Friday, November 28, 2008

Longing For The Bad Old Days

A number of my friends have contacted me in recent days wondering why I haven't posted anything on my blog for more than three weeks now. After all, before the election it was all I could do to keep my musings down to three or four a week and people were worried that something terrible had happened to me.

The truth is that since the election it's just been hard to come up with interesting things to say. After a couple of years of constant passion and issues of legitimate contention, we had gotten terribly spoiled. Back then, all a person had to do was sit down at the keyboard and the thoughts came pouring out.

Since that fateful day, it's been tough because there seem to be very few issues about which reasonable people can disagree.

The only people who are carrying on the fight are the professionally angry bloviators of the far Right Wing like Sean Hannity and Rush Limbaugh who didn't get the message that they have been fired as self-appointed spokespersons for conservatism and the Republican Party. They aren't conservative--they're just angry and what remains of their "base" has shrunk to the point where it is no longer statistically significant.

But pretty much everyone else has been on the same page for weeks now. It's hard to find anyone on the Left, Right, or in between who's not reassured by the way President-elect Obama has been handling himself. He has been intelligent, careful, and smart in his appointments (except for selecting Hillary Clinton to be secretary of state, but that's a conversation for another day). It's ironic that the man who Republicans had painted as a socialist and an ultra-liberal has only been criticized by the far Left for being too centrist in his appointments.

It has been so long since we had a president who thinks things through and makes appointments based on competence and ability that we had forgotten how reassuring it feels when it actually happens.

The other emotion that has united us has been fear. The horrible news from Mumbai over Thanksgiving has been shocking and probably hasn't really sunk in yet, but the truth of the matter is that most Americans have been scared to death for months over the financial crisis that we have now exported to the entire world.

Much has been said about the greed of the various villains in this play. But let's be honest--we have all known for years that people in business are greedy. We tend to idolize and reward financial accomplishments. The term "successful" is generally used to describe someone who has made a lot of money. What is shocking is just how stupid and short-sighted our government and financial leaders turned out to be.

As the stock market and every other asset class has collapsed over the last two months, there has been plenty of anger, outrage, and finger-pointing. But most people are past that now. Now we're just afraid--not just because we're in a huge mess but because no one really believes that it will end quickly or painlessly.

It's sort of like the feeling one might get after drinking a whole bottle of scotch and starting to feel sick (by the way--I'm speaking hypothetically--I would never do such a thing). You would do anything to come up with a way to feel better immediately but you also know that it ain't going to happen. The only way to keep from spending the night in a state of total misery is not to have drunk so much in the first place.

So here we are. United in fear. Hoping for better times and praying that the very smart man we have picked to be president can get us back on track.

It's not the end of the world and things will eventually get better. We all pretty much believe that. But in the meantime I fear it's going to be hard to come up with provocative and interesting things to disagree about.

Maybe that's not so bad. After two years of constant passion and contention it's sort of nice to all be on the same page for at least a little while. Nice--and a little boring.

Sunday, November 9, 2008

It Was About Stupid, Stupid

During the last week there has been a lot of discussion about the reasons why Barack Obama won such a broad-based and convincing victory over John McCain.

Most of my Republican friends believe that McCain was doomed from the start due to the collapse of the economy and the overwhelming unpopularity of George Bush. Others believe it was a case of voters choosing a Democrat over a Republican, black over white, young over old, liberal over conservative, left over right, or some combination of the above.

There were certainly voters for whom those criteria were decisive but at the end of the day I believe that a majority of Americans chose smart over stupid.

We have dealt with eight years of stupid and people are tired of it. It is well documented that appointments and decisions within the Bush administration have been made based on loyalty and ideology at times when complicated and nuanced issues required a greater emphasis on ability and competence.

The Bush approach led to predictably disastrous outcomes in Iraq, the response to Katrina, and our current economic crisis. Bush chose to surround himself with people based on personal friendships and their views on abortion and gender issues rather than their professional qualifications and job-specific abilities.

As a result, not only have bad decisions regularly been made but it seems clear that the people in charge were often unaware that problems even existed until it was too late. That would explain the repeated insistence by Bush, McCain, and others that the war in Iraq would be cheap and quick, that we would be greeted as liberators there, and that the economy was fundamentally strong.

Most of the crises we have faced were not entirely of Bush's making, but the "Emperor's New Clothes" culture that has come to be synonymous with the Republican party has made every one of these challenges far worse than it had to be.

That is what this election was all about. Americans were tired of slogans, lies, stupidity and incompetence. With his pick of Sarah Palin as a running mate (can you imagine four more years of NOOK-you-lurr?)and his frequent factual errors and flip-flops on the economy and other key issues, McCain caused voters concern about his judgment while Obama appeared consistent, presidential and, above all, intelligent.

Many McCain apologists have suggested that the meltdown in the stock market over the last month doomed his campaign. That assessment seems far too friendly. McCain was ahead in the polls a month before the election. In fact, it was McCain's awkward and stumbling response to the economic issues combined with the toxicity of the attacks on Obama that were spewed from his campaign and its radio talk show supporters that turned what would have been at worst a narrow defeat into a rout.

There is already a palpable sense of relief that our president-elect has chosen to surround himself with a diverse and accomplished team of advisers to help him address our economic problems. An electorate that has become used to a president who relied on Dick Cheney, Harriet Miers, Alberto Gonzales, and "Brownie" is so ready for a new and smarter approach--one based less on gut feelings, empty slogans and advice directly from God and more on thoughtful rational analysis and expertise.

The challenges our country faces are complex and will require smart and well-reasoned solutions. Joe Sixpack and Joe the Plumber may represent a block of voters, but if someone needed brain surgery they would probably rather have it performed by a trained experienced doctor than by a maverick.

It's time for smart. Stupid has not served us well at all.

Monday, November 3, 2008

Pay It Backward--The Greatest Wealth Transfer in History

For the last 20 years, I have been hearing that we were in the midst of the Greatest Wealth Transfer in History (GWTH). During that period the slogan has remained the same but both the alleged sources and beneficiaries of the wealth have changed several times.

The first time I heard about this wealth transfer was in the late 1980s in my role as both a solicitor for and a donor to a number of Jewish community organizations. We were all told that the next 25 years would be a critical period for philanthropy because the generation of immigrants who had achieved enormous financial success in America would soon start passing from the scene. The huge amounts of wealth they had amassed over the years would be passed on to their families and/or the organizations that many of these people had generously supported during their lifetimes.

As fund raisers we were instructed to get out in front of this transfer of wealth lest all the money pass into the hands of their less generous children who would be more likely to spend it on themselves and less inclined to be philanthropic.

I have to assume that this wealth transfer is well underway but we don't hear so much about it anymore.

That's because a new GWTH has supplanted it in the public conversation with an assist from T. Boone Pickens.

That GWTH is the transfer of more than $700 billion a year from the United States to those countries that provide us with oil. Pickens has spent more than $50 million of his own money over the last year to publicize our need to eliminate our dependence on foreign oil. The case is even more compelling since the recipients of our wealth include all the countries and leaders in the world who are trying to destroy us.

Pickens has met privately with and apparently had a great influence on the thinking of both John McCain and Barack Obama, each of whom has incorporated most of his talking points into their campaign rhetoric. Each candidate,of course blames the other for the problem.

As is so often the case, while all of the media headlines and political attention has been focused elsewhere, the real GWTH has been taking place quietly and beneath the radar. There is no Pickens Plan or other public effort being made to alert people, but it is by far the most significant wealth tranfer in our lifetime.

It has been the trillions of dollars of wealth that our generation has transferred (actually embezzled) out of the pockets of our children so we can live way beyond our means.

This addiction to debt--the things it can buy us and the painful choices it keeps us from making--has saturated every level of our society including government, corporations, and our personal finances.

The devastating impact that the irresponsible use of leverage has had on the financial system is well documented. Established blue chip companies such as Lehman, Bear Stearns, and AIG have disappeared from the scene completely and many others are a shadow of their former selves--not because they made bad investments but because they were so leveraged up and had borrowed so much that a big move against them in the market could actually wipe them out.

On the personal finance side we have all heard about the sub-prime mortgage disasters but we're learning that the sickness is far more widespread. According to CNN, more than 20% of all homeowners in the U.S. now owe more principal on their mortgages than their homes are now worth and that number is rising. That means that purely from an investment perspective, they would be better off giving their homes back to the lender and walking away with nothing.

And it doesn't end there. Millions of people now owe more on their auto loans than their cars are currently worth. Pools of securitized car loans could be the next credit issue that the markets have to deal with.

On top of that, millions more Americans are maxed out on multiple credit cards which they have used along with home equity loans to maintain their unsustainable standards of living for many years. Now credit is harder to come by and the credit card companies are actually starting to call in outstanding debt and raise minimum monthly payments dramatically. It's not surprising that the economy is in the tank.

But the real embezzlement from our kids has taken place on the government level. Since 2001, our national debt has more than doubled and is now spiraling into the stratosphere as the result of needed rescue programs designed to keep our financial system from totally collapsing.

Since Bush took office, we have embarked upon two wars and seen government programs grow exponentially without any serious discussion of how we are going to pay for any of it. Instead, our president has given us tax cuts and told us to keep shopping.

Throughout the presidential campaign, both McCain and Obama have been obsessed with defining who is rich and figuring out which of us should get the biggest tax cuts. There has been no discussion from either side about how we are going to pay our bills much less the bills we have racked up over the last eight years.

New York Times columnist Thomas Friedman said it perfectly: "Never has one generation spent so much of its children's wealth in such a short period of time with so little to show for it as in the Bush years." The bill for our tax cuts, wars, and bailouts will all fall on the heads of our kids. And still there is no serious discussion of what it means and how to deal with it.

There is no doubt that the Greatest Wealth Transfer in History is taking place right under our noses. It's just not the one we've been hearing about. It's about our generation spending our kids' inheritence and embezzling money from their futures to pay for our addiction to wars, bigger houses, fancier cars, and more stuff.

Before we can hope to solve the problem, we have to recognize it. Hopefully our new president will help us act like grownups so we can put ourselves in "time out" until we learn how to behave as individuals and as a country.