Sunday I sent around an e-message to friends telling them that I felt it was time to leave the NY Observer. As I usually am, I was candid about my reasons. I have no intellectual or ideological connection to the new regime there. Tom McGeveran, the new editor, seems like a very nice guy, but we've never worked together, and since I have some idea what Peter Kaplan endured over the last couple of years, I can only imagine that Tom must feel, some mornings, that he's woken up in the journalistic equivalent of the trenches at Verdun.
My e-circulation list included a few people in what we broadly call media." Friends who happen to be journalists, people for whom I've written. Page Six wasn't on the list, not that I don't like Richard Johnson, and enjoy what he does, because I do - emphatically - but I simply didn't think the departure of an old guy of 73 after a gig that ran 22 years from first word to last wa very gossipworthy. I lawyer friend of mine is fond of saying, "In e-mail, the e' stands for 'evidence'" - advice that I've taken to heart, but - to repeat myself - I really didn't think there was any evidentiary interest in my having decided to go in the direction I have. That I used to refer to Donald Trump as "the Prince of Swine" is a matter of record; in my NYO column I took a view of the way people exhibited themselves in public (their private lives were off the record) and got themselves written about. Nicknames and sobriquets were a neat way of sticking a pin in; I was particularly fond of my coinage for Ralph Lauren: "the Wee Haberdasher." There were risks in this; having referred once to a fashion personality as "a shirtlifter," I found myself essentially blacklisted with regard to freelance assignments for a major publishing company. Anyway, public is as public does, and private is something else. I know Donald Trump's dirty secret, going back some 40 years, when we were both on the board of the much-missed Le Club. It is this: when he shrugs off the public persona that sells books and buildings and TV bullying, he's a very nice guy. But don't tell anyone!
Anyway, someone on my list obviously forwarded the e-mail to Page Six. I'm pretty certain I know who it is, because there are only one or two people on my circulation list to whose lives publicity - the trade-off of someone else's info for future mention of oneself - is as vital and essential a force as gravity is to the solar system. Not that it matters.
But that's really neither here nor there. It does prompt one or two reflections about my former employer. Some dozen years ago, it must have been, Conrad Black briefly flirted with the idea of buying the NYO. A mutual friend, the late, beloved Arthur Ross, called me up and invited me - then a NYO headliner - to meet Conrad for an exchange of views. After te usual pleasantries, I asked Conrad what he thought of NYO as a newspaper. I've never forgotten his answer: "The NYO isn't a newspaper," he said, "it's a mascot."
I think Conrad had a point. Long, long ago the paper hit a circulation wall at around the 50,000 mark - a level it's never surmounted since to any meaningful degree. This suggests that people grow into the paper and later grow out of it. In the past six months, I can't count how many times someone's come up to me and said "I see you're back in the NYO. I gave up my subscription but now I'll start reading it again."
Here's the thing. When you're young, at least until the recent economic mess, life is a lark, to be lived in and of the moment. You want to be hip, current, a la mode. You don't want serious - which is why most young people don't read newspapers, because the NYT et al traffic in the serious. But as you grow older, life starts to get more serious. Policy begins to matter more than personality. The latest fashion no longer matters, the latest scandal, the latest nightclub. They no longer make movies that anyone with an IQ over the national speed limit can suffer through, and hip-hop is unspeakable, so you quickly stop knowing exactly what the latest celebrity is famous for. You're no longer the person the NYO is written and published for. You give it up.
Most people won't believe this, but the NYO started life as a serious paper. The city already had enough of those, however, and Graydon Carter came along and created the editorial enlivenment that got the paper talked about. I stopped writing thinkpieces about capitalism and started calling people funny names, and Women's Wear Daily sent someone to interview me and take my picture. Pretty heady stuff.
The trick is, however, to hold your original audience while adding new readers. Twenty years ago, I pleaded with Arthur Carter to start a Medicine page, on the theory that of the straws that stir the New York drink, medicine is right up there with media and finance, and an aging readership, naturally more mindful of its health, of what are called "wellness issues," would stay with us. Just look at how New York does with its annual "Best Doctors" issue. Arthur didn't buy the idea. I tried again with the new publisher. He didn't answer my e-mail. I still think the idea's a good one.
In my demographic, no day begins without a lament for the late Sun. In culture, arts, sports - and in coverage of the city, which was NYO's original stakeout - it quickly rose right to the top. Made chopped liver of the NYT, with its pathetic, alienating effort to be groovy. Early on, Seth Lipsky asked me to write for his fledgling paper. I was also being importuned to return to the NYO. Here's what I told Seth: "I'm on the horns of a dilemma. Either I can be a juvenile on a grownup paper, or a grownup on a juvenile paper."
I think that says it all.
Tuesday, July 28, 2009
July 28,2009/1
All of a sudden, questions are being asked of Goldman Sachs from every side. The big firm has its critics and its defenders. I suppose I count among the former.
I'm simply trying to see GS plain. I think that firms, being composites of human nature, have a DNA of their own that ultimately determines their outcome. Lehman Brothers was a hotbed of self-destructive dissension when I was there (1961-1973), and after a number of attempts at suicide, finally succeeded. There was always something cheesy about Bear Stearns. Goldman seemed always to operate on the principle that if you're going to work within a system, you might as well work the system itself. Here's an example of what I mean. During my Wall Street time, Gus Levy was simultaneously managing partner of GS and Chairman of the New York Stock Exchange. It so happened that Gus and I found ourselves opposed in a tender offer for United Fruit, I on behalf of Zapata, Gus representing the late Eli Black. father of Apollo's Leon Black. In those days, the NYSE had a rule that firms (in this instance Lehman and GS) acting as dealer-managers in a tender could only accept "unsolicited orders" in the shares of the target company (United Fruit.) In other words, you couldn't just go out and round up the target shares, you were supposed to wait for thm to come to you. I was in my office one day when it was reported to me that GS had just crossed (had both sides of a buy-sell order) what looked like half the common stock of United Fruit. I called Gus. "Congratulations," I said, "that has to be the goddamdest unsolicited order ever." "well, Mike," Gus drawled in that syrupy Confederate way of his, "you know how these things are."
Well, if I hadn't before, I did now. But I've always wondered about the ethic of playing fast and loose with the rules of an organization you're the chair of. In 1929, Albert Wiggin, President of Chase, was shorting his bank's stock even as he was offering bland public assurances that all was well. Nothing changes.
What needs explaining to me is the rapidity with which GS has returned to fat profitability. Last all, it was theoretically on the ropes. Today, it's practically back to the level of profit it enjoyed back before anyone knew how to spell "subprime"(I exaggerate, for historical purposes, but readers will know what I mean.) That was a mere 9-10 months ago. Logic suggests that GS was in nowhere as desperate shape as was represented. Between the time Buffett made his deal and March, 2009, GS stock went from around $100 to around $50, even as TARP funds had been aded to Buffett's and Goldman was at the government trough, snout buried in virtually free taxpayer money. Its trading computers were whirring ceaseless and its competition had been decimated. Even though it was now a bank , it had no depositors, in the conventional sense, to look out for.
Great big firms simply don't turn around on a dime. One can only assume that GS was in nowhere as bad shape it let the bailout boys believe.
I'm simply trying to see GS plain. I think that firms, being composites of human nature, have a DNA of their own that ultimately determines their outcome. Lehman Brothers was a hotbed of self-destructive dissension when I was there (1961-1973), and after a number of attempts at suicide, finally succeeded. There was always something cheesy about Bear Stearns. Goldman seemed always to operate on the principle that if you're going to work within a system, you might as well work the system itself. Here's an example of what I mean. During my Wall Street time, Gus Levy was simultaneously managing partner of GS and Chairman of the New York Stock Exchange. It so happened that Gus and I found ourselves opposed in a tender offer for United Fruit, I on behalf of Zapata, Gus representing the late Eli Black. father of Apollo's Leon Black. In those days, the NYSE had a rule that firms (in this instance Lehman and GS) acting as dealer-managers in a tender could only accept "unsolicited orders" in the shares of the target company (United Fruit.) In other words, you couldn't just go out and round up the target shares, you were supposed to wait for thm to come to you. I was in my office one day when it was reported to me that GS had just crossed (had both sides of a buy-sell order) what looked like half the common stock of United Fruit. I called Gus. "Congratulations," I said, "that has to be the goddamdest unsolicited order ever." "well, Mike," Gus drawled in that syrupy Confederate way of his, "you know how these things are."
Well, if I hadn't before, I did now. But I've always wondered about the ethic of playing fast and loose with the rules of an organization you're the chair of. In 1929, Albert Wiggin, President of Chase, was shorting his bank's stock even as he was offering bland public assurances that all was well. Nothing changes.
What needs explaining to me is the rapidity with which GS has returned to fat profitability. Last all, it was theoretically on the ropes. Today, it's practically back to the level of profit it enjoyed back before anyone knew how to spell "subprime"(I exaggerate, for historical purposes, but readers will know what I mean.) That was a mere 9-10 months ago. Logic suggests that GS was in nowhere as desperate shape as was represented. Between the time Buffett made his deal and March, 2009, GS stock went from around $100 to around $50, even as TARP funds had been aded to Buffett's and Goldman was at the government trough, snout buried in virtually free taxpayer money. Its trading computers were whirring ceaseless and its competition had been decimated. Even though it was now a bank , it had no depositors, in the conventional sense, to look out for.
Great big firms simply don't turn around on a dime. One can only assume that GS was in nowhere as bad shape it let the bailout boys believe.
Monday, July 27, 2009
July 27,2009/4
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."
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."
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!
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