Risk Rap

Rapping About a World at Risk

Leaking Visions of a New World Order

Every once a while an event happens that shifts the prevailing scheme of things. Julian Assange’s dump and release of US State Department cables (CableGate) for global distribution on WikiLeaks is such an event. It radically alters existing convention and the public’s general perception of normalcy, acceptability and protocol.  It brings into question the motives and interests of nations and their leaders. It squarely plops an 800 pound gorilla on the sofa in everyone’s living room and provokes questions that naggingly insist answers.   Asking leaders about duplicity, conflicts of interest, distortions, fabrications, fibs and outright lies all done in the national interest.  It is how a new Weltanschauung is cast and forged to conform to the needs a new world order.  The sun has set on the American Century.  Blessedly, America’s days as a self righteous post Cold War marauding superpower are coming to a close.  The WikiLeaks disclosures gives us some insights into the thinking and banter world leaders engage as they move the Chess pieces across the board on the great global game  of new world order.

There are moral considerations and ethical arguments to be made on each side of Mr. Assange’s incendiary action.  CableGate raises complex multidimensional issues of national security, informed citizenry, the protection of information, its public disclosure and citizens right to know.  The natural tension between  the simultaneous need for confidentiality and transparency is a reality of our complex and interconnected world.  The management of these issues have escalated to become a preeminent dilemma of our time.  This raises significant  challenges to democratic societies and the governance structures of both public and private institutions.  It threatens institutional sustainability and undermines institutional capability to function in highly interdependent stakeholder ecosystems.  The risk of seeking pathways to safely navigate the virtual minefields of a digitized global world is great and continues to grow.

The most impassioned issue raised by CableGate is the ethical violation of stolen property.  The cables were not Mr. Assange’s property and what gives him the right to publish and violate diplomats right to confidentiality and privacy? His actions could endanger diplomatic relationships, compromise government initiatives or derail delicate negotiations.  Do governments have a right to privacy?  If so, what information needs to be classified as secret and confidential?  If all documents are secret then the designation is meaningless and government nothing more then a ruthless leviathan lording over a clueless citizenry.

Another critical question CableGate raises is who is served by the publication of these cables? Certainly American citizens in whose interest the State Department purportedly acts benefits from the added transparency.  US citizens must admit there is a certain level of comfort in being able to track the satchel of an Afghanistan Vice President stuffed $52 million of taxpayers money through the U.A.E. Customs.

Detractors of CableGate assert that the leaks are a danger to America and its citizens.  If so why is the public aggrieved and who exactly is the “aggrieved public”?  Soldiers and servicemen fighting in Afghanistan?  Does State Department Cables provide tactical and strategic information on troop deployments?  Highly doubtful.  More likely it is the special interests enriching themselves at the public troughs by cutting deals to shamelessly engorge themselves as insidious war profiteers.  Better to ask why our country has placed our young servicemen and woman at risk in wars that makes little sense and accomplishes nothing.

Another set of critical questions CableGate raises are “Do citizens have a right to truth?  Is access to information meaningful?  Does the information help citizens of democratic societies understand the actions and motivations of their government?  Why do diplomats pursue certain course of action and who is profiting from the course of action pursued?  These are critical tenants citizens require to make informed decisions in a democratic society and CableGate certainly supports the notion of information empowerment for citizens.

Arguing the contrary one must ask “is it better to be mislead and be lied too in the name of propriety and protocol then to be victimized by the truth?  I’ll take conviction in a court of truth and pray for a life sentence every time.

If you believe that the public can’t handle the truth or needs protection from it; imagine yourself living near a nuclear power plant and it was leaking radiation into your drinking water.  Would you like to know about it?  What if disclosure led to wide spread panic?  I believe that truth and transparency always serves to discover and determine the best course of action to pursue.

CableGate has also shed damaging light on the power exercised by private corporations and the commercial control and open access and free availability of information.  Amazon’s cloud computing service had no silver lining for WikiLeaks.  After the WikiLeak dump it shut down access to the cables due to the unacceptable risk posed by denial of service attacks mounted by computer hackers.   This was followed by PayPal’s closure of WikiLeaks donation solicitation account.  Was PayPal’s motive purely patriotic?  Where they just pissed at WikiLeaks or were they at risk of  aiding and abetting a subversive organization that risked prosecution under certain provisions of  THE USA PATRIOT ACT?

Academic freedom also seems to have taken a blow due to CableGate.  This weekend, Columbia University warned its students not to download or distribute WikiLeak cables because it may affect future employment opportunities with the State Department. Government employees were also warned not to read or access the cables because they had no security clearance to do so.  If they were caught accessing the leaked cables it could cost them their jobs.  Even though the cables are published in great detail everyday by newspapers throughout the world, government employees must be careful not to notice for risk of losing their employment.  This is truly a Kafkaesque dilemma for some, a divine comedy for others and a growing political drama for everyone.

I’m still not sure that Cablegate is what it purports to be.  As the old saying goes and the cables affirm nothing is ever as it seems.  I find it  most improbable that a Private First Class sitting at a PC in Baghdad could download the Iraq War Logs and throw a great superpower into a first class crisis of the new world order.  I liken the leaks  to the past practice  of “special unnamed high placed sources” leaking inside information to the liberal mainstream media outlets.  Its done to float trial balloons about new government directions.  They do it to test the waters of public sentiment to new ideas, or change in policy course or  potentially damaging information to see how the public reacts.  Not one to be of a conspiratorial mindset, I perceive CableGate in this light.  As expected the public reaction thus far  has elevated our collective sense of outrage to a heightened level of ambivalence.

In many respects Iraq War Logs supports the construction of a new narrative about an exit strategy from Iraq and Afghanistan.  The revelations of wastefulness, corruption and back room deal making with a full caste of sordid characters reinforces  the public perception about the uselessness of these wasteful and expensive misadventures.  The cables may prove to be the documentary evidence  of  America’s Waterloo and CableGate  may be seen by future generations as the  historical high watermark of an expired global empire.

As the Iraq and Afghanistan War Logs helped to prepare the public psyche for an exit strategy in Afghanistan and Iraq; CableGate helps construct a narrative surrounding the need to “cut off the head of the snake in Iran”.  These cables implicate Arab States in a desire to undermine the apostate Persians and abrogates Israeli culpability as the driving force behind an attack on Iran.

Iranian President Mahmoud Ahmadinejad called the cables psychological warfare.  I don’t doubt for a second that atomic weapons in the hands of Iran is a dangerous development that needs to be mitigated.  That does not mean that we should employ bombers to destroy Iranian nuclear processing facilities.  This would only create an environmental disaster and political crisis  that further destabilizes the region.  It would secure the enmity of new generations of Muslims and no doubt stoke the escalation of the Crusade against Islam.

In the Far East,China’s growth as a world super power and ascending rival to US dominance makes for compelling reading.  Here its no surprise that cables assess a strengthening China, its growing nationalism and military readiness.  Reading these cables against the backdrop of rising tensions on the Korean peninsula, China’s complicity in helping North Korea ship nuclear materials to Iran and the changing sentiment in the US concerning the largest note holder of government bonds may prove to  carry grave consequences for harmonious US/China relations.   The cable revealing China’s ambivalence toward its North Korean surrogate state is laid bare as long as it can secure preferred trade agreements with a unified Korea.

The revelations offered by Pakistan’s leaders about support for the Taliban and a growing concern about the safety of their nuclear arsenals raised the possibility of a US military move to quarantine or neutralize Pakistani weapon systems.  Though so far India seems to come off unscathed by the cables it must be heartening for India’s leaders to know that its budding friendship with the US may encourage a move to disarm the nuclear capability of its northern antagonist and the worlds sole Islamic atomic state.

These WikiLeaks offer up a brand new narrative for an emerging new world order.  The damaging realization of the spillage of confidential proprietary discussions and dialogs between world governments and the mishandling of those documents diminishes the stature of US federalism.  The undermining of federalism and its suitability as a governance structure for the new millennium foreshadows the growing antagonism of global corporate entities like Google and the nationalistic government of the People’s Republic of China augers an era of  conflict between statism and corporatism.

CableGate is a deliberate attempt to have institutions open up with greater transparency and construct a democratic narrative that force governments to change.  Mr. Assange’s  avowed goal is to, “allow governments and institutions to become more transparent or force them to become more opaque”  Depending on the what side of the fence your sitting on, openness and transparency benefits the public interest.  The struggle for democracy requires the open access and the free flow of information.

In the digital age denial of free, open and equal access to information is tantamount to fascism.  Withheld, it will encourage people to rise up demanding the means to pursue conscious enlightenment.  This may spur political activism that demands institutional accountability,  and the practice of democratic governance based on constitutional principles.  Failing that once free citizens will be forced to accept the meager lies and obfuscations of leaders and power elites whose self interest is the sole interest of government.

So as Secretary of State Hillary Clinton tries to plug the leaks in a failing dike system, we cannot content ourselves to live with our heads buried in the sand,  filling our minds with reality TV reruns of Jack Ass Three and Bristol Palin bustin a move on Dance Fever.  I’ve heard it said that the best way to influence the future is to invent it.  Mr. Assange has given us a world of insights and a basic tool set to start constructing a foundation for a new world order.

You Tube Music Video: REM, End of the World As We Know It

Risk: diplomacy, international relations, governance

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December 6, 2010 Posted by | Cablegate, corporate governance, corruption, culture, democracy, ethics, government, institutional, Iraq War Logs, legal, nuclear, peace, politics, psychology, reputational risk, terrorism, values, war, WikiLeaks | , , , , , , , , , , , , , , , , , , , | Leave a comment

The Fall of Prince Charles

Charlie Rangel you stayed one term too long.  Twenty terms in office has taken its toll on you.  You have courageously fought for the marginalized in our society and have brilliantly served your constituency and country.  But like Brett Favre you didn’t know when to call it quits.  You could have gone out on top like a champion of the people you so ably represented during your four decades in public office.  Now your left to tramp through the morass of pedestrian politics to defend your reputation and salvage a bit of your integrity.

I didn’t think it was wise decision to run for reelection during the last midterms.  I thought it was motivated by a selfish ego.  Your alleged indiscretions and misdemeanors have made you the poster child for all overreaching politicians and their supercharged sense of entitlement.  As Chairman of the Ways and Means Committee your oversight to pay taxes on Dominican rental properties, improper use of mail privileges and your expansive portfolio of rent controlled apartments showed you to be a master exploiter of the numerous ways politician lose touch with the mission of service and the means by which they shamelessly serve themselves by using the power of their office.

Mr. Rangel you did your party and your president a disservice by running for reelection.  This country needs new fresh ideas, youthful energy and representatives unsullied by the  graft and excess privilege taking endemic to political careerists. Yesterday, a panel of your peers on the House Ethics Committee convicted you of numerous policy offenses and conduct unbecoming a congressmen.  They did you and the country a huge favor.  The swift dispatch of justice helps our country avoid the political theater of a  national trauma that a Republican controlled and Tea Party inspired Committee hearing would orchestrate for the American people.

During your last campaign I recall some Eyewitness News video of you strolling down 125th Street followed by a courtier of staffers and hangers-on.  As you waded through your adoring constituents they obligingly parted as if to make way for a royal prince.  As you passed by you pointed with extended arm to individuals as if to say to each “‘I see you and you are mine, you are mine and you are mine.”

Clearly the  good Bonnie Prince Charlie is beloved in his principality.  Mr. Rangel has faithfully served the people of the 15th District of New York and brought home some major bacon.   He has fought hard for the marginalized and working people to codify social justice as a law of the land.  But as he pointed to exuberant constituents anointing them with a royal recognition I could not chase the thought of you holding leases on four rent controlled apartments.  Given the national nightmare of home foreclosures and rising homelessness I couldn’t help but think of the families displaced from affordable housing by Mr. Rangel’s gluttonous pursuit of a radical entitlement.  All the good work Mr. Rangel accomplished does not excuse a mindset that  allows one  to rationalize behavior that shuts out needy families from affordable housing.  It’s an example of how power and privilege corrupts the best men and a symbol of all that is wrong with America and the leaders we chose that brought us to where we are today.

Thank you for your service Mr. Rangel.

You Tube Video: Bobby Womack, Across 110th Street

Risk: democracy, corruption, politicians

November 18, 2010 Posted by | corruption, democracy, democrats, ethics, homelessness, politics, republicans, social justice, Tea Party | , , , , , , , , , , , , | Leave a comment

Profit Us Maximus

The deal is closed.  American democracy has been sold. The US Constitution, discovered in a discount bin at a cheap dollar store at the Mall of America will now be fully privatized to serve the greater corporate interests of America.  The deal will enable the global fraternity of capitalists to finally unlock and fully realize the hidden value of an unencumbered American dream.  Profit-Us-Maximus  will replace E Pluribus Unum as the national slogan.  Undoubtedly it will appear on our national currency for the freedom of commercial interests and the uninhibited power of capital has triumphed.  Commercial interests have trumped “we the people”.  American liberty, a political currency once recognized as the worlds leading example of representative democracy has been severely devalued.

The Supreme Courts decision overturning laws that restrict corporate freedom of speech now allows corporations the unrestricted right to financially support candidates for public office.  This paves the way for an installation of  a more corporate friendly oligarchy to rule over the citizens of the worlds first and now defunct representative democracy.  The courts ruling in the Citizens United vs. the US Federal Election Commission overturned existing laws that prohibited corporations from exercising free speech.  The ruling now sanctifies the corporate purchase of air time to fund media campaigns that support or attack candidates running for public office.  The wisdom behind the overturned law was to protect the interests of citizens from a corporations ability to use its considerable capital resources to finance and influence the election of  political candidates favorable to their corporate interests.  That law is yesterdays newspaper.

The decision opens the possibility that the governance of our nation, states and townships will be administered by elected officials financed and paid for by corporate largess proffered with the proviso to do their bidding.  America risks becoming one giant company store.  Once free citizens endowed with the protection and empowerment of a Constitution and a Bill of Rights will become beholden to the whims of corporate paternalism.

If your a shareholder in one of the corporations this is a bullish market event and your equity position has surely appreciated in value.  The special dividend of political power born from purchased access to legislators will accrue favorable returns to investors in The United Corporate States of America.  No longer will senators hail from the great state of Georgia or the Live Free or Die State of New Hampshire.  It’ll be the senator from “Do No Harm” Google or “Have It Your Way” Burger King.

There will be a million unintended consequences resulting from this decision.  How government administers and delivers services and how institutions fulfill their social mission will drastically alter.  Institutions and functions that serve and support education,  military, roads and infrastructure, health care, consumer and  environmental regulations, labor protection laws and provision of social services will be transformed.  The very nature of the liberal nation state will change.

This decision will create conditions for the privatization of governmental assets and institutional service structure  to accelerate at mind numbing speed.  The New Jersey Turnpike can now be sold to a private equity firm from China.  Drilling and the exploitation of resources found on National Parks will proceed without prohibition.  Public schools will be offered on a Dutch Auction hosted on e-bay; attracting the participation of a well capitalized confederation of publicly traded Charter Schools.  The mission to acquire the listless brick and mortar carcass of a once  venerated public school system will commence.  The promise of the systems renewal with the breath  of a new life fired by entrepreneurial zeal and taxpayer support will create a new Dow Jones Index constituent,  Education Inc.   Many functions of government will be downsized and outsourced to sophisticated data processing and business process companies.  Military units will also be privatized, becoming mercenary divisions of corporate security firms.   This will enlarge their market opportunities because they will no longer be beholden to exclusively serving the needs of a single client, the USA.

As Keith Olbermann pointed out in his Special Comment concerning the Supreme Court decision, the parallels with Dred Scott Decision are ironic.  The decision ruled that Dred Scott was not a man, but merely a commodity to create wealth for a person with full rights of citizenship.   Now corporations are blessed with all the rights and privileges of a person and the rising ascendancy of their power will soon supplant the interests of individuals.  In so doing, the Supreme Court has once again proven itself to be an activist  political tool to protect the interests of political and economic elites.

We can at least be thankful that the Supreme Courts decision allows us to dispense with the charade of participatory democracy.  Rampant cynicism about the unfair influence of money on the political process has always been understood as a problem.  This has undermined the people’s trust in the electoral process.  It has  eroded a collective sense of political enfranchisement.  It has contributed to creating a pervading  malaise of ambivalence within the electorate.  The monied interests with fathomless pockets can now come out into the open and make their presence plain for all to see.   It remains to be seen how this will alter the structure of K Street.

A new business model for how money is dispensed to politicians will need to be considered .   Perhaps a new derivative  called  a PIMP, (Politician In My Pocket) should be considered.  A PIMP Exchange could be set up in Washington DC.  This future exchange would surely prosper and would propel Washington DC as the fast rising global financial center on  the come.    PIMP trading would be recognized as a fast growing emerging market.  The trading in PIMPs would attract capital from all over the world and may even rise to supplant the future pits in Chicago as the place “where the world goes to manage risk.”

The PIMP Exchange will add that much needed transparency on how the political influence market is performing and what the going price is to buy and sell politicians.  We should be grateful to the Supreme Court  Decision  that laid the judicial foundation that will finally shine light on this aspect of our political process.  Now that its out in the open its all above board.  No more under the table deals will be necessary.  This ruling and the PIMP Exchange makes it very easy to follow the money.  Perhaps legislation should be considered that require senators and congressmen to wear the corporate logos of their three largest sponsors.  If a corporation wishes to remain anonymous feeling that the  interests of their shareholders are better served they can continue to operate under the radar.  A Generic Omnibus  Politician In My Pocket or a (GO PIMP) will be  designed specifically for this purpose.

The laissez faire approach to freedom of speech unfortunately confers all the power to those with the deepest pockets.  “Politicians will be bought and sold by the gross”, according to Alan Grayson a congressman from Florida.  Mr. Grayson is proposing legislation to protect citizens rights from being trampled by an avalanche of corporate money.  The first amendment guarantees citizens that no one shall abridge or prohibit the free and open expression of ideas.  Unfortunately money speaks the loudest and facilitates access to media channels and distribution. The free and open internet provides an individual little protection.  The tussle in China between Google and the government is an instructive warning of what we can expect to occur as corporate control of the internet grows.  It is an indication of a growing rift born from competitive postures of power capitalist institutions.

Our birthright of liberty was orphaned by a pervading cynicism and the seeming ambivalence of citizens who cared little for the rights democratic republics confer and understood less about the responsibilities required to guard them.  The decision by the Supreme Court is a watershed event.  Our political culture has changed.  The United States model for governance is moving closer to the Chinese model of governance.  The state capitalism of the United States is is a mirror image replication of the Chinese model.  A ruling oligarchy of economic interests acting in concert with its hand picked governmental representatives is common to them both.

Did we awaken this morning to the sober realization that American’s best hope is a trust in a benevolent corporate paternalism?  Can we believe that the rule of unencumbered enlightened capitalists is the way to realize the promises of a post scarce society? Can we still believe in the promise that innovation and social progress  and our democratic impulses will continue to inform America’s historical evolution?  Has America and the rest of the world arrived at a tipping point, a harbinger of a dystopian future where property right trumps human rights and the hard edges of economic deprivation, class marginalization and political disenfranchisement are ills that continue to infect society.  We need a doctor.  We need a strong antibiotic to cure this disease metastasizing in the body politic.

You Tube Music Video: Tennessee Ernie Ford: 16 Tons

January 22, 2010 Posted by | China, Civil Rights, corruption, culture, democracy, economics, elections, environment, Federalism, government, infrastructure, institutional, LGBT, military, politics, private equity, psychology, regulatory, taxation, war | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

Hedge Funds Navigating Industry Sea Change

This years Schulte Roth Zabel’s (SRZ) 19th Annual Private Investment Funds Seminar stuck a very different pose from last years event. One year on from the global meltdown of financial markets, languishing institutional certainty and the pervading crisis of industry confidence has been replaced with a cautious optimism. The bold swagger of the industry however is gone, in its place a more certain sense of direction and expectation is emerging. Though managers continue to labor under unachievable high water marks due to the 2008 market devastation, 2009 marked a year of exceptional performance. Investment portfolios rebounded in line with the upturn in the equity and bond markets. Liquidity improved and net inflows into the industry has turned positive during the last quarter as large institutional investors and sovereign wealth funds returned to the sector with generous allocations. These are taken as clear signs that the industry has stabilized and the path to recovery and the healing of economic and psychological wounds are underway. Yes the industry will survive and ultimately thrive again but it will do so under vastly different conditions. The new business landscape will require an industry with a guarded culture of opaqueness to provide much greater transparency while operating under a regimen of greater regulatory scrutiny.

The 1,900 registered attendees heard a message about an industry at a cross road still coming to terms with the market cataclysm brought on by unfettered, unregulated markets and excessive risk taking. SRZ offered an honest assessment in examining the industries role in the market turmoil. Speakers alerted attendees to an industry at a tipping point. To survive the industry must adapt to a converging world that believes that uniform market rules and regulations are the surest safeguards against catastrophic systemic risk events. A global political consensus is emerging that expresses support for industry regulation as an effective tool to mitigate the pervasiveness of fraud and market manipulation that undermines investor confidence and ultimately the functioning of a fair and efficient open free market.

Paul Roth, Founding Partner of SRZ, noted in the events opening remarks that the market is beginning to recover as evidenced by industry AUM once again exceeding the $2 trillion mark; but he warned that any exuberance needs to be tempered with the understanding that the new normal would not resemble the pre-crash world. The days of cowboy capitalism and radical laissez-faire investing are clearly over. Indeed Mr. Roth wryly observed “the industry must develop a maturity about the need for change. He concluded “that the industry must respond by playing a constructive role in forming that change.”

The conference subject matter, speakers and materials were all top shelf. Break out presentations on risk management, regulatory compliance, distressed debt deal structuring, tax strategies and compensation issues all reinforced the overriding theme of an industry in flux. The presenters passionately advocated the need to intentionally engage the issues to confront accelerated changes in market conditions. By doing so, fund complexes will be in a position to better manage the profound impact these changes will have on their business and operating culture. Subject issues like insider trading, tax efficient structuring, hedge fund registration, preparing for SEC examinations and the thrust of DOJ litigation initiatives and how to respond to subpoenas were some of the topics explored.

To highlight the emerging regulatory environment confronting the industry, a presenter pointed to the Southerization of the SEC. This is an allusion to the hiring of former criminal prosecutors from the Department of Justice, Southern District of New York to go after wayward fund managers. The SEC is ramping up its organizational capability to effectively prosecute any violations of the new regulatory codes. The growing specter of criminal prosecutions and the growing web of indictments concerning the high profile case of Mr. Raj Rajaratnam of the Galleon Group was presented as evidence of an emerging aggressive enforcement posture being pursued by regulators. Managers beware!

Presenters made some excellent points about how institutional investors are demanding greater levels of TLC from their hedge fund managers. This TLC stands for transparency, liquidity and control. Creating an operational infrastructure and business culture that can accommodate these demands by institutional investors will strengthen the fund complex and help it to attract capital during the difficult market cycle.

The evening concluded with an interesting and honest conversation between Paul Roth and Thomas Steyer, the Senior Managing Partner of Farallon Capital Management. The conversation included increased regulatory oversight, compensation issues, industry direction and matching investor liquidity with fund strategy, capacity, structure and scale. Mr. Steyer manages a multi-strategy fund complex with $20 billion AUM, his insights are borne from a rich industry experience. He made the startling admission that Farallon has been a registered hedge fund for many years and he believes that the regulatory oversight and preparation for examiners reviews helped his fund management company to develop operational discipline informed by sound practices.

Mr. Steyer also spoke about scale and that additional regulatory oversight will add expense to the cost of doing business. Mr. Steyer believes that it will become increasingly difficult for smaller hedge funds to operate and compete under these market conditions.

Another interesting topic Mr. Steyer addressed were issues surrounding investor redemption and fund liquidity. During last years SRZ conference investor liquidity was the hot topic. Fund preservation during a period of market illiquidity and a fair and orderly liquidation of an investment partnership were major themes that ran through last years presentations. Mr. Steyer struck a more conciliatory tone of investor accommodation. He confessed his dislike for the use of “gates” as a way to control the exit of capital from a fund. In its place he offered a new fund structure he referred to as a “strip” to allocate portfolio positions to redeeming partners in proportion to the overall funds liquid and illiquid positions. He stated he believed that strategy to be more investor friendly.

Schulte Roth & Zabel has once again demonstrated its market leadership and foresight to an industry clearly in flux, confronting multiple challenges. These challenges will force fund managers to transform their operating culture in response to the sweeping demands of global market pressures, political impetus for regulatory reform and the heightened expectations of increasingly sophisticated investors. The industry could not have a more capable hand at the helm to help it navigate through the jagged rocks and shifting shoals endemic to the alternative investment management marketplace.

You Tube Music Video: Beach Boys, Sail On Sailor

Risk: industry, market, regulatory, political

January 16, 2010 Posted by | commerce, compliance, corruption, hedge funds, investments, legal, off shore, private equity, regulatory, reputational risk, risk management, SEC, sovereign wealth funds | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

City of Broad Shoulders

“Boyish Man”

The cosmic scales are correcting Chicago’s over abundance of positive karma. A rebalancing was clearly overdue. The Windy City’s favorite son, Barack Obama was beaming constellations of light and hope like an exploding quasar showering positive electrons onto a depressive American culture in a recessive state of mind. We needed the positivism. We needed a reason to believe that we can uncouple ourselves from the fear and loathing of a broken political system, bankrupt bankers, the drudgery of war, the gloom of recession and a nation tearing itself into a thousand pieces along the million fault lines of our fractured cultural divide. President Elect Obama convinced us that it didn’t have to be. We could arrest our slide into the slow boil of constant simmering conflict within our boarders and in the far reaches of the globe where America is intent on projecting its dissipating power. The man from Chicago said it didn’t have to be. The man from Chicago said he had a better way. The people from American agreed with the man from Chicago and said, “Yes We Can.”


But fate, destiny and determinism has a curious way of bringing us back to earth. After we have looked over the highest peaks of our expectations to glimpse the possibility of our ideals we get smacked in the face by greed, corruption and the callous disregard for others that human beings use much to frequently as the common currency to guide our interactions and relations with one another.


First there is the greed exemplified by Sam Zell. That crusty Chicago street guy who is as tough as he is smart. He parlayed his gifts and built a multi billion dollar real estate empire in Chicago and eventually sold his company at the height of the market. He pocketed a cool $6 bn in that transaction and used a tiny fraction of the proceeds from that deal to buy the Chicago Tribune newspaper chain; owner of the LA Times and the Chicago Cubs and Wrigley Field as part of the package. Mr. Zell financed the large portion of this transaction with equity participation and debt assumption collateralized by the assets in the Tribune Company pension funds. As the fundamentals of the newspaper industry deteriorated the Tribune deal quickly went south prompting Mr. Zell to initiate his exit strategy while the company filed for bankruptcy. Zell’s trying to cash out of the deal recouping his small initial investment. Workers at The Tribune Company feel Mr. Zell did irreparable damage to workers retirement funds and degraded the company brands by placing the company in a most precarious financial position to extract a maximum return on Zell’s small initial investment.


Next there’s the story of the month, the arrest and indictment of Illinois Governor Milorad “Rod” R. Blagojevich. Mr. Blagojevich is accused of seeking compensation or favors in anointing the successor to sit in Mr. Obama’s vacated US Senate seat. Apparently this is a trend with Illinois Governorships. Once they leave the governor mansion the career path leads to a cell in a federal penitentiary. Three of the last four sitting Governors made the move and one is still serving time. The culture of corruption among our country’s political and business elites seems to know no bounds and its symptomatic of Americas deep crisis in leadership and citizens deepening cynicism and distrust of institutional leadership. This distrust was a major reason why the American electorate overwhelmingly turned to Mr. Obama. His message of change resonated with our deep revulsion of executive fiat placing their personal interests first last and always in any decision or program.


This scandal has legs. It has the potential to walk down Wacker Drive taking with it important allies and supporters of our President Elect Obama. Already Senate Candidate #5, Jessie Jackson Jr. name has surfaced in this scandal. Republicans can make this a major political trauma for the incoming administration. Good grist for partisan politics is bad medicine for the United States as it desperately needs strong and focused leadership from our executive branch of government to get us through our current multidimensional crisis.


Lastly we have an industrial action at Republic Windows and Doors. The management of the company shut down the business stiffing the 300 plant workers of their separation pay and benefits rightfully due them under federal labor laws. In response, the workers have taken over the factory and refuse to leave until they are paid the separation compensation due them. This is the callous part of our initial equation of greed, corruption and disregard for those who are vulnerable. We salute the courage of the Republic workers actions. The Republic workers have turned their vulnerability into a strength that inspires all Americans and hopefully will open the hearts of Republic management to settle accounts with their former employees.


Yes the cosmic scales over Chicago are correcting. They are tilting back in an infinite flux of balancing the attainment of our desires and needs with the prohibitive reality of restraint borne from the power elites inability to cede anything. A return to normalcy as its business as usual in sweet home Chicago.


CHICAGO

HOG Butcher for the World,

Tool Maker, Stacker of Wheat,

Player with Railroads and the Nation’s Freight Handler;

Stormy, husky, brawling,

City of the Big Shoulders

Carl Sandburg



You Tube Video: Muddy Waters, Mannish Boy


You Tube Music Video: Buddy Guy, Sweet Home Chicago


Risk: political, ethical, moral,

December 12, 2008 Posted by | corruption, Obama, poetry, politics | , , , , , , , , , , , , | Leave a comment