Seeking Redemption

There are no second acts in American life.

F. Scott Fitzgerald said that, no doubt referring to his career. He wrote that brilliant first novel – The Great Gatsby – perhaps the Great American Novel, as they say. But each novel that followed was less good. And he ended up living his last days out here in Hollywood, just down the street at his small apartment at 1403 North Laurel Avenue, working on commercial short stories, scripts for MGM, and his final novel, The Love of the Last Tycoon. He never finished that. In those Hollywood years – lunch and long afternoons of drinking up the street at Musso and Frank, sometimes with Faulkner, who had the sense to get out of Hollywood fast – he probably was a bit bitter. His wife Zelda was quite mad and locked up at Highland Hospital back east in Asheville, and kicking around in Paris with Hemingway and on the French Riviera with the pretty people, who were very rich, was far in the past. What happened?

But he should have known. That’s what the Gatsby novel was all about. Jay Gatsby was trying to have a second act. There had been a first act. No one knew how he got all his money, but he did. But that didn’t matter. The past didn’t matter. Gatsby was using all that money to win back the girl of his dreams from long ago, the lovely but painfully shallow Daisy Buchanan, who had long ago married someone else, for money. But that someone else was a crude dolt. Gatsby thought he could have a second act, or thought if he had enough money he could buy one – he and Daisy would be together as they should be. But he ended up shot dead, floating face down in the swimming pool – kind of like the character William Holden played in the movie Sunset Boulevard. And that’s another tale of there being no second acts. Norma Desmond didn’t get it either. There would be no triumphant return to the screen. There is no second act.

So here’s bit of advice. Don’t sell everything and move to California to reinvent yourself or redeem yourself or whatever. It seldom works. You know the songs – Hollywood Nights or Life in the Fast Lane or The Last Resort or all the others. This is where the American dream ends, as far west as you can go. The rest is just the empty blank ocean. If you visit we can have lunch down on the corner at Greenblatt’s – where Fitzgerald had his last meal. You’ll get a feel for it all.

Or maybe you won’t. We are a religious nation, and mainly a Christian nation, so we believe in redemption, in being saved. Jesus can give you a second act, no matter how much you’ve screwed up, as he will wash your sins away and remake you. It’s that Amazing Grace thing, that grace that can save a wretch like you.

This is a bit unusual, as Stephen Prothero points out here:

Christians see sin as the human problem and salvation from sin as the religious goal. Buddhists see suffering (which, in their tradition, is not ennobling) as the problem, and liberation from suffering as the goal. Confucians see social disorder as the problem and social harmony as the goal. And so it goes from tradition to tradition, with Hindus seeking release from the cycle of life, death, and rebirth, Muslims seeking paradise via submission to Allah, and practitioners of the Yoruba religion seeking sacred connections – among humans, between humans and the persons of power they call the orishas, and between humans and the natural environment.

That whole item is fascinating, but we are who we are. We may know in our bones that there are no second acts, and we believe in them. Various professional sports name their Comeback Player of the Year. And Tiger Woods has been a jerk, betraying his wife and being a first-class sinner in some eyes, or betraying his fans and ruining the sport, or betraying his race or what have you – but he may make a comeback and redeem himself. He just has to be really sorry and remorseful and ask forgiveness, and Fox News’ Brit Hume says Woods obviously has to give up his Buddhism and get with Jesus, because Jesus can forgive anything if you give yourself to Him. Hume says Woods can recover as a golfer, but to recover as a person he must become a Christian to be forgiven. Apparently that’s the secret to second acts.

Of course there’s Fox News’ Glenn Beck – a goofball with severe Attention Deficit Hyperactivity Disorder and a drunk and drug addict, who became a Mormon and a Fox News star. Joseph Smith gave him a second act, or Rupert Murdoch did.

And the most famous example of getting a second act in American life is George W. Bush – an alcoholic and perhaps a heavy user of cocaine until he turned forty. Hume may have been thinking if him when he made his remarks about Woods.

But there’s a problem with that example, which Alan Bisbort pointed out in American Politics back in 2002:

Alcoholics Anonymous has a name for someone who is a drunk in every way except for the actual imbibing of spirits. They call that person a “dry drunk.” This is not a judgmental term, nor should this be a judgmental topic in America, where there are, by even the most conservative estimates, ten million adult alcoholics, and very few families that have not been touched, in one way or another, by this national scourge. This same scourge has, by his own admission, also touched the life of our Commander in Chief.

Whether George W. Bush is or was an alcoholic is not the point here. I am taking him at his word that he stopped what he termed “heavy drinking” in 1986, at age 40. The point here is that, based on Bush’s recent behavior, he could very well be a “dry drunk.” Of course, he may just be an immature bully who will gladly sacrifice thousands of lives to get his way even against the advice of the most respected and mature members of his own party.

Second acts may not be what they seem:

How did he, at age 58, get so fumble-tongued, incapable of stringing more than two coherent sentences together, snippily irritable with anyone who dares disagree with him or even ask a question, poutily turning his back on the democratically elected president of one of our most important allies because of something one of his underlings said about him (Germany’s Schroder, of course), listlessly in need of constant vacations and rest, dangerously obsessed with only one thing (Iraq), to the exclusion of all other things (including an economy that is slowly sucking the life from the nation as well as the retirement savings of anyone reading these words)?

Furthermore, why is Bush so eager to engage in violence and so incapable of explaining why?

Katherine Van Wormer, a Professor of Social Work at the University of Northern Iowa and co-author of Addiction Treatment: A Strengths Perspective had a few things to say about that:

Such an individual tends to go to extremes.

It was when I started noticing the extreme language that colored President Bush’s speeches that I began to wonder. First there were the terms – “crusade” and “infinite justice” that were later withdrawn. Next came “evil doers,” “axis of evil,” and “regime change” – terms that have almost become clichés in the mass media. Something about the polarized thinking and the obsessive repetition reminded me of many of the recovering alcoholics/addicts I had treated. (A point worth noting is that because of the connection between addiction and “stinking thinking” relapse prevention usually consists of work in the cognitive area). Having worked with recovering alcoholics for years, I flinched at the single-mindedness and ego and ethnocentricity in the President’s speeches. (My husband likened his phraseology to the gardener character played by Peter Sellers in the movie, Being There). Since words are the tools, the representations, of thought, I wondered what Bush’s choice of words said about where he was coming from.

So she looks at the characteristics of the dry drunk:

Exaggerated self-importance and pomposity

Grandiose behavior

A rigid, judgmental outlook

Impatience

Childish behavior

Irresponsible behavior

Irrational rationalization

Projection

Overreaction

So this:

George W. Bush manifests all the classic patterns of what alcoholics in recovery call “the dry drunk.” His behavior is consistent with barely noticeable but meaningful brain damage brought on by years of heavy drinking and possible cocaine use.

So the nasty and belligerent and proudly incurious man who had failed at everything he touched had a second act, but it ended in disaster, proving Fitzgerald right after all. Reinventing yourself is a really cool idea, but sometimes the damage is done, and it’s permanent. And Jesus isn’t helping you. He’s just providing personal comfort for you as everything turns to dust, or so you believe. And of course you can say you are only doing what Jesus would want you to do, just to get people to stop snickering at you. That’s some second act.

But there may be a way to have a second act, providing there’s no organic brain damage involved. And one man seems to be on his way to doing the impossible:

Christine Kearney, Reuters, Sunday, April 25, 2010:

NEW YORK – Eliot Spitzer left a lot of enemies in his wake as the “The Sheriff of Wall Street” and some still have not forgiven the former state attorney general, who resigned in 2008 as governor of New York in a prostitution scandal.

These opponents, prostitutes and Spitzer himself, talk for the cameras in a new film, shown for the first time as work-in-progress at the Tribeca Film Festival on Saturday night.

The as-yet-untitled film details Spitzer’s days crossing companies including Merrill Lynch, AIG and The New York Stock Exchange as New York attorney general and trying to change dirty politics as governor in the state’s capital of Albany.

It seems the secret of a second act is not trying a second act, but doing what you were doing just fine in the first act. Some will remind everyone of the scandal, and say that means no one should listen to you, but if what you were doing well in the first place is still important to do, or even more important these days, Brit Hume can say what he will about Jesus. Sometimes sinners who don’t much care what you think of their inherent evil can do useful things. And forgiving them then becomes moot.

And this new documentary film is interesting:

Among the Wall Street types interviewed was ex-New York Stock Exchange director Kenneth Langone, who said Spitzer was feared on Wall Street. “I like to think that I am not a vindictive person,” he said, but continued, “I can’t forgive him.”

Former Goldman Sachs chief executive John Whitehead recalled Spitzer’s aggressive manner and tactics. “He said, ‘I will destroy you.'”

“I hope I didn’t say that,” Spitzer said on camera.

Of course Spitzer did not show up for the screening. There was no point in stirring the pot. And what was on screen was controversial enough:

In one of the four interviews for the film he discussed his prostitution scandal, in which he paid $100,000 for high-priced prostitutes.

“You cave to temptations in ways that seem easier and perhaps less damaging,” he says. His wife, Silda Wall Spitzer, declined to be interviewed.

Spitzer’s alleged former favorite escort, “Angelina” – now a commodities trader – recalled meeting Spitzer outside New York in Puerto Rico, Washington and other places.

She said there was a tacit agreement not to acknowledge his identity. “He knew I knew,” she said. She also denied previous reports that he had worn black socks during sex.

Angelina’s identity is not revealed and an actress read her answer on camera.

It’s all hot stuff. But Spitzer wants a second act, or to continue the first:

Spitzer, who has fueled speculation of a return with increased visibility in interviews and as a pundit, recently told Fortune magazine that he was “incredibly frustrated” at no longer being governor. “I’ve never said I would never consider running for office again,” he added.

Can he do that? He resigned a year after becoming governor and has kept a low profile until the US Attorney’s office announced it would not seek charges. No charges, ideas on how to fix the system – he could do this. Fox News may scream that he’s been disgraced, but he may have something to say, and have useful things to do. And David Vitter – the guy who had the DC Madam provide him prostitutes for sex where he wore diapers and pretended to be an infant – is still a Republican senator after all. Maybe Democrats can catch a break too. And the Reuters item quotes the film’s director suggesting what many assume – the big Wall Street firms made sure Spitzer was caught and charged and that it was all very public – you don’t mess with the big boys.

And Joe Conason says this former New York governor shows every sign of spoiling for a fight with his old enemies on Wall Street – “Whether or not Spitzer believes there was a conspiracy against him, he shows no signs of backing down from his old adversaries.”

Conason cites this item in New Deal 2.0 – the news and opinion website of the Franklin and Eleanor Roosevelt Institute – where “Spitzer and Bill Black, the economist and scholar who is among the nation’s leading experts on financial fraud, launch a broadside at Goldman Sachs and former Treasury Secretary Hank Paulson, among others, and more or less insist that the public interest demands indictments.” And yes. We’re talking crimes:

For those who have spent years investigating fraud, it was no surprise to hear that Goldman Sachs, the (self-described) jewel of Wall Street, is the latest firm to emerge from the financial crisis with tarnished reputation. According to a lawsuit brought by the Securities and Exchange Commission, Goldman misrepresented to its customers the quality of the toxic assets underlying a complex financial derivative known as a “synthetic collateralized debt obligation (CDO).”

As you may now have heard, the story involves a pair of Paulson’s. As CEO of Goldman, Hank Paulson oversaw the buying of large amounts of CDO’s backed by largely fraudulent “liar’s loans.” When he became U.S. Treasury Secretary, he went on to launch a successful war against securities and banking regulation. Hank Paulson’s successors at Goldman saw the writing on the wall and began to “short” CDO’s. They realized that they had an unusual, brief window of opportunity to unload their losers on their customers. Being the very model of a modern investment banking firm, they thought that blowing up their customers would be fine sport. …

John Paulson (unrelated), who controls a large hedge fund, also wanted to short CDO’s and he, too, recognized that there was a narrow window for doing so. The reason there was a profit opportunity was that the “market” for toxic mortgages only appeared to be a functioning market. It was, in reality, a massive bubble in which ratings and “market” prices were grotesquely inflated. The inflated prices were continuing only because the huge players knew that the prices and races were fictional and were covering it up through the financial equivalent of “don’t ask; don’t tell.” According to the SEC complaint:

In January 2007, a Paulson employee explained the company’s view, saying that “rating agencies, CDO managers and underwriters have all the incentives to keep the game going, while ‘real money’ investors have neither the analytical tools nor the institutional framework to take action.”

That sounds like conspiracy and fraud. And these two want Hank Paulson’s hide too. As second acts go, this is pretty dynamic – unless it’s just the first act continuing, after a brief interruption.

Conason does note that New Deal 2.0 also features an alternative view of the SEC action against Goldman. That’s’ by Bowman Cutter, a former Warburg Pincus managing partner, “who says that although he doesn’t believe the giant bank committed a crime, the Paulson deal reveals why, in the absence of real financial reform, the instinctual greed of its partners may devour us all (again).”

That’s not much of a defense – there was no crime, per se, just actions that will ruin us all.

And then there’s Spitzer’s column at Slate:

In ordinary times, the SEC’s fraud case against Goldman Sachs would have been settled before it was even filed. There would have been a consent decree in which Goldman neither admitted nor denied any wrongdoing, paid a fine, and agreed to make more fulsome disclosures in the future.

But these are not ordinary times, and HE’S BACK!

And things are falling his way, and he wants more this time around:

The Republican effort to oppose financial regulatory reform is now fading into an effort to forge a compromise that will give them some sort of defensible exit strategy. Under any bill that is likely to pass, derivatives trading will become reasonably transparent; a consumer protection agency will be created with a significant degree of independence; some chairs will be rearranged on the organizational deck of the regulatory ship of state; capital requirements and leverage ratios will be adjusted in ways that will be designed to reduce overall risk; and a systemic risk overseer will be created.

This is all good stuff, but none of it is really adequate to address the “too big to fail” structure of the financial industry in a fundamental way. And it won’t repair the underlying asymmetry of our having “socialized risk” and “privatized gain” for those entities that have an explicit federal guarantee behind them.

The furor around the Goldman case offers an opportunity to consider Wall Street’s most profound, and entirely ignored, crisis. Now that we are seeing the inner workings of the products that Goldman is marketing, we must ask whether what Goldman and others investment banks do deserves the huge public subsidies they have received. Do they do anything that has any real social value?

That’s harsh, but then he cuts their legs out from under them:

In the traditional model, investment banks are thought to serve two critical functions. First, they are financial intermediaries: They are the conduits for transferring savings to those sectors of the economy that need capital. They fulfill the essential function, the economists tell us, of efficient allocation of capital. That is where their initial public offering and other capital-raising functions come into play. They enable productive companies to access the capital markets so they can grow their businesses. Second, they are supposed to be market makers that provide liquidity and stability in the markets to permit the free flow of capital on an ongoing basis.

The question that must now be asked is: Are investment banks doing that? Are they doing the things that merit public support at all? Or are they just running a casino with products that have no great social utility?

The regulators, legislators, and investigators have not focused on the fact that the fundamental business of banking has changed from capital allocation to, essentially, gambling.

And he says the real question is how big banks deploy their capital and how they make their money.

1. What percentage of Goldman’s capital is dedicated to proprietary trading, as opposed to capital formation for client companies?

2. What percentage of Goldman’s profits derives from proprietary trading, asset management, and prime brokerage activities; and what percentage comes from capital formation for client companies?

3. What percentage of Goldman’s profits derives from marketing and trading derivatives, specifically the synthetic CDO’s that are at the heart of the SEC investigation?

4. What percentage of Goldman’s capital has been invested in U.S. government securities over the last year, essentially taking advantage of an interest arbitrage between Goldman’s cost of capital and the rate being paid on Treasury bills?

5. How much income did Goldman derive from bets against products it marketed?

6. How much capital – debt and equity – have Goldman and the other major investment houses raised for their clients over each of the past five years?

7. How much capital have they invested overseas in foreign-based companies – especially through private equity funds?

And he says that’s just a start. So, do you want to talk about his sexual appetites and his foolish choices there and how he did his wife and family wrong? Or do you want to talk about Goldman Sachs and the like are how they might be not only useless, but dangerous, and what we can do about that? That’s your choice.

There are no second acts in American life. That’s not always true.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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