President Obama and his fellow Democrats are extremely good at messaging. When they select a message, it is short, easy to understand and explain. It will be repeated by Democrats everywhere from the White House to local party officials. They make Republicans look like amateurs when it comes to messaging. We could only wish the "message" was beneficial to the country; but it is usually divisive.
The current themes for Democratic candidates include "increasing the minimum wage" and "improving income equality." Democrats accross the country will talk about these ideas in just about every political race. The message is consistent with the platform of the Democratic Party, and most importantly, is something with which women and young people can identify. Brilliant, again.
Democrats can't discuss typical core campaign issues: economic growth, low unemployment, helping the poor, creating equal opportunities for women and minorities, and improving access to education and healthcare. In every instance, these are issues Republicans should talk about, and talk a lot. Economic growth has barely a pulse. Unemployment numbers only improved because the government publishes creative results and the unemployed have stopped looking for a job. In these difficult times, women and minorities have been hit the hardest. In fact, the following quote from Forbes Magazine says it all:
"Mr. Obama was reelected with 51% of the vote….He cleaned up with 60% of the youth vote, 67% of single women, 93% of blacks, 71% of Hispanics, and 64% of those without a high school diploma, according to exit polls.
But it is precisely these groups that President Obama’s economic policies have punished the most. The latest data on incomes shows that since the end of the recession in June, 2009 incomes for black heads of households have plunged by 10.9%. Incomes for those under age 25 have plummeted by 9.6%. Incomes for workers with a high school diploma or less have dived by 8%. Single women have suffered an income decline of 7%. Incomes for Hispanic heads of households have declined by 4.5%."/1
Simply saying that Obama and the Democrats have done a poor job will not be enough to win control of the US Senate this year. The Republicans need to establish their own message, and stick to it. They have the right economic philosophies, but they must say they have a plan; a different course than the current road. Republicans must remind voters that Democrats controlled the federal government for two years and had the ability to pass any law, any budget. And pass laws they did!
Democrats passed a $1 trillion stimulus spending bill hoping to ignite the countries economic engine. Remember those "shovel-ready" jobs? The stimulus spending failed, but did provide big government bailouts and government-guaranteed loans to party allies. These included Solyndra, Abound Solar, plus 31 more loan guarantees which ultimately cost taxpayers $2.45 billion, according to some estimates. A123 Batteries received a huge government guaranteed loan before being sold to the Chinese. Fisker was a similar story building their factory in Sweden. GM was taken over with government money and still under government control because the stock must double in order to pay back taxpayers.
The only successful loans were made to Wall Street, where government ownership would have reaped huge profits. After paying off their loans in record time, they later paid record bonuses that year. Remember, these were the people mostly responsible for the credit crisis. Fannie and Freddie were also bailed out, and we should have ended all government control; but we didn't.
The Democrats can't talk about improved access to education or healthcare. Tuition fees are growing much faster than inflation, so students are very unhappy. Similarly, ObamaCare was a complete disaster for Democrats. Intending to cover all Americans, including the 30 million who were uninsured, early results suggest that the far majority of people who signed up for State Exchanges were already insured. Worse, many of those people saw their private insurance terminated, and their plan design options were severely limited. Most who signed up were older and disabled. The target demographic, young people, did not enroll. Without this important group, premiums through the State Exchanges will quickly become unaffordable. Needless to say here, ObamaCare is a complete disaster!
The dismal results from the laws and policies passed during these two very important years are not good. They did not produce results that make Democrats proud, which is why their messaging has nothing to do with past performance, policy successes or the coat tails of President Obama. However, these subjects make for a great message for Republican Candidates. Except, however, there are actually too many failures with too much detail to make into good campaign messages.
Knowing their play book produces disastrous results, the Democrats will blame Republicans for not cooperating; not allowing them to finish the job. They will also point to the Republican plans to turn the nation around; or more importantly, the lack of such plans. For this reason, the Republicans MUST develop good, solid messaging.
Besides pointing to Democratic policy failures: economic, budget, deficit, regulatory and foreign policy, they cannot allow themselves to get trapped into a dialogue decided by Democrats. The Republicans MUST steal a play fro the Democrats play book and develop their own narrative that will drive the national discussion. Let's cover these, point by point.
MINIMUM WAGE. The Primary theme of every democratic campaign will include a demand for increasing the minimum wage. While absolutely true, saying that increasing the minimum wage will result in lost jobs will be simply insufficient. It sounds like a defense on behalf of rich business owners who don't want to share their profits.
INCOME EQUALITY. While this can mean a lot of things, from equal wages for women to spreading the wealth by making fewer millionaires and more middle class, it is a simple message to understand and is highly adaptable. No doubt this includes a desire by Democrats to raise taxes, and that should be asked each time income equality comes out of the lips of a Democratic candidate.
Republicans MUST defeat both of these themes with an offensive position. That means, offering a choice between "increasing unemployment and raising taxes." Explaining why these are more of the same policies adopted by President Obama, Republicans must offer a short, clear option to actions that will increase unemployment and raising taxes.
After all, would increasing the minimum wage to $9.00/hour really make a meaningful difference to the lifestyle of a worker at this income level? No, it wouldn't, and Democratic Candidates should be asked to explain exactly what difference this will make for them. How much more per year would a person make, and what would that buy? When you think about it, NOT MUCH!
What exactly does income equality mean and how would they accomplish it? Asking this question, and forcing an answer, will reveal this is an impossible concept--unless it's just another name for a tax increase. It sounds like something most people would agree with, but the devil is in the details. Republicans must confuse the message by asking Democrats to clarify it. It will no longer be a clear message. It will become vague garbage!
The Republican message should be, we have the same essential goal as the Democrats. However, the Democrats have a dream; we have a plan.
Because we compete in a world economy, our ability to increase wages in any meaningful way cannot be accomplished without losing jobs to overseas competition. Instead, the Republicans are going to implement laws and policies that will stretch a families budget farther. The republicans are going to go after policies that will make the household budget for all Americans to go farther.
Under President Obama, gas and oil prices have increased dramatically, consumer a much larger share of family budgets. Republicans will not only promote the use of alternative domestic energies, like natural gas, but build the Keystone pipeline. The pipeline will create thousands of new jobs, but will move us towards independence from Middle East oil and gas.
ObamaCare has increased the cost of healthcare and reduced the consumers' options. Republicans will pass real reforms, allowing free markets to cut costs and increase consumer choices. Republicans will increase competition by allowing health insurance companies to sell the same policy in all 50 states. They will also introduce tort reform, removing lawyers fees from health premiums. Republicans will preserve the few good aspects of ObamaCare, preserving the pre-existing condition ban and allowing dependent children to stay on their parents' plans.
The first step to improve wages and equalize incomes will be accomplished by reducing unemployment levels created by President Obama's policies. Ronald Reagan said it best, "the best social program is a job."
Thursday, January 23, 2014
Tuesday, November 5, 2013
Why ObamaCare will Fail
Several years ago I had breakfast with Mitt Romney and he was talking about the state healthcare plan put in while he was governor. An analysis showed that a high percentage of young people don't sign up for health insurance through their employer, and he believed the Mass. Health Plan would work if they required young people to enroll, and young people would subsidize the cost for older people. He proclaimed the enrollment mandate was key.
Forward several years and Mitt losing the Presidential election, Obama claimed ACA was patterned after Mitt's plan. However, by then Mitt's plan had been in for several years and we already knew that Mass had about the highest healthcare cost per capita in the nation, so the enrollment mandate wasn't working.
Under ACA, a young adult to age 26 can remain under their parents plan, so those young people won't help keep the cost of ACA lower. Those not fortunate enough to have coverage under their parents plan have a choice between paying about $100 per month for very basic coverage, or $90 per year as a tax penalty. Simple economics and human behavior will explain the outcome: few will take coverage. Early indications are proving this expectation will become reality, and the cost for ObamaCare will quickly become the more expensive option for many people.
Insurance companies are smart, and they understand the dynamics of risk much better that the Federal Government. Over a decade ago, the Feds came up with what they thought was a good idea to contain Medicare expenses: pay insurers 95% of the expected cost in a geographic area and cuts costs by 5%. It might have sounded reasonable to a Washington paper pusher, but those of us who understand risk either laughed or took advantage. In fact, insurance companies instantly marketed new plans under this law, but their ads didn't feature old people in wheelchairs with free transportation to the doctor or hospital, they featured younger, healthier seniors and offered such things as free gym memberships. These plans didn't attract average or above average risk, they marketed to younger, healthier seniors and they made billions while the cost of care outside these plans skyrocketed!
With ACA offering guaranteed coverage, they will attract the bad risk like a supermodel visiting a boys summer camp. Insurance companies who did not join ACA as a provider will market to healthier people in need of coverage, and I predict this cycle will be a repeat of the original Medicare Risk plan experience. Katherine Sebelius is an amateur, and she is competing against people who actually understand risk and know how to do marketing. You might notice the largest insurers didn't join the ACA provider list, because they once again smell opportunity.
Forward several years and Mitt losing the Presidential election, Obama claimed ACA was patterned after Mitt's plan. However, by then Mitt's plan had been in for several years and we already knew that Mass had about the highest healthcare cost per capita in the nation, so the enrollment mandate wasn't working.
Under ACA, a young adult to age 26 can remain under their parents plan, so those young people won't help keep the cost of ACA lower. Those not fortunate enough to have coverage under their parents plan have a choice between paying about $100 per month for very basic coverage, or $90 per year as a tax penalty. Simple economics and human behavior will explain the outcome: few will take coverage. Early indications are proving this expectation will become reality, and the cost for ObamaCare will quickly become the more expensive option for many people.
Insurance companies are smart, and they understand the dynamics of risk much better that the Federal Government. Over a decade ago, the Feds came up with what they thought was a good idea to contain Medicare expenses: pay insurers 95% of the expected cost in a geographic area and cuts costs by 5%. It might have sounded reasonable to a Washington paper pusher, but those of us who understand risk either laughed or took advantage. In fact, insurance companies instantly marketed new plans under this law, but their ads didn't feature old people in wheelchairs with free transportation to the doctor or hospital, they featured younger, healthier seniors and offered such things as free gym memberships. These plans didn't attract average or above average risk, they marketed to younger, healthier seniors and they made billions while the cost of care outside these plans skyrocketed!
With ACA offering guaranteed coverage, they will attract the bad risk like a supermodel visiting a boys summer camp. Insurance companies who did not join ACA as a provider will market to healthier people in need of coverage, and I predict this cycle will be a repeat of the original Medicare Risk plan experience. Katherine Sebelius is an amateur, and she is competing against people who actually understand risk and know how to do marketing. You might notice the largest insurers didn't join the ACA provider list, because they once again smell opportunity.
Thursday, October 17, 2013
A Lesson in Civics
I remember watching on television a very liberal college professor who was advocating more power for the minority party. She saw the role of the minority as a group that has veto power over policies, and I recall thinking what a nut she was to make this outrageous suggestion. For our nation is a Democracy where the majority rules. It's not like a Parliamentary system where the majority forms a new government, but a representative system where power is divided based upon the aggregate of localized elections. The Senate is a house that is more respectful of minority views compared to the House which is a winner takes all structure. Real power rests with the Executive Branch, which is responsible for carrying out the laws passed by Congress. Last, but not least, is the Judiciary, which has the last say when it comes to the rules by which the other two branches of government operate.
The Democrats control about 50% of the elected federal government. The Republicans control about 17% of the elected government, leaving the remaining 33% to the appointed Judiciary. Was it right for the Republicans to make such divisive demands, resulting in a government deadlock which closed down Washington and everything they control? Regardless how noble the cause, they never had a snowballs chance in hell that they would win this fight. In the end, they caved and lost the battle.
Was it fair for our mainstream press to blame the Republicans for the government shutdown? Probably not, but you have to look at the distribution of power to see why they might have received the blame. That's not to say the mainstream press is fair or impartial--they aren't. That's not to say the President or Harry Reid conducted themselves appropriately. Not only did the President say he would not negotiate, but he criticized the Republicans for doing exactly what Senator Obama did during Bush's Presidency. In fact, Senator Obama suggested the Republicans have a patriotic duty to take the position they assumed, and that the mere fact this fight occurred was a "failure of leadership" by the President. Was Senator Obama wrong then? Is President Obama a hypocrite? Did the mainstream press talk about the position of then Senator Obama and either agree with the Republican strategy, or underscore the hypocracy? Neither occurred, and I would be foolish to expect our mainstream press to hold their darling to a high standard. The press is not fair. They are not balanced. They are not neutral. They are not analytical, or serving the good of the country. Get over it, they a business seeking ratings or newspaper sales. Journalism has lost its way for sure.
Regardless what Senator Obama said or did, following his strategy was foolish. The Republicans entered this fight with no clear plan; with no exit strategy; with little coordination of messaging by party members; they entered this divided, and it showed.
Until now, the President owned the economy. The record the Republicans were going to run against was the most poorly managed economy since the Great Depression. Unfortunately, the Republican fight will invite the Democrats to say, "the Republican shutdown harmed the economy..." We all know from an intellectual standpoint that this short event is not responsible for the multi-trillion dollar deficit spending; the high unemployment; the very slow growing economy; the huge increase in welfare recipients; higher taxes, and on and on. The memories of our electorate are very short. Voters didn't recall 9/11 when the Democrats complained about Bush's poor economy. Voters forgot about how proud they were of George Herbert Walker Bush as our Commander in Chief overseeing the Gulf War. They are unlikely to remember Benghazi and all of the other foreign policy failures under Obama.
It is too bad the press failed to identify the great importance of the Republican's objective to put fiscal responsibility back on the negotiating table. No doubt this is the single most important threat to our nation's security, but the Republicans CANNOT rely on the press to put this issue on the front burner. The press is not going to do anything that will hurt their chosen party, regardless how critical the issues are that confront our nation. For example, they are not going to write about how damaging the Obama/Iran policy might be to our nation and Israel, at least until Israel attacks Iran or Iran uses a nuclear weapon against Israel.
There are so many examples of how President a Obama lied to the people about ObamaCare in order to get it passed. Despite what he said, ObamaCare will impact your ability to keep your current health plan and/or doctor; ObamaCare will NOT reduce healthcare costs, and it will NOT reduce the nation's death. The White House refuses to tell us how many people have enrolled for ObamaCare, saying that so many people want this they crashed the system because so many people tried to enroll on the first day. The press knows these are lies, or at least incredible exaggerations, but they aren't about to hold the President to a standard that expects or demands honesty.
What this all means is the Republicans MUST get their house in order. They need to establish common, achievable objectives between now and the next Congressional elections. They can learn a lot from the Democrats, who are very good at messaging. The Democrats have developed a sophisticated plan and organization that coordinates the messages they wish to convey; speaking as a single party with short, concise talking points. It matters not if it is the President, a Senator or Congresswoman, they are all saying the same thing at the same time. Regardless how outrageous, inaccurate or deceptive the message might be, it is coordinated. When our very uninformed voting public hears the same message over and over, they begin to believe it. The Democrats are very good about using social media, political operatives (labor unions, woman's' groups, abortion advocates and even the press) to get their messages out.
With nearly three decades of professional services under my belt dealing with labor unions, I have developed primary principles by which I serve my clients: 1) pick your battles. Every issue is not of equal importance, and fighting over every issue not only makes you look unprofessional, but it makes it impossible to achieve your objectives. 2) working with labor unions is like being in a bad marriage where divorce is not an option. You must give in order to take. Decide what is important, and determine what you can give up for it that is least damaging to your client. Big issues usually require bid trades. 3) you both have a job to do, so treating the other side with disrespect will invite the same towards you. You are unlikely to have a lot in common, or share the same objectives. However, don't make it personal, it's business. You can treat the other side with respect without appearing weak. If you want them to work with you, use charm. Keep things light, when possible. Let them know when something is important by changing the tone--forceful, but not rude or disrespectful.
The American public is as divided as Congress. These issues are important, and as much as people often do not want to talk politics, you can't fix our problems without dialogue. Political correctness is the liberal approach to shut down a dialogue about some very important issue confronting this nation. You can't fix problems you can't discuss. Political correctness is a strategy to protect bigotry and preserve racism.
The Democrats control about 50% of the elected federal government. The Republicans control about 17% of the elected government, leaving the remaining 33% to the appointed Judiciary. Was it right for the Republicans to make such divisive demands, resulting in a government deadlock which closed down Washington and everything they control? Regardless how noble the cause, they never had a snowballs chance in hell that they would win this fight. In the end, they caved and lost the battle.
Was it fair for our mainstream press to blame the Republicans for the government shutdown? Probably not, but you have to look at the distribution of power to see why they might have received the blame. That's not to say the mainstream press is fair or impartial--they aren't. That's not to say the President or Harry Reid conducted themselves appropriately. Not only did the President say he would not negotiate, but he criticized the Republicans for doing exactly what Senator Obama did during Bush's Presidency. In fact, Senator Obama suggested the Republicans have a patriotic duty to take the position they assumed, and that the mere fact this fight occurred was a "failure of leadership" by the President. Was Senator Obama wrong then? Is President Obama a hypocrite? Did the mainstream press talk about the position of then Senator Obama and either agree with the Republican strategy, or underscore the hypocracy? Neither occurred, and I would be foolish to expect our mainstream press to hold their darling to a high standard. The press is not fair. They are not balanced. They are not neutral. They are not analytical, or serving the good of the country. Get over it, they a business seeking ratings or newspaper sales. Journalism has lost its way for sure.
Regardless what Senator Obama said or did, following his strategy was foolish. The Republicans entered this fight with no clear plan; with no exit strategy; with little coordination of messaging by party members; they entered this divided, and it showed.
Until now, the President owned the economy. The record the Republicans were going to run against was the most poorly managed economy since the Great Depression. Unfortunately, the Republican fight will invite the Democrats to say, "the Republican shutdown harmed the economy..." We all know from an intellectual standpoint that this short event is not responsible for the multi-trillion dollar deficit spending; the high unemployment; the very slow growing economy; the huge increase in welfare recipients; higher taxes, and on and on. The memories of our electorate are very short. Voters didn't recall 9/11 when the Democrats complained about Bush's poor economy. Voters forgot about how proud they were of George Herbert Walker Bush as our Commander in Chief overseeing the Gulf War. They are unlikely to remember Benghazi and all of the other foreign policy failures under Obama.
It is too bad the press failed to identify the great importance of the Republican's objective to put fiscal responsibility back on the negotiating table. No doubt this is the single most important threat to our nation's security, but the Republicans CANNOT rely on the press to put this issue on the front burner. The press is not going to do anything that will hurt their chosen party, regardless how critical the issues are that confront our nation. For example, they are not going to write about how damaging the Obama/Iran policy might be to our nation and Israel, at least until Israel attacks Iran or Iran uses a nuclear weapon against Israel.
There are so many examples of how President a Obama lied to the people about ObamaCare in order to get it passed. Despite what he said, ObamaCare will impact your ability to keep your current health plan and/or doctor; ObamaCare will NOT reduce healthcare costs, and it will NOT reduce the nation's death. The White House refuses to tell us how many people have enrolled for ObamaCare, saying that so many people want this they crashed the system because so many people tried to enroll on the first day. The press knows these are lies, or at least incredible exaggerations, but they aren't about to hold the President to a standard that expects or demands honesty.
What this all means is the Republicans MUST get their house in order. They need to establish common, achievable objectives between now and the next Congressional elections. They can learn a lot from the Democrats, who are very good at messaging. The Democrats have developed a sophisticated plan and organization that coordinates the messages they wish to convey; speaking as a single party with short, concise talking points. It matters not if it is the President, a Senator or Congresswoman, they are all saying the same thing at the same time. Regardless how outrageous, inaccurate or deceptive the message might be, it is coordinated. When our very uninformed voting public hears the same message over and over, they begin to believe it. The Democrats are very good about using social media, political operatives (labor unions, woman's' groups, abortion advocates and even the press) to get their messages out.
With nearly three decades of professional services under my belt dealing with labor unions, I have developed primary principles by which I serve my clients: 1) pick your battles. Every issue is not of equal importance, and fighting over every issue not only makes you look unprofessional, but it makes it impossible to achieve your objectives. 2) working with labor unions is like being in a bad marriage where divorce is not an option. You must give in order to take. Decide what is important, and determine what you can give up for it that is least damaging to your client. Big issues usually require bid trades. 3) you both have a job to do, so treating the other side with disrespect will invite the same towards you. You are unlikely to have a lot in common, or share the same objectives. However, don't make it personal, it's business. You can treat the other side with respect without appearing weak. If you want them to work with you, use charm. Keep things light, when possible. Let them know when something is important by changing the tone--forceful, but not rude or disrespectful.
The American public is as divided as Congress. These issues are important, and as much as people often do not want to talk politics, you can't fix our problems without dialogue. Political correctness is the liberal approach to shut down a dialogue about some very important issue confronting this nation. You can't fix problems you can't discuss. Political correctness is a strategy to protect bigotry and preserve racism.
Monday, October 14, 2013
More Bananas, Please!
We were told the Sequester would be so bad, with cuts so deep, nobody in Congress would allow themselves to reach an impasse and implement the Sequester. We heard the same frightening stories about the shutdown--if it happens we will surely see our country fall back into a deep recession, or even trigger a depression.
For those of us who do not rely on a government paycheck or handout, both events were hardly detectable, except when you tune into your favorite news channel. If the press was full of knowledgeable souls, perhaps we would have not heard things would be so bad. Instead, the press is composed of mostly liberal masters of dogma, only capable of parroting their favorite politician or political operative.there is only one certainty: the press is incapable of providing an honest, neutral view based on fact, or at least knowledgeable sources. Perhaps it is not possible to find people capable of offering a more educated viewpoint, but I suspect the press just finds it beneficial to report more controversial views because the truth is simply not so sensational.
But that is the point. The Sequester and Shutdowns simply did not produce the destructive result promised by our many newspapers and television shows. For journalism is no longer the pursuit of a story as much as it is pursuit of interested followers. The truth about the Sequester and Shutdown are far less interesting than the ticking clock countdown until our country falls off the face of the earth. In order to support the sensationalist story, the White House blocked off open air memorials, parks and sidewalks. Yes, sidewalks. While Mount Vernon is not a federally-funded attraction, the sidewalk from the street to the home of our first President is on federal land and the administration made sure to erect barricades to make Mount Vernon appear closed. No doubt it took more effort and more dollars to erect the many barricades to parks, monuments and buildings than if they did nothing.
We all know the closures and barricades were there to make a point, but it came off a lot more like the poor sport who picked up his ball, the game ball, and went home because he didn't get to play his chosen position and if he didn't get his way, the game ball is going home with him and nobody gets to play. I know it sounds childish, but that is exactly how I view our President during this debate.
As for Congress, I find it easy to side with the Republicans because I know we need to reduce Federal spending, and the Sequester and Shutdown are proof positive we can survive with a much smaller government. However, I cannot say the Republicans entered this fight prepared, with a plan of action. It seems they gave up on a delay of ObamaCare early on and changed the objective to budget cuts. Their objective might be just, but they have not demonstrated they are ready or capable of taking the reins of this country's government; instead giving the Democrats plenty of arguments to point out their lack of planning and failure to stay on message. The fact is, they all look like a bunch of monkeys in need of bananas because they are not fooling anyone into believing we have a leader ready to take over the White House when the eight year plague ends.
For those of us who do not rely on a government paycheck or handout, both events were hardly detectable, except when you tune into your favorite news channel. If the press was full of knowledgeable souls, perhaps we would have not heard things would be so bad. Instead, the press is composed of mostly liberal masters of dogma, only capable of parroting their favorite politician or political operative.there is only one certainty: the press is incapable of providing an honest, neutral view based on fact, or at least knowledgeable sources. Perhaps it is not possible to find people capable of offering a more educated viewpoint, but I suspect the press just finds it beneficial to report more controversial views because the truth is simply not so sensational.
But that is the point. The Sequester and Shutdowns simply did not produce the destructive result promised by our many newspapers and television shows. For journalism is no longer the pursuit of a story as much as it is pursuit of interested followers. The truth about the Sequester and Shutdown are far less interesting than the ticking clock countdown until our country falls off the face of the earth. In order to support the sensationalist story, the White House blocked off open air memorials, parks and sidewalks. Yes, sidewalks. While Mount Vernon is not a federally-funded attraction, the sidewalk from the street to the home of our first President is on federal land and the administration made sure to erect barricades to make Mount Vernon appear closed. No doubt it took more effort and more dollars to erect the many barricades to parks, monuments and buildings than if they did nothing.
We all know the closures and barricades were there to make a point, but it came off a lot more like the poor sport who picked up his ball, the game ball, and went home because he didn't get to play his chosen position and if he didn't get his way, the game ball is going home with him and nobody gets to play. I know it sounds childish, but that is exactly how I view our President during this debate.
As for Congress, I find it easy to side with the Republicans because I know we need to reduce Federal spending, and the Sequester and Shutdown are proof positive we can survive with a much smaller government. However, I cannot say the Republicans entered this fight prepared, with a plan of action. It seems they gave up on a delay of ObamaCare early on and changed the objective to budget cuts. Their objective might be just, but they have not demonstrated they are ready or capable of taking the reins of this country's government; instead giving the Democrats plenty of arguments to point out their lack of planning and failure to stay on message. The fact is, they all look like a bunch of monkeys in need of bananas because they are not fooling anyone into believing we have a leader ready to take over the White House when the eight year plague ends.
Friday, October 14, 2011
Wall Street Protesters
I am amazed when I listen to the Occupy Wall Street protesters. Under the banner of being part of the 99%, they claim a common agenda and join in protest. Multiple interest groups have attempted to join the protest to publicize their grievances--unions, public employees, Democrats and numerous other disgruntled groups. Their cries for the end to corporate greed and bailouts are most common, but it is clear that few of these people are productive members of society. Based on numerous interviews, they lack any clear understanding about the system they seek to change.
Let's consider the subject of bank bailouts, a common complaint, and explore who is most responsible for that event. Simple as it might seem, but the web of events that lead to the credit crisis are complex and far reaching. For example, President Clinton was in the White House when Glass Steagal was repealed. This law was enacted after the market crash in 1929 and put an end to traditional banks engaging in securities brokerage. Do we blame President Clinton?
It is fair to say both political parties played a role and share blame. How about Wall Street greed as the cause? Unlike the days when your grandparents bought their home, most home loans are not made by your local banker and placed into that bank's investment portfolio. In order to increase home ownership, the Federal Government created Fannie Mae and Freddie Mac, quasi-private institutions that guarantee home loans to qualified buyers, with the word "qualified" being operative word. Because they are quasi-private and quasi-government, they are subject to political wisdom for both policy and leadership. Combine these institutions with Wall Streets' securitization of home loans, and access to home loans ballooned.
Loans not guaranteed by Fannie and Freddie are those that are either too large (a.k.a. jumbo loans) or too risky to meet Fannie and Freddie standards. However, heavy political influences from Barney Frank, Chris Dodd and others, operating under the authority of the 1970s Community Reinvestment Act, pushed for an increasing number of home loans made to the poor and disadvantaged racial groups. Banking institutions became less concerned about quality of loans because they were being sold off via Wall Street in the form of complex mortgage securities. Either way, the banks were making money by transacting loans, not placing home loans in their own investment portfolio.
Despite Republican calls to assess the risk being assumed by taxpayers via Fannie and Freddie loan portfolios, Barney Frank and Chris Dodd opposed tightening the rules and reducing the risk associated with low quality loans. After all, home ownership was expanding and the ever increasing value of real estate led to a worldwide economic boom. A self-fulfilling prophecy of ever growing home values expanded home ownership to an all-time high. To keep the momentum and profits going, qualifying standards were lowered to the point that anyone could buy a home. Not only did poor credit customers get loans, but home equity loans were offered to homeowners so they could use their "equity" to buy cars, boats and anything else they desired.
Key to this scheme was Wall Street's ability to sell these loans, especially loans with the coveted AAA rating. It was as if the credit rating companies agreed to stop looking at what they stamped AAA. Why? Enter AIG, the company that found a way to make the smelliest of home loan portfolios look like winners. AIG offered buyers a Credit Default Swap which guaranteed payment of principal in the event of default. This made just about every mortgage pool a sure bet, and buyers couldn't acquire enough of these AAA mortgage pools. These investments found their way into portfolios that would not ordinarilly touch these securities with a 10 foot pole.
There was only one small problem. AIG, the largest issuer of Credit Default Swaps, didn't call this insurance, and they didn't call it a security. Accordingly, the swaps were not regulated by any government agency. Even when one sharp government bureaucrat blew the whistle, she was shut down by those in the Treasury and Federal Reserve. Swaps weren't regulated by the SEC or the 50 state insurance commissioners, and nobody but AIG really knew how much of the mortgage market they had insured. The rocket scientist analysts at AIG determined the chance of default was less than 1 in 1,000. Boy, were they wrong!
When it blew up, buyers of mortgage pools had insurance that wasn't, and the buyers (states, counties and many other countries, like Iceland) were left holding the bag. The market for mortgage securities dried up, and banks were stuck with loans they knew were not AAA or anything near it. It was an all-out meltdown, and cash became the only means of survival for every investment bank. Because of the capital requirements for both banks and investment houses, they all stopped lending to each other and everyone else. Soon, what started as a mortgage issue grew into a complete meltdown of the entire world of lending and borrowing.
The governments ingenious solution: merge banks and brokers, and make more institutions "too big to fail." Who do we blame? AIG? The credit rating companies? The banks? The brokers? Barney Frank and Chris Dodd? Fannie and Freddie?
The question is, who do the Wall Street protesters blame? Bush and Obama supported the bailouts, as did the majority of Congress. Could they have stuck the banks and the brokers with the losses, and not we taxpayers? Simply, yes. However, few understand the complex web of players who had a big role in this event, and that includes the millions of homeowners who bought homes they could not afford. Just maybe those people in the park had the smallest role in this crisis, but it appears most are too young to own a home?
Let's consider the subject of bank bailouts, a common complaint, and explore who is most responsible for that event. Simple as it might seem, but the web of events that lead to the credit crisis are complex and far reaching. For example, President Clinton was in the White House when Glass Steagal was repealed. This law was enacted after the market crash in 1929 and put an end to traditional banks engaging in securities brokerage. Do we blame President Clinton?
It is fair to say both political parties played a role and share blame. How about Wall Street greed as the cause? Unlike the days when your grandparents bought their home, most home loans are not made by your local banker and placed into that bank's investment portfolio. In order to increase home ownership, the Federal Government created Fannie Mae and Freddie Mac, quasi-private institutions that guarantee home loans to qualified buyers, with the word "qualified" being operative word. Because they are quasi-private and quasi-government, they are subject to political wisdom for both policy and leadership. Combine these institutions with Wall Streets' securitization of home loans, and access to home loans ballooned.
Loans not guaranteed by Fannie and Freddie are those that are either too large (a.k.a. jumbo loans) or too risky to meet Fannie and Freddie standards. However, heavy political influences from Barney Frank, Chris Dodd and others, operating under the authority of the 1970s Community Reinvestment Act, pushed for an increasing number of home loans made to the poor and disadvantaged racial groups. Banking institutions became less concerned about quality of loans because they were being sold off via Wall Street in the form of complex mortgage securities. Either way, the banks were making money by transacting loans, not placing home loans in their own investment portfolio.
Despite Republican calls to assess the risk being assumed by taxpayers via Fannie and Freddie loan portfolios, Barney Frank and Chris Dodd opposed tightening the rules and reducing the risk associated with low quality loans. After all, home ownership was expanding and the ever increasing value of real estate led to a worldwide economic boom. A self-fulfilling prophecy of ever growing home values expanded home ownership to an all-time high. To keep the momentum and profits going, qualifying standards were lowered to the point that anyone could buy a home. Not only did poor credit customers get loans, but home equity loans were offered to homeowners so they could use their "equity" to buy cars, boats and anything else they desired.
Key to this scheme was Wall Street's ability to sell these loans, especially loans with the coveted AAA rating. It was as if the credit rating companies agreed to stop looking at what they stamped AAA. Why? Enter AIG, the company that found a way to make the smelliest of home loan portfolios look like winners. AIG offered buyers a Credit Default Swap which guaranteed payment of principal in the event of default. This made just about every mortgage pool a sure bet, and buyers couldn't acquire enough of these AAA mortgage pools. These investments found their way into portfolios that would not ordinarilly touch these securities with a 10 foot pole.
There was only one small problem. AIG, the largest issuer of Credit Default Swaps, didn't call this insurance, and they didn't call it a security. Accordingly, the swaps were not regulated by any government agency. Even when one sharp government bureaucrat blew the whistle, she was shut down by those in the Treasury and Federal Reserve. Swaps weren't regulated by the SEC or the 50 state insurance commissioners, and nobody but AIG really knew how much of the mortgage market they had insured. The rocket scientist analysts at AIG determined the chance of default was less than 1 in 1,000. Boy, were they wrong!
When it blew up, buyers of mortgage pools had insurance that wasn't, and the buyers (states, counties and many other countries, like Iceland) were left holding the bag. The market for mortgage securities dried up, and banks were stuck with loans they knew were not AAA or anything near it. It was an all-out meltdown, and cash became the only means of survival for every investment bank. Because of the capital requirements for both banks and investment houses, they all stopped lending to each other and everyone else. Soon, what started as a mortgage issue grew into a complete meltdown of the entire world of lending and borrowing.
The governments ingenious solution: merge banks and brokers, and make more institutions "too big to fail." Who do we blame? AIG? The credit rating companies? The banks? The brokers? Barney Frank and Chris Dodd? Fannie and Freddie?
The question is, who do the Wall Street protesters blame? Bush and Obama supported the bailouts, as did the majority of Congress. Could they have stuck the banks and the brokers with the losses, and not we taxpayers? Simply, yes. However, few understand the complex web of players who had a big role in this event, and that includes the millions of homeowners who bought homes they could not afford. Just maybe those people in the park had the smallest role in this crisis, but it appears most are too young to own a home?
Monday, October 10, 2011
My Father 1935-2011
Thank
you for coming to celebrate my father’s life. On behalf of my mother, sister and brothers, we appreciate
you being here today to share in his memory. It speaks well of him to see so many people here, some
traveling from far away.
My
father was born in a small Louisiana town. He was the son of Baptist preacher and grew up in a very
modest home with his older brother and younger sister. Maybe it was growing up in a small
town, or being from Louisiana that made feel he had a larger than life personality.
We
lived outside of Cleveland in the late 1960’s where he served as the
commissioner of the town’s youth softball league. After observing an umpire make several very bad calls, he
walked down to the field and ejected him from the game. “Besides making horrible calls, you
know you cannot umpire a game being played by your son,” he said to this
volunteer father. After hearing
this, the umpire turned to his home plate umpire and asked, “Who is this
guy?” “He is the league
commissioner,” the plate umpire explained. So, graciously, the umpire left the field without argument.
Several
years later, after we moved to Los Angeles, he saw this same man being
interviewed on the national news.
Shocked, he couldn’t believe what he was seeing. All he could think about was how he had
ejected this man from a youth softball game several years earlier. To this day,
I am confident that George Steinbrenner was not thinking about the day he was
ejected from a youth softball game on the day he announced he was buying the
New York Yankees.
Everyone
who knew my father knows where golf ranked in his life. He belonged to more country clubs than
he had children. He was President
of Friendly Hills Country Club, and a Board Member of the Bob Hope Chrysler
Classic. If he wasn’t playing
golf, he was watching it on T.V. One
Christmas, at my father’s urging, the boys in the family decided to start a tradition
and play nine holes of golf on Christmas Day. The problem was, most of us had not played golf in a long
time and was a bit rusty. After
successfully playing two holes, one of my brothers hit a house on his tee
shot. You can’t imagine the anger
expressed by my father, for this was his country club and he know the people
who lived along the course. Next
followed my other brother and he too hit a house on his tee shot. Normally, we were all faster than my
father, but on that walk home we couldn’t keep up with him. Needless to say,
that tradition ended up last just two holes.
Some
of you know my father as a businessman.
Others know him as a golfer, a card player or just a friend. No matter how you knew him, you will
probably agree that he did things his way, and only his way. He had a plaque in his office that
said: “Rule 1. The boss is always
right. Rule 2. If the boss is wrong, refer to rule
number one.”
My
Dad was a very strong personality.
Sometimes, especially at restaurants, he was a little too intense. On more than one occasion I felt very
uncomfortable knowing the person serving him that night was going to remember
him for a very, very long time. As
an employee of his company, I was the object of his wrath on more than one
occasion, and I was fired at least four times—once we were not even talking
about business when he fired me.
In the end, it worked for him and me. In fact, the business that he started in 1972 continues to
this day under the name Crews MacQuarrie & Associates.
After
he retired he pursued five interests:
golf, playing cards, travel, golf and golf. He was married for 55 years; he had four children and
eleven grandchildren. He worked in
the same career most of his life.
He started as a group representative for Occidental Life shortly after
graduating from college. That job
took us to Shreveport, Louisiana, Cleveland, Ohio and eventually Los
Angeles. He started his own consulting
firm in 1972, providing actuarial and consulting services to the retail food
industry for about 35 years. Those
numbers (55 years of marriage and 35 years of professional services to the same
industry) says something about him.
He was committed and he was trusted.
Several
years ago, after my Mother’s father passed away, my father became very close to
the Catholic Priest who performed the services at my grandfather’s funeral,
Father Roy. They really enjoyed
each other’s company, and my father converted to Catholicism. Having grown up the son of a Baptist
preacher, he was always a spiritual man.
I guess that
rubbed-off more on my brother than the rest of us since he is a pastor (and a
lawyer).
On
September 24, 2011, I lost a father, a mentor, a friend, a fellow golfer and a
business partner. I had the honor
and the pleasure of knowing my father in many ways not often experienced by a
son.
Let’s
not mourn him too long, but celebrate a long [pause] wonderful life.
Sunday, October 9, 2011
The Solyndra Syndrom
Did I really hear the President correctly the other day? While criticizing Bank of America for their new $5 applicable to debit card users, he said that BofA "thinks they have a right to make [a profit] of whatever they want." Really, did he say that?
Yes, Mr. President, we have a free enterprise system that does allow companies to make a profit-- and profit is not an evil concept. Our system of free enterprise does not allow a company to make whatever profit they want, but it does allow them to make whatever profit they can. Competition protects consumers, not government. In making that comment, the President told us a great deal about what he actually believes, and it is not what he told us when he was seeking election to the highest office in the land.
While the President did not advocate socialism, or anything like that, he did go on to say the country needs a "consumer advocate" to tell people when they are being treated unfairly. President Obama continues to advocate a government solution to every problem, actual or perceived.
Rather than make the next Presidential Election about political party affiliation, or demonstrating the country's commitment to social equality, voters need to decide the future of this great country. Should we choose a President who will increase the power and scope of government (especially the Federal Government), or a President who will support, enhance and wholly support our commitment to capitalism.
When government has the ability to decide winners and losers, we get Solyndra. The Solyndra Symdome is much bigger than the $535 million loan to cronies associated with Obama. The Solyndra Syndrom also includes such things as the Wall Street bailout, GM, Chrysler, public employees, teachers unions and many, many more that received government assistance or favoritism in exchange for political donations. This is not a one party issue, it is an issue with an elected government.
Yes, Mr. President, we have a free enterprise system that does allow companies to make a profit-- and profit is not an evil concept. Our system of free enterprise does not allow a company to make whatever profit they want, but it does allow them to make whatever profit they can. Competition protects consumers, not government. In making that comment, the President told us a great deal about what he actually believes, and it is not what he told us when he was seeking election to the highest office in the land.
While the President did not advocate socialism, or anything like that, he did go on to say the country needs a "consumer advocate" to tell people when they are being treated unfairly. President Obama continues to advocate a government solution to every problem, actual or perceived.
Rather than make the next Presidential Election about political party affiliation, or demonstrating the country's commitment to social equality, voters need to decide the future of this great country. Should we choose a President who will increase the power and scope of government (especially the Federal Government), or a President who will support, enhance and wholly support our commitment to capitalism.
When government has the ability to decide winners and losers, we get Solyndra. The Solyndra Symdome is much bigger than the $535 million loan to cronies associated with Obama. The Solyndra Syndrom also includes such things as the Wall Street bailout, GM, Chrysler, public employees, teachers unions and many, many more that received government assistance or favoritism in exchange for political donations. This is not a one party issue, it is an issue with an elected government.
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