Sunday, October 25, 2009

Harry Reid: On the Ropes?

It's shaping up to be an interesting political season in Nevada.

In a bylined story in the Las Vegas Sun, Sun Washington
Bureau correspondent Lisa Mascaro believes that the
conventional wisdom on Senate Majority Leader Harry Reid's
election campaign may not hold up.

The "conventional wisdom" on Reid's chances runs something
like this:

- Reid will have enough of a war chest to almost guarantee
a victory;

- A cluttered Republican field of unknowns will beat each
other up in the June primary, leaving an exhausted novice
candidate facing a prepared and rested Reid in the general

- National Republican operatives' hopes of making this
a replay of the John Thune-Tom Daschle battle in 2004
(which cost Daschle his seat and the Majority leadership),
may not pan out this time;

- Recent demographic changes in Nevada have changed the
state from majority-Republican to majority Democratic,
with a 100,00+ Democratic edge. In 2008, the state went to
Obama by 13 percentage points, and Democratic State Senator
Dina Titus beat three-term Republican incumbent Jon Porter
in a conservative suburban Las Vegas district.

And there's a lot of logic behind this.

First of all, when it comes to fund raising, Harry Reid is
no slouch. The $8.7 million he raised in just the last quarter
would be the largest sum ever spent by a Senate candidate in
the state's history. And he intends to have $25 million on hand
by the general election. And, as predicted, the declared
Republican candidates are for the most part relative

But to this observer, that's where the conventional
wisdom ends.

According to both the Sun and Jennifer Duffy of the
Cook Political
Report, Reid is in for a tougher fight than
almost anyone imagines. His poll numbers are lower at this
point than in any of his previous contests. And the national
mood is starting to trend away from Democrats, as voters
perceive the Democratic Congress and White House as unable to
deliver on health care reform or economic recovery.

And there's more yet.

According to Duffy, Reid's war chest may not be the advantage it's
cracked up to be. To overcome his low polling numbers, Reid is
starting his commercial effort a full thirteen months early -
to "reintroduce himself" to Nevada voters. And an
incumbent who has to "reintroduce himself" to his constituents
isn't running from a position of strength - even though Reid
vows to "vaporize" anyRepublican in the general election.
Duffy estimates that a Republican with a $6-8 million war
chest may be competitive in Nevada's relatively inexpensive
media markets.

The other Reid "problem" is that The Nevada Republican Party
shows signs of coalescing around one of two relatively
attractive candidates - either Nevada Republican Party Chair
Sue Lowden (a former State Senate Majority Leader), or
Las Vegas businessman Danny Tarkanian, son of
well-known former UNLV basketball coach Jerry

In early polling, Reid trails Lowden by ten points and
Tarkanian by six among likely voters.

These are not numbers a nationally prominent
incumbent wants to hear.

And if these numbers hold up, A Nevada replay of the
Thune-Daschle battle might become more likely. John
Thune was a former Congressman who had narrowly lost
a Senate bid two years previously, and who won against
a nationally prominent incumbent widely perceived as
being "out of touch" with the home folks. And to many
Nevadans, "out of touch" accurately describes Harry

Nevada has severe problems - an unemployment rate
second only to Michigan's, a huge home foreclosure
problem, and an undiversified economy excessively
dependent on the troubled gaming and residential
construction industries. And Harry Reid, rightly or wrongly,
is perceived as having done almost nothing about any of this.
Even his one noticeable accomplishment, the blocking of
the Yucca Mountain nuclear waste dump, is being re-considered
by voters in a state desperate for stable, high-wage, high-skill

But the biggest problem Reid has, in my opinion, is the steady
erosion of liberal and progressive support. On health care,
Reid has never been enthusiastic about the Public Option.
He has been very quiet about banking, financial, or foreclosure
reform. In a unionized state, he has been opposed to card check.
And with tens of thousands of unemployed Nevadans scheduled
to exhaust their unemployment benefits by the end of the year,
he has been unable to get a benefit extension through the Senate
with a 60-vote majority.

Small wonder that many progressives feel that their best bet
might be to sit this one out and take their chances against
scandal-scarred John Ensign, Reid's Republican Senate
colleague, in 2012.

And large-scale liberal and progressive defection would
make Reid's task enormously difficult and the Republicans'
much easier. Nevada liberals and Democrats are largely
clustered in Las Vegas, among minorities and unionized
government and construction workers and casino employees.
The rest of the state is white, rural, and very conservative.
A plausible Republican strategy therefore might be to battle
Reid to a draw in Clark County (Las Vegas), and win the rest
of the state, which normally votes lopsidedly Republican.

If that happens, the former boxer gets off the ropes - and goes
down for the count.

And for progressives, that may not be entirely a bad thing. Good
as Harry Reid was in partisan opposition to former President
George W. Bush, he has been singularly ineffective in advancing
Obama's agenda with a filibuster-proof majority. And even if Reid
loses, the Democrats are not forecast to lose their majority.
And a more vigorously partisan Majority Leader might even
succeed in installing some badly-needed partisan backbone
where it's most needed - in the White House.

It will make for an interesting election year.

Saturday, October 24, 2009

Should We Legalize Insider Trading?

The recent tumult with the Galleon Group has gotten
everyone's attention on "insider trading". That's trading in
the markets on "material, non-public, inside information"
(information not available to the ordinary investor) to
obtain excess profits.

However, not everyone agrees that "insider trading" is
necessarily a bad thing. In an article in the Wall Street Journal,
Donald J. Boudreaux, an economics professor at
George Mason University, makes a compelling case that
prohibitions on insider trading actually prevent the timely
flow of information to markets.

How? Let's use a couple of examples. Let's say I am the CEO
and principal of Fans Of The Vampire Squid LLC, a hedge fund.
In the course of working my connections on the Street, I hear
from someone "in the know" that ABC Corporation is about to
post substantially greater earnings for the third quarter than
expected. According to my research, ABC has become a dog
and I'm not only thinking about selling my small position
but shorting the stock as well. But because of the inside tip,
I hold my position but don't add to it lest I be accused of
trading on "material, non-public inside information".
And, I avoid the sure loss that would have occurred had I
shorted the stock.

In other words, thanks to inside information, I make a
small profit and avoid a big loss by doing nothing.
And can I be prosecuted for this? Absolutely Not.

But, there's been a cost. For fear of prosecution,I've
been denied the opportunity to get in at the beginning
on a quick kill - which is what my clients pay me to do.
And by my making my "quick kill", relevant information
actually gets to the market sooner than it otherwise
would - which, in a perfect world, should be the object
of reasonable securities regulation.

But we don't live in a perfect world. And in the markets
players that are large, well capitalized, and able to
procure private information and act on it more quickly than
others have an advantage . And big players - Goldman Sachs
for example - have spent millions of dollars to both facilitate
the discovery of "material non-public inside information"
and act on it more quickly than anyone else.

Maybe this is how "The Squid" can make fully 80%
of its third quarter revenue on proprietary trading
and have over 90% of its trades be profitable (GS actual
3Q numbers - hat tip to Zero Hedge).

But does all this mean that the average trader or investor
shouldn't participate? Not necessarily. The Squid (and
all the other big boys) can make millions from tiny moves
in stocks, options, or fixed-income instruments or
their derivatives. They receive "material non-public
information" about thousands of different issues
every day. That's what a Research Department is for.
And in many cases, the "inside information" only moves
a particular issue a few pennies. Doesn't matter - when
you are trading tens of millions of shares at at time,
that's still millions of dollars in profit at the end of the

Just understand that if you're the average trader
or investor,you can't duplicate this even if you have
the same information - on your micro scale of operation,
your transaction costs are likely greater than your profit.

But the biggest issue I have with "illegal trading on
insider information"? It's that for some reason, the
SEC and the Justice Department never go after
the Big Boys - it's always some small-time accountant,
broker, or small-time operator like Galleon who gets
pinched. That's not right. The rules should be the same
for the big guy as well as the small. And when the
regulators start using enforcement "discretion"
to ignore "insider trading" when it facilitates
"market making" or "providing liquidity to the
market", then the whole premise of regulation is
lost, along with the legitimacy of the regulators.

But are we likely to "de-regulate" the market
for corporate information? In today's political
climate, not likely. And will the "regulated"
still be able to control the market for "material,
non-public, inside information" for their own
advantage? Absolutely.

Even if we were to snap our fingers and declare
"insider trading" legal, nothing would change.

Remember, Wall Street is a Casino. And Goldman
Sachs, JP Morgan, Morgan Stanley and the others
are to The Street what MGM Grand, Harrah's ,
and Wynn's are to Las Vegas - they are THE HOUSE.

And the House always wins. So gamble -
I mean trade or invest - accordingly.

Sunday, October 18, 2009

The Strange Case of The Galleon Group

Last Friday, something happened on Wall Street you don't often see anymore.

A Hedge Fund operator actually got busted!

Yes, the Feds finally caught someone doing something wrong.
Raj Rajaratnam,the Principal and CEO of The Galleon Group,
a minor league hedge fund ($3.7 billion under management),
did the "perp walk", accused of insider trading.

He is alleged to have bought shares of Hilton Hotels Corp
(HLT), prior to its acquisition by The Blackstone Group
in a leveraged buyout in 2007, on an "insider" tip from
Moody's, the investment rating agency, making a
$ 4 million profit in two days.

Moody's was working with Blackstone in performing
due diligence on the buyout, which involved potential
rating changes on Hilton's outstanding debt. As such,
Moody's owed a fiduciary duty to Blackstone and Hilton
to keep its work secret.

But in reality, such things are never kept secret for very long.
And this one was leaked out to Galleon for a mere $10,000 - chump
change by today's standards.

But there's more to this story than meets the eye. The Squid
(Goldman Sachs), J.P. Morgan, Citigroup, UBS, and all of the
other operators of The Great Wall Street Casino all earn their
profits by taking advantage of "material, non-public inside
information". The Squid, for example, has spent tens of millions
of dollars on advanced computerized research and trading
systems designed to safely ferret out just this sort of information

So why, all of a sudden, is the SEC coming down so hard on a
minor player? After all, $3.7 billion is the typical "book" size
that a mid-level trader on The Squid's "prop desk" would be
running. Why Galleon? For several reasons.

First of all, Rajaratnam and his colleagues were outsiders.
They are all, with few exceptions, Sri Lankan citizens
and ethnic Tamils. Much of their capital is alleged to have come
from the worldwide Tamil diaspora - both Indian and Sri Lankan.
And early in 2000, Galleon Group came under State Department
suspicion of being a funding source for the Eelam Tigers -
the rebel group engaged in a protracted and bloody conflict
with the Sri Lankan government. That put them on the
SEC "watch list" - a list that folks like Bernie Madoff
were somehow never able to make.

Second, the way that they went about "obtaining" their inside
information was just bush league . Cell phones, secret
meetings, and envelopes stuffed with cash are outdated

That's so 1980's - Michael Milken and Ivan Boesky
and the like.

Instead, if you are going to trade on non-public
inside information today, you do things the way
The Squid does things.

First of all, you use your trading systems to scour
the debt and equity markets for companies that
might be going into "play". There are almost
always telltale electronic signs of this that you
can spot - but only if you've first made the multi-million
dollar investment in computerized research and analysis.

Lesser players like Galleon have to do it the
old-fashioned way- tips and bribes.

Second, your Research Department correlates
the raw trading information with the "rumors"
flowing in to the department every day. Since
all of this is computerized, you can generate
"actionable intelligence" in a matter of seconds.

Then - you execute. But not the way Galleon did it.
You never make a move in the public markets that
after the fact might prove to have been market-moving
in the light of subsequent events, which you might be
accused of having private knowledge of beforehand.

Instead, you split your order. You buy or sell in the public
markets only so much as to make the move look routine ;
an everyday client order. The rest goes "off books" - through
a "dark pool" on a private exchange, which won't show up on
the tape until way later. That way, there's no incriminating
paper trail.

Second, you don't leave money on the table if there's more to
be made. You make a corresponding move in the debt
markets, going long if you think the deal might reduce
the target company's leverage, or short if you think it
will increase, remembering always to hedge the other way
with the appropriate CDS's. Or, you just might keep it simple
and buy the corresponding CDS itself. Since that market is
completely private, so much the better.

And if you're The Squid, you can do this all electronically -
no muss, no fuss, and no incriminating humans anywhere
in the equation. And most likely, Galleon would have had
access to none of these wondrous money-making tools.

Finally, there's the political environment. The natives are
finally getting restless. The Regulatory Gods are getting
angry - and they are demanding that a propitiating
sacrifice be made. So, let's go looking for a scapegoat.

And a small hedge fund, manned by outsiders, who might
have in the past been linked to terrorists, is the perfect
candidate. And there's another lesson here. If you're
a little guy, especially if you're an unsavory little guy, it's
too dangerous to go it alone. You need protection.The
kind of protection that only The Squid offers its loyal

So, the next time you come across a juicy tidbit like
Hilton, go see the Godfather - the Lord of The Squid.
He'll put your deal together for you - nice and safe -
and your $4 million profit (or likely much more than that)
will be in your Squid account that very day.

And the "vig"? Minimal. More likely, Father Squid will
reward you for your loyalty by cutting you in on the
next juicy deal he uncovers. All you have to do is
be loyal and be ready to do him some future small
favor or service.

Because if The Squid helped you make $4 million,
he likely made $20 or $30 million on the same information.

And The Squid (and JP Morgan, and UBS, and Morgan Stanley)
do what Galleon got busted for every day.

To them, trading on inside information is routine,
everyday business.

It's not what you do, it's how you do it that counts.

Saturday, October 17, 2009

4th and Wrong: Rush Limbaugh and The Rams

Dittoheads everywhere have been thrown for a loss.

Backpedaling under unrelenting pressure, Dave Checketts,
the St. Louis Blues owner putting together a syndicate to buy
the troubled Rams franchise, finally punted - booting
Rush Limbaugh from the team's prospective ownership group.

Leading the charge up front was Roger Goodell, the
NFL Commissioner, who said he was "troubled" that
Checkett's syndicate included such a "divisive figure".
DeMaurice Smith, the head of the NFL Player's
Association, said that including Limbaugh in the
ownership group was a "slap in the face" to a union that is
70% African-American.

Smith went even further to say that players should
boycott St. Louis and refuse to play the Rams if Limbaugh
was permitted to remain in the ownership group.
And "piling on" were those two great pass rushers
and NFL supporters, The Revs. Jesse Jackson and
Al Sharpton, promising all sorts of problems for the NFL
if Limbaugh were to remain.

The end result for the Rams? Fourth and Wrong.

To be sure, Limbaugh has made comments over the years that
haven't helped his relationship with the NFL. He was booted
from a guest commentator's spot on ESPN after suggesting
that the Philadelphia Eagles were giving quarterback Donovan
McNabb the kid-glove treatment because they "needed a black
quarterback to look good". Hell, I can remember that at that time
the Eagles were desperate to make any quarterback "look good".

Rush's comments that a typical NFL game resembled a
gang fightbetween the Bloods and Crips without weapons
didn't help either. That one prompted Jim Irsay, the owner
of the Indianapolis Colts, to say that he could never vote for
an ownership syndicate that included Rush. And going back
over the years, Rush's many comments about blacks and
black culture have generally delighted conservatives
and infuriated liberals and progressives.

But is this sufficient reason to deny Rush the
opportunity to become an NFL owner? No.
For several reasons.

First of all, if we start denying people On Political
Grounds the opportunities to which they might
be entitled, we're setting a dangerous precedent.

That's Freedom for Me - but Not for Thee.

Even Keith Olbermann - a liberal famous for his
ad hominem attacks who also comments on NBC's
NFL broadcasts, took this line of reasoning, saying that
blackballing Rush from the NFL threatens
everyone's free speech rights. And Olbermann is right.
There are very few people in public life who haven't
said something at some time that gave offense to
someone else. Should we ban all public figures from
professional sports ownership because (horrors)
back in the day, they might have said something offensive?
I don't think so.

And I don't care if Rush Limbaugh is the second coming
of George Wallace or Theodore Bilbo on race relations.
If his money entitles him to own a part of a professional
sports team, he should be allowed to do so. Case closed.

Second, it's not as if the NFL couldn't use a little more
controversy. From the fans' perspective, one of the
great parts of the NFL experience is watching or listening
to a bonehead NFL owner saying something mean, stupid,
downright nasty or just plain wrong. That's enough to provide
sports-talk radio hosts such as Jim Rome an unending source
of great material. I love it when Romey picks apart Al Davis
or Jerry Jones for saying something stupid or
inappropriate. Think of what he could do with Rush.

Too much "corporate bland" and too little controversy
is Bad For Ratings, folks. Like it or not, controversy and
conflict attract listeners and viewers.

And Having Rush as an owner could be the best thing that
ever happened to the St. Louis Sheep - errr, I mean Rams.

Right now, the Sheep are on track to match the Detroit
Pussycats - I mean the Lions - in gridiron futility with
fifteen losses in a row. Season ticket holders are deserting
like French soldiers - and the Sheep play at home to less
than full capacity.

But Rush has the ability to change all that with a single stroke.
"Dittoheads" from all over the Midwest would buy season
tickets by the thousands. Players and coaches would be under
merciless pressure to perform, lest they be pilloried the next day
on the air. And a "boycott" ? Don't kid yourself. NFL players
and coaches are Millionaire Mercenaries. They go where the
MONEY is. And if anything, Rush is Money - one of the deepest
individual pockets in radio broadcasting today.

And the NFL's "corporate image" ? If I were Roger Goodell, I
would be afraid of Rush. If I were to fine or otherwise discipline
him for something he might say on the air, the last thing I want
is millions of "Dittoheads" tying up my switchboard, burying
me with e-mails, and burning up the talk-show lines.

That's a battle I'm never going to win. And that's why I don't want

But the greatest irony of all is that Rush is being denied the
opportunity to participate in one of the most successful
Socialist enterprises of all time.

As the Boston Globe points out, all TV revenue is shared equally
by all teams. So are a large portion of the gate receipts. The
total salary bill for each team is capped, with maximums and
minimums for each position. The draft each year is skewed
so that the teams with the poorest records get the first pick
of new talent. And the schedules are fixed so that teams with
the worst records get the easiest schedules the following year.

The NFL is all about "taking from the strong, for the benefit of
the weak". Karl Marx would have loved it.

And I really would like to know how Rush feels about that.

Saturday, October 10, 2009

"Great Expectations" - The Nobel Peace Prize and Barack Obama

Yesterday, Oslo surprised and amazed the world.

In one of the most stunning developments of the year, the
Norwegian Nobel Peace Prize Committee decided to award
the 2009 Nobel Peace Prize to President Barack Obama.

Both liberal and conservative reaction was mixed.
While liberals generally applauded the selection, they
were also puzzled in that many of the President's
Nobel-worthy initiatives - most notably, on peace and
climate change - have yet to bear any fruit.

Conservatives, on the other hand, had no such problem.
Rush Limbaugh and Glenn Beck immediately seized on
the award as Proof Positive of President Obama's lack of

To conservatives, Obama's not one of us - a red-blooded
American. He's one of them - a soft, idealistic,
European Socialist.

But to this writer, there is nothing truly unusual about
the award. In fact, there are many reasons for it.

First, and most importantly, Obama is the Un-Bush.
To the Europeans, George W. Bush represented everything they
most detested about America; provincial, small-minded, ignorant
of the larger world, who compensated for his ignorance with an
"armed and dangerous" arrogance towards both his friends and
his perceived enemies.

But Obama - now, there at last, is an American President
who gets it. One of us. A man comfortable with policy
details. A man who prefers the solutions of technocrats
to the imperfect messiness of mere politicians.

And more importantly, he understands the grand
gesture - the great speech. Without great words of
inspiration and imagination, even the most necessary
and pragmatic actions fall short.

In other words, from the European standpoint, The
Perfect Nobel Laureate.

So what if he hasn't yet achieved anything? Look at Al
Gore - the 2007 Nobel Laureate. He made lots of grand
speeches about Climate Change - even wrote a book about it.
It doesn't matter that his policy prescriptions haven't been
implemented anywhere yet - he said all the right things
to all the right people. Style -that's what matters . Substance?
that's better put off for another day. We don't want to think
about that. Not right now.

And this tendency to reward good intentions rather than
good results actually suits Obama rather well. In the actual
arena of getting things done, he has shown a distressing
tendency to both temporize and compromise rather than
engage in tooth-and-claw combat for his programs and
beliefs. But now, thanks to the Nobel Prize award, he'll have
to change that.

He'll actually have to produce.

And if he achieves just a fraction of what he has set out to do -
achieve global agreement on climate change, settle the Israeli-
Palestinian dispute, and start on ridding the world of nuclear
weapons - he'll be worthy of the award.

And if he were to make a more lasting contribution - to
enact universal health care here at home and bring to
heel once and for all the global financial elites who
threaten the well-being and prosperity of all peoples, then
he'll truly deserve this award - and every other a grateful
world can bring him.

Truly, "Great Expectations".

Sunday, October 4, 2009

Review: Michael Moore's "Capitalism - A Love Story"

I'll begin by admitting I'm a fairly big Michael Moore fan.

His trademark baseball cap, faded jacket and blue jeans, and
rumpled Everyman persona make him unique among
Hollywood producers.

Ever since I first saw Roger and Me twenty years ago, I've enjoyed
watching Moore's use of of kitsch and video clips, street theater
interviews to create trenchant social commentary.

Roger and Me accurately predicted the demise of General Motors
through arrogance, neglect, and the relentless pursuit of
Soviet-level build quality.

Bowling for Columbine portrayed the "weaponization" of
disagreements and disputes . Fahrenheit 9/11 showed how
misinformation, arrogance and ignorance get a country
into unplanned and unnecessary wars.

And if you saw Sicko and didn't come away convinced
about the need for Universal Health Care, you haven't
been paying attention.

So, in that spirit, I took myself yesterday to the local Movieplex,
got my Supersize Coke and buttered popcorn, and settled in
to be both entertained and ideologically motivated.

Was I? Yes and No. Yes - I was entertained. But no, I wasn't
convinced any more than I was before that certain aspects
of Capitalism have gotten out of hand.

The film opens with security-camera footage of actual bank
robberies (set to a hip-hop version of Louie Louie) , and then
cuts to a scene of twelve Sheriff's deputies in rural North
Carolina, breaking down a door to serve a huddled and
frightened rural family with an eviction notice.

Hmm... I guess while some people rob banks, some banks
rob people. But the connection between the two isn't really
made clear.

Scenes from a grade-school educational film of ancient
Rome are there to illustrate the decadence of our Moneyed
Classes. Juxtaposed with clips of current pop culture, I
suppose these are the modern "bread and circuses" meant to
pacify the populace.

But the film picks up from there. Scenes of the industrial
devastation of Moore's hometown of Flint are spliced
together with some of Moore's childhood home movies.
Good old stolid, reliable Dad supporting the wife and kids
on his good job at the GM plant. Nicely kept little home.
Well-scrubbed, neatly dressed kids attending Catholic
school. Completely familiar to anyone who grew up
in Middle America in the 50's or the 60's.

But then, things changed. The Powers That Be decided
that a contented, unexploited workforce was Bad For
The Bottom Line. And so dour but wise Jimmy Carter
was replaced with a "Corporate Spokesmodel" as
President - Ronald Reagan.

Here Moore gets his facts wrong. The open
subversion of the government by financial interests
didn't begin until the Clinton administration. And
Reagan sent the "financial innovators" of his era -
Michael Milken and Ivan Boesky - to prison.

But then there are moments when Moore gets it
spectacularly right. "Dead Peasants Insurance" -
(yes, that's what it's called by the industry) shows
modern capitalism at its creepy and atavistic worst,
insuring the lives of ordinary workers for huge sums
without their knowledge or consent. The practice
only ceased when workers started outliving the
actuarial tables - not when states started outlawing
the practice.

"Influence Peddling" depicts how Angelo Mozilo, the
CEO of America's largest subprime lender, Countrywide
Mortgage, bought influence and favors with low-interest
or no-interest loans to the powerful, including Sen. Chris Dodd
(D-Ct.), and Rep. Barney Frank (D-MA) .

The former loan officer in charge of the operation
detailed page after page of Senators, Congressmen,
Administration officials and lobbyists who were
"Friends of Angelo" and received his largesse.

And Angelo Mozilo himself? Think Vito Corleone
with a bad toupee, dental caps and a too-deep tan.

"Juvenile Justice" showed a corrupt Pennsylvania
juvenile judge sending youths brought to court for
offenses such as truancy, school misbehavior, and
traffic violations to a juvenile detention facility run
by private investors.

The judge received a kickback for every young inmate
committed - and was under pressure from the prison
company to commit more and more young people
to the facility. Eventually, the judge went too far -
imprisoning a young woman whose "offense" was
publishing an unflattering website about her high
school principal. Moore doesn't mention it, but
that case brought in the ACLU, and the judge,
the prison company officials, and two county
supervisors eventually wound up in federal prison.

A follow-up on one former inmate, a young man who
aspired to be a pilot, segues into a devastating segment
on airline compensation. Hero pilot Sully Sullenberger
testifies before Congress that because of low wages, both safety
and industry integrity are compromised. A commuter
airline first officer details getting food stamps and housing
assistance for his family. Another waited tables to make
ends meet.

And the cockpit crew involved in a fatal crash in
Buffalo, NY earned less than a first-year manager at
Burger King - combined.

That's not an accusation - that's an indictment that
should cost an airline the loss of its operating certificate.
And as I have family connections to the airline industry,
I know that if Moore said anything, he understated the

But there are uplifting moments in the movie as well.
A foreclosure-impacted Miami neighborhood faces down
the "repo man" - with the aid of the police. The sheriff of
Wayne County (Detroit) goes public announcing he will
serve no more foreclosures until he is satisfied that those to
be evicted have been availed every legal right possible.
And the gallant workers of Republic Window and Door
in Chicago barricaded themselves inside the plant rather than
forfeit their back pay when Bank of America shut the company
down on no notice.

Chicago rallied around the Republic workers as if they were
the Cubs. Neighbors and friends brought food and clothing.
Donations poured in. The Archbishop of Chicago came in and
celebrated Mass for the strikers. Even the Thinking Nationalist
- hard-bitten and cynical - had to blink back a tear at that one.

And for once, the workers won. Under pressure, Bank of
America caved - to the tune of $6,000 a head. And Moore
deftly followed that up with footage from a 1935 strike at a
Chevrolet plant in Detroit, where FDR sends in the Army -
to arrest the cops and strikebreakers hired by GM.

And the best moment in the film? Footage of FDR from 1944
proclaiming a "Second Bill of Rights" for the American worker.
The right to a decent job at a livable wage. The right to housing.
The right to organize. The right to Health Care and higher education.

It was intended to be a reward for those who did the
fighting and the dying from Normandy to Iwo Jima in
the Nation's most desperate struggle. And had he lived
a few more years, we might have had it.

At this moment, Michael Moore has us in the palms of
his hands - ready to go off and fight to replace a corrupt
and rotten system. But here he lets us down.

He doesn't prescribe what he would would replace "Capitalism"
with - only mumbling a few words about "democracy".

But "Democracy" isn't a system of economic organization - it's
a form of government. Like monarchy, oligarchy, or autocracy.

And what we have today, if Moore is right, isn't Capitalism.
Capitalism concedes that while capital may be unevenly
distributed, everybody at least has some. And, if people
spend or invest their capital wisely in a system of free
markets, all of society benefits.

But when 1% of the population owns 99% of the capital,
and 99% of the population must grovel to that 1% for
its daily existence, that's neither capitalism nor

That's Feudalism.

And the last time I looked, I didn't see anything
resembling an American titled nobility.

Except perhaps the Lords and Ladies of Wall Street.
Or the Congress. Or the clueless, bailed-out occupants
of corporate corner offices who make up the
"Plutonomy" (in Citibank's artless phrase), that
controls our economic destiny.

Now, I'm not a doctrinaire socialist. But neither am I
an apologist for a shameless institutional kleptocracy
that has looted the people, brazenly bought off the
government, and brought the country to the brink
of ruin.

So now, Thinking Nationalist readers, it's up to you.
Flawed though it may be, this is an important film
portraying a deciding moment in our history.


Better yet, break out a few bucks and take your
neighbors, family and friends. And then go home and
discuss it, over a traditional American potluck dinner.

And see what you can do to turn things around.

Before we become the next Argentina, Mexico, or
the Phillipines.

Friday, October 2, 2009

The People's Republic of China: Sixty Years of Progress and Achievement

On October 1, 1949, Mao Zedong stood in Beijing's Tienanmen
Square and declared:

" After centuries of foreign domination and humiliation,
the Chinese people have stood up."

With those words, the People's Republic of China was

Sixty years later, the People's Republic is not just still standing,
but has risen to heights undreamed of by even the most rabid of
Mao's followers.

And for the Chinese people, it was a day of justly-earned celebration.

In a spectacle never before seen in China, 100,000 troops
marched through Tienanmen Square, publicly displaying
the nation's military might as never before. The military
displays were followed by thousands more coreographed
and costumed participants reminiscent of the Beijing Olympics
opening ceremonies just a year ago. Naturally, the festivities
concluded in the evening with traditional Chinese fireworks.

And the entire event was broadcast live around the nation and
around the world by Chinese television. And congratulations
poured in from everywhere . Several nations issued
commemorative postage stamps. Chinese communities
around the world celebrated with flags, fireworks, and even
dragon dances. Even the Empire State Building was lit up
for the occasion in red and gold.

Truly a remarkable day for a remarkable people.

But no one knows better than the Chinese people what
struggles they had to overcome to get there.

After coming to power, the Chinese Communist Party
began to try to wrest China from its age-old poverty
and backwardness. The first effort, The Great Leap
Forward, resulted in famines that killed tens of millions.

The next convulsion, The Cultural Revolution, threatened
to tear the country apart. After the loss of almost a hundred
million lives, it ended only when the People's Liberation Army
threatened to put an end to Party rule.

But the leader of that would-be coup, Deng Xiaoping, is The Man
who Turned China Around.

Declining all official position (except the most powerful position,
Head of The Central Military Commission), he declared:

"I don't care if a cat is black or white. I don't care if a cat
is a Capitalist Cat or a Socialist Cat. What I want is a cat
that catches mice."

With that China took off - and it hasn't stopped since.

Opening its doors to foreign education and foreign
investment, today China is the world's factory and foundry.

Instead of sending its most promising students to Moscow
to study Marxism and Leninism, it started sending its brightest
students West - to study science, technology, engineering and

Carefully studying the economic history of the West, China
replaced utopian communism with state-directed mercantilist
capitalism - using currency controls,tariffs, taxes and subsidies
to vault itself past "free market" Western economies.

In the process, China has also become the world's largest
Creditor nation. And early in 2010, it will pass Japan as
the world's second largest economy. And, if present
trends continue, by 2020 China will attain the economic
position it has always coveted - Number One.

None of this, though, has come without a price. "Political
Freedom" as we in the West understand it, is unknown.
But, there are compensations and accomplishments
of which the Chinese are justly proud.

In two generations, over a half-billion people have been
lifted out of the abject poverty that they had known since
antiquity. That has never before happened in history anywhere.
Another three hundred million people - mostly in the cities -
now comprise a Chinese Middle Class, with owned homes,
modern appliances, TV and internet, working in the sorts of
jobs that didn't exist even twenty years ago. There are over a
million millionaires - and even in the worldwide downturn,
that number continues to grow.

Along the way, there have been missteps - but China has
used these as learning experiences. National Day celebrations
twenty years ago were marred by the "democracy"
demonstrations, which were quickly suppressed by tanks
and troops. But, instead of embarking on endless new rounds
of repression, China used this experience to begin a decade-long
anti-corruption drive against its often corrupt and inefficient
local officials.

The local bosses now know they have to deliver for their
people - or there will be consequences. And in a remarkable
development, the National Government now encourages
the local press to speak out against corruption and
incompetence when discovered.

You can't question the Party's right to rule - but you
can question how well they do it.

And this shows up in the opinions of the people.
Even with the recession, fully two-thirds of China's people
are optimistic about the future - higher than any
Western country. Western-educated Chinese youth now
see more opportunity at home than in the US or Europe.
And the Chinese diaspora supports The Motherland as
never before.

There may be problems in the future - but for right now,
"The East is Red"

Thursday, October 1, 2009

William Safire: 1929-2009

William Safire, 79, the Pulitzer Prize -winning Op-Ed columnist for
The New York Times, died Sunday in Rockville, MD of pancreatic cancer.

For more than three decades, Mr. Safire was the Dean of
the New York Times Op-Ed page, skewering both liberal and
conservative targets alike with his rapier wit and excruciatingly
sharp pen.

In addition to his political column, he also wrote a twice-monthly
column for the New York Times Magazine "On Language" , which
made grammar, syntax and spelling both understandable and

While he retired from active column-writing in 2005, his
"On Language" series continued until just last month, attracting
a worldwide following of writers whom Mr. Safire called his
" Lexicographic Irregulars".

But this latter-day Samuel Johnson combined his wit with
a solid dose of well-grounded principle and a journalist's
skepticism of the " Platitudinous Pronouncements of the

And in his columns, no self-satisfied political figure -
liberal or conservative - was safe.

Born William Safir in Brooklyn, (the "e" was added later to
guide pronunciation), he attended Syracuse University for
two years but dropped out to work as a publicist and writer for
Tex McRary, the dean of New York publicists in the 1950's.
Drafted into the Army shortly thereafter, he worked for Armed
Forces radio and stayed in Europe briefly after discharge to work
for NBC Radio.

Returning to the United States, he worked again for McRary,
producing the "Tex and Jinx" show on NBC which featured McRary
and his wife, Jinx Falkenburg. Rising to become a Vice President
of McRary's public relations firm in 1958, he orchestrated the
"Typical American Home" exhibit constructed by a McRary client
at the 1959 American National Exhibition in Moscow.

Then-Vice President Richard Nixon opened the show in July 1959,
and Mr. Safire managed to corral both Nixon and Soviet Premier
Nikita Krushchev in the kitchen exhibit, provoking the famous
"kitchen debate" over the relative merits of communism and capitalism.

An AP photographer, blocked by the crowd, threw
Safire his camera, whereupon he snapped the famous
"kitchen debate" photograph used in the 1960 Presidential Campaign.

It also brought the young Bill Safire to Nixon's attention.

After working in the 1960 Nixon campaign, Mr. Safire opened
his own PR firm but continued to do political work, most notably
for Jacob Javits, Nelson Rockefeller and John Lindsay.
But after the 1964 Presidential campaign, he became
re-acquainted with Nixon, by then a New York lawyer who also
penned a weekly newspaper column.

Asked by Nixon to work with longtime aide Patrick Buchanan,
he began the speechwriting effort that would help bring Nixon
the 1968 Republican nomination and victory in the general
election. Moving over to the White House speechwriting shop
after the inauguration, he quickly became the "go-to" guy for
the quick riposte or snappy put-down for the Administration's
liberal press critics.

Assigned to sharpen Vice President Spiro Agnew's role
as "attack dog" for the 1970 mid-term elections, he wrote
Agnew's memorable "Nattering Nabobs of Negativism" speech,
which enraged "The Chattering Classes" (yet another Safirism).

Hired away after the 1972 elections by New York Times publisher
Arthur Sulzberger, the intent was to set "a hawk among the doves".

But, aware of the growing Watergate scandal, his new
colleagues were slow to accept him. They need not have feared.

Once the full extent of Nixon's involvement in the scandal
became known, Mr. Safire's conservative voice was among
those that persuaded the country that Nixon had to go.

Safire's Watergate experience was to stand him in good
stead three years later when, through a combination of
well-crafted opinion and solid investigative reporting, he
brought about the resignation of Bert Lance, Jimmy Carter's
ethically-challenged banker pal turned Budget Director.

This effort won Safire the 1978 Pulitzer Prize for commentary.

Though his columns were often painfully sharp, he was never
mean. He was as quick to skewer complacent conservatives as
he was self-righteous liberals. And he called it as he saw it.

During the 1993 battle over Hillarycare, he called Hillary
Clinton a "liar" in print when her public pronouncements on
health care contradicted leaked White House documents in
his possession.

This prompted President Clinton to say that if he weren't
President, his fist would find a resting place on the bridge of
Mr. Safire's nose.

To which Bill Safire replied, "well, at least he didn't split
an infinitive."

Sharp, witty, and always contemporary, he and others
such as Robert Novak and William Buckley were among
the last of the old-school principled conservative columnists,
bringing both elegance and erudition to an often- derided
portion of the opinion spectrum.

He will be missed.