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How Elite Economic Hucksters Drive America's Biggest Fraud Epidemics

Business  (tags: money, economy, corporate, business, finance, ethics, debt, cover-up, corruption )

- 1843 days ago -
What do you get when you throw together economic fraudsters, plutocrats and opportunistic criminals? A financial crisis, that's what. If you look back over the massive frauds that have swept the country in recent decades, from the savings and loan crisis

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Tim C (2420)
Thursday June 6, 2013, 1:48 pm

Judy C (97)
Thursday June 6, 2013, 7:36 pm
This is a great article. The following outlines Grenspan's approach to the economy, and what he was apparntly thinking during the financial crisis:

The three most recent financial crises in U.S. history were driven by a special type of fraud called “control fraud” -- cases where the officers who control what look like legitimate entities use them as “weapons” to commit crimes. Each time, Alan Greenspan, former chairman of the Federal Reserve, played a catastrophic role. First, his policies created the fraud-friendly (criminogenic) environment that produces epidemics of control fraud, then he failed to identify those epidemics and incipient crises, and finally, he failed to counter them.

At the heart of Greenspan’s failure lies an ethical void in the brand of economics that has dominated American universities and policy circles for the last several decades, a brand known as “free market fundamentalism” or the “neoclassical school.” (I call it “theoclassical economics” for its quasi-religious belief system.) Mainstream economists who follow this school assert a deeply flawed and controversial concept known as the “efficient market hypothesis,” which holds that financial markets magically regulate themselves (they automatically “self-correct”) and are thus immune to fraud. When an economist starts believing in that kind of fallacy, he is bound to become blind to reality. Let’s take a look at what blinded Greenspan:

* Greenspan knew that markets were “efficient” because the efficient market hypothesis is the foundational pillar underlying modern finance theory.

* Markets can’t be efficient if there is control fraud, so there must not be any.

* Wait, there are control frauds! Tens of thousands of them.

* Then control fraud must not really be harmful, or markets would not be efficient.

* Control fraud, therefore, must not be immoral. As crime boss Emilio Barzini put it in The Godfather, “It’s just business.”

As delusional and immoral as this “logic” chain is, many elite economists believe it.
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