[...]Accounting fraud « Jim’s Blog[...]…

[...]Accounting fraud « Jim’s Blog[...]…

[...]Accounting fraud « Jim’s Blog[...]…

I think that Frank would come around if he appreciated the risk he is running of ending up ruling over smoking ruins.

There is a lot of ruin in a nation. I estimate that the US financial system will not become a smoking ruin until after 2016 at the earliest, more likely around 2020, 2025. Politicians just do not pay much attention to things that are that far out.

Leftists are really childish in their understanding of capitalism. It just doesn’t naturally occur to them that (1) the job that honest accountants, actuaries, etc do is actually important, … they don’t really get that they are destroying anything when they corrupt critical trusted-third-party type institutions.

You are right that Barney Frank’s ideology blinds him to the destructiveness of his activities. Newt’s ideology allows him to see the destruction reasonably clearly, as was apparent in the debates over Fannie and Freddie in – but because Newt is a politician he does not care all that much.

Before this disaster, republicans spoke up that Fannie and Freddie’s policies were leading us to this disaster. Democrats jumped on them, pointing out, quite truthfully, that republicans were threatening free money for major voting blocks. Republicans ran like rabbits. Saving the financial system from ruin, or even mentioning too loudly that it was heading for ruin, was not compassionate enough.

Leftists are really childish in their understanding of capitalism. It just doesn’t naturally occur to them that (1) the job that honest accountants, actuaries, etc do is actually important, (2) that there are honest accountants, actuaries, etc, and (3) left to its own devices, the market will at least tend to reward firms employing honest accountants, actuaries, etc. Lefties have the crazy belief that capitalism is all build on lies, so they don’t really get that they are destroying anything when they corrupt critical trusted-third-party type institutions.

punish the employees of the ratings agencies — like put the boards of directors and corporate officers en masse in federal prison.

The crisis of 2007 was the culmination of a run on the repo market that began around 2005 November. And the run on the repo market was a reflection of the realization that AAA ratings represented political correctness and connections, rather than solvency, that the ratings were fraudulent, that the rating agencies were behaving feloniously. But the ratings were for the most part fraudulent in an effort to please the politicians. The politicians do not want truthful ratings, they want ratings that reflect political influence, but they want finance markets to act as if the ratings were real. Thus the repo market has been “stabilized”, which is to say, funded, bribed, and coerced to act as if ratings are real.

Plus, Barney Frank can bash capitalism and big business as he crushes the ratings agencies. Win win for him.

Not so. He wants to punish honest businessmen, not corrupt criminals. Corrupt criminals are useful. If he were to punish corrupt and criminal big business, then the next time he asks them to be corrupt and criminal, they might not cooperate.

I think the big problem is a lack of education and imagination on the part of the politicians. Ruling over smoking ruins is not that appealing. Plus, Barney Frank can bash capitalism and big business as he crushes the ratings agencies. Win win for him.