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Archive for 'financial regulation'

Intellectual Dishonesty at the Ivey Business Journal

Under the headline “Canada Isn’t Rotten to the Core”, the new editor of the Ivey Business Journal, Thomas Watson, attacked my book “Thieves of Bay Street” in his inaugural editorial. Although the book hit bookstores almost two years ago, and has faded from view, I found this assault so distorted to what “Thieves” explores I […]

Glass-House Mortgages

A letter appears in today’s Globe and Mail in response to recent direction given by Minister Flaherty to private mortgage lenders over mortgage rates.  The letter was written by Steve Pomeroy, one of Canada’s leading housing policy experts. Here is the full text of the letter: – Glass-house mortgages Twice in recent weeks, the Minister […]

The Austerity Trap

Below is a recent editorial from the New York Times that does an excellent job of summarizing the failures of austerity policies. The NYTimes also published a very good analysis of how austerity measures have actually increased debt loads in many countries, instead of reducing them:  “Despite Push for Austerity, European Debt has Soared” I made […]

Household debt going from bad to worse

Canadians are now more indebted than either Americans or the Brits at the peak of their housing bubble.  Statistics Canada today revised the national accounts.  The result on the household debt front was that instead of Canadian households having a debt to disposable income ratio of 154, it has now been revised upwards to 166. […]

Complete details of 2008-09 Bank Support

Readers of this blog will have hopefully read my report “The big banks big secret” which examines the $114 billion that Canada’s banks received during the 2008-09 financial crisis.  Its major finding was that at some point three of Canada’s five big banks had received support worth more than their market capitalization, or the value of all […]

The Big Banks’ Big Secret

The CCPA today released my report: “The Big Banks Big Secret” which provides the first public estimates of the emergency funds taken by Canadian banks.  The report bases its estimates on publicly available data from CMHC, the Office of the Superintendent of Financial Institutions, US Federal Reserve, the Bank of Canada, as well as quarterly […]

BMO Professor vs. Bank Regulation

Last week, the C. D. Howe Institute was out with an op-ed contending that Canadian household debt is not worth worrying too much about: “There does not seem to be a strong case for restrictive regulation of consumer credit products, such as tight caps on interest rates.” The C. D. Howe Institute arguing for looser […]

Stock Market Swindles Galore

This past weekend (March 31st), Sino-Forest Corp. announced it was filing for bankruptcy protection. The Chinese-Canadian company, once the largest publicly-traded forestry firm on the TSX, collapsed under allegations it was nothing more than a sophisticated fraud and Ponzi scheme. Sino-Forest’s demise wiped out about $6-billion in shareholders’ value, making it a catastrophe on par […]

Wageless recovery and the politics of austerity

The UNTCAD just published its annual report on Trade and Development, titled Post-crisis Policy Challenges in the World Economy. The report describes a two speed global recovery, showing how developing economies have come out of the crisis stronger then their developed European and American counterparts. There the author invokes the contradictory forces at work in […]

Financial Illiteracy

The Report of the Task Force on Financial Literacy is all that one would have expected from one co chaired by the CEO of Sun Life Financial and the Chairman of  BMO Nesbitt Burns. There is hardly a whisper of criticism of financial institutions and the myriad fees, charges and interest rates they extract from […]

A Call for Capital Controls

Today, the Global Development and Environment Institute and the Institute for Policy Studies released the following statement signed by more than 250 economists, including a couple of Progressive Economics Forum members: Dear Secretary Clinton, Secretary Geithner, and Ambassador Kirk: We, the undersigned economists, write to alert you to important new developments in the economics literature […]

From Wall Street to the White House

Sometimes the crudest forms of Marxist analysis of the relationship between class and politics make the most sense. Read this  scorching commentary by Simon Johnson – the former IMF Chief Economist turned ubercritic of the power of the big banks -  on the appointment of  a senior Wall Street figure, Bill Daley from Morgan Stanley, […]

Revenge of the Debt Zombies — or — “What are Banks for Anyway?”

What are banks for?  Typically, banks are described as intermediaries that take deposits and lend them out, earning what is called net interest margin on the gap between what is paid on the savings and what is earned on loans.  From where I stand, this description is wrong on three counts. First, it suggests that […]

Might the proposed new federal securities regulator weaken regulatory oversight?

The front page of today’s Globe and Mail reports the latest chapter in the federal attempt to create a national securities regulator. (Premiers push back against national securities regulator plan).   Part of the Harper government’s response to the financial crisis was to promise to remedy the patchwork of provincial securities regulators.  If securities regulators […]

Finance Capital Turns Parasitic

In an announcement that largely went unnoticed last week, U.S. Steel said it plans to close down the blast furnace at Stelco’s Hilton Works in Hamilton, Ontario. Hilton Works was once the main steelmaking operation of what was once Canada’s largest integrated steelmaker. Its demise exposes how Stelco has been reduced to a mere shell […]

Fox Guarding the Henhouse?

From the “fox guarding the henhouse” category comes news that the Bank of Canada has appointed Tim Hodgson, CEO of Goldman Sachs’ Canadian subsidiary, to be a special advisor for the next 18 months on financial regulatory reform.  Hodgson worked with Governor Mark Carney when the latter was also at Goldman Sachs.  (Don’t forget, Carney […]

Transactions tax on the front page

I was surprised to see the IMF highlighting the potential virtues of a Financial Transactions Tax (FTT) on the front page of its website.  The Bloomberg news service earlier had a good story about on the background of this idea, tracing it back to Keynes.   This is a proposal that progressive economists and unions have advocated for […]

Towards a SAFER Financial System

The good folks at PERI at U Mass Amherst led by Gerry Epstein and  Jane D’Arista have just launched a new web site so theirr useful work on why and how to reign in finance can be easily accessed. http://www.peri.umass.edu/safer/ “The Economists’ Committee for Stable, Accountable, Fair and Efficient Financial Reform (SAFER) is a focal […]

What’s in Play at Pittsburgh?

The London G-20 summit last fall may go down history as the meeting that saved the world. That’s a huge exaggeration of course, but leaders did agree to a program of co-ordinated monetary and fiscal stimulus which may have arrested an economic free-fall, and they agreed to an agenda for financial re-regulation with a view […]

Bank Mergers – The Left was Right

My personal theory as to why the Canadian banking system survived the great global financial crisis relatively unscathed is that calls by the big Canadian banks in the late 1990s to allow mergers were successfully resisted. Had the big banks been allowed to merge to pursue their global ambitions, they would have ramped up their […]

Bonds, lame bonds

Below is a dispatch on bond rating agencies from my former CCPA colleague, Stuart Murray: Here is some more grist for the blog.  Bloomberg just published a very interesting and informative article on the role of the bond rating agencies in the current meltdown. http://bloomberg.com/apps/news?pid=20601109&sid=au4oIx.judz4&refer=home The pitchforks are out for Moody’s and S&P, as they […]

Warning: Credit Card Use May be Harmful (to Your Country’s Income Distribution)

Ah plastic. What’s not to love? Convenient? Check. Light in the pocket? Check. Monthly bill summaries? Check. Free short-term credit? Check (provided you pay your bills in full, on time). Benefits (free car rental insurance, points, cash back etc): Check AND… Take from the poor and give to the rich? err… wait a minute. Unfortunately, […]

Obama’s Bank Bail Out

Martin Wolf of the Financial Times has written a pretty scathing critique of the new US Administation’s overhaul of the TARP program.  I am increasingly convinced by Duncan Cameron’s  argument that – in the US at least – the best way out is to nationalize the banks, run them as a public utility, and compensate […]

Re Regulating Finance

http://www.tuac.org/en/public/e-docs/00/00/03/91/document_doc.phtml This is a very useful discussion/policy paper from Pierre Habbard of the Trade Union Advisory Committee to the OECD. Executive summary 1. The latest phase of the financial crisis that broke out in the summer 2007 was marked by a dramatic turn in mid-September with the collapse of Wall Street, US insurance group AIG, […]