I knew Charles Keating, the head of Lincoln Savings, in my capacity as a financial regulator and as the subject of his wrath. His fraud schemes and the manner in which they targeted our system’s vulnerabilities in an era before Citizens United made the corruption of politicians by fraudulent CEOs child’s play remain the play book for the world’s most destructive financial frauds. Our failure to learn the ten lessons has caused immense suffering. Keating’s life, and the great harm he caused, will not have been in vain if we step back and use the occasion of his death to reflect on the changes we need to make.
By Doug French, Contributing Editor, Casey Research Figuring out what’s going on in Ukraine is like following the plot of Tinker Tailor Soldier Spy. Bloomberg reports Viktor Yanukovych’s ouster as “Moscow-backed,” while Al Jazeera calls Ukraine’s new government “Western-backed.” Which one is it? We’re supposed to trust what’s reported on the ground. But as wordsmith Theodore Dalrymple says, we should […]
By Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak, Todd Mitton This post was originally published at Vox. Political connections affect economic outcomes in emerging markets. This column discusses new evidence showing that something similar goes on in the US. Over the ten trading days following the announcement of Timothy Geithner as Treasury Secretary, financial firms with a connection to […]
Here is the heart of the matter. It is not the motivation to make money that makes people efficient with resources. It is having a single clearly-defined purpose. When objectives are unclear, money is inevitably wasted.
Argentina’s official economic growth surprised analysts with a 7.8% year over year jump in May. But can the growth numbers be trusted?
The real challenges for China, if you believe in the social capital constraint, are not about maintaining high rates of growth in the short term but rather of raising the levels of social capital in China. This is much more difficult and much more likely to be virulently opposed by the elites whose ability to constrain economic efficiency is precisely at the heart of their wealth – which consists of appropriating resources rather than creating resources – and of their power. It is, however, the only real way to sustain growth over the medium and long terms.
A reader of our blog here at Credit Writedowns recently wrote to me, detailing why Italians voted as they did in the recent general election. Her view speaks more to a rejection of corporatism and corruption than austerity.
Recent Bulgarian developments are worth discussing. Austerity just brought down another European government, as Prime Minister Borisov and his cabinet resigned this week amidst rising popular protests against his policies. But the story goes even deeper than just austerity, with corruption allegations and higher electricity prices added to the mix as well. In fact, protests against higher electricity prices went hand in hand with power distributor CEZ having its license revoked due to allegations that it routinely broke procurement rules.
Europe seems to have reached the nadir economically, judging from the last few economic data points. But there is still a long way to go. In my view, Spain remains the most important country in Europe’s sovereign debt crisis because of its large size and the potential for economic under-performance. The corruption scandal there could prove costly.
The last post I wrote on endogenous money and fully reserved banking set out a case for viewing the demand for credit to attain real or financial assets as a fundamental aspect of any monetary system. The point of that post was to make clear that the real economy comes first and that money is merely a tool to effect […]
April 9, 2012 is the twenty-fifth anniversary of the most infamous savings and loan fraud, Charles Keating’s, successful use of five U.S. Senators to escape sanction for a massive violation of the law. The Senators were Alan Cranston (D. CA), Dennis DeConcini (D. AZ), John Glenn (D OH), John McCain (R. AZ), and Donald Riegle (D. MI). They became infamous as the “Keating Five.” I was one of four regulators who attended the April 9, 1987 meeting. I took the notes of the meeting, in transcript format, that were so detailed and accurate that the Senators testified that they were sure I had tape recorded the meeting. Reviewing my (near) transcript of the April 9 offers a large number of important lessons that would have allowed us to avoid future crises.
The answer is yes. video below