The Attorney General’s office of New York State yesterday accused GNC, Target, Walgreens and Walmart of selling store brand herbal supplements like echinacea, ginseng, and St. John’s Wort which failed to contain any or all of the ingredients listed on the packages. In fact, many of the supplements thought by some to be life-extending contained nothing but filler: rice, beans, pine, citrus, asparagus, primrose, wheat, and ground up houseplants. Nothing deadly perhaps (unless you’re allergic to any of it), but illegal nevertheless.
I’ve often harbored skepticism about the efficacy of the plethora of exotic and medieval-sounding health supplements for sale in chain stores, gas stations and in the margins of Facebook feeds. Now I’m more certain than ever there’s a vast conspiracy run by unscrupulous alchemists to leech off of the gullible health-nut cohort.
But thanks to the diligence of the AG’s office, slime in the herbal industry has been uncovered and maybe thwarted for the time being. But that’s just one state. What about the U.S. at large? Why isn’t the FDA or some other agency looking for pulverized rat-shit in the stuff Americans consume? After all, the USDA does a pretty good job at rating beef. No one seems to be complaining about their intrusion in the abattoir, least of all the beef industry itself which leverages government grades like “prime” and “choice” to promote their product to consumers.
It’s because of obstructionists in Congress like Orrin “the Snatch” Hatch that no federal oversight of supplements exists. Hatch’s 1994 law specifically forbids the FDA to get involved. The reason: Supplements are safe, sayeth the Snatch (that, plus Hatch has taken hundreds of thousands in contributions from the supplement industry.) And, let’s face it, the effort to keep the FDA out of the action comports with a long-standing belief among many laissez-faire politicians that the government should never regulate anything.
Remember that affable geezer on TV who used to say government isn’t the solution to the problem – government is the problem? Welllll . . . his disciples would much prefer to turn the task of regulation over to private industry which is much better equipped, more efficient and more motivated to do the right thing.
So what can happen when private sector rates itself?
Consider another news story that broke yesterday – the one about Standard and Poor’s agreement to pay a $1.375 billion fine to atone for its mischief leading up to the devastating 2008 financial crisis. Here’s a tale of a private sector firm paid by banks and other financial institutions to rate the quality of the instruments they sell. Along with Moody’s and Fitch, S&P applies ratings to bonds, mortgage backed securities, collateralized debt obligations, or any other figment of a quant’s imagination that investors can purchase along with a gauzy promise to be paid back some day. As one S&P analyst was quoted as saying, “It could be structured by cows and we would rate it.”
The ratings agencies theoretically act as independent agents who study markets, probe companies’ capabilities and financial wherewithal, estimate risk, and offer assessments of the quality (and hence the value) of whatever instrument is placed into the market.
In reality, these agencies do little of that. Financial instruments like credit default swaps and synthetic CDO’s are too complex for the rating agencies to assess (not that that would stop them from trying), and besides, the agencies are essentially owned by the companies that hire them. Should S&P or Moody’s plop a mediocre rating on a bond issue from Goldman Sachs, the fallout would no doubt be swift – banishment from sucking on the lucrative, derivative tit.
Such incestuous relations explain how S&P could give Enron debt a top rating in August of 2001 when in fact the company was about to crater into bankruptcy in December of that year. At every step in Enron’s procession toward death, S&P was one or two steps behind reality – always bestowing upon the company a too-generous rating and in the process fucking over the average investor with bullshit sunshine. Affirming a strong BBB+ rating on October 25, 2001, S&P said, “The fundamental strength of Enron’s energy marketing and trading franchise has remained steady. Standard & Poor’s has detected no lapses in the company’s risk management practices and trading discipline.” Two weeks later, Enron restated earnings to the tune of $600 million. S&P’s defense has always been “Enron lied to us.” But if that’s your excuse – if all you do is regurgitate what companies tell you – why exist? What possible value do you bring to investors if your role is to be nothing more than a gussied-up PR firm?
Whenever I hear wags proclaim the stultifying effects of government regulators on commerce, and how such regulation – if done at all – should be done by the private sector, I think first of S&P and the damage such shills can inflict upon said commerce.
RIP: Kel Nagle
Kel Nagle, the winner of the 1960 British Open golf tournament died the other day at age 94. Not well known in America at the time, for he plied his trade mainly in the South Pacific league where he won 61 tournaments, including an Australian Open, six Australian P.G.A. tournaments, seven New Zealand Opens and seven New Zealand P.G.A.s, Nagle rocketed to fame when he nipped Arnold Palmer at St. Andrews.
My earliest recollection of Nagle came in 1965 when he vied for the U.S. Open against Gary Player. I don’t remember much except that Nagle and Player were going head to head on Monday in an 18 hole playoff after coming up tied on the 72nd hole of regular play. Early on, Nagle sliced a drive into the head of a female spectator. When he arrived to his ball, Nagle encountered the woman bleeding profusely from a gash in her head (she later received eight stitches). Nagle was so flustered that he bladed his next shot into the ankle of another female spectator. He took a double bogey on the hole. Needless to say, Player won the U.S. Open that day after Nagle put up a four over par 74.
RIP Kel Nagle who demonstrated so ungracefully how the game of golf is satanic and evil.