Category Archives: ECONNED

Scandal-Splattered UK Outsourcing Giant, Serco, Sets Sights on the Ultimate Gravy Train: U.S. Defense Contracting

The company has been repeatedly caught falsifying records, at times on a gargantuan scale. Now it is seeking opportunities in an industry where money routinely disappears in the trillions. What could possibly go wrong?

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Debunking “The Big Short”: How Michael Lewis Turned the Real Villains of the Crisis into Heroes

How Michael Lewis’ The Big Short, whether for profit or by accident, has denied the public the truth about what really causes the crisis.

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Memo to Readers: If You Want to Beat Big Finance, You Need to Be Able to Take the Fight to Their Terrain

We are now 35 years into a finance-led counterrevolution. If you care about income inequality, student loan debt slavery, foreclosure abuses, and other products of the success of this effort, it behooves you, as Sun Tzu urged, to understand your enemy.

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Stephen Roach Takes the Fed to the Woodshed

While the Fed appears to be getting nervous about increasing (and long overdue) criticism for its undue coziness with banks, it has for the most part ignored opponents of its aggressive monetary policies. And for good reason. Most of them have been fixated on the risk of inflation, which is not in the cards as long as labor bargaining power remains weak. There are other, more substantial grounds for taking issue with the central bank’s policies. For instance, gooding asset prices widens income and wealth inequality, which in the long term is a damper on growth. Moreover, one can argue that the sustained super-accommodative policy gave the impression that Something Was Being Done, which took the heat off the Administration to push for more spending. Indeed, the IMF recently found that infrastructure spending pays for itself, with each dollar of spending in an economy with high unemployment generating nearly $3 in GDP growth. And a lot of people are uncomfortable for aesthetic or pragmatic reasons. Aesthetically, a lot of investors, even ones that have done well, are deeply uncomfortable with a central bank meddling so much. And many investors and savers are frustrated by their inability to invest at a positive real yield without being forced to take on a lot of risk.

Stephen Roach, former chief economist of Morgan Stanley and later its chairman for Asia, offers a straightforward, sharply-worded critique: just as in the runup to the crisis of 2007-2008, the Fed’s failure to raise rates is leading to an underpricing of financial market risk, or in layspeak, to the blowing of bubbles. He argues that has to end badly.

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Who Wins in the Financial Casino?

I received a message last week from a savvy reader, a former McKinsey partner who has also done among other things significant pro-bono work with housing not-for-profits (as in he has more interest and experience in social justice issues than most people with his background). His query:

We both know that financialization has, among so many other things, turned large swaths of the capital markets into a casino

Here’s my thought/question: is there a house?

The common wisdom is that the ‘house wins’ in casinos.

So, who or what was really the ‘house’?

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