You can tell a lot about a nation by its trading activities, and what goes on at the international seaports where cargo ships of all kinds come and go – the important ports of call of a nation.


Take the United States; today, there are international seaports on all coasts plus those on inland waterways.  There used to be lots more shiploads of manufactured goods stamped “Made in the USA” leaving these seaports, loaded in the holds or on the decks in containers.


After World War II, with war-torn Europe and Japan in ruins, the USA accounted for 50 percent of all world trade.  We helped our former enemies – Germany and most of Western Europe – rebuild through the Marshall Plan, named for former commander of US forces and then secretary of state, (General) George Marshall.  It was one of the most magnanimous gestures of this nation, one all Americans can be proud of.  We fought in WW II not to conquer, not for land, but to assure the freedom of millions of people – and their descendants.


Continued global peace and harmony among nations depends on the free flow of trade – flows of money, hard goods, farm products, intellectual property, science, people, ideas, and more.  With world trade greatly expanded in the 63 years since WW II ended, the US still accounts for about a quarter of the total.


The US could once boast of dominance in some important areas – think of Detroit’s auto products that rolled out of factories in the US and also in England, Germany, and many other countries, and shipped to many foreign ports.  Once upon a time, Ford Motor Company’s products accounted for either one of every two cars on the road everywhere (or, by some accounts, one-in-three). Everywhere in the world!  And GM – the largest industrial company in the USA in the postwar years, a titan among even the biggest of the country’s industrial giants, with its dazzling array of popular brands and array of products.


Sad to see the CEOs of the auto giants in Congressional hearings, sitting all in a row, seeking billions from Uncle Sam to stay alive.  In the same newspaper with the reports on the auto leaders’ plight, something caught my eye.


This was a report from the west coast of the US – home of those sprawling, automated complexes where countless cargo ships leaving the Far East now end up. Seems many of these foreign made autos are now piling up on the docks.  So many, the foreign carmakers are renting space until the cars move off the docks to local dealers.


And outbound cargo is not moving as well.  American-made goods for foreign markets, right?  No – the back up involves American consumption.  Waste.  Mostly recycled cardboard for Asian manufacturers – to ship their consumer and other goods to the United States.  (The cardboard is not needed due to the Chinese factory slowdowns as American consumers tighten their budgets.)


The largest volume of “things” moving from the United States to foreign markets in the Pacific Basin via the huge seaport of Long Beach, California are … recycled cardboard and paper products for China’s manufacturing plant.   Not American-made cars.


Perhaps we need to re-think some of the advantages of having a larger manufacturing base in the United States — especially as the nation gropes for solutions to our current financial crisis.


This is not saying we need to stop buying foreign made goods – that would not work either short or long term.  But should we keep shipping jobs to foreign lands? First it was tens of thousands, and then flows of millions of good manufacturing jobs – from the USA to foreign shores.  Every American manufacturing job has a positive ripple effect of 4-to-1 or 5-to-1 – one manufacturing job creating four or more jobs at local stores, in banking, at other manufacturing plants, and in services industries of all kind.  Manufacturing jobs typically pay higher salaries that permit workers to buy the goods manufactured by other workers.   And many – too many – are never coming back.


We have been hollowing out American industry.


A century ago Henry Ford was hailed a genius in a very important aspect of the still young US manufacturing industry– he figured out how to make products that could be bought by the workers making them, and he made the system work.  So well, in fact, that we would say Mr. Ford put Americans in cars and on the roads, and then exported Ford cars to every corner of the globe.


And now…as the powers-with-the-federal-purse strings noodle on how – or even whether to – save Detroit jobs, let’s think about the biggest things leaving US seaports.  Waste.  America’s cast-off waste, recycled and shipped to foreign factories to use to pack still more consumer goods to ship to US retailers.


Eventually, one might ask, with fewer and fewer good paying US jobs (and diminishing real disposable  income) – could we reach a point where there are too few retail buyers  resulting in lost sales taxes for local government?  Not enough income taxes for the federal coffers?  Far fetched?  Maybe.  But I would feel better some day seeing more Ford, Chrysler and GM vehicles muscling aside waiting ship containers of … American waste.  Cars with far better clean technology features than are on the road today, greener cars, vehicles with highly-desirable motive power that can compete with the hybrids coming from Asia.  The Congress hasalready set aside $25 billion for the Big 3 to tackle such innovative solutions.


Let’s fill up those ships returning to Asian markets with US manufacturers’ cars and we’ll feel a lot more optimistic about the US economy.


Take it to the People, Mr. President. That’s my unsolicited advice for our new president, who takes office January 20, 2009.  Considering the complex issues that our new leader will face after he leaves the Capitol steps and the swearing in ceremony, there won’t be much of a honeymoon for his administration.  The real work begins on Day Two, as we’ve written here.



So my advice is this:  As the Storyteller-in-Chief, just as he is Commander-in-Chief, President Obama should use every means of communication possible to tell the American people what we are facing (in this time of multiple national crises), and what he and his team will do about it.  And what we can do to help. Tell it straight – we can take it – and tell it simple, so we can process all that is shared with us, and rally around our new leadership to tackle the massive problems that we face as a nation…all together now!

The United States is blessed with an amazing assortment of the means of communicating.  Newspapers, radio, television, magazines, Web social media, blogs, Web sites, videotaped and DVD recordings, instant messaging, movie house trailers, satellite conferencing — and more. It’s so easy to tell a story.  The way has been paved by past president storytellers, who set the pace.  Franklin Delano Roosevelt.  Harry S. Truman (“give ‘em hell, Harry’), John Fitzgerald Kennedy, and the Great Communicator, Ronald Wilson Reagan.  (“Tear down this wall, Mr. Gorbachev” –  powerful message, and a little story that summed up the 40 years of the Cold War.)

Some channels are there for our instant use – our Web sites – and others require the
permission of the owners – for example, as when the President of the United States requests broadcast and cable TV time for a major address.  Given his personal charm and the media’s fascination with this president-elect, it will be easy to say “yes” to the White house request.


The way to direct-talk to the American people — from coast-to-coast-to-coast and everything in between, in millions of homes, at offices, or in bars and others’ homes — was paved by the president you (Senator Obama) are being increasingly compared to, and the history that is eerily sounding more familiar every day:  President Franklin Roosevelt (FDR).


Radio was still quite new when he was sworn in (March 1933); commercial radio had been birthed about 10 years earlier.  (Sort of like our World Wide Web since 1996 or so), and television in the years 1946 to the mid-1950s, which President John Kennedy mastered as our first television Storyteller-in-Chief.  Having made speeches on the radio as governor (of New York), and on the campaign trail, President Roosevelt decided to “use The Radio” as a major means of directly taking his messages and stories to the people.


FDR’s inauguration was broadcast to the nation from the Capitol steps on March 4, 1933.
His first broadcast to the nation was on March 12th, from the White House. He had requested the air time for an important address and the leading radio networks (including CBS, Mutual, and NBC “Red” and “Blue”) agreed. FDR said he wanted to talk directly to the American people.  CBS newsman Robert Trout supposedly dubbed this a “fireside chat,” envisioning the president at his desk and millions of Americans sitting in their homes…beside a crackling fire.


The subject was serious – very serious, even dire to the listeners.  Hundreds of banks had failed, were failing, with the dominoes never ending…bank after bank and bank…gone.

Along with depositors’ saving and mortgages. The president’s tone was reassuring – he had to be that – and educational …and informative…and presidential.  He announced that every bank –every bank – in the nation would be closed at once.  A “bank holiday,” he brilliantly called it.  And after government inspection of the books, they would begin to re-open.  Deposits would be insured.  And if a bank opened (many did not), customers could trust the institution.  FDR went on to explain the how / why / who,etc. of the issue. In the end, the American people understood what was at stake and they could count on their new leader.  The great climb out of the dark days had begun.


FDR told a great story that evening and established an important precedent of talking to the American people whenever a story needed to be told.  Like the progress being made to roll back the Bad Times of the Depression years.  Why certain legislation was needed (the New Deal laws and regulations). Why this isolationist nation after WWI must prepare for war, what was at stake as fascism swept Europe, and so on.  The attack on Pearl Harbor by the Japanese Empire – that address was a comprehensive review of global politics, world history, and more.  The people understood; we were going to war and that would be great personal sacrifice needed. For hundreds of thousands of Americans, it would be the ultimate sacrifice.


The 125 million American people got the story, straight, the goods, understood the stakes, came together in a common cause…and in the years to follow accomplished the impossible.


From 1933 to his passing in spring 1945, through the years of the Great Depression, through a world war fought on all continents, through all kinds of challenges to the nation, President Roosevelt talked to his people, about three dozen times total.  (The actual “Fireside Chats” count varies).  Millions of homes would tune in. The White House would notify the broadcasters of the president’s request, usually for a Sunday night after all the prime time shows, and FDR would broadcast from his microphone-studded desk,storytelling in earnest.  (You can hear some of these today at:http://www.mhric.org/fdr/fdr.html — listen – be inspired!)


FDR’s example was followed by most of the presidents who followed.  The intimacy of radio is different from the “hot medium” of television (picture with sound vs. the mind-images conjured up by individuals around the RCA radio set in the night hours).  And the proliferating social media, wireless devices, XM car receivers, etc. are different as well.


But the storytelling – responding to basic human instincts – is as important as ever.  And, President-elect Obama, will be ever more important to the American people given the challenges we face and will be facing in 2009 and beyond.  Tell it to us straight – we can take it!


Very impressive — over the weekend the governmental leaders of the world’s largest economies gathered in Washington to exchange ideas and lay the groundwork for greater cooperation in solving the multiple financial crises their nations are experiencing. Or maybe it’s a multi-dimensional crisis (one) with many moving parts affecting many countries…

One thing that may be clear is that just as in ancient times, all roads were said to lead to Imperial Rome, the 21st Century “AppianWay” in financial, economic and capital markets terms are the global electronic networks over which numbers fly (some quite large) representing financial transactions.  This Appian Way has been centered in New York (for the most part), with brokers, hedge fund managers, money managers, portfolio managers, and other market players moving millions’ and billions’ of dollars of financial products…turns out, some of them turned toxic.


And those toxic assets are part of the reasons that world leaders traveled to the United States over the weekend.  Their nations’ central bankers and other investors were eager buyers of the collateralized mortgage obligations (CMOs) and mortgage-backed securities (MBS’s) and other asset-backed securities conceived, assembled and expertly marketed by (primarily) US-based market players.


It’s more complicated than that, but it is accurate to say theexotica created by the ever-innovative American Masters of Wall Street in time became the financial instruments that are now clogging the arteries of banking, brokerage, investment management and the world’s capital markets.  Now it’s time to un-clog the global financial system and get things going in the right direction.


To unravel the complicated financial web weaved as the exoticawere marketed, heroic measures are required such as the US Treasury “TARP” program. (Unfortunately, a good many of the investments involved were un-regulated). What is that old expression Grandma used…about closing the barn doors after the horses have all run off?  That was sort of the starting point in Washington – the horses are surely thundering away in the markets — but at least it’s a good beginning to try to do the rights things to protect investors and stakeholders in the years ahead…


The Summit of the Big 20


One thing that was very different about this summit meeting of 20 nations was the makeup of the invitee list – the BRICS were there (that’s what Goldman Sachs identified as the new power players on the global stage: Brazil, Russia, India and China. This was way beyond the usual G-7 meeting plus one (Russia).   The current world crisis involves many nations, including the resource-rich players (think oil and gas) that have been recycling some of their revenues through the US and other markets to buy those asset-backed exotica.  Most of the nations at the summit have their own Sovereign Wealth Funds (SWFs) and state pension plans…some of these are also investors with stakes in the troubled capital markets.  As we said, there’s a lot of inter-connectivity in finance these days.


One topic high on the agenda was risk – the means necessary to address risky investments and weak regulatory oversight (hear those horses running away from the barn?)  It seemed from press reports that the participants agreed that a new regulatory framework is needed, and there was consensus that work should go forward to update and expand domestic, global and interdependent financial oversight.  The details of what, how, whenwas less clear as the meeting ended, although an ambitious framework was established, with deadlines…


The New York Times reported today that the summiteers had agreed on these points:


  • Financial markets must be made more transparent.
  • Derivative instruments must be addressed globally.
  • Regulation must be coordinated [globally].
  • Executive compensation must be addressed more broadly (the USA’s excessive CEO pay practices are becoming a global issue).
  • The concept of establishing “Colleges of Regulators” to share information across national borders seemed to find favor among the delegates.


There was a Declaration of the Summit on Financial Markets and the World Economy issued by the Group of 20 nation leaders to stress the consensus reached on at least the possible way forward: “We are committed and determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world’s financial systems.”


Goal of the Summit 20:  To help ensure that a global crisis (such as this one) does not happen again.  The work going forward will be guided by the nations’ shared belief that market principles, open trade and investment regimes, and effectively regulated and   financial markets foster the dynamism, innovation and entrepreneurship essential for economic growth, employment and reduction of poverty.


Deadlines for study and action steps were set at the summit. There will now be serious discussion of capital market and banking reforms: (1) in the United States, certainly a top priority for the Administration and the Congress; (2) inside in other sovereign states; (3) within the European Union system; (4) within cooperative efforts that are ongoing, such as the dialogue between US and international accounting rule setters and banking standard setters.   Watch for this action as the research, dialogues and potential action steps reach their deadlines (a number were set for March 31, 2009).


These efforts include looking at financial markets regulation; accounting and financial reporting standards; executive compensation; derivative products; hedge funds; securities regulation and oversight; risk management; and banking industry best practices (re: Basel agreements); and more.


Stay Tuned – in the United States, and in other major economics, and now among the world’s major sovereign players – to the efforts to bring about greater accountability in the global financial system and capital markets.  Before the horses race away again from the wide open barn doors.  


Note: The communiqué issued by participants via the White House is available at:


As we await the arrival of our new president and vice president, cabinet members, and the new members of House and Senate…


During the primary campaign season at one point Senator Hillary Clinton was asked about her political leanings (wasn’t she a true liberal as charged by the Right?). Her reply resonated with a number of people:  I am a Modern Progressive, she told the interviewer.  It got me thinking – what’s wrong with being aprogressive…isn’t it the fundamental drive of the American Dream to make “progress” and be all that we can be, to borrow from the great US Army marketing slogan…as a society…and as individuals?


As we consider how (liberal) or (left-leaning) or (middle-of the road) the incoming administration and factions of the new congress might be, I’d like to put the question in  the context of my belief that we are at the moment of dramatic societal change – this is one of the fundamental, once-in-a-generation shift of American politics and culture– from the dominance of right-leaning (more conservative) politics of the 1980s (and things cultural) to the center-left … and maybe even more left than that.


The perilous state of the economy has a lot to with this – consider the several millions of manufacturing and related industrial jobs lost in the US in recent years; the ongoing chaos in the capital markets; the seizing up of banking and business, government and commercial credit markets; the consequences of our military affairs (wars in Iraq and Afghanistan going on longer than the years this nation fought all of WW II); the erosion of all-white dominance of institutions; the increase in the nation’s non-white populations; the foreclosures that are mounting month-over-month in too many neighborhoods (10,000 US homes a day are foreclosed); the growing wealth and income gaps as the middle and lower economic rungs become ever more slippery for American families …as the wealthy get wealthier-still…and more issues than that to address!


Where does Modern Progressivism fit into these issues?


The original Progressive Movement came together more than a century ago.  Under conditions that include several sounding a bit familiar in 2008.  Immigrants were flooding into the US (the late-1800’s waves came from Italy, Eastern Europe, Russia, and other lands) and many of the recent arrivals were living in terrible conditions as they landed and remained in the crowding cities.


The era’s “Robber Barons” (wealthy interests and strong men who monopolized and controlled the railroads, Wall Street institutions, banking, large corporate enterprises, and numerous monopolies, a/k/a the “Trusts”) were under fire for their practices and ways of doing business.  At many levels of society there was growing displeasure about monopolies, price fixing and other practices of the big businesses of the era.


Common factory workplace conditions for many Americans were about the same as [those] social investors today criticize certain US companies for condoning in their overseas supply chain.


When one of the Robber Barons’ companies took a strike in Homestead, Pennsylvania, owner Andrew Carnegie took a trip to the British Isles while his hired strikebreakers, the Pinkertons (with the looking away of local and state officials), savagely attacked the workers, injuring many and killing nine.  Union leaders were charged with murder and treason.  The company broke the back of the movement workers to organize and the concept of collective bargaining.  Such was the state of labor-management (or owner) relations as the new Progressive Movement began.


This was the ending of the “Gilded Age” (said author Mark Twain), delightful times for the elites and the wealthy and super-wealthy (and as he penned, an era full of business and political corruption).  For many in big business firms, working conditions were more like those in Charles Dickens’ novels, such as Ebenezer Scrooge (the owner) and Bob Cratchit (his employee), in the scene from that Christmas Eve in “A Christmas Carol.”


Enter the President as Chief Crusader


As the progressive thinkers in the American society reacted to conditions that they believed had to be changed for the nation to fulfill its promise of social and economic equality, in the White House, an [seemingly] unlikely champion took center stage to dramatically change the way things were:  Ambitious, young, action-oriented, and very bright, Teddy Roosevelt had been governor of New York, and was elected William McKinley’s VP in 1900, mostly to get him out of the way of the Republican big bosses. (He had too many radical thoughts about upsetting the system that benefit the wealthy ownership class.) Upon the assassination of President McKinley, “TR” became President of the United States (September 14, 1901). Throughout his presidency he was a dogged, committed crusader — especially against corruption in both the public sector and the private sector.


In the era of giant corporate enterprises rapidly (and rapaciously) consolidating power and influence on a scale never seen before, President Roosevelt and the Progressive Movement provided a very effective counterbalance.  Seeing threats to the American Democracy and the unique capitalistic system of the USA if things weren’t changed, TR took action and the progressive movement grew to support the concepts advanced.  (He was an unlikely leader of reform of the system because he was born into the wealthy class and easily could have been an elitist leader.) He used what he called “the Bully Pulpit” to rally support for change.


As though the pressure building – especially from below – had blown the lid off the American Society, the reforms flowed forth over two decades:


  • Consumer Protection – advocates drove adoption of the landmark Pure Food and Drug Act (resulting in today’s FDA protections; many of today’s food supply protections; regulation of medicines, and more).
  • Protection of Workers – workers got the right to organize; the 8-hour workday became the norm; there was protection of worker health (such as in the coal industry where many suffered from black lung disease); unsafe factory conditions began to be eliminated.
  • Child Labor was controlled – eliminating tiny children working alongside adults in industrial facilities.
  • Urban Residents began to be protected – reforms of the day began eliminating crowded tenement housing, which often led to sickness, including widespread tuberculosis; water supplies were regulated and protected, probably the greatest single factor in health advances in the early 20th Century.
  • Education – Progressives encouraged wider access to education for children, especially in the cities, to eliminate crime and the cycle of poverty, and to begin to build a larger, more educated middle class.
  • Political Corruption Battles – included direct election of member of the US Senate; encouraging closed (secret) ballot elections; addressing the power of political bosses in the big cities; addressing voter fraud.
  • Progressives addressed the root causes of poverty – especially urban poverty, with millions of immigrants flowing to port cities, and then crowding in to work in the steadily expanding universe of factories. (The plight of immigrants were top-of-mind for progressives, including encouraging immigrants to move out of over-crowded cities, and address their health, job, education, and other social needs.)
  • Protecting the Nation’s Natural Resources – President Teddy Roosevelt was in the lead here, setting aside about 100,000 acres a day for the future generations throughout his two terms!  He created sanctuaries and reserves of various kinds by executive order. (The National Park System would come about a few years after he left office, in one of the Progressive Movement’s finest moments.)
  • Treatment of the Nation’s Veterans – encouraging health care for veterans, and pensions for military retirees
  • Fair Taxation – Spreading the Burden – the adoption of a progressive / fair tax system (the personal income tax came during the Progressive Era; before that, the primary means of support the federal government included tariffs on goods.)
  • Encouraging Social and Economic Justice – addressing the situations of Native Americans, and tens of millions of immigrants pouring into the USA – your ancestors and mine!
  • Regulating Industry – curbing the runaway power of large corporations; curbing large business monopolies in key sectors; first President Roosevelt and then successor William Howard Taft led the battle to break up large industrial trusts, such as the Sugar Trust, Steel Trust, Beef Trust, and the Oil Trust (the Rockefellers’ Standard Oil Empire was broken into individual operating companies.)


Progressivism – A Broad Societal Movement


Note that what we’re describing here was in ways a political movement, yes, but the progressives were not necessarily organized as a political party movement (such as “the Democratic Platform”).  This was a society-wide, mostly national social movement at many levels of the culture working to make America a better place…a kinder and more caring society…and more inclusive society…yes, a society which encouraged the spreading of wealth beyond the handful of powerful elites who commanded the apportioning of capital, the means of industrial production, and the transport and distribution systems necessary for truly national commerce.


A combination of forces brought progressivism to the center of American life:  as author A.J. Scopino, Jr. writes:


“…Historians agree that in the first two decades of the 20th Century [reformers] employed a scientific approach when addressing social problems,  No longer content to accept and explain the miseries of life through fatalism or sheer luck, progressives were eager to utilize new tools, strategies, methods, and discoveries of new academic disciplines (especially sociology), to correct social maladjustment.


“Examining workers’ wages, living expenses, housing conditions, family size, working conditions, diets, and other data, progressive reformers studied, analyzed, and then offered measures to correct inequity and insure social justice…


“As firm believers in the American democratic process and in American institutions, reformers called on the government to legislate against political, social and economic wrong doing…”


And the Progressives wielded mighty clubs – the era’s hot new media such as mass circulation magazines, as well as daily newspapers (New York City had a half dozen or more) were there outlets.  This was the time of the muckrakers – whose words were eagerly awaited as the uncovered corruption in business and government.  Today’s “60 Minutes” continues the tradition begun a century ago by Ida Tarbell (nemesis of Standard Oil), Upton Sinclair (whose novel about big oil was recently made into the movie, “There Will Be Blood,” starring Daniel Day Lewis), writer Lincoln Steffens, and others.


The progressives brought about a better country with their reforms.  Their work was instrumental, I believe, in creating the conditions that led to the rise of the middle class – the engine of our GDP (2/3 of the US economy).  Millions of Americans were the beneficiaries of the progressive thinking of 100 years ago.


Of course, conditions are different in 2008, aren’t they?  OK, let’s admit we’ve made tremendous progress as a society since the early 1900s.  Thank the progressives for that.


The problems and challenges and issues of our age will be addressed in different ways, it appears, after January 20, 2009.


The early 20th Century progressives were united by a number of forces.  Based on what I have been seeing in recent months – one example was the Obama campaign fervor – this Millennium Generation, approaching positions of influence and power – may revive the spirit of the early Progressive Movement, especially if they unite to bring about important changes.


Stay Tuned to the shift taking place in public opinion, the shift from right to center or even center-left, and the drive for a better quality of life in this great nation.  We may be on the verge of something really exciting – with expanding (not contracting) opportunity for most Americans!  The best that our nation can be…may be just ahead of us.


Your thoughts?


(for more details on the Progressive Movement, read “The Progressive Movement, 1900-1917,” by A.J. Scopino, Jr; 1996m Discovery Enterprises Ltd.)


President George W. Bush came to Wall Street today to meet and greet Wall Street’s power crowd, and to reassure the capitalists that HE still has faith in the capitalist system. The president spoke in what was the first capitol building of the United States, the “sub” Treasury Building opposite those pillars of capitalism, (1) the New York Stock Exchange and (2) the venerable Morgan Bank on the opposite corner


T’was a well prepared talk, touching on the all the key points about and surrounding the current capital markets crisis. He talked about cause and effect (lots of both, of course), and the next steps in the repair and rebuilding of the markets.  This weekend President Bush will host the leaders of the world’s top 19 economies plus European Union representatives…We’re all in this together!


The loudest applause of this, the Street crowd, was when the free markets, capitalism, free trade, less government regulation, and less government involvement in businesswere mentioned.  Hmm…seems like the opposite of the opinions held by people not in downtown Manhattan today…did these folks watch the Election Night results…do they read the daily papers…are they watching the plunging market indicators…the leading economic indicators…hearing about decimated 401-k’s?  No matter; the mood in the hall was –we want less regulations and less government in our business!


Except…when we need the Big Government safety net spread below our financial high wire acts…when we peddle junk to investors and that flotsam and jetsam floats back to our balance sheets…etc.


The president spelled out some moves that he believes Big Government should now take to fix the mess in banking, the capital markets, the economy, and so on.


We need to address accounting rules so that investors and all players know the value of underlying assets or securities (a clear call for fair value accounting!).


The various financial instruments now wreaking havoc around the world should be regulated (e.g., credit default swaps); and, while we’re at out, let’s set up exchanges where these can trade with transparency (he said that!).


The world’s financial market leaders should band together to address fraud and market manipulation.  And while they are at it, why don’t they agree on much closer cooperation.


And let’s put our heads together to modernize the capital markets infrastructure. Let’s also do the same for the World Bank and International Monetary Fund.


Let’s have greater accountability in the markets – he said that!


Government intervention is a not a cure-all, he observed. (Let’s see how things work out with the current Big Government safety net being spread under Big Business.)  We need smarter government – he said that! 


The takeaway, the boffo moments in the old sub-Treasury Building (now National Hall Federal Monument) today were this:  It’s not about more regulation; it is about addressing the greed, exploitation and failure in the capital markets (no applause); and about the following (to loud applause):


Sustained economic growth requires free markets.  This was not a failure (we’re seeing) of the free market system.  Capitalism is not perfect, but it does offer the greatest choices.  the greatest opportunities, and incentive, and chances to innovate, and to create.  We must preserve the best of the free market principles, he urged the Wall Streeters.


Good speech, upbeat, many good points made.  Of course, #44 is warming up in the bullpen now, and President Bush has but a few weeks left to make dramatic changes to fix things, and diminishing political and public opinion capital in the count down.


He finished with some plugs of the remaining free trade agreements on the agenda – South Korea, Japan, Hong Kong, Taiwan, Colombia, etc.


What will folks on Main Street, far removed from the inner circle on Wall Street this noon, what will they think of this speech?


We were encouraged that the president specifically mentioned [that improvements in] social justice and human dignity could come of out of the capital markets reforms that he outlined.


We’re reminded that only months ago the wisest heads in the room were calling for Social Security “reforms” and “choices’ – just let Wall Street get access these funds!


And a year ago there were at least three concerted and connected efforts gearing up to roll back the Sarbanes-Oxley corporate government reforms.  (You can read about them in my posted columns on the Accountability Web platform, in the Commentary section by clicking here.)


An interesting afternoon in New York for President Bush – let’s see how Main Street and national media play it out.


The “reforming” of the capital markets is just beginning.  Stay Tuned.


Are you seeing the delightful TV commercials currently being placed by Macy’s?  A parade of stars from movies and television are being featured in the original settings portrayed by the actors – with scenes from such movies as 1947’s “Miracle on 34th Street (starring little Natalie Wood – and the Macy’s store on 34th ).


This brings to mind the great performance of Edmund Gwenn as “Kris Kringle,” the perfect Santa Claus (in my view).  Whenever I watch that movie, that is Santa Claus!  Macy’s is bringing these memorable images to us…yes, to remind us of the holiday shopping season in interesting and appealing ways.  And to spread some good old-fashioned cheer in these increasingly bleak economic times.


Sunday’s New York Times carried a two-page advertisement by Macy’s, on one broadsheet was printed the banner of the old New York Sun, and a reprint of the letter from a little girl – 8 year old Virginia O’Hanlon – to the editors back in September 1897…and the editors’ heart-warming response.


Dear Editor


I am 8 years old.  Some of my little friends say there is no Santa Claus. Papa says, “If you see it in the Sun, it’s so.”  Please tell me the truth, is there a Santa Claus?


The editorial printed in reply – Yes, Virginia  — There is a Santa Claus – became a classic that is revived regularly at Christmas Season.  Virginia, your little friends are wrong.  They have been affected by the skepticism of a skeptical age…. (see the complete letter at: http://beebo.org/smackerels/yes-virginia.html



Macy’s then makes this offer for today’s children:  Write your own letter to Santa Claus…telling Santa why you are one in a million.  (And drop off at Macy’s at a special mailbox for Santa.)


For each letter received, Macy’s will donate $1 – up to $1 million total in this effort – to the Make A Wish Foundation…to help ailing little children live their wish.


Write your letter to Santa, the retailer says, and help make wishes come true.


What a great holiday season gesture.  Macy’s ad campaign is true to the company’s origins, a very focused effort to remind all of us what a venerable and remarkable retailing institution Macy’s is…as represented by the well-known brand…and making serious attempts to preserve the 150 year old brand promise.  (Contrast that with a now littered field of other well-known brands whose leaders forgot what the brand promise was…what the expectations of their stakeholder base was…including the very familiar brand names on Wall Street and Detroit that come quickly to mind today.)


Well done, Macy’s – your campaign demonstrates your effort to remain an accountable company to all stakeholders.  Thanks for reminding us how much joy shopping for gifts for others at Christmas season can be.  A good example of enlightened self-interest and capturing the best of our capitalist system.


The new president and his administration will have lots of issues awaiting them on “Day Two,” after the inaugural balls have ended and the partygoers have flown home.  One of the biggest headaches – one that may have President Obama up at 3 a.m. with that fabled phone call, unable to get rest – will be what to do with the financial system…the banking system…the condition of the capital markets…and the regulation needed to prevent a similar meltdown in the future.  It’ll be like 1933 and 1934 all over again – except for the notable presence of the legion of lobbyists who will be demanding breaks for their corporate clients.


As news of a big event or trend breaks, the cable guys and gals typically slap a logo and catchy headline on the screen – “Wall Street Bailout” is an example of what was trumpeted on broadcast and cable channels all through October (which naturally followed the “Wall Street Crashes” earlier treatment).


This morning MSNBC (owned in part by NBC / part of General Electric today) had a new banner up:  “Bail – OUTRAGE!”  (Get it? Bail – Out Rage) Recognizing the rising public outrage over the Wall Street and banking and insurance industries’ bailouts and now the pending auto industry bail out.  Next sector or industry up?  Stay tuned!


We have our own construct, which we’ve shared with correspondents and colleagues.  The rising anger, frustration and tragic lack of trust in our leadership in private and public sectors has been building for much more time than just the recent election cycle.  Watching this continued abandonment of leader responsibility, our construct is:


Americans are enraged by recent events in the capital markets, in the corporate sector, the public sector, and especially banking:  It’s all about RAGE – caused by the widespread failure or abandonment of too many leaders in terms of [their individual and collective] Responsibility, Accountability, Governance andEthics.  Simple:  People are enraged by the demonstrated lack of leadership in too many sectors of our society.  Trust has been broken – and once broken, trust can take forever to rebuild.


Which raises the question:  Is it the inherent nature of our capitalist system to drive financial success to the point of self-destruction?  This is a question a growing number of folks are asking (and asked in 1929, 1987 etc.).  One important tenet of democratic capitalism is the belief (hope?) that markets and players can self-regulate – and do the right thing (for investors, stakeholders, employees, customers, etc.).  An important part of the major securities industry reforms of the 1930s was the designation in the 1933 Securities Act by statute and regulations [the] for oversight of elements of the financial services industry by industry organizations – by self regulating bodies embedded within those industries, like stock brokerage…


Thus in the 1930s the New York Stock Exchange became not only a place and mechanism to facilitate the buying and selling of equities, but also by congressional designation became a very important “Self-Regulating Organization” – a SRO. (Similar mechanisms were established for municipal bond trading and other activities.)  The NYSE established myriad rules for listed corporations and brokerage firm members.


Today with the NYSE a public company (how’s that for major change?), the successor regulator is “FINRA” — the Financial Industry Regulatory Authority.  (Its self-description is: FINRA is the largest independent regulator for all securities firms doing business in the United States. We oversee nearly 5,000 brokerage firms, 175,000 branch offices and 680,000 registered securities representatives. Our chief role is to protect investors by maintaining the fairness of the U.S. capital markets.” 


How well were your investments “protected” and “fairly treated” by those firms and individuals directly under the jurisdiction of this independent regulator?  Investors are asking: Where was FINRA while those independent brokerage firms with thousands of offices were peddling all-too-risky products to individual and institutional investors …who trusted them?  What happened to fair treatment in the securities marketplace?


FINRA is under the direction of Mary Schapiro, an experienced industry hand, who once ran the federal government’s oversight agency for commodities trading (the Commodities Futures Trading Commission / CFTC, appointed in 1994 by President Bill Clinton). She was also acting head of the SEC, and served as NADASQ Chair after leaving government.  What FINRA’s view of itself?  To quote:


“FINRA has approximately 3,000 employees and operates from Washington, DC, and New York City, with 15 District Offices around the country.

“The creation of FINRA is the most significant modernization of the self-regulatory regime in decades,” said Mary L. Schapiro, Chief Executive Officer of FINRA. “With investor protection and market integrity as our overarching objectives, FINRA is an investor-focused and more streamlined regulator that is better suited to the complexity and competitiveness of today’s global capital markets.”


Reading this, and looking at the carnage of the US and world securities industries – in the capital markets – we are mindful of the weakness of the argument of relying too heavily on the ability of industry to self-regulate.  Perhaps the pull of greed is too much to overcome (evidently the case in sub prime risk taking).


It’s becoming very apparent to the American public that self-regulation [by business interests] that (a) business self-regulation can experience quite spectacular failures, such as the 2008 market meltdown, and (2) it is clear that government regulation and oversight is absolutely necessary.  The critical questions then center on “what kind of regulations” and “where is the common sense balance of such regulations?”


These critical questions are on the table for the new Senate and House of Representatives and the new Obama-Biden Administration as they take office:  What kind of regulations are [now] needed to provide investors and market participants (and all of us) with the necessary oversight to maintain a fair, open, transparent, and trustworthy capital marketplace, for all types of investments and all investors?


How do we create a regulatory framework that encouragesinnovation, creativity, intelligent risk taking, and reasonable rewardwhile providing reliable risk management processes and policies for those who put up the capital and take the risk – the investors, central players in democratic capitalism.


This will be challenging tasks for legislators, regulators, industry participants and for every one of us as stakeholders in a democracy based on capitalist principles.


Watch the catchy logos and catchy headlines of the broadcasters as they focus on the regulatory discussions once the new congress is convened, and Day Two challenges dawn for the Obama-Biden Administration.


The leadership of the US auto industry traveled from Motor City to Capital Hill yesterday to plead for federal government intervention in their business affairs…as the American economic situation worsened. This was an important meeting for Detroit, for both the corporate leaders of the “Big Three” automakers, and for union leadership.


Consider that one-out-of-six of those of us employed in the United States derives her and his income from things automotive – building, selling or maintaining cars and trucks; building and repairing road and highways; insuring the 130+ million vehicles on the road; drilling, refining, distributing and marketing the oil and gas for this gigantic fleet – you get the picture.


The invention of the motor car is somewhat disputed; undisputed is that [it was] Henry Ford who created the mass production system that put Americans in their cars and on the roads.  He created a system so everyone could buy a car – including the men on the production line who built them.  Henry put America on wheels.


So we can say that the US car industry is 100 years old, and thoroughly integrated into virtually every element of the American society.  That’s why the conversations with Congressional leadership are of such importance.


Think about the infrastructure of the automobile and truck:  Oil refineries, gas stations, repair shops, auto dealers, roads and highways; one, two or more cars in many American driveways; tens of thousands of trucks on our highways, delivering goods overnight to tens of thousands of warehouses and retail outlets…


Think of the millions of men and women involved in this commerce; think especially of the men and women who toil in the GM, Ford and Chrysler plants, spread across the breadth of North America.


As part of the current nationalization of some American businesses – OK, the semi-nationalization at this point – the Congress has allocated $25 billion for US carmakers, targeted for new initiatives in building new vehicles that get better mileage, reduce GhG emissions, can use alternative fuels and motive power, etc.  The carmakers asked, according to news reports, for $25 billion (more), and this would be un-related to them building “greener” vehicles.


Detroit is in awful shape these days.  General Motors has lost $50 billion (yes, a  “b”) in the last three years.. Chrysler, once merged with Daimler Benz of Germany, has been cut loose and is privately owned.  Ford has similarly been bleeding billions of dollars and its stock is about $2.00 at this writing.  (GM is at $5.00).  If the [stock market’s] efficient market theory is applied, what is the smart investor saying about the Big Three – that their stock is worth just above pennies going forward?


How did the mighty US auto industry get in this awful situation?  The answers are long, varied, complex, and subject to interpretation.  But – I recall a conversation with the former director of the Pension Benefit Guaranty Corporation (PBGC), when I asked him why the federal government (which bails out corporate pension funds that fail) is sometimes tough on companies, He explained the theory:  Think about, he said to me, the company that we know today is unlikely to be the same company that we knew years ago, and that we will know in the future.  In the fast-paced life cycles of companies, sectors, industries, or products, the average company may last 25 or 35 years…but a lot will change in that time, changes that could threaten the existence of that company (and most important to the PBGC, and its pension fund).  So the government often has to take a tough line, which is often politically unpopular.


The PBCG did just that with GM a decade ago, pressuring General Motors to pony up the billions in shortfall in its pension funding.  GM sold off the E business (the former EDS).  Lately the company sold off 51% of the GMAC operations.  Ford sold off some of the brands it acquired.  All three auto companies, under certain conditions, could burden the PBGC pension funding if they fail (e.g., file for bankruptcy).  PBGC is usually first in line to claim what’s due – but what will that do to the thousands of companies that are GM, Ford or Chrysler suppliers.  This is a very complicated situation.


The stakes are high in two cities – Detroit and Washington DC – and in the hundreds of towns and cities across the land when the Big Three does business.


Given that the US bankers are now getting hundreds of billions of taxpayer dollars, surely to keep some [banks] afloat and also to attempt to make other institutions stronger, how can the federal government now say “no” to the auto makers?


After, we will have lots of time to sort out the “who” as in “who is accountable …for the lack of effective leadership in the auto business…in banking…in investment banking…in regulatory oversight…etc etc.…and whatever other businesses we may benationalizing – oops, “socializing”, as in, “after all, this is all for the common good…”.


We heard today that President-elect Barack Obama’s advisors are scouring the records for examples of the crises events that faced President-elect Franklin Delano Roosevelt 75 years ago, when FDR took the oath of office. Some of the events and conditions of that era, which seems so far away, in fact seem eerily familiar in late-2008.  Scary.


President Roosevelt had been the governor of New York State, elected in 1928 to his first term (and re-elected two years later).  As chief executive of the nation’s most populous state, he had dealt with the spiraling down of the US and state economies following the dramatic October 1929 stock market crash.


President-elect Roosevelt brought a portfolio of government service to the White House:  He was an assistant secretary of the Navy during WWI; he was elected to the state senate; and then to the governorship. From all the voluminous records compiled about the Roosevelt years, he didn’t come to Washington with a complete, well thought out plan about dealing with the desperate years of the Great Depression.  He did bring a cadre of trusted aides – the famed “Brain Trust” – from New York.


Following WWI, the American nation embarked an era of good times and plenty (of everything); the Florida land boom created a frenzy of margin buying (of real estate) and speculation, which ended badly with two devastating hurricanes.  A series of Republican presidents had the good fortune to serve in what popular columnist Westbrook Pegler called “The Wonderful Era of Nonsense” – created in large part by media hype, mass advertising, movies, and characterized by often irrational exuberancein sports, business, finance, government – sound vaguely familiar yet?


It was the misfortune of an esteemed personality – Herbert Hoover, a mining engineer who helped save millions of souls from starvation in war-ravaged Europe and then served as secretary of commerce – to be elected president in November 1928.  Speculation in the stock market was nearing its frenzied peak.  Millions of Americans from all walks of life were going nuts over stocks, and too many were buying on margin, only 10% down.  Shoe shine men were famously giving stock market advice to customers on Wall Street. Thousands of people came to gawk at the New York Stock Exchange and the Morgan Bank across the street.  Hundreds of millions of dollars’ were wagered by the Common Man (and a good number of women) on stocks.


In a burst of collective irresponsibility, Wall Street served up a smorgasbord of financial offerings for unwary, overeager buyers — including “trusts” (investment pools) similar in ways to the collateralized debt instruments of 2007-2008.  And then…it began to seriously unravel. Even heroic measures by Wall Street bankers could not stop the sickening downward spiral of the stock markets.  CRASH! – October 29, 1929.  Margins were called, customer accounts cashed in by brokers, and fortunes (on paper) wiped out — and it would take decades for the market to recover.  So ended the “New Era of Prosperity.”  It would take many years for investor trust to be rebuilt.


Enter FDR: We view him as the Accountable President. Elected in November 1932, he offered the American people…Hope!  As he said in his inaugural address… “This great nation will endure as it has endured, will revive and will prosper…let me assert my firm belief that the only thing we have to fear is fear itself…”  And with these words he began his mission of hope that would lift the United States out of the Great Depression and into the world’s stage as the leader of nations.


President-elect Obama could be well-served by some elements of the Roosevelt Model of Governance and National Resuscitation.  FDR spoke directly and candidly (well, most of the time) about the conditions in the country, about the economy, about threats the US faced from overseas fascist enemies, and the need for sacrifice, and the common good, and what needed to be done to revive the people’s hopes and finances.  While often politically manipulative, he viewed the presidency as an important trust, and himself as a servant of the people.


In the beginning, contrary to right-wing claims of his envisioning a socialist agenda, President Roosevelt mostly used existing federal dollars to put people to work.  He adopted Keynesian economics (named for economist John Maynard Keynes), which despite being criticized in later decades by opponents, remains part of the financial and monetary framework of this country. (See the federal stimulus checks distributed earlier this year; see the flow of money to leading banks from the Treasury, etc.).


A note on the famous “100 days” of 1933:  In those years the US Congress was sworn in right after January 1st; the president, in March.  The congress had met, diddled around with the financial calamity and went home.  FDR called them back, and promised they could go home before the muggy heat of summer engulfed the capital city.  So was birthed the 100-day rush to adopt strong measures.  It doesn’t look like our new president will be following that example, based on his election night address. This recovery will take some time, he advised.


There is much more to say about the heroic (and often controversial) policies of President Franklin Roosevelt.  This much we know:  He saved capitalism as we know it; he created a much bigger government than the nation had ever known; and later, he led the Allies’ effort in WWII to save the world from fascism – and to spread democracy to many nations.  The world as we have known it was in large measure created by the forces put in play by President Roosevelt.


On balance, a pretty good model.  Especially if some of the conditions our 32nd president faced in the grim economy days of the 1930s will be present in 2009.  Read on, Obama advisors!


What drama we’ve been witness to, unfolding over the past year-and-a-half, when the first candidacies were announced by aspiring presidential hopefuls in both major political parties – remember Romney and Edwards and Huckabee and Clinton, et al?  In the end it came down to the two powerful, tireless campaigners who carried their parties’ banner through Election Day 2008.  Congratulations to the great Americans, John McCain and his running mate, Governor Sarah Palin; and to Senators Barack Obama and Joseph Biden.


The American People are fortunate indeed to have the choice of their dedicated public services.  Well done, all!


And now we’ve made history – the first person of color in the 200+ years of electing our presidents will now ascend to the Oval Office in January 2009.  Good for us!  As a People we have now overcome centuries of outright or indirect prejudice and put racial considerations aside in selecting our next Chief Executive Officer and Commander-in-Chief, Barack Obama.  What a long, long journey to this moment.


All Americans should be very proud of this moment.  We have begun, with this election, to put aside personal prejudices of various kinds to address the critical issues we face as a nation. And with Senator Obama’s election, we can begin to regain the prestige we enjoyed in the world before our unilateral military adventures in some parts of the world.


This has been a long journey for significant numbers of our people. In 1619 the first slaves from Africa came ashore to work under the whip in the Virginia colony plantations.  It would be almost 250 years before the United States eliminated the last of the despised system of enslaving human beings.  (And it took a disastrous war between northern and southern states to finally settle the issue of slavery – an awful and permanent stain on the American nation.) Another century would pass before the federal government’s full force was finally put behind equal rights for all – including the precious right to vote (with the 1964 Civil Rights legislation and the 1965 Voting Rights Act).


Who could have imagined that in only another four decades a man of African-American descent would be decisively elected president of these United States!  It was less than 50 years ago when we were deciding whether a Roman Catholic could serve both the nation and his religion.  (We have written here that Senator Obama was a multi-racial candidate, breaking the long list of all-white previous presidential candidates, fitting for the increasingly multi-racial makeup of the US.)


Senator Barack Obama’s path to the top was in large measure due to his intellect, his personal character, organizational skills (running one of the best campaigns in modern history), his personal charm, appeal to voters on issues of importance to many, and other factors.


The path he traveled was along the footsteps laid down by tens of millions of Americans of color who lived over the past (almost) 400 years, since the first arrivees came across the dreaded Middle Passage.  The descendants of African-Americas would serve in the military, work in the manufacturing plants of Motor City (Detroit), work the land as freed farmers, become civil servants, save the lives of others as healers, and some would be elected to the US Senate and House of Representatives.  Recently, two people of color would be US Secretaries of State.


Senator Obama’s path was made easier by the courageous work of the Rev. Dr. Martin Luther King, Jr. and the work of many heroic white men and women – the Freedom Riders of the 1960s, who worked to bring voting rights to those left out of the electorate in the southern states.  Some of those states helped to put President-elect Obama over the top – including Florida and Virginia (Home of the Confederacy!).


America itself is a long and continuing journey to being color blind – as well as religious, ethnic, nationality, and gender blind.  While we may still have a ways to go, this Election Day 2008 throughout this great land showed the world how far we have come.


When the tiny band of the Early Pilgrims came ashore in the early 1600s, they were seeking freedom to worship as they saw fit and pursue a new kind of life in a new land.


The leaders reached back to biblical times to characterize the “New Jerusalem.”  It would be the Shining City on a Hill. That vision has persisted through all the years of the American Experience. It was validated by tens of millions of American voters yesterday.


The America that many of the rest of the world admired for its most appealing characteristics can be again the Shining City on a Hill.  This writer is very proud today of this nation and the American People.


Now let us come together and live the vision that we can all be proud of.

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Contents - By Governance & Accountability Institute, Inc 2007 - Please credit author and Accountability-Central.com if you use this content.