Tag Archives: financial crisis

The worst crimes are not always the punishable ones

By Alex Mozell

HMRC_offshore_evasion_poster_February_2014

“The worst crimes are not always the punishable ones.”1

-George Orwell

George Orwell was an esteemed writer, political philosopher, socialist, and critic, who braved the Luftwaffe hellfire and joined the armed resistance against Franco’s rise to power.  He hated dictatorship in all forms, from dogmatic fascism in the West to the dehumanizing communism of the East.  He wrote against totalitarianism, and in his novel, 1984, imagined a world in which thoughts were punishable by death, while “vaporizing” political dissenters was not only legal, but official policy.

Indeed, power corrupts, and absolute power corrupts absolutely.  And those with power use it to legalize their corruption. Their touch reaches far, scores of people harmed by their maneuvering.  Ultimately, corruption is a parasite, stealing much from the masses, and enriching only a few.  Of course, there are horrible people everywhere, who roam the streets, stealing, destroying property, or murdering, but they rarely hold political sway, and so their crimes are reviled and punished – and very rightfully so.

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Jobs Report + Stress Tests = More Zombie Banks

Zombie banks

Check out this entry from Calculated Risk if you’d like a shot of cold, hard reality about the value of the happy Stress Test predictions. So far, unemployment is exceeding the “more adverse” stress test scenario and already higher than the peak unemployment rate in the baseline scenario. That rough beast slouching towards Bethlehem not to be born, but to die, is Bank of America.

Calculated Risk: Employment Report: 539K Jobs Lost, 8.9% Unemployment Rate

A flawed second draft of history

In “A flawed first draft of history“, FT editor Lionel Barber gets history wrong (again). He claims the origins of the financial crisis were too hard to spot even for financial reporters, because they were to be found “in the credit markets, coverage of which in most news organizations counted as a backwater.” All those derivatives and such were the root of the problem. Actually, as some economists predicted,* the origins of the current crisis were to be found inthe bursting of a huge housing bubble (you may have heard of this). The Financial Times, on the other hand, believed Harvard economists who found that the growing number of households in the US meant that the increase in housing prices was warranted. Third time’s a charm!

* I predicted it, too, when I first heard that the Fed was raising interest rates again in 2004. Alas, I have no written proof.