Economist James Galbraith: Economists Should Move into the Background, and "Criminologists to the Forefront"
(Washington's Blog) --
University of Texas economics professor James K. Galbraith previously said that fraud caused the financial crisis:
"You had fraud in the origination of the mortgages, fraud in the underwriting, fraud in the ratings agencies."
Senator Kaufman said last month:
"Fraud and potential criminal conduct were at the heart of the financial crisis."
Congresswoman Marcy Kaptur says that there was rampant fraud leading up to the crash (see this and this).
TARP overseer Elizabeth Warren suspects fraud as the cause of the crisis.
Yves Smith has shown that fraud largely caused the subprime crisis. Janet Tavakoli says that rampant fraud and Ponzi schemes caused the financial crisis.
According to economist Max Wolff:
"The securitization process worked by "packag(ing), sell(ing), repack(aging) and resell(ing) mortages making what was a small housing bubble, a gigantic (one) and making what became an American financial problem very much a global" one by selling mortgage bundles worldwide "without full disclosure of the lack of underlying assets or risks." Buyers accepted them on good faith, failed in their due diligence, and rating agencies were negligent, even criminal, in overvaluing and endorsing junk assets that they knew were high-risk or toxic. "The whole process was corrupt at its core."
William Black - professor of economics and law, and former head of prosecution during the S&L crisis - says that massive fraud by is what caused this economic crisis. Specifically, he says that companies, auditors, rating agencies and regulators all committed fraud which helped blow the bubble and sowed the seeds of the inevitable crash. And see this.
Black and economist Simon Johnson also state that the banks committed fraud by making loans to people that they knew would default, to make huge profits during the boom, knowing that the taxpayers would bail them out when things went bust...
As economist James Galbraith told Dan Froomkin this week:
"Once you understand the implications of massively fraudulent practices, it changes the professional community that has the principal say about interpreting the crisis."
Economists, he said, should move into the background -- and "criminologists to the forefront."...MORE...LINK