2/27/09
On January 23, 2009, GE CEO Jeff Immelt was adamant about GE’s dividend: It was secure and would stay intact, right where it was at 31 cents a quarter. Today, February 27, 2009, a little over a month later, GE cut its dividend to 10 cents a quarter. Jeff Immelt lied, is clueless, or both. GE’s argument that the economy is far worse than it had thought when Immelt made his statements last month makes no sense, given the time frame. But if that argument has even a shred of credibility, it says plenty about the skill and ability of GE’s executives, Mr. Immelt especially, to see what is in the plain sight of everyone around them. So Mr. Immelt is either a liar or an incompetent.
One hates (but not all that much) to generalize, but Mr. Immelt is not at all unique among this generation of blow-dried yahoos, “educated” and steeped in the latest actionless, pointless babble that constitutes modern American management, that runs America’s major corporations. They are so used to lying that telling the truth becomes an unnatural act. Like politicians (which, in this era of the iron big business/big government axis, they are), they lie simply because it comes more naturally than telling the truth. On top of that, they are hopelessly incompetent at anything but self-congratulation and self-enrichment. Their only qualifications for their jobs are, as I have said before, are a thick set of knee pads for their superiors (on their way up) and a heavy cudgel for their underling (forever).
It was especially ironic and laughable when Jack Welch, Mr. Immelt’s predecessor whose last act of complete mismanagement was hand-picking Mr. Immelt as his successor (I suppose it could have been worse—one of the candidates for the GE CEOship was Bob Nardelli.), entitled one of the paeans to himself he calls books “Straight from the Gut.” Any CEO of a major U.S. corporation, and especially Mr. Welch, has never said anything straight from the gut. These non-entities are in the business of peddling unadulterated codswallop in order to obfuscate their glaring incompetence.
Perhaps the solution to the dearth of management ability that characterizes the top brass at the typical large U.S. corporation is for their lap dog boards to replace the maladroit mountebanks who run these myopic mastodons with people who really know how to run a company. There are plenty of such skilled managers among America’s small businesspeople. But it is doubtful that your typical small businessman, steeped in quaint old notions like common sense and actually working for a living, would have the patience to deal with the Frankenstein monsters that years of “modern management theory” and top management pilfery have made of our former great corporations.
And, again, we wonder why we are in such trouble.
Friday, February 27, 2009
HOW MUCH IS IT? FREE? GIMME A DOZEN!
2/27/09
Of course I’m against the tax increases in the Obama budget. But I also would have been against the spending increases under both Presidents Bush and Obama that have made these tax increases necessary. Don’t give me the oft parroted supply line that we can “grow” our way out of these deficits if only we keep marginal tax rates low enough; these deficits, the largest since World War II, are incapable of being eliminated by sufficiently strong growth, even if such growth were anywhere on the horizon. We have to raise taxes to pay for the profligate spending of Messrs. Bush and Obama. While the so called “small government conservatives” in the GOP have rightly opposed the Obama spending increases, in a largely quixotic and half-hearted manner, they raised nary a peep when their boy was going about spending in a fashion that would have made LBJ blush.
This leads to a larger point. I am for a balanced budget amendment…period. Years ago, I was in favor of balanced budget amendment that included a limitation on government spending to a certain percentage of the GDP. The fear was that a balanced budget amendment without such a limitation would simply give politicians, largely Democrats, license to raise taxes, as in “Hey, I don’t want to raise taxes, but, gee, the Constitution says we have to…” But now I’ve come to realize that license to raise taxes in order to pay for spending is the very beauty of a balanced budget amendment.
Public Finance (which is really a branch of Economics, rather than Finance, despite its name) teaches that government has an innate tendency to grow because the benefits of government programs are concentrated in the hands, or pocketbooks, of a vocal few who will passionately demand and defend such programs. The opposition to government programs comes from those who must pay for those programs while seeing little or no benefit. But the latter group is a far larger group than the former; benefits are concentrated, costs are spread. The recipients feel strongly, those paying feel not nearly as strongly (because the costs to each payer is low due to the spreading of those costs), so programs get enacted, and government grows.
Such argumentation, though compelling, is old-fashioned; in an era of unfettered deficit spending, the recipient/payer imbalance has grown far worse. As things stand now, there is very little incentive for the taxpayer to oppose the growth of government because government is effectively free. When the federal government can continually run deficits, the cost of government programs becomes nothing, or close to it at today’s interest rates. The beneficiaries of such programs, obvious and not so obvious, are obviously going to support such spending. Since no one, at least no one in the current generation, is paying for the programs, there is little but token opposition. The demand for anything, even government, is unlimited when the costs of that thing are zero. So there is no throttle on the growth of government, other than some pointless yammering about the size of our deficits, which are now measured in numbers so huge that the human mind stutters and stumbles when trying to deal with them.
On the other hand, if the budget had to be balanced, and thus new programs would have to be paid for with tax increases, there would suddenly be an incentive for the taxpayers to oppose new programs: these programs wouldn’t be “free” any more. Sure, we would still have the problem of concentrated benefits and dispersed costs, but at least there would be some costs to consider when some almost inevitably moronic, counterproductive program springs whole out of the head of some Congressman trying to please someone who wrote him a campaign check. And with costs would come opposition, real opposition, to the growth of government.
So, while I am opposed to tax increases of any kind, I am for a mandatory balanced budget that would necessitate tax increases in some cases. Why? Because I agree with Dr. Friedman’s argument that the true cost of government is not the taxes we pay but the amount the government spends, that the method we choose to finance government spending is not nearly as important as the drag on the economy, on a nation’s wealth, that government spending presents regardless of how it’s financed. I believe in a balanced budget amendment because I, unlike all but one or two Washington politicians, genuinely believe in the concept of limited government. Making people pay full cost for government is the only way to limit government.
But it’s probably too late anyway. Government is well on its way to gobbling up our economy, which was once as bright and shining a tribute to human endeavor and freedom as was our experiment in self-government, which also had gone by the wayside in the interest of expediency and self-centeredness.
Of course I’m against the tax increases in the Obama budget. But I also would have been against the spending increases under both Presidents Bush and Obama that have made these tax increases necessary. Don’t give me the oft parroted supply line that we can “grow” our way out of these deficits if only we keep marginal tax rates low enough; these deficits, the largest since World War II, are incapable of being eliminated by sufficiently strong growth, even if such growth were anywhere on the horizon. We have to raise taxes to pay for the profligate spending of Messrs. Bush and Obama. While the so called “small government conservatives” in the GOP have rightly opposed the Obama spending increases, in a largely quixotic and half-hearted manner, they raised nary a peep when their boy was going about spending in a fashion that would have made LBJ blush.
This leads to a larger point. I am for a balanced budget amendment…period. Years ago, I was in favor of balanced budget amendment that included a limitation on government spending to a certain percentage of the GDP. The fear was that a balanced budget amendment without such a limitation would simply give politicians, largely Democrats, license to raise taxes, as in “Hey, I don’t want to raise taxes, but, gee, the Constitution says we have to…” But now I’ve come to realize that license to raise taxes in order to pay for spending is the very beauty of a balanced budget amendment.
Public Finance (which is really a branch of Economics, rather than Finance, despite its name) teaches that government has an innate tendency to grow because the benefits of government programs are concentrated in the hands, or pocketbooks, of a vocal few who will passionately demand and defend such programs. The opposition to government programs comes from those who must pay for those programs while seeing little or no benefit. But the latter group is a far larger group than the former; benefits are concentrated, costs are spread. The recipients feel strongly, those paying feel not nearly as strongly (because the costs to each payer is low due to the spreading of those costs), so programs get enacted, and government grows.
Such argumentation, though compelling, is old-fashioned; in an era of unfettered deficit spending, the recipient/payer imbalance has grown far worse. As things stand now, there is very little incentive for the taxpayer to oppose the growth of government because government is effectively free. When the federal government can continually run deficits, the cost of government programs becomes nothing, or close to it at today’s interest rates. The beneficiaries of such programs, obvious and not so obvious, are obviously going to support such spending. Since no one, at least no one in the current generation, is paying for the programs, there is little but token opposition. The demand for anything, even government, is unlimited when the costs of that thing are zero. So there is no throttle on the growth of government, other than some pointless yammering about the size of our deficits, which are now measured in numbers so huge that the human mind stutters and stumbles when trying to deal with them.
On the other hand, if the budget had to be balanced, and thus new programs would have to be paid for with tax increases, there would suddenly be an incentive for the taxpayers to oppose new programs: these programs wouldn’t be “free” any more. Sure, we would still have the problem of concentrated benefits and dispersed costs, but at least there would be some costs to consider when some almost inevitably moronic, counterproductive program springs whole out of the head of some Congressman trying to please someone who wrote him a campaign check. And with costs would come opposition, real opposition, to the growth of government.
So, while I am opposed to tax increases of any kind, I am for a mandatory balanced budget that would necessitate tax increases in some cases. Why? Because I agree with Dr. Friedman’s argument that the true cost of government is not the taxes we pay but the amount the government spends, that the method we choose to finance government spending is not nearly as important as the drag on the economy, on a nation’s wealth, that government spending presents regardless of how it’s financed. I believe in a balanced budget amendment because I, unlike all but one or two Washington politicians, genuinely believe in the concept of limited government. Making people pay full cost for government is the only way to limit government.
But it’s probably too late anyway. Government is well on its way to gobbling up our economy, which was once as bright and shining a tribute to human endeavor and freedom as was our experiment in self-government, which also had gone by the wayside in the interest of expediency and self-centeredness.
Tuesday, February 24, 2009
YET ANOTHER SNIDELY WHIPLASH FROM WHOM THE DEMOCRATS ARE GOING TO SAVE US
2/24/09
The scandal du jour is that Paradigm Global Advisors, a manager of funds of (hedge) funds run by none other than Hunter and James Biden, son and brother, respectively, of Vice-President Joe “Hardscrabble” Biden, marketed one of its funds of funds exclusively through companies run by the very much in the news Honest Allen Stanford. (See my previous post.) The relationship was so cozy that the $50mm fund was known as the Paradigm Stanford Capital Management Core Alternative Fund. Besides being the exclusive marketer of this extravagantly named piece of financial piffle, Stanford related entities invested $2.7mm, or about 5% of total assets (or at least OF total equity) in the fund. The choice of that mouthful of a moniker pretty much excludes the possibility of the Bidens’ denying knowing that Stanford was involved (unless they want to claim a level of ignorance that would be impressive even by Washington standards), so the Bidens have taken another route around this faux pas: They have pledged to turn the $2.7mm Stanford investment over to the receiver in the SEC’s civil fraud case against Mr. Stanford. The Bidens, of course, make this ostensibly civic minded act sound as if it were voluntary and expect that turning over the money will somehow extricate them from this embarrassing embranglement with the latest headline grabbing Bernie Madoff wannabe.
As usual, the Pontificator finds underlying aspects of the underlying story more interesting than the headline. First, and less titillating, it is interesting to learn that Joe “Hardscrabble” Biden has relatives in the hedge fund business. From his campaign rhetoric, one would think the whole family is either shoveling coal, working in the steel mills, or selling used cars in order to put day old bread on the table. Who would have thought a Biden scion would be a big time hedge fund player? Aren’t such scoundrels the same guys who served as convenient piñatas for the Obama/Biden campaign? Hmm…
That the Bidens are among the financial villains in the Biden view of America, however, is largely forgivable. After all, perhaps the largest aspect of the American dream is to work hard so that one’s kids could have advantages one did not have. Perhaps we take this to ridiculous, sometimes counterproductive, lengths (Guilty as charged at the Quinn household.), but that is what we, as parents, are supposed to do.
What I find really interesting about this story is that young (Perhaps that is an inapt adjective; at 39 years old, the younger Biden is positively ancient in the world of hedge fund managers, but I digress.) Hunter Biden, who was diligently working away as a Washington lobbyist until 2006, got into the hedge fund business that year, according to his former business partner Anthony Lotito, because Papa Joe Biden was concerned about the impact his son’s being a lobbyist would have on his planned 2008 presidential run. Mr. Lotito later sued the Bidens, claiming they still owed him money from the purchase, but that is another story.
So there you have it. Some very smart people would love to start their own hedge funds, or funds of funds, but don’t realize that dream because, despite their smarts, they don’t have the proper connections, like a dad who is a Senator aspiring to be president with friends like Mr. Lotito who are willing to front them the money to get into the business, doubtless for reasons having nothing at all to do with wanting to court the favor of the aspiring financial wunderkind’s father. But a guy like young Hunter Biden is told by his father that he has to get out of the lobbying business for appearance reasons, sits down and wonders “Gee whiz, Dad, what business should I go into? Hey, this hedge fund stuff sounds really awesome. Could I get into that, Dad? Could I?” And, with a handful of Senatorial fairy dust, Paradigm Asset (mis)Management becomes his new toy.
Some hedge funds are run by some very smart people, including some of my readers. (Not that I am claiming a connection or anything.) Some are run by people who simply who know the right people. Most are run by people who haven’t a clue concerning the financial markets, the economy, the way the world works, etc.. But all investors in hedge funds must meet the SEC definition of “sophisticated” investors. If such “sophistication” leads one to invest in a hedge fund, or a fund of funds, simply because it is run by someone’s kid looking for something to do until the heat blows over, one gets what one deserves. (That Paradigm Stanford’s performance hasn’t been all that bad on relative basis (down 9.5% in 2008, up 0.1% this year) detracts little from the above observation.) Bear in mind, though, that the return on an investment in a fund of funds such as any run by Paradigm cannot be measured in mere percentages. “Did I mention, Mr. Vice-President, that I am an investor in Hunter’s fund? That boy of yours is doing one heck of a job, Mr. Vice-President! Now, about that contract…” So I suspect that many of Paradigm’s investors would be happy with their investments even if the measured return were negative 100%, but, as loyal readers know, I am more cynical than most.
One more thought: Hedge funds wield a great deal of influence and sway in the global markets and thus in your financial life. They are often run by people who are as hebetudinous as their connections, familial or otherwise, who hold power over your financial life by virtue of holding high public office. And we wonder why we are in such trouble.
The scandal du jour is that Paradigm Global Advisors, a manager of funds of (hedge) funds run by none other than Hunter and James Biden, son and brother, respectively, of Vice-President Joe “Hardscrabble” Biden, marketed one of its funds of funds exclusively through companies run by the very much in the news Honest Allen Stanford. (See my previous post.) The relationship was so cozy that the $50mm fund was known as the Paradigm Stanford Capital Management Core Alternative Fund. Besides being the exclusive marketer of this extravagantly named piece of financial piffle, Stanford related entities invested $2.7mm, or about 5% of total assets (or at least OF total equity) in the fund. The choice of that mouthful of a moniker pretty much excludes the possibility of the Bidens’ denying knowing that Stanford was involved (unless they want to claim a level of ignorance that would be impressive even by Washington standards), so the Bidens have taken another route around this faux pas: They have pledged to turn the $2.7mm Stanford investment over to the receiver in the SEC’s civil fraud case against Mr. Stanford. The Bidens, of course, make this ostensibly civic minded act sound as if it were voluntary and expect that turning over the money will somehow extricate them from this embarrassing embranglement with the latest headline grabbing Bernie Madoff wannabe.
As usual, the Pontificator finds underlying aspects of the underlying story more interesting than the headline. First, and less titillating, it is interesting to learn that Joe “Hardscrabble” Biden has relatives in the hedge fund business. From his campaign rhetoric, one would think the whole family is either shoveling coal, working in the steel mills, or selling used cars in order to put day old bread on the table. Who would have thought a Biden scion would be a big time hedge fund player? Aren’t such scoundrels the same guys who served as convenient piñatas for the Obama/Biden campaign? Hmm…
That the Bidens are among the financial villains in the Biden view of America, however, is largely forgivable. After all, perhaps the largest aspect of the American dream is to work hard so that one’s kids could have advantages one did not have. Perhaps we take this to ridiculous, sometimes counterproductive, lengths (Guilty as charged at the Quinn household.), but that is what we, as parents, are supposed to do.
What I find really interesting about this story is that young (Perhaps that is an inapt adjective; at 39 years old, the younger Biden is positively ancient in the world of hedge fund managers, but I digress.) Hunter Biden, who was diligently working away as a Washington lobbyist until 2006, got into the hedge fund business that year, according to his former business partner Anthony Lotito, because Papa Joe Biden was concerned about the impact his son’s being a lobbyist would have on his planned 2008 presidential run. Mr. Lotito later sued the Bidens, claiming they still owed him money from the purchase, but that is another story.
So there you have it. Some very smart people would love to start their own hedge funds, or funds of funds, but don’t realize that dream because, despite their smarts, they don’t have the proper connections, like a dad who is a Senator aspiring to be president with friends like Mr. Lotito who are willing to front them the money to get into the business, doubtless for reasons having nothing at all to do with wanting to court the favor of the aspiring financial wunderkind’s father. But a guy like young Hunter Biden is told by his father that he has to get out of the lobbying business for appearance reasons, sits down and wonders “Gee whiz, Dad, what business should I go into? Hey, this hedge fund stuff sounds really awesome. Could I get into that, Dad? Could I?” And, with a handful of Senatorial fairy dust, Paradigm Asset (mis)Management becomes his new toy.
Some hedge funds are run by some very smart people, including some of my readers. (Not that I am claiming a connection or anything.) Some are run by people who simply who know the right people. Most are run by people who haven’t a clue concerning the financial markets, the economy, the way the world works, etc.. But all investors in hedge funds must meet the SEC definition of “sophisticated” investors. If such “sophistication” leads one to invest in a hedge fund, or a fund of funds, simply because it is run by someone’s kid looking for something to do until the heat blows over, one gets what one deserves. (That Paradigm Stanford’s performance hasn’t been all that bad on relative basis (down 9.5% in 2008, up 0.1% this year) detracts little from the above observation.) Bear in mind, though, that the return on an investment in a fund of funds such as any run by Paradigm cannot be measured in mere percentages. “Did I mention, Mr. Vice-President, that I am an investor in Hunter’s fund? That boy of yours is doing one heck of a job, Mr. Vice-President! Now, about that contract…” So I suspect that many of Paradigm’s investors would be happy with their investments even if the measured return were negative 100%, but, as loyal readers know, I am more cynical than most.
One more thought: Hedge funds wield a great deal of influence and sway in the global markets and thus in your financial life. They are often run by people who are as hebetudinous as their connections, familial or otherwise, who hold power over your financial life by virtue of holding high public office. And we wonder why we are in such trouble.
Wednesday, February 18, 2009
“A MERE INDEX FUND? HAH! MY MONEY’S INVESTED OFFSHORE BY A GUY WHOSE FAMILY HAD A COLLEGE NAMED AFTER IT!”
2/18/09
The SEC has accused financier R. Allen Stanford (Ever notice how big time financiers, e.g., J. Paul Getty, H. Lamar Hunt, J. Robert Vesco, R. Allen Stanford, tend to use a first initial and a complete middle name? Perhaps this is one of the techniques they learn in Big Time Financier School, but I digress.) of massive financial fraud involving selling of non-federally insured CDs of offshore banks and investing the proceeds into opaque assets that may or may not have existed while assuring investors that their money was invested in liquid, relatively safe assets. The Stanford scheme, of course, sounds all too familiar in the wake of the Madoff scandal. There are some differences, some substantive, some not so substantive, between the Stanford scheme:
--The scale of the Stanford scheme, at least at this writing, seems to be far smaller.
--The Stanford scam (again, at least at this writing), does not appear to be a naked Ponzi scheme, like the Madoff caper.
--The appearance of the perps. Bernie Madoff could look positively avuncular. Allen Stanford, on the other hand, has a smarmy appearance that can best be described as a cross between a cheshire cat, Alfred E. Neuman, and a villain on a Three Stooges episode. One does not like to judge people by appearance, but, having been in or around the money business for my entire adult life, I have learned that you simply don’t trust people with certain looks about them. Stanford’s appearance screamed “Crook!”
Other than, that, though, the Madoff and Stanford schemes were remarkably similar. Both featured high living characters who used the trappings of wealth, and a deep understanding of the appeals to vanity to which all humans, but especially Americans, it seems, are most vulnerable, as their main selling points. Both supposedly delivered “returns” that were remarkably consistent and lacking in credibility. Both Madoff and Stanford cultivated and achieved degrees of political influence. Both were multinational in their reach, though Madoff’s non-American “investors” tended to be from Europe and Stanford’s tended to be from Latin America. Both involved victims that were, for the most part, wealthy and, at least according to the SEC definition, “sophisticated” (though Stanford’s “investors,” in general, appeared to be slightly less upscale than Madoff’s) and should have known better. My attitude toward both sets of victims is the same: If my supply of compassion were inexhaustible (It’s not yet.), I would expend some on these people. But if one’s idea of investing is giving one’s money to some charlatan because one’s equally gullible and gormless friends have done so, the mountebank has an exotic address (in Stanford’s case, Antigua) and the imprimatur of some foreign power (Stanford was “Sir Allen, having been knighted in Antigua in 2006.), and the jackanapes who lusts after your dough looks like he has money, one deserve what one gets.
What makes Stanford’s scheme so notable, coming in the wake of Madoff’s rip-off, is the perhaps obvious question: How more of these are yet to surface? Given that the main attraction of both these imperious imbroglios was snob appeal, and given the typical wealthy American’s (and, to be fair, wealthy foreigner’s) fondness for snobbishly looking down his proboscis at his fellow man, I suspect plenty.
The SEC has accused financier R. Allen Stanford (Ever notice how big time financiers, e.g., J. Paul Getty, H. Lamar Hunt, J. Robert Vesco, R. Allen Stanford, tend to use a first initial and a complete middle name? Perhaps this is one of the techniques they learn in Big Time Financier School, but I digress.) of massive financial fraud involving selling of non-federally insured CDs of offshore banks and investing the proceeds into opaque assets that may or may not have existed while assuring investors that their money was invested in liquid, relatively safe assets. The Stanford scheme, of course, sounds all too familiar in the wake of the Madoff scandal. There are some differences, some substantive, some not so substantive, between the Stanford scheme:
--The scale of the Stanford scheme, at least at this writing, seems to be far smaller.
--The Stanford scam (again, at least at this writing), does not appear to be a naked Ponzi scheme, like the Madoff caper.
--The appearance of the perps. Bernie Madoff could look positively avuncular. Allen Stanford, on the other hand, has a smarmy appearance that can best be described as a cross between a cheshire cat, Alfred E. Neuman, and a villain on a Three Stooges episode. One does not like to judge people by appearance, but, having been in or around the money business for my entire adult life, I have learned that you simply don’t trust people with certain looks about them. Stanford’s appearance screamed “Crook!”
Other than, that, though, the Madoff and Stanford schemes were remarkably similar. Both featured high living characters who used the trappings of wealth, and a deep understanding of the appeals to vanity to which all humans, but especially Americans, it seems, are most vulnerable, as their main selling points. Both supposedly delivered “returns” that were remarkably consistent and lacking in credibility. Both Madoff and Stanford cultivated and achieved degrees of political influence. Both were multinational in their reach, though Madoff’s non-American “investors” tended to be from Europe and Stanford’s tended to be from Latin America. Both involved victims that were, for the most part, wealthy and, at least according to the SEC definition, “sophisticated” (though Stanford’s “investors,” in general, appeared to be slightly less upscale than Madoff’s) and should have known better. My attitude toward both sets of victims is the same: If my supply of compassion were inexhaustible (It’s not yet.), I would expend some on these people. But if one’s idea of investing is giving one’s money to some charlatan because one’s equally gullible and gormless friends have done so, the mountebank has an exotic address (in Stanford’s case, Antigua) and the imprimatur of some foreign power (Stanford was “Sir Allen, having been knighted in Antigua in 2006.), and the jackanapes who lusts after your dough looks like he has money, one deserve what one gets.
What makes Stanford’s scheme so notable, coming in the wake of Madoff’s rip-off, is the perhaps obvious question: How more of these are yet to surface? Given that the main attraction of both these imperious imbroglios was snob appeal, and given the typical wealthy American’s (and, to be fair, wealthy foreigner’s) fondness for snobbishly looking down his proboscis at his fellow man, I suspect plenty.
GOVERNOR CALIGULA?
2/18/09
Legend has it that the mad Emperor Caligula appointed his horse, Incitatus, to the Roman Senate in the 30s. (Note that I have inserted no “ ‘ “ before “30s” because those were the aught 30s.) That story may well be true; the tides of history become murky after 2,000 years. The more accurate story may be, however, that Caligula tried to make Incitatus a consul or a priest, rather than a senator, but the former story is more apt to our political situation in Illinois.
It looks as though, while there is no evidence that Rod Blagojevich idolized Caligula, as he did Richard Nixon, our mad former governor has achieved a feat worthy of Caligula by leaving us with Roland Burris as our junior senator. Mr. Burris’s story concerning a possible, keeping with the Latin theme of this post, quid pro quo for his Senate seat has changed on numerous occasions. First, he had no contact with any of Blago’s people concerning the Senate seat. Then it seems he talked to Lon Monk but promised no cash for the seat. Then the story evolved, after the possibility arose that the Feds may have been listening to his conversations, to the point at which that, well, Roland had spoken with several other of the governor’s cronies, including the governor’s brother Rob, but still promised no money. In its latest iteration, Mr. Burris had tried, but failed, to raise money for Governor Rod, at the governor’s brother’s request, and then claimed it wouldn’t be such a good idea to do what he had failed to do because raising funds would present a conflict for an aspiring U.S. Senator. And we know that no U.S. Senator wants to get involved in conflicts of interest, no sir.
Clearly Roland Burris is lying. There is nothing unique or original in this observation. But here are a few more observations.
First, not to beat on a dead horse, but the national media knows ABSOLUTELY NOTHING about Chicago politics. They had Roland portrayed as a man on white horse, even applied expressions like “unimpeachable integrity” to Mr. Burris. As I said in my 12/30 post, ROLAND, ROLAND, ROLAND, KEEP THEM PUNDITS ROLLIN’… (which was, by the way, the first use of the old “Rawhide” theme in this context):
“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.”
I went on to say that
“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.”
It turns out that I was being unfair to Chicago politicians. They may shade the truth once in awhile, but they do so with more aplomb, or at least with more bluster, and shame, than Roland Burris. He simply gets up there and lies and expects us to believe it.
Second, at the risk of making a prediction that will turn out to be wrong, like my 12/30 prediction that Burris would not be seated, Roland Burris will in all likelihood remain in the Senate at least until his term expires in 2010. Why? As I said in my 1/13/09 post, “I WAS WAY OFF!”,
“As soon as it was hinted that blocking Mr. Burris’s appointment could be construed as even remotely racist, Messrs, Durbin and Reid, as is the wont of most politicians, folded like a cheap card table, or a certain baseball team that plies its trade on Chicago’s north side.”
The Democrats in the Senate, and Harry Reid and Dick Durbin in particular, simply do not have the guts to stand up to the race card. They will not censure the Senate’s only Black member. Further, while Burris is clearly lying, this doesn’t look like outright perjury (though those much more well versed in the law than I might make a convincing counter-argument), so the Sangamon County perjury investigation will probably go nowhere. Finally, Roland Burris is not going to resign.
Third, President Obama deserves some of the blame for putting this latest liar in the Senate. With a heavy legislative agenda, he was in a hurry to get a Democrat seated and to put the Burris controversy behind him before the inauguration, so he put pressure on Senate Democrats (as if such pressure were needed with these lilliputians) to seat Burris. Though Obama was never a political insider in Chicago, he had spent enough time around and accommodating Chicago politics to know about Roland Burris’s character. It didn’t seem to bother him that his state would be represented by a man who plays especially and blatantly loose with the truth.
Legend has it that the mad Emperor Caligula appointed his horse, Incitatus, to the Roman Senate in the 30s. (Note that I have inserted no “ ‘ “ before “30s” because those were the aught 30s.) That story may well be true; the tides of history become murky after 2,000 years. The more accurate story may be, however, that Caligula tried to make Incitatus a consul or a priest, rather than a senator, but the former story is more apt to our political situation in Illinois.
It looks as though, while there is no evidence that Rod Blagojevich idolized Caligula, as he did Richard Nixon, our mad former governor has achieved a feat worthy of Caligula by leaving us with Roland Burris as our junior senator. Mr. Burris’s story concerning a possible, keeping with the Latin theme of this post, quid pro quo for his Senate seat has changed on numerous occasions. First, he had no contact with any of Blago’s people concerning the Senate seat. Then it seems he talked to Lon Monk but promised no cash for the seat. Then the story evolved, after the possibility arose that the Feds may have been listening to his conversations, to the point at which that, well, Roland had spoken with several other of the governor’s cronies, including the governor’s brother Rob, but still promised no money. In its latest iteration, Mr. Burris had tried, but failed, to raise money for Governor Rod, at the governor’s brother’s request, and then claimed it wouldn’t be such a good idea to do what he had failed to do because raising funds would present a conflict for an aspiring U.S. Senator. And we know that no U.S. Senator wants to get involved in conflicts of interest, no sir.
Clearly Roland Burris is lying. There is nothing unique or original in this observation. But here are a few more observations.
First, not to beat on a dead horse, but the national media knows ABSOLUTELY NOTHING about Chicago politics. They had Roland portrayed as a man on white horse, even applied expressions like “unimpeachable integrity” to Mr. Burris. As I said in my 12/30 post, ROLAND, ROLAND, ROLAND, KEEP THEM PUNDITS ROLLIN’… (which was, by the way, the first use of the old “Rawhide” theme in this context):
“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.”
I went on to say that
“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.”
It turns out that I was being unfair to Chicago politicians. They may shade the truth once in awhile, but they do so with more aplomb, or at least with more bluster, and shame, than Roland Burris. He simply gets up there and lies and expects us to believe it.
Second, at the risk of making a prediction that will turn out to be wrong, like my 12/30 prediction that Burris would not be seated, Roland Burris will in all likelihood remain in the Senate at least until his term expires in 2010. Why? As I said in my 1/13/09 post, “I WAS WAY OFF!”,
“As soon as it was hinted that blocking Mr. Burris’s appointment could be construed as even remotely racist, Messrs, Durbin and Reid, as is the wont of most politicians, folded like a cheap card table, or a certain baseball team that plies its trade on Chicago’s north side.”
The Democrats in the Senate, and Harry Reid and Dick Durbin in particular, simply do not have the guts to stand up to the race card. They will not censure the Senate’s only Black member. Further, while Burris is clearly lying, this doesn’t look like outright perjury (though those much more well versed in the law than I might make a convincing counter-argument), so the Sangamon County perjury investigation will probably go nowhere. Finally, Roland Burris is not going to resign.
Third, President Obama deserves some of the blame for putting this latest liar in the Senate. With a heavy legislative agenda, he was in a hurry to get a Democrat seated and to put the Burris controversy behind him before the inauguration, so he put pressure on Senate Democrats (as if such pressure were needed with these lilliputians) to seat Burris. Though Obama was never a political insider in Chicago, he had spent enough time around and accommodating Chicago politics to know about Roland Burris’s character. It didn’t seem to bother him that his state would be represented by a man who plays especially and blatantly loose with the truth.
“ENLISTING THE ENEMY”
2/19/09
The March/April 2009 issue of the Writers’ Journal contains one of my short stories, “Enlisting the Enemy.” The magazine is available in most bookstores; you should pick it up and read the story for three reasons:
--It is, if I can say so myself, a riveting, relevant, and well written story.
--It is loosely based on a true story I heard from some friends involved in Chicago politics.
--In a slightly expanded version, this story became a chapter in my novel of Chicago politics, entitled The Chairman, which, while currently going nowhere, will be published one way or another, hopefully by the end of this year.
If you are interested in, fascinated by, or even appalled by Chicago politics, you will like this story. Even if you have no interest in politics of any kind (Since you’re reading this blog, this probably is not the case.), but are fascinated by human nature and Machiavellian machinations, you will like this story, and the novel, when it finally is published.
The March/April 2009 issue of the Writers’ Journal contains one of my short stories, “Enlisting the Enemy.” The magazine is available in most bookstores; you should pick it up and read the story for three reasons:
--It is, if I can say so myself, a riveting, relevant, and well written story.
--It is loosely based on a true story I heard from some friends involved in Chicago politics.
--In a slightly expanded version, this story became a chapter in my novel of Chicago politics, entitled The Chairman, which, while currently going nowhere, will be published one way or another, hopefully by the end of this year.
If you are interested in, fascinated by, or even appalled by Chicago politics, you will like this story. Even if you have no interest in politics of any kind (Since you’re reading this blog, this probably is not the case.), but are fascinated by human nature and Machiavellian machinations, you will like this story, and the novel, when it finally is published.
Sunday, February 15, 2009
SICKOS
2/15/09
The political ineptitude of the Democratic Party never ceases to amaze even the most casual observer of politics. (Singling out the Democratic Party in this instance does not exonerate the Republicans, who are every bit as inept as the Democrats. However, the particular instance of political pococurantism I am addressing here is unique to the Democrats.)
For at least the last thirty years, more like sixty, really, one of the most fervid goals of the Democratic Party, and certainly of its leftmost quarters, has been a system of national health care, most ideally, in the Party’s most febrile dreams, delivered through a one-payer system. This idea has been a non-starter for the same reason that school vouchers, a long held goal of the more libertarian quarters of the Republican right, have been a non-starter (But vouchers are grist for another mill.): most people, and certainly most people who vote, are happy with their health care insurance arrangements. These voters get very generous (They don’t realize how generous their plans are; I advise anyone getting his or her health care through a major employer to get out there and buy his own individual health care policy if he cares to complain about the premia he pays or what an injustice it is to have to pay, say, $10 for a prescription, or a $50 co-pay for a hangnail examination, but I digress.) health insurance through their employers and are happy to have even the most routine and unnecessary procedures covered through what is laughingly called “insurance” but what would be called, if accuracy were the object, prepaid health care arrangements. Why would such people support national health care?
The only hope the Democrats have of realizing their dream of a one-payer national health care scheme is for the voting public, the working middle class, to become unhappy with their health care arrangements. And, with unemployment reaching double digits, the party of Kucinich was on the verge of achieving this goal. With people losing their jobs and suddenly finding that they would have to say, take a little Brioschi rather than run to the doctor to get some widely and very expensively advertised remedy for “acid reflux disease” prescribed for the cost of a $5.00 co-pay, there would indeed be hell to pay. The middle class would demand that politicians “do something” in the form of handing out other people’s money so that people could continue the practice of overconsuming “health care” at a rate that makes the rest of the world either shake its collective head or heap scorn on us Americans who have made the back of the local Walgreen’s busier than your typical McDonald’s at lunch time.
But what do the Democrats do? As part of their stimulus bill, they insert a provision subsidizing COBRA payments for those left unemployed by the economic and financial chickens come home to roost that is described as a national crisis. Now people are not only entitled to continue their employer provided health care coverage while unemployed but no longer have to pick up the whole tab for such coverage. So people have one less reason to be dissatisfied with the current absurdity of a health care system in which one’s access to health insurance depends on one’s employment status.
Don’t misunderstand me; I am not arguing for national health care (as if loyal readers had to be told that!). While our system of employer provided coverage defies economic logic and humanitarian principles and badly needs rethinking, my libertarian instincts tell me that nationalized health care is not the answer. I am only arguing pure, Machiavellian politics. The Democrats had a chance to let the system generate its own discontent, and thus provide an opening for one of their most heartfelt goals, and they blew it.
Some will respond in high dudgeon: “The Democrats are not motivated by such sordid concerns as Machiavellian politics. They are concerned with the plight of the newly unemployed, and if sacrificing one of their longest held goals is necessary to help these people, the big-hearted Democrats surely will.” I, however, stopped believing in the tooth fairy when Kennedy was president.
The political ineptitude of the Democratic Party never ceases to amaze even the most casual observer of politics. (Singling out the Democratic Party in this instance does not exonerate the Republicans, who are every bit as inept as the Democrats. However, the particular instance of political pococurantism I am addressing here is unique to the Democrats.)
For at least the last thirty years, more like sixty, really, one of the most fervid goals of the Democratic Party, and certainly of its leftmost quarters, has been a system of national health care, most ideally, in the Party’s most febrile dreams, delivered through a one-payer system. This idea has been a non-starter for the same reason that school vouchers, a long held goal of the more libertarian quarters of the Republican right, have been a non-starter (But vouchers are grist for another mill.): most people, and certainly most people who vote, are happy with their health care insurance arrangements. These voters get very generous (They don’t realize how generous their plans are; I advise anyone getting his or her health care through a major employer to get out there and buy his own individual health care policy if he cares to complain about the premia he pays or what an injustice it is to have to pay, say, $10 for a prescription, or a $50 co-pay for a hangnail examination, but I digress.) health insurance through their employers and are happy to have even the most routine and unnecessary procedures covered through what is laughingly called “insurance” but what would be called, if accuracy were the object, prepaid health care arrangements. Why would such people support national health care?
The only hope the Democrats have of realizing their dream of a one-payer national health care scheme is for the voting public, the working middle class, to become unhappy with their health care arrangements. And, with unemployment reaching double digits, the party of Kucinich was on the verge of achieving this goal. With people losing their jobs and suddenly finding that they would have to say, take a little Brioschi rather than run to the doctor to get some widely and very expensively advertised remedy for “acid reflux disease” prescribed for the cost of a $5.00 co-pay, there would indeed be hell to pay. The middle class would demand that politicians “do something” in the form of handing out other people’s money so that people could continue the practice of overconsuming “health care” at a rate that makes the rest of the world either shake its collective head or heap scorn on us Americans who have made the back of the local Walgreen’s busier than your typical McDonald’s at lunch time.
But what do the Democrats do? As part of their stimulus bill, they insert a provision subsidizing COBRA payments for those left unemployed by the economic and financial chickens come home to roost that is described as a national crisis. Now people are not only entitled to continue their employer provided health care coverage while unemployed but no longer have to pick up the whole tab for such coverage. So people have one less reason to be dissatisfied with the current absurdity of a health care system in which one’s access to health insurance depends on one’s employment status.
Don’t misunderstand me; I am not arguing for national health care (as if loyal readers had to be told that!). While our system of employer provided coverage defies economic logic and humanitarian principles and badly needs rethinking, my libertarian instincts tell me that nationalized health care is not the answer. I am only arguing pure, Machiavellian politics. The Democrats had a chance to let the system generate its own discontent, and thus provide an opening for one of their most heartfelt goals, and they blew it.
Some will respond in high dudgeon: “The Democrats are not motivated by such sordid concerns as Machiavellian politics. They are concerned with the plight of the newly unemployed, and if sacrificing one of their longest held goals is necessary to help these people, the big-hearted Democrats surely will.” I, however, stopped believing in the tooth fairy when Kennedy was president.
Saturday, February 14, 2009
“YOU MAKE ME…MR. SUCCESS!!!”
2/14/09
Executives in the finance industry, broadly defined, and their stridulous sycophants in the financial media are whining about the admittedly rather severe caps on bonuses inserted into the stimulus bill by Senator Chris Dodd of Connecticut. Even the Obama administration, not known for being overly friendly to Wall Street, at least not until the Street starts paying even more protection money to the Democratic Party, is concerned that the limits may be too stringent. As the law currently reads, any company receiving federal bailout funds couldn’t pay bonuses exceeding 1/3 of total pay, or, algebraically, ½ of salary. This restriction applies retroactively.
Several thoughts come to mind. First, the general rule that the regulatees are almost always smarter than the regulators and thus can always find a way around regulations is once again confirmed. The easiest way around this rule, since it is aimed specifically at bonuses, is to simply increase salaries. If Senator Dodd’s intention was to punish the pack of patheticoes currently in charge of our nation’s financial industry (the industry that we are counting on, remember, to maintain our economic dominance…oh, boy!), or even if his motives were even more noble, he has failed miserably, but this is not an altogether unfamiliar position for Senator Dodd.
Second, one of the objections to the pay restrictions is that they will force “top talent” away from their firms, perhaps to hedge funds, or even out of the financial industry altogether. Nonsense. Going to hedge funds makes no sense for most of these nonentities because, if you run a hedge fund, you don’t get paid much unless you perform, unlike the situation that prevails in their present employment, in which these quisquilians get paid gargantuan sums even when they fall flat on their visages. Leaving the financial industry? C’mon! Where else can anyone, even immensely talented people (about whom we are, for the most part, not talking in the present context) make as much money as they can in the financial business unless they are over 6’10” and have some facility with a basketball?
Third, the simplistic answer to the whining pack of mega-talents that got us into this economic soup is “If you don’t want to live by the government’s addle-brained rules, don’t take the government’s money.” This is one of those not so rare circumstances in which the simplistic answer is the correct one.
Fourth, one of the severest objections, especially from Preppy Tim Geithner’s Treasury Department, to Senator Dodd’s restrictions is that it might dissuade these titans of finance from taking federal money, to which I reply “GREAT!!!” If these institutions are in a position to refuse federal help because their executives might have to endure the ignominious sacrifices involved in a seven, down from a customary eight or nine, figure pay package, then they shouldn’t be getting federal money. One observer, Alan Levine, an executive pay attorney in New York, went so far as to state that “I’ll bet you will see in the next month or so, banks paying back the government. They don’t want to run their businesses under these restrictions.” Perhaps I am not as smart as Mr. Levine, and I am certainly not as smart as the whining Wall Street wunderkinds, but why is such an early return of the taxpayers’ money supposed to be a bad thing? Further, if these financial concerns can so easily pay our largesse back, why were we forced to give it to them in the first place? It probably has a lot to do with the aforementioned protection money.
Someone has to point out to the stupefied solipsists on Wall Street that socialism is a bad idea even if this particular form of socialism were to allow them to maintain their lifelong seven and eight figure entitlements.
Executives in the finance industry, broadly defined, and their stridulous sycophants in the financial media are whining about the admittedly rather severe caps on bonuses inserted into the stimulus bill by Senator Chris Dodd of Connecticut. Even the Obama administration, not known for being overly friendly to Wall Street, at least not until the Street starts paying even more protection money to the Democratic Party, is concerned that the limits may be too stringent. As the law currently reads, any company receiving federal bailout funds couldn’t pay bonuses exceeding 1/3 of total pay, or, algebraically, ½ of salary. This restriction applies retroactively.
Several thoughts come to mind. First, the general rule that the regulatees are almost always smarter than the regulators and thus can always find a way around regulations is once again confirmed. The easiest way around this rule, since it is aimed specifically at bonuses, is to simply increase salaries. If Senator Dodd’s intention was to punish the pack of patheticoes currently in charge of our nation’s financial industry (the industry that we are counting on, remember, to maintain our economic dominance…oh, boy!), or even if his motives were even more noble, he has failed miserably, but this is not an altogether unfamiliar position for Senator Dodd.
Second, one of the objections to the pay restrictions is that they will force “top talent” away from their firms, perhaps to hedge funds, or even out of the financial industry altogether. Nonsense. Going to hedge funds makes no sense for most of these nonentities because, if you run a hedge fund, you don’t get paid much unless you perform, unlike the situation that prevails in their present employment, in which these quisquilians get paid gargantuan sums even when they fall flat on their visages. Leaving the financial industry? C’mon! Where else can anyone, even immensely talented people (about whom we are, for the most part, not talking in the present context) make as much money as they can in the financial business unless they are over 6’10” and have some facility with a basketball?
Third, the simplistic answer to the whining pack of mega-talents that got us into this economic soup is “If you don’t want to live by the government’s addle-brained rules, don’t take the government’s money.” This is one of those not so rare circumstances in which the simplistic answer is the correct one.
Fourth, one of the severest objections, especially from Preppy Tim Geithner’s Treasury Department, to Senator Dodd’s restrictions is that it might dissuade these titans of finance from taking federal money, to which I reply “GREAT!!!” If these institutions are in a position to refuse federal help because their executives might have to endure the ignominious sacrifices involved in a seven, down from a customary eight or nine, figure pay package, then they shouldn’t be getting federal money. One observer, Alan Levine, an executive pay attorney in New York, went so far as to state that “I’ll bet you will see in the next month or so, banks paying back the government. They don’t want to run their businesses under these restrictions.” Perhaps I am not as smart as Mr. Levine, and I am certainly not as smart as the whining Wall Street wunderkinds, but why is such an early return of the taxpayers’ money supposed to be a bad thing? Further, if these financial concerns can so easily pay our largesse back, why were we forced to give it to them in the first place? It probably has a lot to do with the aforementioned protection money.
Someone has to point out to the stupefied solipsists on Wall Street that socialism is a bad idea even if this particular form of socialism were to allow them to maintain their lifelong seven and eight figure entitlements.
Friday, February 13, 2009
“HOME, HOME ON THE (GOVERNMENT)…”
2/13/09
Today’s (i.e., Friday, 2/13’s) Wall Street Journal’s opinion page featured a piece by Professor Todd Zywicki of George Mason University law school arguing against proposed legislation enabling mortgage contracts on first homes to be modified in bankruptcy. This is an outstanding article that makes many good points; I recommend it highly to my readers. Professor Zywicki makes several major arguments against mortgage modification, including that such modification will result in:
Mortgage costs’ rising
A torrent of bankruptcies as underwater and/or behind on their payments homeowners seek to stay in their homes, taxing the bankruptcy court system to the breaking point
Other forms of credit, including credit cards, unpaid medical bills, etc. being caught up in the new wave of bankruptcy filings, and
Bankruptcy abuse as people living over their heads see a chance to escape paying for their big screen TVs and expensive vacations.
Some of these arguments are very strong; loyal readers know that I especially like the last one However, as I reflected on Professor Zywicki’s first argument (i.e., that allowing modification will result in the mortgage costs’ rising), I wonder if that is such a bad thing.
If one’s objective is to prop up a still grossly inflated housing market, then making mortgage loans more expensive and harder to maintain is a bad idea. But the reason that our housing market is so distorted, and such a disproportionate amount of our GDP goes toward owner occupied housing, is the special treatment housing gets from the tax code, the regulatory structure, and, consequently, by the financial system generally. Such privileged treatment arose from the long held American notion that home ownership is so inherently desirable that we must encourage it by all means possible. We have come to believe, with very little evidence, that putting people in their own homes gives them a piece of the rock, if you will, a stake in the system and thus less likely to somehow challenge the system. Somehow, owning a home makes people more patriotic, the thinking goes. So our tax code, bankruptcy system, regulatory environment, and, hence, our financial system generally favor home ownership to an extraordinarily generous degree.
This policy has worked well, or at least hasn’t blown up in our face, until recently. But perhaps now, when we need a return to personal financial sanity if our once great nation is to survive, is a good time to reexamine the notion that home ownership is an overriding good that must be encouraged at the expense of other economic and social goals. Maybe making home ownership a bit more difficult would be a salubrious course to pursue.
This is not necessarily, if at all, an argument in favor of legislation allowing modification of mortgage contracts on first homes, and certainly not in favor of allowing modifications of existing contracts. This is simply a call for the reexamination of the sacrosanct treatment home ownership is afforded in this country, a treatment that has been brought to ridiculous and ruinous ends of late.
Today’s (i.e., Friday, 2/13’s) Wall Street Journal’s opinion page featured a piece by Professor Todd Zywicki of George Mason University law school arguing against proposed legislation enabling mortgage contracts on first homes to be modified in bankruptcy. This is an outstanding article that makes many good points; I recommend it highly to my readers. Professor Zywicki makes several major arguments against mortgage modification, including that such modification will result in:
Mortgage costs’ rising
A torrent of bankruptcies as underwater and/or behind on their payments homeowners seek to stay in their homes, taxing the bankruptcy court system to the breaking point
Other forms of credit, including credit cards, unpaid medical bills, etc. being caught up in the new wave of bankruptcy filings, and
Bankruptcy abuse as people living over their heads see a chance to escape paying for their big screen TVs and expensive vacations.
Some of these arguments are very strong; loyal readers know that I especially like the last one However, as I reflected on Professor Zywicki’s first argument (i.e., that allowing modification will result in the mortgage costs’ rising), I wonder if that is such a bad thing.
If one’s objective is to prop up a still grossly inflated housing market, then making mortgage loans more expensive and harder to maintain is a bad idea. But the reason that our housing market is so distorted, and such a disproportionate amount of our GDP goes toward owner occupied housing, is the special treatment housing gets from the tax code, the regulatory structure, and, consequently, by the financial system generally. Such privileged treatment arose from the long held American notion that home ownership is so inherently desirable that we must encourage it by all means possible. We have come to believe, with very little evidence, that putting people in their own homes gives them a piece of the rock, if you will, a stake in the system and thus less likely to somehow challenge the system. Somehow, owning a home makes people more patriotic, the thinking goes. So our tax code, bankruptcy system, regulatory environment, and, hence, our financial system generally favor home ownership to an extraordinarily generous degree.
This policy has worked well, or at least hasn’t blown up in our face, until recently. But perhaps now, when we need a return to personal financial sanity if our once great nation is to survive, is a good time to reexamine the notion that home ownership is an overriding good that must be encouraged at the expense of other economic and social goals. Maybe making home ownership a bit more difficult would be a salubrious course to pursue.
This is not necessarily, if at all, an argument in favor of legislation allowing modification of mortgage contracts on first homes, and certainly not in favor of allowing modifications of existing contracts. This is simply a call for the reexamination of the sacrosanct treatment home ownership is afforded in this country, a treatment that has been brought to ridiculous and ruinous ends of late.
Thursday, February 12, 2009
THANK GOD FOR SMALL FAVORS
2/12/09
There is one development in the compromise stimulus bill that makes this misguided scheme slightly less rancid, though still quite malodorous. And it isn’t the almost undetectable (and probably, in the end, zero, or worse) reduction in its size.
Try as it might, the GOP could not completely preserve the five year loss carryback for corporations that has been the subject of much derision, at least by the Pontificator. See my previous posts: 2/11/09, SMALL POLITICIANS, NOT SMALL BUSINESS, 2/9/09, post “THEY WOULD BE SELECTED FOR CERTAIN PHYSICAL ATTRIBUTES, WHICH WOULD HAVE TO BE OF A HIGHLY STIMULATING NATURE…”, and 1/16/09, SCREW UP, GET A CHECK!!!. This particular handout for corporations has, unfortunately, not been killed altogether; it has merely been limited to businesses with less than $15mm in revenue. While I have a predisposition toward small business (Again, see my 2/11/09 post SMALL POLITICIANS, NOT SMALL BUSINESS.), I still would have rather seen this abomination eliminated altogether; government should not be handing out money to losing businesses, or at least not gargantuan amounts of money, to businesses that aren’t cutting it, regardless of their size. (More generally, the government should not discriminate in its tax policies between businesses of different sizes; it should keep a level playing field. The problem for years has been that the government has been playing for the big guys against the small guys. To those of you old enough to remember the long defunct College All Star game played in the old Soldier Field, it has been as if the government has been playing for the NFL champions against the hapless, but scrappy, College All Stars. But I digress.) However, this limitation on the size of the recipients of your tax dollars is at least a mitigating factor in this misguided piece of legislation.
Note, however, that it is the GOP, that self-designated pal of the little guy, who fought to keep the large losing corporations firmly positioned at the public trough. It was only pressure from the Democrats that forced the big failures to yield their spots at the aforementioned trough to the small failures.
There is one development in the compromise stimulus bill that makes this misguided scheme slightly less rancid, though still quite malodorous. And it isn’t the almost undetectable (and probably, in the end, zero, or worse) reduction in its size.
Try as it might, the GOP could not completely preserve the five year loss carryback for corporations that has been the subject of much derision, at least by the Pontificator. See my previous posts: 2/11/09, SMALL POLITICIANS, NOT SMALL BUSINESS, 2/9/09, post “THEY WOULD BE SELECTED FOR CERTAIN PHYSICAL ATTRIBUTES, WHICH WOULD HAVE TO BE OF A HIGHLY STIMULATING NATURE…”, and 1/16/09, SCREW UP, GET A CHECK!!!. This particular handout for corporations has, unfortunately, not been killed altogether; it has merely been limited to businesses with less than $15mm in revenue. While I have a predisposition toward small business (Again, see my 2/11/09 post SMALL POLITICIANS, NOT SMALL BUSINESS.), I still would have rather seen this abomination eliminated altogether; government should not be handing out money to losing businesses, or at least not gargantuan amounts of money, to businesses that aren’t cutting it, regardless of their size. (More generally, the government should not discriminate in its tax policies between businesses of different sizes; it should keep a level playing field. The problem for years has been that the government has been playing for the big guys against the small guys. To those of you old enough to remember the long defunct College All Star game played in the old Soldier Field, it has been as if the government has been playing for the NFL champions against the hapless, but scrappy, College All Stars. But I digress.) However, this limitation on the size of the recipients of your tax dollars is at least a mitigating factor in this misguided piece of legislation.
Note, however, that it is the GOP, that self-designated pal of the little guy, who fought to keep the large losing corporations firmly positioned at the public trough. It was only pressure from the Democrats that forced the big failures to yield their spots at the aforementioned trough to the small failures.
Wednesday, February 11, 2009
SMALL POLITICIANS, NOT SMALL BUSINESS
2/11/09
Today’s (i.e., 2/11/09’s) Wall Street Journal contained an article (page A4) on the much maligned (certainly in the Insightful Pontificator) provision in both the House and Senate versions of the “stimulus” bill that would allow money losing companies to carry back their losses for five years, up from the current two years, for tax purposes. I have repeatedly attacked this provision as nothing more than handing out taxpayer money to losers.
The Journal explored another angle to this peculiar piece of legislation. As we all know, this provision would especially benefit large homebuilders who are losing money this year and don’t expect to make any money in the near future but who made gargantuan profits in the years leading up to 2007 thanks to the hyper-leveraged economy that characterized that era. However, the Journal points out, small homebuilders do not like this provision at all. Why? Because it gives large homebuilders an incentive to dump undeveloped land and even finished homes at fire sale prices in order to take advantage of the tax break. This puts further pressure on property prices, severely damaging small homebuilders who hold large (for them) inventories of raw land and unsold homes.
Note that this handout to large losers is the provision in the “stimulus” bill for which Republicans have fought the hardest. Remember this the next time some GOP kool-aid imbiber tells you that the Republicans are the party of small business. As I said in my 2/9/09 post “THEY WOULD BE SELECTED FOR CERTAIN PHYSICAL ATTRIBUTES, WHICH WOULD HAVE TO BE OF A HIGHLY STIMULATING NATURE…”, which in turn harkened back to my 1/16/09 post SCREW UP, GET A CHECK!!!:
“…the GOP is really for very large businesses, and only very large businesses. The GOP’s ardent support of this particular “welfare for losers” scheme, however, leads to suspicion that the GOP is the party only of large businesses who consistently lose money.”
Make no mistake (as perhaps the most noted GOPer of the 20th century was wont to say): small business has NO friends in Washington, D.C.
Today’s (i.e., 2/11/09’s) Wall Street Journal contained an article (page A4) on the much maligned (certainly in the Insightful Pontificator) provision in both the House and Senate versions of the “stimulus” bill that would allow money losing companies to carry back their losses for five years, up from the current two years, for tax purposes. I have repeatedly attacked this provision as nothing more than handing out taxpayer money to losers.
The Journal explored another angle to this peculiar piece of legislation. As we all know, this provision would especially benefit large homebuilders who are losing money this year and don’t expect to make any money in the near future but who made gargantuan profits in the years leading up to 2007 thanks to the hyper-leveraged economy that characterized that era. However, the Journal points out, small homebuilders do not like this provision at all. Why? Because it gives large homebuilders an incentive to dump undeveloped land and even finished homes at fire sale prices in order to take advantage of the tax break. This puts further pressure on property prices, severely damaging small homebuilders who hold large (for them) inventories of raw land and unsold homes.
Note that this handout to large losers is the provision in the “stimulus” bill for which Republicans have fought the hardest. Remember this the next time some GOP kool-aid imbiber tells you that the Republicans are the party of small business. As I said in my 2/9/09 post “THEY WOULD BE SELECTED FOR CERTAIN PHYSICAL ATTRIBUTES, WHICH WOULD HAVE TO BE OF A HIGHLY STIMULATING NATURE…”, which in turn harkened back to my 1/16/09 post SCREW UP, GET A CHECK!!!:
“…the GOP is really for very large businesses, and only very large businesses. The GOP’s ardent support of this particular “welfare for losers” scheme, however, leads to suspicion that the GOP is the party only of large businesses who consistently lose money.”
Make no mistake (as perhaps the most noted GOPer of the 20th century was wont to say): small business has NO friends in Washington, D.C.
“I WISH YOU COULD HAVE COME UP WITH A BETTER STORY; I FELT DISTINCLY LIKE AN IDIOT REPEATING IT.”
2/11/09
The Dow was down some 380 points today, the NASDAQ down 67, and the S&P down 43. All financial punditry was falling all over each other coming up with explanations, which, as experienced investors know, is a fool’s errand. One day’s movements are always inexplicable, and this one was little different. The reason for today’s drop could have been anything, it could have been nothing. It could have simply been the market’s giving back some of the points it picked up last week. But most of the experts attributed the market’s miserable performance to the testimony of Treasury Secretary Tim Geithner’s speech supposedly outlining the Obama Administration’s financial rescue plan.
To the extent that the punditry is right in attributing the market’s plunge to Mr. Geithner’s speech, it is wrong in its specific diagnosis of the disease that was set loose by the Secretary’s vain and pointless babbling. All punditry pointed to the substance of the speech, or lack thereof. The wise men told us that the “plan,” as outlined by Mr. Geithner, lacked specifics, that it was half-baked, that it amounted to (my words) an amorphous mass of maladroit mush.
Though the pundits were correct in their assessment of Mr. Geithner’s speech, they were wrong about what really troubled the market about it. The problem was not the substance of the speech, but, rather, Mr. Geithner himself. This was the world’s, and the world’s markets’, first real look at Mr. Geithner as Treasury Secretary, and they understandably did not like what they saw. He looked tentative and confused. This might very well be because of the disjointed and vague nature of the “plan” he was trying to present, but one suspects he might look that way even delivering the Gettysburg address (provided someone wrote such an eloquent tome for him). Mr. Geithner gave the impression of being a very small boy with a very new and large toy, the directions for which he had prematurely discarded. And that toy was our economy.
Our problems are big and most likely unsolvable by government. In fact, such attempts are bound to exacerbate them. Having Mr. Geithner in charge of the Treasury, the world is coming to realize, increases the chances of the latter.
The Dow was down some 380 points today, the NASDAQ down 67, and the S&P down 43. All financial punditry was falling all over each other coming up with explanations, which, as experienced investors know, is a fool’s errand. One day’s movements are always inexplicable, and this one was little different. The reason for today’s drop could have been anything, it could have been nothing. It could have simply been the market’s giving back some of the points it picked up last week. But most of the experts attributed the market’s miserable performance to the testimony of Treasury Secretary Tim Geithner’s speech supposedly outlining the Obama Administration’s financial rescue plan.
To the extent that the punditry is right in attributing the market’s plunge to Mr. Geithner’s speech, it is wrong in its specific diagnosis of the disease that was set loose by the Secretary’s vain and pointless babbling. All punditry pointed to the substance of the speech, or lack thereof. The wise men told us that the “plan,” as outlined by Mr. Geithner, lacked specifics, that it was half-baked, that it amounted to (my words) an amorphous mass of maladroit mush.
Though the pundits were correct in their assessment of Mr. Geithner’s speech, they were wrong about what really troubled the market about it. The problem was not the substance of the speech, but, rather, Mr. Geithner himself. This was the world’s, and the world’s markets’, first real look at Mr. Geithner as Treasury Secretary, and they understandably did not like what they saw. He looked tentative and confused. This might very well be because of the disjointed and vague nature of the “plan” he was trying to present, but one suspects he might look that way even delivering the Gettysburg address (provided someone wrote such an eloquent tome for him). Mr. Geithner gave the impression of being a very small boy with a very new and large toy, the directions for which he had prematurely discarded. And that toy was our economy.
Our problems are big and most likely unsolvable by government. In fact, such attempts are bound to exacerbate them. Having Mr. Geithner in charge of the Treasury, the world is coming to realize, increases the chances of the latter.
Monday, February 9, 2009
HEY, BUDDY, CAN YOU SPARE 5 BUCKS FOR A CUP OF COFFEE?
2/9/09
Justin Lahart of the Wall Street Journal argued in today’s (i.e., 2/9/09’s) paper that “Pent-Up Demand Could Quickly Pull Economy Out of Its Hole,” as the headline on page A2 read. In the article, Mr. Lahart defines “pent-up demand” as the result of a condition in which “consumers and businesses are foregoing (during recessions) spending that they might otherwise see as necessary purchases” He cites history, primarily the 1980 recession, in his argument that such pent-up demand might lead to a rapid snapback of the economy if the stimulus package bears some fruit, “consumers and companies start thinking the worst is behind them,” and start spending. To his credit, Mr. Lahart also cites 1981, during which the economy, after a false start, fell into the “longest downturn since the Great Depression,” to inject some caution into his otherwise optimistic proposition.
There is something to the pent-up demand argument, but, at the risk of uttering the most regretted words in economic and financial prognostication, this time is probably different.
First, pent-up demand implies need; people have pent-up demand for things they needed but had to forgo during lean times. I will be the first to admit (Admit? I beat this concept over the head over and over and over!) that my generation’s definition of “needs” has expanded to the point of gross and ridiculous deception. We “need” TVs as large as our parents’ garage doors. We “need” cars that talk to us in order to tell us how to get to nearest mall in order to more quickly and efficiently pee away our money. We “need” to eat at restaurants in which the price of the meal displays a significantly negative correlation to the amount of food served (“Oh, but the presentation is so BEAUTIFUL!” What the heck do I care? I’m going to eat the stuff, not stare at it, and I’d like a little more food than is necessary to fill my tooth, thank you.) and in which the wait staff displays an attitude reminiscent of that of the staffs at the various gulags that used to dot the Siberian countryside. (Ever try to eat at one of those places and not order alcohol? Talk about getting treated like something the waiter would like to scrape off his shoe!) We “need” to, when we are “sacrificing,” eat lunch at fast food places at which lunch costs what a nice dinner did a few years ago. We “need” to buy our morning (and our mid-morning, post-lunch, mid-afternoon, and “showtime” post 5 o’clock cups of joe) coffee at places at which a cup of coffee costs what three or four pots of home brewed rocket fuel would cost. You get the point.
None of these “needs” are needs in the strict sense of the term. Very few people, or at least very few people who ever had any real purchasing power, really need anything they don’t already have. In fact, even if we expand the definition of “need” to conform to the “needs” of my materially lascivious generation, people have all the weak ego fortifying gimcracks they need. Once one has four wide screen, plasma, HD (or whatever they call these troublesome geegaws) televisions and a car with heated brake and gas pedals, does one “need” another?
Okay, maybe our generation “needs” more garbage for which they then must pay outrageous monthly fees to rent storage facilities. We simply cannot live without our silver plated toothpicks and $15 dollar razor blades that give, at best, a marginally closer shave than a Bic disposable. But that leads to my second point: “Demand,” pent-up or otherwise, implies not only wanting something but being able to pay for it. My generation is broke. It was living on the edge when times are good. Now that times are bad, it has fallen off the edge. People not only have NO MONEY but they also have LARGE PILES OF BILLS that THEY CAN’T PAY for things that THEY NEVER NEEDED in the first place. As Uncle Roman so articulately put it in the classic “The Great Outdoors,” “we’re broke, busted, ruined.” (He also said he was “a fake, a phony, a fraud” presciently speaking for (almost) an entire generation, but that is grist for another post.) No sensible financial institution will lend to the typical member of my generation. With no money and no access to credit, this profligate cohort can want all the Caribbean (or less plebeian spots, I suppose) “getaways” from the dreary confines of their McMansions their deprived hearts can imagine, but that desire adds nothing to genuine demand.
Perhaps (probably, really), no one will learn anything from our current economic travails; my generation’s “needs” are indeed unlimited and these financial dunces will go out and blow money on more spiritually and economically toxic refuse as soon as doing so becomes even remotely possible. And perhaps (probably, really) the government’s ardent efforts to restore our financial system to the good old days when money was lent with nary a care as to the borrowers’ ability to repay will bear abundant fruit. Perhaps, as a result of the combination of personal irresponsibility and generous government enablement thereof, pent-up demand will bring us out of the economic doldrums before thrusting us even more deeply into fiery pits of economic dystopia. That seems to be the goal of the Obama (and Bush—There is not much difference (Surprise!) between the objectives, or even the tactics, of these two administrations’ financial and economic policies.) economic and financial approach.
But maybe not. Perhaps something good will come out of this economic time of trial: People will learn what they really need and how ridiculously they have behaved for the last, oh, twenty years or so. Financial institutions will learn that the object of making loans is not to make a fee but, rather, to create a profitable and economically salubrious asset. Should this (admittedly way too optimistic (What in the world is happening to me?)) dream come true, this period of economic difficulty will have all been worth it.
Don’t get your hopes up, though.
Justin Lahart of the Wall Street Journal argued in today’s (i.e., 2/9/09’s) paper that “Pent-Up Demand Could Quickly Pull Economy Out of Its Hole,” as the headline on page A2 read. In the article, Mr. Lahart defines “pent-up demand” as the result of a condition in which “consumers and businesses are foregoing (during recessions) spending that they might otherwise see as necessary purchases” He cites history, primarily the 1980 recession, in his argument that such pent-up demand might lead to a rapid snapback of the economy if the stimulus package bears some fruit, “consumers and companies start thinking the worst is behind them,” and start spending. To his credit, Mr. Lahart also cites 1981, during which the economy, after a false start, fell into the “longest downturn since the Great Depression,” to inject some caution into his otherwise optimistic proposition.
There is something to the pent-up demand argument, but, at the risk of uttering the most regretted words in economic and financial prognostication, this time is probably different.
First, pent-up demand implies need; people have pent-up demand for things they needed but had to forgo during lean times. I will be the first to admit (Admit? I beat this concept over the head over and over and over!) that my generation’s definition of “needs” has expanded to the point of gross and ridiculous deception. We “need” TVs as large as our parents’ garage doors. We “need” cars that talk to us in order to tell us how to get to nearest mall in order to more quickly and efficiently pee away our money. We “need” to eat at restaurants in which the price of the meal displays a significantly negative correlation to the amount of food served (“Oh, but the presentation is so BEAUTIFUL!” What the heck do I care? I’m going to eat the stuff, not stare at it, and I’d like a little more food than is necessary to fill my tooth, thank you.) and in which the wait staff displays an attitude reminiscent of that of the staffs at the various gulags that used to dot the Siberian countryside. (Ever try to eat at one of those places and not order alcohol? Talk about getting treated like something the waiter would like to scrape off his shoe!) We “need” to, when we are “sacrificing,” eat lunch at fast food places at which lunch costs what a nice dinner did a few years ago. We “need” to buy our morning (and our mid-morning, post-lunch, mid-afternoon, and “showtime” post 5 o’clock cups of joe) coffee at places at which a cup of coffee costs what three or four pots of home brewed rocket fuel would cost. You get the point.
None of these “needs” are needs in the strict sense of the term. Very few people, or at least very few people who ever had any real purchasing power, really need anything they don’t already have. In fact, even if we expand the definition of “need” to conform to the “needs” of my materially lascivious generation, people have all the weak ego fortifying gimcracks they need. Once one has four wide screen, plasma, HD (or whatever they call these troublesome geegaws) televisions and a car with heated brake and gas pedals, does one “need” another?
Okay, maybe our generation “needs” more garbage for which they then must pay outrageous monthly fees to rent storage facilities. We simply cannot live without our silver plated toothpicks and $15 dollar razor blades that give, at best, a marginally closer shave than a Bic disposable. But that leads to my second point: “Demand,” pent-up or otherwise, implies not only wanting something but being able to pay for it. My generation is broke. It was living on the edge when times are good. Now that times are bad, it has fallen off the edge. People not only have NO MONEY but they also have LARGE PILES OF BILLS that THEY CAN’T PAY for things that THEY NEVER NEEDED in the first place. As Uncle Roman so articulately put it in the classic “The Great Outdoors,” “we’re broke, busted, ruined.” (He also said he was “a fake, a phony, a fraud” presciently speaking for (almost) an entire generation, but that is grist for another post.) No sensible financial institution will lend to the typical member of my generation. With no money and no access to credit, this profligate cohort can want all the Caribbean (or less plebeian spots, I suppose) “getaways” from the dreary confines of their McMansions their deprived hearts can imagine, but that desire adds nothing to genuine demand.
Perhaps (probably, really), no one will learn anything from our current economic travails; my generation’s “needs” are indeed unlimited and these financial dunces will go out and blow money on more spiritually and economically toxic refuse as soon as doing so becomes even remotely possible. And perhaps (probably, really) the government’s ardent efforts to restore our financial system to the good old days when money was lent with nary a care as to the borrowers’ ability to repay will bear abundant fruit. Perhaps, as a result of the combination of personal irresponsibility and generous government enablement thereof, pent-up demand will bring us out of the economic doldrums before thrusting us even more deeply into fiery pits of economic dystopia. That seems to be the goal of the Obama (and Bush—There is not much difference (Surprise!) between the objectives, or even the tactics, of these two administrations’ financial and economic policies.) economic and financial approach.
But maybe not. Perhaps something good will come out of this economic time of trial: People will learn what they really need and how ridiculously they have behaved for the last, oh, twenty years or so. Financial institutions will learn that the object of making loans is not to make a fee but, rather, to create a profitable and economically salubrious asset. Should this (admittedly way too optimistic (What in the world is happening to me?)) dream come true, this period of economic difficulty will have all been worth it.
Don’t get your hopes up, though.
“THEY WOULD BE SELECTED FOR CERTAIN PHYSICAL ATTRIBUTES, WHICH WOULD HAVE TO BE OF A HIGHLY STIMULATING NATURE…”
2/9/09
Loyal readers know that I am no fan of either President Obama’s “stimulus” plan or any of the Republican alternatives thereto. Why? These tired old “take money from one pocket, put it in another, and wait for the magical ‘multiplier’ effect (which somehow only works, according to its acolytes, when money passes through the government’s hands) to wave its pixie dust over the economy” concoctions only work, if at all, in the most ephemeral of manners.
But let’s suppose that I’m wrong. Unlike people in charge on Wall Street, in Washington, and in most of our once great nation’s huge corporations, I admit to that possibility. Let’s say that a large dose of the type of spending that got us into this mess in the first place is the perfect elixir for what ails us, and the government should go out and spend a lot of money in order to get us back on the path of economic righteousness. If that is the case, I would propose a (perhaps massive) plan to repave and build roads, bridges, etc.
Anyone who drives and pays attention (an increasingly rare combination) has noticed that our roads are in terrible shape: potholed, dangerous, and riddled with bottlenecks. These roads are badly in need of repair. Further, being “green” is all the rage of late, and perhaps understandably so. If the government wants to do something about the condition of the environment, and it probably should, the most immediately effective course of action would be, ironically (and doubtless to the shrieks of many of the greenies), to build more roads. Why? Because we don’t have enough roads to accommodate the large and growing (until recently) number of cars. Few things are as bad for air quality as cars’ stuck in traffic spewing noxious fumes into the atmosphere.
If building and repairing roads, bridges, and other “infrastructure” (narrowly defined) ends up having, as I suspect, negligible economic impact (certainly not economic impact anywhere commensurate with its fiscal impact), at least we will get some badly needed roads out of the deal.
As for the rest of the items in the “stimulus” package, i.e., more money for education, health care, and every other item that has been rotting on the wish list of the Democratic party for at least the last eight years, they may or may not have merit, but they don’t belong in a “stimulus” bill. Most don’t belong in any federal budget, according to that archaic document we call the U.S. Constitution, but that is another matter entirely. Even the tax cuts, which I normally consider especially salubrious for the economy, don’t belong in this bill at this time of unprecedented federal deficits.
Especially odious is the provision (Surprise!) contained in both the House and the Senate bills allowing businesses to carry back losses for tax purposes five years, up from the current two, which amounts to handing money out to large businesses that just can’t cut it but can still manage to cut checks to the GOP and, to lesser extent, to the Democrats. (See my 1/16/09 post SCREW UP, GET A CHECK!!!) The GOP fought harder for this provision than any other in the “stimulus” bill, and an insightful observer suspects that Democratic resistance was more cinematic than real. I have long suspected (known, really) that, despite its protestations that it is for the “free-market” and “small business” that the GOP is really for very large businesses, and only very large businesses. The GOP’s ardent support of this particular “welfare for losers” scheme, however, leads to suspicion that the GOP is the party only of large businesses who consistently lose money. But I digress. This especially malodorous portion of the “stimulus” package, which will doubtless survive, is a bad idea at any time and belongs in no piece of legislation, “stimulatory” or otherwise.
Loyal readers know that I am no fan of either President Obama’s “stimulus” plan or any of the Republican alternatives thereto. Why? These tired old “take money from one pocket, put it in another, and wait for the magical ‘multiplier’ effect (which somehow only works, according to its acolytes, when money passes through the government’s hands) to wave its pixie dust over the economy” concoctions only work, if at all, in the most ephemeral of manners.
But let’s suppose that I’m wrong. Unlike people in charge on Wall Street, in Washington, and in most of our once great nation’s huge corporations, I admit to that possibility. Let’s say that a large dose of the type of spending that got us into this mess in the first place is the perfect elixir for what ails us, and the government should go out and spend a lot of money in order to get us back on the path of economic righteousness. If that is the case, I would propose a (perhaps massive) plan to repave and build roads, bridges, etc.
Anyone who drives and pays attention (an increasingly rare combination) has noticed that our roads are in terrible shape: potholed, dangerous, and riddled with bottlenecks. These roads are badly in need of repair. Further, being “green” is all the rage of late, and perhaps understandably so. If the government wants to do something about the condition of the environment, and it probably should, the most immediately effective course of action would be, ironically (and doubtless to the shrieks of many of the greenies), to build more roads. Why? Because we don’t have enough roads to accommodate the large and growing (until recently) number of cars. Few things are as bad for air quality as cars’ stuck in traffic spewing noxious fumes into the atmosphere.
If building and repairing roads, bridges, and other “infrastructure” (narrowly defined) ends up having, as I suspect, negligible economic impact (certainly not economic impact anywhere commensurate with its fiscal impact), at least we will get some badly needed roads out of the deal.
As for the rest of the items in the “stimulus” package, i.e., more money for education, health care, and every other item that has been rotting on the wish list of the Democratic party for at least the last eight years, they may or may not have merit, but they don’t belong in a “stimulus” bill. Most don’t belong in any federal budget, according to that archaic document we call the U.S. Constitution, but that is another matter entirely. Even the tax cuts, which I normally consider especially salubrious for the economy, don’t belong in this bill at this time of unprecedented federal deficits.
Especially odious is the provision (Surprise!) contained in both the House and the Senate bills allowing businesses to carry back losses for tax purposes five years, up from the current two, which amounts to handing money out to large businesses that just can’t cut it but can still manage to cut checks to the GOP and, to lesser extent, to the Democrats. (See my 1/16/09 post SCREW UP, GET A CHECK!!!) The GOP fought harder for this provision than any other in the “stimulus” bill, and an insightful observer suspects that Democratic resistance was more cinematic than real. I have long suspected (known, really) that, despite its protestations that it is for the “free-market” and “small business” that the GOP is really for very large businesses, and only very large businesses. The GOP’s ardent support of this particular “welfare for losers” scheme, however, leads to suspicion that the GOP is the party only of large businesses who consistently lose money. But I digress. This especially malodorous portion of the “stimulus” package, which will doubtless survive, is a bad idea at any time and belongs in no piece of legislation, “stimulatory” or otherwise.
Friday, February 6, 2009
“TO KNOW, KNOW, KNOW HIM IS TO (TRUST, TRUST, TRUST) HIM”?
2/6/09
I heard on WBBM Newsradio 78 (Chicago) this morning the tale of a North Shore widow (Her identity isn’t important; this post is not about her but applies more generally to Madoff investors.) who lost $120mm (Later reports put the total lost as low as $15 to $20mm.)to Bernie Madoff. The report indicated that she will have to sell three of her homes, downsizing to one, but, while livid that Bernie made off with a big pile of her cash, feels grateful that she is not “destitute.” How many of you would like to be able to lose $120mm (or even $15mm or $20mm) and still not be destitute? But I digress.
This particular Madoff investor stated, concerning Mr. Madoff: “We knew him for twenty years. Who can you trust?” Since when did this nexus between knowing someone and trusting him arise? One of the first things I teach my students in a survey Finance course, and something everyone should know intuitively, is that you don’t trust everyone you know.
As I said in my prior posts concerning Bernie Madoff (See my 12/12/08 post BUT HE BELONGED TO BOCA RIO AND FRESH MEADOWS!, my 12/18/08 post “YOU ONLY FALL FOR LIES AND STORIES WHEN YOU REALLY WANT TO”, and, to a lesser extent, my 1/26/09 post OOOHHH, ZSA ZSA!!!), if I had an inexhaustible supply of compassion, like Someone I know, I would extend some of it to Madoff’s victims. But I don’t have such a bottomless bin of sympathy, at least not yet. Despite the efforts of much of the media to scrounge up “average guy” victims of Madoff, their efforts have been largely fruitless. Almost to a person, Mr. Madoff’s “victims” were sophisticated investors, certainly by the SEC definition, or were people who hired such financial mavens to manage their money for them, doubtless without a lot of due diligence. And, though this might be something of a stretch, I dare say that most Madoff investors were the types of people who would with scorn on “plain vanilla” investments like index funds or CDs. You can almost here the cocktail chatter at Boca Rio: “An index fund? Ha! Those are for the plebeians! I’m with Bernie Madoff. And he says that, as long as I don’t ask many questions, I can stay with Bernie Madoff. What a guy!”
Ken Phillips, who runs a fund of funds out of Boulder, Colorado, and who was quoted in the Wall Street Journal this morning, put it best when he said, referring to the list of Madoff “victims” currently circulating on the net: “This is the best prospecting list ever. You’ve got the names and addresses of a whole bunch of rich people who don’t demand much accountability.”
No, I’ll expend my humanly limited amounts of compassion on the guy who lost his house because the corporate master of the universe who ran his company closed his factory and shipped production to China, reasoning that doing so would enable him to justify an increase in his bonus sufficient to buy a another fleet of yachts (this time on the west coast) and perhaps send another $20 million or so Bernie Madoff’s way.
I heard on WBBM Newsradio 78 (Chicago) this morning the tale of a North Shore widow (Her identity isn’t important; this post is not about her but applies more generally to Madoff investors.) who lost $120mm (Later reports put the total lost as low as $15 to $20mm.)to Bernie Madoff. The report indicated that she will have to sell three of her homes, downsizing to one, but, while livid that Bernie made off with a big pile of her cash, feels grateful that she is not “destitute.” How many of you would like to be able to lose $120mm (or even $15mm or $20mm) and still not be destitute? But I digress.
This particular Madoff investor stated, concerning Mr. Madoff: “We knew him for twenty years. Who can you trust?” Since when did this nexus between knowing someone and trusting him arise? One of the first things I teach my students in a survey Finance course, and something everyone should know intuitively, is that you don’t trust everyone you know.
As I said in my prior posts concerning Bernie Madoff (See my 12/12/08 post BUT HE BELONGED TO BOCA RIO AND FRESH MEADOWS!, my 12/18/08 post “YOU ONLY FALL FOR LIES AND STORIES WHEN YOU REALLY WANT TO”, and, to a lesser extent, my 1/26/09 post OOOHHH, ZSA ZSA!!!), if I had an inexhaustible supply of compassion, like Someone I know, I would extend some of it to Madoff’s victims. But I don’t have such a bottomless bin of sympathy, at least not yet. Despite the efforts of much of the media to scrounge up “average guy” victims of Madoff, their efforts have been largely fruitless. Almost to a person, Mr. Madoff’s “victims” were sophisticated investors, certainly by the SEC definition, or were people who hired such financial mavens to manage their money for them, doubtless without a lot of due diligence. And, though this might be something of a stretch, I dare say that most Madoff investors were the types of people who would with scorn on “plain vanilla” investments like index funds or CDs. You can almost here the cocktail chatter at Boca Rio: “An index fund? Ha! Those are for the plebeians! I’m with Bernie Madoff. And he says that, as long as I don’t ask many questions, I can stay with Bernie Madoff. What a guy!”
Ken Phillips, who runs a fund of funds out of Boulder, Colorado, and who was quoted in the Wall Street Journal this morning, put it best when he said, referring to the list of Madoff “victims” currently circulating on the net: “This is the best prospecting list ever. You’ve got the names and addresses of a whole bunch of rich people who don’t demand much accountability.”
No, I’ll expend my humanly limited amounts of compassion on the guy who lost his house because the corporate master of the universe who ran his company closed his factory and shipped production to China, reasoning that doing so would enable him to justify an increase in his bonus sufficient to buy a another fleet of yachts (this time on the west coast) and perhaps send another $20 million or so Bernie Madoff’s way.
“AND HE’S OH SO GOOD, AND HE’S OH SO FINE, AND HE’S OH SO HEALTHY IN HIS BODY AND HIS MIND…”
2/6/09
I also heard on WBBM Newsradio 78 (Chicago) this morning that a former corporate senior vice president (As in today’s Madoff post, her identity is not important because this post is not about her, but is more general in its observations.), having been laid off and unable to find comparable work, is considering working at Starbuck’s or Border’s, which, she hastens to add in a typical corporate CYA manner, are fine companies but not the type of work to which she was accustomed. Believe it or not, I do feel sorry for such people; the transition from uber-boss to barista must be tough and doubtless involves considerable costs to the families of those experiencing such a metamorphosis.
But a thought came to me…
Perhaps this woman, like so many people who achieved high paying and great sounding jobs in our formerly hyper-leveraged, ultra frothy economy, are more suited to work at Starbuck’s or Border’s than they were to positions of responsibility at major corporations. Plenty of mediocrities (In many cases the term “mediocrities” may be unduly generous, but I digress.) made it near the top following the usual corporate formula, i.e., thick knee pads for dealing with their superiorities, blunt cudgels for dealing with their underlings (speaking figuratively, of course), in the crazy economy that has just passed, and, come to think of it, have risen to positions of great authority under many more normal economic scenarios.
Too harsh, you might ask? C’mon. You’ve seen it. I’ve seen it. There are people with BIG jobs in many corporations about whom the most salient question is how they find their way to work in the morning. This is one of the reasons that our economy is in such trouble, but I digress.
Another thought came to me…
No one is saying that 7.6% unemployment is normal or that consecutive quarters of sharp economic contractions are normal. However, perhaps what we are seeing, through all this economic pain, is a return to a normal economy, from an economy in which people whose only skills are a lap dog attitude toward their bosses and a bulldog attitude toward the people they manage reach the heights of corporate power to an economy in which real talent, effort, and brains are the key to success.
If that is indeed the case, maybe something good, in addition to a renewed appreciation for saving money (See MANY prior posts.), will come out of this period of economic trial. But, again, I doubt it.
I also heard on WBBM Newsradio 78 (Chicago) this morning that a former corporate senior vice president (As in today’s Madoff post, her identity is not important because this post is not about her, but is more general in its observations.), having been laid off and unable to find comparable work, is considering working at Starbuck’s or Border’s, which, she hastens to add in a typical corporate CYA manner, are fine companies but not the type of work to which she was accustomed. Believe it or not, I do feel sorry for such people; the transition from uber-boss to barista must be tough and doubtless involves considerable costs to the families of those experiencing such a metamorphosis.
But a thought came to me…
Perhaps this woman, like so many people who achieved high paying and great sounding jobs in our formerly hyper-leveraged, ultra frothy economy, are more suited to work at Starbuck’s or Border’s than they were to positions of responsibility at major corporations. Plenty of mediocrities (In many cases the term “mediocrities” may be unduly generous, but I digress.) made it near the top following the usual corporate formula, i.e., thick knee pads for dealing with their superiorities, blunt cudgels for dealing with their underlings (speaking figuratively, of course), in the crazy economy that has just passed, and, come to think of it, have risen to positions of great authority under many more normal economic scenarios.
Too harsh, you might ask? C’mon. You’ve seen it. I’ve seen it. There are people with BIG jobs in many corporations about whom the most salient question is how they find their way to work in the morning. This is one of the reasons that our economy is in such trouble, but I digress.
Another thought came to me…
No one is saying that 7.6% unemployment is normal or that consecutive quarters of sharp economic contractions are normal. However, perhaps what we are seeing, through all this economic pain, is a return to a normal economy, from an economy in which people whose only skills are a lap dog attitude toward their bosses and a bulldog attitude toward the people they manage reach the heights of corporate power to an economy in which real talent, effort, and brains are the key to success.
If that is indeed the case, maybe something good, in addition to a renewed appreciation for saving money (See MANY prior posts.), will come out of this period of economic trial. But, again, I doubt it.
FORD NEEDS A BETTER IDEA
2/6/09
Ford is now showing the 2010 Taurus on the auto show circuit. The new Taurus replaces the old Taurus, one of the most competent and underrated cars on the road. The new car is unusually significant for a number of reasons. First, it is the bread and butter of the Ford car lineup, the car that proved, when it first arrived over twenty years ago, and before the blue oval boys let it go to seed, Ford could make a car that could go head to head against the Accord and the Camry. Second, the new Taurus is the product of a state of the art computer design process that enabled the car to be designed in under 24 months, the wave of the future as car companies attempt to be more nimble in response to consumer demand, gas prices, and the diktats of their new masters in Washington. Third, the car shows what the new Alan Mulally led Ford can do. Fourth, if the car doesn’t work, Ford might very well be toast. Fifth, from all indication, this will be a GREAT car.
I, however, find the new Taurus most significant for another attribute, and the news isn’t good for either Ford or the economy.
The current Taurus is a very good car that I have repeatedly recommended it (along with its near identical cousin, the soon to be ditched Mercury Sable) to friends interested in a larger family sedan. None has been disappointed, and this reaction is not limited to friends of Mark Quinn. The current car starts at retail in the mid $20s and tops out at about $34m, very generously equipped. In today’s economy, base models are readily available in the low $20s and loaded models can be had in the mid to high $20s. The new car will also be available, according to Ford, in the mid-$20s, but the really eye-popping, loaded to the gills car, the car that can legitimately compete with the fully loaded Toyota Avalon and Nissan Maxima, and even with the Lexus ES 350, will reach the low $40s.
The low $40s for a Ford that isn’t a truck (or for a Ford that is a truck, for that matter)?
The most obvious question is “Is this a time to be bringing out a $40,000 family sedan?” But, as usual, I am digging a little deeper.
The problem that I am highlighting is not unique to Ford but can be generalized easily to the whole car business and, with even modest effort, to the entire retail or travel sectors, and it is simply this: Cars are priced for an economy characterized by easy credit. The overwhelming majority of people, and almost everyone in the market for a Ford, could not possibly afford a $40m vehicle were it not for sweetheart leases or access to the equity in their homes, both of which long since left the building. The days of “Why should I give a damn? It’s not my money” credit are gone for a long, long time. People thus cannot pay $40m for a car. No car company (or other retail or travel concern) management, even that led by Alan Mulally, the best of the bunch in the car business, seems to realize that, or, even if they do realize it, will confront it.
The “transition” through which our economy is going will be more painful and prolonged than most people think. Corporate managements’, and ordinary people’s, inability or unwillingness to confront new realities will only make it longer and more excruciating.
Ford is now showing the 2010 Taurus on the auto show circuit. The new Taurus replaces the old Taurus, one of the most competent and underrated cars on the road. The new car is unusually significant for a number of reasons. First, it is the bread and butter of the Ford car lineup, the car that proved, when it first arrived over twenty years ago, and before the blue oval boys let it go to seed, Ford could make a car that could go head to head against the Accord and the Camry. Second, the new Taurus is the product of a state of the art computer design process that enabled the car to be designed in under 24 months, the wave of the future as car companies attempt to be more nimble in response to consumer demand, gas prices, and the diktats of their new masters in Washington. Third, the car shows what the new Alan Mulally led Ford can do. Fourth, if the car doesn’t work, Ford might very well be toast. Fifth, from all indication, this will be a GREAT car.
I, however, find the new Taurus most significant for another attribute, and the news isn’t good for either Ford or the economy.
The current Taurus is a very good car that I have repeatedly recommended it (along with its near identical cousin, the soon to be ditched Mercury Sable) to friends interested in a larger family sedan. None has been disappointed, and this reaction is not limited to friends of Mark Quinn. The current car starts at retail in the mid $20s and tops out at about $34m, very generously equipped. In today’s economy, base models are readily available in the low $20s and loaded models can be had in the mid to high $20s. The new car will also be available, according to Ford, in the mid-$20s, but the really eye-popping, loaded to the gills car, the car that can legitimately compete with the fully loaded Toyota Avalon and Nissan Maxima, and even with the Lexus ES 350, will reach the low $40s.
The low $40s for a Ford that isn’t a truck (or for a Ford that is a truck, for that matter)?
The most obvious question is “Is this a time to be bringing out a $40,000 family sedan?” But, as usual, I am digging a little deeper.
The problem that I am highlighting is not unique to Ford but can be generalized easily to the whole car business and, with even modest effort, to the entire retail or travel sectors, and it is simply this: Cars are priced for an economy characterized by easy credit. The overwhelming majority of people, and almost everyone in the market for a Ford, could not possibly afford a $40m vehicle were it not for sweetheart leases or access to the equity in their homes, both of which long since left the building. The days of “Why should I give a damn? It’s not my money” credit are gone for a long, long time. People thus cannot pay $40m for a car. No car company (or other retail or travel concern) management, even that led by Alan Mulally, the best of the bunch in the car business, seems to realize that, or, even if they do realize it, will confront it.
The “transition” through which our economy is going will be more painful and prolonged than most people think. Corporate managements’, and ordinary people’s, inability or unwillingness to confront new realities will only make it longer and more excruciating.
Thursday, February 5, 2009
“…WORKIN’ FOR THE MAN EVERY NIGHT AND DAY…”
2/5/09
Right wing parrot Sean Hannity, commenting on President Obama’s proposal to cap pay for executives whose firms are receiving “exceptional assistance” under the TARF (Loyal readers will recall that what is not called the TARP, i.e., the Troubled Assets Relief Program, was, immediately after its proposal, referred to as the TARF, i.e., the Troubled Asset Relief Fund. The name was changed almost immediately, perhaps because one of its architect, or publicists, decided that the name TARF drew immediate attention to the digestive detritus with which “TARF” rhymes. I, however, thought the name “TARF” was particularly apt for that very reason, so I continue to call the TARP the TARF.) at $500,000, ranted, in his usual original way, that such restrictions are “a dramatic move away from capitalism and toward socialism.”
Perhaps Mr. Hannity does not follow the news as closely as he should (Who needs to listen to that vicious left-leaning mainstream media. Right, Sean?), but we crossed the bridge to socialism in the early stages of this trip down the rabbit hole. I, too, am appalled by the thought of the government dictating pay packages and find this particular episode especially malodorous because it does not apply retroactively, so the real miscreants, like the people who run Bank of America, AIG, and Citicorp, can continue to grant themselves gargantuan pay packages with the very money that is coming out of taxpayers’ pockets. (Money is, after all, fungible.) But once these corporations took federal money, they asked for it. As I’ve said before, once you take the man’s money, you play by the man’s rules. Some of these financial mavens will argue that they had no choice, but, at least according to the Wall Street Journal this (i.e., Thursday, 2/5/09) morning, when opposition to taking federal money, for reasons that should be painfully obvious now, arose among financial executives when the government ladled out $125 billion of your money in October, it was whiner Ken Lewis, whose face should be most prominent on the “Wanted” posters if the peasants ever do get out the pitchforks, who told his colleagues, in his usual potvaliant manner “We are going to do this.” The very guys who beached our financial ship took the money, even if they did so after feigned or flaccid protest, and now, according to the government’s (being generous here) arbitrary rules, they are will not be subject to any restrictions, but banks that need “extraordinary assistance” in the future will be subject to such restrictions. If the “attracting talent” argument against such restrictions holds any water, how’s that for using your bought and paid for clout in Washington to throw the proverbial monkey wrench into your competition? But such Alice in Wonderland logic is what we request when we go on the public dole.
There are other arguments against the restrictions on pay that transcend libertarian philosophy. For example, Phil Collins (not that Phil Collins; the Phil Collins who runs Sound Banking Co. in Morehead City, North Carolina) argues, quite logically, that if executives are making money for their shareholders (As my Finance students know, the objective of financial management, and of all management, is ultimately to increase the wealth of the firm’s owners. This will be on the mid-term.), “they should be rewarded for it.” At the expense of defending this federal abomination, this very sensible and obvious argument by Mr. Collins has been addressed. The “hard” limits on compensation apply only to firms that receive “exceptional assistance.” If a financial firm needs “exceptional assistance,” presumably it is not making money for its shareholders and is, in fact, decreasing, if not crippling, their wealth. Companies receiving less than “extraordinary” assistance can pay their people more than $500,000 if they disclose such compensation and subject their plans to a non-binding shareholder vote. Executives who are making their shareholders money should have no problems clearing such hurdles. One could ask exactly what “extraordinary” means in this (or any, come to think of it) context, and one would get only a blank stare from the people in Washington who coined the term “extraordinary assistance.” But, again, that is the type of Three Stooges thought processes we subject ourselves to when we start slopping at the public trough.
Some “compensation experts” worry that restrictions on compensation might dissuade firms from taking federal assistance, to which I say “Good.” If an organization is in such eupeptic financial state that it can refuse federal assistance if it doesn’t like the terms, especially terms that say that the culprits who got it into the position of having to seek federal money have to take some pain along with the shareholders they ruined, it shouldn’t be in the taxpayers’ pockets.
The people taking the money can whine all they want about “federal intrusion” into their business, an intrusion that (Surprise!) never seemed to bother them when it weighted the scales in their favor. But this is the sort of thing that one subjects one’s self to when one grovels for charity to get one out of a situation that one largely created. The only shame in this is that the really bad actors in this drama completely escape the rules to which they are subjecting their less influential competitors. But that is the craziness that defines government, in most cases.
Right wing parrot Sean Hannity, commenting on President Obama’s proposal to cap pay for executives whose firms are receiving “exceptional assistance” under the TARF (Loyal readers will recall that what is not called the TARP, i.e., the Troubled Assets Relief Program, was, immediately after its proposal, referred to as the TARF, i.e., the Troubled Asset Relief Fund. The name was changed almost immediately, perhaps because one of its architect, or publicists, decided that the name TARF drew immediate attention to the digestive detritus with which “TARF” rhymes. I, however, thought the name “TARF” was particularly apt for that very reason, so I continue to call the TARP the TARF.) at $500,000, ranted, in his usual original way, that such restrictions are “a dramatic move away from capitalism and toward socialism.”
Perhaps Mr. Hannity does not follow the news as closely as he should (Who needs to listen to that vicious left-leaning mainstream media. Right, Sean?), but we crossed the bridge to socialism in the early stages of this trip down the rabbit hole. I, too, am appalled by the thought of the government dictating pay packages and find this particular episode especially malodorous because it does not apply retroactively, so the real miscreants, like the people who run Bank of America, AIG, and Citicorp, can continue to grant themselves gargantuan pay packages with the very money that is coming out of taxpayers’ pockets. (Money is, after all, fungible.) But once these corporations took federal money, they asked for it. As I’ve said before, once you take the man’s money, you play by the man’s rules. Some of these financial mavens will argue that they had no choice, but, at least according to the Wall Street Journal this (i.e., Thursday, 2/5/09) morning, when opposition to taking federal money, for reasons that should be painfully obvious now, arose among financial executives when the government ladled out $125 billion of your money in October, it was whiner Ken Lewis, whose face should be most prominent on the “Wanted” posters if the peasants ever do get out the pitchforks, who told his colleagues, in his usual potvaliant manner “We are going to do this.” The very guys who beached our financial ship took the money, even if they did so after feigned or flaccid protest, and now, according to the government’s (being generous here) arbitrary rules, they are will not be subject to any restrictions, but banks that need “extraordinary assistance” in the future will be subject to such restrictions. If the “attracting talent” argument against such restrictions holds any water, how’s that for using your bought and paid for clout in Washington to throw the proverbial monkey wrench into your competition? But such Alice in Wonderland logic is what we request when we go on the public dole.
There are other arguments against the restrictions on pay that transcend libertarian philosophy. For example, Phil Collins (not that Phil Collins; the Phil Collins who runs Sound Banking Co. in Morehead City, North Carolina) argues, quite logically, that if executives are making money for their shareholders (As my Finance students know, the objective of financial management, and of all management, is ultimately to increase the wealth of the firm’s owners. This will be on the mid-term.), “they should be rewarded for it.” At the expense of defending this federal abomination, this very sensible and obvious argument by Mr. Collins has been addressed. The “hard” limits on compensation apply only to firms that receive “exceptional assistance.” If a financial firm needs “exceptional assistance,” presumably it is not making money for its shareholders and is, in fact, decreasing, if not crippling, their wealth. Companies receiving less than “extraordinary” assistance can pay their people more than $500,000 if they disclose such compensation and subject their plans to a non-binding shareholder vote. Executives who are making their shareholders money should have no problems clearing such hurdles. One could ask exactly what “extraordinary” means in this (or any, come to think of it) context, and one would get only a blank stare from the people in Washington who coined the term “extraordinary assistance.” But, again, that is the type of Three Stooges thought processes we subject ourselves to when we start slopping at the public trough.
Some “compensation experts” worry that restrictions on compensation might dissuade firms from taking federal assistance, to which I say “Good.” If an organization is in such eupeptic financial state that it can refuse federal assistance if it doesn’t like the terms, especially terms that say that the culprits who got it into the position of having to seek federal money have to take some pain along with the shareholders they ruined, it shouldn’t be in the taxpayers’ pockets.
The people taking the money can whine all they want about “federal intrusion” into their business, an intrusion that (Surprise!) never seemed to bother them when it weighted the scales in their favor. But this is the sort of thing that one subjects one’s self to when one grovels for charity to get one out of a situation that one largely created. The only shame in this is that the really bad actors in this drama completely escape the rules to which they are subjecting their less influential competitors. But that is the craziness that defines government, in most cases.
Wednesday, February 4, 2009
MAN OF STEELE?
2/4/09
The selection of former Maryland Lieutenant Governor Michael Steele as new chairman of the Republican National Committee could be the best move that the GOP has made in years. Admittedly, the bar is very low here, but I am very enthusiastic about this selection, and not because of the attribute the national punditry has decided is Mr. Steele’s most salient characteristic: that he is Black. Entirely too much is made of race in this country; it should not even be considered when assessing a person’s candidacy for any position. That having been said, it is heartening to think that the GOP might actually be reaching out beyond its increasingly narrowing base of white men and acknowledging that (Can you imagine that?) minorities and women actually live in our country, but, still, it is not Mr. Steele’s race that makes him such an attractive RNC head, but, rather, his feelings regarding our former and not at all lamented President.
When asked at a debate for RNC Chair candidates held earlier this month what he thought was the Bush administration’s biggest mistake, Mr. Steele answered “Failure to communicate on the war. Katrina. The bailout. Yeah, we’ll stop there.” Only I wouldn’t have stopped there; I could have gone on for about five days, but this is a good start.
That the Republicans could elevate to the chairmanship of their national committee a man who is willing to acknowledge that the GOP’s titular leader for the last eight years indeed had no clothes is a salubrious sign. Assuming that this is not just another case of Republican tokenism and me-tooism (“Hey, they almost nominated a woman for president, so let’s nominate a woman for vice-president. They nominated and elected a Black guy for President, so let’s take a Black guy and make him Party chair.”), Michael Steele’s selection indicates that there might actually be hope for the Republican Party. Probably not, but maybe.
The selection of former Maryland Lieutenant Governor Michael Steele as new chairman of the Republican National Committee could be the best move that the GOP has made in years. Admittedly, the bar is very low here, but I am very enthusiastic about this selection, and not because of the attribute the national punditry has decided is Mr. Steele’s most salient characteristic: that he is Black. Entirely too much is made of race in this country; it should not even be considered when assessing a person’s candidacy for any position. That having been said, it is heartening to think that the GOP might actually be reaching out beyond its increasingly narrowing base of white men and acknowledging that (Can you imagine that?) minorities and women actually live in our country, but, still, it is not Mr. Steele’s race that makes him such an attractive RNC head, but, rather, his feelings regarding our former and not at all lamented President.
When asked at a debate for RNC Chair candidates held earlier this month what he thought was the Bush administration’s biggest mistake, Mr. Steele answered “Failure to communicate on the war. Katrina. The bailout. Yeah, we’ll stop there.” Only I wouldn’t have stopped there; I could have gone on for about five days, but this is a good start.
That the Republicans could elevate to the chairmanship of their national committee a man who is willing to acknowledge that the GOP’s titular leader for the last eight years indeed had no clothes is a salubrious sign. Assuming that this is not just another case of Republican tokenism and me-tooism (“Hey, they almost nominated a woman for president, so let’s nominate a woman for vice-president. They nominated and elected a Black guy for President, so let’s take a Black guy and make him Party chair.”), Michael Steele’s selection indicates that there might actually be hope for the Republican Party. Probably not, but maybe.
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