Apologies about the break from posts for the past week plus. I just moved apartments, and that kept me from blogging. (Though around the same time I was moving we had some troubles with our sister blog, Triple Crisis, which also took up a lot of time. I have found some temporary fixes for our troubles, but if there are any WordPress developers out there who could give us some pro bono help with our two blogs (which both run on WordPress) and our website (which we intend to shift over to WordPress), please drop us a line.) Here are my latest links:
(1) Jeff Madrick’s Seven Bad Ideas: I have been listening to, and enjoying, the audiobook version of the new book by Challenge editor and economic journalist Jeff Madrick, Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World. If you’re in the DC area, Madrick will be speaking about his book at EPI this Thursday (1-2:30pm) with Brad DeLong and EPI’s Josh Bivens. Event announcement here. Find a pretty positive review of the book in the NYT by Krugman here. And find an interview Alternet’s Lynn Parramore did with Madrick here.
(2) Scathing report critical of NY Fed: The Inspector General of the Federal Reserve just put out a report (summary here; article from Bloomberg here) saying that as early as 2008 and 2009, the NY Fed had info about problems with JPMorgan’s investment office that eventually lost billions because of the so-called “London Whale,” but failed to follow up on the information. This is very juicy, especially given what has come out about the NY Fed as a result of the 46 hours of secret recordings made by NY Fed examiner Carmen Segarra, who was apparently fired for asking too many questions about the bank she was “embedded” in, Goldman Sachs. The This American Life episode about Segarra (here) is well worth listening to; the reporting was done in partnership with Pro Publica’s Jake Bernstein (here).
(3) Patrick Radden Keefe, “The Empire of Edge”: A great piece in the second-most-recent New Yorker (hat-tip TM) about hedge-fund billionaire Steven A. Cohen of what was S.A.C. Capital and insider trading, “The Empire of Edge: How a doctor, a trader, and the billionaire Steven A. Cohen Got entangled in a vast financial scandal.” The elderly Alzheimer’s researcher who provided the inside information that allowed Cohen and his company to make hundreds of millions shorting stock of two pharmaceutical companies was disgraced; the trader for S.A.C. Capital who courted the doctor and presumably brought the info to Cohen, or at least got him to sell his shares and then short them, Mathew Martoma was sentenced to nine years in federal prison. But Cohen couldn’t even be indicted, and from what the article’s author says it seems to be simply because he doesn’t allow his employees to say anything explicit about the insider information that is the basis of how they are advising him to invest (or disinvest):
Cohen would never be so foolish as to sit and listen while a subordinate laid out the full provenance of an illegal tip. At some firms, … there is an unwritten “don’t ask, don’t tell” policy, where the fact that a piece of information came from an insider would be conveyed not in so many words but with a facial expression, a tone of voice, or coded language (say, a conviction level of nine). The sociologist Diego Gambetta, in his book “Codes of the Underworld,” explains that people engaged in criminal conduct often evolve an elaborate semiotics to communicate with one another, because they cannot speak openly about their plans. One federal official who has investigated S.A.C. told me, “In the Mob, sometimes it’s just an expression. One expression means ‘Kill him.’ Another expression means ‘Don’t kill him.’ How do you bring that to a jury?”
The skit from the BBC’s Mitchell & Webb at the top of this post (see it on the Youtube here) humorously illustrates mobsters’ use of “needlessly ambiguous terms” (hat-tip Kannan). Of course, the gag is that the ambiguity isn’t needless at all for organized crime outfits like the mob and S.A.C. Capital–it can keep you out of jail. But they do manage to indict and convict mobsters–why not banksters and fraudstsers too?
That’s it for now.