the golden bullet proof golf shirt

In the 1990s, Thomas Friedman wrote a book that, in a sense, was the founding document of neo-smarm – a pundit style for the end of history crowd. It was called the Lexus and the Olive Tree, or something like that, and it was littered with phrases that are instantly bullet point-able - amply demonstrating the difference between the art of the epigram and the banality of the sound byte. Neo-smarm is neo-liberalism that has kicked off its shoes, and Friedman is its master.

I mention this not to attack the latest Friedman column – who cares about the latest Friedman column, or the one before that, or the one before that? Rather, it is to borrow a phrase from his book that struck me at the time. Friedman coined the phrase ‘golden strait-jacket’ to refer to the ‘de-politicizing’ of economic decisions. By de-politicizing, he really means the segregating of political decisions from the will of the people, as evidenced in elections and other such Christmas ornaments. . Not that Friedman was opposed to democracy, now – he loved the use of democratization. For him, day trading ‘democratizes’ the stock market. In fact, any popular consumerist fad immediately gets the “democratizing” label from Friedman, who’d like the producers of wealth to confine their politics to the consumption of brands. Meanwhile, the smart guys in the room, in Treasury, the Fed, and the board rooms of the great and good banks, make all the macro economic decisions for us. Cause they have the models, you see.

Since Friedman’s paen to the end of the business cycle, we’ve had – the business cycle. The first one whipped the butt of NASDAQ, and the second one whipped the butt of about every American corporation, including the business of shopping malls, from which Friedman’s wife, and Friedman, derived their considerable wealth.

And yet, the golden strait-jacket survives and flourishes. Its biggest fan is the President. And its effects are strewn across the Great Recession. What other democratic society would look at the destruction of the wealth of the middle class – the destruction of 12 trillion dollars in their assets – and decide to loan, at less than one percent, 16 trillion dollars to the investor class? The answer is no democracy would do that. For that, we need a golden straight jacket.

It has taken some time, but the rest of the populace, it now appears, understands that golden strait jackets are really made of another material – one excreted, I believe, by mammals.

And so, as the golden straitjacket evolved, so did the bullet proof golf shirt. Via a fascinating article on couture for the plutocrats in the New Yorker by David Owen, it appears that Colombians, after having to undergo the violent wars of the 80s and 90s that pitted a pathological guerilla left against a pathological paramilitary right and both against a pathological network of cocaine cartels, have emerged from that din and casualty count with some innovative ideas about safety. Just as Big Pharma learned from the dime drug dealer how to market its anti-depressants and other various pills, so, too, from the world of kidnapping and drive-bys has emerged a cottage industry for protecting the plutocratic gut from the hollow tipped bullet.

The man the article centers on is a designer named Manuel Cabellero, who demonstrates his product by shooting the visitor: “the founder and chief executive of a company that makes "specialized personal protection," and when he shot me I was wearing one of his products, a black suede jacket with lightweight bulletproof panels in the lining. The company, which is called Miguel Caballero, makes fashion-oriented body armor, and sells it mainly to executives, celebrities, political figures, and others who have security concerns but don't want to dress like members of a SWAT team.

Popular items include a three-button blazer, a V-necked wool sweater, a Nehru vest (for customers in the subcontinent and, conceivably, for anxious idolizers of Sammy Davis, Jr.), and a polo shirt, which, because of its extra bulk, may usefully promote a compact golf swing. Caballero also makes bulletproof camouflaged hunting clothes, to protect hunters from misdirected shots fired by their companions--an eventuality that he referred to as "a Dick Cheney accident."

Are we all seeing ‘growth industry” here? We should be. As from the American ashes there begins to grow an American third world culture, I do not think the plutocrats are going to be able to do without the third world billionaire’s accessories, among which are the four car squadron (which I have seen, negotiating the streets of Mexico City), the bodyguards and bodyguards of bodyguards (the latter selected to stop the first line of bodyguard if, as it sometimes turns out, the first line gets the idea to kidnap the body they are guarding) and the appropriate security procedures. The age of the golden bulletproof polo shirt is definitely here.

“When he started making bulletproof garments, nineteen years ago, his customers were almost exclusively Colombian--a reflection both of the small scale of his original enterprise and of the turmoil in the country at the time. Today, ninety-eight per cent of his production is for export. He has dealers in two dozen countries and customers in more than fifty, and he has a retail boutique in Harrods, where some of his golf shirts sell for the equivalent of about twelve thousand dollars.”

Twelve thousand dollars is a significant sum. How significant? According to a recent probe into the underbelly of the wondrous neo-liberal age prophecied by Tom Friedman: From Andy Kroll in Tom's Dispatch

“According to Census data, between 2009 and 2010 alone the black poverty rate jumped from 25% to 27%. For Hispanics, it climbed from 25% to 26%, and for whites, from 9.4% to 9.9%. At 16.4 million, more children now live in poverty than at any time since 1962. Put another way, 22% of kids currently live below the poverty line, a 17-year record.

America’s lost decade also did a remarkable job of destroying the wealth of nonwhite families, the Pew Research Center reported in July. Between 2005 and 2009, the household wealth of a typical black family dropped off a cliff, plunging by a whopping 53%; for a typical Hispanic family, it was even worse, at 66%. For white middle-class households, losses on average totaled “only” 16%.
Here's a more eye-opening way to look at it: in 2009, the median wealth for a white family was $113,149, for a black family $5,677, and for a Hispanic family $6,325. The second half of the lost decade, in other words, laid ruin to whatever wealth was possessed by blacks and Hispanics -- largely home ownership devastated by the popping of the housing bubble.”

So, we can evaluate the golf shirt as double the wealth of a median Hispanic family. Fun, eh?

“I had heard that President Obama, during his Inauguration, wore clothing made by Caballero. Neither Ballesteros nor Caballero would say anything about that, but they did tell me that the company's customers include King Abdullah II of Jordan, the Prince of Asturias, a Thai princess, and the leaders of El Salvador, Guatemala, Honduras, Paraguay, Panama, and Malaysia.”

History lesson for Occupy Wall Street: smash the stock market

In the election of 1910, Democrats took control of the House of Representatives. The economy still hadn’t recovered from the bust of 1907. The original impetus for the progressive legislation that had received support and scorn in equal measure from Teddy Roosevelt – America’s most bipolar president – had not died out, which is why President Taft couldn’t block the amendment to the Constitution instituting a federal income tax. Unfortunately, the move to force corporations to incorporate federally, instead of in the states, failed.

There was, back in those days, a burning issue that has flamed out so much since that the very word brings an eery blank to the mind: overcapitalization. The reason this figured so heavily as a scare word among the progressives is that the era from the turn of the century to the establishment of the Interstate Commerce Commission, in 1914 – which is generally taken to bookend the progressive moment – saw the instantiation of what Lawrence Mitchell, in The Speculation Economy, claims is the founding moment of modern American capitalism: the subjugation of industry to finance. This was a moment that expressed itself on several fronts – for instance, the Courts finally cleared up the confusion about how property law applied to corporations – creating a new form of property, defined by John Commons this way: [the old common law definition] … is Property, the other is Business. The one is property in the sense of Things owned, the other is property in the sense of exchange-value of things. One is physical objects, the other is marketable assets.” [quoted by Sklar, page 50]

One of the results of this legal change, or rather, one of the reasons it came about, was that the notion of a corporation as a body issuing stock was changing. And that change brought up the charge of overcapitalization – that a corporation, instead of finding its raison d’etre in using its assets to produce a good or service on which it made a profit, was now an entity wrapped up entirely in the market for its stocks.

In 1911, a bill was voted through the House of Representatives and narrowly turned down in the Senate that would have smashed this legal structure. S. 232 built on legislative ideas already crafted during Roosevelt’s term (remember, Roosevelt was in the wings in 1911, and would run in 1912, thus ruining Taft’s chance at a second term). S. 232 would not only have required federal incorporation of all interstate businesses. Here’s Mitchell’s description of it:

“It would have replaced traditional state corporate finance law by preventing companies from issuing “new stock” for more than the cash value of their assets, addressing both traditional antitrust concerns and newer worries about the stability of the stock market by preventing overcapitalization. But it would have done much more.

S. 232 was designed to restore industry to its primary role in American business, subjugating finance to its service. It would have directed the proceeds of securities issues to industrial progress by preventing corporations from issuing stock except “for the purpose of enlarging or extending the business of such corporation or for improvements or betterments”, and only with the permission of the Secretary of Commerce and Labor. Corporations would only be permitted to issue stock to finance revenue-generating industrial activities rather than finance the ambitions of sellers and promoters. … S. 232 would have restored the industrial business model to American corporate capitalism and prevented the spread of the finance combination from continuing it dominance of American industry.” (137) In Sklar’s account of the Roosevelt era draft, ‘whenever the amount of outstanding stock should exceed the value of assets, the secretary would require the corporation to call in all staock and issue new stock in lieu thereof in an amount not exceeding the value of assets, and each stockholder would be required to surrender the old stock and receive the new issue in an amount proportionate to the old holdings.”

This may well be the most radical legislation every considered by Congress. Think of it – the stock market as we know it today simply wouldn’t exist. Instead of being a legal fiction, the stock holders would literally own the company, and their profits would be limited to the profits of the company. The price to earnings index would level out so that the stock price would only hover marginally above earnings.

Needless to say, America did not go down this path, and the powers that be found the experience so traumatic that it dropped out of any account of our history. We accept the equities market as it is as an expression of American capitalism. It is really an expression of changes in the physiology of American capitalism that came about during this era – almost overnight, in Mitchell’s view.

Changes can be changed. Incorporating all companies nationally, with the Commerce department, instead of this bogus crosspatch of state incorporations, would be one radical change we could make to take control of our economy. Another would be to get rid of a market based on P/E, and make it a market based on P/A - for Price to Assets.

to be buried naked

For Mr. T.

I am fascinated and mystified by Chinese history. I am always coming across stories that are on the edge of allegory – but unlike allegory, don’t seem to reference any larger exterior abstraction. Rather, they seem to allegorize concepts I have never thought, and which I suspect have not been thought, at least not yet. Allegories of the virtual, quoi.

Which is my preface to this passage I found in an essay by a French sinonolgue, Jacques Gernet, entitled: To be buried Naked. From 300 B.C. to 100 BC, Chinese nobles engaged in a status contest of more and more luxuriant funeral ceremonies. It was not enough to be buried in one coffin – one coffin was put in another, all made of different and rare substances. It was not enough to be buried with ceremonial robes, but the finest jewelry had to be added. It got to the point that families ruined themselves to bury their dead.

Gernet notes: “It was thus necessary to be an original to go against practices that had imposed on all of society such powerful motifs, and to want to be buried nude, like a certain Wang Yangsun to which the History of the Han consecrated the following notice:

Yang Wangun was a man of the epoch of the Emperor Xioaowu. He studied the techniques of Huangdi and of Lao Tze. Very rich, he had given himself without counting to cost to various longevity practices. Being sick and on the point of dying, he addressed his sons as follows: “I want to be buried naked in order to make a return to my true nature. Don’t change my wishes the slightest jot: when I am dead, make a canvas sack, put my body in it, and dig a hole seven meters deep. When he put me in it, pull the sack off me from the direction of my feet, in order that my body might be in contact with the earth.” His sons, discovering that it was difficult not to obey his orders and insupportable to obey them, went to see his friend, the marquis of Qi (K’I), who wrote him this letter: “Although you are suffering, I have to accompany the emperor to Yong for the sacrifices and cannot come to see you. I am praying that you remain alive. Don’t worry, take your medicines and you will be properly sustained. I learned that your last wish was to be buried naked. If the dead are unconscious, there would be nothing to say about that. But if they are conscious, you would inflict a cruel torment on your cadaver underground; and you will be going to present yourself naked to your ancestors. This is something that, in your interest, I cannot accept. Moreover, doesn’t the Classic of Filial Piety say: “They will make him a first and a second coffin, as well as a suit and a winding sheet? “ These are the rules that have been handed down to us from the saints. How can one be so stubborn and act individually, following one’s own knowledge?” To which Yang Wangsun responded: “I have heard that the sainted kings of old instituted the funeral rites, because men at that time did not have any regard for their deceased parents. But, in our days, we go too far. This is why I am having myself buried naked in order to redress the customs of my age. Sumptuous funerals are really of no use to the dead, and yet everyone tries to surpass his neighbor; this results in an unfettered waste of wealth, which will decay under the earth. What is put in the earth today is sometimes dug up tomorrow [by the pillagers of tombs]. But besides, death is only the final transformation and the return of all beings. When this return is accomplished and the transformation is perfect, beings return to their true nature. This return to the obscure indistinct which has neither form nor voice is the union with the Dao. The display of luxury aims to blind the crowd, but sumptuary funerals keep the dead from returning to their true nature. To act in such a way that the return cannot happen and the transformation cannot come to its destined end is to deprive beings of their natural place. But I have also heard that the spirit belongs to heaven and the body to the earth. When the spirit quits the body, each of them returns to their true nature. This is why one speaks of gui [the revenant]; gui means return. How can the cadaver, which remains as alone as a brute thing, be conscious? However, one wraps it in silks, one isolates it in two coffins, one ties up its limbs and its body in ribbons, one puts jade in its mouth, and in order that the transformation cannot happen, one mummifies it. It is only a thousand years later, when the coffins have decayed, that the dead can at last return to the earth and find their true home. By this logic, what good is it to be a guest of the earth for so long? In the past, in the time of King Yao, in high antiquity, in order to bury the dead, one scooped out a tree in the form of a coffin and one made cords from bamboo. One never dug too deeply, in order not to trouble the springs of water, but deep enough that the miasmas could not escape outside. The sainted kings loved simplicity above everything in life as in death. They never bothered with useless things and did not spend their goods on them. The great sums we now spend on burials retard the return and prevent the destined end. The dead have no consciousness of what is done in their honor, and the living don’t find any value in it either. It is a double fraud. And this, I will not do.” The maquis of Qi approved these words, and Yang Wangsun was thus buried nude.”

Wallfare around the world! and my definition of democracy

The case of the Arab Banking Corp.

Among the banks that got TALF money from the Fed was a certain entity called Arab Banking Corp. Arab Banking Corp has a New York Branch and, when the ‘window’ of TALF was opened during the bad, bad financial blizzard of 2008, the Fed, in the best spirit of American hospitality, gave the bank emergency loans – on which interest ranged from 05 to 1 percent! to a bank that is partly owned and controlled by the Central Bank of Libya. Gadhafi’s bank.

According to Bloomberg, which broke the story -- -- the bank got five billion in loans. We, the people of the US, decided in our infinite wisdom, as routed of course through the ouija board that Ben Bernanke uses to decide these things, to loan the bank five billion dollars. And do you know that the bank paid it all back? That was so sweet. Of course, if I was given 72 rounds of money at one percent interest or below, I might be able to pay it back with interest and… even make a profit!

The Arab Banking Corp apparently made a wonderful impression on the Fed, on the Treasury, and on the Obama administration overall! Read the last paragraph of this passage from the Bloomberg story:

“The bank, then 29 percent-owned by the Libyan state, had aggregate borrowings in that period of $35 billion -- while the largest single loan amount outstanding was $1.2 billion in July 2009, according to Fed data released yesterday. In October 2008, when lending to financial institutions by the central bank’s so- called discount window peaked at $111 billion, Arab Banking took repeated loans totaling more than $2 billion.

Fed officials say all the discount window loans made during the worst financial crisis since the 1930s have been repaid with interest.

The U.S. government has frozen assets linked to the regime of Libyan ruler Muammar Qaddafi and engaged in air strikes against his military forces, which are battling a rebel uprising in the North African country. Arab Banking got an exemption that allows the firm to continue operating while barring it from engaging in any transactions with the Libyan government, according to the U.S. Treasury Department.”

Oh, those banks! The way the government treats them, it makes you dream… Dream the utopian dream of a government that treats its citizens the same way it treats international banks! I believe that dream is called democracy, and one day we will certainly have it.

From the files of Wallfare: Yorkville associates, come on down!

In a series meant to probe that underappreciated beast, the toiling trader, Joris Luyendjik interviewed one pathological specimen in a high frequency trading joint who, after describing what he did – basically using a computer to poach micropoint, icrosecond advantages, which must be the reductio ad absurdam of the ‘market’ as an in any way useful social entity – regaled the readers of the Guardian with his philosophy, a sort of autistic egotism wrapped in Darwinian slogans that were exploded by my grandpa’s grandpa. However, the sad soul of the trader, and the sad state of an economy that hasn’t regulated him into extinction, is not the point of this post. The point was a bit of lore he spouted, that is now the common currency not only of the City, but of the Street.

“Some of the commenters [on the Guardian] figured out that I work for a hedge fund, meaning we use money given to us by clients. Hedge funds did not receive any bailout money. They also seem to think that these traders effectively trade with a safety net because of these bailouts. Clearly since no bailout money is given to hedge funds, they don't have this safety net.”

Of course, the trader is as wrong about his own business as he is about Darwin. Not that I blame the poor pathetic rascal: the amnesia about what the U.S. government did is miles deep on the Street. Wallfare has been so normalized that the traders and the high salarymen cannot even see it, now.

Here’s the story of one hedgefund that did get Wallfare:

“A Jersey City, N.J., hedge fund under Securities and Exchange Commission investigation received more than $230 million in federal loans as part of a government bailout program.

Yorkville Advisors has been part of the Term Asset-Backed Securities Loan Facility Program since last year. Under TALF, the Federal Reserve Bank of New York has up to $1 billion to lend as part of an effort to inject liquidity into the ABS market.
Yorkville received some $233 million of that financing, using it to buy $253 million in securities last year for its flagship, YA Global Investments. The TALF deals were made via a subsidiary of the fund, New Earthshell Corp., and placed with a special-purpose entity called YA TALF Holdings, Forbes reports. The hedge fund still owes the Fed $162 million.”

This is of course a pennyante amount. You, my friend, may not be able to get one cent from the Fed even if you write them and ask pretty please and include pics of your starving kids, but to other of the higher players in the Wallfare world, that loan is pocket change.
Since it isn’t pocket change to me, though (if I and one thousand of my clones worked one thousand years at the rate in which I make money, we would not have collected anything near 230 million dollars), I figure that it might be a good idea to poke around Yorkville Associates, and see what they are about.

So what does Yorkville do, and why would we want to loan it money?

Here’s a good summary of one of Yorkville’s big money makers:

“Yorkville Advisors, founded by 38-year-old Mark Angelo in 2001, is one of the largest hedge fund firms specializing in investing in thinly-traded and often illiquid outfits by making private investments in public equities, also known as PIPEs. The hedge fund firm reported nearly $1 billion in assets as recently as 2008. Angelo’s variation on PIPEs is a structured product called a standby equity distribution agreement, which like most PIPEs often causes the stock of the company receiving the investment to drop because it results in Yorkville’s funds collecting discounted shares.

A report prepared by Sagient Research’s PlacementTracker shows that Yorkville has entered into $762 million in PIPE deals since 2001, causing the underlying stocks to drop 38% on average in the first year. Most of those investments were made by Yorkville’s Cornell Capital Partners, which later changed its name to YA Global Investments.
YA Global Investments reported a total return of 6.04% in 2009 and 6.22% in 2008, its financial statements say. It reported a net investment loss of 0.09% in 2009 and net investment income of 5.43% in 2008.

According to the one-page independent auditor’s report prepared on August 13 by McGladrey & Pullen, YA Global Investments’ consolidated financial statements include investments valued at $804 million, representing 94% of its partners’ capital plus the amounts due to certain Yorkville special purpose vehicles, “whose fair values have been estimated” by Yorkville Advisors “in the absence of readily ascertainable fair values.”

Now, that seems a bit curious. We gave this outfit money so that it could use the money to mount a play to make selected stock prices drop, which made it money.

Hmm, how is this possible? Well, here’s an explanation of PIPE action as it pertains to another fund, the NIR group, written by Matthew Goldstein at Reuters:

"But what’s surprising to me is why the SEC is just looking into the NIR funds now, given that it has been a dominant player in so-called “death spiral” convertible market. These securities have gotten a bad rap over the years because they include a trigger that permits bonds to be converted into common shares whenever there is a precipitous drop in the prices of a company’s stock.

Back in 2004, the SEC launched a sweeping probe into the market for these and other so-called PIPEs–private investments in public equity. Most PIPEs are a form of a convertible bond, mainly sold by small-cap companies, with terms highly favorable to hedge fund investors.
The shorts love PIPEs because the flood of stock in these highly-illiquid small cap companies invariably pushes the share prices lower. Not surprisingly, death spirals are real popular with short sellers.

The SEC probe led to a number of actions against hedge funds charged with improper short selling. Many of the hedge funds nabbed by the SEC were found to be shorting companies doing PIPES in advance of the offering–in effect trying to game the deal.
When I worked at TheStreet.com I did a lot of reporting on PIPE abuses and the SEC investigation. NIR was never charged with any wrongoing by the SEC during that long-running investigation. And it’s very well possible that NIR did nothing wrong in the death spirals it invested in–just as it is possible Ribotsky’s firm has done nothing improper this time around either.
But in 2006, I wrote a story for TheStreet.com about the surprising return of the death spiral, and in it I noted that NIR was one of the biggest players in this kind of PIPE deal. Back then I reported that there were no allegations of wrongdoing by NIR, but the firm did report having “some stellar annual returns.””

Well, okay. The Federal Government can’t exactly loan money to the deadbeat homeowner. What would he use it for? Paying off his mortgage? The Fed just chuckles about such obvious inefficient wastes of money. The Government will, indirectly, loan to students, but not at one percent interest – cause that would barely cover the penthouses of the CEOs of the lending companies. As for poor children’s health care – who is gonna pay any loan there back? Forget about it. As Mr. O. and his Republican opponents are agreed, we just have to cut back entitlements to the non-value crowd.

But in the case of Mr. Angelo’s death spiral fund, different criteria apply. We need to loan to Mr. Angelo’s death spiral fund because we want to prevent Depression. We want to prevent catastrophe. We want to preserve civilization.

The death spiral fund is the kind of thing the government pats on the head. It is the kind of thing it loans 230 million dollars to.

Now, one of the arguments made in comments sections of blogs and newspaper stories about Occupy Wall Street is that the financial section is flailing. It is not racking up the profits. This argument is apparently oriented towards getting us to pity this sector, but it raises the question: you mean we loaned out 16 trillion dollars and the financial sector is still rotten?
In miniature, this seems to be the problem with Yorkville. Thus, the headline in Forbes earlier this year:
“New Jersey Hedge Fund Posts Its First Down Year In A Decade”

Turns out that the company has problems stemming from 2008 that it still can’t cope with. And even as the stock market recovered, a poor little fund that depends on a complicated mechanism to pull stock prices lower and benefit from the short side can’t seem to get no traction.

“The hedge fund firm, which reported nearly $1 billion in assets as recently as 2008, specializes in a structured product called a standby equity distribution agreement. In connection with investor redemptions it could not meet in 2008, however, Yorkville Advisors restructured its hedge fund operations, creating special purpose vehicles and giving redeeming investors the option of receiving securities in-kind or ownership in the SPVs. The SPVs were distributed pro-rata participation interests in YA Global Investments’ securities. The plan has been for the SPVs to get cash distributions as YA Global Investments liquidates its assets and for the SPVs to pay out its members.”

Ahh, financial gobbledy gook! In plain English, the fund resorted towards various shifts to cover up a money losing strategy, and lost money anyway.

Still, given these facts, our loan saved the company from bankruptcy, and so surely contributed to the greater good. Which brings up the question: what kind of greater good has Yorkville been generating over the past decade?

Looking up the company’s history, one discovers that it lies in a profusion of nomenclature and ‘vehicles’, which make it a little difficult to follow in any linear fashion. But one thing at least is clear. Yorkville is a legal entity created as part of something called Cornell Capital. And Cornell Capital, and Mr. Angelo, certainly have some interesting associates!

In 2007, an investor group named sleuthshares ran an investigation of a number of New Jersey companies that had two things in common: their directors had records for fraud, and they were connected to Cornell Capital.

“Sharesleuth’s investigation uncovered a daisy-chain of dealmaking that has provided millions in hedge fund money to small, struggling companies and has generated millions in stock and cash for consultants, promoters and other financial middlemen
Sharesleuth will outline those connections in a series of articles over the next few weeks.
At the center of the deal making is Robert D. Press, who a decade ago was president of a company that ran a boiler-room brokerage called PCM Securities Ltd. He was in his early 30s at the time.
Federal prosecutors charged in 1999 that PCM and several related brokerages were infiltrated by organized crime and became part of a vast “pump and dump’ scheme that cheated investors out of more than $150 million.
More than 50 people connected to PCM and three other firms – Hanover Sterling & Co., Norfolk Securities Corp. and Capital Planning Associates Inc. -- either pleaded guilty or were found guilty of racketeering or fraud charges.
Press was not among those indicted.
Press more recently has been a presence at several firms that provided money or consulting services to small public companies, including Cargo Connection and others listed in the New Jersey court documents.
From November 2004 until late 2006, Press also was co-portfolio manager for one of Cornell’s affiliated funds, Montgomery Equity Partners Ltd.
Yorkville Advisors LLC is the general partner of Cornell Capital, and also was general partner of two other funds, Montgomery Equity Partners and Highgate House Funds Ltd. The latter two funds have been consolidated into Cornell.
Mark A. Angelo, the managing member of Yorkville Advisors and president of Cornell, was the co-portfolio manager of all three funds.
Cornell said it no longer has any association with Press, noting that “it didn’t work out, so we parted ways.’’ However, Press still has an active telephone extension that is reachable through the hedge fund’s main switchboard.
Sharesleuth’s investigation shows that Press and the Cornell family of funds participated in at least two financing deals alongside Robert H. Pozner, who was one of the original defendants indicted in the New Jersey fraud case in 2005.
Pozner, a former stock broker and trader, has signed a plea agreement that calls for a maximum of five years in prison. He previously pleaded guilty to securities fraud and perjury charges in another stock manipulation case and served three months in prison.”

Well, heavens, what the internet turns up! It is hard to believe that a little blogger, moi, could find this out and the Federal Reserve couldn’t. So I suppose we must conclude that a death spiral fund with a shaky history - the kind of fund that engineers drops in share prices and has associates that have been fingered for pump and dump kind of operations in the past - is just the kind of thing that we must prop up so as to not suffer from Depression and other horrendous events. And now that we have propped up this financial services sector, we shouldn’t go around taxing its CEOs too onerously – poor babies had quite enough scares for one decade!
But we should righteously cut the entitlements that the wage class uses to pursue its frivolous lifestyle.
Ask an economist, and this is the answer he’ll give you.
Of course, we could give them all the raspberry and occupy Wallfare Street.

the fed dole: hartford insurance, come on down!

Spotlighting Wall Street's Welfare companies

I've been loving the Occupy Wall Street group. And their newly published newspaper, the Occupy Wall Street Journal. So far it is only four pages. I'd suggest that the paper feature spotlights - easily assembled bits of new analysis about the entities on Wall Street that the Federal Reserve helped out, in a friendly way, with its 16 tril. in emergency loans.

So, without further ado, let's go on to one of them: Hartford Financial Services, which is of course more famous as Hartford Insurance. The Hartford took a heady flyer in the 00s, and alas, due to its CDS biz with AIG and its role in the sub-prime market biz, it was gonna have to go bankrupt when AIG had to go bankrupt. But luckily, Uncle Sam arrived! According to the Inspector General’s report on TARP:

“The Hartford Financial Services Group, Inc, which received 3.4 billion, reported that it invested 3.2 billion (94 percent) in high quality short-term investments or money market funds. This allowed the company to issue additional insurance policies. Hartford also provided $195 million (6 percent) in TARP funds to Federal Trust Bank…”

Now you might think, gee, isn’t it just sweet of Uncle Sam to loan out money to businesses who can then “invest’ them in short term money markets, i.e. put a couple billion down on a crap table? Why it is sweet. In fact, perhaps you should write your congressman suggesting that Uncle Sam loan you 3.4 billion dollars to invest in short term money markets. You can assure Uncle that you, too, will do something ultra virtuous with the profits.

But then, you might not have the pull Hartford has. Let’s look at their stellar CEOs!

The CEO in 2008, when Hartford needed just that pinch of help from Uncle, was a guy named Ramani Ayer. Now, you might think a CEO who steered the company near bankruptcy would be suffering at least a bit of a salary cut. You’d be right! According to Forbes, Ayer went from being the 76th on the list of CEO salaries all the way down to 151st. His total compensation was only 9.8 million, and that plummeted the figure for his five year compensation down to a mere 77.86 million. A man can barely buy a good cheeseburger (and a small town in Maine) for such a paltry sum.

Well, Ayer had generally a good run. The usual bumlicking profiles were issued about him in the 00s. He had the touch! He superbly managed the company - and how about that stock price. All the way up to when everything blew up on him. When he received criticism like this:

“The company and its stock price have taken such a battering that a retiree of The Hartford asked Ayer at the annual meeting when he would resign.

"Congratulations on driving The Hartford into the ground," Justin Winthrop, 88, of West Hartford, told Ayer. "You've destroyed the image, reputation and the name of The Hartford. When may we expect your resignation?"

Winthrop said he has been a stockholder since the 1940s, retired from The Hartford in 1982 after more than 30 years, and had been a secretary of the company — an officer level below vice president. He told Ayer if he didn't step down, the company's directors, who have "had their heads in the sand," should consider firing him.

Ayer, in response at the shareholder meeting, said nothing about resigning but said he understood it has been a traumatic time for shareholders and that he and the company are trying hard to restore its image.

In the interview, he added, "I feel we are in a very good place now with all the actions we have taken, the strategic thinking we have done. I really for now am focused on making sure we just continue that work."

In Connecticut, where the company had 12,500 employees at year-end, Ayer said the life and annuity operations "will certainly be impacted" by layoffs — the variable annuity business is being scaled back — and he expects property-casualty operations "would not be impacted anywhere near the same extent."

Now, to be fair, in response to the crisis and getting a little allowance from the Fed, Ayer’s compensation, as we pointed out, did go way down. And in due course he was canned, and the new CEO came in with an inflation adjusted salary – times are tough, and we can’t blame the new CEO, Liam McGee, for taking a bit more – he was given a mere 4. 8 million in cash and 7.26 million in stock.

He is not, of course, the only millionaire working in the upper management of Hartford. The Courier ran a nice article about the upper management compensation of Hartford last year, that should make us all proud that we helped these guys out:

"By any measure, 2010 was a significant turn-around year for The Hartford," said company spokeswoman Shannon Lapierre. "We reported $1.7 billion in net income versus a net loss of more than $888 million in the prior year."

Chief Financial Officer Christopher Swift received $2.1 million last year in salary, incentive pay, change in pension value, stocks vested and other compensation. Additionally, he received stock awards valued at $1.79 million when they were granted which will vest at a later date.

Swift, a former AIG life insurance executive, took over as chief financial officer in February 2010.

Lizabeth Zlatkus, the former chief financial officer and current chief risk officer, received $4.89 million in salary, incentive pay, change in pension value, stocks vested and other compensation. She also received stock awards valued at $2.67 million when they were granted and will vest later.

David Levenson, president of the company's wealth management division, was compensated $3.2 million, not including $1.3 million in stock awards that vest later.

Gregory McGreevey, chief investment officer and president of Hartford Investment Management Co., was compensated $2.55 million, not including $1.2 million in stock awards that vest later.

Andrew Pinkes, executive vice president of claims and head of commercial markets, was compensated $2.26 million, not including $782,617 in stock awards that vest later.

Former Chief Operating Officer John Walters received $5.37 million in salary, stocks vested, severance and other compensation, which doesn't include $1.77 million in stock awards that vest later. Walters left in July to "pursue other opportunities."

I particularly liked the fact that Hartford could cough up so many bucks for Walters when, apparently, he only worked at the company half a year. Good job! I'm sure that the money bought very valuable intangible good will from Walters, whereever his other opportunities lead him.

Among the comments to thsi Hartford Courier article, we especially like this one:

“Been with this company since coming out of college about 10 yrs ago. I do have a degree and several certifications. Upper mgmt lowered most employess tiers (demotion) because they wanted to restructure our career paths. Pay is low for someone who starts at the bottom and a typical annual increase is 2.5% of your salary. Work here only out of desperation.”

Well, times change, and Hartford changes with the times, too! After the Fed bailouts, Congress, pretending to care, passed a package of regulatory changes that especially impacted on systematically important financial players. Now, one definition of that is a player who is an insurance company who gets 3.2 billion dollars to ‘invest’ in the short term money markets from Uncle Sam. But apparently, it is no longer going to do that stuff, no sir! According to a recent NYT article, with which I’ll end this spotlight:

“A few big insurers have sheared off businesses that would land them under the Federal Reserve’s thumb.
In May, the Hartford Financial Services Group sold off a thrift it bought in 2009 to secure billions of dollars of bailout funds designated for banks. In February, the Allstate Corporation sold a similar bank that had made it eligible for aid, though it decided not to accept the cash.
Now, both Hartford and Allstate are arguing that they should not be deemed systemically important — a claim raising eyebrows in financial policymaking circles.
“You would want to be particularly attentive to firms that got themselves into trouble during the crisis, needed government assistance, and now that they are subject to real supervision at the federal level, are hoping to escape additional regulation,” said Michael S. Barr, who recently stepped down as the assistant Treasury secretary for financial institutions to return to the University of Michigan law school.
A Hartford Financial spokesman, David Snowden, said the sale was part of a broader strategy of “focusing our resources on our core business and insurance operations.” Allstate, in a statement, said its decision was partly due to concerns that the new financial legislation would impose rules that the company “did not consider beneficial given the limited role of the Allstate Bank in our overall strategic plans.”

be realistic, demand the impossible

Another note for Occupy Wall Street.
One of the problems with the rhetoric of populism is that it has a tendency to lead one to the individual malfactor - which has its uses, but often masks the larger structure that normalized malfeasance. And so it is with the charge that the bankers are greedy. Well, they are. However, it has two bad side effects: it can be used to trivialize the protest, and it displaces the real focus, which should be on the banks themselves. I don't really care whether individual bankers are greedy - I care that the system in which they operate doesn't constrain their greed, as it should. Thus, greed becomes not a personal trait, but a standard operating procedure incorporated impersonally into the way business has to be conducted.

Long ago, at the very beginning of the capitalist mentality, Mandeville wrote about the fact that private vices can be public virtues. Greed and envy can very well motivate moneymaking as well as the sense of justice among individual players. But their effects are secondary to the systems in which these passions are allowed to operate. Or, in less muckity muck wording, greed and envy can operate for the general good, as long as constraints are in place to keep them from becoming perverse incentives. It is the general good that counts, and that fills the charge of greed with a political content.

It is the systematic will to power of the investor class - however motivated - that needs to be counter-acted. It is impossible to predict whether a protest movement will actually generate a real and successful antidote to our general ills. Most protests do fail. Some succeed. I doubt that the roots of success or failure can be predicted outside of the particular situation of the protest. But one of the things we can do is use the protest and the attention space it takes up to propose the most radical changes to the system possible.
There as a slogan in 1968, be realistic, demand the impossible. I think that slogan may once again come into play in the current situation.