Thanks for the history. I experienced that when my professional job from 1960 to the present became one seventh the value from the time that I was paying for the service. What the economists told me here and elsewhere, not that it was the Gold standard but that it was productivity. The work still requires the same extreme expertise, continual education and unpaid practice but I make 1/7th what my teachers made and my current Maestro makes no more than I do. When everyone else of extreme expertise saw their salaries raise to keep up with the dollar, our's didn't. He was knighted by the French government and teaches all over the world and is emeritus at the most prestigious school and his salary, like mine, is 1/7th the value due to nothing. All of this crap means nothing except the market is incapable of rewarding genuine value and expertise. Today, it is happening all over the professions. The God I mentioned, by the way, is the old forest God, should we call it "Pan" or "Herne's" invisible hand? The man who called Herne was Adam Smith and the nation followed him just like the third act of Falstaff. Laissez Faire is the old European method of forestry which trusts nature rather than shaping nature for the good of all life. Hell, they don't even think the rest of world is conscious at all.
But thank you Keith for your willingness to keep me straight about the history. I realize firsthand how Europeans feel about gold. We called it the shit of the Gods. It has certainly proven toxic to us with its moonchild silver. Almost eight million men, women and children died in the mines at Potosi for the moon god under the Spanish. Arbeit macht Frei. Komm Susser Tod. As for the shit of the sun, that all started for us at Jamestown with Pokie and Johnny. They didn't find Gold so they addicted the world to tobacco. Arbeit macht Frei, komm susser Tod. REH From: Keith Hudson [mailto:[email protected]] Sent: Sunday, September 16, 2012 5:10 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION; Ray Harrell Subject: Re: [Futurework] FW: For those who believe God's on Wall Street. At 20:35 15/09/2012, REH wrote: Did any of you know this guy? No, but it all seems authentic to me. First class article. What Powell and Hakin don't cover in this biographical type of article is the step by step breakdown in both the validity and value of money since 1918 (since when, the US$ is now worth 1/50th of what it was). This is the background in four simple steps: 1. After the 1918-1918 War the stiff-necked refusal of the Bank of England to go back onto the gold-backed pound except under pre-war exchange value of pound versus US dollar. Keynes and the UK Treasury wanted to reinstitute gold-backing but only at the new, realistic post-war rate of exchange of the pound (having depreciated twice against the dollar during the War). Under the US Constitution the dollar was already gold-backed (particularly since 1913 with the formation of the US Fed). This was the beginning of the decline of the British Empire and a vastly accelerated growth in American economic power; 2. In 1931 an economically confused President Roosevelt, against the advice of the US Treasury (and almost all the eminent economists at that time), established a false gold-backing of the dollar by changing the value of the dollar from the free-market value of 1 ounce of pure gold ($35) to a fixed value. By thus fixing the dollar and gold at both ends, the dollar could be inflated at a gentle trotting pace without the electorate realizing it for decades. Meanwhile the US government could trim its own debts from month to month and give itself more scope for colossal war expenditures (e.g. Korea, Vietnam,etc) 3. Meanwhile, European countries started cashing in their US dollar surpluses (from exports to America and American purchases of European industries) by buying gold at $35/ounce from the New York Fed and re-selling it at $40+ on the open market. The "carry trade" reduced the US stock of gold from about 25,000 tonnes in the 1950s to about 11,000 by the late 1960s -- and accelerating. In 1971, President Nixon in a blue funk, and against the Constitution, cut off gold as the backing. One might say that Nixon was not only as economically-confused as Roosevelt had been but was now acting treasonably. The value of the dollar now floated away from gold (the real value of the dollar sinking), and Nixon could now start to print more and more banknotes. 4. From 1971 to 2008 the value of the dollar was not only depreciating but high street banks were allowed to create credit far beyond internationally-recognized reserves of about 10%, down to, in effect, nil or very close to (typically 1% to 3%, just to show something in their accounts!). Credit cards were let rip, so were easier and easier house mortgages (commercial mortgages even more so). The US Fed and the US Treasury also turned blind eyes whole new gigantic rafts of derivatives, made for their own benefit by the investment banks, but which finally (by 2008) had the effect of expanding American money supply by about 10 times. 5. The above of the major steps in producing the situation well described in the following article. If you believe in Him, God knows what is going to happen now with yet more QE announced by Bernanke. Keith (Excerpt) "Sandy's right; government created a banking oligopoly with no accountability," said Peter Solomon, a friend of Mr. Lewis's who runs an investment banking firm. Sandy Lewis is describing where we are now. From: Ray Harrell [ mailto:[email protected] <mailto:[email protected]> ] Sent: Saturday, September 15, 2012 3:33 PM To: Alex Leon; August Watters; Carol Dean Hood; 'Cole, Karen Watters'; Darcy Dunn; [email protected]; Dawn Laird; 'Douthit, Paul and Marylyn'; 'Harrell , Rick'; Jane & Ron Lind-Garritson; 'Jane Harrell'; Linda Whaley; 'mcore'; [email protected]; 'Stephanie Weems' Subject: For those who believe God's on Wall Street. Uncle REH September 15, 2012 NYTimes A Lonely Redemption By MICHAEL POWELL <http://topics.nytimes.com/topics/reference/timestopics/people/p/michael_pow ell/index.html> and DANNY HAKIM <http://topics.nytimes.com/top/reference/timestopics/people/h/danny_hakim/in dex.html> ESSEX, N.Y. - Striding barefoot through the fields of his farm in the Adirondacks, S. B. Lewis, known as Sandy, is talking without pause, gesturing this way and that in a soft summer rain. That Mr. Lewis is in a rage is not unusual. A few days earlier, he had watched as the computerized stock trading of Knight Capital ran amok. "If Knight blows, six firms follow, and the whole corrupt thing goes up," he said. "Predator banks and hedge funds run the market for their pleasure - there's no rational structure, nothing!" He is just warming up. News reports have revealed a world he knows intimately. Goldman Sachs pays vast fines to avoid prosecution for mortgage securities fraud. Barclays manipulates interest rates. The Senate exposes HSBC as a racketeering enterprise, laundering money for drug cartels. Banks are laden with bad assets. And Wall Street, Washington, the press corps, everyone sits and stares like so many dumb cows. "The complicity on Wall Street is sickness!" Mr. Lewis says. He fixes you with his laser stare. "If you think the big firms are being honest" - his tone slides streetwise - "well, sweetheart, go think something else!" The temptation is to dismiss Mr. Lewis, 73, as a crank, except he once ruled as an eccentric genius of arbitrage, with a preternatural feel for the tectonic movements of the markets. He has railed for decades about venalities now on daily display. Rude truth is his currency. He knows Wall Street's heights. He helped hire Michael R. Bloomberg, and he invested the money of two former Securities and Exchange Commission chairmen, making a fortune in the 1980s. And he knows its depths, since he pleaded guilty <http://www.nytimes.com/1989/08/31/business/a-prominent-trader-admits-he-sch emed-to-rig-a-stock-price.html?pagewanted=all&src=pm> to stock manipulation in 1989, and was barred from the Street. President Bill Clinton pardoned him, and a federal court judge later said Mr. Lewis acted out of pure reforming impulse. But he remains in self-imposed exile. Mr. Lewis wants to flip over Wall Street's paving stones and search for worms. He relies on his singular strength: he discerns patterns where most see random data. He forecast the financial meltdown of 2008 that vaporized Bear Stearns, Merrill Lynch and Lehman Brothers. In 2006, he warned a Bear Stearns executive: "Bear is toast. Get out now!" Lehman Brothers, he notes, certified it was in good health in June 2008 and issued stock, attracting investment, including from the New Jersey Teachers' Pension and Annuity Fund. Secretly, Lehman was on an intravenous drip, poisoned by bad debt. "My respect for their brains is too great to think Lehman's top guys didn't know they were conveying the cynical impression of health," Mr. Lewis said. He is no less suspicious of Goldman Sachs, which has alumni sprinkled across the upper reaches of government. In a tough spot, Goldman obtained extraordinary permission to make an overnight metamorphosis from investment bank to traditional bank holding company. "Can I prove this was a wired deal? Absolutely not," Mr. Lewis said. "Am I certain of it? Only 100 percent." As for the whirling, three-million-shares-per-second casino of Wall Street? He sees it as rigged. "I would not risk stocks under any circumstances," he said, "because we don't know when this thing is going to blow." Nothing about Mr. Lewis is easy. He delights in sending scabrous, insulting, free-associative mass e-mails to journalists, financiers and members of Congress. Show annoyance, and he doubles down. "You know what I do with tension?" he said. "I ratchet it up!" Not surprisingly, some dismiss him as a nut. As striking are those who pay careful heed. "Sandy's right; government created a banking oligopoly with no accountability," said Peter Solomon, a friend of Mr. Lewis's who runs an investment banking firm. Arthur Aeder, a retired accounting executive, was twice fired by Mr. Lewis. "Not many antagonize Goldman just for the hell of it," Mr. Aeder said. "Most people think, 'I have a family to feed.' " Mr. Lewis is no less harsh on himself. After a visit, he handed us laptops containing every furious e-mail he had sent and received over 10 years. "The Wall Street ethic broke decades ago," he said by way of goodbye. "The stink is terrible." MR. LEWIS was born to Wall Street royalty - his father, Cy, was managing partner at Bear Stearns from 1949 to 1978. His parents were characters out of a Fitzgerald novel: his father was Jewish, debonair and domineering; he desired power, wealth and a beautiful woman - wife or mistress, that mattered little. His mother, Diana Bonnor, a member of the Protestant establishment, was beautiful, brilliant and no less formidable. She cared about social justice and status and was profoundly uninterested in mothering. "I never remember her at breakfast," recalled Roger Lewis, Mr. Lewis's younger brother. "High tea? Oh, yes. Cocktails? Yes! But breakfast? Never." Cy doted on Sandy while Diana screamed at the boy, striking him with a hair brush when he refused to read, he said. A willful child, the boy stopped speaking for days and sometimes retreated onto a window ledge, sitting high above Park Avenue. Another brother, John, renounced wealth, bought clothes in thrift shops and became a well-known legal-aid lawyer. Roger got off to a fine start on Wall Street until the Grateful Dead moved into his town house before Woodstock. He ingested gobs of LSD, was arrested on charges of selling drugs and served time. "I broke all the bonds of polite behavior," Roger said. "Prison was pretty fascinating." When Sandy Lewis was 10, his parents shipped him off to Chicago and Bruno Bettelheim's Orthogenic School, an institution for emotionally disturbed children. The first day, he held his breath until he nearly passed out. But he credits the school with saving his life; Bettelheim became a second father. "He had Bruno's traits: he was arrogant, controlling, all powerful - and generous," recalled George Kaiser, a former teacher at the school. Mr. Lewis saw in Wall Street a three-dimensional chess game played at great velocity. "Brain not brawn, and the smartest wins, yes!" he said. He came to conceive of the Street as a drainage system, every pipe connected to another. Inside information sluiced from brokerages to white-shoe law firms to investment houses. He glimpsed this world when he returned to New York in 1964. He said he sat in the front of his father's Cadillac limousine, listening as Cy and friends talked angrily about a partner who had impersonated a reporter for The New York Times and got a half-hour drop on a Supreme Court decision. The firm profited by trading ahead of the news. Mr. Lewis said he confronted his father that night. Dad, you must fire that man. Cy shook his head: He is too valuable, Son. "That," Mr. Lewis said recently, "was when I realized that the trouble on Wall Street was systemic." He refused to sit at the Four Seasons trolling for inside tips and paying for call girls for clients. He was fired by all the best firms: Salomon Brothers, White Weld, Dean Witter and Merrill Lynch. At Merrill, the chief executive officer at the time, Donald Regan, pursued a system to buy and sell stocks without using the exchange floor. Mr. Lewis came to see this creation as unfair to the public. So Mr. Lewis, in speeches and work with the S.E.C., fought to make all sales transparent on the floor of the exchange. "In one of my periodic periods of unemployment, I walked down the street thinking, 'O.K., now I'm going to sabotage Don Regan,' " he said. "I have six kids and I'm going to be eating worms." He worked briefly for Ivan F. Boesky, until he realized the arbitrage specialist was trolling for inside information. Mr. Lewis quit and Mr. Boesky was later imprisoned. To find a place that would not fire him, in 1980 Mr. Lewis established S. B. Lewis and Company. The company's returns were meteoric - over 50 percent annual returns after expenses. Former employees recall a brilliant arbitrageur who could, without warning, go to "Sandy World," a mental planetoid with a population of one. Mr. Lewis brokered the merger between Sandy Weill's Shearson and James Robinson's American Express. "I told Robinson: 'Weill's got the brains; you've got great class. It's perfect,' " Mr. Lewis recalled. He had found success, a lovely wife and five boys and a girl, with a home in Short Hills, N.J. Except his volcanic pit never stopped rumbling. IN November 1988, Rudolph W. Giuliani, the United States attorney, indicted Mr. Lewis on 22 charges, accusing him of manipulating the stock of a large insurer. Mr. Giuliani was a Savonarola in the canyons of mammon, and Mr. Lewis would fall beneath his sword. Rivals shared laughs at Sandy the Moralist laid low. The trouble, however, took root not in venality but in his mania to police his industry. He had watched as insiders reaped profits by driving down prices before shares went public. He laid a trap. He asked another securities firm to buy stock in the insurer to shore up the price. I'll cover your losses and describe the payments as "investment banking services," he told them. Mr. Lewis hoped to deliver a delicious kick to the teeth of the insiders. He made not a dime; his firm was not involved in the offering. Years later, a federal judge, William C. Conner, described Mr. Lewis's action as "an act of market vigilantism in which Lewis in no way personally profited." He was infuriated, the judge wrote, "by what he viewed as the unethical actions of arbitrageurs." "He was the Lone Ranger," Mr. Solomon recalled, "and Giuliani treated him like a member of the corrupt club." Prosecutors threatened Mr. Lewis with 15 years if he went to trial. His wife, Barbara, urged him to cut a deal. He argued prison would be interesting. His bravado reinforced her fears. Silver haired and trim, she looks at Mr. Lewis, still consumed: "I thought he would die. That was weak of me." He pleaded guilty to three charges, and the judge handed him three years' probation and a $250,000 fine. TELL us about Bill Clinton. Mr. Lewis cannot resist a smile; even by his standards, this is a weird tale. In the summer of 1994, Mr. Lewis - in exile - got a phone call at his Maine home from his friend, Douglas S. Eakeley. Mr. Eakeley was also an old friend of Mr. Clinton's. I want you to go to a fund-raiser in Portland, Mr. Eakeley said, and talk with the president about his womanizing. Is this, Mr. Lewis asked, an intervention? As it happens, Mr. Lewis possesses a sixth sense for psychic pain. He can pick the addicted, the sick and the depressed out of a crowd. His fractured childhood and pathological candor give him an expert hand with the singed. He rounded up Barbara and a friend, Dr. Stanley Evans, and drove to see Mr. Clinton at the Holiday Inn by the Bay. Mr. Lewis introduced himself. "You're Doug's friend?" the president said, according to Mr. Lewis and Dr. Evans. "Wait, we'll talk." The Secret Service escorted Mr. Lewis, his wife and the doctor into the kitchen, and the president followed. "Sir," Mr. Lewis recalled saying as he stared at Mr. Clinton. "Doug thought maybe I should spend a weekend with you. It would be the two of us only." Mr. Lewis said the president was taken aback. "What is this about?" "Sir," Mr. Lewis said, "this is about your most personal business. You probably won't be too happy with me by Monday morning, but I think we can avoid a train wreck." The president's face flushed. Dr. Evans realized his friend was confronting the president about his extramarital affairs. "I thought Sandy had lost his mind," he said. The weekend session never took place. Revelations of the president's sexual dalliance with Monica Lewinsky came years later. Mr. Eakeley is circumspect. "Sandy has incredible intuition and intellect, and I knew he could help if the president could stand it," he said. "Sandy may have alarmed the president, but I don't think he repelled him." Mr. Clinton's office declined to comment. So it goes for Mr. Lewis on his walk, decades long, through the wilderness. One night, he said, he yanked a truck driver out of a fiery wreck on the New Jersey Turnpike, only to discover that the driver had Mafia connections. He said a mob representative told him he could call in his i.o.u. anytime; Mr. Lewis declined, politely. He became the de facto impresario of the Clinton Correctional Facility, a prison near his farm in the Adirondacks, arranging frequent performances. The prison has housed a who's who of the criminal and homicidal, from Lucky Luciano to the serial killer Joel Rifkin. Recently, Mr. Lewis brought in Helena Baillie, 30, an accomplished violinist who is akin to his surrogate daughter, to perform Bach's "Chaconne" in the Church of St. Dismas, the Good Thief. Many prisoners were in tears. Mr. Eakeley said Mr. Lewis might be better for his exile. One of Mr. Lewis's sons, John, is not convinced. He sees a father become "walking id." "Giuliani," he said, "obliterated some part of him." In 2000, Mr. Eakeley and former Attorney General Nicholas deB. Katzenbach worked pro bono and submitted a pardon application to Mr. Clinton. In January 2001, just before leaving office, the president signed it. Six years later, Judge Conner overturned the S.E.C. order that barred Mr. Lewis from Wall Street. "Federal regulations now outlaw the very practice his actions were meant to thwart," the judge noted. No cloud of mellow descended. Mr. Lewis trailed the S.E.C. counsel out of the courthouse. "I will rip your guts out," he bellowed. "Letter to follow!" A few days later, he looked at the mountains and experienced an epiphany: "I've gotten my redemption, and no one cares." THE phone rings and Mr. Lewis, in midsentence of a long disquisition, picks up the receiver. A North Country car dealer asks about the economy. "Yes? Yes!" he listens for 30 seconds. "It's going to get a lot worse. We'll be burning scrap wood in our fireplaces before it's over. Goodbye!" Among residents of this rural land, Mr. Lewis has a reputation as a savant. He warned that the housing market was overheating years ago and sold several properties. He converted to cash before the 1987 stock crash. Still, he could not complete the last act in his redemptive play. Financiers with White House connections solicited his advice during the 2008 crisis. But he was not invited into the circle of advisers who, to his mind, poorly served this young president. As a Wall Street friend warned in an e-mail: "Sandy, you constantly kill yourself. You exhaust folks." Mr. Lewis considers his plight over a dinner with Barbara. His eyes are red, his voice a rasp. "I'm bright as hell, but I'm impossible to live with." Barbara nods. "I am in a state of outrage all the time." Barbara nods. "I bring this Orthogenic morality to everything on Wall Street, and it's unsustainable." Barbara, dry as gin, says, "No kidding." Mr. Lewis sees a banking system in unstable remission. Goldman answers to no one. China and Europe are wobbling, deflation is at the door, another crash is coming. "The criminality is astounding," he says. "You have a complete confusion between principal and principle." He is pacing again. "You don't understand what it is to find someone on Wall Street who tells it like it is. You want to get real? Baby, let's do the full root canal!" _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework Keith Hudson, Saltford, England http://allisstatus.wordpress.com <http://allisstatus.wordpress.com/>
_______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
