4/30/10
So Judge Zagel ruled this afternoon that Rod Blagojevich couldn’t call President Obama as a defense witness in the former governor’s upcoming federal corruption trial, at least not yet. When one of Blago’s lawyers was asked whether the Judge’s denial would hurt the RodMan’s case, the lawyer replied that, no, Obama’s absence would not hurt Blagojevich’s defense.
The logical question becomes as follows: if Obama’s testimony would have so little impact on the case, why did the defense attempt to subpoena the President in the first case? I’m no lawyer, and I know that plenty of gamesmanship goes on at trials and in life in general. I also know that Blago’s defense team isn’t known for its quiet, work-a-day approach to the law; they are basically a pack of grandstanders, so therein probably lies the answer. But, still, was there something more to it?
John Kass of the Chicago Tribune came up with an interesting theory last week. He said that the RodMan’s attempt to call Obama as a witness was a signal to the White House, indicating that Blago knows plenty about what goes on in Chicago politics and is ready to spill the beans. Given Obama’s involvement, limited though it might be, in Chicago politics, some things might come out that the President might not like. Therefore, if Obama wants to avoid trouble, he’d be advised to do something to get Rod out of his predicament.
As I said, Kass’s theory is interesting, but it is not very convincing for two reasons, the first perhaps itself questionable but the second rock solid. First, even though Blago was governor, I’m not convinced he knew all that much about the inner workings of politics in Chicago. The guys who really matter don’t trust people easily, and they all knew, probably long before he became governor, that Blago was a flighty, self-serving lightweight, a man not to be trusted. His double-crossing his father-in-law and patron, 33rd Ward Alderman Dick Mell, soon after becoming governor confirmed what the smart people already knew about this young popinjay. Further, even though the right wing reaches of the media, who know next to nothing about how politics works in this town, like to paint Obama as some kind of Machine hack, he was far from a major player in Chicago politics. Yes, he had a powerful, and some might say shady, patron in my former State Senator Emil Jones, and, yes, either out of necessity or all consuming ambition, Obama played ball with the power structure in Chicago, but he was never on the inside. So one wonders how much mud there is in Blago’s skull to smear the President.
Second, even if we assume that Blago knows everything that goes, or went, on in Chicago politics and that Obama was up to his elbows in the kind of backroom dealing and inside baseball that characterizes this town (See the brilliant and often scathing The Chairman, A Novel of Big City Politics, by the ever insightful Mark M. Quinn, available at bookstores everywhere and at Amazon.com.), what could Obama possibly do to extricate Blagojevich from his legal predicament? Does Kass think for a moment that Obama would consider pardoning national joke Rod Blagojevich and risk ridicule and the ever predictable “A Chicago hack pardoning a Chicago hack” baying and mewing? Can’t you just hear Jay Leno and David Letterman making silly jokes about the contrasting heads of hair of these two estimables? It isn’t going to happen.
So why did our former governor’s defense team attempt to call the President as a witness? I suspect that they’re just grandstanding, but it makes for interesting speculation.
Friday, April 30, 2010
Thursday, April 29, 2010
ON GOLDMAN, ON BEAR, ON UNIONS, ON SENATORS, ON PEOPLE….
4/29/10
Several thoughts on the Goldman hearings, the SEC suit, financial regulatory legislation, etc. I may have to break this down into several posts, but maybe not; it is broken down into sections, partially to avoid overwhelming my readers. Here goes:
--CNBC had AFL-CIO President Rich Trumka on this morning and, predictably and perhaps justifiably, he was railing against Wall Street. When the host (Erin Burnett? I guess I should pay closer attention to the personalities on CNBC.) asked what he would like Wall Street to do, Trumka spewed such pabulum as “Pay their fair share,” “Make credit available to small business,” and, of course, accede to a transaction tax, which, according to Mr. Trumka, would create millions of jobs.
Mr. Trumka would have displayed more credibility if he said, in response to his questioner, that Wall Street ought to get back to its traditional role in the economy, which was raising capital for businesses, and move away from its what certainly looks to most observers as its current role of placing bets on esoterica with the downside socialized and the upside thoroughly privatized. How can I use a term like “esoterica” when Wall Street will argue that it is merely contributing to the efficient operation of the capital markets? Are 5th derivative securities (the subject of the SEC suit, at least according to my calculations) absolutely necessary to the “efficient operation of the capital markets”? Do hedgers really need such securities in order to protect their positions?
--The big news in the Wall Street Journal this morning on the ongoing SEC suit against Goldman is that GSC Group turned down Goldman’s offer to construct what became Abacus 2007-AC1. According to an e-mail composed by Goldman trader and 31 year old wunderkind Fabrice Tourre (the type of guy, by the way, who has all the risks in our economy and financial system under control, so no need to worry…just keep buying stocks and “betting on America,” but I digress), “GSC had declined given their negative views on most of the credits that Paulson had selected.” When GSC passed, ACA took up the task of…well, we don’t really know at this point. (See the latter section of my 4/27 post “HAVE YOU NO SENSE OF DECENCY, SIR?”)
Clearly, GSC’s taking a pass is interesting, but not as interesting as an earlier revelation that Paulson & Co. approached Bear Stearns to do what became the Abacus deal but Bear turned Paulson down for reasons that are not entirely clear but that had to do with risk and concern for the impact of the deal on its clients. When Bear refused, Goldman took the deal.
Now, a few caveats. First, I have been away from active participation in the markets for almost twenty years, and maybe Bear changed a great deal in the time between the stage of my career during which I was slinging junk bonds around and the firm’s demise a few years ago. Second, two of my favorite people in the world, or certainly in the money business, worked at Bear Stearns at one stage or another of their careers, one for almost all of his. (One of my regrets about no longer being “in the business” is my having lost touch with both these guys, though I remained in touch with one of them even after I was only tangentially involved in the business, but, again, I digress.) All that having been said, to those who dealt with the Bear during much of its storied history, hearing that Bear turned the deal down is perhaps the reddest of red flags. This would be akin to former 10th Ward Alderman and current convicted felon Ed Vrdolyak not getting involved in a real estate deal because he felt it was unethical.
--One does not have to be too cynical to think that Wednesday’s Goldman hearings, for all their historic import, were little more than yet another extortion attempt on the part of our public servants in the U.S. Senate. Goldman has been exceedingly generous with the political types. Since 1989, Goldman has been the largest corporate contributor to the Democratic party, providing a total of $20.3 million to the party of the people, according to the Center for Responsive Politics. Goldman employees gave community organizer Barack Obama $1mm for his presidential campaign. Lest any readers think I am, or Goldman is, is being partisan, the Republicans have reaped nearly as much largesse from Goldman over the years. But maybe it’s not enough; maybe our Senators want more and are merely showing Goldman what they could avoid if they only pay a little more protection money. And the message certainly has not been lost on Goldman’s Street colleagues: Do you also want to be harangued by a pack of hyenas with the financial knowledge of fifth graders? Well, pay up and maybe you’ll have no trouble.
It seems to have worked; note an upcoming (next Monday) fundraiser for Senators Kirsten Gillenbrand and Chris Dodd at a private Park Avenue residence of a Wall Streeter. $19,800 will let one achieve “host” status for “a political discussion” with these two estimables.
Lest anyone think that Goldman is an innocent victim here, like young Vito Corleone’s employer who was forced to hire Fanucci’s ne’er-do-well nephew, please don’t get that impression. Goldman seems to enjoy buying influence; it appears to be a vital part of its business model.
--One also does not have to be too cynical to think that these hearings were just a massive effort to get Republicans onboard for the financial reform bill being cooked up by the Dems in Congress and the Obama administration. This, too, seems to have worked. Do you really think that it was the flushing of the $50 billion bailout escrow fund that brought the GOP onboard? Of course not; the Republicans came onboard when the rage of their constituents was stoked by Lloyd Blankfein’s stumbling, yet still arrogant, performance under the grilling of Carl Levin and Company.
--One further does not have to be too cynical to think that these hearings were yet another attempt to absolve the American public in general for any culpability for the recession and near financial meltdown from which the likes of Fabrice Tourre are currently rescuing us. Sure, Goldman, and all of Wall Street, had a role in that financial fiasco. But the “crisis” had its roots in Americans’, and I might even say most Americans, borrowing too much money in order to finance a lifestyle to which they felt they were somehow entitled. There may have been many dark forces at work here (See my 4/22 post “TRY A LITTLE PROPAGANDA ON THEM”), but, ultimately, it is the people who borrowed too much money to buy things they couldn’t afford in order to impress people about whom they really didn’t care who are at least as culpable as anybody else, including the firms that provided the financial equivalent of heroin the people were craving.
--And how do I feel about the financial regulation bill? True to my overriding philosophy, I think such further regulation is completely unnecessary, unwarranted, and potentially dangerous. If the government would stay nearly completely uninvolved and let the Wall Street firms and the banks bear the consequences of their actions, we wouldn’t have had the problems from which the Wall Street Wizards are currently extricating us, according to the company line being blared in the financial media. That is, if the government didn’t insist on socializing the downside, these guys wouldn’t be taking the risks they are currently taking. A reversion to the partnership structure that prevailed on Wall Street when things worked, and worked not only for Wall Street, as Michael Lewis has suggested, would also help. But simply letting Wall Street bear the brunt of the downside of its risky bets would put things in order quite quickly. Regulation won’t work; Wall Street people are smarter, and better incentivized, than the regulators.
Several thoughts on the Goldman hearings, the SEC suit, financial regulatory legislation, etc. I may have to break this down into several posts, but maybe not; it is broken down into sections, partially to avoid overwhelming my readers. Here goes:
--CNBC had AFL-CIO President Rich Trumka on this morning and, predictably and perhaps justifiably, he was railing against Wall Street. When the host (Erin Burnett? I guess I should pay closer attention to the personalities on CNBC.) asked what he would like Wall Street to do, Trumka spewed such pabulum as “Pay their fair share,” “Make credit available to small business,” and, of course, accede to a transaction tax, which, according to Mr. Trumka, would create millions of jobs.
Mr. Trumka would have displayed more credibility if he said, in response to his questioner, that Wall Street ought to get back to its traditional role in the economy, which was raising capital for businesses, and move away from its what certainly looks to most observers as its current role of placing bets on esoterica with the downside socialized and the upside thoroughly privatized. How can I use a term like “esoterica” when Wall Street will argue that it is merely contributing to the efficient operation of the capital markets? Are 5th derivative securities (the subject of the SEC suit, at least according to my calculations) absolutely necessary to the “efficient operation of the capital markets”? Do hedgers really need such securities in order to protect their positions?
--The big news in the Wall Street Journal this morning on the ongoing SEC suit against Goldman is that GSC Group turned down Goldman’s offer to construct what became Abacus 2007-AC1. According to an e-mail composed by Goldman trader and 31 year old wunderkind Fabrice Tourre (the type of guy, by the way, who has all the risks in our economy and financial system under control, so no need to worry…just keep buying stocks and “betting on America,” but I digress), “GSC had declined given their negative views on most of the credits that Paulson had selected.” When GSC passed, ACA took up the task of…well, we don’t really know at this point. (See the latter section of my 4/27 post “HAVE YOU NO SENSE OF DECENCY, SIR?”)
Clearly, GSC’s taking a pass is interesting, but not as interesting as an earlier revelation that Paulson & Co. approached Bear Stearns to do what became the Abacus deal but Bear turned Paulson down for reasons that are not entirely clear but that had to do with risk and concern for the impact of the deal on its clients. When Bear refused, Goldman took the deal.
Now, a few caveats. First, I have been away from active participation in the markets for almost twenty years, and maybe Bear changed a great deal in the time between the stage of my career during which I was slinging junk bonds around and the firm’s demise a few years ago. Second, two of my favorite people in the world, or certainly in the money business, worked at Bear Stearns at one stage or another of their careers, one for almost all of his. (One of my regrets about no longer being “in the business” is my having lost touch with both these guys, though I remained in touch with one of them even after I was only tangentially involved in the business, but, again, I digress.) All that having been said, to those who dealt with the Bear during much of its storied history, hearing that Bear turned the deal down is perhaps the reddest of red flags. This would be akin to former 10th Ward Alderman and current convicted felon Ed Vrdolyak not getting involved in a real estate deal because he felt it was unethical.
--One does not have to be too cynical to think that Wednesday’s Goldman hearings, for all their historic import, were little more than yet another extortion attempt on the part of our public servants in the U.S. Senate. Goldman has been exceedingly generous with the political types. Since 1989, Goldman has been the largest corporate contributor to the Democratic party, providing a total of $20.3 million to the party of the people, according to the Center for Responsive Politics. Goldman employees gave community organizer Barack Obama $1mm for his presidential campaign. Lest any readers think I am, or Goldman is, is being partisan, the Republicans have reaped nearly as much largesse from Goldman over the years. But maybe it’s not enough; maybe our Senators want more and are merely showing Goldman what they could avoid if they only pay a little more protection money. And the message certainly has not been lost on Goldman’s Street colleagues: Do you also want to be harangued by a pack of hyenas with the financial knowledge of fifth graders? Well, pay up and maybe you’ll have no trouble.
It seems to have worked; note an upcoming (next Monday) fundraiser for Senators Kirsten Gillenbrand and Chris Dodd at a private Park Avenue residence of a Wall Streeter. $19,800 will let one achieve “host” status for “a political discussion” with these two estimables.
Lest anyone think that Goldman is an innocent victim here, like young Vito Corleone’s employer who was forced to hire Fanucci’s ne’er-do-well nephew, please don’t get that impression. Goldman seems to enjoy buying influence; it appears to be a vital part of its business model.
--One also does not have to be too cynical to think that these hearings were just a massive effort to get Republicans onboard for the financial reform bill being cooked up by the Dems in Congress and the Obama administration. This, too, seems to have worked. Do you really think that it was the flushing of the $50 billion bailout escrow fund that brought the GOP onboard? Of course not; the Republicans came onboard when the rage of their constituents was stoked by Lloyd Blankfein’s stumbling, yet still arrogant, performance under the grilling of Carl Levin and Company.
--One further does not have to be too cynical to think that these hearings were yet another attempt to absolve the American public in general for any culpability for the recession and near financial meltdown from which the likes of Fabrice Tourre are currently rescuing us. Sure, Goldman, and all of Wall Street, had a role in that financial fiasco. But the “crisis” had its roots in Americans’, and I might even say most Americans, borrowing too much money in order to finance a lifestyle to which they felt they were somehow entitled. There may have been many dark forces at work here (See my 4/22 post “TRY A LITTLE PROPAGANDA ON THEM”), but, ultimately, it is the people who borrowed too much money to buy things they couldn’t afford in order to impress people about whom they really didn’t care who are at least as culpable as anybody else, including the firms that provided the financial equivalent of heroin the people were craving.
--And how do I feel about the financial regulation bill? True to my overriding philosophy, I think such further regulation is completely unnecessary, unwarranted, and potentially dangerous. If the government would stay nearly completely uninvolved and let the Wall Street firms and the banks bear the consequences of their actions, we wouldn’t have had the problems from which the Wall Street Wizards are currently extricating us, according to the company line being blared in the financial media. That is, if the government didn’t insist on socializing the downside, these guys wouldn’t be taking the risks they are currently taking. A reversion to the partnership structure that prevailed on Wall Street when things worked, and worked not only for Wall Street, as Michael Lewis has suggested, would also help. But simply letting Wall Street bear the brunt of the downside of its risky bets would put things in order quite quickly. Regulation won’t work; Wall Street people are smarter, and better incentivized, than the regulators.
INTERNATIONALIZING LILLY LIVERED LILLIPUTIANISM
4/29/10
In what CBS news described as an episode of “blowing his top,” British Prime Minister Gordon Brown, thinking he was safely out of microphone range, described a questioner as “a bigoted woman.” The woman confronted Mr. Brown on the campaign trail about the huge influx of foreign workers in Great Britain and Mr. Brown felt his aides should have protected him from such questioning. Upon being discovered, Mr. Brown delivered the now familiar mea culpas, going so far as to describe himself as a “penitent sinner.”
First, “blowing his top”? It seems only in Britain could a relatively calm designation of a person as “bigoted” be considered blowing one’s top.
Second, why the need to apologize? Maybe the woman was expressing a legitimate concern or maybe she was just a bigot; for these purposes, it doesn’t matter. If Mr. Brown thought she was a bigot, why didn’t he just say so in public, or at least not cower when discovered expressing such an opinion in private? Why do politicians feel the need to apologize for what they truly feel? Why do they need protection from those who might challenge them? Is holding political office so very vital to the typical politician’s continued existence that he must emasculate and prostrate himself before anyone capable of expressing a negative opinion about him? If I were given to use of profane language, I’d ask if any of these political types have a pair. If they did, and they displayed them (figuratively, of course), perhaps they’d get credit for having the courage of their convictions.
In what CBS news described as an episode of “blowing his top,” British Prime Minister Gordon Brown, thinking he was safely out of microphone range, described a questioner as “a bigoted woman.” The woman confronted Mr. Brown on the campaign trail about the huge influx of foreign workers in Great Britain and Mr. Brown felt his aides should have protected him from such questioning. Upon being discovered, Mr. Brown delivered the now familiar mea culpas, going so far as to describe himself as a “penitent sinner.”
First, “blowing his top”? It seems only in Britain could a relatively calm designation of a person as “bigoted” be considered blowing one’s top.
Second, why the need to apologize? Maybe the woman was expressing a legitimate concern or maybe she was just a bigot; for these purposes, it doesn’t matter. If Mr. Brown thought she was a bigot, why didn’t he just say so in public, or at least not cower when discovered expressing such an opinion in private? Why do politicians feel the need to apologize for what they truly feel? Why do they need protection from those who might challenge them? Is holding political office so very vital to the typical politician’s continued existence that he must emasculate and prostrate himself before anyone capable of expressing a negative opinion about him? If I were given to use of profane language, I’d ask if any of these political types have a pair. If they did, and they displayed them (figuratively, of course), perhaps they’d get credit for having the courage of their convictions.
Tuesday, April 27, 2010
“HAVE YOU NO SENSE OF DECENCY, SIR?”
4/27/10
I told my son today as we drove home from his soccer practice that his children will read about today’s testimony in their history books. Being 11, and a more normal 11 year old than his father was in 1968, he didn’t care that much. I, however, found the hearings fascinating, providing plenty of grist for a follow-up to my 4/19/10 post HE THAT PLAYS WITH GOLDMAN MAKES THE RULES.
Many times in the course of the hearings and the CNBC post game show, Blankfein and the other Goldman witnesses, and such CNBC estimables as Jim Cramer and Larry Kudlow, made the perfectly logical point that whenever someone sells a security, whether the seller is an Wall Street firm, a local trader, a sophisticated investor, or a not so sophisticated investor, he is taking the other side of the trade from the buyer. Cramer and Kudlow made the point derisively, as if this were a concept so simple that even a Senator should be able to get it. Clearly, it is an obvious point, but consider two things.
First, the smaller, and equally obvious point. Yes, a seller is by definition on the other side of a trade from a buyer. But that one trade says nothing about the seller’s overall position. A seller could be selling a small portion of his long position, leaving himself net long or he could be shorting a security, leaving himself net short. It makes a difference. A particular trade says nothing about that trader’s overall position. However, in any case, it would not seem that the seller’s overall position needs to be disclosed to the buyer. Cramer, Kudlow, Blankfein, etc. are doubtless right on this point.
Second, the more important point. We are not talking about any seller here, but an underwriter. In fact, when one of the senators (And it may have been Levin but I was either in the car or looking elsewhere; I only got the audio, but it doesn’t matter for these purposes.) quoted a senator who was involved in the hearings in the ‘30s about the causes of the Great Depression, that quote from the ‘30s specifically cited the “underwriter” of securities, not just any seller or not just any dealer. If an investment banker is underwriting securities, should that firm be simultaneously shorting the securities it is promoting to the public? One can understand a small and temporary short, which I understand is common in oversubscribed issues, to partially or completely fill customer orders. One can also understand a small, temporary short in order to make a market in securities a firm has underwritten. But a large, long term net short is another story, a bet against the very securities the investment banker is underwriting.
What this all has to do with the Abacus deal is not clear. Goldman underwrote the deal but ended up net long when it couldn’t sell the whole position. It was Paulson, not Goldman, who was effectively shorting the deal by going long the protection. I guess one could argue, as some senators seemed to be arguing, that one should not be underwriting any CDOs while being net short the mortgage market, but that is a stretch. That would almost be like saying that an underwriter of junk bonds should not be shorting any junk bonds, which would make no sense at all.
Another observation on the Abacus deal…
It is becoming even clearer that ACA’s role is the key here. ACA at least nominally assembled Abacus. The SEC alleges that ACA was little more than a cover story, that, indeed, it was Paulson who assembled the CDO with ACA as the financial equivalent of a codpiece. But ACA wound up losing substantial money from a long position in Abacus, and a long position that was completely volitional, unlike Goldman’s long position. This allegation thus doesn’t make a lot of sense, at least on its face. Why would ACA accede to stuffing a CDO in which it intended to take a long position with securities that would assure that CDO’s demise? It seems clear, as I said in my 4/19/10 post HE THAT PLAYS WITH GOLDMAN MAKES THE RULES, that ACA was not some kind of co-conspirator. Was ACA another victim in this situation, a witless dupe, deceived every step of the way by Goldman and Paulson? Or did ACA legitimately put together a portfolio in which it had enough confidence to take a substantial long position but was just wrong on the market, with no excuses given its expertise in the CDO markets? Goldman obviously, argues the latter, and cites ACA’s rejecting numerous Paulson suggestions for inclusion in the portfolio as evidence. If the latter is true , there is much adieu here about very little. If the former is true, who really put the portfolio together while letting ACA think it was in charge? The only answers would be Paulson & Co. (which made a bundle on its effective short in Abacus and fully intended to do so), Goldman, or some combination of the two. If that is the case, and Goldman, Abacus’s underwriter, did not disclose Paulson’s, or its own, role, then Goldman has a problem.
I told my son today as we drove home from his soccer practice that his children will read about today’s testimony in their history books. Being 11, and a more normal 11 year old than his father was in 1968, he didn’t care that much. I, however, found the hearings fascinating, providing plenty of grist for a follow-up to my 4/19/10 post HE THAT PLAYS WITH GOLDMAN MAKES THE RULES.
Many times in the course of the hearings and the CNBC post game show, Blankfein and the other Goldman witnesses, and such CNBC estimables as Jim Cramer and Larry Kudlow, made the perfectly logical point that whenever someone sells a security, whether the seller is an Wall Street firm, a local trader, a sophisticated investor, or a not so sophisticated investor, he is taking the other side of the trade from the buyer. Cramer and Kudlow made the point derisively, as if this were a concept so simple that even a Senator should be able to get it. Clearly, it is an obvious point, but consider two things.
First, the smaller, and equally obvious point. Yes, a seller is by definition on the other side of a trade from a buyer. But that one trade says nothing about the seller’s overall position. A seller could be selling a small portion of his long position, leaving himself net long or he could be shorting a security, leaving himself net short. It makes a difference. A particular trade says nothing about that trader’s overall position. However, in any case, it would not seem that the seller’s overall position needs to be disclosed to the buyer. Cramer, Kudlow, Blankfein, etc. are doubtless right on this point.
Second, the more important point. We are not talking about any seller here, but an underwriter. In fact, when one of the senators (And it may have been Levin but I was either in the car or looking elsewhere; I only got the audio, but it doesn’t matter for these purposes.) quoted a senator who was involved in the hearings in the ‘30s about the causes of the Great Depression, that quote from the ‘30s specifically cited the “underwriter” of securities, not just any seller or not just any dealer. If an investment banker is underwriting securities, should that firm be simultaneously shorting the securities it is promoting to the public? One can understand a small and temporary short, which I understand is common in oversubscribed issues, to partially or completely fill customer orders. One can also understand a small, temporary short in order to make a market in securities a firm has underwritten. But a large, long term net short is another story, a bet against the very securities the investment banker is underwriting.
What this all has to do with the Abacus deal is not clear. Goldman underwrote the deal but ended up net long when it couldn’t sell the whole position. It was Paulson, not Goldman, who was effectively shorting the deal by going long the protection. I guess one could argue, as some senators seemed to be arguing, that one should not be underwriting any CDOs while being net short the mortgage market, but that is a stretch. That would almost be like saying that an underwriter of junk bonds should not be shorting any junk bonds, which would make no sense at all.
Another observation on the Abacus deal…
It is becoming even clearer that ACA’s role is the key here. ACA at least nominally assembled Abacus. The SEC alleges that ACA was little more than a cover story, that, indeed, it was Paulson who assembled the CDO with ACA as the financial equivalent of a codpiece. But ACA wound up losing substantial money from a long position in Abacus, and a long position that was completely volitional, unlike Goldman’s long position. This allegation thus doesn’t make a lot of sense, at least on its face. Why would ACA accede to stuffing a CDO in which it intended to take a long position with securities that would assure that CDO’s demise? It seems clear, as I said in my 4/19/10 post HE THAT PLAYS WITH GOLDMAN MAKES THE RULES, that ACA was not some kind of co-conspirator. Was ACA another victim in this situation, a witless dupe, deceived every step of the way by Goldman and Paulson? Or did ACA legitimately put together a portfolio in which it had enough confidence to take a substantial long position but was just wrong on the market, with no excuses given its expertise in the CDO markets? Goldman obviously, argues the latter, and cites ACA’s rejecting numerous Paulson suggestions for inclusion in the portfolio as evidence. If the latter is true , there is much adieu here about very little. If the former is true, who really put the portfolio together while letting ACA think it was in charge? The only answers would be Paulson & Co. (which made a bundle on its effective short in Abacus and fully intended to do so), Goldman, or some combination of the two. If that is the case, and Goldman, Abacus’s underwriter, did not disclose Paulson’s, or its own, role, then Goldman has a problem.
Monday, April 26, 2010
ROCK OF AGES
4/26/10
A good friend sent along an e-mail that is in wide circulation entitled
“WHAT A BEAUTIFUL WRITE UP ON CATHOLICS -Jewish Sam Miller on Catholics”
You’ve probably seen it. In general, it is a terrific e-mail, in which Mr. Miller points out all the good works that the Church does, citing specifically its efforts in education and health care. Mr. Miller does not mention, though he easily could have, the Church’s ongoing efforts among the poor.
The e-mail does cite at least one questionable statistic, to wit:
“ Meanwhile, 1.7% of the Catholic clergy has been found guilty of pedophilia. 10% of the Protestant ministers have been found guilty of pedophilia. This is not a Catholic Problem.”
Hmm…
Mr. Miller cites no source, but, even if we assume that the above statistic was not cut out of whole cloth, there are problems with it. Note the operative term is “found guilty.” If there indeed is such a disparity in the incidence of convictions for pedophilia between Protestant and Catholic clergy, much of it may arise because of the continual and apparently strident efforts of the Catholic Church hierarchy to cover up pedophilia among Catholic clergy. Thus, Mr. Miller’s e-mail may have the unintended effect of reinforcing the charges of cover-up being made against the Church hierarchy.
Further, even if the above statistic is true, the act of pedophilia is one crime, and one that does not seem to have been committed, except in very rare instances (e.g., Bishop Roger Vangheluwe of Bruges, Belgium, who admitted sexually abusing a boy in the ‘90s), by the Church hierarchy (for these purposes, bishops and above). But it is another, related crime, the cover-up of pedophilia, and the enabling of pedophilia by keeping pervert priests in positions in which they have access to children, that is the sin of the hierarchy. And even if only 1.7% of the Catholic clergy has been found guilty of pedophilia (a statistic with which I have little problem; what makes Mr. Miller’s citation unbelievable is its “10% of Protestant clergy” claim and what makes it irrelevant, at best, is the clever use of the terminology “found guilty”), a much larger percentage of the hierarchy is guilty of covering up and enabling the ghastly crime of pedophilia.
All that having been written, Mr. Miller has made some great points that need to be made and he has this Catholic’s gratitude. My response to my friend who sent me the e-mail is worth sharing with my readers, and so I have reproduced its essence below:
No one does more good for more people than the Catholic Church, which, as a church, is far more than its hierarchy. That the Church does so much good is only one of the reasons that it is worth protecting from the people who run it. That it is a divinely inspired institution is the reason that it will survive the incompetence, obtuseness, and, in some cases, misogynistic and misanthropic tendencies and actions of some in the hierarchy.
A good friend sent along an e-mail that is in wide circulation entitled
“WHAT A BEAUTIFUL WRITE UP ON CATHOLICS -Jewish Sam Miller on Catholics”
You’ve probably seen it. In general, it is a terrific e-mail, in which Mr. Miller points out all the good works that the Church does, citing specifically its efforts in education and health care. Mr. Miller does not mention, though he easily could have, the Church’s ongoing efforts among the poor.
The e-mail does cite at least one questionable statistic, to wit:
“ Meanwhile, 1.7% of the Catholic clergy has been found guilty of pedophilia. 10% of the Protestant ministers have been found guilty of pedophilia. This is not a Catholic Problem.”
Hmm…
Mr. Miller cites no source, but, even if we assume that the above statistic was not cut out of whole cloth, there are problems with it. Note the operative term is “found guilty.” If there indeed is such a disparity in the incidence of convictions for pedophilia between Protestant and Catholic clergy, much of it may arise because of the continual and apparently strident efforts of the Catholic Church hierarchy to cover up pedophilia among Catholic clergy. Thus, Mr. Miller’s e-mail may have the unintended effect of reinforcing the charges of cover-up being made against the Church hierarchy.
Further, even if the above statistic is true, the act of pedophilia is one crime, and one that does not seem to have been committed, except in very rare instances (e.g., Bishop Roger Vangheluwe of Bruges, Belgium, who admitted sexually abusing a boy in the ‘90s), by the Church hierarchy (for these purposes, bishops and above). But it is another, related crime, the cover-up of pedophilia, and the enabling of pedophilia by keeping pervert priests in positions in which they have access to children, that is the sin of the hierarchy. And even if only 1.7% of the Catholic clergy has been found guilty of pedophilia (a statistic with which I have little problem; what makes Mr. Miller’s citation unbelievable is its “10% of Protestant clergy” claim and what makes it irrelevant, at best, is the clever use of the terminology “found guilty”), a much larger percentage of the hierarchy is guilty of covering up and enabling the ghastly crime of pedophilia.
All that having been written, Mr. Miller has made some great points that need to be made and he has this Catholic’s gratitude. My response to my friend who sent me the e-mail is worth sharing with my readers, and so I have reproduced its essence below:
No one does more good for more people than the Catholic Church, which, as a church, is far more than its hierarchy. That the Church does so much good is only one of the reasons that it is worth protecting from the people who run it. That it is a divinely inspired institution is the reason that it will survive the incompetence, obtuseness, and, in some cases, misogynistic and misanthropic tendencies and actions of some in the hierarchy.
Saturday, April 24, 2010
“SOME PEOPLE GET THEIR KICKS…STOMPIN’ ON A DREAM…”
4/25/10
So the saga of the tax returns of Bill Brady, GOP candidate for Illinois governor, continues. (See my two 4/21/10 posts, DON’T SHOW ME YOURS AND I WON’T SHOW YOU MINE and IXNAY ON THAT LAST MESSAGE.) Mr. Brady caved in to pressure from Governor Pat Quinn (Caving into “pressure” from the likes of Pat Quinn (no relation) is almost enough to disqualify one perhaps not from public office in these times when a degree of poltroonishness seems to be a prerequisite for political office, but certainly from being taken seriously. That, however, is another issue.) and released his tax returns, albeit briefly.
Mr. Brady’s returns showed that he paid no federal income taxes for 2008 and 2009 due to a disastrous 2008 for his construction business and a provision in the Obama stimulus package, a provision that was not by any means a radical departure from established tax law, that allows carryforwards of business losses to subsequent profitable tax years.
Predictably, Governor Quinn and his accomplices were all over this piece of information. Mica Matsoff, a Quinn spokeswoman, opined
“The original Tea Party’s rallying cry was ‘no taxation without representation.’ Apparently, Senator Brady misinterpreted this line as ‘no taxation for elected representatives.’”
The Governor himself castigated State Senator Brady for failing to pay “his fair share.”
At the risk of sounding impolitic, all I can say in response to Mr. Quinn’s latest baying is “What a dope,” or, more temperately, “What a disingenuous windbag.” Mr. Brady paid no federal income taxes because he actually invested his own money, started a business, employed lots of people, put his own financial well being on the line, and lost a lot of money in a down economy. He had the guts to actually go out there and provide a product that people wanted so much they were willing to pay for it, a concept completely unfamiliar to those who make their livings (How can I put his nicely?), er, living off the public treasury. If Senator Brady, rather than operating a business, merely went to work for the government full time and drew a paycheck from the taxpayers, he, like Governor Quinn, whose familiarity with real work is at best transitory and in the distant past, would have paid income taxes. But a lot of people wouldn’t be in the homes they currently occupy and a lot of people wouldn’t be putting food on their families’ tables.
Perhaps in Governor Quinn’s febrile designs for the perfect world, we should all go to work for the government or a fat and happy mega-corporation that draws most of its sustenance from its “relationships” with the leeches that make a career out of “public service.” But small business people’s taking big risks made America great once upon a time and if there is any hope for our economic future, it lies in the continuation of the entrepreneurial spirit. Without the willingness of entrepreneurs to take risks and chase dreams, our economy would grind to a halt and the public till would run dry. Then whence would these estimables draw their substantial public salaries?
So the saga of the tax returns of Bill Brady, GOP candidate for Illinois governor, continues. (See my two 4/21/10 posts, DON’T SHOW ME YOURS AND I WON’T SHOW YOU MINE and IXNAY ON THAT LAST MESSAGE.) Mr. Brady caved in to pressure from Governor Pat Quinn (Caving into “pressure” from the likes of Pat Quinn (no relation) is almost enough to disqualify one perhaps not from public office in these times when a degree of poltroonishness seems to be a prerequisite for political office, but certainly from being taken seriously. That, however, is another issue.) and released his tax returns, albeit briefly.
Mr. Brady’s returns showed that he paid no federal income taxes for 2008 and 2009 due to a disastrous 2008 for his construction business and a provision in the Obama stimulus package, a provision that was not by any means a radical departure from established tax law, that allows carryforwards of business losses to subsequent profitable tax years.
Predictably, Governor Quinn and his accomplices were all over this piece of information. Mica Matsoff, a Quinn spokeswoman, opined
“The original Tea Party’s rallying cry was ‘no taxation without representation.’ Apparently, Senator Brady misinterpreted this line as ‘no taxation for elected representatives.’”
The Governor himself castigated State Senator Brady for failing to pay “his fair share.”
At the risk of sounding impolitic, all I can say in response to Mr. Quinn’s latest baying is “What a dope,” or, more temperately, “What a disingenuous windbag.” Mr. Brady paid no federal income taxes because he actually invested his own money, started a business, employed lots of people, put his own financial well being on the line, and lost a lot of money in a down economy. He had the guts to actually go out there and provide a product that people wanted so much they were willing to pay for it, a concept completely unfamiliar to those who make their livings (How can I put his nicely?), er, living off the public treasury. If Senator Brady, rather than operating a business, merely went to work for the government full time and drew a paycheck from the taxpayers, he, like Governor Quinn, whose familiarity with real work is at best transitory and in the distant past, would have paid income taxes. But a lot of people wouldn’t be in the homes they currently occupy and a lot of people wouldn’t be putting food on their families’ tables.
Perhaps in Governor Quinn’s febrile designs for the perfect world, we should all go to work for the government or a fat and happy mega-corporation that draws most of its sustenance from its “relationships” with the leeches that make a career out of “public service.” But small business people’s taking big risks made America great once upon a time and if there is any hope for our economic future, it lies in the continuation of the entrepreneurial spirit. Without the willingness of entrepreneurs to take risks and chase dreams, our economy would grind to a halt and the public till would run dry. Then whence would these estimables draw their substantial public salaries?
Thursday, April 22, 2010
“TRY A LITTLE PROPAGANDA ON THEM”
4/22/10
I heartily recommend that my readers see David Wessel’s page A2 article in today’s (i.e., Thursday, 4/22’s) Wall Street Journal entitled “Mapping Fault Lines of Crisis.” Mr. Wessel introduces the reader to University of Chicago economist Raghuram Rajan who has a three pronged explanation, which is among the best I’ve read, for the economic “crisis” from which we are supposedly emerging.
Particularly interesting to me was the first prong of Dr. Rajan’s argument, to wit:
“As incomes at the top soared, politicians responded to middle class angst about stagnant wages and insecurity over jobs and health insurance. Since they couldn’t raise incomes—Mr. Rajan is in the camp that sees better education as the only cure and that takes time—politicians of both parties gave constituents more to spend by fostering an explosion of credit, especially for housing.”
Dr. Rajan’s argument is in general line with one I have been making for years. Middle class incomes (not necessarily household incomes, which have been bolstered, some might say artificially, by the growth to dominance of the two income household, but, rather, real wages) have been stagnant, at best, for about the last twenty years. Meanwhile, incomes at the top of the income distribution have soared. This disparity has come about for some reasons that have their roots in the operation of the free market (e.g., globalization, higher returns to education in a post-industrial economy) and for some reasons that don’t (e.g., the growth of government and the attendant importance of government contracts that go to politically favored companies, the bipartisan, nearly religious, genuflection to globalization without regard to its secondary and tertiary consequences and ultimate ramifications, apathetic, conflicted, and/or stacked corporate boards that have stood by while executive compensation has soared to a point at which it has become nearly completely divorced from the underlying economics of rational compensation structures).
Whatever the reason, the top has done very well and the income disparity has become gaping under (surprise!) both Democratic and Republican administrations. Even the most vacuous politician recognizes that growing income and wealth disparities are not good for society. So what can be done? Given the vestiges of a free market economy, as opposed to a stacked deck, that remain in this country, the politicians’ latitude is constrained. Efforts to restrain incomes at the top are, for the most part, ill-advised economically and, in almost all cases, ill-advised politically, especially when it is those with higher income types who bankroll both parties. Efforts to bolster incomes at the bottom and in the middle are difficult and, as Dr. Rajan points out, take time. Further, the kinds of schemes to bolster lower and middle class incomes that are within the limited scope of the economic understanding of the typical politician are almost always ill-advised.
So how did the political structure respond to an increasingly disgruntled population that was about to see its lifestyle severely restrained while those at the top, most of whom apparently have even less discretion than they do class or maturity, lorded over the populace with a gauche and tone deaf display of the incomes they had managed to attain largely through a degree of coziness with those who make the rules? It seemed so simple—make debt widely and easily available to the middle class so that they could attain the trappings of wealth, a Potemkin prosperity, if you will by simply overleveraging their stagnating real incomes. That way, those at the top could continue to shamelessly display the trappings of their wealth without making the middle class feel that it missed the entire party. And defenders of the current system could respond to those who voiced concern about the growing income disparities with a blithe “What do you mean the system isn’t working? The middle class is living better than it ever has!” Sure it is…because it’s leveraged to a degree that would make previous generations wretch and heave before keeling over in cardiac arrest.
It was brilliant…until it wasn’t.
Now that so much of this debt has come a cropper, if you will, the government is making prodigious efforts, through various default avoidance programs and the like, to relieve borrowers, the overwhelming majority of which are middle class (and often pretending not to be) of the obligation to repay their debts. In effect, then, the government’s current policies are a massive subsidy to the indebted middle class that was made necessary by the government’s massive subsidy to upper income types, both of which were and are being effectively financed by the saving middle class (through lower returns on savings and inevitable higher taxes), which, as usual, gets kicked in the teeth…for its own good, of course.
I heartily recommend that my readers see David Wessel’s page A2 article in today’s (i.e., Thursday, 4/22’s) Wall Street Journal entitled “Mapping Fault Lines of Crisis.” Mr. Wessel introduces the reader to University of Chicago economist Raghuram Rajan who has a three pronged explanation, which is among the best I’ve read, for the economic “crisis” from which we are supposedly emerging.
Particularly interesting to me was the first prong of Dr. Rajan’s argument, to wit:
“As incomes at the top soared, politicians responded to middle class angst about stagnant wages and insecurity over jobs and health insurance. Since they couldn’t raise incomes—Mr. Rajan is in the camp that sees better education as the only cure and that takes time—politicians of both parties gave constituents more to spend by fostering an explosion of credit, especially for housing.”
Dr. Rajan’s argument is in general line with one I have been making for years. Middle class incomes (not necessarily household incomes, which have been bolstered, some might say artificially, by the growth to dominance of the two income household, but, rather, real wages) have been stagnant, at best, for about the last twenty years. Meanwhile, incomes at the top of the income distribution have soared. This disparity has come about for some reasons that have their roots in the operation of the free market (e.g., globalization, higher returns to education in a post-industrial economy) and for some reasons that don’t (e.g., the growth of government and the attendant importance of government contracts that go to politically favored companies, the bipartisan, nearly religious, genuflection to globalization without regard to its secondary and tertiary consequences and ultimate ramifications, apathetic, conflicted, and/or stacked corporate boards that have stood by while executive compensation has soared to a point at which it has become nearly completely divorced from the underlying economics of rational compensation structures).
Whatever the reason, the top has done very well and the income disparity has become gaping under (surprise!) both Democratic and Republican administrations. Even the most vacuous politician recognizes that growing income and wealth disparities are not good for society. So what can be done? Given the vestiges of a free market economy, as opposed to a stacked deck, that remain in this country, the politicians’ latitude is constrained. Efforts to restrain incomes at the top are, for the most part, ill-advised economically and, in almost all cases, ill-advised politically, especially when it is those with higher income types who bankroll both parties. Efforts to bolster incomes at the bottom and in the middle are difficult and, as Dr. Rajan points out, take time. Further, the kinds of schemes to bolster lower and middle class incomes that are within the limited scope of the economic understanding of the typical politician are almost always ill-advised.
So how did the political structure respond to an increasingly disgruntled population that was about to see its lifestyle severely restrained while those at the top, most of whom apparently have even less discretion than they do class or maturity, lorded over the populace with a gauche and tone deaf display of the incomes they had managed to attain largely through a degree of coziness with those who make the rules? It seemed so simple—make debt widely and easily available to the middle class so that they could attain the trappings of wealth, a Potemkin prosperity, if you will by simply overleveraging their stagnating real incomes. That way, those at the top could continue to shamelessly display the trappings of their wealth without making the middle class feel that it missed the entire party. And defenders of the current system could respond to those who voiced concern about the growing income disparities with a blithe “What do you mean the system isn’t working? The middle class is living better than it ever has!” Sure it is…because it’s leveraged to a degree that would make previous generations wretch and heave before keeling over in cardiac arrest.
It was brilliant…until it wasn’t.
Now that so much of this debt has come a cropper, if you will, the government is making prodigious efforts, through various default avoidance programs and the like, to relieve borrowers, the overwhelming majority of which are middle class (and often pretending not to be) of the obligation to repay their debts. In effect, then, the government’s current policies are a massive subsidy to the indebted middle class that was made necessary by the government’s massive subsidy to upper income types, both of which were and are being effectively financed by the saving middle class (through lower returns on savings and inevitable higher taxes), which, as usual, gets kicked in the teeth…for its own good, of course.
Wednesday, April 21, 2010
IXNAY ON THAT LAST MESSAGE
4/21/10
I should have known better than to give any politician even an inkling of credit. (See my last (or next, depending on your perspective) post “DON’T SHOW ME YOURS AND I WON’T SHOW YOU MINE,” with today’s publication date.) Today’s paper (I didn’t get to the local papers, other than the Emanuel stories, until early this evening.) reports that GOP candidate for governor, State Senator Bill Brady, has caved in to pressure from, of all people, Governor Quinn and Sheila Simon, and decided that he will release his tax returns, thus showing that Bill Brady is as lily-livered as any of the barnacles on the ship of state who seek high office. They are indeed all the same; it seems like the mere act of seeking public office should disqualify one from public office.
Let’s hope no one asks Brady to disrobe in public. (Again, see today’s other post “DON’T SHOW ME YOURS AND I WON’T SHOW YOU MINE.”)
I should have known better than to give any politician even an inkling of credit. (See my last (or next, depending on your perspective) post “DON’T SHOW ME YOURS AND I WON’T SHOW YOU MINE,” with today’s publication date.) Today’s paper (I didn’t get to the local papers, other than the Emanuel stories, until early this evening.) reports that GOP candidate for governor, State Senator Bill Brady, has caved in to pressure from, of all people, Governor Quinn and Sheila Simon, and decided that he will release his tax returns, thus showing that Bill Brady is as lily-livered as any of the barnacles on the ship of state who seek high office. They are indeed all the same; it seems like the mere act of seeking public office should disqualify one from public office.
Let’s hope no one asks Brady to disrobe in public. (Again, see today’s other post “DON’T SHOW ME YOURS AND I WON’T SHOW YOU MINE.”)
DON’T SHOW ME YOURS AND I WON’T SHOW YOU MINE
4/21/10
This morning’s news reported that Illinois State Treasurer, U.s. senate candidate, and failed banker Alexi Giannoulias has filed for an extension on his 2009 tax return and thus cannot make his yet to be filed return public. His senatorial opponent, the thoroughly conventional Mark Kirk, has lambasted Mr. Giannoulias for this oversight, or tactic, indicating that Mr. Giannoulias must have something to hide, and hinting that that something probably involves the Giannoulias family owned Broadway Bank, which, as readers of this blog know, has taken on many characteristics of a den of iniquity. Mr. Kirk also indicates that Mr. Giannoulias’s failing to file his personal tax returns says plenty about the financial acumen of the man who is Treasurer and would be senator, as if more evidence of Mr. Giannoulias’s lack of financial skill were needed.
I find myself in the rare position of defending Mr. Giannoulias in this instance. Given the troubles at Broadway and their implications for the taxes of the principals at that institution, it is perfectly understandable that he might have been unable to file his return in a timely manner. He probably is not trying to hide anything and will make his return public as soon as it is filed; after all, he is as unimaginative and banal as Mr. Kirk.
What Mr. Giannoulias’s temporary failure to disclose his personal tax return does highlight is the courage and freshness of the GOP candidate for Illinois Governor, State Senator Bill Brady. Mr. Brady has refused to release his tax returns and stated that he has no intention of doing so. He has filed his financial disclosure forms as a state senator. Everything that the voters need to know is in those forms; there is nothing new in his tax return. His tax returns are, he seems to be saying, none of the voters’ business and he is under no obligation to whet the voyeuristic tendencies of the media.
Finally, we have in Bill Brady, someone with the guts to stand up and say that running for public office does not mean that one forfeits all rights to privacy. Asking someone to share something as intimate as one’s tax return is the financial equivalent of asking someone to take off one’s clothes. Such revelations are not to be made to anyone who expresses a desire to be the recipient thereof but only to those who absolutely need such information and/or with whom we have some burning personal desire to share such information. One suspects, though, that if the media were to ask our candidates for public office to disrobe in public or risk losing an election, our dull thinking, power and adulation obsessed politicians would willingly comply “for the good of the people.” Thank the good Lord, in the cases of most of our aspiring public servants, that the media have expressed no such desires. And thank the good Lord for someone, like Bill Brady, who has the courage to say that certain things are private and will remain private despite the Pavlovian responses of such meretricious politicians as Mark Kirk, Alexi Giannoulias (eventually), and Pat Quinn to whatever outrageous requests the media make at election time.
This morning’s news reported that Illinois State Treasurer, U.s. senate candidate, and failed banker Alexi Giannoulias has filed for an extension on his 2009 tax return and thus cannot make his yet to be filed return public. His senatorial opponent, the thoroughly conventional Mark Kirk, has lambasted Mr. Giannoulias for this oversight, or tactic, indicating that Mr. Giannoulias must have something to hide, and hinting that that something probably involves the Giannoulias family owned Broadway Bank, which, as readers of this blog know, has taken on many characteristics of a den of iniquity. Mr. Kirk also indicates that Mr. Giannoulias’s failing to file his personal tax returns says plenty about the financial acumen of the man who is Treasurer and would be senator, as if more evidence of Mr. Giannoulias’s lack of financial skill were needed.
I find myself in the rare position of defending Mr. Giannoulias in this instance. Given the troubles at Broadway and their implications for the taxes of the principals at that institution, it is perfectly understandable that he might have been unable to file his return in a timely manner. He probably is not trying to hide anything and will make his return public as soon as it is filed; after all, he is as unimaginative and banal as Mr. Kirk.
What Mr. Giannoulias’s temporary failure to disclose his personal tax return does highlight is the courage and freshness of the GOP candidate for Illinois Governor, State Senator Bill Brady. Mr. Brady has refused to release his tax returns and stated that he has no intention of doing so. He has filed his financial disclosure forms as a state senator. Everything that the voters need to know is in those forms; there is nothing new in his tax return. His tax returns are, he seems to be saying, none of the voters’ business and he is under no obligation to whet the voyeuristic tendencies of the media.
Finally, we have in Bill Brady, someone with the guts to stand up and say that running for public office does not mean that one forfeits all rights to privacy. Asking someone to share something as intimate as one’s tax return is the financial equivalent of asking someone to take off one’s clothes. Such revelations are not to be made to anyone who expresses a desire to be the recipient thereof but only to those who absolutely need such information and/or with whom we have some burning personal desire to share such information. One suspects, though, that if the media were to ask our candidates for public office to disrobe in public or risk losing an election, our dull thinking, power and adulation obsessed politicians would willingly comply “for the good of the people.” Thank the good Lord, in the cases of most of our aspiring public servants, that the media have expressed no such desires. And thank the good Lord for someone, like Bill Brady, who has the courage to say that certain things are private and will remain private despite the Pavlovian responses of such meretricious politicians as Mark Kirk, Alexi Giannoulias (eventually), and Pat Quinn to whatever outrageous requests the media make at election time.
Tuesday, April 20, 2010
“I’M SMART, MIKEY, SMART…NOT LIKE EVERYBODY SAYS…”
4/20/10
An e-mail from one of my college buddies prompted me to do something I wanted to do but hadn’t yet gotten around to doing; i.e., commenting on Rahm Emanuel’s stated desire to run for mayor of Chicago:
I think Rahm is serious. I've posted a couple blog entries on this point in the past. (See my 12/23/09 (“I CAN TELL BY THE WAY YOU DRESS THAT YOU ARE A REAL COWBOY”) and 12/13/08 (“I TRUST THESE MEN WITH MY LIFE, SENATOR. TO ASK THEM TO LEAVE NOW WOULD BE AN INSULT.”) posts.) Emanuel, in my opinion, has something of a complex. He has this image in Washington as some kind of tough guy because he throws around a little profanity and the self-styled hard guys in our nation’s capital fold like cheap card tables, but back home, in the city of the dealmakers, he gets coffee for the guys who really matter. This has to drive him crazy, so he has to prove to himself, and to anyone who cares, that he can be a tough guy when dealing with people of more substance than the current crop of lilliputians that comprise current day Washington. Hence his quest for Mayor.
Emanuel's chances of attaining this quest are slim. While I am not in the business of making political predictions, let me say that, unless Maggie’s condition deteriorates further, Rich Daley will run again and be resoundingly reelected. After that term, he may retire, but I suspect not; like his father, he will probably die in office. And even if this turns out not to be the case, let me throw out a few names of people who are more likely to become mayor than is Rahm Emmanuel:
Alderman George Cardenas of the 12th Ward
Sheriff Tom Dart
State Senator James Meeks
But who would have predicted Jane Byrne, even late in 1978 or early in 1979? So predictions about politics, and especially about local politics, are essentially worthless...but fun.
An e-mail from one of my college buddies prompted me to do something I wanted to do but hadn’t yet gotten around to doing; i.e., commenting on Rahm Emanuel’s stated desire to run for mayor of Chicago:
I think Rahm is serious. I've posted a couple blog entries on this point in the past. (See my 12/23/09 (“I CAN TELL BY THE WAY YOU DRESS THAT YOU ARE A REAL COWBOY”) and 12/13/08 (“I TRUST THESE MEN WITH MY LIFE, SENATOR. TO ASK THEM TO LEAVE NOW WOULD BE AN INSULT.”) posts.) Emanuel, in my opinion, has something of a complex. He has this image in Washington as some kind of tough guy because he throws around a little profanity and the self-styled hard guys in our nation’s capital fold like cheap card tables, but back home, in the city of the dealmakers, he gets coffee for the guys who really matter. This has to drive him crazy, so he has to prove to himself, and to anyone who cares, that he can be a tough guy when dealing with people of more substance than the current crop of lilliputians that comprise current day Washington. Hence his quest for Mayor.
Emanuel's chances of attaining this quest are slim. While I am not in the business of making political predictions, let me say that, unless Maggie’s condition deteriorates further, Rich Daley will run again and be resoundingly reelected. After that term, he may retire, but I suspect not; like his father, he will probably die in office. And even if this turns out not to be the case, let me throw out a few names of people who are more likely to become mayor than is Rahm Emmanuel:
Alderman George Cardenas of the 12th Ward
Sheriff Tom Dart
State Senator James Meeks
But who would have predicted Jane Byrne, even late in 1978 or early in 1979? So predictions about politics, and especially about local politics, are essentially worthless...but fun.
Monday, April 19, 2010
HE THAT PLAYS WITH GOLDMAN MAKES THE RULES
4/19/20
The big financial story of the last few days has been the SEC suit against Goldman Sachs, alleging that Goldman helped John Paulson’s hedge fund construct a CDO against which Paulson could bet by buying credit default swaps (i.e., going long the protection) and failed to notify prospective purchasers of long positions in the CDO of Paulson’s effective short position. Three things come to mind when thinking about this suit, none of which might be especially insightful but all of which are worth considering.
First, it seems to me that the SEC’s case hinges on two things: the extent to which Paulson & Co. effectively put together the CDO that it bet against and Goldman’s attendant duty to disclose that involvement. The SEC alleges that Paulson was intimately involved in constructing Abacus, the subject CDO, and that ACA Management, the “portfolio selection agent” for the CDO, was, to put it perhaps a little more strongly than would the SEC, a mere laundering device, either a witless dupe or a co-conspirator (The latter is highly unlikely, given the losses ACA ultimately took in this fiasco.). Paulson employees were involved in every meeting, every step of the way in the construction of Abacus. Therefore, the SEC alleges, Goldman engaged in something of a sham, helping a client construct a straw man to set afire at the expense of its other, less favored clients. At the very least, according to the SEC, Goldman should have disclosed to those taking long positions in the CDO the effective short position Paulson was taking. Goldman counters that Paulson’s role in constructing Abacus was advisory at best, that it was ACA who indeed put the portfolio together, even rejecting some of Paulson’s suggestions. That Paulson was taking an effective short position in the CDO was not material and therefore Goldman was not required to disclose Paulson’s effective short position.
If Paulson effectively constructed Abacus to bet against it and Goldman did not disclose Paulson’s short position, Goldman is, to use a technical legal and financial term, screwed. If Paulson was an effective bystander in Abacus’s construction, this case is much adieu about very little, if anything. The ethical issues are more complicated, but the legal issues are as simple as I have just enumerated.
Second, one of Goldman’s defenses, or at least an argument used by its defenders in the press, is that those injured in this alleged fraud, including German bank IKB and ACA, which, in addition to being the “portfolio selection agent” effectively insured Abacus through the use of credit default swaps (i.e., took a position on the other side of Paulson’s) were big boys, “sophisticated investors” in Wall Street and legal parlance and, as such, disclosure requirements were less stringent than they would have been had we been dealing with, I suppose, unsophisticated investors. Further, the drift of the argument, on a broader scale, is that no one should shed a tear for people who should have known better.
As readers of this blog know, I am certainly in profound agreement with this latter argument. However, there are problems with applying the “sophisticated investors” defense here. First, even sophisticated investors need information to conduct effective analysis. If one of those pieces of information was that the people who built this portfolio were betting against it and that piece of information wasn’t disclosed, even sophisticated investors, unless they somehow obtained such knowledge by osmosis or subterfuge, could not conduct the types of analysis we normally associate with sophisticated investors. In short, even sophisticated investors are entitled to information that they need to conduct sophisticated analysis.
Second, the same people making the “sophisticated investor” argument are saying that Paulson’s effective short position in Abacus was not a material fact and therefore did not have to be disclosed. In fact, to disclose Paulson’s position would be unethical because a securities firm should not be discussing its clients’ positions. Why was Paulson’s involvement not material? Because, at that time, the argument goes, John Paulson was not the superstar he is today; he was just another hedge fund manager, so his involvement should not have swayed anyone’s decision making. C’mon. Even back in 2007, Paulson, while not yet a household name (He probably is not a household name even now; note that he has often been confused in the context of this case with Hank Paulson, the former Treasury Secretary and head of Goldman Sachs.), had already achieved a level of success on Wall Street that was the envy of even Goldman partners, much of it from his early forays against the mortgage market. That he became even more wildly successful as the mortgage markets imploded does not mean he was a nobody when Abacus was being assembled. While most people would not have known of John Paulson at that time, certainly anyone considered “sophisticated” in the mortgage markets (i.e., those taking long positions in Abacus) would have known of Paulson and would have found his betting against Abacus worth pondering as they considered a long position in Abacus.
Third, the legal definition of “sophisticated investor” is flawed because it is based largely on the size of an investor’s investable portfolio and net worth rather than his or her level of knowledge of the financial markets. By the SEC’s reckoning, Paris Hilton and Sarah Palin are “sophisticated investors.” Enough said.
My third major point is that the timing of this suit is beyond suspicious; it came just as President Obama is pushing for further regulation of Wall Street. What better way to rouse public sentiment and bring a few Republicans onboard? The timing was blatantly political. But why should this surprise anyone? We are dealing with politicians. They are all, to use a technical, and redundant, political science term, blood sucking leeches with limited understanding of the subject matter they are treating but with, in their own minds, unlimited understanding of the art of spinmeistering.
The big financial story of the last few days has been the SEC suit against Goldman Sachs, alleging that Goldman helped John Paulson’s hedge fund construct a CDO against which Paulson could bet by buying credit default swaps (i.e., going long the protection) and failed to notify prospective purchasers of long positions in the CDO of Paulson’s effective short position. Three things come to mind when thinking about this suit, none of which might be especially insightful but all of which are worth considering.
First, it seems to me that the SEC’s case hinges on two things: the extent to which Paulson & Co. effectively put together the CDO that it bet against and Goldman’s attendant duty to disclose that involvement. The SEC alleges that Paulson was intimately involved in constructing Abacus, the subject CDO, and that ACA Management, the “portfolio selection agent” for the CDO, was, to put it perhaps a little more strongly than would the SEC, a mere laundering device, either a witless dupe or a co-conspirator (The latter is highly unlikely, given the losses ACA ultimately took in this fiasco.). Paulson employees were involved in every meeting, every step of the way in the construction of Abacus. Therefore, the SEC alleges, Goldman engaged in something of a sham, helping a client construct a straw man to set afire at the expense of its other, less favored clients. At the very least, according to the SEC, Goldman should have disclosed to those taking long positions in the CDO the effective short position Paulson was taking. Goldman counters that Paulson’s role in constructing Abacus was advisory at best, that it was ACA who indeed put the portfolio together, even rejecting some of Paulson’s suggestions. That Paulson was taking an effective short position in the CDO was not material and therefore Goldman was not required to disclose Paulson’s effective short position.
If Paulson effectively constructed Abacus to bet against it and Goldman did not disclose Paulson’s short position, Goldman is, to use a technical legal and financial term, screwed. If Paulson was an effective bystander in Abacus’s construction, this case is much adieu about very little, if anything. The ethical issues are more complicated, but the legal issues are as simple as I have just enumerated.
Second, one of Goldman’s defenses, or at least an argument used by its defenders in the press, is that those injured in this alleged fraud, including German bank IKB and ACA, which, in addition to being the “portfolio selection agent” effectively insured Abacus through the use of credit default swaps (i.e., took a position on the other side of Paulson’s) were big boys, “sophisticated investors” in Wall Street and legal parlance and, as such, disclosure requirements were less stringent than they would have been had we been dealing with, I suppose, unsophisticated investors. Further, the drift of the argument, on a broader scale, is that no one should shed a tear for people who should have known better.
As readers of this blog know, I am certainly in profound agreement with this latter argument. However, there are problems with applying the “sophisticated investors” defense here. First, even sophisticated investors need information to conduct effective analysis. If one of those pieces of information was that the people who built this portfolio were betting against it and that piece of information wasn’t disclosed, even sophisticated investors, unless they somehow obtained such knowledge by osmosis or subterfuge, could not conduct the types of analysis we normally associate with sophisticated investors. In short, even sophisticated investors are entitled to information that they need to conduct sophisticated analysis.
Second, the same people making the “sophisticated investor” argument are saying that Paulson’s effective short position in Abacus was not a material fact and therefore did not have to be disclosed. In fact, to disclose Paulson’s position would be unethical because a securities firm should not be discussing its clients’ positions. Why was Paulson’s involvement not material? Because, at that time, the argument goes, John Paulson was not the superstar he is today; he was just another hedge fund manager, so his involvement should not have swayed anyone’s decision making. C’mon. Even back in 2007, Paulson, while not yet a household name (He probably is not a household name even now; note that he has often been confused in the context of this case with Hank Paulson, the former Treasury Secretary and head of Goldman Sachs.), had already achieved a level of success on Wall Street that was the envy of even Goldman partners, much of it from his early forays against the mortgage market. That he became even more wildly successful as the mortgage markets imploded does not mean he was a nobody when Abacus was being assembled. While most people would not have known of John Paulson at that time, certainly anyone considered “sophisticated” in the mortgage markets (i.e., those taking long positions in Abacus) would have known of Paulson and would have found his betting against Abacus worth pondering as they considered a long position in Abacus.
Third, the legal definition of “sophisticated investor” is flawed because it is based largely on the size of an investor’s investable portfolio and net worth rather than his or her level of knowledge of the financial markets. By the SEC’s reckoning, Paris Hilton and Sarah Palin are “sophisticated investors.” Enough said.
My third major point is that the timing of this suit is beyond suspicious; it came just as President Obama is pushing for further regulation of Wall Street. What better way to rouse public sentiment and bring a few Republicans onboard? The timing was blatantly political. But why should this surprise anyone? We are dealing with politicians. They are all, to use a technical, and redundant, political science term, blood sucking leeches with limited understanding of the subject matter they are treating but with, in their own minds, unlimited understanding of the art of spinmeistering.
Saturday, April 17, 2010
“I’M NO ONE TO JUDGE, BUT…”
4/17/10
This morning’s (i.e., Saturday, 4/17/10’s) Wall Street Journal reports that some senators are advocating for the nomination of a politician, rather than a judge, for the soon to be vacated Supreme court seat of Justice John Paul Stevens. While there is plenty of historical precedent for such a nomination (Earl Warren, Hugo Black, William Howard Taft), one wonders how sharp the distinction is, in the new and debased America, between judges and politicians. But such questions, and the advisability of appointing politicians to the Court, are not the subject of this post. Rather, this post deals with a comment made by someone described by the paper as a “White House advisor” when asked about the possibility of a politician on the Court.
Anita Dunn, the aforementioned advisor, is described, but not quoted, as such:
Political figures typically understand the struggles of everyday Americans, and are often skilled at building coalitions, (Ms. Dunn) said.
Only a political figure could say, with a straight face, that political figures understand the struggles of everyday Americans. The reason that we have the tea party movement, and the reason that most Americans, even those who consider themselves as removed from the tea party movement as anyone could be, are very angry is that politicians have no conception of the struggles of everyday Americans.
In modern America, the typical politician has made politics his or her career. He or she, sporting an outsized estimation of his ability to glean wisdom, experience, and character apparently by osmosis, has done nothing else but practice politics. S/he went to college, then to law school, then either worked as an aide to a state legislator or on Capitol Hill, or clerked for a judge, then ran for the state legislature and started working his or her way up the ladder, all the while never coming remotely close to working in the private sector or even holding a government job that involved responsibilities beyond posing for the cameras or prepping one’s popinjay of an employer for such “media events.” And, of course, if one is a Republican, one did all those things while piously proclaiming one’s fealty to the virtues of the “private sector” and the “real Americans,” especially “small business people” while assiduously avoiding any personal exposure to the vicissitudes that the private sector features in any post that involves more than selling one’s influence or working on a Washington coddled Wall Street.
One used to be able to make the argument, with some plausibility, that politicians are less cloistered than judges, but today even that argument falls apart. Besides the aforementioned point that the distinction between being a judge and being a politician is becoming increasingly theoretical, most judges actually practiced as lawyers, at least briefly, before going on the bench. Unlike the typical politician, their law degrees were used for more than impressive wall hangings. But even those judges whose practice of law was at best perfunctory before using their political connections to get an early appointment to the bench are no more hermetically sealed than your typical pol.
The larger point, of course, is that anyone who gets nominated to the Supreme Court, and to most lower courts, has done more than his or her share of politicking and ingratiating himself with the political structure that controls either Washington or his or her locality, so the politician/judge dichotomy is, in at least today’s America, a distinction without a difference.
This morning’s (i.e., Saturday, 4/17/10’s) Wall Street Journal reports that some senators are advocating for the nomination of a politician, rather than a judge, for the soon to be vacated Supreme court seat of Justice John Paul Stevens. While there is plenty of historical precedent for such a nomination (Earl Warren, Hugo Black, William Howard Taft), one wonders how sharp the distinction is, in the new and debased America, between judges and politicians. But such questions, and the advisability of appointing politicians to the Court, are not the subject of this post. Rather, this post deals with a comment made by someone described by the paper as a “White House advisor” when asked about the possibility of a politician on the Court.
Anita Dunn, the aforementioned advisor, is described, but not quoted, as such:
Political figures typically understand the struggles of everyday Americans, and are often skilled at building coalitions, (Ms. Dunn) said.
Only a political figure could say, with a straight face, that political figures understand the struggles of everyday Americans. The reason that we have the tea party movement, and the reason that most Americans, even those who consider themselves as removed from the tea party movement as anyone could be, are very angry is that politicians have no conception of the struggles of everyday Americans.
In modern America, the typical politician has made politics his or her career. He or she, sporting an outsized estimation of his ability to glean wisdom, experience, and character apparently by osmosis, has done nothing else but practice politics. S/he went to college, then to law school, then either worked as an aide to a state legislator or on Capitol Hill, or clerked for a judge, then ran for the state legislature and started working his or her way up the ladder, all the while never coming remotely close to working in the private sector or even holding a government job that involved responsibilities beyond posing for the cameras or prepping one’s popinjay of an employer for such “media events.” And, of course, if one is a Republican, one did all those things while piously proclaiming one’s fealty to the virtues of the “private sector” and the “real Americans,” especially “small business people” while assiduously avoiding any personal exposure to the vicissitudes that the private sector features in any post that involves more than selling one’s influence or working on a Washington coddled Wall Street.
One used to be able to make the argument, with some plausibility, that politicians are less cloistered than judges, but today even that argument falls apart. Besides the aforementioned point that the distinction between being a judge and being a politician is becoming increasingly theoretical, most judges actually practiced as lawyers, at least briefly, before going on the bench. Unlike the typical politician, their law degrees were used for more than impressive wall hangings. But even those judges whose practice of law was at best perfunctory before using their political connections to get an early appointment to the bench are no more hermetically sealed than your typical pol.
The larger point, of course, is that anyone who gets nominated to the Supreme Court, and to most lower courts, has done more than his or her share of politicking and ingratiating himself with the political structure that controls either Washington or his or her locality, so the politician/judge dichotomy is, in at least today’s America, a distinction without a difference.
“GIMME THAT OLD TIME RELIGION”?
4/17/10
In her second consecutive weekly column on the “crisis” in the Catholic Church (“How to Save the Catholic Church,” Wall Street Journal, 4/17/10), and her second consecutive column on that subject with which I, for the most part, agree, Peggy Noonan was going good, advising the Vatican to be more open and to “elevate women,” the latter of which I hope meant what it sounded like it meant. But then she said
“They (the Vatican) need to let younger generations of priests and nuns rise to positions of authority within a new church.”
First, and ancillarily, Ms. Noonan, I’m sure, meant to say “sisters” instead of “nuns.” Though most people, and most Catholics, don’t know the distinction, a “nun” is, by definition, cloistered. Most of the people to whom we refer as “nuns” are not nuns but, instead, are sisters, or we wouldn’t have contact with them. But that is another of those nits I often pick that drive my wife, and others, crazy.
Second, I am hoping, as I mentioned in the last sentence of my first paragraph, that Ms. Noonan’s advocacy of letting “nuns” rise to positions of authority means what I think it meant.
Third, and most important, Ms. Noonan may be mistaken in her desire to give “younger generations” more authority. Ms. Noonan, and anyone who genuinely desires reform, should be doing whatever she can to keep most of this youngest generation of priests as far away from power as she can.
I have no statistics on this, so I might be wrong, but look around your parishes and read the Catholic media. It seems to this Catholic that it is the “younger generations of priests” who are a big source of the problem. It is they who have come of age as this latest bout of Church conservatism, which seems bound and determined to roll back Vatican II and return us to the halcyon days of Pius IX, has gained more sway in the Church. It is many members of these generations who seem to be the most doctrinaire in terms of the trappings, rather than the substance, of Catholicism. It is they who like to dress up in the most auspicious of garb and lord it over their flocks. It is they who are so bound and determined to make sure everyone toes the line. As I said to my wife as we listened to one of these popinjays deliver a homily on ending lackadaisical Catholicism and returning to what he seemed to think was the true doctrine, the pure essence, of the Church, “Only someone so young can be so certain.”
On the other hand, Vatican II ended forty five years ago. So only the very oldest priests, like the Pope, did not come of age in the post Vatican II era. It seems, at least to this observer, that, generally, those who desire reform and openness in the Church ought to be cheering for those priests who came out of the seminary in the late ‘50s though early ‘80s. An inordinately large concentration of those in the later classes of seminarians, at least in my experience, would turn us back even further to the days of “Pray, pay, and obey” and “Yes, Father, indeed Father, whatever you say, Father, shine your shoes, Father?” And we all know the results of that kind of unquestioning obeisance and sycophancy.
In her second consecutive weekly column on the “crisis” in the Catholic Church (“How to Save the Catholic Church,” Wall Street Journal, 4/17/10), and her second consecutive column on that subject with which I, for the most part, agree, Peggy Noonan was going good, advising the Vatican to be more open and to “elevate women,” the latter of which I hope meant what it sounded like it meant. But then she said
“They (the Vatican) need to let younger generations of priests and nuns rise to positions of authority within a new church.”
First, and ancillarily, Ms. Noonan, I’m sure, meant to say “sisters” instead of “nuns.” Though most people, and most Catholics, don’t know the distinction, a “nun” is, by definition, cloistered. Most of the people to whom we refer as “nuns” are not nuns but, instead, are sisters, or we wouldn’t have contact with them. But that is another of those nits I often pick that drive my wife, and others, crazy.
Second, I am hoping, as I mentioned in the last sentence of my first paragraph, that Ms. Noonan’s advocacy of letting “nuns” rise to positions of authority means what I think it meant.
Third, and most important, Ms. Noonan may be mistaken in her desire to give “younger generations” more authority. Ms. Noonan, and anyone who genuinely desires reform, should be doing whatever she can to keep most of this youngest generation of priests as far away from power as she can.
I have no statistics on this, so I might be wrong, but look around your parishes and read the Catholic media. It seems to this Catholic that it is the “younger generations of priests” who are a big source of the problem. It is they who have come of age as this latest bout of Church conservatism, which seems bound and determined to roll back Vatican II and return us to the halcyon days of Pius IX, has gained more sway in the Church. It is many members of these generations who seem to be the most doctrinaire in terms of the trappings, rather than the substance, of Catholicism. It is they who like to dress up in the most auspicious of garb and lord it over their flocks. It is they who are so bound and determined to make sure everyone toes the line. As I said to my wife as we listened to one of these popinjays deliver a homily on ending lackadaisical Catholicism and returning to what he seemed to think was the true doctrine, the pure essence, of the Church, “Only someone so young can be so certain.”
On the other hand, Vatican II ended forty five years ago. So only the very oldest priests, like the Pope, did not come of age in the post Vatican II era. It seems, at least to this observer, that, generally, those who desire reform and openness in the Church ought to be cheering for those priests who came out of the seminary in the late ‘50s though early ‘80s. An inordinately large concentration of those in the later classes of seminarians, at least in my experience, would turn us back even further to the days of “Pray, pay, and obey” and “Yes, Father, indeed Father, whatever you say, Father, shine your shoes, Father?” And we all know the results of that kind of unquestioning obeisance and sycophancy.
Tuesday, April 13, 2010
“THE POOR YOU WILL ALWAYS HAVE WITH YOU…”
4/13/10
This morning’s first reading at Mass came from the Acts of the Apostles, certainly one of my favorite books of either Testament and one of the books of the Bible that has the greatest potential to appeal to those with little interest in matters of religion or faith; it is a book packed with intriguing stories, swashbuckling adventure, and good character development. But I digress…already. The specific reading for this morning contained the following passage from the 4th Chapter of Acts:
There was no needy person among them (MQ—the early Christian community in Jerusalem), for those who owned property or houses would sell them, bring the proceeds of the sale, and put them at the feet of the apostles, and they were distributed to each according to need.
Acts 4, 34-35, New American Bible
I read on Tuesday mornings at 6:45 Mass at Sts. Peter and Paul in Naperville, and, because of that, must stay on the altar in order to read the petitions, which come after the priest’s homily. Therefore, I must listen to the Gospel and the homily from a position behind the priest, which is fine if the speakers are working correctly. However, this morning, there appeared to be something wrong with the sound system. Given the problems with the sound system, and the poor acoustics that seem to come as an unwelcome byproduct of the stunning Gothic architecture of our old and strikingly beautiful church, it was difficult for me, sitting behind the priest, to hear either the Gospel (Fortunately, I’m familiar with the third chapter of John’s Gospel, so that presented little problem.) or the homily delivered by our young and promising Father Ryan Larson, who until recently we would have referred to as an assistant pastor but who, now that the Church seems to be bound and determined to ditch Vatican II, is called our “Parochial Vicar,” but I digress again.
Despite the difficulty in hearing Father Larson’s homily, I was able to pick up its most important points. Ryan pointed out that the political left interprets the above quoted passage from the Acts of the Apostles as meaning that, since we have an obligation to help the needy among us, we must support whatever social program the government deems capable of serving the poor. The political right, he asserted, argues that, since the forfeiture of property among the early Christians was entirely voluntary, no social program is legitimate, the government has no right to force forfeiture of property and that all help given to the poor must therefore be entirely the product of free will. He went on to say (as far as I could tell—that sound system problem, again) that the proper interpretation lies somewhere in the middle. We as Christians have an obligation to help the needy among us. The details of delivery of that help must be worked both in our own consciences and in the political process, on the latter of which the Church has no opinion (at least concerning social spending programs), as long as we all recognize that obligation to help the poor.
Father Larson’s interpretation, if I heard it correctly, of that passage is a sound and perfectly defensible one, certainly more well grounded than either of the extreme interpretations he outlined at the outset of his homily, both of which had a faint odor of straw, but that is another issue. I would suggest, however, a simpler interpretation, or lack thereof. Perhaps the “interpretation” of that passage is that the early Christian community held everything in common. In other words, it is what it is, a descriptive, rather than a prescriptive, passage. That the early Christians held all things in common was a fact but not a rule, or even necessarily a suggestion, for how Christians conduct themselves either now or any time after the first generation of Christians went on to bigger and better things. At least I, and just about every Christian should, hope so, because if that passage is prescriptive, the only people living the truly Christian life are members of religious orders who take vows of poverty.
My larger point is that many people read far more into Scripture passages than is truly there. (The opposite is also true, by the way, but that is grist for another post.) Generally, what people read into passages is justification, or rationalization, for a view on an issue or a behavior, that is, at the very most, ancillary to the Christian message. In other words, people use passages from Scripture to further grind their favorite axes, to give the spiritual seal of approval to decidedly secular issues and behavior.
Incidentally, if I interpreted Father Larson correctly, he would probably concur with this larger point, even though our takes on this particular passage differ.
This morning’s first reading at Mass came from the Acts of the Apostles, certainly one of my favorite books of either Testament and one of the books of the Bible that has the greatest potential to appeal to those with little interest in matters of religion or faith; it is a book packed with intriguing stories, swashbuckling adventure, and good character development. But I digress…already. The specific reading for this morning contained the following passage from the 4th Chapter of Acts:
There was no needy person among them (MQ—the early Christian community in Jerusalem), for those who owned property or houses would sell them, bring the proceeds of the sale, and put them at the feet of the apostles, and they were distributed to each according to need.
Acts 4, 34-35, New American Bible
I read on Tuesday mornings at 6:45 Mass at Sts. Peter and Paul in Naperville, and, because of that, must stay on the altar in order to read the petitions, which come after the priest’s homily. Therefore, I must listen to the Gospel and the homily from a position behind the priest, which is fine if the speakers are working correctly. However, this morning, there appeared to be something wrong with the sound system. Given the problems with the sound system, and the poor acoustics that seem to come as an unwelcome byproduct of the stunning Gothic architecture of our old and strikingly beautiful church, it was difficult for me, sitting behind the priest, to hear either the Gospel (Fortunately, I’m familiar with the third chapter of John’s Gospel, so that presented little problem.) or the homily delivered by our young and promising Father Ryan Larson, who until recently we would have referred to as an assistant pastor but who, now that the Church seems to be bound and determined to ditch Vatican II, is called our “Parochial Vicar,” but I digress again.
Despite the difficulty in hearing Father Larson’s homily, I was able to pick up its most important points. Ryan pointed out that the political left interprets the above quoted passage from the Acts of the Apostles as meaning that, since we have an obligation to help the needy among us, we must support whatever social program the government deems capable of serving the poor. The political right, he asserted, argues that, since the forfeiture of property among the early Christians was entirely voluntary, no social program is legitimate, the government has no right to force forfeiture of property and that all help given to the poor must therefore be entirely the product of free will. He went on to say (as far as I could tell—that sound system problem, again) that the proper interpretation lies somewhere in the middle. We as Christians have an obligation to help the needy among us. The details of delivery of that help must be worked both in our own consciences and in the political process, on the latter of which the Church has no opinion (at least concerning social spending programs), as long as we all recognize that obligation to help the poor.
Father Larson’s interpretation, if I heard it correctly, of that passage is a sound and perfectly defensible one, certainly more well grounded than either of the extreme interpretations he outlined at the outset of his homily, both of which had a faint odor of straw, but that is another issue. I would suggest, however, a simpler interpretation, or lack thereof. Perhaps the “interpretation” of that passage is that the early Christian community held everything in common. In other words, it is what it is, a descriptive, rather than a prescriptive, passage. That the early Christians held all things in common was a fact but not a rule, or even necessarily a suggestion, for how Christians conduct themselves either now or any time after the first generation of Christians went on to bigger and better things. At least I, and just about every Christian should, hope so, because if that passage is prescriptive, the only people living the truly Christian life are members of religious orders who take vows of poverty.
My larger point is that many people read far more into Scripture passages than is truly there. (The opposite is also true, by the way, but that is grist for another post.) Generally, what people read into passages is justification, or rationalization, for a view on an issue or a behavior, that is, at the very most, ancillary to the Christian message. In other words, people use passages from Scripture to further grind their favorite axes, to give the spiritual seal of approval to decidedly secular issues and behavior.
Incidentally, if I interpreted Father Larson correctly, he would probably concur with this larger point, even though our takes on this particular passage differ.
Saturday, April 10, 2010
DESTROYING THE CHURCH IN ORDER TO SAVE IT
4/10/10
Today’s papers carry the story of Stephen Kiesle, who was defrocked in 1987, six years after his diocese, Oakland, recommended his removal and two years after then Cardinal Joseph Rat zinger, who was head of the Congregation of the Doctrine of the Faith, counseled caution, for reasons including “the good of the universal Church,” in proceeding against then Father (It almost hurts to use this title in connection with such chunk of figurative excrement.) Kiesle. During the two years between Ratzinger’s letter and Kiesle’s removal, Kiesle did volunteer work with children for the Church.
The Church argues, effectively, no harm, no foul, because Kiesle, as far as anyone knows, did no harm during those two years. One could counter that argument by pointing out that lots of people drive drunk, and text while driving, with no negative ramifications, but a run of good luck does not justify putting one’s self, and other people, in serious jeopardy. But countering this latest ludicrous Vatican argument is not the purpose of this post. There is something more profound at work here.
Doubtless many of the horribles committed by the Church in covering up priestly pedophilia over the years were done in the interest of protecting the universal Church. If one does enough twisting and turning, and goes through especially arduous moral contortions, one can almost justify the argument, though those making it sound much more like the high priest Caiaphas than they do priests of Christ’s Church, to wit:
“You know nothing, nor do you consider that it is better for you that one man should die instead of the people, so that the whole nation may not perish.”
John 11: 49-50 (New American (Official Catholic) Bible)
I realize that some Vatican drone will argue, with a straight face, that citing that passage from John somehow violates “Church tradition,” but it is worth contemplating.
Even more worthy of contemplation is the following question: Even if the celibate old men who run the Church really think that covering up such horrific conduct was justified to protect the universal Church, how much faith does such an attitude display? Don’t these moral paragons believe that Jesus is capable of protecting his Church, or at least sufficiently capable of protecting it that ghastly deeds don’t have to be committed in order to help Him with this task? I am quite familiar with, and sympathetic to, St. Francis’s admonition to “pray as if everything depended on God and work as if everything depended on you,” but I don’t think that the work St. Francis had in mind extended to such moral turpitude as covering up such a horrendous sin as pedophilia.
Trust God and don’t be afraid. Great advice, don’t you think? Jesus apparently thought enough of it to repeat it again and again and again and again and again. Here’s hoping it doesn’t somehow violate “Church tradition.”
Today’s papers carry the story of Stephen Kiesle, who was defrocked in 1987, six years after his diocese, Oakland, recommended his removal and two years after then Cardinal Joseph Rat zinger, who was head of the Congregation of the Doctrine of the Faith, counseled caution, for reasons including “the good of the universal Church,” in proceeding against then Father (It almost hurts to use this title in connection with such chunk of figurative excrement.) Kiesle. During the two years between Ratzinger’s letter and Kiesle’s removal, Kiesle did volunteer work with children for the Church.
The Church argues, effectively, no harm, no foul, because Kiesle, as far as anyone knows, did no harm during those two years. One could counter that argument by pointing out that lots of people drive drunk, and text while driving, with no negative ramifications, but a run of good luck does not justify putting one’s self, and other people, in serious jeopardy. But countering this latest ludicrous Vatican argument is not the purpose of this post. There is something more profound at work here.
Doubtless many of the horribles committed by the Church in covering up priestly pedophilia over the years were done in the interest of protecting the universal Church. If one does enough twisting and turning, and goes through especially arduous moral contortions, one can almost justify the argument, though those making it sound much more like the high priest Caiaphas than they do priests of Christ’s Church, to wit:
“You know nothing, nor do you consider that it is better for you that one man should die instead of the people, so that the whole nation may not perish.”
John 11: 49-50 (New American (Official Catholic) Bible)
I realize that some Vatican drone will argue, with a straight face, that citing that passage from John somehow violates “Church tradition,” but it is worth contemplating.
Even more worthy of contemplation is the following question: Even if the celibate old men who run the Church really think that covering up such horrific conduct was justified to protect the universal Church, how much faith does such an attitude display? Don’t these moral paragons believe that Jesus is capable of protecting his Church, or at least sufficiently capable of protecting it that ghastly deeds don’t have to be committed in order to help Him with this task? I am quite familiar with, and sympathetic to, St. Francis’s admonition to “pray as if everything depended on God and work as if everything depended on you,” but I don’t think that the work St. Francis had in mind extended to such moral turpitude as covering up such a horrendous sin as pedophilia.
Trust God and don’t be afraid. Great advice, don’t you think? Jesus apparently thought enough of it to repeat it again and again and again and again and again. Here’s hoping it doesn’t somehow violate “Church tradition.”
Thursday, April 8, 2010
THINGS (DON’T) CHANGE
I sent the following letter to Chicago Tribune columnist John Kass. I thought my readers might enjoy it:
4/8/10
Hi John,
Interesting hypothesis in today’s column regarding a possible Claypool draft for the Senate. As you said, it’s always fun to speculate, even on long shots. What better way to get the Organization’s attention, and “announce” one’s availability should they decide to dump Alexi, than to run against the nominal head of the Organization as he seeks a higher perch from which to do his puppetmasters’ bidding?
However, I have to argue with your contention, made when commenting on the GOP line of attack against Giannoulias, that “…corruption sells.” In this state? From Bob Merriam to Bill Singer (the 1975 Bill Singer, before he got cozy with Eddie Vrdolyak on the real estate deals) to pseudo reformer Tony Peraica to Ray Figueroa, Illinois and Chicago politics is littered with the figurative corpses of candidates who ran as reformers against Machine or Combine types. It’s difficult to cite a candidate who won on an anti-corruption platform. Yeah, Toni Preckwinckle beat Todd Stroger, but more because Todd is an incompetent boob; had he been competent in his corruption like his father, he would have still been in office. Glenn Poshard got trounced by George Ryan despite the by then increasingly obvious odor of corruption that stuck to George Ryan like a kielbasa and sauerkraut induced bout of flatulence. Paul Vallas couldn’t lay a glove on Rod Blagojevich despite Rod’s closeness to the Organization. (Okay, the Machine’s running Roland Burris as a stalking horse didn’t help Vallas, either, but that’s another issue.) And, going back in history (again), Leon Despres never ran for anything outside the 5th Ward because he knew how hopeless such a venture would be.
My point is that the voters of Illinois don’t get incensed about corruption, at least to the point of wanting to throw the rascals out. If this were not the case, why would we still have the same old cast of characters running the state? Why are we the most corrupt state in the union? People in this part of the world (or least not enough people to make a difference) don’t mind corruption as long as it works for them. As long as the streets are clean, police and fire protection is decent, and there might just be something in it for them, people will continue to send the same rogues’ gallery to high office in the city of Chicago, county of Cook, and state of Illinois. Only when the cost/benefit equation, in dollars and cents, starts to shift more dramatically and obviously against corruption will things change. We’re starting to see such a shift now, but it’s a slow, very slow, shift.
4/8/10
Hi John,
Interesting hypothesis in today’s column regarding a possible Claypool draft for the Senate. As you said, it’s always fun to speculate, even on long shots. What better way to get the Organization’s attention, and “announce” one’s availability should they decide to dump Alexi, than to run against the nominal head of the Organization as he seeks a higher perch from which to do his puppetmasters’ bidding?
However, I have to argue with your contention, made when commenting on the GOP line of attack against Giannoulias, that “…corruption sells.” In this state? From Bob Merriam to Bill Singer (the 1975 Bill Singer, before he got cozy with Eddie Vrdolyak on the real estate deals) to pseudo reformer Tony Peraica to Ray Figueroa, Illinois and Chicago politics is littered with the figurative corpses of candidates who ran as reformers against Machine or Combine types. It’s difficult to cite a candidate who won on an anti-corruption platform. Yeah, Toni Preckwinckle beat Todd Stroger, but more because Todd is an incompetent boob; had he been competent in his corruption like his father, he would have still been in office. Glenn Poshard got trounced by George Ryan despite the by then increasingly obvious odor of corruption that stuck to George Ryan like a kielbasa and sauerkraut induced bout of flatulence. Paul Vallas couldn’t lay a glove on Rod Blagojevich despite Rod’s closeness to the Organization. (Okay, the Machine’s running Roland Burris as a stalking horse didn’t help Vallas, either, but that’s another issue.) And, going back in history (again), Leon Despres never ran for anything outside the 5th Ward because he knew how hopeless such a venture would be.
My point is that the voters of Illinois don’t get incensed about corruption, at least to the point of wanting to throw the rascals out. If this were not the case, why would we still have the same old cast of characters running the state? Why are we the most corrupt state in the union? People in this part of the world (or least not enough people to make a difference) don’t mind corruption as long as it works for them. As long as the streets are clean, police and fire protection is decent, and there might just be something in it for them, people will continue to send the same rogues’ gallery to high office in the city of Chicago, county of Cook, and state of Illinois. Only when the cost/benefit equation, in dollars and cents, starts to shift more dramatically and obviously against corruption will things change. We’re starting to see such a shift now, but it’s a slow, very slow, shift.
Saturday, April 3, 2010
“IT’S THE BISHOP!”
I sent the following letter to the Wall Street Journal in response to an article by Peggy Noonan on the Church hierarchy and its handling of the child sex abuse scandal. It is probably my letter to the editor most worth sharing with my readers:
4/3/10
In her characteristically well written and argued 4/3 “Opinion” piece, Peggy Noonan states that “…it happened in the Catholic Church, where hundred of priests and bishops thought they could do any amount of damage to the church, and it would be fine.” As Ms. Noonan goes on to say, the operative assumption of those in the hierarchy who abuse the Church by failing to adequately address the seemingly global child accuse scandal that encompasses the Church is “The old church will survive.”
Ms. Noonan further argues, among other things, that the Church indeed will survive due to the heroic efforts of what she describes as “the good priests and good nuns” and the “heroic (lay) Catholics of the U.S. and now Europe, the hardy souls who, in spite of what has been done to their church are still there...”
As one of those who, despite probably being not all that heroic, is “still there,” I agree, but I would take it a step further. One of the reasons that I believe that the Church is a divinely inspired institution, in addition to Mathew 16:18, which Ms. Noonan quotes, is that the Church has survived the legions of charlatans, knaves, mountebanks, nincompoops, misanthropes, and outright evil men who have ostensibly run it (interspersed, of course, with legions of saintly, holy, loving, caring, and wise men) through much of its history. No institution that is not divinely ordained could have survived the outright idiots who have found themselves nominally running the Church through so much of its history. And the Church will indeed survive the current crowd that thinks it is in charge.
4/3/10
In her characteristically well written and argued 4/3 “Opinion” piece, Peggy Noonan states that “…it happened in the Catholic Church, where hundred of priests and bishops thought they could do any amount of damage to the church, and it would be fine.” As Ms. Noonan goes on to say, the operative assumption of those in the hierarchy who abuse the Church by failing to adequately address the seemingly global child accuse scandal that encompasses the Church is “The old church will survive.”
Ms. Noonan further argues, among other things, that the Church indeed will survive due to the heroic efforts of what she describes as “the good priests and good nuns” and the “heroic (lay) Catholics of the U.S. and now Europe, the hardy souls who, in spite of what has been done to their church are still there...”
As one of those who, despite probably being not all that heroic, is “still there,” I agree, but I would take it a step further. One of the reasons that I believe that the Church is a divinely inspired institution, in addition to Mathew 16:18, which Ms. Noonan quotes, is that the Church has survived the legions of charlatans, knaves, mountebanks, nincompoops, misanthropes, and outright evil men who have ostensibly run it (interspersed, of course, with legions of saintly, holy, loving, caring, and wise men) through much of its history. No institution that is not divinely ordained could have survived the outright idiots who have found themselves nominally running the Church through so much of its history. And the Church will indeed survive the current crowd that thinks it is in charge.
“TIMEO DANAOS, ET DONA FERENTES”
4/3/10
Yesterday’s (i.e., Good Friday’s, 4/1/10’s) Chicago Tribune ran a brilliant front page article reporting that Broadway Bank, the Giannoulias family’s bank, lent $20mmm to Michael Giorango and Demitri Stavropoulos, or to companies and trusts affiliated with them, while current Illinois Treasurer and Senate candidate Alexi Giannoulias was a senior loan officer at the bank and after both Giorango and Stavropoulos had been convicted of felonies involving gambling and, in the case of Mr. Giorango, pimping, for lack of a better term. This is, in some ways, a variation on an old story (See my 2/27, 3/1, and 3/ 4 posts.), as the Giannoulias campaign asserts before blabbering on about how young Alexi will personally lead us to the promised land of peace and prosperity if only we entrust him with yet another high public office. However, there is something that leaped out at me while I read the story.
It seems that in 2004, Broadway Bank, under the wise tutelage of young Alexi, lent Messrs. Giorango and Stavropoulos $680,000 in order to complete the purchase, for $850,000, of what the Tribune described as a “nondescript West Side commercial building” at 1201 S. Western Avenue. To say that I know the neighborhood around Roosevelt and Western well would be giving myself too much credit, but I do have a reasonable degree of familiarity with the neighborhood, and $850,000 seems like a LOT of money for virtually any commercial building in the neighborhood, let alone a “nondescript” (which, judging from the pictures in the paper of the building, seems to be a generous description) property. Eventually, Messrs. Giorango and Stavropoulos stopped making payments on the loans secured by the property. Broadway foreclosed on the property in 2009.
Depending on who the seller of the 1201 property was, or proves to be, this transaction looks like yet another application of a by now time honored Mob deal: A group of associates buys a building, usually a dilapidated or near dilapidated building, for a song. Then it sells the building to another (or the same, using another legal entity) group of associates at a grossly inflated price, all or almost all of which is borrowed from a financial institution, the officers of which may or may not be in on the scheme. Then the “buyers” default on the mortgage, leaving the bank (or, in some cases, the federal government through the FHA or some other alphabet soup agency) holding a virtually worthless piece of property and the “sellers” with a pile of cash.
From 2004 to 2007, Messrs. Giorango and Stavropoulos actually used the building, running a firm called 1201 South Western LLC that specialized in making “hard” loans, a business very much akin to loan sharking, or payday lending, out of that building. (It is highly likely, by the way, that funds borrowed from Broadway were re-lent as part of 1201 S. Western operations.) One could thus argue that, since the property was actually used for awhile before the underlying loan on the property went into default, as opposed to the building’s being bought and then quickly abandoned, 1201 S. Western was not a classic case of the aforementioned mortgage fraud. But it’s not unheard of to have such a property used for a period of time after being “purchased;” doing so could serve to obscure the trail of the transaction.
One could also argue that, if indeed the 1201 transaction, and who knows how many other transactions involving Giorango and Stavropoulos, was a case of mortgage fraud, then Broadway was the victim of Messrs. Giorango and Stavropoulos and possibly, though probably not, non-family accomplices in the bank. Clearly, this was not a case of the Giannoulias family effectively defrauding itself, so there is something to the “Broadway (and, by extension, Giannoulias family) as victim” argument. But this would lead to questions regarding not young Alexi’s ethics but, rather, his competence. Under his tutelage, the bank was defrauded, if, again, this case is what it looks like. This would be yet another instance that flies in the face of the “genius banker with the skill to lead us through the fiscal swamp” image that young Alexi and his handlers would have us believe.
As I’ve said before, young Alexi Giannoulias could turn out to be the gift that keeps on giving, both to the political junkies among us and to the Republican Party.
Yesterday’s (i.e., Good Friday’s, 4/1/10’s) Chicago Tribune ran a brilliant front page article reporting that Broadway Bank, the Giannoulias family’s bank, lent $20mmm to Michael Giorango and Demitri Stavropoulos, or to companies and trusts affiliated with them, while current Illinois Treasurer and Senate candidate Alexi Giannoulias was a senior loan officer at the bank and after both Giorango and Stavropoulos had been convicted of felonies involving gambling and, in the case of Mr. Giorango, pimping, for lack of a better term. This is, in some ways, a variation on an old story (See my 2/27, 3/1, and 3/ 4 posts.), as the Giannoulias campaign asserts before blabbering on about how young Alexi will personally lead us to the promised land of peace and prosperity if only we entrust him with yet another high public office. However, there is something that leaped out at me while I read the story.
It seems that in 2004, Broadway Bank, under the wise tutelage of young Alexi, lent Messrs. Giorango and Stavropoulos $680,000 in order to complete the purchase, for $850,000, of what the Tribune described as a “nondescript West Side commercial building” at 1201 S. Western Avenue. To say that I know the neighborhood around Roosevelt and Western well would be giving myself too much credit, but I do have a reasonable degree of familiarity with the neighborhood, and $850,000 seems like a LOT of money for virtually any commercial building in the neighborhood, let alone a “nondescript” (which, judging from the pictures in the paper of the building, seems to be a generous description) property. Eventually, Messrs. Giorango and Stavropoulos stopped making payments on the loans secured by the property. Broadway foreclosed on the property in 2009.
Depending on who the seller of the 1201 property was, or proves to be, this transaction looks like yet another application of a by now time honored Mob deal: A group of associates buys a building, usually a dilapidated or near dilapidated building, for a song. Then it sells the building to another (or the same, using another legal entity) group of associates at a grossly inflated price, all or almost all of which is borrowed from a financial institution, the officers of which may or may not be in on the scheme. Then the “buyers” default on the mortgage, leaving the bank (or, in some cases, the federal government through the FHA or some other alphabet soup agency) holding a virtually worthless piece of property and the “sellers” with a pile of cash.
From 2004 to 2007, Messrs. Giorango and Stavropoulos actually used the building, running a firm called 1201 South Western LLC that specialized in making “hard” loans, a business very much akin to loan sharking, or payday lending, out of that building. (It is highly likely, by the way, that funds borrowed from Broadway were re-lent as part of 1201 S. Western operations.) One could thus argue that, since the property was actually used for awhile before the underlying loan on the property went into default, as opposed to the building’s being bought and then quickly abandoned, 1201 S. Western was not a classic case of the aforementioned mortgage fraud. But it’s not unheard of to have such a property used for a period of time after being “purchased;” doing so could serve to obscure the trail of the transaction.
One could also argue that, if indeed the 1201 transaction, and who knows how many other transactions involving Giorango and Stavropoulos, was a case of mortgage fraud, then Broadway was the victim of Messrs. Giorango and Stavropoulos and possibly, though probably not, non-family accomplices in the bank. Clearly, this was not a case of the Giannoulias family effectively defrauding itself, so there is something to the “Broadway (and, by extension, Giannoulias family) as victim” argument. But this would lead to questions regarding not young Alexi’s ethics but, rather, his competence. Under his tutelage, the bank was defrauded, if, again, this case is what it looks like. This would be yet another instance that flies in the face of the “genius banker with the skill to lead us through the fiscal swamp” image that young Alexi and his handlers would have us believe.
As I’ve said before, young Alexi Giannoulias could turn out to be the gift that keeps on giving, both to the political junkies among us and to the Republican Party.
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