Confessions of a TARP Wife

Attention, angry mobs. The wife of the CEO of a company that was one of TARP's biggest recipients, penned a piece in Portfolio magazine's May issue. This downturn has affected her too.

I'm late to the party, as this has already made its way across the internets and back. My first reaction upon reading it was that it had to be satire. Alas, no. The anonymous author has been outed as Liz Peek, wife of Jeffrey Peek, the CEO of CIT Group that accepted $2.33 billion from the government last year.

Consider how Liz's life has changed, then ask yourself if we aren't so very different:

1. She has had to modify her behavior.

I haven’t even looked at spring clothes; God forbid someone catches me out in something new... If I buy a present for someone, I have the package sent to their home. I don’t want to be spotted climbing into a taxi, laden with Bergdorf Goodman shopping bags.

We’ve picked up new habits, like making donations anonymously and sneaking in late to black-tie galas after society photographer Patrick McMullan has packed up his camera and gone home.

2. She is living the Cultural Revolution.

We’re part of the community... whose fall from grace has been swifter and harsher than any since Mao frog-marched intellectuals into China’s countryside.

I'm going to go out on a limb here and suggest that what happened to Chinese intellectuals in the countryside was a tad worse than someone whose primary hardship is "hang[ing] on to some remnant of our former lifestyle."

3. She had to exercise tremendous restraint in choosing a venue to host her husband's birthday party:

Choosing Versailles to host World War I peace negotiations could not have been more complicated than my attempt to select the perfect spot for our annual dinner... At the end of the day, it came down to a choice between an especially accommodating (and well-known) high-end restaurant and a less expensive, clubbier spot. We ultimately picked the cozier restaurant... because our chosen place is distinctly low-profile and rarely mentioned in the press... Really, not even President Obama spends this much time looking after his image.

4. She has learned to enjoy simpler things.

Staying home and watching Law & Order reruns has become our new guilty pleasure. It’s a far cry from opening night at the Metropolitan Opera, but it’s not bad.

Bring on the Jerry Orbach / Bryn Terfel grudge match. My money's on Orbach.

5. She has made necessary sacrifices.

Needless to say, we fly commercial. Using the company plane is now out of bounds; we’ve heard there are reporters staking out the private airports.

6. She is reflective, and finds compassion in the process.

On some level, I feel I’m being punished for too many thoughtless years of assuming that the trappings of success were earned and not given. I’m constantly knocking on wood or offering little good-citizen sacrifices, like manically recycling or chatting with telemarketers.

7. The psychological stress is taking its toll. Her husband is experiencing low self-esteem for the first time in his life:

For a person whose life has been punctuated mainly by success—from perennial class president and high-school sports star to Ivy League MBA—failure is the worst of all nightmares. He seems off balance, as though self-confidence were a physical ballast that he is slowly losing.

8. She is hopeful. These recriminations cannot last. (Perhaps she's right):

The good news is that Americans have short attention spans. Before long, some other group will come along to absorb all the frustration and anger. Meanwhile, I’m off to the tailors to get some clothes altered.

(via kottke.org)

Recession in a Lexus

This story on Andrew Sullivan's site about a homeless family bathing their young children at an Orange County gas station is heartbreaking.  A curious detail is that they were driving "a nice sedan - maybe a Lexus."  

If it was indeed a Lexus, does the car speak to years of one family's overspending and undersaving leading to this terrible situation?  We'll never know, but the irony of finding a homeless family in a Lexus is stark.

A Cloud for Marie

For a great coffee break, a cool site called Wordle allows you to upload text from a document or any url to create a word cloud.   This is what came up for MA+M.  Fun stuff.

(hat tip: Manhattan User's Guide)

Lost in Translation

Yesterday, in his NYT blog, word meister Ben Schott tagged the Chinese phrase, guo jin min tui ("the state advances as the private sector retreats") as one now frequently being used throughout Beijing's beltway.  Call it China's economic policy tagline.

We in the US might have to adapt it, too.  "The state advances as the private sector retreats" accurately describes the present ebb and flow of our economic tides.  With the global financial services industry in disarray, our government has had little choice but advance into the sucking vacuum our decimated private sectors have opened up.   

There is, however, a distinct choice of words in the Chinese phrase that bears pointing out. Here's a direct translation of the characters:

As someone fluent in Mandarin, I thought it particularly striking that the character min — a word primarily used to mean "people, public and citizenry" and secondarily, "private"— was the character chosen to represent "private sector" in this phrase.  This min is also the root character for min zhu, the binary-character word for "democracy."  A more common choice for "private" would have been si, the root word for all things private, like si chan, the word for "private property."

So, is this a question of usage or is there a cloaked meaning in this tagline?  As the state advances, do the people - and democracy - necessarily retreat?  Is the Chinese government communicating something to its citizenry with guo jin min tui?  (i.e., Is this a vaguely threatening and oblique response to the hilarious and subversive Grass Mud Horse Cao Ni Ma (aka, F-- Your Mother) YouTube videos that proliferated throughout the intertubes like a hundred dirty flowers last month?)

Jake the Plumber, Part Deux

A reader responds:

Oy, Oy. Why is this guy complicit in a "bonus scam?" He signed a contract for services and his letter rightly points out the hypocrisy of Messrs. Liddy and Cuomo. To that list he could have added gutless congressmen, hysterical newspersons and bloggers, and those economic experts organizing bus trips to burn crosses in the lawns of bonus recipients. This obsession with a minute blip in our economic crisis, and one that is mostly misunderstood, is actually going to end up causing long term damage. Sounds like Rush of the left.

If you are conducting business with an intent to deceive, that qualifies as a scam in my book. That's why people are so angry. We're told one thing is happening to our money, when reality is quite another. We trusted that everyone invested in one, open market, when our money was really in some back room with a bunch of bookies making bets in bespoke suits.

By the same token, a scheme in which you sell your services to the public for $1 and fashion yourself a martyr when you're in fact a million dollar mercenary (because, let's face it, $750,000 after taxes means $1 million plus, before taxes), and obscure that fact under a ton of fine print -- doesn't exactly strike me as transparent. Worse yet, it plays the taxpayer for a dupe.

And just because it may be technically legal doesn't make it right. Many confidence games are perfectly legal. DeSantis had clever lawyers who, in cooperation with Geithner, helped him dance between the raindrops, is all.

That said, I don't begrudge DeSantis his intelligence, competence and work ethic that lead to his success. I give him credit for having the courage to take a stand for what he believes is true, even if it's an opposing point of view in a decidedly hostile climate.

Unfortunately, he only corroborated that he and his ilk exist in a rarefied bubble of entitlement. It is not the man himself, but the entire culture, of which he is a product, and for which he proudly stands, as evidenced by his defiance, that is being implicated here. He may be a lovely person, kind to small children and animals, but that's beside the point.

A true show of character might've been to return the bonus, thank his lucky stars he's comfortable enough to take some time off, book a flight to Aruba and STFU. Rather, he chose to grandstand in the New York Times, using his resignation letter to demand moral restitution from all the people who have wronged him, and to trumpet his noblesse oblige.

He may not have killed the goose that laid the golden egg, but that goose was good to him for a very long time, and for him to use a major media platform to whine about being misunderstood is so very... Marie Antoinette. Even if he was treated a little unfairly, suck it up. The people standing on line at food pantries and unemployment offices don't want to hear it.

To say we're missing the point, misses the point. AIG has become a potent symbol, and symbols have a habit of transcending the signifier. It's not about DeSantis or his cohorts, but what they represent. This can be dangerous, of course, and I don't agree with the posturing of certain lawmakers and attorneys general who leverage it for political gain, but to pooh-pooh the public's justified frustration is also not the answer. People become angry when they think they are not being heard.

You suggest we've lost the forest for the trees, but the reaction to AIG and all its subplots IS the big picture. Dragging ourselves out of this mess will require restoring confidence -- winning the hearts and minds of the people, if you will -- and responding with a patronizing "Calm down," or, "There are more important things to think about," or, "It's all perfectly legal," isn't going to accomplish that.

No one is advocating burning down houses. (Okay, some are, but they're in the vast minority and reactions to it are just as hysterical -- how many people showed up for that bus tour of AIG exec homes... 20?) The mere sight of a few unwashed investors expressing disapproval over contracts prompted AIG's captains of industry to gather up their skirts and run screaming into their secure compounds. With the exception of Mr. DeSantis, of course, who appeared briefly in a window to shake his fist at the crowd before quickly drawing behind the curtain.

Maybe what they actually fear is that the public reaction will bring about something scarily radical like a measure of finance reform that helps protect and strengthen the market. Or even more terrifying, perhaps it will encourage Geithner to drive a slightly harder bargain next time.

As for the comparison to El Rushbo, all I can say is he fills out pit boss attire -- all 40 yards of it -- better than I do.

Anonymous, thanks for your comment. It's nice to know someone out there is reading.

Jake the Plumber

There's an Op-Ed in today's Times that will surely be the talk of the next 24-hour newscycle, and provide fodder for those with AIG ADD.

Jake DeSantis, an AIG executive and a recipient of a bonus amounting to approximately $750,000 after taxes, has up and quit. In it, he blames everyone for his woes -- CEO Liddy for betraying him, Cuomo for stoking populist rage for political gain, and Congress for listening to their constituents and asking questions on their behalf. 

He takes the opportunity in his resignation letter to tell Mr. Liddy a little bit about himself because they have never met, see, and he wants Mr. Liddy to know he's the child of humble school teachers. He just happens to have cc'd his letter to the New York Times, so if millions of other people read that too, he's cool with that. 

Oh, and btw, he's donating your tax dollars to a charity of his choice. But tax that too much, he warns, and you'll be screwing them over, not him.

The best part is listening to Mr. DeSantis wax righteous about working for $1, when he knew full well he would be handsomely compensated in exchange for touting that line.

For him to assert that he did it for the good of the company, indeed the country, is absurd. In lieu of a reasonable salary, he opted for an outrageously high, guaranteed bonus, to be issued regardless of performance. He argues that he was given repeated assurances on that point, and for the company to renege on it, well, his resignation is nothing less than a matter of honor.

Please. He wasn't working for $1 any more than Bernie Madoff accepted clients out of the goodness of his heart.

But don't even think about shaming him into returning that bonus. He writes:

"As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house."

Hm. More like the electrician burned down the house, and then the company had no choice but to call in a plumber who leveraged his position to charge usurious rates to fix a toilet sitting in ashes. What is it with this country and plumbers anyway?

Mr. DeSantis may not have been a culprit of the collapse, but he was complicit in a bonus scam, and hell if he's sorry about it. Why didn't he jump ship if, as he claims, all his colleagues were receiving attractive offers left and right? Surely dozens of companies were enticing him with better deals than the paltry $750,000 after taxes the government was offering.

It doesn't take much to see that the culture of entitlement and greed that created the villains of AIGFP also created the likes of this twerp.

Knocking on Marie Antoinette's Door

I could not resist clicking on this amusing piece that flashed before me today from Reuters:

A small political party angry at bonuses paid to staff of bailed out insurance giant American International Group is organizing a bus tour to the Connecticut homes of several AIG executives.

"We're all mad at AIG," the Connecticut Working Families Party, a small liberal party, said on its Web site, inviting people to sign up for its "Lifestyles of the Rich and Infamous" bus tour and a rally at the company's Wilton, Connecticut, headquarters, on Saturday.

While we pile on and pull knitting needles out of our bags ala Madame DeFarge, I'll also point to Thomas Friedman's op-ed piece from Sunday.  

The blogosphere went atwitter about the oh-so-liberal NYT's finally critiquing President Obama, but I think Friedman's piece was more sober than that:

Had Mr. Obama given A.I.G.’s American brokers a reputation to live up to, a great national mission to join, I’d bet anything we’d have gotten most of our money back voluntarily. Inspiring conduct has so much more of an impact than coercing it. And it would have elevated the president to where he belongs — above the angry gaggle in Congress.

I'm countering the venting agenda of this blog by saying so, but once the venting is done, all of us - Marie Antoinettes, regular folk and everyone in between - must appeal to the "better angels of our nature" to collectively pull out of this Economaggedon.

Can Marie Antoinette be inspired to donate her millions in a fit of public good will?  Now that would be a feat indeed.

photo courtesy of: Connecticut Working Families

Geithner Needs To Grow a Pair

This has not been a good week for Treasury Secretary, Timothy Geithner. It is now coming to light that not only did he know about the AIG bonuses before last week, he and Larry Summers pressured Senator Dodd to add an amendment to the stimulus package that, in effect, protected the bonuses. Then he pinned it on Senator Dodd.  Timeline, via HuffPo.

In general, cooler heads should prevail in these tense and uncertain times, but Geither comes across as rather too reticent and/or mild. Unlike Obama, who is unflappable but no pushover, Geithner is emerging as something of a doormat. We need someone to take a stand and make a symbolic gesture to right all this corporate malfeasance, not underwrite it.

AIG's argument is that the problem is so esoteric and complex that none but their own can unravel it. Wasn't that essentially the same reason Bernie Madoff was able to run his Ponzi scheme -- his brilliance was of such a high order that his methods were completely opaque and beyond scrutiny, making him a "wizard"?

Geithner bought wholesale AIG's claims that they needed to retain their "best and brightest" in order to understand the contraption the Financial Products unit had built, made of algorithms, fairy dust and 401ks. We can understand the structure of DNA, pinpoint the gene responsible for Parkinson's, invent a polio vaccine, clone sheep and put robots on Mars, yet we cannot find people outside of AIG who are smart enough to decode the subroutines dreamt up by a few rogue derivatives traders? Does it even matter? Those algorithms were fraudulent to begin with. Garbage in, garbage out. And at the end of the day, isn't it essentially going to boil down to forensic accounting like it did for Enron? No one from Enron hung around to help clean up. A couple of them even croaked. But the Feds still got to the bottom of it.

I'm no expert on derivatives trading or the economy, but if you sent in, say, the dynamic duo of Henry Paulson and Eliot Spitzer -- both of whom need jobs -- along with a crack team of economists, lawyers and other credentialed eggheads to dig through the AIG muck, they'd get the task done. With their expertise and no bullshit management style, they'd produce results, with or without AIG's cooperation. Sure, they're unpopular and unlovable and it'd be a bit of a PR nightmare, what with Spitzer's extramarital dalliances with ladies of the night, but is the public's rapidly waning confidence in Geithner any better than that?

Instead of public hand-wringing over legal roadblocks invented by himself, Geithner needs to start playing some serious offense, even at the risk of offending a few dozen precious derivatives traders and their lawyers. Fire the clowns and send in the A-team. If he assigns a high-profile, independent team of experts to clean up the mess, Geithner will be freed up to do the most important part of his job, which is fix the economy.

Corporate Welfare You Can Believe In

In case you've been hanging out under a rock for the last week, there's been a bit of a scandal involving AIG. The insurance behemoth siphoned $165 million in federal bailout funds for "retention" (don't call it a 'bonus') awards to employees of the financial products division -- the same one that helped implode the economy. Someone leaked a few names of the recipients, and now all hell's broken loose. There is populist outrage!

AIG's CEO, Edward M. Liddy, went before Congress to complain that executives were receiving death threats on the interweb, that bastion of civility where there are no, you know, wackos or anything. Never mind that Senator Charles Grassley (R-IA) called upon them to commit harakiri.

According to an article in today's Times, an AIG flack said one executive, Douglas Poling of Fairfield, CT, who received a $6.4 million bonus, offered to return it, “because he thought it was the correct thing to do.” Says his PR guy. And his boss reports he's doing an "outstanding job" winding down the division for whose collapse he is also presumably partially responsible. It's like an arsonist hanging around to sweep up the ashes. Or a murderer joining the search and rescue team for his victim. And is handsomely rewarded for it. The article cites another source -- his daddy's servant -- who vouches that Doug is a really nice guy. Daddy is Harold A. Poling, a former chief executive of Ford Motor Company.

Another recipient of a multi-million dollar bonus, James Haas, choked back tears when asked how he was doing.

“I feel horrible. This has been a complete invasion of privacy... I didn’t have anything to do with those credit problems... I told Mr. Liddy I would rescind my retention contract."

Oh dear. We are faced with an economic collapse, a touch of cultural revolution, and this dude's biggest worry is that some people are trash-talking and there are reporters at the end of his driveway. His privacy is being invaded at his oceanfront property. Someone call Human Rights Watch.

The article doesn't state when Haas or Poling decided it might be best to return their bonuses. Perhaps only after they came under scrutiny and lived to cry about it.

It's also worth noting that Haas, Poling and another AIG exec who received a bailout bonus, Jonathan Liebergall, have all contributed generously to Senator Chris Dodd's (D-CT) campaigns in the past. Senator Dodd snuck in a last-minute bonus exemption into the bailout bill, and this has allowed AIG to argue that the government offered and they merely accepted, making everything perfectly legit. If so, it will be difficult to determine who is more culpable.

I might storm the Bastille too, but seem to have misplaced my battering ram. I'll just have to join the chorus for now.

Even if it's Ice Cream, it's Ours Now

Just caught this in today's NYT Dealbook:

Just how much of a secret are Merrill Lynch’s bonus numbers? As secret as, say, the recipe for Carvel’s ice cream?

That was the comparison that Bank of America’s lawyers made Friday morning in a New York courtroom, as they tried to persuade a judge to let them keep information about the investment bank’s top-earning employees private.

The lawyers compared the legal battle over the pay data — which Andrew M. Cuomo, the attorney general of New York, is seeking as part of an investigation — to a lawsuit involving the secret formula for Carvel’s famous desserts, according to an audio feed of the testimony from the Courtroom View Network...

Bank of America has tried to prevent the names from being made public, arguing that it would cause the company “grave harm,” making it easier for rivals to poach employees and invading workers’ privacy. The bank’s lawyers repeated those arguments in Friday’s hearing.

Unbelievable.  Could BofA's lawyers flaunt their client's "Money for Nothing" attitude any more obnoxiously? 

If both Merrill Lynch and their parent company, Bank of America,  received billions in bailout money — which they both have — those lists of top-earning employees are now owned by us, the public.  Why is this even in argument?

The last bit about the "grave harm" such exposure poses for the company, making it easier for rivals to poach Merrill/Bank of America's top-employees is laughable, because:

A) Said top-employees pocketed billions and lost much of the rest.  They're as desirable as bunch of toxic assets.

B) They have no rivals.  Do they think Goldman would want these bozos?

C) Who's 'poaching' overpaid executives these days? 

D) We're talking about investment bankers, not black ops specialists of the CIA.

What this illuminates is alarming.  They may have purged John Thain and his band of merry interior decorators, but his Antoinettish "because I'm worth it" attitude obviously still pervades the upper ranks at Merrill cum BofA.  

This culture needs a serious reboot, or a booting of all its top brass.  Rather than fear the poaching of their top executives, Kenneth Lewis et al should fear that we - their new bosses - suggest they purge their precious top employees and start over.  

Maybe it's time we take over the ice cream factory — we own most of it already.

Can't Keep Up

As usual, New Yorker cartoonists hit the absurdity nail on the head, at both ends of the economic spectrum:


And:

Cake, Some Cake, or No Cake?

In their most recent blog post, "Let Them Eat a Little Bit of Cake," David Brooks and Gail Collins ask the oft-posed question, "as our economy tanks, is spending on luxury goods acceptable?"  Their answer:  kinda, sorta — maybe a little bit.

Says Brooks:

As for the culture more broadly, again, I think the code of understated luxury applies. Companies should feel free to throw retreats and meetings at golf resorts, even in these tough times, so long as they serve superb chicken or extremely tasty pizza at every meal. The great thing about sumptuary codes is they force people to show their wealth in subtler forms. If we’re going to impose plain living standards on each other during this recession, at least we should allow for that.

So yes to the Canyon Ranch retreats, but just make sure the execs are limited to free-range chicken and gourmet pizza?  

Collins does no better than Brooks.  She wavers between finger-pointing at real estate magnates who hide their Rolls Royces and fear that spending cutbacks amongst the wealthy will send the economy into a further downturn.

This is pretzel-thinking.  Brooks's and Collins's shilly-shallying marks the deceptive difficulty of this question.  As the Economaggedon deepens and conspicuous consumption moves from seriously un-hip to downright taboo, we Americans are experiencing a collective identity crisis of staggering proportions.  

For what are we, if we are not all conspicuous consumers to some degree or another?  We laugh at the Maries; their tone-deafness over the past months has deserved mockery, but the soul-searching has begun for the rest of us as well. (See Megan McArdle's post answering blogger Laura McKenna's question at 11D: "What Will Make You Feel Poor?"; and see Vanity Fair's recent - and excellent - David Kamp article, "Rethinking the American Dream.")

After 9/11, Bush declared that the best way to help our country recover, the optimum way to assert America's freedom and democracy, was to go shopping.  It sounded ridiculous, but the truth is, it illuminated exactly what we were – and are — about.  In 2001, the idea was that spending kept the economy going and a strong US economy kept the ideals and power of the United States in its dominant place.  

We spend, therefore we are.

This cuts two ways.  As a country, we spend to maintain supremacy, and as individuals, we spend to define ourselves.  It is as conventional wisdom dictates.  With the growth and sophistication of marketing techniques over the past fifty years, this meme has been put on steroids.  Two generations (going on three) have been bombarded, everywhere we turn, with messages of what we should want rather than what we really need.  In the modern age, material consumption is the faith we all follow, no matter what our spiritual beliefs.  

Spending and overspending contributes directly to the mess we are now in.  This American Life's recent (and also terrific) podcast explaining the banking crisis speaks to this.  If you don't have the hour to listen, skip to minute 38:00.  Here, Columbia University economist David Beim points out that since 2000, our national debt-to-GDP ratio (what we owe to what we earn) has been 100%.  In other words, for the last eight years, we've been borrowing (and spending) more than we've earned.  The last time this has happened in history?  1929.  

So now what?  How to undo habits so entrenched as to be almost unconscious?  How does any democracy impose true "sumptuary codes" — codes of luxury spending — or even, lessons of prudent personal spending?  How do we define "responsible spending" across our broad (and now drastically changing) class lines?  While overwhelming, I suppose it's healthy that such questions are coming up.

In fairness to Brooks and Collins, I doubt anyone could come up with a satisfactory answer to the question of "Cake, Some Cake or No Cake?"  But it is key to point out that it is much more than a question of etiquette, and not just a question for the Marie Antoinettes of the world. 

Like it or not, we are all tied together in this mess — nationally, and even globally.  Taking responsibility for personal checkbook and spending habits is obviously a concrete and positive way to do one's part in this confusing climate.

But perhaps a deeper responsibility we owe to ourselves and each other is to take the opportunity to challenge the conventional wisdom of spending, of the acquisition of things as symbols of status, success and power.  If we can let this go, then a freedom beyond economics (and the material) might be ours.

(Image from Cakelove: Vanilla / LCD Poundcake)

We'll Get Blago's Royalties, Too

It's better than a soap opera.  Even reality TV pales in comparison.

The Illinois state legislature impeached Blago and condemned him to a life without aides to carry his hairbrush (aka "The Football") for the rest of his days.  But before two months could pass, publisher Phoenix Books rose Blago from the ashes with a six-figure book deal, delivering the benjamins he so craved.  Blago had lost — but oh, how he had won.

Now, clearly, the good congressmen and women of Illinois refuse to go down without a fight. They're pushing a bill through the state legislature to deprive him of future royalties:

The bill would require “any elected official who is convicted of a felony or of a misdemeanor involving a violation of his or her official oath of office to forfeit any monetary rights derived from any media depiction or detailing of the crime for which the person was convicted as a term of their sentence. The forfeiture lasts during the term of the sentence and any period of probation, parole or supervised release.”

Lest we feel bad for Blago, unusual allies in the form of First Amendment rights groups have risen up against the Blago Can't Win bill because of its inherent free-speech violations.  

While of course I'm pro-Free Speech, I kind of wish the zealous First-Amendmenteers could sit this one out and let the Illinois state legislature settle this for once and for all.  After all, the bill's language does confine itself to "elected officials who have violated his or her official oath of office."  They might as well have said "elected officials with bad hairdos and the initials RB who have solicited bribes from everyone in the state."

Will Blago and the First-Amendmenteers succeed in defending Free Speech, and his hard-earned money, or will the Illinois state legislature ride off into the distance with Blago's royalties clinking in their saddlebags?  

Tune in next time, I know I will.

Cartoon Maries

A classic, from this week's New Yorker:

Hold the Truffles

Perhaps it's what the Grey Lady needs to do to attract high-paying ads such as Stuben glass, Saks Fifth Avenue and Tiffany's — God knows newspapers need all the help they can get these days — but underneath her respectable hard-news headlines, her soft Dining & Wine and Fashion & Style sections might as well carry the subtitle, "All the news about Marie Antoinette".

Case in point is today's piece on Upper East Side restaurant Sette Mezzo where the likes of George Soros, Si Newhouse and the scions of Ferragamo dine:

...starting in November, when fresh black truffles arrive, they can be added to any item at $50 for the first flurry of shavings (subsequent shavings are discounted). White truffles bring any entree price up to $200. “I always cover the top,” Mr. Mania said, adding that at a certain other Italian restaurant, “they give you three slices.”

Not that there have been many takers lately. “Nobody ordered truffles this year,” Mr. Esposito added. “It must be the economy.”

Ah.  No truffles – ?  That must mean the economy's tanking.

Sette Mezzo is apparently known for simple, unremarkable dishes at ~ $35 /entree (the implication is these are diner-prices for the uber-wealthy) and its exclusive clientele, who keep running tabs going so cash-only payments aren't (gasp) exchanged in public.   

Vico, a sister restaurant, is just a bit further up the street and features virtually the same menu at lower prices and — as the owner gently explains, lacks the 'energy' of the power-players who frequent Sette Mezzo.  Guess value is of no importance to those who have so much money they don't like to handle it.

These details are handled by the NYT with just a hint of satire, a whiff as delicate as the truffle shavings described above.  The writer has to maintain journalistic neutrality, sure.  But where, as with the now-infamous article on the perils of squeaking-by on $500k/year in Manhattan, are the quotes from folks outside the rarefied world of fur-coated tutors and $50 black truffle garnishes?  

And, for once, can the Grey Lady's Dining & Wine staff get with the times and deign to investigate 'Cheap-eats' for the rest of us suffering through this Ponziconomy? Or is that for the ruder tastes of writers over at The Post and The Daily News?

In Japan, Style = Substance

The Atlantic's Alexandra Harney delivers a striking report on the attitudes of the under-25 set in Tokyo's trendy Shibuya shopping district:

Why are young Japanese women, who as recently as a decade ago were sometimes turning to prostitution to finance their Louis Vuitton habits, losing their lust for foreign luxury brands?

“I’ve never bought anything from a luxury brand, so I really wouldn’t know,” laughed Mika Urasawa, a 20-year-old assistant at the 109 shop Rose Fan Fan, as she helped me into a puffy black jacket with fake-fur trim. “If I bought something from one of those brands, I’d probably spend a fortune on it and a year later it’d be out of fashion anyway.”

As those of us obsessively following this Economaggedon have learned, US economists have been scrutinizing Japan's actions in the early 90s when its economy suffered from the collapse of — yep, you guessed it —a bubble of over-inflated real estate and stock prices.  What followed was a ten-year slump that the Japanese economy has yet to recover from. 

The young men and women quoted here would have spent their teens — a crucial time when consumer habits are developed — during this "lost decade" of Japanese stagflation.  It shows. They shop, but instead of brands, they seek out value and individual expression: 

Today, “it’s not about how much money you have,” [Keiko] Sakurai said. “It’s about expressing your own personal style.”

For young Japanese, as for youth everywhere, the more that personal style differs from their parents’, the better.  Junpei Kosaka, a 26-year-old advertising executive, can afford to buy luxury brands but chooses not to. Brands like Armani, he sniffs, are “for rich old dandies.”

Marie Antoinettes of the world, it's time to take a page from the youth of Shibuya's look books: stop hiding behind outrageously-priced labels and start developing a style from true value that will survive any economic tsunami.  

Ruth Madoff's Personal Bailout Stimulus Package

The Wall Street Journal is reporting that Ruth Madoff withdrew $15.5 million from hubby, Bernie Madoff's firm in two installments, just before his arrest on December 11th. The Massachusetts Secretary of State is looking into the matter:

A complaint filed Wednesday by Secretary William Galvin's office said Ruth Madoff withdrew $5.5 million on Nov. 25 and $10 million on Dec. 10, according to documents from Cohmad Securities, which was co-owned by Mr. Madoff and which the Massachusetts office is investigating. Mr. Madoff was arrested Dec. 11 on allegations of perpetrating a massive Ponzi scheme.

Maybe the question we should be asking isn't what did she know, but what the hell didn't she know?

More on the fealty of wives, here.

[via Gawker]

Back to Reality

The NYT Fashion & Style Section has done it again.  

Again it has given ironic-sympathic voice to the complaints of the Masters/Mistresses of the Universe here in NYC who are serving up Marie Antoinettish quotes by the truckloads as to how it is simply, humanly impossible for anyone (who is anyone) to live on a salary of $500,000 a year — half a mil being the draconian pay cap Barack Obama and Congressional co-horts will place on bank executives who accept funding from the government's stimulus package.

The outrage it has raised among Manhattan's wealthy is akin to the temper tantrums of a child having their pacifier taken away.  What, no more private school educations for the children? And, I have to give up the armed driver/bodyguard — and take the subway? 

Aside from Bernie Madoff and his family, who are now in serious need protection from all the rich and famous they've fleeced — who in Manhattan needs an armed bodyguard??  In post-Giuliani New York, crime has been at an all-time low over the past decade, and yet it seems there are those who consider the city to be as dangerous as Kabul or Baghdad.  

This is pure, paranoid, solipsistic fantasy.  This and the other "can't possibly live without" items detailed in Allen Sorkin's article reveals a depressing fact: that the attitudes of those leading our financial institutions has been akin to those of feudal lords — entitled individuals who live in castles and require protection and layers separating themselves from the teeming masses. 

This outlook is unrealistic, and delivers some insight into how we ended up in the massive banking crises we're now struggling to dig ourselves out of.   Sure, it's not all the Masters of the Universe's fault.  But they need to wake up and see reality for what it now is.  

If they cannot recognize this, and if they cannot rebalance their personal budgets to accommodate a $500,000/annum paycheck (which is not rocket science), then maybe they do not qualify to lead our financial institutions either.

Penney Dreadful

In five interminable installments of The Bag Lady Papers for The Daily Beast, Alexandra Penney recounts her experience as one of Bernard Madoff's victims. She chronicles the horrors of maintaining a rich woman's life, now beyond her means.

Some examples of her plight:

Ironing her own shirts
Fearing not traveling abroad
Eating at the Four Seasons on a developing nation's dime
Figuring out how to get to her friend's private jet, when she doesn't have the cab fare.

Even she acknowledges that her Marie Antoinette antics have provoked outrage, but the fact is, despite the initial knee-jerk reaction, her story, as she tells it, just isn't all that compelling.

It doesn't help that her writing is distractingly craptacular. It's an outpouring of pure id, a kind of Diary of a Mad White Woman. She has an unfortunate weakness for cutesy faux-French phrases ("J'Refuse to obsess about him") and insipid acronyms ("When you become a PORC (Person of Reduced Circumstances) with major bag-lady fears, you grab any freebie advice you can get"). Her thoughts exist in a binary state between unctuous shout-outs to her rich friends and anger at Madoff. A typical example:

Two nights ago, I was slurping Cristal—probably $200 a bottle—and having a fabuloso dinner with my seriously brilliant and dearest friend Richard, who is editor of a major magazine, and his marvelous wife Jennifer. Several years ago, he called and offered me a commercial-photography job—my first ever. We've been blood-close ever since. We talk or email at least once a day.

With writing this bad, it's hard not to judge. Penney is a former editor-in-chief of Self magazine, so one expects that the bar might be raised slightly higher than the average Adult Ed course. Ok, so Self isn't exactly Granta, but they couldn't find someone who could schmooze AND compose a decent paragraph about exercise or whatever?

As someone who's biggest gripe about losing her shirt, is figuring out who is now going to iron her shirts, Penney is inflamed by injustice only when it happens to her. If she still had her millions, would she really be calling the SEC "disgusting, cowardly, and arrogant"? Or disparaging Linda Thomsen for having a "weird crooked-mouth grin." No, she'd probably be toasting Cristal with them, just as she is now with the remaining jet-set friends she so desperately clings to. Who knows whom they've screwed over? As long as someone else is footing the bill, does she really care?

Penney is noteworthy not because of what Bernie Madoff did to her, but because she illustrates how someone can be professionally successful, taken seriously by media brahmins (lookin' at you, Tina Brown), hobnob with movers and shakers... and still be completely, mind-blowingly inane. We're not shocked that she fell, but that she ever rose at all. It's amazing how an abundant sense of entitlement, a total lack of self awareness and a penchant for kissing rich ass can so thoroughly compensate for absence of talent or substantive skill. She may be self-made, but in reality, she's just an isotope of the George W. Bush brand of plutocracy, and she's doing everything she can to clamber back on the bus. Or private jet.

If she makes it, good for her. The world has a place for strivers. But listening to her keen at full volume, one wonders if Madoff wasn't exacting a kind of moral justice by preying upon some of the people who kinda sorta deserved it.

Read it here, if you must.

[Daily Beast]

All about Recessionista

Lest more Marie Antoinettes contract hypothermia wandering Madison Avenue in fruitless search of their favorite stores, it's time for them to go home, warm up, and dial their therapists. Their worst nightmare has hit, in the form of this Reuters headline:

Recessionistas In, Fashionistas Out in Bad Economy

So it seems that Recessionistas — or, those who enjoy being fashionable on a budget — are replacing Fashionistas as the "It" Girls of our economically-beleaguered moment.  

While Fashionistas have been pouting and wingeing about the major cramp the Economaggedon has put in their outrageous lifestyles, Recessionistas have been quietly emerging from the wings, hunting down online bargains, picking up Fashionista cast-offs at their local Goodwill branch, and (gasp) nourishing themselves with home cooking. 

Now, armed with their very own blog and a growing list of articles detailing the tenets of their cause, Recessionistas are taking center stage. 

Here's a choice quote from the Reuters piece about how Fashionista habits are now passé:

"There is something grotesque about paying full price -- $2,500 - $3,500 on a handbag. It is such a dumb thing to do," said Mandi Norwood, former editor-in-chief of Cosmopolitan and Mademoiselle magazines. "It is very chic to save and very chic to get a deal. Any girl wants to look stylish but also be perceived as smart." 

So, then, it took nothing less than a global economic meltdown to make being "a smart girl" hip.  Fine, we'll take it.

Gonzo Journalism

Like 11 million other Americans, helmet-haired amnesiac, Alberto Gonzales is looking for a job.

But he has a little situation, see, that makes it much more difficult -- the economy, being one... oh and "ongoing investigations" being another.

It takes a very special man to be able to release loose stools all over the Constitution on command, and the fact that he is neither recognized nor appreciated for this bit of virtuosity, frustrates him. The disgraced, former Attorney General of the United States is really just a tender-hearted, war casualty.

In a range of interviews for his I Need A Job Tour, kicked-off with NPR's Michelle Martin, Gonzales dismisses the torture thing, the firing thing, and the warrantless wiretapping thing, as totally blown out of proportion. On Tuesday, he told CNN's Campbell Brown: "we did a tremendous job... and so many people are focused on the little negatives that occurred."

The plan hatched by Gonzo and Turd Blossom that lead to the politically-motivated firing of nine U.S. attorneys? Nonsense. They sucked at their jobs. The visit to pressure his predecessor, Songbird Ashcroft, into reauthorizing the domestic surveillance program -- while Ashcroft lay on a hospital bed, seriously ill after emergency gall bladder surgery? Waaay overblown. Contrary to first-hand accounts, the man was totally fine!

And so on.

All he's looking for is some high-paid, do-nothing consultant position in the private sector as thanks for years of unimpeachable service. And why not? So many cronies before him fell upwards. But now, thanks to the economy, he has to go on the teevee and shill for himself. Where's the dignity in that?

[TPM]

A Penny Saved for Tom Daschle...

Here is an '80s campaign ad extolling the virtues of Tom Daschle's then-modest tastes:



So then, was it just Tom's instinctual tight-fistedness which caused him to omit reporting the use of the car and driver (an earnings equivalent of $255,000 over three years) provided for him by the InterMedia Advisors, a private equity firm he was consulting for?

Query why Tom needed (needs?) to be driven around at all, or why he'd agree to it, since he once took such pride in puttering around DC in his beat-up 1971 Pontiac.  Guess all that quaint South Dakotan "sentimentality and cheapness" went out the window the second those special interest groups offered him the wheels and chauffeur — and, let's not forget — some very healthy compensation.

How did Team Obama miss the glaring inappropriateness of Daschle's tax evasions and ties to numerous interest relationships?  Never mind - we got our apology today.  In fact, we almost fell over when we heard the words, "I screwed up" come out of a standing US President's mouth.  

Between this and his shirt-sleeves in the Oval Office, you might just think that Obama is under the crazy impression that he works for the citizenry, rather than rules over it.

Hat tip: The Daily Dish, Andrew Sullivan; Eclectic Dialectics

Senator Thune Explains the Stimulus to Dumb America

Now that we've bailed out so many fat cats, do we really need to be spending more money to help the American people? The GOP would like everyone to know that a trillion dollars is a lot of money! And lest we forget, there are still ballparks in need of names. Priorities, people.

Fear not, America's non-reading, visual learners: Senator John Thune (R-SD) is here to help. If you, like I, do not understand the concept of money, and can only absorb the most rudimentary ideas if they come in the form of the amazing facts vade mecum variety, then his show-me-don't-tell-me explanation of the stimulus bill will bring all relevant facts to light. He gives this kid a run for his money.

Senator, to your point, how many hamburgers (lettuce, tomato, no cheese) to reach the moon?

Bernie's cabin fever

Pity Bernie Madoff.

Thousands of people have lost their savings because of this man and Madoff is feeling sorry for himself. According to the New York Post, Madoff is upset about being trapped in his palatial Upper East Side estate and cannot even go out to grab a bite. Madoff is free on $10 million bail, but he is under house arrest.

"I'm a prisoner in my own house!" Madoff fumed. "I can't go anywhere! I'm stuck here all day!"

First of all Bernie, do you really think it's safe to wander out on your own? Don't you think the days of taking a neighborhood stroll with Ruthie are probably over? You've pissed off so many people that there is probably a bounty for your head. Little old ladies from Palm Beach are waiting to jump you as soon as they see you walk out of your building. Eating out probably isn't safe either. I would also get someone to taste your food before eating if I were you -- just a thought.

Second of all, how can you get bored in a $7 million apartment? It reportedly has four bedrooms, five bathrooms and a library. (Sidenote, why does he have more bathrooms than bedrooms?) Maybe prison, the real Big House, will be a good change of environment for Bernie. There's so much to do that he'll never get bored! Look at how Martha Stewart turned out. Old Boss Lady spent time in the slammer microwaving apples and partaking in yoga classes.

And finally, it goes without saying that he's lucky to have a roof over his head. How many of his victims are now left wondering about their own security, home and future because of Madoff? Not to mention the charitable organizations who put their trust and money in Madoff's hands, only to see it vanish.

So sorry, Bernie. I don't feel sorry for you. I don't even understand why you're free on bail. I hope you lose your multiple homes, cars, yachts and other toys that you purchased by devious and illegal means. I hope you truly understand some of the pain that others are feeling right now in this country. But judging from the strange dolphin-like grin on your face and your comments so far, it seems rather unlikely.

Blago's Parting Comments

As he awaited the Illinois state senate's vote which would unanimously impeach him of his governorship and, bar him from ever holding public office in the state again,  Rod J. Blagojevich (affectionately referred to by some in Illinois as "Blowdryavich") uttered some incredible words:

"We should have been more selfish, not selfless,” he said. “It sounds probably perverse for me to say that based on what some people are saying about me. But it’s true. My family, we didn’t take advantage of all these things that people do. My successor has done a whole bunch as the lieutenant governor — taken all kinds of trips all over the world and trade missions — like he’s got anything to do with anything as lieutenant governor."

For the past two months, this man has been publicly raked over the coals for his unethical behavior and abuse of power as Governor of Illinois, and what does he have to say for himself?  That he should have taken more advantage of his influence and been even more corrupt than he was?

That is some shameful shit.    

A Time to Set Aside Childish Things

Ever since I heard Barack Obama's inauguration speech last Tuesday, I have been ruminating on his words — turning them over in my head and re-experiencing the amazement I felt watching him, our first African-American immigrant President, take over the reins of our beleaguered country.  

Among the many thoughts I've had about the speech, one was that I probably wouldn't talk about it here.  It didn't seem appropriate.  That speech is for discussion on blogs on rhetoric, blogs on foreign policy, blogs on social responsibility, history, politics, law.  Not so much for blogs o' snark and righteous indignation.  

Until now.

You see, tonight, at a friend's recommendation, I read this NYT piece about a group of women who have started a support group, Dating A Banker Anonymous.  Along with holding weekly social events, they've also created a blog, DABAgirls.com where they lament their vexed fates with their "FBFs" (Finance Guy Boyfriends) — guys who are losing their deals, their bonuses — and consequently, their abilities to wine and dine their beloveds at $200/plate restaurants.

DABAgirls.com is a veritable gold mine of Marie Antoinettes of the 20-something set.  While their posts are "infused with our own special brand of DABA Girl humor," the blatant and crass materialism seeping through the cheekiness is jaw-dropping:

This whole messy ordeal has advanced my Botox start date by at least two years. Like every other DABA girl, the economy was wreaking havoc on my relationship and youthful good looks. Phone calls went unanswered, Hamptons invitations un-extended, plans canceled (including, but not limited to, expensive opening night tickets to the ballet, which were scalped instead of being graciously offered to me and a galpal), and so forth and so on. Until – the horror of all horrors – my FBF lost his job, which I guess technically downgrades him to just my BF.

Overnight, he went from unavailable to downright clingy. He wants to have dinner every night. By dinner I mean staying in and cooking as Megu is no longer in the budget.

Since Love is defined in dollar amounts for these women, right now eligible (i.e., rich) men are disappearing before their eyes.  Stripped of their magical millions, all the wealthy princes are turning back into "clingy" math and chess club nerds and, well, what's a princess to do??

So, how does this relate back to Obama?  For the reams that could be written about the multitudes of Marie Antoinettes and the shocking lack of awareness and personal responsibility they express in DABAgirls.com, I think the most eloquent — and sensible — response comes from our new President, in his inaugural speech:

We remain a young nation, but in the words of Scripture, the time has come to set aside childish things . . . 

In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of shortcuts or settling for less. It has not been the path for the fainthearted -- for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long, rugged path toward prosperity and freedom.

Spousal Privilege

Consider Kathy Fuld, wife of Dick Fuld, former CEO of Lehman Brothers. She's not just a secret shopper, but is also an estate bargain hunter. Last November, right after Lehman imploded, she scooped up a $13.75 million oceanfront property on Florida's exclusive Jupiter Island for $100. Alas, Kathy was no real estate prodigy. She nominally "purchased" the home from her husband, in an effort to divest him of assets and help him outrun any legal reckoning coming his way.

And what to make of Ruth Madoff, fake author and wife of the vilified Bernie? She helped her husband with bookkeeping, and was also the keeper of the velvet rope to his fund. More personable than her aloof, wizardly husband, she both humanized him and helped maintain his mystique, which in turn helped him fleece billions.

I've always wondered about the women behind the disgraced, high-profile men, and not just the ones who are forced to stand like mute props next to their husbands at press conference confessionals for marital indiscretions. I'm talking about the ones who get behind a spouse who has committed offensive acts against the public-at-large, either by his own hand (serial killer) or fiat (politician, CEO goon), and whose actions resulted in a rippling outward of wave upon wave of victims. If they truly had no idea, some might argue that their loyalty is honorable and that they are even victims themselves. But what if they did have an inkling?

The scale of the transgression matters too, or should. It's one thing to say, "I love him even though I knew in my heart those office supplies he kept bringing home didn't really come from Staples." It's quite another to say, "I love him even though he started two foreign wars, knowingly caused the deaths of thousands of people, condoned torture and drove the world's economy into a ditch. He's my Bubba, and he meant well."

In the case of Ruth Madoff and Kathy Fuld, did they really just lend their moral support to their husbands, or were they somehow complicit in those greedy pursuits -- if not legally, then at least ethically? If you had a $5k-$10k per week Hermès habit, wouldn't it be in your interest to help perpetuate your husband's behavior, accustomed as you were to living high off the hog? When Kathy Fuld "bought" their Florida home, after Lehman fell, wasn't she essentially slipping behind the wheel of a getaway vehicle? And although Bernie swears Ruth knew nothing about his Ponzi scheme (how chivalrous!), investigators are not so sure. She kept his books for a spell, and it seems unlikely that he stole the equivalent of the GDP of Bulgaria, all by himself. Of course it's only speculation, and no one is saying she was involved, but the 20 million documents recently discovered in a warehouse in Queens may shed some light as to who did know.

Just Plane Stupid

What is with these corporate executives and their fancy jets? Haven't they ever heard of Jet Blue? Okay, fine, I don't expect them to really ride with the masses, but it's ludicrous that Citigroup had the audacity to take the government's -- make that our -- $45 billion to spend it on a souped up jet. This news comes months after those knuckleheads from the Big Three all flew to Washington, D.C. in separate private jets to beg for money. Perhaps MTV should consider a "Pimp My Jet" series.

Consider the specs, according to Maureen Dowd's column today:

As The Daily Beast and CNBC reported, big-ticket items included curtains for $28,000, a pair of chairs for $87,000, fabric for a “Roman Shade” for $11,000, Regency chairs for $24,000, six wall sconces for $2,700, a $13,000 chandelier in the private dining room and six dining chairs for $37,000, a “custom coffee table” for $16,000, an antique commode “on legs” for $35,000, and a $1,400 “parchment waste can.”

This $50 million toy, was fittingly made in France. If Marie Antoinette were around, she would no doubt occupy one of the 12 seats. There are so many better ways to spend that money. For instance, if you divide $50 million by the median income in the United States (roughly $43,000), you come up with the figure 1,162 -- which means Citigroup could've kept on that many people. Instead, they've laid off tens of thousands of their employees.

Although the company claims it has canceled its order for the plane, this episode certainly spotlights the stupidity and arrogance of their executives.

Ponziconomy? Economaggedon? Crecession?

What, exactly, should we call this current economic crisis?  The folks at NPR's Planet Money have created an hilarious poll asking just that.  Vote by this Friday, January 30 and they'll tally the results.  

My favorite: Economaggedon.  It just has a lovely ring to it.

Marie Antoinette Thain Apologizes - Sort of.

By offering to reimburse Bank of America the $1.2 million it cost to remodel his office, former Merrill Lynch CEO John Thain proves he is a bit more porous to the climate around him than some of the other Maries we've mentioned thus far on this blog.  

Although query whether much credit ought to be afforded Thain, who is now playing a finger- pointing game with Bank of America as to exactly who approved the disbursement of bonuses to the executives at Merrill Lynch, even after the company posted bigger losses than expected in the fourth quarter of 2008.  The NYT reports: 

. . . Mr. Thain appeared to challenge Bank of America’s suggestion that Merrill alone was responsible for the earlier-than-usual bonuses. He said the timing, composition and size of the bonuses were all “determined together with Bank of America.”

Bank of America has countered with its version of the bonus affair, telling The Financial Times: “We never said we didn’t talk with them about it. But, in the end, it was their decision and they informed us of it.”

This sniping is revelatory of Thain's still-persistent blindness to the fact that the decision to disburse bonuses to his executives (and himself?) was bone-headed and unethical, whether or not Bank of America was involved.  One can only conclude that entitlement and greed is obscuring Thain's vision.

This all brings to mind that compared to the $4 billion in bonuses disbursed, the $1.2 million Thain is reimbursing Bank of America for the office renovation is really no money at all.

Frankie and Johnny

Frank Rich gets hip to the theme of this blog. On the culprits of the economic collapse:

This debt-ridden national binge of greed and irresponsibility washed over our culture not just through the Marie Antoinette antics of a Schwarzman and a Thain but in mass forms of conspicuous consumption and entertainment. Cable networks like Bravo, A&E, TLC and HGTV produced an avalanche of creepy programming catering to the decade’s housing bubble alone — an orgiastic genre that might be called Subprime Pornography. Some of the series — “Flip This House,” “Flip That House,” “Sell This House,” “My House Is Worth What?” — still play on even as more and more house owners are being flipped into destitute homelessness.

When Obama called it a "collective failure" to rein it in, he rather diplomatically attributed responsibility to everyone rather than call out the jovial idiot and the vulture-in-a-wheelchair by name. Yes, there were ten drivers in the pile-up, but you also have to single out the culpability of the dude in the lead car who knowingly hit the road in a car with no brakes.

Some acts of avariciousness are more egregious than others, and there seems to be an inverse proportion between the scale of greed and its consequences. While many consumers and opportunistic mom-and-pop real estate speculators are paying for their excesses with ruined credit and homelessness, Bernie Madoff sweats it out in a swank co-op paid for with someone else's sweat equity, while John Thain licks his wounds in a country estate that spans three towns and sports five addresses. (His pied-a-terre is a two-bedroom $27.5 million Park Avenue duplex.) If it's business as usual, he will probably land his next CEO gig very soon. Although there are some who caution: beware the lynch mob.

(Also, what's up with John Thain's $1400 wastebasket? Trash cans, always the trash cans with these people!)

John Thain et al - Masters or Servants?

News of John Thain's absolutely audacious behavior just keeps coming in. This is from Businessweek's Matthew Goldstein:

When your company is staring at a $15 billion loss in the face, every dollar saved through cost-cutting and scrimping counts. That’s a big reason there’s so much outrage over the news that former Merrill Lynch CEO John Thain signed off on some $4 billion in bonuses for top executives on the eve of the brokerage’s merger with Bank of America earlier this month. (My italics.)

What?  Someone on Wall Street was signing off on bonuses just a couple of weeks ago?  And $4 billion dollars worth?  

For at least a couple of months now, the word 'bonus' has become the a new taboo, uttered only in disgusted (or regretful) whispers in the back alleys of Manhattan (and beyond), rivaling in notoriety some of the worst racial epithets.  Thousands in the country are suffering job losses, company closings, home foreclosures, etc. and John Thain has the gall to sign off on $4 billion dollars in bonuses to his top executives (likely including himself)?  

How much of that was out of taxpayer bailout dollars from the TARP?

Thain completely lost sight (as many Wall St. CEOs have done) of the fact that as CEO he was a steward of Merrill Lynch -- invested with authority by a collective of stockholders to be responsible and prudent in leading their company -- and not King of All He Surveys, free to do whatever he pleases.  

If there is any lesson to be learned from all this, it's that it's the CEOs who are supposed to be the Servants, and the stockholding public the Master, not the other way around.   

CEO John Thain, Redecorating Office and Skiing in Vail during Economic Crisis

Merrill Lynch CEO John Thain, an uber-Marie Antoinette, has finally gotten the ax from his new boss Kenneth D. Lewis, chief executive of Bank of America (who bought Merrill Lynch in the fall and is now experiencing a form of M&A food poisoning).  

This is good news, given how self-indulgent and out-of-touch Mr. Thain has revealed himself to be in the last couple of months.  Check this out from yesterday's New York Times:

Mr. Thain, who is 53, drew criticism from both outside and inside Merrill Lynch for suggesting in October that he be paid a large annual bonus, said by individuals briefed on the matter to be $30 million to $40 million. In December, the individuals said, the figure dwindled to $10 million and in the end, he received no bonus at all. He later denied having asked for one.

When Merrill Lynch alerted Bank of America in mid-December that its losses were ballooning, Mr. Lewis did not hear the news from Mr. Thain, who around that time left for a skiing trip at his second home in Vail, Colo.

Recent reports that Mr. Thain had spent $1.2 million to redecorate his office caused Mr. Lewis to further question Mr. Thain’s judgment, according to a person close to Mr. Lewis.

Correct me if I'm wrong, but even the thickest person should be able to deduce that:

a) it's a very bad idea to ask for ANY bonus, much less a seven-figure bonus as the rest of the country is calling for your head on a platter 

b) it's not appropriate to go skiing in Vail when your company's losses are ballooning, and you're the CEO

c) you don't redecorate your office for $1.2 million when you're entire industry is asking for billion-dollar handouts from Washington

Come to think of it, this tally causes one to wonder what in the world motivated Lewis to keep Thain on for this long.

Honor amongst thieves?

He never Shruked — or, rather, Shirked his Duty?

Slate's political reporter Christopher Beam crashed George W. Bush's last DC goodbye party last Sunday before W. helicoptered into the sunset following Obama's inauguration.  

Beam has many fine observations of the dreary celebration George II's minions held for him on the threshold of his un-crowning.  This quote takes the cake:

"We never shruk—"
"Shirked!" someone yelled.
"Shirked," Bush corrected, smiling. "You might have shirked; I shrucked. I mean we took the deals head on."
"It has been an awesome eight years," he went on. "The days are long, but the years are short. … If you ever want a nice meal, come and knock on our door in Dallas, Texas." He waved goodbye over the opening chords of "Don't Stop Believin'."

As to whether W. and his team never "shruked" their duties — well, many, many thoughts to the contrary come to mind, but it is the unforgettable images of the legions stranded for days without food, water or proper medical aid  at the Lousiana Superdome and the New Orleans Civic Center after the onslaught of Hurricane Katrina that loom largest.

Never shirked your duties?  No, Mr. Ex-president, I'm sorry.  You shruked and ducked big time. (hat tip: Jason Linkins, Huffington Post)

Old + Strange = Goodbye to all that.

Whether Mr. Cheney be Marie-Antoinettish or not (although I bet he'll show up in another entry here ere long), I have to say, it's extra nice to wake up in the morning after Obama's inauguration and know that Dick Cheney's curmudgeonly, megalomaniacal self is at last gone from the office of VP.   

Alberto Gonzales, "Casualty" of the War on Terror?

As we stand on the eve of president-elect Barack Obama's inauguration, there has been a lot of articles taking a look back at key members of the outgoing Bush Administration.  This brought to mind a recent Wall Street Journal interview with former United States Attorney General Alberto Gonzales, where he says this about the loss of his position some 16 months ago:

What is it that I did that is so fundamentally wrong, that deserves this kind of response to my service?. . . for some reason, I am portrayed as the one who is evil in formulating policies that people disagree with. I consider myself a casualty, one of the many casualties of the war on terror. 

I had to re-read the last sentence twice before I could close my gaping mouth.  Is it possible Mr. Gonzales doesn't know the meaning of the word "casualty"?  A quick check with The Cambridge Dictionary of American English delivers this entry for the word:

casualty /ˈkæʒuəlti/ noun [C]
a person hurt or killed in a war or other event, or something harmed or destroyed by an event

Assuming that Gonzales — a Harvard Law School alum — knows exactly what "casualty" means, I can only conclude that he equates the loss of his job and professional reputation with the loss of life suffered by thousands of American, Iraqi, and Afghani men and women — many of them innocent civilians — as a result of the United States' War on Terror.  

Whatever the verdict is on Gonzales' authorization of interrogation tactics such as waterboarding, or his efforts to reauthorize a secret government eavesdropping initiative, or his office's dismissal of nine U.S. Attorneys nation-wide who refused to use their positions to advance the power of the Republican party — the fact that Alberto Gonzales could equate the loss of his professional reputation, something which even he admits he had a hand in bringing about, with the losses suffered by those who lost their lives, loved ones, families, worlds — points to an audacity and tone-deafness that insults even Marie Antoinette's mythical insularity.

(hat tip: folks at Obsidian Wings)