Saturday, November 29, 2008
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 www.portfolio.com.
Thursday, November 27, 2008
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
- 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
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
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.
Sunday, November 23, 2008
Clinton Mystique: But, it will be Hillary in the plum assignment of Secretary of State that will titillate her coverage like flies hovering over the picnic table. She's a superstar. A celebrity. An icon. A media giant the public both loves and hates. If she doesn't, her faithful entourage will leak tidbits of gossip and policy differences to the hordes of reporters who have established a trust over the years with the Clintons. Certainly, Obama now trusts Clinton despite a bitter primary battle where their differences were more hyped than substantive. Apparently, Obama has pledged direct access and carte blanche for her to appoint people of her own choosing to State jobs. That remains to be seen. Despite her chops knowing many of the foreign leaders personally, the question arises whether she can convince them she speaks for Obama. That will depend on how the working relationship is arranged between Obama, Vice President Joe Biden, Obama's chief of staff, the National Security staff and CIA director. A conflict of egos there, to be sure. Biden's role and force in all this is becoming more curious by the day. But by accepting Secretary of State, Hillary puts her presidential ambitions on hold to carve a new path on her resume. Hillary cannot afford to scew up. She must know State celebrities such as Colin Powell quit or were fired for policy differences with their presidents. Obama sees in her a good trooper whose charm, intelligence and fortitude can counter the likes of a Vladimir Putin or Hugo Chavez. Hillary's biggest problem is she is a Clinton. Her husband's myriad web of financial donations to his library and foundations poses a continual perception of ethical shortcomings. While Hillary is disciplined, Bill is not. Who knows what he will say or what financial deal he is entangled among world industrialists and governments that could be mistaken for U.S. policy? One can only hope the Obama team vetted Bill Clinton's financial records and negotiated in no uncertain terms what he can do while Hillary is Secretary of State.
Saturday, November 22, 2008
What Legacy?: To his credit, Bush last week signed legislation to extend unemployment benefits. His administration also is highly praised for cooperating with the transition team allowing full access to classified materials and briefings. But, he remains a lame duck and acting like one. He's turning his back on all the problems his administration has created and timidly turning them over to Obama. His Secretary of Treasury has said he has done all he can with instrumenting the $700 billion bailout funds to the financial sector. Bush is trying to preserve his legacy by signing executive orders loosening regulations on the environment and commerce.
If Bush really is serious about preserving his legacy and is burned out, exhausted and flummoxed by today's tumultuous climate, he must capitulate his cowboy stubbornness and accommodate his successor. Mr. Bush: get off the pot as Obama might suggest. There's a preponderance of evidence we can't wait another 58 days. To hell with Republican and Democrat ideologies. We're all sinking in the same ship.
Friday, November 21, 2008
How Did We Get Here?: To appreciate the cable wars, a crash course in media history is necessary. Until Ted Turner launched CNN, Americans were spoon fed the news by newspapers, radio and the three major networks, ABC, CBS and NBC. The grandchild on the block, CNN inched its way forward emulating the three networks' 30-minute prime time broadcasts but at a 24/7 clip. In 1992 when media advertising, circulation and viewership started to slip, Rupert Murdock changed the playing field by launching Fox News. It was feisty, opinionated and adversarial while at the same time claiming to be "fair and balanced." The crown jewel of the network was Bill O'Reilly followed by conservative flamethrowers Sean Hannity, John Gibson, Neil Cavuto and a cast of other Neanderthals. The format worked. Fox catapulted to the top by 2000 and held that perch ever since. NBC launched its bastard child MSNBC after Fox but wallowed in obscurity for most of its first decade. Then, GE, the parent company, decided to play Fox's game by being its polar opposite. Three years after the hiring of Keith Olbermann and carried by the tides of viewer interest in the presidential campaign, the niche audience discovered MSNBC big time. MSNBC quickly added far-left liberal Rachael Maddow to the stable. Those two make Chris Matthews, the long-standing face of MSNBC political coverage, pale by comparison. CNN also jumped into the niche audience fray with the reincarnation of the former mild-mannered financial commentator Lou Dobbs. He now bills himself as the beacon for independent thinking on the airwaves.
Where We Are Now: Fox remains the undisputed leader in the prime-time block for the past 27 consecutive quarters. According to data from Nielsen Media Research, the last third quarter shows Fox averaged 2.2 million total viewers for the 8-11 p.m. time block, CNN ninth with 1.3 million and MSNBC 23rd with 867,000. Because of its low base, MSNBC managed a whopping 81% increase from the 2007 third quarter. For the month of September, which included the first presidential debate and the peak of the economic meltdown, CNN registered the biggest year-to-year growth, up 165% in prime time from September 2007. Of note, “Morning Joe” on MSNBC is the fastest-growing morning show in cable news, up 57% in total viewers year-to-year. The No. 1 rated show is “The O’Reilly Factor” (2.9 million viewers). CNN’s “Larry King Live” ranked ninth (1.3 million viewers) and MSNBC’s “Countdown With Keith Olbermann” ranked 11th with 1.24 million viewers.
What It All Means: Michael Grant is a former colleague on the Union and Tribune newspapers in San Diego and now a fellow co-blogger of mine with much more expertise in media marketing. In an item he wrote in Friday's daily email newsletter of former and current Copley employees, Grant notes that O'Reilly and Olbermann are "rabidly op-ed entertainers with very small but big-enough-to-be-lucrative niche audiences. ... As for which entertainment I prefer, I would add “Droppings” to the end of O’Reilly’s new book title. But I also get uncomfortable watching Olbermann the Doberman when he gets really snarly. I believe it is important here to remember the second law of media: “The media is an exercise in the power of small numbers.”
Bashing The Mushy Middle: Laurie Becklund also is a former colleague and contributor to the 919 Gang daily newsletter published by former and current employees of the Copley chain of newspapers. She takes a traditional, old-school approach in the media's role of dispensing news. Offered are excerpts of a letter she wrote to a Columbia Journalism Review article by Dean Starkman who lambasted the financial press for failure to address Wall Street corruption.
- It has always seemed to me that one of the most dangerous errors of American journalism is mistaking the center for neutral. The center is a mid-point on a sliding scale. Its place is determined by opinions and prevailing winds. Neutral is, or should be, the radical willingness to find and communicate what's true, no matter whether that truth lies in the middle or to one side. ... Often, we don't know the facts. But, when was the last time you read a "for the record" from a news organization apologizing for tacitly reassuring the public, often over and over again, even after the facts were in, that it had missed reporting the very heart of the matter? That reporters/editors had allowed readers to assume scary truths weren't really scary at all because they had taken the easy road and let spinmeisters' quotes in effect cancel each other out? Or that we ourselves had failed to grasp the gravity of crises because we couldn't quite believe facts we reported could be so utterly in conflict with the ideals we grew up believing in? As Dean Starkman said in this piece, "Most journalists, I would argue, retreat to the mushy middle... " He was talking about Wall Street and a failure to take aim at "breath-taking corruption." But, he might just as easily have been talking about foreign policy or politics." ... The American public may never have needed clarity from its journalists as it does today -- not just to distinguish accurate political claims from inaccurate ones, but to distinguish what is certain from what is uncertain and separate the "esoterica," as Starkman puts it, from the "breath-taking." ... When we do not think clearly, or when we are not bold enough to find and put forward the facts, regardless of public opinion, we may be safe, but our readers and viewers may well wind up losing their savings, their homes, or even their lives. I like Dean Starkman's simple, intuitive term "The Mushy Middle." It sounds like a kindergarten sandbox, a circumscribed place where you can build all sorts of things in an afternoon that don't survive the next rain. I hope the term catches on as a sort of short-hand so it can be recognized as the public hazard it is. Maybe if we identify the default habits that lead to the Mushy Middle, we can stop ourselves before we step in it.
Ouch!: It is clear that what we on the inside of the media profession have are internal quarrels. Outsiders only see our results. What Ms. Becklund writes is true. But a moderate view on politics and current events is far from mushy. We understand yet abhor the entertainment side of what passes for news shows. We recognize the vile agendas from both the far left and zealous right. We are not ideologues whether we favor one political party over the other, nor are we locked in step with either Republicans, Democrats, Greens or Libertarians. It may sound smug, but common sense -- the rule of the pragmatic -- is a major player. At least in my thinking. I could be wrong.
Tuesday, November 18, 2008
Last Rites: General Motors Corp. is a gasping whale beached and bloodied on the sands of the economic meltdown. Life support from Congress won't do a damn thing unless GM files for reorganization and protection under Chapter 11 bankruptcy. Even then its prospects are grave. It's two buddies, Ford and Chrysler, are caught in the surf wrestling with the same impending tide. Ironic, isn't it, that America's Big Three automakers --their suppliers, their contracts with dealerships, unions, health plans and pensions -- are drowning themselves from the seines of history while the two major foreign competitors, Honda and Toyota, are manufacturing in the U.S. and doing swimmingly? Metaphors aside, it's Darwinian economics. Survival of the fittest. Crass and cruel it may sound, the Big Three are dinosaurs in the free capitalistic market system.
- After 42 years of eroding U.S. market share (53% to 20%), GM produces eight brands of automobiles and trucks; Toyota (19% share) has three and Honda (11%) two.
- GM has about 7,000 dealers, Toyota around 1,450 and Honda about 1,000. Dealers are protected by state law. The cost to reduce them to foreign dealership numbers would be billions and take years.
- GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. GM will run out of bailout money paying off these obligations before it has a chance to downsize to meet market conditions now enjoyed by its competitors. Like AIG, management would ask for more. And more. And more.
Point. Counterpoint: Meanwhile, Treasury Secretary Henry Paulson told Congress Tuesday he opposed the bailout even though he said a failed U.S. automaker would not be a "good thing...I don't see this as the purpose of the bailout program" which he said is intended to stabilize jittery financial markets and get lending flowing more freely again. Leading Congressional liberal Democrats led by Speaker Nancy Pelosi, Rep. Barney Frank and Sen. Carl Levin are seeking cash infusion for the automakers in this lame duck session. Even if they can't get a successful vote, they will try again with the new Congress after Jan. 20. But even then, some of the elected new Democrats are casting a cold shoulder on Detroit. According to an article Tuesday on MSNBC:
- Bobby Bright of Montgomery, Ala., comes from a district where Hyundai operates a manufacturing plant and a number of supplier firms employing 6,500. “I don’t look favorably on it at all,” he said. “Generally I came up the hard way and no one ever bailed me out. I always had to stand on my own two feet.”
- Michael McMahon, elected in a Republican scandal -plagued district in Brooklyn, also said he is skeptical. He warned against supplying taxpayer aid to companies “that are not taking the steps to correct themselves.” He added, “In any industry that is hanging on by its fingernails, both management and the workforce are going to have to take cuts in pay, cuts in benefits, to keep it going.”
- Virginia’s Tom Perriello also is leery about the Big Three bailout: “I think we’ve done too much rewarding the status quo instead of rewarding innovation. I’d much rather see a stimulus package that rewards whatever company comes up with a 100 miles-per-gallon car and 40-miles-per-gallon truck first.” Could Hyundai get the prize? “I think we should do it for American companies. I think we want the auto industry in America to be reborn.”
Monday, November 17, 2008
Money, Money, Money: The BCS, college presidents, television and the groupie bowl game sponsors of which there were a zillion at last count hold the current post-season format. There's a ton of money spread through all the conferences from the bowl games right down to the worst and oftentimes winless klutz in those leagues. A playoff system would take three weeks to carry out. One way of accomplishing that is to shorten the college regular season to 11 games, ending no later than Thanksgiving Day. Hold the next two weeks for the lesser bowl games with all the runners-up and wannabes playing one game for glory and the dollars that come with it. The next three weeks set aside for the playoffs with the larger bowls such as the Rose, Fiesta and Orange, et. al., for the championship runoffs. Like March Madness in college basketball, the ratings should go through the roof. But, no. College presidents resist the idea for a number of reasons, few of which apply to the academic side of the equation. However, corporate sponsorship could be in jeopardy with the downturn in the economy. Television networks may have problems luring the advertising bucks to pay for their broadcasts. Who knows? Perhaps, Obama's impeccable timing to win the presidency continues with his support for a college football championship series. The guy's on a roll. Maybe his influence as prez will be the stimulus this idea conceived in football fan heaven requires.
Saturday, November 15, 2008
What Bankruptcy Can Mean: While GM lobbyists paint an Armageddon picture, bankruptcy can reorganize by cleaning out the top executives and board of directors and develop a more profitable and competitive culture. The WSJ authors quote New York University business professor Edward Altman, a long-time analyst of corporate bankruptcies, saying the federal government should only put money into GM through a pre-planned bankruptcy process that knocks out GM shareholders, rolls bondholders into equity and renegotiates union labor contracts. "I do not think putting more money into the failed business strategy there makes sense," said Altman. "The government should help, but it should use bankruptcy as part of the more-efficient process that also limits exposure to taxpayers." Such an approach, says Altman, would also avoid risk to the broader industry, because GM could use the process to keep paying its most critical vendors.
Tough Call: So there you have it. Not a sexy subject but one with dire consequences. Congress is like the guilty guy whose options are death by firing squad or miracle pill that may or may not prolong his life. Either way, the immediate impact won't be known until midway into 2009. Is the impending failure of U.S. automakers so catastrophic the government must help as it did the financial sector? Like we observed yesterday, if so, where do you draw the line? American Express? FedEx? What about the cities of Philadelphia and Detroit on the verge of bankruptcies? Do you tell them, as President Ford told New York City, drop dead?
Friday, November 14, 2008
Oops! Wrong Direction: Hank Paulson, in his infinite wisdom, has decided that buying toxic home mortgages ain't gonna work. Like an epiphany he's decided to plow portions of the $700 bailout money Congress approved directly to banks to increase cash equity. That leaves the banks to figure out where all the bad loans dissipated into bundlings, defaults, derivatives and God knows what else only M.I.T. grads who concocted the scheme might know. The result is we have national banks that really are national(ized). Paulson has acted so wildly that even the Treasury's solicitor general can't figure out what he's done. Furthermore, there's growing evidence of a policy and directional squabble between Paulson, the chairman of the Federal Reserve Board and the FDIC chairwoman. What this foments is a political decision by Mr. Obama who can't render one until Jan. 20. Meanwhile, lobbyists are stampeding for more government handouts representing Wall Street, the auto industry, state governments and corporate giants such as FedEx and American Express. President Bush is lukewarm to give Detroit's Big Three automakers more than the $25 billion they already have received. He is mildly receptive to a congressional lame duck stimulus package. The biggest fear in conservative circles, including Blue Dog Democrats in Congress, are the dictates the Obama administration imposes on GM, Ford and Chrysler. In return for additional bailout money, concessions could be ousting current management teams and boards of directors and requiring fuel-efficient vehicles with a premium on hybrids and acquiring stock ownership shares. But the economic models in Detroit are different from foreign cars built in America. Toyota and Honda, for example, do not have the overhead expenses of health and retirement pensions and their governments provide the stimulus for new advances in technology.
My Take: Since Paulson, et.al, have proven they don't know what the hell they're doing, I'll offer my guidelines. Suspend any future bailout funds on Wall Street's financial sector. The lone exception would be to ensure the credit markets are flowing. Stop mortgage foreclosures for those who have proven ability to pay timely monthly payments at lower rates and allow the FDIC to insure the loans. Reduce red tape for FHA-backed home loans. And, whatever new regulations are imposed, make them flexible enough so they don't snuff out economic expansion. I predict a power struggle among liberal Democrats and the Obama administration over funding distressed businesses they favor such as the three U.S. automakers and its labor unions. Economic bailouts for political favorites who supported the Obama campaign is not good policy because it fails to answer the question: Where do you draw the line?
Thursday, November 13, 2008
Look at my fellow conservatives! There they go, glumly shuffling along, depressed by the election aftermath. Not me. I'm virtually euphoric. Don't get me wrong. I'm not thrilled with America's flirtation with neo socialism. But there's a massive silver lining in those magical clouds that lofted Barack Obama to the Presidency. For today, without a shred of intellectually legitimate opposition, I can loudly proclaim to America: The Era of White Guilt is over. This seemingly impossible event occurred because the vast majority of white Americans didn't give a fluff about skin color, and enthusiastically pulled the voting lever for a black man. Not just any black man. A very liberal black man who spent his early career race-hustling banks, praying in a racist church for 20 years, and actively worked with America-hating domestic terrorists. Wow! Some resume! Yet they made Barack Obama their leader. Therefore, as of Nov. 4, 2008, white guilt is dead. For over a century, the millstone of white guilt hung around our necks, retribution for slave-owning predecessors. In the 60s, American liberals began yanking that millstone while sticking a fork in the eye of black Americans, exacerbating the racial divide to extort a socialist solution. But if a black man can become President, exactly what significant barrier is left? The election of Barack Obama absolutely destroys the entire validation of liberal white guilt. The dragon is hereby slain. So today, I'm feeling a little "uppity," if you will. From this day forward, my tolerance level for having my skin color hustled is now exactly ZERO. And it's time to clean house. No more Rev. Wright's "God Damn America," Al Sharpton's Church of Perpetual Victimization, or Jesse Jackson's rainbow racism. Cornell West? You're a fraud. Go home. All those "black studies"programs that taught kids to hate whitey? You must now thank Whitey. And I want that on the final. Congressional Black Caucus? Irrelevant. Maxine Waters? Shut up. ACORN? Outlawed. Black Panthers? Go home and pet your kitty. Black separatists? Find another nation that offers better dreams. Go ahead. I'm waiting. Gangsta rappers? Start praising America. Begin with the Pledge of Allegiance. And please…no more Ebonics. Speak English, and who knows where you might end up? Oh, yeah…pull up your pants. Your underwear is showing. You look stupid. To those Euros who forged entire careers hating America? I'm still waiting for the first black French President. And let me offer an equal opportunity whupping. I've always despised lazy white people. Now, I can talk smack about lazy black people. You're poor because you quit school, did drugs, had three kids with three different fathers, and refuse to work. So when you plop your Colt 45-swilling, Oprah-watchin' butt on the couch and complain "Da Man is keepin' me down," allow me to inform you: Da Man is now black. You have no excuses. No more quotas. No more handouts. No more stealing my money because someone's great-great-great-great grandparents suffered actual pain and misery at the hands of people I have no relation to, and personally revile. It's time to toss that massive, obsolete race-hustle machine upon the heap of the other stupid 60s ideas. Drag it over there, by wife swapping, next to dope smoking. Plenty of room right between free love and cop-killing. Careful…don't trip on streaking. There ya go, don't be gentle. Just dump it. Wash your hands. It's filthy. In fact, Obama's ascension created a gargantuan irony. How can you sell class envy and American unfairness when you and your black wife went to Ivy League schools, got high-paying jobs, became millionaires, bought a mansion, and got elected President? How unfair is that? Now, like a delicious O'Henry tale, Obama's spread-the-wealth campaign rendered itself moot by it's own victory! America is officially a meritocracy. Obama's election has validated American conservatism! So, listen carefully…Wham! That's the sound of my foot kicking the door shut on the era of white guilt. The rites have been muttered, the carcass lowered, dirt shoveled, and tombstone erected. White guilt is dead and buried. However, despite my glee, there's apparently one small, rabid bastion of American racism remaining. Black Americans voted 96% for Barack Obama. Hmmm. In a color-blind world, shouldn't that be 50-50? Tonight, every black person should ask forgiveness for their apparent racism and prejudice towards white people. Maybe it's time to start spreading the guilt around.
Pot Calling the Kettle Black: Now that the worm has turned, Atkins is espousing the same stereotype prejudice against blacks as blacks spewed against whites. Conspicuously missing in this argument is any degree of progress. Conservatism is stagnate in America because its representatives fail to offer new ideas. This is reflected in the Republican Party and its mounting losses across the political landscape. For too many years, intellectuals have been bashed by rank-and-file conservative soldiers and as a result now find themselves leaderless. Fostering divisive attacks driving wedges between the myriad of ethnic factions in our society gets us no where. Obama offers a time for change and a small part of that change is tolerance among the masses. A stab at unity trumps divisiveness if this nation wants to forge ahead against economic chaos. Meanwhile, stirring the racial pot is a recipe 52% of the voters rejected so mouthy conservatives of the likes of Tom Atkins should keep a lid on it. If it doesn't work, vote the rascals out in 2010 and 2012.
Wednesday, November 12, 2008
Sarah's Gift: While Sarah Palin launches her comeback trail, she will remain the gift that keeps on giving for her critics and late night show comics. But give her some credit. She is tenacious, a quick study, resilient and ambitious. She's not dumb. She's simply intellectually incurious just like the rap on George W. Bush. A good trooper, she did what she was told during the campaign even though the advise was flawed. On the campaign stages, she was the attack dog, comfortable in her role as Sarah Barracuda. She ignited the Republican base and re-energized McCain's campaign even though in this election the base was out to lunch with the electorate. She thinks outside the box as was her desire to speak before McCain prior to his concession speech. "I wanted to brag him up," she said. She wears religion on her sleeve as guidance for a future career in the secular world of politics. “I’m like, ‘O.K., God, if there is an open door for me somewhere’ — this is what I always pray — I’m like, ‘Don’t let me miss the open door,’ ” she told Greta Van Susteren of Fox News. “And if there is an open door in ’12 or four years later, and if it is something that is going to be good for my family, for my state, for my nation, an opportunity for me, then I’ll plow through that door.” Don't underestimate the barracuda. By 2012 or 2016 she will be self-taught and ready for prime time. She already has accomplished two major goals of a presidential candidate. She has the "it" factor meaning she's attractive and pleasing before the cameras. She owns the "Q" factor, meaning universal name recognition. And, for Christ's sake, prove to us you're smarter than a fifth grader.
Tuesday, November 11, 2008
Monday, November 10, 2008
Saturday, November 8, 2008
The reason behind "change" is to create solidarity (the feeling or expression of union in a group formed by a common interest) was clear in the acceptance speech last night, where it was stated he needed to win over more of the populous to his side. He even went so far as to ask for more acceptance (he needs to win more of us over?)...to what? For what? There is still no goal stated or established in any speech or discussion - ever! If there is ever to be "change," there must be a goal of common interest, hence solidarity. If only emotional "feelings" create that solidarity, which is what we have just seen, then a "hidden agenda" (the goal) may turn out to be the rudest of rude awakenings, and if that goal is only to sway the opinion of the masses to make "radical" change, then the major change will occur in not only what we believe in, but also how we believe (our ability to reason logically). The first step - remove the basis for your beliefs from religion - take God from the equation (looks as if that's working too), remove the concept of Jesus (especially his teachings). Now your morality is questioned and ethics no longer has importance. Then you have human beings in doubt and back to their basic emotions, seeking the unattainable fantasy. We just "feel" things are not quite right, and we don't know what is wrong, thus we must need "change." Saul Alinsky's (an abject Marxist) "Rules for Radicals" produced this excerpt: "The means-and-ends moralists...The standards of judgment must be rooted in the whys and wherefores of life as it is lived, the world as it is, not our wished-for fantasy of the world as it should be" is exactly my point of reference. It is the exact reason for change. The fantasy or quest to change what the "world as it is" to what "...it should be" is essentially the root that can bring about radical upheaval. Just look at Kenya. It's a freaking mind game plying good against evil. What better way to do it then to create division (those who believe in him, and those who do not), which is an intermediate goal. Then ask the balance (the non believers) to come over to his side (in other words, give him a chance) to provide the ultimate authority he needs to make radical change to everything as you knew "it to be" to what "it should be." That only exists in his mind, and I've never been in there. There's but one thing left, and that is for the rest of us to slip into a coma. Don't forget, freedom is what "it should be."
A Rebuttal: Having just awakened from a coma, I agree and have said earlier that Barack Obama's change message hammered throughout his 19-month trek to election could be defined any number of ways: Against eight years of the Bush administration, against how lobbyists control Congress, for a fresh bottom-up approach to governing, etc. However, during the course of the campaign, Obama established himself on enough issues that by Nov. 4 52% of the voters believed he was credible to be our commander-in-chief. Despite a limited voting record to support his intentions, he convinced us otherwise. The ball is now in his court. The fantasies end.
Friday, November 7, 2008
Flash forward to 2008. Obama applied those same principles conceived and tested at Harvard Law School to win the presidency. He listened and weighed input from some very shrewd advisers and experts, made decisions and demanded discipline and loyalty down to the very last volunteer. The only gaffes in the campaign came from Obama himself (rural people clinging to guns and religion) and wife Michelle (for the first time in her life proud to be an American). Willie Brown, California's best and most astute politician ever, proclaimed on MSNBC's Hardball show yesterday Obama ran the best, most disciplined national political campaign he ever witnessed. "It was virtually flawless," he said.
A Diversified Court: In the final weeks of the campaign, Republicans leaped on a statement from Obama in which he told The San Francisco Chronicle he believed the court fell short in its decisions involving civil rights. The full text of Obama's comments were on the Chronicle's website since February. Why it took Republican opposition researchers nine months to bring up the subject may be an indication how dysfunction the campaign was. Their argument was that Obama would appoint judges who legislated from the bench rather than follow the intent of the U.S. constitution. Again, the genesis of that position by Obama goes back to his days at Harvard Law School. Juan Zuniga explains: "In deed, one of the central arguments we tried to overcome was that we were not advocating a simple quota or numbers system. ... Rather, we wanted qualified candidates of diverse backgrounds to be able to introduce the real world context of race and gender into the law. The truth of the matter is America treats a 62-year-old white male grandfather living in Connecticut different than a 34-year-old Guatemalan immigrant single mother living in Arizona. The teaching of the law, by its nature, needs to be to incorporate how society (law enforcement, public schools, employers, landlords, etc.) views and is viewed by these different people. When your faculty is comprised of 90% of older white gentleman who have lived exclusively in New England and have no job experience except for academia, how are they going to make the law relevant in a society they don't reflect? The law is not static and objective in the same way mechanical engineering is and the institutions that teach the law cannot be so arrogant that only a single perspective is valid." It doesn't matter if one agrees with Obama, this is how he formulates his policy decisions. It's been that way since Square One at Harvard Law School.
Full Disclosure: Juan Zuniga practices international and finance law in San Diego. He donated $1,000 to Obama's primary campaign. He is a second cousin in my extended family.
Wednesday, November 5, 2008
World Opinion: In Berlin, jaded teenagers at the bilingual John F. Kennedy School favored Obama by 86% but said that represented a rebuke of President Bush's wars in Iraq and Afghanistan, torture of prisoners at Guantanamo Bay and unilateral foreign policy, not the slick slogans from Obama who has yet to prove himself. At the United Nations headquarters in New York, Secretary General Ban Ki-Moon praised Obama and was confident the new administration would improve working relations which have been radioactive the past eight years. In Baghdad, today was the first time a group of poets and writers who meet twice a week for lunch and debate agreed on any topic: Obama. Such platitudes as "admirable," "inspirational" and "exciting" were heard among the members who represent all Iraqi factions -- the secular, religious, Sunnis, Shiites and former Saddam Hussein reform loyalists. "A black man in the White House, that is the most beautiful thing I have seen in my life," said Daoud al-Rahmani, a self-styled poet and satirist. Walid al-Jubouri, a Saddam loyalist responded he was skeptical the president-elect would stop what he described as America's plan to "occupy the world." In Kisimu, Kenya, where Obama's father was from, thousands danced in the streets shouting slogans of going to America without passports and beating their chests that a half-Kenyan was the new president of the United States. The last time this nation held a presidential election, riots erupted protesting the results. In Dubai, United Arab Emirates, nearly all the citizens favored Obama except the ruling class emirates. "Americans can't think outside the box," declared the news director for the nation's television network. When the U.S. networks announced the projected victory, the director shook his head. "I'm positively surprised," he said. "It's great." In New Delhi, the headline for the lead editorial in the Hindustan Times, read "The World Enters America." The editorial reminded the 44th U.S. president of a world connected with economic problems and two wars. "For America to chart these choppy waters, it will have to have a helmsman who understands and engages the world on the world's terms," it urged. In Buenos Aires, Alejandro Saks, a television writer celebrating the election with Americans at a local bar, said "There is a feeling that the first time since Kennedy, America has a different type of leader." Similar sentiments were expressed in Caracas and Bejing. Not since the immediate aftermath of 9/11 has the world regarded us in such high esteem. That's one characteristic of Americans. We like to be liked.
Business Not As Usual: Business leaders are coming to grips that the new Obama administration and strong Democratic Congress will mean new regulations they hope will not impede commerce. More importantly, they want more money from the government to help spur the economy. "If you think we won't get more regulation in places other than financial services, you're nuts," said General Electric CEO Jeffrey Immelt several weeks ago. "We'll get more regulation in health care, energy and other areas." He also said some of the regulations need not be a negative. It "could be a catalyst for positive change," he said referring to expanded jobs in the renewable energy fields. Another worry is the opinion Democrats will shift the balance of power from employers to unions which have been all but mortally wounded since the Reagan administration. Among other potential losers with the Democrats in power could be banks, private equity funds and Big Oil. Congress also is expected to push legislation requiring businesses to pay for the right to emit carbon dioxide under a cap-and-traide system. Coal and oil producers would be penalized although other energy producers would benefit. Businesses are concerned of health care mandates if Congress adopts a universal reform plan while U.S. pharmacuetical industries fear the monoply they hold selling drugs to Medicare will be open to global bidding. The defense sector is nervous Congress will reduce spending because of the bad economic conditions and a drawdown of troops in Iraq. The defense industry wants the Pentagon budget increased to 4% of gross domestic product, up from 3.1% this year but likely to get less than that. The nation's technology sector could thrive on new green policies but are holding back investments unless the Democrats change course and grant them tax investment credits to expand. As Bob Dylan wrote, times they're a changing.