NY Times-Anti-Virus founder John McAfee lost at least 94% of wealth in financial crisis/recession

The NY Times has a story today about how the Super Rich's 30 year accumulation of the bulk of income and assets in the country has hit a wall with the recession.

Two things come to mind: First, I couldn't care less that the super rich are hurting from the recession, and second, I'm sure they'll find a way to game the recovery, if there is one, to continue their aggrandizement of the country's wealth and income.

But I do think the story is important to counter what I think is one misunderstanding of the financial crisis on the part of the left: I don't think this was disaster capitalism, or a smash and grab or an engineered failure.

The rich do not conspire to make the rich as a class poorer. Although those executives still employed by surviving banks may be making off with giant bonuses, here in New York, there have been lots of news stories over the last year of billionaires who lost everything or most of what they had, with the collapse of the major investment banks of Wall Street.

Harvard, whose Business School delivered to us several generations of graduates who gave us this collapse, lost about 1/3 of its $36 billion endowment. Again, it's hard to square that with a disaster capitalism scheme.

We are almost at the one year anniversary of the September panic, which almost completely destroyed the entire global financial system. As incompetent, reckless and greedy as the Wall Street elite was in bringing on that collapse, I simply can't believe that any of them intended for it to happen.

And understanding what happened is crucial to coming up with a regulatory scheme that will prevent it from happening again. If you think that bad guys broke into the vaults and stole the money, then you would come up with one kind of new regulatory system. If you think that collective risky financial strategies and predatory behavior caused the collapse, you would come up with a different new kind of regulatory system.

http://www.nytimes.com/2009/08/21/business/economy/21inequality.html?_r=1&partner=rss&emc=rss

Rise of the Super-Rich Hits a Sobering Wall

...

Bill Gates, Warren E. Buffett, the heirs to the Wal-Mart Stores fortune and the founders of Google each lost billions last year, according to Forbes magazine. In one stark example, John McAfee, an entrepreneur who founded the antivirus software company that bears his name, is now worth about $4 million, from a peak of more than $100 million. Mr. McAfee will soon auction off his last big property because he needs cash to pay his bills after having been caught off guard by the simultaneous crash in real estate and stocks.

“I had no clue,” he said, “that there would be this tandem collapse.”

...

In 2007, Mr. McAfee sold a 10,000-square-foot home in Colorado with a view of Pike’s Peak. He had spent $25 million to buy the property and build the house. He received $5.7 million for it. When Lehman collapsed last fall, its bonds became virtually worthless. Mr. McAfee’s stock investments cost him millions more.

One day, he realized, as he said, “Whoa, my cash is gone.”

His remaining net worth of about $4 million makes him vastly wealthier than most Americans, of course. But he has nonetheless found himself needing cash and desperately trying to reduce his monthly expenses.

And that's what's happened. Suddenly, these fortunes built on bubble money have burst, and there's no real value.

there's no there there after all.




TG

That is, in addition to investing their own money, they borrowed additional money to invest.

That means when what you own loses value, not only do you lose value, you go into negative territory with that investment.

So in a way, yes, it wasn't real.

But he sold his stake in McAfee and actually had $100 million in real money.

Not my favorite person or software company, but he made it the old-fashioned way by providing something of value to people.

Bushco wanted to convert SS to the stock market.

That is really a case of "keep your hands off my SS".

:rofl:

Do a search. From my very first posts about the first bailouts, I called them partial nationalizations, which I was in favor of as a way to get the financial system under control, as well as to avoid a complete financial collapse.

As it turns out, TARP I is being paid back at a profit to the taxpayer.

The rich do not conspire to create events that lead to nationalization of the banking sector and auto industries.

You, by contrast, have no theory at all, other than "LET IT FAIL"! by which I assume you meant that a Great Depression II and all the misery it would have caused would have ushered in Trotskyite paradise.

You don't call socialized risks, private profits "socialism", by the way. Ronald Reagan called it "trickle down economics" when he advocated it.

I would label the current hyper-militaristic form of corporatism neo-fascism.

Romulox got pwn3d.

Can't say that I'm surprised.

"Competition" is said to be the defining element of your ideology.

I'm not sure what's more disturbing: that you posit some sort of rich guy "good old boys" club in which rich people fret over whether other rich people will be able to retain their wealth (how utterly laughable!), or that you think that pointing out same would be of some comfort to we mere mortals.


"His remaining net worth of about $4 million makes him vastly wealthier than most Americans, of course. But he has nonetheless found himself needing cash and desperately trying to reduce his monthly expenses."

Poor fellow. :nopity: You empathy for the rich and powerful knows no bounds. :silly:

Yes, the rich in competition struggle to make their competitors poorer. So I corrected it to say the rich to not conspire to make the rich as a class poorer.

I think the original quote is more revealing of your motivations than my editing could ever be.

You by contrast are always dishonest. Or maybe I'm confusing something else you exhibit with dishonesty:

:silly: :crazy: :silly:

In the first place, content and spelling are two very different things...

which was why I just went by the headlines this time. I still think you're mistaken...the McAfee guy made his money legitimately, by selling a product people found useful rather than cooking the books or something. I'm not sure why you're pouring scorn on him, since he's an example of someone who made money by actually starting a business and catering to his customers, which is how you're supposed to do it.

I'm not heaping scorn on McAfee, btw, (though I would never use his substandard products.) I am heaping scorn on the pathos Mr. HamdenRice is trying to evoke over his allegedly "tragic" fall.

In fact, the thesis of this thread is bizarre and confused. OK, so McAfee lost his fortune due to his financial incompetence. So what? Does that mean that the system that allowed someone who is demonstrably not an economic genius to amass such wealth is therefore justified? That seems to be the argument, but it is skeletal, and semi-subconscious, from reading Mr. Rice's meandering posts...

Did you (or more accurately, can you) read the OP? I said I don't care about the predicament of rich people losing their money.

The post is entirely aimed at confronting the idea that the rich would engineer a crisis that would impoverish the rich.

What is so difficult about that concept for you to grasp? I always knew you were pretty dense, but this is truly amazing!

is a pathetic argument, when one's follow up is that therefore the government must prop up the incompetents.

Your quest for a "progressive" reason to advocate for the wealthy continues, I'm afraid. :hi:

*Does that mean that the system that allowed someone who is demonstrably not an economic genius to amass such wealth is therefore justified?*

But he didn't amass his wealth via economic manipulation, such as trading stocks or currencies or arbitraging market discrepancies. He made it by selling software that a lot of people considered adequate and good value. Was it the best? That's a matter of opinion. At one stage I liked it better than Symantec's alternative, on the other hand I have enough knowledge to root out computer viruses by hand so I never bought a copy for myself. The point is that it was a legitimate product which was designed, functioned and marketed in a way that satisfied the needs of many customers who were happy to buy it - either in a box or bundled with a new machine.

You might very ask whether the system that allowed such sensibly earned-money to evaporate by being so risky it at fault, or you could say that he overestimated his capabilities and is responsible for the loss of his own money, or somewhere in between. I have absolutely no problem with the way he amassed his (former) wealth, which seems to me like the correct, sensible operation of capitalism - start a business, make something people want, sell it to them, reinvest part of the profit in the business, rinse and repeat.

There are people I disagree with and people I agree with. Then there are one or two DUers who are, basically, unfathomable. Romulan is one of them. His big thing during the financial crisis was that he wanted the entire system to collapse so that billions of people could suffer impoverishment. Iirc, he once said that anyone with over $1,000 in the bank or a 401K is a class enemy.

You can't really have a rational conversation with such a person. He is truly, truly demented, as are a few of his "comrades."

Link, you pompous liar? :silly: :hi:

That's the difference between me and those with infinite compassion for those who were recently rich.


"you could say that he overestimated his capabilities and is responsible for the loss of his own money,"

Or you could say that it is self-parody for one who extols the virtues of the so-called "free market" to whine about the loss of a fortune questionably amassed.

So they can make sure to kill the competition.

Lost a few million dollars.:puke:

They will have to sell the G4 now. The embarrassment of having to go from private jet to private chartered flight must be unbearable.

They have lost NOTHING. When you are a millionaire losing a few million is NOTHING. When you are a hundredaire, losing $50 is a fucking catastrophe.

I don't buy it -- the idea that this means nothing to them. Obviously he is not close to being homeless, but for those people who get into that lifestyle/competition/status, losing almost everything is a big deal.

The point isn't that they are suffering. It's that this economic crisis was unintentional. They would have preferred the prior system to continue.

Deregulation, mergers, etc.

the system would make more money, not that it would crash and trillions of dollars of wealth would be lost.

It's kind of like intent in criminal law. You can have the intent to get in the car and drive while drunk, but that doesn't mean you had the intent to get into an accident.

It ALWAYS crashes and burns. It depends on greed. It's putting a flock of 5-year-olds in a candy store and expecting them to be moderate in their consumption of sweets.

Ain't going to happen.

You can use sweets as a motivation go get a 5-year-old to do something, but just throwing open the doors is insane.


The rich refuse to recognize this fact, for it would mean they would have to accept that they, the financial and business mogels that have risen to the top, would have to let some lesser mortal tell them when they need reigning in.


And so it goes.


You many not intend to get into a drunken crash, but you can't be surprised when it happens. The BushCo defense ("I don't think anybody could have foreseen...") is not applicable.

to prevent this insanity that were removed

That said the argument made is that this was done on purpose, intent, as in disaster capitalism. There was intent for greed, but this does not fit the definition, even close, to disaster capitalism

Now if you use the model for the privatization of schools, shoe meet foot, they fit.

I bet there would be some interesting discoveries from flowing that money around...


Remember, to those in the know, they don't care if the system fails as long as they can jump off the train before it falls off the cliff.

The analogy of the drunk is perfect. The drunk doesn't intend to cause an accident. However getting excessively drunk and driving further and further distances almost makes an accident inevitable. Sure you don't intend to cause an accident by driving way too drunk everyday. Just like they didn't intend to cause an economic collapse with unregulated greed and excessive wealth hoarding. It is just what is going to happen once the inequities created by their actions come to the surface.

Depressions don't come from "disaster capitalism" or "shock capitalism" or any other form of active, intentional "plot". This depression did not arise from "greed" or speculation. Just the opposite... plots, greed, speculation, "bubbles", and money-making schemes of all sorts are are the symptoms of the onset of economic depression. They are not mistaken variations from the system... they ARE the system. The same could be said of "corporatism". Where is Lehman or GM or Washington Mutual today? For that matter, where is PanAm or Carnegie Steel or the Penn Central railroad? Some survive and some don't and the "rich", the capitalists, are as much victims of the process as anyone else.

Still, the rich are victims with a difference. They are partisans of a process which just slammed them, but normally slams others. And, that process is impersonal, uncontrollable, and cannot be reasoned with. It is just good, old-fashioned capitalism - the destroyer of worlds. Far from being benign, it was just on hiatus for a moment... and as with each time that capitalism appears to be on vacation, it was away just long enough to confuse things. The rich will do anything to maintain that confusion. They are no more in control of their own fate than anyone else, but they must still attach their personal future to a social system which they no longer control.

In this country, capitalism destroyed the indigenous population without a thought, conjured up a new population from over half the world, consisting mainly of people ripped from their homes... removed from their lands by physical and economic force, transported half a world away, concentrated in a very short time in a new Rome where trees had just recently grown. And now, capitalism will destroy that which it has just built, exactly as it has always done. And the rich will be content to preside over that destruction... because they accurately see their position, apart from all others, as the fruit of that engine of mayhem.

So, you are right. It's nothing personal.... Feel better?

I think there's confusion about intent. A capitalist may have the intent to gouge, say credit card and mortgage customers. Then the gouging of credit card and mortgage customers may lead to those customers defaulting. And those defaults may lead to an economic crisis and the destruction of the very bank engaged in the gouging.

I think it's a mistake to assume that the intent to gouge the credit card and mortgage customer was the intent to cause them to default or crash the system -- because after all, both the default and crash hurt the interests of the gauger.

Throughout 2007-2008 as the crisis was building, I couldn't stop hearing in my head the lyrics of the reggae band, Third World, "You're playing us to close..." which is what they did.

According to your own history of capitalism, worlds were being created and destroyed long before capitalism came upon the scene.

Do you blame the fall of Rome on capitalism?

I think you miss the point of disaster capitalism when you fail to look for the winners and just focus on the losers.

Blackwater is doing well, despite EVERYTHING. Cheney, personally, made a couple a hundred grand for every soldier killed during his watch. You should give a little effort to following the money. Record profits for Exxon during the financial disaster.

Record profits for ANY corporation ever in the history of the world. Do think that is just an unusual coinkydink? Really? You believe that? You honestly believe that those record profits during the worst economy since the great depression had absolutely NOTHING at all to do with Cheney's secret energy task force?

That just seems idiotic to me. Especially since MOST of the SAME conspirators have been busted before for committing SIMILAR conspiracies and either not prosecuted or pardoned.

I think what you're saying is stupid.

some fraction of theirs.

what's of significance is that gates, buffett, old money still have more than everyone else & can buy up the assets people like mcafee will be offering at fire sale prices.

what's significant is that morgan, goldman, citi can cheaply buy up the assets of the smaller banks being pushed into failure to improve their own balance sheets.

if i have 1 million & everyone else has 25K & we all lose half our money, i'm still the biggest kid on the block.

The issue is whether the destruction of wealth of the wealthy is consistent with an intentional disaster capitalism scenario.

It isn't.

especially when the big boys are backstopped with public money, as with the bank bailout & fed funds you like so much.

people READ the book, but for the most part didn't understand the core of the technical analysis in it. This is not disaster capitalism.

Now the State of California might fit that definition a little better, but even that one I have to push it.

And yes, the book is a must read, but not all the truth is in there.

stoned?

Too many people saw the system headed for disaster and were willfully ignored.

all was engineered that is not even in the thinking pattern

Of course it could have been prevented, and we have gone through that before. If certain laws were not removed from the books, for example, things would not have gotten that bad to begin with. That is greed, not engineering of a disaster.

if i could predict it, so could the folks who removed the laws from the books.

to maintain the status quo.

You don't think it had anything to do with Cheney's secret task force?

Really?

Of course it was planned.

Just like the wars were planned.

Just like the tax cuts for the rich were planned.

Of course it is all planned.

I think this is ridiculous.

Maybe now the fucker will stop making all those pop-ups appear every time I start my computer.

He would have bought more stocks and more real estate, which simply would have made his crash harder.

He had ample assets to start some kind of manufacturing company, a business that adds value to raw materials and actually generates wealth. Instead, because that's hard work, he invested.

Our tax policy and our trade policy is ruining us.

Sounds like a piss-poor "biddnessman" to me :rofl:

To think the big boys don't eat up the medium boys when the shit hits the fan. 100 million like McAffee is chump change to the peopole who really run things. If they can knock out a few of the lessor millionaires and eat up their assets at a discount, it's a win for them.

The big guys love the cyclical busts - hell when all is said and done, the wealth will be concentrated in even fewer hands.

It's not rocket science to figure out.

... just thousands of individual greedy, shortsighted decisions.

The other important thing to remember, that most Americans won't admit, is that the rich are no more intelligent than anybody else. Some of their errors are pure stupidity.

They don't worry their little heads about whether it's other wealthy people losing money instead of the lower income classes. The game is about increasing one's own assets, not caring about economic peers. Greed is good, after all.

The rich are well aware of risk and payback. Sometimes taking a great risk means one suffers a great loss. Many have experienced the loss this time around. Oh well.

You need two or more people to make something into a conspiracy. A bunch of people making individual decisions in their own interest isn't a conspiracy, it's what most of the human race does.

I don't think people here are appreciating the distinction between 'rich people making/losing money' and 'rich people involved in a conspiracy', which is the point of the OP.

For example, five Wall Street giants can conspire to enrich themselves without regard to the other rich people at their country clubs.

When Bank of America plots how to take market share away from Chase, they're focused on their opponent rather than on specifically making people miserable. that's something which happens kind of a side effect, and is one reason why we need regulation. What I'm pointing out is the mistaken belief that's widespread at DU (not you particularly) that everyone over a certain wealth level is working together to actively make the majority of people poorer.

It's just that there is a disregard for that effect when brokering the deals to enrich themselves --and again, that's not all rich people who are like that, but there are enough.

What bothers me is that some people are so callow that even when that side effect is anticipated yet they go ahead anyway. In my corporate experience I learned that very often the potential side effects can and are identified before hand. All that matters is the almighty profit.

to run our government for their own selfish interests? That taxpayer money is required therefore to pay for the the next round of AIG bonuses?

Seriously, what is the "so what" associated with this wonderful insight? That the status quo must therefore be defended at all cost?

to hold back the tears.......... :cry:
NOT! :)

Of course there was a plan to make Exxon money.

Of course there was a plan to launch wars for oil.

Of course Blackwater is doing well in spite of everything, because guess what, there was a PLAN.

This is absurd.