The American Dilemma and How We Can Fix It

Posts tagged ‘O. J. Simpson’

THE NFL (NATIONAL FELONS’ LEAGUE)

Baseball may officially be America’s national game – but the truth of the matter is that it’s football that really turns us on.  It also turns on the books in Las Vegas and elsewhere who make far more money on football than on all other sports combined.  Given the fact that the casinos come up with bizarre but fun “teaser cards” each week during both college and the NFL’s seasons, I was a little surprised that I couldn’t place a wager on whether or not there was going to be a Super Bowl XLVIII in 2014.

Since the last Super Bowl we’re averaging more than one player arrest per week with offenses ranging from using illicit substances, DUI , being in possession of unlicensed firearms and most seriously murder.  So I began thinking at our current arrest rate, will there be enough players left to field two teams when the next Super Bowl rolls around.

Football is a violent game played by people who are in large part, violent people.  And if you examine the backgrounds of many pro players, they come from inner city environments where the only escape is either becoming proficient in a sport and going pro, selling drugs or making it in the entertainment industry.

They are not intellectuals but we push them through our colleges and universities so that our alumni will contribute massive amounts of money to their alma mater.  And then we hand them multi-million dollar contracts which would overwhelm even the most stable and balanced person and which wreak havoc with the minds of kids who often didn’t go a full week as children with regular meals on their table.

There is no rational person who would not want to escape a life of poverty and hopelessness – so I don’t lay the blame at the players’ feet.  They are doing what they need to do to survive.  The fault really lies with us – the fans, the teams, the media and the league as we let loose our blood lust every Sunday and the teams accommodate us by taking our money.

We live our sublimated violent dreams through the players and while we commiserate over a serious injury on the field, it is soon forgotten as we look  forward to next week’s battles.  Perhaps our greatest concern over these injuries is how it will affect the line for the wagers we anticipate making the next Sunday.  There is no better example of the saying, “Give the people what they want” than professional football.  Unless it was the gladiators in the Roman Coliseum.  No, I take that back.

Yesterday in Brazil, a referee got into a dispute with a fútbol player and fatally stabbed him.  Before the player died en route to the hospital, the crowd stoned the referee to death, quartered his body and decapitated him, impaling his head on a wooden stake.  I guess by comparison that makes our game almost seem like a lady’s club tea party.  That event in Brazil should be disturbing to anyone who claims he or she is a human being.

Is there a solution to the NFL’s woes?

Well, if there is it is certainly not going to come from the fans.  It must come from the team owners, the league itself and most importantly from the media that broadcast their games.  They are the ones who really fuel the money pots that the NFL teams are filling to overflowing.  They are the ones who have the clout to say, “You know, unless you start writing some moral clauses into your contracts and enforce them, we’re going to reduce the amount of money we pay you per season.”  But is there an incentive for them to do that – other than being good corporate citizens?  Not really.  And doing the right thing in today’s America is, for the most part, a relic of a former time.

There will, no doubt be a Super Bowl XLVIII in February next year.  By then we will probably see an expansion in the number of arrests of NFL players beyond the current 38.   From the league’s standpoint I guess they will consider these “acceptable losses.”

And as for us fans, we will continue to buy and wear the jerseys that proclaim our devotion to this player or that.  In fact, they may turn out to be good investments – should Sunday’s hero wind up being incarcerated.

Does anybody have an O. J. Simpson jersey for sale?

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J. P. MORGAN CHASE’S $2 BILLION TRADING LOSS

It was mid-June, 1994 when I walked in the door of my office to be greeted by my always-cheery receptionist who said, “Good morning.  What do you think about O.J.?”   I believe I responded, “Well, it’s a work day so we can’t add vodka to it and, besides, it tends to make my stomach a little sour.  Tomato juice would be better.”

She looked at me as though I were from Mars and said, “No, about O. J. Simpson’s wife and friend being murdered.”  As I hadn’t caught the evening news or seen a newspaper headline that morning, this was all truly news to me.  Little did I realize that she was asking me about what would be the largest media circus and most talked about piece of television broadcasting that would grip the country for many months to come.

I have never understood why people are so intrigued by other peoples’ misfortunes.  If it were up to me, there would be no audience for soap operas whether fictional or factual.  We all have enough dirty laundry of our own to fill several hampers to the full.  But I guess that’s how many of us elevate ourselves – taking comfort in the downfall of others thus diverting ourselves away from how we might improve our own lives.

Well, within just a day or so of the news release about the murders, I can honestly say that virtually every friend and acquaintance had formulated an opinion about whether Mr. Simpson were guilty or innocent.  They had not heard a single word of testimony nor been presented with a piece of evidence – but they had formulated their opinion.  This is what is known as “prejudice” – something most of us say is abhorrent yet something in which we actually often engage.

With J. P. Morgan Chase’s CEO Jamie Dimon’s announcement that the financial firm had suffered a $2 Billion trading loss in the most recent quarter to be reported, it didn’t surprise me that this story took on some of the same qualities as the one involving the murders of Nicole Simpson and Ronald Goldman.

People who think the banks are predatory (and that is many) began wagging their fingers and saying, “See, these SOB’s need more regulation.  Here we go again with ‘too big to fail’.”  But the fact is that – well, we don’t know the facts – and any judgment that any of us makes at this point is simply prejudice speaking.  Since I have actively supported a capitalistic viewpoint of economics, it is not a surprise that I heard from a number of people who hold an alternate view.

By way of full disclosure, I do not have any financial relationship with J. P. Morgan Chase.  I neither own nor am short their stock or bonds; I do not have a checking, savings, money market or credit card account with the firm; I do not have any personal loans a mortgage or IRA’s with them.  In other words I have absolutely no personal interest (other than as it may affect the overall financial system) with the company.  Having said that, I believe I am in a position to view this loss in an unbiased manner.

It is the nature of trading financial instruments whether those are stocks, bonds, commodities, currencies, options or any other sort of derivatives to take losses on a regular basis.  Obviously, if you don’t also take profits which are greater than the losses, you ultimately go out of business.  As it turns out, the $2 Billion which Chase took represented a reduction of their quarterly profit by about twenty-five percent.  In other words, the company earned $8 Billion after the loss.

Why this came to everyone’s attention was not that it was a loss but because it was an extremely large loss.  If this had been a $2 Billion profitable trade, none of us would ever have heard about it – it would simply have been included in the company’s earnings statement and we would have to find some other scandal to which we could turn our attention.

But step back from the world of finance for a minute since many of you may not be acquainted with its inner workings – and look at a different form of trading to which we can all relate.  In this case I offer the example of women’s apparel.

A buyer for a major department store chain decides that “hot pink ladies tank-tops” are going to be all the rage this summer season.  So she purchases an overly-large quantity of these, trading the store’s dollars for merchandise.  Sadly, lime green not hot pink is the sensational color this year and the merchandise she has purchased sits unsold within the store’s outlets.  In order to recoup the firm’s investment she authorizes markdowns in the hot pink tops – first twenty percent then forty percent then half off – but she still has an extensive inventory and finally sells the remaining inventory to a discounter – suffering a loss on this unfortunate purchase.

Now in the case of the buyer, there is no Federal regulator overseeing the transaction – only the upper echelon hierarchy of her store – who will, no doubt have a conversation with her about this purchase.   If I were in her boss’ position, before I engaged in that conversation I would look at her overall track record with the store and gauge her performance not solely based on this one event but on her overall skills.  I would examine the facts before reaching a conclusion.

Mr. Dimon has a reputation for a certain feistiness – and I’m sure has a fairly good-sized ego.  I have no doubt that having to make the statement about this loss was a significant embarrassment for him and the firm is internally looking at the circumstances surrounding it.  Clearly, if they had better internal controls and risk management systems, it might not have happened at all.  But it did – and as I can think of nobody who enjoys taking a $2 Billion loss, I am sure that even as I write this the firm is addressing the problem.  But is that enough?  Or is this just an example of why the banks need to be further regulated?

There is no question that certain regulations are good.  I frequently refer in these posts to laws governing our use of motor vehicles because this is something to which we can all relate.  Does it make sense to reduce the speed limit in areas where our children are on their way to school?  It makes sense to me.  Does it make sense to require that we come to a complete halt at a Stop sign.  Sure.  But as good as these provisions are, they are meaningless unless they are enforced.

It is just the same in the world of regulating financial institutions.  We might write the most efficient regulations that can be conceived – but if they are not enforced they have absolutely no value.  And to whom does this responsibility fall?  The answer is that the SEC is responsible for this oversight.  So let’s look at the job they are doing.

Let’s go back to 2009 and Bernie Madoff – do you remember him?  He created the largest Ponzi scheme in the history of the world – ultimately costing his investors an estimated $18 Billion dollars – nine times the trading loss at Chase.  Mr. Madoff’s activities were subject to the scrutiny of the SEC.

Despite the fact that they had received complaints from Mr. Harry Markopolos among others as much as ten years earlier, the SEC found nothing wrong in the way Mr. Madoff conducted business.  In fact, Mr. Madoff came to justice not because of the SEC’s efforts – but because he openly admitted to his deception and turned himself in.  He is currently serving a one hundred fifty year sentence.

Did the SEC have sufficient regulatory authority to bring Mr. Madoff to justice a decade before he admitted to his crime?  They certainly did.  Did they do their jobs in enforcing those regulations?  They certainly did not.  If they had, countless billions might have been saved those investors who were subsequently defrauded – an amount that would make the Chase trading loss look like small potatoes.

So before we go on a witch hunt and start screaming for yet more regulations to protect us from predatory financial institutions, why don’t we look at those who already have the power to oversee these firms and evaluate the quality of the job they are doing with their present authority.  If they are not enforcing the regulations which are already on the books, what could possibly make us believe they would do any better with new ones?

Perhaps that’s the real answer to financial reform and regulation.

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