Saturday, December 20, 2008

The Real Lesson for Madoff's Chosen People

As Bernie Madoff sits in his Upper East Side apartment ordering take-out, the rest of the Jewish world is reading, writing, watching, listening to, and forwarding emails, blogs, letters, articles, editorials, and commentaries regarding the lessons to be learned from his now-notorious Ponzi scheme.

Facts are emerging at a snail's pace but the opinions are flying around like Weatherbeater at a paintball match. Due to my intense interest and involvement with pretty much all things Jewish, I am in the path of most of them. Here is a brief accounting of the issues in no particular order except I'm saving what I consider to be the most important for last.

I have received and (since I chair two Jewish organizations myself) have written letters to donors, employees, clients, and volunteers to make sure they know that Agency X had no money invested with Madoff. Depending on the organization, this was due either to conservative investment policies, due diligence, or dumb luck.

A few of my friends have written or forwarded emails bemoaning the fact that the Madoff affair has brought the anti-Semites out of the woodwork again. This link will send you to one article:

The Anti-Defamation League (ADL) said there had been "an outpouring of anti-Semitic comments on mainstream and extremist Web sites."

"Jews are always a convenient scapegoat in times of crisis, but the Madoff scandal and the fact that so many of the defrauded investors are Jewish has created a perfect storm for the anti-Semites," said Abraham Foxman, ADL national director.

Some friends have sent emails making sure I know how embarrassing it is that Madoff is Jewish. Others have voiced their disgust over the fact that Madoff stole money from fellow Jews and Jewish charities.

Those friends and the ADL have a point, but they should try to get past their fears. This is a sad, even tragic, occurrence. But no one has become a Jew hater over this and there is no one left for us to feel embarrassed in front of other than ourselves. We live in America in 2008--Thanks God.

Meanwhile, no one has talked much about what I consider to be the most fascinating statistic--that almost all the victims Madoff personally recruited were Jewish and, despite the numerous warnings and red flags, most of them stuck it out until the very end. Madoff did have institutional clients who were brought in by hedge fund managers but most of the individual investors and foundations were people he met at all-Jewish clubs or through charities where he was personally involved.

These customers represent a small minority of American Jews but they are unique in their wealth, their influence, and their visibility as leaders of legacy Jewish organizations. They were attracted to Madoff because he came highly recommended by other wealthy, highly-regarded members of the community. In addition, a big reason they felt they could trust Madoff so completely was that he was one of us--he was a Member of the Tribe (MOT).

I use that term advisedly and for a reason because, thankfully, it is a phrase that an an ever-shrinking number of Jews in America would use to describe themselves. It reflects an approach that served and sustained American Jews well for decades as our parents fought to break down discriminatory barriers and to have full access to every opportunity, job, school, neighborhood, and country club in the U.S.

I became attracted to and ultimately immersed in the organized Jewish community because it felt so good to be part of it all. I have chaired my Federation campaign, Israel Bond campain, the boards of two community Jewish day schools, and donated more money to Jewish causes than I am worth today.

My mentors and role models were people who lived through times when there was real anti-Semitism and a big chunk of the American dream was off-limits to our people. It was a battle that needed to be fought.

The good news is that we won. And because we did, our generation and our children are full participants in everything this great country has to offer with a range of choices and options that our parents and grandparents couldn't possibly begin to understand. Ironically, many Jewish clubs (like the ones where Madoff was a member and sought his prey) and some of our day schools are still among the relatively small number of institutions that remain restricted in our country.

As times have become better for Jews in America, the tribal part of being Jewish has become a liability as well as an asset.

We now live a world where, according to a recent survey, 44 percent of Americans say they have changed their religion at least once during their lifetime. A generation ago, nobody changed religions--we were born Jewish or Christian and we stayed that way and married that way whether we liked it or not. A few generations before that, most people never moved more than a few miles away from their birthplace and they usually took on the occupation of their fathers.

But now, for the first time in history, American Jews have unlimited choices. We are free to marry whomever we want and live, work, and go to school wherever we want. Most Americans are taking full advantage of this amazing range of new choices. The MOTs wring their hands and call it assimilation. The rest of us are thrilled to be so free.

The fastest growing group among Christians are people who describe themselves as non-denominational and by far the largest group of Jews are those who describe themselves as Just Jewish. More than 90 percent say they are proud to be Jewish but they tend not to gravitate to the synagogues, Federations, pro-Israel organizations, and all-Jewish clubs that their parents helped build.

Instead they shop for practices and wisdoms that make their lives more meaningful and better. But not everyone has gotten the message. Ten years ago, a number of Jewish organizations became obsessed with promoting "continuity" which was a buzzword that really meant they were scared to death of rising intermarriage rates. That's because it was assumed that if a person intermarried, they and their children were lost to Judaism forever.

In fact, our synagogues and Jewish day schools are full of kids from families where only one parent is Jewish and the other has not converted. It is not unusual for a family to have a Passover seder in the spring and a Christmas tree in the winter. In some of those families, BOTH parents are Jewish. Only in America.

More and more people are doing more and more Jewish but they'd never consider themselves Members of the Tribe. And most of them would never invest all their money with a man whose methodology was sketchy and whose results were being questioned by a wide range of smart objective people just because he belonged to Jewish clubs and gave to Jewish charities. Some may call that assimilation. I call it common sense.

Which brings me back to Bernie Madoff and his victims. All of his victims were Jews but not all Jews were victims. In a perverse way, that is the exact opposite of what is often said about the victims of the Holocaust.

In Madoff's case, by any objective measure it seems strange that so many of his clients seemed both willing and anxious to ignore the warning signs.

As Exhibit A, I submit this article from Time Magazine:,8599,1866398,00.html

The article, entitled "How I Got Screwed By Bernie Madoff," was written by investor Robert Chew. He explains that all of his money and that of his wife's entire family (more than $30 million) was invested with Madoff.

But look at what he says:

"The call came at 6 p.m. on December 11. I had been waiting for it for five years...
I think everyone knew the call would come one day. We all hoped, but we knew deep down that it was too good to be true, right?"

Which brings us back to the original question: Why did so many smart people give Madoff all their money and sit back and do nothing when it became clear--or at least seemed likely--that he was reporting unrealistic results?

Part of it was human nature but I believe a bigger part was related to the rules of the game governing Members of the Tribe--the Chosen People at the Jewish clubs and charities where a select group of their friends and associates were also invested with Madoff. My guess is that it would have been considered bad form in those citcles to doubt Madoff in public. To question Madoff would have been an affront to the other members and particularly those respected tribal leaders who got them in the door in the first place. Never mind the facts and never mind the gnawing feeling described by Robert Chew that this wasn't going to end well.

The Madoff catastrophe has left the Jewish community reeling financially and emotionally. It has also been jarring for many to realize that a fellow MOT could do this to his own.

But the major positive lesson that might be learned is that we need to move beyond or, at last adjust tribal thinking for our own good. We can't and shouldn't abandon the idea of community and a shared responsibility for each other's welfare. But we live in an open, pluralistic world where the true value of Judaism is now reflected by our wisdom, ethics, and values--not by our need to stick together and blindly trust only our own. Most American Jews realized this a long time ago. Hopefully more of our Jewish organizations and their leaders will finally get the message.

Friday, December 19, 2008

The News Media and Politicians Strike Again

As usual, it seems that the news media and politicians are either distorting or just plain don't understand the real economic issues that are confronting the U.S. and world economic systems.

The two headline stories of the week have dealt with the Madoff multi-billion dollar swindle and the constant screaming by CNBC's Larry Kudlow and others regarding how the U.S. has become "Bailout Nation." The most recent controversy has focused on the government loan package to the auto industry which was announced Friday morning.

The market popped higher early Friday on that news but ended down slightly on the day as investors accurately determined that the $17 billion loan package will mean nothing. There is ZERO equity value in any of the Detroit automakers and common shareholders will probably suffer the same fate as investors in Lehman, Bear Stearns, AIG, Citigroup, Wachovia, Fannie Mae and Freddie Mac. In each of those situations, the companies themselves survived in some form but whatever assets they had were nowhere near enough to pay off their creditors--each of whom get a place in line ahead of the shareholders.

Whether GM goes into bankruptcy or not is irrelevant. The shareholders are likely to get nothing even if they don't. All of the political posturing that has taken place had nothing to do with saving the car makers. It was all about politicians going on record to either support or try to bust the UAW. Democrats can now go the the unions and say that they tried to help and Republicans can go to their supporters and say they tried to help level the playing field. None of the conversation of the last few weeks matters. Detroit went broke because for years the companies were managed badly and, unlike the Japanese, they did not design and produce cars that Americans wanted to buy. End of conversation.

The other phony argument that has been spread goes something like this: "How can the government not bail out the millions of autoworkers when they gave $700 billion to bail out Wall Street?"

Wall Street was never bailed out. The stock of every company I just mentioned has lost between 85-100 percent of its value during the last year. Most of the employees have lost their jobs and those that remain are being paid a fraction of what they previously earned. You call that a bailout? Most of the bailout money has been used to protect the interests of their customers and counter parties to keep the entire financial system from imploding which would create a true catastrophe. I am thankful every day that I work for a conservative Midwestern firm that steered clear of the whole mess but as investors and Americans we're all affected.

This is very different from what would happen if the auto makers went into a structured bankruptcy--but enough about that. The point is that not only are not getting good answers, the issues themselves are once again being totally distorted due to politics and incompetence.

The other huge lie is the widespread complaint that American taxpayers are picking up the tab for all of this. The truth of course is that no taxpayer has paid a penny for any of the trillions of dollars in rescue and stimulus packages. It is likely that none of us ever will. Our kids might, but the far likelier scenario is that the government will just print trillions of dollars to pay back our creditors with paper money that will be worth less and less as time goes on. It may not be a bad time to put a little gold or oil in your portfolio.

The irony of course is that investors are lined up to loan money to the U.S. Government for five years locking in a 1 percent return or for 30 years at 2.60 percent. Our ever-growing multi-trillion dollar deficits almost guarantee that the buying power of our dollars--and every other currency in the world--will drop pretty dramatically when it becomes clear that we can't raise taxes enough to pay down this debt without starting a revolution.

That's the story the politicians and news media should be talking about. Instead all we hear about is how the U.S. taxpayers are bailing out Wall Street and the automakers. Meanwhile, Wall Street and the auto makers are not being bailed out--they're going broke--and the taxpayers aren't paying an extra penny. How's that for good leadership and honest reporting?

Tuesday, December 16, 2008

Bernie Madoff and His Chosen People

Much has been written and said as the shocking details of the Bernie Madoff Ponzi scheme continue to emerge. Most of the commentary has been predictable--shock and dismay over the size and duration of the swindle along with much pontificating regarding the importance of due diligence, not putting all your eggs in one basket, and the wisdom of questioning opportunities that seem too good to be true. The news media have been tripping over each other to trot out the names of celebrities, charities, and regular folks who were wiped out.

Like many others, I've been obsessed with this story since it first was reported. I'd love to write about aspects of the issues just mentioned but, let's face it, we just don't know very much about how the swindle worked, what Madoff was thinking, and how he pulled it off for so long. When we do, I'll weigh in.

We do know that many Jewish charities and philanthropists have been wiped out or mortally wounded. But I have yet to see a serious discussion of why virtually all of Madoff's clients were Jewish individuals or organizations. In many cases, Madoff was entrusted with all the money these people had.

Perhaps the truth that no one seems to want to say out loud is that this could not and would not have happened on the scale it did if Madoff was not Jewish. None of these particular investors would have given all their money to someone who wasn't Jewish.

I have no data to back that statement up, but I'm certain that it's true. It is a byproduct of a world view that served Jewish organizations well for many years--that we are victims and members of a tribe that can only thrive and survive if we trust each other, take care of each of other, and remain wary of anyone who says otherwise.

It was the mantra of the United Jewish Appeal which for years used it to raise unprecendented amounts of money for Israel and other important Jewish causes. But in recent years this tribal view has become increasingly foreign or irrelevant to the thinking of most American Jews. Nevertheless, it continues to be promoted by the leaders of Jewish and pro-Israel organizations as a rallying cry and fundraising tool.

It is also common a common sentiment at Jews-only country clubs (such as those where Madoff connected with most of his clients) as a way of justifying a form of discrimination that is no longer tolerated elsewhere.

As we now know, Madoff attracted billions of dollars from investors at these clubs even though many red flags went up over the years as experts questioned the legitimacy of his legendary returns. An article appeared in Barron's several years ago raising some pointed questions about Madoff's track record. The article was based on this report:

These concerns caused a number of funds, managers, and investors to steer clear of Madoff's scheme. His pitch only seemed to work in exclusively Jewish venues where members couldn't imagine that a fellow lantzman would cheat one of his own. Fortified with a sense of tribal confidence, otherwise sensible people were willing to invest their life savings with a seemingly charming man they hardly knew.

I am reminded of the wise person who once told me that there are two types of people who believe that Jews are smarter than everyone else--Jews and anti-Semites. But I digress.

Before I go further, you should understand that I am a proud and serious financial advisor who has been a member of a Jewish country club and has served as campaign chairman of Israel Bonds and the Jewish Federation campaigns as well as the chairing the boards of two Jewish day schools and a major national Jewish organization.

I love our rituals, culture, and sense of peoplehood but mainly I am passionate about our religion's great wisdom traditions which are amazingly relevant and useful tools that help all of us live fuller and more meaningful and ethical lives.

I have no desire to belittle or put down Madoff's victims who have suffered devastating financial and personal losses. The list of Jewish charities and philanthropists who lost billions in this scam continues to grow. Brandeis University--where Madoff served as treasurer and a board member--lost more than $100 million. Several charities were wiped out and have been forced to shut their doors

My concern is with the culture and mindset that helped make this scam possible--the widening disconnect between the full, diverse, and pluralistic lives being lived by the vast majority of American Jews and the sense of tribalism and victimhood that continues to be encouraged by key Jewish leaders and the organizations they represent. Madoff could never have succeeded to the extent he did without the xenophobic mindset that has been kept on life support by those who purport to speak for the rest of us.

That schism was dramatically reflected during the election campaign when we all received countless Jew-to-Jew blast emails warning us that Barack Obama was a terrorist sympathizer who would "cut the throat" of Israel if elected. Many self-proclaimed leaders of pro-Israel organizations were passionate in their opposition to Obama and gave the impression that they represented mainstream Jewish sentiment. And yet exit polls taken on election day showed that 77 percent of American Jews in fact voted for Obama.

The disconnect extends to views on Israel and the press coverage coming out of our distant homeland.

Whenever U.S. politicians are taken on trips to Israel by AIPAC or other organizations, the first thing they do is visit Yad Vashem--the Holocaust memorial in Jerusalem--quickly followed by a trip to Sderot--the Israeli city located a mile or so from Gaza which suffers from almost daily bombing and rocket fire. Israeli political observers call it the "Look what they did to us then--look what they're doing to us now" tour.

When Obama visited Israel during the campaign, he got that tour but was never shown the bustling city life of Tel Aviv or the prosperous high-tech industrial parks sprinkled around the country. The top priority was to reinforce the mantra that the Jews have been and still are the victims of vicious and murderous foes that want to wipe us out.

Other active pro-Israel groups such as The Israel Project and are devoted to countering what they believe is pervasive anti-Israel bias in the news media here and abroad. But those same organizations were silent when virtually no coverage was given to the violent incident in Hebron last week when Israeli soldiers forcibly evicted 60 Jewish settlers from an apartment. Other settlers then went on a violent rampage (Prime Minister Olmert referred to it as a "pogrom") inflicting injuries and destroying neighboring Palestinian homes and property.

I just got a fundraising email from The Israel Project (TIP). There is often anti-Israel bias in the world media and it's good to have an organization committed to getting the truth out. During the recent terror attacks in Mumbai, TIP was the first group to alert the world media that the Chabad center and Jews had been targeted by the terrorists.

But their fundraising piece was headed "My Son was Killed by a Palestinian Suicide Murderer." The message was written by an Israeli asking us to give money to this organization so his son would not have died in vain. That's why we are supposed to give money--because we are perpetual victims and the whole outside world wants to kill us--not because we need an organization devoted to helping the media do better reporting? Am I the only one who thinks there's something wrong with this picture?

Most American Jews feel a connection to and are proud of Israel. But they also value truth and fairness over loyalty and partisanship. They can relate to honesty much more than boosterism.

Polls show that more than 90 percent of American Jews say they are proud to be Jewish. While most are not ritually observant or actively involved in Jewish organizations, they lead lives that reflect Jewish ethics and values and feel comfortable with their identity.

Unlike 30 years ago, virtually none of them are changing their names or getting nose jobs to make them look less Jewish. They view intermarriage, with all its challenges, as part of life in America--not as an existential tragedy. They would never think of joining an all Jewish club and are not worried about Obama's secret plans to undermine Israel. And they would never invest all of their money with a man whose strategy was based on a system that didn't seem to make sense--even if he was Jewish.

Madoff had hundreds of clients and they assuredly invested with him for different reasons. I only know a few of them so I can't speak for them all.

But from a distance it appears as though most of them trustingly followed the advice of a handful of Jewish leaders within their country clubs or organizations--people who they respected and viewed as wise and successful. It reminds me of the way I used to be solicited for Federation and Israel Bonds. A leader of the community would tell me how special I was, how much I was expected to give, and that I should feel great about it. That was a perfect and effective approach for those times--but not for today.

Although most of those new investors were successful independent thinkers, their common sense was apparently overwhelmed by their desire to be a member of the tribe and to be viewed of a part of the chosen people--the Madoff Jews. They were victims of a con man--and of a flawed paradigm.

Monday, December 15, 2008

The Return of Missionary Position Investing

I have to admit that since I first heard of the unraveling of the Bernard Madoff Ponzi scheme last week, I have been totally obsessed with the whole story on a variety of levels. I don't understand the logistics of pulling off such an enormous swindle for decades involving billions of dollars invested by some of the most successful people in the world.

What I really don't understand is how a person can wake up in the morning knowing that he has been robbing his very closest friends and charitable institutions and has left many of them destitute.

But for all of the questions that remain about the Madoff meltdown, some things already seem quite clear.

Even before this episode, investors were clearly losing their appetite for the esoteric and exotic investment approaches of hedge funds. The massive redemptions that have taken place were actually the cause of Madoff's demise. He had to come up with $7 billion by the end of the year and, as we now know, he didn't have it.

Investors have been moving to the sidelines to a record extent and piling up cash like firewood by the stove. Opportunities are being created and the next bull market will benefit from people chasing performance again. The big question is whether that will take place during our lifetime.

But my sense is that we're going to see a lot more "missionary position" investing going forward and less demand for the manufactured strategies that made Wall Street such a fortune and have now undone many people who really never understood what they were buying in the first place.

I view this as very good news. My investment philosophy for years has been "buy good stocks, live a long time." When I started in the business almost 30 years ago, my role models were people like Warren Buffett and Peter Lynch who advocated buying good companies that you understand and holding them. Over the last 10 years, the traders, arbitrageurs, and manufacturers of synthetic investments and strategies have taken over. It was like they gave the market a face lift and a boob job.

Over the last 10 years the stock market has provided a negative return. None of the major indices is up over that period and the NASDAQ has lost more than 70 percent of its value. Many of my younger colleagues--and a few contemporaries--are now saying that "buy and hold" is a dead strategy and it will never work again.

My feeling is that they are wrong about that and a lot of other things. What the last three months have truly taught us is that money that is going to be needed over the next couple years should be in the bank or a money market fund--not in stocks.

The other great lesson is that leverage is a two-edged sword. That is true whether you are borrowing 95 or 100 percent of the value of your home or if you are investing in "ultra" exchange traded funds (ETFs) which do provide diversification but which can provide up to four times the volatility of a "missionary position" index fund. Instead of getting the performance of the broad group you get four times that. It's sort of like buying a car that will go 240 miles and hour in a state where the speed limit is never above 75. It's a prescription for trouble.

It's hard to ignore the crumbling economy or the staggering losses that investors have absorbed in recent months.

My advice is to try to stay focused on the well-managed companies with strong balance sheets, good management, solid business models, and no need to raise capital in the foreseeable future. Add to that cocktail a chunk of investment grade bonds and preferreds and finish it off with a larger than normal exposure to gold, oil and other hard assets. After all, we will eventually pay a price for running the dollar printing presses 24-7.

Then, instead of day-trading it, put it in a crock pot and let it cook for five years. From these levels, the results are likely to be very tasty. It is not time to be bullish or bearish. It is time to be smart.

Call me old fashioned. Actually, going forward, old fashioned should look pretty good.

Wednesday, December 10, 2008

It Just Gets Curiouser and Curiouser

This time it's different.

That's the one phrase that I was always taught to view with great suspicion because it tends to be used to justify market bubbles when valuations and investor behavior seem to be moving to irrational extremes.

It was used by investors to justify plowing into internet stocks ten years ago even after prices had gone to the moon and the companies that were being valued at billions of dollars still had no earnings. It was also used to justify skyrocketing real estate prices and mortgage lending practices that seemed reckless and dangerous. Instead of pulling back, excited buyers came up with reasons why it was different this time than every time in the past when those bubbles popped and wealth disappeared.

At the end of the day, however, the laws of supply and demand and human nature don't seem to change much. People get too excited (greedy) when prices are going up and they get too excited (afraid) when prices are going down. At those times there are always good reasons to think that whatever trend is in motion is so powerful that it's just going to be different this time. But it never is.

Yesterday marked a real milestone that points out just how extreme the fear and panic about the future have become. The U.S. Government auctioned off $30 billion worth of one-month treasury bills with a yield of zero. An even more shocking statistic is that there was so much demand for those t-bills offering no return that almost $100 billion of additional orders went unfilled. For more details and explanation, check this article from today's New York Times:

At the same time, investors seem totally disinterested in the highest quality corporate bonds yielding 6 percent, the highest quality bank preferreds yielding more than 10 percent, natural gas pipeline stocks yielding 10 percent, and hundreds of established companies with solid cash flows, little or no debt, dividends of between 3 and 6 percent and the potential for growth.

Call me stupid but I think we are at one of those moments in time where excitement ( fear) is causing investors to overlook great opportunities. At the same time, excitement (depression and self-loathing) is causing others to remain paralyzed with their current holdings because they have lost so much already that they feel they can't afford to make a change. As I've said before, this is not a time to invest looking in the rear view mirror and obsessing about how much this or that stock is down. It's a time to be smart and upgrade. It may be that those people can't afford NOT to make a change.

There is no doubt that the economy faces daunting challenges. The wave of corporate layoffs is gaining steam and at this point in time people just aren't spending money or buying anything they don't really need. The news media has focused on the trillions of dollars in government programs as the key to getting out of this mess. But, at the end of the day, a lot of people bought more stuff than they could afford and it's going to be hard for them and hard for the people who loaned them the money to do it.

I read yesterday that in more than half of the distressed mortgages that have been renogiated by lenders, the homeowners were back in default in just a few months. Most of these people just bought way more house than they can afford and eventually the lender will end up taking it back no matter what adjustments are made to interest rates.

Kristen and I were in Las Vegas for two days over the weekend and the place was empty. I met a 23-year old kid from New York who just lost his job on Wall Street. He said he came to Vegas because he got a round trip flight and three nights at the MGM Grand for a total of $329. I ran into a lot of people like that. What I didn't see was a large group of high rollers throwing money around. We went to see Bette Midler and the theater was half full. Large sections of the casinos were shut down due to lack of customers and The Strip was lined with half-finished huge developments. I am not a Las Vegas person but my sense is that these are tough times.

There will be more bad news regarding disappointing corporate earnings and billions of dollars worth of loans that will not be paid back. But for people with a need for current income or the ability to invest with a 3 to 5 year time horizon in stocks, these will prove to have been times of great opportunity.

The riskiest times are those when people feel secure but they really aren't. Once the risks are known and are on our minds constantly {priced into the markets}, times are actually less risky. As a country, we were far more at risk prior to 9/11 than we have been since because we are now aware that those previously unimaginable risks actually exist. Ironically, once we are aware of the threats, we feel more vulnerable but actually we are safer.

Investors have lost a lot of money and are more aware of the risks in the market than they have ever been before. That awareness makes them safer and yet they feel more worried. Even with the challenges that remain, we are less at risk from these price levels than we were a year ago when no one was losing any sleep over their investments.

People ask me if it's time to be bullish or bearish. I say that it's a time to be smart. Three years ago, people were lined up to buy houses in Las Vegas and Aspen that had already tripled in price. That was the sign of an irrational environment that couldn't keep going. Today they are lined up to buy treasury bills that guarantee them zero return. Enough said.

It just gets curiouser and curiouser.

Thursday, December 4, 2008

The Day the Music Died

Everyone knew that the election would change the way we view our country, its leadership, and the way we relate to each other and the rest of the world. But it's now clear that we are talking about a paradigm shift of monumental proportions. Sort of like the feeling we had when we learned the truth about the tooth fairy or Santa Claus.

As a result, points of view that as recently as a month ago were viewed as mainstream and credible now seem so out of touch and ridiculous that we are left scratching our heads wondering how anyone could have believed that garbage.

We were told by the pundits and water carriers of both parties that we are a very divided country with about half of our voters Democrat and the other half Republican. Half on the Left and half on the Right. Half Liberal and half Conservative.

Each side has its base issues and talking points and we were told people would vote one way or the other based on how they felt on those important matters. The Right wing was anti-surrender in Iraq, anti-gay marriage, anti-abortion, and in favor of free market capitalism. The Left wing wanted us out of Iraq yesterday, was pro-choice, in favor of same sex marriage, and wanted America to be a more socialist place where the wealth was spread around.

What has now become clear is that those weren't the issues that divided us at all. Many voters certainly have strong feelings on those topics, but they voted based on their passions and gut feelings about the candidates. What is even more clear is that most voters are as complex and nuanced as are the issues we face.

There were some common themes that showed up in the election results--themes that are very bad news for the Republican Party.

For all the posturing, McCain and the Republicans did well only in those states that spend the lowest amount per capita on education--states in the Deep South and those wilderness states which have no major cities and where each citizen has hundreds of acres to call his or her own. Every other state was carried by Obama and the Democrats.

At the end of the day, Obama's convincing win was a rebellion against stupidity and ignorance. None of the other issues had any real traction. More revealing was that groups of people did not fit into tidy little ideological boxes as the pundits had hoped.

Polls showed that virtually every African-American voter went for Obama. Yet more than two-thirds of Blacks now say they do not believe it is moral or acceptable for people to be gay. Does that make them Liberal or Conservative? They are clearly Democrats, but their values don't fit the pattern created by those who view life as a battle between the forces of the Left and Right. Which team do these Blacks play for?

And what about the 20 percent of Republicans voted for Obama? What uniform do they wear? How about the fact that 80 percent of Americans--many of whom supposedly felt that Obama was a socialist who palled around with terrorists--now give the president-elect high marks for his appointments and the way he has handled himself during the last month?

An entire radio talk show and blogging industry has been built on the premise that there is a massive group of Liberals out there who want to destroy the fabric of American life and undermine everything our country has ever stood for. They painted Barack Obama as a combination of Fidel Castro and Osama Bin Laden--the patron saint of the forces of evil.

Now it turns out that he's none of those things--he's just the smart and honest president-elect of a country that is tired of deceptive and stupid.

So who is now the audience for Sean Hannity, Rush Limbaugh, and their dozens of colleagues who have pledged to continue the Conservative Underground and fight the Liberal forces of evil? Sarah Palin is now considered a star of the Republican base but can the party ever grow beyond the Deep South and the mountain wilderness with her as a leader? As much as she is loved by Bubba and June Cleaver, she is viewed as a sad joke by everyone else.

Meanwhile, the qualities that Bush supporters used to spin as reflecting his loyalty and stubborn devotion to principles are now being revealed as simply the result of stupidity and laziness. Obama is actually putting partisanship aside to put together the best qualified and most competent team he can assemble.

In his recent round of farewell TV interviews, Bush has put a devastating exclamation point on his pathetic track record and persistent cluelessness. He talked about the economic crisis as something that "happened" as opposed to pointing out decisions he could have made differently or things that could have been handled better.

He said he regrets that we never found WMDs in Iraq--not that he took us to war based on flawed information and then deceived the country for years after he learned that all his initial assumptions were dead wrong. To this day, he seems to be more of a spectator who watched his administration create or fail to effectively address disaster after disaster rather than the commander in chief who actually was calling the shots.

Bush's comments stand in stark contrast to Obama's tone and actions that are making the entire country feel more hopeful. We have huge challenges facing us but for the first time in many years, it seems like the man in charge really knows what he is doing.

Americans are tired of stupid empty gestures. I felt it on a very personal level when I flew home from St. Louis after Thanksgiving.

This was days after the bloodbath and terrorism in Mumbai. As I stood in the airport and listened to the recordings blare about us being under Security Code Orange and watching people take off their shoes and throw away their bottles of water and their toothpaste, I felt the anger I always feel when I travel. I am angry that we are being manipulated by stupid ineffective policies designed not to make us safer but rather just to make us feel that our government is doing something to make us safer. I was praying that this recent act of terrorism wouldn't lead to more rules and foolishness imposed on us in the name of security.

I have an artificial hip and wear an insulin pump. I set off all the alarms when I go through security and get the Full Monty ever time I fly. I have no problem with that. It's the foolishness I see going on around me and all the color coding that drives me crazy. Message to Obama--get rid of the colors. Just tell everyone that we live in a dangerous world and we should always be alert and report suspicious behavior.

My friend Jeffrey Goldberg has an outstanding article in The Atlantic where he talks about the "security theater" we are forced to act out in airports. I encourage you to read Goldberg's recent piece and watch his recent appearance on the Colbert show:

For eight years, our president, his team, and his vocal fan club on Fox and the radio have been singing the same sick and dissonant song. They tried to divide the country by spreading fear and hatred of those who dared to question the Bush agenda. November 4th was the day that music died, hopefully once and for all. Most of us are ready to dance to a much different tune going forward.