Paul Krugman: Looters in Loafers

[cal04]

http://www.nytimes.com/2010/04/19/opinion/19krugman.html

Last October, I saw a cartoon by Mike Peters in which a teacher asks a student to create a sentence that uses the verb “sacks,” as in looting and pillaging. The student replies, “Goldman Sachs.”

Sure enough, last week the Securities and Exchange Commission accused the Gucci-loafer guys at Goldman of engaging in what amounts to white-collar looting.

I’m using the term looting in the sense defined by the economists George Akerlof and Paul Romer in a 1993 paper titled “Looting: The Economic Underworld of Bankruptcy for Profit.” That paper, written in the aftermath of the savings-and-loan crisis of the Reagan years, argued that many of the losses in that crisis were the result of deliberate fraud.

(snip)
What we’re now seeing are accusations of a third form of fraud.

We’ve known for some time that Goldman Sachs and other firms marketed mortgage-backed securities even as they sought to make profits by betting that such securities would plunge in value. This practice, however, while arguably reprehensible, wasn’t illegal. But now the S.E.C. is charging that Goldman created and marketed securities that were deliberately designed to fail, so that an important client could make money off that failure. That’s what I would call looting.

[BeFree]

1. You see?

At least with Dems running the show, the bad guys don't get a totally free ride like what happens when the pubbies open the barn doors.

[senseandsensibility]

2. I love Krugman

Thanks for posting.

[AnArmyVeteran]

3. We need Special White Collar Criminal Laws!!! Or 'Loafer Laws'...

Current FEDERAL drug forfeiture laws empower the government to seize all property, bank accounts, automobiles, and essentially all possession of anyone who is caught dealing even a small quantity of drugs.

So why aren't there equivalent laws to strip away all the possessions of white collar criminals like Mark Sanford, Bernard Madoff, Ken Lay and thousands of other white collar criminals just like them?

"We the People" need to FORCE our government to pass forfeiture laws to strip away every dime from any white collar criminal who steals more than $100,000. If a person of average means steals even a small possession they can end up in prison. I even heard of a California man who stole a candy bar, and because it was his '3rd strike' he was given life in prison. There are definitely two sets of laws, one for the rich, and the other for the poor.

If a white collared criminal is guilty of stealing millions then we should be able to seize their mansions, fleets of luxury cars, yatchs, jewelry, bank accounts (in the US and offshore), stocks, bonds, even their family dog. And take EVERYTHING from their corrupt families too! If their families are in on the crime, put them in prison for life too. And if somehow one of these criminals gets out of prison, mandate by law that they can never amass more than $20,000 in a year for the rest of their lives. Currently, white collared criminals usually get token sentences in country club prisons, and then when they are released they simply get all of the money they stole out of their oversees bank accounts. With a $20,000 yearly limit they would find out how the rest of us have to survive.

I am never for excess government intervention, but I am always for equality. I believe even the rich should have to abide by the laws and since they have gifts, abilities and intelligence to know better, they should be forced to submit to a tougher set of penalties.

Call your representative TODAY! Their number is 800-828-0498. Call NOW! Demand this legislation now. This country is the people's country. It was built on the backs of the poor and middle classes. The poor and people with average means have shed a disproportionate amount of blood defending this country. But while the contributions of the poor and middle class have been great, the biggest rewards go to a miniscule segment of our population who are the most greedy and selfish.

[msongs]

4. goldman sachs has a "plant" in the white house now, how comforting is that? nt

[arendt]

5. Link to 1993 Akerlof/Romer "looting" paper n/t

http://www.signallake.com/innovation/Looting1993.pdf