Friday, November 28, 2008
Tuesday, November 25, 2008
Yes, they do have that history. But Rubinomics -- of which all the members of the team were dutiful adherents -- may end up consigned to the dustbin of history.
Larry Summers, who was Robert Rubin's protege at the U.S. Treasury in the Clinton administration, hasn't been talking like a centrist lately. From a story in today's the Wall Street Journal:
"There are a lot of different ways of saying it, but the way I heard it said best was by President Zedillo about six months into the Mexican financial crisis. He said: Markets overreact -- and that means policy has to overreact. You don't want to come up late -- and you don't want to come up short."
Today's financial crisis has turned even the Republican anti-regulatory stalwart Treasury Secretary Paulson into an on-the-fly Keynesian.
And looks who's elbowed its way to a special place at the federal bailout trough -- Citibank, whose top economic adviser during its calamitous embrace of securitized mortgages was Rubin.
Christina Romer, the new chair of Obama's Council of Economic Advisers, is a resolute monetarist who thinks fiscal stimuluses, unless they are tightly controlled, lead to inflation. But at his press conference Monday, Obama called for Congress to pass stimulus legislation that may cost as much as $700 billion and extend over two years. While Obama was urging passage of this legislation, standing alongside him -- to the left and right, but not in the center, were all the members of his economic team.
Monday, November 24, 2008
You have to believe that many banks are licking their chops after looking at the deal that on-the-ropes Citibank got from the U.S. Treasury. In exchange for a guarantee of $306 billion in very troubled Citibank real estate assets, plus the injection of $20 billion of capital on top of the $25 billion pumped in earlier, the U.S. gets $7 billion worth of preferred stock paying 8% interest annually, well below the 12-13% rate that Citi would have to pay if it could get a commercial loan, which it apparently can't. The text of the deal here.
Nowhere in the agreement does Citi receive even a velvet-gloved slap of the hand for its reckless pursuit of profits, reported with devastating detail in this investigative piece in the New York Times and this analysis by the Washington Post's excellent business columnist Steven Pearlstein, who wonders if Citi is too big to succeed.
The agreement says to banks, in effect, that the U.S. will hold them harmless for profit-at-all-cost decisons as it showers bailout money on them.
President-elect Obama said today at his news conference that the financial/economic crisis requires action extending from Wall Street to Main Street. In the meantime -- almost two months -- it looks as if one of the worst players in Wall Street will be the primary beneficiary of the federal life line.
Saturday, November 22, 2008
Why bankruptcy won't work for General Motors is masterfully explained by New York Times columnist Joe Nocera. The nut graf:
"It is a long, difficult, drawn-out process with no guarantee that a bankruptcy judge will go along with everything G.M. wants to do. Several bankruptcy lawyers I spoke to all made the same point: if there is any way these goals can be accomplished outside of the bankruptcy process, then that should be tried first."
But read the whole piece, which details how a U.S. bailout can achieve bankruptcy's goals, but without the fallout that can be fatal to a company as big and complicated as GM.
There's also this interesting piece in the Washington Post's Sunday Outlook section -- "Why Detroit Can't Keep Up" --that explains why international automakers, particularly in Europe, are so much more nimble in going from design to production, and reaching the break-even point with fewer units.
The writer, Bernard Avishai, a former technology editor at the Harvard Business Review, says the U.S. "still has the world's largest proven reserves of intellectual capital. " But the Big 3 needs to unleash that capital the way Silicon Valley does to come up with product wonders like the iPhone.
Thursday, November 20, 2008
Democratic Sen. Joe Lieberman's post-election "charm offensive" probably helped him keep his key Senate chairmanship, despite his all-out support for GOP presidential candidate John McCain. But I didn't see much charm in his interview with Katie Couric during her CBS Evening News program Wednesday evening. What I saw -- and heard -- was deviousness, and with a smarmy sheen.
Couric bore in on Lieberman's answer to a cable-show question regarding whether Brack Obama was a Marxist.
Couric: "You said, quote, 'It's a good question to ask.' Are you sorry you said that?"
Lieberman: "Well, that's one of those things I wish I had said more clearly. Obviously Barack Obama is not a Marxist."
Couric: "But you said it's a good question to ask."
Lieberman: "Well, then I answered that and said he's not a Marxist. I said at the time that he's somewhat to the left of me on some issues."
But here's what Lieberman actually said during the cable-show interview:
Lieberman: "Well, you know, I must say that’s a good question. I know him now for a little more than three years since he came into the Senate and he’s obviously very smart and he’s a good guy. I will tell ya that during this campaign, I’ve learned some things about him, about the kind of environment from which he came ideologically. And I wouldn’t…I’d hesitate to say he’s a Marxist, but he’s got some positions that are far to the left of me and I think mainstream America."
Notice the choice of phrasing: "I'd hesitate [emphasis added] to say he's a Marxist."
Was Lieberman trying to correct a gross distortion of Obama's economic philosophy -- as he claimed with Couric -- or was he trying to extend the life of one of the ugliest, and most preposterous, campaign smears?
I would hesitate to say it was the former.
I like this commentary from the Detroit Free Press about the real case the Big 3 should be making to save the U.S. auto industry. Forget parsing the numbers about "two-tier" wages and other talking points, says columnist Tom Walsh, and make a straight-to-the-heart appeal to the "American family," of which Detroit has been a prominent member for a century.
Shes my little deuce coupeSure, Detroit has committed a succession of blunders in product strategy, labor deals and foot dragging on mileage standards. But it's asked for federal help only once -- $1.5 billion in loan guarantees to Chrysler in 1979 which later resulted in a $350 million windfall to the U.S. Treasury. Compare that to the hundreds of millions that have been showered on insurance giant AIG and banks which committed much more costly blunders during the mortgage securitization craze of the last decade.
You dont know what I got
(my little deuce coupe)
(you dont know what I got)
Does big-hearted America want to kiss off Detroit? I don't think so.
Wednesday, November 19, 2008
There's the continual debate over whether Barack Obama is or should be more like Lincoln or FDR. It's easy to get pulled into the debate because Lincoln and FDR are such huge change agents in American history, and comparisons to the 44th -- and "Change Now" -- President are irresistible.
But Obama, even before he's inaugurated, has already broken both the Lincoln and FDR molds with a new, 21st century model for how he wants to govern. He's done that by creating a Web-based grassroots force that could scarcely be imagined in Lincoln's or FDR's time -- and maybe any time right up to when Obama launched his presidential campaign in front of the Old State Capitol in Springfield, Ill., on Feb. 10, 2007 (where Lincoln gave his "House Divided" speech).
Go to the post-election Obama change.gov site, and see why it isn't useful to debate whether Obama should pursue a Lincoln or FDR model. Make sure you drill down to the blog, "An American Moment" and other sections that encourage people to get involved in issues that animate them or maybe just bear witness. Behind most of this focused but non-frenetic post-election campaign is Obama Campaign Manager David Plouffe, who, with Field Director Jon Carson, masterminded the primary strategy that nailed down whole contingents of delegates in caucus states, like Idaho, to exceed Hillary Clinton's successes in statewide votes where even a second-place performance by Obama was good for a healthy percentage of delegates.
What's clear is that Obama is attempting to create a permanent, post-election grassroots force. This force, if you read between the lines of the change.gov site, will be active not only through the first 100 but the next 1,360 days of the Obama administration. Signups will not just be cheerleaders for the Obama change mission in Washington, but active on the local and state levels in pushing climate-change, health-care reform and other Obama initiatives.
In Lincoln's administration, change was concentrated in his cabinet and in the military leaders he was active in selecting, pre-eminently Ulysses Grant. In FDR's administration, change was more horizontal -- extending from his brain trust and cabinet to the practical-minded idealists who were attracted to Washington, or conscripted, and filled old and newly created agencies. Under Obama, the agents of change will be more distributed -- to the grassroots across America, where hundreds of thousands of citizens who aren't in government and maybe don't want to be, but do want to participate in the transformation of America. Think "democracy 2.0."
Monday, November 17, 2008
This "6 Myths About the Detroit 3" answers some of the biggest stereotypes that are continually trundled out against federal help for GM, Ford and Chrysler. While the article comes from the Detroit Free Press, which is often a booster of the auto industry, it is based on facts, not opinion. The piece could have added a seventh myth -- that Detroit is so burdened by union labor costs it can't compete with international automakers who build and sell vehicles in the U.S. In fact, the new two-tier wage schedule, which goes into effect in 2010, will cut production-line costs for new workers in half. GM has also off-loaded its employee health-care costs to the United Auto Workers -- one big reason it needs a bridge loan to 2010.
Any federal bailout of the Big 3 should have tough conditions that ensure Detroit can't backslide to gas guzzlers, and that it continues to invest in the all-electric vehicle. The conditions should be pointed to the future -- where hundreds of millions of people will become first-time car buyers, helping to raise global auto production by 26% by 2014. For sure, the sellers will include automakers in Europe, Asia and Latin America, providing millions of jobs and bolstering the economies of industrialized countries in those regions . Will the U.S. be the odd country out?
Friday, November 14, 2008
What a brilliant stroke -- Hillary Clinton as (maybe) President Obama's Secretary of State. Clinton, more than any candidate I can think of, is so well suited to epitomize the message of the Presidential Seal --the Bald Eagle brandishing, in either claw, arrows and an olive branch, and betraying no pre-disposition.
There are other qualified candidates -- Sens. John Kerry and Chuck Hagel, pre-eminently -- but none as good, or right, as Clinton. U.S. influence around the world has taken a terrible beating during the Bush/Cheney Presidency. Obama has promised to reverse that record. Clinton, more than any other possible choice, could help him do what Gen. Colin Powell said could when he endorsed Obama -- "electrify the world. "
Obama has indicated he would build a bipartisan Cabinet that included Republicans. Clinton would be stronger proof of his bipartisanship -- and his confidence as a leader who, like Lincoln, was comfortable surrounded by former adversaries. In the hard-fought Democratic primaries, Clinton ran up 17.8 million votes compared to Obama's 17.5 million. Imagine the message of confidence and strength that Obama would send around the world if he chose Clinton.
Global demand for new autos over the next decade is estimated to be about 180 million units. GM needs to be strong enough to keep its approximately 14.5% share of worldwide production, and possibly increase that number. If it can make a global success of its 40MPG Chevy Cruze mid-size sedan (due in 2011), it could increase -- actually recover -- share. Bankruptcy, however its "pre-packaged," will be a brake on that happening.
Thursday, November 13, 2008
In the debate over whether GM should be bailed out or pushed into bankruptcy, I see almost no discussion of the big global demand for new vehicles that will come over the next decade, pushed particularly by fast growth in developing countries (like India and members of the Russian Federation). If GM goes under or into bankruptcy, the U.S. will not be a major player in producing the demand for 180 million vehicles from new owners -- on top of replacement demand. Most of that production will be ceded to international makers. Just think about that 180-million number. Say the average global retail price for those cars is $15,000, which is on the low-low end of current average prices. That comes to $2.7 trillion.
GM's share of that growth, based on its current 20% of the international market (including the U.S.), would be $540 billion -- or $54 billion a year over two decades. Its fuel-efficient, mid-size Chevrolet Cruze sedan (photo above) will be its major entrant in the global market starting in 2011. It will offer 40 MPG. Figure on a price tag north of the current global Chevy Cobalt, which goes for $15,0000-$17,000.
Keep in mind, too, that if GM were able to keep its market share as that growth gains steam, and production transitions to the all-electric auto (which GM finally is totally committed to), it would provide a big chunk of the 5 million "green collar" jobs that President-elect Obama wants to create over the next decade.
Could GM do that with a bailout? It has a shot -- a far better shot than if it is forced into bankruptcy that will prevent it from taking the expansionary steps it would need to take to be a player in meeting the coming global auto demand.
Politico.com asked a variety of quotable people whether they thought federal bailout money should be available to the Detroit Big Three. The only big foot who raised the issue of future global auto demand was Peter Fenn, a Democratic media consultant. Too many of the other quotables were talking off the top of their heads.
"Beware of those who say we've hit the bottom," says Nouriel Roubini, the New York University economics professor who saw a recession coming back in 2006 when so many other experts were still cheerily optimistic.
The recession will last through 2009, he says, and it will be "U-shaped," with a slight possibility it could be worse -- "L-shaped," like Japan's stubbornly long economic downturn in the 1990s.
Even if Roubini is only three-quarters right (a Wall Street Journal survey of economist sees growth resuming in the second half of 2009), the U.S. better get moving on a strong response. Treasury Secretary Paulson did the right thing in deciding the U.S., instead of using the $700 million in bailout money to buy "troubled assets" would inject funds directly into financial institutions to keep them solvent, and also aid consumers more directly.
But Paulson and the Bush administration should back off from the opposition to using bailout money to save General Motors from bankruptcy. There's a lot of talk about a "pre-packaged bankruptcy," but however it's wrapped and be-ribboned, bankruptcy for the giant automaker would be devastating -- to the entire U.S. economy. As I argued last week, GM has already taken major steps to cut its production costs. What it needs is a bridge loan to get to 2010 -- when the cost cutting takes effect and lowers the private of each GM vehicle by about $3,000. The fragile economy doesn't need a body blow like GM bankruptcy, which would threaten several million auto-related jobs and, possibly worse, imperil the company's ability to create its share of the 5 million "green collar" jobs that is President-elect Obama's 10-year goal. A GM bailout can be tied to conditions that the company be required to meet to become competitive with international automakers.
The U.S. response to a deep recession should also include President-elect Obama's "big bang" reform package, as reported in the Financial Times and flagged on Brad DeLong's blog. That package would push a short-term stimulus to aid consumers and long-term investments for neglected infrastructure, and defer budget-deficit reductions till the economy was beyond the U- and possibly L-shaped recession.
Tuesday, November 11, 2008
The sorry post-election state of the Republican Party is captured by David Brooks in his New York Times column today. The "Traditionalists," who believe their party lost so big because it strayed from bright red values, will come out on top during in-between election jockeying, Brooks says resignedly. It'll be an indeterminate period of time, he says, before the "Reformers" "build new institutions, new structures and new ideas, and the cycle of conservative ascendance will begin again."
Conservative blogger Hugh Hewitt thinks Brooks' assessment is too Beltway-centric and elitist, and therefore "can't drive a movement or a party."
Jonah Goldberg offers his view in his Los Angeles Times column, "Was George W. Bush a conservative President?"
It will be interesting to see what comes out of the Republican Governors Association meeting this week in Miami. Will there be a healthy debate about ideas -- or will the meeting be dominated by the incandescent Gov. Sarah Palin, who will be on the panel "Looking Towards the Future"?
Sunday, November 9, 2008
A Rasmussen poll last Friday has 66% of Republican men and 61% of party women supporting Sarah Palin for President in 2012. These numbers collide with New York Times/CBS polling held shortly before Election Day showing that 48% had a "very negative" or "somewhat negative" opinion of Palin -- way up from early September when adverse opinion of Palin totaled 27%.
It's a long way to 2012, but Palin, for all her negatives, is the gravitational center of the GOP. As she gains more experience and exposure as governor of Alaska, and possibly becomes a replacement for Alaska senator Ted Stevens -- a convicted felon -- Palin may become an even more commanding figure within her party. Her only serious competitors -- at this time -- are Mitt Romney and Mike Huckabee, neither of whom wears the mantle of elected public official.
Some elected Republicans are saying their party has to move beyond the iron circle of the base. California Gov. Arnold Schwarzenegger is urging his party "not to get stuck in ideology," and "let's go and . . . fund programs if they're necessary programs." And here are four Republican governors -- all of them re-elected last Tuesday -- talking about a bigger-tent party, in David Broder's column.
These successful Republicans understand the implications behind this year's returns. The once extensive national pattern of Republican states is shrinking to red patches in the Deep South and the Plains. In deep-red Texas, Democrats are strategizing -- not just dreaming -- about winning statewide elections in 2010. Montana went for Bush 67 to 30 in 2004, but McCain won the state by just 50 to 47 this time. Longtime red states North Carolina and Virginia and Indiana and Ohio all went for Obama.
Driving this transformation are what demographer William H. Frey of the Brookings Institution in Washington, D.C., calls "Melting Pot Metros," fast-growing urban regions where blacks, Hispanics and Asians are or soon will be the majority. In a new Brookings report, Frey and Rudy Teixeira, also of Brookings, say Barack Obama won so big -- 52.6 to 46.1 -- because he "connected the party to potent demographic trends," which Frey mapped in his earlier study. His "Melting Pot Metros" are located in states that are becoming more deeply Democratic blue -- like California and Washington -- or turning from red to purple -- like Nevada and North Carolina.
"Melting Pot Metros" also tend to mirror the so-called "New Economy" metros with large and growing numbers of knowledge workers, who vote disproportionately Democratic.
To avoid becoming the semi-permanent minority party they were for four decades -- from FDR's first election in 1932 to Nixon's re-election in 1972 -- Republicans will have to appeal to steadily growing minorities and knowledge workers. Yet during the campaign, Palin, while appearing at a rally in Greensboro, N.C., said she liked visiting "pro-America areas of this great nation" -- a remark for which she later apologized. Oddly enough, Greensboro is part of the demographic changes favoring Democrats. It went from being 77% white in 1990 to 67% in 2004, according to Frey, and it ranks 45th among the Top 50 in the "Metropolitan New Economy Index" produced by the Progressive Policy Institute. Living up to its Melting Pot/New Economy profile, metro Greensboro voted 59 to 41 for Obama. In 2004, Kerry barely beat Bush 50 to 49 in greater Greensboro.
What do Republicans plan to do about this continuing demographic transformation -- filibuster against it?
Saturday, November 8, 2008
Some commentators wish that President-elect Obama in his first press conference Friday had been more Roosevelt-like. Joe Nocera, who writes a thoughtful, and diligently researched, business column for the New York Times, asked, "Where Is FDR When We Need Him?" But Roosevelt didn't become President for more than three and a half years after the Great Depression began. Americans were truly despairing when Roosevelt, in his 1933 inaugural address, said "the only thing we have to fear is fear itself." So here's Obama, less than two months after the financial meltdown, followed by the diagnosis of a recession of indeterminate force, making his first media appearance -- more than two months before he takes office. For him at this time to pull out the rhetorical stops would be...erratic. On Nov. 4, American voters demonstrated what they thought of the impulsive responses to the financial crisis that occurred the presidential campaign. Obama wisely chose not to offer up a post-election reprise to what his opponent did.
At his press conference, Obama said, emphatically, about the pace of his economic recovery program: "I want to emphasize 'deliberate' as well as 'haste.'"
Since he won't be President for more than two months -- during which time the financial/economic situation may go through continuing volatile changes -- doesn't this make sense?
Friday, November 7, 2008
Analysts can't agree on whether there was a sizable uptick in overall voting last Tuesday. The Center for the Study of the American Electorate at American University says bullish pre-election estimates were all wrong. The center says the actual turnout will reach between 126.5 million and 128.5 million, which, percentage-wise, would put it close to the 2004 total -- "or, at most, one percent higher." But Michael P. McDonald, the George Mason University professor who runs the United States Election Project at that college, doesn't agree. McDonald has revised his original estimate of 133.3 million voters down to 130.9 million, but that's still appreciably higher than the AU center's estimate.
But both Curtis Gans, director of the AU center, and GMU's McDonald agree that some Republican voters, unenthusiastic about GOP presidential nominee John McCain, shunned the polling booth on Election Day. McDonald goes further, saying his higher turnout estimate reflects "Democrats and African-Americans enthusiastic to vote for Obama."
We won't know the actual turnout total until early December, when, says McDonald, all states will have certified results.
Thursday, November 6, 2008
General Motors drove itself into a deep ditch after a decade and more of bad product strategy. Should the federal government haul it out with a multibillion-dollar bailout?
For both short- and long-term reasons, the answer has to be yes.
Without more federal aid -- the company is seeking $25 billion in loans on top of billions already approved by Congress for retooling -- GM very likely will be forced into bankruptcy. The Washington Post's savvy, Pulitzer prize-winning business columnist Steven Pearlstein contended recently that "pre-packaged bankruptcy" would actually help put GM back on a path to stability. But many experts who follow Detroit closely -- more closely than Pearlstein -- agree bankruptcy would have disastrous consequences -- not just for the whiplashed U.S. auto industry but the reeling national economy. My initial impulse was to punish GM for its bad product decisions. But think back to investment banker Lehman Brothers' bankruptcy in September. More than any other single event, that hasty U.S.-decreed liquidation triggered the financial crisis that went global within days.
Pearlstein argues that a bankruptcy judge could quickly dismantle GM's obligations to the United Auto Workers. But GM has already offloaded $51 billion in retiree health-care obligations, and by 2010 it will start saving billions more with implementation of its two-tier, union-approved compensation schedule that halves hourly wages for production workers and slashes fringe benefits. Together, the two moves lower per-car production costs by close to $3,000.
That cost reduction, plus GM's continuing strong gains in productivity, plus retooling for higher-mileage cars and trucks (including super-hybrid electric "plug-ins"), should, finally, put the company in the same market fast lane as Toyota and other internationals that build vehicles in the U.S. But GM needs a $25 billion bridge to get to the turnaround year of 2010.
That doesn't mean that the federal government should just drop $25 billion in GM's lap. The loan should be accompanied by conditions -- not ones that encourage bureaucratic meddling, but promote the long-term health of the huge auto-related industry in Detroit, the tri-state area of Michigan, Ohio and Indiana, and throughout the U.S.
The conditions should ensure that GM implement its public pledges to pursue fuel-cell propulsion systems and the all-electric vehicle, and, shorter term, accelerate production of a stable of "plug-ins" (beyond the Chevy Volt due out in 2010) that would be transitional to the completely electrified car. The U.S. should also demand that Michigan take immediate steps to increase the number of new state engineering students, which was down more than 13% between 2000 and 2007, as mass boomer retirements were leaving big gaps among those critically important knowledge workers. These conditions should be prominently folded into President-elect Obama's strategy to produce 5 million "green collar" jobs over the next decade.
The demand for cars won't disappear with petroleum reserves. Beth Lowery, GM's vice president for environment, energy and safety policy, says global ownership by 2020 will increase to over 1 billion vehicles from the current 820 million. Many of those extra 180 million vehicles will be "green" ones. Most of them will be produced by international makers if GM goes under or is crippled by bankruptcy. The end result would do far more than mar the prestige of the U.S. as an industrial giant. It would devastate this country's ability to keep its already precarious technological lead as industries and entire national economies struggle to make the all-important transition to a post-petroleum future.
We should be careful that any damning epitaph we wish to chisel for GM doesn't become an RIP for the entire American economy.
Wednesday, November 5, 2008
To appreciate how much America has changed, look at these two images of Chicago police reacting to groups expressing their political views. The first image (from the Chicago Tribune) shows an officer autographing the T-shirt of a participant during Barack Obama's victory celebration at Grant Park. The second image shows police autographing protesters' heads during a protest outside the Democratic National Convention in 1968 that rammed through the nomination of Hubert Humphrey, who chose to support Lyndon Johnson's prosecution of the Vietnam war against the opposition of many Democratic delegates.
The Chicago mayor on Obama's victory night was Richard M. Daley. Forty years ago the mayor was his father, Richard J. Daley. The current Mayor Daley is a huge supporter of Obama, and helped pave the way for his political success (even while the impatient Obama pushed boldly against the levers of Daley's Chicago machine). Daley's father was a staunch supporter of John F. Kennedy, and unquestionably helped Kennedy squeak to victory over Richard Nixon in the extremely close 1960 presidential election, where Illinois put JFK over the top. Eight years later the senior Daley encouraged the excesses of the anti-Vietnam movement by running the Democratic convention like the boss he was of his city and overreacting to the the Yippies and other anti-war protesters who decided to draw their line in the sand as Humphrey's nomination was rammed against antiwar candidate Eugene McCarthy.
Historians will argue over whether the Boss Daley of 1968 could have prevented the head-crunching protests that besmirched his and his city's name. When I look at the slideshow of the Grant Park Obama victory celebration decreed by his son, I marvel how times could change so epochally within two generations in one geographical space.
Of course Obama is pivotally in the middle of this sea change.
Last night America stepped into a new era. It was a sure step, accompanied by 52% of voters casting their ballots for Barack ("Yes, we can") Obama. Many forces came together to swing this hinge of history, but the biggest push came from the junior Senator from Illinois who in January will be the 46th President.
For many people, in the U.S. and in other countries, Obama fulfills their so-often-frustrated hopes -- for a more harmonious world, for racial reconciliation, for anything and everything that helps us see that each of us is part of a human community that is as small as our family and friends and big as the world.
In their speeches last night, Obama and John McCain recognized that elemental truth, each in his own way.
Let's hope what they said continues to echo, particularly in Washington, and starting on Jan. 20, 2009.
Tuesday, November 4, 2008
This is the best proposal I've seen for reforming a 21st century financial system that's regulated by 20th century rules. It comes from Stephen Schwarzman, the high-living founder and CEO of the global private equity firm Blackstone Group. When Schwarzman emphasizes the need for transparency and more and centralized regulation in today's often-opaque system of financial instruments, he knows whereof he speaks. Blackstone, among other things, manages hedge funds, the secretive, little-regulated entities in which the very rich invest ("speculate" might be a better description). Highly leveraged hedge funds are part of the global financial web that's been snapping strand by strand. I notice that Securities and Exchange Commission Chairman Christopher Cox makes a similar case for transparency and centralized regulation in an op-ed article in the Washington Post. But the call for reform means more coming from the Wall Street player who happily describes himself as the "raging bull" of private equity -- Stephen Schwarzman.
Monday, November 3, 2008
* McCain was (mis-) served by a team of small minds and hacks who created a campaign cutout McCain who was a pale shadow of the McCain who became an admired national political figure. The cutout McCain chose Palin as VP candidate, did a closely watched pratfall when the financial crisis burst open, and spent the critical last weeks of the campaign throwing futile glancing blows at his agile opponent.
* Obama got a huge boost from the financial crisis, which, following historical precedent, would be blamed on Republicans, including maverick McCain.
* The press was indeed biased toward Obama. It did not, for example, get to the root of how Obama could maintain that he himself had never heard his pastor, Jeremiah Wright, deliver wild invective from the pulpit (e.g., "God damn America!"), even though he sat in the pew of Wright's church for 20 years' worth of sermons (the most damning of them available for purchase in the church gift shop).
* Obama developed and sustained a powerful tax message ("Everybody making less than $250,000 a year won't pay a dime more in taxes") that made more sense than McCain's frantic "Joe the Plumber" message based on the hypothetical huh? threat from Obama's plan to raise the tax on present $40,000 earners when their income exceeded $250,000.
* Obama, whatever his weaknesses in experience, was seen as a young, temperamentally steady leader, while McCain was seen as an old, temperamental maverick.
* The electorate, even die-hard Republicans, was fed up with the Bush administration. Any Republican would have had an enormous handicap trying to overcome that eight-year legacy. Obama couldn't help benefit from the GOP wreckage. But wouldn't any other Democrat, particularly Hillary Clinton, have achieved the same? Maybe. Possibly. We'll never know for certain.
Sixty years later, polls are more finely tuned. There are also more of them, and they track opinion closer to the Election Day. Still, Obama has not succeeded in pushing his percentage that much above 50% -- except in the last Gallup poll -- from Nov. 2 -- where he is given a 55 to to 44 lead when undecided votes are allocated.
McCain's problem is that he has to come from behind in so many states that used to be reliably red. Mathematically, the odds are way against him. But the potential for surprising results in this election is high.
Will a Republican base energized by McCain's pick of Sarah Palin as his running mate offset a big turnout by young voter weighted toward Obama? What about the "Bradley effect" where white voters, once they're in the secrecy of the voting booth, supposedly decide not to back a black candidate? Will the disproportionate high percentage of Catholics who are reportedly undecided -- as many as 11% -- tend toward McCain, whose pro-life position mirrors the church's? What if voters who initially leaned toward Obama as the financial crisis exploded, express their swirling fears in a sudden new direction -- toward McCain?
So many questions, for which, before the votes are counted, there are no sure answers.