November 20, 2013
It’s very hard to make a connection between one man’s actions and the other man’s suffering due to those actions. For a hedge fund manager it’s difficult to link his actions to a suffering of a small town teacher. His thinking goes: I exploit market discrepancies, I make money and pay taxes, I donate to charity. He may even think: I am genuinely a nice guy and I really want to help. It’s hard to trace the root of the problems back to himself and his colleagues and industry peers. That would require the rethinking, perhaps painful and unwelcome, of his entire existential premise: is he as good for the society as he thinks he is? And if he’s honest with himself, he will realize that the answer is not necessarily yes.
I wrote recently about how hedge funds these days, rather than engage in honest betting on markets are instead seeking to extract value at the expense of the communities, bully others for value or simply seek rent opportunities. None of those activities produce anything of value; they strip value from the existing caches. Then they use various tax loopholes. And then they donate to charity, being under the illusion that it can cure social ills and because, you know, they are not monsters.
That’s the model we’ve had for some time.
But here comes the danger. In another illuminating Bloomberg article (Bloomberg columnists are really on a roll, finding their mojo recently), we’re risking societal breakdown if we continue on the present course. This sentiment has been widely explored on the pages of my blog, but this article summarizes my thoughts in a concise and trenchant manner. Over the course of history many societies have reached this point. Many got out of this rather unscathed, if they embarked on the policy of alleviating the social and economic discrepancies (New Deal), many others have experienced a more painful chain of events.
I want to stress, again and again, that helping the poor does not turn us into Commies and socialists. It merely helps smooth out such transitions, it is in the very interests of those hedge fund managers. Blaming the poor, the unemployed and food stamps recipients on the lack of alpha is disingenuous and counterproductive.
November 18, 2013
No shit, Alan!
Greenspan takes about 5000 words to ruminate on how people can be irrational.
November 8, 2013
Pasty White Guy, also known as Rich Boatti, my fellow board member of ACT NOW, can play some serious hoops. He will be on Olbermann tonight.
November 3, 2013
“Women are only good because they never had a chance to be bad”.
I saw “The Counselor” the other day, a movie based on the screenplay by Cormac McCarthy, the same guy who wrote No Country for Old Men and this post is a result of my ruminations on one of the film’s character. Spoiler alert: Cameron Diaz’s scheming and ruthless character kills Brad Pitt in an especially gruesome and chilling manner. For money – the most mundane and age-old reason of all. Some will find my thoughts and conclusions controversial. But here goes.
Women’s entire world, even when they are inclined to delude themselves about having some sort of power, revolved around the world of men. It’s the world built by men, with the rules written by men, so even when we think that we can achieve some sort of power, all we do is just play, real hard, by men’s rules. Sometimes we succeed, but those exceptions only confirm the rule. The bitchiness and cruelty that those of us who decide to wager into the man’s world develop is the manifestation and the confirmation of the man’s world. All this “Lean In” feminism that you keep hearing about is just a manual on how to be able to function in a man’s world. (A long, but dissecting and revealing account of what’s behind this movement.)
The ultimate gender equalizer is the ability to do evil. That includes the power to fleece the fools, to take advantage of the weak, to wage wars. True equality between sexes will be achieved not when a woman acquires access to tools of power she’s been denied for millennia; it will be achieved when she learns to lay them down after she’s had a good run. Women, especially at all those ubiquitous women’s conferences, like to think and talk of themselves as being better than men: we are nurturing, cooperative, benevolent, etc., etc. After all that uplifting talk women really begin to believe that they are better than those brutal apes, men. What bullshit! Women are only good because they never had a chance to be bad. It’s a feel-good fairy tale that women have been telling themselves for thousands of years just to cope with their second-class status. If you don’t have the power to do real shit then your only outlet in life, your only point of consolation is to “be nice”. When you are good out of weakness it doesn’t count, because you have no choice; you don’t get to pick a path, it’s been picked for you. How do you know if you’re truly a better part of humanity if you haven’t been exposed to and tempted with, at least not on a scale that men were, real power? Women think they are better than men because women never held that kind of power in reality – the power to do shit, not just depend on others to do shit. It is only during the last century we began to slowly shed those misconceptions. But here’s the kicker: once we, women, receive access to it, we are no different, no better no worse than men. That is a true equality – the ability to do things, sometimes despicable things, and only then the ability to abstain from doing them. Men had plenty of time to purge themselves of the bad things they were doing, to contemplate about their bad behavior; after all they’ve been doing bad things for a millennia. Men have had “fat tails” for generations (to use the statistical bell curve illustration): there are plenty of criminals, murderers, and vagabonds on the left-hand side of the curve among men; there are also a lot of geniuses and heroes on the right-hand side. Women’s bell curve looks much narrower: we don’t have as many delinquents and hobos, but we also don’t have as many outstanding statesmen and thinkers. We are new to this.
It is naïve to think that we can circumvent such natural evolution. First we have to have our own Raskolnikovs, Mussolinis, and Joe McCarthys in our midst; only then we can produce our own Rousseaus, our own Voltaires, our own Churchills. Only then we can sit by the fire, sip cognac and contemplate, in earnest, on the depravity of a human soul and our struggle to overcome it. Because then we will have a true understanding. Then we will know what it takes to lay down the power voluntarily, to refuse to use it to your advantage.
Benevolence and kindness of a woman had always carried a different flavor than a benevolence of a man. When a man is benevolent he projects strength; when a woman is benevolent she only does what is expected of her. A man doesn’t have to be benevolent; if he chooses to be it will come from his strength. If a woman is benevolent, she’s merely doing it because she’s weak.
Whether you like it or not, Margaret Thatcher waging war over Falklands was an essential part of that progress. That’s why we have to welcome even such cunts and dimwits as Ann Coulter and Sarah Palin – it’s progress; a hundred years ago they would just be voiceless housewives or spinsters. Having those public figures is natural growing pains. We despise them, but their existence is necessary to make way for future groundbreaking female leaders.
To achieve true equality we have to be bad first. We have to be bad for the next 2000 years. We will have to become the corrupt politicians, we will have to fleece the populace, to start wars, to fuck things up. We have to purge it all out of our system, to inoculate ourselves, so that later, hundreds or thousands of years from now, we can, this time genuinely, magnanimously, and without any social expectations, be good, show mercy. Then, we shall be truly equal.
October 31, 2013
The culture of entrepreneurship and risk-taking has always been a central theme of the American history and character, but in the last few decades it morphed into a rather bizarre and unnatural form.
America today reminds me of a poker table where one player has sucked in all the other players’ chips and insists on keeping the game going, dismayed that the customers don’t have any money. “Come on, people, what’s the matter with you? Let’s play!” He laments. But he gets no action. It is at this moment that he has to decide whether it is all about the money or all about the game for him: what’s the point of having all those chips if you can’t use them? The chips only have value if you can use them to get even more chips. But what’s the point of being great at taking other people’s money when there are no customers around? What’s the point of having billions in cash if you have nowhere to invest it? You know you’re good at your game, but the more money you have the less opportunities you have to demonstrate it. It’s much easier to make 20% return on $10 million than on $10 billion. And the thought of shopping for yet another Lamborghini is depressing, because you already have several in your garage.
Game, action – is what you seek at that point. Perfecting your skills and promoting your gospel is the reason you wake up in the morning. That’s the main reason, perhaps, that many billionaires go into politics. With this mindset you invite, or rather, insist on others participating in your game. You view any human interaction as a business transaction, an opportunity for one-upmanship. To keep playing that game you have convince all the suckers out there that they too, if they work hard, can learn to play it. It is only when millions of others are striving to become like you, to play at your table, by your rules, you can have a lasting legacy. If they don’t then you’re just a lonely guy with mountains of chips at an empty table. And after you used all the leverage out there to improve your returns and received all the political favors, it all still comes down to having players at your table. At some point, when the flow of new customers slows over the normal course of business, you begin to devise plans to extract fees from the existing ones to keep with the original pace of growth. That’s how we got the new business models with various “financial innovations” schemes: private equity funds or activist investors extracting value from already existing caches, like pension funds or profitable companies; raiding others for value rather than building it.
With such a mindset one becomes blind to the idea that, perhaps, making a few hires, parting with a few chips, would jump start the game. But lack of introspection is the name of the game. The ideology of competition has penetrated our political quarters and our national discourse so deep that we glorify the gamblers and pity or tolerate the salaried workers. Such over-the-top encouragement of risk-taking produced many bad players. Extracting value from companies through M&A, rent seeking, and trading synthetic indices is not entrepreneurship in its distilled form, because there’s no risk involved or no product being made. These bad players have entered the game over the last few decades and in order to win they began to manipulate the odds for all other players. They situated themselves permanently on the button (the best position in poker) by making deals with dealers and the floor managers. But of course, they don’t attribute their success to such a privileged position – they attribute it to their skills. They look at 9-to-5 cubicle workers as cost centers, because those schmucks don’t engage in a game. And yet they would like for them to join the table. We rarely hear stories of a businessman turning into an office worker, because that is viewed as a failure. College students are encouraged to scrape around or borrow money and start their own businesses. We expect, nay, demand, that everyone becomes a small entrepreneur. Good luck with that, kid. Except you won’t be doing M&A, or charging others 2/20, or collecting insurance premiums from dumb customers with money, the businesses with essentially zero risk – the kind of businesses only “serious people in suits” and incidentally the biggest advocates of risk-taking are engaged in. You’ll be spending that last $50K to open a cup cake shop or a restaurant that has an 80% chance of closing in a few years. Giving such an advice to someone right out of college is bad faith. Strangely, the loudest advocates of risk-taking are the ones who deal with no risk at all. But then what’s wrong if one simply wants a quiet life, a stable paycheck, some financial security? He’s seen the statistics – the majority of small businesses fail, so perhaps he decided that such gamble would be imprudent given their circumstances. And why should such a decision be derided by the gambling worshipers on top of the hierarchy? Those workers simply assessed the situation and decided, correctly, that it would be a bad investment. If anything they should be commended for it, not ridiculed and called names, like “moochers” or “takers”. Since when simply working for a paycheck became a point of derision?
Poker players in the casino have a choice not to play, they can stand up and leave the table if they don’t like the game. Average citizens do not have that luxury. If the business community still insists on fleecing those unfortunates who scrape by paycheck to paycheck the least they can do is stop calling them names.
October 22, 2013
If it’s all about business, then, perhaps, Magnetar can halt its cheap displays of benevolence. A $25,000 donation by the property manager to staff one police officer at one of city’s schools would be a nice gesture if it weren’t accompanied by the attempt to strip the very same community of $1.39 million. If Magnetar really wants to repair its image from times past and to demonstrate its goodwill to the local community, there’s a great and easy way to do it: Pay property taxes and stop extracting value at the expense of the locals.
October 13, 2013
Ross Douthat in his column today compares Republicans to Colonel Kurtz, the demented fugitive in the Apocalypse Now.
I made this exact analogy almost 2 years ago!
October 10, 2013
Here. With references to Game of Thrones and Breaking Bad!
There can be no half-measures when the full faith and credit of the United States is on the line. In 2011 Obama chose a half-measure, when he should have gone all the way. He’ll never make that mistake again. The U.S. always pays its debts. Even if the Treasury has to break some laws to do it. Obama realized that a few weeks ago. Ryan, Cantor and Boehner are beginning to realize that now.
October 7, 2013
There’s an interesting line of thought being tested in the blogosphere that alleges that Democrats actually have to negotiate with Republicans, but not in order to give them any sort of concessions, but on the contrary, to get something out of it, as Republicans are seeking for a face-saving way out. Peter Beinart thinks that it would be beneficial for Democrats to provide them with such a way out.
I couldn’t help but recall a great American short story by O. Henry, The Ransom of Red Chief, that deliciously describes exactly this sort of predicament. Two swindlers, short of $2000 for a business venture, devise a plan to kidnap a 10-yeat old son of a wealthy citizen. The kid thinks he’s an Indian Chief on a warpath and only welcomes this sort of development. The two hapless kidnappers didn’t account for such a turn of events, as the kid terrorizes them with violent games. As the boy’s father, the prominent Ebenezer Dorset, responds to kidnappers in a note, he’s fully aware of the predicament those guys got themselves into, and shrewdly demands a payment of $250 just to take the boy back.
The end of the story needs to be quoted in full:
It was just twelve o’clock when we knocked at Ebenezer’s front door. Just at the moment when I should have been abstracting the fifteen hundred dollars from the box under the tree, according to the original proposition, Bill was counting out two hundred and fifty dollars into Dorset’s hand.
When the kid found out we were going to leave him at home he started up a howl like a calliope and fastened himself as tight as a leech to Bill’s leg. His father peeled him away gradually, like a porous plaster.
”How long can you hold him?” asks Bill.
“I’m not as strong as I used to be,” says old Dorset, “but I think I can promise you ten minutes.”
“Enough,” says Bill. “In ten minutes I shall cross the Central, Southern and Middle Western States, and be legging it trippingly for the Canadian border.”
And, as dark as it was, and as fat as Bill was, and as good a runner as I am, he was a good mile and a half out of Summit before I could catch up with him.
If Republicans want to get out of the hole they dug themselves into they have to pay something for it.
October 3, 2013
It’s becoming a recurring theme: men of power pretending or even believing to be the little guy, sort of “Mr. Smith goes to Washington”-type, speaking truth to power. Here’s a Republican congressman from TX, who supported the shutdown, telling park ranger “How do you look at them and deny them access?”, referring to a group of WWII veterans trying to enter the memorial. Unbelievably, he blames the poor park ranger (who probably doesn’t even get paid because of the shutdown) for the shutdown!
This kind of behavior is common among the “trickle-down” and Ayn Rand crowd: they blame the hoi polloi, the Joe Schmos for their troubles. But in order to not look like complete assholes, they have to turn everything around and pretend that it is them who are the little guy, the salt of the earth, and it is those food stamp recipients, the unions and the unemployed who are the real threat.
I think that for some, and Krugman made a good point about it recently, it’s not enough to just be rich and powerful. One has to be adored and admired. It’s like the next step after you have amassed fortunes and made powerful friends and opened your own charity. Your next step is to become a hero, but since opportunities for heroism are limited, you enter the make-belief world, a parallel realm, where you are the persecuted minority and everyone else is out to get you. You find someone who can’t really fight back and make a grand stand.