Michael Collins

(March 10) Wall Streets is headed toward international pariah status thanks to two recent actions by the European Union (EU).

On Tuesday, the EU announced that it was banning Wall Street banks from the lucrative government bond business in Europe. They didn't express official concern or fire off a warning shot. They simply banned Wall Street from financing government bond deals like the one Goldman Sachs sold to Greece. The Guardian pointed out that Wall Street bond business from European governments has gone down over the last two years. Now the business is gone period. In effect, the EU has labeled Wall Streets business tactics as too dangerous for their governments to handle.

It may be the one-year anniversary of an amazing stock market rally, but economists are sounding rather pessimistic these days.

A growing expectation of a double-dip recession is evident in a new poll of financial executives...the poll found more than half of financial executives predicting another downturn, and most expecting jobs recovery to lag into 2011.

The predictions don't end with just this poll. Nouriel Roubini is also warning of a second leg down, and even more disturbing is this report.

Note: this is a cross-post from The Realignment Project.

Introduction:

Even under the relatively optimistic economic forecast included in the 2011 Federal Budget, unemployment will remain at the 9.8% rate through the end of this year, dropping to 8.9% in 2011 and 7.9% in 2012.  In other words, after four years since the first stimulus, unemployment will remain at recessionary levels. To be fair, the passage of a jobs bill – and the promised efforts to pass further stimulative elements (aid to states, highway money, public works, etc.) – lends some slight hope that this catastrophe might be averted.

However, as we’ve seen with the jobs bill, it’s incredibly hard and slow to get even the smallest elements of a jobs bill through Congress; this makes it highly unlikely that sufficient actions will be taken to bring down the unemployment. However, I do think that it is possible to push through more aggressive jobs measures at the state level in heavily Democratic states that aren’t hamstrung by the Senate’s rules and the Blue Dog Caucus. As I’ve discussed in my 50-State Keynesianism and Job Insurance series, I believe that it’s possible to reform state governments to be successful anti-recession institutions, complementing Congressional action.

Today, I’ll take California and New York as two heavily Democratic states that are also large enough to have a significant impact on the national economy.

One sometimes hears a repeated exaggeration of the Inuit (inappropriately referred to as Eskimos) language, claiming that they have hundreds of words to describe snow. While the actual number is considerably less, this exurban legend does make its point.

I suspect that centuries from now, historians will remark similarly about 21st century America, stating that they had one thousand names for fraud.

The Blackstone Group: Tax Fraud Incorporated

A year or so ago, it was reported that the private equity firm, the Blackstone Group, was going public. Like many, I gave little thought beyond the fact that they had sought investment from China due to their brittle financial position at that time.

Recently, I came across an excellently written research paper by a law professor at the University of Illinois College of Law, Victor Fleischer, titled Taxing Blackstone.