Wednesday, May 30, 2012

Romney lacks a sense of community

My column in the Sky Hi News today

The Bain Capital vs. job creation debate has indeed gone off the rails. Two are at fault: the Democrats and the Republicans. Each side is attempting to twist and spin the accusations of the other. Their responses only make it worse.

Mitt Romney began his campaign with one premise: His expertise in venture capitalism uniquely qualifies him to fix the economy and create jobs, and the Democrats made a big deal of examples of his failure to create jobs. The conflict then devolved to whether Romney was qualified to be president and the Republicans claimed Obama was not qualified either because mostly — gasp!— he was just a community organizer and therefore anti-business and anti-capitalism.

Vice President Joe Biden once in a while gets it right and sometimes gets it wrong. Equating the governing skills of an investment banker with a plumber was silly but his assertions that “he (Romney) does not get us” (an audience of blue collar workers) was closer to the truth. The point Biden was making was that the less than elite did not have “rich” envy. They wanted to be rich themselves, but that they had “opportunity” envy and the GOP was bent on restricting their opportunity to succeed, whether it was access to education or to jobs in the face of layoffs caused by venture/vulture takeover capitalists' uncaring business practices.

The GOP's response, sneering that Obama's record as a community organizer disqualifies him to the president, hit me as strange, especially since they also try to define him as an ivory tower professor who is out of touch with the real world. What in the world is wrong about getting down and dirty with struggling people to understand how those who are different than you think, feel, and struggle?

More of that experience might have helped Romney connect with more people instead of trying to pose of one of them. It did not work. The GOP launched a diversionary strategy, that any attack on Romney's decisions at Bain Capital is an attack on all private equity corporate takeovers and capitalism as a whole. The Obama team fumbled a response, saying they were only attacking Romney's “values” and intensified attention to the collateral damage his decisions or his company caused to working people who lost income, health care, and pensions. Lately, Obama's surrogates have tried to clarify that their attack was not on capitalism but to make the case that Romney himself had not translated his expertise to good public policy.

The debate could be recast in terms of who has a sense of “community interests.” That is not the drumbeat of the Tea Party whose single-minded attention is to their own financial interests, whether it is opposing higher taxes or any restraint on their freedom to do what they please that benefits their own interests. I stumbled on a quotation posted on the Republican Men's Club website that defines what it means to be Republican in politics in today's society:

“… it requires listening to constituents and understanding their role in the ‘global' perspective. Leadership is involvement: the prudent application of wisdom for the benefit of the whole, or at least as many as possible while ensuring that those in the minority have a say …”

Many investment bankers have successfully taken their skills to government and the Obama administration, but they brought with them a sense of community they already possessed. Romney has not demonstrated that his sense of community extends past his skills to analyze a balance sheet and to act on the bottom line. Political leadership also demands a cost benefit analysis of community impact.

For more go to, 

Wednesday, May 23, 2012

Does Mitt Romney's expertise translate to his ability to lead the US economy?

My column in the Sky Hi Daily News today:
We live in a short-hand, sloganeered and sound bite world but it is worth our time to get into the weeds, especially when complex issues of the economy are involved.

I took a deeper look at some recent sound bites regarding the auto bailouts, Wall Street regulation, and debt/budgets  and came out of the wonky weeds shaking my head. Mitt Romney's expertise has not translated into good judgment, or good public policy, or even good banking practices.

Let's look at Romney's claim that a private sector auto industry bankruptcy would have been better than the Obama bailout. It is fundamental to his claim he was a fixer of the economy's problems and a job creator and it illustrates why a banking perspective does not always make for good public policy. The number of jobs that could have been lost in 2009 if GM and Chrysler went under (including the ripple effects to parts suppliers and others), would have been 3 million, auto executives predicted. If Obama had not fixed it with the government bailout, we would still be looking at an unemployment rate in 2012 much higher than 8.1 percent.

The fix Romney advocated publicly in 2009 and still defends was to let the private sector provide the capital for a structured bankruptcy. There must be capital provided by investors in a managed bankruptcy, or the enterprise has no way to pay its workers, parts suppliers, or any other costs of doing business. It padlocks the gates and employees become the unemployed.

The reality in 2009 was there was no private capital to do it. Either Romney was being deceptive to make a political point or he was blind to the investment climate. Even when challenged later to name any private investors willing and able, he couldn't. The Obama administration understood that and provided the capital by the way of government money (the bailout) so the factory gates remained open while needed changes were made. The U.S. auto industry has roared back and many of those laid off are now back to work.

This month JP Morgan-Chase lost over $2 billion in proprietary trades gone bad. Luckily JPM is strong enough to survive, but the same could not be said for other banks. Had Wall Street Reform (Dodd-Frank) with its Volcker rule been implemented, it may have prevented certain kinds of proprietary trades that risk a bank's own funds. If trades were simply bad judgment calls that could take down a bank, the reform would provide a way to wind down a big bank without taking down other banks, avoiding what  caused the 2008 crash and bailouts. The financial service lobbyists have successfully delayed implementation of Wall Street reform that includes the Volcker rule. Romney's position? Repeal Wall Street reform. Bad business, Mitt Romney.

Coming to a head this summer is the Ryan plan and GOP's extreme reliance on austerity as the solution to both the budget and debt. Romney has called this approach “marvelous.” The GOP's reliance on cuts in social programs while increasing Pentagon spending has been condemned as immoral by the Catholic Bishops because it cuts into the poor's safety net. This is the same single-minded reliance on cuts to recover from the 2008 crash that Europe has tried, with Great Britain and seven countries in the Euro Zone now facing a double dip recession, higher debt, and no growth.  

The GOP scares the pants off of voters, pointing to the Greek situation with “we too could go their way if we do not get our debt under control.”  Even Democrats agree we must solve the debt problem. The question is “how?” The GOP identifies the right problem and advocates the wrong solution. To tackle debt takes a balanced approach like Simpson-Bowles of some stimulus and some austerity as Obama has done. Relying on cuts alone cripples recovery. That is the lesson Romney and the GOP should take from Europe.

For more, visit,

Wednesday, May 16, 2012

Obama should embrace Simpson Bowles

My column in the Sky Hi News today
As expected the presidential election is coming down to the 5-6 percent who either are not focused on the campaign or who are just plain conflicted.

On many of the major issues and ideology, most voter opinions are already set in concrete. The problem facing both Mitt Romney and President Obama is how to keep the concrete firm and still snag the elusive middle.

The president has some work to do, but his options are not as big as some gambles he has already taken, and embracing Simpson-Bowles debt reduction proposals by name is one good bet.

Obama has a record of taking risks and winning. Reflecting on what has happened this last week regarding the president's endorsement of marriage equality, events moved so quickly he went with his gut, but the gut may be a winner when the dust settles. Like Obama's decision on how best to get bin Laden that gambled his re-election chances, or taking the risk to bail out the auto industry, his gut coupled with good analysis and faith in our special forces and changes forced in business practices turned out to be   gambles that paid off.

Marriage equality is a gamble with only 50 percent in agreement. Evangelicals, Southerners, the LGBT community, and social libertarians had already dug themselves in. Others who were not with him on this issue, like members of the black and Hispanic communities and young voters, are committed to him for other reasons. The gamble is that    Rust Belt blue collar workers who were grateful for the auto bailouts and women would likely put their own economic and health access agendas ahead of marriage equality issues in deciding whom to support.

To appeal to moderates, Obama needs to endorse Simpson-Bowles debt reduction plan by name, because just about everyone in both political parties and in between do feel there is a need to tackle debt. Opinion polls are already showing support, with voters approving Simpson-Bowles. It is not that big of a gamble.

By embracing Simpson-Bowles, the president can put a brand name to his policies. He can then pit Simpson Bowles against the GOP-Ryan plans and make case that Simpson-Bowles is far more fair and balanced when it comes to   who or what gets hit with the cuts and who pays more or fewer taxes.

Obama has already embraced many of the details in Simpson-Bowles. However, there is still left the thousand pound gorilla: “entitlements” and support of Simpson-Bowles implies support of their proposals.

I hate the term “entitlements” because it makes me feel guilty that I am a beneficiary of two of them, Medicare and Social Security., From time to time ill relatives have also been able to live out their lives humanely, first on Medicare and Social security, and later on Medicaid after assets ran out. We had put in our money and time and earned them or desperately needed them. Many on the conservative side  have been or will be beneficiaries as well. That is why  Obama and many on the right pussy foot around the issue, delay decisions for lame ducks to tackle, or exempt from changes current beneficiaries.

Potentially to their downfall, Rep. Paul Ryan, and the House Republicans have proposed a solution that Romney called “marvelous.” However, what policies they propose, especially regarding Medicare, are potentially politically toxic. Obama can bite the bullet and endorse the Simpson-Bowles proposal to raise retirement age to 70. He should contrast that with the Ryan plan to privatize, voucherize, and leave future beneficiaries stuck with higher co-pays when they do get their “entitlements.” After all, fellow retirees, we are so much healthier than our predecessors. The next generations will be able to work a few more years, too. It is a haircut we can more comfortably ask them to take.

For more, go to and

Monday, May 14, 2012

and Romney wants to roll back Wall Street reform?

Romney deserves a raspberry for a  policy he promotes.. to roll back  Obama supported  Dodd-Frank Wall Street reform legislation …freeing big banks from more regulations so  they could resume the same practices  that led to the crash of 2008.   This month a revered Wall Street firm,  JP Morgan, lost   two billion dollars of proprietary trades gone bad. Luckily JPM is strong enough to survive, but the same could not be said for other  banks. . Had Wall Street Reform with its Volcker rule been implemented, it would not have happened because  the rule would keep  banks too big to fail from investing their own proprietary funds in certain risky instruments as an insurance policy,  betting  against their own customer’s  investment interests.  The financial sector  lobbyists have successfully delayed implementation of  Wall Street Reform that includes the Volcker rule.  The result: JPMorgan was a victim of their own practices that the Volcker rule could have prohibited if worded correctly

Romney’s banking  expertise does not automatically translate to good judgment, or good public policy, or even good banking practices.....

Wednesday, May 9, 2012

How Obama could win the economy argument

My column in the Sky News today:

Is Mitt Romney a sheep in wolf's clothing or putting on an act that he is wolf in sheep's clothing?

Is he looking like a serious conservative or will he govern as an extreme conservative in spite of his supposed inner moderate self? Or is he like a Navajo shape-shifter, taking on the animal form that gets him the most visibility?

Now that the primaries are over, he will have to look more sheep-like to appeal to the swing voter moderates.

Obama's positions on women's rights and a kinder approach to immigration issues have helped his poll numbers. However, he is tied with Romney on the economy. He needs to do more.

A case Obama has not yet made: We do not need to trade away fair social policies for bad economic policies proposed by the GOP. He has a better, fairer plan for both. To make such a case, Obama does not need to be a shape shifter because he is consistent with his past policy priorities, but he also must attack Romney's plans more effectively than he has.

There are those who believe Romney had been appearing as a wolf on social and economic issues to get the support of his party's far right, but he is really a sheep inside that would govern as a moderate once he got elected. Obama can make the point they are fooling themselves. The pressure on Romney from the ultra conservatives dominating the GOP and Congress would make a second term improbable if he flip-flops on tax, health care, immigration and women's issues.

Romney‘s way out of this schizophrenic dilemma to appeal to moderates has been to make the conversation only about the economy, while hoping they forget the bargain he made to with the GOP right wing to support them on social issues. Simultaneously he claims his plan to decrease taxes on the rich and to increase military spending while slashing and burning discretionary programs that benefit the middle class, will be the better route to economic prosperity.

The route Romney has irrevocably tied himself to is the closest version of a European austerity program that exists in the US: the Ryan budget. Even the Catholic bishops opined that the Ryan budget "fails to meet the moral criteria" (to protect the poor) because it takes money away from the safety net. One phrase will come back to haunt him: He called that plan “marvelous” because it would reduce the deficit and create jobs.

This last weekend Obama began to make that case that his plans for the economy would better for America in the future although we may not have climbed out of the economic hole left by the GOP as quickly as we want. So far Obama has relied on reminding us that Romney's sole reliance on budget cuts /pump up the rich plan was a throwback to the policies that never dug us out of the holes in the past, so how could it be better?

That argument is not strong enough: Obama needs to take his attacks to the another level, arguing Romney's plan could even make the economy and debt worse, linking GOP plans to the extreme approach in Europe that led to the rejection of austerity by voters this past week in France and the experience of austerity in the United Kingdom. Obama could now argue that too much reliance on austerity there has led to stagnant growth or a double dip recession, job loss, and higher debt. Those are exactly the opposite results for which the GOP hopes and the Democrats have achieved in part.

The president's moderate, middle way, combining budget cuts, fiscal, tax, and income stimulants, has resulted in GDP growth, steady private sector job creation, and unemployment decreasing significantly. His balanced approach, similar to the Simpson Bowles recommendations, will also improve the debt situation.

Tuesday, May 8, 2012

Romney is no business genius on the auto bailout

In Ohio, Mitt Romney once again is trying to cover his tracks from the unpopular public positions he took opposing the auto industry bailout.  He is claiming he proposed the structured bankruptcy and Obama then copied him.  Consulting with  investment bankers I know, in order for it to be done as Romney proposed, there must be  Debtor in Possession Financing (DIP).  There must be capital to keep the enterprise running or else it just shuts down and lays off everyone and closes its gates and doors.  Some investors must get together, come up with the money, to make it work.  At that time there was no DIP . It was the worst part of the recession .Outfits like Romney’s Bain Capital did not rise to the occasion, either. 

The bailout (government stimulus) served as the DIP instead and made it possible for new management and the retention of GM to rise from the dead.  Romney’s approach would have left us trying to resurrect   an already long dead horse . Estimates at the time were unemployment figures of 10,000, if such a scenario would have happened, counting dealerships, parts suppliers  and their  manufacturers.  The auto sales battlefield  and ownership would have been left to the Japanese  and Koreans. 

While some dealerships closed, and the hiring is not yet up to the pre crash, GM is once again the largest auto manufacturer the world . The ownership is still in the hands of the  good ol’ USA.  As an investor friend of mine commented: “ The fact that Romney misses the point leads me to believe that he is no business genius as he claims to be.”

Wednesday, May 2, 2012

My column May 2,2012 in the Sky Hi News

Education is the legacy  we should leave our children

Dream acts are not only for undocumented Hispanics, graduates of U.S. secondary education who are hoping to be able to afford to go to college in the United States and to become valuable contributing members to our society. Those born in the USA — of all backgrounds — have their dreams, too. Going to a four year college has been the key to class mobility in our country for as long as I can remember ...until now.

I remember as an exchange student in Europe longer than 50 years ago Americans could boast with pride that anyone with intelligence, motivation, and energy could move across all income levels by going to college, that the U.S. was superior to Europe because we were not locked in a class structure. For us it was only a matter of motivation and being able to work through college because the cost was low enough and one could find jobs to pay for tuition.

I was struck that middle-schoolers in post-war Europe were already divided into class — some going on to “gymnasium” in preparation for higher university learning and others were designated for trade school. Family and class attitudes were also a prediction of slotting for future employment. Those whose fathers were miners or factory workers could only see a future of working in factories or the mines. Money was not the barrier to higher education in Europe because universities were free; it was a matter of passing exams and envisioning one's life could be different than the generations before.

It hit me hard recently how much it has all changed. One was a study that showed those in Europe have more ability to improve their position in society and income brackets than in the U.S.

The other: Two grandchildren applying to college and two younger grandchildren, whose parents are beginning to think about their aspirations to a first-class four-year college in a few years. Listening to their conversations with their parents and overhearing discussions with their classmates, I am jolted by the new reality of the class of 2012.

Both skyrocketing costs of higher education and the financial crash of 2008 have changed many high school graduates' strategies for attending college. Debilitating student-loan debt is to be avoided, even if it means sacrificing the best education suited for their abilities and talents. Instead, they are looking to community colleges for their first two years, and then hoping they can afford and can transfer to a four-year institution so they can have the more prestigious diploma and a chance at a better-paying future. This is true of both those seeking a liberal arts education and engineering degrees.

For some it has meant working to earn money, from flipping burgers and making sandwiches, to other $10-an-hour jobs. It means attending colleges close enough so they can live at home with parents to avoid having to pay for room and board. The dream of going to a big-name college that will guarantee them a high-paying job upon graduation is dead for so many more. For others, the financial mountain is too high to climb so they drop out of school.

What a waste of brains and talent of both native born and immigrants for our nation's vibrant economic future and our ability to compete in the world.

To add insult to injury, forces from the political right continue to cut state-provided funding for Kindergarten-through-college, and vote to increase interest rates on student loans and to lay off teachers. They concentrate their worries on our national debt we leave to our children just as they demand their own taxes be kept low. They are unwilling to pay for the more important key to their children and grandchildren's success: the best education they can have.

For more commentary, go to