Tuesday, April 28, 2009

100 Day Report Card of President Obama

Report cards are ubiquitous on President Obama’s first 100 days. They can be easily summarized. Liberals love the President, Conservatives loathe him, and moderates are agnostic. The main stream media remains his biggest cheerleader (see the May 4, 2009 Time Magazine), while Rush Limbaugh, Sean Hannity, and Glen Beck preach to the minority.

President Franklin Delano Roosevelt set the standard with his first 100 days. He became President in a great economic collapse. FDR with the assistance of a new Democratic Congress enacted a series of breathtaking measures without even giving the legislators time to read the bills before voting. Sounds familiar!

Of course, we do not apply the 100 day mark to most Presidents. Presidents Truman and Johnson assumed office upon the deaths of FDR and JFK, so a different standard should apply. President Truman ended World War II though, albeit not in 100 days. President Eisenhower similarly ended the Korean War. However, President Johnson sharply escalated a war, and then lied to the public about his plans for Vietnam, projecting his intentions upon Senator Goldwater.

President Kennedy brought freshness and culture to the nation’s capital, but is measured by 1000 days because he accomplished little of substance in 1000 days, much less 100 days. He signed off on the disastrous CIA Bay of Pigs invasion of Cuba, and sent military troops to South Vietnam, which President Eisenhower refused to do.

President Nixon faced a hostile Congress and his secret plan for Vietnam took 2 years to complete.

President Ford succeeded the disgraced President Nixon, and was immediately caricatured by Chevy Chase and Saturday Night Live. He watched as overwhelming, veto proof Democratic majorities in the House and Senate cut off all funding for the South Vietnamese. He also encountered high inflation.

President Carter pardoned the Vietnam War draft dodgers who fled to Canada, endorsed a Palestinian Homeland (foreshadowing his more recent anti-Israel positions), antagonized Congress, and displayed early signs of his incompetence.

President Reagan welcomed home the hostages, survived an assassination attempt, and cut taxes.

President George H. W. Bush followed President Reagan. Lacking an agenda, he let events control him, including the S & L crisis, although he acted quickly to throw off whatever remained of the Reagan Administration. So much for loyalty! He paid the price in his reelection campaign.

President Clinton announced major, retroactive tax increases, dropped a stimulus bill, and fought the military brass over gays in the military, while Hillary Clinton pursued a then failed socialized medicine bill.

President Bush acted to steady the economy in the collapse of the dot.com boom, cutting taxes.

President Obama has a similarity to his predecessor, President George W. Bush. Both really mean it when they believe in a program. In a city of insincerity, could it possibly be that we should believe what our leaders say? At least that is the case with the substantive proposals. The incidentals, such as high ethical standards, no earmarks, and no lobbyists in the Administration, well that’s still business as usual, which keeps Congress happy.

The whole stimulus bill, not to mention the budget bill, was basically earmarks.

All adminstrations make rookie mistakes at the beginning, such as President Obama's political military director in the White House having Air Force One fly by the Statue of Liberty.


President Obama’s popularity is currently in the low to mid 60%. While much can be made, especially by the media, of his high approval, the reality is that Presidents Carter, Reagan, and George W. Bush enjoyed similar ratings at this time in their Administrations, while Presidents George H. W. Bush and Clinton were in the high 50%’s. Both Presidents Clinton (37%) and George W. Bush (29%) had relative had negatives at this point, foreshadowing future problems. President Obama's negatives average a dangerous 30% at this point.

Foreign Policy



He played well to international audiences, especially those of the left. Castro and Chavez received favorable attention, he bowed to the Saudi King, but presented the British Ambassador and Queen Elizabeth thoughtless gifts.


If only words could change European behavior! Apparently, they say they loathed President Bush, and love President Obama, but they do not want any of the Gitmo prisoners. Nor will they materially aid the war effort in Afghanistan.

President Obama’s big test is the fate of Pakistan. He cannot lose Pakistan, such as President Carter lost Iran, for which we are still paying a steep price in the Mideast.


Too early to assess; sometimes, as with President Truman, decades are needed. His recent acts and decisions may over time increase the image of America as an unreliable partner.

National Security

President Obama has found true waste in the federal budget. As with most Democratic Presidents, he wishes to substantially cut the defense budget and new weapons programs. The anti-missile program has been cut, and eastern European countries, which have agreed to base some of the necessary radar, may be cast adrift. His Administration is proposing to cut an aircraft carrier unit out of an already substantially shrunken navy.

He’s conflicted about the legal opinions allowing aggressive interrogation/torture. A presidency built on populism and demagogy (especially in Congress) runs the risk of unleashing uncontrollable forces. Both the French and Russian revolutions consumed most of their own.

He must also appease the left of his party, but knows that if a 9/11 occurs on his watch, he will fail.

Thus, he’s closing Gitmo (maybe), but keeping Bagram open.

Domestic Policy


The Stimulus and Budget Bills unleash the potential for hyper inflation, but the path was marked by President Bush.

The more immediate problem with the Stimulus Bill is that little of it is stimulus or infrastructure investments, but mostly transfer payments.

FDR’s concern was to put millions of unemployed Americans to work. President Obama’s bills pay out billions to a relatively small number of highly paid (union) workers.

The economy and his political leanings point to a major nationalization of the domestic auto industry, the banking system, and the healthcare industry. The result will be Eurosclerosis..


Whenever possible, a reversal of the Bush Administration policies.


A dangerous reliance on Green Energy coupled with opposition to coal and oil. Watch energy prices skyrocket in the future as the economy recovers.

Global Climate Change

Even if Congress won’t act, President Obama has an ace in the hole; the EPA will regulate carbon dioxide emissions pursuant to the power granted it by the Supreme Court last term.


Universal healthcare will soon be jammed through Congress as we join Canada and England in medical rationing.


Card check is delayed, but Labor has been rewarded with a relaxation of federal regulations of unions, protectionism in the Stimulus Bill for steel, and tightening of the Davis-Bacon prevailing wage requirements on government contracts. Mexican trucks are now banned, contra to NAFTA, with Mexico retaliating. Visas for foreign workers are greatly restricted.

President Obama is trying to save what’s left of the once great UAW. It’s hard though when the Administration does not believe in Detroit. Just as Californians, his people drive imports.


The Teachers Unions don’t want Charter schools, Neither does Congress so President Obama signed on.

Social Issues

Elections have consequences, so President Obama quickly reversed the Bush positions on embryonic stem cell research, abortions, and medical conscience.


“Comprehensive immigration reform”, labeled “amnesty by opponents, is on the agenda.

The Cabinet

A combination of competence and an ethical morass - perhaps a promise of greatness or an ethical time bomb.

Political Future

The Reagan Revolution is currently in hibernation if not dead.

President Obama and the Democratic Party are currently in great political shape. Yesterday’s defection of Senator Arlen Spector to the Democratic Party coupled with the imminent swearing in of Al Franken as the Senator from Minnesota will give the Democrats a filibuster proof 60 Senators if they maintain solidarity.

The Democrats just held onto an open House seat in upstate New York. This seat was historically Republican, but now Senator Kristen Gilbertson won it for the Democrats 4 years ago.

A now leaderless, demoralized, and possibly rudderless GOP, lacking the Presidency and either house in Congress also faces a substantial fund raising handicap for the 2010 midyear elections.

Presidential Style

President Obama is very disciplined unlike his Democratic predecessor, President Clinton, but Clinton couldwing it when the teleprompter failed.

The 100 Day Grade

Technically an incomplete, but President Obama is well on the path to converting the American economy to the statism of Western Europe.

Monday, April 27, 2009

Is Ken Lewis Just Naive or Tone Deaf?

Bank of America’s annual meeting is Wednesday. With any luck shareholders will vote Chair Ken Lewis and the rest of the Board of Directors out of office.

Shareholders are outraged at the $50 billion paid for Merrill Lynch when the brokerage was failing. Lewis intentionally failed to inform B of A shareholders of this material fact before they voted on the merger. Only after completion of the merger was it announced that the bank would receive an additional $20 billion in TARP funds, further diluting the existing shareholders’ interests. The bank’s shares plunged to $3/share, and are still under water.

Merrill Lynch was hemorrhaging so bad that Lewis wished to scuttle the merger by invoking the “material adverse change” clause in the merger agreement. Such a public announcement would have sunk Merrill Lynch and in the words of then Secretary of the Treasury Henry Paulson would have “posed a systemic risk.”

Lewis further claims that Secretary Paulson and Federal Reserve Chair Ben Bernancke admonished him not to tell shareholders of Merrill’s risky condition. The Secretary purportedly said “We do not want public disclosure.”

Secretary Paulson could not risk the collapse of the largest investment banking firm, Merrill Lynch, in the aftermath of the Lehman Brothers collapse, which sent the global credit markets into a global freeze. The global economy was in danger of plunging into a depression. The Bush Administration threw money into the breach to save what was left of Wall Street. Lehman crippled the world’s financial markets.

Paulson admits applying pressure to Lewis, but denies Bernancke was involved. Both deny providing Lewis any advice on disclosure

Apparently, neither a recording nor transcription of the meeting exists.

This dispute is over a multibillion conversation. Utterly amazing that apparently neither a recording nor transcript exits of these conversations in light of their significance! What we have here is a multi-billion dollar failure to communicate.

It reminds me of one of my favorite quotes as a professor. “I know what I said, and you know what you heard. But I know that what I said is not what you heard.”

In essence, B of A acquired Merrill Lynch in a shotgun wedding. The Bank had buyer’s remorse before the marriage was consummated.

Even without the power possessed through the issuance of preferred stock and warrants for TARP financing, federal regulators have tremendous power over the nation’s banks; indeed, the power of life and death.

Congress enacted the $750 billion TARP Fund, with almost no limits on the power of the Secretary of the Treasury to distribute the funds.

Secretary Paulson called the heads of the nation’s top 13 banks and investment banks into his office on October 13, 2008 and informed then that they would receive TARP funds in exchange for preferred stock and warrants.

Richard Kovacevich of Wells Fargo and Jamie Dimon of J.P. Morgan Chase protested they did not need the funds. They were adequately funded and had avoided the toxic subprime mortgages that were threatening the American and world banks.

As recounted by Fortune magazine, Secretary Paulson responded: “Your regulator is sitting right there” (pointing to Comptroller of the Currency John Dugan and FDIC Chair Sheila Bair) and continued “[Y]ou’re going to get a call tomorrow telling you you’re undercapitalized and that you won’t be able to raise money in the capital markets.”

A Fed willing to summarily fire Rick Wagoner, the Chair of GM, and half its Board of Directors, would not hesitate to throw out the entire Bank of America management.

I believe Lewis, but it doesn’t matter. He owed the shareholders both a fiduciary duty and the securities regulation duty to disclose material facts to them before they voted. That is the purpose of proxy statements and amended proxy statements. Apparently, no facts have surfaced that he even consulted legal counsel for advice.

Remember also that he initially claimed to be a surprised as anyone of Merrill’s large loss of $15.84 billion during the 4th quarter of 2008 and was shocked by the $3.62 billion bonuses. Lewis was shocked, just shocked, straight out of the classic scene from Casablanca.

We now know that he was aware of these developments along the way. He had agreed to the acceleration of the bonuses.

John Thain, Chair of Merrill Lynch, was fired by Lewis shortly after the acquisition of Merrill Lynch. Thain is outraged by his treatment and the misstatements about Merrill’s bonuses and economic condition. He could prove an interesting witness in any securities fraud litigation against Lewis and the B of A Board.

Lewis’ initial recollection was wrong once, and hence, perhaps again.

Interestingly, he now defends the mergers by bragging that Countrywide and Merrill Lynch are primarily responsible for B of A’s reported $4.2 billion in first quarter profits. Merrill accounted for $3.7 billion, or 90% of the bank’s profit. If so, that doesn’t say much about the core Bank of America business he was overseeing.

If his remarks are interpreted literally, Lewis sold out the shareholders of the Bank of America to keep his job.

Thursday, April 23, 2009

Phil Spector and Celebrity Trials and Mistrials, Justice and Injustice

Prosecutors all around the country quietly celebrated the second degree murder conviction last week of Phil Spector. Once, seemingly just once, a Hollywood celebrity did not beat a homicide rap. O.J. Simpson and Robert Blake, not to mention Michael Jackson, did not win this one.

Yet, all is not as it seems. Prosecutors have won more trials than one realizes while acquittals often occur far outside the greater Los Angeles metropolitan area. In addition, prosecutors have encountered similar problems with non-Hollywood celebrities such as star athletes.

We will ignore the lesser crimes, the common, run-of-the mill peccadillos of Hollywood, no mater how egregious or conversely humorous, such as DWI’s (Mel Gibson with anti-semitism), drugs (father and son Ryan and Redmond O’Neal), illicit sex (Hugh Grant), indecent exposure (George Michael and Pee Wee Herman), transgender encounters (Eddie Murphy), shop lifting (Winona Ryder), and tax evasion (Al Capone convicted and Wesley Snipes acquitted).

The first non-Hollywood supertrial of a Hollywood star was that of Roscoe “Fatty” Arbuckle. Fatty was the superstar of the silent film era, earning millions of dollars. Virginia Rappe, an actress, was raped in a hotel room he rented at the Palace Hotel in San Francisco. She subsequently died of her injuries. Fatty was tried for the rape and murder. Juries twice could not reach a verdict. He was acquitted by a San Francisco jury after the third trial. He won, but his career died.

The swashbuckling Errol Flynn had a well-earned reputation for swashbuckling underaged women, “San Quentin Quail” as he would call them. He was acquitted in 1943 of two counts of statutory rape, which had the perverse effect of embellishing his reputation. I remember reading once that his wife (I don’t remember which one) liked to have sex with Errol every morning to minimize the chances of him fooling around later in the day.

Charlie Chaplin, who twice married 16 year old brides, was also acquitted of violating the Federal Mann Act, which prohibits the taking of a woman across state lines for immoral purposes. The statute was most often applied when minors were involved. The English born Chaplin showed his gratitude to the jury and America by moving to Switzerland.

The singer “R. Kelly,” Robert Sylvester Kelly, was indicted in Chicago on June 6, 2002 of 22 counts of sex with a minor. He was acquitted 6 years later.

On the other hand, Chuck Berry, the great singer, was convicted in 1959 of the Mann Act. He was released from prison in 1963. Four decades earlier, Jack Jackson, the first black heavyweight champion, was also convicted of the Mann Act. The real crime of each was that the woman was of a different race. Jack Jackson was with a white prostitute, while Chuck Berry cavorted with a 14 year old Native American.

Another African American heavyweight champion, Mike Tyson, was convicted by an Indiana jury of rape in 1992.

Rob Lowe dodged a bullet. He was stupid enough to film a sexual escapade in Atlanta during the 1988 Democratic National Convention with two women, one of whom was only 16. No charges were filed, but he subsequently entered rehab, claiming an addiction to alcohol and sex (the Michael Douglas defense).

Another Bad Boy of music, Sean “Puff Daddy” “P. Diddly” Combs was acquitted in New York in 2001 of a weapons violation. Combs allegedly fired a gun outside a nightclub, wounding three, and then bribed his chauffeur to be the fall guy. He was represented by the great lawyer, Johnnie Cochran, Jr., who also represented O.J. in his double murder acquittal. Puff Daddy did lose his then girl friend, J. Lo, though.

Calvin “Snoop Dogg” Broadus was also acquitted of homicide in the shooting death of a rival gang member.

A 2005 LA jury acquitted Robert Blake of killing his wife, Bonnie Lee Bakley in 2001. His defense was the standard defense in homicide cases of putting the deceased on trial. Bonnie was a woman with a checkered past. Los Angeles District Attorney Steve Cooley referred to the Blake jurors as “incredibly stupid.” A smarter jury in a subsequent civil trial awarded $30 million to her survivors. Blake dodged that too by entering bankruptcy.

Of course, the most infamous homicide trial was that of O.J., “The Juice,” Simpson, who was not only acquitted in Los Angeles, but also subsequently in Florida of road rage. The Juice always possessed street smarts, but was otherwise a little slow on the uptake. OJ was a great high school football player at Galileo High School in San Francisco, but had to play two years for San Francisco City College (CCSF) before enrolling at USC. OJ was also stupid enough to commit a crime in Vegas while one of his accomplices was taping it.

OJ’s LA acquittal was preordained when the then, but since voted out of office, DA Gil Garcetti, decided to book OJ at the Central Jail rather than Santa Monica, the normal venue for crimes in Brentwood. Garcetti was scared that a conviction of OJ, shortly after the vicious riots in the aftermath of the acquittal of the officers involved in the beating of Rodney King, would trigger another series of riots.

The resulting jury pool was comprised mostly of minorities who shared great animus towards the LAPD. Johnnie Cochran, who got his start as a prosecutor in LA, knew where the skeletons were in the LAPD and could play the police brutality and incompetence angle to the jury.

As with Robert Blake, a subsequent civil jury awarded $33.5 million to the Goldman family, who unfortunately cannot claim his house or pension.

John Holmes, aka Johnny Wadd, was acquitted of the of the 1981 quadruple Wonderland murders.

Claudine Longet, the singer, actress, and ex-wife of Andy Williams, shot her boy friend, Spider Sabich, to death in his Aspen, Colorado home on March 21, 1976. The Colorado jury acquitted her of homicide, but convicted her of misdemeanor homicide for the “accidental discharge.” She paid a small fine, spent 30 days in jail, ran off with her married attorney, and watched a vicious parody on Saturday Night Live.

Not only ex-spouses, but also celebrity children can get in the act. Cheryl Crane, the 14 year old daughter of the actress Lana Turner, stabbed to death with a kitchen knife Lana’s abusive lover Johnny Stompanato. That 1958 murder didn’t even go to a trial. The Coroner’s Inquest ruled it “justifiable homicide.”

Christian Brando, Marlon’s neglected son, pled guilty to manslaughter in 1990 for killing Dag Drolley, his half sister’s boyfriend.

In a small, small world after all, Robert Blake’s attorneys attempted to pin Bonnie Lee’s murder on Christian. Apparently Blake and Brando had been competing for her affections. Blake won by impregnating Bonnie Lee.

Let us also not forget the fabled Menendez Brothers, Lyle and Erik, who murdered their parents on August 20, 1989 for money. Leslie Abrahamson won fame as the defense attorney by getting a hung jury in the first trial. Retrials resulted in guilty verdicts and life imprisonment for the two, who both managed to get married in prison.

Phil Spector was also convicted in a retrial of second degree homicide of Lana Clarkson in the drunken sport of Russian roulette. Lana lost.

No retrial though for the Baltimore Colts All-Pro Linebacker, Ray Lewis. 2 died in a shooting at a Super Bowl Party in Atlanta on January 30, 2000. Lewis and two others were arrested. Lewis flipped, copped a misdemeanor obstruction of justice charge, and testified against the two co-defendants. They were acquitted. Settlements of undisclosed amounts were subsequently entered into with the victims’ families.

William Kennedy Smith beat a Florida rape charge in 1991. He was represented by the great Florida trial lawyer Roy Black, who more recently represented Rush Limbaugh in his drug possession case. On the other hand, Michael Skakel, related by marriage to the Kennedy’s, but lacking the Kennedy surname, was convicted in Connecticut in 2002 of the murder of his 15 year old neighbor 27 years earlier.

John DeLorean, a automotive genius with GM, had less success with his DeLorean, was charged with cocaine trafficking on October 19, 1982, but was acquitted in 1984 with the defense that the feds entrapped him.

This blog started with Fatty Arbuckle, but one earlier famous murderer won an acquittal in Fall River, Massachusetts, about as far as you can get in America, both geographically and culturally, from the City of Angels. Lizzie Borden, the axe woman, convinced a jury in 1893 of her innocence in the brutal murders of her father and step mother.

The reason many of these celebrities escaped justice is not that they are celebrities, but that the golden rule of justice applies. Those with the gold can buy justice, or at least acquittals, by retaining the best attorneys and sparing no expense on the defense.

Wednesday, April 15, 2009

Four Somali Pirates Tested President Obama

They lost.

Even though only four pirates lost to the U.S. Navy, the outcome is significant in America’s modern involvement in the Mideast. Had the Obama Administration failed the test, President Obama would have joined Presidents Carter, Reagan, and Clinton. The Mideast has been a blackhole for recent American presidents.

President Carter first lost Iran to the Ayatollah Khomeini and the radical mullahs. He then presided over the national humiliation of 52 American diplomats held hostage for 444 days. The rescue mission he authorized turned into a disaster in the desert. America appeared impotent while Iran remains the Godfather of Radical Islam.

Carter’s successor, President Reagan had his moment of weakness in the area. He dispatched the Marines to Beirut to stabilize Lebanon. A truck bomb exploded in the Marine Barracks on October 23, 1983, killing 220 Marines, 18 Navy sailors, and three Army soldiers. The tragedy could have been averted, but the rules of engagement forbad the Marine guards from loading live ammo in their weapons. They watched helplessly as the bomber drove into the Barracks lobby.

President Reagan pulled the Marines out of Lebanon in February 1984. The effect was an image of American weakness and lack of will. Osama Bin-Laden took note.

President George H. W. Bush sent U.S. military forces into Mogadishu, Somalia. Under President Clinton, military units were dispatched on October 3, 1993 to seize Mohammad Farah Azid, a Somali warlord. Secretary of Defense Les Aspin refused requests to provide the units with the heavy equipment they requested. The result was the Battle of Mogadishu, memorialized as Blackhawk Down. Two Blackhawk helicopters were shot down in attempting to aid a force of Rangers, Navy Seals, Delta Force, and Air Force Specials Ops. 18 Americans died, and some of their bodies were desecrated.

President Clinton on December 15, 1993 ordered the military to cease active operations, except for self-defense. The forces were then fully withdrawn in 1994.

The withdrawal reinforced Osama Bin-Laden’s view that America lacked will.

On June 25, 1996 the Khobar Towers, housing U.S. military, were bombed in Saudi Arabia. 19 Americans died.

President Clinton sent in the FBI to investigate.

Bin-Laden struck again on August 7, 1998, bombing the U.S. embassies in Nairobi, Kenya and Dar es Salaam, Tanzania.

President Clinton sent in the FBI to investigate.

An emboldened Bin-Laden then bombed the U.S.S. Cole on October 12, 2000, killing 17 sailors. Under the rules of engagement, the sailors on the Cole could not fire on the unauthorized small boat approaching them.

President Clinton sent in the FBI to investigate.

Then came 9/11. President Bush sent in more than the FBI.

President Obama faces a problem with the pirates off Somalia. They extorted $100 million from shipping companies last year in over 100 hijackings. Pirates are also active in the 550 mile Malacca Strait between Indonesia and Malaysia/Singapore. They are not as active in the South China Sea as they were in the 1990’s once China executed a full boatload of pirates.

To date, the shipping companies have acquiesced in the piracy, refusing to arm their crews and readily paying ransoms.

Pirates have historically been outlaws in international law. The British Navy, during the Pax Britannica, had an effective solution to piracy. Pirates were hanged from the yardarm.

Confusion exists today under international law over the proper handling of terrorists, although universal jurisdiction exists. The United States entered into an agreement with Kenya in January to have pirates tried in Kenya. The Navy has turned captured pirates over to Kenya rather than deal with them in the United States.

Confusion need not exist. Article I, Section 8, Clause 10 gives Congress the power “To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations.”

The major obstacle to eliminating the piracy problem is the recalcitrance of the ship owners. They prefer to pay off the pirates rather than risk a fight that will endanger the lives of sailors or the vessel and its cargo. The owners lack the will.

Let us commend President Obama on the resolution of the Maersk Alabama hijacking and rescue of Captain Richard Phillips.

The initial impression was once again American weakness as yet again the FBI (Hostage Negotiation Team) was dispatched to the scene. The New York Times opined the “Navy’s Standoff With Pirates Shows U.S. Power Has limits.” President Obama was strangely silent on the situation.

In fact, President Obama authorized the use of deadly force, two Navy Seals teams were dispatched, and orders were that the four pirates were not to be allowed to go free. President Obama remained silent because he did not want to repeat President Carter’s mistake. Not only was America held hostage by Iran, but so too was President Carter.

The New York Times was wrong; the issue is not one of power, but of will. President Obama showed the will, and the message will be heard throughout the Mideast.

He passed the first test, but the second, the tougher, is still to come – the elimination of the Piracy and the Somali pirates’ viper nests. President Obama need not declare a war on piracy - just implement one.

Conservatives complained for 8 years that liberals not only blamed everything on President Bush, but also never praised him for his successes. Conservatives should not fall into that rut.

The means of substantially reducing the Piracy risks are well known:

Arm the crews

Place armed escorts on the vessels

Remove the permanent ladders on the sides of the vessels

Destroy the mother ships

Follow the money trail and then freeze it


Rescue the hostages ashore and then destroy the shore bases

The French are not messing around when French vessels are attacked. They have engaged in several rescue efforts, killed pirates, and apparently today attacked a mother ship.

Let Obama learn from the French. Viva Le France!

Tuesday, April 14, 2009

April 15 is Patriotism Day

April 15 used to be “Tax Day,” but ever since Vice President Joe Biden exhorted us about our patriotic duty to pay taxes, it has become the day we show our patriotism. His actual statement is “It’s time to be patriotic …. Time to jump in, time to be part of the deal, time to help get America out of the rut.”

Incidentally, the video has been pulled from YouTube as if he never said it.

Calling April 15 “Patriot Day” or ‘Patriot’s Day” sounds better, but those titles are already taken.

So as we celebrate Patriotism Day, without parades, fireworks, or barbecues, let us look at the record of our leading patriots in the Obama Administration.

While many might think Treasury Secretary Tim Geithner with his $34,000 in tax deficiencies and interest should win the prize of Chief Tax Scofflaw, he only places second. He used $30 TurboTax as his excuse.

The winner is White House Chief of Staff, and former Representative, Rahm Emanuel. He wins for creativity, as befits one who earned $16.2 million from Wasserstein Perella and $320,000 as a director of Freddie Mac (The Federal Home Mortgage Corp.)(2000-2002). He lists 4228 North Hermitage, Chicago as his home address, but pays no property taxes on it, unlike his neighbors who pay $3,500 - $7,000 on their comparable properties. The owner of the house is listed as “The Rahm Emanuel & Amy Rule Charitable Trust.” He set up his house with his wife as a non-profit charity (Chicago Rules, remember).

During his 2008 reelection campaign, Emanuel was the largest recipient of campaign contributions from hedge funds, private equity firms, and the securities/investment industry.

We shouldn’t count either former Senator Tom Daschle (as Secretary of Health and Human Services) or Nancy Killefer (as Chief Performance Officer) because they both withdrew their nominations because of tax problems. Killifer ran afoul of the Nanny Tax, made famous by Zoe Baird and Judge Kimba Wood in their failed appointments as Attorney General in the Clinton Administration. Caroline Kennedy of New York is also rumored to have withdrawn her request for appointment to the United States Senate because of tax issues; to wit, the dreaded Nanny Tax.

That leaves us Governor Sebelius of Kansas, the new Secretary of Health and Human Services owing $8,000, a stiff discount from Daschle’s $140,000.

Representative Hilda L. Solis, the recently confirmed Secretary of Labor, had no personal tax problems, but her husband, Sam Sayyad, did.

Former Dallas Mayor Ron Kirk, the Obama Administration’s Trade Representative owed almost $10,000.

The soon to be Democratic Senator from Minnesota, Al Franken, stiffed 17 states of $70,000, while Representative Charles Rangel of New York is apparently a opportunistic tax cheat.

The recent House election in upstate New York will probably have Republican Jim Tedisco defeating Democratic carpetbagger Scott Murphy, who also has tax issues.

So next April 15 we will be even more patriotic as our taxes continue to rise, and as I remember from George Orwell’s Animal Farm: “All Animals Are Equal, But Some Animals Are More Equal Than Others.”

Sunday, April 12, 2009

Commencement at Notre Dame, Arizona State and Columbia Law School

Universities line up every year to bestow honorary degrees on commencement speakers, alums and benefactors, politicians, business leaders, educators, and humanitarians.

The recipients are distinguished, and hopefully will not subsequently embarrass the institution through an arrest, imprisonment, or crimes against humanity. For example The University of Edinburgh, The University of Massachusetts, and Michigan State have revoked their honorary degrees to Robert Mugabe, the dictator of Zimbabwe.

Antioch College, the now defunct Antioch College, rescinded its speaking invitation to Ward Churchill in 2005, after the controversy over his intemperate remarks erupted.

The Ohio State University fired Woody Hayes as head football coach in 1978, but then awarded him the honorary degree of Doctor of Humanities in 1986. He actually received an even greater honor at Ohio State three years earlier; he is one of the few non-sousaphone players to dot the “I” in Script Ohio. Ohio residents and Ohio State alums undoubtedly overwhelmingly supported all three decisions.

Universities try to avoid controversy with their honors. For example, conservative Republican Presidents receive few invitations to give the commencement speech at universities, aside from the military academies.

As at Chapman, the issuance of honorary degrees should be with the advice and consent of the Faculty Senate as well as the Board of Trustees. That is not always the case with many institutions.

This year the University of Michigan found the perfect choice for the Commencement speaker, its wealthiest alum, Larry Page, the co-founder of Google.

Every year though, the commencement season becomes the Silly Season for some institutions. For example, in 2004 the University of Pennsylvania honored Bono, Villanova recognized Big Bird (Carroll Spinney) and Pitzer honored the domestic terrorist Bernardine Dohrn. Knox College in 2008 deemed Stephen Colbert deserving of an honorary doctorate.

Why not? The days of an eminent public official using the occasion to announce a major initiative have passed by. No longer will a George Marshall at the Harvard Commencement in 1947 propose the Marshall Plan to rebuild Europe.

Let us start this year with Columbia Law School. It has bestowed the honor of giving the graduation address to an alumnus, who achieved great political success, the governorship of California. Unfortunately, Gray Davis then proceeded to lose the governorship, having been recalled in 2002 by the voters because of gross incompetence. Davis mastered the art of fundraising on an unparallel scale for a governor, but failed abysmally at governing.

It required incredible skill for an incumbent Democratic governor to be recalled by the voters in one of the most Democratic states of the Union. A failure, yes, but a spectacular failure, who can serve as inspiration in these troubling economic times!

A satire circulating at Columbia Law School posits that Governor Davis was chosen because an even more distinguished grad, Lewis “Scooter” Libby had “a prior commitment to speak before a half-dozen seniors in the basement of a VFW hall in Rockville, Maryland.” That hurts!

The Committee actually stated that since in all our lives we will fail at some point, Davis should serve as an inspiration to us.

It’s not often that a certified loser is a graduation speaker.

Notre Dame is the nation’s most famous and highest ranked Catholic university, outshining the 28 Jesuit Universities.

President John Jenkins must have been shocked at the negative reaction to the announcement of President Obama as the commencement speaker and recipient of an honorary degree. The choice undoubtedly met with approval by the Faculty. The popularly elected President Obama won a majority of the Catholic vote in 2008.

Notre Dame has granted honorary degrees to 9 of the past 13 Presidents starting with FDR. The four exceptions are Presidents Truman, Johnson, Nixon, and Clinton. Six Presidents have been commencement speakers. Three, Presidents Reagan, Carter, and George W. Bush, were honored in the first year of their administration, so the award to President Obama has strong precedence.

President George W. Bush was not universally welcomed, but the negative response was professional. Many students at President Bush’s appearance wore armbands protesting his support of capital punishment.

The Obama announcement struck a nerve with Notre Dame alumni, clergy and Catholics throughout America. The Bishop of South Bend, Indiana announced he will boycott the commencement.

The core tenets of modern Catholicism, as recognized by Guidelines of the United States Conference of Bishops, include opposition to abortions and embryonic stem cell research. President Obama has the contrary viewpoint and is implementing measures accordingly. Elections have consequences.

President Jenkins and the University of Notre Dame have every right to invite President Obama to the Commencement. The chances that President Jenkins will change his mind are small, but with actions come consequences and reactions.

Notre Dame is one of the nation’s greatest universities with one of the strongest alumni networks in the world. U.S. News & World Reports currently ranks Notre Dame tied with Emory as the 18th best National University in America.

But the ranking is tenuous. Emory and Notre dame are the only two of the top 26 universities with peer assessment scores under 4.0. They come in at 3.9. Universities ranked below Notre Dame, but with higher peer assessments are Vanderbilt, Berkeley, Carnegie Mellon, Georgetown, Virginia, UCLA, Michigan, North Carolina, Georgia Tech, Wisconsin, Illinois and Texas.

Notre Dame soars on the loyalty of its alumni, which it rewards with 40% of the entering class being legacies, compared to 12-15% at schools such as Harvard, Yale and Princeton. A critical factor in the rankings is the percent of alumni who give to the university. Notre Dame ranks third with 51%, trailing only Princeton and Dartmouth. By way of contrast, Berkeley and UCLA alums give only at a 14% rate, Michigan 18%, and Virginia the highest public university with 24%.

If Notre Dame’s fiercely loyal alumni reduce their giving rate, the university will drop rapidly in U. S News.

The alumni will remain loyal, as did Michigan Law School’s alumni, many of whom opposed the school’s position on affirmative action. The Michigan alums are giving in record numbers, 28% last year.

Notre Dame is not in Arizona State’s embarrassing position. It accepted President Obama as its commencement speaker, but is not awarding an honorary degree. ASU, historically one of the nation’s great party schools but now striving for academic excellence, believes the President has not accomplished enough yet in his short career to warrant an honorary degree.

ASU President Michael Crow is eating crow and announced that, while not granting the honorary degree, it will name the university’s most important scholarship “The President Barack Obama Scholars Program.”

The irony about graduation speakers is that few of us remember who our speakers were, much less what they said. In almost every case, they were too long.

Friday, April 10, 2009

Garzon & Boya: A Judicial Farce

Spanish Judge Baltasar Garzon recently initiated an investigation into alleged war crimes, human rights violations, and torture by six Bush administration officials. He requested the prosecutor’s office examine a complaint filed by Gonzalo Bove.

The six Bush officials are Attorney General Alberto R. Gonzales, Douglas J. Feith, Judge Jay Bybee, William J. Haynes II, David Addington, and Professor John Yoo. Garzon has not, to date, proceeded against President Bush, Vice President Cheney, or Secretary of Defense Rumsfeld.

Judge Garzon is one of six examining magistrates of the Spanish National Criminal Court. Judges play a different role in Europe than in the United States. They can be as much investigatory as judicial.

He is highly regarded in international circles for issuing on October 10, 1998 an international arrest warrant against former President Pinochet of Chile, and filing genocide charges against several Argentine Junta officers.

Garzon hardly displays judicial impartiality. In January 2003 he strongly criticized the United States for the Iraq War and Gitmo. We do not expect our judges to adjudicate cases which they have previously, publicly prejudged.

The left has been forum shopping for a favorable judge or prosecutor. A German prosecutor previously refused to issue an indictment against the Bush Administration officials.

Earlier this year, another Spanish judge, at the request of Boye on behalf of his client, the Gaza based Palestinian Center for Human Rights,, initiated a war crimes investigation against seven Israelis, including then Defense Minister Binyamin Ben-Eliezer, for dropping a bomb on a housing block in Gaza, killing Salah Shehada, a Hamas leader who dispatched scores of suicide bombers into Israel.

Garzon’s record as a judge is checkered. He investigated Italian Prime Minister Silvio Berlusconi in 2001-2002 for alleged tax evasion, which is hardly a crime in Italy, but it involved a Madrid company. He was unsuccessful in getting the Council of Europe to lift the Prime Minister’s immunity. He still would like to extradite Henry Kissinger.

Garzon ordered an investigation of the Franco regime on October 17, 2008, but had to drop it one month later. An amnesty had been enacted in 1977.

Garzon did act earlier in his career against the ETA and Al Qaeda, but his outrage tends to be selective, mostly against political opponents and conservatives.

Missing in his resume are prosecutions against Communist and left-wing thuggish dictators. He has not pursued human rights violations against Fidel and Raul Castro, Hugo Chavez, or Robert Mugabe. He has been silent on Russia’s treatment of Chechnya, and the Chechnyan’s terrorist acts. He has ignored Russia’s invasion of Georgia a few months ago. He has found no reason to act against Hamas and Helbollah, not to mention Iran, for their multiple human rights violations. The IRA receives no attention from the judge.

Chilean Gonzalo Boye, the complaining attorney, has an interesting past. He earned his law degree from the Universidad Nacional de Educacion a Distancia, while serving eight years in a Spanish prison. His crime was, as a member of the Chilean terrorist group Revolutionary Left Movement (MIR), he kidnapped a Spanish millionaire, Emiliano Revilla, on behalf of the Spanish terrorist group ETA. Revilla was held for 249 days in a 2 by 1 by 1.8 meters cell.

Some find religion in prison; Boye found the law.

Judge Garzon took a sabbatical in 2005-2006 to teach at NYU. He received over $200,000 in salary, travel expenses, and tuition for his daughter. The problem is that he continued to draw his judicial salary at the same time.

The practical effect for the time being is that the six accused need to watch their travel outside the United States. They should not take solace in listening to the Three Dog Night hit: “I’ve never been to Spain, but I kinda like the music.”

Spain lost the remnants of its once great empire in 1898. Yet, it claims universal jurisdiction for genocide, crimes against humanity, and torture committed anywhere in the world.

Universal jurisdiction is a troublesome doctrine. It essentially allows any country, large or small, to prosecute citizens of another country at any time for any reason. The prosecuting countries could be as large as China, India, Russia, United States or Brazil, or as small as the .2 square mile Vatican City, Monaco, Malta, Lichtenstein, Grenada, Tonga, or the Comoros. The Vatican City certainly has the high moral position and canon law to prosecute crimes against humanity.

Grenada might still harbor a grudge for the United States’ invasion in 1984. Who knows, Mexico might wish a reconquista of California and the Southwest. In spite of treaties, European countries may still seek the return of lands lost in the aftermath of past wars. Japan, ignoring Pearl Harbor and the Rape of Nanking, could seek justice for Hiroshima and Nagasaki, while Germany might still be seething over the fire bombing of Dresden.

Garzon & Boya: A Judicial Farce

Sunday, April 5, 2009

Bank of America Shareholders - Vote Out Management!

The Bank of America Proxy statement just came in the mail.

Don’t bother reading the impenetrable 192 pages. You already know what to do.

Vote out Chairman of the Board Kenneth D. Lewis and the rest of the Board of Directors. They took our stock selling at $54.90 in 2006 and drove it down to $3 just a few weeks ago. Any board that can drive its stock down 95% should be tossed. Rick Wagoner of GM needed almost a decade to take GM from 70 to 3. Now he and most of the Directors have been given the boot. The compliant directors at the Bank of America have earned no less.

They diluted existing shareholders by selling 455 million shares below book value @$22 in October 2008. That was before the ill-advised acquisition of Merrill Lynch.

The dividend is quite a work of corporate mismanagement. The bank just paid $713 million in preferred dividends to the federal government on $45 billion in TARP funds. The quarterly dividend rate for common shares was $.64 a share a year ago. The Board cut it in half in October, but that’s just the starter. In January they lowered it to $.01/share.
Assuming you hold a thousand shares, that’s barely enough for a six pack to drown your sorrows as the directors rode the dividend down 98%.

The Board broke the record of raising the dividend every year since 1977.

Buying Countrywide followed the tradition of A.P. Giannini during the Great Depression of buying distressed banks in California and adding them to the Bank of America family.

But why Lewis impulsively jumped in to buy Merrill Lynch at a grossly inflated price, 70% above its traded price, as Lehman Brothers was collapsing is inexplicable.

Nations Bank, FleetBoston, and the older Bank of America had all tried their hands earlier in investment banking by acquiring investment banks with abysmal results. These three banks form the foundation of today’s Bank of America.

The older Bank of America acquired Robertson Stephens in 1997 for $540 million. BofA in 1998 merged with Nations Bank, which had acquired Montgomery Securities in 1997. Robertson Stephens was sold to BankBoston in 1998 for $800 million, and was closed in 2002. BankBoston merged with Fleet and is now part of the new Bank of America. One of BofA’s directors is Charles Gifford, the former Chair of Bank Boston. Obviously he learnt nothing from his prior experience.

The directors received not only annual salaries of $80,000, but also substantial stock awards, which is not bad for a few days a year of work.

The best was yet to come. Lewis claimed he was shocked to learn of the failing conditions of Merrill and its $3.6 billion in bonuses just before the merger was consummated on January 1, 2009.

Merrill Lynch lost $13.8 billion in the last three months of 2008.

However, Lewis either misspoke or was blindly ignorant of Merrill’s travails. Unlike his predecessor, Lewis is an intense on-hands manager. Bank of America was aware of the bonuses and deteriorating financial condition. The merger was announced on September 15, at which point a BofA team of 200 descended on Merrill Lynch and a top exec at the bank was closely monitoring conditions at the brokerage firm.

Lewis was sufficiently concerned that he told the Federal Reserve Bank and Treasury he wanted to cancel the merger. The Treasury responded on December 17 that the merger had to go forward, but threw in another $20 billion in TARP funds (on which it is earning 8%) and $100 billion in guarantees to reduce the risks. Unwilling to say no to the federal officials who can make life difficult for any bank, he proceeded with the merger without changing any of the terms and conditions of the merger.

The shareholders of both companies approved the merger on December 5. At no point were the shareholders informed of Merrill’s declining economic condition prior to the votes. Such intentional non-disclosure of a material fact can give rise to substantial shareholder litigation.

Lewis forgot that he worked for the shareholders – not the government. A banker may have to answer to both, but he only works for one.

Lewis and his fellow directors breached their duties to the shareholders.

Vote them out!

Friday, April 3, 2009

The "Vindication" of Senator Ted Stevens

Attorney General Eric Holder announced Wednesday that the Justice Department will request dismissal of the indictment and seven convictions of Senator Ted Stevens for corruption. The dismissal is “in the interest of justice.”

The government’s prosecution was so fundamentally flawed that Judge Emmet Sullivan, the trial judge, admonished the prosecutors before trial, excluded evidence during trial, and then held the prosecutors in contempt of court after the trial for failure to produce evidence. The prosecutors claimed they couldn’t find the documents, knowledge of which surfaced when an FBI agent informed the court of their existence. The prosecutors also knowingly introduced false testimony into evidence. The Justice Department removed the prosecution team from the case and is investigating their actions.

The case, brought by the Public Ethics Section of the Justice Department, alleged the Senator failed to list on his Senate disclosure statement $250,000 in gifts and services, mostly on renovations of his chalet, from Bill Allen, Chief Executive of the Veco Oil Services Company. The jury convicted the Senator on all seven counts on October 27, 2008, a week before the November election.

Prosecutors must disclose exculpatory evidence to the defense. The primary dispute in this case involved the testimony of Bill Allen. Allen told FBI investigators in a 2008 interview that the cost of the disputed renovations came to $80,000 and that he could not remember a critical conversation regarding billing with Bob Persons, a friend of the Senator. At trial though Allen had a photographic memory of the conversation and claimed the costs were $250,000. Allen testified that even though the Senator requested a bill for the work done, Persons told Allen to ignore the bill because it was sent to protect the Senator.

Such miraculous recollections are more common than one might think, especially when the condition of a plea bargain is to rat out another. Senator Stevens’ defense claimed he had paid $160,000 for the work on the chalet.

The defense should be able though to argue the credibility of the witness under these circumstances.

The false testimony was by David Anderson, a Veco employee, who listed 280 hours of work in October 2000. Grand Jury documents, which Judge Sullivan ordered released to the defense, showed that Anderson was not in Alaska from late September to November. In other words, a significant amount of the billing on the house was fraudulent.

Another prospective government witness, Robert Williams, also billed fraudulent hours, but then suddenly went ill before the trail, went home to Alaska, and was not called to testify.

Raymond J. Donovan was Executive Vice president of Schiavone Construction Company when President Reagan appointed him Secretary of Labor in 1981. Donovan and six other defendants were indicted by a Bronx Grand Jury of grand larceny and fraud in a construction contract won by Schiavone. The underlying charge was that the construction company, based in New Jersey, was acting illegally in conjunction with the Genovese crime family.

A jury on May 25, 1087 acquitted the defendants of all charges, whereupon Donovan asked the prescient question: “Which office do I go to get my reputation back?”

Which office does Senator Stevens go to get his Senate seat back?

He lost reelection by less than 4,000 votes. The conviction fed into the impression of the Republican Party as the “Party of Corruption”. Collateral damage included the probable loss of Senator Norm Coleman’s Senate seat in Minnesota and perhaps a few other Senate and House seats.

Prosecutors, even local prosecutors, possess great power. The criminal law presumes we are innocent until proven guilty. Often though, as with Governor Blagojevich, we presume the indicted are guilty. Without the ability to afford a full scale defense, the accussed will often be unable to overcome the powers of the prosecution. If though they possess the funds to retain the best counsel, then as with Mike Nifong’s attempt to railroad the three Duke Lacrosse players, they can prove their innocence.

Federal prosecutors have the full weight of the federal government behind them, including the investigatory powers of the FBI

Senator Stevens, the Senator with the “Bridge to Nowhere,” at the minimum showed bad judgment, but may well have been corrupt.

The Justice Department had previously obtained convictions of Republican Congressmen Randy ”Duke” Cunningham and Robert Ney, indicted Congressman Rick Renzi, as well as convictions of Jack Abramoff, the disgraced lobbyist, and Scooter Libby. Now came the chance to add one of the most powerful Senators to the list.

Yet, the prosecutors blew it. Prosecutorial misconduct was probably unnecessary. Almost any D.C. jury would have eagerly convicted Bush Administration and Congressional Republicans of almost anything.

Significantly, contra to Justice Department guidelines, they filed the indictment in the middle of an election cycle, thereby affecting the November elections

The Justice Department prosecutors are ironically in the Office of Public Integrity. The Office of Public Integrity is now being investigated by the Office of Professional Responsibility.

Former Democratic Governor Don Seligman of Alabama believes he is the victim of a Karl Rove plot to jail him. Unfortunately for the Governor, his bribery conviction was affirmed by both the trial court and the Court of Appeals.

He may be right, but the Bush Justice Department, as with Senator Stevens, aggressively prosecuted Republicans.

Maybe the Office of Public Integrity was simply incompetent.

Wednesday, April 1, 2009

April Fool's: The Official Motto of California is Exodus

Eureka; I Found It!

“Eureka, I Found It” is not just the official motto of California, but also the historic spirit of California, startying with the 49ers.

California for centuries has been the promised land. Blest by beautiful weather and bountiful natural resources, the state has issued a siren call to generations of immigrants. The Surf, Redwoods, Golden Gate and Tahoe called.

Opportunity beaconed to all.

“Veni, vidi, vici”, Caesar’s famous phrase, aptly summarized the draw of California.

Entrepreneurs, such as Hearst, Kaiser, Hewlett, Packard, Beckman, A.P. Giannini, Ahmanson, Zellerbach, Ralston, Stanford, Crocker, Huntington, Hopkins, Irvine, Sutro, De Mille, Spielberg, Douglas, Martin, Northrop, Ryan, Lockheed, Disney, Mulholland, Doheny, Getty responded and built the state.

“Hollywood” and “Silicon Valley” say it all.

A state which can build the Golden Gate Bridge can build anything.

Hiram Johnson, Pat Brown, Ronald Reagan, and Jesse Unruh were political leaders par excellence.

Cesar Chavez and Deloris Huerta gave voice to a people. The Beach Boys gave voice to a state.

Wheeler, Sproul and Kerr built the University of California Berkeley into the world’s greatest university by 1964. Jordan and Sterling at Stanford, Topping at USC, Millikan at Caltech, and Murphy and Young at UCLA led their institutions into greatness.

Wooden, Russell, Johnson, Robinson and Montana shine above a galaxy of great athletes.

But that was then; this is now.

Exodus is the new motto of the state.

Roughly 1.4 million non-immigrant Californians left the state over the past decade. The net exodus last year was 135,173. Popular destinations are Arizona, Nevada, Texas, and Washington, three of which have no income tax. The émigrés are entrepreneurs, taxpayers, and retirees, reducing the tax base in the state. The top 10% of California’s taxpayers pay 75% of the state’s income taxes.

Ten years ago, with the election of Gray Davis as Governor, California effectively became a one party state, and that party is the public employee unions controlling the Democratic legislature.

Tax and tax, spend and spend, elect and elect, FDR’s motto, became the governing philosophy in California.

The state budget in 1998 was $56 billion. It rose to $104 billion in 2003 and $145 billion last year. The growth was unsustainable, but neither the legislature nor the governor blinked. Taxes and fees rose. State holidays rose to 16 compared to 6 in most states.

The Legislature does not do math. Neither does the Governor. Revenues rose by $30 billion in the period, but expenditures $40 billion.

But unless spending is controlled, taxes cannot be raised fast enough to sustain explosive growth.

California had become the most taxed state, but that was no bar to the legislature. A $42 billion budget deficit emerged.

The “budget agreement” in theory raised taxes $12.8 billion, cut spending $15 billion, borrowed another $11.4 billion, and eliminated two of the state holidays, leaving state employees 14 paid holidays. $8.6 billion was cut from the education budget, with 10% coming from the University of California and the state college system.

The colleges and universities are responding by cutting enrollment, eliminating faculty positions, and classes. Graduation in 4 years is increasingly difficult at the state colleges.

California now has the nation’s highest income and sales tax rates. The marginal tax rate on millionaires is 10.55%, double even the tax rate of Taxachusetts. The marginal tax rate on couples earning $94,110 is 9.55%.

The tax increase is even regressive at lower income levels because of reduction in the dependent credit. A single mother of two children with an income of $15,000 will see her income taxes increase by $498.

The sales tax rose 1%, which means the sales tax varies from 8.25% to 10.75% throughout the state. The car tax essentially doubled. 15% of the sales tax revenues come from the transportation sector. Needless to say, auto sales have plummeted in California. Sales dropped 23% in 2008, with sales drops of over 50% in recent months in affluent Orange County. 137 dealers closed their doors in 2008 while 22 have failed so far this year. Even a Nissan dealer went under in recent weeks.

The tax increases transfer disposable/discretionary income from the lower and middle classes to the legislature's favored beneficiaries. The state has substituted its judgment for that of earners on how they should spend their disposable income.

5,000 of the state’s 25,000 millionaires, measured by income, left the State earlier this decade. they vote dwith their feet.

The last major corporate success from Silicon Valley was Google, over a decade ago.

Corporations are leaving the State; the most recent are Fluor and Hilton Hotels.

Even Hollywood is fleeing the state. 66% of Hollywood’s movies in 2003 were made in the greater LA area. By 2008 the percent dropped to 31%.

Shortly after the Governor signed the budget bill, the state announced it is now facing a new deficit of $8 billion.

The unemployment rate is now 10.1% and rising, up from 6.9% last summer.

California now offers the nation’s highest taxes, lowest credit rating of any state, and near Michigan level unemployment. California Dreaming is no longer becoming a reality.