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Healthy campaign; Sick government.

I just finished reading Double Down: Game Change 2012. It’s a tick-tock of the last presidential election.  As you might expect from someone who ran for Congress (and is a geek), I’m fascinated by the behind-the-scenes stuff. (Yes, recommended for those w/a similar mindset.)

One of the sharpest points in the book was just how finely-tuned the Obama campaign was, both in 2008, and, again, in 2012.  On strategy, on tactics, on adjustments, and discipline they were off the charts.

I found this spectacular performance particularly grating when placed up against the actual Obama administration’s execution. The most current, and glaring, demonstration of which is the disastrous rollout of the Accountable Care Act (aka ACA, aka Obamacare).

The failure goes much deeper than simple procedural errors or stupid technical decisions. The botched implementation is a reminder and reinforcement of everyone’s worst belief: that the government is incapable of executing, and left to its own devices, will screw up pretty much everything. The central “argument” among the most vocal critics of health reform was that the government getting more involved would just make things worse.  Hmm.

The book makes what’s plainly obvious, all the more glaring: the Obama election had a life-or-death accountability attached to the planning and executing of the election campaigns. In the implementation of a program that touches all Americans and has consequences measured in the trillions? Not so much.

The practice of politics is a true market exercise, giving us ugly, painful to experience campaigns and sometimes it creates ruthlessly efficient machines like the Obama campaign. The knock on government execution is exactly that – there is no accountability, no market forces, no stimulus leading to course correction. The rollout of ACA apparently embodies this.

This is why we can’t have nice things.

Health reform was a mess from the beginning. It started with Republican intransigence, leaving Democrats to moderate the legislation themselves. There was the fundamental focus on the political palatable instead of an intellectually honest dedication to addressing the fundamental issues of the existing system. Then there was the standard opposition-driven hysteria abetted by a generally clueless public, and the “required” back-room deals which weighed down the legislation further. Now, after surviving a Supreme Court challenge,  triggering one of the biggest wave elections in 100 years (which I was knocked on my ass by as a candidate), and all other theatrics, here we are: The crowning indignity. The public launch basically coudn’t have gone worse.

This is why we can’t have nice things.

The president and his administration, I hope, are ashamed. And, look, I’m not saying the bill is doomed: Not saying that we won’t bend the cost-curve long-term and end up with a more humane system. But since it only gets more complicated from here, why should we believe that this screwup was the aberration and not the sign of things to come?

It’s my belief that government is going to have an even more critical role in the not-so-distant future. Unfortunately, the general vapidness of political conduct and current execution of complicated policy, like the ACA, only shows how ill-prepared we are as a nation.

Forget China. We have the met the enemy and he is us.

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the deal with manufacturing.

A few years ago I was obsessed with manufacturing. While not an expert, I have read thousands of pages on the topic and hundreds of articles. In my campaign for Congress, I tried to make jobs, and as a result, manufacturing a cornerstone. All that to say, that this is something I find interesting and care deeply about.

In the past few days I came across two must-read articles on the topic.

1) The NY Times dives into the topic through the lens of Apple and the iPhone. How the US lost out on iPhone work; Apple, America and a squeezed middle class. Must Read.

2) The Atlantic Monthly absolutely blows the doors off with a great dissection at the high-level of American manufacturing and weaving in the human face. Making It in America. Phenomenal.

I recommend starting there. There are a slew of topics that every citizen should understand, Manufacturing among them. It drives the wealth and stability of nations and the type of society you have. At least until now it has. It was arguably the main building block of a prosperous and triumphant America. Our mercantilist policies and inherent natural advantages largely contributed to the sole superpower position we held.

I want to lay out 3 important things about manufacturing that are not well understood or known. I’ll do a separate post on why manufacturing matters — but the fact that it has historically been a primary source of work for the masses should be enough for now. (That shouldn’t be controversial.)

1) Automation. Robert Reich is the one who first drew my attention to this in 2009. Essentially, global competition aside, technology was rapidly cutting into the humans you needed for production. This trend has only accelerated, as robotics and software improve at scale, the costs of automating repetitive tasks continue to decline sharply. We’ll see more automation everywhere in the world. It will literally take a shortage of the natural resources (again, another post) to cease this inevitability. So, net, automation has cost a good chunk of American jobs. This is also true for Chinese, German, Japanese, South Korean, et al jobs.

2) Training. I blame politicians for why this is so little understood. Since the days of Bill Clinton, “Move up the value chain. Education is the key. etc, etc”  has been one of those safe ubiquitous lines everyone parrots. It’s led us to the “sacred truth” that everyone needs to go to college and then they’d be OK. I think this is total bullshit.  (Google “Thiel Higher Education Bubble” for an excellent background on the counter to this “truth”). In reality, “educated workforce” meant a very complex, diverse truth. It meant a great liberal arts education for some, a rigorous math, science/engineering education for others, and the missing one — was a highly valued vocational training. Germany has long known the importance of this and has a variety of vocational training. Both articles linked to above touch on the need for this. Over the past decade we have all but given up on this kind of training. While part of a more complex point, I believe that we should aggressively be retooling our community colleges to focus on this kind of vocational training.

3) Industrial Policy. Automation aside, the Apple story talks about foreign governments that targeted specific desired industries and how this resulted in an unbeatable combination. This is  called industrial policy and is rarely talked about in America. Countries that have heavily used industrial policy: Japan, China, Germany, South Korea. It’s a list of the powerful, triumphant manufacturers of the world. America once had a very muscular industrial policy from the 1800’s going through World War II. With Europe in shambles and our industrial and economic might seemingly infinite, foreign policy and political concerns prevailed over any kind of industrial policy. The result has been a consistent (with a surge this past decade) overseas build-up of industrial capability that has led to the realization of Ross Perot’s “giant sucking sound of jobs going away.” Industrial policy can be a combination of tax benefits, cash and natural resource subsidies, calculated currency manipulation, and protectionist trade restrictions to protect a fledgling industry. While there are examples of America focusing here (agricultural) we’ve sat out this “game.” While industrial policy has its share of valid skeptics (can the government really pick the right industries that matter?) — it really does matter. The rise of most of China, Japan, South Korea, etc is the blinding proof that an intellectually-honest person can’t ignore.

There are a lot of other important things to join. The importance of building a cost infrastructure that supports manufacturing vs consumption. On a scale of 1 to 10, with 10 being most geared towards production and jobs — China is a 10 towards supporting jobs (manufacturing, etc). The US is close to a 1. On the scale of 1 to 10, with focused on consuming as much as possible, America is a 10 and China is a 1. We’ve focused on consumerism and the amassing of boundless crap. By the way, lately that crap has been debt. Unfortunately we’re not having a real conversation about where we’re headed, what we’ve been doing, and where want to go, nor discussing the actual impact on Americans’ lives. Both the NYT piece and The Atlantic do these things on some level.

I’ll end by saying that while I loved the articles, I found Davidson’s closing line in The Atlantic to be a bit disingenuous:

For most of U.S. history, most people had a slow and steady wind at their back, a combination of economic forces that didn’t make life easy but gave many of us little pushes forward that allowed us to earn a bit more every year. Over a lifetime, it all added up to a better sort of life than the one we were born into. That wind seems to be dying for a lot of Americans. What the country will be like without it is not quite clear.

In so far as the future is always hard to predict, fine. That aside, I think it actually is fairly clear. In fact, it’s the strength of the article. He lays out the clear arc:
1) People like Maggie, who the article opens, with are quite rare. A great very many “Maggie’s” across the country don’t even have the opportunity that she has.
2) Even for Maggie, the basic ideal of a middle class life eludes her reach on a salary of sub-$30K.
3) The writing is on the wall that with automation, even what the lucky ones like Maggie have, is likely to be gone in the foreseeable future.

The “very lucky” in this story, Luke, is shown as a clear anomaly. In fact the NY Times story on Apple presented the other side of Luke, in the well-trained Eric Sargoza an engineer who can’t find a job because he’s been replaced by someone in Shenzen who makes nearly what he did.

The obvious outstanding variable left is that we live in increasingly chaotic times. In times like this you can’t predict the future, because there are just too many variables. In the absence of predicting the future, you have to at least connect the dots and prepare best you can. Sadly, the dots have clearly been there since I was born (30+ years). We’ve chosen mostly to ignore them and, I fear, the chickens are coming home to roost.

Business Financial News Politics reading

financial services reading.

Lots of disturbing, horrifying, and bizarre facts out there about the state of the financial services sector of our economy.

One of my all-time favorite writers, Michael Lewis, has a great piece on AIG in Vanity Fair.

Much more controversially, Matt Taibbi, in Rolling Stone posts a searing indictment of uber-bank Goldman Sachs. Almost must read.

The past year in the banking sector (based on the actions over the past decade+) has had a truly stunning impact on our country. Likely, we’re going through a history-shaping event. It’s why I’m shocked at how what has gone on has been out of the public spotlight. I hope to see more in-depth reporting coming out soon on the role lobbyists, PAC’s, and financial firms themselves played in this national nightmare.

News Politics

buckley endorses obama.

Wow. Conservative William F. Buckley Jr‘s son, Christopher, endorsed Barack Obama. And then, shortly after, resigned from The National Review, the journal his father founded, over the outcry. Good stuff. Quoted are some of my choicest bits.

McCain rose to power on his personality and biography. He was authentic. He spoke truth to power. He told the media they were “jerks” (a sure sign of authenticity, to say nothing of good taste; we are jerks). He was real. He was unconventional. He embraced former anti-war leaders. He brought resolution to the awful missing-POW business. He brought about normalization with Vietnam—his former torturers! Yes, he erred in accepting plane rides and vacations from Charles Keating, but then, having been cleared on technicalities, groveled in apology before the nation. He told me across a lunch table, “The Keating business was much worse than my five and a half years in Hanoi, because I at least walked away from that with my honor.” Your heart went out to the guy. I thought at the time, God, this guy should be president someday.

But that was—sigh—then. John McCain has changed. He said, famously, apropos the Republican debacle post-1994, “We came to Washington to change it, and Washington changed us.” This campaign has changed John McCain. It has made him inauthentic. A once-first class temperament has become irascible and snarly; his positions change, and lack coherence; he makes unrealistic promises, such as balancing the federal budget “by the end of my first term.” Who, really, believes that? Then there was the self-dramatizing and feckless suspension of his campaign over the financial crisis. His ninth-inning attack ads are mean-spirited and pointless. And finally, not to belabor it, there was the Palin nomination. What on earth can he have been thinking?

All this is genuinely saddening, and for the country is perhaps even tragic, for America ought, really, to be governed by men like John McCain—who have spent their entire lives in its service, even willing to give the last full measure of their devotion to it. If he goes out losing ugly, it will be beyond tragic, graffiti on a marble bust.

So, I wish him all the best. We are all in this together. Necessity is the mother of bipartisanship. And so, for the first time in my life, I’ll be pulling the Democratic lever in November. As the saying goes, God save the United States of America.

My point, simply, is that William F. Buckley held to rigorous standards, and if those were met by members of the other side rather than by his own camp, he said as much. My father was also unpredictable, which tends to keep things fresh and lively and on-their-feet. He came out for legalization of drugs once he decided that the war on drugs was largely counterproductive. Hardly a conservative position. Finally, and hardly least, he was fun. God, he was fun. He liked to mix it up.

While I regret this development, I am not in mourning, for I no longer have any clear idea what, exactly, the modern conservative movement stands for. Eight years of “conservative” government has brought us a doubled national debt, ruinous expansion of entitlement programs, bridges to nowhere, poster boy Jack Abramoff and an ill-premised, ill-waged war conducted by politicians of breathtaking arrogance. As a sideshow, it brought us a truly obscene attempt at federal intervention in the Terry Schiavo case.

The Daily Beast: Sorry, Dad, I’m Voting for Obama

The Daily Beast: Buckley Bows Out of National Review

The Edge of the American West: Apostates


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with love for my adopted state of ohio.


forsaken Life News Politics

america’s new favorite sport.

dear politics,

I’ll say that its only in the last ~20 years that we’ve devolved into this. Politics is now the average American’s favorite sport. The only thing funnier to me than partisan hacks, are the partisans who think they can change another partisan’s mind.

While it probably started in earnest years before– in the 21st century, America’s political system converted 100% into a professional sport. We support “our” candidate with the same glee and ardor that we “cheer” for our favorite sports teams. Do you think you could ever convince a Yankees fan to cheer for the Mets? Do you think you could get me (a tortured Mets fan) to ever become a Yankees fan? I’m thinking snow in hell and all that. What makes this tragic of course, and all the more of an accurate analogy, is that our continued support is based in nothing more than tradition, loyalty, and irrationality. Think about it– in baseball, do you really *hate* the opposing team’s pitcher? What if he switched team jerseys next season? Seinfeld had it right that at some point we stopped cheering for team, and we started cheering for uniforms. Well, I guess you could say we stopped supporting issues and principles and we started supporting little letters in parentheses after names ie. Barack Obama (D). When did the parentheses become more important than what came before it? When did the label become more important than what it stood for?

The parallel goes further. The impact of money to MLB, NFL, NBA, etc is huge in the past few decades. Look at how money has almost completely conquered sports, and you’ll see that in politics we’ve created a system in which money has totally taken over. Hundred million dollar players and hundred million dollar candidates.

The idiocy of this drives me to the point of explosion. Realistically, what are the chances of someone listing out their views on a host of issues and having them link up perfectly with any one candidate or party? Yet most people have a fervent adoration and support for “their guy” and almost unconditionally defend all of their positions. And this is killing America.

Our nation had the largest bank failure in its history today. And, given recent events, no one even flinched. That’s how bad things are. This is a crisis. Make no mistake, what got us into this is the politics of big money and partisanship. And that’s clearly not changed, and shows no sign of changing. So, to each of you, partisan hacks, who I meet more and more of every day– i just want to tell you one thing:

I hate you all.

love, surya

forsaken Investing News Politics

the financial crisis explained.

So. Like most people you’re wondering what the hell is going on, right?

Don’t worry. Well, you should worry about the fundamentals of America but you shouldn’t worry about understanding it. Because I’ve got it covered.

First, go to Blockbuster and rent the movie Boiler Room.

YouTube Trailer:

In real life, all of Wall Street followed the pattern of the firm in Boiler Room. Wall Street packaged incredibly crappy mortgages in a complex way and sold them to “savvy” investors that understood them about as much as the average Joe that was sold worthless stock in made-up companies in Boiler Room.

In Boiler Room, they talked about the huge “rips” (commissions) they’d get when they sold stocks and wondered out loud how it was possible to be making so much money for doing so little. The risk-reward was way off. Guess what? In real life, Wall Street was even more incompetent because they never seemed to ask how they were getting such lucrative fees for constructing these seemingly low-risk mortgage backed securities. Well, it’s either incompetence or hubris. It seems so many on Wall Street actually thought they deserved these massive fees just for existing. At least in Boiler Room, the main character wonders what the deal is.

In real life, our government was nowhere near as competent as portrayed in Boiler Room. In the film, government agents were watching the scam, looking for a way on the inside, and trying to take it down. While in actuality, our government aided these morons efforts by providing next to zero oversight or regulation, relaxing rules on leverage and capital requirements so they could ensure the firms would get “too big to fail.”

One more way that Boiler Room is different from reality? I already touched on it, but in the movie, Morgan Stanley, Goldman, Lehman, Bear, ML, et al are lionized. Today, they’re bankrupt, consolidating, or disgraced.

In summary:
Go watch Boiler Room. Step one is to substitute their fictional firm with all of Wall Street’s banks. Next, substitute schilling stocks to average Joe for packaging and selling weak-ass mortgages to the world’s investors. For step three, replace a competent SEC for a worthless Washington (Alan Greenspan & company) and you’ll get government intervention only when things start blowing up and nearly a trillion dollars is lost instead of actual oversight.

News Politics

obama on the economy.

I’m looking for something like this that explains McCain’s positions. When I find, will post.

NYT Mag: Obama on the Economy.

Good stuff. Any good long McCain articles? Please send them over.

Business forsaken Investing News Politics

do you realize what just happened?

dear children,

I think we’re sorry for what we’ve done to you. I say “think” because I don’t believe that most Americans have any idea what’s going on right now.

We’re sorry that we’re sandbagging you with massive amounts of debt that will likely reduce your standard of living. Someone called it “indentured slavery”. They might not be far off.

What the hell am I talking about?

Most of us have heard about the current sub-prime crisis, housing values dropping, the gov’t having to take on debts incurred by the private sector. But other than getting that this is likely a bad thing, it can be hard to grasp what this all really, practically means.

In real terms, we might have just increased our total national debt by 50% by guaranteeing Fannie and Freddie. Why does this matter? Because our debt per working person in this country works itself out to be somewhere around $60,000 a person.

No, I didn’t mistype that.

Read this NY Times op-ed.

I’m horrified by just how many people think everything is OK with our economy. How many think everything is OK because we  spend a lot of money (ie., # of cars on the road, housing sizes, total consumer consumption.). The problem is that this is all symptomatic of the disease which we’re in danger of dying from. We’ve borrowed massively from the rest of the world (and from what we would consider the poorer nations of the world, to boot) to finance our decades of prosperity. Then, in a bizarre turn of logic, we point to that borrowed prosperity as a sign that everything is OK. It’s as if we we were parents, and our teenager worked at McDonalds, but thanks to her credit card, she drove a new Lexus, wore all designer clothing, and took fabulous vacations. When we’d try and explain that this just doesn’t work, and that problems are ahead, she’d say that we, “just don’t get it” and point to how well she was doing.

As Bill Gross pointed out in the letter he wrote to Obama a few weeks ago, the reckoning is coming. Our president in ’09 is going to have to choose to right the ship (incredibly painfully) or to continue as is, and ignore the problem. Either way, it sure looks pain is coming. Good luck, children of America.


P.S. This is essentially the overview material for the chapter in Forsaken, on fiscal crises.

5/27/13 –

Business Investing News Politics

hand baskets.

dear hand baskets,

When people ask what I’m buying these days, I respond: “hand baskets.”
“Hand baskets?”
“Yeah, everything seems to be going to hell in a hand basket these days, so I might as well own stock”.

(Credit goes to my boy Graig for coming up with that one)

But still, Mr. Basket, you must be a busy guy these days. America’s banks are imploding. The government is promising literally trillions of dollars in taxpayer money to bail out these institutions. People are losing their homes. People can’t sell their homes (9 months and counting for me…sweet!). People can’t afford gas. Almost every other commodity is going sky-high. Since jobs have been leaving the US for years now, and the middle class is heavily beaten down, spending is down and growth has gone from stagnant to negative. Aforementioned inflation is kicking ass. Stagflation – something my parents remember that well in the 70’s! Oh, yes, hand baskets, times most certainly are good for you.

And what is the media covering? Cartoons. When I did my previous entry on The New Yorker on Obama I had no idea about the cover. I didn’t think much of it, other than to add the PS. But it seems the media thinks that this is the important issue. Don’t look at the steady stream of hand baskets marching down the highway, look at the cartoons.

So, in summation, I’m long hand baskets (you), short everything else (especially the damned media).