Financier

The Book of the Week is “Financier, The Biography of Andre Meyer, a Story of Money, Power, and the Reshaping of American Business” by Cary Reich, published in 1983.

In the 1950’s and 1960’s, Meyer was a pioneer of the mergers and acquisitions craze in corporate America. He was the head honcho at the investment banking firm of Lazard Freres.

The firm exploited the trend, switching from supplying venture capital to advising its clients which were institutional, to form conglomerates, because it was thought that bigger was better. Other firms spent big bucks on research analysts, whose pronouncements were sometimes wrong. Lazard specialized in numerous, diverse, creatively structured deals.

Beginning in August 1951, for instance, for the purpose of minimizing the tax on the purchase and sale of an eight hundred thousand acre cattle ranch in Texas, over what turned out to be the course of a decade– Lazard split up the real property into sixteen different parcels, each owned by a different corporate entity. This way, the eventual 80% profit on the approximately $18 million investment was classified as capital gains (taxed at 25%) rather than real-estate income (taxed at 90% in those days; that’s not a typo).

The absolutely most valuable investment in the 1950’s and 1960’s was real estate because inflation was only 1%, and real estate ventures were easy to form. This was shown by Bill Zeckendorf, who (after obtaining loans with usurious terms on various occasions from Lazard), in August 1968, with assets of $1.8 million and debt of $79 million, rose from the ashes of bankruptcy to form General Property Corporation, and continued doing real estate business.

In early 1977, Meyer “… was convinced that the world was heading for economic apocalypse, that capitalism was dying, that government deficits and inflation were out of hand, and that nothing was a safe investment any longer… Should you buy gold? Stocks? Art? Bonds? And he didn’t want to buy anything.”

A man with his life experience should have known better. As is well known, the economy recovered within a decade. Granted, it got worse before it got better, and of course, shortly after that, there occurred a stock market crash and recession. But one need only wait ten years or less to see major changes in the nation’s economics (and politics for that matter; not that there aren’t lingering scars).

Excuse the cliche, but this too, shall pass.

Read the book to learn about Meyer’s major deals, the corporate culture of Lazard Freres, and how its reputation was hurt when it became too creative with its complicated stock swaps in its underwriting activities.

American Governor

The Book of the Week is “American Governor, Chris Christie’s Bridge to Redemption” by Matt Katz, published in 2016. Christie was a two-term New Jersey governor known for skillful fund-raising, telling cute stories, and verbally attacking the media, hecklers and political opponents.

In September 1962 in Newark, New Jersey, Christie was born to be a politician. He was elected to leadership roles beginning in high school. He argued for civil rights as a student-officeholder in college. But his stands on most major issues prompted him to become a Republican.

Christie entered politics after practicing law as a commercial litigator with the help of his law partner’s contacts. He started to work in politics in the early 1990’s. After 9/11, he was appointed by George W. Bush to the patronage position of U.S. Attorney (chief prosecutor) for the state of New Jersey. He lacked the criminal-law experience for it, but learned on the job.

He drained the swamp of dirty New Jersey politicians of both parties. At the same time, he was collecting goodwill by doling out multi-million dollar legal contracts to big-money political donors.

After his election to the New Jersey governorship in 2009, out of necessity, Christie was forced to work with a Democrat-controlled legislature. Otherwise, he would have gotten nothing done.

To his credit, Christie “… was a big guy who knew how to get people to sit down and shut up and compromise– just what Washington needed.” He was so good at fundraising because his staffers identified community influencers at the most local levels, and invited them to town hall meetings.

However, “The reformers, led by [Newark mayor Cory] Booker and Christie, were shockingly naive about how closing schools with little public input would upend the daily lives of Newarkers.” Christie argued or voted in favor of a series of anti-liberal policies which hurt the poor in housing, wages, heating and cooling of homes, and food stamps.

Additionally, due to the purported reason of a fiscal crisis, he “… froze almost all construction funding for the state’s poorest school districts.” (It would have killed him to raise taxes; then he wouldn’t get reelected.) This led to the cancellation of the building of a new school in the neighborhood of Lanning Square in the city of Camden. Instead of a new school, Christie’s crony would get the opportunity to construct a building for his medical school on the site, plus five privately funded schools in Camden.

Christie gave tax breaks of tens of or millions of dollars to a diverse bunch of businesses to get them to stay in his state so that they “created jobs” (and bragging rights for politicians). Over the years, those tax breaks resulted in: the creation of tens of jobs, a net dollar value of hundreds of thousands in benefits’ going to the state, and incalculable billions of dollars in lost tax revenue; showing yet again that cronyism thrived in Christie’s New Jersey.

And now, as an aside, an interesting factoid: “Christie had met Bill and Hillary Clinton in January 2005 at Donald Trump’s wedding.” And another: In January 2014, he signed the Dream Act, which (conditionally) allows children of illegal immigrants to qualify for (greatly discounted) in-state college tuition.

However, the major incident for which former Governor Christie will be remembered is “Bridgegate.” His political enemies turned out to be sufficiently aggressive to turn it into a humungous scandal.

Deliberately-created traffic congestion by a handful of people in Christie’s organization caused hours-long delays in September 2013 for five days in a row during the morning rush hour on the George Washington Bridge (GWB)– that links New Jersey and New York City. This was done for the purpose of petty, political retaliation against the mayor of a New Jersey suburb in GWB territory. That mayor had declined to endorse Christie for gubernatorial reelection.

It is a shame that Christie’s political record of unethical behavior in so many areas that ended his political career negated the one good thing he did that had long-term positive results– eliminated a significant amount of corruption in New Jersey.

The same seems to be happening with New York City mayor Bill de Blasio: the one good thing he did was institute free pre-kindergarten across the city. There is ample evidence that this is a game-changer– it helps “even the playing field” for kids of all economic and social levels. The earlier the intervention in the lives of at-risk kids, the better. Preschool is not too soon.

Research has shown that the kids who have home environments with severe deprivations, are significantly less likely become career criminals when, in very early childhood, they are provided with a safe place that provides resources to assist them in learning, and learning how to interact with other children.

However, de Blasio’s alleged wrongs in recent years in fund-raising activities and housing, both steeped in patronage (like Chris Christie’s administration) — just to name two of many issues– have earned him numerous political enemies.

Anyway, read the book to learn more about the above GWB scandal, and Christie’s fights with New Jersey’s civil service unions – especially the teachers’; how he sold out environmentally; why his approval rating soared immediately following Hurricane Sandy; his actions on a range of other issues such as drugs, abortion and gun control, and much more.

Kingdom of Lies – BONUS POST

The Bonus Book of the Week is “Kingdom of Lies, Unnerving Adventures in the World of Cybercrime” by Kate Fazzini, published in 2019. This slim volume contained a few anecdotes of people who recently participated in schemes to defraud others or manipulate data on the World Wide Web.

The computer hackers who keep a low profile are better coders and have better technological knowledge than the ones who are attention whores. The latter who are employed in cybersecurity attend conferences and are more talk than action. Some of them think they’re the hero of a movie– do-gooders who are trying to save the world, in a power struggle with evil, arrogant rebels.

Over the decades, individuals and governments from lots of different countries have continually attempted to gain access to certain data through the Internet, usually for intelligence or money. For instance, “Chinese nationals have been stealing proprietary data on [mergers and acquisitions] deals [in America] for years in order to inside trade… The Department of Justice is investigating. The SEC is investigating. But the law firms are clueless. Then the SEC was hacked too, by the same people. The cycle continues.”

A trend that started in the 2000’s that has largely run its course is ransomware. That is, software that steals valuable data that forces the victim to pay a ransom– hundreds of dollars or more to the cybercriminal– to get that data back. In the last seven years or so, information-technology departments of businesses, especially in the financial sector, have thrown a vast quantity of money at specialists in cybersecurity to prevent further attacks in that area.

Probably the country that can crank out the best cybersecurity experts is Israel. Middle schoolers begin learning technology there. That nation’s population is small, enterprising, flexible, militarily trained, and is always thinking defensively.

Voting in United States elections is becoming more and more computerized, and so elections have become vulnerable to interference by hackers. It is not necessary to tamper with the presidential election results of all fifty states in order to significantly affect the outcome. A hacker need only change the data of battleground states (five to ten states) for a specific candidate.

Read the book to learn additional details about the world of cybercrime.

I Should Be Dead By Now

The Book of the Week is “I Should Be Dead By Now, The Wild Life and Crazy Times of the NBA’s Greatest Rebounder of Modern Times” by Dennis Rodman With Jack Isenhour, originally published in 2005. Despite its sensationalist title, this slim volume somewhat repetitively, but in detail, gave good reasons for why the subject should be dead, in the form of an expletive-laden, extended reality-show monologue.

Rodman, a former professional basketball player, told a series of anecdotes about himself– the world’s biggest attention whore– that involved his professional and personal antics, love life, and his handlers– the people who tried to keep him safe.

Starting in the 1980’s, Rodman got the media’s attention with his dyed hair (various colors), cross-dressing, tattoos, piercings, makeup, etc. By the new millennium, thanks to his high-paying: athletic career, promotional gigs and celebrity appearances (notwithstanding his expensive on-off relationships), he owned a luxury apartment in Newport Beach, California. “Meanwhile, the parties grew bigger and bigger and the neighbors got madder and madder” about the noise.

In early 2003, Rodman did a reality show called “Rodman on the Rebound” on ESPN, but he wasn’t ready to return to the NBA. The show should have been called, “Rodman on the Rehab.” One reason why occurred in the autumn of 2003 shortly before the start of basketball season, when the Denver Nuggets had agreed to hire him after every team in the National Basketball Association had been scorning him for about three years.

One late night, as he did every night, at a strip club, Rodman consumed a vast quantity of alcohol; even for his six-foot, eight-inch frame. The members of his entourage had to pick their battles with him, as his risky behavior was constant but not always extreme or predictable. On a whim, in the wee hours of the morning, Rodman decided to fly to Las Vegas.

Once there, in the parking lot of another strip club, a stranger allowed Rodman, sans helmet, to ride a new motorcycle. Rodman attempted to do a wheelie. To his credit, he did not gloze over the unpleasant consequences. At the hospital, he claimed that he refused “Novocain.” Also, he hadn’t been wearing underwear, and his torn-up legs needed 70 stitches. There went his NBA-comeback opportunity. The media had initially given him his celebrity status, and had a field day highlighting his stupidity.

Rodman claimed that “… there are many things stats just don’t measure: … how well you can get in another guy’s head, and the number of Redheaded Sluts you can drink and still get it up– all categories in which Dennis Rodman excelled.”

Read the book to learn much more about guess who?

Billy Martin

The Book of the Week is “Billy Martin, Baseball’s Flawed Genius” by Bill Pennington, published in 2015. This biography documented not only Martin’s life, but how the culture of American baseball has changed through the decades.

Born in May 1928, Martin grew up in West Berkeley, California. His lower middle-class family consisted of a mother of Italian extraction, a stepfather of Irish extraction, and four siblings. He was passionate about playing baseball from the time he was a young child.

In his teen years, Martin was an amateur boxer at the local community center, and played on his high school basketball team. But he was mentored by minor-league and professional baseball players at his local baseball field, in James Kenney Park. He learned all the tricks, including the unethical ones.

At eighteen years old, the hot-tempered Martin was hired as a member of a minor league team in Idaho Falls, Idaho, thanks to mentor Casey Stengel– a baseball great– who spotted his doggedness and obvious talent. Most of the time, though, rather than play, he was assigned to loudly trash-talk the opposing teams in front of his team’s dugout. This was a valued activity in baseball in the 1940’s and 1950’s, practiced by teenagers all the way up to professionals.

Martin’s dream to play for the New York Yankees came true, starting in 1950. “There was free booze in every clubhouse in the country, and every stadium had a press room lounge where the drinks were complimentary… Players, coaches, reporters and managers” were no stranger to the clubby atmosphere.

Martin was a drinker with his buddies, Mickey Mantle and Whitey Ford. However, Martin developed a reputation for getting into not only barroom brawls, but also fights with umpires– often kicking dirt on them– and getting thrown out of games. Through the years, he had trouble staying employed for more than three seasons at a time, as a player, scout, coach or manager on various teams. As a manager, his expertise lay in turning around losing teams.

In 1972, fans braved subfreezing cold weather overnight outside the stadium, standing in line to buy tickets to the final regular-season game of the Detroit Tigers, who of course made the playoffs, under Martin’s intense, win-at-all-costs management.

Martin taught his players how to steal opposing teams’ signals, and steal bases– even three at a time when the bases were loaded– plus how to bunt.

One edgy trick Martin got away with was executed by his Yankees in the last game of the 1976 World Series. The half-inning ended with a bad call, as a Yankees baseman “… caught the ball in stride [but too late] and then quickly ran off the field before the call was made.” In on the ruse, the team followed. The umpire wrongly called the safe runner out.

Later, the Bronx fans threw things onto the field, at the Kansas City Royals players. That was normal fan behavior into the 1970’s. Ejections by security were few and far between.

Furthermore, just as the last 1977 playoffs game was ending, fans who had run onto the field obstructed the last base runner from scoring until a group of ten police officers surrounded the runner to allow him to get to home plate. Exciting for its time: that player’s game-winning home run was videotaped in color from multiple camera angles.

Yet another bygone aspect of baseball included gratuitous violence. In the 1977 playoffs, “[George] Brett slid hard at third base… propelling him into [Graig] Nettles, whom he also shoved with a forearm to the chest. Nettles responded by kicking Brett in the ribs as he lay on the ground. Brett jumped up and threw a right hand punch that grazed the top of Nettles’ head and knocked off his cap… [unsurprisingly] the benches emptied…”

During the 1980 season, Martin taught his Oakland A’s pitchers how to get away with an illicit spitball. He told them to rub an excessive amount of soap on the inner thigh of their uniform. This would mix with their sweat. Rubbing the ball on it before pitching would give them an edge in striking out batters. At the time, a suspicious umpire would inspect body parts other than the thigh, so the pitcher wouldn’t get caught.

By the end of 1988, George Steinbrenner had owned the Yankees for fifteen years. During that period, he had changed managers fifteen times, five of which involved Billy Martin.

Read the book to learn of numerous episodes of Martin’s shenanigans on and off the field.

Bitter Scent – BONUS POST

The Bonus Book of the Week is “Bitter Scent, The Case of L’Oreal, Nazis and the Arab Boycott” by Michael Bar-Zohar, published in 1996.

The complicated history that led up to the situation which monster-sized international health-and-beauty-aids company L’Oreal faced in 1989 was most ironic. It dated back to the start of WWII, when two future executives of L’Oreal and Francois Mitterand (future president of France) became good friends, Nazi collaborators– pro-Vichy propagandists and sabotage-plotters, and then, when the tide of the war changed in 1943, allies of the Allies.

In March 1989, Jean Frydman (Israeli and French citizen, Jew, and former member of the WWII French Resistance,) was vice president of Paravision, his film distribution company. Unbeknownst to him, he resigned from the board of directors of Paravision in a fait-accompli by L’Oreal executives. He was ousted in absentia because he had business dealings in Israel.

Various business entities had significant financial interests in others, among them, Paravision, L’Oreal (based in a Paris suburb) and its international subsidiaries, Columbia Pictures, Nestle and Coca-Cola. L’Oreal executives felt the need to comply with a troublesome policy called the “Arab boycott” — considered ethically repugnant by non-Arab industrialized nations. L’Oreal executives were willing to go through a tremendous amount of trouble (most of which they didn’t anticipate) to comply with the boycott to enhance their business interests, but also arguably, because they were anti-Semitic.

The boycott imposed by the Arab League began in 1948 to financially strangle Israel by banning companies that did business with Israel, from doing business with any Arab countries. L’Oreal needed to get Frydman out of the way so it could say it did no business with Israel. But besides, there was a big-name cosmetics company called Helena Rubinstein located in Israel, with which L’Oreal was affiliated. The Arabs were pressuring L’Oreal to dispose of that asset as well, before it allowed lucrative trade with their side.

When Frydman was gobsmacked by his fellow executives and learned that top people at L’Oreal (including its founder) had been Nazi collaborators, hilarity did not ensue. Instead, an orgy of litigation, fishing expeditions, political machinations, palace intrigue, and of course, a propaganda war did.

Read the book to learn the details of this suspenseful, sordid story.

The Gambler – BONUS POST

The Bonus Book of the Week is “The Gambler, How Penniless Dropout Kirk Kerkorian Became the Greatest Deal Maker in Capitalist History” by William C. Rempel, published in 2018.

Born in Fresno, CA in June 1917, Kerkorian was the youngest of four children of Armenian extraction. In the first half of the twentieth century, he pursued his passions of amateur boxing and piloting planes. His entrepreneurial spirit led him to go into the chartered airplane business. He began associating with unsavory characters when he bet on sports in 1961. His FBI dossier related this factoid that was learned via wiretapping.

Kerkorian dreamed big and took the outrageous risks required to fulfill them. Thanks to his cultivating friends in high places, in the early 1960’s, he managed to borrow a steep $5 million to purchase a DC-8 (jetliner) to expand his transcontinental shuttle service for the U.S. military and other lucrative clients.

In 1963, Kerkorian got into the casino business. He launched an IPO for his holding company in 1965. Then he became aggressive in acquiring companies against their will. Like Western Air Lines. He also opened the biggest hotel/casino in the world in July 1969. He got international celebrities to provide entertainment on opening night just to rub it in the faces of the competition, such as Howard Hughes.

However, one casino Kerkorian took over had been run by the Mob. In late 1969, the IRS forced him to sell a yacht and a plane to pay back-taxes. In 1972, a German bank was dunning him for an amount of money he couldn’t possibly pay. He didn’t worry. He simply ordered that his financially struggling company, MGM, issue a ginormous dividend to himself, and all other holders of the company’s stock. This way, he could pay off his personal bank debt; never mind that MGM risked going bankrupt. Of course some shareholders sued.

Read the book to learn of Kerkorian’s many other adventures in business and pleasure.