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Monthly Archives: December 2008
“Everyone should know Wilberforce,” Abraham Lincoln once said.
Wilberforce who? William Wilberforce.
I just put down an excellent biography by William Hague called William Wilberforce: The Life of the Great Anti-Slave Trade Campaigner.
First off, I had no idea who William Wilberforce was before I read this book, nor did I realize how great a man he was or how big of a figure he was in British politics from 1780 to 1830 (a time of great turmoil not only in the world but especially in Britain). I read a review of the book in the Wall Street Journal or the Financial Times (I forget which) and for some reason I was moved to buy the book.
One of the reasons I bought the book is that I was curious after reading a little bit about William Wilberforce, how a person goes up against powerful interests for a moral cause and in the end, converts almost everyone to his side.
This book and William Wilberforce’s life resonate with me deeply. One reason is that he went through a religious awakening in his late 20s like me. His awakening was evangelical Chrisitianity, mine was Judaism. His conversion compelled him to not waste any of his time and to try as much as possible to better the world. He was the standard bearer and unshakable advocate for abolition of the slave trade and also of prison reform and of education for children. He was constantly trying to help others and busy educating himself about the world. He stayed in Parliament despite many offers to be bought out and be made a Lord and be set for life. He fought the good fight and stayed independent his entire life and was widely admired for doing so.
A cheerful man, who loved to sing, who never gave up despite hopeless odds, with strong faith in God and the good of men, William Wilberforce is a “powerful beacon of light,” Mr. Hague tells us especially in our times, and I agree.
What I also love about William Wilberforce is that today, religion is put down and blamed for so many problems such as wars. Some of the blame is justified, some is not. But rarely do secularists or atheists mention the positive results from religion. And there is no greater example than that of abolition of the slave trade and of slavery itself. Without William Wilberforce’s unflappable faith in God and the faith of others like him, and his accountability to making the world a better place and of his own actions, slavery and the slave trade may still be going on to this day.
Besides the topic, the author has to be commended, because this book could easily be boring and yet it is stirring, powerful and an extremely engaging read. I highly recommend this book and think Mr. Wilberforce’s name and example should be taught to everyone.
David Kotok is the chief investment adviser and writes a market commentary for Cumberland Advisors. I love anything that quotes the Mishnah:
“For this reason, man [i.e. the first human being] was created alone to teach that whoever destroys a single life is as though he had destroyed an entire universe, and whoever saves a single life is as if he had saved an entire universe. Furthermore [the first man was created alone] for the sake of peace among men, so that no one could say to another, ‘My ancestor was greater than yours.’”
Mishnah: Sanhedrin 4:5
Here is the link: David Kotok on Madoff
This is a great post from Paul Kedrosky about Harvard’s real results are really, really bad right now. Seems that investment banks, brokers and commercial banks aren’t the only ones pretending things are better than they really are.
Tremont’s Rye Investment Management unit had $3.1 billion, virtually all of its assets, invested with Madoff, said the person, who declined to be identified because the information is private. Tremont had another $200 million invested through its fund of funds group, Tremont Capital Management.
“We believe Tremont exercised appropriate due diligence in connection with the Madoff investments,” the company said in a statement.
The above comes from the latest revelation on Bloomberg from the Bernard Madoff ponzi scheme scandal. I believe that not only is the above statement completely and patently untrue, but that there is an excellent case for scores of enterprising lawyers to litigate anyone who recommended others to invest in Madoff for a fee or invested other people’s money in Madoff for a fee. There is simply no possible way that anyone did their financially fiduciary responsibility to clients by investigating Madoff.
There are three key points that should have stopped people from investing with good ol Bernie:
1)He held custody of his own money. Every financial fraud of recent memory all had one thing in common, the person committing the fraud had possession of the money. There are simply too many conflicts of interest when the person managing the money possesses the money and there are no safeguards.
2)His auditor was a firm no one ever heard of. Not only that but it had three employees, one of whom apparently worked in a tie die shirt for 15 minutes a day. Not only do I have a big name auditor, who is expensive, but I actually have three different accountants from different firms. One is my auditor, one is my administrator and the other approves whenever I, personally, withdraw money. These are all safeguards for investors, so that they know there are procedures and many eyes making sure everything is picture perfect.
3)Abnormal consistency of his returns. As this year shows very clearly, there is simply no way for an investment strategy to show consistent positive returns. There is always something that throws a monkey wrench in it, even for a short period of time and you should be paranoid by someone claiming to never show volatility.
The fact is that simple due diligence on the auditor, checking that he had custody of the money or verifying the consistency of the returns should have raised many red flags. There are even some reports that the monthly numbers did not add up to the yearly numbers! The reason why many of these firms really did no due diligence is that they were getting sweetheart fee deals from Madoff. Greed apparently trumps fiduciary responsibility.
All those advisors, funds of funds and marketing people that made money by Madoff better hire really good attorneys. Because with all of that money gone, all those burned investors will soon be coming for every accomplice, and there are many of them. And they apparently have been feeding at trough for years.
What makes me write this blog entry is that I spend tons of money doing the right thing and being buried under a regulatory burden that is financially tough and time consuming for a small fund manager such as myself. And I hear talk now of adding even more regulations and burdens to my life and more expense, it makes me angry. There are plenty of regulations, it just appears that none of them were enforced and that the SEC and NY State were asleep at the switch and consistently failed to investigate Madoff, despite repeated warnings.
Its not only the financial advisers and funds of funds that are culpable here, it is the regulators and government officials, who were clearly too busy working on their witch hunt of short sellers. The negligence and culpability in the Madoff saga is widespread and it disgusts, saddens and angers me.
I received phone calls from two friends this week and I think they illustrate how our banking system and broader financial system is barely working.
A friend from the southeast of the U.S. called me on Monday and asked for my advice and help (please excuse my generalities to protect my friends and their exact situations and details). He is contractor and is bidding on a contract for a small part of several hundred million dollar energy project. His part is a couple of million dollars. He needs some short term financing to put a deposit for the materials he will use. He went to his local bank and they told him no. The bank manager that he has dealt with for years told him they want nothing to do with construction.
My other friend on the west coast works at a restaurant that is growing like a weed. They seem to have expanded a little too fast in a new location and had a major cost overrun. Regardless, they are still very, profitable and generating cash but they now have some short term debt they have to pay off. They went to their bank, and the bank said, sorry, no. Now my friend’s company is in a short term cash crunch and that has nothing to do with the fundamentals of their business and they may be in trouble.
Both of these situations are relatively simple, extremely low risk financings for banks or financial institutions. And yet neither of my friends can find banks to finance them right now. This is very, very bad for the economy as a whole and speaks volumes for the state of the financial system.
This is a great blog post from Jeff Matthews:
This is a great writeup by a Michael Mauboussin who is a strategist for Legg Mason. I agree with his conclusions and the similarity between the flack Buffett received in 1999 is very similar to the flack he is getting today.
I am reading a wonderful new biography about William Wilberforce, the great British anti-slave trade campaigner. As part of the book, the author, William Hague, describes the slave trade, how slaves were kidnapped and transported in the most brutal conditions with no regard to health or humanity.
One of the more disgusting stories describes how disease spread on one ship and many slaves died. The captain realizing that the trip was no longer profitable decided to throw the remaining slaves overboard to drown in order to collect insurance on them.
I thought to myself: how is that possible? How is it possible for one human being to do such a thing to another human being? This is not a new thought for me or other people for that matter. I’ve often wondered it when I read about slavery, the Holocaust, the Inquisition, genocide in Rwanda or events such as the Rape of Nanking. Unfortunately there are many, many examples of human atrocities.
But the thought that always gets me, is that beyond evil, how is it that a mass group of people who often believe in God and are decent people in their home setting to their families and friends can turn around and spear a baby with a bayonet or shoot a helpless old person. For any normal person to do this to another person is not natural. Then why has it happened so often throughout the history of mankind?
I believe that separation is the key. What do I mean by separation?
We feel separate from the other. We don’t look like them, we don’t act like them, and we don’t pray like them. They aren’t us. They are different. We are we and they are they. I believe this is where it starts. This is the very first step in dehumanizing or degrading someone into something. For example, I’m a Protestant and you are a Catholic, I must fight you, you aren’t me and not only are you different, you aren’t anything like me. Do Christians understand how weird and bizarre it is to Jews that Protestants and Catholics kill themselves over what seems like very small differences in beliefs? Do you think Jesus, if you believe he is God or God’s son, thinks it’s bizarre?
Just because something is different doesn’t mean it has to be separate. Your hand is different than your foot, the sky is different from land, or a trumpet is different from drums, yet they go together. There is a connection.
And this is the point I would like to make: we aren’t really separate at all. We may be different, but we are all connected by one big thing. And this thing is bigger than all of our petty differences: God. If God breathes life into us, creates us and endows us with a divine spark, then we are all connected by God. The problem is that if we don’t see that divine spark or recognize it in ourselves, then all we are is an ego mind with no real connection to each other or to God.
Until we can see that connectedness we will remain separate and will remain hostage to an inauthentic life, filled with petty differences and made up separations. We need to see, act and live the connection we have with each other.
If you were truly connected, you wouldn’t steal from yourself or kill yourself, would you? Because that is what the other person is, that person isn’t the other or separate, he is a part of you, he or she is connected to you. And the people that do hurt themselves and commit suicide do so because they feel separated or estranged from God, society, and more importantly their souls or divine sparks.
Imagine we are tiny cells or atoms that make up God’s body. If we don’t communicate to each other and help each other then how can the body function? Further, if we attack other cells, doesn’t that lead to disease? And wouldn’t a group of cells attacking other cells be considered cancer? In this analogy, is it possible that when we fight each other and kill based upon silly differences that we are killing or harming God? This is not to say that self-defense is wrong or that bad cells shouldn’t be fought, quite the contrary a body only works if its immune system is strong and works.
My request to you is to try to imagine every person you encounter as having the spark of God inside of them, even if it is hidden. Make that your very first reaction and go from there. So what if they are different. Don’t immediately make them separate, because separate starts the process of dehumanizing and devaluing that spark of God, something powerful you are connected to. At a minimum, you should start to see people in a different light. This is what has happened for me.
And maybe then you will start to see that people aren’t good or bad, but instead shades of gray and that a lot of “bad” people are instead people that are actually experiencing dysfunction and hurt, and are struggling to find God or their soul in their own life. And when you see someone less fortunate than you, maybe you will realize that it is your responsibility to help that other, connected person. Or simply help that person so you can strengthen your own connection with God, for yourself and for God.
In the Bible, when the Israelites finish building the Mishkan (the Tabernacle), they place the ark inside, in a place call the holy of holies. The ark is built with wood and inlaid with gold and inside holds the Ten Commandments. On the top were built two cherubim, or human/angel creatures facing each other from opposite ends.
In Exodus 25:22, God tells Moses he will be in the space above the ark and the Ten Commandments and between the two cherubim. One of the best commentaries I’ve ever heard taught that what God tells us he will reside in the space between two people as they face each other.
Stop separating yourself from other people. You have a connection to them and you don’t even realize it. Instead, imagine you are searching for or connected to God through other people. If more and more people believed this, then maybe atrocities and crimes against each other would slowdown or stop. Maybe people would realize they are really only hurting themselves and God.