The Wandering Donkey

How not to lose money in this (or any) economy?

Don't listen to Jim Cramer.

H/T: Andrew Sullivan

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

The fabled sweater

See, now here's my problem with George Will come full bloom, all his own fault mind you. Because I question his use of the data and facts in this column and this column, as I explained here and here, I now cannot take him at face value when he presents other "facts" in his new column in Newsweek.

If I really want to bother rebutting an otherwise fairly standard 'Can't you people see Obama is a socialist' column, I should take this part:

FDR's Washington was awash in confidence about government's ability to skillfully engineer a proper allocation of production within each industry. Supposedly the government's knack for economic planning would soon have the nation regulated back to prosperity. This would happen by, among other things, replacing competition with cartelization, the sweater cartel being, presumably, a paradigm.

And I should, regardless of arguing whether that was exactly FDR's intention, argue about it's contextual use here and now. After all, it's use implies that he thinks that this is where President Obama is going. Does George honestly think Barack Obama, Tim Geithner and Larry Summers want to do that? Or even anything remotely close to that? Heck even those of us more toward the middle think a government takeover of the insolvent big banks would be good, but only to restructure them and reprivatize them. It's those three that are holding that back! Heck, how about what your old buddy former Treasury Secretary and Secretary of State James Baker said in the FT today:

This is not a call for nationalisation but rather for a temporary injection of public funds to clean up problem banks and return them to private ownership as soon as possible. As president Ronald Reagan's secretary of the Treasury, I abhor the idea of government ownership - either partial or full - even if only temporary. Unfortunately, we may have no choice.

That goes a lot further than what Geithner and Summers seem comfortable with. Do you think Baker is a closet socialist George? He says he's not but you never know nowadays.

I digress. The problem is that the above should be the post I write. Since, however, I no longer trust George Will to give me facts and data unsupported, and since I have never heard this "Sweater fable" story before (and I know a lot of Presidential history off the top of my head), I cannot get past the idea that maybe he might have made the story up just to support the rest of his column in Newsweek.

That is what is truly sad about this whole situation. George Will was not Rush Limbaugh, Sean Hannity, Bill O'Reilly or Ann Coulter. He could be counted upon for relying on actual, undistorted facts to support his conclusions. I don't usually agree with the conclusions but I didn't dispute the facts. Now, I've got a problem with the conclusions and have to do extra legwork to make sure he is even using appropriate facts. We are approaching irrelevancy here. I don't need that kind of crap just to argue with a guy I disagree with anyway. That's why I rarely discuss Limbaugh, Hannity, O'Reilly, Coulter et al. in this blog to begin with.

I am, nevertheless, still relatively sure that the story must be true. He can't possibly pull that in a column in Newsweek (can he?). I'm sure I'll be seeing Doris Kearns Goodwin all over the place if it's not true. The point is that I am still angry that one of the last conservatives I had respect for seems to be going down the same low road as the rest of the herd. I hope he doubles back. I'd sure like to argue about just his conclusions and not his facts as well.

One last thing, not for nothing, but I waited eight years for George Will to fire a broadside or two at the USS G.W. Bush. It starts coming a month and a half after he leaves office? Gimme a break.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

Not sure if this is a good play

Senator Charles Schumer today came out firing at Governor Bobby Jindal, et al. over the idea of rejecting only part of the stimulus money for their states. Specifically, what our dear potential Republican 2012 nominee wants to reject, is an expansion of unemployment benefits to certain part-time workers who get laid off.

It amounts to a little more than 1% of what the State of Louisiana is slated to get from the stimulus. His 'problem': That the effect isn't temporary. In other words when the government stimulus money runs out his state will still have to cover this expanded pool of workers without extra money from the government. Solution (for him): Don't expand it in the first place. Screw 'em.

Today Senator Chuck's office released a letter he sent to Peter Orszag, the Director of the Office of Management and Budget. It essentially says that the Governor's of the states have no such option to decline portions of the stimulus package. They must either accept or reject it in full.

Video:

Now I like Chuck. I grew up in the tri-state area of NYC and followed his career in the House and marvelled at his defeat of Senator Pothole (Al D'Amato). But this is playing with fire. It could play right into the Republican's hands.

The Republican's spent a good deal of the 80's and early 90's trying to bash the Democratic Congresses upside the head because of "unfunded mandates." It's one of the things that helped them make inroads in the south as well as they did. Hell, I don't really like "unfunded mandates". That is exactly how Bobby and the boys and girls (I see ya Sarah!) are gonna play this.

Up until here, it's been all about the idiocy of a Governor, who may possibly want the presidency in 2012, trying to make political points with his base by refusing to accept about 1% of the stimulus package slated for his state. Now, it may well become how the big spending Democrats in Washington are trying to force the states to spend more not only now, but in the future.

That's not really a message we want playing on the nightly news. The one about the Governor who wants to reject a measly 1% of his states stimulus package that will go to the poorest of his constituents; that's the message we want. The one that makes him look like a self serving, grandstanding meany; that's the one we want.

We do not want to make him the poster boy for how the state's are getting screwed by the Federal government ramming spending requirements down their throats without ongoing funding for those requirements.

In other words, you just made his message more relevant Chuck. Congratulations.

President Obama, presumably, is going to stay way the heck out of the way on this one. Listening to him yesterday speaking to the National Governor's Association, he sounded like he didn't want to hear any crap about rejecting the package by states when their constituents need the money. He was sympathetic to the idea that there might be some things in there that some governors didn't want. In other words, exactly the opposite message Chuck is giving. (Hey Chuck, it was on C-Span. Guess you didn't catch it.)

Now, there are apparently avenues for governors to explore, for example: having legislatures pass legislation that automatically contracts the unemployment pool back to normal when the federal funding runs out. Sensible answers.

We may not hear them now because there is a s#!t storm brewing about this now. Now it becomes a pissing contest. Our only hope is that, when President Obama does weigh in, he does so in a way that makes the combatants look like fools for starting the pissing contest to begin with. If that means Sen. Chuck Schumer gets egg on his face along with Gov. Jindal, so be it.

It could have been just this stuff:

The words that would stick there are, "Let's be honest about it, they'd probably be stupid not to take it.." That's what everybody would have heard. On every interview. Not the justification that follows from Sen. Orrin Hatch. The "they'd proably be stupid" part. Now, we may lose that.

I don't think this was a well thought out play. Sorry Chuck.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

Why do CEO's even matter Politico?

In light of the current economic crisis, who are some of the least popular people in the country? Arguably, CEO's rank right behind members of Congress. That doesn't stop Eamon Javers from writing, "The Obama Cabinet is a CEO black hole." Rather, this article is a black hole.

The article's fifth paragraph argues against the very existence of article itself:

Whether it is a significant absence, however, is far more debatable. As it happens, only a small number of the business leaders in recent administrations were stand-outs. And several were ostentatious flops. It would be hard to argue that there is a close correlation between success in business and success in Washington.

Actually, having worked for three of the largest corporations in the world in my lifetime, I can tell you that the absence of CEO's is not all that big of a loss. The people who inhabit that spot, in far too many companies, are as often as not, "Not worth a bucket of warm piss." as the great Texan John Nance Garner once said opining on a different subject.

That's not to say that there aren't some that are bright but most of them spend their corporate lives trying to please Wall St. Yes, Wall St, not their investors. You see, Wall St. believes only in companies that perpetually grow in the double digits both revenue and profit wise. That it is impossible to forever sustain this in practice is irrelevant, that's what they want. And that is what most CEO's try to do.

They don't make the tough long term decisions. They make the short term, "how do I meet Wall St.'s expectations" decisions regardless of the long term consequences. That is how Chrysler and GM are where they are today. (Well, let's say GM since Chrysler got hosed by the wonderful folks in Stuttgart, so it's not entirely their fault.) They've known for years what they needed to be doing to shore things up. They just haven't had the balls to do it in the face of Wall St.'s expectations. Example: Wall St. didn't like the 1.3 billion it cost to shut down the Oldsmobile dealers a few years ago. Ergo, we wind up with a GM that is hanging on to several makes that it hasn't wanted for years because it's afraid to shut them down. That's not responsibility to shareholders we can believe in.

Still, some long-time White House observers find it noteworthy that when Obama convenes his best minds, there will be few people who have answered to shareholders as well as voters..

I have not used the term "shareholders" for a reason. Most of these people pay lip service to shareholders, nothing more. "Wall St." and "shareholders" are two very different animals. Have been for a very long time. Given a choice between a short term fix that will make Wall St. happy and meet "expectations" or a longer term fix that will ensure the company will be healthy for the next five years but might make you miss "expectations" near term, well, I think you know which one the vast majority of these CEO's will pick. That is endemic of all publicly traded companies and could take another entire post. So it is really rather irrelevant to mention "answering to shareholders." Unless you actually buy the idea that short term profits are always the best interest of the company and shareholders.

Not for nothing, but few of these people have ever answered to "voters" either. Nor would they be be answerable to voters in the cabinet. They would be answerable to President Barack Obama and, maybe, if we get away from the Bushian secrecy, Congress. Finally, these are CEO's. Part of the reason they are where they are is because they didn't like being answerable to other people. They aren't always the best "team" players.

The point is, this article is rather pointless and recognizes itself as such. I think Javers was trying to go for objective and present two sides to the article. It comes across as more of "Why is the article even being written?" Perhaps I'd be less harsh if the title were less provocative. More like: "Does it matter that Obama has no CEO in the cabinet?" That might have worked.

Whatever. Competent CEO's are far rarer than most people imagine. I always said that I never rose to upper management because I had too many scruples. I don't know very many people who have much in the way of scruples that have risen that high either. I sounds good on paper but CEO's aren't all they're made out to be.

As the article itself says, Eisenhower, frustrated with his Secretary of Defense once said, “Damn it, how in the hell did a man as shallow as Charlie Wilson ever get to be head of General Motors?”

'Nuff said.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

The legend of Chippy the Salt Marsh Harvest Mouse

If there is one thing that Americans are good at, particularly of late, Republican Americans, it is manufacturing stories out of whole cloth. Our latest, great example is Chippy (there is no Chippy, I just felt like adding a name to go along with all of this) the Salt Marsh Harvest Mouse. You see, Chippy and his kind are endangered and might need some help to survive. Chippy and his friends also appear to be harmless and somewhat cute, even to one who isn't a particular rodent fan.

Enter the Grand Old Party. You see, unlike Disney, and some of the rest of us, the GOP doesn't think it matters a rats a$$ that Chippy and friends are cute, much less help the ecosystem they inhabit and thus be an important priority to help. Of course, it wouldn't help create jobs if they did happen to have $30 million allocated to help save them. That money would obviously simply be handed to them so they could waste it on alcohol, crack cocaine and tiny little whorehouses. So it is a crime to them that that very thing is written right into the stimulus bill! To help Chippy and his friends, who also happen to live in Nancy Pelosi's district, drink, get high and get laid!

Mike Huckabee decried the foul rodents on FOX News! Rep. Dan Lundgren (R-CA) decried them! The Washington Times wrote an article about them! Wow, what a break finding out about this! This could have screwed up everything! It represents less than 1/200^th of 1% of the stimulus package! How did we manage to find out about this!

Well, according to Greg Sargent at The Plum Line:

Yesterday a House Republican leadership staffer circulated a background email, which I obtained, charging that GOP staffers had been told by an unnamed Federal agency that if it got money from the stim package, it would spend “thirty million dollars for wetland restoration in the San Francisco Bay Area — including work to protect the Salt Marsh Harvest Mouse.”

The GOP staffer’s email didn’t say what agency it was. It didn’t say the money was actually in the package — just that an unnamed agency had said they would spend it on that if they got it.

But don't we need to verify this with someone who actually might know what is in the bill? I mean, this has been locked up tighter than a standard version Dick Cheney bunker. What does Pelosi's office have to say?

Well the Washington Times article has one line:

A spokesman for Mrs. Pelosi said Republicans "fabricated" the claim.

But, because their core constituency wouldn't think it matters a a rats a$$ that Chippy and his friends are cute, much less help the ecosystem they inhabit and thus be a priority to help, the Washington Times spends the rest of the article casting doubt upon that one sentence of fact (which, please note, only includes one quoted word) that comes from a source that might actually be credible.

What else does Greg have?

But I just contacted the House GOP staffer who wrote the initial email laying out this talking point, and he conceded that the claim by conservative media that the mouse money is currently in the bill is a misstatement. “There is not specific language in the legislation for this project,” he said.

The staffer held to the claim that the mouse money would ultimately be spent, however, arguing that the bill’s passage would ensure that money would ultimately go to the unnamed agency. “If the bill passes, the project will be funded according to what the relevant agency told our staff,” he said. “The bottom line is, if this bill becomes law, taxpayers will spend 30 million on the mouse.”

What! Talk to the source of the entire controversy! What Voodoo Witch Doctor Magic is this!? OH!!! Journalism. Oops. We forgot for a second!

It is quite unsuprising that the "source" proceeds to defend the extrapolation that he/she initially made. Standard Bush-Cheynian "We think it will happen, therefore it must be so" GOP thinking.

Not to sound like a late night infomercial: But WAIT, Greg has more!

But Pelosi’s staff disputes even this point, arguing that the only projects being referred to here are federal wetland restoration projects — and that this wasn’t even Pelosi’s project to begin with, despite claims about “Pelosi’s mouse.”

“There are no federal wetland restoration projects in line to get funded in San Francisco,” Pelosi spokesperson Drew Hammill said. “Neither the Speaker nor her staff have had any involvement in this initiative. The idea that $30 million will be spent to save mice is a total fabrication.”

Hey! More Voodoo Witch Doctor Magic! Why isn't he "chopping" up that long quote from the spokesman! OH! Yeah! My bad again! Actual journalism!

Now, I know that I am biased but I think that Nancy Pelosi, knowing that this has already been all over the news, isn't going to call this a "total fabrication" unless it's a total fabrication! She is many things but she is not that stupid. John Boehner, maybe, but not Pelosi.

So it is that Chippy is a non-starter as a story. At least for most of us. Somehow, even when the text comes out on the bill, disproving Republican claims, I am sure that Chippy and his friends will live on in right-wing neocon talking point sheets. So, do us all a favor, spread the word. Chippy and his friends are not going to get drunk, stoned and laid from this stimulus package. They should be so lucky. They will be lucky to survive extinction.

Have news organizations such as The Washington Times cut back so much that they can't make a couple phone calls? Somehow I think they know the original source. You can only wonder why. Laziness or something more?

Regardless, because of all of this, someday, an old grumpy House Minority Leader who has spent most of his life trying to become Speaker whilst it always remained out of reach will give an interview. And Eric Cantor will recall the utter horror of discovering funding for the Salt Marsh Harvest Mouse in the legendary Stimulus Package of 2009. ;)

Update:

They are still at it. As Greg and TPM are reporting they've decided to stick by the story that the money will find it's way to Chippy and company somehow. What's really sad about that is that this is the best they can come up with? Thirty million for Chippy? Less than 1/200th of 1% of the entire bill? Here's Rep. Tom Price on the House Floor:

This is no longer "almost" comical. Although I guess it plays well with the conservative base back home.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

It's cheaper than having your own experts

You may have heard RNC Chairman Michael Steele spouting off about how:

the Republican plan would create 6.2 million jobs, twice the number created under the Democrats' plan, at half the cost.

Well, as Elana Schor and Eric Kleefeld have reported, though those numbers come from a credible source, using them as they are being used is questionable at best.

The numbers come from a study done by now Chair of the Council of Economic Advisors Christina Romer and her husband, David Romer in March 2007. The study concludes that the net effect of a tax increase of 1% of the GDP would be a loss of 2.2% - 3.0% in the GDP. Catch that? Tax Increase. Although the studies discusses 'tax changes', nowhere does it put forward the idea that a tax cut equal to 1% of the GDP would necessarily result in a 2.2% - 3.0% increase in the GDP. That's just the Republican's on the Ways and Means committee deciding that they can just flip it and it will necessarily follow.

That 6.2 million jobs number is directly derived from the great assumption that you can just flip the math around and get that number. The Ways and Means Republicans take the 2.2% - 3.0% growth number and then apply the math that Romer is now using to that assumption and come up with 6.2 million jobs. Look at it here (page 5 will show you how they got their numbers).

As Kleefeld quite rightly points out:

There are two problems here. First, that paper didn't actually examine tax cuts, but instead looked at the negative effects of tax increases under normal circumstances. The Republicans' predictions about tax cuts come from flipping the numbers around and assuming the mirror-image effects.

And furthermore, they've totally ignored the fact that we are in an abnormal scenario right now, with different fundamental underlying assumptions.

I am not sure if it worries me more that Steele, Boehner and Co. are using these numbers just to win the political fight or whether they might actually believe them. Given their apparent lack of intellectual curiosity, it might be the latter that is happening. That is scary.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

Makes you wonder

Not being completely in the tank for the Obama administration, I find this "honest mistake" of Timothy Geithner failing to pay payroll taxes rather hard to swallow.

I am not qualified to be Secretary of the Treasury. I am not an accountant by trade. I have used "a popular tax-preparation computer program" to prepare my taxes. I have also not used said program and done it by hand. I have paid payroll taxes due from self-employment under both circumstances. Why this man didn't raises some big flags for me.

I will suppose my first statement, that I am not qualified to be Secretary of the Treasury, is the most important. As Senator Charles Grassley (R-Iowa) said, "To some, he is not only the best choice, he is the only choice." I am still apprehensive of this choice. Seems like a really crappy personal decision.

I am familiar with people who are incredibly successful professionally while having a disastrous personal life. Also, I am familiar with many who are great at handling their personal affairs whilst being unsuccessful professionally. I must assume that this man will not carry over his personal oversights into his professional obligations. I make this assumption with great trepidation.

Timothy Geithner appears to be an extremely intelligent man. Under most circumstances, I would be more than happy to cheer his nomination. I, like a number of Republicans (aagghh, I'm agreeing with Jim Bunning!), have deep reservations about this nomination. He is someone who, under most circumstances I would be pleased with which really ticks me off!

In conclusion, we need this guy. He's going to get confirmed. I think he'll work. I hope he'll work. But I am really annoyed that there are stupid things in his past that nag at me! I would rather that he had an affair. At least that wouldn't touch on his professional competence.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

The near future?

Rioting continued in Greece yesterday as the funeral for Alexandros Grigoropoulos, a 15 year old boy shot by police on Saturday took place. High school and college students joined self-described anarchists in the mayhem. Leftist groups protested but did not necessarily join in the rioting.

The boy's shooting seems to have become a flashpoint for what are simmering tensions about the economy and government in general in Greece. The shooting itself, however, seems like it may have provoked outrage on it's own even without the underlying tensions. From the LA Times:

The circumstances surrounding Grigoropoulos' shooting are unclear, but the two officers involved have been arrested; one has been charged with murder and the other as an accomplice. A coroner's report shows the boy was shot in the chest.

I just hope we don't have this to look forward to at an increasing level in the near future.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

Economic transition team

I don't know about you but the people on the economic transition team are pretty damn impressive as far as I'm concerned.

• David Bonior (Member House of Representatives 1977-2003)
• Warren Buffett (Chairman and CEO, Berkshire Hathaway)
• Roel Campos (former SEC Commissioner)
• William Daley (Chairman of the Midwest, JP Morgan Chase and Former Secretary, U.S. Dept of Commerce, 1997-2000)
• William Donaldson (Former Chairman of the SEC 2003-2005)
• Roger Ferguson (President and CEO, TIAA-CREF and former Vice Chairman of the Board of Governors of the Federal Reserve)
• Jennifer Granholm (Governor, State of Michigan)
• Anne Mulcahy (Chairman and CEO, Xerox)
• Richard Parsons (Chairman of the Board, Time Warner)
• Penny Pritzker (CEO, Classic Residence by Hyatt)
• Robert Reich (Former Secretary, U.S. Dept of Labor, 1993-1997)
• Robert Rubin (Chairman and Director of the Executive Committee, Citigroup and Former Secretary, U.S. Dept of Treasury, 1995-1999)
• Eric Schmidt (Chairman and CEO, Google)
• Lawrence Summers (Harvard University; Managing Director, D.E. Shaw and Former Secretary, U.S. Dept of Treasury, 1999-2001)
• Laura Tyson (Haas School of Business, University of California, Berkeley; Former Chairman, National Economic Council, 1995-1996; Former Chairman, President's Council of Economic Advisors, 1993-1995)
• Antonio Villaraigosa (Mayor of Los Angeles, CA)
• Paul Volcker (Former Chairman, U.S. Federal Reserve 1979-1987)

Wow, I don't have any problems with this team at all. Of course, I wasn't really expecting to. I think Wall Street needs to calm down. I will be getting to possible Treasury Secretaries. The pick may come from this group. Then again, it may not. We shall see.

Comments welcome,

Pat McGovern

It's got electoral votes. It's what politicians crave.

A rather busy day

Difficult day to post, for any of you paying attention, I apologize.

Today's biggest news is the resurgence of the Dow Jones Industrial Average, John McCain's disappearing economic plan, Barack Obama's aggressive new three point economic plan and John McCain subsequently announcing that, "No, wait! I really do have an new economic plan!! And I'll tell you all about it.....tomorrow!! Yeah! That's the the ticket!"

The Dow closed up a record 14 gadjillion percent (actually 11.08%). This was after everyone in Europe followed a British Prime Minister, Gordon Brown, whose international (and possibly domestic, as well) stature has suddenly surged forth in an almost unseemly manner, and actually took action to prop up banks and free up the credit markets in Europe over the weekend. The U.S. Secretary of the Treasury, for now, Hank Paulson, finally giving up his rather stubborn position that capital injection wasn't necessary despite hoards of economists trying to patiently explain it to him, also made a much more forceful statement about purchasing equity stakes in America's largest banks in order to help free up capital over the weekend. It is now being said that he and Federal Reserve Chairman Ben Bernanke will introduce a more comprehensive plan of their own tomorrow morning before the markets open.

It has also been rumored today that Ben Bernake was for the capital infusion from day one but didn't make his views known for the sake of providing a unified front.