Business dailies, journals, TV shows, Blogs, and newsletters became an integral part of the big "investment scam" where "objective analysis" flowed freely to manipulate markets. Once the internet bubble burst and the scam of "objective stock and bond analysts" was exposed, banks and investment firms had to change their strategy to continue amassing quick profits by manipulating the securities and commodities markets around the world, and in the process to defraud the multitudes who have investments in stock and bonds, many through their retirement portfolios.
Government regulators were well aware of what the banks and investment firms were doing, everything from fixing rates to illegal activities that included money laundering. Against the background of a "hands-off" climate and a neo-liberal ideology, and given the reality of large campaign contributions by banks and investment firms, government did very little to restore credibility, with the exception of egregious cases where modest fines were imposed and class action law suits that yielded a tiny fraction to defrauded investors. Because most market observers and participants became well aware of the scam that banks and investment firms perpetrated, a more credible method was needed in order to defraud more efficiently. This is where the "objective academic" freelancing as "consultant" comes in. Prominent economists, including Nobel Prize winners, took advantage of the lucrative opportunities to serve as "consultants" for banks and investment firms, as they had before the recent crisis.
The public generally assumes the economist as an academic is "objective" motivated by theoretical models, empirical data, and wisdom combined with a conscience rooted in serving public welfare. However, the crisis of 2008-2010 made it apparent that such individuals were on the payroll to deliver their employer's "gospel truth" with the sole purpose of swaying the market in everything from crude oil and currency values to bonds and stocks. This new "investment scam" is continuing. Hesitant to mention specific companies, media outlets and individuals involved, I will only point out that in the past several months a number of Hedge Funds, business TV and web programs, newspapers and magazines have employed "investment scam" artists parading in legitimate "economists" suits to continue manipulating currency markets, stocks, commodities and especially bonds.
The most recent example of how academics and the corporate media are in the service of scam-artists involves Euro-bonds and the euro. On the eve of the Davos economic conference in 2011, a very popular New York-based business TV network, a popular London financial newspaper, and a world-renowned economist simultaneously announced that Spain, Greece, Portugal, and possibly Ireland if its austerity programs fails are the Euro-Zone's weak links on the verge of bankruptcy. It is true that all EU countries are experiencing very serious deficits that should drive down the currency and the bonds higher.
The EU's strongest economy Germany is suffering a staggering budgetary deficit of 6% of GDP (86 billion euros), while Greece, one of the smallest EU members, is heading the deficit countries with budgetary deficit at 12.7% of GDP. The IMF has announced that in fact most countries suffer from inordinately high budgetary and balance of payments deficits. The deficits are a result of the recent crisis that required immense public funds to save finance capitalism. Naturally, this means higher bond yields, and lower value of the currency for EU. Here is where the "investment scams" enter into the picture, disseminating disinformation to make even greater profits by forcing the Euro-bond yields higher and the euro's value lower.
As the fourth-largest EU economy, Spain under a Socialist regime became a target of the disinformation regarding the degree to which specific EU country austerity measures would work to lower government deficits and restore market confidence. Spain with the highest unemployment in the EU has no room for the type of austerity measures that Ireland adopted, so it is an easy target. At the Davos conference of 2011, business journalists asked European heads of state if more rigid austerity measures are required to restore "investor confidence." To illustrate the absurd limits of finance capital's demands for social sacrifice, former Greek Prime Minister Papandreou sardonically replied that his government could impose euthanasia on 700,000 retirees to solve the deficit much faster. In 2011, this was a joke perhaps in poor taster. At the end of 2013, it is not far from the truth, given that the elderly have to choose between basic food needs, heating their homes and medications.
The EU central Bank and number of top EU officials, including heads of state and finance ministers had to undo alarmist "investment scam" propaganda by reassuring the public that EU monetary unity and market solidarity remains unshaken. The same officials confronted the media and economists that were spreading "investment scams," and the latter had to retract and claim they simply did not have "sufficient information" with which to analyze bond and currency trends. In some cases, "investment scam" artists blatantly lied about empirical events that were groundless, while in others they were simply feeding hyperbolic analysis on existing data and reaching absurd conclusions, such as "the end of the EU and the common currency."
In both cases, the purpose was to drive up bond yields and the euro down, which coincidentally serves the interests of EU exporters along with bond investors, in some cases one and the same entity. At the outbreak of the current crisis, the EU proposed tighter government regulation of banks, investment firms, and especially off-shore companies that shield large investors. Obama did not go along with the EU proposal until after the Kennedy Senate seat in Massachusetts went to the Republicans and the Supreme Court ruled to restore corporate campaign contributions under the guise of free speech.
Exploitation of the public by a handful of fraudulent investors determined to continue manipulating markets so they can amass greater wealth is indeed a Constitutional right under free speech protection. I have no doubt that when the Founding Fathers debated the merits of free speech they had in mind "investment scams." The question after the early 21st century's first major global economic recession is whether the role of the state in protecting public welfare is comparable to protecting national sovereignty from enemies foreign and domestic. Although free speech is not free if it excludes certain groups, currently it does exclude those engaged in "hate speech," libel, or speech intended to terrorize citizens (e.g. fire in the theatre, there is a bomb on this train, etc.).
Should governments curtail free speech to prevent the "investment scams," should they treat them in the same manner as libel suits, should they treat "scams" in the same manner as "hate speech," should they impose heavy fines for disinformation that is after all commonly used in the political arena? If "hate speech" is contrary to a democratic society because it promotes conflict and social disharmony, do "investment scams" cause far more damage to public welfare? Governments will do very little if anything for the very simple reason that the "investment scam" artists are an integral part of the capitalist system and they help in the relentless process of capital accumulation on a global scale.
Specifically, the pressure on the Euro-bond and the euro in recent weeks has actually forced EU governments to squeeze more concessions from labor and the middle class--raising retirement age, lowering social benefits, lowering wages, more flexible labor market with less job security, higher indirect taxes, and greater incentives for corporate investment. The "investor scams" that manipulate markets every single day prove that Adam Smith's "Invisible Hand" is visibly corrupt, and left to its own devices it will prolong the pain of billions of people around the world who work for a living.