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Archive for July 2007

democratic party as financial instrument; or, capital-gains meritocracy

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Playing ball, one way or another, with the hedge funds outfits, seems to be more or less mandatory for Democratic candidates today. One wonders what would happen to the expected Dem-demographic if the average american actually knew what a hedge fund is, who is allowed to pay to play, and the like.

First, from tomorrow’s NYT, we can be happy to see that Chelsea Clinton has made it to the top all completely on her own and with absolutely no consideration of the fact that her job might keep mom (and dad) on the right side of the capital-gains tax issue.

But after Oxford, Chelsea Clinton signed up with McKinsey, a consulting company known as an elite business training corps. She was the youngest in her class, hired at the same rank as those with M.B.A. degrees. Her interview was more like a conversation, said D. Ronald Daniel, a senior partner. “That’s why she was a good consultant, because we are professional question-askers and professional listeners,” Mr. Daniel said.

Because clients often prefer McKinsey to remain invisible, the work was quiet, allowing Ms. Clinton and her peers to pretend that she was just another freshly hatched graduate.

“When she was at parties with us, she was one of the group,” said Gautam Mukunda, whose office was a few doors down from hers. “From what I know of her father, he has never been in any room in which he was not the center of attention, starting from before he became president. Chelsea has a deeply admirable ability to yield focus.”

Last fall, Ms. Clinton moved on, taking a job analyzing investments at Avenue Capital Group, a hedge fund run by Marc Lasry, a loyal donor to Democratic causes generally, and Clinton-related ones specifically. The company invests its $18 billion in the debt of troubled businesses.

Friends say financial independence is important to Ms. Clinton; she may improve on her low-six-figure McKinsey salary by hundreds of thousands of dollars at Avenue because of potential bonuses, industry headhunters say.

Next, we’ve got a piece from April 2007 about John Edwards stint as a “consultant” at Fortress Investment Group:

Two years ago, former senator John Edwards of North Carolina, gearing up for his second run at the Democratic presidential nomination, gave a speech decrying the “two different economies in this country: one for wealthy insiders and then one for everybody else.”

Four months later, he began working for the kind of firm that to many Wall Street critics embodies the economy of wealthy insiders — a hedge fund.

Edwards became a consultant for Fortress Investment Group, a New York-based firm known mainly for its hedge funds, just as the funds were gaining prominence in the financial world — and in the public consciousness, where awe over their outsize returns has mixed with misgivings about a rarefied industry that is, on the whole, run by and for extremely wealthy people and operates largely in secrecy.

A midsize but growing player in the hedge fund industry with more than $30 billion in assets, Fortress was the first hedge fund manager to go public, thereby subjecting itself to far more scrutiny. But it was an unusual choice of employment for Edwards, who for years has decried offshore tax shelters as part of his broader campaign to reduce inequality. While Fortress was incorporated in Delaware, its hedge funds were incorporated in the Cayman Islands, enabling its partners and foreign investors to defer or avoid paying U.S. taxes.

And finally of course there is the biggest hedge-fundraiser of them all, Barack Obama:

With $32.8 million in campaign contributions last quarter, Barack Obama, the Illinois senator and Democratic presidential candidate, easily surpassed his rivals in both parties. And it seems Wall Street money had something to do with it.

Employees of three big investment banks and one major hedge fund were among the leading sources of cash for Mr. Obama, according to data filed Sunday with the Federal Elections Commission. His contributors during the three-month period ended June 30 included Richard S. Fuld Jr., the chief executive of Lehman Brothers, and Kenneth C. Griffin, president of the Citadel Investment Group.

Citadel, a hedge-fund firm based in Chicago, was a wellspring of cash for Mr. Obama. In addition to the $4,600 he collected from Mr. Griffin — the maximum donation allowed from an individual — other Citadel employees donated a combined $147,550 to Mr. Obama’s campaign, according to the Associated Press.

Bulge-bracket investment banks also gave Mr. Obama a lift. Employees of Lehman contributed $160,760 to his presidential run (which includes $2,300 from Mr. Fuld), Goldman Sachs employees gave $103,550 and employees of J.P. Morgan Chase gave $101,950, records show.

Now, everyone seems to think that the dominant issue here that has the funders and fundees lining up behind candidates is the capital-gains tax issue (basically, when you make money on the appreciation of a good, including investments, you pay taxes at a much lower rate (15 vs. 33 percent) than someone who made their money the old fashioned way, by selling labor in exchange for a wage or a salary. “Strangely,” many of the Democratic candidates have been voicing support for capital-gains tax reform, even if it is, at times, of a cosmetic sort. So what gives? Given the recent chop in the market, and the dawning sense that some very shitty bets have been placed by these organizations, I’m wondering if all of those extremely wealthy Obama-Clinton-Edwards supporters aren’t thinking of something more along these lines

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July 31, 2007 at 2:46 am

Posted in Uncategorized

“operationally define ‘happiness’ Hillary Rodham”

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I’ve found my question for the next "youtube" debate in a weird article about Hillary Clinton’s letters to a penpal during college from Sunday’s NYT

Ms. Rodham skates earnestly on the surface of life, raising more
questions than answers. “Last week I decided that even if life is
absurd why couldn’t I spend it absurdly happy?” she wrote in November
of her junior year. “Then, of course, the question naturally bellows operationally define ‘happiness’
Hillary Rodham, acknowledged agnostic intellectual liberal, emotional
conservative.” *

I’d love to hear how she would answer this today. Actually, I wouldn’t.

* As you’ll notice, if you follow the link, the NYT has edited the paragraph I am quoting in the current web version. For clarity, it seems, but I much prefer the clotted, weird sentence that we get here in full.

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July 30, 2007 at 2:37 pm

Posted in consciousness

“in a word”

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I’m a regular reader of Jim Kunstler’s site where every Monday he unleashes a new blast about America’s rush towards towards a disastrous collision of peak oil, poor urban planning, and corporate and governmental malfeasance. The posts are stirring reads, really great rhetorically and in the details… but they are often enough marked by insanely bad “big picture” moments, where Kunstler hauls the load of shit he has collected up to an entirely unlikely and unhelpful location. For instance, while I’m not going to go into detail, but in the earlier days of the Iraq War he was particularly bad in spots, playing out a counter-productive “sure, the republicans are nuts, but those pansy liberals want to drive their big cars and not fuck with Iraq!” – as if it were ever possible to believe that bringing cheap oil to the homeland was ever the point of this adventure. But since I don’t have time to link you to his posts from this period, I’ll just leave it at the level of a brief mention… It is as if there is something (the professional freelancer’s need to make hay? plain old political perversity?) that makes him skew his otherwise decent stuff in unreasonable directions.

Today’s post is emblematic of Kunstler’s problem, albeit in a less offensive way than usual. Here’s a paragraph from the middle of the piece:

By the way, I believe the stunning failure of responsibility actually can be accounted for, though my theory may not be to everyone’s taste (especially the science hard-asses out there). In a word: entropy. The US has enjoyed unprecedented energy inputs and the result is unprecedented entropy outputs. The protean force of entropy then manifests as degradation in just about everything around us from the immersive ugliness of a landscape overbuilt with WalMarts, Pizza Huts, and vinyl houses, to the sexual perversion available on the Internet, to the surrender of standards and norms by executives in the financial sector. It’s as simple as that. Entropy rules.

“Entropy,” is it, or a very specific and describable, if complex, brand of political economy? What does it mean to blur the finance sector presentism that comes of deregulation and a crisis in profits, the inefficient and corrupt distribution of energy resources, housing speculation and the long history of American resistance to urban planning and transit investment, and (ugh) “sexual perversion” under the sign of “entropy” rather than, say, laissez faire deregulatory capitalism? Even if there is something “entropic” about all that it is going on, Kunstler needs to go a few more steps to tell us how it is so in solid terms. Throwing the metaphor out as if it itself is an argument just turns everything pointless, leads you to flip the page and move on to the next thing.

Further, Kunstler’s tic is such a vividly American gesture – perhaps the most American gesture there is – to construct a thorough and largely accurate representation of all that is wrong with everything everywhere and then to caption this representation with a phrase drawn from the metaphysical (or pseudo-scientifical-metaphysical) rather than the blander, though more operable, phrasebook of political economy? Think of “the war on terror,” just to start. And to take it to a more personal place, think, if you’re ready to squirm a bit, about the form that American academic engagement generally takes, filling the hole where the argument needs to be with decorative, metaphorical stuffing – engaging in a general critique of everything that is always automatically defanged and rendered comfortable inhabitable by a lapse into poor poetry when self-aware purposefulness is the order of the day.

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July 30, 2007 at 10:21 am

Posted in america

privatization and its discontents

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A very clear rendition of the story of the privatization of US financial aid for college….

Personally, I think a topic-appropriate variation on the following paragraph, which ends the piece, could (should?) come at the end of every single piece that the NYT publishes, even though I’d change "mostly" to "sometimes" or "occasionally."

It’s a sobering lesson in the limits of capitalism. As a culture, we
praise the ability of the market to create the proper incentives and do
more good than not. And mostly that’s true. But there are some things
that are too important to entrust to the profit motive. Shouldn’t
paying for a college education be one of them?

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July 30, 2007 at 10:11 am

Posted in academia, america

“something wrong with the way movies are made today”

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This is exactly the sort of thing I was trying to talk about here, especially in the comments.

Frustrated with the rightward drift in Portuguese politics and the scarcity of financing, [Pedro Costa] ventured abroad — to the West African islands of Cape Verde, a former Portuguese colony — and made “Casa de Lava” (Down to Earth,” 1994). The story of a nurse who accompanies a comatose laborer home to Cape Verde, it changed the course of his career.

The Cape Verdeans he met sent him back to Lisbon with gifts for relatives who had emigrated there. The delivery mission led him to the shantytown of Fontainhas, where many Cape Verdeans had settled. He decided to set a film in the neighborhood, using residents as actors.

The result, “Ossos” (“Bones,” 1997), centered on the newborn infant of two hapless teenagers, is a parable of economic and spiritual desperation as oblique and concentrated as anything by Bresson. Mr. Costa was dissatisfied with the shoot, not least for having invaded a residential neighborhood with the unwieldy machinery of film production.

“We would be shooting late at night and shining lights into people’s houses,” he said. “I realized there’s something wrong with the way movies are made today.”

Mr. Costa set out to address not merely logistical headaches but also the responsibility that comes with picking up a camera. The act of filmmaking is premised on a discrepancy of power. As Mr. Costa put it, “The balance is off between those behind and in front of the camera.” His next film, “In Vanda’s Room” (2000), went a long way toward redressing the inequality.

Encouraged by Vanda Duarte, an actress in “Ossos,” he continued to film in Fontainhas, which was being demolished. This time he did so with a small video camera, often by himself. He grew close to his subjects and shot for almost two years. From 140 hours of footage he shaped a three-hour film.

A series of shadowy domestic tableaus (the camera never moves, and Mr. Costa used only available light), “In Vanda’s Room” is a stark, intimate portrait of a community whose world is literally falling apart. (Bulldozers are continuously heard on the soundtrack.) It feels at times like a documentary but is actually the result of long conversations and multiple takes. Ms. Duarte and her friends, who sit around, talk, prepare heroin fixes, smoke and shoot up, are not documentary subjects so much as actors playing themselves.

Sounds wonderful. Now where am I going to get my hands on the movies?

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July 30, 2007 at 2:27 am

Posted in movies

even with the loonie at par…

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July 30, 2007 at 2:03 am

Posted in americas

“an American-like personal quality”

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Not really a big fan of the Onion, or really of any of the many permutations of fake news to emerge in the last few years. But this piece is very well done – close to perfect, actually.

CHAPEL HILL, NC—A field study released Monday by the University of North Carolina School of Public Health suggests that Iraqi citizens experience sadness and a sense of loss when relatives, spouses, and even friends perish, emotions that have until recently been identified almost exclusively with Westerners..

[…]

Iraqis have often been observed weeping and wailing in apparent
anguish, but the study offers evidence indicating this may not be
exclusively an outward expression of anger or a desire for revenge. It
also provocatively suggests that this grief can possess an
American-like personal quality, and is not simply a tribal lamentation
ritual.

I honestly do believe that many (most?) Americans do have a bit of trouble picturing people from other nations, especially non-English speaking nations, as human in the full sense of the word. Not trying to be silly or mean in saying this – I believe it’s a strange sort of cultural dysfunction. Partly it has to do with the isolation / insularity of the place. It’s hard to get anywhere from most of the country where another language is dominant (Mexico for some along the southern border, and Quebec for us in the northeast.) Only about 25% of Americans even have a passport – I’d love to find the number of us who die never having left the US. (When my wife’s grandfather was driving her to college, they stopped at Niagara Falls. He was in his 70s – and would die two years later – and had never visited another country. Faced with the very easy prospect of driving or walking across the Rainbow Bridge to the Canadian side of the Falls, he decided not to. A bit too scary and strange to leave – why bother now, at this point, etc…)

It’s no excuse, really, none at all, for condoning what has been condoned. But it is a factor…

(via Ghost in the Wire)

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July 25, 2007 at 9:50 pm