Economic Articles from 2015
Killing Off Community Banks — Intended Consequence of Dodd-Frank?
by Ellen Brown
Posted October 22, 2015
The Dodd-Frank regulations are so lethal to community banks that some say the intent was to force them to sell out to the megabanks. Community banks are rapidly disappearing — except in North Dakota, where they are thriving.
The rapid demise of community banking is blamed largely on Dodd-Frank’s massively complex rules and onerous capitalization requirements. Just doing the paperwork requires an army of compliance officers, and increased capital and loan requirements are eliminating the smaller banks’ profit margins. They have little recourse but to sell to the larger banks, which have large staffs capable of dealing with the regulations, and which skirt the capital requirements by parking assets in off-balance-sheet vehicles.
According to Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, the disappearance of community banks was not an unintended consequence of Dodd-Frank. More…
Finance Is to Blame for Rise in Inequality
by Wallace Turbeville
Posted October 21, 2015
Economists, policy wonks, and politicians of both persuasions agree that middle class income stagnation, and the inequality that it causes, is the principal economic challenge for the nation. U.S. inequality has been on the rise for more than 30 years, and the Organization for Economic Cooperation and Development estimates that it has reduced U.S. economic growth more than even the financial crash. This cost is still accruing.
There are vast differences in views of inequality’s causes. At one end of the spectrum, conservatives believe that the “makers” create a “rising tide” that lifts all boats. Mainstream progressives take a middle view, believing that individuals fail to take advantage of capitalism’s opportunities because they are insufficiently educated or suffer from debilitating disadvantages. More…
The Wonderland Matrix
by Jeff Nielson
Posted October 16, 2015
One of the principal traits of sound analysis is that it begins with “definition of terms”. It is only minimally productive (if not totally pointless) to attempt to analyze a particular subject matter without first explaining/defining that subject matter. Thus one of the Cardinal Sins of sound analysis is the failure of an analyst to start at the beginning.
In this respect; my own work has been lacking. Numerous recent commentaries have referred to “the Wonderland Matrix”, and some previous efforts have even been made in tangentially defining this label. However, nowhere has a full definition/description been provided of what is now one of the most important analytical concepts of the current Western paradigm of fraud and corruption. More…
The Derivatives Market: Bets, Bookies, and Fraud
by Jeff Nielson
Posted October 8, 2015
How corrupt, illegal, and utterly irredeemable is the fraudulent casino which the banksters call “the derivatives market”? When these criminals actually manage to lose on their own gambling (despite rigging these markets, themselves), they simply refuse to pay.
In the real world, any casino (legal or otherwise) which refused to pay when the “house” lost would quickly be driven out of business – one way or another. But we don’t live in the real world. Almost all of us live in the Wonderland Matrix: a magical realm where “bookies” are allowed to place bets in their own book-making operations, there are no laws, and nothing ever has to make sense. More…
How Local Governments Got Burned by Private Prison Investments
by Lauren Etter and Margaret Newkirk
Posted October 6, 2015
James Parkey spent more than a decade crisscrossing the U.S. selling poor counties on a way to get rich quick. He’d help local governments issue tax-free bonds to build private prisons that would rent beds to the federal government, mainly to hold undocumented immigrants. Parkey’s model for financing lockups, which he promoted with help from a team of bond dealers, consultants, and lawyers, led to a boom in prison construction.
They provided local officials with feasibility studies suggesting the facilities would pay for themselves with rental revenue from the U.S. Marshals Service and U.S. Immigration and Customs Enforcement. Counties were urged to build jails with two to three times more capacity than they’d need for local inmates. They also were advised to act fast to nail down that business, lest they “allow other counties or private developers to capture the market,” according to a report given to prospects by Parkey’s team. Local development authorities, some created specifically for the detention deals, owned the projects and issued bonds for them whose interest was exempt from federal taxes. More…
By Benjamin Wallace-Wells
Posted October 5, 2015
What if everything we’ve come to think of as American is predicated on a freak coincidence of economic history? And what if that coincidence has run its course? Picture this, arranged along a time line.
For all of measurable human history up until the year 1750, nothing happened that mattered. This isn’t to say history was stagnant, or that life was only grim and blank, but the well-being of average people did not perceptibly improve. All of the wars, literature, love affairs, and religious schisms, the schemes for empire-making and ocean-crossing and simple profit and freedom, the entire human theater of ambition and deceit and redemption took place on a scale too small to register, too minor to much improve the lot of ordinary human beings.
In England before the middle of the eighteenth century, where industrialization first began, the pace of progress was so slow that it took 350 years for a family to double its standard of living. In Sweden, during a similar 200-year period, there was essentially no improvement at all. By the middle of the eighteenth century, the state of technology and the luxury and quality of life afforded the average individual were little better than they had been two millennia earlier, in ancient Rome. More…
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