Sunday, November 30, 2008

Obama Moves from Eight Years of Private Healthcare Solutions

President Barack Obama promised to address America's legions of uninsured citizens during his political campaign. The number of uninsured and underinsureds grew by tens of millions the last eight years. President George W. Bush relied on the private health care system to produce the best, most efficient, cost effective health care.

Financial pressure impacted nonprofit community and teaching hospitals disproportionately. Three large charity hospitals haven't reopened in Gulf Coast communities devastated by hurricanes. While CitiBank got $45 billion in cash and hundreds of billions more in loan guarantees, John Sealy Hospital in Galveston begs with its hand out at state and federal houses. CitiGroup fired 52,000 employees so Uncle Sam could get a return on its preferred stock investment. John Sealy let 3,000 health care professionals go, while it struggles to restart critical services.

Financially strapped nonprofit hospitals considered selling out to their for-profit brethren the last few years. Such a merger was announced in my hometown, but it later failed. One might expect a little compassion for institutions carrying the burden of caring for all who present. I've yet to see it.

The Washington Post reported on wide variations in health care practice and costs in various regions of the U.S. Much of our expensive care is delivered in the last two years of a person's life. The piece stated:

A Dartmouth team concluded that as much as 30 percent of medical spending -- or $700 billion -- does nothing to improve care.

Even if only a third of that could be invested in critical programs, "imagine the possibilities," said Peter Orszag, head of the Congressional Budget Office, who was nominated last week to be director of the Office of Management and Budget in the Obama administration. "Given the scale of it, I am puzzled as to why we are not doing more to improve the efficiency of the health system."

Peter Orzag, please look up the history of DRG's and HMO's in America. They were efforts to improve the efficiency of the health care system. President Bush pushed the ever efficient private health care marketplace as the tonic for America's ills. Yet, that hasn't worked so well.

The WaPo article cited expert advice:

A high-performance 21st-century health system, they say, must revolve around the central goal of paying for results.

Horse hockey! It must revolve around the central goal of improving processes. That requires an understanding of variation, systems, psychology, and knowledge, along with their interactions. Results or outcomes can only be improved by changing the underlying processes.

America saw the distorting impact of "paying for results" with Wall Street executive incentive compensation. Health care "pay for performance" will cause similar suboptimization as providers do whatever it takes to get the reward. How many will cook the charts, like their CEO counterparts did with their books? How many will steer their patient load to already healthy patients, like executives steered stock option award dates to maximize their future bounty? How far will the ethics bar fall to garner the reward?

Providers have a long history of adapting to carrots and sticks, whether they came from government or private insurers. They will adapt to whatever Peter Orzag, Tom Daschle, Max Baucus and President elect Obama put on the table. I just hope America's nonprofit community hospitals have a good seat and that Dr. W. Edwards Deming's teachings are foundational for planned change.

People in health care have a good job to do. It's time to build a more optimal system, one that works for 300 million of us. If we can afford $7 trillion to save our financial system, filled with tainted Tylenol like products. we can afford to transform our health care system and its tattered safety net.

The early lingo points to a U.S. Chamber of Commerce approach, where employers need relief from expensive health insurance benefit costs. But Barack Obama is yet to take office. It will be interesting to see the frames used as our federal leaders tackle health care reform.

Let's hope its not part of the drive to a global lowest common denominator on worker pay and benefits. The big money boys are loath to step up to the plate.

Saturday, November 29, 2008

George Bush Hates Poor People

Besides creating more poor Americans, two terms of President George Bush provided additional burdens for low income families. The latest blow involves government provided health coverage. A federal regulation officially allows states to charge a portion of the health insurance premium. Medicaid can add higher copayments for doctor visits, hospital care, and pharmaceuticals.

Poor people are expected to pony up $1.3 billion in cash or credit for care. Over the same five year period, state and federal governments will save $2.5 billion. However, George W. is a notorious sandbagger when it comes to estimates. If history is a guide, poor people will pay much more and government savings will be larger. How many people are at risk for reduced access to care, due to financial constraints?

13 million Medicaid recipients
46.5 million uninsureds
25 million underinsureds
2 million dual eligibles under Medicare Part D
Much of the total 86.5 million at risk Americans arose during Bush's eight years in office. His corporate sponsored White House has a clear legacy of shame. Unfortunately, the pattern continues as America races to the lowest common denominator on worker pay and benefits. With business pulling away from the traditional health insurance benefit and government shifting costs to the poor, average folks will pay. Some may do so with their life, given the Bush team's acknowledgment "some individuals may choose to delay or forgo care rather than pay their cost-sharing obligations."

CNN's Terrorism Expert AWOL During Mumbai Attacks

Ex-White House Homeland Security Adviser Frances Townsend joined CNN in May. One might expect a terrorism expert to weigh in during the three day attack in Mumbai, India. But Fran was quiet. Why?

Not long ago, a reporter from The Scotsman reported Frances advised the Obama campaign. The author spelled her middle/maiden name wrong, so he lost credibility points. But shortly thereafter, CQPolitics had Mrs. Townsend offering her services to an Obama administration. It wasn't quite "Barack, call me!", but it was close.

Is Frances Fragos Townsend hard at work advising the President elect? Will she be named this week, along with Hillary Clinton and General James L. Jones? Stay tuned...

Friday, November 28, 2008

Back to "Great Man" Model of Leadership

A reporter asked President elect Barack Obama how the public should interpret his appointment of long time political insiders to key positions within his administration, in light of his calls for change in Washington. Pundits call his appointment of political hard ball staffers a "good cop-bad cop" relationship. Obama responded:

"Understand where the vision for change comes from first and foremost," Obama asserted. "It comes from me. That's my job, is to provide a vision in terms of where we are going and to make sure that my team is implementing it."

The Clinton administration was surprisingly business friendly. George W. Bush repeatedly granted the U.S. Chamber of Commerce's wish list. So far, the Obama administration is peppered with people from both camps.

At a roast Obama joked that he is Superman. He'll need his x-ray vision to find conflicts of interest amongst his team, much less within Congress.

But here's a shout for our super visionary leader. He has alot on his shoulders, if he plans on driving real change. The big money men want a return on their investment and America's federal government has a history of delivering. Even re-balancing that a bit in favor of the common citizen, will cause Obama much pain.

Time will prove his mettle and how much kryptonite Corporate America has. Let's hope none of those "bad cops" deliver strength sapping material to the Oval Office.

Tuesday, November 25, 2008

Obama to Evaluate Government Programs for Effectiveness

In appointing his new OMB director, President elect Barack Obama gave Peter Orszag a charge, evaluate existing government programs for effectiveness and eliminate those that do not work. This sounds great. However, Obama is following the spectacularly incompetent George W. Bush.

Bush's heavy handed, incurious management style means our current federal bureaucracy is rife with suboptimization and wrong figures. A better approach would involve identifying the aim of government and critical programs necessary to achieve that aim. Then put everyone to work on improvement.

Government and corporate leaders need to use profound knowledge to improve our economy, business operations, and government functioning. That means education on systems, knowledge, psychology, variation, and their interaction.

America used Dr. Deming's teachings during WWII, when material for manufacturing was so scarce, every bit needed use. He helped rebuild Japanese manufacturing after the war. Dr. Deming refined his teachings until his death in the mid 90's.

Our financial crisis has its roots in poor quality work, extrinsically motivated (greedy) leaders, and a government asleep at the wheel. With profound knowledge America can produce high quality goods, leaders will be transformed, and markets/jobs will grow. The time to start is now.

The aim is to provide good jobs, to grow the market, to give people the chance to do quality work. I know it's a huge job, recovering from bad leadership. But, let's not start out with large scale amputations based on Bush's mangling of our federal limbs. Try the ICU first.

Tainted Tylenol in Financial Markets

What did Johnson & Johnson do when poisoned Tylenol hit store shelves? They pulled it, all of it. That action saved the market for their painkiller.

Securitized loans, credit "peace of mind", and corporate annual reports are today's Tylenol. America's financial sector keeps cranking out products that burned the investor. They're finding few buyers. What does the public realize? I suggest they sense that:

Credit ratings mean little, given the history of investment pigs obtaining AAA ratings.

Balance sheets are suspect, due to off balance sheet items and accounting practices.

Pretend J & J kept Tylenol on the shelf and asked the federal government to buy back 5% of the stock. What would that do to public confidence? Nothing. It wouldn't impact the probability of their container holding tampered, deadly goods.

What if they J & J kept their production line going, with elevated attention to the quality of ingredients? Who would line up to buy their product? Very few, as 95% of the bad stuff remained on the shelf and the company had no idea of where tampering occurred.

Would a guarantee by the Food & Drug Administration make a difference? Very little.

The FDIC will guarantee $5 billion in corporate bonds packaged by Goldman Sachs in conjunction with Citibank and Morgan Stanley. Who's paying the bond issuance fees? If it's Uncle Sam, we're sending revenue to ex-investment houses, in addition to liquidity and capital injections.

Why should the Federal Deposit Insurance Company guarantee bank bond debt? I thought they were chartered to insurance individual depositors, not the debt of deposit institutions. NYT's Dealbook reported:

Goldman Sachs is expected to be the first firm to tap the F.D.I.C.’s new program. The F.D.I.C. on Friday approved a program to guarantee to banks’ new senior unsecured debt, potentially allowing the firms to issue debt with top “AAA” ratings.

The market could see roughly $50 billion in issuance per month until the deadline for debt issuance next June, Bank of America estimated in a report.

The Temporary Liquidity Guarantee Program is expected to fill a financing gap for banks shut out of the corporate bond market by skyrocketing yields.

We know J & J took clear, strong action to ensure a safe product to the consumer. The financial implosion is a much bigger problem, and it may not be feasible to buy back all the defective financial products or failed loans. But the Tylenol situation can point to possible consumer reactions to the government's interventions.

Poor quality killed credit and corresponding investment in credit products. The future of securitizations, credit derivatives, and corporate financial statements is profoundly unclear. Yet, they continue, with a shelf life that remains to be seen. Painkiller or market killer? Monitoring will reveal the public's decision.

TARP Levered Loans to Buy Junk Assets

Treasury Chief Hank Paulson and Fed Chair Ben Bernake aren't tapped out. The Bush team offered another $800 billion in Corporafornication, raising total interventions to $5 trillion. Treasury's Paulson levered $20 billion of TARP money into a $200 billion Federal Reserve Loan. That $200 billion will buy back securitized consumer debt, student loans, credit card debt and car loans.

Paulson left the door open for future expansion in size and scope. He presaged that commercial mortgage backed securities (CMBS) could be included.

The Carlyle Group would love to buy back affiliate CMBS debt for pennies on the dollar. Treasury slipped $153 million to Carlyle's Boston Private Financial Holdings. Apparently, the high net worth marketplace needs access to loans using taxpayer money.

Carlyle's infrastructure division would love some of that $500-700 billion looming stimulus package. In this venture, the private equity underwriter (PEU) is happy to take a government guaranteed 15% annual return, roughly half of their historical yearly profit percentage of 30%. What other divisions look to make money hand over fist from taxpayer dollars?

President elect Obama indicated a substantial stimulus package to be on the way. The Bush team decimated the federal ability to provide services directly. That means quick action must be contracted. A lobbyist frenzy occurs in Washington for the right to help "create or save" 2.5 million jobs. Note the addition of "or save" in Obama's speech today. Expectation sandbagging has begun.

The problem that got us here? Greed, leverage and federal incompetence. All are still in play, just at slightly reduced levels.

Sunday, November 23, 2008

Obama Makes His Job Harder

Besides trying to deal with a collapsing American economy, President elect Obama has to deal with potentially contentious advisers. Political pundits call his appointment of "center right" Democrats a "good cop-bad cop" pairing. How often does a bad cop restrict his/her role to the interrogation room? They don't.

Chief of Staff Rahm Emanuel and Secretary of State Hillary Clinton fit the bad cop role. Neither are the promised new blood. They are known for hard nosed, pragmatic, finger snapping politics. They have corporate ties as deep as their Clinton White House roots. Many of those lead to America's favorite private equity underwriter (PEU), The Carlyle Group. A Carlyle affiliate, catering to the high net worth marketplace just pocketed $153 million from Hank Paulson's TARP.

What other campaign promises made their way into that D.C. sewer? The 3% tax increase for people making more than $250,000 a year may not come from an Obama proposed tax law change or budget proposal. It's now predicted to occur when the Bush tax cuts expire in 2011.

How will President elect Obama control those renegade staffers, while saving the economy? Achieving his campaign promises got a lot tougher. That is, if he really wants to deliver...

Unprecedented "Meet the Press" Highlights Change

Meet the Press hadn't seen this number of "unprecedented's" since September 2005. James Baker, Richard Daley and Joe Lieberman repeatedly called our economic free fall "unprecedented." Hurricane Katrina was the 2005 "unprecedented" event.

How unprecedented are they? FEMA drilled for a "Katrina like" event in 2004. They practiced on fictitious Hurricane Pam. Practice didn't make perfect.

Numerous financial guru's predicted the economic meltdown. America's financial stewards, from the Federal Reserve to the SEC to corporate board rooms, took down our fire walls. A decade of ramped up greed and leverage led to our economic conflagration.

Financial products that cranked up returns in an up market, turned into razor blades on the way down. Numerous vaporware products disappeared in a plume of smoke. So far, I don't hear many calls for change, other than to reduce leverage a tad. A failure to learn from mistakes means we are destined to repeat them.

The peppering of "unprecedented's" implied no real change. Senator Joe Lieberman kept his Homeland Security Chair. His regret over harsh words on candidate Barack Obama seemed as sincere as Lehman Brother's Dick Fuld before Congress. Tom Brokaw did his best to get Joltin' Joe to apologize, but Lieberman wouldn't fold.

The last "unprecedented" came from none of the guests. I uttered the derogatory word when James A. Baker, III called President elect Obama's appointments "center right" of the Democratic party. Seeing his happiness with the incoming Cabinet, I felt the victim of campaign bait and switch.

When a Carlyle Group insider is happy, I'm not. Baker and company don't need to make 30% annual returns on the taxpayer's back. Many of Carlyle's affiliates are government contractors. Private equity underwriters (PEU's) ride a government greased, gravy train via their preferred taxation on carried interest.

Mr. Baker may be worried his PEU tax benefit may disappear, but another fear had his immediate attention. Systemic risk hasn't fallen, despite $4.28 trillion in federal interventions. He urged President Bush and President elect Obama to take short term action to shore up America's financial sector. Financial failure remains on the table.

Disaster capitalists use economic risk to drive down employee wages and benefits. Richard Daley promised an Obama administration would create jobs. Mr. Daley threw a sandbag in for good measure, promising to "create or save 2.5 million jobs." How will job growth/stabilization express in the corporate race to a global common denominator on pay and benefits?

The job multiplier made a Rocky IV like comeback in the last year. In the 1990's economic developers used the multiplier to highlight the impact of new jobs. The statistic showed how many times a dollar washed through a community, creating more jobs. But the U.S. Chamber of Commerce sent the job multiplier to China and India.

It substituted the dollar extender for Americans. Cheap goods meant your dollar went farther. The dollar extender champ ruled from 2000 to just two months ago. Yes, 2.1 million jobs fled America for the siren song of cheap Asian labor. The job multiplier in reverse has the public's attention, but our elected leaders remain skeptical. Congress ignores big auto's request for $25 billion in bridge financing, even though 2.5 million jobs may be at risk.

Members of Congress vilified Big Three auto executives for their mode of travel. Funny, auto execs' private planes look surprisingly similar to the fleet of private jets at this summer's Democratic National Convention.

Citibank received $25 billion from Hank Paulson's TARP. Who gives a company that kind of money to cut 50,000 jobs? Despite American taxpayer's investment in Citi, Wall Street traders drove its stock down to three dollars and change. The market bets on CitiGroup's failure.

Change is coming, like it or not. Maybe the change I voted for will manifest when I find a quarter in a parking lot. If that's all I have, banks, new cars, and politicians are irrelevant. Now, that would be unprecedented!

Saturday, November 22, 2008

Jones for Change

President elect Barack Obama rode an election wave for change. Like all curls, this one broke into a mash of whitewater. A surfboard fin can lose hold in the froth. Did Barack steer his board to center or did it uncontrollably cavitate? The results are the same.

Chevron may once again promote a Board member to National Security Adviser. Condoleezza Rice served in that role for George W. Bush. Retired General James L. Jones is rumored to fill the NSA Chief position. General. Jones sits on the boards of Chevron, Boeing, Invacare and Cross Match Technologies.

James is also president and chief executive officer of the Institute for 21st Century Energy, a policy center in affiliation with the U.S. Chamber of Commerce. They unveiled a Transition Plan for Securing America's Energy Future, an energy policy roadmap with 88 concrete recommendations and detailed time lines for President-elect Barack Obama and the 111th Congress.

Want to bet Chevron keeps their natural gas interest in Myanmar? How about Boeing getting the new Air Force refueling tanker to ensure U.S. jobs in an economic downturn? America's Government-Industrial Monstrosity is Eisenhower's MIC on steroids. It seems firmly entrenched and ready to profit from energy security, infrastructure development and health care reform. Stay tuned for change, likely better packaged and sold Corporafornication.

Friday, November 21, 2008

Pod Casting for Truth

Representative Mike Conaway's latest podcast addressed the upcoming Obama administration and his reasons for opposing an auto bailout or additional fiscal stimulus. Ironically, he derided excessive federal spending, after voting for the $700 billion bailout bill. Conaway joins his Senate counterpart, Kay Bailey Hutchison, in opposing auto assistance while voting for Wall Street aid. I made the following comment on Mike's Blog:

Happy Thanksgiving to you as well, Representative Conaway. I bet Cerberus Capital and The Carlyle Group are grateful for taxpayer funded recapitalization of their affiliates, GMAC and Boston Private Financial Holdings.

I fully understand your opposition to an auto bailout, given the industry's cloudy future. Funny, Goldman Sachs stock continues to free fall. The street is unsure how Goldman will make money in the future. Their business model is in question, much like big auto.

But $153 million for an affiliate of The Carlyle Group, supposedly flush with capital and ready to pounce on cheap financial firms? The press release stated BPFH had an already strong capital position. Boston Private targets the high net worth marketplace.

Reporting will reveal how much Cerberus' GMAC gets from the TARP. Why should taxpayers put recapitalize private equity affiliates? If Carlyle can bid on the Bank of Ireland, it can prop up BPFH.

Please explain why the TARP is being used this way. Also, please explain why credit remains frozen, why markets continue to behave fearfully. You voted for the $700 billion bailout and are my Representative for the $4.28 trillion in federal financial interventions.

It's time your CPA and bank backgrounds are used to translate for your constituents. Please do so.

Little Reporting on Taxpayer Investment in Carlyle Group affiliate

Why would a progressive website pass on $153 million in taxpayer funds going to buy equity in Boston Private Financial Holdings, an affiliate of The Carlyle Group? BPFH caters to high net worth individuals and institutions. Maybe, Think Progress isn't so progressive. There's a blue brand to protect. Did Carlyle train them on how to keep "their good name"?

Thursday, November 20, 2008


GMAC applied for bank holding company status to gain access to a Treasury capital investment. Boston Private Financial Holdings will get $153 million in the same program via the sale of preferred shares and common stock warrants.

GMAC-majority owned by Cerberus Capital Management

BPFH-affiliate of The Carlyle Group

Why do private equity underwriters (PEU's) need the taxpayer to recapitalize their affiliates? Supposedly they have billions on the sidelines, waiting for values of financial firms to plummet before leaving their vulture branch.

Why aren't they putting their own money to work? No credit. Gee, wasn't that the reason for the emergency $700 billion financial rescue program (FRP)? May I suggest a new name?


Financial Equity Capitalization for Key Loaners Eviscerated by Sorry Securitizations (and Short Selling)

Wednesday, November 19, 2008

Blue Degrees to The Carlyle Group

The Obama administration ensured the American public that it would take on special interests in the dirty waters of Washington, D.C. Take them on, the President elect did. One high profile special interest shares Pennsylvania Avenue with the White House. The Carlyle Group, a private equity underwriter (PEU) is at 1001 Pennsylvania Avenue, blocks down from 1600. Consider Carlyle's Blue connections:

Obama bundlers

William Kennard-$500,000 FCC Chair for Bill Clinton
Mark Johnson-$50,000-$100,000

Clinton Advisors currently on Carlyle payroll (all are Senior Advisers)

Arthur Levitt-SEC Chair
Mack McLarty-Chief of Staff
Charles Rossotti-IRS Commissioner

Other Carlyle employees with Clinton ties:

David Marchick-Clinton White House staffer, now Carlyle's chief lobbyist
Christopher Ullman-Spokesman for SEC Chair Levitt, now a Carlyle Principal

I ran across an interesting last name while touring the PEU's stable of professionals:

Lana Axelrod-Associate in Carlyle's health care sector.

The only reference I could find to David Axelrod's children came from an epilepsy fundraiser. The newspaper said one of his children suffered from the disease, but did not mention any names. Is Lana related to David?

Flip to the Oval Office and known advisors to our President elect. How much did The Carlyle Group contribute to their political career?

Rahm Emanuel-Chief of Staff, Clinton White House staffer. He received $16,250 from Carlyle Group this last election cycle.

Other possible ties include:

David Axelrod-Senior Advisor, had Hillary Clinton as a past client for his political consulting firm. David may or may not have a relative on Carlyle's payroll. I don't expect an answer given his skills as a corporate spinner.

Frances Fragos Townsend-offered to work for the Obama team, after serving as Bush's White House Homeland Security Adviser. She did Carlyle a huge favor by omitting any mention of their LifeCare affiliate's 24 patient deaths in her White House Katrina Lessons Learned report.

Moses Mercado-prior Carlyle Group lobbyist for Ogilvy Government Relations. Served as top adviser in Obama campaign.

Dov Zakheim, Defense Business Board advises President and Pentagon, Senior executive for Booz, Allen, Hamilton, Carlyle Group affiliate.

It will be interesting to watch how much the blue team bleeds toward the green.

Frances Townsend Available to Work for Obama Administration

CQ Politics reported Frances Fragos Townsend's willingness to work in an Obama administration. Fran served as George W. Bush's Homeland Security Adviser. She produced the White House Lessons Learned Report on Hurricane Katrina. The article stated:

As for an appointment in the Obama administration, "it would depend on what department or agency," mentioning that a job in homeland security might be a good fit.

"If they think my experience or participation could help in any way, I'd say, 'Sure, call me.'"

"I wouldn't foreclose any idea they had," she said.

"It's an historic time."

Unfortunately Fran isn't good at capturing history, at least in her Katrina investigative report. Mrs. Townsend omitted the hospital facility with the highest patient death toll post landfall. Memorial Hospital, owned by Tenet Healthcare, rented a floor to LifeCare Hospitals. LifeCare's long term acute care unit lost 24 patients during Katrina. Memorial lost 10 more patients and all power. Caregivers and patients lingered in an overheated, toxic soup for four days.

Other history Fran omitted? The Carlyle Group, a politically connected private equity underwriter, purchased LifeCare just weeks before landfall. They benefit from the fed's silence on their actions, or inaction in saving acutely ill patients.

Tenet settled with LifeCare in a secret judgement regarding the building owner's liability related to the disaster. LifeCare's attorneys blame the federal government for their patient deaths, suggesting patients became wards of the government as soon as FEMA evacuation teams set up in New Orleans.

On the Board of Tenet Healthcare sits one member of the Red and Blue team. Bob Kerrey (D)served on the board of directors since 2001, while Jeb Bush (R) got his seat last year. These facts helped explain the deafening bi-partisan silence given my inquiries to accountable elected officials.

Should President elect Obama tap Frances Townsend for a leading role in his administration, honesty, competence and transparency cannot be the criteria. She's failed on all three counts.

"I'm a patriot and enjoyed serving in government and for the American people." Frances Townsend

A patriot wouldn't jump on a plane to Saudi Arabia while Americans drowned in a toxic gumbo. A patriot would've delivered on the promised "robust" investigative report. Fran's bust of a study did not serve the American people in the least. I'll be disappointed if President elect Barack Obama gives her another chance.

The Carlyle Group Benefits from Hank's TARP Corporafornication

It was a matter of time before The Carlyle Group got a direct capital injection from the Treasury. Future American taxpayers will invest $153 million in Boston Private Financial Holdings, an investment firm catering to the high net worth marketplace. Carlyle's Olivier Sarkozy and Randall Quarles earned their high dollar income with this deal.

TARP money will garner preferred stock and common stock warrants. The MarketWatch article did not specify the dividend rate on our preferred stock. Are we recapitalizing Boston Private on the cheap without squeezing Carlyle's equity investment?

Ironically, Boston Private's CEO said the Paulson injection would enhance "their already strong capital position" such that it can increase lending. Trust will return to big money boy borrowing, courtesy of the common taxpayer.

Will you sleep better with this knowledge? Or does yet another round of Bush sponsored Corporafornication make you spitting mad? Pffft! Pfffttt!

Monday, November 17, 2008

Rough Financial Seas Require Ceaseless Bailout of SickiGroup & Company

The big money boy, never ending bailout continues to sicken taxpayers. Apparently, $4.28 trillion isn't enough. The U.S. Chamber screams for more:

1. Corporate tax and capital gains cuts
2. Lower employee wages and benefits

When was the last time a government entity gave a firm $10 billion and the beneficiary turned around and cut 50,000 jobs like Citigroup? America used to have economic development programs, now it’s straight up corporate welfare.

The State of Texas gave Vought Aircraft Industries $35 million. They cut 600 jobs and reneged on the Boeing 787 program, preferring Lindsey Graham's South Carolina.

Vought is an affiliate of The Carlyle Group. They owe folks in Dallas 3,000 jobs by 2009. My bet? They go they way of CitiGroup (layoffs) or Hawaiian Telecom (debt reorganization), before fulfilling their contractual obligation.

Over $4.2 Trillion Spent to Improve Financial Health

CNBC kept track of the Bush administration's interventions to rescue the imploding American financial system. The total to date is $4.28 trillion dollars. That doesn't include:

1. The projected $140 billion in merged bank tax cuts
2. Interest the fed is now paying on excess fed funds
3. Impact of lowered feds fund rate

That's some serious Corporafornication, easily over $4 trillion. With the big money boy bailout, how much is left to help Americans get health care? Hospital uncompensated care stood at a paltry $31 billion, at last check. Exxon alone made enough profit to pay off the tab.

America has the means to ensure access to care for all citizens. It lacks the political will. The Bush bailout has a high probability of sapping the message of change sent by voters. How soon before we hear, "America can't afford it?" A preemptive pox on all their mansions. That might help our leaders understand the importance of health care. They seem fully capable of intervening when it impacts them and theirs.

Saturday, November 15, 2008

Mike Conaway, Twenty Five Years Short of a Century

Representative Mike Conaway, R-TX diagnosed Wall Street investment houses needed taxpayer bailout money. He voted for the $700 billion rescue, after initially voting against it. But he draws the line at helping America's flagging auto manufacturers.

Instead, he wants the free market to race to the lowest common denominator on worker pay and benefits. The problem with big auto in the professional accountant's mind? The Abilene Reporter News wrote:

U.S. Rep. Mike Conaway, R-Midland, said the consequences of the financial failure of the big three would be huge.

"But I'm not convinced that any further help by the federal government, or the federal taxpayers more importantly, will address the core issues those companies have," said Conaway, who represents the 11th Congressional District.

They have employment costs resulting from 100 years of union-driven pay, he said.

A century of union driven pay? Really, Mike should consider history, the written kind vs. a Republican "reality creating" version.

The first production line came from Henry Ford. It began in 1913. Ford voluntarily paid his workers twice the prevailing rate to stimulate demand for his product.

The first union for auto workers came in 1935.

Mike's about 25 years short of a century, but what's new for the CPA?

Wall Street Trumps Charity Care Hospitals Devasted by Hurricanes

A perfect financial storm mobilized trillions of dollars to rescue American financial institutions. It struck the week of September 15th. Ironically the week before, Hurricane Ike devastated Southeast Texas, dealing a particularly nasty blow to Galveston.

UTMB's John Sealy Hospital, a 435 bed facility on Galveston Island, treated charity care cases from across the state of Texas. The storm flooded the first floor, requiring millions in repairs. With no patients, other than obstetrics, the hospital is bleeding $40 million a month.

The University's Regents cut staffing by 3,800 to stem the losses. The New York Times reported the university lacks the funds to make repairs, while state and federal assistance have not been appropriated. My questions include:

1. Did UTMB have flood and/or business interruption insurance? If so, funds should be coming to repair the facility and make up the cost of being temporarily out of business. If not, why did the University not insure against these obvious risks?

2. How many indigent UTMB patients came from outside Galveston proper? What happens to those people with a closed or dramatically reduced John Sealy?

3. Why are charity care hospitals allowed to shutter after a major disaster, but for-profit financial firms are rescued? Bush's big money boy bailout approaches $4 trillion and New Orleans/Galveston facilities remain virtually shuttered?

Some thing's wrong. If disaster capitalism has its way, for-profit hospitals will make their way into New Orleans and Galveston. Stressed nonprofit's have a funny way of throwing up their hands when things get bad enough. Could there be a fire sale after the hurricane shuttering?

Friday, November 14, 2008

Obama's Less Transparent Carlyle Group Bundlers

While lobbying firms burnish their Democratic credentials, trade groups look for insider connections to the Obama transitions team. The wireless industry offered numerous connections, including:

Though not having an official title on the Obama-Biden transition team, former FCC chairman William Kennard — a Clinton appointee who succeeded Hundt as agency chief — is likely to have an influential voice on telecom and high tech matters during the transition and afterward when the Obama administration takes power early next year. Kennard, a managing director of The Carlyle Group’s global telecommunications and media unit, was a $500,000 bundler for Obama.

High dollar bundlers raised over $40 million for Barack Obama according to Open Secrets. Look at how these two gentlemen were listed:

$50,000-$100,000 Johnson, Mark
Washington, DC

Is his employer The Carlyle Group, the Carlyle Hotel, or the law firm Carlyle Womble? It's hard to tell. Next up:

$500,000 Kennard, Bill
Washington, DC

One might conclude Bill Kennard to be self employed. Nope, Bill is the William Kennard mentioned earlier, the Managing Director of The Carlyle Group. Ironically, Mark Johnson works in the same division as William E. Kennard at Carlyle, telecom & media.

And right before the Democratic National Convention, Senator Barack Obama voted for telecom immunity. I thought it was a nod to AT&T for their sponsorship of the big event. But, it turns out Barack could've had other motivations.

Note: William Kennard was appointed as European Union Ambassador by President Obama.

Thursday, November 13, 2008

Rahm Emanuel Distances Himself from Father's Disparaging Remarks about Arabs

President Barack Obama appointed Rahm Emanuel as his Chief of Staff last week. Dr. Benjamin Emanuel, Rahm's father, said the following in an interview:

"Obviously, he will influence the president to be pro-Israel. Why wouldn't he? What is he, an Arab? He's not going to clean the floors of the White House."

Rahm reportedly apologized to the President of the American-Arab Anti-Discrimination Committee. Haaretz reported he said:

"From the fullness of my heart, I personally apologize on behalf of my family and me. These are not the values upon which I was raised or those of my family."

Recall Rahm's father was in the Irgun, a British designated Zionist terrorist group. From Benjamin's actions and words, it's hard to discern the values upon which Rahm was raised. News reports show how much Rahm Emanuel values his middle finger.

Taxpayers Invest in America's Sovereign Debt Fund

Hank Paulson noted the Financial Recovery Program (FRP) won't buy toxic assets but invest in financial firms. Thus the $700 billion toxic asset relief program (TARP) is misnamed. I offer several suggestions to the Bush administration as if searches for a new name:


Sovereign America Defaulted Debt Investment Enema for Limpid American Yokels


Bogus Underhanded Money Bailout of Landed Elite


Billions Usurped by Rich People


Financial Enhancement of Corporations on Citizen's Checking Accounts


Sovereign American Glorious Goliath Investment in Noncommittal Groups

I would do one for the real Bush/Paulson strategy, but the word Corporafornication is simply too long.

Wednesday, November 12, 2008

Rove, Edwards, Financial Lobbying Group to Join in Howling Chorus

The Commercial Financial Association, a trade group for asset backed lenders, will offer Karl Rove and John Edwards the opportunity to debate at their meeting in San Francisco. The topic will be "the recent election and its impact on the U.S. economy and business environment."

All three brands, Rove, Edwards & the CFA, would be taken off the shelf, if they were dog food. The Bush administration and greedy American CEO's set the table for the fall financial meltdown. Karl Rove was a key part the George W. Bush White House.

The CFA represents the lending arms of commercial banks, independent finance companies, floor plan financing organizations, factoring organizations and financing subsidiaries of major industrial corporations. CFA membership is by organization. Membership comprises:

24% - Banks
76% - Non-Bank Financial Institutions

John Edwards' political stock cratered after an extramarital affair was revealed. How will the three groups combine on stage? Will they howl at each other in a backyard, late night chorus? Who will throw their shoe at the stage to stop their irritating prognostications? If they couldn't predict or prevent the meltdown, why should we listen?

Ironically, Treasury Chief Hank Paulson revealed new uses for the toxic asset recovery program (TARP). He wants to change the Financial Rescue Program (FRP) to help nonbank firms. That helps members of the CFA, as 76% are nonbanks.

Congress got bait and switched. I'm afraid that describes America's political process as well. We keep recycling dog food, or its sorry leadership equivalent. Did someone FRP? It's most malodorous...

Obama's Lobbying Rules: Daschle & Breaux

In a pointed move Barack Obama banned lobbyists from donating to his White House transition. They are forbidden from helping his transition team in any area where they lobbied for clients in the last year. The rule only applies to registered lobbyists. Many in Washington aren't registered, as they do not lobby federal officials on specific issues.

Take two influential Democratic ex-Senators, Tom Daschle and John Breaux. Tom hangs his hat at Alston & Bird, alongside Bob Dole and ex-Medicare Chief Tom Scully. John Breaux works with Patton Boggs and has his own firm, The Breaux Lott Leadership Group.

Tom Daschle is not a registered lobbyist, so he can help the Obama team in any capacity. John Breaux lobbied for companies representing most major industries, according to federal records. John Breaux could have a hard time finding a way to help Barack's transition team, were he so inspired.

The question remains, how many high dollar influence peddlers are unregistered? And how many registered lobbyists are multi-talented, able to help outside their areas of paid influence? Stay tuned.

Tuesday, November 11, 2008

Hard to Shut Down Greed Cycle

Executive incentive pay for companies suckling on the federal bailout tit is hugely unpopular with the American public. Board compensation committees sell the extrinsic motivator as "pay for performance". People see monumental failure in the financial sector as abysmal performance, thus unworthy of bonuses.

It's sad CEO's aren't intrinsically motivated to do a good job. The poison of executive bribes fueled higher risk strategies, which are now being painfully unwound at taxpayer expense.

"Bonuses and severance packages will obsess the American public'' and become "a humiliation and embarrassment,'' said Arthur Levitt, a senior adviser to the Carlyle Group, former chairman of the Securities and Exchange Commission, and a board member of Bloomberg LP, the parent company of Bloomberg News. "Compensation committees, believe me, are paying close attention to this.''

Compensation committees should give CEO's good job to do, one that doesn't need bribing. Greed and leverage got America into the financial sinkhole. "Too big to fail" and "too high a campaign donor" seduced our elected officials into proffering taxpayer rescue money. Yet, storied institutions keep disappearing and more bailout money is tossed into the giant pit. It looks America is doubling down on greed and too big to fail. We do so with a bit less leverage, due to taxpayer recapitalizations.

Monday, November 10, 2008

TDI Approves Shannon's Shuttering of Legacy

On October 29, 2008 the Texas Department of Insurance approved the closing of Legacy Health Plans and Legacy Health Solutions, their HMO subsidiary. The health insurer will close eight years after getting initial approval from the same regulatory body.

What will happen to LHP's nearly $5.5 million in net surplus, as reported on the TDI website? Add LHS's $2.2 million for a total potential roll up of $7.7 million. That could be considerably less given the quarterly results for 2008.

The HMO division lost $166,000 on an underwriting basis in the first quarter. That grew in the second quarter to a negative $316,000.

Hopefully, assets will be left at the end of Legacy Health's deconstruction. Given Bush's latest Medicaid cut for outpatient services, Shannon could use any excess Legacy funds. The Bush health care blanket party continues.

Friday, November 07, 2008

Scotsman Calls Frances Townsend Obama Adviser?

The Scotsman did a piece on President elect Obama's dire in-box. It touched on the cratering economy, Homeland Security, the two Wars, addressing health care, and restoring America's luster in the world. I found nothing new, until I hit:

One of Mr Obama's senior aides, Frances Fragus Townsend, a former Homeland Security adviser, outlined some of the incoming administration's concerns, especially about the potential for conflict to create "spin-off" operations linked to global terrorism.

He said: "The most immediate counter-terrorism issue is the Pakistan tribal region; it represents the greatest threat to American security interests."

What? When did Fran Townsend sign up to work for Obama as a senior aide? I searched the web and found no indication that this is anything other than journalistic freewheeling. After all, author Chris Stephen quoted Fran as "he" and got her maiden name wrong. It's Fragos, not Fragus.

However, if Frances Fragos Townsend ends up on the Obama team, I'll have plenty to say about Fran's Brownie side. Until I get confirmation, this story is about questionable journalism. (A recent CNN interview made no mention of this relationship.)

Change or Narrative?

One decision does not a Presidency make, but the choice of White House Chief of Staff is an important indicator. President elect Barack Obama promised change, something that resonated deeply. During his acceptance speech, he encouraged us to “resist the temptation to fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long.”

How does Obama's new Chief of Staff Rahm Emanuel measure up? Newsweek reported:

Rahm Emanuel has been described as a street fighter with a killer instinct—as explosive, profane, wired and ruthless—sometimes as a compliment, sometimes not.

Emanuel has relished raising his hacked-off middle figure at his foes. In conversation with almost anyone about anything, Emanuel uses the F word like a sergeant in a World War II motor pool.

As a Democratic Party official, he once sent a pollster who was late delivering polling results a dead fish in a box. Old Clinton hands still laugh about the night after Bill Clinton won the 1992 presidential election. In his book, “The Thumpin’: How Rahm Emanuel and the Democrats Learned to Be Ruthless and Ended the Republican Revolution,” Chicago Tribune deputy Washington bureau chief Naftali Bendavid writes that, as about a score of them sat around a picnic table mushily declaring their love for one another, Emanuel picked up a knife and called out the names of different politicians who had “f–––ed us.” After each name, Emanuel would cry out, “Dead man!”—and stab the knife into the table.

The American Prospect offered:

Emanuel is a brawler. He’s legendarily tough and effective and ruthless. He's the type of guy who makes enemies, then makes lists of his enemies, then makes lists of his enemies’ friends, then makes lists of how they’ll pay. If you thought the Obama administration would be all about bringing people together and would simply make sad faces when stubborn congressmen refused to come to the table, this is a clear sign otherwise. If good feelings don’t suffice, bareknuckle politics will happily be employed.

I found the McCain/Palin ticket all fiction and no substance. Don't tell me I fell for a more uplifting version. I badly hoped for one that wouldn't involve the middle finger or breaking of same.

Tuesday, November 04, 2008

Barack Obama Wins U.S. Presidency

Citizens voted for change in America. Congratulations to President elect Barack Obama and future Vice President Joe Biden.

Will our elected officials in Washington, D.C. get the message? It's time for them to show leadership, along the lines taught by American management guru, Dr. W. Edwards Deming. Will they foster good jobs, manage for quality, understand and use theory? It remains to be seen.

The clueless rule of President George W. Bush winds down. My hope is something much better replaces it. However, it requires our elected officials transform management. Let the change begin...

Cat Has White House Tongue

Since the President's Radio Address on November 1, the White House website has been very, very quiet. (His administration finally posted something Nov. 5th) George W. Bush and Dick Cheney must be hunting wabbits. As usual, I'll take the President's words and offer my interpretation of his radio address:

THE PRESIDENT: This Tuesday is Election Day. After months of mean spirited debate and rigorous complaining about anything from the media to makeup, the time has come for Americans to make decisions about our Nation's future. So what if it looks like 1929 and I'm talking to you by radio? I encourage real Americans to go to the polls and vote.

Election season brings out the spirit of hyper-competition between our corrupt political parties. That $5 billion "high dollar donor" funded competition is an essential part of an purchased democracy. But as the hard sell, fictional narratives come to a close, Republicans, Democrats, and independents can find common ground on at least one point: We fucking hate each other. That, and our system of campaign funded democracy is one of America's corporations' greatest strengths. Many of our leaders won't accept e-mail from people outside their area, but they will take a check from a business with no facilities in their state. Ain't that grand? Maybe ten grand.

The United States was founded on the belief that all men are created equal. But it took two hundred years to put that belief into practice. Every Election Day, Congress holds their breath and sphincters while millions of Americans of all races, religions, and backgrounds step into voting booths throughout the Nation. Whether they are rich or poor, old or young, each voter has an equal share in choosing leaders who take our country off road, down the path that enriches members personally. And every vote those elected officials cast is a reminder that corporafornication is alive and well. But you're to blame, because you picked the spate of millionaires.

Voting is one of the great privileges of American citizenship, and it has always required brave defenders. Even today, efforts are underway to prevent unreal Americans from voting. As you head to the polls, remember any unpaid parking tickets may be due. Remember the sacrifices made by generations of common Americans to preserve the wealthy man's way of life. From Banker Hill to Bagman Nob, the men and women of American Armed Forces protected democracy's looters. And remember the party that calls the military its own, Republicans. The GOP owes our armed services a special debt of gratitude on Election Day as they continue to serve as a wedge issue.

Americans should also remember the important example our elections set throughout the world. Young democracies from Georgia and Ukraine to Afghanistan and Iraq can look to the United States for proof that self-enriching government can endure. They're also looking for tricks to reduce power to just two entrenched parties. Pay no attention to elections in Lebanon and the Palestinian Territories.

Tyranny and oppression can be framed as hope and inspiration in our "commitment" to liberty. Note I only said commitment, not actualization.

For more than two centuries, Americans demonstrated the ability of free people to choose their leaders, the same people who ignore your wishes after being sworn into office. Now, I'll say something completely inane.

Our Nation has flourished because of its commitment to trusting the wisdom of our citizenry. In this year's election, we will see this tradition continue.

Don't worry about your unflourishing personal financial situation. This too will pass. But it's only the first hour of your financial Montezuma's revenge. The pain of losing assets from both ends may be excruciating. You'll survive though. Vote, while you still feel OK.

I trust you're wise enough to swallow narrative campaigns and vicious, untrue attacks on opponents. And we will be reminded once again that we are blessed to live with freehdem, that irritating itch near your wallet, inflamed by the financial needs of our elected officials. Note: the country has no needs (tax cuts!), just send your money to campaigns and political party 527's.

Thank you for listening. I'll soon be available for speeches at $1 million a pop. Me and Tony Blair are going to hit the circuit together. We're promoting nukular energy. Hire us! Maybe, I can get a chunk of the coming stimulus package as an ex-President, doing something Presidential like cashing in on my public service. So go elect more future cashers inners!

Huge Stimulation, It's Coming

Bloomberg reported a $500 billion economic stimulus bill could soon be on the table. It's the third sign of yet another round of massive government spending. Carlyle Group co-founder broke the ice during his Alaska talk on October 25. Yesterday, ex-Treasury Chief Bob Rubin posited the need for stimulus in a New York Times op-ed.

Lobbyists swarm our nation's capital. They're looking for their share of the fresh, steaming hot multi-trillion dollar federal pie. Be clear, a Democratic majority Congress will have to pass the stimulus package. That means lobbyist largess is coming their way.

The question remains, who will sign the next round of Corporafornication into law? That should be answered this evening.

Monday, November 03, 2008

McCain Political Ads: Ignorance or Subconscious Manipulation

After the third McCain/Palin ad with misspelled words, I concluded the spelling is intentional. The question is why?

Do ads with misspelled words garner people's attention, when they normally might not look?

What associations occur in the viewer's mind as they process the image and the incorrectly spelled word? Two of the three images show black men. Misspellings could frame black men as ignorant. One error occurs within a direct quote by Barack Obama. After reading "virture", vulture came to my mind. Republicans say he will prey on citizens through higher taxes.

What lingers after the ad is viewed? Do viewers just not feel right? Do they associate any dysfunction with the target of the ad and not its sponsor?

Republicans paid big money for these ads. They were tested amongst likely, undecided voters before getting aired. They work for the McCain camp, the question is why? C'mon Maverick, give us the straight talk. Are misspellings the result of error, or a well tested means of manipulation?

(HT-Think Progress)

Today's Lobbying, Tomorrow's Legislation

Despite America's financial meltdown and rapidly rising unemployment, lobbying firms are on a tear. CQ Politics reported lobbying firms signed up 500 new clients in October and annual revenues will likely top $3 billion.

Those "in the know" understand the relationship between the lobbying increase and America's financial trouble. Carlyle Group co-founder told Alaskans on October 25, "the mother of stimulus bills" is coming in January 2009. He advised them to get in line, even detailing which industries could be big winners.

Today, Robert Rubin echoed the need for "stimulus" in an Op-Ed in the New York Times. He and co-author Jared Bernstein said:

With the current financial crisis, our joint view is that for the short term, our economy needs a large fiscal stimulus that generates substantial economic demand.

Today's lobbying influences tomorrow's legislation. Stay tuned for major corporafornication in America's Government Industrial Monstrosity, Eisenhower's MIC on steroids. Bush won't be signing this particular bill. Who will?

Saturday, November 01, 2008

Cheney Sports McCain

Vice President Cheney endorsed John McCain's run today. Dick noted John's suitability to serving on his new show, Running Man 2009. Cheney's quote is below:

“I’m delighted to sport John McCain and I’m pleased that he’s chosen a running mate with executive talent, toughness and common sense, our next vice president in Sarah Palin.

The ticket gets a five minute head start, then I come ablazing. Welcome to Dick Cheney’s Running Man 2009!”

I noted the odd parallels between the 1987 movie and America as it approaches 2009.

The world economy has collapsed. The great freedoms of the United States are no longer, as the once great nation has sealed off its borders and become a militarized police state, censoring all film, art, literature, and communications.

With full control over the media, the government attempts to quell the nation’s yearning for freedom by broadcasting a number of game shows on which convicted criminals fight for their lives. The most popular and sadistic of these programs is “The Running Man,” hosted by Damon Killian.

The contestants must search through the ruins for the resistance in the hopes of finally broadcasting the truth about the government.


New President to Approve the Mother of All Stimulus Packages

Congress plans on throwing more money at America's financial problems. A huge new stimulus package will be signed the first week or two of the new President's term. At least that's the prediction of Carlyle Group co-founder David Rubenstein. With offices down the street from the White House and numerous political legends calling him "boss", Rubenstein certainly knows best.

David gave this assessment to the good folks of Alaska on October 25. He suggested they go after the hundreds of billions that will soon gush from our government on the Potomac. Rubenstein knew full well his team at Carlyle already had this strategy in play.

The co-founder positioned the private equity underwriter (PEU) to win under Red or Blue government. On the payroll are ex-Clintonista's Mack McLarty and David Marchick. Senator Evan Bayh, an Indiana Democrat, has Carlyle as #7 on his lifetime donor list. Carlyle's red qualifications are legendary, with their long ties to the Bush family. Those could expand if they win Lehman Brother's PEU at auction. Brother Jeb and cousin George Herbert Walker could join #41 and #43 as beneficiaries of Carlyle largess.

Positioned to win more government business under either major political party, the sales job comes next. Carlyle's Booz, Allen, Hamilton could be consulting with Uncle Sam on the stimulus package at this very moment. David mentioned the following "stimulation" areas in his talk.

Alternative energy
Power grid
Public Infrastructure
Job Creation programs

How can Carlyle deliver to a needy federal government? They own hundreds of companies, many in those industries.

Aerospace and Defense --Carlyle currently holds 7 firms, historically they show 24.

Energy and Power--They own 33 companies in this sector and have a joint venture Riverstone Holdings

Automotive and Transportation--Carlyle has 8 companies, historically they've owned 16

Infrastructure--Robert Dove heads up this $1.15 billion fund

Tech and Business Services--The PEU owns 69 companies in this sector.

Job Creation-Carlyle's Vought Aircraft Industries took $35 million from the State of Texas to add 3,000 jobs. Their big job announcement since then was cutting 600 jobs. Carlyle may have hundreds of affiliates willing to do likewise.

Isn't it interesting how the word "stimulation" works well with Corporafornication? Carlyle will work hard to get their share of any economic boost package. They have the means and motive, an average 30% return.

Greed and leverage got us into our current financial mess. David Rubenstein plans on priming those same drivers to get us out. OK, greed and little less leverage. But either way, this PEU plans on winning, preferrably on an unfair trading table, i.e. one tilted in the Carlyle Group's favor.

Who will pump up the American economy in early 2009? Will it be Barack Obama or might John McCain pull a Harry, as in Truman by eeking out a surprise win? Either way, I feel another round of Corporafornication coming. I can see Fred Sanford saying, "Watch out Elizabeth, this might be the big one."

Warning: Do not use stimulus enhancing packages if the patient has a heart condition.

How damaged is America's economic pump from decades of artery crusting greed? Time will tell how long we stay in the intensive care unit.