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Economies dominated by hedge financing—that is, those with strong cashflows and low debt levels—are the most stable. When speculative and, especially, Ponzi financing come to the fore, financial systems are more vulnerable. If asset values start to fall, either because of monetary tightening or some external shock, the most overstretched firms will be forced to sell their positions. This further undermines asset values, causing pain for even more firms. They could avoid this trouble by restricting themselves to hedge financing. But over time, particularly when the economy is in fine fettle, the temptation to take on debt is irresistible. When growth looks assured, why not borrow more? Banks add to the dynamic, lowering their credit standards the longer booms last. If defaults are minimal, why not lend more? Minsky’s conclusion was unsettling. Economic stability breeds instability. Periods of prosperity give way to financial fragility.

Minsky’s insight might sound obvious. Of course, debt and finance matter. But for decades the study of economics paid little heed to the former and relegated the latter to a sub-discipline, not an essential element in broader theories.

Minsky was a maverick. He challenged both the Keynesian backbone of macroeconomics and a prevailing belief in efficient markets.

it would be a stretch to expect the financial-instability hypothesis to become a new foundation for economic theory. Minsky’s legacy has more to do with focusing on the right things than correctly structuring quantifiable models. It is enough to observe that debt and financial instability, his main preoccupations, have become some of the principal topics of inquiry for economists today

His challenge to the prophets of efficient markets was even more acute. Eugene Fama and Robert Lucas, among others, persuaded most of academia and policymaking circles that markets tended towards equilibrium as people digested all available information. The structure of the financial system was treated as almost irrelevant

In recent years, behavioural economists have attacked one plank of efficient-market theory: people, far from being rational actors who maximise their gains, are often clueless about what they want and make the wrong decisions.

But years earlier Minsky had attacked another: deep-seated forces in financial systems propel them towards trouble, he argued, with stability only ever a fleeting illusion.

Investors were faster than professors to latch onto his views. More than anyone else it was Paul McCulley of PIMCO, a fund-management group, who popularised his ideas. He coined the term “Minsky moment” to describe a situation when debt levels reach breaking-point and asset prices across the board start plunging. Mr McCulley initially used the term in explaining the Russian financial crisis of 1998. Since the global turmoil of 2008, it has become ubiquitous. For investment analysts and fund managers, a “Minsky moment” is now virtually synonymous with a financial crisis.

t Messrs Hicks and Hansen largely left the financial sector out of the picture, even though Keynes was keenly aware of the importance of markets. To Minsky, this was an “unfair and naive representation of Keynes’s subtle and sophisticated views”. Minsky’s financial-instability hypothesis helped fill in the holes.

As Mr Krugman has quipped: “We are all Minskyites now.”

Albert Jones Jr., Warren's campaign treasurer, and Rosalind Brooks-Harris, who was the treasurer of a political action committee for Warren and now serves as Rochester's finance director, also entered not guilty pleas.

a grand jury handed up indictments, which include a first-degree charge of scheme to defraud and campaign finance violations "for the purpose of evading the contribution limits set by law."

"I don't believe this affects her ability to serve as the mayor,

While Warren has resisted calls thus far to resign, the charges will surely be damaging to her reelection prospects. She plans to seek another term when the current one expires at the end of next year

Prosecutors would not disclose the specific amount of the alleged violation, but they suggested it could be several hundred thousand dollars.

Mayoral business needs to continue. I don't want to disrupt that and I want us to continue in our community," she added.

The mayor has not commented publicly since the indictment was announced. However, an attorney for Warren told WXXI that she is innocent of the charges.

"She did not knowingly violate the law and she's anxious to get this process started and she's ready to go to trial."

Both charges are nonviolent Class E felonies, which if convicted, carry a range of sentences from no jail time to four years in prison, according to Rochester-based NPR member station WXXI. Warren could also lose her law license if found guilty. According to state law, a felony conviction would also be grounds for removal from office.

Warren's office has previously said she was not informed of the full details of Prude's death until August, roughly five months after he died following an encounter with police. Critics have called that timeline into question.

Prude had suffered from mental health issues, when was fatally restrained by police in Rochester. Prude's brother called 911 to report Prude was missing and suffering from a mental health crisis. When police encountered Prude, he was naked and there are reports that he said he had the coronavirus. Police handcuffed Prude and placed a mesh covering over his head, known as a "spit hood," to prevent him from spitting and biting.

Officers then held his head to the ground.

Last month, Warren fired then-police chief La'Ron Singletary, two weeks before he planned to step down from the post. Warren has also requested federal investigations and citywide reforms since Prude's death became widely known following the release of police footage last month. The footage sparked protests and accusations of a police cover-up.

Shares of Morgan Stanley (MS.N) slid 6.9 percent in their largest one-day drop since November 2012, while rival Goldman Sachs (GS.N) fell 4.6 percent. Both closed at their lowest since 2013.

Facebook Inc (FB.O), Amazon.com Inc (AMZN.O) and other technology stocks that had lent strength to the market last year extended their decline from Friday. Fund managers said last year's outsized gains among some Internet stocks made them the first choice to sell now.

The Dow Jones industrial average .DJI closed down 177.92 points, or 1.1 percent, at 16,027.05, the S&P 500 .SPX lost 26.61 points, or 1.42 percent, to end at 1,853.44 and the Nasdaq Composite .IXIC dropped 79.39 points, or 1.82 percent, to 4,283.75.

Falling oil prices along with concern over a worsening global growth outlook have caused a sharp selloff in stocks this year. Investors have been searching for a catalyst that might change the market's course.

Adding to recent woes for the tech sector, Cognizant (CTSH.O) dropped 7.7 percent to $54.05 after the IT services provider issued a weak sales forecast. Amazon fell 2.8 percent while Facebook dropped 4.2 percent

Declining issues outnumbered advancing ones on the NYSE by 2,484 to 618; on the Nasdaq, 2,029 issues fell and 804 advanced. The S&P 500 posted 7 new 52-week highs and 97 new lows; the Nasdaq recorded 4 new highs and 495 new lows.

EU citizens have no means of legal recourse against the misuse of their data in the United States, the court said. A bill is currently winding its way through the U.S. Congress to give Europeans the right to legal redress.

ECJ in its ruling referred to revelations from former National Security Agency contractor Edward Snowden, which included that the Prism program allowed U.S. authorities to harvest private information directly from big tech companies such as Apple (AAPL.O), Facebook (FB.O) and Google.

IBM (IBM.N) said it created commercial uncertainty and jeopardized the flow of data across borders.

But regardless of industry, the families investing the most in presidential politics overwhelmingly lean right, contributing tens of millions of dollars to support Republican candidates who have pledged to pare regulations; cut taxes on income, capital gains and inheritances; and shrink entitlement programs.

In marshaling their financial resources chiefly behind Republican candidates, the donors are also serving as a kind of financial check on demographic forces that have been nudging the electorate toward support for the Democratic Party and its economic policies. Two-thirds of Americans support higher taxes on those earning $1 million or more a year, according to a June New York Times/CBS News poll, while six in 10 favor more government intervention to reduce the gap between the rich and the poor. According to the Pew Research Center, nearly seven in 10 favor preserving Social Security and Medicare benefits as they are.

The donor families’ wealth reflects, in part, the vast growth of the financial-services sector and the boom in oil and gas, which have helped transform the American economy in recent decades. They are also the beneficiaries of political and economic forces that are driving widening inequality: As the share of national wealth and income going to the middle class has shrunk, these families are among those whose share has grown.

Most of the families are clustered around just nine cities. Many are neighbors, living near one another in neighborhoods like Bel Air and Brentwood in Los Angeles; River Oaks, a Houston community popular with energy executives; or Indian Creek Village, a private island near Miami that has a private security force and just 35 homes lining an 18-hole golf course.

More than 50 members of these families have made the Forbes 400 list of the country’s top billionaires, marking a scale of wealth against which even a million-dollar political contribution can seem relatively small. The Chicago hedge fund billionaire Kenneth C. Griffin, for example, earns about $68.5 million a month after taxes, according to court filings made by his wife in their divorce. He has given a total of $300,000 to groups backing Republican presidential candidates. That is a huge sum on its face, yet is the equivalent of only $21.17 for a typical American household, according to Congressional Budget Office data on after-tax income.

“The campaign finance system is now a countervailing force to the way the actual voters of the country are evolving and the policies they want,” said Ruy Teixeira, a political and demographic expert at the left-leaning Center for American Progress.

The accumulation of wealth has been particularly rapid at the elite levels of Wall Street, where financiers who once managed other people’s capital now, increasingly, own it themselves. Since 1979, according to one study, the one-tenth of 1 percent of American taxpayers who work in finance have roughly quintupled their share of the country’s income. Sixty-four of the families made their wealth in finance, the largest single faction among the super-donors of 2016.

instead of working their way up to the executive suite at Goldman Sachs or Exxon, most of these donors set out on their own, establishing privately held firms controlled individually or with partners. In finance, they started hedge funds, or formed private equity and venture capital firms, benefiting from favorable tax treatment of debt and capital gains, and more recently from a rising stock market and low interest rates

In energy, some were latter-day wildcatters, early to capitalize on the new drilling technologies and high energy prices that made it economical to exploit shale formations in North Dakota, Ohio, Pennsylvania and Texas. Others made fortunes supplying those wildcatters with pipelines, trucks and equipment for “fracking.”

The families who give do so, to some extent, because of personal, regional and professional ties to the candidates. Jeb Bush’s father made money in the oil business, while Mr. Bush himself earned millions of dollars on Wall Street. Some of the candidates most popular among ultrawealthy donors have also served in elected office in Florida and Texas, two states that are home to many of the affluent families on the list.

the giving, more broadly, reflects the political stakes this year for the families and businesses that have moved most aggressively to take advantage of Citizens United, particularly in the energy and finance industries.

The Obama administration, Democrats in Congress and even Mr. Bush have argued for tax and regulatory shifts that could subject many venture capital and private equity firms to higher levels of corporate or investment taxation. Hedge funds, which historically were lightly regulated, are bound by new rules with the Dodd-Frank regulations, which several Republican candidates have pledged to roll back and which Mrs. Clinton has pledged to defend.

And while the shale boom has generated new fortunes, it has also produced a glut of oil that is now driving down prices. Most in the industry favor lifting the 40-year-old ban on exporting oi

Many Chinese tech companies are “at this critical size that the China market alone is not enough to support their business and valuation,

The surge also positions Asia’s investors to win stakes in markets that Western companies covet, or that have national security implications.

. “If you think that being the locus of invention gives you a boost to your GDP and so forth, that’s a deterioration of the U.S. competitive advantage.”

Although one of the biggest Asian investors is Japan’s SoftBank Group Corp. , which has tapped Middle Eastern money to create the world’s largest tech-investment fund, it is Chinese activity that is having the greatest impact.

China is creating unicorns—startups valued at a billion dollars or more—at much the same pace as the U.S., drawing on funding from internet giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as well as more than a thousand domestic venture-capital firms that have raised billions of dollars a year for the past few year

Chinese-led venture funding is about 15 times its size in 2013, outpacing growth in U.S.-led financing, which roughly doubled in that time period

Most Chinese-led investment so far has gone to the country’s own firms, the Journal analysis found. Many of them, like the Yelp equivalent Meituan-Dianping, are household names with millions of customers in China, yet virtually unknown elsewhere.

The rise of China’s venture market “signifies a shift from a single-epicenter view of the world to a duopoly,” he says.

Madhur Deora, chief financial officer for Paytm, one of India’s biggest e-payments firms, says the company approached Alibaba affiliate Ant Financial instead of U.S. backers for funding in 2015 because Chinese mobile-internet innovations are “way far ahead of anything that’s happened in the U.S.

One reason China’s push into new technologies worries many in the U.S. is that, unlike the hunt for good returns that underpins most Western venture finance, a lot of Chinese investment is driven by strategic interests, some carrying the specter of state influence.

China is pushing hard into semiconductors, for which the government has provided billions of dollars in public funding, and artificial intelligence, where Beijing in July set a goal of global leadership by 2030

Mr. Lee, the venture investor, predicts that in the next five to 10 years Chinese tech companies will become pacesetters for tech-related development, vying with the likes of Alphabet Inc.’s Google and Facebook for dominance in markets outside the English-speaking world and Western Europe.

“All the rest of the world will basically be a land grab between the U.S. and China,

“The U.S. approach is: We’ll build a better product and just win over all the countries,” says Mr. Lee. The Chinese approach is “we’ll fund the local partner to beat off the American companies.”

Asia’s rise as a startup financier is even starker in the biggest venture investments—those of $100 million or more. These megadeals have become an increasingly important part of venture finance as valuations have ballooned, with their proportion of deal volume growing from around 8% in 2007 to around half of the total last year.

In Southeast Asia, a flood of Chinese money into local startups—such as the $1.1 billion Alibaba-led investment into Indonesian online marketplace PT Tokopedia last year—is drawing the region closer to China

Chinese money is also playing a big role in India, which, with a population of 1.2 billion, has been described as the next big internet market. Chinese and Japanese investors each led nearly $3 billion in venture finance in India last year, ahead of the nearly $2 billion in deals led by U.S. investors

“Think of strategic investments and M&A as playing a game of go,” said Mr. Tsai, the Alibaba executive vice chairman, at the investor conference last year. “In a game of go the strategic objective is to put your pieces on the chessboard and surround your opponent.”

Digital art: The latest fad in crypto is a bitcoin “ordinal,” digital art—or anything else—virtually inscribed on a fraction of a bitcoin in the digital ledger known as the blockchain.

The sudden demand supports bitcoin’s value, in the same way that shopping in bitcoin would. I don’t understand why anyone would pay a cent, let alone real money, to inscribe art in the bitcoin blockchain, but hey, whatever floats your boat. 

The rise in small bitcoin transactions also shows just how useless it is as a currency, and why it’s nonsensical to think bitcoin could ever be used as real money. The median fee leapt to more than $5 over the past week, even as transaction sizes plunged, an insane cost to pay for something invented as a payment method.

Crime: I was tempted a few years ago by the idea that the value of crypto could be underpinned by genuine transactions that need to avoid the financial system: buying illegal drugs; money laundering; avoiding sanctions; anonymous (but legal) pornography purchases; terrorist finance; and ransomware. 

Digital gold: When it became clear that bitcoin was useless as a currency, its backers switched to claiming that it is a store of value, with its maximum issuance offering protection against the money-printing tendencies of the Federal Reserve. The argument was tested to destruction over the past two years. Inflation was last below the Fed’s 2% target in February 2021, when one bitcoin cost close to $50,000. By the time inflation peaked in June last year the price had collapsed to $20,000, the opposite of what it should have done.

There was a time when savers in countries with dodgy currencies and bad governments would buy bitcoin or other crypto to escape devaluation and avoid capital controls. But the rise of stablecoins allows these savers to buy digital dollars without the pain of trying to open offshore bank accounts, so they have no need for other cryptocurrencies

Gambling: Crypto offers a store of volatility more than a store of value. Its volatility makes it an excellent way to bet, and the pretense that it is an investment asset gives speculators cover; it sounds much better to say you are a crypto trader than that you just bet $100,000 at the track.

Basing the value of an asset on speculation is risky, because the value depends on everyone else betting that it has value. But so long as the merry-go-round continues, it looks like it has value, and decentralized finance, or DeFi, provides the infrastructure for speculation in the language of Wall Street.

Bitcoin’s moves over the past three years have been much closer to the S&P 500 than to gold or inflation. But stocks are an investment in real assets that pay dividends, while bitcoin produces nothing.

Lots of that was going on, and Binance has paid the price for helping. Bitcoin isn’t a particularly good way to hide from the cops, anyway, as repeated police busts have demonstrated. Crypto has to clean up its act, so basing its value on illegal transactions no longer makes sense.

Bitcoin has failed to live up to its original promise of being cheap online cash, but crypto keeps on reinventing itself. It’s so technically satisfying that it must be the solution to something, but quite what remains a mystery.

the absence of limits on the amount individuals or corporations can donate has contributed to the ongoing erosion of public confidence in the political process in the UK, according to one watchdog organization. "When donors are making contributions exceeding £20,000 ($31,000) -- and some are making donations well over £250,000 ($390,000) -- it's perfectly understandable you don't give away that kind of money without expecting something in return,"

n Norway, government funding accounted for 74% of political parties' income in 2010, according to Statistics Norway. And unlike in the U.S., where candidates and their supporters can buy as much television time as they can afford, political ads are banned from television and radio.

Corruption monitors say the lack of public funding in India, the world's largest democracy, has contributed to a staggering influx of under the table corporate contributions to candidates that has undercut the integrity of recent elections.

Intelligence reports received by India's Electoral Commission suggested that upwards of $2 billion in so-called "black money" will be spent to influence the Uttar Pradesh state elections this year, according to Anupama Jha, executive director of TI India."Everybody knows about black money," Jha told CNN. "Corporations are expected to donate no more than 5 percent of their profits, but they pay more than that under the table. Those who donate funds also control the politicians, and the politicians (become) more accountable to their sponsors than to their constituents."

ut it's not just corporate black money that's a problem, but the buying of votes in poor areas with hard cash, and sometimes with smuggled liquor.

In the 2009 election in Tamil Nadu, a state with a population roughly the size of France, 33.4% of voters received money from candidates' supporters for their vote, according to a poll by India's Centre of Media Studies -- and in 2011, voters were lured to the polls with blenders, grinders and other household appliances.

"This is why good people don't want to contest elections ... so ultimately you vote for corrupt people, because those are the only people you have to choose from."

The parties try to hijack whatever they can hijack in Russia," Panfilova told CNN

"There are two sets of rules in Russia -- one set for parties who are paying out of their own pockets, and another for the party and candidates with access to public resources," says Elena Panfilova, head of TI Russia.

While there are no limitations on the amount U.S. political parties can spend on televison ads, broadcast time in Russia is doled out on a limited basis, and is proportionate to the results of the last election.

Roughly $2 billion was spent by parties and candidates in the 2010 presidential election, according to Claudio Weber Abramo, executive director of TI Brazil.

Nearly 98% of winner Dilma Rouseff's campaign donations -- and 95.5% of her main opponent's -- came from corporations, says Abramo.Abramo says corporations donated 99.04% of all money spent in Sao Paulo, Brazil's most populous state, during the 2010 election -- a reflection mainly of voters' apathy and politicians' failure to form relationships with their constituents.

"The distribution of money reveals something deeper in the Brazilian political landscape, which is that citizens are not very much concerned about supporting parties and having a political life."While some observers want to ban corporate spending outright, Abramo says that will only make it harder to track corporate influence on politics in the country."The interests are still there even if you prohibit corporations from donating to candidates above the board," he told CNN. "They will do it in a hidden way, and they will lose visibility."

no reliable information exists for how much money was spent during the 2011 presidential election in Nigeria.

While Nigerian law gives the country's election commission the right to set a maximum spending limit for parties, the commission neglected to do so before the 2011 election, according to Magnus Ohman."Parties can do whatever they want, there's no limit to the amount they can spend," Ohman told CNN. "Candidates do have limits, but the money they get from their parties is excluded from that limit."

2011 elections were hailed as a step forward in Nigeria's evolution as a young democracy, the lack of restraint on political spending is a worrying development for election monitors."It really was an expensive election not only at a presidential level but also at the gubernatorial level, especially down in the south," said Ohman. "It's an electoral system where you need to spend."

UK corruption monitor Chandu Krishnan says an ever-increasing amount of money in elections is a global problem."In many countries across the world, the cost of elections is increasing," he told CNN. "If parties and politicians can't find the resources from the state, there is an increasing desperation to seek them from private sources -- and that is where the corruption comes in."

He considers the president a hyper-nationalist, a hypocrite and a covert imperialist intoxicated by his own rhetoric. Wilson, he claims, aspired to global hegemony not militarily, as did Wilhelmine Germany, but through the imposition of a capitalist new order.

His formulary included industrial pre-eminence, preferential finance, an Open Door policy for trade everywhere, and a backward-looking presumption of white supremacy. That felicitous combination would at once maintain the peace and perpetuate American advantage.

Other nations, he believed, would necessarily shuffle along in an international “chain gang,” possessing the trappings but not the substance of sovereignty.

he seeks to elaborate an integrated planetary history. Trained in economics as well as history, he illuminates the interconnections between politics and finance. His geographical purview seems limitless.

Mr. Tooze sustains his argument through a close and often imaginative reading of the Wilson papers.

Wilson’s assertion of moral supremacy, he contends, finds roots in a “distinctive vision of America’s historic destiny” to which statesmen of both parties subscribed. Mr. Tooze expresses as much impatience with “strong-arm nationalists of the Teddy Roosevelt variety” as with Wilson. In short, both Democrats and Republicans sought to transform America into a “de facto super-state.”

The country’s failure to join the League of Nations after the war and its refusal to participate in European political affairs, even while it pulled the strings of international finance, made the “absent presence of US power” the defining characteristic of the 1920s

Wilson never changed his objective. At the 1919 peace conference he aimed at “the collective humbling of all the European powers.”

Mr. Tooze discerns an institutional problem here that goes deeper than the idiosyncrasies of politicians or voters’ naïveté. Americans clung to an obsolete Constitution, he maintains, a “vestigial thing” ill-suited to the modern world. Not until 1945 did the federal government acquire both the domestic tax resources and the power over international institutions necessary to properly exercise global hegemony.

When the European nations stopped payment on their debts in 1933, Congress passed a law forbidding loans to defaulting governments.

Once the U.S. joined the war, it lent to Great Britain, France and Italy some $10 billion (equivalent to $170 billion today) raised from U.S. citizens through the issue of “Liberty Bonds.” Britain had advanced a comparable sum but largely to czarist Russia and other polities unlikely to repay.

Since it could never collect on its own credit extensions, the U.K. pushed successive schemes to write down debts all around. The U.S. Treasury offered a brief moratorium in 1919 but thereafter summoned the borrowers to settle. The U.S. Debt Commission proved relatively generous, given adverse sentiment in the heartland

the sum required from London amounted to only 0.8% annually of British foreign investment.

Mr. Tooze nonetheless considers the British debt settlement outrageous, comparing its size to that of the U.K.’s national education budget or the sum needed to clear the country’s slums.

Mr. Tooze provides readers with additional graphic evidence of the subterranean animosity that characterized Anglo-American relations. He cites Wilson’s 1918 boast that if the British declined to limit their navy the U.S. would build a bigger one. In another bloody war, “England would be wiped off the face of the map.”

He sympathizes with the difficulties that Berlin governments encountered in the early 1920s and considers the notion of stabilizing the depreciating paper mark a chimera. As a result of the 1918 revolution, organized labor held effective veto power over tax and social policy. Nor could Weimar’s fractured society tolerate the level of unemployment that deflation would have imposed.

Under the circumstances, Mr. Tooze contends, the German government simply took the path of least resistance; it did not intentionally bring about the 1923 hyperinflation to undermine reparations.

The Koch brothers have put together a coalition that intends to spend almost $1 billion in 2016. Some donors complained after McCutcheon that they'd no longer be able to hide behind limits when they didn't want to give, but the overall landscape has clearly shifted toward those writing the checks.

Members of Congress get the shaft, too, spending up to 12 hours a day dialing for dollars. The simple drag of having to do all that seems like a potent reason for candidates to push back

For extremely wealthy donors who want to elect candidates and influence issues, their newfound power is a godsend. After spending $92 million on super PACs in 2012, Sheldon Adelson can summon any Republican candidate he wants and has their ears to discuss Israel, his pet issue.

The candidates who are doing best at fundraising, or for whom super PACs are likely to raise money effectively, are staying tactfully quiet on the issue.

she also called last week for a constitutional amendment to create limits or mandate transparency for campaign cash.

Peter Schweizer has excited the political world with allegations of quid pro quos, in which foreign governments gave to the Clinton Foundation and Hillary Clinton, then serving as secretary of state, did them favors—essentially alleging bribery in foreign affairs

Shadowy organizations funded by multimillionaires, many of which scrupulously cover up their sources of donations, are going to pour huge amounts of money into trying to sway the democratic process—all in an attempt to prove that huge, insufficiently transparent infusions of cash from wealthy donors can corrupt a public servant’s policy decisions. Is this irony lost on the donors and the candidates they back, or does it simply not bother them?

Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.

That is the modus operandi of the leveraged-buyout business, and in an honest free-market economy, there wouldn’t be much scope for it because it creates little of economic value. But we have a rigged system—a regime of crony capitalism—where the tax code heavily favors debt and capital gains, and the central bank purposefully enables rampant speculation by propping up the price of financial assets and battering down the cost of leveraged finance.

So the vast outpouring of LBOs in recent decades has been the consequence of bad policy, not the product of capitalist enterprise. I know this from 17 years of experience doing leveraged buyouts at one of the pioneering private-equity houses, Blackstone, and then my own firm. I know the pitfalls of private equity. The whole business was about maximizing debt, extracting cash, cutting head counts, skimping on capital spending, outsourcing production, and dressing up the deal for the earliest, highest-profit exit possible. Occasionally, we did invest in genuine growth companies, but without cheap debt and deep tax subsidies, most deals would not make economic sense.

In truth, LBOs are capitalism’s natural undertakers—vulture investors who feed on failing businesses. Due to bad policy, however, they have now become monsters of the financial midway that strip-mine cash from healthy businesses and recycle it mostly to the top 1 percent.

Accordingly, Bain’s returns on the overwhelming bulk of the deals—67 out of 77—were actually lower than what a passive S&P 500 indexer would have earned even without the risk of leverage or paying all the private-equity fees. Investor profits amounted to a prosaic 0.7X the original investment on these deals and, based on its average five-year holding period, the annual return would have computed to about 12 percent—well below the 17 percent average return on the S&P in this period.

having a trader’s facility for knowing when to hold ’em and when to fold ’em has virtually nothing to do with rectifying the massive fiscal hemorrhage and debt-burdened private economy that are the real issues before the American electorate

Indeed, the next president’s overriding task is restoring national solvency—an undertaking that will involve immense societywide pain, sacrifice, and denial and that will therefore require “fairness” as a defining principle. And that’s why heralding Romney’s record at Bain is so completely perverse. The record is actually all about the utter unfairness of windfall riches obtained under our anti-free market regime of bubble finance.

When Romney opened the doors to Bain Capital in 1984, the S&P 500 stood at 160. By the time he answered the call to duty in Salt Lake City in early 1999, it had gone parabolic and reached 1270. This meant that had a modern Rip Van Winkle bought the S&P 500 index and held it through the 15 years in question, the annual return (with dividends) would have been a spectacular 17 percent. Bain did considerably better, of course, but the reason wasn’t business acumen.

The secret was leverage, luck, inside baseball, and the peculiar asymmetrical dynamics of the leveraged gambling carried on by private-equity shops. LBO funds are invested as equity at the bottom of a company’s capital structure, which means that the lenders who provide 80 to 90 percent of the capital have no recourse to the private-equity sponsor if deals go bust. Accordingly, LBO funds can lose 1X (one times) their money on failed deals, but make 10X or even 50X on the occasional “home run.” During a period of rising markets, expanding valuation multiples, and abundant credit, the opportunity to “average up” the home runs with the 1X losses is considerable; it can generate a spectacular portfolio outcome.

The Wall Street Journal examined 77 significant deals completed during that period based on fundraising documents from Bain, and the results are a perfect illustration of bull-market asymmetry. Overall, Bain generated an impressive $2.5 billion in investor gains on $1.1 billion in investments. But 10 of Bain’s deals accounted for 75 percent of the investor profits.

The credentials that Romney proffers as evidence of his business acumen, in fact, mainly show that he hung around the basket during the greatest bull market in recorded history.

By contrast, the 10 home runs generated profits of $1.8 billion on investments of only $250 million, yielding a spectacular return of 7X investment. Yet it is this handful of home runs that both make the Romney investment legend and also seal the indictment: they show that Bain Capital was a vehicle for leveraged speculation that was gifted immeasurably by the Greenspan bubble. It was a fortunate place where leverage got lucky, not a higher form of capitalist endeavor or training school for presidential aspirants.

The startling fact is that four of the 10 Bain Capital home runs ended up in bankruptcy, and for an obvious reason: Bain got its money out at the top of the Greenspan boom in the late 1990s and then these companies hit the wall during the 2000-02 downturn, weighed down by the massive load of debt Bain had bequeathed them. In fact, nearly $600 million, or one third of the profits earned by the home-run companies, had been extracted from the hide of these four eventual debt zombies.

The bankruptcy forced the closure of about 250—or 40 percent—of the company’s stores and the loss of about 5,000 jobs. Yet the moral of the Stage Stores saga is not simply that in this instance Bain Capital was a jobs destroyer, not a jobs creator. The larger point is that it is actually a tale of Wall Street speculators toying with Main Street properties in defiance of sound finance—an anti-Schumpeterian project that used state-subsidized debt to milk cash from stores that would not have otherwise survived on the free market.

Ironically, the businesses and jobs that Staples eliminated were the office-supply counterparts of the cracker-box stores selling shoes, shirts, and dresses that Bain kept on artificial life-support at Stage Stores Inc. At length, Wal-Mart eliminated these jobs and replaced them with back-of–the-store automation and front-end part-timers, as did Staples, which now has 40,000 part-time employees out of its approximate 90,000 total head count. The pointless exercise of counting jobs won and lost owing to these epochal shifts on the free market is obviously irrelevant to the job of being president, but the fact that Bain made $15 million from the winner and $175 million from the loser is evidence that it did not make a fortune all on its own. It had considerable help from the Easy Button at the Fed.

The lesson is that LBOs are just another legal (and risky) way for speculators to make money, but they are dangerous because when they fail, they leave needless economic disruption and job losses in their wake. That’s why LBOs would be rare in an honest free market—it’s only cheap debt, interest deductions, and ludicrously low capital-gains taxes that artifically fuel them.

The larger point is that Romney’s personal experience in the nation’s financial casinos is no mark against his character or competence. I’ve made money and lost it and know what it is like to be judged. But that experience doesn’t translate into answers on the great public issues before the nation, either. The Romney campaign’s feckless narrative that private equity generates real economic efficiency and societal wealth is dead wrong.

The Bain Capital investments here reviewed accounted for $1.4 billion or 60 percent of the fund’s profits over 15 years, by my calculations. Four of them ended in bankruptcy; one was an inside job and fast flip; one was essentially a massive M&A brokerage fee; and the seventh and largest gain—the Italian Job—amounted to a veritable freak of financial nature.

In short, this is a record about a dangerous form of leveraged gambling that has been enabled by the failed central banking and taxing policies of the state. That it should be offered as evidence that Mitt Romney is a deeply experienced capitalist entrepreneur and job creator is surely a testament to the financial deformations of our times.

almost 13 percent of student-loan borrowers of all ages owe more than $50,000, and nearly 4 percent owe more than $100,000

Some 17 percent of student-loan borrowers were 90 days or more behind in payments at the end of 2012. When only those in repayment were counted — in other words, not including borrowers who were in loan deferment or forbearance — more than 30 percent were 90 days or more behind

America is distinctive among advanced industrialized countries in the burden it places on students and their parents for financing higher education. America is also exceptional among comparable countries for the high cost of a college degree, including at public universities. Average tuition, and room and board, at four-year colleges is just short of $22,000 a year, up from under $9,000 (adjusted for inflation) in 1980-81.

Compare this more-than-doubling in tuition with the stagnation in median family income, which is now about $50,000, compared to $46,000 in 1980 (adjusted for inflation).

it was not surprising that total student debt, around $1 trillion, surpassed total credit-card debt last year

the challenge of controlling student debt is even more unsettling. Curbing student debt is tantamount to curbing social and economic opportunity.

What economists call “human capital” — investing in people — is a key to long-term growth. To be competitive in the 21st century is to have a highly educated labor force, one with college and advanced degrees. Instead, we are foreclosing on our future as a nation.

It’s a vicious cycle: lack of demand for housing contributes to a lack of jobs, which contributes to weak household formation, which contributes to a lack of demand for housing.

As bad as things are, they may get worse.

Interest rates on federal Stafford loans were set to double in July, to 6.8 percent.  Good news came on Friday: it appears that there is a temporary reprieve, as Republicans have come around. But the stay would be temporary and would not address a more fundamental issue: if the Federal Reserve is willing to lend to the banks that caused the crisis at just 0.75 percent, shouldn’t it be willing to lend to students, who will be crucial to our long-term recovery, at an appropriately low rate?

a real long-term solution requires rethinking how we finance higher education. Australia has designed a system of publicly provided income-contingent loans that all students must take out. Repayments vary according to individual income after graduation. This aligns the incentives of the providers of education and the receivers. Both have an incentive to see that students do well. It means that if an unfortunate event happens, like an illness or an accident, the loan obligation is automatically reduced. It means that the burden of the debt is always commensurate with an individual’s ability to repay. The repayments are collected through the tax system, minimizing the administrative costs.

Some wonder how the American ideal of equality of opportunity has eroded so much. The way we finance higher education provides part of the answer. Student debt has become an integral part of the story of American inequality. Robust higher education, with healthy public support, was once the linchpin in a system that promised opportunity for dedicated students of any means. We now have a pay-to-play, winner-take-all game where the wealthiest are assured a spot, and the rest are compelled to take a gamble on huge debts, with no guarantee of a payoff.

The second effect cited by reformers is the increased likelihood of adoption of legislation generally opposed by business interests, including increases in minimum wage and liberalized family leave policies

The third positive consequence cited by advocates of public financing is the election of more working class and moderate income men and women to state legislatures and city councils.

Since the Sarbanes bill uses taxpayer money and raises the possibility of shifting legislative bodies to the left, it has zero chance of enactment as long as Republicans control either branch of Congress.

“It’s gotten to the point where the only people who can run are those who have contact lists rich enough to raise millions.”

“The thing about money is that it always seems to find a way around the rules,” Sarbanes said. A “power-based reform” seeks to “match power with power” instead

In testimony to the New York state Moreland Commission in 2013, Malbin argued that increased small donor participation is a way to counteranother kind of more systemic corruption: the corruption of representation that occurs when candidates spend so much of their time raising campaign money from rich contributors.

I have nothing against rich contributors, but the system needs broader participation. Surveys make it clear that those who can afford large contributions do not have the same policy interests or priorities as most citizens. When office holders spend so much time hearing from big donors, they get a slanted view of the public’s priorities.

The current system of financing federal campaigns is out of whack. The power of the rich – captured in the Oct. 10 Times story about “the 158 families that have provided nearly half of the early money for efforts to capture the White House” – defies even the very elastic boundaries of American democracy.

The Roberts court has deregulated campaign finance on the premise that the only legitimate grounds for restricting money in politics is to prevent explicit corruption. In doing so, however, the court has sanctioned a pervasively corrupt regime.

The more central problem of money in politics is something just as troubling but much harder to see: systems in which economic inequalities, inevitable in a free market economy, are transformed into political inequalities that affect both electoral and legislative outcomes. Without any politician taking a single bribe, wealth has an increasingly disproportionate influence on our politics. While we can call that a problem of “corruption,” this pushes the limits of the words too far (certainly far beyond what the Supreme Court is going to entertain as corruption) and obscures the fundamental unfairness of a political system moving toward plutocracy.

The long run solution, Hasen argues — with reasoning I find unimpeachable — is a Supreme Court “that will accept political equality as a compelling interest that justifies reasonable campaign regulations.”

And he was a legacy al Qaeda member."

announcement came on the same day that the U.S. Treasury Department detailed its efforts with other countries to stop the flow of money to ISIS

"Killing him and his predecessors exhausts the knowledge and talent needed to coordinate funding within the organization,

Abu Maryam, described as an "enforcer and senior leader of their extortion network;"

announced the recent killings of two other prominent ISIS figures

Abu Rahman al-Tunisi, who was believed to be responsible for coordinating the movement of information, people and weapons.

The history of capitals, as well as countries, confirms the importance of courts. The rise of Berlin, Vienna, Madrid (often called Corte), St Petersburg and Istanbul cannot be understood except as court cities, apparent in the appearance of their streets and squares or, in Istanbul, mosques. A final, fatal expression of that role occurred in July 1914. Thousands, eager for war, gathered in front of palaces in London, Berlin, Munich (where, in a photograph, the young Hitler can be seen in the crowd) and St Petersburg, to wave hands, flags and hats, cheer and sing the national anthem as their monarch appeared on the palace balcony

The Louvre was a royal palace before it became an art gallery, founded by Francis I and principal residence of Louis XIV from 1652 to 1671. After the Revolution Paris again became a court city and remained one from 1804 to 1870.

The development of constitutions also owed much to courts. The rise of the House of Commons was helped by disputed royal successions – no monarchy had more of them than England – as well as the needs of royal finances. The founding document of constitutional monarchy in 19th-century Europe was the Charte constitutionelle des francais, promulgated by Louis XVIII (who was one of its authors) on June 4th, 1814. The Charte became the principal model for other constitutions in Europe, including those of Bavaria (1818), Belgium (1831), Spain (1834), Prussia (1850), Piedmont(1848) and the Ottoman Empire (1876). Britain could not have a comparable influence, since it did not have a written constitution to copy

A constitution was a royal life insurance policy: when Louis XVIII’s brother Charles X violated it in July 1830 the dynasty was deposed. Nevertheless France finally became a republic, after 1870, only after three dynasties – the Bourbons, Orléans and Bonapartes  – had been tried and found wanting

Having helped to finance the struggle against the French Empire, the Rothschilds became financiers to the Holy Alliance. They financed Louis XVIII’s return to France in 1814, Charles X’s departure in 1830, the Neapolitan Bourbons both before and after their exile in 1861 and the Austrian monarchy. As one Rothschild wrote to another, on February 8th, 1816: ‘A court is always a court and it always leads to something.

Under Edward VII public ceremonial increased in splendour, the court entertained more frequently than before and there were more royal warrant-holders

He wrote admiringly about monarchs, from Henri IV and Louis XIV to Charles XII. In the 19th century Walter Scott was an admirer of George IV, whose visit to Edinburgh he arranged; Chateaubriand was a brilliant royalist pamphleteer and memorialist; Stendhal and Mérimée were convinced Bonapartists

Court history also subverts national boundaries. The Tudors came to power with French help: Henry VII, after 14 years of exile in Brittany and France, had French as well as English troops in his victorious army at Bosworth. One aspect of Anne Boleyn’s appeal to Henry VIII was her French education and the skills she had acquired while serving at the French court. The House of Orange was both German and Dutch (and partly English), the Bourbons acquired Spanish, Neapolitan and Parmesan branches. The Habsburgs were  able to switch nationalities and capitals between Prague, Vienna, Budapest, Brussels, Barcelona, Madrid, Lisbon and, in the brief reign of Philip I, London

Through the prism of courts and monarchy, Cortes could communicate with Montezuma. The Sunni-Shi’a struggle now destroying Syria and Iraq is another war of succession. It began as a dynastic dispute, between the prophet Muhammad’s Umayyad cousins and his son-in-law Ali over succession to the caliphate: from the start Islam was a state as well as a religion. In 680 the struggle culminated in the murder of Ali’s son, the Imam Hussein, in Kerbela in Iraq. Every year, on the Day of Ashura, this murder is commemorated by Shi’a in mournful flagellatory processions

Above all, courts subvert boundaries between the sexes. Because of a European consort’s role in assuring the succession and enhancing dynastic prestige, her household and apartments could rival in size and splendour those of the monarch. Sometimes she controlled her own finances. The court of France was called ‘a paradise of women’. A court was therefore the only arena where women could compete with men, on near equal terms, for power and influence. Hence the decisive impact on national and international politics of, to name only a few consorts, Anne Boleyn, Catherine the Great and Marie Antoinette. Or, among rulers’ mothers: Catherine de’ Medici and Anne of Austria in France; 17th-century Valide Sultans in the Ottoman Empire; and the Empress Dowager in China

On Thursday morning, GameStop shares spiked to $467 but then crashed to $126 as investors were unable to purchase more shares. As of 8:46 a.m. PT, the stock's price had rebounded to $207.90.

"In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME [GameStop], $AMC [AMC Theaters] and other securities," reads the TD Ameritrade message.

He had always thought of Capital Good Fund as a place people could come to improve their finances. But lately it was akin to a food bank, doling out small loans that—like a bag of groceries—wouldn’t go very far in a crisis whose effects could linger for years.

“The nonprofit system was never capable of solving all of the problems that we have,” he said. “But at this point it is starting to seem almost futile.”

The proposal lands in the midst of the Covid-19 pandemic, which has shed light on many inefficiencies in the American system, including banking. Take the Paycheck Protection Program, for example: It used the regular banking system as an intermediary, which ultimately meant that bigger businesses and those with preexisting relationships with those banks were prioritized over others.

guarantee a more equitable recovery by providing an alternative to Wall Street banks for state and local governments, businesses, and ordinary people,

The public banking bill also does double duty as a climate bill: It would prohibit public banks from investing in or doing business with the fossil fuel industry.

“Public banks empower states and municipalities to establish new channels of public investment to help solve systemic crises.”

But, he said, this proposal is particularly comprehensive and supportive.

If Democrats keep control of the House come 2021 and manage to flip the Senate and win the White House, they’ll be able to take some big legislative swings, including and perhaps especially on issues related to the economy.

which theoretically would be more motivated to do public good and invest in their communities than private institutions, which are out for profit.

To be clear, the Public Banking Act isn’t creating a federal public bank.

encourage and enable the creation of public banks across the US. It provides legitimacy to those who are pushing for more public banking, and it also includes regulators as key stakeholders who can support and provide guidance for how those banks should operate.

though different public banks would likely have different areas of emphasis.

They could also facilitate easier access to funds for state and local governments from the federal government or Federal Reserve.

“It’s basically a way to finance state and local investment that doesn’t go through Wall Street and doesn’t leave the community and turn into a windfall for shareholders,

Public banks need the FDIC to provide assurances that it will recognize them in accordance with the bond rating of the city or state they represent.

Tlaib recalled hearing from her constituents when the $1,200 coronavirus stimulus checks went out this spring — people waiting days and weeks for direct deposits, or getting a check in the mail only to lose a substantial portion of it cashing it at the store down the street.

The Public Banking Act allows the Federal Reserve to charter and grant membership to public banks and creates a grant program for the Treasury secretary to provide seed money for public banks to be formed, capitalized, and developed.

“This is more about community development.”

McConnell said the FDIC issuing guidance that it recognizes the city’s — and the state’s — public banks as an AAA rating would send a clear direction to the state financial regulators that the public bank is considered low risk.

The bill would also provide a road map for the FDIC, which insures bank deposits of up to $250,000, to insure deposits for public banks, so people feel assured they won’t lose all their money by choosing to open an account with their state bank instead of, say, Wells Fargo.

the Office of the Comptroller of the Currency (OCC) has historically been charged with chartering national banks in the US, not the Fed, meaning this is a fairly novel idea.

It prohibits the Fed and Treasury from considering the financial health of an entity that controls or owns a bank in grant-making decisions.

So here is the thing about private companies, including, yes, banks: The point of them is to make money, and that drives their decisions. It’s not necessarily evil (though sometimes it kind of is), but it’s just how they work.

The idea behind public banking isn’t that Goldman Sachs, Wells Fargo, and Morgan Stanley go away; it’s that they have to compete with a government-owned entity — and one that’s a little fairer and more ethical in how it does business.

Public banks, as imagined in the Tlaib/Ocasio-Cortez proposal, would provide loans to small businesses and governments with lower interest rates and lower fees.

Student loans are facilitated directly with BND, but other loans, called participation loans, go through a local financial institution — often with BND support.

According to a study on public banks, BND had some $2 billion in active participation loans in 2014. BND can grant larger loans at a lower risk, which fosters a healthy financial ecosystem populated by a cluster of small North Dakota banks.

Democrats have a lot of ideas, and if they take power come January 2021, there’s a lot they can do.

The Public Banking Act is meant to complement ideas such as the ABC Act and postal banking. And, of course, it’s linked to the Green New Deal, not only because it would bar public banks from financing things that hurt the environment, but also because the idea is that public banks would play a major role in financing Green New Deal and climate-friendly projects.

If former Vice President Joe Biden wins the White House and Democrats control both the House and the Senate come 2021, the talk around these ideas becomes a lot more serious.

Lauri Myllyvirta, the centre’s lead analyst, said this was equivalent to about three months of global emissions. “These plants, if built and operated, would have emitted around 250-280 megatonnes of CO2 a year, which is roughly equal to the total emissions of Spain. Assuming an operating life of 35 years, the cumulative emissions would amount to 10 gigatonnes, or a year of China’s emissions, or three months of global emissions,”

there is evidence that 40% of the heavy equipment at new coal plants outside China and India comes from China

With coal now seemingly in terminal decline, climate activists are turning their sights towards oil, gas, and domestic coal power in China and India.

The immediate impact is likely to be felt in the countries that rely most heavily on Chinese funding for new coal projects: Indonesia, Vietnam, Bangladesh and Pakistan

Depending on implementation, other possible beneficiaries of this announcement could be the rhinos, giraffes, cheetahs and other endangered species at Zimbabwe’s Hwange national park, where two Chinese companies had hoped to extract the fossil fuel.

Another positive knock-on effect would be to push Japan to follow suit. The government in Tokyo has already taken steps in this direction but left a door open for financing by its private-sector institutions. Their geopolitical reason had been that they did not want to leave China as the only option for regional energy projects.

Despite the uncertainties over implementation, Myllyvirta said China’s announcement would accelerate decarbonisation. “Countries now know that going forward, there is no financing on the table for coal. That should clarify things a lot. Chinese delegates are going to visit Indonesia or Vietnam or Pakistan and they will be saying, ‘We don’t do coal any more, but we can help with clean energy.’ That will make a difference.”

Close to 58% of its power comes from the country’s 1,058 coal plants, almost half the total in the entire the world. This makes China far the biggest carbon emitter, pumping more than one out of every four gigatonnes that enter the atmosphere.

oughly half the country’s plants will have to close if the government 2060 net-zero target is to be achieved.