defending the right to innovate
Monopoly corrupts. Absolute monopoly corrupts absolutely.
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Check it out on the Borowitz Report
Few people I know watch Bill Moyer's Journal. His broadcast last week was really thought provoking. He first interviewed Professor William K. Black, a one time bank regulator link here and then FCC commissioner Michael J Copps link here, each with videos followed by transcripts. Both were thought provoking, as is usually the case. Black slams all the regulators for failing to stop the financial community which either caused the financial disaster or greatly worsened it. One quote that will leap out at you, "The Fed had unique authority. And it had it since 1994 to regulate every single mortgage lender in America." Which implies it still does. I haven't been able to confirm that but elsewhere Black notes that with the end of Glass-Steagall, the authorities were indicating their disinclination to regulate and had concluded that all was for the best in unregulated markets.
Copps never mentions the Citizens United case by which the Supreme Court took away the FCC's authority to regulate the internet because the Commission had decided years back that the internet was entertainment, not communications (probably in cahoots with the companies) and the FCC did not have authority to regulate entertainment. The simple solution is to go back to the old definition of the internet as communication so that the FCC can reclaim its authority. But like so much involving making the internet more competitive, it is strongly opposed by most of the industry.
The broadcast next week will be Moyer's last. He says he wants to retire and do a few things with the rest of his life. PBS is supposed to be finding a replacement. We will see with what success.
Simon Johnson writes that unless we shrink the big banks drastically, the banking system will become "Way Too Big To Save" link here. Interesting counterpoint to "Too big to fail." We are at the point where we can't afford to bail the system out again, incredible as that may seem. The issue is that the banking system is no longer just that of the US and if we save one bank, we will have to save all the others as well--and we won't have the resources to do it.
Johnson, who was International Monetary Fund's Economic Counselor (chief economist) and Director of its Research Department and now teaches at the MIT Sloan School of Management, writes a blog and a constant flow of papers, and serves on the Congressional Budget Office's Panel of Economic Advisers and as a senior fellow at the Peterson Institute for International Economics.
The steady drip of details about the financial crisis continues. PBS News Hour has Paul Solman interviewing an ex-bank regulator, William Black who now teaches at the University of Missouri link here. Points Black makes that are worth thinking about:
*Following the S & L collapse, more than 1000 executive insiders were convicted and jailed for fraud. No one has been charged in the current mess, much less convicted or jailed.
*The financial system began to crumble in 2007, when the FBI was already aware that mortgage fraud was rampant and was perpetrated because it was in the interest of the banks to make more and more loans.
*The banks got out of having to mark their bad loans to market by pressuring the Congress to tell the Financial Accounting Standards Board to change the rules or it would be put out of business. Currently, the do not have to recognize losses until the loans are taken off the bank's books.
*Fitch, the accounting firm, did a study of mortgage loans which concluded that the vast bulk of the mortgages were fraudulent, and was easily detected.
*The 19 largest banks are insolvent if their assets were marked to market. They can get away with it and pay enormous salaries and bonuses for now--but that will end with the next financial crisis.
Auction rate securities are again in the news, and they are still garbage, but some smell worse than others link here. Some actually have modest value but new ones are not being sold. What went wrong?
The first problem was that no one bothered to look at the underlying securities. When prospectuses were sought long after the market crashed, they were hard to find. But why bother, as the derivatives were repriced and could be rolled over in monthly auctions. They came with high ratings from S & P or Moody's or Fitch and they were apparently completely liquid but paid better than other short term securities.
Other problems were, according the New York Times:
"ÂThey were based on the assumption, endorsed by the bond rating agencies, that insurance regulators were requiring life insurers to retain too much capital.
ÂTherefore, investors could take on a large part of the risk of the insurance with complete safety. That would be only the "excess" part, as calculated by the insurance company
ÂThe securities were sold as virtually risk-free cash equivalents, enabling the investor to get out, at par, once a month. Supposedly sophisticated investors sank more than $30 billion into them.
ÂThe securities were explained in complex prospectuses that almost nobody even obtained, let alone read.
ÂThey were guaranteed by bond insurers, like Ambac, further persuading people there was nothing to worry about."
Read the article for all the ugly details on this colossal fraud, arising from no one paying attention and no one taking responsibility. It implicitly makes the case for tough regulation. But the news doesn't hold out great hope we will get it.
GRETCHEN MORGENSON and LOUISE STORY write in the New York Times today a long story about how Goldman Sachs raped AIG and in the process, got us tax payers, all of the unemployed in America, and all of the savers who received low interest rates because of the need to stimulate the economy link here. It didn't cause all of the problem, but it lit the match that started the conflagration, forced the bailout of AIG, and then made out in the wreckage. Building on its connections and the boldness of its gunslingers, it flourished and now it seems to be in a position to hold off even the most minor reforms that have been put forth by the administration.
Read it. The story is too long to repeat here to get the flavor of what went on. There are lots of details that will emerge in the future, but this reporting tells us how bad it was and hints at what is to come.
I want to end with this Dilbert which is a kind of visual epitaph on where we are today.
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Questions and Challenges For Defenders of the Current Copyright Regime It is one of the finest websites I have stumbled upon. It is not only well developed, but has good
at 06/19/2018 10:36 PM by Michael Jones
Killing people with patents I'm not really commenting the post, but rather asking if this blog is going to make a comeback
at 01/09/2018 03:46 AM by Anonymous
The right to rub smooth using a hardened steel tool with ridges Finally got around to looking at the comments, sorry for delay... Replying to Stephan: I'm sorry
at 05/08/2015 08:35 AM by Dan Dobkin
Let's See: Pallas, Pan, Patents, Persephone, Perses, Poseidon, Prometheus... Seems like a kinda bizarre proposal to me. We just need to abolish the patent system, not replace
at 04/10/2015 10:44 AM by Stephan Kinsella
The right to rub smooth using a hardened steel tool with ridges I'm a bit confused by this--even if "hired to invent" went away, that would just change the default
at 04/10/2015 10:34 AM by Stephan Kinsella
Do we need a law? @ Alexander Baker: So basically, if I copy parts of 'Titus Andronicus' to a webpage without
at 01/08/2015 08:58 PM by Sheogorath
Do we need a law? The issue is whether the crime is punished not who punishes it. If somebody robs our house we do
at 11/17/2014 04:48 AM by David K. Levine
Do we need a law? 1. Plagiarism most certainly is illegal, it is called "copyright infringement". One very famous
at 10/29/2014 10:49 AM by Alexander Baker
Yet another proof of the inutility of copyright. The 9/11 Commission report cost $15,000,000 to produce, not counting the salaries of the authors.
at 09/20/2014 03:19 PM by Alexander Baker
WKRP In Cincinnati - Requiem For A Masterpiece P.S. The link to Amazon's WKRP product page:
at 06/28/2014 10:03 AM by Doris
WKRP In Cincinnati - Requiem For A Masterpiece Hopefully some very good news. Shout! Factory is releasing the entire series of WKRP in Cincinnati,
at 06/28/2014 10:00 AM by Doris
What's copywritable? Go fish in court. @ Anonymous: You misunderstood my intent. I was actually trying to point out a huge but basic
at 05/05/2014 01:03 PM by Sheogorath
Rights Violations Aren't the Only Bads I hear that nonsense from pro-IP people all the
at 04/07/2014 04:47 AM by Dan McCracken
Intellectual Property Fosters Corporate Concentration Yeah, I see the discouragement of working on a patented device all the time. Great examples
at 01/13/2014 06:13 AM by Anonymous
Music without copyright Hundreds of businessmen are looking for premium quality article distribution services that can be
at 11/28/2013 05:03 PM by Stephanie Smith
at 11/28/2013 09:23 AM by Anonymous
at 11/28/2013 09:22 AM by Anonymous
Patent Lawyers Who Don't Toe the Line Should Be Punished! Moreover "the single most destructive force to innovation is patents". We'd like to unite with you
at 11/24/2013 10:48 AM by SpaceCorp Technologies
at 11/20/2013 03:18 PM by Anonymous
Does the decline in total factor productivity explain the drop in innovation? So, if our patent system was "broken," TFP of durable goods should have dropped. Conversely, since
at 11/02/2013 08:09 PM by Anonymous