So on to the main subject. Obama clearly wanted to be President, he campaigned hard for the job and he won it fairly. My conjecture is that he is now the most prominent member in the world's "Be Careful What You Wish For Club." Look, I have no political ambitions whatsoever; never have and never will, but if somehow I could "beam down" into the presidency, I would like to have been the head honcho when the Berlin Wall fell. Or when the commander-in-chief Bush-I (made possible by Colin Powell and executed by Stormin Norman (I will never forget the TV coverage)) annihilated the Iraqis when they invaded Kuwait. It might even be pleasant to be Bill Clinton, surfing down an enormous Internet wave and his predecessors favorable policies so that I could bang young White House interns with reckless abandon. Bush-II after 9-11 wasn't such a bad performance either. But to be the USA's CEO today is a nightmare. Let's explore some themes that we're reviewed in the past.
True Reform
In two NY Times articles and one WSJ piece, the stage is eloquently set to (1) debunk any comparison with FDR, (2) demonstrate that the present Washington staffers don't have the experience to cope with today's problems and (3) that Obama has a very limited time frame to work with.
The FDR comparison is particularly damaging because it highlights that unlike Obama, FDR was actually willing to piss people off, not the least being the banking establishment in power at the time. Congressional bills were passed (Glass-Steagall) among others that were wildly unpopular with the power brokers, and the fox (Joe Kennedy) was appointed to supervise other predators. Today we get every conciliatory phrase and more oratory than action. Incidentally, although I won't quote it here, if you want a fascinating description about the many decades involving Wall Street corruption and government complicity back then, as it is today, you'll seek out the most recent "Rolling Stone" issue for an extremely comprehensive (12 page) expose...enough said.
On the inexperience issue...I have a trick question. Which current Washington "financial architect" has actually run a real (nuts and bolts) business? I won't keep you guessing...the answer is none. How many have been investment bankers, economists, academics, theoreticians and the like...the answer is all. So the Journal editorial correctly points this out, as well as the perils for all Americans because we are dealing with so much hogwash.
Finally, on the immediate Obama front, I had a lovely (and inexpensive) brunch in New York City today in which I ended up debating three nice young gentlemen who exeuded optimism and were willing to let the new, admittedly popular and photogenic President nearly as much time as needed to get the situation under control. I listened politely and finally opined, as has been my decades-long experience that the new CEO can't blame the old one for too long...honestly, only a few months or so before the problems he "inherits" become his to solve. "Make It Or Break It Obama Summer" neatly explores that issue.
Here are the three links:
http://www.nytimes.com/2009/06/18/business/18nocera.html?_r=1&emc=eta1
http://www.wsj.com/article/SB124528087493225237.html
http://www.nytimes.com/2009/06/21/opinion/21rich.html?_r=1&emc=eta1
Compensation
This one is brief. The Harvard endowment, which has lost many billions thanks to Mr. Summers et al announced recently that a bond trader has departed the organization, with $6.3 million in compensation. This is genuinely beyond belief. Call me old-fashioned, but if I ever worked for an company that reported a 30% diminishment in total assets, there would be no bonuses nor anything beyond a sharp kick in the ass. Even Citigroup, that citadel representing corporate greed rescinded egregious "severance payments" some as high as $43 million dollars. Let me get this straight. Either you quit or got fired. If you quit, why do you deserve any severance and if you're fired, then isn't $40+M a little rich to get you to hold your tongue? To its credit, Citigroup, no doubt fearing massive public backlash, unilaterally canceled the arrangement, but it may not end there...if I were the affected executives, I would fight tooth and nail to reinstate things that I did not conjure up in the first place. But in the old days, we all worked as a team, and despite the fact that I did not entirely appreciate all my colleagues, if the company did well then I did well, and if not, then not. Don't know what ever happened to that one.
Here's the link:
http://www.wsj.com/article/SB124568674308337519.html
Job Counting And Recovery
Unemployment is set to be announced at +10%. This is the biggest lie being told to the American public. When one really calculates the unemployed, the number is much closer to the Depression-Era 20+% because we simply (as has been stated in earlier blogs) don't account for those who have abandoned looking for work; temporary workers and the like. So the reported unemployment rate is terrible, but it is much more horrible than what the press would have you believe.
Worse yet, in many prior recessions, job loss was transitory...this time it is permanent. I have been a college instructor for many years and the number of young adults that are not finding employment right now is utterly alarming, including those with strong resumes in disciplines such as Accounting.
Here are links that provoke these thoughts:
http://www.nytimes.com/2009/06/27/opinion/27herbert.html?_r=1&emc=eta1
Interest Rates
These are going through the roof because, despite the Fed's attempts at subsidizing the financial industry, nobody in the rational world believes that this is non-inflationary and most all believe that it is possibly deflationary. Have fun. One of the elements that depresses me the most is that American's (unlike Iranians) are in denial about all this. But the destruction occurring in all investing forms from Venture Capital, to Private Equity to Real Estate (residential and commercial) confirms my instincts.
http://online.wsj.com/article/SB124467701447204165.html
Man-Made Climate Change
For years I have asserted that the climate may be changing, although recent studies have shown that the world's temperature has "flat-lined since 2001," and that the main problem is three-fold. (1) We don't have enough data to track these trends through the ages, (2) the world only crossed the 1B population threshold in the late 1890's and (3) the worst polluters in modern history (in absolute terms) are the Chinese and the Indians.
Having said all that, and unless you are willing to entertain a 5B reduction in the world's population, there is no solid evidence that all the efforts that we are voting on and proposing spending money for will have one iota of efficacy. Hey, I like clean air and such, but the "science" that has attended this thing for years has been seriously suspect...so much so that at least 1000 scientists who previously endorsed the thing are backtracking faster than a 4-wheel drive. The world may or may not be getting warmer; but be honest with yourself, who the hell knows the real causes? I confess that I have never liked Al Gore, but the fraud and puppetry that they have engaged in are really damaging.
Here's a credible article. (Incidentally, for a time I was chairman of a world-class weather prediction company, and we routinely made the above argument, but finally abandoned it because no one would listen...just like what the lady PhD says in the article.)
Check out the read:
http://www.wsj.com/article/SB124597505076157449.html
Nukes
This has been highlighted by me before, and it continues to be an enormous problem. North Korea is scheduled (you can bet on it) to launch a dud at Hawaii. I don't think it will make it all the way, but the US has a major issue at hand. Ignore it and let it fall into the ocean (probably the wise course) try to intercept it and succeed (a great but unlikely victory) or try to stop it in flight and fail (a huge catastrophe.) The Taliban forces are not, per the popular wisdom (see the link below) contained and I am still predicting a 100% chance that they will steal a nuclear weapon. North Korea and Iran move forward on the Nuke front, and so it looks to me like we are going to be living in a world with a nuclear awareness as heightened as it was during the Cuban missile crisis. But the devices are smaller and easier to deploy now. I live in New York City...ground zero for God's sake for the first terrorist nuke attempt and I sure hope that all you happy faces out there have your precautions in order.
In summary, I marvel at American optimism but it also scares me to death. We somehow seem to like to produce and read trivial blogs, pursue idle thoughts and ignore clear and present dangers when they are utterly obvious in business, politics, the military et al.
So if you ask me what I am doing...here goes...I am preparing myself to live in a condition that has not existed in America before. I can't get into specifics, but you can probably imagine what this means.
Here's the Taliban (not gone yet) link:
http://www.nytimes.com/2009/06/28/world/asia/28swat.html?_r=1&emc=eta1
Thank you
John A.
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