Category: “Wall Street”

The (Honest) Truth About Dishonesty

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The Book of the Week is “The (Honest) Truth About Dishonesty, How We Lie to Everyone– Especially Ourselves” by Dan Ariely, published in 2012.

The author presented one way human beings think about ethical behavior in a given situation: the Simple Model of Rational Crime (SMORC). It says someone would do a cost / benefit analysis in order to decide, for instance, whether to park illegally because they’re late for a meeting. Of course, a major factor in their decision-making includes how likely they are to get caught, and if they are caught, how willing they would be to bear the consequences.

The author wrote that SMORC doesn’t take emotion and trust into account, so most people wouldn’t engage in that kind of moral reasoning. With only reciprocity as the sole consideration, an individual using SMORC would require contracts for almost every ethical dilemma. He would spend most of his life in legal battles and litigation; like, Howard Hughes, Ted Turner, and Donald Trump.

Although the author failed to distinguish between guilt and shame, he cited numerous behavioral-economics studies he and other professors conducted (on mostly American subjects) to learn the causes of dishonest behavior, and ways it can be curbed.

The author realized that in a matter of weeks, even he was getting brainwashed by the propaganda of his bosses, because he was receiving generous compensation for serving as an expert witness.

Two ways to reduce cheating included:

  • Having people read or sign an honor-code document (such as the Ten Commandments, or an agreement not to cheat on an exam, or a set of rules, which, if broken, would give them an unfair advantage) before completing a particular task, taking a test, or competing.
  • Having people put their signature at the top of a document, and then fill in the info (such as on an application or tax return), rather than fill in the info and then sign at the bottom.

Read the book to learn of additional ways society can spread more ethical behavior (yes, it can be contagious!) so as to stave off the collapse of modern civilization just a little longer.

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

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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.

The Education of A Speculator

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The Book of the Week is “The Education of A Speculator” by Victor Niederhoffer, published in 1997.

Born in 1943 in Brooklyn in New York City, the author sorted “market advisers and investment newsletter writers” into eight different categories, providing a brief description of their behaviors or personality traits. He classified himself as “The Other World Person” because he ignored the overpaid noisemakers and distractions of conventional media outlets that purported to convey information on which securities to buy, sell, or avoid.

The author’s two data sources for his commodities, currency trading and investing ideas consisted of the National Enquirer and his research results from testing all kinds of variables in statistics-calculations of past securities-market data using software. No other sources.

The mid-1990’s saw great advances in statistics software modeling that could process scads and scads of data; hence, market players could erroneously use past performance of investment vehicles faster than ever before for predictive purposes to help themselves and others lose their money faster than ever before. And those advances might have played a part in the scandals and financial crashes that have occurred with alarmingly increasing frequency in the last thirty years. Big Tech’s and Big Media’s incestuous oligopolies (fraught with political donations) just keep getting more hegemonic, so that power and money keep feeding on themselves ad infinitum. Globalization is yet another wrench in the works.

At the book’s writing, global trade had been maturing for decades, but capitalism was still in its infancy in many territories of the world; particularly in ones that were becoming politically democratic again, or for the first time in their histories. Many European countries were in the process of adopting cooperation rather than competition in their financial and economic dealings. A large proportion of them even voted to use one currency among them. The United States kept to itself, but more and more people around the world were starting to trade or invest in foreign securities, currencies and governmental financial entities, so chain reactions occurred more and more.

The Federal Reserve (aka Fed) has always been a major influence on America’s financial markets. The author contended that the Fed was just as clueless as the rest of the country about what effects its making of rate-adjustments would have on the nation’s economy. It is currently just as clueless. But its announcements are made with such confidence and arrogance, that a large number of their listeners are brainwashed into believing they are receiving valuable information.

The incumbents– known names pre-Internet–became the most influential voices in the financial sphere. The wiliest ones use propaganda techniques to paper over their wrong predictions. They never apologize for the losses stemming from their pronouncements. The walls of the author’s business office were lined with portraits of ones who had disastrous losses.

To be fair, the author himself told various anecdotes of his own failures. In 1992, he bought IBM stock for his own kids. That was an embarrassing mistake. He learned to cut his losses at a certain level of the total money he reinvested. And, he didn’t let his greed get out of control when he was winning.

The author was a champion squash player. One similarity between squash and speculating is externalities–opponents’ actions determine players’ actions in the game. So, for instance, in ten-pin bowling, there are no externalities. In squash, there are. In one college finals-match, the author moved his body in a way that tricked his opponent into thinking the ball was going to go in a certain direction, but it went the opposite way. Traders and investors play similar tricks in their communications in the financial markets. Conditions change rapidly so even the market propagandists’ winning streaks don’t last long.

The reason is:

First, independent thinkers make observations or find obscure data that works in making them money. Then software detects their trading tricks. So word gets around, and everyone else jumps on the bandwagon so that the advantage is lost.

Human beings want so badly— to believe they can predict the future, and love to fantasize about getting rich quick– that they tend to look for patterns and order where none exist. The author did provide one vast generalization that might be valuable, though. His statistical analysis between the years 1870 and 1995 inclusive showed that years ending in the digit 5 were good years, and those ending in 7 were bad, for the American stock markets. He didn’t speculate as to why.

However, politics is one major mover of markets, and the collective mood of the United States specifically, might be a bit more upbeat in years when political uncertainty is at a minimum. Presidents and other politicians begin or continue their terms during years ending in 5. The public might be unclear about their future policy directions, or weary of them by the years that end in 7.

Anyway, read the book to learn a boatload more about the author’s philosophy, his trials, tribulations and triumphs in the markets, his research results and comparisons between financial markets and: ecology, games and sports.

The Six Days of Yad-Mordechai – BONUS POST

The Bonus Book of the Week is “The Six Days of Yad-Mordechai” by M. Larkin, originally published in 1965.

Passionate, mostly Polish Holocaust survivors who were able to make their way to the Gaza Strip in Palestine in late 1943 worked tirelessly to establish a new kibbutz called Yad-Mordechai. The socialistic ideal of their farm collective was this: “Since economic dependence upon the father was what gave him power, such dependence was abolished in their society.”

Still, the community fell short of total gender equality, as the males did the hard manual labor on the infrastructure; an all-male militia except for one female fought against attacking Egyptians, and females did all the food preparation and childcare.

In November 1947, a majority of United Nations (UN) members voted in favor of partitioning Palestine between an Arab state and a Jewish state. The situation was to become official in mid-May 1948, when the British were to withdraw its officials from Palestine. Arab countries broadcast propaganda that gave their fellow tribesmen the impression they were only temporarily evacuating their homes by that same deadline, and would eventually conquer the Jews and return to take over the entire strip of land that was slightly larger than the state of New Jersey.

The Yad Mordechai kibbutz just happened to be located in the Arab state. The Arabs refused to recognize the UN vote, and decided to fight the Jews for the entire territory. The villains of WWII– ex-Nazis and Italian Fascists, plus Lebanese, Egyptians, Syrians and Trans-Jordanians fought on behalf of the Arabs. The Jews had poorly equipped militias and intelligence cells called the Hagana, Palmach, Irgun and the Stern group.

Nevertheless, as of this writing, Wikipedia says this kibbutz still exists today, and its population is 737. It might be recalled that pure socialism thrived for a short time when the State of Israel was born. That was an extremely special exception, for the following major reasons; the kibbutzniks:

  • were forced to work together in order to survive in the desert, geographically surrounded by enemies;
  • were like-minded– oppressed for their religion– seeking a safe place in the world;
  • had a common goal bigger than themselves– building a country for themselves from the ground up– creating the political, social and cultural systems and infrastructure when everything was simple and their population was low;
  • had in common the shared, traumatic experience of WWII and/or the Holocaust; and
  • had substantial financial and military help from the United States.

Lo and behold, Yad Mordechai has since turned to capitalism to survive, selling certain brands of foods. However, the dangers of capitalism become apparent when financial scandals and crashes plague the nation due to EXCESSIVE DEREGULATION.

As is well known, there was consolidation through the 1980’s and 1990’s of the corporate auditing industry, and “Big Six” became the “Big Four” eventually, prompting businesses across the country to become even more incestuous (corrupt) in their relationships with their auditors.

In 1994, the big-name auditor Ernst & Young fired their in-house legal department and hired outside legal counsel. They must have been hiring employees from the competition, who brought a certain corporate culture to their legal department. In 2002, the Enron / Arthur Andersen scandal broke.

Certain wise folks can see a scandal coming. Like Ernst & Young. They don’t know exactly when it will hit the fan, but they know they don’t want to be there when it happens. James Baker of the Reagan administration was one of those sharp individuals. He switched positions with Donald Regan so that he would be far away when the Iran-Contra scandal became publicized.

In 2019, BB&T, a government bond broker, merged with Sun Trust Banks. Excessive deregulation can do wonders for the bottom lines (when they go hog-wild) of any profit-making organizations in the short term. BUT– it seems as though as the decades pass, financial-industry-players gain more and more experience in preventing lawsuits brought against them from their customers and clients by:

having the latter sign legal documents they never had to sign before, and placing disclaimers galore on all of their communications. The latest disturbing trend is for (previously low-risk) government-bond(!) brokers to do this.

Anyway, read the book to learn of the spirited beginnings, independence-warfare death toll and traumas suffered by the Yad Mordechai kibbutzniks, and their eventual fate. [And stay tuned for more traumas in the government bond market.]

Pity the Billionaire

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“It is as though the frightening news of recent years has driven them into a defensiveness so extreme that they feel they must either deify the system that failed or lose it altogether.”

No, not the Republican Party in connection with Donald Trump.

The Republican Party in connection with Republican voters’ gullibility in believing the Right’s propaganda machine that rationalized away Wall Street’s unmitigated hubris and unconscionable greed amid the subprime mortgage crisis of 2008-2009. As is well known, the rich were made richer and poor, poorer in the second half of the single-digit 2000’s. The GOP’s clever aftermath-messaging led to big wins for them in the 2010 midterm elections.

The Book of the Week is “Pity the Billionaire, The Hard-Times Swindle and the Unlikely Comeback of the Right” by Thomas Frank, published in 2012. This short volume described how the political group called the Tea Party (“TP”), a subset of the GOP, whipped an alarmingly high number of Republican voters into a hysterical rage against the Obama administration’s handling of bailouts of financial institutions and foreclosed-upon ex-homeowners.

It appeared to be counterintuitive, that the TP raged against bailouts for bankers, brokers and lenders. After all, taxpayers were forced to reward these greedy perpetrators of the economic disaster. Through flawed reasoning, though, the TP propagandized that capitalism should be free of any and all economic intervention from the government, whether in the form of regulation or assistance. They pretended to be an enemy of big business, screaming “Socialism!!!” at the government’s every move. They did this because the resulting continued excessive deregulation would make Republicans wealthier and more powerful, and each trait would feed on the other ad infinitum. As ought to be well known– politics cannot be divorced from economics.

The TP was really pushing for 100% pure, capitalistic Libertarianism. Under the “you have two cows” scenario (look this up on the Web): you can do with the cows whatever you wish, whenever, wherever. Also, remove: ALL regulation from all aspects of American life, taxation and social safety nets. And to make the situation truly American, throw firearms into the mix and see what happens. Absent rule-of-law, sanity and civility, the resulting ruthlessness would evolve into (judging from the federal-level administrations’ gyrations of the most recent thirty years) a dictatorial kleptocracy (sort of like Zaire (aka Congo) in the 1980’s), and then anarchy, not unlike… Somalia (?)

Fortunately, a sufficient number of Americans– despite most politicians’ cronyism with big-money donors– clung to the country’s democratic underpinnings (reasonable regulation, taxation with representation, and social safety nets) to weather the storm. The author harshly criticized Obama and his Democratic party for not punishing the morally bankrupt financiers and enforcing the law in helping the bankrupted borrowers. It is possible the president felt it was worth selling his soul to those big-money donors; he wouldn’t have been reelected otherwise and wouldn’t have been able to accomplish more of his agenda. His Democratic party, too, was too nice to get down in the gutter and use the GOP’s sleazy propaganda techniques.

Anyway, read the book to learn of how the pronouncements of the TP and Glen Beck and the contents of Ayn Rand’s novel Atlas Shrugged influenced numerous voters in 2010, and other reasons the nation’s political history unfolded the way it did in the early 2000’s.