My goodness gracious me!
See here why I'm thrilled.
So, if Bernanke held nose then, why not apply Kleenex now: windfal/excess profits tax - proposed by me months ago in a col?
Listening to WNYC's Brian Lehrer, a true genius of an interviewer - but maestro of a show that, 9 times in 10, ought to be called "The Usual Suspects."
Monday, July 27, 2009
July 27, 2009/3
Correction. The link to Gongloff in today's WSJ is here. The link above is to Peggy Noonan's interesting healh care op-ed of last Saturday, recommended to me by Philip Howard and worth reading.
July 27,2009/2
Finally!
Finally finally finally!
For months I have been railing, in NYO and on Forbes.com, that Wall Street was turning a fat profit on the taxpayers' dollar thanks to the subsidies and guarantees made available at the Fed and FDIC. Now, at long long last, the mainstream media has picked up on the greatest bailout scandal of all. An excellent piece by Mark Gangloff in today's WSJ lays it out. You can read it here. The "lede" and "sublede" say it all:
Finally finally finally!
For months I have been railing, in NYO and on Forbes.com, that Wall Street was turning a fat profit on the taxpayers' dollar thanks to the subsidies and guarantees made available at the Fed and FDIC. Now, at long long last, the mainstream media has picked up on the greatest bailout scandal of all. An excellent piece by Mark Gangloff in today's WSJ lays it out. You can read it here. The "lede" and "sublede" say it all:
"Banks Profit from U.S.Guarantee/The U.S. guarantee on new debt issued by financial firms will save the companies about $24 billion in borrowing costs over next three years."
Thanks to tax losses, that $24 BILLION! goes straight to the bottom line of GS and other deserving sorts. That's where the profits on which bonuses are based are coming from. It is - to repeat myself - the greatest scandal of the bailout, among the greatest scandals in history. In his grave, Jay Gould must be whirling with envy. Who knew it could be so easy?
Thanks to tax losses, that $24 BILLION! goes straight to the bottom line of GS and other deserving sorts. That's where the profits on which bonuses are based are coming from. It is - to repeat myself - the greatest scandal of the bailout, among the greatest scandals in history. In his grave, Jay Gould must be whirling with envy. Who knew it could be so easy?
Monday, July 27,2009
Last week, on Tina Brown's Daily Best, I expressed my curiosity why it could have been that GS didn't figure in the "Pecora Commission" hearings that in 1933-34 investigated the 1929 Stock Market Crash. After all, GS, with its pyramided investment trusts ("Blue Ridge," "Shenandoah" and "Goldman Sachs Trading Company") was as notorious as any other firm for Jazz Age abuses, thanks largely to the onstage abuse heaped on the firm by the comedian Eddie Cantor, who had been killed by his GS investments. But Pecora doesn't mention them in Wall Street Under Oath, the book he published in 1939, and the official GS history barely mentions Pecora, and not at all in context. What the GS history (Charles, D. Ellis, The Partnership, 2008) does reveal is that Sidney Weinberg of GS already well on his way to becoming a Wall Street and American legend, was FDR's largest Wall Street contributor, and was appointed by FDR to head a committee set up in 1934, at the same time that Pecora was grilling J.P.Morgan and others, to give business leaders "an assured hearing" in the White House. It would seem that GS may have learned a thing or two from the crafty Machiavellian at 1600 Pennsylvania Avenue as it - under Weinberg - began to develop what has become its signature business trait: a unique ability to place itself on every side of every issue, to be on both ends and the middle, of major financial and political transactions.
Since that post, I've been pondering the matter, and it strikes me that there may have been another factor at work, which simple fairness insists on putting on the table. The Pecora hearings were a ind of "show trial," a relatively benign ancestor of the proceedings that would begin three years later in Moscow. The great names of Wall Street - of which GS was then not quite yet one - were hauled into a Senate hearing chamber and publicly pilloried, mainly by their own testimony.
At the same time, however, across the Atlantic, the Nazis had come to power. FDR had always been sensitive to Jewish concerns (see Arthur Hertzberg, The Jews in America, 1989) and these feelings, possibly coupled with advice from the likes of Felix Frankurter, with whom FDR was still on good terms, may have convinced him that to put an upstart Jewish firm on public trial, as it were, could be combustible. After all, this was a time when people like Father Charles Coughlin, a spewer of radio-borne ethnic and religious hatred, were getting up to speed.
Anyway, it's an interesting, happily minor historical puzzle.
Pecora's book has long been out of print, but it makes for fascinating reading; one can only wish that someone in Washington or the New York Fed had taken down a copy in, say, 2006. What I find so interesting about Pecora is that his investigation found exactly the same kind of causal abuses figuring in the runup to 1929 that analysts have been connected to the Credit Crash of 2008: leveraged and pyramided securities too complex to be understood, massive amounts of credit for investment, the system twisted inside out and so on and so on.
I think this is what Santayana had in mind when he spoke of the lesson of history. As far as present action is concerned, we tend to think of the uses of history in terms of outcomes rather than causes. The latter is what we get into after the fact, among the ruins. What Pecora seems to show is that certain behaviors - behaviors that need to be understood psychologically and pragmatically, in a way that no trading/investment algorithm can ever capture - are going to produce a crash. That when these behaviors manifest themselves in markets, they need to be put a stop to - or else there is going to be a convulsion.
In 2009, Wall Street is behaving the way it did in 1930: the worst is over, business is getting back to normal, time to buy stocks again and away we go. I missed this rally, which pains my brain almost as much as, among other vital organs, it pains my wallet. Still, I cannot suppress the conviction that the only one true constant in history is human nature, and that generations alternate in a cycle of remembrance and forgetting, and that we have a way to go yet before this drama is played out.
And now I think I'll go ponder the fact that Warren Buffett has earned approximately twice the return on his bailout investment in GS as Washington has on behalf of the taxpayers' bailout investment of multiples of billions more. Which is why I have taken to calling the Wall Street Rescue of 2008-09 "the Great Geithner Giveaway."
Since that post, I've been pondering the matter, and it strikes me that there may have been another factor at work, which simple fairness insists on putting on the table. The Pecora hearings were a ind of "show trial," a relatively benign ancestor of the proceedings that would begin three years later in Moscow. The great names of Wall Street - of which GS was then not quite yet one - were hauled into a Senate hearing chamber and publicly pilloried, mainly by their own testimony.
At the same time, however, across the Atlantic, the Nazis had come to power. FDR had always been sensitive to Jewish concerns (see Arthur Hertzberg, The Jews in America, 1989) and these feelings, possibly coupled with advice from the likes of Felix Frankurter, with whom FDR was still on good terms, may have convinced him that to put an upstart Jewish firm on public trial, as it were, could be combustible. After all, this was a time when people like Father Charles Coughlin, a spewer of radio-borne ethnic and religious hatred, were getting up to speed.
Anyway, it's an interesting, happily minor historical puzzle.
Pecora's book has long been out of print, but it makes for fascinating reading; one can only wish that someone in Washington or the New York Fed had taken down a copy in, say, 2006. What I find so interesting about Pecora is that his investigation found exactly the same kind of causal abuses figuring in the runup to 1929 that analysts have been connected to the Credit Crash of 2008: leveraged and pyramided securities too complex to be understood, massive amounts of credit for investment, the system twisted inside out and so on and so on.
I think this is what Santayana had in mind when he spoke of the lesson of history. As far as present action is concerned, we tend to think of the uses of history in terms of outcomes rather than causes. The latter is what we get into after the fact, among the ruins. What Pecora seems to show is that certain behaviors - behaviors that need to be understood psychologically and pragmatically, in a way that no trading/investment algorithm can ever capture - are going to produce a crash. That when these behaviors manifest themselves in markets, they need to be put a stop to - or else there is going to be a convulsion.
In 2009, Wall Street is behaving the way it did in 1930: the worst is over, business is getting back to normal, time to buy stocks again and away we go. I missed this rally, which pains my brain almost as much as, among other vital organs, it pains my wallet. Still, I cannot suppress the conviction that the only one true constant in history is human nature, and that generations alternate in a cycle of remembrance and forgetting, and that we have a way to go yet before this drama is played out.
And now I think I'll go ponder the fact that Warren Buffett has earned approximately twice the return on his bailout investment in GS as Washington has on behalf of the taxpayers' bailout investment of multiples of billions more. Which is why I have taken to calling the Wall Street Rescue of 2008-09 "the Great Geithner Giveaway."
Sunday, July 26, 2009
It looks as if the NY Observer and I are parting company for good. The new owner stands pretty much squarely on the side of those whom I consider the bad guys in the great civic and financial equations that govern our parlous existence. That his prospective father-in-law is Donald Trump, a person known to earlier readers of the NYO "Midas Watch" as "the Prince of Swine," only adds to the confusion. While I have written for other websites, most notably Forbes.com and, most recently, The Daily Beast (here)
the complete editorial freedom of this blog is appealing, although I may from time to time revert to those or other venues with a link here. I am also frankly tired of seeing stuff I write about crop up in some more famous column or from a bullier pulpit three or four weeks later, with no idea whether it was my thinking that struck the spark in a particular writer.
This blog will not be about me, or what I am up to. It will be about what I think, about what I like and dislike about the way we live now. I may write about books, food, the media, golf, music, Wall Street, manners, the writer's trade, Brooklyn, local politics, the Hamptons and other subjects that deeply interest me and that I think I have earned some small right - thanks to experience, research, observation and reflection - to discuss.
You might want to bookmark this space.
Onward!
the complete editorial freedom of this blog is appealing, although I may from time to time revert to those or other venues with a link here. I am also frankly tired of seeing stuff I write about crop up in some more famous column or from a bullier pulpit three or four weeks later, with no idea whether it was my thinking that struck the spark in a particular writer.
This blog will not be about me, or what I am up to. It will be about what I think, about what I like and dislike about the way we live now. I may write about books, food, the media, golf, music, Wall Street, manners, the writer's trade, Brooklyn, local politics, the Hamptons and other subjects that deeply interest me and that I think I have earned some small right - thanks to experience, research, observation and reflection - to discuss.
You might want to bookmark this space.
Onward!
Thursday, June 18, 2009
Wednesday, June 10, 2009
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