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. 

THE BUDGET DEAL IN WASHINGTON: “AND NOW, THE END IS NEAR, AND SO I FACE THE FINAL CURTAIN…”

10/17/13

Now that the government shutdown/debt limit standoff has been resolved, for now, the nation can proceed on three fronts.   First, the people who do the actual work in the federal government, as opposed to the politicians who make a living primping, preening, and posing for the media, can get back to work.  Second, the U.S. Treasury is “good for it” for a little while.   Third, yours truly has some comments, and hopefully some insightful comments, on the whole imbroglio.

One of the great things about being a cynic is that it allows one to overcome one’s former partisan leanings and look at political issues from a more objective perspective.   Cynicism leads one to loathe, or at least find both amusing and deeply troubling at the same time, politicians of both parties.  Being able to find very little, if anything, good in either party, we cynics can look at issues from a nearly non-partisan, nearly non-ideological standpoint, to wit…

First, the most obvious flaw with this deal is that it is only temporary.   The government will be “reopened” until January 15 and the debt ceiling will be suspended through February 7.   With the shell game tactics that the deal allowed the Treasury secretary to continue to employ, we should be able to avert another default until early March.   Oh, joy.   This temporary fix will allow the poltroons and popinjays on the Hill and in the White House time to negotiate.   Allowing the likes of Paul Ryan and Patty Murray more time to posture and pontificate is supposed to bring us relief.  O tempora, o mores!

One does not have to be too cynical to suspect that the narcissists in Washington are prolonging this soap opera because they crave the attention; see my 10/11/13 piece, THE DEBT CEILING“CRISIS”:  “HE WANTED TAN SHOES AND PINK SHOELACES, A POLKA DOT VEST AND MAN, OH MAN!”)

 

Second, the GOP does look like something of a traveling freak show after a massive deluge, an earth jarring earthquake, and a series of tornadoes at this stage.  But it is untrue that the Republicans came out of this with no victories whatsoever.  Recall that, earlier this week, the Democrats, feeling their oats, started making demands about rolling back the scheduled sequester cuts due to be implemented in January.  They quickly fell back from that position when it looked like insistence on rolling back the sequester would nearly certainly result in default.  So the GOP did achieve a small victory, along with tightening eligibility verification procedures for those receiving subsidies under the Affordable Health Care Act, or ObamaCare.  It’s certainly not much, and the GOP is looking quite ragged at this stage, but it’s not as if the GOP achieved nothing, as the media would have you believe.

Third, one of the early, and quickly abandoned, goals of the tea partiers was the postponement, or the elimination, of the ObamaCare requirement that that individuals buy health insurance.   As the Wall Street Journal put it this morning (Thursday, 10/17/13, page A6):

They (participants at the “Conversations with Conservatives” confab at the Heritage Foundation) continued to argue that the law (the Affordable Health Care Act) is unfair, and restated their goal to shield individuals who don’t buy insurance from a penalty that kicks in next year.  (Emphasis mine)

Yours truly is no fan of ObamaCare, doesn’t like to be told to do anything, and has something of a libertarian conservative streak in him.   However, protecting the right of people not to buy insurance, which is tantamount to protecting their right to welsh on their responsibilities and force others to pick up their health care expenses, does not seem like the most conservative of ideals to me.   Is this what the tea partiers were fighting for?  The right to shirk one’s responsibilities and force others to pay one’s bills?   If this is true, where do I turn in my “conservative” card?

Fourth, the most enthusiastic “conservatives” in the tea party have to be asking themselves why they are Republicans.  That they will get nowhere with the Republican Party, as it is currently constituted, is best illustrated by an odd, or perhaps intentional, juxtaposition of articles in today’s Wall Street Journal.  On page 1 of today’s (Thursday, 10/17/13’s) paper, we saw two articles with the headlines “Congress Passes a Debt Bill” and “Business Voices Frustration with GOP.”  

The GOP remains, for now, the party of business.  It will take the votes and contributions of the social conservatives and of the genuine fiscal conservatives, but when the chips are down it will do the bidding of the Chamber of Commerce, and will ally itself with the Democrats to do so, as the House vote on yesterday’s deal showed.   That was only the latest illustration of the true colors, for better or worse, of today’s GOP.    Look, for example, at whom the party nominated as its presidential standard-bearer in 2012; what in the world does a guy like Mitt Romney have in common with a populist social conservative who is willing to have the Treasury default on its obligations, and thus risk financial catastrophe, to make a point about a nearly completely unrelated issue? 

Either the tea partiers and their now social conservative allies have to take over the GOP and force the traditional Republicans out or the tea partiers and their social conservative allies have to form a third party.   The two groups can’t realistically co-exist…unless the tea partiers are a bunch of chumps.

As a side note, the President’s speech this morning, gloating and kicking the Republicans while they were down, didn’t help increase the level of “civility,” or “the ability to legislate” either.   Silliness and vanity are by no means exclusive to one party in Washington, despite what the media would have you believe.

Fifth, as much as those of us who genuinely favor a smaller government, and are nearly terrified by the rate at which the government is growing, would like to fantasize about it, there is no consensus, indeed very little enthusiasm among the populace for small government or even meaningful spending cuts.  Sure, everyone wants to cut spending in the abstract, but what those who profess such desire (everyone) really mean is that they’d like to cut the spending that benefits someone else.   No one wants his or her program even nicked, let alone eliminated.   Look at the outcry over the government shutdown and the serial re-opening of government agencies and functions that suddenly became “essential,” “vital,” or “indispensable.”  If we’d waited another week, every program would have been re-opened while the government remained on “lockdown.” Look at the understandable near panic at the prospect of the government’s missing that $50 billion social security payment on November 1.

 

Sadly, the American people, despite loud protests from some quarters about government’s reach and spending skyrocketing and seemingly out of control, have gotten very comfortable with big government, even creeping socialism.   They not only like their share of the bounty that flows from Washington, but one also suspects that, deep inside, they like being told what to do.  It makes life easier and enables one to get back to the business of acquiring crap one doesn’t need with money one doesn’t have to impress people one doesn’t like in a vain attempt to fill the gaping holes in one’s life.

Sixth, the world has to be shaking its head as it looks at once great America, having elected a cabal of mountebanks and charlatans to govern it, bringing itself to the brink of tarnishing, if not destroying, the credibility of the world’s bedrock credit and currency.   Chinese talk earlier this week of “de-Americanizing” the world’s financial structure has to be falling on fertile ground.

What’s the alternative, one might ask?  Right now, there may not be an alternative, though one suspects that when one looks at the German, British, and Japanese government bond markets, one has the makings of a realistic alternative, or set of alternatives (The last may not be a good candidate, given Japan’s fiscal problems; see my 9/13/13 piece ABENOMICS: HAVE THE GOVERNMENT CREATE A MESS AND THEN SPEND MONEY CLEANING IT UP for only my latest screed on Japanese fiscal mismanagement), and this is even before the Chinese bond market develops.  At any rate, one suspects that the search has intensified in recent weeks for an alternative to the U.S. treasury market, and thus to the dollar, that has somehow put itself in a position of being at the mercy of the whims of a pack of poltroons and popinjays who feel allegiance to nothing so much as their own visages in the paper, on television, and in the mirror.

Maybe I’m wrong; Treasuries have caught a big bid today, with the ten year yield down to 2.60% as I write this.  But gold and silver have also caught big bids today.  And the dollar is down virtually across the board.

As I have said ad nauseam in the past, one can’t draw conclusions from one day’s trading.  But yours truly’s enthusiasm for gold and silver, always present and always disproportionate, is only growing, as is my enthusiasm for foreign markets in general.   And yours truly is far from alone.

THE DEBT CEILING “CRISIS”: “HE WANTED TAN SHOES AND PINK SHOELACES, A POLKA DOT VEST AND MAN, OH MAN!”

10/11/13

As do most people who are interested in the markets, I keep the television in my office tuned to CNBC, with the volume mooted, throughout the trading day.    As you might guess, today’s CNBC broadcast day has featured frequent break-ins to show us pictures of limos and limo-like SUVs (Modern day pols can’t be seen in good old Cadillacs or a Lincolns; no sir.  So they deck out GMC Yukons or Ford Expeditions just like limos, at probably a far higher cost, to avoid the appearance of spending lavishly on themselves.  These are people of the people, don’t you know?) pulling into or out of the White House.  These photos are accompanied by breathless headlines, or spoken accounts, of various self-important personages making progress, or not making progress, on the debt limit/government shutdown negotiations.

It finally hit me after about the third of these pointless reports…these patheticos in Washington have to be basking, rejoicing, reveling in this attention, achieving near orgasmic ecstasy from the notion that the world and the world’s markets are focused on them, and nearly only them, today.

It wouldn’t be too much of a leap to think that these pediculous popinjays and poltroons are prolonging this parlous prestidigitation simply to prolong their moment in the sun of unceasing attention.   These ultimate narcissists are doing what narcissists do best…primp and preen for the attention of everyone around them.

These purportedly pervicacious politicasters don’t even care if the populace’s well warranted contempt for them grows with each passing moment that this “crisis” (See today’s other post, THE DEBT CEILING “CRISIS” AND THE CREDIT CARD ANALOGY.) continues; everyone is looking at them!   Everyone notices them!   Someone is actually paying attention to them!   And isn’t that the whole reason for their miserable existences?

THE DEBT CEILING “CRISIS” AND THE CREDIT CARD ANALOGY

10/11/13

The other day, a regular reader asked why I haven’t written anything on the debt ceiling imbroglio or the government shutdown inconvenience.   The reason involves more than a lack of time as I toil more on other endeavors:  I haven’t written on the debt ceiling and the government shutdown because until (maybe) today, I haven’t had anything unique, or at least different, to say about these twin situations.  As loyal readers know, unlike many commentators who make vast money flapping their jaws or drying out their pens, I am not in the habit of parroting what others are saying in order to increase the quantity of red meat thrown to the true believers; I try to say something no one, as far as I know, has said about a situation.  That what I write becomes common knowledge a few days or weeks after I write it is a recurring phenomenon over which I have no control.

Note that I used the term “situations,” “imbroglio,” or “inconvenience” when referring to the debt ceiling or the government shutdown when the rest of the world refers to them as “crises.”   As I have said before, but not lately, in my various commentaries, the term “crisis” and its plural have been overused to the point of trivializing the term, as has been the case with many words in our modern world.   Everything, it seems, is a crisis.   This reflects the current tendency to assume that life should be free of risk, discomfort, or inconvenience.   Anything that threatens the presumed right to live in a manner that would make a renaissance potentate envious while being completely free of genuine concern or care thus becomes a crisis.   Thus, genuine crises, like the Cuban missile crisis, which had the potential to incinerate much of the world, become trivialized, put on a par with, for example, not being able to get all the gasoline we want at prices we consider fair (the OPEC oil “crisis” that prevailed when I first started to drive), the movement of a few warships in the Mediterranean, or the inability to visit a national park or a national monument for a few days.

That having been said, while the so-called “government shutdown” that somehow doesn’t affect vast reaches of the government bureaucracy, is something of a yawner to the vast majority of people, a genuine default by the U.S. Treasury would approach the scope of a crisis, not on a par with the Cuban missile crisis, but a crisis nonetheless.   Most people, however, don’t understand what is going on here and use some oversimplified analogies to explain the situation.  

John Kass, Chicago Tribune columnist and WLS radio talk show host, yesterday used the analogy of a credit card when attempting to explain the debt limit situation.  He said that extending the debt limit is akin to giving the government our credit card to do with as it pleases.   Since Mr. Kass, a good fiscal conservative with libertarian instincts, knows at least as well as anyone else that the government has had our credit card for generations, one assumes that he meant that extending the debt limit is akin to increasing the debt limit on the credit card the government already has.

This analogy is good as far as it goes, but it misses one side of the equation.   The government takes on debt to cover spending that has already taken place, money that has been appropriated and spent, or, to use the analogy, charges that it has already made on our credit card.  So when the government looks to expand the debt limit, what it is asking for, to use the credit card analogy, is permission to pay the bills on that credit card.  To extend the analogy, if you refuse to pay your credit card bill, that doesn’t make the charges go away; it only gets you into deep, deep trouble…or at least it used to before the government decided that those who abuse credit are somehow victims and therefore entitled to succor from an always benevolent, with your money, government, but I digress.

So if we refuse to extend the debt limit, we won’t be cutting spending; we will just be refusing to pay our bills.  While this has become fashionable for individuals in the last five or so years, the markets won’t look kindly upon the government mimicking the “What, me worry?” approach to finance that it has made possible, indeed desirable, for its citizens.

But let’s take a step in the other direction.   It is entirely responsible for, and even incumbent upon, the GOP to insist on fiscal restraint in exchange for extending the debt limit.  To use the credit card analogy, this is like a benevolent, but stern, dad agreeing to pay his presumably grown child’s foolishly inflated credit card bill in exchange for tight restraints on future spending.   While the GOP may be a poor candidate for playing that role (Note the “fiscal restraint” the GOP showed when its man George W. Bush was in the White House and the nagging and justified belief that the Republicans would like the government to stop blowing money on the President’s misguided priorities so that it can blow money on the GOP’s misguided priorities, usually involving foreign conflicts in places where we have no business.), somebody in Washington should be playing that part, and as the almost microscopically less boobish of the two boob parties that populate Washington, the GOP, I suppose, by process of quick elimination, is the party to play the role of fiscal disciplinarian.

The problem is it’s very hard, and irresponsible, to enforce fiscal discipline under these circumstances, when, unless some kind of deal is reached today or soon thereafter, the U.S. Treasury will default on its obligations.  To further employ the credit card analogy, if the account that one’s presumably grown child is abusing is a joint account with his or her father, dad cannot credibly threaten to not pay the credit card bill; to do so would damage not only his kid’s credit but his credit as well.   His name in on the credit card; if he defaults, he and his entire family suffer.  Our name is on the federal credit card; if we default, we hurt ourselves, the entire country, and the entire world financial system.

So threatening to default on our obligations, to not pay our credit card bill, if you will, is very much akin to holding a gun to our own head and threatening to shoot.  The Democrats aren’t stupid; they understand this and consequently hold most of the cards here.  One wonders if the GOP has figured this out yet.

ALDERMAN ED BURKE AND PROPERTY TAX APPEALS: YOU’VE GOT A FRIEND?

10/7/13

Today’s (i.e., Monday, 10/7/13’s, page 12) Chicago Sun-Times ran an article by Tim Novak entitled “Ald. Burke’s Tax Victories Costing City Hall Millions,” in which Mr. Novak reveals that Alderman Ed Burke’s law firm, Klafter & Burke, has won $18.1 million in property tax refunds for clients since 2003.   Those taxes would have gone to several taxing bodies, including Cook County and the Chicago Public Schools; only 20% would have gone to the city of Chicago.  So, doing the arithmetic, Mr. Novak argues that the refunds Klafter & Burke have won have cost the city about $3.6 million, or 20% of $18.1 million, rounded.

This analysis is fine as far as it goes, but is flawed by one perhaps fatal assumption, i.e., that Mr. Burke’s clients would not have won their property tax appeals, and resultant refunds, had they not availed themselves of the legal services of Mr. Burke and his opponents.

I’m not a lawyer, and I don’t know much more than I read in the papers.  But property tax lawyers have told me that many of these appeals are relatively routine and that the same, or nearly the same, results could have been reached by any reasonably competent lawyer well versed in property taxes.

No, I’m not being naïve here and I am not exonerating politicians like Ed Burke (and Mike Madigan and John Cullerton, mentioned in a side article) who make a lot of money ostensibly opposing the very governmental bodies in which they, to say the least, wield great influence.  Indeed, if we accept that the likelihood of success in a property tax appeal is not greatly enhanced by hiring a politically connected law firm, the implications may be even more malodorous for the likes of Messrs. Burke, Madigan, and Cullerton.

Say you are a property owner, maybe small, maybe big, but, in any case, looking to curry favor with the powers that be in the city of Chicago and its environs.   You want to appeal a property tax bill.  You can hire Joe Dokes and Associates or you can hire Klafter & Burke.  The likelihood of victory is at least as good with Klafter & Burke as it is with Dokes and Associate.  Whom do you hire? 

The answer, of course, is obvious and, while it might have something to do with the perception, right or wrong, that Klafter & Burke has a better chance of winning due to its clout, it has more to do with the desire to curry favor with the likes of Ed Burke for other matters that might come up between you and the city and/or its kindred government bodies.  

Simply put, if I hire Dokes and Associates, I probably win my appeal.  If I hire a firm that has as one of its partners a prominent Chicago politician, I probably win my appeal AND I have made a contact, a business associate, and possibly a friend of someone who can help me with matters that transcend property taxes.

Even more simply put, I can’t outright bribe a politician, even in Chicago.   But I can hire him or her to do my legal, real estate, or insurance work.   Why do you suppose so many politicians around here, or anywhere, go into the law, real estate, or insurance?  A real cynic might say they choose those professions because they are perhaps more respectable, and more lucrative, than the saloon keeping profession of the legendary mid-20^th century 43^rd Ward Alderman Paddy “Chicago ain’t ready for a reform mayor” Bauler and many of his contemporaries.  (By the way, that was Mr. Bauler’s actual quote on election night, 1955, when Richard J. Daley defeated Robert Merriam to replace Martin Kennelly as Chicago mayor; it wasn’t “Chicago ain’t ready for reform yet.”  But I digress.)

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. 

THE SEATTLE FIRE: A CHINK IN TESLA’S ARMOR?

10/3/13

News of a Tesla Model S’s catching fire near Seattle after being struck by roadside debris, and the inevitable accompanying YouTube video thereof, has helped send Tesla shares (TSLA) down more than $20 from their all time high close of $193.00 on September 30.  The company is looking into the incident (I’ll bet it is!) and, so far, has emphasized that the fire was caused by road debris, not spontaneous combustion, and that no one was hurt.  The design of the car, the company further points out, prevented the fire from spreading as quickly as it otherwise would, helping to protect the driver of the vehicle.  

This fire may be much ado about very little.   Cars burn up all the time.  And every conventional car contains a fuel tank filled with, in most cases, gasoline, which is about as flammable a substance as one can imagine.  But the Tesla fire has caught people’s attention for several reasons.  First, this is new technology.  People are leery of new technology and new technology, almost be definition, holds more unknowns than older, more conventional technology.  Second, there are plenty of people gunning for Tesla for whatever reason…they are scoffers at the new technology and/or they are short Tesla stock.   Third, and more disconcerting, is that firefighters reported that they needed several attempts to extinguish the blaze because the car kept reigniting.   Marry this to the fear of technology, and one can see why people, or at least investors, are jittery.

Regular readers know that I am no big fan of Tesla, or, more properly, of TSLA stock.  See

IF YOU WANT TO GET PEOPLE CHARGED UP, WRITE ABOUT TESLA (TSLA)

5/30/13

and

TESLA (TSLA):  THE GREENIES ARE CHARGED UP, BUT…

5/23/13

Despite my antipathy toward the stock, I am not at all gloating, as doubtless some are, about the fire.  This is serious business and people could have been hurt.  Further, the technology behind Tesla is both intriguing and promising; it is good obviously for the company and its shareholders but also for the entire car industry and for the nation as a whole.  I am thus pulling for Elon Musk and his cohorts, as we all should be.

From a purely financial standpoint, having been burned by betting against Tesla stock (I owned, and watched expire, puts on TSLA at $85, more than $100 below its peak price.  Sheer genius.  Fortunately, I wasn’t betting serious money on this proposition!), I am no longer short the stock or long puts on TSLA.  It’s too risky to take such positions, the financial equivalent, so far, of standing in front of an oncoming freight train.

However, the fire has reminded me of something I wrote back in that 5/23 piece…

Maybe a GM, Ford, Toyota, Nissan, Honda, or VW can make better use of the TSLA’s technology than can TSLA, but does anybody really think TSLA knows something these guys don’t?

It’s fashionable to bash Detroit, and maybe its Japanese and German equivalents, as a bunch of old line metal benders hopelessly out of touch with the newest trends in technology, luddites mired in the miasma of another age of belching dinosaurs and antiquated ideas.   The contrast, in this view, with the forward, modern, next century thinking of the likes of Elon Musk could not be more stark.   Such thinking, however, is flat out wrong.  There are a lot of very smart people working in Detroit specifically and in the global auto industry in general.  It is therefore very difficult to believe that Mr. Musk, as bright as he is, has figured out something that his competitors haven’t. 

Simply put, the technology behind the Model S and its upcoming corporate brethren cannot be as flawless and perfect as its most ardent adherents believe it to be or the guys in Detroit, Hiroshima, Munich, Wolfsburg, and Toyota City would have come up with it, and put it on the market, by now.  There has to be a reason that Detroit and its competitors have not embraced this technology, and it isn’t obtuseness on their part.

Maybe the fire will lead us to that fly in the ointment.  Or maybe it’s something as simple as the Tesla’s being, for the foreseeable future, a car for the relative handful of people who can afford to spend $70,000 on a third car; hence the enthusiasm for it on Wall Street and in Silicon Valley.  Or maybe everything people say about the car is true; it is the modern day equivalent of the perpetual motion, or perhaps the time, machine.  But the fire outside Seattle has people thinking…and looking for possible chinks in Tesla’s armor.

At any rate, even if the car is what its most ardent acolytes believe it to be, TSLA stock is still expensive.  However, betting against it has been a chastening experience for those of us who have tried it.   So I can’t be accused of talking my position…at least not at this juncture.  If I can find an attractive entry point, I might place a prudent bet against TSLA again, if such a thing becomes possible.

TSLA:              $170.64