have come to this conclusion had the big banks not gotten away with engaging in activities that have fraud and corruption written all over them. And because these two op-ed columnists from the New York Times, whom Obama holds in such high regards, are also unabashed brown-nosers for the military-industrial complex, coupling that with the fact that none of our war criminals have been hauled off to a prison cell in the Hague, I’m also seriously contemplating the possibility that the 9/11 attacks were an inside job as well.
http://www.salon.com/news/politics/war_room/2010/10/26/obama_columnists
The blatantness of their criminality is radicalising the former middle.
In the contemplation of this 9/11 issue…..I would like to raise the issue of one fact that has made me continue to question….Building 7. No mention of Building 7 in the 9/11 Commission Report. No fires that would make this building completely collapse into itself. Do some research on Building 7 and it puts all the other questions in a different light.
Now that I have learned that two of President Obama’s most favorite columnists are none other than Thomas Friedman and David Brooks
Is that true? Not at all surprising. I have two things to say about it.
1. In December 2008 Brooks was writing advice-for-Obama columns, advising pretty much exactly what he’s gone on to do. I thought at the time that, since that he had appointed Geithner and Summers, and kept blathering idiotically about “bipartisanship” and “continuity” (“change” suddenly was nowhere to be found), that it was a good idea for the more pseudo-respectable kind of Republican to make a pitch to him; that it might appeal to him.
2. It gives me Schadenfreude that all of Krugman’s flip-flopping and shilling and pandering and astroturfing and criminal lying couldn’t get him any respect. Obama still despises him. Good! Serves him right.
“It gives me Schadenfreude that all of Krugman’s flip-flopping and shilling and pandering and astroturfing and criminal lying couldn’t get him any respect. Obama still despises him. Good! Serves him right.”
Care to expand and justify such an incredibly nasty ad hominem attack? That is not your usual style and I am really surprised to read that kind of diatribe from you.
You’re right, ad hom fallacies are not my style, and I didn’t engage in one here. Once again someone needs to be reminded that an attack based on evidence is not an “ad hom” attack. People really need to learn how to use that term correctly. I’m surprised you missed my many previous criticisms of Krugman as one of the most pernicious of the astroturfing Democratic partisans, but here’s just a quick list:
1. Aggressive shilling for the health racket bailout, after he used to pretend to advocate Single Payer.
During the campaign, when he was still a Hillary hack, Krugman starkly spoke the truth: By their very existence the health insurance rackets are in a zero sum game with true reform. By definition it’s not possible for them to be legitimate participants in any true reform process. He said that by way of criticizing Obama’s solicitude for those rackets, brazen even then.
So we know that he knows the truth, which renders his later aggressive shilling for Obamacare to be all the more despicable.
2. Just as I documented in a series of posts, Krugman’s earlier opposition to “austerity” was purely tactical and provisional. In recent writings he’s endorsed various criminal policies like Medicare cuts (which he himself called “death panels”) and regressive taxation.
I continue to predict that he’ll end up supporting the gutting of Social Security. I’ve already been proven right about the austerity in general.
3. Many people think Krugman opposes the war. I used to think so. But now we know that Krugman never opposed the war. He was lying in every word he said. Now we know he only opposed Bush’s war. His contemptible silence since Obama came in translates to support for the exact same war now that it’s Obama’s War.
Those are specifically partisan crimes. I laughed at him above because all that pandering hasn’t rendered him any more worthy in Obama’s eyes.
Then there are his broader crimes against humanity.
4. He supports the Bailout. He supports the Bailout America regime. He openly says that he wants us to live under this finance tyranny in perpetuity. In the same column where he explicitly said, “what Goldman Sachs does is bad for America”, he also said “nevertheless, we have no choice but to bail them out”, which is a criminal lie.
5. And finally, after his original public incarnation as a militant neoliberal globalization propagandist during the Clinton administration, today we’re deafened by his despicable silence with regard to the crimes of globalization. These most of all are his crimes against humanity. How many murders does he have on his rap sheet already? How much blood on his hands? E.g., how many Indian farmers have been driven to suicide after being driven off the land by Krugman’s ideology? Perhaps hundreds of thousands. That’s just one high-profile incident.
I think the closest Nuremburg precedent is Julius Streicher, convicted as a virulent propagandist.
Bravo.
To blow up your edifice of objection to Krugman the person, all we have to do is to show with one example how misguided, wrong and arbitrary you are.
Let’s take austerity. You claim “Krugman’s earlier opposition to “austerity” was purely tactical and provisional.” How do you decide what is tactical and what is provisional when Krugman without a single exception is squarely against austerity. The number of example for that is so high to make your argument downright clownish.
I don’t tend to read your comments because they way too long; I am reading this blog for the quality of the posts (Yves’ work mainly) and read comments to get more insight. To make comments helpful, they have to short and clear; you go on and on and on and …
I suppose you had to take just that one example, since the others are obviously true, and no one would try disputing them. All one could do is side with him.
As for K’s position on austerity, since I recently wrote two posts on it I’ll just link those.
http://attempter.wordpress.com/2010/11/15/krugman-watch-1115-the-austerity-mongering-is-on/
http://attempter.wordpress.com/2010/11/18/krugman-austerity-lite/
Those were the latest of a sequence of over a dozen posts I’ve written which comprise a dossier on Krugman’s partisan flip-flop.
But austerity in a nutshell:
1. Krugman never objected to it as robbery, and indeed explicitly denied that it’s robbery. He merely called it bad policy.
2. He supported the health racket bailout, which is an austerity bill.
Those two points together caused me to infer that he’d never object to any austerity measure on principled grounds, but only tactical grounds.
3. And today, he calls for what he himself called “death panels” and “regressive taxes”. Both are, of course, austerity measures. (Don’t tell me you need the MSM to tell you something’s “austerity” for you to recognize it as such?)
Links documenting all three of those points can be found at the two posts I just linked.
Um, no. None of your criticisms of Krugman hold water, and that’s because you haven’t figured out the point of view he’s coming from.
Read the intro to _The Great Unraveling_, and you’ll realize that there was nothing hypocritical about anything Krugman has written since then.
He recognizes that the Republican Party is a group of revolutionary reactionaries out to destroy everything we hold dear, and that they’re doing very well at it. And of course he is in favor of a fairly stable society. So read everything he advises through the lens of: *does this help destroy the Republican Party and stabilize society, or does it take us further on the path to total collapse?* He is willing to settle for second-best or fifth-best solutions if they help with that goal.
To put it bluntly, if a policy seems likely to help force insane Republicans and those who think like them out of office, Krugman is willing to give it a go, even if it’s bad policy in other terms. But if it’s just going to help Republicans win more elections *and* it’s bad policy, then he’s clearly against it.
Nice try, Mr. Democratic Party, but:
1. The health racket bill Krugman astroturfed for and your party unilaterally imposed is a Republican bill.
http://fdlaction.firedoglake.com/2010/03/30/new-health-care-law-a-republican-plan-that-should-make-insurance-companies-proud/
As Krugman knows damn well.
2. Globalization’s crimes against humanity, the Bailout (history’s worst financial crime), and the wars of aggression are all of course 100% bipartisan policies.
3. As (2) demonstrates, there’s no difference whatsoever between the Republican and Democratic parties. Both are criminal enterprises. Krugman’s simply a partisan thug on behalf of one of them.
Do you really think anyone other than fellow criminals are going to keep listening to Washington lies, when we all know the facts about the Bailout and the war? Really, how can you possibly even try to argue that Krugman doesn’t support these crimes? And what could it possibly mean to support crimes at this level but still be “against” the Republicans? Once one supports such things, what’s left to oppose? That doesn’t make sense on any level other than that of partisan hackery. History’s worst crimes are bipartisan efforts.
In coming out against demand-side jobs simulus in favor of tax cuts for the superrich, Brooks wrote:
“The Demand Siders are brilliant, but they write as if changing fiscal policy were as easy as adjusting the knob on your stove. In fact, it’s very hard to get money out the door and impossible to do it quickly.”
OMG, who are you kidding … really, who? It took Paulson, Timmy, and Benny days to shovel trillions out to banks with scant paperwork; it takes no debate whatsoever to spend trillions on wars; and nothing for special approriations to subsidized Israel’s occupation/annexation or to shore up its nukes.
Brooks again: “These Demand Siders have very high I.Q.’s, but they seem to be strangers to doubt and modesty. They have total faith in their models. But all schools of economic thought have taken their lumps over the past few years. Are you really willing to risk national insolvency on the basis of a model?”
When and where have demand-siders’ ideas been put into practice or taken seriously? Supply-siders have not yet taken their lumps; they’re still running the show. Speaking of “strangers to doubt and modesty”, will someone please wipe that arrogant smirk off of Brooks face?
“Speaking of “strangers to doubt and modesty”, will someone please wipe that arrogant smirk off of Brooks face?”
I’d like nothing better, but am not sure it’s even possible. Brooks’ arrogant smirk seems to have frozen in place with a couple gallons of botox.
The Mustache of Understanding is no surprise, but Brooksie??
Now I’m really disappointed.
Are you nuts? Everybody knows that on 911 the laws of physics were suspended for an entire day. The melting point of steel beams was lowered from 2600-2800f to 1250f resulting in the collapse of the steel structure supporting building 7 and the twin towers. It took hours for the smoky fires burning in wastebaskets and carpeting in building 7 to reach the temperature where suddenly it collapsed inward, causing little damage to Mr. Silverstein’s other leasehold buildings nearby. When he was interviewed on video saying they had to pull the building down to avoid further loss of life, he must have been channeled by Osama Bin Laden. Must have been quite an adventure to bring the thermite charges into the building and prepare it for demolition while the twin towers were collapsing next door—-.
At the same time the melting point of structural steel was altered, the Newtonian laws of gravity regarding rate of fall of objects were suspended. All you need is a stopwatch and video of the falling buildings to determine that gravity took a vacation, or perhaps a mini-black hole appeared suddenly in the basements?
What I don’t understand is why God chose to suspend the laws of the physical universe on that particular day without explaining himself. Because he has not been forthcoming it leads to all sort of bizarre conspiracy theories.
Don’t be duped Cynthia, move along now, there is nothing to see here.
Thanks for posting the links. I’m surprised that I had not heard about this documentary. Unfortunately, it doesn’t seem to be showing locally any more. DVD release is still TBD. I’m planning to buy two copies. One for myself. Another as an educational loaner for others.
“Inside Job” should be at Netflix fairly soon, if you are a subscriber. I can’t tell whether it will be available for online streaming (hope so), but it is already possible to order as a mailed DVD when they get it. Otherwise, you can google the movie’s title and find their website; they’ll have additional details about how to view post-theatrical release.
I hadn’t realized this interview was on the INET website, but for any readers hereabouts who have not yet had the pleasure of viewing that website or its very fine online interviews, the main web address is: ineteconomics.org. It’s a beautifully done website, with lots of resources and creative thinking.
Thanks for this post, Yves. Wonderful!
Sorry to confuse.
Netflix has the title “Inside Job” online, but so far it’s not clear whether this movie will be available for streaming.
It appears that Netflix is waiting for the DVDs to be produced, at which time they will be available for subscribers to order via (postal) mail.
The movie’s website is http://www.sonyclassics.com/insidejob/
It appears that you can place an order for the DVD at Amazon; they are waiting for the DVDs to arrive at their warehouses, but are accepting orders at this time and will ship as soon as they have the DVDs.
What was more surprising to me about the film was the people who refused to be interviewed…..namely Geithner! Greenspan! Bernanke!
Otherwise, if you have been paying attention in this whole fiasco, the information in the film was pretty much common knowledge.
The film did not go into the possibility that the banks did not transfer the documents properly and that there are many mortgages that are quite possibly voidable now. Perhaps this was information that was literally inconceivable at the time? Who knows.
Regarding former Federal Reserve vice chairman Frederic Mishkin, and so many fine experts in economics coming out of our most venerable institutions in academia, government and finance… and who’ve done so much for our nation’s future…
I ran across an excellent brief article covering the history of this most honorable profession here:
http://en.wikipedia.org/wiki/Shill
The movie was absolutely terrific. I saw it last Wednesday night on 2nd Avenue at 67th Street. There were about 400 seats in the theater and about 20 people watching the movie. Well, it was a cold night.
I am jealous of Charles Ferguson (in a good way). Jealous of his ability to organize and produce something as serious and meaningful and intelligent and thoughtful as that movie. All I do is post comments. I wish I had my sh-t together enough to do something like what he did.
I don’t know how he got all those dudes to be interviewed? That’s remarkable access. Really. And several of them were pretty good sports, I thought, just to let the camera in. But they all come across like morons. LOL.
Fred Mishkin wrote a very good macroeconomic textbook, in which he carefully delineated the risks of moral hazard and adverse selection in financial markets. Where did things go bad? it’s like a fallen woman. ha ah. Where’s Blanche DuBois?
This must be how Joan of Arc got the French armies to follow her around. They were all hypnotized. All these dudes were hypnotized. They hypnotized themselves with their lunatic equations and all the cash. And Mr. Ferguson sort of breaks the hypnotic spell.
Good luck recreating a new economics. It makes me laugh. Consider the tribe and the energies in the tribe. Consider that a hunter brings meat and the weaver weaves and the canoe maker makes the canoe and every one is cared for. Unless they are lazy or insane. In which case they may be banished or murdered. Then consider money as an abstraction of that energy. Where can you model that with equations? You can’t. Economics is what it is. The problem is where the boundaries of the tribe are drawn. Who is inside. Who is outside, and how and why.
The movie was absolutely terrific.
So were “Wall Street”(1987) and “Barbarians at the Gate”(1993) — for all the good they did.
I saw it a couple weeks ago in a theater in Scottsdale with maybe 200 seats. We had to go to the later show because the 3:45 pm was full. There were a lot of angry people in the audience after watching this, and I was one of them.
And how about Hubbard’s performance?
You’re on to it!
The areas most in need of PRAGMATIC remedy (in my humbleacious opinion) are these…
1. Decision systems and technologies in large scale social organisms.(not just governments but also corporations and any large enterprise)
(Decision = an Idea + an Action; a decision can be as elementary as which side of the bed to get out of or as complex as a nation’s decision to go to the moon. Decisions may be motivated by any number of factors from fear to greed to altruism… but ALL these decisions have a foundation in individual and biological drives developed over a very long hunter-gatherer existence.)
The fundamental determinant of a group’s (tribe, nation, whatever) success or failure is a complex interplay of individual and group decisions operating within the confines of available resources and the laws of the physical universe. Money is a technology for the storage of ‘decision rights’ (more useful for analysis than as a store of value in my opinion but that’s a separate discussion). Moreover money is SOCIAL whether fiat or not… both a pile of dollars and a mountain of gold are useless to a solitary individual without an accompanying social structure.
Decision Technologies: Currencies and the Social Contract
http://culturalengineer.blogspot.com/2010/07/decision-technologies-currencies-and.html
2. Recognizing and Addressing the Biological Altruism Problem in decision systems
The root of biological altruism lies in the distinction between in-group vs out-group AT A BIOLOGICAL LEVEL. This is very different from intellectual altruism and can produce problems in unexpected ways. e.g. Today many children will die in unknown places around the world for very unjust reasons or no reason at all. This is undeniably tragic. But in truth this will little affect my day. But if my dog died this morning I’d be devastated and dysfunctional for at least some period of time. This illustrates a couple of things:
It suggests that biological altruism in humans ISN’T limited to close genetic relationship but IS connected to cognitive limits and Dunbar’s Number).
It also suggests that this boundary is a survival necessity (we couldn’t get anything done in a scaled social organism if we were all incapacitated every day by the daily tragedies) but DOESN’T SCALE DIRECTLY.
Social Networks & The Social Organism: Healing the Breach
http://culturalengineer.blogspot.com/2009/05/social-networks-social-organism-healing.html
Ayn Rand & Alan Greenspan: The Altruism Fly in the Objectivist Ointment
http://culturalengineer.blogspot.com/2009/10/ayn-rand-alan-greenspan-altruism-fly-in.html
3. Ensuring that ICT’s critical role in the current revolution in proximity (social and psychological as much as physical) is not foreclosed upon by legal, cultural, corporate or any other means… (net neutrality AND dispersed resilience)
Capability ENABLES Responsibility
http://culturalengineer.blogspot.com/2008/10/capability-enables-responsibility.html
The Commons-dedicated Account* System and theory arose out of these assumptions.
*A self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contribution… which for fundamental reasons of scale must allow a viable micro-transaction. Such a network ideally should maintain its own cloud and bank. Accounts may be created and/or maintained with zero balances and/or only momentary balances during a pass-through transfer (I believe the monetization model requires no burden on the actual transaction.)
LinkedIn
http://www.linkedin.com/in/culturalengineer
“Where can you model that with equations? You can’t. ”
Sure you can. You can model damn near anything with math, including psychology. It’s one of the things math is good for.
You have to make better models than the current economists, mind you….
Just when I thought I had my arms around this mess comes this article on “trust-preferred securities” which I don’t recall reading about before – and I follow several great blogs (including NC of course). Greenspan is the gift that keeps on giving.
http://www.mcclatchydc.com/2010/12/22/105708/fed-could-have-saved-many-smaller.html
Jim
Inside Job?
Makes it sound like a conspiracy when it wasn’t! Anyone who bothered to read could have seen what the consequences of supply-side economics meant for the average American and this country – even if “financialization” happens to be the focus of this film. One illusion that must be dispelled is that this “collapse” was and is a failure of supply-side economic policies – and not their SUCCESS. That’s the real inside job… the noble lie.
Moreover, focusing on the TBTF financial institutions misses the forest for the tree, obfuscating the SYSTEMIC-WIDE looting that has taken place in this country for 30 years or more. The decline of manufacturing, dumbing down of public education, willful neglect of public infrastructure, reduced taxes, and “financial innovation” – easy credit – that accompanied it are all of the same piece – the same CONSENSUS subscribed to by the ruling elites [CLASS] of this country regardless of “party” affiliation. The expansion of credit was the liquidity with which declining living standards were masked while this wholesale systemic looting took place. It was and remains a systematic, well orchestrated campaign to transfer wealth [already created] from the majority to a small minority. Call it CLASS WARFARE FROM ABOVE but it doesn’t change the fact that the damage has extended far beyond the FIRE sector. And that it is GLOBAL in scope belies its portayal as an “inside job”.
How can it be an “inside job” when the ruling elite[s] ALL subscribed to this “Washington consensus”? It’s as if a small group of insiders did all the damage – not the FIRE sector in toto and beyond. It also suggests that reform of the FIRE sector is all that is required and “we” can return to the good old days… the city of light up on the hill shining brightly as a beacon of hope for the world? ECONNED by Yves details at length how academia over time, particularly economics, merely became the priesthood with which to propagate this new “faith” among the future leaders – social, political, and economic – of this country. That they succeeded is beyond doubt.
Another more disturbing facet of this kind of documentary is that there is no role for the average citizen in this new world order. It absolves him/her of responsibility – precisely what the “insiders” want US to believe. It’s too big and complicated to understand… leave it to experts and even they make mistakes. Almost makes you feel sorry for them… But it also absolves “leadership”, intimating that it was only one elite among these elites that went “bad”. It was SECTORAL and not SYSTEMIC. But is that really the case? How could one sector wreak such widespread havoc without the complicity, or perhaps stupidity, of the others? Without deregulation and laxed oversight by government how could this have happened?
This is not to denigrate the film or its author – which I have not seen – but to try to put it in perspective. Will this film reveal anything that anyone who has been paying attention doesn’t already know? Well meaning, well educated, clean cut people who just lost their way… victims of their own hubris? But will any of them do time? Will any of them lose their homes or go hungry?
Call it “groupthink” or whatever you like, but don’t call it an INSIDE JOB. The BLOW JOB might be more accurate…
Posts like yours continue to piss me off. Of course it was an Inside Job. If the consumer knew that the underwriters were being thrown these loans many times and with completely different numbers each and every time to “fit” the underwriting…..do you really think anyone would have signed?
Get off your intellectual high horse. Especially if you haven’t seen it.
Dump the BS… Julian,
Unfortunately my intellect does not see the world in black and white but a very bleak steel gray in which there were many “consumers” who knew exactly what they were doing – working the system to their benefit with the consequences being the next guy’s problem – not their’s – your’s and mine if you will.
Do you know any “house flippers”? Some of my high school friends engaged in the practice before the term “house flipping” even came into use because the disappearance of good-paying, unionized jobs in manufacturing in NE OHIO drove them into more entrepreneurial pursuits. This was back in the 1980s… Slum lording and block busting are two other terms, depending on the circumstances, we used as well. But the participants knew the game was a scam from the beginning and knew that the trick was to get out before the bottom dropped out. Purchasing homes in blighted neighborhoods, drywall when and where necessary, repaint from top to bottom, and then sell at a profit… Get in and get out was the strategy. I know of only one who got burned badly. But to see this as an “inside job” fails to understand the antecedents that made it possible. It didn’t BEGIN with mortgage-backed securities. Hyman Minsky [1986] discussed the dangers of “financial innovation” prior to your recent discovery.
The tendency of some individuals to see the “little people” as virtuous and hapless victims of evil bankers without any faults is one sided and myopic. The sad truth is that many from the ranks of the “little people” are hungry, willing recruits for these “bankers” who want to be rich and have the street smarts to climb the stairway to heaven. Given an opportunity some would “off” any resistance/impedimant in a second. Otherwise, the game would come to a screeching halt. Isn’t it called upward social mobility – the American Dream? Doesn’t matter how you get there, just get there!
No, the corruption is SYSTEMIC and infects all segments/institutions of American society. Can you name one institution that is capable of reforming itself from within? Just one? Anyone who believed that the free market utopian anarchy of theorists like Friedman and Hayek would not degenerate into Hobbes’ “war of all against all” is as much a victim as he/she is a fool.
In your case I suspect it’s a little bit of both. Buyer’s remorse at a minimum.
Merry Christmas!
While the corruption was systemic, it was *still* an inside job. The people who deliberately committed fraud and walked away with giant bonuses — and are still doing it after bankrupting their banking institutions (and demanding government bailouts) — that’s an inside job on *top* of systemic corruption.
The “people” aren’t just confined to New York City and Wall Street, but involve local bankers, real estate agents and developers, zoning commisssions, mortgage brokers, etc in cities from San Diego to Tampa, Miami to Seattle, San Francisco to Boston and parts in between. It’s a pretty wide swath to insist that it was an inside job as it involved the entire country in one great societal consumption frenzy predicated on credit.
Nobody knew because everybody knew. Does that have a historical precedent? Like good Germans who had no knowledge of the ashes wafting into the air from the camps outside their city/village, good Americans had no knowledge of what this finanzkapital SS was doing, right? We were duped by our leaders!
The analogy may offend some sensibilites here but this isn’t the first time a crime has been committed with the American people’s acquiescence and/or ignorance. So long as the “goodies” streamed in from the provinces, did it matter?
Perhaps in place of denazification Americans should be subjected to DEFINANCIFICATION…
Don’t be harsh, Julian; Mickey does have a point.
The financialization of the economy over the past thirty or so years has forced the productive side of the economy to take actions (off shoring, private equity buyouts, releasing the inner Gordon Gekko of CEOs, etc.) which are harmful to 90% of the people.
In the absence of easy credit the people might well have noticed before it was too late.
I agree with you that Julian is being too harsh on him.
Mickey’s post is very well written and has a number of good points, including, but not limited to:
“the SYSTEMIC-WIDE looting that has taken place in this country for 30 years or more. The decline of manufacturing, dumbing down of public education, willful neglect of public infrastructure, reduced taxes, etc.
Also that we are facing class warfare from above, and a hollowing out of the middle class.
Spot on, Mickey. It was all hidden in plain sight, just as Southern slavery was and is ‘hidden’, spread gobally like a pandemic. Empowering this is the blind messianic zeal and (self) righteousness of elite plantation massas who are entirely certain of their divine right to rule for the greater good no matter how many helots are killed or impoverished in the process. It is the will of their Almighty.
The gospel of prosperity is this theocracy’s ideology, and it will not be dislodged by any “temporary problem of liquidity” to quote John LeCarre in “A Perfect Spy”. It will only be shaken by utter bankruptcy, widespread devastation, ecological collapse, and a groundswell of public rebellion … just around the corner, in 2012.
a feature, not a bug.
The issue of academic freedom and the corruption of discourse by money is quite complex. There appears to be no limit on discussion between the neo-liberals (laissez-faire, privatize everything) and Keynesians, or as Krugman likes to position these two schools, freshwater and saltwater economics. But the need for discourse is in the dark corners of economics, finance, monetary theory and the dynamics between markets and governments. It isn’t that academia does not have good political economists, or financial theorists, it is that thoughts, like reconstituting the Federal Reserve (see Dennis Kucinich’s recent National Emergency Employment Defense Act), or financial regulation are being demagogued. These are “kooky” ideas. Discourse is not required. Behind this marginalization lies the general ignorance of the American People. I don’t want to write a dissertation, but there is something remarkably incongruous about a culture that disdains knowledge about money and finance, perhaps associated with a Calvinistic division of skills and perception that money is the root of all evil, while simultaneously worshiping at the money altar. If there is one thing we as a culture should learn from this crisis, this division of skills has led to an acceptance of economic ignorance that has placed us all at enormous risk. To be perfectly clear, note Charles’ reference to the enormous promise provided by Obama’s resounding victory, and his pathetic, virtually sycophantic response, “I don’t want to own a bank”. In the war the American People are in, this is a virtual declaration of surrender. Our illustrious president does not even understand that We the People, have been and are being, ripped-off.
In my humble opinion, the requirements for high school graduation should include at least 6 semester hours of finance and economics. Yeah, this would likely be about as popular as Algebra or Government, but I am convinced that an effective citizen must understand the rudiments of economics. Even more so for our leaders.
The interview with Ferguson was just riveting. Thank you very much.
Thanks for posting this Yves. Really great stuff. However, one big concern upon going to their web site is that Soros is funding it. Very suspicious indeed and one needs to ask why and what is his agenda this time?
Hmm. Last time Soros’s agenda was the survival of academia, the arts, sciences, and humanities, and culture, in the whole of Eastern Europe.
Maybe he’d like it to survive in the US too. Just a guess, y’know,
Obama appointed Bernanke, Geither, and summers because he is corrupt
Throughout, interviewer and interviewee cast around for a grassroots organizational vessel for their outrage–third party, Sierra Club, civil rights movement, Common Cause all named. Every time I’m saying, “Yeah, right.”
Throughout, I kept waiting for a mention of the grassroots movement that bounced a whole bunch of go-along, get-along congressmen and senators, prevented the election of several more, and delivered a major shock to both parties in the process–that would be the Tea Party. But no, neither interviewer nor interviewee were looking for that. Tea Partiers are not the type of people they want to associate with. Socially lacking. Probably anti-communist. Generally yucky.
But I would say to interviewer and interviewee, if you really want reform these are your people, because they are the only large element of the population that aren’t content underneath it all with the role they’ve been given in the de-development of America.
Richard
Problem with Tea Party types is not what you say, but that they’re stupid dupes who were mostly purchased wholesale by Dick Armey’s “FreedomWorks” and didn’t even notice.
Full credit to Karl Denninger, of course, who while having founded one of the Tea Party groups, has now angrily denounced them for being coopted.
Now who’s going to really start the struggle? Look no further than this blog. The angry people who formerly worked in finance before it became one big con job, the lawyers fighting illegal foreclosures — the middle-class professionals who know exactly how the system is being scammed and wrecked.
Charles Ferguson has rendered a great service. As much as this great recession is about inane theories, it is about corruption on a massive scale.
The decadence is odorous and it is time to prosecute the blatant frauds that have been perpetrated. I do not want ot hear about the difficulty of proving fraud. For example, the Valukas report is a serious road map as the Lehman fraud. Cuomo’s filing is more political that prosecutorial. One hopes that there will be prosecutions that follow.
What angered me in the Mishkin clip was his disdain, a sort of how dare you ask me that all the while there was this underlying sense of him thinking, damm, you’ve got me on that.
Economics is the ONLY profession w/o a code of ethics.
Any questions?
Great interview!
Inside Job needs more exposure. When can we show it on cable TV? (Imagine the carnage if we slipped this on Fox News for a couple of nights.)
In the Mishkin video, the thing in the end about disclosing being paid was really misleading. It was actually borderline defamation. Glenn Hubbard was most likely referring to papers published in academic journals when he said financial ties needed to be disclosed. The paper Mishkin wrote was specifically commissioned by the Iceland Chamber of Commerce, not meant for an academic journal. There was no secret about it. I mean right on the top of the paper there’s a big logo that says Iceland Chamber of Commerce. Why would anyone assume Mishkin wasn’t being paid? And the amount he was paid WAS disclosed, otherwise the filmaker wouldn’t know the number.
http://www.vi.is/files/555877819Financial%20Stability%20in%20Iceland%20Screen%20Version.pdf
Also, if you were unaware, the Iceland Chamber of Commerce is not part of the government. Just like the US Chamber of Commerce, the Iceland Chamber of Commerce is an organization of various businesses with common interests. That was another thing that that bothered me about this clip. I thought they were part of the government before I looked it up and I’m sure lots of people did too. They should have explained what the Iceland Chamber of Commerce is to give the viewer some context. The documentary is called “Inside Job.” Mishkin was not an inside man in the context of Iceland. He was outside independent contractor. If it’s one thing if Mishkin was an official government regulator of Iceland and wrote that report, but honestly, how accurate of a study can a foreigner make with no real power to see what the banks are up to behind closed doors?
And the mistake on his CV was corrected long before this interview.
“In the Mishkin video, the thing in the end about disclosing being paid was really misleading. It was actually borderline defamation.”
That’s right, Mishkin doesn’t have nearly enough defenders in the media, and those CNBC reporters always frame their questions in such a harsh, unfair manner whenever they invite him on Squawkbox for three hours in the morning. If Mishkin tries to make any self-serving statements, the vigilant CNBC reporters always stop him in his tracks, and pose tough questions about ethics or potential conflicts of interest that make him squirm. And they never ask questions that are the least bit fawning or obsequious, nor do they ever kowtow or slaver over him.
Therefore, since no one else is doing it, on this blog, we must try to be fair and defend men like Frederic Mishkin, just as we must stand up for all those who are without power or connections. We must not raise any questions that could possibly be construed as borderline defamation, god forbid!, certainly not when you consider that we are dealing with the Alfred Lerner Professor of Banking and Financial Institutions at the Graduate School of Business, Columbia University!
And one more thing: “…if you were unaware, the Iceland Chamber of Commerce is not part of the government. US Chamber of Commerce, the Iceland Chamber of Commerce is an organization of various businesses with common interests.”
That’s right…nothing more; Got that? Just simple diverse business folks, like your local co-op or rotary. Contrary to all evidence, the US star Chamber of Commerce does not own or run the government and has nothing whatsoever to do with the global military garrison or decades-long multi-front wars. Just keeping the record straight. Let lying dogs lie.
An economist can’t get something wrong without being a fraud and a liar?
“An economist can’t get something wrong without being a fraud and a liar?”
If it makes you happy, then let’s say that Mishkin is not a fraud and a liar.
All right, but that doesn’t change the fact that he’s a self-inflated fool and a pompous ass, who, at the very least, is not worth the trouble of defending.
And why did Mishkin change the name of the report on his CV from “Financial Stability in Iceland” to “Financial Instability in Iceland”?
Was that just another mistake? A typo, as he claimed?
Would he buy that explanation if it came from one of his students?
The mistake was on his CV before the crisis.
Mishkin’s co-author on the report, Tryggvi Thor Herbertsson, MP for the ruling Independence Party was paid 2 million ISK payment for the report which was paid for by the Icelandic Chamber of Commerce and used as the main counterweight by Icelandic businesses and politicians against foreign claims that Iceland was headed for an economic crisis.
(To be fair, 2 million ISK is less than the $124,000 Miskkin received.)
At the time, Tryggvi was the chair of the Institute of Economic Studies at the University of Iceland and the favored economic spin doctor for the Independence Party.
Mishkin probably didn’t even write the report, and may not have even read the report, it was probably written by the Iceland Chamber of Commerce spin machine and he simply lent his name in exchange for the $124,000.
That’s the way things are done, why would anyone assume otherwise?
This clip was nothing but highly edited sensationalist trash with zero substance. Yes, it’s always nice to know with an economist gets it wrong, but I didn’t learn anything from that clip other than this Mishkin guy is evil incarnate. There was a heavy insinuation that Mishkin is some corrupt economist, but zero proof was offered other than the extremely misleading emphasis of the large sum of money he was paid. I would have love to know why Mishkin got it wrong. But they barely asked anything pertaining to Iceland that would actually be informative in any way.
The biggest point of this clip was that there was a conflict of interest, but there wasn’t any. He was paid to write the report. So what? It’s like saying there’s a conflict of interest anytime somebody published a paper for CATO because they were paid. Then insinuate even further that he changed the the title to “Instability” on his CV in order to cover himself, but that mistake was like that back in 2006 before the crisis and it was changed long before this interview.
Mmm-hmm. So all that that “report” really tells us is that when Iceland’s big business lobby asks Mishkin to write a “report” praising Iceland, and pays him to do it, he provides the service they request. In other words, he’s an intellectually dishonest provider of puff pieces for large amounts of cash.
Isn’t the heart of the video really talking about the pervasiveness of the ELITEST tendency of American CULTURE…?
When Ferguson says that it was a surprise to him that “nobody had ever asked such questions” of these Ivy League, academics (elitists), shouldn’t that be a clue that there is some sort of cultural-value deficit in America? To me this indicates that U.S. culture is sick with this “elitist, deferrence-disease.” You know what I speak of. Just think of the all too common news reporting like, “authorities have determined…” or “an academic at (insert elitist institution) has concluded…” and therefore, (insert favorite opinion on topic) must be true. With this uncritical appraisal of the world, and the acceptance there of, it is quite clear how humanity has arrived at its present situation.
John,
Bravo! Heaven forbid that anyone suggest there’s a connection between rugged individualism and elitism. Two sides of the same cultural coin perhaps? Striving to be the best is inherently elitist. Whether sports, education, the professions, what rises to the top is an elite who expect to be compensated for their efforts. After all they have sacrificed so much….
How else does an individual distinguish him/herself from the rank-and-file, the unwashed rabble? This elitism is also why there is a virulent anti-intellectualism and mistrust of “intellectuals” among the rank and file in this country.
Mishkin may be a distinguished professor recognized by his peers at an elite university – Columbia. But from the rank and file way down below he’s not much more than a smart whore who knows from whence his bread is buttered. To be questioned about such “whoring” is what is so bothersome – not the whoring itself.
Quoting myself on a comment that got me banned from an economics Professor’s blog:
“…economics today isn’t about truth or near truth, it’s about justifying the rape of less fortunate and the planet itself. Religion once filled this role, but tiring of the indefensible, they’ve turned the dirty work over to “Economics”
It is a crying shame Brennan. I have a business education myself from years ago and I am continually astounded to watch these markets, the stage shows on CNBC, the chain of either lying or poorly educated analysts paraded as experts. They are either incompetent or lying.
There is amazing misinformation in the system about investments. It is clear that Wall Street has a mechanism to drive the stocks they wish to drive in a direction and unload them on the public. The public pensions, a source of hundreds of billions a year, are being sold a financial lie, that stocks make 8% or 9% a year. Well, history has shown that 1% or less of that is real growth over dividends. So, it stands to reason that if that is the average discount, the current situation can only yield 8% with 5% inflation. A 2% inflation rate would require a 50% reduction in the price of the SPX portfolio in order to produce a long term yield of 8%. This is a theft of hundreds of billions a year. The skeptics are continually branded as wrong because the mechanism of selling lead for gold works so well. Now we are being sold the idea you never had 2 bad decades in a row. Reality is Bernanke is fueling this with crony capitalism at its best and the bag holders are beginning to line up. Wall Street has no more legitimacy in my book than a carnival hawker.
I find his comments on Obama interesting. How the hell could anyone do anything or be willing to do anything about these crooks when they bring in the biggest crooks that have ever brushed against a government position. The idea that Obama made Geithner the Secretary of Treasury, the most powerful unelected position on earth says plenty about who is running the Obama administration. The idea he brought in Larry, I see something to steal through deception, Summers says that if you want to rob a bank get Baby Face Nelson out of prison or the grave. His advisors were Franklin, “I see a buck still in the bank I missed at FNMA” Raines and Robert “Bank Robbin” Rubin, says the coverup was in the works. Who was more likely to get hung in corruption than these guys if there was an honest investigation, enforcement of laws and reform? Maybe there are no experts left because the Boomers and Generation X’s experts are all complicit crooks?
I’ll agree with Edwn to the extent that one shouldn’t reach a definitive conclusion about anyone’s probity based on a clip from a documentary. If there’s more dirt there, some digging should reveal it. On the other hand, Mishkin was paid $124,000 to write the report. Ferguson was entirely correct to ask what type, and how much, research was done, and how that research led to Mishkin’s (erroneous) conclusions about Iceland. There didn’t seem to be a very good answer to that question.
“one shouldn’t reach a definitive conclusion about’s probity”
Um, probity? as in “integrity, honesty and uprightness”?
I almost spit up my coffee when I read that one.
So like Edwn we’re supposed to assume that our esteemed leaders of finance and business possess qualities such as “integrity, honesty and uprightness” unless proven otherwise?
Yeah, right, and Goldman Sachs is just doing god’s work.
What planet do you people live on?
A planet where people intelligent people don’t form conclusive judgements based on one minute and 54 seconds of video.
Ironic quote of the year, from Kazakhstan, from Wikileaks:
“The Ambassador asked if the corruption and infighting are worse now than before in Kazakhstan. Idenov paused, thought, and then replied, “No, not really. It’s business as usual.
They’re confused by the corrupt excesses of capitalism. “If Goldman Sachs executives can make $50 million a year and then run America’s economy in Washington, what’s so different about what we do?’ they ask.”
I can just hear the response from Edwn, dr. horsemeat, as well as the defenders of Goldman Sachs, Tim Geithner, Larry Summers, Angelo Mozilo, etc
“What corrupt excesses of capitalism? I haven’t seen this in the New York Times, where’s the evidence, prove it”,
But let’s turn things around for a minute, based on what we’ve seen in finance the last few years, why should I give Mishkin the benefit of doubt?, why should anyone assume that Mishkin or any other financial leaders are honest and truthful and acting with integrity and good intentions?
Prove to me that he’s not a lying scumbag like Blankfein, Mozilo and all the rest of them.
Tim,
I think my initial and follow-up comments speak for themselves. You seem to be projecting onto them an alliance with or defense of of Goldman Sachs, Tim Geithner, Larry Summers, etc, which I don’t think can reasonably be construed from anything I actually wrote there.
If you have any interest in what I said, calm down, take a deep breath, and go back and read the two comments again. If not, find amother straw man to go after. Or just pour yourself a drink.
Merry Christmas.
I’m a blue collar worker. Albeit old enough to have gone through well-funded public schools. Ones that taught me how to read, write, and think critically.
Due to a deep concern with the remnants of that old American ideal of the common good, I learned basic economic theory. Which often raised unanswered questions.
Economics is said to be the most rational of the social sciences. Basic theory says that the utility function, maximizing one’s economic position, (in plain English, greed) is the only real human motivation.
However, science is supposed to be about the accumulation of knowledge for its own sake. Scientists are motivated by discovery.
Do economists consider themesleves scientists? If so, then their theory is flawed since there is another factor other than the utility function.
Or do they still claim the utility function as the only validity? If so, their science is suspect. Especially when they are among those most rewarded by their own theories.
During the anti-WTO demonstrations in Seattle (1999) I asked David Korten and Herman Daly. Both said I was essentially right.
I think the last two decades show that economists, at least those apologists for that orgy on Wall Street, do believe the utilty function. And the evidence revealed in the movie “Inside Job” is a horrendous confirmation.
Which implies that in their own twisted version of reality, they are “ethical.” Ethics, or any other considerations, is simply irrelevant to economic determinism.
For what reason all of the sudden do we seem to have some sort of outbreak problem involving bed bugs in america I worked for a local University for 30 years and didn’t have a problem until 2 yrs ago?