Monday, September 29, 2008

Post No. 49: Finally, Someone Explains Something That We Can Understand

I was fortunate enough to receive a decent education at some decent educational institutions. I also took corporate, business, accounting, banking, finance, and various other management courses.

However, I must be honest. I do not understand even a quarter of what occurred over the past 20 – 30 years to lead to our current financial situation.

Although I am sure that most of us can point to some emotional, conceptual issues, be it outsourcing, illegal immigration, two foreign wars, decreased industrial output, and greed, I just really feel like I am in the minority in terms of understanding investment banks, hedge funds, selling short, bundling, derivatives, and such.

Just last week, I contacted two of my graduate school buddies, one with a specialty in banking, and the other in corporate securities, and I told them that I hoped that they were in the Senate Banking Committee sessions to keep them honest.

One of them, “The Bear” (no relation to the term to describe financial markets), forwarded the following article to us by John P. Hussman, Ph.D. of Hussman Funds, entitled You Can’t Rescue the Financial System If You Can’t Read a Balance Sheet, which was posted by Dr. Hussman earlier today. It provides food for thought.

September 29, 2008

You Can't Rescue the Financial System If You Can't Read a Balance Sheet
John P. Hussman, Ph.D.
All rights reserved and actively enforced.

This is a bad idea.

However the final legislation is written, the Troubled Assets Relief Program (TARP) being rushed through Congress will evidently be built around its single worst provision, which is that the Treasury will have authority to purchase distressed mortgage securities from U.S. financials.
As I noted last week in An Open Letter To Congress Regarding the Current Financial Crisis, the sequence of bankruptcies that we've observed among U.S. financials has been almost exactly in order of their gross leverage (the ratio of total assets to shareholder equity). The reason for that is:
1) as the assets of a financial company lose value, the losses reduce the asset side of the balance sheet, but also reduce shareholder equity on the liability side;

2) as the cushion of shareholder equity becomes thinner, customers begin to make withdrawals;

3) in order to satisfy customer withdrawals, the financial company is forced to liquidate assets at distressed prices, prompting a further reduction in shareholder equity;

4) go back to 1) and continue the vicious cycle until shareholder equity goes negative and the company becomes insolvent.

Let's return to the basic balance sheet of a typical financial company before the writedowns:
To read the remainder, click on:

Sunday, September 28, 2008

Post No. 48: A Missed Opportunity

© 2008, The Institute for Applied Common Sense

Candidate McCain has frequently noted that many of his colleagues headed to Washington to change Washington, and that Washington actually changed them. Unfortunately, the former naval fighter pilot may be the best example of that phenomenon.

The non-eventful first debate between the presidential candidates last Friday supports that notion.

There’s something “unique” about being an active participant in war. That unity of experience and emotion draws warriors together, no matter the generation. (And if you note, they rarely talk about it, until some documentary film maker shoves a microphone in their faces, or their remaining years are few in number.)

After a major earthquake in California in 1994, a WWII veteran father in North Carolina called his mid-40s son in an effort to ensure that he was not too rattled. Although he had never been in an earthquake, the father recounted his unsettling feeling when one of Hitler’s V bombs exploded next to him. That 87 year old veteran, despite a lifetime of voting the straight Democratic ticket, has hinted that he plans to vote for a fellow warrior, although of a different war.

In a recent article, we noted that any modern solder will tell you that in selecting a combat leader, they would not give a rat’s ___ whether he was white, black, Harvard or Academy educated, Democrat, Republican, old, young, eastern, northern, Christian, Muslim, male, female, pro-choice, pro-life, had “family values,” whatever that is, or ate caribou. (They would all want him to be a gun toter.)

They would tell you that they would want someone who could best manage to save their rear ends by their ability to manage the team and the dangers in front of them, right then and there.

They would also all tell you that the preceding 17 factors do not really bear on that elusive leadership quality. We must admit that there has to be something beyond all of that dissection.

On Friday night past, there was a one time, never to come again, opportunity for candidates McCain and Obama to walk across the stage...look each other in the eye...shake hands...and promise the American public that our economic engine would not self-destruct... regardless of who gets elected. With McCain having the background in triage and team building, and the benefit of experience, at a minimum, he should have suggested the maneuver.

They didn't do it.

Apparently, it is also considered political suicide to ask the American people to knowingly support the cost of current American foreign policy with the financial sacrifices necessary to support same.Or to admit that the $10 billion/month current cost of our Iraqi involvement, and our former bad planning, means there is no money for either candidate to fulfill any of their campaign promises.We’re now in a “war,” but not the type of war about which our current President often speaks. Question any Middle East expert who has studied Osama bid Laden’s game plan for the past 20 years, and they will tell you that despite the rhetoric about killing the Great Satan, the goal is not to kill our people...they want to convert them...

Twice they attacked the World Trade Center. Twice. If this is not about symbols and philosophy…. This is a war about values executed through a war on our economy, and there are probably lots of smiles in the caves these days.

By sucking us into a couple of wars in the Middle East, the cost of which our current administration is unwilling to acknowledge...we are right back to Viet Nam...and all of the nonsense that follows. That someone thought that we could somehow transport resources over thousands of miles to accomplish something that others could not in their own backyards should cause us to pause.

We suspect that the cost of our “enemy's” per person kill rate is running something less than $5,000/per funeral... and the cost of our kill rate is running something like $500,000/per... not including friendly funerals.

Maybe more.

A snarky guy might even suggest that our economic enemies are least on the only short term over riding measure we consider important.

When you think that you’re fighting charging water buffalos, and you’re really standing knee deep in a snake pit, things get a little distorted. do we fix this?

Radically change the paradigm. Back in June, we posted an article entitled, “How Radical Action Could be a Good Thing Right Now.” ( In that article, we suggested that each candidate name the other as his vice-presidential choice. Quite frankly, we’re not sure whether under the current political party rules, candidates Biden and Palin could be replaced by the names of McCain and Obama.

But who’s following rules these days any way? And these rules do not even have the force of law, in that they were not promulgated by legislative or administrative governmental bodies. Perhaps the two presidential candidates should take a lesson from the guys on Wall Street and do whatever they think is in their best interests.

Since we have faith in the basic, underlying motivations of these two mavericks, we are reasonably certain that they would do what was in the best interests of this nation. And that’s more than what the Wall Street guys did for us.

Once again, it’s the party handlers and consultants about whom we’re concerned.

© 2008, The Institute for Applied Common Sense

Post 47b: First Draft of Economic Rescue Package Released at 5 pm EDST

View the first draft. Still to be finalized.

Saturday, September 27, 2008

Post 47a: If You’re Willing to Momentarily Laugh about Our Current Financial Crisis

We, here at the Institute for Applied Common Sense, generally try to avoid cynicism, since our ultimate goal is to encourage the development of innovative solutions to serious societal issues. We always assume that positive changes can be achieved. At the same time, we recognize the importance of entertaining views across the spectrum to stimulate thought and keep us on our toes. We further appreciate the role of wit and humor.

It is in this spirit that we submit for your consideration the Con Man’s Blog of Jack Payne. The following is an excerpt from his September 26, 2008 post, entitled:

Legal Scam? – Con Artists’/Politicians’ Ace in the Hole: Create Controversy

Generating 2 Strongly Opposing Sides is Key to a Good Legal Scam Employed by Con Artists and Politicians Everywhere

“It’s said that the hand that turns the knob opens the door.

If you be the con artist / politician, you know that to succeed in selling a legal scam, several steps are essential – steps necessary to just getting to the door, before you can even hope to open it.

As it’s said: Never wrestle a pig; you’ll both get dirty, and the pig likes it. Take the easy way.

You must hatch a problem so that you can organize a group of people to step in with the “solution.” You must then employ the Us and Them technique so that your group of suckers can be manipulated, with strong emotion, to become the “void-filler” in this legal scam. Tell them your powers can only be used for good. At no time overlook the potency of collective stupidity….”

It only gets better. Check it out:


Friday, September 26, 2008

Post No. 47: Needed - Attitude Adjustment Following Meltdown

© 2008, The Institute for Applied Common Sense

Much has been made in recent days regarding a prospective leader’s ability to multi-task. And yet we must recognize that there are consequences.

Just yesterday, a colleague here at the Institute mentioned that there was plenty blame to go around in connection with this economic mess. He also suggested that the first step in addressing a problem is to take responsibility for having participated in its creation.

Consequently, we the citizens of this nation, must examine ourselves, since a nation is not comprised of political and business leaders alone.

Most available evidence suggests that members of the last two generations do not read anything but comic books. They purportedly depend almost entirely on friends, and the Internet, for their news. In the competition to be among Phil Night's "Cool Five," ( being first with the rumor counts more than being right with the implication.

And when you are doing six things at once, who has time to run the numbers, or check the sources? In the interest of fiscal responsibility, GM has canned more than half its North American work force in the last five years... replaced them with a workforce with virtually no experience in auto manufacturing… but willing to work for half as much. And while GM was busy canning workers, revisiting the expectations of retirees, cutting "supplier" costs, building new factories in the cheapest labor markets possible, and taking a fling in the sub prime real estate lending market, Toyota increased its US production by half to become the best selling brand in the US, and the best selling producer in the world.

In the mean time, Toyota's credit arm surpassed both Ford and GM's captive units to become the most profitable lender in the US.Toyota's currently underutilized employees are still working for Toyota... most receiving more training, and thus looking toward the future.

That may be partly due to government involvement in corporate conduct, as is the case in many countries, but it still reflects the nature of the competition, not quite as anxious to post quarterly profits and thus sacrifice the long term. The scientific method teaches us that experience is not expensive; it is priceless... that results you cannot duplicate cannot be attributed to the work you are doing... and that repeating the same actions and expecting different results is insane.We do not need to reproduce the ten year long recession Japan suffered after their housing bubble burst.

But if we are going to avoid it, we are also going to have to concentrate on what they did right...and wrong, and learn from their mistakes.

We as a nation need to observe how others do things, and take notes. To do that, some of us are going to have to spend a bit more time reading printed material other than comic books...and a bit less time on FaceBook, running down the latest rampant rumor.

A colleague, after teaching adults students at a local community college, called me up and said that he felt that someone had “cheated these people out of an education.” The cheaters obviously did not appreciate that cheating affects us all, and for the long term.

With the New Deal, more and more of our citizens learned to depend on government. In recent years, more and more workers learned not to depend on jobs, particularly in the corporate arena, and launched out on their own.

Having now determined that we can not trust our government and political leaders, perhaps it’s time for ordinary citizens to take charge of their destiny, and rely less on our purported “leaders.”

Maybe McCain had it right in picking someone who could connect with “regular citizens.” I can’t imagine any hard working citizen from that social strata doing to this nation what our corporate and political leaders have done.

© 2008, The Institute for Applied Common Sense

Post No. 46a: A Somewhat Different Analysis of What Led to Our Current Economic Situation

Article of Interest from

Economic Dis-Equilibrium: Can You Have Your House and Spend It Too?

by George Dyson

Thursday, September 25, 2008

Post No. 46: They Actually Faked Me Out - They Really Did

© 2008, The Institute for Applied Common Sense

There are significant problems associated with being an eternal optimist, and always hoping for the best. I’ve often been described as na├»ve and unsophisticated. I’ve generally responded that I’m usually aware of the dangers and the negative side of things, but that I do not like to occupy my time watching my back.

As a general proposition, I always assume that people will do the right thing at least 51% of the time, and that at least 51% of people are good.

There is another character trait which has been problematic on occasion, that being that I’ve never seen any real reason for conflict. In my view of the world, it’s just not frigging necessary. I mean, why spend your time that way?

For over a year now, I have been absolutely amazed at the vituperative and acrimonious nature of the debate about the various candidates, both during the primaries, and after their respective selections. I’ve watched both sides draw lines in the sand, denigrate one another, and accuse the other of the most heinous acts. That people think that this is acceptable is an issue for another day.

What has most fascinated me is the manner in which party loyalists have lined up to support their candidate’s or party’s position, to the point of being disingenuous. Intellectual honesty has largely been absent. On both sides.

I mean, come on, let’s face it. This disaster has been decades in the making. Anyone who suggests otherwise is just not being honest. It can not be traced to one event in 1999 when a Democratic president was in office, and it can not be traced to any one single event during the Bush administration. Both the Democrats and the Republicans have been complicit in running this country into the ground.

It’s been pretty obvious to common folk. It’s only the intellectuals, the upper middle class, and the talking heads who have managed to convince themselves otherwise, or that the other party was primarily responsible. It’s always been my understanding that the first step in addressing a problem is to take responsibility for having participated in its creation.

It’s just common sense to me.

And the other countries of the world watched this whole thing with amazement.

And while I understand the importance of not creating panic and thus avoiding the generation of emotionally charged negative economic momentum, to have so many in our society (and they’re all responsible) tell us only weeks or months ago that the American economy was strong, and for this meltdown to occur “virtually overnight,” left my head spinning.

Who are these people? Was this a movie that I just watched?

And so it was with some delight, and relief, that I watched the Senate Banking Committee hearing on Tuesday, as they grilled the Chairman of the Federal Reserve, and the Treasury Secretary.

I first detected a hint of bipartisan outrage. I thought I observed and heard Senators from both sides of the aisle ask some tough, and not unreasonable, questions. I noted the absence of the speeches typically made before the speakers pose their questions which always telegraph their positions.

At the conclusion of the hearing, I said to myself, “We might actually get something done here.”

Not being quite sure as to whether my perceptions were shared by others, I then watched the news coverage throughout Tuesday evening. Much to my delight, they generally had the same impression as did I. Apart from the banter about the media’s access to vice-presidential candidate Palin during her U.N. visit, it appeared as though some civility had been established.

I managed to miss the political news all during the morning and early afternoon on Wednesday. At roughly 3:30 pm on Wednesday, I saw candidate McCain participating in a news conference indicating that he would suspend his campaign to focus his efforts on the economic situation. He further indicated that he had spoken with the Obama campaign, and that he had suggested that first debate be postponed.

I actually said out loud, “Finally, now we’re talking,” and a huge smile came on my face. Not only had the system worked, but we had finally come together as a country.

I did question why Senator Obama, who has painted himself as able to cross party lines, did not initiate this seemingly collaborative effort. And then reality set in, and the usual partisanship revealed its ugly head.

The Obama campaign had purportedly initiated the contact at 8:30 am, and had suggested a joint statement. The McCain campaign had not gotten back to them until 2:30 pm, and wanted something beyond a statement, and shortly thereafter, the news conference was held.

There were accusations on both sides. “Obama thinks the campaign is more important than the financial crisis.” “McCain is afraid to debate Obama, and is unprepared.” “Obama refuses to respond to McCain’s statesmanlike gesture.” “McCain tried to upstage Obama.”

A joint statement was issued, which was not actually joint. The party loyalists, once again, joined in lock step support of their particular candidate. The noise of the talk show hosts, and their talking heads, reached a fever pitch.

And the band played on….

And I realized that I had been had.

“They” had actually faked me out.

I felt like a fool for having had faith that they could have dealt with this thing collaboratively.

Perhaps I shouldn’t take it so personally. It’s not the first time that a member of the American public has been faked out.

My concern is whether I’ll be able to whip up my enthusiasm again, and again, and again….

© 2008, The Institute for Applied Common Sense

Wednesday, September 24, 2008

Post No. 45a: Where is Adam Smith’s "Invisible Hand?"

Where is Adam Smith’s "Invisible Hand? "

1. Thus far, 53,000 babies have become sick, and 4 have died from this product. I imagine that if you are in a country of 1.4 billion, that’s small change. But do we here in America care? Check out the latest on the global milk scandal.

2. By the way, some have suggested that there is a common element which exists between the motives of those behind the Chinese global milk problem and those individuals who led our country into its current financial mess. It might be instructive for us to revisit the ideas of Adam Smith.; or

3. Finally, we previously examined the failure of our government to address, three years later, the basic living standards of some of the Louisiana residents ravaged by Katrina. Earlier today, the news reports showed long lines of cars containing Galveston, Galveston Island, and other South Texas residents heading back to their homes. Does our country have the political will and economic resources to return these folks back to the status they enjoyed prior to the storm? If so, will any Louisiana residents still be in limbo after the needs of Galveston residents are theoretically addressed?

Just stuff to think about today other than our current financial and economic complications…. You know, maybe we have created a false sense of expectations in this country. When you take people’s money through taxation, they develop expectations about what the government can and should do, and I can guarantee you that the expectations vary in amount and degree.

Tuesday, September 23, 2008

Post No. 45: CEO America by Guest Author "Mark Twain"

CEO America

© 2008, The Institute for Applied Common Sense

Shortly after the election of George W. Bush to the presidency, someone commented that for the first time in American history, we might see a president who would run the country like a corporate CEO.

Few of us appreciated, at the time, the prescience of that statement.

We are now at a tipping point.

We have two, very, very good guys... individuals who make their own party finance people squirm and sit up nights worrying about their own futures... running for president... and, ladies and gentlemen, the game has changed.

When Congress gets done, we, the American taxpayers, will be on the hook for about $1 trillion, to guarantee that the derivatives, sub prime mortgage bundles, and a host of other questionable financial vehicles, we were repeatedly told we were "not sophisticated enough to understand."

(Tell me if I am alone; however, I know very few regular, working class people, who would have tried to pull this B.S. off, at least not in good conscience.)

What this means is that neither candidate will get to do any spending on behalf of his financial backers.

There is not enough difference between these two guys, with respect to the leadership qualities which really matter, to overload a mosquito in flight.

We are forty something days away from an election that will decide the future of our country... and we are being inundated with paid for advertisements debating the meaning of putting lipstick on a pig.Talk about putting lipstick on a pig.

What is more interesting is how the talking heads and spokespeople who engage in this ridiculous banter generate more in annual income than the average American family.

The first question I want to hear answered in the upcoming debates is: "Where would you put your opponent in your cabinet?"

And the second is, "Who would you put in charge of the economy?"

In 1975, car sales fell 50% below 1974 levels.

Sure the Arabs had something to do with it...but the bigger problem was our own federal government's "Seat Belt Interlock Law."

A law that fixed no problem I know of... and I fear without some serious discussion of what has got us into this financial hole, we will see another such idiotic piece of legislation promoted to the public as the solution to the rape Congress is currently debating.

Of course, I could always be wrong... but I am part of the emergency medical staff the local politicians are bragging about... and as best I can tell, they have no intention of paying me for my services... but I’ve got a few creditors out there who want some serious bucks from me... and want them right now... for services rendered to me and my family which were far more pressing and necessary than padding the wallets of some greedy business types.

Go figure....

Yeah, you business types may consider me unsophisticated, but I’m mad at hell… and, for good reason.

© 2008, The Institute for Applied Common Sense

Post 44b: Anxious in America by Thomas Friedman

This is a reprint of an op-ed piece by Thomas Friedman originally published on June 29, 2008

Copyright 2008, The New York Times

June 29, 2008

Op-Ed Columnist

Anxious in America


Just a few months ago, the consensus view was that Barack Obama would need to choose a hard-core national-security type as his vice presidential running mate to compensate for his lack of foreign policy experience and that John McCain would need a running mate who was young and sprightly to compensate for his age. Come August, though, I predict both men will be looking for a financial wizard as their running mates to help them steer America out of what could become a serious economic tailspin.

I do not believe nation-building in Iraq is going to be the issue come November — whether things get better there or worse. If they get better, we’ll ignore Iraq more; if they get worse, the next president will be under pressure to get out quicker. I think nation-building in America is going to be the issue.

It’s the state of America now that is the most gripping source of anxiety for Americans, not Al Qaeda or Iraq. Anyone who thinks they are going to win this election playing the Iraq or the terrorism card — one way or another — is, in my view, seriously deluded. Things have changed.

Up to now, the economic crisis we’ve been in has been largely a credit crisis in the capital markets, while consumer spending has kept reasonably steady, as have manufacturing and exports. But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down.

The straws in the wind are hard to ignore: If you visit any car dealership in America today you will see row after row of unsold S.U.V.’s. And if you own a gas guzzler already, good luck. On Thursday, The Palm Beach Post ran an article on your S.U.V. options: “Continue to spend upward of $100 for a fill-up. Sell or trade in the vehicle for a fraction of the original cost. Or hold out and park the truck in the driveway for occasional use in hopes the market will turn around.” Just be glad you don’t own a bus. Montgomery County, Md., where I live, just announced that more children were going to have to walk to school next year to save money on bus fuel.

On top of it all, our bank crisis is not over. Two weeks ago, Goldman Sachs analysts said that U.S. banks may need another $65 billion to cover more write-downs of bad mortgage-related instruments and potential new losses if consumer loans start to buckle. Since President Bush came to office, our national savings have gone from 6 percent of gross domestic product to 1 percent, and consumer debt has climbed from $8 trillion to $14 trillion.

My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working.

I continue to be appalled at the gap between what is clearly going to be the next great global industry — renewable energy and clean power — and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry.

“America and its political leaders, after two decades of failing to come together to solve big problems, seem to have lost faith in their ability to do so,” Wall Street Journal columnist Gerald Seib noted last week. “A political system that expects failure doesn’t try very hard to produce anything else.”

We used to try harder and do better. After Sputnik, we came together as a nation and responded with a technology, infrastructure and education surge, notes Robert Hormats, vice chairman of Goldman Sachs International. After the 1973 oil crisis, we came together and made dramatic improvements in energy efficiency. After Social Security became imperiled in the early 1980s, we came together and fixed it for that moment. “But today,” added Hormats, “the political system seems incapable of producing a critical mass to support any kind of serious long-term reform.”

If the old saying — that “as General Motors goes, so goes America” — is true, then folks, we’re in a lot of trouble. General Motors’s stock-market value now stands at just $6.47 billion, compared with Toyota’s $162.6 billion. On top of it, G.M. shares sank to a 34-year low last week.

That’s us. We’re at a 34-year low. And digging out of this hole is what the next election has to be about and is going to be about — even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters.

Copyright 2008, The New York Times

Post No. 44a: An Argument for Further Deliberation about Our Financial Situation

Copyright 2008 The New York Times Company

September 22, 2008

Op-Ed Columnist

Cash for Trash

Some skeptics are calling Henry Paulson’s $700 billion rescue plan for the U.S. financial system “cash for trash.” Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.

There’s justice in the gibes. Everyone agrees that something major must be done. But Mr. Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers’ money on behalf of a plan that, as far as I can see, doesn’t make sense.

Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis “contained,” and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing? He’s making it up as he goes along, just like the rest of us.

So let’s try to think this through for ourselves. I have a four-step view of the financial crisis:

1. The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.

2. These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.

3. Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.

4. Financial institutions have been trying to pay down their debt by selling assets, including those mortgage-backed securities, but this drives asset prices down and makes their financial position even worse. This vicious circle is what some call the “paradox of deleveraging.”

The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis?

Well, it might — might — break the vicious circle of deleveraging, step 4 in my capsule description. Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.

Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan?

The logic of the crisis seems to call for an intervention, not at step 4, but at step 2: the financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.

That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)

But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.

I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.

But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.

Copyright 2008 The New York Times Company

Monday, September 22, 2008

Post No. 44: At What Price Dumbing Down?

© The Institute for Applied Common Sense

One of the somewhat overlooked ironies of this campaign year is that a black man, who was born outside of this country and the product of a broken home, and who managed to beat the odds and become a reasonably well educated public servant after attending two Ivy League institutions, is currently being framed as an “elitist” in our society.

That this should occur should cause us all to pause.

Last spring I managed to get myself involved is scoring reading and writing competencies for some of the prospective graduates of one of our state institutions.

The state wide results just came in reflecting an, on average, 2% decrease in reading comprehension, and a 17% increase in writing communication.

Not surprisingly, the schools that scored worst are challenging the test.

Even less surprisingly, I will be spending the last half of October explaining my scoring.

My guess is that this anomaly can be explained by the Internet.

Computers have got kids writing, seriously, earlier than ever before in history... but to paraphrase Mr. Gossage (, they write about what interests them.

If we continue to dumb down and politically correct our text books, year after year, to revise the content to match whatever we consider to be the prevailing political winds... we shouldn't be surprised if our children choose to read that which seems to be of more immediate, personal, value.

And the more we chose to force our teachers to keep to the politically correct curriculum of the day, the less opportunity these mostly right headed people will have to inspire and challenge their students...absent which we are well and truly screwed.

Advertising is not a bad example of what has gone wrong with our culture.

There is nothing more expensive in the marketing business than a failed campaign. But agency holding companies have gotten into bed with client purchasing departments, often offering to provide their services for free, and earned back their 20 - 30% margins by eliminating the people who actually do the work... not to mention any semblance of a training program

The result is often a single ad that offends nobody world wide... mostly because it is so innocuous nobody world wide notices it...supported by intergalactic media buys.... The Olympics come to mind...that cost nothing to negotiate... can be promoted as being available at some fictional discount only because of the agency's "massive media clout," and get bought on the discount rather than their effectiveness.

All of which we do under the umbrella of branding...and we ought to be ashamed of ourselves.

This is not the way people buy stuff.

Jim Jordan [], a giant in the marketing field, once said. "It's not creative unless it sells."

Bill Bernbach (, also a giant, said, "It won't sell unless it's creative."

They were both right.

The problem is the people who now run their agencies got their jobs by buying things cheap... and that's what they talk to the client about when they sit down for their quarterly "state of the account dinners."

Unfortunately, expressing any of the above in front of current agency and client management can produce chronic underemployment.

More unfortunately, if somebody doesn't stand up pretty quick, we are on our way to becoming a supplier of natural resources to countries that have mastered the art of adding value.

In the immortal words of Jimmy Williams, "When you stop taking pride in what you make, you have hitched your star to a wagon."

Which I believe is Mr. Friedman's ( point as well, in his discussion of innovation, global competition, and the future position of the United States. (

At the end of the day, it really is all about creativity and innovation…. It’s what ultimately sells.

Always has, always will.

© The Institute for Applied Common Sense

Friday, September 19, 2008

Post No. 43: A Few Thoughts about the Current Political Climate

© The Institute for Applied Common Sense

I believe that there is a strong argument which can be made for the abolition of both the Democratic and Republican parties.

The thinking public, I would suspect, has very little respect for either of them, based on the behavior of the parties during the past two years. Leaders, on both sides of the aisle, who I once regarded as intellectually sound stalwarts for their respective parties, have stooped to employ whatever means advances their party’s short-term interests, and have relegated the nation’s most pressing and long term interests to a tertiary consideration.

The recent collapse of several significant financial institutions is evidence enough of that, not to mention our continued dependence on foreign oil.

“Group Think,” and “Group Speak” rule the day. What ever happened to intellectual honesty? Have we as a society eliminated the words “irrelevant,” “specious,” and “disingenuous” from our lexicon?

And there is another concept which appears to have been lost, that being, "taking responsibility for one's actions." One must be careful to avoid being caught in the volley of partisan accusations.

That we even engage in, or report on, conversations about “lipstick on a pig” during a period when we should be collaboratively applying triage principles to remedy significant problems, is, quite frankly, disillusionment at its worst.

Is the basic underlying assumption that we should play to the fears of the masses, because it “works?”

Is another basic underlying assumption that lying is justified if it "works?"

This is just sick. All of us, who have been fortunate enough to receive a decent education and have the luxury to engage in conversations about the major issues of the day (and not have to worry about child care, shitty schools, transportation, basic food, drive-by shootings, and the lack of health insurance), should say to the leaders of both parties that “enough is enough.”

I'll tell you this, if only the poor and disenfranchised were allowed to vote, they wouldn't vote in this type of con-man, or con-woman.

That we sit here and allow them to do this to us, and as a consequence, simultaneously convey certain messages and images to our children, is an abdication of our responsibilities as responsible citizens.

Where is the party of “common sense?”

Where is the party of “collaboration?”

Where is the party of “execution?”

Where is the party of "getting s___ done!?”

What is more troubling is that once the Democrat or Republican label is attached to an individual, then the lowest or wildest conduct, attributable to one member of that party, is so conveniently and swiftly attributed to others within the same.

This is insanity. The real change should be voting them all out.

Otherwise, I’m concerned that I just might not ultimately care. And that’s disturbing to me, on a personal level.

What's even more disturbing is that I believe that there is a 95% chance that they will get away with it unscathed.

© The Institute for Applied Common Sense

Tuesday, September 16, 2008

Survey No. 1: Can You Indentify a Republican vs. a Democrat

Identification of Republicans vs. Democrats

I spend a tremendous amount of watching C-Span.

As a result, I watch many U.S. Senate and House proceedings.

Quite often, I turn off the sound for some unrelated reason, and when I turn around and focus on the TV screen, I usually see the face of an elected official speaking. However, since I do not have the benefit of sound, I am unable to determine the subject about which the person is speaking.

Frequently, there is a banner below the person identifying their state, whether that individual is a Representative or Senator, and the party affiliation.

I've found myself playing a game with myself, trying to guess the party of the person without looking at the banner, and without listening to his or her position. Although I have not actually kept score, I believe that I can, within 10 seconds, tell a Democrat versus a Republican, simply by looking at them, based purely on physicality, with an accuracy of roughly 95%. Can you?

Do you think that there are some distinguishing physical characteristics?

Sunday, September 14, 2008

Post No. 42: If You Really Want to Do Some Thinking

Reprint of Article of Interest: What Makes People Vote Republican by Jonathan Haidt

Yesterday, a friend of many years sent me the article the link for which appears below. It is a fascinating piece of work. For my purposes, quite frankly, it is way too deep for me to process within an hour or two after reading it. Even a day or two would be insufficient time to be honest. There are segments of it which are intellectually and emotionally appealing. I will probably read it five to ten more times before trying to work through it.

I’ll tell you this at this point. As a general rule, I try to identify internal consistencies when reading someone’s analysis of an issue. There is one line which I think provides the essence of the argument: “Most democrats don’t understand that politics is more like a religion than it is like shopping.”

I saw George Will on Charlie Rose a couple of months ago. He essentially said that conservatism has the upper hand because it is “pure.” The problem with liberalism, according to Will, is that it comes off as elitist, in that it essentially says that “we can do a better job of thinking about your interests than you can.”

I’ve been processing Will’s comment for the past two months. This piece provides a little more meat around which I can place my arms.

This is work. This one will keep me up tonight. As the individual who sent it to me suggested, please read it in its entirety. It’s a journey that….

Saturday, September 13, 2008

Post 41g: A Little Humor to Soothe the Savage Beast

A couple of weeks again, we ventured into some dangerous territory when we posted our article “Why Men Cheat.” The responses of our readers were, let us say, “intense.” The “spirited” discourse even lead the administrators over at to cancel our discussion of the subject, citing that it had become too “inflammatory.” Fortunately, the publication of a recent scientific study on the subject, along with the appearance on Oprah of an author who has written more extensively about the subject, took some of the heat off of us.

Just to show that we here at the Institute of Applied Common Sense do not take ourselves too seriously, and that we are willing to consider the views of others on issues of importance to our readers, we contacted a number of authorities on the subject of human propagation and asked them for their views on the subject of our article.

“I believe that sex is one of the most beautiful, natural, wholesome things that money can buy.” – Tom Clancy

“You know ‘that look’ women get when they want sex? Me neither.” – Steve Martin

“Having sex is like playing bridge. If you don’t have a good partner, you’d better have a good hand.” – Woody Allen

“Bisexuality immediately doubles your chances for a date on Saturday night.” – Rodney Dangerfield

“Sex at age 90 is like trying to shoot pool with a rope.” – George Burns

“Women might be able to fake orgasms. But men can fake whole relationships.” – Sharon Stone

“My girlfriend always laughs during sex – no matter what’s she’s reading.” – Steve Jobs (Founder, Apple Computers)

“My Mother never saw the irony in calling me a son-of-a-bitch.” – Jack Nicholson

“Clinton lied. A man might forget where he parks or where he lives, but he never forgets oral sex, no matter how bad it is.” – Barbara Bush (Former First Lady)

“Ah yes, divorce, from the Latin word meaning to rip out a man’s genitals through his wallet.” – Robin Williams

“Women complain about premenstrual syndrome, but I think of it as the only time of the month that I can be myself.” – Roseanne Barr Arnold

“Women need a reason to have sex. Men just need a place.” – Billy Crystal

“According to a new survey, women say that feel more comfortable undressing in front of men than they do undressing in front of other women. They say that women are too judgmental, where, of course, men are just grateful.” – Robert De Niro

“Instead of getting married again, I’m going to find a woman I don’t like and just give her a house.” – Rod Stewart

FINALLY, on a serious note, we contacted the ultimate authority on this subject, Robin Williams, whose research, expressed in one sentence, summarizes what we spent eight pages trying to say:

“See, the problem is that God gives men a brain and a penis, and only enough blood to run one at a time.”

Friday, September 12, 2008

Post 41f: Since the Gas Prices Went Up So Dramatically Today

Earlier today, A friend indicated that when she awoke this morning, she looked out the window at a nearby gas station, and noted that the gas price for regular was $3.58. By the time she proceeded to work a couple of hours later, it was $3.89. By the time she returned home, it had risen to $4.09. I missed all of that. I did not notice the prices when I went to a luncheon meeting, but I sure noticed them when I pulled into a station on my way home: $4.19.

I actually thought that I had just awakened from a dream, since I just purchased gas yesterday, and did not see anything close to $4.19. In light of this dramatic increase, we thought it appropriate to revisit a couple of articles previously posted on energy issues:

The first deals with the various competing factors which come into play in the energy equation, and helps one understand the complexity of the issue.

The second deals with our past addiction to foreign oil, and the T. Boone Pickens plan for energy independence.

The third is an article about alternative energy, specifically about the "Saudi Arabia" of solar energy. You might be surprised.

Let's hear from you about what you think is really going on with respect to this energy issue.

Thursday, September 11, 2008

Post 41e: A Little Comic Relief in a Serious World

Taken from the September 11, 2008 Electronic Edition of the New York Times:

Quotation of the Day

"Every time I thought I was getting somewhere, they'd start speaking Spanish." Rep. Charles B. Rangel, on his difficulties in getting detailed financial statements from a resort in the Dominican Republic that rented his villa, which has resulted in a misconduct probe.

Wednesday, September 10, 2008

Post 41d: Coverage of Third Parties Convention on C-Span2

At the time of this post, this coverage is currently airing on C-Span2 / Campaign 2008

Post 41c: Article of Interest from

Adviser Soapbox

Professional Bailout No. Six

Ron Rowland, All Star Fund Trader 09.08.08, 2:49 PM ET

Austin, Texas -

Monday brought a sense of deja vu in the markets. How many financial sector bailouts can we have in one year? Quite a few, apparently. Six times in the last 13 months, the game has changed or appeared to change due to political intervention in the markets. Let's review:

August 2007: The Federal Reserve makes emergency cut in the discount rate

December 2007: Fed announces creation of special lending privileges for banks

January 2008: Another emergency 75 basis point rate cut

March 2008: Bear Stearns bailout

July 2008: First Fannie/Freddie rescue attempt

September 2008: Another Fannie/Freddie rescue attempt

The latest action effectively brings Fannie Mae and Freddie Mac under governmental control. Existing shareholders in these institutions are not, to our surprise, being totally wiped out--yet. There is still plenty of time for that to happen.

There is an even bigger loser in this transaction: anyone who owns U.S. Treasury bonds. Interest rates spiked higher, leaving the principal value of government debt sharply lower than it was last week. This is perfectly logical. Having just taken on the massive obligations of Fannie and Freddie, the Treasury's own credit rating had to take a hit. There are no free lunches.

In the big picture, the government's goal is clear: drive down mortgage rates and, more important, convince bankers to actually lend money to people who want to buy houses. Wholesale mortgage rates dropped dramatically Monday morning, so by that standard we have to say the bailout is doing what it is supposed to do. Whether the new liquidity will trickle down to individual borrowers is not yet clear.

Will the sixth bailout be the charm? The record of the last year is not very encouraging. Each action brought a market rally, but the rallies have been getting progressively weaker and shorter each time. As noted above, there are no free lunches. Risk cannot be eliminated, but it can be moved around. What is happening now is that the losses in the mortgage market are being transferred to what may be the only larger fixed-income sector: U.S. Treasury securities.

Since other kinds of bonds take their cue from the Treasury market, the bottom line is that interest rates on all kinds of debt will rise so that those who lost money in mortgage debt can be saved from loss. Is this a good thing? Maybe. But whatever it is, it is not capitalism. It is not what happens when markets are allowed to operate freely and without interference.

In a free market economy, people bear the cost of their own decisions, for better or worse. With that principle out the window, who will be next? This precedent is now in place: If an industry proves that its continued functioning is crucial to the economy and its failure will bring widespread pain, it is entitled to be saved from its otherwise inevitable demise by the collective action of society. The automobile industry is already making noise along these lines. Other applicants will no doubt follow.

For now, stocks are rallying around the globe. Monday morning's opening surge faded with remarkable alacrity, though, suggesting that at least a few investors remain skeptical. We count ourselves among them.

Post No. 41b: Television Worth Viewing

Charlie Rose on PBS: A conversation with Thomas Friedman

No matter what you may think of Thomas Friedman’s politics or positions, he raises some very significant points about innovation, global competition, and the future position of the United States, about which we should all be thinking. Friedman discusses his new book, Hot, Flat, and Crowded: Why We Need a Green Revolution - and How It Can Renew America ),+flat+and+crowded%22&ei=0VDHSOm9JpLkywS_q9DkAw.)

We can not simply continue to sit around, argue amongst ourselves, and think that terrorists are around every corner, while the world passes us by. This is a big picture discussion. We need to come up with solutions, and Friedman at least suggests some for our consideration.

Check your local listings. On the East Coast, it aired at 11:30 am on Tuesday, September 9, 2008.

Friday, September 5, 2008

Post No. 41a: This is a Very Special Weekend on C-Span2 BookTV

We, at the Institute for Applied Common Sense, frequently make reference to books and their authors in our articles. For those of you interested in the presidential campaigns, and getting to know the candidates better, this weekend is for you.

Once you click on to the link, check out the entire page, particularly those things under the section, "What's New." At least four books about Sens. McCain and Obama will be discussed, and at least two of them, "In Depth." No one should be legitimately able to say they do not know the candidates after listening to these discussions.

Did Sen. McCain show his true colors, as we suggested in Post No. 40, during his acceptance speech last night?

Wednesday, September 3, 2008

Post No. 41: Do I Have Something to Sell You!

© 2008, The Institute of Applied Common Sense

It is clear that modern day politicians and campaigns use advertising and public relations consultants in crafting their message to potential voters. We asked the Laughingman, an advertising professional with more than 30 years of experience, for his thoughts about the practice. More specifically, we inquired as to whether the utilization of such consultants served some long-term, positive, societal interests. He responded as follows.

Do I Have Something to Sell You!

I fear the learning may be going the other everyone's detriment.

When the vaunted Tuesday Team, authors of Ronald Reagan's famous "Morning in America" spot, was invited to meet with Ross Perot, they brought beautifully drawn storyboards of a series of spots revisiting the Morning in America theme.

Mr. Perot asked the not unreasonable question, "How much will this cost?"

After hearing the figure, Mr. Perot's response was, "Five Million Dollars? Whose Money Do You Think That You are Spending?"

Hence Mr. Perot's pencil pointer and cardboard chart campaign, which was so effective in communicating his position on economic issues, that the Clinton administration was forced to accumulate a government surplus for the next eight years, out of fear of Mr. Perot running again.

If Mr. Perot's campaign cost more than $50 large per spot to produce, I will eat my stop watch.

If he spent even 10% of what the Republicans and Democrats spent that year on media, I will eat my rabbit ears.

Unfortunately, when you take the message out of the hands of the creative group and hand it over to the pollsters and accountants, you are guaranteed to see negative advertising. They spend millions and millions of dollars dissecting the country by voter district. Since we all seem to want the same things, namely security, stability, honesty, and the wherewithal to pay our bills, most of this research is focused on perceived weaknesses in the competition's perceptions.

Is it any wonder what they find winds up in their ads?

The funny thing is that trying to define yourself by what you aren't seldom has any effect. At best you can throw so much money at the market that the consumer becomes confused, responds with "a pox on all your houses," and goes on doing what he was doing before you spent all that money.

This strategy is supposed to work to the advantage of the dominant brand in the category...or the front runner in a political race. If you look at those who were most strident in objecting to a ban on television advertising for cigarettes, it wasn't the tobacco was the networks and big ad agencies. Similarly, Miller and Budweiser would not mind at all seeing a ban on television beer promotion...assuming such a ban would roughly freeze market share at its current levels, and allow them to trouser the better than $1 billion annually they currently piss away on Super Bowl entertainment.

More importantly, it is very hard to find any relationship between all this public mud slinging and measurable results. In fact, I have yet to see a macro statistical analysis that demonstrates that advertising causes sales. Rather, the numbers indicate that sales cause advertising.The ad industry's promises, that they could turn this situation around, produced campaigns like the pet food sock puppet, with an advertising budget two and a half times current sales...and a well and justifiably burst investment bubble.

"Boys and Girls, you need to be very careful these days about how you write your marketing plan. Being cooler or more popular than your neighbors is not a marketing objective, or a company credit, which you can sell to a bank."

Interestingly, neither Obama nor McCain had front runner status, or any money to speak of, last year. They both stayed pretty much above the mud slinging pit...and look what happened. It may seem an odd time to change strategies, but the guys advising both campaigns now come from the old, politics of division and reward, school...and risk the loss of their very lucrative careers if a Ross Perot like, issues oriented, campaign carries the election.

In the mean time, brands like Mini and Red Bull should have proved to everyone's satisfaction that it is, in fact, the product, stupid. Carpet bombing media campaigns are still trumped by clever marketing executions while the same old ad strategies position the product (animal, mineral, or political) as more of the same...and therefore not really worthy of the time necessary to learn about it...let alone try it.

For what it is worth, the single most powerful word in the advertising man's quiver remains, "New," not "Free," but new.

The consumer is not an idiot, she is your accountant.

Mud slinging suggests that we have no idea how to grow the once great American pie, so we are promising to get you more than your fair share. This kind of thinking may work in the Lake Woebegone School District, where everybody ranks above average, but it is has no place in this economic environment. Furthermore, it is an unconscionable justification to send our boys and girls in uniform into harm’s way.

So it goes...

© 2008, The Institute of Applied Common Sense

Post No. 40: Should I Vote for McCain or Obama? Hmmm, Let Me Think about That a Nanosecond

© 2008, The Institute for Applied Common Sense

There are two things that immediately come to mind with respect to the current Presidential campaign.

The first is that I could handle either Mr. McCain or Mr. Obama being our next President. It’s all the handlers and hanger-ons about whom I am concerned.

The second is that Bristol Palin has emerged as the poster child for much that is screwed up about our political climate, and perhaps our expectations of our leaders.

The problems are much larger than this 17 year old and her family; however, the recent events should make us question some of the demands we place on our leaders and their families, and the length to which those interested in advancing their personal agendas will go. And that’s not to mention the media’s daily assembly of screamers, haters, and pitchmen to denigrate each other.

Is this collateral damage to our collective psyche really worth it? (We previously addressed this concern in early May in Post No. 3, “Some Lessons to be Learned by Our Kids in the Current Political Climate” (

Since the name Palin exemplifies the tragedy of the day, I’ll focus on Sen. McCain in this piece. Much has been made of his campaign’s purported failure to properly investigate the background of Sarah Palin and her family. Some have even suggested that Ms. Palin’s selection, which, out of necessity, includes her baggage, may have been consciously done for devious purposes.

Sure, it’s now very clear that the campaign dropped the ball with respect to the investigation. Quite frankly, I don’t think that John McCain is subject to political whims, and I do not read him as “spin oriented.” At some point one has to feel that there wouldn’t be any need to extensively investigate someone, about whom you feel instinctively good and who has three or four basic leadership qualities, were it not necessary to prepare for the scrutiny juggernaut consisting of dissecting our candidates to determine their positions on 38 different subjects.

I think that Sen. McCain is a pretty good guy. I also think that he has, reluctantly, chosen to appear like a Bush clone, pursuant to the advice of his handlers, and the demands of the Republican Party. I suspect that they have been pressuring him to appear to be more right wing than he really is, to please the religious right and ensure that they come out and vote in November.

I also suspect that Palin was HIS pick (the Washington establishment be damned), and a transitory expression of his “free will”, after the pro-life forces rejected his other choices. Mrs. McCain was a participant in the selection process, which probably made the men in the room squirm.

This guy has traditionally been a maverick and a pain in the ass to many Republicans. His new persona got him past the primary phase. The “real McCain” will return should he be elected.

Watch him speak. He’s so rehearsed and jerry rigged that he’s uncomfortable. You can see the distress in his face, and hear the tone of acquiescence in his voice. This is not the feisty, shoot-from-the-hip, John McCain we’ve known.

I am reasonably sure that he knew that the Palin girl was pregnant before the announcement. Knowing John McCain, he probably said, “Who gives a rat’s ____.”

It’s all the dissectors out there, who, by the way, have never had to run or manage anything of any size or importance in life, who care about all of this nit-picking over minutiae. And all in an effort to have him represent their squalid, selfish, hypocritical, and often contradictory interests.

This country needs a change in many respects. To those who opposed Sen. Obama’s campaign based on change by asking “change to what?” I respond “a change to anything that advances the long term interests of the majority of our citizens, and not just the fortunate, the privileged, the lucky, and the corporate.

Why not vote out ALL elected officials nationwide? This is supposed to be a country of, by, and for the people, not big money interests. And to think that these people, on both sides of the aisle, not only quietly fill their pockets while in office, but then become consultants in areas over which they previously had regulatory and oversight responsibilities.

I think that McCain is a solid citizen, genuinely interested in doing the best for his country, and not for his personal pocketbook or that of his buddies or supporters. I, like the majority of Americans based on long standing research, really don’t care what his qualifications are. He’ll be alright when he needs to be. It’s not like he’ll function alone, without a support system. Same with Obama. I could handle either one. Additionally, as George Will reminds us, there is the inertia that is Washington.

War, and time spent in a prisoner of war camp, make one view the world from a perspective not shared by the majority of voters. The vast majority of us have never had any real trying experience, beyond our personal issues, in life. There is something about having responsibility, either good or bad, for the lives and welfare of dozens of people under your command that transforms a person. That sense of responsibility increases exponentially as the number of people for whom you have charge increases arithmetically. That’s very different than just worrying about your immediate stuff.

The next time that we flip out over some personal crisis, stop and consider how our attitude would change if the precipitating event occurred just prior to a 7.5 earthquake, or a Category 5 hurricane, or a wild fire ravaging your neighborhood; I suspect that you might have a different sense of priorities.

John McCain has been to the edge of the earth, and barely avoided falling off. That’s good enough for me.

Everyday we should recite Bogart’s line to Bergman, in the movie Casablanca, each day when we wake up.

Its time for a new paradigm.

Either Obama or McCain will be just fine, but for entirely different reasons. We should be proud of the process this election year. That the two candidates are who they are speaks volumes about the zeitgeist.

As the Laughingman once said, “Why can’t we simply let McCain, be McCain, be McCain, and let Obama be Obama?

One last note on this pregnancy issue. I’m positive that none of my baby boomer friends had sex right out of high school during the 60s and 70s. Yeah. Some of you were just down right lucky that you, or your girlfriend, managed not to get pregnant during that period. So now it’s time to judge….

Leave this gal alone. She doesn’t deserve this, even if her Mother could have avoided it.

By the way, when it is revealed who the father of the child is, please restrain yourselves. It’s a can of worms which need not be opened right now.

© 2008, The Institute for Applied Common Sense

Tuesday, September 2, 2008

Post No. 39b: And So You Thought That America Only Had to Worry About China's Ability to Make Things

Article of Interest from the New York Times:
August 31, 2008

Op-Ed Columnist

Postcard From South China

Guangzhou, China

I had the pleasure the other day of visiting the delightfully named Zhuhai Guohua Wonderful Wind Power Exploitation Co. in Zhuhai, on the southern coast of China. It’s a good news/bad news story.
The good news was that the Chinese engineers showed me their control room, which has a giant glass window that looks out onto their 21 wind turbines that crown the peaks of a nearby mountain. “How nice,” I thought. “China’s really starting to go green.”
But as my eye drifted just to the left of that mountain, I saw Macau, with its rising skyline of casino skyscrapers. The Venetian Hotel in Macau alone has some 870 gaming tables and 3,400 slot machines. So, I did a quick calculation and figured that those 21 wind turbines together might power the Venetian’s army of one-armed bandits for a few hours of green gambling.
That dichotomy runs through a lot of what is going on here in Guangdong Province, where 30 years ago China began its economic opening. You’re starting to see the emergence of Chinese clean-tech companies — I also visited a solar panel start-up — and real environmental awareness among officials and students. But the momentum of this region’s growth, the sheer land-of-the-giants scale of the buildings, makes the renewable energy here literally a drop in the bucket.
As a result, there is a dawning awareness that if China is to break its own addiction to oil, it will take a much more fundamental shift from the growth model that powered its first 30 years.
That model was based on two linked ideas: 1) energy was inexhaustible, inexpensive and benign; and 2) China could count on raising its living standards by forever being the world’s low-cost manufacturing workshop, based on cheap energy.
In recent years, though, fossil-fuel energy has become expensive, exhaustible and toxic, and rising wages — to some extent because of rising environmental considerations and social security requirements — have meant that the workshops of southern China are no longer the low-cost producers in Asia. Vietnam and Western China now beckon.
The only way forward, say officials, is for China to gradually develop a cleaner, knowledge-based, service/finance economy. It has to move from “made in China” to “designed in China” to “imagined in China.”
In short, the economy here has to become greener and smarter. (Sound familiar?)
In 1992, China’s coastal economic powerhouses hit a similar wall when they found they could not grow further without the government loosening travel restrictions to attract workers from all over China. So, more personal freedom to move around China was unleashed then. Now, these same provinces need to allow more “mind movement” to get to the next level.
The problem for the ruling Communist Party is this: China can’t have a greener society without empowering citizens to become watchdogs and allowing them to sue local businesses and governments that pollute, and it can’t have a more knowledge-intensive innovation society without a freer flow of information and experimentation.
What surprised me is how much the party is thinking about all this. I actually came here at the invitation of Wang Yang, the Communist Party secretary, i.e. the boss of Guangdong Province. He had read one of my books on globalization in Chinese.
Wang is also a member of the Politburo in Beijing and is considered one of the most innovative thinkers in China’s leadership today. He has been given room to experiment and has begun advocating something he calls “mind liberation” — primarily an effort to change the culture of his bureaucracy and open it up to new ways of thinking. Right now he is focused on trying to shift dirty, low-wage manufacturing out of Guangzhou to the countryside, where jobs are still scarce.
And he is trying to attract clean industries and services to the city. His goal, he said, was a more “low-carbon economy.”
“Please put it in your column that Party Secretary Wang Yang welcomes [Western] clean energy technology companies to come to Guangdong Province and use it as a laboratory to develop their products,” he told me. “We will be most willing to participate in the innovation and provide the services they need.”
So my postcard from Guangzhou would read like this: “Dear Mom and Dad, this place is so much more interesting than it looks from abroad. I met wind and solar companies eager for Western investment and Chinese college students who were organizing a boycott of an Indonesian paper company for despoiling their forest. An ‘Institute of Civil Society’ has quietly opened at the local Sun Yat-sen University. The Communist Party is trying to break the old mold without breaking its hold. It’s quite a drama. Can’t wait to come back next summer and see how they’re doing ...”

Post 39a: Reposting of May 2008 Article in Light of Sarah and Bristol Palin Pregnancy Issue


© 2008, The Institute for Applied Common Sense

Being that I am 56 years of age, I am often asked whether I have ever been married and have a family. My response often surprises people, but it really is the truth. At some point between my late teens and early twenties, I had this vague notion of having a family with six or seven children. I formulated that notion due to the fact that both of my parents came from families of ten kids. I observed the close knit nature of their relationships, and all of the fun and craziness that took place during family reunions.

To further contribute to my desire to have a large family, I observed my high school girlfriend’s large family, and the manner in which the older kids worked to support and raise the younger ones. At an early age, I admired the values of team work and cooperation, and generally believed that the interests of the group or unit always outweighed the interests of the individual. To this day, that is a fundamental principle underlying many of my decisions.

However, at some point, I came to the realization that there were several prerequisites to having a family, no matter the size, including dating, finding the appropriate spouse, and then actually following through with marriage. At this point, folks usually laugh and inquire as to why these were stumbling blocks. Often times, they suggest that I was unwilling to “commit,” whatever that means. Quite frankly, it is far more complex than that, since I’ve been fully committed to lots of teams, units, causes, and issues in my life – just not to one individual.

In my early thirties, I still thought that it was theoretically possible that I might one day have a family, albeit with a smaller number of children. However, my whole approach to life began to fundamentally change once I began to travel to foreign countries. My whole sense of values, good and bad, right and wrong, rich and poor, began to take on more complexity. I became less rigid in my thinking, and perhaps far too curious about, and tolerant, of virtually everything. I often told my friends that my entire worldview appeared to change roughly every two years based on my new travels and experiences.

By my early forties, I was beginning to recognize the more “pragmatic “ aspects of having a family and all that it involves, particularly from a professional and career perspective. Additionally, more and more of my single friends were deserting the ranks. There was another development that ultimately led me to conclude that I would never be “qualified” to be a parent, and consequently I decided to avoid that venture. By this time, I had seen children at all levels of society in many countries, in virtually every imaginable condition, and I became confused as to the “proper” way to raise a child.

What plays over and over in my mind is the picture and sound of kids under the age of ten, working the streets of Rio de Janeiro in the wee hours of the morning, selling chewing gum, or offering to shine your shoes, for a few cruzados. In one sense, you were stunned by the youth of these kids, and the fact that their parents, assuming that they had parents, allowed them to be out, unescorted, at that hour of the night. On the other hand, they were always savvy, sharp, enterprising, witty, spunky, and far wiser than their ages would suggest.

I then began to question, which situation was better for the kid. It also reminded me of the dilemma which my Mother often posed. Having grown up on a farm in rural Alabama during the Depression, she saw lots of poor families living in shotgun houses. However, after visiting many of her family members and friends who lived in the tenements and projects of Chicago and Detroit, she often wondered which version of poverty was preferable.

At some point I began to intellectualize the issue. This was aided by the fact that some close friends of mine, who were not particularly religious, explained how they planned to provide religious or spiritual guidance for their newborn daughter, despite their uncertainties about the whole faith issue. Using their model, I initially thought that I could provide my kids with some conceptual construct, outline the various competing factors for them to take into consideration, and assist them through the thought and decision process, utilizing something vaguely akin to the Socratic Method used in some academic settings.

However, I very quickly disabused myself of that notion. Parents have to establish clear parameters and define limits. There has to be, at varying points in time, and to varying degrees, specific amounts of black and white, and a continuum of grey. But it’s all a crap shoot, involving doing your best (perhaps with a little assistance from child psychologists, books, spiritual advisors, and close family members and friends), and we all know that there is no specific “how to” manual.

In my last article, I raised some issues about the qualifications necessary for one to run for elected office, particularly focusing on the highest office in the land, the presidency. With Mother’s Day approaching, I knew that I was going to hear a familiar statement. Hillary Clinton did not disappoint me. After her daughter Chelsea introduced her on the Saturday before Mother’s Day, Senator Clinton mentioned that one of her supporters had noted that being a Mother is the most difficult job on earth. She followed by noting that since she had done such a good job performing her parental responsibilities, handling the second most difficult job in the world would be a breeze.

We all recognize this type of statement for what it really is; however, it got me a thinking. We’ve spent the last year and a half examining, testing, questioning, scrutinizing, and just about every other “…ing” in connection with these candidates - why don’t we conduct a similar examination of potential parents before they are “permitted” to have children? Should society have some criteria? Should the criteria take the form of requirements or recommendations? Should parents have to participate in parenting courses before they screw it up?

When you stop to think about it, at least with respect to the presidency, he or she has all sorts of advisors and staff members. Additionally, the President has two other branches of government to keep him or her in check. His or her actions are relatively transparent and constantly subject to public scrutiny. We even have an impeachment mechanism for dealing with serious breaches of trust and inappropriate conduct, not to mention the court of public opinion and the media.

But the influence or impact that a President has on the citizenry is filtered, moderated, vicarious, derivative, and relatively indirect at best. Additionally, we have an opportunity every four years to reconsider our choice. On the other hand, parents have a direct, significant, immediate impact on human lives right from the day one. Most of their conduct is in private. We can all recall points in time where various government regimes have tried to control the number of children born, or their sex, or impose other restrictions. However, from a practical perspective, the parents rule, and in the event that their rule is not in the best interests of the child, it takes quite a bit of time for society to recognize it, and then to deal with it. Furthermore, society generally only deals with the most egregious cases, not the subtle ones. So why should we subject presidential candidates to more intense scrutiny than we do for those seeking to be parents?

I’ve also thought about this parental responsibility thing from another perspective, that being the legal one. For years, I have questioned the appropriateness of allowing individuals to sue business employers for various forms of discrimination, or perceived discrimination, in the workplace. You mean to tell me that a sexist or racist person all of a sudden becomes that way once they become employed by the company? And you mean to tell me that business entities, the legal fictions that they are, have the capabilities and sophistication to prevent that type of conduct once their adult employees join the workforce? What about holding the parents responsible financially? And the churches? And the grade schools? No, you say. Too impractical. But what about fairness, or comparative fault or responsibility?

Quite frankly, we all know that it is a game and a fiction inartfully crafted to serve some societal purpose, that we just don’t seem capable of addressing, or have the political will to address, in some more direct and relevant manner. My concern is that, as a general rule, games and fictions don’t serve us well very long. Their functionality lasts for brief spurts, and then we have to pervert the construct to continue to make it work. Not only is this approach not particularly efficient or effective, it engenders disrespect, by our citizens, for the system.

Getting back to presidential candidates, perhaps we should have a presidential academy which all those individuals interested in becoming president should be required to attend. By establishing such an institution, we could ensure that all of our candidates are properly trained for the job, so that we can avoid engaging in this free-for-all during which they are dissected and demonized. Perhaps that will also make us have more respect for our elected officials.

But that’s only the second most difficult job in the universe. But what should we do about the most difficult? We’re intelligent beings. We ought to be able to come up with some approaches, and not just continue conducting business as usual. We constantly try to improve in virtually every area of technology and human endeavor. Can’t we improve on this election process, and the development of parents? Or do we just leave it up to the individual prospective candidates and parents to make the call themselves, and decide that they aren’t qualified before entering the arena? I honestly don’t know. Do you?

© 2008, The Institute for Applied Common Sense

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