Posts Tagged ‘William K. Black’

William K. Black on ‘Financial Racketeering;’ Government Coverup; a 250% Tax Increase

William K Black on ‘Financial Racketeering;’ Government Coverup; a 250% Tax Increase

Courtesy of JESSE’S CAFÉ AMÉRICAIN

The interview with William K. Black starts at 13:00 in this video and is well worth seeing.

Gresham’s Dynamic: The least ethically inclined have an advantage in the US financial system (in which regulatory capture nullifies enforcement) driven by perverse incentives of oversized bonuses and the failure to investigate and prosecute criminal activity.

In addition to the overhang of unindicted and undeclared fraud that is still in place, distorting the clearing of the markets, there is the issue of an imbalanced economy in which an oversized financial sector exacts what amounts to a draconian tax on the real economy, that is, fees and tariffs and other unproductive drains in excess of anything that the government is levying.

What Do You Get for a 250% Tax Increase?

As I recall the percentage of financial sector profits to corporate profits recently peaked at 41%, from a long run average of less than 16%. Granted, this is a bit theoretical because of the pervasive accounting fraud in the banks and the corporations.

I wonder what the percentage of profit, pre-bonus, is being enjoyed now?

This can be viewed as a form of a tax. If the government raised taxes from 16% to 41% what do you think the impact on the US economy would be? And yet there is little discussion of this, or the racketeering that accompanied such a festival of looting.

Yet conceptually this is what has been accomplished through the deregulation of the banks and the repeal of Glass-Steagall, and of course, regulatory capture. The financial sector acts primarily as a capital accumulation and allocation system, and secondarily to facilitate wealth transferals through pure investment and speculation, the famous school of winners and losers. I would suggest that this latter function has grown out of control like a cancer, and metastasized to drain and debilitate the better part of the political system and the non-financial economy.

I would suggest that this system is broken, and that there can be no sustainable recovery until it is fixed. How can confidence return when most of those in the know realize that the fraud is still in play? Who can take positions with confidence in such a corrupt…
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How the Servant Became a Predator: Finance’s Five Fatal Flaws

Here’s an excellent, must-read article by William K. Black.  Special thanks to New Deal 2.0. - Ilene

How the Servant Became a Predator: Finance’s Five Fatal Flaws

By Bill Black, Courtesy of New Deal 2.0

money-shark-150 - preditor stateRoosevelt Institute Braintruster William K. Black explains how the finance economy preys on the real economy instead of serving it. He shows how both have become dysfunctional and warns that we must not neglect the real economy — the source of our jobs, our incomes, and the creator of goods and services — as we focus on financial reform.

What exactly is the function of the financial sector in our society? Simply this: Its sole function is supplying capital efficiently to aid the real economy. The financial sector is a tool to help those that make real tools, not an end in itself. But five fatal flaws in the financial sector’s current structure have created a monster that drains the real economy, promotes fraud and corruption, threatens democracy, and causes recurrent, intensifying crises.

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. The finance sector is an intermediary — essentially a “middleman”. Like all middlemen, it should be as small as possible, while still being capable of accomplishing its mission. Otherwise it is inherently parasitical. Unfortunately, it is now vastly larger than necessary, dwarfing the real economy it is supposed to serve. Forty years ago, our real economy grew better with a financial sector that received one-twentieth as large a percentage of total profits (2%) than does the current financial sector (40%). The minimum measure of how much damage the bloated, grossly over-compensated finance sector causes to the real economy is this massive increase in the share of total national income wasted through the finance sector’s parasitism.

Second, the finance sector is worse than parasitic. In the title of his recent book, The Predator State, James Galbraith aptly names the problem. The financial sector functions as the sharp canines that the predator state uses to rend the nation. In addition to siphoning off capital for its own benefit, the finance sector misallocates the remaining capital in ways that harm the real economy in order to reward already-rich financial elites harming the nation. The facts are alarming:

• Corporate stock repurchases…
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Citi Takes Billions in Taxpayer Bailout Money, Then Focuses on Lending to Those Who Don’t Really Need Loans

Citi Takes Billions in Taxpayer Bailout Money, Then Focuses on Lending to Those Who Don’t Really Need Loans

George

Courtesy of George at Washington’s Blog

The Wall Street Journal reports:

Executives at the New York company plan to narrow the focus of Citigroup’s U.S. branch network to six major metropolitan areas, according to people familiar with the situation. Citigroup also will limit its overall consumer lending in the U.S. primarily to credit cards and "jumbo" mortgages, while catering largely to affluent customers.

Huffington Post writes:

Citigroup, which has received $45 billion in TARP funds — in addition to billions in government asset guarantees — has come up with a brash tax-payer funded restructuring plan: cut U.S. locations and limit most lending to only the wealthy.

Actually, Citigroup got a "secret $230 billion bailout", according to Congressman Alan Grayson.

In any event, as we have been writing for a year, the bailouts won’t do anything to increase loans to those who really need them – average individuals and small businesses. Indeed, just today, the bailout’s Special Inspector General – Neil Barofsky – said that the Troubled Asset Relief Program has failed to increase bank lending. And that, in turn, may mean that the economy won’t recover any time soon.

As Huffington Post puts it:

For U.S. taxpayers, however, the larger question is why taxpayer money should have gone to a bank that is now looking to severely scale back both its lending and retail presence.

Read more at: http://www.huffingtonpost.com/2009/09/24/citigroup-locations-to-be_n_298189.html

Note: I understand that some will argue that Citi is just being prudent, shifting from riskier to safer loans.

But as William K. Black – senior regulator during the S&L crisis, professor of Economics and Law, and an expert on white collar financial crime – says, the banks intentionally made loans to people who are uncreditworthy, because they’ll agree to pay you more, and that’s how you grow rapidly. You can grow really fast if you loan to people who can’t you pay you back.

This combination guarantees stratospheric initial profits during the expansion phase of the bubble. But it guarantees a catastrophic subsequent failure when the bubble loses steam. And collectively – if a lot of companies are…
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The Great American Bankruptcy

Here’s an excellent documentary video called "The Great American Bankruptcy."  H/t Tyler Durden at Zero Hedge, who h/tipped Ian.  William K. Black, a white collar criminologist, discusses the financial crisis and our pseudo-capitalistic fraud-ridden system. - Ilene

William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black’s expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of "control fraud", in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud.  

On April 3, 2009 Black appeared on "Bill Moyers Journal" on PBS and provided critical commentary on the U.S. banking crisis. In the interview with Bill Moyers, Black asserted that the banking crisis in the United States that started in late 2008 is essentially a big Ponzi scheme; that the "liar loans" and other financial tricks were essentially illegal frauds; and that the triple-A ratings given to these loans was part of a criminal cover-up.

More at Wikipedia here.  

 


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Phil's Favorites

Momentum Monday...Enjoy the Gains...Keep an Eye on Page 10

 

Momentum Monday…Enjoy the Gains…Keep an Eye on Page 10

Courtesy of Howard Lindzon

It seems obvious, to the markets at least, that the digital economy will survive whatever COVID has to throw at humans.

There is nothing on the first 10 pages of the news that has the markets worried.

Last week it was more of the same…biotechs and software stocks hitting more highs. This weekend, Warren Buffett woke from his long slumber and spent $10 billion on some energy assets so the bears will freak out and buy stocks this morning.

A game of chicken is taking place as the ...



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Zero Hedge

Google Joins Twitter, Facebook In Refusing To Cooperate With Hong Kong Nat Sec Law

Courtesy of ZeroHedge View original post here.

Update (1500ET): Google has just confirmed its intention not to cooperate with CCP officials or Hong Kong police regarding data requests under the new nat sec law.

  • GOOGLE STOPPED RESPONDING TO NEW HONG KONG DATA REQUESTS

That leaves Apple left...will Tim Cook dare to jeopardize Apple's access to Chinese markets just to show solidarity with Hong Kong?

* * *

Update (1220ET): Twitter has joined Facebook and Telegram in...



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ValueWalk

Bank OZK and John Wiley & Sons Reward Shareholders With Raises

By DIVIDEND GROWTH INVESTOR. Originally published at ValueWalk.

I review the list of dividend increases every week, in an effort to monitor existing holdings, and uncover hidden dividend gems for further research.

Q2 2020 hedge fund letters, conferences and more

I usually narrow my research to companies with a ten year history of annual dividend increases.

Bank Ozk Raises Its Dividends

Last week, there were two companies that raised dividends. The companies include:

Bank Ozk (NASDAQ:OZK) provides ...



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Kimble Charting Solutions

Shangai Index Soars Higher, Testing 11-Year Breakout Level!

Courtesy of Chris Kimble

Is the Shanghai Index (SSE) about to experience a long-term breakout and send the world a bullish message?

An 11-year breakout test is in play that will answer this question.

The Shanghai index trend continues to send a bullish message, as it has created a series of higher lows for the past 24-years above line (1).

This long-term support line was tested at the March lows at (2) and it held.

The rally off the lows has the index testing dual resistance at (3).

Will this important index succeed in breaking out? If it does at (3), it will send a very bu...



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Biotech/COVID-19

As U.S. buys up remdesivir, 'vaccine nationalism' threatens access to COVID-19 treatments

 

As U.S. buys up remdesivir, ‘vaccine nationalism’ threatens access to COVID-19 treatments

Are we really all in this together? ‘Vaccine nationalism’ must be addressed to ensure equitable distribution of a COVID-19 vaccine. (Pixabay)

Courtesy of Joel Lexchin, University of Toronto

At the end of June, the United States government announced that it had ...



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Chart School

Golds quick price move increases the odds of a correction

Courtesy of Read the Ticker

Every market corrects, maybe profit taking, maybe of allowing those who missed out, to get in!


The current open interest on the gold contract looks to high after a very fast price move, it looks like 2008 may be repeating. A quick flushing out of the weak hands open interest may take place before a real advance in price takes place. The correction may be on the back of a wider sell off of risk assets (either before of after US elections) as all assets suffer contagion selling (just like 2008).

This blog view is a gold price correction of 10% to 20% range is a buying opportunity. Of course we may see  a very minor price correction but a long time correction, a price or time is correction is expected, we shall watch and...

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The Technical Traders

Wild Volatility Continues As US Markets Attempt To Establish New Trend

Courtesy of Technical Traders

We’ve continued to attempt to warn investors of the risks ahead for the US and global markets by generating these research posts and by providing very clear data supporting our conclusions.  Throughout the entire months of May and June, we’ve seen various economic data points report very mixed results – and in some cases, surprise numbers as a result of the deep economic collapse related to the COVID-19 virus event.  This research post should help to clear things up going forward for most traders/investors.

As technical traders, we attempt to digest these economic data factors into technical and price analysis while determining where and what ...



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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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