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I had dinner last night with one of the most important conservative media voices in America and some of his friends. I had gone to the dinner expecting some fireworks, but was totally caught off guard by his charm and what he had to say.

First, he was disgusted by “the pygmies” in the Republican Presidential Race. As much as he dislikes Obama, there was not a one of the current Republican candidates that he could be enthusiastic about.

Second, we found ourselves in agreement that the issue of Crony Capitalism is perhaps the most pernicious threat to our Republic. Crony Capitalism distorts everything from Crop subsidies flowing to agribusiness to our inability to cancel useless Pentagon weapon systems. And the disease effects both political parties.

As the evening progressed I kept trying to move us beyond the Left-Right dialectic we are trapped in and to suggest that we might find some common ground in the liberal principles that are the basis for our Republic:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

Now the word “liberal” is seen as poisonous to conservatives, but it’s origins in John Locke’s Natural Rights theory were the basis for our revolution. Read more…

Apple Store-Shanghai

I have been known to make occasional predictions about our economy, and this quiet time between Christmas and New Years leads me to venture once again into these waters.

In general I feel that the incessant Chicken Little “sky is falling” rhetoric coming out of the media is creating opportunities in the American stock market. When Apple is selling at a P/E of 14 and I can buy Chevron at a P/E of 8 with a 3% yield, good quality companies are selling cheaper than I can remember. Europe may have a financial crisis, but remember after 2008 the ECB did relatively little to shore up their banks. The stress tests were pathetic compared to the ones forced on the U.S. banks. Germany and France are rich enough to fix this problem and since they have both benefited from the Euro, I doubt they will let it crash. The temporary problems of European banks does however provide an opportunity for U.S. Multinationals to raise their game. Procter and Gamble competes with Unilever all over the world to sell shampoo and detergent. Unilever depends on European banks for lines of credit and my guess is that P & G’s cost of capital is cheap compared to Unilever.

Speaking of cost of capital. Despite the hand wringing from Republicans, the U.S. Treasury’s cost of capital is at an all time low. What does that tell you? That the rest of the world sees the U.S. as the best bet for the future. Part of this Republican meme about the “decline of America” is based on 19th Century notions of measuring trade. In David Ricardo’s time, the fact that England was a manufacturing powerhouse that exported to high value goods to Portugal and Portugal was a rural country that exported wine to England gave them each a comparative advantage in their sector. But when Apple assembles an I Pad in China and imports it into the United States it adds $500 to our trade deficit. But where is the great value captured in the product? By Apple shareholders, because the Chinese labor component is a tiny fraction of the selling cost? So traditional economics is totally distorting our real strength in the world economy.

This is not to say that there isn’t a job crisis in America as our less educated workers are caught in a global labor price arbitrage with Korean and Chinese workers. But this too will sort itself out in the next ten years as huge numbers of Baby Boomers retire. Even now, many companies are trying to hold on to Boomers with hard to replace skills past their retirement age. I’m well aware that there are a few Thirty-somethings who troll this blog that are totally frightened that they will never live as well as their parents. It is kind of pathetic because rather than adopting the obvious solutions to shore up their retirement prospects like removing the cap on Medicare and Social Security payroll deductions on high earners and drastically cutting back the defense budget, they are trying to start a generational war by scapegoating my generation and stealing their pensions.

I try to teach my students that one of America’s great understandings is the link between art and science. Hold up your I Phone and you intuitively get that. I’m pretty confident we can continue to excel as long as we somehow get our politics straightened out. That of course will be the task in front of us for 2012.

The first post of this blog was exactly four years ago. It’s been a long strange journey and yet I’m struck by how much I feel the same mixture of hope and foreboding. As to hope, I am still struck by the creativity of my family and close colleagues. I am still in awe of a few artists who seem to be able to make music or films with a passionate commitment to truth and beauty. And despite the disappointments, I still have an essential faith in the humanity and intelligence of Barack Obama. And the foreboding that I felt four years ago, before the Great Recession had struck, still is in place.

And then you ask–so where does the aforementioned dread come from? It comes from a sense of profound economic peril. We have lived as a country off the rich inheritance of past generations and now the party may be coming to a close.

This has been a revolutionary year. Some would compare it to 1848, 1917 or 1968. Look at the Pictures of the year as organized by the New York Times and you can’t ignore the interregnum upheaval we are experiencing. I chose the photo of the young Egyptian revolutionaries at their computers as the quintessential image of “the old is dying and the new is struggling to be borne” that defines the Interregnum. These kids give me hope and I was struck by the words of their young Russian counterpart, Aleksei Navalny at the massive anti-Putin rally in Moscow yesterday.

“Where is this man?” Mr. Navalny asked. “Can you see him? Is he here?”

He added: “These days, with the help of the zombie-box, they are trying to prove to us that they are big and scary beasts. But we know who they are. Little sneaky jackals! Is that right?” The crowd roared. “Is that true or not?” Another roar.

Of course we have our own battles with the forces that control “the zombie-box” in America. For all our idealistic belief in the liberating power of the Internet, most of our citizens still get their information from television–Fox News, CBS, ABC and NBC. And of course there is the large minority that gets no news at all, but rather sits like Mr. Navalny’s zombies zoned out on the fake spectacle of Wrestling or the lives of the Kardashians. Near the end of a presidential campaign all the advertising goes to reach these zombies–people who for some reason in late October of a Presidential race have been paying so little attention that they are still “undecided”. WTF! These cretins get to decide a close political race?

And you can bank on it that Karl Rove’s $500 Million Super Pac will have some killer ads to wake these moron’s out of their stupor just long enough to get them outraged enough to drag their sorry asses to the polls on the first Tuesday in November. Somehow, I can guarantee you that Obama will be painted as “un-American” and the Know-Nothings will drink a couple of Red Bulls and be driven to the polls to pull the lever of Democracy.

So let’s hope we can be inspired by the young activists in Cairo, Moscow, Damascus, New York, Oakland and all the points around the globe where citizens are trying to make the word “democracy” have some meaning. For me, that means going back to Localism. Trying to make Los Angeles the most livable, just, optimistic and creative city on the planet.

Merry Christmas and Happy Holidays,

JT

Bernard Marcus

Our some time correspondent, Tennessee William Shakespeare sent me a link and I wrote a friend who used to work for Bloomberg News to ask if this story, written by one Max Abelson for Bloomberg Business Week was tongue in cheek. He replied no, it was totally serious.

Dimon, 55, whose 2010 compensation was $23 million, joined billionaires including hedge-fund manager John Paulson and Home Depot Inc. co-founder Bernard Marcus in using speeches, open letters and television appearances to defend themselves and the richest 1 percent of the population targeted by Occupy Wall Street demonstrators.

If successful businesspeople don’t go public to share their stories and talk about their troubles, “they deserve what they’re going to get,” said Marcus, 82, a founding member of Job Creators Alliance, a Dallas-based nonprofit that develops talking points and op-ed pieces aimed at “shaping the national agenda,” according to the group’s website. He said he isn’t worried that speaking out might make him a target of protesters.

“Who gives a crap about some imbecile?” Marcus said. “Are you kidding me?”

I want a reality show where the Billionaires come on every day and talk about their troubles. It could be like the old TV show “Queen for a Day”. The 1 Percenter with the biggest sob story wins a brand new dishwasher.

Two years ago Citizens United financed a documentary by Newt & Callista Gingrich called America at Risk. It was the typical Gingrich over the top Global War on Islam screed and par for the course for the production company most famous for the Supreme Court decision that unleashed unlimited corporate funds into the 2012 election cycle.

So what a delicious irony that Newt’s campaign has been brought to earth by the very force of Citizens United and the Super Pacs it spawned which are dumping endless negative ads on Gingrich.

The involvement of such groups can be especially damaging for candidates like Mr. Gingrich who have not raised enough money to be able to counter negative attacks with an advertising blitz of their own. Nor does Mr. Gingrich have a well-financed super PAC working on his behalf.

“The problem is the super PACs come in and spend $1 million a week blasting a candidate,” said Tim Albrecht, a senior aide to Gov. Terry E. Branstad of Iowa, a Republican. “And Newt has not been able to put an apparatus like that together.”

Live by the sword, die by the sword.

The reports of the death of the Neo-Conservative Movement have been greatly exaggerated. Dick Cheney has become a cheerleader for Newt Gingrich whose sole intention seems to be to continue The Long War ad infinitum. On a day when we finally ended the most disastrous strategy of the Neo-Cons, the Iraq War, Gingrich is doubling down on the next war–In Iran.

He painted a chain of events in which an Israeli prime minister asked an American president for help with a conventional military invasion of Iran so that Israel would not have to use its nuclear arsenal to defend itself. Mr. Gingrich implied that he would go along. “What I won’t do is allow Israel to be threatened with another Holocaust,” he said. “This is a not-very-far-down-the-road decision.”

A joint US-Israeli invasion of Iran! Unfuckingbelievable. These people are counting on the collective amnesia of Americans.

The juxtaposition of the Gingrich-Cheney Plan for our future with the New York Times discovery of a cache of Top Secret documents about the Haditha Massacre in Iraq couldn’t have been more poignant .

The stress of combat left some soldiers paralyzed, the testimony shows. Troops, traumatized by the rising violence and feeling constantly under siege, grew increasingly twitchy, killing more and more civilians in accidental encounters. Others became so desensitized and inured to the killing that they fired on Iraqi civilians deliberately while their fellow soldiers snapped pictures, and were court-martialed. The bodies piled up at a time when the war had gone horribly wrong.

As I have said before, this election needs to be fought on two issues: income inequality and cutting the bloated Pentagon and our imperial overreach. Whether President Obama and the Democrats have the guts to fight on those issues will be a test, but strangely enough they might find support among the Ron Paul wing of the Republican party in that fight.

When did it start?

When did America’s mass consensual hallucination begin? When did the boundaries between truth and fiction dissolve?

Consider the evidence.

I awoke this morning to read that a candidate for the Presidency (Newt Gingrich) believes we should launch a preemptive nuclear strike on North Korea and Iran because he fears they are about to launch a nuclear missle to be “detonated in outer space high above the American heartland, (which) would set off a huge and crippling shockwave of electricity. Mr. Gingrich warns that it would fry electrical circuits from coast to coast, knocking out computers, electrical power and cellphones. Everything from cars to hospitals would be knocked out. “Millions would die in the first week alone,” he wrote in the foreword to a science-fiction thriller published in 2009 that describes an imaginary EMP attack on the United States. Most scientists regard this as the ravings of a paranoid lunatic even if these two pygmy powers had such a rocket, and yet this man could seriously be the Republican nominee for the President of the United States. This is like Ron Hubbard running for President on the Scientology ticket. Read more…

I’m ready to wager that when the campaign of 2012 is all over, President Obama’s speech yesterday in Osawatomie, Kansas will be seen as the turning point that led to his victory in November 2012. Readers of this blog know that I have long cited Teddy Roosevelt’s Progressive Movement (outlined in his own speech at Osawatomie 101 years ago) as one of the high water marks in American politics. The great historian Richard Hofstadter noted that the progressive reform movement “was the effort to restore a type of economic individualism and political democracy that was widely believed to have existed earlier in America and to have been destroyed by the great corporation and the corrupt political machine.” That of course is the effort that we must undertake today.

My first request is that you read the whole speech. It is one of the finest examples of progressive political oratory in my lifetime. It is part history lesson and part economics seminar. Read more…

I think things are beginning to turn towards the Democrats. Even though Newt Gingrich is dismissive of the Occupy Movement, it has already changed the political conversation for 2012.

But politically, Democrats believe that they have already won this latest skirmish in the message wars. And some exasperated Republicans acknowledge that they are losing the exchange; party leaders have worked this week to bring the rank and file in line behind the tax cut.

Democrats have concluded from the payroll tax debate that Republicans are vulnerable over their opposition to any new taxes on the wealthy in a way they were not when Democrats proposed such taxes for deficit reduction. So they have reprised an old message — that Democrats fight for the middle class, Republicans for the rich — and are likely to sound it through 2012, in hopes of blunting the headwinds they face as unemployment remains high.

“Tonight, Senate Republicans chose to raise taxes on nearly 160 million hard-working Americans because they refused to ask a few hundred thousand millionaires and billionaires to pay their fair share,” Mr. Obama said in a statement after the first Senate vote.

You add to this the possibility that the first big wave of Baby Boomer retirements and an improving employment picture might drop the unemployment rate below the 8% level by next summer. We have talked here about the fact that America is no longer a hard goods export economy. This may ironically be an advantage in the next couple of years as Europe struggles and China sees it’s largest export market pull back its purchases. Even more reason for us to concentrate on the American Redoubt.

Which leaves us with the question of Obama’s opponent. Clearly Cain is in free-fall and should be out of the race by Monday. He was a construct of the Koch Brothers and Fox News—a proxy to debunk the notion that the Tea party was a bunch of racist know-nothings. Anthea Butler gave him the “Lawn Jockey of the Year Award”, but now that Cain has served his purpose, Rupert and the Koch’s will drop him like a hot potato.

That seems to leave us with Gingrich and Romney. Some of my die hard Republican friends hold out the hope that these two will fight to a draw over the coming months, with neither of them having enough delegates to lock up the convention on the first ballot. This fantasy then leads to an old fashioned brokered convention where Chris Christie or Mitch Daniels emerges from a brokered convention. Shades of Mark Hanna and the Gilded Age of the Republican Oligarchs. How fitting for these times. Personally I think this is pure fantasy. As the recent Ron Paul Ad shows, Gingrich is such a hypocrite, he could not survive a Presidential Race. However, Conservatives are so wary of Romney that they may overlook Gingrich’s truckload of baggage. What Josh Marshall calls “the Murdoch Primary” is clearly being won by Gingrich, now that they have thrown Cain under the bus. There is a good case to be made that Gingrich could win both Iowa and South Carolina, thereby blunting Romney’s inevitability pitch.

All this must bring a smile to the President.