How Much Land Does A Man Need?

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“How Much Land Does a Man Need?” — Leo Tolstoi
Sections VII – IX

“Pahom lay on the feather-bed, but could not sleep. He kept thinking about the land.

“What a large tract I will mark off!” thought he. “ I can easily do thirty-five miles in a day. The days are long now, and within a circuit of thirty-five miles what a lot of land there will be! I will sell the poorer land, or let it to peasants, but I’ll pick out the best and farm it. I will buy two oxteams, and hire two more laborers. About a hundred and fifty acres shall be plough-land, and I will pasture cattle on the rest.”

Pahom lay awake all night, and dozed off only just before dawn. Hardly were his eyes closed when he had a dream. He thought he was lying in that same tent and heard somebody chuckling outside. He wondered who it could be, and rose and went out, and he saw the Bashkir Chief sitting in front of the tent holding his sides and rolling about with laughter. Going nearer to the Chief, Pahom asked: “What are you laughing at?” But he saw that it was no longer the Chief, but the dealer who had recently stopped at his house and had told him about the land. Just as Pahom was going to ask, “Have you been here long?” he saw that it was not the dealer, but the peasant who had come up from the Volga, long ago, to Pahom’s old home. Then he saw that it was not the peasant either, but the Devil himself with hoofs and horns, sitting there and chuckling, and before him lay a man barefoot, prostrate on the ground, with only trousers and a shirt on. And Pahom dreamt that he looked more attentively to see what sort of a man it was that was lying there, and he saw that the man was dead, and that it was himself! He awoke horror-struck.

“What things one does dream,” thought he.

Looking around he saw through the open door that the dawn was breaking.

“It’s time to wake them up,” thought he. “We ought to be starting.”

He got up, roused his man (who was sleeping in his cart), bade him harness; and went to call the Bashkirs.

“It’s time to go to the steppe to measure the land,” he said.

The Bashkirs rose and assembled, and the Chief came too. Then they began drinking kumiss again, and offered Pahom some tea, but he would not wait.

“If we are to go, let us go. It is high time,” said he.
VII.

The Bashkirs got ready and they all started: some mounted on horses, and some in carts. Pahom drove in his own small cart with his servant and took a spade with him. When they reached the steppe, the morning red was beginning kindle. They ascended a hillock (called by the Bashkirs a shikhan) and dismounting from their carts and their horses, gathered in one spot. The Chief came up to Pahom and stretching out his arm towards the plain:

“See,” said he, “all this, as far as your eye can reach, is ours. You may have any part of it you like.”

Pahom’s eyes glistened: it was all virgin soil, as flat as the palm of your hand, as black as the seed of a poppy, and in the hollows different kinds of grasses grew breast high.

The Chief took off his fox-fur cap, placed it on the ground and said:

“This will be the mark. Start from here, and return here again. All the land you go round shall be yours.”

Pahom took out his money and put it on the cap. Then he took off his outer coat, remaining in his sleeveless under-coat. He unfastened his girdle and tied it tight below his stomach, put a little bag of bread into the breast of his coat, and tying a flask of water to his girdle, he drew up the tops of his boots, took the spade from his man, and stood ready to start. He considered for some moments which way he had better go – it was tempting everywhere.

“No matter,” he concluded, “I will go towards the rising sun.”

He turned his face to the east, stretched himself, and waited for the sun to appear above the rim.

“I must lose no time,” he thought, “and it is easier walking while it is still cool.”

The sun’s rays had hardly flashed above the horizon, before Pahom, carrying the spade over his shoulder, went down into the steppe.

Pahom started walking neither slowly nor quickly. After having gone a thousand yards he stopped, dug a hole, and placed pieces of turf one on another to make it more visible. Then he went on; and now that he had walked off his stiffness he quickened his pace. After a while he dug another hole.

Pahom looked back. The hillock could be distinctly seen in the sunlight, with the people on it, and the glittering tires of the cart-wheels. At a rough guess Pahom concluded that he had walked three miles. It was growing warmer; he took off his under-coat, flung it across his shoulder, and went on again. It had grown quite warm now; he looked at the sun, it was time to think of breakfast.

“The first shift is done, but there are four in a day, and it is too soon yet to turn. But I will just take off my boots,” said he to himself.

He sat down, took off his boots, stuck them into his girdle, and went on. It was easy walking now.

“I will go on for another three miles,” though he, “and then turn to the left. This spot is so fine, that it would be a pity to lose it. The further ones goes, the better the land seems.”

He went straight on for a while, and when he looked round, the hillock was scarcely visible and the people on it looked like black ants, and he could just see something glistening there in the sun.

“Ah,” though Pahom, “I have gone far enough in this direction, it is time to turn. Besides I am in a regular sweat, and very thirsty.”

He stopped, dug a large hole, and heaped up pieces of turf. Next he untied his flask, had a drink, and then turned sharply to the left. He went on and on; the grass was high, and it was very hot.

Pahom began to grow tired: he looked at the sun and saw that it was noon.

“Well,” he thought, “I must have a rest.”

He sat down, and ate some bread and drank some water; but he did not lie down, thinking that if he did he might fall asleep. After sitting a little while, he went on again. At first he walked easily: the food had strengthened him; but it had become terribly hot and he felt sleepy, still he went on, thinking: “An hour to suffer, a life-time to live.”

He went a long way in this direction also, and was about to turn to the left again, when he perceived a damp hollow: “It would be a pity to leave that out,” he thought. “Flax would do well there.” So he went on past the hollow, and dug a hole on the other side of it before he turned the corner. Pahom looked towards the hillock. The heat made the air hazy: it seemed to be quivering, and through the haze the people on the hillock could scarcely be seen.

“Ah!” Thought Pahom, “I have made the sides too long; I must make this one shorter.” And he went along the third side, stepping faster. He looked at the sun: it was nearly half-way to the horizon, and he had not yet done two miles of the third side of the square. He was still ten miles from the goal.

“No,” he thought, “though it will make my land lop-sided, I must hurry back in a straight line now. I might go too far, and as it is I have a great deal of land.”

So Pahom hurriedly dug a hole, and turned straight towards the hillock.
IX.

Pahom went straight towards the hillock, but he now walked with difficulty. He was done up with the heat, his bare feet were cut and bruised, and his legs began to fail. He longed to rest, but it was impossible if he meant to get back before sunset. The sun waits for no man, and it was sinking lower and lower.

“Oh dear,” he thought, “if only I have not blundered trying for too much! What if I am too late?”

He looked towards the hillock and at the sun. He was still far from his goal, and the sun was already near the rim.

Pahom walked on and on; it was very hard walking but he went quicker and quicker. He pressed on, but was still far from the place. He began running, threw away his coat, his boots, his flask, and his cap, and kept only the spade which he used as a support.

“What shall I do,” he thought again, “I have grasped too much and ruined the whole affair. I can’t get there before the sun sets.”

And this fear made him still more breathless. Pahom went on running, his soaking shirt and trousers stuck to him and his mouth was parched. His breast was working like a blacksmith’s bellows, his heart was beating like a hammer, and his legs were giving way as if they did not belong to him. Pahom was seized with terror lest he should die of the strain.

Though afraid of death, he could not stop. “After having run all that way they will call me a fool if I stop now,” thought he. And he ran on and on, and drew near and hear the Bashkirs yelling and shouting to him, and their cries inflamed his heart still more. He gathered his last strength and ran on.

The sun was close to the rim, and cloaked in mist looked large, and red as blood. Now, yes now, it was about to set! The sun was quite low, but he was also quite near his aim. Pahom could already see the people on the hillock waving their arms to hurry him up. He could see the fox-fur cap on the ground and the money on it, and the Chief sitting on the ground holding his sides. And Pahom remembered his dream.

“There is plenty of land,” though he, “but will God let me live on it? I have lost my life, I have lost my life! I shall never reach that spot!”

Pahom looked at the sun, which had reached the earth: one side of it had already disappeared. With all his remaining strength he rushed on, bending his body forward so that his legs could hardly follow fast enough to keep him from falling. Just as he reached the hillock it suddenly grew dark. He looked up – the sun had already set! He gave a cry: “All my labor has been in vain,” though he, and was about to stop, but he heard the Bashkirs shouting, and remembered that though to him, from below, the sun seemed to have set, they on the hillock could still see it. He took a long breath and ran up the hillock. It was still light there. He reached the top and saw the cap. Before it sat the Chief laughing and holding his sides. Again Pahom remembered his dream, and he uttered a cry: his legs gave way beneath him, he fell forward and reached the cap with his hands.

“Ah, that’s a fine fellow!” exclaimed the Chief. “He has gained much land!”

Pahom’s servant came running up and tried to raise him, but he saw that blood was flowing from his mouth. Pahom was dead!

The Bashkirs clicked their tongues to show their pity.

His servant picked up the spade and dug a grave long enough for Pahom to lie in, and buried him in it. Six feet from his head to his heels was all he needed….”

From The Kreutzer Sonata and Other Short Stories, by Leo Tolstoi

Don’t Blame Obama….or Bush…for Octo-Potus

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Brian Doherty writes at American Conservative magazine:

“No call for liberty and constitutional principle seems convincing when Obama is arguing that those relying on government giveaways should have to follow government-set rules. That is, once you’ve allowed them to go ahead with the handouts, the political game is almost over. Under the guise of “managing the taxpayers’ money,” Obama and his crew are rewriting mortgages, deciding executive compensation, tossing out CEO’s. And note carefully that his plans for where taxpayers’ money should go continue to swell, from healthcare to the environment to energy policy to expanded “national service” programs. When taxpayers’ money is everywhere—and Obama is doing his best to make sure it is—then Obama’s control is everywhere.

The Octo-potus is claiming his space and flexing his grip. As far as he’s concerned, it’s Barack Obama’s country. We’re just living in it.”

My Comment:

This would be much more plausible if it were true that the vast majority of people opposed either Obama…or Bush.

But they didn’t.

They could have stood up to militarism..and jingoism…and government hand-outs…and bail-outs…and subsidies..

But they didn’t – that’s the crucial point.

The Octo-potus rules, because, when all’s said and done, that’s exactly the way we (whoever that nebulous creature is) wanted it.

Lila

Momentum Traders Slaughtered By Value Investors

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“April 20 (Bloomberg) — Companies with the most debt and lowest returns on assets are turning the biggest six-week rally in stocks since 1938 into a bloodbath for last year’s best- performing trading strategy.

Investors using so-called quantitative momentum strategies — which speculate that the worst stocks in the past 12 months will continue to decline — have become this year’s biggest losers after banks and companies that rely on consumer spending surged. Quant momentum techniques may have lost 27 percent this month in the U.S., the most since at least 1993, while those in Europe may have dropped 20 percent in March and 24 percent in April, according to data compiled by JPMorgan Chase & Co.

“Not in a million years would we have expected this gyration to be as vicious and enduring as it has been,” Steven Solmonson, the head of Park Place Capital Ltd., a hedge fund that oversees $150 million, said in an interview from New York. “The quants got whipsawed badly.”

The turnaround battering investors who use mathematical models to pick stocks is making heroes out of last year’s worst- performing money managers. Bill Miller, who lost 55 percent in 2008 running the Legg Mason Value Trust after beating the Standard & Poor’s 500 Index for a record 15 straight years, is topping the measure again. Value investors buy companies that are the cheapest relative to their earnings or assets….”

More here at Bloomberg. 

Hat-tip for the lead to Eddie Elfenbein at Crossing Wall Street 

Will Grigg On Tax Eaters and Tax Victims

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“There are no “Blue” states, only blue cities. The rural and much of the suburban population in both “Blue” and “Red” states consists of net payers of taxes; what Steven Malanga of the Manhattan Institute properly calls the “tax eater sector” is overwhelmingly an urban phenomenon (and former “community organizer” Barack Obama is a pure product of the urban tax parasite constituency Malanga describes).What this means, of course, is that the schism between urban tax-eaters and rural/suburban tax victims will grow steadily wider until something – either the present political/economic system, or the people ruled by it – collapses altogether.

With the government now little more than a full-service plundering arm of Wall Street, now is the best time for states to withdraw from the corporatist unitary state and repudiate its system of taxation, fiat money, inflation, and debt.

Unfortunately, if there is one thing that both Red State national socialists and Blue State socialist nationalists enjoy more than hating and baiting each other, it’s nurturing the prospect of ruling the other side – and this simply can’t be done if the “other side” if permitted the option of exercising the right to peaceful secession.

So the exercise in mutual self-oppression continues, and the “New Unhappy Lords” ruling from behind the scenes continue to make us poorer and less free….”

Will Grigg, at Lew Rockwell

Mankiw’s Negative Fed Rate Proposal

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This excerpt from a column on April 18 by Greg Mankiw (“It May be Time for the Fed to Go Negative,” New York Times)  has been raising howls in the blogosphere:

“At one of my recent Harvard seminars, a graduate student proposed a clever scheme to [make holding money less attractive].

Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.

That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.

Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit….”

My Comment

I didn’t see this until today because I haven’t followed the economics blogosphere very closely recently. Post-TARP, it’s been awash with all sorts of schemes and proposals built on very flimsy foundations.

The numero uno objection to all of them is the notion that the economy is something that can be manipulated like a board game. It’s not.

Objection two is also obvious and also foundational.  Any grand scheme based on taking illegally from someone what they’ve earned honestly (and I think it’s safe to say at least a few people here and there have earned their livings honestly) is morally wrong. What’s morally wrong on an individual level cannot be morally right on a grand scale, even if we allow for all sorts of prudential calculations, reservations about “the public good” and so on.

Objection three is that a crisis caused by excessive borrowing and spending is not plausibly solved by more spending and borrowing.

Objection four is  that degrees in economics do not give you an understanding of how proposals might actually work in the real world. That takes common sense and some experience of how human beings actually function and build businesses.

Objection five is that theories are only very nebulous and hazy road maps with no correspondence to the actual terrain underneath.  A theory which has never been tried before, let alone produced the results touted, is a very flimsy guide to follow.

Mish Shedlock takes on Mankiw here in more detail but quite unnecessarily, since the proposal is on its face absurd and impracticable.

You can see, however, that on this, the New York Times (ostensibly more left-ish) and the Washington Post (ostensibly more centrist) are both singing from the same page.

In my previous blog post, “Bernays and Citizen Parrot” I cited a Wash Po article, “When You’re Flush But Acting Flat Broke,” by Michael Rosenwald (April 16) that referenced the work of Robert Cialdini, a scholar of marketing.  The Post piece was slanted to getting the consumer to go out and spend.

So, keep that in your mind. The two things the establishment wants right now are:

(1) Increased consumer spending

(2) Nationalization of banks

More spending means what? Putting your money (one of the few forms of control you exert over your circumstances) into someone else’s pocket. (I’m not opposed to this if you’ve got plenty saved, are getting a good deal and need what it is you’re buying, but that’s not the kind of savvy spending the powers that be are looking for).

Nationalization means what? Allowing the government to control the people in charge of lending you money…who are also the people holding your savings….who are also the people mainly responsible for getting us into this mess.

Forget all the deep explanations, economics theories, and punditry.

Just focus on those two things. Do they make sense to you right now, right here?

No? I thought not…..

De Crevecoeur: Letters From An American Farmer

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The following is a description of Nantucket from De Crevecoeur’s Letters From An American Farmer, a literary account of the political principles informing the Declaration of Independence and Paine’s Common Sense:

“My simple wish is to trace them throughout their progressive steps from their arrival here to this present hour; to enquire by what means they have raised themselves from the most humble, the most insignificant beginnings, to the ease and the wealth they now possess; and to give you some idea of their customs, religion, manners, policy, and mode of living.

This happy settlement [Nantucket] was not founded on intrusion, forcible entries, or blood, as so many others have been; it drew its origin from necessity on the one side and from good will on the other; and ever since, all has been a scene of uninterrupted harmony. Neither political nor religious broils, neither disputes with the natives, nor any other contentions, have in the least agitated or disturbed its detached society. Yet the first founders knew nothing either of Lycurgus or Solon; for this settlement has not been the work of eminent men or powerful legislators forcing nature by the accumulated labours of art.

This singular establishment has been effected by means of that native industry and perseverance common to all men when they are protected by a government which demands but little for its protection, when they are permitted to enjoy a system of rational laws founded on perfect freedom. The mildness and humanity of such a government necessarily implies that confidence which is the source of the most arduous undertakings and permanent success. Would you believe that a sandy spot of about twenty-three thousand acres, affording neither stones nor timber, meadows nor arable, yet can boast of an handsome town consisting of more than 500 houses, should possess above 200 sail of vessels, constantly employ upwards of 2000 seamen; feed more than 15,000 sheep, 500 cows, 200 horses; and has several citizens worth 20,000L. sterling! Yet all these facts are uncontroverted. Who would have imagined that any people should have abandoned a fruitful and extensive continent filled with the riches which the most ample vegetation affords; replete with good soil, enamelled meadows, rich pastures, every kind of timber, and with all other materials necessary to render life happy and comfortable, to come and inhabit a little sand-bank to which nature had refused those advantages, to dwell on a spot where there scarcely grew a shrub to announce, by the budding of its leaves, the arrival of the spring and to warn by their fall the proximity of winter?

Had this island been contiguous to the shores of some ancient monarchy, it would only have been occupied by a few wretched fishermen, who, oppressed by poverty, would hardly have been able to purchase or build little fishing barks, always dreading the weight of taxes or the servitude of men-of-war. Instead of that boldness of speculation for which the inhabitants of this island are so remarkable, they would fearfully have confined themselves within the narrow limits of the most trifling attempts; timid in their excursions, they never could have extricated themselves from their first difficulties. This island, on the contrary, contains 5,000 hardy people who boldly derive their riches from the element that surrounds them and have been compelled by the sterility of the soil to seek abroad for the means of subsistence. You must not imagine, from the recital of these facts, that they enjoyed any exclusive privileges or royal charters or that they were nursed by particular immunities in the infancy of their settlement. No, their freedom, their skill, their probity, and perseverance have accomplished everything and brought them by degrees to the rank they now hold.…”

“Letters From an American Farmer,” by J. Hector St. John Crevecoeur (1735-1813) reprinted from the original ed., with a prefatory note by W.P. Trent and an introduction by Ludwig Lewisohn. New York, Fox, Duffield, 1904.

The Gita On Equanimity

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“Neither by study of the Vedas, nor by austerity, nor by charity, nor by ritual, can I be seen in this form as you have seen Me. (11.53)
However, through single-minded devotion alone, I can be seen in this form, can be known in essence, and also can be reached, O Arjuna. (11.54)
The one who does all works for Me, and to whom I am the supreme goal, who is my devotee, who has no attachment, and is free from enmity towards any being attains Me, O Arjuna.”

Bhagavad Gita, translated by Ramanand Prasad, Chapter 11: 53-55

My Comment

Free from enmity…well, you try. And what if you free yourself of enmity, but your enemies don’t remember to free themselves?

The teaching of equanimity in the Gita is very hard for me. Very much in the western tradition, I like my emotions…and cultivate them. But there are times when the Gita’s teaching becomes overwhelmingly necessary. Now is one of those times.

Black Swans and Nationalization: More On Media Memes

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(This is the second half of the earlier post on Taleb cut and reposted here so as to be more readable)

As  I wrote in my earlier post, I agree with everything in Taleb’s list of “black swan proofing” the economy, except two points:

As I see it,

(1) This financial crisis had NOTHING to do with Black Swans (and Taleb himself says so elsewhere, so this piece confuses me).

(2) Nationalization (which he seems to be supporting here…and it may be he has a different understanding of what is involved)  is not the the right response, in my opinion.

A Black Swan refers to an unpredictable event. The financial crisis was predicted repeatedly, was completely foreseeable, and was indeed foreseen by Austrian theorists in writings throughout this century. 

The financial industry spin doctors (I’m not including Taleb in this group – but I think his writing may be put to that use) have been working overtime to associate this mess with the notion of “black swans,” hence the centrality given to accounts of the blow-up by industry insiders, who have acted as if it were something unforeseeable (Greenspan and others – I’ll find the links).

Why?

Saving face could be one reason. But considering the level of corruption and malfeasance that we’ve seen so far, it’s more likely that the angle is being worked as a diversion  from the obvious fact that the whole business seems at least partly engineered.

Equally important: by emphasizing the “unknown risk” angle, the industry also makes more control, regulation and centralization the natural option.

Do you see that?

Taleb is right about risk and Black Swans otherwise.

He’s a very smart guy and he certainly warned a lot about unknown risks and the foolishness of conventional wisdom.But he didn’t give the kind of detailed specific step-by-step account that Austrian economists, journalists, and theorists have done, not just in the last two years but for decades, predicting what would happen once the country went off the gold standard.

My own suspicions about Fannie and Freddie had nothing to do with risk or financial models. They arose from the clear and widespread evidence of fraud oozing in every direction from Goldman Sachs and the rest of the banking cartel, with Fannie and Freddie at the center. It didn’t need rocket science to see that. Just common sense and  the ability to see through jive talk. “Don’t dazzle me with bull shit,” as an acquaintance of mine used to say, making up for any lack of metaphoric aptness with dead-on accuracy about human nature.

I’m not knocking Taleb whom I greatly admire. I’m knocking what’s being pushed through his writing.

As I said in an earlier blog post, the whole establishment is for nationalization. The same fellows who drove the bus that just wrecked itself.

Why listen to them?

Stick your fingers into your ears – NO NATIONALIZATION

This is not about ideology. It’s about transparency.

Nationalization in a small, incorrupt, transparent state of Vermonters is one thing.

Nationalization in the American empire, circa 2009, is another. It’s cover for a power grab. The reason it’s being pushed so hurriedly is because something is unraveling and a few too many people are catching on.

Don’t take my word for it.

Ask yourself why one of the savviest investors, Warren Buffett, thinks that the banking industry is on the verge of tremendous profitability.

Buffett has a stake in the banks, of course. But is what he’s saying entirely about chatting up his investment?

Ask yourself why Nouriel Rubini first advocated nationalization as though it were diametrically opposed to the position (private-public partnership) held by Larry Summers and Tim Geithner.

Ask why he didn’t let the public know he was in business with Summers .

Ask why it is that since that business connection was revealed,  Roubini has now started saying that “nationalization” can proceed even with “private-public partnership”?

[Note: Roubini’s warning about the economic crash, made in September, 2006 to the IMF doesn’t seem to be available on the IMF site and any links I found on the web didn’t work. The closest I got to the actual speech was a reference at the IMF website in September 2007 to the 2006 speech.

Here’s an extended bio of Rubini at the IMF site that mentions the 2006 speech, but again there are no links.

Rubini’s own site has a link to his September 2007 speech which warns of a hard landing but no 2006 link.

On wiki, as well, there are no links to any 2006 predictions although there is a NY Times interview with Roubini from Sept. 2006 about the housing bubble, where he anticipates a housing bubble burst, with prices down 5-10% in a year in New York and perhaps 20-30% nationally. Honestly, in September 2006, everyone was saying that. Yours truly is on record calling the peak of the housing bubble in July 2005, as you can check from this website. And was much more detailed about it too. And I’m not an economist in the heart of the global financial order like Roubini.

Bottom line, except for this 2006 piece, which is very narrow in scope, limited to the housing bubble and quite modest in its predictions, there really is no other prediction of apocalypse I could find from2006 that would qualify Roubini for the title Dr. Doom, a title that more appropriately belongs to the Asia-based fund manager and commodities guru, Marc Faber, who is an Austrian and who was far more prescient and detailed in his warnings. Again, you have to wonder if the “Doom” moniker wasn’t intentionally applied to Roubini to coopt the libertarian Faber’s argument into the statist Roubini’s policy prescriptions.

Roubini’s cv also rings some alarm bells for me. His thesis adviser was Jeffrey Sachs and Roubini still admires him the most of all his colleagues; he’s worked closely with Larry Summers; he’s been on Clinton’s advisory team at Treasury; he was involved in the Asian crisis; he’s worked in a number of positions at the IMF (which is being pushed as the new global central bank). Now he’s been brought in as “Dr. Doom” (effectively co-opting bearish commentary on the market) and he’s pushing nationalizatio,n like every other establishment figure.

This is not a confidence-builder.

To return to my caveat: why set up nationalization and PPP as as an either/or alternative if they can work as complements?

Either/or is the binary switch which propagandists use to turn individuals into mobs. Scare the public and tell them, either you do this…OR you suffer that.

Either/or provokes people into instinctive responses. It makes them scared or angry. It forces them into flight (panic) or fight (anger).

It’s us or them.

We’re seeing all that now. Some very clever people are pushing those two buttons over and over.

This is one of those snakes and ladders games where you move left, and a green snake swallows you and you’re back on square one.

So you move right and a ladder takes you up four rows and then a green snake swallows you and you’re back on square one.

Solution? Stay where you are and let the snakes sort it out for themselves.

Instead of rooting around for fixes for the problem, we should be investigating the chicanery that led to it, and finding out legal ways to undo or challenge the legislation that gave us TARP etc.

Bernie’s Web: Who Dunnit & Where’s the Dough

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There have been some interesting developments in the Madoff business recently, all of which have confirmed my early insight that the Madoff fraud was much more than a solo effort.

[In my opinion, it is likely an international criminal conspiracy tied to the financial crisis. You can reference my Madoff posts through the search function and also through my last three articles at Lew Rockwell which indirectly address the issue].

The Madoff business is why I’ve come down squarely against nationalization. It’s not because of ideology. Or pig-headedness.  Or from a desire to pander to the neanderthal crowd (is there any other kind?)….

It’s because as long as the ties between all these corrupt financial deals and dealers are not clear, any move made by the government is guaranteed to set precedents that will in the long run be against the public interest. To all the libertarians who will rush to tell me there is no such thing as the “public interest”  but only the “aggregated individual interests of many people” – yes, of course, but we’ll do the abstract cud-chewing at another time.  What I mean is that public money (tax money) will go to private interests.

Which is why unraveling the Madoff -banking cartel story is the most needful thing right now.

Here are some recent developments.

(1) Talking Points Memo, January 4

If the Feds ever get around to realizing Bernie’s brother and thirty-year business partner, Peter B. Madoff, was in on the scam, they might want to take look at his holdings.

Craig Kugel, a long time Madoff employee, is involved in Essex Realty Development LLC, registered in NYS on 12/10/07 to an address at 34 Pheasant Run, Old Westbury. 34 Pheasant Run is one of Peter Madoff’s primary residences along with a W. 53rd St apartment and a Palm Beach house.

While much has been made of Ruth Madoff, Bernie’s wife, being sole owner of her Palm Beach estate, no one has said anything about Peter and Marion Madoff transferring ownership of their Palm Beach property solely to Marion in 11/06 which is probably when the Madoffs got serious about giving it up.”

and

“David Kugel, I believe, is Craig’s father. They both live in the same North Shore neighborhood on Long Island and they may be related to the Madoffs.

Madoff Technologies, L.L.C. was registered in NYS in 10/98 in care of Craig Kugel at 885 Third Ave.

In 2003, Craig Kugel was identified in another Trader Magazine photo as being with Primex Trading. Primex was registered as Primex Holdings, L.L.C. in NYS in 10/98. Primex is a joint venture between Bernard L. Madoff Investment Securities, Goldman Sachs and other brokerage firms and involves a digital trading auction which operates out of Bernie’s 18th floor office at 885 Third Ave.

(2) The New York Daily News, March 12:

“The timing of her [Ruth Madoff’s] $15.5 million in withdrawals – as he was becoming aware of his problems, and then on the day before his arrest – is very suspect,” Massachusetts Secretary of State William Galvin told the Daily News. Galvin, the top securities regulator in the state, calls Cohmad a feeder fund in Bernie Madoff’s empire. Representatives for Cohmad didn’t return calls. Galvin ridiculed Bernie Madoff’s claim of having executed the complex, decades-long global banditry alone. “There are only two questions that exist right now: Where’s the money? And was there anybody else involved?”

Ruth Madoff has not been accused of wrongdoing. Still, she has fueled outrage by trying to claim a $69 million personal fortune unconnected to her husband’s booty, which will be subject to court-ordered forfeitures….”

(4) Talking Points Memo, April 8

[Steve ] Labaton [of the New York Times] understates the NSX case. According to a 5/19/2005 SEC  administrative ruling, NSX openly and flagrantly violated SEC regulations year in and year out for more than six years. As a result, NSX brokers made untold millions cheating their customers.

NSX encouraged the cheating by failing to enforce “compliance by its dealer firms (known as “designated dealers”) with two important provisions of its rules: the market order exposure (“MOE”) rule and the customer priority (or trading ahead) rule”.

On top of trading violations, NSX destroyed email correspondence that was supposed to be retained for five years.

What punishment did Eric Swanson “aggressively” mete out to NSX for cheating customers and destroying evidence?  NSX was required to set aside a million dollar reserve for an independent audit and David Colker, NSX CEO, was censured. A slap on the wrist.

As an aside, anyone who claims the Madoffs operated the brokerage side of the business honestly is full of crap. Bernie and Peter knew NSX was violating SEC regulations and they profited from those violations. Destruction of email correspondence is right up the Madoff alley, too, as we now know.

Peter and Bernie were certainly closely associated with NSX. In January 2004, NSX sponsored a Swiss ski trip for the Madoffs and a dozen of their friends and business associates……..

Labaton again understates the case. Peter Madoff was a member of the A.G. Edwards board of directors. A. G. Edwards is headquartered in St, Louis and, outside of New York, Missouri is the only other state where Bernard L. Madoff Investment Securities LLC is registered.

Shana Madoff wasn’t on the compliance committee of just any old industry group. She was appointed to the NASD Market Regulation Commitee in 2003..”

(4) The New York Daily News, April 18:

“Hedge-fund founder Ezra Merkin was warned years ago that Bernie Madoff wasn’t on the level but still invested and lost tens of millions in his Ponzi scheme, it was charged in court papers unsealed Friday. Among the documents were e-mails from former Merkin employee Victor Teicher who said he told Merkin several times in the early 1990s that Madoff’s consistently high profits weren’t possible year after year.  The claimed profits “were inconsistent with what could possibly take place in reality,” he said. Teicher, a former financial analyst and convicted felon, also said Merkin’s former accountant Andrew Gordon reported that Madoff’s investment scheme “looked like a fraud to him.”