One of the Giants Speaks

Bernie Marcus is one of the founders of Home Depot, one of the most remarkable businesses to spring to life in the last 30 years.  He and his co-founders, Arthur Blank and Ken Langone started from nothing back in the late ‘70’s and built a huge, successful business that redefined an entire industry.  In short, Marcus is the sort of man you would want to listen to about creating jobs, since he had a big hand in creating over 300,000 of them.

Being the evil rich man that he is (he’s worth somewhere in the neighborhood of $2 billion), a few years ago he single-handedly kicked in $200 million to the city of Atlanta to build what is now the world’s largest aquarium and has also signed on with Warren Buffett and Bill Gates at The Giving Pledge, (read his nasty letter at the link) where he has pledged to give most of his fortune to their foundation upon his death.

Mr. Marcus was on CNBC today and, well, he ain’t happy.  This is a little over 15 minutes long and worth every minute.  (I tried mightily with my puny HTML skilz to embed the video here, but it is apparently the video that will not be embedded.)

Are you listening up there in your Ivory Tower, Mr. President?

Another One on the Way Out

Yesterday, I wrote about Paul Otellini and his comments on investing in the US from the high point of being a Fortune 500 CEO.  Big picture, you might say.  Well, here is what it looks like up close, from the Washington Post, via Minyanville.

Read down a bit in the Minyanville piece and see what a guy went to engineering school to do in Elkhart, Indiana.

Here’s my theory on doing business with any government entity.  They pass rules and regulations not to get anything done but to keep something from getting done.  Specifically, government employees and manager come up with the regs that they come up with to keep them from getting in trouble.  That’s all.  That engineer is filling out mounds of paper for a stimulus project for no other reason than so a government clerk somewhere can make sure that all the i’s are dotted and t’s are crossed because if that is done, then they really don’t care about the outcome.

It is this that led to the Bernie Madoff scheme.  Harry Markopolos, the man who tried to stop Madoff but couldn’t get anyone to listen to him, eventually came to the conclusion that the people running the SEC were all lawyers who neither had the math skills to understand what Madoff was doing, nor the inclination to understand.  They were merely concerned with making sure all the disclosure documents were properly filed.  Which they were.  How’d that work out?

How to drive businesses out of the US in three easy steps:

• Raise taxes
• Raise uncertainty
• Bury them with paperwork:
• “The United States, by contrast, has offered financing under the stimulus program, but the process has proved too cumbersome for the small company.”

Man, it works like a charm!

Why Isn’t Paul Otellini Being Listened to in the White House?

From CNN, via HotAir.

Paul Otellini is the current  Evil CEO of Intel, the largest computer chip maker in the world.  Intel is, by any definition, a raging American success story and is something that we have all too little of in America today.  Intel is an exporter.  As you will hear in the video at the link, 75% of their revenues are overseas.

Mr. Otellini has some strong, common-sense ideas on how to make the US a more hospitable place for companies to do business in in the long term and on how to get the damn thing back out of the ditch in the short term.  He says in the interview that he has had more meetings with Obama administration officials in the last two years than he had with anyone in the Bush administration in eight years.  The interviewer asks what more he would like to see from the administration and he answers that he would like to see them take action. 

And therein lies the problem.  The White House is full of ideologues and theorists who can talk beautifully about bullshit but don’t have the slightest idea of how to put those theories to work or even if they should be put to work.

I like the juxtaposition at HotAir of Alan Greenspan, one of the Smartest People in the World, talking out of his ass again just above Otellini making practical sense.

Jeez, the Press Sucks Balls

They are like a pack of cur dogs, sucking the balls of whatever politician is in front of them.  Read this article on Politico, “Seven Questions for the President”. 

Now read my questions that I left in their comments forum:

This is why people just don't trust the press.  6 of these 7 questions deal with image or politics or strategy. Only the Israel question, #6, deals with an actual issue.  Hey Politico?!?!  How about asking the Prez about an issue and about the actions he intends to take with respect to that issue?  Here are some suggestions:

1.  You promised that unemployment wouldn't go over 8%.  It has been in the 10% range for nearly your entire presidency.  Specifically, what changes will you make to solve this pressing issue?

2.  The US has, for decades, allowed illegal aliens to stream across the border.  Will you stop that flow of illegals as is your constitutional duty?

3.  Your financial reform bill has left many zombie banks still operating and failed to address the "too big to fail" aspect of those big banks.  In other words, the reform did little to eliminate the systemic risk that multiplied this economic collapse. It seems that the reform was the equivalent of throwing the banks into the briar patch.  What steps will you take to prevent such a collapse from happening again?

4.  The administration appears poised to push GM into a public offering even though early reviews of GM's SEC filings have garnered a collective yawn.  Wouldn't it make more sense to wait until business conditions improve?  Or are you pushing this for purely political reasons, to give yourself something to tout during the election cycle?  And do you plan to purchase a Chevy Volt?

5.  Why are you now asking for an additional stimulus bill given that roughly half of the first stimulus has not been spent?

6.  A recent headline stated that you have accumulated more debt for the country than all the Presidents from Washington through Reagan, collectively.  Secretary of Defense Gates has stated that this level of debt represents a national security threat.  Secretary of State Clinton has said that it impairs her ability to conduct our affairs abroad and limits American influence abroad.  How will you pay that down and strengthen this country?

7.  Governing is a lot harder than running your mouth on the campaign trail, isn't it?

Enjoy your round of golf today, Mr. President.

Why Government Shouldn’t Try to Pick Winners

Whenever the government meddles about in any given market, trying to designate its preferred winner or outcome, it invariably fails.  Right now, the Exalted One is involved in doing just this on a number of fronts; the auto industry, the energy industry, the medical industry, the financial industry and so on.  In the auto industry, The One gives us the Chevy Volt:

Not a bad looking car.  But you can get a non-hybrid counterpart from Chevy for about $25,000 less.  Chevy had more or less mothballed the Volt until the government bought 61% of them and ordered the Volt to be brought to market.  Obama, you see, knows what we want better than we know what we want.  Prediction:  neither the Volt nor its lower-cost counterpart (the Cruze?).  See, that’s how I know it won’t sell.  I can’t even remember the name of the car.  But, because O wants to see “green” stuff (let alone the fact that there isn’t anything significantly more green about the Volt), the Volt gets built.  It’s suits his political purposes.  Sometime in November, O is going to force GM to go public and it has little to do with whether or not it makes good business sense.  It will happen because it suits O’s political purposes.

For decades, government has mucked about in the housing industry.  Mortgage interest deductions, Fannie and Freddie doing their thing with the sub-prime stuff, flood insurance and so on.  Here is proof that all this centralized planning (and that is what it is) has failed.  18 months and billions of dollars and the Moron in Chief still thinks that throwing another $50 billion or so at the economy will somehow magically cure it.  Here is an open letter to the President by Dr. Jeffrey Harding, an economics blogger that tells him exactly what the problems are and how to address them.  The blogger is right on every point.  (BTW, any time you read an econ blog you must read the accompanying comments.  They are frequently better and more informative than the original post.)  From ZeroHedge:

“Here are some guiding principles for "what works":

1. Economies can repair themselves without a lot of government help. History has proven this time and again.
2. Government interference in the repair process can hinder recovery or even make things worse.
3. Government spending is very inefficient.
4. Individuals can make better choices about what to do with their money than the government.
5. Economic growth only comes from private enterprise. The corollary of this is that government can only spend money, not make money.
6. Since government produces nothing, then real growth and real jobs can only come from private enterprise.
7. If government spending is inefficient and if economic growth comes only from the private sector, then taking vast amounts of money out of private hands and putting it into government hands will hinder growth.
8. Government spending to revive an economy has failed wherever and whenever it has been tried.
9. More legislation increases uncertainty for businesses, making them reluctant to expand (called "regime uncertainty" in economic terms).”

As noted in the comments, this viewpoint and the accompanying advice will be ignored.  It doesn’t fit with O’s worldview.

This just in and related to this post.  Austan Goolsbee is on the Prez’s Council of Economic Advisers and may be up next to replace the horribly inept Christina Romer.  This admittedly wonky piece basically sums up what I have been trying to say here.  So-called “targeted” spending or incentives don’t work, and Goolsbee based his doctoral thesis on this finding.  Now, he has to dance around his own work.  Should be fun.

Finally, here is what happens when a politician goes off the deep end when it comes to spending money based on his own preferences.  Learn about Russia’s Chess City, built in 1998 on the whim of a politician.  Why, he likes chess so everybody must like chess just as much! 

Chess City is crumbling, by the way, and largely uninhabited.  So, what color Volt are you gonna buy?