"Greed, for Lack of a Better Word, is Good!"

It is as if yesteryear played musical chairs with yesterday. Even as the U.S.
Congress worked fervently to close a deal conceived by Secretary of the Treasury, Henry Paulson, and bolstered by the weighty imprimatur of Federal Reserve Chairman Ben Shalom Bernanke, the FBI announced it was adding 4 new firms to its Subprime Fraud Probe. Hold up, before you submit to the temptation to yawn knowingly, reckoning that there are 22 other firms previously cited in this already underway investigation, and lamenting, “What’s a few more?”

Well for starters these are not just any four companies. These are star attractions, including Fannie Mae, Freddie Mac, Lehman Brothers, and AIG…yes that AIG, the one of the $85 billion buy-out, discussed in this space last week. Of course Lehman Brothers was mentioned then too. Moreover, while Fannie & Freddie were not mentioned, that was only because they had already been headliners in their own two-part rescue. Put another way, these four Fortune 500 firms lie at ground zero of the currently proposed financial bailout.

In the 1987 blockbuster, Wall Street, directed by Oliver Stone, Gordon Gekko, otherwise known as Michael Douglas, uttered that “life as we are taught it” defying phrase, featured in the Title. At the time it was thought to symbolize the 80’s, a time of wretched excess. Who would have thought, as the first Baby Boomers turned 62, we would not only reprise those times, but do so with exponential zeal and greatly enhanced impact. Recent events soberly inform us, to paraphrase Pogo, we really have seen the enemy, and believe it or not, it was us.

A week ago, word of the proposed mega-bailout filtered out. At first, the TDP, Trillion Dollar Plan, pitched as a measure of last resort was largely thought to be a bitter, but likely necessary evil. Virtually out of the blue, President Bush sequestered key Members of Congress, along with top financial advisers, Paulson, and Bernanke. As they emerged, talk of desperate measures for equally desperate times reigned.

The American public was immediately advised that we are in the midst of a compelling financial crisis, and that the cost for the cure is uber expensive. Of course, it is fair to say, preceding business failures and buy-outs, not to mention the national mortgage morass had already tipped-off most of us to that reality. The real news here was that an actual plan, at least a strategy, was emerging, and along with it a price tag, estimated at $700 billion. Interestingly, almost any conversation about the plan included mention of the prospect, if not likelihood, the cost would end up north of a trillion dollars.

Clearly the spin masters engaged in a little creative ciphering to avoid breaking through the psychological barrier implied by even saying the word trillion. This is akin to what I refer to as the 99-retail pricing practice. That occurs, for example, when a vendor sets a price for goods or services at $19.99, rather than $20, due to the belief that buyers are averse to the “next level” increase. I believe there are even studies that support this theory.

When the President Bush, Speaker of the House, Nancy Pelosi, Treasury Secretary Paulson, and Federal Reserve Chairman Bernanke made their first appearance, it appeared, if only briefly, that there may really be traction and consensus for a for a quick and unified decision. The group appeared well on the way to resolving what former Federal Reserve Chairman, Alan Greenspan, called a “once-in-a-century crisis,” just 10 days ago. Initially, President Bush alluded to a commitment by the participants and their support staff to work through the weekend, or however long it took, to broker an agreement.

Of course, once the euphoria of the moment subsided, reality reared its ugly head. The partisan dogma that separates Democrats from Republicans intervened and at least stalled any hope for a quick final accord. There was also a outcry from vocal elements of the American public.

Many viewers tuned into the evening and nightly news to hear stories of how these corporate giants were about to be saved, while as consumers, they had, or were about to lose their homes, due to the very subprime mortgage fiasco engineered by the CEO’s of these companies. Add to that Mr. Paulson’s lobbying for the latitude to ensure that the CEO’s retained their Golden Parachutes, and his push to make the deal unalterable by federal judges, we can see a clear recipe for stalemate by politicians readying for a General Election less than 6 weeks from today. Finally, adding drama to this financial passion play, the FBI, in news headlining today’s newspapers and other media outlets, puts an even brighter spotlight on four of the key players.

One added, but under reported, dimension to this catastrophe is a potential conflict of interest by Treasury Secretary Paulson. In his previous life, Mr. Paulson was an executive at Goldman Sachs (GS), where he worked 32 years. His compensation packages from the company for 2005, and 2006 respectively were estimated at $37 million, and $16 million. At first glance, it appears Paulson’s compensation was reduced significantly in 2006. However, the reduction is almost completely offset by the fact that he worked only half the year, or less for GS, as he assumed the office of Treasury Secretary July 3, 2006. Mr. Paulson’s net worth has been estimated at over $700 million.

That fact Mr. Paulson has actively lobbied for retention of CEO Golden Parachutes, and includes GS in the group of firms eligible for the bailout, should be looked at askance. His involvement in creating the bailout plan, the positions he has taken, and his historical association with key business interests directly benefiting from the plan he crafted, cause me to be suspicious of him and his plan. It surely appears that Henry Paulson and Gordon Gekko are kindred spirits. I’m done; holla back!
Read my blog anytime by clicking the link: http://thesphinxofcharlotte.blogspot.com. A new post is published each Wednesday.


http://en.wikipedia.org/wiki/Wall_Street_(film)

http://money.cnn.com/2008/09/23/news/companies/fbi_finance.ap/index.htm?cnn=yes

http://blogs.wsj.com/deals/2008/09/19/the-winners-and-losers-of-the-wall-street-bailouts/

http://www.nytimes.com/2008/09/21/business/21qanda.html

http://www.iht.com/articles/2008/09/21/business/21qanda.php

http://www.usnews.com/blogs/capital-commerce/2008/9/19/analysis-washingtons-trillion-dollar-wall-street-bailout.html

http://en.wikipedia.org/wiki/Henry_Paulson

http://en.wikipedia.org/wiki/Ben_Bernanke

http://en.wikipedia.org/wiki/George_W._Bush

http://en.wikipedia.org/wiki/Nancy_Pelosi

http://en.wikipedia.org/wiki/Alan_Greenspan

http://abcnews.go.com/Politics/PersonalFinance/story?id=5865241&page=1

http://www.cbsnews.com/stories/2008/09/23/business/main4470574.shtml

http://elections.foxnews.com/2008/09/22/obama-mccain-question-wall-street-bailout/

http://www.msnbc.msn.com/id/26856877/

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092300284.html?hpid=topnews

http://thinkprogress.org/2008/09/22/mccain-budget-first-term/

http://www.cnn.com/2008/POLITICS/09/19/campaign.wrap/index.html

http://www.commondreams.org/view/2008/09/22-4


http://money.cnn.com/2008/09/14/news/economy/greenspan/index.htm

A Crisis of Confidence: Economic Homeland Insecurity!

Last week’s flight of fancy began with a math quiz. For several weeks my focus has been the pending Presidential Election, and various aspects, personalities, or positions promoted by the two campaigns. This past week however, has produced a veritable buffet of American TV screen crawl disasters, which prompted my shift in focus for today.

We saw the devastation that relentless forces of nature can unleash as hurricanes buffeted the Gulf States. We observed the catastrophic horror precipitated by the crash of commuter and freight trains in Chatsworth, California, outside Los Angeles. While these events wrought a trail of human casualties, and property loss, it almost certain the triple play of cataclysmic economic collapses of the last three days garnered at least as much attention.

On Sunday evening we learned that Bank of America agreed to purchase the Merrill Lynch brokerage firm for 50 B, as in Billion, dollars. Monday, Lehman Brothers, a banking and financial services firm, filed for Chapter 11 bankruptcy protection. The company cited bank debt of $613 billion, $155 billion in bond debt, and $639 billion in assets. The action made Lehman’s the largest bankruptcy in history. The Three Act Economic Tragedy culminated yesterday when the Federal Reserve Bank announced an $85-billion Federal Reserve loan to mega-firm, American International Group, Inc. (AIG), in exchange for 79.9% of its shares.

The sub-prime mortgage lending market has cast a long shadow across the landscape of the U.S. Economy for months, spurring tightening money markets. Monday, the Dow saw its worst day since September 2001, in the wake of 9-11. Home prices are falling; unemployment is rising. I think we can safely say the R word now, and no I do not mean Republican. A number of so-called experts have quibbled about whether we are in a recession. Yes, yes, a thousand times yes, already!

Americans of all stripes are challenged to keep score as the financial markets reel and sway under the weight of waves of relentless and stifling uncertainty. We are besieged by a terror as clear and present as that fostered by Gustav, Hanna, or Ike. The recent financial storms born on Wall Street have rained down fear (about our future), and blown the winds of economic distress throughout America's Main Streets.

I would posit, aside from the truly financially savvy, most people never heard of, or at least never paid any attention to, AIG. If that is true, indeed, ignorance was bliss. Yes, the company has had a series of TV commercials, but in the age of TiVo and DVR, who watches commercials?

For the record, AIG is a major insurance company, with offices around the world. Founded in 1919 in Shanghai by Cornelius Vander Starr, AIG is headquartered in New York City. The company’s UK Offices are located in London, the Continental Europe operations are based in Paris, and its Asian Headquarters is in Hong Kong. Beginning to get the picture? AIG, a global conglomerate, became a component of the Dow Jones Industrial Average in 2004, and was cited by Forbes in 2008 as being the 18th largest company in the world.

Just 3 days ago, the feds opted not to bail out Lehman Brothers after a weekend- long effort by the bank to persuade the Government to do just that. So why save AIG?

For starters AIG is in a league of its own. Government officials decided they had to act, lest the nation's largest insurer file bankruptcy. Such a move would roil world markets since AIG has 1.1 T, as in trillion, dollars in assets, and 74 million clients in 130 countries. Plus, AIG's insurance businesses make so much money they could conceivably pay off the cost of the bailout within a few years.

AIG is far and away the largest insurer in the world. A quick search of any sampling of mutual funds or any S&P 500 index fund is likely to show the inclusion of the Company’s stock. AIG is a staple in 401k’s, and has been singly responsible for deflating the Dow more than 400 points this year.

In other words a comparison with Lehman Brothers reveals there is no comparison. Officials deemed AIG a company “too big to fail.” Indeed, had AIG gone under, the repercussions would have been not just monumental, but global. The U.S. simply could not afford to let that happen.

Now somewhere, embedded beneath the surface, there is a moral about greed; the overwhelming catalyst for the sub-prime mortgage lending market crisis. Having planted that seed, I will spare you the sermon about the massive amount of corporate welfare used to erase the mistakes brought on by greed, both individual and corporate.

But you know…don’t you? So next time you hear some self-righteous politico haranguing, high-mindedly about the ills and perils of safety net programs, I won’t have to tell you what to think. After all it’s as simple as ABC; make that AIG! I’m done; holla back!

Read my blog anytime by clicking the link: http://thesphinxofcharlotte.blogspot.com. A new post is published each Wednesday.


http://en.wikipedia.org/wiki/Merrill_Lynch

http://en.wikipedia.org/wiki/Lehman_Brothers

http://en.wikipedia.org/wiki/American_International_Group

http://money.cnn.com/2008/09/16/news/companies/AIG/index.htm?cnn=yes

http://money.cnn.com/2008/09/16/news/companies/aig_questions/index.htm

http://www.time.com/time/business/article/0,8599,1841699,00.html

http://money.cnn.com/2008/09/16/news/companies/barclays_lehman.ap/index.htm

http://www.msnbc.msn.com/id/21134540/vp/26743902#26743902

http://money.cnn.com/2008/09/15/news/companies/why_bear_not_lehman/index.htm

http://www.msnbc.msn.com/id/26746909/

http://www.msnbc.msn.com/id/21134540/vp/26735472#26735472

http://www.charlotteobserver.com/100/story/197093.html

http://www.nytimes.com/2008/09/15/business/15merrill.html?_r=1&scp=5&sq=merrill%20lynch&st=cse&oref=slogin

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/16/AR2008091602877.html

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/16/AR2008091600883.html

"He is One of Us!"

When does 36 = 1.5? Hold that thought; I’ll get back to you.

For the past two weeks, I have discussed various aspects of the two major political party’s National Conventions. The pomp and pageantry of the conventions has subsided, and the daily hand-to-hand trench battles have resumed, with the full four-party contingent now in tow.

Senators Obama and Biden have been criss crossing the Country, attempting to shore up support in several critical swing states. Meanwhile, Senator McCain and Governor Palin have spent time traveling together, but their focus has been the same; swing states.

Throughout the primary season, up to and including the Conventions, Senator McCain’s Republican supporters stressed the mantra, “John McCain is one of us.” In its purest and most innocuous sense, this oft repeated affirmation was pitched as intending to reassure the GOP faithful, swing voters, and disaffected Democrats by conveying that Senator McCain shared their values, respected their points of view, and would likely most often shape policy with their interests in mind. Not surprisingly, a prevalent less generous assessment was that the advisory was an insidious reminder to certain groups that McCain was “white, like them,” and moreover that Obama was not only black, but possibly, if not probably, Muslim as well.

Two weeks ago the Democrats convened in Denver, Colorado for their 2008 National Convention. The event drew 4,418 official delegates, 1,082, of them black. That number translates to 24.5%. The number and resulting percentage represent a proportional derivation used by the Democratic Party since 1976 to seat delegates based on their approximate voting strength in Democratic primaries and caucuses.

Minority Representation, along with several other voting segments and subsets are tracked. According to published records, the delegate participation rate at the 2008 Democratic National Convention in Denver included 81% college graduates, 58.9% whites, 50.1% women, 49.9% men, 25% Union Members, 24.5% blacks, 12% Hispanics, 12% GLBT (Gay, Lesbian, Bi-sexual, Transgender), and 4.6% were Asian-Pacific Islanders. The Democratic Party has hitched its star to inclusiveness, and in 2008 produced the most diverse political convention in American History.

Back to that initial thought! Last week, the Republicans convened in St. Paul, Minnesota for their 2008 National Convention. Based on the number of delegates, respectively, the Republicans ran a significantly more compact, and I am sure some would say efficient, convention. While it took 4,418 delegates to comprise the Democrat’s Big Tent, the Republicans required 2,038 fewer delegates, for a total of 2,380.

For those who took time to watch both forums, it was apparent the two conventions were clearly products of starkly different operational philosophies. While the Democrats preached and modeled the tenets of diversity and inclusion, the Republicans, if their National Convention was any indication, were guided by the principle of homogeneity. In contrast to the numbers above, that characterize the make-up of delegates at the Democratic National Convention, the assembly in St. Paul was 93% white, 5% Hispanic, 68% male, and 32% female.

In 2004, the Republican National Convention was 85% white, and 57% male. Four years later, the Grand Old Party has regressed, at least that is, if you consider diversity and inclusion good things. At least one UPI story cited a New York Times report that says “Republican Leaders this year, mindful of the black backlash over the government response to Hurricane Katrina, and the pull of Democrat Barack Obama’s candidacy, have largely de-emphasized their outreach to minorities.”

I can see the Republican Brain Trust being flummoxed by Senator Obama’s popularity and success, somewhat, but the Katrina imbroglio seems to be the perfect catalyst for demonstrating that Republicans could...and, in fact, would generate a more focused and effective effort. Apparently, suspending much of the Convention’s Day 1 activities, as Hurricane Gustav threatened the New Orleans area was just the ticket.

So as 2,380 delegates descended upon the tundra of the great Upper Midwest, 36 blacks, equaling 1.5%, were invited. Michael Steel, former lieutenant governor of the State of Maryland, and the Chair of GOPAC, the Republican political action committee that thrived during the Newt Gingrich era, was the only black to reach the podium during prime time, giving a roughly 10-minute speech. He later admonished his Party, saying, "We have to get our act together sufficiently to be competitive and effectively engage the black vote, the Hispanic vote, the white vote, every vote in this country with a values message - an empowerment message, an ownership message that resonates with communities."

After watching GOP partisans sanguinely articulate their vision for America, amidst a rowdy and rousing sea of homogeneous faces, one thing is crystal clear; I now know to whom “us” refers, when John McCain's supporters describe their affinity with him, extolling, “he’s one of us!” I’m done; holla back!

Read my blog anytime by clicking the link: http://thesphinxofcharlotte.blogspot.com. A new post is published each Wednesday.


For more detailed insight into this topic, click on the links below:

http://www.courier-journal.com/apps/pbcs.dll/article?AID=/20080903/NEWS0106/809030791

http://www.jointcenter.org/index.php/news_room/press_releases/joint_center_points_to_large_drop_in_number_of_black_delegates_to_gop_convention

http://www.kansascity.com/444/story/782276.html

http://www.azcentral.com/news/election/mccain/articles/2008/09/01/20080901repcon0901diversity.html

http://www.nj.com/news/index.ssf/2008/09/republican_convention_njs_gop.html

http://www.oliverwillis.com/2008/09/02/less-black-republican-delegates/

http://www.nationaljournal.com/conventions/co_20080901_3469.php

http://www.guardian.co.uk/world/2008/sep/04/uselections2008.republicans20088

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/03/AR2008090303962.html?hpid=artslot

http://www.latimes.com/news/politics/la-na-blacks4-2008sep04,0,4212739.story

http://allotherpersons.wordpress.com/2008/09/02/blacked-out-african-americans-near-invisible-at-the-republican-convention/

http://www.canada.com/ottawacitizen/news/story.html?id=1730a1cf-0de9-4d03-9a48-10fd926424d6

http://www.eurweb.com/story/eur46696.cfm

http://www.boston.com/news/politics/2008/articles/2008/09/05/number_of_black_gop_delegates_at_a_marked_low_survey_finds/?page=full

http://www.usatoday.com/news/politics/election2008/2008-09-01-diversity_N.htm?loc=interstitialskip

http://thinkprogress.org/2008/09/02/blacks-represent-just-2-percent-of-gop-convention-delegates/

http://detnews.com/apps/pbcs.dll/article?AID=/20080901/POLITICS/809010367/1022/POLITICS

http://www.youtube.com/watch?v=cPLg65HDA6E

http://www.rgj.com/apps/pbcs.dll/article?AID=/20080902/NEWS19/809020353/1321/NEWS

http://bookerrising.blogspot.com/2008/09/black-delegates-are-rare-at-gop.html

http://www.stereohyped.com/black-republican-delegates-at-an-all-time-low-20080902/

http://www.politicalbase.com/profile/Chris%20Brown/blog/&blogId=3567

http://www.dallasnews.com/sharedcontent/dws/news/politics/national/stories/090408dnpolblacks.3fcf93b.html

Campaign 2008: The Palin Effect

It’s relatively early in the life and times of the freshly minted 2008 Presidential Final Four. The Democrats solidified the team they hope will be their Dynamic Duo, last Thursday night in Denver, Colorado, with Senator Barack Obama’s acceptance of his Party’s nomination. Senator Joe Biden joins him in this quest for the Holy Grail of American politics.

The Republicans will do the same thing tomorrow in St. Paul, Minnesota, when Senator John McCain accepts the GOP nomination. Alaska Governor Sarah Palin rounds out the Party’s team of would be Valorous Vanquishers of all things evil. Yes it is early, but it is not too soon to pose questions, and/or speculate about specific aspects of the two campaigns.

Last week I examined the key players in a drama that had been unfolding since January, and February, 2007, when Hillary Clinton and Barack Obama, respectively, declared their candidacies for President. While the Democrats added a new player in Senator Biden a couple of Saturdays ago, the Senator is not new to the National, or even the International stage. Because of this distinction, I spent most of the time discussing the individuals who had commanded the podium during the first two nights of the Convention, Mrs. Obama, and Mrs. Clinton.

This week has been different, however. First Senator McCain, playing to his maverick image, pulled a stunner by selecting Alaska’s Governor as his running mate. Merely holding the Republican National Convention (RNC) has been further complicated by the paths of two major storm systems, Hurricanes Gustav, and Hanna.

Gustav was especially nettlesome for the RNC because it held the City of New Orleans in its sights, threatening to reprise the devastation and mayhem wrought by Hurricane Katrina, nearly 3 years ago to the day. Republican Convention strategists decided to play down the flourish and festive aspects scheduled for the outset of the of the Convention, in favor of targeting with laser-like precision and intensity, “the care and concern” maintained by the GOP faithful for the people of New Orleans.

A great deal of attention has been devoted to the addition of Palin to the Ticket, by the media and common folks alike. An ardent proponent of the Pro-Life viewpoint, an NRA member, a supporter of drilling to increase Oil Reserves, a maverick in her own right, and of course a woman, Governor Palin enables the Grand Old Party to argue that it has strengthened its Ticket, and created a buzz about Senator McCain’s efforts to secure the White House.

Yet, as with most things political, choosing the gun-toting Governor was not universally viewed as a slam dunk. In fact, while she nailed a number of the Party’s platform planks, and talking points, her selection ensured a number of other equally salient counterpoints. Republicans have incessantly highlighted Obama’s inexperience.

The Governor adds little, if anything on that issue; she may even diminish the Party's standing.

Arguably, the issue that drives the range of Palin’s detractors from apathy to apoplexy, both within, and outside the Republican Party, is the seeming lack of thorough vetting her selection received. Published reports indicate Senator McCain met with Governor Palin, in their sole encounter, in February at a Governors’ Conference. Then August 27th, he spoke with her to offer the Vice President’s slot.

For his part, Senator McCain confidently asserted he had fully vetted her. Then the other shoe(s) began to drop:

The Governor is being investigated by the Alaska Legislature for allegations of abuse of power in connection with dismissing a Public Safety Commissioner who refused to fire her brother-in-law.

The Commissioner’s replacement, appointed by Palin, subsequently resigned after if was revealed he had received a letter of reprimand for sexual harassment in his previous position.

News was released of a 22-year old DUI arrest record for the Governor’s husband, Todd Palin,

The Governor gave birth to her first child 8-months after eloping to marry her husband, Todd Palin.

The Governor’s acknowledged her 17-year old daughter Bristol is 5-months pregnant.

In one of the more olive branch-acts of the Race for the White House, Democratic nominee, Barack Obama immediately declared Bristol’s baby would not be an issue during the campaign, declaring it, “off-limits.” I think it’s fair to say that’s certainly a “Change We Can Believe In.”

So what can we make of The Palin Effect on Campaign 08? The Right's Spin will be in full effect for the next couple of days. Governor Palin will officially accept her Party’s nomination for Vice President this evening. Before that happens, she will be labeled a patriot, a heroine, and a woman of great conviction. Her support for her daughter and simultaneous adherence to the principles of Pro-Choice will be indelibly etched in our collective psyche. Tears will be shed; she will be deemed fit for the job to which she aspires…and the one that logically follows.

When all is said and done, the Republican Ticket will get a “bounce” (just as the Democratic Ticket did a week ago), the race will be a dead heat, and for the next 61 days, it will be “on like a pot of neck bones.” As the world watches and waits for the unfolding of events, you the electorate will determine just what kind of historic change America makes on November 4th, or more likely, in the early morning hours of November 5th.

One way or another, it will be an historic occasion. Either we will propel a woman to the lofty status of our Country’s Vice President, for the first time, or we will catapult an African American to the positions of President of the United States, and Commander-in-Chief; Leader of the Free World.

What is it going to be; and why? I’m done; holla!
Read my blog anytime by clicking the link: http://thesphinxofcharlotte.blogspot.com. A new post is published each Wednesday.


http://en.wikipedia.org/wiki/2008_Republican_National_Convention

http://en.wikipedia.org/wiki/Sarah_Palin

http://gov.state.ak.us/

http://gov.state.ak.us/bio.php

http://www.realclearpolitics.com/articles/2008/06/the_vp_case_for_gov_sarah_pali.html

http://www.cnn.com/2008/POLITICS/09/02/palin.investigation/index.html?iref=topnews

http://www.cnn.com/2008/POLITICS/09/02/palin.pregnancy/index.html

http://www.blog.newsweek.com/blogs/stumper/archive/2008/09/02/bushies-come-to-palin-s-rescue.aspx

http://www.msnbc.msn.com/id/26517781/

http://www.cbsnews.com/stories/2008/09/01/politics/main4405552.shtml

http://abcnews.go.com/Politics/Vote2008/story?id=5710653&page=1

http://news.yahoo.com/s/ap/20080902/ap_on_el_pr/cvn_palin_daughter

http://politicalblogs.startribune.com/bigquestionblog/?p=1142

http://www.nydailynews.com/news/politics/republican_race/2008/08/30/2008-08-30_sarah_palins_motherinlaw_uncertain_about.html

http://tpmelectioncentral.talkingpointsmemo.com/2008/09/the_palin_meltdown_in_slomo.php


http://www.charlotteobserver.com/194/story/167870.html