Yellow and red in the rain. 1:40 pm.

August 26, 2010. Overcast, damp with an occasional spritz. Coolish weather except yesterday mid-afternoon we had a spell of muggy air that departed by early evening.

I dined early at Swifty’s with my friend Pax. The place was full up by 7:30. On the banquette to my right was Barbara Taylor Bradford (76 million books in forty languages!) with her husband Bob, and friends. On my left were Jeanne and Herb Siegel, the man I like to think of as New York’s anonymous tycoon. Across the way were Steve and Kitty Sherrill. I went over to the Metropolitan Museum to lunch with Michael Thomas and Yves Smith, the founder and writer of Naked Capitalism [1]. We met in the Great Entrance Hall. The place was very crowded. I mentioned how when I first used to visit back in the 60s, it wasn’t this crowded on a weekend, let alone a Wednesday. Michael remarked that when he worked there in 1959, they were lucky if they had 10,000 attendance on a weekend. Now it’s over 100,000. It’s wonderful.

Michael Thomas and Yves Smith at lunch today at the Metropolitan Museum.

I’ve been reading Yves Smith’s “Naked Capitalism” almost since it first came online in 2007. The writing is clear and comprehensible for this non-economist, non-math guy, and because many of the Comments contributors are smart and knowledgeable; there is always something to learn. At first I thought Yves was a man. It is a nom de plume chosen for a variety of reasons (mainly to keep a basic anonymity). She told me she chose “Smith” as an homage to Adam Smith and Yves as a reference to a French (or maybe Swiss?) economist I’d never heard of. Knowing I was going to meet her, I’d thought of some questions I could ask about her, but on meeting, with the natural input of our host, the conversation raced off in a variety of interesting directions.

The three of us.

Michael and Yves talked about the markets, the math, the Masters of the Universe, including sharing anecdotes about the clay feet and/or distended egos of some of those “Masters.” That’s a cauldron of intriguing (and harmless — and often funny) gossip, heavily garnished (if not spiced) by tales of ego and arrogance. We talked about families and children and grandchildren and behavior and how it’s changed in one generation. We talked about the unflagging demands of the web. We did not discuss the President, the Congress, the media and fun/pundits. We talked about our histories. I told them how when I started working as a stockbroker in the late 60s (we were called registered reps) for an old retail firm now merged into oblivion, Harris, Upham, Howard Dean’s father was a partner and was almost always in the board (ticker) room. A small, compact man, a natty dresser whose sartorial could easily have inspired Ralph Lauren. He had the reputation of being a big clubman who kept bankers hours and was privately known for his unobtrusive but conservative point of view about the ways of the world. In retrospect, his way of looking at things was later thought of as prejudice or outright bigotry. Although not at the time. A not uninteresting contrast to the son who ran for President.

In Southampton, circa 1966. From left to right: Willie, Michael Thomas, Leslie (in lap), Wendell, Charlie (dog), Michael Jr. and Jeffrey.

Michael remarked how Wall Street was so quiet after the Great Depression that in 1940, before America went into the war (WWII), that his father, Joe Thomas, who was head of Lehman Brothers, joined the Navy. A lot of the big boys on Wall Street did, he said; because business was so quiet; there were no deals going on. Conversation turned to the current wave of bearishness that has swept over the community. I recounted a conversation I had recently with a friend in the financial business who does Southampton in the summer. He is convinced that a lot of people are pretending things are okay but aren’t; and that soon real troubles are going to surface and surprise people. All is mystery and speculation and therefore dramatic. All look to Washington and to Wall Street. Not being an economist or a financier, I tend to look to the social.

Above: I took this shot of the window of Treillage, the Johnny Rosselli and Bunny Williams shop next door to Swifty's. Left: My own private garden. Pretty simple with the hardiest of flowering plants, the impatiens. The heat of the summer prevented the blossoming in abundance until this past week, when it finally cooled down.

We got an email there other day from a reader who obviously stumbled upon the NYSD and was so affected that he was compelled to write: What a bunch of self indulgent crap. The social scene is obscene. I've never seen so many people so full of themselves as I've seen on your web site. And, I've never seen so much plastic surgery among the trust fund baby elite either. It did make me laugh. We get a lot of comments about the way people look and dress. A majority are about the cosmetic surgery. Most are not favorable. A few are crude. More men comment than women. We all have a critical eye when it comes to looking at someone else. Many of us enjoy making fun of the passing parade. The great thing about Party Pictures is that you can stare all you want to. And pass judgment. Charles and David Koch. I thought of this reader’s letter in another context yesterday when I was reading the Jane Mayer profile of David Koch in this week’s New Yorker. It’s a very long piece about the man who with his brother owns the second largest privately held company in North America, Koch Industries (Cargill, owned by the the Cargill and MacMillan family, descendants of the founders, is the largest). There are four Koch brothers, heirs of their father Fred Sr. Two, David and his elder brother Charles own it entirely, having bought out their two brothers, David’s twin, William, and Fred Jr. Jane Mayer’s piece is about what these two brothers do with their very large largesse, or most specifically who and what they fund. It is very controversial to some and very agreeable to others, although for many, Mayer’s report could in no way be considered favorable in terms of their funding activities. David Koch and I are not personal friends but we have known each other for quite some time because of the nature of my business and the nature of his social life. He knows what I do for a living and I know what he does for a living. Because of what I do for a living, I also know a little something (and I mean both those words literally – a little, and something) about his personal life, and how he conducts his personal life. I’ve watched its progression. He has always been a fascinating character. His presence and stature have grown slowly and solidly, and yet almost imperceptibly until the last few years. His presence exemplifies what “Society” is in New York and what it always has been. It plays the pivotal role in the metropolis and its corridors of power. Anyone who cares to dispute this is unaware. It’s about power. It has many levels and facets but its ultimate form is the position David Koch occupies in New York and the world that is the United States today. He came to it by intent and with purpose, equipped with the financial wherewithal. Julia and David Koch. I first knew him back in the early 90s when he was dating Julia Flesher, a very pretty, tall and willowy fashion model who had come to New York from Arkansas to make her way. In those days, David was well known in his set for his “playboy” ways – big parties at his summer house on the beach in Southampton. To some, particularly women who were considering ways of landing him as a husband, everybody knew he was rich. However, that image was more publicity than anything else. He’s very serious. He’s always been very serious. As little as I know him, I know that about him the way you know a face after you’ve first seen it. When he finally married Julia (who is about thirty years his junior), many thought she’d be his trophy wife. She has taken on the role, however of Wife and Mother in an ideal form: she is his consort; his life changed and so did his image. They moved into a large apartment (the first was bought from Jackie Onassis’ estate) to accommodate the burgeoning family, and they bought and renovated a mansion in Palm Beach. She bore him three children. Those close to them know it as that: a family, doing what families do. There are even some neighbors of theirs, who find it a little annoying that there are always so many kids (they have lots of guests and staff often bring their children to work) in the elevators of this fanciest of New York’s fancy residential buildings. Their parties in Palm Beach are elegant, but eclectic and comfy. Julia Koch is very close to her family who are often present so the children have lots of aunts, uncles, cousins. David also took on a greater role in cultural philanthropy in New York including the American Ballet Theatre which he has been a major supporter of for years, as well as hundreds of millions to institutions like Lincoln Center, Sloan-Kettering, etc., Literacy. Today Julia and David Koch are the de facto social leaders of New York although it can be assumed the title doesn’t interest them. What surely interests is the position he has forged for himself. The Mayer article gives the impression that Charles Koch, David’s brother, is the man who runs their dually owned $100 billion corporate empire. That may be, but we can be certain brother David serves in full capacity looking after their own best interests. Therein lies the strength of their partnership. Julia and David Koch. Mayer indicates that the brothers have been using their vast fortune for years to influence the way we think, that is to say: to influence the way policy is conducted in this country. It can easily be construed as political because it is what political is. That may be. They won’t be the first. The lingering, even sometimes malingering problem with rich is that being very rich naturally distracts permanently from many of the realities of life that must be faced daily, even hourly by the 99.99% of the six billion people we are. Money changes us. We may not lose physical contact with our poorer brothers or sisters, but we do, and not necessarily with intent, separate ourselves into the We’s and the They’s. That is what “a matter of opinion” usually means. Also, with rich comes a natural assumption of authority. They can even find themselves lauded for it (“he must know what he’s doing, he made a fortune ...”), etc. The world in which they hold sway has many of fame and fortune who seek, fund, and influence public opinion and policy. There is not one of them who doesn’t think his opinion is the correct one. Just like the rest of us. It is highminded with its own nobility to make a more perfect world. This is human. Not Dickens, not Darwin, but alas the stuff of Shakespeare. This is New York.

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