Thursday, November 29, 2012

Being prepared

I like planning ahead.  I get that from my Mom, not so much from my Dad who would inevitably be planning his lesson plan right up to the moment when the bell for class would ring.  I was also never a Boy Scout, well, at least in the official sense! Being prepared is probably a control issue –if things are set up in advance then I have a higher likelihood of knowing the outcome.  Of course that’s a myth, but it makes me feel better.  When I see other people who plan ahead I generally have a positive reaction of a like minded soul.  That wasn’t the case with the planning that happened around the recent Presidential election.
It was terribly amusing and a little bit embarrassing when Mitt Romney’s President-Elect website went live after he had conceded the election.  It became a metaphor for what didn’t work about his candidacy.  Humorous as it may be that the site went live when it shouldn’t have, it is comforting to know that there was planning going on in the event that he won.  It would have been terrible for him to win and have nothing in place for transition.  Kudos on the planning.  A Bronx cheer for the erroneous release. 
President Obama likewise was planning both for a win and what he and his Administration would do in the event that he lost.   The New York Times and Boston Globe reported on Sunday that the Obama administration crafted drone rules in case Romeny won. 
 
 
Drones are the devices that are operated by remote control and account for hundreds of deaths each year of people on the President’s Kill ListDrones were first used under President George W. Bush #43 and were used on a limited basis.  Drones are a signature Obama tactic and as part of his administration’s legacy they wanted to establish concrete rules about when they could be used and when they couldn’t, and not have leave the flexibility in place that President Obama enjoys.

Providing consistent policy is a good thing.  Having the Executive Branch formalize a policy when there President is judge, jury and executioner is not.  No member of Congress or the Senate were involved in the crafting of the policy.  The former Constitutional professor doesn’t permit any legislative oversight.  The article assures the reader that in the preparation of a formal policy there is internal discussion inside of the Administration, with representatives from Justice and State challenging officials from Defense and the CIA.  There was little debate let alone discourse about this in the campaign.  Even without bequeathing the Obama Doctrine the Romney camp would have likely just continued the killings.
 
When one person makes the unilateral determination of who lives and dies Western media and politicians traditionally define that person as a dictator.  Not so in this case.  The arrogance of a Kill List is exceeded by the chutzpah to memorialize it as a policy for future administrations.  It’s the rare instance where the Boy Scout motto of being prepared is harmful.

Wednesday, November 21, 2012

Long Live the Twinkie

The potential death of the Twinkie has captured the imagination of the American media.  Like the snack cake itself the company is well beyond its expiration date.  Despite some hyperventilating this situation again proves Mark Twain’s famous saying:  “Rumors of my death are greatly exaggerated.”  It’s the type of story that seems tailor made for today’s media culture – no matter what your perspective there’s good guys and there are bad guys and the loser is nostalgia.
Since its founding in 1930 the company has undergone more than 25 mergers and acquisitions, the first in 1937.  This activity indicates that from its inception the company has undergone significant and near constant change in its corporate structure and ownership as a variety of individuals, companies and conglomerates have attempted to maximize profits from the various breads and snacks they make and sell.  Despite America’s nostalgia for their products, this has never been a family run affair.
The company’s history of acquisitions, mergers and the various labor issues is captures the ethos of American Business depending on the time in history.  In the 1950’s and 60’s when the U.S. was growing rapidly the company expanded greatly, buying up 9 different bakeries.  Reaganomics materialized in the 1980’s with the company going private and being run by a high-tech business entity that was trying to run a diverse portfolio.  The 1990’s saw the company go public (again), riding the stock market and economic boom of the time.  The 2000’s found the company in labor battles and the longest bankruptcy in history at that time.  The current bankruptcy proceedings are the most bitter – mirroring today’s business and political cultures.
 
Liberals point to the hedge funds and are irate that management has run the company into the ground while pocketing all of the cash along the way.  Conservatives point to the intransigence of the unions and the strikes that have left them no choice but to liquidate the company and fire all 18,500 workers. 
Both sides are right.  Hedge funds have taken profits out of the company – but that’s what they are designed to do.  A hedge fund is obligated to maximize their investors return.  If they’ve done so by pulling out returns to the point that the company can’t operate and goes under then the original capital is lost and the Fund will have not done their job well and their investors will ultimately lose their funding and not invest in that hedge fund again.  Unions have gone on strike against the company to get better wages and benefits.  That’s their job – to obtain the maximum compensation and working conditions for their membership.  If they’ve done so to the point that the company dissolves, then ultimately the Union will lose membership.
 
Let the company dissolve.  The fact that online sales of the snacks went crazy with the potential dissolution shows that there’s still a strong consumer base.  The company has $2.5 billion in sales.  History has shown that these products have survived under dozens of mergers and acquisitions – this is no different.  American-style capitalism will survive and the snack foods will live.  Ding Dong – the witch isn’t dead and neither is the Twinkie.

Thursday, November 15, 2012

A bump in the road

The pundits and politicians are hyperventilating about “the fiscal cliff” as if the end of civilization is at stake.  It’s not a cliff at all – more like a pothole.  The Federal Government has been spending more than it brings in for generations.  As part of a bipartisan agreement in August 2011 Congress and the President agreed to raise the so-called ‘debt ceiling’ to meet the ongoing spending deficit only if certain ‘draconian’ cuts kicked in starting in 2013.  The theory was that the cuts would be so unpalatable politically that the politicians would have no choice but to compromise.  It’s these very cuts that Congress and the President agreed to that they are now saying are going to destabilize the western world and the global economy which is, of course, not quite true.
The approx. $1.2 trillion in automatic spending cuts and the expiration of the Bush-Obama tax breaks to the rich would have a significant impact on the U.S. economy if they all happened at once, which is the implication that is in the discourse about this subject.  It’s not all immediate.  It’s over 10 years.  And many of the changes don’t start for several years. 
Think of it this way:  You have to come up with $10,000 right now.  That’s a huge amount of money.  Now consider coming up with that same $10,000 – but over ten years.  That’s $1,000 per year.  That’s $83.33 per month, or $2.84 a day.  Can you come up with $2.84 a day?  That’s a much more likely scenario than coming up with $10,000 tomorrow and it changes what you would do significantly.
The political and media narrative is at a near panic level that a compromise has to be figured out for the proverbial $10,000 – not agreement on how to find the $2.84.  Who benefits from such obfuscation?  The media – because they have another simple narrative to report on – with a clear pro/con argument, and the use of the hyperbolic descriptor “fiscal cliff” implies danger. 
The United States is $16 trillion in debt.  The Obama policies have contributed nearly a quarter of this, but the debt has built up over a long period of time --- all with the Congressional approval.   When in session 13% of Americans approve of the job they do – when out of session 21% approve.   The waters get even muddier looking at last week’s election results.  Only 5% of Congress lost their seats in the 2012 election – 10 Democrats and 15 Republicans – out of 435 seats.  How can 13% of Americans approve of the job Congress does yet return 95% of them to their job?   That's another blog...
The automatic cuts of $1.2 trillion spread over 10 years are $120 billion per year.  The 2012 US budget had $3.96 trillion in spending.  Taking $120 billion out of that spending is 3%.  If the United States goes off a cliff for 3% of a budget that runs at a deficit 10 times the proposed cuts, then we may have to rethink the whole math thing.  It’s not a cliff – it’s a bump in the road, and the way to navigate it calmly driving through it.

Thursday, November 8, 2012

And the winner is...

This week most American’s ‘gained’ an hour with the end of Daylight Savings time.  The ‘additional’ hour provided many the ability to get some more sleep but it doesn’t solve the fact that part of the US is always ahead of the rest of it.  For those of us who like to be in the know as events happen, some events happen in real time while others are held with the hope that those in different time zones won’t need a spoiler alert.
Major cultural or sporting events have an accommodation where people simply adjust to realities of a varied timeline.  Many reality competition shows are tape delayed to keep with the structure of prime time viewing habits.  ‘Major events’ are different.  The Oscars are presented in Los Angeles with people arriving on the red carpet at 4pm in the afternoon so that the show can begin at 5 – or at 8pm on the East Coast.  To do the show at the traditional 8pm on the West Coast would mean that a large part of the country wouldn’t see it since it would start after most have gone to bed.
Sporting events likewise occur so that those living on the West coast watch the games over breakfast – with many college and professional games starting on the East in the early afternoon. 
The 2012 Summer Olympics went the other way, much to the complaint of the Twitter universe.  NBC’s tape-delay decision to package events so that they aired in the U.S. during the evening when most people watch television riled the social media population accustomed to having everything right now.  The challenge of not reporting the results for hours before the event aired was evident with the network inadvertently revealing winners, defeating their own efforts.  Even though all of the events were available for streaming there were record ratings and viewership of the games via the tape delay presentations.
America decided this week on a new President, Congress and a slew of ballot issues.  Cable and broadcast networks began airing exit poll results in the late afternoon on the East coast – mid afternoon in many other parts of the country.  While the graphics and information was preceded by “it’s too early to tell, these are just preliminary…” the fact is that hours and hours of time was filled with conclusions about who was winning and losing.  Then as polls actually closed in the East and votes were actually tabulated and reported, this was reported as well – all the while voting continued in many other areas of the country.
It’s impossible to know how many people heard or saw that President Obama was ‘winning’ and then opted not to vote (or were then motivated to go out).  But it has an impact on whether somebody thinks that their vote has an impact.  There is one universal and consistent message on Election Day – from candidates to one’s Facebook feed:  vote.  That message is diluted and even eradicated by reporting the results early.  It may explain the nation’s shift towards ‘early’ voting.  Anything that might suppress the vote is unacceptable.  There are solutions – from multi-day voting that end simultaneously across the country to states not releasing their results until a synchronized time – maybe even the next morning.  Whatever the fix – there must be one.  Putting a “spoiler alert” warning is not enough. 

Thursday, November 1, 2012

Let there be light

It’s raining, It’s Pouring. This old man was snoring.  I was fortunate that the Superstorm Sandy had nary an impact on me – other than a deluge while walking the dogs.  (That happened in St. Paul too, but that soaking came with a sound and light show.)  Sandy’s devastation has been significant – and the most telling impact is in how people prepared.  Some got water, prepped food, put out sand bags, etc.  Others, like me, went to great efforts to make sure that the laptop, the phone and the Kindle were charged.  I even have a hand crank gizmo that I can wind up to generate a charge for a device.
Approx. 8.2 million households went dark during the height of the storm – and huge numbers of people won’t see power return for days or even weeks.  Hollywood has kept us entertained over the years imagining a world without electricity. Reality is the scariest storyline of all.
The U.S. electric grid is described as a “complex matrix of transmission and distribution lines.”  The U.S. Energy Administration actually has a simple map:  there are 10 geographic grid distributors.  It’s rather unnerving how simple it would be to disable connectivity for the country – a handful of incidents and the U.S. is plunged into another age.  Everything we do is reliant on electricity – not just our devices and obvious things like lights – but pumping gas, flushing toilets and doing laundry.  That Americans are so reliant on a centralized source for power is counterintuitive to the idea of rugged individualism.
 
Having a centralized power grid allows for certain efficiencies, but also contains dangers as well.  In September 2011 5+ million in the Southwest were without power due to an equipment issue.  In India this July half the country went dark.  Disabling the handful of nexus points in the U.S. system would be debilitating.
What would a private grid of networks look like?  It would localize the power consumption and generation so that if something happened in one state, dozens of other states wouldn’t be affected.  It would add a huge amount of available power for purchase – the ultimate way to further reduce cost since it’s the essence of a free market economy.  It’d be cumbersome and prone to problems.  Regulation would have to be streamlined, but not eliminated.  Democracy is messy and so would having an electric grid that reflected it.  The plus is that there would be more power and it would be cheaper. 
 
Fixing the electric grid is a national security issue.  Imagine what California would be like if then Governor Gray and his successor Arnold Schwarzenegger had put the huge amounts of capital (political and economic) into solar instead of building additional power stations in the state after the Enron fiasco.  It doesn’t make sense for government to fund the building of private power stations – since that decision had already been made and it was going to expend that money anyway – what would the Golden state be like today if millions of people had received rebates to put solar on their houses? There’d be hundreds of thousands of power generating plants – even giving back to the grid.  When the next natural disaster occurred the entire region wouldn’t be impacted.