Sunday, April 18, 2010

The Big Bite of Stupid: Elite Failure Everywhere

The recent week has provided evidence that the elites, who run Wall Street, politics, and Entertainment are failures. Incompetents. People pursuing policies so massively stupid, that failure is inevitable, because the Elites buy their own hype and (wrong) conventional wisdom. Given the global collapse of wages and employment, it cannot be long before an overwhelming urge to replace an obvious incompetent group of Elites gathers steam and is successful.

First, Wall Street. Citi chose to buy lots of CDO's just as the market was cratering, and blamed the consultants, who it hired at considerable expense, for bad advice:

Last week, the Financial Crisis Inquiry Commission was told by Chuck Prince, former chief executive of Citigroup, that “everyone” from banks to rating agencies and regulators thought that triple-A tranches of collateralised debt obligations were safe investments, and that all were flabbergasted when the values collapsed.
This week, a Senate committee grilled Kerry Killinger, the former chief executive of Washington Mutual, one of the biggest mortgage lenders before regulators seized and sold it to JPMorgan Chase in September 2008. He insisted that WaMu’s foray into subprime, spurred by Wall Street and by government-backed entities such as Fannie Mae, was an anomaly.

Magnetar, the fund in question, did not pretend to be engaged in something socially useful by trading subprime securities. It was simply making money for its partners and investors by examining closely the shaky foundations of the mortgage mania, and undermining them.
In that sense, it was like Michael Burry, the investor who realised that many CDOs were over-rated and over-valued, and whose fund Scion Capital was one of the first to short them. Mr Burry is the central figure in – and hero of – Michael Lewis’s book about the crisis, The Big Short.

Political leaders from Greece to Iceland borrowed recklessly with the idea that paying the money back would be someone else's problem. Iceland, a place known previously for sober, small government, let banks run wild, borrow from themselves, and grow 20 times over in size over a space of few years, with political leaders and regulators accused of negligence.

The commission criticised regulators for failing to rein in the banks – Landsbanki, Glitnir and Kaupthing – as they grew 20-fold in size between 2001 and 2008 until their liabilities far exceeded the country’s ability to bail them out.

Goldman Sachs, figuring its many alumni in Obama's Administration (and folks in the Democratic Party, and Congress) would protect it found itself the focus of fraud charges by the SEC. This was predictably stupid, since the biggest chumps were politically connected folks like the Royal Bank of Scotland, and German and Dutch state banks, who could be absolutely predicted to sue and pursue political remedies against a Wall Street firm like Goldman Sachs. Not even Barney Frank is defending them, again utterly predictably. Smart deal making only screws over people who have no ability to retaliate.

ESPN meanwhile, is making one of the stupidest bets possible. ESPN plans to spend many millions of dollars, promoting the World Cup (of Soccer).

ESPN, the sports broadcaster, is making its largest marketing investment in a single sporting event in its 30-year history as it looks to use the World Cup to transform the audience for football in the US.

“We’re pulling out all the stops to make sure people pay attention to the game, because we’re convinced that when they pay attention they’re going to fall in love with the game,” said John Skipper, ESPN’s executive vice-president for content.

ESPN expects to see ratings for the tournament that opens in South Africa in June to improve by about 25 to 50 per cent over the audience figures it saw four years ago in Germany, despite a time difference that means games will be played at 7am, 9.30am and 2pm east coast time.

Artie Bulgrin, ESPN’s head of research and analytics, said the broadcaster had been encouraged by research from TNS suggesting the number of “avid” football fans had grown in the past four years from 6 per cent of the US population to 10 per cent.

Hispanic viewers will make up about one-third of ESPN’s World Cup audience, Mr Bulgrin estimated, adding that advertisers were attracted by the young and affluent nature of US football audiences.

ESPN has exclusive US domestic rights, with the exception of Spanish language broadcasts, for the first time and is planning a multimedia blitz, from live online streaming to radio broadcasts, mobile applications and special editions of ESPN Magazine.

Seth Ader, senior director of sports marketing, said ESPN was planning two months of “respectful education” about the sport and the host country before the first game on June 11.

Hmm … ESPN has the exclusive rights to the World Cup in North America, except for Spanish Language broadcasts. WHAT could go possibly wrong with this plan? After all, it is well known that Hispanics in North America prefer to watch English Language Broadcasts. Oh wait, they don't!.

Top Ten (Week April 5) Broadcast Television (all races) [Rating/Viewers in 000's]:





  5. NCIS CBS 10.2 16,448

  6. MENTALIST, THE CBS 10.2 16,318

  7. 60 MINUTES CBS 9.7 15,033

  8. CSI CBS 9.3 14,968

  9. NCIS: LOS ANGELES CBS 8.6 13,785

  10. UNDERCOVER BOSS CBS 8.6 14,676

Top Ten (Week April 5) Broadcast Television (Hispanic) [Rating/Viewers in 000's]

  1. HASTA DINERO SEPARE THU-04/08/2010 UNI 19.4 4,390

  2. HASTA DINERO SEPARE WED-04/07/2010 UNI 19.4 4,478

  3. HASTA DINERO SEPARE MON-04/05/2010 UNI 19.2 4,219

  4. HASTA DINERO SEPARE TUE-04/06/2010 UNI 19.2 4,428

  5. HASTA DINERO SEPARE FRI-04/09/2010 UNI 18.4 4,336

  6. CORAZON SALVAJE MON-04/05/2010 UNI 16.0 3,395

  7. CORAZON SALVAJE THU-04/08/2010 UNI 15.6 3,405

  8. CORAZON SALVAJE WED-04/07/2010 UNI 15.6 3,364

  9. CORAZON SALVAJE TUE-04/06/2010 UNI 15.1 3,175

  10. CORAZON SALVAJE FRI-04/09/2010 UNI 14.4 3,033

Only someone who believes PC hype could make this call, investing tens of millions of dollars in the World Cup for what is sure to be a failure. It took me all of five minutes to find this information on Nielsen's site.

Meanwhile, utterly predictably, the movie "Kick-Ass" didn't at the box office. An R-rated movie, based on an obscure comic book with almost no sales, no visibility, and no real appeal to a broad audience, featuring a foul-mouthed 11 year old girl killing people? THAT is supposed to be the next Batman movie? In a later post, I'll discuss WHY comic book movies, being simple, are hard to do correctly. But even the most cursory examination of the movie would show that it had almost no potential to make money. None.

Marvel is betting it all on stupid. Joss Whedon will direct the Avengers movie, as well as re-writing the Captain America movie. Meanwhile, we learn that the NYT is reporting that Obama has no plan to deal with a nuclear Iran. None at all.

No other conclusion can be reached. Our elites, in every field, are uniformly stupid and need to be replaced.


Rollory said...

Not just stupid: traitorous.

Although the treason might be a side effect of the stupid.

Nine-of-Diamonds said...

Well, I suppose it's inevitable that hubristic elites begin to see the world as they want it to be, and not as it is.

There's no need to deal with a Nuclear Iran because "soft power" will contain them and the situation's our fault anyway - after all, Reverend Wright & Frank Marshall Davis said so.

"Kick Ass" will make money because the appeal of a dirty-mouthed young kid is obvious to sophisticates like us. Therefore, it will be obvious to Joe Sixpack.

This hubris reminds me of a story I heard about the Battle of Midway. Prior to the battle, the Japanese admirals conducted a "war game" where they predicted the results of an engagement; to their dismay, the Americans kept on sinking 3-4 of their carriers. Finally, they "unsunk" their carriers, declared victory, and decided that nothing was fundamentally wrong with their battle plan. The rest is history...

Kinuachdrach said...

No doubt -- the elites have failed, and ought to go. But there is no easy way to get rid of them.

Adam Smith wrote there is is a lot of ruin in a nation. The elites are ruining the nation, but they will ride it all the way down.

Eventually, an external blow (physical or financial) or an internal revolution will finish off the elites. But it may take a long time before then, and a lot of people are going to get hurt along the way.

It is almost depressing!

Rookh Kshatriya said...

Another example of elite detachment from mainstream opinion: 70% of British people want out of the 'war' in Afghanistan, but British politicians from the major parties insist in prosecuting it.

wearegovernment said...

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Feel free to check out my blog coving some similar topics. Here is one on Biden's recent trip to Brussels.

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