Wednesday, October 28, 2009

OH, SO YOU’RE IN FAVOR OF JUVENILE DIABETES, EH?

10/28/09

Mike Sneed of the Chicago Sun-Times (Sneed’s column, by the way, is indispensable for those who want to keep abreast of the various shenanigans that surround the politics of the Windy City.) reports today that Governor Pat Quinn is pushing for “the creation of a public health advocate to centralize the efforts of the state’s major medical institutions in battling chronic illnesses like juvenile diabetes, asthma, and autism.”

Hmm…

To hear Governor Quinn, and just about everyone else in Springfield tell it, the state is broke, busted, bankrupt. Things are so bad that the governor and his accomplices in the state legislator have no other choice but to raise taxes. The governor assures us that he is squeezing every dime he can out of state spending, but that will not be enough to obviate raising taxes and impose, for the first time since the inception of the state income tax in 1969, an effectively progressive income tax.

So if the governor is squeezing every dime out of the budget, where will the money come from to create this position, or perhaps office, of “public health advocate”?

One is sure that Governor Quinn, always effusive about his concern for the downtrodden, will accuse anyone who opposes this latest scheme to spend more of your money of lacking “compassion,” and probably of being in favor of the spread of juvenile diabetes, asthma, and autism. Those who will benefit, one way or the other, from this new arm of the state bureaucracy will scream that we “need” such an advocate. We need such an advocate? The state has done well for the last 191 years without such an advocate, so the term “need” is in this case, as it always is in public discourse, a term generally used by those with a huge vested interest in finding unmet needs, needs that can only be met by the direction of generous amounts of other people’s money toward the “only” people who can solve those “needs.”

One does not know whether creating the office of the public health advocate would be a good use of state money. It might just be another layer of bureaucracy that serves to inhibit the worthy missions it is ostensibly designed to facilitate. Even worse, it might be just another means of rewarding an assortment of lackeys, toadies, and hangers-on, along with any other jackanapes willing to kick back a portion of his taxpayer financed earnings to the coffers of the Demipublicans who run this state. But let’s assume for a moment that creating such an advocate is a worthy public expenditure that will actually make a positive difference in the battle against assorted debilitating, potentially fatal diseases. Even if this is the case, is this a time, when the state coffers are running on less than empty, to be embarking on this crusade?

The politicians keep telling us we’re broke, that they need more of our money because there is simply “no place to cut.” Yet, even in what they tell us are the worst of times, they still can come up with new ways to spend our money. In better times, they consistently managed to find a “need” that became “pressing” when it looked like tax revenues were in danger of going unspent. Now, those needs become “pressing” even when the pols are crying for more tax revenues to stave off bankruptcy.

Have these people no sense of what the typical person is going through? Does the word “economize” have any meaning to our public servants? Don’t they have any sense that, when the people who pay the bills have to find ways to cut spending, the government just might have to tighten its belt just a tiny notch? Do the people who make a living spending your money to advance their careers have any sense of responsibility…or even shame?

Tuesday, October 27, 2009

BOOK SIGNING AT ANDERSON’S IN NAPERVILLE!

10/27/09


We have scheduled a book signing for my book, The Chairman, A Novel of Big City Politics

Anderson’s Book Shop
123 West Jefferson, Naperville, 60540
630 355 2665

Saturday, November 21
11:00 AM

Anderson’s website is:

http://www.andersonsbookshop.com/


Watch the Anderson site, the Insightful Pontificator, and perhaps the Tribune book section as 11/21 approaches for more information.

Thanks!

Mark

"HOC EST CORPUS MEUM"

10/27/09

As a lifelong and rather seriously practicing Catholic and the husband of a nurse by training who seems to be obsessed about the H1N1 virus and the flu in general, especially in light of the death of one of our daughter’s high school classmates from H1N1, I am acutely interested in the Church’s reaction to the H1N1 scare.

First, a little personal background. We are classic parish shoppers; we are registered at what has long been, and is becoming more of, a “traditional” Catholic parish, Sts. Peter and Paul in Naperville. We also attend a neighboring parish, St. Thomas the Apostle, which takes a much more progressive approach to the faith and liturgy. We maintain strong ties to the church I attended as a child, Sacred Heart in Chicago; our kids were confirmed there and I am a lector and Eucharistic minister there. It’s difficult to classify Sacred Heart’s position on the “ideological” spectrum. Yes, it’s traditional, but it’s not. It is clearly run by the laity, and thus is probably on the forefront of Church evolution, though perhaps not realizing so. “Interesting” is perhaps the best, but still least descriptive, way to describe Sacred Heart, though some would say “quick and to the point” and “homey” would be more salient descriptions. We also occasionally attend yet another church, Our Lady of Mercy in Aurora. Its place on the ideological spectrum lies much closer to that of Sts. Peter and Paul than to St. Thomas. We very much enjoy the simplicity of its liturgy.

In the throes of the H1N1 scare, and especially prompted by the death of Michelle Fahle, the aforementioned Naperville North student, St. Thomas suspended distribution of the Precious Blood, distributing Communion only under the species of the Host. Sts. Peter and Paul, a few weeks later, took the same action and went a step further, suggesting that rather than a handshake of peace, a wave, a bow, or a “verbal expression of peace” be substituted.

I applaud these moves. Some would argue that such precautions are unnecessary because God would never allow us to get sick ingesting His Body and Blood and, to a degree, I admire that level of faith. However, I, and most of my fellow Catholics, would argue that God wants us to employ our heads along with our faith. He’s given us the ability to think for a reason; we ought to use it. Taking such precautions just makes sense, especially since the Church teaches that Christ is fully received in Communion under one species; i.e., it is not necessary to take Communion under both species.

However, there are at least two flaws in the Church’s precautionary measures, or at least in St. Peter and Paul’s, and, probably by extension, the more traditional camp’s in the Church, approach. First, people are still taking Communion on their tongues, as opposed to in their hands. As a Eucharistic minister, I know what happens when a Communicant takes Communion on her tongue: her tongue, saliva and all, almost inevitably comes into contact with the priest’s or Eucharistic minister’s hand. That hand then picks up the next Host and distributes it to the next Communicant. The problem is obvious, and if the Church is serious about arresting the spread of disease, it should immediately discontinue the practice of taking Communion on one’s tongue, requiring that Communion be taken in one’s hand.

On this note, I should disclose that I have long looked askance at the practice of taking Communion on one’s tongue. I made my First Communion as Vatican II was winding down and thus, for the first few years I took Communion, I took it on my tongue. However, as soon as Communion in the hand, so to speak, became available, I quickly abandoned the practice of taking Communion on my tongue. Hygiene was not even a consideration at the time; just the wonder of holding the Creator of the universe in my hands was sufficient reason to want to take Communion in my hand. I have to admit that I don’t understand people’s insistence on taking Communion on their tongue. Perhaps in the case of older people (Remember, Vatican II was forty five years ago!) who grew up and came of age in the pre-Vatican II days and have a hard time breaking with tradition, such insistence is understandable. But one wonders what motivates young people, sometimes kids, to insist on taking Communion on their tongues. Obviously, their parents or teachers have them convinced that there is something more profound about receiving Communion that way or even that there is something sinful about taking Communion in one’s hands. If Jesus had not said “Take this and eat,” but had rather said “Stick out your tongue while I put this in your mouth,” perhaps I could understand. And if I weren’t a Eucharistic minister, and thus able to see how ridiculous people look with their eyes closed and perhaps the least attractive appendage on their bodies fully extended, while waiting to receive their Lord, perhaps I could understand. But given my reasonable familiarity with scripture, and my experience as a Eucharistic minister, seeing people at what certainly approaches their worst and having my fingers effectively licked repeatedly, I have become even more opposed to Communion on the tongue. While I understand that the Catholic Church is an awfully big place with plenty of room for people with different approaches to the incidentals as long as we agree on the essentials, I have an especially hard time understanding that odd approach to reception of Our Savior. But hygienic reasons make objection to Communion on the tongue more than a strong preference; it is an imperative.

The second flaw in the Church’s approach to hygiene is the continued use of the holy water font at the entrance to the church. I know people who refuse to engage in the handshake of peace (for hygienic reasons, of course) but think nothing of dipping their hands into the stagnant water of the holy water font upon entering and leaving church. Talk about a veritable agar dish of bacteria! If one is going to eliminate the handshake of peace and the distribution of the Precious Blood, one should certainly take out the holy water fonts!

One would hope that elimination of the distribution of the Precious Blood from a common cup, removal of the holy water fonts, and perhaps altering the handshake of peace would become permanent features of our liturgical practice, even after H1N1 is no longer a threat. H1N1 is not the only disease extant, and having people drink from the same cup, and dipping their hands into the same stagnant water, as people, who are carrying colds, flu, and God only knows what else is an ideal way to spread any type of disease. At least ten years ago, our then pastor at Sacred Heart told me that, in addition to his pastoral duties at two parishes, he was the chaplain for an association of Catholic doctors and nurses. He went on to report that none of the people in that group would ever take the Precious Blood from a common cup for fear of contacting disease. This was long before the current bout of swine flu. It made eminent sense then, and it does now.

The Church teaches us that Jesus is fully present in his Body and Blood distributed to us at Communion. But the Church also teaches us that we are the body of Christ. We have to respect, and continually nourish ourselves with, the former, but we also have to take care of the latter.

Wednesday, October 21, 2009

“IF MY SON IS STRUCK BY A BOLT OF LIGHTNING, I WILL BLAME SOME OF THE PEOPLE HERE.”

10/21/09

Yesterday brought news of a plea agreement of Alonzo “Lon” Monk in connection with the case against the latest accused felon to head the executive branch of Illinois state government. Mr. Monk, former law school roommate, campaign manager, and chief of staff of former Governor Rod Blagojevich, pled guilty to one count of mail fraud, thereby cutting his stay at federally funded housing in half, and agreed to testify against Mr. Blagojevich. Mr. Monk, about as inside in the Blago administration as anyone could be, will reportedly tell of several money making schemes that make the characters in my book, The Chairman, A Novel of Big City Politics, look like pikers by comparison. These schemes include shaking down race track owners, directing bond business to an underwriter (according to court documents, Bear Stearns) that was willing to pay over $800,000 in bribes, and having Patty Blagojevich apply her renowned real estate expertise to the marketing of a prime 62 acre plot in the south Loop. Okay, maybe the Chairman’s and the Reverend James Monroe’s score on Jack Smith’s project west of the downtown area of the fictional town in my novel was provided a bigger payoff than most of the deals contemplated by Messrs. Blagojevich, Monk, Rezko, et. al., but, remember, Messrs. Collins, Monroe, and Smith are fictional characters!

Several thoughts come to mind as one contemplates Mr. Monk’s cooperation:

--I am not a lawyer, but, as I said when the Blago case started unfolding, this doesn’t look like an open and shut case against our wonderboy former Governor. While a sane and rational person could easily conclude that Mr. Blagojevich has done something wrong, perhaps even evil, and certainly idiotic, it is up to the legal system to determine if he has done something illegal. So far, the feds’ case is composed primarily of testimony of people like Messrs. Rezko and Monk, who are making deals to shorten their stays in federal dwelling facilities. The local U.S. Attorney’s office has shown, especially in the Family Secrets Outfit trial, an amazing ability to put people away on the testimony of felons, but the Blago case looks a bit dicier. We shall see; I never thought the case against Mr. Blagojevich’s predecessor, George Ryan, was all that strong, either, and I could be similarly wrong on this one.

--Mr. Monk will doubtless be a key, and interesting, witness, but his material is limited to affairs concocted by the rank amateur Mr. Blagojevich. A far more interesting witness from a broader perspective is the man who followed Mr. Monk as Mr. Blagojevich’s chief of staff, John Harris. (See my now seminal 12/13/08 post, “I TRUST THESE MEN WITH MY LIFE, SENATOR. TO ASK THEM TO LEAVE NOW WOULD BE AN INSULT.”) Before making perhaps the worst career move in modern history by signing on as Blago’s chief if staff in a fit of pique over not getting the job as Mayor Daley’s chief of staff, Mr. Harris held a number of jobs in the Daley administration, including a big post in the Aviation Department, which, as I said in that 12/13/08 post, is “supposedly a nest of corruption.” While Mr. Harris may not be able to sing as clearly as Mr. Monk when it comes to Mr. Blagojevich, one suspects that the real power structure in this state is much more concerned about Mr. Harris.

--Perhaps Messrs. Monk and Harris should be kept in protective custody in order to keep them away from self storage facilities in the south suburbs.

Friday, October 16, 2009

QUINN’S BOOK IS NOW AVAILABLE ON AMAZON!

10/16/09

Thanks to an alert friend and avid reader of the Insightful Pontificator, I learned that my book The Chairman, A Novel of Big City Politics, is available on Amazon TODAY, even as you read this! This is much sooner than I had anticipated; as I said in my last post, my publisher said the book would be available on Amazon “over the course of 15 business days.” I suppose that, technically, was true, but I didn’t think we would be talking ONE day.

To order the book, simply go to Amazon.com and type “The Chairman, A Novel of Big City Politics” in the search bar and you will be taken right to the book. (If you type my name or “The Chairman” in the search bar, you’ll get pages and pages of offerings by people named Quinn or about Mao Tse Tung.) The “Look Inside” feature is not up and running yet, but you can still order the book and, at least according to Amazon, have it by Monday, 10/19 if you want to pay up for shipping. But it is also available with free Super Saving Shipping. Those of you who know me well, or who have read my blog even cursorily, know that I would opt for the latter…free shipping is good.

And…

We are also working on possibly scheduling a book signing at Anderson’s in Naperville sometime in the very near future; I will certainly keep you posted on that development.


Thanks, everybody, for your years of support and friendship.


Mark
mightydad@att.net

Wednesday, October 14, 2009

“THE CHAIRMAN, A NOVEL OF BIG CITY POLITICS” IS AVAILABLE!!!

10/14/09

My long awaited book, The Chairman, A Novel of Big City Politics, is available. In fact, I am looking at a copy of the book as I type this. It is not yet available on Amazon, but…

The book can be ordered immediately through my publisher, BookSurge, an Amazon subsidiary, by placing a call to Customer Service to

866 308 6235, option 6

or

843 789 5000, option 6

If you decide to use this ordering method, referring to the book’s ISBN number, 978 1 4392 5559 9 should make the process easier, but simply asking for The Chairman, A Novel of Big City Politics by Mark M. Quinn should be sufficient. The price is $15.99. Shipping depends on where you want it shipped, but should be about $3.00 for US mail and $5.50 for USPS ground.

THE BOOK SHOULD BE AVAILABLE ON AMAZON.COM AND BOOKSURGE.COM “OVER THE COURSE OF 15 BUSINESS DAYS” FROM 10/13.
BookSurge seemed to indicate that the 15 business days is a worst case scenario and it should be available earlier. I, of course, will be checking daily and will let you know when the book is available on Amazon. The price should be the same, though Amazon may choose to discount the book.

Ordering by phone through BookSurge is probably a hassle for most of you and you would prefer to wait to buy the book through Amazon. I completely understand. For some of you, however, ordering by phone is at least as easy as ordering through Amazon, so you might want to avail yourself of that option.

I do need strong sales in the early stages of the process in order to make the book a success and/or to get it into bookstores, and I am quite confident that, if you have any interest in Chicago politics, or just in good writing, you’ll enjoy this book. So please buy a copy, using whatever method is easier for you. Remember also that the Christmas and Hanukkah seasons will soon be upon us, and books make great gifts!

Thanks for your friendship and support through the years. If you’ve liked my blog over the years, buying a copy of the book would be an ideal way to show support for it.

Again, thanks. I will keep you very posted.

Mark
mightydad@att.net

“I TOLD YA I WAS SICK”

10/13/09

For a guy who is largely agnostic on what seems to be the pressing issue of the day, health care, I have written extensively on the topic. See, inter alia, my posts of 9/23/09, 9/17/09, 9/11/09, 8/29/09, and 8/26/09. The passing of what has come to be called the Baucus bill out of the Senate Finance Committee has provided an opportunity to further ruminate, and opine, on what promises to be the political issue, or at least the domestic policy issue, of the year.

First, as usual, the cognoscenti have mischaracterized the entire debate and the average citizen has followed along, like the lemming s/he is increasingly proving to be. This entire debate is not about “health care reform.” No one, or at least no one rational, is proposing reforming health care per se. It would be hard to argue that our health care system is not the best in the world or is in need of much reform, and certainly not in need of reform from the politicians. Our health care system, properly understood, is a story of ongoing, day to day, seemingly never ending “reform,” but that reform emerges from the minds of the doctors, nurses, research scientists, etc., who seem to be constantly coming up with new and better ways of making or keeping us well. What this debate concerns in not heath care reform, but health insurance reform, or finding ways to provide the citizenry with financial access to the best health care system in the world. This is more than splitting hairs; genuine reform, and genuine progress, is greatly facilitated when we clarify the subject of discussion.

Second, a measure of my agnosticism on health insurance reform is melting away as I think about the specific legislation that is emerging and compare that legislation to what is truly needed in this country.

There are two fundamental flaws in our current delivery of health insurance in this country. The first is that it is tied to one’s work. One gets one’s health insurance through his or her employer. If one works for a company, or for a government agency, that provides health insurance, one has an easy time getting insurance, if not necessarily an easy time paying for it. (Those who get insurance through their employers and whine about the costs of that insurance, though, should try purchasing an individual policy and seeing what health insurance really costs.) Employers have to spend outrageous amounts of time and money delivering health care insurance to their employees on the idiotic assumption that every company is somehow ideally equipped to perform the services of an HMO or other health care provider. Not only is the expertise often lacking in most companies, but time and effort that could be focused on making one’s enterprise, and our nation’s industry, more competitive is spent dealing with insurance claims of employees. This approach is an absurd relic of World War II price controls that has been enshrined by an equally moronic tax treatment of health care benefits that effectively drops the responsibility for health insurance in employers’ laps.

Any effective and meaningful approach to health insurance reform should break that curious intertwining of one’s employment to one’s health insurance. Neither the House nor the Senate bill do that; instead, the House bill uses mandates and the Senate bill uses financial penalties to further ossify the iron tie between employment and health insurance.

The second fundamental, and even more salient, flaw in our health insurance system is the disconnect between the user of the service and the payer for the service. When one pays little or nothing for any given good or service, one will demand more of that good or service. To try to change this immutable law of economics is as pointless as trying to repeal the laws of physics. It is this artificially inflated demand for health care, the definition of and the “necessity” for which increases with the generosity of employer provided health insurance policies, that has made health insurance the Pac-man of both private and public budgets.

Thus, any effective health insurance reform should tie the user of health care services to payment for that service. This can be done through meaningful deductibles and co-pays. The definitions of “meaningful” could be tied to one’s income, but out of pocket costs have to be sufficiently high to stem the gross overuse of the “health care” system wrought by the “What the heck, it’s not my money; give me the very best” mentality that prevails under our current health insurance set-up. Americans are very good shoppers; we can make meaningful reductions in overall health care costs, and probably improve the quality of health care, if we could provide the incentives necessary to get Americans to apply those considerable shopping skills to their health care purchases. Unfortunately, neither the House nor the Senate bill does anything to increase deductibles and co-pays. Instead, we witness Nancy Pelosi traipsing around the country providing endless lists of procedures for which there will be no deductibles. Such an approach will exacerbate the largest problem of our health insurance system and expedite the bankruptcy of our once great nation.

Third, anyone who thinks that we can substantially increase health insurance coverage without higher taxes is badly misinformed or transparently disingenuous. All this talk of no tax increases or no costs to the average taxpayer is just silly. Insuring everybody is an expensive proposition no matter how it’s done. Someone has to be honest about this; taxes are going to go up if we want to provide health insurance for everyone. Then people can make a logical, reasoned cost/benefit analysis of health insurance reform, deciding whether universal, or near universal, coverage is worth the additional tax burden. To pretend that somehow health care reform can be conjured up with pixie dust, or through making “the rich,” “the insurance industry,” or “health care providers” pick up the tab is specious and spurious, the work of mountebanks and charlatans. Given that Washington is filled with mountebanks and charlatans, this should come as no surprise.

The current “health care proposals” fail on all three of the aforementioned counts: They tie health insurance more closely to one’s employment, they further isolate the user of the service from the financial consequences of his or her health care decisions, and they hide the costs of the entire undertaking, thus making a legitimate cost/benefit analysis impossible. The current proposals thus exacerbate the problems of our current health insurance system and will, if enacted, press down the accelerator on our joy ride to financial doom.

Sunday, October 11, 2009

HOW ABOUT BEHIND, OR PERHAPS BETWEEN, OUR EARS?

10/11/09

While driving my daughter and one of her friends back from a soccer game this morning, I heard one of those now ubiquitous public service announcements regarding H1N1. (Remember when we used to call H1N1 swine flu? One can only conclude that political correctness, and raising regard for the feelings of others beyond all other considerations, now extends to livestock. But I digress.) The message alerted the citizenry to do three things to avoid H1N1:

--cough into one’s elbow or a kleenex

--stay home from work if one feels ill, and

--wash one’s hands frequently with soap and water.

No one means to minimize the danger of the H1N1 outbreak, or, at this stage, epidemic. The number of people infected with this very dangerous disease has reached record levels and is almost certain to increase, causing untold human misery and horrible strain on our medical system. H1N1 has hit uncomfortably close to home with last Thursday’s tragic death of my daughter’s Naperville North classmate, Michelle Fahle. All of us are affected, some more than others, by H1N1, and we would all help ourselves and our neighbors by taking common sense precautions.

As cognizant and respectful as I am of the very real dangers of H1N1, as one with libertarian leanings and what some would describe as an obsessive concern with personal hygiene, I have to ask…

What has come of our society when the government has to tell us to wash our hands?

“BUT GENERAL TURGIDSON, I AM THE ONLY ONE WHO HAS AUTHORITY TO ORDER THE USE OF NUCLEAR WEAPONS…’

10/11/09

Last week, General Stanley McChrystal, the U.S. military commander in Kabul, sent his superiors three possible options for pursuit of the Bush/Obama war in Afghanistan. The first is to keep troop levels in Afghanistan about where they are, at 68,000 troops. The second option, and that preferred by General McChrystal, is to increase troop strength by 40,000 soldiers. The third, designed to make the General’s preferred option look sane by comparison, is to commit 60,000 additional troops to this hopeless conflict in that great graveyard of empires in Central Asia.

Fans of the Afghanistan war, primarily, but not exclusively, Republicans, are urging the President to “go with the general.” After all, they argue, he is a military man and knows what he is doing.

Hmm…

The defense of our country is the most important and most defensible duty of our government. Therefore, even though our political and military leadership has strayed from that task for at least the last sixty years, and the expansion of the military’s role has picked up considerably under the Bush/Obama administration, the military top brass are the most important bureaucrats in the federal government. However, they are only that…the most important bureaucrats in our government. As bureaucrats, the generals and admirals behave as bureaucrats do: they seek to expand their power and influence by increasing the numbers of people and dollars under their control. Therefore, if decisions on deployment and troop levels were left in the hands of the military because, after all, they are military people, and especially because four of our last five presidents have no real military experience, we would forever be increasing troop levels in places where our forces are already deployed and constantly looking for new places to deploy troops. After all, the bigger and more engaged the military, the greater the power of the military leadership. This is natural bureaucratic behavior.

The Founding Fathers were smart enough to understand the bureaucratic mindset. They further understood that wars had emptied the treasuries and decimated the young, promising generations of the monarchies of the old Europe from which our infant Republic sought a clean break. The Founding Fathers also knew that the most important liberty of which the state could deprive a citizen was his or her life. Those are some of the reason the Founders weren’t about to let the generals decide issues of war and peace and so put a civilian, the president of the United States, in charge of the military. While the GOP, in its curious and horribly misguided insistence on equating militarism with patriotism and conservatism, seems to have forgotten this, civilian control of the military is one of the paramount pillars of our Republic, and it has done as much to guard our liberty as have the actions our military has been ordered to undertake by our civilian leadership.

Wednesday, October 7, 2009

“YA GOTTA BUY REAL ESTATE; AFTER ALL, THEY’RE NOT MAKIN’ ANY MORE OF IT!”

10/7/09

This morning’s (i.e., Wednesday, 10/7’s) Wall Street Journal reports that a real estate expert at the Atlanta Fed, Mr. K.C. Conway, who, one might think, judging from his name, but apparently not the intensity of his insight, should have pursued a career either as an NFL running back or an R&B singer, has issued a report on the impact the cratering of the commercial real estate market will have on banks. Among other insightful observations, the report states:

Banks will be slow to recognize the severity of the loss—just as they were in residential (real estate).”

A much more highly placed, but much less beneficially named, Fed official, New York Fed President Bill Dudley, confirmed the wisdom of Mr. Conway’s observations in a speech Monday in which he said

“More pain likely lies ahead for this (the commercial real estate) sector and for those banks with heavy commercial real estate exposures.”

The Journal further reports that, based on its analysis of data from 800 banks, commercial banks had, at the end of the second quarter of this year, 38 cents in reserves for every dollar of bad commercial real estate loans. This was down from $1.58 in reserves for every dollar in bad commercial loans at the beginning of 2007. Apparently, we have a case of non semper paratus, unless, of course, commercial real estate is turning around. But all one has to do is turn off CNBC and drive down one’s local commercial strip to see how badly commercial real estate is hurting.

None of this should surprise anybody, especially readers of the Insightful Pontificator. I was not the only one sounding the alarm bell on the commercial real estate front when, in my 4/20/09 post, I stated:

Even if the housing market is improving, some combination of the following four should blow up in the next several months with devastating consequences both for the real economy and for the psyche of investors who really think we have turned the corner on the aftermath of a twenty year display of financial foppery:
--life insurance companies, primarily through their variable life and annuity contracts.
--credit cards—big time.
--municipal bonds
--commercial real estate

These have already blown up, you say? Think again.

If Messrs. Conway, Dudley, and Quinn are right, we may soon have to live through the same financial dystopia that we experienced last year. Why? Because, in what has become a new recurring theme in the Insightful Pontificator, some people never learn. They simply react and chant.

In other hopeful economic news of the type I find useful, I have seen no decrease in “For Sale” signs in the ultimate suburb in which I live. These signs are spread across virtually every pricing point available out here, but the preponderance of such advertising lies in the ostentatious “McMansion” sector of the market. Some of these monstrosities for sale are of the unoccupied variety, but more seem to be occupied, presumably of the “I just had to buy more house than I could afford because I finally got a few bucks ahead and had to display my wealth but wound up only displaying my economic and financial illiteracy” variety. This is not to say that more homes are for sale than ever before in Naperville, only that I am seeing more “For Sale” signs than ever before. And I like anecdotal evidence.

Also on the anecdotal front, a friend and I are in the habit of having lunch weekly and discussing the world’s problems and our brilliant, but unheeded, solutions thereto. Usually, our choice of restaurants is dictated by the availability of coupons, and whenever they have a “Buy one meal, get one free” coupons, we generally choose our local IHOP. The food is good, the service is terrific, my iced tea glass is never allowed to run dry, and the prices, while very high without a coupon, are reasonable with a coupon. The “busy-ness” of IHOP, and similar restaurants, has been a near perfect economic indicator for me, ebbing and flowing just ahead of the vicissitudes of the economy. After seeming to perk up during the last round of coupon availability, about two months ago, business at IHOP has been down, and down big, in this latest round of coupon availability, which started three weeks ago. In fact, we have never seen the restaurant as dead as it was yesterday.

So the commercial real estate market has not stopped plummeting, the housing market, at least at the upper middle end, still stinks, and the IHOP indicator has never been more negative. Yet stocks are up well over 50% from their bottom. Something isn’t right here.

Monday, October 5, 2009

WHEN WILL WE EVER LEARN?

10/5/09

This morning’s (i.e., Monday, 10/5/19’s) Wall Street Journal reports on the increasing trend of corporations’ borrowing not to invest in operations, or even to buy other companies, but, rather, to pay dividends, often special (i.e., one time, and usually very large) dividends, to shareholders. Such leveraging up to reward the shareholders was quite the rage in the past, especially for companies whose shareholders were private equity firms who, of course, were interested primarily in restoring the “competitiveness” of, and rooting out the waste in, the companies they acquired. Financial engineering, we were assured, was a mere afterthought, if it entered into the thought processes of the private equity wunderkinds at all. The Journal article cited the case of Dex Media, which borrowed heavily to pay a special dividends to its private equity owners, including Thomas H. Lee Partners, Bain Capital, and the Blackstone Group (which recently announced plans to purchase SeaWorld—Orca meat, anyone?). Dex later filed bankruptcy because it could not service the debt it took on to pay these groups that did so much to enhance its competitiveness and keep management on its toes. Lee, Bain, and Blackstone kept the money.

In illustrating this atavistic trend toward stiffing bondholders to pay shareholders The Journal cited the case of TransDigm Group, Inc.’s decision to borrow $425mm to pay a $360mm special dividend to shareholders, increasing debt from 3.1 times EBIT (earnings before interest and taxes) to 4.3 times EBIT. The new debt will get a rating of B3, pretty close to the bottom rungs of the junk ladder. Good luck with that, TransDigm.

While all this might seem appalling, even to those like yours truly, who a long time ago made his living in the junk bond market, it is a natural response to public policy. The Bush/Obama administration, along with its flunky at the Fed, Obsequious Ben Bernanke, decided that the proper response to a crisis that arose from too much borrowing was to make it easier to borrow. The Fed drove interest rates on super safe short term treasuries to record lows. As the economy recovered, spreads tightened, allowing corporations relatively easy access to cheap money. The companies, faced with such cheap money, made a perfectly rational decision to lever up their balance sheets. So such leveraging makes sense from a micro standpoint, especially when, as is the case, the shareholders get to keep their dividends even if the company winds up getting crushed by the debt it took on to pay those dividends.

From a macro standpoint, however, the trend toward further corporate leverage for purely financial reasons, if it continues, will be disastrous. With the government borrowing record amounts of money, even if the current trend towards greater savings by households proves more than an evanescent fluke (It won’t.), the last thing we need is more borrowing in the corporate sector.

Friday, October 2, 2009

"BE CAREFUL WHAT YOU WISH FOR"

10/2/08

Not to detract from, indeed, perhaps expanding on, the points I made in the next (or last, depending on how one looks at it) post, the instantly seminal “C’MON; I NEVER THOUGHT HE’D LAST THAT LONG AGAINST CLAY!”…

Perhaps, instead of spelling Mayor Daley’s demise, as several ill-informed “pundits” and ordinary citizens have opined, the abject failure of Chicago’s 2016 Olympic bid may actually have given the Mayor a new lease on political life. Why? If Chicago 2016 had succeeded and it had turned into the financial and logistical nightmare that I, and several other clearly thinking people, expected, the repercussions for the Mayor would have been disastrous. Cost overruns, kinky contracts, outright silliness, prying national media, and “Whoops! We never saw that one comin’” surprises that naturally need the expensive help of a politically connected contractor, at great expense to the taxpayers (and not only Chicago taxpayers), would become as regular a feature of the Chicago landscape as the Picasso and the Sears (that’s right, the Sears) Tower. And all this would develop quickly; the guys who would be making money on the Olympics don’t like to wait. The citizenry, no longer mollified by the cheerleading media and the sycophantic civic community, would rise up and demand Rich Daley’s head on a stake. Under the circumstances wrought by this Olympian disaster, one could beat somebody with nobody. Remember Mayor Byrne? Sadly, I do, too.

There have long been at least two sides to enigmatic Rich Daley: the good government side and the thuggish, reward my friends and screw my enemies side. While the failure of the Olympics has doubtless disappointed those who have benefited from the latter, especially since Daley made it look like such a sure thing (See again today’s other post, “C’MON; I NEVER THOUGHT HE’D LAST THAT LONG AGAINST CLAY!”), not getting the Olympics may help Daley’s increasingly dormant good government side re-emerge, and thus re-endear him to the people of the city of Chicago. Okay, maybe not. But the Olympics surely would have driven the final stake in the heart of Good Government Rich, forcing the peasants to go after Thuggish Rich with proverbial pitchforks. And, remember, when the Wolfman died, Larry Talbot died with him.

“C’MON; I NEVER THOUGHT HE’D LAST THAT LONG AGAINST CLAY!”

10/2/09

This morning, Chicagoans received the terrific news that they won’t have their pockets picked for the next seven or eight years in order to provide even more lucre for those who have already gotten rich, fat, and happy under the Daley administration. The lapdog, cheerleading news media in this town, sullen and down in the mouth in the wake of these developments, were reporting that, in the wake of the news, crowds in the Daley center were shocked and dejected. Some were so upset that they were crying “actual tears.” If such tears were shed by members of the crowd who actually think rather than chant slogans fed to them by the Mayor’s various propaganda organs, one can only conclude that these were tears of joy; we just dodged a MAJOR financial bullet. See, for example, my insightful 9/22/09 post “I GO TO RIO…”

Already, some pundits are saying that the demise of the Olympic bid means the demise of Mayor Richard M. Daley. I don’t think so. Yes, the Mayor’s approval rating is as low as it has ever been. Yes, he looks foolish (but perhaps not as foolish as the President) in the wake of having been shot down in the first round after, while not actually saying so, displaying a belief that Chicago 2016 was pretty much a done deal. And yes, John Kass made a good, though not unassailable, point when he indicated that the Olympics would keep Daley alive politically by providing a means of dispensing largesse to those who have supported him in an environment in which a depleted city treasury no longer provides such opportunities. However, talk of Daley’s being a “lame duck” or “finished politically” is premature, or perhaps downright wrong, for a number of reasons. As much as a lot of people understandably seem not to like Daley and the corruption and other shenanigans that have seemed endemic to at least the latter half of his mayoralty (but you wouldn’t know it by the 2007 election results), just take a look around the city. This city has never been cleaner, more beautiful, or more inviting. And the progress is not limited to downtown, as the Mayor’s detractors like to say. An old friend and I spent much of last Friday driving around the west side, in neighborhoods that one wouldn’t enter in broad daylight, heavily armed only ten or fifteen years ago. A few weeks before then, I diverted off the Stevenson onto King Drive on a trip to the Science and Industry Museum with my kids. The change in those neighborhoods is nothing less than stunning. As one with a somewhat libertarian viewpoint, I can’t attribute all this progress to the Administration, but, especially in a city like Chicago, where business and government are often indistinguishable, Mayor Daley has to get some credit. But even if you don’t buy the “Good for Chicago” argument, Daley seems safe for the mere fact that you can’t beat somebody with nobody. And right now, there is nobody around who can beat Daley, or at least nobody who can get the votes of two especially disgruntled, and necessary, constituencies, firefighters and police officers on the city’s far northwest and southwest sides.

The only sense in which Mayor Daley may be facing the end is that he might decide, in the wake of the miserable failure of his excellent Olympic adventure, not to run again, especially given the magnitude of other problems, including an empty treasury and the parking meter fiasco, facing the city. He’s been Mayor now for 20 years and, by the time 2011 rolls around, he will have served longer than his father, which one supposes was one of Richard II’s goals. Why put up with this any more, especially with, without the Olympics, he has few means to keep his supporters rolling in dough? Some more cynical, and more opposed to Daley, than I might argue that the whole reason for Rich Daley’s being Mayor falls apart if he no longer has means of doing “business” with his friends and supporters.

So, unless Daley decides not to run again, he is not political toast by any means because of the Olympics. But the failure of the Olympics certainly can’t help. As I pondered these developments this morning, an analogy so clear came to my mind that I had to recommend it to my readers, to wit:

To understand Daley’s position, rent the outstanding 1962 film, written by the until recently incomparable Rod Serling, Requiem for a Heavyweight. Early in the film, Luis “Mountain” Rivera (Anthony Quinn—no relation) goes seven (or maybe it was eight, but, in any case, far more than was expected) rounds against a very young fighter named, at the time, Cassius Clay, who played himself. Rivera’s crooked manager, Maish Rennick (Jackie Gleason), has bet heavily against his fighter, placing his bets through gangsters who, based on Maish’s assurances, bet that Mountain wouldn’t last more than three or four rounds.

The portion of the movie most relevant to this discussion comes very early: After Mountain lasts longer against Clay than Maish had predicted, the gangsters catch up with Maish, chasing him down an alley and finally cornering him in a boxing ring. They are very upset that Mountain lasted as long as he did, costing them lots of money. But they don’t kill Maish; instead, they give him a severe working over and warn him that there will be no next time.

Is Rich Daley, in the wake of his Olympic fiasco, Maish Rennick? Are the guys he has made rich, or richer (And, no, I’m not saying they’re gangsters. This is Chicago, so some of the guys behind Daley have somewhat, er, questionable pasts, but certainly such unsavory types are in the distinct minority among the beneficiaries of Daley’s (the taxpayers’ of Chicago, really.) beneficiaries.), leaving him on the ropes but giving him one just more chance?

Thursday, October 1, 2009

“PEOPLE PUT ME DOWN ‘CAUSE THAT’S THE SIDE OF TOWN I WAS BORN IN”

10/1/09

This morning’s (i.e., Thursday, 10/1’s) Wall Street Journal reports that, after months (years now) of modifying home loans by reducing interest rates and extending terms, and not meeting much success doing so, banks and other loan servicers have begun reducing the principal on such loans with some degree of seriousness. Indeed, in the second quarter of 2009, 10% of loan modifications involved writing down principal, up from 3.1% in the first quarter of 2009.

The banks’ newfound enthusiasm for writing down loan principal springs partly from the utter failure of other types of modifications. The Journal reports that 28% of loans modified in the first quarter of this year were in default within three months. (THREE MONTHS!) But it’s even worse than that; 56% of loans modified in the second quarter of 2008 were in default again a year later. Maybe, the banks think, reducing principal will prove more effective. Good luck on that.

The real reason, though, for the banks’ ramping up principal reductions is, as the Journal reports, “…prodding from the Obama administration which has made saving homeowners from foreclosure a cornerstone of its economic rescue strategy.”

So let’s outline what’s going on here:

The Bush/Obama administration has shoveled billions of your dollars into banks and other financial institutions and effectively told them to use a substantial chunk of that money to modify home loans for those who bought more house than they could afford. Since initial efforts to keep “homeowners” in their houses have failed, further pressure from the Bush/Obama administration has resulted in these lenders’ forgiving principal on loans extended to people who bought too much house. Therefore, the net result is that the government is using the money of those prudent enough to live within their means to subsidize those who whose profligacy, silliness, economic illiteracy, and gormless desire for “status” led them to buy far more house than they could afford. Ironically, this Bush/Obama policy has, in many cases, resulted in your subsidizing your former neighbors who could no longer bear the ignominy of having to live in your neighborhood because those pathetic boondocks were not sufficiently “upscale” for their tastes.

More of your government at work.