WHY IS WEALTHY INSIDER BRUCE RAUNER TRYING TO TELL US HE IS A SIMPLE, MIDDLE CLASS OUTSIDER?

12/22/13

Speaking of the Republican primary for governor in Illinois  (See today’s other post, HOW DARE BILL BRADY TAKE RISKS, PUT PEOPLE TO WORK, AND ACTUALLY PUT SOMETHING ON THE PILE?), people have asked me what I think of Bruce Rauner.   Would like him to become our next governor? I don’t know, but probably not.  Why?

First, Mr. Rauner is a very rich man who, in ads that insult people’s intelligence, if such a thing is possible in modern America, pretends not to be rich.   Such chicanery is especially obnoxious to yours truly.   There is nothing wrong with being rich…if one has come about his riches in an honest and forthright manner and remains mindful of the needs of those who have not attained one’s level of riches.   Why should one be ashamed of one’s achievements…unless one is a fraud?

Second, Mr. Rauner is an insider who pretends to be an outsider.   He knows everyone in city government.  He is very close to Rahm Emanuel; Mr. Rauner made Mr. Emanuel rich and, if the press reports are to be believed, the Rauners and the Emanuels vacation together.  (The idea of vacationing with even my best friends is appalling to yours truly, but I digress.)   Before Mr. Emanuel somehow decided that being mayor of Chicago would be a good stepping stone to the job he really wants, Mr. Rauner was close to Mayor Richard M. Daley.  Mr. Rauner has a habit of getting very cozy with people in “public life” who can make him money.   One can see why, especially in this state, one who is an insider would pretend to be an outsider, but does Mr. Rauner expect us to believe such protestations?   Maybe he does, and perhaps with some justification.

Still, I suppose I could support Mr. Rauner if I could be convinced he is a legitimate venture capitalist or private equity maven, or whatever he purports to be.  However, one gets the nagging feeling that Mr. Rauner is just another guy who has made money from his political connections in this most corrupt of states.  For example, his investment business seems to have easy access to public pension money, pools of funds that unconnected people have virtually no shot at.  And one wonders in how many other ways his connections have benefited not only his getting money to invest but also his performance in investing the money.

Maybe everything Mr. Rauner does is due to his diligence, his intelligence, and his wise insights into the markets and the way the economy works.  And maybe I and my libertarian leaning friends will be contributing heavily to Elizabeth Warren’s campaign for president in 2016.  Certainly Mr. Rauner’s connections have a lot to do with his success, and that is to be expected…but how much?  One suspects a great deal; as I said a few paragraphs ago… Why should one be ashamed of one’s achievements…unless one is a fraud?

It matters little, however, what I think of Mr. Rauner.   While I don’t like to make political prediction, it’s hard to see how he won’t get the GOP nomination, if only because of the weak competition he faces.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

HOW DARE BILL BRADY TAKE RISKS, PUT PEOPLE TO WORK, AND ACTUALLY PUT SOMETHING ON THE PILE?

12/22/13

Today’s (i.e., Sunday, 12/22/13’s, page 4) Chicago Tribune reports that State Senator and GOP gubernatorial candidate Bill Brady has been sued twice since 2010 in connection with about $4mm of loans on which his real estate development company has defaulted.

This is old news on which I commented the first time Mr. Brady ran for governor; see my 4/25/10 piece in the Insightful Pontificator entitled “SOME PEOPLE GET THEIR KICKS…STOMPIN’ ON A DREAM…”.   My conclusion has not changed.   If Mr. Brady had spent his life, er, feasting on the public mammary gland, like at least one of his GOP primary opponents and the current governor, he wouldn’t have gotten himself into financial trouble.   But Mr. Brady is a small business man and, like many, if not most, small business people, has had to put his personal assets on the line in order to obtain the financing necessary to pursue his dream, or at least to keep his business operating, building homes and employing people.  He has spent his life contributing to the economic pile that most politicians have spent their lives distributing as if it were somehow their own. 

My hat remains off to Mr. Brady; while I have not yet decided whom I will support in the GOP primary, or in the general election, Mr. Brady is the type of man who should be in public office…temporarily.  NO ONE should be in public office full time, permanently.  But the idea of a citizen legislator, or citizen executive, has become a quaint notion in the era of the professional barnacle on the ship of state.

Perhaps I am being uncharacteristically naive about Mr. Brady; maybe he, like at least one of his GOP opponents, is just another guy making money from his connections but is not as artful at doing so.  See today’s other post, WHY IS WEALTHY INSIDER BRUCE RAUNER TRYING TO TELL US HE IS A SIMPLE, MIDDLE CLASS OUTSIDER?  As the ever insightful H.L. Mencken (probably more than) once said

“All men are frauds.   The only difference between them is that some admit it.” 

No one in public life in the state of Illinois, of course, admits it.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

TAPER TALK, THE FED AND THE FINANCIAL MEDIA: WHAT WOULD JESUS SAY?

12/19/13

Unless you’ve been living in a cave, you know that the Fed announced yesterday that “the taper” will begin, i.e., the Fed will cut back its $85 billion per month program of buying longer dated treasuries and mortgage backed securities (“MBS”) by $10 billion per month, with the cutback being split evenly between treasuries and MBS.  Obsequious Ben made a point, however, of “reassuring” the markets that short term rates will remain low for about as long as the eye can see and then some; see today’s other post, THE CAR BUSINESS AND CHEAP MONEY:  “HOW MUCH YA GOTTA PUT DOWN?   HOW MUCH YA GOT IN YOUR POCKET?” for the impact of this “easy money forever” policy on one vital industry.

It’s bad enough that money will stay easy seemingly forever; it’s even worse that this senseless, pointless “taper talk” will continue as long as Ben Bernanke, his successor, and their henchpersons continue to shovel money into the system (now “only” $75 billion per month) at about the same rate Flash Gordon and Doctor Zarkov were forced by Prince Vultan to shovel coal into the ovens of the Flying City of the Hawkmen.   For at least the last few months, there has seemingly been nothing else going on in the world of finance, or the world, for that matter, but a “potential for tapering,” if one gets one’s news from the financial media.  Now, with only a minor retreat on the monetary front from the Bizarro World, this talk of tapering will apparently never cease.

So, tiring of having the financial talking heads speak of nothing but tapering, I fell asleep on the couch the other day watching CNBC and Bloomberg TV, while reading the Wall Street Journal, and lapsed into a dream….

FINANCIAL REPORTER I:   Here with us today is Elon Musk, Chairman, CEO, and founder of Tesla.   Welcome, Mr. Musk.  You company, and its stock, has been one of the year’s major stories.

MUSK:   That’s right.  Our sales are increasing, our nationwide network of superchargers will soon make it possible to traverse the nation without the remotest fear of being stranded, the fires amounted to nothing, and it’s onward and upward.

FINANCIAL REPORTER I:   That’s great, Mr. Musk.  But do you think the Fed will start tapering in December or March?

MUSK:  Huh?

FINANCIAL REPORTER II:   Thanks for asking all the right questions, my esteemed colleague.  I have here with me Alan Mulally, chairman and CEO of Ford Motor Company.   Mr. Mulally, your stock has been on a tear this year.

MULALLY:   That’s right.   While we’ve had to cut back on Focus and Fusion production to keep inventories in line, that is, in reality, good news because now we actually have the flexibility to adjust production.   Sales remain strong, affordability is about as good as it’s ever been.   And our products are continually being updated to remain competitive.   Here we have the brand new Mustang….

FINANCIAL REPORTER II:   But, Mr. Mulally….

MULALLY:   You’re not going to ask me about my going to Microsoft, are you?   Because I’m saying nothing on that topic; I’m here to talk about Ford, whose shareholders I am proud to serve as Chairman….

FINANCIAL REPORTER II:   No, Mr. Mulally.  I wasn’t going to bring up Microsoft at all.  I want to know if the Fed will taper next month.

MULALLY:   How the heck am I supposed to know?

FINANCIAL REPORTER II:   Since Mr. Mulally has nothing of interest to say, let’s go over to our sports reporter with a special guest.

SPORTS REPORTER:   I have with me the uncrowned Heisman Trophy winner, Jordan Lynch from Northern Illinois University, a man who runs, throws, and even catches passes, for big yards, a man who has broken every MAC record that seemingly can be broken, a man who clearly should have won the Heisman Trophy.

LYNCH:   Thanks for the kind words.  But Jameis Winston is a great quarterback and deserved to win the Trophy.  I’ve had a great career at NIU and I look forward to playing QB in the pros.   They said I couldn’t play QB in Division I and I proved them wrong.  They now say I can’t play QB in the pros, and I intend to prove them wrong….

SPORTS REPORTER:   That’s great, Jordan, but I have something that everyone wants your opinion on.   When will the Fed start tapering?

LYNCH:   Who do I look like?   Maria Bartiromo?

SPORTS REPORTER:   Wait, wait.  We have to break in for what, if it’s true, appears to be at least the story of the century.   Now to our world affairs reporter….

WORLD AFFAIRS REPORTER:        We have in the studio Jesus Christ, who apparently just dropped in for a visit.   Mr. Christ, do you have anything you’d like to tell us.

CHRIST:   As a matter of fact I do.   I’m getting pretty sick and tired of the way people are celebrating My birthday.  I’m the Prince of Peace, for My sake, and yet everyone sees fit to commemorate my birth by getting all stressed out in the silly acquisition of material things, the type of stuff I always preached against.  It’s like I’m going to My birthday party and having the guests take turn slapping Me in the face!   You think I like that?   Why can’t we get back to the original point?   Peace on earth, goodwill to men, render unto Caesar the things that are Caesar’s and unto God the things that are God’s, how many people I fed with seven loaves and two fishes, the leaven of the Pharisees and all those things I was trying to tell you.  Where did everything connected with MY birthday go so horribly wrong?

WORLD AFFAIRS REPORTER:   Yeah, yeah, Mr. Christ.  Wonderful sentiments, I’m sure.  But what our viewers want to know is whether the Fed will taper, by how much, and when.

CHRIST:   I’ll be back…be assured, I’ll be back.

…as Jesus vanishes from the studio.

Blessed, holy, and wonderful Christmas with your families.  Remember the Man on His birthday. 

Hopefully, we’ll talk before the new year breaks, but, if not, prosperous and joyous new year to you and those you love.

THE CAR BUSINESS AND CHEAP MONEY: “HOW MUCH YA GOTTA PUT DOWN? HOW MUCH YA GOT IN YOUR POCKET?”

12/19/13

Ford (F) took the proverbial dump yesterday, falling $1.05, or 6%, to $15.65, and, so far, the carnage continues today.  Most of the drop was attributed to the company’s warnings of problems in Europe and South America along with the weakening yen and the attendant fierce competition in the North American car business.   Ford has already cut back on production of its Focus and Fusion models, so there is doubtless something to the latter argument.   Some analysts piled on and talked of Ford’s “stale” product line, but the same people are currently falling all over themselves lauding GM’s “terrific” product line.  (See my 6/7/13 post, “I BETWHEN YOU BUY THIS CAR YOU GET FREE MAINTENANCE…LOOKS GOOD ON YOU, THOUGH” for an earlier counterargument.)  A Malibu or a Fusion?  A Cruze or a Focus?  While you might make the Ford stale, GM terrific when discussing the pickup truck market or the luxury car market, the former will soon be rectified with the new F-150, leaving the latter the only area in which one could make that argument with a straight face.  GM’s product line is fine, but it’s not terrific; Ford’s remains the better of the two, or at least is far from “stale.”  The lesson here is don’t assume that all Wall Street car analysts know anything about cars.   But I digress.

Who knows what makes a stock go up or down on any given day?   Certainly not the people who make a living telling us why a stock, or stocks, go up or down on any given day.  But since everyone seems to want to get in on this artificially lucrative fun, I may as well chime in, at least partially.

I have been saying for a long time, incorrectly, as it has turned out, unless yesterday is indicative of a trend (See, for example, my 5/23/13 post THE CAR SALES BUBBLE:  “JUST TELLME WHAT YOU WANT AND THEN SIGN THAT LINE AND I’LL HAVE IT BROUGHT DOWN TO YOU IN A HOUR’S TIME”), that the car stocks have gotten way ahead of themselves.  Why?  Because no industry, other than housing, is more dependent on cheap money than the automobile industry.  So the industry has naturally benefited from the force feeding of cheap money that yours truly calls Ben Bernanke’s War on the Elderly.   All this talk of “pent up demand” is largely bullroar; all that pent-up demand would remain pent up if money weren’t so cheap, given that the modern car, with reasonable maintenance, can give hundreds of thousands of miles of reliable and more than satisfactory service.

Two days ago, we received proof of my thesis:  Trans-Union reported that the average car loan currently shows a balance of $16,942, an all time high and only slightly less than I paid for my current car, a 2007 Honda Accord approaching 100,000 miles and still running like the proverbial top.  The average amount “financed” (the somehow respectable term for “borrowed”) on a new car is $26,719, obviously a heck of a lot more than I paid for my current terrific and running like new automobile.

Simply put, it’s cheap money that’s making the car business seem like such a money machine.  If the cheap money somehow gets cut off, the car business is going to head south and rapidly so, especially given the sales numbers put up in the last few years.

Of course, if we are to believe SuperBen and his disciples, and they are half as smart as everyone supposes them to be, maybe we can have cheap money, at least at the short end of the curve, forever, so we can drive cars we otherwise can’t afford in which we can drive our parents to the supermarket so they can buy the cat food Mr. Bernanke’s policies will make the staple of their diets.  The intergenerational transfers that have supposedly enriched our generation are now running in two directions, but, again, I digress.

MARY BARRA AS GM CEO: “YOU’LL BE SWELL! YOU’LL BE GREAT! GONNA HAVE THE WHOLE WORLD ON THE PLATE!”

12/10/13

General Motors (“GM”) announced this morning that Mary Barra, who is currently head of global product development at the General, will succeed Dan Akerson as CEO.

This is terrific news, but not for the reason with which the media have already started to bombard us.   It never ceases to amaze me how those who pride themselves as ardent foes of sexism focus so intently and myopically people’s genders, just as those who pride themselves as ardent foes of racism focus so intently and myopically on people’s races.  But I digress.  Mary Barra is not a great CEO choice because she is a woman; she is a great CEO choice for two primary reasons. 

First, Ms. Barra is GM through and through.  She has worked at the General for 31 years, starting when she was working on her degree in electrical engineering.   Her father worked at Pontiac for 39 years.  Note that the other logical candidate for CEO, GM North America President Mark Reuss, who too would have been an outstanding choice, had a dad who worked at GM.   But while Mr. Reuss’s dad was president of GM, Ms. Barra’s dad was a die maker at Pontiac.  I like that.

Second, Ms. Barra is what we would call a car guy if she were a guy, and I refuse to call her a “car gal,” which I think is more than a tad sexist.  She has been immersed in cars since childhood and has done a great job in product development.   She also has a degree in electrical engineering, which means she knows something beyond the jargon spewing and buck passing that often passes for “management” these days.  

While Dan Akerson did a great job at GM, Alan Mulally has done an even better job at Ford, and both were right for their times, I still suffer from the quaint notion that car companies should be run by car people.  Does leadership by car guys get car companies into trouble on occasion?   Sure, but not always.  And product means something, a great deal, really, especially in the car business.  Without car people in charge, the industry loses something.   But this feeling may arise from my love for the industry and its products, and perhaps a good manager, a real manager, not a malarkey master, can run any type of firm.    What car guy could adequately replace Alan Mulally, should he leave for Microsoft, for instance?

So I, for one, am delighted that Mary Barra will soon be at the helm of General Motors.  Further, I share the sentiment being widely expressed today that Dan Akerson hasn’t received the credit he deserves for his large part in GM’s turnaround.   This lack of recognition has been described as “sad” in the financial media, but “sad” is somehow not the right word.   I am sure that the millions with which Mr. Akerson will leave the General, and the acclaim he will receive over the next few months, will surely serve as sufficient succor.

What is sad, in the proper meaning of the word, is a comment by Mr. Akerson’s predecessor at GM, Ed Whitacre, in the September, 2013 edition of Car & Driver…

“I was chairman at AT&T, then at GM, and I was awful (sic) busy.  I didn’t spend enough time with my kids.  I’m trying to change that now, at least with my grandkids.”

Not getting the acclaim that one deserves for feats in the corporate world is regrettable or unfortunate.   Not being able to spend “enough time” with one’s kids due to the pursuit of those accolades, and desperately trying to change with the next generation what can’t be changed, is genuinely sad.   Thank God for the times He answers your requests with “No.”   But I digress.

DETROIT BANKRUPTCY: “IT’S NOT TINSEL TOWN; IT’S NOT CHI-TOWN…” HMM….

12/3/13

U.S. Bankruptcy Court Judge Steven Rhodes ruled today that Detroit could indeed file for protection under Chapter 9 of the bankruptcy code.    Since I advised bankruptcy for the state of Illinois in yesterday’s post (SOLVING ILLINOIS’ PENSION MALADY:  WHY, ONE CAN ALWAYS COUNT ON THE WORD OF OUR LEGISLATURE!, 12/2/13), it probably behooves me to make a few comments on the Detroit situation, even though the decision was immediately appealed and may, though probably won’t, be overturned.

First, while the lawyers will have to sort this out, and doubtless arguments will be made to the contrary, it looks like all unsecured creditors, be they bondholders, employee pension funds, contractors, or anybody else, have the same priority in bankruptcy.   Regardless of the law, however, it would seem that some sort of special accommodation has to be made for employee pension claims.   Since the pensioners have no access to social security, their pensions are their only means of livelihood; to deprive them of their pensions would be to throw them out in the street.  We can’t do that.  Judge Rhodes knows that. Everyone knows that.

So while Judge Rhodes said that the court could cut future pension payments, he is not saying, as some people would have you believe, that the courts should, or even could, eliminate those payments.  Some, perhaps all, pensioners will see their payments cut; one suspects none will see them eliminated.  Some clever formula will have to be derived under which the most highly paid pensioners take some cuts, perhaps some big cuts, but those at the bottom take few, if any, cuts.   Even under the plan working its way through the Illinois legislature as I write this, a plan that was, of course, formulated away from the bankruptcy court, the people at the bottom of the pension ladder will be taken care of, as they should be.

Second, an argument is being made, and doubtless will be continued, that any substantial hair cut for bondholders will send a chill throughout the municipal bond market, that all municipal bond issuers will pay higher rates if Detroit bondholders are made to suffer.

I don’t know whether such damage will be done to the muni bond markets if the supposedly big boys who hold Detroit bonds are made to feel some pain.  But I do know whether such damage should be done…of course it shouldn’t!   If a potential investor cannot distinguish between the credit of Detroit and, say, Dallas, s/he has no business owning municipal bonds, plain and simple.  Having to suffer for buying bonds of a lousy credit is part of the normal workings of the market place.  Those who take such risks cannot cry innocence when their big, risky bets don’t work out.   You pays your money, you takes your chances…Capitalism without failure is like Christianity without hell…or any other trite expressions come immediately to mind.   Bondholders took the risk and thought they would be paid to do so.  They were wrong.   They should feel the pain.  That’s capitalism.  And that’s life.

Third, Judge Rhodes determined that Detroit was insolvent before its bankruptcy filing in the summer; that was the major reason that he allowed the bankruptcy to proceed.  By those standards, it looks like neither Illinois nor Chicago is an obvious candidate for bankruptcy because one could argue that neither is insolvent.   Or maybe not.   Contractors who do business with the state are waiting a long, long time to be paid.  Both state and city pension plans are severely underfunded.   And both the city and the state are effectively borrowing to pay operating expenses.  One could conceivably make the argument that both Chicago and Illinois are insolvent, but it would be a stretch.   It will only be a matter of time, however, before the practical, if not legal, bankruptcy of both becomes obvious.  By then, of course, the hole will be much deeper and the pain more intense, but what do the politicians care?

I prescribed bankruptcy for Illinois yesterday.  Last week (“OKLAHOMA VS. ILLINOIS”:  COMMENTS FROM SOMEONE WHO KNOWS SOMETHING ABOUT ILLINOIS POLITICS), I made the case that, contrary to the self-assured but fact denying chest thumpers in these parts, Chicago is Detroit in many ways.   Don’t think that I’m the only one thinking about Chicago and Illinois in the context of bankruptcy and Detroit.   Investors, taxpayers, state officials (in their more candid, perhaps very private, moments), and people who make decisions regarding where to locate businesses do not think a municipal bankruptcy in the Land of Lincoln is such a laughable proposition.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

SOLVING ILLINOIS’ PENSION MALADY: WHY, ONE CAN ALWAYS COUNT ON THE WORD OF OUR LEGISLATURE!

12/2/13

The four leaders of the Illinois legislature have come up with a deal to solve the state’s public pension deal crisis.  Perhaps I should clarify here; the one leader of the Illinois legislature and the other three poseurs have come up with a deal to solve the state’s public pension crisis. The plan will be voted on this week, after the filing deadline for the 2014 primary has safely passed so that legislators, mostly but not exclusively Democrats, who curry the favor of the public employee unions, can vote for the necessary legislation without fear of retribution in the primaries.

So have yours truly and others who are convinced that our once great state’s $100 billion plus unfunded pension liability will sink us as surely as the iceberg sunk the Titanic, been proven wrong?   Won’t this bill, as its champions argue, save the state $160 billion over the next half century or so and result in the pension plans’ being fully funded by 2044?  The answer to both questions is a resounding “No.”

Not that this isn’t a decent bill.   Ending the nonsensically generous 3% compounded increase in pensioners’ entire pension payment while protecting those at or near the bottom of the pension ladder makes eminent sense.  So does increasing the retirement age, though this provision would have been better had it not been limited to those under 45.  Taking one or more COLA adjustment “holidays” is also fiscally sound.   Offering the option of a defined contribution plan for some state employees could have ultimately solved the entire problem…if it weren’t voluntary and necessarily limited to 5% of employees due to the systems’ needing those contributions to stay afloat…or, more properly, to continue slowing the systems’ descent to the bottom.  The 1% reduction in the required contributions by employees, which seems counterproductive at first glance, might, but only might, help the plan pass Constitutional muster.  All these are great ideas, and Representative Elaine Nekritz and others who worked so hard on this plan, and even Speaker Mike Madigan, the only guy that matters, who pledges to push this plan, deserve some praise for these attractive plan features.

The whole plan falls apart, however, with what is perhaps its most widely touted feature, i.e., the supposedly legally enforceable requirement that the state make supplemental payments to shore up the plan.  The payments amount to $364 million in FY 2019 and then $1 billion each year thereafter until 2045.

What do you suppose the odds are that the state will actually come up with the spondulicks when the time comes to write these checks?   Our distinguished public servants in Springfield (and Chicago, but that’s another matter) have made such pledges before only to break them when the time came to fork over the dough.  Why should it be any different this time?   Oh, yes, we are told, under provisions of this plan, the state’s promise to make those supplemental payments is legally enforceable; the unions can go to court to compel payment.  But our esteemed legislators can, under terms of the plan, declare a “crisis” and decide to forgo or reduce the payment.   What do you suppose the odds are that a “crisis” will surely arise when the chips are down and our modern day versions of Pericles decide they’d rather spend the money on something more directly related to keeping their jobs?

But suppose that last question is more than rhetorical and our selfless, dedicated legislators decide not to do their typical dodge and actually come up with the money the plan demands?   Where will they get the money?   Does the state have an extra $1 billion here and there lying around every year?  Will these guys cut the programs that they feel are so vital and that, doubtless as a surprise by-product, help prolong the lifelong sinecures they call careers?  Will the populace stand for higher taxes and, if they do, what will such higher taxes do to our already miserable business climate?  

One more point.   The legislators are telling us that the reason they are supposedly so hell bent on fixing this one of the many problems that they have created is because funding pensions will “crowd out other functions of government.”   Translating, this means that funding pensions will result in our public servants’ being unable to spend our money on constituents and contributors who will keep them on the public payroll and, not for nothing, eligible for generous public pensions.   So even if this plan somehow works and the Land of Lincoln avoids fiscal doom wrought of pension underfunding, it will surely run aground, perhaps a few years later than currently scheduled, due to the spending the legislators intend to do with the “savings” generated by the pension deal.  

In other words, the legislature and the governor will either spend the money funding pensions or spend the money on something else.   This is largely a moot point, however, because we are discussing spending money the state doesn’t have and can’t possibly generate because the level of taxation necessary to come up the money in question would force businesses and people out of the state and hence be self-defeating.

Does this mean I oppose the bill?  By no means.  While substituting one meant to be broken promise with another meant to be broken promise seems silly, this plan ought to be passed because of its aforementioned salubrious provisions.   They may delay doom for a number of years.

But make no mistake; this state of Illinois is doomed and it is too late at this point to change that.   The only feasible long run solution would be to file bankruptcy, if such a thing is possible, and do so right away before the hole gets deeper.  But that isn’t going to happen.  And even if we were to face reality by declaring the obvious, one can bet that the legislature would take the opportunity presented by a clean fiscal slate to spend us back into bankruptcy within a very short time period.  And, perhaps saddest of all, the voters in the Land of Lincoln would continue to vote for the pack of poltroons and popinjays that has gotten us into this pickle…as we always have in the past.

Merry Christmas.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

THIS PARTICULAR STUPID THANKSGIVING TRADITION PREDATES THE “OPEN ON THANKSGIVING” IDIOCY

11/26/13

We are all aware of the stupid tradition of the President of the United State’s “pardoning” a turkey around Thanksgiving Day.   John Kennedy started this nonsense (as he did so much other nonsense…like Vietnam and the Great Society) back when he was darkening the White House door with his other shenanigans.  The first Bush continued the bi-partisan bout of brainlessness by making the exoneration an official presidential pardon.

A couple questions…

First, just how much time does the president, whomever he may be, have on his hands?

Second, I just learned today, in Michael Sneed’s column in the Chicago Sun-Times, that this year’s turkeys destined for pardon were trucked to Washington D.C. from a farm in Minnesota.  Who pays for this idiotic nonsense?   Please don’t tell me the taxpayers do!

People will argue “What can it cost to truck in a few turkeys?”   The first answer is “Plenty” by normal people terms.  The second answer is that, even if, in government terms, the cost of trucking the turkeys is peanuts, what’s wrong with small cuts in government spending?   Small cuts add up.  And eschewing small cuts because they are small leads to big spending.  

Blessed Thanksgiving, everybody.  And note that it’s not “Turkey Day”; it’s THANKSgiving, a day designated by President Lincoln for thanking God for the gifts He has bestowed on us.   Let’s remember that and enjoy the holiday before the almighty dollar society in which we live completely destroys this holiday...as it has done with the Holiday Formerly Known As Christmas.

“OKLAHOMA VS. ILLINOIS”: COMMENTS FROM SOMEONE WHO KNOWS SOMETHING ABOUT ILLINOIS POLITICS

11/26/13

A good friend forwarded a message to me that seems to be making its way around the internet.  The message, entitled “Illinois vs. Oklahoma,” by a Harlan Twible blames the Democrats for Illinois’ financial problems and draws an unfavorable comparison to Oklahoma, but the author’s comments on the latter center around illegal immigration rather than finances.

The piece contained one of my favorite quotes, which the author quoted but did not attribute to its source, which reportedly was Henry Ford…

"Any man who thinks he can be happy and prosperous by letting the Government take care of him; better take a closer look at the American Indian."

Yes, Ford was both an industrial genius and a political kook.   But this is one of those instances when his political/social views were absolutely correct, if it is indeed his quote.   Including this quote was not the only area in which Mr. Twible made convincing points.  Nonetheless, those points need refinement.

I was asked by my buddy to comment on the author’s observations on Illinois’ political/financial situation.   I thought my readers might be interested in my observations.  I limited those comments to Illinois; I didn’t touch the author’s views on Oklahoma’s approach to illegal immigration:

Illinois is a mess; for all intents and purposes it is bankrupt, and if we followed the same GAAP conventions for pensions that corporations do, that would be even more obvious.  Chicago's situation is at least as perilous.  Our situation is yet another case of pols buying people's votes with other people's money; ironically, often with the people's own money, which is what Tocqueville warned us about nearly 200 years ago now.

The Detroit analogy is more on target than most people think.  We continually play a game of denial in Chicago.  We thump our chests and say, while giggling at those who make the Motown analogy, "Chicago isn't Detroit" and then go on to cite our more diversified economy while avoiding the obvious political analogy of reckless spending by pols who remain reassured by the assumption that we will always find a way to pay for their excesses...somewhere down the road.   And in the post-industrial age, the raison d' etres for places like Detroit and Chicago are similarly slim, so the diversified economy argument will weaken, and do so quickly.   Mayor Emanuel and his obsequiants in the media and in favored quarters of the “business community” seem to think that businesses are lining up to live here because they want to bask in the glow of the Mayor’s greatness.  Such is the through process of those who believe that government is everything.

Chicago is a great place.  Illinois is a great place.  I love them both.  But they are not as great as those of us who love them seem to think they are.   There are plenty of objectively nice(r) places to live and to do business in this country.   We are soon approaching a point at which people will not put up with the shenanigans of the pols just to be able to live here.

I'd take issue with just a couple things regarding Illinois in the Twible piece....

First, his chain of command in Illinois is wrong.  The real chain of command would have Mike Madigan at the top and Rahm Emanuel near the top.   The governor has nowhere near the power his office would indicate; this has been the case for a long time in Illinois.   In fact, the governor of this state, whomever he may be, only has power to the extent he can work with, and accommodate, the Democratic power base, which is located in Chicago and manifests itself in control of the legislature and the huge concentration of statewide votes in and around Chicago.  

This leads to my next point.   We have a strange breed of GOPer here in Illinois who, since s/he craves power above all else like all pols, plays a game of get-along, go-along.  (Come to think of it, perhaps our GOPers are not all that strange; most Republicans everywhere crave power above all else and hence continually play a game of get-along, go-along, but I digress.)  This has been the case since at least the '50s, when Governor Stratton played footsie with the first and real Mayor Daley.  So the Republicans in this state are far from blameless for our pension mess.  In fact, the mess had at least some  roots in the Thompson and Edgar administrations, who went along with juicy pension deals with the teachers and other public employee unions so that Messrs. Thompson and Edgar could bask in the glow of teachers' unions endorsements, or at least pats on the head.

But Twible’s major point is certainly correct; the Democratic establishment has controlled things in this state forever.  Mike Madigan has been Speaker of the House for the last thirty or so years, with a brief (I think four year) interregnum in the '90s.   Clearly, the Dems wear the jacket.  But to assume that things would get, or be, much better if the GOP took power is delusional and naive.  Even if they had the guts to attack this problem, rather than attempt to curry the favor of the public employees' unions in order to secure their newfound positions of power, we are probably too far gone to fix this mess.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

YES, I’M STILL HOLDING ONTO MY TIPS…UPDATED EDITION

11/21/13

Today’s (Thursday, 11/21/13’s, page C1) Wall Street Journal featured a front page article in the Money and Finance section entitled “Inflation Linked Bonds Take a Hit.”   The paper reports, accurately, that Treasury Inflation Protected Securities (“TIPS”) have taken something a beating, in bond terms, this year, with a total return of negative 7%.  (While the article doesn’t specify where this number for “TIPS” came from, I’m assuming that it is measuring return based on the exchange traded fund (“ETF”) TIP; the ETF’s year to date return matches that negative 7% number.)   This miserable, by bond standards, performance has been the obvious result of two distinctly anti-TIP developments in the economy and the financial markets.  First, all bonds, or at least all treasury bonds, have had a bad year as the economy improves and the Fed hints at tapering (Oh, how I’ve come to hate this latest term from which one cannot seem to escape!  But I digress.) its bond buying program.  Second, there is no measurable inflation in the economy.   The CPI is increasing at a 1% annual.  Whether that number jibes with one’s experience is another issue; the inflation compensating increments to TIPS are based on the CPI, so that is the measure with which we are forced to live in this circumstance.

As regular readers know, I’m a big (for me; by most standards, I’m not a big holder of anything) holder of TIPS in my own accounts, and have been for years.  I have counseled friends and consultees to own TIPS for just as long.  I continue to both hold TIPS and advise people to hold TIPS despite some misgivings and hand wringing near the top of the TIP market; see 6/26/13’s TREASURY INFLATION PROTECTED SECURITIES (“TIPS”):  REPLACING PANIC WITH CALM PERSPECTIVE and 2/2/13’s YES, I’M STILL HOLDING ONTO MY TIPS.

Am I displeased, sullen and down in the mouth, about my large TIP holdings?   No.  The same Wall Street Journal article points out that, before this year’s debacle, in the three years from 2009 to 2012, TIPS returned 44%, which works out to an annual return of 12.9%, which, in bond terms, if a terrific performance.  Even after this year’s 7% hit, TIPS are up 34% over the last three years, which works out to an annual return of 7.6%.  This remains an outstanding return for a  credit instrument with no real default risk.   I’m happy, bordering on the ecstatic, with the four year return on TIPS and, if you’ve been holding them, you should be, too; this is investing, not trading!

Note also, in one of those “not for nothing” observations, that since I wrote the aforementioned 6/26/13 piece, TIPS are up a touch.  The ETF was trading at 110.72 then and it is at 111.23 as I write this, plus they’ve paid five dividends.

Why do I insist on holding onto my TIPS?   Aren’t we experiencing conditions that continue to argue against TIPS?   If I were inclined to trade major portions of my portfolio, I might, and only might, be tempted to get out of TIPS with the hopes of getting in again at a lower price.  But I’m not trading my TIPS because I decided long ago that TIPS make sense in our economic environment for long term investors who are either very risk averse or who simply want a buffer against several nasty possibilities in the financial markets. 

I agree that, at this juncture, those horribles, such as inflation or a plunge in the stock markets, do not look imminent, though I am starting to think the probability of the latter is increasing.   However, unlike those who pretend to be for a living, I realize that I am not clairvoyant.  The older I get, the more I realize I don’t know, especially about the short term movements of the financial markets.   I am about as likely to be right as I am to be wrong on any short to intermediate term call in markets, as are those who pretend they can see the future, and I am not willing to bet my long term investment results on such fuzzy odds.  If I were inclined to trade these things, I would be about as likely to get out at a bottom and in at a top as I would be to get out at a top and in at a bottom.

So, yes, I continue to hold my TIPS.   They have delivered a near spectacular risk adjusted return over the long period I have held them and I expect them to do nearly as well over the similarly long anticipated remainder of my holding period.   While economic and financial conditions right now do not favor TIPS, things change fast.  And, despite their high opinions of their own prognosticatory skills, the “experts” rarely can tell you, with any degree of consistency, when those changes will come.

“…LIVIN’ ON MONEY THAT I AIN’T MADE YET…”

11/15/13

The New York Fed came out with its quarterly report on consumer debt yesterday.  Conventional thinkers are nearly overjoyed at the news that total consumer debt increased by $127 billion, or 1.1%, for the third quarter, the fastest pace since 2008. 

Some of this increase in debt came about because of fewer mortgage foreclosures and bankruptcies during the third quarter.  As regular readers know, it was bankruptcies and foreclosures, or nice ways of describing stiffing one’s creditors, that provided Wall Street economists an opportunity to wax joyful about the “deleveraging” and “balance sheet clean-up” that the American consumer was “achieving.”  Now that we are stiffing fewer of our creditors, it seems that debt outstanding is going up.  The obvious suspicion, therefore, is that debt in any realistic sense has been going up all along but that a trail of sorry creditors was masking our continuing propensity to take on debt in order to achieve the “lifestyle” we are somehow entitled to simply by virtue of living in the United States of America.

Other observations arise from the New York Fed data.   First, those who think that taking on more debt to excrete away more money on stuff we don’t need is the key to our economic recovery, while being overjoyed at the increase in debt levels, are sullen and down-in-the-mouth that credit card debt is barely growing; it was up $4 billion, or 0.6%, in the third quarter.  Though we would prefer actual decreases in credit card debt to mere slowings of its increases, those of us who are so benighted as to think that we have to learn to save money again see this slowdown in revolving credit accumulation as a favorable development.   Perhaps our sanguinity is poorly placed.   Just as I was reading about the slowdown in the growth of credit card debt, I heard an ad on the radio from a mortgage broker who was preaching the fiscal soundness of refinancing one’s credit card debt by taking out mortgage debt.   One wonders how much the return of the popularity of this game of financial three card monte had to do with the slowdown in the growth of total credit card outstanding in the third quarter.  More importantly, one sees the return of the highly popular dinner out financed with a thirty year mortgage as yet another reminder of the people’s short memories and another sign of financial trouble down the road.

Second, the widely advertised big culprit in the increase in consumer debt is the increase in student loans, which passed $1 trillion last quarter by increasing $33 billion, or 3.3%.   Mark my words:   this surge in student debt, and the growing acceptance of student debt as something one takes on in the perfectly normal course of one’s life, is not only an enormous financial problem for the borrowers and for the economy on a whole, but it is speeding us down the road to making higher education yet another “free” entitlement.  

There are some who ascribe to the Obama Administration enough Machiavellian cunning to believe that the whole defecation show that ObamaCare has become is just a ploy to get the American people to throw up their hands and beg for a single payer health system as a solution to the intentionally inflicted maladies the Affordable (Says who?) Care Act has thrust upon them.   Whether yours truly gives the Obamaites such credit is open to question.  But I can easily see the growing, and increasingly unrepayable, pile of student debt as a Machiavellian way of getting the government to pay for college by simply forgiving the debt, thereby stiffing those of us who made the sacrifices, and choices, necessary to pay for our own kids’ education.   That’s government for you.

Third, even though student debt is supposedly the most salient source of increasing consumer debt, people don’t mention that car loans outstanding went up even more on a percentage basis, or by 3.8% to $845 billion.  I’ve said it before and I’ll say it again:  nearly all the prosperity we are seeing in the auto business and in the auto stocks has been manufactured by the Fed.   Other than housing, what industry benefits more from engineered interest rates than the automobile business?   All this talk of pent-up demand is largely nonsense.   Yes, the fleet is old but one can drive a modern car hundreds of thousands of miles with little difficulty.   What we call pent up demand would stay pent up were it not for the cheap financing Ben Bernanke’s War on the Elderly has provided for new car buyers.   Auto sales are a bubble that would burst quickly if the low interest rate elixir is ever removed.   This is, of course, yet another reason that the Fed cannot let rates normalize, on either the long or short end, any time soon, but that is another conversation. 

PAUL VALLAS ON THE TICKET: PAT QUINN MAKES ANOTHER BRILLIANT MOVE TOWARD RE-ELECTION

11/8/13

Regardless of what you think of the guy’s ideology, background, or performance on the job, you have to admit that Illinois Governor Pat Quinn (no relation) is running a brilliant campaign for re-election.  (See my 9/16/13 post ILLINOIS DEMOCRATIC PRIMARY:  DALEY IS OUT; IS LISA BACK IN? for only the most recent of my comments on the campaign.)  The latest manifestation of this brilliance is his selection of Paul Vallas as his running mate.

Mr. Vallas’ being on the Quinn ticket makes sense for all the obvious reasons.  Originally a budget wonk in Springfield who caught a lot of important people’s eyes, he was appointed budget director for Chicago Mayor Richard M. Daley early in the reign of Richard II, when the scion was a good mayor and fiscal manager, before Mr. Daley became a living, breathing argument for the wisdom of term limits.  After leaving that post, Mr. Vallas did a great job, or at least as good a job as anyone could do, given the circumstances, as the CEO of the Chicago Public School System.  After a failed run for governor (against Rod Blagojevich; how would you like to have that vote back?), which was partially Mr. Vallas’s fault but was at least partially engineered by the bosses in Chicago who ran Roland Burris to siphon the black vote from Mr. Vallas in the primary, Mr. Vallas went on to run the public school systems in Philadelphia, New Orleans, and, currently, Bridgeport, Connecticut.  His performance in all three tough jobs has been admirable.  So Mr. Vallas has expertise in the areas of education and budgets, the first of which is always important and the second of which is beyond critical at this point in Illinois’ history.

Some can argue that Mr. Vallas had made enemies among the teachers’ unions in his tenure at the helm of the CPS.  But so what?   Mr. Quinn has already enraged the public employee unions with his aggressive push for a solution to the state’s public pension problems.  And where else are the public employee unions going to go?  

So Mr. Vallas is a great candidate for the obvious reasons.  But yours truly also finds merit in the selection for what it says about Governor Quinn.  Mr. Quinn’s Republican opponents, who are supposed to eschew such things as racial, ethnic, and gender quotas out of principal, go about selecting running mates who just happen to be women, Hispanic-Americans, Asian-Americans, or some combination thereof.  Mr. Quinn, however, eschews such tokenism and selects a running mate based on the man’s merits.  This refusal to kowtow to the conventional wisdom is a mark of character on Mr. Quinn’s part. 

Don’t think voters don’t notice Mr. Quinn’s good sense…and his opponents’ hypocrisy lily-livered obeisance to pollsters, conventional wisdom, and addle-brained political correctness.  Don’t misunderstand me; Mr. Quinn has made a career of obeisance to pollsters, conventional wisdom, and addle-brained political correctness, but voters have short attention spans and hence politics becomes a game of “What ya done (for me or to me) lately?”

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

OBAMACARE: CAN THE REPUBLICANS OPEN THE GIFT THE DEMOCRATS HAVE JUST HANDED THEM?

11/8/13

As I pointed out a few days ago (THE OBAMACARE ROLLOUT 'S ECONOMIC IMPACT:  “YOU THINK THIS COUNTRY’S IN BAD SHAPE, JUST WAIT ‘TIL I GET THROUGH WITH IT!”, 11/6/13), the debacle at least the initial rollout of ObamaCare has done more damage to the economy than most people think, and certainly far more than the non-event government shutdown about which so many economists continue to wring their hands.   The political consequences of the ObamaCare defecation show, however, are at least as profound, transcend party politics, and will have their own impact on the economy.

The overwhelming reaction to the increased prices, the sieve like jalopy of a website, and the general overall confusion and uncertainty associated with the ObamaCare startup is a now pervasive feeling throughout the land that we have an incompetent in the White House, a guy who never had a real job, is not as smart as he and his most ardent supporters suppose (Nobody is, by the way.), and is in way over his head.  This is damaging to the Democratic Party, for sure, but also is bad for the country and for the economy.  The consequences of a rudderless ship of state for business and consumer confidence and in international political and economic affairs can be devastating.  Money likes to go to where it is treated well and, barring that, at least likes to go where it has a reasonable idea of how it will be treated.  So the follow-on effects of the problems ObamaCare is facing have the potential to be more long lasting and widespread than they appear at first glance.

In the less important, buy maybe more fun, realm of partisan politics, the ObamaCare travails have done incalculable damage to Mr. Obama and the party he heads.   Those middle ground voters are not only being socked with the stress inducing consequences of the ObamaCare rollout, but they are now coming to the conclusion that the whole idea of ObamaCare was a mistake, a costly experiment in social engineering by a group of people who have no idea of how Mr. and Mrs. America live their lives and how challenging those lives have become.  They are disgusted and ready for a change.

The first opportunity to act on these feelings of disgust will come in the Fall of next year.  The bigger opportunity will come in the Fall of 2016.  Both are a long way off in realistic political terms.  But even at this early juncture, one overwhelming conclusion is that if the Republicans cannot capitalize on this dropping of the ball by Mr. Obama and his cohorts, they ought to just fold up the tent and go home.  This is a huge opportunity that, thankfully for the Republicans, did not rely on any skill or intelligence by the GOP; it was a pure gift to a party that, given its political obtuseness, needs to subsist on gifts.

Can the GOP capitalize on this?   Recent history would indicate that it can’t.  But maybe the Republicans can capitalize if they realize that the reason they now have a chance is that the people are tired of incompetence.   So rather than emphasize arcane issues in which many, if not most, people think government should be at best only ancillarily involved, perhaps the GOP ought to emphasize competence…the ability to get things done, an ability long and sadly lacking in Washington.   People are not ideological; people want results.  They may or may not want much from government, but they want government to deliver what it promises.  Government’s part in the life of the populace may not be a major concern in people’s lives, but people certainly want government to do its part, whatever it may be.

Is this an argument for a certain recently re-elected governor from New Jersey who has shown a distaste for ideological arguments paired with an ability to achieve results?   At least at this point, certainly.   If the GOP wants to win, it better nominate the big guy from Jersey.  If it wants to live in an echo chamber, constantly rehashing arguments most people don’t listen to, it can nominate one of the ideological warriors from Congress and continue to get a charge from listening to its imagined unappreciated brilliance.

THE OBAMACARE ROLL OUT'S ECONOMIC IMPACT: “YOU THINK THIS COUNTRY’S IN BAD SHAPE, JUST WAIT ‘TIL I GET THROUGH WITH IT!”

11/6/13

We are incessantly hearing from the “experts” about the impact that the government shutdown has had, and that the sequester will have, on our economy.  Why do we hear so little about the impact the ObamaCare debacle is having, and will have, on the economy?

Millions of Americans who buy their own insurance, of whom yours truly is one, will pay higher, sometimes vastly higher, premiums.   While this is anecdotal, I have talked to no one among my acquaintances who buy their own insurance (and there are many) who will not be paying higher premiums.   Those individual policy purchasers who don’t yet know whether they will face higher premiums are confronted at the very least with uncertainty regarding their premiums, their coverage, and the processes necessary to obtain compliant coverage within the constraints of a health care insurance site no one trusts, and with good reason.   What impact do you suppose a big hike in monthly unavoidable expenses, and uncertainty regarding how much higher those expenses will be, will have on the economy?

Businesses have been given their one year reprieve from having to provide insurance for their employees.  But even when that reprieve was granted, it only prolonged the existing uncertainty businesses faced.   Now all these stories swirling around about the horror show individuals are facing obtaining, and paying for, policies that satisfy the bureaucrats and politicians (who, bear in mind, have never had to buy their own insurance in their lives) can only exacerbate the worst fears of business owners regarding providing prescribed coverage for their employees.   Prolonged, heightened uncertainty on the part of businesses…what do you think that does for hiring plans?

The Affordable Health Care Act is proving to be, at least at this juncture, a bigger defecation show than its most vociferous detractors predicted it would be.  Given the salience, the importance, and the potential political power this issue packs, we have heard plenty about the screwed up, sieve-like ObamaCare website and the higher costs people will have to pay to satisfy the whims of the bureaucrats, the politicians, and their campaign contributors.   But why haven’t we heard much about the economic, or the market, impact of this disaster?

It seems to yours truly that if one wants to talk about roadblocks to sustained recovery, one ought to start with an insurance scheme that will suck purchasing power out of the economy like a vacuum cleaner while discouraging businesses from making long term investment or hiring plans.   All the Fed money printing in the world would have a hard time circumventing the obstacles ObamaCare has placed in the way of sustained recovery. 

What impact will this have on the markets?  As loyal readers know, I am not one to call markets; they seem to do what they want to do.   The ObamaCare travails have so far done nothing to abate the “Where else will we go?” mentality that keeps the stock markets rocketing upward.  But if the markets ever revert to the fundamentals, one has to think that this atrociously miserably executed roll out of a poorly thought out plan designed by people who appear to be hapless and clueless does not bode well for continuation of this Potemkin rally.

GREAT CHICAGO FIRE FEST: “CATHARTIC POWER” AND THE PRIVATE SECTOR SHAKEDOWN

10/31/13

The latest manifestation of Chicago Mayor Rahm Emanuel’s Bread and Circuses approach to government is upcoming Great Chicago Fire Festival.   One wonders why the Mayor feels a sudden urgency to celebrate the Great Chicago Fire, which took place in 1871, or 143 years before the 2014 date of the Fest.   If the Fest were schedule for 2021, or 150 years after the Fire, one could perhaps understand the need to commemorate the bad rap Mr. O’Leary has suffered for the last century and a half.  But why a Chicago Fire Festival in 2014?   But I digress.

Michelle Boone, the city’s Cultural Affairs and Special Events Commissioner, explains that there will be more to the Fire Fest than a commemoration of the blaze the failed to fell yours truly’s alma mater, St. Ignatius (at the time) College.  No, sir; this will be a far deeper event, an opportunity for collective reflection and expiation of sins.   It seems that Ms. Boone and her team will be working with Redmoon Theater company on the central core of the fest, which will feature “floating sculptures” representing “the thing they (community groups) most want to be rid of in their lives” that will then be set ablaze as they float along the Chicago River in a “huge public ritual” with “cathartic power.”

Several thoughts come to mind even before I reach the major point of this post.

First, hopefully, the campaign to clean up the Chicago River is sufficiently far along that we don’t have a Chicago version of Cleveland’s Cuyahoga incident in June, 1969, in which the mighty Cuyahoga burst into flames, as it had on several occasions before then.   One would hate to see such a “cathartic event” marred by igniting pollutants that cause a repeat of the event the Fire Fest was designed to commemorate.

Second, will Mayor Emanuel be on the list of things community groups “most want to be rid of in their lives”?  How about his predecessor’s parking meter deal?

Third, those who promote and design such “huge public rituals” with such immense “cathartic power” as burning barges on a river are often the same people who tell us religion is silly, riddled with superstition and loaded with meaningless and bizarre rituals.  They do so with a straight face.

Fourth, can’t those of you who are old enough to remember the man and/or who are as intensely interested in the politics of this town as yours truly just see the expression that would appear on Richard J. Daley’s face if one of his aides were to propose such a “huge public ritual” with “cathartic power”?   

Now, for the major point of the post...

The Great Chicago Fire Fest has, according to Ms. Boone, an “operating budget” of a cool $1 million, which should be no problem for a city with so much excess cash lying around.   Perhaps cognizant of such sarcastic criticism, Ms. Boone has assured us that “only” a quarter of a million will come from the city.  The rest will be recovered from, you guessed it, “the private sector,” that perennial milk cow of Messrs. Emanuel and Daley II.

It seems like “the private sector” is constantly being shaken down by the powers that be in this town.  The “private sector” was shaken down for the Olympics that never happened, for the NATO summit, for “after school initiatives” (THE PRIVATESECTOR’S ROLE IN “MODERN” CHICAGO:  SHUT UP AND PAY, 2/20/13), for the Mayor’s “infrastructure trust,” for Millennium Park, for the tourism initiative “Choose Chicago” (CHOOSE CHICAGO…OR CHOOSE MORE POLICE OFFICERS?, 2/21/13), and, seemingly, for whatever strikes the Mayor’s fancy and/or will help him build a record on which he can fashion a run at the White House.

There are two logical ramification of the great private sector shakedown in Chicago.   The first is that businesses in this city will grow sick and tired of seeing yet another pol with his hand out at their door and of being forced to kick in “for a better Chicago” or some such drivel.  They will thus have more reason, in addition to our state and city’s miserable fiscal conditions and the inevitable tax increases that they necessitate, to locate elsewhere.  Chicago’s a great city, and Illinois is a great state.  But there are plenty of great cities and states in this country and the cost of doing business, or simply living, around here is growing less and less competitive.

The second possible ramification is that what is going on when Super Rahm taps on the “private sector”’s shoulder is not a shakedown at all, but, rather, a voluntary arrangement, a cabal of conspirators in cahoots.  The “private sector” willingly bankrolls Mr. Emanuel’s “public rituals” with “cathartic power” in exchange for a wink and a nod, a promise not of ugly consequences for not contributing but, rather, an assurance that such contributions will be repaid in the future in some form, always involving the public purse.   The Mayor and his accomplices in the connected private sector are just exchanging IOUs that will be paid by the taxpaying citizens, many of whom are businesses and business owners who are not in on the deal, who are not the types of “private sector” people that the Mayor finds useful.

Whether businesses are being shaken down or are willingly cooperating for a piece of the pie baked by you, Mr. and Ms. Taxpayer, this is no way to run a government.  If the Mayor and his minions want to spend money on feel good initiatives designed to advance the Mayor’s political career, they should spend the money from public funds and honestly tax the citizenry to raise the money.  Then the citizens can decide, or could if the City Council were not a group of trained circus seals for the Mayor, whether they want to spend money on “public rituals” with “cathartic power.”

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

HILLARY ON THE NON-CAMPAIGN TRAIL: TALKING MUCH AND SAYING LITTLE

10/28/13

The Wall Street Journal reported this morning (Monday, 10/28/13, page A4) that Hillary Clinton’s people say Mrs. Clinton “isn’t calibrating her speeches to make inroads with various Democratic constituencies.”

Oh, c’mon!  Just how naïve do Hillary’s people think we are?   As loyal readers know, I am not one to overestimate the insight or attention span of the American electorate; indeed, I am fond of citing one of my hero H.L. Mencken’s most famous, and misquoted, statements, to wit,

 “No one in this world, so far as I know—and I have researched the records for years, and employed agents to help me—has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.”

But are even we supposed to believe that Hillary, a very good (but not nearly as good as her husband, but that is grist for another mill) politician, doesn’t say everything she says with an eye toward maintaining her “political viability” and attaining the next slot on the public trough?  Not a word passes her lips that she, and probably a gaggle of handlers, has not spliced, diced, and de-iced for possible political piquancy.

Or perhaps Hillary’s handlers are right; maybe Hillary says nothing to make inroads with any particular constituency, Democratic or otherwise.  Perhaps she says things to make inroads with everybody.  Note her comments on a deficit reduction package that addresses both added revenues (higher taxes in political speak) and entitlement reform:

“What has worked is a compromise where, yes, we raise revenues for a certain period and we go and look at entitlements to see what is fair and can be done without really disadvantaging either existing beneficiaries or people who are going to rely on those programs.”

So Mrs. Clinton will boldly go for a program of entitlement reform that doesn’t “really” disadvantage…anyone.

Talk about bold leadership for the new millennium!

THE MERKEL SPYING STORY: “I WISH YOU COULD HAVE INVENTED A MORE CONVINCING STORY; I FELT DISTINCTLY LIKE AN IDIOT REPEATING IT.”

10/28/13

If we are to believe the White House, the NSA had been spying on 35 world leaders since 2002 but the spying stopped after the White House found out about it earlier this year.  So Angela Merkel is not alone in being the subject of great interest by American spies, which should surprise no one.  But the President knew absolutely nothing about the program for over five years but put an immediate end to it as soon as he got wind of it, which should surprise everyone…if it were true.

Why do I doubt the White House on this one, and you should as well?

First, Mr. Obama and his henchmen are politicians and, as such, are rarely, if ever to be believed because a politician lies at least as easily as s/he tells the truth.   It seems as if this tendency to lie reflexively springs from an inability to make a moral distinction between deceit and honesty when the only legitimate moral standard is the advancement of one’s political career and the obvious benefits such continuation and furtherance will bring to the benighted masses.  But who knows what goes on in the febrile minds of these narcissistic fops?

Second, the reason given for the President’s not knowing about the program is that it wasn’t, as the Wall Street Journal put it (Monday, 10/28/13, page A1),  “practical to brief him on all of (the eavesdropping operations).”

Hmm…

While it might not be practical to brief the President on all the NSA’s eavesdropping operations, wouldn’t it make sense to take the time to brief him on an operation so important as that conducted against Angela Merkel, given that Germany is one of our closest allies, one of the world’s preeminent economic powers, and the de facto ruler of Europe?  One would think the NSA would have time to brief the President on such a trifling matter, right?

Third, let’s assume for a moment that the NSA really didn’t brief President Obama on its eavesdropping on Germany and 34 other countries.   Wasn’t the President sufficiently curious to wonder where all the juicy intelligence the operation garnered was coming from?   Though the President is not half as smart as his cheering section would have you believe (Nobody is.), he’s a pretty smart guy.  One would think that access to the information one hopes such an operation would be able to gather would pique his curiosity.

Interestingly, unless I have missed something, no one at the NSA or the White House has commented on whether President Bush was briefed on the eavesdropping on, inter alia, Angela Merkel and her predecessor, Gerhard Schroeder.  (Note that the operation had been going on since 2002.)   Given Mr. Bush’s having been nearly entirely free from the burden of intellectual curiosity, or even rational thought, no one would be at all surprised if, had he not been briefed, Mr. Bush displayed no curiosity whatsoever regarding the source of the intelligence he was getting on Mr. Schroeder and Mr. Merkel.   But I digress.

Two further points…

First, it is entirely possible, one supposes, that the NSA felt no need to brief the President of the United States on one of its most important, or at least one of its most high level, spying operations.  If this were true, the good news would be that the White House is not lying…but only about not being briefed on, not about its complete ignorance of, the operation.  The bad news is that the implications of a spy agency that does not feel that it ultimately reports to the President are genuinely horrifying. 

Second, on a slightly less frightening note, maybe the whole story about the NSA’s not briefing the President on a successful plot to bug the personal phone of the leader of a loyal ally and the second most consequential nation in the Western hemisphere is a load of horse excrement, as is the tale of the President’s being completely unaware of the caper.  Maybe the reason that the NSA and the White House are trying to force us to dine on such equine detritus is that, as many have suggested, the real story is that everyone spies on everyone but no one can admit it.   Maybe this is just the way “diplomacy” is conducted…trust but verify, as the Gipper put it in a related context. 

“Everyone does it” is never justification for a course of action desired by one’s teenage children.  And “everyone does it” does not seem like sufficient justification for spying on a good and faithful friend; it still offends our, or at least yours truly’s, sensibilities.  But the rules of international diplomacy do not necessarily comport closely with the ethical rules by which individuals conduct their lives.   But, as hypocrisy is the tribute immorality pays to morality, the politicians’ not being able to speak freely about what really goes on in international relations is an admission that ethics, as commonly understood, are at best an afterthought in such matters.

RAHM EMANUEL’S BUDGET, JOHN CULLERTON’S ATTITUDE: “WHY NOT USE YOUR MENTALITY? STEP UP, WAKE UP TO REALITY…”

10/23/13

Chicago Mayor Rahm Emanuel yesterday unveiled his proposed fiscal 2014 budget, a document that his trained circus seals in the City Council will doubtless overwhelmingly pass while taking the time to lick the Mayor’s boots in the process.   The budget proposes no increases in property, sales, or gasoline taxes.   However, the Mayor is counting on raising $130 mm from “enhanced” traffic and parking fines and $10 mm from an increase in the cigaret tax. 

If one stretched and craned and denied reality sufficiently, one could almost say that this isn’t a bad budget; there is no increase in the most politically charged, for good reason, taxes and yet the city raises $140 mm in badly needed money to help balance the budget.   However, such an observation would be wrong on at least one count.  All that added revenue from the red light cameras, the speeding cameras, the higher fines for parking where the Mayor doesn’t want you to park, etc., will not go toward balancing the budget.  No, the Mayor and his henchmen plan to spend that money on such feel good programs as summer jobs, children’s health and vision programs, cultural programming in neighborhood parks, tree-trimming, rodent control (in City Hall, perhaps?  But I digress.), graffiti removal, and other such vague yet anodyne pursuits.

One wonders how the city of Chicago will ever balance its budget on a sustainable basis, and begin to address the date with bankruptcy its long term budget “problems” promise, if the Mayor and his lackeys who shamelessly call themselves a legislative body always manage to spend whatever additional revenue they manage to raise.   Perhaps there is no need to wonder; the answer is that Chicago will never balance its budget on a sustainable basis and will never address its budget problems.

The Mayor has a ready answer for such objections.  He is indeed going to address Chicago’s leak-ridden long term financial superstructure, yes sir.  He is going to do so through “economic growth and revenue enhancement” from an improving economy, cost reductions that involve no lay-offs, and “improved fiscal management.”  Talk about boldly facing one’s problems with concrete proposals!  

One suspects that the only reason Mr. Emanuel hasn’t come up with a plan for spending the savings and revenue generated by the aforementioned maneuvers is that he, too, being nobody’s fool, realizes how phony baloney, pie-in-the-sky, I’ll gladly pay you tomorrow for a hamburger today such piffles are.

At the same time, one of Super Rohm’s water carriers, Senate President John Cullerton, is telling us that the state of Illinois has no pension crisis.  As long as we keep our business and personal income tax rates at their “temporary” elevated levels, everything will be fine, this financial Einstein reassures us.

Let’s stipulate that nobody ever thought there was anything remotely temporary about the recent 60% increase in the Illinois  personal income tax and the similar increase in business taxes that accompanied it.  So Mr. Cullerton is not telling us anything we didn’t know about the income tax.  He also is proposing very little, if anything, to reform pensions.  The problem is, though, that, even with taxes at these extortionate levels, we will still have an enormous pension hole, still around $100 billion, if we do nothing to reform public pensions in this state, despite what Mr. Cullerton seems to believe, or at least is pretending to believe.  

The only thing that Mr. Cullerton is achieving by denying the existence of a pension crisis as long as we keep taxes at their current level is betraying an attitude, misguided as it may be, that is by no means unique to him, to wit…as long as those poor suckers who work in this state continue to pay through the nose, the politicians can continue to buy votes with the money the saps fork over.   Mr. Cullerton, having made his living in politics, sees nothing wrong with such a situation; indeed, having the people of Illinois finance the exercises in self-aggrandizement he and his cohorts call careers is the political equivalent of valhalla and he thus obviously sees no reason to change it.   Why should he?   It works nicely for Mr. Cullerton…and we continue to elect his ilk, and usually with great enthusiasm.  

The shenanigans and attitudes of the likes of Rahm Emanuel and John Cullerton, combined with their enormous success at the polls, cause yours truly to do things.  First, I quote a man who is something of an idol to me, H.L. Mencken, and I do so twice:

“Democracy is the theory that the common people know what they want and deserve to get it good and hard.”

And

“Government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.”

Second, I continue to pursue plausible avenues of escape from the Land of Lincoln, and do so with an increased degree of enthusiasm, indeed, with an ardor approaching that of those poor souls looking for a way off the Titanic.   If you live here, you should do so as well.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics.