Author Archives: Yves Smith

Obama and Boehner’s Grand Bargain: Gullible Democrats are Falling for the Ol’ “Good Cop, Bad Cop” Routine

By Michael Hoexter, a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency.

What is happening now in American politics surrounding the political theater called “the fiscal cliff”, must be understood with the utmost clarity because, in part, the organizers of what James K. Galbraith aptly calls a “scam” are counting on confusion and rash action to complete their scheme. If we can understand what is going on with greater clarity, we may be able to highlight to more people the import of the events occurring and hopefully short-circuit the efforts of politicians to damage the social safety net and the economy more generally.

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HSBC to Pay $1.9 Billion Fine for Money Laundering

It seems the Federal Government has finally woken up and is making a show of being serious about one type of bank misbehavior, that of money laundering. The striking element about the agreementwith various Federal agencies and the Department of Justice is that nearly $1.3 billion of the $1.9 million fine comes in the form of a deferred prosecution agreement.

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Bill Black:  Why is the Failed Monti a “Technocrat” and the Successful Correa a “Left-Leaning Economist”?

By 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. Cross posted from New Economic Perspectives

The New York Times produces profiles of national leaders like Italy’s Mario Monti and Ecuador’s Rafael Correa. I invite readers to contrast the worshipful treatment accorded Monti with the Correa profile. The next time someone tells you the NYT is a “leftist” paper you can show them how far right it is on financial issues.

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The Grey Lady Voices Some Skepticism About IPO of Single Family Rental Player Silver Lake

This site refrains from talking about individual stocks, since we don’t give investment advice. However, a potential sea-change is underway, as a large portion of the inventory of foreclosed homes is being converted to rentals. Private equity firms are pursuing this opportunity eagerly, as the combination of low financing costs and tight rental markets in the US means that, at least on paper, investor believe they can earn attractive income, with potential for appreciation, either by eventually selling the houses to individuals or by taking the company public.

Given all the excitement over this conversion (it was voted the best opportunity over the next 12 months at a real estate conference I attended in the fall), it was interesting to detect a fair bit in the way of reservations in an article in the New York Times on the first IPO in this space, Silver Lake.

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Yanis Varoufakis: Why Europe Needs More Leaders Like Bruno Kreisky, Who Navigated 1970s Upheaval and Stagflation Well

Yanis Varoufakis asked: Why has European social democracy abandoned the legacy of leaders like Bruno Kreisky, falling in line with a toxic economics and politics that thinkers like Kreisky would have dismissed in their sleep as pathetic claptrap? Here he takes a step back to explain why he views Kreisky’s chancellorship in Austria in the 1970s as a success in social and economic terms.

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Dan Kervick: Why MMT is Not a Free Lunch

By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives

A common criticism of Modern Monetary Theory is that it is a naïve doctrine of free lunches.

But this criticism misses the mark. MMT does focus a good deal of attention on the monetary system and the banking system, and on the operational mechanisms of public and private finance. But the whole point of analyzing and clarifying the monetary system is to help people see through the glare of the economy’s glittering monetary surface to the social and economic fundamentals that operate below that surface.

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