Paul Krugman is predicting another Depression because governments are refusing to keep pumping more money into the economies of Europe and the United States. He has written that the mistake of 1938 is being repeated. At that time, Franklin Roosevelt listened to the deficit hawks and cut back on federal subsidies meant to create jobs and fuel the economy. The economy tanked and the New Deal hit a brick wall.
After an $800 billion stimulus package spearheaded by President Obama and a Democratic Congress, job creation is stalled and deficits are ballooning. Republicans smell blood as the November elections approach. Political will has softened among moderate Democrats for more government spending to spur employment and growth. A large cadre of first term Democrats in Congress were elected in conservative districts fed up with George Bush and failing Republican policies.
But now Obama is the incumbent and his policies have become the target of an increasingly agitated American electorate. Wall Street’s collapse has left average citizens with a bitter taste in their mouths. The detritus is strewn throughout middle America. Millions of soured mortgages, confiscated homes, failed businesses and lost jobs remain as financial titans responsible for the carnage are nursed back to health with taxpayer subsidies. Polls show decisive majorities for shrinking government rather than embracing the pump priming policies of John Maynard Keynes that were the Democratic formula for the New Deal, Fair Deal, New Frontier and the Great Society. Read More »
After a brief respite, I’m back. I intend to periodically record my thoughts on matters of public interest. My column in Bay Area Media News papers has run the agreed upon three years and now I will record my thoughts for a vastly reduced readership. No matter. I learned a powerful lesson from having a deadline every Tuesday. The benefits to self from writing – apart from whether or not anyone ever reads your content – are awesome.
When I was a student, my seminary English professor made us write a daily essay. I remember the grueling nights spent dissecting Shakespeare’s poetry. But the forced regimen, learned long ago, to condense ideas into one clear message, has served me well throughout the rest of my life. Also, there is a certain value in the simple discipline of articulating your own thoughts and impressions only to yourself. We sometimes don’t know what we think until we reflect and organize our precise thinking.
But writers write to be read. So let us begin… Read More »
A few months ago, I devoted a column to the impending opening of my restaurant, Credo, at 360 Pine Street in the heart of downtown San Francisco. I recounted the doom-and-gloomers and naysayers who scoffed at me. They predicted falling sky.
Today, Credo is open and serving more than 1,000 diners per week.
For our March launch party, we squeezed more than 400 friends into Credo’s 75-seat ground floor dining room. The original skeptic, my wife Janet, opened the night on a humorous note by recounting her initial horrified reaction to my idea.
The famous social justice priest Monsignor Eugene Boyle, now a venerable 88 years old, then blessed the premises.
Our guests enjoyed a short parade of Credo personalities: Mario Maggi, our Milanese executive chef; Tim Felkner, our suave young general manager; Frank Holland, our editor and creative director; and finally my close friend, Lorenzo Petroni.
Lorenzo owns North Beach Restaurant, a renowned destination which is thronged nightly. Who better to help me cut the ribbon?
That was the easy part.
Credo’s grand opening was a lot like some of my experiences as a political consultant.
The campaign launch always turned out to be irrelevant to the final outcome of the election. I usually forgot the details of the announcement by the time the election rolled around; the rough and tumble of the actual campaign quickly replaced the ceremonial perfection of opening day. Read More »
Change is supposed to be difficult. Major progress – like reforming a country’s education system or achieving universal health care – takes vision, patience and will.
But it’s not supposed to be impossible.
Especially not for the most economically prosperous, militarily powerful and politically advanced country in the world.
Still, here we are.
Nearly 15 months into the Obama presidency – with huge Democratic congressional majorities – we’re still waiting for health care reform. Our corrupt and broken banking system remains unaddressed. A climate bill? Please.
These are just a few of the big problems now confronting us. Dig a little deeper and you’ll find a rapidly deteriorating education system, a fragmented immigration policy, the looming insolvency of Social Security, and the absence of a rational plan for energy independence.
Conservatives implore the president to slow down, that “America” doesn’t want big change. They throw sand in the gears of government. So, nothing happens at all.
It’s no wonder that a recent poll showed that 86% of Americans believe our system of government is broken. Time and again we have proven incapable of addressing major national concerns without the boot of acute crisis bearing down on our necks. Read More »
I recently attended a small party with President Obama’s deputy chief of staff, Jim Messina. Messina – a Huck Finn type originally from the office of Montana Senator Max Baucus – treated us to a Pollyannaish assessment of Obama’s first year.
According to Messina, White House Chief of Staff Rahm Emanuel is the smartest political brain in America and Obama is the greatest political communicator of his generation.
That’s where I started to tune out. My BS periscope surfaces whenever I hear these superlatives used to describe politicians. After a lifetime in the game, I’ve learned that genius labels should be reserved for Nobel Prize winning scientists and mathematicians.
Why am I so skeptical? Maybe it’s because our “genius” political class so often drums out rational, intelligent voices of dissent.
Take the case of Brooksley Born.
You could be forgiven for not knowing the former Commodity Futures Trading Commission Chair. But last week’s powerful PBS Frontline story about Born should be must-see TV for all Americans.
Let’s put it this way: If former Fed Chairman Alan Greenspan, former Treasury Secretary Robert Rubin and Assistant Treasury Secretary Lawrence Summers had heeded Born’s warnings, we might have averted the worst financial crisis since the Great Depression, saved taxpayers $12 trillion in bailouts and averted the loss of millions of jobs. Read More »
American banks love to affect a false pose of solidity and enduring strength. That’s why so much bank architecture mimics the classical columns of ancient Greece.
But the American financial system today is in ruins – much like the Parthenon.
So, how can it be that more than a year after the ignominious collapse of our financial system, banking reform still languishes in Congress?
A just-published book by former Treasury Secretary Henry Paulson – who wrote the trillion dollar checks – contends that taxpayers stand to make a profit on the bank bailouts.
Paulson’s conjecture is laughable in light of the more than $11 trillion of taxpayer infusions and guarantees committed to staunching our hemorrhaging financial system and stabilizing our economy. Even if it had a grain of truth, it still wouldn’t change history: the unprecedented intervention, the ruined personal wealth, the mass unemployment and our shattered economy.
President Obama has proposed a Consumer Financial Protection Agency to oversee credit cards and mortgages. Mega-money hedge funds would be required to register with the SEC. A Financial Services Oversight Council would target and regulate banks and financial firms too big to fail. A National Bank Supervisor would scrutinize problem banks. He even proposes a tax on banks to repay the government and the end of proprietary securities trading with depositors’ money.
Of course, the banking lobby is shamelessly resisting regulation the way car companies once smeared seat belts. Read More »
“I thought you were a smart businessman,” an astonished colleague exclaimed when he heard I was opening a restaurant. “Even my wife Janet looked at me quizzically and said, “You’re opening a what?!”
I had heard the horror stories all before. “Restaurants don’t make money” is ensconced in the pantheon of aphorisms right next to “Money doesn’t grow on trees.”
When I began to tell friends and associates last year that I planned to open an eatery in San Francisco, they practically organized an intervention to deter me.
Coming as it did while the country was plunging headlong into a financial catastrophe, my urban trattoria concept wasn’t wildly embraced.
I countered skeptics with the example of my good friend, Lorenzo Petroni, who began his career as a waiter upon his arrival from Lucca and who now presided over a small empire from his North Beach Restaurant in San Francisco. I also cited the legendary Sirio Maccioni, whose famous restaurant Le Cirque has become an internationally recognized brand.
“But you’re Irish,” folks admonished me while shooting winks at nearby associates.
Nevertheless, I forged ahead with little more than a name: “Credo,” the Latin word for “I believe.” Catholics recognize Credo as the prayer of the mass which enunciates the tenets of the Catholic faith. But this creed is followed immediately by prayers to God for help in daily life.
Let’s just say that I’ve done my share of praying for Credo to get off the ground. Read More »
Why are these fortresses under attack?
Formerly impregnable bulwarks of our society – banks and car companies, churches, governments and newspapers – are facing convulsive challenges, wrenching change or extinction.
The printed word, long a building block of our democracy, is passing away in many communities, taking with it the local columnist and the blistering editorial. Many young people no longer find newspapers relevant to their lives.
California’s democratic government has hit the wall. The ever-widening gulf between rising expectations and shrinking pocketbooks has caused Sacramento to grind to a halt. Apparent needs have far outpaced the willingness of citizens to foot the bill. But that’s only part of the problem. The legislature seems increasingly unable to solve problems. Special interest money calls the shots.
Unbridled capitalism has fewer worshipers today than 20 years ago. And Ronald Reagan, the standard bearer of capitalism’s triumph, is a much-diminished figure after his hands-off policies toward the free market nearly ended in global bankruptcy.
“What’s good for General Motors is good for America,” now seems more like an Andy Warhol screen print than a paean to quality. The Republican Party no longer has a message that resonates. Home ownership is a questionable aspiration. The stock market is a casino. The line between borrowing and binging, success and excess, just rewards and greed has closed. The Greek columns that symbolize banks’ timeless stability are now just reminders of false promises made upon rotten foundations.
The church pews are thinning. A clergy shortage continues to pose challenges. A child abuse scandal rocks the Catholic Church. Vigorous debate over such controversial issues as contraception, abortion, gay marriage, married clergy and the ordination of women have wracked Catholicism and Anglicanism on both sides of the Atlantic. Fundamentalist Christians face off in a culture war against “godless elites.”
Our crumbling institutions suffer from many of the same ailments. Read More »
Now that the Dow Jones Industrial Average is creeping up, so is my skepticism. I don’t know about you, but I’m tired of the stock market dictating public policy in our country.
When the Dow doesn’t like what it hears from President Barack Obama, Congress or Treasury Secretary Timothy Geithner, it falls down like a baby in a snit. When it hears something positive, it’s a hippie high on marijuana.
I’m sure the following imaginary announcement would precipitate a 1,000-point drop:
“Consumers have decided to pay off their debts. They are eschewing the mall and spending more time at home playing Monopoly and riding bikes. The car is in the garage to conserve energy.
“Buyers have gone on a national spending strike to repair their personal balance sheets and save for their kids’ college tuition. And guess what? After seeing their life savings evaporate in the stock market, people on Main Street are tucking their money under the mattress.”
Such thrift would terrify the Dow. Read More »
During his presidential campaign, John McCain said he would appoint Greenspan to lead a review of the nation’s tax code: “If he’s alive or dead it doesn’t matter. If he’s dead, just prop him up and put some dark glasses on him.”
Even as it became obvious that the real estate bubble presented a growing danger in 2006, BusinessWeek magazine heaped on the praise: “Concise when it suited him and artfully opaque when it didn’t, his prescience, record and stewardship of the Federal Reserve make him a hard act to follow.”
But that was all before it became apparent that Greenspan’s easy credit policies were only sustaining artificial growth fueled by second mortgages and credit cards rather than higher wages and better jobs.
History sometimes shreds the proudest of reputations. Read More »
Last week, I told the sad story of the death of Mervyn’s.
I recounted my childhood memories of the first Mervyn’s store in San Lorenzo, and how that single store eventually grew to nearly 300 across 12 states with $4.5 billion in annual sales, only to be brought to its knees by corporate greed.
I received dozens of thoughtful messages from folks who came from families like my own and who wished to share their own fond memories of Mervyn’s.
The unnecessary demise of this Bay Area retailing icon evoked deep emotions. It was more like the death of a person than the passing of a department store chain.
“I remember many times when my children gathered their allowance to purchase Hot Wheels or a Barbie outfit,” wrote one parent.
Another reader recalled a time when “credit” was more personal: “When I was about eight years old, my mother would give me a note saying it was OK to charge a new shirt or a pair of shoes at Mervyn’s.
“Mr. Mervin Morris would check our account on a 3×5 card and I would soon be on my way with my purchase.”
One mother’s story showed how Mervyn’s remained true to its community roots through the years. “Our family will never forget the “Local Hero” scholarship that Mervyn’s gave our daughter,” she wrote. “It was a company that understood and honored the need to give back to its community.” Read More »
The death of a business rarely evokes emotion these days. “Good riddance” is a frequent reaction. “Don’t let the door hit your fanny on the way out,” is another popular refrain.
But when Mervyn’s – a Bay Area retail institution – declared bankruptcy in July and announced a liquidation sale on October 15, many were saddened.
Of course, the company has been hurt by the same stormy economic picture that all retailers are now facing. But Mervyn’s is also an example of how unscrupulous financial engineers loot good companies and abandon them to be picked over by buzzards as they roll over and die.
When I was a young boy in the 1950s, my family lived in Washington Manor – a small enclave of postwar homes near San Lorenzo’s Arroyo High School.
I can still remember the day my mother took me to Mervyn’s in the San Lorenzo Village Shopping Center to purchase my first pair of black-and-white Converse high tops. It was the first of many trips to the friendly local department store during my childhood.
Mervin Morris began in 1949 with this single store in San Lorenzo and built it into a chain he ultimately sold in 1977 to Dayton Hudson, (now the Target Corporation, one of the nation’s iconic retail brands).
Opening branches from Hayward to Daly City, Walnut Creek to San Jose, and from Vallejo to Marin, Morris developed the prototype of the modern department store chain serving working class families. Read More »
When more than 75 percent of Americans believe their country is on the wrong track, the pent-up frustration is like a geyser ready to blow.
This presidential election could be the catalyst for angry voters to lash out at everything “big” – banks, Wall Street, special interests, lobbyists, oil companies and other corporations, not to mention a costly and ineffective federal government.
Americans have rebelled against “big” before. During the Progressive Era of the early 20th century, the country rolled back the excesses of unrestrained corporate power.
March, 2008 will go down in history as a turning point in finance. The delusion of deregulated financial markets has been exposed.
For decades, the titans of Wall Street have demonized government regulation meant to protect the public interest and the integrity of our financial system. They framed their case against intervention as “innovative public policy.” But as the financial giants have crumbled, their argument has been revealed as a mere tactic to avoid scrutiny of their unsavory and imprudent practices.
Martin Wolf, writing in the Financial Times of London, describes the current crisis in stark terms: “Remember Friday March 14, 2008,” he writes. “It was the day the dream of global free market capitalism died.”
In recent weeks, the Federal Reserve has been forced to bail out Bear Stearns, guarantee tens of billions of the firm’s losses and loan hundreds of billions to big banks and Wall Street investment firms in order to prevent the collapse of both the domestic and global financial systems.
Breaking a barrier that had never before been broken, the Federal Reserve used the taxpayers’ credit and dollars to save Wall Street from imploding. Read More »
Are the barons of high finance ever called to account for their avarice, or for the billions squandered by their schemes?
A culture has evolved which allows the corporate executives of public companies to achieve monumental pay packages without investing a dime of their own money. I recently talked to the 45-year-old retired CFO of a famous Silicon Valley company who justified his $250 million stock package by saying that he had worked six days a week for five years. I thought of my father, who worked six- and seven-day weeks for 40 years as a deliveryman for Berkeley Farms and Dreyer’s Ice Cream.
Business leaders are portrayed as omnipotent gurus who blame the ills of society on a recalcitrant government bureaucracy and a self-dealing political class. The myth of the meritocracy of financial genius is perpetuated by horserace coverage of wealth, such as the Forbes 400 list. Here the accumulation of money is more than lauded; it is mythologized. Success has become so equated with money that critical professions such as teaching, journalism, medicine, public health and government service, which require a spirit of sacrifice, are made to seem less important than pure capitalistic endeavors.
But current events are challenging the myth of the omnipotent businessman. Read More »