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Posts Tagged ‘Naked Capitalism’

How “Shareholder Value” is Killing Innovation

Posted by hkarner - 2. August 2017

Yves here. Lazonink’s key points may seem a bit abstract at first, but they do get to the essence of the big defects of the “shareholder value” ideology.

By William Lazonick, Professor of Economics, University of Massachusetts Lowell. Originally published at the Institute for New Economic Thinking website

Conventional wisdom holds that the primary function of the stock market is to raise cash that companies use to invest in productive capabilities. The conventional wisdom is wrong. Academic research on corporate finance shows that, compared with other sources of funds, stock markets in advanced countries have in fact been insignificant suppliers of capital to corporations. What, then, is their function? If we are to understand employment opportunity, income distribution, and productivity growth, we need an accurate analysis of the role of the stock market in the corporate economy.

The insignificance of the stock market as a source of real investment capital exposes as fallacious the fundamental assumptions of the prevailing ideology that, for the sake of economic efficiency, a business corporation should be run to “maximize shareholder value” (MSV). As a rule, public shareholders do not invest in a corporation’s productive capabilities; they simply buy shares outstanding on the market, hoping to extract value that they have played no role in helping to create. And in practice, MSV advocates modes of corporate resource allocation that undermine innovative enterprise and result in unstable employment, inequitable incomes, and sagging productivity. Den Rest des Beitrags lesen »

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Trump Reiterates Support for a New Glass-Steagall Act, But It Will it Pass Congress?

Posted by hkarner - 20. Mai 2017

Posted on May 16, 2017 by

Yves here. This Real News Network interview discusses one of the few campaign promises that Trump hans’t yet abandoned, that of reviving Glass-Steagall.

SHARMINI PERIES: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

Earlier this month, President Trump reiterated his commitment to a campaign promise that he made last year during the presidential campaign to break up large banks and to reinstate a new version of the so-called Glass-Steagall Act. This is the law that for over 60 years separated investment banks from commercial banks. The law was repealed in 1999 under President Bill Clinton. Some economists say that the repeal of the Glass-Steagall Act contributed to the 2008 financial crisis. Others say that other forms of banking deregulation was far more important for having caused the crisis. Den Rest des Beitrags lesen »

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Debunking 5 Myths About Frexit

Posted by hkarner - 13. März 2017

Posted on March 12, 2017 by , Naked Capitalism

Yves here. This post drills into some of the claims made about the advantages of France leaving the Eurozone, as in a Frexit, and finds many of them wanting. Reader input and reactions are very much encouraged.

From my vantage, author Grégory Claeys needs to get up to speed on Modern Monetary Theory. His third concern, regarding how much deficit spending France could do, is based on the misapprehension that France would need to borrow to run deficits. He’s thus managed to miss the big point of exiting the Euro: as a monetarily sovereign nation, French deficit spending would be limited by the need to avoid generating too much inflation, which in turn reflects how much demand needs to be created to employ otherwise slack resources.

The flip side is his final point focuses on the economic dislocation of a Frexit. As we, aided by many bank IT experts, in particular Clive but also seasoned members of the commentariat, have stressed, the technology implementation of a new currency is a very long lead time process due to the fact that:

1. There is tons of code involved, including lots of legacy code that can only be inspected and changed line by line

2. There are numerous parties involved. Any task requiring coordination is far more cumbersome and time consuming than one that can be accomplished internally

3. Banks are already very thinly staffed in their IT areas and the guys who know their way around the legacy code have been and are continuing to retire, which does not bode well for banks and other financial players being able to mobilize enough resources even if they decided to throw a lot of budget dollars at it

By Grégory Claeys, an Associate Professor at the Conservatoire National des Arts et Métiers in Paris where he is teaching macroeconomics in the Master of Finance. He previously taught undergraduate macroeconomics at Sciences Po in Paris. Originally published at Bruegel Den Rest des Beitrags lesen »

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Euroland: Will the Netherlands Be the Next Domino To Fall?

Posted by hkarner - 15. Februar 2017

Posted on February 15, 2017 by , Naked Capitalismsmith-yves-cc

By Servaas Storm, a Dutch economist and author who works on macroeconomics, technological progress, income distribution & economic growth, finance, development and structural change, and climate change. Originally published at the Institute for New Economic Thinking website

Austerity has nurtured resentments that will likely make the populist right PVV the biggest winner in the March 17 election — but without the majority or the allies needed to govern.

he Dutch go the polls on March 15, a few weeks ahead of the French vote to choose the successor to Président François Hollande and well before Bundeskanzlerin Angela Merkel seeks a fourth term in September. The Dutch vote takes on a wider European significance, however, because Dutch voters — who rebelled against a EU ‘constitution’ in 2005 and last year rejected the association treaty between the EU and Ukraine in a referendum — have in the past proved to be a good gauge of European sentiment. Den Rest des Beitrags lesen »

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Germany-IMF Staredown on Greece: The Election Calculus

Posted by hkarner - 14. Februar 2017

Posted on February 13, 2017 by Yves Smith

The next big round of extend and pretend for Greece isn’t set to take place until July, yet serious jockeying between the key actors, the IMF versus the European countries acting as lenders, is underway now. Why? The politicians and Eurocrats are keen to get a deal, at least in general terms, agreed now so as to keep Greece out of the headlines as much as possible for an upcoming series of European elections.

Of course, the European view of “getting to a deal” means knuckling the IMF into joining a new round of financing. As we’ve discussed since 2015, the Fund’s staff has been in open revolt, and has leaked important internal documents to the press more than once, making clear the agency’s view that Greek debts are not sustainable (note that these leaks may have been sanctioned at a more senior level). By the Fund’s own rules, that means it cannot provide additional loans. The latest Financial Sustainability Report reached the same conclusion, although it did uncharacteristically say that some fund directors (as in board members) did not agree with that view.

If the IMF does not provide more dough, the consequences are serious, as we’ve stressed and Wolfgang Munchau underscores in a comment at the Financial Times: Den Rest des Beitrags lesen »

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How Repo Works

Posted by hkarner - 16. Dezember 2015

Posted on October 30, 2015 by , naked capitalismYves Smith

Yves here. Repo is a critically important mechanism by which major dealer banks finance themselves, and repo is therefore often a major topic in bank reform discussions. We thus thought it would be useful to post this overview.

By Daniela Gabor, an associate professor in the Faculty of Business and Law at the University of Western England-Bristol and Cornel Ba, an assistant professor of International Relations and Co-Director of the Global Economic Governance Initiative at Boston University. This is an excerpt from a recent paper that was originally published in the Journal of Common Market Studies Den Rest des Beitrags lesen »

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What’s Called “Capitalism” Is Far from Any Model of Capitalism or Market

Posted by hkarner - 1. Oktober 2015

Posted on September 30, 2015 by

By Gaius Publius, a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius, Tumblr and Facebook. This piece first appeared at Down With Tyranny. GP article archive here.


Predators and prey. The homeless and left-behind are at the bottom (“decomposers”). Most of everyone else is in the next layer up (“producers”). The rest, from the well-off to the wealthy, are “consumers.” Interesting how that language works, isn’t it? (source)

by Gaius Publius

A recent piece I did on the British Labour politician Tony Benn featured a speech that offered a “history of neoliberalism” (click here to read and listen). Near the beginning of the speech, Benn said, “This country and the world have been run by rich and powerful men from the beginning of time.” Consider that for a moment, what that means about the arc of human history.

Near the end of his short talk, referencing the Thatcher (and Reagan) counterrevolution against the great populist gains of the 19th and 20th centuries, he said that this is “what the whole [modern] crisis is about, the restoration of power to those who’ve always controlled the world, the people who own the land and the resources and all the rest of it.”

That radical re-transformation of the world back to control by its original and longtime owners, “rich and powerful men,” was begun in England by Margaret Thatcher and several deliberate policies. Benn (my emphasis): “So privatization is a deliberate policy, along with the destruction of local democracy and the destruction of the trade unions to restore power back to to where it was.”

Benn also mentions the role of crushing personal debt in the Thatcher de-democratization of her society: Den Rest des Beitrags lesen »

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Why Tax Havens Will be at the Heart of the Next Financial Crisis

Posted by hkarner - 4. September 2015

Posted on September 4, 2015 by , Naked Capitalism

By Nicholas Shaxson, the author of Treasure Islands, an award-winning book about tax havens. Originally published at Tax Justice Network

This post examines another excellent in-depth investigation by Reuters into global financial stability issues, and the role of tax havens in this giant game of pain and plunder. The investigation uncovers, among other things, a whole lot of offshore shenanigans, complementing what we (and relatively few others) have been saying for some years now, and it goes right to the heart of what capitalism is — or at least what it has become.

Before reading this, though, see the box “What is a tax haven?” There’s a lot of misunderstanding out there.

What is a tax haven?

Deep offshore

The term ‘tax haven’ is a bit of a misnomer: they aren’t just about tax. We will mostly use the term ‘offshore’ here instead of ‘tax haven’ – what we are talking about is the same basic phenomenon: jurisdictions offering escape routes to financial players elsewhere, helping them avoid taxes or disclosure or financial regulation or whatever other ‘burdens’ of society they don’t like.

In financial stability terms the world of offshore — a world that includes places like Ireland, Luxembourg, Cayman and the City of London (see box) – has been where financial services players have been able to escape regulatory barriers at home, taking the cream from risky activities while shifting the risks onto taxpayers via bailouts and other nasties.  Offshore was very significantly at the root of the global financial crisis that erupted in 2008 — and on all evidence it will be at or near the epicentre of the next one tooDen Rest des Beitrags lesen »

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On Syriza as a Party: Tragic Flaws, or Tragic Errors?

Posted by hkarner - 18. August 2015

Posted on August 17, 2015 by , Naked Capitalism

By Lambert Strether of Corrente.

The YouTube titled “The Battle Against Austerity: Lessons From Greece,” was recorded at a two-person panel discussion sponsored by Canada’s Socialist Project. The speakers are Leo Panitch, Canada Research Chair in Comparative Political Economy at York University and editor of the Socialist Register, and Richard Fidler, a life long socialist, activist, and writer.

I’m going to select a few points I regard as salient. First, I want to raise highlight the issue of Greece’s organizational capacity for self-sufficency in food, since that’s a key issue in terms of negotiating leverage with the troika. Second, I’ll look at some features of Syriza as a party of the European left. Finally, I’ll contextualize the Greek Question introduce some comparisons between the Greek’s situation and our own. (I should say that I’m going to rely mostly on Panitch, and not on Fidler, first because, Panitch as a speaker, is easier to transcribe, but more importantly because Panitch speaks from some knowledge gathered on the ground, and that’s the sort of data I respond to.[1])

Greek Organizational Capacity in Food ProductionIn the question and answer period following the two speakers, the issue of “food security” was raised. (Weirdly, the questions were all asked at once, and only answered afterwards.) Den Rest des Beitrags lesen »

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