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Warren Graham's Blog

Postings by Warren on a variety of timely and (hopefully) interesting topics

Thursday, November 30, 2017

Some Things Are Not Political, Or At Least, Shouldn't Be

     I haven't posted in a long time on this spot, though God knows, there's been PLENTY to rant about. But there's something going on that I can't help but weigh in on.

     It shouldn't surprise me, but it truly saddens me that the almost daily accusations against (almost exclusively) men in the entertainment, news media (perhaps those fields have become largely redundant) and the political sphere, have become yet additional grist for the mill that is the schism in today's public "discourse."

     I have, as they say, "no dog in this fight."  People who are responsible for sexual harassment in the workplace should face the music, and accusations should be investigated, with the chips falling where they may.

     I am a conservative.  Everyone who knows me is aware of that.  On a political level, I must concede that I loathe Al Franken and everything about his political Weltanschauung. I have no particular opinion about him as a human being.  As for Roy Moore, I consider him a redneck yahoo, who is an embarrassment, not only to the GOP, but to all Right-leaning members of the public.  That doesn't even take into account to the manifold accusations of sexual misconduct lodged against him, which I find nearly impossible to disbelieve. I cringe nearly every day at the inexplicable nonsense that emanates from Mr. Trump's Twitter account (and often, his mouth), and, like many, question his basic stability. As for all the rest of the political elite who have been accused, but remain in office, I believe they are entitled to the benefit of a full investigation.  Notwithstanding the fallacious public oratory on this subject, they do not fall into the category of "presumed innocent until found guilty." None of these folks, to my knowledge, has been charged with a crime.  But as elected officials, charged with, among other things, maintaining the public trust, they must not only be trustworthy, but SEEN to be trustworthy.

     It is astonishing to me to see Progressives (as they now call themselves, given the stigma attached to Liberals), coming forward to support Al Franken, who is one of their champions, and who has been whispered about (God help us) as a possible Presidential candidate.  These Progressives are the same folks who hold themselves out as the most important supporters of women and their issues: equality in the workplace (both as to compensation and to upward mobility without a glass ceiling).  Parenthetically, it may come as a surprise to my Left wing friends that I stand in complete solidarity with them on that issue.  For many years, one of the credos of feminism was the utter injustice in the "blame the victim" attitude, that kept many women quiet about harassment and even sexual assault.  The argument, which is totally legitimate, is that an accusation, especially against a powerful man, would result in an inquiry into the accuser's own sexual past and the implication of promiscuity, as a suggestion that the woman was "asking for it."

     Now, suddenly, while (unsurprisingly) all too happy to beat up on Roy Moore (who, I'm quite sure, deserves it), there are suggestions that the accusations against Franken are questionable because they haven't been "made under oath," and that, accordingly, they are politically motivated.  This is an astonishing and most distressing display of hypocrisy, especially given that Franken has owned up to at least some of these misdeeds.  Indeed, his public display of contrition and avowed willingness to cooperate in the investigation has been touted as some sort of mitigation of his misdeeds.  Of course, one never knows whether contrition is the act of someone who is sorry for what he did, or sorry he got nailed.

     Again, shouldn't we all agree that these kinds of accusations should be investigated and properly addressed, rather than colored by our own assorted political agendas?  This should be true in politics, media and entertainment, though it is most important in politics, as these are the people WE vote for.  I am very pessimistic about this Country's ability to bridge the chasm in political ideology anytime soon, but I daresay that it is right and appropriate to demand that all of us agree on SOME basic set of rules.  Do we all think that "what's good for the goose is good for the gander"? Or should we all retreat to our political corners and support our political demigods, even in light of a clear violation of what we all know to be conventional societal norms.  It might be legitimate to argue about how some of the abusers in the public eye were able to continue their reprehensible behavior while it appeared to have been known to their colleagues, and why some accusers have taken 30 or more years to come forward (again, "blame the victim" and inequality of status may well be the explanation), but it is, in my judgment, indefensible to apply differing standards to those of opposing political persuasions or of public popularity.

     If, as many argue, the pendulum has swung too far, it's likely to swing back and hopefully, eventually, get to the right place. I worry sometimes, for example, that the standards which prevail for accusation of a "hostile work environment" are vague and hard to follow and that, in an abundance of concern, employers have, understandably, mandated, at least implicitly, that the workplace become a very dry, humorless and mechanical place.  It is bad enough that many or, perhaps, most of us have to get up in the morning and spend the day doing things we don't love, to earn a paycheck. It is doubly bad when we have to behave like automatons, and watch every word we say and every wisecrack we make.  I genuinely hope that, one of these days, we will, as a society, find the right middle ground.

     I earnestly beg everyone to stand down.  Let the process take its course and keep the political spin out of it.  Both accusers and accused deserve that basic courtesy and fairness.

     Thanks for reading.  I needed that!

Friday, January 06, 2012

Note to Readers:

The material on this blog is intended for general consumption, and in it, I am attempting to put out material which (I hope) will be of wide-ranging interest. I have a separate blogsite which focuses primarily on legal topics, which should be of interest to clients, potential clients, friends/colleagues in the legal field, and those who, generally, have no life. I will try to publish as regularly as I can, and the most recent additions will always indicate that they are new, and will follow right below this message.

I hope you enjoy the materials in either or both of these sites, and please contact me, even to tell me if you do not!




So we’ve gotten pastthe silliness (treated with utmost gravity by the Media) that is the IowaCaucus. Now we get to the business of trying to find, among the remaining field, the candidate most likely to take the fight to Obama. It is a virtual certainty that, notwithstanding the abject failure of his presidency, neither he, nor his cadre of believers is going down without a VERY well-funded and vicious fight.

The problem is: who is equipped to withstand the onslaught? More to the point, the question is: who is best suited to make the campaign about Obama and HIS record? Any campaign that can succeed in the latter is destined for success. Thus far, the remaining GOP class seems wanting, to say the least.

Governor Romney, in my opinion, is emphatically NOT the guy. No matter how much money he has thrown into two presidential campaigns, he cannotseem to generate any excitement within the Party. He has shown himself to be a reasonbly worthy debater, but he gives off a certain plasticity and absence of passion. I believe that such a flaw will put him at a distinct disadvantage against a politician who is a master of feigned oratory commitment. Although “Yes We Can” has plainly become “No We Didn’t,” we may be sure that Obama will come up with some new rhetorical flourish designed to pump up the Democratic Party faithful and obfuscate, to the American Public, the utter vacuousness of his 2008 message of hope and change.

Mitt Romney has another problem as well. He cannot hope to defeat an incumbent president without attracting large numbers of independents and so-called “Reagan Democrats.” Before doing that, however, he needs to have an energized and passionate base. And while there is energy and passion to spare within the GOP precincts for the proposition that Mr. Obama has to go, there is, certainly in the more conservative elements in the party, a certain suspicion that Mitt’s newly found conservative values are as fickle as his previously held more moderate and liberal ones were. His explanation for all the successes of a liberal agenda in Massachusetts under his stewardship reduce to the lame excuse that he was hostage to a liberal legislative majority. While that argument may be factually accurate, it does not bode well for the kind of leadership a president should exhibit against an unruly, and sometimes hostile congress. There is no evidence, in fact, that Mr. Romney ever went down fighting against his legislature.

What about the rest of the field? Rick Santorum, the flavor of the week, seems to be a “true” conservative, with not much personal baggage, but he is clearly “not ready for prime time.” He would be a poor match for Obama in a debate. Moreover, his campaign, to date, has largely been about a conservative social agenda, i.e., abortion, gay marriage, etc. While this may energize devoted cadre of evangelicals and other social conservatives, it will not win an election. Indeed, it may be a turnoff to the centrists and independents that are needed by the GOP to assure victory. This coming election is about two things, and two things only: the first is the economy, and the second is….the economy (stupid)! Now, of course, the economy discussion incorporates the question of jobs, and how to create them, and the question of how to revive a private sector economy in which governmenttakes an ever increasing share of GDP and tax burden. Just by virtue of the unbelievable interest obligation, government debt is simply eating this nation alive. And there is no sign among the pols in Washington (yes, this is a bipartisan failing) of any willingness to engage in a fundamental change of direction. For my part, I don’t really believe that Mitt Romney is the man to effectuate sucha change, and Rick Santorum, a one term senator who was voted out of office in a landslide is not that man either. Rick Perry and Jon Huntsman, regardless of their respective qualities, are not worth commenting on, as they will almost surely be nothing more than memories after New Hampshire.

Notwithstanding my previous statement that this election is almost exclusively economy-driven, it is not sufficiently so to enable the Republicans to nominate Ron Paul. Senator Paul who is, in essence, a libertarian, puts forth many very appealing positions on domestic policy, and has a most devoted following. But his whacko isolationist positions on foreign policy really make his campaign a non-starter.

So, we come to Newt. Newt has personal and political baggage to spare. It is already well-known to everyone, thanks, in large measure, to the barrage launched
against him by Romney and his minions in Iowa. He needs to put together a strong defense to these attacks, so as to “Newtralize” them. After all, if Romney can evade the sting of “Romneycare” in Massachusetts, and Obama can dissociate himself from Rev. Jeremiah Wright, it should be possible for Newt and his sophisticated political advisors to put together a narrative to explain his personal foibles and his having consulting with Freddie Mac. Once that is accomplished, I would contend, Newt is in the best position to take on Obama on the latter’s record. It is ONLY by
making this campaign about Barack Obama’s dismal record that the GOP can hope
to wrest the White House from him. Sideshows about abortion, gay marriage,school prayer and the like (however sincerely felt) are a godsend for the Democrats, as they pose a distraction from the disaster of Obamacare, the obscene national debt and the gross overregulation of private enterprise that is rendering the U.S. unable to compete in a world economy. Newt has an encyclopedic understanding of these issues, as well as considerable oratorical skills to match (or exceed) those of Obama and, I would argue, is by far in the best position to take on the richly funded Obama machine in substantive debate, if he is able to overcome the inevitable blitzkrieg of character assassination that the Dems will launch. Whether he can do that will be tested in the next few weeks as the remaining GOP candidates slug it out.

Concededly, Newt cannot reasonably hope to prevail in New Hampshire. After all,
that State is in Romney’s backyard and, absent some sort of collapse, the millions
he has spent there should guarantee him a victory. But South Carolina is another matter. It is a conservative State, and its Republicans are rightly suspicious of Romney for the reasons I’ve put forth. And it should be obvious that, among the GOP conservatives, an endorsement by John McCain is probably the kiss of death. The Republican regulars are not content to have Romney shoved down their throats by the party elites, especially by the party’s losing standard bearer from 2008, who was shoved down their throats back then.

Next comes Florida, a HUGE prize for any aspiring candidate. This nomination is far from a done deal. Stay tuned, friends!

Friday, December 23, 2011


It becomes more apparent each day that the “Republican Establishment” is determined to ram Mitt Romney down our throats, despite the inconvenient fact that a single vote has yet to be cast. Remember, friends, that these are the political geniuses who brought us Bob Dole and John McCain, both first-rate in their delivery of concession speeches.

It is profoundly troubling that, at a time in which Barack Obama is so vulnerable, that the GOP seems determined to self-destruct. On the one hand, the “tea party” freshmen in the House, so convinced that they were brought to Washington to effect “change” have, perhaps, succeeded, in that the Republican majority in that body is at risk. This is exacerbated by a Speaker who seems to have no ability to mobilize his troops, and who thus has been outmaneuvered by a President who, by all rights should be on the ropes.

Meanwhile, on the election front, there is no clear nominee emerging. This, Thank God, is true despite the iron determination by what was once referred to as the “smoke filled room” leaders, that it should be Mitt Romney. Romney, they all tell us, is the only one who has a realistic shot at defeating Obama in the general election. Frankly, it is hard to see that, given that he can’t even muster any excitement within the rank and file Republican voters. I believe this is true because he has a “plastic” demeanor about him, and although he answers questions well, he lacks evident passion. He’s sort of like the GOP version of Michael Dukakis, the Dems 1988 candidate, who couldn’t even muster any real (or even contrived) feeling when asked how he might react to a physical assault on his wife. Aside from this, of course, many Republicans are distrustful of Mitt’s rather recent conversion to the conservative cause.

Here, in the interest of full disclosure, I must confess that I am unabashedly a Newt Gingrich supporter. Clearly Newt comes with a great deal of baggage, both personal and political, but, by any metric, he is head and shoulders the smartest of all the GOP candidates. I concede that being the smartest is not enough, or perhaps not even so important, as any president worth his or her salt is going to surround himself or herself with smart people (Barack Obama being one notable exception). But I believe that a profound understanding of the nature of the United States (at least as it used to be), and a deep comprehension of world affairs makes Gingrich the logical choice.

All that politicking aside, I rather resent the fervor with which Romney’s inevitability as our nominee is being sold by the “fat cats.” I hope that such resentment is being felt in the GOP ranks as well. Regrettably, Romney has enough money to sell Iowans a bill of goods about Gingrich over the airways, and Newt lacks the funds to respond adequately. Normally, I would not be concerned about Iowa (recall that in 2008, Mike Huckabee won the Iowa caucus). But if Romney wins there, and wins (as he is likely to, having spent megabucks) in New Hampshire, the aroma of inevitability may infect such early primary states as South Carolina and Florida, very rich sources of delegates.

All of this is further complicated by the change in primary rules, in that delegates are awarded proportionately, rather than in the old “winner take all” method. The result of this is that candidates like Rick Perry, who has lots of money to spend, and Ron Paul, whose base is small, but rabid, may be able to stay in the race for quite some time. It is hard to see who, in the party, benefits by this prospect, but it is an absolute certainty that Barack Obama wins just a bit more for every day that the Republican wannabes are slinging it at each other.

There are two conditions, in my opinion that the GOP needs in order to recapture the presidency, hold the House, and perhaps achieve a majority in the Senate. The first is that its nominee must be one who can “take the fight” to Obama. The Marquis of Queensbury rules simply won’t cut it, and we may be certain that the Dems will fight will a no-holds barred strategy (after all, Obama will find it hard to run on the merits of his record). The second is that all Republican regulars need to line up wholeheartedly behind that nominee, as then, the battle for the presidency will be entirely about gathering the independent vote.

Alas, neither of these conditions is anywhere even remotely in evidence. The starker the choice in 2012, the more likely, I believe, Barack Obama will be a one-term president.Personally, I would spring for a pay-per-view airing of a Gingrich/Obama debate. Obama, I concede is a wonderful orator and a pretty good debater. But this time, the debate (if the Republicans play it right) will not be about George W. Bush; rather it will be about the abject failure of the Obama Administration to bring any relief to a nation beset by serious financial woes, and its relentless sacrifice of the futures of our children and grandchildren on the altar of misguided giveaways. Aside from the obvious fact that these schemes will bankrupt a country already in peril, they do something even worse: they threaten the basis tenet of a nation, the success of which has always been built upon individual achievement and self-reliance. Where's the answer to that Mr. Obama, without a teleprompter?

The Republican Party needs, unabashedly, to stand for its principles, so as to present a real and visible choice to the American People. As for myself, I am not the least bit interested in listening to another concession speech, unless it is delivered by Barack Obama.

Thursday, December 25, 2008

******NEWEST POST******
Happy Holiday? Bah, Humbug!
It is a truism that Chanukah has become the Jewish equivalent of Christmas. This is most obviously demonstrated by the directive of the P.C. Police on high, that everybody wishes each other a Happy (generic) Holiday. I consider this to be insulting to everyone, and to the inherent (and Constitutional) right to celebrate his or her own applicable holiday. Chanukah is most definitely NOT equivalent to Christmas, either in its (proper and traditional) mode of celebration, or its importance to the religious calendar. Christmas is, to all outward appearance, the most important and widely celebrated holiday in the Christian calendar. By all rights, parenthetically, Easter should be much more important, as the celebration by believing Christians of Christ’s resurrection, while Christmas, as we know it today, is of surprisingly recent vintage, and of highly questionable dating on the calendar. But an examination of Christian dogma and practice is beyond the scope of this piece, and surely beyond the expertise of this author.

By contrast, Chanukah, a beautiful and joyous holiday, to be sure, is considered by observant Jews to be relatively minor in the Jewish calendar. By way of example, Jews are permitted to work on Chanukah, drive on Chanukah, write on Chanukah (as I am doing right now), etc. These activities are prohibited to Jews not only on the “major” holidays of the Jewish calendar, but every single week on the Sabbath. I concede, of course, that these rules are mostly honored in the breach by Jews worldwide.

Nevertheless, it bears pointing out that, while nearly every Jew in America can tell you when Chanukah is and, in greatly varying degrees, what the holiday commemorates, I wonder what percentage of them can tell you when and what, for example, Shavuot is, and what it commemorates. I daresay that it is a small minority, indeed. Notwithstanding that, Shavuot (which takes place approximately 7 weeks after Passover) is very much a major holiday to Jews. Its observance is mandated in the Torah, which is what makes it so important. In the days when the Temple in Jerusalem stood, it was one of only three annual holidays on which Jews made pilgrimage and sacrifice to God. In Jewish tradition, it also commemorates the giving of the Torah at Mount Sinai, and represents, agriculturally, the festival of the first fruits of the season. The activities described above, while permitted on Chanukah, are proscribed on Shavuot. Chanukah, by contrast, is not commanded to Jews in the Torah; the reason for this is obvious: the events commemorated on that holiday took place at least 1,000 years after the revelation at Sinai. The victory of a small number of Jewish rebels over a exponentially larger force of Greco-Syrian forces and the miracle of a single day’s supply of oil burning for eight days is a wonderful reminder of our heritage, but falls somewhat within the rubric of the old joke about every Jewish holiday being based upon the principle: “they tried to kill us, we won, now let’s eat.”

That being said, there are many rules, regulations and special prayers said on Chanukah (after all, Judaism is a religion very much given to rules, regulations and special prayers). I certainly do not, therefore, mean to diminish Chanukah, but merely to put in into a proper Jewish perspective.

Needless to say, we all know that Chanukah has taken on a very outsize importance, particularly in America. Many or most Jewish children (and perhaps some adults), feeling left out of the beautiful Christmas celebrations, including, most particularly, the music, the decorations and of course, the gifts, have turned our lovely holiday into a Jewish Christmas, involving major gift giving (never a tradition amongst Jews in earlier times). I won’t even get into the question of so-called “Chanukah bushes,” as the very concept makes me gag, so I am unable to write about it.

In recent years, after decades of angst, handwringing and litigation over such issues (add these to the list of things I don’t care about) as Christmas trees and crèches on public property, political correctness seems to require that we take the word “Christmas” out of our vocabulary and replace it with the word “Holiday.” This, presumably, is intended to ensure that everyone, whether he or she celebrates Christmas, Chanukah or Kwanza, feels included in the good cheer. To my astonishment, I have actually heard the term “Holiday Tree” uttered over the last few years. Well, folks, it’s not a “Holiday Tree,” it’s a Christmas tree. I say that knowing that the Christmas tree in the home goes back only to Victorian times among Christians and most certainly is pagan in its origin. Again, 'nuff said about the history of Christian observance.

Many Christians are pushing back against this trend, and rightly so. It is my custom, as it should be everyone’s, I believe, to wish his or her non-Jewish friends and acquaintances a Merry Christmas. Once upon a time, Christian Holidays were frequently an occasion for pogroms against Jews, but that is not the case today, and certainly not in America. Christians are entitled to celebrate their holiday joyously and unashamedly, and to call it by its right name. We Jews, of course, are entitled to the same privilege.

Speaking for myself, I enjoy and appreciate the Christmas (yes, Christmas) season. The decorations are beautiful, as is the music (In addition to the well-known Christmas carols, I particularly enjoy Handel’s Messiah and Ave Maria, for example). It is a welcome relief from what would otherwise be a cold and dreary time of year, with short days and long nights. But I do not delude myself; it is emphatically NOT my holiday, and I appreciate it from a distance, and as an outsider. I see nothing whatever wrong in this, although perhaps, some Jews might differ with me. And I, for one, do not need Chanukah to compensate for the absence of Christmas in my life. Chanukah stands on its own merits, and I enjoy it and celebrate it for what it is: a lovely and meaningful Jewish holiday.

As for us in the Jewish Community, we would be infinitely better off directing our energies hitherto expended in neutering Christmas, to such issues as support for Israel, bringing unaffiliated Jews into “the fold,” and improving the lot of Americans and humankind in general.

Happy Holidays? No, sir! Merry Christmas, Happy Chanukah, Joyous Kwanza, and Happy and Healthy New Year to all of us!

Friday, September 19, 2008


By: Warren R. Graham

Imagine the following scenario: You’re in the “high limit” room of a Las Vegas casino, shooting craps. The table is hot, hot, hot! You’ve got a pile of black hundred dollar chips spread out over the pass line, and the numbers 5, 6, 8, 9 and 10, all with full double odds. The point is 4. The numbers keep hitting, and the pile keeps growing. You continue pressing your bets. Now, you’ve got thousands of dollars riding on every roll of the dice. More numbers hit, more money piles up, and the bets increase. “Press the bets,” you tell the croupier. .“Yes, sir,” says he. “You’ve got a bet.”

“C’mon, little Joe from Kokamo,” you pray, to the gods of chance.

Then, OOPS, the inevitable happens: “Seven out!” says the boxman. “Take the line, pay the don’ts.” The croupier, reaching over the table with his dreaded rake, takes all your chips off the table. After a long hot run, suddenly you’ve given back all your winnings and lost your entire stake.

But, fear not: your luck hasn’t yet run out. You turn around, and there, standing right behind you is Treasury Secretary Hank Paulson. He is beaming with a beatific smile. He reaches into his jacket pocket and pulls out a checkbook.

“How much have you lost, my friend, he asks?” When you tell him, he says: “No problem. Here’s a check, courtesy of the United States of America. If you are able, pay it back someday. If you can’t, no worries! Your losses are covered in any case. In fact, why don’t you go back to the table, and play some more? I’ll stick around, just in case you need me again.”

A full understanding of the intricacies of the dice table might make this a more vivid illustration, but I’m “betting” that you get the picture.

Let’s see: Bear Stearns, Freddie Mac, Fannie Mae, AIG and now, the ultimate: your benevolent Uncle Sam is about to backstop all those troubling, nasty, panic-inducing, balance sheet-wrecking, impossible-to-value, junk-rated, securitized pools of sewage, which have generally become known as “subprime mortgages.” At the same time, Sugar Daddy Hank issues orders from on high to those nasty, hateful short sellers: “OK, now there’ll be no more of that! After all, short selling might make the Stock Market go down, and worse, engender public pessimism about the economy. And on the eve of an election, no less.”

Isn’t this all wonderful news?

Remember those Gen-Y, 30 year old investment banking captains of industry who made tens of millions, plus or minus, in each of the last couple of years? They did so, in large measure by packaging as “securities,” pools of subprime mortgages, built on a house of easy money cards, sold by hucksters and bought by people gullible enough to believe that “[y]es, Virginia, there is a Santa Clause;” that they, too, could realize the American dream of owning a home without the pesky nuisance of having to accumulate savings for a downpayment, and earning an income sufficient to support their debt service when the sucker-teaser rates reset. Those same young’uns then sold those gift-wrapped-with-a-pretty-bow securities to financial institutions, who were, in turn, too greedy and stupid to do what financial institutions are expected to do: sell their most valueless assets out to an unsuspecting public.

How about those other barely-old-enough-to-shave hedge fund managers, raking 40% off the top, plus a very handsome management fee, in exchange for producing enormous profits in a spiraling bull market for their well-heeled clients, in the expectation of endlessly appreciating home values and stock prices? Remember how those guys ended up paying taxes on those towering stacks of money at the capital gains rate of 15%? Remember how, at the same time, the sanitation worker continued to pay his taxes at the fully indexed federal income tax level, got socked with a “marriage penalty,” and teetered on the yawning abyss generally known as “Alternate Minimum Tax,” so that his meager and pitiful itemized deductions might be disallowed by that same Sugar Daddy Hank?

Well, folks, the government would certainly love, on the eve of election, to return us to those halcyon days of yore, but it can’t. The housing values won’t support the subprime mortgages, those beautiful gift-wrapped pools of those same mortgages (belying the pieces of coal within) are depriving the financial institutions (who are largely responsible for this financial “Pearl Harbor”) of the capital requirements to allow them to continue in business, and the coupon clipping investors won’t stand for their fund managers taking those big chunks of their money in a foundering market.

So what is our gang of merry pranksters in Washington to do? The Wall Street “houses” are burning, threatening high six and seven figure bonuses, and in many instances, even jobs themselves, the quasi-governmental “corporations” who had backed up these garbage mortgages are teetering on the verge of bankruptcy, insurance companies, ostensibly in the business of {gasp} selling insurance (a highly profitable business), are discovered to be, instead, in the business of making foolish investments, at the expense of trusting stockholders, not to mention policyholders. So Sugar Daddy Hank fires up the printing presses, opens up the public wallet and agrees to backstop the collapse of Bear Stearns, Freddie Mac, Fannie Mae and AIG. Somehow, poor old venerable Lehman Brothers fell between the cracks and, for some reason was, alas, not “too big to fail.”

Nevertheless, and notwithstanding Hank’s commitment of John Q. Taxpayer to untold billions (and maybe trillions) of dollars to rescue these mismanaged businesses, the infection simply could not, and would not be contained. The Stock Market appeared to be in free fall, and every investment house looked like easy pickings for other investment houses, corporate LBO raiders or vulture funds.

So Hank, hankering for more, has apparently agreed to put the national weal behind the entire subprime debacle, thus relieving investment bankers, brokerage houses, banks, insurance companies, and other houses of ill repute, of the inconvenience of having to explain their foolish decisions, or to suffer their punitive consequences. In most cases, it is the unwitting shareholder who will have his or her asset erased. But have no fear. The CEO of AIG is walking away with a $7 Million severance package.

And yet, it gets even better. Now, our kindly own uncle has decided to nip this virus right in the bud: It will shoulder the entire burden of all these reams of valueless paper. The cost of this, as of this writing, is estimated to be in the trillions. The Stock Market is euphoric with the news that its most illustrious (and negligent) denizens will be freed of the shackles of these problem assets.

Still better yet, the cast of characters who brought us this national debacle will be able to hide under Uncle Sam’s skirts, while Americans, already overburdened with soaring fuel and energy costs, will surely foot the bill. Of course, there is another alternative: the government can float more bonds (which might or might sell, given the unattractive interest coupon that all these machinations have engendered), or continue to sell off pieces of our national treasure to such “friends” as Dubai and China.

What a country, eh?

Well, friends, lest this all sound like the rantings of a socialist, don’t be misled; it is, in fact, exactly the opposite. I am a capitalist to the core, and a conservative. Where I come from, those values suggest that risk takers are sometimes rewarded, and sometimes punished. The bigger the risk, the bigger the reward (or loss). Regrettably, our “Republican” administration has forgotten all about that and, instead, has abandoned its “shrink the government and keep its damned hands out of my pocket” mantra in favor of government-as-guarantor of all private losses. This government, which has steadfastly refused to intervene (via the SEC) in enforcing laws already on the books and neglected to seek some oversight over opaque hedge fund shenanigans (remember those capital gains rate tax loopholes?), has now decided to jump into the fray, by lending a parachute to the mismanagers and coddling the malfeasors. In addition, because “a rising tide lifts all boats,” Hank has, yet again, engaged in naked market manipulation by seeking to prohibit short selling (particularly in financial stocks), and releasing news at the end of nearly every trading day, designed to promote glee in the trading pits. Such activity, if engaged in by a private individual, would have the SEC seizing computers and pursuing federal investigations in a New York minute.

If all of these increasingly desperate efforts to prevent Darwinian inevitability in the financial world prove unavailing, as they likely will (after, in passing, tripling the national debt), the government might consider, for example, prohibiting ANY selling of stock, so as to ensure endless price rises. Perhaps, our government will, as the Democrats in Congress are urging, will place a moratorium on foreclosures. This will enable people to continue to live in their homes they cannot afford, and which have no equity without paying for them, while those with better credit ratings and “prime” mortgages continue to meet their obligations, month in and month out. While this moratorium is underway, of course, the government, which will have, one assumes, have bought this paper at a discount, will derive no income whatever from them, thus having laid out trillions for no return. It’s a good thing that Hank doesn’t have to answer to shareholders and a board of directors for his actions as CEO, for he’d surely be canned for that level of non-performance of his loan portfolio; rather, he reports only to the President (and he, in turn, is no longer running for anything).

We are surely on the path of virtual nationalization of each company that is about to fall in the row of dominoes that is our ill-used financial services industry. The solution lies elsewhere, and it’s not pretty and it will hurt. Sick companies must be allowed to sink or swim. Otherwise the concept of any vestige of a free economy is an illusion. It will be painful, indeed. People will lose jobs, the Stock Market will fall (quite a lot, perhaps), shareholders (many of them, sadly, relying on their holdings for retirement) will absorb serious losses and people will have to give up homes they can’t afford. But the government cannot and must not try to solve every problem, stem every loss and plug every hole in a leaky dike. We will pull out of this by mostly letting nature take its ugly course. The current policy of “shifting the deck chairs on the Titanic” will only prolong the agony.

Alas, that is not how Hank sees it. Remember the crap table metaphor? Hank will bankroll you endlessly, but you better not play the don’t pass line. “Wrong” bettors are not welcome here.

Warren R. Graham
Copyright 2008

Monday, December 10, 2007

A Wall Street Christmas Fable

'Twas the month before Christmas, when all through “the Street”
Exub’rance was rampant, the bulls were in heat;

The Fed’s words were hung on by traders with care,
In hopes that St. Bernanke soon would be there;

By night they were sleeping all smug in their beds,
While visions of rate relief danced in their heads;

They left the TV on, tuned to CNBC,
In case overnight, a new write-down there’d be;

Next day out on Wall Street there arose such a clatter,
Traders ran from the floor and started to chatter;

Away to the window they flew like a flash,
And left their belongings, but never their cash;

The sun shining bright on the Street paved with gold
Gives the lustre of mid-day to what we behold;

When, what did we hear then, but reins being pulled
On a Mercedes Sleigh, hauled by seven tiny bulls;

With a beard bearing driver, that greatest of men,
We knew in a moment it must be St. Ben;

More rapid than Porsches his coursers they came,
And he whistled, and shouted, and called them by name;

"Now, Cashflow! Now, Hedge Fund! Financer and Friedman!
On, Rubin! On Paulson! On, BDO Seidman!

To a new record Dow! To manageable growth!
Now buy away! Buy away! I’ve given my oath!

Inflation be damned, I don't give a holler
What traders abroad do to our sinking dollar!"

As traders that before a Fed Meeting fly,
To take up the averages straight to the sky;

So up to new records St. Ben’s bulls they flew,
With rate cuts in hand, Dow 15,000 in view;

And then, in a twinkling, we heard at the door
Thund’rous bull hooves headed straight for the Floor;

As the trading did halt, we were turning around,
Into the Exchange came St. Ben with a bound;

His dress was quite staid, for he never was loud,
Yet his presence could not fail to gather a crowd;

A handful of tools would he now bring to bear,
So the rise could resume, but minus the scare;

Sartorial Splendor! But not a bit garish!
And woe to the few of those left who were bearish!

Low rates and free money would make buying manic,
And force all the bears into short cov’ring panic;

And the beard of his chin became white as the snow;
As he invited us all to his discount window;

The credit crunch ended as quick as a flash,
As once again everyone was swimming in cash;

New traunches of loans could now be financed,
Once more Private Equity could be romanced;

Securitization would regain its place,
The real estate bubble could resume apace;

A mere wink of Ben’s eye and a twist of his head,
Soon gave us to know we had nothing to dread;

For it all was a dream, a nightmare in full
That had almost succeeded to waylay the bull;

Now could the Santa Claus rally return,
Short-sellers a very hard lesson would learn;

And in leaving the Floor, Gentle Ben gave a nod,
To tell us the bad times had been a façade;

And giving a smile, back to DC he rode;
Having all his largesse with benev'lence bestowed;

And I heard him exclaim, ere he drove out of sight,
"Happy Christmas to all, and to all a good-night."


Now we turn from our poem to consider the truth
That the Bull Market’s gotten quite long in the tooth;

While those who like fairy tales and believe in St. Ben,
May jump right back into the gambling den,

But Kudlow, be still! And Cramer…please chill!
The Market’s in trouble if we elect Hil

And the fable you’ve read is only as true,
As what flying bulls overhead will drop down on you!

Warren R. Graham
Copyright 2007