September 11,2009/1

President Obama is going to Wall Street this coming Monday to make a speech. The date chosen is the first anniversary of the failure of Lehman Brothers. The speech will presumably be self-congratulatory, about how the world has been made safe for capitalism. This stinks; it smells like dancing on the grave - but presumably the President, for whom I am losing increments of trust and respect every waking day, will stick the Bush administration with the Lehman Brothers decision, which unarguably can be said to have made matters much worse than they need have been, but which did open the door for Goldman, JP Morgan Chase and others to mulct the taxpayer for upwards of a trillion dollars. In the passing twelvemonth whose anniversary the President will be marking, millions more have lost jobs, homes, self-respect, medical security. Is all this compensated for by Goldman's record profits? Is this proper cause for celebration? Not in my book.

September 10, 2009/2

Briefly, on the President's health-care speech:
The first part of the speech was necessarily complicated but was to some extent rescued by the exhortatory peroration and conclusion. The situation still looks functionally intractable to me - too many members of Congress in the pocket of insurers etc. - but I have no doubt some illusory plan will emerge. The behavior of the Republicans - Boehner, in particular, who for some reason didn't show up in full SS regalia although he was clearly dreaming of Polish villages to liquidate - was despicable.

September 10, 2009/1

" The property portfolio doomed Lehman when a rescue still seemed possible. On Saturday, Sept. 13, 2008, Timothy Geithner, then president of the Federal Reserve Bank of New York and now U.S. Treasury secretary, asked a team of the world’s top bankers to evaluate Lehman’s real estate holdings as part of an effort to facilitate a sale of the investment bank to London-based Barclays Plc.

The team, including representatives from Goldman Sachs and Credit Suisse Group AG, determined that Lehman had overvalued its real estate investments by $20 billion to $30 billion, according to people who attended meetings at the New York Fed last September."

This, from Bloomberg this morning, validates what I, virtually alone since October, have been saying with regard to Washington's decision to le Lehman go. It wasn't Fuld's arrogance, or Barclay's being held up by UK regulators (a straw man of an excuse, if ever I heard one) that doomed Lehman, it was the firm's commercial real estate book - which set it apart from other supplicants, mainly Merrill. Here's what I wrote on Forbes.com on October 7,2008, three weeks after Lehman failed:

"Think about this. Every report on Lehman that I have recently read is saying that the real toxicity on the Lehman balance sheet is in its commercial real estate holdings and investments. Of no other troubled firm does this seem to be true, only Lehman, which may also explain the Paulson team's no-bailout call."

No wonder I can't find work. There's no one the mediocrities who run American media hate worse than someone who knows what he's talking/writing about.

September 2, 2009/1

I'm trying to balance a whole bunch of things, so won't be blogging much until Labor Day. I am fascinated by the way the media is cheerleading this "recovery." Take "productivity." The late unlamented Greenspan based much of his folly on a notion called "anhedonic pricing," which basically meant that thanks to Moore's Law each month saw an increase in productivity as computer capabilities increased faster than computer prices, ie. more bang for the buck, or more "productive." It never bothered Greenspan that the more work computers take on, the less there is for humans to do. This may be more "productive" statistically, but it promises sheer hell for any political economy pretending to be a functioning free-market democracy. Another few years of this, the United States is going to be little more than a giant El Salvador.

August 30, 2009

We spent last week away, in far New England, in a place where it is always 1954. No tweeting, blogging, prose composition. Just sun,water, mountains, friends. This was the week that saw both Teddy Kennedy and Dominick Dunne shuffle off this mortal coil, so it was a good place - away from the noisy, and the froward and the vain (Dickens) - to reflect on two lives that mark, for me, the passing of an era.
The last time I spoke with Dominick, with whom I had an unevenly textured friendship going back almost forty years, was in June, perhaps nine weeks before he died. My publisher was pressing me to seek a blurb from Dominick, despite my admonitions that he was very sick, was in fact in Germany receiving treatment for his cancer, and I reluctantly sent him bound galleys. That would have been in May. I came home one day and Dominick - I never called him "Nick" any more than he would have called me "Mike" - was on my voicemail. He sounded worse than terrible. He couldn't do the blurb, just didn't have the strength, in fact, he said, "I think this may be it." I called him back immediately and got his voicemail. I left a message saying for God's sakes, all that matters is for you to get better, you must use every scintilla of energy for yourself. He called back a few minutes later; we chatted briefly; I told him I was praying for him.
The way we met was funny. It would have been around 1968-69, and I and a friend were on our way to Los Angeles for a weekend of fun and frolic. To make the flight pass more slowly, we had ingested some cookies baked in an upstate ashram that had a high cannabis content. By the time our flight was abeam Pittsburgh, we really no longer had need of an airplane. A bit later, it was suggested that he top off our exhilaration with a toke in the loo (we were upstairs in a 747.) The restroom door was locked when we got there, but a minute later it clicked open, and in a scene reminiscent of the Wizard of Oz, there was an enormous gust of marijuana snoke with a small figure in the middle. It was Dominick. We urged him to try what we had, and the three of us squeezed back into the small cabine and enjoyed a jolly puff.
As I say, ours was an uneven relationship. There was a bit of professional envy mixed in there, probably - make that certainly - more on my side than his. I didn't think much of his novels, and the world he wrote about for Vanity Fair didn't interest me. But I was also happy for him: he got the life and recognition that he craved, and he won the devoted admiration of thousands of fans and the deference of headwaiters. I think that when someone gets what they want, and get it more or less honestly, it's cause for a round of applause, even though it might not be what you want. It was a life that deserved a better ending.

August 20,2009/1

Everyone agrees that what is taking place in "town halls" and elsewhere, most notably in connection with health-care reform, is proof positive of Americans' mistrust of government. On the basis of second- and third-hand observation, I'm inclined to agree, with this rider: if I had to guess, I'd say that Americans are deeply fed up with this government, which they see - as I do - as essentially functioning as a delivery system for the money interests: Wall Street, Big Pharma, Insurance etc. And I include the White House in this indictment. Back in November, I hardly thought I was voting for the Enabler-in-Chief.
I'm in my ninth year as Medicare user, and I have nothing but satisfaction to show for it. I'm not alone. Even louder than the anti-government babble is the theme, "But don't touch my Medicare!" I've had two knees replaced on Medicare, and various other procedures. It works, and I have no sense that my doctors are gaming the system, even those who don't take Medicare but will do and submit the paperwork (not the same as those who've opted out of the system.) I can't understand why the principal thrust of health-care reform, which as it's now being argued looks to me like an absolutely unresolvable Gordian knot, with the interests of the impecunious being notionally served by the bought-off, hasn't focused on extending Medicare to the uninsured, possibly working backward by age groups (extend the program to people over 55, then 45-55 and so on.)
(Added later): The head of the Mayo Clinic checks in here.
And in counterpoint, this.

August 19,2009/2

Your stimulus dollars at work, right here.

August 19,2009/1

Today's WSJ lead headline says it all "Reluctant Shoppers Hold Back Recovery." It's all our fault, you see. We should be out there spending money we don't have and will never see. It really is us against them. Meanwhile, profit margins are being helped by "productivity," which is output enhanced by squeezing extra hours out of workers afraid of being laid off. I have been saying and writing for years, based on my adventurous wanderings among the world's executive class and the world's wealthy, that Marx might get another bite at the apple.

August 18,2009/3

This bears thinking about. I think a huge psychological shift has taken place. People of moderate means, even those - like myself - theoretically in a high quintile of that economic sector, no longer buy the Reagan-Bush-Clinton-Bush myth that the ordinary unconnected citizen, who borrows money at retail, can get rich. Nor do we believe that the best-off will (a) do anything for us and (b) will cease to grab all they can using the immensely powerful financial and political levers at their disposal. We need to circle our creaky financial wagons as best we can, try to get by in a World According to Goldman Sachs and wait for some kind of messianic political eruption.

August 18,2009/2

Just listened to an absolutely pointless colloquy between Kurt Andersen and Leonard Lopate on the latter's WNYC gabfest. Kurt has written what sounds like a straw man of a book called "Reset," but being as deft a media politician as there is, he's garnered a good deal of underserved ink and attention. The thesis of the book is - apparently - that the mess we're going through will make us stronger and braver. Amazingly, Kurt claimed authorship of the use of the modifier "casino" with respect to aspects of our culture, saying he happened upon it a couple of years ago, while I think in fact Felix Rohatyn popularized the term 'casino capitalism" some twenty-plus years ago. What bothers me is that at a time when, at least in my lifetime, there has never been a greater need for clear, insightful, original thinking and clear, insightful, original speaking, the gatekeepers of the media, like Leonard Lopate, reserve access to a practiced and thus dependable troupe of blahblahblahbarians.

August 18,2009/1

Hamptons analysis: I think this is pretty much on the money.

August 17,2009/2

One does wonder sometimes. Take a look at this page from the NYT website about the present director of the Toledo Museum becoming the new director of Alice Walton's new museum of American art that is under construction in Bentonville, AK. Ms. Walton, it will be recalled, bought the famous Asher B. Durand painting "Kindred Spirits" from the New York Public Library in a transaction decried by this writer among others (Kimmelman as usual waited until the barn door was closed, locked and horse in the next county before raising a tentative admonitory finger). You can read all about it here. I hate the word "iconic," but if there is one painting that deserves the appelation in a New York context, it was this. The gilded board of NYPL, which could have passed the hat with no meaningful effect on its collective or individual net worth and kept the painting in the city, sat on its hands. What amuses me about the NYT's account of the new appointment is that it lists a number of the great American artists whose work Ms.Walton has acquired, and prints links references to each in its archive, but somehow skips a link to Durand. I seem to recall that that GREAT newspaperman, Arthur Sulzberger the whatever aka "Pinch" is on the NYPL board. The way society protects its own validates Michael Gross's charge that his interesting study of the people who've run the Met's boardroom, Rogue's Gallery, has been embargoed. All I can do is reiterate my late father's definition of "the upper crust": a bunch of crumbs held together by dough.

August 16,2009/1

Catching up after a long delightful weekend with friends who, despite considerable comparative advantage, have zero pretensions. So while I crank up,, read this, which explains my feeling that cash dividends, not share buybacks, are what managements should do with their "excess" cash.

August 13,2009/4

This is why Obama voters like me are losing faith.

August 13,2009/3

Here's a typical NPR-style discussion (on 7/16 - just caught up with) with Bove clearly hoping someone at Goldman is listening, Taibbi staying away from the numbers. The real issue is whether Goldman's access to government/Fed/taxpayer funds and guarantees was to prop up business as usual. Goldman not having been a bank as any normal human being would define "bank" until practically the day before it reached into the TARP etc. honeypot did not have the "as usual" business real banks did. My own take is that Goldman saw an opportunity, figured out how to qualify, and took it.

August 13,2009/2

Read and weep:

For comparison, consider an illustrative family of three in which the father earns $30,000 as an independent contractor for a small plumbing company and the mother earns $25,000 from a small retailer. Neither small business provides health benefits. The couple has a daughter in second grade at the local public school and pays $100 a week for child care after school and during the summer. The family lives in a modest home and pays $1,000 a month in rent and $250 in utilities. It owes $2,312 in federal income taxes, $6,502 in Social Security and Medicare taxes, and $1,350 in state income taxes. It has two cars with payments of $300 a month each, and pays $2,000 a year in car insurance and $1,000 a year for gasoline. It spends $150 a week on groceries. The couple has avoided accruing any credit card debt, but they have no saving for retirement and no life insurance…

Right now, the federal government pays $14,777 to provide health insurance for each of Goldman Sachs’s managing directors and pays nothing to provide health insurance for this middle-income family. The Administration and Congress face a clear choice: can we modestly reduce the extremely generous government subsidies provided to the Goldman bankers and others similarly situated to help pay for a subsidy worth a fraction of that amount to families of modest means?

From the Center on Budget and Policy Priorities

August 13,2009/1

I feel like an idiot. I completely missed this market run - which for most people won't go long term until Sept-Oct-Nov. My 22-year-old son is mad at me for convincing him to hold 20% of his funds in cash. People I don't consider very smart are jangling coin and dancing in the aisles; people I consider perceptive are like me, staring gloomily from the sidelines, unable to believe that issues like toxic assets and unemployment have either vanished or no longer matter. It would appear that all that counts are corporate "profits" based on getting rid of people and squeezing suppliers. The good news from Europe comes from France & Germany, nations of savers. It's all about mood-momentum. And the fact that Goldman has gotten away with gaming the bailout the way it has makes me nauseous. Help me, someone, in my moment of agony!
And I like this.

August 12,2009/1

A smart quote from Dorothy Rabinowitz of the WSJ:

"The president has a problem. For, despite a great election victory, Mr. Obama, it becomes ever clearer, knows little about Americans. He knows the crowds—he is at home with those. He is a stranger to the country’s heart and character."

And this strikes me as insightful and important.

And what have some of us been arguing all along, especially with regard to Lehman?

August 11,2009/2

This is the speech the President should be giving.

August 11, 2009/1

Starting a new novel, so may be brief here until I get routine and momentum. An interesting column by John Crudele in this morning's NY Post. In this morning's WSJ, there's a piece that should only be read in the vomitorium, about how "B-list" firms, in this case a former employee of the bucket-shop Blinder Robinson, are coining it.
This is also excellent.
Running through some notes, I find this statement by the President to Jim Lehrer (July 21,2009):

And so our job is to -- with the resources that we've got -- try to maximize the help that we're getting to Main Street and to try to pressure Wall Street to do its part in making sure that credit is available so that businesses can start picking up again.

As my young texting friends would write: hahaha