- Rapha Winter Jersey, $230. Can also wear it as a light jacket.
- The Quants by Scott Patterson, $17.82 at Amazon.
- Framed Print of Untitled (Red and Black), 1955 by Mark Rothko, $200 at MoMA.
- Sidi Dragon 2 SRS Carbon Mountain Bike Shoes in Red, $372.50 at Chainreactioncycles. Retails for $465.
- Paddle Shifting Steering Wheel for my car, $2,095 at Suncoast. Retails for $2615.
- Decoded by Jay-Z, $18.88 at Amazon.
- Vision Racer VR3 Racing Simulator, $1295. The best way to play Gran Turismo.
- Rapha 3/4 Bib shorts, $225. I’m a sucker for that white stripe.

Cheers!

Copy + Paste of his 1939 Essay:

I

ONE AND THE SAME civilization produces simultaneously two such different things s a poem by T. S. Eliot and a Tin Pan Alley song, or a painting by Braque and a Saturday Evening Post cover. All four are on the order of culture, and ostensibly, parts of the same culture and products of the same society. Here, however, their connection seems to end. A poem by Eliot and a poem by Eddie Guest — what perspective of culture is large enough to enable us to situate them in an enlightening relation to each other? Does the fact that a disparity such as this within the frame of a single cultural tradition, which is and has been taken for granted — does this fact indicate that the disparity is a part of the natural order of things? Or is it something entirely new, and particular to our age?

The answer involves more than an investigation in aesthetics. It appears to me that it is necessary to examine more closely and with more originality than hitherto the relationship between aesthetic experience as met by the specific — not the generalized — individual, and the social and historical contexts in which that experience takes place. What is brought to light will answer, in addition to the question posed above, other and perhaps more important questions.

A society, as it becomes less and less able, in the course of its development, to justify the inevitability of its particular forms, breaks up the accepted notions upon which artists and writers must depend in large part for communication with their audiences. It becomes difficult to assume anything. All the verities involved by religion, authority, tradition, style, are thrown into question, and the writer or artist is no longer able to estimate the response of his audience to the symbols and references with which he works. In the past such a state of affairs has usually resolved itself into a motionless Alexandrianism, an academicism in which the really important issues are left untouched because they involve controversy, and in which creative activity dwindles to virtuosity in the small details of form, all larger questions being decided by the precedent of the old masters. The same themes are mechanically varied in a hundred different works, and yet nothing new is produced: Statius, mandarin verse, Roman sculpture, Beaux-Arts painting, neo-republican architecture.

It is among the hopeful signs in the midst of the decay of our present society that we — some of us — have been unwilling to accept this last phase for our own culture. In seeking to go beyond Alexandrianism, a part of Western bourgeois society has produced something unheard of heretofore: — avant-garde culture. A superior consciousness of history — more precisely, the appearance of a new kind of criticism of society, an historical criticism — made this possible. This criticism has not confronted our present society with timeless utopias, but has soberly examined in the terms of history and of cause and effect the antecedents, justifications and functions of the forms that lie at the heart of every society. Thus our present bourgeois social order was shown to be, not an eternal, “natural” condition of life, but simply the latest term in a succession of social orders. New perspectives of this kind, becoming a part of the advanced intellectual conscience of the fifth and sixth decades of the nineteenth century, soon were absorbed by artists and poets, even if unconsciously for the most part. It was no accident, therefore, that the birth of the avant-garde coincided chronologically — and geographically, too — with the first bold development of scientific revolutionary thought in Europe.

True, the first settlers of bohemia — which was then identical with the avant-garde — turned out soon to be demonstratively uninterested in politics. Nevertheless, without the circulation of revolutionary ideas in the air about them, they would never have been able to isolate their concept of the “bourgeois” in order to define what they were not. Nor, without the moral aid of revolutionary political attitudes would they have had the courage to assert themselves as aggressively as they did against the prevailing standards of society. Courage indeed was needed for this, because the avant-garde’s emigration from bourgeois society to bohemia meant also an emigration from the markets of capitalism, upon which artists and writers had been thrown by the falling away of aristocratic patronage. (Ostensibly, at least, it meant this — meant starving in a garret — although, as we will be shown later, the avant-garde remained attached to bourgeois society precisely because it needed its money.)

Yet it is true that once the avant-garde had succeeded in “detaching” itself from society, it proceeded to turn around and repudiate revolutionary as well as bourgeois politics. The revolution was left inside society, a part of that welter of ideological struggle which art and poetry find so unpropitious as soon as it begins to involve those “precious” axiomatic beliefs upon which culture thus far has had to rest. Hence it developed that the true and most important function of the avant-garde was not to “experiment,” but to find a path along which it would be possible to keep culture moving in the midst of ideological confusion and violence. Retiring from public altogether, the avant-garde poet or artist sought to maintain the high level of his art by both narrowing and raising it to the expression of an absolute in which all relativities and contradictions would be either resolved or beside the point. “Art for art’s sake” and “pure poetry” appear, and subject matter or content becomes something to be avoided like a plague.

It has been in search of the absolute that the avant-garde has arrived at “abstract” or “nonobjective” art — and poetry, too. The avant-garde poet or artist tries in effect to imitate God by creating something valid solely on its own terms, in the way nature itself is valid, in the way a landscape — not its picture — is aesthetically valid; something given, increate, independent of meanings, similars or originals. Content is to be dissolved so completely into form that the work of art or literature cannot be reduced in whole or in part to anything not itself.

But the absolute is absolute, and the poet or artist, being what he is, cherishes certain relative values more than others. The very values in the name of which he invokes the absolute are relative values, the values of aesthetics. And so he turns out to be imitating, not God — and here I use “imitate” in its Aristotelian sense — but the disciplines and processes of art and literature themselves. This is the genesis of the “abstract.”(1) In turning his attention away from subject matter of common experience, the poet or artist turns it in upon the medium of his own craft. The nonrepresentational or “abstract,” if it is to have aesthetic validity, cannot be arbitrary and accidental, but must stem from obedience to some worthy constraint or original. This constraint, once the world of common, extroverted experience has been renounced, can only be found in the very processes or disciplines by which art and literature have already imitated the former. These themselves become the subject matter of art and literature. If, to continue with Aristotle, all art and literature are imitation, then what we have here is the imitation of imitating. To quote Yeats:

Nor is there singing school but studying
Monuments of its own magnificence.

Picasso, Braque, Mondrian, Miro, Kandinsky, Brancusi, even Klee, Matisse and Cézanne derive their chief inspiration from the medium they work in.(2) The excitement of their art seems to lie most of all in its pure preoccupation with the invention and arrangement of spaces, surfaces, shapes, colors, etc., to the exclusion of whatever is not necessarily implicated in these factors. The attention of poets like Rimbaud, Mallarmé, Valéry, Éluard, Pound, Hart Crane, Stevens, even Rilke and Yeats, appears to be centered on the effort to create poetry and on the “moments” themselves of poetic conversion, rather than on experience to be converted into poetry. Of course, this cannot exclude other preoccupations in their work, for poetry must deal with words, and words must communicate. Certain poets, such as Mallarmé and Valéry (3) are more radical in this respect than others — leaving aside those poets who have tried to compose poetry in pure sound alone. However, if it were easier to define poetry, modern poetry would be much more “pure” and “abstract.” As for the other fields of literature — the definition of avant-garde aesthetics advanced here is no Procrustean bed. But aside from the fact that most of our best contemporary novelists have gone to school with the avant-garde, it is significant that Gide’s most ambitious book is a novel about the writing of a novel, and that Joyce’s Ulysses and Finnegans Wake seem to be, above all, as one French critic says, the reduction of experience to expression for the sake of expression, the expression mattering more than what is being expressed.

That avant-garde culture is the imitation of imitating — the fact itself — calls for neither approval nor disapproval. It is true that this culture contains within itself some of the very Alexandrianism it seeks to overcome. The lines quoted from Yeats referred to Byzantium, which is very close to Alexandria; and in a sense this imitation of imitating is a superior sort of Alexandrianism. But there is one most important difference: the avant-garde moves, while Alexandrianism stands still. And this, precisely, is what justifies the avant-garde’s methods and makes them necessary. The necessity lies in the fact that by no other means is it possible today to create art and literature of a high order. To quarrel with necessity by throwing about terms like “formalism,” “purism,” “ivory tower” and so forth is either dull or dishonest. This is not to say, however, that it is to the social advantage of the avant-garde that it is what it is. Quite the opposite.

The avant-garde’s specialization of itself, the fact that its best artists are artists’ artists, its best poets, poets’ poets, has estranged a great many of those who were capable formerly of enjoying and appreciating ambitious art and literature, but who are now unwilling or unable to acquire an initiation into their craft secrets. The masses have always remained more or less indifferent to culture in the process of development. But today such culture is being abandoned by those to whom it actually belongs — our ruling class. For it is to the latter that the avant-garde belongs. No culture can develop without a social basis, without a source of stable income. And in the case of the avant-garde, this was provided by an elite among the ruling class of that society from which it assumed itself to be cut off, but to which it has always remained attached by an umbilical cord of gold. The paradox is real. And now this elite is rapidly shrinking. Since the avant-garde forms the only living culture we now have, the survival in the near future of culture in general is thus threatened.

We must not be deceived by superficial phenomena and local successes. Picasso’s shows still draw crowds, and T. S. Eliot is taught in the universities; the dealers in modernist art are still in business, and the publishers still publish some “difficult” poetry. But the avant-garde itself, already sensing the danger, is becoming more and more timid every day that passes. Academicism and commercialism are appearing in the strangest places. This can mean only one thing: that the avant-garde is becoming unsure of the audience it depends on — the rich and the cultivated.

Is it the nature itself of avant-garde culture that is alone responsible for the danger it finds itself in? Or is that only a dangerous liability? Are there other, and perhaps more important, factors involved?

II

Where there is an avant-garde, generally we also find a rear-guard. True enough — simultaneously with the entrance of the avant-garde, a second new cultural phenomenon appeared in the industrial West: that thing to which the Germans give the wonderful name of Kitsch: popular, commercial art and literature with their chromeotypes, magazine covers, illustrations, ads, slick and pulp fiction, comics, Tin Pan Alley music, tap dancing, Hollywood movies, etc., etc. For some reason this gigantic apparition has always been taken for granted. It is time we looked into its whys and wherefores.

Kitsch is a product of the industrial revolution which urbanized the masses of Western Europe and America and established what is called universal literacy.

Prior to this the only market for formal culture, as distinguished from folk culture, had been among those who, in addition to being able to read and write, could command the leisure and comfort that always goes hand in hand with cultivation of some sort. This until then had been inextricably associated with literacy. But with the introduction of universal literacy, the ability to read and write became almost a minor skill like driving a car, and it no longer served to distinguish an individual’s cultural inclinations, since it was no longer the exclusive concomitant of refined tastes.

The peasants who settled in the cities as proletariat and petty bourgeois learned to read and write for the sake of efficiency, but they did not win the leisure and comfort necessary for the enjoyment of the city’s traditional culture. Losing, nevertheless, their taste for the folk culture whose background was the countryside, and discovering a new capacity for boredom at the same time, the new urban masses set up a pressure on society to provide them with a kind of culture fit for their own consumption. To fill the demand of the new market, a new commodity was devised: ersatz culture, kitsch, destined for those who, insensible to the values of genuine culture, are hungry nevertheless for the diversion that only culture of some sort can provide.

Kitsch, using for raw material the debased and academicized simulacra of genuine culture, welcomes and cultivates this insensibility. It is the source of its profits. Kitsch is mechanical and operates by formulas. Kitsch is vicarious experience and faked sensations. Kitsch changes according to style, but remains always the same. Kitsch is the epitome of all that is spurious in the life of our times. Kitsch pretends to demand nothing of its customers except their money — not even their time.

The precondition for kitsch, a condition without which kitsch would be impossible, is the availability close at hand of a fully matured cultural tradition, whose discoveries, acquisitions, and perfected self-consciousness kitsch can take advantage of for its own ends. It borrows from it devices, tricks, stratagems, rules of thumb, themes, converts them into a system, and discards the rest. It draws its life blood, so to speak, from this reservoir of accumulated experience. This is what is really meant when it is said that the popular art and literature of today were once the daring, esoteric art and literature of yesterday. Of course, no such thing is true. What is meant is that when enough time has elapsed the new is looted for new “twists,” which are then watered down and served up as kitsch. Self-evidently, all kitsch is academic; and conversely, all that’s academic is kitsch. For what is called the academic as such no longer has an independent existence, but has become the stuffed-shirt “front” for kitsch. The methods of industrialism displace the handicrafts.

Because it can be turned out mechanically, kitsch has become an integral part of our productive system in a way in which true culture could never be, except accidentally. It has been capitalized at a tremendous investment which must show commensurate returns; it is compelled to extend as well as to keep its markets. While it is essentially its own salesman, a great sales apparatus has nevertheless been created for it, which brings pressure to bear on every member of society. Traps are laid even in those areas, so to speak, that are the preserves of genuine culture. It is not enough today, in a country like ours, to have an inclination towards the latter; one must have a true passion for it that will give him the power to resist the faked article that surrounds and presses in on him from the moment he is old enough to look at the funny papers. Kitsch is deceptive. It has many different levels, and some of them are high enough to be dangerous to the naive seeker of true light. A magazine like the New Yorker, which is fundamentally high-class kitsch for the luxury trade, converts and waters down a great deal of avant-garde material for its own uses. Nor is every single item of kitsch altogether worthless. Now and then it produces something of merit, something that has an authentic folk flavor; and these accidental and isolated instances have fooled people who should know better.

Kitsch’s enormous profits are a source of temptation to the avant-garde itself, and its members have not always resisted this temptation. Ambitious writers and artists will modify their work under the pressure of kitsch, if they do not succumb to it entirely. And then those puzzling borderline cases appear, such as the popular novelist, Simenon, in France, and Steinbeck in this country. The net result is always to the detriment of true culture in any case.

Kitsch has not been confined to the cities in which it was born, but has flowed out over the countryside, wiping out folk culture. Nor has it shown any regard for geographical and national cultural boundaries. Another mass product of Western industrialism, it has gone on a triumphal tour of the world, crowding out and defacing native cultures in one colonial country after another, so that it is now by way of becoming a universal culture, the first universal culture ever beheld. Today the native of China, no less than the South American Indian, the Hindu, no less than the Polynesian, have come to prefer to the products of their native art, magazine covers, rotogravure sections and calendar girls. How is this virulence of kitsch, this irresistible attractiveness, to be explained? Naturally, machine-made kitsch can undersell the native handmade article, and the prestige of the West also helps; but why is kitsch a so much more profitable export article than Rembrandt? One, after all, can be reproduced as cheaply as the other.

In his last article on the Soviet cinema in the Partisan Review, Dwight Macdonald points out that kitsch has in the last ten years become the dominant culture in Soviet Russia. For this he blames the political regime — not only for the fact that kitsch is the official culture, but also that it is actually the dominant, most popular culture, and he quotes the following from Kurt London’s The Seven Soviet Arts: “. . . the attitude of the masses both to the old and new art styles probably remains essentially dependent on the nature of the education afforded them by their respective states.” Macdonald goes on to say: “Why after all should ignorant peasants prefer Repin (a leading exponent of Russian academic kitsch in painting) to Picasso, whose abstract technique is at least as relevant to their own primitive folk art as is the former’s realistic style? No, if the masses crowd into the Tretyakov (Moscow’s museum of contemporary Russian art: kitsch), it is largely because they have been conditioned to shun ‘formalism’ and to admire ‘socialist realism.’”

In the first place it is not a question of a choice between merely the old and merely the new, as London seems to think — but of a choice between the bad, up-to-date old and the genuinely new. The alternative to Picasso is not Michelangelo, but kitsch. In the second place, neither in backward Russia nor in the advanced West do the masses prefer kitsch simply because their governments condition them toward it. Where state educational systems take the trouble to mention art, we are told to respect the old masters, not kitsch; and yet we go and hang Maxfield Parrish or his equivalent on our walls, instead of Rembrandt and Michelangelo. Moreover, as Macdonald himself points out, around 1925 when the Soviet regime was encouraging avant-garde cinema, the Russian masses continued to prefer Hollywood movies. No, “conditioning” does not explain the potency of kitsch.

All values are human values, relative values, in art as well as elsewhere. Yet there does seem to have been more or less of a general agreement among the cultivated of mankind over the ages as to what is good art and what bad. Taste has varied, but not beyond certain limits; contemporary connoisseurs agree with the eighteenth-century Japanese that Hokusai was one of the greatest artists of his time; we even agree with the ancient Egyptians that Third and Fourth Dynasty art was the most worthy of being selected as their paragon by those who came after. We may have come to prefer Giotto to Raphael, but we still do not deny that Raphael was one of the best painters of his time. There has been an agreement then, and this agreement rests, I believe, on a fairly constant distinction made between those values only to be found in art and the values which can be found elsewhere. Kitsch, by virtue of a rationalized technique that draws on science and industry, has erased this distinction in practice.

Let us see, for example, what happens when an ignorant Russian peasant such as Macdonald mentions stands with hypothetical freedom of choice before two paintings, one by Picasso, the other by Repin. In the first he sees, let us say, a play of lines, colors and spaces that represent a woman. The abstract technique — to accept Macdonald’s supposition, which I am inclined to doubt — reminds him somewhat of the icons he has left behind him in the village, and he feels the attraction of the familiar. We will even suppose that he faintly surmises some of the great art values the cultivated find in Picasso. He turns next to Repin’s picture and sees a battle scene. The technique is not so familiar — as technique. But that weighs very little with the peasant, for he suddenly discovers values in Repin’s picture that seem far superior to the values he has been accustomed to find in icon art; and the unfamiliar itself is one of the sources of those values: the values of the vividly recognizable, the miraculous and the sympathetic. In Repin’s picture the peasant recognizes and sees things in the way in which he recognizes and sees things outside of pictures — there is no discontinuity between art and life, no need to accept a convention and say to oneself, that icon represents Jesus because it intends to represent Jesus, even if it does not remind me very much of a man. That Repin can paint so realistically that identifications are self-evident immediately and without any effort on the part of the spectator — that is miraculous. The peasant is also pleased by the wealth of self-evident meanings which he finds in the picture: “it tells a story. ” Picasso and the icons are so austere and barren in comparison. What is more, Repin heightens reality and makes it dramatic: sunset, exploding shells, running and falling men. There is no longer any question of Picasso or icons. Repin is what the peasant wants, and nothing else but Repin. It is lucky, however, for Repin that the peasant is protected from the products of American capitalism, for he would not stand a chance next to a Saturday Evening Post cover by Norman Rockwell.

Ultimately, it can be said that the cultivated spectator derives the same values from Picasso that the peasant gets from Repin, since what the latter enjoys in Repin is somehow art too, on however low a scale, and he is sent to look at pictures by the same instincts that send the cultivated spectator. But the ultimate values which the cultivated spectator derives from Picasso are derived at a second remove, as the result of reflection upon the immediate impression left by the plastic values. It is only then that the recognizable, the miraculous and the sympathetic enter. They are not immediately or externally present in Picasso’s painting, but must be projected into it by the spectator sensitive enough to react sufficiently to plastic qualities. They belong to the “reflected” effect. In Repin, on the other hand, the “reflected” effect has already been included in the picture, ready for the spectator’s unreflective enjoyment.(4) Where Picasso paints cause, Repin paints effect. Repin predigests art for the spectator and spares him effort, provides him with a shore cut to the pleasure of art that detours what is necessarily difficult in genuine art. Repin, or kitsch, is synthetic art.

The same point can be made with respect to kitsch literature: it provides vicarious experience for the insensitive with far greater immediacy than serious fiction can hope to do. And Eddie Guest and the Indian Love Lyrics are more poetic than T. S. Eliot and Shakespeare.

III

If the avant-garde imitates the processes of art, kitsch, we now see, imitates its effects. The neatness of this antithesis is more than contrived; it corresponds to and defines the tremendous interval that separates from each other two such simultaneous cultural phenomena as the avant-garde and kitsch. This interval, too great to be closed by all the infinite gradations of popularized “modernism” and “modernistic” kitsch, corresponds in turn to a social interval, a social interval that has always existed in formal culture, as elsewhere in civilized society, and whose two termini converge and diverge in fixed relation to the increasing or decreasing stability of the given society. There has always been on one side the minority of the powerful — and therefore the cultivated — and on the other the great mass of the exploited and poor — and therefore the ignorant. Formal culture has always belonged to the first, while the last have had to content themselves with folk or rudimentary culture, or kitsch.

In a stable society that functions well enough to hold in solution the contradictions between its classes, the cultural dichotomy becomes somewhat blurred. The axioms of the few are shared by the many; the latter believe superstitiously what the former believe soberly. And at such moments in history the masses are able to feel wonder and admiration for the culture, on no matter how high a plane, of its masters. This applies at least to plastic culture, which is accessible to all.

In the Middle Ages the plastic artist paid lip service at least to the lowest common denominators of experience. This even remained true to some extent until the seventeenth century. There was available for imitation a universally valid conceptual reality, whose order the artist could not tamper with. The subject matter of art was prescribed by those who commissioned works of art, which were not created, as in bourgeois society, on speculation. Precisely because his content was determined in advance, the artist was free to concentrate on his medium. He needed not to be philosopher, or visionary, but simply artificer. As long as there was general agreement as to what were the worthiest subjects for art, the artist was relieved of the necessity to be original and inventive in his “matter” and could devote all his energy to formal problems. For him the medium became, privately, professionally, the content of his art, even as his medium is today the public content of the abstract painter’s art — with that difference, however, that the medieval artist had to suppress his professional preoccupation in public — had always to suppress and subordinate the personal and professional in the finished, official work of art. If, as an ordinary member of the Christian community, he felt some personal emotion about his subject matter, this only contributed to the enrichment of the work’s public meaning. Only with the Renaissance do the inflections of the personal become legitimate, still to be kept, however, within the limits of the simply and universally recognizable. And only with Rembrandt do “lonely” artists begin to appear, lonely in their art.

But even during the Renaissance, and as long as Western art was endeavoring to perfect its technique, victories in this realm could only be signalized by success in realistic imitation, since there was no other objective criterion at hand. Thus the masses could still find in the art of their masters objects of admiration and wonder. Even the bird that pecked at the fruit in Zeuxis’ picture could applaud.

It is a platitude that art becomes caviar to the general when the reality it imitates no longer corresponds even roughly to the reality recognized by the general. Even then, however, the resentment the common man may feel is silenced by the awe in which he stands of the patrons of this art. Only when he becomes dissatisfied with the social order they administer does he begin to criticize their culture. Then the plebian finds courage for the first time to voice his opinions openly. Every man, from the Tammany alderman to the Austrian house-painter, finds that he is entitled to his opinion. Most often this resentment toward culture is to be found where the dissatisfaction with society is a reactionary dissatisfaction which expresses itself in revivalism and puritanism, and latest of all, in fascism. Here revolvers and torches begin to be mentioned in the same breath as culture. In the name of godliness or the blood’s health, in the name of simple ways and solid virtues, the statue-smashing commences.

IV

Returning to our Russian peasant for the moment, let us suppose that after he has chosen Repin in preference to Picasso, the state’s educational apparatus comes along and tells him that he is wrong, that he should have chosen Picasso — and shows him why. It is quite possible for the Soviet state to do this. But things being as they are in Russia — and everywhere else — the peasant soon finds the necessity of working hard all day for his living and the rude, uncomfortable circumstances in which he lives do not allow him enough leisure, energy and comfort to train for the enjoyment of Picasso. This needs, after all, a considerable amount of “conditioning.” Superior culture is one of the most artificial of all human creations, and the peasant finds no “natural” urgency within himself that will drive him toward Picasso in spite of all difficulties. In the end the peasant will go back to kitsch when he feels like looking at pictures, for he can enjoy kitsch without effort. The state is helpless in this matter and remains so as long as the problems of production have not been solved in a socialist sense. The same holds true, of course, for capitalist countries and makes all talk of art for the masses there nothing but demagogy.(5)

Where today a political regime establishes an official cultural policy, it is for the sake of demagogy. If kitsch is the official tendency of culture in Germany, Italy and Russia, it is not because their respective governments are controlled by philistines, but because kitsch is the culture of the masses in these countries, as it is everywhere else. The encouragement of kitsch is merely another of the inexpensive ways in which totalitarian regimes seek to ingratiate themselves with their subjects. Since these regimes cannot raise the cultural level of the masses — even if they wanted to — by anything short of a surrender to international socialism, they will flatter the masses by bringing all culture down to their level. It is for this reason that the avant-garde is outlawed, and not so much because a superior culture is inherently a more critical culture. (Whether or not the avant-garde could possibly flourish under a totalitarian regime is not pertinent to the question at this point.) As a matter of fact, the main trouble with avant-garde art and literature, from the point of view of fascists and Stalinists, is not that they are too critical, but that they are too “innocent,” that it is too difficult to inject effective propaganda into them, that kitsch is more pliable to this end. Kitsch keeps a dictator in closer contact with the “soul” of the people. Should the official culture be one superior to the general mass-level, there would be a danger of isolation.

Nevertheless, if the masses were conceivably to ask for avant-garde art and literature, Hitler, Mussolini and Stalin would not hesitate long in attempting to satisfy such a demand. Hitler is a bitter enemy of the avant-garde, both on doctrinal and personal grounds, yet this did not prevent Goebbels in 1932-1933 from strenuously courting avant-garde artists and writers. When Gottfried Benn, an Expressionist poet, came over to the Nazis he was welcomed with a great fanfare, although at that very moment Hitler was denouncing Expressionism as Kulturbolschewismus. This was at a time when the Nazis felt that the prestige which the avant-garde enjoyed among the cultivated German public could be of advantage to them, and practical considerations of this nature, the Nazis being skillful politicians, have always taken precedence over Hitler’s personal inclinations. Later the Nazis realized that it was more practical to accede to the wishes of the masses in matters of culture than to those of their paymasters; the latter, when it came to a question of preserving power, were as willing to sacrifice their culture as they were their moral principles; while the former, precisely because power was being withheld from them, had to be cozened in every other way possible. It was necessary to promote on a much more grandiose style than in the democracies the illusion that the masses actually rule. The literature and art they enjoy and understand were to be proclaimed the only true art and literature and any other kind was to be suppressed. Under these circumstances people like Gottfried Benn, no matter how ardently they support Hitler, become a liability; and we hear no more of them in Nazi Germany.

We can see then that although from one point of view the personal philistinism of Hitler and Stalin is not accidental to the roles they play, from another point of view it is only an incidentally contributory factor in determining the cultural policies of their respective regimes. Their personal philistinism simply adds brutality and double-darkness to policies they would be forced to support anyhow by the pressure of all their other policies — even were they, personally, devotees of avant-garde culture. What the acceptance of the isolation of the Russian Revolution forces Stalin to do, Hitler is compelled to do by his acceptance of the contradictions of capitalism and his efforts to freeze them. As for Mussolini — his case is a perfect example of the disponsibilité of a realist in these matters. For years he bent a benevolent eye on the Futurists and built modernistic railroad stations and government-owned apartment houses. One can still see in the suburbs of Rome more modernistic apartments than almost anywhere else in the world. Perhaps Fascism wanted to show its up-to-dateness, to conceal the fact that it was a retrogression; perhaps it wanted to conform to the tastes of the wealthy elite it served. At any rate Mussolini seems to have realized lately that it would be more useful to him to please the cultural tastes of the Italian masses than those of their masters. The masses must be provided with objects of admiration and wonder; the latter can dispense with them. And so we find Mussolini announcing a “new Imperial style.” Marinetti, Chirico, et al., are sent into the outer darkness, and the new railroad station in Rome will not be modernistic. That Mussolini was late in coming to this only illustrates again the relative hesitance with which Italian Fascism has drawn the necessary implications of its role.

Capitalism in decline finds that whatever of quality it is still capable of producing becomes almost invariably a threat to its own existence. Advances in culture, no less than advances in science and industry, corrode the very society under whose aegis they are made possible. Here, as in every other question today, it becomes necessary to quote Marx word for word. Today we no longer look toward socialism for a new culture — as inevitably as one will appear, once we do have socialism. Today we look to socialism simply for the preservation of whatever living culture we have right now.

Source of Copy and Paste.

It offered insight to my story of success, as well as offered me pointers to keep in mind if I want my kids (if I ever end up having any) to succeed.

Found this picture online that perfectly illustrates Gladwell’s points.  

Direct quotes I took down while reading the book:

Opportunity 

The Matthew Effect
 
There is something profoundly wrong with the way we make sense of success. (p.18)
 
…in fact they are invariably the beneficiaries of hidden advantages and extraordinary opportunities and cultural legacies that allow them to learn and work hard and make sense of the world in ways others cannot. It makes a difference where and when we grew up. The culture we belong to and the legacies passed down by our forebears shape the patterns of our achievement in ways we cannot begin to imagine… It is only by asking where [successful people] are from that we can unravel the logic behind who succeeds and who doesn’t. (p.19)
 
Success is the result of what sociologists like to call “accumulative advantage.”… He started out just a little bit better. (p.30)
 
The 10,000-Hour Rule
 
It was a story of how the outliers in a particular field reached their lofty status through a combination of ability, opportunity, and utterly arbitrary advantage. (p.37)
 
…the thing that distinguishes one performer from another is how hard he or she works. That’s it. And what’s more, the people at the very top don’t work just harder or even much harder than everyone else. They work much, much harder. (p.39)
 
In fact, researchers have settled on what they believe is the magic number for true expertise: ten thousand hours. (p.40)
 
“The emerging picture from such studies is that ten thousand hours of practice is required to achieve the level of mastery associated with being a world-class expert – in anything,” writes the neurologist Daniel Levitin. (p.40)
 
Practice isn’t the thing you do once you’re good. It’s the thing you do that makes you good. (p.42)
 
The Trouble with Geniuses, Part 1
 
Once someone has reached an IQ somewhere around 120, having additional IQ points doesn’t seem to translate into any measurable real-world advantage. (p. 79)
 
Intelligence has a threshold. (p.80)
 
The Trouble with Geniuses, Part 2
 
To [psychologist Robert] Sternberg, practical intelligence includes things like “knowing what to say to whom, knowing when to say it, and knowing how to say it for maximum effect.” It is procedural: it is about knowing how to do something without necessarily knowing why you know it or being able to explain it. It’s practical in nature: that is, it’s not knowledge for its own sake. It’s knowledge that helps you read situations correctly and get what you want. (p.101)
 
…social savvy is knowledge. It’s a set of skills that have to be learned. It has to come from somewhere, and the place where we seem to get these kinds of attitudes and skills is from our families. (p.102)
 
The wealthier parents were heavily involved in their children’s free time, shuttling them from one activity to the next, quizzing them about their teachers and coaches and teammates…. That kind of intensive scheduling was almost entirely absent from the lives of the poor children. (p. 103)
 
[Sociologist Annette] Laureau calls the middle-class parenting style “concerted cultivation.” It’s an attempt to actively “foster and assess a child’s talents, opinions and skills.” Poor parents tend to follow, by contract, a strategy of “accomplishment of natural growth.” They see as their responsibility to care for their children but to let them grow and develop on their own…. But in practical terms, concerted cultivation has enormous advantages. The heavily scheduled middle-class child is exposed to a constantly shifting set of experiences. She learns teamwork and how to cope in highly structured settings. She is taught how to cope in highly structured settings. She is taught how to interact comfortably with adults, and to speak up when she needs to. In Lareau’s words, the middle-class children learn a sense of “entitlement.” (Pp.104-105)
 
The Three Lessons of Joe Flom
 
Successful people don’t do it alone. Where they come from matters. They’re products of particular places and environments. (p.119)
 
…what your parents do for a living, and the assumptions that accompany the class your parents belong to, matter. (p.131)
 
…if you work hard enough and assert yourself, and use your mind and imagination, you can shape the world to your desires. (p.151)
 
Their world – their culture and generation and family history – gave them the greatest of opportunities. (p.158)
 
Legacy 

Harlan, Kentucky
 
“Culture of honor” means – It’s a world where a man’s reputation is at the center of his livelihood and self-worth. (p.167)
 
The “culture of honor” hypothesis says that it matters where you’re from, not just in terms of where you grew up or where your parents grew up, but in terms of where your great-grandparents and great-great grandparents grew up and even where your great-great-great-grandparents grew up. (p.170)
 
The Ethnic Theory of Plane Crashes
 
Each of us has his or her own distinct personality. But overlaid on top of that are tendencies and assumptions and reflexes handed down to us by the history of the community we grew up in, and those differences are extraordinarily specific. (p.204)
 
Our ability to succeed at what we do is powerfully bound up with where we’re from…. (p. 209)
 
He offered… what everyone… has been offered on the way to success: an opportunity to transform their relationship to their work. (p.219)
 
Rice Paddies and Math Tests
 
It turns out that there is also a big difference in how number-naming systems in Western and Asian languages are constructed. (p.228)
 
Success is a function of persistence and doggedness and the willingness to work hard for twenty-two minutes to make sense of something that most people would give up on after thirty seconds. (p.246)

Links:
Buy the book for cheap at Amazon – $14 - Worth it.

Top Row:
> Kartell Tati Table Lamp. Retails for $798. Found it on Amazon.com for cheaper, $765 (that includes shipping and no tax).
> Flos Gun Lamp designed by Philippe Starck. $948 at unicahome (free shipping and no tax).
> Marilyn Monroe 1 Print by Andy Warhol. Retails for $750 at Opus Art. Use ANDYW2 coupon code for 25% off.

Middle Row:
> Herman Miller Eames Lounge Chair (LCW) in Ebony. Retails for $818. Amazon has it for $551 (free shipping and no tax).
> All Cone Bracelet by Eddie Borgo. Retails on the official site for $450.
> Bodum Chambord Coffee Press – 32oz. Amazon sells it for the cheapest, for $35.89 (free shipping and no tax).
> Converse Chuck Taylor by Cody Hudson. Aloha Rag is selling these shoes for $75.

Bottom Row:
> Alexander McQueen Skull Black Cushion by The Rug Company. Sells direct for $675.
> Martin Margiela Leather Traveling Bag. On sale at Aloha Rag for $995.
> The Selby Is In Your Place by Todd Selby. Amazon has it for $23.10

Link:
After Modern Art 1945-2000

HILARIOUS!

Just get it.

Link:
Buy it here (Amazon – cheapest)

This guy animates the talk. Very worthwhile 10 minutes.

Links:
Watership Down
Monkey Business
Christie’s

Excerpt form Adam Bryant’s interview with Barbara Krumseik of the Calvert Group Ltd:

…I think the key is that people who work for me honestly believe that there is going to be a win-win here. I’ll bring it back to my obstacle-course analogy. I believe that the whole career ladder concept is a very disruptive concept because what does it suggest? You can’t get past the person ahead of you unless you push them off the ladder. It promotes aggressive behavior.

When you think of an obstacle course, there are a lot of people on the obstacle course at the same time, and my success doesn’t impede your success. And I may be able to take a minute and help you over that next obstacle and still get where I want to get to.

I also think you have to be a little humble. You have to be maybe a little bit overly confident to break into new things, but a little bit overly humble about what you don’t know, and admiring of the talents different people bring to the table.

Link:
Corner Office: It’s Not a Career Ladder, It’s an Obstacle Course, New York Times, 5/21/10.

With added commentary, stories, and really nice photos, they’re really more than just cookbooks.

Glimpsing inside the French Laundry – how to prepare foie gras.

His famous roast chicken inside Bouchon.

Ad Hoc at Home is good for bulk cooking.

Links:
Thomas Keller – French Laundry Cookbook
Thomas Keller – Bouchon Cookbook
Thomas Keller – The Complete Keller (includes both French Laundry and Bouchon Cookbooks)
Thomas Keller – Ad Hoc at Home

Link: Borowitz Report

Copy + Paste from Indiepulp:

He accepted the job because it would be like doing the 1929 issue of the magazine, and he filled the image with tons of satirical imagery, like the U.S. [Treasury] being raided by Wall Street, China dumping money into the ocean, homes being flooded, homes being foreclosed, and CEOs dancing a jig while society devolves into chaos.

It’s too bad that the folks at Fortune don’t have a sense of humor.

Links:
Indiepulp
Link to a giganormous jpeg of the cover for downloading pleasure

Anyways, here’s the part of the review that got me to pick up the book:

The story begins almost whimsically in Jamaica, with five English children surviving a hurricane. Later on, as the ship is returning to Europe, we enter Treasure Island territory when the vessel is boarded by pirates.

Here’s where it gets good, because the pirates and the children begin to switch places. At first the pirates are the brutal ones, drinking heavily and throwing people overboard as pirates will. But the children have such a deformed sense of right and wrong that it’s soon the pirates who are frightened of them.

Having just finished it, I’d say that the book did not disappoint. In the course of a couple of days, the 1929 novel transported my mind to colonial Jamaica, then on board a pirate ship, and finally to an English coutroom. All the while, I was given omniscient access to the thinking and reasoning of the pirates and children. This gave credence to the characters’ calculated interactions and to the eventual story conclusion, which kind of left me unease (in a good way).

Note: The picture in this post is a screen shot of the 1965 film adaptaion of the novel, which I have yet to see.

Links:
Buy The Book for Cheap
Andrew Sean Greer, A Delightfully Evil Tale of Pirates and Children, NPR, 7/7/2009.
Introduction to A High Wind in Jamaica by Francine Prose (a worthwhile read)

Liar’s Poker by Michael Lewis
The Big Short: Inside the Doomsday Machine by Michael Lewis
Outliers: The Story of Success by Malcom Gladwell
A High Wind in Jamaica by Richard Hughes

..and that’s my ring that I wear everyday, right middle finger.

Get the books off of Amazon for cheap. No tax (at least in California) and Free shipping (spend over $25).

Goldman Sachs and other big banks aren’t just pocketing the trillions we gave them to rescue the economy – they’re re-creating the conditions for another crash

MATT TAIBBI

On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America’s pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman’s role in precipitating the global financial crisis.

The bank had already set aside a tidy $16.2 billion for salaries and bonuses — meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a “bailout tax” on banks. Maybe this wasn’t the right time for Goldman to be throwing its annual Roman bonus orgy.

Not to worry, Blankfein reassured employees. “In a year that proved to have no shortage of story lines,” he said, “I believe very strongly that performance is the ultimate narrative.”

Translation: We made a shitload of money last year because we’re so amazing at our jobs, so fuck all those people who want us to reduce our bonuses.

Goldman wasn’t alone. The nation’s six largest banks — all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry — set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007. In a gesture of self-sacrifice, Blankfein himself took a humiliatingly low bonus of $9 million, less than the 2009 pay of elephantine New York Knicks washout Eddy Curry. But in reality, not much had changed. “What is the state of our moral being when Lloyd Blankfein taking a $9 million bonus is viewed as this great act of contrition, when every penny of it was a direct transfer from the taxpayer?” asks Eliot Spitzer, who tried to hold Wall Street accountable during his own ill-fated stint as governor of New York.

Beyond a few such bleats of outrage, however, the huge payout was met, by and large, with a collective sigh of resignation. Because beneath America’s populist veneer, on a more subtle strata of the national psyche, there remains a strong temptation to not really give a shit. The rich, after all, have always made way too much money; what’s the difference if some fat cat in New York pockets $20 million instead of $10 million?

The only reason such apathy exists, however, is because there’s still a widespread misunderstanding of how exactly Wall Street “earns” its money, with emphasis on the quotation marks around “earns.” The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?

The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.

The bottom line is that banks like Goldman have learned absolutely nothing from the global economic meltdown. In fact, they’re back conniving and playing speculative long shots in force — only this time with the full financial support of the U.S. government. In the process, they’re rapidly re-creating the conditions for another crash, with the same actors once again playing the same crazy games of financial chicken with the same toxic assets as before.

That’s why this bonus business isn’t merely a matter of getting upset about whether or not Lloyd Blankfein buys himself one tropical island or two on his next birthday. The reality is that the post-bailout era in which Goldman thrived has turned out to be a chaotic frenzy of high-stakes con-artistry, with taxpayers and clients bilked out of billions using a dizzying array of old-school hustles that, but for their ponderous complexity, would have fit well in slick grifter movies like The Sting and Matchstick Men. There’s even a term in con-man lingo for what some of the banks are doing right now, with all their cosmetic gestures of scaling back bonuses and giving to charities. In the grifter world, calming down a mark so he doesn’t call the cops is known as the “Cool Off.”

To appreciate how all of these (sometimes brilliant) schemes work is to understand the difference between earning money and taking scores, and to realize that the profits these banks are posting don’t so much represent national growth and recovery, but something closer to the losses one would report after a theft or a car crash. Many Americans instinctively understand this to be true — but, much like when your wife does it with your 300-pound plumber in the kids’ playroom, knowing it and actually watching the whole scene from start to finish are two very different things. In that spirit, a brief history of the best 18 months of grifting this country has ever seen:

CON #1 THE SWOOP AND SQUAT

By now, most people who have followed the financial crisis know that the bailout of AIG was actually a bailout of AIG’s “counterparties” — the big banks like Goldman to whom the insurance giant owed billions when it went belly up.

What is less understood is that the bailout of AIG counter-parties like Goldman and Société Générale, a French bank, actually began before the collapse of AIG, before the Federal Reserve paid them so much as a dollar. Nor is it understood that these counterparties actually accelerated the wreck of AIG in what was, ironically, something very like the old insurance scam known as “Swoop and Squat,” in which a target car is trapped between two perpetrator vehicles and wrecked, with the mark in the game being the target’s insurance company — in this case, the government.

This may sound far-fetched, but the financial crisis of 2008 was very much caused by a perverse series of legal incentives that often made failed investments worth more than thriving ones. Our economy was like a town where everyone has juicy insurance policies on their neighbors’ cars and houses. In such a town, the driving will be suspiciously bad, and there will be a lot of fires.

AIG was the ultimate example of this dynamic. At the height of the housing boom, Goldman was selling billions in bundled mortgage-backed securities — often toxic crap of the no-money-down, no-identification-needed variety of home loan — to various institutional suckers like pensions and insurance companies, who frequently thought they were buying investment-grade instruments. At the same time, in a glaring example of the perverse incentives that existed and still exist, Goldman was also betting against those same sorts of securities — a practice that one government investigator compared to “selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars.”

Goldman often “insured” some of this garbage with AIG, using a virtually unregulated form of pseudo-insurance called credit-default swaps. Thanks in large part to deregulation pushed by Bob Rubin, former chairman of Goldman, and Treasury secretary under Bill Clinton, AIG wasn’t required to actually have the capital to pay off the deals. As a result, banks like Goldman bought more than $440 billion worth of this bogus insurance from AIG, a huge blind bet that the taxpayer ended up having to eat.

Thus, when the housing bubble went crazy, Goldman made money coming and going. They made money selling the crap mortgages, and they made money by collecting on the bogus insurance from AIG when the crap mortgages flopped.

Still, the trick for Goldman was: how to collect the insurance money. As AIG headed into a tailspin that fateful summer of 2008, it looked like the beleaguered firm wasn’t going to have the money to pay off the bogus insurance. So Goldman and other banks began demanding that AIG provide them with cash collateral. In the 15 months leading up to the collapse of AIG, Goldman received $5.9 billion in collateral. Société Générale, a bank holding lots of mortgage-backed crap originally underwritten by Goldman, received $5.5 billion. These collateral demands squeezing AIG from two sides were the “Swoop and Squat” that ultimately crashed the firm. “It put the company into a liquidity crisis,” says Eric Dinallo, who was intimately involved in the AIG bailout as head of the New York State Insurance Department.

It was a brilliant move. When a company like AIG is about to die, it isn’t supposed to hand over big hunks of assets to a single creditor like Goldman; it’s supposed to equitably distribute whatever assets it has left among all its creditors. Had AIG gone bankrupt, Goldman would have likely lost much of the $5.9 billion that it pocketed as collateral. “Any bankruptcy court that saw those collateral payments would have declined that transaction as a fraudulent conveyance,” says Barry Ritholtz, the author of Bailout Nation. Instead, Goldman and the other counterparties got their money out in advance — putting a torch to what was left of AIG. Fans of the movie Goodfellas will recall Henry Hill and Tommy DeVito taking the same approach to the Bamboo Lounge nightclub they’d been gouging. Roll the Ray Liotta narration: “Finally, when there’s nothing left, when you can’t borrow another buck . . . you bust the joint out. You light a match.”

And why not? After all, according to the terms of the bailout deal struck when AIG was taken over by the state in September 2008, Goldman was paid 100 cents on the dollar on an additional $12.9 billion it was owed by AIG — again, money it almost certainly would not have seen a fraction of had AIG proceeded to a normal bankruptcy. Along with the collateral it pocketed, that’s $19 billion in pure cash that Goldman would not have “earned” without massive state intervention. How’s that $13.4 billion in 2009 profits looking now? And that doesn’t even include the direct bailouts of Goldman Sachs and other big banks, which began in earnest after the collapse of AIG.

CON #2 THE DOLLAR STORE

In the usual “DollarStore” or “Big Store” scam — popularized in movies like The Sting — a huge cast of con artists is hired to create a whole fake environment into which the unsuspecting mark walks and gets robbed over and over again. A warehouse is converted into a makeshift casino or off-track betting parlor, the fool walks in with money, leaves without it.

The two key elements to the Dollar Store scam are the whiz-bang theatrical redecorating job and the fact that everyone is in on it except the mark. In this case, a pair of investment banks were dressed up to look like commercial banks overnight, and it was the taxpayer who walked in and lost his shirt, confused by the appearance of what looked like real Federal Reserve officials minding the store.

Less than a week after the AIG bailout, Goldman and another investment bank, Morgan Stanley, applied for, and received, federal permission to become bank holding companies — a move that would make them eligible for much greater federal support. The stock prices of both firms were cratering, and there was talk that either or both might go the way of Lehman Brothers, another once-mighty investment bank that just a week earlier had disappeared from the face of the earth under the weight of its toxic assets. By law, a five-day waiting period was required for such a conversion — but the two banks got them overnight, with final approval actually coming only five days after the AIG bailout.

Why did they need those federal bank charters? This question is the key to understanding the entire bailout era — because this Dollar Store scam was the big one. Institutions that were, in reality, high-risk gambling houses were allowed to masquerade as conservative commercial banks. As a result of this new designation, they were given access to a virtually endless tap of “free money” by unsuspecting taxpayers. The $10 billion that Goldman received under the better-known TARP bailout was chump change in comparison to the smorgasbord of direct and indirect aid it qualified for as a commercial bank.

When Goldman Sachs and Morgan Stanley got their federal bank charters, they joined Bank of America, Citigroup, J.P. Morgan Chase and the other banking titans who could go to the Fed and borrow massive amounts of money at interest rates that, thanks to the aggressive rate-cutting policies of Fed chief Ben Bernanke during the crisis, soon sank to zero percent. The ability to go to the Fed and borrow big at next to no interest was what saved Goldman, Morgan Stanley and other banks from death in the fall of 2008. “They had no other way to raise capital at that moment, meaning they were on the brink of insolvency,” says Nomi Prins, a former managing director at Goldman Sachs. “The Fed was the only shot.”

In fact, the Fed became not just a source of emergency borrowing that enabled Goldman and Morgan Stanley to stave off disaster — it became a source of long-term guaranteed income. Borrowing at zero percent interest, banks like Goldman now had virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they borrowed from the government at zero percent and lent it back to the government by buying Treasury bills that paid interest of three or four percent. It was basically a license to print money — no different than attaching an ATM to the side of the Federal Reserve.

“You’re borrowing at zero, putting it out there at two or three percent, with hundreds of billions of dollars — man, you can make a lot of money that way,” says the manager of one prominent hedge fund. “It’s free money.” Which goes a long way to explaining Goldman’s enormous profits last year. But all that free money was amplified by another scam:

CON #3 THE PIG IN THE POKE

At one point or another, pretty much everyone who takes drugs has been burned by this one, also known as the “Rocks in the Box” scam or, in its more elaborate variations, the “Jamaican Switch.” Someone sells you what looks like an eightball of coke in a baggie, you get home and, you dumbass, it’s baby powder.

The scam’s name comes from the Middle Ages, when some fool would be sold a bound and gagged pig that he would see being put into a bag; he’d miss the switch, then get home and find a tied-up cat in there instead. Hence the expression “Don’t let the cat out of the bag.”

The “Pig in the Poke” scam is another key to the entire bailout era. After the crash of the housing bubble — the largest asset bubble in history — the economy was suddenly flooded with securities backed by failing or near-failing home loans. In the cleanup phase after that bubble burst, the whole game was to get taxpayers, clients and shareholders to buy these worthless cats, but at pig prices.

One of the first times we saw the scam appear was in September 2008, right around the time that AIG was imploding. That was when the Fed changed some of its collateral rules, meaning banks that could once borrow only against sound collateral, like Treasury bills or AAA-rated corporate bonds, could now borrow against pretty much anything — including some of the mortgage-backed sewage that got us into this mess in the first place. In other words, banks that once had to show a real pig to borrow from the Fed could now show up with a cat and get pig money. “All of a sudden, banks were allowed to post absolute shit to the Fed’s balance sheet,” says the manager of the prominent hedge fund.

The Fed spelled it out on September 14th, 2008, when it changed the collateral rules for one of its first bailout facilities — the Primary Dealer Credit Facility, or PDCF. The Fed’s own write-up described the changes: “With the Fed’s action, all the kinds of collateral then in use . . . including non-investment-grade securities and equities . . . became eligible for pledge in the PDCF.”

Translation: We now accept cats.

The Pig in the Poke also came into play in April of last year, when Congress pushed a little-known agency called the Financial Accounting Standards Board, or FASB, to change the so-called “mark-to-market” accounting rules. Until this rule change, banks had to assign a real-market price to all of their assets. If they had a balance sheet full of securities they had bought at $3 that were now only worth $1, they had to figure their year-end accounting using that $1 value. In other words, if you were the dope who bought a cat instead of a pig, you couldn’t invite your shareholders to a slate of pork dinners come year-end accounting time.

But last April, FASB changed all that. From now on, it announced, banks could avoid reporting losses on some of their crappy cat investments simply by declaring that they would “more likely than not” hold on to them until they recovered their pig value. In short, the banks didn’t even have to actually hold on to the toxic shit they owned — they just had to sort of promise to hold on to it.

That’s why the “profit” numbers of a lot of these banks are really a joke. In many cases, we have absolutely no idea how many cats are in their proverbial bag. What they call “profits” might really be profits, only minus undeclared millions or billions in losses.

“They’re hiding all this stuff from their shareholders,” says Ritholtz, who was disgusted that the banks lobbied for the rule changes. “Now, suddenly banks that were happy to mark to market on the way up don’t have to mark to market on the way down.”

CON #4 THE RUMANIAN BOX

One of the great innovations of Victor Lustig, the legendary Depression-era con man who wrote the famous “Ten Commandments for Con Men,” was a thing called the “Rumanian Box.” This was a little machine that a mark would put a blank piece of paper into, only to see real currency come out the other side. The brilliant Lustig sold this Rumanian Box over and over again for vast sums — but he’s been outdone by the modern barons of Wall Street, who managed to get themselves a real Rumanian Box.

How they accomplished this is a story that by itself highlights the challenge of placing this era in any kind of historical context of known financial crime. What the banks did was something that was never — and never could have been — thought of before. They took so much money from the government, and then did so little with it, that the state was forced to start printing new cash to throw at them. Even the great Lustig in his wildest, horniest dreams could never have dreamed up this one.

The setup: By early 2009, the banks had already replenished themselves with billions if not trillions in bailout money. It wasn’t just the $700 billion in TARP cash, the free money provided by the Fed, and the untold losses obscured by accounting tricks. Another new rule allowed banks to collect interest on the cash they were required by law to keep in reserve accounts at the Fed — meaning the state was now compensating the banks simply for guaranteeing their own solvency. And a new federal operation called the Temporary Liquidity Guarantee Program let insolvent and near-insolvent banks dispense with their deservedly ruined credit profiles and borrow on a clean slate, with FDIC backing. Goldman borrowed $29 billion on the government’s good name, J.P. Morgan Chase $38 billion, and Bank of America $44 billion. “TLGP,” says Prins, the former Goldman manager, “was a big one.”

Collectively, all this largesse was worth trillions. The idea behind the flood of money, from the government’s standpoint, was to spark a national recovery: We refill the banks’ balance sheets, and they, in turn, start to lend money again, recharging the economy and producing jobs. “The banks were fast approaching insolvency,” says Rep. Paul Kanjorski, a vocal critic of Wall Street who nevertheless defends the initial decision to bail out the banks. “It was vitally important that we recapitalize these institutions.”

But here’s the thing. Despite all these trillions in government rescues, despite the Fed slashing interest rates down to nothing and showering the banks with mountains of guarantees, Goldman and its friends had still not jump-started lending again by the first quarter of 2009. That’s where those nuclear-powered balls of Lloyd Blankfein came into play, as Goldman and other banks basically threatened to pick up their bailout billions and go home if the government didn’t fork over more cash — a lot more. “Even if the Fed could make interest rates negative, that wouldn’t necessarily help,” warned Goldman’s chief domestic economist, Jan Hatzius. “We’re in a deep recession mainly because the private sector, for a variety of reasons, has decided to save a lot more.”

Translation: You can lower interest rates all you want, but we’re still not fucking lending the bailout money to anyone in this economy. Until the government agreed to hand over even more goodies, the banks opted to join the rest of the “private sector” and “save” the taxpayer aid they had received — in the form of bonuses and compensation.

The ploy worked. In March of last year, the Fed sharply expanded a radical new program called quantitative easing, which effectively operated as a real-live Rumanian Box. The government put stacks of paper in one side, and out came $1.2 trillion “real” dollars.

The government used some of that freshly printed money to prop itself up by purchasing Treasury bonds — a desperation move, since Washington’s demand for cash was so great post-Clusterfuck ’08 that even the Chinese couldn’t buy U.S. debt fast enough to keep America afloat. But the Fed used most of the new cash to buy mortgage-backed securities in an effort to spur home lending — instantly creating a massive market for major banks.

And what did the banks do with the proceeds? Among other things, they bought Treasury bonds, essentially lending the money back to the government, at interest. The money that came out of the magic Rumanian Box went from the government back to the government, with Wall Street stepping into the circle just long enough to get paid. And once quantitative easing ends, as it is scheduled to do in March, the flow of money for home loans will once again grind to a halt. The Mortgage Bankers Association expects the number of new residential mortgages to plunge by 40 percent this year.

CON #5 THE BIG MITT

All of that Rumanian box paper was made even more valuable by running it through the next stage of the grift. Michael Masters, one of the country’s leading experts on commodities trading, compares this part of the scam to the poker game in the Bill Murray comedy Stripes. “It’s like that scene where John Candy leans over to the guy who’s new at poker and says, ‘Let me see your cards,’ then starts giving him advice,” Masters says. “He looks at the hand, and the guy has bad cards, and he’s like, ‘Bluff me, come on! If it were me, I’d bet everything!’ That’s what it’s like. It’s like they’re looking at your cards as they give you advice.”

In more ways than one can count, the economy in the bailout era turned into a “Big Mitt,” the con man’s name for a rigged poker game. Everybody was indeed looking at everyone else’s cards, in many cases with state sanction. Only taxpayers and clients were left out of the loop.

At the same time the Fed and the Treasury were making massive, earthshaking moves like quantitative easing and TARP, they were also consulting regularly with private advisory boards that include every major player on Wall Street. The Treasury Borrowing Advisory Committee has a J.P. Morgan executive as its chairman and a Goldman executive as its vice chairman, while the board advising the Fed includes bankers from Capital One and Bank of New York Mellon. That means that, in addition to getting great gobs of free money, the banks were also getting clear signals about when they were getting that money, making it possible to position themselves to make the appropriate investments.

One of the best examples of the banks blatantly gambling, and winning, on government moves was the Public-Private Investment Program, or PPIP. In this bizarre scheme cooked up by goofball-geek Treasury Secretary Tim Geithner, the government loaned money to hedge funds and other private investors to buy up the absolutely most toxic horseshit on the market — the same kind of high-risk, high-yield mortgages that were most responsible for triggering the financial chain reaction in the fall of 2008. These satanic deals were the basic currency of the bubble: Jobless dope fiends bought houses with no money down, and the big banks wrapped those mortgages into securities and then sold them off to pensions and other suckers as investment-grade deals. The whole point of the PPIP was to get private investors to relieve the banks of these dangerous assets before they hurt any more innocent bystanders.

But what did the banks do instead, once they got wind of the PPIP? They started buying that worthless crap again, presumably to sell back to the government at inflated prices! In the third quarter of last year, Goldman, Morgan Stanley, Citigroup and Bank of America combined to add $3.36 billion of exactly this horseshit to their balance sheets.

This brazen decision to gouge the taxpayer startled even hardened market observers. According to Michael Schlachter of the investment firm Wilshire Associates, it was “absolutely ridiculous” that the banks that were supposed to be reducing their exposure to these volatile instruments were instead loading up on them in order to make a quick buck. “Some of them created this mess,” he said, “and they are making a killing undoing it.”

CON #6 THE WIRE

Here’s the thing about our current economy. When Goldman and Morgan Stanley transformed overnight from investment banks into commercial banks, we were told this would mean a new era of “significantly tighter regulations and much closer supervision by bank examiners,” as The New York Times put it the very next day. In reality, however, the conversion of Goldman and Morgan Stanley simply completed the dangerous concentration of power and wealth that began in 1999, when Congress repealed the Glass-Steagall Act — the Depression-era law that had prevented the merger of insurance firms, commercial banks and investment houses. Wall Street and the government became one giant dope house, where a few major players share valuable information between conflicted departments the way junkies share needles.

One of the most common practices is a thing called front-running, which is really no different from the old “Wire” con, another scam popularized in The Sting. But instead of intercepting a telegraph wire in order to bet on racetrack results ahead of the crowd, what Wall Street does is make bets ahead of valuable information they obtain in the course of everyday business.

Say you’re working for the commodities desk of a big investment bank, and a major client — a pension fund, perhaps — calls you up and asks you to buy a billion dollars of oil futures for them. Once you place that huge order, the price of those futures is almost guaranteed to go up. If the guy in charge of asset management a few desks down from you somehow finds out about that, he can make a fortune for the bank by betting ahead of that client of yours. The deal would be instantaneous and undetectable, and it would offer huge profits. Your own client would lose money, of course — he’d end up paying a higher price for the oil futures he ordered, because you would have driven up the price. But that doesn’t keep banks from screwing their own customers in this very way.

The scam is so blatant that Goldman Sachs actually warns its clients that something along these lines might happen to them. In the disclosure section at the back of a research paper the bank issued on January 15th, Goldman advises clients to buy some dubious high-yield bonds while admitting that the bank itself may bet against those same shitty bonds. “Our salespeople, traders and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research,” the disclosure reads. “Our asset-management area, our proprietary-trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research.”

Banks like Goldman admit this stuff openly, despite the fact that there are securities laws that require banks to engage in “fair dealing with customers” and prohibit analysts from issuing opinions that are at odds with what they really think. And yet here they are, saying flat-out that they may be issuing an opinion at odds with what they really think.

To help them screw their own clients, the major investment banks employ high-speed computer programs that can glimpse orders from investors before the deals are processed and then make trades on behalf of the banks at speeds of fractions of a second. None of them will admit it, but everybody knows what this computerized trading — known as “flash trading” — really is. “Flash trading is nothing more than computerized front-running,” says the prominent hedge-fund manager. The SEC voted to ban flash trading in September, but five months later it has yet to issue a regulation to put a stop to the practice.

Over the summer, Goldman suffered an embarrassment on that score when one of its employees, a Russian named Sergey Aleynikov, allegedly stole the bank’s computerized trading code. In a court proceeding after Aleynikov’s arrest, Assistant U.S. Attorney Joseph Facciponti reported that “the bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”

Six months after a federal prosecutor admitted in open court that the Goldman trading program could be used to unfairly manipulate markets, the bank released its annual numbers. Among the notable details was the fact that a staggering 76 percent of its revenue came from trading, both for its clients and for its own account. “That is much, much higher than any other bank,” says Prins, the former Goldman managing director. “If I were a client and I saw that they were making this much money from trading, I would question how badly I was getting screwed.”

Why big institutional investors like pension funds continually come to Wall Street to get raped is the million-dollar question that many experienced observers puzzle over. Goldman’s own explanation for this phenomenon is comedy of the highest order. In testimony before a government panel in January, Blankfein was confronted about his firm’s practice of betting against the same sorts of investments it sells to clients. His response: “These are the professional investors who want this exposure.”

In other words, our clients are big boys, so screw ‘em if they’re dumb enough to take the sucker bets I’m offering.

CON #7 THE RELOAD

Not many con men are good enough or brazen enough to con the same victim twice in a row, but the few who try have a name for this excellent sport: reloading. The usual way to reload on a repeat victim (called an “addict” in grifter parlance) is to rope him into trying to get back the money he just lost. This is exactly what started to happen late last year.

It’s important to remember that the housing bubble itself was a classic confidence game — the Ponzi scheme. The Ponzi scheme is any scam in which old investors must be continually paid off with money from new investors to keep up what appear to be high rates of investment return. Residential housing was never as valuable as it seemed during the bubble; the soaring home values were instead a reflection of a continual upward rush of new investors in mortgage-backed securities, a rush that finally collapsed in 2008.

But by the end of 2009, the unimaginable was happening: The bubble was re-inflating. A bailout policy that was designed to help us get out from under the bursting of the largest asset bubble in history inadvertently produced exactly the opposite result, as all that government-fueled capital suddenly began flowing into the most dangerous and destructive investments all over again. Wall Street was going for the reload.

A lot of this was the government’s own fault, of course. By slashing interest rates to zero and flooding the market with money, the Fed was replicating the historic mistake that Alan Greenspan had made not once, but twice, before the tech bubble in the early 1990s and before the housing bubble in the early 2000s. By making sure that traditionally safe investments like CDs and savings accounts earned basically nothing, thanks to rock-bottom interest rates, investors were forced to go elsewhere to search for moneymaking opportunities.

Now we’re in the same situation all over again, only far worse. Wall Street is flooded with government money, and interest rates that are not just low but flat are pushing investors to seek out more “creative” opportunities. (It’s “Greenspan times 10,” jokes one hedge-fund trader.) Some of that money could be put to use on Main Street, of course, backing the efforts of investment-worthy entrepreneurs. But that’s not what our modern Wall Street is built to do. “They don’t seem to want to lend to small and medium-sized business,” says Rep. Brad Sherman, who serves on the House Financial Services Committee. “What they want to invest in is marketable securities. And the definition of small and medium-sized businesses, for the most part, is that they don’t have marketable securities. They have bank loans.”

In other words, unless you’re dealing with the stock of a major, publicly traded company, or a giant pile of home mortgages, or the bonds of a large corporation, or a foreign currency, or oil futures, or some country’s debt, or anything else that can be rapidly traded back and forth in huge numbers, factory-style, by big banks, you’re not really on Wall Street’s radar.

So with small business out of the picture, and the safe stuff not worth looking at thanks to the Fed’s low interest rates, where did Wall Street go? Right back into the shit that got us here.

One trader, who asked not to be identified, recounts a story of what happened with his hedge fund this past fall. His firm wanted to short — that is, bet against — all the crap toxic bonds that were suddenly in vogue again. The fund’s analysts had examined the fundamentals of these instruments and concluded that they were absolutely not good investments.

So they took a short position. One month passed, and they lost money. Another month passed — same thing. Finally, the trader just shrugged and decided to change course and buy.

“I said, ‘Fuck it, let’s make some money,’” he recalls. “I absolutely did not believe in the fundamentals of any of this stuff. However, I can get on the bandwagon, just so long as I know when to jump out of the car before it goes off the damn cliff!”

This is the very definition of bubble economics — betting on crowd behavior instead of on fundamentals. It’s old investors betting on the arrival of new ones, with the value of the underlying thing itself being irrelevant. And this behavior is being driven, no surprise, by the biggest firms on Wall Street.

The research report published by Goldman Sachs on January 15th underlines this sort of thinking. Goldman issued a strong recommendation to buy exactly the sort of high-yield toxic crap our hedge-fund guy was, by then, driving rapidly toward the cliff. “Summarizing our views,” the bank wrote, “we expect robust flows . . . to dominate fundamentals.” In other words: This stuff is crap, but everyone’s buying it in an awfully robust way, so you should too. Just like tech stocks in 1999, and mortgage-backed securities in 2006.

To sum up, this is what Lloyd Blankfein meant by “performance”: Take massive sums of money from the government, sit on it until the government starts printing trillions of dollars in a desperate attempt to restart the economy, buy even more toxic assets to sell back to the government at inflated prices — and then, when all else fails, start driving us all toward the cliff again with a frank and open endorsement of bubble economics. I mean, shit — who wouldn’t deserve billions in bonuses for doing all that?

Con artists have a word for the inability of their victims to accept that they’ve been scammed. They call it the “True Believer Syndrome.” That’s sort of where we are, in a state of nagging disbelief about the real problem on Wall Street. It isn’t so much that we have inadequate rules or incompetent regulators, although both of these things are certainly true. The real problem is that it doesn’t matter what regulations are in place if the people running the economy are rip-off artists. The system assumes a certain minimum level of ethical behavior and civic instinct over and above what is spelled out by the regulations. If those ethics are absent — well, this thing isn’t going to work, no matter what we do. Sure, mugging old ladies is against the law, but it’s also easy. To prevent it, we depend, for the most part, not on cops but on people making the conscious decision not to do it.

That’s why the biggest gift the bankers got in the bailout was not fiscal but psychological. “The most valuable part of the bailout,” says Rep. Sherman, “was the implicit guarantee that they’re Too Big to Fail.” Instead of liquidating and prosecuting the insolvent institutions that took us all down with them in a giant Ponzi scheme, we have showered them with money and guarantees and all sorts of other enabling gestures. And what should really freak everyone out is the fact that Wall Street immediately started skimming off its own rescue money. If the bailouts validated anew the crooked psychology of the bubble, the recent profit and bonus numbers show that the same psychology is back, thriving, and looking for new disasters to create. “It’s evidence,” says Rep. Kanjorski, “that they still don’t get it.”

More to the point, the fact that we haven’t done much of anything to change the rules and behavior of Wall Street shows that we still don’t get it. Instituting a bailout policy that stressed recapitalizing bad banks was like the addict coming back to the con man to get his lost money back. Ask yourself how well that ever works out. And then get ready for the reload.

Copy + Paste from Bloomberg:

To: Lloyd Blankfein
Re: Winning the Public Relations War

Six months ago, with what I mistakenly took to be your tacit approval, I attempted to address ordinary Americans, almost as equals. (read it here)

They envied and resented our firm; I sought merely to correct their misunderstandings about Goldman Sachs and send them on their way, so that they might more briskly resume their quest for gainful employment.

In hindsight, I misjudged their ability to see the reality of their situation, and of ours. At the time I accepted your strong suggestion that I never again try to speak directly to mortals — or, as you referred to them, “The Morts.”

Now our predicament is suddenly more dire. Ordinary Americans wish to control not just our pay but our core values: We at Goldman have long stood for the right of every prop group to trade against its firm’s customers. If we abdicate that right, who are we, deep down?

In just the past few days many of us on the Goldman trading floor have wrestled with that question. We believe that rather than re-think our core values we should re-think our relations with the American public.

Hence this memo. Your recent non-verbal signals — your habit of passing directly behind my trading desk en route to the elevators, your selection of the urinal adjacent to my own — convince me that you continue to value my thoughts.

As it happens, I have recently conducted a thorough study of the culture of ordinary Americans. Please take the following ideas in the spirit in which they are intended: a team spirit. There is no “I” in Goldman Sachs, or in me. Nor will there ever be.

Idea No. 1: Give the Morts a small, perhaps even illusory, stake in our upside.

We have all seen the effects on the hearts and minds of our government officials and business leaders when they sense that our prosperity might one day be theirs. In the past year Warren Buffett has gone from being a leading critic of Wall Street to the greatest defender of Wall Street bailouts. Him we needed to pay hard cash — most accept less.

That’s perhaps the most curious trait of these ordinary Americans: you don’t need to give them any money to lead them to hope that you might. Take Larry Summers, for instance. We both know that we would never actually employ even this surprisingly intelligent Mort in anything but the most humiliatingly ceremonial role. But he doesn’t know that — and thus he has done so much for us.

Ordinary Americans

Obviously we can never employ large numbers of ordinary Americans. But if you stop for a moment and think like a Mort you will realize that we don’t need to. We need only harness two more of his many irrational traits: overconfidence, plus a willingness to ignore the odds — as evidenced by everything from his interest in the Lotto, to his belief in what he calls “love.”

Each year, for example, Goldman Sachs might announce a grand national competition, much like “American Idol.” Finalists will appear before a national television audience to be judged by a panel of three rather ordinary looking Goldman executives. On stage they will perform various Wall Street tricks: negotiating with Tim Geithner, lobbying the Senate Banking Committee, designing securities that blow up, selling bonds to Germans, etc.

The winner receives a job at Goldman Sachs. Which brings me to…

Big Idea No. 2: Give Morts the illusion that they have been admitted into our realm, and can now truly see who we are and what we do.

The winner of our national competition, for instance, might easily be attached to a small Web-enabled, head-top photographic device. Thus equipped he would become the eyes and ears of Morts everywhere. As he stumbles around our offices, attempting to understand that which is beyond his comprehension, he will no doubt create what ordinary Americans refer to as “comedy.” Morts love to laugh, to the point where they interpret our most straightforward remarks as occasions for humor. As we do not respond to comedy it will not disrupt the flow of our business, and we can encourage it.

Let me say here that I, like every other Goldman trader, have admired the lengths to which you have gone to resemble an ordinary, non-threatening American. Your conscious decision to forgo muscle definition, along with your persistent hairlessness, has been nothing less than enlightened public relations.

Only So Much

But there is only so much one human being can do, even when that being is more than human. Our employees along this new interface with Mort culture should reinforce your subliminal message. They should be “normal looking” and trained to mimic the Mort’s strange, emotional responses to external stimuli.

But the main purpose of any new personal contact with individual Morts is to address what is perhaps our biggest problem: the new belief of ordinary Americans that they now, finally, understand what we do. That our work should be as simple as “facilitating productive enterprise,” or “allocating capital.” They have lost their former awe; we must restore it.

Notice that they do not begrudge professional basketball players their vast salaries: they can see that those players are so unlike themselves as to constitute a different species. As our differences lie below the surface, they are harder for the Morts to perceive. Closer proximity to us, and our complexity, will solve this problem. They will soon weary of trying to comprehend what we do, and go looking for another outlet for their personal frustrations. Which brings me to my final thought…

Big Thought No. 3: Remind the Morts of their more natural resentments.

At the moment they mistrust us, perhaps even despise us, but their feelings toward us are new and thus shallow. They have had 30 years of training in hating their own government (the ultimate example of Mort irrationality). We must remind Morts that we share a common enemy: them.

Link: Goldman Trader Shares Three Big Ideas With Lloyd: Michael Lewis, Bloomberg, 1/29/2010.

1. Ask: “What would make me happier?” It might be having more of something good. It might be less of something bad. It might be fixing something that doesn’t feel right.

2. Ask: “What is a concrete action that would bring about change?” Look for a specific, measurable action.

3. Ask: “Am I a ‘yes’ resolver or a ‘no’ resolver?” A lot of my resolutions are aimed at getting me to stop doing something or to do something I don’t really want to do. Don’t expect praise or appreciation. There’s no right way to make a resolution, but it’s important to know what works for you. As always, the secret is to know your own nature.

4. Ask: “Am I starting small enough?” We tend to over-estimate what we can do over a short time and under-estimate what we can do over a long time, if we make consistent, small steps. Little accomplishments provide energy for bigger challenges.

5. Ask: “How am I going to hold myself accountable?” Accountability is the secret to sticking to resolutions. You could track your resolutions online using the tools at the Happiness Project Toolbox. Or you could form a goals group – or even a happiness-project group! Accountability is why #2 is so important. If your resolution is too vague, it’s hard to measure whether you’ve been keeping it.

Links:
Happiness Project: Five Tips for Planning Effective New Year’s Resolutions, Gretchen Ruben, 1/1/2010.
Happiness Project Toolbox

Your Majesties, Your Royal Highnesses, distinguished members of the Norwegian Nobel Committee, citizens of America, and citizens of the world:

I receive this honor with deep gratitude and great humility. It is an award that speaks to our highest aspirations — that for all the cruelty and hardship of our world, we are not mere prisoners of fate. Our actions matter, and can bend history in the direction of justice.

And yet I would be remiss if I did not acknowledge the considerable controversy that your generous decision has generated. (Laughter.) In part, this is because I am at the beginning, and not the end, of my labors on the world stage. Compared to some of the giants of history who’ve received this prize — Schweitzer and King; Marshall and Mandela — my accomplishments are slight. And then there are the men and women around the world who have been jailed and beaten in the pursuit of justice; those who toil in humanitarian organizations to relieve suffering; the unrecognized millions whose quiet acts of courage and compassion inspire even the most hardened cynics. I cannot argue with those who find these men and women — some known, some obscure to all but those they help — to be far more deserving of this honor than I.

But perhaps the most profound issue surrounding my receipt of this prize is the fact that I am the Commander-in-Chief of the military of a nation in the midst of two wars. One of these wars is winding down. The other is a conflict that America did not seek; one in which we are joined by 42 other countries — including Norway — in an effort to defend ourselves and all nations from further attacks.

Still, we are at war, and I’m responsible for the deployment of thousands of young Americans to battle in a distant land. Some will kill, and some will be killed. And so I come here with an acute sense of the costs of armed conflict — filled with difficult questions about the relationship between war and peace, and our effort to replace one with the other.

Now these questions are not new. War, in one form or another, appeared with the first man. At the dawn of history, its morality was not questioned; it was simply a fact, like drought or disease — the manner in which tribes and then civilizations sought power and settled their differences.

And over time, as codes of law sought to control violence within groups, so did philosophers and clerics and statesmen seek to regulate the destructive power of war. The concept of a “just war” emerged, suggesting that war is justified only when certain conditions were met: if it is waged as a last resort or in self-defense; if the force used is proportional; and if, whenever possible, civilians are spared from violence.

Of course, we know that for most of history, this concept of “just war” was rarely observed. The capacity of human beings to think up new ways to kill one another proved inexhaustible, as did our capacity to exempt from mercy those who look different or pray to a different God. Wars between armies gave way to wars between nations — total wars in which the distinction between combatant and civilian became blurred. In the span of 30 years, such carnage would twice engulf this continent. And while it’s hard to conceive of a cause more just than the defeat of the Third Reich and the Axis powers, World War II was a conflict in which the total number of civilians who died exceeded the number of soldiers who perished.

In the wake of such destruction, and with the advent of the nuclear age, it became clear to victor and vanquished alike that the world needed institutions to prevent another world war. And so, a quarter century after the United States Senate rejected the League of Nations — an idea for which Woodrow Wilson received this prize — America led the world in constructing an architecture to keep the peace: a Marshall Plan and a United Nations, mechanisms to govern the waging of war, treaties to protect human rights, prevent genocide, restrict the most dangerous weapons.

In many ways, these efforts succeeded. Yes, terrible wars have been fought, and atrocities committed. But there has been no Third World War. The Cold War ended with jubilant crowds dismantling a wall. Commerce has stitched much of the world together. Billions have been lifted from poverty. The ideals of liberty and self-determination, equality and the rule of law have haltingly advanced. We are the heirs of the fortitude and foresight of generations past, and it is a legacy for which my own country is rightfully proud.

And yet, a decade into a new century, this old architecture is buckling under the weight of new threats. The world may no longer shudder at the prospect of war between two nuclear superpowers, but proliferation may increase the risk of catastrophe. Terrorism has long been a tactic, but modern technology allows a few small men with outsized rage to murder innocents on a horrific scale.

Moreover, wars between nations have increasingly given way to wars within nations. The resurgence of ethnic or sectarian conflicts; the growth of secessionist movements, insurgencies, and failed states — all these things have increasingly trapped civilians in unending chaos. In today’s wars, many more civilians are killed than soldiers; the seeds of future conflict are sown, economies are wrecked, civil societies torn asunder, refugees amassed, children scarred.

I do not bring with me today a definitive solution to the problems of war. What I do know is that meeting these challenges will require the same vision, hard work, and persistence of those men and women who acted so boldly decades ago. And it will require us to think in new ways about the notions of just war and the imperatives of a just peace.

We must begin by acknowledging the hard truth: We will not eradicate violent conflict in our lifetimes. There will be times when nations — acting individually or in concert — will find the use of force not only necessary but morally justified.

I make this statement mindful of what Martin Luther King Jr. said in this same ceremony years ago: “Violence never brings permanent peace. It solves no social problem: it merely creates new and more complicated ones.” As someone who stands here as a direct consequence of Dr. King’s life work, I am living testimony to the moral force of non-violence. I know there’s nothing weak — nothing passive — nothing naïve — in the creed and lives of Gandhi and King.

But as a head of state sworn to protect and defend my nation, I cannot be guided by their examples alone. I face the world as it is, and cannot stand idle in the face of threats to the American people. For make no mistake: Evil does exist in the world. A non-violent movement could not have halted Hitler’s armies. Negotiations cannot convince al Qaeda’s leaders to lay down their arms. To say that force may sometimes be necessary is not a call to cynicism — it is a recognition of history; the imperfections of man and the limits of reason.

I raise this point, I begin with this point because in many countries there is a deep ambivalence about military action today, no matter what the cause. And at times, this is joined by a reflexive suspicion of America, the world’s sole military superpower.

But the world must remember that it was not simply international institutions — not just treaties and declarations — that brought stability to a post-World War II world. Whatever mistakes we have made, the plain fact is this: The United States of America has helped underwrite global security for more than six decades with the blood of our citizens and the strength of our arms. The service and sacrifice of our men and women in uniform has promoted peace and prosperity from Germany to Korea, and enabled democracy to take hold in places like the Balkans. We have borne this burden not because we seek to impose our will. We have done so out of enlightened self-interest — because we seek a better future for our children and grandchildren, and we believe that their lives will be better if others’ children and grandchildren can live in freedom and prosperity.

So yes, the instruments of war do have a role to play in preserving the peace. And yet this truth must coexist with another — that no matter how justified, war promises human tragedy. The soldier’s courage and sacrifice is full of glory, expressing devotion to country, to cause, to comrades in arms. But war itself is never glorious, and we must never trumpet it as such.

So part of our challenge is reconciling these two seemingly inreconcilable truths — that war is sometimes necessary, and war at some level is an expression of human folly. Concretely, we must direct our effort to the task that President Kennedy called for long ago. “Let us focus,” he said, “on a more practical, more attainable peace, based not on a sudden revolution in human nature but on a gradual evolution in human institutions.” A gradual evolution of human institutions.

What might this evolution look like? What might these practical steps be?

To begin with, I believe that all nations — strong and weak alike — must adhere to standards that govern the use of force. I — like any head of state — reserve the right to act unilaterally if necessary to defend my nation. Nevertheless, I am convinced that adhering to standards, international standards, strengthens those who do, and isolates and weakens those who don’t.

The world rallied around America after the 9/11 attacks, and continues to support our efforts in Afghanistan, because of the horror of those senseless attacks and the recognized principle of self-defense. Likewise, the world recognized the need to confront Saddam Hussein when he invaded Kuwait — a consensus that sent a clear message to all about the cost of aggression.

Furthermore, America — in fact, no nation — can insist that others follow the rules of the road if we refuse to follow them ourselves. For when we don’t, our actions appear arbitrary and undercut the legitimacy of future interventions, no matter how justified.

And this becomes particularly important when the purpose of military action extends beyond self-defense or the defense of one nation against an aggressor. More and more, we all confront difficult questions about how to prevent the slaughter of civilians by their own government, or to stop a civil war whose violence and suffering can engulf an entire region.

I believe that force can be justified on humanitarian grounds, as it was in the Balkans, or in other places that have been scarred by war. Inaction tears at our conscience and can lead to more costly intervention later. That’s why all responsible nations must embrace the role that militaries with a clear mandate can play to keep the peace.

America’s commitment to global security will never waver. But in a world in which threats are more diffuse, and missions more complex, America cannot act alone. America alone cannot secure the peace. This is true in Afghanistan. This is true in failed states like Somalia, where terrorism and piracy is joined by famine and human suffering. And sadly, it will continue to be true in unstable regions for years to come.

The leaders and soldiers of NATO countries, and other friends and allies, demonstrate this truth through the capacity and courage they’ve shown in Afghanistan. But in many countries, there is a disconnect between the efforts of those who serve and the ambivalence of the broader public. I understand why war is not popular, but I also know this: The belief that peace is desirable is rarely enough to achieve it. Peace requires responsibility. Peace entails sacrifice. That’s why NATO continues to be indispensable. That’s why we must strengthen U.N. and regional peacekeeping, and not leave the task to a few countries. That’s why we honor those who return home from peacekeeping and training abroad to Oslo and Rome; to Ottawa and Sydney; to Dhaka and Kigali — we honor them not as makers of war, but of wagers — but as wagers of peace.

Let me make one final point about the use of force. Even as we make difficult decisions about going to war, we must also think clearly about how we fight it. The Nobel Committee recognized this truth in awarding its first prize for peace to Henry Dunant — the founder of the Red Cross, and a driving force behind the Geneva Conventions.

Where force is necessary, we have a moral and strategic interest in binding ourselves to certain rules of conduct. And even as we confront a vicious adversary that abides by no rules, I believe the United States of America must remain a standard bearer in the conduct of war. That is what makes us different from those whom we fight. That is a source of our strength. That is why I prohibited torture. That is why I ordered the prison at Guantanamo Bay closed. And that is why I have reaffirmed America’s commitment to abide by the Geneva Conventions. We lose ourselves when we compromise the very ideals that we fight to defend. (Applause.) And we honor — we honor those ideals by upholding them not when it’s easy, but when it is hard.

I have spoken at some length to the question that must weigh on our minds and our hearts as we choose to wage war. But let me now turn to our effort to avoid such tragic choices, and speak of three ways that we can build a just and lasting peace.

First, in dealing with those nations that break rules and laws, I believe that we must develop alternatives to violence that are tough enough to actually change behavior — for if we want a lasting peace, then the words of the international community must mean something. Those regimes that break the rules must be held accountable. Sanctions must exact a real price. Intransigence must be met with increased pressure — and such pressure exists only when the world stands together as one.

One urgent example is the effort to prevent the spread of nuclear weapons, and to seek a world without them. In the middle of the last century, nations agreed to be bound by a treaty whose bargain is clear: All will have access to peaceful nuclear power; those without nuclear weapons will forsake them; and those with nuclear weapons will work towards disarmament. I am committed to upholding this treaty. It is a centerpiece of my foreign policy. And I’m working with President Medvedev to reduce America and Russia’s nuclear stockpiles.

But it is also incumbent upon all of us to insist that nations like Iran and North Korea do not game the system. Those who claim to respect international law cannot avert their eyes when those laws are flouted. Those who care for their own security cannot ignore the danger of an arms race in the Middle East or East Asia. Those who seek peace cannot stand idly by as nations arm themselves for nuclear war.

The same principle applies to those who violate international laws by brutalizing their own people. When there is genocide in Darfur, systematic rape in Congo, repression in Burma — there must be consequences. Yes, there will be engagement; yes, there will be diplomacy — but there must be consequences when those things fail. And the closer we stand together, the less likely we will be faced with the choice between armed intervention and complicity in oppression.

This brings me to a second point — the nature of the peace that we seek. For peace is not merely the absence of visible conflict. Only a just peace based on the inherent rights and dignity of every individual can truly be lasting.

It was this insight that drove drafters of the Universal Declaration of Human Rights after the Second World War. In the wake of devastation, they recognized that if human rights are not protected, peace is a hollow promise.

And yet too often, these words are ignored. For some countries, the failure to uphold human rights is excused by the false suggestion that these are somehow Western principles, foreign to local cultures or stages of a nation’s development. And within America, there has long been a tension between those who describe themselves as realists or idealists — a tension that suggests a stark choice between the narrow pursuit of interests or an endless campaign to impose our values around the world.

I reject these choices. I believe that peace is unstable where citizens are denied the right to speak freely or worship as they please; choose their own leaders or assemble without fear. Pent-up grievances fester, and the suppression of tribal and religious identity can lead to violence. We also know that the opposite is true. Only when Europe became free did it finally find peace. America has never fought a war against a democracy, and our closest friends are governments that protect the rights of their citizens. No matter how callously defined, neither America’s interests — nor the world’s — are served by the denial of human aspirations.

So even as we respect the unique culture and traditions of different countries, America will always be a voice for those aspirations that are universal. We will bear witness to the quiet dignity of reformers like Aung Sang Suu Kyi; to the bravery of Zimbabweans who cast their ballots in the face of beatings; to the hundreds of thousands who have marched silently through the streets of Iran. It is telling that the leaders of these governments fear the aspirations of their own people more than the power of any other nation. And it is the responsibility of all free people and free nations to make clear that these movements — these movements of hope and history — they have us on their side.

Let me also say this: The promotion of human rights cannot be about exhortation alone. At times, it must be coupled with painstaking diplomacy. I know that engagement with repressive regimes lacks the satisfying purity of indignation. But I also know that sanctions without outreach — condemnation without discussion — can carry forward only a crippling status quo. No repressive regime can move down a new path unless it has the choice of an open door.

In light of the Cultural Revolution’s horrors, Nixon’s meeting with Mao appeared inexcusable — and yet it surely helped set China on a path where millions of its citizens have been lifted from poverty and connected to open societies. Pope John Paul’s engagement with Poland created space not just for the Catholic Church, but for labor leaders like Lech Walesa. Ronald Reagan’s efforts on arms control and embrace of perestroika not only improved relations with the Soviet Union, but empowered dissidents throughout Eastern Europe. There’s no simple formula here. But we must try as best we can to balance isolation and engagement, pressure and incentives, so that human rights and dignity are advanced over time.

Third, a just peace includes not only civil and political rights — it must encompass economic security and opportunity. For true peace is not just freedom from fear, but freedom from want.

It is undoubtedly true that development rarely takes root without security; it is also true that security does not exist where human beings do not have access to enough food, or clean water, or the medicine and shelter they need to survive. It does not exist where children can’t aspire to a decent education or a job that supports a family. The absence of hope can rot a society from within.

And that’s why helping farmers feed their own people — or nations educate their children and care for the sick — is not mere charity. It’s also why the world must come together to confront climate change. There is little scientific dispute that if we do nothing, we will face more drought, more famine, more mass displacement — all of which will fuel more conflict for decades. For this reason, it is not merely scientists and environmental activists who call for swift and forceful action — it’s military leaders in my own country and others who understand our common security hangs in the balance.

Agreements among nations. Strong institutions. Support for human rights. Investments in development. All these are vital ingredients in bringing about the evolution that President Kennedy spoke about. And yet, I do not believe that we will have the will, the determination, the staying power, to complete this work without something more — and that’s the continued expansion of our moral imagination; an insistence that there’s something irreducible that we all share.

As the world grows smaller, you might think it would be easier for human beings to recognize how similar we are; to understand that we’re all basically seeking the same things; that we all hope for the chance to live out our lives with some measure of happiness and fulfillment for ourselves and our families.

And yet somehow, given the dizzying pace of globalization, the cultural leveling of modernity, it perhaps comes as no surprise that people fear the loss of what they cherish in their particular identities — their race, their tribe, and perhaps most powerfully their religion. In some places, this fear has led to conflict. At times, it even feels like we’re moving backwards. We see it in the Middle East, as the conflict between Arabs and Jews seems to harden. We see it in nations that are torn asunder by tribal lines.

And most dangerously, we see it in the way that religion is used to justify the murder of innocents by those who have distorted and defiled the great religion of Islam, and who attacked my country from Afghanistan. These extremists are not the first to kill in the name of God; the cruelties of the Crusades are amply recorded. But they remind us that no Holy War can ever be a just war. For if you truly believe that you are carrying out divine will, then there is no need for restraint — no need to spare the pregnant mother, or the medic, or the Red Cross worker, or even a person of one’s own faith. Such a warped view of religion is not just incompatible with the concept of peace, but I believe it’s incompatible with the very purpose of faith — for the one rule that lies at the heart of every major religion is that we do unto others as we would have them do unto us.

Adhering to this law of love has always been the core struggle of human nature. For we are fallible. We make mistakes, and fall victim to the temptations of pride, and power, and sometimes evil. Even those of us with the best of intentions will at times fail to right the wrongs before us.

But we do not have to think that human nature is perfect for us to still believe that the human condition can be perfected. We do not have to live in an idealized world to still reach for those ideals that will make it a better place. The non-violence practiced by men like Gandhi and King may not have been practical or possible in every circumstance, but the love that they preached — their fundamental faith in human progress — that must always be the North Star that guides us on our journey.

For if we lose that faith — if we dismiss it as silly or naïve; if we divorce it from the decisions that we make on issues of war and peace — then we lose what’s best about humanity. We lose our sense of possibility. We lose our moral compass.

Like generations have before us, we must reject that future. As Dr. King said at this occasion so many years ago, “I refuse to accept despair as the final response to the ambiguities of history. I refuse to accept the idea that the ‘isness’ of man’s present condition makes him morally incapable of reaching up for the eternal ‘oughtness’ that forever confronts him.”

Let us reach for the world that ought to be — that spark of the divine that still stirs within each of our souls. (Applause.)

Somewhere today, in the here and now, in the world as it is, a soldier sees he’s outgunned, but stands firm to keep the peace. Somewhere today, in this world, a young protestor awaits the brutality of her government, but has the courage to march on. Somewhere today, a mother facing punishing poverty still takes the time to teach her child, scrapes together what few coins she has to send that child to school — because she believes that a cruel world still has a place for that child’s dreams.

Let us live by their example. We can acknowledge that oppression will always be with us, and still strive for justice. We can admit the intractability of deprivation, and still strive for dignity. Clear-eyed, we can understand that there will be war, and still strive for peace. We can do that — for that is the story of human progress; that’s the hope of all the world; and at this moment of challenge, that must be our work here on Earth.

Thank you very much. (Applause.)

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Obama’s Big Sellout

The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway.

Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers “at the expense of hardworking Americans.” Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it’s not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

Then he got elected.

What’s taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we’ve been seeing on TV this fall who Obama really is?

Whatever the president’s real motives are, the extensive series of loophole-rich financial “reforms” that the Democrats are currently pushing may ultimately do more harm than good. In fact, some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street’s political power by institutionalizing the taxpayer’s role as a welfare provider for the financial-services industry. At one point in the debate, Obama’s top economic advisers demanded the power to award future bailouts without even going to Congress for approval — and without providing taxpayers a single dime in equity on the deals.

How did we get here? It started just moments after the election — and almost nobody noticed.

‘Just look at the timeline of the Citigroup deal,” says one leading Democratic consultant. “Just look at it. It’s fucking amazing. Amazing! And nobody said a thing about it.”

Barack Obama was still just the president-elect when it happened, but the revolting and inexcusable $306 billion bailout that Citigroup received was the first major act of his presidency. In order to grasp the full horror of what took place, however, one needs to go back a few weeks before the actual bailout — to November 5th, 2008, the day after Obama’s election.

That was the day the jubilant Obama campaign announced its transition team. Though many of the names were familiar — former Bill Clinton chief of staff John Podesta, long-time Obama confidante Valerie Jarrett — the list was most notable for who was not on it, especially on the economic side. Austan Goolsbee, a University of Chicago economist who had served as one of Obama’s chief advisers during the campaign, didn’t make the cut. Neither did Karen Kornbluh, who had served as Obama’s policy director and was instrumental in crafting the Democratic Party’s platform. Both had emphasized populist themes during the campaign: Kornbluh was known for pushing Democrats to focus on the plight of the poor and middle class, while Goolsbee was an aggressive critic of Wall Street, declaring that AIG executives should receive “a Nobel Prize — for evil.”

But come November 5th, both were banished from Obama’s inner circle — and replaced with a group of Wall Street bankers. Leading the search for the president’s new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama’s biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters — chief among them his mentor Bob Rubin, the former co-chairman of Goldman Sachs who served as Treasury secretary under Bill Clinton. Froman had served as chief of staff to Rubin at Treasury, and had followed his boss when Rubin left the Clinton administration to serve as a senior counselor to Citigroup (a massive new financial conglomerate created by deregulatory moves pushed through by Rubin himself).

Incredibly, Froman did not resign from the bank when he went to work for Obama: He remained in the employ of Citigroup for two more months, even as he helped appoint the very people who would shape the future of his own firm. And to help him pick Obama’s economic team, Froman brought in none other than Jamie Rubin, a former Clinton diplomat who happens to be Bob Rubin’s son. At the time, Jamie’s dad was still earning roughly $15 million a year working for Citigroup, which was in the midst of a collapse brought on in part because Rubin had pushed the bank to invest heavily in mortgage-backed CDOs and other risky instruments.

Now here’s where it gets really interesting. It’s three weeks after the election. You have a lame-duck president in George W. Bush — still nominally in charge, but in reality already halfway to the golf-and-O’Doul’s portion of his career and more than happy to vacate the scene. Left to deal with the still-reeling economy are lame-duck Treasury Secretary Henry Paulson, a former head of Goldman Sachs, and New York Fed chief Timothy Geithner, who served under Bob Rubin in the Clinton White House. Running Obama’s economic team are a still-employed Citigroup executive and the son of another Citigroup executive, who himself joined Obama’s transition team that same month.

So on November 23rd, 2008, a deal is announced in which the government will bail out Rubin’s messes at Citigroup with a massive buffet of taxpayer-funded cash and guarantees. It is a terrible deal for the government, almost universally panned by all serious economists, an outrage to anyone who pays taxes. Under the deal, the bank gets $20 billion in cash, on top of the $25 billion it had already received just weeks before as part of the Troubled Asset Relief Program. But that’s just the appetizer. The government also agrees to charge taxpayers for up to $277 billion in losses on troubled Citi assets, many of them those toxic CDOs that Rubin had pushed Citi to invest in. No Citi executives are replaced, and few restrictions are placed on their compensation. It’s the sweetheart deal of the century, putting generations of working-stiff taxpayers on the hook to pay off Bob Rubin’s fuck-up-rich tenure at Citi. “If you had any doubts at all about the primacy of Wall Street over Main Street,” former labor secretary Robert Reich declares when the bailout is announced, “your doubts should be laid to rest.”

It is bad enough that one of Bob Rubin’s former protégés from the Clinton years, the New York Fed chief Geithner, is intimately involved in the negotiations, which unsurprisingly leave the Federal Reserve massively exposed to future Citi losses. But the real stunner comes only hours after the bailout deal is struck, when the Obama transition team makes a cheerful announcement: Timothy Geithner is going to be Barack Obama’s Treasury secretary!

Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman — before the ink is even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering. In the annals of brazen political swindles, this one has to go in the all-time Fuck-the-Optics Hall of Fame.

Wall Street loved the Citi bailout and the Geithner nomination so much that the Dow immediately posted its biggest two-day jump since 1987, rising 11.8 percent. Citi shares jumped 58 percent in a single day, and JP Morgan Chase, Merrill Lynch and Morgan Stanley soared more than 20 percent, as Wall Street embraced the news that the government’s bailout generosity would not die with George W. Bush and Hank Paulson. “Geithner assures a smooth transition between the Bush administration and that of Obama, because he’s already co-managing what’s happening now,” observed Stephen Leeb, president of Leeb Capital Management.

Left unnoticed, however, was the fact that Geithner had been hired by a sitting Citigroup executive who still had a big bonus coming despite his proximity to Obama. In January 2009, just over a month after the bailout, Citigroup paid Froman a year-end bonus of $2.25 million. But as outrageous as it was, that payoff would prove to be chump change for the banker crowd, who were about to get everything they wanted — and more — from the new president.

The irony of Bob Rubin: He’s an unapologetic arch-capitalist demagogue whose very career is proof that a free-market meritocracy is a myth. Much like Alan Greenspan, a staggeringly incompetent economic forecaster who was worshipped by four decades of politicians because he once dated Barbara Walters, Rubin has been held in awe by the American political elite for nearly 20 years despite having fucked up virtually every project he ever got his hands on. He went from running Goldman Sachs (1990-1992) to the Clinton White House (1993-1999) to Citigroup (1999-2009), leaving behind a trail of historic gaffes that somehow boosted his stature every step of the way.

As Treasury secretary under Clinton, Rubin was the driving force behind two monstrous deregulatory actions that would be primary causes of last year’s financial crisis: the repeal of the Glass-Steagall Act (passed specifically to legalize the Citigroup megamerger) and the deregulation of the derivatives market. Having set that time bomb, Rubin left government to join Citi, which promptly expressed its gratitude by giving him $126 million in compensation over the next eight years (they don’t call it bribery in this country when they give you the money post factum). After urging management to amp up its risky investments in toxic vehicles, a strategy that very nearly destroyed the company, Rubin blamed Citi’s board for his screw-ups and complained that he had been underpaid to boot. “I bet there’s not a single year where I couldn’t have gone somewhere else and made more,” he said.

Despite being perhaps more responsible for last year’s crash than any other single living person — his colossally stupid decisions at both the highest levels of government and the management of a private financial superpower make him unique — Rubin was the man Barack Obama chose to build his White House around.

There are four main ways to be connected to Bob Rubin: through Goldman Sachs, the Clinton administration, Citigroup and, finally, the Hamilton Project, a think tank Rubin spearheaded under the auspices of the Brookings Institute to promote his philosophy of balanced budgets, free trade and financial deregulation. The team Obama put in place to run his economic policy after his inauguration was dominated by people who boasted connections to at least one of these four institutions — so much so that the White House now looks like a backstage party for an episode of Bob Rubin, This Is Your Life!

At Treasury, there is Geithner, who worked under Rubin in the Clinton years. Serving as Geithner’s “counselor” — a made-up post not subject to Senate confirmation — is Lewis Alexander, the former chief economist of Citigroup, who advised Citi back in 2007 that the upcoming housing crash was nothing to worry about. Two other top Geithner “counselors” — Gene Sperling and Lael Brainard — worked under Rubin at the National Economic Council, the key group that coordinates all economic policymaking for the White House.

As director of the NEC, meanwhile, Obama installed economic czar Larry Summers, who had served as Rubin’s protégé at Treasury. Just below Summers is Jason Furman, who worked for Rubin in the Clinton White House and was one of the first directors of Rubin’s Hamilton Project. The appointment of Furman — a persistent advocate of free-trade agreements like NAFTA and the author of droolingly pro-globalization reports with titles like “Walmart: A Progressive Success Story” — provided one of the first clues that Obama had only been posturing when he promised crowds of struggling Midwesterners during the campaign that he would renegotiate NAFTA, which facilitated the flight of blue-collar jobs to other countries. “NAFTA’s shortcomings were evident when signed, and we must now amend the agreement to fix them,” Obama declared. A few months after hiring Furman to help shape its economic policy, however, the White House quietly quashed any talk of renegotiating the trade deal. “The president has said we will look at all of our options, but I think they can be addressed without having to reopen the agreement,” U.S. Trade Representative Ronald Kirk told reporters in a little-publicized conference call last April.

The announcement was not so surprising, given who Obama hired to serve alongside Furman at the NEC: management consultant Diana Farrell, who worked under Rubin at Goldman Sachs. In 2003, Farrell was the author of an infamous paper in which she argued that sending American jobs overseas might be “as beneficial to the U.S. as to the destination country, probably more so.”

Joining Summers, Furman and Farrell at the NEC is Froman, who by then had been formally appointed to a unique position: He is not only Obama’s international finance adviser at the National Economic Council, he simultaneously serves as deputy national security adviser at the National Security Council. The twin posts give Froman a direct line to the president, putting him in a position to coordinate Obama’s international economic policy during a crisis. He’ll have help from David Lipton, another joint appointee to the economics and security councils who worked with Rubin at Treasury and Citigroup, and from Jacob Lew, a former Citi colleague of Rubin’s whom Obama named as deputy director at the State Department to focus on international finance.

Over at the Commodity Futures Trading Commission, which is supposed to regulate derivatives trading, Obama appointed Gary Gensler, a former Goldman banker who worked under Rubin in the Clinton White House. Gensler had been instrumental in helping to pass the infamous Commodity Futures Modernization Act of 2000, which prevented deregulation of derivative instruments like CDOs and credit-default swaps that played such a big role in cratering the economy last year. And as head of the powerful Office of Management and Budget, Obama named Peter Orszag, who served as the first director of Rubin’s Hamilton Project. Orszag once succinctly summed up the project’s ideology as a sort of liberal spin on trickle-down Reaganomics: “Market competition and globalization generate significant economic benefits.”

Taken together, the rash of appointments with ties to Bob Rubin may well represent the most sweeping influence by a single Wall Street insider in the history of government. “Rather than having a team of rivals, they’ve got a team of Rubins,” says Steven Clemons, director of the American Strategy Program at the New America Foundation. “You see that in policy choices that have resuscitated — but not reformed — Wall Street.”

While Rubin’s allies and acolytes got all the important jobs in the Obama administration, the academics and progressives got banished to semi-meaningless, even comical roles. Kornbluh was rewarded for being the chief policy architect of Obama’s meteoric rise by being outfitted with a pith helmet and booted across the ocean to Paris, where she now serves as America’s never-again-to-be-seen-on-TV ambassador to the Organization for Economic Cooperation and Development. Goolsbee, meanwhile, was appointed as staff director of the President’s Economic Recovery Advisory Board, a kind of dumping ground for Wall Street critics who had assisted Obama during the campaign; one top Democrat calls the panel “Siberia.”

Joining Goolsbee as chairman of the PERAB gulag is former Fed chief Paul Volcker, who back in March 2008 helped candidate Obama write a speech declaring that the deregulatory efforts of the Eighties and Nineties had “excused and even embraced an ethic of greed, corner-cutting, insider dealing, things that have always threatened the long-term stability of our economic system.” That speech met with rapturous applause, but the commission Obama gave Volcker to manage is so toothless that it didn’t even meet for the first time until last May. The lone progressive in the White House, economist Jared Bernstein, holds the impressive-sounding title of chief economist and national policy adviser — except that the man he is advising is Joe Biden, who seems more interested in foreign policy than financial reform.

The significance of all of these appointments isn’t that the Wall Street types are now in a position to provide direct favors to their former employers. It’s that, with one or two exceptions, they collectively offer a microcosm of what the Democratic Party has come to stand for in the 21st century. Virtually all of the Rubinites brought in to manage the economy under Obama share the same fundamental political philosophy carefully articulated for years by the Hamilton Project: Expand the safety net to protect the poor, but let Wall Street do whatever it wants. “Bob Rubin, these guys, they’re classic limousine liberals,” says David Sirota, a former Democratic strategist. “These are basically people who have made shitloads of money in the speculative economy, but they want to call themselves good Democrats because they’re willing to give a little more to the poor. That’s the model for this Democratic Party: Let the rich do their thing, but give a fraction more to everyone else.”

Even the members of Obama’s economic team who have spent most of their lives in public office have managed to make small fortunes on Wall Street. The president’s economic czar, Larry Summers, was paid more than $5.2 million in 2008 alone as a managing director of the hedge fund D.E. Shaw, and pocketed an additional $2.7 million in speaking fees from a smorgasbord of future bailout recipients, including Goldman Sachs and Citigroup. At Treasury, Geithner’s aide Gene Sperling earned a staggering $887,727 from Goldman Sachs last year for performing the punch-line-worthy service of “advice on charitable giving.” Sperling’s fellow Treasury appointee, Mark Patterson, received $637,492 as a full-time lobbyist for Goldman Sachs, and another top Geithner aide, Lee Sachs, made more than $3 million working for a New York hedge fund called Mariner Investment Group. The list goes on and on. Even Obama’s chief of staff, Rahm Emanuel, who has been out of government for only 30 months of his adult life, managed to collect $18 million during his private-sector stint with a Wall Street firm called Wasserstein-Perella.

The point is that an economic team made up exclusively of callous millionaire-assholes has absolutely zero interest in reforming the gamed system that made them rich in the first place. “You can’t expect these people to do anything other than protect Wall Street,” says Rep. Cliff Stearns, a Republican from Florida. That thinking was clear from Obama’s first address to Congress, when he stressed the importance of getting Americans to borrow like crazy again. “Credit is the lifeblood of the economy,” he declared, pledging “the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money.” A president elected on a platform of change was announcing, in so many words, that he planned to change nothing fundamental when it came to the economy. Rather than doing what FDR had done during the Great Depression and institute stringent new rules to curb financial abuses, Obama planned to institutionalize the policy, firmly established during the Bush years, of keeping a few megafirms rich at the expense of everyone else.

Obama hasn’t always toed the Rubin line when it comes to economic policy. Despite being surrounded by a team that is powerfully opposed to deficit spending — balanced budgets and deficit reduction have always been central to the Rubin way of thinking — Obama came out of the gate with a huge stimulus plan designed to kick-start the economy and address the job losses brought on by the 2008 crisis. “You have to give him credit there,” says Sen. Bernie Sanders, an advocate of using government resources to address unemployment. “It’s a very significant piece of legislation, and $787 billion is a lot of money.”

But whatever jobs the stimulus has created or preserved so far — 640,329, according to an absurdly precise and already debunked calculation by the White House — the aid that Obama has provided to real people has been dwarfed in size and scope by the taxpayer money that has been handed over to America’s financial giants. “They spent $75 billion on mortgage relief, but come on — look at how much they gave Wall Street,” says a leading Democratic strategist. Neil Barofsky, the inspector general charged with overseeing TARP, estimates that the total cost of the Wall Street bailouts could eventually reach $23.7 trillion. And while the government continues to dole out big money to big banks, Obama and his team of Rubinites have done almost nothing to reform the warped financial system responsible for imploding the global economy in the first place.

The push for reform seemed to get off to a promising start. In the House, the charge was led by Rep. Barney Frank, the outspoken chair of the House Financial Services Committee, who emerged during last year’s Bush bailouts as a sharp-tongued critic of Wall Street. Back when Obama was still a senator, he and Frank even worked together to introduce a populist bill targeting executive compensation. Last spring, with the economy shattered, Frank began to hold hearings on a host of reforms, crafted with significant input from the White House, that initially contained some very good elements. There were measures to curb abusive credit-card lending, prevent banks from charging excessive fees, force publicly traded firms to conduct meaningful risk assessment and allow shareholders to vote on executive compensation. There were even measures to crack down on risky derivatives and to bar firms like AIG from picking their own regulators.

Then the committee went to work — and the loopholes started to appear.

The most notable of these came in the proposal to regulate derivatives like credit-default swaps. Even Gary Gensler, the former Goldmanite whom Obama put in charge of commodities regulation, was pushing to make these normally obscure investments more transparent, enabling regulators and investors to identify speculative bubbles sooner. But in August, a month after Gensler came out in favor of reform, Geithner slapped him down by issuing a 115-page paper called “Improvements to Regulation of Over-the-Counter Derivatives Markets” that called for a series of exemptions for “end users” — i.e., almost all of the clients who buy derivatives from banks like Goldman Sachs and Morgan Stanley. Even more stunning, Frank’s bill included a blanket exception to the rules for currency swaps traded on foreign exchanges — the very instruments that had triggered the Long-Term Capital Management meltdown in the late 1990s.

Given that derivatives were at the heart of the financial meltdown last year, the decision to gut derivatives reform sent some legislators howling with disgust. Sen. Maria Cantwell of Washington, who estimates that as much as 90 percent of all derivatives could remain unregulated under the new rules, went so far as to say the new laws would make things worse. “Current law with its loopholes might actually be better than these loopholes,” she said.

An even bigger loophole could do far worse damage to the economy. Under the original bill, the Securities and Exchange Commission and the Commodity Futures Trading Commission were granted the power to ban any credit swaps deemed to be “detrimental to the stability of a financial market or of participants in a financial market.” By the time Frank’s committee was done with the bill, however, the SEC and the CFTC were left with no authority to do anything about abusive derivatives other than to send a report to Congress. The move, in effect, would leave the kind of credit-default swaps that brought down AIG largely unregulated.

Why would leading congressional Democrats, working closely with the Obama administration, agree to leave one of the riskiest of all financial instruments unregulated, even before the issue could be debated by the House? “There was concern that a broad grant to ban abusive swaps would be unsettling,” Frank explained.

Unsettling to whom? Certainly not to you and me — but then again, actual people are not really part of the calculus when it comes to finance reform. According to those close to the markup process, Frank’s committee inserted loopholes under pressure from “constituents” — by which they mean anyone “who can afford a lobbyist,” says Michael Greenberger, the former head of trading at the CFTC under Clinton.

This pattern would repeat itself over and over again throughout the fall. Take the centerpiece of Obama’s reform proposal: the much-ballyhooed creation of a Consumer Finance Protection Agency to protect the little guy from abusive bank practices. Like the derivatives bill, the debate over the CFPA ended up being dominated by horse-trading for loopholes. In the end, Frank not only agreed to exempt some 8,000 of the nation’s 8,200 banks from oversight by the castrated-in-advance agency, leaving most consumers unprotected, he allowed the committee to pass the exemption by voice vote, meaning that congressmen could side with the banks without actually attaching their name to their “Aye.”

To win the support of conservative Democrats, Frank also backed down on another issue that seemed like a slam-dunk: a requirement that all banks offer so-called “plain vanilla” products, such as no-frills mortgages, to give consumers an alternative to deceptive, “fully loaded” deals like adjustable-rate loans. Frank’s last-minute reversal — made in consultation with Geithner — was such a transparent giveaway to the banks that even an economics writer for Reuters, hardly a far-left source, called it “the beginning of the end of meaningful regulatory reform.”

But the real kicker came when Frank’s committee took up what is known as “resolution authority” — government-speak for “Who the hell is in charge the next time somebody at AIG or Lehman Brothers decides to vaporize the economy?” What the committee initially introduced bore a striking resemblance to a proposal written by Geithner earlier in the summer. A masterpiece of legislative chicanery, the measure would have given the White House permanent and unlimited authority to execute future bailouts of megaconglomerates like Citigroup and Bear Stearns.

Democrats pushed the move as politically uncontroversial, claiming that the bill will force Wall Street to pay for any future bailouts and “doesn’t use taxpayer money.” In reality, that was complete bullshit. The way the bill was written, the FDIC would basically borrow money from the Treasury — i.e., from ordinary taxpayers — to bail out any of the nation’s two dozen or so largest financial companies that the president deems in need of government assistance. After the bailout is executed, the president would then levy a tax on financial firms with assets of more than $10 billion to repay the Treasury within 60 months — unless, that is, the president decides he doesn’t want to! “They can wait indefinitely to repay,” says Rep. Brad Sherman of California, who dubbed the early version of the bill “TARP on steroids.”

The new bailout authority also mandated that future bailouts would not include an exchange of equity “in any form” — meaning that taxpayers would get nothing in return for underwriting Wall Street’s mistakes. Even more outrageous, it specifically prohibited Congress from rejecting tax giveaways to Wall Street, as it did last year, by removing all congressional oversight of future bailouts. In fact, the resolution authority proposed by Frank was such a slurpingly obvious blow job of Wall Street that it provoked a revolt among his own committee members, with junior Democrats waging a spirited fight that restored congressional oversight to future bailouts, requires equity for taxpayer money and caps assistance to troubled firms at $150 billion. Another amendment to force companies with more than $50 billion in assets to pay into a rainy-day fund for bailouts passed by a resounding vote of 52 to 17 — with the “Nays” all coming from Frank and other senior Democrats loyal to the administration.

Even as amended, however, resolution authority still has the potential to be truly revolutionary legislation. The Senate version still grants the president unlimited power over equity-free bailouts, and the amended House bill still institutionalizes a system of taxpayer support for the 20 to 25 biggest banks in the country. It would essentially grant economic immortality to those top few megafirms, who will continually gobble up greater and greater slices of market share as money becomes cheaper and cheaper for them to borrow (after all, who wouldn’t lend to a company permanently backstopped by the federal government?). It would also formalize the government’s role in the global economy and turn the presidential-appointment process into an important part of every big firm’s business strategy. “If this passes, the very first thing these companies are going to do in the future is ask themselves, ‘How do we make sure that one of our executives becomes assistant Treasury secretary?’” says Sherman.

On the Senate side, finance reform has yet to make it through the markup process, but there’s every reason to believe that its final bill will be as watered down as the House version by the time it comes to a vote. The original measure, drafted by chairman Christopher Dodd of the Senate Banking Committee, is surprisingly tough on Wall Street — a fact that almost everyone in town chalks up to Dodd’s desperation to shake the bad publicity he incurred by accepting a sweetheart mortgage from the notorious lender Countrywide. “He’s got to do the shake-his-fist-at-Wall Street thing because of his, you know, problems,” says a Democratic Senate aide. “So that’s why the bill is starting out kind of tough.”

The aide pauses. “The question is, though, what will it end up looking like?”

He’s right — that is the question. Because the way it works is that all of these great-sounding reforms get whittled down bit by bit as they move through the committee markup process, until finally there’s nothing left but the exceptions. In one example, a measure that would have forced financial companies to be more accountable to shareholders by holding elections for their entire boards every year has already been watered down to preserve the current system of staggered votes. In other cases, this being the Senate, loopholes were inserted before the debate even began: The Dodd bill included the exemption for foreign-currency swaps — a gift to Wall Street that only appeared in the Frank bill during the course of hearings — from the very outset.

The White House’s refusal to push for real reform stands in stark contrast to what it should be doing. It was left to Rep. Pete Kanjorski in the House and Bernie Sanders in the Senate to propose bills to break up the so-called “too big to fail” banks. Both measures would give Congress the power to dismantle those pseudomonopolies controlling almost the entire derivatives market (Goldman, Citi, Chase, Morgan Stanley and Bank of America control 95 percent of the $290 trillion over-the-counter market) and the consumer-lending market (Citi, Chase, Bank of America and Wells Fargo issue one of every two mortgages, and two of every three credit cards). On November 18th, in a move that demonstrates just how nervous Democrats are getting about the growing outrage over taxpayer giveaways, Barney Frank’s committee actually passed Kanjorski’s measure. “It’s a beginning,” Kanjorski says hopefully. “We’re on our way.” But even if the Senate follows suit, big banks could well survive — depending on whom the president appoints to sit on the new regulatory board mandated by the measure. An oversight body filled with executives of the type Obama has favored to date from Citi and Goldman Sachs hardly seems like a strong bet to start taking an ax to concentrated wealth. And given the new bailout provisions that provide these megafirms a market advantage over smaller banks (those Paul Volcker calls “too small to save”), the failure to break them up qualifies as a major policy decision with potentially disastrous consequences.

“They should be doing what Teddy Roosevelt did,” says Sanders. “They should be busting the trusts.”

That probably won’t happen anytime soon. But at a minimum, Obama should start on the road back to sanity by making a long-overdue move: firing Geithner. Not only are the mop-headed weenie of a Treasury secretary’s fingerprints on virtually all the gross giveaways in the new reform legislation, he’s a living symbol of the Rubinite gangrene crawling up the leg of this administration. Putting Geithner against the wall and replacing him with an actual human being not recently employed by a Wall Street megabank would do a lot to prove that Obama was listening this past Election Day. And while there are some who think Geithner is about to go — “he almost has to,” says one Democratic strategist — at the moment, the president is still letting Wall Street do his talking.

Morning, the National Mall, November 5th. A year to the day after Obama named Michael Froman to his transition team, his political “opposition” has descended upon the city. Republican teabaggers from all 50 states have showed up, a vast horde of frowning, pissed-off middle-aged white people with their idiot placards in hand, ready to do cultural battle. They are here to protest Obama’s “socialist” health care bill — you know, the one that even a bloodsucking capitalist interest group like Big Pharma spent $150 million to get passed.

These teabaggers don’t know that, however. All they know is that a big government program might end up using tax dollars to pay the medical bills of rapidly breeding Dominican immigrants. So they hate it. They’re also in a groove, knowing that at the polls a few days earlier, people like themselves had a big hand in ousting several Obama-allied Democrats, including a governor of New Jersey who just happened to be the former CEO of Goldman Sachs. A sign held up by New Jersey protesters bears the warning, “If You Vote For Obamacare, We Will Corzine You.”

I approach a woman named Pat Defillipis from Toms River, New Jersey, and ask her why she’s here. “To protest health care,” she answers. “And then amnesty. You know, immigration amnesty.”

I ask her if she’s aware that there’s a big hearing going on in the House today, where Barney Frank’s committee is marking up a bill to reform the financial regulatory system. She recognizes Frank’s name, wincing, but the rest of my question leaves her staring at me like I’m an alien.

“Do you care at all about economic regulation?” I ask. “There was sort of a big economic collapse last year. Do you have any ideas about how that whole deal should be fixed?”

“We got to slow down on spending,” she says. “We can’t afford it.”

“But what do we do about the rules governing Wall Street . . .”

She walks away. She doesn’t give a fuck. People like Pat aren’t aware of it, but they’re the best friends Obama has. They hate him, sure, but they don’t hate him for any reasons that make sense. When it comes down to it, most of them hate the president for all the usual reasons they hate “liberals” — because he uses big words, doesn’t believe in hell and doesn’t flip out at the sight of gay people holding hands. Additionally, of course, he’s black, and wasn’t born in America, and is married to a woman who secretly hates our country.

These are the kinds of voters whom Obama’s gang of Wall Street advisers is counting on: idiots. People whose votes depend not on whether the party in power delivers them jobs or protects them from economic villains, but on what cultural markers the candidate flashes on TV. Finance reform has become to Obama what Iraq War coffins were to Bush: something to be tucked safely out of sight.

Around the same time that finance reform was being watered down in Congress at the behest of his Treasury secretary, Obama was making a pit stop to raise money from Wall Street. On October 20th, the president went to the Mandarin Oriental Hotel in New York and addressed some 200 financiers and business moguls, each of whom paid the maximum allowable contribution of $30,400 to the Democratic Party. But an organizer of the event, Daniel Fass, announced in advance that support for the president might be lighter than expected — bailed-out firms like JP Morgan Chase and Goldman Sachs were expected to contribute a meager $91,000 to the event — because bankers were tired of being lectured about their misdeeds.

“The investment community feels very put-upon,” Fass explained. “They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.”

Which makes sense. Shit, who could blame the investment community for the meltdown? What kind of assholes are we to put any of this on them?

This is the kind of person who is working for the Obama administration, which makes it unsurprising that we’re getting no real reform of the finance industry. There’s no other way to say it: Barack Obama, a once-in-a-generation political talent whose graceful conquest of America’s racial dragons en route to the White House inspired the entire world, has for some reason allowed his presidency to be hijacked by sniveling, low-rent shitheads. Instead of reining in Wall Street, Obama has allowed himself to be seduced by it, leaving even his erstwhile campaign adviser, ex-Fed chief Paul Volcker, concerned about a “moral hazard” creeping over his administration.

“The obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted,” Volcker told Congress in September, expressing concerns about all the regulatory loopholes in Frank’s bill. “Ultimately, the possibility of further crises — even greater crises — will increase.”

What’s most troubling is that we don’t know if Obama has changed, or if the influence of Wall Street is simply a fundamental and ineradicable element of our electoral system. What we do know is that Barack Obama pulled a bait-and-switch on us. If it were any other politician, we wouldn’t be surprised. Maybe it’s our fault, for thinking he was different.

Link: Obama’s Big Selllout, Matt Taibbi, Rolling Stones, 12/9/09.

Copy + Paste:

From: Simon Edhouse
Date: Monday 16 November 2009 2.19pm
To: David Thorne
Subject: Logo Design

Hello David,

I would like to catch up as I am working on a really exciting project at the moment and need a logo designed. Basically something representing peer to peer networking. I have to have something to show prospective clients this week so would you be able to pull something together in the next few days? I will also need a couple of pie charts done for a 1 page website. If deal goes ahead there will be some good money in it for you.

Simon

From: David Thorne
Date: Monday 16 November 2009 3.52pm
To: Simon Edhouse
Subject: Re: Logo Design

Dear Simon,

Disregarding the fact that you have still not paid me for work I completed earlier this year despite several assertions that you would do so, I would be delighted to spend my free time creating logos and pie charts for you based on further vague promises of future possible payment. Please find attached pie chart as requested and let me know of any changes required.

Regards, David.

From: Simon Edhouse
Date: Monday 16 November 2009 4.11pm
To: David Thorne
Subject: Re: Re: Logo Design

Is that supposed to be a fucking joke? I told you the previous projects did not go ahead. I invested a lot more time and energy in those projects than you did. If you put as much energy into the projects as you do being a dickhead you would be a lot more successful.

From: David Thorne
Date: Monday 16 November 2009 5.27pm
To: Simon Edhouse
Subject: Re: Re: Re: Logo Design

Dear Simon,

You are correct and I apologise. Your last project was actually both commercially viable and original. Unfortunately the part that was commercially viable was not original, and the part that was original was not commercially viable.

I would no doubt find your ideas more ‘cutting edge’ and original if I had traveled forward in time from the 1950′s but as it stands, your ideas for technology based projects that have already been put into application by other people several years before you thought of them fail to generate the enthusiasm they possibly deserve. Having said that though, if I had traveled forward in time, my time machine would probably put your peer to peer networking technology to shame as not only would it have commercial viability, but also an awesome logo and accompanying pie charts.

Regardless, I have, as requested, attached a logo that represents not only the peer to peer networking project you are currently working on, but working with you in general.

Regards, David.

From: Simon Edhouse
Date: Tuesday 17 November 2009 11.07am
To: David Thorne
Subject: Re: Re: Re: Re: Logo Design

You just crossed the line. You have no idea about the potential this project has. The technology allows users to network peer to peer, add contacts, share information and is potentially worth many millions of dollars and your short sightedness just cost you any chance of being involved.

From: David Thorne
Date: Tuesday 17 November 2009 1.36pm
To: Simon Edhouse
Subject: Re: Re: Re: Re: Re: Logo Design

Dear Simon,

So you have invented Twitter. Congratulations. This is where that time machine would definitely have come in quite handy.

When I was about twelve, I read that time slows down when approaching the speed of light so I constructed a time machine by securing my father’s portable generator to the back of my mini-bike with rope and attaching the drive belt to the back wheel. Unfortunately, instead of traveling through time and finding myself in the future, I traveled about fifty metres along the footpath at 200mph before finding myself in a bush. When asked by the nurse filling out the hospital accident report “Cause of accident?” I stated ‘time travel attempt’ but she wrote down ‘stupidity’.

If I did have a working time machine, the first thing I would do is go back four days and tell myself to read the warning on the hair removal cream packaging where it recommends not using on sensitive areas. I would then travel several months back to warn myself against agreeing to do copious amounts of design work for an old man wielding the business plan equivalent of a retarded child poking itself in the eye with a spoon, before finally traveling back to 1982 and explaining to myself the long term photographic repercussions of going to the hairdresser and asking for a haircut exactly like Simon LeBon’s the day before a large family gathering.

Regards, David.

From: Simon Edhouse
Date: Tuesday 17 November 2009 3.29pm
To: David Thorne
Subject: Re: Re: Re: Re: Re: Re: Logo Design

You really are a fucking idiot and have no idea what you are talking about. The project I am working on will be more successful than twitter within a year. When I sell the project for 40 million dollars I will ignore any emails from you begging to be a part of it and will send you a postcard from my yaght. Ciao.

From: David Thorne
Date: Tuesday 17 November 2009 3.58pm
To: Simon Edhouse
Subject: Re: Re: Re: Re: Re: Re: Re: Logo Design

From: Simon Edhouse
Date: Tuesday 17 November 2009 4.10pm
To: David Thorne
Subject: Re: Re: Re: Re: Re: Re: Re: Re: Logo Design

Anyone else would be able to see the opportunity I am presenting but not you. You have to be a fucking smart arse about it. All I was asking for was a logo and a few pie charts which would have taken you a few fucking hours.

From: David Thorne
Date: Tuesday 17 November 2009 4.25pm
To: Simon Edhouse
Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: Logo Design

Dear Simon

Actually, you were asking me to design a logotype which would have taken me a few hours and fifteen years experience. For free. With pie charts. Usually when people don’t ask me to design them a logo, pie charts or website, I, in return, do not ask them to paint my apartment, drive me to the airport, represent me in court or whatever it is they do for a living. Unfortunately though, as your business model consists entirely of “Facebook is cool, I am going to make a website just like that”, this non exchange of free services has no foundation as you offer nothing of which I wont ask for.

Regards, David.

From: Simon Edhouse
Date: Tuesday 17 November 2009 4.43pm
To: David Thorne
Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Logo Design

What the fuck is your point? Are you going to do the logo and charts for me or not?

From: David Thorne
Date: Tuesday 17 November 2009 5.02pm
To: Simon Edhouse
Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Logo Design

From: Simon Edhouse
Date: Tuesday 17 November 2009 5.13pm
To: David Thorne
Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Logo Design

Do not ever email me again.

From: David Thorne
Date: Tuesday 17 November 2009 5.19pm
To: Simon Edhouse
Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Logo Design

Ok. Good luck with your project. If you need anything let me know.

Regards, David.

From: Simon Edhouse
Date: Tuesday 17 November 2009 5.27pm
To: David Thorne
Subject: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Logo Design

Get fucked.

Link: Simon’s Pie Charts, David Thorne.

Copy + Paste from Bloomberg (my highlights in blue):

Nov. 20 (Bloomberg) — Brandon Adams, who teaches behavioral finance at Harvard University’s Department of Economics, says some of the best candidates for Wall Street trading jobs are the professional card players at FullTiltPoker.com and similar Web sites.

“They’ve essentially been the survivors in the system, a very difficult system where 95 percent of people lose money,” the 30-year-old Adams, who plays at the site, said in a telephone interview. “Anyone smart enough and disciplined enough to survive that system is probably going to do very well in the trading world.”

An increasing number of hedge funds and brokerages are scrutinizing professional poker to find talent and analytical tools, according to financial recruiters including Options Group, a New York-based executive-search company. Susquehanna International Group LLP, the Bala Cynwyd, Pennsylvania-based options and equity trading company, uses poker to teach strategic thinking.

“Someone who has made a successful living as a poker player for a few years would more likely be a good trader than someone who hasn’t,” said Aaron Brown, a 53-year-old former poker pro who is now a risk manager at AQR Capital Management LLC in Greenwich, Connecticut, which oversees $23 billion. “They know to push when they have the edge and they know how not to bust, and that’s a tough combination to find.”

Skill Sets

Skills that define successful traders — rational approach toward risk, speedy decision-making under pressure, discipline and a well-trained memory — are the same ones that separate elite poker players from ones known as “dead money,” financial recruiters say.

After the World Series of Poker started in Las Vegas four months ago, Options Group recruiter Simon Satanovsky said he received a hedge-fund request for online poker players with no financial experience. He wouldn’t identify the client.

“Before, we were asking about GPA or the Math/Physics Olympiad,” Satanovsky, a former Russian national bridge champion, said in a telephone interview. “Now, we’re asking questions about poker successes.”

Satanovsky said Wall Street firms and recruiters have been paying increasing attention to poker players as job candidates since 2003, when amateur Chris Moneymaker beat hundreds of professionals to win the World Series of Poker’s No-Limit Texas Hold ‘Em main event.

The Right Game

Adams, who has taught at Harvard in Cambridge, Massachusetts, each spring since 2003, said disciplined poker players can be spotted on sites such as Full Tilt and PokerStars.com waiting for particular games, not tempted by those outside their area of expertise or financial comfort level.

Their self-control and confidence would be useful in trading where large profits are possible, the probability of going broke high and the competition formidable, he said. Adams cited as an example a trader who notices a slight imperfection in the way options are being priced, then works to come up with the proper bet per trade.

“In poker, people are used to not sitting back and waiting for the fat pitch,” Adams said. “They’re used to skirting the edge of ruin and they learn the tools of how to do that.”

Susquehanna has been using poker to teach its new traders since it was founded in 1987, said Pat McCauley, who heads the privately held firm’s trader-development program.

College Friends

The company’s founders played the game as college friends at the State University of New York-Binghamton. Susquehanna has held in-house poker tournaments to recruit traders and monitor decision-making skills.

The trainees learn to use information they see in the marketplace to infer what motivates others, helping them make better prices. It’s the same way poker pro Phil Ivey, considered among the game’s greats, makes bets based on what he sees among his opponents, McCauley said.

“What professional poker players are really good at is taking this information that’s relatively subjective, quantifying it and making it objective, and that’s what trading is about,” McCauley said.

The ability to write complex poker algorithms, which either run poker Web sites or try to beat them, will get hedge funds interested, said Todd Fahey, a recruiter who specializes in quantitative finance at New York-based Exemplar Partners.

“There have been a few guys that I’ve placed in the industry that come from the poker software side of the house,” Fahey said in a telephone interview. “Two Sigma, D.E. Shaw and any of your larger computationally-based hedge funds are going to want to see people like this.”

Two Sigma Investments LLC and D.E. Shaw Group, both based in New York, declined to comment.

Begleiter’s Try

The worlds of poker and finance often intersect. Steven Begleiter, who headed corporate strategy at Bear Stearns Cos. before its 2008 collapse, earned $1.6 million earlier this month with a sixth-place finish in the main event. Greenlight Capital LLC founder David Einhorn was 18th in 2006. The annual “Wall Street Poker Night,” benefiting Math for America, was started by billionaire James Simons, the founder of hedge-fund firm Renaissance Technologies Corp. This April, the $5,000 buy-in tournament drew 100 entrants — 90 percent from hedge funds or other Wall Street jobs — raising $1.3 million.

Even though poker players make good traders, they aren’t necessarily good with their own investments, said Adams, adding that he is almost “famously unsuccessful” as an investor.

“Poker players are lazy and they’re gossipers,” he said. “If you look at the way they trade, they tend to latch onto other people’s ideas.”

Texas Hold ‘Em

One person who has chosen poker over finance is Joe Cada, who this month outlasted Begleiter and Ivey at the main event final table. Cada, who plays the game professionally, was first among 6,494 entrants and took home the $8.55 million top prize, giving half to financial backers Cliff Josephy and Eric Haber, poker pros with Wall Street backgrounds. The Texas Hold ‘Em contest had a $10,000 entry fee.

“As a little kid, I used to watch the stock markets day in and day out,” Cada, 22, said in an interview. “My parents always thought I was going to get into banking or become a stockbroker because I was really good with math and logic, and I was obsessed with money.”

Cada said he plans to remain a poker pro. AQR’s Brown, the author of “The Poker Face of Wall Street” and a life-long player, long ago gave up the game professionally after a couple years of trying.

“I eventually decided finance was easier,” he said.

To contact the reporter on this story: Mason Levinson in New York at mlevinson@bloomberg.net.

Link: Harvard Poker Pro Says Texas Hold ‘Em Can Teach Traders to Fold, Mason Levinson, Bloomberg, 11/20/2009.

THE story of Vincent van Gogh’s life is more heartbreaking, and heart-lifting, than the romantic myth that has enshrouded him for decades. It is told, in his own words and works, in the six-volume “Vincent van Gogh: The Letters”. His 819 surviving letters (and the 83 addressed to him) form the core. The first letter was written when Vincent, aged 19, was a trainee at The Hague branch of Goupil & Cie, a firm of international art dealers. Like most of the letters, it was sent to his brother, Theo, then 15. The two remained close. Theo became an art dealer and Vincent’s main source of financial and emotional support.

Van Gogh is irascible, engaging, intelligent, touchy, high-minded, well read, rebellious and pigheaded. When he started dressing like a tramp he claimed it was, in part, to advertise his refusal to join polite, ie, hypocritical society. (Equally, it may have been because polite society was refusing to accept him.) He was often miserable, occasionally love-struck, almost always fiercely committed to something or other and sometimes mad.

Art and literature were his constant companions. He wrote often about what he was reading and seeing. His concern was never a book’s place in the canon or a painting’s in art history. He judged a work on what it communicated, and how. From Antwerp he wrote that the religious paintings of Rubens are “theatrical…But what he can do is paint a queen, a statesman, well analysed, just as they are.” He wrote beautifully about landscapes and peasants. In time, he gave a vivid, perhaps unequalled, account of an artist making art.

He set off at 16, a seemingly conventional young man, to make his way as a dealer first in The Hague and then, via Paris, in London. There, a prickly instability, characteristic of his childhood, re-emerged, perhaps brought on by a rebuff from his landlady’s daughter. He lost the job he had had for seven years. Other failures followed, as a preacher and a teacher.

His religious fanaticism grew. Indeed, the letters offer a rare look at obsession from the inside. His pursuit of a young widow was so unrelenting he would be called a stalker today. But to him, her repetition of “No, nay, never!” was “a piece of ice that I press to my heart to thaw.”

When he was 26 his fixation became art. By then he was a penniless, eccentric loner. This coincides with a year-long break in the correspondence. He had fallen out with Theo following a “discussion” about his future. When the letters resume, Vincent refers to himself as a prisoner, a caged bird. “I know I could be quite a different man!” he writes. “There’s something within me, so what is it!” Two months later he bent himself to the study of drawing and painting as others would bend to the plough. It was as if he had to labour, and metaphorically sweat, before his genius could, or was allowed to, emerge. Five years later, in the spring of 1885, came “The Potato Eaters”. Movingly, triumphantly, van Gogh had broken through.

After two years in Paris, living with Theo (only nine letters; no images), Vincent moved to Arles in 1888. Colour now floods the pages. This was the beginning of the legendary period of prodigious, radiant creativity. Yes, he cut off his ear. He also painted nearly 200 pictures, among them “The Night Café” and “The Yellow House”.

In 1889, after a series of crack-ups (in reaction to Theo’s marriage or perhaps just too much absinthe?), he spent a year in the asylum at Saint-Rémy-de-Provence. The work continued to pour out (about 150 paintings). Sunflowers and irises but also “Starry Night”, in which viewer and artist are pulled up over the rooftops, and tumble round and round across the dark sky.

The very last letter reproduced, addressed to Theo but unfinished, was written on July 23rd 1890. He was staying in Auvers-sur-Oise, not far from Paris where Theo lived with his wife and child. The note was found in Vincent’s pocket after he shot himself. He died, aged 37, on July 27th.

fteen years were devoted to this publication. The Dutch, English and French editions are the joint project of the Huygens Institute and Amsterdam’s Van Gogh Museum. Letters and illustrations fill five books; the sixth has commentaries, maps and indexes. It is all accessible, free, at www.vangoghletters.org (the site provides a valuable concordance). There is also a free iPod app, “Yours, Vincent”.

This is not the first attempt to publish the complete letters but it is the best. There were editions in 1914; an expanded version appeared in English in 1958; 20 newly discovered letters were added for the 1990 Dutch centenary edition. Now the letters have been retranslated, comprehensively annotated and there are 20 new items.

But what really sets this edition apart from, and above, all others are the illustrations. Sketches are embedded in many of van Gogh’s letters; the drawings and “scratches” he sometimes tucked into envelopes before posting are reproduced. So are thumbnail illustrations of every work the artist mentions (whether by himself or by others) plus larger reproductions of paintings based on these letter sketches.

The Van Gogh Museum is marking the publication of the letters by rehanging its permanent collection and displaying 100 letters. (“Van Gogh’s Letters: The Artist Speaks” closes on January 3rd.) On January 23rd a different exhibition opens at London’s Royal Academy: “The Real Van Gogh: The Artist and his Letters”. More than 60 paintings and 35 drawings will come from across the world, closely related to the 40 letters that will be shown.

The publication of the six volumes is cause for celebration. To have all the artist’s words together with all those images is like being given a pair of super-special 3D spectacles. The resulting self-portrait has a depth that would not exist were this a collection only of images or only of words. This could be the best autobiography of an artist yet to appear anywhere.

Link:
“An Artist Making Art,” The Economist. October 29, 2009.
The Van Gogh Letters

I’ve been collecting this magazine ever since Series 1. I have them all! I particularly liked the CDs and stickers that accompanied them. With Iggy Pop on the cover, this one already looks like it will be another winner!

 Link: Stand up Economist

1. A lot of fashion houses design for the catwalk and not the street—then you see the clothes on a regular guy and it’s a mess. Don’t disguise your personality behind labels; impose it on the clothes.

2. The most embarrassing thing a man can own is a disposable razor. They’re for women. And speaking of grooming, there’s nothing less flattering than shaved legs.

3. Wearing a pair of high-tops with a suit deconstructs the look, and that’s important. I like the way high-tops and pants act together. It’s like the effect of rolled-up sleeves for your trousers. Just make sure the socks match your sneakers, not the pants. If you like black high-tops, wear black socks. White, white.

4. I don’t really think I know a man who wouldn’t look good in black. Black is always good. It’s the basic.

5. You can wear a white shirt to work, to dinner, to visit the grandmother, to the opera, on vacation, at the beach. It’s the true get-away-with-anything item.

6. There’s definitely an age limit for wearing leather pants, but not for wearing leather jackets. A standout fashion leather jacket can look great on a young guy. And there are a lot of suedes that men can get away with at any age.

7. Don’t just copy an outfit. Look in the mirror and do a reality check. It’s all about making the good match. You’ll know when something is right. And if you don’t, just walk down the street: If people look away from you, then you know you’ve done something wrong.

8. When I took over Dior Homme, I was warned. I knew it was going to be tough—but it was worse. In life you need good friends, and at work you need a good team. There’s so much drama in life and work that you can easily get lost. You need to keep a little distance from everything.

9. We’ve had beefy guys and we’ve had—well, skinny isn’t really the right word, it’s more like scary. Now men should be athletic, healthy. Today it’s about having a balance in life—having nice clothes, good food, and respecting your body.

10. My grandmother told me there are two ways of living: You can either survive or you can really make a life. There is eating and there is dining. She would always give that extra little effort, and I still believe that is important—to make things more beautiful makes all the difference.

Link: Details Magazine

I share values and beliefs from both sides.

Link: Information is Beautiful

Like the above painting depicts, I felt a tremendous pressure on my chest, but it was not static. Instead, it was a penetrating force, a spirit if you will, that seemed to want to invade my body. I could imagine an opaque spirit stream enter and exit through my head and chest, all the while, my arms and legs lay limp.

During the episode, I recall thinking, “Fuck, an evil demon wants to take over my body to do some bad shit on earth and then leave me holding the bag.” Instinctively, I had to fight it, telling it, “Fuck you, you’ll never take me!”

I was pretty scared. The whole thing lasted for a good 5 minutes or so.

Since then, I have experienced attempted demon possession a handful of times (most recent being a few weeks ago), usually when I sleep on my back and my arms are stretched above my head, leaving my body fully exposed. 

These days, I’m much more calm about these experiences, sometimes to the point of even welcoming the sensation. Once, I even granted permission to the demon, saying ”Go ahead and take me. I’m ready to cause some mayhem!” Of course, nothing of consequence has happened since.

Or perhaps, I am possessed and the demon in me is just lying dormant, waiting for an opportune moment to reveal itself….

I should probably curb my imagination right here for real fear of some of my overly religious friends trying to kidnap me to exorcise my demon(s). =P 

In any case, I recently found this really good Wikipedia entry on Sleep Paralysis that talks about the phenomenon.

Worth the Read!

According to the abstract….

the authors found that visitors to the ancient art museum conducted their visit with the primary aim of acquiring understanding and knowledge, while modern art museum visitors conducted their visit with an approach that was primarily emotional and pleasure-seeking…Concerning personality traits, no difference was found between the two museum groups on the “Openness to Experience” dimension; differences were found on the “Sensation Seeking” trait; modern art museum visitors attained higher scores as compared to ancient art museum visitors.

Myself, I prefer the newer stuff.

Link: Preferences for ancient and modern art museums: Visitor experiences and personality characteristics. Mastandrea, Stefano; Bartoli, Gabriella; Bove, Giuseppe. Psychology of Aesthetics, Creativity, and the Arts. Vol 3(3), Aug 2009, 164-173.

We introduce Game Theory by playing a game. We organize the game into players, their strategies, and their goals or payoffs; and we learn that we should decide what our goals are before we make choices. With some plausible payoffs, our game is a prisoners’ dilemma. We learn that we should never choose a dominated strategy; but that rational play by rational players can lead to bad outcomes. We discuss some prisoners’ dilemmas in the real world and some possible real-world remedies. With other plausible payoffs, our game is a coordination problem and has very different outcomes: so different payoffs matter. We often need to think, not only about our own payoffs, but also others’ payoffs. We should put ourselves in others’ shoes and try to predict what they will do. This is the essence of strategic thinking.

Sometimes it’s the journey, sometimes it’s the destination—and sometimes, it’s both. National Geographic Traveler has scoured the globe for the world’s most beautiful, interesting, and off-beat road trips.

It’s worth a look.

Two of the featured drives – Pacific Coast Highway and Santa Barbara Loop – take place right here in California.

Here is a Copy + Paste:

Pacific Coast Highway.

An exhilarating driving experience, this twisting, cliff-hugging, 123-mile (198-kilometer) route along the central California coast takes about five hours to complete at a leisurely pace. Designated an All-American Road—among the nation’s most scenic—the drive encompasses both the Big Sur Coast Highway and the San Luis Obispo North Coast Byway.

Overview
The route starts in historic Monterey, visits the art colony of Carmel, and threads through Big Sur, where mountains plunge into the Pacific. Farther south, the landscape mellows to oak-studded hills as the road passes Hearst Castle on its way to Morro Bay. In places, the road has narrow shoulders and sharp drop-offs, so stay alert. This route can be tricky for RVs or other oversize vehicles.

Start in Monterey
Join California Route 1 in Monterey (Monterey County Convention & Visitors Bureau. +1 831 649 1770. www.montereyinfo.org.). The town served as California’s capital under Spanish, Mexican, and American flags, and by the early 1900s boasted an important sardine industry. Surviving sites include the Royal Presidio Chapel, Monterey State Historic Park, Custom House, Casa Soberanes, Larkin House, and other adobe buildings, as well as touristy Fisherman’s Wharf and Cannery Row, home of the celebrated Monterey Bay Aquarium (www.montereybayaquarium.org).

Carmel-by-the-Sea
After enjoying Monterey, drive 3 miles (4.8 kilometers) south on Highway 1 to Carmel-by-the-Sea (Visitors Center: San Carlos St.; tel. +1 831 624 2522 or +1 800 550 4333; www.carmelcalifornia.org), an upscale village of quaint colorful cottages, restaurants, inns, shops, and art galleries fronted by a broad beach fringed with Monterey pines. Among the highlights are Mission San Carlos Borroméo del Río Carmelo, second of the California missions, founded by Padre Junípero Serra in 1770; Tor House, the 1919 home of poet Robinson Jeffers; and mile-long Carmel River State Beach (831-649-2836), with its pelicans and kingfishers.

Point Lobos State Reserve
From Carmel drive 3.5 miles (5.6 kilometers) south to Point Lobos State Reserve (tel. +1 831 624 4909; www.pointlobos.org; $10 fee for car), a 550-acre (220-hectare) park encompassing coves, headlands, meadows, tide pools, and the nation’s first undersea ecological reserve, covering an additional 750 acres (300 hectares), with kelp forests 70 feet (20 meters) high. Trails lead past Monterey cypresses, which grow naturally only here and in Pebble Beach. The park’s 250 species of birds and mammals include black-tailed deer, gray foxes, sea otters, and sea lions. Migrating gray whales pass by from December through April.

Big Sur
After driving through Carmel Highlands, where impressive houses perch on granite cliffs above the sea, you reach the start of Big Sur, which extends 90 miles (145 kilometers) south to San Simeon. On this fabled coastline, redwood groves reach skyward, the Santa Lucia Range plunges into the sea, and waves are beaten to froth on ragged rocks. It’s a place of elemental power that can make human affairs seem inconsequential.

Garrapata State Park
Route 1, opened in 1937, climbs higher than 1,000 feet (300 meters) above the sea. One of the few easy-to-reach beaches is at Garrapata State Park (tel. +1 831 667 2315; www.parks.ca.gov/?page_id=579), about 2 miles (3.2 kilometers) south of Carmel Highlands. From Soberanes Point watch for sea otters, which are protected under California state law.

Old Coast Road
En route to Bixby Bridge, six miles (ten kilometers) farther, you can choose to leave Calif. 1 and drive the 11-mile (18-kilometer) Old Coast Road, which climbs through remote forests and canyons and offers silent ocean views before ending at Andrew Molera State Park (tel. +1 831 667 2315, www.parks.ca.gov/?page_id=582). The unpaved road is tortuous and impassable when it rains.

Bixby Bridge
Much photographed Bixby Bridge is a single-span concrete arch more than 260 feet (80 meters) high and 700 feet (200 meters) long. Park at turnouts near either end to gawk or take pictures. Ahead, the highway passes Hurricane Point, a place of big winds and big views, and then descends to the mouth of the Little Sur River. Looking inland, you’ll see 3,709-foot-high (1,131-meter-high) Pico Blanco, distinguishable by its lime deposits. Toward the sea, sand dunes soon appear, rolling toward the 1889 Point Sur Lighthouse (tel. +1 831 625 4419; tours Saturdays and Sundays, call for additional days April through October; $8; http://www.pointsur.org), a state historic park. In a few miles you reach Andrew Molera State Park (tel. +1 831 667 2315; www.parks.ca.gov/?page_id=582; fee), whose broad beach, oak and redwood forests, and stretch of the Big Sur River are accessible only by foot.

Pfeiffer Big Sur State Park
Pass through the settlement of Big Sur, which offers food and lodging, and head for Pfeiffer Big Sur State Park (tel. +1 831 667 2315; www.parks.ca.gov/?page_id=570; fee), where the Big Sur River runs through 964 acres (390 hectares) of redwoods, sycamores, and ferns. Then go 1.5 miles (2.4 kilometers) south and turn right on the 2-mile (3.2-kilometer) road down Sycamore Canyon Road to the white sands of Pfeiffer Beach, where the surf roars through arched rocks.

Nepenthe
Less than 2 miles (3.2 kilometers) farther on the highway you come to Nepenthe (tel. +1 831 667 2345; www.nepenthebigsur.com), an indoor-outdoor restaurant perched 800 feet (245 meters) above the sea and famous for its views. About half a mile (0.8 kilometers) south, on the left, look for the Henry Miller Memorial Library (tel. +1 831 667 2574; www.henrymiller.org; closed Tuesdays), perched among towering redwoods. It displays books and memorabilia of the novelist who spent 18 years in Big Sur. Also stop 8 miles (12.8 kilometers) farther at Julia Pfeiffer Burns State Park (tel. +1 831 667 2315; www.parks.ca.gov/?page_id=578 Fee), whose terrain ranges from 3,000-foot-high (914-meter-high) ridges to an underwater preserve. Do walk the short trail along the seaside bluff to see McWay Falls pour 100 feet (30 meters) into a picturesque cove.

Lucia, Plaskett, Gorda, and Ragged Point
Ahead of you lies the southern stretch of Big Sur. The road clings to a precipitous coastline, and the only settlements in the next 40 miles (64 kilometers) are Lucia, Plaskett, Gorda, and Ragged Point. From here onward are hills and pastureland. You’ll spy the Piedras Blancas Light Station on a point supposedly named in 1542 by Spanish explorer Juan Rodríguez Cabrillo for its white rocks (stained with bird droppings).

San Simeon
After a spell away from the Pacific, the road reaches the town of San Simeon, a staging area for the five-mile (eight-kilometer) bus ride to Hearst Castle (tel. +1 805 927 2020 or 800 444 4445; www.hearstcastle.org; tours only, call for reservations; fee), begun in 1919 by newspaperman William Randolph Hearst. Perched in the Santa Lucia Range, the 127-acre (51-hectare) estate features the 115-room main house and guesthouses, which mix classical and Mediterranean Revival styles, using European architectural elements, antiques, and artwork collected by Hearst.

Cambria
Continue six miles (ten kilometers) to Cambria (Chamber of Commerce: tel. +1 805 927 3624; www.cambriachamber.org), nestled against hills where Monterey pines thrive in porous soil of decomposed sandstone. On the ocean side of the highway, at Moonstone Beach, look for moonstones and California jade. Drive on four miles (six kilometers) to the colony of Harmony, where you might glimpse artists at work. Ahead on Estero Bay, the small town of Cayucos dates from the coastal schooner era of the 1860s; the pier has good fishing for perch and sometimes rockfish, plus views of pelicans and cormorants.

End in Morro Bay
The end of your route is Morro Bay (Chamber of Commerce: tel. +1 805 772 4467; www.morrobay.org), easily identified by its landmark Morro Rock. A turban-shaped, extinct volcanic cone about 23 million years old, it is 576 feet (176 meters) high and sits on the bay. Peregrine falcons live here. To learn about local wildlife, visit the Morro Bay State Park Museum of Natural History (tel. +1 805 772 2694; www.morrobaymuseum.org; $2). Around Morro Bay you’ll see great blue herons and, from October to March, monarch butterflies in eucalyptus trees.

Road Kit
Enjoy this drive any time of year, but beware of winter mudslides; see www.wunderground.com/US/CA/Big_Sur.html for local weather conditions; for current road conditions, see www.dot.ca.gov/hq/roadinfo. For more information on the Pacific Coast Highway, visit www.byways.org/explore/byways/2301 and www.byways.org/explore/byways/2475. The itinerary below describes a north-to-south route; if you drive from south to north, you’ll have a few extra feet of roadway between your car and the hair-raising drop-offs to the Pacific Ocean.

Santa Barbara Loop.

This sunny, 166-mile romp is centered in Santa Barbara, a coastal resort where bougainvillea flowers climb white walls and an old California mission drowses in the sun. Among the city’s ravishing charms are a Mediterranean climate, gardens, broad beaches, a pretty yacht harbor, and mountains tinged with Impressionist pinks and blues.

Overview
The drive makes two loops. First it jogs westward from Santa Barbara, visiting the flower fields of sleepy Lompoc and the wine and horse country of the newly glamorous Santa Ynez Valley. Then, circling back to Santa Barbara, it takes off eastward, to the mission city of Ventura and the orange groves of the Ojai Valley.

Start in Santa Barbara
Santa Barbara was settled by the Spanish in the late 1700s and lived graciously during California’s later rancho period. In the late 19th century, it became a health resort for wealthy Easterners after a guidebook writer touted it as a “Mecca for the moribund.” When a 1925 earthquake leveled the haphazardly built downtown, civic leaders rebuilt in the Spanish colonial style that now unifies the city.

Queen of the Missions
On a slope overlooking town stands the venerable Mission Santa Barbara (2201 Laguna St.; +1 805 682 4713; http://santabarbaramission.org). At the old mission, founded in 1786, it’s easy to picture gray-robed padres saying Mass for the Indians.

Franciscan friars still reside at this Queen of the Missions, and Sunday services continue in the colorfully painted church. The sandstone Roman facade and adobe walls demonstrate how missionaries integrated European architecture with the rude but handsome materials—mud, stone, and timber—available on the California frontier.

Museums, Gardens, Theaters, Historic Sites, and More
From here, head up Mission Canyon. Kids love the Santa Barbara Museum of Natural History (2559 Puesta del Sol Rd.; +1 805 682 4711), with its 72-foot blue whale skeleton, animal dioramas, insects, “lizard lounge,” and planetarium. The tree-shaded grounds by Mission Creek make a lovely picnic spot. At the nearby Santa Barbara Botanic Garden (1212 Mission Canyon Rd. +1 805 682 4726; www.sbbg.org), five and a half miles of paths wind among a thousand species of California native plants, from paper-dry poppies to fog-loving redwood trees. A dam across the creek was built by padres and Chumash Indians in 1806.

Downtown, take in a movie or concert at the Arlington Theatre (1317 State St.; +1 805 963 4408; www.thearlingtontheatre.com) just to see the interior, designed to evoke the plaza of a Spanish village. At the nearby Santa Barbara Museum of Art (1130 State St.; +1 805 963 4364; www.sbmuseart.org), look for Monet’s 1884 painting of the Italian Riviera in sunny pastels; it could have been painted yesterday in Santa Barbara. This impressive regional museum also has works by Matisse and Chagall, Picasso and Dalí, plus classical antiquities and Asian art.

Wander a few blocks to the Santa Barbara County Courthouse (1100 Anacapa St.; +1 805 962 6464; www.santabarbaracourthouse.org), which looks like a fantasy out of El Cid. Built in 1929, it has thick white walls and red-tile roofs, set off by sunken gardens. Inside are hand-painted ceilings, wrought-iron chandeliers, hallways sheathed in Tunisian tiles, and marvelous historical murals. For a 360-degree view of the city, ride the elevator up the clock tower.

Nearby, El Presidio de Santa Barbara State Historic Park (123 E. Canon Perdido St.; +1 805 965 0093; www.sbthp.org/presidio.htm) preserves a bit of Spain’s original military outpost, including the city’s oldest remaining building (1788), which once provided housing for married soldiers and their families. Reconstruction of the fort includes an adobe chapel, a two-story lookout tower, and soldiers’ and commander’s quarters.

The Santa Barbara Historical Society Museum (136 E. De la Guerra St.; +1 805 966 1601; www.santabarbaramuseum.com), a short stroll away, displays iron treasure chests from Spanish explorers, silver saddles from the rancho period, and a golden altar from old Chinatown. Material from Santa Barbara’s Flying A Studio, which pioneered moviemaking around 1913 and became the then-largest studio in the world, includes an early Bell-and-Howell motion picture camera.

A charming holdover from earlier days is the nearby 1920s shopping arcade called El Paseo (State and De la Guerra Sts.), which calls to mind a street in Spain. Passages wind among shops built around the adobe 1828 Casa de la Guerra (closed to the public), the home of the Spanish military commander and the center of Santa Barbara’s surprisingly refined society of the 1820s.

Now turn toward the city’s waterfront, where Stearns Wharf (foot of State St.) ranks as the oldest wharf operating on the West Coast (1872). Like any self-respecting pier, it has a bait shop and a gypsy palm reader; also, restaurants and shops. The Ty Warner Sea Center (211 Stearns Wharf; +1 805 962 2526; www.sbnature.org/seacenter) displays a model whale and tanks of live marine animals, giving you a glimpse (and sometimes a feel) of what’s underwater in the Santa Barbara Channel.

Santa Barbara Harbor is both a yacht basin and home to a commercial fishing fleet. Inhale the waterfront smells of boiling crabs, diesel fuel, and salt spray; walk to the end of the breakwater for a memorable view of the ocean, mountains, and town. Whale-watching trips (Sea Landing; +1 805 963 3564; www.sealanding.net) seek blue whales and humpbacks June through September, and gray whales December through May.

Just east of the wharf you’ll find East Beach—the most popular of Santa Barbara’s five miles of beaches. Here, volleyball players dive for impossible shots, in-line skaters zip along the bike path, and teens hang out at the snack bar.

Link: National Geographic Traveler: Drives of a Lifetime

The collapse of many storied institutions, like Bear Stearns, Lehman Brothers, AIG, and the auto industry, are explored. The faulty reasoning behind the US Fed and Treasury’s current actions are presented. Most importatly though, root causes are identified, and how events of the last 30 years institutionalized Moral Hazard, which led to the Financial Crisis of 2008, are explained.  There is some financial jargon but for the most part, everything is defined and written in plain english – a major plus that keeps this book flowing at a good pace.

In addition to the amusingly appropriate book cover, there are also pictures and graphs galore to illustrate points…

Click on the picture for a better view.

….as well as cartoons and quotes to keep things in perspective, like these gems:

Ritholtz does a fine job at keeping things concise, while providing enough details for the layman to understand the role of the myriad of contributing players. People (Alan Greenspan seems to get most of the blame), government actions and policies (both Democrat- and Republican-driven), as well as long-held belief systems (i.e. free market and deregulation) are questioned and analyzed for their role in turning us into a Bailout Nation (sheepishly supporting corporate welfare and asset prices).

Jam-packed with facts intertwined in the Bailout Nation story, the book is rounded out with thoughts and interesting ideas from some of Ritholtz’s respected contemporaries, like Doug Kass and Ned Davis, that the current administration would be hard-pressed to ignore.

To truly appreciate the historical time we are in, this book is highly recommended; I don’t get any kick backs for promoting this book. With that said, the book can be had for cheap at Amazon.com.

Links:
BarryRitholtz’ Blog, The Big Picture
Strip’s Classic Designs
John Sherffius

Thomas Friedman giving an outstanding (non-boring) lecture…

Lecture Description

Pulitzer Prize winning New York Times columnist Thomas Friedman speaks on the MIT campus to discuss the 2007 update to his bestseller The World is Flat. He also provides a preview of his latest book, Hot, Flat, and Crowded.

I’m currently reading Hot, Flat, and Crowded… and I highly recommend it!

Links:
Thomas Friedman’s website
Closet Ambitions (Joiji’s website)