Five Things You Need to Know: Caught Between a Wall and a Main Street
By Kevin Depew Dec 12, 2008 3:45 pm
Mr. Jones shot by both sides.
Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:
Shot by Both Sides, It's Tough Being Mr. Jones
Between the news of whatever company is going to be bailed out next and the arrest of Wall Street Superstar, "Mr. 12%," Bernard Madoff, Mr. Jones had every right to walk out of his favorite Main Street diner this morning after having enjoyed his typical weekday breakfast, feeling perhaps as if he was the only one left out of the secret understanding that seems to pervade all things financial these days.
Walking to his office, he caught his reflection in a storefront window and paused. Haven't I done everything right? he asked himself. It was a legitimate question. But the reflection in the glass looking back at him made him feel embarrassed, small and even a little dumb.
The answer seemed to be both yes and no. After all, his small town was a long, long way from Wall Street. He stepped back from the storefront and leaned his elbow on a parking meter.
"New York. What a joke," he thought, "and we're the punchline. Who are those people?" he wondered. "Somebody somewhere must be making money on all of this, but who? How do you get to be one of "those" people?"
He choked the thought off almost as soon as it entered his mind. He had chosen this; this small town, this life - choices just as legitimate as any made by the bankers and the salesmen wearing suits in Manhattan.
Sure, he knew the rules; the closer you are to the money, the higher up on the food chain, the easier the meals are. He also knew that for the rest of America the rules worked much the same, only on a smaller scale. He had chosen to live on a smaller scale, to carve out his own place, a humble place, he thought. But now, the rules seemed to be changing, the goal posts always shifting.
Shot by both sides. He laughed to himself at the concept. "It's true," he thought. "All this time I've been playing hard, like I'm really a part of the team, but I'm not. I'm just one of the balls."
Shot by Both Sides
Yes, the writing is on the wall. All that's left really is to figure out how much more humiliation Mr. Jones will be willing to accept and what indignity will finally be the last straw.
Will it be General Motors (GM) and the unmitigated gall it takes for politicians to place the safety of a million or so auto industry-related jobs above the million-and-a-half other jobs that have already been lost this year?
Or what about a U.S. Governor who auctions off a United States Senate seat to the highest bidder?
Will it be a "giant ponzi scheme" that ran so deep, and for so long, as to be able to perpetrate a $50 billion dollar securities fraud that could possibly leave people who thought they were rich on Wednesday penniless by Friday?
Or will it be something "smaller," like the high-profile New York City law firm principal who was arrested in Canada last week and is accused of cheating hedge funds and investors out of a mere $380 million?
Who's to say?
No positions in stocks mentioned.
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2008-12-12 16:14:28
The Blank Check
I thought this week that someone, somewhere is making money.
Now the morphing TARP is now getting very reckless.
My new thought is that someone, somewhere should be allowed to fail.
Now the morphing TARP is now getting very reckless.
My new thought is that someone, somewhere should be allowed to fail.
2008-12-12 17:05:29
Shot
Kevin,
Thank you for expressing how I feel; one "Mr. Jones" here.
I feel shot on both sides; duped, played, and betrayed.
Conspiracy? Fifth Column? No.
I agree that the overall patterns and herding instincts come and go without a master plan by the government or other mortals.
I do though believe that there has been a long term erosion of ethics and stewardship over the past two or three generations.
Yes, there have always been corrupt people and institutions. However, there is a generational pattern within the human condition whereby we forget the consequences of living for the moment, and of lust, greed, and avarice. The costs are: loss of wealth, liberty, and innocent life.
Sadly, without destruction and collapse, we forget the need, the necessity, the yearning for morals and ethics that builds a civilized society.
The Ten Commandments are the Ten Commandments for a reason.
Eric
Thank you for expressing how I feel; one "Mr. Jones" here.
I feel shot on both sides; duped, played, and betrayed.
Conspiracy? Fifth Column? No.
I agree that the overall patterns and herding instincts come and go without a master plan by the government or other mortals.
I do though believe that there has been a long term erosion of ethics and stewardship over the past two or three generations.
Yes, there have always been corrupt people and institutions. However, there is a generational pattern within the human condition whereby we forget the consequences of living for the moment, and of lust, greed, and avarice. The costs are: loss of wealth, liberty, and innocent life.
Sadly, without destruction and collapse, we forget the need, the necessity, the yearning for morals and ethics that builds a civilized society.
The Ten Commandments are the Ten Commandments for a reason.
Eric
2008-12-12 17:47:15
Human condition
Never attribute to malice that which can adequately be explained by stupidity.
2008-12-12 19:45:03
2 sides
I think the two sides are like this. One side is the regulators and/or government, the other side is big business. The two are actually siblings, constantly bickering, sniping, and degrading each other, but enter the general population as a force, and the two siblings join forces to stave off enemy. The two siblings act as though they are entitled to all the wealth and/or power they can obtain, always at the expense of the general population.
Look at the current auto problem. From what I hear no one has even taken the time to look at the financial statements and become somewhat savy about the finances of these companies. In brief Ford is presently backing out so I did not look at them. Now one of the good ones, Chrysler is majority owned by a rather recent purchase by Cerebus Capital. It would appear Cerebus went to the trough because why wouldn't they if money is being given out. They could probably use the free money to pay off some of the purchase price, and have some left over. Or just simply shift it out of the business, and disregard any consequenses.
Finally we have good old G.M. From two different angles of approach it appears in the financials that in between 2005 and 2006 their long term investments went from 206 Billion dollars down to 12 billion dollars. I see a huge drop off 192 billion and wonder whats up. Then in 2007 I see a company that claims to have a net income loss of 38 billion dollars, while for the same year they claim a 37 billion dollar tax expense. I don't know much but I think GMAC financial which is majority owned by, you guessed it, Cerebus Capital, has a large influence on these out of whack big numbers helping to provide them the opportunity to double dip the bail out monies. In days gone by this would all seem rather unseemly, but now money is the measure and any means to a profit are justified.
As far as conspiracy theory goes it looks like this. Smart Sibling (Cerebus) is entirely capable of creating a way to capitalise on the situation, and they would not hesitate to denigrate the dumb sibling, (the government) even further, as in the end the general population will be paying the bill. It's enough to make me want to stand up in front of the senate and the house and say quit being so stupid.
Look at the current auto problem. From what I hear no one has even taken the time to look at the financial statements and become somewhat savy about the finances of these companies. In brief Ford is presently backing out so I did not look at them. Now one of the good ones, Chrysler is majority owned by a rather recent purchase by Cerebus Capital. It would appear Cerebus went to the trough because why wouldn't they if money is being given out. They could probably use the free money to pay off some of the purchase price, and have some left over. Or just simply shift it out of the business, and disregard any consequenses.
Finally we have good old G.M. From two different angles of approach it appears in the financials that in between 2005 and 2006 their long term investments went from 206 Billion dollars down to 12 billion dollars. I see a huge drop off 192 billion and wonder whats up. Then in 2007 I see a company that claims to have a net income loss of 38 billion dollars, while for the same year they claim a 37 billion dollar tax expense. I don't know much but I think GMAC financial which is majority owned by, you guessed it, Cerebus Capital, has a large influence on these out of whack big numbers helping to provide them the opportunity to double dip the bail out monies. In days gone by this would all seem rather unseemly, but now money is the measure and any means to a profit are justified.
As far as conspiracy theory goes it looks like this. Smart Sibling (Cerebus) is entirely capable of creating a way to capitalise on the situation, and they would not hesitate to denigrate the dumb sibling, (the government) even further, as in the end the general population will be paying the bill. It's enough to make me want to stand up in front of the senate and the house and say quit being so stupid.
2008-12-12 20:22:13
Great Commentary
What a great description of how this financial crisis is affecting "Mr. Jones".
And I never thought I would see the lyrics from Magazine quoted in the financial press. Well done!
And I never thought I would see the lyrics from Magazine quoted in the financial press. Well done!
2008-12-12 21:25:50
Shot
lust is not mentioned in he 10 commandments,
lust is what keeps the bars open in manhattan:)
lust is what keeps the bars open in manhattan:)
2008-12-13 01:34:40
Shot
Right.
It's lust that causes most of them to be broken, and keep the bars open.
Cheers,
Eric
2008-12-13 11:09:20
Conspiracy vs. coordinated self interest
Well, I don't know where the line is, but I do know that all it takes is ten people to spend $700 billion in one hour. That's not a conspiracy we are told; that's great leadership by a hard driving Treasury head.
In short, you can assemble one Treasury head, one Fed head, six or seven CEOs, a President, and four Congress chairs, and you have a bakers dozen of very powerful people who meet and talk and plan together all the time. And commit $8.5 trillion dollars of other people's money with very little public process and a whole lot of secrecy.
That is not, strictly speaking, a conspiracy.
So, what is it then?
In short, you can assemble one Treasury head, one Fed head, six or seven CEOs, a President, and four Congress chairs, and you have a bakers dozen of very powerful people who meet and talk and plan together all the time. And commit $8.5 trillion dollars of other people's money with very little public process and a whole lot of secrecy.
That is not, strictly speaking, a conspiracy.
So, what is it then?
2008-12-13 11:14:27
A Conspiracy of Limbic Proportions?
We are all co-conspirators in this criminal enterprise we so glibly refer to as 'the American Way of Life'.
We all benefited from the suffering and oppression of the people we exploited in third world countries around the world.
We all wanted to get 'ours'...to greater and lesser degrees.
Some people have even come out and admitted that they knew Bernie Madoff was cheating...that's why they invested with him!
This economic crisis isn't an accident. This isn't an unavoidable perfect storm. These are your chickens coming home to roost.
Why are all the Mr. Joneses only now complaining of the unfairness of it all?
The fault, dear Mr. Jones, is not in our stars, but in ourselves, that we are underlings.
2008-12-13 11:32:15
And then...
I don't ordinarily find myself in agreement with Mr. Will but this time I think he gets it fundamentally right:
This crisis came partly because so many households decided that it would be jolly fun to budget the way government does, hitching outlays to appetites. Beneath Americans' perfunctory disapproval of government deficits lurks an inconvenient truth: They enjoy deficits, by which they are charged less than a dollar for a dollar's worth of government. Conservatives participate in this, even though deficits fuel government's growth by obscuring its cost. The people can emulate the government because credit has been democratized. Democratization of everything is supposedly an unquestionable good, but a blizzard of credit cards (1.5 billion of them, nine per cardholder), subsidized loans and cheap money has separated the pleasure of purchasing from the pain of paying. Furthermore, the entitlement mentality fostered by the welfare state includes a felt entitlement to a standard of living untethered from savings. Populism flatters the people, contrasting their virtue with the alleged vices of some minority…[T]oday, the villain is ‘Wall Street greed,' which is contrasted with the supposed sobriety of ‘Main Street.' When people on Main Street misbehave by, say, buying houses for more than they can afford to pay, they blame the wily knaves who made them do it.“
George Will
2008-12-13 12:16:16
It is conspiracies
The decisions we are seeing about the financial and (now) other industries are the result of many small conspiracies. Not 6 people in a room controlling the world. Every time you get people in a room to decide on a future plan for anything, they will end up conspiring to keep or increase whatever power they have and hurt their friends as little as possible. This is human nature. Powerful people are really good at this and, because they are powerful people, get to make decisions that affect a large number of people. There is always random chance involved so when the decision makers leave the room they can't be sure that everything will work as agreed. If things don't work it can be bad for the deciders so there are some limitations on what can be decided. Anyone who has been in a company meeting anywhere has seen this. Yes, I know, you (gentle reader) are above that sort of thing and always work for the betterment of your fellow man.
Luckily for all of us, this country was based on these three ideas. First that we can't trust our leaders to do the right thing so we elect them in hopes that we can align their interest for power with our interest in a good life.
Second, to make it hard enough to get new things done so that not much gets done by government. (i.e. reduce the risk of a bad decision by not making any decisions at all if possible.)
Third that people in groups can be swayed by others and don't always (maybe hardly ever) think rationally. Elected officials as individuals and interested in the status quo (its safer when election time comes) usually work to limit swings in the country's fortunes and theirs...
It takes the right kind of experience to believe in the long term "goodness" of moral codes like the ten commandments. Or even simpler ones like "What goes up must come down". Or, my favorite, "Back up your work daily".
As a country we are getting some experience and will likely get some more... We will get through this but we will be different...
Luckily for all of us, this country was based on these three ideas. First that we can't trust our leaders to do the right thing so we elect them in hopes that we can align their interest for power with our interest in a good life.
Second, to make it hard enough to get new things done so that not much gets done by government. (i.e. reduce the risk of a bad decision by not making any decisions at all if possible.)
Third that people in groups can be swayed by others and don't always (maybe hardly ever) think rationally. Elected officials as individuals and interested in the status quo (its safer when election time comes) usually work to limit swings in the country's fortunes and theirs...
It takes the right kind of experience to believe in the long term "goodness" of moral codes like the ten commandments. Or even simpler ones like "What goes up must come down". Or, my favorite, "Back up your work daily".
As a country we are getting some experience and will likely get some more... We will get through this but we will be different...
2008-12-14 01:43:05
Tin Foil Hats
Although there is no shortage of crackpots out there, have you ever noticed that the Kleptocracy attaches the word "conspiracy" and its associated stigma to ideas that they wish to discredit?
For instance, anyone who believes that artificial price floors are being brazenly establised in the equities markets is deemed a conspiracy crackpot. They're told that this is an impossibility because the markets are too large to be rigged. Yet, didn't we just see two bans on short selling becuase the shorts had "undue" influence on the markets? Apparently, we're to believe that short sellers have much more power than the federal government. No wonder the public quit thinking years ago.
For instance, anyone who believes that artificial price floors are being brazenly establised in the equities markets is deemed a conspiracy crackpot. They're told that this is an impossibility because the markets are too large to be rigged. Yet, didn't we just see two bans on short selling becuase the shorts had "undue" influence on the markets? Apparently, we're to believe that short sellers have much more power than the federal government. No wonder the public quit thinking years ago.
2008-12-15 08:39:21
How's this for a wall? (from MSNBC this AM):
"But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty [for top execs] would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.
Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives."
Best,
Seamus O'Bannion.
"But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty [for top execs] would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.
Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives."
Best,
Seamus O'Bannion.
2008-12-15 11:09:26
go barney make it retroactive
maybe barney frank will now go back to his friends - yes the male type and do something right.
TAX THE CRA*P OUT OF EXECUTIVES!!
make it retroactive too!!!
75% tax rate looks good by me!!
we NEED HIGHER TAXES ON THOSE MAKING OVER $250,000 a year.
I'll pay it if I make it!!!
So why shouldn't everyone else.
GREED TO PERVADES the establishment!!
TAX THE CRA*P OUT OF EXECUTIVES!!
make it retroactive too!!!
75% tax rate looks good by me!!
we NEED HIGHER TAXES ON THOSE MAKING OVER $250,000 a year.
I'll pay it if I make it!!!
So why shouldn't everyone else.
GREED TO PERVADES the establishment!!
2008-12-15 14:11:32
go barney make it retroactive
Adding financial disincentives will surely make the US popular smarter, harder working and apt to increase his or her income!
Rumors abound that Frank has the IQ of a Donkey.
Rumors abound that Frank has the IQ of a Donkey.
2008-12-17 09:43:48
additional comment to Fred & Bashir
The problem isn't Barney Frank. If it were, it would be easy to solve - vote the bum out (& vote in a bum w/ a different face). The problem is calling a system in which government & business have once again been made partners by a former administration - Reagan's - a democracy. The two parties (& a third doesn't have a chance because the press is one of the partners of the first two) disagree at the margins - abortion, g*y rights (sorry, Minyanville, I'll try to remember in the future not to write g*y, but g*y; I know this is a family show & just zillions & zillions of kids under 18 literally pore over these comments), whether or not to allow smoking in the lobby of your neighborhood theater [never to allow drugs - God forbid!] - but first they have to take care of business (actually, BIG business & BIG money).
The people who blame our failure on the unions aren't stupid; they know that one man alone can't stand up to a megabucks employer & demand his fair share of the wealth he creates. In the late 19th century, when the union movement began to get some legs, it wasn't just Pinkertons that were shooting workers, it was the National Guards of the various states. Here, in the 3rd world country that I call "home" (I try not to laugh too hard when I say that), paying your employees is optional. How come all Americans don't know that? After all, there's enough propaganda about the "developing world"; how come not enough room to squeeze in such an important fact? Also, how much one is paid is almost never as much as the amount promised. In 2004 (2005?) the public school teachers of Peru went on strike for several weeks. How much were they being paid? 450 soles/month - about $128. The government called out the army & some were shot & killed . The teachers kept on striking - their pay was 150 soles less than what my wife & I were spending on food, soap, toilet paper, etc. at the time. Gov. promised them 100 sol increase, then gave them just 50. Big news in gringo land? Hardly. No time. After all, they need so much time to bash the socialists like Castro & Chavez, they hardly have enough time left for the commercials.
Best,
Seamus O'Bannion.
The people who blame our failure on the unions aren't stupid; they know that one man alone can't stand up to a megabucks employer & demand his fair share of the wealth he creates. In the late 19th century, when the union movement began to get some legs, it wasn't just Pinkertons that were shooting workers, it was the National Guards of the various states. Here, in the 3rd world country that I call "home" (I try not to laugh too hard when I say that), paying your employees is optional. How come all Americans don't know that? After all, there's enough propaganda about the "developing world"; how come not enough room to squeeze in such an important fact? Also, how much one is paid is almost never as much as the amount promised. In 2004 (2005?) the public school teachers of Peru went on strike for several weeks. How much were they being paid? 450 soles/month - about $128. The government called out the army & some were shot & killed . The teachers kept on striking - their pay was 150 soles less than what my wife & I were spending on food, soap, toilet paper, etc. at the time. Gov. promised them 100 sol increase, then gave them just 50. Big news in gringo land? Hardly. No time. After all, they need so much time to bash the socialists like Castro & Chavez, they hardly have enough time left for the commercials.
Best,
Seamus O'Bannion.
2008-12-17 11:06:17
additional comment to Fred & Bashir
Heck, its much worse than that. Ask people in America (supposed purveyors of freedom and democracy) about the green Ford Falcons in Argentina. Or Allende being replaced with Pinochet in Chile (anyone remember ITT). Or the United Fruit Company in Guatemala. Or U.S. support of Trujillo in the Dominican Republic until we 'discovered' he was a brutal dictator (if you think Saddam Hussein was an anomaly) Etc. Etc.
The list goes on and on while the vast majority of Americans are sublimely ignorant.
History not only repeats itself (and often rhymes) but during the last 50 years it usually has a lot to do with the United States supporting dictators (aka stability) at the expense of workers around the world.
As Rumsfeld is famously quoted as saying about Musharaff...
He may be a dictator but he's OUR dictator.
2008-12-17 19:18:09
Dear David,
To my knowledge, the first time that was said was by FDR to his secretary of state who told him that Samoza, the dictator of Nicaragua, was a b*stard. Quote FDR: "Yes, but he's our b*stard."
And you know, the guy we killed about three thousand civilians to liberate Panama from, wasn't a b*stard at all. He just decided to stop being our gofer. And, oh yeah, his trial (Noriega's) took place at the same time as OJ Simson's.
While we're on the subject of righteousness in foreign policy, can anyone tell me why we had to "defend" outselves against Sadam Hussein? All he did was take the nerve gas he got from us to use against the Iranians and used it against the Kurds. And I'm not sure how charitable or law-abiding Bush would be against an armed insurgency who wanted to, say, carve out Kansas & Nebraska & make them their own country.
Actually, I think every people - Kurds, Palestinians, the Irish, and even Americans - should have their own country. So where do we begin?
Best,
Seamus O'Bannion.
To my knowledge, the first time that was said was by FDR to his secretary of state who told him that Samoza, the dictator of Nicaragua, was a b*stard. Quote FDR: "Yes, but he's our b*stard."
And you know, the guy we killed about three thousand civilians to liberate Panama from, wasn't a b*stard at all. He just decided to stop being our gofer. And, oh yeah, his trial (Noriega's) took place at the same time as OJ Simson's.
While we're on the subject of righteousness in foreign policy, can anyone tell me why we had to "defend" outselves against Sadam Hussein? All he did was take the nerve gas he got from us to use against the Iranians and used it against the Kurds. And I'm not sure how charitable or law-abiding Bush would be against an armed insurgency who wanted to, say, carve out Kansas & Nebraska & make them their own country.
Actually, I think every people - Kurds, Palestinians, the Irish, and even Americans - should have their own country. So where do we begin?
Best,
Seamus O'Bannion.
2008-12-18 11:22:34
Lone voices in the wilderness of intellectual honesty
Thank you for reminding me that I'm not alone.
There was a time when individuals had a defense for their ignorance of our foreign policy. After all, you weren't going to hear the truth in most of our schools or media. However, thanks to the Internet, that time has passed. The only reason to remain ignorant of the injustices perpetrated and supported around the world by the United States is that it is a self-serving ignorance.
I have a neighbor who is a devout christian and spends a significant amount of time and money supporting charitable causes. He is however oblivious to the suffering and opression our foreign policy is responsible for. I asked him a question:
If I could prove to you beyond a shadow of a doubt that the United States has been directly responsible for untold oppression, torture, suffering and death around the world for at least the last 50 years would you be willing to look at the evidence?
He got very serious and was quiet for about a minute and then he said no, if I saw that evidence how could I go on believing in my country? He went on to say that he likes putting out the flag on Memorial Day and Veteran's Day. He likes singing the National Anthem at ball games. He likes being proud of his country. Most of all, he likes believing that he and his fellow friends, neighbors and citizens are good people.
Before I hear from people saying 'if this country is so bad, why don't you leave" my response is why don't we all open our eyes, stop believing we are God's chosen people deserving of a standard of living so far beyond most other peoples of the earth that it is shameful and DO something to make this a better more just country. It starts with awareness.
We have great road maps in the Declaration of Independence and the Constitution but they should be more than just words on paper meant to gather dust in some museum. They represent concepts applicable to all men...not laws that we attempt to circumvent when they aren't in our 'interests'.
In the coming years, as Americans learn what real sacrifice and hardship are all about, it might help to remember that this is all the vast majority of people who ever lived on this planet have ever known.
What will be the reaction when people who have never known hunger start to go hungry?
Its probably not going to be pretty.
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