Wednesday, December 29, 2010

Tuesday, December 14, 2010

What do the Koran and the U.S. Constitution Have in Common?

¨ They both provide practical political instruction to large groups of fairly ignorant and feckless people, mainly in the form of establishing certain default expectations that are very powerful because they mold perception and experience, and provide practical labels that people use as a guide to reality.
¨ They are both regarded by their numerous devotees with the greatest awe as incomparable and unique, and their principal traits become ritualized and assume mythical proportions.
¨ Neither of them can be changed, although they adduce different pretexts for this peculiar common trait.
¨ They are both sacred relics from the time of our blessed ancestors who wrought no sin.
¨ Accordingly they are both completely outdated and should be discarded at the earliest opportunity in favor of something with more sex appeal.
¨ I mean, sheesh!
Rabbi Tech U. Pantzov provides  practical answers  for the despairing 

masses who must endure the anguish of contemporary  existence!

Sunday, December 12, 2010



04/18/2007 @ 11:49 am
Filed by RAW STORY

Conservative economist Bruce Bartlett accused President Bush of "bankrupting" America and betraying the Reagan legacy in an interview on PBS's Tavis Smiley Show on Tuesday....

TAVIS SMILEY: Bruce Bartlett is a columnist who served as economic policy advisor to Ronald Reagan and later Deputy Assistant Secretary of the Treasury Department under the first President Bush. The most recent book is "Imposter: How George W. Bush bankrupted America and Betrayed the Reagan Legacy.
TAVIS SMILEY: Did George W. Bush do all of that?
BRUCE BARTLETT: Bankrupt America? Yes, I think that we have had something like a $20 trillion increase in the national debt under this president's watch and I think that one of these days, I don't know when, but one of these days, the chickens are going to come home to roost.
BRUCE BARTLETT: … it appears in retrospect this president didn't really have any clear economic plan. A lot of things were done in an ad hoc basis or based solely on political considerations without much thought as to how all the pieces fit together.
BRUCE BARTLETT: . Secondly, I think a lot of the tax cuts were not well designed to help with economic growth and were really just the tax equivalent of pork barrel spending, just special deals for special groups. And as a consequence I don't think we have really gotten the economic benefits of the tax cuts
BRUCE BARTLETT: As an economist, you look at tax cuts, different kinds of tax cuts they have different effects on the economy. Some have very positive effects, some have virtually no effect at all. Some might have negative effects. If you look at the whole menu of all the different kinds of tax cuts that this president enacted, only some of them were really very helpful to economic growth and a lot of the others were not. They were just revenue that was lost to no purpose of any kind whatsoever.
BRUCE BARTLETT: . This president doesn't care one whit about the fiscal situation, doesn't worry at all about deficits or debt.

Saturday, December 11, 2010

Global warming research for rank amateurs

Global warming research 
conducted applying revolutionary 
new seat-of-the-pants methodology

It's easy to be a global warming skeptic when you just want to sound tough. However businesses that have something to gain or lose by global warming are taking global warming very seriously indeed. Like insurance companies. And reinsurance companies. No scoffers at Munich Re. Read the article in Slate. 

As usual, the political right is ignoring objective reality in order to support the profits of a handful of multinational corporations.

True, the ten commandments contain vital messages for today’s youth, like: “No graven images!” and “Keep the Sabbath holy!” Don't know what I would do without them commandments, no siree.

But on the other hand, saying that the thermometer is relentlessly rising, a proven scientific fact that no amount of right-wing propaganda can refute, THAT is not important. That is “junk science”. Glaciers are melting? A fluke!

So many Gates! This-Gate and That-Gate and the Other-Gate. So I decided to conduct an enquiry into global warming while avoiding any risk of data manipulation, such as that perpetrated by those horrid English scientists. (I'm still not sure what they are supposed to have done wrong.)  

In a rapture of brilliance, I resolved to cut the Gordian knot by asking dozens of shopkeepers and farmers in a single town in Central America if it was now warmer than, colder than, or the same temperature as ten years ago. Without exception they all said it is now considerably warmer than ten years ago. 

So I reported the results of my global warming research on a global warming skeptics' web site.

But, you guessed it: my methodology didn't cut the mustard either. The global warming skeptics were shocked, shocked! Shopkeepers! Farmers! Heaven forfend! Absolutely unacceptable!

You can’t win. Specifically, no matter what data you provide to prove global warming, it's never enough. I wonder why. 


Saturday, October 30, 2010

Democrats Offer Stealth Liberalism

08/29/08 Wall Street Journal - Potomac Watch by Kimberley A. Strassel

"If today's liberal storyline were correct, a proud "progressive" candidate should win voter acclaim with promises of higher taxes, government regulation, an encompassing health-care entitlement, protectionism and corporate-bashing. We can't know if that's the case, since the "progressive" Mr. Obama is doing such an excellent job of hiding those policies behind the conservative rhetoric of "choice," "tax cuts," "free trade" and "freedom."

Tequila Kid's reply: “Today's liberal storyline”, as you put it, is indeed accurate. You claim there's no way of telling whether voters prefer statist solutions or individualistic solutions. That claim is clearly false, and constitutes part of a mendacious conservative narrative intended to obscure the facts of America’s recent history.

In 2000 Al Gore won “voter acclaim with promises of higher taxes, government regulation, an[d] encompassing health-care entitlement”. More voters voted for liberal Gore than for ”conservative” Bush, despite an intense and ruthless campaign by the conservative mainstream media (especially The NY Times and The Washington Post) in favor of Bush. However the conservative élite – by resorting to Byzantine intrigues culminating in a judicial coup d'état -- overruled voters' preferences.

In my view freedom of collective choice is just as worth striving for as freedom of individual choice. But conservatives, who dominate the media -- thanks to the concentration of media ownership in the hands of a few plutocrats, enabled in turn by pro-monopoly Republican legislation of the 1990s -- are opposed to freedom of collective choice. Their opposition takes the form of denying that such a freedom exists. The flimsy theoretical basis for this claim is to deny – within the sphere of economic theory -- the existence of public goods and of market failure.

If Obama disguises his collectivist policies as individualistic ones, that is because the politically correct conservative establishment has conducted a hysterical, decades-long witch hunt against collective decision-making by the majority through free elections. Thus Obama wishes to elude the opprobrium regularly meted out to those who challenge the cretinous free-market twaddle that in the United States has become a folk religion. The right wing denounces choices freely made by the electorate as the doings of sinister bureaucratic insiders. Conservatives wish to preserve the current system in which collective decisions are made in secret by a handful of plutocrats to further their own class interests.

It is a well-known fact that Americans overwhelmingly prefer a universal single-payer health care system. The economist and Nobel laureate Kenneth Arrow conducted theoretical research into the economics of health care and concluded that a free market in health care is incompatible with inborn human values and is instinctively rejected by almost everybody.

Right-wing insistence on a private health care system is done principally pro forma, i.e. for show – since they know perfectly well that it is a chimera -- because it is required by their ideological cover story.

Friday, October 29, 2010

Not the Eliot Spitzer scandal but the Banana Republican Party scandal

Indignant retort to the scribbler and régime apologist David Carr [1]

Apologists of totalitarianism can be easily identified by their habit of making mountains out of molehills while remaining conspicuously silent in the face of the most outrageously arbitrary and anti-constitutional shenanigans on the part of the state.

The true scandal is not that Mr. Spitzer hired the services of a prostitute -- which should not be illegal in the first place – but that Mr. Spitzer’ peccadilloes only came to light as a result of blatantly anti-constitutional persecution of Mr. Spitzer by the notorious Bush II régime, of odious memory, as a pretext for hounding Spitzer out of office.

That corrupt Republican potentate sicked the FBI on Mr. Spitzer, illegally and unjustly breaching his bank secrecy rights, as an act of retaliation for Mr. Spitzer’s revelation in the pages of the Washington Post that the Bush mob had been instrumental in blocking any federal or state law enforcement action to nip the mortgage crisis in the bud. [2]  I will prudently refrain from speculating on the magnitude of the swag thereby plundered by the Bush mob.

As revealed by Mr. Spitzer, the corrupt Banana Republican régime around 2003 not only signally failed to prevent, but actually egged on the fraudulent schemes of Wall Street swindler outfits like Bear Sterns, Goldman Sachs, Lehman Bros, Bank of America, etc. in amassing vast illegal profits from granting and then securitizing fraudulent mortgages.

Thanks to the protection granted by the Bush mob and the festering corruption of the Banana Republican Party, swindler mortgages fueled a huge speculative boom that led to the present financial crisis, which threatens to blight the lives of a whole generation of human beings.

The issue is not “Client number nine”, as David Carr, the cynical scribbler and régime apologist of the NY Times, calls the then governor of New York. The problem is the domination of government by an infamous and parasitical financial oligarchy that uses shit-heel politicos like the nepo-oligarch Bush II as accomplices in its frenzied quest for boundless filthy lucre, come hell or high water.

Mr. Spitzer, as the victim of political persecution by the Banana Republican Party in its capacity as a tool of the parasitical financial oligarchy, which he courageously combated for many years in his capacity as New York Attorney General and consequently ex officio overseer of the fetid Wall Street swamp, should be spared as a matter of principle the indignity of being taunted with names like “Client number nine” by the scribblers of the now neoconservative NY Times.

Mr. Spitzer is a political dissident who has been illegally persecuted by our corrupt masters, and hence deserves the support, respect and admiration of all. He is the American Sinyavsky, the American Solzhenytsin, who denounced to the world the bottomless pit of corruption that is synonymous with the odious tyranny exercised by the oligarchy through its tools like the Banana Republican gangsters.

To join the meretricious rabble taunting Mr. Spitzer is to support the totalitarian rule of the parasitical financial oligarchy. It is to become an accomplice of the countless crimes of the ruling caste.

[1] Client 9 and Other Interested Parties, by David Carr, October 22, 2010, New York Times

[2] Predatory Lenders' Partner in Crime. How the Bush Administration Stopped the States From Stepping In to Help Consumers, by Eliot Spitzer, New York governor, Washington Post, Thursday, February 14, 2008

Sunday, September 26, 2010

Friendly advice to a bunch of capitalist pigs

An economist’s friendly advice to a bunch of capitalist pigs
Dear chums,
Get used to the  idea that
You're going to  have to dream up
A new line of bullshit.
‘Cause after that last number you pulled
Ain’t nobody buying the old one no mo’.

Thursday, August 26, 2010

You don't always get what you pay for by Elliott D. Sclar

TequilaKid’s comment:

This is one hell of a good book. It is a serious study of privatisation that analyses specific cases. The outcome is the diametrical opposite of the pie-in-the-sky horse-pucky that is regularly disseminated by pro-system pimps like John Stossel, who has a regular column on Town Hall by means of which he entertains, confuses and stultifies the populace. As a matter of fact in one of his scribbles he promises $1,000 to anyone who can point to a case in which the government does a better job than private biz. I immediately took him up on it, citing a well documented case in which US bridges (practically all government-owned) were deemed better maintained than the electrical power grid (all privately owned). I never got a reply, which shows you what a hypocritical dirt-bag John Stossel is.

The following review is by the book's publisher (I think):

Today, nearly all public services--schools, hospitals, prisons, fire departments, sanitation--are considered fair game for privatization. Proponents of privatization argue that private firms will respond to competitive market pressures and provide better service at lower cost. While this assertion has caused much controversy, the debate between both sides has consisted mainly of impassioned defenses of entrenched positions.
In You Don't Always Get What You Pay For, Elliott D. Sclar offers a balanced look at the pitfalls and promises of public sector privatization in the United States. By describing the underlying economic dynamics of how public agencies and private organizations actually work together, he provides a rigorous analysis of the assumptions behind the case for privatization.
The competitive-market model may seem appealing, but Sclar warns that it does not address the complex reality of contracting for government services. Using specific examples, such as mail service and urban transportation, he shows that ironically privatization does not shrink government--the broader goal of many of its own champions. He also demonstrates that there is more to consider in providing public services than trying to achieve efficiency; there are issues of equity and access that cannot be ignored.
Sclar believes that public officials and voters will soon realize the limitations of "contracting out" just as private corporations have come to understand the drawbacks of outsourcing. After examining the effectiveness of alternatives to privatization, he offers suggestions for improving public sector performance--advice he hopes will be heeded before it is too late.

Tuesday, August 24, 2010

Total zombie

PALADIN OF FREEDOM - Life of Ronald Reagan - Chapter 43: DABBLING IN GENOCIDE

In 1982 President Reagan received a worrisome report from the CIA describing Guatemalan army operations in rural Guatemala: "When an army patrol meets resistance and takes fire from a town or village, it is assumed that the entire town is hostile and it is subsequently destroyed." When the army encountered an empty village, it was "assumed to have been supporting the EGP, and it is destroyed. There are hundreds, possibly thousands of refugees in the bush with no homes to return to. …the entire Ixil Indian population is pro-EGP [so] the army can be expected to give no quarter..."

In March 1982, the situation grew even more dramatic when General Efrain Rios Montt seized power in a coup d'état. He soon began a new scorched-earth campaign and secretly gave orders to expand death squad operations. The U.S. embassy promptly heard new reports about the army massacring Indians.

In view of the alarming situation in Guatemala, on Jan. 7, 1983, Reagan lifted the ban on military aid to Guatemala and authorized the sale of $6 million in military hardware. Approval covered spare parts for UH-1H helicopters and A-37 aircraft used in counterinsurgency operations.

State Department spokesman John Hughes said political violence in the cities had "declined dramatically" and that rural conditions had improved too. The following month a secret CIA cable reported a rise in "suspect right-wing violence" with kidnappings of students and teachers. Bodies of victims were appearing in ditches and gullies.

    Ronald Reagan with the genocidal Evangelical   
   Protestant tyrant of Guatemala Efraín  Ríos Montt 

Source: History of Guatemala's Death Squads, by Robert Parry,, 1/11/05


Sunday, August 22, 2010

Good ole US of A!

In order to avoid being blacklisted by Irving Horowitz as an America-hater, I have decided once a year to publish a list of economic things that the US does better than Europe. And there are several of them. Offhand I can think of two.

NUMBAH ONE. Despite American bankers´ notoriously criminal instincts, I must confess that the US beats Europe hands down when it comes to issuing credit cards and the like. In the US it´s easy to get a credit card. Banks in all the European countries I have enquired about issue credit cards only to people who either own real estate, have a large bank balance or are relatives of the Grand Duke of Luxembourg. That is an inestimable advantage for denizens of this fair republic.

By the same token, in France at least, you can only buy or rent a dwelling if you have a full-time steady job. This pig-headedness of European bankers and real estate agents is the source of much woe to Europe´s youth. Neoliberal labor policies (for the sake of labor market “flexibility”, of course) have reduced the ranks of steady job-holders while increasing the numbers of temps and people working on short-term contracts. However the banks and real estate agents apparently didn't get the memo because they continue to demand compliance with draconian evidence of stability. Consequently many young French earn their own living but are barred from renting an apartment because their jobs are too precarious to warrant signing a lease with them, and they are forced to live with their parents into early middle age.

NUMBAH TWO. The US of A is the only country in the entire universe where you can get a 30-year mortgage. Apparently that's big deal, although I don't know exactly WHY it is such a marvelous arrangement. In any case it is universally regarded as cause for exultation.

And we owe it all to that peculiarly ingenious American institution known as the New Deal. Yes, boys and girls, President Franklin Roosevelt made it possible -- for the first time since the Precambrian epoch – to get a 30-year mortgage, thanks to the federal government's meddling with the economy.

Friday, August 20, 2010

The Germanic peoples jointly and severally bear the guilt of the Holocaust.

But the Jews took their revenge by imposing 30 years of Republican rule on the US.

Sunday, August 15, 2010

Is this Doubletalk or Tripletalk? A Critique of Pathocrookis

I cite one James Pathocrookis: “… Goldman Sachs is today’s scapegoat ...”

Later in the same article Pathocrookis allows as how:

“All of that makes the recommendation that you and I share — strong government support of basic free market principles — one that looks increasingly vulnerable to populist politics within free market democracies. The problem is even larger in Europe and Japan than in America.”

May 11, 2010 14:42 EDT
State capitalism, crony capitalism | New Normal

My bemused comment:

Fascinating! So Goldman Sachs is just a scapegoat! I see.

And furthermore “you and” I “share” a “recommendation”, to wit “strong government support of basic free market principles”, no less!

If you were really desirous of free-market policies -- and not just using them as a cheap rhetorical device, as you do in your rant -- you would at least mention in passing that if Goldman Sachs -- like the rest of the Wall Street mob – managed to achieve notoriety through its reckless speculation, it was only because Goldman Sachs (and the rest of the Wall Street mob) had previously persuaded the US congress and the SEC to remove all curbs on speculation.

When a participant in the market, in this case Goldman Sachs (plus the rest of the Wall Street mob), has the power to change the rules, then it is grossly inaccurate to speak of a free market. To back up this statement I cite the great German free-market economist Walter Eucken (1891-1950).

Eucken recommended a policy of strict division of labor between government and private business. The government regulates the economy, i.e. it makes rules about how private parties should behave on the market, but is not itself a market player. On the other hand market players are barred from trying to change the rules, unless it be through the ballot-box. Eucken’s thinking formed the basis of West Germany’s “socially aware market system”, which was the propitious framework in which the German economic miracle (1948-1973) took place.

Cite by Walter Eucken:

This [i.e. the strict division of labor explained above] is the only way in which we can accomplish the goal of enabling all citizens to control the economy through the price mechanism, instead of allowing a small minority to control it. The only economic system in which this is possible is that of complete[ly free] competition. IT CAN ONLY BE ACCOMPLISHED IF ALL MARKET PARTICIPANTS ARE PREVENTED FROM CHANGING THE RULES OF THE MARKET. [1] (my stress)

Walter Eucken (1891-1950)

To her credit, Margaret Thatcher observed Eucken’s rule and forbade members of her government to have any contract with lobbyists of any sort. To expect such a policy of an US Republican would be an act of madness.

[1] From Walter Eucken’s preface to the first issue of Ordo (an annual publication reflecting free-market views) in 1948. This is my translation of the cite found in the article Walter Eucken in the German-language Wikipedia.

Critique of libertarianism

The idea you propose of libertarians as intellectual heavyweights who rightly despise the crude thinking of the left, is devastatingly comical. Do you write your own material, siamdave?

Although I sympathise – up to a point -- with the ideas of freedom and self-reliance from which libertarianism derives its strength, libertarianism itself is a shallow, mechanistic doctrine whose partisans continually commit gross logical blunders when they think, or try to.

I grant that the Austrian School has made important contributions to the theory of planned economies and yields interesting results when used to criticise mainstream establishment economic theory. But the Austrian School is far removed from espousing the robotic extremist chatter that emanates from the current crop of libertarians.

Hayek’s critique of Keynes, for example, does not call Keynes’ economic policy recommendations into question – Hayek expressly admitted that in a situation of underemployed resources Keynes’ policies were appropriate, at least in principle. Current libertarian fashion on the other hand demands a thoroughly deflationist standpoint, namely by proposing that economic policy actively promote unemployment, virtually as a goal in itself. In politics such a propensity is known as a death wish.

Hayek does not dispute Keynes’ substantive conclusions, which constitute the essence of Keynes' work and have always drawn the most ire from the right. Hayek’s critique of Keynes merely challenged Keynes’ claim to universal validity (i.e. GENERAL theory of unemployment, etc.) for his theory. Hayek is just saying that Keynes theory isn’t general at all, but rather only applicable to special conditions.

By publicly advocating the Byzantine equivocations of Thomas Sowell, the notorious ideological mouthpiece for monopoly capital, Ron Paul has given notice that the libertarian Utopia will just be a remake of the current squalid setup, consisting most likely in changing a few labels and then muddling through as usual, leaving us firmly under Wall Street’s thumb.

Ron Paul also takes a shine to another icon of rightist economic ideology, namely Robert Murphy, who produces a unified, homogenized but nonetheless profoundly eclectic and feeble-minded extremist economic discourse that, despite its pretensions, is thoroughly incompatible with free-market economics. That is because Murphy does not theorise. What he does is string together a whole Shi’ite-load of right-wing economic clichés that serve to buttress the claim to a place at the feeding-trough for each of a number of factions of capital. It is an unreflected patchwork of special-interest slogans, which largely cancel each other out. All threaded together with admirable dexterity by Murphy, a master of the theoretical slalom, who athletically zooms from one theoretical position to its opposite and back again without pausing to catch his breath.

My esteemed Siamdave, you and I are in a way mirror images of each other: You, a rightist, keep an eye on the dangerous collectivists at Alternet and I, a leftist, keep an eye on the libertarian wackos by regularly reading their web sites. However my beat covers broad segments of the right, not just the libertarians.

My father was one of those people who have far more opinions than they could ever hope to find support for in observing and reflecting on reality. I was so repelled by his self-indulgent attitude of only noticing information that happened to confirm his prejudices and ignoring the rest, that I became his opposite and refused to accept any opinion until all objections to that opinion had first been satisfactorily refuted.

Consequently I had no firm political beliefs until I was over 40. By that time I had accumulated a huge mass of observations and considerable theoretical ability to reflect on them. That enabled me to read critically opposing arguments and draw promptly firm conclusions from them, a skill that I took 25 years to acquire.

Although my attitude remains one of resolute objectivism and hard-nosed skepticism tous azimuths, as the French say, for some reason most right-wing discourse seems to me consistently detached from reality.

After reading the right-wing US media for some 8 years now with the greatest effort at objectivity and sober analysis, I have reached the inescapable conclusion that – in a nutshell -- the right-wing US media basically exude a concoction of assorted horse-pucky whose main purpose is to entertain, deceive and confuse the populace. Although I try to seek reasons to challenge my own conclusion, I find it constantly reinforced by my observations.

That does not mean the left is perfect. As a matter of fact I constantly get static from certain lefties because of my reluctance to worship at their respective shrines. Nonetheless reading the left-wing media I do not get the same queasy Kafkaesque feeling I get when I read National Review or Weekly Standard and others. The right-wing US press gives off that unmistakable stench of propaganda that I recall so clearly from when I was living in Communist East Germany. (Strictly speaking I was in capitalist West Berlin, surrounded by communist East Germany, but I monitored local communist media of both East Germany and West Berlin.) One has the feeling that even the most innocent remark published in such a press is merely setting the stage, presenting the cooked evidence that will soon be necessary to justify their next hypocritical piece of outrageous effrontery. [1]

I grant the libertarians are less hypocritical than most of the right – but to make up for it, libertarian thinking is much more mechanical and easily distracted from the real issues.

The 18th-century rationalistic Enlightenment approach that lives on among libertarians – despite its respectable historical antecedents – is, owing to its unfortunate reluctance to incorporate findings of current social science and psychology (specifically their ignorance of behavioral economics), much too flimsy an instrument of analysis to yield any but the simplest of reliable conclusions. The Austrian School’s obsession with its atomistic methodology consistently prevents the Austrians from incorporating a theory of government into their lucubrations. See my critique on of Hayek’s Road to Serfdom, where by suspending one of Hayek’s tacit assumptions about the nature of government I expose the whole argument of the Road to Serfdom as a silly misunderstanding, merely the fruit of professorial absent-mindedness.


[1] In A brief history of GOP lying, Robert Parry tells us, "It's not entirely clear when the Republican Party made disinformation a political weapon of choice. In covering the emerging U.S. policy toward Central America in late 1980, Robert Parry encountered a systematic strategy of lying. Coming as he did from movies, President Reagan seemed to have only a casual relationship with the truth anyway.

The Austrian School of Corporate Crime

Review of The Mystery of Banking by Murray Rothbard

This book by “Mystery Murray” – the most prominent American exponent of the Austrian School of economics -- is a true model of ingeniously argued and highly refined right-wing horse-shit. Pardon me for being so gauche as to criticize this book on the basis of reviews, instead of actually reading it. However I can smell the dogmatism a mile off, when “a surge in bank failures, central banks around the globe bailing out failed commercial and investment banks, double-digit inflation rates in many parts of the world and hyperinflation …” is attributed to technical banking issues and excessive government intervention.

It totally ignores the notorious fact that the financial crisis was largely caused by fraud, i.e. criminal activity on the part of bankers and other Wall Street crooks. I concede that The Mystery of Banking was published many years before the Republicans managed to wreck the economy in the 2008 crisis. But contemporary Austrian authors persist in ignoring financial fraud. Hence it is reasonable to attribute the same obtuseness to Rothbard.

The financial crisis was not caused by any intrinsically economic event, but rather by a breakdown of law and order, euphemistically known as “deregulation”. I cite from a letter written by the noted economist James K. Galbraith to the US Congress in May 2010:

“Economists have soft- pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the bubble. They continue to do so now.”

“[I]s it possible for mortgage originators, ratings agencies, underwriters, insurers and supervising agencies NOT to have known that the system of housing finance had become infested with fraud? Every statistical indicator of fraudulent practice – growth and profitability – suggests otherwise. Every examination of the record so far suggests otherwise. The very language in use: ‘liars' loans,’ ‘ninja loans,’ ‘neutron loans,’ and ‘toxic waste,’ tells you that people knew. I have also heard the expression, ‘IBG,YBG;’ the meaning of that bit of code was: ‘I'll be gone, you'll be gone.’”

“In this situation, let me suggest, the country faces an existential threat. Either the legal system must do its work. Or the market system cannot be restored. There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case.”[1]

More evidence that the financial crisis was caused by fraud is provided by the Financial Times, which in July 2010 interviewed Guan Jianzhong, chairman of Dagong Global Credit Rating, a privately owned Chinese rating agency. Mr. Guan stated, “The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests.”

The Financial Times notes: “… [W]estern regulators … have heavily criticised the big three agencies for handing top ratings to mortgage-linked securities that turned toxic when the US housing market collapsed in 2007.”

Mr. Guan went on to say: “The western rating agencies are politicised and highly ideological and they do not adhere to objective standards.” The Financial Times adds that Mr. Guan ”specifically criticised the practice of “rating shopping” by companies who offer their business to the agency that provides the most favourable rating.”[2]

Rothbard’s ideological blinkers prevent him from noticing fraud. This is characteristic for the Austrian School of Economics. I have searched in vain in the works of Hayek and von Mises for any mention of business crime.

Such consistent neglect of business crime is a clear indication that the sort of economics practiced by these worthies serves primarily as an apologetic discourse intended to protect the interests of the business class come hell or high water and regardless of the facts. Moreover this obsessive avoidance of the subject of fraud serves as the principal justification for their crackpot opposition to government regulation of business.

After 30 years of deregulation, largely justified by reference to the Austrian School’s convenient doctrines – which, by the way, are largely unsupported by any logical argument -- the GOP finally managed to demolish all the safeguards that the New Deal had prudently put in place to prevent a recurrence of the massive fraudulent speculation that triggered the 1929 Wall Street crash. The inevitable result was that the entire US financial sector started systematically breaking the law, culminating in the financial catastrophe we are now experiencing.[3]

In a nutshell, libertarians and Austrians are nothing but enablers and justifiers of criminal activity by the wealthy. Their specious theories should be judged, not from the standpoint of economics, but from that of criminology.[4]

[1] James K. Galbraith: Why the 'experts' failed to see how financial fraud collapsed the economy,
[2] China Calls Our Bluff: The US is Insolvent and Faces Bankruptcy as a Pure Debtor Nation, by Washington's Blog,
[3] The insouciant recklessness of the Republicans’ deregulating frenzy is briefly recounted in Joseph Stiglitz’ article 5 Disastrous Decisions that Got Us into this Economic Mess, of December 2008. On the same subject:
[4] I will expand on this subject in a forthcoming article entitled Slouching towards Catastrophe; A Brief History of GOP Economic Lunacy