Tuesday, November 12, 2013

644 Correction - the WRONG Michael Hudson

Correction - the WRONG Michael Hudson

Newsletter published on 26 January 2014

(1) Correction - the WRONG Michael Hudson
(2) Not THAT Michael Hudson
(3) Michael W. Hudson, journalist at International Consortium of
Investigative Journalists
(4) Predatory Lenders and Wall Street Bankers - Michael W. Hudson
(5) Michael W. Hudson shows Predatory reality, cf the abstract Economics
theory taught in Universities
(6) A corporation’s place of domicile = its place of incorporation
(7) British Virgin Islands - the leading corporate domicile in the world

(1) Correction - the WRONG Michael Hudson

From: Ellen Brown <ellenhbrown@gmail.com>
Date: Sat, 25 Jan 2014 03:26:10 -0800
Subject: Re: China leaders' use of Tax Havens OUTED by Michael Hudson &
Investigative Journalists

I think it's a different Michael Hudson --



Comment (Peter M.):

You are right. What a mistake - I nearly got Michael Hudson (the
Economist) excluded from China.

I remember now - his name is Michael Huckleberry Hudson. His father,
Carlos Hudson, was a fan of Huck Finn.

Michael the Economist had written about Tax Havens in the past, but was
also something of a Georgist - eg he spoke at a Georgist fest in
Melbourne a few years ago; he was brought out by Prosper Australia.

Georgists would replace all existing taxes with a Land Tax - but Tax
Havens would escape this, because they are offshore.

However, Michael Hudson also advocates increased Capital Gains Taxes on
the wealthy, the cessation of Payroll Tax (a tax on employment), and
more generally a shift of the tax burden from Workers to Capital.

Michael W. Hudson, the journalist, has written this excellent book:

The Monster: How a Gang of Predatory Lenders and Wall Street Bankers
Fleeced America--and Spawned a Global Crisis

(2) Not THAT Michael Hudson

Date: Sat, 25 Jan 2014 21:15:43 -0500
Subject: Not THAT Michael Hudson
From: Michael Hudson <michael.hudson@earthlink.net>

Please put a retraction in. this isn't me. It's probably a former Wall
Street Journal reporter, M W. Hudson.

(3) Michael W. Hudson, journalist at International Consortium of
Investigative Journalists


Michael Hudson, USA, is a senior editor at ICIJ.

His two decades of work on mortgage and banking fraud has prompted media
critics to call him the reporter "who beat the world on subprime abuses"
and the "guru of all things predatory lending." He previously worked as
a reporter for the Wall Street Journal and as an investigator for the
Center for Responsible Lending. Hudson has also written for Forbes, the
New York Times, the Los Angeles Times and Mother Jones.

His work has won many honors, including a George Polk Award for magazine
reporting, a John Hancock Award for business journalism and accolades
from the National Press Club, the White House Correspondents’
Association, the American Bar Association and the New York State Society
of CPAs.

He edited the award-winning book Merchants of Misery and appeared in the
documentary film Maxed Out. His latest book, THE MONSTER: How a Gang of
Predatory Lenders and Wall Street Bankers Fleeced America—and Spawned a
Global Crisis, was named 2010 Book of the Year by Baltimore City Paper
and called "essential reading for anyone concerned with the mortgage
crisis" by Library Journal.

His recent series of stories for the Center for Public Integrity, "The
Great Mortgage Cover-Up," has been selected to appear in Columbia
University Press's Best Business Writing, 2012.

(4) Predatory Lenders and Wall Street Bankers - Michael W. Hudson


Insiders and Outsiders

Reviewed by JAKE WHITNEY

The Monster: How a Gang of Predatory Lenders and Wall Street Bankers
Fleeced America – And Spawned a Global Crisis

by Michael W. Hudson
Times Books, 384 pp., $26

ON A RAINY NOVEMBER morning in 1990, an eighty-nine-year-old widower
from Burbank, California named Anthony Elliott, after discovering that
he had lost his life savings, climbed into his bathtub and slit his
wrists with a straight razor. Three days earlier, on Thanksgiving Day,
he had typed a suicide note. It read: “There is nothing left for me ...
My government is supposed to serve and protect, but who? Those who can
gather the most savings from retired people.”

Elliott had been a victim of “predatory lending,” and the financial
institution that coaxed him out of his $200,000 nest egg was Lincoln
Savings and Loan, run by the now-infamous Charles Keating. Federal
regulators had been watching Lincoln, but Keating recruited Alan
Greenspan, former chairman of President Ford’s Council of Economic
Advisors and soon to be Chairman of the Federal Reserve, to get them off
his back. Greenspan told the regulators that Lincoln was “financially
strong” and presented “no foreseeable risk” to investors. It collapsed
soon afterward.

Elliott’s suicide is but a footnote in Michael W. Hudson’s new book, but
it resonates nonetheless. If predatory lending played a role in the S&L
debacle, how could we have allowed it to thrive again? Once the
deregulation of financial institutions began, so did the skullduggery of
those who ran them.

Deregulation started all the way back in 1979. The Carter Administration
removed rules governing what S&L’s could invest in, and almost
immediately CEOs such as Roland Arnall, who launched Long Beach Savings
and Loan and later Ameriquest, began concocting schemes to exploit the
looser regulations. Those schemes would create great wealth for Arnall
and his ilk while placing investors in increasing peril—an imbalance
that became more extreme as deregulation progressed over the next three

Along with deregulation came something more insidious: a campaign by the
big banks to push homeowners into second mortgages and home-equity
loans. Hudson reminds us that before the 1980s, “the idea of borrowing
against the family homestead … was considered vaguely disreputable, an
act of desperation or irresponsibility.” But that changed after Citicorp
and the large S&L’s bombarded homeowners with advertisements telling
them to liquidate their equity. In a bit of wordplay that would make
Frank Luntz proud, the ads invariably replaced the stigma-holding term
“second mortgage” with the friendlier “equity access.” While this
campaign was initially aimed at the economically stable, it did not take
long before an alternate industry emerged to target the poor and
financially unsophisticated.

Retirees such as Elliott, lenders quickly learned, were among the most
easily manipulated. “Remember,” executives from one firm wrote in an
internal memo, “the weak, meek and ignorant are always good targets.”
Hudson offers multiple examples of this type of targeting, first by the
shadier S&Ls in the 1990s and then, most prolifically, by modern
subprime lenders. Hudson’s delineation of a systematic effort to deceive
these borrowers rebuts arguments that the borrowers themselves bear most
of the responsibility for the subprime crisis. On the contrary, the
dishonesty of many lenders was mind-bogglingly ubiquitous, and went
beyond lying about mortgage rates and prepayment penalties to forging
signatures and doctoring loan applications.

Hudson focuses on Arnall, among all other potential targets, because
Arnall spent virtually his entire career as a predatory lender.
Ameriquest, his flagship company, became the largest and perhaps the
most devious of the subprime mortgage lenders. He was also among the
first to partner with Wall Street to securitize subprime loans. This
turned out to be a watershed moment, because it was not until investment
banks began bankrolling mortgage lenders that the stage was set for a
major crisis. And here Hudson turns to Lehman Brothers—the investment
bank that gambled biggest on subprime—to explain how our housing mess
sparked a global meltdown.

The Monster is among a wave of books and films that attempt to shed
light on the subprime crisis and the 2008 crash, but it is remarkably
comprehensive on its own—a sweeping, detailed, and forceful account of
the events, the people, and the policies that led to our current
economic woes. Hudson’s wisest decision was to avoid obsessing over
infamous and arcane Wall Street creations, such as derivatives,
collateralized debt obligations, and credit-default swaps, even though
they played a role in the market crash. Instead he chose to focus on
people—the perpetrators and the victims of mortgage fraud, and the brave
few who tried to stop it.

In the end, though, Hudson’s book is about something broader than
mortgage lending; its true subject is the insular world of corporate
sales, and the dire consequences that ensue when sales departments are
usurped by a culture of absolute greed. (The title refers to a deceptive
sales tactic wielded by First Alliance Mortgage Company.) Hudson
portrays Ameriquest and First Alliance as paradigms of this culture:
where cut-throat competition and complete disregard for a client’s best
interests were the rule, where movies such as Boiler Room were
worshiped, and where managers pressed for more loan volume, regardless
of how it was achieved. Absent deregulation and the culture that gave
rise to it, Hudson asserts, the crisis would not have occurred.

So why was it allowed to thrive again after wreaking such havoc only a
few years earlier? The truth was that this culture was viewed not as a
danger but as a virtue by those in positions of real power. Deregulation
had been gospel for twenty-five years at the executive level, and
Greenspan refused to step in during the crisis. While Greenspan gave lip
service to concerns about “questionable practices,” his true philosophy
was summed up in 1963 in an essay for Ayn Rand’s journal: “It is
precisely the ‘greed’ of the businessman which is the excelled protector
of the consumer.”

Hudson’s book is an utter repudiation of that philosophy. “All we care
about is fucking making money,” one Ameriquest manager wrote in an
email, “Nothing else matters.” Here, embodied by Arnall and his company,
is Greenspan’s “‘greed’ of the businessman” in its purest form. While
conservatives continue to insist that it was government action, not
government inaction, that caused the crisis, the culprits they point
to—Fannie Mae and Freddie Mac, the Community Reinvestment Act—were minor
players in the orchestra that ushered in the collapse.

No, here was an unfettered market that failed to “self-correct,” and
Greenspan, in what were perhaps his final hours upon the world stage,
admitted as much. In a chilling exchange with Rep. Henry Waxman before a
House Committee, Greenspan lamented that the crisis had exposed a flaw
in the philosophy that he had promoted for more than forty years. “What
I’m saying to you is, yes, I found a flaw. I don’t know how significant
or permanent it is, but I’ve been very distressed by that fact.” Not as
distressed, certainly, as many other Americans.

Jake Whitney is a journalist in New York.

(5) Michael W. Hudson shows Predatory reality, cf the abstract Economics
theory taught in Universities


The Monster: How a Gang of Predatory Lenders and Wall Street Bankers
Fleeced America--and Spawned a Global Crisis

by Michael W. Hudson

44 of 47 people found the following review helpful

   Strong account of predatory lendingBy MT57 on October 31, 2010

This was a strong book. Strong in the sense of well documented and
researched, and strong in vivid detail and tone. The author says he has
been covering predatory lending since the early 90's and I can believe
it. He has many anecdotes, many stories of individuals being defrauded,
and many interviews of persons who worked for predatory lenders. This is
the first writing of any kind I can find to enable me to understand
predatory lending, as opposed to just dumb subprime lending. This
understanding arose when the author cited statistics that show 99.75% of
these lenders' loans were not to purchase a house but to people who
already owned a house. The book conveys in very strong detail the ways
in which First Alliance and Ameriquest "preyed" on elderly, minority,
sometimes incompetent homeowners and tricked them into putting their
homes at risk for loans that were unnecessary, more expensive than
called for and in many cases based on fraudulent documentation. There is
no doubt that these are stories of outright criminal behavior and many
more people should have been prosecuted for what they did (the owner of
First Alliance and Ameriquest has died). Mr Hudson depicts thoroughly
the business model of predatory lending, their hiring and training and
sales practices, their advertising budgets and their lobbying prowess
(he absolutely impales Deval Patrick, ACORN and many other organizations
as being bought off by the predatory lenders). He provides real insight
when he demonstrates that the owners of these businesses appear to take
it for granted that they will only be in business for a few years. Read
more ›

26 of 29 people found the following review helpful

   Explodes politically self serving myths of economics and rational
choiceBy Eggcrate on November 18, 2010

The previous reviewers have done a good job of explaining basically what
The Monster is all about. However, I would like to highlight why the
book presents a unique challenge to academic economic theory,
particularly as it applies to public policy.

The foundation stone of Neo-Classical economics is that market
participants are inherently rational, are capable of "discovering" the
best available deals, and will quickly put destructive market
participants out of business. This is the Revealed Truth of Milton
Freidman, the bonkers Objectivist philosophy of the beyond bonkers Ayn
Rand, the rigid simple mindedness of the economics texts by Gregrory
Mankiw and the Harvard kids who have been force fed this abstracted,
idealized, establishmentarian slop....

Micheal Hudson never explicitly sets out to torpedo theoretic economics,
he simply sets forth the way a set of perverse incentives, aided and
abetted by an utterly dysfunctional regulatory apparatus, could make an
absolute, unrecoverable hash of the Ivy League worldview... one in which
all markets naturally seek the most efficient (and in Friedmanite
orthodoxy) most moral allocation of assets and talent.

Hudson instead shows a nested structure of economic actors that behave
more like criminalized, methamphetamine soaked, reckless, soulless
swine. It is abundantly clear that "incentive structures" can, quite
easily, produce outcomes that have a high degree of local rationality,
i.e. individuals maximizing their gains, while at the same time have a
higher degree of systemic irrationality.... i.e. stuffing grossly
fraudulent paper into the securitization system in wholesale quantities
with zero regard for the ultimate consequences. Such as imploding the
credit markets...

Frankly, Hudson's book should be a mandatory text in every introductory
economics class taught in this country, because it dispositively proves
that the Neo-Classical/Washington Consensus model is a broken model.

(6) A corporation’s place of domicile = its place of incorporation


In law, domicile is the status or attribution of being a permanent
resident in a particular jurisdiction. [...] A corporation’s place of
domicile is equivalent to its place of incorporation.

(7) British Virgin Islands - the leading corporate domicile in the world


A corporate haven is a jurisdiction with laws friendly to corporations
thereby encouraging them to choose that jurisdiction as a legal domicile.



Corporate Havens are a post 1970s[citation needed] global economic
phenomenon. This decade more or less marked the end of colonialism and
the formation of EU in the form of the EEC. Many legal and taxation
processes culminated in this decade that led to the formation of Tax
Havens and Corporate Havens throughout the developed world.

[edit]Geographical distribution

[edit]North America

Within the United States, Delaware is considered the pre-eminent
corporate haven for large public corporations, while Nevada, Wyoming,
and Alaska are corporate havens for small closed corporations.

Delaware, through its developed legal system and laws protecting
shareholder rights, is geared toward the large complex public
corporation, whereas Nevada and Wyoming are more attractive to the small
privately held corporation. Delaware law tends to protect the rights of
boards of directors and shareholders, while Nevada and Wyoming tend to
favor management.

[edit]Commonwealth & Western Europe

Corporate havens outside the United States include British Overseas
Territories such as

  Bermuda (according to the Foot report[1] Bermuda is the third largest
reinsurance centre in the world and the second largest captive insurance
  British Virgin Islands (the leading corporate domicile in the world,
with nearly 500,000 active registered companies)
  Cayman Islands (the leading jurisdiction for hedge funds)
  Gibraltar (for financial services, and incorporation)
and the British Crown Dependencies:
  Guernsey (for incorporations, offshore back office services)
  Jersey (for incorporations, offshore back office services)

Other havens include
  Zug, Switzerland
  Dutch Crown Colonies: Aruba, Bonaire and CuraƧao
  Nauru (mostly for financial services, and banking)

Increasingly, multinational corporations are using the leading corporate
havens, either by incorporating subsidiary corporations in these
locations or by moving their corporate domicile (the home company of the
corporation) there.

Corporate havens are often not beneficial to small corporations
operating in one legal jurisdiction because of the complexity of
creating a corporation elsewhere and then having to re-register in the
local area as a foreign corporation. [...]

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