STRATOSPHERE

Posted in Rants on June 19th, 2017 by Ed

Of all the things I've figured out about life – by no means an extensive list – the lesson that took the longest to sink in is that wealthy people or people in the social "elite" however you choose define it do not have advantages for the reasons the rest of us usually think. People assume that Old Money or social status allow one to play The Game with any number of advantages like better preparation, more knowledge, or better connections. This is true for people playing The Game, to be sure. But the elites are not competing like the rest of us, with varying degrees of advantage over one another. They are playing an entirely separate game. They live, for all intents and purposes, in a different world.

It's certainly not an important news item given all that is going on in the world, but earlier this year Marc Mezvinsky's hedge fund shut down earlier this year. If that name seems familiar, it's Chelsea Clinton's husband. Bill and Hillary's son in law. But beyond the status he gained in marriage, his own mother was a Member of Congress (she of the infamous "Bye Bye Marjorie" vote to pass Bill's budget in 1994) and his father was a millionaire financier in addition to, obviously, also being a Congressman. Incidentally, he spent some time in the pokey for his financial dealings, but hey, nobody's perfect. So, to say Marc has and has had it all would be an understatement.

He garnered some attention during the Greek debt crisis by using about $25 million to buy Greek sovereign debt for pennies on the dollar despite the fact that the government was clearly indicating that it would default. Now, as far as investment ideas go this is not strictly an awful idea; he made a gamble that someone – the IMF, Germany, the EU, China, private banks – would bail Greece out at the last second. Had that happened, the notes he bought at something like $0.04 on the dollar would have paid off with a gain of thousands of percent. Seriously, it's not a strictly terrible idea. It was not totally implausible that someone would bail Greece out.

The problem was that this isn't really "hedging" anything in the sense of what a hedge fund is actually supposed to do. This is more like betting on a three legged horse with 10,000:1 odds to win the Kentucky Derby. This was buying junk bonds and losing, essentially. The other problem is that Greece did in fact default and he was totally exposed. He lost $25 million overnight.

It is arguable that in the world of banking and finance, $25 million is like 25 cents to the rest of us. But it represented a good portion of his fund's assets, and with their closure in February it is obvious that this fit into a pattern of big losses. The financial aspect of this story is uninteresting unless you happen to be very excited by financial wheeling and dealing. What strikes me about this single example is that this guy pissed away $25,000,000 and nothing happened to him. Nothing. He's not in legal trouble. The fund's investors aren't wielding torches and howling for his blood. He hasn't been ostracized by Wall Street. In his reality, this is maybe, at worst, cause for some good-natured ribbing from the fraternity of his fellow untouchables. He might get some grief after a couple drinks at exclusive charity events. Hey Marc, wanna buy some Greek magic beans? Hi-larious.

Think about that. He threw $25 million down the drain and nothing happened to him in a world in which a woman who is 10 minutes late for her minimum wage retail shift because the school bus didn't show up to get her kid not only gets fired but is confidently told that she deserves nothing better. This is a society where teachers get fired if parents complain about them, where people who do their jobs well and work hard are laid off or fired anyway because of *shrug* "Progress" But if you're one of the chosen, you cannot fail unless failing up counts. Flushed $100 million of venture capital down the drain at your startup? LOL bro, it's cool, here's more money to play with. Your last company fired you after you took over as CEO and ran them into the ground? Don't worry, another CEO gig awaits. There is no end to the number of mulligans these people give and receive within their exclusive circle of Old Money and Ivy Leaguers deemed worthy of admittance. The poor (or merely Not Super Wealthy) need discipline and punishment – one mistake and it's all over. The wealthy, though, need coddling and endless do-overs; how else will we encourage them to Create and Innovate, amirite?

The only profession in which a person can be demonstrably terrible yet continue to get rewarded over and over again is being a left-handed starting pitcher. And that's just a supply problem. There is no shortage of cocky Stanford-minted scions of the Old Money willing to play with, manipulate, and gamble other people's money, yet the same guarantees of lifetime job security and lavish compensation apply.

That's the different between the oligarchs and everyone else. It would be nice to live in a world with a gentlemen's agreement that no one can be permitted to truly fail, but I guess most of us would settle for one in which any job was available and maybe a few of them even had paid vacation days.

PRETEND WE HAVE A JUSTICE DEPARTMENT

Posted in Quick Hits on June 19th, 2017 by Ed

One silver lining to the increased attention given to police using lethal force is that some of the creepier aspects of the cop subculture are being exposed to the public. Turns out, perhaps unsurprisingly, that a lot of contractors who market themselves to police departments under the guise of "training" are absolute lunatics.

The officer recently found not guilty of manslaughter in the Philando Castile shooting, for example, attended a training session for something called "Bulletproof Warrior," an odd name for a program aimed at police officers who are neither bulletproof nor "warriors." The gist of the program is that every suspect is waiting to kill you, it will happen in the blink of an eye, and the Bulletproof Warrior must silence that nagging voice in his head that says not to kill people. Kill or be killed, so you better hurry up and shoot the suspect before he shoots you.

I mean, what could go wrong.

Also take a look at this guy named Dave Grossmann (who was featured in the 2016 documentary Do Not Resist) who promises trainees that they will have the best sex of their lives on the day they finally kill someone.

For all of the "Not all cops are bad!" talk that takes place, where are the people in the police departments that use this sort of "training" who should be standing up and saying, "Hold on, this is completely insane"? Maybe they exist and get silenced. Or maybe they don't exist. What would be nice is if we had a real Justice Department that did the job of overseeing law enforcement in this country, one that would use every tool at its disposal to take Federal control over any police department whose leadership looks at what these "trainers" have to offer and decides that this is how street cops should be interacting with the public. It would be nice not to have to tiptoe around reality whenever the topic is law enforcement; a real political leader would say unequivocally, "Anyone who thinks the problem with law enforcement in this country is that police do not shoot enough people is not fit to have a badge and a gun, period."

It would be nice. Too bad we can't have anything nice.