“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, May 1, 2009

The Folly Of Avoiding Debate On Social Change

This week has been full of nonsensical pomp and arrogance surrounding Wonderboy's first 100 days in office.

Of course the comparison is always made with FDR. In Wonderboy's case, he actually thinks he is another FDR. Or JFK. Or maybe Lincoln. We never know which he'll choose to embody on any given day, so stricken with his own rock-star persona.

FDR, however, had actual government experience of some substantial nature prior to running for president. He served as Secretary of the Navy and governor of New York.

That experience notwithstanding, Roosevelt essentially failed in his management of the Depression. Sure, now he is remembered for all the socialist programs and changes to society and government which remain: Social Security, insured bank deposits, and the SEC, to name a few.

What are now largely forgotten, but was still taught in my youth, were: court packing, the unconstitutional National Recovery Administration, the joke WPA and PWA. Yes, even in his own time, FDR was seen as a socialist of the first rank. The truth is that federal spending on armaments for WWII gradually pulled the US economy out of the Depression, not Roosevelt's programs. In fact, consumer spending didn't really affect the economy again until ten years later, after WWII's end, when pent-up demand and a returning workforce of ex-GI's caused economic dislocations.

Much of FDR's program was, as the Supreme Court ruled, unconstitutional. That's why he tried to pack the court, but failed, even with his own party in the majority. Even now, less actually remains of FDR's legacy than we imagine, for all the chaos it caused at the time. But the lasting impression of heavy federal government intervention is still with us.

That's what fueled LBJ's largely-failed Great Society. What hasn't been scuttled or modified has been generally seen to have either become bankrupt (social security, medicaid, medicare) or disastrously eroded key societal values (welfare programs and ADC).

To me, though, Wonderboy's 100 days is different. A colleague put his finger on it when he noted the accelerated pace of single-party-backed changes. The many executive orders overturning standing policies. The unread, but passed stimulus bill- the largest spending bill in our nation's history. A bill that is less about economic stimulus, and much, much more about radical social policy change cloaked in an anti-recession spending sheath. The recent budget bill.

Because of such obvious stiff-arming of Republican opposition, and conscious ignorance of that party's alternative proposals, we have essentially draconian social policy change at the whim of only one party in less than six months.

Our current First Rookie is just an empty suit with a racial ancestry that attracted the guilt vote of many non-blacks who should have known better. He has absolutely no experiential qualifications for the office he now holds, and it is showing. Thus, when I use the term 'whim,' I mean it in the worst way. None of what Wonderboy has proposed has any evidence of being appropriate or effective, from his Treasury Secretary's manipulation and intimidation of our banks to his administrations plans to undertake government-designed, wholesale change in our insurance, medical, automotive, financial and energy sectors.

Change of this nature is probably not lasting. It's too fast and autocratic to fit with our nation's representative and collaborative form of societal change through government. Perhaps even change that will bring about improper reaction.

The real danger, though, is what every Republic dreads. Change that comes faster than the election cycle.

One cannot help but think, with all the despotic plans our president has in mind, someone, somewhere, may react by attempting to assassinate him.

That could well be the price of tampering with the US economy and society too quickly, without allowing for meaningful Congressional debate and compromise.

Of course, such an event is wrong and not to be desired. No matter how much you despise and disrespect a president, settling scores from a gun barrel, as opposed to the ballot box, is bad for everyone in the long run.

But you can just feel the pressure building among disenfranchised, disenchanted voters whose elected representatives in Congress have effectively been ignored.

Wonderboy was elected by far less than a Reaganesque landslide. His margin of victory was only 6 percentage points. At least forty percent of the Senate and forty-one percent of the House are Republican, so to totally ignore those Congresspersons is to effectively ignore a significant percentage of Americans whom they represent. It's not like the GOP in Congress has only 15 or 25% of the seats.

As such, the Democratic party's decision to freeze out any ideas but their own, sanctioned and directed by Wonderboy, could have real, deadly consequences within the next four years. And that would be a tragedy for the overall, long term health of the American Republic.

Thursday, April 30, 2009

Wonderboy's Demonizing of Legitimate Creditors

I try not to watch Wonderboy's speeches. The mere sound of his voice sickens me, so I head for the 'mute' button as fast as possible.

However, this afternoon, CNBC replayed some of the First Rookie's noon speech concerning Chrysler.

If you ever needed more evidence of why government should not interfere in private sector affairs, that speech was it.

Not that the presidential limousines are Chryslers, but our new president assured the nation that he, too, loves Chrysler cars and hopes we all buy one.

Gee, don't you typically have to pay for advertising? Will Alan Mulalley be demanding equal Oval Office time for his company's cars? I guess Wonderboy could shill for GM, since his actions are making that company the next likely government-owned auto maker.

But the low point was when he demonized legitimate bondholders by claiming that they are the only ones not sacrificing enough for Chrysler's survival. As if that is some pre-destined good.

No, Wonderboy heaped public opprobrium on those who lent money to Chrysler with an expectation of repayment, and clear legal rights if that doesn't occur.

How is that a lawyer, as president, is taking the lead in using thuggery and recommending the explicit ignorance and breaking of laws?

Is this the change we were to believe in?

As bad as George Bush's economic policies were, beginning in late 2007 by not amending mark-to-market methodologies via executive order, Wonderboy is much, much worse.

He's publicly choosing not only which companies will win, and which will not be granted government funding. He now is turning to specific investor classes and calling for senior secured debt holders to relinquish their legal rights.

This is surely government gone way, way too far with intervention into the private sector.

Wednesday, April 29, 2009

Arlen Specter's Party Switch

Of course, the major political news today was Pennsylvania's former-Republican Senator Arlen Specter changing parties.

I listened to a host of pundits bantering with each other about the change.

How, if Norm Coleman loses in Minnesota, the Democrats can block a filibuster. That this is another sign of the Republican party imploding. That Pennsylvania is turning bluer, and the GOP won't get this seat back.

I guess I come away with the sense that what should happen, usually does. Specter hasn't been a reliable Republican for years. Nor, of course, for that matter are Susan Collins or Olympia Snowe. Or, to be honest, even John McCain.

Who really knows if Mitch McConnell could have whipped Specter into supporting GOP filibusters? Who knows if Harry Reid can get him to vote for cloture?

Anyway, the Senate Democrats have threatened to abuse the 'budget reconciliation' process for any bill on which they don't care to compromise.

If the Senate Republicans had held firm on the stimulus bill, it would at least have been a partisan split.

Maybe it's time the American voters learned, again, just what uncompromising liberal Democratic rule will be like for a few years. It seems that memories of the costly, inflation-ridden 1970s and failed social legislation of the 1960s are gone, or significantly dimmed.

It's well understood that Arlen Specter, aged and gaunt-looking, has been and intends to remain a career Senator. He was trailing his primary challenger, and probably would not have made it to the general election in 2010. His blather about the Republican party having veered to the right on him is a lie. He's been a liberal Republican, which is also known as a Northeast Republican moderate, since he was first elected.

I tend to feel that, if we must have parties, then let's have them mean something. Frequent defectors like Snowe, Specter and Collins make life difficult for the GOP. Despite the chortling of various liberal pundits that the Republican party is washed up, in trouble, in disarray, or any number of other phrases to celebrate its current Congressional weakness, parties naturally ebb and flow in power.

If a more honest culling of Republican Senators results in more focus on just what the party represents, maybe that's a good thing. There's nothing like dissatisfaction with the party in power to make the other party suddenly look a lot better, even if you don't agree with them on everything. The Congressional Democrats could pull that off yet next year.

Tuesday, April 28, 2009

NewsCorp Gets Tough on Obama

Holman Jenkins writes a weekly column each Wednesday in the Wall Street Journal. Last week, he ratcheted up the level of stridency in his criticism of the US president by exposing the folly of his positions on the GM mess.

Jenkins has typically been rather careful and indirect in his tone when dealing with politics. However, last week's column seemed to take his recent, more adversarial tone to a new height. Prior to this, he had probably reached his high-water mark by calling New York AG Andrew Cuomo a thug.

At the time, I suggested to colleagues that Jenkins' columns must now be vetted by Rupert Murdoch himself, because Jenkins' verbiage had escalated to the point that political recriminations surely would be considered by aggrieved parties.

Here are a few choice passages from Jenkins' column last week,

"It's good to be the king -- until you start tripping over your own robe.

So King Barack the Mild is finding as he tries to dictate the terms of what amounts to an out-of-court bankruptcy for Chrysler and GM. He wants Chrysler's secured lenders to give up their right to nearly full recovery in a bankruptcy in return for 15 cents on the dollar. They'd be crazy to do so, of course, except that these banks also happen to be beholden to the administration for TARP money.

Wasn't TARP supposed to be about restoring a healthy banking system? Isn't that a tad inconsistent with banks just voluntarily relinquishing valuable claims on borrowers? Don't ask.

His retainer, Steven Rattner, has delivered word that the king's pleasure is that these unsecured creditors give up 100% of their claims in return for GM stock.

It may also be the king's pleasure, he advised, to convert at some point the government's own $13 billion in bailout loans into GM stock.

There's just one problem: Why on earth would GM's creditors -- who include not just bondholders but the UAW's health-care trust -- want any part of this deal?

No wonder the king's mediation of 40 years of stalemated labor and business issues in the auto sector isn't going so well. There's a reason royal discretion has long been outmoded as a way to run an economy: Things just work better if a realm's subjects are left to resolve their own disputes and interests through the impersonal mechanism of the markets and the law.

King Barack has only been on his throne for three months. His policies already have devolved into savage incoherence.

But let's face it, the king is also somewhat lacking in the lion-heartedness department.

He's on record saying that the only sensible way to reduce fossil-fuel dependence is to put a price on it, as with cap and trade. Then why not have the courage of his convictions and do away with the proven ineffectualness and perversity of trying to regulate automotive fuel mileage directly?

King Barack could take a leaf from St. Jimmy the Simple, who faced a collapse of the railroad industry. He signed the Staggers deregulation law, returning power to the industry itself to decide what services to provide and which customers to chase. What had previously been an industrial basket case, halfway nationalized already, fixed itself almost overnight.

He might consult with the Sage of Omaha, who has become a fan of the rail business."

Hardly Jenkins' usual mild, irony-filled prose.

Add this to Bill O'Reilly's interrogation of Newsweek's publisher last night, in which he claimed that only Fox News and the Wall Street Journal, both Newscorp properties, are reporting honestly on the new administration, and you get a sense of something larger brewing in media-land.

CNBC Backs Liberal Candidates: Illinois Treasurer Alexi Giannoulias

It appears that CNBC has dropped all pretense of being a neutral cable network.

As I write this, I hear Carlos whathisname browbeating a Republican Congressman, telling him that the GOP has already lost Coleman's seat, won't be gaining seats next year, and has no leadership.

But what really caught my attention was a segment last week in which Illinois Treasurer Alexi Giannoulias actually appeared in the studio in NJ.

The 33-year old Democrat is clearly stumping for higher office, as the linked webpage notes. No doubt, seeing an uncredentialed Illinois Senator rise to the presidency in less than one term, Giannoulias probably figures he can make it, too, just after meeting the age qualification.

I've seen Giannoulias interviewed on CNBC before. They clearly favor him, since free air time like that is an immense gift. And he's not the only state-level Democrat to be given this sort of gift. There are a handful of Democratic governmors and AGs who also frequently appear on the network- much more frequently than any Republicans.

But, back to Giannoulias. He was grinning and primping for his big, free nationwide media event. Although it would seem to have no relevance to major national issues, he described how he has personally written a bill to regulate credit card issuers' activities with the state's college students.

As I heard this, I was aghast. You would think that college is a time when young people need to learn how to manage in the real world for themselves. If they unwisely take and use credit, they'll need to pay the consequences. Most are minors, and would require parental co-signatures, anyway.

But according to Giannoulias, the issuers are the villains, and he has to protect these youngsters from themselves.

Sadly, he discussed nothing regarding Illinois probably being number two or three among states following California to the brink of bankruptcy. No, Giannoulias obviously wants to beat it out of the Treasurer's office before that reality hits home to the people of Illinois.

Come to think of it, what are we to make of a nation that elects an inexperienced legislator from a nearly-bankrupt state to its highest office?

Sad times, indeed. And most of our media seem to be aiding such folly.

Sunday, April 26, 2009

Lanny Davis' Other Career

This post is one that probably belongs in both of my blogs. The larger context is business, but since the focused subject is Lanny Davis, the well-known Democratic political operative, it also belongs here.

A colleague who recently attended an alternative investment conference passed along one of the parting gifts, a copy of David Einhorn's book, "Fooling Some of the People All of the Time." It describes Einhorn's running battle with Allied Capital, a so-called 'business development company' whose business is largely making SBA-backed loans to smallish businesses.

I won't go into the particulars of the book or case, except to note that Einhorn's account, assuming it is true, characterizes Allied as guilty of a number of fairly obvious accounting deceptions. Maybe I'm more of a geek than I realize, because I actually enjoy reading Einhorn's book. I'm not an accountant, but, because of my background, including TA'ing accounting courses in college, and having two business degrees, I can follow Einhorn's work quite easily. It's entertaining reading his account of how Allied's management attempts to parry and hide from Einhorn's consistent, relentless quest for answers to his questions about suspicious accounting and business practices.

So, we come to Lanny Davis.

Sometime in the middle of Einhorn's debacle with Allied, the firm hired Davis as their 'fixer.' Apparently not wanting to know whether Einhorn's charges were true, or not, Davis, according to the book, simply launched into full defense of Allied, meaning, attacking Einhorn and his motives.

According to Einhorn, Davis has represented a fair number of corporations and their CEOs, out of court, who were later found guilty of many of the things for which Davis was retained to fend off.

In effect, Lanny Davis gains access to cable news shows and builds a clientele as a Clintonista with connections, then turns around and presents himself as an objective, disinterested pursuer of suspect 'short sellers' and hedge fund managers. Einhorn even details how Davis, upon representing Allied, suddenly began to form an anti-hedge fund interest group.

I've seen Davis on Fox News quite a bit, and he tries, unfortunately with some apparent success, to come off as an old, semi-retired political hack who is just interested in protecting the little guy. In truth, though, according to Einhorn, Davis has been making his latest fortune protecting precisely the types of corporate so-called greedy executives which his old bosses, and continuing Democratic party friends, used to and still publicly target.

How can Lanny Davis have represented Richard Scrushy and Allied, yet still claim to be a populist?

I understand that our legal system guarantees everyone, even the guilty, a defense. But that's in court.

What Lanny Davis does is represent the guilty before they are charged, and, according to Einhorn, using tactics which avoid the issues, and focus, instead, on the questioners. Is this really what we want in our economic and justice system?

Davis' motive would seem pretty transparent. Represent the corporate wrong-doers, while violating the principles of his own party, because, well, that's where the money is.