Christie – Many Things Considered

A Malefactor of Great Wealth

Posted on July 9, 2015by christian

We remember 2008 right? The great recession? The worst financial crisis since the Great Depression? Recall the photos of grim faced politicians and financial industry executives huddled in tense meetings trying to keep the U.S. and world economy from going over a fiscal cliff?

Treasury Secretary Hank Paulson dry heaving as he headed into a meeting that might or might not save the economy? Paulson actually got down on one knee in one meeting begging then-House Speaker Nancy Pelosi to explain the seriousness of the crisis to mostly clueless Washington politicians.

Remember?

The American attention span is…short. We tend to forget and often forgive and move on. That might be the American way or it might be just be our collective attention deficit disorder. We forget and then forget to connect the dots. Once in a while it’s worth remembering how close we came to economic Armageddon as well as those who took us there.

The Lehman Bankruptcy…

On September 15, 2008 Lehman Brothers, a massive international investment bank, declared bankruptcy. The United States government had stepped in and prevented the demise of several other big and equally reckless firms – Bear Stearns and AIG among them – but Lehman was left to die an ignominious death. It was one of the largest corporate collapses in modern history. Billions were lost. The already fragile U.S. economy was badly shaken. Questions were then asked if not answered about how it had all happened. Legislation was proposed and some passed. Time moved on.

Two years ago and five years after the Lehman bankruptcy, The Guardian newspaper took stock of the Lehman fallout and concluded, in part: that the magnitude and scope of the crisis was still impacting the global economy. The paper also noted some of the additional fallout, including “the fact that only a handful of politicians and central bankers saw it coming; the rise and fall of global co-operation; the unprecedented policy response with its as yet unknown side-effects; the transformation of a private debt crisis into a sovereign debt crisis; the squeeze on living standards; and the shift in the global economy away from the developed west towards emerging markets.”

In other words the events of 2008, which may now seem like ancient history, remains strikingly relevant to the American and world economy.

The Gorilla of Wall Street…

A little over a month ago the man at the helm of Lehman before and during the great crash, Richard Fuld, made an extremely rare public appearance, his first speech to a Wall Street crowd in six years. The event was certainly noticed in the financial press, but most of the rest of us could be forgiven for missing the story. We have a presidential campaign to endure, after all, and it’s baseball season.

Dick Fuld, the one-time Lehman CEO, is described in one profile as a diminutive 5’8” bundle of brashness and energy, with a “famously voracious appetite.” Senior executives at Lehman “sometimes ordered him a mid-morning plate of ribs. The joke was that he never gained weight; his intensity burned off the calories.” Fuld – his nickname “The Gorilla” is a reference to his large, slanting, primate-like forehead – used his rare public appearance in New York recently to attempt, not surprisingly perhaps, to re-write his own and Lehman’s history.

Fuld also displayed no contrition or self-awareness. Lehman really wasn’t failing back in 2008, Fuld said, its demise was the result of the mistakes of others, including – should we see irony here – federal banking regulations and cut throat competitors who sold Lehman short. The Lehman culture, the former CEO contends, was nothing short of perfect. Mistakes were made, Fuld admitted, but not by him.

Not everyone – or perhaps no one – who heard the speech bought Fuld’s message. One former Lehman employee helpfully pointed out that lots of people lost lots of money even as the one-time CEO pocketed nearly a half billion dollars “in salary, bonuses and options between 2000 and 2007.”

Here’s Someone to Blame…

Time magazine named Fuld as one of the 25 people “to blame for the financial crisis” and summed up Lehman’s role in the near destruction of the U.S. economy by saying that the man who built that perfect Lehman “culture”:

“Steered Lehman deep into the business of subprime mortgages, bankrolling lenders across the country that were making convoluted loans to questionable borrowers. Lehman even made its own subprime loans. The firm took all those loans, whipped them into bonds and passed on to investors billions of dollars of what is now toxic debt. For all this wealth destruction, Fuld raked in nearly $500 million in compensation during his tenure as CEO…”

The flavor of the Lehman “culture” that Fuld raved about recently was captured in a lengthy piece in Vanity Fair back in 2010.

“The wives of Executive Committee members,” the magazine noted, “were expected to support the numerous philanthropic causes Lehman endorsed—for example, to make annual donations to the American Red Cross, Harlem Children’s Zone, the American Friends of London Business School, and various hospitals. Kathy Fuld collected modern art, and she particularly liked Cy Twombly, Brice Marden, and Jasper Johns. In 2002 she joined the board of the Museum of Modern Art and by 2007 was a vice-chairman. Not only were the wives of Lehman’s senior management expected to attend MoMA evenings and other charity events (along with their husbands), they “were told exactly how much they had to donate,” says one. (There is now a gallery at MoMA dedicated to Kathy and Richard S. Fuld Jr.)”

How About a Little House in Idaho…

Fuld's Bigwood estate in Sun Valley, Idaho — Fuld’s Bigwood estate in Sun Valley, Idaho

Meanwhile, Lehman’s subprime mortgage play and the firm’s strategy to pass along to investors all that toxic debt were no doubt hatched during the company’s annual summer retreat at Fuld’s opulent, eleven bedroom estate in Sun Valley, Idaho. The compound complete with a pool and gatehouse occupies more than 70 acres and thousands of feet of river frontage.

Back before his fall from the ranks of Wall Street’s elite, Fuld decreed that the annual Lehman’s Sun Valley retreat was a mandatory event for wives as well as the firm’s high rolling executives. One wife told Vanity Fair the event “was this weird combination of business and then competition between wives and their husbands. Hiking was mandatory for all.”

Another Lehman spouse recalled that the trip was “an absolute nightmare to pack for.” Evenings events “required pretty dresses, jewelry, and Manolo Blahnik shoes, while hiking gear was needed for the days, as well as ‘day clothes’ for the mornings spent antiquing—trips for which there was a hierarchy as to who got to ride in which car…The couples got to Sun Valley on the two planes owned by Lehman, together known as ‘Lehman Air.’ Francine “Fran” Kittredge, a managing director, arranged for each person or couple to be met at the airport by a driver with an S.U.V. The waiting line of dark-glassed S.U.V.’s was almost comical to behold, according to one attendee—like a scene from a movie depicting the motorcade waiting for a landing president.”

You might think that one of the 25 people responsible for the most serious financial crisis since Herbert Hoover was in the White House might, just might, suffer some of the adverse consequences of his actions. But in the United States few things succeed like excess, or put another way excess on the part of the crowd that brought us the Great Recession creates cash flow, at least for them. Dick Fuld and his wife reportedly have had to sell off parts of their art collection, which fetched $13.5 million. The couple’s 16-room Park Avenue apartment had to go, as well. It netted nearly $26 million.

A few days after Fuld blamed the “government, reckless borrowers, aggressive investors and poor regulation,” for Lehman’s demise, while of course assuming no blame for himself, his outrageously well-paid minions or the “Lehman culture,” he put that little Sun Valley fixer-upper on the auction block.

The company handling the auction told the Wall Street Journal that Fuld’s compound is expected to fetch $30 to $50 million. He’s reportedly selling because “he isn’t using” the place as often as he used to. We should consider that good news, I think, And don’t feel too sorry for the guy. He’s obviously not wasting any time worrying about what he did and his net worth is still in the neighborhood of $200 million.

A Malefactor of Great Wealth…

In a 2013 piece in Bloomberg Business Joshua Green wrote, “Although many of his peers also made disastrous decisions, no one on Wall Street has paid a steeper price in reputation and personal fortune. This owes partly to Fuld’s hubris, brutish manner, and aggressiveness…” Fuld figures in several dozen lawsuits relating to the Lehman downfall that are still pending and there are reports that the one-time Wall Street “gorilla” is still under investigation by the Securities and Exchange Commission, which if there is any justice means his next “house” might be easier to get into than out of.

Fuld has also become the subject of academic research mostly focused on how powerful CEO’s go off the rails. One study was entitled “When Does Narcissistic Leadership Become Problematic? Dick Fuld at Lehman Brothers.” The author of that study, British academic Mark Stein, told Bloomberg Business that initially Fuld’s military demeanor and demanding ways were an asset to Lehman, but that his own ego and personality soon become more important than running the business carefully.

“When the credit crisis struck…Fuld’s narcissism became ruinous. ‘It was clear that Lehman was overleveraged,’ Stein says. ‘Many people inside and outside the firm understood that it had to be sold to survive.’ But Fuld’s identity was wrapped up in Lehman, and he wouldn’t countenance the affront to his dignity that a sale would have represented. ‘As long as I am alive, this firm will never be sold,’ he said in late 2007, the Wall Street Journal reported. ‘And if it is sold after I die, I will reach back from the grave and prevent it.’

More than a hundred years ago Theodore Roosevelt had a term for the crowd that thanks to their egos, greed and shamelessness came close to taking the American economy over the cliff. We still live with their avarice and recklessness, even as some attempt to re-write their role in the story. T.R. called them “malefactors of great wealth.”

Those malefactors are still around. Don’t forget it.

Baseball, Campaign Finance, Christie, Poetry, Politics, Wall Street

The Appearance of Influence

Posted on March 17, 2015by christian

“…this Court now concludes that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption. That speakers may have influence over or access to elected officials does not mean that those officials are corrupt. And the appearance of influence or access will not cause the electorate to lose faith in this democracy. “ – Justice Anthony Kennedy in Citizens United v. Federal Elections Commission, 2010.

Generally speaking there are two types of political scandal: the sex scandal and the money scandal.

The first type of scandal, perhaps for obvious reasons, gets more attention from public and press. Think of Bill Clinton and the blue dress, Mark Sanford hiking the Appalachian Trail all the way to his Argentine mistress, General David Petraeus going all in with his biographer (and sharing much more than pillow talk) and, of course, the continuing saga of former Senator Larry Craig’s wide stance in the Minneapolis airport. One could go on and on – Packwood, Weiner, Edwards – it is a long, long and bipartisan list.

The other type of scandal – the money scandal – is generally less memorable, but also more important. Political sex sells and fuels late night comedy. Political money merely corrupts. Like political sex scandals, political money scandals are a bipartisan problem and unlike what Justice Kennedy naively (or cynically) wrote in that Supreme Court decision, vastly expanded access to money and private influence in our politics has, and will continue to erode “faith in this democracy.”

Several recent cases still in the news make the point: Illinois Representative Aaron Schock, former Oregon Governor John Kitzhaber, would-be president Hillary Clinton and Senator Robert Menendez or, if you prefer, Governor Chris Christie of New Jersey are in the top-of-mind scandal class. (It probably goes without saying that in any list of political scandals involving money, New Jersey is routinely entitled to two mentions.)

Schock is the junior Republican from Peoria who first came to national prominence when a Washington Post story reported on the elaborate Downton Abbey-like redecorating of his Capitol Hill office, a real estate makeover that likely constituted an illegal gift. It didn’t take long for the deep red walls and Edwardian touches to gave way to more important insights into Schock’s extensive connections to his wealthy donors. As the Post reported recently, the Congressman’s Lord Grantham moment “prompted a flurry of stories about his use of private charter planes that he says are to get around his district, concert ticket purchases, trips overseas and other forms of travel.” Expensive tastes are hardly an indictable offense, but failing to report gifts from donors or using their airplanes improperly may well be and Schock has now announced his resignation, likely just before his indictment.

There have been so many twists and turns to the sad and bizarre Kitzhaber saga in Oregon that is has become difficult to keep track of all of them, but it seems clear that an underlying theme in the tangled web that drove the four-time elected governor from office was…wait for it…money.

Kitzhaber’s fiancée seems to have been obsessed by making money and oblivious to how her public role created conflicts, or worse, for the couple. In another case, as reported by Willamette Week, Kitzhaber courted one of his biggest campaign donors, a developer who had given candidate Kitzhaber more than $65,000 since 2010, by attending a “summit” organized by the donor, who incidentally regularly complained to the governor about state environmental regulators. As the paper noted following the “summit,” which Kitzhaber had flown to on the donor’s private plane, the then-governor “asked a fundraising consultant how much money [the big donor] had given his re-election campaign so he could hit up another summit attendee…for the same amount.”

The Hillary Clinton case is even more obtuse, but no less troubling, involving Clinton the Secretary of State, Clinton the world famous mover and shaker of the Clinton family foundation (which has received millions from corporate and foreign sources) and coming to a campaign trail near you soon, Clinton the presidential candidate. If you think the recent flap over Hillary’s emails (particularly the ones that have been destroyed) doesn’t involve the intersection of her official work at the State Department and her work, as well as her husband’s and daughter’s, with the high flying Clinton foundation, and now the need to raise a billion dollars or so to run for the White House, well I have some aluminum siding I’d like you to consider.

A CBS New investigation found that one donor to the Clinton Foundation, “Rilin Enterprises – pledged $2 million in 2013…The company is a privately-held Chinese construction and trade conglomerate and run by billionaire Wang Wenliang, who is also a delegate to the Chinese parliament…The firm owns a strategic port along the border with North Korea and was also one of the contractors that built the Chinese embassy in Washington. That contract is a direct tie to the Chinese government.” We haven’t heard the last of these kinds of stories and she hasn’t even announced.

Senator Menendez’s scandal seems to involve more garden-variety type corruption – doing big favors for a big donor. For months the Justice Department has been looking into the connection between the Soprano State senator and a wealthy South Florida eye doctor, Salomon Melgen, who clearly loves Menendez. As Slate has noted, the doc and his family “gave $33,700 to Menendez’s 2012 re-election campaign, as well as $60,400 to the Democratic Senatorial Campaign Committee while Menendez served as its chairman during the 2010 election cycle. But the biggest contribution by far was a series of three payments totaling $700,000 that Melgen’s business gave in 2012 to Majority PAC, a Democratic super PAC that in turn shoveled nearly $600,000 toward Menendez’s re-election that year. Melgen also paid for two free trips that Menendez took in 2010 to Melgen’s seaside mansion in the Dominican Republic,” a gift that Menendez did not initially disclose, but for which he later paid $58,500 to reimburse.

And what did the donor get beside the stimulating company of a United States Senator? “In recent years,” Slate reports, “Menendez repeatedly interceded on Melgen’s behalf in a dispute with the Centers for Medicare and Medicaid Services over allegations that Melgen had overbilled Medicare for millions of dollars for injections he was performing on patients with macular degeneration. Menendez has also been pressing on Melgen’s behalf to help him see through a deal he has to sell port-screening equipment to the Dominican government.”

The latest Chris Christie greasiness in New Jersey rings of the kind of thing that the notorious Boss Tweed did across the Hudson more than a century ago – hand out tax breaks, contracts and other goodies to the politically well-connected and then sit back and reap the rewards. As the Associated Press reported this week, on Governor Christie’s watch, “New Jersey has authorized more than $2 billion in economic development tax breaks since 2014, often to corporations with notable political connections. One grant went to a developer who owes millions of dollars on an unpaid state loan.”

Christie’s administration lavished more than $600 million in tax breaks on Camden, New Jersey, (population 77,000) an amount four times the city’s annual budget. As AP notes, “As money has flowed to development in Camden, some trickled back into politics. Camden tax incentive recipients donated more than $150,000 to the Republican Governors Association during the time Christie ran it. But no donations are as notable as those from Pennsylvania developer Israel Roizman. Last February, the state awarded tax incentives worth $13.4 million to Broadway Associates 2010 LLC, a real estate development company he controls. The project in question: refurbishing 175 low-income housing units that deteriorated under two decades of Roizman’s ownership.”

It turns out Roizman – and here is proof that the acrid stench of corruption smells of bipartisanship – was a big “bundler” of campaign cash for Barack Obama, but also thoughtfully “donated $10,000 to the Christie-led [Republican] governors association in late 2013, a few months before receiving his tax breaks. Last year, he gave the group the same amount.” Meanwhile, the developer owes the New Jersey housing agency “$6.2 million in unpaid loans on another Camden housing project.”

There may be perfectly simple explanations for all these unrelated cases and it would not be correct to say the corrosive Citizens United decision alone ushered in a new era of corruption in our politics. The country’s convoluted campaign finance apparatus is so complex that it has spawned an entire industry of lawyers and consultants who make it their life’s work to navigate the system.

Still, to believe that cases like Schock, Kitzhaber, Clinton, Menendez, Christie and many others can be innocently explained away, one must accept the idea that really wealthy people give money to political candidates simply out of the goodness of their hearts or because of their passionate belief in the candidate or the cause. (Some do, of course, but their commitment could be demonstrated just as fervently by a check for a thousand dollars as it is by donating what for many Americans would be a sizeable bank account.) At the same time the innocent explanation of a situation involving money and politics that also has “the appearance of corruption” demands embracing the idea that candidates, particularly when they are recipients of really, really big checks and personal favors from donors, are totally immune to the concept of quid pro quo. There are many honest politicians, but we don’t make laws – nor did we once limit campaign contributions – because of the honest people.

Political corruption has existed since Caesar and human nature being what it is there will always be some fast buck artist angling for some favor from some powerful person. But with the adoption of the philosophy, sanctioned by the United States Supreme Court, that anything goes when it comes to money and politics we can expect Justice Kennedy to more-and-more be feasting on his words.

Unlimited, largely unregulated money in politics does give rise to both the appearance and the reality of corruption. The excesses will only grow worse over time in direct proportion to the electorate’s loss of faith in this democracy. Makes you long for a good political sex scandal.

Baseball, Christie, Economy, Politics, Uncategorized

Fighting to Innovate

Posted on March 18, 2014by christian

Tesla, the electric car manufacturer, is attempting to revolutionize the American auto industry by building safe, attractive, energy efficient electric cars that are designed to meet a growing customer demand. But…there are some challenges.

Tesla, in challenging the long-established American way of selling new cars, is (big surprise) hitting decades-old speed bumps as it tries to invent a new approach for you – the consumer – to purchase a car. The Tesla story is a great case study in innovation, but also a story about how often American capitalism is arranged to thwart innovation and protect the status quo of well-entrenched interests who like the things just the way they are.

Henry Ford’s great contribution to American industry was, if not to invent at least to perfect, the assembly line. That process allowed one of his Model T automobiles (and after 1928 the Model A) to seamlessly travel a route along the factory floor as auto workers added piece after piece until finally a finish car eased off the line. It was an innovation that helped revolutionize the auto industry and made Detroit, for a couple of generations at least, the center of world manufacturing.

In ol’ Henry’s day Ford workers were paid $5 a day and it was said you could have any color Model T you wanted as it was black. The cars were affordable, relatively easy to repair and drive and Americans bought 15 million of them. When Ford decided to introduce the improved and more stylish Model A – you could buy the car in exotic colors including Arabian Sand – the big factories the company operated had to completely shut down for months while re-tooling took place. Ford’s dominance with the “T” had been challenged by General Motors and other manufactures who were innovating with more powerful engines and attractive features like electric starters and windshield wipers. Ford was into basic until he couldn’t sell basic. And while the Model A was a great car, Ford Motor Company never again truly dominated the industry Henry Ford had invented, in part, because the company took an innovation holiday that never really stopped until the advent of the trendsetting Mustang in 1964.

Ford and his rivals back in the early days of American motoring also faced tremendous challenges in getting their products to market. The system of automobile dealerships so common today began to develop in response to the need to distribute the product. Before long almost any town of size had a Ford dealer, a Chevy dealer and eventually perhaps a Packard, a DeSoto or a Chrysler dealer. The dealers became major players in the local and state economy. Some became household names because their faces were splashed on billboards or later television. And, in keeping with the American way, they became influential players in politics. In time the car dealers largely wrote the laws in most states that attractively (for them) limited competition by requiring, among other things, that you buy your new car directly from “Happy Town Ford,” an independent franchisee, rather than directly from a factory.

The trouble for Tesla is simply that the old dealership model, a feature of the American industry since the 1920’s, isn’t how Tesla sees its cars being sold in the 21st Century. I think of Tesla as the Apple of car dealers. Lots of customer service, a showroom more Mad Men than Joe’s Garage and a product that demands high touch and higher concept. Looking at a Tesla is like browsing an Apple store. Buying a new Toyota unfortunately feels more like a trip to K-Mart.

Three states – New Jersey, Texas and Arizona – have now made it clear to Tesla that the company can’t sell cars directly from its sleek, Apple-inspired stores. Rather the company, under existing state laws, must conform to the old, old dealership model. Not surprisingly long-established automobile dealers, no doubt threatened by aggressive new competition and no doubt quietly encouraged by established manufacturers, have pushed state officials to make Tesla conform to a sales model and state laws that Henry Ford would have recognized.

“The dealer regulations are similar to those put in place to save the family farm and protect individual farmers,” Jack R. Nerad, the executive market analyst at Kelley Blue Book told the New York Times. “But the landscape is vastly different now. Big dealerships don’t need the type of protection the single-brand store needed back in the day.”

The latest state to tell Tesla to take a hike is New Jersey, ironically where Gov. Chris Christie has lately experienced his share of auto-inflicted political wounds. After apparently first encouraging Tesla to do business in New Jersey, Christie now says the automaker needs to deal with the state legislature in order implement its business plan in the Garden State. He sounds like he’s suddenly never heard of lobbying the legislature to encourage a new business venture.

“Tesla was operating outside the law,” Christie recently said during a town hall meeting. “I have no problem with Tesla selling directly to customers, except it’s against the law in New Jersey.” That, indeed, is the problem. Maybe, just maybe, the law needs to change, but if you’ve been around state legislatures much you know the local car dealers have a lot of clout.

Ironically, Tesla is facing serious push back from two states – Arizona and Texas – that Tesla’s CEO Elon Musk has said he wants to consider as sites for a $6 billion factory that might employ 6,500 workers who would manufacture the lithium ion batteries to power the cars he wants to sell. I hardly need point out that the places where Tesla has been most aggressively backed off are all states with free market loving Republican governors. So far tough guy governors like Christie in New Jersey and Rick Perry in Texas haven’t done much of anything to change a restraint of trade business model enshrined in state law. The next time you hear a politician rail against too much regulation you might think Tesla.

All of this makes corporate recruitment a good deal more difficult, too. Tucson, Arizona would like to host the Tesla factory – who wouldn’t – but why would Tesla open a state-of-the-art facility and spend a few billion in a state that won’t allow the company to sell its product the way it believes in most effective?

I long ago came to believe that in politics, and in most of life, the simplest explanation is most often correct. American automobile manufacturers, and that group would include firms like Toyota, Nissan and others that have effectively become U.S. manufacturers, are looking over their shoulders at Tesla and seeing a smart, sophisticated and aggressive competitor. Detroit, a name we don’t often associate with new thinking, has been late to the innovation party at least since the Edsel hit the street. The status quo they know is comfortable and predictable. You can almost hear them saying – why change? We wrote the law and we like it just fine thank you.

Tesla is a 21st Century car company that is also trying to revolutionize the energy world. First, however, the company needs to change public policy and alter a status quo that works to the advantage of a powerful, entrenched group of business owners who love to sell and service cars just like they did when my dad bought his Model A Ford.

Inventing a new kind of car might prove to be a lot easier than changing a few decades of law that protects the aging and arguably outmoded business model of all those guys down at the Auto Mall.

Baseball, Christie, Mansfield, Politics, Wall Street

I Am Not A Bully

Posted on January 12, 2014by christian

It’s too early to know for sure, but I’d be willing to bet that the third paragraph of Gov. Chris Christie eventual obituary will include the words “I am not a bully.” Those five words, like Richard Nixon’s “I am not a crook,” may well end up defining Christie’s life on the American political stage.

There is a truism in politics that the worst wounds are those that are self inflicted. The next most damaging wounds are those that are not quickly recognized as potentially deadly and are allowed to grow and fester. Both types of political wounds are present in Gov. Christie’s George Washington Bridge scandal.

The tough and combative Governor of New Jersey stood before cameras last week and apparently did himself enough good in explaining away any personal involvement in “Bridgegate” that the bleeding has been stopped. Christie, however, is not out of political intensive care for lots of reasons. The political payback scandal that shut down portions of the world’s busiest bridge linking New Jersey and New York is the worst kind political scandal simply because it is so readily understandable to voters. Everyone has been caught in a traffic jam. No one expects a politician, or his staff, to actually engineer a traffic jam. This is far from over.

Christie has fired his deputy chief of staff and another top political aide, but the governor did not act until those moves were forced upon him by the release of documents that implicated his staff members in the effort to payback a small town Jersey mayor who had declined to endorse Christie’s recent re-election. Two other Christie appointees to the Port Authority, the agency that runs the George Washington Bridge, resigned some ago, but the governor flush from a resounding re-election win repeatedly failed to act to deal with the damaging political fallout. The result: a self-inflicted wound and a supremely damaging delay in responding.

Two observations about both good politics and good management based upon what I know about how a governor’s office operates, or should operate:

1) Being hands on is not a crime for a politician. It may be more work, require more hours in the day and it may even force more decisions to be made at the top, but for voters it should be a given that an elected official, particularly a governor, attends to a million details. When you wall yourself off from the details you get burned. Even if you believe that Christie didn’t know about the chaos caused by the lane closures leading to the GW bridge the fact is that he should have known and certainly should not have been the last to know. According to press accounts Jersey commuters were complaining plenty about the traffic jams when they occurred last September.

The Fort Lee, New Jersey police chief told a columnist for the Bergen Record on September 12 that during “four days of gridlock we’ve been asking the Port Authority what problem they’ve been trying to fix, and so far we haven’t gotten any answers.” Governors exist to get answers to such questions. Christie, with several very senior appointees serving at his behest on the Port Authority Board, could have solved the bridge closure with a single phone call. It stretches credibility to think the tough guy, no nonsense and self-described hands on governor wasn’t curious enough to ask someone “just what the hell is going on?”

It would be like Butch Otter in Idaho not following up on a very public issue with the Fish and Game Commission or John Kitzhaber in Oregon sitting around while Nike leaves town. Governors are paid to stay on top of problems.

The best your can say for Christie – the best – is that he was so consumed with running up the score in his November re-election that he didn’t read the morning papers in September. If that’s the best case then the governor really is guilty of gubernatorial malpractice. That the boss didn’t know or that his underlinings thought it appropriate that he not be informed is simply mismanagement – mismanagement at the top.

2) The other observation so far from “Bridgegate” is that the best you can say for Christie’s inner circle – the best you can say – is that he fostered or allowed to be created a culture where a senior staff member, the fired deputy chief of staff, could take it upon her own to play such silly and damaging political games. The Christie culture smacks of arrogance and, frankly, a small-minded pettiness that would not exist unless the tone had been set from the top. In this failure, too, the buck stops with the governor.

Chris Christie – and Barack Obama for that matter with his detached management style – should take many lessons from such political and management failures, but one lesson that should be seared into any politician’s ambition is the fact that it is the rare elected official who gets in trouble for acting too quickly. Christie, allegedly at the top of his craft and on the way to serious contention for the GOP nomination for president, gets a D-minus for not seeing problems and moving quickly to correct those problems.That is the best you can say about his scandal.

If it turns out that more traffic cones start to drop, or that Christie had knowledge he’s not fessed up to, or that he actually ordered or allowed the petty political payback to take place then all bets are off. Let the subpoenas issue and the investigations begin.

If it turns out that Christie’s marathon news conference was just an effort at immediate damage control and his story doesn’t hold up in the details then the Nixon analogy will have come full circle. Another absolute rule of political scandal is that the cover-up is always more damaging than the original sin. In that case “I am not a bully” will morph into “I am not a crook.”

Christie, Economy, Egan, Higher Education, Idaho Politics, Iran

Higher Ed, Lower Expectations

Posted on March 8, 2013by christian

Idaho is about to lose another high value educational asset. The loss is coming, in part I suspect, because the state has engaged in prolonged and systematic disinvestment in education at all levels and higher education has been particularly hard hit.

University of Idaho President Duane Nellis apparently will depart shortly for Texas Tech University in Lubbock; a 30,000 student, major research university that competes athletically in the Big 12. Nellis was named late last week as the “sole” finalist for the desirable Texas Tech job.

Nellis’ departure comes four years after University of Idaho supporters prevailed upon him to take the job at Idaho’s land grant university by sweetening the salary offer with private dollars above and beyond what the State Board of Education was prepared to pay. The Nellis move marks the second departure of a high value U of I president to a place where education is clearly a higher priority than it is in Idaho. Tim White, Nellis’ predecessor, left the Moscow school in 2008 to head the University of California-Riverside and since has since been promoted to head the entire 23-campus California State University system. Talk about a brain drain.

(Full disclosure: my firm has had a long-standing client relationship with the University of Idaho and know and admire both Nellis and White. I have also done volunteer work for years with the Andrus Center at Boise State University.)

It’s clear that Nellis was recruited for the Texas Tech job and White’s rapid rise in the huge Cal State system speaks for itself. Both men are quality leaders with national reputations who, in the whole scheme of things, had barely a cup of coffee as they passed through educational penny-wise and pound-foolish Idaho. One can hardly blame them for leaving for states where admittedly educational budgets have been whacked, but where higher education is still seen as the surest path to economic growth.

At California-Riverside White helped open the first new medical school in the state in four decades, while during his tenure in Idaho Nellis launched a major fundraising campaign and continued to grow the U of I’s research budget. Nellis moves to a Texas Tech system that boasts a law school, a health sciences center, a big graduate school and a national/international foot print in agriculture and trade.

(Political junkies will note that the Texas Tech system’s Chancellor is former U.S. Representative Kent Hance, a conservative Democrat-turned-Republican who holds the distinction of having beaten one George W. Bush in a congressional race in the 1970’s. Hance is a major player in Texas politics who, among other things, as a House Democrat, helped then-President Ronald Reagan pass the Reagan tax cuts in 1981.)

California’s bizarre budget and spending constraints required that Gov. Jerry Brown take a measure to the ballot last November to raise taxes, part of which he sold as a break with the state’s recent history of disinvestment in higher education.

As the New York Times recently noted, “Governor Brown holds a position on the board of trustees for both Cal State and [the University of California]. Since November, he has attended every meeting of both boards, asking about everything from dormitories to private donations and federal student loans. He is twisting arms on issues he has long held dear, like slashing executive pay and increasing teaching requirements for professors — ideas that have long been met with considerable resistance from academia. But Mr. Brown, himself a graduate of University of California, Berkeley, has never been a man to shrink from a debate.”

Like Idaho, spending on colleges and universities is down in California and in Texas, and enrollment is up. What seems different, however, is that some states in the post-recession period are finally starting, however tentatively, to invest again. And of equal importance these states actually demonstrate a genuine commitment to higher education by exploring real reform. For example, Oregon Gov. John Kitzhaber is pushing forward with a major reworking of the state’s university governance system that will likely lead to more independence and spending flexibility. Other states are linking state support to educational outcomes, hoping to change incentives from merely enrolling students to keeping them in school.

Idaho, on the other hand, seems content not even to discuss new models, while maintaining a top-down command structure enforced by a part-time board that generally sees it’s job as policing the higher education budget rather than growing it. A legislator who might be inclined to dust-off old ideas about a single university system, a chancellor for Idaho higher education or a higher education board devoted to policy would get laughed out of the Statehouse.

As the National Conference of State Legislatures (NCSL) noted in a recent report 20 years ago the United States “topped the world in the percentage of adults age 25 to 34 with college degrees. Our elementary and secondary schools might have been cause for concern but, with students from around the world wanting to enroll, our colleges and universities were above reproach.” No longer.

“Today,” the NCLS report says, “the United States ranks 10th among developed nations in the percentage of young workers holding a post-secondary credential or degree. It’s not that today’s young people are less educated than their elders. Rather, it’s that other nations are doing all they can to boost college participation and attainment and have surpassed the United States.”

Another study, the Times World Higher Education study, concludes that elite United States colleges – Harvard, Stanford, etc. – continue to be among the very best in the world, but the rest of the world is catching up to the rest of American higher education and catching up quickly.

“New forces in higher education are emerging, especially in the East Asian countries that are investing heavily in building world-class universities, so the traditional elite must be very careful,” according to Phil Baty, editor of Times Higher Education. “In the three years that the World Reputation Rankings have been running, we have clear evidence that the U.S. and the U.K. in particular are losing ground.”

So place all this in this global context and recognize that the bean counters in the Idaho legislature have, after a decade of disinvestment, succeeded in downsized state government to a place many of them have long dreamed about. At the same time they seem entirely content to let higher education patch and scratch its way forward. This year there will apparently be no new money to allow the University of Idaho to expand its law school offerings in the business and government center of the state and no new money to work on critical programs to retain kids in school once they have gotten there. The vast majority of the extremely limited new money for higher education – so far the legislature has approved less than the governor requested – will barely allow the state’s colleges and universities to keep up with new enrollment and occupy a few new buildings. This hardly signifies a strategic view of how to apply the essential grease of quality higher education to the sticky gears of a still lagging state economy.

You have to wonder how Idaho will attract the jobs of the 21st Century when the state continues to have one of the most dismal percentages in the country of high school grads going on to college or skills education. Meanwhile, study after study shows the unmistakable connection between the level of educational attainment by Americans and how well they do on measures of economic security and income. It’s not difficult to conclude that while Idaho education policy in recent years has centered on various “reforms” that have often promised improvements without more money, the state’s per capita personal income has fallen from 41st in the country in 2000 to 49th in 2011.

Most state policy makers seem entirely content with the steadily diminished status quo and they scarcely speak as another proven higher education leader leaves for a greener pasture. You won’t hear many speeches from Idaho political leaders about how the state should aspire to lead the nation (or even the region) in some academic area or find the resources to build a world-class research capability. Quite to the contrary the view seems to be that things in Idaho are just good enough and budgets and aspiration best be held in check. One doubts Duane Nellis or Tim White heard such sentiments in Texas or California when they made decisions to move on.

At the same time, new forces in higher education indeed are emerging. The Chinese, the Koreans and the Indians, just to mention the obvious, understand the links between robust, continually improving higher education and a growing 21st Century economy. Higher education shrinks income disparity, provides one sure path from poverty to a better life and, not insignificantly, creates better, critically thinking citizens. It’s one thing to be ideologically blind to the need for new investment in higher education that might require new resources. It’s quite another thing to be willfully ignorant of the way the world works.

Andrus, Baseball, Christie, Economy, FDR, Pete Seeger, Politics, Romney

House of Morgan

Posted on May 29, 2012by christian

Too Big to Fail, Too Big to Manage

A little over one hundred years ago J. Pierpont Morgan ran much of the world’s business from an elegant office at 23 Wall Street in New York. The investment and commercial banking operations that J.P. oversaw financed railroads, mining, energy, steel and insurance companies. Morgan was big, so big that when the U.S. economy was on the verge of tanking in 1907, Morgan put a wad of money on the table and saved the day.

In the days before “too big to fail” became part of the national dialogue, the House of Morgan literally was too big and too powerful to fail. Morgan was the banker to the robber barons of the Gilded Age and as such earned the scorn of many a progressive politician. By the early 1930’s, with the old man, J.Pierpont dead since 1913, the House of Morgan finally got its comeuppance. The Glass-Steagall Act, also known as The Banking Act of 1933, passed the Congress, was signed by Franklin D. Roosevelt and the big banks, particularly The House of Morgan, had to separate investment and commercial banking. Glass-Steagall was a clear cut response to The Great Depression and the widespread belief that reckless speculation by some bankers had played a contributing role in the international economic crisis that began in 1929.

It’s worth noting that the Glass in Glass-Steagall was Sen. Carter Glass of Virginia one of the old-style southern conservative Democrats who dominated Congress during much of the New Deal period. Glass, a newspaper editor by profession, served in the U.S. House of Representatives, helped write the Federal Reserve Act and then served as Treasury Secretary under Woodrow Wilson. Franklin Roosevelt wanted the tough, no nonsense, very conservative Sen. Glass to come back to the Treasury in 1933, but Glass preferred to stay in the Senate and devote his attention to improving banking regulation and modernizing the Fed. In short, Carter Glass was an expert legislator in these areas who applied decades of experience to sorting out how the federal government – and this guy was no big government liberal – ought to regulate banking.

American banking was governed by Glass-Steagall until 1999 when the Clinton Administration led the charge to eliminate the last visage of the New Deal-era regulation that separated traditional banking activity – loans, credit cards, deposits – from the substantially more speculative and riskier investment banking that centers on underwriting securities. Then-Treasury Sec. Lawrence Summers called the elimination of the 1930’s law an “update” of old rules, which would create a banking system for the 21st Century. Just how is that “update” working out so far you’d be smart to ask.

Enter Jamie Dimon the man who now presides over the 21st Century firm that J.P. Morgan invented in the 19th Century. Dimon, whose bank lost at least $2 billion recently by speculating in what are not incorrectly called financial “bets,” will testify before the Senate Banking Committee on June 7th to provide, as chairman Sen. Tim Johnson (D-South Dakota) said, “a better understanding of this massive trading loss so we can take the implications into account as we continue to conduct our robust oversight over the full implementation of Wall Street reform.”

Sounds like Congress is finally set to get to the bottom of all this risk taking by Wall Street banks, but wait, don’t bet the house payment just yet.

So far Dimon’s explanation for the big losses his firm suffered has been what we might call the “we were stupid” defense. This from the guy universally regarded as the smartest operator on The Street. Dimon has called the trading – bets more precisely – on extraordinarily complex corporate-bond derivatives – hope Sen. Johnson knows what those are – a “terrible, egregious mistake” and he’s humbly admitted JPMorgan Chase has “egg on our face.”

Dimon is displaying excellent crisis management skills by admitting the obvious, his bank screwed up, but he is also the guy who has repeatedly condemned the Wall Street reforms contained in the Dodd-Frank legislation. That legislation, passed in the wake of the most recent economic collapse, stopped well short of re-imposing the kind of controls that once existed with Glass-Steagall, but Dodd-Frank nevertheless earns the widespread scorn of most Wall Streeters as well as conservative politicians beginning with Mitt Romney. Romney has condemned the JPMorgan risk taking, but also says he’ll work to repeal Dodd-Frank.

Here’s a guess – call it a policy bet – the Dimon appearance before the Senate committee will involve a great many speeches both chastising big bankers and federal regulators, but nothing much will change. Dimon will gracefully sidestep any real responsibility for the betting errors, in part, because everyone knows that even the smartest guy on Wall Street can’t possibly keep track of all the esoteric trading his minions are engaged in across the globe. Many commentators will again bemoan the reckless greed that drives the kind of speculation JPMorgan and its competitors engage in but, when all is said and done, legislators will not be able to tighten the regulatory screws on the excesses of Dimon’s firm and other banking houses, because they too have placed a bet. The Congress – both parties – are gambling that continuing to woo the campaign financial largess of Wall Street, while not engaging in real regulatory reform won’t continue to imperil the American economy. I hope they win the bet, but I wouldn’t put money on it.

Two things to know from the messy details of this new Gilded Age: vast amounts of money is being made by what can only be called the wildest, most uncontrolled speculation since J.P. Morgan reigned on Wall Street and, through all the months of anguish and pain that followed the financial meltdown in 2008, not a single Wall Street player has had to face the legal, let alone the moral, consequences of the kind of reckless behavior that Jamie Dimon says put egg on his face.

The New York Times reports that the fellow who made a bundle while JPMorgan was losing a bundle is Boaz Weinstein, an aggressive hedge fund manager – he made $90 million last year – who was smart enough and gutsy enough to understand that JPMorgan’s “egregious mistake” was another gambler’s opportunity. The Times says of Weinstein: “In the hedge fund game, a business in which ruthlessness is prized and money is the ultimate measure, Mr. Weinstein is what is known as a “monster” — an aggressive trader with a preternatural appetite for risk and a take-no-prisoners style. He is a chess master, as well as a high-roller on the velvet-topped tables of Las Vegas. He has been banned from the Bellagio for counting cards.”

If you believe modern capitalism is a zero-sum game where someone wins and someone loses, little of value is produced, few jobs are created, and vast amounts of money are at stake for a handful of gamblers, then the capitalism of Dimon-Weinstein is just what the regulator ordered. If, on the other hand, if you believe in what I’ll call old fashion capitalism where money is borrowed and invested in real enterprises that employ people and make things, then you might think that Washington, D.C., with its unwillingness to confront Wall Street gambling, is continuing to whistle past the next economic meltdown graveyard.

How else to explain that no one – not a person – has suffered even mild public rebuke, let alone jail time, for the series of decisions in housing and finance that brought much of the American middle class to its knees in 2008 and since. Not only has no one been held accountable, fundamentally – as the JPMorgan bets confirm – nothing has changed with the big banks. In fact, as David Rohde explained recently in The Atlantic, “The country’s biggest banks are getting bigger.”

“Five U.S. banks – JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs – held $8.5 trillion in assets at the end of 2011,” writes Rohde, “equal to 56 percent of the country’s economy, according to Bloomberg Businessweek. Five years earlier, before the financial crisis, the biggest banks’ holdings amounted to 43 percent of U.S. output. Today, they are roughly twice as large as they were a decade ago relative to the economy.”

Using World Bank numbers, JPMorgan Chase’s market capitalization is greater than the GDP of 130 of the world’s countries, including New Zealand, Iraq and Vietnam. Given such size and scope, it’s little wonder the big banks behave like sovereign nations.

So, the biggest get bigger and ensure their position as “too big to fail” and even alleged smart guys like Jamie Dimon admit that banks too big to fail are, by definition, too big to manage. The big winners in this modern capitalism are guys like Boaz Weinstein who is a good enough gambler to get himself banned from Las Vegas, a place that really knows how to manage risk, but is, as the Times article says, “practically a featured attraction on Wall Street. [Weinstein] attends galas and charity events, and is sought out to speak at big events. Pictures of him clasping a drink at last night’s party appear with regularity on business Web sites.”

By comparison old J.P. seems like a genuine piker.

2014 Election, Al Gore, Borah, Bush, Christie, Church, Economy, Nebraska, Theodore Roosevelt, Wall Street

Bigness

Posted on April 25, 2012by christian

An Old Notion Relevant Again

On the downhill side of the Gilded Age in American political and business life – that would have been in the late 1800’s – progressive reformers from Theodore Roosevelt to Woodrow Wilson to Louis Brandeis found fault with the idea and reality of a concentration of economic power.

Brandeis, a great legal advocate before he went on the U.S. Supreme Court in 1916, described the threat of economic concentration by a single, simple word “bigness.” Brandeis entitled one of his greatest works, published in 1913, Other People’s Money and one chapter in that book was called “The Curse of Bigness.”

“Size, we are told, is not a crime,” Brandeis wrote, “But size may, at least, become noxious by reason of the means through which it was attained or the uses to which it is put. And it is size attained by combination, instead of natural growth, which has contributed so largely to our financial concentration.”

Today it is almost an article of faith that “bigger is better,” but the early 20th Century focus on means and uses of economic concentration are just as relevant today as when Woodrow Wilson was in the White House.

Our political and regulatory system seems unable to address the “too big to fail” syndrome and the human abuses that can follow. Much of corporate America seems one big merger followed by another and meanwhile, Walmart, one of the biggest of the bigs, seems to be engulfed by a major foreign bribery scandal in Mexico, Rupert Murdoch’s vast media empire is now defending its political clout in Great Britain as Murdoch execs fend off criminal charges for violating privacy. Criminal charges have been leveled against a BP engineer involved in the Gulf oil spill. You could go on, but the situation is clear – too big to fail can also be too good to be true.

Idaho Sen. Frank Church – he served in the Senate from 1957-1981 – is remembered today primarily for his headline generating investigation of the Central Intelligence Agency in the 1970’s, but Church always considered another of his Senate investigations equally, if not more, important. As chairman of a subcommittee on multinational corporations in 1973, Church delved deeply into the practices, some of them corrupt, of some of the biggest, most powerful companies in the world.

Church’s work cast light on International Telephone & Telegraph’s involvement in the fall and murder of Chilean President Salvador Allende and Lockheed was exposed for its role in a bribery scandal in Japan. Lockheed’s CEO at the time admitted to spending millions on bribes to foreign officials and a Japanese prime minister went to jail in the resulting scandal. The entire chain of events led to passage of the Foreign Corrupt Practices Act in 1977, the U.S. law that Walmart may find itself on the wrong side of today.

Frank Church discovered in that long ago investigation that human nature, driven by an imperative to constantly expand and concentrate economic power has its dark side. In such a world corners get trimmed, ends justify means and we experience an Enron or we end up bailing out a financial institution that can only justify its continued existence because it’s too big to fail.

A thinking man’s conservative, New York Times columnist David Brooks, had a fascinating column this week in which, in a way, he came at this bigness issue from a novel angle. Brooks’ point was that a blind focus on destroying the competition – Brandeis might have termed it how businesses become always bigger – is the flip side of a lack of innovation. When the focus is on constantly and relentlessly growing, creativity goes begging. The need to be bigger inevitably trumps everything, including finding a better way to make a widget.

Brandeis argued a hundred years ago – his was the age of Standard Oil and the House of Morgan – that eventually bigness, that which “is attendant of excessive size,” is inefficient. Eventually, he wrote, “Decentralization will begin. The liberated smaller units will find no difficulty in financing their needs without bowing the knee to money lords. And a long step will have been taken toward attainment of the New Freedom [a reference to Wilson-era reforms in banking and business.]

It may well be in this age of globalization with a bank in Rhode Island tied to the fate of a housing development in Ireland that there is no going back from bigness, but there may be more than nostalgia in longing for a simpler, smaller time.

Frank Church, a liberal Democrat, helped expose the evils of bigness and concentrated power in the 1970’s, just as his role model in the Senate, William E. Borah, had done in the 1930’s. Borah, a Republican progressive, hated bigness, monopoly and concentration of power. He championed small business and decentralization and once said, “When you have destroyed small business, you have destroyed our towns and our country life, and you have guaranteed and made permanent the concentration of economic power, [which in turn ensures] the concentration of political power. Monopoly and bureaucracy are twin whelps from the same kennel.”

I don’t know about you, but I long for a political leader willing to call bluff on concentrated power. Bigger isn’t always better, it may just be bigger.

Christie, Economy

What Does It Mean

Posted on November 14, 2011by christian

Mindless Protest…or Something More

What to make of the “occupy” protests?

Is it the fad of the moment; the “trust fund” demographic playing at protest against the consumer and corporate culture they quietly and passionately embrace? It can be hard to be credible as part of the 99% while sipping a double macchiato from Starbucks and resist the autumn breeze in your Patagonia fleece.

On the other hand, it’s hard to warm to a Treasury Secretary in a Democratic administration who hasn’t always paid his taxes and seems intent on insulating Wall Street from real scrutiny and real reform. Beyond sullying parks from New York to Portland, we must credit the 99% with raising the issue of income disparity to the national conversation.

But what to make of a “movement” with no goals and no leader? Maybe it’s just mindless anger addressed toward a political and business culture that seems more and more remote from the daily existence of many Americans or it may just be – may just be – the vanguard of a new progressive movement; the type of which has always come in our history on the heels of capitalism behaving badly.

Three examples, all in the news in the last two weeks, that should take even the cozy and comfortable down to the occupied zone.

Former New Jersey Senator and Gov. Jon Corzine’s political afterlife found him settling in at a “futures brokerage firm” that recently declared bankruptcy after it was disclosed that $633 million of the firm’s client’s money had gone missing. I can understand accidentally dropping a $20 bill, but $633 million? More than 1,000 employees of MF Global were cut loose on Friday. Corzine, a Democrat who once ran Goldman Sachs, obviously knows both the ways of Wall Street and Capitol Hill. He may soon know the ways of a federal crossbar hotel.

As Robert Mintz reported in The Guardian, the MF Global meltdown is most likely another example of an inadequate regulatory system that failed to assess the risks that greed will run.

“One of the hallmarks of the financial crisis was the degree to which firms became so highly leveraged that a run on the bank became almost inevitable,” Mintz wrote. “The level that MF Global was permitted to leverage itself should have raised red flags, but didn’t.”

Greed has also been batting clean-up in the epic demise of the one-time blue chip franchise that used to be the Los Angeles Dodgers. Like the Corzine caper, Frank McCourt’s looting of the Dodgers has yet to be fully documented, but it seems pretty clear he turned the team’s cash drawer into a personal slush fund. McCourt will eventually lose his team, Dodger fans will undoubtedly lose another season and the sleazy owner will walk. Being greedy is rarely a crime, apparently.

That brings us to Nancy Pelosi. The House minority leader and former Speaker of the House has some explaining to do today after a truly devastating piece last night on the CBS broadcast 60 Minutes. Correspondent Steve Kroft, reminding us of the old Mike Wallace, asked Pelosi how she could justify having what is in effect insider stock information that allowed her and her husband to benefit handsomely on an initial public offering. Kroft’s report also examined the benefits of insider information in the hands of current Speaker John Boehner and House Financial Service Chairman Spencer Bachus.

None of the lawmakers, of course, sat for an interview to explain themselves, but the bumbling answer Pelosi gave when Kroft confronted her during a news conference was a classic of the “I don’t know what you’re talking about, but you must be wrong” variety. The lawmaker’s ultimate defense, again of course, is that the insider information members of Congress have access to, and can trade upon, is not illegal. It’s just wrong.

It can be difficult to see a popular uprising as it unfolds. It took us a while to catch on to the Arab Spring. When the end came, the Soviet Union collapsed much faster than anyone could have predicted. The backlash against the greed and excess of the Gilded Age of the 1890’s unfolded over more than a decade through the administrations of three presidents – Theodore Roosevelt, Taft and Wilson. The raw speculation and lack of regulation in the 1920’s ushered in the regulatory reforms of the New Deal.

We’re still sorting out – and will be for a long time – the real consequences of the financial and housing meltdown of 2008. I’m not sure I completely agree with those, like Columbia economist Jeffrey Sachs, who contend we are on the cusp of a new progressive era that will, as Sachs wrote Sunday in the New York Times, will usher in an age of renewal.

I also don’t know if the Occupy crowd watches 60 Minutes or cares a fig about the future of the Dodgers, and I don’t have a clue as to whether they have any substance to offer to the national debate, but they do seem to have identified simple and time-honored truths – greed is not good and a modern representative democracy will not function well when those in positions of real power behave so very badly.

In another context, I’m reminded of the famous words of the lawyer who finally put Sen. Joe McCarthy in his place. Joseph Welch, with guts and eloquence, glared at McCarthy during the famous televised hearings and asked, “Senator. You’ve done enough. Have you no sense of decency, sir? At long last, have you left no sense of decency?”

A good question for Corzine, McCourt, Pelosi, et al. Indeed, they have no sense of decency.

2012 Election, Christie, Economy, Minnick

Lost Generation

Posted on October 12, 2011by christian

The Fall of the American Dream

While Herman Cain talks about his “9-9-9” plan to restore the economy and Mitt Romney touts a 59 point plan to do the same, while President Obama’s most recent plan can’t even command enough respect to get a vote in the Senate, the glass half empty crowd wonders if we’ll capable of solving any problem – economic or political.

Case in point: new research from the Washington Post and Bloomberg News paints the American mindset in gloomy colors. As Chris Cilliza notes in the Post, Forty four percent of the folks surveyed “said that it wouldn’t make much difference for their family’s financial situation if President Obama won a second term or if a Republican was elected. Among independents, nearly six in ten (58 percent) said no matter what happens in the 2012 there would likely be little change in their own financial situation.”

Put another way, many, many Americans say we’re doomed to endless political deadlock and prolonged economic stagnation. Welcome to America in the 21st Century.

In a sober piece in last Sunday’s New York Times, David Leonhardt offered the assessment that the current economic – and I would add political – turmoil may be even worse than it seems. In Leonhardt’s view, even during the Great Depression, Americans were inventing, innovating, building things. Not so much now.

“Even before the financial crisis began, the American economy was not healthy,” Leonhardt wrote. “Job growth was so weak during the economic expansion from 2001 to 2007 that employment failed to keep pace with the growing population, and the share of working adults declined. For the average person with a job, income growth barely exceeded inflation.”

Flat wages, not enough jobs, rapidly growing income disparity, a troubled education system, aging infrastructure, debt and default – the litany of American decline, but does it have to be?

Ask those folks in the Post and Bloomberg poll what the problems are and they know – no one has the answer, its all politics. As Cizilla wrote: “The wild swings in the electorate are directly attributable to a belief that neither party really knows what it’s doing and so once one side is given a chance for two years and nothing changes, voters — especially independents — are more than willing to give the other side a try. And then when that side produces few results, the cycle repeats itself.”

We are slipping into a year of political campaigning that, based upon what we’ve seen so far, is likely to produce a mostly irrelevant and depressing debate about the country’s real problems and what the real solutions might be.

A little over a year from now someone will be elected. Someone always is. But the current level of debate – and the almost total inability of our politics to engage on what is really important – brought to mind a piece I read years ago in the Wall Street Journal. The Journal’s Dorothy Rabinowitz won a Pulitzer Prize for commentary for a column she wrote in 2001 entitled “The Campaign Speech You’ll Never Hear.”

Here’s a key sentence, Rabinowitz quoting a politician who, sadly, doesn’t exist on the presidential campaign trail today.

“I would say they’ve lowered the bar a lot for the highest office in the land, and I’m terrified to think how much, when I let myself think about it at all. My opponent and I — this is the best America can do? One of us is going to stand up and be sworn in as the new president of the United States? I suppose others in my shoes have had the same feeling, so maybe it’ll all work out.”

Maybe. The glass seems half empty.

2012 Election, American Presidents, Andrus, Baseball, Biden, Britain, Christie, Economy, FDR, Lincoln, Minnick, Obama, Politics, Reagan

Trying Times

Posted on September 28, 2011by christian

Leadership? Not So Much

At pivotal moments in American history it has often been the case that the right leader somehow emerged from the chaos of the moment and the nation was able to pass through trying times and set course for a better future.

Presidents Franklin Pierce and James Buchanan lacked the vision and courage to head off the steady drift in the direction of sectional strife in the 1850’s and, while there is a good argument to be made that Abraham Lincoln’s election in 1860 was the tipping point toward civil war, there is hardly any disputing that Lincoln brought to the presidency the powers of leadership that ultimately saved the country.

Likewise Franklin D. Roosevelt proved to be the right leader at the worse time in the 20th Century. FDR restored confidence and, I’m convinced, reformed American capitalism enough to save it. He was a leader made for his times.

There are a handful of other examples in our history. Andrew Jackson, with all his flaws, may qualify for a leadership award. More recently Ronald Reagan, invoked by every current GOP candidate for president as the leadership gold standard, had some of the FDR in him. He was a confidence builder when the nation needed a big dose. Washington stands, of course, in a special class of right leader at a trying time.

It’s hard to escape the reality that the nation is at another such crossroads and our politics and politicians hardly seem up to the task. The litany of problems is almost too big to fathom: stagnant economy, double-dip recession looming, crippling unemployment, increasing poverty and income gap, a national and international debt crisis, declining quality of public education, the need for entitlement reform, the European fiscal crisis, the uncertainty and unpredictability of the Arab Spring, climate change, terrorism, even the Red Sox have melted down.

The thinking man’s conservative, David Brooks, identified the heart of the problem in his New York Times column yesterday: “the ideologues who dominate the political conversation are unable to think in holistic, emergent ways. They pick out the one factor that best conforms to their preformed prejudices and, like blind men grabbing a piece of the elephant, they persuade themselves they understand the whole thing.”

The Democrats are all about tax increases on the most wealthy and increased spending to stimulate consumer demand. The Republicans can’t shake the gospel of tax cuts, controlling the deficit and whacking at regulation. What both sides miss is that we need to do all of that and more.

It may well be recorded at the supreme moment of missed opportunity in the Obama Administration was the president’s failure to grasp and champion the most important political and policy work to come out of Washington in a long, long time – the recommendations of Simpson-Bowles Commission. In the end, the discarding of the work of the former Wyoming Senator, Alan Simpson, and the Clinton-era White House Chief of Staff, Erskine Bowles, will be recorded as a failure of leadership. The bi-partisan commission called for doing it all – tax and entitlement reform, spending cuts, deficit reduction. The Commission prescribed exactly what every thinking American knows in their partisan heart must be done. Obama punted and Congressional Republicans did as well.

And meanwhile the country is hungry – desperate even – for real leadership. Many Republicans salivate over the prospect that New Jersey Gov. Chris Christie will turn his consistent “no” into an announcement that he’ll enter the GOP battle and it’s easy to see why. Christie delivered an inspirational speech last night at Republican hallowed ground, the Reagan Library in Simi Valley. His indictment of Washington leadership will surely resonate with Democrats and Republicans who long for leadership from someone.

“In Washington,” Christie said, “we have watched as we drift from conflict to conflict, with little or no resolution.

“We watch a president who once talked about the courage of his convictions, but still has yet to find the courage to lead.

“We watch a Congress at war with itself because they are unwilling to leave campaign style politics at the Capitol’s door. The result is a debt ceiling limitation debate that made our democracy appear as if we could no longer effectively govern ourselves.”

Christie specifically jabbed President Obama for failing to embrace the Simpson-Bowles work noting pointedly that it was “a report the president asked for himself.”

I’m not at all convinced Chris Christie is the Lincoln or FDR we need, but I am convinced that genuinely honest talk about the enormous problems facing the country, with an unstinting focus on big solutions to big problems rather than what David Brooks calls “proposals that are incommensurate with the problem at hand,” would be the beginning of the leadership the country needs and hungers for.

The electorate is deeply unsettled. The evidence floats about everywhere you look. A new CNN survey says only 15% of Americans have confidence in their government; an all-time low. The Coca-Cola chief says China is a better business bet than the USA. There is an unmistakable sense that American power and influence is in decline.

Is anyone up to the task? Can anyone see beyond the next election? I’m betting if someone could look that far ahead – see ahead to real leadership – it would be the best possible strategy to win.