Another Nobel Economist Says We Have to Prosecute Fraud Or Else the Economy Won't Recover

As economists such as William Black and James Galbraith have repeatedly said, we cannot solve the economic crisis unless we throw the criminals who committed fraud in jail.

And Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals - and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. See this, this and this.

Nobel prize winning economist Joseph Stiglitz just agreed. As Stiglitz told Yahoo's Daily Finance on October 20th:

This is a really important point to understand from the point of view of our society. The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that's really the problem that's going on.

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Guest Post: Destined to Fail – Magical Thinking at the G20

Submitted by Chris Martenson

Destined to Fail – Magical Thinking at the G20

The G20 meeting has revealed two important things that tell us something about our combined economic future. First we learned that the US lost the battle to try to get everyone back on the Keynesian print-a-thon bandwagon. This tells us something about US leadership in these troubled times. Once-upon-a-time, the US could dictate such things, and those days are apparently over which deserves to be noted.

I am a supporter of austerity as the least worst of two paths which I will outline below (the other being printing), but I want to be sure to give the global rejection of the US position on stimulus the proper attention it merits. Here’s the relevant information:

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Too Big to Jail?

Executives unscathed as regulators let banks report criminal fraud

Ted Kaufman, a veteran of the S&L crisis-turned-U.S. Senator, says there haven't been enough cops on the beat. (Photo by Lagan Sebert / Huffington Post Investigative Fund)

by David Heath

The financial crisis has spawned hundreds of criminal prosecutions for alleged fraud. Yet so far, defendants have been mostly minor players such as real-estate agents, mortgage brokers, borrowers and a few low-level bank employees. No senior executives at large financial institutions face criminal charges.

That’s in stark contrast to prosecutions during the savings and loan scandal two decades ago, when the government’s strategy targeted and snagged some of banking's most powerful players. The approach back then succeeded in sending scores of S&L executives to prison, as well as junk-bond king Michael Milken and business tycoon Charles Keating Jr.

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Could the Global Meltdown Spark a Great Revolution?

By Ben Protess, Christian Science Monitor. Posted August 4, 2009.

A look at mass protests during the past 500 years reveals surprising clues.

For the first time in generations, people are challenging the view that a free-market order -- the system that dominates the globe today -- is the destiny of all nations. The free market's uncanny ability to enrich the elite, coupled with its inability to soften the sharp experiences of staggering poverty, has pushed inequality to the breaking point.

As a result, we live at an important historical juncture -- one where alternatives to the world's neoliberal capitalism could emerge. Thus, it is a particularly apt time to examine revolutionary movements that have periodically challenged dominant state and imperial power structures over the past 500 years.

Following the collapse of the Soviet Union in 1991, which laid the foundation for liberal democratic elections and the expansion of the free-market system throughout the world, revolution and protest seemed to lose some of their potency.

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