Share on Google Plus Share on Twitter Share on Facebook 7 Share on LinkedIn Share on PInterest Share on Fark! 1 Share on Reddit 1 Share on StumbleUpon Tell A Friend 1 (10 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   2 comments

OpEdNews Op Eds

The Taylor Rule: Ignore Fraud Epidemics and Worship Markets

By (about the author)     Permalink       (Page 5 of 5 pages)
Related Topic(s): ; ; ; ; ; ; ; ; ; , Add Tags Add to My Group(s)

Must Read 1   Interesting 1   Valuable 1  
View Ratings | Rate It

opednews.com Headlined to H3 11/1/13

Become a Fan
  (38 fans)
- Advertisement -

"The crisis did not reflect some inherent defect of the market system that needed to be corrected, as many Americans have been led to believe. Rather it grew out of faulty government policies."

Conclusion

The VIX index can be driven by many variables.  I believe it is increased appreciation of the extent and nature of risk, particularly fraud risk, rather than risk aversion changes, that is the primary driver of extreme changes in the VIX index.  I do not believe that even if there were a reliable VIX S&P 500 stock option index and even if it could be reliably decomposed to quantify stock aversion changes among the purchasers of those options that the index would explain the behavior of the CEOs that led the three massive epidemics of accounting control fraud that hyper-inflated the bubble and drove the crisis.  There is no evidence that these CEOs decisions were the product of changes in the CEOs' risk aversion, but the relevant means by which the CEOs leading the frauds changed risk was by using a fraud scheme that greatly reduced the risk of detection and sanction and by using their political power to maximize the three "de's."  The rate of growth of the money supply (Taylor's fixation) has nothing to do with the risk aversion of the CEOs that led the three fraud epidemics.  Neither Taylor nor the ECB authors understand the relevant nature of the CEOs' risk aversion or how the CEOs that led the three epic control fraud epidemics minimized their risk while greatly increasing the firm's risk of loss.

- Advertisement -
- Advertisement -

Next Page  1  |  2  |  3  |  4  |  5

 

http://neweconomicperspectives.org/

William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon


Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Incredible Con the Banksters Pulled on the FBI

What if the Public Understood How Money Works?

The Greek Depression, the Troika, and the New York Times (videos)

Rajan Calls Krugman "Paranoid" for Criticizing Reinhart and Rogoff's Research | New Economic Perspectives

Will the Chilean People Save the U.S. by Electing Michelle Bachelet?

The Wall Street Journal Still Refuses to Grasp Accounting Control Fraud via Appraisal Fraud

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
2 people are discussing this page, with 2 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

"... .   Many who have been vociferou... by Lance Brofman on Saturday, Nov 2, 2013 at 8:45:19 AM
Professor, with all due respect, this scholarly ar... by Carol Burns on Saturday, Nov 2, 2013 at 12:10:47 PM