NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING

  • Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • Davos Still Pushes Failed Global Vision


    Bill Black reports from Davos that the Global Competitiveness Report pushes countries towards even more deregulation - policies that helped trigger the crisis -   January 25, 2013
    Members don't see ads. If you are a member, and you're seeing this appeal, click here


    Audio

    Share to Facebook Share to Twitter




    I support TRNN because it is the closest expression of the ideal of a free press I have seen. - Daniel
    Log in and tell us why you support TRNN

    Bio

    William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.

    Transcript

    Davos Still Pushes Failed Global VisionPAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore. And welcome to this week's edition of The Black Financial and Fraud Report with Bill Black.

    Bill's an associate professor of economics and law at the University of Missouri–Kansas City. He's a white-collar criminologist, a former financial regulator, and the author of the book The Best Way to Rob a Bank Is to Own One. And Bill joins us today from Davos, Switzerland.

    What are you doing in Davos, Bill?

    BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: I'm part of the Greenpeace counter-Davos event.

    So Davos has this annual meeting, the World Economic Forum, that brings the wealthiest corporate heads and some key politicians out as well, and they work together and purportedly make the world better—and some people are rather dubious about that. Greenpeace, as a counter-Davos event, gives the Public Eye Award to entities that people vote as the worst corporate entities in the world during that relevant time period. And I was brought out in particular for the award to Goldman Sachs, which focused on Goldman Sachs helping Greece lie about the state of its debt so that it could get into the euro and, you know, the disasters that followed from all of that.

    But I was asked to talk about more why we have so much fraud, why we have these financial crises, and what role this World Economic Forum plays in actually making the world a worse place instead of what they purport to do, of course, which is make it a better place.

    JAY: Yeah. So give us a sense of what you said there.

    BLACK: So I researched what in God's name the World Economic Forum actually does. And it has two primary products. One is this global competitiveness index, and the second is a global risk report. And I discovered that this competitiveness index is really a glorified expanded version of the Washington consensus.

    And the Washington consensus, to review a bit on that, was what the IMF and the World Bank and the Bush and Reagan administrations and such agreed should be imposed on Latin America in the context of their debt crisis to ensure that we got repaid, our creditors got repaid. And the central policy of all of that was austerity. And no surprise, the World Economic Forum has been big on pushing austerity in the Eurozone. And we've discussed a number of times how that has led to pushing the entire Eurozone into recession in places like Greece, Spain, and Italy, into Great Depression levels of unemployment.

    But it turns out that Davos does these indicators, these supposed competitiveness indicators, that also pick up a bunch of the things in the Washington consensus. And in particular they push for deregulation and they push for tying compensation of executives to supposed performance. And it turns out both of those things have been central to creating the criminogenic environments that have produced our crises. So instead of making things better, they've actually made things much worse. And it's particularly nasty because the whole purpose of this competitive index is so you can, whatever country you're in, take the index score for your country and go to your national legislature and say, we need to weaken regulation, we need to give—make it easier to fire employees, because we're not very competitive compared to whatever neighboring nations are or [crosstalk]

    JAY: Right. So, to put this in sports terms, this is like international standings of countries in the race to the bottom.

    BLACK: Exactly. Designed by business for business to make it easy for business leaders to become ever wealthier at the expense of everyone else. Now, I don't think they intend to make the world a better place for crime, but that is the unintended consequence of what they're doing—and, of course, in some cases it's quite intended by some of the business people that are doing it.

    So it also means that this global competitiveness index is ridiculously embarrassing. So I looked at what they rated, places like Ireland, Iceland, Spain, the United Kingdom, in terms of the soundness of their banking system. It has a separate scale for that. And the way they create this is by just taking surveys of business leaders, which is, of course, not a very good scientific approach in any event. But who was top of the charts back in 2006, 2007? Well, none other than Ireland, the United Kingdom, and Spain, and Iceland not all that far behind. And guess who is today absolute rock-bottom the worst country in the world at 144th ranking? That would be Ireland, the one they claim was the third-best banking system in the world at a time when the Irish banks were actually deeply insolvent. Now they say, oops, sorry, it's really the worst banking system in the world. And the United Kingdom, which they said was the absolute best banking system in the world, well, almost every large bank in England was insolvent. Well, they're now 97th in the world.

    JAY: Right. When you say that this encourages criminal activity, this is because if you tie executive salary compensation to performance, it encourages phony performance. As long as you can make it look on your books like you've made money, you get more money. It has no bearing on how sustainable or even how real it is.

    BLACK: That's correct. And it's another weakness of their survey mechanism. You know, it just says something like, do you, your country, tie pay to performance. Well, yeah, supposedly, but in a way that actually encourages fraud because it's heavily based on short-term reported results, which are easy to pervert through accounting fraud. And that's exactly what it meant, and that's exactly why it got those rankings so bad. I mean, the Irish banks, the United Kingdom banks, the Spanish banks, the Icelandic banks were all reporting record profits so that they could goose their bonuses to their executives under their performance plans.

    And so the theme of the World Economic Forum is, you know, making sure the corporation does well for all the stakeholders. But the reality is that it creates a criminogenic environment in which control frauds flourish. And when control frauds operate, they put a stake in the stakeholder.

    JAY: Now, is there any sense do you get from the—I don't know if you had time to spend time talking to people in the official Davos, but do you get any sense that there's a recognition that this great neoliberal vision they've been promoting—obviously for some of their stakeholders it worked very well, 'cause it made them very rich. On the other hand, the global economy's a complete basket case.

    BLACK: No. They, in fact, as recently as 2012 did a publication entitled Rethinking the Financial System. They said actually not a whole lot of need to rethink it, because while fraud is extremely negative when it happens, it's also extremely rare, and you can simply get rid of it through mechanisms like having audits and good governance. And, of course, they have indexesthat purport to do audit and good governance, and no surprise, they said again that places like Ireland and the United Kingdom and Iceland and Spain had superb controls. And there are simply no success stories where—.

    JAY: And I guess it also works well when the United States, for example, can say what happened simply isn't fraud, even though I don't know what else it would be, 'cause it meets every definition, one would think, of fraud in terms of what Goldman and others like them did.

    BLACK: Absolutely. In fact, the government, through two different agencies, the federal housing finance administration and the Securities and Exchange Commission, has put in former legal pleadings that Goldman Sachs did engage in acts that constituted fraud against both Fannie Mae and Freddie Mac and their own customers.

    JAY: Thanks very much for joining us, Bill.

    BLACK: Thank you.

    JAY: And thank you for joining us on The Real News Network.

    End

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Comments

    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

    Comments


    Latest Stories


    University Sit-In Targets World's Largest Private Coal Company
    The Modern History of Venezuela and the Need for a Post-Oil Economy - Edgardo Lander on RAI (6/9)
    Can Johns Hopkins Afford to Pay A Living Wage? (1/2)
    One Percent of Environmentalists Killings Lead to Convictions
    Investigation Finds Former Ukraine President Not Responsible For Sniper Attack on Protestors
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Ukraine Transitional Gov't Moves Militarily To Reclaim Seized Buildings
    IPCC Report Flawed By Narrow Focus on Carbon Emissions
    The Modern History of Venezuela: The Bolivarian Revolution - Edgardo Lander on Reality Asserts Itself (5/9)
    Obama Signs Directives to Reduce the Gender Wage Gap
    Eastern Ukraine Lacks Political Representation in Kiev
    Demystifying the Role of Mitigation in the Most Recent IPCC Report
    Hypersurveillance State Won't Prevent Another Boston Marathon Bombing
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Univ. of Maine Faculty Reinstated After Students Protest Against Cuts
    The Modern History of Venezuela from 1908 to 1973 - Edgardo Lander on Reality Asserts Itself (2/9)
    IMF Will Address Global Inequality, Says Managing Director Christine Lagarde
    Raising Big Banks' Leverage Ratio Good, But Not Nearly Enough
    TRNN Replay: Austerity Road to 19th Century
    Has Palestinian Maneuvering Revived Peace Talks?
    Late Jackson Mayor Lumumba's Son Wins Primary to Replace His Father, Runoff Election Ahead
    Quebecers Reject PQ and Elect a Liberal Government Representing Big Business
    TRNN Debate: Decriminalization vs. Legalization
    The Beginning of the Chavez Era - Edgardo Lander on Reality Asserts Itself (4/9)
    "Off With His Head": Court Upholds Obama's Power to Kill
    Workers at Nation's Top Hospital Strike For Fair Wages
    From Exile to Radicalization in Venezuela - Edgardo Lander on Reality Asserts Itself (1/9)
    Rwanda 20 Years Later: Genocide, Western Plunder of Congo, and President Kagame
    Ukrainian Protesters in the East Demand More Autonomy From Kiev Government
    Hunger Strikers Demand President Obama Halt His Record 2 Million Deportations
    Indian Parliamentary Elections - A Primer With Vijay Prashad
    West Looks to Carve Up Ukraine & Privatize Industries Held by Kleptocrats
    Where Are Israeli-Palestinian Peace Negotiations Headed?
    The Multiple Kingdoms of Saudi Arabia (5/5)
    Do the Afghan Presidential Elections Signify Progress?
    Republican Presidential Hopefuls Pay Homage to Billionaire Casino Tycoon Sheldon Adelson
    Will Extremist Lieberman Become Israel's Next Prime Minister?
    Why do the Saudis Want the US to Attack Iran? (4/5)
    Immigrant Advocates and Families Tell President Obama 'Not One More'
    Elections, Pipelines, and Protests - The Canada Panel
    Chris Hedges on "Israel's War on American Universities"
    Baltimore Residents Decry Lack of Affordable Housing
    Yellen Talks the Talk But Will She Walk the Walk?
    Hopkins Hospital Workers Speak Out against "Poverty Wages"
    Will Venezuela's New Floating Exchange Rate Curb Inflation?
    The European Central Bank's War on Wages is Pushing Europe's Economy to the Brink
    Supreme Court Decision Opens Floodgates for More Campaign Cash
    Charles Keating, the Financier Behind the Savings and Loan Scandal, Dies at 90
    Saudi Arabia and the al-Qaeda Monster (3/5)
    Maryland Residents Voice Opposition to Natural Gas Fracking Export Facility
    Supreme Court Ruling Gives Wealthy Individuals More Influence Over Elections
    What are the Saudis Afraid Of? - Madawi Al-Rasheed (2/5)
    Baltimore's MICA Adjunct Professors Set to Vote on Unionization
    Boycott of Israel Moving to Next Level?
    Hypocrisy Dressed Up as "Realism" Justifies American Alliance with Saudi Dictatorship
    Immigration Reform in the Shadows of Cesar Chavez's Legacy
    Leaked Senate Report Shows Use of Torture As "Ineffective"
    UN Report Says Climate Change Will Threaten Food Production Worldwide
    The Hypocrisy of US Calling for Enforcement of International Law
    How the Ecuadorian Economy Grew in a Global Recession
    'Shadows of Liberty' Trailer
    Kristina Borjesson on Why CBS Shut Down Her investigation into Flight 800 (2/8)
    Glen Ford on Racism in the American Media (3/8)
    Paul Jay on What Drives Corporate Media and What Drive The Real News (4/8)
    Creating a New Media Paradigm After Citizens United (5/8)
    Should The Left Engage with the Mainstream Media? (6/8)
    What Is the Financial Backing For The Real News? (7/8)
    Standing up to Character Assassination (8/8)
    Oligarchs, Fascists and the People's Protest in Ukraine
    TRNN Debate: Is Obamacare In the Interest of Workers?
    Too-Big-To-Fail Advantage Remains Intact For Big Banks
    Obama and the Saudi Agenda
    TRNN Replay: Investigating the Saudi Government's 9/11 Connection and the Path to Disilliusionment - Sen. Graham on Reality Asserts Itself pt 1
    The Iraq War's Real Legacy
    Petitions with 100,000+ Signatures Call for Snowden's Passport to be Reinstated
    We Need to Harness People Power - Andy Shallal on Reality Asserts Itself (4/4)
    BC Pipeline Fight and Quebec Elections - The Canada Panel
    Jonathan Schell - 1943-2014: Board Member of TRNN on Why We Need The Real News
    Teachers on Strike from the UK to Argentina
    Connecticut Poised to Become First State with $10.10 Minimum Wage
    Oil Spill Threatens Wildlife and Local Economy
    DC School Test Scores Up, But Poor Black Kids Are Doing Worse - Andy Shallal on RAI (3/4)
    Obama's Proposal To End NSA Bulk Data Collection Won't Protect Privacy
    How Google, Apple & The Biggest Tech Companies Colluded to Fix Workers' Wages
    An American Should be One that Questions Their Government - Andy Shallal on RAI (2/4)
    What's Driving Putin & Obama's Posturing on Ukraine?
    Hundreds of Students & Faculty Occupy College Campus to Fight Cuts to Public Higher Ed
    Due Process 'Impossible' In Harsh Death Sentencing Of Over 500 Muslim Brotherhood Members
    Has Anglo-American Capitalism Run Out of Steam?
    Being the "Other" in America - Andy Shallal on Reality Asserts Itself (1/4)
    TRNN Debate: Should Baltimore 'Ban The Box'?
    How Fallujah Became the Iraqi Government's New Battleground
    Why I Decided to Blow the Whistle on the NSA
    NASA Climate Predictions Show Serious Threat To Humanity
    Professor Who Teaches Israel-Palestine Conflict Accuses College of Violating His Academic Freedom
    CIA and NSA Wrongdoing Requires Independent Investigation, Says Former Church Committee Staff
    Are Tuition Breaks Enough To Combat High Student Debt And Low Graduation Rates?
    Industries Across the U.S. Are Stealing Wages From Their Lowest Paid Workers
    Who In Ukraine Will Benefit From An IMF Bailout?
    NSA Recording All International Calls From U.S.
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (2/2)
    BP Gets Green Light to Drill in Gulf, But Has Safety Improved?
    Residents Still Not Drinking Tap Water Two Months After West Virginia Spill (1/2)
    Libya's Descent Into Turmoil Three Years After NATO Intervention
    From Pipelines to Peladeau - Canadian Report
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (1/2)
    Congressional Progressive Caucus Budget Strikes Back Against Austerity
    Libya Three Years Later - Chaos and Partition
    Why Was Gaddafi Overthrown?
    Should Ukraine and West Accept De Facto Crimea Joining Russia? (2/2)
    Tony Benn Saw Socialism as the Culmination of Democratization
    Why Didn't Bush/Cheney Attack Iran and Can Obama Make and Sell a Deal? - Gareth Porter on Reality Asserts Itself (3/3)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi? (2/2)
    Crimea Referendum: Self Determination or Big Power Manipulation? (1/2)
    Sen. Graham: President Must Side with Openness About CIA and 9/11
    Manufacturing a Narrative for War - Gareth Porter on Reality Asserts Itself (2/3)
    Protesters Hit the Streets of Brooklyn to Demand $15 Minimum Wage
    Hammer: 'Moral Bankruptcy' Behind Massive GM Recall
    White House Withholds Thousands of Documents from Senate CIA Probe
    I Grew Up Believing in Time Magazine's Version of America - Gareth Porter on RAI (1/3)
    Western European Banks Vulnerable to Ukrainian Sovereign Debt Crisis
    TRNN Debate: What's Driving Inflation in Venezuela? (2/2)
    CIA vs. Senate: Who Is Obama Protecting?
    Will Tipped Workers Get Excluded Again From Minimum Wage Hike?
    TRNN Debate: What's Driving Inflation in Venezuela? (1/2)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi?(1/2)
    TRNN Replay: A Look at Who's Poised to Become No.2 at the Fed
    How Right-Wing Nationalism Rose to Influence in Ukraine (2/2)
    Netanyahu Attacks Boycott As Campaign Enters New Phase
    Moving Towards a Police State - Michael Ratner on Reality Asserts Itself (7/7)
    Fighting Reagan's Secret, Illegal Wars - Michael Ratner on Reality Asserts Itself (6/7)
    Puerto Rican Independence Movement and Cuba Further Radicalized Me - Michael Ratner on RAI (5/7)
    The Butcher of Attica - Michael Ratner on Reality Asserts Itself (4/7)
    MLK and a Radicalizing Moment in American History - Michael Ratner on Reality Asserts Itself (3/7)

    RealNewsNetwork.com, Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting