Two links from two weeks ago that you may or may not have seen, but I had saved to share and not gotten around to it yet.
The Yes Men sent out a hoax press release from the US Chamber of Commerce saying they had changed their position on climate change. Obviously the media was interested in this so the Yes Men rented a room at the DC Press Club and gave a fake press conference. Then it gets really awesome when a representative of the Chamber shows up and shuts down the presser. And now, they're getting sued for it
If you saw the profits made by the big banks last quarter and wondered how they were doing it, Philip Greenspun has an answer:
Because of the Collapse of 2008 financial reforms, the big investment banks are able to borrow money from the U.S. government at 0 percent interest. Then they can turn around and buy short-term bonds that pay 2 or 3 percent annual interest. Now they’re making 2 percent on whatever they borrowed. They can use leverage to increase this number, by pledging some of the bonds that they’ve already bought as collateral on additional bonds.
In a new interview on HuffPo with Terrence McNally, Michael Lewis explains why it only SEEMS like all the financial firms were full of idiots (instead of actually being idiots).
As a trader inside a big Wall Street firm...you would face a decision: Do I exercise my independent judgment and bet against this market, or do I just keep going along with what my firm is doing? If you exercise your independent judgment and bet against sub-prime mortgage bonds, you not only probably run into some political conflict within your firm, but you'd never make the big score for yourself... The minute you make a bunch of money from your bet, your firm is doomed. They couldn't pay you. So the smart thing was just to go along and hope it lasted long enough for you to get rich.
If you read Michael Lewis' latest Bloomberg column, Bashing Goldman Sachs Is Simply a Game for Fools, quickly, you might think it's a brutal take down of the newest Wall St muckraker (Taibbi) by the grand marshal of Wall St muckraking (Lewis). Fortunately or unfortunately, depending on how you look at it, this column seems to be satire. I can't decide which I'd prefer to see, a Lewis/Taibbi Tag Team, or a knockdown drag out between the them. In any case, a good read.
America stands at a crossroads, and Goldman Sachs now owns both of them. In choosing which road to take, ordinary Americans must not be distracted by unproductive resentment toward the toll-takers. To that end we at Goldman Sachs would like to dispel several false and insidious rumors.
Matt Taibbi's recent take down of Goldman Sachs in Rolling Stone, The Great American Bubble Machine, is full of Taibbi's usual clever turns of phrase and acerbic prose. What I feel differentiates this article from his work is the high pitched response from Goldman Sachs and detractors in the media who are making tons of points about Taibbi's article, none of which are, 'It's not true.' (PDF and Full Text of article.)
Felix Salmon has a refutation by a Goldman flack.
Taibbi responds to the flack and notes why Goldman's POV is not represented in the article. They didn't want to talk.
Time Magazine steps into it in a somewhat ham handed way. Not making many points or adding much substance to the discussion.
Taibbi responds to Time, taking most issue with Time's 'everyone was doing it' defense of Goldman. Megan McArdle somehow connects Taibbi's writing to Sarah Palin, which doesn't make much sense. Then she hangs out in the comments section saying, "I'm just not down with the idea that there's some sort of elusive "central point" to stories that permits you to write a bunch of total nonsense as long as the "central point" is good." Which, as a commenter points out, will probably be posted as a comment on every McArdle piece for the rest of time.
Here's Obsidian Wings saying the article isn't as bad as Kevin Drum said it was (though Drum then recanted his statement based on the fact that Rolling Stone confusingly posted excerpts of the article online instead of the full text).
Vanity Fair has a habit of posting stub abstracts of their bigger articles. This isn't exclusive to VF, Rolling Stone does it, too, but it is an annoying way of using the web. Barry Ritholtz takes them to task for this, and then publishes the PDF that they sent him to drum up publicity. If you can't wait until next week to read Michael Lewis' take down of Joe C and AIG that explores among other things:
How A.I.G. F.P. became the first stop for Wall Street banks looking to insure the massive amounts of debt they were buying, packaging, and selling: “We were doing every single [credit-default swap] deal with every single Wall Street firm, except Citigroup,” says one A.I.G. F.P. trader. “Citigroup decided it liked the risk and kept it on their books. We took all the rest,”
click above for the full article.
In other Michael Lewis news, you probably knew that the Siderbergh/Pitt vehicle, 'Moneyball', got axed last week. Here's an insider's version of events that doesn't make anyone at Sony look very good. Sandra Bullock's 'The Blindside' continues to truck, and still, for some reason, no one has made any moves to make 'Liar's Poker'.
I suppose everything can get repossessed if someone falls behind on their payments. This story from Boing Boing about a guy who repossesses planes, small and large reads like a Hollywood story:
Popovich's first rule of firearms is pretty simple: The man who tells you he's going to shoot you will not shoot you. So without so much as looking back, he got on the plane and flew it right to Chicago. "My job is to grab that plane," Popovich says. "And if you haven't paid for it, then it's mine. And I don't like to lose." Nick Popovich is a repo man, but not the kind that spirits away Hyundais from suburban driveways. Popovich is a super repo man, one of a handful of specialists who get the call when a bank wants back its Gulfstream II jet from, say, a small army of neo-Nazi freaks.
As does this story I remember reading a couple years ago about a cargo ship repo man:
Meanwhile, an oceangoing tugboat also hired by Hardberger slipped into port and backed up to the Aztec Express. Under a full moon, the crew began cutting the anchor chains with blowtorches. In case harbor officials noticed and tried to call for help on their cellphone, Hardberger had paid a witch doctor $100 to cast spells on the port's soccer field. The witch doctor marked the field with gray powder, a clear warning to believers in voodoo, the nation's dominant religion. No call ever went out.
However, this story about another boat repo man, not so much.
"The big problem of small change" is Italian economic historian Carlo Cipolla's way of describing the hoarding of coins when because of inflation the face value of a coin is less than than the value of the metal used to make the coin. This hoarding of coins is one of 3 explanations for the current coin shortage in Buenos Aires.
The other two:
1. Coin-only bus companies were saving coins to sell to businesses at a mark up.
2. The left wing government of Argentina is conspiring to embarrass the right wing government of Buenos Aires in advance of a electronic bus card system that is way behind schedule.
What's coming for the big banks?
"I think they steadily become much more boring. I think they steadily attract a lesser caliber people to work for them and they pay less."
"The people who created the problem are so powerful in deciding in what the solution to the problem will be."
I'll say it again. No one wants to make Liar's Poker into a movie? How can this be?
Seven reasons GM is headed to bankruptcy, Sharon Silke Carty, USA Today:
When GM realized how fast 1990s buyers were switching to trucks as personal transportation, it overreacted, pouring time and money into SUVs and pickups at the expense of car development. The result: As long ago as 2000, Wall Street was warning that GM could be overcommitted to trucks and wind up out of phase if the pendulum of buyer preference swung back to cars. Once consumer tastes began changing, the market was awash in new truck models, and profits were sapped by discounts needed to keep sales boiling.
Most fascinating to me was a paragraph describing behavior of the financial markets from 1982-1992. Close your eyes and think he's talking about 1999-2008 and it's spooky how well it fits. Eventually we'll figure out that you can't just make money out of nothing. Until then, I guess we'll just cycle through.
Still, in the short run he is probably right. You can frighten people into behaving themselves for a while. But in the long run he's wrong. The financial revolution of the last decade introduced to Wall Street all sorts of temptations to abuse one's position. When socially unproductive behavior pays as well as it has, it isn't merely a matter of needing a few more good men. The dirty little secret on Wall Street is that the men responsible for its current reputation were not exceptionally bad. They were just ordinary people placed in unusual circumstances.
Also of note, and the thrust of the entire piece, is Lewis dismantling Buffett's (at that time) pristine moral and ethical reputation with examples of deals Buffett cut seemingly at odds with his public statements. I had no idea Lewis wasn't a fan of Buffett:
This modesty is inconsistent with Buffett's vanity about his reputation as an investment genius. The main threat to this reputation--other than his performance, which has lagged the market during the past two years--is the strong academic evidence that success in the stock market is no different from success in a coin-flipping contest. The suggestion that he is merely lucky drives Buffett to distraction. He regularly ridicules skeptical professors with a vaguely thuggish if-you're-so-smart-why-am-I-rich routine. (The reason he is rich is simply that random games produce big winners, but pity the business school professor on fifty grand a year who tries to argue with a billionaire.) While his little rhetorical victories may offer him short-term consolation, they also reveal the enormous pressure on Buffett to vindicate his precarious perception of himself.
In the Esquire article about Roger Ebert a few weeks back, Ebert mentioned his interview interview with Lee Marvin as one of his favorites, and now they've republished it online.
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