The Anti-Regulators Are the “Job Killers”

The new mantra of the Republican Party is the old mantra — regulation is a “job killer.” It is certainly possible to have regulations kill jobs, and when I was a financial regulator I was a leader in cutting away many dumb requirements. But we have just experienced the epic ability of the anti-regulators to kill well over ten million jobs. Why then is there not a single word from the new House leadership about investigations to determine how the anti-regulators did their damage? Why is there no plan to investigate the fields in which inadequate regulation most endangers jobs? While we’re at it, why not investigate the areas in which inadequate regulation allows firms to maim and kill. This column addresses only financial regulation.

Deregulation, desupervision, and de facto decriminalization (the three “des”) created the criminogenic environment that drove the modern U.S. financial crises. The three “des” were essential to create the epidemics of accounting control fraud that hyper-inflated the bubble that triggered the Great Recession. “Job killing” is a combination of two factors — increased job losses and decreased job creation. I’ll focus solely on private sector jobs — but the recession has also been devastating in terms of the loss of state and local governmental jobs.

From 1996-2000, for example, annual private sector gross job increases rose from roughly 14 million to 16 million while annual private sector gross job losses increased from 12 to 13 million. The annual net job increases in those years, therefore, rose from two million to three million. Over that five year period, the net increase in private sector jobs was over 10 million. One common rule of thumb is that the economy needs to produce an annual net increase of about 1.5 million jobs to employ new entrants to our workforce, so the growth rate in this era was large enough to make the unemployment and poverty rates fall significantly.

The Great Recession (which officially began in the third quarter of 2007) shows why the anti-regulators are the premier job killers in America. Annual private sector gross job losses rose from roughly 12.5 to a peak of 16 million and gross private sector job gains fell from approximately 13 to 10 million. As late as March 2010, after the official end of the Great Recession, the annualized net job loss in the private sector was approximately three million (that job loss has now turned around, but the increases are far too small).

Again, we need net gains of roughly 1.5 million jobs to accommodate new workers, so the total net job losses plus the loss of essential job growth was well over 10 million during the Great Recession. These numbers, again, do not include the large job losses of state and local government workers, the dramatic rise in underemployment, the sharp rise in far longer-term unemployment, and the salary/wage (and job satisfaction) losses that many workers had to take to find a new, typically inferior, job after they lost their job. It also ignores the rise in poverty, particularly the scandalous increase in children living in poverty.

The Great Recession was triggered by the collapse of the real estate bubble epidemic of mortgage fraud by lenders that hyper-inflated that bubble. That epidemic could not have happened without the appointment of anti-regulators to key leadership positions. The epidemic of mortgage fraud was centered on loans that the lending industry (behind closed doors) referred to as “liar’s” loans — so any regulatory leader who was not an anti-regulatory ideologue would (as we did in the early 1990s during the first wave of liar’s loans in California) have ordered banks not to make these pervasively fraudulent loans.  . . . (more…)

How Did a Relatively Small Number of Subprime Loans Cause a Record Crisis?

A number of analyses of the U.S. and global crisis begin by attempting to explain what they assume to be a paradox – how could so small a market segment (subprime housing and CDOs backed by subprime) have caused (1) the largest financial bubble in history, (2) a U.S. economic crisis, and (3) a nearly global crisis? To these scholars the obvious answer is that subprime lending could not have caused this traumatic trifecta. If follows that the importance of subprime lending must be overstated and there must be other, more powerful causes of the trifecta.

I will show that the focus on subprime loans was excessive and allude briefly to the points I have made in prior columns about the variant causes of the global crisis. The next column will address in more detail how criminologists determine the true incidence of mortgage fraud. Subprime loans were and are a serious problem, but there has been a destructive overemphasis on subprime loans as the core of the U.S. crisis. “Liar’s” loans are a far greater problem, and most problem subprime loans are actually liar’s loans. While the nonprime mortgage industry’s preferred euphemisms were “alt-a” and “stated income” loans, it was the industry that accurately dubbed them liar’s loans. It was the industry that created liar’s loans and it is liar’s loans that made so many officers wealthy.

The industry pitched liar’s loans to the regulators on a series of bright shining lie – that they were equivalent to the risk of prime loans and simply underwritten on an alternative basis because the borrowers were entrepreneurs who could verify their incomes. The further lie was that liar’s loans were distinct from subprime loans, which were only made to those with serious credit defects with conventional underwriting. The reality is that there is an easy means for small business owners to verify their income – by authorizing the IRS to provide information from their tax returns to the lender via IRS Form 4506. There were two groups of borrowers who had acute needs to avoid disclosing their income and wealth – those engaged in tax fraud evaders and those seeking to deceive their spouses or defraud their prior spouses and children in order to evade alimony and child support payments. (Remember when one of “C’s” in lending referred to “character” and we taught loan officers why one should not lend to those of bad character?) People who will cheat their kids are certain to be willing to cheat their lender.  . . . (more…)

Obama Haters Praise His Tax Policies Because They Believe Those Policies Will Make Him Fail

Koch-funded Tea Party protesters. (photo: Fibonacci Blue via Flickr)

Like the Sirens reputed to lure sailors onto rocks, a series of columnists who want President Obama to fail are praising Obama’s capitulation on extending the Bush tax cuts for the wealthy. The motif of these comments has three common characteristics – all designed to destroy the Obama presidency. First, and the chutzpah of this aspect is wondrous, those that hate Obama’s policies are telling Obama he is demonstrating his strength by surrendering on the Bush tax cuts to the wealthy. Second, they claim that Obama “moved to the center” by agreeing to support tax cuts for the wealthy. Third, they claim that Obama’s attacks on his strongest supporters are brilliant politics essential to saving his Presidency.

Dana Milbank’s recent column is one example of the three-part motif. The title of the column captures the first aspect: “Obama finally stands his ground.” What he means of course is that Obama failed to stand his ground, repudiating his promises to end the Bush tax cuts for the wealthy. Milbank also said that while extending the Bush tax cuts for the wealthy was “dumb,” Obama’s agreement to extend those tax cuts was the first thing that Obama had ever done that made Milbank “proud.” Milbank is finally “proud” because Obama is excoriating his strongest political supporters – the “liberals” who Milbank detests. Milbank’s explanation of why he detests liberals parrots conservative Republicans.

Monday, we were treated to the triple motif from another commentator who desperately wants Obama to fail. Mark Penn, the CEO of Burson-Marsteller, claims in a column entitled “Democrats need to back Obama” that:

By becoming reverse tax protesters (chanting “raise taxes”), the liberals are sending out all the wrong messages to a country that overwhelmingly backs the key elements of the bipartisan deal the president struck.

[T]he Democrats have got to stop returning to class warfare.

Obama took the first step this week in seeking to save his floundering presidency by moving to the center. His execution was far from perfect but his actions were sound.

Obama has now gone down a path he cannot and should not retreat from — governing from the center.

In a series of untruthful sentences, Penn hits each of the elements of the motif. Supporting the Bush tax cuts for the wealthy constitutes “moving to the center.” “Liberals” are the demons whose desire to raise taxes would doom the Obama Presidency. Bush doesn’t engage in “class warfare” when he cuts tax rates for the wealthiest Americans – anyone who opposes Bush’s tax cuts for the wealthy, however, is engaged in “class warfare.” Obama’s capitulation on Bush tax cuts for the wealthy is not a retreat from his campaign promises – repudiating his capitulation to the Republicans on those tax cuts would constitute a “retreat” and demonstrate weakness.  . . . (more…)

Obama Haters Praise His Tax Policies Because They Believe Those Policies Will Make Him Fail

Like the Sirens reputed to lure sailors onto rocks, a series of columnists who want President Obama to fail are praising Obama’s capitulation on extending the Bush tax cuts for the wealthy. The motif of these comments has three common characteristics – all designed to destroy the Obama presidency. First, and the chutzpah of this aspect is wondrous, those that hate Obama’s policies are telling Obama he is demonstrating his strength by surrendering on the Bush tax cuts to the wealthy. Second, they claim that Obama “moved to the center” by agreeing to support tax cuts for the wealthy. Third, they claim that Obama’s attacks on his strongest supporters are brilliant politics essential to saving his Presidency.

Dana Milbank’s recent column is one example of the three-part motif. The title of the column captures the first aspect: “Obama finally stands his ground.” What he means of course is that Obama failed to stand his ground, repudiating his promises to end the Bush tax cuts for the wealthy. Milbank also said that while extending the Bush tax cuts for the wealthy was “dumb,” Obama’s agreement to extend those tax cuts was the first thing that Obama had ever done that made Milbank “proud.” Milbank is finally “proud” because Obama is excoriating his strongest political supporters – the “liberals” who Milbank detests. Milbank’s explanation of why he detests liberals parrots conservative Republicans.

Monday, we were treated to the triple motif from another commentator who desperately wants Obama to fail. Mark Penn, the CEO of Burson-Marsteller, claims in a column entitled “Democrats need to back Obama” that:

By becoming reverse tax protesters (chanting “raise taxes”), the liberals are sending out all the wrong messages to a country that overwhelmingly backs the key elements of the bipartisan deal the president struck.

[T]he Democrats have got to stop returning to class warfare.

Obama took the first step this week in seeking to save his floundering presidency by moving to the center. His execution was far from perfect but his actions were sound.

Obama has now gone down a path he cannot and should not retreat from — governing from the center.

In a series of untruthful sentences, Penn hits each of the elements of the motif. Supporting the Bush tax cuts for the wealthy constitutes “moving to the center.” “Liberals” are the demons whose desire to raise taxes would doom the Obama Presidency. Bush doesn’t engage in “class warfare” when he cuts tax rates for the wealthiest Americans – anyone who opposes Bush’s tax cuts for the wealthy, however, is engaged in “class warfare.” Obama’s capitulation on Bush tax cuts for the wealthy is not a retreat from his campaign promises – repudiating his capitulation to the Republicans on those tax cuts would constitute a “retreat” and demonstrate weakness.  . . . (more…)

If Obama Thinks the Response to the S&L Debacle Failed, Why Is He Adopting It?

This mess was never really cleaned up. (photo: marctonysmith via Flickr)

President Obama told Jon Stewart that the proof of the administration’s skills in responding to the crisis was holding the costs to the public to below one percent of GDP compared to the 2.5% of GDP cost to the public of dealing with the S&L debacle, which he correctly emphasized was a far smaller crisis than the one he inherited. Our GDP is roughly twice today what it was in 1993, so Obama’s claim is that the respective public costs to resolve the crises were (roughly): $150 billion (S&Ls) v. less than $150 billion (current crisis).

The Bush and Obama administrations have consistently refused to apply any of the successful lessons learned in responding to the S&L debacle – even though the response has been praised by experts in public administration and Treasury Secretaries from both parties for decades. Both administrations refused to even discuss the current crisis with the senior S&L regulators that contained that crisis before it caused a recession. Obama thinks his response to the crisis was brilliant because it did not follow the S&L regulators’ much more expensive strategy. Obama cited the comparison to the S&L debacle as the most telling demonstration he could make of why his administration deserves praise.

It’s a Miracle!

What Obama does not understand is that his “cover up” strategy and his claims of brilliant success are direct steals from Dick Pratt’s playbook. Dick Pratt was the top S&L regulator in 1981-83. When he left (to join Merrill Lynch) he claimed that he had contained the crisis through innovative resolution strategies that slashed the average historic costs (from over 20% to less than 5% of the S&L’s assets). Pratt’s “resolutions” were accounting scams that did not resolve anything. They did, however, transmute real insolvencies into fake assets and create guaranteed (fictional) accounting income. The scam was so crazy that the more insolvent the S&L acquired, the greater the fictional income that the deal created. Pratt did so many of these scam resolutions that they created so much fictional income and capital that the industry reported it had suddenly returned to profitability.

The reality was quite different. There was no miracle, only the cumulative results of multiple accounting scams. Pratt’s resolutions did not resolve failed S&Ls. They were still insolvent.  [cont’d.] (more…)

If Obama Thinks the Response to the S&L Debacle Failed, Why Is He Adopting It?

President Obama told Jon Stewart that the proof of the administration’s skills in responding to the crisis was holding the costs to the public to below one percent of GDP compared to the 2.5% of GDP cost to the public of dealing with the S&L debacle, which he correctly emphasized was a far smaller crisis than the one he inherited. Our GDP is roughly twice today what it was in 1993, so Obama’s claim is that the respective public costs to resolve the crises were (roughly): $150 billion (S&Ls) v. less than $150 billion (current crisis).

The Bush and Obama administrations have consistently refused to apply any of the successful lessons learned in responding to the S&L debacle – even though the response has been praised by experts in public administration and Treasury Secretaries from both parties for decades. Both administrations refused to even discuss the current crisis with the senior S&L regulators that contained that crisis before it caused a recession. Obama thinks his response to the crisis was brilliant because it did not follow the S&L regulators’ much more expensive strategy. Obama cited the comparison to the S&L debacle as the most telling demonstration he could make of why his administration deserves praise.

It’s a Miracle!

What Obama does not understand is that his “cover up” strategy and his claims of brilliant success are direct steals from Dick Pratt’s playbook. Dick Pratt was the top S&L regulator in 1981-83. When he left (to join Merrill Lynch) he claimed that he had contained the crisis through innovative resolution strategies that slashed the average historic costs (from over 20% to less than 5% of the S&L’s assets). Pratt’s “resolutions” were accounting scams that did not resolve anything. They did, however, transmute real insolvencies into fake assets and create guaranteed (fictional) accounting income. The scam was so crazy that the more insolvent the S&L acquired, the greater the fictional income that the deal created. Pratt did so many of these scam resolutions that they created so much fictional income and capital that the industry reported it had suddenly returned to profitability.

The reality was quite different. There was no miracle, only the cumulative results of multiple accounting scams. Pratt’s resolutions did not resolve failed S&Ls. They were still insolvent.

Regulatory Accounting Scams Create the Ideal Environment for Fraud

Pratt’s cover up strategy is what made the S&L debacle so expensive to resolve. Indeed, it would have caused an economic catastrophe if his successor had not ended the cover up and reregulated. Covering up a banking crisis always has a seductive appeal to politicians. There are always senior officials, close to the bankers, who counsel that covering up the bank losses and providing hidden public subsidies to the failed banks is a “silver bullet” solution that can resolve a banking crisis virtually without cost to the public. Pratt’s cover up cost the public so much because it created a criminogenic environment that caused the second (“control fraud”) phase of the debacle. Interest rate increases ultimately cost the public $25 billion. The second phase of the S&L debacle cost the public an additional $125 billion (five times the cost of the interest rate phase). If Obama understood any aspect of the S&L debacle accurately he would know that his administration’s response to the current crisis (1) has not resolved the crisis, and (2) reprises the disastrous (and dishonest) regulatory strategy that caused the initial S&L crisis to grow massively and become the debacle.

President Reagan appointed Richard (Dick) Pratt, an academic finance expert, as Chairman of the Federal Home Loan Bank Board (Bank Board) in 1981. Pratt led the response to the first (interest rate risk) phase of the S&L crisis. He gimmicked the accounting rules, cut the number of examiners, and desupervised the industry. This allowed S&Ls to hide real losses and create fictional income. He championed the entry of “entrepreneurs,” primarily real estate developers with intense conflicts of interest.

The administration, Congress, and the media treated these Pratt’s fictional “resolutions” and claims of brilliance as real. By allowing S&Ls to hide real losses and create fictional income, deregulating, desupervising, closing none of the control frauds (which were growing in assets at an annual rate of 50%), and making virtually no criminal referrals (which mean there were no prosecutions), Pratt (and several states that won the “competition in laxity”) created an intensely criminogenic environment that led to the entry of hundreds of control frauds into the S&L industry. As the National Commission on Financial Institution Reform, Recovery and Enforcement (NCFIRRE) emphasized in its 1993 report, at the “typical large failure” “fraud was invariably present.” The NCFIRRE report also explained how deregulation, desupervision, the lack of prosecutions, the accounting scams that hid real losses and created fictional income, the manipulation of professional compensation for appraisers and outside auditors by the fraudulent S&L executives to produce a “Gresham’s” dynamic in which bad ethics drove good ethics out of the professions, and the perverse incentives caused by modern executive compensation allowed CEOs to create guaranteed, record (albeit fictional) profits and become wealthy by looting “their” S&Ls. (George Akerlof and Paul Romer concurred in their 1993 article. Looting: the Economic Underworld of Bankruptcy for Profit.) Martin Mayer aptly concluded, if one had to pick a single person most responsible for the S&L crisis becoming a debacle it would be Dick Pratt. Indeed, but for Pratt’s successor, Edwin (Ed) Gray’s reregulation of the industry, Pratt’s policies would have caused a Great Recession.

For reasons that only Summers, Geithner, and Obama can know, they chose to adopt Pratt’s disastrous and dishonest anti-regulatory strategy and parrot his dishonest claims of brilliance and success. Congress passed the Prompt Corrective Action (PCA) law in 1991 for the express purpose of outlawing any repeat of Pratt’s refusal to close insolvent banks. Congress, at the behest of the Chamber of Commerce, the American Bankers Association (ABA), and Chairman Bernanke, successfully (and shamefully) extorted the Financial Accounting Standards Board to change the accounting rules so that banks no longer had to recognize losses on their toxic mortgage paper appropriately until they sold the assets. Covering up the losses had three real (carefully unstated) purposes: (1) permitting evasions of the PCA, (2) allowing the banks to remove themselves from the strictures of the TARP program even if they are, in reality, insolvent, and (3) allowing insolvent and impaired banks to pay their senior executives huge bonuses on the basis of the (fictional) income that results when a bank does not recognize its losses. Each of these purposes is unprincipled and indefensible, but taken together they are also dangerous. The stated purpose – that the losses were temporary because of unusual liquidity constraints in the secondary markets) was never credible given the exceptional incidence of fraud by nonprime mortgage lenders and CDO sellers. The secondary market in nonprime paper collapsed three-and-one-half years ago. If we are fortunate, it will never return from the dead.

The administration and its odd bedfellows, the Chamber of Commerce and the ABA, have maximized the perverse incentives that will drive future fraud epidemics, bubbles, and severe recessions. The administration’s embrace of Pratt’s cover up strategy, its breathless self-praise for its own brilliance in resolving the crisis at virtually no cost, its perversion of the accounting rules and the PCA to bail out and make even wealthier the senior officers’ whose frauds drove the current crisis, and both administrations’ failure to prosecute the elite frauds have enraged a broad spectrum of Americans. The Chamber of Commerce and the ABA have rewarded Obama’s tacit support for their dearest dreams with a vicious assault on him. This means that the administration’s banking policies have attained the terrible trifecta: terrible economics, terrible ethics, and terrible politics.
__________

Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.

Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.

FDL Book Salon Welcomes Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy

Welcome Raghuram G. Rajan, and Host William Black.

[ As a courtesy to our guests, please keep comments to the book. Please take other conversations to a previous thread. – bev]

Fault Lines: How Hidden Fractures Still Threaten the World Economy

William Black, Host:

Ignoring the Elephant in the Room: Control Fraud and the Financial Crisis

A review of Fault Lines: How Hidden Fractures Still Threaten the World Economy

Dr. Raghuram G. Rajan, is a distinguished professor at the University of Chicago’s business school and former chief economist of the International Monetary Fund (IMF). Readers familiar with Chicago school economics will see that the crisis has not led to a fundamental reevaluation of that school’s policy recommendations. The title of his book captures his thesis – Fault Lines: How Hidden Fractures still Threaten the World Economy. Rajan writes clearly and his book is intended for the intelligent lay reader. His book contains no charts, graphs, or equations, doubtless at the urgings of the Princeton University Press. It is an ambitious book, for it seeks to explain the global crisis and different trends in the real economy and the financial sector in many nations.

Brief Synopsis and Primary Themes

Rajan argues that the “rational actor” model explains the crisis – and why future crises are likely: “each one of us did what was sensible given the incentives we faced” (p. 4). He argues that the government can cause individually rational, well-motivated actors to produce results which, collectively, are disastrous. Their actions were disastrous because the government interferes with the economy, “derail[ing]” what would otherwise be “finely incentivized” financial markets (p. 126).

U.S. housing policy caused the crisis. Rajan offers an obligatory passing whack to the Community Reinvestment Act, but his real target is the equally obligatory “government sponsored enterprises” (GSEs) – Fannie and Freddie. Fannie and Freddie were the weapons of mass destruction that perverted the “finely incentivized” financial markets. The “government” is culpable for the making Fannie and Freddie the GSEs that perverted the private incentives. The government did so, inevitably because of the most treasured Chicago school meme – “unintended (negative) consequences.” Rajan speculates (he concedes that he has no evidence) that because U.S. income inequality became so extreme and middle class families’ income stalled, the “government” decided to reduce the inequality through subsidies to housing. In Rajan’s account, income inequality’s great danger becomes the risk that the government will interfere with the economy. Fannie and Freddie prevented “private market discipline” from being effective because they were willing to pay top dollar for “liar’s” loans and securities backed by liar’s loans that were certain to suffer catastrophic losses as soon as the housing bubble stalled. If Fannie and Freddie were the “fool” in the market, then everyone else simply, rationally, skinned them alive. Rajan asserts that Fannie and Freddie made these suicidal purchases because the Congress mandated that they do so. Rajan claims that Fannie and Freddie’s creditors and shareholders did not exert effective private market discipline to prevent the suicide because they (erroneously) expected to be bailed out fully by the Treasury and suffer no losses.  [cont’d] (more…)

FDL Book Salon Welcomes Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy

Welcome Raghuram G. Rajan, and Host William Black.

[ As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread. – bev]

Fault Lines: How Hidden Fractures Still Threaten the World Economy

William Black, Host:

Ignoring the Elephant in the Room: Control Fraud and the Financial Crisis

A review of Fault Lines: How Hidden Fractures Still Threaten the World Economy

Dr. Raghuram G. Rajan, is a distinguished professor at the University of Chicago’s business school and former chief economist of the International Monetary Fund (IMF). Readers familiar with Chicago school economics will see that the crisis has not led to a fundamental reevaluation of that school’s policy recommendations. The title of his book captures his thesis – Fault Lines: How Hidden Fractures still Threaten the World Economy. Rajan writes clearly and his book is intended for the intelligent lay reader. His book contains no charts, graphs, or equations, doubtless at the urgings of the Princeton University Press. It is an ambitious book, for it seeks to explain the global crisis and different trends in the real economy and the financial sector in many nations. (more…)

FDL Book Salon Welcomes Richard D. Wolff, Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It

Welcome Richard D. Wolff, and Host, William K. Black.

[As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread.  – bev]

Dr. Richard D. Wolff is a prominent Marxist economist who teaches at U. Mass and The New School. The book is composed of scores of short essays he did for Monthly Review beginning in 2005. The publicity blurb sent to potential reviewers states that Dr. Wolff “predicted the economic meltdown years ago.” The book does not contain specific predictions of the meltdown beyond the omnipresent Marxist prediction that capitalism is inherently unstable. Dr. Wolff’s articles take note of the bubble and nonprime assets in the articles in the book after the collapse of the bubble and after the crisis in nonprime assets were obvious. Readers interested in the scholars that predicted the specific crisis should consult Jamie Galbraith’s article.

Dr. Wolff’s emphasis is explaining his overall Marxist critique of capitalism’s defects. The articles can be read easily by the general reader. No economic expertise is required and Dr. Wolff writes in English without the Marxist jargon that non-specialists find confusing. (more…)

FDL Book Salon Welcomes Richard D. Wolff, Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It

Welcome Richard D. Wolff, and Host, William K. Black.

[As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread.  – bev]

Dr. Richard D. Wolff is a prominent Marxist economist who teaches at U. Mass and The New School. The book is composed of scores of short essays he did for Monthly Review beginning in 2005. The publicity blurb sent to potential reviewers states that Dr. Wolff “predicted the economic meltdown years ago.” The book does not contain specific predictions of the meltdown beyond the omnipresent Marxist prediction that capitalism is inherently unstable. Dr. Wolff’s articles take note of the bubble and nonprime assets in the articles in the book after the collapse of the bubble and after the crisis in nonprime assets were obvious. Readers interested in the scholars that predicted the specific crisis should consult Jamie Galbraith’s article.

Dr. Wolff’s emphasis is explaining his overall Marxist critique of capitalism’s defects. The articles can be read easily by the general reader. No economic expertise is required and Dr. Wolff writes in English without the Marxist jargon that non-specialists find confusing. (more…)