Why can't more rich people be like Cindy McCain? Not with the strumpet makeup, I mean, but with the white guilt? Today a LA Times profile made us officially decide to like Cindy, who grew up a rich spoiled rodeo queen cheerleader in Phoenix and then one day went on a scuba trip and came back a crying, caring compassionate woman who sometimes took pills to ease the psychic pain. Okay, so I like Cindy. I get her, I think. I also get Barry Marx Obama and Michelle and their "elitism and all of that." I get Pennsylvanians and why they are bitter. But here's what I don't get: what do the world's 50 top hedge fund managers need with the collected $29 billion they made last year? Are they saving up to buy the Great Wall or the Vatican or something? (Can you even securitize the Vatican?) And how is it they were so smart in a year that everyone at Merrill Lynch who didn't get demoted was soooo...goddamn...stupid. Just testosterone? Glamocracy Megan and I discuss why we can't just pass a law outlawing people from accumulating more than $50 million and, totally unrelated, the concept of "bitterness," after the jump.
MEGAN: MSNBC has reliably informed me that we're in a recession, just not a technical recession.
MOE: Yeah the economy just doesn't isn't in the mood. I think it's cool though.
MOE: I was kind of sad that like 5 people seemed to get that parallel, which was really funny to me in my head., but marin79 made it all better.
MEGAN: But I wanted to sell my place! Or at least refinance my mortgage or something. But, hahaha, I'm a freelancer now so the banks don't care.
MEGAN: I got it! It was awesome.
MEGAN: So, have you shot your economics wad for the week then? We could talk about Cindy McCain instead and how, at this point, pretty much all the potential first spouses are better liked than the actual candidates. She seems, um, really cool.
MOE: Wow, thanks, I had not read that. And I didn't blow my wad. I'll read that while you read this, on how Merrill reacted when, in 2005, AIG stopped insuring the mortgage-backed securities they'd repackaged as collateralized debt obligations: they dove headfirst into the business of "insuring" those things themselves! All the executives who thought it was a bad idea were canned or demoted.
To oversee the job of taking CDOs onto Merrill's own books, the firm tapped Ranodeb Roy, a senior trader but one without much experience in mortgage securities. CDO holdings on Merrill's books were soon piling up at a rate of $5 billion to $6 billion per quarter. This led to an inside joke at Merrill. Mr. Roy is known as Ronnie. Some employees took to saying that if they couldn't find a specialized bond insurer, known as a "monoline," to take Merrill's risk on the deal, they could resort to a "Ronoline."
MOE: Hey, wow, that's a pretty interesting profile of Cindy. I like that she regrets the dig at Michelle. I like that she doesn't talk about her son in Iraq only because she fears crying in public. But the thing I like most about her is this:
"It's not about being a cowboy," she said during a series of interviews over the course of her four-day trip to Kosovo. "It's just these types of things don't necessarily happen in Phoenix, Ariz., and you have to go where it is."
MEGAN: I know, I don't know why people would be insulted that she would cry about her son in Iraq. I wouldn't be insulted, and I'm kind of an asshole. I think people are big assholes.
MOE: I mean, she was a spoiled rodeo queen college cheerleader who went on a scuba trip to Micronesia and became inspired to help others when she realized how destitute it was. She went to Bangladesh on a philanthropic trip and came back with a child. She credits her rich dad with a lot. She has the humility of someone who never forgot the moment she realized she'd been living life oblivious to how good she had it, and that's very nice. She seems, you know, like a stand-up American.
MEGAN: I know, I like her much better than her husband. I really think we should just tell Hillary, Barry and John to step aside and let Cindy, Bill and Michelle run.
MOE: Dude I am not giving up my alienated Marxist chainsmoker.
MEGAN: Michelle, by the way, got her own digs in yesterday about the elitist thing and they were kinda awesome.
MOE: Oh, FUCK, that reminds me. Hahahahaha, dear Mike Madden, this is why I will always love you, this and because you were the only person at the Daily Pennsylvanian offices with any taste in music (do you still listen to Morphine all the time?):Salon on how Pennsylvanians kinda like being bitter:
Shawn Erfman lives in a trailer park, listens to Rush Limbaugh and voted for George W. Bush — twice. Over the weekend, he heard all about what Barack Obama had to say about "bitter" Pennsylvanians like himself. And he's mad as hell.
Not at the guy you might expect, though. "It's fucking true," he said Monday night. "Everybody's bitter for one reason or another. So they're crucifying him because he spoke the truth? Cause he's not saying something that's going to suck up to people and kiss ass? Because, what, he slipped and accidentally spoke the truth, instead of kissing butt?"
Sciandra said he understood what Obama meant, and wasn't offended by the idea that he "clings" to guns. "I hunt, I fish, I love the outdoors," he said. "Me, I tell you, I'm not worried about anybody taking my guns ... I think it just came out the wrong way." As for Erfman, he's more worried about healthcare than his job. His 60-year-old mother-in-law, Iona White, just moved in with his family so she could get onto their health insurance. A lifelong Democrat, White says she'll vote for Obama next week. "It's a bad time in the world," she said. "People are bitter."
MEGAN: I mean, I was having this conversation with Michael Calderone the other day. I grew up in a small town where the major employer is gone. There is a lot of bitterness, people do like their hunting and their religions and I'll be damned if some of them weren't racist... And that's why I left.
MOE: Oh, my brother complained to me about Obama's meh economic policy and I thought one up on the fly.
I wish he would install Huckabee's tax plan. And then give forensic accounting jobs to all the out of work IRS people trailing financial corruption and enforcing net worth caps. No household should have more than $50
million, period. You want to be a billionaire you can give your money to a massive education and cancer fund. Donations to the church of scientology (or actually, anything having to do with religion and that includes you israel) not allowed. move to switzerland or thecaymans if you want to avoid us but don't expect to get through customs without some hardcore guiltripping.
MEGAN: And anal cavity searches.
MEGAN: Also, Huckabee's economic plan sucks and was designed to pander to a very small slice of the conservative electorate. There's something to be said for progressive taxation.
MEGAN: The reason really, really wealthy people donate money to causes like the "fair" tax and the "flat" tax is that they'll pay a lot less money that way. Also, because it would exempt capital gains from taxation. And the fair tax, if I recall, is basically like a national sales tax, so it's incredibly regressive but [waves shiny things] look over there and we'll totally refund that to poor people at the end of the year and whatever. Plus all fair tax advocates like to stand really, really close to you and don't have great breath.
MOE: It may have been designed to pander to those types, but it appealed to me as well, they just need to punish people for accumulating pointless weath a whole lot more. The thing that gives me hope is all the guys like Shawn Erfman, actually. The thing about this country is that a whole lot of unskilled working-class lower class whatever types are not actually dumb. Precisely because they are bitter! They have been forced by underemployment to sift through that which is their own fault, that which is the government's, that which is the fault of the mindless pandering to public sensibilities that get unnecessarily ruffled over the use of non-euphemisms such as "bitter." I feel like, people in cities have this sense that people out there all like people from Borat or something, and like, well, naw.
MOE: Oooooh the debate is tonight.
MEGAN: Yes, sadly.
MEGAN: Obama hasn't RSVP'd for the one in NC that was originally scheduled for the 19th with Katie Couric but is now rescheduled for the 27th and I'm praying desperately that he won't.
MOE: Hey did you read this story about Juarez? The drug war: still a mess! I'm ashamed to say that the headline "Wild West Blood Bath" and the touting of 210 deaths got me hooked. But it was only 210 in the last three months which is conveniently 70 a month which is just over two a day which is just like Philadelphia, and the crime networks seem just as confusing. (But somehow more Soderberghian.)
MEGAN: Is it sad that part of me was like, well, maybe if crime gets organized there then whatever dude or group of dudes has been raping and murdering women will get killed/run out of town? Because God knows the cops ain't been that successful at it.
MOE: Oh look it's John Paulson back in the news. John Paulson is the hedge fund manager who got the idea to figure out how to buy credit default swaps or something. His strategy got totally ripped off by his smarmy friend Jeff, but he still made out with $3.7 billion last year.
MEGAN: Wait, that dude's got a smarmier friend?
MEGAN: Never mind, I scrolled down. I'd call that creepy more than smarmy.
Even on Wall Street, where money is the ultimate measure of success, the size of the winnings makes some uneasy. "There is nothing wrong with it — it's not illegal," said William H. Gross, the chief investment officer of the bond fund Pimco. "But it's ugly."
Hey, here's a crazy idea: why not just make it illegal?
MEGAN: I think enforcement would be too much of a problem, personally. I mean, law enforcement sucks now. We have a huge tax gap already, which is a hugely euphemistic way of saying "tons of people cheat on their taxes" and between the IRS and Congress no one can figure out what the fuck to do about it that doesn't cost more than the money we're losing to cheaters... so they don't do anything, and then the rest of us just end up paying more in taxes than we should have to in order to subsidize the cheaters.
MEGAN: Like Wesley Snipes.
MEGAN: Sorry to wonk out there. Um, maybe we can discuss the obvious unrequited love that Hillary spokesperson Phillipe Reines has for Chelsea, as pictured here? His face totally says "She doesn't hug me like that now, but she'll notice me someday" and the whole article is about how overprotective he is of her and how he hates reporters and stuff. Sweetie, she's just not that into you. Unrequited love sucks, find someone who likes you for you and forget about her.
MOE: Wait, wait! I thought we were talking about something boring and dry that for whatever reason stokes my inner Marxist leninist spirit! A long time ago I read about some sort of tax on all flows of money. A proposal that would just slow the liquidity down ever so slightly. I'm not sure if it's possible or would be effective. But like, in the cases of the hedge fund investment bank plutocracy where most of the time the compensation is a matter of public record, we should be able to go after the cheats, no? Ugh, I hate this business. Here's something interesting.
With a combined $2 trillion under management, the hedge fund industry is coming off its richest year ever — a feat all the more remarkable given the billions of dollars of losses suffered by major Wall Street banks.
The top 50 hedge fund managers — just the managers themselves, not their firms — earned $29 billion this year. That's 30% more than the Christmas bonuses won by everyone at Goldman Sachs combined. Something is amiss here. They liken it to Las Vegas...but...Merrill Lynch would be, like, dead by now. Instead their new CEO is getting paid a gazillion dollars to clean it up or something.
MEGAN: Yeah, I tried reading the Merrill article but my eyes crossed somewhere around the point where their insurance company bailed and they decided to buy more stuff their insurance company said was too risky and then the company paid them more because they took their piggie-securitized-mortgages and put a tiara/high rating on it.
MEGAN: I think that a lot of hedge funds would just go offshore, but, yes, a tax on capital flows would probably reduce the flows but also drive them offshore and rich people would just be rich somewhere else. Actually, I mean, I'd be fine with going and being rich somewhere else right now. Or just rich. Or just somewhere else.