No, Again No

Patterson did the right thing by resisting promoters of Caroline Kennedy

2009-01-24T12:12:00.000-08:00

New York Gov. David Patterson is taking a lot of hits for how he handled what's being called the "fiasco" over his naming a successor to former senator Hillary Clinton, the Obama Administration's new Secretary of State. But in resisting intense pressure to name Caroline Kennedy, which included a last-minute inquiry by Kennedy about where she stood, Patterson was doing his job under extremely difficult conditions. Hurray for him.

Instead of being muddle-headed, as he's been portrayed in some media reports, Patterson looks to have shown tough resolve and a sharp sense of assessing the top senatorial candidates' political skills, as this New York Daily News piece shows. Key grafs:

"In meetings, the governor and his aides decided [Kennedy] had no political depth, the source said.
"She had no firmly held views and little idea about why she wanted the job, the source said."

So instead of caving to the pressure from the formidable Kennedy claque, Patterson named a relatively conservative upstate Democrat, Rep. Kirsten Gillibrand, who had won her seat in 2006 by ousting a hitherto entrenched Republican.

While Gillibrand does not have the dynastic trappings of Kennedy, she comes from a politically active family, and, in contrast to Kennedy, enjoys the endless meet-and-greet chores that any politician must embrace. Those chores are often dismissed in the media, but they are a crucial part of the compact that politicians -- good ones -- make with the voting public. Eating a knish in Manhattan or milking a cow upstate does not a great elected leader make, but it tells the public that the candidate does not live in a self-created bubble.

Caroline Kennedy lives in a bubble of privacy. With her tragic family history, she's entitled to do so -- but not if she wants to be the junior senator from New York State. In her audition for that job, she seemed to want to keep her bubble mostly intact, deciding when and where she would occasionally step out of it. This is what turned off Patterson, it looks like. It seems not to have turned off the Kennedyites, including high-ranking politicians who could make life difficult for Patterson, especially if he decides to run, as he is expected to do, for a full term in 2010, beginning with a Democratic primary.

By the time Gillibrand is comfortable with her 99 colleagues in the Upper Chamber, I'll bet most of Patterson's critics will concede he did the right thing.

Caroline Kennedy does the obvious thing

2009-01-22T05:29:00.001-08:00

The New York Post, I'm sure, got it exactly right when it reported that Caroline Kennedy withdrew as a candidate to replace Hillary Clinton as junior senator from New York because she knew she was not Gov. David Patterson's choice.

The unsourced claims that Kennedy withdrew out of concern for her ailing uncle, Sen. Ted Kennedy, seems a pretty obvious cover story. Are we supposed to believe that the daughter of Jackie and John Kennedy was prepared to become Ted Kennedy's caretaker?

Throughout Thursday, there was a flurry of reports -- always citing sources "close to" somebody important, beginning with Patterson -- about Kennedy problems ranging from "tax issues" regarding a nanny to the state of her marriage to Edwin Schlossberg. I'm sure that there were all kinds of peripheral issues that could be brought to bear. But there's something far more important regarding the exit of Caroline Kennedy from electoral politics. The uncomfortable truth is that Kennedy, despite her estimable pedigree, showed no political skills or charm when she entered the selection race after Clinton was nominated by President-elect Obama for secretary of state last month. Polling in mid-January showed that New York Attorney General Andrew Cuomo was preferred by more New York State voters than Kennedy. Patterson, who is an accomplished politician, had to wonder whether Kennedy could live up to the challenge of being a senator from New York (think Clinton, Daniel Moynihan and, of course, Kennedy's uncle, Robert).

Kennedy's several attempts to improve her very private, Upper East Side image (which included not voting in many elections) by glad handing with upstate politicos looked contrived. She was not in her element, and photographs that emphasized her strained public demeanor didn't help.

Many offspring of the three politically successful Kennedy brothers -- John, Robert and Ted -- have stumbled badly as they tried to keep the dynasty alive.

Right now it looks like that dynasty might end with the youngest of the brothers.

President Obama's Inaugural Address climbed no peaks

2009-01-20T14:48:00.000-08:00

President Obama's Inaugural Address will not likely be mentioned with Franklin Roosevelt’s First Inaugural or John F. Kennedy’s Inaugural, much less Abraham Lincoln’s Second Inaugural. It was poorly constructed and forced in its delivery. Worst of all, Obama missed his opportunity to embolden Americans to recapture their misplaced sense of national purpose.

Early in the speech, he said:

“Today I say to you that the challenges we face are real, they are serious and they are many. They will not be met easily or in a short span of time. But know this America: They will be met.”

By saying, categorically, that the challenges “will be met,” Obama invites Americans to be complacent at one of the country’s most critical moments.

Later, he veers close to what we were led to believe would be the real message of his address – re-dedication to individual and collective responsibility. But he missed the mark with these anticlimactic words:

“Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.”

What a letdown! For Obama, the “work of remaking America” is nothing more heroic than building “roads and bridges, the electric grids and digital lines,” and improving health care.

These objectives are fine, but they don’t address Americans’ need to recover their sense of national purpose, of the kind of collective action that has continually breathed new life into the words of our country’s founding documents.

Obama seems to suggest we don’t need to do anything so basic:

“On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.”

But have Americans “chosen hope over fear”? All around us we see numerous examples that tell another, far more problematic story. It’s no so much that most of us are paralyzed with fear, but that we are doubtful – about our financial system, about our economy, about the ability of either the private or public sector to respond to crises that radiate throughout the U.S. and beyond to every section of the globe. We are sometimes even doubtful about ourselves, wondering if we have distracted ourselves from purposeful civic action by clinging to a distorted sense of national exceptionalism, consumerism and perhaps excessive attention to our personal and family lives.

Actually, it was invocation speaker Rick Warren who ventured into this sensitive zone, imploring:

“Help us, O God, to remember that we are Americans, united not by race, or religion, or blood, but to our commitment to freedom and justice for all. When we focus on ourselves, when we fight each other, when we forget you, forgive us. When we presume that our greatness and our prosperity is ours alone, forgive us. When we fail to treat our fellow human beings and all the earth with the respect that they deserve, forgive us.”

Warren’s message was that Americans must get back on the path to accountability. He didn't match Moses admonishing the idol-enamored Israelis, but he was not mealy mouthed. In contrast, Obama said all we had to do was, in effect, pour concrete, pound nails and computerize medical records.

The 44th President's Inaugural Address didn't reach toward greatness. But Obama will, in the weeks and months ahead, sure have more opportunities to inspire Americans to reclaim the true greatness of their country. I am sure the new President, a quick learner, will seize them.

Bush administration $17.4B auto plan provides the carrots -- and the stick

2008-12-19T06:52:00.001-08:00

General Motors and Chrysler now have a chance to become 21st century automakers.

The Bush administration's $17.4 billion loan plan provides the necessary carrots and the stick. According to the Wall Street Journal:

"The deal is contingent on the companies' showing that they are financially viable by March 31. If they aren't, the loans will be called and all funds must be returned, officials said."

The plan means GM and Chrysler won't have to go through what would have been a destructive bankruptcy. It doesn't guarantee they'll recover from their years of blindered decision making, but the money, plus costs savings and new product technology and design that are already being put in place, means the automakers have a shot at competing with foreign companies who produce increasingly popular U.S.-made vehicles.

GM, Chrysler and Ford (which doesn't need emergency financial help) can turn automaking into a "green" industry. If they become technology leaders in low-pollution, all-electric autos, the Big 3 could capitalize on major growth that's projected in global sales as millions more poor people achieve middle-class status in countries like China, India and Brazil.

Rick Warren is a 'conservative' evangelist, but what does that mean in the Obama era?

2008-12-18T03:24:00.000-08:00

When the pastor of my former Catholic parish announced from the pulpit several years ago that Rick Warren's "The Purpose-Driven Life" would be the text for our Lenten studies program, I exclaimed to myself (in a whisper) Oh, no -- from Paul, Augustine, Teresa of Avila, Aquinas and Thomas Merton, we go to a TV evangelist for spiritual insight and guidance?

I had heard about Warren's book, and lumped it with other inspirational best-sellers that clog bookstore tables, right next to those on how to lose weight (in six or eight or 10 easy steps).

But while preparing some material for my parish's Lenten studies, I had to confront "The Purpose-Driven Life." The first two paragraphs forced me to rethink my stereotypes:

"It's not about you.

"The purpose of your life is far greater than your own personal fulfillment, your peace of mind, or even your happiness. It’s far greater than your family, your career, or even your wildest dreams and ambitions. If you want to know why you were placed on this planet, you must begin with God. You were born by his purpose and for his purpose."

These words were the perfect antidote for our narcissism. They had, I immediately recognized, a Pauline thrust -- direct, prodding and aimed well beyond the reach of our reflected images. Warren recognized that we were the lineal descendants of the clever, self-regarding, high-maintenance Corinthians who were such a special, and recurring, challenge to Paul.

What Warren preaches -- like Paul -- is that "God is not just the starting point of your life; he is the source of it." In other words, faith is not a one-on-one negotiation between man and God , it is a surrender of man to God.

Yet Warren, again like Paul, is not saying that surrender to God means man is essentially a nobody. He writes:

"...there is a God who made you for a reason, and your life has profound meaning! We discover that meaning and purpose only when we make God the reference point of our lives. “The only accurate way to understand ourselves is by what God is and by what he does for us [paraphrase of Romans 12:3]. ”

Warren strikes a balance between man as the center of the universe and -- the other extreme -- a mere dot.

Some more conservative Southern Baptist religious leaders criticize Warren as a "feel good" evangelical. But Warren himself specifically rejects that notion:

"The number one goal of a hedonist is to feel good, be comfortable, and have fun."

President-elect Obama's decision to have Warren deliver the invocation at his Inaugural has enraged gay groups because Warren -- pastor of the huge Saddleback Church in Orange County, CA -- supported the successful Proposition 8 banning same-sex marriages in California.

Gays make a good point, but the Obama Inaugural team argues that the day-long event will be inclusive. The benediction will be given by the Rev. Joseph Lowery, whom the Rev. Martin Luther King Jr. chose to lead the epochal civil right march from Selma to Montgomery in 1965, and who today is a supporter for gay marriage. The Lesbian and Gay Band Association will, for the first time, march in the Inaugural parade.

But, in the end, obsessing about who's conservative or liberal or in-between runs counter to the new spirit that Obama has sought to kindle from the beginning. In the lexicon of labels, Rick Warren is indeed a "conservative" religious leader. But that label doesn't tell us much about Warren's spiritual message of finding purpose in our lives.

President-elect Obama -- who technically would be called a "liberal" -- speaks about purposeful lives too.

It's no coincidence.

Bernard Madoff -- the unlikely macher

2008-12-17T13:53:00.000-08:00

What was Bernard Madoff really thinking, and when?

In all the extensive coverage of the multi-billion-dollar fraud connected with this so-called pillar of Wall Street, I don't find any substantial clues helping to explain why or when Madoff started his self-described Ponzi scheme. Did it begin after he tried, perhaps unsuccessfully, to be a Wall Street Master of the Universe?

To me, that seems the likely explanation. It's hard to believe Madoff consciously made fraud the starting point of his investment ventures back in the 1960s. He would have had to know that such a pyramid scheme would, sooner or later, collapse -- at which point his inflated status would become a shrinking, flubbering balloon.

I am not persuaded that Madoff was quite the macher -- Jewish "big shot" -- he's described as in the media. Yes, he gave to Jewish charities and he had rich people literally begging to permit them to invest in his funds. But can you see this pudding-faced guy holding down a mike at, say, a New York charity event, and triggering a wave of inside laughter as he laser-beams the real big shots commanding the center tables?

Here's how Madoff described his investment company, as reported by Los Angeles Times columnist Tim Rutten:

"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing and high ethical standards that has always been the firm's hallmark."

No real macher would powder his image with such platitudes.

Madoff was "smart," he worked hard and -- here I'm venturing into perhaps pop psychologizing -- he wanted to make his mark in a world where there were many Masters of the Universe who were not only "smart" and worked hard, but had that je ne se quois that I don't think Madoff had but sought.

So, to continue my theorizing, what could Madoff do to compete against -- even outdo -- the Masters who got all the attention? He could deliver investment returns that over time would beat the ups and downs of the mercurial Masters. That, I believe, was the road to perdition for Madoff. Perhaps early on he had to do a little trimming if not cheating on returns in the hope that his market guesses would, over the longer term, pay returns bigger than the Masters. But if Madoff proved to be no more a Master of the Universe than he was a macher, what could he do? The better question might be what would he have been forced to do?

The answer, I believe, was replacing small-scale trimming and chating with the massive Ponzi pyramid that ultimately would collapse. If Madoff, cornered by his bad choices, resorted to such a dead-end scheme, then he was perhaps still rational but not sensible.

Rational people can spin logic up to the point of walking off a cliff. Look at all the business executives who have found a cliff to walk off in the current financial crisis. Sensible people don't do that.

Will what's left in TARP go to Detroit Big 3?

2008-12-12T04:41:00.000-08:00

The collapse of legislation in the Senate to help save the Detroit Big 3 may or may not spell the end of emergency aid for the automakers. The White House says it's considering using what's left of the $700 billion TARP financial bailout fund to finance the $14 billion bridge loan that was torpedoed Thursday by GOP senators. The bridge loan would keep the Big 3 alive until a longer-term aid plan was taken up by the new, more Democratic Congress in January.

If the bridge loan fails, Chrysler says it will close all 59 of its plants and lay off 53,000 workers. GM hasn't announced what it would do, but even if it stays alive through Chapter 11 reorganization, it would probably be forced to close plants, adding thousands more to the unemployment rolls.

The impact on the U.S. economy, which has seen job losses totaling nearly 2 million through November, would be devastating. A big plunge in the markets today could concentrate minds, and, one way or another, produce the $14 billion bridge loan for the Big 3.

A not incidental note: The drive by Senate Republicans that killed rescue legislation was led by GOP members from Southern states, where international automakers have non-union production facilities. Heading the Southern opponents was Richard Shelby of Alabama, where the internationals have several major facilities.

$73 hourly salary for Big 3 production workers adds up to bad math

2008-12-10T08:57:00.000-08:00

Most media commentary on General Motors and the Big amounts to one endless smackdown. But yesterday and today the New York Times offered quite different takes on the ailing domestic automakers. First, there was the profile of GM Vice Chairman Robert Lutz. My favorite quote from the tart-tongued Lutz:

“My sense of frustration is that all of this is hopelessly out of date,” he said. “Much of what I read and hear is reflective of the criticism that would have been legitimate of General Motors in the 1980s, but not today.”

The other piece is an admirable deconstruction of that frequently quoted "$73 an hour" that Big 3 production workers are supposed to make -- way over the $45 hourly salary that Toyota, Honda and other international automakers pay to their American workers. The biggest reason for the difference is the $15 share of the Big 3 hourly wage that covers pension payments to retirees. The internationals don't have to add that number to the wage costs of their workers because they don't have -- yet -- many thousands of retirees.

The bad news about newspapers

2008-12-08T04:36:00.000-08:00

Bad news about newspapers just keeps coming. Tribune Co., owner of the Chicago Tribune and Los Angeles Times, among other nameplates, has filed for bankruptcy, McClatchy is reportedly trying to sell its prestigious (19 Pulitzers) Miami Herald and Scripps Howard is virtually begging for a buyer of its 150-year-old Rocky Mountain News in Denver.

Penny stocks now include some major newspaper companies: Journal Register, whose holdings include 22 dailies, among them the New Haven Register, sells for 6/10 of 1 cent a share, down more than 99 percent from its price two years ago. GateHouse Media, which owns eight dailies and more than 500 community publications, sells for 8 cents a share, also down more than 99 percent from its price two years ago.

Companies with the most prestigious nameplates have also been sucked into the downward swirl. The New York Times Co.'s share price has fallen from the mid-$20s two years ago to the mid-$7s, and the Washington Post Co., from the $700s to the $400s.

The recession has accelerated these dismal trends, but the bigger and longer-term problem is the migration of print readers to the Internet. Newspapers have responded by developing websites, but in a ham-handed way. Basically, the sites are simply electronic versions of the print products, with a few webby bells and whistles. Newspapers are mostly clueless in building websites that are interactive, socially sticky communities.

Here's what a sampling of dailies in some of the biggest markets offer potential online audiences in the millions: Detroit Free Press, Atlanta Constitution, San Diego Union-Tribune. Is it any wonder that newspaper web traffic, overall, shows such weak growth, compared to non-newspaper news sites?

An important exception is the New York Times, whose website attracts 20 million unique visitors monthly -- 20 times its print circulation. But even the Times site doesn't really exploit the potential of its huge, demographically attractive audience. If it did so, I argue in this article on Online Journalism Review, it might generate millions of dollars that would offset the double-digit percentage losses in advertising in the Times print version.

The Times' 20 million unique visitors are a community waiting to be formed, but the Times has to create some social networking opportunities for that to happen. Other newspapers, big and small, could create their own communities. Look at the success of Facebook and other networking sites. They are filling a vacuum while newspapers stumble about trying to convert their print products to pixels.

Very bad news -- and there are few signs it'll get better.

"Meet the Press" gets a new moderator, but it's still stuck with its 60-year-old format

2008-12-07T14:23:00.000-08:00

The new moderator of "Meet the Press" -- the successor to the late and venerated Tim Russert -- is David Gregory. Gregory is articulate, well informed, convivial and probing. When he feels he's being spun, he can be waspish. Early on, President Bush gave him the White House Press Room nickname "Stretch," in recognition of his 6-foot-5 height. But after what Bush seemed to think was one too many assaultive questions, he cut the NBC correspondent down to size with the new nickname "Little Stretch."

Given all his qualities, Gregory would seem to be destined to be a successful successor to Russert. But is that what's desirable? Astonishingly, "Meet the Press" has changed very little in its 60 years. The format is (usually) a top government official being grilled by the moderator. Russert pumped some new life into the creaky format by displaying sometimes embarrassing and even contradictory quotes by the guest (in block letters or even video), and then, prosecutorial style, asking the quotee to explain.

Transitional "Meet the Press" host Tom Brokaw did just that Sunday morning with President-elect Barack Obama. But Obama knows how to cool down the hot seat. Brokaw tried to get Obama to say something for the record about whether he supported a "pre-packaged bankruptcy" as a condition for federal loans to General Motors, Ford and Chrysler. Obama, shrewdly, refused to step into a trap that would launch a flurry of stories that would force him into defensive explanations over several days that undermined his President-elect maneuverability. When Brokaw persisted, Obama just kept moving the issue to other areas of discussion.

I don't see how Gregory will be able to extract much more from his subjects. He is, of course, younger (38), hungrier and more energetic than Brokaw (who, in his 68th year, would prefer to be fishing in Montana) and, as he's shown at Bush's White House press conferences, can throw some sharp darts when he thinks he's being spun. But Obama and his communications-savvy team will be ready for the darts. Other potential "MTP" guests, Democratic or Republican, also have learned how to cope with the "gotcha"-tuned format.

"Meet the Press Executive Producer Betsy Fischer should use the transition from Russert to Gregory to take the program to a whole new level that reflects the radical changes that have come to how the media and the public relate in a world where the consumers of news can be producers as well. "Meet the Press" is, to be blunt, out of date with its 60-year-old format. One obvious post-Russert change it could make would be to display not only the sometimes embarrassing or contradictory quotes of the interviewee, but comments by "MTP" viewers, who would be invited to contribute their thoughts as the program is being broadcast live Sunday morning. Those on-the-fly comments would give Gregory a rationale to be persistent when his subject tries to change the subject -- as Obama did, and successfully so, with Brokaw Sunday.

Uinterview -- whose subject is the entertainment world -- is one example of how to turn passive audiences into active, and productive, participants -- no green room required.

Maybe "Meet the Press" needs a new name -- "Meet the Press & the Public."

If the auto Big 3 is a bad business model, which industries are better?

2008-12-04T13:21:00.000-08:00

The Big 3 automakers don't deserve federal loans, say critics, because they have lousy production, sales and financial records and their restructuring promises are too little too late. So which other U.S. industry has a better business model, and can prove it by its composite stock performance or at least its last quarterly and yearly results ?

Banks?

Investment companies?

Mortgage companies?

Real estate investment trusts?

Hedge funds?

Retailers?

Electronics?

Internet?

Chemicals?

Trucking?

Restaurants?

Newspapers?

Airlines?

Health care?

If you want to see how well (i.e. badly) any of these industries are performing, check out this chart.

Which of the most financially hurt companies in these industries have presented detailed restructuring plans that include their CEO's reducing their salaries to $1 per year until the firms' financial situations are turned around, as the Big 3 chiefs have pledged to do? If any companies from these industries have done so, I missed it.

If Congress turns thumbs down and forces the Big 3 into bankruptcy, that decision will create an economic cataclysm more severe than any of the worst recession scenarios that have been spread before us like upside down Tarot cards.

Astonishingly, newspapers and the rest of the media -- among the worst industry performers -- are clamoring loudest to gangplank the Big 3 into bankruptcy.

I hope they're spared what they wish on the Big 3.

Big 3's restructuring is a road map to saving jobs and making them green

2008-12-03T07:54:00.000-08:00

The blather about "pre-packaged bankruptcy" for General Motors and possibly Ford and Chrysler continues to echo in media reports, but is fading fast as the automakers present their restructuring plans as a precondition to federal loans.

Bankruptcy, however it would be tied up with ribbons, would ensured the death -- immediate or within a few years -- of that considerable part of the auto industry owned by U.S. companies. The auto Big 3 is often called "Detroit," but nearly half of the companies' domestic jobs -- 112,000 -- aren't in Detroit or Michigan. They're in Ohio, Indiana, Wisconsin, California and other states. Then there are all the other related jobs -- auto parts, sales, etc. -- that bankruptcy would also wipe out.

Take a look at the restructuring plans presented to Congress by GM, Ford and Chrysler. They all agree that even under the worst production scenario, each company can return to profitability over the next four years -- and pay back the $34 billion total in loans they're seeking.

They companies detail soon-to-be-realized savings from their historic 2007 labor contracts with the United Auto Workers, and other recent and future cost cutting that will, finally, let them produce all their vehicles -- including money-losing small ones -- at a profit, and compete with international companies whose plants are located in non-union states.

From the GM plan:

"General Motors’ total cost per hour for new hires can now be as low as $25, growing to $35 over time, significantly below the average fully-loaded labor cost for Toyota, which public sources indicate is between $45 and $50 per hour."

With all its restructuring, the Big 3 won't ever be as big as they used to be, but will still be the power train of U.S. industry, and, with the billions they plan to invest in advanced technology, make a big contribution to the necessary greening of American jobs.

Obama and Pakistan: A die waiting to be cast

2008-12-02T04:43:00.000-08:00

Will President-elect Obama's "new beginning" mean a new U.S. war -- in Pakistan's terrorist havens bordering Afghanistan?

Presenting his "national security" team Monday, Obama was circumspect:

"We're going to have to bring the full force of our power -- not only military but also diplomatic, economic and political -- to deal with those threats. Not only to keep America safe but also to ensure that peace and prosperity continue around the world."

But early in his race for the Presidency, on Aug. 1, 2007, he was very precise about what he would do as Supreme Commander:

"I understand that President Musharraf has his own challenges, but let me make this clear. There are terrorists holed up in those mountains [of mostly lawless tribal areas in northwestern Pakistan] who murdered 3,000 Americans. They are plotting to strike again. It was a terrible mistake to fail to act when we had a chance to take out an al Qaeda leadership meeting in 2005. If we have actionable intelligence about high-value terrorist targets and President Musharraf won't act, we will."

Pakistan's then foreign minister in the since-resigned Musharaff government, Khusheed Kasuri, assailed Obama's "very irresponsible statement," and Pakistani protests against the candidate's remarks included the very public burning of a U.S. flag in Karachi.

The new Pakistan government -- headed by Asif Ali Zardari -- is just as opposed to U.S. military action in the tribal areas. The Pakistani ambassador to the U.S., Husain Haqqani,
said in September at a presentation at the Carnegie Endowment for International Peace in Washington:

"Pakistan will not allow foreign troops to conduct operations on Pakistani soil. Never."

Haqqani cannot be stereotyped as a super-nationalist or creature of Pakistan's military. A journalist as well as diplomat, he has a inside-out understanding of U.S. interests from having been a visiting scholar at the Carnegie Endowment, adjunct professor at the School of Advanced International Studies at Johns Hopkins University and a professor at Boston University.

At the Carnegie event, Haqqani elaborated on why Pakistan was unalterably opposed to unilateral U.S. military action in his country:

"...if you go and just conduct the operation like this latest one in which you don’t get any identifiable target, then all you do is enrage people and create ill will. And that is not what you need if you are going to have a holistic approach to fighting terrorism. You need the people to support those who fight terrorism rather than those who are on the side of the terrorists."

Haqqani maintains that contrary to most perceptions in the U.S. media, Pakistan's military is making gains in those tribal areas that have been terrorist havens. He says the U.S. must be patient and give Pakistan time to gain control in the northwest, and to complete the exit of the military from politics.

But will the Obama administration be heedful? Frustrated by its inability to subdue the Taliban rebels in the Afghanistan war, the U.S. is, inch by inch, moving the battle to Pakistan's northwest, where rebels and terrorists hide and incubate. Based on his public statements, Obama appears ready to make even bolder incursions -- to protect the U.S. and its vital interests.

If Obama indeed pursues this interventionist course, what will happen to the nation of Pakistan? Will the military, which had controlled the government for more than a decade, reverse its decision to withdraw from politics -- signaled by the resignation of Musharaff in early 2008? Will Islamic militants in an already fragile nation state manage to seize control or at least be a partner in a coalition government?

In October, during the U.S. presidential campaign, President Zardari gave high government awards to Obama's VP running mate, Joseph Biden, and Republican Sen. Richard Lugar for their legislation to give Pakistan $7.5 billion in non-military aid over five years. The awards seemed to indicate at least a tacit acceptance of the bill's language regarding U.S. military aid to Pakistan -- that it would not be given unless the U.S. secretary of state certified that Pakistani security forces "are making concerted efforts to prevent al Qaeda and associated terrorists groups from operating in the territory of Pakistan."

The Biden-Lugar bill will be taken up by the House and Senate when the new Congress convenes in January. If it passes, will Obama -- who has made it clear that he will be the last word on setting U.S. foreign policy -- give it a chance to succeed? Or will he decide to expand the Afghanistan war to northwest Pakistan?

Depending on which way he goes, Pakistan could be his Iraq.

Mumbai massacre shows need for global anti-terror intelligence

2008-11-28T13:17:00.000-08:00

The terrorist siege of Mumbai was frighteningly successful. More than two days after it began, two of the estimated 10 attackers were still holding out against all the forces that India threw at them. The message to terrorists anywhere is that with some money, careful planning and, of course, a willingness to fight unto death they can shake an entire major city to its foundations.

Mumbai will recover, but how after how long and how diminished? What will happen to foreign investment in rapidly industrializing India? To India-Pakistan relations? Which city and country will be the next targets of emboldened terrorists?

The answers to those questions may be more rueful than we even imagine -- if nations everywhere don't adopt a common strategy, reinforced by a reliable international web of anti-terror intelligence. The planned visit of a top rep of Pakistan's formidable ISI intelligence service to India is a reassuring initiative between the two often-feuding South Asian countries. But more, much more, will have to happen to prevent more Mumbais.

If the attackers were not part of Al Queada, that is even more terrifying. It would mean that massive, multiple-target offensives are within the reach of groups that may have only a fraction of the resources. That's why all potentially targeted nations must develop coordinated global anti-terror intelligence -- geared to detect not only Al Queada cells, but also smaller groups that may be exist in only one country. Until that happens, terrorist groups anywhere and of any size and mission can confidently plan the next Mumbai.

Obama and his 'centrist' economic advisers

2008-11-25T07:35:00.000-08:00

Obama's newly assembled economic team is described as "centrists" who have a history of emphasizing balanced budgets over federal stimulus spending.

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.

Citi's reward for reckless pursuit of profits: $306B guarantees plus $20B up front

2008-11-24T13:34:00.000-08:00

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.

Saving Detroit: There's a better way than bankruptcy

2008-11-22T11:15:00.001-08:00

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.

Joe Lieberman's performance as the cat who ate the canary: Gulp

2008-11-20T05:42:00.000-08:00

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.

For all its blunders, Detroit's Big 3 is a big part of the American family

2008-11-20T04:38:00.000-08:00

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 coupe
You dont know what I got
(my little deuce coupe)
(you dont know what I got)

Sure, 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.

Does big-hearted America want to kiss off Detroit? I don't think so.

Should Obama emulate Lincoln or FDR? It's irrelevant with 'democracy 2.0'

2008-11-19T13:28:00.000-08:00

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."

Myths about Detroit get a lot of mileage

2008-11-17T07:27:00.000-08:00

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?

Why Clinton is Obama's best choice for Secretary of State

2008-11-14T14:22:00.000-08:00

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.

More on GM and bankruptcy

2008-11-14T05:40:00.000-08:00

Jonathan Cohn's "Panic in Detroit" piece in the New Republic is a good explainer on why GM should be saved. Cohn tells why well-intentioned Chapter 11 reorganization could send the automaker into no-exit Chapter 7 liquidation. With reduced production costs from recent two-tier labor agreements, GM will save almost $3,000 per vehicle. But those savings won't materialize until 2010 -- which is why the company needs a bridge loan of $25 billion guaranteed by the U.S.

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.

If GM is neutered, U.S. won't be a player in meeting surging global demand for autos

2008-11-13T13:09:00.000-08:00

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.

Grim economic forecast reinforces need for "big bang" response from Obama

2008-11-13T07:03:00.000-08:00

"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.

Are Republicans "Looking Towards the Future" or the past?

2008-11-11T07:12:00.000-08:00

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"?

Palin is center of GOP gravity, but demographics pull in opposite direction

2008-11-09T07:04:00.000-08:00

Almost a week after their party was soundly defeated in the presidential and congressional elections, the Republican faithful is in deep denial.

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?

How soon should Obama start trying to emulate FDR?

2008-11-08T13:12:00.000-08:00

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?

Voter turnout: A split decision

2008-11-07T23:28:00.000-08:00

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.

What's good for GM is good for the country, and vice versa (pace Charlie Wilson)

2008-11-06T13:45:00.000-08:00

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.

* * *

Postscript: For what "Engine Charlie" Wilson, the president of GM who became Dwight Eisenhower's secretary of defense, was famously misquoted saying at his confirmation hearing, check out his obituary from Time magazine.

Tuesday's turnout sets record, with more than 133M casting ballots

2008-11-06T06:18:00.000-08:00

The drive to register voters, particularly young ones, apparently paid off. Tuesday's turnout was 133,275,000, smashing the record of 122 million voters set in 2004. Tuesday's turnout percentage of eligible voters -- 62.6% -- was the highest since the election of 1964 -- 62.8%.

Obama, JFK, the Chicago riots -- and the two Richard Daleys

2008-11-05T13:51:00.000-08:00

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.

Obama's election and the swing of history's hinge

2008-11-05T07:31:00.000-08:00

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.

Wall Street's "raging bull" calls for tough reform of outdated global financial system

2008-11-04T05:28:00.000-08:00

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.

The final hours of the McCain-Obama campaign: Closing thoughts

2008-11-03T13:24:00.000-08:00

Some last pre-election thoughts:

* 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.

Election Day question: Will mathematical odds prevail over volatile feelings?

2008-11-03T05:49:00.000-08:00

The polls point toward an Obama victory. But what if the polls are wrong, asks Slate's John Dickerson. The most famous wrong poll, of course, was Gallup's in 1948, which said Dewey would defeat Truman. But Gallup's last tracking in the 1948 race was more than a week before the election, after which Truman gained a lot of ground and, of course, ended up winning.

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.

Some Republicans think about erecting a bigger tent, but...

2008-10-31T07:20:00.000-07:00

If Republicans get drubbed in the election, which way will they go? Will they keep trying to energize their base -- or will they return to the "big tent" approach that prevailed in the Reagan years? In a new piece, Kimberley Strassel, the Wall Street Journal's Potomac Watch columnist, argues for the big tent -- or at least a bigger tent.

Some other Republican thinkers -- like David Frum and David Brooks -- are saying the same thing, but the passionate believers who rally the base aren't yielding. They are already preparing to hoist SARAH PALIN IN 2001 banners.

Ideologically, the GOP is going through the same agonies that gripped the Democrats after their New Deal-Fair Deal-Great Society big-government programs didn't work in an America whose aspirations were increasingly middle class and geography increasingly suburban.

"Joe the Plumber" incantations will rouse the Republican base, but they don't address problems like how to dig out from a financial crisis that circles the globe, re-energize the U.S. economy and create more winners than losers (like auto workers) and enact an immigration law that balances strictness with openness. That's just for starters.

Sadly, John McCain came to the presidential race with a political history that suggested he would enlarge the GOP tent. But he shaped his campaign to appeal to the base. Why such a political maverick would have made such a conventional move is puzzling. As Washington Post columnist Anne Applebaum said in her "Why McCain Lost Me" piece earlier this week, McCain is no die-cast base politico. Maybe he went with the base because he felt he had to keep proving himself to the diehards who were cool toward him -- until he chose Palin.

If the election goes as the polls are forecasting, the Republicans will not only have to decide which direction to go in -- hunker in with the base or build a bigger tent -- but who will lead them in the struggle to a solution. If Palin is leading the base, who will be her opposite?

Obama talks to the "undecideds"; can McCain match him?

2008-10-30T07:03:00.000-07:00

The Obama 30-minute infomercial was a shrewdly spent $4 million worth of campaign money. Its primary target was those "undecideds" who probably amount to less than 10% of the electorate, but because of the tightening race, may truly decide who will be the next President.

The main vibe I picked up from the show was that Obama is a guy who doesn't get rattled easily, if at all, even when the subject is what he calls America's biggest economic challenge since the Great Depression. With many Americans feeling the pangs of panic, those who tuned in or watched replays had to be struck to the calmness and steadiness that Obama projected.

With less than five days of electioneering left, the McCain campaign will have to act fast to make a counter-appeal to the undecideds. It'll have to be better than the "socialism" label that GOP ads have tried to pin on Obama. It should be woven around McCain -- why this war hero and courageous senator is the best person to be President in these dark times. It's a powerful message, but it may be too late to deliver it.

In polls, Obama's blue line keeps going north, and McCain's red line south

2008-10-28T07:51:00.000-07:00

It's easy to get carried away by polls when they seem to back up what you wish for. Still, I was struck by the uniform pattern of state polls trending for Obama, as compiled by Real Clear Politics. In 12 "battleground" states, polling charts show a consistent pattern -- Obama's blue line rising and McCain's red line falling. Sometimes the blue line flattens out, but since September, in all 12 states -- including GOP strongholds like North Carolina and Missouri -- it never yields to the red line. Even in Indiana, which Bush won by more than 20 percentage points in 2000 and 2004, the blue line is now on top, albeit slightly (46.8% to 46.5%).

To find battleground states that are still polling for Bush, you have to go to the West or Deep South, but in some of those -- Montana and Georgia in particular -- Obama's blue line grows stronger.

GOP bloggers like Hugh Hewitt cherry-pick the rare national poll that shows the presidential race tighter than the composite of state polls, which typically are based on more respondents. There are also the warnings, like this one aimed at the mainstream news media, that voters might "pull a Truman" on Nov. 4 and leave the polls looking like confetti on the convention floor the morning after.

There is still a week left in the campaign, and McCain and the GOP could unleash a multi-megaton accusation at Obama aimed at suddenly reversing the steady upward path of that blue line. After Bill Ayers and "spreading the wealth around," what might that be?

With Stevens now a convicted felon, what will reformer Palin do if he won't step aside?

2008-10-27T15:02:00.001-07:00

So Ted Stevens, the longest-serving member of the U.S. Senate, is now a convicted felon. The Republicans are being ground down by an amazing string of bad luck. Stevens can appeal and keep his case going for several years, during which he could probably continue to serve in the Senate, assuming he wins on Nov. 4. While the Democrats are hungry for as big a Senate majority as they can get, they might prefer to see Stevens choosing to hold on by his finger nails -- a desperate act that could turn off undecided voters everywhere, not just in Alaska, and move them toward Obama and Democratic congressional candidates on Nov. 4.

Sarah Palin is in yet another predicament in her short national political life. If Stevens decides to keep running for office despite his conviction, will she -- the acclaimed reformer who took on her own party in Alaska -- oppose that decision? If she says no to Stevens, she's got a good chance of turning his scandal into a net plus for her party --and for her and her running mate John McCain's chances in the White House race.

Interesting!

A Republican warns Republicans, but is anyone listening?

2008-10-25T08:39:00.001-07:00

How McCain's post-convention campaign strategy -- to re-energize the deeply conservative GOP base -- is wrecking not only his chances but those of many incumbent Republican members of Congress is mournfully laid out in this Washington Post op-ed by David Frum. Author of the recent book "Comeback: Conservatism That Can Win Again," Frum is resigned to the Democrats capturing the White House, but he thinks it's not too late for his party to hold on to enough of its Senate seats so it can thwart what it considers the worst of Democratic tax-and-spend legislation.

Even Democrats might see the wisdom in their party not controlling Pennsylvania Avenue from one end to the other. But with about 10 days remaining in the campaign, will McCain and GOP strategists step back from their suicidal march that could cost them what should be secure Senate seats in North Carolina, Minnesota and Oregon? It's possible Republicans could even lose their contested seat in bright red Georgia.

Talking about what he'd do if he lost, McCain said no problem, he'd just go back to Arizona and be a senator again. But if he and his party keeps pushing the campaign to the base-pleasing right, some of his colleagues in the Senate may not be able to do the same.

Is Palin the next Reagan?

2008-10-22T13:56:00.000-07:00

If Obama wins -- and I join the big and increasing crowd of guessers who thinks he will -- what fortune awaits Sarah Palin? Her future is very bright, according to this blog post in the New Republic. I nod at all the points that are made. Palin is a political animal, she is a quick study and she has that je ne c'est quoi quality. But is she a 21st century Reagan?

I say no -- at this point. Palin, for all her formal gifts, remains too aligned to, too imprisonend by, her GOP base. Reagan was no one's prisoner. He and his LA-based advisers knew where they wanted to take the Republican Party. It was not with a Goldwater road map.

In her campaign speeches, Palin is talking the standard line of the GOP base -- when she should be at least giving some hints of where she would take the party post-2008 (after the Obama victory).

A Rovian culture war won't make it. Too many people -- too many people who are supposed to be in the vanguard of the GOP faithful, like the socially conservative working class -- are being so ground down by the economy.

Look at Joe the (Non-) Plumber. McCain and the GOP tried to make him into a hero fighting against Democratic tax policies. Joe says Obama's tax policies would penalize him if he carries out his dream of buying the plumbing firm where he works and makes more than $250,000 a year. But in metro Toledo, Ohio, where Joe lives, the central issue is not how to make $250,000+ a year and avoid taxes. It's people already unemployed, the under-employed or the likely to be without a job soon as the auto industry continues to downsize. Most working families make under $40,000 a year. While Joe is talking economic fantasy -- making the kind of money that only 2% of Americans make -- thousands of Toledo area residents, even those who are employed, are struggling to buy groceries, pay for health care and cope with foreclosure.

Palin addresses none of these issues in her speeches or statements. As the economy goes deeper into recession, Toledo area workers and their families will suffer even more. Joe-the-(non)- Plumber tropes, even if they're delivered by an accomplished public speaker like Paylin, will not increase their salaries or find them jobs.

'Joe the plumber is me': An encounter in a looking-glass world

2008-10-20T04:38:00.000-07:00

Byron York, a National Review writer who can't be easily pigeon-holed into any right-wing media box, captured a revealing "Joe the Plumber" encounter at a recent McCain rally in Prince William County, Virginia.

York provides the backdrop:

"In recent days, the Joe the Plumber phenomenon has taken on a deeper meaning for McCain’s audiences, for two reasons. First, he is a symbol of their belief that Barack Obama is going to raise their taxes, regardless of what Obama says about hitting up only those taxpayers who make more than $250,000 a year. They know Wurzelbacher doesn’t make that much, and they know they don’t make that much. And they’re not suspicious because they believe that someday they will make $250,000, and thus face higher taxes. No, they just don’t believe Obama right now. If he’s elected, they say, he’ll eventually come looking for taxpayers who make well below a quarter-million dollars, and that will include them."

The focus of York's piece is documented immigrant Tito Munoz, a native of Colombia, who's "disgusted" with the media and its coverage of Joe the Plumber:

“Why the hell are you going after Joe the Plumber? Joe the Plumber has an idea. He has a future. He wants to be something else. Why is that wrong? Everything is possible in America. I made it. Joe the Plumber could make it even better than me….I was born in Colombia, but I was made in the U.S.A.”

The reporter who tries to answer Munoz -- Mother Jones magazine's David Corn, who has done highly regarded investigative digging into "Plamegate" and other Bush administration misdeeds -- is portrayed as being no match for Munoz and his indictment of the media.

"Joe the Plumber is me!" shouts Munoz at Corn. Is he? Munoz thrusts all his documentation, including U.S. passport, in Corn's face. But let's say Munoz was from Lucas County, Ohio, and that he was a plumber -- a licensed one. Then, in the economic downturn, there are fewer plumbing jobs, and Munoz loses work to outfits like Joe's firm because Joe, being unlicensed, can charge less for a job. Would Munoz then be shouting "Joe the Plumber is me!"? Who would he be madder at -- unlicensed plumbers who can cut into his earnings or a President Barack Obama whose tax policies, Munoz fears, with no evidence, may some day clip more dollars from his paycheck?

Paulson's bailout team should start culling insolvent banks

2008-10-19T15:20:00.000-07:00

This is an interesting interview in the WSJ with a monetary expert who who is not only a scholar of the earlier big financial crash -- the Great Depression --but was around when it happened. She is Anna Schwartz, who co-authored, with Milton Friedman, "A Monetary History of the United States" in 1963. Since 1941, Ms. Schwartz has been on the staff of the National Bureau of Economic Research in New York City. At age 92, she was a teenager when Wall Street crashed in 1929.

Ms. Schwartz fears Treasury Secretary Paulson and his team will use federal bailout money to try to make weak banks solvent. I hope her fears are misplaced. As she emphasizes, the problem is not liquidity -- the Federal Reserve and Treasury have flooded the banking system with liquidity -- but solvency. Solvency is the ability of a financial institution to withstand a rush against its deposits and other funds. If an institution is leveraged, say, 40 to 1, it has little chance of surviving panic withdrawals, regardless of injections of bailout cash it may receive.

It shouldn't take Paulson and his team that much time to size up an institution's ability to stay solvent. Experts have pointed out that Fannie Mae has all the tools that are needed to calculate the value of so-called "toxic" securities and weigh them on balance sheets. Those institutions that are over-leveraged should not get any bailout money. There are 5,250 banks and saving banks insured by the FDIC, more than enough to survive a solvency evaluation and provide adequate credit for personal and business customers.

Let the culling begin.

Would you want an un-licensed non-plumber fixing your pipes?

2008-10-18T07:01:00.000-07:00

It's understandable that conservative bloggers would defend Joe the Non-Plumber. But Hugh Hewitt's Townhall.com and Michelle Malkin are taking their case to ridiculous extremes. This is Bill Dyer aka Beldar on Townhall: "Why would Barack Obama think that someone running a successful small plumbing business might not be able to make as much as the $273k salary his wife made as an administrator for the University of Chicago Hospitals?" One obvious reason is that Michelle Obama prepared herself for such a job by earning undergraduate and law degrees. Joe Wurzelbacher, on the other hand, didn't complete the apprentice plumber's course he needs to earn the basic license that he needs to practice the craft in the State of Ohio. Wurzelbacher says he doesn't need a license because he works for a licensed plumber and does only residential work -- a claim that the plumbers' union and Lucas County, Ohio, authorities dispute. But in any case, would a homeowner be comfortable knowing that the guy fixing his leaking water pipes or hot water heater wasn't even a licensed apprentice, much less a journeyman? If Wurzelbacher can't complete the basic apprentice course, how can he be serious about buying the shop for which he works -- never mind how, with his $40,000 salary (according to court records), he'd be able to get even a government-supported SBA loan to buy and build a plumbing business that would earn him his goal -- $250,000+ profits.

Wurzelbacher is a great talker, but business-wise, he doesn't seem to know how to take the first step toward realizing his dream. As he himself says, "There's a lot I've got to learn." Instead of pumping him up as a heroic small businessman, why don't Malkin, Hewitt and his other idolaters lay off and let him learn?

http://www.msnbc.msn.com/id/27207215

Joe the Non-Plumber vs. the plight of millions of working-class Americans

2008-10-17T05:57:00.000-07:00

Funny thing about "Joe the Plumber." That's not his name and he isn't a plumber. His first name is Samuel, and because he doesn't have a license, the State of Ohio says he can't call himself a plumber.

Another funny thing: Samuel (Joe) Wurzelbacher, based on his income -- $40,000, according to recent court records -- would receive a bigger tax reduction under Obama than he would under John McCain, who has adopted the Ohioan as his tax-plan hero.

There doesn't appear to be any danger that Joe the Non-Licensed Plumber will have to pay taxes on an income above $250,000 -- the ceiling for Obama's tax breaks. If the plumbing company that he said he was interested in buying delivered that kind of boodle, it would have a price tag of at least $1 million (four times profit). In actuality, the two-man company, which operates out of the garage behind the house of its owner, had sales of $100,000 last year, and a likely income (after expenses) of about $6,000, according to a Wall Street Journal story.

What's frustrating about this story is that for about 24 hours America, and a big chunk of the rest of the world, was obsessing about one man's concern about his taxes going up on an income he didn't and wouldn't have. Meanwhile the tax plight of millions of Ohioans and other Americans who make less than the median income of $30,000 and get 15.3% in FICA scooped off the top of their paychecks goes ignored.

McCain does better, but was it enough?

2008-10-16T05:44:00.000-07:00

McCain had his best debate last night. But after 90 minutes of poking and prodding, he didn't succeed in knocking Obama off his calm and cool perch. He opened by stressing how "angry" Americans are. But as MSNBC commentator Chris Matthews pointed out, Americans, coping with a financial crisis that's still playing out, are more fearful than they're angry.

McCain himself was angry, but with the temperamentally even Obama just a few feet away, the Republican candidate's thrombotic face was an unsettling visual. I think a lot of voters, particularly the undecided, are thinking about the consequences of a 72-year-old man pacing about the Oval Office in a semi-perpetual state of high dudgeon.

McCain did score points by riffing about "Joe the Plumber,"
who, in a campaign encounter with Obama outside of Toledo, Ohio, a few days ago, expressed concern about paying higher taxes under Obama if he bought his employer's business, which "makes $250,0000 to $280,000 a year." Obama's ceiling for his tax decreases to wage earners is $250,000.

But debating what Joe Wurzelbacher would actually pay under the Obama tax plan is fruitless without knowing specifics. Are Wurzelbacher's numbers for the company's net income as a business (subject to 35 percent federal taxes) or for what his personal income would be from the business?

Wurzelbacher says he would expand the plumbing business if he bought it. That would earn him tax credits of $3,000 per each new employee for a maximum of two years under Obama's plan.

Politico.com is now reporting that "Samuel J. Wurzelbacher" has a lien of $1,182.92 for unpaid taxes against him in Lucas County, Ohio, which includes the Toledo area.

Will McCain show he's a 'great man'?

2008-10-15T02:41:00.000-07:00

They may be premature, but the political obituaries for McCain's presidential campaign are starting to appear. Even some conservatives are looking into the abyss. Michael Gerson, the former Bush speechwriter, sees McCain as a "great man" who was "ambushed by history."

But if McCain is a great man, why didn't he shape the history that confronted him? That's what great political leaders -- Lincoln, Roosevelt, Truman, Reagan -- did. McCain, in contrast, seems to have morphed into an impulsive erratic, not always coherent pol in the last stage of his campaign. His choice of Sarah Palin as running mate -- just as the tsunami of the financial crisis was creating its first ominous ripples -- is not just laughable but scary. His "suspension" of his campaign to get back to Washington and on top of the bailout turned into a charade. After initially insisting that the "fundamentals" of the American economy were intact, McCain is now producing a new, major fix on what looks like a daily basis.

His opponent, Obama, has been no model of leadership in the financial crisis, but, as even Republicans are noticing, his calmness is reassuring in the fearful public climate.

The presidential debate tonight may be McCain's last chance to prove he has greatness in him. He's being urged to use the time to "expose" Obama. But that's not greatness, that's just another campaign pit stop -- the last one.

A sign the financial crisis may be receding

2008-10-12T14:47:00.000-07:00

This is very interesting news about those damnable credit default swaps that, we've been told, would make the Great Depression look like the opening act for Global Meltdown 2008.

We'll see as the markets open Monday. My guess is that the overall crisis, bad as it is, will subside, and in a relatively orderly way, this week. Credit is indeed the lubricant for the global economy -- but it is not the economy itself. Consumers continue to consume, and that's not going to stop (apart from the temporary suspension of buying cruises and $150 bottles of perfume). Producers are ready to continue to meet market demands. If producers can't get credit from conventional avenues, they will, driven by demand, find other means. Supply and demand is a more powerful market force than credit, especially in an economy where there's no shortage of capital, like right now.

The problem is that in the current global climate of panic/fear, capital is being hoarded.

We'll see how long trillions of dollars, euros and other currencies remain hoarded when demand and supply predominate. I think not very long.

A bold move for McCain to stop his slide

2008-10-10T13:40:00.001-07:00

How about this McCain "Hail Mary," courtesy of Mickey Kaus:

Tearful Sarah Palin gives press conference to withdraw as VP. Presents herself as the victim of a sexist, elitist media that has drunk the Obama Kool-Aid. Can’t bear to be a distraction any longer, but promises to be back once she’s cleared her name in Alaska.
A shaken and angry McCain accepts her resignation. The base is in flames. The McCain camp seemingly in disarray.
A news cycle later - McCain is back with Romney as his new pick for VP. Announces that Romney’s job will be to work exclusively on the fallout from the financial meltdown. He’s the only man with the CV to get the US out of this mess.

Banks need solvency more than liquidity

2008-10-10T05:57:00.001-07:00

The $700 billion bailout is not calming markets and freeing up credit. What banks and other lending institutions urgently need, more than cleaner balance sheets, are fresh injections of capital. Solvency, not liquidity, is the paramount problem, as many critics of the bailout legislation have pointed out. But the bailout, as economist Nouriel Roubini points out, has language that's sweeping enough to let the U.S. Treasury recapitalize banks as well as buy up the "toxic" securities that helped trigger a financial crisis that's gone global. That's the route Britain has taken. The problem in the U.S. is that $700 billion may not be enough to do the job. It may take something like $1 trillion. But postive results are likely to come faster. There would be fallout, though -- an unknown number of banks would not be strong enough to merit recapitalization, and thereby go under. That could give giant-sized survivors a financial oligopoly when the crisis settles down.

Obama and McCain: 90 minutes of ho-hum

2008-10-07T20:35:00.000-07:00

Obama won the debate, CBS News says its panel of undecided voters concluded -- 40% to 26%, with 35% calling it a draw. If Obama won, I think, it was because he looked more vigorously presidential. Between his POW injuries and plain old age, McCain is not as smooth and agile as a man 25 years younger.

Strangely, McCain didn't take his gloves off -- the pledge his campaign chiefs made Monday. But the result was a debate that, overall, was as boring as it was proper. Moderator Tom Brokaw, unbecomingly officious, several times prevented the candidates from making on-the-fly rebuttals -- until Obama finally used his oversized mike as a kind of club to extract a couple of unscheduled minutes.

Obama started strong, but in the last 30 minutes was like a racehorse who, running a couple of lengths ahead, decides to coast to the finish line. McCain started slowly, but made the most of the last third of the 90-minute town-hall-type session, where undecided voters threw screened questions at the candidates.

The only new thing that came up was McCain's proposal for $300 million in federal aid to homeowners who are losing their property to foreclosure. This is the kind of legislative initiative that McCain should have showed when the financial crisis detonated last month.

'World wreckage,' or not?

2008-10-06T13:47:00.000-07:00

Earlier today, Marketwatch.com splashed the phrase "World Wreckage" in the headline on the the plunge in stock prices. That was when the DJIA was down 700 points and heading further south. But when the bell rang at 4 o'clock, the wreckage was about 370 points. Markets are indeed falling -- but is it "free fall," to use another Marketwatch phrase from the trading day?

These are, as we are constantly reminded, terrible times, and the financial contagion is spreading from Wall Street globally. But scores of countries continue to produce products and services that people want -- I'm not talking about ocean cruises or $150 bottles of perfume. Can that supply and demand be brought to a halt because this investment company or that bank has too much debt (real or not) in relation to its assets?

Fear is a powerful force when owned money is involved. But it is not a force stronger than the engines of production in China or India or Brazil, much less than those in industrialized countries.

The factory workers in Guangzhou, and the worldwide consumers of their products, probably won't be heard as panic selling captures the markets, but the force of those and billions of other transactions will prevail sooner or later -- and I think it will be sooner.

Maybe why McCain-leaning states are now bending toward Obama

2008-10-05T13:44:00.000-07:00

In every battleground state where McCain had an edge, Obama is steadily moving ahead. Florida (with its big 27 Electoral Votes) and North Carolina may be the most dramatic reversals, but there are also Michigan -- from which McCain has decided to pull out -- Ohio and Nevada.

The economy surely is the biggest factor, but in at least two cases -- Florida and Nevada (i.e. Las Vegas, Reno) -- I think likely voters are reacting in particular to the battering that home values have taken in those states. While home prices are down 15-20% nationwide, they're down much more steeply in those two states, where residential real estate activity was hyperactive until a year ago. So millions of homeowners who have not gone into foreclosure or delinquincey are finding their biggest investment is worth less today than it was several years ago. If this trend continues -- as the experts say it will for at least a year -- many homeowners who were not part of the subprime crisis will see their biggest investment zeroed out.

As homeowners in Florida, Nevada and other hyperactive states watch this happen, they will react -- in fact, they are already reacting: The GOP lean-ers among them are migrating to Obama, hoping, in their financial straits, that he and the Democrats will do more for them than de-regulators McCain and the GOP.

People do indeed vote their pocketbook.

Why Wells Fargo resumed its hot pursuit of Wachovia

2008-10-04T13:59:00.000-07:00

I wondered what propelled the Wells Fargo counter-deal to acquire Wachovia Corp., but this Washington Post story explains why. The tax law change described in the story apparently will cost the federal government more than it might have paid in providing a safety net for Citigroup in its earlier move to buy the Charlotte-based banking giant after Wells Fargo seemed to have dropped out of the bidding -- which the Wall Street Journal's story today says wasn't the case, after all.

A risky but necessary debate gambit for McCain

2008-10-04T06:37:00.000-07:00

John MccCain is down to his final option, and it looks as if he'll play it: going after Barack Obama's character. Sarah Palin will not close the gap between McCain and his Democratic opponent. The Sarah Palin Show enthuses the disheartened GOP base, and is wonderful media theater, but it doesn't do much for McCain among the undecideds, who, as they shrink, are choosing Obama more often. McCain's millstone is the economic crisis, which will hang from his neck, and his party's, for the rest of the campaign.

But McCain might still win with an attack on Obama's Achilles' heel -- his character. His attack must be as daring as it is forceful. The place to launch it is the presidential debate Tuesday night. McCain should go through his usual campaign tropes for the first 75 minutes, winning a point here, losing a point there. Then, with maybe 15 minutes to go, he should simply abandon the debate format, and announce that it's time for the candidates -- he and Obama -- to put aside their campaign props and talk to the American people about who they are. That's what happened in the fateful election of 1860, when Lincoln ran against Northern Democrat Douglas, who had defeated him in the senatorial race two years earlier. This time Lincoln was "Honest Abe" and "the Railsplitter" -- nicknames which, for all their placard spin, spoke to character.

Let McCain arbitrarily begin the 75th moment of the debate talking about character, starting with himself. He can and should acknowledge, with mortifying examples, his streaks of tempestuousness and righteousness. Then he can talk about what he and his supporters see as the larger side of his character -- the courage, steadfastness and faith in God, country, comrades and family that sustained him for five and a half years in the Hanoi Hilton. He should also cite -- thankfully, not pridefully -- his willingness to conciliate, which made him a leader in America's rapprochement with Vietnam. Finally he can talk about his maverick spirit that has sometimes earned him enemies within his own party.

Finally he should turn to Obama, and invite him to do the same. If Obama demurs, or moderator Tom Brokaw says, "Let's move on to the next question," McCain should say, no, the American people need to see their presidential candidates put a mirror to their characters. The candidates have given scores, hundreds, of speeches, with pre-packaged sound bites. Just this one time -- with maybe a quarter of all Americans in front of their TV -- let them talk revealingly about their inner core, where campaign managers and speechwriters can't reach.

If Obama choose to do so, fine -- voters can decide who they want to trust running America in such a parlous period. Maybe the young and smart Democrat will, on the fly, provide the most important chapter to his hitherto selective biography. But if he still demurs, and Brokaw still tries to get to the next unimportant debate question, McCain should stop the proceedings in its tracks, and ask his opponent about Jeremiah Wright -- even though, months ago, McCain said any more criticism of the Obama-Wright connection was off-limits. How could it be, McCain should ask, that Obama could sit in the pew of Trinity United Church of Christ for 20 years and not have heard his pastor utter any of his racist rants, his denunciations of the middle class, his repudiation of Martin Luther King Jr.'s message of reconciliation? If Obama couldn't cope with Jeremiah Wright, how could he deal with Vladimir Putin or Mahmoud Ahmadinejad or Hugo Chavez?

There would be a big risk in McCain trying to derail Tuesday night's debate. If he allowed himself to become self-righteous -- as he has too many times during the campaign -- he could end up a big loser. But in this time of major economic crisis and when this country is engaged in three wars (against terror and in Iraq and Aghanistan), Americans might be ready to listen to their presidential candidates talk about the two men behind the political posters.

Postscript: Palin, on a campaign stop Saturday, said Obama, according to a Page One story in the New York Times, "sees America as imperfect enough to pal around with terrorists who targeted their own country." The Times piece was about William Ayers, a founder of the Weatherman group in the 1960s that plotted bombings against the Pentagon, U.S. Capitol and other major targets. Now Ayers is a professor of education at the University of Chicago. The Times piece said Ayers and Obama's "paths have crossed sproadically" since they met at a school reform meeting in 1995, "but the two men do not appear to have been close" since then. It looks as if it would be a stretch to use Ayers as a major reason to question Obama's character. The 20-year Obama-Rev. Wright relationship is a whole other story.

The economic fate that awaits Sarah Palin's future son-in-law

2008-10-03T08:39:00.001-07:00

A high school dropout earns 25 percent less than a graduate ($30,202 vs. $40,112), U.S. Census Bureau numbers show. This is the economic fate that awaits 18-year-old Levi Johnston, who, in several months, will be the father of Bristol Palin's baby. Will Johnston decide to return to high school and get his diploma, so he can be an adequate breadwinner for his soon-to-be family of three? Will Sarah Palin, Bristol's mother, use some of her hockey mom's pit-bull tactics (with or without lipstick) to push Johnston in that direction?

The Sarah Palin Show, Courtesy of Gwen Ifill

2008-10-03T06:23:00.000-07:00

First Hockey Mom Sarah Palin did indeed dominate the "debate" between her and her Democratic opponent Joe Biden. But only because moderator Gwen Ifill let Palin get away with deflecting questions and launching into rehearsed riffs about "greed" on Wall Street and what she'd do about the energy crisis.

Palin offered this revealing view on getting her message out:

"I like being able to answer these tough questions without the filter, even, of the mainstream media kind of telling viewers what they've just heard. I'd rather be able to just speak to the American people like we just did."

But Palin's pre-packaged messages are no improvement over any filtering by the mainstream media. We supposedly got the real deal from her Thursday night, according to these gasps of admiration from Hugh Hewitt and Michelle Malkin. But everything she said, except the "you betcha's," was carefully rehearsed earlier this week in preparation sessions at McCain's home in Sedona, Ariz.

Despite being given complete freedom to say her own thing during the 90-minute evening, Palin didn't quite get the the morning-after verdicts McCain's team was hoping for. A CNN poll had Biden winning 51 to 36.

Why is Wachovia's loan portfolio suddenly less toxic?

2008-10-03T05:31:00.000-07:00

Less than a week ago, Wachovia Corp. was supposedly in such bad shape that it agreed to sell its banking division to Citigroup for $2.16 billion, with the federal government agreeing to financial support if Wachovia's portfolio of bad loans proved more toxic than estimated. Now Wells Fargo is buying all of Wachovia for $15.1 billion -- and with no federal safety net.

Could this new deal mean that the overall banking crisis is not as bad as it's portrayed?

The purchase price is above the $10 billion Wells Fargo offered last weekend before it backed out, reportedly because it was concerned about the particular health of one of Wachovia's mortgage portfolios. So what gives?

Today's news stories about Wells Fargo's change of mind offer no clues. Even the Wall Street Journal, which has been delivering sterling coverage of the financial crisis, was pro forma in its coverage.

Let's see how this interesting story unfolds.

LATER DEVELOPMENT: This WSJ piece provides some new information.

The bailout and the end of "Reaganism": That's not the whole story

2008-10-01T14:48:00.000-07:00

I agree with much of what the Washington Post's very liberal op-ed columnist Harold Meyerson says in his take on the big picture to be drawn from the financial crisis.

This is the end of Reaganism -- to a degree. It's the end of ideologically driven economic theory -- a lot of which came from Arthur Laffer, Reagan's somewhat weird promoter of "supply-side" economics, and some of which came from disciples (acolytes?) of Milton Friedman and his (University of) "Chicago School."

Reagan was much more than his economic theory -- so it's wrong for Democrats (and columnist Meyerson) to use the current financial crisis to try to pull down his reputation and break it into pieces a la the Saddam Hussein statue in Baghdad's Firdous Square in 2003.

The financial markets do need more regulation. But regulation alone is a simplistic answer. Look at how Wachovia was saved from a bank run that very well could have triggered a national, and maybe international, catastrophe. The successful outcome -- Citibank buying most of Wachovia's assets -- was an impressive example of the federal government working with the private sector -- with no evidence of the public regulators being heavy handed. Indeed, the regulators, in this case, were quite savvy and prescient -- and fast moving enough to put together a plan in the early hours of Monday morning (Sept. 29) before the markets opened.

Unfortunately, the Wall Street bailout -- even though it was originally penned by Treasury Secretary Paulson, the former CEO of Goldman Sachs who, pre-financial crisis, sang the praises of deregulation -- is, in its evolving legislative form, way too regulatory. As so many critics, including myself, have said, it's an undesirable "bailout" when what Wall Street and the rest of America need are a "workout." (I latched onto that catch phrase before Republican free-market zealots in the House.)

Was does that mean?

It means that the government injects money into Wall Street, but with these conditions:

First, the Street's financial institutions consider holding on to "toxic" mortgage securities that they believe can become marketable as the real estate regains its health over the next five years.

Second, in the case of securities that are judged to be hopeless, the institutions that hold them will, with federal financial support of their balance sheets, dump them at a salvage price.

Third, the federal government's aid to troubled institutions will be guided by how honestly they seek to meet legitimate credit requests, both private and public.

None of these conditions implies imposition of heavy-handed regulation on Wall Street. We don't need bureaucratic stifling. As Reagan or Friedman -- or, for that matter, John Maynard Keynes, whom liberals revere -- would agree, wealth is created and enlarged by private enterprise. Government should be a vigilant participant in economic activity, but when it tries to play quarterback or coach -- like Paulson & Co. did -- look out.

Of course we can't achieve the desirable outcome without Congress doing more major work on the terribly drafted -- and named -- "bailout." But we can't rely on Capitol Hill's leaders alone. Presidential candidates Obama and McCain need to weigh in -- and not just with platitudinous rhetoric. I've repeatedly argued in this blog for them to do get down to the details. A new Washington Post editorial makes the case more effectively than I ever could.

A further thought: The workout ultimately will have to include not only Wall Street but all of us. We Americans, whichever side or end of Main Street we may live on, have often been spending beyond our means. We got second mortgages to live more largely. The cruise-ship industry has thrived so gaudily mostly, I bet, through major mad money found through second mortgages. We borrowed with gusto against our credit cards. Think about those TV commercials for credit cards -- conferring respectability on living on debt upon debt -- at sometimes 24% interest (which of course is never mentioned in the commercials).

The odds are that Congress will pass the bailout in its essentially bad form. But by early next year, I'm sure, we'll know we need to move ahead to a workout -- by and for all of America. Maybe we should get ready by reaching out our hands to each other, from sea to shining sea.

So just how bad is the financial crisis?

2008-09-30T05:56:00.000-07:00

If the bailout isn't approved soon -- very soon -- look out for a deep economic depression that could last maybe a decade. That's the assessment of the Washington Post's Steven Pearlstein this morning. From left to right on the opinion spectrum, there's the same dire assessment. But is it really that bad?

David Cay Johnston, a former New York Times reporter, says no. Johnston is not just a journalist sounding off. He's an expert on tax and economic policy and a Pulitzer prize-winning investigative reporter with 40 years' experience.

In the linked interview, Johnston says journalists should dig to the core of the financial crisis:

"No one I've seen has asked the Treasury, did you ask every bank to submit to you data on how many illiquid assets you have, what you bought them at and what you value them at now? That might identify the problem is concentrated in a handful of banks."

America won't bail out Wall Street

2008-09-29T11:26:00.000-07:00

The defeat of the bailout in the House means that the authors of this defective, bungled legislation will have to do a lot better. The basic problem is not House Speaker Pelosi's ill-timed accusations against the Republicans, or Minority Leader Boehner not corraling more GOP members -- it's the bailout bill itself.

Americans, whether they're on Main Street or in academia and the think tanks, don't, for the most part, don't want a "bailout" of Wall Street. They want the Street to go through a "workout." They're not emotionally reacting to punish Wall Street. What they want, which is difficult to communicate accurately in the inflamed atmosphere, is a process that will deliver results based not on hysteria but reality, however fugitive reality may be right now. Yes -- inject money into the financial institutions that can cope with their problems if they can buy time till housing prices increase enough to make their most shaky mortgage securities stable. The only alternative for the weakest institutions is for them to go under. In which case they can be bought out, again with government assistance, to the extent that's necessary to protect homeowners.

The current bill, despite the massaging it received in House and Senate negotiations over the past several days, doesn't go this route. It remains essentially what Treasury Secretary Paulson crafted. Not surprisingly, Paulson, the former CEO of Goldman Sachs, came up with a bailout instead of a workout.

A bailout won't make it. Who will show the leadership to come up with a legislative solution that lets Wall Street work out its problems instead of being bailed out?

Obama, McCain, are you listening to America?

A bold move that this time could help McCain

2008-09-28T15:11:00.000-07:00

As Obama opens up bigger leads in national polls, like this 8-point margin in the Gallup Daily Poll -- what will McCain do? He likes to take bold moves -- like naming a popular, contrarian but mostly unknown Alaska governor, Sara Palin, as his running mate, or suspending his campaign to promote congressional enactment of the bailout to free up credit and soothe the markets.

Neither of these moves had a Houdini-like effect on the campaign -- most likely because they weren't carefully thought out (something you could never accuse Houdini of). ln the current circumstances, McCain has no choice but to stay bold, but with more tactical care. The financial crisis has benefited Obama, even though the Democratic candidate isn't doing much to capitalize on his gift. As the bailout compromise legislation heads toward a vote, McCain should go all out to point out what he thinks are its defects. If he believes the compromise still rewards Wall Street at the expense of Main Street, he should say so. And, on Wednesday -- when the Senate vote is scheduled -- he should be in the well of the chamber, calmly but firmly spelling out his concerns and objections, even if he ultimately votes aye.

In truth, the bailout, despite the massaging that the legislation has produced, is flawed, perhaps fatally. It would not be reckless or "political" for McCain to question the current language. "Bailout" is the wrong solution to the crisis. What's needed is a workout, as I argued last Tuesday. McCain should go after this core weakness of the legislation If he loses in Congress -- which he is more than likely to do -- he may win in the court of public opinion and help his faltering campaign.

Voters are still trying to get the measure of the presidential candidates. By taking a courageous stand on the massive federal forgiveness of Wall Street recklessness, McCain can clearly reveal how tall he stands.

The bailout: Big crisis, small thinking

2008-09-28T14:25:00.000-07:00

As the $700 billion bailout (such a terrible word to sum up the crisis this country is in) gets parsed into legislation, Americans are pausing to wonder not only whether the financial crisis will be fixed, but where are we...as a nation -- as a confident nation that's always been optimistically poised toward the future. Except recently.

Peggy Noonan picks up on that unique but now Xerox shadow of our national characteristic:

"If nothing else, this [crisis] means we must now have our fights over big issues, issues of real consequence that are pertinent to the moment we're in. We shouldn't be fighting and hitting each other over the head over little things, stupid things, needlessly chafing ones."

In retrospect, it is shocking that we didn't use the dark time of 9/11 to light more candles. Properly, we committed ourselves to creating a country that would be safe from terrorists. But we didn't commit ourselves to building an America that would be stronger in other ways. We didn't make a long-term investment in people and physical assets -- the bulwark against any enemy, known or unknown. Instead, Washington invested in deregulation. The result was an army of mediocrities with MBAs getting their green belts as mini-Masters of the Universe on Wall Street. Now most of the Masters, mini and major (excluding those of the hedge funds in Greenwich, Conn., as Tom Wolfe points out), have fallen. But who will succeed them to lead the rebuilding of America?

The bailout -- that terrible, here's-your-crutch word again -- proposes to extricate us from the mess of underwater securities -- but where will it take us? The wheels of credit will be greased again, but where will the credit go, particularly in the sphere of public benefit?

It's amazing to me that most of the participants in the bailout -- Democrat and Republican alike -- don't see this moment as a defining one -- not just for Wall Street, or Main Street, but for America as a nation and people.

Why aren't Obama and McCain shaping the bailout?

2008-09-27T12:56:00.000-07:00

Senate Majority Leader Reid disinvited Obama and McCain to be part of the bailout negotiations. But why? One of them will be the next President, in fewer than four months, and spending much of his time coping with the impact of the bailout.

McCain apparently did insert himself in the counter-negotiations of the Republican minority, but reportedly without taking a clear stand. Obama, while saying the bailout should not reward executives whose companies unload underwater mortgage securities, has not offered any specifics regarding what enabling legislation should or shouldn't include.

But with Treasury Secretary Paulson and his team and congressional leaders so unsure of the consequences of the legislative package they're wrapping up, Obama and McCain should be involved to the point of putting their clear and indelible stamp on the results. If they aren't, if all they do is vote aye or nay in the Senate Sunday night or whenever the legislation goes to vote, the one of them who wins the election will be a damaged President from the day he's inaugurated.

Are we really at the edge of a financial cliff?

2008-09-24T05:18:00.000-07:00

We keep being told how dire the financial situation is. But then Warren Buffett steps up with a $5 billion investment in Goldman Sachs -- a drop in the bucket compared to the proposed $700 billion bailout -- and the markets respond warmly.

Mutual funds and institutional investors are the majority stockholders in U.S. companies. While they are not immune to panicky thinking, their job -- their responsibility -- is to make decisions that will protect their multibillion-dollar investments. A sustained sell-off is not a protection strategy.

Congressional leaders are beginning to communicate that the narrow-based bailout hurriedly concocted by Treasury Secretary Paulson & Co. is a non-starter. But at the same time they should emphasize they're dedicated to crafting a more comprehensive solution to a crisis that's bigger than so-called toxic securities and a potential credit seizure. That solution should include Main Street as well as Wall Street, and provide at least a template for long-term investment in America's human and physical resources.

The crossroads that we're at is not just saving the financial system, but all the pillars of the economy -- infrastructure, education, health care, as well as credit facilities.

If doing this takes longer than a few days -- which it will -- so be it.

We need a 'workout,' not a 'bailout'

2008-09-23T17:11:00.000-07:00

Skepticism about the Paulson bailout is swelling. But what does it mean -- that Congress will go through a limited-hangout of grumbling, and then cave in? We are told that if a drastic bailout doesn't happen soon, the entire global financial system will go kaput. But why does a rescue have to follow the Paulson lose-you-win prescription? Instead of a bailout, why not a workout? Why not bring everybody together -- Wall Street, Main Street and Washington -- to agree to a plan that would achieve the desired results. That's two big challenges: Blunting the panicky run on the financial system that, sooner rather than later, might collapse it, and creating a template for long-term investment in our country's human and physical assets?

The financial situation is bad, but is it a precursor to the total disintegration that occurred in the Great Depression? Back then, stock was owned primarily by wealthy families. There were few mutual funds or institutional investors. In other words, the government could do nothing but jaw-bone that things would get better -- which is what President Hoover did. The stock-owning families, having no recognized community of interest, caved -- sometimes literally out of windows. But today most stock is held by mutual funds and institutional investors. While they are not immune to panicky fears, they could be reasoned with if the pitch came from all the major interests.

Why not create a "trust" consisting of key government players -- including Treasury and the financial and housing oversight agencies -- and Wall Street and Main Street. This trust would structure not a "bailout" but a "workout." A workout would require everyone to tighten his belt for a few years until economic circumstances improved, and the "toxic" loans became healthy ones. The federal government would provide a flow of funds to financial institutions that showed responsibility in trying to solve the crisis -- loan by loan, month by month. If we can't agree that's possible, then we have no faith in capitalism. At that point, why not turn the country over to a Chavez or Castro?

If you want to do a little history on bailouts, go back to the Emperor Hadrian, who, in 118 A.D. forgave a huge amount of taxes owned to the empire's treasury by the big guys. It didn't work. Rome's decline continued. Marcus Aurelius tried another bailout toward the end of that century. Didn't work either. Someone might say, hey, Rome kept going for many years after Hadrian and Marcus Aurelius. But reread Gibbon, and get a renewed feel for the brutish -- hellish -- life in the empire during its last 200-plus years. Do we want to bequeath to our children and their children that kind of life?

Fannie Mae/Freddie Mac and the presidential candidates

2008-09-22T11:05:00.000-07:00

McCain's campaign operations manager, Steve Schmidt, is huffing and puffing about the New York Times piece detailing campaign top guy Rick Davis's $30,000-a-month gig for five years with Fannie Mae and Freddie Mac. "This [the Times] is an organization that is completely, totally 150 percent in the tank for the Democratic candidate," Schmidt said in a conference call to campaign reporters. Davis himself offered this explanation of his role: "I was the public face of an organization that promoted homeownership for a number of years." Sure.

The Times should have included more detail in the story, but it's been pretty well documented in the media that the Fannie Mae-Freddie Mac group that Davis headed up -- Homeownership Alliance -- was basically a front to help the mortgage giants fight off more regulation.

But how about Obama and the two F's? The McCain campaign has tried to draw a solid line between the Democratic presidential candidate and former Fannie Mae CEO Jim Johnson, who headed Obama's VP search team before abruptly resigning after the Wall Street Journal reported he personally received favorable mortgage loan rates while CEO from one of Fannie Mae's biggest customers, Countrywide Financial. Obama has been responding to the McCain attacks by saying he spent no more than "five minutes" meeting with Johnson. But so what? Obama chose Johnson for an important role -- when he should have known, or cared, that this Washington insider helped to set up the Fannie Mae "their way" culture -- detailed in a devastating report by the Office of Federal Housing Enterprise Oversight in 2004 -- that lead to Fannie's undoing.

Presidential candidates and the bailout

2008-09-22T08:09:00.000-07:00

The (maybe fatally) flawed financial bailout is the presidential candidates' chance to show leadership that could make the difference in their even race. I wouldn't count on McCain to pick the bailout apart and propose an alternative. All the reasons why are in this Bloomberg piece. Obama says legislation should not reward the reckless financial players who created the mess, and says the bailout concocted by Paulson & Co. is only a "concept," not a plan. But Obama is yet to say what a real plan should be.

Maybe the biggest Wall Street bailout tale

2008-09-21T15:34:00.000-07:00

This tale is surely the most sensational of the stories about the terrible things that would happen to the global economy if there hadn't been the sudden and dramatic federal move for a Wall Street bailout. You'll notice from the story that the panic sellers would have included money market funds and institutional accounts. But knowing that dumping their holdings would send the Dow Jones down by 20 percent or more, why would those investors, responsible for so many billions of dollars entrusted to their professional care, put a gun to their and their customers' heads?

Poker player Paulson changes the rules

2008-09-21T14:12:00.000-07:00

Forbes is featuring "What We Need to Know About the Bailout Plan," but too many of the answers end in question marks. No one, not even Treasury Secretary Paulson, the chief author of the bailout, can hazard a good guess about the outcome, because the "assets" can't be calculated with any certainty. Paulson says he's playing the hand he was dealt. But he's not, according to poker rules. Called by the dealer (the market), he's clinging to his cards but insisting, "I don't like this hand, so I'm changing the rules." The change of rules is the bailout.

Capitalism has many faults, but it's the best system we have. The bailout is an end run around capitalism. But to where?

Instead of a bailout, why not table-turning workouts?

2008-09-20T12:59:00.000-07:00

Almost everyone, it seems, is drinking the bailout Kool-Aid mixed up by Treasury Secretary Paulson, Federal Reserve Chairman Bernanke & Co. The Bush administration is asking Congress to approve its $700 billion plan to buy up "bad" loans from financial institutions so credit -- the lifeblood of economic growth -- can start flowing again. Or so the bill writers devoutly hope. It looks as if the Democratic-controlled Congress will pass the proposal, or something close to it. But is this quickly produced ad-hoc concoction the way to go?

Yes, say advocates, who argue that such drastic action must be taken to avert an economic depression that likely would be global. But just how "bad" are the written-down loans? Under "mark-to-market rules" of Fair Value Accounting, they're very bad. That's because the assets collateralizing the loans are -- in most cases -- residential real estate. Homes, as everyone knows, have been rapidly declining in many key markets, where most real estate transactions occur. But over the next several years, deflated home values should come back -- at least to the point where many of the "bad" loans to buy them would become tolerably "good" loans. That point of inflection would mean the financial institutions holdings the loans would not have big write-downs weighing their books, and thus not be sinking as defined by accounting rules.

So why not let this market process take place -- with the government being ready to provide targeted cash aid to financial institutions when each of them needed it? The aid would come with the traditional loan "workout" strings that financial institutions impose on business lenders who fall behind on their payments, but have a reasonable chance of regaining their credit-worthiness. In such cases, lenders order failing borrowers to give up all their liquid assets -- including, even, the Rolex watch on their wrists -- and impose severe cost cutting within their companies. Now the tables would be turned, and it would be the financial institutions who would have to go through the workout. Institutions with reckless records of speculative loan churning would get no deal permitting them to stay in business. Their loans would be assumed by the government, and their businesses would be shuttered or sold whole or piece-meal through receiverships. Liquidation would include no golden parachutes for the top executives who created the mess.

The administration bailout is nowhere as discriminating. It bails out every institution, and thus rewards the most reckless with everyone else.

Selective assistance would not require as much money as the bailout plan's $300 billion because the government wouldn't be buying in one fell swoop all the written-down securities. It would also send a strong message to financial institutions -- we will help you work through your problems, but we won't wave them away. Isn't that the message that both lenders and borrowers need to hear?

From Peggy Noonan, a hammock truth about the McCain-Obama race

2008-09-19T13:57:00.000-07:00

I enjoy Peggy Noonan's straight-from-the-hammock, sipping-my-iced-tea political musings in the Wall Street Journal , whether I agree with them or not. I think she got the presidential race exactly right in this column. Which ever side we come down on, we're a lot less than satisfied. Obama amps us his mantra ("Change We Need"), but once you get beyond the eloquence quotient, what's there? McCain, of course, delivered his cringing affirmation of "the fundamental strength" of the U.S. economy in the middle of its down-for-the-count pasting, and then, trigger happily, tries to zap Securities and Exchange Commission Chairman Christoper Cox.

You look at the videos and photos of square-jawed Treasury Secretary Hank Paulson, and, reflexively, want to start banging your fight program against your seat. Except you know, or should know, that that photogenic jaw is an inviting target.

Washington's 'sweeping changes' in financial mess should focus on transparency

2008-09-19T10:38:00.000-07:00

This is the way it's done in the movies -- bam, bam, thank you, ma'am (or, in this case, Uncle Sam). When I hear the words "sweeping plan" from Washington, I am not reassured. The situation is bad, but how much of the bad is structural? The flashing orange light in this WSJ column, "How to Save the Financial System," by William M. Isaac, who was chairman of the Federal Deposit Insurance Corp. in President Reagan's first term, makes me wonder.

Wall Street indeed screwed up, but why should we count on both ends of Pennsylvania Avenue to fix things? What's needed most of all in the financial markets is transparency, not a lot of new rules. Fannie Mae and Freddie Mac hid their dodgy dealings through opaque accounting. On Wall Street, it was the same story, with investment houses and other debt-churning businesses hiding their dodgy stuff in off-balance-sheet instruments like "Structured Investment Vehicles."

Marched to the edge of the gang plank, Wall Street looks to be ready to roll up the shades and let the light come in. If Washington's sweeping changes concentrate on enforcing transparency, that may be sweeping enough.

Stocks Prices Plunge, Political Truth Telling Rises

2008-09-17T13:16:00.001-07:00

The spreading financial crisis is not only reducing the value of hyper-extended balance sheets and stock prices, but also tiresome political rhetoric -- at least wishfully. That's good for the body politic, rudely shaken as it is. When it became clear that Treasury Secretary Hank Paulson's Vegas-inspired poker playing was not succeeding, and all the arrows pointed deeply south, the quack-quackers started talking in language that approximated reality. Of course it's reality -- not bluster or even the most rarefied and skilled guile -- that matters when a poker hand is called, as it has been for Wall Street.

We'll see where this reality check takes us with the closely polled presidential candidates. Both of them are so straitjacked by their parties' cliches on the economy it's not clear how much truth telling we'll see in the last six weeks of the campaign.

Obama, representing the party that's been out for eight years, has an advantage. But as his critics have pointed out, he keeps serving up standard Democratic attack rhetoric. In this new truth telling time, he could connect with voters by saying what he really thinks about the economy, beyond his mantra of the "last eight failed years."

Will he?

McCain and Palin: What He Could Do

2008-09-17T13:16:00.000-07:00

Sarah Palin got rid of the old-boy network in the entrenched Republican Party in Alaska. Maybe McCain should promise his VP candidate will get rid of Secretary Paulson's Treasury Department/Goldman Sachs gang that's running, and maybe ruining, the U.S. economy and a good chunk of the global one.

Palin does say she's "disappointed" by the new bailout of the Paulson gang -- of the big swaps contracts insurer AIG. McCain himself has been in a quack-quack mode on the newest eruptions in the financial crisis, so here's a chance for him to show the electorate how Palin could keep on cleaning up messes.

Advice to Obama in Revlon Super Lustrous

2008-09-11T13:30:00.000-07:00

The Obama campaign remains trapped in its death spiral. The candidate had a chance to neutralize the blowback from his putting-lipstick-on-a-pig rumination, but he blew it. David Letterman gave Obama an exceedingly wide berth Wednesday night, but all he succeeded in doing was digging a slightly deeper rhetorical hole.

In one of his trademark convolutions, Obama dissected the lipstick-on-a-pig line to say that Sarah Palin was the lipstick, and John McCain's economic program was the pig. Ouch. Letterman did a double take, then tried to verbally skate around Obama's tortured comment and rescue him. But Obama wanted to keep digging his hopeless semantic hole.

All Obama had to do from his seat on the enviable Letterman couch -- which has to be worth a couple of hundred thousands of dollars in campaign media buys -- was show a little humor, which is in very short supply in his campaign. He could have, for example, said something like:

"David, I would never compare Sarah Palin, a very attractive woman and very strong candidate, to a pig with lipstick. After all, she's already compared herself to a pit bull with lipstick. Besides, I don't have any lipstick, and I'm pretty sure Michelle wouldn't give me any."

Let's hope that Bill Clinton has given his new pal a few campaigning tips.

Biden Over Schweitzer – A Missed Opportunity?

2008-09-10T06:07:00.000-07:00

When Barack Obama named Joe Biden as his running mate, the decision looked so responsible, so statesmanlike. The Russian invasion of Georgia several weeks earlier had jarred everyone into thinking again about that knottiest of subjects – foreign policy. But we could trust Biden to help untie the knots. He was chairman of the Senate Foreign Relations Committee, and he'd just made a visit to besieged Georgia a week before he was picked. Here was a guy who knew his way around the Caucusus and every other hot spot.

But today, with the Democratic ticket sinking in the polls, how good does Obama's choice look?

Obama propelled himself into being a contender for the Democratic presidential nomination with his fresh and eloquent theme of change. At the Democratic National Convention, he said, in one of his few memorable rhetorical flourishes:

"You understand that in this election, the greatest risk we can take is to try the same old politics with the same old players and expect a different result. You have shown what history teaches us -- that at defining moments like this one, the change we need doesn't come from Washington. Change comes to Washington."

But how does choosing a U.S. senator of 36 years standing help make that happen?

What if Obama's choice had been a Washington outsider? What if it had been, say, Brian Schweitzer, governor of Montana?

Schweitzer did get a little bit of pre-selection buzz, but I'm mystified why he didn't get more play. Democrats love to talk about the need for universal health care and energy independence, but for Schweitzer those issues are not programmatic abstractions but interrelated practicalities. Like in this Q. & A. from Salon magazine:

Q. A lot of people are talking about, if Obama wins, should healthcare come first or energy reform come first?

A. Both. You can't pay for healthcare if we're sending a trillion dollars a year to dictators. Bottom line is, we gotta stop hemorrhaging, and the hemorrhaging is full-flung. Climate change, that is the long-term economic hit to our economy. The short-term economic hit to our economy is the largest transfer of wealth from one economy to another economy. So, create a new energy system in America, and create an energy system that's cleaner and greener and is designed by American engineers and built by American workers. Once we get that right we can afford to invest in healthcare and education.

In front of a microphone, Schweitzer is even more impressive. Watch him at the Democratic National Convention.

A rancher, he charmingly bragged about the Big Sky State: "I may be a little biased, but I think it's the greatest place in the world to raise a family, start and grow a business and build a community."

Even though he was only a warm-up for eagerly awaited Hillary Clinton, Schweitzer grabbed the attention of the convention crowd. Bill Clinton, sitting in the audience, nodded enthusiastically when the governor ad-libbed:

“We need all of you to stand up,” he yelled. “Colorado! Stand up! Florida! Stand up! Pennsylvania! Get off your hind end! In the cheap seats! Stand up! We want to hear you from Denver to Detroit, from Montana to Mississippi, from California to Carolinas.”

When Obama decided on Biden, did he miss an opportunity to choose a running mate who would be his own version of a Sarah Palin-like running mate?

Obama's Hissing Balloon: Don't Blame Palin

2008-09-09T10:46:00.000-07:00

Is it too soon to talk about how Barack Obama lost the election?

I not so sure – not with him down 15 points against John McCain. That’s right, 15 – five points in the Gallup Daily Poll (two days in a row) and the 10-point gift for any Democrat who would have run against a party in charge of the most unpopular administration in modern history.

Some campaign watchers say Sarah Palin did it. But air began seeping out of the Obama balloon months before Palin delivered her deft pinpricks.

It began, actually, last spring, when Obama, who promised he would bring change to Washington, showed he couldn’t bring change to his parish church in Chicago.

Trinity United Pastor Jeremiah Wright’s rants were the perfect opportunity for Obama to actually “do” something rather than talk about it. The Trinity community was, understandably, deeply conflicted about how to balance the social and racial views of their esteemed pastor and equally regarded congregant Obama. But Obama did nothing – except literally walk away from the church where he had worshipped for 20 years.

That cop-out, I think, was the beginning of the end of the Obama phenomenon. If he couldn’t help heal a crisis in his own church community – one that he was a party to creating – how could he change Washington?

More air seeped out of the balloon when the head of Obama’s vice presidential search team, Jim Johnson, had to resign because of his role in the Fannie Mae/mortgage financing mess. (As CEO of Fannie Mae in the late 1990s, Johnson helped set in motion the risky borrow-buy-and-flip culture that lead to the institution’s meltdown. About the same time, he got some favorable mortgage interest rates for his own home purchases from Countrywide Financial Corp.’s CEO Angelo Mozilo, who, as a major customer of Fannie Mae, assembled his "friends of Angelo.") How could Obama turn to such a quintessential Washington deal maker and palm greaser to help him choose his No. 2 broom wielder?

Then came the Democratic National Convention, where Obama could have redeemed himself and re-energized his presidential run by making just one single, significant pledge of change that didn’t come out of his page-worn campaign playbook. He could have, for example, promised to fight for ending payroll taxes for all those who make less than the median income. It would be costly, but the benefits – for the workers and their rusted-out communities – would be greater, as detailed in the 2007 Foreign Affairs article co-written by Matthew J. Slaughter, the Dartmouth/Tuck School of Business professor who earlier served on President Bush’s Council of Economic Advisers. Payroll taxes – they total 15.3% and come right off the top of wages -- are a crushing burden for lower-income workers, and are a barrier to their making life-transforming decisions, like getting more education they need to move up economically. A frontal assault on payroll taxes would have won Obama support where he most needed it in many battleground states and given him sustained media attention. Talk about a game changer. Instead, he offered up the same old, tired programs from his long campaign for the nomination.

Along comes Sarah Palin. Yes, she knocked Obama off stride. But he was already heading down the wrong path to election victory.

For Debt Addicts Fannie Mae and Freddie Mac -- the Big Fix

2008-09-08T18:01:00.000-07:00

If you heard about a drug treatment program that gave heroin addicts a continuing, unlimited supply of the powerful narcotic, insisting only that they be minded by a “conservator,” you would surely say – no way.

But that’s exactly what the Fannie Mae/Freddie Mac federal bailout does. The two housing hermaphrodites will be able – actually be compelled – to continue the reckless financing strategy that has taken them, and much of the global financial system with them, to the edge of calamity.

Oh, goody, we are told, the two “F’s” won’t be able to do any more lobbying – on which they spent $170 million in the past decade – and their new CEOs will take big pay cuts.

But consider this fine print from the agreement (the last graf):

“Each [government-sponsored enterprise’s] retained mortgages and mortgage-backed securities portfolio shall not exceed $850 billon as of Dec. 31, 2009, and shall decline by 10% per year until it reaches $250 billion.”

With the two F’s total liability standing at about $6 trillion – counting mortgages they both own and back – how are they going to shrink that staggering pile of obligations down to $1.7 trillion ($850 billion x 2) in a year-plus?

For at least a couple more years, the real estate market will continue to be pulled downward as the second-wave crisis kicks in – the so-called “Alt-A” loans that were turbo-dispensed in the years leading up to the current mess. These no- or low-interest introductory loans, which are automatically kicking into punishing “resets” that will continue till about 2010, are a financial time bomb. To try to prevent a megaton detonation, the two F’s will have to take over foreclosed Alt-A’s that it backed. As they do that – with seemingly unlimited taxpayer dollars -- how will they manage to reduce their mountainous obligations?

Treasury Secretary Hank Paulson won’t be around to have to answer for the virtually certain failure. In the bailout language he crafted or at least approved, the most time-certain word is “until.” Until when – hell freezes over?

Closed door at The Washington Post

2008-09-08T14:40:00.000-07:00

It's tough to get an op-ed piece published by The Washington Post. The editorial page department gets hundreds weekly, so even if you're No. 3 or 4 in the sorting process, you're likely to be zapped as unceremoniously as submitter No. 150 or 250. I know, because I've had many submissions rejected, probably more than the 25 or so I've had published over the years. So I didn't stamp my feet too loudly when my most recent submission -- a reply to the Aug. 4 op-ed titled "Housing Collapse Ahead?" -- was rejected. But I did ask editorial page editor Fred Hiatt to run an important correction regarding the identity of the published piece's three authors -- Charles W. Calomiris, Stanley D. Longhofer and William Miles. They were identified as academics, when, in fact, all three were also creatures of the real estate industry. I received no reply from Hiatt, or from Deborah Howell, the Post ombudsman, whom I copied. The Post is a great newspaper -- I spent many years working there as a reporter and editor. So why is it permitting itself to be part of such a blatant deception? Contrary to Calomiris & Co. in their op-ed, the real estate crisis is not going to go away -- and housing prices are likely to continue to fall in many key markets -- as almost everybody but the real estate industry acknowledges. The Post is not part of that industry, but by refusing to own up to how its op-ed page was used by three industry creatures, it blemishes its reputation.

Here's my rejected op-ed:

Real Estate Industry Cheerleaders
Find a Home in Groves of Academe

By Tom Grubisich

Why wouldn’t Post op-ed writers Charles W. Calomiris, Stanley D. Longhofer and William Miles be optimistic about where home prices are headed? (“Housing Collapse Ahead?” – Aug. 4, 2008.) All three of them are tied umbilically to the real estate industry – a fact not disclosed in the op-ed.

Calomiris is, as described, Henry Kaufman professor of financial institutions at Columbia University. But he is also board chairman of Greater Atlantic Financial Corp., whose Greater Atlantic Bank in suburban Northern Virginia and Maryland sells, among other mortgage instruments, the infamous “no documentation” loans that helped to trigger the U.S. financial crisis that he and his writing colleagues find overblown. Greater Atlantic Bank advertises its aggressive lending practices on its website.

Greater Atlantic Financial was de-listed from the Nasdaq exchange in 2007 for not maintaining minimum stockholder equity and has lost two thirds of its stock value in the past four years. It is in the process of merging with less-battered Summit Financial Corp. of Moorfield, W.Va.

Calomiris’ op-ed co-author Stanley D. Longhofer is, as described, director of the Center for Real Estate at Wichita State University’s business school, and William Miles is, as described, an associate professor of economics and Barton fellow at Wichita State. But most Post readers may not know that the WSU center is an appendage of the local real estate industry – a fact about which the center, the university and its business school proudly boast on the center’s website: “Leveraging the Center's close ties to the real estate community, the real estate degree programs at WSU also give students the unique opportunity to gain educational, technical, and practical experience by working and interacting with some of the areas best and brightest real estate professionals. This unique blend of education and networking give students the foundation they need to get started in their career, and to propel them to the top of their profession.” Sinclair Lewis’s George Babbitt, the top Realtor of Zenith, couldn’t have said it better.

The center’s “close ties” to the Wichita real estate industry are personified by the industry’s complete domination of the group’s advisory board. There is only one official on the 24-member board who doesn’t work for a real estate company, bank, builder or other part of the industry – Terry Cassady, who is in the Wichita city manager’s office. But what does Cassady do? She’s director of the candidly named Development Assistance Center, whose mission, as described on its website, is: “To improve service to the real estate development industry by streamlining processes and cutting through the red tape of City Hall for developers.”

Calomiris, Longhofer and Miles, like anyone else, should have access to the Post’s op-ed page. Self-interested opinions are not, by definition, evil. Counter-intuitively, they may throw light on a complicated issue that is in danger of being reduced to simplicities that don’t jibe with reality.

The home mortgage crisis is just such an issue. Sometimes confounded by all the swirling “facts” of this crisis, I would love to know everything that’s important to know. But do Calomiris, Longhofer and Miles help us to really understand the crisis?
Unfortunately for millions of financially threatened home owners, desperate stockholders in Fannie Mae, Freddie Mac and other institutions heavily invested in mortgages, and, most significantly, American taxpayers who will pay for a bailout of the real estate industry that has no defined cap, Messrs. Calomiris, Longhofer and Miles are the anxious emperor’s soothsayers.

They argue that the decline in housing prices has been hugely exaggerated. I could serve up a lot of contrary conclusions, from experts. Instead, here are some home-sale metrics from the metro Washington, DC, community of South Riding in eastern Loudoun County. Greater Atlantic Bank has an office there.

The metrics, compiled by real estate agent Mike Murad, whose blog covers activity in the South Riding area:

· Net price of second-quarter sales in 2008: $423,956 – down 15.7 percent compared to 2007.
· Short sales (where the mortgage owner accepts less than is owed) for the same period: 8 – compared to none in 2007.
· Foreclosures: 24 – compared to two in 2007.
I wonder how much comfort home sellers in South Riding were able to find in the op-ed by Calomiris & Co., and how much of it was cold?

The writer is a former reporter and editor at the Washington Post. He is reachable at TomEditor@msn.com.