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March 10, 2008
The Spitzer Matter: It IS Private
Don Boudreaux
I sent this letter just now to the New York Times:
Gov. Eliot Spitzer says that his patronage of prostitutes is a "private matter" ("Spitzer Is Linked to Prostitution Ring," March 10). He's correct; that matter is between himself and his family and is no one else's business. I wish only that Mr. Spitzer understood that many of his most famous crusades - for example, against musical-recording companies aggressively marketing their products, against banks lending money to lower-income consumers, and, indeed, even against prostitution rings(!) - were crusades against behaviors that in each case is a "private matter."
If Mr. Spitzer wants us to butt out of his private affairs, he should from here on in set an example by butting out of everyone else's private affairs.
Sincerely,
Donald J. Boudreaux
Of course, Spitzer is a professional busy-body, so he's unlikely to mind only his own business even as he asks us to mind only our own.
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"...against banks lending money to lower-income consumers,..."
Nope...no way... Banks function because of the federal treasury and they have the priveledge of the backing of the the US government.
We are now seeing a financial meltdown because we specifically allowed deregulation of the banking and finance industry. Now millions are being caught in all forms of predatory lending and financial wizadry with the backing of the US government and its tax payers.
What is needed is more oversight not less.
Posted by: muirgeo | Mar 10, 2008 5:05:59 PM
It's not a private matter because it is against the law. Since Spitzer, as Attorney General and then Governor, has been responsible for enforcing the law--that is a serious problem.
If Mr. Spitzer had been opposed to the laws against prostitution, then I might look at his situation a little differently. He would still be a law-breaker, but he would at least not be a hypocrite.
But he has in fact been a vocal supporter of the laws against prostitution. As the Times reprts, "In one such case in 2004, Mr. Spitzer spoke with revulsion and anger after announcing the arrest of 16 people for operating a high-end prostitution ring out of Staten Island."
This says a great deal about Mr. Spitzer's character and his attitude toward the rule of law. It also says that he is not fit to be the governor of New York or any other state. He might fit into Hugo Chavez's government in Venezuela, though.
Posted by: rwe | Mar 10, 2008 5:06:21 PM
If Spitzer had not made a career of destroying lives for actions such as this I would feel bad for him (except maybe for the whole having a wife thing). Prostitution may be against the law, but that doesn't make it wrong. However, here it's just a cse of Spitzer being hoisted by his own petard. Whatever that actually means.
Posted by: Avatar300 | Mar 10, 2008 5:18:00 PM
I love it whenever any politician or bureaucrat steps in his own trap.
David Hays
Grand Coteau, Louisiana
Posted by: GumboFilé | Mar 10, 2008 5:52:41 PM
Spitzer went after anything that moved. He threatened to break people's kneecaps if they didn't pay up so that he could look like a white knight. Not a single case, save Dick Grasso's, went to trial and common legal opinion is that Spitzer wouldn't have won any of them. Only Grasso stood up to Spitzer. Now, it's Cuomo's job to prosecute the Grasso case and, predictably, the state is losing its case.
You'll forgive me if I delight in the downfall of a man who forcibly extracted Billions in "protection" money from shareholders. And I do delight in that sleazy bastard's downfall.
Posted by: Methinks | Mar 10, 2008 6:03:19 PM
Why is it that politicians can't keep their dicks in their pants? I know of a MN state senate candidate whose mistress caught him with his girlfriend and told his wife.
Posted by: Russ Nelson | Mar 10, 2008 6:36:54 PM
But muirduck will defend this cretin to the ends of the earth.
Posted by: FreedomLover | Mar 10, 2008 6:37:18 PM
I think this is why the Germans invented the word Schadenfreude.
Posted by: Adam | Mar 10, 2008 7:17:56 PM
I’m with Methinks.
Guy is a scumbag.
You gotta wonder though, how many Wall Streeters (Dick Grasso?) pooled their money and hired private investigators to tail Spitzer…..
Posted by: Mesa Econoguy | Mar 10, 2008 7:25:02 PM
[sarcasm]This is proof that we need more people in government to watch over the other people in government. Then, we can have another layer of people watching the people who are watching the first people. Unemployment will drop to 0% and nobody will ever do anything wrong ever again.[/sarcasm]
Posted by: Python | Mar 10, 2008 7:27:30 PM
Russ Nelson,
That is hysterical.
freedomlover,
judging by Muirgeo's first post, he doesn't even understand the topic.
Posted by: Methinks | Mar 10, 2008 7:30:06 PM
I'm deeply disappointed in Spitzer. He did a lot of good as AG and evoked remarkable clarity in everything he said. Of course he should resign given his hypocrisy in this matter, particularly if taxpayer funds subsidized any component of of his escapades.
That said, I think Beadreaux's point for private matters is a bit hollow. He prosecuted the behaviors of illegal businesses, not the johns or the music consumers or the financial borrowers.
Also, did he say that we should butt out of his private affairs?
Posted by: Steve H. | Mar 10, 2008 7:32:26 PM
Mesa,
I was wondering the same thing. Not whether or not anyone was tailing him but how many!
This isn't the first time he's been in trouble since he became governor either. He continued to use his mafia tactics once he got to Albany but they didn't go over as well there and he got a lot of bad press when the story of his coercion broke.
His double standards are truly amazing. If a company aggressively markets a product, that's a felony. If he threatens to break people's kneecaps, that's God's work.
Posted by: Methinks | Mar 10, 2008 7:35:16 PM
Steve, this guy built a whole career based on being a moral crusader. This is as blatant an example of hypocrisy as you'll ever see.
And God, I hope he did use taxpayer's money to pay for his hookers. It would just make the poetic justice even more so.
Posted by: Adam | Mar 10, 2008 7:36:40 PM
He did a lot of good as AG and evoked remarkable clarity in everything he said.
What good things did he do?
He prosecuted the behaviors of illegal businesses
Since when did investment banking, insurance and music become illegal?
Posted by: Methinks | Mar 10, 2008 7:39:23 PM
I would be equally happy if Warren Buffett went away.
Posted by: Mesa Econoguy | Mar 10, 2008 7:46:59 PM
I love the smell of karma in the morning....
Posted by: colson | Mar 10, 2008 7:49:23 PM
As they say: "what goes round, comes round." That includes the shit too!
Posted by: Frederick Davies | Mar 10, 2008 7:49:28 PM
muirduck is a troll because "it" routinely goes off topic into it's pre-canned talking points like the good little Bolshevik it is.
Posted by: FreedomLover | Mar 10, 2008 7:54:12 PM
That's too bad about his resignation. I mean, not that I want him sticking around as governor. It's just that it would be so much sweeter if his agony could be prolonged for a few days, or even a week.
Posted by: Adam | Mar 10, 2008 7:55:27 PM
"And God, I hope he did use taxpayer's money to pay for his hookers."
As a New York taxpayer, I resent that. I want my tax dollars going to socially useful things that the state of New York provides like... ...like... ...um...
Oh hell, why not support the hookers.
Posted by: M. Hodak | Mar 10, 2008 7:55:45 PM
Adam,
For his prosecutorial achievements, just read a bit...
http://en.wikipedia.org/wiki/Elliott_spitzer#Work_as_Attorney_General
In here, you'll find what's illegal about investment banking, insurance, and music... (securities fraud, conflicts of insurance agent interests, record companies welching on royalties earned by musicians).
In any case, I'm not defending him. I'm just saying that Beaudreaux's privacy reference is off the point.
Posted by: Steve H. | Mar 10, 2008 8:05:27 PM
Steve H.
It was Methinks who said what you credited to Adam. And Methinks is correct. Those businesses are not illegal.
You should not say "He prosecuted the behaviors of illegal businesses." You should have said "He prosecuted businesses who behaved illegally."
Prostitution rings are timely examples of illegal businesses. The Music Industry is not.
Posted by: Python | Mar 10, 2008 8:19:04 PM
We are now seeing a financial meltdown because we specifically allowed deregulation of the banking and finance industry.
Straw man slayer saves the day once again.
The banking and finance industries are unregulated?
Posted by: Sam Grove | Mar 10, 2008 8:48:53 PM
Python, point taken on my poor sentence structure, although I was just following Beaudreaux's reference "...crusades against behaviors..."
I stand in my opinion that Spitzer's "crusades" were legitimate prosecutions of illegal activities and in the public interest. I also feel that Spitzer deserves no privacy on the prostitution sting; it is absolutely a public matter because he's a public official who broke the law.
Posted by: Steve H. | Mar 10, 2008 8:55:52 PM
Steve H. above cited Spitzer’s “accomplishments” as AG. He was responsible for what became a witch hunt related to late trading and market timing of mutual funds.
To reveal any more would get into too much detail about what I do. Suffice it to say that the information on Wikipedia is not entirely accurate, nor is the portrayal of events related to that subject.
And yes, Sam, that’s now the dumbest thing ever posted on an economics blog…
Posted by: Mesa Econoguy | Mar 10, 2008 9:00:29 PM
Steve H,
Spitzer doesn't have any prosecutorial achievements. There was almost no evidence for most of his accusations. Knowing this, he would call his victims and threaten to ruin them in the court of public opinion. They caved. A former Goldman Sachs partner once publicly stated that he thought Spitzer was overstepping his boundaries. He got a call from Spitzer threatening to destroy him. Cowing people is his only achievement.
As a New Yorker, I watched as he went after my colleagues and competitors. There are definitely practices that I thought should have changed on Wall Street and people that I knew played fast and loose with ethics. We all watched as Grubman and the shareholders of Citigroup took the fall for Sandy Weill, who personally contributed to Spitzer's campaign but who also personally ordered Grubman to work out the unethical deals with WorldCom and AT&T. None of the "offenders" went to prison or even lost their jobs. The rules enforced by the SEC in the aftermath caused nothing but the need for more compliance staff. Nothing got better but shareholders got poorer.
Grasso was the CEO of a private organization which privately decided to pay him an enormous amount of money. Apparently, it's okay for Eliot Spitzer to inherit his billion dollars but it's not okay for Grasso to earn his hundreds of millions. Spitzer tried hard to cow Grasso, but if you've ever been in the company of old-school floor traders, you know those guys don't go down easy. So, Grasso fought back and he's winning in court because - as it turns out - a private organization can pay its officers as they see fit. Who knew? Ugh.
I realize you're not defending this serpent, but I don't know how any of this can be called prosecutorial success and I don't know how you can claim that he did so much good as AG.
Posted by: Methinks | Mar 10, 2008 9:09:27 PM
I stand in my opinion that Spitzer's "crusades" were legitimate prosecutions of illegal activities and in the public interest.
Again, he rarely prosecuted anything. He persecuted a lot but rarely prosecuted. What proof was there that these businesses were actually engaged in illegal activity?
Spitzer mostly publicly alleged all manner of BS and filed lawsuits. The businesses settled and paid fines instead of going to the expense of fighting him in court. Mind, if there were actual ILLEGAL activity, the AG would have been OBLIGATED to file criminal charges. How many criminal charges were filed? Exceptionally few because he rarely had evidence for his accusations. What makes you so sure he was actually prosecuting illegal activity and that his actions were in anyone's interest except his own?
Posted by: Methinks | Mar 10, 2008 9:18:00 PM
A private matter? Really? A governer and former attorney general commiting a crime (whether it should be one or not under Boudreauxian libertarian principals) and setting himself up for blackmail with the organized criminals who by definition, since it is currently illegal, run prostitution rings. Are there no standards for high office? Is there really no connection between how a man treats the contract with his wife and his kids and how he treats his obligation to run the affairs of state (i.e., his contract with the people he represents?
I generally love Mr. Brodeaux's brand of economics, but no wonder economists aren't more popular?
I also ususally don't experience shadenfreude, but I will make an exception here for Mr. Spitzer.
I am sure the apparently innocent Spitzer targets Hank Greenberg, Dick Grasso and many others are celebrating tonight.
A toast is in order all round to the hoped for demise (politically at least) of that hyprotical, market bashing, and opportunistic scoundrel. How wonderful that he go out in a self inflicted spastic fit of seedy hyprocisy.
Voters of New York, congratulations to you, too. You got just what you voted for and as I expected you to get based on his past. I hope it is your junior Senator's turn next. My advice, check em out beforehand next time.
Tom
Posted by: Tom | Mar 10, 2008 9:21:48 PM
Tom, adhem, you totally missed the saracasm in the letter. Don was mocking the Times for past past claims of "personal matters" of Chiefs molesting the help.
I bet you don't even know how to say Grankatoe!
Posted by: jpm | Mar 10, 2008 9:44:03 PM
Colson,
Great line!
I love the smell of karma in the morning....
Posted by: colson | Mar 10, 2008 7:49:23 PM
Made me laugh, thanks.
Posted by: vidyohs | Mar 10, 2008 9:55:37 PM
M.Hodak,
Well put, I like the style.
"And God, I hope he did use taxpayer's money to pay for his hookers."
As a New York taxpayer, I resent that. I want my tax dollars going to socially useful things that the state of New York provides like... ...like... ...um...
Oh hell, why not support the hookers.
Posted by: M. Hodak | Mar 10, 2008 7:55:45 PM'
Compared to the other shit they use the money on, hookers seems like a good thing, at least someone gets some satisfaction.
Posted by: vidyohs | Mar 10, 2008 9:58:05 PM
Nope...no way... Banks function because of the federal treasury and they have the priveledge of the backing of the the US government.
We are now seeing a financial meltdown because we specifically allowed deregulation of the banking and finance industry. Now millions are being caught in all forms of predatory lending and financial wizadry with the backing of the US government and its tax payers.
What is needed is more oversight not less.
Posted by: muirgeo | Mar 10, 2008 5:05:59 PM
That's incorrect. Some banks operate without the backing of the FDIC.
First, there is no lending meltdown. Secondly, the subprime mortgage 'crisis' is due specifically to the busy bodies (that Don is talking about) alleged discrimination in lending practices. Thus these busy bodies forced banks to lower their underwriting practices or ignore them altogether. This resulted in... that's right: higher than average default rates.
muirgeo, thanks to people like you being in the government, an unnecessary problem (not crisis) has risen. These same people who created the problem now think they have to solve it. But the solution is easy: butt out!
Posted by: Ken | Mar 10, 2008 9:58:44 PM
Hmmm... hitting a few nerves here with mention of Spitzer's prosecutorial acclaim. Again, not the point I was making, but hell, I like banter in any form.
Here's a concise piece that sort of sums up how and why Spitzer was effective and positive as AG.
http://www.slate.com/id/2108509/
True, Spitzer didn't go for convictions, instead preferring to lean on corporate bad boys with tools that prior AGs never thought to use. And as a well-heeled investor himself, there's no doubting his keen sophistication on the workings of the investment industry.
His successes depend on ones perspective. For brokerage investors, mutual fund and insurance customers, and even consumers chasing down squirrely rebate operators, he did a lot of good. Executives and shareholders of greedy, unethical firms maybe not so much.
Perhaps some find it unfair that he would leverage his knowledge and the visibility of the office in the ways he did. The fact is that the firms he went after admitted wrongdoing (in most but not all cases), made restitution, and changed the way they did business in the interests of their customers and the public. (Hardly "witch hunts" when these firms admit guilt, Mesa.)
I'm sure there were a few victims, scapegoats, and vendettas as Methinks describes. Frankly, I'm less worried about them then the small powerless 401k investor getting snaked by Merrill or Janus.
Regardless of what you think about him, it took balls to go after New York finance in New York (to say nothing of going after the Gambinis in NYC) and his noteriety inspired many other states to shore up their own fences. He's a populist, winning his gubernatorial primary with 81% and the general with 69%. He had to have gotten SOMETHING done as AG to garner that kind of support!
Posted by: Steve H. | Mar 10, 2008 9:59:26 PM
Muirgeo, the real question is if banks would make crappy loans if the institutions were not backed by the government? Does the government create moral hazards in bank lending?
Posted by: mcwop | Mar 10, 2008 10:01:45 PM
We are now seeing a financial meltdown because we specifically allowed deregulation of the banking and finance industry.
Here muirgeo, read this. The beginning should keep you gripped -- because you buy into the negativity -- but the ending is what I'm hoping you'll truly grasp. Holding my breath would be a stupid move on my part.
Posted by: lowcountryjoe | Mar 10, 2008 10:05:41 PM
Caught a news spot of Hillary defending Spitzer today. She said, "At least he didn't use a cigar to prep 'em".
Posted by: vidyohs | Mar 10, 2008 10:06:09 PM
Remember when banks didn't lend money to people who were bad risks, or if an unknow they loaned money at more stringent standards than a known relaible borrower?
I do.
What happened to those days?
Why are banks now lending to anyone and everyone?
There is an answer.
Posted by: vidyohs | Mar 10, 2008 10:29:06 PM
lcj,
First Alan Greenspan was a cult member of the Objectivist Society and apparently met with Ms. Rand.
I tell you what I agree with her solution more then with what the Fed is doing. The Fed set up the game to these looters likings and now they are bailing them out with more tax payor dollars. The Fed has bowed to the asset holders over and over agian with rate cuts and infusions of massive dollars at everyone elses expense. They always do and then we get to foot the bill. It's the biggest hidden tax in the world. This is nothing new and its preventable with good regulation but that was all scraped starting with Reagan and the Era of Corporate welfare.
It's a Ponzi scheme LCJ...It's a Pyramid scheme. It's not about free markets for these guys its about controling markets by controling the money supply and we all pay for it.
Because of crap like this we now pay $500 billion in interest debt a year that could easily go for Universal Health care and Day care or we could all get huge tax cuts. But no we are funneling money to these wealthy elite paper pushers who often add nothing to productivity but suck it dry like leeches from the working man. Its BULLCRAP!
Again did you see Wall Street crying like big fat babies when Bears-Streans announced its write offs???
These f'ing jack azzas are laisse faire free marketeers during their bubble economies and fricking socialist when their crap hits the fan and the bubbles they make burst. They are dispicable on the level of the worst of politicians.
DEEEP BREATH>>>>>OK I'm better....rasum frasum riickin FRACKEM()&#_) (&*#(* deep breath....slowly......sighhhhhhh....hmmmmmm....rant out...
Posted by: muirgeo | Mar 10, 2008 10:36:16 PM
Does the government create moral hazards in bank lending?
Posted by: mcwop
We didn't used to see such problems when banks could only do simple loans to private individuals. We didn't see huge debt when lenders were held to reasonable usury (?sp) laws.
Damn why do you guys root for the Mr. Potters of the world over George Baileys? Seriously when you watch It's A Wonderful Life do you guys actually walk away thinking what a good guy Mr. Potter is???
Posted by: muirgeo | Mar 10, 2008 10:40:48 PM
True, Spitzer didn't go for convictions, instead preferring to lean on corporate bad boys with tools that prior AGs never thought to use.
Colourful use of language. It's probably true that other AGs didn't think to use mafia style extortion. Define "bad boys".
And as a well-heeled investor himself, there's no doubting his keen sophistication on the workings of the investment industry.
Inheriting money doesn't make you a sophisticated investor.
Perhaps some find it unfair that he would leverage his knowledge and the visibility of the office in the ways he did.
Uh, no. What we find unfair is that he used the power of his office to threaten and extort.
I'm sure there were a few victims, scapegoats, and vendettas as Methinks describes.
What drivel. The point of the AG's office is to aid in the maintaining rule of law to prevent victims and prosecute criminals, not to CREATE victims and pursue vendettas.
Frankly, I'm less worried about them then the small powerless 401k investor getting snaked by Merrill or Janus.
Perfect. So, justice should not be blind. Every man should not be equal under the law. If the man is in one position, then it's okay to victimize him. If he is in another, then it's not okay to victimize him. I'll bet you think it's not okay to treat black suspects worse than white ones, right? But if we are not equal in the eyes of the law, then why would that be wrong?
Also, what do you mean by poor, helpless 401K holders getting "snaked" by Merrill?
Regardless of what you think about him, it took balls to go after New York finance in New York...
Where have you been? Ever heard of Giuliani and Michael Milken? This has been going on for a long time. The main difference between Spitzer and his predecessors is that Spitzer really took extortion to new heights.
(to say nothing of going after the Gambinis in NYC...
Who do you think runs prostitution rings? Nuns?
Posted by: Methinks | Mar 10, 2008 10:45:51 PM
Damn why do you guys root for the Mr. Potters of the world over George Baileys? Seriously when you watch It's A Wonderful Life do you guys actually walk away thinking what a good guy Mr. Potter is???
No. Our understanding of the banking industry goes deeper than a Jimmy Stewart movie. Remember, the round peg goes in the round hole and the square peg goes in the square hole.
Posted by: Methinks | Mar 10, 2008 10:48:16 PM
Muirgeo, we have seen the same problems over and over through history. This time is nothing unique. Do you want to discuss regulations (early nineties) that require marking securities to CMV versus a longer term valuation and how much that has contributed to the problem. Or how accusations of redlining contribute to the sub-prime mess?
Posted by: mcwop | Mar 10, 2008 10:50:25 PM
Hold on with the valuations, mcwop. Muirgeo is still working out which peg goes into which hole.
Posted by: Methinks | Mar 10, 2008 10:55:24 PM
The Fed has bowed to the asset holders over and over agian with rate cuts and infusions of massive dollars at everyone elses expense.
You have no idea, zip, zero, nil, none, nada, about what you wrote here.
It's a Ponzi scheme LCJ...
So says the guy who supports Social Safety Nets schemes.
More deep breaths are in order doctor, Doctor. It would help if the burning crack rocks were extinguished in the background prior to those breaths.
Posted by: lowcountryjoe | Mar 10, 2008 11:03:48 PM
Perhaps, Methinks, many of us believe that the scoundrels in the executive suite are worse than the scoundrels in the AG's office. There's certainly a lot more opportunity for greed and in the former, and that's what's driving all of this.
Anyway, you're angry and there's no point in responding to your vitriol. If you really think that Spitzer was creating victims by going after "your colleagues and competitors," there's not much I can say to bring you back to the real world. Enjoy your day of righteousness in Spitzer's fall from grace. ;-)
Posted by: Steve H. | Mar 10, 2008 11:07:09 PM
Sorry Steve, not trying to pick a fight here, but this is incorrect:
“For brokerage investors, mutual fund and insurance customers, and even consumers chasing down squirrely rebate operators, he did a lot of good.”
No, he did not. This is a characteristic of the financial industry: the appearance of impropriety is (often) as damaging as actual impropriety.
Spitzer functioned largely on innuendo, backed by bully tactics. Much of it was substanceless.
I cannot get into details, but I personally know people who lost their jobs because Spitzer opened his mouth, effectively creating false accusations.
You (and most others) are incorrectly ascribing noble intentions to this person: his intent was not to "clean up" Wall Street (or any other street). His intent was to gain power for himself.
Posted by: Mesa Econoguy | Mar 10, 2008 11:23:08 PM
Well, Ken, I suppose that any response to drivel would be called vitriol by the author of the drivel. It's a cute way to sidestep when you have issues with basic logic.
many of us believe that the scoundrels in the executive suite are worse than the scoundrels in the AG's office.
Brilliant. It's better to have corrupt officers of the law with the full coercive power of the state behind them than it is to have corrupt businessmen.
Posted by: Methinks | Mar 10, 2008 11:25:42 PM
Mesa, I believe Ken has just told us he's okay with false accusations and victimizing innocent people as long as they belonged to a certain group. 'nuff said.
G'night.
Posted by: Methinks | Mar 10, 2008 11:30:00 PM
"Perhaps, Methinks, many of us believe that the scoundrels in the executive suite are worse than the scoundrels in the AG's office."
I haven't met a scoundrel in an executive suite that can falsely prosecute a man and have him put in prison. Personally, I think the scoundrel with the police force, and the billions of dollars of government behind him is the far bigger threat.
"There's certainly a lot more opportunity for greed and in the former, and that's what's driving all of this."
More opportunity for greed in executive suites than in elected office? That's funny. Methinks writes much better than I, so I'll leave the rest of the rebuttal of that point to her.
Posted by: brotio | Mar 10, 2008 11:31:37 PM
I believe that Dick Grasso's pay package was also hammered out between consenting (and sophisticated) adults, but that did not stop Spitzer from attempting to prosecute him for ... uh... whatever the hell he was prosecuting him for (making too much money?)
Posted by: coyote | Mar 10, 2008 11:37:14 PM
To: jpm,
In all due respect, I don't think I missed anything.
I did though get my quote mixed up. Spitzer in the NYT piece said the matter was "a private matter"
Don in his letter to the NYT said "He's (Spitzer) correct; that matter is between himself and his family and is no one else's business.
It is a difference with the same meaning.
However you say it, that is the minor point upon which I disagree. Law breaking, even if it has to do with the purchase of sex, by Spitzer, the governor and former AG, is not "no one else's business",
Don then goes on to attack Spitzer for the bullying manner he used his office to attempt to prosecute people, who, unlike customers of prostitutes, were many times not even committing crimes but for what appears to have been purely personal political motives.
You must not have read my entire post before you corrected me nor Don's. I generally but not always agree with Don. I do completely agree with Don that Spitzer is an abomination.
You are right about one thing though, I have no idea what a "Grankatoe" is or how to say it. How clever of you.
Tom
Posted by: T. Fry | Mar 10, 2008 11:43:22 PM
To: jpm,
In all due respect, I don't think I missed anything.
I did though get my quote mixed up. Spitzer in the NYT piece said the matter was "a private matter"
Don in his letter to the NYT said "He's (Spitzer) correct; that matter is between himself and his family and is no one else's business.
It is a difference with the same meaning.
However you say it, that is the minor point upon which I disagree. Law breaking, even if it has to do with the purchase of sex, by Spitzer, the governor and former AG, is not "no one else's business",
Don then goes on to attack Spitzer for the bullying manner he used his office to attempt to prosecute people, who, unlike the customers of prostitutes, were many times not even committing crimes but for what appears to have been purely personal political or personal motives.
You must not have read my entire post before you corrected me nor Don's. I generally but not always agree with Don. I do completely agree with Don that Spitzer is an abomination.
You are right about one thing though, I have no idea what a "Grankatoe" is or how to say it. You are so clever.
Tom
Posted by: Tom | Mar 10, 2008 11:45:54 PM
Mesa, I'm sorry for your friends who lost jobs. It sounds like they were innocent victims. Obviously I can't speak to false accusations one way or the other.
I agree that Spitzer was seeking power in his role as AG, but if the end result was cleaning up illegal and unethical business practices, which it did unquestionaby, reasonable people woouldn't object. And they didn't - they elected the man governer.
If these firms were truly innocent, they wouldn't have caved to "substanceless innuendo" and forked over billions of settlement dollars to settle. They and their shareholders would use their money and their might to prevail in court.
I remember the letter I received from Janus Funds announcing that they were guilty of late trading and market timing schemes, and that my expense fees for the next year would be credited by the settlement amount. Who wants to argue that I (and countless other small investors) didn't benefit from Spitzer's efforts?
We can argue about his tactics but there can be no contesting that improvements for the public good occurred in a number of the industries his office watchdogged.
Posted by: Steve H. | Mar 10, 2008 11:51:46 PM
Tom I stand corrected. I didn't read Don's letter close enough. I just caught "private matter" that was the bullhorn head line of the Times for 8 years and just jumped at the sarcasm! I agree that Spitzer is a phoney buth it didn't take this scandal to ID It.
Grankatoe is how Don would say the name of the town that the poster David Hayes is from
Posted by: jpm | Mar 11, 2008 12:00:09 AM
"I believe that Dick Grasso's pay package was also hammered out between consenting (and sophisticated) adults, but that did not stop Spitzer from attempting to prosecute him for ... uh... whatever the hell he was prosecuting him for (making too much money?)"
NYSE was a not-for-profit organization subject to regulation by both the state and the IRS, including the private inurement regs.
Even rich people have to play by the rules once in a while.
If NYSE wanted to pay Grasso like a CEO NSYE could have dropped the NFP status and done as it wished, and paid taxes.
Posted by: save_the_rustbelt | Mar 11, 2008 12:37:22 AM
I have no problem legalizing prostitution, as soon as all the Democrat criminals are locked up in max security prison where they can be gang-raped by Bubba.
Posted by: FreedomLover | Mar 11, 2008 1:26:45 AM
Hey Spitzer, don't drop the soap.
Posted by: FreedomLover | Mar 11, 2008 1:27:15 AM
Hey Spitzer, don't drop the soap.
Posted by: FreedomLover
Yeah, Republicans like Ted Haggard, Larry Craig or Mark Foley might be sharing your shower.
Posted by: muirgeo | Mar 11, 2008 2:11:35 AM
"Yeah, Republicans like Ted Haggard, Larry Craig or Mark Foley might be sharing your shower."
Spitzer should have perjured himself. Then Murthaduck and the rest of the proletariat could have lectured us again that perjury and subornation of perjury are no big deal if it's only about sex.
Posted by: brotio | Mar 11, 2008 2:23:11 AM
Yeah, Republicans like Ted Haggard, Larry Craig or Mark Foley might be sharing your shower.
Posted by: muirgeo | Mar 11, 2008 2:11:35 AM
Wishing prison on me? What did I do muirdiot? Or is that you revealing your true colors - that anyone who doesn't go along with the socialist spec should be sent to prison. Lenin would like you.
Posted by: FreedomLover | Mar 11, 2008 2:49:59 AM
If these firms were truly innocent, they wouldn't have caved to "substanceless innuendo" and forked over billions of settlement dollars to settle. They and their shareholders would use their money and their might to prevail in court.
Steve, that's not necessarily true. Many times businesses settle out of court even when they have not done anything wrong. There are two problems at work: 1) doing wrong and committing infractions of legislation are sometimes different things -- with the latter being easier to do 2) substanceless innuendo goes a long way in the court of public opinion and future demand for a business's products thanks to a slick-tongued media who chooses words very carefully will 'reporting' the news.
Save_the_Rust_Belt, good point about the NFTs and Grasso.
Have you ever noticed that in publicly traded companies -- you know, the kind that anti-market types show disdain for -- that the accounting & economic profits are more equitably distributed amongst the owners and the principals. Whereas in a NFP, the economic profits are far more concentrated amoung few principals. Yet, it is the NFPs that are the darlings in most people's eyes. I think most people are far too sympathetic to beauracracy and busy work than the real choices that are available, and that get taken for granted, when made possible by for profit entities.
Posted by: lowcountryjoe | Mar 11, 2008 4:45:39 AM
joe:
Most of the big cash reserves are sitting in private equity funds beyond the reach of government money grubbers like Spitzer. Literally several trillion dollars worth.
Posted by: FreedomLover | Mar 11, 2008 5:13:37 AM
Private equity on the rise:
http://www.ftmandate.com/news/fullstory.php/aid/827/Private_equity_assets_on_the_rise.html
Posted by: FreedomLover | Mar 11, 2008 5:15:09 AM
Here's the link:
http://tiny.cc/mEnd3
Posted by: FreedomLover | Mar 11, 2008 5:16:16 AM
"Now millions are being caught in all forms of predatory lending and financial wizadry with the backing of the US government and its tax payers.
What is needed is more oversight not less."
For years the regulatory mandate has been to make credit available to those of us who are less fortunate. Mission accomplished!
Posted by: The Dirty Mac | Mar 11, 2008 7:29:23 AM
Steve H,
Your comment here is at best naive.
"If these firms were truly innocent, they wouldn't have caved to "substanceless innuendo" and forked over billions of settlement dollars to settle. They and their shareholders would use their money and their might to prevail in court.
Posted by: Steve H. | Mar 10, 2008 11:51:46 PM"
I am not qualified to argue economics on the level some of you guys are, but I am qualified to talk about street level tactics and actions of the legal system.
Because a business of business man caves to pressure from the bad boys in the legal system does not for one minute mean he has some guilt.
The tactics by the plaintif(s) is to not get into court too quickly and in the meantime drain enormous sums of money from the target defendant through the use of discovery and delays. While this is going on the plaintif(s), particularly government investigators or prosecuters, use a naive or compliant press to vilify the defendant with continuous false allegations and out right lies.
The net result is that, though innocent of any provable wrong-doing, business has learned that in most cases it is cheaper and less disruptive to business to just simply reach a settlement.
This is just the simple truth I see played out every single day in front of my camera.
Posted by: vidyohs | Mar 11, 2008 8:07:34 AM
Ooops.
Because a business or business man caves to pressure
Posted by: vidyohs | Mar 11, 2008 8:09:14 AM
Isn't anybody going to say something about the Emperor having no clothes?
Posted by: flix | Mar 11, 2008 8:14:41 AM
I remember the letter I received from Janus Funds announcing that they were guilty of late trading and market timing schemes, and that my expense fees for the next year would be credited by the settlement amount. Who wants to argue that I (and countless other small investors) didn't benefit from Spitzer's efforts?
Yep, late trading was illegal and unethical and it was the AG's job to apply the appropriate legal remedy. And in a minority of Spitzer's cases there was actual fraud. Yippeee. He sometimes did his job. However, the fact that some of his cases were legitimate doesn't justify his victimization of firms and their employees. The destruction he caused far exceeded whatever pennies you made in your 401K. It's disturbing that you find that the ends justifies the means.
Posted by: Methinks | Mar 11, 2008 8:57:19 AM
Vidyohs and lcj, I agree that there are plenty of situations where it's cheaper and less bloody for a defendant business to settle rather than risk a costly court battle to prove their innocence.
But come on, ALL of these firms decide to settle for extraordinary amounts of money and major reformations in business practice - while STILL remaining guilty in the perception of the media and public?
For grins, let's review a partial list...
Global Settlement -
Bear Stearns, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Salomon Smith Barney, UBS Warburg
Late Trading/Market Timing (NY AG & SEC)-
Alliance Capital, Bank One, Canary Capital Partners LLC, Invesco, Janus Capital Group
Bank of America, Prudential Securities
Putnam Investments, Strong Funds
Contingent Insurance Commissions -
Marsh & McLennan, Aon, Willis, Arthur J. Gallagher & Co (IL AG)
Radio Play Payola -
Sony BMG, Warner
Am I to understand that all of these major firms are innocent of wrongdoing? Don't you think they would band resources to take down a reckless renegade once and for all? To protect their wallets and their honor? Who's being naive here?
As I conceded to Mesa, there are certainly innocent victims in Spitzer's path, and there's no excusing that. Many of his hunts turned up nothing or blew up in his face. He's cavalier, rude, and egotistical. It's easy to hate him whether you are pro-business or not. But reasonable people will look beyond that and acknowledge that he rooted out bad boys and policies that the SEC and insurance regulators were fine to let propagate.
Posted by: Steve H. | Mar 11, 2008 8:57:24 AM
That's not the issue with Grasso. And I don't think the NYSE was anyone's darling. Now the NYSE is a public company. At the time the NYSE was a private club of exchange seat holders. The NYSE, as an organization, was an NFP because all the profit flowed directly to seat holders. Those seat holders decided how much to pay Grasso - out of their own pockets. The NYSE is not a charity organization whose stated purpose is to collect funds and spend them on charity work. If executives of a charity make "too much money" (however that's defined) there may be a legitimate claim. Donors give money to charity for the charity to spend on whatever the stated mission is, not to pay CEOs. The NYSE was not a charity, had no donors and the only people paying Grasso were the members of the private club known as the NYSE and they payed him out of their own pockets. Thus, the only people who are fit to decide how large Grasso's comp should have been were the seat holders.
Spitzer's attack on Grasso was symbolic - the poor schmuck just made sooo much money. Tasty political stuff. He expected Grasso to fold just like the others. But Grasso fought back.
Initially, Grasso lost in court. Maybe we can get some of the lawyers who sometimes post here to explain this bit better. My understanding is that the first motions are always to claim that the AG didn't have jurisdiction over the NYSE. Grasso lost those because of the NYSE's NFP status. Now, they're hammering out the issue of the actual compensation package. Grasso is winning that. So, the AG was the appropriate body to bring a suite and the AG didn't have enough evidence to prosecute the case. Of course, Spitzer never counted on it getting to court.
Posted by: Methinks | Mar 11, 2008 9:21:44 AM
Sorry, the above post was in response to LCJ's post. specifically to:
Have you ever noticed that in publicly traded companies -- you know, the kind that anti-market types show disdain for -- that the accounting & economic profits are more equitably distributed amongst the owners and the principals. Whereas in a NFP, the economic profits are far more concentrated amoung few principals. Yet, it is the NFPs that are the darlings in most people's eyes. I think most people are far too sympathetic to beauracracy and busy work than the real choices that are available, and that get taken for granted, when made possible by for profit entities.
Posted by: Methinks | Mar 11, 2008 9:32:01 AM
Spitzer's dilemma is indeed a classic case of karma, is it not? It is cosmically ironic that, after meddling in the private lives of dozens of others as a prosecutor, Spitzer is about to be prosecuted for doing the same things.
Perhaps Mr. Spitzer will see the wisdom of libertarian philosophy at this point and give up his evil statist ways. But somehow, I doubt it.
Posted by: Sam Davis | Mar 11, 2008 9:44:03 AM
"He prosecuted the behaviors of illegal businesses . . . "
That was not always the case. His high-profile crusades against Wall Street usually involved no breaking of any laws, just Eliot's personal disapproval of their business practices. He would threaten massive state-backed lawsuits against an entire corporation to force a settlement.
When his cases actually went to court, he often lost. Eliot never saw his job as upholding the law so much as making it at his whim.
Posted by: Craig Howard | Mar 11, 2008 9:48:54 AM
For years the regulatory mandate has been to make credit available to those of us who are less fortunate. Mission accomplished!
Posted by: The Dirty Mac
LOL! So Mac are you a wealthy Wall Streeter or just a simpleton foot-soldier for their cause?
Anyway the Fed is giving those rugged free-marketeers another $200,000,000,000 too play with. Ahhhh the free market..... and I do mean FREE. Didn't Germany do this after WW1? They thought they'd outsmart the rest of the world by making more money to pay off their debt. That worked well uh?
Even funnier is David Malpass of Bear-Stearns claiming the whole problem could be solved if Bush just claimed he supported a stronger dollar. What a pathetic person. These guys are prostituting our treasury and our economy.
Posted by: muirgeo | Mar 11, 2008 10:53:52 AM
Nice.
Posted by: Nathaniel | Mar 11, 2008 11:03:42 AM
This Wall Street Journal has a great editorial this morning concisely outlining exactly what's wrong with Spitzer here' the link: Spitzer's Rise and fall
Posted by: Methinks | Mar 11, 2008 11:16:02 AM
Methinks - I think the opinion piece hits the nail on the head. Spitzer AG was the legal form of an extortionist. As others have noted here, and elsewhere, most of the cases he held were settled out of court with no admission of wrong doing. No facts were tried, no decisions were made in many of the cases.
But the damage was done - the government of New York took its settlement dollars while never considering the harm it was doing as it pursued the crusade against anyone Mr. Spitzer chose to spew his bile at.
As someone who has worked within relative proximity of those who have handled AG requests and demands during Mr. Spitzer's tenure and provided assistance in resolving Spitzer's demands, I can not begin to describe the asinine nature of and contemptuous power Spitzer held.
Consider that those who raise Spitzer's greatest achievements only hold assertions of wrong doing rather than factual declarations of guilt from the courts, Spitzer's influence continues to have collateral damage in the business world. Sure, some of Spitzer's actions may have been legit and he may have one a few cases; I'm sure Mao did *some* good things too at one point or another in his life.
Posted by: colson | Mar 11, 2008 12:49:22 PM
Muirgeo, you do realize that many here might be happy to do away with the Federal Reserve.
Posted by: Mcwop | Mar 11, 2008 12:57:53 PM
Muirgeo is one of the bestest straw man slayers around these here parts.
==============
On a completely unrelated note, I was thinking this morning that a bone of contention that arises around here is Martin's insistence that only the legal definition of theft, etc. are valid for discussion here.
I take issue with that. Libertarian philosophy is primarily a moral philosophy and I hold that the moral use of such terms is entirely appropriate here.
Posted by: Sam Grove | Mar 11, 2008 1:06:45 PM
Muirgeo, you do realize that many here might be happy to do away with the Federal Reserve.
Posted by: Mcwop
Yes, see we have something in common. Actually we have a lot in common but often different solutions. But I plead ignorance as to what alternative there is to the Fed. I've read about Milton Friedmans fix (set parameters for interest rate changes and steady monetary growth) that seemed to make sense but from what I've heard some claim it was largely responsible for the stagflation of the 70's.
Posted by: muirgeo | Mar 11, 2008 1:44:48 PM
Rumor has it that his "friend" specializes S&M. Yeah baby - punish me for being a naughty boy. Gov, tell us, tell us it ain't so!
Posted by: FF | Mar 11, 2008 3:28:56 PM
I've read about Milton Friedmans fix (set parameters for interest rate changes and steady monetary growth)...
Do tell us where you read the portion about Friedman's parameters for interest rate changes. He may have wrote or spoke of this (particularly as it relates to interest rates) but please tell me where you saw/heard this?
that seemed to make sense but from what I've heard some claim it was largely responsible for the stagflation of the 70's.
Who are these "some" who claimed it? Name names please.
But I plead ignorance as to what alternative there is to the Fed.
This is equivalent as saying, "I do not know of how banking worked prior to 1913. I am too lazy to research it. And if I did do the reasearch to see how banking worked in the past, I'd likely see no alternative, now, that could be re-established that would offer sufficient regulations, oversight, and the necessary degree of the squelching of the free market for my authoritarian tastes."
Though it is refreshing to see you write of your ignorance on these matters...for a change. Don't you have any patients today, Doc?
Posted by: LowcountryJoe | Mar 11, 2008 5:21:17 PM
OK, I’ll stop picking on Steve. After this.
This is still incorrect:
“It's easy to hate him whether you are pro-business or not. But reasonable people will look beyond that and acknowledge that he rooted out bad boys and policies that the SEC and insurance regulators were fine to let propagate.”
What positive came out of his actions?
Practically nothing. A few suspicious activities were exposed and prosecuted.
What negatives have come about from his actions? Tons: billions of dollars of increased regulatory burdens (Sarbanes-Oxley, other reporting requirements), elevated transactions costs to financial services (and many other areas) consumers, increased difficulty in posting and reconciling mutual fund trade errors and related transactions, and general dis- and mistrust of business in general and financial companies in particular, the vast majority of which is completely compliant and above board.
That’s terrible.
Steve (and “reasonable people,” whoever they are) have the incorrect impression of Spitzer and others like him, due largely to favorable press portrayal, as some kind of moral crusader and public advocate. He’s nothing of the sort. In fact, I could make a pretty good argument that he’s worse than many of the people he prosecuted, especially given yesterday’s revelations about his own incredibly and overtly hypocritical, not to mention illegal, behavior.
So to say that he caught some bad guys really doesn't capture the truly despicable and revolting nature of this asshole's character. He was out for power and glory, that's all. He doesn't give a damn about you, the public, or his family apparently.
Posted by: Mesa Econoguy | Mar 11, 2008 6:55:41 PM
I’m hearing rumblings that Spitzer used state money to pay some of the prostitutes, which, if true, is an automatic indictment.
Also, he’s apparently been patronizing hookers for six years.
And everyone read that WSJ editorial that Methinks posted above.
Posted by: Mesa Econoguy | Mar 11, 2008 7:03:48 PM
This has too many marks of "Wall Street sanctioned hit job" that it's not even funny. He did quite a job of it, and someone wants to trip him up for it.
I'll probably get a ton of flak for it(from the usual suspects), but he filled a needed function. That function was to strike fear into Wall Street instead of making a Faustian deal with it. Should he resign, his replacement should keep that fear coming(as the business community isn't going to back down, but try to get a yes-man for them next round).
If he should find good work, he'd be welcome in somewhere such as Ohio, where his practice would receive some appreciation.
Posted by: sethstorm | Mar 11, 2008 7:04:20 PM
Spitzer is also apparently worth around $500 million, courtesy of his real estate mogul daddy.
Typical rich-boy "rules don't apply to me" snotnosed punk.
Troglodytes like muirgeo think corporate excesses are the problem.
Pathetic.
Posted by: Mesa Econoguy | Mar 11, 2008 7:10:23 PM
This has too many marks of "Wall Street sanctioned hit job" that it's not even funny.
I had read that his account activities were reported by a bank as suspicious to the FBI under some government reporting requirement.
Does that sound like a 'Wall Street sanctioned hit job.'?
If Wall Street had that much power, how did Spitzer manage to make it this far?
Posted by: Sam Grove | Mar 11, 2008 7:19:23 PM
And if Spitzer performed such a “necessary function,” how come he didn’t avert the subprime mortgage meltdown?
Posted by: Mesa Econoguy | Mar 11, 2008 7:28:18 PM
I'll probably get a ton of flak for it(from the usual suspects), but he filled a needed function.
Yes, because sanctominous, tyrranical, overreaching, duplicitous bullies are always needed someplace inside our federal government.
...he'd be welcome in somewhere such as Ohio, where his practice would receive some appreciation.
Imagine how many of the remaing entrepreneurs would be left in Ohio then. Commerce-hating Leftists might appreciate it, maybe.
Posted by: A_Usual_Suspect | Mar 11, 2008 7:31:07 PM
"This has too many marks of "Wall Street sanctioned hit job" that it's not even funny. He did quite a job of it, and someone wants to trip him up for it."
Posted by: sethstorm
Delusional.
Posted by: Mesa Econoguy | Mar 11, 2008 7:33:02 PM
Correction: any level of government, not just the federal level (as I had incorrectly stated for the former NY State AG and current -- as of this writing -- Gov.).
Posted by: A_Usual_Suspect | Mar 11, 2008 7:34:32 PM
And what Spitzer did wasn't a government hit job?
I despise Dick Grasso more than most, but his paycheck is the sole concern of the private investors and members (and now shareholders) of the NYSE. Muirgeo, seth, it is effectively none of your business what that idiot made for being a glorified doorman.
This goes right back to my point that liberals always confuse public and private.
Much has been posted on this blog (mostly by ignoramus supreme muirgeo) about having the public pay for what's currently happening on Wall Street.
That sentiment is absolutely correct, but those trumpeting it are the ones who put in place the "safety nets" and "second chances" which create the moral hazard situations and unwise decisionmaking we now see effectively rewarded (or severely insulated from consequence), in the name of compassion.
You are the real problem, seth, muirgeo, et al., and especially you, Eliot Spitzer.
Posted by: Mesa Econoguy | Mar 11, 2008 8:14:19 PM
M.E.,
You're doing a great job.
"That sentiment is absolutely correct, but those trumpeting it are the ones who put in place the "safety nets" and "second chances" which create the moral hazard situations and unwise decisionmaking we now see effectively rewarded (or severely insulated from consequence), in the name of compassion.
You are the real problem, seth, muirgeo, et al., and especially you, Eliot Spitzer.
Posted by: Mesa Econoguy | Mar 11, 2008 8:14:19 PM"
Absolutely true.
Posted by: vidyohs | Mar 11, 2008 8:41:57 PM
Mesa,
Are you one of these Hedge Fund guys? Coming along some ruff times or what?
Bullcrap about who puts in place the Wall Street safety nets. These jerks are all for free markets when the bubbles they create are expanding and then they go teet-sucking government handout wanting socialist when they over extend. And every one of us pays for it so it IS OUR business. Jeez what did we put up just today...another $200,000,000 for these bastards?
We are not the problem mesa. The problem is s system that funnels all of the increased productivity pie to a wealthy elite while the real productive workers get nothing. You can't expect such a system to remain stable.
The daily headlines bear this out...such a system is economically and socially unsustainable. And its just wrong because wealth and value are de-linked.
Posted by: muirgeo | Mar 11, 2008 8:44:35 PM
You are most definitely the problem, asshole. The pie is not fixed in size (i.e. not zero sum, moron) nor is it “funneled” towards particular parties, dumbass. If that were so, answer Sam’s and my questions above, and the 50 billion other ones you won’t answer, because you are too stupid.
You think you understand banking and financial intermediation? Wrong. You can’t even cite comparative advantage properly, you fool. You’re dumb enough to believe journalists who aren’t smart enough to pass regular curriculae (Al Gore). They’re the intellectual rejects of society.
I’d go to law school for the sole purpose of suing you for malpractice.
Dumbass.
Posted by: Mesa Econoguy | Mar 11, 2008 8:52:18 PM
Ok, dumbfuck, what are about the margin requirements for daytrading, initial and maintenance?
What are the Reg S safe harbors for international securities trading, and the required seasoning period? What are the various exchange and stamp charges throughout the world, and how does the SEC view each? What are the SEC future plans and white papers for allowing international securities trading both within and without the US? What are the boarder implications for financial markets? How does this potentially affect US investors, and the investing public at large?
What is a Qualified Institutional Buyer? How does that relate to GDRs, and other foreign securities?
What are bank reserve requirements, and bank settlement requirements? What are they crossing the dateline in DVP transactions? What are the most protected international markets? What is India’s requirement? Vietnam’s? Singapore’s? Can you hold these securities legally in the US? What about prime brokerage?
Who are the major Global Custodians? What do they do?
What are the Reg NMS implications of Best Execution? How are they quantified? What are the available data to support those conclusions? What constitutes legal Rule 611 trade-thru? How is this reported?
You think you know your shit? You think finance is largely unregulated? Then step up, you cock-sucking freeloader…..
Posted by: Mesa Econoguy | Mar 11, 2008 9:10:36 PM
"Man, I'd like to be a fly on the wall in that meeting!" Heard that one?
Well I get to be the fly on the wall in so many meetings.
My brother does the same thing I do, videography. He had a contract with one of the world's largest Oil Companies to film their legal department's Continuing Education seminars.
The lead attorney for the defense of Arthur Anderson, Acct Firm which was the accounting firm for ENRON, gave a presentation after AA accting had been indicted and tried. His purpose was to educate the Oil Firms attorneys on Sarbanes Oxley specifically. He did that and also gave a detailed account of the behavior and character of the government prosecuters he faced in the AA Acctng ordeal. I was privy to viewing the tape.
The Atty said that there was zero evidence of any wrong doing or complicity by AA Acctng and the only real thing that gave the appearance of impropriety was a memo from one of the high executives, a lady, who directed the firm to destroy stored documents, an action long past due and allowable by existing law. Bad timing, the govt prosecuters seized on that and made their case that AA Actng had done so to cover-up crimes. You have to understand what a coup bringing down AA Acctng was to those govt prosecuters, what a resume builder!
The prosecuters were in the Spitzer mode and wanted a kill. After the Atty and his staff had gone over everything he pointed out that if AA Acctng was indicted that it was dead and literally thousands of employees around the world would be immediately unemployed. He said the govt prosecuters poopoo'd that and refused to believe it. After many many days and hours, the Atty said he finally got an agreement with the govt prosecuters, not to indict, but to agree to sanctions and fines to avoid indictment. They put it in notes, shook hands on it, and the government prosecuters marched from that meeting directly to a press conference at which they announced the indictment of AA Acctng.
Within 24 hours, AA Acctng had no clients left and all employees were let go, worldwide.
The trial hinged on that memo directing destruction of stored documents. A jury favorable to the govt gave the prosecuters a conviction on that count.
At the time of the C & E I speak of, the atty said that the Supreme Court had the case on appeal and that he had a 50 50 gut feeling on reversal, but refused to predict.
About two weeks after that C & E the Supreme court threw out the AA Acctng conviction and chastised the govt prosecuters for over zealous prosection in the face of lack of evidence.
The net affect? Thousands of AA Acctng employees worldwide lost their employment. An honorable firm lost everything to Spitzer like persecution. Govt prosecuters got red marks in the files.
Even innocent, AA Acctng was willing to pay huge fines just to make the case go away and avoid the indictment. While damaged by the accusations and the skillful way the government played the press, AA Acctng would have survived and recovered. The indictment was like a bullet between the eyes, instant death, just like our Defense Atty said.
The ones above that express more fear of the government prosecuter than they do of the greedy business man have it right.
Government can, and will, take it by force simply because they can.
Businesses must take it through temptation.
I can resist the latter where I will get steamrolled by the former.
Posted by: vidyohs | Mar 11, 2008 9:10:46 PM
A man with a large case of food and a man with a bag full of gold land on a desert island.
After a while the man with the food exchanges half his food for all of the gold.
A man with a gun lands on the island.
After a while, the man with the gun has all of the food and all of the gold.
Muirgeo thinks the man with the gold has all of the power.
Posted by: Sam Grove | Mar 11, 2008 9:40:23 PM
Muirgeo doesn’t know jack-fucking-shit about the financial system.
Posted by: Mesa Econoguy | Mar 11, 2008 9:51:14 PM
Mesa,
That was breathtaking.
Posted by: Methinks | Mar 11, 2008 9:56:30 PM
“Sorry for the mess.”
- Han Solo
Posted by: Mesa Econoguy | Mar 11, 2008 9:58:36 PM
Seth,
There are lots of Wall Street practices that hurt Joe Public. Lots of them are codified in SEC regulations and committed by the den of thieves known as specialists on the floors of the exchanges. Yet, these practices were left completely untouched by Spitzer. They are difficult to understand for Joe Public (hell, for a lot of people on Wall Street, for that matter) and he doesn't realize he's getting screwed, so changing these rules won't have much of a political impact. Thus, Spitzer didn't bother with them.
I've been on Wall Street for a very long time. I've both had to go through the frustration of complying with utterly ridiculous regulation which irritates everyone and protects no-one and seen fraudulent activity ignored. If Spitzer had actually changed anything for the better and "struck fear" into Wall Street because he was determined to root out and prosecute true fraud (i.e. do his job), then that would have been okay.
Unfortunately, Spitzer was essentially a blackmailer. He's a criminal. He rarely had a case and rarely won his cases in court. Instead, he made a practice of collecting embarrassing personal information about his victims via subpoena and then threatening to leak it to the press unless the victim bent to his will. In fact, as AG, he almost completely circumvented the court system and tried his targets in the court of public opinion by actively leaking personal information about his targets. This is why the press never wrote about his bullying and the public has such a favourable impression of that asshole. If a journalist did write about his bullying, he'd get cut-off from the leaks and have no story to deliver to his editor. For this reason, the coverage of this man was not journalism - it was propaganda.
And don't worry about "striking fear into the heart of Wall Street". We have regulators crawling up our ass all day long. The SEC's latest brilliant move is to adopt a rule that the SEC can charge you with fraud even if there was no intent to commit fraud. Nor does there have to be a victim. This means that, for example, a fund manager can make an offhand comment at a cocktail party on Saturday and be charged with fraud on Tuesday even if nobody got hurt and he didn't intend to defraud. There's no need for Spitzer to add stupidity and fear into the system. We already have the SEC for that.
As for Faustian deals...those were the only kinds of deals Spitzer ever struck. There was always a scapegoat, a promise of a campaign contribution and an extraction of tens of millions from shareholders.
Posted by: Methinks | Mar 11, 2008 10:17:46 PM
“Sorry for the mess.”
- Han Solo
I'll bet Muirdiot's mother gets tired of apologizing for him too.
Posted by: Methinks | Mar 11, 2008 10:19:26 PM
Vidyohs, my suspicions are confirmed: you have far more economic and regulatory knowledge than you let on.
I have a similar story about the RTC, to be shared on a future thread.
Apparently, we’re up to 10 years on the Spitzer hooker usage watch now.
Why is this woman forced to stand with her piece-of-shit-husband at a press conference?
That’s gonna be one expensive and uuuugly divorce……….
Posted by: Mesa Econoguy | Mar 11, 2008 10:31:47 PM
That’s gonna be one expensive and uuuugly divorce……….
You think? I would think that Silda's afraid she might get the Hank Greenberg treatment and just be happy to get out with the clothes on her back.
Frankly, I don't know how much sympathy I have for her. What did she expect from that sanctimonious, sadistic, dead-behind-the-eyes prick?
Posted by: Methinks | Mar 11, 2008 10:38:41 PM
I was half-expecting another Jim McGreevy (NJ, D-Gay), which is why I told the desk to reserve judgment, we don’t yet know what kind of escort service.
McCreepy's "wife" was apparently aware for years that he was batting for the other team. That's stupid. Somebody piped up in the desk "I'm not sure if I can take another 'I'm a gay American' speech" on this one.
I do feel very sorry for the kids (I have a daughter), and the rest of his family who had not only to put up with his sanctimonious bullshit, but also his generally annoying personality.
When you've got $500 million (Spitzer), or $23 billion (Warren Buffett), it gets reeeeaaally easy to tell people what to do.
What's that line these modern liberal jerkoffs love to throw out there?
Absolute power corrupts absolutely, or something......? Hmmmmmm......
Posted by: Mesa Econoguy | Mar 11, 2008 10:52:17 PM
Vidyohs,
Thanks for sharing that account. Truly amazing.
I'm not familiar with the details of the Enron case. However, I am intimately familiar with WorldCom and, in my opinion, the auditors were negligent. However, negligence is not a felony and a charge of negligence would not have destroyed the firm.
Modeling WorldCom was very difficult. The firm restated its quarterlies constantly. This is usually not a sign of anything good. To be thorough, I read every word of every document the company released for the preceding five years. I then built a reconciliation statement to reconcile the company's restatements and reclassifications. The capital expenditures wouldn't reconcile (but the discrepancy in my reconciliation was much smaller than the fraud turned out to be). When I asked Scott Sullivan for an explanation, I got the run around. I never did get an answer.
To reconcile the discrepancy on my own, I would have needed access to non-public information. The very information that auditors are responsible for verifying and reconciling. They obviously didn't do their job because if I can find such an obvious discrepancy, it should have been a piece of cake for the auditors. Did the auditors bend to WorldCom's will? Did WorldCom hide information from the auditors? We'll never know but AA should have never signed off on that audit.
So, I agree with you that AA was innocent of the charge of obstruction of justice, but, IMO, they were negligent. However, a charge of negligence is not the "big kill" that obstruction of justice is and it wouldn't have destroyed the company. And what prosecutor would sacrifice fame and political fortune for the mere satisfaction of doing a good job?
Posted by: Methinks | Mar 11, 2008 11:02:44 PM
What's that line these modern liberal jerkoffs love to throw out there?
Absolute power corrupts absolutely, or something......
Oh. I thought it was "money is the root of all evil. Give me yours."
Posted by: Methinks | Mar 11, 2008 11:10:28 PM
And name the great achievements of regulatory enforcement.
Here ya go:
http://online.wsj.com/article/business_world.html
Posted by: Mesa Econoguy | Mar 11, 2008 11:13:08 PM
See RTC.
Posted by: Mesa Econoguy | Mar 11, 2008 11:14:07 PM
Whether a company values its assets at historic cost or market value or a value derived by some other formula, investors still have to make their own forecasts and judgments. A thermometer is equally useful whether it says water freezes at 0 degrees or 32 degrees -- though it still doesn't tell what the temperature will be next week.
Posted by: Mesa Econoguy | Mar 11, 2008 11:21:09 PM
I’d go to law school for the sole purpose of suing you for malpractice.
Dumbass.
Posted by: Mesa Econoguy
Somebody tried that and I made a damn fool out of the lawyer. Bring it on...
Posted by: muirgeo | Mar 12, 2008 12:41:23 AM
Ok, dumbfuck, what are about the margin requirements for daytrading, initial and maintenance?
What are the Reg S safe .....blah, blah,blah.....
You think you know your shit? You think finance is largely unregulated? Then step up, you cock-sucking freeloader…..
Posted by: Mesa Econoguy
What does all that BS have to do with you're teet sucking butt slurping up on the $200,000,000,000 from the Fed today?
Just because some one made 50 million on short term trading doesn't mean they added anywhere near that amount to the real economy. Billions of dollars are paid to traders when I'm struggling to find a nurse to help me resuscitate a dying baby. I'll take 100 good nurses over any single piece of crap short term speculative economy destroying day trader any day. That's all I'm saying.... There's work to be done and you guys are pushing pieces of paper around instead of helping out. I mean even if you guys could just weave baskets or mow some lawns at least you'd be contributing SOMETHING but what you're doing isn't even helping anyone...it's hurting a lot of people and our economy.
Posted by: muirgeo | Mar 12, 2008 1:52:38 AM
Mesa, That was one of the most beautifully written, fact-based smackdowns I've ever read. I had to save that post because It made me laugh my ass off while simultaneously educating me about the regulatory maze that the general public has no clue about. Thankyou.
Sam, I love your desert island story. What a fun night tonight!
Posted by: brotio | Mar 12, 2008 1:58:24 AM
I've read about Milton Friedmans fix (set parameters for interest rate changes and steady monetary growth)...Do tell us where you read the portion about Friedman's parameters for interest rate changes. He may have wrote or spoke of this (particularly as it relates to interest rates) but please tell me where you saw/heard this?
that seemed to make sense but from what I've heard some claim it was largely responsible for the stagflation of the 70's.
Who are these "some" who claimed it? Name names please.
...
Posted by: LowcountryJoe | Mar 11, 2008 5:21:17 PM
muirgeo, it is time to stop playing Duck, Duck, Goose-step here and answer these two questions. You made the statements! So, was this truth or are you using fascist propagana?
Posted by: A_Usual_Suspect | Mar 12, 2008 6:39:18 AM
Mureigo,
Obviously, since finance is worthless, you can probably easily find a nurse if you offer to pay her with peanuts. You can drop them off at her house in lieu of your complete independence from banking. Or perhaps you can just pay her with the fruits of your labour: blood.
Posted by: Gamut | Mar 12, 2008 9:42:16 AM
Billions of dollars are paid to traders when I'm struggling to find a nurse to help me resuscitate a dying baby. - Muirdiot
The depth of your stupidity is immeasurable, moron. Do you honestly believe that anyone with even a mid-double digit IQ would be stupid enough to allow you to touch their baby? The only place you save anything is in what's left of that crack-addled brain of yours.
I'd explain where you're wrong but talking to you is like smacking your head against a cement wall studded with metal spikes.
Go back to figuring out which peg goes into which hole, idiot.
Posted by: Methinks | Mar 12, 2008 10:12:10 AM
To Methinks and the rest of the anti-Muir[insult] crowd:
This is getting out of hand. This board is supposed to be a place for intelligent discussion, not name calling. If you think the guy's an idiot (and worse) and beyond help, then for God's sake just ignore him. What's the point of polluting the comments with profanity?
For the record (and before *I* start getting the same treatment!), I agree with your position. I don't agree with his. But if we can't have a civilized discussion then wouldn't it be better for everyone's blood pressure just not to have one at all?
Posted by: Adam | Mar 12, 2008 12:09:11 PM
More on the media fawning over Spitzer as he twisted campaign finance laws and used the power of his office to destroy people he didn't like.
Posted by: Methinks | Mar 12, 2008 1:06:31 PM
Adam,
I second that. And yes, I know that I have been a prime offender of late. I have, however, discovered that the subject's comments are easily recognized within the first line or two, and that they can be easily scrolled past. Unfortunately the next several comments are usually responses to the bypassed comment. In short, this is getting ridiculous. I hereby swear to respond only to intelligent and/or interesting comments, and to ignore the OCD troll.
Posted by: Randy | Mar 12, 2008 2:20:09 PM
LOL.
Way to get past the namecalling there Randy.
Posted by: Gamut | Mar 12, 2008 2:31:28 PM
Sorry. Couldn't resist twisting the knife one last time :)
Posted by: Randy | Mar 12, 2008 2:54:06 PM
Randy & Adam,
You know what would be even better? If you just quietly stuck to your new-found higher ground of dignified silence. When you publicly moralize, the troll feels vindicated by your implied defense of its stupidity and is encouraged to keep coming back - to the point that threads become unreadable. Moreover, I've seen these proclamations before. Nobody ever sticks to them. The ones that do ignore the troll don't announce it first.
Call me a total bitch, but I'll continue to deal with the troll my way - sometimes ignoring, sometimes mocking and sometimes giving him a piece of my mind - and you do things your way. So long as we don't actually throttle him, we've committed no crime. Isn't the exercise of free will one of the tenants of libertarianism?
I respect both of you and understand what you're saying how you feel but it is what it is...
Posted by: Methinks | Mar 12, 2008 4:21:20 PM
Methinks,
I respect your position. I'm not calling for a boycott or an expulsion. Just trying to strengthen my resolve to not contribute to the problem.
Posted by: Randy | Mar 12, 2008 5:20:45 PM
Randy, I totally understand.
Posted by: Methinks | Mar 12, 2008 6:11:40 PM
Methinks,
I'm not disputing your right to say whatever you want, it's just that I'm not sure that the best way to keep the threads readable is to hurl insults back and forth. I'm not trying to moralize, I'm just saying that I think that it's the flame wars and name calling that render the comments unreadable. Even if the consensus among everyone here is that the guy's the stupidest living organism in all of creation, what's it helping to call him a cocksucker (not your word, I know)?
Most people who approach the libertarian argument are carrying a lifetime of almost insurmountable statist bias. It's a massive uphill challenge. Every person who comes across this blog and wonders what we libertarians are all about is probably going to have a look at the comments. And if we come across as a bunch of arrogant, loud-mouthed, bullying jerks then we're going to confirm a lot of the prejudices that people have against us (namely, that libertarians are a bunch of assholes).
If, conversely, we simply ask him questions to which he never responds, point out flaws in his logic, facts which he ignores or misrepresents, and generally destroy his argument by attacking the argument itself... well, isn't that the best way to convince people that we're right?
Getting people to buy into libertarianism is mostly a PR battle because frankly, I think 95% of our argument is unassailable by anyone functioning on a logical level. There are exceptions at the margins (air pollution, animal cruelty, abortion, etc.) on which libertarians themselves disagree and where some otherwise committed individualists would say that state action is warranted (like myself in some of those examples). But our challenge lies almost entirely in convincing people that we're not monsters who want orphans to starve in the streets. If they realize that we're decent folk who actually have better ways to solve people's problems, there will be an anti-statist revolution overnight.
Anyways, those are just my two cents. I'm not trying to be holier-than-thou, I'm just expressing some frustration I've been feeling silently as a dedicated reader who is usually content to remain a lurker.
Posted by: Adam | Mar 12, 2008 6:12:15 PM
Adam, I understand where you're coming from. Most of us (including me) have tried for MONTHS to do exactly as you've suggested before becoming too frustrated. The responses to the troll are targeted to that one troll and anyone with half a brain can understand why. I'm not here to recruit anyone to libertarianism. As a result of growing up partially in a college town, a majority of my friends are admitted socialists. No reasoned argument could persuade them (but they are good debaters and we've been debating and respectfully disagreeing for decades). My experience has been that people will change their positions based only on the experiences in their lives, not persuasive arguments by others. If newbies come here and they are persuadable, then they are open and they will understand why an incoherent troll provokes such a reaction.
Normally I would agree with you that destroying arguments is the better course of action. However, this particular troll has no arguments - just incoherent ramblings and insults - from which people here try to decipher and argument. Frankly, reasoning with the unreasonable can be more annoying to passersby than telling a troll off. Plus, it encourages the troll to keep coming back. I haven't heard that libertarians want babies to die in the street but I have heard the complaint that they will reason with the unreasonable.
We are individuals and not responsible for representing Libertarians. I don't describe myself as a Libertarian (although, as you can see, I agree with most libertarian positions), don't belong to the party and don't want the responsibility of being the face of Libertarianism.
I do understand your feelings, Adam and I do understand that you're not trying to impose your will (impossible on a blog, anyway). But, it's a bit of a catch-22 situation.
Posted by: Methinks | Mar 12, 2008 7:36:16 PM
I've simply been trying to find if he has a lynch pin somewhere that my pry loose, but he's apparently glued it in place.
Posted by: Sam Grove | Mar 12, 2008 8:12:32 PM
Which Flame Warrior best exemplfies? [Does the 'who' really need to be established here?]
My best guess is this (second pick: that). And after the yellow rubber bath toy moves along...hopefully canned reply guy will not be far behind.
Posted by: LowcountryJoe | Mar 12, 2008 8:48:10 PM
Adam,
I am torn (Arrrrrggg it hurts) by mixed feelings vis-a-vis muirduck and how to treat him.
While Sam has tried to gently discipline me he has simply failed.
I agree that actual profanity is not really desireable, I do believe that rough and tumble debate or discussion has a long time honored tradition of scorching invective and creative insults.
And, pardon me chihuahuas, but good effective and affective debate depends upon arousing emotions and nimble wits.
Dull polite debate might exchange data, but it is doubtful in most cases (in my humble opinion). Show me a debate winner in any college contest that did not display emotion, passion, and sometimes even sorching wit in dismissing the opponent and his/her views.
So, while I refrain from using language I could not speak in front of my sisters, I consider myself free to be creative in disapproval or even approval.
I love Disreali, Menchken, Buckley, and Churchill plus many more I can not name without research of my notes.
Thank you very much
Posted by: vidyohs | Mar 12, 2008 8:49:46 PM
If we weren't in the extreme minority, we might be able to bulldoze our way to success.
Posted by: Sam Grove | Mar 12, 2008 9:31:20 PM
That's a very sly comment, Sam.
If no one notes it, it stands as a condemnation of slapping muirduck and ilk upside the head. If it is noted it can be tongue in cheek.
Good worksmanship.
For myself I am dogmatic in my belief that we do not convert socialists. They either grow up or they don't. If they don't, then I move they are candidates for retroactive birth control.
Posted by: vidyohs | Mar 13, 2008 6:20:07 AM
Vidyohs,
I think there's a place in the world for socialists, charity organizations for example. But they should never be allowed anywhere near government, or anywhere else where they can control the lives of others. There should be a screening test;