Who else wants the secret of Rothschild?

In case you're wondering about the title, I've combined two of the suggestions from a site dedicated to showing bloggers 'formulas' for blog headlines. Admittedly the site is aimed at online marketers, and I have nothing to market apart from a few poorly constructed posts and armchair social observations. Nevertheless I've combined two of them ('who else wants..' and 'the secret of..') so the formula should be twice as powerful! (That’s how it works right?) I have also decided, in the wake of the flooding of articles relating to the financial crisis, to stop writing about the financial crisis (and the minutiae that accompanies it). After this post.

All this financial tumult has provided plenty of watercooler chatter, and everyone’s throwing around buzzwords of the day. These include (but are not limited to) the following: Recapitalisation, mark-to-market, credit default swap and negative equity. Recently we've also seen the re-emergence of a fancier term for 'pyramid scheme', the Ponzi scheme - which when thrown into watercooler chat also allows one to use the names Bernie Madoff and Charles Ponzi, the mail fraud maven whom the term is named after.

Additionally, those interested in sounding interesting seem to have suddenly become interested in the history of finance, similar to when they suddenly took an interest in previous presidential speeches during the Obama campaign (followed by e.g. 'That was Kennedy right?'). That's not to say that keeping in tune with topical conversation is a bad thing, but the speed at which false historical accounts spreads through word of mouth (office or elsewhere) is alarming - perhaps there should be a section on the email/internet hoax site snopes.com for word-of-mouth hoaxes and misinformation. The most recent one going around has inspired me to get history straight so that at least the 10 or so people that might read this will be able to spread the correction. Namely, the story going around involves that 'Napoleon of finance' Nathan M. Rothschild. Of course the Rothschild’s were a wealthy family by the time Nathan entered the family business, but it was he who took them from moderately wealthy to stratospheric heights of wealth not seen till perhaps the Rockefeller dynasty.

So this week I heard the same story twice, on opposite ends of the city, that Nathan Rothschild created his family's banking powerhouse by being able to receive news of Napoleons loss at Waterloo before everyone else (he had extremely fast couriers, which is true), at a time when Napoleon was surging through territories voraciously enough that many thought the British would also suffer defeat. In this version of the story, Rothschild, having early knowledge of Wellington's victory, buys up British sovereign bonds at a low price (the price being low because of speculation of a Napoleon victory) and sells them a year later for a massive return after British victory and financial stability returns - government borrowing reduces after the war is over, sending bond prices up and the Rothschild fortune in the same direction. This version of the story, heard across two areas of the city (not in the exact same words naturally) was enough to make me go back and check its validity. Now some may say this is not a representative enough sample - but if those two people tell another two people and so forth, you can see how this inaccuracy can be a problem - it's like when everyone at the White House thought there were nuclear weapons in Iraq, that’s how that started. This is actually far from the real story, and neglects a few key details. Now it's time to launch into history mode, SMRM style.

Nathan Rothschild was, according to the 4th Lord Rothschild (his great-great-great grandson, which makes him very great indeed) 'short, fat, obsessive, extremely clever and wholly focused....’ Meyer Rothschild had ran a moderately successful antique dealing and bill-brokering business, and in efforts to expand he expatriated his sons across Europe with Amschel (Frankfurt), Salomon (Vienna), Calmann (Naples) and James (Paris) spread across mainland Europe, and Nathan sent to London to conduct business. After arriving in 1799, making most of his business purchasing textiles and sending them back to Germany, Nathan entered the banking business in 1811 not through his own directive, but being fatefully approached by the British Government themselves. Napoleon was at this time conducting his efforts in earnest, setting up a blockade imposing trade from Europe to England. The British Government approached Nathan as he had acquired valuable experience smuggling gold to the Continent, often in breach of these blockades. Britain’s Commissary-in-Chief, John Herries, was authorised to employ Rothschild to (confidentially of course) collect the largest quantity he possibly could of French silver and gold from Germany, France and Holland within 2 months.

Nathan and his brothers stretched their trade channels and executed the commission well enough that by May 1814, he had advanced £1.2 million to the Government (almost twice the expected target) and collected hefty commissions for himself in the process. The Rothschilds, being spread out across Europe, were now in a great position to exploit price and exchange rate differences between markets (arbitrage). Rothschilds also handled 12.6 million francs of subsidies to be paid to Continental allies, as such Nathan was 'a very useful friend' according to the Prime Minister Lord Liverpool. When Napoleon famously left his exile in Elba, deciding to revive his Empire (March 1, 1815) Nathan Rothschild responded by buying up all the gold and coins him and his family could get their hands on - totalling almost £9.8 million. In this purchase, they had assumed the war would be a long one, the gold necessary for its funding. This proved to be an almost fatal miscalculation, as the belated arrival of the Prussian army dismantled Napoleons chances at Waterloo, to the exaltation of Wellington (he of the boots) and co.

Thanks to the speed of his couriers, Rothschild received the news 48 hours earlier than the official dispatch sent to the Cabinet. However, unlike the urban legend suggests, this news was hardly positive from Nathan's standpoint. Now the family was 'sitting on top of a pile of cash that nobody needed - to pay for a war that was over' (Ferguson, 2008). With the coalition dissolved, and the armies disbanded, there were no more soldiers’ wages ant no need for subsidies to Britain's wartime allies. During the war when Government borrowing and demand were high, gold prices soared, but now they were bound to have a post-war fall. Rothschild was faced with heavy and growing losses.

It was under this predicament that Nathan made one of the most audacious trades in financial history. Using much of the gold Rothschilds acquired, Nathan made an enormously risky bet on the bond market, buying up great purchases of 'stock' (as reported in the Courier 20th July, 1815, meaning Government bonds). The idea was that a reduction in government borrowing following victory at Waterloo, would soon escalate the price of British bonds (upwards escalator, not the one going downwards that is more stressful on the knees and which old people claim is more difficult to get on). Nathan bought, and as the price of consols began to rise, bought some more. I think N*Sync's 'Buy, Buy, Buy' is about shopping, right? - think of this song as the soundtrack for this part of the event. Despite his brothers' desperate calls to suppress the gamble and realise faster profits, Nathan held his nerve for another year, eventually selling his stock in late 1817 when bond prices were up 40%. As historian Niall Ferguson notes 'Allowing for the effects on the purchasing power of sterling of inflation and economic growth, his profits were worth around £600 million today'. Now that’s alot of breadsticks.

Why? Why have I derided a site dedicated to interest and mockery of small oddities and anomalies of our activities, and suddenly turned history professor? Because now when you hear the inaccurate version of the story, you can be that annoying woman/man who uses one finger to correct her/his glasses (from the middle), then raises her/his finger slowly and begins with 'Actually...what happened was...' and proceed to regale them with some enlightenment. This is for all of the correctors, and if someone started a sentence with 'Actually...' in the White House 8 years ago, who knows where we'd be, a better place I'd like to think. And after you're done correcting them with the Rothschild story of wealthy to swealthy (that’s stinking-wealthy), no doubt you'll find yourself with a captive audience around you, and so you can ask 'Who else wants the secret of Rothschild?'

Doom and Gloom, clouds in the boardroom

Unlike many other popular expressions in the English language, 'Doom and Gloom' which has likely featured somewhere in every form of media since September 2008, is not derived from the King James Bible or that colossus of adage and maxim, William Shakespeare. The phrase has its humble beginnings in the 19th Century Newspapers in the U.S. - take for example this ominous titbit from The Statesville Landmark (1875) "Slowly, and with a tone of doom and gloom, the ponderous clock began striking." Moreover, the phrase was predominantly used in economic and political pieces. However, with nationwide literacy rates still relatively low in the mid 1870's (approximately 50% illiteracy in the U.S.) it's unlikely that Jeb from the anvil factory was going to pick it up and pass the ball till word spread of 'doom and gloom' and the devils earpiece invented by Alexander Graham Bell.

The modern proliferation of the expression can be attributed to that steadfast bastion of the American golden years, the Broadway musical. Specifically, it was the 1947 musical Finian's Rainbow (also popularised for later audiences through revivals and a film adaptation) which spouted a classic line from the pessimistic leprechaun Og "Doom and gloom... D-o-o-m and gl-o-o-m... I told you that gold could only bring you doom and gloom, gloom and doom.” Nowadays you may find "doom and gloom" employed as phrase of the crisis in all media forms. Googling "doom and gloom" proves its popularity also runs across industries - with articles on doom and gloom in finance, I.T., fashion and even fruit juice companies (economic Boost anyone?, Stimulus Jamba Juice?). Although the locution has its origins in Broadway, it is precisely that staple of popular culture that has been thriving despite the global gloom and doom. Broadway ticket sales are surging, even improving during the early part of 2009 on previous earnings from February 2008. True that some of this effect can be attributed to the potential 'ticket tax' that may be passed by New York state, adding an extra $10 to theatregoers bills, however the irony brings a wry smile to the faces of those who are jobless and have time to dig for it (this blogger falls into said category). How can the financial services industry, which has so long eschewed the values of honesty, integrity and basic competence we learnt from musicals such as Chicago (crooks become celebrity) and Westside story (ethical gangster show) suddenly owe so much to the not so humble song and dance narrative..right? Surely a musical about the falling giants of Wall St - complete with Bull symbolism, choreography in the shape of plummeting stock prices, a hedge fund that actually deals in hedges (those of the garden variety) to save itself and numbers like ‘Lehmann Brothers to the gutters’ - is in tall order (and I would say, timely). Also if produced before the NY ticket tax, it may even be profitable – thus becoming the only thing related to financial services that is so.

Doom and Gloom, like a team of parasitic bit-players (think the evil twins in Cinderella, Rosencrantz and Guildenstern in Hamlet) have filtered their way through the media, via a hopelessly deregulated U.S. market, to all of us to the point where we aren’t even buying underwear. Is there more of a basic human right to be denied? A society in recession and without underwear is a worry indeed. So the recession is real, Pacific Brands has canned 1,850 jobs in Australia, Macquarie Bank had a period prior to Christmas where almost 50 heads were rolling each week, and countless others in financial and other industries are afraid that any second the boss is going to lean over their desk and ask them to come in 'for a chat' or to simply leave with only their personal belongings. As if the layoffs weren’t enough bad PR for these large conglomerates, Pacific Brands, one of the great underwear suppliers (I have some) and now much maligned employers, are paying the Cato Counsel PR firm up to $50,000 per month to revive their public image. Somehow I think that strategy in itself will work against them. Perhaps there should be a PR firm to revive the PR of the PR firm hired to revive the PR of a brand with failed PR. The firm could be called Doom and Gloom PR, their mascot Og from Finian’s Rainbow, assuring us that despite the volatility of financial markets, not even ‘stable’ investments such as gold can escape a global recession “I told you that gold could only bring you doom and gloom, gloom and doom." An optimist might say that the bit players always lose out in the end (see Cinderella, etc), a realist might say this is just the beginning of the play and they will still make us scrub the dirty floors for a while.

One man’s recession is another man’s boom, as they say (I don’t know if anybody has actually said that, but surely someone has). Federal departments have too long been bogged down by mediocre staff, unable to offer top guns the salaries they receive in the private sectors. Now, with big name firms falling faster than a man without a parachute, Governments wait eagerly with napkins on laps, holding out the trampoline below. They are preparing for a net grab, to get the best hired guns who worked for the very companies that strove to find loopholes in federal law to maximise profits. Yes, the silver lining has come in 2009 and it’s called The Year of the Regulator.

Excellence in mediocrity (and the award goes to..)

History books spread across classrooms around the world chronicle the venerable characters of the past, and whether they are portrayed as heroes or villians, they are nonetheless exceptional heroes and villians. Khan, Napoleon, Shakespeare, Gandhi, (Queen) Elizabeth, Hitler, Curie, Lincoln, Einstein, Churchill, Kennedy - all examples of historical figures and more importantly, whether applied for vice or virtue, people with outstanding talents and power. History has rightly been kind to the exceptional - defined as having or showing intelligence and ability well above average - as they are the ones who write it. With our culture dissolving into contradictory increases in consumerism in the face of a financial crisis, where celebrity worship and instant gratification reign supreme, it is difficult to discredit the arguement that (more so than in the past) many of those central to the history of our times (Paris Hilton? Hefner? Bush Jr?) are mediocre personnel whose impact has largely been a result of shock value, celebrity obsession, good start-up capital (Hilton, Bush) or factors more poignant than any aspect of excellence inherent in these people.

As a member of Gen-Y, and an ardent Gen-Y defender to boot, it is nonetheless disappointing to witness the degradation of what is considered exceptional talent in the public eye, and what appears to be an increasing preference for mediocrity amongst positions in which selecting outstanding individuals is crucial in instigating the change required for society to advance. Although quick analogies do not necessarily suffice in an arguement of this scale, they are nonetheless the most direct manner in which to make a point within the blog framework. So Bill Clinton - by any standards an exceptionally intelligent politician, was the first to begin to reel in the treasury deficit. George Bush - by any standards an exceptionally mediocre politician, has in accordance with treasury monkeys, congress puppets and the legitimate Mafiosi of the Fed board (with the exception of Bernanke and a number of others not directly running the institutions insisting on bailouts for debt which they are responsible for creating) has allowed the deficit to blow out to $11.3 trillion to 'save' the world’s financial markets. Spend on a futile war, spend to maintain US dollar supremacy, raise the deficit ceiling to breaking point. The actions of the mediocre have negated the progress of the exceptional and increased the regression of a society and its values.

It is in essence a vicious cycle - feed the masses the ignorant, easily digestible celebrity laden angle of the story, it will sell and propagate in value, further increasing demand for its supply. Nowhere is this more evident than in the comedy otherwise known as the US electoral race. That Sarah Palin can even be considered to be vice-presidential material can happen, as they say, only in America. That a man from Tokyo has made a multi-million dollar fortune in his homeland selling Sarah Palin glasses frames speaks to the ludicrous nature of this electoral race and the 'values' that underpin the Republican party. Even the political move to select a running mate such as Palin, however shrewd, is indicative of the sort of candidate political party's think will win over the majority of Americans. An average education, a strong belief in 'intelligent design', a bible belt buckle holder who ironically had a daughter knocked up before marriage, she thinks she can see Russia from her house, and is unsure of the meaning of the word 'doctrine'. I could go on, however surely the kicker is that she doesn’t even know how to turn up the volume on her TV (thank you Tina Fey for a hilarious impersonation). No amount of toy dolls, cheap-trick advertisements or calls to Americas misinformed and uneducated can hide what the rest of the world seems to already know - that surely the election of McCain/Palin will likely mark the beginning of the end of the great history of the U.S.

That someone of the questionable 'calibre' of Palin is not only standing on the same stage, but attaining greater popularity than Obama/Biden - an opponent with far greater qualifications, integrity, vision and charisma (yes, this is necessary to inspire people in a country that for all intents and purposes appears on the decline) - is an insult to a nation which has proudly displayed its supremacy largely through the exceptional characters of its history.

Although it is generally satisfying to watch the greedy suffer at the hands of their own indulgence, there is nonetheless a dollop of sympathy and regret. This is reserved not for the fat cats who will walk away unscathed, but for the general populace, who in this case seem to have been left highly misinformed (or uninformed altogether), swayed by passionate beliefs rather than the rationality which should be paramount in nation building. As all of us in the rest of the world laugh and shake our heads at the circus surrounding what to us appears to be a simple decision to elect a leader who has great promise to inspire, educate and revive a superpower, we also wonder if that country is smart enough to make the right choice. If you're unsure, buy a pair of Sarah Palin frames, note the blur that ensues, put in some earplugs and listen to confederate songs, while watching the TV with the volume down. That should do the trick.

Friends for the 00's

And we're back - to a rousing reception and much fanfare, people have lined the streets, they closed off George st and we all received SMS's from the Pope - oh no that was World Youth Day Sydney 08'. Nevertheless, with WYD coming to an end this week there are some interesting observations to be made by those of us constituting the normal population of the city. We have peeked into the pilgrim world with curiosity, bemusement, and perhaps the fear that belies the former (apologies for the lengthy sentence):

1) With all the face paint, large groups of various nations adorned their respective flags and were sprawled out across the city - some of us were half expecting a soccer (euro:football) world cup. I may have even seen a group of italians with the ball they love best (not meatball).

2) Being the chaste, cleansed and enlighted souls they are, I was surprised to find a report on a group of pilgrims who had entered a large shopping centre in the city (Myer). They were caught shoplifting. There may be reasons for this, including the following:
- It was a conspiracy organised by atheists/Jedi's who disguised themselves in WYD gear in order to undermine *conversion rates*, I mean Youth Day celebrations, and increase taxpayer angst.
- The pilgrims had discovered fine print below the tablet which contains the 10 commandments. The footnote attached to 'thou shalt not steal' details exceptions to this commandment, those exceptions being woolly jumpers, tracksuit pants, clubbing shirts, and those awesome novelty alarm clocks. Wait..theres a knock on the door..someones outsitde...oh it's Irony.

With all the hoopla surrounding the Papa's visit, it's difficult not to get caught up in the blessed atmosphere of the last week. Thus, I find myself in a pensive, reflective, perhaps even spiritual mood. And as such, I have a confession to make: I am and have been..a sitcom tragic (or a sitcom slut, as suggested). From the moment Vinny Barbarino swung into the classroom in Welcome Back Kotter to the daily dose of theme song opening line 'Now this a story all about how, my life got fliped, turned upside down..' and the teenage boy fantasy that was Rachel Green (seasons 1-6 being particularly spectacular) - sitcoms have become an escapist, time-consuming, educational and affirming feature of our idiot boxes. They are a tapestry of the absurd (Kramer, Joey, Balky) and emotional, peppered with light and ultimately inoffensive social commentary. When Martin Crane provides wisdom to the stubborn and pompous Frasier, which he ignores and ultimately pays for this ignorance, he is affirming a core belief of the working and middle class that the smartest guy in the room isnt always the one with the degrees and the money. This may be false, but in tapping into the belief of the masses, it is also a brilliant way to make a show popular.

More recently, shows such as Scrubs and 30 Rock have veered from the conventional and time-honoured (read: lame and unrealistic - but thoroughly enjoyable) format, opting instead for time jumps, special effects, and other filmic techniques otherwise reserved for hollywood. However, a new player has emerged, combining the best of the old and new schools, and thus becoming the Friends of our generation (Y, in case there is confusion here) and it is, legen - wait for it - dary.

How I met your mother has brought back the sitcom - with a simple yet clever idea, a set of five well concieved characters (where other shows would have 6 or 7 characters to put forth much the same). It is full of plot holes and inconsistencies, like Friends, but the characters SMS, have college debt, youtube, ipods, reminisce about the 90's and were too young to really know the 80's. It also includes the ultimate bachelor character perhaps ever placed inside the microcosm of the sitcom world. Evidently, you can see where this recommendation is headed - watch it, just don't steal the DVD. We move now from World Youth Day and back into the regular week, which can't be summarised sitcom style, in 2 mins before the ad break.

Big Man 'G' Bless, and signing off

FB

And so it goes..

A man, youngish yet withered by his jaded view of the world, sits at his desk and begins to type on his laptop - the first time he has attempted anything outside the creation of corporate memorandums, emails, proposals and literature within the similar vein, for 3 months. The cursor, blinking ever so steadily, akin to perhaps an elderly lady with a walker straddling a pedestrian crossing, entices his fingertips to translate ideas into words on a page. He stares at the cursor. It says nothing. He stares blankly. Nothing but self-absorbed, self-referential drivel emanates onto the screen. Why isnt there anything to write about? There appears to be a plethora of objects to inspire mediocre comment on. Phone bills piled up to the left of his laptop, an empty cup of coffee from the night before still bears the stains of cheap nestcafe, and amongst this mad modern mess, a pen sits idly by the ipod. Pen: mightier than the sword, might err in the presence of the word processor. He types a sentence, deletes it, and lets the pen idea slide - no point philosophising about the evolution of how ideas have been recorded by humans for other humans. He decides to summarise this idea in one sentence, not to trivialise it, but merely to point out the frivolity in thinking it can be expressed in an internet forum. He writes 'spoken word, cave drawings (ochre), sand drawings, papyrus, inks, quail, pencil, pen, printing, typewriter, wordprocessor'. So it goes.

He has called in sick at work today, in order to pursue other goals which are difficult to partake on working days. Despite taking the first step in making some time, laziness rears its head and fixates its eyes on the mind numbing entertainment that is Midday TV (free-to-air). Girls are screaming because some celebrity or the other with an axe to grind and a product/film/album to plug have shown up on a couch next to the ever omnipotent Oprah. Dr Phil spends an hour discussing various marital problems, before rubbing it in everyones face at the end of the show when he walks off ever so happily with his wife. Melodramatic antics ensue on various soap operas when someones husbands dog marries his sister, dies and comes back to life, or so you would think until you realise that the husband is actually the father, best friend and second uncles cousin of the girl who is the town bicycle. Very confusing. Next up, a man with a history of petty crime and a ragged checkered shirt requests the payment of $200 from his ex-lover: an overweight, underdressed and illiterate character who allegedly broke her ex-boyfriends window when they lived together 2 years ago. Judge Judy's verdict is final - someone wins, but ultimately the viewer loses. So it goes.

He sits back in front of his laptop, upon the realisation that none of the things he'd set out to do today had been achieved. His attempt at contributing to an otherwise (relatively) interesting forum has simply become a trite recollection of a day spent in the usual mediocrity and obscurity many of us in the middle(ish) classes have become accustomed to. He realises however, that things could be worse, the pain of midday TV or living in a sub-saharan slum. Middle class guilt sets in, and he decides to give some money to charity. He walks away realising that he hasn't yet given up his name to those reading his blog post, but that part of him continues to walk away from the screen. Since we don't know his name, let's call him 'I'. And so it goes.

Nice to meet you, stranger I've known a while..

If there's one industry that has profited from the steady increase in working hours over the last 50 years in most of the worlds nations, it is the beverage industry - specifically re (in wanky corporate office lingo we say 're' for regarding) coffee. The digital age has the whole world connected 24/7, and the playing field has been 'flattened' (Thomas Friedman - The World is Flat [2004]) thanks to outsourcing - quality skills at lower market rates - fiber optic cables, web browsers and everything else i'm sure all intelligent readers are aware of. However this flattening has seen the emergence and subsequent proliferation of the angular, yet cylindrical figure many of us take for granted as an integral part of our day to day minutae - your coffee cup.

To notice the coffee habits of coworkers is to understand their cycles, whether they're morning or afternoon people, whether they use coffee as an innocent pick-me-up, or they devour it 10 times a day just to get wired since it may be inappropriate to snort a line of cocaine off ones HP notebook (unless you're in investment banking, in which case this i'm told this is regular fare on a friday afternoon in the bathrooms - see http://www.leveragedsellout.com/ ). The direction of the lifestyle-coffee relationship is uncertain, but evident. As a result we grow accustomed to, perhaps even attached, to our local barista. This is the genius, the man amongst men, that works at the cafe which services all the caffene hungry constituents in surrounding office blocks, and memorises each individuals order. When you turn up, there's no verbal order but a code word - 'the usual'. Suddenly from being a cog in a wheel (in an office) one is made to feel like a someone.

The barista/regular customer relationship is a special one, and could well serve as a model for many a successful relationship. Some opt for an interaction of efficiency: for $3.00, you get satisfaction guaranteed with no questions asked, and bit of small talk before leaving with a smile. Others have their barista as a listening ear, rewarded for divulging their life secrets with something hot, possibly sweet, and certainly satisfying. It is precicely the sort of bond which keeps many of us office plebs going through the day, knowing that tomorrow contains the possibilty of the same.

Those who aren't coffee drinkers (or 'mocha' drinkers - please don't say you're buying coffee if you're getting a mocha) wouldn't understand this relationship, perhaps equating it more with traditional retail/consumer interactions. Maybe they're tea drinkers - the type who go out to essentially pay for boiling water, as most establishments will source teabags from your regulars; Mildura, Tetley, dare I say Dilmah. 'You ordered a camomile tea' - goodness gracious that cafe makes good boiling water. Hot chocolate drinkers are generally the types who don't frequent beverage establishments often, as it is not the sort of drink to have daily. The hot chocolate order, i'm told by our barista Ben, is either the order of the aloof, or the order of novelty - that is non-frequenters.

After posting this one here, i'm gonig to walk over and say hi to Ben. He will say 'the usual', there will be a nod of confirmation and a returning nod for recognition. We will lament and discuss the dearth of mens magazines in the cafe (only reading material is womens/gossip mags) and i'll get my card stamped and collect my 30 mins of satisfaction in a cup, and return to my desk. The Moccopan coffee brand has an interesting slogan which I never understood until recently: 'Coffee Philosophy'. Perhaps its my own particular delusion, could be a number of completely incorrect abstract connections, but this beautifully bittersweet drink does have something to say about people, their interactions, and maybe the world around us. Philosophy indeed.