It's an open secret that many of America's largest banks are "zombies" - institutions that are able to carry on despite having a negative net worth, thanks to "a combination of implicit and explicit government credit support."
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"Masters of Illusion: Bank and Regulatory Accounting for Losses in Distressed Banks," is a new @INETeconomics paper by Boston College finance prof Edward J Kane, revealing collusion between bank accountants and financial regulators to conceal losses.
Bank accountants want to help their employers stay solvent, while regulators don't want the public to spook and stampede, which would cause a run on the bank. All this is laid out in a layperson-friendly article accompanying the paper
Taken together, accountants and regulators have a "disposition toward supervisory informational deception and regulatory forbearance" and during crises, this comes to the fore, allowing zombie banks to borrow even more money under the expectation that they will be bailed out.
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The degree to which banks are guaranteed to be solvent regardless of recklessness and deception means that any time you see an insider running away from a bank, you should assume that things are REALLY bad.
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Kane: "The processes through which bankers extract benefits from the safety net closely resemble those of embezzlement and the rewards bankers garner usually rise to the level of grand larceny...
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"The difference between street crime and safety-net abuse lies mainly in the class and clout of the criminal and the subtlety of the crime."
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And as ever, a chart tells quite a story: the Big Four accounting firms failed 808 audits between 2009-17, and faced only 53 enforcement actions.
If AI has a future (a big if), it will have to be economically viable. An industry can't spend 1,700% more on Nvidia chips than it earns indefinitely - not even with Nvidia being a principle investor in its largest customers:
I'm touring my new, nationally bestselling novel *The Bezzle*! Catch me in THIS SATURDAY (Apr 27) in MARIN COUNTY, Winnipeg (May 2), Calgary (May 3), Vancouver (May 4), and beyond!
Combine Angelou's "When someone shows you who they are, believe them" with the truism that in politics, "every accusation is a confession" and you get: "Every time someone accuses you of a vice, they're showing you who they are and you should believe them."
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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on , my surveillance-free, ad-free, tracker-free blog:
Let's talk about some of those accusations. Remember the moral panic over the CARES Act covid stimulus checks? Hyperventilating mouthpieces for the ruling class were on every cable network, complaining that "no one wants to work anymore."
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Corporate crime is underpoliced and underprosecuted. We just choose not to do anything about it. US corporations commit crimes at 20X the rate of humans, and their crimes are far worse than any human crime, but they are almost never prosecuted:
We can't even bear to utter the *words* "corporate crime": instead, we deploy a whole raft of euphemisms like "risk and compliance," and that ole fave, the trusty "white-collar crime":
Using Amazon, or Twitter, or Facebook, or Google, or Doordash, or Uber doesn't make you lazy. Platform capitalism isn't enshittifying because you made the wrong shopping choices.
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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on , my surveillance-free, ad-free, tracker-free blog:
Remember, the reason these corporations were able to capture such substantial market-share is that the capital markets saw them as a bet that they could lose money for years, drive out competition, capture their markets.
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