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November 18, 2011 in Opinion, Poison, Politics, Uncategorized | Tags: 1%, angry, bankers, blood, democracy, elite, event, Financial, Financiers, future, investment, meltdown, metaphor, opinion, OWS, rich, Wall Street | by Wayne | 8 comments
I have lots of jobs and do lots of things, but my main source of income is working as an administrative drudge for the development office of a prestigious private university. Development is a euphemism for asking people for money—particularly rich people (who are more generous than you might think—as evinced by the sorts of large charitable gifts they give major universities). One of my occasional duties is to help staff special events. In such a capacity (i.e. as a footman/attendant who handed out brochures and nametags), I attended a financial math event about a month ago. Almost everyone in the room was a successful Wall Street financial employee with a comprehensive background in liberal arts as well as a high powered math degree.
The keynote speaker was a young financier who became vastly wealthy in the hedge fund world. He gave a conscientious lecture about his qualms concerning his industry. Basically, according to the speaker, most (or all) hedge fund managers suggest to potential clients that a 15% return per year is the likely upshot of investing in their hedge funds—even though, if such a thing were possible, the money created by hedge funds would quickly surpass all of the riches created by the remainder of all other enterprises (it’s amazing how a few extra points add up). The speaker then explained the basic tenets of the industry (sadly I was too busy pillaging the immense cheese platter to listen attentively) and presented his conclusion: the hedge fund industry does not add 15% per year every year and it is unable to do so. Not even close. Many of its supposed gains are illusory.
The room erupted in angry muttering. The richest and most generous financier (who was not the keynote speaker but many, many times wealthier) leaped up and began to assail the underlying assertions of the speaker. In addition to his wealth, this particular financier also had a…forceful personality. He reputedly owns a giant baronial estate in Connecticut where he emulates the lifestyle of an Edwardian grandee—complete with a downstairs staff that is not the supposed to look him in the eye! He launched into a tirade which included the following metaphor for the financial industry.
Finance, said the wealthiest financier in the room, is a means by which society apportions resources to the sectors most in need of them. It is like the blood. The blood carries oxygen away from the lungs and carries waste products to the kidneys. When a person eats a meal, the blood rushes to the stomach and then subsequently rushes digested nutrients away from the intestines. When a person runs, the blood rushes oxygen to the legs and carries off the bi-products of muscle labor. When a person is about to make love the blood rushes to the… and there the great financier trailed off, while everyone in the room started tittering or furiously gesturing for the microphone (which I, in my tattered jacket, dutifully rushed over to them).
The financial mathematicians talked angrily for a while about how critical their industry is to making civilization run and then the last speaker angrily added that people who do not like banks, brokerages, or financial companies are free not to use them. Then they left (leaving the cheese and cured meats almost untouched by anyone save me). I noticed the keynote speaker’s scruples did not keep him from jumping into a chauffeured midnight blue Maybach limousine (the cheapest model of which has a base price of $344,000.00) which had been idling by the curb.
In this age of anti-Wall Street protests, I have been thinking about the wealthy financier’s metaphor and I feel that it was apt. The financial markets are indeed supposed to deliver capital to medical research, nanotechnology firms, or to the construction industry–just as blood is meant to rush nutrients to the pancreas or to the biceps when needed. Blood however is not supposed to build a 50 room mansion on Long Island and then buy a private jet and a dozen cigarette boats. Society’s resources are being misallocated. Our blood is bad! When I related the whole metaphor to a clever friend he likened the current state of investment banking to leukemia or some sort of esoteric metastasizing blood-borne cancer that takes over the resources of an entire body to build a useless self-sustaining tumor that then destroys the body.
So, what do we do about this cancer?
I don’t like regulations. I feel that America has too many already. People who are rich and powerful can afford to follow asinine bureaucratic rules by means of large teams of experts (or they can subvert or change the rules with help from their politician buddies). The same friend who likened investment banking to a cancer is a securities lawyer! He described just a handful of the astringent requirements already laid upon the industry and they were profoundly onerous. If complex regulation were a solution to Wall Street’s excesses, it already would have kicked in.
In a certain sense it may be that the snide Wall Street guy at my event who closed the evening by telling the protesters not to use banks or corporations was right. Such a thing is already happening. Investors are waking up to the illusory nature of the wares hawked by investment banks and huge financial firms. I was at a development event for the business school of the university earlier this week. The dean privately confided (to a room with 700 people) that his most talented graduates were heading towards smaller private equity firms rather than the overexposed and hated bulge bracket investment banks. In an ecosystem where the wolves are too much stronger than the sheep, they eat all of the sheep and then starve. Newer smaller predators take their place. This is beginning to happen. And so a new cycle begins.
But I’m not sure that just talking about the finance sector is satisfactory after the havoc that sector has caused.
Our representative democracy may have been subverted by wealthy and powerful clicks, but it is still a democracy. Be sure to vote against any incumbents even if you are voting against your interests. And last of all, to you protesters out there: I’m not sure I like your drum circles or the way you dress. Your point is ill-defined and badly articulated…but it is still a good point. I believe you are gradually having an effect on public opinion and public discourse (even if media companies owned by billionaires say otherwise). The blood is bad! Keep on telling everyone! Such is your right in the land of the free. But while you are doing so please be careful and be safe. Keep your heads un-truncheoned. These bad times pass away and society will need you all to run the next generation of companies that private equity is only just starting to finance.
April 20, 2011 in Gothic, Mollusca, Uncategorized | Tags: bioluminescent, cephalopod, depths, ear-fins, Goldman Sachs, Lloyd Blankfein, metaphor, oxygen, photophores, recession, statocysts, vampire squid, Van Praag | by Wayne | 2 comments
As you probably know, the financial firm Goldman Sachs has been famously compared to a mollusk. During the bleakest depths of the great recession (assuming we are finally past such troubles) Matt Taibbi of Rolling Stone wrote, “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Naturally, the unbelievably rich bankers were offended and the aggrieved and bombastic spokesman for the bank Lucas Van Praag, hilariously missed the point of the insult by correctly pointing out that vampire squid are actually very small and harmless to humans. Since then, the vampire squid has become the de facto mascot of Goldman Sachs and now represents the bank in political cartoons the same way Uncle Sam appears as the United States or a dragon represents China. The Goldman Sachs squid is usually portrayed as a giant squid dressed up in gothic garb and sporting a vampire’s voracious mien.
Goldman Sachs indeed deserves such opprobrium for crafting shell-game style derivatives and credit default swaps which helped bring about the recession (while making the bank richer) but what did the actual vampire squid do? The real victim of the quotation was this fascinating oddity of a cephalopod which shares similarities between squids and octopuses and thus merits placement in its own unique taxonomic order, the Vampyromorphida. As Van Praag observed, vampire squid are indeed quite small: they seldom exceed 6 inches (15 cm) with another 6 inches for their tentacles. Although they have eight arms, like octopuses, the creatures additionally possess unique retractile sensory filaments and immense blue-red eyes to help them apprehend their black surroundings. They have two light-sensitive photo-receptors on their head and their bodies are covered with photophores, specialized organs capable of producing light. The photophores at the tips of the arms are larger than the rest and appear as white spots. Vampire squid use these photophores to communicate, to dazzle predators, to hypnotize prey, and to hide themselves by mimicking ambient surface light.
Vampire squid live in the benthic depths of the ocean 2,000-3,000 feet (600-900 meters) below sea level. They “fly” through their habitat by means of ear-like fins which project from their mantle. To deal with the inhospitable conditions of such depths, they have large gills and hemocyanin-rich blue blood. Much like ground-water dwelling catfish mentioned in a previous post, their velvety/slimy skin is oxygen permeable in order to exploit the precious oxygen to the maximum extent. To quote Wikipedia “The animals have weak musculature but maintain agility and buoyancy with little effort thanks to sophisticated statocysts (balancing organs akin to a human’s inner ear) and ammonium-rich gelatinous tissues closely matching the density of the surrounding seawater.”
Unlike most cephalopods, Vampire Squid lack ink sacs (which would be of little use in the nearly lightless depths). To make up for the loss, they possess sacs of brightly bioluminescent mucous which they squirt out at predators to dazzle and confuse them. Such a defense costs the squid dear and is only undertaken as a measure of last resort. Additionally when confronted by predators, the vampire squid can inflate its webbing to appear bigger (as in the photo above). The squid pray on larval fish, copepods, prawns, cnidarians, and other deep sea arthropods. They are eaten by deep sea fish and by deep diving marine mammals like whales, seals, and sea lions. Little is known of their reproductive cycle although young squid pass through various stages of morphologic form possessing first one set of fins, then two sets of fins, and then one again.
One of the metaphors commonly used to describe the entirety of humankind is the image of a parade. We hear it all the time and hardly think about it: the parade of nations, the march of progress, the triumph of man….I think it is a good image to hold in one’s head when thinking about people taken as a collective entity (and despite our pretensions of self-sufficiency, these days we are very much a super organism like a clonal colony or a hive of army ants).
Here’s how I picture it.
Imagine a new frontier (be it a virgin land, outer space, a scientific breakthrough, a manufacturing notion…anything). Out there today are theoreticians and dreamers who are trying to envision a way to use new resources and new ideas. Then suddenly someone has an epiphany based on a half-heard sentence, or a daydream, or a happy column of numbers and the true parade commences. First come the explorers—robotic probes, Ponce de Leon, bathyspheres, runners-of-the-woods, and lonely obsessive men in labcoats. Next are the early adapters: hipsters, the curious, the desperate, and the visionaries. The progress begins to swell as politicians, business leaders, and media stars proceed past. Upon the backs and shoulders of the multitude, the great and the mighty are carried like juggernauts as ticker tape falls down around them and they preen on top of gilded palanquins. Soldiers and legionnaires ride by frowning in their glittering armor. The middle class pass by in sensible cars and comfortable shoes holding the hands of children with happy smiling faces.
Next come rank upon rank of the underemployed and the working poor. They are struggling to get along beneath the yellow checks cashed signs and the shadow of the workhouse. Finally at the back of the parade are the old and the sick. The diseased and the lost are laboring to keep up. The wounded conscript is lying in the muck barely crawling forward as the parade leaves him further and further behind. A senile nonagenarian sits down in a rocking chair and never gets up.
And behind us all there is the detritus of our once great endeavors. The landscape is strewn with rubbish and cast-offs. A great winding pathway is built of garbage from gum wrappers to whale bone corsets to smashed bronze cannons to gnawed mammoth bones. Along the empty road there are old cities waning away to irrelevance and there are cities entirely lost—burned, abandoned, or buried in the sand–going back to ancient Eridu itself. And there is an endless trail of corpses slowly returning to the mud.
Ultimately the trail leads back to the dry highlands of eastern Africa, but where the parade is going is anyone’s guess. Picture it in your head dear reader. Smile and wave while the golden light shines on you and the horns play impossibly beautiful music tinged with sadness…