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Wednesday, December 7, 2011

OMG, Lee Cooperman Thinks He's a Victim!

Hedge fund legend (and former Goldman guy...) thinks he a victim.

Dear Mr. Cooperman:

I don't doubt that you are not naive, as you say; but your idea that the wealthy, on the whole, might be persuaded or moved to action on behalf of the needy (in the midst of our current economic crisis) by using a softer tone isn't naive, it's just daft.

Don't take my word for it:

“The best way to reach a deal for Obama is to pull out the partisan cudgel and slam the [Republicans] between the eyes repeatedly. They’ll only come to the table if their political brand is damaged. They’re not coming for the good of the country,” - Norm Ornstein, AEI (via Andrew Sullivan)

What's more, you are politically misinformed.  The President tried reasonable intonations, even with his own political party, on taxes and burden-sharing.  He was rebuffed and then, later, held hostage on the issue.

No one wants to blame the innocent, but you do have the misfortune of belonging to an industry that appears to have rescued itself, by commanding or commandeering the levers of government, and passed the bill on for its economic arson to  .... everyone else, who are largely innocent, too, frankly.

What's worse is that you imagine that the tone of the backlash against this injustice is at the heart of the problem, and not the inability of the Street to accept that it cannot police itself adequately.

Do you agree that AIG Financial Products was a criminal enterprise, in the commonsense usage?  They deliberately sought to skirt rules, by seeking out a friendly regulator.  They used cunning to deliberately avoid internal oversight.  They created products deliberately to skirt capital requirements.  They knew or should have known the risks - including the systemic risks - of writing blank checks of an enormous notional size, as they pocketed millions in salary and bonus, on the back of AIG's enabling, AAA rating.

Your own hedge fund industry is systematically destabilizing, most likely, because so many hedge funds operate as off-trading-floor trading-floors.  Put simply, no one knows the leverage in the system, because of it.  A $41B fund just blew up, with 80:1 leverage, reportedly.  Why should everyone else be concerned about the hardwork that you and your hedge fund guys are putting in, when what really matters is that enough simultaneous blow-ups of that size could start another massive liquidity crisis and, once again, dash the general living standard for the entire population!

Your industry is also seen as an enabler of the bogus 'CEO lifestyle', not only tacitly, but expressly, by passing out CEO treats to decisionmakers for deals that the Street likes for its own enrichment. No one really believes your indirect conjecture that these multi-million dollar packages of all stripes have anything to do with hard work and reward, even for philanthropy, when art sales and high-end retailers are doing so swimmingly.

So, while a gentle tone is often a good thing, railing against a tone that seems almost required by circumstance to re-shape things properly is probably misdirected anger, itself.

Citizens Willing to Finally Say Something