“Damn, I love this Place.” Stephen Carston stared at the distant horizon where the water meets the cloudless blue sky knowing he might never be able to enjoy this again.
“If only things hadn’t…”
Life was great for Stephen Carston. Hell it was more than great–it was gluttonous. In my first novel, Final Audit, Carston was the fictional CFO for GlobalNet, a multi-national telecommunications corporation where there seemed to be no limit to the money executives at GlobalNet could make.
Their stock was skyrocketing, reaching new highs everyday and with each new high Stephen’s net worth increased by millions. He was building a new three-story mansion of unequaled beauty in Boca Raton and was looking forward to the recognition and acclaim he would receive after its completion.
But that was a fictional financial world. Or was it?
Like my fictional character, vulgar extravagance was the norm for avaricious executives at Enron, WorldCom, and many other giant corporations. There was nothing these guys didn’t want and very little they couldn’t have–until it all imploded.
Sometimes ‘real life’ leads to compelling fiction. Greed and corruption were powerful forces behind, Final Audit.
Enron, after reporting capital value at $42 billion in its 2000 Annual Report, filed bankruptcy a year later. It was the largest bankruptcy in history. Greedy executives had hidden failed projects and failed divisions from investors while selling-off millions of dollars of their own corporate stock before the company crashed.
Soon, others followed. WorldCom unraveled and filed for bankruptcy protection. Adelphia executives were using corporate money as their personal piggy bank, and Tyco’s CEO was throwing elaborate million dollar birthday parties with corporate funds.
You couldn’t make this stuff up!
The environment was perfect for murder. Bring in two Houston detectives, Dave Duncan, and his new partner, Stephanie Fox, throw in a homicide in Houston, mix in equal parts of greed and corruption and you’ve got the beginning of an edgy and ‘mystriguing‘ mystery. Though entertaining, the compelling message in Final Audit is that greed, corruption and immoral and unethical behavior should not go unpunished.
But the lessons of Final Audit,–of Enron and WorldCom–have already been lost as evidenced by the continuing predatory behavior of banks, investment firms, healthcare and pharmaceutical companies, and a multitude of others.
I wrote about unchecked greed, about arrogance, about predatory capitalism, how it brought down the system and destroyed people’s lives. I wrote about the growing anger and the desire of some to exact revenge. In the second book, Executive Resort, a sequel, new and equally complicit executives will meet their demise and Duncan and Fox will be drawn in to solve the new mystery.
Final Audit, the exciting financial mystery, is available at the mystriguepress web site.
The current milieu on Wall Street threatens the global economy again. This time, after the taxpayer bailouts, the anger is even greater than during the failures of Enron and WorldCom. It remains to be seen how that anger will manifest itself. Will people go to prison? Will someone seek revenge?
That’s the beauty of ‘real life‘ drama. It leads to chapter one in a new ‘mystriguing‘ murder mystery!
Additional articles about the ongoing financial mess and its effect on Main Street are posted on The Cutting Edge Blog at It’s Worth an Opinion.
Heath has written enough essays like this to make me think about the next questions, even though he avoids it in this essay. Is the GOP intentionally fostering this helplessness? To what end? For a party that pushes the entrepreneurial spirit what is the benefit of helpless masses? Are sheep easier to rule over if they are complacent?
Now that it’s been asked, why not tackle it head-on?
The fundamental differences between the left and the right — between conservatives and progressives — comes down to how we answer three simple questions: "Can we?," "Should we?" and "What do we mean, ‘We’?"
Apply them to any challenge we face as a country — Can we make health care available to all? Can we reign in Wall Street? Can we build an economy that works for the other 99% of us? Can we keep teachers, police officers, and fire fighters working in our communities? Can we reduce our contribution to climate change? — and how we answer them or have answered them reveals where we’re headed.
Each side’s answer to the first question have most recently been emblazoned on Barack Obama’s campaign posters and shouted on the floor of Congress by House Minority Leader John Boehner: "Yes, we can," and "Hell no, you can’t."
It may be trite to begin an argument citing definitions, but in this case it’s appropriate. The dictionary on my Macbook. which seems as good as any, defines "conservative" as:
a person who is averse to change and holds to traditional values and attitudes, typically in relation to politics.
And it defines "progressive" as:
a person advocating or implementing social reform or new, liberal ideas.
The difference between the two was illustrated for me by two blog posts I read weeks apart. The first came to my attention through Athenae, via Digby. Aptly titled "No, We Can’t," it was written by the John Derbyshire of the National Review Online. I was struck by his oddly celebratory, and almost gleeful tone concerning the oil leak in the Gulf, and the possibility it was unstoppable.
As the writer says: "The very least damaging outcome as bad as it is, is that we are stuck with a wide open gusher blowing out 150,000 barrels a day of raw oil or more."
In slightly different words: The best we can hope for is that the thing just goes on gushing through the bore hole indefinitely. (Or until we can drill enough relief wells to reduce the pressure. Don’t hold your breath.)
I’m as horrified as anyone by this — if the guy has got it right, and I’ve understood him correctly. At the same time, as a constitutional pessimist, I’ll own to a certain grim satisfaction. The infantile optimism of post-JFK America may have met its match down there in the Gulf. Nature is not mocked.
My reaction was the same as Athenae’s. (Though not nearly as colorful.) I wondered, as she did, what Derbyshire meant by "infantile optimism." So I searched NRO, and found Derbyshire’s definition.
Optimism helped build this nation. Yes, we can clear the forest, tame the prairies, fight off the Indians. Yes, we can build heavier-than-air flying machines, land on the Moon, defeat fascism and communism. Yes, we can prosper without the horror and indignity of slavery. I am sure there were pessimists who said those things could not be done. They were wrong; and thoughtful persons, including thoughtful pessimists, knew at the time that they were wrong.
Today, however, American optimism has got completely out of hand. A corrective is needed. The corrective must come from conservatives, the people who understand that "human nature has no history." We must revive the fine tradition of conservative pessimism. In this age, optimism is for children and fools. And liberals.
Some children will be left behind. You cannot "remake the Middle East" or "defeat evil." The poor will always be with us. Black and white will never mingle together in unselfconscious harmony. Corporations will not research and explore without hope of profit. Russia will not become Sweden. Forty million immigrants speaking a single language will not assimilate.
Conservatives used to know all this. Some – the infallibly sapient Roger Kimball, for example – still do. The smiley-faces are leading us to perdition. They must be shouted down.
I filed Derbyshire’s post away, to maybe write about later. Later came when I read Paul Rosenberg’s post about why it’s so complicated to be a progressive. Rosenberg offered definitions of progressive and conservative that shed more light Derbyshire’s post.
I think that the primary difference between conservatives and progressives is that:
Conservatives believe in tribally-shared narrative myths that comfort them in perpetuating a world of inequality, while
Progressives believe in a universalist, critical-empirical approach to creating a world that works for everyone.
This is not an all-encompassing explanation. There are other important factors as well as a host of secondary ones. But I believe that this captures a "good enough" central core of the difference between the two worldviews. (emphasis added) By its very nature, conservatism’s tribalism, focus on narratives, attraction to comfort and acceptance of hierarchy provide a strong impetus towards a relative simplicity of political self-concept.
The exact opposite is true of progressivism. The universalist tendency means everyone is invited in, and tribalism is always distrusted to some degree or other — even the idea of establishing a progressive identity. Having a critical-empirical approach means that what a given progressive individual or group believes is highly mutable, depending on the latest research — or at least, the latest information available to them, as it fits into their pre-existing understanding of the world.
Rosenberg underscores a nuance that Derbyshire either misses or ignores. Derbyshire paints progressives as naive idealists pursuing a perfect world, so starry-eyed that they can’t see the the "real world," that clear-eyed conservatives — in Derbyshire’s view — obviously do. But, as Rosenberg spells out, it’s not a question of a perfect world vs.the "real world," but whether "better" is possible or the status quo is "good enough."
For progressives, the possibility of a better world makes inevitable a moral responsibility to work towards achieving it. It means looking at situations as neither black nor white, but to discern what can be changed and ought to be changed through advocacy, social organizing, and (yes) political action.
It’s that process of questioning the status quo that has catalyzed progressive movements — from the labor movement, to the women’s movement, the abolitionist movement, the civil rights movement, the LGBT movement, etc. — that strove for inclusion of those who were excluded from the status quo, and led to the growth of the (now endangered) American middle class, the presidency of Barack Obama, and the gavel in Nancy Pelosi’s hand.
Justice vs. "Just Us"
Think about where we are now and how far we come since the birth of this country, when its promises were reserved for a narrow portion of its population. Yet, its principles provided the basis for ever progressive movement that had as its goal the extension of those promises to the full spectrum of the population.
I’ll even go so far as to say that only progressive movements could have led to such changes, because of how we answer that first question. A conservatism primarily concerned with preserving the status quo could never and would never have produced them. In fact, the progressive movements responsible for these changes were opposed by conservative movements that were yelling “Stop!” as every one of those movements marched passed them towards greater freedom, enfranchisement, and equality.
They were yelling "Stop!" as the country moved closer to determining whether millions of American’s having no access to quality, affordable health care was an injustice or merely unfortunate. For progressives health care reform is comparable to other movements for social change, like the civil rights movement, the women’s movement, or the LGBT movement. Each sought, and still seeks, to extend the basic rights of citizens and human beings to an ever wider spectrum of people than were afforded such by the status quo.
As Al Vivian, CEO of Basic Diversity wrote a year ago, "Privilege can be a dangerous thing. It releases you from the task of thinking about things that others must." Though many progressives — past and present — are privileged by the status quo, progressive movements seek change that meant a lost of privilege or a change in status for the individuals engaged in these movements. The choice comes down one of justice over the preservation of personal privilege; or rather, justice over "Just us."
To do less is to let injustice stand. Letting injustice stand unchallenged is not an option. That’s a major difference between the progressivism Rosenberg describes, and what I call "complacent conservatism." Last year, a Pew Research survey found that conservatives were "happier" than liberals, but that "happiness" bore a close resemblance to complacency.
The authors argue that a conservative belief acts as a psychological buffer in a world of increasing inequality. The idea is that conservatives tend to rationalize inequality as the result of a fair process in a meritocracy, whereas liberals tend to see inequality as inherently unjust.
Being happy is a cinch, if you can rationalize inequities as right and just. Then, no matter how bad things are for someone else, you can be assured that things are as they ought to be.
On the other hand, someone more progressive, and lacking rationalizations for injustice and inequality might question why they exist and why they persist — and keep questioning, even as the answers become more challenging — rather than simply accepting that they exist and that they persist because they ought to.
Derbyshire’s brand of conservatism, for example, says "the poor shall always be with us," in order to justify not only not bothering to anything about poverty (or unemployment, or hunger, etc.), but to questioning the roots of inequality. (Though he easily concedes that at least one progressive movement — the abolitionist movement — got something right.)
It’s a conservatism that is willing to let some injustices stand. Some people will always be poor, so why try save them all? Some people will always be racist and there will always be some degree of discrimination, so why keep strengthening or expanding civil rights legislation? Derbyshire’s conservatism says "Stop!" or "No further!" to movements addressing injustices that it sees as inevitable and un-fixable. Better to let them stand than endanger the status quo with futile efforts to correct them. Utopia is a pipe-dream that cannot attained, and perhaps should not be attempted.
Bending the Arc of Justice.
At least Derbyshire’s "Stop!" is less bewildering than moderate refrain of "Wait!"
Bewildering, because shallow understanding of the “why” of health care reform (unjust vs. unfortunate), inevitably has its basis in what [Martin Luther] King calls a “misconception of time,” and its role in social change. In fact, he might be speaking directly to present-day moderates whose exhortation to “Wait” is based in a belief in the inevitability of justice.
…Human progress never rolls in on wheels of inevitability; it comes through the tireless efforts of men willing to be co workers with God, and without this hard work, time itself becomes an ally of the forces of social stagnation. We must use time creatively, in the knowledge that the time is always ripe to do right. Now is the time to make real the promise of democracy and transform our pending national elegy into a creative psalm of brotherhood. Now is the time to lift our national policy from the quicksand of racial injustice to the solid rock of human dignity.
In other words, the man who said “Let us realize the arc of the moral universe is long but it bends toward justice,” would probably add that it bends not of its own accord, or because it can do no other — but because of countless hands reaching up to bend it towards justice sooner rather than later.
And, ultimately, that’s the moral question at the whole of the health care reform debate. Do we wait for the long moral arc of the universe to bend inevitably towards justice, or do we work to bend it ourselves?
Either a better world is possible or it isn’t. For progressives, if it’s possible, then working to achieve it is a matter of conscience. To do otherwise is to let injustice stand, and require people to continue to suffer injustice indefinitely and without remedy, to preserve privileges that rely on the perpetuation of injustice and the suffering accompanies it.
Yes, We Can.
Where we encounter injustice or inequity in the status quo, progressives ask "Can we bend ‘the moral arc of the universe’ further towards justice?" Conservatives, faced with the unjust or merely unfortunate realities of the status quo may ask themselves a similar question.
For progressives, the answer is always the same: Yes, we can.
That leads to the second question, which sheds more light on Derbyshire’s "No, you can’t," changing it from an assertion to an admonition. For even Derbyshire is aware that, yes, much can be done about the problems even he is aware of and catalogs in his post.
Having answered the question, "Can we?", the next question is "Should we?" The obvious answer for progressives is "Yes, we should." For conservatives, even if we can, the clear answer is "No, we shouldn’t."
Four Years of Non-Disclosure. Thousands of Incidents.
FINRA found that from April 2006 to June 2010, Morgan Stanley issued equity research reports that failed to disclose accurate information about the relationships Morgan Stanley, or its analysts, had with companies covered in its research reports. Overall, these inaccuracies resulted in approximately
6,836 deficient disclosures
in about 6,632 equity research reports and
84 public appearances by research analysts.
Among the deficient disclosures were:
Securities holdings of an analyst, or a member of the analyst’s household, in a subject company;
Morgan Stanley’s receipt of investment banking and non-investment banking revenue from subject companies;
Morgan Stanley’s role as a manager, or co-manager, of a public offering of securities for subject companies;
Morgan Stanley’s role as a market maker for certain subject companies’ securities; and
Price charts for securities covered in equity research reports and the valuation method used to support published price targets.
Moreover, Morgan Stanley did not disclose in approximately 127,600 monthly account statements sent to customers from August 2007 to February 2008 that it had available independent, third-party research. The requirement to provide customers with this notification was part of the Securities and Exchange Commission’s final agreement with Morgan Stanley as part of the 2003 Research Analyst Settlement and was incorporated into a separate agreement with FINRA.
FINRA Gives Credit for Self-Review and Self-Reporting — gee, that’s nice
In determining the appropriate sanctions in this matter, FINRA considered Morgan Stanley’s self-review and self-reporting of some of its disclosure violations and remedial steps taken by the firm, as well as a prior FINRA settlement that found the firm violated FINRA’s research analyst disclosure rules. In settling this matter, Morgan Stanley neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
Bill Singer’s Comment:
For those of you who still desperately cling to the belief that allowing Wall Street to self regulate itself works, perhaps this case may yet change your mind.
Consider that for a four-year period from April 2006 to June 2010, Morgan Stanley issued over 6,000 research reports with deficiences — yet, amazingly, no regulator seemed to have had a clue about these violations. If I were being a truly obnoxious, sarcastic bastard, I might suggest that the regulators failed to timely detect Morgan Stanley’s violations because Wall Street’s cops were all hot on the trail of both Madoff and Stanford. But I”m not that crude a pundit. Course not. I mean, you know, it’s not like Bernie and Sir Alan were up to their shenanigans for over a decade, right under the formidable noses of so many regulators.
In April 2003, the U.S. Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), the National Association of State Securities Administrators (NASAA), and the New York State Attorney General announced the final terms of the Global Settlement of Conflicts of Interest Between Research and Investment Banking (Global Settlement), which resulted from joint regulatory investigations into conflicts of interest between investment banking and securities research at brokerage firms.
As a result of that high profile and much ballyhooed investigation, ten of the nation’s top investment firms agreed to pay $1.4 billion:
$387.5 million of it in restitution to be returned to harmed investors through a process overseen by the SEC, and
$487.5 million in penalties.
Funds were also earmarked for investor education and to help pay for independent research for investors.
And let us not forget that the regulators required that the settling firms also agreed to reforms in the way they do business to help prevent these conflicts in the future. Not only were the financial penalties supposed to send the proverbial message and get the big boys’ attention, but they were also made to promise, no fingers crossed, cross my heart and hope to die, that they would change their wayward ways.
FINRA is more than happy to toot its own horn when trumpeting its own settlements with the firms involved in the 2003 Global Settlement. Morgan Stanley’s settlement with FINRA’s predecessor, the NASD, resulted in the imposition of a Censure, $25 million fine, $25 million disgorgement, and $75 million earmarked for the “procurement of Independent Research.” Add it up — that’s $125 million dollars. If nothing else, since 2003, someone at FINRA should have been paying attention to Morgan Stanley’s compliance with the terms of the settlement. Hell, given all the bucks paid by the brokerage firm, at the very least FINRA could have hired one full time employee to do nothing but monitor Morgan Stanley!
Then there is this odd tidbit from the August FINRA settlement. From August 2007 through February 2008, a period of six months, Morgan Stanley did not disclose in approximately 127,600 monthly account statements sent to customers that it had available independent, third-party research. That specific requirement to provide customers with this notification was part of the 2003 Research Analyst Settlement and was incorporated into a separate agreement with FINRA. Think about that. For six months statements went out that failed to disclose the availability of independent, third-party research — a disclosure that was among the alleged keystone achievements of the 2003 settlement.
Maybe I’m just dense but did anyone at the SEC or FINRA even bother to monitor Morgan Stanley’s monthly statements for this mandated disclosure — you know, like for even one month during the six in question? After all, hundreds of millions of dollars later, many promises later, years later, Morgan Stanley agreed to print a disclosure on its statements that indicated the availability of the independent research. Apparently, that disclosure didn’t make it on to the statements. Sort of an easy omission to spot, no? And the excuse from Wall Street’s cops is what? They were too busy on other more important things?
We didn’t see it. Is that the sorry state to which Wall Street’s regulators have fallen? Of course, if you’re not looking, you can’t see anything.
Moreover, given that FINRA is crediting “Morgan Stanley’s self-review and self reporting of some of its disclosure violations. . .” you have to wonder whether any regulator would have uncovered this long-term, massive disclosure failure by Morgan Stanley but for the firm’s own efforts to come clean.
I guess that NASD/FINRA settlement didn’t really get it done. Not for all the publicized million dollar fines and the self-aggrandizing regulatory publicity. After all, it was only three years after the 2003 Global Settlement that Morgan Stanley returned to its former errant ways. And for good measure, it appears that Morgan Stanley kept it up for more than four years. So much for self-regulation sending a meaningful message to its larger member firms.
Of course, if this matter had involved, say, a smaller FINRA member firm, I’m sure that some heads would have rolled and folks would have been suspended, if not barred. But, things are as they are. The high and mighty on Wall Street get to write out fat checks and say “sorry.” Line forms to the rear, get behind Goldman Sachs, then Morgan Stanley. No cutting in.
In a step that will be one of the markers on the road to economic and financial catastrophe, the Federal Open Market Committee (otherwise known as the FOMC) of the Federal Reserve, made a bombshell policy decision on August 10, 2010, one fraught with dangerous long-term consequences for the American and global economy.
In a policy being dubbed QE2, the Federal Reserve’s FOMC conceded that the so-called U.S. economic recovery has “slowed,” and required more stimulus from the Fed. However, with federal funds interest rates now effectively at zero, the only aspect of monetary policy left is money printing. Thus, the Federal Reserve, in effect, will use its printing press to buy long-term U.S. government debt.
Of course, that is not how the FOMC is positioning this major escalation in quantitative easing by the Federal Reserve. In the dry, obtuse language that the obscurantists of the Federal Reserve love to engage in, the committee’s official statement said:
“To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.”
In its first bout of heavy quantitative easing, in the wake of the implosion of the major Wall Street investment banks in the fall of 2008, Ben Bernanke, utilizing his printing press, purchased $1.25 trillion in mortgage-backed securities, and an additional $200 billion in debts owed by so-called government-sponsored enterprises, primarily Freddie Mac and Fannie Mae.
This massive explosion in the Fed’s balance sheet has thus far failed to stimulate economic activity and retard a persistent deflationary recession. All that Bernanke has accomplished has been to create a new asset bubble, this time on Wall Street, with equities exploding in price far beyond their post-crisis lows.
Beyond the Dow Jones index, however, the impact of Bernanke’s balance sheet expansion has been impotent in the face of economic realities, particularly a collapsing labor market and the contraction in consumer demand. The erosion in the M3 money supply, a statistic the Federal Reserve no longer publicly discloses, attests to the failure of its policies.
Now that the Federal Reserve admits, though in its typically obscure linguistic constructs, that a double-dip recession is becoming increasingly likely, Bernanke is going to enter a buying binge of long-term U.S. Treasuries. The hope is that this will stabilize financial markets, and somehow force liquidity into the economy. That, at least is the hope. Given Ben Bernanke’s track record, I would not bank on hope in the infallible judgement of the Federal Reserve and its FOMC.
What is likely to result from the QE2 phase of the Federal Reserve’s disastrous policymaking? In time, sovereign wealth funds will recognize Bernanke’s maneuver for what it is: monetization of the U.S. national debt. When that happens, Treasury auctions will begin to fail, and yields will advance.
This will all put added pressure on the Fed to print even more dollars, and monetize an increasing proportion of the federal government’s debt. This will unquestionably inject liquidity into the U.S. economy. But this Federal Reserve monetary injection will be as beneficial as money printing was in Weimar Germany in the early 1920s, or Zimbabwe more recently.
In deciding on a process that will lead to an ever-growing proportion of the U.S. national debt and yearly budget deficits being monetized by its printing press, the Federal Reserve, under the leadership of its chairman, Ben Bernanke, has taken a fateful step towards irredeemable economic and financial ruin, ultimately convulsing America with a savage, hyperinflationary depression. And, as history teaches us, severe economic depressions bring along other unanticipated consequences, often leading to political and social turmoil and even global war.
President Bush- not President Obama- enacted TARP and signed the Bank bailout into law towards the end of his presidency. And yet a large percentage of Americans believe that Obama is responsible, according to the latest Pew survey:
Only a third of Americans (34%) correctly say the Troubled Asset Relief Program (TARP) was enacted by the Bush administration. Nearly half (47%) incorrectly believe TARP was passed under President Obama. Another 19% admit they do not know which president signed the bank bailout into law. Notably, there is no partisan divide on the question. Just 36% of Republicans, 35% of independents and 34% of Democrats know that the government bailout of banks and financial institutions was signed into law by former President Bush. And Democrats (46%) are just as likely as Republicans (50%) to say TARP was passed under Obama.
How are so many people misinformed about the TARP “bailout”? It’s not just Fox-watching Republicans (who are often grossly misinformed by the channel) but Democrats as well. Doesn’t anybody check their facts anymore? Or do people just choose the facts that support the narrative they want to believe? Bush bailed out the banks and fueled the greatest Recession in generations. Why blame it all on the guy trying to clean up his mess?
WASHINGTON (Reuters) – The majority of Americans do not favor making affordable high-speed Internet access a government priority, according to a study released by the Pew Internet & American Life Project on Wednesday.