I remember going to Washington after 9/11 to meet with attorneys whose offices were on one of the beautiful parks in downtown DC. Each trip I noticed less and less African-Americans downtown. At lunchtime, I would go to a hip lunch place that sold expensive but terribly fresh soups, salads and sandwiches. The only dark skinned faces I would see were behind the counter. They were either young African-Americans who were very hip and friendly, or immigrants. They projected a masterful, theatric delight for the opportunity to serve an ongoing sea of white people interspersed with a rare African-American attorney or accountant also looking for lunch.
Once a week a group would set up in the park to feed the homeless. There would suddenly emerge a sea of hungry African-Americans looking for food. If you slowed down and paid attention you could enter into a parallel universe aching with exhausted grief. Hundreds of prosperous white people would pass them by, headed for home, looking as if all was normal, nothing amiss.
Kelly O’Meara wrote a brilliant investigative piece for Insight Magazine about D.C.’s St. Elizabeths Hospital, the first large-scale, federally-run psychiatric hospital in the U.S, “Forgotten Dead of St. Elizabeths“.
After days at the National Archives digging up records about patients she noted a consistent pattern of poor and indigent people dying after six months at St. Elizabeths. I noted that there was probably funding to study them or care for them for six months, but after six months the money ran out.
I was in Washington and Philadelphia last week. There was no sign of a recession that I saw. Washington was a boomtown. The talk in the airports and hotel lobby signaled good times from lots of government contracts. There was no mention of all the young people who seem to be disappearing “to Iraq, to prison, to drugs“ or the older people dying from cancer and other diseases for which cures have been discovered and then suppressed. Given the flood of immigrants and population growth, there are plenty of people. Traffic jams are constant, life goes on.
I once made the error of associating with a partner at a hip San Francisco bay area consulting company. My company paid thousands of dollars to be a member of his network, but so did many other, bigger companies and government agencies, including the CIA.
When I was attacked in the 1990s by the folks who wanted to run the federal housing programs dirty, he was particularly effective at smearing me. He networked telling others and me “where there is smoke, there is fire.” He proposed that our office be converted into a new office for his company. When I declined to reinvent my business as something that made money for him, he suggested that I contact the Soros Foundation for grants to continue my work. Somehow, now that my equity had been wiped out, he seemed to think that I should be consigned to an upper class serfdom — why bother getting my equity back or restoring it with new creations? If I was not going to make money for him or someone like him, then I should do a not-for-profit thing. No equity allowed unless you go through approved channels.
There are lots of perks for someone close to you who is willing to promote officialdom’s spin against you. Whenever I tried to warn him what was happening, he would smile his patient 33 degree Mason smile and point out how high the average life expectancy in our society was. I came to appreciate that he represented a way of thinking that was relatively simple. He seemed to believe that governing humans was essentially livestock management and as long as the average life expectancy overall was above a certain age, genocide by for-profit means was simply an effective way of culling the unruly herd.
I rented a car in Washington last week and drove up to Philadelphia to visit with a dear friend, someone I have known all my life. We drove around West Philadelphia, where I had grown up. Blocks of row houses have been razed for a huge mall with a Lowe’s and other shops opening. Millions of dollars of municipal and philanthropic funds are funding the restoration of beautiful old buildings in Fairmount Park next to the area. Bill Gates has funded a sparkling, white modern computer school. There were still pockets of old row houses. Older African-American men sat around, silently. Next to them stood a 6-foot tall Obama poster with the word “HOPE” at the bottom. Perhaps this is why the banks that engineered the predatory lending that was such a successful part of razing this neighborhood are supporting Obama. There is no housing crisis. Rather there is a housing plan. It is not, however, about housing. It is about people.
I often write about the Slow Burn and how we are subsidizing financial assets with the liquidation of life. This neighborhood is filled with thousands of examples. Kids sell drugs, the profits are laundered through restaurants owned by publicly traded companies. It is surprising how destroying a few children can keep a stock price elevated. After a few years of drug dealing, the kids go to prison, inflating the stocks of private prison companies. It all works so long as the citizens keep subsidizing the uneconomic government contracts and enforcement. You just keep liquidating people and moving them around and keeping them scared, tired, busy, pecking up the ladders of survival and prestige so they don’t see the world whole.
I had a privileged childhood. Although I grew up in a modest neighborhood, my father was a very gifted surgeon at the University of Pennsylvania. My motherwas the daughter of the Dean of the Wharton school. I got to see bits and pieces of all sides of the drug trafficking â€“ from the rich and powerful who engineered it, to the judges and lawyers and politicians who fixed the different parts of the legal system to accommodate the operations and the money laundering, to the devastation on the streets in my community in West Philadelphia, including the build up of the War on Drugs and the ancillary mortgage fraud. To make sense of it, I followed the money, as the money connects all parts of the whole. Ultimately, the money does not lie.
The part that always had me stumped were all the people who pretended it was not really happening. I remember one very socially prestigious Philadelphia attorney deeply entrenched in the money laundering and political fixing operations once telling me, “Never tell the mushrooms. The mushrooms want to live in the dark. They don’t want to know.”
So, for example, as the University of Pennsylvania grew richer and richer and the community around it grew poorer and poorer, hundreds of PhD’s in economics and urban development and criminology seemed not to notice. Considered one of the top business schools in the country, my beloved alma mater, Wharton, seemed oblivious to the #1 revenue generating business in its own neighborhood. The same can be said for many other urban universities whose endowments have grown as the community wealth around was sucked through them by invisible means. We were building complex edifices of disassociation.
One of the minor irritants in my life is that I occasionally will venture back into my old Wall Street and Washington networks. Invariably, someone who does not know me or has not seen me for a while will indicate that they know something about me which is just completely off. I don’t mean they have facts wrong â€“ although that happens too as someone needs to justify spending millions of dollars and more than a decade persecuting people who stood in the way of their housing bubbles and mortgage and mortgage-backed securities collateral frauds.
Rather, they have a simplistic view of my motivations and goals. It took me quite a while to understand that one of the reasons that they do not understand what I am doing is that their own understanding of reality is so encumbered by myth. They cannot see where I am going because their continued success depends literally on not being able to see the world around them clearly.
One of the myths is that my goal is to help African-Americans. In fact, what I have often found within pockets of the African-American community are pockets of sanity that understood what was happening and had found effective ways of dealing with an Orwellian situation without losing their humanity. I have tremendous respect and gratitude for that world. I am far from the only one. Watch the people of all races flocking to the great African-American led churches, preachers and gospel singers. Watch the politicians who are trying to buy those churches off with big bucks. Or watch the money that Americans spend for African-American soul culture, albeit sanitized and marketed by large corporations.
My efforts to prototype business investment in African-American communities was part of a search for an investment model that would equate cost of capital to economic performance – an issue which is at the heart of the dream of free markets and democratic process. I went to those neighborhoods because that was where the obvious anomalies between the real economy and the official story were the greatest. The dirty tricks that I endured as a result of those efforts were about the machinery that controls cost of capital in America and not just to small businesses or farms or in poor communities. Capital controls – both invisible and visible – are a concern for all of us.
Another way to say it is that what can be done to one can be done to all. What is happening in West Philadelphia and New Orleans and in Guantanamo Bay is prototyping. The New World Order always prototypes on the small, the isolated and the poor. But once the models are worked out, they are adapted broadly. And sure enough, read the latest proposal from the US Treasury – the Paulson Plan. While we have been sweeping poor people out of their homes with mortgage fraud and drugs to places unknown, the President’s Working Group on Financial Markets has been prototyping how to take the costs of capital rigging on scale.
I often tell a story about the psychoanalyst Carl Jung that I heard at an investment conference in London. Apparently, Jung had a patient who came to see him after a nervous breakdown. She had, as a young woman, fallen in love with her best friend’s husband. To resolve the tension, she had murdered her best friend and married the husband. It seems she got away with it. She reported to Jung, however, that from the time she killed her best friend on, the birds stopped singing wherever she was. She told Jung, “the birds knew.”
I wonder what the birds could tell us about where all the people have gone. Where are the people in West Philadelphia who have lost their homes to Lowe’s? Are they dead from overdose or a heart attack or stroke induced by stress or are they in a privatized prison making uniforms for the Department of Defense? Or are they in an unmarked grave, like the Indians who once lived on this land before us, or the indigents who made the mistake of allowing themselves to be swept into St. Eizabeths?
Isaiah Chapter 59:14 in the Old Testament says, “And judgment is turned away backward, and justice standeth afar off: for truth is fallen in the street, and equity cannot enter.:
The conundrum for an ethical investment strategy is just this. For an investment to be sound, equity must flow into a place or an enterprise that exists in one or more places. And that equity must grow. It must grow without lies, without uneconomic government contracts, without dirty tricks, without liquidating life in a slow burn to feed its financial machine. For that to happen, we require a restoration of truth. Truth must enter, so that real equity can enter.
We require the kind of truth that heals our alienation from each other as we wander around disassociated, talking “pretzel talk” and fearing invisible, mysterious forces.
We require the kind of truth that allows us to see what is happening and feel confidence in our intelligence and ability to assess risk.
We require the kind of truth that will not cause those of us who are investors to panic and walk away or give up our financial equity for cheap, while others are giving up their living equity — their health, their children and their lives.
And this is a conundrum because the status quo and the personal prestige and cash flows of all who earn their money in it require the absence of truth to keep it humming its slow burn along.