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Friday, February 24, 2012

Who are the One Percent, continued

Listening to "Money for Nothing" by David Zweig and John Gillespie.  It's about the cozy relationships between Boards and CEOs that have led to ill-advised corporate takeovers (80% of takeovers turn out badly) as well as insanely lucrative CEO pay, pension, and golden parachute packages.  And of course the Board members are making tons of money too -- often hundreds of thousands of dollars a year for attending a few board meetings.  And since the same people sit on multiple boards, this means that many Board members are making millions of dollars a year from Board income, by only "working" a few days a year.

It's almost too benign to call many of these people "skimmers."  Really, many of them are more like "looters" -- paying themselves and their cronies disproportionate sums for mediocre work out of shareholder money.

I'll provide a more detailed summary when I get my hands on a  hard copy of the book, but for now, here are some things I remember:

1.  CEOs look at their salaries as validation of their skills, in comparison with the competition (other CEOs).   

2.  CEOs take credit for things that happen in good times, and this leads them to assume that everything they do will turn out right.

3.  There is often a huge financial incentive for CEOs to engage in takeover activity.  They are not investing their own money, but if things go well, the returns can be enormous.  But things rarely go well -- typically, the CEOs end up overbidding for takeover targets that they are in any event not suited to run.  Add to this the financial incentives that investment bankers, lawyers, and board members have in seeing mergers through, and you have a recipe for mergers that ends up sending shareholder assets up the chimney.

4.  CEOs rarely lose, no matter how badly they perform.  Often they are hired for millions of dollars a year, and if they don't work out, they are given millions more just for leaving.

5.  Lance Armstrong was a member of a board one year and never showed up for meetings (nothing against Lance -- someone ought to double check if he was undergoing cancer treatment or something that year; but still, he should have resigned sooner).

6.  Board members who attempt to be independent are often shunned and marginalized. 

Part of the problem might well be that all of these people get to keep so much of what they make.  What would be wrong with taxing them just a bit more?  Although the book is mostly anecdotal, it does underscore the fact that CEOs (and Board members) are at best "merely human" and are often more self-confident (and therefore reckless) than other people.  They are not necessarily uniquely qualified to run companies (in fact, their risk-taking personalities makes many of them unsuited), and there would be no shortage of people who would step in to run companies competently if the CEO class simply refused to do so for less pay.

Thursday, February 9, 2012

Presidential Grace

So if you don't like Bill Clinton because of his inability to stay faithful to his wife, you must hate JFK.  Mimi Alford's memoir came out yesterday, and it confirms much of the worst of what we already knew about the man.  Seymour Hersh and others had already given us a glimpse of what journalists in the 1960s knew about but did not write about, but there's a little something extra when it comes from one of the women herself.

The newspapers lead with the most shocking aspects of the book; i.e. that (1) Kennedy first saw her when she visited the White House for a story for her prep school newspaper; (2) he offered her a job a year later, even though she hadn't applied (pretty impressive, for a high school senior/college freshman to be on the President's mind for a year); (3) he took her virginity in a semi-consensual encounter days after she started work; (4) he had her perform a sex act on aide Dave Powers; (5) he asked her to do one on brother Teddy (who was present when the President suggested it), but she declined; (6) she did drugs with the President; and (7) she was with him the night of the Cuban missile crisis, although they didn't have sex.

Maybe this aspect of character (and that is what it is, after all) shouldn't necessarily disqualify someone from being President (after all, good Presidential candidates are few and far between, if we set the bar too high, no one will apply for the job), but it is relevant.  A lot stuff simply didn't get done during the last years of Clinton's second term, simply because everyone was obsessed with the sex scandal.  That might have been the time to kill Bin Laden, for instance, or to think seriously about Social Security, the environment, or the stock market bubble.  The scandal also gave Congress the cover it needed to pass the Copyright Term Extension Act right under everyone's noses, with the only objections coming from a small group of law professors.  Although the Glass-Steagall repeal was passed several months after the end of impeachment proceedings, I'd like to blame it on Clinton's libido as well, and I don't think it's too much of a stretch.  I'm not sure that anything good came out of that Presidency during or after the scandal, and his final F-You-to-the-American-People Presidential pardons suggest that he didn't care too much about his legacy either.  (It was only after 9-11 --when we all had other things on our mind -- that he was able to rehabilitate his image and pave the way for becoming the esteemed elder statesman/philanthropist that he is today.)

So what if we were to vote based on a candidate's likeliness to commit adultery while in the White House?  Obviously, Gingrich is out.  I think Obama wins this one -- he cares too much about his legacy to take this kind of risk, even though the temptation is likely always there.  Romney is fairly safe in this respect too.  Although Santorum looks rather shifty, I'm not sure that translates into a propensity for adultery.

Wednesday, February 8, 2012

Not so fast, media!

As I reported in the post just after the Nevada caucuses, the media really seemed quite desperate for us to believe that Romney had everything under control, to the point of using words like "obliterated" and "overwhelming" to describe Romney's still-less-than-fifty-percent performance.  I wondered why then, and I still wonder why, now that it's no longer so clear (as Santorum just won three states last night).

Sunday, February 5, 2012

Was 42-26 (early numbers) in Nevada an "obliteration"?

Both the Washington Post and the New York Times this morning report that Romney stomped on everyone else in Nevada, and they both seem to be trying to convey the impression that the GOP is finally coming around to supporting Romney.  While I do believe that Romney will be the Republican candidate in the end, it seems strange -- even disingenuous -- for these two liberal newspapers to be characterizing the victory that way.

Earlier this morning, when the articles first came out, the score was Romney 42 percent (to be honest, I thought I saw 37%, but I can't find that any more), Gingrich 26%.  That just doesn't seem that commanding or even significant to me, especially when you compare it to Romney's 51-13 win over McCain in Nevada four years ago.  I see that the numbers have now gone up to something like 47% Romney, 22% Gingrich.  So that's a bit more commanding, but it's still not an obliteration.

Aaron Blake's Washington Post "post" says Romney "obliterated" Gingrich, whose recent performance in Nevada (I think he means in the days leading up to the caucuses) was "disastrous," but fails to even mention the numbers.  Blake at times acknowledges that this might not be such a big deal (Romney won it four years with 51% ago against McCain, who only got 13%).

Dan Balz calls it "overwhelming."

The New York Times said he won "handily" with "broad support."   

Thursday, February 2, 2012

What Mitt Romney Meant to Say . . . .

People (e.g. Gail Collins today) are jumping all over Mitt Romney for yesterday morning's post-Florida-victory assertion that he doesn't care about the very rich or the very poor because the rich are fine and the poor have a safety net.  And it was a stupid thing to say.

But for me, it goes more to how completely inarticulate and tone-deaf he is, as opposed to what he really thinks about the "very poor."  All he was trying to say was that he's not going to be investing a lot of money in social programs for the very poor, since they've already got plenty of social programs to help them.  That's a fine Republican sentiment.  The point is that there will always be "very poor" people in this country; you can't run on a platform that somehow suggests we will eliminate poverty.  That's been tried and it hasn't worked.  So he was just trying to assure the middle class -- the biggest voting block -- that he would be focusing on their needs, and not fretting about solving problems that are unsolvable.  In other words, he can't even articulate a simple plank of the Republican platform without hosing it up and getting himself into trouble.

That tone-deafness will prove fatal for his campaign.  There hasn't been anyone that inarticulate on the campaign trail since George W. Bush.  But the difference is that Bush managed to win because his handlers were fully aware of his weakness and kept him under wraps to the fullest extent possible.  Because people think Romney is smart (and he has the grades and the money, if nothing else, to prove he is), they don't recognize how truly "stupid" he is.  If he hasn't already lost the race, he certainly will for that reason.  Just watch him try to connect with people and you'll see what I mean.

Wednesday, February 1, 2012

Politics and Killing Bin Laden

Maureen Dowd reports today on how Biden is going around talking about what a strong backbone Obama has.  Although she meanders a bit, she finally settles on the conclusion that "Romney would do well to remember that real tough guys don’t brag on themselves. They let others do it."

But along the way, she gave us -- without any commentary -- this revealing quote from Biden:

“He knew what was at stake,” Biden said. “Not just the lives of those brave warriors, but literally the presidency. And he pulled the trigger.” The vice president concluded triumphantly: “This guy doesn’t lead from behind. He just leads.” 

Wow.  I guess this can be read both ways -- he knew he that if the mission failed, his presidency would go down the tubes, but he did it anyway.  That takes guts.  On the other hand, it could be read (as I first read it) as saying he knew that if the mission succeeded, his presidency would be saved.  And he was willing to risk the lives of the SEALS to do it.  Given how low his approval ratings were at the time, the latter explanation actually seems more plausible.

Conclusion:  Biden is clueless and should probably be locked in a closet until the election is over.