Friday, December 19, 2008

Musings: Lyin, Cheatin' and Thievin'

It was blustery and gusty and very dark, though not especially early, when Koko and I went walking this morning. As we edge toward Sunday’s solstice, the sun is late in rising.

The moon, exactly half, was made ghostly by racing clouds and the loathsome albezzia creaked and groaned in the wind as the inflatable Santa down the street took a wild Superferry-kine ride in his madly bobbing sleigh.

For those who just can’t get enuf of the Superferry, here’s a link to yesterday’s oral arguments before the Hawaii Supreme Court. The issues are the constitutionality of Act 2 — the special legislation that allowed the boat to run without an EIS — the public’s right to have a proper EIS done on the project and whether attorney fees for Isaac Hall, who has been challengng the state and HSF on this matter, should be limited to $200 per hour.

It seems only fair that Isaac should be awarded more than 200 bucks an hour. After all, yesterday he went up against two attorneys for the state and three for HSF, all by his lonesome. And shoots, the state has already pissed away well over $40 million on this boondoggle. What’s another mill or two for ole Isaac? God knows he’s earned it as one of the few attorneys in the state willing to do what’s right instead of sell out to liars, cheats and land thieves.

Besides, the state could make HSF pick up most of the tab, because according to the auditor’s report, this whole fiasco was driven by the company’s demands, anyway.

Yesterday I chatted with Rep. Mina Morita — she’s on vacation, skiing in Mammoth — about the auditor’s report. Her take on it:

“Everyone was criticized, and rightfully so. This was bringing out the worst in politics. They (lawmakers) were not even thinking things through, but trying to please and help their friends.”

As you may recall, Mina and Kauai Sen. Gary Hooser were among the few who voted against Act 2. Mina made a good point when she noted that an even bigger issue than HSF’s environmental impact is its financial viability “and they still haven’t proven that.”

Mina went on to say that overt end-runs of HRS 343, the state’s EIS law, aren’t the only concern here. She’s also worried about the more subtle erosion of the Office of Environmental Quality Control (OEQC), which implements that law.

“They’re so short-staffed and they play a really important role. With the budget cuts, for many years there’s been a dismantling of that office. We’re going to have to pay special attention to what happens to OEQC.”

We also need to pay special attention to the ongoing problem of domestic violence, what with a record 11 women being killed this year in Hawaii and untold others beaten and/or emotionally abused. The Advertiser and KGMB teamed up for a multi-part series that does a good job of expressing the underlying dynamics of power, control, secrecy, shame and fear.

Of course, drugs and alcohol often play a role in so many troubled families. I interviewed two women yesterday who run a social services program on Kauai, and they said they are now seeing great-grandparents raising children because the grandparents and parents are in jail, many for ice. Incarcerating multiple generations isn’t going to solve this problem. We need to stop treating addiction like a crime and provide rehab services, while addressing the socioeconomic issues that so often are the root cause.

A friend who lives in Illinois was telling me that many of the folks she works with at a concrete plant, as well as those in the local construction trade, have prison records. She wrote in an email:

Once again, it is the glaring discrepancy of what blue collar people do time for vs. white collar crime. Incredible.

Yes, just take a look at Wall Street, where the perps made off like bandits and the feds stepped in with billions to cover their crimes. How many of those Armani-suited crooks will ever see the inside of a cell, even the country club prison kine, or be forced to turn over their ill-gotten gains?

Meanwhile, the bruddahs do time at KCCC and are ordered to pay restitution from their $10-an-hour jobs.

Justice ain’t blind. It’s just tends to look the other way when the rich and powerful are doing the lyin’ and cheatin’ and thievin’.

And on that note, be sure to check out the documentary "Noho Hewa," which will be screened at 6 Saturday night at the KCC performing arts center. Garans, it'll make you think, and likely cry a little, even if you're not the thinking, crying type.


Anonymous said...

-- so to do business in hawaii you gotta prove to the state your venture is sufficiently viable? ya that will help encourage econ development and diversification

-- too bad the kauai rehab/drug treatment place location down south was shot down; the guys running the jail thought that having it on-island would have helped a lot of people

-- nice of you to point out the women thing; the rate of assaults here on ladies is too high...a little spooky really. one is reminded of that isaac asimov said: ~ "you can usually measure how advanced a society is by how well it treats its women/womans rights

Anonymous said...

It would have been nice to determine that the SF was financially viable before the State sank $$$ into the ramps, barges and other improvements.

Anonymous said...

> Yes, just take a look at Wall Street, where the perps made off like bandits and the feds stepped in with billions to cover their crimes. How many of those Armani-suited crooks will ever see the inside of a cell, even the country club prison kine, or be forced to turn over their ill-gotten gains? <

Bingo. As the saying goes, all politics is local. So, it seems, is corruption.

I'm reminded of Paul Krugman's piece in the NY Times, titled "The Madoff Economy."

"The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.

Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?

The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.

Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.

But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.

Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.

O.K., maybe my example wasn’t hypothetical after all.

So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.

We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.

But the costs of America’s Ponzi era surely went beyond the direct waste of dollars and cents.

At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.

Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

After all, that’s why so many people trusted Mr. Madoff.

Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff."

Full text at

Anonymous said...

"It would have been nice to determine that the SF was financially viable before the State sank $$$ into the ramps, barges and other improvements."

a reasonable thing to do, sure.

it is just like prior to building or helping to build an prob want to make sure that some planes/people plan on landing there or would want to (ex- certain congressmen have gotten $$ in the past to build small airports in their district...they are built...and then go demand for it. nice idea to chip in for public transport; bad idea not to look ahead enough)

December 19, 2008 11:20 AM