Category: “Wall Street” – Securities Markets

Evil Geniuses

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The Book of the Week is “Evil Geniuses, The Unmaking of America, A Recent History” by Kurt Andersen, published in 2020. In this large, redundant volume, the author described how wealth inequality in the United States has been increasing at an alarming rate in the last forty years, as evil geniuses– economic royalists and self-made empire-builders (who take advantage of existing resources and infrastructure)– have rigged the system to compound their spoils and re-distribute it among themselves in a self-serving cycle.

Lots of research has shown that financial inequality in society actually hinders economic growth in developed nations. In connection therewith, in 2014, the OECD conducted a United States study that showed a 20% slowdown in economic growth since the 1980’s.

The author argued that the year 1980 was the turning point at which America’s hegemony started to decline. Both the Republican and Democratic parties’ elitists (other evil geniuses in addition to the above-mentioned) actually hurt America’s ability to remain economically dominant in the world. They brainwashed a significant number of ordinary Americans into:

  • believing that government is the enemy;
  • agreeing to tax cuts for the rich (also called “trickle down” economics);
  • favoring excessive deregulation; and
  • bashing unions

because such actions would make everyone wealthy!

The author cited ample evidence that the above actions do NOT make everyone wealthy.

The author contended that conservative Republican 1964 presidential candidate Barry Goldwater paved the way for Ronald Reagan’s wrong-headed economic agenda (described above).

Politics cannot be divorced from economics. This is a simple idea that has been hardly ever EXPLICITLY SAID in historical, political and economic literature read by ordinary Americans, through centuries. The author calls this the “political economy” and former president Bill Clinton had the line, “It’s the economy, stupid.”

Politics involves the making, monitoring, changing, and enforcing of society’s laws. The evil geniuses in the legal field who helped perpetrate the insidious brainwashing of the American masses, actually conveyed the following attitude in writing and speaking:

“So if you happen to think it’s a good idea for judicial decisions to also consider fairness or moral justice, or other values or versions of social happiness that can’t be reduced to simple metrics of efficiency,

Law and Economics [a body of legal theory from Robert Bork and his fellow Chicago School libertarians] says you’re a fool.”

That is how the 1980’s saw the American legal system start to focus on efficiency– favoring profiteers. The author argued that old men who are resistant to change are the conspirators of the current state of affairs. Well, SOMEone’s got to be oppressed.

Another indication that Americans’ attitude was becoming even more inclined toward rule-breaking greed and showing off wealth, could be heard in a 1980’s SUV TV commercial, which featured a visual of a white, 40ish male driving. The voice-over says, “It doesn’t just say you’ve arrived; it says you got there any way you darn well pleased.”

The author cited evidence that taxing the rich would be the largest factor in more evenly distributing wealth. The first Trump administration passed a tax cut for the rich that gave rise to the “…largest percentage reduction in tax revenues of any developed country on earth.” This was BEFORE COVID. And “…the federal debt increased by $1.5 trillion more than it had in Obama’s final three years.”

Nonetheless, the most hurtful president ever was George W. Bush, whose unconscionable greed and unmitigated hubris led to the crashing of the American economy and the commencement of two wars that enriched him and his cronies.

LBJ and Nixon were two other war-criminal presidents. Their war policies, too, wasted an excessive amount of taxpayer dollars on needless deaths and ruined lives. At the same time, they tried not to foul their own nest. They attempted to maintain this country’s economic dominance in the world, and salve their own consciences by funding domestic social programs. LBJ did some profiteering, but not nearly as much as Trump.

Trump is an angry, vengeful old president who, at the end of his career, is hurting not only his own political party, but also ordinary Americans. His excessive financial criminality has incalculably hurt society as a whole.

In 2018, Trump said NAFTA was the “worst trade deal ever made.” But in 2025, after all his bluster, the trade deals he’s going to make with Mexico and Canada, are going to be largely similar to NAFTA’s, all over again! And through his spokespeople who draft the words spoken by his deepfake image, he will take full credit for “great, great trade deals.”

His threats are causing a panic that certain sectors of the American economy will crash. Even the threat of a soft economy will deter some illegal immigrants from coming to this country. Given financial cycles, it is likely that some people will be hurting financially in the next few years. Trump is using a scorched earth strategy on his way out of office in order to be able to brag that HE reduced the number of illegal immigrants who are coming here. He will brainwash his base into believing that the economic downturn was all Biden’s fault!

Anyway, the author also commented that the internet changed American culture in accelerating the automation of the exchange of information, obsolescing a humungous number of jobs. Machine-learning is also making the job situation even worse. It could be said that the internet is the “new television” for the Millennial and Z Generations. However, there are major differences in the ways television changed American culture, and the ways the internet has changed it.

Television was a passive entertainment / infotainment / education source that, for most Americans, was consumed at home only, in one’s leisure time; perhaps on average, most students and workers (there were many more of those then than now) watched three to four hours a day, at no extra charge (except for electricity)– for the lifespan of the set. Then came recording of shows, but also cable TV– whose costs are many times higher for shows and sports games that used to be free.

The internet is an interactive source, and can be accessed globally, 24/7. So the younger generations are wasting so, so, so much more time obsessing over politics, than did the older generations. People have been bamboozled into paying big bucks to purchase electronic toys on which to subscribe to the internet, for which they have to pay even more!

So the amounts of time and money most Americans are spending on the internet are infinitely higher than that of television (and movies, and reading books, magazines, and newspapers). The early years of the internet (up to the single-digit 2000’s) brought emotional comfort to Americans. They flocked to websites that featured relatable, entertaining user-contributions with few or no ads that interrupted their viewing pleasure.

Once the entrepreneurial dot-commers mastered monetization and propagandizing, users became victims of their mind-control techniques. Arguably, the cultural transition from television to the internet has been economically and psychologically regressive for most Americans.

Anyway, read the book to learn much more about the depressing developments in politics, economics and culture that will eventually lead to the collapse of American civilization.

Confessions of A Wall Street Analyst


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The Book of the Week is “Confessions of a Wall Street Analyst, A True Story of Inside Information and Corruption in the Stock Market” By Dan Reingold with Jennifer Reingold, published in 2006.

The author happened to become a telecommunications-industry stock analyst, hopping from one big-name investment bank to another. This, at the start of about two decades of an excessively deregulated, gravy train of greed on Wall Street: the early 1990’s. He described his job as requiring lots of reading and writing, and as having long, long hours. He got to travel around the world to meet his contacts, and gossip with industry competitors. The compensation he collected for doing so was obscene.

The U.S. government had just acted on a wave of anti-trust sentiment, so competitors were scrambling to game the situation. Telephones were going wireless, while their service providers were merging like crazy.

The author detailed the changes in the industry, including how it became corrupted by the usual suspects– greedy Wall Street workers. These included analysts and the departments that trade securities on behalf of their clients and their employers’ compliance departments who looked the other way on the LAWS against analysts’ getting inside information from the said departments.

For example, if the banking arm told an analyst that a certain company was a takeover target before information in connection therewith was publicly disclosed, the analyst could write a report recommending that his employer’s clients (which ranged from huge pension funds to little investors and everyone in between) buy its stock. That is one kind of insider trading.

In the mid to late 1990’s, the author witnessed various episodes in which one particular analyst at a competing big-name investment bank was manipulating the system. There was circumstantial evidence that he was receiving inside information on the stocks he was touting. Later on, one telecommunications company turned out to be not just “cooking the books” but scorching them. The resulting mess turned out to be the largest accounting-fraud scandal to that date.

These and other Wall Street shenanigans (that were bunched together in the course of a decade!) resulted in the usual harm to society and more excessive wealth for the wealthy; more specifically:

  • The perpetrators (the offending workers and their employers) got a “slap on the wrist” in the form of chump-change fines from regulators, while collecting excessively large fees for servicing the merger transactions and advising their clients on what to trade when– while admitting no wrongdoing;
  • The mergers resulted in massive layoffs of working-class people;
  • Taxpayers paid for the salaries of the regulators who bragged about how great they were in catching and punishing the few white-collar criminals they did nab; and
  • Unsurprisingly, the author retired before he got nabbed but he claimed his employment contract contained no pay-for-performance provision with regard to his employer’s investment-banking revenues.

Anyway, read the book to learn a boatload more about Wall Street’s goings-on in telecommunications from the 1990’s into the single-digit 2000’s, and the author’s career.

My American Dream

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The Book of the Week is “My American Dream, My True Story As An Undocumented Immigrant Who Became A Wall Street Executive” by Julissa Arce, published in 2016.

The author was born in 1983 in Taxco, Mexico. In 1994, she moved with her parents to San Antonio, Texas on a tourist visa. Because she was going to school (a private one) she was actually living in the U.S. illegally. Her parents (who were legal immigrants) didn’t understand the implications of such a situation. They simply wanted her to get a good education. Americans’ tax dollars weren’t even paying for it.

The upshot, though, was that Arce never got a Social Security Number, and couldn’t get any kinds of government or financial services: healthcare, a driver’s license, a bank account, or financial aid when she applied to go to college.

By living in the United States, Arce’s foreign status became her single biggest life-problem, especially when she was in her late teens. That problem led to others. If she moved back to Mexico, she most likely would be unable to return to the United States for at least ten years, unless laws changed.

Arce needed to earn “off the books” money to support her family, and pay her mother’s medical bills. On top of that, she had a drunk, abusive father. She was accepted to a college at the last minute, based on academic and student-participatory merit, and thanks to a new Texas state law. As is well known, many students are accepted to schools based on “legacy” or alumni-bribery practices, or on athletic rather than academic merits.

After many more hardships, the author got a job in the real world. She initially omitted the inconvenient fact that fake identity papers would allow her to work at the job only until she got caught for having a fraudulent Social Security Number. It appears that both her employer and the IRS turned a blind eye to her situation, as the former was able to pay her less than it would a non-foreign employee. BUT her employer was still withholding taxes from her paycheck. So why should her employer fire her? She was a model worker. She had to be– she was under the constant threat of deportation. She had to try harder than everyone else to please everyone.

Fortunately, several people in Arce’s life gave her good advice:

  • get the best education she could;
  • always strive do be the best at whatever she did– regardless of what it was;
  • be persistent;
  • associate with the appropriate people;
  • be professional at all times; and
  • continually socially network.

Arce was actually a shameless social climber, but she also showed she was a team player– unselfish with her time and talents. When the author achieved the pinnacle of what she perceived to be success, she wrote, “I felt normal– just another drunk Wall Street analyst on Stone Street on a Friday night.” And yet, she realized she still wasn’t truly happy.

Read the book to learn much, much more about Arce’s life experiences, and additional (true!!!) information (not emotionally-charged political propaganda) about immigrants in America.

The Trading Game

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The Book of the Week is “The Trading Game, A Confession” by Gary Stevenson, published in 2024. This blogger highly encourages the reader to peruse the entire “Wall Street” and Economics categories of this blog in order to gain a better understanding of financial matters and economics.

In March 2007, the 1987-born author began working on the Fixed Income Trading Floor at the Short Term Interest Rates Trading Desk in the Foreign Exchange section of Citibank in its London branch. He had grown up in a tough, poor neighborhood in East London. He beat the odds for someone of his demographic group, considering the fierce competition in both getting accepted to a prestigious university and getting a job in currency trading.

Stevenson nurtured an aspiration to make lots of money. Fortunately, his talent and hard work in mathematics allowed him to score high on standardized exams. He attended the London School of Economics where he rubbed shoulders with mostly male, wealthy elitists whose fathers gave them a leg up in life, and whose futures were almost guaranteed to be bright. At school, when he won a game involving hypothetical securities trading, Stevenson’s life turned around. For, he won an internship which turned into a career.

After a few lucky breaks and bold moves on his part, the author was just hitting his stride in work-experience when he happened to be at the right place at the right time to earn extremely large financial gains from a triple-whammy disaster. In March of 2011, about twenty thousand people died in Japan due to an earthquake, tsunami and nuclear meltdown of three power plants. Amidst the resulting financial turmoil and previous turmoil of the 2008 worldwide financial crises, Stevenson made a percentage of the millions upon millions of dollars he earned in currency trading for Citibank.

Stevenson alone in his department had been correct in gaming the situation. Everyone else had been wrong and they lost money. Nevertheless, he was still emotionally troubled. He bore two major similarities with Alan Turing– another genius: social dysfunctionality, and indifference to how he looked and what he wore.

Stevenson was one of the proverbial three kinds of people (geniuses in the minority)– the kind who knew what was happening and made things happen. The vast majority account for the other two kinds of people– brainwashed, unwashed masses who watched what was happening, and then still wondered what happened.

In the early 2010’s, the author came to the realization that there would NEVER be economic recovery of any financially-struggling countries in the European Union while the Swiss National Bank kept interest rates at or below zero. The other traders in his department optimistically kept repeating that interest rates HAD to rise sooner or later, because they had bet wrong.

But, the tiny percentage of the super-wealthy, super-powerful people of the world sought to maintain the then-status quo, because it made THEM even richer, and the poor, poorer, as the cliche goes. The income inequality of the world would eventually result in a slave-based economy (as existed in ancient times) all over again.

Read the book to learn much more of Stevenson’s personal and professional life, and his times. As is well known, the United States is one of the major economic superpowers of the world, and its politics are part and parcel of that. Here’s a little ditty on its momentary political situation.

LET THE BEST TEAM WIN

sung to the tune of “Let the River Run” with apologies to Carly Simon, BMG Gold Songs C’est Music and Tcf Music Pub Inc.

[Spoken: We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.]

Let the best team win.
Let’s all peaceFULly watch the changes.
Come the new, new Washington.

Brilliant ideas rise.
The media lies, about, and smears them.
And celebs get themselves in your face.

It’s asking for the taking,
blaming, deep-faking.
Oh, Americans are aching.
We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.

Through the hate and all.
It’s who we are:
Place a trail of desire
on the White House lawn.

It’s asking for the taking.
Just hold on now.
Democratic convention will be a show
you’ve never even seen in political history.

Oh, Americans are aching.
We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.

It’s asking for the taking,
blaming, deep-faking.
Oh, Americans are aching.
We’re all on edge,
waiting for the savior,
gaping with alarm
at the immature behavior.

Let the best team win.
Let’s all peaceFULly watch the changes [watch the changes]
Come the new, new Washington.

Davos Man

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The Book of the Week is “Davos Man, How the Billionaires Devoured the World” by Peter S. Goodman, published in 2022. As the now-cliche joke goes, “You can tell Monopoly is an ancient game because there’s a luxury tax and rich people can go to jail.”

Yearly, about three thousand, super-rich people gather in Switzerland at a five-day conference called “Davos.” The least wealthy people there consist of journalists, academics, diplomats, entrepreneurs, activists and senior government officials. The billionaire-attendees (whom the author called “Davos Man”) pay lip service to the world’s social, economic and environmental problems, and behind closed doors, discuss how to profiteer in connection therewith.

In the last half century, Davos Man has enriched himself through making campaign contributions to politicians who have legislated:

  • monopolistic practices
  • tax cuts
  • excessive deregulation and
  • gutting of social programs.

The above favor powerful, rich people in Silicon Valley, New York City and Washington, D.C. Their propaganda campaigns brainwash the masses into blaming:

  • China
  • immigrants whom they believe are taking their jobs away, and
  • automation

for the working classes’ job losses.

The author argued that the common people in most industrialized nations of the world should blame DAVOS MAN and politicians, who are sometimes one and the same!

Davos Man– the modern-day Robber Barons– salve their consciences through philanthropic activities that are comprised of a tiny, tiny percentage of their businesses’ profits. Plus, the author contended that it is a Cosmic Lie that tax cuts pay for themselves by spurring spending.

During the COVID pandemic, the American Davos Man enriched himself through incestuous corporate / political relationships: “The United States had employed a Rube Goldberg contraption, with [Steven] Mnuchin’s slush fund [in the U.S. Treasury] funneled through Jamie Dimon’s bank [JPMorgan Chase], and Larry Fink’s firm [BlackRock] buying bonds on behalf of the Fed, allowing Steve Schwartzman’s private equity empire [Blackstone Group] to borrow for free.”

The English government convinced many of its people that through Brexit, their nation could decide its own financial fate. But Davos Man actually ended up collecting a boatload of their hard-earned taxes. Meanwhile, Argentina was defaulting on its loans for the tenth time in the last half-century. The aforementioned Davos Man, Larry Fink, blamed Argentina for the resulting disastrous losses of his clients at BlackRock. BUT– his firm was the sucker that lent it the money!

Anyway, read the book to learn of: Davos Man’s activities in various countries of the world– that resulted in skyrocketing wealth for him, and plummeting economic security for everyone else; why the author is still optimistic that the world can reverse the current, cold-hearted global financial climate in which inequality between rich and poor is ever-widening (hint: creative ideas on community cooperatives are in the air, but also– read Amy Klobuchar’s tome on antitrust issues); and the economic history explaining how Davos Man has become so rich and powerful.

Character & Characters / Retail Gangster

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The first Book of the Week is “Character & Characters, the Spirit of Alaska Airlines” by Robert J. Serling, published in 2008.

Alaska Airlines (AKA) came into existence in the mid-1940’s with the buyout of Star Air Service. It faced stiff competition from Northwest Airlines, and Pan American– which was already monster-sized from: its contract with the federal government to deliver the U.S. mails, and exchanging many political favors.

Mostly, AKA transported passengers between the Pacific Northwest and Alaska. In early 1949, it completed a dangerous mission, flying about 140 Jews from Yemen to the airport in Tel Aviv, while an Arab bomb could have hit the plane anytime.

In the 1950’s, top executive Charlie Willis had such passion for and loyalty and dedication to AKA, that he borrowed $100,000 using his personal house as collateral, in order to restore the pilot-pension-fund shortfall, to keep his employer from going out of business. Beginning at the dawn of the 1960’s, he enabled his second-in-command-executive to engage in deficit spending. They broke the bank to do promotional gimmicks.

In the back of its model CONVAIR 880, AKA installed a stand-up beer bar, even though it replaced eight passenger seats. AKA generated goodwill by throwing parties it couldn’t afford for industry players, such as its own employees and trade associations. In the late 1960’s, it bought hotels and a ski resort. AKA was one of the very first airlines to provide in-flight movies and music. So it hovered near bankruptcy, repeatedly unable to meet its employee payroll. For years.

Commercial airlines, initially transporting wealthy passengers, employed stewardesses in sexy uniforms– with no or minimal training, and offered alcoholic beverages included with the airfare. With evolution came the organization of labor– of pilots, flight crews and ground crews. Alaska’s bush pilots who had gotten in on aviation’s ground floor, had become disenchanted with the changing times. Bob Ellis sold his tiny airline in Alaska because he was no longer having fun, was emotionally exhausted from the government’s imposition of regulations, and didn’t understand the need for union labor. He had treated his employees well.

The Civil Aeronautics Board, one of the government’s regulatory bodies, was soon to stop subsidizing the (small, financially struggling) regional airlines (including AKA) in Alaska. The consolidation of the industry in the 1960’s meant no more floatplanes, biplanes, and single-engine monoplanes. These were replaced with DC-3’s and other faster, technologically superior aircraft.

Competing airlines were growing in size, complexity, and needed economies-of-scale and scope. Bosses couldn’t afford to pay for their employees’ expensive personal problems as though they were in a small business anymore. There was backlash by the workers against this vanishing era. They no longer felt like a family.

In summer 1970, AKA’s Willis (rumored to be an alcoholic) was able to get a new air route: to the U.S.S.R. Ironically, AKA had to lease a Pan Am 707 in order to do it. Willis became a drinking buddy to his Aeroflot counterparts. The passengers, who flew to Siberia, consisted mostly of Native Americans from Alaska visiting family, missionaries, and businessmen. They were treated to flatware made of gold, caviar in their Caesar salads, wine, and Russian samovars. The flight attendants dressed in Cossacks’ attire, with bear fur hats. Unsurprisingly, the flights proved insufficiently profitable over the course of three years.

AKA suffered less disastrous financial losses when the oil industry in Alaska kicked into high gear, in the late 1960’s. Oil-pipeline construction around Prudhoe Bay in the North Slope area became all the rage. From the Seattle-Tacoma airport, the airline’s Hercules’ C-130 planes transferred cargo, including hazardous materials that could accidentally cause a lot of wrongful deaths and property damage: 25,000 pounds of dynamite, heating and fuel oil and big, heavy drilling rigs for ground vehicles, and heaters.

In the early 1970’s, many pipeline workers liked hunting, but they got drunk before they flew home. AKA allowed rifles on their planes, so they hired the equivalent of bouncers who served as ground-crew screeners, and had a locked-up special gun-rack section in the front of the plane.

Read the book to learn a wealth of additional details on Alaska Airlines’ role in the development of aviation, people, power struggles, technologies, and the tenor of its times up until the book’s writing.

The second Book of the Week is “Retail Gangster, the Insane, Real-Life Story of CRAZY EDDIE” by Gary Weiss, published in 2020.

Currently fading from Americans’ memory, is “Crazy Eddie.” Launched in the mid-1970’s, it was a retail chain of electronics stores in the northeastern United States. The company became known for a spokesman who flooded all kinds of advertising media with emotionally-charged screaming, that Crazy Eddie’s prices were insane. The repetitive repetition of this singular message worked. Eddie projected an image of success that fed on itself.

However, from the start, the store’s top executive– Eddie Antar– committed financial crimes. He had selfish, greedy intent, unlike the aforementioned Alaska Airlines executives, who were merely big spenders out of unbridled optimism and honest ineptitude.

Starting in 1984 when the company sold shares to the public, Eddie and his key employees (mostly his relatives) engaged in securities fraud. They had ongoing, frantic bursts of activity in which they: “…stuffed cash in the ceiling, stole store sales-taxes, [plus, they falsified inventory records] and defrauded insurance companies without a second thought. They did not expect to be caught, and if the Antars had any doubt on that score, they had only to look to City Hall for inspiration.” New York City’s government had committed exactly the same kinds of accounting fraud for years and years, beginning in the 1960’s. As the behavioral-economics cliche goes, “The fish rots from the head down.”

By 1987, Crazy Eddie had 2,250 workers in 32 locations from Philadelphia to New England. Read the book to learn a slew of details on the fates of Eddie, his families, and his businesses.

Warnings

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The Book of the Week is “Warnings, Finding Cassandras to Stop Catastrophes” by Richard A. Clarke and R.P. Eddy, published in 2017. The authors explored the concept of “sentinel intelligence” which means that certain members of humanity have a sixth sense for future dangerous occurrences. The one who issues a warning in connection therewith, is called a “Cassandra.” The Initial Occurrence Syndrome means humans find difficulty in acknowledging that an extremely improbable event could happen, simply because it has never happened before.

The authors recounted various instances in which Cassandras spoke up prior to horrible events. A few of the events they described should not count in the annals of Cassandra-warnings; wars, for instance. There are going to be needless deaths and ruined lives in any and all wars. Predicting what is going to happen when tensions are rising in the hotspots of the world is not rocket science. Those who see them are not Cassandras. People like them are basically Nostradamus. He got famous in the 1500’s for “predicting” all kinds of catastrophes that are inevitably going to happen to human beings, such as wars, pestilence and natural disasters, over the course of centuries.

Also, the authors failed to define “catastrophes” referred to in their book’s title. They might want to refine their description of Cassandra events. The difference between Nostradamus’ and Cassandra’s premonitions is in the specificity: Cassandras identify one individual and/or entities around whom or which one specialized scandal is brewing, or describe signals around which, say, a natural disaster, financial crash or pandemic is coming, within a relatively short time frame (i.e., a Jeffrey Epstein or a Chernobyl).

One good example the authors provided, was the Bernard Madoff scandal. Madoff was a specific criminal– a power broker who harmed a significant number of people in a community. The circumstances were not a general, ongoing situation like welfare fraud or insider trading.

However, the situation still all boils down to how one defines “catastrophe.” There were various Cassandras who claimed to know the different events associated with Donald Trump that have actually come to pass. If one defines his getting elected in 2016 for instance as a catastrophe because the community harmed was the entire United States, then yes, its qualifies as a Cassandra event.

Anyway, the authors explained how a Cassandra in the securities industry helped forward the women’s movement. She issued a warning before a financial crash. She garnered kudos when she turned out to be correct. At the book’s writing, though, another female Cassandra issued a warning in the field of public health. Of course, a white male made a sexist remark about her appearance in an ad hominem attack. That’s how critics seek to discredit female Cassandras.

In another of the authors’ Cassandra cases, in July 2004, the federal U.S. agency FEMA (which provides disaster assistance) and the Army Corps of Engineers held a severe-storm-drill in the New Orleans area, but didn’t take it too seriously. Insufficient funding was provided to make specific plans regarding evacuation-transportation for people who were unable or unwilling to heed the evacuation order.

Nevertheless, the Coast Guard and (federal agency) Wildlife and Fisheries did. At the end of August 2005, they were somewhat prepared when Hurricane Katrina actually hit Louisiana. But hilarity did not ensue. Many needless deaths and ruined lives did, as the aforesaid New Orleans residents couldn’t be evacuated. Of course, the exacerbated disaster aftermath was caused by honest ineptitude, profiteering and opportunism rather than malicious intent. Beforehand, there were a few Cassandras who tried to tell others that a “Katrina” was on the way.

The reason Cassandras aren’t listened to, is that they tend to be gadflies in their organizations. There are: clashing egos, jealousy, and inter-agency rivalries. Cassandras are outspoken, and their mouths get them in trouble. They begin their careers as idealists, and usually end up disillusioned, frustrated, cynical and emotionally burned out. They embarrass powerful and/or monied groups whose support they need to keep their jobs.

Read the book to learn about many more Cassandra events, and the authors’ suggestions for encouraging Cassandras to come forward (Hint: one idea is to revive the White House group from the Reagan Era that evaluated foreign policy threats– but expand it, to take other kinds of disaster-preparedness measures).

the signal and the noise (sic)

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The Book of the Week is “the signal and the noise (sic)” by nate silver (sic), published in 2012. In this volume, the author described in redundant and wordy terms, why human beings are so fallible in their predictions and forecasts (and explained the difference between the two). Basically, humans get distracted by noise, so they don’t zero in on the right signals in order to tell the future correctly.

Ironically, the author used less-than-ideal language in describing the epic failings of ratings-agencies in the 2008 financial crash. He should have pointed out that they could have mitigated, just a little, their false advertising by using better risk-assessment wording.

Silver wrote, “… trillions of dollars in investments that were rated as being almost completely safe instead turned out to be almost completely unsafe.” (Never mind the awkwardness of the word “being” in the middle of the sentence, or “it” in the middle of a sentence– so many recently published books have that kind of bad writing.) The ratings agencies should describe investments as “low-risk” or “high-risk” and use the adverbs “extremely” or “very” or “somewhat” or “slightly” as applicable, but never use the word safe.

Anyway, another irony was that the author appeared to be distracted by vast generalizations that were just noise– as cherry-picked data tend to be. He provided all sorts of line graphs and scads of data on housing bubbles. He cited a study on market prices of the “American home” completed by Robert Schiller and Karl Case that created an index based on a century’s worth of data– the years between 1896 and 1996, inclusive.

The research indicated that an inflation-adjusted home bought for $10,000 in 1896 would be worth $10,600 in 1996. Is that noise or what? Silver didn’t specify what “American home” meant. Anyhow, who would buy a home in 1896, and sell it in 1996?

Silver did admit that predictions and forecasts were less inaccurate when qualitative data supplemented statistical models. Worded facts are considerations that add real-world conditions because numbers never tell the full story in complex situations, which are dynamic.

Incidentally, at the book’s writing, he had had success in making predictions in professional baseball because: 1) an excessive amount of data on it had been collected, and 2) he claimed its rules didn’t change. The latter is not true anymore. And besides, performance-enhancing drugs, not to mention new stadiums– among other factors– have put new noise and signals in baseball statistics.

The author pointed out that more data actually made for worse accuracy in predictions in many areas of life. Technology in the form of software that can process scads and scads of data in record time has improved humans’ ability to specifically forecast severe weather, but not earthquakes. As an aside– in any area that involves linguistics, technology is overrated. A chatbot cannot comprehend complex concepts and nuanced language (like sarcasm, irony and idioms). American English is especially fraught with words that have multiple meanings, so it is highly contextual.

There are still financial crashes, gamblers who lose big-time, and “experts” who can’t modify conditions to improve the economy with certainty. Incidentally, as is well known, more and more, daily life in America has been infiltrated by politics.

Read the book to learn about futuristic pronouncements of: television pundits, professional-sports commentators and gamblers, seismologists, chess software, national-security advisers, poker players, and many others.

Just About Everybody vs. Howard Hughes

[Please note: The word “Featured” on the left side above was NOT inserted by this blogger, but apparently was inserted by WordPress, and it cannot be removed. NO post in this blog is sponsored.]

The Book of the Week is “Just About Everybody vs. Howard Hughes, The Inside Story of The TWA-Howard Hughes Trial” by David B. Tinnin, published in 1973.

In the 1930’s, Howard Hughes inherited his father’s oil-industry-equipment company, Toolco, which sold a unique, patented, lucrative drill. By the early 1950’s, Hughes had become a pilot passionate about acquiring jets (whose engines had technology that was obsolescing pistons) for his airline, TWA. He was an alpha male whose desire for control of his company led to decades of complex litigation involving age-old economic and political issues.

As American society became ever more capitalistic in the Postwar Era, businessmen hired more and more attorneys to wield more and more power and influence. They sought to change the tax laws to make more and more money.

Hughes was a victim of his own success in that he was using highly leveraged, deficit financing to purchase the new jets through his Toolco. Into the 1950’s, individuals (rather than their companies or employers) were the ones responsible for debts if they needed to borrow money for their businesses. This economic condition has come full circle with tech startups.

Hughes borrowed from banks and insurance companies, but by the late 1950’s, his debt was so high, they refused to give him special treatment. He used dirty tricks (which arguably weren’t illegal but were unethical, at best) to order jets from a few different suppliers.

Hughes’ incestuous business transactions generated an escalation of commitment among various parties, who were averse to losing even more money if they withdrew from their ongoing deals with him. Need it be said, there is nothing new under the son (or sun– either one). In the early 1960’s, his creditors terminated his borrowing privileges and created a voting trust that took control of TWA. Neither side wanted to see TWA go bankrupt. There were, of course, other wrenches in the works, which are too numerous to mention here.

The orgy of litigation resulting from Hughes’ business activities triggered a very controversial legal and economic issue. Hughes owned 78.23% of the voting stock of TWA, which was financially affiliated with his Toolco. At that time, TWA shares were not owned by the general public. His side argued that he should be allowed to control his companies as he saw fit, because he had a controlling interest in them. On the other hand, he really didn’t own them– his creditors did!

Besides that, if TWA went belly-up, there would be far-reaching economic consequences for many stakeholders. All employees of TWA would lose their jobs, competing airlines would benefit financially, contractors supplying jets and their parts to TWA would lose a customer, Hughes’ lenders would lose megabucks, etc., etc., etc.

According to the book (which appeared to be credible although it lacked Notes, Sources, References, and Bibliography), in June 1961, the big lawsuit initially launched in federal court in the Southern District of New York against Hughes was named TWA v. Howard Hughes. TWA charged Hughes with making special deals with third parties that led to financial harm for TWA. He tried to keep competing airlines from buying jets he wanted for TWA, through monopolistic practices.

BUT, due to disastrous losses (from a downturn in air travel that prompted proposals of various airline mergers, and his tax-evasion tricks), Hughes chose to cancel a portion of jet orders for TWA. Under his crushing debt load, he couldn’t afford to pay for all of his purchases. So the airline couldn’t stay competitive in the commercial airline industry. Other airlines were purchasing jets sooner at lower cost. Hughes’ series of attorneys through the years, of course used all manner of shenanigans (through: filing a blizzard of documents with creative legal arguments, counter-suing and appealing rulings) to delay the case.

One last-minute development that aided Hughes’ attorney before Hughes would be charged with contempt of court yet again, was a curious January 1963 Supreme Court ruling regarding jurisdiction in connection with a monopolistic entity. There was a little federal agency called the Civil Aeronautics Board (CAB), that had been regulating the airlines. The attorney repeatedly tried to get the case against Hughes dismissed– by arguing that CAB, rather than a federal court, should have been trying Hughes’ case.

Read the book to learn every last detail of this suspenseful story that spawned reams of tabloid fodder, but also greatly impacted the legal, economic and tax cultures of corporate America.