Monday, December 29, 2008

Smoke Police Handcuff Obama

Three To Five Cigarettes A Day

The anti-smoking police are thrusting their will on President-elect Barack Obama to stop smoking. We assume they mean cigarettes. By all intents and purposes, Obama seems to be trying.

A medical report on Obama's health quotes his physician saying Obama smokes three to five cigarettes a day. He has quit and relapsed on numerous occasions. Three to five cigs a day? Some might call it an addiction. I call it an affliction.

There's probably a chromosome in our genes that nicotine titillates. It releases a fleeting moment of pleasure from stress that your brain makes you think you crave. The trick is telling your brain to shove it. I know that from smoking off and on the past 60 years.

We have heard all the arguments against smoking. Most of them are true. It's a dirty, filthy, smelly habit unhealthy in our public domain which in many parts bans it. It's also expensive.
The anti-smoking warriors have forced smokers outdoors in the snow, wind, rain or steamy heat. It parallels the social ostracism of gays and lesbians until they broke out of their closets in the past two generations.

In an article in Monday's New York Times, the authors ask if Obama will honor a New Year's resolution to quit smoking. They also wonder whether he will violate the White House's no smoking rules.

I'm with Michael Kinsley on this subject and he's the most gung-ho anti-smoking creature on planet Earth. Kinsley, writing an opinion column in the Washington Post, said with two wars, the Israeli-Palestinian conflict and an economy sinking far into recession, if Obama smokes an occasional cigarette to relieve the stress, than so be it. If the worst Obama does is smoke three to five cigarettes a day and saves us from future wars and enacts policies that improve the economy, hell, I will buy him a pack of smokes.

Obama is a picture of good health. That ill-gotten front page photo in the New York Daily News of a bare chested future president is proof.

He jogs and plays basketball daily. How many goody goody two-shoes politically correct commentators can boast that?

Three to five cigs a day? Get a life, smoking police.

Saturday, December 27, 2008

The Best And Worst of 2008

Keeping in tradition of media's annual best and worst selections -- because this is the slowest news cycle of every year -- we offer the following:

Best: The Kaiser Permanente TV ad which sings "I want to grow up to be an old woman."

Tackiest: Serving McNuggets at a wedding reception.

Worst: Any commercial where a guy named Mays yells at you.

Best: Barack Obama elected the first black U.S. president.

Worst: Illinois Gov. Rod Blagojevich trying to sell Obama's senate seat to the highest bidder, according to the U.S. Attorney.

Best: The Republican Party nominating Sen. John McCain for president, the only person who stood a chance at beating Obama.

Worst: McCain's selection of Alaska Gov. Sarah Palin for vice president who proved to be unprepared for the job but was embraced by the party's base.

Best: Michael Phelps with help from his teammates winning nine Olympic gold medals.

Worst: The Detroit Lions.

Dumbest: Congress rushing through the $700 billion financial sector bailout and having no clue how the money would be spent.

Best: President Bush's financial assistance to combat AIDS in Africa.

Worst: Almost everything else Bush did.

Best: Rep. Barney Frank, chairman of a House banking committee, calling Bill O'Reilly ignorant.

Worst: O'Reilly.

Funniest: Jay Leno who commended Bush for the housing market collapse so he could buy his new $10 million home for $2 million.

Lamest: Vice President Dick Cheney's revision of history.

Most Callow: Cheney's response to using torture of captured militants: "So?"

Best: Most of Obama's speeches during the election campaign.

Worst: All of McCain's speeches.

Best Line: Joe Biden describing Rudy Giuliani's sentence structure: "A noun, a verb and 9/11."

Best: Caroline Kennedy as a surrogate for Barack Obama.

Worst: Joe the Plumber.

Most Tasteless: Sarah Palin's press conference while a turkey was beheaded 20 feet to her back.

Classiest: Hillary Clinton's public demeanor after losing the primary nomination.

Sleaziest: Bill Clinton's foundation donors list.

Worst: ESPN for the schilling during the bowl games they broadcast and the opposition they represent against a college playoff format.

Best: Al Costas and John Madden as football announcer and colorman on NBC's Sunday Night Football.

Worst: NBC's Sunday Night Football pregame and halftime shows -- too many talking heads.

Best: MSNBC's "Morning Joe."

Worst: Fox dropping Alan Combs and replacing him with Glenn Beck and Mike Huckabee.

Most Missed: Tim Russert of "Meet The Press."

Happy New Year!

Tuesday, December 23, 2008

What The Auto Bailout Does Not Do

No Money, No Buy

Whatever so-called "viable" business restructuring plan Detroit's automakers concoct, they will continue to require federal assistance to survive 2009. No one can manufacture a car no one can buy. No one can buy if the banks won't lend. Even the financial credit arms of the automakers are hard pressed to lend. And, the more jobs are lost, fewer cars are bought.

The drop in gasoline prices from more than $4 a gallon to $1.65 national average this week has had no apparent cause and effect. Consumers with money are saving. Those less fortunate can't borrow.

It's as simple as that.

This tailspin applies not only to Detroit but also to foreign automakers assembling their cars in our country. Toyota lost money for the first time since 1941.

The sales slowdown, and some of the accompanying business problems, that have engulfed the Detroit automobile makers are rapidly spreading to the world’s strongest auto companies. To cope, Toyota, Honda, Nissan and Hyundai are all slowing American production, and many foreign auto companies are putting off plant expansions.

For the most part, the so-called auto transplants have deep pockets and ample credit, and they are not facing potential bankruptcy like General Motors and Chrysler. But none of the foreign companies have proved any better than the Detroit Three at predicting how gasoline prices would gyrate or the extent to which demand for cars and trucks would collapse in a deepening recession.

Conditions on the ground are unlikely to change until the credit market loosens and unemployment decreases. These are market factors. The rest is politics.

President Bush temporally saved thousands of jobs in the U.S. automobile industry last week when he agreed to provide General Motors and Chrysler with $13.4 billion from the Troubled Asset Relief Program. The following is an excerpt from an editorial in the Los Angeles Times:
  • "The main piece missing from the administration's plan is the one government is particularly ill suited to provide: a way to restore Detroit's ability to innovate and improve faster than its competition while also designing models that are more compelling. Those issues are a function of management and marketing skill, neither of which are much in evidence in Washington. Thus far, lawmakers' main impact on Detroit has been to press for more high-mileage cars that the Big Three haven't been able to sell, while also deterring them from importing the small cars they make successfully overseas. Those kinds of political judgments won't help the automakers transform themselves in a way that restores the confidence of consumers, investors or the capital markets. Without their support, GM and Chrysler will never make it off the public dole."

It is curious why the government refuses to allow GM and Ford's profitable divisions in Europe and Australia to pay for their domestic fixes. Afterall, they used their own capitol to build those plants.

Toyota Sales Off 50%

Without getting into the political bullying and posturing between Southern Republican Senators and the United Auto Workers union, the Bush bailout sours any future private investment with the Detroit automakers.

Among the restrictions is bondholders receive only one-third of the debt they are owed and investors receive no dividends until the loans are repaid. That places the burden solely on the taxpayer.

Meanwhile, it is worth taking a look at the problems the best-managed automaker is facing -- Toyota. According to the Wall Street Journal:

  • Early on, the (Toyota) Tundra met expectations, winning Motor Trend magazine’s Truck of the Year award and falling just short of the company goal of 200,000 in sales in 2007. But sales of the Tundra were off 50,000 over the first 11 months of this year compared with last. Last month, Toyota sold 6,607 Tundras, compared with 14,988 in November 2007.
  • The Tundra’s poor sales performance is by no means exceptional. The Prius did only marginally better, with a sales drop last month of almost 50 percent. With total United States sales down 13.4 percent over the first 11 months, Toyota is cutting production days at plants across North America.
  • ...Toyota’s labor practices contrast with those of the Detroit Three. Typically, during temporary factory shutdowns like those Chrysler announced last week, workers are paid about 70 percent of their salaries, which comes from unemployment benefits and a contribution from the company. Until recently, when plants were closed permanently, workers received their full salaries and reported to a room until a new job was found, in an often-ridiculed system called the “job bank.
  • Some auto analysts think it is only a matter of time before Toyota and other transplants change course, because it is too expensive to pay workers who are not building vehicles. Many of the transplants’ factories are not union shops, and workers receive less generous pay and benefits than their counterparts in Detroit — total compensation, counting benefits, runs about $45 an hour for the foreign companies, versus $55 an hour for the Detroit automakers."

Holiday cheers to motorists where ever you are hiding.

(Sources: The Los Angeles Times, New York Times, The Wall Street Journal)

Monday, December 22, 2008

For San Diego, It's Mission Impossible

A Graveyard of Expectations

This is a sp sp spor spor sports story. But not to worry, political junkies. It's also a story about a town in search of redeeming values. The San Diego Chargers are the epitome of the city they represent.

They tease you with their talent. But fall on their face when it counts.

Sunday's win in Tampa Bay coupled with a Denver loss to Buffalo allows the Chargers to once again reach the impossible dream. By beating the Broncos in San Diego next Sunday night on national television, the Chargers would win the American Western Conference title and make the National Football League playoffs. They would arrive there with an 8-8 record, tied for second worst in playoff history.

No one gives them much of a chance except die-hard Charger fans in a town with lofty goals, beautiful weather and a graveyard of dead expectations. San Diego the city is a perennial bridesmaid but never a bride.

It still clings to "America's Finest City" title it won nearly a half-century ago but its economy and leadership since has been nothing more than a ride on the old Ocean Beach rollercoaster.

Time Magazine once dubbed it "Bust Town, U.S.A." At one time it had a local bank go under in the largest bank failure in U.S. history. A La Jolla investor bilked millions in a Ponzi scheme unmatched until the recent Maddof scam estimated at $50 billion in New York City. Residents have seen their city and county elected officials jailed and convicted on penny ante corruption charges.

Today, unemployment in the county is 18% and San Diego's neighbor to the south, Chula Vista, has one of the highest mortgage default rates in the nation. Little wonder the populace seeks redemption in their sports teams. But only those seniors over the age of 55 can remember championship teams.

They Stunk Up The Joint

The Chargers won the old American Football League championship in the days before the merger with the NFL. They have been to the Super Bowl once since then. And, lost.
The Padres since their inception in 1969 have been to the World Series twice. And, lost. Both times. There was a time under coach Don Coryell the San Diego State Aztecs were a small college powerhouse, beating teams regularly by 40-point margins. They outdrew the Chargers in attendance. But that was 30 years ago.

San Diego had two National Basketball Association teams. The Rockets moved to Houston. The Clippers relocated to Los Angeles.

Entering the 2008 season, the Chargers were considered one of the NFL's best teams and considered by more than just San Diego scribes to reach the Super Bowl. All they were good at was losing by one to four points to six of the teams that beat them. They still stunk up the joint, as the great columnist Nick Canepa wrote in the San Diego Union-Tribune, which, by the way, is up for sale before it goes broke.

So it is with much trepidation the team is teasing its denizens with the chance of glory. Even the diehards recognize failure is in its grasp.

Saturday, December 20, 2008

California's Rush To Judgment On Same Sex Marriage

Prop. 8 Backers Want 18,000 Marriages Nullified

Only in California can the bizarre become the norm.

In a spate of a few hours Friday afternoon, briefs were filed with the state Supreme Court challenging, supporting and extending a ban on same sex marriages.

Backers of Proposition 8, the initiative that bans same sex marriage, petitioned to nullify the 18,000 marriages conducted after the high court voted 4-3 approving such nuptials.

State Attorney General Jerry Brown countered with a brief indicating he could not support the proposition because "the amendment process cannot be used to extinguish fundamental constitutional rights without compelling justification." Brown's argument represents a curious legal theory as well as a reversal when he announced after the Nov. 4 election he would defend the law. Prop. 8 passed by a 52-48 margin. But in his filing, Brown, who personally supports same-sex marriage, said the California Constitution protects certain rights as "inalienable." Those include a right to liberty and to privacy, which the courts have said includes a person's right to marry. The issue "is whether rights secured under the state Constitution's safeguard of liberty as an 'inalienable' right may intentionally be withdrawn from a class of persons by an initiative amendment." To take away an "inalienable" right would establish a "tyranny of the majority," which the Constitution was designed, in part, to prevent, he wrote.

Judges Must Bow To Will Of The People
Opponents of gay marriage offered a sharply differing view of the case.

The brief, filed by the Protect Marriage coalition, told the justices the law "commands judges -- as servants of the people -- to bow to the will of those whom they serve -- even if the substantive result of what the people have wrought in constitution-amending is deemed unenlightened."

The two briefs also disagreed about the fate of the estimated 18,000 same-sex marriages performed before the election. Brown argued that Proposition 8 was not written to be retroactive and that the marriages should remain valid. Protect Marriage argued that no same-sex marriages should any longer be recognized.

The Supreme Court justices have indicated they will hear arguments in the case as early as March.

In a landmark ruling in May, the court ruled that the guarantee of equal protection in the state Constitution required that same-sex marriage be treated the same as heterosexual marriage.
Santa Clara University law professor Gerald Uelmen, an expert on the state high court, said Brown's argument "turns constitutional law on its head." Uelmen said he was unaware of any case law that supported Brown's theory.

Goodwin Liu, associate dean and professor of law at UC Berkeley's Boalt Hall School of Law, said it was "extraordinary for the chief law enforcement officer of the state to decline to enforce a law -- even on the grounds that it is unconstitutional. The chief law enforcement officer of the state is charged with enforcing laws, even laws with which he disagrees," Liu said.

Brown, who served two terms as governor in the 1970s, is exploring running for the office in 2010. His sometimes quirky view of the state earned him the nickname of Gov. Moonbeam.
(Sources: The Associated Press, Los Angeles Times)

Friday, December 19, 2008

Can U.S. Afford NASA?

A History Of Cost Overruns

As the Obama transition team is addressing budget deficits in the trillions, it is being stonewalled by the space cadets who operate NASA.

The National Aeronautics and Space Administration has at least 73 programs that blew their budgets by an average of 50% since 1990, according to Congressional Budget Office estimates.

Of 74 questions submitted to the agency by Obama's NASA transition team, more than half asked about basic spending issues, including cost overruns.
The first question was how many programs have cost overruns not reported by NASA.

Michael Griffin, the current NASA administrator, resisted cooperating with the Obama team. He said NASA shouldn't be evaluated by how well it estimated the cost of projects. "If we are to judge the worth of our work by our ability to estimate, then that is a standard I am not ready to apply or to accept," Griffin said.

Oh, yeah?

Maybe it is time to evaluate the worth of some of the projects.

For example, what value do rovers probing Mars surface have compared to improving our roads, bridges, sewers and electrical grid systems? Griffin announced this month that its Mars rover mission would be delayed two years and cost an additional $400 million. That boosted the total cost of the Mars Science Laboratory to about $2.3 billion.

Satellite Glory To No Where
Some projects seem worthwhile, especially to climate-conscious Obama thinkers. A science satellite named Glory was conceived more than a decade ago to help scientists better understand how the sun and particles in the atmosphere affect Earth's climate. Since 2007, its cost has jumped by nearly one-third, from $169 million to $221 million. It's still in the planning stages. The original contractor ran out of research money and came no where near development until bailed out by NASA.

NASA says that part of the problem is the cutting-edge nature of what it does. "We start these things out, and we admit up front we don't completely know how to do them. That is what makes them interesting," Griffin said recently.
NASA's 2009 budget is $17.6 billion to continue exploring the solar system, building the International Space Station, studying Earth from space and conducting aeronautics research.
Its budget represents about 1% of federal government spending.

NASA now has 55 science missions currently in space, about half involving international partnerships, with 15 additional missions scheduled for launch by the end of 2009.

Our space programs have offered new technology and pride for Americans. It is a luxury we can ill afford. All one needs is a cheap pair of binoculars on a clear night. The glowing object is an orbiting NASA tool bag lost last month by an astronaut during a routine spacewalk.

The bag of tools cost $100,000.

The canvas-and-acrylic caddy contained two grease guns, a scraper, a trash bag and some wipes. Why so expensive? NASA officials said they had no answer to that question -- beyond the fact that, as spokesman Allard Beutel put it, "space flight is expensive."
"Our space program is running inefficiently, and without sufficient regard to cost performance," wrote Alan Stern, a former NASA associate administrator who has been mentioned as a possible replacement for Michael Griffin, the current NASA administrator.
In a recent op-ed piece in the New York Times, Stern called the cost overruns a "cancer" that has cost the agency's science program about $5 billion over five years.

(Sources: NASA, Orlando Sentinel, New York Times)

Wednesday, December 17, 2008

Our Love For Star Power

Caroline, Oh, Caroline: What is this American fascination of celebrities perpetuated by our media giants? A bunch of bunk I say. In the world of politics, these know-it-all columnists are slobbering over the possibility Caroline Kennedy might be appointed to the U.S. Senate seat to be vacated by Hilllary Clinton. "I have to confess, my heart remains with a Senator Caroline," gushes Ruth Marcus of the Washington Post. She and Nicholas Kristof of the New York Times wrestle with political dynasties -- the good, bad and ugly. Kristof opposes it and writes: “No Title of Nobility shall be granted by the United States,” reads Article I of the Constitution. Kristof argues American voters have created their own notion of modern nobility: families such as the Kennedys, the Rockefellers, the Bushes, and the Bidens who win political office generation after generation. Nonsense, I say. Political dynasties are the creation of the media playing to the masses who have nothing better to do than dream of a higher exultation in their sorry lives. Now that I have pushed the outrage button to impugn everyone, let me explain.

Dynasties Are Fleeting: Successful politicians in order to get into office and sustain reelection must have three things in their favor, in this order: Money, name recognition and a voting record in tune with their constituents. The first two can launch one into office. The third depends on the person's skills while in office. Most celebrities have money and a high Q rating. But, if they are a dolt like the late song-and-dance actor turned Sen. George Murphy of California, they don't last long. The rap against Caroline Kennedy is she hasn't made her bones yet in retail politics. We heard the same nonsense about Barack Obama in the early stages of the primary season. Eleven current members of the Senate are the children of former senators or governors, or the spouses of former senators, governors, and even a president. Not to mention celebrities such as Arnold Schwarzenegger, Sonny Bono, Jesse Ventura, Jim Bunning and other acting and sports stars reaching public office. No one ever said politics is fair. So, stop whining. Political dynasties last only as long as they perform. Just ask the Bushes. But, they have Jeb Bush waiting in the wings poised for election to the Senate from Florida and a possible bid for the White House in 2016. The Kennedy family is so strung out they'll have Kennedys running for political office for generations to come. Get used to it. If New York Gov. David Paterson were to hand the job to Caroline Kennedy, she'd be the seventh member of her family to serve in Congress, joining a roster which includes two of her uncles, two of her cousins, her father, and her great-grandfather, John F. Fitzgerald, who first went to Congress in 1895. Writes Kristof:
The Constitution’s ban on titles of nobility (and, thus, on nobility itself) is “the corner-stone of republican government,” said Alexander Hamilton. And by “republican government,” he meant representative government, as in, people electing their leaders. As long as nobles are excluded from government, he said, “There can never be serious danger that the government will be any other than that of the people.” But again and again “the people” have shown a preference for names they know.
Voters Hold The Trump Card: “The rampant nepotism in politics tells the American public that they don't live in a democracy, they live in an aristocracy where only those inside Washington's gated community are allowed to have power,” said syndicated columnist and author David Sirota. “The Caroline Kennedy buzz is only the latest — if most overt — example of this. Here is a person with no government experience whatsoever, a person whose major claim to fame is her last name,” Sirota said. “And she's in a state teeming with possible candidates who exhibit a wealth of experience and political talent, from longtime members of Congress to community organizers to grassroots nonprofit leaders. And yet, she is apparently a major contender for a U.S. Senate seat based on her last name alone.” The saving grace in this process actually rests with the voters. Forgive them for initially bamboozled by star attraction. If the star falls from grace, the star is extinguished. Squashed like a bug.

Tuesday, December 16, 2008

Passing Out

Life's Mystery: Writing a blog takes on many fronts. For some, it is an ego trip. They thrust their view of life into cyberspace and pray for hits. Most seek confirmation for their myopic observations. Others simply seek attention for being outrageous. For me, it is writing down impressions on how I see the world around me. I try to be fair and see so many issues from both sides of the spectrum. You write. You click "Publish," and you hope for the best that someone out there reads it and says "Gee whiz." Bloggers are groupies. They form links to other bloggers who share similar views. The trick and ultimate satisfaction is your blog post picked up by the Major Leagues -- the websites, magazines and newspapers everyone heard. There's little or no pay in this. One does it out of love to communicate to others. I'm one of a growing cadre in the blogging world with years of experience in the newspaper field. By training, it only comes natural to write commentary on the day's current events. There is a discipline implied that you don't libel, fabricate or verbally defecate on people you write about. Bloggers do have a license to slant their opinions to a particular cause and fairness be damned. Occasionally, blogs can become extremely personal. That is the subject of today's discussion.

Blackout: This morning I passed out. I was signing into my email account. Next thing I realized I was sprawled on the carpet. My first thoughts were why was I looking at the books on the second shelf of my bookcase next to my computer desk-- from the floor. The disorientation lasted only seconds. I realized I had slumped out of my swivel chair which had also tipped over. The cup of coffee I was drinking was spilled and dripping on my pants. I felt physically weak. Mentally, my only cognizance to reality was "what the f---." At least my typical verbal response was normal. I lumbered to an upright position, stood up and grabbed a wet cloth and dry towel to cleanup the spilled coffee. That was the only damage if one could call it that. Then, the process of why and how did that happen take place. I determined the blackout lasted no longer than a minute, if that long. Unlikely I simply dozed off to sleep. I had a restful 8-1/2 hours sleep. I had arisen a half hour earlier, did the dishes and showered. As is my custom, I felt terrific after sipping my first cup of coffee after the blackout. Should I call the doctor? No. I will tell her of the incident at my next appointment with her. Is that a dumb decision? Perhaps. If it happens again, your damn right I will seek medical help. But, for now, it was a case of the weird. I have a mild heart condition known as pericardic contraction. The pericardium which is the protective sac around your heart is contracting, causing the heart valves not to pump at full capacity. It is a condition I have lived with for several years. It prevents the Venus blood from returning properly from your feet to your heart. It causes shortness of breath. It is stressful on your kidneys. It prevents you from walking more than 100 yards before you stop and rest for several minutes. It is a condition I have accepted without complaint. There's not much doctors can do except perform open heart surgery and remove the pericardium. Because of my health and age, the risks are too dangerous. I'm better off living with it. The strange thing of all this is if I'm going to die it certainly is a painless way to go. No fuss. Just drop dead. Goodbye old world. It's been a good trip. I'll miss my two grandchildren, my son and my three brothers. But, I did it my way.

Saturday, December 13, 2008

Living Downwind Of Bush Rule No. ?

Our Government At Work: The Bush administration has sneaked another rule into the deregulation books. This one definitely passes the smell test. The rule: Poultry and livestock farmers no longer have to report emissions from animal waste. The Environmental Protection Agency said the rule change would "enable authorities to better focus their attention on hazardous substance releases that require a response, while reducing reporting burdens on America's farms." It said reports from farms on air emissions involving ammonia and hydrogen sulfide -- animal urine and feces -- exceeding certain levels rarely were acted upon. A Government Accounting Office study said such farms can generate as much as 1.6 million tons of manure annually -- more than one and a half times the waste produced each year by the city of Philadelphia.

And, to think W.C. Fields had inscribed on his tombstone, "I'd Rather Be In Philadelphia."

Friday, December 12, 2008

A Weeklong Orgy of Crooks

A Culture of Corruption: Chalk up the week of Dec. 8, 2008, as the week that will go down in infamy. It was the week of a contest in which an Illinois governor, Wall Street titan and Florida mortgage manipulator competed for Scam Artist of the Year. It was a short work week, too. In the span of four days federal authorities charged:

  • Gov. Rod Blagojevich trying to sell Barack Obama's vacant senate seat to the highest bidder for personal gains.
  • Bernard L. Madoff, a legendary Wall Street mogul, bilking an estimated $50 billion from investors.
  • Steven Gordon, former partner in a Coral Gables, Florida, mortgage firm, fraudulently earning $2.8 million in commissions by using a pen converting credit scores of mobile home owners to single-family houses.

And, that skims only the cream from the top of this barrel of greed and cultural corruptness. The federal charges give us a hint at what motivated these violators of the public trust.

Bills, Bills, Bills: Gov. Goofus, as the Chicago Tribune editorial page describes him, is, of course, the poster child of this group. Blagojevich has been a target of federal investigators for several years and owes more than $500,000 in legal bills from the federal inquiry. He also owes more than $900,000 on homes in Chicago and Washington D.C. The open Senate seat was a way out of his troubles, according to government allegations. One day after the presidential election, Blagojevich was taped by federal authorities saying, "I've got this thing and it's f -- -ing golden. I'm just not giving it up for f -- -ing nothing," according to the federal criminal complaint. The document refers to taped conversations in which Blagojevich talks about using the Senate appointment to win a job making $250,000 to $300,000 a year. The governor also weighed the option of appointing himself to the Senate seat, the affidavit said, with the chance at even better opportunities.

Fraud Of Epic Proportions: Madoff, meanwhile, had a fistfull of money parlayed 40 years ago from savings as a Long Island lifeguard into the largest market maker on the electronic Nasdaq market, regularly operating as both a buyer and seller of a host of widely traded securities. Andrew M. Calamari, an associate director for enforcement in the Security and Exchange Commission's regional office in New York, said the case involved “a stunning fraud that appears to be of epic proportions.” Early estimates is Madoff by his own admission bilked a score of investors of $50 billion, according to investigating regulators. They said he told them that his money-management business was “all just one big lie” and “basically, a giant Ponzi scheme.” In that conversation, according to the criminal complaint, Madoff “stated that he was ‘finished,’ that he had ‘absolutely nothing.’ ” According to the S.E.C., Madoff confessed to an F.B.I. agent that there was “no innocent explanation” for his behavior and he expected to go to jail. He had lost money on his trades, he told the agent, and had “paid investors with money that wasn’t there.”

"Mistake in Judgement"?: And, then there's the Stephen Gordon scam prosecutors say goes to the heart of the mortgage meltdown in the housing industry. He simply used a pen to alter credit scores and reclassify mobile homes and vacant lots as single-family homes. Gordon, a former director of residential acquisitions at Bayview Financial, inflated the value of 2,800 loans. He repackaged and sold them to investors, earning more than $2.8 million in additional commissions, according to documents filed by prosecutors in U.S. District Court in Miami. Bayview said in a securities filing that after it discovered the fraud, it bought out or substituted potentially fraudulent loans valued at $66 million. It said there were no investor losses. "I am appalled at how easy it was for him to do this," U.S. Attorney R. Alexander Acosta said. "You would think there would be more due diligence." The case comes as Justice Department and Federal Bureau of Investigation officials push to determine the role fraud may have played in the inflation and subsequent collapse of sophisticated mortgage-backed securities, which have deepened the turmoil facing Wall Street firms. Federal investigators say Gordon reviewed portfolios of Bayview loans and plucked out certain mortgages that he wanted to make more valuable before securitization. On some, he simply used a pen to increase the credit scores of borrowers, making the loans appear less risky and more valuable to investors, according to investigators. On others, he changed internal codes used to classify mobile homes or vacant land and reclassified them as single-family homes, investigators said. Marty Steinberg, the lawyer for Gordon, said the conduct was "aberrant behavior" for his client. "When it occurred, Steve admitted he made a mistake in judgment. He has made full restitution," Steinberg said.

As we can see, greed comes in all sorts of flavors.

(Sources: The New York Times and Wall Street Journal)

Wednesday, December 10, 2008

Our Dirty Little Secret: The Mexican Drug Wars

Where's The Outrage Now?: It was less than two years ago outrage spread through U.S. cities on the pretext illegal immigrants from Mexico were taking jobs from Americans. Today, the Mexican drug cartels are killing more people on an average day than in the Iraq and Afghanistan wars and in the recent Mumbai terrorist attacks. Nary a whimper in protest is heard. The Mexican drug wars are more than bad guys killing bad guys. They could topple the Mexican government which, despite its corruption, is as effective as firing bee bees against tanks. In Juarez, across the Rio Grande from El Paso, Texas, telephone messages and banners threatened teachers that if they failed to pay protection money to cartels, their students would suffer brutal consequences. Local authorities responded by assigning 350 teenage police cadets to the city's 900 schools. In Ciudad Juarez, a man was beheaded. His bloody corpse was suspended on an overpass. No one had the courage to remove the body until dark. While Mexican citizens live in fear, U.S. officials remain numb. The cartels' henchmen so far have not killed or held ransom innocent U.S. tourists or businessmen. Consequently, our citizens north of the border are looking the other way. Big mistake.
Workers No, Drugs Si: Mexico is the U.S.'s second largest trading partner and U.S. tourism is Mexico's second largest industry. With the U.S. in full economic recession, hundreds of thousands of the estimated 10 million undocumented Latino workers are returning home. Money these people earned in the U.S. and sent home to families is down 20% in 2008. Illegal immigration -- the only border issue that seems to stir the masses -- was avoided like the plague in the recent U.S. presidential primaries and debates. While the economic meltdown slackened the illegal immigrant debate, recent drug interdiction along the U.S. border stuffs the drug cartels' coffers. What hasn't slackened is America's thirst for these drugs. Illicit drug prices are at an all-time high on U.S. streets. In 37 states the price of cocaine has gone up by as much as 24%, while the average purity has dropped by 11%. In a power bid for dominance a year ago, the two largest crime groups, the Sinaloa and Gulf cartels, murdered 250 people by February 2008. By April the toll spiked to 900. Under President Felipe Calderon, Mexico has spent about $7 billion purging the federal, state and municipal police from corruption. The U.S. Congress has authorized $1.6 billion to interdict drug trafficking. Partial construction of a 2,000-mile border fence between the U.S. and Mexico hasn't worked. The illegals find new gaps for passage. The drug cartels fly over or sail around the wall. U.S.-Mexican forces have seized 270 airplanes and at least one submarine carrying 500 pounds of cocaine operated by the syndicates.
Root Cause Ignored: Multiple researchers propose focusing on prevention, treatment and education programs to curb demand rather than the continued support of combating the supply of drugs. Studies show that military interdiction efforts fail because they ignore the root cause of the problem: U.S. demand. The Bush administration proposed cutting spending on drug treatment and prevention programs by $73 million, or 1.5%, in the 2009 budget, which hasn't been approved yet.

The moral to this story is Americans protest vigorously the influx of illegal migrant workers and the burden some of them weigh on our healthcare system. Yet, they turn their backs on the addictive vile the cartels deliver to their very own neighborhoods.

Which is worse?

Tuesday, December 9, 2008

Dirty Politiccs

A Crook For The Ages: Every newsperson, every website, every blogger in the United States at this very moment has an opinion on the latest inductee into the Corrupt Politicians Hall of Shame. If it weren't for such a tough name to digest, Illinois Gov. Rod Blagojevich would be a household name for the ages. If any of the criminal charges brought against him are true, he will make yesteryear's Tammany Hall and Tom Pendergast look like a bunch of kids playing dice on the streets of New York and Kansas City. Nearly all of the charges against Blagojevich came from court-appointed wiretaps. Thus, they probably are true. Whether they all stick is another matter. The obvious conclusion in the court of public opinion is he is guilty as hell. Blagojevich will go to the head of the class in college political science courses discussing politicians breaching the public trust.
California More Weird That Crooked: What a shame. Politicians have a thankless task. Most do the best they can even if some of them aren't the brightest lights in the room. All we ask as voters is at least be honest. Blagojevich is the latest in a series of corrupt Illinois governors, all of whom had associations with the political power players in Chicago, a city better known for physical toughness than ethical standards. Otto Kerner, a Democrat who was governor from 1961 to 1968, was convicted in 1973 for bribery, tax evasion and other counts. Dan Walker, a Democrat who was governor from 1973 to 1977, pleaded guilty in 1987 to bank fraud, misapplication of funds and perjury. The charges were not related to his service as governor. George Ryan, a Republican who was governor from 1999 to 2003, was convicted of corruption in 2006 for steering state contracts and leases to political insiders while he was Illinois secretary of state and then governor. William Stratton, governor from 1953-1961, was later indicted but then acquitted on charges of income tax evasion. Illinois and Chicago in particular don't have a monopoly on political corruption. They just get caught more often than not. I was raised in California where politics is as rough and tumble as anywhere. The liquor license scandals in Los Angeles were notorious. Nefarious dealings in Sacramento where governors exchanged jobs with senators was the norm when the Republicans were in power. Gov. Earl Warren returned so many favors he was appointed Chief Justice of the U.S. Supreme Court. House Speakers Jesse Unruh and Willie Brown remain political legends in the state. Whether any of them were on the take, no one knows. There were no wiretaps in those days.
The Teflon Politician: What is sad is that skeptics point to the Blagojevichs' and others in the latest criminal crop from Congress and the state capitols and justify their opinion that all politicians are crooks. Public opinion paints a broad swath. It stains those who do good.
It should not be understated that Barack Obama's transition team rejected overtures from Blagojevich for political favors in exchange for his senatorial replacement appointment.
With a dirty Chicago political infrastructure, the Tony Rezko influence maker, the Rev. Jeremiah Wright and other creeps at his feet, it is a miracle Obama has remained Teflon clean.

So far.

Sunday, December 7, 2008

GM Broke Here, Flush Abroad

Foreign Profits Up 28%: What happens if General Motors files bankruptcy for its U.S. operations while its plants in foreign countries turn a nice profit? The answer is ...

No one knows.

Ken Bensinger of the Los Angeles Times explains GM's foreign connections and how its failure in the United States would create a downturn ripple globally. Among the noteworthy activities of GM abroad:
  • In the last three years, GM's revenue has sunk 24% in the U.S., but in the rest of the world it boasts a 28% increase.
  • It employs 60% of its total work force in other countries. Of the company's 252,000 employees, 152,000 work abroad, building Chevys, Opels, Vauxhalls, Holdens and Buicks in 33 countries.
  • Through the first nine months of this year, 4.3 million of the 6.7 million cars and trucks GM sold -- nearly two-thirds -- were purchased outside this country.
  • With a rising middle class fueling demand in countries like Brazil, Colombia, India, China, Russia and in the stronger Euro markets, GM sees a golden opportunity for meteoric growth. And they are getting an assist from foreign governments eager to develop industry.
  • In the United States, the Big Three face crushing healthcare costs and restrictive dealer franchise laws, and are burdened with a factory network built to produce the gas-guzzling sport utility vehicles now collecting dust on dealer lots.
  • Abroad, however, GM operates clean and lean -- paying competitive salaries, benefiting from government-paid healthcare coverage, and producing small, economical vehicles geared to those markets. To maximize its profits, the company has spent the last few years working to significantly unify what were once very independent foreign operations, interlinking product planning, development, purchasing and production, GM officials say.
    Such a globally-minded approach, said Rebecca Lindland, auto analyst with IHS Global Insight, carries a significant risk: Disruptions in one market can spell problems throughout the GM world.
  • Today, GM's immensely complicated worldwide operations work in concert. The Pontiac G8 for sale in Van Nuys was designed in Australia. In Bogota, Colombia, GM operates an enormous 3-million-square-foot factory employing 3,100 workers who assemble up to 75,000 cars a year. Many of the cars put together there are partially built by GM subsidiary Daewoo in Korea and shipped over for final assembly. The president of GM's Colombia unit, Santiago Chamorro, worries that news of problems in the U.S. could scare car buyers in South America. "Bankruptcy is not in the interests of our employees, shareholders, suppliers or clients," he said.
  • The global economic tailspin has had an effect on GM's foreign operations. It laid off 1,000 workers in South Africa this year and idled production for several weeks in Brazil and Argentina. In Russia, sales of Chevrolets were up 32% through October but have fallen of late, while overall industry sales in China fell 10% last month compared with a year earlier.

As in the U.S., GM has appealed to foreign governments for help. Last month, Opel requested about $1.25 billion in loans from Germany. Leaders of France and Spain have already pledged aid to the auto industry, with one regional Spanish government promising a 200-million Euro loan to Opel to help it begin production of a new four-door hatchback. And last week, GM, Chrysler and Ford asked the Canadians for help with operations there. "A major argument for keeping GM out of bankruptcy is the strength of its foreign footprint," said Kimberly Rodriguez, a partner at accounting and management consulting firm Grant Thornton, which works with auto companies. Yet because of the deeply intertwined nature of GM's global operations, if the company goes down here, she said, "there will certainly be problems for the company worldwide." Company officials declined to discuss what would happen in the event of a bankruptcy. GM's foreign units are separate corporate entities, which means they would probably be shielded from a U.S. filing and could continue to operate without concerns of a U.S. court seizing their assets.

Meanwhile, Congress was spurred to action this weekend not to save GM from itself but the consequences of another 150,000 employees losing their jobs. The loan agreements for the three U.S. automakers suddenly looked more viable following the Labor Department news reporting 530,000 U.S. jobs lost during the month of November.

Saturday, December 6, 2008

Feeling Pain For The Big Three

Congress Acts Like Jilted Lover: Burned by the absence of accountability with half of the $700 billion spent to bailout the financial sector, Congress is poised to loan U.S. automakers $15 billion with a million strings attached. The reason is simple. Congress and the American people don't understand the intangibles of financial markets. You can't wrap your arms around a tranche like, say, a car. Besides, timing is not one of Detroit's strongest suits. Consider the financial sector bailout. Treasury can't track how the money was spent. Several banks used bailout money to purchase smaller banks. Insurance giant AIG spent more than a half million dollars on parties and then asked Treasury for additional billions. An Associated Press survey reported Treasury starting in October negotiated options to buy up to 1.2 billion shares of common bank stock that was valued at $27 billion. Value of that common stock today is less than $18 billion, a $9.3 billion loss to taxpayers. "We're not day traders, and we're not looking for a return tomorrow" said Neel Kashkari, the director of Treasury's Office of Financial Stability, which oversees the $700 billion financial rescue fund. "Over time, we believe the taxpayers will be protected and have a return on their investment." Potential losses among these common stocks include more than $3 billion for the administration's biggest deal, a $45 billion injection into Citigroup Inc. The government gave the New York-based giant $25 billion on Oct. 28. In addition to preferred stock worth $1,000 per share, the deal included warrants to pick up 210 million shares of common stock at $17.85. In late November, the White House put together a plan to give Citibank another $20 billion. The deal also included warrants to pick up 254 million shares, with the price set at $10.61. Citigroup stock has since fallen below $8. Despite their arrogance, greed and stupidity that led to the housing and financial market meltdown, these captains of the financial world barely received a hand slap from Congress.

Passing The Buck: Now consider the auto bailout for GM, Ford and Chrysler. A tentative agreement between congressional Democrats, House Speaker Nancy Pelosi and the White House offers $15 billion to the three automakers to tide them over into early next year when the new Obama administration takes over. Automakers must submit a viable recovery plan before any federal funds are dispensed. The aid will come from a fund set aside for the production of environmentally friendlier cars Congress approved earlier this year. Any legislation Congress might approve — in an emergency session next week — is likely to include appointment of a trustee or board to assure that the automakers use the aid to return their firms to viability.
In other words, Congress will dictate the terms that Detroit will produce environmentally clean cars -- or else. Solving Wall Street's woes, in theory, involves pumping a lot of money into the financial system and hoping the credit crunch goes away. Detroit's problems are more systemic and will require more extensive triage efforts. That said, a bailout's a bailout, at least as far as taxpayers are concerned. "Most Americans don't understand -- or don't want to understand -- the complicated deal we made with Citigroup," said economist Robert Reich, Labor Secretary in the Clinton administration. "But when you talk about General Motors, it's much more concrete. People know what a car is." For that reason, he said, lawmakers in Washington have been more assertive about wringing concessions from the auto industry, whereas the heads of Wall Street firms essentially got by with slaps on the wrist. "It's completely backward," said Eve Weinbaum, director of the labor studies program at the University of Massachusetts at Amherst. "There's this perception that the people who make things with their hands somehow count for less than people on Wall Street who sit around thinking up things like derivatives. "You could argue that an economy doesn't need derivatives but does need manufacturing."

Friday, December 5, 2008

Dumb Rule: Feds Ease Gun Ban In Parks

Rule Will Take Years To Reverse: The Interior Department revised a Reagan-era regulation Friday that now allows persons to carry concealed firearms in some national parks and wildlife refuges. It is a dumb rule observed from personal experience which will be described later. According to the Associated Press, the rule allows an individual to carry a loaded weapon in a park or wildlife refuge — but only if the person has a permit for a concealed weapon, and if the state where the park or refuge is located also allows loaded firearms in parks. The previous regulations enacted by the Reagan administration required that firearms be unloaded and placed somewhere that is not easily accessible, such as in a car trunk. The National Rifle Association hailed the rule change. "We are pleased that the Interior Department recognizes the right of law-abiding citizens to protect themselves and their families while enjoying America's national parks and wildlife refuges," said Chris W. Cox, the NRA's chief lobbyist. Bill Wade, president of the Coalition of National Park Service Retirees, said: "This regulation will put visitors, employees and precious resources of the National Park System at risk. We will do everything possible to overturn it and return to a common sense approach to guns in national parks that has been working for decades." The park rule will be published in the Federal Register next week and take effect 30 days later, well before President-elect Barack Obama takes office Jan. 20. Overturning the rule could take months or even years, since it would require the new administration to restart the lengthy rule-making process.

No Rule For Drunks: I travelled in a motorhome throughout the northern states in 1990-91 spending numerous nights camped in state and national parks. I carried a .22-caliber rifle stored in an upper cabinet. Only once did I observe the old rule enforced by park rangers. Teenagers lining up beer bottles for target practice firing pistols was a common event. The holidays of July 4th, Memorial Day and Labor Day were the worst and most dangerous. Drunken adults would fire pistol shots in the air, at squirrels and deer. On July 4th, 1990, at a state park near Jamestown, North Dakota, the husbands of two couples travelling together argued over some senseless issue. One grabbed his pistol and fired it near the foot of the other. I tried to be peacemaker and asked the gun-toting drunk to put down his pistol. Instead, he aimed it at my chest. I backed off just as park rangers who heard the early shot came to the rescue. The NRA can say what it wants. Putting guns in the hands of teenagers and drunken adults is a recipe for disaster even if it occurs in an open wilderness environment.

Thursday, December 4, 2008

Obamamania Needs Reality Check

Wait 'Til He Does Something: Barack Obama hasn't even been sworn in as the 44th President of the United States. Yet, a myriad of public opinion polls reflect Obamamania to its ultimate fantasy conclusion: He can save the economy; he can wean us off foreign oil; he can restore America's good will and leadership throughout the world; he can ... Even the U.S. Mint in Connecticut has pressed a commemorative coin in Obama's name -- and selling it for a discount TV price of $9.99. The feel-good notion list goes on and on. Earth to Planet Obama: He ain't done nothin' yet. Yes, it is true the president-elect has filled the power vacuum in Washington while the lamest duck in recent memory takes a hiatus. And, it is also true his transition team has set the stage to accomplish Obama's goals of righting our sinking ship of state. Oh, if only consumer confidence could be restored in the economy as so many have expressed in Obama's abilities. The problem is the goals are set so high that failure lurks on the other side of the bar.

The Alabama Love-In: As long as the fun lasts, take a look at the commissioners of Perry County, Alabama. They have voted the second Monday in November "Barack Obama Day" in which county offices will be closed and its 60 employees a day off with pay. Perry County is predominantly black and presented Obama a strong majority vote in the Nov. 4 election. Said Albert Turner Jr., the county commissioner who introduced the resolution passed by a 4-1 vote: “This holiday will remind people at least one time a year that we do have hope to overcome obstacles in our lives that people say are insurmountable.” He said he hoped the school board and local officials in Uniontown and Marion, the largest towns in Perry County, would soon pass similar resolutions.

Never has expectations so high been thrust on the shoulders of a man so unproven at this stage of his political career.

Wednesday, December 3, 2008

Mitchell For "Meet the Press"

Gregory Too Partisan?: Under the helm of Lawrence Spivak and Tim Russert, NBC's "Meet the Press" was the leader in Sunday morning political talk shows. So powerful, it oftentimes set the agenda on Capitol Hill. Its competitors are copy cats. With the untimely death of Russert at age 56, former NBC anchor Tom Brokaw stepped in and wishes not to continue. NBC may be passing the torch to up and coming reporter and fill-in "Today" show host David Gregory. Executives said it is not a done deal. Gregory earned his bones as an aggressive White House correspondent grilling President Bush on the Iraq war. He's become a player in Washington D.C. social circles. He is not ready for the most prestigious job on Sunday television.

Andrea Mitchell is.

Mitchell is the best reporter in NBC's news arsenal. She knows the players. She is obscenely qualified as her experience draws on nearly 30 years of quality reportage. She has on the air masked her personal biases. She has instant credibility not only from her peers but the power people she covers and -- most importantly -- the viewers. In short, she is the perfect candidate to moderate "Meet the Press." Of course, she may have turned down the job if offered. She may have retirement in sight and live out her days with her husband, former Fed Chairman Alan Greenspan. Too bad. Mitchell offers what Gregory and other candidates for the position cannot: the perception of bi-partisan fairness.

Better Suited For "Today": Gregory hosted "The Race For The White House" on MSNBC during the past presidential campaign. Whether unintentional or not, viewers -- especially those coaxed by the right-wing opinonators on Fox cable -- considered the show a rooting section for Barack Obama. However, since the show renamed to "1600 Pennsylvania" after the Nov. 4 election, Gregory has improved the format to a more informational guide to how Obama will govern. But the stigma of a Democrat partisan remains. Gregory has long been considered a replacement for Matt Lauer on NBC's goldmine morning "Today" show. As an observer and political junkie, that would be an ideal job for Gregory. The list of contenders at one time included Mitchell, MSNBC's Chuck Todd, MSNBC host Chris Matthews; PBS host Gwen Ifill; CNN correspondent John King; and even the “CBS Evening News” anchor Katie Couric, who had been a longtime host of “Today.” Gregory is under contract at NBC until January 2010.

Tuesday, December 2, 2008

Big 3 Changes Tune But Still Fiddles

A Bridge Too Far: Top executives of Detroit's Big Three automakers got the memo when they delivered a lemon to Congress last month asking for $25 billion to keep their cars running. Ford Chief Executive Alan Mulally and Chrysler LLC CEO Robert Nardelli said they would work for $1 per year if Congress granted them the loans. General Motors Chief Rick Wagoner was expected to follow along. Nor will they arrive on three corporate jets to appear before Congress Thursday and Friday as they did in last month's dog and pony show. Mulally is coming by car from Detroit. Wagoner will drive a Chevrolet Malibu hybrid sedan for the 520-mile trek. Nardelli won't travel by corporate jet, but a spokeswoman declined to elaborate on his travel plans, citing security reasons. Whoop de do da. That's just fluff. What substance will the three tycoons offer? Skeptics analyzing the companies' detailed reports to Congress suggest it may be more about public relations than economics. They describe the loans as a bridge to economic recovery. It may be a bridge too far.
Limited Options: Analysts say the expected promises to renegotiate labor contracts, cut benefit costs or reduce product lines may placate some in Congress but will be hard to achieve.
GM has had its Hummer unit on the block since June, and it is now understood to be considering the sale of Saab or even Pontiac and Saturn. Ford, meanwhile, sold Jaguar and Land Rover to Indian carmaker Tata Motors this year. Ford on Monday added another high-end line to the for-sale list: Volvo. According to the Los Angeles Times:
  • Saying a brand is for sale and actually selling it are two different things. Robert Schulz, an auto industry analyst for Standard & Poor's, said with lending for corporate acquisitions all but frozen, there may be few takers for even a prestige marque such as Volvo. "There's no obvious candidate to offload these assets to," Schulz said.
  • Labor costs will almost certainly be on the line. Yet labor specialists wonder how much more the United Auto Workers union can give. Last year, the UAW signed a landmark deal with the Big Three that will effectively allow the automakers to unload retiree healthcare costs starting in 2010. Even if the UAW agreed to more cuts, the savings to the Detroit Three might be surprisingly small. Only a few years ago, GM's UAW payroll was well over 100,000. Today it's barely 55,000. As a result, even an across-the-board 20% pay cut "would result in a savings of only $1.1 billion per year," said Michigan State University professor Richard Block, a specialist in labor relations. "That's enough to keep them going for what, two weeks?"
  • GM and Chrysler have both expressed concern that they could run out of cash by early next year, whereas Ford has insisted that it does not necessarily need government aid and would take it only if there weren't too many strings attached. Ford's sales are off by nearly as much as GM's this year, but its cash position is stronger thanks to $23 billion the company borrowed in late 2006, and the fact that Ford still has an untapped credit line worth more than $10 billion. GM, on the other hand, has been unable to borrow cash and exhausted its last line of credit this summer. One possible cost-cutting move -- simply eliminating poor-selling brands like Buick, which is down nearly 24% this year -- may be a nonstarter because of the costs involved. Franchise contracts with dealers require the automakers to buy them out should a brand fold; the last to do so, Oldsmobile, cost GM more than $1 billion in payouts to dealers.

Part of a turnaround plan has to focus on developing attractive products and revamping marketing to get consumers buying. But the current sales environment is dismal.
This year, U.S. vehicle sales are on pace to drop below 13 million units, compared with more than 16 million in 2007. Forecasters don't expect sales to top 15 million before 2011 at the earliest. Meanwhile, of the Big Three, Ford is in the best financial shape. It is asking Congress for a $9 billion "stand-by line of credit" to stabilize its business, but says it doesn't expect to tap it.
Unless one of Detroit's other Big Three auto companies goes bust, Ford expects to have enough money to make it through next year, it said in a plan that projected the firm will break even or turn a pretax profit in 2011. Reports the Wall Street Journal:

  • Ford owes more than $26 billion, with $6.3 billion due to its UAW trust fund at the end of 2009. All three likely are negotiating with the UAW for delays in payments to the trusts.

GM will outline efforts to negotiate swapping some of the company's debt for equity stakes in the automaker, either shares or warrants for them, said two people briefed on the company's plan. With eight separate brands, GM will also discuss efforts to shed brands but it would prefer to sell them instead of shutting down Pontiac, Saturn or Saab, said one of the people briefed on the plan. Killing off brands, like GM did with Oldsmobile in 2004, would require cash the company doesn't have, the person said.

  • Chrysler is expected to outline changes that would include a swap of debt in the company for equity stakes and reductions in some vehicle models, according to a person who was briefed on the plan.

The companies are resisting calls for bankruptcy. The executives said last month that bankruptcy cannot be an option because no one would buy a car from an automaker that may not survive the life of the vehicle.

Saturday, November 29, 2008

A Lesson For Wall Street Greed

A Bonus To Remember: After reading Michael Lewis's outstanding article on the greed, avarice, stupidity and cunning manipulation by Wall Street that dropped the U.S. economy to its knees, what a relief it is to learn of one business family who understands and appreciates how it achieved success.

Its employees.

While many executives compensate themselves with millions of dollars for running their corporations into the ground and ruining the credit and life savings of millions of Americans, the Spungen family of Waukegan, Ill., shared its $6.6 million fortune with 230 employees. Now that's the spirit of American capitalism. What a terrific gesture in these trying times. It speaks proudly of U.S. small businesses which drive our economy and puts in perspective the shame cast upon those Wall Street bastards who destroyed it. The Spungen family, owners of Peer Bearing Co., manufactures ball bearings in the U.S. and England. It sold to a Swedish company in September for an undisclosed amount. Danny Spungen, whose grandfather founded the company in 1941, said it was a unanimous family decision to thank employees with the bonuses. Amounts varied and were based on years of service. "They treated us like extended family," said Maria Dima, who works at Peer Bearing along with her husband, Valentin, and received a somewhat smaller check than his $33,000. "We won the lottery." Danny Spungen and other family members signed, by hand, two thank-you cards to each employee, one in Spanish and one in English. Each card was printed with all the workers' names and the years they were hired. The text expressed gratitude for "the loyalty and hard work of our employees over the years."

Ironic, isn't it, that ball bearings are crucial to run the engines that makes the mechanical world go around. Compare that to the con game by Wall Street geeks fresh out of Ivy League schools who concocted a Ponzi scam so sinister no one but themselves could understand. Not the CEOs. Not the CFOs. Not the regulators, And certainly not Congress with $700 billion laughingly referred to as a rescue package. You think we're tough? Read Lewis's article "The End" on

Thursday, November 27, 2008

Iraqi Pact A Step Forward

A Lose-Win For Bush: A security pack ratified by the Iraqi Parliament Thursday finally allows the United States to legally withdraw its troops in a responsible time frame. It won't appease the liberal wing of the Democrat Party whose support for Barack Obama opposing the Iraq war catapulted him to prominence in the early stages of the presidential primaries. But is does lend credence for Obama's expected choice to keep Defense Secretary Robert Gates who supported the compromised agreement on board for a year as a means of continuity. It also reflects a partial defeat for President Bush who opposed time tables for withdrawal and, to use his own words, because events on the ground changed. The pact consists of two documents: a Status of Forces Agreement defining the rules under which American forces will operate, and a wider Strategic Framework Agreement outlining a broad bilateral view looking toward the future. A New York Times dispatch from Baghdad outlines the bitterly contested pact:

  • The new agreement comes into force when the United Nations’ mandate that currently governs the American troops expires on Dec 31. The new pact says all American combat forces should withdraw from Iraqi cities by June 30 next year and all American troops should be out of Iraq by Dec. 31, 2011.
  • The pact gives Iraq considerable say in what operations American troops can undertake in the country, and sets limits on the Americans’ ability to search homes and buildings, and hold suspects that they detain.
  • The agreement also allows some foreign contractors to be tried under Iraqi law if they commit a crime, a clause aimed particularly at curbing the behavior of Western security contractors such as Blackwater.
  • American troops will remain subject to American military law if they are on duty and on their bases, but could be prosecuted under Iraqi law if they commit heinous offenses while off duty and outside their bases.
  • The Iraqi Supreme Council consisting of a Sh'ite, Sunni and Kurd is expected to certify the agreement in the next several weeks. One of the compromises approved by 140 of Parliament's 275 members was a referendum vote next July. If the people vote it down, all U.S. troops would be withdrawn in 2010.
  • However, the Prime Minister Nuri Kamal al-Maliki government can negotiate a later, separate, agreement with the Americans allowing them to stay longer if it believes Iraq is not yet stable enough.

Let's Move On: The so-called preemptive invasion of Iraq was a colossal blunder by the neocons who held favor with the Bush administration in 2002. The strike was justified by fabricated intelligence that Saddam Hussein possessed nuclear warhead capabilities.
Management of the occupation was bungled by U.S. Ambassador Paul Bremer and then Defense Secretary Donald Rumsfeld. Nearly 4,000 U.S. soldiers were killed and 30,000 wounded.
Americans should allow this sorry chapter in U.S. geopolitics to drift away into the sunset. It almost has as our attention is now directed at ourselves struggling to cope in a recession economy. Our military is commended for its bravery and fighting a cause with one hand tied behind its back. There is no sense in arguing the past. The Iraq war was not won. It was a diplomatic settlement as so many wars end.

Wednesday, November 26, 2008

Conservative Jingoism

Power To The People: We live in a Republic, a representative democracy, in which we use the ballot box to express favor or disfavor with our elected officials. "Throw the rascals out," is an ancient refrain we've heard since the founding of our nation. The recent election of Barack Obama somewhat reflects that notion. But, it's not that simple. Yes, there will be a Democrat president, a strong Democrat majority in the House and close to a supermajority of 60 Democrats in the Senate where only a third of its members are up for re-election every two years. But the Supreme Court, our third branch of the federal government, remains the same. The point here is that you can throw some of the rascals out but not all of them. Because of that, decisions made in Washington are from consensus. There is an element in the conservative base that just doesn't get it. They stoop to simplistic slogans. Some blame government for all our problems on the pretext that politicians create them. Although they don't advocate anarchy, they envision a nation as a perfect panacea free of regulations and safety nets for the impoverished. Ground rules for a free market system in all aspects of our lives be damned. Any fool can look around and conclude that concept isn't working in the real world. Days before the election, I was sent an article that best describes the conservative cure to all our ills. The author is Charlie Reese, a former columnist for the Orlando Sentinel:
  • One hundred senators, 435 congressmen, one president, and nine Supreme Court justices (are the) 545 human beings out of the 300 million directly, legally, morally, and individually responsible for the domestic problems that plague this country. I can't think of a single domestic problem that is not traceable directly to those 545 people.
  • If the tax code is unfair, it's because they want it unfair. If the budget is in the red, it's because they want it in the red.
  • There are no insoluble government problems.
  • Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power.
  • Above all, do not let them con you into the belief that there exists disembodied mystical forces like 'the economy,' 'inflation,' or 'politics' that prevent them from doing what they take an oath to do.
  • Those 545 people, and they alone, are responsible. ... They, and they alone, should be held accountable by the people who are their bosses provided the voters have the gumption to manage their own employees. We should vote all of them out of office and clean up their mess!

Wow!: Where oh where does one begin? The concurrent theme of what Mr. Reese advocates is the people managing those they elect. In my way of thinking, voters don't have a constitutional power for hands-on management. We don't have the time nor the expertise. Andrew Jackson discovered that on the day he was inaugurated. But, his main thrust is for everyone to vote in lockstep the way Mr. Reese and the conservatives believe and presto! Problems solved. We've seen that in the old Soviet Union and more recently in Venezuela. Our system of government is not the best but no other system is better. -- Note: For a complete text of Charlie Reese's column, click on to the "Comments" section of this posting.

Tuesday, November 25, 2008

Obama Rips Farm Subsidy Abuse

Dead Farmers Scam: President-elect Barack Obama at his news conference Tuesday singled out farm subsidy abuses as one of many areas his budget advisers seek to eliminate.
He cited reports of corporations receiving millions of dollars in subsidies far over the cap of $250,000. If true, he said, the oversight by the U.S. Department of Agriculture will be fixed.
Lots of luck. The farm lobby and a harvest of congressmen and senators from the agricultural-driven states have been swilling the taxpayers' troughs for years. Although the intent of the subsidy programs are admirable, sometimes necessary, they all too often are abused.
How about $1.1 billion in farm subsidies from 1999 to 2006 given to dead people?

Token Oversight: A Government Accounting Office report last year discovered 172,801 deceased individuals received subsidies, 19% of them dead for seven years or more. In some cases the money went to deceased agri-business corporate executives. In others, to estates which families no longer farm. Farm subsidy recipients are required to re-certify with the USDA annually. But only 39 of the 181 estates (a token fraction reviewed by the GOA ) were determined for eligibility by the Farm Services Agency. Forty percent of the 181 were granted as much as $500,000 in subsidies without re-certifying for up to seven years after the farmer was buried. The GAO report said $130 billion in farm subsidies were doled out between 1999 and 2005. Of that, $2.858 billion (11.17%) were improper payments. And, that's scratching only the top layer of this pork barrel As Obama's Illinois predecessor years ago, Sen. Majority Leader Everett Dirkson, famously ruminated: "A million here, a million there. It adds up." Today we are talking billions and Obama's short and long-term economic recovery programs in the trillions. At every turn, someone wants a piece of the pie. How much Obama carves out savings from wasteful programs is a challenge we hear with every new administration. There is little evidence the Blue Dog Democrats and Republicans serving the nation's food chain will not be at the front of the line. These are seasoned veterans of the pork barrel wars. They kick sand in the faces of Big Oil interests.

Monday, November 24, 2008

Citigroup Bailout Fiasco

Too Big To Fail?: While Wall Street and stock investors smile with relief, Main Street grimaces in pain. The government plowing $20 billion into Citigroup to forestall collapse is another example of throwing good money after bad. President Bush and his economic advisers said the company is too large to fail. "It would create chaos," said Winson Fong, managing director at SG Asset Management in Hong Kong, which oversees about $3 billion in equities in Asia. "Simply put, you couldn't borrow or lend for a while. This is a nightmare scenario." That it is. But, let's take a look at what Citigroup did to create its own manure pile. Let's examine the latest Citigroup bailout proposal by the feds. Finally, let's explore the possibility it won't work.

Big Is Better: Former CEO Sanford Weill built Citi into the largest U.S. financial institution and left it in the hands of incompetent management. Writes Steven Pearlstein in Monday's Washington Post:
  • It was Weill who orchestrated bringing down the old regulatory wall that had separated commercial banking from investment banking and insurance. The combination of Citibank with Solomon Smith Barney under the bright red umbrella of Travelers Insurance was accepted with a regulatory wink and nod by the Federal Reserve while then-Fed Chairman Alan Greenspan worked to persuade Congress to make it legal by repealing the Glass-Steagall Act, put in place during the Great Depression to prevent another market crash like that of 1929. For no sooner had Weill stitched together his empire than it began coming unraveled as a result of a series of soured investments and embarrassing ethical scandals that cost shareholders tens of billions of dollars. In the years since Weill's departure, as various pieces of the company have been sold off or closed down, it has become obvious that the promised economies of scale had been overhyped, the synergies across business lines had never developed and the cultures and systems of the various parts had never meshed. The whole thing was simply too big and too complex to be managed. It has also proved too big to be regulated. Over the past 20 years, the Federal Reserve, Citi's chief regulator, has been unable to get a handle on the bank's excessive risk-taking and incessant corner-cutting. Time after time, Citi rushed to jump aboard the latest gravy train -- developing country loans, commercial real estate, Internet stocks, subprime lending and securitization -- and time after time, Fed regulators failed to spot a problem until it was too late.

The Bailout: Citi has $2 trillion in assets, more than 300,000 employees and operations in 100 countries. The capital infusion follows an earlier one — of $25 billion — in Citigroup in which the government also received an ownership stake. As part of the plan, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages. Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup. In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup. In addition, Citi said it will issue warrants to the U.S. Treasury and the FDIC for about 254 million shares of the company's common stock at a strike price of $10.61. In the most self-serving understatement of the millennium, current Citi CEO Vikram S. Pandit said in a statement issued early Monday:"We appreciate the tremendous effort by the government to assure market stability."

Will It Succeed?: The evidence is grim the fed bailout of our financial sector is working. Since the housing market collapse two years ago, $4 trillion in housing wealth and $9 trillion in stock-market wealth has been destroyed. "There is little doubt that we are witnessing a classic debt-deflation bust at work, characterized by falling prices, frozen credit markets and plummeting asset values," writes Christopher Wood in an op-ed article in Monday's Wall Street Journal. He makes a startling observation Main Street understands:

  • The Federal Reserve banks' total assets have increased by $1.28 trillion since early September to $2.19 trillion on Nov. 19. Likewise, the aggregate reserves of U.S. depository institutions have surged nearly 14-fold in the past two months to $653 billion in the week ended Nov. 19 from $47 billion at the beginning of September. But the growth of excess reserves also reflects bank disinterest in lending the money.

  • (Federal Reserve Chairman Ben) Bernanke and others blame Japan's postbubble deflationary downturn on policy errors by the Bank of Japan. But he and others are about to find out that monetary gymnastics are not as effective as they would like to think. So too will the Keynesians who view an aggressive fiscal policy as the best way to counter a deflationary slump. While public-works spending can blunt the downside and provide jobs, it remains the case that FDR's New Deal did not end the Great Depression.

  • Meanwhile, the most recent Fed survey of loan officers provides hard evidence of the intensifying credit crunch in America. A net 83.6% of domestic banks reported having tightened lending standards on commercial and industrial loans to large and midsize firms over the past three months, the highest since the data series began in 1990. A net 47% of banks also indicated that they had become less willing to make consumer installment loans over the past three months.

There are no easy policy answers to the current credit convulsion and intensifying financial panic -- not as long as politicians and central bankers are determined not to let financial institutions fail, and so prevent the market from correcting the excesses.
The origins of the modern conventional wisdom lies in the simplistic monetarist interpretation of the Great Depression popularized by Milton Friedman and taught to generations of economics students ever since. This argued that the Great Depression could have been avoided if the Federal Reserve had been more proactive about printing money. Yet the Japanese experience of the 1990s -- persistent deflationary malaise unresponsive to near zero-percent interest rates -- shows that it is not so easy to inflate one's way out of a debt bust.
News Flash: Dow Industrials spiked 300% this morning based on the government's cash infusion plan for Citigroup. Stock price of Citi rose 59% to $6.95. Investor confidence? Try selling that to the guy on Main Street seeking a loan from Citi or the other cash-infested fat cats.