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Tuesday, March 31, 2009

APRIL FOOLS DAY, 2009


I don’t approve of practical jokes. I seen nothing humorous in having your shoes set afire while you are wearing them. And dribble glasses are not only not practical they are also not funny - especially on “April Fools Day”, when every glass is a dribble glass and every shoe is a potential combustion chamber. And it turns out that this celebration of sociopathic behavior was invented by the French, a nation without humorous inclinations since Moliere slipped on a banana peel in 1673. But the story of April Fool’s Day began long before that tragic event, when in 1564 King Charles IX decided to follow Pope Gregory’s suggestion and begin the New Year with January rather than April. Why the French originally celebrated New Years Day on April 1st, I have no idea.
Now, in the 16th century France had only one road. It came out of Paris, turned left, looped all the way around the city and re-entered on the other side of town. This tragic design error,(the World’s first traffic circle) made communication with the majority of the nation difficult (and introducing the phrase “Out-of-the-loop”) and when combined with the French phone system - which was in no better shape in the 16th century than it is today - meant that a lot of peasants never got the King’s memo concerning the calendar adjustment.
So as they had every year thousands of these ill-informed peasants journeyed to Paris during the last week of March and on what they thought was New Year’s Eve, gathered in Bastille Square to say bonjour to 1565 and watch the guillotine drop. In unison they gleefully chanted, “Cing, quartre, trios, deux, un” and…No guillotine. No satisfying plop of a head into the basket. No champaign corks popping. No le Dick Clark. Instead of cheers and shouts of glee, mass ennui broke out amongst the masses. Now anyone who has experienced the Parisian version of “good manners” can imagine what came next; the locals mocked the bewildered peasants and made them feel like complete Americans,…ah,I mean,fools. But the way they did it makes the word “odd” seem inadequate.
For reasons beyond understanding the Parisians snuck up behind their confused country cousins, surreptitiously stuck a paper fish to the bumpkin’s backs and then shouted in a loud voice, “Poisson d’Avril!”, which translates as “April Fish!”, and then collapsed in raucous laughter and shouts of “tres bien.”
Why would they shout “April Fish!”? Perhaps because the first Parisian to label his victim an April “fool” immediately received a mouth full of fist, while calling the victim an April “fish” confused him just long enough so that the prankster could escape.
I have long thought that this uncharacteristic outbreak of French “humor” was actually inspired by Charles’ Italian Queen, Catherine de Medici, who was already famous throughout Europe for her gastronomical gags, such as her duck a la cyanide with a hemlock sauce. Only a Medici could see the humor in humiliating the people who handled your food.
But however it started the Parisians knew a good time when they saw it and they sent peasants on “fool’s errands”, and tricked peasants with “fool’s tales”, until every April 1st France reverberated with gales of laughter and shouts of “Poisson d’Avril!” Good times. But eventually the Parisian bullies grew bored with taunting the unresponsive peasants and in 1572 they shifted their attentions to the Huguenots. But by then the tradition of humiliating people for your own amusement on the first day of April had become popular. And like Disco music and Special Federal Prosecutors, once invented some institutions have proven impossible to stop.
This holiday for the humor-impaired spread around the globe with the new calendar like a fungus, infecting and evolving a little in each afflicted nation. The Germans added the “Kick Me” sign, and a second day which they call “Taily Day”, to further enjoy the frivolity of bruised buttocks. Ahh, those Germans.
In Portugal today’s innocent victim is hit with flour, sometimes while it is still in the bag - the flour not the victim. In Scotland the target is humiliatingly referred to as an “April Gawk” (?!), in England as a “Noodle” and in Canada as an “American.” I would have expected mental health professionals to call for a stop to this public insanity but evidently they are too busy setting their patients’ shoes on fire.
There is no defense for April Fool tomfoolery except a preemptive strike. So button up your top button, zip up your pants, tie your shoes and look out for that cat. And repeat after me; “Poison d’Avril, sucker!”
Funny, huh?
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FRIDAY: AN UNPAID DEBT

PIKE'S PIQUE

I have been searching for the right word to describe Zebulon Pike, and I keep coming back to “Shlub”. It is Yiddish word meaning a foolish, stupid or inferior person. But at least he was handsome. He stood “…5'8" tall, with a ruddy complexion, blue eyes and light hair…(was) a crack shot…(with) great physical endurance …” He was also a teetotaler who one biographer kindly described as “an efficient but unremarkable career officer” while another put it more succinctly; “…a puffed-up little popinjay...”. As proof of Zeb’s shlub-dom I submit his first voyage of discovery in 1805 when he was ordered to find the source of the Mississippi River.The 27 year old lieutenant set out on August 9, 1805 from Fort Belle Fontaine, on the south bank of the Missouri River, four miles upstream from its joining with the mighty Mississippi. He was accompanied by what he called a “Dam'd set of Rascels,” 20 soldiers manning a 70 foot keelboat. He included on his voyage no doctor, no interpreter and no one qualified to map the voyage, including Pike himself. Because of the low water level, Pike’s men spent as much time dragging their boat over sand bars as they did laboriously poling it northward. Two days of exhausting work brought them to the mouth of Illinois River, near present day Grafton, all of twenty miles from their starting point.The Mississippi river has been winding and looping here for 145 million years, following a weakness in the crust now called the New Madrid Fault line. But north of the Illinois river the big river has been more influenced by ice.
A mere 130,000 years ago the “Wisconsin Ice Sheet” covered most of modern Indiana under a lake. When that ice collapsed the lake drained catastrophically. Called the Kankakee Flood it carved a valley so deep that when a similar glacier blocked the big river 13,000 years ago the Mississippi itself chose this channel, exiting its old course at Rock Island, Illinois, some 200 miles above St. Louis.Another 150 miles above Rock Island, Pike found a perfect place for a fort, a 500 foot tall bluff (locally called Pike’s Peak) across the river from Prairie du Chien, a trading post at the mouth of the Wisconsin River. No fort was ever built there but it was here that Pike finally agreed the 70 foot keel boat monstrosity was too much trouble and shifted his men to two barges, easier to handle in the low water.At the mouth of the Minnesota River (655 miles from his starting point), on September 23rd, 1805, Pike took advantage of a gathering of Sioux Indians for a little land grab. He promised to pay them less than a dollar an acre for land on which the government would eventually build a fort, which would eventually become the city of Minneapolis.
But when Congress finally paid up for their new “Fort Snelling”, in 1808, the price had been summarily reduced by 90%. And even that was actually paid to the French and British traders who had been feeding the Sioux rot gut whiskey on credit during the intervening three years. Commenting on the friendly welcome Pike received from the Sioux and the treaty Pike duped them into signing, a modern Sioux observed, “They gave him the keys (to the city), but they didn't expect him to think he owned the city”. I would say that seventy years later General Custer got the revised bill for this deal.The next morning Pike arose to discover his personal flag was missing. He threw a fit. He had a soldier stripped to the waist and flogged for losing it. The Sioux were so disturbed by this display of pique that they dispatched two men downstream who found the flag floating in the river and returned it to the intrepid if insecure explorer.Fifty miles further to the north Pike reached the 60 foot high St. Anthony Falls, where the river passed from the hard surface dolomites to the softer sandstone bedrock. It took three days for his men to drag their barges around the falls, and it occurred to Pike (finally) that the local Ojibwe Indian canoes’ were lighter and more maneuverable than his barges. But instead of asking for help, Pike instructed his men in hollowing out a large log. Loaded with supplies, including most of their black powder, the huge canoe was slid into the river…and immediately sank. Pike ordered all the wet powder rescued and stacked on a rack over a fire, to dry out. The resulting explosion burned down his own tent and most of his personal clothing, supplies and notes. He barely saved his trunk.Back into the river again, with the current lessoning and the channel narrowing every day, four of Pike’s men came close to physical collapse. Sergeant Henry Kennerman, ““one of the stoutest men I ever knew,” according to Pike, began to vomit blood. Zeb wrote the men were, “…killing themselves to obey my orders.” With snow already falling, on October 16, 1805, Pike ordered the men to build a blockhouse. While they worked, he hunted, supplying them with fresh meat.With Sgt. Kennerman in charge of the ill men left behind at the blockhouse, Pike led a small detachment overland, on snowshoes and pulling sleds, both borrowed from local British traders. They followed the river as best they could. On December 10th they reached the little falls of the Mississippi, and on the last day of the 1805 they camped near the mouth of the Pine River. On the night of January 4th Pike suffered another black powder explosion. (Where was storing his powder, in the smoking tent?)
Finally, on February 12th , 1806, “…exhausted and worn out by cold, hunger and exposure” Pike reached Red Cedar Lake (later renamed Cass Lake). Here, I suspect out of sheer desperation, Pike wrote, “This may be called the upper source of the Mississippi River.”Pike may have called it that, but it wasn’t. Twenty- six years later, in 1832, Henry Rowe Schoolcraft followed an Anishinaabe Indian guide (another approach Pike never tried) to a small lake that he named Itasca, and which he declared was the actual source of the great river, and that is what most tourist today accept. But that isn’t the actual source either.
The actual source of the “father of waters” is Little Elk Lake (below), 9 miles further upstream. Little Elk Lake drains into Elk Lake, which drains into Lake Itasca. Ninety days after a drop of rain falls on Little Elk Lake, it flows into the Gulf of Mexico.Pike was not very concerned with details like that. What concerned him was that when he got back to the blockhouse he found that Sgt. Kennerman had recovered. The Sargeant was feeling so well, in fact, that he had eaten or bartered away the entire companies’ supply of meat and Pike’s personal trunk as well, which had survived two explosions and at least one dumping in the river. No explanation for his actions was offered by the now Private Kennerman. But Pike lost no time in returning to civilization.He arrived back in Fort Belle Fontaine on April 30th , 1806. Ordered to find the source of the Mississippi, Lt. Pike had failed. In fact he had failed to locate a single stream, river or lake which had not been previously mapped. And yet the “Lost Pathfiner” was immediately dispatched to explore the southwestern edges of the Louisiana Purchase, during which he probably spotted a mile high peak named after him, and during which the long suffering Private Kennerman deserted, never to be seen again.Ever a self promoter, Pike rose to the level of Brigadier General during the War of 1812. And he played a crucial but little known role in that war. It was general Zebulon Pike who led the assault on the capital of Upper Canada, the city of York, (since renamed Toronto), on April 17, 1813. When a British mine exploded prematurely, killing 42 British and 52 American soldiers, Pike was hit in the back by a falling rock, which killed him. In retribution his soldiers burned the Parliamentary Buildings in York. And it was that act of vandalism which the British repaid by the burning Washington, D.C. on August 24, 1814.I would call that quite an impressive funeral pyre for a schlub.
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Saturday, March 28, 2009

RECENT HISTORY

I suppose by now you have read the letter. I am referring to the note of resignation from Jake DeSantis (below), the Executive Vice President and self appointed VP for whining from American International Group, Financial Products unit. If you haven’t read it recently, allow me to remind you:“Dear Mr. Liddy…I am proud of everything I have done…have been betrayed…unfairly persecuted…11 years of dedicated, honorable service… I have personally suffered…. feel betrayed… untrue and unfair accusations… None of us should be cheated of our payments any more than a plumber…I received a payment from A.I.G. amounting to $742,006.40, after taxes… Sincerely, Jake DeSantis".
First, please excuse me but I have to blow off a little steam by mentioning that it seems to me that all these professors of procyclicality, credit default swappers, derivative magicians and Credit Default Option voodoo witch doctors, all insist it was somebody else who farted in the elevator. And yet it stinks.
Someone should explain to Mr. DeSantis that each year there are plenty of plumbers cheated out of their earnings when the financial wizards run out of money and declare bankruptcy or just torch the condos under construction for the insurance. And without a union every Joe the Plumber (to pick a name at random) has no choice but to hire a lawyer and get in line to eventually collect a few pennies on every dollar he or she is due. It is called capitalism, and one of its central tenets is that it is unfair. But for some reason most of the financial wizards think that tenet only applies to other people.Now that I have that out of the way – on to the history: AIG was founded with just 300 yen in 1919 in Shanghai, by Cornelius V. Starr (above). And, good news for all conspiracy freaks, C.V. Starr is the uncle of Ken Starr, Whitewater prosecutor and publisher of legal brief pornography. C.V. was selling insurance to the Chinese. According to Fortune Magazine in 1935, although he “never bothered to become proficient in Chinese…” C.V.’s “knowledge of China is encyclopedic, and he is famed in the foreign community for his uncanny ability to work with and through the natives.” That also probably helped his work (if any) for the American Office of Strategic Services (O.S.S.), forerunner of the C.I.A., for which C.V. openly worked during World War One and – I suspect- beyond. When the communists ran A.I.G. out of China in 1949 Cornelius moved his operations to New York and the tax haven of Bermuda. So, if you are so inclined, you can connect the current financial disaster to the C.I.A. plots to murder Castro and overthrow the government of Chile.Now we jump ahead to September 25, 1987, when a minor item appeared in a column by New York Times business writer Michael Quint; “…the Imperial Savings Association is offering the first issue of notes…through Drexel Burnham Lambert…The notes are collateralized by a pool of junk bonds whose market value is estimated at 175 to 180 percent of the new three-year notes….The financing provides fresh cash for Imperial while allowing it to benefit from the difference between the high interest rates paid by the junk bonds and the much lower interest rate on the new notes.”
In other words they were borrowing money, collateralized with money they were owed by third parties. Those notes were without a name yet, but they would one day be christened Collateralized Debt Obligations. The parents did not survive the birth by much. Drexel Burnham and Lambert filed for Chapter 11 bankruptcy on February 13, 1990 and vanished from Wall Street soon after. And Imperial Savings was taken over by the Resolution Trust Association (and the taxpayer) on June 22nd of the same year.
But their terrible child, the CDO, described by investor Warren Buffet as an “investment of mass destruction”, grew into adulthood without any parental oversight thanks to the era of deregulation.
The market savvy junkies call the CDO a synthetic security (implying there is such a thing as a natural security), and along with “credit swaps” (“I'm going to trade you my dead cow for your dead horse”) came to rule the financial markets. They were not well known in the market until 1998 when the banking firm of JP Morgan asked AIG to insure their credit default swaps against a market collapse. AIG-FP, populated as it was with MIT physics and math grads (the only people who understand derivatives), turned to a professor of business at Yale, who figured out that there was a 98.85% chance that AIG would never have to payoff on the insurance. Ooops. And that is how AIG became the chief enabler for the CDO juggernaut, on the mathematical assurance that the good times were going to go on forever.
But, as any historian could have told Mr. DeSantis to a mathematical certainty (and that Yale professor as well) that the good times never have and never will go on forever. That is another basic tenet of capitalism. These guys really should learn this stuff.
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Tuesday, March 24, 2009

THE BRIDGE AT LODI

I begin with the event, as described by John Cabot. “The line wheeled instantly into a dense and solid column, crowding the street with its impenetrable mass. Emerging from the shelter upon the full run, while rending the air with their enthusiastic shouts, they rushed upon the bridge. They were met by a murderous discharge…the whole head of the column was immediately cut down like grass before the scythe, and the progress of those in the rear was encumbered by piles of the dead. Still the column pressed on,…until it had forced its way to the middle of the bridge. Here it hesitated, wavered, and was on the point of retreating…when Napoleon, seizing a standard…placed himself at the head of the troops, and shouted, “Follow your general!” The bleeding mangled column, animated by this example, rushed with their bayonets upon the Austrian gunners….The French army now poured across the narrow passage like a torrent…”The great Prussian general and student of Napoleon’s methods, Karl Von Clauswitz, announced at the time, “There was no feat of arms which excited such amazement in Europe.” The audacity and courage of the attack quickly made Napoleon famous in Germany and England as well as France. A century later the English poet Thomas Hardy would write;“On that far-famed spot by Lodi, Where Napoleon clove his way
To his fame, when like a god he, Bent the nations to his sway…
Even as when the trackway thundered, With the charge of grenadiers, And the blood of forty hundred, Splashed its parapets and piers…”
Napoleon always contended that the Bridge at Lodi marked a transition in his life. “From that moment I foresaw what I might be. Already I felt the earth flee from beneath me, as if I were being carried into the sky.” The very night of the battle Napoleon told one of his generals, “They haven’t seen anything yet. In our time no one has the slightest conception of what is great. It is up to me to give them an example." And an historian would later write, “The battle at Lodi convinced Napoleon Bonaparte that he was a man of destiny.” That conviction propelled him, in just six years, to declare himself Emperor of France. But…Forget the painting. In 1796 the 27 year old Napoleon crossed the Alps on a mule. The revolutionary government in Paris had given him command of the stalemated war in Italy because, as an official warned, "Advance this man or he will advance himself without you." Within an hour of taking command of 37,000 starving men in the Alpine foothills, Napoleon issued his first order. “I seek to lead you into the most fertile plains in the world…There you will find honor, glory, and riches.” And they did. Within a month and with a minimum of fighting Napoleon had outmaneuvered the 50,000 man Austrian army and cleared Italy south of the River Po.That broad river now protected the Austrian Army under General Beaulieu and it did not seem possible that the outnumbered French could force their way across without suffering debilitating losses. But without pausing to consider the odds Napoleon feinted toward the bridge at Valenza. Then, “When certain that Beaulieu had his eye on that point, Bonaparte marched rapidly down the river, and crossed at Placentia…. Beaulieu took alarm, and withdrew the body of his army, …Bonaparte was jubilant. " ...Another victory, and we shall be masters of Italy." (“A Life of Napoleon” by Ida Minerva Tarbell). That next victory was to be the Bridge at Lodi, on May 10th, 1796. However…The Austrians lost 355 men killed defending the bridge while estimates of the French dead run as high as 2,000. Also, the Lodi bridge (over the River Adda, above) was at most 200 feet long, not 600 as Napoleon claimed in his dispatches. And even David Chandler, in his massive “The Campaigns of Napoleon” was forced to admit, “In sober fact, of course, the result was another disappointment…for once again Beaulieu had evaded his clutches and made good his escape.” In other words General Beaulieu was not present at Lodi, but only a 10,000 man Austrian rear guard, which would have abandoned the bridge without a fight if only given the chance. The Battle of the Bridge at Lodi was totally unnecessary - except for its role in the creation of the Napoleonic legend.
Philip Dwyer calls the legend of Napoleon leading the charge across the bridge, “…remarkable, since Bonaparte was not personally involved in the crossing and in the memories of the day he is not even mentioned….And yet, within a month, this ‘feat’…was to become the cornerstone of the Napoleonic legend.” And as far as proving to Napoleon his own greatness, Steven Englund, yet another Napoleon biographer, has observed that Napoleon’s “… belief in his own superiority was strong and clear and it predated Lodi” (Napoleon, p 108). So the traditional story of the Bridge at Lodi, Napoleon’s version, was largely what would today be called “spin”. And a decade after becoming Emperor, after the death of three to six million souls in his name and opposing him, the map of Europe would look a great deal like it did before his rise. Great social forces were unleashed by the revolution but a decade and a half after his rise Napoleon’s empire would consist of one large house on a rock in the middle of the South Atlantic.In the wake of the invasion of Iraq, and before the full implications of its bungling had become obvious, a member of a later generation of spin makers told reporter Ron Suskind, in October of 2004, “We’re an empire now and when we act, we create our own reality. And while you’re studying that reality…we’ll act again, creating other new realities, which you can study too…We’re history’s actors…and you, all of you, will be left to just study what we do.”“Not a creature cares in Lodi, How Napoleon swept each arch,
Or where up and downward trod he, Or for his memorial March!
And if here, from strand to steeple, Be no stone to fame the fight,
Must I say the Lodi people, Are but viewing the crime aright?”
“The Bridge at Lodi” by Thomas Hardy, Spring 1887

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