Liar Liar Pants on Fire

Oh please.  Surely, David Einhorn cannot have actually used THAT as his defense. And the FSA, like The Revenue in the Vodafone and Goldman Tax cases, and who remains in apparent awe of corporate celebrity, has seemingly bought at least some of it, judging by their willingness to accept his representations at face value.  By comparison with former GLG Chief Spec Philippe Jabre's torpedoing of Sumitomo Bank shares with thermonuclear ordnance in front of their imminent CB issue while still on the bat-phone to GS's "Philby", Einhorn's corporal caning by the FSA was a step in the right direction.  However, despite Mr Einhorn's attempt to nuance his rather implausible defense, I really see little difference in spirit between IMCL's Waksman, Martha Stewart, Raj-Raj or other examples of law-breaking financial malfeasance.

The thing is, Mr Einhorn paints himself to be, well, errrr ummm like David, representing Truth, Honesty, Goodwill Towards Men (OK maybe not the latter) and the Light of Virtue versus the evil dishonest greedy Goliath-like titans of Allied, MBIA and the gorgon's of Lehman. So today's ruling by the FSA, even if not what it should have been since few of his peers or practitioners would doubt that he knows very well what constitutes material non-public information, knew this approach was material non-public information, and yet brazenly acted upon it for parochial advantage, thereby representing yet one more "another one bites the dust" moment for what previously passed for integrity. He has been found out to be a cheat, playing his preferred game with marked cards.

And so it is a sad day for anti-cheats.  And I too am a bit forlorn because Mr Einhorn has been right  about a number of the well-researched cases he's made, and seemed somehow different to others-who-shall-not-be-named. ***Sigh*** But now, investors, stringers, financial journalists and even his acolytes, will need to scrutinize him, and his public proclamations  carefully - far more carefully than before. Because cheats are often liars, and the line between a cheat and a liar, and a sociopath who will talk his own book and harvest from his neighbors' Victory Gardens for parochial advantage, irrespective of collateral damage, is very thin indeed.

Kudos for his lawyers (they must have earned their fees)...shame (again) on the FSA.

Final Result: ZH Mob-417, PK-4

I will sheepishly admit that I occasionally read the odd ZeroHedge post. Sometimes, it is because they provide some useful information (such as a reprint of a Richar Koo research article). More often it is out of some morbid fascination with demagoguery and how it palpably impacts people's belief structures. 

Today, the post  entitled United Welfare States of America 2011 - Nearly Half Population Received Some Form of Government Benefit caught my attention. Not because I thought it overstated the case, but because I reckon it UNDERSTATED the case. Indeed, the number is closer to 100%. The post was highlighting entitlement recipients, and their rise as a apercet of the population and a percent of GDP. Indeed, since the beginning of the crisis from an average of 12% of GDP for the preceding three decades to a conspiratorial 15% of GDP post crisis.   

The numbers reveal a reasonably counter-cyclical pattern of rising during recessions and falling (even if slightly) during recoveries.  

I would argue for fairness, it should be 100%, as they have conveniently forgotten or ignored those receiving other benefits or subsidies. For if taxpayers are incensed, they should be as outraged, not by the extra five percent thrown onto the benefit rolls during hard times, but by the other 50% of the people whose non-welfare benefits are received 100% of the time, such as those using mortgage interest deductions, and all manner of tax-reducing loop-holes, grants, and other deduction to reduce their level of tax, and therefore keep the federal income statement deep in the red. Indeed, there is likley no one in the country who did not receive some benefit - in kind, or service - be it a road, defense of the nation, hospital or educational grant, or beneficiary of technological or medical research financed in part or whole by the government.  But this is subject matter for another post.  

More interestingly, it appeared that Dr Paul Krugman made a surprise appearance in the comments section, pointing out, that, such countercyclical sensitivity was not only to be be expected (as in the past) but needed, and debating with other commenters. It could have been a ruse or hoax, but it actually appeared veritable, with the correct language and timbre of Dr PK himself (not that this would be too difficult to fake).  I would like to say that Dr Paul Krugman emerged unscathed today from this Zero-Hedge-sponsored rumble with the likes of YogiBear, AlienIQ, JPMHater001, SHEEPFUKKER, Satan2Liberals, Blindman, and HarBanger and a horde of apparently brown-shirted zealots, but it was akin to what one might imagine of Dr Martin Luther King trying to chat to the hooded-chapter of a KKK at a midnight cross-burning.  And he did not fare well. While the PK was calm and measured, the crowd, in not unexpected ZH fashion tarred and feathered him, pissed downwind upon from behind the bushes, before the lynch-mob hoisted him up by a rope into the tree. 

The final tally was a disappointment for those interested in informed debate. I felt sorry for Dr Krugman - if it WAS PK - sorry that he felt it necessary to try and debate folks that have no interest in discussion, little grasp of the facts, and that his calm discourse only inflamed seeming hatred and rage already burning our of control. I wonder aloud with some dread whether THIS is the precursor of what awaits America, the mob of Atwood & Roth's dread. 

So Long (and thanks for the all the....)

The European Commission

rue Archimède, 73

1000 Bruxelles

BELGIUM

18th January, 2012

Dear Hedge Funds, Financial Speculators and Bloggers,

Euro-Area members wish to thank you for your support through these difficult times. 

As you know, thanks chiefly to munificently-expansive fiscal and monetary policies, in other regions (Japanese ZIRP, American near-ZIRP and their respective persistent fiscal yawns), compounded by the Chinese desire for reserve diversification and insuring an attractive quasi-pegged exchange rate, we Europeans have been living with a significantly overvalued currency for the better part of the past decade. This has undoubtedly been difficult for much of both labour and export related industries across the community (though not nearly as difficult as the eye-popping pain suffered by Swiss, Norwegian and Swedish non-commodity exporters. Your concerted actions against the Euro, in both words and positioning, have been unbelievably helpful in relieving some of the pressure from over-valuation, and for this we thank you.  

Currency strength has not been without its benefits. We have been able to fill our shopping trollies with all manner of consumer goods, at prices and in quantities heretofore undreamt. It has allowed our enterprises to acquire assets, plant and equipment abroad at attractive prices that will serve our business' future production and distribution needs. Finally, as our Calvinist forefathers philosophized "What doesn't kill you makes you stronger", and trying to export out of the EU at  USD1.50 indeed came very close to killing us (and sadly remains challenging for Urs, Lars and Sven respectively). But it did encourage meaningful leaps in productivity and efficiency gains in manufacturing processes and services. And thanks to high energy taxes, our sensitivity to energy prices is greatly reduced thanks to our alternative energy investments and higher efficiency vehicle fleets running on diesel.  While the latter leaves us in a better position than had our industrial and energy policies been directed by rent-seeking interests and industries (as in the Anglo Saxon Countries), the time had clearly come to unshackle ourselves, and pursue more aggressive growth policies by every means possible.   

We also wish to thank you for highlighting the flaws in our financial framework left unfinished from our first go at Maastricht. These were bound to be fleshed out at some point, and the Commissioners wish to express their gratitude for taking such a focused interest in our future monetary affairs. Your attention  has been most welcome by helping us achieve what we, ourselves, have been unable to do: encourage the ECB to broaden its mandate and to move the exchange value of our common currency back towards more competitive levels - one that will help boost our growth and employment and find new markets which can afford our substantial selection of food, fine wines, well-made manufactured goods and first-rate services, in addition to making the Euro-Area a destination-of-choice for newly-minted tourists the world-over.

Indeed, far from being a nuisance as some now-departed civil servants might have let slip in haste, your aggressive intervention in our affairs has been of great assistance in helping us focus upon what needs to be done. Of course amongst the cacophony, there have been wing-nuts and the self-serving with much contradictory advice (urging us at once to borrow less, devalue, spend less, spend more, borrow more etc.). Confusing as this has been, it has helped us focus upon our issues and policy weaknesses, and what is important to us, helping us, finally, embark upon changes sorely needed such as those related to pension reform, fiscal adjustment, greater financial integration and significant labour market reform. In fact your attentions and the fear of the abyss where you've been herding us, has helped leaders rally a political support  necessary to overcome parochial political opposition that has been the been a chief obstacle to change. Indeed, thanks to you, the EU will achieve first-mover status in many such reforms, which interestingly, neither Japan, nor the the American Union have been able to make either in reducing primary deficits or reining in future liabilities. Finally, your valuable input has kept us consistent with our new motto: "Doing the right thing for YOU....after exhausting all other possibilities!".    

We recognize that for many of you, labels like "altruist",  "communitarian", or even "do-gooder" are shunned lest they sully an otherwise pristine reputation for selfishness and greed. But in this case, there is no denying that in applying your version of "tough love", you have helped the people of Europe, and for this we wish to express our gratitude. 

Yours truly,

The European Commissioners

P.S. - While we are thankful, and hopeful of your continued support in dissing the EU weakening the Euro further to levels more sympathetic with PPP, please do not think we will relent in trying our best to prevent you from gaming politically hard-fought solutions to our present difficulties. 

P.S.S. - If you are a hedge fund manager buying Greek Debt and making a fuss to be paid 100% of face, please note irrespective of Schengen, we reserve the right to detain and cavity-search anyone suspected of trafficking. And even if you choose NEVER to come here, you never know when your London->GVA flight might unexpectedly be diverted to Frankfurt. Just saying....  

Pleasure Principles

“What will fill the vacuum formerly occupied by religion?”

The most thoughtful, as well as the most memorable wedding gift my spouse and I received in 1993, the year of my first (and only) marriage, was neither the most expensive, nor an object. Rather it was a “Brunch” - that uniquely American invention deplored by Anthony Bourdain in Kitchen Confidential as a reliable though odious route for restaurants to recycle anything and everything left over in their refrigerator and pantry. I learned other useful pointers from Boudrain, (who since parlayed that success into a TV Celebrity status that sufficiently provides for his habits), such as never eat restaurant fish on a Monday, and if you're a foodie and looking for best execution, avoid Fri and Sat evenings like the plague., etc. But I digress. This 'Brunch' was a simple but special affair in that it included the company of [the late] acclaimed author, Chaim Potok, and his lovely wife Adena.

Who is Chaim Potok, you might ask? I'd read several of his novels, independently, following on the heels of those  by Nobelists Saul Bellow and Isaac Bashevis Singer, though before I'd been introduced to works of Philip Roth. All their voices rang true. All chewed upon the clash of the traditional with the modern. All seemingly lamented the loss(es) of what was, even when (reluctantly) accepting the victory of modernity's “progress”. And they all struck some chord within me, each ruminating in their own perspectives and style upon issues still-raw-and-contentious (in my own family), growing up as I did on the generational cusp, and witnessing my parents wrestling with theirs over the same.

I think Potok stands out as his breadth of thought was more encompassing. He was first a Rabbi, then a writer, also a theological academic and philosopher (PhD Penn, Philosophy) as well as a graphic artist, and playwrite, though the arts were his first love and a source of conflict with his own (traditional) parents. His  timeline reflected this same struggle: from indoctrination and orthodox study sliding towards the increasingly secular graphical artist and thinker. He may not have been the superior novelist of the genre shared by the four eminent writers, but he probably was the most eclectic and adept thinker. His experiences were varied: an army Chaplain, a rabbi, a teacher, an editor, writer, an artist). Bellow's and Roth's characters and dialogue might have been more realistic, Potok stretched the boundaries of thought further than the others. Like the great Jewish minds (unlike those of current-day Likud), Potok ruminated thoroughly and saw things not categorically, but nuanced – context within context within context.

Beyond these spartan observations, there is little I can add. We drank coffee, and chatted about our experiences, and about faith. I made no effort to hide my lack thereof, though I couched it in the agnosticism of the empiricist versus certitude of the militant aetheist, which was more useful for friendly discussion than Dawkin's axe-wielding approach. More coffee and cakes, and the conversation drifted from the first to third person, and modernity's impacts upon religion. I noted that religion was useful historically as a means control. Fear of God, his wrath (for the Jews) or Hell (for Christians) were powerful tools. And whether a tool for purposes of control, or more recently as panaceas for the spirit, there is in modernity, I suggested, a gaping hole in the psyche and in one's preoccupation that was previously occupied by religion. “What”, I continued, did he “think might or will replace it???!!?”

He pulled on his whiskers for a long time, looked upwards towards the heavens, and then stared deep into the depths of his half-filled cup before meeting my eyes and saying more categorically than he had about anything to that moment ......”Hedonism”. “Hedonism will fill the void...”, and for the first time, I saw resignation on the face of this otherwise thoughtful optimist. It is the same resignation floor traders must have felt as transactions went "upstairs", or that which strikes value-oriented reversion traders horse-whipped by seemingly less-than-explicable momentum, or an allocator feels when assessing the new normal of what used to be the risk-free rate. It is a distinct feeling that the sense one previously made of the world has been palpably altered, leaving it a less-hospitable place as a result.

Conversation rebounded from the after-effects of this pronouncement, for it was clear he knew that however depressing the prognostication, there was nothing he could do. He could analyse this wave, indeed, he could explain it. But he knew it will be as it inevitably will be. Efforts to change the direction of such a tide would be futile. I understood he was not whining. Nor was he living in the past. As was the case with his literature, he sought first and foremost to understand what was going on around him, and make sense of it, rather than tell us how it should be.

In 2012, it seems ironic, that mired in debt with unemployment rife, that our Grasshopper-like spirits' gaze is, as Potok forecast nearly two decades ago, firmly fixed (and growing) upon hedonism. Not spiritualism or New Age-ism, but full, unbridled "Whatever!" I see it manifested in demagogues pandering "7-Minute Abs" solutions, to problems of marathon proportions. I see it in my eldest's seeming addiction to fatuous social networking, or under the spell of inane traditional media at the cost of reading or doing. I see it in the increasingly stylized beach or ski holidays. I see it in the untempered expectations still being conjured and polished by companies and their Madison Ave agents. I see it in the politicians' promises to restore what Americans' believe is owed to them.   

But is this not natural? Should hedonism be a pejorative?  To the extent it plays a part in fueling expectations and pursuit of a lifestyle for the individual that is unsustainable for the group, then yes. To the extent that it prevents sober or pragmatic evaluation  of what needs or might  be done to pursue even weak-form sustainability, then yes. To the extent it discounts the longer run policy pursuits, for the short-run, then indeed, yes. To the extent it encourages anti-social behaviour to finance parochial hedonism, then yes.  To the extent it fuels near-unprecendented greed at the expense charity yielding a coarser way of life for the benefit of parochial pleasure and the privilege of the yet unborn, then yes, it is a pejorative, and we should lament its expansion in filling the vacuum.

Unlike the Apocalyptors and Tin-Foil Hat Brigade, I do not believe 2012 will be the year of the Return of Barter or Oblivion For Mankind, and while it may even surprise to the upside given the hugely bearish expectations of the market and anti-European shills, I do think it will be an interesting year for observing what happens when hedonistic rubber meets the austere reality of the road ahead of us [all].

A Farewell DingDong

Farewell 

then

Hostess Brands - 

America's 

Twentieth-Century 

national baker. 

Some knew

you as

Continental Baking 

or

Interstate Bakeries.

Others will 

remember your 

WonderBread (Indeed!!)

or 

Homepride 

(the one upon which Madison Ave. 

lusciously poured liquid butter);

Though it is the child within me who

most fondly recalls your 

DevilDogs,

Ho-Ho's

Suzy-Q's

Twinkies, 

or the most awesome-of-all

DingDongs,

which my mom never forget 

to put in my lunchbox.

(NB: Hostess Cakes were NEVER as good as Tasty Baking's various offerings, though DingDongs (RingDings) came close...)

(NBB: Sno-Balls were just plain alien: pink rubbery glutinous coconut-studded shell around a VW-Beetle-shaped cake filling with bland white creme inside. They were generally avoided, and traded at big discounts in the secondary school lunch-room market )

(NBBB: RingDings and DingDongs were best when frozen and eaten straight out of the freezer; RingDings were to be avoided in summer lunch boxes at all costs as their chocolate shells were prone to melting, making it impossible to remove the aluminium-foil wrapper)

No Virginia, Tin-Foil Hats Do Not Help....

Half-truths and paranoia can be downright dangerous. Indeed, the few remaining at MIT who possess a sense of humour demonstrate that, far from protecting their wearers against invasions of the mind by Extra-Terrestrials Dr. Evil Abba The Fed The Government, the shiny material may actually aid their invasion by amplifying radio signals. Ever insightful, they recursively hypothesize that the Tin-Foil Hat myth may have actually been promulgated by the evil government itself in order to encourage adherents and thus more easily gain entry.

New Year's Eve Austerity Ball Menu

That Euro-Area New Year's Eve Austerity Ball Menu (in Full)

31st December, 2011

*** COCKTAILS & HORS D'OUEVRES ***

Blood-Orange Punch

Perfect Storm Cocktail

Spanish Sangria (on the Rocks)

Campari OJ Crush

Bloody Marys (xtra Horsradish)

'Clairette de Die' Fizzlers

Greek Revolution Shooters

Die Kinder Punch (for our less responsible guests)

PIIGS in a Blanket

Fried & Shredded Treaties

Clownfish Mini-Skewers

Marmite Butty (Specially for our UK 'guests')

Mixed Nuts

*** SOUPE UND SALADE ***

Strasbourg Stone Soup

or

Portuguese Black-Eye Pea Salad

*** PRIMO PLATI ***

Downward Spiralinis in a Red-ink Sauce

or

Fagottini con niente (al dente, con Pesto alla Draghi)

*** SECONDI PLATI *** 

(Sorry! This course has been cancelled due to budgetary constraints)

*** LES ENTREES ***

Wurstel mit Kraut Fur Alles und Bitter Herbs

or
Fried WienerSchnitzel w/Sauce Lagarde

or

BBQed Fattened-PIIGS w/Cracklin' 

*** DESSERT TRAY ***

Strawberry ShortsqueezeCake

Leftover Elysee Buche de Noel

OATmeal & Crabapple Crumble

Brussels Treacle Tart
Bowl of Southern Lychees

*** 'INDIGESTIVE DIGESTIVE  ***

Flaming Shots of Sambuca

Greek Ouzo

Limoncello

Cowen's Irish Coffee

Maceira (Neat)




 ***PETIT FOURS THREES ***




WE also wish to recognize:
Music and Fireworks provided by The Hedgehogs
Entertainment & French Letters courtesy Mr Berlusconi
Catering underwritten by the ECB 
The British PM for his  helpful advice,
and the Anglosphere Press for their fair & balanced reporting. 

Burnt Out

Q: How many Tea-Party Members does it take to change an incandescent light bulb??

A: None! They don't change lightbulbs....

Xmas Presents for All!!! (...Red States that is)

Despite what I have curmudgeonly been telling my children about the realities of Santa, it appears rather to the contrary that (at least for the Red States) there is indeed a Father Christmas.  This is evidenced by the luscious  and revealing graphic and table provided by an Economist magazine post from Aug 1st entitled America's Fiscal Union. It is germane (and ironic) in several ways: It displays who amongst the States are the net contributors and who are net beneficiaries; it exemplifies a distinctly Euro-like core and periphery, and it exposes an anecdotal counterintuitive correlation between the net beneficiaries over the last decades and their political alignment with al facets of the GOP from wet-Tory-like Mainers to the hardcore  Mormon Utahns (pronounced yew-tawns).  


The flow of funds indeed is consistent. Wealthier urban, productive population centers (despite their large concentrations of poor, and the benefits they inevitably suck) pay more than receive and effectively provide net transfer funding for the sparsely-populated rural lower productivity and poorer states/regions. There are obvious explanations for some of the flows, be they military bases (New Mexico) , true rural poverty (West Virginia, Mississippi, Maine, Alabama), Walmart (Arkansas), farm subsidies (Great and Northern Plains),  or Retirement States (Florida, Arizona). And one can argue about whether the funding states receive like non-accountable benefits in return (national defense, a stable agricultural sector, an independently-living elderly population, highway transit and by-ways enroute to market, etc.) Nonetheless, the fact remains, Federal tax dollars on a net-basis are siphoned from some and directed to others. 

It is likely that these patterns are endemic, and in some ways resemble Europe. Puerto Rico might be Greece, and Alabama, the US's own Portugal (though Lisbonites might take exception to such comparison), California approximates France, NY/PA (complete with Amish) equates to Germany, while Florida and Arizona resembles Spain, and so forth. Such comparisons have their limits of course if only because Oregon, for example,needn't worry as it doesn't have its own currency (unless one considers Green Sinsemilla sufficiently legal-tender). But they do highlight the nature of imbalances and their persistence and the lack of moral judgment heaped upon the deficit generators by surplus states. Maybe the payors should be looking for ways to jettison the the deadbeats, which seems like something the Wall Street Journal's editorial page writers could get behind. 


Despite this, few New Yorkers, Minnesotans or Left-Coasters call for the expulsion of Mississippi, North Dakota or Montana from the union, nor do they vilify their parents or grandparents taking it easy in Sun-City or Tampa. Quite to the contrary, en masse they vote for the party that through the elevation of tax rates, attempts to insure the continuation of these transfers. Yet somewhat counterintuitively, in terms of both hyperbole and demagogic whining, it is the aptly-named red-states who vilify the blue states as lazy undeserving socialist spongers sucking from the great milk-teat of the State. The table, however, displays a dramatic picture of who, in aggregate, is doing the giving who in aggregate are the recipients of some very large Christmas presents indeed. Maybe, for a change, some thanks are in order. Or, if they just cannot bring themselves to utter these two simple words, perhaps they can, for once, just refrain from uttering bile.   

End Run??!?

This is Olympus Corp.'s infamous"4th & Long", Hail Mary attempt at ummm ...  errrr .....well it was so long we are not really sure. But we are sure they didn't want anyone to know about -especially their investors, the Tokyo Stock Exchange, and their nosey Limey boss who the board all greatly regret appointing no matter how much money their camera business is bleeding.  Of course they should have punted, instead of fumbling in their own end-zone, getting hammered and having the whole team ejected simultaneously for personal fouls. It is one straight from Joe Paterno's playbook....

There is also an alternative explanation. It may look like a Japanese attempt to replicate that most famous Joe Namath Superbowl III Strategy, but it might just be a clever way of hiding the schematic design blueprint for their secret device known as the EndothescamScope. This scientific machine will allow forensic accountants to look deep into the bowels of company accounts and help identify Zaitech scar-tissue or more lethal cancerous Tobashi. This was reputed to have been derived from their [withheld] research into Scammograms, reputedly stolen by agents of GS and secretly passed onto MG Global where it underwent clinical trials.  

Whatever it is. It is complicated. And me, who after witnessing the blunt near-neanderthal construction of Lehman's Repo-105 thought accountants were just plane stoopid. This is clearly a work of art. Watch out Damien Hurst!! Nikon and Canon may be dancing all over the corpse of Olympus in the Camera market, but they can't even come close to Olympus's imagination in conjuring the financial equivalent of the most audacious David Copperfield routine.  The Pointy-Lines. The symmetrical boxes. The acronyms (which include some of our favourite banks!!). The Science-Fiction-sounding names. The Shuffling, and the true Genius of the whole thing: The recursiveness!

In case you're confused, don't be. For it all makes perfect sense when you think that their business is: photographs and endoscopes, (and after their latest acquisitions) medical waste disposal. Now, look again at the Diagram above. Isn't that what you see??

Lowest Hanging Fruit

There has been much vitriol leveled at inequality and what is believed by some to be unfair compensation. CEOs, Professional Sports Stars, Brokers, Bankers, Brokeback Bankers, Actors, Paris Hilton, Hedge Fund Managers, The Koch Brothers, Trial Lawyers, Plastic Surgeons, LBO/Private-Equity Kings, Trustafarians,  Mark Zuckerberg, Televangelists, all though not exclusively have been the target of critics questioning whether or not they are in fact deserving of the riches heaped upon them, or in perhaps the rarer case, otherwise earned.

Some people see such folks (particularly Bankers, Private Equity and Hedge Fund Managers) as unequivocally Evil and, as such, are proverbially low-hanging fruit in their search for scapegoats, sources of Government revenue, or merely general contempt. While sympathetic in-part, I think they are missing the obvious. Indeed, the over-sized day-glo bullseye, and the lowest-hanging fruit for all derision and heated debate regarding inequality should in reality be directed elsewhere - quite simply, at The Dead. No, not Jerry & the Boys who it must be said have been scorned by many 1%ers for decades, but the Deceased; the Un-Living;  the Already-Departed.

For those who think this a joke, let me state categorically that it is not. The cremated and already-decomposed  are the perfect villains - vampirious leeches, the ultimate symbol of absurdist something-for-nothingism, not to mention quite convenient effigies upon which to heap our rage. "They" - or their estates and beneficiaries receive royalities, own assets, extract rents, but we must ask the question: should they? For presently, the State needs it more than the offspring, and is probably more deserving. Errr ummm, well, perhaps not, though one might better argue that descendants are LESS deserving of the eddying pools and wealth in legacies, trusts and foundations for their benefit. Randians, even more than others should welcome this boot-strap-lifting proposal since it logically follows their preference for Darwinian outcomes, and the resultant wealth that increasing is believe to yield. And what could foster more genuine competition than everyone starting from more or less the same lane?

So here they lie, in box or urn, now, dead. They can neither spend it nor enjoy it. They certainly no longer EARN it. And their chosen or Napoleanoic beneficiaries did even less to earn it. What is the philosophical or moral basis of their claim? The politically astute cannot fail to notice one of the most compelling reasons to shine the klieglights thusly: They cannot complain. They cannot vote you out or vilify you on Fox news. They cannot [any longer] directly mobilize lobbyists or start a Swift Boat-like smear campaign that will stick and possibly remove you from the Great Milk-Teat. They are a far better target than illegal immigrants, whose legal relatives and extended families increasingly control Florida, and Texas, and are significant swing voters in more and more states. Why waste time building fences (which costs money) when we can simply raise it from the dead (no pun intended) before it corrosively arrives in the control of its heirs?

Walmart heirs control wealth equivalent to the net worth of the bottom 30% of The People. This simply cannot be good for consumption, and hence employment and economic activity. And Politicians should realize that highlighting this to their voters will be more advantageous than accepting campaign contributions from such heirs in support of the status quo. Sustainability (without private armies) apart, the more fundamental question that people have ceased asking is: Why this is so, and how fair it is (or isn't). What philosophical basis is there for passing ownership and de facto control of vast pools of wealth and accompanying privilege via blood, kin or for that matter by legal assignment? If we have transcended this in the political sphere (or tried to since political dynasties DO still exist), why are we so forgiving in the economic sphere which given the influence of money over politics equates to the former in any event?

I understand that you might have some hesitation. You may be afraid of the paranormal and their potential wrath. You might wonder whether or not you might regret abetting what some will term as the immoral sequestration of assets, when you are seeking entry into the Great Country Club On High. As a 1%er you may yourself have grave concerns about your progeny's wits, motivation, or ability to tie their own shoelaces when well into adulthood. Or perhaps you have more systemic concerns about how it might affect the property rights of the living. As a politician, or a member of the 1%ers who will benefit from the deflection of attention, you no doubt will understand the pragmatism of focusing upon the here-and-the-now. If you are concerned for the downward mobility and consequential well-being of your offspring, I would highlight that it is worth thinking about such issues as social safety nets and universal healthcare BEFORE the cards are dealt. If on the other hand, you are concerned that an economic placeholder is required for systemic reasons of securing property rights of the living, why not let it be in the Public's Interest - who is able, like other SWFs to hold it in trust for a rainy day, or as collateral for the inevitable future demographic inversion? Indeed, it is likely that the societal beneficiaries will in aggregate be the same public that contributed towards your success when amongst the living. Being presumptuous, speaking on  behalf of The Dead, it is a befitting memorialization, and a gesture (nearly) all of the living would appreciate.

Of course, if one thinks such a proposal too bold, or simply too unfair, there remains one further, even more-surefire-target (on par with banning assault rifles in elementary schools) upon which to point the wrath and fury of the 99%ers: Dead Pet Trusts....

Caught Out

Where I used to live, there was little more entertaining than a visit to the local court. An old fashioned justice system, with arbitrary magistrates, colourful defendants opposite the application of justice. This was decidedly NOT a big city court. The transgressions and infractions were typically minor and often bizarre, but always humane in ways not often seen or read about in modernity. Waiting in the foyer, one would overhear the reality of most folks be they family problems, living paycheck to paycheck, and seeing firsthand the effectiveness of political demagogues in shaping attitudes of at least some of The People.

While I believe there is a wonderful book to be written translating the daily march of the people and their cases into vivid anecdotes and weaving them into a heart-warming read of village and humanity, my visits were utilitarian. Exceeding the speed-limit by more than a certain amount requires, without exception, a mandatory court appearance. Waiting on the wooden benches, witnessing a series of "54 in a 35 zone - how do you plead", followed by "Guilty, your honor", and a ruling of "....$250 dollar fine or 30 days inside....", my interest was piqued by a most amusing case.

The prosecutor Mr Marquette, described the course of events. A Mr G. Reece was in the supermarket,  and was caught shoplifting. He had apparently hidden a head of green iceberg lettuce, and a few bags vegetables under his overcoat, and was discovered upon exit, and the police were called to the scene, and the accused was taken to jail. The magistrate, Mr Deutsch, asked how he wanted to plead. "Guilty with an explanation your honor..."  "Go ahead", he said, rolling his eyes.  "I don't want to steal, but I got a family and I don't have any money". Then magistrate Deutsch made his ruling: "That'll be a $200 dollar fine...do you have anything to say....?" Mr Reece, stood up, and and in the most pleading of tones asked "What's the point of fining me $200 if I don't got any money? IF I had any money, I wouldn't have stolen the food in the first place....!!!??!!!" The whole court laughed at this most obvious logic flaw before Magistrate Deutsch banged the gavel and cried "Order, Order, Order in this Court, as the defendant was led away." "Next case your honor; a Mrs I. Tally accused of going 54 in a 35 zone...how do you plead...."

I have fond and vivid memories of this place. So vivid, they could have happened last night...

(editor's note: The above is an absolutely true story - only the names have been changed to protect identities)

Payback M*#*erF$#(R!!

 The Wall Street Urinal attempted to kill two birds with a single stone today in article questioning the privilege granted to certain large investors to delay publication of 13F-HRs and 13D filings with the SEC. They specifically target Warren Buffet's Berkshire Hathaway who of course has to file at the same time as everyone but who, along with a handful of others, have been granted delay in publicly releasing the filings.

I am agnostic on Mr Buffet generally though I have taken shots at him before. And I prefer more transparency, than less. So I shouldn't be bothered by the article. Yet, I AM amused and irritated for I cannot help but wonder what is behind the new-found populist editorial line of the WSJ. I reckon its two-fold: first it is payback for Mr Buffet's Benedict Arnold routine visa-vis the Capitalist Class in regards to his expressed opinions on top-end marginal tax rates in general and the level of estate tax in particular. Payback is indeed a bitch.  Second, I think, like Fox news has found, selective populism pays and sells - particularly the kind that panders to the generalized rage against a rigged system, evidenced first and foremost by, yes, you guessed it WB's Berkshire Hathaway, that renegade anti-pillar of the little guy.

False Labeling ??!!?

I must admit to being on the sidelines with regards to OWS. Although I empathise with their visceral outrage, and admire their willingness to get out on the streets for a cause, I suspect there is lots culpability all around. But my apathy was broken recently when FT Alphaville ran excerpts from a Dennis Gartman speech entitled "God Bless Income Disparity" in which he characterized the non-one-percenters as "failures" for taking the one-percenters to task for their apparent "success(es) and the singularly Randian-Blood-Sweat-&-Tears it apparently took to achieve it. Despite human beings being hard-wired for jealousy, I think this wrongly parses the issue into one of accused envy by the 99%, instead of one that highlights the responsibilities incumbent upon the 1%ers derived from their dumb luck and debts to....ummmm....errrrrr......well, more or less everything not self-attributed. 

Self-attribution bias  and similar psychological flaws have long been contemplated by thoughtful observers with even the most meager amounts of introspection. I also have long wondered what the ingredient formula for my own comparatively fortunate state of affairs might look like. I suspect, being of profoundly self-effacing stock, that it mostly has had to do with luck (some marginally engineered, but mostly of  the "dumb" variety).  Moreover, it was in the main, mightily fostered by all manner of communitarianism, from my fortunate local and state university education, cooperative non-profit healthcare, to the State and NGO-funded munificence of my mentors.  Moreover, I have been legally allowed to keep the lion's share due to the rule of law - unlike the Sea-lion beachmaster or South American Drug Baron, whose property rights and political-economic position within the realm is far more precarious.    

As it happens, my own attribution would also be reasonably benign, with little to be embarrassed about, or lurking in the grey areas or moral compromises that might be required to bag the proverbially bigger game. With that preamble, it might be worth contrasting the hypothetical labeling of Gartman's All-Natural ingredient list for success, to that which resonates more closely with the archetypical one we might publicly (or for these embarrassed, privately) know first-hand, read-about in the less-edited versions of 1%er exploits.

DENNIS GARTMAN RECIPE FOR 1% MEMBERSHIP:

INGREDIENTS: SHEER DINT OF WILL, TENACITY, STREET-SMARTS & THE LIKE, PLUS (following added by The Editor) TRACE AMOUNTS OF HARD WORK, SKILL, FORTITUDE, FAITH & ANNOINTMENT BY DEITY OF CHOICE; COPIOUS BOOTSTRAP PULLS.  (This product  is safe for those allergic to the concept of social responsibility or obligation and was produced in a safe facility containing no traces Luck or Free-Riding. It has been produced or miraculously conceived without  benefits received from public goods, or positive externalities derived therefrom or contributed by any collective or social programs, rent-seeking, rule-breaking, gaming or other transgressions against established laws, morals or regulations).  

A MORE REALISTIC RECIPE FOR 1% MEMBERSHIP, HOWEVER MIGHT LOOK MORE LIKE THIS:

INGREDIENTS:  LUCK, TRAINING , SKILL, WORK, HAPPENSTANCE, NEPOTISM, SOCIOECONOMICALLY-ADVANTAGED EDUCATION; PRIVATELY-FINANCED TUTORING, PUBLICLY-SUBSIDIZED STUDENT LOANS AND/OR GRANTS; PUBLICLY FINANCED UNIVERSITY OR RESEARCH CONTRIBUTIONS TO PRIVATE UNIVERSITY; TAX-DEDUCTIBLE CHARITABLE CONTRIBUTIONS TO PRIVATE UNIVERSITIES AND ENDOWMENTS; GOV'T DEFINED EXCLUSIONARY OR PROTECTIONIST TRADE-ASSOCIATION OR QUALIFICATIONS; GOV'T DEFINED AND ENFORCED PATENT PROTECTION; HISTORICALLY-EASIER ELITE UNIVERSITY ADMISSIONS; HISTORICALLY EASIER COMPETITION FOR ENTRY-LEVEL JOBS;  PAY-PACKAGE APPROVAL BY BACK-SCRATCHING BOARD MEMBERS; LOW HURDLE MGMT BONUS-SCHEMES APPROVED BY MGMT-APPOINTED BOARD-MEMBERS; INSIDER TRADING TIPS FROM GOLFING BUDS; CHANGE-OF-CONTROL CLAUSES;  ENTRY TO HOUSING MARKET DURING ASSET PRICE TROUGH; LEGACY DEFINED-BENEFIT PENSION PLAN;  GOLDEN HANDSHAKES; ADVANTAGEOUS WASHINGTON REGULATORY CONNECTIONS;  LOBBYING BENEFITS FROM QUID-PRO QUO CAMPAIGN CONTRIBUTIONS; RENT-SEEKING; TAX GROSS-UPS AND REIMBURSED LEGAL & TAX-ADVICE; GOLDEN PARACHUTES; GRATIS D&O COVERAGE THAT LIMITS PERSONAL LIABILITY;  NON-PROFIT PROVIDED CHILDHOOD HEALTHCARE; FREE COMMUNITY VACCINATIONS & IMMUNIZATIONS, ADVANTAGEOUS TAX DEFERRALS & DEDUCTIONS; UNDER-SCRUTINZED CURR VITAE INFLATION; GLORY-STEALING OF COLLEAGUES' CONTRIBUTIONS; SECOND-DERIVATIVE PARENTAL ASSISTANCE THEMSELVES BENEFICIARIES OF SOCIAL EXTERNALITIES OF THE STATE'S MUNIFICENCE; SHORT-TERM ASSET-STRIPPING, PENSION HOLIDAYS AND CHANGES IN ACTUARIAL ASSUMPTIONS TO ARTIFICIALLY RAISE EPS AND TRIGGER BONUSES; OUT-SIZED OPTION GRANTS WITH ABSURDLY LOW HURDLES; COLLUSIVE OLIGOPOLISTIC PRICE-FIXING ARRANGEMENTS WITH KEY COMPETITORS; BENEFITS FROM PUBLIC ORDER & RULE OF LAW; WINDFALL BENEFICIARIES OF: GLOBALIZATION, GEOGRAPHICAL FORTUNE, SERENDIPPITY, HISTORICAL ASSET OWNERSHIP,  PRE-EXISTING RENTIER-CLASS INTERESTS; ETC ETC ETC

Rainbow Warrior - Part Deux

Even I had wavered in my conviction following the deluge of character assassination following DSK's arrest. But now, appearing vindicated per my original post (recounted below),  The DSK affair IS looking more definitively like a set-up. Edward Jay Eptstein's account in the NYRB entitled "What Really Happened to Strauss-Kahn" nicely summarizes precisely what we know, and what we don't. To sum it up: Sarko's Boys knew he could never refuse a blow-job, (and they were right!!) in a crude yet effective elimination of political competition.

Original May 15th  Post below....

Sunday, May 15, 2011

A Quarter of a Century Later....

In general, I admire the french civil service. Not everything. Not all the time. But both relatively and absolutely, their performance should give anti-Statists pause for thought about their position (not that such dogmatists will ever do so). Sometimes, however, they do fuck-up. Sometimes quite badly. Such as, for example, twenty-five years ago in New Zealand (youngsters see inset photo to the left).. Ummm errrrrr great plan guys!! A Franco Bay-of-Pigs of sorts.

Time travel back to the present, a quarter-of -a-century later, and after reading today's lead story, one must wonder whetherAgents Prieur and Mafart have been seconded back into service - this time on an even more ignoble plan to sink (no pun intended) the political fortunes of DSK, presently polling several percentage points ahead of Mssr Sarkozy, even after the announcement of the soon-to-emerge mini-Bruni. Ouch! Decisive action appears to have been called for. Some shit that, once thrown, will stick stick stick.

I am not saying he doesn't have a dark side. You don't really know someone until they come an live with you (and even then there is still.....ummm errrr stuff that....). I am not saying he didn't do it. Heck almost everyone has something that might not withstand public scrutiny and microscopic examination. But this one just seems implausible. In all my years, and too numerous hotel stays, I've never been cornered in my hotel room by the J-Lo hot chambermaid (and, then, in the micro instant of having emerged clothes-less from shower, schocked by the instrusion, thought: Wow she's hot! Followed by "Hey babe wanna fuck??!? No? Really, no? Well then I'll just have to force you...." Oh, yea, and we gonna be quick, 'cause I got ze plane to catch". Perhaps that is because that lot are all swarming by the suites upstairs looking for the bigger fish (like DSK?),  rather than the plebeian closets where I hole up. But c'mon. In the run-up to an imminent election? When you are the the front-runner? And about to depart for an important meeting with Chancellor Merkel about some trifling matter about the future of the periphery of Europe? (Frau M can wait.....right?!??).  Forcible detainment?? After having been busted and having apologized for shagging a (rather willing, it would seem) colleague??  It just smacks of a set-up. A rather dirty, dirty-trick, that needn't be true, but merely cause some fence-sitters to come to the conclusion that the devil you know may just be marginally better than an accused rapist.

Any thoughts on this one guys & girls........??!?