Tuesday, January 27, 2009

America Compromised


Marc Sussman / April 2008

 

America has been compromised

And you will not be able to just “live here”, log on, tune out, zone out on the 5:45 express, because America has been compromised

 

Never again will you see the Bushes, blowing bugles, leading the charge for black gold

There will be no film at 11 of George in his flight suit that he had been saving for just the proper occasion

 

Our children will not shop amid the rubble of the towers

 

American history will not be portrayed by Angelina Jolie, walking the red carpet in her latest Vera Wang 

Not when America has been compromised

We’ll  realize that things don’t go better with Coke

We will not “JUST DO IT.”

We’ve come a long way baby, but we won’t walk a mile for a Camel, and this is not Marlboro Country

GE will not “bring good things to light”

for a New America in 4 parts without commercial interruptions

There was no Tiger in our tank, just a hand in our pocket We won’t need 57 varieties, or 31 flavors  and it won’t be finger lickin’ good to the last drop snap crackle and pop - only puffed cereal will be shot from guns

 

The American Idle won’t care if Dick finally gets down with Jane on Search for Tomorrow Not when there are floating bodies, raging fires, fallen heroes

Not when Mother Earth has been compromised. There will be no highlights on the eleven o'clock news, with pictures of squirrelly little pencil pushers, shuffling and scribbling our economic eulogy America will rise again, this time arm in arm with the rest of humanity

And in the end, we will ask the poets to rewrite our National Anthem, without the rockets red glare

Or we might just sing America the Beautiful, as loud and as long as we must, until we are America the Beautiful   

 

We will be all that we can be

 

Sunday, January 25, 2009

It's as easy as E.S.G.

It has always been termed socially responsible investment – and I’ve always had a non-specific aversion to this description. The issue, so specific and so compelling reduced to that word. Responsible. Yuck. It sounded like the castor oil of the investment world.

Not only did it not identify the problems, it took all the excitement and energy out of the possibilities. It wasn’t about being responsible – it was about being human, and more importantly, about being courageous.

Now, we enter the age of ESG – Environmental, Social, Governance, and all the issues are contained in the clarity of these three words, these three letters. As the financial tragedy were living through unfolds, they will become part of our common understanding.

The Obama administration will bring with it a groundswell of environmental activism. The financial disaster we’ve created has set the stage for different priorities, slowed us down. Extravagance is taboo. Authentic is what we will admire.

There will be difficult challenges. Barack Obama’s support of clean coal technology was easy, a political maneuver necessary for him to carry certain states. It’s easy to support a technology that doesn’t exist, because it is so easy to abandon it. The coal industry is perceptive in mounting one of the great public relations campaigns supporting the future of what they call “clean coal”.  Coal is an industry on the verge of extinction. Carbon sequestration and capture, the theoretical process of injecting CO2 into the ground, is no more a reality than Santa Claus (sorry kids). We are decades away from anything resembling such a technology, and we just don’t have the time. 

As we come to grips with the truth - that our time really is running out - only a few generations left on a habitable Earth, the decisions will be made.  The truth, absolutely, is that coal is the greatest threat to our future. We must stop burning coal. Not in ten, twenty or thirty years, but now. When Al Gore endorses civil disobedience to prevent new coal plant construction, it is with this understanding. The recent protests, arrests, high profile cases - activists chaining themselves to bulldozers – it is just the beginning. They are right on target. There will be thousands more. 

China will bury its citizens faster than they can build coal-fired power. They are adding a massive 1000 megawatt coal plant PER WEEK to what is already a problem of epidemic proportions. It must stop, and they know it. They’ve said so.

The social issues are many– human rights, animal rights, alcohol, tobacco, weapons, gambling - each with negative impact on human existence that cannot be denied or defended. The governance issues are in focus now - excessive executive compensation, financial protection for the working man and woman, the lack of regulation and supervision everywhere, the rights of shareholders under attack, so much that cannot be covered in the space of this article. It’s all contained in those three words, those three letters. ESG.

Investment will be simpler, clearer. I’ve said “Understand the problems, invest in the solutions.” Simple. It will take time. In the New Year, retailers will fold like lawn chairs, crushed by the weight of their holiday season inventories. Unemployment will escalate to double digits. We will be unable to print enough money to keep industries on life support.

We are in store for an historic and necessary restructuring of our system. Change will be driven by the public resentment over the blatant corruption, greed and deception throughout government, industry, and finance; will finally begin to boil over. We tolerated it when we were comfortable. That was our part in this nightmare. If you don’t believe this, it’s probably because you don’t know how bad this will get.

Last year I had the privilege of joining the eminent economist Paul Krugman in a discussion of Healthcare and The Economy (this was when healthcare was an important issue). We were speaking before hundreds of Air America devotees on the AAR cruise. Mr. Krugman, now the winner of the 2008 Nobel Prize for Economics, and me - a legend in my own mind.

A woman stood up to ask as question. She said that she lived in the same community as Bill Gates - asked if she’d have to put barbed wire up to protect her property. Well, Mr. Krugman and I had different answers. He had a cogent response steeped in fundamental economic principles that we have always relied upon

I just said, “yes, you will. Buckle your seatbelts as 2009 approaches. Our unflappable new President will need to impart us with every ounce of his available calm.

The Bush Legacy

Cause and effect.

It amazes how disconnected we can be from the cause of our problems - we are so focused on the effect. It is the reason that little is learned from history. One thing is certain, however. Barack Obama is not the cause of our problems.

In the coming year, we’ll see a continuation of our economic decline. The housing market collapse will continue along with an epidemic of corporate consolidations and bankruptcies. The future of the auto industry is in doubt. Credit markets will continue to remain tight. 2009 sizes up to be a historically bad year.

We’re already hearing the economic chaos racing through our system described as  “Obama’s recession”, and he’s not even sworn in yet.  Conservative factions smell blood in the water. The bloom will fade in record time if we’re not mindful. When in pain, (and will there ever be pain), there will be those that will blame whatever leadership is in power.

Let’s keep these facts in mind.

The collapse in the banking system, the brokerage system, and subsequently the equities markets, was caused by deregulation and a lack of transparency. It was also caused by our attitude towards debt, by our addiction to economic growth, both personally and as a nation.

It is certainly more than just the money, although that has become our focus. The damage that has been done to the U.S. in the court of world opinion will take decades to restore.

So, as the Obama tenure becomes an opportunity for conservative factions to vent   economic and societal frustrations, to place blame, lets review some recent history.

Here is an incomplete summary of the Bush legacyI encourage you to add to this list.  We can then post it to our refrigerators, a reminder what the sacrifice ahead is all about. 

  • Under the Bush Administration, we spent the U.S. surplus, effectively bankrupting the U.S. Treasury, while shattering the record for the largest annual deficit in U.S. history.
  • In the administration’s first year in office, over 2 million Americans lost their jobs -
and that trend continues. During Bush’s tenure, we:                                               
    • Set the all-time record for the most private bankruptcies filed in any
12-month period
    • The all-time record for most foreclosures in a 12-month
period
    • The all-time record for the biggest drop in the history of the U.S. stock market. 



Not all of us have been hurt, however.

  • The current members of the cabinet are the richest of any administration in U.S. history
  • Exxon Mobil set records for the single largest quarterly profit in history.

George Bush set the record for most the campaign fund-raising trips by a U.S. President. The Bush campaigns set the all-time U.S. and world record for corporate campaign donations.

  • Bush’s largest lifetime campaign contributor, (and a close personal friend), was Kenneth Lay. Lay presided over the largest corporate bankruptcy fraud in U.S. history, Enron.
  • More time and money was spent investigating the Monica Lewinsky affair than has been spent in the ensuing Enron investigation.

During the Bush years, we experienced our country’s broadest energy crisis, accompanied by rampant speculation in the oil commodities market and the highest gasoline prices in U.S. history.

Bush is the first President in US. History to order an unprovoked, preemptive attack and the military occupation of a sovereign nation, and did so against the will of the United Nations, the majority of U.S. Citizens and the world community.

  • We invaded and occupied two countries at a continuing cost of over
10 billion dollars per month. We then created the Ministry of Homeland Security, the largest bureaucracy in the history of the United States Government.
  • The Bush Administration has cut health care benefits for war veterans, and supports reductions in benefits for active troops and their families.

Under George Bush’s watch we have broken more international treaties than any during any administration in U.S. history.

  • Bush is the first President in U.S. history to have the United Nations remove the U.S. from the Human Rights Commission.
  • Bush withdrew the U.S. from the World Court of Law. 
  • Bush refused to allow inspectors access to U.S. prisoner of war detainees, and thereby have refused to abide by the rules of the Geneva Convention. 
  • Bush is the first President in history to refuse United Nations election inspectors (during the 2002 US election).

We’ve had very little interaction with our “chief executive”. He set the record for fewest numbers of press conferences of any President since the advent of television.

  • Bush also set the record for most days on vacation in any one-year
period. After taking off the entire month of August 2001, he presided over the worst security failure in U.S. history.
  • Less than a year after the World Trade Center attacks, the U.S. was the most hated country in the world. It was the largest failure of diplomacy in world history.
  • Bush is the first President in history to have a majority of Europeans
(71%) view his presidency as the single biggest threat to world peace and security.
  • Bush has so far failed to fulfill my pledge to bring Osama Bin Laden to justice. 
  • All records of Bush’s tenure as governor of Texas are now in the George H.W. Bush library, sealed and unavailable for public view.
  • All records of SEC investigations into allegations of Bush’s insider trading and the records of his bankrupt companies are sealed in secrecy and unavailable for public view.
  • All records or minutes from meetings regarding public energy policy, that Bush or Vice-President Cheney attended, are sealed in secrecy.

So please feel free to add to this legacy list. We’re looking for additions, not embellishment or venting. We can then look at what our part in this fiasco was.

As hard as it gets through 2009 and 2010, we must remember how much better off we already are. As the bottom approaches, we can remember that our sacrifices will be worth it. 





A review of Lillian Pollak's new book "The Sweetest Dream; Love, Lives, and Assassination"

I’ve often wondered what our overwhelming obsession with nostalgia was really about. We’ve longingly watched our childhood TV shows, and cheered our Broadway revivals.  We have our modern conveniences, of course, but they were nothing like the good old days. And as the headlines reveal scandal after scandal, as we continue to plumb the depths of corruption and deception, yesterday offers us a lot. We can forget for a moment how thoroughly ashamed we are of today. It’s a temporary reprieve.

 The Sweetest Dream is a romantic coming of age tale, the marginally fictionalized story of the life and times of a young activist in The Communist Party of the 1930’s, largely based on the life of Lillian Pollak, the author.

 The essence of the book is encapsulated in the cover photo - Leon Trotsky, his wife Natalya, Van Heijenoort (Trotsky’s secretary) and two young women, Lillian and her friend. The picture, completely authentic, has been transposed onto a fictional brownstone.  

The characters in the book are fictional, however the historical events are completely accurate.  The book is a portrayal of a time in our history that we may find particularly relevant and important. The glossary and pictures attached are a valuable source of information, an historical record.  I’m sure that some will find reason to be critical of the typos, after all, we seem to live to discredit. Yes, the book is rough around the edges, but it does not detract from the inside view it provides of this time of courage and unity. 

The primary characters are two young girls, Miriam and Ketzel, their families and friends. The book is filled with their letters back and forth. We follow them as they sort their way through life. We learn about their personal lives and political activities in this way.

 Through Ketzel’s experience as a student of modern dance, we learn about the great innovators like Martha Graham, Tamiris, and also Anna Sokolow. It has been said that from that perspective alone, the book has great merit.

Through Miriam, we learn about the greater writers of the time- Langston Hughes, John Dos Passos, Delmore Schwartz, and many others. She loves the movies of that time, the Marx Brothers comedies, the romance of Fred Astaire and Ginger Rogers.    

The structure of the book works well. As I read, I felt as if I were reading two books combined. At the end of each chapter, the reader finds the second “book”, in the form of a condensed narrative or letter, in italics, set apart - not an uncommon technique, but somehow I found it unusually effective here. 

The first of these narratives opens after the death of Lenin, in the years after the Russian Revolution. As these parallel stories develop, we are immersed in the day-to-day events around the exile of Trotsky, his life with his wife Natalya and their young son and extended family; the rise of Stalin, the oppression and violence, the executions. Trotsky’s campaign against the corruption of the Stalinist regime builds to his ultimate assassination in Mexico. All along, I found myself resisting the temptation to skip ahead to the next chapter in the Trotsky saga. I was glad I resisted. It is these two stories juxtaposed that works so well in this book.

What develops is a mirror effect, the lives of these characters, how they felt about their personal struggles, and their connection to something bigger. It is the ideological struggle, life in real terms against the backdrop of history. The colorful descriptions are eloquently done – the smells, the sounds, the chatter. The call to action, the meetings, the hours spent passing out flyers, knocking on doors, attending rallies, and always the arguments, rifts and factions. These forces intertwine throughout.

I must admit that my attraction to the book was heightened by our current circumstances,  my feeling that this is an important book at this moment in time.  As we see the rapid deterioration of our system, as we brace ourselves for a complete systemic collapse, we tentatively return to issues of social and economic justice. We hear “The Great Depression” mentioned with every daily news report. I’m not sure that we can ever really know what it felt like to live through those times. “The Sweetest Dream” is a glimpse.

As the book winds down, the energy of change slows its pace, and we see a transformation. The assassination of Trotsky has seemingly sapped enthusiasm and commitment. As WWII develops, the focus turns to waging the battle against the Nazis. The book closes in a wrap-up of events, amid acts of generosity and kindness.     

On a personal note, I find it important to describe Lillian because she represents what is possible. She is a cherub, with more life energy than many half her age. I find out now that she is an active member of the “Raging Grannies,” a group I met and interviewed recently at the annual “Bobfest” in Madison, Wisconsin. I can only describe them as an army of Minnie Pearls, on the leading edge of antiwar activism. It is an infectious and powerful group.

Life is a remarkable journey if you pay attention and stay engaged.  It isn’t always possible. I’ve known Lillian Pollak for more than ten years, and had no idea who she was. I’m glad that I found out. I owe special thanks to this remarkable woman, who has just released her first novel. And, for those of you who think that at 65 we’re on the back-nine of life, in April she turns 94.

Marc Sussman

Things have changed.....

I’m sitting in a courtroom as we speak, waiting to appear before a judge regarding a speeding ticket. I received this ticket on the entrance ramp to the Lincoln Tunnel. It appeared to me that there were two lines, one waiting to receive violations, the other  waiting to enter the tunnel.

 New York City Mayor Michael Bloomberg recently proposed a congestion pricing plan for traffic entering Manhattan. This plan was soundly defeated, as I believe it should be. Citizens should not suffer financial penalties while construction cranes seemingly block every street in Manhattan. My office is located in midtown Manhattan – I’m there every day. I can tell you that in the aftermath of this defeat, an army of ticket agents (I’m not sure if they’re police officers) descended on the city. It was obvious to everyone what was happening. 

 Other developments follow this same trend. We’ve had a law called  “don’t block the box” on the books for as long as I can remember. If you enter an intersection that is not clear, and subsequently block cross-traffic you receive a substantial summons. I had never seen this enforced - before now.

I heard of this as a radio news item – that not only would this law now be enforced, but sources were estimating the expected revenue that this new policy would bring in. It was a revenue issue.

The other day, I came up with a great follow-up idea. I’m in front of the Empire State Building, a popular tourist spot. I was standing in a crowd, waiting for a crossing light to change - no traffic to be seen, just the crowd, waiting for the light to change. Waiting. And waiting. These people were not New Yorkers, they had to be from out of town.

Now there’s been a law on the books, since the beginning of time, against jaywalking. So it occurred to me that we could marshal thousands of rent-a-cops, and begin to issue tickets. We could employ the same technique they use for rides at Disney, people queued, waiting for their jaywalking ticket. I’m guessing we could close the budget deficit within a week.

So, here I am in court. I’m going to agree to an additional fine, and there will be no points on my license. Its only because I can afford the fine that I won’t pay an insurance surcharge. Those who can’t afford it, will be stuck.

And they call this America.             

The Climate Project

In October, I was invited to Nashville to train with The Climate Project, the organization that has grown out of Al Gore's landmark documentary, "An Inconvenient Truth." There are now 2500 presenters worldwide, who travel and present the latest evidence of climate change, try to raise awareness and sound a call to action. Without too much detail, let me say this; the realities of climate change are no longer "an inconvenient truth;"they have become a global imperative.

Since 2005, the disappearance of polar ice has accelerated in a way that has shocked scientists. The Greenland ice shelf appears so fragile that its complete breakup can be projected in mere decades. That event causes oceans to rise 15 to 20 feet, with the domino effect felt throughout the world. Not just in China, and India, but in South Florida, California, the U.S. Gulf Coast, New York, the Netherlands, London. Hundreds of millions the world over will be displaced, and the wars over remaining resources will truly have begun. There is so much more to the story. We must not equivocate. Action cannot be phased in over 10 - 20 years...we must act now, putting any debate to rest. I have made the commitment to make my presentation on behalf of The Climate Project, wherever I'm needed...in houses of worship, town hall meetings...anywhere that concerned citizens want to try and understand the problem, and search for possible solutions.
If you have an interested group, please call the office at (800) 682-0286.

Marc

"Treat the Earth well. We do not inherit the Earth from our ancestors, we borrow it from our children." Ancient Indian Proverb

America in Recovery/ The Beginning

I loved the celebration, don’t get me wrong.  I was just apprehensive. From that moment  when California and Pennsylvania had been decided, and those words flashed on the screen – “Barack Obama is the 44th President of the United States.” Exhale. 

 Then, the interminable three month wait. Three months is an eternity, especially when wolves are guarding the henhouse. $750 billion later we had set the stage for the most difficult road a President has traveled since FDR.

 I understand that we haven’t had anything to celebrate for 8 years and it was a great relief to be rid of the Bush Administration. In the recent words of Liz Holtzman, “we had come dangerously close to a military dictatorship, and we have to admit that”. There were times that I imagined this election not coming off.  Perhaps that’s one of the reasons that the celebration was so incredible.

 Then, it was finally here, and he spoke. He was serious, focused, direct, confident, no nonsense. From the first,  it was clear that we were not going to hear a reprise of  “I have a dream”. There is no time for dreaming. This was the wakeup call.  No cheerleading, no pom-poms, and for good reason. Pick yourself up, dust yourself off, get going.

 The immediate reactions to the speech ranged from disappointment at the serious tone, the lack of a memorable phrase, a “hook” as was described by Rush Limbaugh. The flap over the benediction, over the flub during the “oaf of office.” It was clear that the words  “ it is time for us to set aside childish things “ had been misunderstood.

 In his first days, we saw a clarity which has been sorely missed. Wage freeze for his senior staffers, restrictions that will safeguard against the influence of lobbyists. China put on notice regarding currency manipulation. Close Gitmo, end the War in 16 months. As Emeril might say, BANG!

 But in the ensuing days it is clear that there is misunderstanding throughout finance, as the insanity continues. They’re still talking about sectors, asset allocation, market timing. How long will this “cycle” last. Buying low, and selling high. Amazingly, perceived value still exists. If you’re looking for direction from the financial talking heads that populate the airwaves, you deserve what you get. Stop waiting for a green arrow up, or some other “signal” that a market correction might be over. As a matter of fact, stop thinking in terms of  “markets” at all. If you listen to that noise, shame on you.

 The time to learn is now, to make money real. Understand the problems, invest in the solutions. It has been my mantra for years now. The problems? To begin with, there’s Energy, Water, Food and Nutrition, and Healthcare. There is much more. There was much in the speech that we could absorb.

 We must transform our energy use, moving toward reclaiming our “threatened planet. “ We think we choose growth, when in effect we choose our demise. We much change our relationship with Earth. Now.

 “We cannot prefer leisure over work.” I translate that to mean that nothing worth having, is earned without sacrifice.

 “We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology's wonders to “raise health care's quality and lower its cost. “ “We will harness the sun and the winds and the soil to fuel our cars and run our factories. “

 And we will “transform our schools and colleges and universities to meet the demands of a new age. All this we can do. And all this we will do.”

 How do we begin? We take our part. We understand what has happened, and we vow never to let this happen again. 

 We have “ failed to make hard choices “ take responsible action.

In recovery terms, we wanted an easier softer way. When the banks were having their party, we were borrowing money like drunken sailors. As long as our home prices were soaring we questioned not. That was our part. We kissed Alan Greenspan’s ring, thanked him for sending our kids to college. The housing bull market ran on and on, beyond all reason. Now, three million homes have been lost and the collapse in housing prices accelerates. We were co-conspirators. True, Greenspan now has the nerve to place the blame on investment banks, says he assumed that they knew what they were doing. Alan, you were the gatekeeper. Now they’re writing checks, out of our checkbook. Astonishing.

There are some who are guilty of “greed and irresponsibility”.

AIG, the largest insurance company in the world has been absorbed by the U.S. Treasury. If this doesn’t worry you, consider that the value of the Credit Default Swaps held by AIG is estimated to be 45-50 trillion dollars (yes, that’s a “T”.) In rough terms, that’s equal to the Gross National Product of the entire world for a year. These supposed insurance vehicles had nothing to do with insurance. Insurance dictates that there are reserves against losses. No reserves here. All they did was allow ratings agencies to assign ratings as high as AAA to portfolios that were  essentially worthless. Worse than that, they are so complex and convoluted, that they cannot be valued. Did I hear someone say “due diligence? There are responsible parties, and we need accountability, we want restitution.

 Bank of America bought Merrill Lynch for $50 billion dollars in September, with just a mere shred of due diligence, but with government guarantees.  The deal was closed in one hour.  A mere 4 months later it is estimated that 20 billion dollars in equity is lost, an albatross to hang on future generations of taxpayers. John Thain, who crafted the plan, and has been in charge of the Merrill rehab, resigned today.  

It is learned that Mr. Thain spent $1.2 million on a renovation of his office, while Merrill crumbles. Rug, commode, just a few knick knacks here and there. Chump change for a man who earned over $83 million in 2007. It’s outrageous.  More outrageous is his decision to bonus executives at Merrill just three days before the deal closes.

Bank of America posted a fourth-quarter loss of $1.79 billion, down from net income of $268 million in the period a year earlier. Much of that was caused by growing consumer loan losses. Merrill Lynch, which posted results separate from Bank of America, lost $15.3 billion in the quarter, on a fresh round of write-downs.

We have  contributed $45 billion in bailout money to this deal so far, with undoubtedly more to come. Terms of the Merrill Lynch deal set up the Treasury and FDIC to absorb more than 90% of all future losses. Insane.

The questions remain. How did this deal get done? Who signed off on it? Treasury Secretary Paulsen? Who approved the ML bonuses in the 11th hour?  Why the pittance of equity when we are providing the cash, and the guarantees?  The problems? Corporate governance issues to be sure , a lack of supervision, transparency, accountability. Abuse of power. Greed. This cannot stand.

In the coming weeks I will publish excerpts from my new book “America in Recovery.”  The principles have been proven for decades. We are approaching the day when we will have to admit that we cannot manage, nor control what we have created. We must begin anew. Surely, there is no quick fix.

 Those days are over.