Big Heros Don’t Solve Small Problems

Back when I was in commerce we’d watch a young executive making a play for relevance and import and say, “Big heros don’t solve small problems.” It’s a version of the old “make a mountain out of a mole hill” idea, but much more dangerous if you let it get out of hand.

On April 3  Eamon Javers at Politico reported on Obama’s meeting with the nation’s finance executives (Inside Obama’s bank CEOs meeting) One could call it a staff meeting since everyone in the room now works for Obama.

The description of the meeting went…

“Dimon (JPMC CEO Jamie Dimon) also insisted that he’d like to give the government’s TARP money back as soon as practical, and asked the president to “streamline” that process. But Obama didn’t like that idea — arguing that the system still needs government capital. The president offered an analogy: “This is like a patient who’s on antibiotics,” he said. “Maybe the patient starts feeling better after a couple of days, but you don’t stop taking the medicine until you’ve finished the bottle.” Returning the money too early, the president argued could send a bad signal. Several CEOs disagreed, arguing instead that returning TARP money was their patriotic duty, that they didn’t need it anymore, and that publicity surrounding the return would send a positive signal of confidence to the markets.”

But you see all this isn’t about confidence in the economy, is it? The government has its hooks in the banks now and it is not going to let go. They control vast swaths of the American economy, hire and fire executives, (Wagoner was fired by Obama senior advisor Steven Rattner the same day) There is no way they are going to give that up.

I’m reminded of that idea about big heros only solving big problems. The scary second approbation we used to say was, “Every small problem can be made into a big one.”

Obama is a very young and inexperienced president. His future is ahead of him, not behind him – as would be true of a more seasoned leader. He needs to solve really big problems. He certainly does not want this juicy one to get away, or be solved too quickly.

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Barack Orwell Obama

“Just don’t call it a surge”.

From a policy perspective I guess I should be happy. The Obama administration is pursuing policies that look identical to those from the last administration, even if they are named differently. It’s become so blatant that even the New York (Obama is the messiah!) Times has begun to report it, and Jon Stewart is laughing at it.

  • Tens of thousand of troops are pouring into terrorist enclaves. (We used to call that “the surge”)
  • Know enemies of the state will be detained indefinitely (Close Guantanamo, but move the prisoners to an other secret facility, and keep some there, perhaps, forever)
  • Pay cap restrictions are being circumvented (The administration is building loop holes into the Pay for Performance act and providing instruction to their employees at the banks on how to use them)
  • We no longer are fighting a war on terror, now we have “overseas contingency operations” to prevent “man-caused catastrophes” (Listening to Hillary say these ridiculous phrases makes me think of the sweetness of political revenge. No woman from the Midwest can say those words without sounding churlish.)

But somehow I am dishearten by the disingenuousness of it all. Trounced, defeated, and chagrined, conservatives around the nation girded themselves in anticipation of real change. Lesser pragmatists such as myself looked forward to intelligent action on technology issues, education, and future infrastructure.

It’s all starting too look like a sham.

The White House seems more concerned with naming things differently, that with actually doing things differently. And the real risk is that eventually people will figure this out, and the myth of great change and great hope, and all the good will that has come along with it will be dashed.

If you weren’t disappointed in the first stimulus package then you don’t know enough about it. Those three quarters of a trillion dollars (!) could have built alternative fuel infrastructure, created technical training opportunities, built bridges, inner city school buildings, and so on. Nope. All of it went to pay off political debts incurred by the Dem’s over the years. It was like Nancy Pelosi holding up the first TARP in our greatest hour of need so she could add $150B in payments for her allies. Analyst and commentators have begun calling it the Government Stimulus package, as in it stimulates a larger government. And this from the party that called the Republicans corrupt?

When Obama looses the right to use the word “integrity” in describing his administration we will all be in a very bad place, because all the leaders of the right have lost that capability, primarily because Obama took it away from them. I really liked it better when he told Joe the Plumber the horrific fact that he wanted to “spread the wealth around”. At least that was honest and something we can fight about. How do I argue in favor of habeas corpus when the argument is blocked by saying “I’m closing Guantinimo.” (Dude, I don’t care about GITMO. I care about invisible detention.)

If he continues to act in this inauthentic way, there will be left a huge opportunity for the kind of political leader anyone with a long view of history will see as the natural recourse of a disenchanted electorate. Obama is our chance at pushing aside the swelling movement towards that kind of government, but when everyone finds out what he is actually doing, it will not go over well.

Of course the root of this problem is the institution of government itself. We have grown dependent on government to take care of us. Not just the 1/3 of the nation employed by the state, but all the rest of us who expect way too much from any government. In the pursuit of “something for me, for free” we collectively have passed over the power of our economy, and our rights, to an institution that works best when small and lean.

Disappointment is the only natural result. And that is what we just saw in this last election. Vapidity was elected as we looked into a mirror of our our own making. My biggest fear is we may eventually see the reality in that mirror and not be happy with what is looking back.

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RIP Mark-to-Market

The first good news to emerge since the start of the Financial Crisis came out yesterday as the remarkably dumb regulations requiring Mark-to-Market accounting were repealed. Maybe the government can do some good, after all.

Mark-to-Market (MtM) accounting, along with the Sarbanes-Oxley Act (SOX) were the two prime regulatory failures leading to the current crisis. Coupled with public mandated policy to extend mortgages into sub-prime markets through the facilitation of Fanni Mae and Freddie Mac, Mark-to-Market caused, and then accelerated, the financial crisis and lead to the failure of major banking institutions around the globe.

“But I thought it was the greedy bankers that did this?”

Yes, that is what you are being told. Targeting a small group for blame is easier than telling you the truth, that those bankers were working in a system created by gasp Washington.

It is nearly impossible for the current administration to say this becuse they have a vested interest in villifying a secret enemy of those that ‘did’ rather ‘that’ which did, because the ‘that’ is them. Now however, having exausted all other options their only recourse has been to do what works and change some really bad regulations. It took the French and Germans to beat it out of poor Mr. Obama though. 

SOX and MtM came out of the collective rage we indulged in following the collapse of Enron. Rushing to appear relevant, Congress enacted a series of legislative actions that ensured the future crisis we are now living through would occure. Thanks guys.

Could you explain either of these provisions to a friend or relative? No, they are incredibly complicated, and Congress still doesn’t understand them either. I tried in previous posts, but this is what happens when we as a nation let governent over design what they only mildly understand.

The trashing of Mark-to Market could be just what is needed to get banks lending again, which is what this crisis is all about. Banks stopped lending because they didn’t understand the solvency position of their counter parties. MtM caused vast distortions that clouded this situation and then accelerated it radically as various asset classes were un-priceable, thereby requiring banks to book them at $0 value; which of course was stupid. Collapse for many quickly followed.

The real crime is two fold:

  1. It took the Europeans at the G-20 meting to bludgeon America into repealing this foolish rule.
  2. It all came too late for the bankrupt employees at Lehman, and at Bear, and at… oh, the list is too long of the people that have been hurt because of some really bad over regulation.

Oh wait, wasn’t that Barney (“I want a list of names!”) Frank at the podium of the House, demanding both these measures be enacted back in 2002? It couldn’t be him. He couldn’t be responsible for anything, I mean anything bad, right?

Oh come now, that was so long ago, we all forgot…

 

 

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More from Dougist.com on the Financial Crisis

Congress to America: Drop Dead

Are Americans worthy of being saved?

Comments of the current crisis

Comments of the current crisis – Regulation

Creative destruction, I hope…

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Ginsberg Pays Taxes

They are Looting My Tax Dollars!

Neil Cavuto, who can be like a rabid dog off of its meds, dressed down Congressman Alan Grayson (D-FL) Tuesday over the “Pay for Performance Act,” a bill Grayson is pushing on the Hill. You can’t miss the clip, it’s all over the web. 

The bill is, of course, not about performance. It’s about power. It allows the Treasury to arbitrarily set the pay of all employees; or all employees at companies receiving federal money, which is pretty much the same thing, or will be soon.

There are no guidelines in the bill defining reasonable pay, just authority and full discretion given to the Administration to bypass the market and set pay by non-appealable fiat. 

During the interview, Cavuto created an ad absurdum picture of some GS-12 in a grey DC office building, looking over his glasses at a secretary and saying, “No, you will now only get $30,000 because I say that is reasonable and fair.” (Remember , Neil, only one pill a day, don’t skip, don’t catch up…)

Greyson’s response was to defend the bill using the current zeitgeist retort: It will only effect those people who are, “stealing money from us, the U.S. taxpayer, and stuffing it in their own pocket.”

People actually believe this. They actually believe that everyday American workers are funding the Administration’s stimulus and TARP programs. They believe they are paying for all the rest of the government as well. Since when did the average worker in America start to actually carry his weight in taxes? Not during my lifetime. The vast majority of taxes are paid in America by high income employees working in corporations, in other words the people getting the benefit of the current government programs, and whose (taxable) pay Congress wants to reduce.

I know it’s hard to swallow, but at least in New York if you give a guy $1,000,000, he gives back $600,000+ in taxes. Not so for the guy making $50,000. The tax system has been progressive like this since FDR, and even under the recent changes in rates there is no question that the bulk of our tax dollars come from the top 10% of income earners. I’m not even going to get into corporate taxes and the taxes on the sale of small businesses, but it’s ludicrous to say that our bills are being paid by 90% of the population. If there is stealing going on it’s by rich guy from rich guy, not rich guy from poor guy.

You don’t believe the establishment produced, capitalist-system-supporting, bovine excrement, data? Here’s the New York Daily News version: In New York, the city will be out of money soon because we are killing off the all the high income earners, and there is no one left to tax. That’s the real world, independent of political spin.

During these discussions I think about an interview that Alan Ginsberg gave to the Times not long before he passed away. I clipped it many years ago and I always chuckle when I come across it. 

Ginsberg had just sold his papers to Stanford for $1 million. The NYPL couldn’t raise the cash fast enough, so poof, an invaluable trove of historical material ended up a six hour flight away from New York, instead of in the Berg Collection on 42nd street, where Burroughs’ and Kerouac’s papers reside. With the proceeds he bought a place in the East Village. The article goes on…

“The new loft was made possible by the 1994 sale for $1 million of Mr. Ginsberg’s archives to Stanford University. But the money ended up being less than he had hoped. He ticked off the taxes: ”The Federal Government, 38 percent. The state 12 percent, the city 6. My agent took 5, the archivist who worked on the project for 10 years, 10. I was left with a third. I bought the loft. Now I’m back to square one.”

Yeah, Alan, taxes suck. 

One day when the mob consumes itself, and we are wondering why the subways are dangerous, the water polluted, and the police force looks like the one Serpico served in, maybe we will realize that the taxes we need to run our collective systems don’t materialize out of thin air. Wealth is not produced in the public sector, it is not produced in the academic sector (it shouldn’t be produced in the health care sector, but that’s another story). It comes out of the private sector and as much as we don’t want to believe it, everything else gets funded from the people that produce the most. 

Speaking in terms that the late John Rawls, would find familiar, our public policy goal should be to promote these bastards, make them work as hard as they can, pay them gobs of money and then tax the crap out of them.

And that’s where we really failed. By letting income inequality get so far out of whack these last two decades, the nation sowed deep seeds of jealousy, the most dangerous and murderous of emotions. That jealousy has made people blind to the reality that x% of a smaller number is a smaller number. A tax on a low income means lower taxes overall. 

But right now, all the mob can see is rage…

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Populist Outrage, It’s All The Rage

Populist outrage, it’s all the rage. Everyone’s doing it. Newsweek’s cover story screamed about it. Barney (“I want a list of names!”) Frank is leading it. Anarchist children in London are sharing their view of a utopian future by breaking windows (“In the future we will let in fresh air!”).

But, what it’s all about is a communal display of “blame the other guy, because I’m not at fault.” 

The lack of integrity that is washing out of America, and that has now become a global virus, is a vast disgrace. Perhaps the greatest executor of this hideousness is Paul Krugman who had the temerity to insult every American this week in the Times. The severity of Krugman’s egregiousness comes for the fact that he knows better. Or should. He has personally, as has every other academic in this country, benefited from decades of economic expansion that he now calls a sham. Well, their future problem will be that soon there will be no surplus left to support their vitriol. Let’s hope Nobel Prizes comes with a handbook on substance farming.  

But they will be the last ones to be planting gardens in the back yard, right? Government supported academics, civil servants, political friends of those with access to tax dollars, they are the ones who are unaffected by the discord they sow. At least for a while. 

America is going through a self-destructive deconstruction of its commercial systems, and more importantly, the vilification of the people, the very few people, who can actually run them. Because of the quality of our educational institutions, most Americans actually think this is a good thing, so Barney Frank is applauded for spouting McCarthyisms when he is hiding from the fact that he was a primary reason for the governmental policies that lead to the disruption in our financial system to begin with.

Now, this mob emotion is spiraling out of control. But by identifying an “other,” the finger pointers are deflecting their own responsibility.

New York is dealing with it’s own prophetic paradox of rage. Now that there is no one left who is making any money (bad, making money is bad…) there is no tax revenue coming in. Surprise … shocking news flash: the people the Times is hell bent on vilifying are the ones who paid all the taxes. Opps. Albany’s response? Raise taxes. That can go on for a while, but only till the bones are sucked dry. 

A virtuous intelligentsia, a virtuous government, a virtuous people would have realized by now that we all benefited from the growth in the economy that has occurred over our lifetimes. (You are reading this on a computer, using the internet, via a telecom system, right? I could go on, but the obviousness of this argument becomes embarrassing very quickly) The rest of the world has as well. Arguments to the contrary are self serving and ignorant of the real history of the common man. 

They would also have realized their collective responsibility for the financial crisis we are working through. Instead we are pointing fingers, while hiding our credit cards, damming “the bankers” from inside our inflated houses, vilifying New York, while collecting the fattest social security checks of all time, calling bonuses (of any size?) wrong, while having standards of living and consumption at the highest level in recorded history. None of us bought huge hydrocarbon cars, none of us moved to the suburbs, nope not us, we didn’t do this. Must be them, get them!

Until we grow up and realize that the “them who did this to us” is “us”, then act responsibly and collectively, the only solution to the crisis will be rebuilding from a pile of ashes. If it gets that bad then we deserve the calamity and social bloodletting that will result.  The shattering of glass should be shattering to all our souls.

Looked good on the streets of London today, didn’t it?

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Dating DEVONThink

I was all excited. I thought I had found a solution to my vexing Journler problems. Crashes, freezes, all manner of frustrations had pushed me away from the love of my life application. Journler was the app I had been immersed in for the first year of my writing, my first crush, but the application’s solo developer had gone off, and it was clear, the bugs that existed would be problems forever. So I went looking for another.

I wrote “Bye, bye, Journler. DEVONThink is my girl now. She’s not beautiful like you, kind of clumsy actually, but she is smart and will be here for the long haul…”

Now I’m starting to wonder. DEVONThink is an application best described as inattentive to its appearance. It is messy in the way it interacts with others and is more worried about the mad scientist, artificial intelligence core of the program than in adding any real value to how users create or manage data.

A web buddy of mine, who also searched for another after her Journler romance failed, called DEVONThink “realy, um…. German.” She was right. DT is rigid in its requirements and often sports a bad haircut. You get the idea.

But I’ve got to say that DEVONThink can hold her beer. The program runs and runs even with huge data sets. One user, a DT Evangelist, has over 150,000 journal articles in his DT folder. Another dumps dictionaries in for reference. I’ve realized from the multiple windows that DT offers, each a bit more quirky than the last, that I will need that kind of power, because I can see for the first time just how much stuff I’ve accumulated.

It was this Arian capacity for endurance that seduced me to DT.

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