Friday, April 30, 2010


In my early teens I asked my father what a neighbor who used to take me fishing did for a living. I thought less of the man after being told that he played the stock market. From the perspective of a fourteen year old he was one of the idle rich who did nothing.

Years later another seminal moment for me came on looking up the definition of “arbitrager,” the occupation of Ivan Boesky, one of the pioneers in the breed of culprits spawned during the Reagan presidency. It reads “Someone {engaged in arbitrage} who purchases securities in one market for immediate resale in another in the hope of profiting from the price differential.”              

This definition clearly delineates the function of many of the richest and, in my opinion, least deserving among us. Those who make this profession their life’s work contribute little or nothing other than the portion of their personal wealth spent as consumers. I separate them from the majority of workers in the financial community. It’s doubtful that knowledge of the Goldman Sachs capers went far down the chain of command. While these mid to lower level employees were acting on the instructions of those who support them financially, the same can’t be said of their higher ups, unless the clients who contribute to their livelihood wanted to lose a cool billion.

A recent letter to the editor in the N.Y. Times mentioned that many of today’s rich are not creators, but harvesters of wealth, true in the case of income from interest and dividends on investments. But it is a charitable appraisal of much of the current crop of arbitragers who operate by bringing in the sheaves of crops planted by others. This is not harvesting. It’s poaching. In an ethical context it’s not investment. It’s thievery.

Thievery is punishable by law. But there is historical evidence of it being committed long and often enough for the stolen goods to become not only de facto, but legal property of the thieves. This happened to land once inhabited by American Indians. It is now our property because we were squatters long enough to qualify as owners. We’ve heard the term “squatters’ rights.”  Thieves don’t have these rights as long as they’re simply thieves. If new rules governing the financial community aren’t adopted and enforced, these thieves will one day become accepted legal owners, not only of the swag they’ve accumulated, but whatever they acquire by the same means until further notice.

Sunday, April 25, 2010

Illegal Immigration

A hot button issue at the moment is illegal immigration. Republicans, understandably, would like to make it as hot as possible to compete with Wall Street reform, which can only work against them. In this debate all I can say is that I’ve heard arguments from both sides and agree with each, at least to the extent that we have a problem. I disagree with some of the more simplistic solutions.

Lou Dobbs types are correct in claiming that it’s contrary to the national interest to have so many undocumented people in this country. While some true believers have threatened to shoot trespassing census takers, this inconsistency doesn’t invalidate the other part of the argument. We have a right to know who is occupying our premises. The claim that they only take jobs other workers would refuse notwithstanding, there is more competition for any kind of job, now that we’re two years into our decline, than at any time since the Great Depression. As a consumer I’m annoyed when being served by someone hired to deal with the public who doesn’t speak or understand English well enough to communicate. I found this particularly infuriating in a recent verbal tussle with a Citicorp representative, although he could have been speaking from India. It’s also a reasonable that immigrants who are here illegally should not have a leg up in becoming citizens.

On the other hand I consider it axiomatic that these people deserve humane treatment. While acting illegally, their breaking the law is more a matter of survival than of avarice, as in the case of the other folks making headlines these days. Many have been in this country for years and have children who, according to our law, like it or not are U.S. citizens. The idea of jailing them, posed by some enthusiasts, is both cruel and silly. It costs $40 thousand a year to incarcerate a person. Deporting them? I suppose we can afford the fare. But we would either be deporting citizens or, by parental choice, breaking up families. 

Concerning the Arizona law passed this week, there’s nothing that can be said in its favor. A law degree isn’t necessary to know that our borders are subject to federal, not state, purview. When the Arizona National Guard is sent to Iraq or Afghanistan it’s not at behest of the state. Critics of this law who say that it will lead to racial profiling are understating their case. It is racial profiling. Being of extremely fair complexion I’d have no concern over driving through the state. But I’m not certain about my wife who might do well to stay out of the sun before her trip. Can Arizona afford the expense of the extra law enforcement hours required? Or are they willing to tolerate more common garden variety crime. In criticizing this law the question is not where to begin, but where to end.

I have no panacea for dealing with the plethora of illegal immigrants now in this country or those who will be entering it. Increased border control is a reasonable procedure that falls in the “easier said than done” category. The problem is exacerbated and complicated by political ramifications. Whatever the eventual resolution not everybody will be satisfied with it. In my opinion most of the “sure” remedies that I’ve heard at this point are simply dead ass wrong. 

Friday, April 23, 2010

Many Happy Losers

My fondest hopes have just been dashed. I was eagerly waiting for Senate Republicans to fight financial reform the way they fought health care which would have been a sure loser. Now there’s talk of compromise. I suspect that Democrats are in a state of shock on receiving that single GOP vote in the Banking Committee favoring the Dodd bill. It hints at abandoning Mitch McConnell’s claim that the regulations in the bill would lead to more major bank bailouts, like the ones that just followed thirty years of deregulation. I was looking forward to hearing more of that argument.

After reading review of two books on our financial meltdown in the Book Review section of last Sunday's New York Times I realized how little I know about the mechanics of this part of the world of finance. I do know that the problems involved the selling of IOUs and the use of other peoples’ money to that end. But terms like derivatives, hedge funds and credit default swaps still have my head swimming.

According to the review, both books frequently refer to “selling short.”  I remember the phrase “In 1929 I sold short” from Ira Gershwin’s multiple sets of lyrics to Vernon Duke’s "I Can’t Get Started." I’ve always thought the term just meant getting out while the getting’s good. But it’s not that simple. The foundation of the shenanigans we’ve been hearing about is wagering on and profiting from the devaluation of securities. I don’t understand how this sort of bet is placed. It’s evidently more complicated than calling your broker or friendly neighborhood bookie because it requires considerable subterfuge. This suggests that the wager may be something less than kosher. It may be simplistic. But I’d say that a professional financial advisor’s recommending a security that he or she expects to fail and betting on that failure crosses the line separating misplaced speculation from thievery. In the inner circle of practitioners of this technique it may be considered genius.

I’ll wait to see the Republican version of “compromise” before getting my dander up another time, although I expect the worst or, more accurately, the least. To me the guilt goes well beyond the Frenchman named in the SEC suit and includes almost the whole the kit and caboodle, certainly Goldman Sachs chief honcho Lloyd Blankfein. My version of justice, which may be a bit draconian, would have him doing life in jail in a cell adjoining Bernie Madoff’s where they could talk about the good old days. In lieu of that I’ll have to settle for not having to read those two books.    

Monday, April 19, 2010

Goldman and Sachs Fifth Avenue

I know little about the intricate dealings of the financial world. But it doesn’t take much to know that when an investment counselor recommends that a client buy a security that he believes will fail, to the extent that he bets his own money on its failure, something is wrong.

Nothing yet has been proved in the case against Goldman Sachs. But we already know what we need to about such as the Savings and Loan culprits, Enron and Bernie Madoff. Larceny, in varying degrees is prevalent throughout the world. Individuals like Madoff practiced it to near perfection. Reality-show aspirants do it too, albeit for chump change. Organizations like military contractors do it big time in broad daylight. Rarely a day goes by without news of someone with a hand in the cookie jar, so why should we expect anything different from Wall Street? Greater supervision of the heart of America’s financial world would be beneficial to anyone who isn’t, or doesn’t anticipate being, among the beneficiaries of the heist.

Whatever the outcome of the Goldman case, whether the individual charged is guilty or whether others in the corporation are involved, there is no question that this kind of activity has pervaded high finance and is at the root of the hard times we now face. With financial regulation due to come up in the Senate this week the timing of this case couldn’t be better, a consideration that may have had something to do with the SEC scheduling. If so, I say more power to them!

This breaking news deserves greater attention than the attempted Watergate burglary received, which was little when news of it first broke. The significance of both scandals is on a par although there are differences, one of which is that In Nixon’s time there was no Fat Man or Fox in the henhouse. Had there been it’s likely he would never have had to leave office. With these current right wing “populists” filling the airwaves it will be interesting to hear their arguments on behalf of the likes of Goldman Sachs. The essence, not the language, can probably be distilled to “anything Obama is for is bad.”

It’s time we realize that we have different kinds of enemies. Not all of those with stockpiles of guns and explosives have foreign sounding names. We should also know that others, nowhere near suicidal, unleash much of their brand of destruction daily from limousines while dressed to the nines. 

Friday, April 16, 2010

You Wait Sixteen Years and What Do You Get?

The parallels of this fall’s midterm elections and those of 1994 are clear. Then, the party of a Democratic president in office for two years after defeating an incumbent Republican lost both Houses of Congress. A similar result is considered possible in November. Both elections involved vociferous opposition to the president and his party, even more so this year. Contrary to conventional wisdom I consider health care reform merely a secondary issue in each case. What they have in common is the age old resistance and concomitant anger by those who have, to the possibility of giving to those who haven’t.

Since a larger proportion of the have nots are people of color the matter of race becomes an important part of the equation. In l994 we had the specter of Reagan’s fictitious welfare queen picking up food stamps in her Cadillac. Today we have a black president, which adds to the rage of the poorer members of the Tea Party, at heart Republicans who are not yet housebroken.

A big difference in the circumstances surrounding this election is the state of our economy which is conducive to incivility. In spite of Republicans’ well deserved reputation as the party of the rich, the fact that the problem is mostly their creation and the initial TARP financial bailout having been requested by a president from their party, they have succeeded in reversing much of the public perception. To the lesser informed, Democrats are the party of finance and Republicans the populists. This rhetorical legerdemain is the result of the continuing drain on the Treasury from bailouts necessitated by problems our current president inherited.

I don’t see how this myth can prevail once Republicans have taken their inevitable stand against tightening restrictions on the financial community, particularly if they vote as a block as they did with health care. A lack of proper supervision of Wall Street has preceded our two biggest financial disasters of the past hundred years. Anybody keeping score knows where the parties generally stand. Senate Minority Leader Mitch McConnell fired the opening salvo when he said that regulations would lead to giant bailouts of financial institutions, presumably like the ones taking place lately. Is he dyslexic? This sort of logic is too Alice in Wonderland for anybody with a modicum of knowledge, which excludes the Tea Baggers who apparently come from there.

The long slough to some kind of health care bill seemed like it took forever. The floor is now being occupied by a simpler, but at least as important subject. To paraphrase the Maxwell Anderson lyric to the Kurt Weill melody, it’s a long long time from May to November. The longer the better.  

Friday, April 9, 2010


It was next to impossible for any Republican to have won the l964 presidential election. In Barry Goldwater’s case his fate was sealed early at his party’s convention leading to the most one sided defeat in presidential history, by his saying that extremism in defense of liberty is not a vice. This was a matter of bad timing. Many Americans were still in shock from the assassination of John Kennedy less than a year earlier, a cut and dried act of extremism. Goldwater’s choice of words left a lot to be desired.

In light of his dedicated record of public service, there had to have been a point beyond which Goldwater would begin to see extremism a vice. My guess is that he might have approved of something similar to today’s tea bagger demonstrations, but not what took place on the Capitol steps the day of the health care vote. I’m certain his idea of tolerable extremism didn’t include terrorism, of which we are now experiencing text book examples by those who opposed the health care bill. The dictionary definition of terrorism specifies threats as well as action. In the words of the Bard of the Bronx “you could look it up.”

While 1964 was not a good year for promoting any kind of extremism this seems to be a vintage year. The nation is experiencing its worst and most prolonged financial distress since the Great Depression, during which we were closer to coming apart at the seams than any time since the Civil War. Our situation may have been worse in the 1930s than it is today. But high tech communication easily compensates for the difference. This is a time for cooler heads to prevail. Instead Republican leaders have been fanning the flames, evidenced by the “don’t tread on me” banners hung by congressmen outside the Capitol to encourage the crazies during the vote on health care.

The lumps inflicted by the system on our side in Bush v Gore are monumental compared to those taken by the other side by the passage of a piece of legislation of which they disapproved. Particularly in light of this discrepancy we can take some pride in the fact that we took ours with a hell of a lot more class.   

Wednesday, April 7, 2010

Knowledge vs. Belief

I was impressed with an op-ed piece by Charles Blow in the April 3 New York Times titled “An Article of Faith.” In it he equated the difference between the political left and right to that between mind and heart, evidence and emotions, reason and anger and what we know and what we believe. How about logic and wishful thinking? This argument is a bit simplistic in describing those of us left of center. We also have beliefs to which we are as committed, a bit less audibly, as the folks on the right are to theirs. I agree completely with the other half of the equation.

Analogous to this thought are differences between the crews at MSNBC and Fox. Both have strong, opposing beliefs on controversial matters and both let their beliefs influence their choice of reporting and the spin they put on it. The difference is that at MSBC the house prejudices are argued with facts which, when they’re inaccurate, are corrected on the air. Much of what you hear on Fox is opinion, some of which, with a little luck, might turn out to be factual. The untrue part is repeated so often and for so long that many people come to accept it as fact. The “vast majority” claimed for the network position against health care reform, is pure fiction. The polls have been conflicting and close.     
There’s no mystery in what Republicans believe and how they will respond to proposals on any serious financial reforms that might come up for consideration this year. They’re “agin ‘em” for reasons that don’t require explanation. I eagerly look forward to hearing their rebuttal to the following set of indisputable historical circumstances.

In the past century we’ve had two periods of extended major financial distress. They were both preceded by long periods of rampant Laissez Faire. After the regulations resulting from the Great Depressions had time to take effect we had over a half century of relative stability. It ended after a major part of these regulations had been revoked.

Coincidence doesn’t prove causation. To say that because something has happened twice under a similar circumstances means it will happen for a third time for the same reason violates strict rules of logic, in this case barely. Republicans can argue that this pattern was either one hell of a coincidence or a miracle. But as one who by Mr. Blow’s standard leans in the direction of mind/evidence/reason/logic, I consider a miracle merely a figure of speech. Once it’s happened it’s no longer a miracle. At least that’s what I believe.   

Sunday, April 4, 2010

Third World

We’ve often heard the term “third world” used in reference to the world’s least developed nations. By implication there would be first and second world nations, although I’ve yet to hear the terms used. It would be an interesting exercise to explore how the top two thirds of this hierarchy might be divided.

Your friendly neighborhood xenophobe would probably insist that America is the only first world nation, with other developed nations somewhere in the vast space between us and, say, Somalia. This argument is valid to a point.

In the context of a “super power” there’s no doubt about our unique standing. As to our being the world’s richest it depends on how one measures wealth. A case could be made for China, or even Saudi Arabia, although there are those who might question whether the latter is “developed.” We’ve been first in space exploration for some time, as well as technology, although in the latter case I’ve been hearing of technical innovations developed abroad that have eluded us. Maybe we just weren’t interested. Our higher education has been of such quality that many people from other countries come here to benefit from it.

On the other hand primary education is an area where our presumed superiority breaks down. Our ranking varies with the source of information. But by any measurement we’re well down in the second half in reading skills, mathematics and, I suspect, logic. The right wing has fought successfully to keep us near the bottom in health care. Our system is a disgrace, unless you consider the rest of the developed world wrong. Granted, our medical schools have attracted students worldwide and wealthy foreigners have sought care from our doctors. But the end result of our system of distributing care to our citizens is a place well down on the list of life expectancy. When it comes to equality of wealth distribution we might be last were it not for good old Saudi Arabia.  In this case the gap has been growing for thirty years so we might even pass them on our way. Our deference to Wall Street has created world problems resulting from the global influence of our failing financial community. Our cooperation in international environmental matters can be described as piggish.

I don’t watch TV “professional” wrestling longer than it takes to change channels. But in my farming years I had occasion to see it in person at the station in Dothan, Alabama during the spare time preceding several appearances there with some of my cows. I’d never witnessed anything approaching the wild rage of the spectators, as I recall the most conspicuous being older women, while one gladiator was going through the motions of pummeling a local favorite. They have now been one upped by the tea baggers.

There always have and will be people of this sort and not only in America. But if poll numbers are an indication of how many of us they represent and we also consider the pistol packin’ papas, when it comes to civility we are beginning to look more third world every day.

Thursday, April 1, 2010


Terrorism: “The unlawful use or threatened use of force or violence by a person or organized group against people or property with the intention of intimidating or coercing societies or governments, often for ideological or political reasons.”

This is the first definition on the web sites I checked, of which the events of 9/11 are a textbook example. But if we think of terrorists only as people with swarthy complexions and unusual names we’re overlooking many, if not a majority, of them. The Oklahoma City bombing in 1995 was also a terrorist act even though the perpetrators were Caucasians with ordinary surnames of McVeigh and Nichols.

If one accepts the fact that all terrorists don’t face east at religious rituals it becomes clear that we are now experiencing a new wave of terrorism in the aftermath of the passage of health care reform legislation. While no major material damage has yet taken place, the words “threatened use” make the definition fit the current offenders to a proverbial T, a textbook example being the “militia” group from Michigan.   

The fact that many of those whose interests are entwined with those of the Republicans benefitted from the events of 9/11 does not by itself impugn their patriotism or conviction in opposing terrorism. Neither does the fact that these interests are being served, in many cases unknowingly, by today’s culprits. In my admittedly biased opinion the concern of many of us is directly related to the ethnicity of the perpetrators. But when the WTC buildings collapsed and the Murrah building fragments started flying, wealth, politics and race were irrelevant to the identity of the victims.             

The rhetorical battle now underway is over which party’s response to current domestic terrorism is most appropriate. This is an attempt to shift some of the culpability from the terrorists to domestic political opposition. Worse than being non productive, it is counterproductive in misdirecting our much needed attention and energy.

To most responsible Americans of all political stripes prevention of terrorism is high on their list of priorities. For opposing domestic political forces to argue over on whose list it is higher, divides us where we should be united in a common purpose. I suggest the leaders of both parties in both Houses of Congress get together behind closed doors and craft a statement to which they can agree. Preventing terrorism is in their interest as well as the nation’s and is ill served by a contest over who can come up with the best choice of words.