12/30/08
The big news flash today (This is being written before Governor Blagojevich’s press conference; who knows what Governor Goofy will really say?) is that Blago is going to appoint Roland Burris to Barack Obama’s senate seat. The national media, showing their characteristic ignorance of Chicago politics, is opining that this is a plausible, perhaps even a brilliant move. I say “Balderdash!” It isn’t going to happen. Well, it might happen in the sense that Blago may appoint Burris (perhaps following the admonition that it never hurts to make your enemy suspect you are a little nuts, perhaps because Blago genuinely is nuts), but Roland Burris will never sit in the U.S. Senate. Why?
First, one of the arguments being employed to advance the notion that this is a brilliant political move on Blago’s part is that, by appointing the next Senator from Illinois, the Governor removes one element of pressure on the politicians in this state to remove him from office: the urgency to get him out of office before he can name the President-elect’s replacement. But what the national media don’t seem to know is that the political power structure in this state wanted to get rid of Governor Goofy long before the latest titillating revelations came to the forefront. Impeachment has been seriously discussed for at least the last year. Now the Governor’s, er, impetuousness has presented a golden opportunity to finally get rid of this silly person. Mike Madigan and his cohorts are not going to let this opportunity slip through their fingers. They want to keep the pressure on; therefore, any move to mitigate this pressure will be fiercely resisted by the people who matter in Illinois.
Second, one of the reasons, besides the obvious, that the politicians in Illinois, and especially Mike Madigan and Pat Quinn, want to dump Blago is that the deal has already been cut: Pat Quinn becomes governor, as the state’s Constitution stipulates, and he appoints Lisa Madigan to the Senate seat (perhaps pending a special election, but whether Lisa is appointed until the next scheduled election (2012) or pending a special election makes little difference. In a special election, she will be running as an incumbent with the backing of the Democratic Machine against a flaccid (okay, dead) Republican Party in Illinois. The job will be hers as long as she wants it.). This puts a reformer, but a reformer who wasn’t born yesterday, in the governor’s office, satisfies Lisa Madigan’s ambition to move up (though perhaps not to the office she wanted, but she is young and there is plenty of time for her to become governor if she still harbors that ambition after enjoying the perks of a Senate seat for a few years.), and makes House Speaker Mike Madigan happy, thus insuring that things go much more smoothly for Governor Quinn (I like the sound of that, don’t you?) than they did for Governor Blagojevich, at least in the short run. The only thing standing in the way of this deal, which is as classically Chicago as our hot dogs and Old Style, is Blago’s sticking around like Banquo’s ghost.
How do I know the aforementioned deal has been cut? I don’t know any more than I read in the papers, but I know a little about the politics of my home town from having followed it the last, oh, 45 years or so.
Third, the U.S. Senate will not seat Roland Burris or anyone whom Blago appoints. Harry Reid has already said so and, while I am not naïve, don’t think he will go back on his pledge despite his desire to get a 59th Senate seat (58th if Al Franken loses in Minnesota). First, it would look really bad at the dawn of a new Congress. Second, the seat is going to be filled by a Democrat no matter what happens; it’s just a matter of time. Third, and more importantly, anyone who thinks that Illinois Democrats do not have enormous clout in Democratic politics at the national level is incredibly naïve. For the reasons outlined above, the local guys will make their desires sufficiently clear to the national guys, and the national guys will listen.
And another thing….
At the expense of being redundant, the national press really does know nothing about Chicago politics. Why else would we be subjected to the hagiography that constitutes reporting on Mr. Burris’s background? We are told that Mr. Burris is such a stellar citizen that the Senate will have no choice but to seat him. Roland Burris? A knight in shining armor? C’mon! Roland is a nice enough guy, and his wife is a genuinely wonderful person. But he is little more than a garden variety Chicago politician. He was comptroller of the state of Illinois for three terms and Attorney General for one term (both offices he obtained with generous and fulsome Machine backing) and has been desperate to be governor (or mayor or senator, but primarily governor) ever since. His political life for at least the last twenty years has best been characterized by his frustration at never having become governor (This I do know, or at least strongly suspect, from personal experience.). It is even speculated that he was run by the Machine (probably unwittingly, on Burris’s part) in the 2002 gubernatorial primary in order to siphon Black votes away from Paul Vallas (Mr. Vallas, after a very successful stint as Chicago schools boss was extremely popular in many quarters, but especially among Black voters who were the primary beneficiaries of his largely successful efforts to turn around the Chicago public school system.) and insure the nomination of Rod Blagojevich, who enjoyed Machine support in his first run for governor largely due the patronage of his father-in-law, 33rd alderman and ward committeeman Dick Mell, and Blago’s willingness to carry Machine water in Washington as the Congressman from the Fifth District.
There’s nothing wrong with being a Chicago politician, and Roland Burris has been a mildly successful one, though it would be hard to convince Roland of the latter. But before the national media makes Burris a crusader on a white horse for all that is good and pure, perhaps they’d better do their homework regarding the inner workings of politics in the nation’s greatest city. Oh, I forgot…that would involve living here, a horrifying prospect for the New York and Washington based national media.
Tuesday, December 30, 2008
Thursday, December 18, 2008
“SIR, YOU DESERVE THIS CAR…”
12/18/08
The vestigial appendage known as the Republican Party in Illinois is currently running an ad urging its listeners to challenge the constitution of our state and urge their lawmakers to call a special election to fill Barack Obama’s U.S. Senate seat, the seat that our esteemed governor unsuccessfully attempted to peddle to a rather considerable group of interested parties.
The ad that the GOP is currently running tells us that the people of Illinois “deserve” better than they have been getting from their politicians (the currently second most prominent of whom is none other than that grand Pooh-Bah of the Illinois Republican Party, George Ryan, but somehow that is not at all implied in the ad), that they “deserve” a special election to fill Mr. Obama’s vacant seat. That seat has been pretty vacant for the last, oh, eighteen months or so, by the way, and that hasn’t seemed to bother anyone, but I digress, and this time not even parenthetically.
One can’t blame the GOP for this nakedly self-serving and partisan ad; it wants a shot at another Senate seat and, in an attempt to get it, is exploiting the perhaps two most salient characteristics of the modern American, especially the modern American of my generation: the seemingly uncontrollable habit of taking everything that occurs as yet another excuse for self-congratulation and the endless effort to achieve some sort of victimhood status. As I have said for years, “E Pluribus Unum” ought to be replaced in by “It’s Not My Fault” as the motto for modern America.
One can argue the merits of a special election to fill empty Senate seats, in Illinois or elsewhere. One could also argue for the sanctity of a constitution, but that is an argument that has fallen on increasingly deaf ears for at least the last fifty years in America. But regardless of the merits of a special Senatorial election, one really has to ask one’s self about the basis of this GOP approach. Do we in Illinois really deserve better? After all, we elected this clown of a governor. And he isn’t the first clown, or felon, that we have elected. Indeed, for generations, we have overlooked blatant corruption and voted for the most nefarious of scoundrels. Many of us have even reveled in our state’s, and especially its biggest city’s, hair shirt reputation as a city that boasts “the best politicians money can buy,” where “an honest politician is one who once bought stays bought,” and where voters are urged to “vote early and vote often.”
So where do we, even those of us who never voted for Blagojevich, get the idea that somehow we deserve better than what we are getting? As an electorate, we are getting exactly what we voted for, and, as paraphrasing one of my heroes, H.L. Mencken, we are getting it good.
The vestigial appendage known as the Republican Party in Illinois is currently running an ad urging its listeners to challenge the constitution of our state and urge their lawmakers to call a special election to fill Barack Obama’s U.S. Senate seat, the seat that our esteemed governor unsuccessfully attempted to peddle to a rather considerable group of interested parties.
The ad that the GOP is currently running tells us that the people of Illinois “deserve” better than they have been getting from their politicians (the currently second most prominent of whom is none other than that grand Pooh-Bah of the Illinois Republican Party, George Ryan, but somehow that is not at all implied in the ad), that they “deserve” a special election to fill Mr. Obama’s vacant seat. That seat has been pretty vacant for the last, oh, eighteen months or so, by the way, and that hasn’t seemed to bother anyone, but I digress, and this time not even parenthetically.
One can’t blame the GOP for this nakedly self-serving and partisan ad; it wants a shot at another Senate seat and, in an attempt to get it, is exploiting the perhaps two most salient characteristics of the modern American, especially the modern American of my generation: the seemingly uncontrollable habit of taking everything that occurs as yet another excuse for self-congratulation and the endless effort to achieve some sort of victimhood status. As I have said for years, “E Pluribus Unum” ought to be replaced in by “It’s Not My Fault” as the motto for modern America.
One can argue the merits of a special election to fill empty Senate seats, in Illinois or elsewhere. One could also argue for the sanctity of a constitution, but that is an argument that has fallen on increasingly deaf ears for at least the last fifty years in America. But regardless of the merits of a special Senatorial election, one really has to ask one’s self about the basis of this GOP approach. Do we in Illinois really deserve better? After all, we elected this clown of a governor. And he isn’t the first clown, or felon, that we have elected. Indeed, for generations, we have overlooked blatant corruption and voted for the most nefarious of scoundrels. Many of us have even reveled in our state’s, and especially its biggest city’s, hair shirt reputation as a city that boasts “the best politicians money can buy,” where “an honest politician is one who once bought stays bought,” and where voters are urged to “vote early and vote often.”
So where do we, even those of us who never voted for Blagojevich, get the idea that somehow we deserve better than what we are getting? As an electorate, we are getting exactly what we voted for, and, as paraphrasing one of my heroes, H.L. Mencken, we are getting it good.
“YOU ONLY FALL FOR LIES AND STORIES WHEN YOU REALLY WANT TO”
12/18/08
One of the hot topics on CNBC today was the Bernie Madoff Ponzi scheme that entrapped perhaps thousands of, by SEC definition, “sophisticated” investors and cost billions of dollars. (See my 12/12/08 post, BUT HE BELONGED TO BOCA RIO AND FRESH MEADOWS!) One of the experts consulted on this development was a reporter from the Financial Times whose name I didn’t catch. She was outlining the breadth and depth of this financial fiasco, mentioning the loss of faith in the markets it would engender, the many charities that would be hurt, or worse, and the fact that some of the (once) wealthy victims might be forced to (Gasp!) sell their homes due to the losses that they had incurred from trusting Bernie Madoff.
Unless one has an inexhaustible well of sympathy, it is hard to expend much of it on the people who lost money investing with Bernie Madoff. Yes, some might lose their Palm Beach homes or their Manhattan townhouses, but these were, for the most part, accomplished, smart people who should have known better. A lot of people who were far less worldly, sophisticated, and wealthy than Madoff’s investors (people who, by the way, would not get a second look from Mr. Madoff because their “investable funds” were so paltry) have lost and will lose their homes, and everything else (materially), due to the financial crisis we are currently experiencing, and almost none of these people is anywhere near entirely blameless, as readers of the IP know. Madoff’s groupies were, after all, “sophisticated” investors (by SEC definition and certainly in their own minds until, of course, the bottom fell out and they started grasping for victimhood status) who would not sully their hands with such plebeian investments as dumb old index funds or CDs. Why waste their time, and mix with the common folk, when they could travel in the rarefied company of Bernie Madoff?
Okay, so not all of Bernie’s investors were heartless snobs who felt that normal investing was beneath them when they could be part of the Madoff crowd. Many, perhaps most, doubtless were good people. But all either had something on the ball (like Mr. Carl Shapiro, a 95 year old apparel entrepreneur who amassed a self-made fortune of approximately $500mm and who had been investing with Madoff for decades) or had stumbled on a fortune in the ways that are becoming more fashionable and common among Americans who like to argue that, yes, indeed, capitalism really works: they were born on third base or knew somebody who knew somebody who put them on third base and thought they hit the triple. In the case of Mr. Madoff’s investors who were really accomplished and/or smart, they should have done their homework and had the courage to ask questions, pull their money, or at least diversify. In the case of those Madoff investors who either inherited or lucked into their money…oh well.
What about the charities that have been hurt by Big Hearted Bernie? Am I so heartless that I care little about them? Of course not. The beneficiaries of these charities are the true innocent victims here. But among the true miscreants, along with Mr. Madoff, are the people who run these charities. Charities hire “experts,” who are paid very big salaries, to screen and analyze investments. And even the people in charge of these charities, the people who hire these financial “experts,” generally pay themselves handsomely to steward the funds with which they are entrusted. Nobody earns his or her salary, or the trust of the donors or beneficiaries of these charities, by hiring experts on the basis of “…his parents belong to our club” who in turn choose investments on the basis “…my brother-in-law played golf with him the other day, and he says he’ll let us invest with him if we don’t ask any questions.”
Investing is not a case of putting your money in the hands of someone who knows someone you know or who travels in the right circles. I am not naïve; I realize that much, if not most, business in this country is done on the basis of personal relationships. But an introduction should be only the beginning of the process, not the end of the process. We might (though we shouldn’t) limit our consideration to those who have been introduced to us, but, even after the introduction, there is still consideration, in the form of research, to be done. We should rely on our brains, or at least our common sense, when making investment decisions. And we shouldn’t rely on sympathy, or a government handout (You know such a bailout, or at least a full court press for it, is coming in this case.), when we don’t.
One of the hot topics on CNBC today was the Bernie Madoff Ponzi scheme that entrapped perhaps thousands of, by SEC definition, “sophisticated” investors and cost billions of dollars. (See my 12/12/08 post, BUT HE BELONGED TO BOCA RIO AND FRESH MEADOWS!) One of the experts consulted on this development was a reporter from the Financial Times whose name I didn’t catch. She was outlining the breadth and depth of this financial fiasco, mentioning the loss of faith in the markets it would engender, the many charities that would be hurt, or worse, and the fact that some of the (once) wealthy victims might be forced to (Gasp!) sell their homes due to the losses that they had incurred from trusting Bernie Madoff.
Unless one has an inexhaustible well of sympathy, it is hard to expend much of it on the people who lost money investing with Bernie Madoff. Yes, some might lose their Palm Beach homes or their Manhattan townhouses, but these were, for the most part, accomplished, smart people who should have known better. A lot of people who were far less worldly, sophisticated, and wealthy than Madoff’s investors (people who, by the way, would not get a second look from Mr. Madoff because their “investable funds” were so paltry) have lost and will lose their homes, and everything else (materially), due to the financial crisis we are currently experiencing, and almost none of these people is anywhere near entirely blameless, as readers of the IP know. Madoff’s groupies were, after all, “sophisticated” investors (by SEC definition and certainly in their own minds until, of course, the bottom fell out and they started grasping for victimhood status) who would not sully their hands with such plebeian investments as dumb old index funds or CDs. Why waste their time, and mix with the common folk, when they could travel in the rarefied company of Bernie Madoff?
Okay, so not all of Bernie’s investors were heartless snobs who felt that normal investing was beneath them when they could be part of the Madoff crowd. Many, perhaps most, doubtless were good people. But all either had something on the ball (like Mr. Carl Shapiro, a 95 year old apparel entrepreneur who amassed a self-made fortune of approximately $500mm and who had been investing with Madoff for decades) or had stumbled on a fortune in the ways that are becoming more fashionable and common among Americans who like to argue that, yes, indeed, capitalism really works: they were born on third base or knew somebody who knew somebody who put them on third base and thought they hit the triple. In the case of Mr. Madoff’s investors who were really accomplished and/or smart, they should have done their homework and had the courage to ask questions, pull their money, or at least diversify. In the case of those Madoff investors who either inherited or lucked into their money…oh well.
What about the charities that have been hurt by Big Hearted Bernie? Am I so heartless that I care little about them? Of course not. The beneficiaries of these charities are the true innocent victims here. But among the true miscreants, along with Mr. Madoff, are the people who run these charities. Charities hire “experts,” who are paid very big salaries, to screen and analyze investments. And even the people in charge of these charities, the people who hire these financial “experts,” generally pay themselves handsomely to steward the funds with which they are entrusted. Nobody earns his or her salary, or the trust of the donors or beneficiaries of these charities, by hiring experts on the basis of “…his parents belong to our club” who in turn choose investments on the basis “…my brother-in-law played golf with him the other day, and he says he’ll let us invest with him if we don’t ask any questions.”
Investing is not a case of putting your money in the hands of someone who knows someone you know or who travels in the right circles. I am not naïve; I realize that much, if not most, business in this country is done on the basis of personal relationships. But an introduction should be only the beginning of the process, not the end of the process. We might (though we shouldn’t) limit our consideration to those who have been introduced to us, but, even after the introduction, there is still consideration, in the form of research, to be done. We should rely on our brains, or at least our common sense, when making investment decisions. And we shouldn’t rely on sympathy, or a government handout (You know such a bailout, or at least a full court press for it, is coming in this case.), when we don’t.
“(FINANCIAL) JUNCTION, WHAT’S YOUR FUNCTION?”
12/18/08
All through the financial crisis we are experiencing, we have been hearing from the “experts,” and especially from the rugged, free market type “experts” looking for a government handout, that the credit markets have “ceased to function.”
Here’s a thought…
What if the credit markets are finally functioning as they should? What if their period of dysfunction, if you will, was instead that long period, from which we are finally sobering up, during which anyone could get credit? Isn’t at least one of the functions of the credit market to channel credit from lenders to creditworthy borrowers? During the long period during which the “experts” said the credit markets were working as they should, seemingly anyone, even the least creditworthy among us, could get loans. Almost by definition, then, during those halcyon days for which the “experts” yearn and to which our policymakers in Washington strive to return us, the credit markets were indeed not functioning.
The “experts” are whining that “no one can get credit” now. Perhaps they have something of a point; maybe the markets are going a bit too far to the conservative side. But would the financial equivalent of a few cups of strong black coffee be such a bad thing after a decade long binge on the financial equivalent of cheap hooch? I know that my bank is looking for borrowers; it ran a CD special through the end of November and wound up with more lendable money than it needed. My bank’s problem, it seems, is that it is an antiquated institution that is not at the forefront of modern finance and thus clings to the quaint old notion that money ought to be lent to people who can pay it back. If my bank listened to the “experts,” there is no doubt that it could find plenty of deadbeats to take its money off it hands; it could then join the Wall Street tough guy free marketeer types and go to the federal government with the financial equivalent of a tin cup because, after all, the markets aren’t functioning. But my little bank remains obstinate in its atavistic refusal to lend money to people who can’t pay it back. That is one of the reasons I keep our money in that institution.
My bank’s willingness, but inability, to lend provides only anecdotal evidence that perhaps the problem is not dysfunctional credit markets but, rather, very well functioning credit markets. These properly working markets only seem strange because an entire generation of financial “experts” has witnessed only non-discriminating markets with nary a whit of ability to distinguish between good credits and bad credits. And perhaps all the “experts’” whining about credit markets not functioning has its genesis in the lack of genuine creditworthiness of these “experts” and the institutions that grossly overpay them.
All through the financial crisis we are experiencing, we have been hearing from the “experts,” and especially from the rugged, free market type “experts” looking for a government handout, that the credit markets have “ceased to function.”
Here’s a thought…
What if the credit markets are finally functioning as they should? What if their period of dysfunction, if you will, was instead that long period, from which we are finally sobering up, during which anyone could get credit? Isn’t at least one of the functions of the credit market to channel credit from lenders to creditworthy borrowers? During the long period during which the “experts” said the credit markets were working as they should, seemingly anyone, even the least creditworthy among us, could get loans. Almost by definition, then, during those halcyon days for which the “experts” yearn and to which our policymakers in Washington strive to return us, the credit markets were indeed not functioning.
The “experts” are whining that “no one can get credit” now. Perhaps they have something of a point; maybe the markets are going a bit too far to the conservative side. But would the financial equivalent of a few cups of strong black coffee be such a bad thing after a decade long binge on the financial equivalent of cheap hooch? I know that my bank is looking for borrowers; it ran a CD special through the end of November and wound up with more lendable money than it needed. My bank’s problem, it seems, is that it is an antiquated institution that is not at the forefront of modern finance and thus clings to the quaint old notion that money ought to be lent to people who can pay it back. If my bank listened to the “experts,” there is no doubt that it could find plenty of deadbeats to take its money off it hands; it could then join the Wall Street tough guy free marketeer types and go to the federal government with the financial equivalent of a tin cup because, after all, the markets aren’t functioning. But my little bank remains obstinate in its atavistic refusal to lend money to people who can’t pay it back. That is one of the reasons I keep our money in that institution.
My bank’s willingness, but inability, to lend provides only anecdotal evidence that perhaps the problem is not dysfunctional credit markets but, rather, very well functioning credit markets. These properly working markets only seem strange because an entire generation of financial “experts” has witnessed only non-discriminating markets with nary a whit of ability to distinguish between good credits and bad credits. And perhaps all the “experts’” whining about credit markets not functioning has its genesis in the lack of genuine creditworthiness of these “experts” and the institutions that grossly overpay them.
Saturday, December 13, 2008
“I TRUST THESE MEN WITH MY LIFE, SENATOR. TO ASK THEM TO LEAVE NOW WOULD BE AN INSULT.”
12/13/08
One of my old buddies and a loyal reader of the Insightful Pontificator has been corresponding with me regarding the Blagojevich scandal. (While he went to school in the Chicago area and worked here several years, my friend no longer lives here but remains interested in our ever fascinating politics.) In one of the e-mails he sent, he expressed concern at my contention that IF anyone in the Obama camp will be tainted by this (and I said that, in my opinion, it is highly unlikely that any of Obama’s people were involved, but IF someone is involved…), it would probably be Rahm Emanuel. My friend believes, as do I, that there is a lot on the President’s plate and getting side-tracked by the Blagojevich scandal would be bad for the country, and so my friend is hoping that Emanuel, and the whole Obama team, will emerge unscathed by the scandal. I agree, but it looks, as I said in the first paragraph below, as if this is getting closer to Emanuel.
But the more interesting aspect of the below redacted version of my e-mail is the second paragraph. I thought it was worth sharing, though it might come as no revelation whatsoever to those who follow the politics of my home town closely:
This does seem to be getting closer to Emanuel. He has had at least one conversation with Blago's people, specifically John Harris, the governor’s chief of staff who was indicted along with the governor and resigned yesterday. The question is whether Emanuel and Harris discussed anything illegal. I would hope that Emanuel is smart enough not to anything like that, but note my comments of last night. I hope this isn't the case, because I agree that there are a lot of really important matters to address at the moment, and I also think Emanuel is perfect for the job Obama has given him.
Also...speaking of John Harris, keep an eye on him (not for the scandal as it relates to Emanuel but in its broader scope). He worked for Daley for years, most saliently in the Aviation Department, supposedly a nest of corruption. It has been reported (but remember that all reporting in this town is suspect) that he was angry when Ron Huberman got the chief of staff's job (for Daley) over him and went to work for Blago in a foul disposition toward Daley. The important people around here are too smart to share anything with Governor Fauntleroy, but they probably felt they could trust Harris. Also, by the nature of his job, Harris was in a position to know more than Blagojevich about the goings-on at City Hall. So when the feds squeeze Harris, and you know they are probably squeezing really hard as I write this, who knows what he could spill on lots of important people around here?
One of my old buddies and a loyal reader of the Insightful Pontificator has been corresponding with me regarding the Blagojevich scandal. (While he went to school in the Chicago area and worked here several years, my friend no longer lives here but remains interested in our ever fascinating politics.) In one of the e-mails he sent, he expressed concern at my contention that IF anyone in the Obama camp will be tainted by this (and I said that, in my opinion, it is highly unlikely that any of Obama’s people were involved, but IF someone is involved…), it would probably be Rahm Emanuel. My friend believes, as do I, that there is a lot on the President’s plate and getting side-tracked by the Blagojevich scandal would be bad for the country, and so my friend is hoping that Emanuel, and the whole Obama team, will emerge unscathed by the scandal. I agree, but it looks, as I said in the first paragraph below, as if this is getting closer to Emanuel.
But the more interesting aspect of the below redacted version of my e-mail is the second paragraph. I thought it was worth sharing, though it might come as no revelation whatsoever to those who follow the politics of my home town closely:
This does seem to be getting closer to Emanuel. He has had at least one conversation with Blago's people, specifically John Harris, the governor’s chief of staff who was indicted along with the governor and resigned yesterday. The question is whether Emanuel and Harris discussed anything illegal. I would hope that Emanuel is smart enough not to anything like that, but note my comments of last night. I hope this isn't the case, because I agree that there are a lot of really important matters to address at the moment, and I also think Emanuel is perfect for the job Obama has given him.
Also...speaking of John Harris, keep an eye on him (not for the scandal as it relates to Emanuel but in its broader scope). He worked for Daley for years, most saliently in the Aviation Department, supposedly a nest of corruption. It has been reported (but remember that all reporting in this town is suspect) that he was angry when Ron Huberman got the chief of staff's job (for Daley) over him and went to work for Blago in a foul disposition toward Daley. The important people around here are too smart to share anything with Governor Fauntleroy, but they probably felt they could trust Harris. Also, by the nature of his job, Harris was in a position to know more than Blagojevich about the goings-on at City Hall. So when the feds squeeze Harris, and you know they are probably squeezing really hard as I write this, who knows what he could spill on lots of important people around here?
Friday, December 12, 2008
“I WANT YOU TO GO TO TATTAGLIA AND TELL HIM YOU’RE NOT SO HAPPY WITH OUR FAMILY…”
12/12/08
In yesterday’s comment on the travails of our esteemed governor and the naiveté of the national media concerning the politics practiced in these parts, I mentioned in passing that John Fund’s suggestion that President-elect Obama speak out against the corruption his adopted town “might not be a bad suggestion” and then I went on to make my major point. But now that I think of it, Mr. Obama’s speaking out against Chicago corruption would be a bad idea, certainly meaningless and potentially far more parlous.
If Mr. Obama were to get up on his high horse and denounce Chicago political corruption, the people who matter back in the great metropolis on the southern shores of Lake Michigan would, for public consumption, nod in agreement and piously proclaim the dawn of new, hopeful, kumbayaesque day of righteousness and rectitude in the Second City. In private, they’d be muttering, to themselves and among those whom they can trust, “Go (Blagojevich’s favorite expletive (“BFE” may now become an all purpose abbreviation in future issues of the Pontificator)) yourself, Junior. In eight years you’ll be making speeches, writing books, and pretending to save the world. We, or our kids, will still be conducting business back here at home.”
In other words, if Mr. Obama paraphrases Kay Corleone and says, in anger and exasperation, feigned or otherwise, “This ‘Chicago thing’ that has been going on for at least a century MUST ALL END,” the boys back home will smile, comment on what a nice, well meaning kid they raised, and go back to counting the cash.
So if Obama does denounce the Machine with which he cooperated (though not nearly as closely as the Right fervently hopes), such a denunciation will have zero impact at home and will hurt Obama by showing how impotent he really is, beyond sending money home, in matters of local politics in the greatest city on earth. Perhaps the latter is what the “conservative” punditocracy is hoping for when they urge such a denunciation; perhaps they are not as ingenuous about real politics as I suspect. But probably not.
In yesterday’s comment on the travails of our esteemed governor and the naiveté of the national media concerning the politics practiced in these parts, I mentioned in passing that John Fund’s suggestion that President-elect Obama speak out against the corruption his adopted town “might not be a bad suggestion” and then I went on to make my major point. But now that I think of it, Mr. Obama’s speaking out against Chicago corruption would be a bad idea, certainly meaningless and potentially far more parlous.
If Mr. Obama were to get up on his high horse and denounce Chicago political corruption, the people who matter back in the great metropolis on the southern shores of Lake Michigan would, for public consumption, nod in agreement and piously proclaim the dawn of new, hopeful, kumbayaesque day of righteousness and rectitude in the Second City. In private, they’d be muttering, to themselves and among those whom they can trust, “Go (Blagojevich’s favorite expletive (“BFE” may now become an all purpose abbreviation in future issues of the Pontificator)) yourself, Junior. In eight years you’ll be making speeches, writing books, and pretending to save the world. We, or our kids, will still be conducting business back here at home.”
In other words, if Mr. Obama paraphrases Kay Corleone and says, in anger and exasperation, feigned or otherwise, “This ‘Chicago thing’ that has been going on for at least a century MUST ALL END,” the boys back home will smile, comment on what a nice, well meaning kid they raised, and go back to counting the cash.
So if Obama does denounce the Machine with which he cooperated (though not nearly as closely as the Right fervently hopes), such a denunciation will have zero impact at home and will hurt Obama by showing how impotent he really is, beyond sending money home, in matters of local politics in the greatest city on earth. Perhaps the latter is what the “conservative” punditocracy is hoping for when they urge such a denunciation; perhaps they are not as ingenuous about real politics as I suspect. But probably not.
BUT HE BELONGED TO BOCA RIO AND FRESH MEADOWS!
12/12/08
Just a brief note on the $50 billion Bernard Madoff scandal, in which Mr. Madoff is accused of an ongoing swindle that will cost lots of people, including pension funds, funds of funds, wealthy socialites, and wealthy socialite wannabes, enormous sums of money:
Anyone who makes his or her investment decisions based on the skiing ability, the country club memberships, or the pedigree of the investment manager deserves what he gets…but only if it’s bad. If such an “investor” stumbles onto a good hedge fund or other investment vehicle because, say, “the manager rowed crew at Yale, and his father belongs to our club,” s/he ought to just be grateful, but, in most cases, will instead be braggadocious about his “investment acumen.”
Many “sophisticated investors,” even, or perhaps especially, according to the SEC’s definition, know lots of people…and very little else. They fall for slick presentations and repeatedly (not only in their investments but in their choices of cars, houses, vacation spots, etc.) mistake style for substance. They can’t even take the time, or perhaps lack the cranial capacity or the intestinal fortitude, to examine their “investments” in light of the old adage “If it seems too good to be true, it probably is.” (If you think about it, this adage should be "If it seems too good to be true, it probably isn't." Although this misuse is sui generis with the careless "I could care less," I will make this nod to convention...this time.) Apparently for years people were too timid, or too dull of mind, to even ask Mr. Madoff for the most routine information. I suppose he was so smart and knew so many wealthy people that it was gauche to bother him with such mundane requests.
I’ll bet his PowerPoint presentations, if he had any, were terrific: plenty of bright colors, cool icons, and sounds of clicking cameras. None of that boring numbers stuff. And he knew so many of the right people!
I hope these patheticoes who invested with Mr. Madoff don’t come crying to the government for some sort of bailout, but so many of the “right” people will be around the White House, and will then be replaced by other “right” people, that I wouldn’t be surprised if such requests were to find a sympathetic ear in the Paulson/Geithner Treasury Department.
Just a brief note on the $50 billion Bernard Madoff scandal, in which Mr. Madoff is accused of an ongoing swindle that will cost lots of people, including pension funds, funds of funds, wealthy socialites, and wealthy socialite wannabes, enormous sums of money:
Anyone who makes his or her investment decisions based on the skiing ability, the country club memberships, or the pedigree of the investment manager deserves what he gets…but only if it’s bad. If such an “investor” stumbles onto a good hedge fund or other investment vehicle because, say, “the manager rowed crew at Yale, and his father belongs to our club,” s/he ought to just be grateful, but, in most cases, will instead be braggadocious about his “investment acumen.”
Many “sophisticated investors,” even, or perhaps especially, according to the SEC’s definition, know lots of people…and very little else. They fall for slick presentations and repeatedly (not only in their investments but in their choices of cars, houses, vacation spots, etc.) mistake style for substance. They can’t even take the time, or perhaps lack the cranial capacity or the intestinal fortitude, to examine their “investments” in light of the old adage “If it seems too good to be true, it probably is.” (If you think about it, this adage should be "If it seems too good to be true, it probably isn't." Although this misuse is sui generis with the careless "I could care less," I will make this nod to convention...this time.) Apparently for years people were too timid, or too dull of mind, to even ask Mr. Madoff for the most routine information. I suppose he was so smart and knew so many wealthy people that it was gauche to bother him with such mundane requests.
I’ll bet his PowerPoint presentations, if he had any, were terrific: plenty of bright colors, cool icons, and sounds of clicking cameras. None of that boring numbers stuff. And he knew so many of the right people!
I hope these patheticoes who invested with Mr. Madoff don’t come crying to the government for some sort of bailout, but so many of the “right” people will be around the White House, and will then be replaced by other “right” people, that I wouldn’t be surprised if such requests were to find a sympathetic ear in the Paulson/Geithner Treasury Department.
Thursday, December 11, 2008
“THIS…IS…MY KIND OF TOWN”
12/11/08
Just when I’ve written a piece about national reporters’ displaying their ignorance of Chicago politics in the wake of an national attention garnering story emanating from my hometown, largely because of their eagerness to look at our politics through an ideological prism, John Fund of the Wall Street Journal provides abundant evidence supporting my argument.
In a 12/11/08 Opinion piece in the Journal, Mr. Fund, always eager to go after Mr. Obama and any other liberal Democrat, argues that President-elect Obama ought to speak out against corruption in his home town and lambastes him for being largely silent about its sordid politics. That might not be a bad suggestion, but it is the background that Mr. Fund uses that shows his typical national reporter innocence regarding the politics of the great metropolis on the southern shores of Lake Michigan.
Mr. Fund states that “House Speaker Michael Madigan drafted a memo on why Democrats should impeach Mr. Blagojevich” in the Spring of 2006. But Senate President Emil Jones, an Obama and Blagojevich ally (mentor, in a sense, especially to Mr. Obama) opposed the move, saying that it was wrong for Mr. Madigan to “promote the impeachment of a Democratic governor.” Mr. Obama, shamefully, in Mr. Fund’s estimation, kept silent on the matter rather than stand with Mr. Madigan.
So there you have Mr. Fund’s view of Chicago politics: crusading reformer Michael Madigan seeks to excise corruption from the governor’s office (and presumably Illinois politics) by impeaching Mr. Blagojevich, but the corrupt Emil Jones thwarts his every move while Barack Obama acquiesces to Mr. Jones’ evil designs by his stunning silence.
Hmm…Mike Madigan (who lives in St. Bede’s Parish on my beloved South Side, walking distance from Vito and Nick’s, perhaps the foremost purveyor of the thin crust pizza South Siders prefer to the deep dish stuff (which is by no means bad, just different) that national reporters insist on calling “Chicago style pizza”) is some sort of reformer? Mike Madigan is perhaps the smartest politician in Chicago and one of the most powerful. He runs the most efficient and effective ward organization (13th) in the city and commands the State House of Representatives with an iron fist. He has many admirable qualities, but he is, first and foremost, a Chicago Machine politician in every sense of the word. He has never been in the federal trouble that has plagued so many of his colleagues because he is clean and very smart, the former in a relative sense. Emil Jones has the same exact attributes without the superlatives and a few of the specifics. The two disagree on few things, and one of them is, or was, Mr. Blagojevich. But Mr. Madigan’s longstanding problem with Mr. Blagojevich arises not because of some kind of disgust on Mr. Madigan’s part with corruption per se, but with Mr. Blagojevich’s irresponsible style, lack of anything resembling restraint or subtlety, audacious greed, and unwillingness to play ball with the powers-that-be in the Machine. (That Mr. Madigan’s daughter, Attorney General Lisa Madigan, has long been considered a rival of Mr. Blagojevich has something to do with it, also, but not as much as most national reporters suppose.) Mr. Jones was willing to overlook these attributes of Mr. Blagojevich primarily because Mr. Blagojevich was willing to play ball with Mr. Jones, primarily in a bid to drive a wedge between white and black elements of the Machine in order to weaken Mr. Madigan and other elements of the old guard.
Again, trying to view Chicago politics in anything resembling an ideological light, which we are seeing in abundance of late, primarily from the “conservative” punditocracy, is a huge, hubristic mistake. In my home town, politics is a business, pure and simple. Words like “conservative” and “liberal,” even “Democrat” and “Republican” mean nothing.
And another thing for the national media (though not necessarily Mr. Fund): Mr. Jones, formerly my state senator, pronounces his first name “EE ml” not “u MEEL.” No self-respecting Chicago politician would trot around with a name that makes him sound like a French artist.
Just when I’ve written a piece about national reporters’ displaying their ignorance of Chicago politics in the wake of an national attention garnering story emanating from my hometown, largely because of their eagerness to look at our politics through an ideological prism, John Fund of the Wall Street Journal provides abundant evidence supporting my argument.
In a 12/11/08 Opinion piece in the Journal, Mr. Fund, always eager to go after Mr. Obama and any other liberal Democrat, argues that President-elect Obama ought to speak out against corruption in his home town and lambastes him for being largely silent about its sordid politics. That might not be a bad suggestion, but it is the background that Mr. Fund uses that shows his typical national reporter innocence regarding the politics of the great metropolis on the southern shores of Lake Michigan.
Mr. Fund states that “House Speaker Michael Madigan drafted a memo on why Democrats should impeach Mr. Blagojevich” in the Spring of 2006. But Senate President Emil Jones, an Obama and Blagojevich ally (mentor, in a sense, especially to Mr. Obama) opposed the move, saying that it was wrong for Mr. Madigan to “promote the impeachment of a Democratic governor.” Mr. Obama, shamefully, in Mr. Fund’s estimation, kept silent on the matter rather than stand with Mr. Madigan.
So there you have Mr. Fund’s view of Chicago politics: crusading reformer Michael Madigan seeks to excise corruption from the governor’s office (and presumably Illinois politics) by impeaching Mr. Blagojevich, but the corrupt Emil Jones thwarts his every move while Barack Obama acquiesces to Mr. Jones’ evil designs by his stunning silence.
Hmm…Mike Madigan (who lives in St. Bede’s Parish on my beloved South Side, walking distance from Vito and Nick’s, perhaps the foremost purveyor of the thin crust pizza South Siders prefer to the deep dish stuff (which is by no means bad, just different) that national reporters insist on calling “Chicago style pizza”) is some sort of reformer? Mike Madigan is perhaps the smartest politician in Chicago and one of the most powerful. He runs the most efficient and effective ward organization (13th) in the city and commands the State House of Representatives with an iron fist. He has many admirable qualities, but he is, first and foremost, a Chicago Machine politician in every sense of the word. He has never been in the federal trouble that has plagued so many of his colleagues because he is clean and very smart, the former in a relative sense. Emil Jones has the same exact attributes without the superlatives and a few of the specifics. The two disagree on few things, and one of them is, or was, Mr. Blagojevich. But Mr. Madigan’s longstanding problem with Mr. Blagojevich arises not because of some kind of disgust on Mr. Madigan’s part with corruption per se, but with Mr. Blagojevich’s irresponsible style, lack of anything resembling restraint or subtlety, audacious greed, and unwillingness to play ball with the powers-that-be in the Machine. (That Mr. Madigan’s daughter, Attorney General Lisa Madigan, has long been considered a rival of Mr. Blagojevich has something to do with it, also, but not as much as most national reporters suppose.) Mr. Jones was willing to overlook these attributes of Mr. Blagojevich primarily because Mr. Blagojevich was willing to play ball with Mr. Jones, primarily in a bid to drive a wedge between white and black elements of the Machine in order to weaken Mr. Madigan and other elements of the old guard.
Again, trying to view Chicago politics in anything resembling an ideological light, which we are seeing in abundance of late, primarily from the “conservative” punditocracy, is a huge, hubristic mistake. In my home town, politics is a business, pure and simple. Words like “conservative” and “liberal,” even “Democrat” and “Republican” mean nothing.
And another thing for the national media (though not necessarily Mr. Fund): Mr. Jones, formerly my state senator, pronounces his first name “EE ml” not “u MEEL.” No self-respecting Chicago politician would trot around with a name that makes him sound like a French artist.
Wednesday, December 10, 2008
“WE DON’T WANT NOBODY NOBODY SENT”
12/10/08
Even though time is very short this week and I don’t think I have much original to say on the topic, I feel compelled to comment on the self-induced travails of our esteemed governor.
First, a personal note. A long time ago when I regularly appeared on a political talk show on WLS Radio in Chicago, Blagojevich and I were once placed on the same panel. He was a Congressman at the time and, if you believe those in public life who know, or at least work with (One of the consensus opinions is that no one really knows Rod Blagojevich any more…or at least no one will admit to knowing him.) him, he was a different person at the time. At any rate, Blagojevich and I were really going at each other with a considerable degree of fury; at the time I was pretty much a down the line conservative Republican and he was a Democrat who still had something of a liberal ideological underpinning. As soon as the program was over, he looked at me, shook his head in either frustration or exhaustion, and said “You’re a provocative guy, Quinn.” I said “Thanks, Rod. I appreciate that.” So we know that our governor has, or at least had, a firm grasp of the obvious.
Second, “most” is too strong a word, so I will say that “many” of our public servants in Chicago and its environs are on the take. But the real pros ply their trade with a degree of subtlety and skill that keeps them either actually or effectively out of the reach of the federal government. And they all know sign language when they suspect that they may be under federal scrutiny. Mr. Blagojevich, on the other hand, displayed all the subtlety of a frat boy at a keg party which, come to think of it, is a better analogy than I originally intended. It was not so much the magnitude, which itself was stunning to say the least, of his offenses, but the blatantness of those alleged crimes that shocked even the most hardened observers of our local political scene. Even those of us who have no training in psychology can only conclude that our boy governor not only defines the word “popinjay,” but also seems to be suffering from some kind of psychological handicap far beyond simple narcissism. To put it technically, he is out of his (to use one of what we now know are the favorite words in the Blagojevich household) (fornicating) mind. That seems to be the only logical explanation for such wanton and careless behavior.
Third, I am always amazed by the naiveté of those members of the national media who, whenever something like this forces them to focus on the politics of our town, imagine themselves experts on Chicago politics. No one who has not lived Chicago politics can possibly know Chicago politics. The errors of the national press corps consist not so much of dismissing our politics as unmitigatingly corrupt and then expressing either shock or humor, but, rather, in looking at our politics through an ideological prism. At times like these, conservative Republicans love to emphasize that most (but by no means all; witness George Ryan, et. al.) of the perpetrators are Democrats. The word “liberal” is, if not specifically stated, implied. When the perp is a Republican, like George Ryan, liberal quarters of the media will clearly label him as a Republican with the similarly stated or implied adjective “conservative.” When some politician in this town shows himself or herself to be an effective, even visionary leader, as Mayor Daley often does, as did his father before him, conservative members of the punditocracy love to opine that he or she is a “different kind of Democrat,” or “actually a Republican, if truth be told.”
All such characterizations are balderdash. Party labels are largely meaningless and ideology counts for less than nothing in Chicago. At its best to practitioners of our politics, ideology is a tool, best employed by feigning solidarity, for making allies in Washington who can send money Chicago’s way. At worst it is a hindrance to going about the real business of politics, which is, well, business—making money, accumulating power and prestige, and moving up the ladder by gaining the capacity to do favors that must be returned. To paraphrase one of our greatest presidents, who was not from Chicago (Good thing; he probably would have been eaten alive by the Big Bill Thompsons and the Tony Cermaks who held court in Chicago in his era.), the politics of Chicago is business, or the business of Chicago is politics. To paraphrase another corrupt governor from a faraway land in a faraway time: Ideology? What is that?
Chicago politics is not about ideas or philosophy. It is about getting things done. And those “things” are not all evil. Those instant experts on our politics would do well to spend some time here before looking for pat answers, or gazing in feigned or real bemusement, at the corrupt, but in many ways effective and certainly entertaining, politics of our city.
Even though time is very short this week and I don’t think I have much original to say on the topic, I feel compelled to comment on the self-induced travails of our esteemed governor.
First, a personal note. A long time ago when I regularly appeared on a political talk show on WLS Radio in Chicago, Blagojevich and I were once placed on the same panel. He was a Congressman at the time and, if you believe those in public life who know, or at least work with (One of the consensus opinions is that no one really knows Rod Blagojevich any more…or at least no one will admit to knowing him.) him, he was a different person at the time. At any rate, Blagojevich and I were really going at each other with a considerable degree of fury; at the time I was pretty much a down the line conservative Republican and he was a Democrat who still had something of a liberal ideological underpinning. As soon as the program was over, he looked at me, shook his head in either frustration or exhaustion, and said “You’re a provocative guy, Quinn.” I said “Thanks, Rod. I appreciate that.” So we know that our governor has, or at least had, a firm grasp of the obvious.
Second, “most” is too strong a word, so I will say that “many” of our public servants in Chicago and its environs are on the take. But the real pros ply their trade with a degree of subtlety and skill that keeps them either actually or effectively out of the reach of the federal government. And they all know sign language when they suspect that they may be under federal scrutiny. Mr. Blagojevich, on the other hand, displayed all the subtlety of a frat boy at a keg party which, come to think of it, is a better analogy than I originally intended. It was not so much the magnitude, which itself was stunning to say the least, of his offenses, but the blatantness of those alleged crimes that shocked even the most hardened observers of our local political scene. Even those of us who have no training in psychology can only conclude that our boy governor not only defines the word “popinjay,” but also seems to be suffering from some kind of psychological handicap far beyond simple narcissism. To put it technically, he is out of his (to use one of what we now know are the favorite words in the Blagojevich household) (fornicating) mind. That seems to be the only logical explanation for such wanton and careless behavior.
Third, I am always amazed by the naiveté of those members of the national media who, whenever something like this forces them to focus on the politics of our town, imagine themselves experts on Chicago politics. No one who has not lived Chicago politics can possibly know Chicago politics. The errors of the national press corps consist not so much of dismissing our politics as unmitigatingly corrupt and then expressing either shock or humor, but, rather, in looking at our politics through an ideological prism. At times like these, conservative Republicans love to emphasize that most (but by no means all; witness George Ryan, et. al.) of the perpetrators are Democrats. The word “liberal” is, if not specifically stated, implied. When the perp is a Republican, like George Ryan, liberal quarters of the media will clearly label him as a Republican with the similarly stated or implied adjective “conservative.” When some politician in this town shows himself or herself to be an effective, even visionary leader, as Mayor Daley often does, as did his father before him, conservative members of the punditocracy love to opine that he or she is a “different kind of Democrat,” or “actually a Republican, if truth be told.”
All such characterizations are balderdash. Party labels are largely meaningless and ideology counts for less than nothing in Chicago. At its best to practitioners of our politics, ideology is a tool, best employed by feigning solidarity, for making allies in Washington who can send money Chicago’s way. At worst it is a hindrance to going about the real business of politics, which is, well, business—making money, accumulating power and prestige, and moving up the ladder by gaining the capacity to do favors that must be returned. To paraphrase one of our greatest presidents, who was not from Chicago (Good thing; he probably would have been eaten alive by the Big Bill Thompsons and the Tony Cermaks who held court in Chicago in his era.), the politics of Chicago is business, or the business of Chicago is politics. To paraphrase another corrupt governor from a faraway land in a faraway time: Ideology? What is that?
Chicago politics is not about ideas or philosophy. It is about getting things done. And those “things” are not all evil. Those instant experts on our politics would do well to spend some time here before looking for pat answers, or gazing in feigned or real bemusement, at the corrupt, but in many ways effective and certainly entertaining, politics of our city.
Sunday, December 7, 2008
“LET’S SPEND IT, LEND IT, SEND IT ROLLING ALONG…”
12/7/08
In today’s (i.e., Sunday, 12/7/08’s) Chicago Tribune, we find short a letter from the Mr. Jim Poole of Chicago. Mr. Poole opines:
“I am going to spend some cash. Even though gas prices are going down, I am going go find a car that gets 30-plus miles to the gallon and buy it. I am going to take the kids shopping for clothes, and my wife and I are headed out to dinner. Bailout or not, the only way the economy is going to get going again is with all of us spending money. What good are savings that pay you 2 percent interest? We need to refill the machine and spend some cash. If we don’t, I am afraid we will be seeing 20 percent unemployment in the coming months.”
One can have two not necessarily mutually exclusive reactions to Mr. Poole’s observations. The first is that Mr. Poole is, like just about every modern American, is hopelessly addicted to spending money and so simply can’t help himself. Like a drunk who has been white knuckling it for the last few months, he is looking for half-baked theories to justify indulging his habit. Most Americans, like Mr. Poole, are more than willing to do their patriotic duty if doing so involves spending money.
The second is that Mr. Poole is merely behaving rationally, responding to the incentives the government initially put in place in a desperate attempt to avoid a (Horrors!) recession and, having characteristically failed at that quixotic crusade, continues to concoct in an effort to avoid deepening the recession. As Mr. Poole points out, savers are being taken for chumps at today’s low interest rates and have been played for even bigger fools if they’ve put their money in the stock market over the last, oh, ten years or so. So why not spend? The government, by ever loosening money, has made those responsible savers pay for the excesses of the reflexive spenders who got us into this mess in the first place. This is not a political statement; rewarding the irresponsible and punishing the responsible has long been a bi-partisan enthusiasm in Washington, and Mr. Obama shows no inclination to alter the baleful artifice that passes for economic policy in Washington.
Whether Mr. Poole is just an ingenuous exemplar of the hopeless spending addiction that, unless checked, will surely lead to the end of our long run as a world economic power or a rational economic actor responding to the antipodean palliatives emanating from Washington makes no difference. While a bout of spending may help, as Mr. Poole and economic thinkers in both New York and Washington seem to believe, such succor will be horribly short-lived. Unless we break our spending addiction, it’s curtains for the U.S. economy. .
If economic policy makers continue to punish saving and reward saving, the nescient eupeptic effects our economic problems are having on the nation’s savings rate (See my 11/26/08 post.) will rapidly reverse and we will find ourselves plunging even more quickly than most had previously supposed toward permanent economic ruin.
In my 11/21/08 post, I told readers that I had altered my outlook for the markets, but not for the economy, from outright and deeply bearish to a stance that can best be characterized as somewhere between mildly bearish and mildly bullish, which, come to think of it, sounds a lot like neutral. But given that the S&P is up 9.5% since then (after having traded higher), the almost unmitigated bad economic news that has been released since then, and the government’s seeming determination to counter any favorable economic developments with more of the counter-productive bromides that are endemic to public policy, only now in even more brobdingnagian portions, it is becoming harder to take anything but an outright, unabashed bearish stance toward the economy and the markets.
In today’s (i.e., Sunday, 12/7/08’s) Chicago Tribune, we find short a letter from the Mr. Jim Poole of Chicago. Mr. Poole opines:
“I am going to spend some cash. Even though gas prices are going down, I am going go find a car that gets 30-plus miles to the gallon and buy it. I am going to take the kids shopping for clothes, and my wife and I are headed out to dinner. Bailout or not, the only way the economy is going to get going again is with all of us spending money. What good are savings that pay you 2 percent interest? We need to refill the machine and spend some cash. If we don’t, I am afraid we will be seeing 20 percent unemployment in the coming months.”
One can have two not necessarily mutually exclusive reactions to Mr. Poole’s observations. The first is that Mr. Poole is, like just about every modern American, is hopelessly addicted to spending money and so simply can’t help himself. Like a drunk who has been white knuckling it for the last few months, he is looking for half-baked theories to justify indulging his habit. Most Americans, like Mr. Poole, are more than willing to do their patriotic duty if doing so involves spending money.
The second is that Mr. Poole is merely behaving rationally, responding to the incentives the government initially put in place in a desperate attempt to avoid a (Horrors!) recession and, having characteristically failed at that quixotic crusade, continues to concoct in an effort to avoid deepening the recession. As Mr. Poole points out, savers are being taken for chumps at today’s low interest rates and have been played for even bigger fools if they’ve put their money in the stock market over the last, oh, ten years or so. So why not spend? The government, by ever loosening money, has made those responsible savers pay for the excesses of the reflexive spenders who got us into this mess in the first place. This is not a political statement; rewarding the irresponsible and punishing the responsible has long been a bi-partisan enthusiasm in Washington, and Mr. Obama shows no inclination to alter the baleful artifice that passes for economic policy in Washington.
Whether Mr. Poole is just an ingenuous exemplar of the hopeless spending addiction that, unless checked, will surely lead to the end of our long run as a world economic power or a rational economic actor responding to the antipodean palliatives emanating from Washington makes no difference. While a bout of spending may help, as Mr. Poole and economic thinkers in both New York and Washington seem to believe, such succor will be horribly short-lived. Unless we break our spending addiction, it’s curtains for the U.S. economy. .
If economic policy makers continue to punish saving and reward saving, the nescient eupeptic effects our economic problems are having on the nation’s savings rate (See my 11/26/08 post.) will rapidly reverse and we will find ourselves plunging even more quickly than most had previously supposed toward permanent economic ruin.
In my 11/21/08 post, I told readers that I had altered my outlook for the markets, but not for the economy, from outright and deeply bearish to a stance that can best be characterized as somewhere between mildly bearish and mildly bullish, which, come to think of it, sounds a lot like neutral. But given that the S&P is up 9.5% since then (after having traded higher), the almost unmitigated bad economic news that has been released since then, and the government’s seeming determination to counter any favorable economic developments with more of the counter-productive bromides that are endemic to public policy, only now in even more brobdingnagian portions, it is becoming harder to take anything but an outright, unabashed bearish stance toward the economy and the markets.
Friday, December 5, 2008
MOE, LARRY, AND SOCRATES?
12/5/08
As I have said on numerous occasions in the past, one cannot take the “Big 3” as some monolithic, homogeneous group of industrial monoliths. These are three very different companies. I pointed out some of those differences in my last post, and want to bring up a few more, especially as they relate the bailout.
First, Ford is in the best position of the Big 3. The conventional wisdom is that it is in the best shape because it has enough cash to last it well into 2009 and perhaps beyond, largely because it, wisely anticipating trouble, mortgaged everything in order to raise a cash horde to see it through what it knew would be hard times. I think that, while the conventional wisdom has it partially right, F is also in good shape because it has made more advances than its Detroit colleagues in platform sharing and leveraging its overseas resources to meet growing demand in the U.S. market for fuel efficient cars. As I am in most of my beliefs, I am probably in the minority in this contention, but, as is also not at all unusual, I am probably right.
But let us get back to the point about F mortgaging its assets to raise a cash horde. F did so at rates that, while looking absurdly low at this stage, were considered very rich (for it, the issuer) at the time and that required some sacrifice and a lot of intestinal fortitude. Neither GM nor Chrysler made such moves. Admittedly, Chrysler could not do because it was leveraged to the hilt in order to finance its “unleveraged” takeover by Cerberus, but that is another story. But if the Big 3 do indeed get bailed out, F will need only a line of credit because of its financial foresight. GM and Chrysler will need money yesterday because they were not so financially prescient. So wouldn’t a bailout be rewarding the relatively careless financial stewardship of GM and Chrysler while punishing, in a sense, F’s financial foresight if the bailout involves cheap financing? After all, had F not mortgaged itself at comparatively high rates, wouldn’t it be accessing the comparatively cheap financing that the bailout, if it takes shape, will provide to GM and Chrysler?
Second, if Chrysler does get in on the bailout cash (and it is hard to see how it won’t, though denial of Chrysler while saving the other two is one scenario being mooted), won’t the taxpayers just be dressing it up in order to allow Cerberus to cut its losses on the poorly conceived and incredibly shortsighted deal to buy Chrysler in the first place? Would the U.S. taxpayer just be helping Cerberus tee up Chrysler for a few more billion? One could think of much better uses for taxpayer money.
As I have said on numerous occasions in the past, one cannot take the “Big 3” as some monolithic, homogeneous group of industrial monoliths. These are three very different companies. I pointed out some of those differences in my last post, and want to bring up a few more, especially as they relate the bailout.
First, Ford is in the best position of the Big 3. The conventional wisdom is that it is in the best shape because it has enough cash to last it well into 2009 and perhaps beyond, largely because it, wisely anticipating trouble, mortgaged everything in order to raise a cash horde to see it through what it knew would be hard times. I think that, while the conventional wisdom has it partially right, F is also in good shape because it has made more advances than its Detroit colleagues in platform sharing and leveraging its overseas resources to meet growing demand in the U.S. market for fuel efficient cars. As I am in most of my beliefs, I am probably in the minority in this contention, but, as is also not at all unusual, I am probably right.
But let us get back to the point about F mortgaging its assets to raise a cash horde. F did so at rates that, while looking absurdly low at this stage, were considered very rich (for it, the issuer) at the time and that required some sacrifice and a lot of intestinal fortitude. Neither GM nor Chrysler made such moves. Admittedly, Chrysler could not do because it was leveraged to the hilt in order to finance its “unleveraged” takeover by Cerberus, but that is another story. But if the Big 3 do indeed get bailed out, F will need only a line of credit because of its financial foresight. GM and Chrysler will need money yesterday because they were not so financially prescient. So wouldn’t a bailout be rewarding the relatively careless financial stewardship of GM and Chrysler while punishing, in a sense, F’s financial foresight if the bailout involves cheap financing? After all, had F not mortgaged itself at comparatively high rates, wouldn’t it be accessing the comparatively cheap financing that the bailout, if it takes shape, will provide to GM and Chrysler?
Second, if Chrysler does get in on the bailout cash (and it is hard to see how it won’t, though denial of Chrysler while saving the other two is one scenario being mooted), won’t the taxpayers just be dressing it up in order to allow Cerberus to cut its losses on the poorly conceived and incredibly shortsighted deal to buy Chrysler in the first place? Would the U.S. taxpayer just be helping Cerberus tee up Chrysler for a few more billion? One could think of much better uses for taxpayer money.
“WATCH AND LEARN, BOYS, WATCH AND LEARN”
12/5/08
In its lead editorial today, the Wall Street Journal cited the importance of the choice of a new President of the New York Fed to replace Treasury Secretary nominee Tim Geithner. The Journal stated that the new Gotham Fed President must have “hard-money credentials,” must “(know) financial markets yet isn’t too close to Wall Street” and “should have the independent stature to rise above the inevitable turf battles that will break out among the giant commercial banks” that call New York home.
I couldn’t agree more with this list of qualifications for the very important New York Fed job. That is why I was surprised when the Journal didn’t mention the obvious nominee, Paul Volcker. Yes, I know Mr. Volcker has been selected by Mr. Obama to head a new appendage called the President’s Economic Recovery Advisory Board, but such councils and boards often end up becoming little more than vestigial organs that produce nothing more than paper, and one suspects that this Board may have been created as something of a gold watch for Mr. Volcker’s service to the Obama campaign. (See my 11/26/08 post.) Why not put a man of such stature and intellect into a real job whose importance is almost incalculable at this time of crisis, the New York Fed presidency, rather than what might turn out to be a useless sinecure? These times demand our best, and Mr. Volcker is certainly among our best.
In its lead editorial today, the Wall Street Journal cited the importance of the choice of a new President of the New York Fed to replace Treasury Secretary nominee Tim Geithner. The Journal stated that the new Gotham Fed President must have “hard-money credentials,” must “(know) financial markets yet isn’t too close to Wall Street” and “should have the independent stature to rise above the inevitable turf battles that will break out among the giant commercial banks” that call New York home.
I couldn’t agree more with this list of qualifications for the very important New York Fed job. That is why I was surprised when the Journal didn’t mention the obvious nominee, Paul Volcker. Yes, I know Mr. Volcker has been selected by Mr. Obama to head a new appendage called the President’s Economic Recovery Advisory Board, but such councils and boards often end up becoming little more than vestigial organs that produce nothing more than paper, and one suspects that this Board may have been created as something of a gold watch for Mr. Volcker’s service to the Obama campaign. (See my 11/26/08 post.) Why not put a man of such stature and intellect into a real job whose importance is almost incalculable at this time of crisis, the New York Fed presidency, rather than what might turn out to be a useless sinecure? These times demand our best, and Mr. Volcker is certainly among our best.
PAGING SENATOR GLASS AND REPRESENTATIVE STEAGALL
12/5/08
We learned in this morning’s Wall Street Journal (page C2, 12/5/08) that Citibank is putting the pressure on General Growth as that mall developer is seeking an extension on a $900mm secured loan for which Citi is a lead bank. It seems Citi is demanding concessions on a second, unsecured, $2.6 billion unsecured loan on which Citi is also a lead, but the details are unimportant for sake of this discussion.
We learned in the same article that Citi disclosed yesterday that it has bought 14.2 million General Growth common shares, or 5.3% of the company, in a separate transaction. Hmm…
I know that the purchase of shares is indirect, part of a swap arrangement with Pershing Square Capital Management, a hedge fund with which Citi has a lending arrangement. And I also know that Citi’s General Growth common purchase, with a total value of just over $20mm, is paltry compared to the size of its loans to general growth. That having been said, isn’t this type of arrangement what the Glass-Steagall Law, repealed in 1999, was designed to thwart, i.e., a commercial bank using its government insured deposits to protect the equity investments of its investment banking affiliate, or perhaps the equity investments of an important client? While Citi may not be doing that, the appearance here certainly has an odor rather than an aroma.
As an almost reflexive deregulator, I am not calling for the reinstatement of Glass-Steagall. Even if I were in favor of such a move, it is probably impossible at this point and, indeed, a large portion of the government’s bailout efforts of the financial industry involves having investment banks either merge with or come to look more and more like commercial banks, further blurring the distinction between the two. But, given the irresponsible behavior of some the behemoths that the repeal of Glass-Steagall made possible, maybe the new Administration and Congress might want to take a long look at Glass-Steagall and what it has wrought.
We learned in this morning’s Wall Street Journal (page C2, 12/5/08) that Citibank is putting the pressure on General Growth as that mall developer is seeking an extension on a $900mm secured loan for which Citi is a lead bank. It seems Citi is demanding concessions on a second, unsecured, $2.6 billion unsecured loan on which Citi is also a lead, but the details are unimportant for sake of this discussion.
We learned in the same article that Citi disclosed yesterday that it has bought 14.2 million General Growth common shares, or 5.3% of the company, in a separate transaction. Hmm…
I know that the purchase of shares is indirect, part of a swap arrangement with Pershing Square Capital Management, a hedge fund with which Citi has a lending arrangement. And I also know that Citi’s General Growth common purchase, with a total value of just over $20mm, is paltry compared to the size of its loans to general growth. That having been said, isn’t this type of arrangement what the Glass-Steagall Law, repealed in 1999, was designed to thwart, i.e., a commercial bank using its government insured deposits to protect the equity investments of its investment banking affiliate, or perhaps the equity investments of an important client? While Citi may not be doing that, the appearance here certainly has an odor rather than an aroma.
As an almost reflexive deregulator, I am not calling for the reinstatement of Glass-Steagall. Even if I were in favor of such a move, it is probably impossible at this point and, indeed, a large portion of the government’s bailout efforts of the financial industry involves having investment banks either merge with or come to look more and more like commercial banks, further blurring the distinction between the two. But, given the irresponsible behavior of some the behemoths that the repeal of Glass-Steagall made possible, maybe the new Administration and Congress might want to take a long look at Glass-Steagall and what it has wrought.
Thursday, December 4, 2008
THE LION LYING DOWN WITH THE LAMB
12/4/08
On today’s (i.e., Thursday, 12/4’s) Wall Street Journal Opinion page (A17), the Journal quotes Michael Moore complaining that his Chrysler (from his description, I am assuming it is a Chrysler 300, but could conceivable be a Crossfire) starts only sporadically.
Since when does the Journal cite Michael Moore as an authority on anything? I have to admit that I like Michael Moore. Sure, I disagree with him most of the time, though far less often of late. But his movies are entertaining and thought provoking and he gives the impression of being a sincere guy who genuinely cares about the average person. But the Wall Street Journal, the former voice of free men and free markets turned cheerleader for all things Republican, and especially for the current occupant of the White House, has never had a good thing to say about Michael Moore. I suppose that, as is typical lately with the Journal, all sense of shame and proportion goes out the window as long as we an all join hands and stick it to the Big 3 and the UAW. Why, if someone so liberal, even radical, as Michael Moore finds the Big 3 so incompetent and repugnant (He may not feel that way about the Big 3, by the way, but the Journal’s editing of his DailyBeast.com comments would lead one to believe that he does.), revulsion at the Big 3 and the people who work at them might just be the next great bipartisan cause. But, as usual, the Journal misses the point by trying to see everything through the lens of politics, which is, by the way, quite interesting for a publication that daily pledges its fidelity to small government and free enterprise.
It’s not surprising that people across the political spectrum love to pound on the Big 3. It doesn’t take a certain political philosophy to bash the Big 3; it takes only a glaring ignorance of the auto industry. While one could legitimately argue that the Big 3, taken as a whole, have not quite caught up to the Japanese manufacturers in terms of that nebulous quality called, well, quality, one would be a fool to say that the Big 3 produce junk and are far behind their Japanese competition. In fact, according to J.D. Powers IQS, the Big 3 are neck and neck with their Japanese competitors and, in most cases, far ahead of the European competition. According to the far more important longer term (3 year) quality surveys, the Big 3 are only slightly behind the Japanese nameplates and ahead of the European nameplates. The latter is not surprising given the vast improvements in quality that have taken in place among the Detroit 3 in the last few years.
It is also a mistake to consider the “Big 3” and the “Japanese nameplates” into meaningless agglutinations, as is so common that even I did it in the last paragraph. Some Big 3 makes, such as Buick, Cadillac, and Mercury, are even with or ahead of the best of the Japanese nameplates, such as Toyota, Lexus, and Infiniti, in reliability. Further, Caddy, Buick, Mercury and several other domestic marques are far ahead of Mercedes and VW in most measures of product reliability.
(Note that Chrysler nameplates are noticeably absent from the upper ranks of most quality and reliability measurements, so Mr. Moore might be onto something. But somehow one suspects that the inclusion of Mr. Moore’s quote was not inspired by a sudden desire of the Journal to single out Chrysler for criticism.)
Again, do the Big 3 deserve a bailout? On its face, no. But the “free market” argument that the Wall Street Journal is trying so hard to make goes out the window when the Journal has supported (I know…oh so reluctantly) the bailout of Wall Street. But why such Schadenfreude at the problems of the Big 3 that the opinion of a man the Journal would normally find despicable suddenly becomes “Notable and Quotable”?
On today’s (i.e., Thursday, 12/4’s) Wall Street Journal Opinion page (A17), the Journal quotes Michael Moore complaining that his Chrysler (from his description, I am assuming it is a Chrysler 300, but could conceivable be a Crossfire) starts only sporadically.
Since when does the Journal cite Michael Moore as an authority on anything? I have to admit that I like Michael Moore. Sure, I disagree with him most of the time, though far less often of late. But his movies are entertaining and thought provoking and he gives the impression of being a sincere guy who genuinely cares about the average person. But the Wall Street Journal, the former voice of free men and free markets turned cheerleader for all things Republican, and especially for the current occupant of the White House, has never had a good thing to say about Michael Moore. I suppose that, as is typical lately with the Journal, all sense of shame and proportion goes out the window as long as we an all join hands and stick it to the Big 3 and the UAW. Why, if someone so liberal, even radical, as Michael Moore finds the Big 3 so incompetent and repugnant (He may not feel that way about the Big 3, by the way, but the Journal’s editing of his DailyBeast.com comments would lead one to believe that he does.), revulsion at the Big 3 and the people who work at them might just be the next great bipartisan cause. But, as usual, the Journal misses the point by trying to see everything through the lens of politics, which is, by the way, quite interesting for a publication that daily pledges its fidelity to small government and free enterprise.
It’s not surprising that people across the political spectrum love to pound on the Big 3. It doesn’t take a certain political philosophy to bash the Big 3; it takes only a glaring ignorance of the auto industry. While one could legitimately argue that the Big 3, taken as a whole, have not quite caught up to the Japanese manufacturers in terms of that nebulous quality called, well, quality, one would be a fool to say that the Big 3 produce junk and are far behind their Japanese competition. In fact, according to J.D. Powers IQS, the Big 3 are neck and neck with their Japanese competitors and, in most cases, far ahead of the European competition. According to the far more important longer term (3 year) quality surveys, the Big 3 are only slightly behind the Japanese nameplates and ahead of the European nameplates. The latter is not surprising given the vast improvements in quality that have taken in place among the Detroit 3 in the last few years.
It is also a mistake to consider the “Big 3” and the “Japanese nameplates” into meaningless agglutinations, as is so common that even I did it in the last paragraph. Some Big 3 makes, such as Buick, Cadillac, and Mercury, are even with or ahead of the best of the Japanese nameplates, such as Toyota, Lexus, and Infiniti, in reliability. Further, Caddy, Buick, Mercury and several other domestic marques are far ahead of Mercedes and VW in most measures of product reliability.
(Note that Chrysler nameplates are noticeably absent from the upper ranks of most quality and reliability measurements, so Mr. Moore might be onto something. But somehow one suspects that the inclusion of Mr. Moore’s quote was not inspired by a sudden desire of the Journal to single out Chrysler for criticism.)
Again, do the Big 3 deserve a bailout? On its face, no. But the “free market” argument that the Wall Street Journal is trying so hard to make goes out the window when the Journal has supported (I know…oh so reluctantly) the bailout of Wall Street. But why such Schadenfreude at the problems of the Big 3 that the opinion of a man the Journal would normally find despicable suddenly becomes “Notable and Quotable”?
Wednesday, December 3, 2008
KEEP CHRIST OUT OF “CHRISTMAS”
12/3/08
Our society seems to have completely forgotten what this “holimonth” or “holiquarter” we are currently enduring was designed to celebrate. It was originally intended to celebrate the birth of a Great Man, a Man whom many of us believe was God Himself. Jesus took on the form of a man some 2,000 years ago (probably 2012 years ago, though scholarship differs on the almost completely unimportant exact year) in order to lead humankind to salvation by His voluntary death on the cross. Along the way to His death, he showed us how to live life to its fullest. Although you’d never know it by the way we celebrate His birth, he didn’t tell us that the key to a good life is acquiring all kinds of junk that we don’t need. He didn’t say that we ought to get anxious and short with one another in order to achieve some sort of self-designated “perfection” in the celebration of His birthday. He didn’t teach that excess is the way to happiness. He didn’t say that the real way to show love to each other was in the quantity, quality, or the price of the material things we gave each other. On the contrary, His is a way of peace, service, and relative indifference to the material aspects of our very short life here on earth. He tried to teach that a life well lived is a life of service, peace, contentment, and giving of one’s self and one’s time.
The way we celebrate Christmas is beyond sacrilege; it is a figurative slap in the face of the One whose birthday we supposedly celebrate. Everyone is appalled at the death of the Wal-Mart employee on Long Island on what is called “Black Friday,” a title that is telling enough of the monikers we have assigned to our various days of purported celebration of the birth of our Savior. But that death, as tragic as it is, is only a reflection of what Christmas has become: a money-grubbing, anxiety causing, stress inducing self-indulgent, my fellow man be damned debauch that smears the very name of the One whose birth we celebrate. Jesus has become at best an afterthought in the weeks (fast becoming months) long bacchanal we insist on calling Christmas.
Since we as a society have insisted on perverting the celebration of Christ’s birth to a point far beyond recognition and even caricature to the point of outright defiance of His message to and wishes for us, please don’t call this time of the year Christmas. Call it the Holidays. Call it the Winter Celebration. Call it whatever you want, as long as Christ’s name is kept out of it.
Consecrate the name of Christ for true Christmas, the living of His message of service, love, and peace, a Christmas that should not be restricted to the end of December, which, as most of you, was not the time of His birth but was chosen to counter the Roman feast of Saturnalia or winter solstice. Go to Christmas Mass or Christmas services. Sing and enjoy Christmas carols and hymns, prayers, and vespers. Take special care of those less (or even more) fortunate than yourself. Celebrate the birth of Christ and of His salvation. But go to Holiday sales and Holiday parties and sing and/or try to choke down vapid and tawdry Holiday songs like the especially odious “Have a Holly Jolly (Profanation),” “I Saw Mommy Kissing Santa Claus,” or “Jingle Bell Rock.” What on earth do these brazen and insipid “Holiday” celebrations have to do with the birth of Christ?
Keep Christ in Christmas, but keep Him far away from “The Holidays.”
Our society seems to have completely forgotten what this “holimonth” or “holiquarter” we are currently enduring was designed to celebrate. It was originally intended to celebrate the birth of a Great Man, a Man whom many of us believe was God Himself. Jesus took on the form of a man some 2,000 years ago (probably 2012 years ago, though scholarship differs on the almost completely unimportant exact year) in order to lead humankind to salvation by His voluntary death on the cross. Along the way to His death, he showed us how to live life to its fullest. Although you’d never know it by the way we celebrate His birth, he didn’t tell us that the key to a good life is acquiring all kinds of junk that we don’t need. He didn’t say that we ought to get anxious and short with one another in order to achieve some sort of self-designated “perfection” in the celebration of His birthday. He didn’t teach that excess is the way to happiness. He didn’t say that the real way to show love to each other was in the quantity, quality, or the price of the material things we gave each other. On the contrary, His is a way of peace, service, and relative indifference to the material aspects of our very short life here on earth. He tried to teach that a life well lived is a life of service, peace, contentment, and giving of one’s self and one’s time.
The way we celebrate Christmas is beyond sacrilege; it is a figurative slap in the face of the One whose birthday we supposedly celebrate. Everyone is appalled at the death of the Wal-Mart employee on Long Island on what is called “Black Friday,” a title that is telling enough of the monikers we have assigned to our various days of purported celebration of the birth of our Savior. But that death, as tragic as it is, is only a reflection of what Christmas has become: a money-grubbing, anxiety causing, stress inducing self-indulgent, my fellow man be damned debauch that smears the very name of the One whose birth we celebrate. Jesus has become at best an afterthought in the weeks (fast becoming months) long bacchanal we insist on calling Christmas.
Since we as a society have insisted on perverting the celebration of Christ’s birth to a point far beyond recognition and even caricature to the point of outright defiance of His message to and wishes for us, please don’t call this time of the year Christmas. Call it the Holidays. Call it the Winter Celebration. Call it whatever you want, as long as Christ’s name is kept out of it.
Consecrate the name of Christ for true Christmas, the living of His message of service, love, and peace, a Christmas that should not be restricted to the end of December, which, as most of you, was not the time of His birth but was chosen to counter the Roman feast of Saturnalia or winter solstice. Go to Christmas Mass or Christmas services. Sing and enjoy Christmas carols and hymns, prayers, and vespers. Take special care of those less (or even more) fortunate than yourself. Celebrate the birth of Christ and of His salvation. But go to Holiday sales and Holiday parties and sing and/or try to choke down vapid and tawdry Holiday songs like the especially odious “Have a Holly Jolly (Profanation),” “I Saw Mommy Kissing Santa Claus,” or “Jingle Bell Rock.” What on earth do these brazen and insipid “Holiday” celebrations have to do with the birth of Christ?
Keep Christ in Christmas, but keep Him far away from “The Holidays.”
Tuesday, December 2, 2008
“WELCOME TO THE WORLD OF GENTLEMEN, GENTLEMEN”
12/2/08
As I write this, the CEOs of the Big 3 automakers are reappearing before Congress asking for a taxpayer bailout. As those who follow the news will recall, these three first appeared a few weeks ago and were sent home with a homework assignment, i.e., concoct a plan for saving these American industrial bulwarks and leading them once again to prosperity. The plans from the various companies will probably include cuts in executive pay packages, elimination of brands, importing of fuel efficient vehicles, or vehicle designs, from foreign operations, improving the fuel efficiency and/or eco-friendliness of the fleet, further concessions from the UAW, etc. These plans should be interesting, as, of course, should be the outcome of the meeting. But that is not the point of this particular post.
While the Big 3 grovel and debase themselves before the self-styled doyens of all public endeavor who occupy Capitol Hill, Wall Street already has its oversized share of the public dole, all of which was garnered without so much as a hint of a “plan” to emerge from its self-inflicted near death experience. Wall Street has only had to complain of the financial equivalent of a bad case of the flu and our public servants, whose “campaign funds” have been generously larded with largesse from the free marketeers on Wall Street, have hopped to attention, shoveling your dollars into these poorly managed enigmae at a pace that reminds one of nothing so much as Flash Gordon and Dr. Zarkov shoveling coal into the furnaces that provided the energy to the beam that supported the city of the Hawkmen after our heroes were captured by the evil Prince Vultan.
So, courtesy of you, the taxpayer, the good times will continue to roll on Wall Street. Oh, they won’t roll for the shareholders of these Wall Street icons, or for the “ordinary” employees of these financial Hoover devices. However, for the actual “producers,” those financial savants who devised the schemes, and who sold and traded the progeny thereof, that brought these once venerable financial institutions, and the world financial system, to the foyer of Hades, will continue to receive pay packages which, though perhaps not at the completely inconceivable and unconscionable levels that once characterized the most overpaid industry in the long history of our planet, will still be at a level that the average person can only begin to imagine in the most ecstatic and fleeting of his dreams.
And so I have a modest proposal…
With the Big 3 looking for a bailout after Wall Street has already received what I suspect will only prove to be the first installment of its bailout, why not require those who have been saved on Wall Street to purchase their next round of toys from the Big 3?
For example, rather than let the CDS salesperson round out his West Coast fleet of Ferraris with another 430 Scuderia, require him to buy a new Corvette or Viper. Rather than let that denizen of Wall Street outfit her second Hamptons home with, say, a Lexus RX, require her to purchase, say, a Caddy SRX. Instead of letting the wunderkind CDO trader trade in his tired old 2008 S-Class on a 2009 S-Class, he ought to be made to purchase, say, a Caddy STS or Lincoln MKS. Make the new Wall Street CEO, fresh from his most recent gig in Washington, forgo the Bentley Arnage for the equally tasteful Chrysler 300C, or perhaps Cerberus can dust off those plans for a new Imperial to serve this newfound demand for mindless ostentation. And when the big time partner wants to give his daughter, say, a 335i for her 16th birthday, perhaps he should be required to purchase her a CTS. With all the money this new welfare class spends on motor vehicles, such a program should fix up the problems in Detroit in a proverbial jiffy.
Oh, yes, this will require sacrifice on the parts of those blameless Wall Street victims who clearly deserve a bailout after having had so many unfortunate, thoroughly unforeseen and, completely, of course, out of their control, events render them helpless victims of the worldwide financial crisis. But if those lazy, overpaid layabouts who work in the car factories that dot the Midwest are going to have to take massive pay cuts (Doubtless, given enough time and federal money, the mavens of the Street could probably prove that it is these blue collar no-accounts who got us into this trouble in the first place, but I digress. At least I do so parenthetically.), Wall Street must be made to make similarly painful sacrifices. It’s only fair.
As I write this, the CEOs of the Big 3 automakers are reappearing before Congress asking for a taxpayer bailout. As those who follow the news will recall, these three first appeared a few weeks ago and were sent home with a homework assignment, i.e., concoct a plan for saving these American industrial bulwarks and leading them once again to prosperity. The plans from the various companies will probably include cuts in executive pay packages, elimination of brands, importing of fuel efficient vehicles, or vehicle designs, from foreign operations, improving the fuel efficiency and/or eco-friendliness of the fleet, further concessions from the UAW, etc. These plans should be interesting, as, of course, should be the outcome of the meeting. But that is not the point of this particular post.
While the Big 3 grovel and debase themselves before the self-styled doyens of all public endeavor who occupy Capitol Hill, Wall Street already has its oversized share of the public dole, all of which was garnered without so much as a hint of a “plan” to emerge from its self-inflicted near death experience. Wall Street has only had to complain of the financial equivalent of a bad case of the flu and our public servants, whose “campaign funds” have been generously larded with largesse from the free marketeers on Wall Street, have hopped to attention, shoveling your dollars into these poorly managed enigmae at a pace that reminds one of nothing so much as Flash Gordon and Dr. Zarkov shoveling coal into the furnaces that provided the energy to the beam that supported the city of the Hawkmen after our heroes were captured by the evil Prince Vultan.
So, courtesy of you, the taxpayer, the good times will continue to roll on Wall Street. Oh, they won’t roll for the shareholders of these Wall Street icons, or for the “ordinary” employees of these financial Hoover devices. However, for the actual “producers,” those financial savants who devised the schemes, and who sold and traded the progeny thereof, that brought these once venerable financial institutions, and the world financial system, to the foyer of Hades, will continue to receive pay packages which, though perhaps not at the completely inconceivable and unconscionable levels that once characterized the most overpaid industry in the long history of our planet, will still be at a level that the average person can only begin to imagine in the most ecstatic and fleeting of his dreams.
And so I have a modest proposal…
With the Big 3 looking for a bailout after Wall Street has already received what I suspect will only prove to be the first installment of its bailout, why not require those who have been saved on Wall Street to purchase their next round of toys from the Big 3?
For example, rather than let the CDS salesperson round out his West Coast fleet of Ferraris with another 430 Scuderia, require him to buy a new Corvette or Viper. Rather than let that denizen of Wall Street outfit her second Hamptons home with, say, a Lexus RX, require her to purchase, say, a Caddy SRX. Instead of letting the wunderkind CDO trader trade in his tired old 2008 S-Class on a 2009 S-Class, he ought to be made to purchase, say, a Caddy STS or Lincoln MKS. Make the new Wall Street CEO, fresh from his most recent gig in Washington, forgo the Bentley Arnage for the equally tasteful Chrysler 300C, or perhaps Cerberus can dust off those plans for a new Imperial to serve this newfound demand for mindless ostentation. And when the big time partner wants to give his daughter, say, a 335i for her 16th birthday, perhaps he should be required to purchase her a CTS. With all the money this new welfare class spends on motor vehicles, such a program should fix up the problems in Detroit in a proverbial jiffy.
Oh, yes, this will require sacrifice on the parts of those blameless Wall Street victims who clearly deserve a bailout after having had so many unfortunate, thoroughly unforeseen and, completely, of course, out of their control, events render them helpless victims of the worldwide financial crisis. But if those lazy, overpaid layabouts who work in the car factories that dot the Midwest are going to have to take massive pay cuts (Doubtless, given enough time and federal money, the mavens of the Street could probably prove that it is these blue collar no-accounts who got us into this trouble in the first place, but I digress. At least I do so parenthetically.), Wall Street must be made to make similarly painful sacrifices. It’s only fair.
Wednesday, November 26, 2008
“WISHIN’ AND HOPIN’ AND PLANNIN’ AND PRAYIN’…”
11/26/08
In my 11/21/08 Commentary, in which I announced that my posture toward the stock market had moved from decidedly and unrelentingly bearish to a stance that could perhaps best, though clumsily, be characterized as somewhere between mildly bearish and mildly bullish, I mentioned that
“I wish I could say that there is plenty of anecdotal evidence (which readers know I like) that the economy is turning around, but there isn’t. I notice the restaurants I frequent (primarily low priced) are slightly busier than they used to be and there are fewer “For Sale” signs around the suburban paradise we inhabit and its environs. But that is pretty thin gruel. Again, however, markets turn before the economy”
Since then, I have been struggling (perhaps too strong a verb) to find some signs that the economy may be turning around, perhaps to fortify my confidence in my shift in attitude toward the market, and I may have found some.
This morning, the Commerce Department reported that personal spending fell by 1.0% in October, the sharpest drop in seven years. Most experts and conventional thinkers were sullen and down in the mouth about this latest development, offering it as more evidence that we are plunging precipitously into an economic Hades. I, on the other hand, think this is terrific. Why? In order to explain this onset of uncharacteristic and uncomfortable bout of optimism, I offer the following statistics: (The first three columns are changes from the previous month; the last is a simple ratio.)
Disposable Personal
Personal Personal Personal Savings/
Income Spending Income (DPI) DPI
October 0.3% -1.0% 0.4% 2.4%
September 0.1% -0.3% 0.1% 1.0%
(Okay, so Blogspot cannot handle columns very well. The gist of what was supposed to be the above is that personal income and disposable personal income are rising while personal spending is falling, resulting in rapidly increasing personal savings/disposable personal income ratio. This trend has picked up considerably from September to October. I apologize that that didn’t come through when my Word document was translated to Blogspot.)
This is obviously (at least to yours truly) good news. Why? If these numbers are any indication (always a big “if” with two months of data), people are learning not to spend every last dime on which they get their hands, and then some Our economic problems have at their source the chronic inability of Americans (or at least Americans of my and, perhaps, later generations) to save money. If we can get Americans to learn to save again, we perhaps can find our way out this economic problem. If we can’t, we have no hope whatsoever of maintaining (or perhaps regaining) our status as the world’s preeminent economic power.
Conventional thinkers scoff at the notion outlined in the last paragraph. They argue that we will never emerge from this recession if people don’t spend and borrow again. But, as I have said repeatedly in the past (and most recently, at great length, in my 11/11/08 piece, “Happy (?) Days Aren’t Here Again” and at lesser length in my 11/14/08 piece, “A Random Walk Toward Hooverville”), policies designed to get people to spend and borrow more are the financial equivalent of that temporarily soothing shot of JTS Brown in the morning. We’ll feel better for a few hours, but then the old brown bottle flu comes back with even greater fury.
Others might argue that people aren’t spending because their incomes have dropped. But, while allowing that figures don’t lie but liars figure, the above numbers tell a different story. Income is up, but spending is down. Even if you don’t believe that income is up, you have to concede that spending is down more than income. In any case, we are saving more of our income than we have in the past, which would be the case if we were saving ANY portion of our personal income.
Still others might argue that people are saving because they are afraid of the, and their, economic situation. To which I would reply that fear is, while a motivator of last resort, a great motivator nonetheless.
Please don’t misunderstand me; this one set of statistics is not evidence of a rapid, or even a slow, economic turnaround. Given the depths of our problems and the maladroit responses to it from Washington that look to be continued under the Obama administration (See the references in the previous post to the appointment of Tim Geithner as Treasury Secretary.), we could be in this economic sewage drain for a long time. But, as much as it feels awkward for me to do so, I am finding a few glimmers of hope in an otherwise gloomy situation.
In my 11/21/08 Commentary, in which I announced that my posture toward the stock market had moved from decidedly and unrelentingly bearish to a stance that could perhaps best, though clumsily, be characterized as somewhere between mildly bearish and mildly bullish, I mentioned that
“I wish I could say that there is plenty of anecdotal evidence (which readers know I like) that the economy is turning around, but there isn’t. I notice the restaurants I frequent (primarily low priced) are slightly busier than they used to be and there are fewer “For Sale” signs around the suburban paradise we inhabit and its environs. But that is pretty thin gruel. Again, however, markets turn before the economy”
Since then, I have been struggling (perhaps too strong a verb) to find some signs that the economy may be turning around, perhaps to fortify my confidence in my shift in attitude toward the market, and I may have found some.
This morning, the Commerce Department reported that personal spending fell by 1.0% in October, the sharpest drop in seven years. Most experts and conventional thinkers were sullen and down in the mouth about this latest development, offering it as more evidence that we are plunging precipitously into an economic Hades. I, on the other hand, think this is terrific. Why? In order to explain this onset of uncharacteristic and uncomfortable bout of optimism, I offer the following statistics: (The first three columns are changes from the previous month; the last is a simple ratio.)
Disposable Personal
Personal Personal Personal Savings/
Income Spending Income (DPI) DPI
October 0.3% -1.0% 0.4% 2.4%
September 0.1% -0.3% 0.1% 1.0%
(Okay, so Blogspot cannot handle columns very well. The gist of what was supposed to be the above is that personal income and disposable personal income are rising while personal spending is falling, resulting in rapidly increasing personal savings/disposable personal income ratio. This trend has picked up considerably from September to October. I apologize that that didn’t come through when my Word document was translated to Blogspot.)
This is obviously (at least to yours truly) good news. Why? If these numbers are any indication (always a big “if” with two months of data), people are learning not to spend every last dime on which they get their hands, and then some Our economic problems have at their source the chronic inability of Americans (or at least Americans of my and, perhaps, later generations) to save money. If we can get Americans to learn to save again, we perhaps can find our way out this economic problem. If we can’t, we have no hope whatsoever of maintaining (or perhaps regaining) our status as the world’s preeminent economic power.
Conventional thinkers scoff at the notion outlined in the last paragraph. They argue that we will never emerge from this recession if people don’t spend and borrow again. But, as I have said repeatedly in the past (and most recently, at great length, in my 11/11/08 piece, “Happy (?) Days Aren’t Here Again” and at lesser length in my 11/14/08 piece, “A Random Walk Toward Hooverville”), policies designed to get people to spend and borrow more are the financial equivalent of that temporarily soothing shot of JTS Brown in the morning. We’ll feel better for a few hours, but then the old brown bottle flu comes back with even greater fury.
Others might argue that people aren’t spending because their incomes have dropped. But, while allowing that figures don’t lie but liars figure, the above numbers tell a different story. Income is up, but spending is down. Even if you don’t believe that income is up, you have to concede that spending is down more than income. In any case, we are saving more of our income than we have in the past, which would be the case if we were saving ANY portion of our personal income.
Still others might argue that people are saving because they are afraid of the, and their, economic situation. To which I would reply that fear is, while a motivator of last resort, a great motivator nonetheless.
Please don’t misunderstand me; this one set of statistics is not evidence of a rapid, or even a slow, economic turnaround. Given the depths of our problems and the maladroit responses to it from Washington that look to be continued under the Obama administration (See the references in the previous post to the appointment of Tim Geithner as Treasury Secretary.), we could be in this economic sewage drain for a long time. But, as much as it feels awkward for me to do so, I am finding a few glimmers of hope in an otherwise gloomy situation.
A NEW SHERIFF IN TOWN?
11/26/08
As those who know me, and many of my readers, might suspect, I am delighted that Paul Volcker has been named Chairman of something called the President’s Economic Recovery Advisory Board. No, I am not happy about their being yet another Council or Board or other soon to be vestigial bureaucracy, but I am confident that the presence of Mr. Volcker will have a eupeptic effect on economic policies emerging from the Obama Administration.
As those who know me, and many of my readers, might also suspect, I am not at all happy that Tim Geithner has been named Treasury Secretary. While I didn’t think that Mr. Volcker would get that job (Mr. Volcker is 81 and I am realistic.), I was hoping for someone other than Mr. Geithner, perhaps Bob Rubin, not for any policy reasons but for the confidence Mr. Rubin could inspire. Mr. Geithner is a reflexive interventionist and one of the chief architects of what I think are the severely wrong-headed policy responses to our economic difficulties. His appointment is an indication that Mr. Obama may intend to lead us further down the rabbit hole of economic mismanagement, much as the dyspeptic retention of Robert Gates as Defense Secretary is an indication that Mr. Obama may intend to lead us further down the rabbit hole of muddle-headed overseas adventures, but that is another conversation entirely.
One could very plausibly argue that Mr. Volcker is also onboard with the sort of economic interventionism that I feel is digging us further into the economic latrine. I understand that. But Paul Volcker is Paul Volcker. He stands for more than frenetic economic intervention. It is not too far beyond the bounds of good sense to argue that Paul Volcker, by crushing the runaway Carter/Miller/Burns inflation of the late ‘70s and early ‘80s, saved Western civilization. Paul Volcker is the type of guy (like Warren Buffett) who, when he says or prescribes something that runs counter to what I think or believe, makes me reexamine my thought or belief. Tim Geithner is just a career bureaucrat who, while bright and energetic (characteristics that can be big negatives when applied in the wrong direction), has very limited experience in the private sector (none, really) and who hence seems to have a reflexive belief in the salubriousness of heavy-handed government.
I just hope that this President’s Economic Recovery Advisory Board is more than a symbolic way of saying “Thanks” to Mr. Volcker for lending intellectual heft and centrist cover to the Obama campaign.
As those who know me, and many of my readers, might suspect, I am delighted that Paul Volcker has been named Chairman of something called the President’s Economic Recovery Advisory Board. No, I am not happy about their being yet another Council or Board or other soon to be vestigial bureaucracy, but I am confident that the presence of Mr. Volcker will have a eupeptic effect on economic policies emerging from the Obama Administration.
As those who know me, and many of my readers, might also suspect, I am not at all happy that Tim Geithner has been named Treasury Secretary. While I didn’t think that Mr. Volcker would get that job (Mr. Volcker is 81 and I am realistic.), I was hoping for someone other than Mr. Geithner, perhaps Bob Rubin, not for any policy reasons but for the confidence Mr. Rubin could inspire. Mr. Geithner is a reflexive interventionist and one of the chief architects of what I think are the severely wrong-headed policy responses to our economic difficulties. His appointment is an indication that Mr. Obama may intend to lead us further down the rabbit hole of economic mismanagement, much as the dyspeptic retention of Robert Gates as Defense Secretary is an indication that Mr. Obama may intend to lead us further down the rabbit hole of muddle-headed overseas adventures, but that is another conversation entirely.
One could very plausibly argue that Mr. Volcker is also onboard with the sort of economic interventionism that I feel is digging us further into the economic latrine. I understand that. But Paul Volcker is Paul Volcker. He stands for more than frenetic economic intervention. It is not too far beyond the bounds of good sense to argue that Paul Volcker, by crushing the runaway Carter/Miller/Burns inflation of the late ‘70s and early ‘80s, saved Western civilization. Paul Volcker is the type of guy (like Warren Buffett) who, when he says or prescribes something that runs counter to what I think or believe, makes me reexamine my thought or belief. Tim Geithner is just a career bureaucrat who, while bright and energetic (characteristics that can be big negatives when applied in the wrong direction), has very limited experience in the private sector (none, really) and who hence seems to have a reflexive belief in the salubriousness of heavy-handed government.
I just hope that this President’s Economic Recovery Advisory Board is more than a symbolic way of saying “Thanks” to Mr. Volcker for lending intellectual heft and centrist cover to the Obama campaign.
Friday, November 21, 2008
TAURUS MINOR
11/21/08
I don’t like to use the Pontificator to report on my market posture, at least not directly; it was not designed as a purely financial site. I try to limit the Pontificator to musings on economic, financial, societal, and political developments. I’ve refrained from making this a typical financial site for a number of reasons, the foremost being that I am a much better writer and thinker than I am a trader; even though my (small; our larger investment accounts are doing well only on a relative basis because they have had small stock positions and large TIP positions; the last few months have not been kind to these accounts, given what has happened to TIPs, but, on a relative basis, they have done very well. Given my discipline, my posture in the larger investment accounts won’t change until their scheduled annual rebalancing dates.) trading account is up 201% over the last year, I’m not so sure that isn’t a case of a broken clock's finally being right.
That having been said, regular readers have a pretty good idea of what my investment and trading posture has been for the last few years: unapologetically and unmistakably bearish. I have been trading in and out of puts on the QQQQs and on various individual stocks and have been consistently long the ultrashorts on the QQQQs (QID) and on the Russell 2000 (TWM).
Over the last few days, however, I have been changing my outlook. Do I think the economy is improving markedly? No. But, like anyone who knows anything about investing, I realize the stock markets turn before, usually well before, the economy. And, as I said in my 11/11/08 post “Happy (?) Days Aren’t Here Again”:
“As far as the markets go, with the S&P down some 42% from its high, it is foolish, if not mathematically impossible, to be as bearish on the market as I was when the market was at its October, 2007 peak and as I have been all the way down. However, it is nearly as hard to be even the slightest bit bullish. While, as with the economy, we might see an ephemeral pop now and then, I see more trouble on the way and more, albeit of necessity fewer, opportunities for bears, even permabears, to make some money on the short side.”
Since then, the market has traded down to the point at which, at yesterday’s close, the S&P was down 52% from its 10/9/07 closing peak. At that point, common sense says that there is likely more room on the upside than the downside. Further, the almost uniform bearishness among the experts (for whom, the loyal readers know, I have such brimming admiration!) also has made me reevaluate my bearishness.
I wish I could say that there is plenty of anecdotal evidence (which readers know I like) that the economy is turning around, but there isn’t. I notice the restaurants I frequent (primarily low priced) are slightly busier than they used to be and there are fewer “For Sale” signs around the suburban paradise we inhabit and its environs. But that is pretty thin gruel. Again, however, markets turn before the economy.
So, I am out of all my QQQQ puts, but my being out is the result of my trading discipline which demands a sale at a certain level, not a firm determination that things are turning around. The last position put I had (the March 29s, QAVOC) touched my limit price, taking me out before promptly trading down in this afternoon’s rally. I have been peeling out of my QIDs and TWMs for the last month, and am down to less than half of my original position. I originally was replacing the QIDs with TIPs (at one point yesterday, the 10 year TIP was trading within two basis points of the conventional 10 year Treasury; you have to be convinced that either deflation will prevail for years or that the monetary authorities will act responsibly in order to buy the conventional 10 year under those circumstances. I scoff at either notion.), but today began to replace them with the Direxion Russell 1000 3x Bull ETF (BGU) and began replacing my TWMs with the Direxion Russell 2000 3x Bull ETF (TNA). I am doing this gradually, as I do everything in investing and trading, the latter on relative basis.
As I said at the outset, I’m not the greatest trader or investor in the world and there probably is a good chance that, now that I have begun my move from bearishness to bullishness the market will soon trade down to zero. SO THIS PIECE IS NOT MEANT IN THE LEAST TO BE CONSTRUED AS INVESTMENT OR TADING ADVICE. But I thought I would report on this alteration of my thinking for a few reasons. First, so I can brag about if things do work out and, second, because my being even the slightest bit bullish happens about as often as the Bears win the Super Bowl.
I don’t like to use the Pontificator to report on my market posture, at least not directly; it was not designed as a purely financial site. I try to limit the Pontificator to musings on economic, financial, societal, and political developments. I’ve refrained from making this a typical financial site for a number of reasons, the foremost being that I am a much better writer and thinker than I am a trader; even though my (small; our larger investment accounts are doing well only on a relative basis because they have had small stock positions and large TIP positions; the last few months have not been kind to these accounts, given what has happened to TIPs, but, on a relative basis, they have done very well. Given my discipline, my posture in the larger investment accounts won’t change until their scheduled annual rebalancing dates.) trading account is up 201% over the last year, I’m not so sure that isn’t a case of a broken clock's finally being right.
That having been said, regular readers have a pretty good idea of what my investment and trading posture has been for the last few years: unapologetically and unmistakably bearish. I have been trading in and out of puts on the QQQQs and on various individual stocks and have been consistently long the ultrashorts on the QQQQs (QID) and on the Russell 2000 (TWM).
Over the last few days, however, I have been changing my outlook. Do I think the economy is improving markedly? No. But, like anyone who knows anything about investing, I realize the stock markets turn before, usually well before, the economy. And, as I said in my 11/11/08 post “Happy (?) Days Aren’t Here Again”:
“As far as the markets go, with the S&P down some 42% from its high, it is foolish, if not mathematically impossible, to be as bearish on the market as I was when the market was at its October, 2007 peak and as I have been all the way down. However, it is nearly as hard to be even the slightest bit bullish. While, as with the economy, we might see an ephemeral pop now and then, I see more trouble on the way and more, albeit of necessity fewer, opportunities for bears, even permabears, to make some money on the short side.”
Since then, the market has traded down to the point at which, at yesterday’s close, the S&P was down 52% from its 10/9/07 closing peak. At that point, common sense says that there is likely more room on the upside than the downside. Further, the almost uniform bearishness among the experts (for whom, the loyal readers know, I have such brimming admiration!) also has made me reevaluate my bearishness.
I wish I could say that there is plenty of anecdotal evidence (which readers know I like) that the economy is turning around, but there isn’t. I notice the restaurants I frequent (primarily low priced) are slightly busier than they used to be and there are fewer “For Sale” signs around the suburban paradise we inhabit and its environs. But that is pretty thin gruel. Again, however, markets turn before the economy.
So, I am out of all my QQQQ puts, but my being out is the result of my trading discipline which demands a sale at a certain level, not a firm determination that things are turning around. The last position put I had (the March 29s, QAVOC) touched my limit price, taking me out before promptly trading down in this afternoon’s rally. I have been peeling out of my QIDs and TWMs for the last month, and am down to less than half of my original position. I originally was replacing the QIDs with TIPs (at one point yesterday, the 10 year TIP was trading within two basis points of the conventional 10 year Treasury; you have to be convinced that either deflation will prevail for years or that the monetary authorities will act responsibly in order to buy the conventional 10 year under those circumstances. I scoff at either notion.), but today began to replace them with the Direxion Russell 1000 3x Bull ETF (BGU) and began replacing my TWMs with the Direxion Russell 2000 3x Bull ETF (TNA). I am doing this gradually, as I do everything in investing and trading, the latter on relative basis.
As I said at the outset, I’m not the greatest trader or investor in the world and there probably is a good chance that, now that I have begun my move from bearishness to bullishness the market will soon trade down to zero. SO THIS PIECE IS NOT MEANT IN THE LEAST TO BE CONSTRUED AS INVESTMENT OR TADING ADVICE. But I thought I would report on this alteration of my thinking for a few reasons. First, so I can brag about if things do work out and, second, because my being even the slightest bit bullish happens about as often as the Bears win the Super Bowl.
Friday, November 14, 2008
A RANDOM WALK TOWARD HOOVERVILLE
11/14/08
Back in September, when Hank Paulson was pushing for what is now called the TARP (See the digression at the end of this piece.), he was telling us how absolutely essential it was to get bad assets off the books of the nation’s titanic financial institutions in order to “unclog the arteries” of the financial system. Almost as soon as the Congress had written him a $350 billion check (with another $350 billion “on reserve,” as we used to say in college in a completely different, but less toxic, context), he began to move away from that febrile argument and starting dishing out the money to comparatively healthy financial institutions in the form of very attractively priced (from the issuers’ standpoints) preferred stock. The he doled a chunk out to the ever vigilant AIG while its executives vacationed (oh, I’m sorry, “conferenced”) in sunny climes of which the check writers could only dream. Finally, on Wednesday of this week, Mr. Paulson finally gave up the ghost and simply admitted that the urgent national priority of not even two months ago is not so important any more. Those arteries which desperately needed the financial equivalent of the Roto-Rooter man can indeed remain clogged and the economy will do just fine as long as we invest more money in banks and Wall Street, encourage the type of lending that got us into this trouble in the first place, and lend succor to homeowners who bought more house than they could afford and now can no longer make, or have decided not to make, their house payments. Those of you who were responsible and kept up with your payments, even when it was painful and you could have used the money for something else, shut up and pay. But I digress.
The evolution of buying toxic assets from an urgent national priority that needed $700 billion RIGHT NOW only two months ago into something that is not as important as fortifying relatively healthy financial institutions and assuring the free flow of the type of credit that got us into this soup in the first place reiterates a point I have been making for months. People, and especially “experts,” are fond of telling us that another Depression is impossible because the government now has a dizzying array of tools at it disposal that are designed to thwart an economic catastrophe. However, I have been arguing, and continue to argue, that when the government uses the wrong tools, or clumsily misuses the tools it is attempting to use, it will only serve to exacerbate the problem it is trying to solve and thus, given the government’s size and resultant immense and immediate impact on the economy, might hasten, rather than thwart, the downward journey into economic dystopia.
Now, on a (thankfully) lighter note, sort of a silly, but nevertheless insightful, point of digression…
The program that I referred to as RTC II back when it was being proposed in September originally came to be called the TARF (Troubled Asset Relief Fund). I thought that was an especially apt name, given the obvious rhyme for TARF. However, perhaps catching this oversight, the “designers” of this program quickly and surreptitiously renamed it TARP (Troubled Asset Relief Program), and TARF quickly evaporated into the mists of history. While I thought that TARF was especially appropriate as a moniker for this abomination, TARP also serves very well. After all, a tarp is a huge, ungainly opaque cloth used to cover up things, right?
+
Back in September, when Hank Paulson was pushing for what is now called the TARP (See the digression at the end of this piece.), he was telling us how absolutely essential it was to get bad assets off the books of the nation’s titanic financial institutions in order to “unclog the arteries” of the financial system. Almost as soon as the Congress had written him a $350 billion check (with another $350 billion “on reserve,” as we used to say in college in a completely different, but less toxic, context), he began to move away from that febrile argument and starting dishing out the money to comparatively healthy financial institutions in the form of very attractively priced (from the issuers’ standpoints) preferred stock. The he doled a chunk out to the ever vigilant AIG while its executives vacationed (oh, I’m sorry, “conferenced”) in sunny climes of which the check writers could only dream. Finally, on Wednesday of this week, Mr. Paulson finally gave up the ghost and simply admitted that the urgent national priority of not even two months ago is not so important any more. Those arteries which desperately needed the financial equivalent of the Roto-Rooter man can indeed remain clogged and the economy will do just fine as long as we invest more money in banks and Wall Street, encourage the type of lending that got us into this trouble in the first place, and lend succor to homeowners who bought more house than they could afford and now can no longer make, or have decided not to make, their house payments. Those of you who were responsible and kept up with your payments, even when it was painful and you could have used the money for something else, shut up and pay. But I digress.
The evolution of buying toxic assets from an urgent national priority that needed $700 billion RIGHT NOW only two months ago into something that is not as important as fortifying relatively healthy financial institutions and assuring the free flow of the type of credit that got us into this soup in the first place reiterates a point I have been making for months. People, and especially “experts,” are fond of telling us that another Depression is impossible because the government now has a dizzying array of tools at it disposal that are designed to thwart an economic catastrophe. However, I have been arguing, and continue to argue, that when the government uses the wrong tools, or clumsily misuses the tools it is attempting to use, it will only serve to exacerbate the problem it is trying to solve and thus, given the government’s size and resultant immense and immediate impact on the economy, might hasten, rather than thwart, the downward journey into economic dystopia.
Now, on a (thankfully) lighter note, sort of a silly, but nevertheless insightful, point of digression…
The program that I referred to as RTC II back when it was being proposed in September originally came to be called the TARF (Troubled Asset Relief Fund). I thought that was an especially apt name, given the obvious rhyme for TARF. However, perhaps catching this oversight, the “designers” of this program quickly and surreptitiously renamed it TARP (Troubled Asset Relief Program), and TARF quickly evaporated into the mists of history. While I thought that TARF was especially appropriate as a moniker for this abomination, TARP also serves very well. After all, a tarp is a huge, ungainly opaque cloth used to cover up things, right?
+
“LAST NIGHT I WENT TO SLEEP IN DETROIT CITY…”
11/14/08
The Big 3 automakers and their supporters in Congress are looking for their piece of the bailout mania that is currently consuming our nation’s capital. The Republicans, professing profound piety toward the gods of the free market, are refusing any sort of bailout for the Big 3.
I am the last person to argue that government ought to be in the business of bailing out private businesses. However, once the precedent has been set by spending billions (trillions, really) to bail out Wall Street, how can the government legitimately deny help to the Big 3? (I know that the Republicans, and especially the (Thank God!) outgoing Administration, are falling all over themselves saying that the Wall Street bailouts were against their principles but were absolutely necessary, that they had “no choice.” However, one should recognize such pious proclamations for what they are: futile attempts by meretricious politicians to cloak their solipsistic tendencies under a thin veneer of easily and conveniently disposed principle.)
Opponents of a Big 3 bailout argue that a collapse of Wall Street is fraught with “systemic risks” that hold ghastly consequences for our economy. Do they really believe that there are no “systemic risks” from a failure of the Big 3? Have these anodyne acolytes of what they have twisted free market principles into ever ventured out of New York or Washington? Have they ever been to the nation’s heartland? Parts suppliers, car dealers, car salesmen, steelmakers, advertisers, pro sports teams, even cattle ranchers and cotton farmers depend on the Big 3 for their prosperity, indeed, in some of the aforementioned cases, even their survival. Some opponents of the Big 3 bailout who had little problem with the Wall Street bailout argue that the Big 3 are mismanaged and that their workers make too much money. They make this argument with a straight face. Do they really believe that much of Wall Street and the banking industry were not mismanaged or that their workers do not make too much money?
As one of our more notorious presidents used to say, make no mistake. I am not for bailouts, but there is something perverse about bailing out Wall Street while giving the cold shoulder to the industrial base of our nation. The Republican refusal to bail out the Big 3 while harboring an enthusiasm for the bail out for Wall Street that was not well concealed by their ephemeral protests of having been dragged, kicking and screaming, into those bailouts is beginning to look like a manifestation of some sort of contempt for manufacturing. I don’t know whence this arises. Has their enthusiasm for a free markets and global competition somehow metamorphosized into a disdain for our side in that global competition or a failure to recognize that there indeed is an “our side” in the global marketplace? Or are some quarters of the Democratic Party right when they charge that the Republicans simply have no regard for people who work with their hands? The former is scary enough, the latter is downright chilling.
The Big 3 automakers and their supporters in Congress are looking for their piece of the bailout mania that is currently consuming our nation’s capital. The Republicans, professing profound piety toward the gods of the free market, are refusing any sort of bailout for the Big 3.
I am the last person to argue that government ought to be in the business of bailing out private businesses. However, once the precedent has been set by spending billions (trillions, really) to bail out Wall Street, how can the government legitimately deny help to the Big 3? (I know that the Republicans, and especially the (Thank God!) outgoing Administration, are falling all over themselves saying that the Wall Street bailouts were against their principles but were absolutely necessary, that they had “no choice.” However, one should recognize such pious proclamations for what they are: futile attempts by meretricious politicians to cloak their solipsistic tendencies under a thin veneer of easily and conveniently disposed principle.)
Opponents of a Big 3 bailout argue that a collapse of Wall Street is fraught with “systemic risks” that hold ghastly consequences for our economy. Do they really believe that there are no “systemic risks” from a failure of the Big 3? Have these anodyne acolytes of what they have twisted free market principles into ever ventured out of New York or Washington? Have they ever been to the nation’s heartland? Parts suppliers, car dealers, car salesmen, steelmakers, advertisers, pro sports teams, even cattle ranchers and cotton farmers depend on the Big 3 for their prosperity, indeed, in some of the aforementioned cases, even their survival. Some opponents of the Big 3 bailout who had little problem with the Wall Street bailout argue that the Big 3 are mismanaged and that their workers make too much money. They make this argument with a straight face. Do they really believe that much of Wall Street and the banking industry were not mismanaged or that their workers do not make too much money?
As one of our more notorious presidents used to say, make no mistake. I am not for bailouts, but there is something perverse about bailing out Wall Street while giving the cold shoulder to the industrial base of our nation. The Republican refusal to bail out the Big 3 while harboring an enthusiasm for the bail out for Wall Street that was not well concealed by their ephemeral protests of having been dragged, kicking and screaming, into those bailouts is beginning to look like a manifestation of some sort of contempt for manufacturing. I don’t know whence this arises. Has their enthusiasm for a free markets and global competition somehow metamorphosized into a disdain for our side in that global competition or a failure to recognize that there indeed is an “our side” in the global marketplace? Or are some quarters of the Democratic Party right when they charge that the Republicans simply have no regard for people who work with their hands? The former is scary enough, the latter is downright chilling.
Tuesday, November 11, 2008
HAPPY (?) DAYS AREN’T HERE AGAIN
11/11/08
One of the lead stories on the CBS radio business news this morning was that Citicorp will be modifying terms on 130,000 mortgage loans (with a potential value of $20 billion) for customers who are current on their payments but are facing financial difficulties. This is probably a salubrious development, but its overall beneficence is a matter, as these things should be, between Citicorp and its customers. However, it was the news report’s referring to the housing crisis, which this move by Citi is designed to partially address, as being the “root cause” of our current financial difficulties that prompted me to repeat what I have said ad nauseam in the past: despite what the “experts” are assuring us, the housing crisis is not the “root cause” of our current financial difficulties.
Though it lies pretty far down the trunk, housing is not the root cause of our financial difficulties. The root of our financial difficulties is too much spending and too much borrowing by individuals, governments, and, to a lesser extent, by businesses. We have been living way beyond our means, and have thus been enjoying a Potemkin prosperity, for at least the last ten years. The housing bubble, the bursting of which has been one of the most salient manifestations of our current financial difficulties, was both a symptom of excessive borrowing and spending and a means of facilitating further excessive borrowing and spending.
Given that our problem lies not in housing, but in gormless management of our personal, business, and societal finances, we can pursue, or, more properly, could have pursued, one of two courses. First, we could go through a long period of deleveraging, in which we pay down our debts, get our balance sheets (and income statements) in order, and learn to live within our means and save money. This sounds a lot easier than it would have been; given the hole we have dug and the sense of entitlement we have developed as a people, such a deleveraging would have been long, difficult, and excruciating. Doing so, if we ever summon the requisite courage, or are simply forced by an utter lack of alternatives, will be necessary if we are to survive as a people, and we will emerge a much stronger economy and a much more formidable people should we ever pursue this course of actions.
Second, we could pursue a hodgepodge of macroeconomic policies designed to avoid the aforementioned painful deleveraging. Given the utter inability of the American people to withstand pain and the short and completely self-interested time tables of our political leaders, this is the course we have chosen. The problem is that such a course of action is the financial equivalent of hair of the dog. These policies, be they financial bailouts, low interest rates, encouraging (forcing, really) banks to dilute credit standards, “stimulus” programs, forced mortgage renegotiations, etc., are nonsensically designed to combat a problem that has as its genesis too much spending and borrowing by encouraging (and indeed necessitating on the government’s part) more spending and borrowing. Like the aforementioned morning belt of Jack Daniels, they might feel quite efficacious for a few hours, but eventually 11:00AM is going to roll around and we will be in far worse shape than we would have been had we downed a quart of orange juice, a quart of water, and a handful of vitamins at 6:00 AM or, better yet, stayed home and drank iced tea the night before.
Given that we have pursued the latter course, and given the political and financial leadership’s glaring misdiagnosis of our economic difficulties, it is awfully difficult to be sanguine about the economy at this stage. We might get a temporary break, much like the several we experienced in the ‘30s, but we won’t get out of this until we bite the bullet. Hopefully, unlike the ‘40s, the phrase “bite the bullet” will remain figurative in this case.
As far as the markets go, with the S&P down some 42% from its high, it is foolish, if not mathematically impossible, to be as bearish on the market as I was when the market was at its October, 2007 peak and as I have been all the way down. However, it is nearly as hard to be even the slightest bit bullish. While, as with the economy, we might see an ephemeral pop now and then, I see more trouble on the way and more, albeit of necessity fewer, opportunities for bears, even permabears, to make some money on the short side.
One of the lead stories on the CBS radio business news this morning was that Citicorp will be modifying terms on 130,000 mortgage loans (with a potential value of $20 billion) for customers who are current on their payments but are facing financial difficulties. This is probably a salubrious development, but its overall beneficence is a matter, as these things should be, between Citicorp and its customers. However, it was the news report’s referring to the housing crisis, which this move by Citi is designed to partially address, as being the “root cause” of our current financial difficulties that prompted me to repeat what I have said ad nauseam in the past: despite what the “experts” are assuring us, the housing crisis is not the “root cause” of our current financial difficulties.
Though it lies pretty far down the trunk, housing is not the root cause of our financial difficulties. The root of our financial difficulties is too much spending and too much borrowing by individuals, governments, and, to a lesser extent, by businesses. We have been living way beyond our means, and have thus been enjoying a Potemkin prosperity, for at least the last ten years. The housing bubble, the bursting of which has been one of the most salient manifestations of our current financial difficulties, was both a symptom of excessive borrowing and spending and a means of facilitating further excessive borrowing and spending.
Given that our problem lies not in housing, but in gormless management of our personal, business, and societal finances, we can pursue, or, more properly, could have pursued, one of two courses. First, we could go through a long period of deleveraging, in which we pay down our debts, get our balance sheets (and income statements) in order, and learn to live within our means and save money. This sounds a lot easier than it would have been; given the hole we have dug and the sense of entitlement we have developed as a people, such a deleveraging would have been long, difficult, and excruciating. Doing so, if we ever summon the requisite courage, or are simply forced by an utter lack of alternatives, will be necessary if we are to survive as a people, and we will emerge a much stronger economy and a much more formidable people should we ever pursue this course of actions.
Second, we could pursue a hodgepodge of macroeconomic policies designed to avoid the aforementioned painful deleveraging. Given the utter inability of the American people to withstand pain and the short and completely self-interested time tables of our political leaders, this is the course we have chosen. The problem is that such a course of action is the financial equivalent of hair of the dog. These policies, be they financial bailouts, low interest rates, encouraging (forcing, really) banks to dilute credit standards, “stimulus” programs, forced mortgage renegotiations, etc., are nonsensically designed to combat a problem that has as its genesis too much spending and borrowing by encouraging (and indeed necessitating on the government’s part) more spending and borrowing. Like the aforementioned morning belt of Jack Daniels, they might feel quite efficacious for a few hours, but eventually 11:00AM is going to roll around and we will be in far worse shape than we would have been had we downed a quart of orange juice, a quart of water, and a handful of vitamins at 6:00 AM or, better yet, stayed home and drank iced tea the night before.
Given that we have pursued the latter course, and given the political and financial leadership’s glaring misdiagnosis of our economic difficulties, it is awfully difficult to be sanguine about the economy at this stage. We might get a temporary break, much like the several we experienced in the ‘30s, but we won’t get out of this until we bite the bullet. Hopefully, unlike the ‘40s, the phrase “bite the bullet” will remain figurative in this case.
As far as the markets go, with the S&P down some 42% from its high, it is foolish, if not mathematically impossible, to be as bearish on the market as I was when the market was at its October, 2007 peak and as I have been all the way down. However, it is nearly as hard to be even the slightest bit bullish. While, as with the economy, we might see an ephemeral pop now and then, I see more trouble on the way and more, albeit of necessity fewer, opportunities for bears, even permabears, to make some money on the short side.
Tuesday, November 4, 2008
“IT’S OVER, IT’S OVER…”
11/4/08
I write this after the 10:00 (CST) declaration by all the major networks and news services that Barack Obama has won the election and before President-elect Obama’s speeches. I’m not much for speeches; pap and pabulum do little for me and even the best political speech is little more than an agglomeration of platitudes and other cotton candy for the mind, so I have chosen to write a few thoughts while anticipating, and listening to, President-elect Obama’s speech.
Mr. Obama’s election is, in many ways, a propitious development for our country. The most obvious reason is that his election shows that we have moved even further along the path away from the racism and bi-nationalism that characterized much of our history. As has been said ad nauseam by the talking heads, young people have no idea how much this election means because they have no idea how preposterous the idea of a Black president sounded not all that many years ago. But even if Mr. Obama were not born of a White mother and a Black father, his election would be a wondrous event. President-elect Obama embodies what America is, or was, all about: he is a guy who came from nothing, a product of a broken home, who worked hard, studied hard, and accomplished great things for himself and for his family and hopefully will do even more remarkable things for the country that has been so good to him. He is one of those great American stories that comprise our history and our very meaning as a nation. He is a role model for all young Americans, a family man, a good man, a decent and honorable man.
Will Obama lead us on some sort of dangerous path to statism and reckless social experimentation, as some of my conservative friends seem to think? Not if he is smart and ambitious, and Mr. Obama is both in abundance. It’s hard to believe that the overwhelmingly centrist American electorate will stand for some sort of radical agenda, so, even with overwhelming majorities in the House and the Senate, it is very doubtful that the very bright Mr. Obama will embark on some quixotic, misguided statist agenda.
On the other hand, a look at the electoral map does not contribute to such a sanguine view of the future of the country, or certainly for the Republican Party and, by extension, our nation. The red states very much resemble the old confederacy, with an extension into the west. It would be a stretch to say that the implications are obvious, but, by its firm embrace of Sarah Palin and her seeming quest to return us to what she doubtless considers the halcyon days of the Know Nothing Party, the core of the GOP seems to be confirming its comfort with its baser instincts and elements. Clearly, large numbers of Republicans rejected the inclinations of what has become the GOP base. So it looks like the GOP is headed toward schism, a reexamination of its mission, or both. Some of us are hoping that a few years out of power will chasten and purify the Party and return it to its roots. But I’m not sure at times what those roots are. I used to think that the GOP stood for, to put it very simply, free markets and free men, but, after eight years of Bushism, the McCain campaign, and the ghastly Sarah Palin flier, one has to wonder if that assumption was ever true. The GOP got a well deserved spanking (body slamming and atomic dropping, really) tonight. What it learns from this spanking could be salutary if the Party returns to sanity or disastrous if it only leads to a round of witch-hunting and reaffirmation of its baser instincts characterized by a growing certainty that those who don’t agree with its lunatic fringe do so out of a profound disloyalty to the country and/or a secret socialist, pro-terrorist agenda. Some partisans on the Democratic side might say that an increasingly irrelevant Republican Party might not be a bad thing, and they might be right. But there has to be a viable alternative to the Democrats if our system is to survive. Maybe it won’t be the Republican Party; it definitely won’t be if the Palin wing of the Party somehow gains ascendancy from the party’s electoral fiasco. But there better be some alternative.
By the way, President-elect Obama’s speech has just ended and, as much as I abhor political speeches, it was a great one. Perhaps I am just a sucker for any speech that begins with “It’s great to be here in Chicago” and that features my beloved hometown as its backdrop, but this speech would have been great even if it had been delivered in Washington, D.C.
Senator McCain’s concession speech was also outstanding. However, the reaction of the crowd at Senator McCain’s speech to his mention of Vice-President elect Biden only confirmed the fears I expressed two paragraphs ago.
On a personal note, as this election entered the home stretch, the stock market, and the financial system, melted down, and the Republicans responded with their own especially noxious form of statism, I have reflected on the last eight disastrous years of George Bush and the obsequiousness shown toward him by virtually his entire party (including, despite the mythology he tried to propagate, Senator McCain) until very late in this election season. I have been continually reminded of a line from the play “Annie,” in which FDR says to Oliver Warbucks “We’ll make a New Dealer out of you yet.” Well, we are embarking on a new administration and a new approach in the throes of very difficult time in our nation’s history. It’s all very exciting and thought provoking. No, Barack Obama probably is never going to make a Democrat out of me, but I suspect that he is probably the ONLY guy who even has a remote chance of doing so.
Finally, MSNBC had as one of its commentators a Bishop Jakes whose first name and affiliation, channel hopper that I am on election night, I did not get. However, I was impressed by Bishop Jakes and especially by his observation that President-elect Obama will need our prayers as he faces the challenges that lie ahead for him and for our nation and by his earnest pleas that we say, and continue to say, those prayers. As great as Mr. Obama’s speech was, Bishop Jakes’ observation on the necessity of prayers was the most profound utterance of the evening.
I write this after the 10:00 (CST) declaration by all the major networks and news services that Barack Obama has won the election and before President-elect Obama’s speeches. I’m not much for speeches; pap and pabulum do little for me and even the best political speech is little more than an agglomeration of platitudes and other cotton candy for the mind, so I have chosen to write a few thoughts while anticipating, and listening to, President-elect Obama’s speech.
Mr. Obama’s election is, in many ways, a propitious development for our country. The most obvious reason is that his election shows that we have moved even further along the path away from the racism and bi-nationalism that characterized much of our history. As has been said ad nauseam by the talking heads, young people have no idea how much this election means because they have no idea how preposterous the idea of a Black president sounded not all that many years ago. But even if Mr. Obama were not born of a White mother and a Black father, his election would be a wondrous event. President-elect Obama embodies what America is, or was, all about: he is a guy who came from nothing, a product of a broken home, who worked hard, studied hard, and accomplished great things for himself and for his family and hopefully will do even more remarkable things for the country that has been so good to him. He is one of those great American stories that comprise our history and our very meaning as a nation. He is a role model for all young Americans, a family man, a good man, a decent and honorable man.
Will Obama lead us on some sort of dangerous path to statism and reckless social experimentation, as some of my conservative friends seem to think? Not if he is smart and ambitious, and Mr. Obama is both in abundance. It’s hard to believe that the overwhelmingly centrist American electorate will stand for some sort of radical agenda, so, even with overwhelming majorities in the House and the Senate, it is very doubtful that the very bright Mr. Obama will embark on some quixotic, misguided statist agenda.
On the other hand, a look at the electoral map does not contribute to such a sanguine view of the future of the country, or certainly for the Republican Party and, by extension, our nation. The red states very much resemble the old confederacy, with an extension into the west. It would be a stretch to say that the implications are obvious, but, by its firm embrace of Sarah Palin and her seeming quest to return us to what she doubtless considers the halcyon days of the Know Nothing Party, the core of the GOP seems to be confirming its comfort with its baser instincts and elements. Clearly, large numbers of Republicans rejected the inclinations of what has become the GOP base. So it looks like the GOP is headed toward schism, a reexamination of its mission, or both. Some of us are hoping that a few years out of power will chasten and purify the Party and return it to its roots. But I’m not sure at times what those roots are. I used to think that the GOP stood for, to put it very simply, free markets and free men, but, after eight years of Bushism, the McCain campaign, and the ghastly Sarah Palin flier, one has to wonder if that assumption was ever true. The GOP got a well deserved spanking (body slamming and atomic dropping, really) tonight. What it learns from this spanking could be salutary if the Party returns to sanity or disastrous if it only leads to a round of witch-hunting and reaffirmation of its baser instincts characterized by a growing certainty that those who don’t agree with its lunatic fringe do so out of a profound disloyalty to the country and/or a secret socialist, pro-terrorist agenda. Some partisans on the Democratic side might say that an increasingly irrelevant Republican Party might not be a bad thing, and they might be right. But there has to be a viable alternative to the Democrats if our system is to survive. Maybe it won’t be the Republican Party; it definitely won’t be if the Palin wing of the Party somehow gains ascendancy from the party’s electoral fiasco. But there better be some alternative.
By the way, President-elect Obama’s speech has just ended and, as much as I abhor political speeches, it was a great one. Perhaps I am just a sucker for any speech that begins with “It’s great to be here in Chicago” and that features my beloved hometown as its backdrop, but this speech would have been great even if it had been delivered in Washington, D.C.
Senator McCain’s concession speech was also outstanding. However, the reaction of the crowd at Senator McCain’s speech to his mention of Vice-President elect Biden only confirmed the fears I expressed two paragraphs ago.
On a personal note, as this election entered the home stretch, the stock market, and the financial system, melted down, and the Republicans responded with their own especially noxious form of statism, I have reflected on the last eight disastrous years of George Bush and the obsequiousness shown toward him by virtually his entire party (including, despite the mythology he tried to propagate, Senator McCain) until very late in this election season. I have been continually reminded of a line from the play “Annie,” in which FDR says to Oliver Warbucks “We’ll make a New Dealer out of you yet.” Well, we are embarking on a new administration and a new approach in the throes of very difficult time in our nation’s history. It’s all very exciting and thought provoking. No, Barack Obama probably is never going to make a Democrat out of me, but I suspect that he is probably the ONLY guy who even has a remote chance of doing so.
Finally, MSNBC had as one of its commentators a Bishop Jakes whose first name and affiliation, channel hopper that I am on election night, I did not get. However, I was impressed by Bishop Jakes and especially by his observation that President-elect Obama will need our prayers as he faces the challenges that lie ahead for him and for our nation and by his earnest pleas that we say, and continue to say, those prayers. As great as Mr. Obama’s speech was, Bishop Jakes’ observation on the necessity of prayers was the most profound utterance of the evening.
Saturday, October 18, 2008
YOU CAN LEARN A LOT FROM A 92 YEAR OLD, ET. AL.
10/18/08
It has been a long time since I’ve enjoyed the Wall Street Journal’s editorial page. What once was the nation’s clearest and most articulate advocate of the principals of free men and free markets has metamorphosized into a jejune purveyor of meretricious and shameless closed-eyed cheerleading for the Bush administration and the GOP, even as both have thoroughly betrayed the principals that the Journal has long advocated and continues to insist it fervently holds.
This morning’s (i.e., 10/18-10/19’s) editorial page of the Journal, however, was perhaps the best I have read in the last ten years and, for once, I was delighted that my Saturday was not thoroughly consumed with our kids’ soccer games so that I could spend some time with my erstwhile friend from Wall Street.
A few of this morning’s articles, “Most Pundits Are Wrong About the Bubble” by Professor Charles W. Calomiris of Columbia and an editorial entitled “Another ‘Deregulation’ Myth,” by the Journal’s once redoubtable, but now largely insipid, editorial staff attempt to make the case for deregulation of the financial markets. They do so clumsily, by, for example, arguing that the implementation of Basel II standards for financial institutions argues that regulation was responsible for our financial mess while ignoring, based on facts cited in these articles themselves, that Basel II was, in fact, an instance of aggressive deregulation. Mr. Calomiris makes the same logical error while also proposing for a minimum subordinated debt requirement for financial institutions in an article that ostensibly advocating deregulation and arguing that unregulated activities of banks (subprime lending, securitization, and dealing in swaps) that got the banks into trouble indeed advance the point that regulation is what has gotten the markets into trouble. These are clumsy arguments in favor of a case that is currently hard to make (and may always be hard to make, sad to say) and, in fact, end up contradicting themselves, but at least these two articles provide plenty of information that is worth reading and take the Journal’s traditional side of an especially salient philosophical debate. They also expose how illogical the Journal has become in its pursuit of one of the few ideas it has yet to throw under the bus.
Peggy Noonan’s article, “Palin’s Failin’” is perhaps the greatest that the estimable Ms. Noonan has ever produced, not so much for her observations, best encapsulated by “…there is little sign that (Palin) has the tools, the equipment, the knowledge or the philosophical grounding one hopes for, and expects, in a holder of high office,” but rather for long time conservative Noonan’s observation that “If (self-styled conservatives) stood for conservative principles and the full expression of views—instead of attempting to silence those who opposed mere party—their movement, and the party, would be in a better, and healthier, position.” Then, fully expecting the kind of treatment Christopher Buckley received from those who purport to be acolytes of his father, Ms. Noonan ends her article with “…come and get me, copper.” It’s too late for this erstwhile conservative Republican; while I hate to use words like “never,” it’s going to be very difficult for me to vote for any Republican for any office after what George Bush has taught us about the GOP’s real motivation, and I don’t even call myself “conservative” any more after what Mr. Bush and his cheerleaders have done to our movement and, more importantly, to our county. But those of you who still call the GOP, and/or the conservative movement, home would do well to listen to Ms. Noonan and to respect her courage. But most GOPers won’t; they’ll simply accuse her of being a “liberal,” a “statist,” an “elitist,” and, who knows, perhaps a “terrorist sympathizer.” The Journal can be counted on to, perhaps indirectly but certainly snidely, join in such criticism.
The best article in today’s Journal, however, was an encapsulation of an interview of Anna Schwartz, who was the co-winner of Milton Friedman’s Nobel Prize for “A Monetary History of the United States,” and who, at 92, still works for the National Bureau of Economic Research, as she has since 1941 and who remains as sharp, and as unruffled, as ever. In this article, she argues four square against the Journal’s stance on the government interventions we have seen over the last several months in its doomed efforts to “rescue” the financial markets. She argues persuasively against the bailouts, against treating irresponsible lenders with more deference than irresponsible stockholders, and that “Everything works much better when wrong decisions are punished and good decisions make you rich.” Would that the Journal had not abandoned such wisdom the moment George W. Bush became president!
At any rate, try to get your hands on the 10/18-10/19 Wall Street Journal and read the aforementioned articles. Not only are they entertaining and informative, but they are brutal testimony to how far from the principles of free men and free markets the Journal has come.
It has been a long time since I’ve enjoyed the Wall Street Journal’s editorial page. What once was the nation’s clearest and most articulate advocate of the principals of free men and free markets has metamorphosized into a jejune purveyor of meretricious and shameless closed-eyed cheerleading for the Bush administration and the GOP, even as both have thoroughly betrayed the principals that the Journal has long advocated and continues to insist it fervently holds.
This morning’s (i.e., 10/18-10/19’s) editorial page of the Journal, however, was perhaps the best I have read in the last ten years and, for once, I was delighted that my Saturday was not thoroughly consumed with our kids’ soccer games so that I could spend some time with my erstwhile friend from Wall Street.
A few of this morning’s articles, “Most Pundits Are Wrong About the Bubble” by Professor Charles W. Calomiris of Columbia and an editorial entitled “Another ‘Deregulation’ Myth,” by the Journal’s once redoubtable, but now largely insipid, editorial staff attempt to make the case for deregulation of the financial markets. They do so clumsily, by, for example, arguing that the implementation of Basel II standards for financial institutions argues that regulation was responsible for our financial mess while ignoring, based on facts cited in these articles themselves, that Basel II was, in fact, an instance of aggressive deregulation. Mr. Calomiris makes the same logical error while also proposing for a minimum subordinated debt requirement for financial institutions in an article that ostensibly advocating deregulation and arguing that unregulated activities of banks (subprime lending, securitization, and dealing in swaps) that got the banks into trouble indeed advance the point that regulation is what has gotten the markets into trouble. These are clumsy arguments in favor of a case that is currently hard to make (and may always be hard to make, sad to say) and, in fact, end up contradicting themselves, but at least these two articles provide plenty of information that is worth reading and take the Journal’s traditional side of an especially salient philosophical debate. They also expose how illogical the Journal has become in its pursuit of one of the few ideas it has yet to throw under the bus.
Peggy Noonan’s article, “Palin’s Failin’” is perhaps the greatest that the estimable Ms. Noonan has ever produced, not so much for her observations, best encapsulated by “…there is little sign that (Palin) has the tools, the equipment, the knowledge or the philosophical grounding one hopes for, and expects, in a holder of high office,” but rather for long time conservative Noonan’s observation that “If (self-styled conservatives) stood for conservative principles and the full expression of views—instead of attempting to silence those who opposed mere party—their movement, and the party, would be in a better, and healthier, position.” Then, fully expecting the kind of treatment Christopher Buckley received from those who purport to be acolytes of his father, Ms. Noonan ends her article with “…come and get me, copper.” It’s too late for this erstwhile conservative Republican; while I hate to use words like “never,” it’s going to be very difficult for me to vote for any Republican for any office after what George Bush has taught us about the GOP’s real motivation, and I don’t even call myself “conservative” any more after what Mr. Bush and his cheerleaders have done to our movement and, more importantly, to our county. But those of you who still call the GOP, and/or the conservative movement, home would do well to listen to Ms. Noonan and to respect her courage. But most GOPers won’t; they’ll simply accuse her of being a “liberal,” a “statist,” an “elitist,” and, who knows, perhaps a “terrorist sympathizer.” The Journal can be counted on to, perhaps indirectly but certainly snidely, join in such criticism.
The best article in today’s Journal, however, was an encapsulation of an interview of Anna Schwartz, who was the co-winner of Milton Friedman’s Nobel Prize for “A Monetary History of the United States,” and who, at 92, still works for the National Bureau of Economic Research, as she has since 1941 and who remains as sharp, and as unruffled, as ever. In this article, she argues four square against the Journal’s stance on the government interventions we have seen over the last several months in its doomed efforts to “rescue” the financial markets. She argues persuasively against the bailouts, against treating irresponsible lenders with more deference than irresponsible stockholders, and that “Everything works much better when wrong decisions are punished and good decisions make you rich.” Would that the Journal had not abandoned such wisdom the moment George W. Bush became president!
At any rate, try to get your hands on the 10/18-10/19 Wall Street Journal and read the aforementioned articles. Not only are they entertaining and informative, but they are brutal testimony to how far from the principles of free men and free markets the Journal has come.
Tuesday, October 14, 2008
“I’M THINKING THESE PROBLEMS MIGHT GO AWAY IF YOU MAYBE ASKED PAULY TO BE YOUR PARTNER…”
10/14/08
There are several notable (amazing, really) points about the Bush Administration’s plan to take equity (preferred stock, to be specific) stakes in most of the country’s major financial institutions.
For the most part, we are talking about healthy (well, relatively healthy) financial institutions here. These are not institutions that are teetering on the precipice of financial disaster. Free Market Hank Paulson was concerned that the plan might not be sufficiently attractive to induce institutions to participate, and so carefully designed the plan to minimize chances of spooking common stock holders, and managements, of the affected firms. Note the strong element of choice on the part of the participants. Or maybe not: as the Wall Street Journal reported this morning (page A1): “Some of the big banks were unhappy about the government (sic) taking equity stakes, but acquiesced under pressure from Treasury Secretary Hank Paulson in a meeting Monday.” So the government is forcing, in some cases, healthy financial institutions to let the government take a stake in them.
Keep this plan in mind the next time you hear someone tell you he or she if voting for McCain because Obama is a socialist or because he is in favor of big government. Note that it is a Republican administration that is doing more to socialize our economy, and certainly our financial system, than any administration in history, including that of FDR. Enthusiasm for big government, and now even elements of outright socialism, is one of the few truly bipartisan traits remaining in Washington.
We also read in today’s Wall Street Journal (page A3) that European governments “are facing a new challenge: how to pay for it all.” “It all,” in this case, is the bailout of their banking systems. First, perhaps our friends (Ever notice how the Europeans are “friends” when we need their help but something else entirely when they are, say, counseling us against self-destructive foreign policy adventures? But I digress.) across the Atlantic should have thought about the cost before they rushed headlong into a new crusade, this one apparently designed to make capital more comfy in the Old World and thus to take financial business away from New York. Second, who else, do you suppose, will be “facing a new challenge: how to pay for it all”?
Hmm…thinking before acting, considering the consequences of one’s actions before engaging in such actions. These appear to be yet more quaint old notions that have been dispensed with in our brave new “Yes, indeed, our best years are ahead of us” world.
There are several notable (amazing, really) points about the Bush Administration’s plan to take equity (preferred stock, to be specific) stakes in most of the country’s major financial institutions.
For the most part, we are talking about healthy (well, relatively healthy) financial institutions here. These are not institutions that are teetering on the precipice of financial disaster. Free Market Hank Paulson was concerned that the plan might not be sufficiently attractive to induce institutions to participate, and so carefully designed the plan to minimize chances of spooking common stock holders, and managements, of the affected firms. Note the strong element of choice on the part of the participants. Or maybe not: as the Wall Street Journal reported this morning (page A1): “Some of the big banks were unhappy about the government (sic) taking equity stakes, but acquiesced under pressure from Treasury Secretary Hank Paulson in a meeting Monday.” So the government is forcing, in some cases, healthy financial institutions to let the government take a stake in them.
Keep this plan in mind the next time you hear someone tell you he or she if voting for McCain because Obama is a socialist or because he is in favor of big government. Note that it is a Republican administration that is doing more to socialize our economy, and certainly our financial system, than any administration in history, including that of FDR. Enthusiasm for big government, and now even elements of outright socialism, is one of the few truly bipartisan traits remaining in Washington.
We also read in today’s Wall Street Journal (page A3) that European governments “are facing a new challenge: how to pay for it all.” “It all,” in this case, is the bailout of their banking systems. First, perhaps our friends (Ever notice how the Europeans are “friends” when we need their help but something else entirely when they are, say, counseling us against self-destructive foreign policy adventures? But I digress.) across the Atlantic should have thought about the cost before they rushed headlong into a new crusade, this one apparently designed to make capital more comfy in the Old World and thus to take financial business away from New York. Second, who else, do you suppose, will be “facing a new challenge: how to pay for it all”?
Hmm…thinking before acting, considering the consequences of one’s actions before engaging in such actions. These appear to be yet more quaint old notions that have been dispensed with in our brave new “Yes, indeed, our best years are ahead of us” world.
Wednesday, October 8, 2008
ON BIG DEBT AND SMALL GOVERNMENT
10/8/08
The markets being what they are of late, I have time only for a few random thoughts on recent financial and political developments:
--Hank Paulson said again today that declining home prices are at the root of our economic and financial problems. Mr. Paulson’s view on this topic is very much in line with the consensus thinking, which is very wrong. Declining home prices, as I have said many times before, might be down the trunk of this problem, but they are not at its root. The root of this problem lies in too much spending and too much debt, primarily at the household level, but also at the governmental and corporate levels. Homes and home equity loans were merely the vehicles that consumers used to facilitate their excessive borrowing and spending. Since this is the case, even ending the downward spiral in home prices will not solve our current problems. We will not be out of the woods until the current “spend, spend, spend, borrow, borrow, borrow” ethos is wrung out of our society. That will take a long time.
--Wait until the credit card problem rears the full manifestation of its ugly head. The MBS market has been decimated, as we all know. The ABS market is next. Yes, we’ve seen slowness and plenty of outright defaults on unsecured lines of credit, but there is plenty more to come. Again, our economic problems are far, far from over.
--At the “debate” last night, John McCain (Did you know he was a POW in Vietnam?) “outlined” a vague plan for the federal government to buy up mortgages and renegotiate with the debtors in order to arrest the decline in housing prices. Such a plan would make the federal government the nation’s largest home lender and mortgagee. (Mr. McCain, never much of an original thinker, apparently shares the common wisdom that it is home prices that are at the root of our financial and economic difficulties.) Later in the same debate, Mr. McCain (Did you know he was a POW in Vietnam?) castigated Barack Obama as being a politician who is forever looking to the government for solutions, always telling people what government can do for them, while he, John McCain (Did you know he was a POW in Vietnam?) is in favor of limited government, small government. Is Mr. McCain (Did you know he was a POW in Vietnam?) so befuddled that he lacks any sense of irony? Does he have any idea what he is saying when he claims to be in favor of less government, or is that just another of the verbalized bumper stickers that passes for thought in his (and most) campaigns? Is “limited government” even a principle of the GOP, or merely a convenient cudgel with which to beat up those at the lower rungs of the economic ladder who look to the government for help?
The markets being what they are of late, I have time only for a few random thoughts on recent financial and political developments:
--Hank Paulson said again today that declining home prices are at the root of our economic and financial problems. Mr. Paulson’s view on this topic is very much in line with the consensus thinking, which is very wrong. Declining home prices, as I have said many times before, might be down the trunk of this problem, but they are not at its root. The root of this problem lies in too much spending and too much debt, primarily at the household level, but also at the governmental and corporate levels. Homes and home equity loans were merely the vehicles that consumers used to facilitate their excessive borrowing and spending. Since this is the case, even ending the downward spiral in home prices will not solve our current problems. We will not be out of the woods until the current “spend, spend, spend, borrow, borrow, borrow” ethos is wrung out of our society. That will take a long time.
--Wait until the credit card problem rears the full manifestation of its ugly head. The MBS market has been decimated, as we all know. The ABS market is next. Yes, we’ve seen slowness and plenty of outright defaults on unsecured lines of credit, but there is plenty more to come. Again, our economic problems are far, far from over.
--At the “debate” last night, John McCain (Did you know he was a POW in Vietnam?) “outlined” a vague plan for the federal government to buy up mortgages and renegotiate with the debtors in order to arrest the decline in housing prices. Such a plan would make the federal government the nation’s largest home lender and mortgagee. (Mr. McCain, never much of an original thinker, apparently shares the common wisdom that it is home prices that are at the root of our financial and economic difficulties.) Later in the same debate, Mr. McCain (Did you know he was a POW in Vietnam?) castigated Barack Obama as being a politician who is forever looking to the government for solutions, always telling people what government can do for them, while he, John McCain (Did you know he was a POW in Vietnam?) is in favor of limited government, small government. Is Mr. McCain (Did you know he was a POW in Vietnam?) so befuddled that he lacks any sense of irony? Does he have any idea what he is saying when he claims to be in favor of less government, or is that just another of the verbalized bumper stickers that passes for thought in his (and most) campaigns? Is “limited government” even a principle of the GOP, or merely a convenient cudgel with which to beat up those at the lower rungs of the economic ladder who look to the government for help?
Saturday, October 4, 2008
WHOSE SIDE ARE YOU ON?
10/4/08
A few thoughts in the wake of the “freezing up” of our financial system and the subsequent bailout that, we are now (Surprise!) hearing will not be enough:
--Over the last few decades, as large portions of our manufacturing base have moved overseas and a growing piece of our service industries has followed suit in pursuit of the dream of globalization (and cheap labor), the experts told us not to worry: America’s big advantage was high tech (despite the growing proportion of foreign students in our grad and undergrad engineering programs) and our “strong, vibrant, dynamic financial system.” “Strong, vibrant, dynamic financial system?” A few bankruptcies and assorted insolvencies and illiquidities and all of the sudden our dynamo of a financial system is, if one believes Free Market Hank and the Cry Babies, imploding and no longer able to distinguish a good credit from a bad credit. This is the powerhouse of a financial system that will sustain the U.S. economy in the 21st century? Saints preserve us! It’s worse than even I thought.
--We were assured by Free Market Hank and the Cry Babies that the assets that the TARP (I still like TARF more for the word with which it rhymes, but I digress.) will be buying are fine assets that, over time, will increase in value returning most, if not all, of Hank’s $700 billion slush fund. If these are such great assets, why does the public purse have to come into play? Players in our “strong, vibrant, financial system” should be able to snuff out value and bid appropriately, perhaps at lower prices than the TARP (in order to enhance, or at least make more probable, returns), but nonetheless at some prices. One can draw one or both of two conclusions: The government is paying prices far above market (or even intrinsic value, for that matter) and thus heavily subsidizing Wall Street with your money and has little hope of seeing much of its money back or perhaps our “strong, vibrant, dynamic financial system” is not all that strong, vibrant, or dynamic and needs to man up.
--Warren Buffett stated on CNBC that he would like 1% of the profits that will be realized by TARP. Since Mr. Buffett has about $44 billion, he could easily take 1% (or more) of the $700 billion TARP action if he would like to. So perhaps he ought to step up. But I suspect Mr. Buffett is far too smart to do so and seriously regrets his statement about wanting 1% of the TARP action. He is far more comfortable on the other side of the trade, with positions in Goldman, GE, and Wachovia.
--Please read an op-ed piece on page A15 of today’s (i.e., Saturday, 10/4’s) Wall Street Journal: “Nothing’s the Matter With Kansas.” Despite the shrieks emanating from the Bushmen, the lily-livered in Congress, and a Wall Street contingent terrified at the prospect of having to, say, sell the west coast fleet of Ferraris, business is getting done. Good loans are being made. And little government intervention is necessary to accomplish this.
A few thoughts in the wake of the “freezing up” of our financial system and the subsequent bailout that, we are now (Surprise!) hearing will not be enough:
--Over the last few decades, as large portions of our manufacturing base have moved overseas and a growing piece of our service industries has followed suit in pursuit of the dream of globalization (and cheap labor), the experts told us not to worry: America’s big advantage was high tech (despite the growing proportion of foreign students in our grad and undergrad engineering programs) and our “strong, vibrant, dynamic financial system.” “Strong, vibrant, dynamic financial system?” A few bankruptcies and assorted insolvencies and illiquidities and all of the sudden our dynamo of a financial system is, if one believes Free Market Hank and the Cry Babies, imploding and no longer able to distinguish a good credit from a bad credit. This is the powerhouse of a financial system that will sustain the U.S. economy in the 21st century? Saints preserve us! It’s worse than even I thought.
--We were assured by Free Market Hank and the Cry Babies that the assets that the TARP (I still like TARF more for the word with which it rhymes, but I digress.) will be buying are fine assets that, over time, will increase in value returning most, if not all, of Hank’s $700 billion slush fund. If these are such great assets, why does the public purse have to come into play? Players in our “strong, vibrant, financial system” should be able to snuff out value and bid appropriately, perhaps at lower prices than the TARP (in order to enhance, or at least make more probable, returns), but nonetheless at some prices. One can draw one or both of two conclusions: The government is paying prices far above market (or even intrinsic value, for that matter) and thus heavily subsidizing Wall Street with your money and has little hope of seeing much of its money back or perhaps our “strong, vibrant, dynamic financial system” is not all that strong, vibrant, or dynamic and needs to man up.
--Warren Buffett stated on CNBC that he would like 1% of the profits that will be realized by TARP. Since Mr. Buffett has about $44 billion, he could easily take 1% (or more) of the $700 billion TARP action if he would like to. So perhaps he ought to step up. But I suspect Mr. Buffett is far too smart to do so and seriously regrets his statement about wanting 1% of the TARP action. He is far more comfortable on the other side of the trade, with positions in Goldman, GE, and Wachovia.
--Please read an op-ed piece on page A15 of today’s (i.e., Saturday, 10/4’s) Wall Street Journal: “Nothing’s the Matter With Kansas.” Despite the shrieks emanating from the Bushmen, the lily-livered in Congress, and a Wall Street contingent terrified at the prospect of having to, say, sell the west coast fleet of Ferraris, business is getting done. Good loans are being made. And little government intervention is necessary to accomplish this.
Friday, October 3, 2008
WHO LET THE DOGS OUT?
10/3/08
I sent the following e-mail to an old, good, and frighteningly smart friend who passed along to me one of those e-mails blaming the Democrats for the current housing crisis. While the Democrats certainly bear some of the blame, there is plenty to go around, and not all of it should be directed at Washington or New York:
10/3/08
Yes, the Dems used Fannie and Freddie as a piggy bank and an errand boy for decades and thus helped inflate the housing bubble. But the Bush administration did its part to push us to the precipice, pushing and pulling all manner of fiscal and regulatory levers to "encourage home ownership," including sweetening tax treatment of home ownership and, as recently as early this year, lowering capital requirements for Fannie and Freddie so that they could make more mortgage money available.
And how about Greenspan inflating the bubble with easy money for years and years lest we have to (egads!) suffer a recession? And who appointed Greenspan? Reagan. Who kept reappointing Greenspan? Clinton and the two Georges. They're all the same. Democrats, Republicans...the only choice is the direction in which you want the government to grow, and often there is no difference in that matter, either, as in this abominable, pork-laden bailout package. You're already hearing the Wall Street guys yelling "Fire" again, looking for more. And, like lap dogs looking for doggie treats, both Dems and Republicans will sit up and beg before their masters, i.e., anyone capable of writing a campaign check.
And lest you think I never say anything good about politicians, thank God for that handful of stout-hearted Republicans and Democrats who stood against this bloated, ghastly socialization of our financial system.
Neither party created this crisis (The American public would do well to take a good, long look in the mirror when seeking scapegoats; as I've said before (quoting Steve Goodman), you only fall for lies and stories when you really want to.), but both parties abetted this financial firestorm and will continue to abet it, admittedly often (but far from always) with the best of intentions.
One more thing...Though it's hard for me to say much good about most Democrats, the last great (even good) Fed chairman, Paul Volcker, was appointed by a Democrat (Jimmy Carter). And, though it’s hard for me to say much good about most Republicans, Ronald Reagan had the good sense to reappoint the towering (in more ways than one) Mr. Volcker.
(As you can see, I’m trying to adopt a more positive attitude by saying good things about people, even about politicians, when such laudation is merited.)
I sent the following e-mail to an old, good, and frighteningly smart friend who passed along to me one of those e-mails blaming the Democrats for the current housing crisis. While the Democrats certainly bear some of the blame, there is plenty to go around, and not all of it should be directed at Washington or New York:
10/3/08
Yes, the Dems used Fannie and Freddie as a piggy bank and an errand boy for decades and thus helped inflate the housing bubble. But the Bush administration did its part to push us to the precipice, pushing and pulling all manner of fiscal and regulatory levers to "encourage home ownership," including sweetening tax treatment of home ownership and, as recently as early this year, lowering capital requirements for Fannie and Freddie so that they could make more mortgage money available.
And how about Greenspan inflating the bubble with easy money for years and years lest we have to (egads!) suffer a recession? And who appointed Greenspan? Reagan. Who kept reappointing Greenspan? Clinton and the two Georges. They're all the same. Democrats, Republicans...the only choice is the direction in which you want the government to grow, and often there is no difference in that matter, either, as in this abominable, pork-laden bailout package. You're already hearing the Wall Street guys yelling "Fire" again, looking for more. And, like lap dogs looking for doggie treats, both Dems and Republicans will sit up and beg before their masters, i.e., anyone capable of writing a campaign check.
And lest you think I never say anything good about politicians, thank God for that handful of stout-hearted Republicans and Democrats who stood against this bloated, ghastly socialization of our financial system.
Neither party created this crisis (The American public would do well to take a good, long look in the mirror when seeking scapegoats; as I've said before (quoting Steve Goodman), you only fall for lies and stories when you really want to.), but both parties abetted this financial firestorm and will continue to abet it, admittedly often (but far from always) with the best of intentions.
One more thing...Though it's hard for me to say much good about most Democrats, the last great (even good) Fed chairman, Paul Volcker, was appointed by a Democrat (Jimmy Carter). And, though it’s hard for me to say much good about most Republicans, Ronald Reagan had the good sense to reappoint the towering (in more ways than one) Mr. Volcker.
(As you can see, I’m trying to adopt a more positive attitude by saying good things about people, even about politicians, when such laudation is merited.)
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