Category Archives: Media

Paperback Edition of “Mobs, Messiahs, and Markets”

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The paper back edition of “Mobs, Messiahs, and Markets” is coming out in a week or so. You can find it on Amazon. A part of the book can also be found in the new edition of “Financial Reckoning Day.” I haven’t checked the new “Empire of Debt” yet.

“Mobs” is a pretty good book and as easy a read as you’ll find on the financial crisis. We also don’t miss a beat on the technical details. Check it out, and you’ll see we were on the money on nearly everything about the last two years…..

Government Conspiracy Theory Blames Hybrid Mortgages for Depression

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Tom di Lorenzo at Lew Rockwell blog has this:

“Following Alan Greenspan’s pathetic “don’t blame me” speeches and books, various Fed branches have parroted his view that the Greenspan Depression we are in was caused by thrifty Orientals whose savings drove down interest rates.  So imagine my surprise upon receiving a hard copy of a Dallas Fed publicaton entitled “Taming the Credit Cycle by Limiting High-Risk Lending” and reading that “The present troubles emerged to a large extent from the growing use of hybrid adjustable-rate mortgages . . .”   Huh?  What happened to The New Yellow Peril?

There is no mention at all — not one word — of the role of Fed monetary policy in creating the housing bubble. The culprits, say these self-serving excuse makers (the author is Jeffrey W. Gunther), are “lightly regulated institutions” that are in need of the Fed’s “disciplining force.”

My Conment

Mr. di Lorenzo can relax –  this new tack does nothing to exonerate Greenspan. Look at this USA Today piece from early 2004, when housing was already showing bubbl-y tendencies:

“He [Greenspan] said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.

“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage,” Greenspan said.”

Read through the whole piece and it’s  clear that American house buyers actually “preferred the stability” of the traditional fixed rate mortgages. In other words, it was only a concerted PR effort by Greenspan & Co. that changed people’s tastes in this.

Let that put an end to any moralizing of this issue.  Yes – rampant consumerism and debt binging exacerbated the problem. But the problem wasn’t caused by some moral defect in American consumers. It was caused by policies deliberately pushed by the federal government in the hope that the consumer would succumb. The chairman of the Federal Reserve thus acted no differently from any confidence man or grifter who spots a mark (a naive, uninformed person easy to manipulate), then sets about winning the mark’s confidence before baiting the trap….

You can see the chairman’s own words to the national association of credit unions on February 23, 2004. (Skip down to the last 2-3 paragraphs to catch the gist)

And now, just like any con man, the Fed chairman too blames his victims.

They had it coming to them...


Thought Control and the Sex Police

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The media these days has an unhealthy and strange preoccupation with the sex lives of politicians and “public figures”… especially when they’re adulterous.

All this, despite journalists’ protests that they’re interested in “privacy”…

The issue becomes doubly important because of the role sexual blackmail…or worse yet, sexual libel.… plays and has played in controlling political mavericks, reformers, or even whistle-blowers, whether in government or elsewhere.

I call it strange, because modernity is supposed to have removed itself so far from oppressive mores and bourgeois conventions….and yet in most commentary on the subject, one finds nothing more than the same hideous cliches – about guilt, predation, sex-pots, cheating, and high drama….
In point of fact, most spouses wander (or more accurately, cultivate fantasies of wandering) because of lack of emotional connection in their marriage.

That’s clear from Mark Sanford’s tepid (yawn) revelations..

Now, as a good Tory-Bohemian, I find myself often on both sides of this issue.

On the one hand, the nostalgic popular imagery of It’s a Wonderful Life, and Father Knows Best…..

And, as a Christian – even an unorthodox one, the fact that one is supposed to admire the impossible standard set in the Sermon On the Mount…

A standard that no normal human could follow to the letter..
A standard that perhaps no normal human should follow to the letter.
[I wonder if that was the point Jesus was trying to make?]

Yet, while no one casts stones at anyone for not giving away all his belongings, or for failing to keep the sabbath, or for slandering or lying, or for fraudulent business practices, strange that even the most benign friendship should bring out the sex police.

(As an example, think of McCain’s supposed affair with a lobbyist – an affair both of them denied and for which no proof existed beyond the media’s fervent desire for a little dirt…and mind you, if one were to be precise, it was McCain’s marriage itself that was grounded in adultery…Cindy being a former ‘other woman’).

Stranger yet, the sex police these days are usually so-called leftists and liberals.
Their modus operandi would have made the gestapo proud…

If there’s anything calculated to keep women out of public life, it’s this intensely misogynistic and pornographic scrutiny. If you don’t think that’s what all this is, why haven’t we been treated to sexualized nudes of, say, George Bush, as we have of Hillary?

Why wasn’t Ralph Nader lynched by the media mob in the same way as Cindy Sheehan?

So my sympathies are with scarlet women (and men), then and now, paraded up and down while the public stones them symbolically. Even Eliot Spitzer has my sympathy. The man after all did try to cordon off his extramarital life from his wife and children. He had that much concern for them. It was the guardians of public morality who had none.

I admit it. When there’s a stoning, I’ll take the side of Hester Prynne and Anna K.

I prefer Tolstoi’s intelligent, ambitious, restless, sexual, and deeply moral adulteress, to either her vain, shallow lover or her wooden, hypocritical husband….or even to her brother’s long-suffering wife, the plaintive, babied-out Dolly – so aptly named.

Tolstoi, being a man, could give Anna no credit for anything except beauty or sexuality, but the fact is, you read the novel for her. ..and not for Dolly, or for Levin, or for Karenin, or for Vronsky. She’s worth them all.

The other woman…..

Who’s to say how much this unspeakable she profited countless miserable marriages, neutered husbands, and pathetic, damaged children…by taking up the slack (physical or emotional) of the immoral “business arrangement,” by which I loan you my body to make babies and play with, and in return you fork over 50% or more of everything you make, or will ever make, while we endlessly bait, hurt, rob, insult, control, extort, blackmail, bore, manipulate, wound, sue, demean, abuse, and torture each other verbally, emotionally, and physically….all in the name of holy matrimony.

What a fraud….

And that’s how many children are raised today. Any wonder they became traumatized adults, easily manipulated by propaganda?

Where would respectable Victorian marriage have been without the brothel, asked Shaw..

And where would the nuclear family be without countless other women, whether they were only friends, sisters, neighbors, and “office wives,” or whether they crossed the boundary into a physical relationship?

Thank God for other women….and for other men.

It takes a village to raise a married couple…..

We all have an image of the other woman in our heads: the calculating predator who moves in on happily coupled men. The cloistered, diamond-draped mistress. The office sexpot who’s always just a little too close to your guy at his holiday party. She’s a staple of novels, movies, tabloids, even history books – from the restless Emma in Madame Bovary to Fatal Attraction’s bunny boiler to, most recently, Eliot Spitzer’s hotel call girl. And if you’ve never seen it, go YouTube the legendary clip of Marilyn Monroe purring “Happy Birthday, Mr. President” to her rumored lover, J.F.K. That’s the other woman as we usually imagine her.

More at Glamour, via Truth to Power blog.

American Idolatry: White-Washing Hank Greenberg

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In 2005, Fortune Magazine ran this piece by Devin Leonard. I just came across it in my mail, where it was lying forgotten at the bottom of the inbox.

So. There was at least one mainstream journalist hip to the revered boss of AIG. I take back my general denunciation of the media on this point. Apparently, what was missing was the larger picture…

Well, that’s what bloggers are for. We supply the big picture. We connect the dots…

Here’s a part of the piece:

“Not long after starting a prestigious new job as general counsel at American International Group, 48-year-old E. Michael Joye received an alarming piece of news. AIG, an employee confided, had for years been improperly booking premiums it received for workers’ compensation insurance. If true, it meant that the insurance company was cheating state governments out of tens of millions of dollars used to pay benefits to injured workers.

Joye, a former Navy lieutenant who had left a blue-chip law-firm partnership to join AIG, investigated the matter personally. He soon heard even more shocking news: that AIG chief Maurice R. “Hank” Greenberg knew about the practice–and had done nothing to stop it. Greenberg was one of the all-time great American CEOs. Could it really be true?…..

…According to Joye’s notes, one employee even described a meeting about the matter at which Greenberg had asked, “Are we legal?” When an employee responded, “If we were legal, we wouldn’t be in business,” Greenberg “began laughing, and that was the end of it.”

Nonetheless, Joye reported what he had learned in meetings with Greenberg and Thomas Tizzio, then AIG’s president. Then he wrote them a memo that couldn’t have been blunter. AIG’s behavior was “permeated with illegality,” he wrote; these “intentional violations” could produce criminal fraud and racketeering charges and “expose AIG to fines and penalties in the hundreds of millions of dollars,” as well as civil suits producing “astronomical damages awards.” AIG, Joye wrote, needed to end the illegal practices immediately, fire all those involved, report the violations, and make restitution.

After finishing the memo, Joye met with Tizzio. What was Greenberg going to do? Nothing, Tizzio told him, according to Joye’s later account. Greenberg had decided that correcting the problem would be too expensive. (Tizzio declined to comment.) Appalled at the news, Joye tendered his letter of resignation on the spot, packed up his office, and left the building. He had been at AIG for eight months……..

Hank Greenberg, however, did move quickly to deal with the thorny problem of a former general counsel who might publicly accuse him of condoning fraud. Two weeks after Joye quit, Greenberg sent a short note to Jules Kroll, founder of the well-known corporate-intelligence firm, forwarding background material about Joye. ……

Joye’s abrupt parting with AIG was not a case of skittishness brought about by the current spate of investigations into insurance industry accounting. No, Joye left AIG in January 1992, and for 13 years he remained silent about what he had discovered there. …….

But Joye never forgot his glimpse of the way AIG’s CEO did business. Even after retiring to his home near Princeton, N.J., he kept his AIG files. And so, this past spring, after New York attorney general Eliot Spitzer began an investigation into Greenberg’s long-buried secrets, Joye came forward to offer one of them up.”

My Comment

Notice how the universal (and well-merited) emphasis on the wrong-doing of Goldman Sachs, the company, or on AIG, the company, takes the focus off Greenberg. See, for example, this piece by Matt Taibbi, which does just that.

But worrying about AIG, or GS, as companies, at this point – while useful and necessary – is in some ways beside the point. The problem is not any company or organization itself but a network made up of people who use companies like GS or AIG or Citi. They’re the culprits of the financial crisis.

This network communicates outside the formal communication channels usual to business and government. You’re going to get relatively little looking for an email record or phone record — as a smoking gun. Or rather, even if you did find it, it would be secondary.

Take Blankfein’s presence (Lloyd Blankfein, CEO of Goldman Sachs) at the bail-out pow-wow hosted by Tim Geithner.  Outing this gives you a tea-pot dome type scandal, but then what? The scandal can quickly be resolved by disposing of the offender. But that  does next to nothing to disrupt the network. The rest of the insiders can always get another member to pick up the slack.

That means that in this game there are bag-holders... and there are players.

Vikram Pandit is, from that perspective, a bag-holder. Franklin Raines is a bag-holder. Bernie Madoff may have been turned into a bag-holder, but he was also a player.

And Hank Greenberg is a player, for sure.

Just my speculation, this Friday afternoon, as winter starts closing up shop in the Southern Cone. It was warm enough today to walk around without a coat. A couple of weeks more and spring will be here…