Mailbag: Amy Chua, Warren Buffett, Elizabeth Warren
On my way to Washington -- traveling as usual in the Amtrak Quiet Car and as usual there's a dude behind me chattering away with a friend. I hope someday there is a scientific inquiry into this phenomenon, that there's some chance of finding out if maybe there's something structurally different about the brains of such people, masses in the Hippocampus or something. For now, I guess, it's a mystery.
I got a few interesting letters after Friday's Supreme Court ruling, involving "Tiger Mother" Amy Chua. One chided the Court for not naming her husband Jed as a codefendant. In retrospect, I have to agree. Having read the book all the way to the end by now, I have to say that Jed is, perhaps, the biggest pussy in the history of men. Is there even a close second? I appeal to readers for advice on that one.
Mailbag won't be as extensive this week, as I'm on the road; have an interesting story that I'm working on, with a deadline this Friday. Anyway, on to the letters:
Our mutual friends say you were a beast on the boards. Still playing? And if so, has the game ventured outside of the paint? ...'cause I know all too well how hard it is to play that rough & tumble inside game at 40.
My game has definitely ventured outside the paint. Like way, way outside it -- all the way to my couch. You know that old balding white guy in street basketball who can't play without cheating and throwing elbows? When I realized that was me, I quit. Who's our mutual friend, by the way? I'm guessing it's Noah, right?
Are the airwaves in the US public (as they are here)? That is, they are public and then the government sells the right to broadcast by issuing licenses?
If so, why not require corporations to give airtime to political ads as a condition of license -- either when they are first issued or when they are renewed? This wouldn't cover print media or many other campaign costs such as phones, offices, travel, etc. but would lessen them. Also, if combined with a law requiring taxpayer financing of campaigns it would significantly reduce the drain on the public purse.
The airwaves are public and such a procedure would be totally sensible and in the public interest but we'll never get it because nobody in positions of authority wants it -- least of all the media companies, who make fortunes on political advertising.
I liked the blog about your buddy's book regarding how pop culture in the 80s was full of right wing propaganda. While I agree that The A-Team and The Dukes of Hazzard sucked (minus BA Baracus and Daisy Duke, of course), I wanted to draft a quick contrarian reply pointing out how awesome Magnum P.I. was. You could take all the neglected children of the world and plop them down in front of a TV to watch Magnum P.I. seasons 3-7 and these kids would instantly develop a superior moral and ethical foundation. If Magnum P.I. was required class work for Ivy League business schools Wall Street would be synonymous with Doctors without Borders and the Bill & Melinda Gates Foundation. But I couldn't post this because your Rolling Stone blog site requires me to log in via Facebook. I don't have a Facebook account because Facebook fvcking sucks. If you want to know why people are such assholes these days. well look no further than Facebook. Narcissism is defined as an inordinate fascination with oneself and I'm pretty certain spending hours a day posting pictures of yourself, updating people on your every move, and spamming your really insightful thoughts and opinions to anyone you ever met qualifies and even encourages such self-fascination. Plus the government uses Facebook to control your thoughts. Just kidding. That's what vaccinations are for. Anyway Matt, is there any chance you could lose the Facebook log-in requirement? Seeing as you are a champion against the asshole revolution you should probably require people to NOT have Facebook accounts to log-in and reply to your blog.
I didn’t even know about the Facebook requirement. I hate Facebook. I'll see what I can do (probably, not much). And I agree on Magnum, P.I. The best part of that show was that it extended the Seventies-mustache craze years beyond its natural life cycle.
Love your articles and am planning to buy your book. My question is simple; I have a lot of friends/collegues that I speak to about Obama. The people I speak with are mostly Obama supporters (actually, most of them are Obama disciples and pretty much don't lay any blame at his feet for anything). When I try to convey some points that I have gleaned from you regarding Obamas' sellouts, I always get stumped by the " the Republicans won't let him do what he wants" type of argument.
Take the Health Care Reform. As you and other progressives have pointed out, it falls short of Universal Health Care/Single Payer which is what he campaigned on. In this case, my colleagues may have a point. The Republicans NEVER would have let Obama push anything remotely close to single payer through. He probably did the best he could.
On a side note, any thoughts about radio shock jock Michael Savage? You (along with Olbermann before he left Countdown, Jon Stewart and others) never mention him.
Keep up the good work!
Here’s the starting point about Michael Savage – the text of a postcard he wrote to the openly gay poet Allen Ginsburg, in the early Seventies: "Watched a tourist from New Zealand taking pictures of Fijian people in the marketplace [and] thought of inserting my camera's lens in your A-hole to photograph the walls of your rectum. I really do apologize, but the thought did occur." He goes on from there to a short-lived career humping herbal remedies, and then he switches gears completely and turns into a plumper, hairier version of Goebbels, specializing in gay-baiting xenophobia and anticommunism, which turns out to be the first thing in his adult life he’s really good at. I would say the dude has serious problems. I think this is the kind of person best watched from a very great distance.
As for Obama, I just disagree that he did all he could, in health care or elsewhere. I just don't fall for the storyline that deep down inside he wants to do all these wonderful progressive things, but is halted by political circumstance. The evidence doesn't support the idea that he actually wants these things, deep down. The evidence does, however, support the idea that he has very effectively marketed himself to progressives as someone who secretly sympathizes with progressives. I have conflicting feelings about Obama, and think there is some good in him still, but I've given up the idea that he could be a champion for any kind of real reform of anything.
"Goldman to Pay Back Warren Buffett" reads the Dealbook headline.
I'm wondering about the investment Buffett made into Goldman Sachs during the nastiest days of the crash. Maybe I'm missing something, but Buffett would have had to know a few things to confidently plunk five billion dollars on Goldman during the week of Sept. 21-8, 2008 (possibly Sept. 23?). I don't know how these mega-deals work, but he would have had to know that Goldman was either A) heavily into mortgage-backed bonds and CDOs, or B) heavily short on those same assets, or C) both A and B at the same time (!). Assuming one of the prior, he would have had to have known that AIG would have been holding the other end of those same CDS's, and would therefore owe the money to Goldman (I'm automatically granting that Buffett would realize how shitty things were going to get with mortgage-backed assets). So, it seems ultimately, Buffett would be betting the $5 billion not on Goldman, per se, but more on its ability to squeeze blood out of the proverbial AIG turnip, and that would be quite an act of clairvoyance, because AIG received $37.8 bil from Uncle Sam a few weeks later (Oct. 8), and then turned around and posted $37.3 bil in collateral one month after that (Nov. 10). This, atop the $85 bil (Sept. 16) before Buffett ponied up. This is incredibly complicated, but how much of that Fed money turned around and went to Goldman as collateral, and therefore made Buffett's investment good? They don't call him the Oracle of Omaha for nothing.
I have respect for the man as a billionaire who lobbies against his own interest (the carried-interest tax loophole), but come on. I'm not alleging any stinking conspiracy (aside from that one really big one), but if every Tom, Dick and Harry knew what Warren Buffett would have had to have known, lots of people would have put their money into Goldman Sachs during that week.
Now that I’ve been doing this story for almost three years, I’m totally convinced that there are 4-5 Watergates lurking behind the events of August-September-October of 2008. We’re seeing a glimpse of it now, just a little, through this Rajat Gupta case, in which a former Goldman board member was inside-trading news of Buffet’s investment literally one minute after he heard about it. But the timing of all these moves made behind the scenes by people like Buffett, Hank Paulson, Tim Geithner, Lloyd Blankfein, Ken Lewis et al is incredibly suspicious and almost by nature involves some kind of profiteering on non-public information. If I’m reading you right, I don’t think what you’re saying was any big secret, i.e. that Goldman was going to make out hugely in the AIG bailout. Warren Buffett certainly knew this by the time he made his investment; the terms of the bailout had already been hashed out at that point. But there are a lot of questions – all of these moves were made in suspiciously rapid succession. First the AIG bailout, then the ban on short-selling, then the awarding to Goldman of a federal bank charter, and then (just a day or so later) Buffett’s $5 billion investment… The bottom line on all of this is that there were people during this time who were continually exposed to inside information about the rearranging of the economy, from the rescue of Goldman (through the bank charter and the short-sale ban and the AIG bailout) through the rescue of Wachovia (bought by a company Buffett is heavily invested in, Wells Fargo, after it received some $50 billion in government aid), to the shotgun weddings of Chase-Bear and Bank of America-Merrill.
I have no doubt there were mountains of improprieties committed before and during these transactions. I think in the end we’re going to find out that the emergency bailouts of 2008 were really a wide-scale government-aided effort at consolidating financial power, in which the taxpayer was asked to fund a series of lucrative mergers that greatly limited consumer choices and made the entire financial system markedly less transparent. To me there’s a dangerous precedent involved when you have one group of investors who get all their news from the papers, and another group of active traders who are on the phone with the Treasury and the Fed in real-time as they marionette the economy.
Hey Matt -
The CEO of Starbucks is out there blasting Wall Street speculators' role in the escalating price of coffee. You would think that with the way unchecked price manipulation disrupts so many businesses, that an overwhelming consortium of NON-finance corporate titans would be able to bully the government into doing something about it. It speaks to the power Wall Street has over Washington, I think.
-Kyle, Los Angeles
I had a conversation once with a trader in a small commodities shop who told me how one of the big banks would occasionally call up and place orders for its own account ahead of massive, billion-dollar client orders in commodities like corn. In this way the client making the billion-dollar order had to pay an extra “tax” to the bank in the form of the bank’s front-running/insider trading. I’m asking myself, does the client know? And if so, why isn’t the client furious and making a big stink? The trader’s opinion was that the clients do know and they just see this little theft "tax" as a cost of doing business. But when we’re talking about massive run-ups in commodity prices that affect everybody’s bottom line, I don’t see why there isn’t more of an uproar. For every farmer that is getting a bump from the artificial run-up in wheat and cotton prices, there’s a clothing manufacturer or a cookie company that’s getting gouged. Where are they? I just don’t get it. Why are ordinary people on the streets of Egypt and Libya hipper to this stuff than American business professionals who stare at these numbers for a living?
As the New York Times transitions from corporate funding through advertising to public funding with a paywall, do you think their bias may also shift towards public interests versus corporate? It's probable that the staff at the NYT have not realized the opportunity they've just created for themselves, but can't you just fantasize for one second about a day where the David Brooks and Tom Friedmans of the world are not necessary to push a thinly-veiled, pro-corporate agenda? Wouldn't it be incredible if the next time Goldman Sachs needed bailout money, we could see a credible newspaper with a headline articulating that we're being robbed blind? We can dream anyways...
I still think that ultimately they’ll find a way to make sucking up to monied interests profitable. It’s sort of like when Howard Dean briefly busted through with his internet-fundraising model – for a few minutes there everyone said this might be the way out of corporate influence over campaigns. Then they just found a way to make internet fundraising supplement the usual whoring. My guess is that there will be a lot of internet media companies that start out very progressive and end up being bought out by bigger companies and gradually pushed into the usual commercial content scheme.
HuffPo ran a recent article that apparently a former bigwig at Goldman Sachs, a Mary Kissel, is behind recent Wall Street Journal editorials. The editorials are smear campaigns, and rave constantly about the new consumer protection agency isn't not answerable to the taxpayer (i.e the banking industry is pissed the new agency can't be weakened by Congress and its lobbyist). Ms. Kissel is also very upset that banks have to apparently fund this new agency through fees that will cost them about 20 billion dollars. And how much did they get from the government essentially for their bailouts?
Ms. Kissel was recently on a radio interview, and she describes Warren as a "far out leftist who has never worked in the private sector."And it goes downhill from there. Kissel whines about several states A.G. not willing to agree with some sort of settlement (she doesn't mention that the ones she mentions are Republicans) over the foreclosure screw-up. I wondered if you planned on looking into the pressure being exerted on Warren by the banking industry or is there another juicy back-story with Kissel from her Goldman Sachs days? When you listen to this interview -- the sense of entitlement she demonstrates is pretty infuriating.
You can hear that interview here.
Kim Patrick Clow
I hadn’t heard that interview, but you're right, it's maddening. I love the idea that a government official, hired solely for the purpose of protecting the interests of the consumer, is somehow unqualified because she’s never worked in the private sector. But most infuriating is the survival of the public perception that there were no “shenanigans” committed by the banks in the foreclosure mess (Kissel sounds this theme as well). The public still largely doesn’t understand the many types of fraud routinely committed by the banks in the mortgage bubble, or what the “bad paperwork” means. That allows people like Kissel to claim the banks don’t owe damages, which they definitely do – primarily to the investors in MBS who were scammed into buying these mortgages, but also to help unwind the foreclosure problem. That $20 billion is a very, very low number compared to the actual amount of money they owe to fix the mortgage problem.
Last year you wrote a guide to the NFL draft and had a whole list of rules teams should follow when making picks. You liked players who had positive weed tests, for instance (I forget the reason). Who do you like this year?
David, Los Angeles
I'm making my list now. I should point out that my draft system produced some good hits last year -- two of the guys on my board had great rookie years (Aaron Hernandez and Jacoby Ford). I'm still doing my secret research, but I can tell you that Derrick Locke, the running back from Kentucky, is on my list. I'll put out a list of seven guys in draft week, which frankly can't get here fast enough. I wish I could cryogenically freeze myself, Cartman-style, to make the time go faster.
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