IF MACHIAVELLI CAME TO CHICAGO…

10/31/10

Michael Sneed’s Sun-Times piece today (Sunday, 10/31) was even more interesting than is this “must read” column for anyone interested in Chicago politics. Ms. Sneed, when asking if Mayor Daley’s decision not to seek reelection, which, according to Sneed, caught Tom Dart off guard, caught everyone off guard, answered

“Not on your life. The Washington Post reported last January that Emanuel was looking at the mayoral job. It’s a safe bet he didn’t know about Daley’s abdication until his final decision, but it’s a good bet Emanuel had plenty of warning it might happen from his big backer, hizzoner’s brother, Bill Daley, who was encouraging the mayor to retire.”

Hmm…

If Michael Sneed is right and Bill Daley is a “big backer” of Rahm Emanuel to the point at which he would indicate to Emanuel that Rich Daley might not seek reelection months before that announcement was made, then Rich Daley also must be a “big backer” of Emanuel; is the Daley family ever divided in things political?

Juxtapose this with reports that members of the city council and the ward organizations behind them are not at all excited, to say the least, about Rahm Emanuel’s becoming mayor. After 21 years of Daley, who needs another potential puppetmaster lording it over the Council? Just last week, it was reported that such heavyweight committeemen as Ed Burke, Mike Madigan, and Mike Zalewski, and possibly Dick Mell (though other reports indicate that Mell is looking to jump on the Emanuel bandwagon if the deal is right) are holding their cards close to the chest, looking for the ideal anti-Rahm, or looking to make the ideal anti-Rahm. Taken together, reports that Emanuel is the Daley candidate and reports that the big guys in the central committee want no part of Emanuel would indicate that this is shaping up to be a classic battle of City Hall vs. the old ward organizations, a final attempt by the old ward based Machine to cling to life in the face of a vigorous, and largely enormously successful, onslaught by City Hall. This is the very conflict outlined in my books The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics. Further, as I have said in the past, both in this blog (See, inter alia, my 10/11/10 post “HE’S A VERY SCARY GUY, KAY.”), and in public fora of various kinds, if Emanuel should become mayor, it would be, as I put it in that now seminal piece, the final indication that the Machine is, without a doubt, dead, over, finished. Emanuel’s being the Daley candidate only adds cogency and an air of perspicacity to that comment.

However, problems arise from a Daley vs. the Committeemen match-up. Who would be the candidate of the Machine committeemen to slay the mighty Rahm? There are only two alternatives, since there are only two other viable candidates, at this juncture: James Meeks and Gery Chico. It’s hard to see how the Machine could rally behind Meeks, who has been perceived as a Machine opponent since his arrival in politics. Further, given the racially charged atmosphere in Chicago, it’s hard to see a cabal of powerful white committeemen getting behind Meeks, if only because his race would make him a tough sell in their wards. On the other hand, perhaps we are post-racial in Chicago. Further, the Reverend Meeks’ social conservatism should play well in the similarly socially conservative white wards on the geographic fringes of the city. Meeks is a coalition builder who works well with most people, and is working especially hard cultivating the police officers and fire fighters who live in the white wards. These guys will be eager to back anyone perceived as an anti-Daley candidate. And there are a lot of people, and not just fire fighters and police officers, in the Machine wards who would just love to see Emanuel lose this election just to stick it in the ear of a guy who is widely perceived as the president’s guy. People just don’t like Rahm and would love to see him lose everything. A lot of those people live in neighborhoods represented by Machine committeemen. Finally, a lot of what I, and others, have described as “white” wards aren’t so white any more; backing a black candidate wouldn’t hurt committeemen in those wards with their growing minority constituencies. So Meeks might not be such a long shot for Machine support.

On the other hand, I get the sense that Meeks may not be around for the February ballot simply because he has made deals for his support in the past and Rahm might be dealing. On a third hand, if such a thing were possible, Rahm may not be dealing simply because, as long as Carol Moseley Braun (Can you believe it? Just how dumb can the voters be? I hope not that dumb, but I digress.) is in the race, it is in Rahm’s interest to keep the black vote split so that he can win by appealing to his natural base of north side yuppies, sophisticated downtown media and business types, and pols on the take. Further, if you really believe the conspiracy theorists, the only reason Braun is in the race is because Rahm and the Daleys put her up to draw black votes away from Meeks.

It is similarly not easy to see Gery Chico carrying the standard of the Machine committeemen against his former boss, Rich Daley. Stranger things have happened, though, and, as Metternich said of nations, politicians don’t have permanent friends, only permanent interests. And Chico’s mixed white-Hispanic background make him an attractive candidate given the demographics of the town. So maybe he will be carrying the banner of the Madigans, Burkes, Zalewskis, and Berrios of the world.

This could, and, it’s looking like, will change after Tuesday when Congressman Danny Davis, Attorney General Lisa Madigan, and County Treasurer Maria Pappas win re-election to their current posts and decide whether to run for mayor. A more natural standard-bearer for the Machine could emerge and we’re all back to square one.

Or perhaps Michael Sneed is wrong and Emanuel is not the Daley family candidate. Gery Chico would seem to be just as natural a candidate for the Daleys, unless they see the obvious advantages to Chicago of having a guy with a firm hold on the President’s ear on the Fifth Floor.

This is all confusing, but one has to admit that such swirling cross-currents are what make Chicago THE place to live if one genuinely loves REAL politics.

CURIOUS GEORGE INDEED

10/27/10

I sent the following letter to our local paper, the Naperville Sun. Note that Naperville operates under a city manager system, leaving the long time mayor, George Pradel, with little to do, besides issuing liquor licenses to those he deems worthy, but appear as Santa Claus in the town Christmas parade and go to the grade schools to read to the children. He prides himself on these two vital tasks. Understanding this will help the reader understand the first of my two punch lines.

Thanks.


10/27/10

Show Me’s (sic) Restaurants is about to open its fourth Illinois location at the former Famous Dave’s location on Ogden Avenue, about three blocks from our home. Show Me’s (sic) is a bar/café very much akin to those paragons of good taste and refinement, Hooters and The Tilted Kilt, but with (believe it or not) less class and less clothing on the servers.

The neighbors are understandably upset. While almost all those opposing the new restaurant would understand if the new Show Me’s (sic) were located on the vast commercial strips on Routes 59 or 53, this new entertainment venue would be located immediately adjacent to and across the street from single family homes. Combine the theme of the restaurant, which is essentially men who apparently have trouble getting anything anywhere else ogling women half their age in various stages of undress and the 2:00 o’clock closing time with the quiet residential character of the neighborhood, and one can see why the residents consider the new Show Me’s (sic) a recipe for disaster.

The feelings of the residents will in all likelihood prove to be irrelevant in this instance, however. Why? Mayor George Pradel, who is also Naperville’s liquor commissioner and thus in charge of dispensing liquor licenses, has already determined that the restaurant will open, or at least that is the distinct impression residents get when they attempt to contact the suddenly uncharacteristically reclusive Mr. Pradel but instead are pawned off to members of his staff.

Why is Mayor Pradel in favor of granting a liquor license to Show Me’s (sic)? One could possibly understand a principled libertarian argument, though not from the decidedly non-libertarian Mr. Pradel. (I say “possibly” because even those of us with libertarian leanings recognize such things as zoning to be legitimate functions of local government, unlike, say, buying Children’s Museums in order to maintain the family friendly character of Naperville.) But Mr. Pradel’s argument is not one of principle; he apparently likes Show Me’s (sic) and thinks it would be a “good fit” for Naperville. The Daily Herald reported on October 27, 2010:

Pradel, who also serves as city liquor commissioner, said he visited the Springfield location Saturday night and had a cup of coffee while watching the Iowa State-Texas football game. Based on what he observed, Pradel said he thinks the establishment could be a “good fit” for the empty lot along the busy street.

“I went down and took a look and I brought back some information to share with the commission and the (city) council, if it gets that far,” Pradel said Tuesday. “I like that they sell reasonably priced food and more food than beer. And I like that it seems like a nice friendly place to watch a game or have dinner.”
Two thoughts come to mind when one hears Mr. Pradel gushing about the “nice, friendly” character of Show Me’s (sic) and its being a “good fit” for Naperville, which constantly reminds anyone who will listen that its most salient feature is its family friendly nature:

--The next time Mr. Pradel goes to one of our elementary schools to read to the kids, perhaps he ought to point out to the little girls in the audience that a worthy career aspiration would be waitressing at the “nice, friendly” Show Me’s (sic).

--Mayor Pradel is running for reelection on February 22, 2011. Perhaps voters should relieve him of his duties so that he can spend more time at the “nice, friendly” Show Me’s (sic) that he seems to enjoy so much.

DART STILL HITS THE TARGET

10/27/10

I would describe my reaction to Cook County Sheriff Tom Dart’s dropping out of the mayoral race (or, more properly, never formally entering the race for mayor) as shocked, but not surprised. I’m shocked because I, and just about (Lynn Sweet of the Sun-Times said this morning that Dart’s not running was no surprise to her.) everybody else, thought he was in. And, as I have said in a few fora, if I had to pick a winner at this juncture, it would have been Tom Dart. But I’m not surprised he dropped out, given his personal situation; he has five young children (I heard five under the age of ten; I haven’t been able to verify that, though.) It must be tough enough to spend enough time with one’s family when one is sheriff; doing so when one is mayor would present some seemingly insurmountable difficulties, and some very tough, almost heart wrenching decisions. Yes, I know the current mayor’s father was able to balance being mayor, party boss, and capable father of a large family, but expectations for, and the role of, a father are quite a bit different today than they were in 1955. While I don’t know Tom Dart, from what I know of him, I believe him when he cited his family as the reason for his not running, and I think his statement

“The only regret I’d ever have is if I turned out to be a bad father.”

is sincere. I admire this sentiment and I wish Mr. Dart well.

As I said in my 10/15/10 piece, AND THEN THERE WERE FOUR…, this field is narrowing faster than even I, who never thought this race was going to be as wide open as the experts thought, had suspected. AT THIS JUNCTURE, we are down to three candidates with a viable chance of being the next mayor of the greatest city in the world:
James Meeks, Gery Chico, and Rahm Emanuel, in no particular order. Some would argue that Carol Moseley Braun has a chance, and her having hired such big guns as Victor Reyes and Mike Noonan to run her campaign lends credence to that view. However, I, and doubtless many of you, simply cannot see it. Carol Braun’s record is one of slovenliness, neglect of office, and serial failure. Noonan and Reyes are good, but even the best salesman cannot sell such a tainted product. Miguel del Valle might be considered to be viable, but he never had much of a chance and it hasn’t improved with Dart’s dropping out.

Unlike most of the punditocracy, I’m not sure that Dart’s dropping out provides a huge boost for Rahm Emanuel. I’m not being coy; I’m just not sure. Dart and Emanuel were both perceived as Daley favorites, but so is Gery Chico, so some of that Dart support could just as easily go to Chico as to Emanuel. Dart had strong support in the black community, largely due to his efforts in the wake of the Burr Oak cemetery fiasco and his efforts on behalf of tenants evicted due to their landlords’ foreclosures. That support would more likely go to Meeks than to Emanuel. So it’s difficult to say whom Dart’s staying away helps the most.

All this could change after November 2 when the likes of Danny Davis, Lisa Madigan, and Maria Pappas are safely reelected to their current posts and make final decisions on whether to run for mayor. The entry of any of these three will have huge ramifications for the election. Right now, one would have to bet that none of these three will enter, but who knows? Who would have predicted Tom Dart’s staying away from the race?

This continues to be lots of fun; I hope it doesn’t end too soon. But I do think the chances of our not seeing an April runoff, already better than most people thought (See, again, my 10/15 piece, AND THEN THERE WERE FOUR), have increased dramatically.

AFTER ALL, THEY’RE BOTH IRISH-CATHOLICS, RIGHT?

10/23/10

As we head into the tightening November 2 gubernatorial election, a thought has occurred to me: perhaps the outcome of this election may turn as much on what happens in those wards that comprise the remainder of the old Machine as it does on what happens in the collar counties.

The conventional wisdom is that Pat Quinn will get nothing south of I-80 and perhaps west of I-39. Bill Brady will get nothing in the city of Chicago and in some of the close-in suburbs. Therefore, the battleground will be the collar counties and large swaths of suburban Cook County.

It’s hard to argue with that logic. However, there may be more at work here. Traditionally, mayors of Chicago have not been comfortable with Democratic governors of Illinois, perhaps because they represent an alternative center of power when they get too big for their proverbial britches and come to think that being governor of Illinois is somehow remotely as important as being mayor of Chicago. Whatever the reasons, powerful mayors of Chicago would rather work with Republican governors. Richard J. Daley’s favorite governor was Bill Stratton and Dick Ogilvie kept out of the Mayor’s way, even helping out by committing political suicide in implementing the state income tax. Richard M. Daley got along famously with Jim Thompson as they lasciviously divided the generous spoils provided by the hapless taxpayers of Illinois. While Jim Edgar could occasionally be a burr in the Mayor’s saddle, he ultimately presented few obstacles to the designs of the boys in Chicago and Springfield, including Thompson and Edgar pal, and former Ogilvie protégé Bill Cellini, who played well with the guys in Chicago. Democrat Rod Blagojevich, on the other hand, was a major problem for the Mayor, largely because of his general doofishness and ham-handed approach to fleecing the taxpayers, but also because he really thought that, by virtue of being governor of Illinois, he had achieved a position of power approximating that of the Mayor’s office.

In fact, mayoral antipathy (perhaps too strong a word) toward Democratic governors led to perhaps my favorite Richard M. Daley quote. When Democratic Attorney General Neil Hartigan ran for governor against Republican Jim Edgar in 1990, he expressed frustration, and not all that privately, that Mayor Daley, who was far more comfortable with the milquetoast Jim Edgar than he let on, was not doing enough to support Hartigan’s candidacy. In response, Daley said

“What do you want me to do, take my pants off?”

Great quote. I can almost see Hartigan quickly telling reporters “Hey, I never asked the guy to take his pants off!” But I digress.

Combine this historical preference of Chicago mayors for Republican governors with Pat Quinn’s reputation as an anti-Machine reformer (a reputation that is very rapidly fading into the distant past; see my 9/30/10, 5/13/10, 3/26/10, 2/4/10, 2/2/10, and 2/1/10 posts), and one wonders how the votes in, say, the 11th, the 19th, and 13th wards, and maybe even the 36th, the 38th, and other north side wards, among others, will come out. No one is saying that Brady will carry these wards, but he won’t have to carry them to “win” them in a sense.

With Daley’s leaving office, perhaps the historical preference of Chicago mayors for Republican governors will not be in play this time around. But this preference is, and has never been, at least in most cases, anything personal; it results from a cold, some might say Machiavellian, analysis of the two poles of power in the state, so there is no reason to believe that those supporting the mayoral aspirations of any of the leading candidates will be brimming with enthusiasm for Quinn’s reelection. And the historic antipathy toward Quinn on the part of Machine pols may be fading, but it’s still there. Remember, a lot of these guys suffer from what we call Irish amnesia: they forgive, but they never forget.

So watch the votes in what remains of the Machine wards on election day; they could tell an interesting, and perhaps decisive, tale.

AXEL WEBER VS. PRINCE VULTAN

10/23/10

Axel Weber, the current head of the Bundesbank, used to be a shoo-in to be the next president of the European Central Bank. Then he started acting like a central banker. He, in typically German fashion, was never very keen on the ECB purchasing the sovereign debt of eurozone countries, largely fiscally wayward eurozone countries, no questions asked, no discipline demanded. Then he proposed that such purchases, which amount to a subsidy of countries that can’t get their fiscal houses in order with the thin air of newly created money, be curtailed as quickly as possible, as was originally promised when such purchases started in response to the Greek “crisis.” His suggestion, or perhaps his demand (Mr. Weber, as a good central banker, is perhaps not the most diplomatic guy in the world.), was quickly rebuffed by his fellow ECB governors, who pleaded monetary and fiscal reality. Mr. Weber then warned, in perhaps my favorite quote of the last year, against

“…the illusion that central banks can achieve things that only the taxpayer and ultimately the governments can achieve.”

It looks like, for the sin of acting like a responsible central banker, Mr. Weber has blown his chance to head the ECB. The job will likely go to Bank of Italy President Mario Draghi, who may be a terrific guy but whose most salient attribute at the moment is that he is not Mr. Weber. Mr. Draghi is also known for his “crisis management” and “diplomatic” skills, which, roughly translated, means he is willing to go along with the further debasement of the euro in order to allow the continuation of fiscal irresponsibility on the periphery of the eurozone. So it goes.

When one thinks of latter day central bankers, or at least those central bankers who have a chance at positions of great responsibility in an era when politicians and the citizenry pass the buck to central banks that are assumed to possess mystical powers and magic wands, largely in the form of turbocharged printing presses, one image comes to mind, at least to those of us who remember the original Flash Gordon serials. Whenever Flash Gordon, Dr. Zarkov, and Prince Barin were captured by Prince Vultan, Vultan put our intrepid heroes to work shoveling coal into the furnaces that generated the power necessary to keep the flying city of the Hawkmen afloat. With each shovel of coal, the furnace would heat with an intensity that made Flash, Zarkov, and Barin recoil in pain from the heat. But the coal was quickly burned, necessitating yet more seemingly futile shoveling to satisfy the incessant demands for more power. The furnaces, and Vultan’s cruel taskmasters, were never sated.

And that about sums up the role of the central banker today; keep shoveling money at various problems, and, in the case of the ECB, problem countries, that continually demand more cash be burned to fuel their esurient spending habits.

MARK QUINN TO APPEAR AT IRISH BOOKS ARTS AND MUSIC CELEBRATION (IBAM)

10/22/10

I, along with legions of Irish and Irish-American authors, artists, and musicians will be appearing at the Irish Books, Arts, and Music Celebration (IBAM!) on Saturday, November 6 and Sunday, November 7, starting at noon each day. IBAM will be held at

The Irish American Heritage Center (“IAHC”)
4626 N. Knox
Chicago, 60630.

Cost for attending IBAM is $10 for one day, $15 for both.

I will also be a part of an IBAM panel discussion entitled “Publishing your book—The Tricks of the Trade” to be held on Sunday, November 7 at 5:00 PM.

IBAM should be an entertaining and interesting event. Further, the IAHC is a wonderful showplace for and keeper of Irish and Irish-American culture that you will enjoy whether or not you or your people hale from the Emerald Isle, and IBAM is a perfect opportunity to visit.

More details can be had by going to

www.ibamchicago.com

Thanks.

THE CRANKY PONTIFICATOR RETURNS…

10/22/10

While driving through downtown Naperville today, I heard a radio commercial for one of Chicago’s major banks. It’s one I (and doubtless you, if you listen to news or talk radio) have heard on many occasions in the past but to which I only carefully listened today. In this stylistically schlocky piece, a fortune teller advises a (presumably) fortune seeker that there is “much water” in his future, probably a flooded basement or the like. The helpful announcer then goes on to advise the listener to get a second mortgage (which we have euphemistically called “home equity” loans for at least the last fifteen years) in order to have cash available for such eventualities.

Hmm…

Here’s a novel, probably wacko, idea: How about actually saving some money in order to have cash on hand for such eventualities? How about actually building up an emergency fund for the things that inevitably go wrong in life rather than creating another liability, calling doing so building an emergency fund, and congratulating yourself on your financial acumen? Hey, it worked for your parents; would doing so yourself really be the sure sign of financial fatuousness such idiotic ads want you to think it would be?

Wait, I forgot. If by some miracle, people manage to delay the purchase of the latest bauble designed to fortify their fragile egos and save some money, some financial “professional” will advise them that putting that money aside in some sort of liquid investment, such as a savings account, is a chump’s game. Why, if they were financially savvy, they would put the money in the stock market, where an 11% return is guaranteed “for the long term” (See my by now long seminal 9/3/10 piece YOU PROBABLY DIDN’T HAVE TO BE TOLD THIS AFTER THE LAST FEW YEARS BUT…), take out a home equity loan for emergencies, and thereby set up an ingenious arbitrage. Oh, boy!

What’s my point, beyond assuming my usual position of personal financial scold? Don’t be so sure that our bad financial habits have been eliminated by the travails we have experienced. Taken as a whole, the American people are still financial nincompoops, and the people whose job it is to provide them financial guidance (with a few exceptions, several of whom, probably not coincidentally, read this regular morsel of wisdom) are financial nitwits.

NOBODY OWES NOBODY NUTHIN’, EH?

10/22/10

For the last few weeks, I have been struggling to say something especially insightful, or even intelligent, about what looks like a redux, or merely a continuation, of what has been blithely referred to as the “mortgage crisis.” While I don’t purport to have come up with anything especially unique regarding this matter, I have come up with a coherent approach to the topic which might bring some enlightenment and convey some insight.

Two major developments have led to the manifestation of the mortgage situation we currently face. First, major mortgage servicers such as Bank of America and Chase instituted temporary moratoria on mortgage foreclosures due to flaws in the paperwork conveying home loans and the mortgages that secure them from the originators (or those a step or two away from the originators) to the CMOs and CBOs that currently hold the mortgages. It seems that borrowers are arguing that the ultimate creditors could not prove that they actually owned the loans, and the mortgages that secured them, and thus could not foreclose on the property; i.e., without a valid security interest in the property, how could a lender foreclose?

The second development was a movement on the part of the CMO and CBO holders to sue the originators (or those a step or two away from the originators) of the loans in their portfolios to force them to buy back the loans due to sloppy and/or defective underwriting and servicing of the loans.

AGs (“AG” is short for “Attorney General,” but, in practice, it could just as easily be short for “Aspiring Governor,” but I digress.) from all fifty states have jumped into this latest brouhaha with gusto, as one might expect. These notables were especially instrumental in “encouraging” financial institutions to initiate or join the foreclosure moratoria, which ended too quickly for the politicians’ tastes.

As I see it, there are three possible outcomes to this latest episode in our ongoing mortgage travails. The worst case scenario would be for some enterprising lawyers to discover that there is indeed a defect in the transference of the loans and underlying mortgages to the ultimate purported holders of those loans and mortgages and that, as a consequence, nobody owes anybody anything; i.e., all borrowers, whether current or in default, are off the hook as long as their mortgages are no longer held by the originator of their loans. So not only can banks not foreclose on deadbeat borrowers, they can’t collect from up to date borrowers. This scenario is, of course, a veritable financial dystopia that would threaten just about every financial institution, pension fund, or ordinary investor in the world, and would especially infuriate our friends across the Pacific who hold so much of this paper. Further, an outcome would make those who have been honoring their obligations feel like a bunch of chumps and thus spark plenty of societal resentment, if not outright societal breakdown, as the obligations of borrowers to lenders, honored throughout the millennia, would suddenly become passé remnants of a benighted, bygone era.

Fortunately, this worst case scenario is highly unlikely to come to fruition. Surely, those who laid the legal groundwork for the modern system of mortgage finance under which we currently operate have taken the steps necessary to insure that title to the loans and the mortgages that secure them were properly transferred. At least I hope so; perhaps I am taking an unwarranted detour from my normal cynical approach to life.

Moving along the outright disaster to much adieu about nothing continuum, we come to another possible outcome: CMO and CBO holders may ultimately force originators to buy back the shoddily underwritten and serviced mortgages that comprise the collateral for those CMOs and CBOs. While such an outcome would not have the dire societal, financial, or economic ramifications of the worst case scenario outlined above, it looks attractive ONLY relative to the worst case scenario. A substantial forced buyback would cause those originators, including the nation’s financial giants, to fail (again) and force the taxpayer to bail them out (again).

One could argue that if the transfers of the loans and the mortgages that secure them were indeed fraudulent, CMO and CBO holders never really bought anything and thus can’t force the originators to buy loans and mortgages back. But if that condition were true, we would be dealing with the first scenario, which would be far worse than this second scenario. Again, though, fraudulent or otherwise defective transfer, at least in any kind of size, is unlikely.

A third scenario resides much further along the aforementioned continuum. That is that everything we have been discussing is much adieu about very little. The borrowers still owe the money and so the holders, who remain the trusts that underlie the CMOs and CBOs, still can continue to collect if they can and foreclose if they can’t. While the aforementioned AGs, desperate to pander to those elements of our society that see financial obligations as optional and the contract into which they entered voluntary as just another manifestation of the heavy-handed predations of “the man” or “the corporate criminals” and thus no responsibility of their own, would be sullen and down in the mouth with such an outcome, it is the outcome for which anyone who wants to avoid financial catastrophe should be cheering.

What is the probable outcome? God only knows, and He’s not talking. I would guess, though, that we might ultimately see something close to the second outcome; that is, originators, or those a few steps from the originators, forced by legal action to buy back some of the loans they conveyed with sloppy, or perhaps fraudulent, paperwork. This would appear to be poetic justice for those who foisted such mortgages on the market, but what about those who bought such mortgages with insufficient due diligence, relying on the models of the wunderkinds who gave life to these financial Frankensteins (i.e., the “carefully calibrated” CMOs and CBOs)? There is plenty of blame, and financial responsibility, to go around here; I fear, though, that most of the financial responsibility will fall to the taxpayers or, if current trends continue, to the Fed’s printing press. So it goes.

One more brief note in an already long winded post. According to today’s (i.e., Friday, 10/22’s) Wall Street Journal, the Obama administration has said “a government role may still be needed to preserve the long-term, fixed-rate mortgages that have become the keystone of the American mortgage market” (quoting the Journal, not an Obama spokesman). Not to unduly bash the Obama administration, because I am quite confident that the Bush or a McCain administration would also bellow such drivel, but, as the kids would say “Well, duh!” Without a government role, there would be no long-term, fixed rate mortgages; such peculiarities only came about in the ‘30s and ‘40s as the government started to take what would become its preeminent role in the mortgage market; note that Fannie Mae was founded in 1938. So of course some government involvement would be necessary to preserve the long-term, fixed-rate mortgages that have become the custom in this country, largely due to government involvement.

But why have long-term, fixed-rate mortgage loans become such a middle class entitlement? What if such juicy (to the lender) loans were no longer widely available, perhaps due to less government intervention in the mortgage market? I can already hear the wailing and gnashing of teeth about how the home market depends on such mortgages for its survival and their curtailment would surely lead to our economic and financial ruin. Baloney. People would still buy houses with adjustable rate mortgage loans, shorter term home loans, or any number of yet to be discovered loans. Without thirty year fixed rate loans, there would be less need for securitization; originating financial institutions would be more comfortable, and profitable, holding such loans, on which all the risks and embedded options are not running in favor of the borrower. Wall Street would surely scream, but people on Wall Street are, at least if you believe them, smart and resilient. They will find ways to make money. Fewer people would be able to buy homes, but is that such a bad thing? The idea that home ownership is an entitlement is one of the notions that got us into the financial soup in which we continue to swim.

Maybe it’s a good time to question the idea that “owning” one’s home by taking out a loan that, even with all the options skewed in one’s favor, one cannot afford is a sacred entitlement. Perhaps it’s time to finance homes with loans that lenders could actually hold, rather than make and immediately sell. Such a financial template worked for decades in this country before the advent of the type of enlightened thinking that has so come a cropper of late. Why must we assume that the generations that built this country were so benighted, especially when the dire consequences of my generations’ financial machinations are only beginning to become apparent?

BRADY QUINN…DIDN’T HE PLAY QUARTERBACK FOR NOTRE DAME A FEW YEARS BACK?

10/18/10

Below is an excerpted note I sent to two friends of mine who would probably not support Pat Quinn on philosophical/policy grounds, but who are supporting him largely because he is a friend and fellow Fenwick alum, but also because they aren't comfortable with Bill Brady. As I point out in this note, I have no problem with supporting people for these reasons; I have done the same thing in the past and would have few qualms about doing so in the future; I am, after all, from the 19th Ward in which, as in many other wards and quarters, personal loyalty and friendship count for more than governing philosophy, especially since most politicians treat their self-proclaimed governing philosophies like so much used kleenex once in office. But, since I am not a friend of Pat (no relation) Quinn, and couldn’t possibly be further from him philosophically, I am supporting Bill Brady. Also, a relative whom I consider an especially close friend is close to Brady…so there you go.


10/18/10

I have to disagree with you guys both on Brady's prospects and on his qualifications. Admittedly, he's not the brightest bulb in the chandelier, but he's no Sarah Palin. He's actually run a business, and did so successfully until the housing bust. I'm much more comfortable with guys with private sector business experience, or even public sector experience at the operational/managerial level, than I am with career politicians. I didn't vote for Brady in the primary (I voted for Andrzejewski, who had more extensive and successful private sector experience, was far more libertarian in his outlook, and who never held office in his life.), but I'll support Brady in the general. I certainly can't blame you for supporting Pat Quinn, since he's a friend. I supported my next door neighbor in Beverly, Ellis Reid, for an Illinois Supreme Court seat because he was a friend. But I've met Quinn only a few times and, while I enjoyed his company, he's not a friend of mine. So it gets down to policy and philosophy, and I couldn't be further from Pat Quinn on policy and philosophy. I also don't like the degree of comfort he seems to have reached with power and the old way of doing things, but I've blogged on that extensively.

I think the race will tighten up, first, because this is a Democratic state and, second, the Quinn people are going to hammer Brady on his conservative Catholic views on social issues, hoping to scare the suburbanites. But, while it's possible, I can't see Quinn winning with the state in the financial shape it's in, his association with Blagojevich (think Ford in '76, doomed through his association with Nixon, which was tenuous at best, as is Quinn's with Blago, but politics not only ain't beanbag, it isn't always fair, either), and his seemingly unbridled faith in the efficacy of government in an election year when hyperactive government is very much out of favor.

Still, watch Cohen. (See my 9/5/10 post “I’M ALFRED E. NEUMAN, AND I’M VOTING FOR SCOTT LEE COHEN”) There is going to be a very large "anyone but Quinn" vote for the reasons I enumerated above, and if enough people are scared off by Brady's social views, Cohen may take enough votes from Brady to hand it to Quinn. Remember, people have short memories; 42% of voters, according to one poll, had never heard of Cohen a month ago, despite his being February's big story. But I don't think it will be that close; Brady will really have to screw up to lose this one. He's certainly capable of that, but he's going to be playing too defensively and carefully to commit a big gaffe. He IS smart enough to avoid one of those...I think.

ED VRDOLYAK, MEET EAMON DEVALERA COLLINS

10/16/10

One of the most colorful characters in the history of Chicago politics, former 10th Ward Alderman Ed “Fast Eddie” Vrdolyak was sentenced to ten months in prison yesterday for a real estate fraud involving the sale of property by Rosalind Franklin University of Medicine and Science to some developers who paid Vrdolyak a seven figure finders’ fee. Vrdolyak had been convicted in February of 2009 but was sentenced, in one of the stranger junctures of crime, politics, and the law in our town, to probation and community service by U.S. District Judge Milton Shadur. The original sentence of probation was appealed by the government, resulting in yesterday’s sentence, which Vrdolyak will not appeal.

U.S. District Judge Matthew Kennelly who, as far as I have been able to determine, is no relation to former Mayor Martin Kennelly, received, as did Judge Shadur, scores, maybe hundreds, of letters commending Ed Vrdolyak for the good works he has performed over his long career in and around Chicago politics. These letters came from law clients, constituents, charities, ordinary citizens, politicians, clergymen, and even professional athletes. Jerry Elsner, who heads a charity for whom Vrdolyak has done extensive fundraising as part of his community service obligations in the first sentencing, went so far as to say

“I know I’m going to be crucified for saying this, but Ed Vrdolyak is the finest man I’ve ever met. You just come away talking to him feeling better about things.”

Mr. Elsner, who, as far as I know, has not been hoisted on a cross yet, had company. Vrdolyak’s lawyer Michael Monico, predictably, said, among other things “He never forgot what was important in life.” Radio hosts on WLS, on which Vrdolyak does a talk show now and then, were similarly effusive in their praise of the man, citing his hardscrabble first generation Croatian roots and his struggle to make it in the tough world of Chicago politics while never forgetting those still in the early stages of their similar struggles. All in all, one got the impression, both before and after Vrdolyak’s sentencing, that he was one magnanimous guy sowing the seeds of sweetness and light wherever he went.

In a sense, it’s hard to argue with this hagiographic description of Ed Vrdolyak. I’ve never seen a politician work a crowd more enthusiastically and effectively than Eddie Vrdolyak. I’ve never met a more likeable politician than Eddie Vrdolyak (Well, maybe former Congressman and Illinois gubernatorial candidate Glenn Poshard, but in an entirely different way; Poshard was, and is, quietly likeable. Eddie is, for lack of a better description, loudly likeable. The late Roman Pucinski may also fall somewhere around the Vrdolyak/Poshard position in the likeableness continuum, but that might have something to do with my having met Pucinski when I was a junior in high school, when avuncularity carries heavier weight. But I digess.) and, I have to agree, I’ve never come away not feeling better about things after hearing Vrdolyak talk. In a city populated, contrary to popular myth, with very smart politicians (Yes, we do have our dumbbells, nitwits, and numbskulls, but the people who get near the top and stay there are exceptionally bright people.), Eddie Vrdolyak is among the smartest, if not the smartest, I’ve ever seen, sharing that rarified air with the likes of Ed Burke, Mike Madigan and, yes, Rich Daley. And how can you not like a guy who told Michael Sneed of the Sun-Times, after being sentenced,

“I’m too old to be surprised. God is still good. It’s true I’ve never had a bad day…and I’m the luckiest guy. Life tomorrow is promised to no one. I do the best I can and go on”?

No one can argue that the man does not have the proper perspective on life.

On the other hand, one wonders what we would have heard about Ed Vrdolyak if we were to talk to those who crossed him. One suspects that we would have gotten a very different picture of the man.

My point is that Fast Eddie Vrdolyak is a very complicated man. He could, and can, be the most magnanimous guy in the world. But he also was known for a ruthlessness that would raise hackles of terror in the most hardened of the city’s operators. He was neither black nor white, but a pastel of grays, or, perhaps, a patchwork of the blacks so deep and whites so bright that they could never blend to form a gray. In this sense, Ed Vrdolyak was different from any skilled practitioner of machine politics only in degree.

This fascinating complexity, this perplexing blend of good and evil, that characterizes the likes of Ed Vrdolyak is the reason I created Chairman Eamon DeValera Collins, the protagonist in my novels, The Chairman, A Novel of Big City Politics, and its sequel The Chairman, A Continuing Novel of Big City Politics. (Some might argue that Chairman Collins is the co-protagonist, or even the antagonist, in the sequel. Again, he, like the many real people on whom he is based, is an immensely complicated character.) Chairman Collins, like Eddie Vrdolyak, is a man capable of incalculable good and incalculable evil.

One final note…I often say that the late 25th Ward Alderman Vito Marzullo summed up Chicago politics best when, in response to a question regarding his motivation for entering politics, responded

“I entered politics to reward my friends and screw my enemies.”

No beating around the bush, no sugarcoating, no bows to political correctness for the prototypical Alderman and Committeeman Vito Marzullo. But Eddie Vrdolyak came awfully close in summarizing Chicago politics when, in the aforementioned interview with Mike Sneed, said

“Hey, not even fishing is on the square.”

Could there be a better subject for a series of novels? I think not.

AND THEN THERE WERE FOUR…

10/15/10

When the Mayor first announced on September 7 that he would not be running for reelection, the conventional wisdom was that there would be a plethora of candidates running in the February preliminary election, so a candidate could conceivably make it to the April finals with a very small percentage of the February vote. It was going to be, according to the cognoscenti, a wide open race. This would seem to make sense; there is no shortage of egos in politics anywhere, least of all in Chicago, and mayor of this town is not a position that becomes vacant all that often. However, I thought the conventional was, as usual, wrong on this one. There were, and are, plenty of people who would like to be mayor, and a smaller, but still large, number of people who would make good mayors. (See my 9/7/10 piece “LONG LIVE THE KING!”) However, it soon became clear to me that as the expense and other travails associated with a real race for mayor became apparent to the legions of wannabes “considering” a run for the Fifth Floor, the pack would thin and thin quickly. This belief was confirmed for me in mid-September when Alderman Scott Waguespack of the 32nd, a very capable young man who had all but declared that he would run before Daley decided to take a pass, became one of the first to declare his non-candidacy, citing the expense and difficulty of running in what looked like a crowded field.

It is October 15 and we have already reached the point at which there are only four viable candidates for mayor: Tom Dart, Rahm Emanuel, James Meeks, and Gerry Chico. Sure, there are plenty of others still technically in the race, but they represent quite slim pickings. Who really thinks Ricky Hendon, Miguel del Valle, or Carol Moseley Braun has any chance of becoming our next mayor? In fact, I would go so far as to say that, as the deal making continues (Does anyone think Luis Gutierrez dropped out to concentrate on his immigration crusade in Congress?) and the field narrows further, we could see the mayor chosen in February, with no need for an April runoff, just as we have seen since the inception of the non-partisan mayoral election in 1999.

Note, though, that it is still early; the race only began about five weeks ago and the February preliminary is still almost four months away. Anything could happen. If, say, Lisa Madigan or Danny Davis gets into the race, both unlikely, the former more than the latter, everything changes. The same might also be said for Maria Pappas. And, as crazy as this might sound at this juncture, I still think the name of my long shot candidate, Alderman George Cardenas of the 12th (See, again, my 9/7/10 piece “LONG LIVE THE KING!”), still could come up before the dust settles. And maybe even stranger things might happen; this is, after all, Chicago.

“I SAY WE INFLATE!!!”

10/14/10

So this morning we learned that September consumer prices were up 0.4% in this non-inflationary economy. Let’s see…annualize 0.4% and you get an inflation rate of 4.9%. That doesn’t sound like no inflation to me, but I am neither a highly paid Wall Street wunderkind nor a government official poring over the latest models produced by similar innocents desperately seeking tenured positions at Ivy League universities.

There are two counters to my sullen outlook on the inflation front. One is that “core” prices (i.e., prices excluding food and energy) rose only 0.1%, no cause at all for alarm. I would point out to those who use this argument that if we exclude everything, prices are always unchanged. While I completely understand that food and energy prices are volatile, that volatility does not justify excluding them completely to get some “true” picture of “underlying” inflation. We use food and energy every day, unlike most of the components of every price index. So while using some sort of moving average to smooth the month to month price changes of food and energy might be justified, excluding them altogether makes no sense.

The other counter to those of us who see and fear inflation is that a little inflation is a good thing in this environment, an argument currently very popular at the Fed. (See my 10/06/10 piece “WE’RE IN THE MONEY, COME ON MY HONEY, LET’S SPEND IT, LEND IT, SEND IT ROLLING ALONG!” PART ?????) Given that this canard is coming back into fashion, I will only reply that I grow increasingly comfortable (ecstatic, really) with my large relative positions in gold, which, as I write this, has traded to another all time high of $1374.20, as measured by the December future, and TIPS, which have been on fire of late. However, if this current enlightened approach to monetary policy continues, I might be looking to diversify into bottled water, beef jerky, and ammunition.

“YEAH, I’M A TRAVELIN’ MAN…”

10/14/10

A blurb in today’s Wall Street Journal reports…

“A humpback whale traveled over 6,000 miles from Brazil to Madagascar, a record for a migrating mammal.”

Leave aside what this news does to the argument of those who run places like Sea World that whales are perfectly happy being confined in a pool not much larger than a really good sized municipal or college swimming pool; that’s another issue.

Take another look at that blurb. Don’t humans routinely travel, and often move, more than 6,000 miles? How far is it from here to Australia? Or from, say, England to India or China? Aren’t humans mammals?

Perhaps the Journal, and others who have reported on this aquatic hobo’s exploits, ought to go back to the drawing board.

“(LUIS LUIS,), OH BABY, SAID THE WAY I GO…”

10/12/10

Today’s (i.e., Tuesday, 10/12/10’s) Chicago Sun-Times ran a column by Lynn Sweet headlined “Poll suggests (Congressman Luis Gutierrez) can win.”

According to the column, Gutierrez commissioned a poll of likely voters in the race for mayor of Chicago. The following candidates for mayor received the corresponding percentages of support from the respondents:

Rahm Emanuel 27%
Tom Dart 19%
Carol Moseley Braun 9%
Luis Gutierrez 8%
Danny Davis 6%
James Meeks 5%
Miguel Del Valle 3%
Bob Fioretti 2%
Gerry Chico 2%

I posted the following on Ms. Sweet’s blog in response to the article:


Interesting article today, Lynn…thanks. I’m a bit surprised by some of the numbers, especially by how poorly Gerry Chico and James Meeks did in the poll and, to a somewhat lesser extent, by how well Carol Moseley Braun did. But I don’t see how you conclude that Gutierrez can win based on an also-ran showing in a poll he commissioned. Even if he is “in a strong position to consolidate Hispanic support,” if you take the total vote of the three Hispanic contenders in the poll, you come up with 13% of the vote, still behind the two front-runners, Emanuel and Dart. Gutierrez also has several problems he probably can’t overcome:

--He has very few friends among the powers that be in the city. Those who feign friendship with him are those who need him for something.

--One wonders how he escaped more serious problems in the Calvin Boender business. Ike Carothers, a Daley loyalist, went away while Gutierrez skated for roughly the same type of activity. Either Gutierrez is more clever or has more friends than most people think. In any case, he will have a lot of explaining to do about his dealings with convicted felon Boender.

--He’s Puerto Rican, which doesn’t help with the Mexicans, who are the largest Hispanic voting group in the city. (See my 9/23 post “BANANA SPLIT FOR MY BABY, A GLASS OF PLAIN WATER FOR ME…”) His work on immigration does help in this area, though.

--He’s just a hard guy to like.

What do I think Gutierrez will do? He’ll run for Congress and win (of course) and then make a lot of noise about running for mayor before trying cut some kind of deal with one of the frontrunners for his support, claiming that he can deliver the entire Latino community.

But we’ll see.

“DON’T YOU KNOW ME? I’M YOUR NATIVE SON…”

Some have argued that one of the reasons that Rahm Emanuel will be the next mayor of Chicago is because he will have the support of Mayor Daley and Daley’s “patronage army.” While I don’t discount the possibility that Emanuel could win this election with the millions he will have at his disposal, I still don’t think it will happen. And I am quite sure that, if Emanuel does win, it will not be because he has the backing of a Daley “patronage army” for a number of reasons.

First, such a scenario assumes that Daley would back, overtly or covertly, Rahm Emanuel in the upcoming mayoral election. Given that there are several people close to Daley running or considering a run, including Emanuel, Gerry Chico and Tom Dart, Daley’s backing Rahm Emanuel is by no means a foregone conclusion. Second, it assumes Daley still has a “patronage army.” With Al Sanchez, Robert Sorich, and Don Tomczak having been convicted of patronage related abuses and the HDO having been broken up, whatever is left of Daley’s patronage army is looking quite ragged, at least in relative terms. Third, as the years have gone by, more and more, or at least a greater portion, of Daley’s political strength, at least at the street level, comes from the 19th Ward. Does anyone honestly believe that the 19th ward guys are going to abandon native son Tom Dart en masse in favor of Rahm Emanuel? Fourth, does anyone think that even if Emanuel wins the mayoralty (again, a possibility I don’t completely discount; money can buy a lot of votes from a TV addled electorate), he will be in a position, three years into his new office, to pick the next governor? That kind of power doesn’t automatically come with the job; it only appeared that way because two giants named Daley have held the mayor’s for most of most Chicagoans’ lifetimes. (See my 9/28 post, BETTER THAN WHITE CASTLE TASTE TESTER? at http://insightfulpontificator.blogspot.com/)

“WE WERE ALL IMPRESSED BY YOUR SPEECH, MR. CORLEONE, ESPECIALLY THE PART ABOUT YOUR LOVE FOR OUR COUNTRY…”

10/11/10

You saw the headlines over the weekend, and perhaps this morning, wailing that GOP congressional candidate in Ohio and, the headlines rarely fail to add, tea party favorite Rich Iott, once wore a Nazi SS uniform. One would get the impression, from glancing at such headlines, that Mr. Iott, in his spare time, likes to parade around adorned in iron crosses and swastikas while pledging eternal fealty to Adolph Hitler and Heinrich Himmler, and one would be expected to conclude that the tea party movement, and perhaps the entire GOP, is infested with neo-Nazis. Democratic Congressperson Debbie Wasserman-Schultz cited Mr. Iott’s wearing of the uniform as an example of the extremism that permeates the Republican Party. But the Democrats were not alone in excoriating Mr. Iott. None other than Republican GOP House Whip Eric Cantor, showing the type of courage that characterizes the modern politician quickly distanced himself from Mr. Iott and piously proclaimed “I would absolutely repudiate that (wearing a Nazi uniform).”

Taking the time to read the entire articles following the blaring headlines that provoked such breast beating among our public servants, one would learn that Mr. Iott wore the SS uniform as part of various historic reenactments of World War II battles. Given that World War II, for those congresspersons, and those who elect them, who think that history started sometime around 1995, was fought with the, inter alia, British, Russians, and Americans on one side and the Germans and the Italians on the other side, it would be difficult to conduct an historic reenactment of any battle in the European War without actors’ depicting German soldiers. And given that the SS were, in addition to their despicable crimes against humanity, among the Reich’s crack troops and thus were involved in most of the European theater’s epic battles, it would be difficult to accurately reenact virtually any decisive battle without actors depicting SS troops. If one presumes, as we apparently are expected to presume, that Mr. Iott were eager to don the SS regalia out of some deep-seated sympathy for their cause, that would be certainly be worthy of the attention Mr. Iott has drawn. Further, he showed some incredibly poor judgment donning the SS garb a mere handful of weeks before an election. But there is no evidence that Mr. Iott’s wearing the uniform was the result of anything other than a fealty to historic accuracy, a concept that, admittedly, is being tossed aside routinely in the interest of political correctness.

Mr. Iott, if he were anything other than the mealy-mouthed, lily-livered politician he claims to so despise, should have dismissed this entire “controversy” simply by saying something like “It was a reenactment, you pack of idiots! Get off your high horses, ditch the disingenuous discordance, and read the whole article!” But he didn’t. Instead, in the typical politico-speak his tea party movement claims to so stridently oppose, he sycophantically babbled the following platitudes

“I have immense respect for veterans…particularly those who fought to rid the world of tyranny and aggression by relegating Nazism to the trash heap of history.”

with all the originality of a hand puppet. He doubtless thought that, by taking a courageous stand in favor of the veterans who helped quash Nazism, he was rallying the populace against the legions of Nazi sympathizers and veteran haters out there who, Mr. Iott may next tell us, support his opponent.

“AW, C’MON…ALL WE NEED IS A LITTLE OPTIMISM, A POSITIVE ATTITUDE!”

10/8/10

I’ve been reading the Wall Street Journal since I was in 7th grade. It is succinct and intelligent. Its writers are among the best in the country. Until recently, it avoided the fluff and excerebrose nonsense that has come to dominate most other corners of the press. That seems to be changing as its “Personal Journal,” “Friday Journal,” and “Weekend Journal” sections, chock full of vital stories on the relative merits of various wines, or whatever constitutes the latest ephemeral yuppie fascination, and commentary on the latest figurative excretory product served up by the nation’s television networks to a public seemingly eager to swallow such dyspeptic fare, come to dominate the Journal’s available space, but the Journal still has retained a greater semblance of sanity and sobriety than most other papers. And even though the Journal’s editorial page over the last few years seems to have abandoned its traditional defense of free markets and free men to assume the position of a meretricious cheerleader for the Republican Party and/or for big business in general, we still see glimmers of its former greatness when one of its young writers gives in to his or her atavistic impulses and stands up for the notions of freedom and responsibility most of its readers still hold dear. In short, the Journal, despite its growing list of faults and missteps, remains perhaps the greatest of the nation’s national newspapers, certainly for those of us who are more interested in business and economics than in the latest adventures of the air-headed celebrities who populate Hollywood and Washington, D.C.

Over the forty or so years I have been reading the Journal, I have read, in addition to the daily news stories that so endear me to the paper, certain articles, usually, but not always, in the Opinion section, that confirm for me the wisdom of having spent so large a portion of my life with this extraordinary product of the journalistic art. One of those article appeared today (Friday, 10/8) on page A19 of the Opinion section. This article, entitled “The U.S. Will Lose a China Trade War,”

http://online.wsj.com/article/SB10001424052748703843804575534423508502744.html?mod=ITP_opinion_0

written by Dee Woo, who teaches economics at the Beijing Huijia Private School, is notable for a few things. First, it has that quality of saying things that I, and doubtless most of you, knew all along but have never heard put so articulately…or starkly. For example…

“When other nations want imports, they must produce goods to sell abroad. All the U.S. needs to do is print more greenbacks…It’s little wonder that manufacturing is dying in the U.S. while Wall Street is prospering. And it’s no coincidence that Germany produces robust machinery, while the U.S. produces dazzling financial derivatives.”

And

“…Washington can’t afford a weak-dollar policy—because the only thing standing between the U.S. and a Greek-style sovereign debt crisis is the dollar’s status as the global currency. A weaker dollar would threaten that status.”

Second, the tone of the article is disturbing, almost alarming. We are not used to people talking to us in the manner in which Mr. Dee talks to us in this article. For example, in the last paragraph:

“All this means that the U.S. should adopt a collaborative approach toward China. Now is a bad time for collaboration. The U.S. currently needs China more than China needs the U.S.”

I emphasized that last sentence because it is increasingly true. And, while it might be fashionable to bash the Chinese, we would do better, as a people, to look in the mirror when looking for someone to bash. We probably have reached the point at which we need China more than China needs, and the Chinese feel free to talk to us in a manner in which we do not like to be addressed, due to our own profligate spending, out vastly over-extended lifestyles that we take as an entitlement, our steadfast refusal to save, our abandonment of the responsibilities inherent in self-government, and our smug attitude toward the rest of the world, born of a widely applauded, indeed seemingly mandatory, impulse to constantly and loudly reassure ourselves that we, indeed, were, are, and forever will be the world’s greatest nation regardless of our abandonment of those principles, such as thrift, personal responsibility, self-control, perspective, and humility that once made us not only the world’s greatest nation, but something special, something unique, something seemingly endowed by God with gifts and attributes that had never appeared before on earth. While many of us believe God had a role in creating this once great nation, we have a role to play, as Benjamin Franklin reminded us at the Republic’s inception. And much of our citizenry has decided it is too busy with the mental and spiritual cotton candy that so permeates our society to bother with the hard work of building, maintaining, and preserving the great nation that God and our forefathers entrusted to us.

APPARENTLY, THESE GUYS AGREE WITH TIP O’NEILL ON MORE THAN THE LOCUS OF POLITICS

10/6/10

In this bastion of small government conservatism we call Naperville, our Republican dominated City Council yesterday approved the purchase by the city of the land beneath and the building housing the DuPage Children’s Museum. This “urgent need” came about when the Museum, run by a non-profit, non-government group, developed trouble paying a $9mm loan from Chase Bank after top-ticking the market when it purchased the property and doing so with a loan that the Museum’s managers apparently did not understand. So the small government crowd came to the rescue with the following package:

$3 million from the city of Naperville
$2 million from the state of Illinois
$250 thousand from DuPage County
$700 thousand from private contributions
$3,050 in loan forgiveness from Chase.

Those of us who actually believe the platitudes the Republican Party establishment mouths at election time, are troubled by this use of public funds to bail out a private enterprise. After all, aren’t the Republicans at the national level castigating the Obama administration for the same type of thing?

The local small government acolytes in the Naperville City Council justify this purchase by saying that:

--The $3mm the city is coming up with is being raised from $2mm in capital projects that came in under budget and $1mm from the Burlington parking lot fund.

--The City will recoup its investment by stopping its $200,000 per year subsidy to the Children’s Museum and charging more than $60,000 per year rent after charging $1 per year for the first five years.

--$2.25mm is not from the city at all, but rather from the State and the County.

--The Museum sits on a nice piece of real estate that will foster economic development in Naperville regardless of its use. So if the museum does fail, the land could be used for other purposes that will benefit the City. As Councilman Jim Boyajian said, in justifying the purchase while promising that this does not mean that the city should go out and buy “every piece of property in this city,”

“I look at the underlying value of the property and where it sits in proximity to our train station and the payment mechanism to get us repaid. And above all, I preserve an enterprise that brings 330,000 people a year to our downtown.”


Talk about easy arguments to destroy! Piece by piece:

--If the City has saved $2mm in taxpayer money in capital projects, where does it get off using those savings to speculate in the real estate market? That money belongs to the taxpayers and should be returned to the taxpayers in the form of lower taxes or, at the very least, of some kind of rainy-day fund to be securely roped off to avoid a tax increase for use when times get bad (or the politicians have blown too much money) and the city fathers come to us looking for more money. The same goes for the $1mm from the “Burlington parking lot fund.” If there is no specified use for the money in this fund, and hence it can be used to fulfill the Trumpian dreams of the City Council, why does it exist in the first place?

--If the city does indeed eliminate its $200,000 subsidy and the Museum can make the $60,000 per year rent beginning in year 5, it will take the city between just short of 13 years to recoup its $3mm “investment.” Taking into account time value of money, it will take the city just short of 15 years to get its money back at a discount rate of 2%. At 3%, it will take 17 years. At 5%, it will take 21 years. These aren’t short paybacks, and they assume, of course, that, somewhere down the line, the Museum will not come back for a renewed subsidy or rent abatement.

--The money that comes from the State is government money, is it not? Is speculating in real estate somehow a legitimate function of state government? And since when is the State of Illinois so flush with cash that it can take a flier on a piece of real estate in one of the state’s wealthiest communities? Isn’t Governor Pat (no relation) Quinn telling us we need a big tax increase because the state simply can’t pay its bills? Is big government a bad thing when it ostensibly benefits poor people but a good thing when it ostensibly benefits at last relatively well off people?

--This might be an attractive piece of real estate purchased at a good price, but it might not be. Who knows if we have hit bottom in commercial real estate? In any case, is real estate speculation a legitimate government endeavor? Should the Councilmen be making such prognostications with our money? Certainly, those who pound their chests and piously proclaim their fealty to limited government should answer with a resounding “NO!” But one guesses big government is fine with them as long as the money flows in the direction of the right kind of people.

--The “if the Museum fails, we end up with an attractive parcel that can be used for other purposes” argument is a perverse one, even though one can be quite sure that the councilmen were trying to sound like financial wunderkinds when making it. We are doing this to save the Children’s Museum, not to speculate in real estate, the town fathers tell us. But if the Museum fails, we should make out like bandits. This argument has a certain logic to it, but a perverse logic.

--The Museum may or may not bring 330,000 people to downtown Naperville each year, as Councilman Boyajian argues. One who has been around longer than a week or so learns to distrust such numbers when thrown around by politicians and the consultants they hire. But assume the Museum does bring in that many people. Then the bars, restaurants, and night spots that have made downtown Naperville the night life center of the western suburbs bring in at least as many people, probably many more. So do we buy them out when they fail? The “logic” employed by Councilman Boyajian and his fellow enthusiasts for the bailout of the Museum would certainly dictate that the City should do just that. And when, by the way, is downtown Naperville in such poor shape financially that it needs such taxpayer subsidies?

--Thank God that our City Council did not propose that the City take over the operation of the Museum; owning the land seems to be more than enough government involvement. However, the same management that got the Museum into the financial mess from which we are rescuing it remains in charge. Does that make any sense? Shouldn’t the City of Naperville, as the biggest investor in the Museum, demand some changes?



One can almost excuse the Democrats on the City Council (Yes, there are Democrats on the City Council.) for going along with this deal. There are, in general, few and porous boundaries around what a Democrat would call legitimate government functions. Apparently, the modern Republicans who inhabit the City Council in Naperville, and doubtless who occupy offices across our country agree…but they just won’t say so. Is it any wonder that rank and file Republicans are fed up with the hypocrisy the leaders of their Party display at the local, state, and national levels?

“WE’RE IN THE MONEY, COME ON MY HONEY, LET’S SPEND IT, LEND IT, SEND IT ROLLING ALONG!” PART ?????

10/6/10

Yesterday, Chicago Fed President Charles Evans called for “much more (monetary) accommodation than we’ve put in place.” Specifically, he wants the Fed to expand its purchase of treasury bonds and to aim to overshoot its 2% inflation target in an effort to push down real rates in order to get households to start borrowing and spending again. He justifies this aggressive posture by pointing out that “…it’s (unemployment’s) not coming down nearly as quickly as it should” and that “…current circumstances are extraordinary.”

Hmm…

We’ve heard this all before. We’ve heard that what the economy needs is for people to get out there and spend money, and not only from the economic illiterates in Washington and on talk radio but also from serious and knowledgeable economists like Mr. Evans. There may be some very short term justification for such an argument; in the throes of a recession (which, if you believe the National Bureau of Economic Research, is not a condition in which the U.S. currently finds itself), a little spending is needed to jump start the economy. But, in any but the shortest of runs, the problem with the U.S. economy is not a dearth of spending and/or a surfeit of frugality. The problems from which we are supposedly currently emerging had their origins in the profligacy of not only our government but also of our citizenry. If the United States is to survive as a going economic concern, we have to learn to save again. Therefore, if any good has come from our recent economic travails, it is that people have learned to save again. The real danger, however, is not that such new found parsimony will derail the economy but that its abandonment, as Americans return to their seemingly congenital financial irresponsibility, will land us in an even deeper bowl of economic soup than the one from which we are supposed to be emerging. To have a Fed regional president bemoaning a very salubrious rediscovery of saving on the part of the American people is thus deeply disturbing.

We’ve also heard “…current circumstances are extraordinary,” or something like it, when some eminence wants to ditch traditions, practices, or sacrosanct approaches to life that served us well back in the benighted days when America was the undisputed leader of the world, before the new types of thinking that have led us over a cliff came so much into vogue. “Current circumstances are extraordinary” is an expression very much akin to “This time it’s different,” employed when expediency is about to trump well founded and grounded tradition. To have a Fed regional president plead extraordinariness in an effort to further turbocharge the printing presses is unsettling at best.

We’ve also heard about the salutary effects of just a little inflation in the past, most notably from the likes of Jimmy Carter and his lap dog at the Fed, the highly successful G. William Miller, just before we headed into the inflationary nightmare from which Paul Volcker had to save us with some very dyspeptic medicine. Once upon a time, the Fed’s sole job was to preserve the purchasing power of the dollar. But, again, that was back in the dark days, when America was great and justifiably confident in its future. New ways of thinking, about which we are supposed to exude optimism, now hold sway, seemingly in all corners of society. The old formulae which served us so well in our past are now archaic, benighted thinking. I understand (but don’t accept, perhaps due to a lack of sufficient reeducation) that. But to hear a Fed regional president, a top dog at the institution that was once supposed to keep our dollar from becoming worthless, extol the virtues of increasing an inflation target in order to get people to pee away money, largely on goods of foreign manufacture, is to justify my sour and curmudgeonly outlook on the prospects for what was once the greatest nation, and economy, in the history of the world.

With the likes of Mr. Hughes telling us that inflation is a good thing because it will induce people to borrow and spend, is there any wonder that gold reached an all time high yesterday and just about every other commodity rallied? Is anyone surprised that, as I write this, gold is up another $7.80, to $1,348.10 an ounce? Optimistic types who tell us that it is very unwise to “bet against America” will point out that stocks rallied nearly 200 Dow points yesterday on Mr. Hughes musings and consonant actions by the Bank of Japan. To those optimists, I say that’s fine; continue to buy stocks, secure in the knowledge that the monetary authorities will fortify and insure this recovery. Meanwhile, I will hold onto my longstanding and huge (for me) positions in gold and TIPS and look to add to them when such opportunities arise. The type of thinking exemplified by Mr. Hughes and his soul mates at the Bank of Japan (who at least might have some justification, in the form of a seemingly overpriced yen) behoove me to adhere to this course.

“I SEEN MY OPPORTUNITIES AND I TOOK ‘EM,” IN THIS CASE, TOO FAST

10/5/10

The big news in the Chicago papers this morning is the arrest of Carla Oglesby, Cook County Board President Todd Stroger’s Deputy Chief of Staff, by investigators from the State’s Attorney’s office as Ms. Oglesby pulled out of a downtown parking garage. The arrest stemmed from charges that Ms. Oglesby routinely authorized county contracts awarded to companies that were controlled by, among others:

--Ms. Oglesby herself

--Mark Carter, a West Side activist who did extensive campaign work for Todd Stroger in the 2006 election, including distributing fliers and other advertising that depicted 4th ward alderman, and eventual winner of the 2006 primary for County Board president, Toni Preckwinkle, as “Aunt Je’Mamie.”

--Members of the rap duo Dude ‘N Nem, who may or may have not worked with Ms. Oglesby in her former career as a promoter of sports notables and hip-hop “artists.”

The contracts in question were uniformly for just under $25,000; one, to Ms. Oglesby’s CGC Communications, was for $24,975. That $25,000 is the threshold for full Board approval might have something to do with the dollar amounts of the contracts Ms. Oglesby either approved or was instrumental in approving. There is also a question as to whether any actual work was done in exchange for the payments, but one wonders how anyone could tell, given that the contracts were for such vital government functions as, according to the Chicago Tribune, informing residents about federal flood relief grants, “build(ing) awareness of the (county’s) composting and electronic collection programs,” and “building awareness of (county) energy and conservation programs.”

One might ask, with a degree of legitimacy, what Ms. Oglesby and, by implication, Mr. Stroger did that is outside the proud tradition of Chicago politicians’ securing comfortable positions at the public trough for their friends and supporters. Why did State’s Attorney Anita Alvarez decide to go after Ms. Oglesby and Mr. Stroger when, seemingly, “everyone” does it in Chicago? Doubtless, charges of racism will fly.

But Mr. Stroger and his pathetic cast of characters are not getting in trouble because of their race. They are getting in trouble because of their incompetence. The old hands, the real pros, the seasoned lifers in the politics of our city manage to filter money to friends, supporters, relatives, and themselves with a degree of aplomb and sophistication that Todd(ler) Stroger and his sorry pack of minions cannot even approach. Perhaps given enough time in office, Mr. Stroger and his henchpeople, like Ms. Oglesby, would have developed into skilled practitioners of the open palm, but they were impatient and impetuous, not waiting to artfully employ the Chicago Grab but, out of a lack of experience, maturity, or confidence, stealing all they could as quickly as they could. The consequences have been predictable.

Readers who are interested in the techniques of public thievery, and the consequences of those too obtuse to master them, are directed to my books, The Chairman, A Novel of Big City Politics and its sequel, The Chairman’s Challenge, A Continuing Novel of Big City Politics. Both are available at Amazon.com, numerous independent bookstores, and for order virtually anywhere books are sold. The theme of the amateurs vs. the professionals, and the fate of the amateurs, is a recurring one in both books, but is especially highlighted in The Chairman’s Challenge in the figure of Ron Milovanovic, a fictional governor who is clearly in over his head and hence out of favor with the people who really run the state. It’s a great read.

“HE’S A VERY SCARY GUY, KAY.”

10/1/10

The national media, and increasingly the local Chicago media, are all aflutter about Rahm Emanuel’s soon to be declared candidacy for mayor of Chicago, to the point at which one wonders whether the breathless media types think an airplane will be involved when they report that Mr. Emanuel will fly home to Chicago to begin his “listening tour.” “Listening tour?” Well, one has to concede that while everyone is agog at Mr. Emanuel’s toughness, no one has argued that he is an original thinker. But I digress.

As I have said before, I simply don’t see why everyone seems to think, as Roe Conn said on his WLS talk show yesterday, that Rahm Emanuel is the “odds-on favorite” to be the world’s greatest city’s next mayor.

Mr. Emanuel’s ties to the city are tenuous. He grew up in the suburbs. He has not ever been actively involved in the city’s politics at the street level. He was elected to the storied 5th District Congressional seat (Former holders include Stephen A. Douglas, John Kluczynski, Bill Lipinski, Dan Rostenkowski, Michael Patrick Flanagan (Yes, I know he served only one term and was something of an historical fluke, but he had perhaps the greatest name in the history of politics. But I digress again.), and Rod Blagojevich.) only because Mayor Daley flooded the district with his political legions, under the direction of First Deputy Water Commissioner, genuine tough guy, and later convicted felon, Don Tomczak and muscled him into office. Emanuel has no political foot soldiers of his own. He has few friends among the city’s ward committeemen. He hasn’t lived in the city for a few years, if then, a fact that will doubtless result in what will prove to be pointless litigation when he declares his candidacy. Rahm Emanuel is a Chicago outsider. While outsidership, if you will, may be popular on the national stage, most cities are not welcoming to outsiders who decide they want to move in and take over. This is especially true of Chicago.

There is also the “tough intimidating guy” factor. Rahm Emanuel, as we are being endlessly reminded of late by awe struck reporters, is a very tough, very intimidating guy, presumably because he throws around profanity and doesn’t back down. One who is not in politics, wants nothing from politicians other than material for his books and blog, has no skeletons in his closet, finds profanity indicative of a weak command of vocabulary and inability to articulately express one’s self rather than of toughness, and backs down when the cost/benefit calculations dictate that judicious retreat is merited still does not understand what makes Mr. Emanuel so tough. But those who know him, deal with him, and/or write about him assure us that Mr. Emanuel is indeed a very tough, very intimidating guy. So I will concede that point; after all, even those of us who don’t like the legislation have to admit that Emanuel did a very good job of banging congressional heads to get the health insurance reform, financial reform, and stimulus bills through Congress. Perhaps Mr. Emanuel’s profanity borne intimidation tactics work in Washington, a den of iniquity populated by poltroons who quiver and shake at the feet of anyone who has a remote chance of separating them from their lifetime sinecures on the public payroll. But when he comes to Chicago to run for mayor, Mr. Emanuel will find himself immersed in a politics that is characterized by tough, intimidating guys, a town defined by the toughness, indeed the scariness, of its politicians. One wonders how Mr. Emanuel’s tough guy routine will work on the likes of, say, Mike Madigan and Jimmy DeLeo, two genuinely tough, intimidating, and scary guys who, while not running for mayor, will have a great deal to say about who will be the next mayor.

So I am not as sure as is, seemingly, the punditocracy in Washington and New York and increasingly in Chicago that Rahm Emanuel will be the next mayor of our great city. As I’ve said in the past, at least at this stage, several people, including James Meeks and Tom Dart, are for more likely to have their offices on the 5th Floor of City Hall next year than is Rahm Emanuel. On the other hand, Mr. Emanuel has plenty of money at his disposal and, through his family and other connections, can gather plenty more. And money wins elections. Further, perhaps Mr. Daley’s ground troops will work for Mr. Emanuel as ardently when he runs for mayor as they did when he ran for Congress. But with the convictions of Robert Sorich, Don Tomczak, Al Sanchez, and others, those troops are not nearly what they used to be. And there is no assurance that Mr. Daley’s supporters, a substantial number of whom hail from the 19th Ward, Tom Dart’s home base, will rally behind Mr. Emanuel.

Still, though, money wins elections and the influence of the ward organizations has been waning for at least the last twenty, probably thirty or forty, years. So if Mr. Emanuel does become the next mayor of Chicago, unless he does so by buying off key ward organizations (as it looks he may be doing on the west side, among other places), we can conclude definitively and unequivocally that the old ward based Chicago Machine is officially, undeniably dead.