Created and Posted by TSH
I’m very happy for the employees at Goldman, who’ve managed to completely kill it this past year and are, subsequently compensated (very well). What concerns me is the continued arrogance, greed and manipulation that ultimately made the bonus pot all the more golden.
Now, I’m all for a free marketplace. And, I do believe that performance-based bonuses are extremely important to the competitive marketplace. You need guys and gals going out every day, fighting in the pits to keep our economy moving. We need smart Americans to battle it out against other countries in the global marketplace. And, we need money coming into America in the form of dollar reserves, or from straight trade. We also need those funds to go to that person, so he, or she can get taxed highly, effectively stealing money from other countries and sending it right to Washington. In this way, competition and free markets are very necessary for our continued stature as a leading player in the world marketplace.
My problem, highlighted recently with the Goldman bonus announcement, is the lack of job creation. Let’s assume that government really gave money to failing banks to make loans and create jobs, (or stave off the impeding mass-firings). We know that what really happened was that banks didn’t make that many loans and fired a hell of a lot of employees. By taking advantage of the low interest rates, banks were thus able to receive good spreads in making quality loans, that, prior to the downturn, were not money generating business models.
Unemployment numbers, which are provided to us by government, are based on a period of time, like the last 3-6 months. The problem with this is that it’s not reflective of reality. Many people that got laid off in the very beginning of the downturn are not being counted in the unemployment numbers. So, we can then use initial jobless claims as a gauge, but, we’re still left with a very obvious gap. You don’t need to be a quant, or a sector analyst. You just need to ask those affected.
There’s a lot of really unhappy people out there. I don’t want to get all caught up in Obama policy, or Geithner’s financial revamping. I just want to remain concerned for the human aspect of all that went down and all that continues to remain unfixed. I guess I’m still left with a lot of questions: Why can’t banks start on-shoring stuff? Why are civil service jobs actually on the headcount decline? Where is the next big job opportunity market? Healthcare? Green services? Financial re-engineering, The Fed, or other watchdog-esque services? I just don’t really know any answers and it’s a bit scary.
I talk to a lot of people that remain unemployed and have absolutely no prospects. Some of them are in a real world of trouble. Sure, unemployment benefits got extended for a lot of them, but a lot are extremely close to foreclosure. And they have families. I just feel so terrible for them. I’m now motivated to do all I can to create jobs. Even on a small scale. I think money should be sent to organizations like the S.B.A (small business administration). If we gave a trillion dollars to loan to small businesses around the country, sure some would fail, but maybe that 140 bn that was generated by Goldman, could’ve been pieced out to 140 trillion Joe the Plumbers.
I think it is up to us to consume ourselves with helping our fellow man. Anyone with the resources should focus on helping another American put food on the table. Even if it’s something like opening a eatery that, maybe at the end of the year you’re flat, but you put 22 people to work that year. We need to do the right thing here, kind of like our grandparents did in fighting for our freedom. We need to fight for our stability.
-TSH
Saturday, October 17, 2009
Monday, October 12, 2009
Mad Men
I've titled this post 'Mad Men' after AMC's hit show depicting 1960's advertising executives who sell their services to create illusion in order to sell products for clients. I thought of this blog title after having read the weekend edition of the Wall Street Journal, which features a piece in the Weekend Journal section written by David Yermack, a professor of finance at the NYU school of business. The title of professor Yermack's entry is 'Keeping the Pay Police at Bay', and at first you might think it's main point is that it would be difficult for the government to set exec compensation. Sounds reasonable enough, and I'd be willing to agree with him on this. However, you have to read on to see that actually, professor Yermack, in opinion is a shill, peddling his services to create an illusion in order to sell a product for his clients. Let's read on together to find out why he is a shill, what illusion he is peddling, and who his clients are.
When you begin reading prof Yermack's op-ed, you immediately notice he is pro business, anti gov. However, I think, it is when you reach the end of the second paragraph and read, "At the G20 summit two weeks ago, important world-wide problems got shunted aside so that President Barack Obama and other national leaders could talk about executive pay", you realize it isn't that prof. Yermack feels that having gov't try to set exec pay would be difficult, it is his feeling that exec pay run amock is not an important issue at all. A feeling he confirms in the following paragraph stating, "Executive compensation ranks far down the list of our society's econcomic challenges, which include unemployment, scarce credit, and protectionism". Well, aren't there some people who might disagree and say that the concentration of weatlh in the top 1% (since 1980 the the concentration of wealth the top 1% controls has grown from 8% to 25%), the scarce credit and balooning unemployment we now face due to the outsized leveraged risk CEOs were encouraged to take due to deregulation and the short term benefits to their pay for performace packages, are in fact, serious and important issues?
Well, prof. Yermack dismisses all of this by stating, "No evidence whatsoever indicates that errant executive compensation "caused" the financial crisis of 2008, or that its reduction would prevent similar events in the future. The recent scrutiny of executive pay seems to stem from an odd mix of envy and vengeance, unsupported by facts and theories." I'd have to say that there are more than a few economists who will be responding to prof Yermack's opinion here. That there are indeed theories and facts and papers currently in the process of being published that will link deregulation, excessive risk taking, and CEO to the crash. The crash just happened, the research is still being conducted. And, is it fair to say this recent scrutiny can all be chalked up to "an odd mix of envy and vengeance". He doesn't mention that CEO pay has gone from 30x the avg worker pay to 350x the avg pay over the past 20-30 years, while pay in the middle class has remained relatively flat. Is scrutinizing this simply an "odd mix of envy and vengeance"? Managers are getting paid enormous bonuses to increase the bottom line, which in many cases, includes outsourcing jobs to Khuala Lampur, Mumbai, and elsewhere. Prof. Yermack may say, well that is good business. Well I have yet to hear why then Europe and Asia, the very place we can ship mid level jobs, can find senior level talent for a fraction of what we pay our CEOs. Why can't we outsource some of these positions? Wouldn't that be good business?
Prof Yermack consistently defends these CEO packages, never once references the fact that pay in Asia and Europe for CEOs is a fraction of the cost here, and why this is. I think he pretty much sums up his sentiment towards this issue saying, "For the large majority of companies and executives, compensation is structured rationally and provides big rewards only for creating shareholder value over sustained periods". What? Over the past year, banks given TARP money, banks barely staying afloat, continue to pay out enourmous bonuses, based on what? When their chieftens are asked, 'why are you paying out these ridiculous bonuses despite poor earnings?" These CEOs have not been responding as prof Yermack would suggest, "Well, we pay these out because we've created shareholder value over sustained periods". No, the CEOs, say something to the effect of, well, we don't want to lose all of our talent to foreign banks.. what? The foreign banks who pay a fraction of what we pay? Where are all these CEOs going to go if you don't pay them 38.2 million dollars as Vikram Pandit was paid in 2008, the head of Citigroup, a company now nearly 40% owned by the gov't, was paid? They can't all go to hedge funds.
So, I think prof Yermack might cameo on Mad Men one of these days. I think he might make a great ad exec. He works for NYUs business school, and every piece of literature that NYUs b-school sends out to prospective students touts what great connections the school has to the city's corporpate directors, CEOs, boards, etc. I don't think it would behoove NYU to have professors in their b-school running around writing anti-ceo compensation op eds. So, prof Yermack I hope your advertising campaign/op ed gets you some wonderful guest speakers in one of your classes this Fall - perhaps Ken Lewis will drop in now that he has some time on his hands and as prof Yermack himself mentioned "Mr. Lewis liquidated a whopping $173 million of Bank of America stock in the second half of 2006, when it traded around its all-time high."
Anyhow, as I close out this entry, you can check out the Institute for Policy Studies or google any of Paul Krugman's articles to hear some points contrarty to professor Yermack's. I'll also try to post a few more links to other blogs, etc that simply do what I've been doing but a lot better, and thus I will probably be posting less and considering changing the format a bit for this blog. Another note, anyone can co-post, as did TSH, just let me know what you 'd like to blog about (spares you the time of setting up your own blog.. my email is tt00136@hotmail.com) and I can change the settings to allow you to post.
TST
When you begin reading prof Yermack's op-ed, you immediately notice he is pro business, anti gov. However, I think, it is when you reach the end of the second paragraph and read, "At the G20 summit two weeks ago, important world-wide problems got shunted aside so that President Barack Obama and other national leaders could talk about executive pay", you realize it isn't that prof. Yermack feels that having gov't try to set exec pay would be difficult, it is his feeling that exec pay run amock is not an important issue at all. A feeling he confirms in the following paragraph stating, "Executive compensation ranks far down the list of our society's econcomic challenges, which include unemployment, scarce credit, and protectionism". Well, aren't there some people who might disagree and say that the concentration of weatlh in the top 1% (since 1980 the the concentration of wealth the top 1% controls has grown from 8% to 25%), the scarce credit and balooning unemployment we now face due to the outsized leveraged risk CEOs were encouraged to take due to deregulation and the short term benefits to their pay for performace packages, are in fact, serious and important issues?
Well, prof. Yermack dismisses all of this by stating, "No evidence whatsoever indicates that errant executive compensation "caused" the financial crisis of 2008, or that its reduction would prevent similar events in the future. The recent scrutiny of executive pay seems to stem from an odd mix of envy and vengeance, unsupported by facts and theories." I'd have to say that there are more than a few economists who will be responding to prof Yermack's opinion here. That there are indeed theories and facts and papers currently in the process of being published that will link deregulation, excessive risk taking, and CEO to the crash. The crash just happened, the research is still being conducted. And, is it fair to say this recent scrutiny can all be chalked up to "an odd mix of envy and vengeance". He doesn't mention that CEO pay has gone from 30x the avg worker pay to 350x the avg pay over the past 20-30 years, while pay in the middle class has remained relatively flat. Is scrutinizing this simply an "odd mix of envy and vengeance"? Managers are getting paid enormous bonuses to increase the bottom line, which in many cases, includes outsourcing jobs to Khuala Lampur, Mumbai, and elsewhere. Prof. Yermack may say, well that is good business. Well I have yet to hear why then Europe and Asia, the very place we can ship mid level jobs, can find senior level talent for a fraction of what we pay our CEOs. Why can't we outsource some of these positions? Wouldn't that be good business?
Prof Yermack consistently defends these CEO packages, never once references the fact that pay in Asia and Europe for CEOs is a fraction of the cost here, and why this is. I think he pretty much sums up his sentiment towards this issue saying, "For the large majority of companies and executives, compensation is structured rationally and provides big rewards only for creating shareholder value over sustained periods". What? Over the past year, banks given TARP money, banks barely staying afloat, continue to pay out enourmous bonuses, based on what? When their chieftens are asked, 'why are you paying out these ridiculous bonuses despite poor earnings?" These CEOs have not been responding as prof Yermack would suggest, "Well, we pay these out because we've created shareholder value over sustained periods". No, the CEOs, say something to the effect of, well, we don't want to lose all of our talent to foreign banks.. what? The foreign banks who pay a fraction of what we pay? Where are all these CEOs going to go if you don't pay them 38.2 million dollars as Vikram Pandit was paid in 2008, the head of Citigroup, a company now nearly 40% owned by the gov't, was paid? They can't all go to hedge funds.
So, I think prof Yermack might cameo on Mad Men one of these days. I think he might make a great ad exec. He works for NYUs business school, and every piece of literature that NYUs b-school sends out to prospective students touts what great connections the school has to the city's corporpate directors, CEOs, boards, etc. I don't think it would behoove NYU to have professors in their b-school running around writing anti-ceo compensation op eds. So, prof Yermack I hope your advertising campaign/op ed gets you some wonderful guest speakers in one of your classes this Fall - perhaps Ken Lewis will drop in now that he has some time on his hands and as prof Yermack himself mentioned "Mr. Lewis liquidated a whopping $173 million of Bank of America stock in the second half of 2006, when it traded around its all-time high."
Anyhow, as I close out this entry, you can check out the Institute for Policy Studies or google any of Paul Krugman's articles to hear some points contrarty to professor Yermack's. I'll also try to post a few more links to other blogs, etc that simply do what I've been doing but a lot better, and thus I will probably be posting less and considering changing the format a bit for this blog. Another note, anyone can co-post, as did TSH, just let me know what you 'd like to blog about (spares you the time of setting up your own blog.. my email is tt00136@hotmail.com) and I can change the settings to allow you to post.
TST
Thursday, October 8, 2009
From Pheasants to Foxes
From Pheasants to Foxes
I write this blog as a co-editor and (infrequent) contributor. I’ve known TST for quite some time, both personally and professionally. We’ve talked many times in regards to his dealings in, and views on, our beloved Wall Street, but it wasn’t until recently that I really saw eye-to-eye with TST. I have a pretty large social network in NYC, but I can say, without a shadow of a doubt, that the founder of this blog has more completely insane stories than anyone I’ve ever met, (even me). And, the worst part is that they’re all true.
As for myself, I was raised on Long Island as a north-shore church, boat, fish, sail, soccer, and lacrosse boy. I was raised to be a good, nice, generous, kind-hearted and classy gentleman. I voluntarily taught religion on the weekends throughout college and after I graduated. I had internships all over the world for my summers, starting in 11th grade. I wrote for a few international magazines and tutored in writing and grammar.
I guess I could blog about some of my stories on Wall Street. Stuff I saw done that was totally insane, stupid and born from pure greed. But, I think that before I get to all that stuff, it’s important to understand how a really nice boy from Long Island could be involved in one of the largest scandals ever: Structured Credit. Perhaps, in understanding me, you can understand that greed is a learned behavior. I’m going to blog ‘simple’ for a while because I’m trying to remain as un-derivative as possible.
--------------------------------------------------
I am extremely Type-A. I was a pilot in the Army for a few years and got banged up a few times. I only wanted blood from Type-A people. I engraved it on my dog tags: “Roman Catholic, O Positive, (Type-A only, otherwise DNR). I didn’t want to get infused with any blood from any slacker. I learned to fly apaches. I learned to kill people with it. I learned how to blow up houses, at command, with hellfire missiles, knowing that there were civilians inside.
Things I did and learned weren’t all right, but it’s what the government taught me to do, so I did it. I couldn’t hurt people anymore. It wasn’t how I was raised. So, I left early and went back to Wall Street.
I am extremely Type-A. I was in the FO of JP Morgan straight out of college. I did very well. I worked with the best traders on the street. They were animals. I partied my face off. I traveled the world for JPM and (later) HSBC. I worked with brilliant people, built trading and risk systems, got the best reviews, gave speeches, taught people the ways of the most complex financial products on the street, made money, lost money, made friends, lost a lot more. I ’evolved’ from credit derivatives into the next-best-thing: Structured Credit Products. We made hundreds of millions of dollars for the bank by packaging pools of assets, whatever they may have been, rating their default level in line with the average FICO score of the parties involved in the pool (which was most often complete shit), booking a total return swap to account for the principal pay downs, hedging the bond and counterparty risk with a credit default swap and, ultimately selling pieces out to the street for pretty decent spreads. I learned how to give credit when credit was not due. It was easy, I guess. Credit scores of 500 totally deserved jumbo loans because they were ‘no stated income‘…. I think I just ask the mortgage broker at: I.Fucked.Your.Life.Up.Mortgages.Com. Yea, he said Clinton gave their shop a ton of business a couple years back. He said something like, “Yo, bro, we help people bro. We found a way to let every minority own a home. But, dude, we’re just the originators. You hold the risk. That’s why you guys all get paid the big bucks bro”. I learned to look the other way.
Things I did and learned weren’t all right, but it’s what the government taught me to do, so I did it. I couldn’t hurt people anymore. It wasn’t how I was raised. So, I left Wall Street and have gone fishing every single nice day since then.
-TSH
I write this blog as a co-editor and (infrequent) contributor. I’ve known TST for quite some time, both personally and professionally. We’ve talked many times in regards to his dealings in, and views on, our beloved Wall Street, but it wasn’t until recently that I really saw eye-to-eye with TST. I have a pretty large social network in NYC, but I can say, without a shadow of a doubt, that the founder of this blog has more completely insane stories than anyone I’ve ever met, (even me). And, the worst part is that they’re all true.
As for myself, I was raised on Long Island as a north-shore church, boat, fish, sail, soccer, and lacrosse boy. I was raised to be a good, nice, generous, kind-hearted and classy gentleman. I voluntarily taught religion on the weekends throughout college and after I graduated. I had internships all over the world for my summers, starting in 11th grade. I wrote for a few international magazines and tutored in writing and grammar.
I guess I could blog about some of my stories on Wall Street. Stuff I saw done that was totally insane, stupid and born from pure greed. But, I think that before I get to all that stuff, it’s important to understand how a really nice boy from Long Island could be involved in one of the largest scandals ever: Structured Credit. Perhaps, in understanding me, you can understand that greed is a learned behavior. I’m going to blog ‘simple’ for a while because I’m trying to remain as un-derivative as possible.
--------------------------------------------------
I am extremely Type-A. I was a pilot in the Army for a few years and got banged up a few times. I only wanted blood from Type-A people. I engraved it on my dog tags: “Roman Catholic, O Positive, (Type-A only, otherwise DNR). I didn’t want to get infused with any blood from any slacker. I learned to fly apaches. I learned to kill people with it. I learned how to blow up houses, at command, with hellfire missiles, knowing that there were civilians inside.
Things I did and learned weren’t all right, but it’s what the government taught me to do, so I did it. I couldn’t hurt people anymore. It wasn’t how I was raised. So, I left early and went back to Wall Street.
I am extremely Type-A. I was in the FO of JP Morgan straight out of college. I did very well. I worked with the best traders on the street. They were animals. I partied my face off. I traveled the world for JPM and (later) HSBC. I worked with brilliant people, built trading and risk systems, got the best reviews, gave speeches, taught people the ways of the most complex financial products on the street, made money, lost money, made friends, lost a lot more. I ’evolved’ from credit derivatives into the next-best-thing: Structured Credit Products. We made hundreds of millions of dollars for the bank by packaging pools of assets, whatever they may have been, rating their default level in line with the average FICO score of the parties involved in the pool (which was most often complete shit), booking a total return swap to account for the principal pay downs, hedging the bond and counterparty risk with a credit default swap and, ultimately selling pieces out to the street for pretty decent spreads. I learned how to give credit when credit was not due. It was easy, I guess. Credit scores of 500 totally deserved jumbo loans because they were ‘no stated income‘…. I think I just ask the mortgage broker at: I.Fucked.Your.Life.Up.Mortgages.Com. Yea, he said Clinton gave their shop a ton of business a couple years back. He said something like, “Yo, bro, we help people bro. We found a way to let every minority own a home. But, dude, we’re just the originators. You hold the risk. That’s why you guys all get paid the big bucks bro”. I learned to look the other way.
Things I did and learned weren’t all right, but it’s what the government taught me to do, so I did it. I couldn’t hurt people anymore. It wasn’t how I was raised. So, I left Wall Street and have gone fishing every single nice day since then.
-TSH
Tuesday, October 6, 2009
House of Cards part deux
Well, I am tired and have been putting off writing the follow up to House of Cards for the past two nights. I spent today first with a friend who has been in media and is thinking about starting a political consultancy group. He had kind words for my blog, and also gave me food for thought with respect to tonight's entry. If you recall from my previous entry, I ended with the tale of a hedge fund manager who had pumped a 23 yr old tanning salon assistant in Vegas so full of cocaine that she died in his Vegas apartment. My friend, said, ok, you knew this guy, spent time with him, he evidently had an affair with your ex-fiance, however, most, if not all of this information (other than the affair with my ex) is public knowledge that people have read about in the NY Post, the NY Observer, the WSJ, and the Gawker. How are you going to add anything to the story, he asked. Good point. I'll deal with that in a moment.
The second friend I met with once ran a large trading desk for an investment bank. Speaking with him on subjects ranging from relationships and anthropology (evidently we can fall in love just as deeply and madly at 88 as we can at 28 according to some study my friend cited), to art, and of course to executive compensation. Firstly, speaking with people in trading/sales/investment banking who have achieved success reminds me that more likely than not you are going to find a multifaceted, extremely interesting, well-traveled, well-reasoned, and engaging conversationalist at your disposal (yet, who, I might add, could at a moment's notice also, and am not claiming that this particular friend would, cut your balls off, sell them to gypsies, and use the proceeds for either a night at Scores - now the Saphire Lounge - or a peek into a competing bank's balance sheet, depending on the character type you are dealing with). Anyway, two thoughts on this: First, not all of these guys are the enemy - they are playing by the current rules. If anyone/anything is the enemy it's the rules. I think on this subject he and I agreed. Boards and compensation committees are all tied together by six degrees of seperation. Second, pay could be structured to be paid out gradually over time, rather than lump sum, with clawback provisions added. Again nothing astonishly new. Information doesn't have to be new however, for you to support it, to rally around it, to spread the word, expand the discussion to your friends and neighbors. Sometimes information just has to be right, and right is enough, or at the very least, a starting place.
To return to the comments made by my first friend in regard to how do I contribute on the margin to a piece that has already been run in four, maybe five papers here in NYC. Well, for one, I did spend time with the man. I don't think any of these reporters can say the same. Secondly, I'm not entirely sure everyone did catch this scandal. There were so many, weren't there? It was hard to keep track. Lastly, the reason I am writing it is not a out of Schadenfreude or revenge for his having placed his mummifed man parts in my 27 yr old fiance in exchange for
baubles and extravagant trips, it is something I came across in the Observer. It is beyond me, the utter sycophanticism we as a society have towards those with a few extra benjamins to go around. I think this topic ties in with how CEOs once having amassed a few extra benjamins are able to begin stacking the decks (boardrooms, compensations committiees, political officials) in their favor. So, let me explain in short order. I will post the links to the articles below for further reference. The hedge fund manager (married, with children) gets the fever for the flava of my fiance at the time who could be his daughter. He presents her with his sagging mayo bag he's been tucking into his gold toe socks along with tickets to Aruba or some such place. The affair begins. Said fiance believes he will leave his wife for her, however, he leaves wife, but not for said fiance, but rather for 23 yr old tanning assistant in Vegas. Shortly thereafter, 23 yr old is dead of cocaine overdose in hedge fund managers apartment. Her cell phone records are found, and they state, "I am not having fun. I can't believe how much coke he does, all the time, all day long. He keeps leaving me to talk to a girl he dated. Things are really bad. Ed has been so mean to me"
Ok, great. We have all perhaps experimented. But this guy is 50 years old, she is 23. Anyone in NYC knows how easy it is to manipulate someone so young, so naive, if you have a lot of money as Ed does. So now this girl is dead. Ed chooses then to take some time off from acting CEO of Morgan Hotel and maybe work on his backstroke, get that "deviated septum" looked at, whatever.
What really got to me was the article in the Observer. The artile describes Ed's return to NYC to purchase a 10 million penthouse at 20 Green St. The listing broker Keith Copley describes what a wonderful guy Ed is, and the article references (adoringly) a Gawker post that "teased" Mr. Scheetz "for his Vegas troubles". His Vegas troubles?... a euphomistic way of saying, his providing to a girl half his age waaay too much of an illegal drug that she herself said was making her miserable and eventually killed her.
I've either not lived here long enough to be so jaded as to get the joke, or it's simply not funny. I'm fairly certian if one of the 14, god bless you, people who follow this blog, returned to your hotel room where you had earlier left a girl/guy half your age with a soap dish full of coke and that person is now dead, you would not be "teased" in the Observer while being described as a super nice guy who had had some "Vegas troubles".
So, point being, one set of rules for mummifed man parts with the millions.. one set of rules for the rest of you.
http://www.observer.com/2008/vegas-scandal-refugee-edward-scheetz-buys-soho-penthouse-
http://www.nypost.com/p/news/regional/dead_girl_tells-tale_on-cell
http://therealdeal.com/newyork/articles/disgraced-hotel-exec-buys-condo-for-10m
Hi, It's been brought to my attention the links are broken. I will amend them, but in the meantime you can google Ed Scheetz 911 call, Ed Scheetz NY Post, Ed Scheetz NY Observer.
Ciao for now,
TST
The second friend I met with once ran a large trading desk for an investment bank. Speaking with him on subjects ranging from relationships and anthropology (evidently we can fall in love just as deeply and madly at 88 as we can at 28 according to some study my friend cited), to art, and of course to executive compensation. Firstly, speaking with people in trading/sales/investment banking who have achieved success reminds me that more likely than not you are going to find a multifaceted, extremely interesting, well-traveled, well-reasoned, and engaging conversationalist at your disposal (yet, who, I might add, could at a moment's notice also, and am not claiming that this particular friend would, cut your balls off, sell them to gypsies, and use the proceeds for either a night at Scores - now the Saphire Lounge - or a peek into a competing bank's balance sheet, depending on the character type you are dealing with). Anyway, two thoughts on this: First, not all of these guys are the enemy - they are playing by the current rules. If anyone/anything is the enemy it's the rules. I think on this subject he and I agreed. Boards and compensation committees are all tied together by six degrees of seperation. Second, pay could be structured to be paid out gradually over time, rather than lump sum, with clawback provisions added. Again nothing astonishly new. Information doesn't have to be new however, for you to support it, to rally around it, to spread the word, expand the discussion to your friends and neighbors. Sometimes information just has to be right, and right is enough, or at the very least, a starting place.
To return to the comments made by my first friend in regard to how do I contribute on the margin to a piece that has already been run in four, maybe five papers here in NYC. Well, for one, I did spend time with the man. I don't think any of these reporters can say the same. Secondly, I'm not entirely sure everyone did catch this scandal. There were so many, weren't there? It was hard to keep track. Lastly, the reason I am writing it is not a out of Schadenfreude or revenge for his having placed his mummifed man parts in my 27 yr old fiance in exchange for
baubles and extravagant trips, it is something I came across in the Observer. It is beyond me, the utter sycophanticism we as a society have towards those with a few extra benjamins to go around. I think this topic ties in with how CEOs once having amassed a few extra benjamins are able to begin stacking the decks (boardrooms, compensations committiees, political officials) in their favor. So, let me explain in short order. I will post the links to the articles below for further reference. The hedge fund manager (married, with children) gets the fever for the flava of my fiance at the time who could be his daughter. He presents her with his sagging mayo bag he's been tucking into his gold toe socks along with tickets to Aruba or some such place. The affair begins. Said fiance believes he will leave his wife for her, however, he leaves wife, but not for said fiance, but rather for 23 yr old tanning assistant in Vegas. Shortly thereafter, 23 yr old is dead of cocaine overdose in hedge fund managers apartment. Her cell phone records are found, and they state, "I am not having fun. I can't believe how much coke he does, all the time, all day long. He keeps leaving me to talk to a girl he dated. Things are really bad. Ed has been so mean to me"
Ok, great. We have all perhaps experimented. But this guy is 50 years old, she is 23. Anyone in NYC knows how easy it is to manipulate someone so young, so naive, if you have a lot of money as Ed does. So now this girl is dead. Ed chooses then to take some time off from acting CEO of Morgan Hotel and maybe work on his backstroke, get that "deviated septum" looked at, whatever.
What really got to me was the article in the Observer. The artile describes Ed's return to NYC to purchase a 10 million penthouse at 20 Green St. The listing broker Keith Copley describes what a wonderful guy Ed is, and the article references (adoringly) a Gawker post that "teased" Mr. Scheetz "for his Vegas troubles". His Vegas troubles?... a euphomistic way of saying, his providing to a girl half his age waaay too much of an illegal drug that she herself said was making her miserable and eventually killed her.
I've either not lived here long enough to be so jaded as to get the joke, or it's simply not funny. I'm fairly certian if one of the 14, god bless you, people who follow this blog, returned to your hotel room where you had earlier left a girl/guy half your age with a soap dish full of coke and that person is now dead, you would not be "teased" in the Observer while being described as a super nice guy who had had some "Vegas troubles".
So, point being, one set of rules for mummifed man parts with the millions.. one set of rules for the rest of you.
http://www.observer.com/2008/vegas-scandal-refugee-edward-scheetz-buys-soho-penthouse-
http://www.nypost.com/p/news/regional/dead_girl_tells-tale_on-cell
http://therealdeal.com/newyork/articles/disgraced-hotel-exec-buys-condo-for-10m
Hi, It's been brought to my attention the links are broken. I will amend them, but in the meantime you can google Ed Scheetz 911 call, Ed Scheetz NY Post, Ed Scheetz NY Observer.
Ciao for now,
TST
Monday, October 5, 2009
House of Cards
So tonight I am sitting in a class offered by one of New York's many financial institutions listenening to a very nice gentleman go on about sub prime loans, auction rate securities, special purpose vehicles, structured investment vehicles, credit defualt swaps, collateralized debt obligations and so forth. All of this leading into a plug for the book, "House of Cards" by William D. Cohan which depicts the downfall of Bear Stearns. Having become disgusted by my chosen profession, yet still bound by human laws such as one must feed oneself and so on, I continue to pursue these courses, but really, while sitting through them my mind wanders with a frightening frequency towards visions of using the pen given to me by one of my former brokers as a device with which to perfom a tracheotomy right there, in the middle of this very nice gentleman's class.
When I return home, I look up the book online to see if the famous Jimmy Cayne had anything to say for himself. We all know he liked to golf - so much so that he wasn't around much while the sky was falling. We know that he liked to smoke pot and play bridge - I mean what CEO of a major investment bank whose personal worth at one point touched upon, what, a billion or so dollars, shouldn't be able to slack off, smokc pot, and play his favorite card game whilst the rest of the firm collapses. However, I had been remiss in not having heard that Mr. Jimmy Cayne, the pot smoking, bridge enthusiast was also a homophobic misogynist. I am certain everyone on earth already knows this. I am sure everyone has already read how JC called Treasury Secretary Tim Geithner a fag, and as for Ms. Kate Kelly, a Wall Street Journal Reporter, JC went so far to call her a, "cunt....whose capability is zero".
So, these crass, pot smoking, evidently incompetent, bullies with limited vocabularies are the very men we as a nation simply cannot do without. Despite the fact that the CEOs in Asia and Europe seem to get the job done for a fracton of what we pay our CEOs without referring to their journalists as "cunts" and their treasury secretaries as "fags', we have been so convinced that the "market" here has accurately assessed our nations CEOs worth that we dare not challenge the market lest we be denounced a communist or a socialist. Hmmm, let's say we have two competing theories, one is our crass, incompotent, pot smoking, mysogonist CEO JC is worth every dime despite the collapse of Bear Stearns, and that if you disagree you are in fact a communist or a socialist. The other theory, is that over the years, JC has cagily appointed members to the board who have looked past his behaviour due to favortism, nepotism, cronyism, a couple of decent rounds out at Bethpage, what have you. Occam's Razor, I think, might point us in the direction of the latter rather than the former explanation.
Well, this you all already know. Tomorrow, I will write about a CEO of a hedge fund I knew personally as he not only spent a good deal of his time shagging my ex-fiance, but when he lost that loving feeling for her, he decided to pump a 23 yr old tanning assistant in Vegas so full of cocaine that she died. He did in fact settle out of court for a very handsome sum with the family of the deceased, as an American CEO can do when that CEO is worth 150 millon or so dollars. Well, all of this bullshit is either exactly as the market dictates and we are but it's servants, or really, this is all a house of cards, and all it takes is just one.. simple..push.
Until tomorrow.
TST
When I return home, I look up the book online to see if the famous Jimmy Cayne had anything to say for himself. We all know he liked to golf - so much so that he wasn't around much while the sky was falling. We know that he liked to smoke pot and play bridge - I mean what CEO of a major investment bank whose personal worth at one point touched upon, what, a billion or so dollars, shouldn't be able to slack off, smokc pot, and play his favorite card game whilst the rest of the firm collapses. However, I had been remiss in not having heard that Mr. Jimmy Cayne, the pot smoking, bridge enthusiast was also a homophobic misogynist. I am certain everyone on earth already knows this. I am sure everyone has already read how JC called Treasury Secretary Tim Geithner a fag, and as for Ms. Kate Kelly, a Wall Street Journal Reporter, JC went so far to call her a, "cunt....whose capability is zero".
So, these crass, pot smoking, evidently incompetent, bullies with limited vocabularies are the very men we as a nation simply cannot do without. Despite the fact that the CEOs in Asia and Europe seem to get the job done for a fracton of what we pay our CEOs without referring to their journalists as "cunts" and their treasury secretaries as "fags', we have been so convinced that the "market" here has accurately assessed our nations CEOs worth that we dare not challenge the market lest we be denounced a communist or a socialist. Hmmm, let's say we have two competing theories, one is our crass, incompotent, pot smoking, mysogonist CEO JC is worth every dime despite the collapse of Bear Stearns, and that if you disagree you are in fact a communist or a socialist. The other theory, is that over the years, JC has cagily appointed members to the board who have looked past his behaviour due to favortism, nepotism, cronyism, a couple of decent rounds out at Bethpage, what have you. Occam's Razor, I think, might point us in the direction of the latter rather than the former explanation.
Well, this you all already know. Tomorrow, I will write about a CEO of a hedge fund I knew personally as he not only spent a good deal of his time shagging my ex-fiance, but when he lost that loving feeling for her, he decided to pump a 23 yr old tanning assistant in Vegas so full of cocaine that she died. He did in fact settle out of court for a very handsome sum with the family of the deceased, as an American CEO can do when that CEO is worth 150 millon or so dollars. Well, all of this bullshit is either exactly as the market dictates and we are but it's servants, or really, this is all a house of cards, and all it takes is just one.. simple..push.
Until tomorrow.
TST
Saturday, October 3, 2009
Dead Peasants
My wife and I just returned from seeing Mike Moore's latest film, during which it is revealed at some point that employers have been taking out insurance policies on their employees in hopes that the employee will die and thus the contract pay off. These contracts are called Dead Peasant Insurance. Seriously, companies such as Wal-Mart, Walt Disney, and Procter & Gamble have been issuing these contracts, without the consent or knowlege of the employee, in order to use the gains to pay for retirement benefits and perks for top executives. I don't want to reveal too much from the movie as you should definitely see it, but I thought I would lead in with this as it has almost a Jonathon Swift, "A Modest Proposal" feel to it.
I'll wait a week to discuss the movie so as not to spoil it for anyone, and to see if I can attract anyone else to this crappy little blog of mine. However, and this isn't a spoiler as it has been pretty much discussed endlessly on talk shows and such, that Mike Moore leaves it open at the end of the film that he may not continue to produce films if people don't get involved. I had heard this prior to starting what is my crappy little blog, and I had also contributed to a few threads on CNN where I found so many people tired of a system that seems to truly represent so few (one spoilier here - in the film, Moore reveals a leaked Citigroup memo describing that America is no longer a true Democracy, but rather a Plutonomy wherein the top 1% control more wealth than do the bottom 95% combined. The memo goes on to describe how to maintain this, and what could possibly cause a shift in this dynamic).
I really don't have all that much more to blog at the moment without revealing more about the movie itself. There's definitely been a breakdown in the system, I think we are all pretty much aware of it, and the question is now - what the hell do we do about it?
I'll wait a week to discuss the movie so as not to spoil it for anyone, and to see if I can attract anyone else to this crappy little blog of mine. However, and this isn't a spoiler as it has been pretty much discussed endlessly on talk shows and such, that Mike Moore leaves it open at the end of the film that he may not continue to produce films if people don't get involved. I had heard this prior to starting what is my crappy little blog, and I had also contributed to a few threads on CNN where I found so many people tired of a system that seems to truly represent so few (one spoilier here - in the film, Moore reveals a leaked Citigroup memo describing that America is no longer a true Democracy, but rather a Plutonomy wherein the top 1% control more wealth than do the bottom 95% combined. The memo goes on to describe how to maintain this, and what could possibly cause a shift in this dynamic).
I really don't have all that much more to blog at the moment without revealing more about the movie itself. There's definitely been a breakdown in the system, I think we are all pretty much aware of it, and the question is now - what the hell do we do about it?
Friday, October 2, 2009
Hi and Welcome
I've started this blog in response to some of the feedback I received while contributing to several threads on CNN relating to corporate malfeasance, bloated CEO pay, and the general abuse of the middle class by the now well-entrenched plutocracy. I am not sure what to expect from a blog, or what I'll achieve by starting one, but what I would hope to happen is to find that some of those people who had expressed such a profound distaste for what is taking place in America's boardrooms will discover each other here, express themselves, perhaps come up with new ideas with which to attack what has become a plague on middle America - the overpaid, underachieving CEO, and the cronyism that has permitted this creature to grotesquely transform from a relatively manageable beastie earnie 30x what the average worker is paid, to, in this day, a horrid and rather unseemly psuedo aristocrat taking home nearly 500x what the average worker is paid.
Even JP Morgan himself once declared that executives should earn no more than 20x the average worker as it was bad for morale to do so. Certainly JP, Carnegie, duPont, Rockefeller et al became fabulously wealthy robber barons, however they actually created industries. We face today a growing segment of the executive class who create absolutely nothing. They trade paper back and forth, they create derivatives upon derivatives, that, in the end, leave us with absolutely nothing of real value. The public ire isn't directed at the Bill Gates or Larry Ellisons of the world, it is focused on these snake oil salesman who have run amok peddling products such as credit default swaps, and collateralized debt obligations, which, at the end of the day, left us with absolutely nothing. Not a tangible good of any sort. Meanwhile, we watch as unemployment surpasses 10%, and the Dow sheds nearly half its value, as the Dick Fulds of the world smugly walk away with 500 million in compensation, Ken Lewis a 53 million dollar pension, and of course the list goes on.
I've entitled this first entry "Let Them Eat Cake". You probably already know this as a reference attributed to Marie Antoinette. Whether it be apocryphal or not, I really don't know. I do know that the story, true or not, describes pretty well what is going on now, and at the very least, serves as a good tale for what took place shortly before the French Revolution. The people in France were suffering, the elite were living immune to the suffering of the people, and when asked what should be done about the people's suffering, it is said that Marie responded, "let them eat cake". The point being, cake was well beyond the means of the commoner, and Marie already known as a voluptuary, was basically saying, "let them eat shit" for all she cared. I think many of us these days have felt as if we have been told that we too can eat shit for all anyone cares. And we too, would like very much to fit our CEO for a modern day guillotine.
One of the nice things of already having had both a very bloody Revolutionary War here in the States, and a French Revolution, is that we don't necessarily have to run around guillotining anyone. We can organize and mobilize freely, turn back the tide, protest, rally, vote from office those who refuse to represent 'we the people' and instead choose to represent the lobbyists rather than their consituents.
So, the night before Mike Moore's movie comes out everywhere - and whatever you think of Mike Moore, I believe his most recent film will serve as a decent primer for explaining the genesis of the crash and who played a large role in it - I am going to throw this blog online and my hope is to link up eventually with others who I know have similar blogs already out there, attract some of those who expressed interest previously, and perhaps build some interest from there and keep the momentum going.
TST
Even JP Morgan himself once declared that executives should earn no more than 20x the average worker as it was bad for morale to do so. Certainly JP, Carnegie, duPont, Rockefeller et al became fabulously wealthy robber barons, however they actually created industries. We face today a growing segment of the executive class who create absolutely nothing. They trade paper back and forth, they create derivatives upon derivatives, that, in the end, leave us with absolutely nothing of real value. The public ire isn't directed at the Bill Gates or Larry Ellisons of the world, it is focused on these snake oil salesman who have run amok peddling products such as credit default swaps, and collateralized debt obligations, which, at the end of the day, left us with absolutely nothing. Not a tangible good of any sort. Meanwhile, we watch as unemployment surpasses 10%, and the Dow sheds nearly half its value, as the Dick Fulds of the world smugly walk away with 500 million in compensation, Ken Lewis a 53 million dollar pension, and of course the list goes on.
I've entitled this first entry "Let Them Eat Cake". You probably already know this as a reference attributed to Marie Antoinette. Whether it be apocryphal or not, I really don't know. I do know that the story, true or not, describes pretty well what is going on now, and at the very least, serves as a good tale for what took place shortly before the French Revolution. The people in France were suffering, the elite were living immune to the suffering of the people, and when asked what should be done about the people's suffering, it is said that Marie responded, "let them eat cake". The point being, cake was well beyond the means of the commoner, and Marie already known as a voluptuary, was basically saying, "let them eat shit" for all she cared. I think many of us these days have felt as if we have been told that we too can eat shit for all anyone cares. And we too, would like very much to fit our CEO for a modern day guillotine.
One of the nice things of already having had both a very bloody Revolutionary War here in the States, and a French Revolution, is that we don't necessarily have to run around guillotining anyone. We can organize and mobilize freely, turn back the tide, protest, rally, vote from office those who refuse to represent 'we the people' and instead choose to represent the lobbyists rather than their consituents.
So, the night before Mike Moore's movie comes out everywhere - and whatever you think of Mike Moore, I believe his most recent film will serve as a decent primer for explaining the genesis of the crash and who played a large role in it - I am going to throw this blog online and my hope is to link up eventually with others who I know have similar blogs already out there, attract some of those who expressed interest previously, and perhaps build some interest from there and keep the momentum going.
TST
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