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The Ring of Gyges or Why Study the Classics at UVA or Why anti-Regulators are full of $#*!

About 2500 years ago, the philosopher Plato told a story that even the most dedicated Fox News viewer can understand.  Here it is in text form:

According to the tradition, Gyges was a shepherd in the service of the king of Lydia; there was a great storm, and an earthquake made an opening in the earth at the place where he was feeding his flock. Amazed at the sight, he descended into the opening, where, among other marvels, he beheld a hollow brazen horse, having doors, at which he stooping and looking in saw a dead body of stature, as appeared to him, more than human, and having nothing on but a gold ring; this he took from the finger of the dead and reascended.

Now the shepherds met together, according to custom, that they might send their monthly report about the flocks to the king; into their assembly he came having the ring on his finger, and as he was sitting among them he chanced to turn the collet of the ring inside his hand, when instantly he became invisible to the rest of the company and they began to speak of him as if he were no longer present. He was astonished at this, and again touching the ring he turned the collet outwards and reappeared; he made several trials of the ring, and always with the same result–when he turned the collet inwards he became invisible, when outwards he reappeared.Whereupon he contrived to be chosen one of the messengers who were sent to the court; where as soon as he arrived he seduced the queen, and with her help conspired against the king and slew him, and took the kingdom.

Suppose now that there were two such magic rings, and the just put on one of them and the unjust the other; no man can be imagined to be of such an iron nature that he would stand fast in justice. No man would keep his hands off what was not his own when he could safely take what he liked out of the market, or go into houses and lie with any one at his pleasure, or kill or release from prison whom he would, and in all respects be like a God among men. Then the actions of the just would be as the actions of the unjust; they would both come at last to the same point.

And this we may truly affirm to be a great proof that a man is just, not willingly or because he thinks that justice is any good to him individually, but of necessity, for wherever any one thinks that he can safely be unjust, there he is unjust. For all men believe in their hearts that injustice is far more profitable to the individual than justice, and he who argues as I have been supposing, will say that they are right. If you could imagine any one obtaining this power of becoming invisible, and never doing any wrong or touching what was another’s, he would be thought by the lookers-on to be a most wretched idiot, although they would praise him to one another’s faces, and keep up appearances with one another from a fear that they too might suffer injustice.

The Greeks go on to say that King Croesus, you know, the guy who had more money than God, was a descendent of Gyges.

Now, the more zealous whip kissers out there will ask why even bring up this stupid story.  I mean, it’s not even in the Bible, right?  I have no way of knowing for sure but I suspect that Jesus would have gotten around to it eventually but his career was cut short by the anti-Occupy forces of the Roman Empire.  You know how it goes, some rowdy bunch of activists for social justice and equality who sleep outdoors and make noisy spectacles of themselves in public places and carry out unpermitted marches into Jerusalem are reported to the authorities for disrupting the peace, keeping everyone up at night, and making everyone uncomfortable and, before you know it, someone gets crucified and the whole group scatters.  So many parables, so little time.  Still, Jesus was totally into shepherds so I think he was leading up to it.

The Ring of Gyges story is pretty easy to understand and there is a reason why we call stuff like this “the classics”.  The classics never go out of style and say something that is universally true.  So, let me give you my spin on this and why the Ring of Gyges should be invoked whenever some politician starts using the evils of “regulation” to persuade others to vote for him.

The power that the ring gives the user is the ability to do what he wants without accountability.  Gyges gets away with murder and seduction and theft because no one can see him.  In other words, shit just happens. Mistakes are made.  We don’t know who.  Maybe Gyges did it, maybe someone else did it.  We can’t hold anyone responsible because no one is able to see or use indirect methods of seeing who did what.  That is, there is no way to measure who went in and out of the palace that doesn’t rely on our own eyes.  There’s no safeguarding person watching over the treasury who has the power to see through the ring’s power and detect Gyges robbing the bank.

The moral of the story is if there’s nobody watching, no justice system in place that is able to hold you accountable, and even the most honest and ethical person can become corrupted.  It is human nature to desire things and if there is no way to hold you accountable for taking what you desire, then you might as well take it.  In fact, you’re going to look like a fool if you have access to unlimited power and the things you desire and don’t take full advantage of it and the power you have over others.  If you don’t have access to the ring, well, you’re just a fricking loser.  Keep that in mind when you listen to this act from a This American Life episode called “Crybabies” about Happy Hour on Wall Street. Try to ignore the fact that Adam Davidson is reporting. The piece is actually quite good and illustrates the power of the ring of Gyges perfectly:

Wall Street: Money Never Weeps

Plato couldn’t have written that act any better.  Isn’t your blood boiling?  Don’t you want to hurt those bankers?  I know I do.  I think, who the f^*$ do those assholes think they are?  Oh, yeah, they’re the guys (and they’re almost always guys.  Women rarely get away with behaving badly.) who think they don’t have to answer to anyone.  They can do pretty much whatever the hell they want because no one can do a thing about it.  And they attribute their success to their smartness.  They’re just smarter than you losers who work at a regular job.  But that’s not why they’re so amazingly successful.  No.  They’re so successful because we have removed just about all the regulation from the financial industry.  There’s no oversight.

Oversight-1.a : watchful and responsible care b : regulatory supervision <congressional oversight>

In other words, those bankers are invisible to the justice system.  They can do what they want because no one can see what they’re doing.  No one can see what they’re doing because they keep telling everyone that regulation is bad.  They convince voters that regulation is bad by focusing the voters’ attention on the plight of small business owners.  And it probably is bad for small business owners.  But the effect of deregulation virtually never benefits small business owners.  It almost always benefits the guys at the top with the ring.  And the more money they get with their rings, like Croesus, the more money they can spend on advertising and Fox News and bribing politicians to make sure that no oversight is ever imposed on them.  Remember Elizabeth Warren?  She was supposed to head up a new oversight commission for the consumer financial products.  But the bankers wouldn’t have any oversight so Obama never appointed her.  Therefore, they can do whatever they want to consumers without oversight.

This is the real story of Elizabeth Warren and what she stands for.  She should be using that against Scott Brown.

And here is the most recent manifestation of the power of the ring of Gyges as explained by Matt Taibbi and Eliot Spitzer with regard to the fraud that Goldman-Sachs perpetrated on unsuspecting pension fund managers.  Goldman-Sachs is negotiating its way out of prosecution with the consent of our US attorney generals.  Matt says:

I was trying not to be too obvious in making the point that Spitzer is an example of the kind of guy you would want looking at that Goldman case. Not only did I not want to look like a suck-up, but I wasn’t sure how, “As you know, Eliot, a prosecutor is supposed to be kind of a dick!” would go over. Because I would have meant it in the most complimentary way possible. And it has nothing to do with politics. If you read James Stewart’s Den of Thieves you can see that Rudy Giuliani had some of the same key qualities. A good prosecutor should look down the barrel of a bunch of millionaire lawyers at Davis Polk or White and Case and feel turned on by the challenge of combat. Making a deal with any devil should burn him at the core, keep him awake at night.

But that’s exactly who Eric Holder and Lanny Breuer haven’t been, exactly who Bob Khuzami at the SEC hasn’t been. Instead of being fighters, they’ve been dealmakers and plea-bargainers. They’ve dealt out every major financial scandal, from Abacus to the Muni-bid-rigging cases (they prosecuted a few low-level guys at GE but let the big players at the big banks skate) to the Citigroup fraud settlement that was so bad a judge threw it back at the govenment’s face. In that latter case, amazingly, the govenment is now fighting not for its constituents, but for its right to give out crappy deals to repeat-offender banks without judicial review.

I’m not surprised that the Obama administration’s justice department has been reluctant to use regulation to its benefit and prosecute the criminals with the full force of the law.  It was evident early on (April 2009, to be exact) that this was the approach that Obama would use when it came to Wall Street.  All of the “oversight” would come in the way of ad hoc deals, each company getting a custom made solution that allowed them to skirt the law and get away with a slap on the wrist.  That’s because Obama doesn’t have any principles that he isn’t willing to bargain away on the negotiating table and he always starts his bidding on terms that are heavily favorable to the other side.  It’s not a bug, it’s a feature.

It goes without saying that you don’t have to be of any particular political persuasion to be incensed that the banking industry is getting away with murder and theft without any oversight.  It goes without saying but for some reason, I feel compelled to say it anyway.

Just because people on the left are the most vocal and angry and disappointed and irate about the fact that the financial industry is going unpunished doesn’t mean they are wrong.  Just because a bunch of Occupiers are calling attention to the financial industry and how the fact that it is not accountable screws all of us doesn’t mean that they’re bad people.

What I wonder is why it is that so many people on the right are focusing all of their attention on abortion and gay rights and how unemployed and poor people are unconscionable deadbeats but giving the real parasites in the finance industry a pass.  And I can only come to two possible conclusions: 1. The people on the right are easily lead and gullible and respond well to authoritarian messaging because it is all over the place or 2. It’s because they hope to *be* part of that privileged group of power ring owners in the future so that they can have all of their desires met without accountability.

Now, I will be the first one to mock the left for their crazy ass beliefs about GMO crops and homeopathy and nuclear energy and that the pharma industry is trying to poison them (because they’re not and anyway, it’s just another way for the trial lawyers to sink their fangs into the money stream. The left has its own unaccountability problem.)  But if you’re on the right or leaning right, or used to be a Democrat but are so pissed off about what Obama and the DNC did in 2008 that you’re letting your anger blind you to what these criminals on Wall Street are doing now, then you need to do some soul searching and get to the bottom of your orneriness because it’s really not helping.

It’s the right that relies on religion to keep everyone in line with threats of hellfire if you’re sexually active and not married.  You can always count on the religious to condemn everyone who doesn’t believe strictly in the Judeo-Christian version of the ten commandments.  They have a holy fit if you’re an atheist.  But they seem to be perfectly Ok with giving Wall Street a pass.  It’s like, “there’s nothing we can do.  They’re evil and we’re scared of them because they have all the power to make our lives miserable.”  Bullshit, of course there’s something you can do.  Stop voting for the politicians who keep asking for fewer regulations.  It doesn’t get any simpler than that.  Unfortunately, they’re also the politicians who hide behind religion or pander to religious people.  Show me a religious politician and I’ll show you someone who doesn’t believe in regulation.  That’s all there is to it.  They want to let the criminals operate without boundaries.

If these wealthy, unaccountable assholes continue to do what they’re doing without oversight, they’re going to bring the entire world’s financial system down.  That’s what happens when you can’t stop yourself from taking whatever you want and no one else has to power to interfere.

It doesn’t matter if you are on the right or the left, everything you own, everything you planned, your health, your retirement, your entire future, is at risk.

Banks on Jello

Does anyone else get the sense that the financial system is so royally screwed up that it’s one butterfly’s wing flap away from collapsing?

Wall Street shut down this morning because of a number of unusual high volume trades, the LIBOR scandal keeps building, the former CEO of Citigroup says merging with Travellers was probably not such a good idea, while Steve Rattner says don’t break up the banks, write a better Dodd-Frank.  Here’s the money quote from Rattner’s piece today:

Because of pressure from Sheila C. Bair, then the chairwoman of the Federal Deposit Insurance Corporation, the primary responsibility for winding down failing institutions was given to the F.D.I.C., an agency woefully ill equipped to deal with complex global entities. The Federal Reserve Board would have been a far superior choice.

In April 2011, the F.D.I.C. published a hypothetical plan suggesting that it could wind down a global octopus like Lehman in a manner similar to the way in which it routinely takes over small community banks. The report was widely derided.

We need a Dodd-Frank do-over to create the right oversight apparatus for huge banks. Regulators will always be outnumbered by bankers, and they will never find every problem. But, like prison guards, regulators are essential, even if they are outnumbered. In a world of behemoth banks, it is wrong to think we can shrink ours to a size that eliminates the “too big to fail” problem without emasculating one of our most successful industries.

You know who else didn’t like the idea of Sheila Bair taking over the banks?  Tim Geithner.  But he pressured Bair to back them anyway, guaranteeing shareholders a lot of money Bair didn’t think they deserved.  She would have made shareholders take substantial haircuts.  I’m betting that Rattner and his friends wouldn’t have liked that very much which is why it was off the table almost from the beginning.

I’m not sure I like Rattner’s tone.  Is he saying that the FDIC, which has something like 80 years of experience taking over failing banks is incapable of dismantling these behemoths or is he just dissing Sheila Bair?  Maybe it was just bad timing to have a woman as head of the FDIC when a man would have been able to do his job without meddling and disrespect.  Or maybe the world of the political elite should be held accountable for the fact that its ingrained sexism appears to be behind some phenomenally bad decisions in the past 13 years.  There’s more than one account of Bair being called “hard to work with” and “not a team player”.  Those are code words, baby, for we don’t want to listen to her and we’re going to pull out the old sexist staples to knock her status down.  Well, it worked so well against Bair and Brooksley Born, Elizabeth Warren, Christina Roemer and Hillary Clinton.  The pattern is obvious.  They don’t even pretend to hide it anymore.

I don’t know but I’m getting really pissed that so many sensible women are ignored and trampled so that the big boys can keep playing their games uninterrupted.  That shit’s gotta stop or why bother appointing women at all??  Again, this is Obama’s responsibility.  He hired these guys. And it’s not like his female White House staff didn’t warn him about the disrespect shown them.  What has Obama done about it?

Then there’s Rattner’s statement that even if we regulate the banks, they’ll just find a way around the regulations.  I’m not sure what point he is trying to make here.  If he’s trying to put us at ease, it’s not working.  It’s probably time to stop treating banks as a blessed industry while everyone else is getting damned.

And then there are the uber wealthy who are starting to worry that the Sans Culottes are going to turn the country into some dystopian state.  Maybe we shouldn’t have taken so much, they muse while they take in the scenery from their mansions.

Yeah, maybe.  Only time will tell.

And then there is Tim Geithner.  It looks like we were right about him.  He knew all about the LIBOR interest rate fix.  According to Taibbi, it was a well known secret on Wall Street.  Everybody knew it but the American people, who put their faith in Obama and his treasury secretary.

All I can think about is the stress tests and the way that Geithner assured everyone that the banks were solvent.  Who knows what the truth is but all of the Obama administration’s policies were built around the fiction of the condition of the banking industry.  Maybe the regular American citizen didn’t know about the LIBOR interest rate fixes but it’s hard for me to believe that Obama didn’t know.  You have to ask yourself what Obama was thinking when the stimulus turned out to be too small, bankers’ asses were saved and not homeowners, and he treated every bank crisis with an ad hoc solution instead of regulation.  Without regulation, it could happen again.

It’s all very, very shaky.

David Brooks’ world: Let all the worms that lurk in the mud hatch out

Ashley Moser, age 25

The shooting in Aurora, Colorado and its aftereffects, appear to be a culmination of all of the ways we Americans have let each other down in the past 30 years.  Let’s take a look, shall we?

Ashley Moser: If there was a poster child for everything that has gone wrong in America since Richard Nixon resigned, Ashley would have to be it.

Ashley is 25 years old.  Her father died recently from leukemia.  His illness wiped out the family’s financial resources.  He died penniless.  Ashley is a single mother, it’s unclear if she is divorced or ever married.  But the “little Depression” has been hard on families who struggle to make ends meet and are broken up by distance when one parent has to make a living in another location and can’t take the whole family.  It’s a common situation these days and marriage is no safeguard against it.  She was living with her parents but times got tough and when her father died, she had to move in with her aunt.

She’s a student.  She is also unemployed.  She had applied to and was accepted into a nursing program.  She was living on student loans.  LOANS, not grants.  She had a six year old daughter who she took to the movie with her.  Been there, done that, waiting with the kid for the latest book in the Harry Potter series at the local bookstore at 12am, surrounded by a store full of Hermione Grangers and Draco Malfoys.  Veronica Moser-Sullivan, aged 6, was the youngest victim.  She died at the scene.

Ashley was shot in the neck and the abdomen and is in critical condition.  Her doctors say she will suffer some paralysis but may have the use of her hands.  There’s a bullet in her head that hasn’t been removed yet. She is pregnant.

Because she is unemployed and uninsured, she is on medicaid. If she weren’t horribly injured at the moment and didn’t have the nation’s sympathy, it’s likely that she’d be shamed by these very same people who would be calling her a deadbeat leech on the American taxpayer.  She’d be treated with more dignity and respect in Norway but she had the misfortune to not be Norwegian during these last critical years of her life. That’s where single motherhood is no big deal, children are valued and she wouldn’t be struggling to live on student loans while she got her life together and was able to contribute to society, which should be the *only* definition of success, other than good parenthood, that gets admiration and respect.

It is unclear what her prospects, medical expenses or living arrangements will be once she is released from the hospital, if she is released. But whatever they are, it is likely that her future wages will be garnished to pay back her student loans.  Otherwise, it would be irresponsible to let this kind of moral hazard stand and wouldn’t be teaching Ashley a valuable lesson.

Her relatives had to tell her about her daughter on Saturday night.  She didn’t take it well and screamed that she wanted to die.

In all likelihood, if she *does* look like she is about to die, some Christian group will petition the state for guardianship of her unborn baby, intending to keep her on life support until the delivery.  Or, she may he on the brink of death without an abortion and they may interfere at that point.  Or, because she is on Medicaid, she will have to pay for a lifesaving and possibly much more expensive high risk abortion herself.  If it’s a “partial birth abortion”, there might not be any way to do it in the state of Colorado.  The scenarios that play out here sound like an updated version of Stephen King’s Misery crossed with Never Let Me Go.  Her family should have kept this information out of the media but it’s too late now.  The cat’s out of the bag and the evangelicals are no doubt already winding up for the prayer circle of all prayer circles, sending her messages about how her lifelong paralysis happened for a reason and god wanted Veronica for his newest angel but it’s a miracle that god has blessed her with a precious replacement!  As if children are swappable objects.  If it were up to me, I would leave life and death decisions up to Ashley and her doctors.  Maybe we should ask Michael Schiavo how that kind of thing works out.

The mass murderer, James Holmes, is apparently a very disturbed individual.  He’s not unlike many other disturbed mass murderers.  Friends and family notice that there is a personality change or he starts to behave strangely but there’s not a whole lot of things parents can do.  After all, the kid is an adult now.  The owner of a gun club says that Holmes left messages on his company’s voice mail and that his voice made him very uneasy.  He thanks god he didn’t have to deal with him, probably because guns are big business in America and it would have been hard to turn him away.

Not much is known about whether or not Holmes was treated for any psychological problems. It’s hard to know when science geeks have crossed the line mentally.  Many a time I have heard, “You know, so and so is acting really weird. He gives me the willies.  If anyone here were to go postal, it would be him.”  “Yeah, but he’s great in the lab! Fricking brilliant. His boss would be lost without him.” (True story about a gun “enthusiast” I used to work with many years ago.) His University probably has a counseling office but in America these days, it’s almost unheard of to commit people.  We usually just let them fall to their natural level, as David Brooks might say, and let them live on the streets. Holmes will probably get better mental health care now that he’s in prison or at the facility for the criminally insane.  For sure, he should never be free again, but will he be turned over to an institution run by a for profit company?

Graduate students are used to working conditions that are unusual.  I’ve heard it said that they have a lot of flexibility in their work.  They can work any 80 hours of the week they want.  It’s unclear if his work schedule contributed to his mental state but we should consider that Wall Street traders and analysts Holmes’ age work about 80 hours a week without a break for a couple of years and they nearly blew up the world, so, you know, there’s that.  His stipend, no matter how much the media makes of it, was probably less than minimum wage for the hours he would have been expected to work and was not enough to live on in the Denver area.  I’ve had a kid who worked in Denver as a chef for a couple of years.  They didn’t pay her enough.  She had to move.  She loves Denver.  Denver wages?  Ehhhhh, not so much.

Holmes ended up in Denver at graduate school because after earning a master’s in Neuroscience in 2010, he couldn’t find a job.  That’s not really all that unusual for scientists these days, including yours truly and everyone I’ve ever worked with.  A master’s is plenty sufficient for anything industrial research could throw at him but without experience, even young, cheap labor can’t find work.  Neither can older, experienced labor.  I find that a lot of employers want experienced labor, they just don’t want to pay for it.  So, Holmes had to go back to graduate school.  He probably would have been better off learning plumbing or joining the navy.  At least the military will help you pay your student loans.

This is not to say that I feel any kind of compassion for James Holmes the mass murderer.  But I do feel sorry for colleagues of James Holmes who are in a similar economic situation through the actions of a bunch of financiers on Wall Street who thought mergers and acquisitions of research companies in the last two decades was a sweet way to make loads of money and big bonuses.  Too bad it ruined research.

Holmes was able to order many rounds of ammunition online.  He also ordered an urban assault vest.  Unlike buying birth control, there is no conscience rule that would allow someone who is using common sense to stop a graduate student like James Holmes from buying combat equipment.  No one was allowed to say, “Where are you headed, buddy? Afghanistan?  Iraq?  Because I don’t think you need any of that stuff in Aurora.  Whatever you’re planning, I’m agin’ it.  No sale for you.”

Let’s think about that for a second.  It is harder for Ashley Moser to buy Plan B in the very same places where James Holmes could buy his own arsenal.  Enough weaponry to mow down a theater?  As long as you have a credit card, not a problem. No questions asked.   A couple of pills of early intervention to prevent a mistake?  Everyone you don’t know has an opinion and a hoop you must jump through.  Sure, the conscience rule executive order has been modified but whose going enforce it?  In a couple of years, Sasha and Malia will be able to buy their own Glocks but long after they’ve given up bubble gum, they will still have problems locating a pharmacist who will sell Plan B to them from behind the counter.

And because this is an election year and we must not piss off the young, white males in western states who might vote, Barack Obama sees no reason why he should develop any policies to address the issue of unfettered access to guns.  He also sees no need to promote an assault weapons ban that Bill Clinton put in place during his terms but went out of fashion during the Bush years.

I wonder if Ashley Moser knows this.  I hear Obama has been visiting the victims.  There’s an outpouring of support for Ashley right now, including a fundraiser.  But in a couple of months, America will forget about Ashley and she’ll have to navigate the social welfare system on her own.  For what it’s worth, I think a fundraiser should never be necessary for Ashley or others like her.  She, and all of the other Ashleys and Alexes, deserves a nation’s support, not charity or pity or insensitive moralizing.  She needed her country to be behind her in the last couple of years.  We’d better not fail her in the years to come.

So, there you go.

Worms everywhere.

Update: Katiebird says there is a second family that will be ruined by this shooting through no fault of their own.  Caleb Medley was shot in the eye and is in a medically induced coma.  His medical bills are expected to top $2 million, which is $2 million *less* than what David Brooks paid for his new house.  Caleb’s wife is on a separate floor of the hospital ready to give birth.

Of course, according to David Brooks, if the Medley’s end up broke, disabled and must remain deliberately impoverished in order to qualify for the bare modicum of subsistence medical care that Medicaid provides, at least we can console ourselves that the nation didn’t “commit sociology” to rescue any Americans who were collateral damage of a disturbed guy who just happened to use an easily available gun on their bodies.

Sunday: Taking the Top off the Mountain

Digby wonders why the bankers are whining.  They’ve gotten everything they wanted but they’re all upset that Obama is speaking harshly to them.  So, now they’re going to sit on their money and not give him any for his re-election.

Wait!  Why is that a *bad* thing?  If they’re not contributing to his campaign, maybe he and other Democrats will have to start paying attention to what the voters want.  Would that be such a crime?  After all, there are more voters than bankers.  Seems to me that banker money has made it too easy for Democrats to coast instead of doing what they’re supposed to be doing.  So, ok, then, let the bankers keep their money.  And if they give it to Republicans to run a bajillion campaign ads, then Democrats better get on it and do some legislatin’.  But I digress.

So, Digby’s question is a valid one: What drives the bankers to be such whiny Verulka Salt’s who want it all NOW!?  She has a couple of theories that glance at the truth tangentially.  They explain the whininess but not what drives the bankers.  They’re either naive, resentful of populism or arrogant twits.

But if you’ve read my Strategy of No Strategy series, you’ll see if from a different point of view altogether.  The finance class actually consists of a bunch of overqualified strip miners.  They’re overworked, which might explain the number of bad decisions they make, and their compensation system decouples the consequences of their actions from the actions themselves.  They are being paid to make “deals” and the purpose of those deals is to extract “wealth”.  In a way, it’s not that much different from getting into the cab of some giant piece of earth moving equipment and mowing down the side of the mountain and then loading that potential ore onto a conveyor belt to be separated from dirt.  They live in a “company” town and are paid “company scrip”.  It’s a truck system for them as well.  The compensation is not proportional to the amount of work they do, they can be fired at will and they’re never going to leave that mountain because they owe their souls to the company store.  The more they work, the more compensation in bonuses they are promised but it’s never enough.

That’s not to make you feel sorry for them.  That’s just the way it is.  And seeing it for the way it really is can help us get over the very legitimate emotion of wanting to ring their skinny necks right out of their Brooks Brothers suits. We need to separate our feelings of hatred towards them from our understanding of what’s really going on here.

What I see is really going on here with Obama is that he was hired because he is one of them.  He comes from the right school, he has the right pedigree, he had the right connections.  It didn’t matter if he knew nothing about finance.  Just like them, he would get a crash course and learn on the job.  And they have taken this deal with him as far as it would go.  Just like them, Obama has stripped the top of the mountain.  There is no more wealth to be extracted.  Now, the middle class has been mined to death.  It’s exhausted and can no longer generate the wealth that they have been paid to retrieve.  They’re screwed.  The owners (ironically, that would be some of us shareholders through our 401Ks) want more money.  There’s no more to give.  It’s a vicious circle because generating more wealth for us, the shareholders, means laying more of us off, which means less wealth going into the 401Ks.  When Obama finally signs the Grand Bargain, he will be creating an environmental catastrophe but before that happens, he has to win this election and people are hurting so badly, he may not be able to do it.

Do the number of ad buys really make a difference anymore?  We may see the effects of the internet on politics for real this election season.  Some of us have given up TVs altogether and no longer subscribe to newspapers.  I’m guessing that would affect the Democrats more.  Their base is younger and better educated (but not necessarily smarter).  The people who are moved by TV ads are older and less well educated.  That would favor Republicans.  I don’t know, this crap makes me crazy.  It’s all a bunch of political psych tricks that make no difference to how people live their lives.  But I suspect that the Osama bin Laden to-do this week had something to do with appealing to older and independent voters.  I could care less.  All I want to hear coming out of either candidates’ mouths is how they are planning to solve the unemployment problem and save our retirements without requiring even one more half penny of sacrifice from the late babyboomers.  Anything other than that might as well be speaking in some obscure language from a small isolated population in the Caucasus.  “Blah-blah-blah-SEALS! Blah-blah-blah-SHOT-IN-THE-EYE!” Who. Gives. A. FRACK.

So, as I was saying, the bankers are like strip miners and they’re not getting much out of the mountain anymore, their manager says the place is exhausted and they’re puzzled because this particular piece of real estate has been pretty rich for so long that it’s hard to take it all in that it’s gone.  It’s really gone.  And now, they have to go mine somewhere else and in those other places, the ore’s not so rich or it’s harder to get at or there are people standing in the way or it’s going to take time to get the permits and pay off the owners or make new deals.  They’re going to have to do a trickier kind of work now or they’re in big trouble because the deals they are about to make are a lot riskier.  Meanwhile, they’re leaving a big mess behind with lots of toxic runoff and the downstream people are angry because they have destroyed our economic ecosystem.  I guess they want Obama to keep the rabble down while they finish their work but it’s getting loud and noisy and not helping their concentration.  Maybe Mitt can keep a lid on it…

Anyway, that’s the way I see it.  They’re getting paid to stripmine.  Changing the way they behave will require the will to change the environment they work in.  If I were really interested in changing the way this works, I would have protected the employees that worked for Wall Street at the very beginning of this crisis.  I would have enforced workplace standards, required a limit on the number of hours worked, required mandatory overtime to be dispensed with the next immediate paycheck, enforced the minimum wage, tied salary to hours worked and prevented bonuses from rising to more than 20% of salary, mandated more 4 weeks of vacation per year, paid, and required every blessed transaction to undergo rigorous outside auditing, just to slooooow everything down.  Also, I might have had the EEOC or some other agency review hiring practices so that applicants were not discriminated on the basis of where they went to school or their genders.

From the money side of things, I would have begun the process of eliminating the 401K, reinstituted the defined benefit pension plan, and placed rigorous outside auditing checks on every blessed pension fund transaction.  One final thing: I would have made sure that I seized control of any fiber optic cable coming out of Wall Street.  We should never negotiate with terrorists.

Wall Street would have screamed bloody murder but such measures might have gotten a lot of support from workers including some of the workers on Wall Street.

Alas, Obama did not do this.  So now he is faced with having to do without finance sector money and will have to face the mountain this fall.

I kind of like the way this is playing out.

The Strategy of No Strategy: Putting it together

N17 on Wall Street

This is the final part of my take on Karen Ho’s book, Liquidated- An Ethnography of Wall Street. I can’t do the book justice in a single blog post (it’s going to take at least four), I’m going to try to summarize some of what she is describing as the culture of Wall Street and how it is infiltrating our lives. I’m going to touch on four major themes in her book: “smartness”, “flexibility”, “shareholder value” and “the strategy of no strategy”. Check here Part1 on Smartness , Part2 on Flexibility and Part3 on Shareholder Value. I am going to try to tie Karen’s analysis of the culture of Wall Street to the pharmaceutical industry because having had a first person perspective, it is my belief that Big Pharma has felt the worst effects of Wall Street on its core business- discovering drugs.

This week, Bruce Booth of Forbes wrote an article about the culture of pharmaceutical R&D and how it has definitely taken a turn for the worse. Let me just say for the record that this is a culture that has developed over time and was forced on the labrats. We didn’t invent it in the lab because we know it would never work. (For more feedback and analysis from the labrats on this article, see this comment thread at In the Pipeline.) Over the years, I definitely got the feeling that our overlords thought of us as 1.)socially awkward nerds who 2.) didn’t know the value of a dollar and 3.) were completely unproductive if left to our own devices. But Booth sets the record straight in some respects. He takes on the ‘tyranny of the committee’ and risk aversion, which are related to one another and further exacerbated by, emphasis on shareholder value, FDA failure rate and class action lawsuits. Then he takes on what many first person labrats would say is the biggest problem with pharma today:

Organizational entropy’s negative impact. [entropy in this context means disorder] For most of Big Pharma, at least a few mega-mergers and their integrations have happened in the past decade. And for all of Big Pharma, there’s been the semi-annual reorganization around the latest fad in corporate design: matrix management, proliferating centers of excellence, end-to-end therapeutic area groups vs functional lines, disease area strategies rather than site strategies, etc… These cause constant organizational upheaval with levels of distraction that can’t be measured. Resumes fly through cyberspace as soon as a deal is announced. Organizations are frozen as these changes happen, fear of the unknown paralyzes entire project teams, and closures/layoffs happen without much regard to upgrading the talent and weeding out the deadwood. Drug R&D takes typically 10-15 years from start to approval; how can it stay on track with a cadence of change this fast? As I noted last summer, most new drugs approved today were discovered in the 1990s. Do you think those approvals would have happened faster if there weren’t so many mega-mergers and reorganizations in the meantime?

The answer to the last question is “yes, probably”. There’s no way to tell, really, but having survived multiple mergers over the past 2 decades, I can tell you that we vamped and put everything on hold for months and years on end while the executives had pissing matches and more local management engaged in political backstabbing. It was a horror show. Much valuable experimental time, money and talent was wasted in the aftermath of Wall Street engineered deals.

But Booth also makes the common mistake that presumes that if all of us just worked at smaller companies, we’ll be more innovative and save oodles of money! If that happens it would be the equivalent of putting a few dozen labrats on a desert island and telling them to build their own labs with the tools available. Yep, there will be some geniuses and amazingly well coordinated teams that will fashion robotics and gel electrophoresis devices from sand and seashells but it won’t necessarily be efficient nor will those labrats be able to purchase stuff they can’t find on the island. There’s a reason why medium sized corporate labs discovered all those drugs back in the 90s.

Nevertheless, this is the new model of drug discovery. You, the scientist are chucked out on your ass and some cocky asshole business class people just assume that you’re going to whip up the next Lipitor with some sleight of hand. We’re encouraged to become entrepreneurs but they seem to have forgotten that our severance packages didn’t consist of millions of dollars in stock options. For the most part, we have a lot of poor scientists with no place to practice their craft and a mountain of extremely hard work and expenses before a vulture capitalist signs on.

The Wall Street smarties never thought about any of this stuff when they made the M&A deals. Nor did they stop to reason out why so many labs were failing to produce new drugs in the wake of those deals. For the last decade, all we’ve heard is that it’s OUR fault. We’re lousy scientists or lazy or spendthrifts. And they probably won’t figure out that the small little islands they set us adrift on aren’t going to be as profitable as they had hoped. But it doesn’t really matter because as soon as they’ve extracted the last bit of wealth from the big pharmas for the shareholders, they’ll just abandon the industry and the American scientific infrastructure to its own fate and move on to some other industry where wealth can be extracted. That’s what they’re paid to do.

Likewise, they will continue to pressure governments to hand over every bit of wealth from their citizens, to adopt austerity measures and cause untold suffering because they are in the business of finance and making money and if you as a country took the loan, they will expect payment. They don’t need to reason out that they’d be better off structuring things so that economies would grow and so they would get a more reliable but unspectacular return over time. That’s your problem. Their problem is to make the biggest, fattest deals they can in the shortest amount of time with the maximum amount of profit. It’s an optimization problem, a Traveling Salesman problem, a Metropolis algorithm on a global scale with one optimization endpoint. How much money can you make? They are in it for the deals, making their numbers and retrieving the wealth and private property of the shareholders. They don’t have time or patience for whiners and losers. They don’t even have the time to worry about another Depression. All they care about is the deal.

Karen Ho describes the culmination of “smartness”, flexibility and shareholder value as a thing called The Strategy of No Strategy. This is where the normal world meets the weirdness of quantum finance. Regular people assume that there is a small evil group directing things for some specific purpose, some grand scheme, some particular worldview. But all that is mere icing on the cake if it happens. What the 1% are really into is how this moment in time is going to affect their bonuses. Their plot to take over the world doesn’t extend much further than that. That is the only cause and effect relationship that matters because other than the expectation of money at the end of the year, they have no other rights or expectations as employees. They’re valued only for their ability to make connections and extract money from other people, they expect to be laid off at any time and the working conditions are brutal. And all of the authoritarian, political crap that gets thrown in to the mix is simply to protect their right to that money. As a result, you, the target of their financial machinations, are expected to conform to their deals. You are expected to give up your job at a moment’s notice to satisfy shareholder value or work in less than optimal conditions because to complain is to be a loser. It even helps them if they don’t have too much contact with you because personal feelings might get in the way of doing what they need to do. If you get in the way of their bonuses, they will have a problem with you, nothing personal. If it ends up feeling very callous and cruel, well, better to decrease the surplus population.

Karen Ho describes how the Strategy of No Strategy drives and changes the world:

Given that the identities of investment banks are wrapped up in their ability to immediately induce change in their people via job insecurity and flexible compensation, it is not surprising that one of their primary strategies-their plans for the future based on their imaginings of “the world and the firm’s position in it”-is, simply, to have no long-term plans (Schoenberger 1997, 122). To actualize their central identity as being immediately responsive to their own changing relationships with the market (including employees, products, and so on), their strategy is, in a sense, to have no strategy. Ironically, having no long-term strategy is contradictory and potentially self-defeating in that investment banks often find themselves making drastic changes only to realize months or weeks later that those changes were unnecessary, premature, and extremely costly. For example, in chapter 5, I described how investment bankers, in part because of their access to “sensitive, proprietary information,” are not only fired in an instant, but must also leave the physical premises of the building within fifteen to thirty minutes. Given how crucial the control of knowledge and the protection of inside information are for Wall Street investment banks, it seems self-defeating that they do not place any premium on loyalty. Despite the fact that firms try above all to enforce secrecy, they accept and maintain this volatility and revolving-door policy.

At first glance, it seems not only improbable, but also “irrational” for investment banks to engage in such practices, for why would a business so focused on profitability and knowledge not engage in practices that always improve its bottom line and its control of information? As many anthropologists have demonstrated, capitalist organizations are not simply motivated by purely instrumentalist quests for profit or governed by perfect rational actors; they are sociocultural organizations with complex, contradictory worldviews and particular organizational practices (Yanagisako 1999, 2002). Profits may be claimed as one of investment banks’ primary ideals, but it is mediated, situated, and enacted-along with other values-through the social and cultural lenses of particular organizations, groups, and bankers. How profits are made, what constitute profits, and what amounts are considered “profitable” enough are also culturally, organizationally, and historically variable.

John Carlton, the seasoned investment banker and managing director from BT, described how Wall Street’s strategy is to operate without a long-term strategy:

“Again, it is a business where there is no tenure. There is no union protection. Basically, if things change, you could be out. That’s one reason why people are very flexible. So you need flexible people, and people who can deal with it every day. Some people would hate that. I don’t mind that. Some people can’t stand it. They can’t last. They say, “I like to know where I am going to be five years from now.” They like the idea of stability. It is not very stable. I think that is a characteristic. Probably most people you talk to would say that it is not a very stable environment. Most businesses have five-year plans-What are we going to be producing?-and have long product life cycles. [We] have very short product life cycles. How do you plan when you never know what the market is going to do?”

Although Carlton attributed the rationale for not having a plan to market unpredictability, my point is that not having a plan is central to the strategy and cultural identity of investment banks.

[...]

Underpinning the continual (re)creation of “instant” teams or product expertise is a corporate culture that values eagerness for change and expediency. The “build a new dam strategy” while the old dam overflows also prefigures waste and even decline. As I learned from informants throughout my fieldwork, these star hires and seven-figure offers are often abysmal failures: stories abound of senior bankers simply pocketing the cash and producing no results, of formerly successful teams that were separated and dislodged from the environments in which they had thrived.

In other words, reflection is not Wall Street’s strong suit.

This is the part of the book that kept me up at night. Here we have a bunch of “smart” people with no job security, driven by their own conditioning and the banks they work for, that see *themselves* as The Market. They are the ultimate precariats. They are no better than miners whose goal it is to take the top off the mountain. And they have asked and gotten more and more leeway to act as they please, without regard to rational expectations for the future of the things they act upon.

The pharmaceutical industry has been destroyed by Wall Street and now, it knows it. There won’t be a recovery for the gigantic monstrosities like Pfizer that merged so fast and furiously that it didn’t have time to structure its most valuable asset- its database of compound and assay information. They’ve jettisoned the most valuable parts of their organizations in order to feed the Wall Street beast and its spawn of corporate CEOs whose job tenure can be measured in less than a handful of years. It does not matter that there is a generation of scientists laid off who will never make the salaries they once had or can pay their taxes. It doesn’t matter that communities and states will feel the effects of hundreds of thousands of terminations. It doesn’t matter that millions of patients will now be left vulnerable to bacterial infections that can’t be stopped or cancer or schizophrenia. It doesn’t matter that once the labs have been dismantled and equipment sold off, there will be no one who will be ready to reconstitute the labs when or if our society wants to discover drugs again. It will not matter that they have retained the scientists who are the best salesmen- of themselves- and not necessarily the best experimentalists. All that mattered was the deal at the time it was made. And now, all that matters is getting in on the get-rich-quick deals that can be made from academic basic science and discoveries that are not quite ready for primetime and will be abandoned as soon as they do not generate the expected profits.

For society at large, the strategy of no strategy is behind the austerity measures pushed on all of us. For countries that took out loans, that money must be paid back regardless of the havoc it plays on the citizens or that more austerity makes recovery of that money even less likely. What matters is that the recovering the money is as optimal an exercise as possible as quickly as possible, to get the highest return in the shortest amount of time. It’s sort of like harvesting organs before the body can’t be kept alive any longer. Go read Never Let Me Go and you’ll know what I mean. So, Spain, Ireland, Greece, Great Britain and the US will continue to pay and pay and pay until no further profits can be extracted. Then, they will move on to a different hemisphere. What is surprising it how passive many countries have been in accepting this fate. How long will it take for western countries to rebel like the middle east has? Decades? Will we have to live with decades of austerity and growing authoritarianism?

And now we can see why our governments act the way they do. Back in 2007, when Hillary Clinton was the front runner. I remember talking to a colleague who had a friend who was once an investment banker on Wall Street who had insights into how the bankers were thinking in 2007. They knew there was trouble coming and were trying to thread the needle. A Republican candidate might cause another Depression with the wrong policies. No, they didn’t want the patient dead, well, not until they could recover themselves. Maybe a Democrat. But Hillary Clinton had a strong responsibility streak in her. Besides, she came from Yale and we know that the culture of smartness distrusts Yalies as being too liberal. Another New Deal might have been too much like rehab. So, they threw their weight behind the Harvard guy whose unchecked ambition and cool demeanor was more like the cut of their own jibs. Just like the undergrads they hire from Princeton and Harvard, it didn’t matter to them if he knew nothing about finance. They would teach him.

If you’ve ever wondered, like I have, why Obama careens from saving one institution  to another in negotiations behind closed doors and apparently without any guiding principles, like he was making it up as he goes along, now you know why. He is governing on a deal by deal basis, without a worldview and without a strategy. It’s his modus operandi and he does it with equal fluidity with the bankers, the auto industry, congress, health insurance companies and voters themselves. He’s playing Let’s Make a Deal with each individual entity and with everything on the table.  Flexibilty and the “culture of smartness” is important to him, which is why Geithner and Summers got so much face time with him.  Loyalty and planning not so much, which is why Christina Romer got the shaft.  All of the reports on the way the White House operates with the fast paced credit stealing and high profile tasks going to smart young men and the golf outings with “front office” guys, sounds a lot like Wall Street.  If it turns out that his team hadn’t thought about how Republicans would game the debt ceiling business or how the individual mandate without a public option would make employees *more* vulnerable to layoffs and loss of health benefits, well, this is what you have signed onto with Obama.  He doesn’t see his role as a long term policy maker or seasoned politician and it shows.  If you’ve never worked in a corporate environment, you might be forgiven for not recognizing how the schmoozer works the system but there’s no excuse the second time around.

All around the world, bankers had their way with government leaders, well, except for Iceland, whose decendents of marauding Vikings and new female prime minister told them to f&*( off.  I guess it takes pirates to know pirates.  But the rest of the world bowed quickly to the notion that recovery of the banking system was The. Most. Important. Thing. Everything else, their sovereignty, public welfare and future growth, was made secondary to the immediacy of keeping the paper flowing between the banks. The fear of a global meltdown made them cower. But there is no strategy to ever get out from under these conditions. There was no effort to reign in the bankers either. And they have a well oiled propaganda machine and know that when a population is under stress, it circles the wagons and becomes more conservative and nationalistic. Liberal policies look too risky and threatening. In next week’s vote in France, I would not be at all surprised if Nicolas Sarkozy managed to hang onto power, despite his unpopularity. The rational people of France may look to the right at Marine Le Pen’s crazy nationalists and fear that Le Pen’s faction will get enough votes to form a coalition with Sarkozy’s. Voting for the socialist candidate may look too risky. I hope I am surprised.

And what does it mean for this country? Well, I am not at all surprised that expectations have been set for Hillary in 2016. The press only sounds beneficent and contrite this time around, acknowledging that maybe they have regrets about what they and the party did to her in 2008. Bullshit. They know damn well that her chances of getting elected in 2016 are nearly zero. But pushing the timeline for her forward is an attempt to pacify the restless elements of the populace who see her as the only legitimate alternative to either Romney or Obama. At this point, it doesn’t even matter who wins the White House. Wall Street doesn’t see either of them as a threat.

In the meantime, they have just scored another victory in the JOBS bill where they can be less than transparent to investors who they hope to make new deals with. I think the idea behind this was to help small companies, like small biotechs, get investment capital. Small biotechs don’t really have a product to sell. They have ideas and beginnings of products. But development takes a lot of time and money and as the big pharmas have already found, you can sink billions of dollars into an idea and have it shot down by the FDA or siphoned off by a side effect that no one anticipated. So the risks are high. But that doesn’t matter. All that matters is the deal and in innovative industries like biotech, there are a lot of potential deals to be made.

And then there is correlation between bonuses and crashes. Ho says that record high bonuses on Wall Street frequently precede crashes. That’s not really surprising. It means that there is a frenzy of unchecked deal making and risk taking with large sums of money in some corner of the market where all of the investment bankers have been attracted like magpies to shiny things. All of the money has poured into this sector and bets have been placed for and against. Maybe the new rules will prevent overleveraging. Maybe they won’t. But there is one thing the bankers can count on- a steady stream of new funds from your 401K accounts to their hands that they can bet in a global casino. Pensions are so passe. 401Ks are the new black and you can be sure that there will be an even bigger push for the banks to get their hands on even more piles of money that are sitting around that no one seems to be using.

There is no goal. There is no plan. There is no strategy. It’s all, “What have you done for me since lunch?”.

The system is broken. Its entropic, unsustainable, moving at speed of fiber optic cables and out of control. The best thing we average Joe’s can do is to limit our own losses, get out while we can and sleep with the lights on.

Wall Street, your corporation and baseball

I’m about 60% through Karen Ho’s book Liquidated- An Ethnography of Wall Street and I think I’ve finally figured out what it is we can’t understand about what Wall Street has been doing to American corporations.  Think baseball.

*WE*, clueless American workers think Wall Street is playing a game of rotisserie baseball where they look at the stats of the teams and their players and they trade and swap the players in order to make up a better line up.  In this ordinary, everyday, American working stiff view of the world, what the players can do is important.  The productivity of the team has value.  Most Americans want to maximize the productivity in homeruns per game because that makes sense.  Teams with more homeruns per game than the other team have winning seasons and lots more fans turn out and they sell more tickets and hot dogs and beers and souvenirs and the team makes the playoffs and everyone benefits.

No.  No, no, no.  That’s not they way Wall Street sees it at all.

Wall Street isn’t trying to optimize the line up.  They are swapping baseball *cards*.  They want the original Honus Wagner and Pie Traynors.  They put an artificial value on the card and swap the cards with each other.  In this scenario, the team doesn’t matter.  The productivity of the team going forward doesn’t matter.  All that matters is that the card still has the shine and gloss on it and that the corners aren’t frayed and the sucker hasn’t got any creases in it.  Your job as a corporate manager is not to make the team more productive.  Your job is to make the card look as attractive as possible to the card swapper.  The reason why you cut and dismantle is not to make the company more efficient and productive.  It’s to package up a product that can be sold to another buyer for the highest possible price.  The value of the product doesn’t have anything to do with the actual productivity of the team.

Now, I’m getting into the nitty-gritty of *why* American corporations are valued less for their productivity and more for their gloss.  It has to do with the temporal nature of the banker’s job on Wall Street.  And at this point in time, it looks like Wall Street workers are the Americans most in need of a union.  At the very least they need an intervention and about 6 months at a spa where they can destress and gain some perspective.

No, I am not kidding.  It’s a mixed up, jumbled up shook up world.

Go get Karen Ho’s book and read it NOW

Last night, I read more of Karen Ho’s book, Liquidated- An Ethnography of Wall Street and it should be required reading for every literate person in America.  I am not exaggerating.  But if you read it late at night, it might just scare the bejeesus out of you so keep your light on when you go to bed.

What scares me the most is how true it rings to my own experiences at work over the past two decades.  Ho writes like an academic.  This is not a beach read.  You will have to reread passages if you’re not familiar with how finance works.  Her descriptions of capitalism and securities over the country’s history are not easy to get through.  But it’s worth the effort because “vampire squid” does not begin to describe the horror that is Wall Street and what it has done to this country. Somewhere in this book Wall Street is referred to as “parasitical and predatory” and I’d say that’s just about right. But it is precisely Ho’s detached, dry academic style that makes the details so disturbing and makes this book more effective than Occupy Wall Street at focussing our attention on the real culprit of our middle class demise.

Several times while reading this I’ve had to stop and ask myself if all this is true or if I’m just being duped by confirmation bias.  But having seen the evidence of what the pressures of Wall Street have done to Big Pharma since the 80’s, Ho’s hypothesis makes too much sense to deny.  All the pieces fit neatly into place.  And now I realize that I missed my true calling in life.  I should have been an anthropologist because I haven’t missed a thing except some of the backstory that only a person of Karen Ho’s socioeconomic privileged background would be able to ferret out.

I’m only half way through the book so I don’t know if Ho has any recommendations but I know what would get Wall Street’s attention, and I think I’ve mentioned this before: sell your 401K.  Yep, get out of the market altogether.  As long as you have investments in that thing, you and the country will never be free.  And to tell you how much Wall Street has a grip on you, that very suggestion probably made you choke on your Starbucks, right?  You’ve been told for decades that it’s the height of irresponsibility to spend your retirement account (who says you have to spend it?).  You’ve been made to feel like a stupid person eating your seed corn if you take that money out.  Or the fact that the taxes you have to pay for early withdrawal are outrageous makes you think twice about it.  Believe me, I know how you feel.  I have all of my retirement savings tied up in two 401K accounts and the thought of taking it out and paying that criminal excise tax makes my blood boil.  You can bet our buddies at the big investment banks were behind that.  They want access to your money and they want to make it as painful as possible for you to take it away from them.  And it’s not even that they want to play with your hard earned dollars at the casino, although that’s true.  It’s that trapping you and your money in the stockmarket means they can fashion this country’s political system any damn way they please.  Your agency will be harnessed to *their* political goals.  The more you give them, the less you will get back.  The whole goal is to atomize the welfare state so that each person is left completely vulnerable and on her own, a single individual plugged into the Wall Street system without any other means of support.  If the market goes down, YOU go down with it.  So, cash in the 401K if you are unemployed and stop making contributions.  Or if you can’t do that, try to get out of stock funds.  One or two people won’t make any difference to them but millions?  Yeah, that ought to make them blink.

If I and my colleagues hadn’t experienced the effects of Wall Street first hand in the most painful way possible, I would think that Ho’s book was an over the top diatribe against Wall Street.  But Ho does something that the left does not expect.  She rescues the word “corporation”.  Half way through the book, you will start to realize what I have been trying to say for a couple of years now.  Corporations that produce things and employ thousands of people are not the enemy here, or at least the people who work for them and the products are not the enemies.  Even corporate management didn’t start off as bastards, even if some of them have not been overly friendly to labor.  You might say that corporate money has too much influence in politics but as you read the book, the reasons behind that become clear.  And if lefties continue to throw themselves against the word “corporation”, they are only going to be wasting their time.  It is too imprecise.  There are industries that work through corporations and then there are the big investment banks on Wall Street and they haven’t always been the same.  Teasing the agents apart at this point in time is going to be tricky but necessary.

Anyway, just read it.  Make sure you have your Teddy Bear to clutch in the middle of the night.

One very interesting fact from Ho’s book: Wall Street investment banks recruit heavily from a handful of prestigious Ivies.  There are two in particular that the bulk of Wall Street analysts and associates come from: Harvard and Princeton.  I’m not surprised about Princeton.  A few years ago, when I was trying to get Brooke into a private school that wouldn’t drive us all crazy, I toured several in the Princeton area and was surprised to see all the cable business channels running on multiple tv screens in the student lounges.  The kid was waitlisted, probably because we asked for financial aid.  But I digress.  The investment banks seem to think that Harvard and Princeton nurture their students in a way that make them perfect for Wall Street.  They’re smart, driven, ambitious, used to the finer things in life and they are looking for the next Harvard after graduation.  A few others get their attention, like MIT and Wharton.

But investment bankers do not like to recruit from Yale.  They don’t trust Yale graduates because they think they are too liberal.

So, maybe it shouldn’t be a surprise that when Wall Street knew it was going down in 2007, it recruited a presidential candidate from Harvard and passed on the one from Yale.

Oh, and Ho uses the word “schmooze” to describe the front office guys (almost all of them are guys) who use their relationships and connections to get to the top.  Some of them didn’t learn a thing during their investment bank’s finance training classes.  Apparently, you don’t have to know anything about finance to climb the corporate ladder to success.  You just have to know the right people and be really good at golf.

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