Why Wall Street isn’t freaking out about Bernie Sanders (because it’s a cartel and they assume the fix is already in)

I haven’t written about last week–which was about the most miserable week which American democracy has endured since 2016 (or maybe since the 1960s…or the 1930s).  Like most good-hearted people, I have been feeling quite depressed about the sordid Senatorial acquittal of our very-obviously-criminal president…and about said criminal president’s ridiculous State of the Union speech…and about the disastrous Iowa caucuses…and about the reprisals and threats against witnesses and career civil servants coming from the White House (and its lapdog GOP)…and about, sigh, about the galloping authoritarian rot which is destroying the nation.  The only way to stop the gangrene in our political body is to cut off the afflicted parts (ahem, any GOP politician other than Mitt Romney) by sweeping the bounders, liars, traitors, thieves, and enablers of the Republican Party out of office in November’s election.

Which brings us to the subject of today’s post: this troubling article which is worth reading in its entirety at The Week.  To quickly summarize, the author believes that Bernie Sanders is unelectable because greedy Wall Street bankers dislike him.  However even if he (Sanders) were somehow elected and Democrats also swept both houses of the legislature, still nothing would change.  The fact that Sanders is doing well in the primaries and yet the market has not crashed proves this point!  It is sort of a peculiar and vacuous argument, yet it makes me furious.  The author asks whether successful business lords and fiance moguls are worried about the possibility of a Sanders presidency upsetting their cozy financial plantation and he answers:

…that’s not how Big Money sees things playing out. “A whopping 80-90 percent of participants at our client conferences thought that President Trump would win re-election in November,” Goldman Sachs noted in a recent report. With the unemployment rate at a half-century low and economic confidence at a 20-year high, it seems inconceivable to many investors that voters wouldn’t return Trump to office. For this crowd, prediction markets are as important, if not more so, than polling. And they show Trump as the favorite over the Democrats, with the exception of Mike Bloomberg.

The author is from the American Enterprise Institute (a right-wing economic think tank) and therefore he doesn’t believe in democracy unless it is a rubber stamp for some elaborate rent-seeking project from his paymasters in high finance.  I was going to excoriate him more about cultural and foreign affairs issues, but he seems indifferent to such things, and mostly concentrates on economic policy. In fact, in many ways he and I have disturbingly similar points of view: we believe that the nation’s largest problem is underinvestment in research and infrastucture.  We are both technophiles. He is even an enthusiatic supporter of space exploration!

But there the similarities end. Pethokoukis believes that medical care should cost as much (and be as ineffectual) as possible.  He believes that monopolies should run rampant and unchecked.  He believes that white collar crime should go unpunished and giant multinational companies should not be regulated by the government. In short he is a pro-business enthusiast of the status quo.

So why does this silly short article make me so angry?

I have some friends in the Wall Street world, and after they have had a few drinks, they confide that a shocking number of their fellow finance titans and hedge fund folks support Donald Trump at the ballot box (and with huge donations).  These are not under-educated people who have been dazzled by the bits of Hollywood tinsel or false piety which Trump wears as a costume (albeit a costume which is even less believable than that awful fake tan ).  They fully understand the President’s incompetence, ignorance, corruption, and racism.  They also can see the damage that this fascist dolt is doing to the nation’s well being and future prospects.  Yet they simply don’t care.  Since they are getting such astronomical kickbacks…er tax cuts, the idea of the degradation or collapse of the United States doesn’t bother them:  they will simply fly off to Zurich in their helicopters and private jets. They are willing to pay to keep Donald Trump in place even though they know he is extremely detrimental to society.

So what the author doesn’t quite say openly is that Wall Street IS Donald Trump. They have the same interests: (1) making as much money as possible through any means; and (2) ensuring that they “win” no matter what the cost to other people or the world.  The market makers don’t really care about the long term, or the medium term, or anything at all other than their bank balance in the immediate present. They don’t even care about the free market–it is “free” only in name and is really a done deal where the winners have already been chosen by collusion, insider deals, and price-fixing.

I simply have no idea about whether Sanders can win either the Democratic nomination or the presidency.  I don’t agree with everything he supports, but he is earnest, hard-working, and concerned about the serious degradation of our nation which has happened during the last few decades.  His sympathy for the working class is not a sham, like Trump’s pretend love for coal miners, factory workers and farmers (although I worry that Trump somehow intuits how to communicate with wage-slaves better than Sanders does). One would think that such things will appeal to anyone not wearing political blinders but our ongoing political crisis is making it difficult to predict or even understand how voters (or anyone) will react to things.  Also, everyone older than I am remembers communists and socialists as despised national enemies.  We will get back to Sanders in future posts.  I don’t think he is the real subject of Pethokoukis’s article.  The real premise is that the market (and market makers) are infallible.

So what truly infuriates me about this article is its smug faith in a free market which doesn’t exist.  Pethokoukis pretends the market is all-knowing (and that it has completely dismissed Sanders before he has even secured the nomination!) but what he is really writing about is a cabal among the management elite who control the system grasp for short-term profit.  Of course such people are fine with Donald Trump (just as the latter is unable to see how extorting foreign aid to win the election is problematic).  It is maddening!  The people who have subalterned free competition,  smugly assure us that everything is very fair, unless someone with different ideas has any chance of winning.  then they threaten to upend the system and destroy everything.  I guess this article strikes me as the real Wall Street response to the the impeachment debacle. Yes Trump is as guilty as possible but that is fine because it benefits us personally.  Just as the Senate’s terrible impeachment acquittal vote left American voters as prey to dark money and foreign interference, Pethokoukis attitude leaves small investors at the mercy of finance titans who can and will punish us if they aren’t guaranteed carte blanche to do exactly as they like.

 

Downtown December

My office has moved to Midtown (across from Grand Central…more about that later), but I think I like the concrete canyons of Downtown better.  The streets down by Wall Street feel like I always imagined New York felt like when I was little (although so do the brownstone streets of Brooklyn).  Downtown also has unique holiday decorations–those jagged star/explosions.  Whenever I see them, I imagine Batman has just punched the lamppost and an audible “Bap” or “Kapow” is forthcoming.  I guess they are supposed to betoken universal peace or some such thing, but it sure looks like Batman went on a rampage.  Indeed, the whole downtown area sort of has the brooding gritty melancholy of Gotham…especially on foggy or wintry days.

Downtown Buildings in the Rain (as seen from my office)

I’m sorry this week got away from me and there were fewer posts than there should have been. I’ll see if I can put up a rare Saturday post tomorrow, but first here is a post about spring rain. Today there was a great monsoon-like storm which swept through New York and though it was gray and cold and filled the streets with water it was strangely beautiful too. I took these pictures from my office (I work on Wall Street, but believe me I am no overpaid master of finance: I think I might have fallen out of the middle class—through the bottom).

Anyway, in the picture at the top you can see the very beautiful and somewhat haunting City Bank-Farmers Trust Building, with its great sad art-deco faces. The building is underappreciated, but I think it is one of New York’s unheralded gems. If I look out the window to the right there is a sliver of the astonishingly beautiful portico of the stock exchange which features Mercury, fickle god of commerce conning the entire world (since my picture is pretty terrible I included a different picture which I stole from the internet immediately below it).

Finally, here is a picture of the National City Bank Building which is currently owned by Cipriani. They regularly have obnoxious events with lots of red carpets and celebrities I don’t know, but I like the sheer number of heavy columns on their building. All of the Wall Street buildings look sort of good in the gray rain. I wish my pictures were better so you could feel the morose charm.

Financial Math and Blood!

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.

"Maybe just a few slices...wait, what was that about how to get rich?"

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.

This car is stupid. Why not buy weird art?

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.

Did Someone Eat Zelda?

Zelda (photo by Lorenzo Ciniglio for Downtown Express)

Zelda is a wild turkey who has lived in Battery Park for six years.  She is street savvy and occasionally goes on walking tours of Tribeca and the village—or at least she used to.  I can’t find any sightings of her after Thanksgiving 2009.  Articles about her tend to allude to her deliciousness and feature aggressive quotes from hungry plebeians.  Maybe someone or something killed her and ate her!

At any rate, her long residence in Battery Park highlights the durability and intelligence of turkeys.  Unlike the hapless rabbits, turkeys have multiple bastions in Manhattan including Riverside Park and Inwood Hill Park.  They are clever flying animals who are extremely gifted at avoiding predators by means of guile.  You saw that I mentioned flying?  A wild turkey can fly at speeds of up to 55 miles per hour.  It may be that Zelda is lying low or that (like all good hearted beings) she came to her senses and fled Wall Street as quickly as possible.