• Goldman Sachs: Thank You Mr. President

Dear Mr. President,

This should prove a challenging week on the PR front for us at Goldman Sachs. There are a few situations surfacing for which appropriate clarification will provide you sufficient context in the event that the inevitable questions arise. We also have a couple of suggestions.

Regarding this nastiness of the past week, please do not be too concerned about all this talk surrounding our super high-speed fully automated transaction processors. Also please understand that they are our future. Admittedly, we are enamored with the technological prowess we have acquired. Don’t believe those jealous rumors coming from begrudging low-level corners of the financial community, whining about our “edge.” We run a clean and very efficient business that can withstand any scrutiny. Our company represents about one quarter of all program trading on the NYSE. We realize you are not familiar with our business or what we do, but just know that the billions in valuations that represent our daily trades require extremely fast, exceptionally complex algorithms running on the largest, and fastest processors money can buy, with as close proximity to the NYSE as is physically possible. This is part of our multifaceted long-term strategic plan.

This business is not for the feint of heart. We take risks, but we are extremely adept at minimizing our exposure. That’s all. Don’t listen to noises suggesting that we make money on trades even when we buy and sell at the same price levels to ourselves. Everyone in the business is familiar with our fee structures. What’s a half penny a trade anyway? Nothing. There is no magic. As for front running orders with our faster than light system on stocks or options, well, that is just not the way we work, and it’s not even legal, is it? We’ll get back to you on that. In these difficult times people can become very excited, and reactive to unwarranted rumors. Pay no attention to hearsay coming from bottom feeders. … Front running indeed.

Thank the guys at Justice and the FBI for being so quick to respond, and picking up that frustrated dancer, Sergey Aleynikov. Stealing secret algorithms should be punishable by incarceration for life. Oh, could you check into what’s wrong with that judge who let him out on bail? Bail should be revoked. This is a matter of grave concern, and is of National import. As we said, someone could get a hold of this program and use it to manipulate the markets. OK, not “manipulate,” so much as harm the markets. We would never manipulate of course, but someone else certainly could. This is no superficial matter. This breach and the whole episode must be snuffed out before it develops any legs. This is no time to demonstrate any sign of weakness or lethargy in addressing such a heinous affront to the intellectual property at the deepest core of our business, and in some ways, the characterization of its essence.

You should see what we pay the guys like Sergey who develop and run our systems. It takes half a million a year to get them out of bed, but we tie them up for life with more legalese than they can understand. No matter what precautionary measures are implemented, there always has to be one that must feed a need we can’t fill and he becomes an abomination, turning to criminal activity.

On other matters, thank you for keeping those lovable and sleepy bureaucrats at the SEC off our backs. We also have to express our sincere gratitude for leaving the AIG dogs to die without clamor. Our involvement was very profitable, but if it had surfaced too visibly, the exposure would have been embarrassing. Our boy Tim is pretty slick isn’t he? He left all the folks in place at AIG who rode that trick pony over the abyss. Amazing talent. Keep him in the job for another year, or two, won’t you? Make sure the billions in bailout checks are cashed before sending him to Paris as ambassador. We need to make sure our friends on the Street are still standing. Competition is good for us, to a certain extent. The smaller fish keep prying eyes busy.

On a sadder note, we feel really bad for the Iceland economic implosion, but hey, we didn’t force them to buy our derivative packages. We sell what we can to make money. They had cash that needed to find a home, and we obliged.

We should point out that operating speculative derivative or futures markets outside the bounds of national or international oversight is fundamentally critical and necessary given the world we now live in. How else could we possibly continue to take advantage of events and situations around the globe unfolding at lightning speed and impacting the fluctuations in such things as commodities or financial instruments. You can get more background on this from Tim, but being nimble in a rapidly changing environment is critical to success. Nothing moves faster than money flowing over electronic waves. Agility is part of our very survival.

Naming our colleague Philip Murphy to an ambassadorship in Germany is a nice touch, which should provide our firm with a very friendly ear on governance in the EU at a time when these countries are fighting over each other’s relative “tax advantages.” What a bunch. They’re killing capitalism with their policies. You can’t find a real capitalist over there anymore. Everyone is an employee, from the Chairman to the clerk, no one is an owner, and everybody waits for a paycheck and the year-end bonus. What’s this world coming to?

Speaking of bonuses, you will be hearing some announcements about our historically large earnings for fiscal 2009, which means it is once again bonus time. The numbers might sound really big, really, really big, but keep in mind that we have top-notch employees we aim to retain in branches spread around the world. If we didn’t provide them ample compensation, they would leave for greener pastures. Do you recall when we told you that about the AIG bonuses, and after a few days you succumbed to pressure, making some angry statements about … well you remember, let’s not have a repeat of that sordid week, shall we. We’re putting aside billions to cover all benefits and compensation, so we are good to go. We are simply in great shape. You should be pleased that at least one company in this country really has its act together. This will in turn enable us to be of help to others as we all weather the economic storm together. Do us all a favor and ignore the squawking.

We might point out that California needs a visit. They’re cracking at the seams in Sacramento. Tell Arnold we said hello, and we’ll see what we can do to help out in a few weeks when we get around to it. He’s not hurting badly enough yet. We’ll wait till they repossess his state issued limousine, at which point we’ll have a chat. Don’t you find his IOU business hilarious? Those Californians are just a little too arrogant, thinking all trends start in the West, and all innovation starts there. We like your attitude, or is it Timmy’s, on holding off and making them sweat before sending in the bailout team. What a day that will be. Bailing out a bankrupt State with bailout money created by debt financing.

Please continue to demonstrate insouciance toward rising unemployment which we believe is heading to 11%. Such distractions can be disquieting and being President requires a clear mind, … so many decisions, so much to learn, so many speeches to give, so many trips to take.

One final note to buttress against the reactionary comments from some invidious corners attacking us with “too big to fail,” accusations. Don’t listen to this jealous and frivolous drivel. We are a proud organization seeped in history and what is good for Goldman Sachs is good for America.

Mr. President, please just let the boys take care of that money supply expansion machine, and we will do our very best to manage its trade, efficiently and diligently. We will also endeavor to do our best to always find a home for your debt.

We know you are grateful for our past contributions, and likewise, we thank you for your continuing support in these emotional and turbulent moments.

Sincerely.
Your Friends at G.S.

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• Obama’s Russian Misadventure

The recent representation of America at the Moscow summit delivered a mutually agreed-to target for the removal of some nuclear warheads and launchers. Almost. The relationship was neither improved nor set back, and America achieved little beyond being dealt a little embarrassment at the hands of Putin. The mainstream media (MSM) is applauding the event as a job well done. What meeting could it possibly be writing about with such approval and commendation?

Getting rid of antiquated and cumbersome warheads, 2,200 down to 1,500 or so, and trimming delivery rockets from 1,600 to around 1,000, is a good thing, if it ever happens, but such reduction would have absolutely no impact on either nation’s present realities. Elimination of a few war heads, or WVMDs, (weapons of very massive destruction), leaves entrenched and siloed enough destructive power to annihilate everything living on the face of the Earth a few times over. We shall hear over the coming months whether the Administration’s claims of these reductions ever actually come to pass. The odds are not terribly favorable to the President’s claims. Any part-time student of international affairs knows that Putin will not allow any such compliance under his watch, if the U.S. proceeds with its defense shield deployment in Poland and Czech.

Did America advance ground on obtaining any cooperation whatsoever on its objective of reigning-in Iran? Not a nod. Putin is very comfortable with selling Iran anything nuclear that it wishes to put its hands on. He has to sell Iranians something, anything, since they won’t buy his cars. Iran strategically presents the most critical foreign relations pillar to potential peace in the Middle East, and for now it remains an ace in Putin’s hand.

Countries expected by Putin of remaining within the “Russian sphere of influence,” such as Ukraine and Georgia, are making efforts to slip away from the bear’s grasp through entry into NATO. While the U.S. supports their inclusion, this stance is considered a direct threat to Russian hegemony in the region, further aggravated by the U.S. ballistic missile defense system intentions. Putin is not buying the sales pitch that this deployment is intended as a deterrent against Iran, no matter how the U.S. presents it. Putin just can’t take a joke. Of course it’s intended to protect against Russian aggression, however, in reality, well, it would augment the threat looming over Moscow, … just in case.

When Obama said to a business audience in Moscow, “Along the way, you gave us a pretty good deal on Alaska. Thank you,” was this intended to liven the discussion? Was it delivered to remind them Czar Alexander II, who received less than a penny per acre in gold for it, had shafted them? ... Under 21st Century Russian perception it is worse than a really bad deal. Is this a novel method of referencing a long history of trade? Russians never quite swallowed that pill, and Obama might have thought twice, or thrice, before raising this caustic historical Russian forget-me-not on Russian soil. Given Alaska’s current importance as a source of natural resources, it should have been evident that such recollection would rub some salt on an old wound. It should also have been obvious that it would be received as a backhand smack at Putin’s urgent quest for new productive oil and gas fields in Siberia, and more recently in contested areas of the Arctic. It would serve little here to imagine in much detail how the MSM might have treated Bush, had he made such a gaffe. Obama should understand that he is addressing a humiliated empire, desperate for a return to former glory.

Some of Putin’s highest priorities are oil and gas, their control, and their prices. He will support any measures that can sustain oil prices above $65 per barrel so that he can continue to fund his expensive power base. America's wishes are for something less than $40 per barrel, rendering Putin's ears deaf to any such discussion on this topic. Putin also needs to be seen as the nation’s strongman, and has been almost Hollywoodian in the shaping of that image. He must be seen as the defender of the motherland, and he enjoys approval by a comfortable majority of his countrymen. While Obama’s insecurity surfaces as arrogance, IMHO, Putin’s insecurity effuses as “My ego will take no prisoners, and my superiority doesn’t care what you think.” Any slights to his ego can only result in automatic and deep setbacks to pretense of cozy relations even though there is a long laundry list of expectations by each side.

The MSM has applauded Obama’s appeal to Russia’s youth that they should ignore past agenda (Putin), and take responsibility for a new 21st century agenda. Such communing with young Russians should help negotiations along astonishingly well with the country’s boss. Still, the MSM considers this strangeness, “a solid foundation,” for the future of the relationship. There is always something to be said for looking at a glass as being half full. There is also something to be said for realistic assessment, which provides a viable platform for effective strategic thinking. This U.S. representation in Moscow, IMHO, established absolutely no inroads that might provide launching pads for addressing the serious confrontational bargaining sessions that Putin’s long-established, aggressive and firm belligerence might budge for.

Obama apologists have excused him with commentary that he was simply stating historical fact. Such perception is baffling. Putin has been around a while, perhaps when visiting him, Obama should have taken more care to recall that his title is that of Prime Minister. No one in Russia does anything of import that his iron fist does not pre-approve. This too is historical fact, but perhaps Obama was tired, and when he mentioned Stalin, well, Stalin is part of Russian history after all, is he not?

The Moscow trip was not a favorable photo-op as it turned out, with Putin doing his best to appear nonplussed, and the meetings seemed to have accomplished nothing of substance. What was the point? The warheads will likely stay where they are, the missile shield has a doubtful future, and Putin will continue feeding Iran’s dreams of nuclear power. Putin understands America’s overwhelming military power. He cannot replicate it, however, he will remain an irritant, unwilling to appear acquiescent to any demands from America and the West. We can be assured that any backwards move Putin might relent to, he will extract maximum price for.

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• Don’t Believe The Pundits On This Being China’s Century

While countries struggle, muddling their way through stimulus packages and bailouts, China is being touted as everything from, “the best current place to invest,” to being, “the engine that will pull the globe out of its recession.” These entreaties and prognostications are sprinkled with reminders of the power it wields over America, given the huge dollar reserves that it holds. If I may quote Tony Soprano, “forget about it.”

China has asked rather politely, that the U.S. maintain its creditworthiness. No kidding? That plea was less a wish that the U.S. not skip town on its debt (devalue the dollar dramatically), than it was a declaration of a deep desire for a return to excessive U.S. borrowing. When the U.S. borrowed, it bought. When it bought, China prospered. This is rather basic, however, what is not so evident, or obvious to many pundits and experts, it seems, is the fact that China became inebriated through the glory days of consumerism. China now suffers the consequences of its acquiescence to a surety that the intoxicating euphoria enjoyed around the globe for a generation, would never end.

China understood that to become America’s principal provider of goods, it had to manufacture less expensively than anyone else. China excelled at squeezing productivity out of its labor force. It rapidly implemented a sweeping expansion of the necessary infrastructure to manufacture products faster, better (sometimes), and cheaper (always). New plants sprouted at an unprecedented rate. China’s expansion of its machine was based on an enormous assumption - the rate of growth it was enjoying through exports would continue unabated. It is now shutting down plants faster than it opened them. The capacity that was preparing for demand twenty years out, is now shutting down, and the Chinese are not about to ramp up their own consumption to energize reopening of the plants. While China has become a major manufacturer, the majority of its manufacturing is for, and on behalf of foreigners, selling established brands. China’s authoritarian “system” has made the creation and recognition of its own brands, all but impossible.

American consumers are not returning to the binge behavior of the past twenty years, although their ambivalence on trade with Asia persists. As for China, it focused on creating trade surpluses, and it adroitly squeezed its workers, but it did not prepare them, or its industries for broad based consumption. It has not created a self-sustaining, stable economic environment. China will dip into its coffers to stimulate internal employment, spending on infrastructure, or investing in what it knows best - export industries. Endeavoring to attract foreign investments, China will claim improvements in efficiencies, forensics, accountability and accounting practices of its indigenous infrastructure. The claims are beyond its ability to deliver. Until such critical elements as property rights, or a welfare breadbasket are implemented through appropriate taxation, Chinese consumers will be more prone to save, as they must individually concern themselves with how to pay for tomorrow’s meals.

Any cash China spends outside will go to acquiring natural resource producers for pennies on the dollar in the present climate, and countries, including Canada will be happy to sell out. This will do absolutely nothing for the long-term health of the North American economy.

There are currently foreign reserves of around $7.5 trillion held around the world with particular concentration of dollars held in East Asia, where since the late 1990s there was perceived need to protect against currency speculations, and a tendency, no, make that urgency, to feed (finance) the American engine driving China’s growth. We should note that the size of China’s reserve accumulations have, in the past couple of years, attracted the very speculation they sought to themselves protect from, which has further accelerated the bloating imbalance. The size of China's dollar reserves forces a tentative, even precarious, equanimity between the U.S. and China, but it is a potent equilibrium nonetheless. It will be a long road traveled before China finds sustainable balance in savings, consumption, exports, and internally stimulated (broad based) investment. It will also be a long wait before we witness demonstrations of international responsibility emerging out of China. Until then, China will continue to flex its new-found influence to push for such things as an independent currency a few degrees removed from the dollar.

The world’s economic history has been fueled by leaps from one bubble to the next, but the current recession may have a long wait for the next bubble of consequence that will yank the world out of the doldrums. Whatever its form, it is not likely to come out of the less than transparent, state owned, and controlled economy of communist China. China has created a massive middle class in a single generation, but it has yet to empower it. China will not soon be supplanting Americans, or Europeans, in the mall line-ups yearning for China-made-American-invented-branded-and-engineered products. American consumers are unconsciously pushing back the clock on that empowerment of the Chinese middle class through their dramatic behavior modification of the past year. Like it or not, global economic stability will for the foreseeable future depend on the West, and very particularly on America.

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• Dear Mr. President: Thanks Again For Cap And Trade

To The Office Of The President Of The United States,

Dear Mr. Obama

We are the heads of a few of your largest constituents, including Dow, GE and DuPont. This letter represents our sentiments in wishing to express our gratitude for your and Ms. Pelosi’s efforts on our behalf. We thank you, our shareholders thank you, and certainly all of us look forward to contributing to your Presidential Library, once you leave office, if we did not sufficiently contribute already prior to the election.

We can appreciate that neither yourself nor your dear friends in Congress have had time to read the new Bill that opens: “A BILL - To create clean energy jobs, achieve energy independence, reduce global warming pollution and transition to a clean energy economy.” This Bill is very, very, very long and boring. It is also very complex. We conceived it and structured it in such way that the fewer the readers, the less editing would take place. We therefore anticipate that its passage will be swift. The sooner that train leaves the station, the more impossible its progress will be to reverse. It would also not be advantageous if the irrationality, and fear surrounding humanity’s hand in the process of global warming were to subside. Now, is an opportune time to strike.

Attaching the name “Cap and Trade” to this whole business has been a stroke of genius. No one really understands what it all means, and the media believes everything you tell them, so keep plugging it, and keep promoting the “reduction in CO2” stuff. That works really well in LA. Have you seen the air out there? Terrible. Terrible, or "turbull" as Charles Barkley would say. We are all thrilled that you have successfully reconstructed the original intent of CO2 reduction, into an energy consumption reduction program. We knew you could do it.

The impact on consumption reduction will, in our view, be minimal, and fortunately, that is not our objective. We wish you much luck in managing this monster, and in building an administration capable of verifying such things as the veracity of corporately claimed offsets. This Bill is so complex that it will provide endless possibilities for abuse and excesses, and we can smell the fraud stinking up the air already. As you know, a transparent system such as a simple graduated carbon tax, paralleled with targeted caps on emissions, would not have been as financially beneficial for us. Not even close.

We are well aware that most of our smaller brethren in the business will get put out to pasture as a result of their inability to move off-shore quickly enough, or by the fact that they will not be able to afford the carbon pollution permits. We, on the other hand, already have unregulated facilities around the world to which we can reallocate resources at a moment’s notice. Our competitors will also not have our advantage of receiving significant Cap and Trade credits based on our being able to provide all necessary products supporting this bill, from solar panels to wind mills in the sky. Our smaller competitors will also be unable to sustain the sheer costs of managing the government’s bureaucratic intrusion into their affairs, as it deploys armies of newly hired climate science experts to distribute and oversee capping and trading of carbon dioxide emissions.

We anticipate much higher costs in the manufacture of many alternate energy sources, such as solar energy absorption cells, and this will impact the expansion of solar cell farms, but well, we have no choice.

The Bill will be very effective in rendering the cost of any carbon-based energy unaffordable through overwhelming taxation. That should help you refill the government coffers somewhat, although the hole you are digging for American taxpayers is becoming rather considerable. Households across the country will bear the brunt of the costs, through higher product prices and a heavier tax burden, but most people seem very accepting of a “price” for reducing climate change. Even if most don’t believe that they impact climate, they still feel that the air needs cleaning. We are unsure, however, how taxpayers will feel about being mandated into financing the adoption of efficient technologies overseas. They will probably not be thrilled with paying to prevent the clear-cutting of the Amazon, for example, at a time when many households are barely paying their food bills. We, on the other hand, will not be affected, whatever reactions surface on that front, although a couple of us feel bad for our buddies running operations like aluminum, or steel mills. They are in for some tough times.

We note that some of our other friends on Wall Street are very preoccupied, as we write this letter, coming up with new and extremely creative financial tools which they expect to launch upon the Bill’s passing. Those boys have amazing ways of getting in on any game with the potential of throwing off billions in cash. They look forward to a whole new set of opportunities opening up for them, replacing the ones eclipsed by the recent devastating financial compression. Listening to some of them, one might conclude that they have been holding séances with Jeffrey Skilling of Enron fame.

We are anxious to be in receipt of our free Trade Allowances, but most of all, we are excited with the anticipation of enjoying astronomical growth for many years. In passing, we should thank you for having allowed, and fuelled with cash, firms like Goldman Sachs or Morgan Stanley to become even bigger, and more powerful than they were before the financial down-turn. This action set a tremendous precedent we look forward to duplicating in our industries. If you thought “too big to fail” applied to these giants before the crash, wait until you see how big a few of us get in the next five years.

We have one last request if we can be so bold. Could you repeat as often as possible to the Nation that this Bill will not cost over $3,000 per household each year, and that much like the national objective of being carbon neutral, so too the cost will be, … “neutral.” Explain to America that it is just a methodology for keeping track of excessive energy consumers, and polluters. Perfect, don’t you think? They’ll all buy it. The media will promote that theme for you.

We will continue to postulate assertively on the need for battling global warming, and look forward to your persistent oratory on getting this momentous Bill passed into law.

Sincerely.
Your Friendly Benefactors

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• IKEA’s Complaint Of Russian Mob Rule

“The withdrawal of such a large foreign investor from the Russian market may cause considerable damage to the image of the country.” This is an understatement published this week in Pravda, Putin’s personal PR machine, relating a major, and far-reaching decision by Ikea.

Ingvar Kamprad, Ikea’s founder, has revealed that his company had been swindled of $190 million by Russian authorities. Many businesses have pulled out of Russia in the past couple of years, but to have one of the wealthiest individuals in the world make such an emphatic declaration against a country, is a powerful signal that warns others who might venture into the corrupted climate ruled by Putin.

Ikea is one of the largest privately held companies in the world with approximately 300 stores across 40 countries, and it employs over 127,000 people. Its more than $31 billion in annual sales give Ikea a broad reach and clout, yet, it could not find the ceiling of the graft that was required to be paid as it attempted for almost 2 years to open its most recent store in Samara, Russia. Now that 130,000 meter facility will never open. A pioneer in the Russian market has slammed on the parking brake.

Kamprad’s very sarcastic characterization of Russia’s business landscape, “the unpredictable character of administrative procedures,” while almost humorous, is very telling. Businesses and investors know that doing business in Russia means you will very likely deal with either remnants of the KGB, or the mob. Dealing with the KGB provides more powerful and far-reaching influence than buying support from the mob. With the former KGB, you get protection from the highest levels of government.

For giant corporations such as Ikea, size means that the price extracted for doing business becomes an impossible number to cap. The money extraction process is insidious, and because the corporate coffers are enormous, the blood money has no ceiling. Kamprad has finally cried, “uncle.” More importantly, he has done so very publicly. Since 2009 he had made Ikea’s entry into Russia a very personal project. It is entirely possible that this declaration is a temporary stance by Ikea, intended to shake up Putin and his friends into putting a ceiling on the graft payments. Either way, there are no indications that the underlying corruption throughout the system has any hope of finding much-needed repair. Perception of Russia’s corruption levels, as published by Transparency International, equals that of Bangladesh, Kenya and Syria, so it cannot get much worse. Ikea found that, “blackmail, sabotage and pressure for bribes,” as well as disrespect for contracts, became too much.

These are economically difficult times for Russia, as with most other countries. Russia can ill afford declarations the likes of those made by Ikea and its boss. Such news, of course, means that for the foreseeable future, America will continue to be the safe haven for the world’s cash.

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• Neda Agha-Soltan - Innocent Symbol Of Revolution

Neda Agha-Soltan was a bystander in the dramatic conflict gripping her country. Today, following her slow death from a bullet in the chest, she is the icon of Iranian reaction to the violent suppression by an entrenched theocracy. Her name means “voice” or “message,” and she has become a dynamic symbol for Iranians seeking openness in government. She has also altered international reaction, even moving the White House off its mark.

The video of her last frightful two minutes was seen around the world within moments of her passing. The ubiquity of the Internet disseminating the powerful images of Neda’s final struggle, elicited additional and essential support almost instantly to the plight of her people.

This unwilling participant has inadvertently stimulated the energy of demonstrators, and has intoxicated events, rapidly evolving them into a full-blown revolution. The success of this revolt is in doubt over the short term, since the ayatollahs are willing and able to take any and all action to retain power. Ali Khamenei has not only gone well beyond the revolutionary Grand Ayatollah Komenei’s tenets, and moved himself toward self-deification, but he is determined to convert his theocracy into a family business, as he grooms and prepares his son to perpetuate his very own history making dynasty.

Neda has made an emotional connection with the world. She is being mythologised, partly because the large demonstrating crowds needed a focus, or rallying point, which opposition leader Mir Hussein Moussavi could not deliver. She has stimulated the popular will. Her biggest contribution may be the impact that she has had on Western leadership. Obama’s reticence on making any statement pertaining to the theocratic thugs he wanted to negotiate with, was broken by, “I strongly condemn these unjust actions.” While this may be typically indecisive, it is a statement that says, “I’m moving off the fence, because I now have no choice, and doing otherwise would show Americans that I lack resolve.” Although this comes well after denouncements of the violence by European leaders, American voices and feelings toward the violence on the streets of Iran have finally been heard officially.

The Iranian leadership cares little what Obama or any other leaders have to say. They are staying on course to retain power at all cost. Only force will alter their determination. At this point they may fear that the retaliation against them might be as extreme as the program of assassinations they very effectively implemented themselves in 1979 against the Shah and his regime.

Neda’s graphic entry into martyrdom will have put an end to the placating of ruling Iranian thugs by a European leadership which has enjoyed business as usual for a generation, sanctions or not. Westerners will no longer idly accept the mollifying that has populated the foreign policy agenda of both Europe and North America on Iran. The ayatollahs and mullahs are prepared to decimate their own population, and will kill many Iranians in the days ahead. We may find Khamenei verbally pretending to give voice to the opposition, however, the systematic aggression will continue, and dissenters will disappear.

Some write that there are divisions among the ruling elite that will grow deeper as the demonstrations and the killings continue. Reality suggests that all members of this despotic regime are complicit in the pilfering of the country’s treasury, and they will in the end go down together. There should also be little doubt of the extreme measures they are capable of perpetrating on other countries once they acquire nuclear potency.

Neda Agha-Soltan has become the perfect symbol for demonstrators who innocently sought a voice in their governance. Reaction to the squashing of that voice is energizing a revolution. The world now waits in anticipation for the day when Iran’s military declares itself “neutral,” and a new leader from within, or from exile, surfaces, marking a new era for Iran, and for the whole of the Middle East.

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• A New Dawn For Iran?

In the wake of demonstrations crowding hundreds of thousands onto the streets of Teheran, the world conjures up visions of the 1979 Islamic revolution. No such event is occurring today. The demonstrations are not revolutionary, but they will bring change.

If we were witnessing a revolution, the Iranian Supreme Leader Ayatollah Ali Khamenei, along with the rest of the vast network of mullahs, would order the army to wreak havoc on the demonstrating public. There is no overt demand for change in the theological administration of the country. There is, however, a relatively peaceful and powerful request for alternate voices in governance, and for a lifting of oppressive measures.

Mahmoud Ahmadinejad’s opponent Mir-Hossein Mousavi has indicated that he would seek to improve relations with the West and enhance the role of women, however, he should not be mistaken for a reformist. Had he been elected, change within Iran would have been minimal. Mousavi is a supporter of the ruling ayatollahs, and is unlikely to appear confrontational to the well entrenched rulers.

Many Iranians seek progress, but ayatollahs and religion will not easily surrender suzerainty over social, economic, and political life in Iran. Unless the violence on the streets escalates the demonstrations into visibly bloody confrontations that are filmed, and disseminated on YouTube, Khamenei will remain firmly in control for the foreseeable future. He will carefully manage Ahmadinejad’s newfound vigor following his landslide victory, and navigate around the Iranian President’s calls for cleaning up corruption among the powerful clerics.

Demonstrators, University Students in particular, are being threatened with the death penalty if they “incite unrest.” Reports indicate that demonstrators are being arrested by the Basij (the Revolutionary Guards), however, their ultimate physical abuse or dispositions will not find their way to our TV sets, or to our computer screens.

Even with the violence, there is a possibility that the marches will continue, and will have impact. The unusual size of the current demonstrations could coerce and change the inertia that has gripped Iranians wishing for an end to the economic and political abuse they are enduring. It may be that the growing crowds, comprised principally of young people, are the proverbial genie that cannot be repressed back into the bottle.

The vast diaspora of Iranians, who left Iran over the past two decades, provides a passionate international network supportive of the demonstrations favoring change. There are anywhere from 500,000 to 1,000,000 Iranians living in the United Sates and Canada, many in Southern California as well as in Toronto and Vancouver. If, in time, the genie succeeds in remaining free of the bottle, a great many of these expatriates would rapidly find their way back to their homeland, bringing their education, contacts, capabilities and money with them. Their return would stimulate an economic growth for Iran that would rapidly escalate the country’s standard of living.

Iran is rich in natural resources, and Iranians have long demonstrated a propensity for hard work and creativity, along with a willingness to “build,” when they are not suppressed by autocratic governments. The lifting of sanctions alone would provide Iran an immediate and discernable economic boost. The resulting socio-economic transformation within Iran would change the Middle East. Iran would become positively pivotal in the region.

The mullahs may have long feared that change would eventually come in reaction to their abuse of the population. Many have moved the proceeds of their pilfering offshore, “just in case.” Some have built themselves Los Angeles and West Vancouver mansions, in anticipation that the gun might eventually not suppress the crowds in Tehran.

The potential for change is directly conditional on the persistence and endurance of the youth filling the streets of Iran. It will be unstoppable if the demonstrations move to the poorer rural regions of the country. Although the nature of the change that crowds are clamoring for may not for now be as dramatic as the video scenes escaping the crackdown, their demands will persist. We can expect that the extent of that change will gradually expand to encompass the nature of Iranian governance. It is now only a matter of time. The growing crowds are shouting, and are being heard.

Note: Jun.19 update - Should the violence being perpetrated on the demonstrators continue or escalate, the ayatollahs and mullahs will have turned these demonstrations into a full-fledged revolution. Our best wishes go to the demonstrators who are defiant, and seek a reduction in their oppression.

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• Does America Yearn For A Monarch?

Life Magazine fabricated a mythical monarchy in the early sixties by applying polish and airbrushing to John and Jacky Kennedy, elevating them into a Camelot. America couldn’t get enough of the magazine, and rewarded its uncommon “access,” to the JFK White House with financial success. The corporate strategy very successfully built an unprecedented, but mutually beneficial, relationship.

This was not the first popularization of an American President, but it was the most successful anointing of an almost-monarch. We all admire true heroes, however, there are many who seem to require more than honored heroes. To satisfy that craving, we create stars and surround them with irrational adoration bordering on veneration. The mainstream media (MSM) plays a role in the process, and has much to gain from it just as Life Magazine solidified itself, and its profits with the creation of the American version Camelot.

Life Magazine presented a glossy veneer of a young President and his family, because it could, and because it would not have been as profitable to have done otherwise. The public reaction was extremely receptive, and the oversized periodical continued to publish its principal stars’ immaculate images.

America has long succumbed to Hollywood’s very adept star manufacturing machine. Studios and production companies very effectively and profitably practiced the art of star production, as well as veneer creation, for a century. Whether the individuals in question believe their own press, matters little to the studios and the machinery that creates them. They are ephemeral creations that have no truth other than that of existence in the percepts of adoring devotees. They scatter nonsense, and often lies, and all utterances are gratefully accepted. Stars step into the light, feigning timidity, as they engage in absorbing gushing adulation. The star making process has been perfected and whether young, old, intelligent, rich, poor, educated or not, it seems that everyone is susceptible to its affects.

In 2009, the MSM has been provided a new President, whose natural tendency is already a well-prepared gleaming image, requiring little visible airbrushing. Obama’s promotional machine has had the added and unabashed advantage of having its subject well versed and practiced in the art of sermon delivery. Obama placed himself on a pedestal, and the MSM has delivered applause and sometimes infatuation. The zeal of this infatuation has translated into an abandonment of any application of journalistic ethics or common sense. The obsession has been transferred onto the population eager to satisfy a yearning for a monarch. This is not to suggest that America wants a king, because it doesn’t, however, there is evidently a vast portion of society that yearns for a personality that it believes will transcend it to a place where Camelots exist. America doesn’t want to literally revisit the anachronism of royalty, yet the British monarchy is as popular in the U.S. as it is in Great Britain.

In Obama, America found a willing aspirant on whom it consigned the cloak and stature of monarch, the ultimate iteration of star. Modern versions of monarchs however, have no effective power, but they enjoy fulfillment of ceremonial roles. Obama accommodates that role rather effectively and continues his cultivation of the “I,” unabated. As President, he has avoided the thorny details of assiduous analysis on the most critical problems facing America, and has used sweeping, but banal statements of obvious principals, while his appointees actually implement policies and programs inconsistent with the claims of the message.

Obama has filled the ceremonial role of monarch with enchanting voyages across the country and around the world, although the country might wish for more representation of America’s interests, rather than promotion of its leader as internationalist. While the public and the MSM might treat a monarch with reverence, a President should be treated as a politician, and challenged as such.

As President, Obama has yet to demonstrate any proclivity for practical leadership of the free nation envisioned by the unpretentious framers of the Constitution. As he insinuates government into all social and economic fibers of the country, the American taxpayer’s expectations of Obama’s heralded change will rapidly evaporate, the “self-evident truths” will become redefined, and the reality of the costs will become the new, overwhelming burden.

Now that the Congressional Budget Office has notified them that federal spending in 2019 will represent at least 25% of the GDP, all taxpayers should decide that a monarch just will not be injected into their futures in any form, and that their President should be challenged. There are enough stars floating out of Hollywood to satisfy desires of royalty.

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• Obama’s Not So Private Economic Conundrum

Having effectively been elected by a population believing in his redistribution of wealth promises, Obama has leaped into the fray of a game in which he has no experience. He arrived with an ideology, and seems to have learned little about the recession facing the Nation. Still he charges ahead. Along with millions of fawning supporters, Wall Street is quietly cheering and encouraging the moves of a neophyte CEO. You would too, if you controlled the game.

Many pundits and most of the mainstream media have intellectualized a rationality for the President’s actions with an unconvincing, “he’s a smart guy, he knows what he’s doing” or the very successful assignation, “the mess is Bush’s fault.” Others who once supported him now have stepped back a little with an abundance of “time will tell, give him some time,” brace-yourself sentiments. The American voters re-elected Bush to a rare second term, so this blames the voters, but more critically it is a disingenuous condemnation.

The anti-capitalism wave that swept the nation and elected Obama was a reaction to the financial sector’s abuse of influence and power. Within the reach of a compliant and not so watchful Congress, some players took absurd risks across the banking spectrum, breaking all rules of reasonable lending practices and leveraging. As Obama continues the out of control bailout of the financial services industry program Bush started, the problem America has faced for the past decade and continues to be saddled with, is the dearth of knowledge on the part of its President pertaining to its most critical challenge.

Any CEO who is perplexed when facing a balance sheet is incapable of effectively managing a large corporation, particularly one passing through a very turbulent and economically treacherous period. In such times, having in place an independent and objective Board of Directors is imperative, even if the CEO is aware. In the President’s case, Congress is expected to act as a balanced and diligent chamber, not an anesthetized rubber-stamping convocation. Both Republican and Democrats in Congress can take blame for having succumbed to the seduction of money, which led them to ignore the bubbles (housing and financial) that have imploded with worldwide ramifications. Congressionally mandated liberal (read: Standardless) mortgage qualifications, coupled with Greenspan’s loose money policies were the fuel that energized the bubbles. Bush was not responsible for the financial meltdown, and neither is Obama, although both can be accused of complacency. However, …

When the markets caved, Bush was in over his head facing challenges he did not understand, and he handed the hot potato to Paulson. Apparently Bush believed that a fox is the only one who has experience with chickens, and is therefore their inevitable overseer. It was evident that Bush had already vacated the White House premises mentally, and was running south for cover, hoping Obama would take over the reigns even before his time. In came Obama, with no more intimate knowledge, perhaps less, of the economic landscape and Wall Street than his predecessor. What did he do? Installed Paulson’s buddy and protégé of sorts to continue the good work of bailing out the financial community. Unfortunately for the taxpayers, Obama will continue to do whatever he is told to do.

At least Bush didn’t pretend he knew what he was doing. Obama’s ego on the other hand refuses to allow for such leak of doubt even in his private moments with the mirror. He is confident, and believes that he is intelligent, but the arrogance is leading him, and the Nation, overzealously into trouble. Problem is, the nation will pay for his ego and his lack of analysis or interest in educating himself.

As I’ve suggested previously he should shut the door of the Oval Office for a month, stay off Air Force One, and get a concentrated dose of education on the biggest challenges. He won’t. If America’s financial house is in order, every other challenge facing the country will be more easily remedied. It deserves his attention and intimate understanding of subtleties. A few phone calls will roundup all the teaching talent he can use. The objective is not to transform him into an economist. That would be just as disastrous. The goal it to get the CEO to become aware of what he doesn’t know, and get a grasp on some right questions to ask those that he has delegated authority to.

The U.S. Treasury and The Fed deserve his attention though they don’t want it. Who wants meddling when you’ve got yourself a key to the vault? They are happy to work with someone who doesn’t know enough to probe effectively with relevant examinations. They have been content for over a generation with residents of the White House who did not know what they didn’t know. Their jobs were made so much easier. Clinton might be the only President in recent memory who might have come close to being analytical and inquisitive. Have we so soon forgotten Allan Greenspan’s endless tenure and obscure meanderings who propelled the money markets over the edge? Why has Geithner’s failed role at the New York Fed garnered him ultimate power in the new Administration? Simple. His boss doesn’t know any different.

The occasionally heard rationalization, “we need those who brought us this mess to help clean it up,” is actually touted as if it made sense. … Not to American taxpayers, it doesn’t. With the bobbing head of the President, those who manipulated the fashioning of the worldwide recession are now tapping into the taxpayer pockets with schemes that will eventually surface, but to no avail. There will be no repercussions because there is no elected official who knows enough to dig, or has competence enough to conduct even superfluous due diligence.

When, for example, will taxpayers ever be apprized of the realities that will have allowed banks to market packaged toxic assets to funds, with the taxpayers, through the deft fingers of Geithner, guaranteeing the losses? ... The funds being pools of capital formed in partnership with Treasury where the taxpayer is fifty percent partner. Yes, you, the taxpayer will be a 50/50 partner, and that’s not good news because you are also the backstop on any losses incurred. Losses will represent much of the packages because we’re talking about mortgage loans that have been under water for some time and worse, these wondrous financial baskets include miasmal securities that were created by the geniuses running these now thrashed financial institutions. The outside independent fund “partners” have you to thank for their lack of risk. Don’t hold your breath waiting for transparency from Geithner. Geithner’s buddies will continue to be bailed, make billions, replenish their coffers, and taxpayers won’t know the hows, whens or whats. Ever. If you think you have a few bucks to invest, and want to get in on this action, good luck.

The big lie was that such radical measures were necessary if big lenders were ever going to lend again. Think about the absurdity of that statement. Your corner lemonade stand entrepreneur knows better than that. Oh, and the other sensible reason was that these giants of the financial world required their lost capital replenished. So, in go the taxpayers, threatened and squeezed into recapitalizing incompetent banks by overpaying for assets, … well, not assets so much as worthless toxic waste.

Thousands of banks across the country with solid financial statements could easily have been provided government backing to loosen some cash for loans, with deals and conditions pre-negotiated, etc., etc., etc., we could go on and on. The Geithners around him, by the way, could care less what Obama does with headaches like GM, Chrysler etc., so he plays pretend capitalist flexing his newfound CEO muscles, guided by an irresistible ideological need to change the rules of capitalism, another game far beyond his capacities and experience. He now seems to be an expert in the desires of the American public, which is apparently clamoring for electric automobiles, but is evidently doing it very silently.

The Administration’s bungling of the GM restructuring completely extinguished any possibilities of renegotiating the repressive union contracts that weighed heavily in the collapse of the auto industry. Obama’s support of unions, and his indulgence of their quid pro quo expectations will have detrimental effect on the taxpayer investment in GM. Obama is adding a whole new level of risk to investments – political risk. With GM and Chrysler as examples of overzealous government intrusion, and being very indicative of the overall climate in Washington, unionized companies and those encumbered with legacy liabilities, can expect to encounter serious difficulties raising capital in the foreseeable future. Unions have an important role to play in the economy, however, overstepping bounds of reason is detrimental to the “host.” The free market system needs oversight, however, Obama is taking the concept of oversight a little too personally, and his insinuation of government into the free market system is exceeding all constitutional expectations.

Meanwhile middle America awaits a positive outcome from its new President’s policies. It holds fervent hope that things will work out, and his wealth redistribution will magically trickle down to better jobs and higher incomes.

The money game and Wall Street are influenced by major players who never write tell-all books. There is no conspiracy, but there IS a game. Even Geithners are pawns in the game, but they play just the same. The vast independent pools of capital circling the globe, are directed by astute, quiet, effective and ruthless administrators. If you influenced the management of $500 billion and more, would you leave the investments to the vagaries and whims of markets? Would you risk the capital? Absolutely not. You would influence, and manage as much of the game as possible to achieve your objectives. You would do what you have to do to preserve capital first, and maximize returns second, to whatever extent possible, as would any mid sized, or small fund, or even minor investor.

As for Bushes and Obamas? They don’t know there is a game. Ideology is blinding, and with arrogance stirred in, the clustered aggregate, marketed and sold with masterful dexterity, will be detrimental to a whole nation’s economic well-being.

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• Obama’s Not So Free Money

Government interference has simply never, repeat never, enhanced the efficiencies of markets. While Obama may claim to be a scholar of history, he appears not to heed what he has read, or simply does not believe it. Learning, real learning, is a long process of trial and error. History is full of trials and errors. Why is this not obvious to the current White House resident?

Attaching operational strings to government stimulus money is forcing many companies to take actions they would not otherwise implement. Along the longest and biggest by dollar volume trading border in the world, are endless American and Canadian communities, as well as companies that have co-existed successfully for generations through mutually beneficial trade. Obama’s exigent and rigid imposition of trade restrictions such as provisions requiring that only U.S. made steel, iron, and other manufactured products be purchased for state and local projects funded with stimulus funds, are twisting communities into stagnation and onto the unemployment lines. While in contravention to the free trade agreement between the two countries, such sweeping and misinformed restrictions have generated reaction from both Sellers and Buyers on either side of the 49th. parallel.

The impact on the U.S. side is that Americans are losing jobs. Canada continues to represent a sustaining market for many American companies manufacturing products used in the housing industry, for example, while the U.S. housing market has dried up for the foreseeable future. Why annoy your own marketplace, and propel it to react and to stop buying from you? “Buy American” makes sense where communities have decided where and on what such stance is of benefit. Enforcing such protectionist programs wholesale is being blind to realities and needs of business, trade, and life of communities where the rubber meets the proverbial road.

Government has no business dictating methods or practices to companies. Set laws for the land and punish those who break them, but don’t interfere with the functioning of such a critical element in the successful progress of a society. In particular, don’t interfere when you have no concept of what a business requires to effectively and profitably function. Allow companies to decide for themselves where to source products and services, particularly when such products are not available to them other than going North of the border. When businesses complain of the paperwork mountain required along with endless strings attached, someone should realize that the Obama free money has been rendered too onerous to be accepted.

If government is going to even establish suggested guidelines, first understand the nature of the beast. Canada, for example, is America’s biggest trading partner. Unlike almost every other nation the U.S. trades with, Canada’s standard of living, lifestyles and society in general are very similar to its own. England, Germany, and France don’t come close, and China isn’t remotely in the same ballpark.

Contrary to Obama’s representations to Unions, the reality is that Canada and the U.S. benefit from the NAFTA arrangement. Trade with China, on the other hand isn’t trade on equal footing, since China has imposed endless restrictions on imports. It is supremely idiotic to treat these different trading “partners,” with the same broad brush Obama style protectionism. While he pretends that he now does not wish to renegotiate NAFTA, his actions are not only confused, they are affirmatively ambiguous.

We can expect to find Obama once more make like Gretzky and implement a fast skate backwards down the ice on this front, much as we have seen him skate on almost everything else this administration has acted on. He forgot to do his homework and he will be forced to pull a reversal on the strings attached to the money, as will local and state governments involved in the cash distribution chain.

The financial services industry which came to represent an enormous percentage of the Nation’s total considered productivity output enchanted America into complacency and unreasonable personal debt. A self-serving Congress failed in its oversight of major financial service providers, and we are now enjoying the fruits of the deliberate bungling. America needs to return to creating, developing, building, and manufacturing, instead of being the world’s bean counter and dominant consumer.

Free enterprise did not bring us the current economic disaster, although free enterprise has become a favorite whipping post of many left leaning expectants of an uncurbed welfare state, and of the current administration. Businesses across Middle America should be allowed to function without government interference, and shouldn’t be made to feel that the new Administration has launched a war against them.

Dismembering the system that has produced the economic engine fueling America’s way of life will be detrimental to that standard of living. As he rushes headlong into an unfathomable indebting record $1.8 trillion deficit, Obama should stop long enough between Air Force One cross-Nation hops to listen a little more attentively to those businesses that are now saying, “No Thanks,” to the stimulus free money. He should pay special attention to the “why.” He should also establish for himself what might be defined as “free trade,” and what parameters such trade might entail before his next policy imposition.

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