Tuesday, November 25, 2008

Expectations and False Hope

Recently, some authors and commentators have stated that many people voted for Obama not really knowing what he would offer -- that they really could not define clear logic for their selection. It has been my experience with people I interact with; e.g., my friends and family members in various parts of the country (not here in Utah) that most people do not study the issues or the candidates to any depth. They make their determinations on face value and opinions they gather primarily through the MSM. With that being said, McCain was a poor option.

McCain was and is an uninspiring politician. Obama painted him effectively as Bush III. The bulk of the conservative and Republican talking heads were unconvincing in their efforts to paint McCain as a viable option.

Obama was someone other than a Clinton. He was not Gore or Kerry -- two individuals that make McCain look like a genius. Obaba is well-spoken when giving a speech. He is young but somewhat of a novice. He has little experience. For some, this is endearing.

When your experience is limited to being a community organizer, a short-time state politician and a Senator with only a few years experience (most of that time was spent running for President), your really do not have a great list of friends capable of running federal departments. He'll be picking party stalwarts and ex-Clinton insiders. His roll-a-dex is rather light for highly-qualified senior managers. Not change anticipated in this area.

The George Bush White House and the Nancy Pelosi and Harry Reid Congress should go down in history as some of the worst ever. They presided, as did to a certain extent Reagan, GHW Bush and Clinton, over the largest increase in government ever, coupled with the largest debt ever -- namely foreign. A debt over 10 trillion and increasing daily.

Obama will do his best to instigate some of his own government expansion from climate control measures and cap and trade to socialized medicine to labor reorganization. However, this financial crisis is going to tie his hands.

Yesterday, Obama made a promise to use a massive stimulus program to "jolt" back on track an economy. He also mentioned -- now this will shock those who voted for CHANGE and HOPE -- that a looming huge budget deficit will require cutting programs and reconsidering priorities.

His team members are going to need every bit of the time allocated by the Presidential Transition Act to get their hands around the issues confronting the nation -- if at all possible.

Each day, there is something new. It is a Citibank rescue one day and then the Fed spending hundreds of billions more on a suite of rescue packages: buying up to a $100 billion of debt issued by government-sponsored mortgage enterprises, buying up to $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae, and launching a $200 billion facility to support consumer finance, including student, auto, and credit card loans and loans backed by the federal Small Business Administration.

I am not counting on realized any personal investments I have. I consider all gains to be gone, now that includes principal, never to be recouped. Why should I assume that things will turn around -- that the markets will rebound to 2007 levels, say within ten years? There is nothing to back up dollar. There is nothing backing up any bailout -- the false assumption that the government will have the money to make good on its promises.

The government will go broke. How can an entity that is going broke provide a stimulus package that could be $700 billion over two years? Where does this money come from? Why does anyone think the consumer is going to use it to jump-start the economy again? Is the average consumer going to go out a buy stuff? Some maybe. However, a consumer who has lost all hope of a decent retirement and knows there will be no social security, should put that money in a savings account that pays 1 percent annually. More likely, he/she will pay down debt...which is not a bad move either...hopefully never to return to it.

There are serious flaws to the economic underlying system. Until they are rectified, the political promises and desperate bureaucratic actions will be band-aids.

Sadly, Obama is going to preside over a desperate situation. The Obama fans are going to be sadly disappointed. The hope and change he promised is looking like it will come up a short to his admirers. Perhaps his is not the messiah.

Wednesday, November 19, 2008

Baseball -- the Greatest of All Games

Here we are in the middle of football season -- rivalry week for many -- and I want to comment on baseball. Over the past few weeks, I re-watch Ken Burn's 1994 PBS Baseball series. Twenty hours of fascinating commentary on America's past time.

I really enjoy football, both college and the NFL. I am a die-hard Buckeyes, Browns and Vikings fan; season ticket holder for the Utes; and NFL fantasy addict. But I love baseball.

My breed is dying. I got it from my dad who got it from his dad and maternal grandfather. My oldest son gets if from me. My youngest son is more NFL and NBA. My daughters are not all that interested -- they can take it or leave it. My wife rarely shows an interest.

Prior to the avent of TV, baseball teams, games and players were the topics of convesations in most households and places of employment throughout the nation. Fans dressed up to attend games: men wore ties and hats, women dresses. The characters are legendary:
Hank Aaron, Grover Alexander, Cap Anson, Ernie Banks, Yogi Berra, Mordecai Brown, Roberto Clemente, Ty Cobb, Leo Durocher, Joe DiMaggio, Bob Feller, Whitey Ford, Jimmie Foxx, Lou Gehrig, Josh Gibson, Bob Gibson, Hank Greenberg, Ken Griffey Jr., Lefty Grove, Tony Gwynn, Rogers Hornsby, Ban Johnson, Walter Johnson, Sandy Koufax, Nap Lajoie, Kenesaw Landis, Buck Leonard, Connie Mack, Greg Maddox, Mickey Mantle, Christy Mathewson, Willie Mays, John McGraw, Stan Musial, Mel Ott, Satchel Paige, Branch Rickey, Kirby Puckett, Cal Ripken, Brooks Robinson, Frank Robinson, Jackie Robinson, Pete Rose, Albert Pujols, Babe Ruth, Nolan Ryan, Al Simmons, George Sisler, Ozzie Smith, Warren Spahn, Al Spalding, Casey Stengel, Tris Speaker, Honus Wagner, Ted Williams, Carl Yastrzemski, Cy Young.
In 1987, Thomas Boswell penned 101 reasons why baseball is better than football. We all have heard Abbott & Costello's Who's On First routine. Less heard is George Carlin's comedic commentary on a comparison between baseball and football...
Baseball is different from any other sport, very different. For instance, in most sports you score points or goals; in baseball you score runs. In most sports the ball, or object, is put in play by the offensive team; in baseball the defensive team puts the ball in play, and only the defense is allowed to touch the ball. In fact, in baseball if an offensive player touches the ball intentionally, he's out; sometimes unintentionally, he's out.

Also: in football,basketball, soccer, volleyball, and all sports played with a ball, you score with the ball and in baseball the ball prevents you from scoring.

In most sports the team is run by a coach; in baseball the team is run by a manager. And only in baseball does the manager or coach wear the same clothing the players do. If you'd ever seen John Madden in his Oakland Raiders uniform,you'd know the reason for this custom.

Now, I've mentioned football. Baseball & football are the two most popular spectator sports in this country. And as such, it seems they ought to be able to tell us something about ourselves and our values.

I enjoy comparing baseball and football:

Baseball is a nineteenth-century pastoral game.
Football is a twentieth-century technological struggle.

Baseball is played on a diamond, in a park.The baseball park!
Football is played on a gridiron, in a stadium, sometimes called Soldier Field or War Memorial Stadium.

Baseball begins in the spring, the season of new life.
Football begins in the fall, when everything's dying.

In football you wear a helmet.
In baseball you wear a cap.

Football is concerned with downs - what down is it?
Baseball is concerned with ups - who's up?

In football you receive a penalty.
In baseball you make an error.

In football the specialist comes in to kick.
In baseball the specialist comes in to relieve somebody.

Football has hitting, clipping, spearing, piling on, personal fouls, late hitting and unnecessary roughness.
Baseball has the sacrifice.

Football is played in any kind of weather: rain, snow, sleet, hail, fog...
In baseball, if it rains, we don't go out to play.

Baseball has the seventh inning stretch.
Football has the two minute warning.

Baseball has no time limit: we don't know when it's gonna end - might have extra innings.
Football is rigidly timed, and it will end even if we've got to go to sudden death.

In baseball, during the game, in the stands, there's kind of a picnic feeling; emotions may run high or low, but there's not too much unpleasantness.
In football, during the game in the stands, you can be sure that at least twenty-seven times you're capable of taking the life of a fellow human being.

And finally, the objectives of the two games are completely different:

In football the object is for the quarterback, also known as the field general, to be on target with his aerial assault, riddling the defense by hitting his receivers with deadly accuracy in spite of the blitz, even if he has to use shotgun. With short bullet passes and long bombs, he marches his troops into enemy territory, balancing this aerial assault with a sustained ground attack that punches holes in the forward wall of the enemy's defensive line.

In baseball the object is to go home! And to be safe! - I hope I'll be safe at home!

Tuesday, November 18, 2008

Let the Automakers Declare Bankruptcy

Today, the chairmen and CEOs of General Motors, Ford and Chrysler and head of the United Auto Workers union testify to the Senate Banking, Housing and Urban Affairs Committee in an effort to receive a $25billion rescue package. As expected, the bulk of Democrats are in favor, the bulk of the Republicans are not.

The Democrat leaders are in favor of tapping the $700B + $150B Troubled Assets Relief Program (TARP) for the auto manufactures. Republican leaders are not are sold on this plan. Neither is Treasury Secretary Henry Paulson, the sole manager of the TARP.

The sky is falling diatribe coming out of Congress and certain industry insiders is that they think failure could be cataclysmic because there are so many companies that are tied to the auto industry. Nobody said solving the problem would be easy. They have taken decades digging their grave, Congress is not going to solve their problems with a short-term $25 billion loan.

Bankruptcy would be a far better option.

Bankruptcy does not mean liquidation. They will still manufacture and sell cars and parts. Repair services will continue. Certainly there will be massive layoffs and plant closings -- for the car companies and the supporting services -- but the end result will be that each will be leaner, more efficient and more competitive.

It makes no sense to continue executing the same failed business model, despite the pain it will cause.

In yesterday's WSJ, Michael Levine's Why Bankruptcy Is the Best Option for GM describe many of the key reasons why bankruptcy is preferred.

-- GM has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer); Toyota has three; Honda has two.

-- GM has about 7,000 dealers; Toyota has fewer than 1,500. Honda has about 1,000. Dealers are protected from termination by state laws; eliminating them and the brands they sell would be expensive.

-- Foreign-owned manufacturers build cars in American workers with wages similar to GM's, but GM's benefit expense are huge -- health coverage for union retirees; support thousands of workers with nearly full wages and benefits for workers who lose their jobs due to automation or plant closure; supports more retirees than current workers; owns or leases enormous amounts of property for facilities it's not using and probably will never use again.

[It is interesting that the American car companies do not have a similar competitive problem outside of the U.S.]

What would the government cash do? It would be used to continue support these inherit business inefficiencies. It would fail to address their underlying problem: their cost and business structures are uncompetitive in today's environment. $25 billion would postpone the inevitable. They will be back in 6-12 months asking for more. GM, and perhaps Ford and Chrysler, is going to fail.

A reorganization under Chapter 11 of the bankruptcy code is GM's (and the taxpayers') best option. All of their handcuffs would be removed -- all options would be put on the table.
State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corporation. Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM's viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue.
The government will be involved but will be part of a plan that will give the companies an actual fighting chance.

Friday, November 14, 2008

Car Company Bailout and More Stimulus

Let's get our bailout score card somewhat up-to-date -- not a bailout history.

-- Bear Stearns - $30 billion to avert default and acquired by JPMorgan Chase
-- Fannie Mae and Freddie Mac - $200 billion in preferred stock, $5 billion in their mortgage securities
-- AIG - $85 billion emergency loan in return for an 80% ownership stake; wait, make that $120 billion
-- Emergency Economic Stabilization Act of 2008 (H.R. 1424) -- $700 billion + $150 billion in Congressional pork yielded the Troubled Assets Relief Program (TARP) and and a newly created Treasury Office of Financial Stability with the initial goal to buy troubled mortgage-backed securities. Wait, Treasury has decided not to do that opting instead to invest in the actual banks in exchange for an equity stake.

Don't forget about Bank of America buying Merrill Lynch, the federal government allowing Lehman Brothers to declare bankruptcy (sold to Nomura and Barclays), and Goldman Sachs and Morgan Stanley converting into traditional banking institutions. On the global stage, the central banks of many nations have guaranteed their banking deposits with money they really don't have.

Today (actually always), liquidity is a premium, making cash flow; i.e., lending, extremely tight. Recession has formally gripped the U.S. and the world. The housing market has not improved -- consumers are months late on their mortgage payments and many in outright default. Likewise credit card debt payments have diminished.

The Congress and the White House were quick to bailout Wall Street and the banks, still not really addressing any core issues. Now the interest is on the big three auto companies. Bush and Congress are serious about loaning them $25B -- the sticking point is where the money comes from. Regardless, the government does not have it and if they do, they are borrowing it from the taxpayers -- future taxes yet to be realized.

Any cash given the auto manufacturers is throw away -- rewarding years of mis-management. Detroit has not created an attractive product line in decades.

Detroit is also tied up with stifling labor contracts and government manufacturing regulations. Pensions and health care costs per Detroit car are in the thousands, costs passed on the consumers.

The Democratic Congress is again talking $billions in more stimulus hoping to increase consumer spending and spur higher production and employment.

Again, this money comes from where? From whom? Future tax receipts -- borrowing from ourselves so we can have stuff now -- stuff we don't need -- and pay for it later.' Isn't that part of what has gotten us into this mess?

The talking heads; i.e., this weekend's G20 powwow in Washington, will blame the lack of sufficient government oversight and look to increasing regulation. And again, they will be wrong.

Whether you bought a home you couldn't afford, loaned money to people or businesses that were too risky, or built cars no one wanted, when poor financial decisions are made, there is a price to be paid by all involved. It is not the government's role to make it all better again.

In the United Socialists States of America, that apparently is the role of government -- to keep everyone equal (except those in power) by hatchet, axe, and saw.

Monday, November 10, 2008

Republicans ... Moving Forward?

Most every one's predication came true this past week: the Democrats won the Presidency for 2009-2012. Specifically Barack Obama garnered 53 percent (65.8 million) of the popular vote to John McCain's 46 percent (57.7 million). Obama had a landslide in electoral delegates 364 to McCain's 163.

Obama ran a good campaign, hammering on McCain's record of voting with Bush and ensuring four more years of the same old rubbish. Who can't be glad that we have seen the end of the Clinton's on the national presidential stage?

McCain ran a terrible campaign. It was unlikely he could have won if he had ran a good campaign. He was just not the man moving forward. He represented the past. A war hero certainly, but a poor senator, a poorer yet Republican and definitely not a conservative. When a Republican abandons his/her conservative core base, he/she is bound to lose -- actually deserves to lose.

I am not a huge fan of Governor Palin but I do think the national media and many inner-circle Republicans have been disrespectful toward her. She was put in a no-win situation from day one. She has only been a governor for a short time, in a small state, far removed from Washington DC (which is a good thing). Her knowledge about foreign affairs, high finance and military operations were non-existent or minimal at best.

They brought her in to 'shore up' the conservative base. It helped in some cases. However, we should remember, we are primarily voting for a President, not a Vice President.

The Republicans have a long way to go if they ever want to win another Congressional majority or Presidency. They were just lucky that the Democrats put up such losers like Gore and Kerry, giving Bush two terms.

There are no inspiring Republicans in the immediate future. Palin's a soccer mom that has been able to figure out Alaskan politics. Kudos to her. She might have a role in the future but not in 2012.

The current batch of Republican leaders have nothing to offer. Until they clean house, they will be losers.

Although liberalism and socialism are growing in popularity, the bulk of Americans want lower taxes, strong homeland security, strong military without lengthy deployments, and economic stability. Conservative is the answer in America.

It can only be accomplished within the Republican Party (of which I am not part of). It will require wholesale leadership changes, not by the old and reformulated leaders but new one's that are not so hung up on self-aggrandizement.

Tuesday, November 04, 2008

California Proposition 8

This year's California Proposition 8 is an initiative to change the California Constitution to eliminate the right of same-sex couples to marry in California by adding "only marriage between a man and a woman is valid or recognized in California."

There are strong opinions on both sides: "No On Prop 8" and "Yes On Prop 8."

The LDS Church has taken a strong stance on it. And for good reason.

In the The Family: A Proclamation to the World, presented September 23, 1995 by the The First Presidency and Council of the Twelve Apostles of The Church of Jesus Christ of Latter-day Saints, it clearly states:
The family is ordained of God. Marriage between man and woman is essential to His eternal plan. Children are entitled to birth within the bonds of matrimony, and to be reared by a father and a mother who honor marital vows with complete fidelity.

...

Further, we warn that the disintegration of the family will bring upon individuals, communities, and nations the calamities foretold by ancient and modern prophets.
I wonder why so-called active LDS people are on the NO side of this issue? There are a number of LDS families with gay and lesbian children and/or siblings that are taking a stance that is clearly against their Church leaders.

When members pick which laws and commandments they will obey, they are taking that slippery slope toward apostasy.

I imagine most members have questioned one thing or another within the Church. But one always is safe by siding with the Brethren.

The gay agenda is intense. They have done a good job convincing people that same gender attraction is the same as race, etc; that they is no choice in the matter. If it would only so easy to explain away behavior...that I was born that way and so it should be permitted.

Advocates are quick to demand freedom of speech and thought for themselves, but equally quick to criticize those with a different view and, if possible, to silence them by applying labels like "homophobic." Elder Oaks states: "Homosexuality is not a noun that describes a condition. It’s an adjective that describes feelings or behavior."

Gays are not second-class citizens. They are not denied equal rights. Many of the arguments like hospital visits being limited to close family members is easy to circumvent. Gay marriage does not benefit society. Marriage between a man and a woman has many benefits to society.

The scriptures are ripe with examples of the falling away from the truth. Not only do we see a liberalization of our American society, we see that same mindset invading the Church. Sadly, this falling away will continue to expand.