Archive for September, 2008

Ya Gotta Bereave

For the second straight year the Mets are eliminated by the Marlins on the final day of the season, after leading the division late in September. I was hoping they would make the playoffs, but I didn’t have high hopes for them IN the playoffs, where pitching is even more important than in the regular season. There’s some solace in the fact that it was the Mets’ bullpen woes and seasonful of injuries that did them in this year — it doesn’t have anything like the feel of the epic choke of 2007.

Today’s loss put a damper on the ceremonies marking the last game at Shea Stadium, but I watched anyway to see the old-timers come back. I was wondering how they were going to handle the absence of Doc Gooden, because the last I knew, he was in prison. But I had old information — he apparently only served a few months in 2006, and he was introduced today to respectful applause.

Doc and Darryl Strawberry (who was also back today) were supposed to anchor the team for a decade or two and then go into the Hall of Fame together, but their cocaine habits got in the way. I don’t typically remember a lot about athletes years later, but I can still see Gooden’s nasty curveball dropping from 12 to 6 as it crosses the plate. And Strawberry had the most beautiful, fluid swing I’ve ever seen. (Trivia note: Strawberry hit over 300 homers despite his drug-shortened career, and actually got a handful of votes in Hall of Fame ballotting in 2005.)

One quirky memory from today’s game: Announcer Howie Rose said that the first four players in today’s lineup — Jose Reyes, Carlos Beltran, David Wright and Carlos Delgado — had all played in at least 159 of the 162 games this season. And this is one of the reasons I love baseball — somebody cranked up the massive databases that chronicle every pitch and out, and determined it had been 40 years since another team had four players who all played at least 159 games in the regular season.

So now the 2008 Mets have taken over from the 1968 Cubs as the reigning champions of having-four-guys-play-159-games. If only they could have gotten Billy Wagner to play in a few more games …

Bailout Wisdom from Various Sources

Bill Whittle recently had a very painful medical mishap, which inspired him to refer to “the $700 billion kidney stone the economy is trying to pass.” He prescribes some therapeutic pain:

Every decision we make is based on a risk/reward calculation. If we take away the consequences of risky behavior, we will see more of it. And if there’s a money-back guarantee for greedy and stupid decisions, we’re in real trouble, because there is only so much money in the bank but supplies of greed and stupidity are endless.

So how do we inflict some badly-needed pain on people who need to feel it, without hurting the rest of the good and honest folks who pay their bills [responsibly]? Well, there are three simple rules that we must follow. Unfortunately, no one knows what those three rules are. So here we are. I’m as flummoxed as the rest of you.

At the risk of being a name-dropper, prominent economist Greg Mankiw was a classmate of mine as a Princeton undergraduate. (I didn’t know him at school, but chatted with him at Reunions once. He seemed like a nice man.) On his blog he’s been fairly neutral about the bailout — he doesn’t seem to dispute that something big has to be done, but he does inject a cautionary note:

Nonetheless, one has to be at least a bit skeptical about the idea that government policymakers gambling with other people’s money are better at judging the value of complex financial instruments than are private investors gambling with their own.

Now, Greg Mankiw wrote a best-selling economics text and did a stint as Chairman of the Council of Economic Advisors under President Bush. I took introductory econ courses at Princeton, and also at Rutgers while working toward an MBA I didn’t finish, and to this day I get confused about the effect of currency exchange fluctuations on domestic inflationary pressure.

So I’d like to take this opportunity to point out a flaw in Greg’s reasoning: seems to me that “private investors gambling with their own money” does not describe the process that got us into this mess. The damage seems to have been caused by titans of Wall Street gambling largely with other people’s money.

I’m by no means a Wall Street basher — I worked there for nearly 15 years, and would be willing to do so again. (I called an ex-boss who’s still at Merrill Lynch… it turns out they’re not hiring this month.) But I certainly understand the impulse to bash Wall Street and the financial Establishment — vital institutions led by people who have a lot to answer for.

Count on uber-libertarian Ron Paul to step up to the plate (hat tip: Bill C.). Under the headline “The Creation of the Second Great Depression,” he writes:

The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder.

I’m not sure Congressman Paul’s internally coherent but overstated case actually constitutes “wisdom” as referenced in my headline, but it certainly is a colorful dose of what he believes is moral clarity. Who knows, maybe he’s right. I can see why he has a strong following… and why he’ll never be president.

Is McCain’s call to suspend the campaign over the financial crisis an example of leadership? Is it a political ploy?

Yes.

Neo-neocon (I like her blog, but I LOVE her blog’s name) sums it up pretty well:

Just because there is some political posturing does not mean there’s not also some sincerity. Each candidate is revealing something about himself even as he jockeys for position, and they are running true to type.

McCain is an action man who doesn’t like to dither. He’s been in the Senate for a long time and has done a great deal of hammering out of deals, and he is comfortable in that arena. …

Obama is not a decision-maker, nor does he really feel comfortable in the Senate, having spent very little time there. He likes to sit back and study all the angles, and even then would prefer to let things emerge rather than taking a leadership role.

Read the whole thing.

Update: Now McCain has said he’ll participate in the debate (about 150 minutes from now as I write this at 6:30), and this is being reported as a cave-in and an embarrassment for McCain. Maybe. But blogger Nate Silver made the point a day ago (hat tip: Taranto) that McCain’s gambit has served to focus attention on a debate that nobody was talking about much.

If McCain does much better than Obama tonight, that will swamp the effect of the flip-flop on suspending the campaign. And while Obama is dramatically better with a teleprompter than McCain, there will be no teleprompter tonight. In a give-and-take discussion, my money’s on McCain.

OK, I’m trying to get my head wrapped around this whole market meltdown thing. One of the things that has puzzled me is seeing complaints that some of the various bailouts have been triggered in part by regulations that force companies to mark mortgage-backed securities to market — that is, to account for changes in the value of the securities they own when market conditions change.

I seem to recall that prior meltdowns were caused in part because financial companies did NOT mark to market, but rather carried securities on their books at artificially high prices after market declines (and then borrowed against those inflated securities).

So here’s a good explanation of the problem with mark-to-market accounting in volatile circumstances (hat tip: Iain Murray):

Imagine if you had a $200,000 mortgage on a $300,000 house that you planned on living in for 20 years. But a neighbor, because of very special circumstances had to sell his house for $150,000. Then, imagine if your banker said you had to mark to this “new market” and give the bank $80,000 in cash immediately (so that you would have 20% down), or lose your home. Would this reflect reality? Not at all. Would this create chaos? Absolutely.

The original article also answers the question in my headline:

Mark-to-market accounting is a good thing. It makes sense most of the time for most financial instruments that are traded frequently and openly. But there are special circumstances, and today’s financial market problems would meet any definition of the word special.

Today’s Wall Street Journal informs me that Wall Street as we knew it has ceased to exist. That bums me out. I used to make quite a decent living as a corporate gumby on Wall Street, and Wall Street firms have been among my most important clients as a communications consultant.

Oh well. I expect the activities of finance and commerce will continue, although perhaps at a slower pace for a while. In the meanwhile, by the grace of God I am safe, healthy and in love with my wife. The other stuff will sort itself out.

And what will all this mean for the Presidential election? I have no clue. Aren’t you glad that you turn to this blog for insight? All six of you?

Gay Republicans Make Their Peace With Palin

This article is a response to gay friends who have taken issue, quite civilly, with my support of John McCain for President. (Disclaimer: there is a comment on the article from someone named “Kirk,” who is not me.)

While John McCain’s “selection of the Alaska governor has energized the GOP’s socially conservative wing,” it has also inspired a lot of gay and lesbian Republicans. It has brought together left-leaning lesbians and Hillary-supporting gay men concerned about Barack Obama’s qualifications with gay conservatives unhappy with McCain’s frequent departures from party orthodoxy.

We see in Sarah Palin John McCain’s real commitment to reform. That is why, despite her mixed record on gay issues, we are excited by her nomination.

The article is by a co-author of GayPatriot, which has been my favorite gay conservative blog ever since Andrew Sullivan let his Bush Derangement Syndrome morph into McCain Derangement Syndrome.

The reference to Sarah Palin’s “mixed record” is a euphemism at best — the only things on the positive side of the ledger are that she vetoed an anti-gay law (because she believed it was unconstitutional), and apparently she interacts respectfully with openly gay individuals. But there’s nothing really “mixed” about her stand on gay issues — she’s simply on the wrong side.

For me, and for some gay voters, national security is a more pressing issue in selecting a president. I think Palin was a bad choice on the basis of experience (although she is better qualified on that basis than Obama). But I think her reform record is admirable, and since for now at least she clearly is helping the ticket, I’ll take my chances on McCain’s continued good health.

Along the same lines, I also want to note estimates that nearly one out of every four gay voters pulled the lever for Bush in 2004 (as did I), despite Bush’s odious support for the proposed constitutional amendment banning gay marriage. (As for this year’s GOP nominee: “In the Senate, McCain has been an ardent opponent of a federal constitutional amendment to ban gay marriage, arguing his case on federalist grounds.”)

Bullish on (Bank of) America

So Merrill Lynch, where I toiled for 12 years, faces the end of nearly a century as a private company. At least it’s not like Lehman, an even-older company that was forced into bankruptcy when nobody would assume its liabilities.

One of my earliest memories of working at Merrill Lynch is hearing CEO William A. Schreyer say “we plan to remain fiercely independent.” This was in 1988, a year after the 1987 crash, a time when venerable Wall Street names like Shearson and E.F. Hutton were disappearing into larger firms. “Good,” I thought at the time. “The boss doesn’t plan to sell.” I did not yet realize that it’s not that simple at a large public company.

There were takeover rumors throughout the time I was there — Chase was the most often rumored suitor. Chase eventually bought JP Morgan instead.

By the time I left in 2000, I had a chunk of Merrill Lynch stock in my company retirement account. I was a corporate gumby, not a Master of the Universe, so it was a modest chunk by Wall Street standards, but still by far the biggest component of my financial holdings. After I left, I could have rolled the stock over into an IRA and sold it, or part of it, at any time… but I did not. Whenever I thought about it, the stock was down, and I waited for better times. When better times arrived, I didn’t think about it — I was no longer on Wall Street, and was not so focused on the ups and downs.

Courtesy of Yahoo Finance, here is the chart of MER’s stock price since I left the company and first became eligible to sell my shares:

And, since that doesn’t quite capture the total flavor of What Might Have Been, here is the the chart since January 2007, when a New Year’s resolution I did not make would have allowed me to sell the stock in the mid-90s:

I wasn’t paying attention Friday, when MER dropped to $17.05. I couldn’t have rolled it over fast enough to sell in a panic, anyway. Now comes Bank of America offering $29 a share in a stock-for-stock transaction, which means that like all of the folks I still know at Merrill, I’m hoping BAC doesn’t crater when the market opens in about 60 minutes.

Looking back, I can see I never sold because I didn’t really want to — I’m fond of the company and proud to have worked there, despite the Enron scandal and the analyst scandal and the sub-prime debacle. All of those happened after I left — while I was there, we (justifiably) boasted about a Tradition of Trust that largely kept the mud off of our corporate feet. (No, I don’t think Gumby Man was the reason the company stayed on the straight and narrow — I just had the good fortune to be there during relatively good times.)

mer-2007-08Sentiment is a bad reason to hold a stock, of course, and I have no such attachment to BAC. Time to look into that rollover. Not that I’ll liquidate right away, but I need to be ready to diversify.

McCain Rides the Palin Tide, Part II

For the first time since I’ve been watching it, the electoral-vote.com map is showing a McCain victory, by the narrowest of margins.

I put the EV map in my sidebar with the thought that it makes more sense to count the votes the way the election will be decided — 50 state votes rather than one national one. I subsequently read someone opining that the national polls are a more reliable indicator of sentiment, because the state polls are taken less frequently and are of varying quality. This makes sense.

Of course, the only poll that counts, blah blah blah. Clearly Palin has given McCain a significant bounce, but it’s a long time (more than 7 weeks) until the election. I’m not sure I’ve ever actually watched a VICE presidential debate before, but I’m sure going to watch this one.

McCain Rides the Palin Tide

For the first time since Obama effectively clinched the Democratic nomination in February, the pay-to-play Intrade prediction market is narrowly predicting a McCain victory.

Never Forget

Some day soon I need to write more extensively about the name of this blog. It comes from something that English statesman Edmund Burke apparently did not actually say, so I’ve felt free to modernize the language:

“All that is necessary for evil to triumph is for good people to do nothing.”

Regardless of who said it first, that sentence is the purest possible distillation of my worldview, and today is a powerful annual reminder of why I regard it as an enduring truth.

The events of 9/11 were the legacy of more than two decades of doing nothing, or next to nothing, in response to attacks from fascists in Islamic guise.

Militant Islamists declared war on America in November 1979 by taking hostages at the U.S. embassy in Tehran. This was followed by 1983 attacks on the U.S. embassy and Marine barracks in Beirut; the Pan Am 103 bombing over Lockerbie in 1988; the first World Trade Center bombing in 1993; the Khobar Towers bombing in 1996; the simultaneous 1998 U.S. embassy bombings in Kenya and Tanzania; and the attack on the U.S.S. Cole in 2000; along with smaller atrocities too numerous to list.

Only after 9/11 did America, led by a President who despite his substantial flaws was resolute enough to call evil by its name, finally mount a sustained response and take the battle to the enemy. And no, Saddam was not behind the 9/11 attacks — but liberating Iraq and planting a (still-fragile) democracy in the heart of the Islamic Middle East is an essential part of the broader war.

All of this is why, despite profound disagreements with the Republican Party on social issues, despite voting for Bill Clinton three times (including 2000), I can no longer vote for Democrats for President. Not until the party has a standard-bearer who understands the cost of meekness in the face of fascism, and who is prepared to stay on the offensive against people for whom “death to America” is not a metaphor.

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