It’s no secret to anybody that Republicans in Congress in general and the top 1% of earners in particular are no big fans of taxes and regulations. In this post I’d like to demonstrate that this is a rather short-sighted view and, out of their own sheer self-interest, they should be for higher taxes and government regulations.

Imagine, you are a billionaire and the economic reality around you has been rather, shall we say, anemic. But why should you give a fuck? You’re set for life, live in a gated community, have private security, household help – in other words with money you can theoretically shield yourself from daily struggles that the peons face every day. There are many reasons why you should (give a fuck), beginning from the fact that, if you’re a billionaire, your worries are of a different scale, namely, you want to close deals, sell products and make smart investments. None of it can be done in a vacuum. You need a solid consumer base, a partner on the other side of the deal, people who want to buy when you want to sell, the suckers at the poker table if you will! In order to be the king of the hill, you have to have the freaking hill! You have to have a vast and robust middle class whose wages are rising consistently year after year. Henry Ford was no fool when he paid his workers high salaries – so that they could buy his cars. The taxes have been falling for the last 30 years but that did not bring the promised prosperity and jobs to the middle class. Let’s admit that we tried it and it didn’t work.

I must also admit that the game that you played for the last 30 years is spectacular in its shrewd, take-no-prisoners ways: pushing for tax breaks and lobbying for favorable legislation, eliminating competition, skimming consumers. Congratulations, you won. Now you’re all dressed up and ready to play but there’s no one left to play with. Now you’re a lonely player at the poker table with mountains of chips in front of you, wondering why is it that no one wants to come and play with you. Maybe it’s because people have no more chips left. In real poker, as in most games, being the last guy standing is the most optimal and desirable outcome, because there are other tables and other games always readily available. But the point of a real life game is not to win the most chips, but to keep the game going, simply because we only have one table. Besides, taking chips and going home is anathema to any businessman worth his salt: chips are supposed to be working. Now that you have that picture of yourself with all the chips let me ask you: Will the dealer taking smaller rake from the pot (I’m drawing an analogy with smaller taxes here, for those who don’t play poker. The dealer takes part of every pot, a ‘rake’) offer real solution to the lack of players at your table?

Another, more mundane reason why you should support taxes is unpleasant visuals that can spoil your day, if you’re not a complete sociopath. Do you like seeing bums on the streets or on subway trains, or, especially heartbreaking, neatly dressed middle-aged, resumes in hand, standing in unemployment line? Neither do I. Conservatives’ standard solution to this kind of situations and other life’s misfortunes is personal responsibility and charity. I disagree. It’s hard to be personally responsible if you’ve been a victim of forces beyond your control: mental disability for example as is the case with many homeless, or mass layoffs. The problem with charity is that it’s selective and whimsy. While there’s no shortage of charity causes here in New York City, the problem is that they mostly target arts, children and breast cancer. Nothing wrong with this, of course, but you can see how many other areas worthy of charity get omitted because, let’s face it, some of them are not picture perfect. And in a bad bonus year even those “New Yorkers for Children” (my favorite moniker on emotionally manipulative scale, to be surpassed only by “New Yorkers for Puppies”) charities will take a back seat to personal priorities of an otherwise generous and vain Wall Street soul. As for the unemployed, I have yet to hear any conservative to explain what is exactly wrong with government hiring those people for useful projects? Because government is evil?

But we’re way past worrying about the homeless problem. At this stage we need a charity ball for the middle class. I’m afraid that such a task is insurmountable, even to Koch brothers and Warren Buffet combined. There’s only so many maids and drivers that they can hire.

Sometimes I think that I’m more conservative than conservatives because I prefer order to chaos, rules to anarchy, so that I don’t have to spend most of my waking hours solving logistical problems like dysfunctional or non-existent public transport, unsafe drinking water in the tap, malpracticing doctors. Which brings me to regulations.

“I can’t be bothered with that shit”. This is my favorite argument in support of regulations. Do you really want to spend valuable time experimenting in choosing the best vendor who sells the best meat, doctor who practices solid medicine, insurance provider that pays off? Especially if you work 12 hours a day? If we lived in the realm of neighborhood mom-and-pop shops (many conservatives still think that this is the world we live in), where you could just go to the other one down the street if the first one treated you unfairly then you could make that case. But unfortunately we live in towns where only 2 or 3 big vendors exist for any product. What is your recourse against, say, an insurance provider to whom you dutifully paid premiums for several years, and who refuses to pay off if an accident happens? Are you going to follow a classic conservative advice and go to another provider? No, you’re going to call your lawyer. Moreover, if you can do your own “testing” of the quality of meat, how are you going to know the promised quality of products that you have no expertise of measuring, like software, for example? Or how about products which questionable quality you can measure only after you’re no longer a consumer, like bad surgery or faulty car breaks? Or how can you be sure that the guy managing your 401(k) is not a crook? Do you want to spend months doing research, aside from your main job, making sure that the guy you’re entrusting your money to is not the next Madoff? And more importantly, who’s going to enforce business contracts that you enter into? Who is going to help you collect? Nicky Santoro?

Sports have strict rules. That doesn’t keep athletes and teams from succeeding. In fact that makes the game more exciting because it is the ultimate ‘let the best man win’ situation. The beauty of a fair competition is that no particular party has an advantage at the beginning of the game. There are stronger teams and weaker teams, of course, but they all play by the same rules. By the same token, I do not resent the fact that there are rich and there are poor, contrary to conservatives’ cries; I resent the fact that there are different rules for different classes, that the game is rigged.

Conservative insists on being left alone, but who is should provide that aloneness, that peace of mind, that mechanism that makes trains run on time, the streets lit up at night, the garbage picked up in the morning? Hire a guy to do that for you. Let that guy have enforcement powers if someone is out to screw you. Such guy is the government, whether you like or not, whether you admit it to yourself or not.

By the way, speaking of Nicky Santoro. What can be better to conclude my post than this insightful quote from the movie, where Nicky laments on how reckless the Mafia has handled the casino business:

“But in the end, we fucked it all up. It should have been so sweet, too. But it turned out to be the last time that street guys like us were ever given anything that fuckin’ valuable again.”

In order to discuss the implications of this trade let’s review, with whatever little information we have, the trade itself. The culprit is a trader Bruno Iksil at London’s JPM CIO desk, nicknamed London Whale. The instrument that he was trading is index CDX.NA.IG.9. To translate that into English it’s an index that contains 125 insurance contracts (CDS) on corporate American investment-grade debt (e.g. Alcoa, GE, etc). Figure 9 stands for series – the index is reissued every 6 months and is now at series 18. To understand such “synthetic” trade you have to think of it as insurance. This is what a credit default swap (CDS) is – an insurance. Imagine you have a house, traders would say – you’re “long” house and you buy an insurance contract on it (traders would say that you “buy CDS” or “protection”) to bring down the risk of owning the house. This way your risk is essentially zero (or at least we declare it for the purposes of this article): if the house value goes down you make money on insurance. In trader’s lingo you’ve entered a “basis trade” – a low risk low-return trade. Now, the guy who sells you the insurance (or writing the contract) is going long risk on the value of your house. He collects the premium and he doesn’t want anything to happen to your house. Traders would call this maneuver as “writing protection” or “selling CDS”. You see, you were long risk with your house before you bought protection on it – now you’re flat risk. The insurance seller is outright long risk, but synthetically, because he doesn’t own the physical house like you do. So this index, consisting of a collection of insurance policies, is an easy way for a trader or a money manager to express either positive or negative sentiment, while with the cash bond you can only express positive sentiment. With this index, if you’re bullish on the corporate bond market – you sell protection, betting that the corporate spreads will tighten; and if you are bearish – you buy protection, betting that spreads will widen.

To sum up:

Going long synthetically = selling CDS, aka selling insurance, aka writing protection, aka buying the index. (I know it’s a little confusing: selling insurance = buying the index; the index was structured in such a way so that it’s easier to understand that you’re going long risk)

Going short synthetically = buying CDS, aka buying insurance, aka buying protection, aka selling the index.

Jamie Dimon wants you to think that this trade was a hedge. Why? Because the upcoming Volcker Rule would prohibit banks to engage in speculative activity, that is taking an outright long or short position. But once you have a position and a corresponding hedge (or, as we discussed above, a house and an insurance policy on it) then everything is tip-top. JP Morgan is a deposit taking institution and, together with Citi, BofA, Wells Fargo, is a primary target of Volcker Rule. Of course, the original Volcker Rule did not have any exemptions – it prohibited any sort of proprietary trading; it is JPMorgan’s own lobbyists that pushed for that “hedging” exception, among other things. I just don’t see how Jamie Dimon “hedging” excuse logic works: if he’s trying to point that the trade was kosher but lost money then how many of such “risk-free” trades can be put in the future and dismissed consistently by the top management as “a tempest in a tea pot” before it blows up in their face?  If you lobby to increase speed limit to 100 mph and drive at that speed you are not really breaking any laws, but should we all just feel safer because the rules are followed? And if the accident happens how can you then turn around and blame the rule? You lost money not because you complied with Volcker Rule, but because you used exception to the rule to put trades on that even you didn’t know how to manage. Now he says: “I was dead wrong to dismiss concerns.” No shit, Jamie.

Bruno Iksil was SELLING protection by amassing about $100bn long position in the index. He was on the hook for losses, he was essentially long risk. And he claimed this to be a hedge.

A hedge against what? If he was selling protection, then his original position would have to be a massive short in those corporate bonds (think of it as a “negative house”: you would have to buy the house, or sell CDS in order to bring your total risk to zero). The only way to achieve that original short position in bonds is either through similar index (perhaps a different vintage) or individual credit default swaps. But let’s assume, for arguments sake, without asking stupid questions of why he happened to have that original position in the first place, that it was a basis trade. A minus $100bn in corporate bonds CDS and a plus $100bn of CDX.NA.IG.9. How can one lose $2bn on such a “riskless, Volcker rule compliant” trade? Index price has fallen from about $100.6 at the end of March to about $99.3 in early May, but because I’m in generous mood and for simplicity, I will assume that the index moved just 1% against Bruno.

Source: Markit.com

You would have to have a naked exposure of $200bn to lose $2bn on a 1% down move. So his “hedge” defense doesn’t stand this simple test. Where is it coming from then? Jamie Dimon threw out “Macro hedge” and “economic hedge” explanations out there as well, probably to see which one sticks. (As a side note – I love it how they throw obscure financial terms to the public that are undecipherable to the general population hoping to blind us with the fancy lingo. Are they expecting us to say: “Oh, ok, Macro hedge – that explains everything!” and go on our way?) These are imperfect hedges that are supposedly protecting your portfolio against broad economy moves. With our house example it would be like having a house in NY and buying protection not on that particular house but on a similar house in Indiana or a basket of houses around the country. What’s risky about this sort of trade is that your NY house’s value will fall more than the value of protection on the Indiana house will rise. To make matters worse, in a frenzy to bring your risk to flat again, you start to frantically add on to your hedge to keep up with falling value of your NY house, thus making your final hedge much, much bigger than the original amount. Since Iksil was adding on his position for several months, my bet is that this is what happened: a small initial trade that gotten out of control when hedges didn’t behave in sync with the underlying.

And why such a theory should be far-fetched? Just look at the language that Dimon used to describe the situation.

“The synthetic credit portfolio was a strategy to hedge the firm’s overall credit exposure, which is our largest risk overall in this stressed credit environment. We’re reducing that hedge. But in hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored. The portfolio has proven to be riskier, more volatile and less effective as an economic hedge than we thought.”

But this isn’t the end of the story. In fact this is just the tip of the iceberg and things are bound to deteriorate further. “It could get worse, and it’s going to go on for a little bit unfortunately.” – Dimon said.  And if he uses this kind of language – it most certainly will. The reason why things might get worse is that JPM haven’t unwound the position yet. The $2bn is a mark-to-market loss, a paper loss. Considering the fact that The London Whale didn’t get his nickname for nothing – he’s the only game in town in that particular niche of the credit market – trying to get out of that position is like running a herd of elephants through the narrow door. He simply won’t get the price that he wants. And everyone, and by that I mean guys who could possibly take the other side of the trade, the hedge funds, know it. They salivate of the prospect of killing the whale. Nothing personal of course, just business.

I am especially entertained by the hedge funds guys. You know, these are the kind of guys who don’t play by the rules, they want to be left alone in a sandbox, and have their own unregulated brawl with no rules, where only the strongest and the savviest survive. Imagine how surprised I was to read this in FT Alphaville. This is what the hedge fund guys began saying when they noticed that some desk in London was cornering the market:

“The hedge funds got more angry. It dawned on the hedge funds that they had no one to complain to. The hedge funds and banks had lobbied long and hard to keep this over-the-counter market in credit derivatives unregulated. Thus it is unregulated, and they had no one to tell, officially, about what they suspected — that a single player had cornered, and distorted the market by putting on huge trades.

And then they complained to journalists.”

Another ironic thing is that the $2bn loss, according to Barney Frank, is 4 times the amount JPMorgan has claimed the regulations will cost them. But with all those exceptions the freedom to lose money is intact, which I guess is more important for Jamie Dimon. Oh, and did I mention that JP Morgan is a bank, backstopped by taxpayers money in the case of unmanageable losses? Guys, I want you to appreciate the magnitude of the fuckup. 3 senior heads have rolled already 4 days after the news broke. Ina Drew, a CFO with 30-year career with the company, has submitted her resignation several times during the past few days with Jamie Dimon reluctantly accepting it. People don’t just leave the company if this was something trivial as they want us to believe, if it was just a little correctable screw up. You can’t unwind such a position without major losses, you can only put it to book-to-maturity and hope that everyone forgets about it. I think this is the only strategy Dimon has to deal with the situation. Should we hope that our regulators and congress won’t forget about it in an election year?

Reblogged from mathbabe:

A post from Cathy O, at mathbabe.org that nicely puts together a line of thought I've been conceiving for weeks.

Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.  Franklin Delano Roosevelt.

I’m Russian, let’s just get that out of the way. May 9^th is a special day for any Russian. It’s both a joyous celebration of our victory over fascist Germany in 1945 and also a day of reflection and remembrance. To many people it’s the most treasured and most profound, a knot-in-the-throat holiday, as sacred as 4^th of July is for any American. Every family has a relative who died or fought in that war. With sadness I watch more and more veterans leave our ranks every year and I contemplate over these special men and women and wonder what I would do if I was born in 1924. Would I have the guts to do what they did, to be on the frontlines, to face an armada of German tanks pacing toward me when I had just a rifle and a grenade? There’s no place of cynicism and individuality on the battlefield. My generation grew up watching war movies and talking to live witnesses of those events, we played “war” and our heroes were young partisans. We grew up picturing ourselves in those situations and admiring real war heroes, just like young Americans grow up admiring comics superheroes. During those games and those daydreams what was always present is the collective spirit. “We’ll show them!” – our thinking went. There was no “I” on our imaginary playground battlefield. Contemplating the victory in World War II (or Great Patriotic War) for a Russian is to invoke the “us” narrative.

Collective is a dirty word in typical American conservative circles. “Individual” is word-du-jour in the current Right’s ideology. Cowboys or lone heroes are admired. Every American actor who played a lone ranger or an oddball police officer is a conservative in real life – Bruce Willis, Arnold Schwarzenegger, Chuck Norris, John Wayne. Rugged individualism rules the day. This is odd because collective effort is what makes military forces – a staple of any conservative stump speech – function. Collective effort is what makes a sports team win. Collective is what made the “war effort” possible. Everyone had to contribute; everyone was part of the game. Collective effort during those war years did not turn Americans into Communists. America faced the best economic growth in the 1950s, when those fighting in the war came home and joined the labor force. In fact it was the so-called “Golden Age of Capitalism”.

Conservatives’ fear of a slippery slope from communal into communist has atrophied their ideology into a very narrow set of ideas. First of all, they don’t even distinguish between the two as if any deviation from the party line would be a betrayal of conservative values (reminds me of late 70s-early 80s crumbling Communist ideology, that was afraid of its own shade, thus banning any hint of even the  most trivial discourse). Second, their own rigidity, the insistence on ideological purity is their own version of “communal values”, the kind of values that would not allow good public servants like Dick Lugar to remain in their ranks. Their hatred of everything “public” or “common” has evolved into a very perverted view of community. Conservative “Community” means “us vs. them” where “them” are not the outside enemy but their fellow Americans. I am dismayed to see how the top 1% of earners in this country is up in arms to the proposition to pay as much taxes as anyone else in this time of crisis. Not more – but just the same share as everyone else! A typical Wall Street worker fancies himself to be a combatant on the battlefield, killing and getting killed, he nonetheless demands to get paid and be praised as an individual hero. They demand the acknowledgement from the public of their superior qualities and of special superhero treatment. Imagine if our soldiers in Afghanistan were as demanding, which in my opinion they have a full right to do. As I do not tire to mention, I believe that Wall Street need a justification of their own activities as socially useful, because if they are honest with themselves, they should be able to acknowledge that they are not really funding that cupcake or barber shop down the road by trading CDS. And it’s a depressing thought to live with. After you made millions and millions of dollars your next goal is not just another million but the public recognition of your own benevolence, of your own social usefulness, of your humanity. Wall Street demands the appreciation of its communal values! Suddenly Wall Street wants public respect! Even though what made their benevolent position possible is a path of destruction if they cared to look back. What made their charitable impulses possible is the scorched earth approach to everything and everybody not in their closest circle, and the corpses left in the process. I guess those corpses are needed after all as a pretext to conduct charity auctions at the high-end, closed up, black-tie venues. You know, fighting poverty, ending hunger, aiding education – all those things that were not supposed to depend on the mood and whim of the richest citizens but on communal contributions, aka taxes. You need to saw destruction so to have an opportunity to show your own goodwill later. Not a bad business plan, if you think about it. Not a bad individual self-promotion scheme. Isn’t that what conservative individualism comes down to – making a hero of oneself at the expense of everybody else?

Gone are the days when victory was a communal celebration with a sense of togetherness. Today’s victors are lone wolfs, celebrated for cheating the “suckers”, for taking advantage of their own fellow citizens. Because it is somehow those citizens’ fault that they didn’t grow up to be predators or don’t want to participate in this ‘game of thrones’. Somehow, teachers and fire fighters and “art history majors” are losers in our new social order. Somehow, being a calculating jerk is now the highest public virtue. How did we come to this?

I, of course, do not underestimate the power of slime. Just recall what happened to John Kerry in 2004. We have to expect more of the “Secret Muslim” and “Where’s the real Birth Certificate” lines of attacks to resurface again among other things. These ads, to be clear, will not be designed to make any new converts, they will be designed to rile up the paranoids to come and vote in droves. So for Republicans these sorts of ops are more of a Get out the Vote (GOTV) exercise rather than converting the undecideds.

I’m not entirely crazy about Obama’s “We Can’t Wait” message because this message is directed at the obstructionist Congress, not at Romney. Something along the lines “A fight for the Middle Class” would be more effective. Obama has to give equally compelling reasons for people to show up at the polling station. “Republican War on Workers” is a more gripping message. First, Obama is already accused of waging a class warfare, so he might as well reap the benefits by talking about decades of stagnating wages and growing inequality gap. Maybe that will bring him some votes from the white working class. Remember when was the last time a presidential candidate talked about growing inequality? Neither do I. And then we’re surprised that white working class is voting Republican every time! I think Republicans are really afraid of this kind of talk, because they have nothing to say against it but the re-recycled and tired message of “trickle-down economics”.

Obama is being accused of so many outlandish things right now that his hands are essentially untied. “If that’s what you think I am” – his campaign thinking should go – “then this is what I shall become”. It’s like buying a cheap bond that cashflows: the downside of the trade has already happened, there’s only the upside left. For instance, those who think that he will take their guns away will not change their minds when shown the facts: they will just think it’s some kind of conspiracy. How much more apoplectic and enraged can they become if Obama really does come and take their guns away?! (I do not advocate it, I merely illustrate the point). Right now those who think he’s not tough enough do not have a compelling reason to walk over to the voting booth, while the Ted Nugent crowd will crawl on broken glass to cast a vote against Obama. Pointing out that Republicans are crazy is useless – everybody knows that. Talking about what is Obama going to do about it – is what people want to hear. And this would involve saying things that will drive Republicans off their rails. This would involve some bare knuckle politics and some strong language. Politically speaking, the coming negative onslaught is a golden opportunity for Obama, a carte blanche; he should be seeking such a battle not avoiding it.

Ultimately the election will come down to GOTV, not converting the swing voters. Romney doesn’t have the skills and personality to do it, so the shadow political groups will do it for him by bringing their voters to the polls. Obama should do the same. The time to reason have passed a long time ago. The opposition is sufficiently nuts.  Now is the time to give people a reason to show up at the polls and vote for Obama. And if he does not fight back he deserves to lose.

OTC trading is only good if you’re doing it. If others are doing it it’s bad!

I can’t help but quote from the article:

The protest followed a massive block options trade performed in Eurodollar futures on Thursday. Block trades are privately negotiated transactions performed off the trading floor, but cleared by the exchange, and reported minutes later on the CME website.

The locals were upset because they weren’t able to participate in the trade, brokers said.” (Emphasis mine)

I find it amusing that I seem to be the only person who doesn’t dislike Bernanke.

Let me first list the reasons.

1.  Rates stayed low (and some who bet against it had acknowledge their mistake – e.g. Bill Gross), which led to the monthly payments on my arm mortgage to stay ridiculously low.

2.  My stock portfolio has performed well for the last 2 years, because I knew Bernanke is not going to raise rates if not forever then for a long time. Which by the way is what made me survive the last summer debacle. It wasn’t hard to infer that investors had nowhere else to go. I was right – the stock market rallied back and more. And he wasn’t cryptic about it as Greenspan was – the message he was sending at numerous public testimonies wasn’t hard to decipher. And by the way, no one was complaining when Greenspan held the rates low for years. Everybody welcomed it – mostly the same people who are now complaining about Bernanke doing the same thing.

3.       Those who trash him on the right, bankers, hedge-funders choose to forget that he lend them free money for taking their toxic shit as collateral. He saved you. The Fed was the lender of last resort to these guys. I’d rather you said thank you and went on your way.

4.       For inflation to increase people first have to have money to spend. With unemployment such as it is and with reduced wages it’s hard for me to see how this will happen in the nearest years. Inflation under Bernanke tenure averages at 2.4% – lower than under any Fed Chairman since Vietnam War.

5.       Congress is not supposed to make monetary policy – Fed is. Nonetheless, Republican congress tried to do just that in unprecedented move last year. Amazing how nowadays they try to insert themselves in matters beyond their expertise.

6.       There’s a lot of money in the system which gives the doomsayers a hammer in the debates. But that money is not being circulated – it is sitting on banks and corporations balance sheets as cash on hand. If they start to spend it – hiring people, paying them salaries, investing into infrastructure – then it will be time to start worry about inflation. Until then – I doubt it.

7.      “Some people don’t understand—fulfilling the responsibility as lender of last resort is what the Fed was created to do. This is what central banks have been doing for 300 years.”  Ben Bernanke

8.       Hawks have been fearing inflation since 2008 when Bernanke first started to cut rates, and they are still waiting.

9.       According to Milton Friedman the Fed’s failure in the 1930s was a matter of not printing enough money.

I’m not an expert on equities and I apply a hatchet rather than a scalpel analysis. It’s amazing how smart people tend to overanalyze the situation. You hear people say, “sure Bernanke will probably keep the rates low” (which would be bullish for stocks), “but look at the Baltic dry index” (this is the index that measures dry goods shipments around the world and has collapsed since last fall), as if the two factors can be commensurate in their impact on stocks. I do not deny that in some situations it is appropriate to see what some obscure indexes are doing, but I think there are way too many analysts employed on the street who are paid to have opinions that don’t matter. When you’re paid to have an opinion you tend to frown upon using simplistic axioms (like buy when everyone is afraid, sell when everyone is greedy) because then your usefulness and employment would be in question, but try to look for fancy obscure correlations to impress your boss or your readers. Remember how last August, during the debt-ceiling debacle everyone was rushing to declare the upcoming double dip recession. Few voices who reasoned that the crisis was completely self-made have been drowned in the mass hysteria. It was indeed rather scary and I had to convince some of my despondent friends to hold on, but this is when those with a long-term view are coming in to buy. But analysts, like traders, seem to only care about the short-term.

Bernanke (and his low rates) plus trillions of cash sitting on the sidelines (with nowhere to go but stocks) – are the two major things that I always kept in mind in the gyrating market and got me through the ups and downs for the last 2 years. There’s simply no counterweight big enough to compensate for these two factors. So every time some talking head on TV comes up with another measurement of upcoming apocalypse he’s either engaging in wishful thinking (there’s a whole class of people these days wanting for the market to go down), or he’s trying to justify his employment, collecting weird obscure parallels. My thinking about stocks now is summed up by portfolio manager Barton Biggs who’s been bullish and remains bullish: “There is an awful lot of money that is out of stocks and in very low- yielding fixed-income instruments. I think the odds are that money is going to migrate back.” There will no doubt be a time for apocalypse, but it’s not now. And I have nothing but praise for Bernanke.

But a few thoughts on the letter and on the reaction. Reading the reaction the first thing I thought was that even while on the buy side I didn’t have enough time to read anything unrelated to work, let alone comment on it. At Goldman, by nature of it being the sell side, I assume, people work even harder thus having no time for and no access to social sites. Which, using further deduction, means that people posting derogatory comments about the guy do not and have never worked at Goldman. And if they do now they are not Goldman material and should be fired.

Furthermore, some commenters are upset that he slammed the door on the company that nurtured him, others are upset that his epiphany came a little too late. Some say that he was a nobody, a low-level employee, but the others say that it’s nice to slam the door when you’ve got enough money to never have to work again. So which is it? He cannot be all of the above. Frankly, I don’t think that a VP, even at Goldman, even after 12 years has enough to retire. So kudos to him there.

On the other hand it’s hard to ignore the nature of his disappointment. Goldman is in the business of making money, not saving the world. The daily routine for an average Wall Street worker is dull and unrewarding but it pays well. Perhaps, with his skills he would be better suited working for World Bank or the UN. To be well paid and receive satisfaction from your job – well, that’s too much to ask for these days. It’s either or. But he wanted both.

I saw some of those “Muppets” at the industry conferences – guys from pension funds and German banks. It’s not an inaccurate description at all. They wanted yield and they didn’t care how they got it. So Goldman and other banks provided. KYC (know you client) they did. If they didn’t give the client what he wanted he would have gone to another dealer – an anathema to any banker worth his keep! And it wasn’t illegal, and those were qualified institutional investors! And if they weren’t – it wasn’t Goldman’s fault. I’m not defending Goldman at all, I’m just describing a part of the larger environment that got the snowball rolling. Inept investors with billions to invest, smart Goldman bankers – it’s like two naked people in bed – what do you think was gonna happen?

Wall Street, as described in detail in many of my earlier posts, is a close-knit community with us vs. them mentality. Even more pronounced at Goldman I would think. Everybody outside is a loser, a non-entity. Greg Smith is outside now. I understand that Goldman as a company is not pleased with whistleblower like him. But I don’t understand why laymen are angry at the guy. I think what he did is a good exercise of free will – leaving Goldman with a slam of the door. He may be mistaken about some things but he’s not without balls.

One is not born a woman, but becomes one. Simone de Beauvoir

In more than 140 posts on this blog this is my first “women’s issues” post as this is not my favorite topic. But the current political environment makes it impossible not to add my two cents to the debates. So, here goes.

To begin, this is the video of little girl being upset about gender stereotypes. It serves as a good example that one is not a woman when born but made into one later.

In America feminism comes in a peculiar form these days. It’s either a bad taste to proclaim oneself outright a feminist or it comes with a disclaimer: I’m a feminist, but…

Normally that means that “I work full time but I also drive to PTA meetings, cook and look good.” From a strategic standpoint it’s a mistake – to fight all battles. From a tactical standpoint it’s fighting out of a self-dug ditch. If I met a man who would claim to be good at everything I would consider him a bum or delusional. Or, better yet, I would say to him “Let’s go play poker”. And yet many women aspire to be that man. No wonder they are being taken advantage of, both at work and at home. While the popular culture would want you to believe that there are numerous roles for women, most of those roles are of dubious importance. While the message that we send through numerous media channels claims that everything is possible, many women mysteriously find that “everything” involves being a super woman: looking good, kicking-ass, having a lovely home and baking. When you’re good at everything – you’re good at nothing. By contrast, notice how men don’t try to be everything, but are focused on one or two things that they find important.

The truth is to be like a man is to be good at one or two things. Working mothers can sure be happy but there’s only 24 hours in a day and there’s only so much that can be done. Most of their free time (if there’s any) is all about chores and children. There’s simply no time for transcendence, for quiet contemplation, for playing air guitar (the activities that, while producing millions of bums, have also given us Einstein, Bertrand Russell and Jimmy Page). And when all else fails you can always find refuge in declaring yourself a mom! To which men say – “oh, okay” and proceed to focus on the stuff that you have just implicitly declared either too unimportant or too tiresome. Margaret Thatcher, whom I greatly admire (and from whom I’d like our conservative women and men to take cues) chose her profession over her family and had no qualms about it. If you live in the West the impediments to becoming the next Margaret Thatcher are less external and more internal. A quick glance at “women’s shows” on TV these days would make you believe that empowerment comes from engaging in verbal and even physical fights while wearing high heels. Or, in the political arena, it comes from stoking the most basic fears and dropping snappy one-liners. Politicians like Michelle Bachmann or Sarah Palin might fancy themselves as resembling Margaret Thatcher, but the difference is that the Iron Lady didn’t talk about having a “titanium spine” but actually had it.  Deeds are more important than words and are increasingly in short supply. Verbal fights, but in the form of debates about issues that affect everybody and not just women could channel the energy for good use.

Let me expand on this. We do not have “men’s issues” but we do have “women’s issues”. Does that imply that whatever the “men’s issues” are of concern to the entire humanity, while the “women’s issues” are only of concern to the female half of the population? Does that also imply that “women’s issues” are separate from “human issues”? As long as reproductive rights will continue to be a women’s issue, the country, especially one with a religious tint such as the US, will always be split on the matter.

Writing an article like this these days is almost impossible without mentioning the recent birth-control debacle. The trick is as old as the world itself: a woman who stepped over some “boundaries” (and those are subjective for any man – very convenient) is called a “slut” or a “prostitute” with the expectation that she will recoil from such labels and retreat. Women almost have to “welcome such hatred”, because that would mean we’re doing something right. Rush Limbaugh is a perfect barometer of this hatred (which, among other things, is why he should stay on the air). Conservatives have played Imaginary Communists, Whites vs. Blacks, Straight vs. Gays before, but the game of Men vs. Women has never been so pronounced as the recent breakout. As if they have ran out of issues to drive a wedge in, Conservatives have regressed into splitting the atom (yes, I’m referring to a nuclear family), driving the wedge between men and women. How can any business be done with the party whose ideas about reproduction are from the 13^th century? How can you negotiate with someone who doesn’t think that you can make sound decisions yourself? To me voting Republican today is like voting for cavemen. To use a metaphor to describe how I feel about this issue – dealing with Republicans is like dealing with the state which denies my right to exist (I’m looking at you, my Jewish Republican friends). But for now,  absurd is the best way to expose and fight absurd. And I think it’s getting some attention.