Video: Ethics in Economics

More on this topic here and here.

The SEC: Just When You Think You've Run Out of Outrage...

SEC Commissioner Mary Schapiro

Things were starting to look up for the beleaguered-since-Madoff  U.S. Securities and Exchange Commission (SEC) with its spate of successful prosecutions of high-profile insider trading criminals. But for the U.S. stock market cop it continues to be a case of one step forward, four steps back.

Rolling Stone's Matt Taibbi delivers the latest bombshell:

For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history. 

It goes without saying that no ordinary law-enforcement agency would willingly destroy its own evidence. In fact, when it comes to garden-variety crooks, more and more police agencies are catching criminals with the aid of large and well-maintained databases.

Much has been made in recent months of the government's glaring failure to police Wall Street; to date, federal and state prosecutors have yet to put a single senior Wall Street executive behind bars for any of the many well-documented crimes related to the financial crisis. Indeed, Flynn's accusations dovetail with a recent series of damaging critiques of the SEC made by reporters, watchdog groups and members of Congress, all of which seem to indicate that top federal regulators spend more time lunching, schmoozing and job-interviewing with Wall Street crooks than they do catching them. As one former SEC staffer describes it, the agency is now filled with so many Wall Street hotshots from oft-investigated banks that it has been "infected with the Goldman mindset from within."

Anyone seen the latest Intrade odds on SEC head Mary Schapiro keeping her job?

Full Taibbi article here. 

The Xinjiang 13 and Chinese Appeasement

A disturbing report from Bloomberg about several elite U.S. universities not standing up to Chinese suppression of academic research freedom and free speech:

They call themselves the “Xinjiang 13.” They have been denied permission to enter China, prohibited from flying on a Chinese airline and pressured to adopt China- friendly views. To return to China, two wrote statements disavowing support for the independence movement in Xinjiang province. 

They aren’t exiled Chinese dissidents. They are American scholars from universities, such as Georgetown and Massachusetts Institute of Technology, who have suffered a backlash from China unprecedented in academia since diplomatic relations resumed in 1979. Their offense was co-writing “Xinjiang: China’s Muslim Borderland,” a 484-page paperback published in 2004. 

“I wound up doing the stupidest thing, bringing all of the experts in the field into one room and having the Chinese take us all out,” said Justin Rudelson, a college friend of U.S. Treasury Secretary Timothy Geithner and former senior lecturer at Dartmouth College, who helped enlist contributors to the book and co-wrote one chapter.
The sanctions, which the scholars say were imposed by China’s security services, have hampered careers, personal relationships and American understanding of a large, mineral- rich province where China has suppressed separatist stirrings. Riots and attacks in Xinjiang in July left about 40 people dead.

In the race to embrace China's riches the leaders of elite U.S. academic institutions (who should know better) seem to have forgotten that China is run by a brutal, freedom-suppressing dictatorship. Yet Stanford, the University of Chicago, Duke and NYU have or are in the process of building branch campuses in mainland China. Have many of the U.S.'s best universities forgotten that history has not looked kindly on those who have cozied-up to regimes like China's current one?

The Xinjiang 13 incident also smacks of the same problem in academia which Oscar Winning Director Charles Ferguson documented in his must-watch film Inside Job. Has the academy not learned anything about the importance of professional ethics these past few years?

Full article on the Xinjiang 13 here.

The Flaw Movie Trailer

The Guardian reviews and compares this film to Charle's Ferguson's Academy Award winning Inside Job here.

Inside Job Takes Home Oscar for Best Documentary!

Inside Job Director Charles Ferguson

"Three years after a horrific financial crisis, not a single financial executive has gone to jail — and that's wrong" said Director Charles Ferguson during his Academy Award acceptance speech.

Bravo!

Why Isn't Wall Street in Jail?

Good question!

Weekend reading from Matt Taibbi in Rolling Stone here on why so few prosecutions have been brought by the Obama administration against 'main stream' Wall Street. This has left over-the-top ponzi crook Bernie Madoff as the only high-profile financial villain serving time in the pokey.

Johny Depp in Blow

Speaking of Madoff, fellow ponzi-schemer 'Sir' Allen Stanford was recently moved into Madoff's digs at Butner prison. Will the two get a chance to compare notes?

Docudrama filmmakers: there may be a fun movie here. I'm imagining a screenplay set in part at Butner, perhaps featuring Stanford and Madoff as cellmates, with flashbacks to their pre-arrest glory days ala the stylized cocaine caper, Blow.

Inside Job Nominated for Oscar!

Full list of Academy Award Oscar nominees here.

Review Roundup: Inside Job (The Movie)

Charles Ferguson's excellent documentary, Inside Job, the story of the people behind the recent financial crisis, is coming to the U.K.

If you have not already had the chance to see it I cannot recommend this film highly enough. It pulls off the not so easy feat of both clearly explaining the financial crisis in sufficient detail while managing to keep your attention throughout.

(Update: Inside Job is an Oscar nominee for Best Documentary. The below list will be updated regularly with additional reviews and please feel free to post links in the comments)

Here's a roundup of some of the film's reviews which I'll try and regularly update as more reviews come in:

Guardian
Felix Salmon
Naked Capitalism / Yves Smith

INET

New Yorker
The New Republic
LA Times
Rotten Tomatoes

And some additional reviews from Yahoo Movies:

Critics Reviews Average Grade:   A-
Source	Brief Review	Grade*
Boston Globe Wesley Morris	"The movie succeeds at upsetting you not by losing its cool, the way so many similar films do, but by slow-cooking its argument." more...	A
Chicago Sun-Times Roger Ebert	"...an angry, well-argued documentary about how the American financial industry set out deliberately to defraud the ordinary American investor." more...	A
Filmcritic.com Chris Cabin	"Like No End in Sight, the key to Inside Job's power is how clearly Ferguson maps out each step towards disaster..." more...	B
New York Times A. O. Scott	"...meticulous and infuriating..."more...	A-

Video: Interview with Director of 'Inside Job' on Corruption in Academic Economics

The below video begins with the trailer for the documentary film Inside Job and then moves to an interview where Director Charles Ferguson discusses the film, the current political situation, and the state of the academic economic world, which he also previously wrote about here in the Chronicle of Higher Education.



Here also is a link to Ferguson's now infamous interview with former Federal Reserve Governor Fred Mishkin and his "Financial Stability of Iceland" report.

The Three Way Intersection: Ethics Problems Atop the Economics Academy?

Larry Summers and Secretary Geithner

For anyone interested in the subject of ethics, conflict of interest, and disclosure of financial relationships by academic economists, here is a great read from Nancy Folbre, an economics professor at the University of Massachusetts Amherst.

A related article which I highly recommend is Inside Job filmmaker Charles Ferguson's scathing critique of the academic economics profession (and Larry Summers in particular). From the article:

Summers is unique but not alone. By now we are all familiar with the role of lobbying and campaign contributions, and with the revolving door between industry and government. What few Americans realize is that the revolving door is now a three-way intersection. Summers's career is the result of an extraordinary and underappreciated scandal in American society: the convergence of academic economics, Wall Street, and political power. 

In my film you will see many famous economists looking very uncomfortable when confronted with their financial-sector activities; others appear only on archival video, because they declined to be interviewed. You'll hear from:

Martin Feldstein, a Harvard professor, a major architect of deregulation in the Reagan administration, president for 30 years of the National Bureau of Economic Research, and for 20 years on the boards of directors of both AIG, which paid him more than $6-million, and AIG Financial Products, whose derivatives deals destroyed the company. Feldstein has written several hundred papers, on many subjects; none of them address the dangers of unregulated financial derivatives or financial-industry compensation.

Glenn Hubbard, chairman of the Council of Economic Advisers in the first George W. Bush administration, dean of Columbia Business School, adviser to many financial firms, on the board of Metropolitan Life ($250,000 per year), and formerly on the board of Capmark, a major commercial mortgage lender, from which he resigned shortly before its bankruptcy, in 2009. In 2004, Hubbard wrote a paper with William C. Dudley, then chief economist of Goldman Sachs, praising securitization and derivatives as improving the stability of both financial markets and the wider economy.

Frederic Mishkin, a professor at the Columbia Business School, and a member of the Federal Reserve Board from 2006 to 2008. He was paid $124,000 by the Icelandic Chamber of Commerce to write a paper praising its regulatory and banking systems, two years before the Icelandic banks' Ponzi scheme collapsed, causing $100-billion in losses. His 2006 federal financial-disclosure form listed his net worth as $6-million to $17-million.

Laura Tyson, a professor at Berkeley, director of the National Economic Council in the Clinton administration, and also on the Board of Directors of Morgan Stanley, which pays her $350,000 per year.

Richard Portes, a professor at London Business School and founding director of the British Centre for Economic Policy Research, paid by the Icelandic Chamber of Commerce to write a report praising Iceland's financial system in 2007, only one year before it collapsed.

And John Campbell, chairman of Harvard's economics department, who finds it very difficult to explain why conflicts of interest in economics should not concern us.

Education Site: Others interested in joining the study of economics should check out Online-MBA.

Video: Inside Job Director Charles Ferguson on Charlie Rose

Click here for the 30 minute interview where Inside Job Director, Charles Ferguson, discusses his documentary on Wall Street and the financial crisis, Secretary Hank Paulson's motivations behind allowing Lehman Brothers to fail, how "Obama had a once in a century opportunity and blew it", and other topics.

Neither Ferguson or Rose appeared very comfortable during the interview, perhaps due to the fact that Rose is buddy-buddy with prominent New York based bankers such as Steven Rattner, Felix Rohatyn, etc. Kudos to Rose for perhaps risking some of his Wall Street cocktail party invitations by bringing uber-Wall Street critic Ferguson on his show.

Unfortunately, I have not yet been able to see his film. Apparently Ferguson was encouraged by Sony Pictures to cut some of the more embarrassing footage, such as this stunning clip of former Fed Governor Fred Mishkin speaking about his infamous report titled "Financial Stability in Iceland". Sony's and Ferguson's concern was that the film's central message -- that the financial crisis was a crime that should be prosecuted (which has largely failed to happen to date) -- would be overshadowed the utter destruction of Mishkin's, etc. other's credibility.

More from Charles Ferguson on the "subversion of economics", which includes a scathing critique of Larry Summers, and on "Obama's Depressingly Rational Decision to Give In to Wall Street".

Charles Ferguson on "Obama's Depressingly Rational Decision to Give In to Wall Street"

Academy Award nominated film director Charles Ferguson, who's documentary Inside Job about the financial crisis is currently playing in theaters, has penned an article on President Obama and Wall Street.

When will we stop indulging the fantasy that 'Too Big to Fail' banks are private enterprises?

And if you haven't already seen Ferguson's interview of former Fed Governor Fred Mishkin on his infamous "Financial Stability in Iceland" report, you can check it out here.

Pay for Say? Outrageous Clip of Fed Governor Mishkin on Iceland's "Financial Stability"

Inside Job, a new documentary set for U.S. release on October 8, is Academy Award nominated Director Charles Ferguson's film about the financial crisis.

I haven't seen the film yet, but it will be worth checking out if the rest of it is anything like the following clip of Columbia University Professor and former Federal Reserve Governor Frederic Mishkin talking about his infamous Iceland report:

Herbertsson (left), Mishkin (right), unknown person (middle)

In the clip Mishkin responds to questions about a 2006 report he authored titled 'Financial Stability in Iceland'. The report was co-authored with Icelander Economist Tryggvi Thor Herbertsson (pictured right hunting with Mishkin in Iceland). Not long after Mishkin's and Herbertsson's report was published Iceland's financial and banking system collapsed.

Mishkin failed to disclose in his report that he was paid $124,000 by the Icelandic Chamber of Commerce to write (if in fact he wrote any of it) a stunningly inaccurate testament to Iceland's financial soundness. Mishkin also later renamed the report on his resume to 'Financial Instability in Iceland', an error he chalks up in the Ferguson interview as a "typo".

Here is the full trailer for Inside Job:

Update: Congratulations to Director Charles Ferguson for Inside Job winning the Academy Award for Best Documentary.