A Review of "Wall Street" - Part II

This is part II of the series I began with this post. In this review, we'll look at the drivers of the character of Gordon Gekko. While I am not in complete agreement with Daniel from crookedtimber.org regarding Gekko being a sympathetic character, he does point out several things about Gekko which clearly played a role in his development. He does have some admirable and sympathetic qualities, which I think will become clearer as you read this (if you disagree initially). All I ask is that you keep an open mind.

There seems to be a bit of controversy around Oliver Stone creating films in which the protagonist is torn between different "fathers". He mentions this in the director's commentary in the 20th anniversary edition DVD. In "Wall Street", those fathers are Bud's biological father Carl (played by Martin Sheen, Charlie Sheen's biological father) and Gordon Gekko, who takes young Fox under his wing. However, this father theme extends even further into the film, and is critical to understanding Gordon Gekko as a person.

In the scene "Business Philosophy" (20th anniversary edition DVD), Gekko says the following to Bud while they ride in the back of Gekko's limo:

"My father, he worked like an elephant pushing electrical supplies til he dropped dead at 49 with a heart attack and tax bills."

Now, why is this important? Well, we don't know how old Gekko was when this happened, but presumably it was when he was quite young, possibly less than 10 years old.

As it so happens, there was a profile of Sir James Dyson, inventor of the Dyson bagless vacuum cleaner, in the Telegraph UK in August 2008. In that profile, Dyson mentions the impact of his father dying when he was young. He also notes that 75% of British Prime Ministers lost their fathers before age 10. This loss, Dyson reckons, instills within the sons a feeling of individualism, of being alone in the world, and thus being forced to succeed because they know there is no one else out there to help them. (Never mind other family such as siblings or a surviving mother.)

Now, if we compare the descriptions of these men whose fathers died before their 10th birthdays, we see a lot of traits that map back to Gordon Gekko. Individualism, even arrogantly so. A selfishness and self-centered orientation personality, derived from the feeling (whether accurate or inaccurate) that Gekko was left alone to figure out the world after his father's death. Focus and determinism. This is evidenced by his rise within the financial world even as a "City College boy".

The other thing you'll notice, if you look past the coarse tone of voice he uses while saying it, is Gekko's disappointment at his father's death from overwork. He clearly believes that his father worked hard and never truly benefited from his labor, so he sees no need to do hard work if another (easier) avenue to his goal exists.

The other major sympathetic moment we have with Gekko, and one I think was majorly overlooked by most, occurs in the scene "A Safe Distance". This is the scene where Bud is at Gekko's beach house signing power of attorney forms to distance himself from Gekko. Now, this whole process inherently violates the notion of Gekko being victimized by Bud. The whole explanation of the process by is clearly saying that you (Bud) will be performing actions which expose Gekko to legal risks he does not want to assume. Thus, this is another point of disagreement for me with crookedtimber.org's analysis; why would Gekko go through this legal maneuvering if he didn't at least believe there was a risk exposure? Gekko, like all great investors, has to understand the idea of risk management. Legally distancing himself from Bud is such a tactic.

Getting back to my original point, the key to this scene is when Gekko's son Rudy is brought poolside by his nanny (au pair?). As soon as Gekko sees his son, he turns into a typical blubbering parent, runs to meet his son, and picks him up. While holding him, he has his son say "hello" to Bud in french. Gekko then takes his seat back at the table, while still holding his son and gloating about how Rudy had "the highest score on his I.Q. test". Looking through the absurdity (an I.Q. test for a 3 year old) and arrogance in that statement, Gekko can be seen as a loving father boasting about his son's achievements. Later, after handing Rudy a raspberry which he immediately pelts across the table, Gekko licks Rudy's fingers clean.

Adding all of this up, we are presented with the picture of Gekko as a doting father who is able and more than willing to give his son all the things his father was unable to give him (Gekko) due to his untimely death.

Returning to the father theme, and the humanity of Gordon Gekko for a last time, we see it on display in the next to last scene on the 20th anniversary edition DVD. In "The Abyss", Bud faces Gordon in Central Park while wearing a wire, unbeknown to Gekko. After using Bud as a punching bag while reciting another great soliloquy, Gekko says these words to the bleeding Fox: "You could have been one of the great ones, Buddy. I look at you, and I see myself. Why?" Gordon, for all of his exploitation of Bud, has developed a true affinity for the younger man and here it is on fully display. After the 2 part, and Bud begins walking toward Tavern on the Green, we're left to linger on Gordon as he walks in the opposite direction. If you watch closely, you'll see in Gordon's eyes the hurt that he feels at the betrayal by someone he allowed to get closer than any other. He carries a somewhat dazed look, as well as the hint of wanting to cry. While his anger is real, Gordon's anger is also a mask (as anger usually is), a cover for the feeling of hurt, loss and disappointment. Anyone who has ever truly and deeply felt those feelings has had a look on their face much like Gordon's at some point, even if they didn't know it.

Personally, I believe these largely overlooked aspects of Michael Douglas' performance were the biggest contributors to his winning the Oscar for Best Actor in 1988. It is easy to overlook the softer side of the character. Oliver Stone intentionally wants us to dislike Gordon for his role in Bud's downfall, and generally how he uses people. However, Gordon is not without emotions. He's human, even if he doesn't want to appear to be.

Should Gordon Gekko be idolized? That is debatable. However, I do think he has as many "good" qualities as "bad" ones, and that needs to be recognized and accepted. We don't have to like the person to see them as they truly are, not as their ego thinks they are or wants them to be. You don't have to like the person, or the person's actions, to transcend your own personal biases and realize that, at our cores, we are all, in some way, just hurt, afraid, scared and vulnerable 8 year olds who have never EVER truly grown up. Even Gordon Gekko.

Happy

Yaaaay!!! Yay!

While it's not the best outcome, compared to what the President is proposing about giving the Federal Reserve more powers to not use (or use incorrectly and/or unevenly), this is a much better outcome.

It's similar to the concept of the 3 branches of government. Absolute power corrupts absolutely, and the Fed has had too much power for too long as it is. Dividing responsibilities among different organizations will prevent this concentration of power among people who don't give a goddamn about the needs of the citizenry. (Greenspan didn't and Bernanke sure as hell doesn't.) It will also force those other regulatory bodies to build their strengths. The FDIC, CFTC, SEC, OTS, OCC and whomever else gains powers through this legislation have been long neglected in the financial regulatory framework (especially the SEC), with too few strong players on bench to execute their missions. Hopefully, this is the beginning of balancing the Fed's evil powers with less evil powers elsewhere. (Whether there will be good coming out of these other agencies is TBD.)

This makes me happy, sort of! Yay!

P.S.: The Federal Reserve should still be audited. Even if this effort is successful, it doesn't change the need to audit and hopefully dismantle the Fed.

My Letter to Steny Hoyer about H.R. 1068, the "Let Wall Street Pay for Wall Street’s Bailout Act of 2009"

Below, you will find the text of the letter I just e-mailed to Steny Hoyer, the Democratic congressman from the Fifth Congressional District of Maryland. It is unedited. Amazingly, I managed not to curse. I will be following this up with phone calls.

If you haven't heard, H.R. 1068 can also be known as the "Let Wall Street Pay for Wall Street's Bailout Act of 2009". Of course, this legislation, like all the crap coming out of DC these days, lands squarely on regular investors like you and me. These fuckwits really deserve a bullet for their intentional destruction of this once great nation. And if this is how Oregon's congressman likes to treat investors and traders, that state should fall into the Pacific Ocean along with California. What a bunch of losers!

I don't normally talk about politics here because I honestly could care less about the subject. It's all legal crime and evidence of how Americans are handing over their Constitutional freedoms to the cock knocker with the best sob story. However, this horrible excuse for legislation will affect everyone, myself included, who hasn't yet escaped from this sinking ship of a nation. This legislation needs to be murdered outright, not modified, not amended, but simply killed. It is terrible for anyone who owns, or would own, any kind of security. And we all know that once a tax is levied, the government has no incentive to get rid of the revenue. (It took 108 years to PARTIALLY kill the Federal telephone excise tax which was originally levied to pay for the Spanish-American War!) Item 8 under Section 2 is a blatant lie!

Anyway, I hope you enjoy. Without further ado...

Representative Hoyer,

I am writing to lodge an official complaint about, and to implore you to do ANYTHING and EVERYTHING in your power to kill H.R. 1068., also known as the "Let Wall Street Pay for Wall Street’s Bailout Act of 2009".

As you must be well aware, the first rule of taxes is "whatever you want less of, tax". I'm sure higher cigarette taxes discourage casual smokers from engaging in an activity that is harmful to themselves. The hardcore, committed smokers are willing to trade the tax money for their fix. The government collects tax revenue on that transaction. But I would posit that much smoking has been ended or prevented due to the increase in cost associated with taxes on cigarettes. Probably way more success has been had by increasing the economic cost of smoking than by highlighting the physical damage done by smoking.

Clearly, by proffering such an absurd piece of legislation, your colleague Rep. Peter DeFazio [D-OR] seeks to discourage securities trading and investing in the United States. I'm sure there are other countries, other stock/options/commodities/futures exchanges outside of the United States which would proudly take up that business, since you and your colleagues seem so interested in giving it away. So please tell me, is killing the trading of securities what you and the Democratic Party want for this country? This is "change that disgusts me", quite honestly.

First, I am a small trader. I already pay significant commissions through my broker, and short term capital gains taxes on my trading earnings. Fine. Imposing a 0.25% tax on sales and purchases would greatly reduce my ability to conduct my business of trading. In fact, it would actively DISCOURAGE me from this activity. I know I am not alone, and many small traders would either stop trading or seek ways to avoid owning the tax to the US Federal Government at all.

Second, this act would DECREASE market liquidity. If buyers and sellers are DECREASED in number, prices of securities will reflect that by going DOWN. You and any other congressional representatives who vote for this act will be contributing to the death of American stock markets. Prices will fall, buyers will strike, and sellers will spend more time and effort seeking to devise clever ways around paying in order to exit a losing position. How are any of these desirable? Liquidity will move to other exchanges around the world. Private companies will have less motivation to become publicly traded.

Taxing transactions will, by definition, reduce the number of transactions. That means less commission revenue for broker/dealers, clearing and settlement companies, administrators, and others in the financial ecosystem. It will also create market distortions by increasing the bid/asked spread on securities and creating more arbitrage opportunities for the savviest and fastest entities. Basically, this act, if signed into law, will force small players out of the market, decrease liquidity and price discovery, and hand more advantage to large players who can exploit the information available. Instead of democratizing investing and trading, it will further stratify that world, handing even more advantage to the already privileged and powerful.

Third, if this tax is imposed, and as I read the current legislation, it will be assessed against transactions of all sorts, including against securities held in retirement accounts. This would violate the existing tax provisions on tax deferred accounts such as 401(k), IRA/Roth IRA and other retirement accounts. That is how the current legislation is worded - very broadly. Do the Congress and the President want to increase taxes on already battered retirement funds? Wouldn't that DIS-INCENTIVIZE saving? Is that something the Congress, the Democratic Party, and the President want to do - reduce long term savings, especially retirement saving, by individuals? What about Rep. Donna Edwards [D-MD].

Fourth, I voted Democratic in the past election. The Democratic Party is clearly showing why it neither deserves nor wants my support. If this act becomes law, I will do my best to prevent Democrats from ever serving in economically important roles within local, state or Federal government ever again, because clearly you, Rep. Edwards, and the party you both represent are our ENEMIES - enemies of the people you say you are serving, enemies of the citizens of this once great country.

Finally, let me say that this incident is making me very clear where Rep. DeFazio's, Rep. Edwards' and your interests lie, and it is not with people like me. Should the "Let Wall Street Pay for Wall Street’s Bailout Act of 2009" pass into law, another personal mission of mine will become to prevent you and your cohorts from ever "serving" US - we, the people - ever again.

P.S.: Do your pensions get assessed this tax? I'm sure you'll find some way to make sure your absurdly large pensions will be privileged and protected to, won't they? How is Congress any different from Wall Street, with similarly large golden parachutes? You make me sick!

My Response to Crooked Timber's Analysis of "Wall Street"

This one I have put off for a while, with no really good reason for doing so other than being busy. However, after buying the 20th anniversary edition of "Wall Street" (my 2nd favorite movie of all time!) on DVD and watching it over and over, I found this analysis on crookedtimber.org and felt compelled to respond to it. I think several components of the review seriously overlook basic facts established in the film. So let's start at the top.

First, I don't disagree with the ultimate hypothesis of this review -- that Gordon Gekko was ultimately acquitted on all charges of securities fraud. Bud Fox, on the other hand, I'm not so sure about. While I see the author's point, I think some of Bud's actions were clearly illegal.

In the second part of this review, I plan to examine some things about Gekko that are critical to my understanding of the man and his motivations. Part II will encompass more of what is considered a movie review.

The first 2 points as laid out by our author only minimally trouble me. The first big problem is with the 3rd of the 6 "general areas" of charges against Gordon Gekko -- trading in Fairchild Foods, Rorker Electronics and Morningstar. Bud Fox does not bribe the owner of Marsala Maintenance to get a job which allows him to wander through the offices of Roger Barnes' firm late at night. In fact, he proposes to Mr. Panos, the aforementioned owner, an arrangement in which he would make an equity investment into Marsala. His exact words, at 57:10 (20th Anniversary Edition on DVD), are "Let me ask you something - what would you say to some working capital and a partner?" He then goes on to lay out his idea, noting that Panos' business is so good that he doesn't have the resources to keep up with his current book of business, not to mention the business that Bud can bring in. You'll also note that Bud walks through the site with clipboard and pen, appearing to evaluate various facets of the business and performance of its employees. At no time does he even deign to pretend to be cleaning. He's an investor monitoring and managing his investment, or at least, that's the image he seeks to portray.

Clearly, Bud has broken the law by reproducing files of Marsala Maintenance's client. There can be no doubt about that. But his gaining access to the offices cleaned by Marsala Maintenance, Roger Barnes' included, are legal under the arrangement he proposes to Panos. Whether that is the actual deal, or some variant thereof, which Panos agreed to, we cannot know. However, you can even call it a bribe. But it was not a bribe just to become an employee. He had the money to at least backup some of his claims, and Panos, being an intelligent businessman, made a business deal to expand his operation.

The 4th general area that this review covers is the conduct (or lack thereof?) surrounding Teldar Paper. This is on Gekko's radar long before he encounters Bud Fox, so there is no impact. Bud is an observer to these proceedings. I will note the mention that Teldar Paper being "leveraged to the hilt, like some piss-poor Latin American country" also has nothing to do with Gekko. In fact, it is probably a large reason that Teldar is position to be raided by Gekko. This is the fault of the then-current management, Cromwell (played by Richard Dysart of "L.A. Law" fame) and his staff. How he could even use this point to implore the current shareholders in Teldar to turn down Gekko's tender is beyond me. It's really an indictment of his poor management. So I agree generally with our author regarding this point.

The 5th general area is Gekko's conduct regarding a buyout of Bluestar. Our author seems to have missed the conversation that Bud and Carl (his father) have around the 1:00:00 mark where Carl informs Bud that the "damn fare wars are killing us" and that he's losing 5 of his men to layoffs. The FAA decision is just one of many affecting the outcome for Blue Star. All it did was increase the airline's chances for success. The author (Daniel) also presupposes that Gekko's intentions at the outset were less than honorable. However, I think we can discount that theory based on the outcome of the meeting at Bud's apartment. Gekko is more than willing to let Bud carry the ball in courting the unions. He also proposes a buyout with employee stock ownership provisions and other incentives for success. Only after Carl lambastes the idea do we see the change in Gekko's enthusiasm. He is obviously crestfallen. Now, none of this is to say that Gekko did not have the breakup idea in his back pocket the whole time, but I think the breakup was not how he intended to enter into the deal. Instead, it became his way of making lemonade from the situation.

Daniel's thesis that Bud committed fraud in his dealings with Gekko regarding Bluestar is plausible. Since I am not a securities lawyer (especially in the late 80s, as I was 12 when the movie was released), I can't say.

I won't address the 6th general area, as my feelings are generally in line with Daniel's.

So that's it. Bud Fox, an ambitious young stockbroker breaks several laws in order to curry favor with the high powered financier he idolizes, until his own world is threatened by his ambitions. He then has a change of heart and turns on his mentor. While ethically, Gekko's actions are questionable, I think they are far from being illegal overall, while Bud Fox has quite clearly crossed the line into illegality.

If you made it this far, you're probably wondering why I wrote this. Honestly, when I found the crookedtimber.org analysis, I was searching generally for information about the movie and stumbled upon it. However, if you watch the movie closely, as I have innumerable times, the points I make above stand out like a sort thumb compared to our reviewer's analysis. This was my attempt at setting the record straight.

In part II, I'll delve into what I think is the motivation behind Gekko. Until then...

I Call B.S.!!!!

Why do people insist that Goldman Sachs and Morgan Stanley will fall under the "tougher regulatory scrutiny" of the Federal Reserve when the Fed hasn't been tough or shown evidence of having a spine since Volcker was the chairman? I just don't get the unbridled inanity of these remarks. Is it only professional journalists that say such stupid things?

That is all.

Capitalism at Work

THIS is what capitalism looks like. Not the pseudo-capitalism, Gordon Gekko wanna-be greed driven shite that has overtaken the Western world for the last few decades.

I honestly believe that if more company owners and managers behaved in the fashion described in this article, unions would not have the kind of traction that they do (did?). Capitalism shouldn't be about maximizing profit at any and all costs. It should be about creating a win for everyone - employees (probably more so employees than anyone), customers (strong second), management, and the community (indirectly through the already named constituencies as well as through direct involvement of the corporation).

I have nothing against unions, personally, but I don't believe in them. I also get that unions derive their leverage from their role as self-appointed defenders of the common man. Unions would largely be unnecessary if the "leaders" of corporations weren't always trying to fuck over their employees (among others). Management creates an adversarial environment and then wonders why the unions are so hostile toward them. How stupid do you have to be? If managements spent more time attempting to share the company's success with all involved in creating that success -- serving the employees, customers, vendors and families -- they'd probably not have to worry about unionization creeping into their workforces. If they spent as much time and energy on enriching those same customers, employees, vendors, et. al, I think a lot of wasted time and energy could be directed into profitable ventures.

(I admit to oversimplifying a bit, but probably not too much. "Getting over" is a human trait. It transcends cultures, nationalities, race, gender, and every other division you can think of. However, it doesn't work, as Nas reminds us. So why bother trying to "get over on someone" if its not a long term strategy for real success?)

Historically, tech companies have been the embodiment of this ideal (more so than old line industrials, anyway). The technology industry has a reputation as a meritocracy, which encourages people to give their all in the (deserved) expectation that they will be compensated commensurately with their contribution. That ideal IS the very definition of service. While the tech industry doesn't get it perfect, they are still much closer than more established industries. This probably explains the lack of presence of unions within technology companies to a large degree (although not exclusively).

Anyway, just something for all of you to think about. I'm feeling the spirit of Earl Nightingale wash over me these days, but the more I think about "The Strangest Secret", the more I see that Earl was spot on. Take care of others, and you will be taken care of. Universal, karmic law.

Just too bad that Ken Lay and the rest of those Enron cocksuckers didn't get their just desserts -- violent anal rape -- in prison. Well, you can't win 'em all!

Amen!

I have no idea how I missed this originally, but I think it was because I was in Las Vegas when this was published by David Merkel.

Simply put, this is the best definition of how Capitalism SHOULD work that I've seen in written form. (I don't like using the word "should" in any context, but it seems appropriate in this case.)

Granted, it does not always work like that. Maybe not even most of the time, at least in this period of world history. However, I don't think Capitalism is dead. On life support maybe, but not dead. The greedy, self-centered and selfish bastards took over and have been running the show for far too long. However, there are still people out there interested in creating the most value for others -- providing service -- in exchange for the money those people are willing to part with.

Pricing is a great measure of the service you're providing people. By definition, if you are lowering your prices, it is because you are not offering enough value to your customers to garner the higher price. Instead of racing to the bottom, you need to figure out how to move up the value chain. No, its not easy, but nothing worth doing is. (And when something is easy or perceived to be easy, too many people start doing it, looking to get rich. See the dot com boom and real estate investing/speculation in the last 10 years. THAT's the definitive contrarian indicator, when everyone is trying to make money in a given arena.)

So I have to hand it to David Merkel with this well timed post. Too bad I'm finding it a month after its original publication.

Now back to creating some value, somehow, for someone...