[Rushtalk] Looting for Profit

Carl Spitzer Winblows at lavabit.com
Sat Dec 29 09:14:36 MST 2012



In 1993 Akerlof and Paul Romer brought forth Looting: The Economic
Underworld of Bankruptcy for Profit, describing how under certain
conditions, owners of corporations will decide it is more profitable for
them personally to 'loot' the company and 'extract value' from it
instead of trying to make it grow and prosper. IE:

        "Bankruptcy for profit will occur if poor accounting, lax
        regulation, or low penalties for abuse give owners an incentive
        to pay themselves more than their firms are worth and then
        default on their debt obligations. Bankruptcy for profit occurs
        most commonly when a government guarantees a firm's debt
        obligations." [8]

Yves Smith argues in her book "Econned" that Akerlof and Romer's
"Looting" theory applies to the subprime mortgage crisis and the
Financial crisis of 2007-2010. She argues that the 'Looted' companies in
this case are banks and others who were 'looted' by certain traders and
executives within those companies.[9]
ObombA did not win erection, Trotskite RINO Mitt Romney threw the
election.  -- Rush Limbaugh
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