Tuesday, December 31, 2013

Matt Taibbi's Best From 2013

AIG has a lengthy history of producing some of the biggest tools on Wall Street. Former CEO Maurice "Hank" Greenberg was considered one of the world's preeminent unapologetic narcissists even before he sued the government for providing an insufficiently generous bailout. Joe Cassano, former chief of AIG's financial products division, was another. First, he arrogantly blew off the accountants who warned him his portfolio of hundreds of billions in uncollateralized bets might destroy the world. Then, after it all went kablooey, he tiptoed back to D.C. (after first being assured of not being prosecuted, mind you) from his lavish four-story townhouse in London just long enough to tell the Financial Crisis Inquiry Commission that he hadabsolutely nothing to be sorry about and they could bite him and his hundreds of millions in earnings if they disagreed.

Now a third AIG executive enters the pantheon of tone-deaf AIG bigwigs: CEO Robert Benmosche, who just told the Wall Street Journal that the post-crash public outcry over the use of bailout money to pay bonuses to executives in Cassano's Financial Products unit was comparable to – get this – lynchings in the deep south. From reporter Leslie Scism's interview:

The uproar over bonuses "was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that – sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong."

For sheer "Let them eat cake"-ness, this ranks right up there with Lloyd Blankfein's "I'm doing God's work" riff and Berkshire Hathaway billionaire Charlie Munger's line about how it was proper to bail out Wall Street, but people in foreclosure should "suck it in and cope." A few notes:

First of all, any white guy anywhere, rich or poor, who steps out in public wearing the mantle of 400 years of black suffering instantly shoots to the very top of the world asshole pyramid. Most white people grasp this instinctively. If they don't already teach it in kindergarten to make sure the rest get it, they ought to.

But when you're a white guy who just presided over a year of declining across-the-board sales but got a 24% pay raise anyway, to $13 million a year, largely because your company is invested in a market that's overheating due to massive Fed intervention, and you're so grateful for your cosmic good fortune that you immediately go out and publicly nail yourself to the cross of black victimhood – and not while stone drunk and with buddies at a bar, mind you, but sober and sitting in front of a Wall Street Journal reporter – that's like a whole new category of asshole. Try to compute just exactly how obnoxious that is – you'll be doing it until the end of time, like someone trying to figure pi.

Benmosche's nooses-and-pitchforks fantasies have their origins in stories about some AIGFP executives who were made to feel uncomfortable by angry crowds on their way home from work, and one about a teacher somewhere in the Midwest who ridiculed in her third-grade class a child whose father worked at the firm. That last bit of course would be very wrong if it did happen, and it may very well have.

Still, comparing being leered at on a train for continuing to collect a huge undeserved bonus from the taxpayer to being taken from your wife and family and hung from a tree for no reason at all is preposterous on at least a hundred different levels. Benmosche then doubled down on his crazy-spasm by explaining that part of the "lynching" involved the great unwashed trying to cheat those innocent AIGFP employees out of money they needed – money they needed, Benmosche explained, not to pay their bills, but to live beyond their bills:

Now you have these bright young people [in the financial-products unit] who had nothing to do with [the bad bets that hurt the company.]. . . They understand the derivatives very well; they understand the complexity. . . They're all scared. They [had made] good livings. They probably lived beyond their means. . . They aren't going to stay there for nothing.

It's a minor part of the story, but this whole notion of angry meanie taxpayers ignorantly trying to rob the poor AIGFP employees out of their hard-earned bonuses was always a fiction.

Those FP workers would normally have been counting on performance bonuses, but since AIGFP not only didn't perform that year, but created a historically bottomless suckhole of losses that nearly destroyed the universe, there were, alas, no performance bonuses to be had.

So management cooked up a bunch of "retention bonuses" for many of the unit's employees. This always seemed like a scam, a way of yanking a little last bit of value out of a company most thought was headed for collapse. Moreover, the notion that anyone (but especially the taxpayer) needed to pay millions in "retention bonuses" to prevent other financial firms from poaching employees of the biggest financial disaster/PR-cancer firm since Enron or Union Carbide – and this at a time when mass layoffs on Wall Street had flooded the labor market with thousands of other highly-qualified financial professionals who would have taken huge pay cuts to fill those slots – was always absurd.

Then Benmosche dropped one last bomb:

We're trying to find the villains [for the financial crisis]. There's got to be a villain somewhere. The problem is that there isn't a villain. There are villains. And they are everybody. They are the speculators in real estate. The people who flipped houses. People who lied and cheated [on mortgage applications]. Nobody did the income appraisals. … I include myself in there. I knew stuff was wrong.

Benmosche worked in high-level positions at both Credit Suisse and MetLife in the pre-crisis years, so one assumes he's talking about those jobs when he hints there was a time when he "knew stuff was wrong" with the mortgage bubble but apparently didn't say anything. So he kept his mouth shut and got rewarded for non-acting in the face of crisis with a job running AIG, where he sucked millions in comp from the taxpayer for years, which must have seemed only natural to him.

In tossing out this "everyone was a villain" line, the CEO, of course, only mentioned the small subset of ordinary people who were "villains" in those days, the low-level speculators who flipped houses and the homeowners who lied on their mortgage applications.

He conveniently left out the bigger institutional players who birthed this scheme, like the giant investment banks (including for instance Credit Suisse, where he worked) that not only knew that mass fraud was being committed at the mortgage application level but encouraged it, so that they could speed up the process of pooling and securitizing those mortgages and selling them off to unsuspecting third parties. Just to take the one example of his own former bank, investors in the mortgage securities sold by Credit Suisse incurred over $11 billion in losses, according to a complaint filed by New York AG Eric Schneiderman against the firm last year.

Banks knew, lenders knew, ratings agencies knew, and then of course firms like AIG knew that something was deeply wrong with the booming mortgage markets in the years leading up to 2008. The peculiar trade of AIGFP was the obviously crazy practice of selling hundreds of billions of uncollateralized insurance to the Goldmans and Deutsche Banks of the world, who in many cases were using these policies to bet against their own products. The 377-odd employees of that sub-unit of AIG took home over $3.5 billion in compensation for such socially-beneficial service in the seven years before it all went bust. If finance-sector pros in those years had reservations about where all that money came from, most, like Benmosche himself, kept them to themselves.

Stories like this "hangman nooses" thing give some insight into the oft-asked question of how the 2008 crisis could ever have happened, the answer being that the people who run our economy, like Benmosche, are basically idiots. They can read a spreadsheet and get through an investor conference call sounding like they know what they're talking about, but in real-world terms, your average pimp is usually an Einstein in comparison.

These people are so used to being told by interns and finance reporters and other ballwashers that they're geniuses that they pretty soon come to believe it, which is how concepts like "We'll never lose a dollar – it's all hedged" go unchallenged in rooms full of econ majors who've just bet the whole store on the mortgages of underemployed janitors and palm-readers. Somebody, please, tell these guys quick how smart they're not, or else we'll be in another crisis before we know it.

Read more: http://www.rollingstone.com/politics/blogs/taibblog/aig-ceo-robert-benmosche-compares-bonus-criticism-to-lynch-mobs-20130924#ixzz2oUEV6yJ9

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Winding The Year Down

The year ending is an arbitrary thing to a logical thinker like me. I gave up thinking much about New Year after the century changed in 1999 (I too think it changed in 2000/01 but let's leave that aside as a hopelessly minority position, okay?). So I spent much of my life wondering about the change of year, change of millennium thing. When I was a kid we were told this or that innovation would happen "by the turn of the century." The 1st of January 2000 came and went and all those jet propelled hover cars and commuting to the moon and all that never materialized. Besides, dates are totally arbitrary, a human invention for convenience based solely on...no one quite knows what. Jesus' Birthday? Historians have been pointing out the Messiah was probably born in 4 Before Christ (the common era we call it today, like it or not). And not likely in December. Jews are still waiting for their Messiah and they name dates after Japanese car companies (Nissan, anyone?). But New Year's Eve is a great way to make money so our bosses push it hard.

This week is a madhouse in Key West packed with people and all of them demanding a good time to see the new year in. Nothing stops or slows down for this holiday. We have a small town with three centers of celebration slated for midnight Tuesday, all based on New York's dropping of the ball. Key West drops a pirate wench, a conch shell and a transvestite - take your pick. My wife and I have an opportunity this year I attend as I am training on day shift so I will be done working by 6pm. On the other hand I can already see the effects of over crowding, bad driving habits and lost tourists, every intersection in Key West is an adventure in self preservation this week. Amalgamating it all into one giant drunken street party seems overwhelming. We may just stay home...
I'd like to attribute my lack of enthusiasm for the street party to superior anti consumerist political principles, or a smug refusal to agree to commonly accepted calendar dates, or perhaps even simple self preservation in a world gone drunk that night. I suspect we will not be seen cheering and drinking on Duval or at Schooner Wharf for one simple reason: sheer laziness.

God I love being 56! No more excuses...

Monday, December 30, 2013

The Great Chocolate Cake Caper

Sometimes all a Labrador wants to do is sleep, and sometimes that's what you have to let Cheyenne do. So we did, and she lifted her head to watch us go. I suspect she has a pretty good time left at home, wandering out onto the porch, sunbathing on deck, pottering about downstairs in the bushes, coming back indoors for a nap and going it all over again. It's a dog's life, it really is.

We stopped by Dolly and Robert's, and for once I got to be a passenger on the ride into town. As we were celebrating Dolly's birthday when she started to whinge about needing, not wanting, chocolate cake with buttermilk frosting we had to listen. More than that my wife and I got onto our phones and tried to find properly frosted traditional chocolate cake. You'd be amazed how hard that was. I figured a chocolate volcano from Michael's would do the trick, after our planned dinner and scheduled play at the Waterfront a Theater. Nope, it had to be chocolate cake. We immediately thought of Harpoon Harry's diner but they close at nine...Louie's didn't have it, Better Than Sex had beer baked chocolate cake, Martin's looked do-able but got nixed, Solo had chocolate cake cheese cake, Salute had something else, Café Sole had a chocolate mousse cake... This was getting to be fun. Do the Impossible!

I suggested, as we turned on White Street, that we order up a custom cake from one of the many fine bakeries in town and we do the birthday dessert thing a day later. To my astonishment this suggestion met with general approval and we settled for that. Until my wife spoke up from the back seat, there' said cupcake place over here....and there it was,with more cupcakes than you can shake a stick at, and bless me! Individual slices of the perfect chocolate cake. Key West Cakes hit the spot.

With that settled we left the car in a secret downtown location, and walked to dinner on Front Street, at the Roof Top Cafe upstairs, indoors with the night breeze blowing through the open French doors. It was lovely.

Andres, our Castilian waiter asked where we were from and seemed to perk up when we told him we were from around here. It augured well for dinner, being served by a pro. I have always liked the atmosphere at the Rooftop but for some reason my wife has been reluctant. Silly woman, the linens were clean and crisp, the water was cold and the rolls were hot enough the butter melted promptly. We were indoors (which I liked) feeling like we were outdoors (which I liked).

We went straight to the main course, vegetables for Dolly, mutton snapper for myself and Robert and mushroom risotto for my wife. The snapper was excellent with a spicy habanero mango sauce and my wife was in raptures over the rice. I had a fair few forks' full and she was right, it was rich and creamy while retaining nuttiness and slight crunch. I'd go back for that.

The place filled up not long after we sat for our six fifteen reservation, and dinner went by unreasonably fast. There was lots of conversation buzzing in the room but the place was not noisy. The Rooftop hit all the right notes.

Dessert was off, of course, as we had that carefully stored in the trunk of the car. While Robert wrestled with the bill, good man, I wandered into the deck and looked down on the teeming masses below.
We strolled through the warm night air to the Waterfront Theater five minutes away. If you fancy some alone time Key West is not the place to be...we had reserved dinner and Robert had tickets to the theater, second tow plumb in the middle. Dolly was getting the birthday she deserved.

Meeting old friends under the awning. The play was Leading Ladies and the Waterfront Playhouse was pretty full.

The play was a good old fashioned bedroom farce. The performance was perfect, campy over the top but not too much. Had Robert not invited us we'd never have gone. Reading about the play I was figuring it would be silly men in silly drag, and while the plot did revolve around that idea it was beautifully done. As a bonus it was also funny. Two feeble actors from England discover a local heiress has died leaving a fortune to two nephews who emigrated to England as children. They decide to impersonate the heirs and then discover Max and Sam are nieces of the deceased, not nephews. Hilarity ensues. The Shakespeare quotations dropped into the dialogue were a lovely counterpoint to the farce. And the final scene playing the entire play backwards from finish to start in three minutes was utterly brilliant. I'd never seen that before.

We had a grand time and it was lovely to walk back to the car in the dark of night and think, merely think, of the sounds of snow crunching underfoot.

Cheyenne was as we left her, busy guarding the home. Kisses all round.

Sunday, December 29, 2013

December 29th,2013

I just realized I dropped a day. I am working five days a week to train a new hire and this schedule confuses me half to death. I like twelve hour shifts, preferably at night, and this regular office schedule is wreaking havoc with my routines. I apparently need more sleep. My apologies.

Normal service resumes at midnight Eastern time.

Saturday, December 28, 2013

My Labrador Home Body

It has been an effort to be seasonal that I have not appreciated but skies have been cloudy. No snow or anything serious, but clearly with nearly a million people out of electricity Up North my irritation at the lack of sunshine seems rather narrow minded.

Cheyenne always perks up massively when cold fronts ride into town. I start getting morose in September in the middle of the hot season worrying my immobile dog is finally accepting her age and all it's limitations and her end is nigh. Then it gets cool, relatively speaking, and the inner puppy is released.

Her morning walks end up being as long as she wants which can be as long as two hours, and when she is a good girl she gets to go into Old Town for her favorite walks.

Old Town is full of smells and food, all the effluvia of last night's revelers who abandon all manner of clothing and food and bodily fluids as they straggle back to their hotels. Cheyenne loves them for it, and I get to take pictures while she snuffles around looking for unconsidered trifles.

Christmas is gone for another year, Thank Festivus, and now we can listen to proper music once again on the radio.

I got Cheyenne four years ago in December when she was walking in the holiday parade with an "Adopt Me" jacket in the SPCA contingent stumping along between floats. Next Monday I walked into the office on college road and told them I wanted Cheyenne. They laughed and said okay.

KeyWest pop quiz. Is this:

A) a not very colorful Christmas gift?

B) a snowbird's car left on the street all summer?

C) something else?

Cheyenne meanwhile is frequently described to me as a big dog. It's all a matter of proportion, really.

When I took her home from the pound I was worried that we didn't have a fence to keep her off the street. I even got a long wire leash to tie her up while I was working in the yard or under the house. She didn't like that at all, as I rather think she had a long history of being confined and tied up. In the end I trusted she was happy and I put a dog door in so she can come and go as she pleases, inside, on the shaded deck or out in the sun.

I tried for a while to put a gate at the top of the stairs to preventer leaving the deck it that was such a pain I took it down. Silly me she never goes. Out. Into the street, she has no desire to leave home because if she did she might miss a really good road trip or a chance for a couple more minutes napping on the couch.


Friday, December 27, 2013

Incas Restaurant

If I asked you: "What's the first thing you think of when I say Peru?" Some might think of Paddington Bear, some like Jeffrey might think of guinea pigs though we will draw a veil over that, but most people would think of this:

That Macchu Picchu poster was livening up one wall of the rather inviting and cozy interior of Key West's only Peruvian restaurant, Incas on White Street, where as far as I could tell no guinea pigs are on the Menu but other classic Peruvian dishes are.

This used to be Jose's Cantina for the longest time, one more Cuban restaurant in this half Cuban town, so the arrival of Peruvian food is a welcome change, and the place was packed as we settled in and checked the menu.

It's a husband and wife operation and Mrs Peru was running sound handing out menus drinks and dishes. We were in no hurry which was as well. My wife ordered a glass of sangria and I had beer, which came soon enough to stave off dehydration and impatience. Mr Peru came by before the of the meal to say hello and we assured him we were glad we came.

We decided to order an appetizer and a main dish. Our first choice of appetizer called causa was off so we missed the chance to try what appears to be some sort of potato cake. We selected fried yuca with a creamy yellow Peruvian sauce. One main dish that intrigued me was French fries and slices of wiener sausage mixed in. Italians love hot dog pizza so I suppose I shouldn't have been surprised by that culinary creation. If I ever get here by without my wife that will be one to try...

The beer was slightly dark and malted, not more than 4.2% alcohol so it was not at all hoppy. I liked it. Our main course (pictured above) was beef tacu tacu a dish where the rice was mushed with white beans giving it a curiously starchy particular flavor. I liked it a lot. For dessert we had a cake brought we are told to the Americas by the Spanish who used almonds and honey which are not apparently found in Peru, land of the potato...It's called alfahores and my wife liked it because the crisp sugar cookies aren't too sweet and the filling is made of dulce de leche, a flavor described as Latin American caramel, and much favored by her.

Promising ourselves a return visit before too long, we took off for the Tropic where to my suprise we found ourselves in a theater that slowly filled to capacity with a mostly gay crowd. The film was Dallas Buyer's Club a story that crossed boundaries telling the very compelling story of a straight man with Aids early in the epidemic who fought to get alternative treatments recognized by the government.

This is a film that will reappear as Oscar material no doubt in the fullness of time. Mathew McConaughey and Jennifer Garner are stand outs but the show is stolen entirely by the most convincing transgendered character to play a serious heart wrenching role. The film is worth a view just to see the astonishing Jared Leto in the role of a lifetime.

A great evening out in Key West with a new worthwhile place to eat, and our Arts house theater still bringing the world of cinema to the end of the road.

Thursday, December 26, 2013

The Heisenberg Principle

The television series Breaking Bad has gained popularity beyond what one might have expected, if like me you stumbled across it on Netflix and had no idea anyone else was watching the story of the physics teacher providing for his family by cooking....methamphetamines! The principal actor's costume of trilby hat, sunglasses and lantern jaw has become an equally popular image, seen here on a power pole.

I was ambling down Southard Street when Cheyenne and I came across a place to sit for a while on a hot December morning. Cheyenne was ready and the bicyclists were vacating a good place to sit, so we sat.

The overhang at Mangia Mangia, an Italian restaurant has benches for waiting patrons but in the early hours of the morning, relatively speaking it was a spot to pause.

The corner of Southard and Margaret Streets is a busy intersection it turns out and I turned my camera on them, as they flashed by. What occurred to me when I spotted the Breaking Bad face was there was an uncertainty principle at work here. Maybe.

" Heisenberg's Uncertainty Principle states that there is inherent uncertainty in the act of measuring a variable of a particle. Commonly applied to the position and momentum of a particle, the principle states that the more precisely the position is known the more uncertain the momentum is and vice versa. This is contrary to classical Newtonian physics which holds all variables of particles to be measurable to an arbitrary uncertainty given good enough equipment. The Heisenberg Uncertainty Principle is a fundamental theory in quantum mechanics that defines why a scientist cannot measure multiple quantum variables simultaneously. Until the dawn of quantum mechanics, it was held as a fact that all variables of an object could be known to exact precision simultaneously for a given moment. Newtonian physics placed no limits on how better procedures and techniques could reduce measurement uncertainty so that it was conceivable that with proper care and accuracy all information could be defined. Heisenberg made the bold proposition that there is a lower limit to this precision making our knowledge of a particle inherently uncertain."

So, if we accept that the individual cyclists are not in fact human but actually represent packets (quanta) of light then we can observe their motion but not be exactly certain where they are.

Inversely the picture of the quantum in motion can show where it was when the picture was taken but not where it was going to be.

On the other hand because this is the real world and cyclists cycling are generally speaking adequately provided for by Isaac Newton's pre-quantum rules we can accept that we see the cyclists come and go and we also known where they are as they move past us and probably where they will also go after they slide out of the frame.

The fact is its a great fantasy to make more money than you could ever spend and to do it in short order. The reality is that mechs is awful and rots people inside out and you can't think of that while you watch the crazy antics of the New Mexico teacher turned drug baron.

Like quantum mechanics, good for physicists versus Newtonian laws which work for ordinary people every day, television spins a nice yarn when written well but real life frequently doesn't.

All this powerful cogitation took place on a street corner one sunny morning and no one noticed. The planet continued in its orbit and people came and went about their business and eventually my dog got her breath back and off we ambled one more time. I can honestly say I was stone cold sober as I sat there and in my defense I can only say I was taking pictures with my phone and my mind wandered. All because of a face painted on a power pole.