Thursday, December 08, 2011

Jamie Dimon actually thinks he is successful

James Dimon, CEO of JP Morgan Chase, said in a speech to stockholders yesterday, "Acting like everyone who's been successful is badand that everyone who is rich is bad,” he said. “I just don't get it."  

It is hard to know what to respond to first: the fact that he is clueless, or the fact that he thinks he is successful.

Rich, yes he is rich. But rich is not the same as successful. Often, rich is the opposite of successful. Rich is the symptom of a system that has allocated its resources illogically, responding to the kind of power differentials that are at the heart of rentseeking and monopoly. On Dimon's scale, Idi Amin was successful. Even in the narrow field of bank management, Dimon has been anything but successful. As the head of JP Morgan Chase in 2008, Dimon's leadership essentially led the bank to the brink of bankruptcy, and it would have gone over if  if the Fed hadn't thoughtfully chosen to 'loan' it emergency money to the amount of 391 billion dollars - at 1 percent interest or below. Here's a nugget from Business Week:

"JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told shareholders in March 2010 that his bank used the Fed's Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn't say that the New York-based bank's total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion came more than a year after the program's creation." 

In other words, if we judge success by an ability to operate as an insider and a parasite on a national scale, he's successful. If we judge success as, well, running a bank that contributes to the wellbeing of society and the creation of wealth, he is the very opposite of successful. He is rust. He is mold. He is the element that creeps and crawls, bores and bites, and turns wealth into dust. As Jeremiah, who had an eye for the Dimon type, put it:  "As the partridge sitteth on eggs, and hatcheth them not; so he that getteth riches, and not by right, shall leave them in the midst of his days, and at his end shall be a fool."

Anyway, let's look into the bones of his comments. He then announced that, according to his calculations – made no doubt with his fingers crossed behind his back -  he is paying 50 percent of his income in income taxes, state and federal. But one has only to look at his Business week profile – which is different from his Forbes profile, such are the 75 ways to see a CEO’s compensation package -- to see that his real income is in stock options. According to Forbes, he has a cool 58,968,234.00 that are currently exercisable. According to Businessweek, he has 31,089,284. The Forbes profile doesn’t include the happy little bonus he got of 5 million dollars, but both sources agree he did make a million dollars in salary. What does this mean? Well, remember that it means, firstly, a tax writeoff for JP Morgan – sweetly enough, Congress has decided that companies can write off the expense of stock options they grant to their execs against their corporate taxes. How convenient! And then it means that when Dimon wants to exercise his options, and he does it after waiting the approved period, 2 years,  he will pay an astonishingly low 15 percent on the amount.  But will he really pay that amount? Or will he exercise his options in such a way that they are run through the increasingly popular tax haven system, so as to avoid hits to the millions and millions for running a bank that exists simply because Lord Bernanke the Lesser looked upon it and decided lo, it was good - and created some money ex nihilo and loaned that money to it.
So mark it down: Dimon, after being bailed out by the government,  is complaining that 3 million dollars (an improbable sum, but lets pretend that his casual remarks correspond to his  accountant’s results) is going to be taken from his six million dollars, and at some date the government will even take 15 percent from his 20 million in stock options, leaving the poor man with a mere 21 million + dollars for 2011. 

One can not call this phenomenon successful, save in the way that freaks and frauds that beguile a gullible audience are successful. Mark the man for what he is: like a partridge that sits on eggs that will not hatch, he is a fool, a deadbeat, a loser with a bonus, another plutocratic mediocrity.

Here's another observation from Jeremiah about the end of systems in which creatures like Dimon experience success:

Because my people hath forgotten me, they have burned incense to vanity, and they have caused them to stumble in their ways from the ancient paths, to walk in paths, in a way not cast up;

16 To make their land desolate, and a perpetual hissing; every one that passeth thereby shall be astonished, and wag his head.

17 I will scatter them as with an east wind before the enemy; I will shew them the back, and not the face, in the day of their calamity.


Wednesday, December 07, 2011

The Forest Books

“All European culture – intellectual not less than material – came out of the woods.” Werner Sombart, Moderne Kapitalismus, Vol. 2

The symbolic key to Rousseau’s Discourse on the Origin of inequality is found in the circumstances of its writing, as Rousseau described them in the Confessions:

“In order to meditate at my ease on this great subject, I made a trip of seven or eight days to Saint-Germain with Therese, and our hostess, who was a good woman, and one of her friends. I count this excursion among the most agreeable ones of my life. The weather was beautiful. The good women took upon themselves the trip’s expenses and organization. Thérèse enjoyed herself with them, and I, without a care, I spent happy hours at mealtime, and for the rest of the day, plunged into the forest, I searched, I discovered there images of the first time, of which I proudly traced the history. I put my hands on the little lies of men, I dared to strip their nature naked, follow the progress of time and things which defigured them, and comparing man with natural man, show them, the true source of their miseries in their so called perfections. My soul, exalted by these sublime contemplations, was elevated to the side of the Divinity; and seeing from there my likenesses, followed, in the blind route of their prejudices, that of their errors, of their sorrows, of their crimes, I cried aloud to them in a feeble voice that they could not hear. Foolish men, who ceaselessly complain about nature, learn that all your woes come from you yourselves!”

The return to the forest makes the Discourse one of the great European forest books. In the vastness of its scale – that of universal history - Rousseau’s book resembles another book that also begins in a forest: “Midway through the journey of life/I found myself in a dark wood/for the straight way had been lost”. Dante’s story encompasses universal history as well, but it is not seen as such – rather, it is seen as a cosmological story, unfolding the great Biblical, classical and Christian events in the afterlife. In Dante’s beginning, the sign that the straight way had been lost is the dark wood; in Rousseau’s, of course, the sign that the straight way had been lost is outside of the forest of Saint German.

In Charles Olson’s reckoning with Moby Dick, he begins by highlighting the material importance of whale hunting to the economy of the United States in Melville’s time. An exhaustively materialist reading of Rousseau’s Discourse could, perhaps, begin by meditating on the importance of forests to the economies of France and other countries in Europe in the 18th century. As Jean Nicolas’ sweeping history of peasant rebellions in that century makes clear, forest rights were no longer the central issue in village jacqueries – but in the 17th century, they clearly had been. Even so, wood, along with clothing and food, stood at the center of European life in Rousseau’s time. Nor was Rousseau the last of the writer’s of forest books. We think of certain classic American writers as creatures of the wood – Cooper, for instance, and, supremely, Thoreau. But as I have pointed out before, Marx, too, begins his real career by entering a forest – or at least entering into the issues that swirled around forest property rights, as he saw them being reshaped in Köln.

Wood theft, according to the two scholars who have studied it in the German context (Blasius and Mooser) was one of the central crimes against property in the 19th century, from the 1830s to the 1860s – over about a generation. Marx’s five articles about the laws concerning wood theft are not, then, about an eccentric issue. And, as much as wood “theft” is an issue in the history of crime, it is also an issue in the creation of property –which is how it opened Marx’s eyes, as much as they were opened in his classes in property law at the University of Berlin. It is here that we find Marx dealing with the kind of enclosures that were central to Polanyi theory of the Great Transformation. Private property was not, on this account, merely guarded by the state – the still reigning liberal myth. Rather, it was through the state that private property was defined. To separate the state from the private sphere is to move from historic fact to ideological myth. Why that myth is important is another matter. What Marx saw happening was important in the way he came to see understand class, rather than remaining with Stand – a word that is hard to translate. Status, station, estate – those are the English equivalents.

In 1858, in the preface to the Contribution to a Critique of Political Economics, Marx wrote: “My major was jurisprudence, that I nonetheless only took up as a subordinate discipline near philosophy and history. In 1842-1843, as the editor of the "Rheinischen Zeitung", I was embarrassed for the first time to have to discuss so called material interests. The Rheinische Landtag’s treatment of Wood theft and the parceling out of land properties, which opened up an official polemic between Herr von Schaper, at that time the president of Rhein province, and the Rheinischen Zeitung over the situation of the grapegrowers, debates finally about free trade and tarrifs, gave me a first occasion to deal with economic questions. On the other hand the good will to go further into this further made up for a lot of special expertise, and a weak philosophically colored echo of French socialism and communism could be heard in the Rheinischen Zeitung.”

I find it significant that these three European writers, setting out to write, on the broadest of scales, the history of human civilization, begin in the forest. Surely this must be an intersigne, an exchange happening in the basement below universal history, where all the dealers in codexes are busy cutting them up and mashing them back together. One way to look at Capital – a bleak way, granted – is that it is the first European book to envision a world completely out of the woods, a human world which has put the woods behind it.

Southern California Death Trip

    “He was kind but he changed and I killed him,” reads the caption of the photo of a woman in an old tabloid. She was headed to ...