Fear not for the future, weep not for the past.
Percy Bysshe Shelley
Note to Romney: Hoover and FDR Are NOBODY'S 'Heroes'
From Bozell's Media Research Center:
Bob Schieffer slammed Mitt Romney on Tuesday's CBS This Morning for his recent "I like to fire people" line, stating that he was "looking for every way he can try to lose and drive down his percentage of victory." He added, "I guess the only thing worse you could say...when people are out of work is that Herbert Hoover is my hero or something like that. It just boggles the mind."Now, just for context, Bozell is more interested with Schieffer's attack, but Romney should have used the occasion to explain his own statements better and distance himself from Hoover/FDR. Schieffer knows the unemployment rate went up to the mid-20's. But Romney didn't adequately explain WHY Hoover wasn't a hero--and it has to do with progressive government "solutions".
I realize that Fox News employs a great-granddaughter of the former President whose term, witnessing the 1929 Crash and the start of the Great Depression, left the GOP out of the Oval Office for a full generation. Romney needs to go back and review the FACTS that Hoover followed Keynesian-style fiscal expansion policies, raised tariffs, and ran up huge deficits. He considered himself a "progressive" (yes, I can hear Glenn Beck's head explode from here), believed in a symbiotic relationship between business and government (can you say "crony capitalism"?), instituted infrastructure plays (ever hear of the Hoover dam?), expanded civil service protections, and nearly tripled upper income tax bracket rates, estate taxes, business taxes, etc. (There are some nuances--he didn't believe in providing transfer payments which he correctly saw as morally hazardous.)
But I've already pointed out in a past post that the 1932 election saw FDR posing as a fiscal hawk and Hoover campaigning as a progressive: talk about bait and switch. The election of FDR was a huge, tragic mistake, but Hoover was no conservative. And that made all the difference...
Tina Turner said it best:
Media Conservatives: A Rare Thumbs UP! For Standing Up
Against the Shameless Demagoguery of Gingrich and Perry
To a certain extent, you've seen both left-wingers and right-wingers beat up on the bankers (I'm referring to the dysfunctional, pointless, counterproductive populism in singling out the bankers and other 1-percenters.) I will comment briefly on my position on the banks. I think anytime you have businesses which seem to generate outsized returns that defy their value in the overall economy, there is something intrinsically wrong. Whether you were investing with Bernie Madoff, putting everything you had into Enron whose returns seemed to be unsustainably high in the long run or flipping houses in the middle-2000's were profitable while overall economic growth was subpar and job growth over the decade was pathetic: if it sounds too good to be true, it probably isn't true (just like the ludicrous kaleidoscope accounting underwriting ObamaCare claiming it "trims" the federal budget).
The one thing you learn (or should learn) early in investment is that high margins are difficult to sustain and make every capitalist's mouth water; every new stock out there promises to be the new Berkshire Hathaway or WalMart, the next Microsoft, Facebook or Google. Finding the next multiplier stock can be almost as elusive as winning the PowerBall Lottery.
There isn't a lot of mystery involving the primary business model of a bank: George Bailey pointed it out quite well in "It's a Wonderful Life". It's a nickel and dime business. You pay a certain amount for funds to loan at a higher rate. Out of that margin you have to guesstimate a spread that covers costs. There is a vast array of regulations at various levels, but what we know is that banks have run into business problems with or without the guidance of politicians and regulators. Even government guarantees of depositors are problematic because the government is essentially subsidizing business risk, which I argue it shouldn't do.
So the OWS crowd tries to somehow indict the private sector for the mutated banking system. Not holding the government responsible for its incompetence in lawmaking and regulatory effectiveness is ludicrous. But it is absolutely ludicrous to say it's an artifact of the American system: dysfunctional bubbles have existed for centuries (remember Dutch tulipmania?) Remember when you could buy vast areas in America for the price of a city block in Tokyo before the Japanese economic bubble burst? We have banking crises in Ireland and all around the world.
I once learned this lesson the hard way: about 10 years ago I pursued the bidding of a new notebook PC on eBay where the bidding process went beyond what I would consider fair value of the PC. It became more an artifact of being vested in the auctioning process than intrinsic value. People were struggling in the 2000's in a tepid growth environment. There are a number of reasons for that. But handing out loans that would reset in a few years with the assumption that home ownership could be sustained over long-term averages and allow homeowners to engage in a game of musical chairs where the music never stops is ridiculous. Blaming it on the original bankers whom accepted the loan is unfair. The bankers probably would have been more prudent without all the government policies and guarantees. To allow a couple of GSE's to take nearly half the market using cheap federal loan dollars put taxpayers, not the private sector on the hook. The government could have simply let the banks fail. Let the market handle the failures.
I have been critical of Rush Limbaugh in this blog on multiple occasions, although occasionally I promote some of his spots (like the "Obama money" bit from Ken Rogulski of WJR in Michigan). This bit about Romney saying he liked to "fire" people was always deliberately taken out of context:
I want individuals to have their own insurance. That means the insurance company will have an incentive to keep you healthy. It also means if you don't like what they do, you can fire them. I like being able to fire people who provide services to me. You know, if someone doesn't give me a good service that I need, I want to say I'm going to go get someone else to provide that service to me.All Romney is talking about is in a vibrant free market, you can decide to do business with a competitor if you don't like the quality of the goods or services you're getting. You think a customer service is condescending, so you decide you want to shop somewhere else? That's fine. If stores don't manage their personnel effectively and lose business--they'll have to let people go. Romney, when he fired that lawn maintenance company for using unauthorized workers, did not directly fire the unauthorized workers. The lawn maintenance company probably simply sent them to the home of a customer not in politics.
It's only in a few circumstances where you can DIRECTLY fire someone, e.g., you are a manager, you hire a lawyer, a nanny, a tutor, an independent plumber, etc. But let's continue with the analysis: Romney doesn't say he likes firing people. He says he likes BEING ABLE to fire people. Think of a monopoly--say, the cable guy, the government bureaucrat, etc. It's not like you have any real power in the situation. You have no leverage over him (assuming you have to have cable service). But even if you decide to change banks or your supermarket and you tell him in particular whom offended you, do you think the business will throw their employee under the bus just to satisfy a single customer? Probably not. They might see a customer every once in a while, and there's always another customer; they also work with their personnel 8 hours a day.
I know of a case where a troublemaking accounting manager whom wanted a DBA she blamed for his predecessor leaving (the latter resigned when he didn't win the IT manager job) fired, so she waited until just before financial statements were due at the parent company and called in sick, saying the only thing that would make her well again was firing the replacement DBA. The comptroller pressed the IT manager to throw the DBA under the bus because all he cared about was getting the financial statements out, but the IT manager, not so much of a sense of loyalty to the DBA, did not want to set a precedent of other managers interfering in his internal affairs.
As an aside, I don't really like Romney's argument here in terms of insurance. I think what he's trying to say is that denying, say, lab tests that would could detect tragic disease at its earliest, least expensive stage is penny-wise, pound-foolish. But how is an insurance company going to make that patient see a doctor and have that test done in the first place when symptoms are often missing early in the disease? Unless the insurance company is going to do something like provide a price incentive to do that...
For Gingrich and Perry to draw an inference that Romney was talking about his turnaround experience with bankrupt companies as if he was counting the minutes until he could fire a lower middle-class worker at home with a mortgage hanging over his head, a pregnant homemaker wife and 5 little kids is just obnoxious and little more than fear-mongering among the distressed unemployed/underemployed. As I've pointed out before, it's a lot easier to simply let a business fail than to make the difficult decisions necessary to give a business a fresh start with a sustainable cost structure.
As I mentioned in a recent post, we have to let the economy be the economy. That includes letting businesses fail without an all-but-bankrupt US government stepping in to save the day, when the government doesn't have the collective wisdom to pay its own bills.
So kudos to the Wall Street Journal, Rush Limbaugh, Herman Cain, Rick Santorum, and even Sarah Palin (a rare moment of praise in this blog) for calling out Gingrich and Perry (not to mention Huntsman) for giving lip service to Democratic talking points. Now as for Todd Palin endorsing the GOP King of Crony Capitalism, Newt "I Heart Freddie Mac" Gingrich...
Political Humor
"Mitt Romney is saying his comments about liking to fire people were taken out of context. Yeah, what he actually said was he likes to set poor people on fire." - Conan O'Brien
[Romney later explained that he meant, on behalf of the American people, that he intended to fire President Obama, the Democrats in Congress, the IRS, his GOP competitors, and, of course, Donald Trump (or maybe he meant to say was that he wanted to set Trump's hair on fire....)]
"While campaigning yesterday, Jon Huntsman said he was 'ready to rock and roll.' Not to be outdone, Mitt Romney said he was ready to 'easy listen.'" - Jimmy Fallon
[Well, if the All-American "well-groomed, clean-cut, boyish" Pat Boone can go "heavy metal" (see below; wow, I still think that's just WRONG), just wait until Mitt Romney unleashes his inner Ted Nugent or Ozzy Osbourne.
As for Ron Paul, can there by any doubt? I present a reprise Christmas song that must have been written with Ron Paul's views on currency in mind...]
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| "Heavy Metal" Pat Boone Courtesy of AFP/Getty Images |
Musical Interlude: My Favorite Groups
Styx, "Too Much Time On My Hands Tommy Shaw, the other Styx lead vocalist and guitarist, also wrote many of Styx rock (vs. pop/theatrical) hits, including the brilliant previous selections "Renegade" and "Blue Collar Man."
