Risk Rap

Rapping About a World at Risk

Puddenhead Wilson and the Jersey Doughboy

When Joe Wilson belched his infamous catcall “lair” during President Obama’s address to a joint session of the legislature, he revealed himself to be a poor example of a mature adult. Puddenhead Wilson’s emotional outburst may have played well with die hard Obama haters, indeed the next day his campaign war chest swelled by a million dollars; but it also sent a terrible message to America’s youth that its acceptable to disrespect your teachers, coaches, police officers or parents if you disagree with what they are saying. The fact that his campaign coffers swelled with contributions as a result of his offense compounded the power of the negative message it sent to youths and to the perpetrator himself. Awarding Puddenhead Wilson for his bad conduct only encourages him to repeat his offensive disrespectful behavior. It also sends a very poor message to America’s youth that bad behavior is OK and childish emotional outbursts may in fact find reward from enabling adults.

New Jersey Governor and emerging GOP superstar Chris Cristie, recently revealed himself to be a poor role model for the youth of America when he told a gathering of students that teachers greed was to blame for the lack of supplies and educational resources available for public schools.  The Governors injection of politics into his presentation to Trenton students is a bit ironic.  In his crusade against the teachers union, Christie  has charged educators with using school children as “drug mules” to carry the message about the danger of funding reductions for public education.   It would seem that the good Governor Christie needs to deliver a couple of kilos of his own to his adoring fans in the Tea Party and his financial backers in the GOP.

Putting partisan politics aside Christie’s message to public school students is extremely damaging.  The public schools are under incredible pressure.  All social institutions are engulfed in severe challenges and are fully engaged in crisis management mode.  America’s public schools are  not exempted from these pressures.  The complex confluence of political, cultural and economic factors plaguing society are acutely manifested and constantly working to undermine the public school system.  Governor Christie’s political rant to students throws gasoline on a combustible pile of institutional challenges confronting teachers and administrators.  Like Puddenhead Wilson, the Jersey Doughboy gives tacit approval and encouragement for students to question the authority and motives of their teachers.  Christie has just provided under-performing students a ready made excuse for failure and disruptive malcontents a lit match to throw onto a gasoline soaked pile of kindling encircling our public schools.

Christie’s partisanship places the context of his egregious mismanagement of the Race to the Top DOE grant in a new light.  Perhaps Christie’s $400 million blunder was an intentional action to reduce resources to the public schools to undermine greedy  teachers and their gluttonous union.  Why would Christie enable the funding of whip cracking greed driven drug mule drivers?  And like his killing of the DOT funded  ARC tunnel project, Christie enhances his conservative street cred by punching the construction unions in the nose and telling the socialist government in Washington to spend its money elsewhere.

Like Puddenhead Wilson,  Christie is cashing in on his actions and is building a nice portfolio of economic and political capital for himself.  His remarks about the greedy teachers provide a convenient cover and solemn absolution for the grand practitioners of greed and avarice that have led this country to the brink of fiscal insolvency, cultural destitution and political bankruptcy.  Christie’s narrative of blaming the needy plays well with large contributors who will be moved to put good 527 Corporation resources at his disposal to underwrite his political rise.

Christie’s midterm election barnstorming tour in service to the GOP booked him on a coast to coast tour that even his hero Bruce Springsteen would envy.  Though Christie’s mojo clearly failed in helping Meg Whitman and Carly Fiorina win election,  the Jersey Doughboy’s political stock has risen so quickly that he felt compelled to send out a few tweets to deny he would run on a ticket with Sarah Palin for president in 2012.

So New Jersey is stuck with the doughy mess of big money winner take all partisan politics of Christie’s ideologically driven governorship for at least the next two years.  Enjoying popular support for now, Christie’s considerable body mass currently displaces enough water to ride the wave of Tea Party conservatism.  But if the fickle citizens of New Jersey make a slight left turn off Exit 16E on Thunder Road,  Christie’s fortunes will drop faster then a lead sinker placed into the rancid brew seeping to perfection in a gaudy Royal Dalton Tea Pot.

You Tube Music Video: Bruce Springsteen, Born to Run (Live Acoustic Version)

Risk: political, labor unions, public education, consensus

Advertisements

November 15, 2010 Posted by | conservatism, culture, democracy, economics, elections, government, institutional, labor unions, Obama, philosophy, politics, republicans, Tea Party, unions | , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

The Forth Estate Crosses Over

There is this program that runs on the WE Cable Network.  It’s called Crossing Over with Jonathan Edwards.   Jonathan Edwards is a psychic medium.  He stands in front of a live gathering of 75 people and tunes into psychic vibes emanating through the audience.  The vibes are messages from deceased loved ones who have crossed over the Acheron.  The dead are keen to communicate warnings, good wishes and assurances to assist living  loved ones on how to navigate the tricky vicissitudes of life.   During the show, Jonathan walks about the room picking up on celestial chatter and begins to relay and interpret a soliloquy of the dead like a macabre game of supernatural telephone. Jonathan Edwards asks his audience to suspend all disbelief as he bestrides the nexus of the metaphysical spirit world and the pedestrian reality that most earthlings inhabit.

The most common messages the dead channel through Jonathan seek to absolve the anxiety and guilt of the tormented living.  Crossing Over is popular because it offers its audience an  absolution, confirms personal cosmology and rationalizes the pursuit of desires by affirming the consequences of decisions as a self fulfilling prophecy.  It safely places its audience in a self validating cosmic echo chamber.  Its an ongoing morality tale with only happy endings and unfortunately only a tenuous connection to authenticity and objective truth.

The state of the news media industry is very much like Crossing Over.  The Forth Estate once thought of as an objective arbiter, information dispersant and truth seeking medium it is now chosen and consumed as a branded version of reality.

The devastating earthquake that buried Haitians in heaps of rubble unleashed global battalions of news teams to cover the event.  Many of the news crews from large established networks beat first responders to the scene.  In some cases the arrival of news teams actually held up the arrival of rescue teams and supplies because the airfield and crowed airspace could not accommodate all the traffic.  The news teams were forced to hole up at the airport because blocked roads prohibited them from going anywhere.  I recall Robin Roberts and the GMA News team dodging fork lifts and supply trucks left with nothing more to do then to urgently interview themselves.  Correspondents were reduced to ghoulishly opining about the tragedy while eagerly mugging for the cameras with contorted faces to portray the human tragedy unfolding beyond the range of their cameras.

GMA’s presence added nothing and in fact inhibited rescue efforts.  I thought of all the drinkable water these crews consumed could have been used to quench the thirst of Haitians dying from dehydration. Thankfully the GMA News team soon left after spending a self indulgent weekend at the airport. Their moral outrage registered and attempt at ratings grab accomplished.  Their contribution to shedding light on the scope of this tragedy and placing it in a larger context of its meaning to the global community of nations was lost in deference to the tragedy’s emotional impact on GMA reporters.  For GMA the subjective condition of the emotional distress of their media stars had become the story.   Their viewers must have figured that if GMA’s News celebrities were hurting this story must be big.

CNN’s Dr. Sanjay Gupta was an example of how a newsman became part of the story in a positive way.  I recall with great admiration watching a camera crew following Dr. Gupta as he walked amidst the rubble of Port-Au-Prince.  He learned of the location of a hospital and went to investigate how it was delivering services to the injured.  Upon his arrival Dr. Gupta discovered the make shift hospital was little more then injured people being placed in the hallway of a building.  The dead were being stacked outside by a wall surrounding the compound.  The hospital had no doctors, nurses, beds or supplies.  The facility lacked water to clean wounds or salve thirst.  What the hospital did have was a constant stream of wounded arriving in greater numbers desperate for any type of care.  The scale of the quake, the massive amounts of injured victims and the overwhelmed capacity of  the hospitals ability to respond was reported in stark clarity.

Dr. Gupta was overwhelmed by parents cradling their broken children.  Dr. Gupta a licensed medical doctor took off his correspondent hat and put on his stethoscope.  He honored his Hippocratic Oath and started treating babies and the wounded with whatever he could cobble together.  Dr. Gupta was no longer a journalist but was now a doctor.  He asked that the cameras stop rolling so he could perform his duties as a doctor.  I’ll never forget the look on Dr. Gupta’s face.  It spoke volumes about the desperate conditions he was confronting and the firm resolve that he would perform his duties as a trained physician under trying almost impossible circumstances.

We could understand Dr. Gupta’s crossover from journalist to doctor.  It was proper and correct response as a human being but as a journalist all objectivity had been lost and in many respects Dr. Gupta had become the story in a constellation of a million stories emanating from the epicenter of one of the great human tragedies of the past century.  This is a departure from the norm of real time documentary reportage.  I can’t tell you how many documentaries I came away from cursing the producers and cameramen for doing nothing to prevent the baby wildebeest from being  consumed by the lion pack or for failing to offer a family of refugees in Darfur a bottle of water or a ride on their jeep to escape the marauding  Janjaweed.

News Corps, network media division Fox News belies the myth of the monolithic liberal mainstream media and its claim of balance in its marketing handle.   Fox News may offer a fair presentment of the news to its conservative viewership but its claim of balance that suggests the inclusion of a liberal perspective in their news product is specious.

Fox News really came of age following 9/11 and the growing conservative drift of the nation. Its useless to posit weather Fox News created the conservative drift or developed programming to market to this political demographic; but the political inclinations of Roger Ailes and Rupert Murdoch have always been decidedly conservative.  At its founding in 1996, Fox News started differentiating itself from the liberal mainstream media by supporting the Republican impeachment drive of President Clinton, effectively  setting the stage for its partisan approach to reporting the news.  In many respects its unabashed partisanship was a game changer in how news and information was being packaged, positioned and delivered in the emerging narrow casting market paradigm.   Its sentiment not very different from the golden days of yellow journalism practiced by William Randolph Hearst.

Liberals and progressives have criticized News Corp for its lack of objectivity and  balance.  Many believe it to be the official party organ of the Republican Party and its compromised coverage is more akin to propaganda then news.  I believe this to be true as well.  Fox News has countered that it provides both news and opinion.  Fox News employs many of the leading conservative voices.  Karl Rove, Sarah Palin, Mike Huckabee are senior GOP members on the payroll of Fox News.  They regularly appear on shows hosted by Bill O’Reilly, Glenn Beck and Sean Hannity who are conservative celebrities in their own right.  The trick is discerning what is news and what constitutes opinion and editorial content.  The line that demarcates them is increasingly a fine one.  Even the innocuous news blurbs scrolling along the bottom of the TV screen seep in partisanship.  Some may report objective facts like the closing level of the Dow or the latest sports score. These little factoids appear alongside pieces that consistently reinforce the conservative credo of the network.  Its also a practice for commentators like Karl Rove to opine on stories covered on news segments.  The pundits impassioned analysis of the story leaves the listener little room to doubt the interpretation as a validation of the viewers conservative  political sentiments and ideological disposition.  The ability to distinguish fact from opinion becomes increasingly lost in these clouds of obfuscation.

As the model of creating, packaging and marketing partisan news the advent of Glenn Beck as a political entertainer is symptomatic of the maturation of the industry.  Glenn Beck’s show is more of a political reeducation camp that tries to provide low information voters and political neophytes with a more robust framework to understand the history and philosophy of conservatism.  Beck extends the Fox News portfolio of infotainment products.

Beck’s role in encouraging the formation of the Tea Party expands the footprint of News Corp.  Some may consider this crosses the line into political activism but I believe it to be a highly developed form of call and response direct marketing.  Beck’s incessant rants about the imminent collapse of  American democracy, the downfall of free market capitalism and the advocacy of the purchase of gold to hedge against these terrible prospects has attracted  the sponsorship of gold marketers and other fear merchants living large and minting major coin in the time of terror.

Fox is not alone in this sin.  CNBC profited from the pre-crash market run-up and had a vested interest in fueling market speculation and excess.  The business channel owned and operated by NBC  took some heat on this issue in the wake of the market meltdown.  During the market run-ups and the creation of the numerous market bubbles CNBC was taken to task for its roll as a biased shill in creating a risk averse mania that fed into the speculative orgy.  The encouragement of reckless behavior would cost investors and Main Street citizens a good portion of their retirement savings.  Jon Stewart took on CNBC celebrity Jim Cramer for his role in stoking unhealthy speculation. The claim of caveat emptor is not a sufficient disclaimer to absolve CNBC of this perceived wrong doing.  Information and data is the fuel that powers the capital market engine and viewers perceived CNBC to be a critical channel for this type of decision support data and analysis.  As animated red bulls flashed across the TV screen screaming “buy buy buy” the speculative urge feeding the demon greed of Cramer’s viewers jumped at the prospect to secure easy profits and pushed the execute button to route a flood of orders to E-Trade.

Media outlets were not alone in profiting from the conflict of interest in their business model.  The rating agencies Moody’s, Standard and Poors and other issuers of financial health assessments were roundly criticized for a business model that accepted fees from companies  to determine their investment ratings investors use to judge safety and soundness of the companies securities.  Investment banking institutions like Goldman Sachs and Morgan Stanley ran into trouble for trading securities that they advised their clients to hold in investment portfolios.  Large commercial banks have also been called on the carpet for the inherent conflict of interest in their mortgage lending business that integrated mortgage underwriters, originators, servicers, securitizers and investors under a single roof.

Citizens United vs. Federal Election Commission has given corporations a megaphone to direct enormous amounts of capital and influence on Americas political culture.  The exponential growth of the political industrial complex places media companies on the cusp of an emerging market.  News Corp occupies a well defined franchise in the vortex of this growth industry.  News Corp will be the predominant media channel attracting politically sponsored advertising from 527 corporations to advocate issues central to the conservative agenda.  The market for political theater is strong and growing and News Corp has one of the hottest theatrical properties in celebrities like Sarah Palin and Glenn Beck.

If Fox News bends and packages information with selected editing in support of political narrative; Andrew “NAACP” Breitbart and James “ACORN” O’Keefe edits news to create a false narrative to affirm ideology.  The omnipresent  multi-channel digital world and the need for consistent real time affirmation justifies entrapment and libel as fair game in the political narrative. The specious political ethics of radical entitlement, means justify ends, medium is the message and relativistic ethics is the next step of  an ideologically mature ,technologically enabled infotainment industry.  The self affirming echo chamber that verifies fact and swears to any truth is blessed with selective amnesia and a self correcting mechanism of  a highly refined subjective fact checker informed by extreme prejudice.

Jon Stewart  use of satire and exaggeration to make a lager point of clarified and reified truth is old school stuff.  In the Age of the Avatar,  the real, the imagined, the intended and the manifested get confused in the digital clouds of form, delivery and content. The medium is the message, the network is the computer and Jon Stewart’s Rally to Restore Sanity was a marketing event to stake a claim on the market of moderation.  No doubt a highly educated discerning market segment with lots of disposable income.  Its only downside its getting a little long in the tooth.

The Forth Estate is rapidly evolving due the dramatic changes in technology, market structure, business model and consumer consciousness.  The role of the free press and the constitutional protections it enjoys in a democratic society is under siege and on the verge of bankruptcy.  The New York Times, Chicago Tribune and LA Times are old media institutions struggling to stay financially solvent and culturally pertinent.  Time will tell of their ability to evolve and create a sustainable business model  that will be validated by a market economy.  We have learned that truth, disclosure and transparency are not priceless assets but virtues that must support a sufficient  p/e ratio to to survive in a capitalist economy.

The past few weeks we’ve had a few First Amendment martyrs.  Rick Sanchez, Juan Williams and Keith Olbermann learned that the sword was more powerful then the pen.  The more important lesson that managers could remove them on the whim of executive fiat if they failed to demonstrate restraint of pen and tongue.  In actuality the  removal of these gentlemen from the news desk was more of a business decision then a violation of  their right of Free Speech.

As we enter the second decade of our two wars on terrorism even the embedded journalists rolling through the distressed hamlets of Iraq and Afghanistan are getting a bit war weary.  Like a captive hostage the embeds could not help but to identify with their chauffeurs.  The brave soldiers driving the Humvees’ were always in control of what the embeds saw, was responsible for their safety and quickly became the reporters best friend born of dependency, admiration and the comradeship that develops during war.  Objective reportage was the first causality in this  type of arrangement.

We need to take a cue from Jonathan Edwards.  He is the real shaman of our time.  Blessed with unique skills to help his audience to realize that self affirming connection is only possible by crossing over and taking suggestions from the well placed authorities residing in an unseen mysterious supernatural world.

You Tube Music Video: Tom Waits, Lie to Me

Risk: First Amendment, free speech

November 12, 2010 Posted by | 9/11, banking, branding, business, Clinton, commercial, commodities, culture, democracy, democrats, economics, elections, government, history, investments, marketing, media, news, philosophy, politics, product, regulatory, sustainability, Tea Party, war | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

We Must Disenthrall Ourselves

lincoln-collage1The wisdom resonating from this voice that now belongs to the ages still begs his countrymen to heed it. Lincoln’s admonition that his countrymen must disenthrall themselves to meet the momentous challenges of the time continues to speak to the dire condition of our nation today. Lincoln asks us to let go of our intransigence and the tired dogmas that we cling too. In a world rife with uncertainty and risk, surrounding us in a whirling maelstrom of existential dread, emotional responses to pressing problems born from fear of a perceived pending doom is insufficient and dangerous. We must mount a constructive response of considered actions to safely land our ship of state in a safe harbor. It is our pathway to becoming whole once again.

The great national hero Captain Sully was successful because he refused to succumb to the quickly deteriorating conditions that were enveloping him and the plane. He disenthralled himself from the emotional distraction of pending doom. He kept the wings level, his nose up and maintained the right speed. Captain Sully landed the plane in the most trying circumstances and became an example of how we must respond get through our national crisis.

Our politicians in Washington can learn much by heeding Mr. Lincoln’s words and studying Captain Sully’s actions. Our elected officials are enthralled with the righteousness of their ideals; contributing to a dreary deadlock of legislative stasis and partisan intractability. Politicians got to get over themselves and begin to serve their largest constituency and not their largest contributors.

Large corporations need to become disenthralled of their self perceived cleverness. Many believe that major investments in applied intelligence create a culture of insularity that hedges all risks and protects every business move. This allows corporate executives to hide behind a wall of opaqueness. They buy the best and brightest minds from our esteemed business schools convinced that this treasure of intellectual capital will protect them. They believe the digital blips of risk models to be sparkling Rosetta Stones containing the secrets that unlock the mysteries of effective risk management. The codified results of these algorithmic exercises are revered as holy Dead Sea Scrolls that offers the protection of an supernatural mojo. This is the thinking of a bankrupt brain trust.

As citizens of the worlds greatest military power we must disenthrall ourselves from the conviction that the powers of our armies, superior technologies and well stocked arsenals is our country’s surest way to protect our beloved country. The power of an enlightened citizenry educated in a vibrant public school system is the bulwark of a democratic republic and its surest defense. Our enlightenment will be a lamp to those who value liberty; as will our practice to extend the hand of peace to all nations through considered diplomacy and an honest search for shared interests.

As a people we must disenthrall ourselves from the petty preoccupations, dogmas and prejudices that consume our time and attention. I believe too many of my countrymen are more impassioned about A Rods admission of steroid use then they are about the substances that control and dictate our behaviors and beliefs and the ever present and growing dangers to our democratic way of life.

We’ll end with the words from the great man himself.

Happy birthday President Lincoln.

“The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.”

You Tube Video: George Harrison, Beware of Darkness

Risk: fear, discernment, action

February 16, 2009 Posted by | Civil Rights, culture, gay rights, philosophy, psychology | , , , , , , | Leave a comment

FAS 157: Allegory of the Cave

In Plato’s magnum opus, The Republic, he devotes a chapter to Socrates’ discourse with his young student Glaucon. Socrates uses an allegory to explain the difference between truth and appearances. The Allegory of the Cave has remained a powerful philosophical metaphor and cornerstone of metaphysics. It outlines how the human perception of reality can be at odds with and diverge widely from what actually is true and good.

The cave is a controlled environment where humans are held captive. The only light they are allowed to see is from a dimly lit fire that casts shadows of images on a far wall. Enclosed in darkness save the faint projections, their inability to see the source or understand how those images appear to their senses gives them the perception that the shadows of things that they see are in fact the real things themselves. It’s not until the cave’s captives are brought out into the light of day that they are able to see that the shadows are only a poor reflection of a manipulated truth.

Socrates’ lesson to young Glaucon, whose name is very close to glaucoma, serves as a proper metaphor to understand the debate concerning FAS 157 and the concept of Fair Value.  For the uninitiated, the issue of Fair Value under FAS 157 addresses how to determine the “value” of securities held in investment portfolios. FAS 157 provide guidelines for three categories of valuation methodologies. Large banks and brokerage firms are increasing the reclassification of their assets using Level 3 methods. The valuation and projected cash flows from assets such as CMOs, CDOs, CLO, and Credit Default Swaps are being derived by sophisticated computer models developed by each firms in-house risk management group. Many of these risk models failed to perceive and detect the melt down in the credit markets that so far has led to $100 billion in balance sheet write downs for the large investment and money center banks. Socrates allegory is similar to the models developed by bank risk managers. These “black box proprietary applications” shines light on the Level 3 assets to determine an approximation of market value. It’s a self created reality of a risk manager’s perception of an assets value.

So what.

Esoteric stuff to be sure but the debate concerning this issue is most relevant to understanding how the current credit crisis evolved, how banks, brokerage firms and hedge funds value and trade securities, how risk mangers make informed decisions concerning risk tolerance and how industry and governmental regulators determine weather a bank is sufficiently capitalized to remain solvent.

The political fallout from the Bear Stearns shotgun wedding is yet to be played out. Main Street wants some relief for mortgage defaults and Wall Street feels that the Fed reacted too quickly and is resisting additional regulation and market intervention into the workings of the capital markets.

Pervasive credit and macroeconomic risks are still present in the global capital and debt markets. Mortgages, municipal finance and commercial paper markets were the first wave of credit market dislocations. Credit card receivables, student loans and other securitized asset classes may pose some acute challenges for our central bankers, accountants, regulators and risk managers in the not to distant future.

Once we emerge from our caves Socrates’ quote to young Glaucon become most prescient. Said Socrates, “And if they were in the habit of conferring honors among themselves on those who were quickest to observe the passing shadows and to remark which of them went before, and which followed after, and which were together; and who were therefore best able to draw conclusions as to the future, do you think that he would care for such honors and glories, or envy the possessors of them? Would he not say with Homer, Better to be the poor servant of a poor master, and to endure anything, rather than think as they do and live after their manner?”

Thank you Socrates. I waited 30 years to use this knowledge that Dr. Choi excitedly taught me in Introduction to Western Philosophy as a freshman at William Paterson College in 1974. Now that we have experienced the light may we never have to slip into darkness again?

Music Video: War, Slippin Into Darkness

Risk: credit, regulatory, accounting, banking, market, risk management

May 18, 2008 Posted by | banking, credit crisis, FASB, hedge funds, jazz, movie, philosophy | , , , , , , , , , , , , , , , , , , , , | 1 Comment