Archives for May 2012

Hollow promises aplenty

MSNBC Host’s Unheroic Apology

Media ties Romney to Trump, ignores Obama-Sharpton connection

From Breitbart.com:

As I mentioned in my piece this morning examining the organized narrative the media built over the weekend to aid Obama and damage Romney, the primary push was going to be to tie Romney to Donald Trump. Because Trump is still pushing the discredited “birther” conspiracy surrounding Obama’s place of birth, the corrupt media feels it can hurt our likely GOP nominee by either tying him to a “racist extremist” or by threatening him with this distraction until he backs down and repudiates Trump.

It’s an old and obvious trick and just a few minutes ago the basement-rated CNN assumed its favorite position — shilling for Obama — with this. Note the chryon: Romney supporter under fire for “birther” comments.

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Photo courtesy pd2020@sbcglobal.net, flickr

Gallup: In U.S., Nearly Half Identify as Economically Conservative

From Gallup:

Americans are more than twice as likely to identify themselves as conservative rather than liberal on economic issues, 46% to 20%. The gap is narrower on social issues, but conservatives still outnumber liberals, 38% to 28%.

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Obama insults Poles with mention of ‘Polish Death Camp’

From WSJ:

The Presidential Medal of Freedom is the highest civilian honor a president can bestow, so there is little doubt that President Barack Obama did not intend to insult the home country of one of the honorees. But insult he did when he spoke of honoree Jan Karski, a hero of the Polish resistance against Nazi occupiers in World War II.

He referred to Mr. Karski’s smuggling into a “Polish death camp” to see for himself that Jews were being murdered “on a massive scale.” The camps were run by the Nazis, and the Poles take great issue with statements that appear to blame them for Nazi crimes.

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Convention Wisdom: Cities keep squandering money on hotels and meeting facilities

For two decades, American cities have used public dollars to build convention center space—far more than demand warranted. The result has been a gigantic nationwide surplus of empty meeting facilities, struggling convention centers, and vacant hotel rooms (see “The Convention Center Shell Game,” Spring 2004). Given the glut, you’d think that cities would stop. Instead, many are spending hundreds of millions of dollars to expand convention centers and open yet more dazzling hotels, arguing that whatever convention business remains will flow to the places with the fanciest amenities. If this dubious rationale proves wrong and the facilities fail—it’s telling that the private sector won’t build them on its own—taxpayers will wind up on the hook, as usual.

The convention business has been waning for years. Back in 2007, before the current economic slowdown, a report from Destination Marketing Association International was already calling it a “buyer’s market.” It has only worsened since. In 2010, conventions and meetings drew just 86 million attendees, down from 126 million ten years earlier. Meantime, available convention space has steadily increased to 70 million square feet, up from 40 million 20 years ago.

Boston exemplifies double-down madness. The city shelled out $230 million to renovate its convention center in the late 1980s. After the makeover produced virtually no economic bounce, Boston concluded that it needed a new $800 million center, projecting that it would help the city rent some 670,000 extra hotel rooms a year by 2009. The new center, which opened in 2004, fell far short of expectations: the actual number of room rentals that it generated in 2009 was slightly more than 300,000. Now Boston tourism officials are proposing to spend $2 billion to double the center’s size and add a convention hotel, to boot. The officials optimistically predict that the expanded facilities would inject $222 million annually into the local economy, including an extra 140,000 room rentals a year. Despite these bullish projections, officials claim that the hotel needs $200 million in subsidies.

Boston is far from alone. Hoping to help its limping convention center, Baltimore paid $300 million to build a city-owned convention hotel, which opened in 2008. The hotel lost $11 million last year and has barely been able to pay its employees or its debt service. Yet Baltimore is now considering a massive $900 million public-private expansion that would add a downtown arena, another convention hotel, and 400,000 feet of new convention space. The projected cost in public money: $400 million.

Convention-hotel mania has swept Texas, too. Dallas just opened a convention hotel financed with $388 million in Build America Bonds, and Arlington and nearby Irving are both proposing new hotels to boost tourism. These facilities will compete with alternatives in places like Austin, which opened a massive 800-room convention hotel in 2003 after a study predicted that it would generate more than 300,000 room rentals annually for the city. But Austin has yet to exceed 200,000 per year.

Perhaps recognizing this weak economic record, convention and tourism officials have been changing their sales pitch. Convention and meeting centers shouldn’t be judged, they now say, by how much business they bring to local hotels, restaurants, and local attractions. Instead, we should see them as helping to establish a tourism brand for their cities. The director of Boston’s convention center, for instance, boasts that it brings the city “tourism impacts”—purportedly an economic value beyond whatever dollars the convention industry manages to attract.

The main value of such nebulous concepts seems to be to obscure the failure of publicly sponsored facilities to live up to exaggerated projections. As far as city officials are concerned, that failure is nothing that hundreds of millions of taxpayer dollars can’t fix.

(Steven Malanga is the senior editor of City Journal and a senior fellow at the Manhattan Institute. Originally posted on City Journal.)

The real threat to Obama’s re-election

Could the coming European financial crisis doom President Obama?  That’s a question that seems worth asking after a ten day trip to Europe this month.  On June 17, voters in Greece will attempt to form a stable government; they will probably fail and Greece could be forced to leave the common European currency known as the Euro.  If that happened, the Euro itself might come apart, setting off a worldwide banking panic with monumental political impacts.

It’s hard to figure how a tiny country like Greece could do all this, but the global financial system is like a knitted sweater, pull out one thread and the whole thing comes apart.  If Greece is forced from the Euro, or it defaults on its monster debt, that will cause a run on Euro zone banks in weak economies like Spain, Portugal and possibly Italy.  Jeremy Siegal writing last week in the Financial Times notes that, “a run on the banks in those countries would need to be met by massive loans from the European Central Bank to prevent a financial collapse.”

Sound familiar?  This is what happened with the Lehman Brother bankruptcy in October 2008, requiring the now hugely unpopular American bank bailout.  But the European situation is different; Europe is already an economic basket case, only Germany has enough money to save it and Germans are revolting against more bailouts.

What does all this have to do with Obama?  World finances are tied together in ways few Americans appreciate.  JPMorgan Chase lost $2 billion earlier this month because of a rogue trader in London, and every time the Greek crisis has flared, the US stock market has fallen.  Recently, the Organization for Economic Cooperation and Development cited Europe’s potential crisis as the leading threat to the global economy.  America won’t escape the fallout.

Politics, like economics, has its rational and irrational side.  It is irrational to let Greece ruin the world economy; it is rational for money to flow away from weak countries, as will happen if the Euro begins to unravel.

An irrational world economy will have a rational political impact; people will get mad, and they will toss out their incumbent governments.  That is occurring now in Europe; almost every election in the past two years has seen the incumbents booted; socialists ejected in Spain and Portugal for conservatives; conservatives defeated in France and Italy for socialists.  If they had an election in Britain, Labor would come back in Conservatives would go out.   In Greece, a country whose problems are the result of a bloated public sector and unsustainable pensions, the thrust has been to the far left.  In other words, everyone who is in is being thrown out, as voters very purposefully vent their anger.

This is what happened in October 2008, the sudden banking collapse occurred on the Republicans’ watch, and whatever chance Sen. John McCain had to win that year disappeared in the bankruptcy uproar.  So it could well be this November.  President Obama is not to blame for Greek pensions, but the unraveling of the European financial system that would accompany a Greek default cannot help but be a body blow to the fragile American economic recovery.

In 2008, the collapse occurred with little warning and there was nothing the Bush Administration could do to head off the public’s anger.  This time the pending collapse is front and center for all to see, yet heading it off seems harder and harder.

That may explain the Obama Administration’s frantic efforts to define GOP nominee Mitt Romney as an unacceptable alternative whose hands are soiled by the same misdeeds that has caused all this financial misery.

This is, however, a difficult sell if Europe’s finances push the world, and America, back into recession.  It is not Obama’s or Romney’s fault, but Obama is the one now holding the bag, and angry voters react bitterly when confronted by hardships they little understand.  Often they throw out the people in charge even if they are not at fault.

In the year 2012, it may not be the Super PACs, or the massive fundraising, or the television talking heads that settles the election.  It may well be a world economy held together by such fragile knitting that the removal of a single thread in far off southern Europe unravels the entire thing.

(Tony Quinn is a Political Commentator and Former Legislative Staffer. Originally posted on Fox & Hounds.)

Facebook: Is intrinsic value enough for a company’s success?

What is the thing about Facebook that makes it worth $108 billion since it is entirely based on intangible values?

Well it looks like the jury is in, and the answer is nothing. Sometime relatively soon, people will wake up and realize that the problem with dot-com successes is that unless companies can create a tangible and necessary value proposition in a down economic period, then the value of a company like Facebook is not merely speculative — it is simply ludicrous.

Worse, I suspect there is hidden in the recesses of this offering the same attitude that was pervasive in the last dot-com bubble burst. The most important thing to the original investors, the venture capitalists that funded this company, is not value, but liquidity.  The good thing for these investors is, once again, what is driving the public is perceived value, not real value. In effect, what a lot of the “public” is willing to pay for does not have to equate to real value — ever.

You see, venture capitalists are paid to return value to their investors, not the future public owners. P. T. Barnum said it best: “There is a sucker born every minute!” So to all those that purchased this snake oil, there is a Latin phrase you should learn, known as “caveat emptor.”

This has been a carefully orchestrated dance with the devil ever since the first big money went in the door.  Rumors of government intelligence connections have been rampant for years, mostly as water-cooler stories, as excuses to try to justify the ever-climbing stratospheric price. But the reality has been a very simple one.

It is the same thing we who have lived in or near this tech-money world have seen for years.  It is the siren song of untold riches, that if you buy just a few of the baubles, these simple slips of paper, they will grow. These that just can’t fail, because after all, it is the next “Excite@Home” (oops, that’s a bad one), or AOL (oops again) or Netscape (oops) — I mean, you know what I mean, because, you know, they simply must grow to ever higher levels. It’s technology after all. If you get in now, you too can be the next “Tim Drapers or Brook Byers.”  Just buy a few, for a small investment — a pittance really — and this dream can all be yours!

I live right in the promised land of private equity investors — Silicon Valley, CA. I have spent much of my career around venture capitalists and angel investors. Private equity is a great thing. Without it, much of the things we take for granted today would not even exist. It is the basis for the growth economy we have had for years. Along with real estate, it has formed the basis of the so called FIRE economy that gave us the rapid rise in currency from a mere $500 billion in 1972, to over $16 trillion today. And while many of the dollars created went to real products, tangible products, things you could touch and feel in your hands, much recently has gone to companies based on perceived value, rather than any tangible calculation. In this modern world, there is no regulation that will protect people from the avarice of Wall Street, nor should there be. The onus is on all of us to keep both of our eyes open and both hands on our wallets.

Alas, now will come the predictable filing of lawsuits by those who will blame everyone for the unrequited love, the incredible get rich quick scheme that was the Facebook juggernaut. Here’s a news flash — you have no one to blame but yourself. You should know that if it sounds too good to be true, it probably is. Get a clue! This was a liquidity game, played by major league players from the get go. Mr. Barnum definitely ruled this day, and many people will likely soon feel like they got caught at a church picnic with their pants down out behind the barn with Mary Sue.

Now, those who are watching this intangible value-based company decline by the day can pray that it pulls a trans-formative move and, like Amazon did years before, maybe become a true value supply chain player. Years ago there were those of us who saw the original Amazon business plan and just knew then that the original “no brick and mortar warehouse, drop ship from publisher’s model” was not going to work.  All of us then learned a valuable lesson. The lesson we learned was that it was liquidity, not value, which was the play.

As my 13-year-old son now says, “You all got schooled!” You know what?  He’s right!

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

MSNBC’s Act of Cowardice: Host Won’t Call Troops “Heroes” on Memorial Day Weekend

Assembly passes bad Cap and Trade bill

The Assembly today passed the controversial Cap and Trade bill,  Assembly Bill 1532, by Assembly Speaker John Perez, D-Los Angeles, which would deposit Cap and Trade carbon credit permit monies into a new Greenhouse Gas Reduction Account, to be managed by the California Air Resources Board.

What a great idea. California is already precariously perched on the edge of a financial cliff – this could be the push that sends the state right over.

AB 1532 would direct the billions of dollars expected to be generated from cap-and-trade auctions in 2012-13, into the new fund. Revenues are expected to exponentially grow in the future, but only if there are any private sector businesses left in the state from which to extort these funds.

“The ARB estimates annual revenue from the auction of
greenhouse gas emission allowances to range from $2 billion to $5 billion in 2013, with that amount increasing to between $17
billion and $67 billion in later years,” the bill analysis states.

The bill would allow the Legislature to direct the appropriation of the funds, with CARB taking charge of the money management.

I think certain legislators see a new checkbook from which to spend.

No one will be spared from this new carbon tax.  As Chicken Little once said, “the sky is falling!

(Katy Grimes is a longtime political analyst, writer and journalist, and CalWatchdog’s news reporter. Originally posted on CalWatchdog.)