Friday, October 5, 2012

Take Monday Off - Columbus Day

Even if you don't like Mitt Romney, here is a good explanation of why to vote for him anyway.  I took this from a Yahoo e-mail group 

Good morning, Star Troopers, and welcome to one of the more puzzling holidays on our nation’s calendar.  Although I guess we have to give Christopher Columbus his props for having the b.s., not to mention the ‘nads, to talk a bunch of his buddies into getting in three of those little rickety ships and sail half-way around the world without really knowing where they were going, kind of like Miller at Grand Lake but without benefit of beer, you really can’t get too excited about the guy considering that when he finally got here he treated the natives like he owned the place.  Maybe that’s where it started – the thought that as Americans we’re pretty much right most of the time.  At any rate, I suppose taking a day off to celebrate the guy is as good an excuse for a day off as any.

Speaking of one thing that we definitely get right, it’s elections.  In case you’ve been living in your office hustling or underwriting or funding or selling or shipping or insuring loans 24 hours a day for the past couple of months, we have a presidential election coming up here in a few weeks, which makes it one of, if not THE, most important dates on our national calendar, and perhaps the event of which, as Americans, we can be most proud.  Think most people around the world wouldn’t like to have a say in who runs the show?  

I know you’ve likely heard about both presidential candidates’ attributes and shortcomings, what the talking heads on TV and radio prognosticate that each would do if elected, and how the country will work or maybe not. For those of you who have already made up your minds on who to support, congratulations and go ahead and take Monday off.  But if you haven’t yet decided, because it’s so important a decision I’d like to share my views briefly. This is not an invitation for a debate, it’s just my opinion so nobody needs to get your shorts in a knot and start firing off rebuttals.

I’ll admit I don’t know much, but I’ve been around long enough to know a couple of truths: 1) In a pragmatic (as opposed to idealistic) sense, America is America principally because of its economic greatness and our economy works because of the free market structure that allows it to work.  Simply put, we can’t do the stuff we do (defense, welfare relief, infrastructure enhancements, foreign aid, etc.) without first being financially sound.  When our economy is curtailed or a perception of uncertainty prevails, we’re all adversely affected.  One has to look no further than the unemployment rate (which, in reality, persistently remains close to 11%, not the white-washed version which is published as 8% and change), or the obscenely large and impossible-to-sustain national debt to recognize that we are, and have been for a time now, struggling economically.  While the economy is a discussion in and of itself, in my view the principal reason that we’re going through the slowest recovery on record after a recession is because under the current Administration we experienced a significant change in our regulatory approach to national economic matters, particularly when the activity provides the fuel which runs the economy, financial services. 

Historically, our economy has grown and shrunk based essentially on market demand for goods and services, both domestically and internationally, with many of the activities that fueled the markets, like financial services, being regulated by the federal government, and rightfully so.  Under our current President’s direction, however, instead of simply regulating the activity and allowing the market to decide winners and losers, the Administration sees it as their responsibility to undertake an expanded role to dictate to the market participants which activities they may undertake and what those markets should look like.  One needs to look no further than our own industry, in which the overseers seek to tell the market participants what types of loans we can and can’t originate, and who and how those market participants can get compensated for that activity. 

This is dramatically different than simply regulating a free market activity.  If you’d like a second, and even more dramatic example, under the current Administration the federal government actually NATIONALIZED the entire student loan industry, taking away from private lenders and banks an activity that had historically been a market activity.  So I trust you can see the difference in approach, and by way of cause and effect, why market participants are so leery of entry and/or expansion.  It really has been an unprecedented change in approach to governing a wide range of activities and, quite frankly, a new level of federal involvement into the private sector. The phrase, “I’m here from the government and I’m here to help you” has never been more ominous.      

2) The president (not this one in particular) doesn’t have all the power that is often attributed to him.  If he did, then the President wouldn’t be president at all, he’d be prime minister, king, whatever.  That said, because the President is the Chief Executive Officer of the United States, he provides tempo, tone, and a general direction that he’d like to pursue, and if he’s good at what he does he has to recognize and understand that he is the starting point for legislative compromise.  He has to be (or at least should be) willing to listen to both sides.  In our current President’s case, while he had control of both houses of Congress, President Obama rammed through the largest tax increase in our country’s history, the National Healthcare Act, and under Dodd- Frank created an agency in the federal government to oversee and control financial services that has no traditional oversight and essentially answers only to the Treasury Department, which is a proxy for the White House.  Both were done against significant and in some areas majority opposition from both the Congress and from the population at large.  The first event was an unprecedented reach into the lives of private citizens, the second created massive uncertainly in the marketplace by stemming the flow of capital where it was needed.     

So I find it kind of disingenuous that he can complain that things aren’t getting done now because he’s not getting any co-operation from Congress.  In fact, if you look at our President’s voting record while he was a Senator, he voted for his party’s position more than 94% of the time, regardless of issue.  That’s probably a good way to get your party’s nomination for President, but doesn’t say much about taking the high road when needed.  Certainly doesn’t seem to be much of a history of willingness to compromise there.  In our business, we use our applicants’ prior acts and actions to try to predict future results, right?  Well, if that’s the test, why would we believe that our current President would behave differently in a second term? 

As I mentioned, the President, whoever he is, has to set the tempo, tone and general direction which, to be effective, needs to include all members of Congress, not just those of his own party.  Our current President has played the divide and conquer game since his election by pitting entire segments of our population against each other.  With him, it goes way beyond a decision made by the “compare and contrast” of ideas.  This might be good politics, but it is just bad management strategy because it’s unsustainable. Is he the only President to have governed in such a way?  Clearly, no.  But he’s the one today we’re being asked to consider supporting.  To be perfectly fair, I’m not sure why we’re surprised by what we’ve seen in the last 4 years.  In reality, in 2008 we elected a man to be the Chief Executive Officer of the United States who had precious little management experience at any level.  It just seemed like a good idea at the time to the majority of American voters. 

But our Founders were pretty damn smart.  In the WWII based movie “Kelly’s Heroes”, Clint Eastwood’s (yes, the one from the Republican Convention) character asks Donald Sutherland’s character who was a tank commander named Oddball why his tank was designed to run backwards as fast as it could forwards.  Oddball says, “Ooh baby, it’s because we like to think we can get out of trouble as fast as we got into it.”  That’s what the Founding Fathers wanted us to be able to do. 

What happened in 2008 was that the majority of America wanted a change in direction.    Quite frankly, I can understand that because I didn’t much like the way the Republicans handled their day in the sun either when they owned three legs of the stool.  But I really don’t like what’s happening today economically speaking, and in my view we should make a similar change as we did in 2008.  We have literally no recovery from a bad recession, persistent and sustained high unemployment, and worst of all a record and massive national debt that’s growing at the fastest pace in our history.  And a President who, in the face of all of this, continues to fail to offer an olive branch in compromise.  It’s still clearly his way or the highway.  Overall, not a very tasty cocktail. 

The candidates have both said this election is about two separate visions and we have a choice.  As flawed a concept as it is, if prior behavior can be used to predict future actions, I believe that Mr. Romney would prove to be a much more effect CEO for the country based on his experiences.  Most likely, under a Romney administration, business activities would be more apt to believe that we would revert to something that resembles a market approach to things, expansion would happen and the government would regulate those activities instead of trying to force markets into something one small group believes they should look like.  And I believe that Mr. Romney, who, based on his record might just be the most left-leaning of all of the Republican national leaders would, at least in my view, do a much better job of “reaching across the aisle” as they say in Washington, to work toward a consensus on issues than President Obama has demonstrated in his almost 4 years on the job.            

At the end of the day, most of the campaign promises that you’re hearing from either candidate are just that: campaign promises, which are designed to make you feel warm and fuzzy.  But we know that the odds of most of these promises turning to reality are worse than playing Pai Gow poker in Vegas.  It’s a question of qualification, and just being experienced in something doesn’t make you the most qualified.  No question that Mr. Romney has the experiences in his background, in both the private and public sectors, which make him the better selection from an economic point of view as the CEO of the country.  And, as I mentioned earlier, America is an economic entity and our strength truly lies in a strong economic model. 

Thus endeth the epistle.  Thank you for your indulgence, and if you haven’t decided who to support, I’d appreciate it if you’d consider Mr. Romney.  OK, either way, you get Monday off anyhow.

Everyone have a great and well deserved long Columbus Day.  That old Chris – he was a character wasn’t he?  

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