• 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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• Detroit Icons - Ending More Than An Era

2009 is a year that will long be remembered by all automobile enthusiasts as the year they killed the American car. After over eight long decades, GM announced the closing of the Pontiac brand. More than an automobile era is closing. For many of us, this is an acknowledgement and confirmation that the transformation in a segment of our social landscape is now permanent.

There were many other closings of venerable marques over the years, such as Plymouth, or more recently Oldsmobile, that hit us as “little deaths.” The current economic devastation spilling bloodshed throughout the auto industry, however, is overwhelming the Detroit based manufacturers. The impact is making some of the dissolution irreversible. The names we grew up with, names that were very much present in the consciousness of our society and had meaning through multiple elements of North American culture, will no longer be components of corporate America. The future of the Big Three is now in serious doubt.

Vehicles such as the 1958 Pontiac Bonneville, the 1956 Ford Crown Victoria, the 1959 Cadillac Eldorado, the 1956 DeSoto Adventurer, the 1955 Chrysler C300, and the 1958 Chevrolet Impala were not simply transportation. They were the artful and complex product of creative teams, led by visionary designers who delivered “glory days” for their employers.

Europeans produced engineering marvels, but Detroit pushed vehicles into the artistic realm. If, for example, you analyze the taillights on vehicles from the ‘50s and ‘60s, their designers made them an integral and unique element of the rear decks. For European manufacturers, on the other hand, taillights were an afterthought. For most of them, it almost appeared as if they had forgotten that taillights were even required and the taillights had been added as the cars rolled off the assembly lines. Not so for the symbols of American knowhow and creativity.

Even the interiors were uniquely stylized, one more exotic than the next. Most importantly, Middle America could afford them. New or used, for a couple of generations, they represented stages and punctuations in one’s life or career. They were icons with vastly differing characteristics and complexions. For millions of us they represented dreams and aspirations, … “one day I’m going to own an Olds 442.” That the day did not always come wasn’t important, but dreaming of that Z28 Camaro, GTO or Barracuda was an enjoyable part of life for young and old.

The emotional component that automobiles of that era provided has not been replicated, and as poor management and careless unions destroyed the fabric of Detroit’s ingenuity, we watched the epoch extinguish itself from within.

The Oldsmobile Toronado, launched in the mid ‘60s when GM held 60% of the U.S. auto market, was a landmark technological wonder. Under one of the longest hoods on the road, the car’s 455 cubic-inch (7.5L) displacement Rocket V8 engines could smoke the enormous front wheels hurling the 5,000lb. vehicle down a quarter mile in under 17 seconds. The ’68 rendition, with hidden headlights and a front end the length of a Concord, is one of the great but underappreciated American automobiles. It punctuated the end of the sixties, and the fading of an automotive era, whose ending after four decades of denial can finally be put to rest in 2009.

We can rest confident and grateful that the tireless efforts of curators, aficionados, enthusiasts as well as hobbyists will continue to resuscitate, restore and preserve the art that has been the American automobile. Dare we dream of a resurgence?

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• Continental Flight 3407 – Casting Blame on Pilots?

North American media has published the pictures of the cockpit crew at the controls of Continental Flight 3407 when it went down in New York on Feb. 12, killing 50 people. Most prominent in the coverage is the 24-year-old co-pilot and her $23 per hour salary, plus the fact that she supposedly had a second job working in a coffee shop. There you have it. Right there. That’s your guilty party.

The media coverage on the young lady, and the blame-throwing, is relentless, … too young, too underpaid, too inexperienced, too tired, living with her parents, and on top of all that, she flew to her co-piloting shift from Seattle in the cockpit of a red-eye flight, and then had the gall to rest or nap illegally in a crew lounge before taking another flight to Newark where she reported for duty. Why else would she not have noticed the alarm indicating a sudden drop in speed? Why else, other than from exhaustion or incompetence would the pilot, reacting too late to the stall with a pull instead of a push on the controls, have conflicted with the plane’s auto-correction system that was attempting to bring the nose down? Boy did they ever mess-up.

Oh, and wait, that’s not all. The pilot failed tests and lied on his application when he was hired by Colgan Air. He probably earned $55,000 per year like other Colgan Pilots. Well, that’s it then. That confirms it. The cockpit crew was to blame for the crash.

Or are they?

Let’s ignore that there was ice on the windshield and on the leading edge of the wings. It was winter, and planes fly in winter. All kinds of planes, including the Bombardier Dash 8 Q400 twin engine turboprop. The severe weather conditions mean that extra measures of caution and diligence are required on the part of all individuals with any responsibility for putting the plane into the air including ground crews, and control towers.

Regardless the weather or technical conditions, ultimate responsibility for who occupies the two seats at the front of the plane rests in the company executives who make the decisions on who fills them. Experience or lack thereof, talented or not, an employer decided that a 24 year old co-pilot and a 47 year of pilot, had enough experience and proficiency to safely transport a plane full of travelers to their destinations.

The media’s unsubtle accusations, as it trumpets a 24 years old, including her picture, who held down two jobs to pay the rent, and who was placed in a situation with which she and her partner in the cockpit were unfamiliar, is unconscionable. We are also understandably surprised that anyone flying a passenger plane would only be paid $23 per hour. Do we not all assume that pilots, particularly those responsible for passengers require wheel barrows to haul their cash home on payday?

The grieving families who lost loved ones on that flight deserve better reporting. Society in general deserves better analysis by the media of a service which has become critical to its daily functioning, but whose financial cutbacks have brought practices of some providers too close to the edge of unsafe, and whose regulators should revisit the application of their rules guiding safe aviation.

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• Obama’s Squandering Of More Than Capital

With a straight face, Obama has announced that just as Americans are tightening their belts, so too he is taking fiscal responsibility seriously. He magniloquently claims he has “charged” the OMB to go through the budget line by line taking action to save Americans tax dollars. He assures that he is taking “aggressive” action, and result? $17 billion in Savings “next year alone.” America is not laughing, and while the MSM is reporting this presentation with languidly deferential support, some of the reporting appears to be betraying some signs of embarrassment with the absurdity of its task.

How can the majority of the MSM not feel queasy when reporting on the Administration’s new aggressive savings claims? After emphatic campaign promises, and consistent affectations since the election that Obama would bring change to Washington’s addictions to spending, a $3.55 trillion dollar budget can only yield $17 billion in cuts?

Evidently the Administration believes that this one half of one percent scrubbing of the budget will be easily “bought” by the public if it is presented with “we can no longer afford to spend as if deficits do not matter and waste is not our problem.” At least that’s how it’s sold to the media since even the NYT and the Washington Post couldn’t find a term in their dictionaries to call this perversion of the truth for what it is, ... a lie.

The MSM must have accepted that Obama’s cutting of a $35 million long-range radio navigation system had taken superhuman effort, and been convinced by Obama's refrained, “we cannot accept business as usual.” Repeated often, with a frown, and earnest conviction, this affirmation apparently becomes convincing. Evidence that it works rests in the fact that a majority (though a shrinking one) of the nation is buying into the brilliant salesmanship committing taxpayers to almost $15 trillion in debt in four years.

Perception is everything, it seems, and the Obama White House has mastered the art of affecting consciousness. It can make absurd statements with seemingly no serious challenges from the Fourth Estate. The repercussions from this complete lack of fiscal acumen will bring an electorate far beyond the change it was seeking after eight years of Bush.

Bush believed it was his right as President to run helter-skelter and without discernment through the corridors of debt. He was clearly apathetic to the consequences. Obama, a little more than a hundred days in office, is making the object of his blame look like a miser.

Obama’s determination to grow government, plus the bailout / stimulus funds he is being manipulated into providing, will bring America’s national debt to a level approximately equal to the nation’s GDP. His supportive Congress will ensure that his programs win the day, however, the nation will become weary of the reality behind the presentation well before the First Term is over, and a popular President will have squandered an opportunity to bring positive change to Washington.

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• Common Sense – Apple Will Not Twitter

Twitter, barely three years old, is being touted as a takeover target by the rumor mill fuelled by every media outlet in North America. The unsubstantiated rumors claim that Apple is planning a $700 million cash buy-out for the still profitless social networking San Francisco company. If this were true, it would suggest that Apple’s senior management has suddenly become careless and dimwitted.

Apple controls a healthy war chest in the neighborhood of $30 billion including receivables, which means it can weather the current economic storm, and continue to invest in the development of new technologies. Having very successfully returned from the brink of disaster, Apple Computer built its cash hoard carefully and diligently. It is not about to blow a major hole in that bank account by acquiring a temporarily fad-sustained-platform that it has the technology and engineering depth to build for itself.

Twitter’s business model has not shown any possibility of sustaining itself over the long term. Publications with influence, such as Businessweek, are suggesting that such an acquisition would keep Twitter out of the hands of Google, Microsoft and Facebook. That’s good business? Isn’t it more likely that Apple would wish that a Google or other, blow a billion on a company with a questionable future? It is more likely that Apple does not care either way. Folding a young corporate infrastructure into a mature stable company is almost never a successful endeavor. It also strains the senior management of the acquisitor beyond its capacities as it bends to the newly transplanted egos intractably flexing their wills against new directives.

Apple’s iPhone/iPod applications will satisfy the needs of all Twitterers until their fleeting affections and mores decide that a new and more useful platform has arrested their insubstantial attention. The media will follow. The rumors that Google was a potential buyer of Twitter only a few weeks ago fizzled into the Silicon Valley ether. Google’s management, it seems, had some common sense.

Through the past decade, Apple has shown an unusually high degree of foresight and has been fastidious in controlling the quality of its offerings. While Apple has stubbornly held onto its own version of the NIH syndrome, it remains one of the most potent engineer magnets in America. Common sense will continue to prevail in Cupertino, and Twitter will continue to deplete the venture capital sustaining its current luster in the media glare, as momentary as it might be. Stories of an Apple acquisition should prove to be little more than wishful media musings about a current fad.

Going all the way back to ’81 when Apple established an alliance of sorts with Logo Computer Systems for the Logo programming language that solidified Apple’s position in the world of education, the hardware manufacturer has a history of establishing effective relationships to solidify its market presence. Spending $700 million on Twitter doesn’t fit that blueprint, and Wall Street very probably does not have the influence on Apple's Board that it did on eBay's when eBay acquired Skype for reasons that strained common sense. Even if Twitter continues its growth trend over the mid term, Apple should stay away.

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• Dilettantes At The Chrysler Gate

As Obama forces his personal views on the automotive landscape, his injection into the Chrysler debacle is evidence of the lengths he appears prepared to reach for morphing the Presidency into a willful bully-pulpit. Even the media is using words like “rogue group,” to describe the Chrysler creditors holding out for better treatment from the government.

Obama complained that the small “group of speculators,” rejected the government’s 33 cents on the dollar offer. Speculators? What a peculiar denigration of bankers who didn’t feed at the government bailout trough. This is a very serious misrepresentation of the reality surrounding the mess that has swirled around the government intervention into corporate America.

The “holdout group,” which included approximately 20 debt holders, claim they are being treated unfairly. No kidding. They have no seat at the negotiating table, and are required to be represented by recipients of taxpayer TARP money. Where is the common sense here? Why would the UAW and TARP fund receivers be more capable of representing the interests of the debt holders than they are themselves? These rogue investors, representing pension and retirement plans and school endowments, as well as teachers union, placed senior secured loans into the Chrysler coffers. Now Obama calls them “speculators,” as if the term is a dirty word that middle America and taxpayers should accept as such. Speculators are exactly what America’s business engines urgently need right now. Why disparage them?

This is simply misrepresentation and obfuscation floating from a White House seemingly unafraid of twisting perception of reality into support for a profoundly ideological agenda. The serious concern rests in the possibility that the government will corrupt the longstanding bankruptcy code that has stood the smooth functioning of the capitalist system very well. The bully pulpit in the hands of an effective salesman might well inflict permanent damage on the open and free corporate landscape which has fuelled America’s growth for over a century.

Those financial institutions who profited handsomely from taxpayer philanthropy which financed their bailout cash, distributed by the current and previous administrations, are understandably very solicitous of Obama’s demands. The White House accusing the holdouts of acting against the national interest, is injecting the government directly into the management and decision making process governing the funds. This is a pretense that the activity of bankruptcy is somehow unnatural and un-American.

Leaders of the rogue funds should continue to act and conduct themselves in line with what they believe are their fiduciary responsibilities on behalf of their investors, regardless what others in fear of the bully-pulpit might do to pacify the domineering harassment from the White House. The bankruptcy proceedings should be allowed to play themselves out legitimately under the rules and laws that have long proven effective and cleansing in corporate America, and the Administration novices should refrain from interference with management of corporate America and speculator fund management. America is a country of laws. Government should abide by them.

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