|December 13, 2011|
John Bedford Lloyd playing the character Bill Clark (based on Henry Paulson), Wall Street: Money Never Sleeps, 20th Century Fox, 2010
Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns Cos. had sold itself for just $10 a share to JPMorgan Chase & Co. (JPM).
Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae (FNMA) and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue.
Paulson had been pushing a plan in Congress to open lines of credit to the two struggling firms and to grant authority for the Treasury Department to buy equity in them. Yet he had told reporters on July 13 that the firms must remain shareholder owned and had testified at a Senate hearing two days later that giving the government new power to intervene made actual intervention improbable.
“If you have a bazooka, and people know you have it, you’re not likely to take it out,” he said.
On the morning of July 21, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.
At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives — at least five of them alumni of Goldman Sachs Group Inc. (GS), of which Paulson was chief executive officer and chairman from 1999 to 2006.
At the time Paulson privately addressed the fund managers at Eton Park, he had given the market some positive signals — and the GSEs’ shares were rallying, with Fannie Mae’s nearly doubling in four days.
William Black, associate professor of economics and law at the University of Missouri-Kansas City, can’t understand why Paulson felt impelled to share the Treasury Department’s plan with the fund managers.
“You just never ever do that as a government regulator — transmit nonpublic market information to market participants,” says Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”
Janet Tavakoli, founder of Chicago-based financial consulting firm Tavakoli Structured Finance Inc., says the meeting fits a pattern.
“What is this but crony capitalism?” she asks. “Most people have had their fill of it.”
The Black Dog
W. H. C. Pynchon
In a corner of our country not far removed from two of its great cities, there is a low range of mountains, the hoary evidences of ancient volcanic action. Countless years have elapsed since the great tide of molten lava rolled over the region. Years fewer, but still countless, have passed during which the shattered and tilted remnants of the lava sheets have watched over the land.
Merleau-Ponty’s Child Psychology
As much as death signals the end of the self, birth is just as mysterious. Both extend out to infinity and signal the brevity and contingency of our lives. As mysterious are those first few years of life that one does not have access to as an adult, I know I existed before my earliest memories. I know I interacted with others, I learned to walk and talk. I was willful from my parent’s tales.
William Pope.L: Reader Friendly
William Pope.L is famous for (among other things) carrying a business card that identifies him as “The Friendliest Black Artist in America.” It’s a clever gag because it makes itself true, in a way, every time it draws people closer. The card must be especially useful when Pope.L does business with people who dread Black men or Black artists.
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The commodification of land—that most basic of resources, the source of terrestrial life, and the foundation of human civilization—was essential for the development of capitalism. And from the early modern capitalist era until the present, it is the commodification of nature—with land bought (or obtained by other means) and sold, speculated upon, and used to produce human food, animal feed, fiber, or fuel and with crops selected based on climate and soil type but also on what would bring the greatest returns—that is the underlying basis of the dispossession of people from their lands.