NEW FOX, SAME HENHOUSE

Considering who is about to be in charge of administering LIBOR, the Obama Administration and U.S. regulators might want to pay close attention to how the process unfolds.

How Wall Street Cornered the Market
by Taking Control of the World’s
Most Important Financial Benchmark

Twitter: @jedmorey

There is a scene in the Godfather II when the Hyman Roth character, played by Lee Strasberg, admonishes Al Pacino’s Michael Corleone over the death of the character credited with building Las Vegas out of a “desert stopover for GIs.”

Roth fixes his steely gaze angrily on Corleone and says, “That kid’s name was Moe Greene and the city he invented was Las Vegas. And there isn’t even a plaque or a signpost or a statue of him in that town.”

The same could be said of Thomas Jasper, the architect of the biggest gambling venture ever invented: the swaps market.

In her book The Futures, Forbes writer Emily Lambert describes how in 1981 Salomon Brothers “pulled an investment banker named Thomas Jasper out of a cloistered office and set him up on Salomon’s trading floor with its loud, swearing, cigar-smoking men.” Jasper’s job was to figure out how to turn a new type of banking agreement called an interest rate “swap” into a contract that could be traded on an exchange much like a commodity. By 1987 Salomon’s new product was ready for market, and as Lambert notes, “by that spring, there were $35 billion worth of bond futures contracts open at the Chicago Board of Trade, and there were $1 trillion worth of outstanding swaps transactions.”

For Wall Street this was like graduating instantly from slots to craps.

Twenty years later, unregulated swaps would be at the heart of the global financial meltdown and the very banks responsible for creating them would be considered “too big to fail.” A lethal mixture of deregulation, manipulation and greed would transform swaps—a type of investment known as a “derivative” in which two parties exchange risk with one another in a negotiated agreement—into opaque mega investments that many traded but few understood.

Today, the global derivatives market is estimated to be somewhere around $1.2 quadrillion—more than 14 times larger than the world economy.

After the crash in 2008, the whole world became acquainted with these investments and some of the toxic assets they were based on. Yet since the crash, and despite the best attempts on the part of regulators to get their arms around the world of derivatives, surprisingly little has changed in the way they are packaged, sold and regulated.

By staying one step ahead of regulators, banks have continued to rake in historic profits. Bart Chilton, a commissioner at the Commodity Futures and Trading Commission (CFTC), is one of the U.S. regulators charged with implementing rules that would curb risky speculative behavior on the part of banks and protect American consumers. He expressed his irritation in an interview with the Press, saying, “The financial sector has made more profits every single quarter since the last quarter of 2008 than any sector of the economy by like a hundred billion dollars. So they crash the economy and still make more than anyone else.”

Chilton points to the aggressive bank lobby against regulators as one major impediment to reform. “They have fuel-injected litigation against regulators,” he laments. “There are ten financial sector lobbyists for every single member of the House and Senate.”

Despite this frustration, Chilton believes in the importance of speculators “in determining what the prices of things are, whether it’s a home mortgage or a gallon of milk.” Instead of squarely blaming the banks, he believes the question “is whether or not government has allowed too much leeway so that the markets have simply become a playground for speculators to roam and romp.”

One of the most important determinants in pricing everything from mortgages to the multi-trillion-dollar derivatives market is the London inter-bank offered rate, better known as LIBOR. Barclays, the British banking giant, thrust LIBOR into the headlines last year when it was discovered that it was among a handful of banks found to be manipulating daily rates for its own benefit. The scandal rocked the banking sector and sent European regulators searching for a replacement to LIBOR or, at the very least, a new third-party administrator.

Charting LIBOR’s new path was left to Martin Wheatley, who was head of the Financial Services Authority in the U.K. when the scandal broke. The recommendations, known as the Wheatley Review, included the formation of a panel charged with finding a new host for LIBOR that would restore confidence to the market and ensure transparency in the rate-setting process.

In a twist even Michael Corleone would appreciate, the panel chose Wall Street.

LIBOR: “A huge, hairy, honking deal.”
Beginning in 2008, rumors began to circulate in the financial world that several of the London banks were involved in influencing the daily posted LIBOR rates. During a 2012 House Financial Services Committee investigation into the matter, Treasury Secretary Timothy Geithner admitted to hearing the rumors while he served as head of the Federal Reserve Bank of New York. In his testimony, Geithner said he attempted to warn U.K. and U.S. regulators but assumed they would “take responsibility for fixing this.”

What the British and American governments knew and when they knew it unfortunately matters little at this juncture, as both have since levied financial penalties on the banks involved that amount to a slap on the wrist. What matters now is how rates are set going forward to ensure some degree of integrity. To understand how the Wheatley Review panel merely chose a new fox to guard the world’s financial henhouse, it’s important to understand how LIBOR is calculated and how much is riding on it.

LIBOR rates are determined on a daily basis. According to an Economist article that details the scandal, “The dollar rate is fixed each day by taking estimates from a panel, currently comprising 18 banks, of what they think they would have to pay to borrow if they needed money. The top four and bottom four estimates are then discarded, and LIBOR is the average of those left.”

Rates were submitted to the British Bankers Association (BBA), a nonprofit third-party administrator responsible for gathering and posting the data. In theory, the arms-length distance of a disinterested third party provided enough oversight and assurances to the market that rates were being determined fairly. Only the rates weren’t based upon actual market rates. Rather, they were estimates supplied by traders from Europe’s largest banks and therefore surprisingly susceptible to manipulation and, as it turns out, collusion.

Traders were caught periodically manipulating these estimates in order to gain a trading advantage in the market and maximize profit on recent transactions. Moreover, because LIBOR is an indication of the perceived health of a financial institution, bankers had an added incentive to suppress rates to artificially illustrate confidence among their colleagues. In short, everyone was in on it. Because of the global credit crunch, few banks were actually lending large sums to other banks since both sides had cheap and easy access to government dollars to provide market liquidity. This reality made LIBOR even less realistic.

Former Barclays president Bob Diamond initially responded to the scandal by admitting that while manipulation occurred, it didn’t happen “on the majority of days.” The Economist said Diamond’s response was “rather like an adulterer saying that he was faithful on most days.” Diamond subsequently resigned and so far three U.K. traders, Tom Hayes, Terry Farr and James Gilmour, were swept up in the LIBOR price-fixing scandal. According to the Financial Times, “Mr. Hayes, Mr. Farr and Mr. Gilmour are the only individuals to face U.K. criminal action to date in a global scandal that has seen three banks pay a combined $2.6bn in fines for attempting to manipulate interbank lending rates.”

Many bankers have distanced themselves from the importance of the scandal by calling it a victimless crime. Bart Chilton had a choice expletive for this attitude, and then added, “If it’s a home loan mortgage, or a small business loan or a credit card bill, if you buy an automobile or if you have a student loan, about everything you purchase on credit is impacted by LIBOR. It’s a huge, hairy, honking deal. If somebody says it’s a victimless crime, I bet you it’s a banker.”

Michael Greenberger, a professor at the University of Maryland, has been an outspoken critic of the way derivatives have been regulated for several years. (The Press first spoke with Greenberger for a 2008 cover story on the price manipulation of crude oil.) He weighed in on the Obama Administration’s reaction to the LIBOR price-fixing scandal saying, “This Justice Department is settling these LIBOR cases for what you and I would consider to be traffic tickets.”

Considering who is about to be in charge of administering LIBOR, the Obama Administration and U.S. regulators might want to pay close attention to how the process unfolds.

The Wheatley Review panel chose NYSE Euronext to step into the BBA’s role as administrator of LIBOR. On the surface, choosing the members of the New York Stock Exchange—one of the oldest and most trusted brand names in global finance—to oversee rate-setting seems like sound concept. Only the NYSE isn’t the clubby, self-governed body of individual members it once was. Today the exchange is a publicly traded, for-profit business whose shareholders include none other than the world’s biggest bank-holding companies.

“They’re moving from a disinterested nonprofit that couldn’t do the job,” exclaims Greenberger, “to an interested for-profit. There’ll be less transparency I bet in the way that rates are set.”

Chilton is equally apprehensive at the idea of the transition: “When there’s a profit motive, I think it’s always suspect. That’s why key benchmark rates like LIBOR in my view should be monitored or overseen by either a government entity, a quasi-government entity or a not-for-profit third party that doesn’t have a vested interest in what the rates should be.”

How LIBOR will be determined in the future is still being hashed out. A spokesperson for NYSE Euronext declined to answer the Press’ questions on the record, instead directing us to their standard press release. Most observers agree, however, that the days of aggregating estimates should be a thing of the past.

“These benchmarks need to be based upon actual trades,” says Chilton, “not a poll of what the money movers believe it should be.”
As far as the bankers’ claims that price-fixing was a victimless crime, there are several municipalities that beg to disagree. The cities of Baltimore and Philadelphia, among others, have filed suit against several banks claiming severe financial injury due to LIBOR manipulation. “That’s the hidden story of Detroit,” says Greenberger. “Detroit got clobbered in the swaps market.”

Greenberger also warns that “pensions are still in this market.” That’s a scary proposition considering the underlying risk and leverage that still exists off bank balance sheets.

Eric Sumberg, the spokesman for the New York State Common Retirement Fund—the nation’s third-largest pension—says State Comptroller Tom DiNapoli is watching the LIBOR transition closely.

“There have been some calls for moving from LIBOR’s banker’s poll to a rate-setting process that is more directly based on a broader universe of transactions and on actual market activity,” Sumberg wrote the Press in response to our inquiries. “Such a change over time could have the potential to improve transparency and integrity in rate-setting, but potential details of any such process have not yet emerged. We will continue to monitor developments in this area.”

Yet even when the proposed rules are made public and the administration of LIBOR has fully transitioned, NYSE Euronext will still only be the titular head of LIBOR. The real force behind the market is neither in London nor New York. Atlanta, home of the Intercontinental Exchange (ICE), is the new financial capital of the world.

ICE in his veins
Many of the toxic assets the public became aware of after the 2008 crash have worked their way through the system and been mostly written off by many of the largest financial institutions. Much of the credit for the industry’s stunning recovery belongs to the U.S. Federal Reserve’s low interest rate policy and aggressive liquidity practices known as quantitative easing. Much like the exuberance that preceded both the tech-bubble crash of 2000 and the mortgage-backed securities crash of 2008, a capital bubble established by the Federal Reserve is artificially propping up the market.

Hedge funds and bank holding companies fueled their own recovery by using deposits, borrowed federal funds and leverage to drive the equity market to historic highs and post speculative profits in the derivatives market. And while the financial sector was scrambling to regain its footing, regulators in Washington, D.C., attempted to keep pace by passing reforms to prevent the next global financial crisis should the Federal Reserve change course and remove liquidity from the system while simultaneously allowing interest rates to gradually climb.

In 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act in an effort to curb speculation and create greater oversight in the financial sector. It was a monumental legislative task that has proven even more difficult to translate into regulatory policy. Regulators at the Securities and Exchange Commission and the Commodity Futures Trading Commission have been working against bank lobbyists and the fact that the markets are global and U.S. regulatory authority only reaches so far.

To complicate matters further, banks have been busy changing the rules of engagement by shifting markets from classic bilateral swaps between parties to futures contracts, which are more standardized agreements traded on exchanges and therefore subject to greater regulatory scrutiny. In theory, exchange-traded derivatives will provide the transparency that regulators seek. In practice, however, this capital shift might simply move risky investments from the frying pan into the fire, as futures exchanges are global, meaning U.S. regulators must rely heavily on the voluntary cooperation of foreign exchanges.

The one person set to benefit from this capital shift is Jeffrey Sprecher, founding chairman of the ICE. Though not a household name outside of investment circles, Sprecher has emerged as the unlikely king of the global trading exchange industry. In little more than a decade, he helped transform the commodities market from a $10 billion market to more than a half a trillion dollars, with the ICE being a huge beneficiary.

The growth of trading on the ICE has been so explosive Sprecher is about to close on a deal to purchase the vaunted NYSE Euronext for $8.2 billion. The deal has already been approved by European regulators and awaits final approval in the U.S. Once completed, Sprecher will not only run the world’s most famous trading exchange; he will also extend his reach into the global derivatives market as the acquisition includes NYSE Liffe, one of the world’s largest derivatives trading desks.

Nathaniel Popper’s front-page story in the business section of The New York Times on Jan. 20, 2013 pulls the veil back on Sprecher, the man, and describes how he grew a little-known Southern exchange into a juggernaut capable of purchasing NYSE. As Popper himself writes, “It sounds preposterous.” Given the inevitable capital shift sparked by U.S. regulators, Popper also notes that “Wall Street firms will have to move trading in many opaque financial products to exchanges, and ICE is in a perfect position to profit.”
Popper’s piece brings forward a story that few people know. Most have no idea that trading exchanges are even for-profit businesses.

And while he does a worthy job demystifying the business of exchanges, he overlooks the planet-sized regulatory loopholes that allowed Sprecher to convert a small energy futures trading exchange into a global exchange that is buying the most famous trading platform on Earth.

To call Sprecher an opportunist would be technically accurate but cheap and intellectually dishonest. He understood the inevitability of electronic trading and the superior potential it held. But there’s a danger in spreading the accepted mythology of Jeff Sprecher and his plucky exchange. Behind his story is the familiar invisible hand of Wall Street.

“The reason Sprecher has been so successful is he’s really representing all the major ‘too big to fail’ banks,” says Greenberger. “And they want him to succeed, and therefore he is succeeding.”

Missing from the brief history of the ICE are the loopholes that gave it life and the ability to flourish beyond imagination. It was the oft-spoken of— but rarely understood—“Enron Loophole” that gave corporations the legal right to trade energy futures on exchanges such as the ICE even if the corporation itself was in the business of energy. The second loophole was a maneuver by the Bush Administration that granted the ICE foreign status as an exchange despite its being based in Atlanta. This initiated a massive shift of trading dollars, and influx of new ones, into the ICE for one reason: This singular move placed the ICE outside the purview of U.S. regulators like Chilton at the Commodities Futures and Trading Commission (CFTC). Essentially, corporations could now trade energy futures electronically through the ICE without oversight or disclosure.

Moreover, the mere fact that the founding investors of the ICE are some of the world’s largest bank-holding companies, Morgan Stanley and Goldman Sachs in particular, speaks to how little transparency there truly is.

This in no way takes away from Sprecher’s genius as a businessman. It simply illustrates how willfully ignorant we are to the business of Wall Street and therefore how frightfully far away we are from properly regulating it. Everything Sprecher has done is legal and ethical, to the extent there is an ethos on Wall Street. Where all of this hits home for the consumer is at places like the gas pump and the supermarket.

Now it’s easier to place the LIBOR issue in its proper context. Almost every “too big to fail” bank has a significant ownership stake in both the ICE and NYSE Euronext, soon to be one entity. This combined entity will also soon control LIBOR, the world’s largest rate-setting mechanism. In trader’s parlance, this would be considered the perfect “corner.”

But wait, there’s more. In the attempt to rein in speculation and manage risk in the marketplace, Dodd-Frank might have unintentionally become the gift that keeps on giving—to Sprecher.

The Future of Futures
The sheer size and complexity of the derivatives market overwhelm even the most interested parties—including Congress, regulators and bankers themselves—leaving average citizens utterly dumbfounded and sidelined. It’s little wonder. Banks that were too big to fail in 2008 are bigger today in 2013. The vast majority of the much-ballyhooed Dodd-Frank regulations have yet to take effect, and bank leverage is back at pre-crash levels.

A former trader who worked in both New York and London recently told me, “At the end of the day, this market is running on the [Federal Reserve]. Once they pull out it’s all over. Cheap money, loads of people making loads of money, but no lessons learned.”
Derivatives themselves aren’t nearly as difficult to understand as the markets they trade in. They are essentially risk transfer agreements between two parties, a way to hedge investments. The word ‘derivative’ refers to the fact that the agreement derives value from other investments: a bet as to how the original investment would perform. It’s helpful to once again employ the casino analogy.

Ten random players approach the roulette table and lay down $100 worth of chips on various numbers. Each individual gambler is making a bet, or an investment, collectively totaling $1,000.

Now imagine that another gambler watching the action on the roulette table calls his or her bookie and places a bet on the outcome of their total wagers when the wheel stops spinning. Having sized up the situation, the gambler predicts that overall this group will win and walk away with $1,100. But in order for this bet to be placed, someone else has to take the action and bet the group will lose $100, leaving them with $900. Before the ball drops on the number, the bookie connects the two outside gamblers and creates a new bet. This bet functions as the derivative investment because even though they’re not actually playing the game, they have a stake in the outcome.

In the real world of investing, the bookie is a trader and the gambler taking the action from the outside is a speculator. Sounds nefarious, but in reality, these transactions are essential to providing market stability.

“If we didn’t have speculators,” says Chilton, the CFTC commissioner, “consumers would pay disproportionate prices.”
There are three classic types of derivatives, all of which Chilton and the CFTC have been trying to rein in well before the crash introduced the world to this type of investment. All three involve counterparties, which trade these investments either directly or through exchanges.

But the differences between the three types of derivatives are diminishing. The first type of derivative is commonly referred to as a “swap.” This is where two parties exchange risk with one another in a negotiated agreement. In the United States, these have traditionally been deals between banks that fall under the purview of the SEC. The other two types of derivatives, futures and cleared derivatives, are negotiated similarly but must be listed and cleared on exchanges.

The CFTC and other regulators have long argued that these investments are similar in nature and should therefore be consistently regulated with complete transparency. With the exception of swaps, the investment created at Salomon Brothers in the 1980s, this was historically the case. But despite the similarity between swaps and other types of cleared derivatives, regulators allowed swaps to be treated as banking instruments that were held “off balance sheet.” Over the next two decades a flurry of deregulation and the growth of global trading reduced the transparency of derivatives trading and increased the size of the market dramatically.

The Dodd-Frank regulations were designed to put an end to this practice by requiring anyone who deals in large amounts of swaps to register as a swaps dealer and clear their trades through an exchange. Yet CNBC’s John Carney believes the new swaps regulations have already created a “flight to futures” from swaps, an unintended consequence of Dodd-Frank that will end up with a “world with less collateral and less capital, less transparency, less investor protection, more concentration of risk, and a huge unanticipated market transformation.”

In other words, the ICE will likely be the greatest beneficiary of Dodd-Frank.

Nevertheless, Chilton believes that there will still be “trillions, tens of trillions if not hundreds of trillions of swaps that will be traded in the U.S. and worldwide that will be regulated and have the light of day cast upon them.”

For his part, Greenberger agrees U.S. regulators are beginning to get a handle on the markets but thinks inordinate risk is still present in the market. He calls the original Dodd-Frank a “Rube Goldberg system” that was “prospective in nature. There’s still trillions of dollars of swaps that are operating in an unregulated environment.”

The world will have to hold its breath until these unregulated swaps run their course and settle in the global marketplace. Intelligent reforms such as margin and capital requirements, position limits and cross-border coordination with respect to regulation are indeed around the corner. These reforms essentially mandate that everyone involved in trading these agreements has enough money to cover potential losses and plays by the same set of rules.

“Ultimately we will have position limits,” Chilton believes. “I would be surprised if they weren’t in place by the end of the year.”
Greenberger also believes the world will begin to recognize universal standards, saying: “The CFTC has made it clear that for futures the foreign exchanges have to comply with U.S. rules.”

Even still, he worries that “this international guidance is a roadmap for banks to avoid Dodd Frank. Just trade in foreign subsidiaries.”
Chilton takes a more sanguine view on immediate concerns such as transparency, working with his European counterparts and the future of LIBOR, but he worries more about the things he cannot see.

“I feel like we’re going to get things done on capital requirements and on cross-border stuff so that other regulators come to where we are,” says Chilton. “But there’s a bunch of new things that are around the corner that we can’t see.”

He cites high-speed trading computers that he calls “cheetah traders” as an example of the unknown. “The cheetah traders, the high-frequency traders, are proliferating. They’re 30 to 50 percent of markets on average but during feeding frenzy time, cheetahs can be up to 70 or 80 percent of the market. There’s not one single word in the Dodd Frank legislation that deals with high-frequency trading. Not one word.”

Once again, pulling the strings behind this unseen phenomenon is Sprecher, the man responsible for making high-frequency trading what it is today.

Thomas Jasper will likely never get that plaque for inventing the investment world’s biggest game of chance. On a positive note, however, he’s alive, well and wealthy, unlike Moe Greene, who infamously took a bullet through the eye. But there are better-than-even odds that a statue of Jeff Sprecher will someday be erected on Wall Street. Or, at the very least, downtown Atlanta.

#OWS: America’s Id

Those of us who believe America has been co-opted by greed and fallen victim to radical nihilism view the agitation of the 99% as the manifestation of our nation’s morality, if such a thing can possibly exist.

The police barricaded the corner of William and Pine streets in lower Manhattan, preventing the tributary of protestors who had broken off from the main throng from doubling back toward Wall Street. Cordoned off, several chose to sit in the street and accept incarceration in the name of civil disobedience.

It’s 9 a.m. on Nov. 17, the International Day of Action for the Occupy Wall Street movement. The arrests are just beginning.

I’m aware of the time because, for a moment, everything is eerily silent but for the sound of the bell from Our Lady of Victory Church tolling above us. The din of the helicopters overhead and the shouts of “Shame!” as protestors are dragged into the nearby NYPD van fade away while the bell rings for what seems like an eternity.

As the last chime echoes in the street, the cacophony returns as though someone is controlling the volume button to the soundtrack of dissent. Gradually, my eyes return to the scene unfolding in front of the church door, which bears a quote from Cardinal Spellman. It reads: “This Holy Shrine is dedicated to Our Lady of Victory in Thanksgiving for Victory won by our valiant dead, our soldier’s blood, our Country’s tears, shed to defend men’s rights and win back men’s hearts to God.”

How strange that a church, born during World War II and forged in blood, should serve as the backdrop for the nation’s symbolic struggle against the excesses of the neighborhood it calls home. America’s new Civil War is spilling onto the streets of cities throughout the country; and here, in this moment, it is raging beneath a monument to our spiritual and temperate selves.

Over the past few years, I have made no secret of my contempt for Wall Street and the insidious corporate interests that run this nation. Admiration for the Occupy Wall Street movement has gushed from my fingertips and poured onto the page, as I am perpetually amazed at the breadth and fervor of the burgeoning revolution. Being here, seeing it evolve and take shape so quickly, so dramatically, has influenced every corner of my mind. Those of us who believe America has been co-opted by greed and fallen victim to radical nihilism view the agitation of the 99% as the manifestation of our nation’s morality, if such a thing can possibly exist.

The question of morality is central to America’s struggle. We perceive ourselves as a good and righteous nation, purveyors of liberty. At times this has been the case. Often, however, our actions belie this view of ourselves, particularly during imperialistic periods of expansion. To wit, we spent the better part of the 19th century expanding our empire to its natural boundaries, squashing and annihilating the indigenous people of the continent every step of the way. Then we deified the likes of Andrew Jackson by imprinting his likeness on our currency, thus bestowing him with the greatest honor of a capitalist society. These are not the actions of a moral nation, but victories such as these in the name of Manifest Destiny have always served to rationalize our pursuit of omnipotence.

The first half of the 20th century held more promise. The country as we know it today was nearly assembled and America was finally recognized as a dominant player on the world stage. Our financial and military ascension gave weight to the Monroe Doctrine and the Roosevelt Corollary, which established complete hegemony in our hemisphere. Yet despite Teddy Roosevelt’s bellicose nature and hawkish views, his and most subsequent administrations tended toward isolationism. Between the great wars, which were seen as moral imperatives, there was work to be done at home. And during this time, America hammered out a legal, industrial and economic infrastructure that fully recognized our potential as a nation.

Internally, this approach also allowed us to focus on social issues such as equal pay and civil rights in the latter half of the century. Unfortunately, while the nation toiled away at crafting a system that recognized the rights of all of its citizens, we began behaving badly in the rest of the world. At precisely the halfway mark of the 20th century we became embroiled in the fighting in Korea. This conflict and the conjuring of bogeymen in far-off lands presaged an era of unprecedented immorality when we would conduct costly battles against phantom enemies. More precisely, it marked the beginning of the Military Industrial Complex.

In his book A People’s History of the United States Howard Zinn describes the dawn of this era as “an old lesson learned by governments: that war solves problems of control. Charles E. Wilson, the president of General Electric Corporation, was so happy about the wartime situation that he suggested a continuing alliance between business and the military for a permanent war economy.” Two million Koreans and 36,000 Americans perished in the formation of our newfound ideology, which continued into Vietnam and, most recently, in Iraq and Afghanistan. America has exported fear and death in the name of democracy but in the actual pursuit of oil and natural resources.

But our politicians did not go it alone. No one person owns these deeds. Over the past few decades the interests of Christian Fundamentalists, Wall Street tycoons, the ruling class and individuals of enormous wealth have gradually coalesced in the quest for a new world order. They are the 1%. They are the reason I’m standing almost nose-to-nose with a cop in riot gear, his club drawn and his eyes fixed on me as I chronicle the events by the church.

There are those who decry Occupy Wall Street as unpatriotic, misguided, or worse. These are understandable reactions to an uncomfortable reality.  The reality is that OWS is more than a movement to restore sanity to the financial markets and equality to our economy. OWS is a cry for help from America’s id. It is the realization that we have strayed not only from the optimistic perception of ourselves but also from what we strive to be as a country.

Ultimately this is a test of our commitment to the First Amendment. But it isn’t simply about free speech or the right to peaceably assemble. This is about the right to “petition the Government for a redress of grievances.” As a free, democratic society this is the penultimate failsafe, the last opportunity before total revolutionary collapse.

So as the Occupiers continue to refine their message, our political leaders would be wise to listen carefully. This is not a dress rehearsal. This is a very real battle; perhaps the first battle since World War II worthy of the inscription at Our Lady of Victory.

9/11 x 10

If these words are abrasive, then perhaps you are still asleep, immune to the truth that there are those who have capitalized upon America’s grief by plunging our youth into two unforgivable wars and plundering our coffers with misguided economic policies that fattened the wallets of a pitiful few at the expense of the trusting many.

The “Baby Boomer” generation was coming of age when President John F. Kennedy was gunned down on Nov. 22, 1963. It was the first defining moment of a generation that would bear witness to a series of culture-shifting events over the next decade; events that included the Vietnam War and the assassinations of other iconic figures such as Malcom X, Martin Luther King Jr. and Robert Kennedy. Beginning with that fateful moment in Dallas until the final withdrawal of American troops from Vietnam 10 years later, America would never be the same.

Today, as we reflect upon the decade that transpired since the seminal moment of the new millennium, those of us who belong to the generations that followed the Baby Boomers find ourselves in a state of malaise and slow-moving transformation, unsure of our place in history. The  Sept. 11, 2001 terrorist attacks should have been our awakening. Instead, it is as though we were collectively numbed and placed in suspended animation. Our grief is still palpable but our actions have been muted and confused—our hopeful innocence resting silently beneath the rubble.

This week we will be inundated with remembrances of that horrible day with many waxing poetic about America coming together and paying homage to our unity. This is not one of those essays. For me, 9/11 is when it all fell apart. The sight of it, the smell of it… It’s all right there. The sick feeling in my gut never left—didn’t even dissipate. Tragically, the ensuing decade haunts me now as much as the day itself.

Hopefully, Sept. 12, 2011 we can begin putting the pieces back together again. Recall, however, how tumultuous the healing process can be as the decade that followed the end of the Vietnam War was rife with unrest and discontent; an unfortunate harbinger for the decade ahead.

From JFK’s assassination until the withdrawal from Vietnam, the “Hippies” of the Sixties and Seventies were on the right side of liberty. They were at the forefront of the Civil Rights Movement. They protested the war and railed against greed and corruption. They challenged conventional wisdom and raged against the machine. They had no children, no responsibilities—only outrage and determination. In defining themselves they redefined America and over time naturally found themselves in charge.

And then it happened.

Over the next few decades the revolutionaries came to embody the status quo. The generation that fought racism, unjust wars and corruption began suffering from selective amnesia. After years of excess and living high on the hog, the Baby Boomers now control the world’s purse strings, and they’ll do anything not to let go.

When 9/11 overwhelmed our nation, we looked to them. Instead of offering guidance they led us to war. Twice. They assuaged their own guilt over the mistreatment of soldiers returning from Vietnam by teaching us to revere service during wartime. Yet they were too cowardly to allow photographs of those who returned home in pine boxes. They called those who spoke out against war “unpatriotic” even though it was this freedom that defined their youth. They famously told us to spend, not save, even though the “Greatest Generation” saved enough to support them after World War II. All we had to do was stay vigilant. Say something if we saw something. Shut our mouths and fall in line.

And since Wall Street was attacked it too became sacrosanct. Only it wasn’t Wall Street that died that day. It was people—people who deserve more than the resurgence of unrestrained capitalism and who are worthy of being remembered for all that liberty truly stands for. Like helping our fellow citizens in their time of need—not vilifying the poor while lining the pockets of the rich; or establishing just and equitable laws that protect every American—not just those who can afford to be protected.

If these words are abrasive, then perhaps you are still asleep, immune to the truth that there are those who have capitalized upon America’s grief by plunging our youth into two unforgivable wars and plundering our coffers with misguided economic policies that fattened the wallets of a pitiful few at the expense of the trusting many. Their triumphant legacy? Our food is unrecognizable, the air is poisonous, and our jobs are overseas. America is fat, polluted and broke. After a solemn decade of reflection upon the chicanery of those who promised to defend our freedom it is time to speak out on behalf of those who are asleep but desirous of truth and those who are awake but unsure of how to speak it.

To be clear, I am not defending the inaction of my generation—the so-called Gen Xers—merely proffering a reasoned explanation of our latent response. When the Baby Boomer generation was jolted from the post-WWII cocoon in 1963, they were young and restless. Their enemies were clear, defined and from within. Racism was overt and ugly. The draft was omnipresent. The Vietnam War was televised, and someone you knew was either there or going. When 9/11 came, our enemies were nebulous and far away. They attacked innocent people and our way of life, instilled fear in our hearts.

Because the enemy wasn’t from within, we had no choice but to heed the call of our leaders who assured us our path was righteous. Only it wasn’t. We began on the right foot by giving chase to our enemy, sealing them off and punishing their leaders. Then, with the wind of public sentiment at their backs, our leaders pulled off an imperialist coup in a blood-for-oil campaign, squandering trillions of dollars and sacrificing thousands of American lives and tens of thousands more Iraqis and Afghanis.

Today, the charlatans in government who call themselves leaders are turning Americans against one another. They have ratcheted up the partisan dialogue to such an extreme many Americans believe that unemployment benefits, infrastructure spending and a health care bill that doesn’t take effect until 2014 are to blame for the failing economy instead of two decade-long wars, historic tax breaks for wealthy Americans and the destruction of oversight in the financial markets. All of this after George W. Bush decided to liquidate the nation’s entire surplus upon taking office.

The same Baby Boomers who fought against this type of irresponsible government have borrowed and refined the playbook in order to protect themselves. Their fear of growing old and losing what they have accumulated, ill-gotten or otherwise, is so acute they are actually trying to tell us that poor people and funding for Sesame Street are the reasons Social Security and Medicare might not exist for us.

So, why have subsequent generations been unable to coalesce as Boomers did when revolution beckoned them? The answer to this is far simpler than the remedy. Those in my generation lost the chance to capture the spirit of revolution by looking the other way for a decade. We bought homes, started families and tried to return to ordinary lives during otherwise extraordinary times. We slept.

Younger generations have substituted Haight-Ashbury with Facebook and protests with Twitter. In their frenetically hyper-connected lives they are ironically disconnected digital beings living a purgatorial existence that knows neither revolution nor responsibility. In fairness, how exactly would one protest genetically modified foods, the derivatives market or the carried interest tax loophole?

America’s youngest citizens have a long and troubled road ahead littered with greed, incompetence and willful ignorance. It is on them to connect beyond the invisible walls of social media and discover the revolutionary spirit that defined the Boomers, but eluded the Xers, and overcome the sordid legacy we jointly bequeath to them. In doing so, they will truly honor the memory of the people who perished on 9/11, rise above those who would do us harm and piece together what remains of our lost decade.

The Dow of Poo

Of all the opiate-like recovery indicators, it’s the Dow Jones Industrial Average that offers the greatest high when injected into the American psyche and, in this case, keeps the bubble inflated.

 

Tao of PoohPart III of The Season of Our Disconnect

Benjamin Graham and David Dodd published a book titled Security Analysis in 1934 that would become a staple financial resource for the investment industry. In the foreword of the sixth edition the great Warren Buffet himself described their book as a “roadmap for investing that I have now been following for 57 years.” With the stock market crash of 1929—a result of the excesses during the preceding decade—fully in the authors’ rearview mirror, they described the collapse in stark, honest light:

“The relaxation of investment bankers’ standards in the late 1920s, and their use of ingenious means to enlarge their compensation, had unwholesome repercussions in the field of corporate management. But it may not be denied that devious and questionable means were frequently employed to secure these large bonuses to the management without full disclosure of their extent to the stockholders.”

The sound investment philosophy behind Security Analysis followed assiduously by the old Oracle of Omaha and tens of thousands of investors who came before him was established as a reaction to the corrupt practices of the Roaring Twenties. Here we are again, lo these many decades later, none the wiser. Taxpayers have been picked up by the ankles and shaken furiously for any remaining change, having been duped by the same Wall Street con artists who employed “devious and questionable means” as described above. Only this time, less than a century later, the bankers weren’t doing swan dives out their windows because they did learn one invaluable lesson from the past: If you’re going to bilk the system, make sure when it all goes bad that you control the release valve on the money flow by installing bankers inside the tank.

While most of America didn’t know what was going on behind the scenes of the recent financial crisis, people like Buffet sure did. Though no longer the wealthiest person in the world (he’s the third), Buffet has maintained his reputation as the preeminent investor on the planet for quite some time in a folksy and unassuming way. He’s the Wilford Brimley of investing, giving us a wink and telling us to eat our oatmeal and buy IBM. But his $5 billion bailout (what else can you call it?) of Goldman Sucks in 2008 shows that the old codger knows a good bet when he sees one, even if the company is rolling with loaded dice. (He got his money back, with a handsome interest payment, and retained warrants on $5 billion more of Goldman stock at what looks to be a favorable strike price.) From a bird’s-eye view, here was the con in a nutshell: Goldman CEO Lloyd Blankfein and company fleece the government for gobs of free money during the bailout—with people like Buffet backstopping their liquidity—to buy up the shitty investment packages they created, sold to their investors, and then bet against themselves.

That part is history. The ensuing game of smoke and mirrors—to restore sanity and transparency into the shit show they created—was to get the government to pony up billions more for their coffers at no cost (and no risk) so they could “invest” this money back into the economy.

Only it never went back into the real economy, instead weaving its way through the banking backchannels where free money flowed to investment banks, who gave it to hedge funds, who invested in government-backed securities, mega-corporations and, yes, even the same kooky “off-balance sheet” investments like swaps and derivatives being traded on offshore exchanges none of us can track. If you failed to spot the point where it actually came back to the taxpayers or funneled through the economy, you’re not crazy because it never happened.

Buffet may have built the most successful investment enterprise in history with Berkshire Hathaway by following the sound advice of people like Graham and Dodd, but it probably didn’t hurt to know that out of all the players in the multiple-bailout fiascos beginning in 2008, Goldman Sucks would wind up on top since nearly everyone involved in engineering the bailouts were former Goldman Suckers or beholden to them. Now we’re stuck in a bizarre carnival mirror economy with high unemployment, low consumer confidence, dwindling savings, and a global debt crisis while we’re being told at the same time the country is in a recovery, Wall Street firms and major corporations are posting incredible profits and the Dow Jones Industrial Average is trading above 12,000. Quite the disconnect, indeed.

It’s called a bubble, and it’s the last one left.

When I asked my friend Peter Klein, a financial advisor on Long Island, how he would characterize our current situation, he referred to it as “the stimulus bubble.” Now the question isn’t whether the bubble will pop, but when. And it’s people like Lloyd Blankfein that are holding the pin. But like every bubble, the average person never fully realizes when he or she is floating inside of it, particularly when receiving mixed messages like the ones above. But of all the opiate-like recovery indicators, it’s the Dow Jones Industrial Average that offers the greatest high when injected into the American psyche and, in this case, keeps the bubble inflated. As average citizens we tend to look at the Dow as the answer to the eternal Ed Koch question: “How am I doing?” Every top-of-the-hour market report on radio and television begins with a Wall Street update tethered to the performance of this antiquated measure of economic health.

For his part, Peter takes little comfort in the Dow’s astounding recovery from its low of around 6,600 in 2009, preferring to monitor indices such as the S&P 500 or the Russell 2000, which have a wider breadth and reach. The Dow, after all, is only comprised of 30 companies with familiar names like Coca-Cola, WalMart and General Electric, which give the illusion that these are somehow the type of corporations our economy is based on. It’s not that these are bad companies or even that the Dow is a lousy index, it’s just that they’re no longer relevant in today’s economy as an indicator of performance. Furthermore, it doesn’t claim to be. The problem is that the Dow is financial pabulum being fed to us by the media and Wall Street alike.

Because the Dow has traditionally been the criterion by which the average person gauges America’s overall economic health, there is a tendency to believe in its healing power. And to an extent it does make a little sense. After all, stocks don’t invest in themselves, right? The money has to come from somewhere. So, if the trading volume is still high, and our major corporations are swimming in investment cash, the logical question is: “Where is the money coming from?” When I asked Peter about this, he didn’t hesitate to respond: “Hedge funds are more or less controlling daily market flows.”

This is an astounding revelation, considering hedge funds didn’t even exist 20 years ago. But today, they are the henchmen that front the investment bank cartel because unlike mutual funds that dominated institutional trading before the rise of the hedge fund, these funds can be leveraged. So not only have the investment banks like Goldman seeded these funds with investment money, they provided them with tremendous loans comprised of…you guessed it… taxpayer money. All it takes is a little reverse engineering and logic to figure out why the Dow is still riding the wave while most Americans are out to sea believing a life raft is coming at any moment. Essentially, we’ve been had, because the only safe harbor is what writer Matt Taibbi sublimely refers to as the Grifter Archipelago—islands of entities teeming with corporate raiders accountable to no one and in control of everyone. It’s a beautiful thing, really, if you’re one of them.

 

The Season of Our Disconnect

The only thing predictable these days is the unpredictability of life on the planet. It’s one part Yogi Berra and two parts Alice in Wonderland as everyone tries to make sense of the world that is using lessons learned from the world that was.

First, a correction. In last week’s column “Whither Reform?” I mistakenly suggested that New York State’s proposed 2-percent property tax cap regulation would apply solely to the amount of the rate increase and not the assessment portion of a property tax bill. This would have allowed local municipalities to skirt the cap and artificially raise the total property levy. That is not the case. The proposed cap applies to the total combined rate and assessment levy. My apologies to the seven people who read a column about the property tax cap on a sunny holiday weekend.

The underlying theme of the column remains unchanged, however. The property tax cap is welcome relief, but a symptomatic and shortsighted one should the government not take care to fix the structural imbalances in the budget that presage the need to increase taxes to begin with. To overcome the existing budget crisis in Nassau County and the one that looms in Suffolk, we must embark on an extended period of construction and redevelopment growth to expand the tax base while deconstructing and redefining the most dramatic and expansive expenditures such as public employee pensions and Medicaid. Absent massive, collaborative efforts to pursue both measures a property tax cap has the potential to be devastating to local municipalities that will be forced to increase their  indebtedness to fund state mandates and obligations, or find more creative ways to tack on hidden taxes and fees at the consumer and recreational levels.

There is much yet to be discussed about the impending budget disasters on the Island and even more on a national scale, but after a long and glorious weekend divorced from bad news and the economic realities at hand I would like to offer a handful of vignettes–loose variations on the theme I like to call “The Great Disconnect.”

Housing Prices
This week Germany agreed to offer further assistance to help control the debt crisis in Greece. Meanwhile, the United States reported that housing prices fell sharply again in the first quarter, one of the strongest indications that the so-called recovery is still on the ropes. Equity traders on Wall Street were nonplussed by the latter news, opting instead to push the Dow Jones Industrial Average north on the news that Greece won’t be adding to its already impressive collection of ruins.

Gas Prices
The good news in Greece was also somehow good news for commodities traders who pushed crude oil prices up to $102 a barrel. My only guess here is that they misunderstood the news and thought someone said, “grease.” That’s about as logical. Elsewhere in the United States, human beings are getting cozy with one another and participating in a phenomenon known as “slugging.” A CNN report showed long lines of commuters waiting to hitch free rides into urban areas so passengers can avoid high gas costs and the drivers can take advantage of the HOV lanes. Despite the mounting evidence of corruption in the markets and the manipulation of oil and gas prices by Wall Street banks and Big Oil, we accept what we’re told at face value and line up like Russians waiting for toilet paper in the ’80s. We are sheep.

GOP field
The GOP field of potential presidential candidates is getting stranger by the minute. Well, strange to some perhaps. I prefer to think of them as a merry band of satirical awesomeness. 2012 is going to rock. Of course, before we get there, we have an exciting local year ahead of us. At the top of the list is the recent news that Suffolk County Treasurer Angie Carpenter, a Republican who was treated like the last kid chosen for kickball on the playground, will be taking on Babylon Town Supervisor Steve Bellone, the Democrats’ candidate, in the Suffolk County executive’s race. Nationally and locally the GOP really knows how to take advantage of the mid-term momentum they just gained. Sigh.

 The Great Disconnect inherent in the above topics and several more will be the prevailing theme of my summer columns. The only thing predictable these days is the unpredictability of life on the planet. It’s one part Yogi Berra and two parts Alice in Wonderland as everyone tries to make sense of the world that is using lessons learned from the world that was. As the lazy days of summer roll on, we’ll pop open a frosty beverage or three together and explore the season of our disconnect.

Capitalism and Regulation Are Not Mutually Exclusive

Deregulation became the mantra of free market capitalists who view all government intervention into the markets as a complete affront to our democratic principles, as though the two are somehow connected. It sounded sexy and even seemed to be working for a while until our speculative chickens came home to roost and laid rotten eggs in all of our coops.

John Boehner NY Economic Club
House Speaker John Boehner speaking in New York

Osama bin Laden’s body has barely come to rest on the ocean floor and the Republicans are back in attack mode against the Obama administration. Speaker of the House John Boehner is taking his spending-cut crusade on parade again in the run-up to the vote to raise the nation’s debt ceiling. In doing so the Ohio Republican is not only acquiescing to the clamorous Tea Party faction of the GOP but to the special interests that define their politics.

The debt ceiling debate is the ultimate diversion from the more genuine debate that should be taking place in Congress. This is not to say it is without merit. But like so many political disputes, our politicians are intent on examining the symptoms of a crisis instead of deconstructing the root causes. The fact is our enormous national debt is a result of fighting two costly, protracted wars abroad and bailing out hooligans on Wall Street who engineered the greatest heist in American history. The problem is the GOP wants to fix everything else they deem to be wrong with the system without addressing these two key components of our indebtedness. 

Boehner and company are continuing the charade begun when Ronald Reagan was king and Alan Greenspan was God. Deregulation became the mantra of free market capitalists who view all government intervention into the markets as a complete affront to our democratic principles, as though the two are somehow connected. It sounded sexy and even seemed to be working for a while until our speculative chickens came home to roost and laid rotten eggs in all of our coops.

In a speech earlier this week to the Economic Club of New York, Boehner returned to the key conservative talking points, excoriating Washington for pandering to banks that are too big to fail without addressing the deregulatory fever in the Beltway that created this situation. He criticizes instead the government’s bailout response, saying that our “debt mostly borrowed from foreign investors caused a further erosion in the economic confidence of America and increased uncertainty for millions of private sector job creators.” If you asked these so-called job creators why they aren’t adding more people to the payroll or taking on more capital projects, I highly doubt the resounding answer would be America’s debt. Under President Reagan our debt skyrocketed but these same job creators doubled-down and invested in America, making the logical question: Why not now? Boehner went on to claim that the “massive borrowing and spending by the Treasury Department crowded out private investment by American business of all sizes.” That’s funny. I could have sworn that by keeping interest rates at practically zero, business owners would have been encouraged to borrow and invest in their companies with alacrity. 

This is where the GOP message gets into funky territory. You would be hard-pressed to find an economist who would deny that pumping bailout funds through the financial sector prevented a total collapse of our economic system. Everyone won in the short run. But because Congress was too cowardly to fix the structural regulatory issues in the banking industry, the big winner overall was Wall Street. The bailout allowed the banks to partake in riskless arbitrage (borrowing money at no cost and investing it in guaranteed government bonds for example) and bypass the private sector and individuals in desperate need of lending support. It’s one of the primary reasons the Dow Jones Industrial Average continues to rise despite a still-flagging economy; the dollars are flowing at the top with very little pulsing through the rest of the economy. But the concept of arbitrage is largely lost on Americans and our politicians are reluctant to talk about it in a meaningful way, instead choosing to focus on the national debt.

What’s worse is that the banks have presumably used a good portion of this money to invest in opaque investments that have artificially created crises in the agriculture and energy sectors. I say “presumably” because no one can really be sure where some of this money is being invested because the regulatory environment is still so broken and corrupt that the funds are impossible to track directly. It’s the pricing and behavior of these markets that gives them away. Energy supply is at an all-time high, demand is still perilously low yet the markets are soaring because unknown companies are pouring billions of dollars through small commodities exchanges and wildly impacting the prices of these investments. This phenomenon translates directly into high gasoline prices and rising food costs, thereby suppressing the recovery and obliterating household savings. Here again Boehner changes the subject, suggesting that the Obama administration is somehow keeping “energy resources under lock and key.” Further, he accuses Democrats in Congress of “creating more uncertainty for those who create American jobs” by raising “the specter of higher taxes.” Another direct attempt to divert the conversation from reality. After all, didn’t we just extend the Bush-era tax cuts? And weren’t these the same tax cuts that were in place prior to and during the economic meltdown?

This year Forbes added 214 new billionaires to its list of the world’s richest people. That’s up from 97 new billionaires last year. In perusing the list of the richest Americans, it’s interesting to note where the wealth of those whom Boehner touts as “job creators” is derived. Hedge funds, investing, oil, pipelines, retail, chemicals and pharmaceuticals are the industries that dominate the roster. Most of these companies employ relatively few people compared to the billionaire industrialists of old. No infrastructure companies, few manufacturing companies, and a handful of high-tech companies appear on this list. And of the ones that do appear, most of them manufacture overseas. I guess in Boehner’s world a job created in Bangalore is equal to one created in Scranton. What many of these industries do have in common is that they represent the vast majority of campaign contributors to people like John Boehner.

So it begs the question: Who is Boehner trying to protect? In his New York address he repeatedly refers to the “arrogance of Washington” even though that’s where he’s been working since 1990. Arrogance is not trying to pay for past transgressions by taxing those who devastated the economy. Arrogance is cutting the government’s primary funding source via an extension of the Bush-era tax cuts and attacking entitlement programs instead of the regulatory issues that brought down America’s entire economic system.

Where the White House fails is by indulging in debates over the debt ceiling and releasing oil reserves while bickering over entitlements. Our economy cannot, will not, improve until our elected officials have the courage to restore sanity to the marketplace by re-implementing the regulations that properly governed debt, equity and commodities trading for decades.

In recent testimony to the Congressional Oversight Panel on the impact of the TARP, Columbia University professor and former Clinton advisor and chief economist of the World Bank Joseph Stiglitz argued that “we have not repaired our banking system, and indeed, with the enhanced moral hazard and concentration in the financial sector, the economy remains very much at risk.”

Joseph Stiglitz

These arguments are nothing new to the Nobel Prize-winning economist, who in 2008 warned of the enduring negative consequences of deregulation. At a hearing held back then by the House Committee on Financial Services, Stiglitz invoked Adam Smith, saying that “even he recognized that unregulated markets will try to restrict competition, and without strong competition markets will not be efficient.” One of Stiglitz’s solutions to this is to restore transparency to investments and the markets themselves by restricting “banks’ dealing with criminals, unregulated and non-transparent hedge funds, and off-shore banks that do not conform to regulatory and accounting standard of our highly regulation financial entities.” For emphasis, he notes that “we have shown that we can do this when we want, when terrorism is the issue.”

He’s right in every aspect. This is economic terrorism that Americans are unwittingly enabling by allowing politicians in Washington to skirt the issue of financial reform and to skip tighter regulations in favor of continuing tax breaks, cutting spending on infrastructure and demonizing programs that provide security for the sick, the aged and the unemployed.

Yet no matter how often people of Stiglitz’s ilk provide testimony, no one on these committees either understands or cares what is being offered. I suppose that just because we call them “hearings” doesn’t mean anyone is necessarily listening.

Why Is Oil So High? Crude: Part II

Former Morgan CEO John Mack and His Love Pump

Greetings all. With oil prices rising and likely topping $100 per barrel in the New Year, I revisited a favorite subject in the Long Island Press this week. This week’s Off The Reservation is an update to a cover story penned two years ago about the oil speculation scandal in 2008 that artificially drove prices through the roof.

Returning to the subject, I found that not much had changed. A couple of the players, perhaps, but the speculation scheme is alive and well. So when you read projections from “industry analysts” who see crude oil prices rising due to a weak dollar and surging demand, you’ll know the real deal. Don’t get me wrong, these are key drivers of crude oil but are far from the entire picture. There are those who believe that pricing for the last several years is anywhere between 60% and 70% as a result of speculation; the remainder is due to market forces.

So when you’re at the pump cursing the Saudi’s, China, Obama, the Fed – whatever your poison – the biggest ass f#$*ing is still coming from Wall Street.