If only Mr. Rogoff had waited a couple of weeks before reviewing Mr. Piketty's opus here the result might have been far more entertaining (as well as thought-provoking).

Why? Mr. Piketty got the R&R treatment from the FT this week (right here, you may have to register to see). Some of the criticism is about data sources; some is about data adjustments; and some concerns data selection. But the underlying question is about the combination of these and their subsequent interpretation.

The New York Times captures that last point when commenting on this graphic from the FT piece written by their economics editor, Chris Giles:

Citing the FT piece the NYT says:

Speaking of Britain, for example, Mr. Giles writes, “There seems to be little consistent evidence of any upward trend in wealth inequality of the top 1 percent.” He further writes that if one incorporates the different British data into numbers for Europe as a whole, and weights by population instead of weighting Britain, France and Sweden equally, “there is no sign that wealth inequality in Europe is rising again.”
That is a damning conclusion, and if it holds up to scrutiny, would significantly undermine the case Mr. Piketty mounts. But Mr. Giles himself writes that “while this post is clear about what is wrong with Piketty’s charts, it is much less certain about the truth.”

Mr. Piketty remains in Zen-mode so far.

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More anti-bank developments reported here by Dealbook featuring, amongst others, Preet Bharara the US attorney in Manhattan. It was Bharara who took down Galleon and saw that Rajaratnam got jail time. 

After that conviction Bharara said:

“The message today is clear — there are rules and there are laws, and they apply to everyone, no matter who you are or how much money you have.”

Now he (and others) are seeking to walk the talk by bringing criminal charges against two foreign banks operating in the US.

Tough ask? Law breaking and deception by banks have only been met to date with non-deterring fines that do nothing to change behaviour.

Citigroup 'misrepresented' subprime exposure ($75m fine); Barclays 'processed transactions' (for over 10 years) for some of the same sanctioned nations BNP is now up for ($298m fine); and there are assorted other US and non-US banking examples that went through the American legal system in similar vein. Limp fines despite reams of emails (for example) incriminating individuals at these banks. 

Removing a banking license is the nuclear option and one that it is hard to see ever being applied in the current environment. So clearly a range of punishments between the nominal fine on one hand and complete crucifixion on the other are needed.

Additionally it would be a pleasant surprise if prosecutors were able, from time to time, to find a human being to prosecute (although some did draw fines too at Citigroup) alongside the corporation. That inability has caused judges in some cases to refuse to sign the settlements (initially) insofar as the law granted them the leeway to so act. But they did make a point of berating prosecutors for negotiating timid settlements.

Now there is an apparent change of heart and strategy. Still, it remains hard not to have the thought that some banks simply have better lobbyists than others.

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