Goldman Sachs - The Smartest "Goodfellas" In The Room (Part 1)

It was a cold, gray day in October of 2008 as four hundred Goldman Sachs
employees filed into the massive auditorium on the 30th floor of 85 Broad Street.

For the last two weeks, the news coming from both the trading floor and the markets could be described in just one word - BAD. The overall market was in freefall - in just a matter of days it had plummeted over a thousand points. And there was worse news yet to come.

Home foreclosures, which had been steadily creeping upwards,
had skyrocketed in a matter of weeks. Fannie Mae and Freddie Mac had
just been "nationalized" by the government. Lehman Brothers - Goldman's
main competitor, had just closed its doors in bankruptcy. Merrill Lynch - the
mainstay brokerage to Main Street - had just been forced into a
shotgun marriage with Bank of America , itself on shaky ground.
And Citicorp? That huge, unwieldy "financial supermarket",
under the uninspired leadership of Vikram Pandit (privately referred to
inside GS as "Rajoo the Hindoo"), was nearing a government takeover any day now.

And in the real economy, things were worse. Layoffs were widespread -
and had doubled since last December. General Motors and Chrysler were just
days away from involuntary bankruptcy. And all of this was taking place during
an unprecedented Presidential Election campaign.

For almost everyone on the Street, these were worrisome times.

But for these chosen Four Hundred, no worries. For, regardless of rank,
these chosen few were the key to Goldman Sach's prosperity.
They weren't just employees or officers - they were Goldman's Made Men.

The first to file into the auditorium were the newest "Made Guys" - the young
traders and analysts in equities, fixed income, options, commodities and
derivatives, upon whose efforts so much of Goldman's fortunes depended.
Unlike their "non-made" counterparts, a good number of these young men
did not hail from MBA programs at Harvard and Wharton,
but from proprietary,family-run graduate programs with names like Gambino,
Provenzano, and Genovese. Known as "soldiers", these young men came in
especially handy when a Goldman client or counterparty needed "persuading"
to see things the Goldman Sachs way.

The next to file into the room, in order of precedence, were the
"linebackers" or underbosses. These gentlemen patrolled the trading floors
and client desks to ensure that whatever Goldman wanted to push that day to its
institutional clients got pushed. This group also included the Senior Analysts
who were entrusted with gathering and analyzing the material, non-public
information upon which Goldman's trading for its proprietary accounts depended.

Finally, the next to last group filed in. These were the Caporegimes -
The Managing Directors and Vice Presidents who oversaw all of Goldman's
day-to-day operations. This group also included the key Vice Presidents of
Public and Investor Relations - charged with maintaining Goldman's
all-important public image in a difficult time.

Then, the lights dimmed. And to thunderous whistles and applause, the last group
filed in to take their places on the stage behind the speaker's rostrum.
These twenty-four men - the current Goldman Sachs Board, their key
outside advisers, former Goldman Vice Chairmen and CEO's - were a
Who's Who of American Finance.

They included a former Senator, now Governor of New Jersey. Two former
and the current Secretary of the Treasury, as well as the current and
former Chairmen of the NYSE. Three Deans of the most eminent Graduate
Business Schools in America. Two Nobel Prize-winning economists.
And the remainder were equally well known, appearing daily on the financial
news networks to utter calming words of reassurance to the world's spooked markets.

These were the Dons - the all-powerful rulers of the Goldman Empire who really mattered.

And now, they all stood and applauded as Lloyd C. Blankfein, The CEO - entered
the room.

Balding, tuxedo-clad, small of stature yet imposing in manner, the son of a Bronx postal worker looked and sounded every bit like a real-life Tony Soprano.

As he proceeded towards the podium, he stopped to offer an embrace here,
a handshake there. Some of the Dons even came forward to formally kiss his
outstretched hand. After ten minutes of fervent adulation, he took the podium,
waved his arms for seats and silence, and began speaking:

" Governor, Mr. Secretary, Mr. Chairman, Distinguished Colleagues,
Gentlemen:

" I am pleased to report to you today, that despite the turmoil in the
markets right now, Goldman Sachs at this moment is stronger than ever.
Despite what is shaping up to be a challenging year, we will still be
profitable at year's end. That means, fellas, that though the bonuses will
be smaller, there will be bonuses! (standing applause)

" Now, just a side word here to some of you younger fellas. One of the
downsides of being a "Made Guy" here at Goldman is that the bonus
you receive initially is 65% stock, 35% cash. For the non-made guys, it's the
other way around. You don't get to a majority cash bonus until you are in
our service for seven years. But, unlike the others, should we send you on
assignment to government or elsewhere, your bonus continues - plus, we
make up the difference in your salary; and when you leave your
outside assignment , you are welcomed back here as if you never left.
That's why we have such loyalty. And outside service for Nostra Famiglia
is the fast-track for advancement here. Ask your division Capo or Don if
you got questions. Capece?

" Now, I also realize that the smaller bonuses may put you in a slight cash bind
when it's time to make another payment on that weekend place in the Hamptons
or your Upper East Side condo. I've been hearing noises about people selling
their Goldman stock to make ends meet. I don't need to tell you that those are
noises I don't like hearing. If anything, you need to be buying Goldman stock
- right here, on the inside. But, I understand. I was a young guy once.

" So, for those of you who might be tempted to sell, Don Gary and Caporegime
Dominic, at my direction, have set up a program where you'll be able to borrow
up to 100% of either the market value or the vesting price of your Goldman
shares - whichever is higher - to bridge yourselves, at the 90-day treasury
rate plus 10bp. Can't do it interest-free, guys - there would be tax consequences
if we did that. So if you need the money, it's there. But don't sell the stock .
There are things we're doing, right now, so that six months from now
you'll be glad you didn't sell.

" Now, I want to go over some of the things that have made this a challenging
year for us. I don't think it was a surprise to anyone in this room that these
Mortgage CDO's became an unholy mess. I wouldn't wipe my butt with
this paper and neither would anyone else in this room. But, I don't think
anyone thought that the Structured Financial Products Division of AIG
would go bat-shit crazy and insure absolutely every stupid issue anyone
could come up with.

" Where our exposure came is, that, as you know, we were making a market
in this stuff - otherwise, all these instruments would have been totally illiquid
and the collapse would have come sooner. That's the problem with CDO's -
even first-year MBA's know they're illiquid - and CDO derivatives are
not tradeable at all unless someone with deep pockets will make a
private market in this crap. As you know, this is something we were asked to
do, over my objections, and we made a lot of money at it. But, when the shit
hit the fan over at AIG, we were stuck for Thirteen Big on our worthless
inventory. Now, this wouldn't have put us under, but it could have meant
we'd have become a lot smaller and less powerful awfully damn quick."

" But, that's why we have the Friends we do," The Capo Di Tutti Capi continued.

" That's why we have Don Enrico, our former CEO and esteemed Consigliere,
as Treasury Secretary. And I have to hand it to him. Between him and Old Ben
at the Fed, they came up with EIGHTY Big to keep AIG alive long enough for
us to get out - whole. The other stuck counterparties - Paribas, Credit Suisse -
they got bailed out too. Some of the Dons wanted us to cut a deal with these
damn Euros - like, take them out for fifty cents on the dollar and cash in for
full value. But, I said no. Too risky. If it ever got out that our hands were all
over this AIG bailout, we'd never live it down. It'd cause a diplomatic crisis.
Even our friends and appointees couldn't help us. But, we were able to guide
our European friends through the AIG mess for a small cut - about two and a half
big. Not bad for a few days work. "

" But I would be lying to you if I said that an ill wind doesn't blow some good.
The Dickie Fuld and Lehman Bros.situation for example. I saw this
coming in late 2007, when those fools started really loading up on all this
subprime mortgage nonsense. Bear Stearns too. That's when I said no more
for us, except for what we needed for the market-making operations.
And I wanted that wound down ASAP too. "

" But when Bear went down in March, the transition to JP Morgan went
fairly smooth. We didn't have to get involved. Lehman was another story,
though. When things first got shaky, The Bank of Korea took a look - but once
the Korean regulators saw the ABS portfolio, they said nothing doing.
Barclay's also was set to do a deal, but once the UK Regulators and The
Bank of England took a look, they started to go wobbly. At this point, as
you know, Lehman sent emissaries to us for help-but "Dickie" never showed up.
Can you believe that? Here's this schmuck - making a multiple of what anyone
here earns - including myself - and he won't show the respect, won't come to us
personally as a friend in an hour of need. Instead - he sends five
errand boys to ask for our help. My first instinct was to politely decline;
but, knowing the stakes involved for everyone and after talking with
Don Enrico, Don Lorenzo, Don Giovanni and the others, I decided to see
what we could do.

"First off, we had a little bit of an in with the Brits that Dickie Fuld did not have.
I've known Mervyn King, the Governor of the Bank of England, for
twenty-five years. He was a professor at LSE when I was a fixed-income guy
for Goldman in London. I even lectured in some his seminars. And,
he and Old Ben at the Fed were economics professors together at MIT before that.

" And, Lord Turner at the UK FSA is an old friend. He was at McKinsey &Co.
when I was in London and I helped him get hired later at Merrill Lynch Europe.
The bottom line is that because of those friendships, both the BOE and
FSA are full of Goldman guys - mostly young, British as well as American,
learning central banking and regulation, getting that all-important exposure
before they get Made. And they were all willing to help.

" I went over to London and took a few of our brightest fellas on the Lehman
situation with me. Two of our Dons from London and our European Capos of
M&A and Institutional met us at the airport. One of them whispered to me
that a hefty advisory fee from Lehman had landed in our City account
that morning. We had nothing signed from Lehman at this point,
but since we'd been paid, I decided to go ahead.

" We worked all night to come up with a plan and then we were off to
Threadneedle Street to meet Mervyn King, Lord Turner, and the Barclay Boys.
I won't bore you with the details, but they were blown away with what
we proposed. We were going to hive off all the garbage into an SPV,
and fund it with a mandatory assessment on all the other players in the
CDO market. We'd make the first contribution. I figured that if everyone
took a small haircut now, we'd all avoid getting scalped later.
Pretty much of a replay of the 1998 Long Term Capital Management fiasco.
Had it stopped there, we might have avoided all this.

" But, Lord Turner said he couldn't approve the deal unless we could
get Alistair Darling, The Chancellor of the Exchequer, and possibly the
PM himself to go along. They had been bit hard last year by the failure of
their largest mortgage lender, and had had to bail them out to the tune of
Twenty Big in Sterling (about $34B US). Plus, they had this mess with the
Icelandic internet banks to deal with. I could see what these guys wanted
- political cover.

" At this point, I was starting to give up hope. But - I figured we would have to
make a case to Ten and Eleven Downing Street sooner or later, so it might
as well be sooner.

" Prime Minister Brown met us personally at the door and escorted us in.
For the next two hours, he and Darling listened without saying a word as
we went through the whole dog-and-pony show again. At the end, Darling
stood up, thanked us all for our time, but said he couldn't justify going ahead
unless we could get the SPV built and bring the funds from our side of the
pond to the table first. The PM nodded at this. He told us that as a financier and
an economist, he understood what we were trying to do and he understood the
gravity of the situation. He also reminded everyone that time was of the essence.

" But he also said that the UK was getting bailout-weary and that they were as
impacted with bad CDO paper as we were. Unless we could completely "remove
the rubbish", as he put it, there was no point in going further. Barclays
would have to get a completely clean Lehman, or there'd be no deal at all.

" We knew now we'd have to move quickly. We left straight for the airport,
and on the way I called Ben, Don Enrico, and that kid at the NY Fed, Geithner.
I told them I wanted a sit-down on the Lehman situation first thing
the next morning, with all the heads of the banks in attendance.
Ben said he'd be there. Don Enrico too. Geithner would host and chair
the meeting. I also told Geithner that Dickie Fuld had better be there too
or there'd be hell to pay, after all the trouble I'd been to.

" Well, when we got to the sit-down, everyone was there - except Dickie, of
course. But he had sent over his CFO with their preliminary
third-quarter numbers. I took a quick look and Don Gary and I just about
had a heart attack. It wasn't just bad - it was worse than we could have
ever imagined. Had we known how bad, we'd have never left the States.
Even if everyone around the table had come up with the max, we'd be about
FORTY BIG short of where we needed to be. I let everyone in the room digest
the numbers, say a few words, and then I said: "It's hopeless. This is going
to have to be a matter for the Fed and the government to solve. Now fellas,
I'm going to use every bit of influence I have to get this thing done.
But I'm going to have to ask you to keep quiet - maybe even for a few days,
so I can try to get this stitched together. I don't think I have to remind you what's
at stake here - if this gets out, and the mortgage CDO market crashes, some of
you in the room here may no longer be with us. We all have exposure to this stuff,
but if it's handled right, we just might be able to ride it out. So, that's it, guys, I
want to thank you for coming - and remember, the Press is waiting downstairs -
your only comment is NO COMMENT. "

(TO BE CONTINUED)

Change We Can Believe In - Or Compromise We Can't?

Mr. President:

We've now had seven months to BELIEVE in "Change We Can Believe In".

Where is it?

Today, we learned that the "Public Option" - the centerpiece of your Health Care Reform - has been officially taken off the table. This follows the revelation
two weeks ago, confirmed by the White House, that you agreed NOT to have the
government negotiate with the pharmaceutical industry for "the lowest possible prices".

We have also learned that the non-profit "health care co-operatives"-
the fallback position in case there was no "public option", now
will not happen either. Neither will Medicare reform.

And Tort Reform - the one thing that might take an immediate 15%
right off the top of the national health care bill - wasn't even up for discussion.

How is this "Change We Can Believe In" ?

It looks to me like more of the same.

But now we've got questions - what else has been agreed to behind closed doors
that we won't find out about until later?

Are the Health Insurance Companies still going to be allowed to profit from
denying coverage for pre-existing conditions or dropping coverage of those
who file a claim? Is Big Pharma still going to be able to exert monopoly
pricing over drugs with a blanket veto over any negotiations for lower prices?

Judging by the reactions of the stock market, that seems likely.

In the past six weeks, CIGNA is up 40%. Wellpoint - up 23%. Aetna - up 21%.
Big Pharma? Pfizer - up 20%. Bristol-Myers/Squibb - up 15%. You get the idea.

The Market seems to believe the Fix is in - do you?

This isn't Change We Can Believe In - this is Compromise We Can't Believe Happened.

Now, if the GOP had a majority in the House and Senate, and you
had won a squeaker of an election, we could understand. You would be starting
from a position of weakness. Realistically, you could expect only those small,
incremental changes you could negotiate. And you would be asking, like
many other Presidents before you, for a Congress you could "work with".

But that's not what happened. We gave you a convincing popular and electoral
victory. You have solid majorities in both houses of Congress.
Health Care should have been a done deal. We could understand some
compromise. No Congress, regardless of party, will give a President
everything he wants.

But this isn't compromise. It's a total cave-in to the other side, which has
a vested interest in keeping our health care a sorry mess. And it didn't
have to happen.

There's lots you could have done.You could have made this a matter of party
discipline. You could have pointedly refused to work with the GOP or
conservatives and used the media to tie them to their corporate masters.
This would have covered your moderates and isolated the Blue Dogs.
Remember, most of those Mutts owe you more than you owe them.

And it would have paid off in other ways too. Big Health Insurance and
Big Pharma are poster children for corporate Bad Citizenship that
everyone recognizes. Almost everyone either has had a claim denied,
coverage denied, been put in a financial bind by illness,or
knows someone who has. That makes them unpopular, easy targets.

Get Health Care through, and you do more than just reform Health Care.
You send a Big Message to the other bad citizens - especially Wall Street -
that it's time to play ball and get with the program. Your program.

But fail on Health Care, and you're done. They'll know you can be had.
You'll be compromised and bi-partisaned to death on absolutely everything
else - banking reform, the environment, everything.

Remember, Mr. President; Compromise is a tactic - not a strategy.
Don't forget that. We voted for Change We Could Believe In ; not
compromise we can't understand.

And your beloved Progressives won't forget that - neither will the people.
If joblessness and foreclosures persist into 2010, a lot of good, loyal
Congressional Democrats are going to lose their seats. That won't help you.
And if things don't improve by 2012, you're going to be replaced -
maybe even by a woman.

And I'm not talking Hillary - I'm talking Sarah.

Barack Earl Hoover, Jr. (Part 2 of 2)

(Continued From Part 1)

For both Herbert Hoover and Barack Obama, the problems began early in their presidencies.

Seven months into office, Herbert Hoover witnessed the great Wall Street
Crash of October 1929. In September 2008, two months prior to Obama's
election, Wall Street repeated its 1929 performance, sending stocks to
ten -year lows while wiping out both major investment banks and
millions of hapless investors.

In both cases, the market collapse resulted in mounting bankruptcies,
foreclosures, and quickly skyrocketing unemployment. By June of 1930,
unemployment had doubled to 9.6 per cent. By May of 2009, using a
more expansive measure, unemployment was also 9.6 per cent - and rising.

At first, both Obama and Hoover were reluctant to directly intervene. In Hoover's time, market panics and crashes happened every seven to ten years, and usually corrected themselves in months after the excesses of speculation had been liquidated away. Obama had been forced to divert valuable
campaign time and resources into negotiations with the outgoing Bush
Administration over relief measures, as it became apparent that he would be the
likely winner of the 2008 election and would require some continuity in order to fully address the problems.. Thus, both men chose to start by using the "bully
pulpit" of their office - to try to stem the tide of events by moral suasion.

Hoover began by calling a series of meetings with the "key men" of his time -
bankers, industrialists, and academics - to explain his view of the problems and
what he needed them to do to help correct them. He wanted the banks to
resume lending, the industrialists to hold the line on layoffs, and the academics
to lend theoretical support to his efforts. To get things started, in 1930 Hoover
and the Congress created the Reconstruction Finance Corporation (the RFC);
an unprecedented combination stimulus and banker's relief measure.

(It would later be greatly expanded by the Roosevelt Administration under the New Deal.)

Obama also called in his "key men" from Congress and the business, financial and academic communities to get their support behind relief efforts. Using the Troubled Asset Relief Program (TARP), passed in the waning days of the Bush Administration as a start, Obama, like Hoover, persuaded a frightened Congress to pass an unprecedented RFC-like stimulus program of tax cuts and spending bills, in an effort to "re-light" the flamed-out economy.

In both cases, the "Key Men" listened politely - and went on as before.
The banks hoarded the cash proffered them under both the RFC and TARP
and quickly ceased lending. The financial community - the investment banks
and brokerage houses - used the funds to resume paying their executives and
traders huge bonuses, while the sector as a whole continued to show losses.

A few investment banks even used the relief funds and government
guarantees to speculate against their own customers - using inside information
and proprietary trading.

The response of the business, government, and academic sectors to the
efforts of both men was equally disappointing. Under both Hoover and
Obama, the business community took the assistance and continued to
slash output and employment. The Congress took Obama's stimulus package
and used it to fund thousands of pet "pork barrel" projects in their districts.
Consumers and the wealthy used tax cuts to increase saving and pay down debt
instead of spending. The States used their portion of the funds to
shore up sagging state budgets and preserve the jobs of existing state
employees instead of embarking on new programs. And the academic
community under both Hoover and Obama began sounding the alarm about
"Deficits"and the need to balance the budget.

Conservative economists began to call for slashed spending and increased
"liquidation"of troubled sectors of the economy. Liberal economists began
calling for immediate tax increases on "the wealthy" and for new sources of
government revenue, such as a Value-Added Tax and new carbon-fuels and
energy-consumption taxes.

The end result? Both men, despite their best efforts, managed to do little
more than slow the rate of an inevitable decline. In Hoover's case, matters
continued to drift gradually downward until he was replaced by Roosevelt in 1933.

Obama, seeing the economy shrink to new lows despite the vast amounts
appropriated and spent, began new initiatives on "the green shoots of the Green
Economy" (a sop to the environmental activists of his party), and a quixotic
attempt to reform Health Care.

In both instances, both of these bright, technocratic men fell into The
Technocrat's Trap: that doing what should be done would result in
what must be done. Hoover, ever the cautious and calculating engineer,
believed that his sheer logic and scientific precision would both win over
doubters and persuade opponents.

Of course, that did not happen - and the same high-minded, logical approach
was to lead another engineer President ,James Earl Carter Jr. - to disaster
fifty years later.

Obama. a lawyer and community activist by training, did not have the same
mathematically logical mindset as Hoover. But his years of experience as
a community organizer, attorney and politician led him to believe in the
value of consensus - that what must be done was to first, achieve consensus;
and then the result could be carried through to do what should be done.

Having carefully studied both the problems and the failures of past Presidents
to achieve consensus, Obama also brought a legislative majority and a solid
electoral victory to the table. Combining a desire to seek consensus and
an extraordinary grasp of detail with an even-handed, mature temperament,
he had every reason to believe he would succeed.

But, as they say, the devil is in the details. And in the rough-and-tumble
struggle between reality and idealism, reality usually wins.

Reality saw Obama's Stimulus package bear only the slightest resemblance to
what he had originally proposed. The final product featured non-stimulative tax
cuts, an unprecedented porkfest for politicians, and precious little in the way
of immediate, employment-creating projects and programs. Even worse,
Obama's natural caution has led to a glacial slowness in implementation.

Result? Hooverization.

But it is on Health Care that Obama's efforts most resemble the struggles
of the 39th President. In what can only be described as a Carteresque
mix of idealism, inexperience, and naivete, Obama handed off the responsibility
for this key Administration initiative to the Democratic leadership of the Congress.

Now you don't have to be a hardened cynic to understand that these Solons
are hardly "tribunes of the people". Rather, they are the bought and paid for
creatures of every special interest with business to transact or bring before the
federal government. And one of the wealthiest and most powerful of
those Special Interests is the Health Care industry.

And on this one they are taking no chances. Backed by a 300 million dollar war
chest, they have deployed a brigade of 3300 lobbyists to Capitol Hill. That's
roughly six cash-carrying lobbyists per Member of Congress.

And they aren't stopping there. The demonstrations against "Government
Health Care" have been largely paid for and orchestrated by those same
interests - often by slick, well-paid young organizers in khakis and polo shirts
with the logos of Blue Cross, Pfizer,Cigna, Wellpoint, and United Health,
to name a few. And coverage of these incidents - especially on conservative
or business-oriented networks - has been paid for by these same folks.

Against this, Obama, until very recently, has declined to use the influence
of his office or the Executive Powers of the Presidency to shape the debate.
As a result, the opinion polls are now running 4 to 1 against Health Care Reform.

Mr. President, you've Carterized yourself.

Barack Hussein Obama, meet Barack Earl Hoover Jr.

Barack Earl Hoover, Jr. (Part 1 of 2)

Seven and a half months into the administration of Barack Hussein Obama, the world is gratified at the impression this highly intelligent and purposeful man has wrought.

Whether speaking at a Town Hall meeting or the meeting of the Group of Eight, one gets the feeling that here, at last, is a man with the gravitas and maturity befitting a President of the United States.

Combining the larger-than life presence and charisma of a Ronald Reagan with
the grasp of detail of the most dedicated academic policy wonk, you can almost
hear the sigh of relief in chancelleries and presidential palaces all around the world:

"There could not be a finer man for our times. He understands all the problems.
He has surrounded himself with the Best and Brightest. He understands
science and modern technology. He'll Get Things Done -
and get them done in the right way".

The problem? These words were spoken by Franklin D. Roosevelt in 1920 -
about Herbert Hoover.

Before we hail Obama as the second coming of Franklin Delano Roosevelt,
we would be wise to consider the striking similarities between Mr. Obama
and two other technocratic presidents: - Herbert Clark Hoover
and James Earl Carter Jr.

As Kevin Baker put it in Harper's Magazine , Obama has fallen into The
Technocrat's Trap: he has confused what should be done with what must be done.

Like Obama, Herbert Hoover was born into modest circumstances. Although
a diligent student, the deaths of his parents forced him to leave school at age
fourteen to be apprenticed to his uncle, a Realtor and merchant in Salem, Ore.

By age eighteen, Hoover was not only running the store but attending night school full time. Shortly thereafter, Hoover left his uncle to attend Stanford University, graduating three years later with degrees in both Mining Engineering and Geology.

The next fifteen years of Hoover's life reads like Indiana Jones meets King
Solomon's Mines. In an age when travel meant both danger and adventure, he
found plenty of both - traveling from Australia to Patagonia to Peru to Peking
in search of geologic riches - which he found more frequently than not.

His Peking trip found him in China during the Boxer rebellion - and he escaped
from the besieged Legation to help guide the Western Armies riding to the
relief. After the Boxer Rebellion, Hoover went next to Burma - where he
uncovered an ancient gold mine (along with more valuable iron ore and
manganese), from studying a centuries-old Chinese map and translations
of ancient legends - while besieged in the Peking Legation.
From there, he returned to Australia - where he set up and managed
iron mining operations at the locations he had previously explored and
perfected a means of extracting zinc from exhausted iron ore tailings.
This innovative method made him rich - and is still used today.

In short, if there was a fortune to be made from exploration and mining in
dangerous and war-torn places, this real-life Indiana Jones was in the thick of it.
Returning home, he was a huge draw on the lecture circuit - speaking to both
learned societies and throngs of the merely curious. By age 40, on the eve of
World War One, he was worth tens of millions of dollars and was eager to
begin a second career in public service.

World War One found him organizing relief to German-occupied
France and Belgium, despite the opposition of both the Allies and the Germans.
After America's entry into the war, he organized relief to war-stricken Europe
and was a leading member of the American Delegation to the Versailles
Conference. Lionized around the world, hailed as both a genius and a
humanitarian, both parties eagerly cultivated him for the 1920 Presidential
Elections. He briefly explored the idea - even entering the California primary
as a Republican - but served as Secretary of Commerce in both the Harding
and Coolidge Administrations, in order to put his theories of efficiency
and scientific management into practice.

Had his career stopped there, he would have still gone down in history
as a great man. But ,when Calvin Coolidge declined to run for another term,
Hoover, somewhat reluctantly, stepped forward for the 1928 nomination.
And here's where the similarities with Obama begin.

Like Hoover, Barack Obama did not descend from wealth or privilege.
Like Hoover, he lost his mother to illness while still a young man and was
largely raised by his maternal grandparents. Like Hoover, he traveled and lived
overseas in his early years. Like Hoover, he leveraged not wealth
and connections but talent and ability to an elite education - graduating
with honors from both Columbia and Harvard Law School, where he was
editor of the Law Review.

With this background, Barack Obama could have gone immediately from
Cambridge to Wall Street and made instant millions as an investment banker
or deal-making lawyer. But he didn't. Motivated more by a spirit of public
service than anything else, he returned to Chicago and began his career as a
community organizer. Realizing he could do more for people as a public official,
he ran first for Congress (losing), and then successfully for the State Senate.
From there, he made it to the U.S. Senate, and from there, he made his
historic run for the Presidency.

(Continued in Part 2)

On the Importance of English - A Tale of Two Countries (2nd of a series)

A recent story in the New York Times caught my eye.

In researching a future Thinking Nationalist piece on Asia and Competitiveness, one of the key factors I've noticed is that successful Asian competitors for world markets not only master science and math but also most importantly, English.

India, of course, is famous for having three hundred million plus fluent English speakers. That's why IT and back-office jobs are outsourced there. China, wanting to move up the value chain in manufacturing, is placing renewed emphasis on English. So are Taiwan and the Philippines.

South Korea is even recruiting Korean-ethnic US College graduates to come home to teach English - at higher salaries than they would receive for teaching English in America.

In Japan, The English portion of the Japanese University Entrance Examination
is so arduous and demanding most American students could not pass it.

The message? If you want to lead in the global economy - learn English.

Which is why I could not believe what I was reading. In a move of incredible
backwardness, Malaysia has decreed that, beginning in 2012,
science and math in Malaysian high schools must be taught in Bahasa Malay -
the predominant dialect of the two most populous provinces of Malaysia.

As a sop to its Chinese and Tamil ethnic minorities, Malaysia will
reverse policy and allow all subjects in separate Chinese and Tamil
public schools to be taught in Mandarin or Tamil.

English will, of course, remain on the curriculum; but as an optional
foreign language, and it won't be taught everywhere, so that additional
resources can be devoted to Malay-language instruction
(this according to the Straits Times).

In my opinion - wrong, wrong, wrong. And I'm not the only one saying so.
The Malaysian International Chamber of Commerce is aghast.
So are the universities. Most importantly, so are parents - with the very real
concern that their Malay-educated children won't be able to compete for jobs or
higher education at home or overseas.

But the Malaysian government is hanging firm on this - even though the global recession has hit Malaysia hard. The economy is down almost 20%,with exports - principally apparel, raw materials and low-level electronics - off almost 30%.

And what about public opinion? Last week, there were riots in Kuala Lumpur
over economic conditions. Ethnic tensions and religious conflicts are increasing.
But, the Malay language issue is, regrettably, a non-starter except among the business and professional classes.

To see how differently another nation with the same ethnic mix is handling the
issue, let's take a quick trip down the Malay peninsula and across the Straits of
Johore to that unique island city-state - Singapore.

Now I'll admit that I am an admirer of the Singaporean nation. They have many
things going for them. Singapore is 21st-century modern. It's so clean it's as
if you picked up Switzerland and put it in the middle of Southeast Asia.
It has a thriving middle class and a larger wealthy class than you would
expect in a nation of four and a half million.

The schools and universities are outstanding - so good, in fact, that many
foreign expatriates elsewhere in Asia send their kids to school there.
And the government is a world leader in measures of performance such as
transparency, honesty and accountability. Public corruption is rare -
and harshly punished when detected.

To be sure, the legal system is draconian even by Asian standards.
Even small transgressions can mean jail time and public flogging.
But the judiciary is independent and professional, and adverse decisions
can be appealed all the way to the Privy Council and Law Lords - in England.

Why? Because according to Singapore's leaders, English Law and the
English Language were the keys to prosperity. Of the four official languages
(English, Malay, Mandarin and Tamil), English is the mandatory
language of instruction. A second language is also mandatory
(unsurprisingly, Mandarin is the most popular choice), and fluency
in the other two is strongly encouraged.

In Singapore, all public business is conducted in English. The Language of
Parliament and the Judiciary - English. Business - English, with Mandarin
a strong second.

And the economy? World-class. Singapore is the headquarters for almost
all multinational corporations operating in Southeast Asia. Singapore Airlines
is a global player in international business travel. Its economy is diverse and
high value-added, with Technology, Financial Services, Pharmaceuticals,
Biotechnology, and Travel and Tourism leading the way.

While Singapore was affected by the recession, its economy only
slipped by 6.5% through June, and began to rebound shortly thereafter.
By December, analysts expect only a modest 2% decline from 2008,
owing largely to lagging travel and tourism.

By all accounts, a marvelous performance. And it's largely due to the
influence of a language that isn't native to any of Singapore's ethnic groups.

That Language? English.

Speaking Truth to Stupid

To quote P.T. Barnum: "No one ever went broke underestimating the intelligence of the American People".

And, judging by the financial results of the Fox News Network, nothing could be more true.

While most media outlets (especially print media), are losing money, Fox News' results show increased viewership, advertising revenue, and, spectacularly, a profit.

According to the Wall Street Journal, the network of Farfetched Outrageous Xenophobia had a 50% jump in profit and a 45% increase in viewership this quarter - indeed, it's the only thing making money right now for Rupert Murdoch - that even-handed, patrician arbiter of news and information.

Glenn Beck, Ann Coulter , Sean Hannity, and Bill O' Reilly, you can all be proud of adding so constructively to the national debate, talking about "The Birth Certificate" and "Socialist Health Care". And CNN and Lou Dobbs - that goes for you too.

Lou, you're so thoughtful and temperate you're making Rush and Michael Savage look almost non-partisan. And I can remember when you were just an Economic Nationalist and before that, a corporate shill.

You liberals aren't exempt either - Keith Olbermann and Rachel Maddow, you are so objective on All Things Obama that, listening to you, you'd think the President's every utterance was the Sermon On The Mount.

Bill Maher put it best ... the reason we have a free press is so that Responsible People with a reasonable command of both the facts and their faculties can Speak Truth To Stupid.

Stupid? Yes, Mainstream American Public, I'm talking to you.

Seventy Per Cent of all Americans can name neither a Senator from their state
nor their Congressman. Half think the Bill of Rights was enacted by
George W. Bush after 9/11.

Before the Iraq War,70% of Americans thought that
Saddam Hussein helped Bin Laden create, train and finance Al-Qaeda and
personally helped plot 9/11. Now, Saddam probably would have if he could have,
but he didn't. And it doesn't stop there.

Thanks to Lou Dobbs and the "Birthers", a Third of Republicans don't think
Obama's even a citizen. A Third of Democrats think Bush had prior knowledge of 9/11.

But we know that's wrong - because, as Bill Maher said, any sentence with the words "Bush" and "Knowledge" in it has to be absurd.

And just look at the Health Care debate - on CNN, we saw a man in South
Carolina at a Town Hall Meeting tell the audience to "Keep the Government's
hands off my Medicare!"

Huh? That's like driving across country to protest Interstate Highways.
And why is it that everyone we see in these Town Halls complaining
about "socialist"health care is obese, white and rural with a Southern accent?
I'm sure these folks have great coverage wherever they work. Right. Uh-huh.
Sure.

The reality is, these are the folks the reforms are supposed to help. Tell me,
Liberals, just how does demonizing these people on TV as ignorant rubes help
get Health Care reform passed?

And Conservatives, what kind of fever-swamp nonsense is "The Birth Certificate"?

You got the wrong guy if you're looking for the Presidential Candidate
who wasn't born in the U.S.

Guess what - it's McCain - who was born in Panama. And that's a fact - either
look it up or just ask him. From a purely Geographic standpoint, he might be
the ineligible candidate. But you'd have a hard time convincing me that a
sitting Senator who is the son and grandson of US Admirals isn't
eligible to be President.

And if you expect me to believe that Obama isn't a US citizen or wasn't born in
Hawaii, you smoke funnier weed than I do. And I'm not talking tobacco or dope,
I'm talking dried cow manure.

Your problem is obvious - too many hits on the crap pipe.

And Lou Dobbs, you're the one who told the Republicans that if they just put
that in their pipe and smoked it, they would escape the fever swamp and emerge
as a credible, authoritative, political alternative.

Instead, you've led them from the swamp to the wilderness. Maybe permanently.

And none of this is good for the country. We have some minor problems
that need attention - bankrupt banks, unemployment, foreclosures, two wars
as well as health care, to name just a few.

And making one political party look irrelevant and ridiculous and giving the
other a free pass doesn't make getting things done easier - it actually gets in the way.

You see, in politics Conflict and Negotiation lead to Resolution and Agreement.
Two sides have to tango before there can be Consensus that everyone
can buy into and make work.

It's a basic engineering principle .... you have to have friction before there can be traction.

And that takes intelligence, maturity, and fact-finding. Media, that's where
you come in. Your job is to uncover the facts, which powerful interests will often
try to hide from you, and then use those facts to poke as many holes in the
fatuous and self-serving arguments of both sides as you can.

That's why we have a free press - not to speak truth to power, but to
Speak Truth to Stupid.

A stupid and ignorant citizenry means even more stupid and ignorant politicians.

That's why I can't depend on those in power to tell me the truth -
because most of the time, they wouldn't know what the truth was if it
came up and bit them.

They're not necessarily venal or corrupt - they just don't know any better.

Making sure that both public and politicians "know better" is the job of a Free Press.

In fact, it's your only job. Don't forget that.

Health Care - Final Thoughts

Just a few final thoughts on Health Care before we move on:

First, let's briefly recap what "Health Care Reform" should consist of:

1) A Public Health Insurance Option, made available either though an
employer or through individual purchase. This option should be both
competitively priced and backed with the full tax and regulatory
power of the state;

2) Medicare Reform, based around a transition to HMO-style Managed
Care Plans and a gradual reduction in the eligibility age to 50;

3) Negotiation with the Pharmaceutical Industry for pricing on a par
with Canada and the UK;

4) Removal of Medicaid from the states, making it a fully federal program;

5) Medical Malpractice reform , removing malpractice from the courts and
the tort bar and replacing it with a system similar to that of
Workmen's Compensation.

Are we likely to get any of this? No.

Will the "reforms" being considered by Congress reduce either costs or
the number of uninsured? No.

Instead are we likely to wind up with both higher costs and fewer insured? Yes.

Why?

Because of purchased political influence.

As I've said before, if you can't offer Washington money, Washington can't
offer you anything. And when it comes to our Senators and Congresspeople,
they never met a cash-carrying lobbyist they didn't like.

And it's not just cynicism that makes me say this.

As I'm writing this, I'm watching a fascinating interview on PBS by
Bill Moyers with a interesting gentleman named Wendell Potter.

Mr. Potter was formerly a senior executive at Cigna, a leading
Health Insurer, and assisted in directing their lobbying efforts
on Capitol Hill. Cigna, of course, is one of the leading co-conspirators
in the effort to derail effective health care reform.

Mr. Potter's story is fascinating listening .. that's why I'm linking to it
here.

It's a long interview ... about 40 minutes ... but if you are at all
concerned about the issue, it's well worth listening to.

Also a short essay from Bill Moyers: