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Thursday, December 13, 2018

Mass Foreclosures as Fallout from Regulatory Capture: Banks in a Conflict of Interest at Treasury

During the summer of 2010, the Obama administration unveiled a $1 billion program to offer loans to help the jobless pay their mortgages until they could find work again. Even as it was to take effect before the end of that year, by April of the next year the program had yet to accept one application. The New York Times avers that this “could be an epitaph for the administration’s broader foreclosure prevention effort, as tens of billions of dollars remain unspent and hundreds of thousands of homeowners have been rejected.” By April of 2011, the existence of the main program, the Home Assistance Modification Program, had become a target of the Republican-controlled U.S. House.  On March 29th, the House voted to end the foreclosure relief program. Even though the Democratic-controlled U.S. Senate vowed to pursue a rescue, even the Democrats there considered the program to be badly flawed. To be sure, the administration had failed to stem the wave of foreclosures.
The full essay is at "Essays on the Financial Crisis," available at Amazon. 

Public Accountants Betraying Clients: Insider-Trading on Client Information

There are two basic types of conflicts of interest: personal and institutional. In any conflict of interest, two roles conflict in such a way that one role can compromise the other. The role compromised is the more legitimate of the two. In this essay, I distinguish the two types and situate the public accountants involved in insider trading in the personal rather than institutional type. I discuss two specific cases, both of which resulted in the auditors being prosecuted, in order to distinguish that outcome from the failure of society to come to grips with some of the most important ongoing institutional conflicts of interest.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

Auto vs. Oil Industries on Emission Standards: Putting a Part Above the Whole

When a company or an entire industry skips over the good of the whole—the public good—in lobbying for legislation that only reflects the needs or desires of individuals (qua consumers only), the society itself (and even the Earth) is slighted and thus more at risk. For the good of the whole is more than just the cumulative needs and desires of individuals in part because the latter do not take into account the wider effects of their choices. When an individual company or industry takes this point into account and rebuffs favorable legislative proposals because they would do too much damage to society and/or the planet, social responsibility is at hand. Companies or industries that do not are thus irresponsible from the standpoint of the whole, which, through government, is justified in keeping an eye on them (especially in making transparent their efforts to influence legislation and regulation. The American auto and oil industries can be distinguished in this regard. 

Tuesday, December 11, 2018

The Young Messiah: A Film Rendering Religious Meaning as Distinct

The 2016 film, The Young Messiah, admits to being an imagined year in Jesus’s childhood. To be sure, historical features are drawn on, but the genre expressed is historical fiction. This label seems too harsh, for Josephus, an ancient Jewish historian, mentions Jesus, “the so-called Christ,” and his brother James. Clearly, Josephus was not a believer; more accurately, he did not believe that Jesus Christ was (or is) the Son of God. Even so, watching the film knowing its screenplay came from imagination drawing on faith narratives and historical figures (e.g. Herod) enables the viewer to become cognizant of religious meaningfulness, which need not depend in the case of faith narratives of conflating them with historical accounts. 
That is to say, a distinctive religious meaningfulness can be separated from the domain of history without any loss.


The full essay is at "The Young Messiah." 

Investor Assessments of Political Events

Although the various investors in the financial markets doubtlessly pay great attention to important political events, such as were a state in the E.U. to default on its bonds, I suspect that market analysts overstate the importance of more commonplace political events. For example, The New York Times reported in late September 2012 that investors were shifting their portfolios to reduce risk out of uncertainty regarding the upcoming American elections and the ongoing negotiations in Congress to avoid the huge budget cuts and tax increases set to begin automatically at the beginning of 2013 and run for a decade. Additionally, fears that E.U. leaders might hesitate on moving forward with the bailout program oriented to indebted states were prompting investors to be more risk-averse. Generally speaking, analysts were “anticipating that politicians may not act until forced,” both in the U.S. and E.U., “setting the markets up for weeks of angst.” In my view, this account is overstated.

 Does expertise on these make one an expert on politics?  
The full essay is at "Investor Assessments."

Source:

Nathaniel Popper, “Fearing Fiscal Cliff, InvestorsCash In and Seek Safety,” The New York Times, September 28, 2012. 

Mitt Romney’s “About-Face" in the 2012 U.S. Presidential Election: A Candidate’s Conflict-of-Interest

As was demonstrated in September 2008 as banks began to stop lending to each other even overnight, trust is the foundation, or grundlagen, of a market. The same is true in relationships between people. I would be surprised were a marriage ever the same after even a contrite spouse has had an extramarital affair. The same is true in politics; once the electorate has been lied to, it is very hesitant to remove the asterisk next to the politician’s name. The relevance of a politician’s extra-marital affair, such as the flowery lapse of Gary Hart or the sordid stains of Bill Clinton, is that the people conclude that they, like the wives, could be betrayed. Once established, a lack of trust tends to spread like an invidious cancer until it has encompassed the entire body politic. The shift is from justice to a lack of harmony on many levels.
Plato theorized that justice is the harmony within the rational psyche and polis (city, or country) as well as between the heavenly spheres (planets and stars)—the harmony between the rational and the vibrations of the spheres being in sync, which is justice itself. It follows that a person who lets his or her desires run rampant is in line with a squalid or aggressive city, and that neither of these shares in the musical/mathematic harmonious vibrations of and between the heavenly spheres. Lack of trust at the personal, business, or civic level can be said to be a symptom of the shift from the condition of harmony, and thus justice, to discord.
It follows that in a republic or union thereof, it is vital to maintaining justice (as harmony) that the electorate not be as sheep in taking in that which a politician claims regarding what he or she “really believes.” Once a candidate has stupidly lapsed in terms of trustworthiness, the electorate should be cognizant of the conflict of interest in the candidate later dismissing the substance of his or her real feelings or beliefs. In general, if a candidate’s statement is in line with him or her getting elected, a due dose of salt should be taken with that dish.
I have in mind Mitt Romney’s statement at a closed-door fundraiser in September, 2012 that nearly half of Americans don’t pay income taxes, view themselves as victims, and refuse to take responsibility for their lives, wanting to live off entitlement programs instead. 

Oceans Arising on Edifices of Arrogance

A study published in late November 2012 in the journal Science estimates that the melting of ice sheets in Antarctica and Greenland had raised global sea levels by 11.1 millimeters (0.43 inch) since 1992. That represents one-fifth of the total sea-level rise increase in that period. Other contributors include the expansion of the sea water from warming, and the melting of glaciers, as for instance on mountains. In the 1990's, melting of the polar ice sheets in the Antarctica and Greenland was responsible for about 10 percent of the global sea-level rise, but by 2012 the effect had risen to 30 percent.[1] The study does not, however, uncover the underlying cause, or association, lying in a complexity in human nature itself. Our species has vaunted to the top of the food chain and leveraged a brain capable of engineering technological advances that would have seemed magical even just in the nineteenth century, and yet we seem hard-wired to accelerate our course to a self-destructive extinction. This lack of balance is reflected in the increasing extremes in the global climate. In this essay, I begin with the study and steadily work toward uncovering the underlying, subterranean culprit, which would go on to produce record-high carbon-emissions in 2017.

The entire essay is at "Oceans Arising on Edifices of Arrogance"




[1] Gautam Naik, “Polar Ice Melt Is Accelerating,” The Wall Street Journal, November 30, 2012.


Thursday, December 6, 2018

Was Goldman Sachs Really Politically Impotent amid Public Scrutiny in the Wake of the Financial Crisis?

If the American financial houses on Wall Street are among the most powerful forces in American politics-- powers, as it were, behind the throne--does it make sense that the strongest bank would be politically impotent?  In other words, can a public blemish nullify the power of all that capital?

The full essay is at "Goldman Sachs: Politically Impotent?"

See also "Essays on the Financial Crisis," available at Amazon. 

Mr. Goldman Goes to Washington

After watching hours of the US House Government Affairs committee on Investigations’ hearing on Goldman Sachs in 2010,  I concluded--totally contrary to the disavowals by the Goldman managers who testified--that there was indeed a conflict of interest between Goldman’s proprietary and market-making functions.  By proprietary, I mean a bank trading on its own books beyond simply being the counter-party in its market-making transactions. In their testimony, Goldman managers presumed that all of the bank’s proprietary transactions are part of its market-making role. However, I contend that the bank has been both a market-maker and a player in those markets, and furthermore that the latter function has affected the former in ways that are intended to benefit the bank. That is to say, Goldman Sachs’ financial interest has been put before that of its customers. In some cases, Goldman’s employees refused clients’ requests for shorts related to the housing market so Goldman’s own profits in shorting the market  could be preserved. Sen. Susan Collins (R-ME) said, “There is something unseemly about Goldman betting against the housing market as it is selling housing-related products to its customers.” Sen. Conrad, a more conservative Republican, echoed this sentiment.  The fact that Republicans on the subcommittee joined with Democrats rather than joined in Goldman’s paradigm points to a major disconnect between Wall Street “speak” and the discourse of the general public.  In other words, the financial managers and the politicians were largely talking past each other.  Even so, the two “worlds” can be translated into a common language that nonetheless finds Goldman culpable, while acknowledging some of the managers’ points.  In what follows, I discuss a number of the points raised in the hearing to bear out my contentions here.

The full essay is at "Essays on the Financial Crisis," available at Amazon. 

CEO Compensation: How Much Is Too Much?

From the previous year, the medium value of salaries, bonuses and long-term-incentive awards for the CEOs of 350 major American companies increased by 11% in 2010 to $9.3 million, according to the Hay Group.  Corporate net income increased by a medium of 17% and shareholders medium returns, including dividends, increased by 18 percent. Share prices also increased more than the CEO compensation. However, bonuses increased 19.7%, which is just barely more than the percentage increases in corporate profit and shareholder returns.


The full essay is at "CEO Compensation."

Tuesday, December 4, 2018

Rosemary's Baby: The Supernatural in Religion

The film narrative centers on Satan impregnating Rosemary, a married woman in New York City. According to Roman Polanski, the film’s director, the decisive point is actually that neither Rosemary in the film nor the film’s viewers can know whether it was the devil who impregnated her. Beyond the more matter of being able to distinguish a psychosis from a more “objective” or external religious event, the importance of the supernatural to religion is also, albeit subtly, in play, according to Polanski.

The full essay is at "Rosemary's Baby."

Monday, December 3, 2018

The Gospel According to Dr. Goebbels

“What does Christianity mean today? National Socialism is a religion. All we lack is a religious genius capable of uprooting outmoded religious practices and putting new ones in their place. We lack traditions and ritual. One day soon, National Socialism will be the religion of all Germans. My party is my church, and I believe . . . " From his diary on Oct 16, 1928.[1]

The full essay is at "The Gospel According to Dr. Goebbels."

1. “The Goebbels Experiment” (2005). 

Sunday, December 2, 2018

The Essence of Leadership

According to DePree (1989, p.19), the first responsibility of a leader is to define reality. This might seem metaphysically esoteric, but I believe DePree hit the nail on the head. Even though far less has been written in leadership research about the importance of viewing reality and interpreting it than about traits, styles and situational factors, defining reality is the fundamental task distinguishing leadership as a phenomenon (Caldwell, Bischoff & Karri, 2002, p. 153).

 Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available at Amazon. 

Sources:

Caldwell, C, S.J. Bischoff, and R. Karri: 2002, “The Four Umpires: A Paradigm for Ethical Leadership,” Journal of Business Ethics 36, 153-163.
De Pree, M.: 1989, Leadership Is an Art (Doubleday: NY).

Industry Self-Regulation: Too Idealistic for Futures

At the time of MF Global’s collapse amid hundreds of millions of dollars in lost customer funds, commodities and futures trading had for decades been “largely policed by the exchanges where they trade, setting up a potential conflict of interest,” according to the New York Times. The paper continues by pointing out that those exchanges, including profit-making companies such as CME Group, the parent company of the Chicago and New York Mercantile Exchanges and the clearing house used by MF Global, “oversee the very futures firms they rely on for business.” The Times refers to this conflict of interest as one centered on industry self-regulation. 
 
The full essay is at Institutional Conflicts of Interest, available at Amazon.

The Market Mechanism: Complicit in E.U. Debt Crisis

According to The New York Times in late 2011, “How European sovereign debt became the new subprime is a story with many culprits, including governments that borrowed beyond their means, regulators who permitted banks to treat the bonds as risk-free and investors who for too long did not make much of a distinction between the bonds of troubled economies like Greece and Italy and those issued by the rock-solid Germany.” In going through these culprits and how they interrelated, it should not be lost that the market mechanism itself can be held as suspect, for at the very least it enabled the furtive games to be played for far too long. Indeed, the market itself did not do a good job for years in providing accurate risk-return relationships.

The full essay is in, "Essays on the E.U. Political Economy," available at Amazon.