Thursday, August 27, 2009

Lionizing Ted Kennedy--An American Embarrassment

Hey, I am never eager to trample on graves. But my readers know that I am willing to express what others only want to keep to themselves. But all this poppycock about Ted Kennedy being a wonderful senator, and all the revisionism that revitalized his questionable political career sickens me greatly.

It was 1969 and I was 14 years old, when I heard that Mr. Kennedy drove his car off a bridge, killing a beautiful 28 year old woman. Then I found out that he didn't report this accident for nearly one day. Now I'm sure we have all done some terrible things in our lives but some events are so horrific that they end up defining our entire existence. Well, not so for Mr. Kennedy. For normal people, a tragedy like this might have ruined them...I can certainly say that I would never have been the same thereafter.

The police treated the episode like a fender-bender. Kennedy was let off the hook despite the assertion that rapid response (under two hours) might have saved the woman's life (see the link below.)

And what was Kennedy (a notorious drunk and womanizer) whose then-current wife was pregnant, doing in a car that late with a lady nearly 10 years younger? Forget about getting any answers anymore...everyone has tried to investigate this thing and only the Lord will ever know what really happened; but I have my strong suspicions. Here's a very interesting link:

So what about the great liberal senator from Massachusetts? Other than introducing the verb "Borked" into the nation's vocabulary, what the hell did this guy ever do for the USA? He served his country without distinction in the military (unlike his two older brothers) and was discharged as a private. He was caught cheating on a Spanish exam at Harvard and was accordingly suspended. He grew up as the privileged son of a famous American bootlegger, so I suppose that you can claim that his prolific and well-detailed drinking habits were genetic. He and his staff introduced more than 300 bills in the Senate but I challenge you to name a single one that has had any lasting consequence (except COBRA.) He was a proponent for the Vietnam War and for universal health care...both turned out to be fiascoes. In 1980, he tried to run for President against his own (admittedly feckless) incumbent, Jimmy Carter.

Ted Kennedy always tried to be the consummate power-broker, but he did so by utter compromise and promise breaking. His pernicious personal habits constantly hindered his efficacy.

After all this, and you can read it for yourself:

what we get from oratorical Obama et al is a hagiography that ignores what could have been a prodigious life, and instead turned out to be a profligate one.

I'm not the first one to imply this, but Ted Kennedy isn't just any departed American hero; he was an American disgrace.

Tuesday, August 18, 2009

Diogenes...Looking For An Honest Man

He eventually settled in Corinth where he continued to pursue the Cynic ideal of self-sufficiency: a life which was natural and not dependent upon the luxuries of civilization. Believing that virtue was better revealed in action and not theory, his life was a relentless campaign to debunk the social values and institutions of what he saw as a corrupt society. (Thank you Wikipedia.)

Well, that's Diogenes, and I have to confess that I am feeling more like him every day. Are we so corrupt that this is the only way to get along in life? I understand that more than 50 thousand US citizens acquired Swiss bank accounts so as to evade income taxes. Bernie Madoff is a new legend. The financial institutions have ripped us off and are now using their new found prowess to rip us off further. The President is a (well-intentioned) liar. The congress consists of not so well intentioned liars. Any baseball player who has avoided steroids (think Derek Jeter and not much further) won't make it into the Hall of Fame.

My home state, New Jersey boasts not only the most corrupt politicians in history (read the papers) but also, Rabbis who sold body parts. I wish this was confined to New Jersey but I fear that these guys were just stupid enough to get caught.

The Wall Street guys have it right...they get caught over and over again, pocket the dough and continue. They have ample help from Greenspan, Bernanke, Buffet and all their other stooges.

Have fun folks...the next 10 years will shake everyone loose.

Monday, August 17, 2009

Have We Hit Bottom In The Great Recession?

I sure hope so, and my favorite friends the "economists" are suggesting it. Let's just be sure that it's not a bottom that is fifty feet below the water's surface; if it is, then we won't have a sufficient air supply to allow us to rise up to see the sun and breathe freely again.

I do not believe that we have even come close to bottoming out. A series of links below tell the story about the real economic news. We are still losing jobs at an alarming pace and these jobs will not be replaced very soon, if ever.

Smaller banks are getting blown out faster than bald tires on a heavy truck. Commercial real estate is not in the tank, it's in an acid bath.

Retail sales, including those for the vaunted back-to-school season, the home improvement industry and virtually anything else you care to think about, are anemic. Even "cash-for-clunkers" has an inherent problem. The automakers can't manufacture qualifying cars fast enough, they still have mountains in inventory that does not qualify for the program and with all that, the best selling vehicles are all made by foreign car makers (admittedly in their US plants.)

California is literally on the rocks, and the vacancy rate in Southern Cal is moribund. Airlines too are complaining that their business models are not sustainable.

This is a worldwide problem despite a few bright spots coming from Asia and Europe. The linkages between these economies ensures that if one nation does poorly, the rest will also suffer. The same economists who predict bottoms also regurgitate their optimistic auguries on very scant data, collected during an extremely short time period. I did not trust these folks a year ago and I am even more mistrustful today. In my opinion, only the politicians stand lower in the intellectual pecking order.

Have We Hit Bottom?

Jobs A Scary Reality

Commercial Loan Defaults

Southern California Vacancies

Sunday, August 9, 2009

A Tale Of Two (Wall Street) Compensation Plans

For those that believe that the Wall Street banks that borrowed billions from the government have been chastened enough to abandon their reckless behavior AND forfeit their outlandish pay packages, you should read the NY Times article linked to below.

"Rewarding Bad Actors" by Paul Krugman explains that not only are firms like Goldman Sachs preparing to pay out billions in bonuses for 2009, but also, that the profits may be coming from marginally legal activities such as high-frequency trading. With this maneuver, Wall Street banks employ powerful computers to execute trades exponentially faster than any human could possibly manage to, thereby capturing tiny spreads on millions of trades. This technique is certainly responsible, in large part, for the profits that Goldman will post.

Over at Citigroup, a small commodities trading team led by Andrew Hall has been speculating successfully enough that Mr. Hall may earn more that $100 million for 2009.

Now I'm not a communist, and I think that people who do well should be rewarded well, but what is it that these organizations are doing so well?

On the high-frequency trading side, Goldman is making an artificial market that crowds out other trades and distorts the real market dynamics. The Citigroup traders are creating similar effects in oil markets and the like, driving up prices because the oil they are trading is being warehoused in tankers, and is not getting to market until prices improve. Of course, Citigroup's machinations are directly aimed at creating that improvement.

Mr. Krugman makes a very strong argument that these activities harm America because they are pointless beyond the fact that they make money for their respective firms. Each tactic corrupts the markets' fundamental purpose. For example, the stock exchanges are intended to allocate capital to companies so that the firms can function effectively. On the commodities side, what was supposed to be a hedging vehicle for things like corn, oil and such, with the intention being to stabilize prices, Mr. Hall and others are grotesquely manipulating things so as to produce a precisely converse result.

I suppose both Goldman and Citigroup are proud that they have such smart people who can devise clever strategies to steal money. After all, I've often opined that America has become a kleptocracy, and if so, the top kleptocrats are those whom we should admire the most. Right?

I suspect that neither organization is particularly proud. Consider that Lloyd Blankfein, Goldman's CEO, sent out a company wide voicemail (who has ever heard of such a thing these days) admonishing employees to avoid spending their bonus money extravagantly (Ferraris I suppose) lest Goldman incur federal government wrath (and maybe Andrew Cuomo's too) and general public vilification. Come to think of it, why did Blankfein use archaic voicemail rather than email? It couldn't possibly be that he wanted to avoid having the press scrutinize his message, could it? Well Lloyd, they got it anyway.

The notoriously press-averse Mr. Hall is working a different plan. Apparently, he wants to get out from under Citigroup's very visible umbrella, and create a separate firm that simply pays Citigroup a hefty (49%) tithe in the future. Undoubtedly under this arrangement, Mr. Hall will make even more money with even less transparency. Nice work if you can get it!

Are these the actions exhibited by people who are proud of what they are doing? As the old gangster adage explains, "if you are going to make money, it's best if you make it in the dark."

Here's the link and I recommend that you read Mr. Krugman's analysis and draw your own conclusions.

Credit Suisse is trying (at least temporarily) a different approach. They too expect to earn sizable profits this year, but they're not paying their traders and bankers bonuses entirely in cash and/or company stock. Rather, they have established a $5B fund that holds toxic mortgages and bonds that those traders and bankers managed to accumulate.

The Credit Suisse folks eligible for bonuses, for the most part, don't like this one bit. That alone convinces me that this is the right way to go and if the responsible individuals manage to profit from the toxicity they created, more power to them. I certainly hope this sets an example for other Wall Street banks; if you create a problem then that problem is yours to fix.

Will Credit Suisse continue to use creative compensation plans in the future? I hope so, but I wouldn't bet on it. Here's the link that caught my eye:

Saturday, August 8, 2009

Global Warming Redux

Do you know what that lovely image above is? No, it's not some abstract art. It's a picture, taken from space, of the thick smog that blankets China, and eventually travels elsewhere around the world.

Several posts ago (July 23rd to be exact) I stated that until and unless the Chinese and the Indians agree to clean up their acts, that all attempts by other nations to improve the environment will prove to be futile. Well the link below explains that these two prime offenders have basically told the world to "kiss off," and that they're not going to jeopardize their economies by enacting, implementing and enforcing clean air policies. Here's the link:

Their central (specious) argument is that, per capita, China and India pollute less than we or others do. They utterly ignore that the capita is precisely the problem here. Who knows if the world is built well-enough to contain nearly seven billion people? These two countries also cry foul because others polluted heavily during their own industrial revolutions; that is certainly accurate. But we didn't know any better way back in history and when we discovered that our streams, rivers and lakes were rancid from dumped industrial waste, we began to clean things up. France leads the world in safe, manageable and pollution-free nuclear energy...honestly, we Americans should follow suit no matter what because the nuclear energy solution is far superior in almost all respects to anything else out there.

But with all this clean tech propaganda being foisted on us by our slippery administration, all they are going to accomplish is to spend vast (tax supported) amounts on measures that will be meaningless in a world-context, unless China and India get religion here, so to speak.

And it seems that both countries have spoken and what they have told us is to "go get lost." So we push on by building so-called clean cars that most people don't want, and on inflicting emissions standards that are exorbitantly expensive, and on attempting to legislate silly cap-and-trade regulations that will simply allow our own worst offenders to continue being just that.

If someone in Washington would take off their dunce hat and replace it with a thinking cap, they would encourage the world to offer whatever economic concessions/punishments it takes to get China and India to play pollution-free baseball with us.

Finally, I have no idea if there really is a legitimate global warming problem, I have so stated in the past, and my opinion is backed by at least a thousand credible scientists. But the smog, carcinogenic rivers, deadly water supplies and the like that exist in China and India can't be good for the world, and so global warming or not, they need, commencing yesterday, to seriously address their environmental problems. Or else.

Health Care Reform As Presently Constructed May Be DOA

Of course, I am not alone in believing this, but I think it is a very positive development. The French who have long touted their universal health care system are retrenching and Mon Dieu, even considering lifting some elements from America's present system. Here's a link that explains this:

In a separate article, The Wall Street Journal reports that 68% of Americans are satisfied with their health coverage, and that they oppose the taxes that would be required to pay for what is being proposed by pending legislation:

Many posts ago I started blathering about social unrest, but I had no inkling that it would be this health care mess that might precipitate that unease. Yet in state after state, district after district, plain ole folk are storming their congressional representatives at town meetings being held to discuss health care reform. Some would have it that the demonstrations, shouting matches and such are fomented by right-wingers and Republicans, and while I know that those factions have been very vocal, I'm simply not buying the argument that all the protesters are stooges. The congress people are running home scared, faster than a 3-minute miler. According to some congressmen, "the situation is becoming dangerous." I've got news for you, you haven't seen anything will get worse, much worse.

From my perspective, health-care reform is an utterly legitimate discussion, and there are certainly micro-economic elements that can be addressed, as my good friend Bob H. has pointed out. But here's a fact for you to chew on. The American public is deeply distrustful whenever the government starts poking its nose into programs that directly affect them, and this oratorical administration is jamming its whole body into this deal.

Washington is very quick and highly disingenuous in declaring victories with respect to the economy...we are still in horrible shape. I don't think that they are going to be able to declare anything about health care reform because these idiot politicians (sorry, that's redundant) have simply bitten off way more than they should have, unfortunately, as is typical.

Mrs. Pelosi et al, I have bad news for you. Your days, politically, are numbered.