An Extraordinary Event

Yesterday, the world witnessed something truly unique: A peaceful governmental transition from one leadership to another. Here in the United States, we often do not appreciate the magnitude of our approach to this governmental change. Yet, to many in the world, they can only dream and wish that they lived in a country that was so blessed with a system that would allow them the opportunity to enjoy the same leadership change mechanism.

Yesterday, we were not witness to an ongoing struggle for governmental leadership through civil war such as the ones being waged in Sri Lanka, Pakistan, and Iraq . Yesterday, we did not see the desparate and brutal hold to power such as Rober Mugabe has been doing for years in Zimbabwe, or the junta in Myanmar, or Vladimir Putin appears to be attempting to resurrect in Russia.  Yesterday, our transfer of power did not take place based on the determination of an elite group of religious rulers as occurs in Iran. Yesterday, our transfer of power did not take place based on heredity and relationship as occurs in Saudi Arabia and Kuwait. Yesterday we were not witness to a complete governmental breakdown in leadership as has existed in Somalia for decades.

Instead, our governmental transition was the culmination of a years-long debate by the citizens of this great country. We discuss, we argue, and we debate. Then we vote. Once done, we lament the loss and we celebrate the win. Then we have the winner recite a simple oath, “I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect, and defend the Constitution of the United States.” For good measure, the tradition has been to append, “so help me God.” Then we throw a parade, have a big dance party, and set about governing in such as way that will improve our collective lot in life. We repeat the process every four years so things can’t get too far off track.

It is such a simple process, not perfect, but one that is the envy of the world. We are so lucky.

Time for Change at SEC

How does the Securities and Exchange Commission (SEC) miss a multi-year, $50 billion ponzi scheme? This is after Bernard Madoff outperformed virtually every other similar fund without disclosing how. This is after whistle-blowers alerted the SEC to irregularities and were dismissed.

Once again, the SEC has failed us This is after the savings and loan meltdown in the 1980s led to reform. This is after the dotcom meltdown at the turn of the century led to demands for closer oversight and disclosure. This is after the Enron, WorldCom, amd Global Crossing meltdowns led to Sarbanes-Oxley and other reforms.

How does the SEC not sound alarms when the country’s largest banks and insurance companies are making highly speculative investments in sub-prime mortgage instruments? Even the Fed gave mild warnings that something was not right, stating that the housing and mortgage markets were “over-heated” and there was no reason for these securities’ heady increases (per testimony by Greenspan years ago).

The SEC has oversight and audit authority over these public and securities-related organizations. The losses that have been directly under the supervision of the SEC now has placed the American taxpayer with a potential $9 trillion (and rising) bill. Every SEC commissioner should be fired (impeached or however the hell you get rid of them). Every SEC compliance officers should be fired.

The only thing that seems to change with each new financial/securities failure is the magnitude and the number of people financially-ruined people increases.

There is no excuse for such gross negligence. The regulatory authorities have been neutered. This is going to get a lot worse before it gets better.

What say you?

[Posted with iBlogger from my iPhone]

Auto Bailout Fails in Senate

Last night, the Senate failed to pass a modified Big 3 Auto bailout that would have provided $14 billion in bridge loans through the first quarter of 2009. The sticking point was the refusal of the unions to cut employee salary to the level of non-union employees at other auto plants in the US. Republican senators wanted an immediate pay-cut and the unions offered to cut salaries once the current contracts expired in 2011. Unless the White House acts in the next week or so, both GM and Chrysler will likely file for bankruptcy by the end of the year.

Hopefully, the White House will do nothing. Both GM and Chrysler need to enter bankruptcy. First, if the US taxpayer keeps bailing out every financial and manufacturing corporation, it will be the US that ends up bankrupt. Second, it is not the Senate’s responsibility to negotiate union contracts on behalf of auto-makers. Third, why is the Senate concentrating on union workers when these companies are bloated with over-paid management. A banckruptcy court will address salary issues across the board. It will also address useless boards of directors. Finally, it will put the risk back on the stockholders where it belongs. Investors–individuals and institutional–will be hurt. But, it’s time to understand that stock investment is not a gambling activity. Buyer beware and buyer be burned.

Finally, if a bank that will invest in a useless sub-prime loan believes that a loan to an auto manufacturer is too risky, why should the US taxpayer be the financial resource of last resort?

Your thoughts?

[Posted with iBlogger from my iPhone]

More Thoughts on Bailout

I have given a lot of thought since my last post on the proposed automotive companies’ bailout. Indeed, I am also rethinking my position on the financial institutions’ bailout. The problem, as I see it, is these companies got themselves into this position through greed and short-term profit strategy. If this is not the case, how come senior executives still stand to get their bloated salaries, still get their golden parachutes, still get their bonuses, and still get their corporate perks even though their respective companies are going down the tubes? Among many leading companies in the world (none of which seem to have the problem that US automotive and financial institutions have), there is an old saying, “Innovate or die.” Yet, the very automotive companies that are asking for a bailout want that bailout to spend on innovation. These very automotive companies used lobbiests and spent multi-millions of dollars fighting increased gas mileage so they wouldn’t be forced to innovate. The boards of directors of these organizations endorsed this behavior by paying the management of these organizations obscene amounts of money. And finally, the stockholders of these automotive companies acted as rubber stamps to this board and executive behavior.

A pox on all your houses. If your organization can’t figure out the solution on your on, then you are doomed anyway and deserve to go into bankruptcy, be acquired, or be parted out and sold off. My tax dollar didn’t get you into this mess and most likely won’t be able to get you out. If you aren’t able to do it on your own, then file for bankruptcy protection. Doing so will allow the courts and debtors to throw out the board, change the management, and do so for pennies on the dollar. Yes, jobs are going to be lost, but they are going to be lost anyway–might as well be sooner than later. Yes, pension benefits and healthcare benefits are going to be lost–might as well be sooner than later. Doing so may just make those green jobs plans and universal healthcare plans look a little more reasonable. I would much rather that $700 billion going to make bad financial managers look good go to the creation of real, needed, and valued green energy jobs. I would much rather that $25 billion automotive bailout go to the transition to a universal healthcare plan.

The fact is, the current bailout activity already authorized and executed by the Federal Reserve, the Treasury Department, the SEC, and the FDIC is over $2 trillion dollars. Think what that amount of money would have done for physical infrastructure improvements, technology infrastructure improvements, universal healthcare, and re-skilling the US workforce!

Stop the insanity! Let those greedy short-term thinking companies fail. There will always be a replacement.

[Posted with iBlogger from my iPhone]

Should We Provide a Bailout?

To date, our government has provided emergency funding for big banks, insurance companies, and now is considering financial support for the automobile industry. I am truly conflicted whether we should be doing this. On the one hand, if it will keep the economy from a crash landing, the investment may be worth it. On the other, the bailout is basically rewarding organizations and the leaders of those organizations for poor decision-making, poor leadership, and in some cases outright greed. An additional problem is that once you start down the bailout path, where do you draw the line and stop?

In the bluntest terms, the issues are these:

1. If the bailout money will save jobs, that is good for the economy. If the bailout protects jobs that are not producing value, that is just delaying the inevitable. Using a medical analogy, isn’t it better to just rip the bandaid off rather than extending the pain over a long period? If the jobs are going away anyway, why not sooner than later? This argument would lead to a decision not to bailout the company.

2. What guarantees are in place to ensure the bailout money will be used for the intended purpose? In the case of financial institutions, if the money is intended to take the pressure off foreclosing on mortgages, what ensures the money will be used for that purpose? The bailout money this far distributed appears to have loose requirements and controls attached.

3. Many if not most of the organizations asking for a bailout have an overpayed management team. Yet, in a downturn, it is the rank-and-file employee that doesn’t get a raise, doesn’t get a bonus, or loses the job. The rank-and-file employee pays the price of poor decision-making by the overpayed executive. What assurances are attached to the bailout money that the management team will share the sacrifice with the employee? What ensures they will forego bonuses, take pay cuts, eliminate numerous perks to demonstrate that the bailout requires shared sacrifice and the sacrifice should start at the top with the people who got the company into the fix in the first place? What ensurances come with the bailout that jobs will be protected since that is a major aspect of staying in business?

4. Why is the government involved with billion dollar loans to businesses to keep them in business when existing bankruptcy laws exist for exactly that purpose?

5. If a bailout is to be given, then the taxpayer should have an equity stake in the business. While this is nationalization of the company, YOU did ask for a bailout. It should come at a cost.

6. To get a bailout, executives should be removed from the board and taxpayer as well as employee representation should be appointed to the board. A small loan is one thing. When the taxpayer is invested in the company for billions of dollars, they have a right to board representation. Similarly, the CEO should not hold the Chairman’s job since asking for the bailout is proof enough that the CEO needs close oversight.

What are your thoughts on the bailout legislation and the continuing efforts to expand the scope of the bailout?

[Posted with iBlogger from my iPhone]

What’s Wrong With A Democrat?

This past campaign pointed out some of the popular misconceptions of parties that have creeped into the political landscape over the past couple of decades. Iblame it on a few–but influential-individuals who have a disproportionate amount of sway on the public. The result has been a distortion of party beliefs that do not do the parties or the country well.

To hear the Republican party in the last election, the Democrats are socialists or Marxists even though there was not a shred of evidence to those alligations. The Republicans painted Democrats as tax-and-spend even though under two Republican presidents (Reagan and Bush II) the national debt has more than quadrupled to it’s highest point since World War II. The Republicans portrayed Democrats as the party of surrender even though it was a Democrat who brought us through World War I (Wilson), Democrats who brought us through World War II (Roosevelt & Truman), and a Democrat who brought us through the Korean War (Truman). As for Viet Nam, it was a Republican that withdrew without victory (Ford), although I think he made the right decision.

Since the election, there is a run on guns because Republicans believe that Democrats are going to take away the right to bear arms. Never mind that the President-elect has said otherwise and previous Democratic presidents have made no such move.

Today Republicans contend that Democrats are going to take away our basic freedoms. Yet, it has been under a Republican president (Bush II) that imprisonment without due process, warrantless wiretaps on US citizens, and the development of terrorist watch lists without due process have all come into being.

It is the Republicans that contend the Democrats are making a concerted effort to remove God from our schools and government institutions. Yet, our Founding Fathers, in developing our Constitution did not want religion to be imposed on our citizens by government mandate. Indeed, our Pledge of Allegiance did not have the words “under God” until the Knights of Columbus–a Catholic religious group–successfully lobbied Congress in the 1950s to add the words.

Republicans contended that electing a Democrat would be bad for the economy, yet it is under a Republican president (Bush II) that the economy has taken its worse turn since the Great Depression (an event that started under another Republican–Hoover).

The scary thing about all this is that some 48% of the voting public voted Republican in this past week’s election. This means that almost half of the voting public were able to hold these conflicting beliefs and still vote Republican!

I don’t particularly fault John McCain as he is actually a fairly moderate Republican. He may not have acted the part during the election, but his record is decidedly centrist when compared to Palin or Huckabee. But there is a far-right element to the Republican party that should be alarming to any freedom-loving American. We got a taste of this belief system over the last eight years. It is insanity to vote against the Democratic candidate for the very reason of avoiding what the Republican incumbant has championed for the past eight years.

Your thoughts?

[Posted with iBlogger from my iPhone]

Director, Environmemtal Protection Agency

In looking at possible candidates for various Cabinet-level positions in an Obama White House, I think it would send a powerful message to business and the world if President-Elect Obama chose Robert F. Kennedy, Jr. to head the Environmental Protection Agency. He has both the political understanding and the commitment to the environment needed in this vital position. While he is an environmental idealist, he is also a pragmatist when it comes to environmental issues. His appointment would send a powerful message that Obama is serious about cleaning and protecting the environment.

Obama Sec. Of Education

President-elect Obama needs to think outside-the-box. In doing so, not just making political expedient appointments should be considered. For example, I think a great Secretary of Education would be Dr. William (Bill) Cosby. He definitely has the qualifications, he is well thought of, he understands the impact of TV on education, and he has a perspective on learning issues in the inner city.

Obama Sec. of Defense

Why isn’t Colin Powell bring proposed for Secretary of Defense? He is the most qualified for the position and understands the political impact of the projection of power.

Waxing Political

I have started this blog because the recent election has gotten me so involved in political discourse. Much of what I have done has been as an anonymous contributor to the Twitter elections feed, but I wanted something where I could write more substantial posts. To the extent possible, I will keep them short and sweet, but also express politics from my perspective.

More to come.