Yes, he’s been in jail, convicted of commercial malfeasance, a conviction which he continues to dispute. Reminders, at least a bit, of disbarred lawyer Julius Melnitzner, who became a respected legal writer, following a major fraud conviction.
Had a Ph.D. mentor who said how, in changing times, “they can never take away your education”. Reason to complete Ph.D. Conrad Black exemplifying that it is more than education. They can never take away your intelligence.
Thought about this when reading this Conrad Black piece, referred to me by my friend, Neil Remington Abramson:
National Post, March 23, 2013
Thursday’s federal budget was a commendable effort that plausibly forecasts a modest surplus in two years, along with a federal debt level that amounts to 28% of GDP (barely a quarter of where the corresponding U.S. figure will be). My own view is that the government should further stabilize the country’s finances by raising the sales tax on elective spending and cut the income tax (in a way that also serves to discourage income-tax increases by the provinces). But since the federal fiscal policy generally has been sensible since the Mulroney years, a steady-on course is not a bad thing — especially as the world around us hobbles toward the finish line in the 80-year devaluation of money.
An examination of the writing of a British 18th Century author such as Dr. [Samuel] Johnson, and a writer from 100 years later, such as Charles Dickens, reveals that there was no increase in that time in the cost of a loaf of bread or the rental of a simple but respectable residential room in London. There were soaring economic bubbles and bone-cracking depressions, and prices followed supply and demand, but the essential currency value was constant. Unfortunately, that would change: There was no way to pay for the appalling hecatomb of the First World War, where almost the whole populations of all the Great Powers except the United States and Japan were at total war for over four years, except to increase the money supply by printing more of it.
In the Roaring Twenties, the New York stock market, especially, was a bubble, fed by the fraudulent notion that permanent growth was assured, and based largely on borrowings secured, in circular fashion, by the stock that was acquired with the borrowed funds. As soon as the market turned, it came down hard. Forced sales of the pledged stocks accelerated and broadened the plunge. Eventually, governments inflated the currencies by flooding the private sector with borrowed money.
The profusion of new, unearned money generates increased demand and starts to push prices and wages higher, but in currency of deteriorating value. This practice has stalked and haunted the world ever since.
This is essentially the trade-off that our civilization has made: Destitution will be spared all but a few people, but savings, investment, and the quest for security will be an endless treadmill on which he who earns and tries to accumulate wealth is in a constant race with the deterioration in the buying power of the currency in which he measures his wealth. Meanwhile, most useful, durable assets, such as homes and fine arts, given some astuteness on the part of the acquirer, increase in value, though they endure severe fluctuations in marketability, according to changing tastes and economic conditions.
Let us be under no illusions about the implications of these trends. Even a Cézanne painting of a bowl of fruit costs 200 times what it did 50 years ago. And, at the risk of seeming an unutterable philistine, great artist though Cezanne was, his bowl of fruit was not a better depiction than the real thing, which with a comparable bowl could be replenished with fresh fruit from the local super market, at today’s prices, for 200,000 years for less than what the Cézanne canvas would cost.
Bubbles occur in almost every area and are corrected eventually. The great housing bubble of 2008 was created in part by the desire of the Clinton administration to promote family home ownership (and befriend the building-trades unions and the residential real-estate developers). But the chief beneficiaries were those who bought five housing units or more at a time, paid almost nothing for them, enjoyed tax-deductibility for mortgage interest payments, flipped the properties at a profit if their value went up, and abandoned them to the mortgage-holders if they didn’t. This isn’t really home ownership.
A former senior official at the largest American bank explained his business’ participation in the mania this way: “When the music’s playing, everybody has to dance.” No they don’t, but they did, and almost the entire banking sectors of the United States, the United Kingdom, and much of Western Europe and Australia was saved from bankruptcy only by government intervention. (Canada was spared that fate only by the fact that Canadian banking is a tightly regulated six-bank cartel, not by the genius of our bankers — contrary to their frequent insinuations otherwise).
The rating agencies, meanwhile, dutifully certified trillions of dollars of worthless real-estate backed debt as investment-grade, and, as a result, now are being investigated, and in one case indicted, by governments (most of whose credit ratings themselves have been reduced). It is financial guerrilla war between combatants that are equally undeserving of trust.
The core of the conundrum is that capitalism is the only economic system that works, because it is the only one that is aligned to the almost universal human ambition for more. It is a myth that people really want to share (other than to a limited degree for charitable reasons; among close-knit groups such as families and some associations; or in over-arching emergencies such as serious wars and national disasters). But it is in the nature of capitalism to incite people to foolhardy risks, causing economic calamity with broad collateral damage. And then only government can address the resulting crisis. This is not because governments have any aptitude to do so — in general, politicians and government officials are even less competent than lions of finance and captains of industry. But the government has the power to legislate, enforce laws and control the money supply.
The federal government debt of the United States has increased by 70% in four years compared to what it was after the first 232 years of independence up to the installation of the current administration in 2009. The remaining hard-currency countries are limited to Canada, Australia, Singapore, the bloc of German and Baltic countries, the Dutch, Poles and Czechs. As for Europe’s fiscal failures,only the Icelanders and the Irish, first in and last out, are tracing a recovery path worthy of emulation.
Of the rest, Cyprus, a haven for financial fugitives and scoundrels, has gone to the front of the line: a collapsed banking system that the government proposed to salvage by taxing bank deposits (an inordinate number of which belong to crooks from other countries). That is the deposits would vanish in taxes rather than to pay for the bank’s bad loans. The people revolted this week, and the government deserted its own measure, making the negative parliamentary vote on it unsuspensefully unanimous. The Cypriot finance ministry adopted Plan B and went to Moscow to offer the banking system and natural resources of Cyprus to Putin’s gangster state in the same week that Russia produced a guilty verdict on a heroic exposeur of the government’s corruption, whom the state murdered three years ago (Sergei Magnitsky). Those who would conduct a kangaroo trial of the dead are expected to be saviours of the Cypriot banking industry,
This charade has gone on so long, and with such affected solemnity, that few seem to realize what volcano most countries are sitting on. Even relatively strong countries such as Germany have reached for the nearer cookie jars, like securitizing debt with pensions. Arizona has sold its state capitol, and is a tenant there. As a distinguished and witty economist (Herbert Stein) famously said, “If something can’t go on, it won’t.”