Highly Confident

The Book of the Week is “Highly Confident, The Crime and Punishment of Michael Milken” by Jesse Kornbluth, published in 1992. This volume described a situation that lends itself to the hypothetical board game “Survival Roulette: Wall Street Edition” (See “Blind Ambition” post).

There have been countless ultimate winners of this game through the decades: all the people never caught for securities-industry crimes. A million lawbreakers a day go unpunished. That doesn’t mean the crimes didn’t happen.

However, the most famous hypothetical losers of the game in this book were Ivan Boesky (an independent bond trader in New York) and Michael Milken (bond-trading executive at Drexel Burnham Lambert in Los Angeles). Other losers could include Dennis Kozlowski, Bernie Ebbers, Kenneth Lay, Steve Jobs and Richard Scrushy.

The board spaces could include Go To Jail (of course), and describe the financial crimes of: insider trading, Free Parking (or “stock parking”), disclosure failures, material misstatements, accounting irregularities, re-pricing stock options, and fraudulent conveyance, but also specific actions of conscience-salving philanthropy in which Milken engaged– such as throwing money at cancer research, and volunteering to teach math to nine and ten year-olds.

In August 1986, the U.S. Attorney’s Office of the Southern District of New York began an investigation into Securities and Exchange Commission (SEC) violations in the bond industry. By October 1986, the head federal prosecutor there, Rudolph Giuliani, was taping phone calls between Boesky and Milken. This, because Boesky had immediately accepted a plea deal to turn state’s evidence in exchange for a slap-on-the-wrist, country-club jail sentence. Boesky was one of the game’s lesser losers, to be sure. He was the king of lying, cheating and stealing.

Milken was a creative workaholic math genius whose meteoric career-rise allowed him to head an entire bond-research department in his mid-twenties. But he had zero ability for honest introspection.

Milken was a master at controlling his environment and other people, but he deceived himself about his “breaking the rules of the game” in his industry. He thought he was helping people all the time, but didn’t see how others were indirectly hurt by his actions. This kind of hubris syndrome is not uncommon in alpha males.

In 1978, Milken initiated the push to have Drexel underwrite junk-bond deals that financed hostile corporate takeovers. This wasn’t illegal in itself, but Boesky persistently badgered Milken until, by the early 1980’s, the latter was eventually manipulated into breaking the law.

Milken had a history of selfless philanthropy, yet his business actions gave rise to obscenely high fees made by his employer, an obscenely high income for himself, and crushing debt load for his clients. This led to extremely adverse financial and social consequences for thousands upon thousands of laid-off American employees of merged companies, subjected to disrupted lives and untold stresses.

The mood of the securities industry could be described thusly: “… with the election of Ronald Reagan… All that mattered was an ability to make money — without concern for risk, without regard for regulation.”

The investigation and resulting plea deals had the law enforcement agencies patting themselves on the back for convincing the perpetrators (other than Milken and Boesky) to implicate others, but the immunity deals the perpetrators got were a joke, considering that they themselves had serious credibility problems, and serious violations. It was a kangaroo court.

Nonetheless, the following parties launched investigations: Drexel and its attorneys, Milken and his attorneys, the U.S. Attorney’s Office, and the SEC. Those last two, of course, engaged in fierce rivalry. By September 1991, there was an orgy of litigation against Milken. The roll call involved fifty-eight lawyers (!)

Around the same time, Wedtech was another 1980’s scandal borne of out-of-control greed. In that case, a personal injury attorney generated billing documents that purported to show charges for legal services, that were actually for lobbying. Wedtech’s executives bribed politicians for the purpose of influence peddling, and swindled shareholders. This kind of crime is not uncommon.

Along these lines, if, for instance, a real-estate mogul declared business bankruptcy repeatedly throughout his business career, why did investors trust him with their money again and again and again and again and again?? Perhaps there was influence peddling. The politicians were his puppets who eventually passed legislation favorable to them all. It was worth it to them to risk losing all their chump-change investment to get access to future (much more) profitable contacts and politicians who did their will.

Anyway, Milken hired a team of lawyers who were the cream of the crop of Northeastern elitists. Yet, unfortunately for him, the media and law enforcement made him the poster-boy / scapegoat for the greed of the 1980’s.

Ben Stein, a wannabe Hollywood writer, was, according to the author, an individual who fueled public outrage against Milken. He was unwisely hired to write articles for Barron’s (a major Wall Street publication) after Milken was indicted. The nature of his utterances in print were “Shocking, unsubstantiated, never-proven assertions made with absolute certainty.” Stein claimed his taking of the drug Halcion caused him to produce such libelous garbage.

Strangely enough, insider trading wasn’t what Milken was jailed for, but rather, a minor disclosure failure. The judge in his case was ridiculously misguided, considering that the court calculated the dollar value of damages Milken caused was a mere $318,000. But the court saw that the revenues generated by him and his firm were in the hundreds of millions of dollars. So the court fined him $600,000,000.

Read the book to learn of Milken’s prison sentence and numerous other details of the whole tabloid-crazy affair.

A Good American Family – BONUS POST

The Bonus Book of the Week is “A Good American Family, The Red Scare and My Father” by David Maraniss, published in 2019.

Born in 1918 in Boston, the author’s father grew up in Brooklyn. He was outed as a Communist by a female member of the FBI. She joined the Communist Party USA in order to spy on it, then for nine years, was paid big bucks to tattle on its members.

In March 1952, the elder Maraniss was subpoenaed to appear at a House Un-American Activities Committee hearing in Detroit. At that time, he was summarily fired from his job as a re-write man at the Detroit Times; ironically, a rabidly anti-Communist newspaper owned by Hearst.

A high-level federal judge in New York State, Learned Hand, provided the legal grounds on which the investigations into Communists rested in the 1950’s. Suppression of free speech was justified by the extent and probability of its leading to evil. “The worse the evil and the greater the probability, the more free speech could be curtailed.”

The ironies and consequences resulting from the above reasoning led to a dark period in American history. The take-away from the Red Scare was that the accusers led by Joe McCarthy, trampled on due process when confronting their prey– those who were allegedly associated with or were allegedly Communists.

One curious little experiment indicated just how effective fear-mongering propaganda can be. One irony is that fear-mongering propaganda is itself considered to be protected free speech!

In early July 1951, a reporter from the Capital Times newspaper in Madison, Wisconsin asked 112 random people in Henry Vilas Park to sign a petition, the text of which contained, “… the preamble to the Declaration of Independence… six of the ten amendments to the Bill of Rights, along with the Fifteenth Amendment granting black men the right to vote.” Only one person willingly signed. Almost one fifth of the people called the reporter a Communist.

Read the book to learn additional details of the tenor of the times in connection with the author’s father’s persuasion and generation, and the fates of his other immediate and extended family members and his accusers.

Indecent Exposure

The Book of the Week is “Indecent Exposure, A True Story of Hollywood and Wall Street” by David McClintick, published in 1982. This volume with the provocative but misleading title had nothing to do with sex. It actually consisted of a suspenseful, albeit long story seen mostly through the eyes of Alan J. Hirschfield, the CEO and officer at Columbia, the movie company. It was about how a lack of honesty, the power of propaganda, and clashing egos basically resulted in the redistribution of wealth among the wealthy. This sort of thing happens all the time.

In February 1977, then-famous actor Cliff Robertson received a document saying he owed taxes in connection with a check he never received. He later found out that the check had been forged and cashed in his name, by David Begelman, a high-level executive at the aforesaid Columbia.

It was common practice for Hollywood studios to send movie actors checks for thousands of dollars (usually unreported to the IRS) that defrayed a small portion of their promotion expenses for a new picture. The IRS had just then begun cracking down on that taxable income. Robertson’s reaction set in motion a series of consequences that affected thousands of people; mostly financially.

Columbia was a public company, and the bad publicity resulting from news of a serious crime committed by one of its executives was a serious public relations problem. Hirschfield, who was on the board of directors, was told by an attorney that he had a duty to inform the executive committee, corporate counsel and the SEC after an internal investigation had been conducted.

As has been the case since the discovery of journalism/tabloidism, (supposedly said by Mark Twain), “A lie can travel halfway around the world while the truth is putting on its shoes.” Begelman’s friends in the Hollywood community (of which the check forger had many) rushed to his defense, having heard only vague rumors that described his transgressions in euphemisms. They really had no clue that he had actually committed several felonies, it turned out. They didn’t want to know.

The friends planted tabloidy messages in the media making the excuse “Everybody Does It” because they took unethical liberties with their own expense accounts, and made Hirschfield the villain, saying he was a power-hungry, vindictive executive, as he technically did compete for power with Begelman in the company hierarchy. Hollywood’s and the public’s gullibility in automatically believing in Begelman’s innocence and Hirschfield’s treachery is human nature.

At the board meeting that initiated the long, heated discussion that would determine whether Begelman was fired, Begelman acted like a prisoner on death row who had suddenly found religion. He implied he might kill himself if removed from his primary job. But actually, anyone who knows this kind of person knows that he would be too arrogant to kill himself.

A preliminary inquiry into Begelman’s history yielded more than one serious crime during his Columbia tenure, and previous lying and other worse misdeeds. Hirschfield argued for termination, saying Begelman was unlikely to change his spots, as dishonesty was a lifelong habit with him. Over the next few years, the Hollywood community and the public, however, still having heard only distorted soundbites that minimized Begelman’s sins, fooled itself into believing they weren’t that bad, and continued to defend him.

Interesting sidenote: In 1982, in a joking context, Hirschfield exclaimed to a female friend who was high on the corporate ladder, in front of some colleagues: “Female executives suck!” She laughed. Clearly, if that was uttered in 2018, hilarity would NOT ensue.

Read the book to learn of the consequences of the stupid actions taken by most of the main characters of this entertaining saga.

The Way Things Ought to Be – Bonus Post

“The Way Things Ought to Be” by Rush Limbaugh, published in 1992, is a summary of the author’s opinions on major political issues he covered on his conservative-Republican radio talk show a few years prior to presidential election day of 1992.

Limbaugh related an anecdote as an example of how he aired a certain political message satirically in a way different from other information outlets. Some time later, change occurred on that issue, such as a proposed law, or a new communication style, or what have you.

Limbaugh contended that he was responsible for initiating that change. Not that there weren’t hundreds of other information outlets competing for viewers’, listeners’ and participants’ attention simultaneously on those issues. Everyone was listening only to Limbaugh, of course.

In 1988, Limbaugh hosted a national radio show from WABC in New York City. He admitted to using offensive language on the show. He wrote that in Santa Barbara, California, an advertiser (a restaurant) complained about his use of the word “feminazi.” That advertiser vowed never to purchase ad time again on his show. Limbaugh gave a free plug to the restaurant. It became mobbed with customers. The reader would have thought that other advertisers would wise up and threaten to pull their ads unless he gave them a free plug. But Limbaugh ended the story there. So the reader will never know.

Limbaugh challenged the reader to “… name one great entertainer who is great in large part because of his or her politics other than me.” Um… Al Franken?  And he’s funny.

Limbaugh believes in the voucher system of education. The idea is to distribute vouchers allowing parents to choose the school (not necessarily in their district) their children would attend so that their children could afford to get a religious education. Regardless of whether income inequality actually prevents people from getting a religious education– vouchers are utterly impractical. If the voucher system were really implemented for all schools in the nation, there would be chaos. There would be lawsuits galore due to overflow demand at some schools and none at others. An overwhelming amount of planning would be required to estimate school space capacities and personnel needs, not to mention a host of other issues.

It is also argued that vouchers give parents more choice of schools. Parents already have choices. If their kids’ education is that important to them, they will move to the school district where they want their children to attend.

It might be recalled that the Ronald Reagan and George H.W. Bush administrations were rocked by several scandals. In one scandal, Congress members were permitted to get away with bouncing checks left and right (getting no-interest loans, basically) from the House Bank. Following the disclosure of this and other disgusting, unethical behavior, Congress had the audacity to vote itself a raise. Limbaugh emphatically stated that Congress thought itself to be above the law. Further, in March 1992, he publicly declared in a TV interview that Congress had been doing nothing for twelve years, “… ever since Reagan was elected… Their only concern was to deny Reagan as many legislative victories as possible.” Sounds familiar. A more current example is Mitch McConnell’s treatment of Barack Obama.

Limbaugh also ranted that top executives at large nonprofit organizations were paid as much as corporate CEOs. “Many of these groups don’t even do charitable work. They are political agitators lobbying the government for money and regulations they can twist to their benefit.” Limbaugh claimed he doesn’t do activism on his show. For activism, in the summer of 1991, he formed the National Conservative Forum. Enough said.

On abortion, Limbaugh boasted that Reagan and Bush won a large number of states due to the fact that they were pro-life, and their opponents were pro-choice. Invalid argument. Incidentally, abortion isn’t the only issue voters consider when they choose a presidential candidate.

Limbaugh took issue with a strongly-worded letter complaining that Reagan appeared in a TV ad with an AIDS activist in 1990, but did nothing to help counter the AIDS epidemic while he was in office. Limbaugh didn’t address that valid point, but suddenly wanted to donate to a pediatric AIDS charity thereafter.

Limbaugh often compared apples and oranges.  He likened Anita Hill’s allegation that she was subjected to sexual harassment by Supreme-Court-justice candidate Clarence Thomas, to Patricia Bowman’s allegation against William Kennedy Smith. However, those were two women in completely different situations.

Hill had a high-powered career in a male-dominated field. She would kill her career if she uttered one word about inappropriate behavior that any of her male colleagues had directed toward her. As it was, any female who spoke out was inviting a tabloid field day. She would do so only if she wanted to change things for the future. She must have known the costs involved going in. In the Hill case, all the people involved had ulterior political motives for why they supported or opposed the accuser. The outcome would affect them personally.

Limbaugh felt that in the 1992 presidential election [prior to election day], “The key to change, though, will be found inside— not outside the system among politically experienced people who are ethical, honest, and moral– characteristics that do matter, despite how loudly they are pooh-poohed by the liberal elite. Outsiders, and those who present themselves as such, will ultimately end up as carcasses strewn across the countryside, false prophets of a false premise.” Hmm.

Read the book to learn of Limbaugh’s views on all the issues aforementioned plus animal rights activism, and the causes he believed in.

My Life So Far

The Book of the Week is “My Life So Far” by Jane Fonda, published in 2005. This insightful autobiography describes an actress, activist and exercise instructor whose childhood family life was psychologically challenged. Throughout her life, she has been continually working through various emotional, moral and gender issues.

Born in the Santa Monica Mountains in December 1937, Fonda was lavishly raised alternately by a nanny and her parents, who were absent on and off. Her father was a famous actor on Broadway and in movies; her mother, until she suicided, was in and out of mental hospitals. Fonda was close with her younger brother, Peter. She became a bulimic and developed an “appeaser” personality.

Although Fonda had a leg up in her career due to her famous father, she chose to engage in activities that she felt were societally beneficial. The media and the U.S. government, however, treated her like a criminal. She was put under surveillance by the FBI, CIA, State Department, IRS and Treasury Department, which created dossiers of thousands upon thousands of pages just about her. In 1979, she settled a lawsuit against them in which the government admitted its guilt.

In 1972, Fonda visited Hanoi to gather information and inform the American people about Nixon’s evil Vietnam-War schemes, a few of which were already in progress. Later that same year at the Academy Awards ceremony when she won a Best Actress Oscar for “Klute,” she maturely did NOT make a political statement, having been told it was the inappropriate place for doing so.

Fonda believed that presidents made war due to their feeling pressure from society to prove their masculinity. She herself was a product of this same environment, judging from her taste in men. Her third husband– media billionaire Ted Turner– “…was unable to experience intimacy because there just wasn’t room in his brain for words other than his own.” He was an emotionally needy narcissist.

Read the book to learn how Jane overcame her eating disorder, achieved success in acting, exercise-business enterprises and political activism, and how she improved her relationships with family and friends.

Silvio Berlusconi

The Book of the Week is “Silvio Berlusconi” by Paul Ginsborg, published in 2004. This is an extended essay on the media mogul/powerful politician in Italy. It examines the issue of whether Berlusconi practiced Fascism, not necessarily through creating an atmosphere of fear and intimidation, but through monopolistically broadcasting propaganda in the guise of education, to the masses. He combined his business dealings with politics to amass a staggering amount of power, with the usual conflicts of interest that come with the territory.

Over the course of three decades starting in the 1970’s, operating out of Milan, Berlusconi, a construction contractor, founded an ad agency and purchased TV stations that accounted for the bulk of Italy’s visual information sources. Later, he entered politics and bought a professional European football team. He was accused of racketeering, bribery and money laundering, among other crimes.

Berlusconi proved to be teflon, escaping punishment in the 1990’s. Not only that, he made a comeback– legally, economically and politically. As of 2004, he was still dragging his feet on answering the legal charges against him, in order to invoke the statute of limitations to weasel out of going to jail.

Read the book to get the details, and the author’s take on whether Berlusconi’s political career would survive much longer, given his outrageous exaggerations when recounting his endeavors for the people of Italy in 2004. The nation’s cost of living had soared and real wages had fallen significantly beginning in 2002.

The following video of Al Franken’s speech on America’s fiscal deficit is well worth watching in its entirety; he mentions a few recent American presidents’ economic policies (starting just after 23:00)– some of which can be compared to Berlusconi’s:

https://youtu.be/hHUDPU7_2qA

Lastly, Berlusconi’s reputation for alleged extensive law-breaking had been a “thing” for a long time.

Joseph Anton

The Book of the Week is “Joseph Anton: A Memoir” by Salman Rushdie, published in 2012. This ebook describes an author’s life, and the furor created by his controversial novel, “Satanic Verses.”

Rushdie grew up in India and England in the 1950’s and 60’s. His parents identified with Islam but did not provide him with a religious education. He became fascinated with the subject at university. In the late 1980’s, he wrote Satanic Verses, which was extremely critical of Islam. Some powerful people became offended by it; over the course of the next decade, serious repercussions– not hilarity– ensued.

Iran’s leader, the Ayatollah Khomeini, issued a “fatwa,” or death threat, against Rushdie. Scotland Yard learned that Muslim groups were plotting to kill the author. There were protests by Islamic fanatics. A price was put on his head.

Rushdie’s publisher, Viking Penguin received threatening phone calls, and over time, a few actual bombs exploded at bookstores that carried the book. In international incidents– injuries and sometimes death befell bombing victims, the book’s translators and a publishing executive. The government of the United Kingdom pressured Rushdie and his family to go into hiding, and endure 24/7 police protection. He changed his name to Joseph Anton.

India became the first nation in the world to prohibit importation of Rushdie’s book. For years, India also denied him a travel visa. However, “India was surrounded by unfree societies– Pakistan, China, Burma– but remained an open democracy; flawed, certainly, perhaps even deeply flawed, but free.” He was deeply hurt. Many other Muslim countries later followed suit.

At one point, he met with a political Muslim organization to negotiate an end to the fatwa. He ended up regretting signing a statement acknowledging that his book was offensive to some Muslims, and also saying that he himself was of Islamic persuasion.

“British Muslim attempts to indict him [Rushdie] for blasphemy and under the public order act were heard in court.” New York Times bestseller status bestowed upon Satanic Verses was probably not due to true likability by the public, but rather, due to all the hullabaloo. Rushdie wrote, “I conclude that my difficulties are not with You, God, but with Your servants and followers on Earth.”

For more than a decade, because the author’s life was thought to be endangered, his ability to live like the citizen of a modern nation was severely curtailed. Read the book to learn about the people who helped him through all of the unanticipated trouble stemming from his writings; the ideology behind his various literary works; and the difficult family situations unrelated to his career, of which he was admittedly the cause.

Just Plain Dick

The Book of the Week is “Just Plain Dick: Richard Nixon’s Checkers Speech and the ‘Rocking Socking’ Election of 1952” by Kevin Mattson, published in 2012. This ebook details the 1952 U.S. presidential election in which vice presidential candidate Nixon became more the center of attention than presidential candidate Dwight Eisenhower.

The dirt that generated bad publicity for a candidate in that election was of a slush fund of Nixon’s. When the news broke in September 1952 about Nixon’s alleged campaign finance impropriety, there was lots of hand-wringing among Eisenhower and his advisors as to whether Nixon should be dropped from the ticket.

The nature of the new medium of television– a visual, collective, simultaneous experience for a large audience– was a game-changer. It allowed Nixon to deliver directly to the American people, what turned out to be the perfect message in a way that repaired his reputation and ultimately helped him and his superior win the election.

Nixon’s emotional appeal persuaded his audience that he was a member of the middle class– not an elitist. Mention of his wife’s cloth coat and his dog struck just the right tone. To top off his speech, he skillfully initiated crowd sourcing by inviting voters to contact the Republican Party to express their opinion on whether he should withdraw from the race.

Read the book to learn the details of this memorable, fascinating episode in American political history.

High Priest

The Book of the Week is “High Priest” by Timothy Leary, published in 1995.  This is a personal account of a man who, in the late 1950’s and early 1960’s, developed a reputation for experimenting with brain-altering chemicals such as LSD.  He used students as guinea pigs at his Harvard University laboratory.

Some of Leary’s impressionable charges unwisely updated their parents on their religious and philosophical enlightenment; others “quit school and pilgrimaged eastward to study yoga on the banks of the Ganges.” Unsurprisingly, the parents and school administrators felt that Leary was a bad influence, and he was fired. He attempted to relocate his spiritual profiteering to Mexico, but was busted in 1963 for failing to obtain authorization to run a business there. He then took his allegedly raunchy, psychoactive, disease-spreading endeavors in the dark arts to Antigua in the West Indies.

Read the book to learn the details of this ideological character’s psychedelic research results.