Posted inUncategorized

The Madoff scandal: More than a Ponzi scheme

Were the damage not so great, it would be amusing to see SEC Chairman Chris Cox running around shocked, shocked, that Bernard Madoff had allegedly pulled off the biggest financial fraud in history — and the watchdog was again caught napping. Or worse. The agency ignored years of warnings about Madoff's activities, and Barron's did an article questioning his returns a decade ago. Madoff reportedly bragged about his influence in D.C., including having an in-law who worked for the SEC.

As the victims of the alleged scheme, including many charities, see their investments wiped out, Madoff is out on bond, having to wear an ankle bracelet and stay home. Had he been a minority/poor kid who stole $100 from a cash register drawer, he'd be in county lockup with hardened criminals. Meanwhile, Attorney General Michael Mukasey has recused himself from the investigation, without giving a reason. This is America in the new gilded age, where government has been essentially handed over to the wealthy and connected — and we're surprised they went wilding?

An older America learned from the frauds and follies of the 1920s, including the legendary collapse of the Samuel Insull monopoly. Regulation of securities and banks was put in place, helping to ensure the success of American business for decades through transparency, competition and fairness. That all began to unravel with the Reagan Revolution — but especially in the 1990s with deregulation pushed by Sen. Phil Gramm (R-UBS) and Clinton Treasury Secretary Robert Rubin, a kingpin from Goldman Sachs.

4
Posted inUncategorized

Rebalancing our national portfolio

The rich are finally afraid. You can see it in their eyes. They're laying off their nannies. The smart ones are fleeing into Treasury notes, even though the yield is zero. According to the New York Times,

While this will lower the cost of borrowing for the United States
government, economists worry that a widespread hunkering-down could
have broader implications that could slow an economic recovery. If
investors remain reluctant to put money into stocks and corporate
bonds, that could choke off funds that businesses need to keep
financing their day-to-day operations.

Perhaps. But it might, just might, jolt Americans back to reality. That means an economy based on producing things of real value. And a re-valuation of business, which in this country means a re-evaluation of our very lives. It won't be easy, perhaps not even likely, because the dead hand of the past rests oh-so-heavy on everything we do. If it happened, however, it might just save us.

6
Posted inPhoenix

The Kookocracy gets its moment

Now Janet Napolitano heads to Washington, leaving not much of a legacy in Arizona, despite what the Sewing Circle cult of personality would have us believe. She was a victim of her native caution and the unwillingness to take on issue No. 1 (land use and all its permutations, including sprawl and water) — to do otherwise would have caused the Real Estate Industrial Complex to destroy her ambitions. Michael Lacey has some further trenchant thoughts on immigration policy and deals with devils. But the biggest reason for Napolitano's failure is simply that the Legislature is by far the most powerful branch of government (the second being the media-ignored Corporation Commission). And the Legislature is dominated by kooks.

Now they will have one of their own as Secretary of State Jan Brewer ascends to the governorship. This is change I can believe in. Brewer is a member of the Kookocracy, having politicized the office charged with the integrity of elections. Except for Attorney General Terry Goddard, Arizona will now have an all-Kookocracy leadership. And I say, go for it. I want no Jane Hull-like temporizing or moments of sanity from Gov. Brewer. I want her to lead Arizona into the brave future that the minority who actually votes has consistently demanded.

This is the state where the most popular politician is Joe Arpiao, the civil-liberties-optional sheriff of Maricopa County. The state where Andrew Peyton Thomas won a resounding re-election as Maricopa County Attorney. Both have waged a thuggish war on the poor, underclass and minorities in the guise of "fighting illegal immigration." Funny, I have yet to see a big construction mogul or developer do a perp walk for hiring them by the hundreds.

It's time for Arizona to get the government it deserves.

7
Posted inUncategorized

Worse than the Great Depression?

It's widely acknowledged by economists, and supported by mounting evidence, that we're in for the worst economic contraction since the Great Depression. This is not "negative news" the media are inventing, dear positive-thinkers. It is simply reality. Yet it won't be as bad as the Depression, right?

For months, I have been giving a qualified "no" to that question. First, because the safety nets of the New Deal and Great Society, although badly frayed by Republican misgovernance, are still in place. Second, Americans are more affluent — we don't have a third of the nation "ill clad, ill-fed and ill-housed" and millions lacking even electricity. My "no" was qualified because expert opinion got us into this mess and will continue to hold sway — watch as the proteges of Robert Rubin steer the Obama economic plan. Experts were flummoxed by the Great Depression and in many cases carried out policies that made it worse. Expertise is only useful when it grows, as when a man demanded to know why Keynes had changed his view on an issue. Keynes responded: "When the facts change, I change my mind. What do you do, sir?"

Now, however, I am starting to wonder about my reassurances. Friday's report that 533,000 jobs were lost in November alone, signaling that the pace of unemployment is accelerating fast, was a kick in the teeth. Could this recession turn into a depression to rival, or surpass, the 1930s?

It is possible.

3
Posted inUncategorized

Change? You can’t be serious

Let the excuses begin.

The New York Times leads off:

Just as the world seemed poised to combat global warming
more aggressively, the economic slump and plunging prices of coal and
oil are upending plans to wean businesses and consumers from fossil
fuel.

The Washington Post weighs in:

Many members of Congress believe they know what the car company of the future should look like. "A business model based on gas — a gas-guzzling past — is unacceptable," Sen. Charles E. Schumer (D-N.Y.)
said last week. "We need a business model based on cars of the future,
and we already know what that future is: the plug-in hybrid electric
car."

But the car company Schumer and other lawmakers envision
for the future could turn out to be a money-losing operation, not part
of a "sustainable U.S. auto industry" that President-elect Barack Obama and most members of Congress say they want to create.

That's
because car manufacturers still haven't figured out how to produce
hybrid and plug-in vehicles cheaply enough to make money on them.

Expect to hear more in the coming days and months. We will see a potentially debilitating alignment of old thinking and old, yet still politically powerful, economic interests. If it succeeds, the country will face much worse pain in the years ahead.

1
Posted inUncategorized

President Hoover and Depression thinking

I feel the need to come to the defense of Herbert Hoover, if for no other reason than this fundamental misreading of history will only set us up for costly mistakes in the future. The left long has labeled George W. Bush "President Hoover" for presiding over a historic economic crisis. Now the meme has been picked up by the right, as well.

Yet to paraphrase Lloyd Bentsen, President Bush, you're no Herbert Hoover. Among the differences: Hoover (1874-1964) was a self-made man, who worked his way through the new Stanford University, made a fortune as a brilliant engineer, then gained international acclaim for coordinating relief for refugees in World War I. Although a Republican, Hoover came from the party's Theodore Roosevelt progressive wing. He was mistrusted by Calvin Coolidge, and for good reason. Hoover wanted to move away from the rapacious capitalism of the 1920s to an ethic that embraced the common good and the obligations of business to society. He was a product of his time of scientific and engineering wonders: The Great Engineer, who could bring pragmatic, fact-based solutions to governing.

Unfortunately, Hoover was elected in 1929, not 1912 — the era in which his worldview had been shaped. After the great crash and with the gathering depression, Hoover was overwhelmed. His administration launched the greatest expansion of government intervention in the economy up to that point, including programs and ideas that would live on in the New Deal. Yet it did little good as unemployment reached a staggering 25 percent and Americans were forced into shantytowns they called Hoovervilles.

10
Los Arcos memories
Posted inPhoenix Phoenix 101: History

Los Arcos memories

Los_Arcos

The interior of Los Arcos Mall, at Scottsdale Road and McDowell Road.

I was recently interviewed by a graduate student at Arizona State University, who is writing on the history and prospects for the area of south Scottsdale around the former Los Arcos mall. Zonies might find the exchange of some interest:

What are your memories of Los Arcos growing up?

I lived about half a mile away during high school, from 1970 to 1974. We had moved there from central Phoenix. It was very much a cohesive neighborhood. Like most of Phoenix then, it was very lush with grass, trees and landscaping. It was homogeneous: middle-class Anglo families, many of whose fathers worked at Motorola.

It was fairly new, and much of McDowell didn’t even have sidewalks. You could still see farming going on a quarter mile north of Thomas Road. Scottsdale Road was barely developed; we have a stunning view of the buttes out the back of our house. Scottsdale itself was still partly rural, with a rustic/touristy downtown. There was not much north of Chaparral Road.

The neighborhood was centered on Coronado High School, which then was a very fine school, including one of the best fine arts departments in the country.

6
Posted inUncategorized

The man in the tiresome cliched casual duds

Whatever else might be said about the departure of Jerry Yang from Yahoo, I'll be glad to see him go. I'm sick of seeing the chief executive of a major company so badly dressed. Alas, he represents the spirit of the age.

I hate casual dress. I date the decline of our civilization not only by the demise of men wearing suits and ties, but by "casual" clothes becoming a mandatory business uniform. Far from being something that makes people comfortable, it's just the new man in the gray flannel suit — except the latter looked better. This is no victory for choice or egalitarianism. When I wear suits, people invariably ask, "Why are you so dressed up?," as if I am in white tie. I want to ask, "Why are you so badly dressed?"

Nowadays, outside of a few professional pockets, it's the rebels that wear suits. (And women look smashing in them, too).

8
Posted inPhoenix

Why Arizona can’t ‘retool’ its economy

Even under the ownership of Gannett, with a publisher whose command to the newsroom is to "say something positive about the community" and a huge loss of talent and institutional knowledge, the Arizona Republic — er, Information Center — still does its occasional "let's do the right thing" stories. The latest appeared Sunday.

This is not investigative, "put-em-in-jail" journalism. Rather, it represents a white paper on the things the "community" needs to do to get better. The Republic has been doing this at least since the 1980s, when it became clear that Phoenix was headed for a trainwreck. I certainly wrote my share. And nothing ever happens. Now I read them, as the real power brokers must do, for entertainment value.

Editors must have been on vacation to allow Chad Graham, one of the small cadre of real reporters, to write:

The Valley's economy could start to recover in 2010. That is when some economists believe the glut of excess homes will be absorbed and new residents will spark new construction.But if history is a guide, metropolitan Phoenix will only seem to rebound. Despite decades of real- estate run-ups, quality-of-life measures for the region continue to fall.

That's the truth. But, then, the paper sometimes allows such unpleasantness on its pages. After all nothing will happen. Then the usual-suspect "experts" talking about "wake-up calls" and "initiatives" for biotech or solar power. There's just one problem with all of this:

4
Posted inUncategorized

Steering the right course on the auto bailout

General Motors is running out of cash. Think about that. What was once the company that embodied American strength is running out of cash. Little wonder that Detroit is angling to get its own "rescue package" from Washington. We should do it — with serious strings attached.

Anyone who has lived in the Midwest can attest to the foundational nature of the auto industry to American manufacturing. It's not just the Big Three themselves, but the vast supply chain they have spawned, from steelmakers to precision machine tool companies to providers of all manner of parts. As we bail out a "financial services industry" that increasingly made little more than frauds and swindles, the auto industry, even heavily diminished from its former greatness, makes real products and is an essential prop of the middle class, particularly in the heartland. A hollowed-out economy can stand no more losses.

Yet the American industry is the author of many of its own problems. The decline of GM and its sisters began decades ago in an unholy alliance of complacency, greed and contempt for customers between management and labor leaders. Despite 20 years of plant closings and pledges of new days, the carmakers never really reformed. There's one exception: hundreds of thousands of union workers in the Big Three and parts makers lost their jobs — and communities their livelihood. Contrary to a persistent mythology, the decline since the early 1990s has been almost entirely the fault of management, not the United Auto Workers.

3
Posted inPolitics: National

Behind the talk of Republican reinvention

We hear much talk now about the Republican Party trying to reinvent itself, fixing its "brand," facing an "identity crisis" or entering a period of internecine war. I'm skeptical about all this. We knew where the Republicans were coming from in the primaries, with a phalanx of middle-aged, rich white guys as candidates. All they had to offer was the same discredited mantra of tax cuts, theocracy and fear, with perhaps the exception of the entertaining libertarian Ron Paul. John McCain emerged as the perfect vessel for this exhausted, intellectually bankrupt yet madly power-hungry political party.

In the wake of a crushing defeat, several bigwigs are meeting at the Virginia estate of Brent Bozell, including "prominent conservatives" such as Grover Norquist — he of the lust to make government small enough to drown in a bathtub — and the religious extremist Tony Perkins. Same old, same old. The reality is that the Republicans have been reduced to a Southern white regional party, with some appeal in Southernized white rural areas elsewhere and the rural white libertarian West. This was brought home in a remarkable map in the New York Times, showing party gains in 2008 vs. 2004.

It's not just that the party's limited bag of ideas have been shown to hold frauds, and has finally been soundly rejected by the public. It's not just that the politics of hysteria and hate don't work now. This is a party totally out of step with the country, which is more diverse and urbanized than ever — even suburban voters recognized their essentially urban issues this time — and becoming more so in the future. This is a party whose ruling creeds are incapable of dealing with a complex modern society or the multi-layered challenges of the 21st century. And whose hidden creeds — policy crafted to ensure a plutocracy — were exposed in the financial crisis.

5
Posted inPolitics: National

This moment

And so it comes down to this. A day that will mark the most important election in my lifetime and certainly the most consequential since 1932. The polls show Obama leading and yet… One wonders how wealthy Republican John Sidney McCain III, standard bearer for the Party that Wrecked America, could have even 41 percent support, much less higher, much less be, perhaps, competitive in Pennsylvania, Florida and Virginia.

This support for a candidate who wholly represents the ruinous governing philosophy of conservatism — a set of ideas so discredited, exhausted and out of step with the values of most Americans that McCain's only strategy was a dishonorable campaign of despicable attacks on his opponent and riling up a hateful "base." The man who claims "Country First" picked — or was forced to pick — the most unqualified and dangerous vice presidential candidate in American history. Who are these supporters and what are they thinking? Has ignorance, television-induced brain damage and Republican hate finally pushed us past the tipping point? And election fraud, that determinative agent of the 2000 and 2004 elections, is an ever present danger. And the confluence of moneyed interests that fears Obama.

And yet, we have this moment, this last chance. John Adams reflected the realism of the Founders when he said democracies always eventually commit suicide. Decades later Lincoln rightly called this an experiment, not a fixed or secure order in human events. Now the American generations living will be tested at history's fulcrum.

9
Posted inUncategorized

The GOP declares intellectual bankruptcy

So it comes to an end. Much of me still believes wealthy Republican John McCain III will win — and if that happens, all of me believes it will be national suicide. Never forget the powerful interests that believe they have too much to lose from an Obama presidency.

It's notable that the McCain campaign has been all attacks, all the time, against Barack Obama. McCain has no real platform, no serious position on anything. He would indeed continue not only the Bush policies, but the conservative policies that have brought us into this vale of tears. That the Republicans are left sputtering "communist" and "terrorist" shows the complete bankruptcy, exhaustion and corruption of conservatism. John McCain, who preens about his honor, has run a historically dishonorable campaign. It reached farcical proportions when the McCain campaign attacked a respected Palestinian scholar (and Christian) as a terrorist bud of Barack's — when in fact McCain had helped the man get funding for democracy efforts in Palestine.

Republicans also left warning about one-party government. Understandably, that didn't bother them through most of the Bush years, when even the federal judiciary had been turned into another branch of the Republican hack political machine.

4