Guns & Politics - What We Must Learn from the Financial Crisis

The U.S. reaction to drug violence in Mexico has the gun-lobby paranoid. The NRA and its supporters are claiming the Obama administration is trying to use the issue to push through more restrictive gun control legislation. The gun-lobby, as you might expect, would much rather self-regulate, even when national security is involved.

Look, I'm not anti-gun. I've shot guns, been duck hunting and even earned the marksmanship merit badge in Boy Scouts. I don't have a problem with hunting or collecting guns, when done safely like it is so many times across the U.S. The problem arises when the gun-lobby endorses bad policies that place us at risk.

We can argue til the cows come home over the Second Amendment, but if we don't effectively address our own involvement in the growing problem of armed drug cartels in Mexico (both drug use AND supply of guns), then we place ourselves at risk of living next door to a failed, armed and violent narco-state whose largest market is us. In which direction do you think the violence is headed?

But when you listen to the gun-lobby you hear a different story.

Secretary of State Clinton's recent admission that firearms purchased in the U.S. and smuggled into Mexico fuel drug violence in that country was met with the usual hyperbole and denial by the guns-at-all-costs crowd. Former U.S. Rep., NRA supporter and 2008 Presidential candidate, Tom Tancredo, R-Colo., says Clinton is "part of Obama's plan to conduct a war on guns". Despite all of the evidence on the ATF website that form the basis for Clinton's admission , Tancredo claims that drug cartels use weapons purchased from Mexican army deserters. And to solve this problem, he says, we should militarize the border.

Sure, Tom. Whatever you say. Even the NRA admits that guns are smuggled across the border (but they say the real problem is drugs, not guns, so any new regulation on the sale of weapons is misplaced - and militarizing the border is the answer).

Militarizing the border is a huge, expensive government program that inefficiently addresses the symptoms of drugs and violence, but not the causes (and how does this possibly bolster our Second Amendment rights???). And to let the root causes of this major problem fester is irresponsible and dangerous.

Part of the immediate solution is to stop the flow of guns by placing reasonable but effective regulations on the more than 6000 gun dealers who have set up shop along the 2000 mile border. That's 3 dealers per mile, on average.

I think we can live free without gangland-style drug executions and a new Columbine every few months. It's not hard to see that the gun-lobby is more concerned about sales than they are about safety, or even the second amendment. C'mon. The argument to further militarize the government is antithetical to the aim of preventing potential tyranny by that same government.

So, I challenge the silent center, on both sides of the aisle, to speak up for our own safety and sane gun regulation, and for an effective policy that prevents U.S.-made weapons from fueling the growing problem of narco-violence along our southern border.

If we learn one thing from the current financial mess, it's that self-regulation, when left unchecked, results in disasterous self-inflicted wounds. When it comes to guns, we don't want to make that same mistake twice.

The Party that cried "Socialism"

Republicans are crying "Socialism!" again. This time, it's because of limited oversight of executive pay in financial companies that would fail were it not for the support of the federal government. As I write this, Fox news is telling me the government wants to "tell companies how much money they can make". The TCOT Report is...wait! they took it down?...WAS running the misleading headline "Socialism Anyone? Pay Restrictions for All", which actually linked through to this Stephen Labaton piece in the NYTimes Politics section, on how the Obama administration is trying to deal with issues of executive pay in regulating an industry driven to insolvency by a culture of executive privilege and greed.

The reason the TCOT headline and the Fox News claim are misleading is that there just isn't any evidence the Obama administration is a proponent of socialism, in favor of dictating "how much money" businesses can make or how much executives should be paid. The administration does seem to be a proponent of responsibly managing the hundreds of billions of dollars that are flowing to private institutions from taxpayer coffers and, at the same time, fixing the regulatory system, whose function it is to help prevent the type of crisis we find ourselves in today.

The American People are now the largest shareholders in AIG, Citigroup, and others. We have assumed a great deal of risk associated with the bailout of these institutions and, as such, have not just a right, but a duty to influence the structure of the turnaround, which is essentially what we're buying.

Let's look at the New York Times article and see if the Socialist Wolf is hiding in there:

"One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company."

This is capitalism, folks. Capitalism works best when compensation is tied to the success of the company. America's best companies operate this way. Does anyone want to argue that we should reward executives who fail? Isn't THAT Socialism?

The article goes on to discuss the need to overhaul regulation of "the shadow banking system that Wall Street firms use to package and trade mortgage-backed securities, the so-called toxic assets held by many banks and blamed for the credit crisis."

The aim of better regulation is reducing risk across the financial system. Clearly, the "shadow banking system" did not do a good job of self-regulation. And now these institutions are on the receiving end of a huge and ongoing public bailout.

Here's another passage from the Times article:

"During the presidential campaign, Mr. Obama repeatedly urged regulators to adopt new rules to give shareholders a greater voice in setting executive pay for all public companies."

If there is one term squarely associated with capitalism it is "shareholder value". Obama is urging support for shareholder rights, not the government's right to specifically dictate pay.

Instead of grappling with the hard details of the financial crisis left to President Obama, some Republicans are grappling to find fault in the other party's plan, sometimes fabricating mountains out of mice and painting administration policies with broad labels like "Socialist" and "liberal tax and spend", largely ignoring the facts on the ground.

So, once again, there is a lot of crying, but no wolf. Instead, Obama sounds like the kind of responsible capitalist that we need right now. The Socialism charge just doesn't hold water.

When the markets collapsed they turned desperately to the US government because the US government is central to both US and global capitalism - the biggest player in the world. So, to say that the government's involvement in a reasonable solution is "Socialism" is just ridiculous. Every good corporation reviews failure in risk management and modifies systems to prevent a reccurrence. The current financial crisis is due to a failure in risk management across the entire system, therefore new controls are necessary.

I, for one, will be on the lookout for the Socialist Wolf, but until he shows up let's focus on how "Americans" are going to work together to fix a broken system.

Survey Results: Why do you use Twitter?

Here are the results from the first Twitter survey, which simply crosses use(s) of Twitter by experience with Twitter. Special thanks to respondents and those who re-tweeted the link.

Summary: Why do you use Twitter?

Results are based on survey field dates 3-9-09 through 3-10-09.

N = 32 respondents (Max. for findings within this post. Poll is open.)

While the margin of error is likely to be +/- 20%, there are still directional findings to be taken from this simple poll.

Main Points

Respondents are fairly evenly distributed in terms of their experience with Twitter.

• While Twitter is primarily used to interact socially (74%) and communicate with friends (74%), an equal percentage of respondents say they use Twitter to find information/search (74%). Certainly Google is doing their own polling and is aware of this interesting finding.

• Fully 6 in 10 (61%) are using Twitter to get daily news. Newspapers and news organizations take note!

• Slightly over 4 in 10 (42%) interact politically on Twitter. I would like to see a comparable figure for Facebook. Anyone?

• Half (50%) market something. About one third (32%) market a blog. 16% market a commercial product/service and 16% market a non-profit/charitable organization.

• More than 1 in 10 (13%) uses Twitter for financial/stock information.

Table: Experience (time spent) with Twitter

Click here for a larger view

Table: Twitter Use(s) by Experience and Total

Click here for a larger view

Take the next poll! Twitter is like a [your answer here]


Please leave your comments/links below. You can also email suggestions/comments to will.speck@gmail.com.

Thanks again for your input!

Liberal Swine & Right Wing Wackos

Despite President Obama's recent overtures, partisanship is alive and well in America. A few quick Google searches on key "terms" reveal (somewhat unscientifically) interesting insights. Oh, the pejorative!


Liberal swine 1,050
Conservative swine 195

Right wing whack job 1,080
Left wing whack job 355

Liberal scum 19,700
Conservative scum 1,160

Right wing scum 2,460
Left wing scum 2,580

Right wing swine 131
Left wing swine 235

Liberal media 1,550,000
Conservative media 196,000

Left wing media 83,100
Right wing media 259,000


So, it looks like conservatives are more likely to wield the pejorative, particularly favoring nastier terms, though liberals are clearly not saints.

Conservatives prefer "liberal" to "left wing", while liberals prefer "right wing" to "conservative".

Both sides favor "scum" vs. "swine", though conservatives are far more likely to sling one of the two terms.

Conservatives are more likely to harp about the left wing, or liberal "media" than are liberals to complain about conservative, or right wing "media".


On a related, and somewhat prescient, note, in "The Real Frank Zappa Book", the late musician and composer called the concept of a "liberal media bias" a "pitiful manipulation" cleverly put forth by the Reagan spin-doctors...."all in the name of balance and fairness, of course". [Emphasis by Zappa]

[NOTE: there is an ongoing discussion on Twitter on bipartisanship (#bipart). @martinschecter, @dmooney9, myself (@hankmehle) and others are currently exploring a more formal dialogue with "Top Conservatives on Twitter" (#tcot). Please add your voice to the discussion if you so choose.]

Your thoughtful comments are welcome.

If hypocrisy was money, the recession would end today

Juiced up by Rick Santelli's myopic rant, conservatives are getting ready to throw "Tea Parties" to protest "all of this fiscal irresponsibility", referring to the huge Obama budget and its ensuing deficit.

What a joke.

It is true that the deficit is historically high, as a percentage of GDP, akin to deficits right after WWII. It is also true, that we are in an economic emergency equivalent to, or close to, that of the Great Depression. It is also true that Obama and his team are focused on solving the massive problems left to them, and are doing so in a manner so open it contrasts violently with the secrecy and Enron-like accounting practices that were hallmarks of the previous administration.

The big joke is that Santelli didn't rant during the 8 years of fiscal irresponsibility that brought this mess upon us, and I didn't hear him rant last October when it became absolutely clear that the deficit under the next president would reach these heights in order to avoid a total global catastrophe, thanks in large part to George W. Bush's "guns and butter" fiscal train wreck.

The joke is that these people are masquerading as patriots when they should be treated as traitors. These "patriots" continue to do the only thing they know how, stir up anger and division, during a time when level-headedness and cooperation are the call of duty.

Not funny in the least.

In Ponzi We Trust

Right after the Madoff scandal I wondered aloud, via Twitter, to Paul Kedrosky if all of Wall Street was a Ponzi scheme. He replied that the Madoff scandal would severly damage trust in US markets.

Today, a Citywire article quoting Bill Gross, famed bond-fund manager at Pimco, says he finds Ponzi-like schemes across the entire US economy.

It reminds me of a quote I heard on CNBC (I can't remember who said it) late last year when a guest analyst said "C'mon. The entire US economy is based on lending people money they can't afford to buy things they don't need".

By any other name would smell as bad.

"What's in a name? That which we call a rose
By any other name would smell as sweet."

Shakespeare would have had much fun with the names of today's tragic heroes that now litter the hollowed canyons of Wall Street.

At Enron, they pulled a Fastow and made a Skilling. Word on the Street is, everyone there was getting Lay-ed.

Yet the party raged on. Capulets slept with Montagues and Montagues with Capulets, late into the night, weaving the fabric of high society. And in the morning, as Wall Street slumbered 'neath its incestuous wool, no one ever imagined that one of their own had Madoff with all the money.


Got another? Post it here!

Bush Shoe Bomber

It seems both small and not small.

That Bush's war is penetrated by a couple of size tens from an Iraqi journo at the end of it all. His Presidency, that is.

The Way the Cookie Crumbles

Mike Shedlock's piece on the Madoff madness underlines the fundamental reason why faith in the "powers that be" is crumbling like a dry cookie.  

It's a house of lies.

Let's consider a few items, shall we?

The CIA never imagined that terrorists would fly jetliners into buildings.

Alan Greenspan never saw the looming credit crisis in 2007, even though a newbie mortgage broker saw it coming in 2005, the minute he joined the industry, and blogged about it.

"If BS were poetry we would all be millionaires. That’s what my aunt would say."

No one could see Enron coming.

And no one on Wall Street could see the Madoff debacle coming...except the "smart money".

Barron's wrote about the mystery of Madoff's returns in 2001.  Sophisticated investors reverse engineered the strategy and said the returns just didn't add up.

But the insiders kept investing with him.  Why?    

Because, as Shedlock points out, they got the lie wrong.  They thought insider trading, made possible by Madoff's huge market making business, was facilitating the fraud, not a simple Ponzi scheme.  Had it been insider trading that would have been just fine with them because the money would have been there and they could cash in on the lie too. 

And so it goes.

But truly, we owe these liars a debt of gratitude for finally imploding the old and broken system so we can replace it with something new.  It's been a long time coming.

I leave you with lyrics to a collaborative poem, "That's the Way", by Tom Waits and William Burroughs:

That's the way the stomach rumbles
That's the way the bee bumbles
That's the way the needle pricks
That's the way the glue sticks
That's the way the potato mashes
That's the way the pan flashes
That's the way the market crashes
That's the way the whip lashes
That's the way the teeth knashes
That's the way the gravy stains
That's the way the moon wanes

Twitterfeed Setup

Ok. So I think I set this up right. I am so spoiled by technology that I'm frustrated it took all of five minutes and didn't cost me anything.

Homer Simpson said it best, "Five seconds?!! I want it NOW!!!"

Mad Mad Mad Madoff World (Update)

Wall Street Manna reports on a Barron's story back in 2001 that was onto Madoff's "don't ask, don't tell policy". The Barron's piece elucidates so nicely how Madoff plucked the social strings of the wealthy elite to lull them to sleep as he robbed Peter to rob Paul (See It's a Mad Mad Mad Madoff World). And after the story came out everyone looked the other way for another 7 years. Well, almost everyone.

This quote from one investor whose eyes began to itch says it all:

"What Madoff told us was, 'If you invest with me, you must never tell anyone that you're invested with me. It's no one's business what goes on here,'" says an investment manager who took over a pool of assets that included an investment in a Madoff fund. "When he couldn't explain \ how they were up or down in a particular month," he added, "I pulled the money out."


As for Ponzi schemes, I wondered aloud after this story broke if all of Wall Street is a Ponzi scheme. It may be a stretch but, in a way, doesn't the current situation prove this? If the money was there then there would be no problem. But the money isn't there. Lots of it isn't there.

But don't listen to me. I am not an economist or a hedge fund manager. I'm just a lucky dummy who got scared of the market last summer and put all my savings into cash.

It's a Mad Mad Mad Madoff World

A Paul Kedrosky tweet informed me of today's arrest of Bernard Madoff for perpetrating perhaps the largest Ponzi scheme...ever.

What's so not funny is Madoff's central role on Wall Street over nearly five decades. He was Vice Governor of the NASD (among numerous high profile regulatory roles), which is supposed to keep an eye on wrongdoers, though anyone who knows a little bit about the ins and outs of Wall Street knows that this dog never had any teeth.

It's so not funny because everyone knows that trust is central to healthy markets. And when trust goes away so do investors. But my guess is that if not everyone, most people had a little voice in the back of their heads that told them to look the other way whenever little things, like the non-disclosure around hedge funds, CDSs and myriad other "instruments" of high-finance , threatened to turn market believers into skeptics.

And why not let a few items slip past the collective ethical gatekeeper? After all, nearly all of us has a good portion, if not all, of our nest eggs invested somewhere around "The Street", right?

And who wouldn't place their money with Bernard Madoff? Turns out the rich and powerful, those most likely to know more about those sniggling little items slipping past the ethical gatekeeper, trusted their millions to Bernard. Of all people, Mr. Madoff was likely tuned to the gatekeeper's little secret more than most, so he placed his own little devil above his door to whisper sweet nothings into the ears of the unconsciously suspecting millionaires and billionaires he fleeced over the years:


“In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner’s name is on the door...Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm’s hallmark.”


But Mr. Madoff is surely the exception to the rule. Don't you think?

Day One

It's difficult to scour the news, blogs, and other sources without wanting to chime in. Whether it's the Plame Name Blame Game and marketing the War in Iraq or Seth Godin's increasingly annoying (remarkably so) postings, there is plenty worth chiming in on, and plenty worth ignoring. The big question is where to begin, and how to make this particular voice in the discussion worthwhile.

Since I have no answer to this big question just now I will take a moment to step back and think about it some more.