Friday, October 04, 2002

Today's post.


No. Not today. The Enron news comes thick and fast, and you know how LI laps this stuff up -- it is our personal financial porno, wish fulfillment that overwhelms the senses. Etc. But isn't it the better portion to resist the snares of the devil, especially when the devil comes bearing such unbearable proofs of the correctness of one's world view?

Surely our world view is not all that correct. Surely there's something diabolic going on here.

We try to diversify our little posts when we can. Actually, we had planned a post on Marilyn Monroe this week. Over the weekend, we watched the Seven Year Itch with our friend, S. We also urged her to see Some Like It Hot -- which she did. She was impressed by Jack Lemmon in the latter, and she laughed at the former, but in neither did she find Ms. Monroe the "stradivarius of sex," as Norman Mailer once pronounced that ill fated woman. Our friend S. doesn't cotton to the "flighty blond" imago -- which would put the keebosh on appreciating Marilyn.

Ourselves -- well, when I was a little boy, with a hey, ho, nonny nonny ne, I used to watch Monroe movies on Channel 17 in Atlanta, Georgia. Of course, I was learning, like any true American adolescent, to connect the hormonal dots with the help of visual aids, and she was a nice visual aid. But I like to think that even then I had a budding, so to speak, sense of what movies were about. Cinematic possibility imported into my own life, that was what they seemed to be about. You watched a movie in a theater, and the very bigness of the screen, the scale of sound and sight, guided you outside of that viewing -- it gave you a sense of how you could manipulate your own scale in the world, a sense for the action of the sensibility on the deceptively inert appearance of things. So, for example, some like it hot gave me the idea that someday I could troop around with scantily dressed chorus girls; it even made me see the girls in the seventh grade as possibly scantily dressed chorus girls, given the right circumstances. This is important -- those who lack any intuition of how fantasy can bend the world are not more careful judges of what exists, but the worst judges -- they walk through a world of locks without keys.

Yet when I watched Seven Year Itch this weekend, on S.'s tiny tv, I experienced this odd thing, this thing I've been experiencing whenever I see a film that was made more than twenty years ago -- I am more interested in the things that existed then, and their evidence in the pans and takes, than I am, really, in the content of the film. To give you a for instance -- S. and I saw The Blues Brothers a couple of weeks ago. The plot of the film was even worse than I vaguely remembered. But what moved me almost to tears was the introductory shots, which showed Chicago from the air. Guess what? Chicago, at that time, still had patches of industry. There were factory chimneys spouting smoke. Just this little factum seemed so intensely interesting to me -- filled me with such a sense of loss, and of time itself -- that I didn't really follow the rest of the movie.

The Seven Year Itch, with its lubricious/silly jokes about straying husbands, and its New York City without a/c, did not thrust its facts on me with the same force. It was an imminently theatrical film. The fact that slowly, slowly filled me with that sense of loss was more a social fact -- the existence, even in caricature, of this kind of culture, this post-war prosperity, that has been so radically altered that it doesn't really exist any more. Yes, I get my Proustian kicks watching b&w films. S., who is so much younger than me, is immune to this nostalgia.

It is one of the gifts of middle age. Alas, the term middle age is so loaded with unfortunate connotations that my readers will probably take me to be meaning something deeply ironic. I'm not being ironic. You don't really understand the past, I think, until you reach middle age. That in itself makes it worth being forty-four.

Okay, since this does seem to be vaguely about Marilyn Monroe: on the Monroe front, we found several articles, each more ridiculous than the other -- this, too, is a tradition that stems from Mailer's Monroe biography. We quite like that bio, but there's rather a disconnect between intelligence and subject in the book -- reading it is like watching a nuclear reactor being attached to a tricycle, the high tech artifice and energy of the one having little to do with the elementary mechanics of the other. The prize for the most ridiculous hommage to Marilyn surely goes to Andrew O'Hagan's St. Marilyn, an article that appeared, all moist and coldcreamed, in the London Review of Books.

O'Hagan, like every writer on Monroe, seems impelled to put his arm over her shoulder. He starts out with a rather pat, and at the same time absurd, juxtaposition of St. Theresa and Marilyn Monroe. The connection here is that both leave relics... Well, undoubtedly, there are relics of saints and there are autographs, pearls, and chattels of dead stars that end up at auctions. But sainthood is not defined by the reliquary. I imagine you could make the argument that the believer's relationship with a saint is similar to the fan's relationship to a movie star, but I think the comparison is way to broad. It ignores way too many social relationships, including the role of the church. The kind of thrill the buyer of Marilyn's letters gets is not, I think, the same thrill experienced by making a pilgrimage to Lourdes.

He then shifts into the classic therapeutic approach to M.M. Odd how you can't write about M.M. without taking a side:

"Barbara Leaming's new book adds to a sense of Monroe as someone in constant struggle with fictionality and mental illness, with the demands of men, and with an overwhelming wish to be taken seriously as an actress. Monroe's mother blamed her daughter for being born, and the child grew up with a dark memory of people screaming in the hall, of departures and uncertainties, and of men taking advantage of her loneliness and dependence."

I wonder what men taking advantage of her loneliness and dependence means. Taking advantage seems to hint at having sex. And the thought behind that, of course, is that the woman surrendering that sexual treasure is, of course, giving a pure gift -- one that takes from her, and gives nothing back. A token, in fact, that signifies conquest. Well, the idea that M.M. was a martyr to the male brute's desires, a blond Olive Oyl, is not borne out by anything M.M. said. In fact, she seemed to enjoy sex quite a bit herself. O'Hagan's wording, here, slots all too easily into the madonna/whore logic Freud explored in his Three Essays on Sexuality.

Here's O'Hagan, being particularly dim, I think, on the period around the time of the Seven Year Itch:

It was Marilyn's misfortune to think that serious acting could save her from self-doubt. In fact it only exacerbated it. The Girl, though certainly choking and limiting as a character, was something she knew about, and it remained for her a very special and individual invention. But Leaming is bigger and better than any other biographer when it comes to describing Monroe's terror in the face of Twentieth Century Fox's view of her.

In 1955, after showing America and the world how to relax about sex by allowing her skirt to blow over her head in The Seven Year Itch, Monroe ran away to New York to become somebody else. But The Girl would always follow her. She threw a press conference to reveal 'the new Monroe':Cocktails were served for about an hour as guests awaited a 'new and different' Marilyn. Shortly after six, the front door opened and Marilyn blew in like a snowdrift. She was dressed from head to toe in white. A fluttery white mink coat covered a white satin sheath with flimsy, loose spaghetti straps. She wore satin high heels and white stockings. Her long, sparkling diamond earrings were on loan from Van Cleef & Arples.

Marilyn seemed disappointed when people asked what was new about her. 'But I have changed my hair!' she protested. Her hair did seem a shade or two lighter. Asked to describe the new colour, Marilyn replied in a child's voice: 'Subdued platinum.' The crowd received Marilyn with good-natured amusement. They responded as though she were one of her comical, ditzy blonde film characters? 'I have formed my own corporation so I can play the kind of roles I want,' Marilyn announced? She declared herself tired of sex roles and vowed to do no more. 'People have scope, you know,' said Marilyn. 'They really do.'"

He doesn't seem to connect this trope -- sexy comedianne wishing to be taken seriously -- with its long tradition in Hollywood, and M.M.'s probable awareness of it -- an awareness inscribed in The Seven Year Itch. As for the "terror" of being manipulated by the Studio publicity machine ... as for 'showing the world how to relax about sex..." Well, as we said earlier, M.M. has an extraordinary effect on writers. She makes them go off the road, over the river and into the trees, crashing all the way.

Thursday, October 03, 2002


Kurt Eichwald, NYT's man on the spot, pens one of those baffled by it all news analyses of Enron's business structure. He notices -- as man and dog tend to do, once their noses are rubbed in it -- the nature of the stuff before him, and gently cries, why, this is not gold dust!

He takes the Cuiaba project -- which we have commented about, back in January was it? -- as an example of a fools gold mislabeled the real stuff. Here's his summary:

"For example, among the examples of failed business dealings cited in the complaint is a power plant construction project in Cuiab�, Brazil. This effort, known as the Cuiab� project, was troubled from the inception, according to the complaint. It rapidly went $120 million over budget and had numerous risks and impediments to keep it from being profitable, the complaint says � problems that were well known throughout Enron.

"The Cuiab� project was so problematic," the complaint says, quoting a statement from an unidentified Enron employee who worked on the effort, "that no buyer would be interested in purchasing the project from Enron."

In the standard world of corporate endeavors, the results of the effort were easily predictable. The doomed project would have to be shut down and then written off, with the marketplace reacting to the stumble in a predictable fashion: Enron shares would drop, the company would remain in the doghouse for a few months, and perhaps a few heads would roll.

But with the partnership scheme described in the complaint, all of that was sidestepped. Instead, Enron shifted enough of the failed project to LJM to remove it from its books, in a transaction that appeared to be a sale. Through that transaction, Enron was able to recognize $65 million in income in the final half of 1999, when it was struggling to meet its financial projections."

Now, why would Enron do that?

The answer, dear reader, is that Enron was just responding to the kind of "entrepeneurial structure" people like Michael Jensen had advised in the 80s. Economists of the red meat school (you know, the ones who want to the poor to work harder in their maquilladoras over the river, so that eventually, as the soil is fertilized with their bones, accumulated over the generations, one of their great great grandchildren might enjoy the rare executive perk) -- yes, the governing classes' shock troop theorists, that is who we are talking about, in a word -- had promoted the idea that no amount was too great for the entrepeneurial exec to earn. Steve Jobs gets one billion dollars for last year? Why, he earned it. Larry Ellison walks off with seven hundred million dollars while his company wallows in shortfalls? He deserves it. These, of course, are the same troopers who we can count on to come out whenever the discussion turns towards raising the minimum wage. Heavens, that just hurts the poor!

So, what do you do? You establish a bonus structure that parallels your accounting structure. The latter is designed to make all deals seem immediately profitable, by various pathetic tricks. And that stimulates the greed gland (located south of the hypothalamus), because guess what? You get a nifty bonus on big deals like that.

Thus, one can only laugh when Eichenwald brings out the true blue market as darwinian force argument:

"But in the end, Enron and its executives were given a harsh lesson about the realities of market discipline. By failing to promptly take their medicine for the wrong-headed mistakes committed over the years, the executives allowed Enron's business problems to build up, hidden behind a thick curtain of obfuscation.Then, finally last year, when errors discovered in the partnerships required certain of them to be moved back onto Enron's books, the curtain began to part."

Right. What executives? Skilling? Out by June, 2001. Lay? Having used the company as a slot machine, by November, 2001, he'd gotten all he was going to get out of the beast. How about Thomas White, our secretary of the Army, and the presumed head of Enron's energy unit? Out by February, 2001, when his stock options were primo. The harsh lesson, here, is for the suckers, not the execs. Folks like the Enron employees who couldn't get their money out of the place when the accounting department froze their 401ks on a technicality.

So what is an exec to do if the rules of the candystore look like they are changing? Well, hit back, and sound the great themes of America, liberty and loot, uh, scratch that, justice for all. The FT has a report on the annual meeting of Pigs of America, uh, scratch that, the Business Council, an annual reunion of CEOs. This kind of gas is being vented at this event:

At the press conference to launch the event on Wednesday, he [Esrey, CEO of Sprint] and other members of the Council's committee pointed out that a combination of new legislation, tighter credit, depressed markets, and stricter regulation was stifling risk-taking at US companies."This is a climate that doesn't reward risk-taking - yet the fundamentals of business are to take prudent risks at the right time," said Carly Fiorina, chief executive of Hewlett-Packard. She said she was pleased that the group had completed its takeover of Compaq Computer already, because in the current environment "you're less likely to undertake bold moves even if you feel they're right".

Bill Harrison, chief executive of JP Morgan Chase, warned that attempts to reform Wall Street - led by Eliot Spitzer, New York attorney-general - might further weaken the sector. "I just hope we don't go too far with these things [so] that we damage what's made Wall Street great and what's made this country great."

What can one say about a JP Morgan man bitching about being investigated for penny ante stuff -- you know, bilking the greedy masses of billions of dollars and the like -- by this Spitzer fella?
Laughter in the dark, laughter in the dark.

Monday, September 30, 2002


The unwinding

LI recommends a Schopenhauerian article in the Economist today. War, depression, and a moronic leader -- it sounds like Austria in 1935, but no, my good buds, no. It is our own beloved superpower, or hyperpower, or mononucleus macronuclear power, the US of A, which seems destined for a bad period. Although we aren�t totally convinced by this kind of talk � after all, during the last bad period, 1991, there was talk of the collapse of US banking. The better bet is that we will eke out this time. But odds wouldn�t be odds if there wasn�t a chance of the losing end:

"The unwinding of America's economic and financial imbalances has barely begun. Share prices are still overvalued by many measures. Companies still need to prune much more excess capacity. Most worryingly, debts still loom dangerously large. Although much of the increase in reported profits in the late 1990s was illusory, the increase in corporate debt to finance that unprofitable investment was horribly real. Dresdner Kleinwort Wasserstein, an investment bank, estimates that American corporate balance sheets are more stretched than at any time during the past half-century.

"American households' net worth is likely to shrink again this year, for the third year running, after a long, uninterrupted rise since the second world war. If lower share prices cause households to increase their saving sharply, America could be pushed back into recession. Even if saving rises more gradually, the economy is headed for several years of below-trend growth. A weaker dollar would help to cushion the economy, but only by squeezing growth in other countries. The rest of the world, which benefited so handsomely from America's speculative binge, will now have to share its hangover."

Isn't that a lovely word, "unwinding"? It has the crisp techno-beauty of one of those words so cleverly collected by Don Delillo � an artificial flower of rhetoric. All those snappy terms that derive distantly from the impression managers, the think tank, the game theorists. Unwinding should remind us of yarn, and homemakers, and cats; oddly enough, it evokes none of those things. My guess is that unwinding comes from a more clockwork world, one in which the key can go in the slot and uncoil the mechanism. We don�t know when "unwinding a position" became a wall street phrase of art, although we�ve looked around. Where are the lexicographers of tomorrow? Here�s a puzzle for you.

Swift uses a prototype of the phrase in "The tale of a tub;"

"However, that neither the world nor our selves, may any longer suffer by such misunderstandings, I have been prevailed on, after much importunity from my friends, to travel in a complete and laborious dissertation upon the prime productions of our society, which, beside their beautiful externals, for the gratification of superficial readers, have darkly and deeply couched under them the most finished and refined systems of all sciences and arts; as I do not doubt to lay open by untwisting or unwinding, and either to draw up by exantlation, or display by incision."

LI knows that Wall Street does have its litterateurs. However, we doubt that the term came from Swift, however nicely this would fit our sense of the, uh, impostures of high finance

Lawrence's Etruscans

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