Tuesday, June 30, 2009

- Get Over Yourself Black America

On the way into the office this morning I listened to some pedantic radio talk show host complain that Michael Jackson isn’t being shown enough deference because he’s black. “Elvis” the man argued, “was show more respect even though his life was filled with drugs and excesses similar to Jacksons." But unlike Elvis, according to him, Jackson was being defiled for his faults instead hailed for his accomplishments. This is as close as I can figure …. complete bull.

Give me a nickel for every time Howard Stern made fun of Elvis as a pork chop eating, pill popping redneck who died on the toilet and I could retire today. As far as I can tell, all of the reporting on both Jackson and Elvis was absolutely true, and the unnamed talk show host conceded that. But this man felt that Jackson should receive a ‘grace period’ so that the black community could reclaim their hero without his memory being soiled by facts. In the end, once again, we have another black media personality insisting that America is primarily motivated by racism.

I can’t tell you how tired I am of constantly being accused (by proxy) of racism, so let me say for the record that I don’t care a whit about race. I honestly don’t. Give me a person of talent and I will appreciate his skills be he white, black, yellow, purple of green. He could be a purple, one armed, transgendered, dwarf and I couldn’t care less. And what’s more, I don’t think anyone who isn’t on the fringes of society does either. In my industry we care about results far more than any other issue, and cant' afford to care about race. If tall black men were the only ones that could make money in the financial markets, then the Goldman Sachs trading floor would look like old timers night at the NBA.

The President of the United States is a black man and was elected (for the most part) by white America. Isn’t that enough to make the point for you? Why can’t you people who make your way in the world trying to squeeze a little more recompense out of liberal white America just get over all this and realize that you have the same chance to make a life for yourselves in America as everyone else?

My god… it’s been a half dozen generations since slavery ended...aren’t you ashamed of yourselves? You’ve had the same time and the same opportunity to prosper as anyone else did, and instead you’d rather sit around complaining that other people haven’t done enough for you. In six generations my family went from impoverished, shoeless potato farmers to generals, academics, statesmen, and millionaires. My father in law went from penniless gardener to multi-millionaire in 10 years, and could barely speak English at the time. For god's sake will you finally quit complaining and do something to help yourselves?

And for all you out there who are now convinced that you can see into my heart and know my “REAL” reasons for what I say, let me remind you of this. My hero, the man I would most like to emulate in my work and in my character, is Dr. Thomas Sowell. He’s a brilliant Economist and academic whose work has been the basis for much of my own. He’s written dozens of books and is unique in the entire world in his ability to cogently reduce complex economic ideas into their simplest and easiest to understand form and to express them to others with stunning clarity. He brought himself up from intense poverty, on his own; and graduated from some of the most prestigious institutions in the country, all without the ‘benefit’ of affirmative action. He’s black.... and to be frank I could't care less about that either.

Michael Jackson was a genius, but he was a troubled genius. If the black community wants to embrace a hero, maybe they would be better off with the brilliant author whose work has changed the world rather than the drug addicted pedophile musician with the identity problems.

- Hard To Say It Any Better Than This:

Mike Cannon in the NRO - Corner:

Since when do we call it a “town hall” meeting when a bunch of pre-screened experts ask the president a bunch of pre-approved questions in the East Wing of the White House? Whatever the case…

If you saw President Obama’s “town hall” meeting on health-care reform last Wednesday, the following Cato video might be just the palate-cleanser you need. If you didn’t watch it, this video will tell you pretty much all you need to know.

Thursday, June 25, 2009

- The Cap And Trade Disaster

Make no mistake about it... the cost of the cap and trade bill will be higher unemployment. No matter what Obama does or how his spin-miesters represent it, the higher energy costs that will come with this new law will decimate the American private sector. Obama will promise bigger subsidies for his preferred political clients, and invent more statistics like his bogus 'saved jobs' claim. But in the end, this will greatly harm the US.

If congress votes for this law it will be economic suicide.

- The Ex-Governor Of South Carolina

In South Carolina today, the buckle of the bible belt, they are saying that Mark Sanford isn't toast ... he's charcoal. It was at least possible that he could have been the next President of the United States and now his career is over. And as much as I may have sympathy for the man trying to come clean and repair his personal life, I have no sympathy for the governor at all.

Personally I think this is a perfect example of how we're electing only the wrong people. Even the best of our politicians is the most shallow and narcissistic members of our community. Even the best of them is without any of the qualities that I personally admire. They may be smart, or speak well, or have good ideas, but in the end they are reprehensible people.

I'm not saying that I'm superior to Sanford in some way because he made a mistake that I didn't. But I do think we need to realize that the fact that people like him keep ending up elected to high office is our problem, not theirs. the properties we look for in elected officials are apparently the wrong ones.

I stole a quote off the corner at NRO about the future of the Republican party. that quote read "Bring on the happily married mother of 5."

There are qualities of character that are more important than how intelligent someone sounds in an interview. I wish we would all start paying a little more attention to them.

Wednesday, June 24, 2009

- The Consequences Of How We Decide

Do you know what the difference is between a successful business and an unsuccessful one? No … not ‘connections in Washington’, but in the future that might be true. The real difference between a successful business and an unsuccessful business is how the business makes decisions.

I once worked for a multi-billion dollar company where the CFO had to personally sign off for any purchase over $2,500. This probably saved some money on unnecessary pencils and toilet paper, but it had a big downside too. The downside was that any spending that was necessary for the firm was made more difficult and took much longer to happen. This made them slower to respond to changes in the industry when compared to their peers. But the company had thought that through and decided that they would prefer to control costs than to be ahead of the pack.

Prior to working for that firm, I worked for another where on occasion, multi-million dollar spending decisions were made at a moment’s notice and with no specific approval from a senior staffer. This made spending money to stay ahead of the competition easy, but it was probably at a cost in dollar terms that was higher than necessary. As you would expect, they spent far more money than the first firm on nearly everything. But because that always put them ahead of the competition, they also made more money too.

The first company generated a profit by slow growth and an even slower growth of costs. The second company generated a profit by being faster and more responsive to their markets, even if it spent a little more than it should have. The different styles of decision making created two completely different kinds of companies, with very different strengths, weaknesses and corporate cultures. And it was all because of the how they made the single decision of who should approve purchases.

This is the actual effect of the profit motive on the private sector. It doesn’t create ‘corporate greed’ (whatever the hell that is) or funnel money out to shareholders that don’t deserve it. What it does is provides incentive to the companies to make their internal procedures as effective as possible. Successful companies learn to make decisions in a way that makes the most of their strengths and minimize their weaknesses because ‘profit’ is only what’s left after you pay everyone else. It’s elusive, and rare, and requires fanatical discipline, or creativity, or both. There are lots of ways to make a profit, but none of them are easy or certain. And as soon as you manage it, a dozen other people appear who are more than happy to do the same thing you’ve been doing for a little less. That’s the way a free market works and what it does.

And after reading the prior few paragraphs, you now know more about ‘producing a profit’ than Barak Obama does.

Obama, like almost everyone in Washington, is a creature of politics. He’s never actually done anything that resulted in a profit for anyone, so he’s never learned how decisions should be made or who should make them. He’s never learned any of the myriad of ways to make an organization respond to a changing reality. Instead, he’s been educated to believe that reality must simply be subordinated to politics rather than the other way around.

To him a political laudable goal like a clean environment or a ‘living wage’ should be achieved by fiat; by command of the government. And if reality doesn’t want to go along with that, then according to the political classes it should be bent and twisted until it does. For example, if using windmills to generate electricity costs more than using less politically appealing methods, and that higher cost forces some companies to lay off workers, according to Obama we should just give those companies a tax subsidy to make up the difference. That way we get our cake and can eat it too. He doesn’t consider that the subsidy he’s included in the equation has consequences of its own. To him that’s a totally separate issue.

This is the kind of thinking that has driven our heavy industry to Mexico, our mining to Canada, our farming to Chile and will soon drive our finance and healthcare industries over seas as well. Manufacturing went to Mexico because it was cheaper and easier to abandon the Midwest and build new factories in Juarez than it was to deal with the unions, the environmentalists and the parasitic bureaucrats in government. The mining industry went to Canada, not because we’re out of oil, but because we’ve placed it all off limits through federal exclusions. California’s San Joaquin valley was the best, most productive farmland in the world until environmental activists and their lawsuits shut off the water for irrigation. Now it’s reverted to desert and we get our vegetables from China and Chile. And instead of learning from these lessons from political decisions past, instead we’re planning on doing much much more of the same.

The Car industry is entering that ‘invasion of the body snatchers’ world where what’s left of them may look like a real company, but in reality they’re just empty shells for the slug like alien parasites from Washington latched tick like on to their spines. Going forward they will be as quick to innovate and embrace new technology as Amtrak has been since it began taking government assistance. And because of that, their decision making processes will atrophy and become as efficient as a congressional budget debate.

To make up for this, they’ll get huge ‘incentives’ from the government to make their products conform to politics rather than the reality of the free market. But while the government subsidies will make their otherwise unpopular cars cheap enough to sell, they will eventually drive Ford out of business and cause the foreign manufacturers to cut back as well. The banking industry will be equally infected (after a fashion) with Citicorp and AIG continuing to function at some greatly reduced level. They’ll take deposits and make the occasional loan to a politically important customer. But the vital parts of those firms – the specific people who have made them profitable though hard work and creativity – will all have left the banks for Hedge Funds and Private Equity firms based in the Caribbean and out of reach of the DC parasites. (some of you may say 'good riddance' to this, but you shouldn't. The people who remain will be the ones who wrecked the banking industry not the people who go.)

The government will be having its problems too. Making reality subordinate to politics is a tough and expensive business, and there never seems to be enough of other people’s money to make the whole thing add up. And this is where those ideas of a politically induced nirvana always seem to end. But rather than go round and round describing some monetary policy issue let me boil it down to something simple enough for even a Maxine Waters or a Joy Behar to understand. Obama’s real problem is unemployment. In a democracy like ours unemployment is the one place where actual reality translates immediately into political reality and even the worst sort of populist, double talking; corrupt and dishonest flim-flam artist turned congressman can understand that. Here’s how this works:

Obama has spent vast sums and plans to spend much much more, but the money needs to come from somewhere. If he raises taxes it slows economic growth and increases unemployment. This is especially true if he only raises taxes on the rich because it’s the rich that actually provide the jobs for the ‘not rich’. But even if he raises taxes on everyone there still isn’t enough, so he’ll also need to borrow. When he borrows he raises interest rates, which slow growth and raises unemployment, putting him right back where he started. So if he doesn’t want to raise taxes, and he doesn’t want higher interest rates, and he doesn’t want to stop spending money to bend reality match his political view, then he only has one other option. He’ll print money, but the debt himself, and destroy it. That’s called ‘monetizing the debt’ and the result is inevitable price inflation and the collapse of the value of the dollar.

Personally I think this is the way he’s going to go. It’s the easiest of the three options for him because it’s the one he can most credibly blame on someone else. When inflation comes, it won’t be him and his policies that are responsible for soaring prices but evil ‘speculators’ in oil, metals and other commodities. I’m sure he’s got a whole plan of action involving busses full of ACORN staffers and a complex set of price fixes and rationing rules where people with odd number plates fill up on odd number days etc. It’s all been done before, but it won’t stop us from doing it again.

And his first step will be to get rid of Ben Bernanke at the Fed, and replace him with someone more … amenable to the administrations’ view. He needs someone in that role who will take orders and tell the story he wants them to no matter what it’s effect. He needs someone who can convincingly go before congress and misrepresent whatever facts are required to make reality match politics. He needs someone who can live with inflation if it means that he gets more power for himself. He needs someone like … well like Tim Geithner, who has proven himself perfectly happy to deal with whatever consequences his actions cause so long as he can find someone else to credibly blame for it.

For all the criticism that I and others have heaped on him over the last 24 months, Ben Bernanke would NEVER stand by and intentionally let the Whitehouse create inflation. He’s too smart for that and far too careful… and that’s why they’re going to get rid of him in January. All told he hasn’t done a terrible job, in totally unprecedented circumstances, but that’s not nearly enough to save him. In the public sector, like the private, they have a way of making decisions. Those decisions are designed to help them reach their goals... not of profit, but of power. And if you stand in the way of that you are out, no matter how sharp you are.

Look for Ben to ‘have a deep desire to return to academic life’ when his term is up in January. And brace yourself when he does.

Tuesday, June 23, 2009

- I'm Fine... How Are You?

To use that often quoted quip by Sam Clemens, “The news of my death has been greatly exaggerated”. I haven’t been around much lately, and while I found a multitude of different excuses (I was very busy in my job… my wife convinced me to build my daughter a tree house… etc.) the truth is that I haven’t been around much because I haven’t had all that much new to say. It’s true that a lot has happened, but it seemed to me that all that could be said about the issue was already being said by someone else. I didn’t really have anything new to add.

So instead I’ve spent the last few weeks quietly going about the process of moving my business out of the United States to a jurisdiction that is friendlier to investment firms and investment advisory work. The Obama administration has made it clear that they think people like me are the problem in America ’s economy, not the solution. So taking them at their word, I’m doing my part for America by going somewhere else. That means that the hiring I’m doing and the facilities I’m renting etc are all going somewhere else too. All the economic growth we generate will be non US economic growth. But the government needs to realize that if they insist on throwing out the baby there is going to be a little loss of bathwater too.

I’ll be moving myself inevitably too - but not immediately, and I won’t be giving up my US citizenship. And since that’s true, I’ll continue to pay taxes on all my personal income earned anywhere in the world. But as my company grows it will be domiciled outside the US so any corporate income that it generates from non-us business will no longer be subject to US taxation. It’s a complicated business in legal terms; more complicated than I’m making it seem. But it’s in complete compliance with US law, and I have excellent advisors on that front helping me navigate the myriad of shoals safely.

So why am I writing this now? Really 2 reasons. The first is that John Derbyshire was generous enough to link my ‘Civil Servant’s Gone Wild” piece in the NRO Corner, so there are a lot of new readers around at the moment. But the second is that I finally have something new to say. And that is that I think the tide is about to turn.

The Obama administration is currently in the process of trying to rush though the last of his plan to nationalize the private sector before his stratospheric approval ratings come crashing back to earth. But the cracks in Obama’s political armor are starting to show. And I think he’s just one political failure away from being chased through the streets by the very same mob that he’s rallied to demonize banking executives, car makers, hedge fund investors, private jet users, bonus recipients, Rush Limbaugh, Glenn Beck, Fox News, and anyone else who opposes him in any way. He sent busses full of protesters to the homes of private citizens, but as soon as he has one slip up, those busses will be heading to Pennsylvania Avenue instead.

Anyway ... I'll be writing a little more in the coming weeks, but for now I thought I'd remind of this piece: "The Problem With America". It's as true as it ever was... we're just at a different point in the curve now.

More Soon.

Monday, June 22, 2009

- The DC 'Train Wreck"

Strangely enough... it's an actual train wreck this time.
4 dead and many injured.
If only it were run by the government, I'm sure all this could have been avoided.... wait a minute....

Personally, I fully expect the same kind of flawless service from the government's new health care, energy, auto, and banking industries. But thankfully I'll be in the Cayman Islands by the time it happens.

I'm around.... I'm doing some stuff.... but I'll be back soon.