Tuesday, March 31, 2009
Finally, someone in the mainstream media is starting to talk about the real travesty of the AIG bonuses. In this piece: The Real AIG Disgrace they call attention to the abhorrent behavior of Andrew Cuomo:
Mr. Cuomo is a thug, but at least he reminds us: It can happen here.
Most if it is about who knew what when (as if we care) but overall the piece is worth reading.
Thursday, March 26, 2009
Jules Crittenden apparently has a problem with the fact that some people make more money than he does. In his class warfare blog post about Jake Desantis’ resignation letter he says:
Any financial brainiacs out there willing to work for something less than two million bucks? Never mind Mom, Apple Pie and the American way, how about $1 million?
Well how about this Jules… do you imagine that there might be anyone out there willing to do your job for a little less? I’ll bet there is. So why don’t we just shove you out to the unemployment line and your new cardboard box home, and let that kid with the A in ‘basic composition’ take over. I’m sure he can handle it right? We’ll outsource your job to the local middle school English department, how about that? That’s the thing about you journalists… you all get to ‘seem’ as if you’re experts on something when the reality is that you really don’t understand it at all. And I’m sure we can find a few thousand kids out there who can overwork an analogy just as well as you for a fraction of the cash.
As to your question, I’m not willing to work for one cent less than the market will bear for my skills and knowledge. Every day that I go to work I place my entire financial future and the future of my family at risk. It can all be gone tomorrow if I’m not more right than wrong. There is no job security at all and my entire career is at stake in every decision that I make. The only way you can ever hope to achieve anything resembling job security in my industry is if you have a nice big fat profit and even then, come the first of the year everything resets to zero and you start all over again anyway.
But for journalists there are no costs to being wrong. As far as I can tell the vast majority are wrong about most things virtually all the time. I and my coworkers don’t have that luxury. We are right, or we are choosing a new career. And taking that risk every day comes with some benefits… as it damned well should in my view. That ‘different planet’ you’re complaining about where Jake Desantis lives, has some different and much more severe costs too. And the people who are willing to pay them, and are capable of doing it well without a steady dose of ulcer medication are much fewer than you realize. The graveyard is full of geniuses who never managed to turn a profit in the markets, and it takes more than being smart to be successful in this industry.
So Eff you and your sanctimony. It’s true that my half of the money that I and the people like me get to keep every year may be larger than some other peoples, but you apparently have no problem spending your share of the other half that the government takes away from us. I and the people like me are picking up the tab around here, and not only do we never get a thank you, we’re called villains for our trouble. Presidente Obama’s future ‘balanced budget’ is going to be balanced on our backs. And that’s a lot to take when you’re also getting death threats and have a mob of protesters in front of your house.
America may have been good to me, but I and those like me have more than returned the favor. But with that said, if what you really want is for us all to go find some other country ‘to pillage’ then just say so. The fact is, we can do this job from anywhere, and there are lots of places where they value smart, law abiding, industrious members of society where we won’t have to worry about a 90% ex-post tax because we work in the wrong industry.
I don’t want you to call me a hero. But if like Jake Desantis I’ve done nothing wrong, then I dammed well want to be able to live my life in peace without a mob of protesters at my door. That’s something the folks at AIG don’t have, and they should. They aren’t guilty of anything but they’re still being punished. And you journalists are either enabling the mob or giving a pass to the politicians who have engineered this whole mess.
Wednesday, March 25, 2009
Jake DeSantis has resigned from AIG and the New York Times has published his resignation letter. He's not going to be threatened into giving back the money he was paid, and I say good for him. It makes me proud to know that there is still a man out there somewhere. He's also pulled the curtain back on the shameful acts of our politicians, and their left wing activist cohorts and their enabling media.
Many of you who are reading this who also know me personally know that I've had a few occasions in my career where I had to choose between doing what I thought was right and doing what most people would call 'the smart thing'. The opportunities for sacrificing your values on the alter of political expediency are many in the modern world, and the financial industry is no different. But on those occasions, I've always tried to act by my conscience instead of being guided by politics. My career has suffered for it, and I've even lost jobs over it, but my decisions have never made me lose any sleep.
And speaking from the perspective of a man who's made those choices, I can only hope to live up to the standard that Jake Desantis is setting here. He's one man standing all alone against the tyranny of the masses. He's on the front lines of the new cultural war between the liberty of the individual, and the mandatory 'responsibility' imposed by force on the public by the ruling elite. The government is discarding the rule of law to coerce him into behaving as they want him to, and his response is that all important phrase that used to mean so much in American culture. He's looking Andrew Cuomo and Barney Frank and Barak Obama in the eye and saying to them what we should all saying if we still value freedom. He's saying "No... I will not!"
I hope he's is proud of himself... I'm certainly proud of him. He's standing up against a long list of powerful tyrants when no one else will do it for him. He's a brave man who deserves our respect, and he certainly has mine.
Well Done Jake.
Read his resignation letter here.
PS. In all honesty there is one thing that I would have done differently than Jake. He's planning on giving his money to charity, and I would have spent mine. If I earn something I'm reluctant in the extreme to hand to over to anyone for any reasons other than my own, least of all because they say they deserve it. I'd have given it up only if it were pried from my cold dead hands, and the shame would be on them for forcing me, not on me for resisting.
Tuesday, March 24, 2009
Dr Tom Sowell proves that he's not only the smartest man in America but also one of the bravest. While the vast majority of the talking heads on the right have simply ignored the issues around the AIG bonuses, Dr. Sowell openly discusses the real outrage which is the behavior of our elected officials.
Here is the piece: "Bad Actors"
Sunday, March 22, 2009
America, the greatest engine for wealth creation that the world has ever seen... is about to be stripped bare like a car left overnight in a bad neighborhood.
“The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.”
Read the whole sad story here.
Saturday, March 21, 2009
By now you must have heard that the US congress has decided that it would rather punish the employees of AIG than respect the rule of law. And if that sounds at all hyperbolic to you then it’s clear that you don’t know the facts. Let me enlighten you.
First of all, the people who lost all that money for AIG are long gone, and have been for some time. None of the traders and executives who lost that money in the mortgage markets are getting any of the money that congress is so shocked and horrified over. The people who remain and who are getting these retention bonuses are middle office staffers, IT professionals, and members of other business units of AIG who were otherwise profitable. Their profitability might have been completely overshadowed by the losses in the CDO group, but that’s hardly their fault.
Anyway, last year, when it became clear that the company they work for had lost so much money that they would not be able to reward them for their sound and prudent decision making, they could have done like any other reasonable person and left. But instead, the new management of AIG persuaded them to stay by offering them something. Not much …not nearly as much as they might have gotten taking their prudent and careful decision making elsewhere, but something. And it was enough to convince a few of them to stay and help clean up the mess.
And now for their trouble… for being the kind of people who will stick with a firm that has done right by them in the past even though they probably won’t be able to in the future…. their loyalty has been rewarded by having the US Congress and that shameful tyrant Andrew Cuomo do all they can to put their lives and risk. In his ceaseless ambition to become New York governor, Andrew Cuomo isn’t even making a pretense of remaining within his authority as Attorney General and is blatantly and publicly abusing his power in every way he can to get to the forefront of the populist revolt against capitalism. And the US Congress has proven themselves to be perfectly willing to surrender the rule of law in America to the goal of making sure they aren’t the ones being blamed for this catastrophe.
The contracts that gave these people those retention bonuses are roughly a year old, but congress doesn’t care about a silly little thing like a contract. Instead, they are implementing a plan to tax back 90% of the money that these people were paid, even though they aren’t the people who caused the problems that congress is so upset about. It’s ex-post legislation that uses taxation as a weapon in the war the administration has declared on capitalism. And Cuomo has used New York’s ‘flexible’ legal system to subpoena the names of all bonus receivers, and has announced his plans to make them public, in spite of the numerous public threats these people have received to their lives and property.
It’s easy to imagine a rabidly power hungry partisan like Andrew Cuomo saying that if a few bankers have to die to make him governor, then it’s a small price to pay. But it’s pretty clear that the Congress hasn’t thought the consequences of this act of theirs through. After all, if contracts no longer matter to them why should they matter to the rest of us?
And they have also apparently forgotten that the document by which they derive their authority over the citizenry is itself a contract. That’s right; the US Constitution is a contract. In the broadest sense, it’s a contract where the government agrees not to be tyrannical, and the citizenry agrees not to kill them all and burn their homes to the ground. The rest of the document is really just the terms and definitions that set up that agreement, and give us a framework for knowing when it’s OK to go get grandpa’s duck hunting gun and break out the maps of greater Baltimore. And if that had occurred to Congress then I can’t believe they’d have gone through with this decision. Contracts protect them from us as well as it protects us from them. Well… at least they used to until last week anyway.
What’s worse is that the more the government gets involved in the minutiae of running the financial business the worse they make things. They say in Washington that they want to establish ‘private public partnerships’ to deal with the toxic assets, but as a professional institutional investor, let me say this about that idea.
Anyone who thinks seriously about getting involved in a "public-private partnership" in a political environment like this one should have his freaking head examined. Heaven forbid he does something wrong like ….make a profit, or something. If he does then Congress will simply subpoena him to a committee meeting to explain the ‘greedy profits he’s making on the backs of the US taxpayer’, and then they’ll have another ‘ex-post’ law to snatch back the money and that’s that. You would have to be a genuine imbecile to partner with these liars and thieves.
And all we professional investors in hedge funds who haven’t taken a penny of federal funds should be very wary. We are all like the Jews in Germany during the 1930’s, where there is no specific evidence that we’re responsible for anything but everyone is certain we had something to do with it all the same. It doesn’t matter if you’ve been profitable for your investors, or if like me, you don’t even work in the mortgage markets. In an environment like this where the rule of law is suspended, you don’t have to do anything wrong to be found guilty. And ‘everyone knows’ the hedge funds are guilty of something, even if they can’t prove what it is. It’s capitalism that’s turned into the great sin of our age. And winning at capitalism is more than enough evidence of your wrongdoing.
All of this ignores the fact that it was Congress who spent a decade telling mortgage underwriters that it was wrong of them to consider credit worthiness as a factor when lending. It ignores all the special deals they got, and campaign kick-backs they happily accepted. It ignores their repeated intentional distortions of the market for the sake of social engineering. And it forgets all about how they set up the twisted accounting rules which made trillions of dollars of perfectly reasonable home loans into worthless pieces of paper along with the junk they forced the banks to create, and how they were all too happy to throw the taxpayers money at the problem when it could no longer be ignored.
As usual the real villains here are the ones who are banging the gavel. But they better take care. Because pretty soon the US public is going to figure out that if contract law is suspended, then so is all other law. And I’d hate to be a guy like Barney Frank or Andrew Cuomo without the protection of the legal system to elevate them above the unwashed peasants. I’m not advocating violence here, I’m just pointing out the risks their taking. And as a guy who manages risk for a living, it’s a risk I wouldn’t take if I were them.
Friday, March 13, 2009
Wednesday, March 11, 2009
Tuesday, March 10, 2009
History repeats itself ... again:
"We must find a way to persuade our neighbors to accept this important new change. We must convince them to believe as we believe. We must force them to understand that this important step is in the interest of all of us. It is up to you to make sure that no one stands in our way."
Nothing left now but to burn all the bibles and start building concentration camps for all the bankers, hedge fund managers and corporate CEO's.
If you think about it, Hitler was nothing more than a community organizer too.
Wednesday, March 4, 2009
I watched Tim Geithner's testimony to congress yesterday and decided that I don't like him. anyone who was capable of being so willfully dishonest has no business in a position of authority. I don't mean his taxes ... I know he lied about that. And I always figured that if he were an honest guy he would be out here earning a living in the private sector like all the other honest people.
No I mean his testimony about the budget. It was as shameful a misrepresentation of the facts as I've ever seen. and it wasn't a situation where it was subject to interpretation, or where he was simply mistaken about the facts. He knew the facts, he knew what they meant, and he intentionally went out of his way to misrepresent them. It really was a new height in government misrepresentation. I've never seen anything like it.
That was ... until this:
This article set a new high water mark for self destructive liberal rationalization. Steve Perlstein is convinced that the government running up huge debts and bringing our country to the point of economic collapse is actually a good thing for our children because it will prevent them from running up their credit card debt. To call him a dumbass would be a horrible injustice to the American dumbass society. He may very well be the dumbest man in America.
On a slightly smarter note, I haven't been writing much because my professional schedule has once again crowded out my blog. But this time it's done so because I'm having what will probably turn out to be one of the best years of my life. Thanks to Team Obama doing virtually everything dead wrong in exactly the way everyone thought they would, both my personal assets and the assets I manage professionally are both growing very nicely. And when the US government has collapsed and I'm rich enough to run my own little fiefdom, I'm going to make Steven Perlstein work cleaning the stables. It will involve less bullshit than the work he's involved in now.