A Dispatch From The Society of Black Ex-Traders
Spoiler alert: Things don’t look good.
Years after he was honorably discharged from the Air Force, my father still made his bed the way he learned in boot camp. To the childhood dismay of my brothers and I, he was bound and determined to pass the routines he learned in the military on to us. While we weren’t forced to rise at the crack of dawn, our in-home drill sergeant demanded we make beds, mop floors, and fold our laundry with military precision. Although I never served in the armed services, some of the lingo I picked up from my father has led some to assume otherwise.
Similarly, I still wake up at five in the morning although I haven’t managed a trading desk in nearly fifteen years. Occasionally, I yearn for the rush of executing an algorithmic strategy. Even though I left that business during the Obama administration, I still pore over data as if preparing for a presentation that will never be given. In a time when chaos is the order of the day, the wisdom I garnered from finance may be more valuable to me now than when I was an active participant in the business.
As I’ve mentioned before, I still maintain regular contact with a handful of former colleagues and members of the small fraternity of Black traders I worked with back in the day. We have moved on to other interests, but still cling to our former careers.
We often commiserate over the economic and political news of the day, each adding our two cents as we divine what it all means. None of us are economists (or politicians, God forbid); our conclusions are derived from the collective experience of having traded our way through numerous episodes of economic upheaval.
Given the small number of African Americans who served as traders on Wall Street, there are no trade groups or social clubs for those of us who hold this distinction. Absent this, I’ve decided to refer to my coterie of former colleagues, at least for the purposes of this dispatch, as The Society of Black Ex-Traders.
Admittedly, this is a tongue-in-cheek name for an organization that has yet to be formally established, but its existence is far more real than Kinky Friedman’s nonexistent book Black Yachtsmen I Have Known.
Based on recent conversations with the members of my cohort of former colleagues, the consensus is that the combination of Trump’s ill-defined policies and seat-of-the-pants governmental firings will push the economy into stagflation or an outright recession.
To be sure, ours is not a risky prognostication. There is an abundance of evidence to support our view, not the least of which being Trump’s haphazardly implemented tariff war with China during his previous term. As a result of that misadventure, the cost of bailing out farmers damaged by China’s retaliatory tariffs exceeded the individual budgets of TANF, Children’s Health Insurance, and what the country spends on its nuclear forces.
But this time could be worse. The Trump 2.0 tariff scheme is broader than before and poses downside risks across multiple sectors of the economy. And if the recent assessment of intelligence expert
is accurate, Trump’s comments regarding annexation of Greenland and Canada could be more than the rants of a declining septuagenarian.Whether our future is a garden-variety economic downturn or a full blown civil war, corporate elites will be shielded from the consequences of Trump’s policies. Wall Street trading desks, even those as small as the one I managed, had a maxim for this eventuality:
“Capitalism on the way up, socialism on the way down.”
This mantra recognizes the tendency of governmental bodies to intercede on behalf of industry when the opposite side of the capitalist coin behaves the way we’ve been told it is supposed to function. The result is a bastardized version of capitalism; when economic conditions are favorable, corporations and by extension, the global financial institutions that support them, gladly reap the benefits of runaway risk-taking, excessive financial packages, and poor stewardship. But the moment calamity strikes, these previously hyper-capitalistic captains of industry will look to the government, i.e., Trump, to save them from the consequences of the behavior that left them exposed to a change of circumstances in the first place.
“Socialism on the way down” is the methodology that resulted in the “too big to fail” form of regulation, the hallmark of a strategy to save essential industries only to make them even larger and thereby more of a systemic risk in need of protection. This maxim is an acceptance of the view that global institutions deserve protection when their risky, and often illegal, behavior goes awry. It tacitly co-signs the belief that the tenets of capitalism should be overridden only when massive losses occur.
Of course, this line of reasoning is reserved for billion-dollar corporations, while the masses who bear the cost of corporate privilege are told to accept their fate, however unfortunate.
By the arrival of the global pandemic, legacy media, and financial news outlets in particular, were thoroughly groomed to accept this philosophy. When the airline industry begged for a governmental savior, many talking heads preemptively concluded that bailouts were the logical solution to calamity-induced corporate failure.
Emblematic of legacy media’s effort to grease the skids in favor of pandemic bailouts is an exchange that occurred in an April 2020 episode of CNBC’s “Halftime Report” between the show’s host Scott Wapner and Chamath Palihapitiya. Palihapitiya, the CEO of Social Capital, a venture capital firm, goes completely off-script by suggesting that corporations unprepared for financial calamities should accept the bitter medicine that we’re constantly told is a necessary component of free markets. Wapner’s televised freak-out at Palihapitiya‘s suggestion that the downside of capitalism be applied equally is something to behold:
The first six weeks of Trump 2.0 given the administration’s habit of “flooding the zone,” we all should bear in mind going forward. The constant stream of assertions without evidence lies emanating from the White House, which are then parroted by a Republican Congress that has surrendered its constitutional authority to the Executive Branch. This dynamic, combined with co-president Elon Musk’s statements regarding alleged instances of fraud and malfeasance while failing to offer a shred of evidence, makes this maxim especially apropos:
“In God We Trust. Everyone else, bring data.”
This statement, while somewhat pithy, recognizes the ease with which some individuals attempt to substitute verifiable facts and data with opinions, bad faith arguments, and, intentional subterfuge. As evidenced in the following video, the Trump administration is already taking steps to limit our access to previously public data.
Unfortunately for us all, not only do we have at least four years of economic uncertainty ahead of us, but we must endure it while being governed by an administration that sees manipulation of truth as an essential part of its political strategy.
Love that video. The Great Recession wiped out tens or hundreds of thousands - of homeowners, but the banks were bailed out. Lines of credit of responsible small businesses were called in but the banks with risky investments and liar loans were made whole or merged.
Scrubbing the historically publicly accessible data is stand alone grounds for Impeachment. I know, I know, but we have to slam these people with every bat in the clubhouse until they are gone forever.