Remora
What did you do in the Great Recession, Daddy?
Well, as analysts on Wall Street bubble with bull opportunities afforded by the rest of this year -- that good old V bounce to the recession -- reality out there isn't so happy. With the Federal Reserve becoming, basically, the Office of Moral Hazard, always willing to cut rates in order to keep equities from finding traditional p/e levels that would bring the Dow Jones Average crashing 2000 some points, the market in housing and autos was banner last year. But banner at what cost? Enron shows what happens when a company is taken apart by the whitewater currents of the futures market -- small bets can become big losses, as was the experience of Barings, of Long Term Capital Management, of the Orange County Teachers retirement fund, of... well, the list goes on.
In order to prevent sales from slumping, Detroit used the Fed's party-time philosophy to finance an incredible issue of credit. This is a balancing act that is reminiscent of the situation the S&Ls faced in 1979 -- in that year, they had to balance the sharp, short term spike on interest with long term housing loans that were pegged to yesteryear's lesser interest rate. Inflationary discounted inflow did not make up for inflationary magnified outflow. Result: changes in the usury and loaning laws that eventually wrecked the industry. Here, we have the inverse situation, with short term interest unnaturally low. If the Fed ratchets up the rate this year, as any good and prudent monetarist would advice, it is going to squeeze Detroit like a sucked lemon. The game plan seems to have been, avoid a sales downturn by any means necessary. But if you hold the firesale, you better have had a fire. Well, this year the story is going to be about a fire foretold. This means legislation will soon be trucking through congress to give the Big Three some special and stupid breaks. We won't hear from any congressmen about how stupidly these companies have used their credit -- unlike the preaching we heard from the high and mighty Senate when they were crafting bankruptcy laws to penalize the poor individual debtor.
If that doesn't happen -- well, take away Limited Inc's prophecy licence and throw our body to the street, where the dogs can lick up our blood. What was good enough for Jezebel is good enough for us.
Here's the NYT:
"In 2001, total auto sales stayed at a near- record level, especially after Sept. 11, largely because G.M. and Ford leaned heavily on their financing businesses to pump up sales. But that burst of interest-free financing deals was just the latest in a string of deal making that led to swelled portfolios of leases and car loans taken on by Ford Motor Credit and the General Motors Acceptance Corporation (news/quote), known as G.M.A.C., in the last five years.
Unlike their foreign rivals, which have developed stables of models that buyers actually will pay more for, Ford and G.M. have relied more on incentives like low- interest loans and cheap leases to attract customers. The automakers have ponied up billions of dollars to their financing units to make up the difference on the below-market financing."
Fun facts to know and tell:
Ford Motor Credit financed more than half of the vehicles Ford Motor sold last year. G.M.A.C. financed more than 40 percent of G.M. sales. At G.M.A.C., 85 percent of loans made in 2000 had some subsidy.
This is a huge shift in loaning practice, to corporate subsidiaries who have every interest in making unsafe loans. If there's a large fall out in those loans, watch the Federal Gov come up with some cozy loan insurance plan.
Sunday, January 6, 2002
Saturday, January 5, 2002
Remora
Tom Paine got Colin Woodard, whose book, Ocean's End, was one of our favorite books last year, to put the heat on The Skeptical Environmentalist
.
But Tom Paine is a little late to the game, compared to Limited Inc., as our lucky readers (the few, the bold, the brave, the ones looking for girles+Arabia+sex) know. For those of you who missed it, this is a reprint of our post in August about Lomborg's miserable tract:
8/8/2001 10:40:02 AM
Bjorn Lomborg seems set to be the most quoted environmentalist of the season. The reason? He has a conversion story. There he was, according to himself, your average know nothing Greenpeace schmoe, kvetching about mass extinction and Global Warming on Planet Gaia, when he got knocked down (spiritually, that is) by libertarian skeptics of the environmental model. No doubt, like Saul, he had his days of reclusion and blindness, the night sweats, the fever - but a vision of Gale Norton apparently visited him, saying, in an unearthly voice, go and tell all mankind about the wonders of cost benefit analysis! So he arose from his bed and now he's come out with a book, and at such a convenient time, too! What with the trashing of the Kyoto accords and all, which looks so terrible in the press. The book plays a theme dear to the corporate mindset - that is, that environmentalists exaggerate, and that such things as climate change, or environmental damage, are myths generated by inaccurate or skewed stats and projections of enviro- Nazis. Of course, modern day converts never convert all the way - they want to bring their cultural capital with them, otherwise they become just another Jack in the Pack. So instead of taking the mantle of libertarian debunker, Lomborg, of course, is still describing himself as an environmentalist. He is of that less dogmatic type, undisturbed when they blacktop those pristine redwood forests in California. Plenty more where that came from! Hell, wonders of biotech nowadays, we'll just fix us up a batch in a laboratory. So come on down, Butterfly!!!
Lomborg summarizes these views in an Economist article. He has developed a handy name - the Litany - for the general complaints about ecological degradation bandied about by environmentalists. He goes through the four major points in the Economist article.
I actually agree with one of his points - I have no sympathy with the population control crowd. In fact, the Litany is very skewed, itself, to the kind of environmentalism represented by Paul Ehrlich and the Club of Rome, which has always been very alarmist about the depletion of natural resources and the danger of over-population.
It is his third and fourth points I find extremely shaky. First, there is the threat of biodiversity loss. Lomburg says this is exaggerated. But his base for that loss is extinction. He doesn't defend this as a standard. He writes, for instance, of predictions of extinction, "...the data simply does not bear out these predictions. In the eastern United States, forests were reduced over two centuries to fragments totalling just 1-2% of their original area, yet this resulted in the extinction of only one forest bird." Presumably he means the Ivory Billed Woodpecker, or perhaps the Carolina Parakeet (that I can name two candidates off the top of my head - and I'm no ornithologist - makes me think that his claim is probably factually dubious). Lomburg simply ignores monoculture, and the destruction of biodiverse habitats. If the loblolly pine takes over the ecological niche of, say, the live oak in Southern Georgia, sure, that doesn't entail the extinction of the live oak - it simply entails its rarity, its being thrusted to the periphery. The whooping crane is not extinct - but the number of the whooping crane is such that its former environmental role is, basically, non-existent. In other words, bio-diversity certainly doesn't mean that species that hang on in severely diminished numbers are some kind of proof that the ecology has remained unimpaired.
As for the claim that "pollution is also exaggerated," this point is much too uniform to hold. Lomburg shows that London air was much more polluted in the 1880s then now. His claim is, presumably, about particulate pollution. But the harm of a pollutant isn't necessarily in its quantity - small quantities of certain pollutants are much more harmful than large quantities of other pollutants. Take Lead. When lead was put into gasoline, it was emitted in quantities that were less than, say, the quantity of carbon dust released by coal energy - but lead is much more toxic. Also, Lomburg simply ignores the complexity of pollution. London is a good example - after the killing fogs of the fifties, a concerted effort was made to clean up the London air. But the clean-up inadvertantly lead to ozone problems, as the sunlight could now interact with car emissions - in other words, smog.
Finally, Lomburg engages in some suspicious cost analysis. For instance, he quotes a chart showing how much it costs to save a persons life in terms of regulation, and enforcing the use of various pollution reduction devices. This is a very common fallacy among the anti-enviro set - that there is only one set of costs. What is never done is to ask - what does pollution cost if it isn't cleaned up? The tacit assumption is that pollution control is some kind of bizarre luxury. If your car emits certain gases, well, that's a moral problem, but surely not an economic one. Right? Wrong. Pollution is not a free lunch. The question is: who pays for the social cost of pollution? This question is evaded by giving us the unilateral costs to businesses of pollution clean-up - which is like being given one side of an accounting ledger. If it costs 800 dollars to install seat belts, for instance, what isn't asked is - how much does it cost to pay for the additional injuries that would result from lack of seat belts? If it costs a million dollars to install filters on a coal burning power plant, how much does it cost, in terms of life and property degradation, when the unfiltered pollution is allowed to spread from the plant? In fact, this is where environmentalists, far from being alarmists, have been sleepwalking - partly because they don't think in terms of, say, property values. The anti-enviro crowd is happy enough with that - they can pass the cost of skewed statistics onto the back of the average citizen, in the shape of using them to justify dirty public policy.
I've written a little essay on the social costs of doing business which I ought to post this week, to continue this discussion.
Anyway, all my caveats aren't going to matter - Lomburg is on his way as the corporate environmentalist du jour. He is handsome, he has a conversion story, and he uses models preferred by the business crowd. What could be better?
Tom Paine got Colin Woodard, whose book, Ocean's End, was one of our favorite books last year, to put the heat on The Skeptical Environmentalist
.
But Tom Paine is a little late to the game, compared to Limited Inc., as our lucky readers (the few, the bold, the brave, the ones looking for girles+Arabia+sex) know. For those of you who missed it, this is a reprint of our post in August about Lomborg's miserable tract:
8/8/2001 10:40:02 AM
Bjorn Lomborg seems set to be the most quoted environmentalist of the season. The reason? He has a conversion story. There he was, according to himself, your average know nothing Greenpeace schmoe, kvetching about mass extinction and Global Warming on Planet Gaia, when he got knocked down (spiritually, that is) by libertarian skeptics of the environmental model. No doubt, like Saul, he had his days of reclusion and blindness, the night sweats, the fever - but a vision of Gale Norton apparently visited him, saying, in an unearthly voice, go and tell all mankind about the wonders of cost benefit analysis! So he arose from his bed and now he's come out with a book, and at such a convenient time, too! What with the trashing of the Kyoto accords and all, which looks so terrible in the press. The book plays a theme dear to the corporate mindset - that is, that environmentalists exaggerate, and that such things as climate change, or environmental damage, are myths generated by inaccurate or skewed stats and projections of enviro- Nazis. Of course, modern day converts never convert all the way - they want to bring their cultural capital with them, otherwise they become just another Jack in the Pack. So instead of taking the mantle of libertarian debunker, Lomborg, of course, is still describing himself as an environmentalist. He is of that less dogmatic type, undisturbed when they blacktop those pristine redwood forests in California. Plenty more where that came from! Hell, wonders of biotech nowadays, we'll just fix us up a batch in a laboratory. So come on down, Butterfly!!!
Lomborg summarizes these views in an Economist article. He has developed a handy name - the Litany - for the general complaints about ecological degradation bandied about by environmentalists. He goes through the four major points in the Economist article.
I actually agree with one of his points - I have no sympathy with the population control crowd. In fact, the Litany is very skewed, itself, to the kind of environmentalism represented by Paul Ehrlich and the Club of Rome, which has always been very alarmist about the depletion of natural resources and the danger of over-population.
It is his third and fourth points I find extremely shaky. First, there is the threat of biodiversity loss. Lomburg says this is exaggerated. But his base for that loss is extinction. He doesn't defend this as a standard. He writes, for instance, of predictions of extinction, "...the data simply does not bear out these predictions. In the eastern United States, forests were reduced over two centuries to fragments totalling just 1-2% of their original area, yet this resulted in the extinction of only one forest bird." Presumably he means the Ivory Billed Woodpecker, or perhaps the Carolina Parakeet (that I can name two candidates off the top of my head - and I'm no ornithologist - makes me think that his claim is probably factually dubious). Lomburg simply ignores monoculture, and the destruction of biodiverse habitats. If the loblolly pine takes over the ecological niche of, say, the live oak in Southern Georgia, sure, that doesn't entail the extinction of the live oak - it simply entails its rarity, its being thrusted to the periphery. The whooping crane is not extinct - but the number of the whooping crane is such that its former environmental role is, basically, non-existent. In other words, bio-diversity certainly doesn't mean that species that hang on in severely diminished numbers are some kind of proof that the ecology has remained unimpaired.
As for the claim that "pollution is also exaggerated," this point is much too uniform to hold. Lomburg shows that London air was much more polluted in the 1880s then now. His claim is, presumably, about particulate pollution. But the harm of a pollutant isn't necessarily in its quantity - small quantities of certain pollutants are much more harmful than large quantities of other pollutants. Take Lead. When lead was put into gasoline, it was emitted in quantities that were less than, say, the quantity of carbon dust released by coal energy - but lead is much more toxic. Also, Lomburg simply ignores the complexity of pollution. London is a good example - after the killing fogs of the fifties, a concerted effort was made to clean up the London air. But the clean-up inadvertantly lead to ozone problems, as the sunlight could now interact with car emissions - in other words, smog.
Finally, Lomburg engages in some suspicious cost analysis. For instance, he quotes a chart showing how much it costs to save a persons life in terms of regulation, and enforcing the use of various pollution reduction devices. This is a very common fallacy among the anti-enviro set - that there is only one set of costs. What is never done is to ask - what does pollution cost if it isn't cleaned up? The tacit assumption is that pollution control is some kind of bizarre luxury. If your car emits certain gases, well, that's a moral problem, but surely not an economic one. Right? Wrong. Pollution is not a free lunch. The question is: who pays for the social cost of pollution? This question is evaded by giving us the unilateral costs to businesses of pollution clean-up - which is like being given one side of an accounting ledger. If it costs 800 dollars to install seat belts, for instance, what isn't asked is - how much does it cost to pay for the additional injuries that would result from lack of seat belts? If it costs a million dollars to install filters on a coal burning power plant, how much does it cost, in terms of life and property degradation, when the unfiltered pollution is allowed to spread from the plant? In fact, this is where environmentalists, far from being alarmists, have been sleepwalking - partly because they don't think in terms of, say, property values. The anti-enviro crowd is happy enough with that - they can pass the cost of skewed statistics onto the back of the average citizen, in the shape of using them to justify dirty public policy.
I've written a little essay on the social costs of doing business which I ought to post this week, to continue this discussion.
Anyway, all my caveats aren't going to matter - Lomburg is on his way as the corporate environmentalist du jour. He is handsome, he has a conversion story, and he uses models preferred by the business crowd. What could be better?
Remora
Limited Inc realizes that our fascination with some of the tedious arguments in the dismal science is not winning this site any popularity awards. Actually, according to our site meter, our most popular posts inevitably include the words Lolita, or tits, of sex, or girles -- so we included them in this sentence to trap the unwary, horny surfer. Ha ha.
But Limited Inc has always pricked up its ears at the sound of a trumpet, the old gray battle horse within stirring to scenes of past Agincourts. Today, the trumpet resounds from the Center for Economic Policy, curtesy of a link on the Arts and Letters site. Let us go then, you and I, to the article entitled A Closer Look at the World Bank's Most Recent Defense of Its Policies by Mark Weisbrot, Dean Baker, Robert Naiman, and Gila Neta. You'll notice the date on this paper -- August 2000. We can't explain why the A & L people spotlighted it a year later, but the paper foregrounds some future post we will no doubt be writing concerning the current turmoil in Argentina. The meat, here, is in the comparison of growth figures. The world bank paper that Mssrs. Weisbot, et al are replying to makes the banal point that growth is good for the poor. It extrapolates that point into another point: that the IMF doctrine of "anti-inflationary" fiscal policy, liberalisation of global financial markets, and openness to international trade are good for the poor. The inference being, these are growth oriented policies. The further inference being, past policies were not growth oriented.
Well, this is a sand castle of an argument, and W.B.N.N. knock it down with one swift kick, consisting of a graph comparing growth rates. The gross and oh so out of fashion Keynsian world displays the kind of growth undreeamt of in the sleek IMF model. If we are looking for policies that help the poor (and this is not something the IMF really is set up to do), unsurprisingly, the poor aren't helped by accident. They aren't, in other words, helped by helping the rich, which is what the IMF all neo-liberal political economics would have us believe. The comparison is strikingly in favor of the Keynsian mix of inflationary/ anti-inflationary measures, and national policies that regulate exports and imports.
Here are some important grafs:
In Latin America, for example, GDP per capita grew by 75 percent from 1960-1980, whereas in the latter period it has only risen 6 percent. For sub-Saharan Africa, GDP per capita grew by 36 percent in the first period, while it has since fallen by 15 percent.
These are enormous differences by any standard of comparison, and represent the loss to an entire generation-- of hundreds of millions of people-- of any chance of improving its living standards. Even where growth was significant, as in Southeast Asia, it was still better in the earlier period. The only exception to this trend was East Asia, which grew faster from 1980 to 1998 than in the previous period. But this is due to the quadrupling of GDP, over the last 18 years, in China (which has 83 percent of the population of East Asia).
In short, there is no region of the world that the Bank or Fund can point to as having succeeded through adopting the policies that they promote-- or in many cases, impose-- upon borrowing countries. (They are understandably reluctant to claim credit for China, which maintains a non-convertible currency, state control over its banking system, and other major violations of IMF/Bank prescriptions).[6]
One cannot stress too strongly the failure of these policies on the measure of economic growth, even ignoring income distribution. The debate over Dollar and Kraay's paper, for example, has simply assumed-- as the authors have-- that IMF/Bank policies do promote growth, and the only question is how well the poor have fared under the growth that has resulted from these policies."
The last is the assasin graf -- the look, the Emperor has no clothes graf. But before Limited Inc puts down our money on Keynsian policies, we feel like these statistics have to be fed into, well, reality. The era of spectacular growth spotlighted the Mssrs. et. al might, indeed, be impossible to replicate even with Keynsian economics. The reason for this is simple: a snapshot of the political economy of, say, Brazil in 1900 compared to Brazil in 1980 is going to be incredibly different; but it is hard to imagine the same technological/sociological/economic alteration occuring in the next twenty years under no matter what economic regime.
A further caveat has to do with the environment. The stats for the first half of the century simply ignore environmental degradation. But we are now more keenly aware that there are social costs to dams, irrigation projects, monocultural agriculture, and other featurs of growth. This impinges, of course, on both sides of the argument, but it is too little taken into account by the same groups who, admirably, dissent from the current model of IMF growth.
Limited Inc realizes that our fascination with some of the tedious arguments in the dismal science is not winning this site any popularity awards. Actually, according to our site meter, our most popular posts inevitably include the words Lolita, or tits, of sex, or girles -- so we included them in this sentence to trap the unwary, horny surfer. Ha ha.
But Limited Inc has always pricked up its ears at the sound of a trumpet, the old gray battle horse within stirring to scenes of past Agincourts. Today, the trumpet resounds from the Center for Economic Policy, curtesy of a link on the Arts and Letters site. Let us go then, you and I, to the article entitled A Closer Look at the World Bank's Most Recent Defense of Its Policies by Mark Weisbrot, Dean Baker, Robert Naiman, and Gila Neta. You'll notice the date on this paper -- August 2000. We can't explain why the A & L people spotlighted it a year later, but the paper foregrounds some future post we will no doubt be writing concerning the current turmoil in Argentina. The meat, here, is in the comparison of growth figures. The world bank paper that Mssrs. Weisbot, et al are replying to makes the banal point that growth is good for the poor. It extrapolates that point into another point: that the IMF doctrine of "anti-inflationary" fiscal policy, liberalisation of global financial markets, and openness to international trade are good for the poor. The inference being, these are growth oriented policies. The further inference being, past policies were not growth oriented.
Well, this is a sand castle of an argument, and W.B.N.N. knock it down with one swift kick, consisting of a graph comparing growth rates. The gross and oh so out of fashion Keynsian world displays the kind of growth undreeamt of in the sleek IMF model. If we are looking for policies that help the poor (and this is not something the IMF really is set up to do), unsurprisingly, the poor aren't helped by accident. They aren't, in other words, helped by helping the rich, which is what the IMF all neo-liberal political economics would have us believe. The comparison is strikingly in favor of the Keynsian mix of inflationary/ anti-inflationary measures, and national policies that regulate exports and imports.
Here are some important grafs:
In Latin America, for example, GDP per capita grew by 75 percent from 1960-1980, whereas in the latter period it has only risen 6 percent. For sub-Saharan Africa, GDP per capita grew by 36 percent in the first period, while it has since fallen by 15 percent.
These are enormous differences by any standard of comparison, and represent the loss to an entire generation-- of hundreds of millions of people-- of any chance of improving its living standards. Even where growth was significant, as in Southeast Asia, it was still better in the earlier period. The only exception to this trend was East Asia, which grew faster from 1980 to 1998 than in the previous period. But this is due to the quadrupling of GDP, over the last 18 years, in China (which has 83 percent of the population of East Asia).
In short, there is no region of the world that the Bank or Fund can point to as having succeeded through adopting the policies that they promote-- or in many cases, impose-- upon borrowing countries. (They are understandably reluctant to claim credit for China, which maintains a non-convertible currency, state control over its banking system, and other major violations of IMF/Bank prescriptions).[6]
One cannot stress too strongly the failure of these policies on the measure of economic growth, even ignoring income distribution. The debate over Dollar and Kraay's paper, for example, has simply assumed-- as the authors have-- that IMF/Bank policies do promote growth, and the only question is how well the poor have fared under the growth that has resulted from these policies."
The last is the assasin graf -- the look, the Emperor has no clothes graf. But before Limited Inc puts down our money on Keynsian policies, we feel like these statistics have to be fed into, well, reality. The era of spectacular growth spotlighted the Mssrs. et. al might, indeed, be impossible to replicate even with Keynsian economics. The reason for this is simple: a snapshot of the political economy of, say, Brazil in 1900 compared to Brazil in 1980 is going to be incredibly different; but it is hard to imagine the same technological/sociological/economic alteration occuring in the next twenty years under no matter what economic regime.
A further caveat has to do with the environment. The stats for the first half of the century simply ignore environmental degradation. But we are now more keenly aware that there are social costs to dams, irrigation projects, monocultural agriculture, and other featurs of growth. This impinges, of course, on both sides of the argument, but it is too little taken into account by the same groups who, admirably, dissent from the current model of IMF growth.
Friday, January 4, 2002
Dope
Some further comments on Senator Torricelli's Houdini like escape from prosecution seem called for.
The question on the mind of the spectator must be: why would the Repugs go along on this deal? After all, damn Senator T with the black spot and Senator Lott will once more be the majority leader, talked to, even, by tv reporters and such.
Well, let's speculate a little bit, children. When one of D.C.'s pirates is caught with his hand in the till, very often a delicate situation arises. Because so many other pirates on the ship have been quietly amassing as much loot as their natural greed allows them. It is a tradition that goes back to the Roman senate. So if Senator T.'s skin is graciously unflayed, one looks around for who else could be outrageously vulnerable to charges of pilfering. And the eye alights on a certain Texas senator, Phil Gramm. Phil and his wonderful and rich wife, Wendy, have made quite a killing in the past decade from their association with Enron corporation, of blessed memory. There's a Public Citizen release that counts the ways Enron loved the Gramms, and the Gramms loved Enron. Consider that Wendy, high spirited free marketer that she is, was appointed by Bushie the elder to head the Commodity Futures Trading Commission. This is a sad sack commission ostensibly armed to police the derivatives market -- but armed like a boyscout with a peashooter facing down the Nazi Wehrmacht. Even so, you never know when some nasty regulation will actually enforce transparency on futures or options trading, the biz Enron was massively in. So our heroine, Wendy, came to Enron's rescue by exempting trading in futures contracts by Enron, in 1993. It was one of her last acts as a truly altruistic public personality, because she then resigned her chairmanship and, five weeks later, took on an entrepeneurial role on the Enron board of directors. Now, reader, you are thinking that this is merely a coincidence; and besides, boards of directors are notoriously composed of crash test dummies, rubberstamping the decisions of the CEO. But our dear Wendy also served on the Enron Audit committee (this part of her story should be scored to that all time popular hit, "Three blind mice'). So double hitting for that innovator in spot prices in power for you and me, she made off with around a million five. Hey, I'm sure that Phil was uninfluenced by that chunk of change, but you know how a loving, christian couple, in the depth of the night, abed, sometimes talks about the meaning of it all, and our redeemer's beautiful life story, and wouldn't it be nice if some properly motivated senator snuck a provision onto some bill de-regulating the power commodity markets. Probably these sweet whispers were in vain, given Phil adamantine integrity, but maybe something, well, unconscious kicked in, cause golly, Phil did muscle in the bill Enron wanted. For good Laissez Faire reasons, no doubt.
Yes, the money rolls in, but Phil's ambitions no longer play out on the national level, and his mind has turned to contemplating the blank verse of The Prelude or something -- those sweet retirement thoughts. But still, with Enron falling apart this year with a speed and desperation much like that of the East German government in 1989, the Gramms probably also had some heart to hearts about those pesky laws constraining politicians from accepting bribes in too public and outrageous a fashion -- laws which, as we all know, are stronger in the spirit than the letter, but still... Maybe it is time to fold your tent and creep home, with the couple millions of Enron bucks under your belt or in your portfolio to watch over you in the golden years. This will no doubt be used by invidious nabobs of negativism to explain why Phil gave a press conference on September 2 announcing his retirement from the Senate, even though he had amassed a 4 million dollar reelection warchest.
Warms your heart, doesn't it, reader? And so maybe Senator T gets traded for Senator G. in the game. We are not of course suggesting anything so cynical went down in D.C. in reality. In reality, all Senatorial transactions are motivated by the unwavering patriotism of the members of that hallowed chamber. All Limited Inc is doing is, well, muddying the waters. Spewing negativism. Speculating, as is our wont, in an idle and destructive manner.
Some further comments on Senator Torricelli's Houdini like escape from prosecution seem called for.
The question on the mind of the spectator must be: why would the Repugs go along on this deal? After all, damn Senator T with the black spot and Senator Lott will once more be the majority leader, talked to, even, by tv reporters and such.
Well, let's speculate a little bit, children. When one of D.C.'s pirates is caught with his hand in the till, very often a delicate situation arises. Because so many other pirates on the ship have been quietly amassing as much loot as their natural greed allows them. It is a tradition that goes back to the Roman senate. So if Senator T.'s skin is graciously unflayed, one looks around for who else could be outrageously vulnerable to charges of pilfering. And the eye alights on a certain Texas senator, Phil Gramm. Phil and his wonderful and rich wife, Wendy, have made quite a killing in the past decade from their association with Enron corporation, of blessed memory. There's a Public Citizen release that counts the ways Enron loved the Gramms, and the Gramms loved Enron. Consider that Wendy, high spirited free marketer that she is, was appointed by Bushie the elder to head the Commodity Futures Trading Commission. This is a sad sack commission ostensibly armed to police the derivatives market -- but armed like a boyscout with a peashooter facing down the Nazi Wehrmacht. Even so, you never know when some nasty regulation will actually enforce transparency on futures or options trading, the biz Enron was massively in. So our heroine, Wendy, came to Enron's rescue by exempting trading in futures contracts by Enron, in 1993. It was one of her last acts as a truly altruistic public personality, because she then resigned her chairmanship and, five weeks later, took on an entrepeneurial role on the Enron board of directors. Now, reader, you are thinking that this is merely a coincidence; and besides, boards of directors are notoriously composed of crash test dummies, rubberstamping the decisions of the CEO. But our dear Wendy also served on the Enron Audit committee (this part of her story should be scored to that all time popular hit, "Three blind mice'). So double hitting for that innovator in spot prices in power for you and me, she made off with around a million five. Hey, I'm sure that Phil was uninfluenced by that chunk of change, but you know how a loving, christian couple, in the depth of the night, abed, sometimes talks about the meaning of it all, and our redeemer's beautiful life story, and wouldn't it be nice if some properly motivated senator snuck a provision onto some bill de-regulating the power commodity markets. Probably these sweet whispers were in vain, given Phil adamantine integrity, but maybe something, well, unconscious kicked in, cause golly, Phil did muscle in the bill Enron wanted. For good Laissez Faire reasons, no doubt.
Yes, the money rolls in, but Phil's ambitions no longer play out on the national level, and his mind has turned to contemplating the blank verse of The Prelude or something -- those sweet retirement thoughts. But still, with Enron falling apart this year with a speed and desperation much like that of the East German government in 1989, the Gramms probably also had some heart to hearts about those pesky laws constraining politicians from accepting bribes in too public and outrageous a fashion -- laws which, as we all know, are stronger in the spirit than the letter, but still... Maybe it is time to fold your tent and creep home, with the couple millions of Enron bucks under your belt or in your portfolio to watch over you in the golden years. This will no doubt be used by invidious nabobs of negativism to explain why Phil gave a press conference on September 2 announcing his retirement from the Senate, even though he had amassed a 4 million dollar reelection warchest.
Warms your heart, doesn't it, reader? And so maybe Senator T gets traded for Senator G. in the game. We are not of course suggesting anything so cynical went down in D.C. in reality. In reality, all Senatorial transactions are motivated by the unwavering patriotism of the members of that hallowed chamber. All Limited Inc is doing is, well, muddying the waters. Spewing negativism. Speculating, as is our wont, in an idle and destructive manner.
Remora
Here are three grafs from the story announcing Senator Torricelli won't be prosecuted for his buyability.
"Even before Ms. White took over the case from the campaign task force early last year, many legal experts had emphasized the difficulty of successfully prosecuting sitting politicians in cases involving bribery or illegal gifts.
Such cases have been especially difficult when the accusers had legal problems of their own. In Mr. Chang, the prosecutors had a witness whom they themselves had called a liar before he agreed to plead guilty.
The senator himself has never denied that he accepted gifts from Mr. Chang, but said merely that he considered Mr. Chang a friend and that he never took any "illegal gifts." Congressional ethics rules allow legislators to accept certain gifts from friends when they are of limited value and are promptly reported."
Limited Inc is only mildly astonished that there will be no trial before a jury of Senator T.'s peers. Instead, he is going to have to negotiate with the Senate Ethics committee, which holds a position vis-a-vis potentially corrupt politicians similar to the position the Taliban held to Al Quaeda. It would be feeble irony to call the Senate Ethics committee an oxymoron. It is, rather, an offense to the word Ethics. Far better to abolish it once and for all, than to pretend that anything like ethics transpires in the Senate.
The up front thievish behavior of Torricelli was testified to by his "friend," Mr. David Chang. On the semantic salience of friendship in this case, there is a nice little article by Jason Zengerle that prefigures the non-prosecutorial conclusion of the Torricelli investigation; although when Zengerle wrote it, he probably thought he was nailing Senator T. Unfortunately, since legislators decide for themselves those laws that they will have to obey and have riddled them with friendly little loopholes, it looks like Torricelli will emerge unjailed from this contretemps because David Chang is just the kind of sleezeball that Torricelli proudly (and intermittently) claims as a friend. As a friend, apparently, the sky's the limit in terms of giving gifts and getting favors. Limited Inc has experienced this ourselves. Our friends often come over with wads of cash to give to us, rolex watches, and such; sometimes our friends, just like Senator T.'s, insist on taking us to tailor shops and buying us ten thousand dollar suits. That's how friends are, God love em.
The fruits of amity are listed at this NYT site. One is reminded of Charles Keating, of S & L debacle fame, who once commented, when asked whether his 'contributions' influenced political figures, I want to say in the most forceful way I can: I certainly hope so.
Here are three grafs from the story announcing Senator Torricelli won't be prosecuted for his buyability.
"Even before Ms. White took over the case from the campaign task force early last year, many legal experts had emphasized the difficulty of successfully prosecuting sitting politicians in cases involving bribery or illegal gifts.
Such cases have been especially difficult when the accusers had legal problems of their own. In Mr. Chang, the prosecutors had a witness whom they themselves had called a liar before he agreed to plead guilty.
The senator himself has never denied that he accepted gifts from Mr. Chang, but said merely that he considered Mr. Chang a friend and that he never took any "illegal gifts." Congressional ethics rules allow legislators to accept certain gifts from friends when they are of limited value and are promptly reported."
Limited Inc is only mildly astonished that there will be no trial before a jury of Senator T.'s peers. Instead, he is going to have to negotiate with the Senate Ethics committee, which holds a position vis-a-vis potentially corrupt politicians similar to the position the Taliban held to Al Quaeda. It would be feeble irony to call the Senate Ethics committee an oxymoron. It is, rather, an offense to the word Ethics. Far better to abolish it once and for all, than to pretend that anything like ethics transpires in the Senate.
The up front thievish behavior of Torricelli was testified to by his "friend," Mr. David Chang. On the semantic salience of friendship in this case, there is a nice little article by Jason Zengerle that prefigures the non-prosecutorial conclusion of the Torricelli investigation; although when Zengerle wrote it, he probably thought he was nailing Senator T. Unfortunately, since legislators decide for themselves those laws that they will have to obey and have riddled them with friendly little loopholes, it looks like Torricelli will emerge unjailed from this contretemps because David Chang is just the kind of sleezeball that Torricelli proudly (and intermittently) claims as a friend. As a friend, apparently, the sky's the limit in terms of giving gifts and getting favors. Limited Inc has experienced this ourselves. Our friends often come over with wads of cash to give to us, rolex watches, and such; sometimes our friends, just like Senator T.'s, insist on taking us to tailor shops and buying us ten thousand dollar suits. That's how friends are, God love em.
The fruits of amity are listed at this NYT site. One is reminded of Charles Keating, of S & L debacle fame, who once commented, when asked whether his 'contributions' influenced political figures, I want to say in the most forceful way I can: I certainly hope so.
Thursday, January 3, 2002
Remora
It is said that passengers of the great dirigibles experienced flight in a much different way than the passengers of other aircraft: for the passengers on the Hindenburg, the landscape moved by in vast visionary sweeps.
The commentariat often write themselves into a sort of dirigible view of events, vast visionary sweeps which, unlike those available to those lucky balloonists of yore, have nothing to do with this or any other planet.
Limited Inc has just finished Stan Crock's column in Business Week on the "third reason" for toppling Saddam Hussein's regime and the feeling of dreamy irreality couldn't be more complete. Here's the middle grafs, bodying forth his argument:
"But let's consider the Unspoken Argument. The cumulative impact of seeing secular moderates such as the opposition Iraqi National Congress assuming power in Baghdad so soon after a moderate secular regime came to power in Kabul could have a transforming impact on the entire Middle East. For too long, the blithe assumption has been that the two alternatives for government in the region are the current corrupt, antidemocratic, oppressive regimes or the radical fundamentalists.
However, Afghanistan and Iraq could demonstrate a Third Way. The secular traditions of a Turkey or Indonesia could take hold in other parts of the Islamic crescent. Look at Morocco, which is already is starting to transform itself into a more modern political and economic model.
Iraq's enemy, Iran, could be one of the first to change. Without a dangerous neighbor like Saddam, the more moderate forces in Tehran may be able to wrest power from the archconservative mullahs. Jordan and Egypt also could evolve."
Love love love. In Mr. Crock's benign view, a government that hasn't even yet been installed in Afghanistan (a country where the rapid turnover of governments and the dissolution of the countryside into a patchwork of warlord domains isn't the exception, but the rule) is already offering tax exemptions to its native software start-ups. As for the secular traditions of "a Turkey or Indonesia" (and we particularly love the placement of the indefinite article, "a" -- with the implication that these nations are mere interchangeable tinker toys for the can do American spirit), this elides the tricky question of nationality big time. Behind Mr. Crock's back, no doubt, Indonesia recently went through a revolution, and a war in East Timor that many might describe as something other than a secular Woodstock. And Turkey is being buffeted by a debt crisis that is only going to play into the hands of the "Virtue" party. As for the bloodshed in the guerilla war waged by the Kurds, this is out of Mr. Crock's purview entirely.
This isn't to disagree with Mr. Crock's view that there has to be another option for the Middle East besides dictatorship and fundamentalism. But that option is definitely not going to arrive, like the tooth fairy's quarter for the baby tooth under your pillow, by amassing American troops for a unilateral action against Iraq.
It is said that passengers of the great dirigibles experienced flight in a much different way than the passengers of other aircraft: for the passengers on the Hindenburg, the landscape moved by in vast visionary sweeps.
The commentariat often write themselves into a sort of dirigible view of events, vast visionary sweeps which, unlike those available to those lucky balloonists of yore, have nothing to do with this or any other planet.
Limited Inc has just finished Stan Crock's column in Business Week on the "third reason" for toppling Saddam Hussein's regime and the feeling of dreamy irreality couldn't be more complete. Here's the middle grafs, bodying forth his argument:
"But let's consider the Unspoken Argument. The cumulative impact of seeing secular moderates such as the opposition Iraqi National Congress assuming power in Baghdad so soon after a moderate secular regime came to power in Kabul could have a transforming impact on the entire Middle East. For too long, the blithe assumption has been that the two alternatives for government in the region are the current corrupt, antidemocratic, oppressive regimes or the radical fundamentalists.
However, Afghanistan and Iraq could demonstrate a Third Way. The secular traditions of a Turkey or Indonesia could take hold in other parts of the Islamic crescent. Look at Morocco, which is already is starting to transform itself into a more modern political and economic model.
Iraq's enemy, Iran, could be one of the first to change. Without a dangerous neighbor like Saddam, the more moderate forces in Tehran may be able to wrest power from the archconservative mullahs. Jordan and Egypt also could evolve."
Love love love. In Mr. Crock's benign view, a government that hasn't even yet been installed in Afghanistan (a country where the rapid turnover of governments and the dissolution of the countryside into a patchwork of warlord domains isn't the exception, but the rule) is already offering tax exemptions to its native software start-ups. As for the secular traditions of "a Turkey or Indonesia" (and we particularly love the placement of the indefinite article, "a" -- with the implication that these nations are mere interchangeable tinker toys for the can do American spirit), this elides the tricky question of nationality big time. Behind Mr. Crock's back, no doubt, Indonesia recently went through a revolution, and a war in East Timor that many might describe as something other than a secular Woodstock. And Turkey is being buffeted by a debt crisis that is only going to play into the hands of the "Virtue" party. As for the bloodshed in the guerilla war waged by the Kurds, this is out of Mr. Crock's purview entirely.
This isn't to disagree with Mr. Crock's view that there has to be another option for the Middle East besides dictatorship and fundamentalism. But that option is definitely not going to arrive, like the tooth fairy's quarter for the baby tooth under your pillow, by amassing American troops for a unilateral action against Iraq.
Wednesday, January 2, 2002
Remora
We recommend the Round Table in today's NYT Biz section. if you want a pretty good cross-section of Wall Street thinking about the economy. Limited Inc, of course, is not a consensus type of entity -- that the predictions of the three players interviewed average out to a Dow around 11-3 -- that in other words, the p/e will continue at around 23 -- seems incredible. However, the incredibility of a figure has never stopped Wall Street from hitting it. The question is, why should we care. There is something wierd going on in the economy, and everybody knows it. The weird thing is what, exactly, the equities markets are measuring. Here's a quote from one of the roundtable guys (Byron Wien) which should be plumbed slowly:
"You've got to look at what you're entitled to as an investor. In my view all you're entitled to is the profit growth plus the dividend. In the 20-year period from 1981 to 2001, that was about 10 percent. The market during that period gave you about 15 percent. So you got five extra percentage points of reward in relation to how much earnings were increasing. That left the market at a point where, particularly if profits are struggling, there could be some adjustment. And that's why the returns from the market may be below the long-term average of 10 percent."
Coincidentally, this is also the period in which the derivatives market exploded. Except that we don't think this is a coincidence -- we think the meta-investment structure, the market in indexes, options, and the whole bestiary of exotic financial instruments wielded by hedge fund managers is driving that extra five percent.
We recommend the Round Table in today's NYT Biz section. if you want a pretty good cross-section of Wall Street thinking about the economy. Limited Inc, of course, is not a consensus type of entity -- that the predictions of the three players interviewed average out to a Dow around 11-3 -- that in other words, the p/e will continue at around 23 -- seems incredible. However, the incredibility of a figure has never stopped Wall Street from hitting it. The question is, why should we care. There is something wierd going on in the economy, and everybody knows it. The weird thing is what, exactly, the equities markets are measuring. Here's a quote from one of the roundtable guys (Byron Wien) which should be plumbed slowly:
"You've got to look at what you're entitled to as an investor. In my view all you're entitled to is the profit growth plus the dividend. In the 20-year period from 1981 to 2001, that was about 10 percent. The market during that period gave you about 15 percent. So you got five extra percentage points of reward in relation to how much earnings were increasing. That left the market at a point where, particularly if profits are struggling, there could be some adjustment. And that's why the returns from the market may be below the long-term average of 10 percent."
Coincidentally, this is also the period in which the derivatives market exploded. Except that we don't think this is a coincidence -- we think the meta-investment structure, the market in indexes, options, and the whole bestiary of exotic financial instruments wielded by hedge fund managers is driving that extra five percent.
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