Rich People Things: Flowers of Evil @11:30 AM
It’s a funny thing, fidelity. Last week’s enormous bankruptcy-report filing on shady financial practices at the late Lehman Brothers investment house depicts an internal braintrust desperate to conceal reckless debt transactions and deceptive accounting practices from public view. The court-appointed examiner in the firm’s bankruptcy proceedings, Anton Valukas, found that senior Lehman officials tried to alert their bosses of blatant efforts to reclassify debt as “sales” under a recondite accounting trick known in house as “Repo 105”—so named because it permitted the company to assess buy-back transactions of assets sold for cash at a value representing 105% or more of the cash the company actually pulled in. And presto, Valukas observes: “Unbeknownst to the investing public, rating agencies, Government regulators, and Lehman's Board of Directors, Lehman reverse engineered the firm's net leverage ratio for public consumption.” READ MORE 12
Chris Lehmann's Baffler essay on the New Deal denialists is available online. Go read it. @11:10 AM 3
Rich People Things: The New Robber Barons Also Robbers @11:30 AM
It was only a matter of time. First, the histrionic cry of “socialism” at the merest suggestion of a more equitable distribution of the social good known as health care. Then, the robust trade in New Deal denialism on the right–the economic version of intelligent design theory, only without the intelligence. And now, unsatisfied with turning the clock back to 1929, Wall Street Journal editorial hand Daniel Henninger has called for the resuscitation of the Robber Barons. Henninger derides the incremental efforts of the Obama administration to boost job creation with tax credits and stimulus funds. That’s all just bootless government meddling in the masterful free market, he announces; in lieu of that we need “industries no one thought of before”—and that means, in turn, that “we need vision, vitality, and commercial moxie. The government is draining it [sic] away.” READ MORE 11
Rich People Things: The Skirt Locker @10:20 AM
As the U.S. economy tries to unshackle itself from lagging indicator after lagging indicator, this seems like just one indignity over the line: Tinsley Mortimer, the prefab Manhattan socialite whose frothy vacuity all but embodied the self-regarding elan of the new millennial money culture, has grown “edgy.”
That’s the worrisome verdict delivered by Wall Street Journal fashion hand Ray Smith, at any rate, who conducts on a sobering tour of La Mortimer’s closet in West Chelsea, supplying a chilling account of What It All Might Mean. The Virginia-bred socialite has, you see, been “going through an emotional time—spurred by her separation from her investment-banker husband Topper a year ago and the intense scrutiny” that accompanies the debut of her CW reality show later this month. Why, just the rumors of a feud with rival socialite-cum-brand-magnet Olivia Palermo, featured already on her own reality franchise, MTV’s "The City," sends fresh charges and countercharges of cynical hype pinwheeling through the confected uptown social scene. Is it any wonder then, that our ingenue has ventured into the dark and brooding netherworld beyond “her trademark pastel-and-ringlets look”? READ MORE 20
Rich People Things: David Brooks and the Myth of the New Fair Society @11:00 AM
Rest easy, America! After our long march through the spiritless battle to prop up our inflammable paper economy, David Brooks has identified the true cause of our distemper: we have been lulled into a terminal state of civic distrust by an overly porous power elite.
Yes. The recruitment of our upper-class leaders has become more demographically open, Brooks notes, with the old WASP establishment giving way to a “meritocratic” scrum of other-than white male power brokers. And as a result, “we’ve changed the criteria for success. It is less important to be clubbable. It is more important to be smart and hard-working.” But there's a twist! “As we’ve made our institutions more meritocratic, their public standing has plummeted. We’ve increased the diversity and talent level of people at the top of society, yet trust in elites has never been lower.” READ MORE 33
Rich People Things: Richard Epstein's Revisionist History Leads To Revising of History @11:17 AM
Today’s market idolators don’t know much, but they know what they hate. Take libertarian University of Chicago law professor Richard Epstein, who in his reliably hallucinatory Forbes.com column uses a wonky John Judis defense of the Obama White House’s approach to regulatory policy to divine all sorts of pernicious motives in the Progressive vision of law and policy making.
If this all sounds a bit of a Byzantine route for the sake of some rather pro forma offense-taking on behalf of the molested free market, well, you haven’t seen anything yet. READ MORE 7
Rich People Things: Alan Greenspan's Window Is Always Open @11:40 AM
Well, this is awkward. Alan Greenspan, hailed for most of his nearly two-decade run as chairman of the Federal Reserve as a market savant of the first order, is now assailed from all sides for the Fed’s apparent role in overinflating the country’s garish housing bubble. The charge is a fraught one, reports Fortune magazine’s Geoff Colvin, since should it stick, it will fundamentally reshape perceptions of Greenspan’s legacy at the central bank. Already the sweep of the emerging indictment is such, Colvin writes, that “four years after leaving the Fed as the Greatest Central Banker Ever, the longest-serving chairman, the Maestro, Alan Greenspan is the designated goat." READ MORE 6
Awl columnist Chris Lehmann sells book based on Awl column? Strange but true! @4:59 PM 49
Rich People Things, with Chris Lehmann: The New Feudal Land Rush @10:40 AM
Economic crises are notoriously the great testing grounds for the restlessly innovative spirit of capitalist enterprise. Adversity refines the mettle and taxes the imagination of your plucky entrepreneur, who doggedly carves new fortunes out of the main chances the chastened market affords for his wares. In the shadow of economic defeat, a thousand crisitunities bloom.
Or you know, maybe not. From across the pond comes an arresting Financial Times dispatch on how the global credit crunch has been an enormous boon for the hoariest brand of economic elite: the titled aristocracy. As global land speculators pack up their debts and head for the exits, the cash-rich beneficiaries of the Old-World bolt from their club chairs to expand their real-estate fiefdoms. Or, as FT correspondent Richard Warren puts it, altogether more discreetly, British aristos “have built castles, mansions and more for thousands of years but the combined effects of the credit crunch, legislation and financial need have encouraged a new wave of land acquisition and property development.” READ MORE 5
Rich People Things, with Chris Lehmann: Frugality Is So Fatiguing @11:00 AM
The Obama administration—now in frantic populist make-up mode—may be pondering beefed-up regulation of the banking industry, but the titans of Wall Street finance are plainly in no mood to be fenced in. Not only did investors pull a major funk last week, putatively thanks to their skittishness over the White House’s antibanking posturing, but Manhattan’s monied class is primed to get frisky once more in the luxe consumer marketplace, according to New York Times Sunday Styles correspondent Laura M. Holson. It’s bonus season, and for all the high dudgeon finance moguls affect to feel over their D.C. victimhood, their generous federal bailouts have put them back decisively in the pink (if not the black, strictly speaking); Morgan Stanley plans to reward its employees with average (which means, highly top-skewed) annual bonuses of $235,000, while Goldman Sachs plans to kick in on a $489,000-per-employee basis. READ MORE 13
Rich People Things, with Chris Lehmann: Looting Overtakes the Media @12:30 PM
"Looters," reported the Wall Street Journal yesterday from Port-au-Prince, "were scaling a crumpled building, apparently a grocery store, and throwing items to the assembled throng below." That "looting" is traditionally construed to mean illegally obtaining goods for one's own benefit—not for the benefit of a waiting crowd of the recently homeless—seems to have entirely escaped these reporters. The Journal, while chronicling this "violence" against property, does, however, offer one dissenting viewpoint: "Standing at the edge of the mob, 18-year-old Reginald Elacen suggested the police should be allowing the badly damaged stores to be emptied, and helping keep order. 'We really don't have a choice,' he said, referring to the desperate needs of Haitians who lost everything in the quake. 'If the police would help, it could be done without violence.'" What a wild idea. And? "Still, just a few blocks away on the road, a store owner was calmly overseeing an orderly emptying of his broken shop. He was using a kind of bucket-brigade of some 30 young men stretching over the store's shattered roof, handing out goods can by can." This article, incidentally, is headlined "Haiti Authorities Battle Looters." READ MORE 17
Rich People Things, with Chris Lehmann: A Steady Diet of Nothing @10:30 AM
Now that American finance capital has laid waste to much of the productive economy, Newsweek weighs in with the question that eventually occurs to all fretful magazine editors in the face of a crisis: What about the children? Or more precisely, what about the generation of striving Americans coming of an age when the lords of finance live in a state of plush federal retainership—and old-economy perks such as pensions, benefits and job security now seem like a sick joke?
For young people launching their tours in the workforce, explains Newsweek reporter Rana Foroohar, it’s hard to summon much in the way of free-spending pluck. READ MORE 19
Rich People Things, with Chris Lehmann: The Real 'Main Street' Revolt @10:20 AM
Taking about 8,400 words to arrive at a puzzled shrug, Steve Brill conducts patient readers of this week’s New York Times Sunday magazine through the elaborate reckonings of executive pay that have convulsed the seven firms benefiting from the federal Troubled Asset Relief Program. Brill, the former publisher of American Lawyer and able chronicler of the Washington bureaucracy’s response to Sept. 11, homes in on the agons of Kenneth Feinberg, the former 9/11 compensation master now tasked by the Treasury Department with the thankless work of serving as TARP’s “compensation czar.” READ MORE 5
Rich People Things, with Chris Lehmann: Sale Brittania @10:30 AM
The great Yuletide consumer potlatch has been a distinctly muted affair in our understimulated, recession-battered economy. The Elmos and Wiis of flusher times seem to mock us, in that garish mechanical way of theirs, from across the chasm that we created, when all that was solid-not least the multileveraged roofs over our heads-melted into air. And all that's to say nothing, of course, of the high-end dosh that, in a perfect world, would punctuate another productive year of giddy pelf-procuring. So how best to honor the complex holiday mandates of pecuniary display in such a chastened new order? High-end-shopping Financial Times blogger Lucia Van der Post has just the thing: Culture-shopping! READ MORE 11
Corrections: Matt Taibbi, Goldman Sachs and Heidi Moore @10:20 AM
A letter from Jim Ledbetter, the editor of The Big Money, corrects a fact in our column yesterday on Rolling Stone writer Matt Taibbi's treatment at the hands of the financial press. In discussing a piece by Heidi Moore at The Big Money, we conflated the amount of Goldman Sachs' total mortgage assets with AIG with the amount of their government bailout funds. READ MORE 8
Rich People Things, with Chris Lehmann: The (Partial) Vindication of Matt Taibbi @11:44 AM
When Rolling Stone reporter Matt Taibbi fingered Goldman Sachs as the main culprit behind the housing bubble-and most of the other commodities bubbles of the past seventy-odd years—financial journalists closed ranks to denounce every element of the case he sought to make. The story was "just plain wrong," thundered Slate's Heidi Moore. Taibbi was "the Sarah Palin of journalism," sniffed Megan McArdle, without showing any serious flaws in the piece's analysis or reasoning. CNBC contributor and Daily Beast columnist Charles Gasparino sputtered that the whole spectacle of the foul-mouthed, pugnacious Taibbi presuming to explain the Goldman-spurred '08 meltdown was "making me ill." This wasn't merely "wrong"-the financial press has spent the better part of the last decade being wrong, after all-it was, rather, that thing that no aspiring inside chronicler of Wall Street can ever afford to be: "pretty naïve." READ MORE 33
Rich People Things, with Chris Lehmann: Moneyster. MoneyBook. MoneySpace? @11:00 AM
Oh, you social media, you! With all that Twittering, messaging and geo-locationing, you do, you must generate some kind of revenue-and, per the big business thinkers of Web 2.0, it has to be ginormous. There are 300 million Facebookers out there, after all, and while Twitter is still in the modest 10-figure range, it operates at a staggering rate of increase; a March study of social media usage found that Twitter users were growing at a monthly clip of 1382%. (I realized that anything was possible in the Twitterverse when I awakened to the news this Sunday that I had acquired Reaganite direct-mail guru Richard Viguerie as a follower.) And each of these self-actualizing Web exhibitionists often lists gratis the sort of fine-grained demographic data-tastes in cars and movies, political leanings, pet fetishes and whatnot-that marketers pay focus groups and research teams premium fees to disgorge from the buying public. READ MORE 7
Rich People Things, with Chris Lehmann: The Tragic Tale of Bunky and Barbara Hearst @10:40 AM
Ever since American courts granted corporations the legal status of persons—in the most woeful misapplication of the 14th Amendment's due process clause prior to the imbecilic Rehnquist court ruling in Bush v. Gore—the traditional upper-caste battle royale over a robber baron's legacy has been an especially fraught family matter. Should a litigating person qua person emerge triumphant, a carefully constructed family ownership trust can become the plaything of a crass interloper, in no way to the manor born. Company assets and proprietary business plans can turn into just more fodder in courtroom campaigns of personal destruction-as carelessly repurposed and quickly tossed away as one of Larry King's elective affinities or a U2 concept album. That, at any rate, is the plain moral of the harrowing tale of John Hearst's divorce, as recounted in Fortune writer Mark Fass's epic reconstruction of the sordid drama, Citizen Bunky. READ MORE 8
Rich People Things, with Chris Lehmann: The Magna Cum Laude Recession @9:42 AM
It's a funny thing, newspapering. Last Saturday, for example, the Washington Post carried a dour dispatch in its business pages announcing that the DC unemployment rate ticked up another half a percentage point in October. This was "its highest level in 34 years of record keeping," noted reporter V. Dion Haynes. While the 11.9% jobless rate is in line with that of other major cities, there's also a peculiar lag in the employment scene here; even though employers in metro DC have added 10,200 jobs in the more credentialed end of the service industries, such as education and health care, they make a poor match for the District's labor market. Citing the work of George Mason University's Center for Regional Analysis, Haynes notes that "the District has a higher proportion of undereducated, low-skilled people who have been most vulnerable to job cuts," and so it stands to reason that "many of the new, higher-paying, higher-skilled jobs in the city are going to people in the suburbs" of Maryland and Virginia. Eagle-eyed readers of the Post business section might recall a similarly underplayed story from earlier this month, which found that DC's rarely functional government has been stoking this urban skills gap by failing to direct recipients of welfare assistance to programs upgrading job skills and offering counsel on job search strategies—even though such referrals are more or less mandatory under federal law. READ MORE 10
Rich People Things, with Chris Lehmann: Rich Enough for You? @10:10 AM
Okay, so this is pretty much the reason why we have a New York Times Sunday Styles section: to rally its readers in a time of raw, unknowing confusion; to dispense the essential information they need in order to make sense of a world seemingly turned upside down; to assure that the bare coordinates of consensual reality remain intact in a social order suddenly deranged by crisis. To grant its imprimatur, in short, to the term "Bling Ring." READ MORE 4
Rich People Things, with Chris Lehmann: Forbes-ismus; A Primer @10:00 AM
Well, the good news is that Steve Forbes seems to have wearied of playing Edward Gibbon in his recent attempt to mine the ancient past for management tips. The far less good news is that the visionary publishing scion is still thinking great thoughts about the way things ought to be-and he still has an eponymous magazine, which conveniently doubles as a platform for repurposed book content. And yes, the still worse news is that the indefatigable Will Durant of Gramercy Square has released another book (again instigated with a long-suffering collaborator) called How Capitalism Will Save Us: Why Free People and Free Markets Are the Best Answer in Today's Economy-and he has once more shoveled it indiscriminately on to Forbes.com for the edification of its well-heeled self-regarding reader base, and to the mortification, no doubt, of the poor editors and writers marooned on the island of a publishing empire that Forbes' dad Malcolm built. READ MORE 5
Rich People Things, with Chris Lehmann: Escape From Superstition Mountain @9:29 AM
Oh, sure, our long economic slough has claimed plenty of casualties, from the (largely) chastened automobile industry to the shameless investment-banking sector. But there is one site of carnage that no correspondent has surveyed: the sheer scale of human loss is unfathomable and the implications of its long-term failure are simply unendurable to contemplate. We speak, of course, of the nation's beleaguered private golf clubs, which fearless embed Dean Foust, the Atlanta bureau chief for Business Week, reveals is embroiled in nothing less than an "existential crisis." READ MORE 8
Rich People Things, with Chris Lehmann: In Praise of Being Made Redundant @11:20 AM
With much of the opinion-making world fretting that American executives may no longer be compensated at their customary levels of obscenity, and fearing an exodus of the kind of top-notch managerial talent that brought the US economy to the brink last year, it may seem perverse, or at the very least unsporting, to dwell on the lot of the garden-variety shitcanned American worker. And it's undeniably true that joblessness is a subject that much preoccupies me these days. Still, as the official rate of unemployment continues inching toward 10 percent—and the real jobless rate having long ago left that benchmark in the dust—even investor-smitten outlets such as Bloomberg News are forced to concede that unemployment is now a chronic drag on an economic recovery that's been largely predicated on bank bailouts.
But the news on the jobless front isn't uniformly grim, reports Business Week's Michelle Conlin. A recent study of the impact of mass layoffs at the home plants of the airplane manufacturing giant Boeing turned up some unexpected findings. READ MORE 14
Rich People Things, with Chris Lehmann: The Rich Rehab Differently, Like by Hugging Horses @11:25 AM
Celebrities flock to Sundance, Utah, of course, to flaunt their Q ratings and take the measure of the great entertainment imperium in the heady mountain air. But the rich and famous are also notoriously inclined to get a little too heady when left to their own devices-and Sundance also has the perfect setup for that dilemma, reports Fortune writer Claudia Wallis: the Cirque Lodge, "the rehab center du jour for those who can afford to go anywhere"-where rates top out at $1,595 a day for a minimum 30-day stay. READ MORE 6
Rich People Things, with Chris Lehmann: Free Fall in Crimson @10:35 AM
Harvard University and the New York Times are the high church bishoprics of the money culture's permanent counter-reformation: elite northeastern institutions that compulsively monitor each other for any sign of declension, heterodoxy, or waning prestige in a time of corrosive status anxiety. Both, of course, have lately fallen on hard times. Harvard has hemorrhaged 27% of its endowment, which plunged from $36.9 billion to $26 billion between June 2008 and June 2009-a crisis that spurred the school's largest ever single bond offering, of $1.5 billion, earlier this year. Meanwhile, the revenue-challenged paper of record finds itself some $250 million in hock to Mexican debt prince Carlos Slim Helú. Both institutions are now stooped under cost-cutting mandates and hiring freezes-and both appreciate just how nettlesome it is for any world-renowned tribune of elite culture to be in the humiliating position of doing more with less. READ MORE 16
Rich People Things, with Chris Lehmann: Egotistical Dubai, $80 Billion in Debt, Is Sliding into the Sea @12:00 PM
All during our new century's orgy of debt-driven real estate expansion, currency floated nowhere else on Earth the way it did—with pure, gleaming, world-conquering ardor—in Dubai. The island city-state in the Persian Gulf seemed less like an actual spot on the map than a Christo-style performance-art installation, an open-ended meditation on the many sleek surfaces of the monied life. Sheik Mohammed bin Rashid al Maktoum, the royal patriarch of the place, had a vision-conveniently spelled out in his 2006 autobiography, My Vision-to make Dubai "the world's number one city for commerce, tourism, and services." The trick would be to leverage all the petrodollars and beguiling debt instruments then sluicing around the once-sleepy outpost in the United Arab Emirates and suddenly you would have a kind of Vegas-on-steroids. And like that great American destination for capital immolation, Sheik Mohammed's playground would conjure reveries of recumbent money right out of the desert sand. READ MORE 9
Rich People Things, with Chris Lehmann: The Horrible Ramadan Servant Exodus @10:28 AM
You've all seen the New York Times TV spots, where one comely Yuppie after another steps forward to testify to the section of the ever-shrinking Weekend editions of the paper that infuses his or her high-consumption life with a roseate sense of well-being. The refrain of the ad underscores the social utility of this sense of plugged-inness: "Join the conversation," the voiceover coos, even though conversing with these pasteboard ingenues is just about the last thing any sane American would care to do.
But now, one gathers, the world economy is continuing to blindly reel toward oblivion, setting up a dilemma for the demographic the marketing masters of the Times so plainly covet: How to stage a conversation about certain urgent current events—global poverty, for instance—that doesn't also involve the awkward question of what earthly purpose the conversation-joiners are actually serving. READ MORE 2
The Lessons Of Peggy Noonan @4:45 PM
Did you know that wordy Republican propagandist Peggy Noonan will be teaching a course at Harvard this fall? Well, she sure will! Hear a dramatic reading of her syllabus—"with a few improvements"—as rendered in the dulcet tones of Awl contributor Chris Lehmann here. 3
Rich People Things: The Great New PR Campaign For Traders And Their Friends @2:19 PM
It was easy to miss amid last week's great celebrity die-off, but while a nation turned its lonely eyes to the departing shade of Billy Mays, the securities industry moved into what it ominously termed the "execution phase" of its campaign to roll back "populist" resentment against the lords of the paper economy. READ MORE 6
