A Certain Stylishness In Hating The Rich

In Marie Antoinette's days, the guillotine was called the 'National Razor.'

Our national discourse on the nature of wealth has been a good cure for sanity of late.

News that a book coming out from the surviving son of Bernard Madoff, mastermind of the largest Ponzi scheme in history, elicited comments from readers that could be called anything but charitable. Alongside an interview with Madoff’s wife, Ruth, whose picture speaks volumes about the toll the scandal has taken on her life — not in the least the suicide of her other son — are comments that plainly show how bitter the feud has become between the rich and the working class in our country. In response to Ruth’s claims of not knowing of her husband’s illegal financial dealings, readers wrote:

“What a bunch of lies. Anyone in the industry knows that the returns had to be made up…the sons knew it, the wife knew it, everyone knew it.”

“I do not think Ruth knew, but she strikes me as remarkably incurious and shallow.”


“This is a woman who married at 18 and never took responsibility for her own financial security. True, she raised their children but she chose to ignore the choices made by her husband.  Now she claims to be a victim. I am sorry but I do not buy this. She chose to remain ignorant.”

Overlooked was this part of the interview, in which Ruth Madoff discusses falling in love with her husband, as it would inevitably inspire some modicum of humanity.

Aside from Madoff-venting, the debates rage about the solutions. At Occupy Wall Street, which I visited last week, you have, on the one hand, a number of concerned Americans questioning — or outright decrying — capitalism in all its trappings. They suggest that the only solution is to raze and rebuild the entire political and financial system.

Unfortunately, they are still experimenting with new models to offer in its place.

On the other, you have national leaders quick to denounce the financial crisis, but just as quick to vote down any new rules aiming to prevent a financial crisis in the future.

Two G-Men (Goldman, that is): Obama and Corzine wave for the crowd

Already, we are seeing the results of this splintering of the populace: we remain effectively paralyzed to redress our own fragility, forced to lurch from one crisis to the next. Large financial powerhouses continue to fail spectacularly as the Department of Justice, the Federal Bureau of Investigation, the Securities and Exchange Commission and a smattering of other government agencies struggle to keep up with reports of unchecked theft, negligence and fraud amid budget cuts frequently meant to hobble them (as if the backlog of cases they’re drowning in wasn’t enough).

In the meantime, too much money in all the wrong places undercuts the healthy cleansing that might otherwise be achieved through a democratic elections process. As one hedge funder told me while in New York last week: “Nothing can pass C0ngress, because the Republicans believe all regulation is bad. They don’t want another financial crisis, but they don’t approve of any new rules either. They haven’t quite worked out their dogma yet.” And we know Obama and the Democrats, whatever the dogma, do not appear capable of executing a plan.

Last week, former U.S. senator, New Jersey governor and high-ranking Goldman Sachs executive, Jon Corzine, stepped down from a job he held for just over a year as head of the world’s largest futures brokerage house. The 200-year-old-plus brokerage, MF Global, handled traders’ transactions in the multitrillion-dollar futures market, where people bet on the future prices of everything from soybeans to gasoline to interest rates.

Corzine’s company, which sought to become a mini-Goldman Sachs, filed for bankruptcy after betting more than $6 billion on bonds tied to the European debt crisis and getting caught short. Corzine, a self-described son of an insurance salesman who grew up on a “small family farm” in Illinois, raked in hundreds of millions at Goldman as he ascended to its highest echelons after starting out as a bond trader there.

Given his trading background, Corzine very likely understood exactly what kind of risk his brokerage was taking ahead of its downfall. (“A good rule of thumb is, if the guy is not a former trader, he probably didn’t know what hit him,” the hedge funder told me over a nice-sized steak. “But if you’re a former trader, you get the joke. You probably wrote the joke.”)

MF Global faces a particularly thorny issue now: customer funds are missing to the tune of hundreds of millions of dollars. This has raised fears that the brokerage may have actually helped itself to some of its clients’ money — a huge no-no, even in the futures market. Separately, additional customer money has been frozen, trapped in bankruptcy-proceedings limbo until all financial issues can be sorted out. This means people with millions entrusted to the once-reputable brokerage won’t recover their funds for years, if at all.

Corzine, however, will recover his funds. On top of his $1.5 million annual salary and $1.5 million signing bonus, he received $11 million of stock options. (Corzine did have a $12.1 million “golden parachute” lined up in case he sold the firm before leaving — which he tried to do — but it didn’t work out.)

Naturally, Corzine is a rock-ribbed liberal who has long spoken out against the ills of overcompensating executives on Wall Street, particularly when their pay is not tied to fiscal performance, as was precisely the case with him in his latest job.

On his blog last week, Sean McGillivray of GP Trading wrote:

This story isn’t about Jon Corzine or whether or not he gets a golden parachute or prison jump suit. It is about the estimated 150,000 investors who have been locked out of their account since Sunday night.

Occupy Wall Street believes firms should not be able to gamble with customers’ money, a tricky concept financial institutions are still having trouble grasping. Turns out it is a tough request to ask big-name firms not to touch our cash.

To blame capitalism or the quote-unquote 1% is to oversimplify things. But it is obvious we have yet to root out the corruption that led to the 2008 financial crisis and the brazen apologists who remain willfully ignorant to change.

13 thoughts on “A Certain Stylishness In Hating The Rich”

  1. It is not so much “hating the rich” for the average middle class–its hating people who obtain obscene wealth by ignoring the legal restrictions–because they could. Because they knew the agencies were crippled–because they had a hand in crippling those agencies. We continue to hear this bit about the agencies being unable to function—it is true. I have seen many agency employees in many agencies frustrated by arbitrary and irrational barriers–things as simple as frozen money to acquire office supplies, and updated PCs. Seems small but try to do your job with no printer paper–no paper clips–no file folders. Using a refurbished laptop that is 6 years old. Businesses could not function in the face of these barriers.

    But these things did not just happen because God stepped in and ordained EIA –IRS—etc shall have no supplies–shall be made ineffective and inefficient. The failures that result were foreseeable and intentional. The persons responsible should be held to account–but they are not. Any anger is justified—the failure to make people accountable simply is a green light to others in future to go again with what works.

  2. Did anyone at Occupy read The Asylum?

    Do the Keystone XL protestors understand the banks involvement in Cushing?

    Do the Occupy protestors understand Cushing’s relationship to the banks?

    1. @decora

      Please expand? I imagine the banks are lending the money—with a throughput and deficiency guarantee by the shippers like all other pipelines.

      My sense is Cushing enables a lot of speculation—and that keystone will allow the price of nymex crude to rise to brent–so iv always thought from an economic perspective its better to expand the lines across midwest refineries before taking it to thr coast and concentrating more refinery capacity in PADD III—-better to reverse current south to north crude line CAPLINE. But Im curious what you are referring to????

    1. I do not think the OWLs really are quite able to get their minds around the implications of the pricing of strandedvmidcontinent crude vs brent–but really i think the purely speculative runup on brent is indicative of excess dollars chasing commodities for speculative purposes–but not limited to crude–just going to be more since copper and steel demand etc is falling like a rock now china is not buying in overheated economy.

      the OWLs iv talked to are not really financially astute at a detail level—this is a problem–it may be enough to point to excessive greed in investment banks [casino betting] –thats hard enough to grasp for a lay person

  3. Decora, the Occupy folks have requested a few signed copies of my book, so I am contributing some to the OWS “People’s Library” in New York. As for the Keystone protesters’ knowledge of the banks involvement at Cushing (and the potential cross-pollination that might be achieved between them and OWS) I am not sure. Are you in touch with any of the Keystone group? I’d be interested in talking to them about their concerns surrounding Cushing.

    David, are people really not getting basic supplies to do their jobs at the agencies? That is worth looking into. And also rather disturbing.

    1. @ LMG
      Yes absolutely problems like that——ie supplies, repairs,

      I worked at IRS new facility in DC –Crystal City—even before budget battle shut dow stuff occurred, the whole office [natl office IRS Excise tax collection which collects the money for infrastructure trust funds–eg highways, airports, oil spill, LUST cleanups]—– had to buy my own basic supplies or do without for most 2011–there was a freeze on all purchases due to budget issues. shredders that did not work and couldnt get fixed????

      terminated all contracts for small contracts for support and outreach
      so little contractors who were usually retired irs poeps that knew the subject matter were booted –but the big name contractors like MITRE just kept on even while freezes went on–without delay or reduction

      basically cuts occurred that disabled people most able to add value while the bells and whisles people were in overdrive performing very questionable things–in terms of need and value added

      there was a natl security issue that arose in connection with one big contractor that i would need to discuss by phone

      i saw /experienced the above–not even staples—but i also had post office people tell me same stuff–they had to but supplies to do basic things needed to secure mail???

      it reminds me of the addage about animals caught in traps and chewing their legs off to escape–govt disintegrating in terms of functionality because it is doing stupid choices for its own employees and mostly concerned about paying big contractors—my phone is 419-306-7963 id suggest some sort of comment request for govt employes to see if my offices’ experience is widespread–i cant speak beyond what i saw

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