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Incomprehension across the cash scale

Thursday, April 29, 2010

HEARING ROOMS of the US Senate lived up this week to their traditional role as news generators.

 Room 106 of the Senate’s Dirksen Building (built for the TV age in 1958 and much updated since then, including fiber-optic rewiring in the 1990s) produced front-page lead-stories, video newsclips and live streaming aplenty. This was political news as theater, of course, more calculated to ventilate the mood of the times than to deliver factual understanding.

Indeed, the complete non-meeting of minds between combative, scolding Senators (of both parties) and the alternately blithe or defensive staffers or ex-staffers from Goldman Sachs was the most dramatic part of this ritualized encounter lasting eleven painful hours.

It felt very familiar to me as I recalled often sitting in rooms over the last four to five years with youngish men who see themselves as major market-movers (and they are mostly men, inevitably, rather than women) and marveling at their capacity to disassociate their work in all its complex detail from the general public’s perception of that work – not unlike some closely-focused research scientists I’ve interviewed, too.

The scandalized stance of – say – Nevada’s Republican Senator John Ensign, saying that “guys on Wall Street” were “tweaking the odds in their favor” would fall on uncomprehending ears in my circle of trading contacts, just as it seemed to baffle witnesses - from the singled-out Fabrice “Fabulous Fab” Tourre, the hapless vice-president who when 28 years old began selling the now-infamous Abacus 2007-AC1 package of dubious derivatives, up to the chief of all the Golden boys, their CEO Lloyd Blankfein (above left).

 

The more substantive effect of this Senate Subcommittee’s contribution to - or just amplification of - public dismay with Wall Street will be felt not in the authorities' civil suit (probably to be expensively settled) against Goldman, nor in any lasting business damage to the company. (How, for instance, the financial community rates all the hullabaloo was shown by Goldman’s stocks being among the few that actually rose, even as markets overall tumbled in reaction to deepening governmental insolvency in Europe.)

No - the all-but-assured outcome will be, I predict, successful passage for legislation to ensure greater transparency in the packaging of financial instruments like those “synthetic collateralized debt obligations”. And there could even be – especially now that the Republicans have dropped their blocking moves on the Senate floor and will debate the Democrats' regulatory Bill – an eventual deal to put a cap on the size of banks, and on their currently unfettered ability to act simultaneously as both bankers and dealers ... just as the Obama Administration would ideally like.

 

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QUITE SEPARATELY, IN THE DECIDEDLY smaller Room 430 of the Dirksen Building, legislation for the near future was also emerging – on an issue to which the press didn’t give such blanket coverage.

In the wake of the Upper Big Branch Mine disaster in West Virginia, which killed 29 workers (memorialized, above right, by a row of miners' helmets) the mine-owner Massey Energy was lambasted for being among the “population of employers that prioritize profits over safety, and knowingly and repeatedly violate the law”, to quote committee chairman Tom Harkin, Senator for Iowa, and himself the son of a miner. Massey has the dire distinction of being cited 515 times for safety violations last year, and another 124 times in the four months of this year.

But it was a government regulator, Joe Main of the Mine Safety and Health Administration who was being grilled – especially over his agency’s power to immediately shut down mines that operate unsafely, a power rarely exerted.

"It's never been used in the history of the Mine Act," Main said, but then, as an Obama appointee, he claimed that things would change now: "We are going to use it."

The committee posited various reforms, as well as new enforcement tools for MSHA, such as - importantly - eliminating ways in which mine operators can at present "game the system" (does that sound familiar from the Goldman hearing?)

As ever, it has taken mass fatalities to bring about change. My own coalmine reporting harks back to the UK (as I wrote at the time of the Upper Big Branch deaths) but both British and American miners have the same grim proverb: “Every new mine safety regulation is written in the blood of miners”.


EVEN FURTHER DOWN THE PAYSCALE, at about two dollars per day in fact, farmers in Kenya obviously encounter different difficulties than the embattled Lloyd Blankfein of Goldman, who earns – if that’s the word – about $77,000 per day.

Protecting their crops against elephants can be far too costly a business for them, involving miles of high electric fencing. But in an uncommon collaboration between a media conglomerate, Disney, and a seat of learning, Oxford University, help is now at hand. Help which relies upon new discoveries about those extraordinary thick-skinned giants of sub-Saharan Africa, and their ever-astonishing modes of communication … which readers of this column know always fascinate me.

Funded by a grant from Disney (and in return there could of course be much revealing footage for wildlife movies) Lucy King of Oxford’s Department of Zoology has learned how elephants tell each other news about one of the few creatures on the planet that can frighten them – the tiny bee, of all things. Bees can sting them painfully in the soft tissue around their eyes and on the inside of their trunks.

The zoologist and her team have been able to record - and play back at a human-hearing frequency - the warning sounds that elephants make to each other about the presence of bees. And she’s measured the rapid rate (usually within ten or twenty seconds) at which the bigger animals vacate the scene. Next step for the scientists – finding out if the sounds are just general warnings, or language that is specific about the nature of the danger: “Look Out - There are bees, yes bees, here”. These warnings evidently carry over considerable distances, and can even appear to be giving directional information, almost like a GPS instrument.

 
Lucy King's video of an instantaneous reaction, from a group of elephants the researchers nicknamed The Butterfly Family, is here:
 
                   

                        

                        

 

(If for any reason the video-player doesn't work with your browser, click here)
 
Next step for the farmers? Putting up fencing that features beehives rather than electrical charges – much, much cheaper to install and maintain. And the scientists can help with the placement of the hives, maybe thus achieving the redirection of elephants from a broad sweep of territory into staying away from the farmers’ cultivated areas.
 
It could result in what you might call, if you wanted to borrow language from both Wall Street and Congress, a "win-win situation" for all parties involved.
 

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