NOVEMBER 2017

NOVEMBER  2017
The Rise of the Billionaires Leaves the Middle Class Stranded

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Friday, November 28, 2008

GOING INTO THE WOODS, TODAY

I have stumbled upon what may be the secret pattern to world events. It rests upon three pillars of wisdom, and they have nothing in common with the seven pillars elucidated by T.E. Lawrence (of Arabia). The have to do with a Tin Pan Alley song writer, and a ski resort in New England, and a disgraced American politician. I’ll prove it to you.
I would say that Jimmy Kennedy was a lyrical genius. Thank God he turned down that job offer from the English Foreign Service in Nigeria. Otherwise we would have been cheated out of such evocative lyrics as, “South of the bor-der, down Mexico way. That’s where I fell in love when the stars came out to play. And now as I wander, my thoughts ever stray, south of the bor-der, down Mexico way”. He wrote that, in classic Tin Pan Alley fashion, after seeing a post card of Tijuana.
And then there was his magical, “You put your left hand in, you take your left hand out, you put your left hand in and you shake it all about.” Yea, he was a genius, alright.Jimmy was an Irishman, and so English –English was a second language to him, which may help explain his lyrics for “Every gal in Cons-tan-tinople, lives in Istanbul, not Con-stan-tinople, so if you've got a date in Cons-tan-tinople, she'll be waiting in Istanbul.” (The name was officially changed in 1930, at the behest of the Turkish Post Office.)
But my favorite Jimmy Kennedy lyric remains the vaguely ominous drumbeat of “If you go down to the woods today you’re sure of a big surprise. If you go down to the woods today you better go in disguise. For every bear that ever there was will gather there for certain because today’s the day the teddy bears have their pi-cnic.”I have a long held the image of the “Teddy Bears Picnic” being sung by that looming giant of economists, John Maynard Keynes. Can’t you just hear him croaking in his perfectly correct Eton English? “If you go down to the woods today you better not go alone. It’s lovely down in the woods today, but safer to stay at home.” I can.
And by woods, I mean "Bretton Woods", the New England ski resort invaded in June-July of 1944 by 730 of the best economic brains in the world, of which Keynes was the very best. The American economists were the bears and they were there to picnic upon the corpse of the British Empire, and John Maynard Keynes had the unenviable (for an Englishman) assignment to acting as the maƮtre d'. Would you like to know what kind of an economist Keynes was? He was married to a ballarina, that's what kind of an economist he was. He was attracted to drama. Interesting, for a student of "the dismal science" of economics.
Amongst the things settled at Bretton Woods was how to structure the world’s economy after World War II. It was clear to everyone that the lead would have to be taken by the United States, because we were the only nation that ended the war with more gold than we had started with. It’s the golden rule; he who has the gold makes the rules. But it just seemed less tacky that the idea would be put forward by a Brit rather than by an American. So the Bretton Woods accords, presided over by Keynes, tied all of the world’s monetary systems (the pound, the franc, the yen) to the American dollar, because each and every ounce of gold in America’s vaults was officially represented by 35 dollars . And nobody else in the world could make that claim. Then.But things change over time, and eventually we Americans tried to pay for our “Great Society” and the Vietnam War, both at the same time, and both without raising taxes. You know what? You can’t do that, no matter how many voters may want to believe that you can, you can’t, as George Bush Jr. could now explain if he had two neurons worth of introspection .
Newly elected President Richard Nixon tried to close the budget deficit by shutting down many of the anti-poverty programs started by the Democrats. But those programs were far too small a fraction of the Federal budget to stop the bleeding of dollars. A Massachusetts Institute of Technology study done in 1971 calculated the real cost of the Vietnam War (in 1971 dollars) was then about $750 billion, equal to the Wall Street bailout thirty-five years later that caused all the conservatives to flinch.(“Vietnam; Past and Present” by D.R. SarDeasai).
The obvious pressure in 1969 when he took office was for Nixon to increase taxes to pay for the war. But that would have made the war even more unpopular than it already was. And having been elected on his pledge to end the war “with honor”, Nixon didn’t yet have a way out of the war, and he was not willing to be a one term president. So he continued the war, and he did not raise taxes.The immediate effect was that the U.S. was plagued by both inflation and a stagnant economy, called “Stagflation”. Wages were stuck. The nation was losing jobs because the Federal deficits were gobbling up all the available dollars. Businesses couldn’t borrow, so they were shutting down. And, as I recall, that was when hamburger jumped from 35 cents a pound to something closer to a $1.25 a pound. It is not the same situation we face today, but at the time it was an untenable situation. But “Tricky Dick” eventually found a way to make it "tenable". He took America off the gold standard.In the stroke of a pen the dollar was no longer backed by gold. That’s when the treasury stopped issuing real dollars and started issuing “silver certificates”. Read your dollar sometime. With out the limit of gold reserves on the treasury, the printing presses were free to work overtime, and suddenly you could print enough money to afford any war you wanted for however long you wanted.
In 1971 thirty-five dollars could buy an ounce of gold, by November of 2008 it would take $816.40 to buy that same ounce of gold. That is what you call inflation. In 1971 the minimum wage, which is a “lagging indicator of inflation” was $1.60 an hour. By 1981 was $2.50 an hour. It had doubled in ten years. Ten years later it was at $3.80 an hour.This period also saw the introduction of the computer into the general economy, so a great deal of new wealth was also being created. But that only masked the growing instability of the new monetary system Nixon had placed us on. Economists call it “Floating Currency” but I call it the “Trust Economy”. There is no longer any gold behind your dollar, and, really, there is no silver, either. You trust that your dollar will provide you with goods and services of value.I don’t blame Nixon for our current mess. Politicians are not hired to create perfect systems, just systems that can function for the time being. But what the sub-prime mortgage fiasco has proven, and the dot-com bubble proved before that, and the Savings & Loan debacle proved before that, is that without regulation there can be no trust. To quote Ronald Regan; “Trust and verify.” And to quote French President Sarkozy, “We must rethink the financial system from scratch, as at Bretton Woods”. And this time we (the United States) ain’t got the gold, so we ain’t making the rules. Those days are past. Or as Jimmy Kennedy put it, “No, you can't go back to Con-stan-tinople, been a long time gone, Con-stan-tinople, Why did Con-tan-tinople get the works? That’s nobody's business but the Turks.” Words of wisdom to ponder as we enter the woods again.
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Wednesday, November 26, 2008

LEONARDO DiCAPRIO AND THE FRENCH REVOLUTION

I have some shocking news for you. The man in the Iron Mask was not Leonardo DiCaprio. And anyway, he didn’t wear an iron mask. I mean, the first time you drool in your sleep an iron mask would rust shut. It was a velvet mask. And he was not the twin of King Louis XIV or any other Louie. Who he was seems to have been mixed up in what is called “The Affair of the Poisons” which is a morality tale of a cute little love-sick tramp with the affinity for “inheritance powders”, and her amoral boyfriend. Throw in the King’s mistress for a little spice, and you have a recipe for what Alexis de Tocqueville called “L’Ancien Regime”, and what in modern terms we would call a soap opera of the rich and infamous. It leaves me wondering why they waited so long to start chopping off heads.
We begin in 1659, with a little tramp named Marie Madeleine Margherite D’Aubray Brinvillers. We’ll call her Maire for short. I don’t think she’ll mind. Marie was a tiny doll of a woman who seems to have committed no major public sins until she was about thirty when her husband introduced her to a handsome cavalryman named Godin de Sainte-Croix, to whom the husband owed a whole bunch of money. Hubby had to move out of the country to avoid his other creditors, and he left Marie behind as a sort of payment on account for Sainte-Croix. Marie didn’t seem to mind this arrangement, and neither did Sainte-Croix. Except, as much fun as Sainte-Croix had with little Marie, she wasn’t making him any richer. Where, oh, where was Sainte-Croix going to find enough money to live in the style to which he wanted to grow accustomed to? Sainte-Croix developed a multi-step plan. Step one was to encourage Marie to do some charity work. Step two was for Sainte-Croix to make the acquaintance of certain people with a knowledge of chemistry, such as a man known only to history by the name of “Auguer”.Now, in the days before CSI the only way to prove poisoning - as opposed to just an unhygienic cook - was to catch the suspect pouring poison on the food, or get him to confess. This is why torture was so popular for so long. It never failed. No matter who you arrested, ten minutes with them on the rack and your case would be solved. But if your suspect was too connected to be tortured the only alternative was to lock him up while you slowly collected evidence. It might take decades. And during that time witnesses could be bought off, killed off, or just die of natural causes. It all made for the convoluted plots of some very popular French novels.
So when poor people started dropping dead at the hospital where Marie volunteered, nobody took notice. They were poor people. In 17th century France the streets were littered with dead poor people. So when Marie had perfected the formula she had gotten from Sainte-Croix, which she did in 1666, she had no trouble slipping the poison into her father’s lunch. He died suddenly and his little darling inherited a little money, which she and Saint-Croix eventually burned through. So in 1670 Marie poisoned her two brothers. She inherited a little more money. By now, the heirs in the Brinvillers family were getting nervous. But still nobody suspected the little elf Marie. She was too cute. Cute people can’t be serial murderers. And just when the homicidal little pixie was about to knock off her own mother, Gordin Sainte-Croix unexpectedly dropped dead himself. Mon Dieu! Cele semble suspecte?!The cops were brought in. They uncovered a hand written confession by Sainte-Croix (Why do upper crust muderers always feel the need to write it down?). And they also found a list of names of satisfied customers who had been directed by Sainte-Croix to Msr. Auger. The list included little Marie, but it also included Madame de Montespan, who was Louis XIV’s mistress – which in pre-revolutionary France was almost a cabinet position - and the Duchesse of Orleans, Louis’s sister-in-law. Marie panicked. The cops were not going to torture the King’s mistress, but they would have no hesitation about putting a cutie like Marie on the rack. She ran off to her husband in exile. But she was now infamous and he wanted nothing to do with her. So Marie signed herself into a convent in Liege, Belgium.This placed the pious nuns running the convent in a moral bind. They were sworn to provide sanctuary to all who asked for it, but on the other hand, how do you solve a problem like Marie? How do you catch a cloud of suspicion and pin it down? The good sisters consulted scripture and after due deliberations decided to rat out their guest. They allowed a cop disguised as a priest to enter the convent and while offering solace to the trouble little lady he escorted Marie right out the front gate, where she was immediately arrested. Marie was brought back to Paris in chains, tortured for a confession, tried in secret, and on July 16, 1676 she was forced to drink eight pints of water… and then mercifully she was beheaded. And just to be sure, they then burned her corpse. And that is how you solve a problem like Marie.It looked like all hell was about to break loose in France, but just before it did...Louis XIV ordered all further investigations to cease. He shut it down. Nobody ever asked Madame Montespan or the Duchesse of Orleans how their names came to be on a list of people who had bought “inheritance powders”. But there was still one big problem oustanding: Msr. Auger. Who was he, and what did he know? And more importantly, did he have any plans to write his memories? And what does any of this have to do with Leonardo DiCaprio?Nothing: like I said, the “Man in the Iron Mask” was really the “Man in a Velvet Mask” and that just sounds too fey for a novel. Ask yourself - why would the King of France keep someone locked in one prison after another for decades, required to wear a mask at all times in front of strangers and not allowed to converse with anyone, even with his jailers? It’s too complicated. James Bond villains have simpler plans than that. Why not just kill him? You don’t even need a trial, let alone a secret trial. By the middle of the 17th century the one thing France had a surfeit of besides starving peasants, was nobility with no morality. Louis could have knocked off every royal mass murderer from “Auger” to the Marquis de Sade and nobody would have said “Boo”. If you ask me this story is mostly a fantasy invented by Alexande Dumas. And wasn’t the truth just as entertaining as the myth? Not to Marie's relatives, of course, but for you? It was for me.

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Monday, November 24, 2008

PART XI; AMAZING RACE, EPITATH.

I wonder how many people worked in the advertising department at the Cole Motor Company in Indianapolis? Besides supporting Bob Fowler’s “Cole Flyer” transcontinental flight, they also had a big balloon that made appearances at county fairs and a share in the founding of the Indianapolis Motor Speedway. As their slogan went, “There’s a Touch of Tomorrow in All Cole Does Today”. Well, not forever. Joe Cole had built a fortune in horse buggies before he borrowed enough cash from Harvey Firestone to start his auto company in 1909. He ordered the parts from other manufacturers and assembled them in the Cole building. “A man’s car any woman can drive.”

Joe offered such innovations as “adjustable door glasses” (i.e., removable windows) a 15 foot long dash light and a speedometer that read up to 75 mph; unfortunately the car only went up to 45 mph. Bigwigs at General Motors wanted to buy out Cole, and when Joe wouldn’t sell they just bought up his suppliers and gradually cut him off. With the post war recession of 1920-21 Joe realized the jig was up and began a careful liquidation of his company. In 1924, as he closed up his firm, Joe died suddenly. His family rented the building out and kept the name, the Cole Building, into the 1970’s.After he reached El Paso it took Bob Fowler a month to escape Texas. He crash landed in a rice field outside of Seixas, Louisiana, on Christmas Eve. He landed in New Orleans at about 3 p.m. on New Year’s Eve. It took him until February of 1912 to reach Florida. He landed on the sand at Jacksonville Beach on February 12, not that anybody noticed, what with the Titanic going down just two nights later. Bob would later observe with understatement, “I was the first to start and the last to finish.” It had taken him 116 days to travel 72 hours of flight time and 2,800 miles across America. The very next year Bob Fowler made the first non-stop transcontinental flight – across the Isthmus of Panama. Bob Fowler was a pretty crafty fellow.Bob sold The “Cole Flyer” in 1912, and after being used in the movie business for a few years it was sold again, this time for scrap. The engine is on display at the Exposition Museum in Los Angles. In 1916 Bob started the “Fowler Airplane Corporation” in his home town of San Francisco. He modified and sold Curtis JN-4’s (“Jennys”) to the U.S. Army as trainers, and after WWI he started Bluebird Airways, a passenger service. He retired to San Jose and died in 1966, at the healthy old age of 82.Jimmy Ward, the man who came to his senses and dropped out of the amazing race, died in Florida sometime after 1917, allegedly of stomach cancer. He was buried in an unmarked paupers grave. Some of his fellow aviation pioneers collected money to give him a more respectful funeral, but I can find no record of that ever happening. Perhaps somebody down in Florida can correct my mistake.Cal Rogers was testing a new airplane on Wednesday April 3, 1912, just off shore of Long Beach, California when he ran into a flock of sea gulls. The plane banked sharply 45 degrees and slid into the surf, crashing just feet from where Cal had posed grinning in the surf with the “Vin Fiz” in December. The engine broke loose from its mounts and crushed Cal, breaking his neck. He was still breathing when swimmers pulled him from the water, but he died soon after. Cal Rogers was the 127th death since the Wright Brothers flight in 1903, and the 22nd American aviator killed. Considering the number of people flying in 1912, those were still terrible odds.His mother, Maria (Rogers) Sweitzer, took procession of her son’s body and had it shipped back to Pittsburg. There Calbraith Perry Rogers was buried in Allegheny Cemetery under an elaborate tombstone, marked with the words “I Endure, I Conquer.”

Cal’s brother John took procession of the “Vin Fiz Flyer” and had it shipped back to Ohio, to the Wright shops, to be repaired. He offered the Flyer to the Smithsonian but they already had a Wright B, so in 1917 the Flyer was donated to the Carnegie Institute in Pittsburg. In 1934 the Smithsonian changed their minds and bought the “Vin Fiz Flyer”. Refurbished and rebuilt, that is the plane that hangs from the ceiling in the Air and Space Museum in Washington, D.C.And little Maude was determined to endure and conquer as well. After lengthy court battles with her ex-mother-in-law in California, Maude was awarded legal possession of the “Vin Fiz Flyer”. How could this be? Wasn’t the Flyer back in Ohio, being rebuilt? It was. But the contents of the baggage car of the “Vin Fiz Special” contained enough spare parts and replacement parts and replaced parts, many of which had actually flown on sections the transcontinental voyage at least once, to construct a second “Vin Fiz Flyer” and still claim it as an “original.”Two years after Cal’s death, and after the court battles with Maria had finally been settled, Maude married Charlie “Wiggie” Wiggin, who had shown such faith and devotion to her Cal; two lonely souls who shared an adoration of another man. “Wiggie”, had, by this time, acquired his own pilot’s license. And Maude and Wiggie made a living for a few years barnstorming their “Vin Fiz Flyer” around the country. And then they quietly faded out of history. It would be ten years later when Jimmy Doolittle would cross the continent in less than a day - 21 hours 19 minutes, with just one stop for fuel. And as you sit in your tiny passenger seat, crammed four to an aisle, held prisoner on the tarmac for endless hours, forced to use a toilet designed for a diminutive Marquise de Sade, charged extra for a micro-waved “snack”, a pillow, a blanket, a soda or a thimble full of peanuts, consider the sacrifices of those who suffered before you; landing in chicken coops, landing in tree tops, landing in barbed wire fences, landing in Texas for day after day. And remember the immortal words of Cal Rogers; “I am not in this business because I like it, but because of what I can make out of it.”It has become the mantra of every airline passenger world wide.

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