“Managed” Economy, Managed Art..

“Opinions may, reasonably, differ on Buffet. He may not be to be everyone’s taste.”

So begins an interesting piece in the Independent this morning on Buffet…not Warren, the investor, but Bernard the painter.

It turns out that Bernard and Warren may in fact have something in common – they are both products of the managerial economy. (Think I  blaspheme against Our Billionaire in Omaha? Check out Warren’s sweetheart deal buying a stake in Goldman Sachs. He paid half what ex-Goldman CEO and former Treasury Secretary Hank Paulson paid for the same stake when the public was footing the bill (5 grand versus 10). Back to Bernard:

“What is extraordinary, something with no parallel in the history of modern French art, is that a painter should have been once so admired, and remain admired abroad, but fall so utterly from critical grace in his homeland.

In 1955, he was chosen by 100 critics as the most impressive young painter in the world. In 1956, he was given a spread in Paris Match in which he was presented as the “young millionaire painter”.

Maurice Garnier is a Paris gallery owner and a friend of Buffet until the artist died in 1999. He still has exclusive rights to trade in Buffet paintings. M. Garnier believes it was Buffet’s lightning success and riches, just after the Second World War, which helped to turn the art establishment against him.

“He sold too well,” M. Garnier said. “He made a lot of money. He lived in an ostentatious way. The powers that be hated him for all that.” Buffet incurred, above all, the enmity of two of the great cultural figures of post-war France. The first was Picasso; the second was André Malraux, the writer who became President Charles de Gaulle’s minister for culture in 1959. Picasso would enter Paris galleries and stare at Buffet canvasses for hours, sometimes glaring in silent hatred, sometimes telling visitors how much he hated what he saw before him. Malraux also detested Buffet. M. Perier believes Picasso influenced Malraux, who knew little about art, but he says the culture minister’s motives for bad-mouthing Buffet were also partly political or art-political.

“Malraux was determined to re-establish the reputation of Paris as the art centre of the world,” M. Périer said. “He decided that the ‘abstract’ movement of the 1950s was the vehicle which would achieve that aim. Buffet was anything but an abstract painter. His success and his reputation threatened to muddle the argument that the future of art was abstract.”

Buffet also made another powerful enemy, or at least alienated someone who might have protected, and boosted, his career and reputation. In the 1950s, Buffet, then a homosexual, was the lover of Pierre Bergé, the man who later became the lover and business partner of the fashion designer Yves Saint Laurent. In 1958, Buffet had a spat with Bergé over his new friendship with the then debutant Yves Saint Laurent. Buffet took up instead with a young woman. Perier believes Berge would have reconciled the art establishment with Buffet if the young lovers had not fallen out. M. Garnier goes further and says Buffet attracted the enmity of several powerful gay figures in the art world because he switched his sexual orientation….”

More in The Independent about the spiteful vendetta to denigrate Bernard Buffet by arch rival Picasso and French cultural minister, Andre Malraux.

Comment:

In a previous article (“Portrait of the CIA as an Artist”), I wrote about how the ‘abstract art’ movement was purposely fostered by the intelligence community in the US.  The story of Bernard Buffett depicts another angle of that story and shows how the scheming and envious rivalry of one of the icons of modernity, Picasso, combined with state action (Malraux was the French minister for culture) perverted the course of art – as it recently did of banking.  The exaggerated worth of some artists at the expense of other artists that is a direct result of state intervention is surely as much an indictment of the state as the exaggerated worth of some businesses (financial) at the expense of others.

Obama Wants FDA Overhauled

“President Barack Obama has said the US food safety system is a “public health hazard” and in need of an overhaul. He sounded the warning during his weekly radio and video address, as he appointed a new head of the federal Food and Drug Administration (FDA). New York Health Commissioner Margaret Hamburg has been named for the post.”

That’s from a BBC report about Obama’s new health czar.

 Comment:

Hat-tip to Sunni Maravillosa for the link. As she points out, calling the FDA “a public health hazard” has a certain libertarian appeal until you read on and find out that what Obama has in mind is an expansion of the funding (hasn’t he heard we’re in a financial meltdown?), an overhaul of the system (read, more bureaucracy), and coordination throughout (read, more centralization).

Here’s the money part:

“The president also announced he was creating a working group to co-ordinate food safety laws throughout government and advise him on how to update the legislation, which he said had not been touched since it was drafted a century ago.”

And who’s the new healthocrat? A bioterrorism expert, who was an assistant health secretary under President Bill Clinton….

We always knew that an Obama presidency would be Clinton – Episode III…

Please underline in your little diaries: bioterrorism, New York, and coordinate through out government.

Now, I know Ms. Hamburg has a very impressive resume (Harvard MD, neuroscience research at Rockefeller University and neuropharmacology research at the National Institute of Mental Health, Bethesda, MD, as well as AIDS research at NIH). She also has an interesting personal profile (bi-racial background). But the fact that she “initiated the nation’s first public-health bio-terrorism defense program” isn’t simply interesting to me – it’s disturbing.  I thought we were going to be ratcheting down the war-like posture with Obama. Why does the top health official in the country have to be someone intimately linked to the defense/intelligence complex?

What pressures would that put on her day-to-day policy recommendations? What is this preparing us for? I don’t know. I just worry about it.

Also this part from the NIH’s rather gushing biography:

“Hamburg sent healthcare workers to patients’ homes to help manage their drug regimen, and between 1992 and 1997, the TB rate for New York City fell by 46 percent, and by 86 percent for the most resistant strains…”

Those results sound good, but “help manage their drug regimen” doesn’t sound so good to me.  What if someone didn’t want to take the drug prescribed? Are they forced to?

More digging needed.

Ode to Enemies

From Ali Eteraz, writer, scholar, and (former) lawyer-activist:

Ode to Enemies

I love my enemies,
with Neruda’s affection.
I cherish insults,
epithets
sarcasm;
I pray,
to be mocked
— abused —
its my redemption.
I love
all enemies,
not only the weak
ones who hate
because they’re empty,
but the heinous
also,
their hyena acidity
it makes me cackle,
it tickles,
it gives me laughter………

The best remedy
for ennui
is to offer my enemy
a plate full of me.”

Comment:

Indeed.

Pile on a big serving of yourself, folks, and shove  a plateful into the hungry mouths of the crooks and liars in power.

Read more of Ali’s observations at his website.

Don’t Nationalize, Says Only Pundit Who Has Nationalized a Bank…

“People who should know better have been speculating publicly that the government might need to nationalize our largest banks. This irresponsible chatter is causing tremendous turmoil in financial markets. The Obama administration needs to make clear immediately that nationalization — government seizing control of ownership and operations of a company — is not a viable option.

Unlike the talking heads, I have actually nationalized a large bank. When I headed the Federal Deposit Insurance Corporation (FDIC) during the banking crisis of the 1980s, the FDIC recapitalized and took control of Continental Illinois Bank, which was then the country’s seventh largest bank…..”

William Isaac , who actually did nationalize a bank, says don’t do it, at the Wall Street Journal.

Comment:

Glad to see confirmation for my argument (I’m always a little nervous  – who wouldn’t be? – criticizing highly credentialed people like Paul Krugman).  But sometimes pundits, like emperors, really don’t have clothes and you have to call them on it.

Any one can see that Sweden is too different from the US to make a valid comparison.

Anyone can also see that nationalization doesn’t automatically get rid of the pain. It might (or might not) postpone it.  In fact, it’s likely to make it worse, in the opinion of many people with real world experience in banking and investment, not just theoretical expertise (which is all most economists have).

It’s also interesting to me that all those austerity measures which IMF experts thought were just fine for Asian and African countries are off the table in the US. That tells you how bogus these debates are. No one is even considering letting any of the banks go bust. The only possibilities on the table are how to give government money to them. The three options being debated are:

1.  Infuse capital on an ad hoc basis by applying certain tests to decide which and when (Obama administration), assuming the system to be fairly sound.

2. Infuse capital without  taking the banks over, by buying their bad assets at higher than market value or by insuring them, so they get cheap capital

3.  Infuse capital by taking the banks over, firing managers, transfering off the bad assets (where? to whom? how?),  recapitalizing them and then selling them back to the private sector.

Now, 3 is supposed to be so much better for tax payers than the other 2, but without access to details and transparency, there is no guarantee whatsoever that it will be. It would depend on what happened to those bad assets. In fact, the additional bureaucratic measures involved look to add their own additional burden.

The main issue, as I see it is, is monopoly and corruption. In the recent past, we’ve seen that taking-over or infusing capital into selected banks has taken place via other favored banks. There’s evidence (I’ve posted on this on Wachovia and others) that the rescues were actually used to funnel government money to the rescuer bank. I think the Lloyd’s-HBOS deal was something of that kind.

Not on the table at all is the simple free-market solution: let the banks go under.  Let them liquidate. If necessary, adjust laws and regulations to make the process as quick as possible so it doesn’t clog up the courts. Perhaps also adjust insurance requirements for a temporary period so that the impact on businesses is reduced.

There will be pain. But there’s going to be pain regardless of what proposal goes through. The bottom line is there was a party and now there’s a bill –  and no one wants to pay. But that’s not how the real world operates. Someone will pay.The only question is will it be the people who incurred the bill or the general public? The rest of the talk about “too big to fail” “the economy will collapse” etc. are all obfuscations, projections and self-serving hypotheticals….

Obama Considers National Guard to Police Mexican Border

President Barack Obama spoke out about the recent violence that has enveloped our neighbor to the south and has begun to spill over from Mexico into the United States. He admitted that he has been weighing the possibility of moving National Guard troops to the border in an effort to contain the violence but ruled out immediate military action.

“We’re going to examine whether and if National Guard deployments would make sense and under what circumstances,” said President Obama, “I think it’s unacceptable if you’ve got drug gangs crossing our borders and killing U.S. citizens.”

One thousand people have already died along the border in 2009 alone, and almost 6 thousand died in 2008. Phoenix, AZ has seen a huge uptick in violence, earning the dubious title of “kidnapping capital of America” while “rape trees” are being found in increasing numbers on the US side of the border…..”

More at Latina

 Comment:

OK. This calls for some Clintonian parsing.

“weighing the possibility” = it’s gonna happen

“ruled out immediate action” = let’s test the waters for now, but wait a bit before going all Wyatt Earp down there

On the positive side, the Sooth-Sayer-In-Chief did admit mundane reality into the thick fog of DC-speak when he conceded that for every drug sale northward, there was a gun sale southward.

Stocks Up, Dollar Down as Market Expects Investor Friendly Changes (Expanded)

“The stock market has rallied the past three days for any number of reasons, chief among them it was due for at least a technical, “dead-cat” bounce after hitting 12-year lows on Monday. One fundamental factor in the rise is Wall Street’s increased expectation for at least some help from Washington D.C. on two issues: mark to market accounting and the uptick rule.On Thursday, the House Financial Services Committee held a , during which Robert Herz, the chairman of the Financial Accounting Standards Board (FASB), agreed provide more detailed guidelines on the controversial accounting practice within three weeks.”

More by Aaron Trask at Yahoo Finance

Comment:

Never make a public pronouncement. You’re sure to eat it. Having affirmed my short-term faith in the dollar (at least until its hits 90 or there abouts on the index),  I’ve had to second-guess myself.

The dollar’s taken a hit since yesterday and gold’s popped up a bit, part of that just the usual bounce after a leg down, but also because of several things:

1. The perception that the stock market may be due for a bit of a rebound (or, at least, a dead-cat bounce). That makes cash less attractive.

2. Signs of the revival of the uptick rule, which would require short-sellers to sell only on ticks up of the price and would probably prevent cascading short-selling…at least to an extent…

Signs also that mark-to-market may be in for some reexamination. Mark-to-market is seen by many banks as unfair, since it requires the mark down of perfectly sound assets to current (fire-sale) prices.  One alternative that’s been proposed is to go to a 3-month rolling average.  Again, that makes equities look more attractive than cash and is dollar-unfriendly.

3. The sale of the Swiss franc by the Swiss National Bank (SNB)to bring it down against the euro. That’s sparked fears of currency wars and simultaneous depreciation of all currencies, which in turns, reduces the dollar’s attractiveness as a safe-haven.

4. Increased flows into the gold ETF (GLD) to a record  1,041.53 tonnes, making it the 6th largest gold holding outfit in the world, overtaking the SNB. (I have to look up the flows and will add a link and a note here later)

5. Unexpected rise in consumer confidence from the preliminary March data.

6. Announcement by Citi (as well as JP Morgan Chase and Wells Fargo) that it’s showing profitability in 2009. (Why don’t they start paying us back then?)

But until gold shows conviction in going through resistance in the 930-940 band, I’ll stick bull-headedly to my belief that the dollar will chug on or at least bounce around 87-89 for a bit more before coming down.

Mind you, I’m not wedded to that opinion, and if I see signs of change I’ll start stock-loading food, buying up gold coins and foraging for wild roots in the backyard…I’ll let you know..

Obamanomics Doesn’t Work….

“Let’s assume that the Obama administration succeeds in collecting an extra $31.8 billion in taxes from the rich (and never mind the coming loss in tax revenues due to corporate profits evaporating and millions of unemployed Americans no longer earning taxable incomes). The president and his team would need to trim more than $800 billion from the deficit. Since total military spending—including expenses for Iraq and Afghanistan—will be approximately $664 billion this year, Obama could theoretically abolish defense spending and still not achieve his budgetary goal.

The only possible way to rein in runaway deficits is to slash runaway federal spending…..”

Into the Financial Abyss,” Mark Hendrikson, Frontpage Magazine.

[*Thanks to Lew Rockwell for that twist to our President’s versatile name… ]

Federal Reserve Vice Chair to US Taxpayer: Shut Up And Give Us Your Money

 

“One of the reasons we had to rescue AIG was the fact that it was going to bring down Europe,” Pennsylvania Rep. Paul Kanjorski told reporters after his subcommittee held a hearing on systemic risk.

Later, in an interview with Reuters, Kanjorski said he was told that a large number of AIG’s counterparties were European.”

 That’s from a report from Reuters that also says that counterparties to AIG “made out like bandits” and that their names would not be revealed because people would stop doing business with them. Fed Vice Chairman Donald Cohn who did the stone-walling of lawmakers and reporters thinks we need more regulation.

Makes a lot of sense, right? Regulators fell down on the job so we need more regulators.  And we can’t tell you who got the tax payer money to the tune of hundreds of billions, because… well…because that’s a seeeeecret.

Yes, folks.  You don’t live in a republic any more. You live in a dictatorship of bankers.

Blaming Asians Instead of the Federal Reserve

“At no point did Asian savers force Fannie Mae to reduce down payments on houses or reduce mortgage rates. At no point did Asian savers force American banks to allow consumers to use their home equity as ATM machines. At no point did Asian savers force the Bush administration to run deficits to pay for foreign wars and domestic welfare. At no point did Asian savers force government-sanctioned ratings agencies to rubber stamp risk assessments. And at no point did Asian savers force Alan Greenspan to lower interest rates.

Neither the US government nor its federally controlled housing agencies had to spend the money it received from Asia. In fact, they could have refused the money altogether. No means no, right?

In addition, the government could have paid off its obligations and maintained a balanced budget. Instead it spent it all and continued borrowing. As a consequence, it is pure balderdash to insinuate that the uptick in Asian savings somehow coerced the House Committee on Ways and Means to appropriate billions in extra liabilities. No one in Asia pointed chopsticks, bamboo, or a gun at Larry Summers, Paul O’Neall, Dennis Hastert, Bill Thomas or American consumers and told them to spend the money.

True enough, Asian countries produced relatively cheap goods that Americans wanted to buy, but it was the Federal Reserve alone that created the “cheap” money that was then lent to Americans who in turn bought products from China.

In fact, the only “hot” money in the global system was that created by the Federal Reserve. Every dollar that the Chinese and Japanese used to buy US Treasury bonds originated from the Federal Reserve. And as much as they would have liked to do it, no evidence has surfaced to suggest that China, Japan, South Korea, or any other Asian country was involved with counterfeiting money. That responsibility is left solely with the Federal Reserve’s own printing press…..”

More at Mises.org by Tim Swanson

Comment:

Well, there you go. The Mises bloggers have it right. The fault, dear Brutus, lies not in our trading partners but in our Federal Reserve policies that we are underproducing….

Trust the MSM to shift blame away from the banksters and from their man in DC and instead blame the Chinese. Here’s Paul Krugman  of the New York Times whinging about the Asian glut. And here’s the Economist doing its own version of deep thinking…i.e. obfuscating the issue.

Look, there was a huge flood of savings from Asia, true. But, Asian savings is held in US dollars and bonds for a reason.

*The mortgage industry doesn’t exist in the same way there. So, while Americans can hold their savings in the form of home payments (mortgage equity), Asians usually have to hold them as deposits in a bank.

*Asian central banks have to adjust their policies to the Fed’s policies  and keep their currencies cheap internationally. That helps strengthen their exports.  They need to do that in part in order to build up reserves in foreign currencies that are hard (convertible), since their own currencies are not.

*If they don’t have hard currency reserves, Asian banks become vulnerable to capital flight when a financial crisis makes people withdraw money not only from the banks, but from the national currency and save it in a Western currency (pound or dollar or Euro, for example).

The “glut of savings” which Krugman and Greenspan  are complaining about looks a bit different if you understand that

1. It’s not comparable to our savings (it should rightly be compared to how much  savings we have in our houses)

2. It’s induced by central banks policies that are in turn instigated by Federal Reserve policy here

3. It protects against currency crises of the kind that we saw in the 1990s, where countries with high reserves saw their currencies actually appreciate, while currencies elsewhere were destroyed.