Links May Day 2010

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Can Microbes Save The Gulf Beaches? The Challenges Are Myriad ScienceInsider

The real reason why Steve Jobs hates Flash Charlie’s Diary

State Department Flies Mercenary Air Force Over Pakistan Wired

The latest national security threat: obesity John Shalikashvili and Hugh Shelton, Washington Post

Goldman Sachs Loses Room to Maneuver After Public Testimony Bloomberg. This part was particularly interesting:

While locking in testimony this early in the litigation process posed risks, it was part of Goldman Sachs’s strategy, according to a person with direct knowledge of the firm’s defense. Tourre’s public statements make it less likely that he could change his story later and negotiate a lesser penalty with the SEC in return for information that could be damaging to the firm or other executives, the person said.

As Recession Ebbs, Many Still See Gloom Floyd Norris, New York Times

Lessons for the Greek crisis from Philip II of Spain Alan Beattie, Financial Times

U.S. Role in Mortgage Market Grows Even Larger Wall Street Journal. Eeek!

Salaries are astonishingly high, says RBS chairman Independent

GDP Growth: It’s the Inventories Stupid! Dean Baker

Bank Bill Attracts Populist Amendments Wall Street Journal. Note this part:

Obama administration officials have declined to weigh in on any specific amendments, with one exception: a move by Sen. Bernie Sanders (I., Vt.) to give the government more power to audit certain operations at the Federal Reserve. Fed and administration officials have signaled they would fight to stop it at all costs. Mr. Sanders has more than a dozen co-sponsors.

“I can’t predict, but I think we’ve got a good chance to pass it,” Mr. Sanders said.

Not surprisingly, we see this: Fed official hits at ‘political meddling’ in reform bill Financial Times. We’ve pointed out the Fed compromised its independence a long time ago (see here and here).

So, yuan to fight about it? Joel P. Trachtman VoxEU

Potential Derivative Loophole #1: Trading Facility Mike Konczal

‘We are wall Street…we are smarter and more vicious than [dinosaurs]‘ FT Alphaville. This has been making the rounds…

Bob Rubin Just Wants to Be Cuddled Iris Mack, Huffington Post. Today’s gotta read.

Antidote du jour:

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    1. Kevin de Bruxelles

      It seems that article is offering people to trade in their current image of Bob Rubin as the corrupt political enabler of Citi’s criminal activities. In exchange Ms. Mack offers up the shiny trinket of a new Rubin — a lovable buffoon who was operating on a higher realm, flying around on his corporate jet hitting on cute math chicks well above the sleazy fray of Wall Street.

      I think I will pass on this trade.

      1. Carrick

        Really? I saw the image you first described (and the one of a Wall St. vet who’s Washington credentials allow him to tread in the shallows of toxic immoral cancer lake of Wall St.), up for trade with the image of a completely juvenile developmentally arrested putz.

        The only reward for reading Mack’s unbearable dork tell-all, was seeing the image of Wall St titans as men of largess (abilities, knowledge, tenacity, and lust of acquisition) dismantled and exposed as the piddling twats they are. I expect Wall St.’s biggest pigs to be men of unmatched self-absorption. I don’t expect their evil to be so banal, or them so oblivious to it.

        Rubin came off as a fucking dork. A bored piddling schmuck using his wealth and power to overcome his unremarkable ordinariness with the least flare and effort possible.

        I worry that Congress Members don’t have the tenacity or intelligence to go head-to-head with a Wall St personality and dismantle them during congressional testimony. If Wall St is stocked with personalities similar to Rubin, then I now presume that the only reason characters like him don’t have their heads ripped off by craven media figures or constituent pressured-Congress Members, is because those slouches have a soft spot for the peevish stunted personalities that are so much like their own.

        It humanizes him, I suppose, but not in a way that’s helpful to him. Exposing how banal and unexceptional these guys are makes people less afraid to question, prosecute and carry on without them.

        1. Kevin de Bruxelles

          Fair enough Carrick. On rereading the article I think I understand where my confusion is coming from.

          The first time through I was struck by how in the opening half of the article we were bombarded by phrases and illusions that emphasized Rubin’s distance and lack of knowledge from the crimes of Wall Street. In other words Mack was pointing towards at Rubin’s benign indifference – his lack of any culpability in the whole Citi scam. For example:

          the most powerful men in the world didn’t really know a whole lot about them until the damned things blew up the financial system


          But none of this seemed to require Bob Rubin to actually do very much


          Don’t you have work to do, Mr. Chairman?” I joked during our third call.

          “I’m the chairman of the executive committee,” he specified.

          “What the hell does that mean?” By then I was confused.

          “It means the word ‘chairman’ is in the title and I get paid very handsomely, but I don’t have any actual managerial responsibilities.” He seemed pleased.


          Three days after this chat, Prince resigned, forcing Bob Rubin to add an additional chairmanship — of the board — to his business cards.


          When Bob Rubin would say — and he said it a lot — that all he wanted to do was retire and go fishing, I believed him

          So sure he was seen as dorky but not criminal. But in the end of the article Ms. Mack does attack Rubin fairly well (although never mentioning criminality).

          What explains this tale of two Ms. Macks?

          To answer that we have to go back the the romance that Ms. Mack describes in her article. What were each of the parties to this romance really after? Although this is never openly stated one can image that the truth behind all this was that while Rubin was looking for some commitment-free sex from an attractive and intelligent woman; Ms. Mack was looking for the title of Mrs. Rubin from a rich and powerful, high-status man.

          In this light, Mack’s comments about Rubin in the first half of the article are not an attempt to defend him but are instead her attempts to rationalize away the alpha male behaviours of the prize she wants to bag.. Most women have uncanny skill at both seeking hypergamous relationships and in rationalizing away the bad behaviours of their high status men. While I have never read the rationalizations used by the women who send marriage proposals to the Night Stalker, Richard Ramirez, I’m sure they too would tend to emphasize his distance from his murders as well as his desire to “retire” from his life as a murderer.

          But at some point it became clear to Ms. Mack that her surname would never be Rubin,

          So the other Ms. Mack we get in the article reflects that age old truth that Heaven’s rage will be released as love turned to hate and Hell’s fury will fly from the scorned.

          Altough in her final paragraph she does leave the door to future Mrs. Rubin-hood slightly ajar with this little parting Valentine:

          and if some are now saying you ran Citi into the ground, you and I both know you had no real responsibility there.

          1. Yves Smith Post author

            I read this quite differently than you did, and in fact, found your interpretation pretty stunning.

            1. I saw her first half as saying he was at best a fraud, taking millions of dollars annually from Citi when he was playing the part of an empty 42 long. I read this as merely laying out the goods for a savvy reader to see. If she had gotten snarky or pointed, she would have sounded like a jilted lover. Admittedly, mixing the romantic revelations with what he said about his role on the board makes for an odd mix, but I thought her revelations here were damning.

            2. I don’t know where you get the idea that she wanted to be Mrs. Rubin. That is your projection, and an amazing one at that. Do all men assume all women want to marry every powerful guy they meet? Jeez, that does explain a lot of male behavior.

            Remember, she runs a charity and he was a prospective major donor. That will induce fawning behavior which he no doubt found flattering. She purports to have been clueless re his intentions (had she wanted to be Mrs. Rubin, she would have been on the lookout) and more important, she would have slept with him (she indicates all she did was what we in my youth called necking) and otherwise acceded to his wishes.

          2. Kevin de Bruxelles

            I came to my conclusion that she was interested in a long term relationship based on this paragraph:

            Yes, I am sorry to confess, human weakness got the best of both of us and there was more “cuddling”. However, when I finally came up for air and came to my senses, I bluntly – in his face – asked the obvious “So, are you married?” question. Of course, I’d read his memoir and figured Google would let me know if he’d officially split from his (very attractive) wife, but I’m also vaguely aware how much time and money it can take for these things to make the transition to “official” from “de facto.” But his reply suggested that either his marriage was far from any stage of finished, or that he was just kind of creepy.

            To me there are three possibilities: she was not interested in him sexually but only wanted to encourage him to donate; she was interested in him only physically; or she was interested in him for a potential long-term relationship.

            But what led her to willingly make out with him twice but stop at sleeping with him? She emphasizes his dorkiness and says he “had his tongue down my throat and hands everywhere sort of like an octopus” but then agrees to a next date and the subsequent make-out session. If she were not interested in him sexually at all, she hardly would have made out with him twice. Sure maybe the first time was an accident – but not the second. If she were just physically attracted to him (hard to believe – yuk!) then the fact that he was married would not have stopped them sleeping together at all. But the combination of her accepting a physical relationship with him but stopping at sleeping with him only when it became clear that it would not be an exclusive relationship leads me to believe she did fancy becoming the next Mrs. Rubin but was smart enough to stop when it became obvious this would not happen. The article implies that had his answer been that his marriage was “de facto” over she would indeed have slept with him.

            From a public relations point of view I’m sure Rubin will gladly exchange a charge of dorkiness in return for absolution of all responsibility for the crimes Citi committed. But I’m a firm believer in the moral responsibility of senior leadership. In war it is not the footsoldiers who are responsible for an immoral war (though the individual soldiers are responsible for their own immoral acts, for example slaughtering innocents, whether the war is moral or immoral), it is the political leadership. So it is not the day-to-day banksta’s who should be punished. But as Wall Street prepares for the coming storm they are setting the propaganda stage to send up a few low-level lone-nuts to be the sacrificial lambs while the senior leadership sail off into golden retirements in the sun. This article helps lay the groundwork for the second part of that equation in the public mind.

            I have no idea whether Ms. Mack has thought any of this through or not. She probably does mean well but is simply compromised by her personal feelings towards Rubin. But I think an article that is riddled with sentences that diminish Mr. Rubin’s moral responsibility for the mess on Wall Street should be held as suspect at best, no matter how many points it scores on a personal level.

          3. Yves Smith Post author


            1. Having sex with someone does not mean you want to marry them.

            2. Every single woman I know of has had an affair with a married (including on their way to being divorced) man. All report it was a bad idea.

            3. Mack might have had MORAL issues with having sex with a still-married man but that idea seems imponderable to you. Separated is not divorced, some separated couples DO work out their issues and get back together.

            4. Pretty much every woman I know has had at least one go at a “let’s just be friends” conversation that has led to more physical intimacy. The usual culprit, IMHO? Women are horny but are trained not to acknowledge that. It’s no different than saying, “Yes’ I’ll go to that fancy restaurant and not have dessert” and suffering from a wee lack of discipline when the choice arises.

            You, by contrast, keep assuming Mack had some long term objective when all the signs are against that: her cluelessness about his attentions, her turning down the sex (and NOT giving the sort of speech destined to keep him in her orbit, along the lines of “Oh, I really like you, but this is moving all too fast, we really don’t know each other all that well, I am old fashioned about sex….”). And you attribute to her having some emotional attachment to Rubin, as opposed to regarding him a buddy of sorts (I say of sorts, it’s hard to regard someone as a friend when they don’t permit you to contact them).

            Reader Richard got it, which says her conduct was not all that impenetrable or unusual:

            Women, in my experience, fancy a shag as much as the next man, but end up with the job of performing all the fine calculations about whether to go for it or not and what the consequences might be (though men do think about this more than is commonly acknowledged). There are two levels to this thinking, especially for the mature lady with a career – in the heat of the moment (how married is he?) and on reflection (is this relationship going to be advantageous, or dangerous?). So we see Iris having both those kinds of thoughts, and it all makes sense, to me anyway. Are those stereotypes? I think they are things that women have to think about. It is not whoring, it is just common sense.

          4. skippy

            I’m going to save this little gem, all above Richard, KdB and Yves. Then use some graphics software, print and frame.

            Skippy…all this talk has stimulated my randy marsupial instincts…honey!!!

            PS. KdB the drives are much the same, only that society imposes different standards on them…ask Mary M.

  1. attempter

    Re Sanders amendment:

    We can take the administration’s public alarm as evidence that it sees the Sanders amendment as a real public interest measure which would be good for America, and that it thinks the thing has a chance of passing, while its silence on the other amendments indicates it believes they’re scams and/or have no prospect of passage.

    Of course its enthusiasm for the bill itself is strong evidence of the bill’s sham nature.

    Re cuddling:

    The embrace of an iron maiden sounds about right for the likes of him.

    Though the Phalarus bull sounds nice and snuggly as well:

  2. LeeAnne

    yves, with all due respect -and I mean respect. this article is the worst. “Bob Rubin Just Wants to Be Cuddled Iris Mack, Huffington Post. Today’s gotta read. ”

    Iris Mack’s article reads like a teenage groupie exploiting her sexual brush with a celebrity to make a name for herself with tedious detail on typical male behavior.

    I read it last night. Much as I despise Rubin’s politics and everything else he stands for, Iris Mack’s writing made my skin crawl -journalism? Huffington is getting to be quite a worthless rag.

    1. LeeAnne

      on the other hand “The real reason why Steve Jobs hates Flash
      By Charlie Stross” is IMHO a must-read -an excellent article detailing the direction of personal computing led by Steve Jobs.

      1. mangy cat

        double-crossing s.o.b.
        “hands everywhere sort of like an octopus”
        when officially he wasn’t part of the giant vampire squid

      2. velobabe

        i agree with you on this one, LeeAnn.

        control freak obsessiveness with Steve Jobs.
        i have been an apple user since 80’s.
        apple adobe couldn’t get enough.
        spent thousands buying learning doing.
        now, not so much.
        safari is the worst browser ever been developed. -1.
        atnt, what were you smoking? -2
        all apple stores in US DON’T accept cash or checks
        for the iphone or ipad, only plastic. -3
        apple’s flash-free agenda. -10
        we lose.
        what does that tell you folks†

        1. velobabe

          oh thanks a lot, for another very distracting blog
          Charlie’s Diary.
          now i have to spend all my time reading all of his commenters thoughts.
          life is too short lately.

    2. craazyman

      yeah rather than asking if she wanted to go upstairs and cuddle, since she’s a math chick he should have asked if she wanted to take a sunset stroll along the beach and let him caress her asymptotes while she strokes his vector

      booowaahahaa ahaha hahahah ahahahahah

      yeah really, I couldn’t even finish the article. I really felt sort of bad for Mr. Rubin, which appalls me. But I’m a humanist and a metaphysician and sometimes I make a fool of myself too. Sincerely yours, Dr. Delerious T. Tremens, Institute for Contemporary Analysis, University of Magonia

    3. Yves Smith Post author


      Mack (I am told, I don’t know her) has a professional reputation (she gets speaking gigs in Europe regularly; she apparently has cred as a critic of how Americans do finance thanks to her experience at Harvard Management) and is running a charity. Her publishing this story is in no way reputation enhancing; in fact, it’s more than a tad self destructive. Do you think this will be a plus with big name donors?

      She does seem to have a need to mix it up. She didn’t have a strong case in being fired from Harvard Management (she was almost certainly employed at will) but presumably she had leverage by Harvard not wanting continued coverage of how badly it screwed up in derivatives (who knows what she would have unearthed in discovery).

      Personally, I think Rubin has gotten a free pass on too many fronts, so I see this piece as a teeny bit of karmic payback. Yes, this little tale is merely one of many “powerful not quite divorced man looking for romance with probably the wrong person” stories. But there is also the Master of the Universe elements of his behavior: that she can’t call him (so how separated is he, exactly?), the obsessive frequency of communications, the awkward “cuddle” line (he has to go straight from restaurant to his hotel room due perhaps to the fact that he can’t take her to a transition spot like a lounge given his concerns re his image).

  3. Ina Deaver

    Even the Senators told Tourre he needs his own lawyer. I’m completely amazed that the lawyer that the company is using would represent him: the conflict is so palpable, even a Wall Street lawyer couldn’t fail to notice it.

    If part of their strategy was really to trap Tourre into going on record with the company line so that he can’t turn on them later, I think that they will find that less than satisfactory. The fact that someone has made a successful career of lying only really matters with a jury: judges are well-accustomed to parsing lies for the kernel of truth at the bottom. Any Federal judge sizes up criminals for a living. As for the perjury charge, it just gets rolled into what Tourre pleads to. Do we really think that GS would ever, in a million years, risk a jury?

    If this is their tactic, I’d like to see the DOJ/SEC really squeeze them with the full ride. If they want to play hardball, perhaps it is time that they discovered that the most frightening thing in this country is a Federal prosecutor who has decided that you deserve to go to jail. I’m having the vindictive feeling that perhaps GS needs to learn to respect the law – if not out of love, out of fear.

  4. Michael

    Steve jobs hates flash because he’s an anti-competitive bully like all the rest ‘at the top’ and he wants to completely control what you do with your property and what services others can provide to that property.

    Capitalism to the likes of Jobs is just a word used to justify shipping jobs to sweatshops, it isn’t something they feel they actually have to play a part in – i.e. free market competition.

    1. B. Mull

      Jobs is right that Flash is the most crash-prone software most people run. At least for me it is, through 15 years and multiple different machines.

  5. fresno dan

    “Bank Bill Attracts Populist Amendments Wall Street Journal.”

    I imagine the thing that the Fed does that is the most important is setting interest rates. As the Fed usually lets people know where they are going months in advance, what exactly it that they do not want revealed?
    Seriously. I can understand the government not releasing certain information – like informant identities.
    What is the rationale for not looking into the Fed books?
    Run on banks???

  6. fresno dan

    “Potential Derivative Loophole #1: Trading Facility Mike Konczal”

    Its not what people know that is the problem – its what they know that ain’t true that is the problem.
    Will Rogers

    Its not what I’m for that you know about thats a problem – its what I’m for that you don’t know about.
    Senator Dodd.

  7. lambert strether

    The FT “More Vicious Then Dinosaurs” guy is a dilettante and a wuss.

    Dinosaur Guy thinks he’s going to take his revenge on Joe Sixpack by doing his own lawn care?

    The hard core unterbussen don’t have lawns; you won’t be able to eat a lawn when the trucks stop. The hard core have gardens. What a loser.

  8. MyLessThanPrimeBeef

    FT Alphaville’s “We are from Wall Street…’ should remind the Greeks, among many other people, of the most dangerous sentence in the English language:

    Hi, we are from Wall Street and we are here to help.

  9. emca

    The Charles Diary article is a succinct analysis on a future in computing.

    Yes, Jobs is a bully and tyrant.

    So what.

    To note, in the 90’s Apple was on the ropes. Many articles of the period said it was just a matter of time. The competition between Macs and PCs had resulted in Bill Gates’ outfit holding all aces. Then Steve Jobs returned to Apple. Rather than continue the losing strategy of head-on battles with Microsoft, Jobs redirected the company’s energy and resources toward other endeavors, finding different niches to satisfy consumer’s insatiable desire for innovation.

    The rest is history.

    That said, you can extract what you want from Stross’ article, but it is not about Steve Jobs character, rather it is about Job’s sense of the direction computing (a deceptive name in that computing has far eclipsed its base of large scale manipulation of numbers)will take, whether the PC itself will continue its supremacy, or whether the world of computation rests in the cloud.

    My own personal reflection is the latter, in part because of the portability, therefore convenience, the system offers(and in a consumer society, convenience trumps all)and in part because (as the article states) that is where the big bets are being made.

    If the schema doesn’t pan out, then Google and Apple (and their investors) are the losers. If it does, then there will be, as with PC’s in the past, many winners including the ultimate financiers of innovation, the end-users.

    A refreshing respite from the bailouts of financial innovation where end-users are suckers, and the rewards fall solely to the few.

  10. KFritz

    As of today’s attempt to view the Alan Beattie article on Phillip II, the Financial Times is demanding a subscription fee to view ‘x’ number of articles per month.
    Caveat emptor.

    Let’s see how this turns out.

  11. bob

    There has to be an angle to putting them before congress just after the SEC suit is out. What lawyer in their right mind would allow their client to go in front of congress while a case like this was pending?

    Torre smells like a scapegoat, he’s got all of the required attitude, and on top of that he’s french. Perfect patsy for the time. A single 28 year old guy is responsible for all of this?

    I have not followed closely enough the congressional hearings, and what led up to this particular hearing, but something stinks.

    The parts of the questioning I did see seemed to be laying a very carefully built foundation to build further off of.

    1. VenusVictrix

      Agreed – and how hard did the SEC have to look to find the one (?) deal that AIG didn’t “insure” for Goldman?

      Clearly they handpicked this particular transaction to avoid disclosing further dirty little secrets about the AIG story which would have emerged had they been involved in Abacus 2007-AC1.

      For a year and a half we’ve been hearing how Goldman “insured” all these subprime deals with AIG, and now suddenly they claim they lost money on this deal executed AFTER they supposedly started reducing their exposure to the mortgage market.

      The contradictions, loopholes, and convoluted explanations further support a conclusion that the whole thing is a cover-up of a backdoor bailout to Goldman and others via AIG facilitated by Federal Officials and covered up with assistance from complicit regulators.

  12. Hugh

    In capitalist mythology, competition and innovation are king. In reality and as we have seen with both Microsoft and Apple, competition and competition are great while the goals are market entry and establishing market share. But once that’s done, it all becomes about market control. Jobs, like Gates, is no longer interested in giving consumers what they want. He wants to sell them what he wants.

  13. melior

    Joe Mainstreet is going to have his revenge, right? Wrong! Guess what: we’re going to stop buying the new 80k car, we aren’t going to leave the 35 percent tip at our business dinners anymore.

    When I got to the ridiculous part about these types ever leaving a tip it made me LOL.

    1. NS

      Well hey, that piece made me LOL too. I really do hope we can tattoo these humans as far above us mere mortals to ID them easily, so when they require the services in the ER and OR I can demand my pound of flesh in a few extra K in a tip jar before the morphine drip. After working a 12 hour shift, and a 10 day stretch, messing around doing such degrading, unintelligent, ordinary work like saving the lives of their children, maybe that tip shouldn’t be unexpected before delivery of that service, eh?

      These guys have it knocked! Perhaps some docs and nurses, with the proper ID, could perform a really vital community service beyond their normal scumbag jobs that really aren’t nearly as important. After all, we aren’t nearly as educated or work nearly as long and hard as they do. Social utility.

  14. VenusVictrix

    If the SEC had any intention of going after Goldman Sachs and/or any member of Senior Management, wouldn’t they have held off on charging Tourre, and instead worked with him in secret to gather enough information to actually level some real charges against the firm?

    Also, regarding statements and testimony by Goldman officials about the Abacus transaction – has anyone bothered asking Blankfein to explain how Goldman lost money by exposing the firm on Paulson’s CDO, at a time when they had supposedly instituted a strategic plan to reduce the firm’s exposure to the mortgage market?

    Goldman’s claims make no sense.

    1. Ina Deaver

      You have a point – but it is civil charges. It does mean that people lawyer up, and someone explains to these guys how their version of “God’s work” might not be the only way to see the transaction. That does lead to less information from human beings, as opposed to paper (and computers. Computer forensics is getting better all the time).

      I suspect that they might be rattling the cage to see what GS destroys rather than turn it over. It’s sort of the flip side of the argument that you are making.

  15. skippy

    Hay can some one pull S. Palin’s talking string (I’m too far away).

    So I can hear her say “DRILL BABY DRILL!!!”

    Skippy…I’ll bet my vote, give it to her if she goes down there and_says it_at a teabagger party just for shits and grins.

  16. dekan

    Re: Irish Mack
    I fully expected to find out this was a joke. It’s not. It’s Monica Lewinsky with a PHD in math. Not that I’m sorry to see Rubin skewered, but…

    From Mack’s bio: Dr. Mack has always kept herself in top physical condition. She used to run with the MIT and the Cambridge Sports Union track clubs and is serious about her weight training. When she does break from her schedule she visits places like the Ashram in California, a spa that she says is more like boot campÑ yoga, hiking, aerobics, weight lifting, water games, and very little food. Last summer she trained with professional body builders at the Muscle and Fitness Body Building Camp in Venice Beach, Calif. She also has managed to fit in flying lessons.

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