Occupy Wall Street
October 27, 2011
Look back on the origin of Investment Banks and you will find people with real money coming together to pool their capital and gamble on commercial opportunities. When the bets were in the black, the partners would share in the gains, and when there were bad investments, the partners would share in the loss.
Fast forward to the time when we began to see a transformation of Investment Banks from private partnerships into publicly held companies.
Most would agree that the beginning of this metamorphosis was the public offering of Merrill Lynch in 1971. That was followed by four other entities which became infamous in the 2008 credit apocalypse: Morgan Stanley (1986), Bear Stearns (1985), Lehman Bros. (1994), and Goldman Sachs (1999) (aka, “the Gang of Five”).
These former partnerships converted to public ownership ostensibly so they could better compete with international banking giants which were encroaching on their core business of underwriting stock offerings and advising firms.
New capital from new shareholders allowed them to increase their involvement in riskier, capital-intensive businesses like proprietary trading.
“In order to have a capital base that would support the funding they needed, they had to be public,” said Roy Smith, a former Goldman Sachs partner and a professor of finance at New York University.
Going public allowed the former Investment Bank Partnerships to become more powerful, with much deeper equity cushions, giving them the gravitas to actively influence significant regulatory change to support their agendas. One clear example of this is the 2004 rule change at the Securities and Exchange Commission which allowed investment banks to increase the amount of debt they could take on their books—a move made at the request of the Gang of Five’s CEOs.
Before Lehman crashed, it had amassed more than $600 Billion in debt. No partnership or private corporation could have achieved that milestone!
The shift to public ownership also replaced the accountability of partnerships—when there are no profits, there are no partner bonuses—with the apparent lemming-like behavior of public boards which some would say are selected for their willingness to rubber stamp recommendations from the COO.
When Lehman failed, $45 Billion in shareholder value disappeared forever. Bear Stearns was rescued from a similar fate when JPMorgan bought it at what some have claimed was a fire-sale price with the help of the Federal Reserve. Morgan Stanley and Goldman managed to remain independent and solvent, apparently because huge subsidies were made available to them.
In the final analysis, shareholders suffered, but employees and executives didn’t. In true Investment Banking partnerships, compensation was contentious: major debates would take place at the end of each year as partners worked to resolve the equitable distribution of bonuses. These debates took place in private, and involved rich people taking money out of one another’s pockets.
Today, it seems to have evolved into a zero-sum game, where the protagonists in the drama have no real skin in the game, yet they are eligible to take Billions from shareholders.
It would seem that the public — as aggrieved owners, taxpayers, and savers — has every right to question the Investment Banks’ methods and practices. If they don’t want the public digging into their businesses, these publicly traded Investment Banks could shrink their balance sheets, replace government-subsidized debt with market-rate debt, stop relying on the Federal Reserve for funding, and get out of index funds that bet against our domestic economy.
Chew Nails, Spit Rust
September 23, 2011
Chew Nails & Spit Rust: This inspiration dates back to my childhood when people really worked for a living and were forced by reality to get along with each other.
Every morning, the tradesmen would gather in the same space, and they knew that if they were going to finish the bridge, the building, the highway, etc. on time, they needed to put aside their egos, come to common terms, eliminate political differences, and get the job done.
These were guys who may have finished high school, but certainly did not go to college. These were guys who came from different cultures; different religions; different ethnicities. They probably had a lot of animosity toward their brothers who were different than they were, but they didn’t seem to allow that to interfere with the overall goal.
Something has gone wrong in the United States of America.
We now have elected officials – more than 90% of whom have at least a 4-year college degree — who apparently are unable to grasp the importance of putting aside their individual egos; coming to common terms; eliminating political differences; and getting the job done on behalf of the citizens of the United States of America.
Back in the day, the theme was: Let’s get the job done, and after 5 PM, we can work out our differences in the parking lot or the back alley.
Today, our elected officials seem to think that the way to work out differences is to abuse victims of natural disasters.
How juvenile is this?
Rick Perry & The Walrus
August 17, 2011
There are a number of very positive things that can be said about Rick Perry. He is pretty, he has great hair, and he is an inspiring orator.
Yet, the Walrus has some nagging concerns about Governor Perry.
At a public event in Bedford, New Hampshire on August 17, Texas Gov. Rick Perry reaffirmed his view that global warming is an unproven scientific theory that has been promoted by scientists who have “manipulated data,” and Perry further stated that programs intended to limit climate change are costing our nation “billions if not trillions” of dollars that he believes could be better spent elsewhere.
“We are seeing almost weekly, or even daily, scientists are coming forward and questioning the original idea that man-made global warming is what is causing the climate to change,” Perry told an audience of several hundred voters, business leaders and local officials who gathered for a breakfast in Bedford. “Yes, our climate has changed — they’ve been changing ever since the Earth was formed.”
Perry added that the cost of implementing what he called “anti-carbon programs” is billions of dollars: “I don’t think, from my perspective, that I want America to be engaged in spending that much money on what is still a scientific theory that hasn’t been proven, and from my perspective is more and more being put into question.”
Perry expressed his skepticism about global warming during his debut at the Politics & Eggs series, a virtually mandatory event for presidential candidates in the state that holds the first primary each election cycle.
In past appearances, Perry has also opined on Darwin’s Theory of Evolution. “I believe that we were created by this all-powerful supreme being and how we got to today versus what we look like thousands of years ago, I think there’s enough holes in the theory of evolution to, you know, say there are some holes in that theory.”
Some have suggested that Perry is also a founding member of the Flat Earth Society, although I can find no strong evidence of that.
In his presidential platform, Perry seems to be focused on the Texas record of job creation during the national economic downturn. In fact, Texas has created plenty of jobs, although that seems to be related to a combination of rising oil prices, which created thousands of jobs in the oil and gas industries, and the shift from Louisiana as a result of Hurricane Katrina.
Perry tells us that his low-tax, low-regulation approach to business is a driving force to economic success. They also say that in Mexico and in China where manufacturing costs are clearly lower than in the U.S.
What Perry neglects to mention is that Texas really is a humanitarian cesspool.
It has the fourth-highest poverty rate of any state. In 2010, it tied with Mississippi for the highest percentage of workers in minimum-wage jobs. It is first in the U.S. for adults without high school diplomas. Twenty-six percent of Texans have no health insurance — the highest percentage of medically uninsured residents of any state. Texas leads the nation in the percentage of children who lack medical insurance. Texas employers are at the forefront in our nation of not providing insurance to their workers.
If Rick Perry is a legitimate candidate for president of the USA, we are in deep, deep trouble, folks.
Juvenile Delinquents in the Congress
August 4, 2011
Last week, I was alarmed and angry at some of our elected representatives in the Congress as they played Russian Roulette with our economy.
This week, I am stunned.
The partisan shenanigans that have transpired in the 112th Congress is just Un-American and unacceptable.
As the entire world watches – in real time, thanks to advanced technology – a group of newly elected individuals in the House of Representatives are behaving badly.
They remind me of unchaperoned adolescent hooligans at their first spring break.
But this is no harmless teenage fun.
This is the real thing.
The credit rating agencies have put the world on notice that they have serious concerns about our Nation’s credit rating.
Today, the domestic equities market dropped about 4%, wiping out nearly $9.3 Trillion of our nation’s private worth.
Meanwhile, our elected officials are on leave from Washington enjoying their August recess, no doubt oblivious to the pain they have caused to regular citizens like you and me.
I’m stunned? Yes, and I’m furious!
The Debt Deal
August 2, 2011
It’s official. The House, The Senate and The White House have come to common ground.
The legislation signed into law today by Pres. Obama is basically a big wet steaming pile of horse manure (“BWSPOHM”).
The popular media — and some right wing bigots — are already slamming Obama for “blinking” and for his “lack of leadership.”
The real story is that it takes a real leader to sign a bill like this knowing full well that it is a BWSPOHM.
And, in the end, even the best leader who ever graced the face of our earth can’t be expected to get a herd of wild recalcitrant donkeys to do anything other than to satisfy their own desires.
I heard it said somewhere, “We can’t allow the American people to become collateral damage to Washington’s political warfare”.
Let’s hope the Tea Party Jihadists find a way to mellow out and address our financial problems in a rational and comprehensive way…
The Silent Majority
August 1, 2011
Something I heard or read today created a connection in my head between “The Silent Majority” and “The Tea Party”
Silent Majority?
I think from the late 1960’s/ early 1970’s — started with President Nixon — and continued to fester well into the 1990’s thanks to Pat Buchanan and some of his ultra-conservative friends and supporters.
Buchanan delivered a keynote address at the 1992 Republican National Convention, which became known as the culture war speech, in which he described “a religious war going on in our country for the soul of America.” In the speech, he said of Bill and Hillary Clinton: “The agenda Clinton & Clinton would impose on America — abortion on demand, a litmus test for the Supreme Court, homosexual rights, discrimination against religious schools, women in combat units — that’s change, all right. But it is not the kind of change America needs. It is not the kind of change America wants. And it is not the kind of change we can abide in a nation we still call God’s country.”
However you slice it, the Tea Party is nothing new.
Back in the day, they wore white sheets, burned the cross, and became the subject of a very haunting song by Billie Holiday, “Strange Fruit”.
I remember when my Mother had a bumper sticker on her car that said, “The Silent Majority is Neither.”
I thought maybe she was a communist or something.
Fast forward 40 years: Here I am! (not a communist, but maybe a centrist?)
Van Jones (formerly the senior advisor to Pres. Obama for ‘Green Jobs”) is now the spokesperson for the American Dream Movement.
He has targeted the vanishing American middle class that he says is working harder than ever, yet is struggling to maintain its livelihood.
When I recently discovered this new movement, I concluded they are Anti-Tea Party, so I immediately signed up and made a modest contribution.
In the short term, I’m planning to haunt Mr. Jones and American Dream —- who knows? Maybe they can muster the REAL “silent majority” into getting vocal.
Economic Jihad
July 29, 2011
We are fast approaching the 10th anniversary of the horrors inflicted on our nation by ultra-fanatic and radical religious extremists intent on causing unspeakable physical damage and wholesale loss of life.
September 11, 2001 marked the first time that any foreign power had successfully invaded the U.S. causing major chaos and catastrophe.
Our nation responded swiftly and in a unified, bi-partisan and multi-faceted manner.
We may have failed to recognize the ultimate goal of Al-Qaeda in their plan to destroy the U.S. both physically and economically. It has been said, “The U.S. economy will finally collapse under the strain of too many engagements in too many places, making the world wide economic system which is depended by the U.S. also collapse leading to global political instability, which in turn leads to a global jihad led by Al-Qaeda and a Wahhabi Caliphate will then be installed across the world”.
What apparently has not been said (or if it has, not very loudly!) is that the Tea Party Extremists are playing right into Al Qaeda’s grand plan.
Where Al Qaeda expected it would take until 2020 to collapse the U.S. economy, the work that is presently being done by John Boehner, Eric Cantor, Michele Bachmann (and more) — under the careful and watchful oversight of shadow characters Grover Norquist, Mark Meckler, Jenny Beth Martin, Judson Phillips Dick Armey and others – has almost guaranteed early success!
It is also clear that the system developed by the Fathers of our Country in the late 18th century is no longer relevant or effective.
We have evolved to a political system where election to public office has virtually nothing to do with experience, ability or integrity. It is clearly all about selfishness, duplicity and shadow special interest groups.
The news this week from Standard & Poor’s about a probable downgrade of the U.S. credit rating is more alarming than the message sent during ‘the midnight ride of Paul Revere’.
Virtually all of my personal assets are in U.S. dollar denominated investments. I have lived conservatively, saved and scrimped to ensure that I would have a suitable cushion to weather future financial storms, and now I am terrified.
Each of us in the U.S. is being held hostage by radical extremist elected officials.
We — the people — need to take action. Now.
Honesty, Integrity and Respect
July 18, 2011
Here is a short snippet from an interview with New York City Council Speaker Christine Quinn on The Brian Lehrer Show July 18, 2011:
“The Mayor and I have a good working relationship because that is what is in the best interests of the citizens of the City of New York for the Mayor and the Speaker to work together — every Mayor and every Speaker. And, for the Mayor and the Speaker to agree as much as they can, and when they can’t, to disagree agreeably…. That’s what the people deserve.”
Refreshing talk from an elected official in the U.S. circa 2011!
Some of our Congressional leaders – elected to Congress by their constituents, and appointed to those leadership positions by their colleagues – could greatly benefit from a lesson in civility and polite political discourse, if for no other reason than to serve as a positive example to our young people of responsible adult behavior.
Stop cyber-bullying in schools? One important ingredient is to show young people by example that public bullying and baseless political attacks are counter-productive.
Some of our elected officials in Washington seem to have lost sight of their responsibility to serve as positive examples to the next generation.
Is this too much to ask or to expect?
A Matter of Economic or Financial Literacy?
July 18, 2011
It’s a fact: there is no requirement that members of Congress (Senate and/or House of Representatives) have a college degree.
This fact raises an interesting question: ‘How many of those elected to the House and the Senate are college graduates?’
The answer is: Almost 95 percent of those serving in the 112th Congress have earned at least a bachelor’s degree.
The colleges and universities where our Senators and Congressmen earned their undergraduate degrees include: Harvard; Stanford; Yale; UCLA; Georgetown; University of Florida (Gainesville); University of Georgia; University of Wisconsin (Madison); University of North Carolina (Chapel Hill); Brigham Young; George Washington University; Louisiana State; University of California (Berkley); University of Missouri; and University of Tennessee.
Now, this information begs another question: ‘Have our colleges and universities failed to provide a sound basic education in economics to their graduates?’
It would seem so, based on the statements emanating from our elected officials in the most recent debate around our debt ceiling.
Which of these statements do you think is true?
1. Columbus was wrong: the earth is flat.
2. Global warming is a fraud, one of the greatest scams of the 20th Century.
3. Bernie Madoff is one of the best investment advisors ever.
4. Enron stock is a great buy.
5. Raising taxes will kill jobs.
6. “Cut, Cap & Balance” will solve our current financial crisis.
Yes, I know. This is a very tricky question, because the answer is “None of the above”.
Why are some of the elected officials serving in our 112th Congress unable or unwilling to grasp the basic principles of how an economy works?
One possible explanation: Some of the elected Republicans from south of the Mason-Dixon Line are really Al Qaeda operatives in disguise, sent here to create the ultimate Economic Jihad, certain to derail our economy and cause our country to become a North American subsidiary of the People’s Republic of China….
Can the Fed do more to boost economic growth?
July 14, 2011
According to Reuters, U.S. Federal Reserve Chairman Ben Bernanke told Congress this week he is ready to ease monetary policy further if economic growth and inflation slow.
The central bank has already cut interest rates to near zero and last month completed a $600 billion round of bond-buying designed to lower borrowing costs still further.
Asked whether the Fed would be willing to launch another bond purchase program if the economy slumps, Bernanke said on Wednesday: “We have to keep all the options on the table. We don’t know where the economy is going to go.”
Bernanke listed several potential easing options, some of which he also included in a more detailed speech he made in August 2010.
Meanwhile, Tea Party Republicans in the House and the Senate reiterated their mandate to “…rock the credit and stock markets and force up the interest the federal government has to pay on its bonds.”
Senate Republican Leader Mitch McConnell said the debt problem belonged squarely in Obama’s lap.
McConnell said, “Republicans will not be reduced to being the tax collectors for the Obama economy. Don’t expect any more cover from Republicans on it than you got on health care. None.”
House Speaker John Boehner (R-Ohio), told reporters that he thought Senate Minority Leader Mitch McConnell’s so-called “last resort” option for resolving the debt ceiling stalemate should be left on the table.
House Majority Leader Eric Cantor (R-Virginia) has emerged as a key player in the negotiations between the Congress and the White House in talks over how to resolve the debt problem. And, not in a very productive or popular way…
“Eric, don’t call my bluff,” President Barack Obama warned late Wednesday after a dramatic back-and-forth with the Virginia Republican that made some in Cantor’s party wince. “Enough is enough.”
One has to pause and ask, “Did growing up amid Republicans in Richmond, Va., the capital of the Confederacy, somehow taint Rep. Cantor’s ability to deal with modern diversity and reality?”
And, Donald Trump (with Sarah Palin close by his side) was heard weighing in on the rancor in D.C.
Apparently not at all impressed by congressional Republicans Eric Cantor and John Boehner and their brand of negotiating, Trump appeared on Fox News to proclaim, “…the Republicans are doing another ‘el foldo’. This is incredible. It is unbelievable what is going on. The fact is, they are terrible, terrible, frightened negotiators. And I just can’t believe they are doing this.”
It all leaves me thinking that maybe the Civil War never was really resolved.
Here we have a President from Chicago — clearly north of the Mason-Dixon line — surrounded by some of the most capable and best educated economic experts in this country, working to fix an economy which tanked due to bad decisions which took place between 2001 and 2009, doing battle with Southern Republicans, many of whom are newly elected on the Tea Party platform.
I keep hearing Billie Holiday singing “Strange Fruit”.
Am I missing something here?
walrus51 