Friday, November 28, 2008

Detroit is a Metaphor for America

Detroit is a Metaphor for the United States

The travails of Detroit, the once great Big Three that forged the industrial heart land of America, are not unique to the auto industry. Indeed, they symbolize the economic risks facing America; the problems are the same.

Too much social services dependent upon too small a revenue base.

At its peak, one of every six workers in America derived their living from Detroit. The nation’s great steel mills, rubber factories, glass companies, machine tool and dye companies, textile mills, owed their existence to Detroit. The auto plants were in every large state, including Michigan, Ohio, Illinois, Indiana, Kansas, Kentucky, Tennessee, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New York, New Jersey, Georgia, Texas, California, Wisconsin, Virginia, Delaware, and Oklahoma. The wealth was spread around.

The United Auto Workers, working with GM, Ford, and Chrysler, built the nation’s great middle class.

The UAW became the premier union in America.

The magnificent public universities of the Midwest were funded by the auto industry. Even three appliance companies were owned by the automobile manufacturers: GM/Frigidaire, Ford/Philco, and Nash/Kelvinator. GMAC, FMCC, and Chrysler Financial were among the largest finance companies in the world.

Detroit’s plants spanned the globe with large operations in Canada, Mexico, Europe, Africa, Australia, and Latin America.

The future seemed even brighter in the 1960’s. And then, slowly by surely, sometimes seemingly imperceptibly, Detroit lost its way.

For Detroit stopped being an industry driven by market pressures to maximize profits by building a competitive product at a competitive price.

The economics scholars of the 1960’s erroneously fixated on oligopolies and their ability to administer prices. Consumers would have no choice but to purchase their products. The UAW and the Big 3 bought into this idea and acted accordingly.

Detroit turned into a private social services agency protecting about 3 million Americans thorough employment, gold plated medical plans, retirement, and even unemployment. A vast private welfare system, dependent upon the sale of uncompetitive vehicles, was doomed to failure in the long term. The recent surge in gas prices is the catalyst that has caused the final collapse.

GM in essence switched from being a profit generating corporation to a social welfare organization for 2 million Americans, sustained by the sale of automobiles. Prices kept rising while quality tumbled. All the while market forces were chipping away at the Big Three, first in small incursions by Volkswagen and then ever larger by Toyota, Honda, and Datsun/Nissan. Accura, BMW, Lexus, Mercedes seized the luxury market. Through the power of compound interest the trickle became a torrent.

Detroit could no longer market competitive cars. The Chevy, Ford, and Plymouth lovers defected to Camry’s, Accords, and Altimas. The demands on the Big Three to provide services kept growing as the resource base shrank.

The social services grew as follows. First came unionization during the Great Depression, necessary for the country. Wages rose, followed by medical insurance, almost as good as that offered members of Congress, and retirement plans. Two other additions added to the burden on Detroit. First came an annual cost of living increase of 3% in addition to whatever might be negotiated during the regular triennial collective bargaining. Then in the 1984 came the jobs bank. Workers laid off by the Big Three and the unionized parts manufacturers, purportedly by improved technology, would report daily to a jobs bank, play cards, fill in crossword puzzles, watch TV, and collect 95% of their regular pay. As an alternative, they could do community service. Until recent modifications, workers could stay in the jobs bank forever. In short, workers were paid not to work. And that is the day the music died.

GM lost a 67 day strike in 1970. 400,000 UAW workers received full retirement after 30 years, regardless of age, and even greater medical benefits. GM, and thus Detroit, was about to head blindly into two oil cutoffs, from which it never recovered.

GM’s share of the US auto market shrank from almost 60% at its peak in the 1960’s to just 22% last month.

So how is this market failure of a company and an industry a metaphor for the United States?

Government, federal, state and local, liberal or conservative, Republican or Democrat, has followed the same path by promising ever more to citizens on a limited resource/revenue base. The needs are infinite, but the resources are finite. The desire to spend, to provide is politically irresistible. For example, the demands of teacher unions and prison guards are irresistible in California.

When revenues are exhausted, then debt becomes the instrument of choice. Schools even bond for routine maintenance. The federal government can print money, but the states lack this option. They must borrow.

Spending can take the path of entitlements, the vast bulk of government spending, or discretionary spending, such as for public safety, recreation, and higher education.

Detroit offerred entitlements by contract; government by legislation.

The entitlements, such as medicare, medicaid, and social security, are on auto pilot so they keep rising irrespective of the underlying economy.

Employees receive high salaries, great medical benefits, and highly favorable, indexed pension plans, often allowing retirement at relatively young ages.

Unlike Detroit, government does not answer to the strict discipline of the market. Business has to adjust to market conditions, or go bankrupt. Modern government grows faster than the underlying revenue base.

Government has difficulty laying off or cutting back, either employment or programs. Thus, it tries to resist budgetary pressures by raising taxes, borrowing ever larger sums, and engaging in budgetary gimmicks. Thus, even before the current recession, California had a structural deficit of $5 billion annually. Los Angeles was running a $400 million deficit prior to the collapse. The federal government, under a conservative president, is somewhere up to $11 trillion in debt, plus untold sums in guarantees and off the books accounting.

Government becomes weaker as it supplies greater resources on a dwindling revenue base. For example, large taxation in the Blue states drives entrepreneurs to the Red states (especially Florida, Georgia, and Texas), leaving behind an ever greater number of residents dependent upon the state for their welfare. The great city of Detroit has shrunk in half from its 1950 population of 1,850,000 to just over 900,000 today, 1/3 of whom live below the poverty line. Almost all of Detroit’s residents are dependent upon government employment or programs. Elected officials must respond to their needs.

Private citizens, you and me, have engaged in similar practices through credit card debt, consumer finance, mortgage refinancing to cash out, home equity loans, leases, student loans, life insurance loans, or payday loans.

Debt is debt is debt, leverage is leverage, whether it be called bills and notes, bonds, debentures, mortgages, personal notes, commercial paper, factoring, cdo’s, senior, junior, subordinated, secured or unsecured.

The problem for Detroit and for America today is that private investors are unwilling to provide additional credit, especially to profligate borrowers.

Thursday, November 27, 2008

Thanks to Claremont on Thanksgiving for Reminding Us of the Meaning of Thanksgiving

Thanksgiving is a feast, a celebration, a holiday, and a day of reaffirmation of the goodness of man. It is a purely American Holiday in origin (Canada also has a Thanksgiving), a secular holiday without a religious basis, that signifies the best of America.

Thanksgiving is a time for thanks: thanks for our family, our friends, our health, our employment, our education, our country; a time to thank all for all we have.

Thanksgiving is above all a time to quietly share with the family without the distractions of picnics, fireworks, and alcohol that may cloud the other secular holidays.

And even if the sky is a little dark, we can still thank ourselves for being Americans – a country in which hope is achievable, and an African American can be elected President of the United States.

For Thanksgiving, the Holiday, was born not once, but twice in times of seeming hopelessness and gloom.

The first was during the darkest days of the American Revolution when the British Army was methodically destroying the Continental Army under the command of General Washington. President John Adams of the Continental Congress proclaimed March 23, 1778 as a day of Thanksgiving as a sign of hope for the future. And just as it is always darkest before the sun comes out, word was received shortly afterwards of the great American triumph at Saratoga. Independence was won that year, although many battles remained to be fought.

President Lincoln formally proclaimed Thanksgiving a holiday on the last Thursday in November in 1863 during the middle of the most horrific period in American history: The Civil War, when father fought son, brother pitted against brother, and the future of both the young Republic and the bitter institution of slavery were at stake.

But none of this is technically what we celebrate on Thanksgiving. Instead, we pay homage to the Pilgrims and Native Americans for breaking bread together in 1621.

The Pilgrims at Plymouth Plantation had lost half their numbers. The Wampanoags under Chief Massasoit, a chief of peace and foresight, and Squanto had taught the Pilgrims how to survive in the New Land. After a bountiful harvest, the Pilgrims and Native Americans broke bread together and celebrated this harvest.

We celebrate a feast between the White Man and the Red Man, a feast which was a rare moment in the history of the 17th, 18th, and 19th centuries of white settlement of the continent.

We celebrate a time of peace and harmony.

Thanksgiving is not the old kids’ game of Cowboys and Indians with talk of scalping. It is not a memorial of Manifest Destiny, a celebration of the Trail of Tears, or a glorification of the genocide that sometimes occurred. We do not commemorate Wounded Knee on Thanksgiving nor mark the anniversary of the reservation system.

It is a celebration of the friendship and sharing between two races – the best that the human spirit can aspire to.

And yet for this day of celebration this year, a grinch has appeared, or more appropriately, a PC gobbler.

Students at Condit Elementary School and Mountain View Elementary School in the Claremont Unified School District have prepared construction paper costumes of the Native Americans and Pilgrims for four decades and then took turns visiting the other’s school every other year to share a Thanksgiving feast and symbolically partake of the coming together of the two peoples. That is a wonderful lesson for young children to learn.

University of California Riverside Professor Michelle Raheja is the mother of a kindergartner student at Condit. She went ballistic in hearing of the custom and wrote a letter, likening the event to dressing up like slaves with friendly slave masters or Jews with friendly Nazis.

The school board held a hearing, after which Superintendent David Cash announced that the two schools agreed to hold the event without costumes. Little did the School Board understand the power of KFI’s John and Ken, the top rated local talk show in Southern California, the blogs, or even the vast majority of the parents.

The parents sent their children to school in the costumes on Tuesday, and threatened to keep the children home on Wednesday, thereby depriving the school district of a substantial sum of money from the state. Superintendent Cash has received police protection because of hate mail and his fears for his safety.

Professor Raheja, whose mother is a registered Seneca, was supported at the hearing by a professor at the University of Redlands, an instructor at Riverside Community College, and a former Pitzer professor, which made their presentations seem like academic political correctness.

What Claremont did was turn a day of togetherness into another lesson of America – that of divisiveness and bigotry.

Monday, November 24, 2008

Citi's In a World of Hurt, and So Are We

What an incredible time we live in, or as a variation of the infamous Chinese Curse: “May you live in interesting times.” We are witnessing the potential collapse of the world's largest bank, CitiBank or CitiGroup as it now wishes to be known.

Seemingly yesterday, two Bear Stearns hedge funds failed, and Bear Stearns shortly succumbed to an old fashion run on the bank – not seen since the days of the Great Crash of 1929. Then Lehman Brothers failed; IndyMac, Washington Mutual, and Wachovia suffered similar fates. AIG, Freddie Mac, and Fannie Mae were bailed out by Uncle Sam. Merrill Lynch threw itself into Bank of America.

But CitiBank, heretofore the world’s largest bank, danced merrily, blindly along, seeing no problems with its hundreds of billions of toxic loans and CDO’s. It banked heavily, blindly, on risk, seduced by the large returns large risks can yield.

And now the real bears on Wall Street are shorting the once mighty Citi into oblivion. If Citi fails, then we are in for a long cold winter, rivaling that of the Great Depression.

Citi’s stock price fell 60% last week, 20% alone on Friday, to a close of $3.77, or roughly $20.5 billion in valuation. This plunge occurred shortly after the federal government invested $25 billion of capital into the bank, and after the bank raised an additional $50 billion in capital.

The collapse has been over 90% from its peak, just a short time ago.

The market’s saying someone is throwing good money after bad.

The market’s looking forward, already discounting the $65 billion in writeoffs so far, half of which are in mortgage failures, with more to come. Corporate buyouts and LBO’s may be unable to refinance or pay off their notes as they come due. Large commercial real estate transactions are under water because of the slumping economy, and Citi faces large writeoffs of credit card debts. It further faces refinancing of $54.6 billion of its own corporate debt through June 30, 2009.

If there is a bank too big to fail, then Citi is it with substantial operations in over 100 countries.

Fortunately for Citi, the bank has not witnessed the run on its deposits.

Fortunately for Citi, it is too big to fail.

As I write, the federal government has agreed to prop up Citi by creating a portfolio of $306 billion in toxic Citi loans. Citi will agree to cover the first $29 billion in losses, and then 10% of additional losses up to $56.7 billion. In exchange the bank gets yet another infusion of $27 billion in tax payer funds.

(And maybe by way of full disclosure, the few Citi shares acquired in my IRA through a merger, might regain some value, and I might even buy more if the price stays depressed).

Management gets to stay. They should go along with the Board of Directors. Clean sweep time!

The real problem for society is not the bailout, however large it may be. Nor is it the greed of the Citi execs who bet the firm’s existence with little understanding of risk. It’s not even incompetence reaching to the highest levels of management.

The underlying problem, which if unresolved, will trigger more disasters in the future is the 1999 repeal of the Glass-Steagall Act of 1933.

The Great Crash of 1929 witnessed the collapse of banks around the country, wiping out the savings of millions of Americans. President Roosevelt declared a bank holiday on assuming office to stabilize the market.

Banks failed because they over aggressively invested depositors' money into Wall Street speculations, risky mortgages, and into an overheated real estate market. (Sounds familiar)

Glass-Steagall separated commercial banking from investment banking. For example, the famous J.P. Morgan & Co. was split into Morgan Guaranty Trust Co. (commercial banking) and Morgan Stanley (the investment bankers). If risks were to be taken, they should be by investment bankers. Checking and savings deposits were to be protected, both through the creation of the Federal Deposit Insurance Corporation and by lowering the risk. Reisdential banking might be boring, but it would be safe.

Bankers chafed at the Glass-Steagall restrictions, which allowed investment bankers greater freedom of operations and higher returns.

Sanford Weill and Citi broke open the act in 1999 and Congress then repealed it. Citi’s commercial bankers led it to ever greater risks, the risks appropriate to investment banking. We are paying the price because we forgot the lessons of the Great Depression.

Friday, November 21, 2008

Michigan - Ohio State

Yes they can! Yes they can! The Wolverines can beat the Buckeyes. Yes, they can beat the Buckeyes tomorrow in Columbus, Ohio at the Horseshoe. Even under the most uneven conditions, the Washington Generals could upset the Harlem Globetrotters. Yes, they can; the University of Michigan can beat The Ohio State University in football tomorrow, but will probably have to wait till next year.

Ignore the 20 1/2 point spread. Toledo did, and see what happened!

The weekends of the great rivalries begin. Great national powers as well as local institutions exult in these games. The Harvard-Yale game is as significant for these great academic schools as any other rivalry.

Marriages are rescheduled around these weekends and births delayed. The bitter, hard fought rivals meet at last in a paroxysm of great hatred, hopefully for four hours, and then the schools can return to sanity and mutuality of respect for each other, along with pride and bragging rights. Such are Cal-Stanford, Army-Navy, UCLA-USC.

Victories bring contributions to the school, coronaries to the excitable losers, and unemployemnt to losing coaches.

Great national rivalries where teams meet once a year in a game meaningful only because it is played, but is totally irrelevant to the daily lives of the alumni and students. Such is USC-Notre Dame.

Some rivalries have names for the battles: The rotten Apple Cup(0-10 Washington against the 1-10 Washington State), the Border War (Kansas/Missouri), the Civil War (Oregon/Oregon State), Red River Classic (Oklahoma/Texas).

Alabama and Auburn met in the Iron Bowl, and if Bama wins this time, then Coach Tuberville of Auburn will be in trouble. Roll Tide.

If only the University of Pittsburgh had not upset West Virginia in the Backyard Bowl last year, then WVA would have been in the BCS Title game and Coach Rodriquez would not have left the Country Roads of West Virginia for the gently rolling hills of the Lower Michigan Peninsula, and this year's game might seem competitive.

Prizes are awardable. The winner of the Big Game, be it Cal or Stanford, gets an axe. Mississippi and Mississippi State play for a "Golden Egg" except when they're both losing. Indiana and Purdue have the Old Oaken Bucket, from which they can drink off their pain.

Michigan-Ohio State; that is the one; universally exclaimed the greatest college rivalry. But not this year. The biggest question is if Coach Tressel can hold the game under the point spread. Of course, that's what they were saying last night when Michigan upset UCLA in basketball.

I have nothing to say about his game except 1-6, 3-8, and 9-2, the meaning of these numbers being well known to the cognoscenti.

What does Michigan have to do to win this game?

Simply follow Michigan's great football tradtion. The record of the 12 Michigan football coaches in this series is 10-1-1 the first time they play Ohio State. The last six have all been winners, and Michigan needs the Magnificent 7.

Maybe Ohio State will get arrogant at home, and play like Florida in the Capitol One Bowl last January. Wouldn't that be great?

Just remember Sweater Vest, every Ohio State coach, including the great Woody Hayes, over the past 75 years has been fired.

Thursday, November 20, 2008

Hail to the Victors! Michigan Beats UCLA in Basketball; Forget Football

Hail to the Victors! Michigan Beats UCLA in Basketball; Forget Football

The lowly Michigan Wolverines, 10-22 last year, just beat the Mighty Bruins of UCLA 55-52 in the 2K Classic semi-finals at Madison Square Garden. UCLA, the greatest team in college basketball history, the Number 4 ranked team in the country, the best recruiting class in America, coached by an almost great coach (you’re not great until you win the NCAA), Ben Howland, the emphasis on defense, just fell to a team it blew out by 40 points at Pauley Pavilion two years ago.

Tonight was certainly not a pretty game, but boy was it beautiful. Indeed, it reflected the rough defensive basketball of the east coast, where both Beilein and Howland have their roots. UCLA could not beat a 1-3-1 zone.

I believe in Michigan. I love New York. David beat Goliath. There will be a bright new tomorrow. Don’t wait until next year. Maybe, just maybe, Michigan stands a chance in Columbus on Saturday.

We can always dream. If Appalachian State can beat Michigan, if Toledo can beat Michigan, if everyone can beat Michigan this fall, then anything is possible.

Dream on!

After a great career at West Virginia, John Beilein was lured to Ann Arbor two years ago to resuscitate the moribund basketball program. The result was an extremely disappointing season; it stank.

This year’s team is now 3-0, and beat UCLA. Did I say Michigan beat UCLA? What were the odds? Michigan’s first win over a top five team in 11 years! – that’s how low the Wolverines had slumped. Let me not gloat though because I have a couple dozen UCLA alums in my classes. Why couldn’t it have been USC in football?

Last year’s Wolverines did not beat one top ranked team; the record was 0-10 against the best, and deservedly so, whereas UCLA lost in the Final Four to Memphis, finishing the season 35-4.

Rick Rodriquez, this year’s football coach, came from West Virginia, and has set a Michigan season record for futility; it sucks. Sounds familiar! Now we know; West Virginia transplants need a year to acclimate.

Wait till next year in Ann Arbor Brutus Buckeye! If you lose to Michigan on Saturday, Jim Tressel should be fired. And all of America, outside Ohio, will salute.

Dream on!

Pete Newell, R.I.P.

Pete Newell, one of the nation’s greatest basketball coaches, passed away on Monday in Rancho Santa Fe at 93.

Pete Newell, one of the most respected coaches in basketball, but among the least known to the public – not an icon like John Wooden, Mike Krzyzewsli, Adolph Rupp, or Dean Smith.

Pete Newell only coached for 14 years, but what a record. In 1949 he took the unknown University of San Francisco to the NIT Title in Madison Square Garden, and Cal Berkeley to the NCAA Title in 1959, third place in 1960 to Ohio State, and then the U.S. to the Olympics Title in 1960. One of the scrubs on the Ohio State team was Bobby Knight, for whom Newell served as a mentor. The Olympics team consisted of Oscar Robertson, Jerry Lucas, and Jerry West.

The NIT was more prestigious than the NCAA at the time.

Only three coaches have won the basketball trifecta of the NIT, NCAA, and the Olympics: Pete Newell, Dean Smith, and Bob Knight.

Newell left USF to build the nascent program at Michigan State for the munificent salary of $12,500, and then went to Cal.

Newell retired after the Olympics at the age of 44. The combination of pre-game stress, chain smoking, copious consumption of caffeine, and pre-game fasting, and the adulation of winning was too much for him. He never stopped coaching for the remaining 49 years of his life.

He served from 1960-1968 as Athletic Director of Cal, and then from 1972-1976 as General Manager of the Lakers. His legacy with the Lakers was the acquisition of Kareem Abdul-Jabbar, and the start of the modern Lakers Dynasty.

The word “coach” is really a misnomer. Like John Wooden, his early contemporary at UCLA, Newell was a teacher of basketball – a teacher of basketball fundamentals.

The Cal championship is an example of his teaching. He took a team of skinny, undersized kids, and got them to play team ball and defense. Cal defeated Cincinnati and its star Oscar Robertson, and West Virginia led by Jerry West to win the title. Robertson was hogtied by Cal, shooting 5 of 16. Oscar had averaged 33ppg that season, leading the nation in scoring. Team defense, fundamentals, conditioning and discipline were his forte – still the key to success today.

He innovated the use of the “over-the-top” pass, resurrected the crosscourt pass, utilized the predecessor of the four-corners offense, and routinely played the all game, full court press before its great success at UCLA.

Newell’s greatest contribution to basketball over the past 3 ½ decades was the creation of the Pete Newell Big Man School – a summer camp for tall basketball players. The alums include Shaquille O’Neal, Bill Walton, Bernard King, Kermit Washington, Hakeem Olajuwon, James Worthy, Scottie Pippen, Sam Perkins, Jermaine O’Neal, and Andrew Bynum. He taught these skilled players the fundamentals of footwork, spacing, and offensive moves.

Newell’s legacy to USF did not end in 1949. While in LA, he recruited a student at Compton Junior College to transfer to USF and become the student Sports Information Director and Assistant Athletic Director from 1948-1950. The student’s PR abilities led to USF receiving the NIT bid. The student’s name: Pete Rozelle.

The glory of the Dons continued. Newell named his assistant, Phil Woolpert, as his successor. Both were graduates of Loyola Marymount in LA.

Woolpert was a true student of Newell. He recruited a tall bench warmer from McClymonds High in Oakland, joined him with a wiry guard, and all of a sudden Bill Russell, K.C. Jones and the Dons won two national titles in 1955 and 1956, and 60 straight games. After losing Russell and Jones to graduation, USF still came in third in the 1957 NCAA. That is coaching! The little Jesuit University on the Hilltop became the biggest mountain in college basketball.

Totally unbiased, Woolpert was the first major coach to start three African American basketball players, Bill Russell, K.C. Jones, and Hal Perry, and then later added a fourth, Gene Brown.

Woolpert later dropped out of basketball coaching, moved to Sequim, Washington, and drove a school bus.

Newell never left coaching.

Ironically, Newell’s death in Rancho Santa Fe followed that of Pete Rozelle’s widow last year in Rancho Santa Fe.

Friday, November 14, 2008

Michigan and Northwestern - Battle of the Academic Titans

Go for TWO: Go for 2 exclaim the Michigan fans – two wins in a row, that is.

Northwestern plays Michigan Saturday in the Big House in a battle of the Academic titans of the Big Ten. Of course, the Big Ten actually has 11 schools, so how stellar can the conference be?

Be that as it may, U.S. News ranks Northwestern # 12 and Michigan # 26. In the two measures that really matter though, Michigan is rated a 4.4 versus 4.3 for Northwestern in professional reputation. More significantly, the London Times study of the world’s great universities ranks Michigan as #18, the highest ranked public university in the world, and Northwestern # 29. We` know the Brits are always so much more sophisticated than the former colonists, so I go with the London Times.

Northwestern is a great national university, but its strength is concentrated in the Midwest. Michigan is truly national in its reach. After all, both my youngest son and myself attended UM.

Michigan has several famous grads in Hollywood, including James Earl Jones, Lucy Liu, Selma Blair, and Lawrence Kasdan.

Northwestern though has long tentacles extending to Hollywood and New York. The grads include Claude Akins, Bonnie Bartlett, Richard Benjamin, Zach Bratt, Stephen Colbert, Robert Conrad, William Daniels, Mary Frann, Brad Hall, Marg Helgenberger,
Charlton Heston, Sherry Lansing, Cloris Leachman, Gary Marshall, Seth Myers, Patricia
Strauss, and Fred Williamson.

Of course, Michigan claims Gilda Ratner, Madonna as two of its most famous dropouts. But once again, Northwestern has Michigan beat with Ann-Margaret, Warren Beatty, Edgar Bergen, Karen Black, Cindy Crawford, Jane Curtin, Julia Louis-Dreyfus, Megan Mullally, Jerry Orbach, Shelly Long, Tony Randall, and Leigh Taylor-Young.

Oh well, Michigan also has Arthur Miller. No Northwestern grad or dropout ever married Norma Jean Baker.

Michigan claims Mike Wallace and Raoul Wallenberg, one of the world’s great humanitarians who disappeared into the Soviet Gulag.

Let’s not forget the Stanford PhD dropout, Larry Page, whose only college degree is from Michigan.

If it’s red meat you want, then Michigan Law School claims Larry Elder, the always temperate Ann Coulter, and Branch Rickey as grads, along with Michael (I don’t like the Pledge of Allegiance) Newdow and Clarence Darrow.

Both Gerald Ford and Tom Dewey failed in their campaigns for the Presidency. Finally, Northwestern has no one to match Bill Ayres, Tom Hayden, Ted “The Unabomber” Kaczynski, Jack Kevorkian, and Francois “Papa Doc” Duvalier. Technically Papa Doc only attended the School of Public Health for two semesters and didn’t graduate, so he’s not formally listed as an alumnus.

Northwestern is the historic doormat of the Big Ten. It leads the NCAA in the all-time loss record for Division IA football teams. It lost a record 34 straight games from 1979-1983. It last won a bowl game in 1949. Michigan has three Heismans to zero for Northwestern, etc., etc.

It’s OK for the Wildcats to win four straight NCAA women lacrosse titles, which is appropriate for a great academic institution. But it should never be competitive in football.

And yet, it won the Big Ten in 1995 and went to the Rose Bowl, where a Hollywood Sea of Purple watched Charlton Heston repart the Red Sea. Northwestern also shared the Big Ten Title in 1996 and 2000, and beat Michigan 54-51 in 2000, 17-16 in 1996, and 19-13 in 1995.

The world is a symmetrical upside down phenomenon this year with Northwestern 7-3 and Michigan 3-7.

Last week, for the first time this season both Michigan’s offense and defense played a complete game and trounced Minnesota, behind the second string QB and a freshman QB/WR Michigan was hoping to redshirt. He QB’d on six plays, ran six times, and gained 48 yards, showing a vision of what a running QB can do for Michigan.

Unfortunately, the thrilling victory did not move Michigan out of Northwestern’s historic perch in the Bottom Ten.

Northwestern may also have to play a backup, backup running QB, whose name is a scary Kafka.

Go Blue.

Friday, November 7, 2008

MIchigan and Minnesota in the Little Brown Jug

Michigan plays Minnesota tomorrow for the Little Brown Jug – whose significance is magnified only when Minnesota wins the game. The Wolverines lead the series 65-32. By the laws of football, Minnesota is only allowed that honor once a decade, 1967, 1977, 1986, 2005. Minnesota has already won the trophy this decade, this century, this millennium, so by all rights Michigan should retain the little jug for perpetuity.

7-2 plays 2-7, the norm in this game. However, the 7-2 are the Golden Gophers and the 2-7 are the Wolverines. An anomaly exists in the football universe.

Not only are the roles reversed, but Minnesota has both a good defense and passing attack, playing into Michigan’s weaknesses. Stephen Threet, Michigan’s QB, has been hitting his stride, but is suffering from a contagious malady on the Michigan team this year; a slight concussion.

Hope exists for Michigan. Minnesota’s successful coach, Glen Mason, was fired at the end of the 2006 season. Tim Brewster, Mason’s successor, led the Fool’s Golden Gophers to a spectacular 1-11 record last season, losing to such powers as Bowling Green, Florida Atlantic, and North Dakota State. Michigan has the chance tomorrow to triple that success.

Minnesota’s wins this year include Northern Illinois, Bowling, Montana State, and Florida Atlantic. A win is a win, especially since Michigan couldn’t even beat Toledo this year.

A friendly warning to Coach Brewster. Beat Michigan this year and lose your job, as happened with Toledo’s Tom Amstutz.

Michigan must win because it is the team's only chance of success this year.

Wednesday, November 5, 2008

Thank You, President Bush

Thank you, Mr. President

Thank you, Mr. President for keeping us safe after 9/11.

Thank you, Mr. President for keeping us safe, even if it meant using aggressive interrogation techniques.

Thank you, Mr. President for showing no mercy to our enemies.

Thank you, Mr. President for lowering taxes, fostering entrepreneurism, and protecting small business.

Thank you, Mr. President for adding 7 million new jobs in 7½ years.

Thank you, Mr. President for steering us through the recession occasioned by the collapse at the end of the previous administration

Thank you, Mr. President for steering us through the 9/11 financial turmoil.

Thank you, Mr. President for comforting the 9/11 families without seeking attention for yourself.

Thank you, Mr. President for steering the airline industry to recovery after 9/11.

Thank you, Mr. President for not panicking at any time.

Thank you, Mr. President for not panicking during the oil price bubble.

Thank you, Mr. President for promoting offshore drilling.

Thank you, Mr. President for your wise judgment in choosing your cabinet.

Thank you, Mr. President for replacing your advisors on the few occasions when they were not up to the job.

Thank you, Mr. President for changing the Secretary of Defense, military leaders, and the strategy when the existing strategy was not working in Iraq.

Thank you, Mr. President for realizing, like President Lincoln, that you need generals who know how to win.

Thank you for the surge.

Thank you for making the most of the military, whose ranks were depleted during the previous administration.

Thank you, Mr. President for changing the ethos in the Mid East.

Thank you, Mr. President for fighting to add to the Republican majorities in 2002 and 2004.

Thank you, Mr. President for keeping a low profile this election cycle to help Senator McCain’s campaign, even while raising funds for the Republican Party.

Thank you, Mr. President for standing up to the Democrats in Congress.

Thank you, Mr. President for your efforts in attempting to rein in Fannie Mae and Freddie Mac before it was too late.

Thank you, Mr. President for letting Treasury Secretary Henry Paulson and Fed Chair Ben Bernacke craft the road out of the global financial collapse.

Thank you, Mr. President for attempting, along with Senator McCain, to broaden the base of the Republican Party.

Thank you, Mr. President for your loyalty, especially with our allies.

Thank you, Mr. President for never complaining or blaming others.

Thank you, Mr. President for restoring dignity, grace, and honor to the Presidency and White House.

Thank you, Mr. President for not one scandal in the Presidency or White House.

Thank you, Mr. President for professionalism.

And thank you, Mr. President, most of all, by governing for what is right for the American people versus popularity, unlike many politicians.

Monday, November 3, 2008

The Republican Party Will Once Again Rise From the Ashes Like the Phoenix

By all rational observations, tomorrow will be an election debacle for the Republican Party. Even if by some modern miracle, the McCain/Palin ticket wins, substantially enlarged Democratic majorities in the House and Senate will cripple their administration.

Worse case scenarios include the Democrats holding 60 seats in the Senate, thereby not only obtaining a filibuster free Senate, but also the ability to throw Democratic Senator Joe Lieberman overboard.

House seats, governorships, and state legislative chambers, including the New York Senate, will flip to the Democrats. Even weak Democratic incumbents will return to office. The collapse of the Dow Jones, followed by the freezing of the credit market, is a tombstone for the party in office.

Pundits will proclaim the end of the GOP and the conservative movement. These will be recycled obits from 1964 and 1974. President Lyndon Baines Johnson in 1964 recorded a landslide victory over Senator Barry Goldwater. The Democrats ended up with 295 House seats and 68 Senate seats compared to 140 and 32 respectively for the Republicans. That is a total rout!

1974 was the Watergate election. The Democrats emerged with 291 House seats and 60 Senators. That too was a rout!

Yet, a Republican, Richard Nixon, won the Presidency in 1968, and out of the Goldwater debacle, like a Phoenix rising from the ashes, rose Ronald Reagan and the modern conservative movement. Governor Reagan won the Presidency in 1980 and carried Republicans to control in the Senate.

The Republicans climbed to political success in 1994 by capturing both the House and Senate. The November 21, 1994 cover of U.S. News & World reports is headed “The Charge of the Right Brigade.”

Republicans are obviously hoping for repeats in 2010 and 2012, betting on overreaching by the Democrats, and a further slipping of the economy. The Democrats will be sorely tempted to overreach with health care, taxes, environmental regulation, labor unions, immigration, trial lawyers and the United Nations. A couple of false steps will lead to high inflation.

The base of the Republican Party had historically been Wall Street, Main Street, rural America, and the suburbs, populated by middle class residents who fled the corruption, crime, poor educational systems, and poverty of the cities for the open space, single family homes, and quality education of the suburbs.

Both Nixon and Reagan expanded the base of the Republican Party. President Nixon implemented the Southern strategy for the Republicans, in the long run trading the shrinking Northeast for the growing and conservative South. President Reagan reached out to the Blue Collar Democrats, the McComb County Democrats, and to the religious conservatives.

The Republican base has been shrinking in recent years. The suburbs have been trending Democrat, mostly because of social issues, especially abortion. Single women have increasingly voted Democratic as have the professional classes.

Economic conservatives abandoned the Party in 2006 as the Republicans became just as spendthrift, wasteful, venal and corrupt as their Democratic colleagues.

A caveat for the Republicans is that it cannot succeed as a “whites only” party in an increasingly diverse population. President Bush and Senator Obama recognized this reality, but the McCain Kennedy Immigration Reform Bill failed. The GOP must expand its base past the political immigrants (especially Cubans and Vietnamese) to the economic Hispanic immigrants.

The challenge for President Obama is to transform a center right populace to a European state oriented/dependent population as the Democratic Party becomes a European Social Democrat party.

The Democrats are the party of government – not of free enterprise.

President Obama will attempt to make the middle class, indeed most of the population, dependent upon the government. His redistributionist plan is to transfer tax credits to the middle class, thereby buying their support. Medical care will be funneled through a single payor system; i.e. the state, joining Social Security and Medicare/Medicaid in tying large numbers of the population to Washington.

If over half the population becomes dependent upon the government through employment, programs, and tax credits, then the Democrats will have an inherent advantage in future elections. In essence, the urban Democrats will extend their reach into traditional Republican bailiwicks. It will be difficult for Republicans to wean the middle class off the government once they become addicted to the government largesse.

This goal is a matter of politics, not of economics. To the extent that private entrepreneurs will be discouraged, and that capital may flee to Asia, will not be an unwelcome development since the remaining population will be increasingly dependent upon the state.

Out of tomorrow will rise new Republican leaders, the Palin Republicans, to replace the “Pork Barrel” Republicans.

Sunday, November 2, 2008

The Cecil B. DeMille Spectacles of Obama

Senator Obama will preside on Election Night over the third of his outdoor spectacles.

The first in Berlin on July 24 was the culmination of his Grand European Tour. Originally proposed for the historic Brandenburg Gate, it was moved at the request of German Chancellor Merkel to the Tiergarten, where it drew 200,000 wild and enthusiastic Germans.

Critics accused him of acting like a celebrity.

His response was at the Democratic National Convention, where he moved his August 28 acceptance speech to Bronco Stadium (Invesco Field) in front of fake Greek columns. His soaring oratory elevated a crowd of 55,000 in the Mile High City.

And now comes the victory celebration in Chicago’s Grant Park before a jubilant crowd of 60,000-70,000 at an estimated cost of $2 million.

Once happens.

Twice may be a coincidence.

Thrice is a clear pattern.

The Senator exults in the adulation of the crowds. Watch his face as he soaks in their vibes. He needs acceptance, mass acceptance. That is a scary proposition. I leave the amateur psychology to you.

Other acts and statements further hint at a high need for acceptance, fear of rejection, a thin skin, and desire not to invite criticism.

Senator Obama voted “present” 129 times (3% of his votes) in the Illinois Senate. He ducked formal votes on controversial issues. That’s not leadership. His intent was either to avoid criticism, or he was looking forward to his run for President.

His answer to Reverend Richard Warren at the Saddleback Church debate is illuminating. When asked when “does a baby get legal rights,” the Senator responded “That’s above my pay grade.” He’s running for President of the United States, and ducked a question of great moral, personal, and religious significance to most Americans.

By way of contrast, whether you are pro-choice or pro-life, Senator McCain gave a direct answer: “At the time of conception.” You know where McCain stands on that issue.

Professor Obama intentionally took a non-tenure track position at the University of Chicago Law School, thereby avoiding the obligation to engage in scholarly and creative work. The Senator has undertaken no leadership positions, and hence has avoided upsetting any major voting blocs.

While the Senator has consistently voted on the left side of issues, thereby securing his political base, he has no written trail, thereby offering a tabula raza for all of us to imprint our hopes and dreams on.

The Senator has consistently singled out FoxNews, Sean Hannity, and Russ Limbaugh for their criticism of him. That is telling, so expect the “Fairness” Doctrine, censorship by another name, to be reimposed on the media. He has stated that he would be winning by a wider margin if it weren’t for FoxNews. Of course, if the mainstream media had flyspecked his record as they did with Governor Sarah Palin, or even Joe the Plumber, then he would not have won the Democratic nomination.

Just a few days ago the Obama campaign kicked three reporters off the campaign plane. Regardless of the explanation proffered, the fact is that in all three cases their employers, the Dallas Morning News, New York Post, and Washington Times, endorsed Senator McCain for President. This act may simply reflect hard nose Chicago politics, but considering that almost every major newspaper endorsed Senator Obama for President, it looks petty and vindictive.

Lashing out and retaliating against critics sends a bad omen for his Presidency. President Obama will actually have to make difficult decisions and face hostile criticism from an increasingly disappointed public.

He insisted certain subjects should be off-limits, including his middle name, his wife, and even Reverend Wright. When you are running for President, nothing is off-limits, no matter out distasteful and unsavory the attacks may be. Michelle Obama has been publicly campaigning for him, and in a moment of exultation uttered a statement that seemed, out of context, to be un-American. That is newsworthy, eventhough my take is that she was so excited because her husband had secured the Democratic nomination that she meant to say “This is the proudest moment of my life as an American.” An even prouder moment will be on January 20, 2009.

Yet, the statement in context with Reverend Wright, Father Pfleger, and Bill Ayres is fair game.

Senator Obama is praised for his “coolness.” He’s “unflappable.” He never seems to panic. But he never lets any observers, including reporters who have been following his campaign for an extended period, see behind his mask. We don’t know who the real Obama is.

But we do, if we look and listen carefully. The “coolness” hides the reality that he is not doing anything. He is leaving decisions and the hard work to others, thereby preserving his popularity. Indeed, during the recent bailout bill, Senator McCain was criticized for suspending his campaign for a day and a half to help out in Washington, but Obama was praised for not doing anything. Technically, Senator Obama said “He would monitor developments.” Wall Street was collapsing, any legislation would affect his Administration, and he would “monitor” events. That is not leadership!

Senator Obama will become on January 20, 2009 the President of the United States, the leader of the Free World, and the most powerful person in the World. Events will force him to make decisions. Acts, not rhetoric, will be called for.

Vice President Elect Biden said President Obama will be tested in the first six months. Wrong! He will be tested from Day I, domestically and globally, by friend and by foe, allies and enemies, challenged by Pelosi and Reid to advance Congress’s agenda, and by the left, his old friends, for their agenda. The AFL-CIO and the Sierra Club will be collecting favors. Vice President Biden will do the bidding for the Trial Lawyers.

The economy is hanging by a thread; the wrong decisions could send us into the Great Depression II, but failing to act or procrastinating, will only compound the problems.

He will soon test leadership against popularity. That’s always a dangerous trap for Presidents, especially those who have never served in executive positions. President Obama will find that his options are limited because talk is cheap when you do not have to make the decisions.

Rightly or wrongly, President Bush decided to ignore popular opinion and “do the right thing.” He’s willing to let history judge.

I worry about President Obama and the American Republic.

Saturday, November 1, 2008

The Charitable Poverty of Our Compassionate , Selfish Liberals

Some talk the talk, others may walk the walk, and a few do both well. Thus, we should judge people by what they do as well as what they say.

Let me start with a few caveats.

First, my initial inclination was not to use words like selfish. However, Senator Obama recently referred to Senator McCain and Governor Palin as “making a virtue out of selfishness.” One who understands capitalism and the human spirit will understand that selfishness is just another word for ambition and drive, this time in the economic arena rather than the blind ambition present in politics.

Second, a different dynamic was at work with Barack and Michelle Obama in their early years. We should no more question their public service over a decade than Senator McCain’s patriotism.

The two Harvard educated lawyers have four Ivy League degrees between them. They could have easily earned a fortune practicing law for the big firms in Chicago. Yet, they clearly dedicated their lives to public service and the community. No cattle futures for them!

However, once their annual income reached $200,000 they remained frugal with charitable contributions. 2004 is a typical year. Only $2,500 was declared as charitable contributions on a reported income of $207,647. In 2002 they donated only $1,050 on income of $259,394.

This frugality with charitable giving is common with our compassionate liberals.

A look at the tax returns of our political candidates reveal a stunning reality about the Democrats. They may express compassion for the middle class and down trodden, but when it comes to actual charity, they are selfish. We know this by looking at their deductible charitable contributions.

Studies show that conservative households on average give 30% more to charities than liberal households, although the average household income of the conservatives is 6% less than that of the liberals.

The Obama’s income jumped to $1,655,106 in 2005; their contributions rose to $77,315, and continued in 2006 and 2007. Their charitable contributions hovered around 6%. Income was $4,139,965 in 2007 and $983,826 in 2006. Charitable deductions were $240,370 and $60,307 respectively. $27,500 went in both 2005 and 2006 to Reverend Wright's Trinity United Church of Christ.

By this time though, Senator Obama has decided to run for President and probably wished to avoid the embarrassment suffered by Vice President Gore during his run at the presidency.

And then we have the Joe Biden, the “common man,” who seems to have forgotten his roots except in elections. The Bidens earned between $210,797 and $321,379 in the ten years from 1998 through 2007. The most they claimed in charitable contributions was $995 (of which only $595 was cash) last year. Other than that it ranged from $120 to $380. Their contributions during this time totaled $3,690.

Both Obama and Biden have been more generous, believe it or not, than Al Gore. The Vice President, living in the Vice President’s Mansion, reported income of $197,729 in 1997, and only managed charitable contributions of $353, for an effective giving rate of .19%

Gore was positively munificent compared to Senator John Kerry, the same John Kerry who has twice married rich. Although he donated $44,000 on income of nearly $400,000 in 2003, the year before he ran for President, he sometimes did not claim even a penny in many years in the 1990’s.

Governor David Patterson of New York earned $269,815 in 2007, but donated only $150 in the form of old clothes to the Salvation Army.

By way of comparison, the Vice President and Lynn Cheney donate all the royalties from their books to charity, amounting to almost $8 million since he became Vice President.

The Palins had income of $166,080 in 1996 and $127,869 in 2007. Their charitable contributions last year were $4,880 and $3,325 in 2006. Either year exceeds the total cash contributions of the Biden’s this decade.

Senator John McCain, who reports separately from his wife, earned $386,527 in 2007 and donated $105,467. He gave away $96,333 in 2006 on income of $338,809. Since Cindy McCain only released the first two pages of her last two returns, we do not know what her contributions were. She did claim total deductions of $569,737 on income of $4,551,901 in 2007.

As with the Vice President, Senator McCain donates his book royalties to charitable organizations. That has amounted to over $1.8 million.

The logical explanation for the liberal parsimoniousness is that they believe that the government should make these decisions whereas the conservatives know they have a personal obligation to help. Conservatives believe in the individual, and with that belief comes personal responsibility – the duty to give back.

Liberals leave it to the government. They believe the government is the answer to all problems, and hence should decide who should be the recipients of largess. The government will decide by taxing the earners to redistribute the income to those the government deems more worthy.