Archive for October 2012

The Oceans Are Coming

October 31, 2012

Hurricane Sandy in addition to billions of dollars of destruction, sent both campaign tough questions.  Would  both campaigns need to curtail the appearances of their standard bearers?  Were Romney’s views on FEMA as well as the whole role of the Federal Government versus the private sector wise?  What did the flooding of New York City’s subways and tunnels mean?

FEMA and the overall role Government are both ideological and pragmatic subjects.  The right sees little need for government services since they require taxes to fund them.  The left sees government provided services as necessary since so many Americans could not afford to fund those services themselves.

Pragmatically, there is always room for examining any government service and deciding it might be accomplished more efficiently in some other way.  FEMA during Hurricane Katrina is certainly not a model to be praised.  We shall see whether FEMA during Hurricane Sandy is better.  It is simply hard to comprehend how Pennsylvania FEMA, New Jersey FEMA, New York FEMA, and Connecticut FEMA could afford to have each the reserves necessary for an emergency such as a hurricane.

The sleeping dog is New York’s flooding situation.  Ocean water overflowed the banks and entered subways and a number of tunnels.  The City is busy now trying to empty this water and then assess the extent of damage.  It could be huge in terms of cost to repair.  That is only part of the issue.

The Atlantic Ocean still lies at the edge of New York City.  The Hudson River still empties into the Atlantic Ocean at the edge of New York City.  Manhattan still is an island surrounded by water.  So what happens if the oceans continue to rise?

The Netherlands have thrived for years with much of its land below sea level.  A system of  sea walls, dykes, and locks protect the Netherlands from the North Sea.  What will protect New York City?

Global warming, of course, is the elephant in the room.  The GOP (and Mitt Romney) have taken strong positions and oppose both the theory that man is causing global warming, and even the proposition that global warming is occurring.  Progressives have said the opposite and proposed “cap and trade” legislation as a method to control carbon emissions.  The right has opposed “cap and trade” and has fought against such legislation.  In the heat of this battle, no one has considered whether ocean levels were rising, or what might happen if they did.

The subject highlights the futility of the current divided ideologic political debate.  Whether rising sea levels are caused by  US carbon emissions or not, is a secondary matter.  Carbon emissions in India and China will result in rising sea levels in New York too.

Higher sea levels are going to flood cities like New York unless some counter measures are taken.  Would dykes and locks will be enough?  How much will these measures cost?

What is clear is that arguing about whether global warming is connected to fossil fuels misses important points.

Pragmatically, fossil fuels will be necessary for years.  How can the developed world continue to use them and ask China and India (2 1/2 billion people) to restrict their use of fossil fuels in order to reduce global warming?

With $16 trillion is debt already, where is the money going to come from to build up New York City’s shore line?

Both parties have inadequate answers.  Romney and the GOP deny global warming.  President Obama and Democrats say global warming is real and “cap and trade” is a path forward.  Neither position appears to deals sufficiently with global warming consequences.

Will Hurricane Sandy be the wake up call?


The Calm After The Storm

October 30, 2012

In the wake of Hurricane Sandy, one is struck by how unforeseen events can take control of everyday life.  This event struck the northeast but just ask anyone living in Tornado Alley what nature can do.  For the Northeast, getting debris cleaned up and electricity restored is the first priority.  No time for politics.

Still, the clock is ticking.  Next Tuesday, one week from today, the nation officially votes for the next President.  For many, Tuesday will mark the end of senseless negative political ads and a return to equally senseless, but less irritating auto and medicine ads.  For others, the election outcome will either raise hopes or caste a spell of near despondency.

In this calm, will voters take this time to think the election issues through?

The election is not about the economy or jobs.   It is true that the political rhetoric says the election is about jobs and the economy.  Compared to other major countries, however, the US economy is growing faster and unemployment is lower.  Any thoughtful analysis would say the US is well on it way towards full employment.

The election is also not about foreign policy.  While some may argue that the US needs to exert its influence (read military power) in the Middle East, Africa and Southeast Asia also represent growing areas of concern.  In short, this is not the time for the US to be tied down with a land war anyplace.

This election is not about the poor, the health care uninsured, the elderly on fixed income, the newly graduated seeking employment, or our failing school systems.  The election is not about the political divide or dysfunctional Congress.

The election is really about all these issues… but in the context of a $1 trillion deficit projected as far as we can see.  The election is about how can the country improve each of these issues while on a path to regain control of both the deficit and the debt.

Neither party has caste the election in these terms.  Most likely the reason for silence is that the only path forward which will work will call for broad sacrifices.  The successful path forward will say good-by to the free lunch form of politics.

So, in the absence of either Mitt Romney or Barack Obama saying taxes must go up for everyone and that entitlements along with defense spending must be reduced, voters are left to decide with only half a deck of cards which candidate to select.

Maybe the Hippocratic Oath is more appropriate for this election.  Who will “do no harm”.

The Calm Before The Storm

October 29, 2012

Hurricane Sandy is heading towards land.  The huge storm estimated over 500 miles wide will put some 50 million Americans in danger.  Winds, rain, and rising water pose challenges to all residents in its path, regardless whether they are Republicans, Democrats, or Independents.


There is another huge storm scheduled to strike the entire US on November 6.   Pundits are busy speculating how Sandy will also impact the election.

National polls are suggesting that Mitt Romney is gaining.  More voters nationwide appear to be trending in favor of Romney.  Surprisingly, however, in the “battle ground” States it appears Romney’s surge following the first debate has stopped and may be receding.  Why?

There are probably many reasons but two jump out immediately.  (1) The voting population has a relatively short memory.  Combining this characteristic with the saturation bombing with political ads, it is not hard to see why images, even positive ones, can be fleeting.

(2) The second and even more compelling reason is that in battle ground States, a wider range of issues are important and in play for undecided voters.  Most everyone has opinions about jobs and the economy.  In battle ground States, other issues have resonance too.

The auto bailout really means something to Ohio residents.  Medicare costs and Social Security benefits are on top of the minds of Florida voters (as well as others across the country).  Women’s rights, full recognition of homosexuals, and comprehensive immigration reform have been lingering just below the surface for months.  Now in the calm before the storm, voters are taking the time to think broadly.

October 29 and 30 will be the time for Hurricane Sandy.  These days are also represent the calm before the November 6 election.  I wonder whether voters will ask themselves whether they can believe someone who was “severely conservative” in the primary season and now in the final weeks of the Presidential election is overtly tacking towards the center?

The election is going to be close.  The outcome remains uncertain.  Maybe this calm before the storm can help some undecided voters decide.  We shall see.

Political Theater

October 28, 2012

Most ads we see on television or in the newspapers, for soap, vitamins, and automobiles for example, must meet certain test of accuracy and relevance.  Have you ever heard, “Brand X can make you younger again.  Look around, everyone is getting older but if you buy Brand X, you will get younger”?

Probably not.

What you have heard would go like this.  “Brand X can make you look younger again.  Look around, everyone is getting older but if you buy Brand X, you will feel younger”.  Two words, big difference.

Advertising is all about what things appear to be (look) and what impressions (feel) they make upon us.  Advertisers know this and the create their commercials (ads) to capitalize on this.

Tom Smith is the GOP Senate candidate in Pennsylvania.  He has spent a boat load of money repeating the same story about Democrat candidate Bob Casey…  “Unemployment is high (the economy is too weak), the debt is increasing (government is spending too much), I (Tom Smith) am not a career politician, I’m a business man, and I know how to create jobs, and Bob Casey has done nothing to fix either”… or words to that effect.

These are all relatively true statements but taken together are completely irrelevant.  Unemployment peaked at 10.1% in 2009 following the onset of the financial crisis which occurred during the previous GOP administration.  Why should anyone believe Tom Smith would put in place policies that could dramatically reduce unemployment, especially since Smith offered no concrete examples?

It is also true the debt continues to rise.  The Bush tax cuts and rising entitlement expenditures account for over half of the yearly deficit (and therefore the additional debt).  Why doesn’t Tom Smith say, “if elected, I will raise taxes and cut Medicare, Medicaid, and Social Security”?

Smith’s last claims (I’m no politician, I’m a businessman) is what you want to make of it.  It is a true statement but there is no connection between being a businessman (who creates jobs in his own business) and being one vote in 100 and causing the creation of jobs across the country.  This statement’s irrelevance is even more dramatically illustrated when one learns that Tom Smith is a Tea Party favorite.  This GOP faction believes there is no roll for government in the economy.  So how exactly would Tom Smith create jobs?

The art of advertising is to avoid additional clarifying information while creating the illusion of providing truthful statements.  Political ads are about creating the appearance (like when someone on television is wearing a white lab coat and tells you Brand X is good for you).  This is an intentional design to entice you to feel you would be better off if you followed the advice.

Advertising is never about encouraging anyone to check on the truthfulness or the relevance of the ad.

Political theater today is not your mother’s theater.

Who’s A Moderate?

October 27, 2012

David Brooks, New York Times columnists, gave an endorsement for President Obama yesterday without giving an endorsement.  Brooks spoke of what he thought it means to be a “moderate”.  Brooks says moderation is not half way between the extremes of conservatism and progressiveness.  Rather it is an approach that is mainstream, nether futuristic nor tied to the past.

The recent voter rush, the polls are citing, to Mitt Romney is not based upon Romney being a moderate.  It is true he has changed his position on most issues and spoken in moderate tones.  It is true he has not repeated his pledges to be “severely conservative” nor has he said he would pursue policies where undocumented aliens would choose to “self deport”.  It is true also that Romney has assured the middle class that his 20% tax reduction which will surely benefit the wealthy will also not put a greater burden on the middle class.  This rush is based upon the hope Romney is a moderate.

Why is Romney not a moderate?

David Brooks description of being moderate was about representing a true position.  Romney probably has true positions but if you add up the primaries and the post convention speeches, it would be difficult to assign a specific position (center, right, far right) for any of the policies Romney has addressed.

Lowering taxes when the debt and deficit are as large as they are is an extreme position.   Reducing entitlements while proposing tax reductions, increases in defense spending, and lowering taxes is an extreme position.  Saying you will eliminate regulations when the country sank into its worse recession since the great depression due to too lenient regulatory action is an extreme position.

Romney may be speaking in the closing days of the campaign like a he thinks a moderate might speak.  Romney may want those still undecided to think of him as a moderate.  Romney, however, given what he has said in total, is no David Brooks moderate.

The Private Equity President?

October 26, 2012

Polls, with 10 days to go, are suggesting the possibility of a Romney popular vote victory and President Obama a Electoral College win.  While it is still too close to call and the polling process is highly suspect, the prospect of a split decision presents a question of legitimacy.

Mitch McConnell will claim this time that President Obama does not represent the will of the people.  Mitch’s mantra of a “one term President” won’t work this time.  Mitch will probably go to just ignoring the President.  Gridlock?  No bi-partisanship?

What type of a second term should the country expect?  Is that a reason for swing State voters to vote for Romney even though they were going to vote for President Obama?

The Country will survive with either Mitt Romney or Barack Obama as President.  That’s the good news.

Mitt Romney is a trained private equity executive.  He sees life through an investment (in sure things) set of eyes.  His goals have been about accumulating profit and nothing more. This is a fairly narrow perspective.

He knows the power of negotiations and how to strike a hard bargain.  He will press for the world and settle for much less.  He will be relentless until he reaches his targets.

Hmmm.  That doesn’t sound so bad.

The question we must continually ask is, first, what is it Romney wants, not whether he can achieve any goal.  Leadership is a much admired skill.  Leading the flock over a cliff represents a misplaced skill.  That is what we must be on the look out for… who will inform or advise Romney on choosing his goals.

  • Will foreign policy default to a neoconservative group like George W Bush allowed?
  • Will economic policy focus upon securing wealth at the top and allowing scraps to fall off (trickle down) the table?
  • Will his pick for the Supreme Court appease the evangelicals and ultra conservatives or someone conservative but more moderate?

During the primary season, Tea Party and ultraconservatives openly worried that Romney was a rudderless person.  He had no ideology and certainly not theirs.  They believed he would flip flop on issues and be far more at home with moderate positions.  When one is the President and not just a candidate, they reasoned, one can show their true colors, what ever they are.

President Obama is a much more known entity.  He has shown himself to be a weak negotiator to be sure.  He has, however, pointed the American ship of State in safe directions and has championed policies which will undoubtably be on the right side of history.  His views would appear to be:

  • Ground wars in pursuit of regime change or nation building do not work.
  • “Too big to fail” is real and must be put in the context of effective regulations.
  • Reducing the federal deficit must be done, and at a pace that does not stifle the economy and involves sacrifices by all Americans.
  • Healthcare access should be available to everyone in an affordable and dignified way.
  • Sexual orientation is not a reason to deny rights accorded other citizens.
  • Women’s rights, and in particular, women’s reproductive health options are not the subject for political debate

These are not positions fundamental to private equity.  Mitt Romney could hold these views but his training and experience does not provide any indications he holds any views.  Instead we must go by what candidate Romney has said, who his supporters are, and which advisors he surrounds himself with.  In this regard it is not encouraging.

A split decision, Romney winning the popular vote and Obama the electoral vote is not the best outcome.  It is, however, far more probable that the President we know will serve Americans better than a private equity President.


Second Versus First

October 25, 2012

Another way to view the 2012 Presidential election is which candidate will be more successful, a man finishing his second term or a man entering his first term (and almost certainly thirsting for a second term).  Who will work harder, who will produce the best results?

What will drive a President Obama?  Where in the spectrum of center to far right will a President Romney feel he needs to govern in order to win a second term?

There are two paths forward for both men.  “Kick the can” and “Take real action”.

“Kick the can” is a sure bet if Romney elects to follow the safest route for a second term.  He can claim the economy was much worse than he thought and so he needed to focus first on fixing that before fixing the deficit.  In that case, 2016 will look much like 2012, only with much larger debt.

“Take real action” for President Romney will be a direct assault upon entitlements.  There is no other way the math works.  Additionally, if a 20% marginal rate tax reduction is pursued, Romney will need significant entitlement changes which will increase the burden on the Middle Class.  There is also no other way with a tax reduction.

For a second term President Obama, “kicking the can” is also the safest approach.  This may be the best option to hold open the chance for another Democratic successor. The GOP will be labeled obstructionists and that will not be a hard case to sell.

To “take real action”, however, is the route for President Obama, if he wants to be remembered as a great and transformative President.  To do this, President Obama must ask all Americans to sacrifice for their country.  He must propose a balanced approach of new revenue (taxes and co-pays) along with some modifications to benefits.

There are other considerations beyond the deficit.  The economy, jobs, and social issues could be different too.  A Romney first term will rise and fall on whether the economy becomes sounder and whether jobs (especially good jobs) flourish.

Social issues are unlikely to be a Romney initiative but his problem will be the evangelical and ultra conservative wings of his party.  We have heard that the body naturally wards off conception during rape and most recently that it is part of god’s plan to create life even during rape.  Romney’s term will be difficult enough trying to deliver on his promises for him to turn his back on these peculiar thinkers.

President Obama will certainly not let women’s rights, homosexual recognition, and immigration reform fall backwards.  It is, however, problematic whether he will champion battles he can’t win in Congress, especially if he is fighting for some deficit reduction plan.

A second term for President Obama or a first term for Mitt Romney?  My vote is that President Obama will keep America closer to the center than a President Romney.

In a few days, we shall see.