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Archive for the ‘politics’ Category

Perhaps calling it a “bailout” was a little counterproductive. Whether or not you support a bill to inject liquidity back into the market in an effort to get the credit machine rolling again (and whether or not you believe that such a bill is even necessary) it became pretty clear today that calling the effort a “bailout” certainly contributed to HR 3997 not getting the votes.

Watching MSNBC, CNN, Fox and Bloomberg today, I heard a common thread: Constituents of representatives who voted to defeat the bill simply didn’t want to see their hard-earned money go towards “bailing out” ginormous banks on Wall Street. In other words, President Bush, Speaker Pelosi, Secretary Paulson and the press probably killed the initiative from Day One by calling it a “bailout.” Perhaps if the plan had been referred to as something else, like an “Asset Purchase,” an “economic intervention” or even a “national credit adrenaline injection,” we probably wouldn’t be looking at the Dow’s worst day on record. Regardless of election-season politics, could today’s failure in Washington simply be due to a poor choice of words when it came to giving it an identity?

From Ina Fried over at Cnet:

I’m going to try to briefly accomplish in a few paragraphs what it seems to me our government has completely failed to do in this financial crisis.

No, I don’t have $700 billion of my own to shell out. But to me, Congress’ failure came not today on the House floor, but over the past week as both elected officials and members of the administration failed to translate the crisis into terms that have meaning for everyday Americans.

I’ve heard the phrases “Main Street” and “Wall Street” a lot, but what I haven’t heard is plain explanations of what credit really means and how essential it is to our system of doing business.

Here goes.

If the credit markets should freeze up–which many say is happening and will continue without massive intervention–everyone that borrows money will face a cash crunch. That means companies that take advantage of short-term loans to get by won’t be able to buy raw materials or make payroll. Even businesses that don’t need short-term capital may defer purchases to preserve capital.

If even banks are having a hard time getting money, what does that say for the small and midsize business? The Wall Street Journal had a story on Monday on how companies like McDonald’s may face a squeeze as their franchisees are unable to get loans to purchase or upgrade stores. I suspect that is just one visible example of a growing issue for businesses across the country.

We are stuck trying to move forward with new loans–essentially to keep the economy moving–while dealing with clearly bad ones of the past. While much of the attention has focused on concern over home loans, there are also construction loans and business loans that are at risk of default, risks that grow as those businesses find themselves essentially shut off from getting any new capital, extending the vicious circle.

You don’t have to take it from me.

Here’s C.H. Low, CEO of social-networking software start-up Orbius and a serial entrepreneur.

“When financial markets don’t function well, the ramification is broad,” he said in an e-mail interview on Monday. He said he is disappointed that the bailout is so misunderstood. Even the term bailout, he said, is a misnomer.

“This is an asset purchase, not a 100 percent bailout expense to taxpayer,” he said. “There is risk but also possibility of making a profit. Government’s main function is to do things that private sector cannot handle. This Market Stabilization Bill…is as necessary as having an Armed Forces to defend the country.”

Low noted that the main beneficiary is not Wall Street.

“As an early stage start-up, we rely on venture investments to carry us through a few more stages before we can be self-sustaining,” Low said. “With turmoil, smaller venture funds which fund many early stage companies themselves get anxious and their own investors may be affected and may affect their capital call. We ourselves planned for a rainy day but even we don’t have that much for a prolonged monsoon.”

He said that the seizing up of credit creates uncertainty in every sector. “Doing nothing is the worst of all choices,” he said.

Read the rest of Ina’s piece here.

Whether HR 3997 was a good plan or not – let’s face it, transparency about the latest contents of the bill hasn’t been great, – perhaps if it had been dubbed something other than a “Wall Street Bailout,” our representatives in Washington wouldn’t have been under so much pressure to vote nay on Monday. Lesson: Regardless of how great you think your product is, you probably won’t be able to launch it if you start by calling it the wrong thing.

The words we use matter.

PS: Since it is election season, click here to find out if your elected representative voted on HR 3997 the way you wanted them to. 😉

Photo by Christopher Wray McCann

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Watching it burn

Some of us who have managed projects know a little bit about budgets. Simply put, a budget is a bucket of money set up to pay for all of the line items in a project – or a series of projects.

Typically, the budget is set based on little things like what the client (internal or external) is looking to accomplish, what the client is able to spend, and ROI: (Return On Investment) Do the project’s benefits outweigh its cost, etc.

If you’re thinking “wow, that sounds like it takes a lot of planning and strategery,” you’re right. It does. The one thing you want to ensure as a project manager is that the goals, tactics and budget are aligned before a project starts: If the project is going to cost more than the budget allows, something is going to have to be cut from the project. Simple, basic stuff. If you don’t do this, you might run out of money before the project ends, which isn’t good. Your options then are a) ask the client for more money, b) close the project before having delivered it 100%, or c) eat the added cost. None of these options are good.

It’s with this simple methodology that I look at our federal budget deficit. Is it more complex than a marketing campaign? Of course it is. Infinitely so. But the principle is the same: Figure out how much funding you need to operate your series of projects (social security, national defense, infrastructure, research, wars, etc.), make the necessary adjustments, and go forward with what you can afford.

… Except… that isn’t how everyone understands the fundamentals of running a business/country. The latest Budget Deficit figures look pretty impressive. From CNN.com:

The White House on Monday predicted a record deficit of $490 billion for the 2009 budget year, a senior government official told CNN.

The deficit would amount to roughly 3.5 percent of the nation’s $14 trillion economy.

The official pointed to a faltering economy and the bipartisan $170 billion stimulus package that passed earlier this year for the record deficit.

The fiscal year begins October 1, 2008.

The federal deficit is the difference between what the government spends and what it takes in from taxes and other revenue sources. The government must borrow money to make up the difference.

President Bush inherited a budget surplus of $128 billion when he took office in 2001 but has since posted a budget deficit every year.

Wow.

Maybe I am reading this wrong, but if the FY’09 $490 BILLION deficit is indeed for the 2009 budget year, we’re talking about overspending $1,342,465,700 per day for 365 days in a row.

Wait… Let me get this straight. The US government is overspending (all up) at a rate of 1.3 BILLION dollars per day?

Tell me I’m not understanding this correctly. Please. Someone tell that figure needs to somehow be stretched out over the last 8 years or something… Pretty please? Tell me there is no way that the United States of America’s operating budget is so poorly managed that it bleeding $1.3B per day. Tell me I am wrong about this.  Tell me there is a plan to fix this. One that doesn’t involve a) just printing more money, or b) borrowing from foreign banks.

Maybe this kind of topic changes the conversation when it comes to what types of questions really need to be on people’s minds (and lips) when political candidates (from Presidential elections down to your municipal seats) run for office. Maybe the conversation should shift from soft broad-sweeping opinions about religion and security to cold hard facts and specific plans to fix what is broken. And by the way, this isn’t an indictment of either political party. Republicans and democrats together need to fix this – which is to say this isn’t just about this candidate or that one, but about us, American taxpayers and voters, who perhaps should refocus our attention when it comes to our definition of political leadership, and what our silver-haired years will be like, and the future our children will inherit.

Maybe there’s a branding lesson in there somewhere, both for world powers and the political candidates who aspire to help run them.

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Guy Kawasaki points us to this very cool little site where you can control where your tax money goes. Well… kinduv.

Connection to the branding discussion: At least four degrees of separation, but whatever. It’s still an interesting and fun little tool.

Update: I just spent fifteen minutes playing with the tool, and managed to push the budget bust back to 2070+ while cleaning up the environment, increasing access to medical care for the poor, children and young adults, and freeing the US from foreign energy.

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Without endorsing either of the three Presidential candidates in the US, and without suggesting any underhanded shenanigans, let me propose a thought about USA ’08.

It occurred to me last week while having drinks with a dozen or so industry peers – almost all democrats, mind you. The subject of the conversation somehow shifted to politics and the candidates… and I fully expected the group to be happy about Sen. Obama’s advantage over Sen. Clinton. That, however, wasn’t the case: No one at the table endorsed Obama.

Let me put it in another way, which is perhaps more telling: Not one single democrat at the table trusted Obama. Not enough experience, rhetoric not matching his record, the whole crazy church thing. The underlying sentiment basically came down to this: “What do we really know about this guy? Nothing. He came out of nowhere way too fast. We aren’t sure what to expect.”

Call it buyer’s remorse. Call it gut feeling. Call it whatever you will, but everyone’s favorite campaign trail rock star, the guy the press is so quick to attach to Kennedy and MLK… well… maybe he isn’t the superstar we’ve been so eagerly sold as the game-changer/unifier/political superhero America has been craving since Kennedy (or Ronald Reagan, depending what side of the fence you’re on).

But we haven’t gotten to the meat of it yet. The truly eye-opening opinion I hadn’t expected to hear. I’m getting to it. Here it is: Everyone there agreed that if Sen. Obama won the nomination instead of Sen. Clinton, they would not vote for him.

I was kind of shocked since I thought Obama – based on what I gather from mass media – would be a clear favorite.

More surprising yet, most admitted that they would actually switch camps and vote for McCain. These are democrats, mind you. People who are fed up with the Bush administration and ready for a change. People who have ALWAYS voted democrat. (Even Dukakis? Really?) And yet here they are, ready to vote for McCain if Obama beats Clinton in the ’08 donkey race.

I just wonder how many democrats around the US feel the same way. Probably a lot. Or rather, just enough.

I am sure every campaign manager knows exactly how many swing voters they can expect to win or lose, all broken down by demos, geos and verticals. The precise impact of these numbers must also be crystal clear to them.

Boiled down to the basics, the equation is simple:

Obama + McCain = McCain wins.
Clinton + McCain = x

What’s the Republicans’ play? Simple: Make sure Obama gets the nomination. Hillary is the real X-Factor, not Obama. McCain can’t shred her. But Obama can with the whole “new dream”/Kennedy/”let’s join hands” thing. Let him do it before we even get to the big game.

Genius.

Elections are a lot easier to win when you control the entire board, not just your half of it. The Dems are still stuck in primary mode. The Republicans, on the other hand, are already five steps ahead in presidential election mode.

Which makes the whole “Hillary should just quit” movement more than just vaguely suspicious. The pressure isn’t just coming from the Obama camp, and now I think I know why.

For better or for worse, I’m calling November ’08 now: McCain will defeat Obama. No Chad manipulation needed. No voting machine hacks necessary. He will win because his people didn’t leave anything to chance. Because they knew how to control the board from the very start.

The dems (yes, the voters) are getting played something fierce.

“Divide and conquer” and all.

As eloquently explained by Bruce Willis in Lucky Number Slevin, a Kansas City Shuffle is where everyone looks left, when they should really be looking right.

Yep.

They’ll be talking about this one for decades to come.


Photo: Bob Elsdale

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Whether or not you like this candidate,you have to admit this ad is friggin’ brilliant.

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