Author Archives: Roger Barris

     

 

 

Red Flags Over Goldman Sachs

Just to prove that I am an even-handed insulter, here is a rant about my former employer, Goldman Sachs. The scandal at 1MDB, the Malaysian sovereign wealth fund from which it appears that billions were stolen by politicians all the way up to the Prime Minister, continues to unfold.

 

The main players in the 1MDB scandal. Irony alert: apparently money siphoned off from 1MDB was used to inter alia finance Martin Scorcese’s movie “The Wolf of Wall Street”, in which Leonardo di Caprio plays a major boiler room operator/ hustler who makes a fortune by defrauding his clients. When the WSJ contacted the people involved in 1MDB, all of them strenuously denied wrongdoing, with the exception of the only currently imprisoned one, who “declined to comment”. The money is gone, but it seems nobody took it. It is so to speak a Malaysian luxury miracle, proudly aided and abetted by those doing God’s work on the other side of the Pacific pond – click to enlarge.

 

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Blind to Crony Socialism

Whenever a failed CEO is fired with a cushy payoff, the outrage is swift and voluminous.  The liberal press usually misrepresents this as a hypocritical “jobs for the boys” program within the capitalist class.  In reality, the payoffs are almost always contractual obligations, often for deferred compensation, that the companies vigorously try to avoid.  Believe me.  I’ve been on both sides of this kind of dispute (except, of course, for the “failed” bit).

 

People are usually struck by the seeming injustice of CEOs running companies into the ground and then getting paid obscene amounts in the form of “golden parachute” type good-bye presents. Often there is no other way to get rid of a bad CEO though –  if his or her employment contract guarantees a large termination benefit, the company may have little choice in the matter. As a rule, private shareholders are bearing the cost of such transactions, and they are in this position voluntarily (after all, they could sell their shares or vote against generous CEO payment packages at shareholder meetings). We realize of course that in the age of crony socialism, one usually has to judge such things carefully on a case by case basis. Still, it is a far cry from the misuse of taxpayer funds, which are appropriated by coercion and offer those bearing the costs no opportunity to “opt out”.

 

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A Convocation Of Gamblers

The Wall Street Journal and BloombergView have just run articles on the shadow banking system in China.  This has put me in a nostalgic mood. About 35 years ago when I was living in Japan, I made a side trip to Hong Kong.

 

MACAU, CHINA - JANUARY 28: Buildings of Macau Casino on January 28, 2013Asia’s Sin City, Macau

Photo credit: Nattee Chalermtiragool

 

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An Unexpected Improvement…

The Wall Street Journal has just run an article about the latest data manipulation coming out of China. China is experiencing strong currency outflows. This is a combination of “hot money” from outside China, which came into the country to bet on an appreciating currency (the yuan) and is now retreating, and domestic money that is looking for a foreign home now that the Chinese bubble is appearing less and less sustainable.

 

china-foreign-exchange-reserves@2xChina’s foreign exchange reserves –  a reversal of fortunes – click to enlarge.

 

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A Lack of “V”

After the February jobs report, President Obama said “America’s pretty darn great right now.”  He then went on to disparage the “doomsday rhetoric” of the Republicans, which he said was pure “fantasy.

I think that there is a good chance that this will enter the Hall of Fame of miss-timed statements, right up there with this jewel from Ben Bernanke in March 2007:  “At this juncture, however, the impact on the broader economy and financial markets of the problems in the sub-prime market seems likely to be contained.”

 

in here somewhereIf you look hard enough, you’ll find it…

 

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Cameron’s EU Gamble

The big news over the weekend in the United Kingdom (UK) is that, after having secured some kind of deal from his European Union (EU) partners, Prime Minister David Cameron has called for an “in-out” referendum on EU membership to be held on June 23.  The betting has to be on the UK staying in, but shit happens.

 

shit sandwich… and sometimes, it not only happens, but comes in a sandwich.

 

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Happy Armchair Warriors

The recent terrorist attacks in Paris and San Bernardino, California, have thrown the debate about ISIS into overdrive, particularly among the presidential candidates.  Several strands have emerged from these discussions, but I think that their taxonomy is not often clearly laid out.  I would therefore like to try to do this.

 

This undated image posted by the Raqqa Media Center, a Syrian opposition group, on Monday, June 30, 2014, which has been verified and is consistent with other AP reporting, shows fighters from the al-Qaida linked Islamic State of Iraq and the Levant (ISIL) during a parade in Raqqa, Syria. Militants from an al-Qaida splinter group held a military parade in their stronghold in northeastern Syria, displaying U.S.-made Humvees, heavy machine guns, and missiles captured from the Iraqi army for the first time since taking over large parts of the Iraq-Syria border. (AP Photo/Raqqa Media Center)IS military parade in Mosul

Photo credit: Raqqa Media Center / AP

 

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The Key Logical Fallacy of Statism

I just read an article in Bloomberg View yesterday by Cass Sunstein, who is a law professor at Harvard.  It was a roundup of a number of books published last year on “behavioral economics”.  For those who don’t know it, behavioral economics typically focuses on the biases and systematic errors in human behavior.

 

communist angelsSurely everyone has heard an argument along these lines before: socialism would really work if only it were done right! For starters, it would need to be administered by a host of angels, so what you see above should be considered the ideal communist bureaucrats.

Image via pixgood.com

 

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Privatizing Profits and Socializing Losses, Tech Bubble Style

The Wall Street Journal had an article this past week entitled “Tech’s Hometown Bank.”  This has convinced me that Silicon Valley has replaced Wall Street as the new epicentre of financial malfeasance and conflict of interest.

 

toshiba-encore-2-sillycon-valley-large-1Image credit: Toshiba

 

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Antidote to Political Correctness?

[If you read the title of this post quickly, you will note the slight play on words.]

[Ed note: after Bill Bonner’s recent tongue-in-cheek “Greatest President of all Time” comment, here is Roger again with a more serious assessment. In case you’re wondering, this was written shortly before the recent altercation over Trump’s proposal to ban Muslims from entering the US altogether, so it contains no references to this event. It offers more general observations anyway, on which specific recent events have no bearing]

 

trumpThe Donald

Cartoon by Damien Glez

 

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Defying Gravity

Donald Trump’s poll numbers continue to defy gravity.  This requires greater scrutiny.  A sacrifice is needed: actually listening to one of Trump’s speeches.  And your intrepid correspondent has done this, all 95 minutes of the one he gave in Iowa on November 12th, which can be found here. If anything, it was worse than I feared.

 

donald-trump-polls-cartoonDefying gravity – Donald Trump continues to lead the polls

Cartoon by Ron Rogers

 

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Dispensing More “Free Stuff”

I  have just finished reading an opinion entitled “A Birth-Control Morality Play Comes to Supreme Court” by Megan McArdle, the lonely voice of libertarianism over at Bloomberg View.

The thrust of the article is to use philosophical hypotheticals to explain the violent reaction of some religious groups to the seemingly minor certifications required to escape the contraception mandate in the Affordable Care Act.  But the article makes another point, albeit in an oblique manner, which is more important.   In the “culture wars,” an overreaching government often fires the first shot.

 

dogslifeCradle-to-grave nannying by the State has certain small drawbacks, but you’ll get used to them, serf.

 

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