The controversial White House counselor says his father’s 2008 financial trauma helped crystallize his antiglobalist views and led to a political hardening; ‘I’m going to be totally wiped out’
“The only net worth my father had beside his tiny little house was that AT&T stock. And nobody is held accountable?” Steve Bannon, 63, said in a recent interview. “All these firms get bailed out. There’s no equity taken from anybody. There’s no one in jail. These companies are all overleveraged, and everyone looked the other way.”
.. Steve Bannon idealizes the bygone corporate era that gave his father the kind of stability that he himself never pursued. Marty Bannon, who voted for Mr. Trump, sought a life of security, while the thrice-divorced Steve Bannon craves chaos and drama. He has served in the Navy, dabbled in penny stocks
.. “He’s the backbone of the country, the everyman who plays by the rules, the hardworking dad that delays his own gratification for the family,” Steve Bannon says. “The world is probably 95% Marty Bannons, and 5% Steve Bannons. And that’s probably the right metric for a stable society.”
.. Under his leadership, the site ran increasingly controversial headlines such as “The Solution to Online ‘Harassment’ Is Simple: Women Should Log Off,” “There’s No Hiring Bias Against Women In Tech, They Just Suck At Interviews,” and “Hoist It High and Proud: The Confederate Flag Proclaims a Glorious Heritage.”
.. ideology is less about Republicans and Democrats than about middle class versus elites—nationalists versus globalists. He says that explains his opposition to open borders, political corruption and what he views as political correctness.
.. He expected to become a priest as an adult, he says, but met his future wife and soon started his family. He declined an offer to play for the Washington Senators
.. I had great faith in AT&T,” Marty Bannon says. “At their peak they were the best company for service. That was inbred. Fire, flood, storm or whatever, they called you and you went. Whatever time of night. And you stayed out there until the job was finished.”
.. His children nicknamed him “Safety Sam.”
.. Marty Bannon says he lost more than $100,000 because he sold the shares for less than he paid for them. It was a decision he made without consulting a broker or his family, including his two sons with investment backgrounds, who only learned about the sale days after it was finished. The shares subsequently regained much of their value.
.. Jim Cramer told “Today” show viewers to pull money from the stock market if they needed any cash for the next five years. Steve Bannon says the warning spooked his father.
.. “He was older, in his 80s. But all these guys from the Depression, it’s a risk-averse generation because of the horrible things they saw in their youth. He was rattled.”
.. The way Steve Bannon sees it, the institutions his father put his faith in failed him.
.. Steve Bannon thinks U.S. companies should once again feel more responsible to their communities. “Why can’t you revert back to a golden age?” he asks. “You can.”
.. “The government created this problem,” Marty Bannon says. “The elites, they got bailed out. Everybody else in the country, whatever happened, happened, and they just had to move on.”
The President of Our Dreams
Had it been not for such a deep crisis in the American political system and its so dramatic polarization (which began during Bill Clinton’s presidency and kept increasing ever since), the U.S. policy and priorities could have been adjusted in a much calmer way and by not so extravagant a person.
.. Interestingly, political adventurism, which reached its peak during George W. Bush’s presidency, did not cause such a strong outburst of isolationist sentiments.
.. But the financial crisis of 2008 and its consequences noticeably radicalized the social and political atmosphere.
.. there came a man who talks not about leadership but greatness. Greatness, as he understands it, is the ability to become an example of success for everyone to follow (very much consonant with the Founding Fathers’ idea), without forcing anything upon anyone and putting on a show of force only when it is necessary for specific U.S. national interests.
.. total domination of the liberal-globalist approach was not a norm but an exception, a product of a unique situation that had accidentally developed after the end of the 20th century.
.. Trump is an American nationalist, inclined towards mercantilism in the economy and a strong-arm approach in politics. This is nothing new if one turns the page and admits the fact that the liberal era is over for the time being. Russia actually wanted to see such a president in the United States, not Trump personally but his type, understandable and not overly disposed towards political correctness. The dream has come true. We shall see how it will actually materialize.
Mastering the Machine
How Ray Dalio built the world’s richest and strangest hedge fund.
.. “Given that I’m never sure, I don’t want to have any concentrated bets.”
.. Dalio is a consistent hitter of singles and doubles
.. these days many markets move in the same direction, which makes it hard to achieve real diversification.
.. “spread” bets, purchasing one security it considers undervalued and selling short another one it considers overvalued.
.. In any market that interests him, he identifies the buyers and sellers, estimates how much they are likely to demand and supply, and then looks at whether his findings are already reflected in the market price. If not, there may be money to be made.
.. Unless he and Jensen and Prince agree that a certain trade makes sense, the firm doesn’t make it.
.. The firm’s researchers also went through the public accounts of nearly all the major financial institutions in the world and constructed estimates of how much money they stood to lose from bad debts. The figure they came up with was eight hundred and thirty-nine billion dollars. Armed with this information, Dalio visited the Treasury Department in December, 2007, and met with some of Treasury Secretary Henry Paulson’s staff. Nobody took much notice of what he said, but he went on to the White House, where he presented his numbers to some senior economic staffers.
.. “Everybody else was talking about liquidity. Ray was talking about solvency.”
.. Summers went on, “He had a fully articulated way of looking at the economy. I’m not sure I would agree with all of it, but it seems to have been a very powerful analytical tool through this particular period.”
.. Dalio’s bearishness cost him in 2009. Despite the Fed’s actions and the Obama Administration’s stimulus package, Dalio predicted that the economic recovery would be weak. When growth rebounded faster than he expected and the Dow rose nineteen per cent, the Pure Alpha fund gained just four per cent.
.. an article in New York ridiculed Dalio’s Principles, saying that they read “as if Ayn Rand and Deepak Chopra had collaborated on a line of fortune cookies.”
.. It’s also the case that in the time I spent at the firm I saw senior people criticizing subordinates—but not the reverse.
.. “What we’re trying to have is a place where there are no ego barriers, no emotional reactions to mistakes. . . . If we could eliminate all those reactions, we’d learn so much faster.”
.. I have never seen a C.E.O. spend as much time developing his people as Ray.”
.. Another new member of Bridgewater’s management committee is James Comey, the firm’s top lawyer, who served as Deputy Attorney General in the Bush Administration between 2003 and 2005. “Most of my friends think I am having a midlife crisis,” Comey told me in a recent phone conversation, referring to his decision, last year, to leave Lockheed Martin and accept an offer from Dalio.
.. Comey said of Dalio, “He’s tough and he’s demanding and sometimes he talks too much, but, God, is he a smart bastard.”
.. “We learned that beyond having enough money to help secure the basics—quality relationships, health, stimulating ideas, etc.—having more money, while nice, wasn’t all that important.”
..
he regards it as self-evident that all social systems obey nature’s laws, and that individual participants get rewarded or punished according to how far they operate in harmony with those laws. He views the financial markets as simply another social system, which determines payoffs and punishments in a like manner. “You have to be accurate,” he says. “Otherwise, you are going to pay. Alpha is zero sum. In order to earn more than the market return, you have to take money from somebody else.”
.. Dalio is right, but somewhat self-serving. If hedge-fund managers are playing a zero-sum game, what is their social utility? And if, as many critics contend, there isn’t any, how can they justify their vast remuneration? When I put these questions to Dalio, he insisted that, through pension funds, Bridgewater’s investors include teachers and other public-sector workers, and that the firm created more value for its clients last year than Amazon, eBay, and Yahoo combined.
However, it is one thing to say that the most successful hedge-fund managers earn the riches they reap. It is quite another to suggest that the entire industry serves a social purpose. But that is Dalio’s contention. “In aggregate, it really contributes a lot to the efficiency of capital allocation, and capital allocation is very important,” he said.
.. Like many successful financiers, Dalio justifies capitalism and his place in it as a Darwinian process, in which the over-all logic of the system is sometimes hidden.
Of course, this view conveniently ignores the argument that hedge funds, through their herd behavior, have contributed to speculative bubbles, in tech stocks, oil, and other commodities.
.. “There is a basis for the argument that hedge funds add economic value,” Andrew Lo, an economist at M.I.T. who runs his own hedge fund, says. “At the same time, they create systemic risks that have to be weighed against those positives.”
.. In 2008, hedge funds had hundreds of billions of dollars on deposit at investment banks, which acted as their brokers and counterparties on many trades. When the Wall Street firms got into trouble, a number of other hedge funds demanded their money back immediately. These demands amounted to a virtual run on the banks and helped to bring down Bear Stearns and Lehman Brothers. Dalio acknowledged to me that Bridgewater was one of the funds that pulled a lot of money out of Lehman
.. Fifteen years ago on Wall Street, remuneration packages of five or ten million dollars a year were rare. Today, C.E.O.s and star traders routinely demand vastly higher sums to keep up with their counterparts at hedge funds.
.. some of the very brightest science and mathematics graduates to the industry. Can it really be in America’s interest to have so much of its young talent playing a zero-sum game?
.. “We are still in a deleveraging period,” he said. “We will be in a deleveraging period for ten years or more.”
.. Dalio believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets. “There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,”
.. Other developed countries, particularly those tied to the euro and thus to the European Central Bank, don’t have the option of printing money and are destined to undergo “classic depressions,” Dalio said
The Magic of Donald Trump
The Apprentice debuted on NBC in 2004 with 20.7 million viewers, ranking it seventh among all primetime programs.
.. Did tens of millions ever cast their eyes on the junior senators from Florida or Kentucky or Texas, or the governor of Ohio, not to mention the ex-governors of Arkansas or Florida, or the ex-CEO of Hewlett Packard, before they chanced to mount the stage for a debate with Donald J. Trump last August, a television event that drew the unheard-of viewership of 24 million? Those 24 million tuned in to see Trump.
.. In the casually corrupt American political system the candidates serve as bagmen carrying cash from the corporations to the networks.
.. What other candidate is allowed to call in to morning shows or the sacred Sunday shows for television “interviews” whenever he pleases?
.. this in large part relies on the carefully cultivated illusion that it is all off the cuff, that it comes from the heart and that on a given day he might indeed say anything
.. So they have a choice: They can pretend some impossible solution is actually going to happen, or they can listen to the person who has proved that he can solve problems.
.. as the height of monomania. One can find, in any speech or tweet, more concentrated versions, for example this tweet on Easter Sunday: “Another radical Islamic attack, this time in Pakistan, targeting Christian women & children. At least 67 dead, 400 injured. I alone can solve.”
.. Ignorance and narcissism are joined together here, surely, but they are fortified by the very fact of the amazing events of the last ten months.
- He hired no pollster.
- He spent relatively little money, bought few ads.
- He promulgated few policies.
- He merely flew on his own plane from city to city, from arena to arena, talking about himself—about how the country “has big problems” and how only he can solve them
Who is there to contradict his claim that “there’s nobody like me. Nobody”?
.. These “exceptional powers or qualities” include not just the reputed business genius—a mysterious power that makes the promulgation of specific policies redundant—but the ability to tell a story about why “our country is in big trouble” that is simple, convincing, and satisfying.
.. “Our leaders are so incompetent,”
.. turning on its head the entire drift of post–World War II American propaganda that said the country acted to rebuild Europe and protect the free world not out of national self-interest but out of good old exceptional American generosity.
.. As he declared last November about waterboarding terrorists, “You bet your ass I would!… It works…. If it doesn’t work they deserve it anyway for what they’re doing!
..
certain European leaders of the 1930s would have recognized. The sense of threat from the Other—whether it be Mexican rapists swarming over the border or Muslim terrorists posing as refugees or “two young bullies cursing and threatening”; the sense of national decline that this signals (“We don’t win any more…”); the clear path to a restoration of greatness marked by simple, autocratic solutions (imposing tariffs, pulling out of NATO, bringing back torture, “bombing the shit” out of ISIS)—all of it springs from the populist toolbox, if not the fascist one, and the advertisements show that the roots of these positions and attitudes run very deep.
.. “fascinating intersection of celebrity and neo-fascism”
.. Trumpism is partly the child of the 2008 Wall Street collapse and the vast sense of political corruption and self-dealing it brought in its wake: the sense that the country was looted on a vast scale and that the politicians of all stripes made sure the criminals were not punished.
.. anger at and fear of the Other—illegal immigrants, Muslim refugees, an African-American and possibly Muslim president who seems in league with both—that Trump has skillfully cultivated.
.. Again and again when I asked rally-goers why they supported Trump I heard the word “honesty.” “He doesn’t slip and slide like all the others,” a retired accountant in his seventies told me. Or else: “I see strength in him, power. He’s not afraid to say what he thinks….” That he speaks clearly—that he is unafraid of the police of political correctness—itself bespeaks a power to cut through the corruption and the dealmaking, to fight and fight to get things done: to actually end illegal immigration, to actually repeal Obamacare. It suggests he has the sheer fighting power and energy to do what he says.
.. Rorty’s words prophesy not only the strongman’s rise but his blithe refusal to let “political correctness” prevent him making sexist and bigoted remarks, and his fans’ euphoric enjoyment of their hero’s reveling in the pleasures of free speech. He says what he wants: he is rich enough, strong enough, to do what he pleases.
.. So we started, and something happened called Paris. Paris happened, and Paris was a disaster. There’ve been many disasters but it was Paris and then we had a case in Los Angeles, in California
.. That this is a fact, and that Trump recognizes this fact, represents the greatest risk of that future that the political class still stubbornly refuses to take seriously
.. the longtime lobbyist and fixer Paul Manafort, confidentially assured Republican National Committee Members:
When he’s out on the stage,…he’s projecting an image that’s for that purpose…. He gets it. The part that he’s been playing is evolving into the part that now you’ve been expecting…. The negatives will come down. The image is going to change.
.. we are sure to be hearing a lot about “Crooked Hillary.” (“You have to brand people a certain way when they are your enemies,” he proclaimed to us at Boca. “You gotta brand people….”)
.. A President Trump could likely only emerge as a product of our own fears, carefully fostered as they have been ever since the airliners emerged out of that bright September sky one morning in 2001.