Where My Mind has Wandered

"Jawbone" Pledge Continues to Dog lil' Bush

In meetings this week in Saudi Arabia -- with leaders including Saudi oil minister Ali al-Naimi, Saudi Foreign Minister Saud al-Faisal, and King Abdullah -- President Bush failed to win an increase Saudi oil production. The failure, his second this year, once again raised references in news coverage to statements he made during the 2000 campaign about the need to "jawbone" oil producing nations to persuade them to increase production.

Today's ubiquitous AP story contains this reference:

When Bush first ran for president in 2000, he criticized the Clinton administration for high fuel prices and said the president must "jawbone" oil producing nations and persuade them to drop rates. At that time, oil was nearing $28 a barrel — less than a quarter what it is now.

I have not been able to find an actual quote from the 2000 campaign, but a quick search does show many references in coverage over the past several years. In a September 2004 article, entitled "Bush's Top Ten Flip-Flops", CBSNews.com Chief Political Writer David Paul Kuhn places the statement in the first Republican debate in December 1999.

Mr. Bush was critical of Al Gore in the 2000 campaign for being part of “the administration that's been in charge” while the “price of gasoline has gone steadily upward.” In December 1999, in the first Republican primary debate, Mr. Bush said President Clinton “must jawbone OPEC members to lower prices.”

An AP writer cited the "jawbone" quote in 2006 in article covering the Bush Administrations efforts to reach out to countries rich in oil and gas but accused of authoritarian rule and human rights violations. An AP writer used the line again in an April 2005 story covering a pending meeting between Bush and then Crown-Prince Abdullah at his Crawford, Texas ranch.

In April 2004 John Kerry raised the comment and suggested it represented a failure on Bush's part to keep a campaign promise. Not that Kerry thought it wasn't possible; he instead suggested that Bush was soft on the issue much the way Bush claimed Clinton was. Commenting on a meeting between Bush and Saudi Ambassador Prince Bandar bin Sultan in which it was reported the two discussed increasing production to drive down prices prior to the election (something Bandar denied), Kerry said:

"I'm here today to say if there was no deal, if there was no agreement, then stand up today and jawbone OPEC to lower the price. They could up that production tomorrow. We need to have them answer why they won't do that."

Bush's self-confidence in his persuasive abilities was evident throughout the 2000 campaign. New York times political reporter Katharine Q. Seelye's coverage of Bush in 2000 included some more often-quoted statements:

''I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply... Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot... Ours is a nation that helped Kuwait and the Saudis, and you'd think we'd have the capital necessary to convince them to increase the crude supplies."

According to Seelye, these quotes came from June 28, 2000 news conference after a meeting with participants in a private welfare-to-work program. Bush's self-confidence was obviously over-confidence, he has had no success in his efforts to combat high oil prices with an increase in global oil production. As mush as President Carter's time in office is marked by long gas lines, Bush's tenure will be tied with an increase in oil prices from the $28 a barrel price he criticized the Clinton administration for the the $128 a barrel price today.

Productivity, Speculation, and Monetary Policy

One of the theories behind U.S. monetary policy is that if we make money easier to get (low taxes and low interest rates) people will invest in activity that drives productivity. Business will expand, new business will open, more jobs and economic growth will follow. The problem with this theory is that it is not absolute. Investment does flow into productivity, but investment also flows into speculation. The technology and real estate bubbles are perfect examples. Speculation drives false productivity, where the value of assets rose based upon perceived value versus actual productivity.

While Alan Greenspan and Ben Bernanke were driving down interest rates to avoid inflation HGTV was airing The Big Flip eight times a week. Funny how the word "flip" showed up in both the tech and housing bubbles. Here is how HGTV promotes the show:

Our renovators, Paul Peic and Kye Husbands, are taking on the challenge of fixing and flipping as many houses as they can in just 12 months. Or lose their minds and shirts trying. Paul and Kye are experienced entrepreneurs who will try anything once, but neither one of them has ever flipped houses before. They say it's not a problem. They're convinced they have what it takes not only to be successful... but really, really rich. The investment, the sweat equity and any ups or downs are all theirs. Can it be done? They think so.

HGTV's peers were all in the game, with competing shows including Flip this House and Flip that House. There is a big difference between a VC that can afford to spend $500 million on 10 start-ups in hopes that one ends up worth $5 billion and people putting all of their savings into real estate and tech stocks. Most venture capital firms aren't investing with their own money. Investing is what a VC does for a living, and the good VCs bring assets to the companies they invest in that make those companies better.

The investor who overextends to invest in properties in Southern Florida is working in a completely different environment. Let's say he put $1.5 million down to buy 20 properties for an average price of $500,000. That gives him $10 million in mortgage liability and $100,000 a month in mortgage payments. He is investing his own money. No one property is going to "make it big" and suddenly be worth $50 million to offset losses elsewhere. And if he can't cover the mortgage payments he has to start selling off property, regardless of the market conditions. The is a real scenario. I rented a house from someone in exactly this situation. The day after we went home from our vacation in Disney World the bank foreclosed on all of his properties.

This kind of speculation happened across the country in both larger and smaller scales. I don't have an answer; the solution is not obvious. I'm all for lowering taxes and trimming government spend. And I am not against low interest rates. I do think that when you use terms like "irrational exuberance" and "froth" to describe market conditions perhaps driving down interest rates, on its own, isn't the best course of action. Once again, I'm not in a position to say where those interest rates should be, but our policy makers need to much smarter at avoiding and/or managing bubbles. 

Exhale. Relax. Feel better. Travis Childers wins in Mississippi.

I am an independent, but there is no doubt I loathe the current administration. It disgusts me. The Republican Party needs a good drubbing in the Presidential election if it is going to reform itself and start caring more about good government and fiscal responsibility and less about stuffing friendly pockets with pork and fat contracts, gaming K-Street, and getting jobs for graduates of Regent University.

That is why I take great comfort in the victory of Travis Childers in Mississippi's 1st Congressional district. Running as a pro-life Democrat in a district that elected and returned Trent Lott to the U.S. Senate for 18 years, Childers overcame a textbook attack ad campaign by his opponent Republican Greg Davis. The ads associated the conservative Childers with Nancy Pelosi, Pastor Jeremiah Wright, 9/11, and Barak Obama's comment about bitter voters in Pennsylvania. That Childers won a conservative district despite the usual bag of dirty tricks suggests that the drubbing I am hoping for might just be in the cards.

Will anyone be sympathetic to Rumsfeld's re-write?

The Rumsfeld memoir is around the corner, and I have to wonder who will stand by him as he attempts to re-write the history of his tenure in an attempt to clear his well-muddied name. Perhaps some of his neo-con ideological partners, like Richard Perle or Paul Wolfowitz.

The problem for Rumsfeld is that he will need to find scapegoats. Had he made fewer enemies he might be able to pull if off, but the list of people standing ready to contradict Rumsfeld is long. Some have already fired shots across his bow, including Lieutenant General Ricardo Sanchez, the commander of U.S. Forces in Iraq from 2003 and 2004. TIME published a lengthy excerpt from Sanchez's recently published memoir that takes direct aim at Rumsfeld and previews his attempts, while he was still Secretary of Defense, to provide some cover for himself for mistakes made in Iraq.

Sanchez feelings of betrayal, and efforts to distance himself, are evident in this passage:

"In the meantime, hundreds of billions of taxpayer dollars were unnecessarily spent, and worse yet, too many of our most precious military resource, our American soldiers, were unnecessarily wounded, maimed, and killed as a result. In my mind, this action by the Bush administration amounts to gross incompetence and dereliction of duty."

Not exactly subtle language. This should be fun.   

Finally, A Moment of Honesty from the Bush Administration on Abstinence

Experts from the American Public Health Association and U.S. Institute of Medicine testified before Congress on April 23 that scientific studies have found that abstinence-only teaching programs have failed to cut pregnancies, sexually transmitted diseases or the age when sexual activity begins.

The American Psychological Association and American College of Obstetricians and Gynecologists issued concurring statements to the House Committee on Oversight and Government Reform criticizing the Republican Party favorite abstinence-only programs suggesting not only did they fail at their stated tasks, they actually made things worse.

In reading coverage of the hearings I thought I spotted a fascinating moment of unvarnished truth coming from a Bush Administration lackey, Charles Keckler of the U.S. Department of Health and Human Services (HHS). Media coverage suggested that Keckler "said the Bush administration believes abstinence education programs send the healthiest message."

Amazing I thought. Here is someone admitting that it isn't the lack of results that count; not the total failure of the program to achieve any of the stated results it was funded by taxpayer money to accomplish. No, it was all about the message. Sending the right message is more important than tangible results. Here I was thinking that Keckler had let a key play from the Bush game plan slip out.

Sending the right message to whom one might ask? Clearly not teens. Statistics indicate that they aren't listening. No, the Bush administration remains focused on sending the right message to the religious right that has become the Republican party base, at the expense of fiscal conservatives.

Of course, being the responsible person I am (or try to be anyway), I read Keckler's actual testimony. Not quite what I was led to believe from the coverage. What Keckler said was:

"The Administration believes that the abstinence education program sends the healthiest message as it is the only certain way to avoid out-of-wedlock pregnancy, and sexually transmitted diseases."

Similar, but not the same. He tied the importance of "message" to the efficacy of abstinence. I didn't have the admission I was looking for. However, I did find one just as good that basically meant the same thing. Keckler followed the statement above with this revelation:

"The great majority of American parents agree: a 2007 poll conducted by the National Campaign to Prevent Teen Pregnancy found that 90 percent of teens aged 12-19 and 93 percent of adults agree that it is important for teens to be given a strong message that they should not have sex until they are at least out of high school."

There you have it. Even though abstinence-only education is a complete and total failure, because both parents and teens say in polls that a strong 'wait until you are out of high school message' is important the Bush Administration is going to hold its ground.

I'd love to ask those same parents and teens some follow-up questions, not that it would matter. The National Campaign to Prevent Teen Pregnancy remains unhindered by their remarkable failure. Instead, they have expanded their mission to "also focus on reducing the high level of unplanned pregnancy in the United States among adults, especially those under 30 where the vast majority of unplanned pregnancies occur." Get ready for more failure! (Apparently it polls well inside evangelical mega-churches in Texas.)

White Knight Misses Battle

Treasury Secretary Henry Paulson's 218-page regulatory blueprint was released today. Sure, I bet some regulatory tweaking would make a difference, but one can only hope that at least 100 pages suggest some common sense and reading a newspaper once a week.

Even as early speculators were making money hand over foot during the real estate bubble they knew a day of reckoning would come. Everyone can't get rich on the same exact scheme, that isn't how the economy works. Press coverage on the issue started ages ago. Home prices were surging. Home builders were getting bolder and bolder, buying huge tracks of land. Experts questioned the wisdom of ARMs. Well-off people were putting their retirement funds into condos and vacation homes with the overt goal of flipping. Sound familiar? Built to flip? Tech bubble? Come on, seriously, we all knew this was coming.

Perhaps the big financial institutions didn't get burned enough by Enron or the tech bubble. It was their clients, after all, that bore the brunt of all that vaporized stock equity. This time around the implosion of Bear Stearns has taught them a hard lesson.

Yet we never apply lessons learned in one area to our future actions in another. Don't think for a moment that we won't suffer another financial debacle within the next decade. Our economy seems to be programmed this way.

So now Henry Paulson has arrived on the battlefield, a white knight mounted on his war horse. Yet he has missed the battle. All he can do is watch the dying get carried off the field and the dead get buried where they fell.

Giuliani Banking on Snow in July

The idea that Rudy Giuliani would rise to victory with a wave of support from the large number of retired New Yorkers living in Florida always struck me as absurd. New Yorkers don't like Giuliani.

Another proof point for this assertion greeted us the morning of January 22 in the form of a brutal article in the New York Times by Michael Powell and Russ Buettner. Front page, above the fold, in the premier top-left corner of the national edition. The article eviscerated Giuliani, painting him as a vindictive man drunk with power. A man who valued loyalty above all else and would viscously attack anyone he felt crossed him, even if it meant violating the boundaries of civil conduct, and even the law itself.

"As mayor, he made the vengeful roundhouse an instrument of government, clipping anyone who crossed him."

After seven years Americans have grown weary of "my way or the highway, I'm the decider and law is subject to my interpretation" leadership. But I don't think this was even about national politics. This was local, this was personal.

Despite what the right-wing media machine might lead you to believe, the New York Times is more than a liberal paper, it is the American newspaper. It has the third highest print circulation and is the number one online newspaper in the United States. For the New York Times to level such a blow on Giuliani days before his Waterloo says something. It says, like most New Yorkers, they don't like him.

The ex-pat New Yorkers living in Florida read the New York Times. Just in case the steady glare of the sun dulled their memories of Giuliani over the years, the paper was going to remind them.

When the paper endorsed McCain for Republican Party primaries with an editorial on January 25 it described Giuliani in this manner:

The real Mr. Giuliani, whom many New Yorkers came to know and mistrust, is a narrow, obsessively secretive, vindictive man who saw no need to limit police power. Racial polarization was as much a legacy of his tenure as the rebirth of Times Square.

Mr. Giuliani’s arrogance and bad judgment are breathtaking.

Maureen Dowd wrote Giuliani's preemptive second political obituary for the paper a few days later on January 27.

It figured that he would snowbird his strategy, taking his New York subtext of blacks-want-to-mug-you-and-I-can-protect-you down to Florida and switching it to Arabs-want-to-kill-you-and-I-can-save-you.

And I wasn’t surprised that he continued to run on fear and divisiveness, zeroing in on Florida the way he used to target Staten Island, Bay Ridge, Queens and parts of Manhattan where the elderly lived. Hizzoner always focused on those who supported him and ignored those who didn’t.

We can only hope there is no act three, but if there is you can be sure that New York will have its say.

Next Bubble Reprise

Last September I pondered what the next bubble would be for the U.S. economy. More people have spoken to me about that post than any other I've made.

In the post I mentioned a friend who was planning on farming hay as a crop because she saw a shortage of hay as a growing trend. It wasn't something I could validate, but it sounded plausible. Last week I was speaking with a colleague about the post and I got a little validation. She lives in the St. Louis metro area and owns horses, and she has noticed that hay is becoming harder and harder to find. In fact, the local rumor mill has it that one of the primary local suppliers is hoarding hay (out of a desire to make profits or a concern over running out I did not ask).

That led to a search, and sure enough, hay shortage. There's this line from the Mississippi State University Office of Agricultural News:

Livestock producers saw it coming, but the hay shortage is forcing some tough decisions that may have long-term repercussions on the health, performance and profitability of their animals.

Hay shortages are not new, they come and go. And the current shortage seems to track back to a dry summer in 1996. Herd animals all across the country were slaughtered due to a lack of feed. Do a search for hay shortage and you will find more than a quarter million results.

Rainfall has a big impact on hay yields, but so does that amount of land dedicated to growing grasses. As long as the green gas bubble continues to build there is going to be less financial incentive to plant grass. Farmers also used corn as a feed-substitute during hay shortages, but with ethanol production driving up corn prices that is no longer an affordable alternative.

Our economy can defy simple answers. It doesn't mean you don't act, change is good and needed. But having everyone suddenly rush to one side of the boat gets us all wet. So ethanol crops are still a candidate for the next bubble, but I am keeping my eye out for others.

Search Volume as a Gauge of Popularity

In her profile of tennis star and celebrity Maria Sharapova for the New York Times, writer Karen Crouse cites Sharapova's volume of Yahoo! searches as proof of her popularity.

Last year, she was the second-most-popular sports entity among Yahoo searchers, behind Nascar and ahead of the Boston Red Sox, David Beckham and Serena Williams.

No doubt search volume isn't a bad indicator, but according to ComScore as of September 2007 Google has a 57 percent share of the search market, more than Yahoo!'s 23.7 percent. So why pull the statistic from Yahoo! vs. Google? Google doesn't make it easy to get that information, while Yahoo! provides a handy dashboard that allows you to follow search popularity like the stock market, even showing daily change and the biggest movers. It is just a glimpse of their data set, but it is smart marketing on the part of Yahoo!

Google, ever the pure developer, has some great stuff in this area as well but it is hidden in Google Labs. Try and find it from their home page and let me know how long it took you. You may be better of searching for it. One of my favorite tools, Google Trends, tells a different, and more detailed story. In 2007 David Beckham far outperformed Maria Sharapova in global search volume except in Pakistan and India, where Sharapova outperformed. She is particularly popular in Delhi. Google Trends also indicates where news coverage coincides with spikes in search volume. In January, June, and September search volume for Sharapova outperformed Beckham, which no surprise coincides with Wimbledon, the French Open, and the U.S. Open.

There are other online indicators of individual popularity. One is simply how much content on the Internet is dedicated to the person in question. A fun tool for exploring that is Google Fight. Enter two names and see them fight it out for dominance.

Google Fight shows us another view. More people may search for Maria Sharapova on Yahoo!, but she only generates 313,000 search results on Google. Serena Williams generates 3.3 million, and David Beckham 9.5 million.

It is a copy and paste world, and when people quote statistics it is important to understand the source. In this case it doesn't impact the story one bit. Sharapova is more popular on Yahoo!, but she isn't more searched for globally.

Giuliani ... No Surprise So Far

When I look at polling data I am drawn to a candidate's unfavorable score among their own party. For me it is a very telling statistic. And Rudy Giuliani, even at times when he has had high favorability ratings over the past year, has also had a pretty high unfavorable ratings among Republicans.  It is easy not to like him, and many people don't. (The pollingreport.com has great favorability data on Guiliani over time, although not much by party affiliation.)

When Giuliani ran for mayor of New York in 1993 he did so as a law and order candidate, playing on his experience as a U.S. District Attorney. New York responded well to his tough demeanor. A little snarl was a welcome thing at the time, and Mayor Dinkins had worn out his welcome. Giuliani also was a pretty moderate Republican, a political breed that still exists in small pockets on the coasts, so he was able to attract some independent voters. When he barely won the election by just more than 50,000 votes he became the first Republican mayor of New York in 28 years.

Perhaps American's are tired of W's angry squint, but the snarl just doesn't play in the current environment. And sadly, a moderate Republican, particularly from New York, isn't going to rally the party's ultra-conservative core.

Giuliani's re-election campaign in 1997 was successful but he faced a very weak challenge from Ruth Messinger. Giuliani won 59 percent of the vote, but voter turnout also hit a 12-year low. People weren't coming to the polls to support him, they just weren't inspired by the competition. We'll never know if he could have won a third mayoral race, term limits made sure of that. His 2000 Senate campaign violently imploded in April and May of 1999. Barring September 11th his political career was likely over.

After September 11th Giuliani became a national figure. The rest of the country viewed him very differently than the population of New York did. He wasn't popular on September 10, he was very unpopular. The nation created a different story for him, one that gave him a second career. He became popular in a symbolic, rather than tangible way. Now we are back to reality, the old Rudy Giuliani that New Yorkers know. They guy it was very easy not to like. From day one I've said "there is no way this guy gets elected President." But then again, I said that about the squinting dunce from Texas.