A Case For Blogs Such as These

I am busy with the final volume of Speculative Capital. The book has been a long time coming; I lost track of the number of times entire chapters were rewritten because Nasser was not happy with them. But he is in the in home stretch now and an end-of-year publication date is a possibility. I think when you read it you will agree that it is different from anything that has come before.

The book has a chapter on theory of knowledge which made me think. How do we know what we know? I am not concerned with the epistemological/philosophical issues. I will leave them to Nasser to explain. My interest is in the more mundane aspects of knowledge. How do I know, for example, that the President of Ireland is precipitously close to violating his constitutional authority?

Why, I read it in the Financial Times. Here is the May 3 story under the heading Dublin defends president over call for ‘radical reform’

The Irish government has defended critical comments made by the country’s ceremonial president about EU leaders’ response to the economic crisis after questions were raised about whether he may have overstepped the mandate of his office.

President Michael D. Higgins called for a “radical rethink” of how the EU leaders tackled the crisis ...

Davie Gwynn Morgan, a constitutional lawyer ... told Irish radio the president may have exceeded the limits allowed under the Irish constitution. “It seems to be we are in unprecedented waters,” he said. “People feel that we are in a time of great stress and they should speak out even though it may be inappropriate for their office. It doesn’t seem to me like a good thing to do.”

The president of Ireland did not plan a coup. He did not interfere with the official function of the prime minister. Nor did he negotiate secret trade agreements. He merely criticized the EU for imposing austerity. The FT reported that as the Irish government being on the defensive about the president's insolent comments.

Note that the story is generated by one, single, solitary, half-literate pissant who says 'unprecedented' when he means 'unchartered'. Even he is not sure. He says it seems and may be what the president said was 'inappropriate'.

No matter. A scandal is whipped up and the Irish government is forced to formally defend the president. The point is to keep him on his toes; next time he will be more careful when he has an urge to criticize austerity.

That is why blogs like Dialectics of Finance are necessary. They act as an antidote to lies. Without them, the good guys are at a disadvantage.

An Update

Nasser is in the 4th rewrite of the draft of Vol. 4. Each time, he expands its scope. I think he’s finally got it, as not much is left which is not already included! But I am not talking about a mishmash of stuff thrown together like a heap of disorderly bones. It is precisely the book’s synthetic thread, its binding and “totalizing” driver, which sets it apart from the others. It will be quite a treat.

In 1999, Nasser wrote in Vol. 1:

Theory is to explain what is happening, i.e., what is changing. The theory can explain the change only if it can show the cause and direction of the change and the point to which it must lead. In that regard, theory delivers us from submissive acceptance of events just because they occur and allows us to interpret them within the body of a logically constructed system and, if need be, take action to influence them.

Has the theory of speculative capital lived to that expectation? Let us look at a few disparate cases.

(1)

Nasser in the same volume:

Speculative capital is not bound to any one market or place. Rather, it is constantly on the lookout for profitable opportunities wherever it can find them. Upon finding such opportunities, it enters into these markets and, through arbitrage, “links” them together ... The linkage knows no limits in terms of markets. It can target two similar or approximately similar markets in the same country, two separate markets within the same country, two similar markets in two different countries or different markets in different countries.

The most elementary form of arbitrage linkage of two similar markets within a country is the one we visited earlier: the price of a stock (such as IBM) being different in the New York and the Pacific Stock Exchanges. ..The linkage of equities, fixed income and currency markets is less simple [and comes later].

From the Financial Times of Feb 20, 2013, under the heading, In search of fast bucks:

The prospect of the speed traders expanding their presence across global markets, linking numerous asset classes ever tighter, poses new challenges to traditional investors, companies – and regulators...

High-frequency trading in assets such as futures and fixed income has picked up in the past four years just as its presence in the US equities has waned. The gains are most visible in foreign exchange, where the global market share of high-frequency trading has soared to 40 per cent up from just a quarter in three years.

The presence of high-frequency trading in the equities market is “waned” because that market is arbitraged away. Speculative capital, Nasser pointed out, is self-destructive. It eliminates opportunities that give rise to it.

(2)

Nasser on his blog on January 22, 2012 about the goings on in Hungary under Viktor Orban:

If you are not Hungarian and ordinarily do not follow the affairs of the country, I say keep Viktor Orban’s name in the back of your mind. My guess is that you will see it again – and never in a positive light. In fact, that is how you will only hear of his name – until you hear of it no more.

From the Financial Times, this past Tuesday, under the heading Hungary accused of power grab

Hungary’s government is being accused of renewed attempts to monopolise power as it tries to reinstate measure from its new constitution last year that European authorities and its own top court had earlier forced it to drop.

In what critics say is a significant reversal, Hungary’s parliament is expected today to pass amendment that will restore many of the most contentious elements of the new basic law. “This [document] is a toxic waste dump of bad constitutional ideas,” said … an expert on Hungarian constitution at Princeton University.

So a country’s parliament passing a bill is considered a ‘power grab’ by the Financial Times and the Princeton critic whose language is decidedly neocon. The same paper reported the next day:

Mr Orabn has found blaming foreign banks and EU “interference” resonate politically. “In some elements it’s just popular [with voters],” says [the] director of ... a Budapest think-tank.

(3)

Nasser on “jobless recovery” on October 8, 2009

In the phrase “jobless recovery”, the news pertaining to the people is grim; there are no jobs to be had. Yet it contains “recovery”. So, what is it that is being recovered? The answer is: the agreeable rate of return of capital. The “data” measures the pulse and performance of capital, which the university professors study and comment about without ever understanding the larger issue surrounding it.

From the New York Times, this past Monday, under the title Recovery in U.S. Lifting Profits, Not Adding Jobs

With the Dow Jones industrial average flirting with a record high, the split between American workers and the companies that employ them is widening...That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high....“There hasn’t been a period in the last 50 years where these trends have been so pronounced,” [an economist] said.

(4)

Nasser on May 10, 2010, about how Europeans are prodded to forget about the ‘old Europe’ and get used to the new conditions:

How much money you are earning or will earn in the future does not depend on what you spend today. Yet, the president of the ECB links the two. Why? Because “fiscal soundness” he mentions is the code word for reducing labor costs by cutting their pay and pensions. That is what the fight is all about: to bring down the labor costs to at least temporarily boost the growth, i.e., increase the rate of return of capital, whose consistent decline in the past decade remains a matter of serious concern to the planners of the European Union.

A professor of history at Columbia University opining in the New York Times on March 1:

So, from today’s perspective, the 1950 and 1960s look like a golden age. Its achievement now looks in danger of being undone. For it is not written in stone that Europe will always be identified in the minds of its citizens with growth and democracy.

(5)

Nasser on democracy, Nov 20, 2011:

Democracy is the name of the form of the government created by capital.

Financial Times, Feb 26, 2013:

Mr Monti ... reforms won the approval of the markets – but not of the voters.

Approval of the market but not of the voters.

The voters will soon find out who is the boss in a democracy.

Have a good week!

The Ground of Existence – 3: The Shift in the Ground

I had written something different for this third part of Ground of Existence. It was about the Supreme Court and the evolution of the thinking of its justices. It followed where Part II had ended.

Then, two things happened. Firstly, several friends commented that the ground of existence was too heavy a topic for a blog. “Being comes into mediation with itself through the negation of itself”. Please, they said!

That was Nasser’s fault, I said. Bad influence.

Then, as if in response to an unuttered prayer, came the banks’ foreclosure practices settlement with the OCC. There was something in the story that could make the point I had in mind, only less abstractly. So I decided to use it. It fits less tightly with the previous parts; there is always a trade-off when you make compromises of this sort. But it made sense to go with it. The story is critically important in its own right. It is something that the readers of this blog must know.

In case you did not know, recently the Comptroller of the Currency settled the case of mortgage foreclosure “wrongdoings” against 14 banks by fining them a total of $8.5 billion. The story was the main business news in all media outlets and received extensive commentary. Let me quote some of what was said. I have underlined the cause of the OCC’s action.

The Financial Times reported the news of the impeding settlement on January 7:

The largest US banks are close to a $10bn settlement with regulators to resolve claims that they broke rules when seizing the homes of customers who defaulted on their mortgage

The “iconoclast” Huffington Post said this:

Under the deal ... the mortgage companies will make $3.3 billion in direct payments to “eligible borrowers” whose foreclosures were handled improperly, and will make $5.2 billion available in other assistance to struggling borrowers, such as loan modifications.

Lost Angeles Times had the story on its front page:

Ten of the nation’s largest mortgage servicers have agreed to an $8.5-billion settlement with federal regulators to end a review of foreclosure abuses.

The settlement … involved some of the biggest names in the financial industry, including Bank of America Corp., Wells Fargo Co., JPMorgan Chase Co. and Citigroup Inc.

The Wall Street Journal called the settlement a “shakedown”, then published the following letter to show that it is man enough to take critical comments.

Having served 9,000 homeowners in distress in California and attempted resolutions with almost all of the 14 major servicers, we disagree with your criticisms of the Office of the Comptroller of the Currency (OCC) and the Federal Reserve regarding...

The 6.5% of affected borrowers that you contend suffered financial harm is an erroneous figure by bank consultants who were paid $1.5 billion by the banking industry. Our estimate is more than 50% that suffered some type of harm.

The Newspaper of the Record wrote the following:

Federal banking regulators are trumpeting an $8.5 billion settlement this week with 10 banks as quick justice for aggrieved homeowners, but the deal is actually a way to quietly paper over a deeply flawed review of foreclosed loans across America, according to current and former regulators and consultants ... As a result, many victims of foreclosure abuses like bungled loan modifications, deficient paperwork, excessive fees and wrongful evictions will most likely get less money.

The article got lots of comments. “James” from Long Island wrote:

Pardon my selfishness, but what do the folks who live within their means and pay their bills get out of all this? Just asking.

Here, “James” is implying that foreclosures hit the “irresponsible” borrowers only. A variation of this theme is the frequently voiced comment that “despite” all irregularities, not one person who paid his mortgage on time was evicted.

That last point is absolutely correct. But James and his fellow selfish nincompoops who pointed to that fact missed the point. The significance of the case arises from something altogether unrelated to responsible social conduct by boorish behavior by banks which caused “some kind of harm” to home owners. In fact, none of the hundreds of reporters and commentators who wrote about it got the source of its significance right – but that is because the ground of existence of law has shifted!

Recall that the trigger of the ongoing crisis that exploded into the open in 2008 was the fall in the value of “mortgage-packed” securities. Nasser dissected the problem in his blog, here, for example. But we do not need the details. Just keep in mind that “mortgage-packed securities” were created by pooling the mortgages. Now, attention:

Q: Who created the securities?

A: The Wall Street firms.

Q: But the Wall Street firms are not mortgage lenders. They do not lend to home buyers. So, where did they get the mortgages?

A: They bought them from the banks.

Q: Meaning that the banks sold their mortgages to Wall Street?

A: Correct.

Q: But if the banks had sold the mortgages, then they – the banks – no longer owned the mortgages. Right?

A: Right, exactly.

Q: Then, how could the banks foreclose? The OCC settlement is with banks. No Wall Street firm was involved. How could the banks foreclose if they were no longer holding the mortgages, meaning that they were no longer the lender of the record?

Aha.

Here, we need a few things about the jurisprudence in the U.S.

In the U.S., if your financial claim against a party is $5000 or less, you go to a small claims court. (In some states, the amount is lower, but $5000 is the ceiling.)

The small claims courts exist in many countries under such names as the elders’ councils or justice councils. Their role is to mediate the minor claims that arise from the social and commercial interactions at the local level. That relieves the higher courts from having to deal with petty disputes and minor sums.

Small claims courts exist in their own judicial world. Their ruling does not become a precedent. And because of the personal nature of the disputes, both the plaintiff and the defendant are allowed to tell stories about their loss. So if you are suing your cat sitter because she let your cat run away, you can sobbingly describe how dear the cat was to you. That is what you see in “Judge Judy” and her small claims court.

When the money in dispute is more than $5000, you have to file the claim in the civil court. No exceptions.

In the civil court, the “Anglo-Saxon” jurisprudence reigns. The rules of evidence kick in.

No personal stories are allowed in the civil court. The focus is on the violation of the law only. Taking the example of the cat, you have to show which law was violated by the cat sitter’s negligence. If there is no statute and no case law applicable, the cat sitter walks free not matter how severe your emotional distress. The centrality of law is the point of Oliver Wendell Holmes’ famous utterance: “This is a court of law, young man, not a court of justice.”

Because the language of the law is the frame of reference in deciding the cases, the technical law is all that matters: which evidence is admissible; which evidence must be presented for establishing a claim, etc. Hence, the role of lawyers who are trained in the law’s technicality. A defendant could be guilty as a matter of fact, but if the evidence against him is inadmissible – because it was obtained through illegal search or by threat or torture – the court will set him free. That is the meaning of a case being dismissed “on a technicality”, an expression familiar to all Americans of a certain age through real life cases or the court-room dramas on TV and in Hollywood movies.

Returning to our main topic, imagine you are a bank. A while back, you lent $200,000 to a homebuyer on which he defaulted. Now, to foreclose so you could claim the house, you have gone to court. There, the absolute first thing you need to do is to establish the evidence of indebtedness; you have to show that the party you are suing owes you money.

But as a participant in the great wave of securitization you have sold the mortgage note, remember?

Now how are you going to establish your claim? You are in a court where stories are not allowed. “Your honor, this is the copy of an advice that shows we deposited $200,000 a few years back to the defendant’s account” will not work. The defendant can claim that he returned the money next day in small bills in a laundry bag. He will demand that you produce the evidence of indebtedness.

With the evidence of indebtedness gone – or lost, or destroyed of misplaced in the mortgage frenzy – the only way to satisfy that demand is to create the evidence. That is forgery. Knowingly testifying to the authenticity of a forged document is perjury. Both are serious offenses punishable by jail time. That is what the closely related but now expunged-from-the-record “robo signing” scandal was all about.

In “robo signing”, a neutered phrase meaning “robot signing”, letters signed by fictional bank staff were presented as the evidence of indebtedness of homeowners who were late in their payments. Those were then used to start the foreclosure and eviction proceedings. Google “robo signing” and read some of the articles. They should make sense now. See also how the central crime of the case is consistently concealed as a matter of good journalism.

Yet, no one served a day in jail. And the settlement with the OCC will see to it that no one will. That is the critical point of the settlement – it is not the fine which works out to a few thousand dollars per “injured” party, but rather, shutting the door to legal action. The offending banks can no longer be sued. The case is closed.

But let us not focus on the OCC. The agency could not and would not settle the case if the rot had already not set in.

The rot is a legal one. It changes the law from a shield protecting the people to a sword attacking them. The headlines of a New York headlines a few months ago about the tactics of collection agencies put that succinctly:

In Prosecutors, Debt Collectors Find a Partner

Here is the opening paragraph:

The letters are sent by the thousands to people across the country who have written bad checks, threatening them with jail if they do not pay up.

They bear the seal and signature of the local district attorney’s office. But there is a catch: the letters are from debt-collection companies, which the prosecutors allow to use their letterhead. In return, the companies try to collect not only the unpaid check, but also high fees from debtors … some of which goes back to the district attorneys’ offices.

In the mortgage scandal, a few home owners did try to fight in court. They got nowhere. The fix – long in the making – was in. From the New York Times of November 29, 2010, reporting about the “high speed” court in Florida which was set up to handle the foreclosure cases:

Lawyers such as Mr Parker allege that these courts show leniency towards the sloppy bookkeeping of the banks, but crack down on homeowners who are ill-prepared.

In a testimony ... one executive from Countrywide Financial said it was routine not to pass along the original notes and related documents as part of the securitization process of the loans…

“After this, the judges in foreclosure cases are going to have to start ignoring massive systemic violations of law in order to grant foreclosures … Do we save the financial markets and sacrifice the rule of law? You can’t save both, you’ve got the sacrifice one for the other.

This “transformation” of the law is the shift in the ground of existence.

A Close up of a Few VIPs

“VIP” is an American appellation. It stands for very important person – or people; I am not sure which. Very important people do not wait in line. They get the best tables at restaurants. And often, they get to set or influence policy – if not directly, then indirectly. A few of them were recently in news.

(i)

Not Understanding What I Hear, Not Knowing What I Write

The recently released minutes of the Federal Reserve Board shows that as late as August 2007, the Board members had no inkling about the approaching storm. The Financial Times reported the story under the heading Fed red-faced as notes reveal officials failed to grasp dangers of 2007 crisis.

The ever obsequious New York Times put a positive spin on the story and presented it as the problem of scarcity of data. We learned that one Board member had presented as evidence of weakening economic conditions his private conversation with a Wal-Mart executive who said that Mexican workers were sending less money back home. Blah, blah, blah.

Of course, no institution in the world has more facts and data about the U.S. economy than the Fed. So what blinded the Board Members was not the paucity of facts, but the inability to interpret them. The mind is an active, synthesizing and interpretive faculty. A deficiency in its interpretive dimension makes it less than whole. The interpretative deficiency we are discussing has its roots not so much in biological, but social factors: facts must be fitted into the Procrustean Bed of the official beliefs and ideologies. As these beliefs and ideologies are false, the interpretations they lead to are necessarily bunk.

Two years before the 2007 Federal Reserve Board meeting, and with the knowledge gleaned from the reading only the newspapers, this is what Nasser wrote in Vol. 3 of Speculative Capital:

The rise of credit derivatives is the latest evolution of finance capital where market and credit “dimensions” are brought together. We are currently witnessing the early stages of this development. But armed with the theory of speculative capital we can see what is happening, i.e., what is changing. We can also discern the cause, pattern and characteristics of the change. So whereas for others credit derivatives are the risk-diversifying, need-fulfilling products of an innovative Wall Street, for us they are the footprint of speculative capital on its march towards systemic crisis.

(ii)

Ditto

Speaking of inability to interpret, a couple of times in his blog Nasser mildly criticized Mohamad El-Erian’s understanding of finance. El-Erian, in case you do not know, is the CEO and co-chief investment officer (with Bill Gross) of Pimco, the largest fixed income fund in the world, with $1 trillion under management.

Both Gross and El-Erian are media darlings. Rarely a day goes by without one or both of them appearing on a TV program or penning a commentary piece in the Financial Times.

Yet, what is the quality of their comments? Here is what El-Erian, rumored to be the more intellectual of the two, wrote on January 8 in the FT:

The investment recommendations made by many financial commentators are dominated by cross-asset-class relative valuation rather than the fundamentals of the investment. A typical refrain runs something like this: buy X because it is cheaper than other things out there.

This is an understandable approach, as unusual central bank activism has artificially elevated certain asset prices. Yet the dominance of this increasingly popular advice comes with potential risks that need to be well understood and well managed.

In talking about the “domination” of “cross-asset-class relative valuation”, our man is describing the modus operandi of speculative capital. Nasser developed a theory and wrote a series of books on that. From his Vol. 1 (1999):

Speculative capital is massive in size. It grazes on the spreads and brings volatility to markets … Because speculative capital was hidden from the view, the cause of this volatility remained a mystery. Markets seemed increasingly irrational.

What can you really know about a stock when its value seesaws 10% or 15% in the space of a week or less for no apparent reason? Not much, say some perplexed investors. With the stock market embroiled in some of the most volatile moves in years, it is getting increasingly difficult for money managers to plan and execute their strategies. (Wall Street Journal, November 24, 1997, p. C1)

And:

Rising volatility is worrisome, if only because people who are paid to study such things have no clear answers as to why it is happening now. (New York Times, August 31, 1997, p. F4)

Nevertheless, fund managers must deliver results. Staying on the sidelines on account of volatility is not an option. What can they do if stocks are volatile and drop for no apparent reason? The answer is that they discover “relative value” trading. A news story in the Wall Street Journal captured this crucial shift in stock trading strategy:

[Mr. Schermerhorn who manages $4 billion] also scorns the growing emphasis on “relative” valuation, comparing a company’s P/E ratio with those of other companies in the sector, rather than absolute valuations or historical levels. But other investors concede they are reluctantly having to pay more attention to relative valuation. “Lately, if you’d used almost any kind of absolute-valuation guidelines, you’d have kept out of this market altogether, and missed a lot of the bull market,” sighs Mr. Jandrain [who manages a stock fund]. “The reality is that we’re still at record [valuation] levels historically by nearly every measure, and you have to look for pockets of relative value.” (Wall Street Journal, November 24, 1997, p. C1)

“Rrelative value” trading – comparing one stock against similar stocks – is arbitrage trading. Mr. Jandrain … is being forced to disregard forecasting, i.e., individual stock analysis with an eye to estimating its future growth, in favor of buying relatively undervalued or selling relatively overvalued stocks. He calls that “looking for pockets of relative value.” But arbitrage by any name is arbitrage. In his quest for pockets of relative value in the equities market, Jandrain has assigned his fund to the ranks of speculative capital, thus guaranteeing that relative value trading, and, with it, the volatility of the stock market, will increase.

Such is the impact of speculative capital on financial markets: fund managers reluctantly joining a trend which they abhor and whose dynamics they do not understand. In the process, they push stock market even higher. Those traders who position themselves to profit from a decrease in P/E ratios get clobbered.

Relative value trading, rise in the market volatility, rise in high-frequency trading, synchronization of the markets across countries, correlation of assets classes (bonds, stock, commodities) as a result of which they all move up and down at the same time (and render diversification for the purpose of hedging pointless) and finally, globalization have but one common cause: speculative capital. El-Erian sees every one of those causes and can dispense expert advice about the best trading strategies under each condition. What he cannot do is see the larger force that links them all together. That is why he could never see what is about to come not matter how hard he looks – or thinks.

(iii)

The Chief of the Naval Operations of Afghanistan

What would you say, and how would you react, if the man sitting next to you on a plane introduced himself as the chief of naval operations of Afghanistan?

Why, you would laugh. You might not actually say anything in consideration of etiquette, but you would involuntarily chortle. Afghanistan, after all, is a land locked country; I am not sure it even has a lake. So the idea of it having a chief of naval operations is prime facie absurd. How could the position even exist and what kind of an ass would accept it if he were offered?

Now, what would you say, and how would you react, if someone introduced himself as the Ireland pension ombudsman?

If you are not sure, see the above. The catch is that this position, unbelievably, does exist and is currently occupied by one Paul Kenny.

Why unbelievably? Because conceptually, an Ireland pension ombudsman is as absurd as an Afghanistan chief of naval operations. What makes the two comparable is that there is exactly the same number of protections for workers’ pensions in Ireland that there is access to open seas in Afghanistan.

From the Financial Times of January 3, under the heading Aer Lingus pension move sheds light on Ireland’s woes:

Under Irish law there is little oversight of the pensions sector and no safety net for workers. Solvent employers with underfunded schemes can wind them up and walk away.

Solvent employers with underfunded schemes – underfunded because they, the employers, have chosen not to put money into the fund – can wind them up and walk away. Just like that.

Note also the word “scheme”. There was a time pension plans were called plans. Now the FT, with its editors’ British sensitivity to words, calls them schemes. Here is the difference between plans and schemes:

“We know from what the Pensions Board has said that 80 per cent of defined benefit pensions schemes in Ireland are technically insolvent,” says Paul Kenny, Ireland pension ombudsman.... But the real issue, analysts say, is whether Irish politicians are prepared to force already hard-pressed businesses to top up the underfunded pensions.

Jim Kelly, regional secretary with the Unite trade union, said companies were using the economic crisis in Ireland as an excuse to close their defined benefit schemes and in some cases to try to get out of providing any pension to workers.

“In the current difficult economic climate businesses are putting more emphasis on their own viability than on their employees’ entitlements,” Mr Kelly said. “This will end up being a disaster for the future. It is only when we get out of this crisis that we will see the real tragedy that has occurred for workers.

(iv)

A Sad, Sad Woman

I am talking about Ruth Porat who is being considered for the No. 2 spot at the Treasury.

Ruth is quite a go-getter: Stanford, Wharton, what have you. A 2010 New York Times laudatory profile quoted he colleagues who said that she was “a tireless worker”. That turned out to be an understatement:

In 1992, during the birth of her first son, she was on the phone in the delivery room making client calls. And in her spare time she, along with her husband, a lawyer, renovate and sell New York City apartments.

Ms. Meeker, the godmother to each of Ms. Porat’s three sons, remembers one meeting with management at the media company Ziff Davis where Ms. Porat threw her back out. “Instead of leaving she laid on the boardroom table and continued on with the presentation,” Ms. Meeker said.

Ruth Porat reminds me of the Ugly – of The Good, The Bad, The Ugly fame – who, trying to entice his fellow thieves, asked them: If you work to live, then why kill yourself working?

The Ugly knew a thing or two about work-life balance.

Yet, there is another angle here beyond obsession with work and money that the Porats, renovating and selling fixed-it-uppers in their “spare time”, cannot hide.

Imagine – visualize – a woman lying in pain on her back on a table in a boardroom full of people and giving a PowerPoint presentation. Can you imagine a man doing it? A George Soros? A Tim Geithner?

Imagine making client calls when you are about to deliver a baby.

Can you top these scenes in obscenity?

There are different ways for the underdogs to put up a defense. Jean Genet gave us one in Our Lady of the Flowers: “If I declare that I am an old whore, no one can better that, I discourage insult.”

Ruth Porat is playing a variation of the same theme. She discourages criticism by being obscene herself. But the whole thing stinks: her behavior and the conditions that make her to behave the way she does. That she acts on her own “free will” only adds insult to the injury. There is an Exhibit A of “internalizing the external conditions” if there ever was one.