Eighty Eight: Health Care Legislation And The Economy

The last watershed piece of health care legislation was the enactment of Medicare in 1965. After that, the economy was in the doldrums, including a couple of recessions, for the next twenty years. The post-Medicare economic malaise was the amount of time required to digest the tremendous inefficiencies and burden of a huge increase in the size of government. In 1985, the Reagan tax cuts kicked in and created the the economic expansion which lasted essentially until 2007.

Now BO and his band are about to enact another round of generational government expansion. In addition to health care, financial, insurance, and industrial meddling by government, in the name of consumer safety or economic stabilization, is going to suck capital out of the private sector and paralyze economic activity for at least as long as the post-Medicare period.

In 1996, Clinton declared that the "era of big government is over." Of course this is not what Clinton philosophically wanted, but he did recognize that the only way to stay in the oval office for another term was to jump on the band wagon of public sentiment which had finally tired of oppressive government intervention in their lives. While government growth never actually decreases in real terms, the rate of growth did slow down during Clinton's reign. Much of this was due to Clinton's inability to do much of anything on account of his constant personal crises. The result however, was the legendary economic expansion of the late 1990s. Reagan tax cuts + Clinton scandals = economic success.

BO and the Dems are doing exactly the wrong thing at the wrong time. Government should be doing everything it can to shovel capital into the private sector. Instead, they are diverting it away from productivity, which will create wealth, and building huge government incinerators to waste resources.

We'll just have to wait for another Reagan.

Eighty Seven: Little Timmy And The Big Banks

The WSJ today reports what everybody already knew: Little Timmy Geithner, is the world's worst negotiator. While president of the New York Fed, LTG agreed to make whole every bank which which entered into deals with AIG, including of course Goldman Sachs (LTG's most likely future employer) and Merrill Lynch. The "deals" were essentially private insurance contracts wherein AIG agreed to insure the banks against losses from bad investments made by the banks. The "deals" of course were made by the best and brightest investment bankers and insurance execs, and were reviewed by the smartest lawyers money could buy, probably $1,500 an hour guys. Now none of these really smart guys ever bothered to think about whether AIG actually had the money to make good on the insurance claims (AIG didn't have the money, which led to Little Timmy's grand plan).

Instead of saying to the banks, "You guys made some bad moves, now you need to live with it," LTG said, "Gee, you guys wouldn't be willing to take a little less than you're owed, would you?" to which the banks said, "up yours Little Timmy," whereupon LTG said, "OK, I'll make sure you get all your money, but please remember me when I'm in the job market, OK?"

Really makes you feel good about paying taxes, doesn't it?

Eighty Six: More Merrill

OK, so this is my third ML post today, but geez, you can't get away from this Sallie K advertising blitz. Now I'm wondering who is benefiting from this ocean of advertising dollars. Agencies, production houses, buyers of pages, air time, pop ups, billboards, all are garnering ML payments. "help2" is obviously the brainchild of some addled ad account exec who has convinced Sallie K that this campaign will polish her otherwise spectacular career failures. Good luck.

Eighty Five: Sallie Krawcheck, The $27 Billion Woman

My name is Sallie Krawcheck, and I have a proven track record of helping Citigroup lose $27 billion. That's why I was selected to run what's left of Merrill Lynch at BAC. You see, ML also lost $27,000,000,000 in 2008, so it's not exactly a stretch for me. I mean, I think I've got this down. Here are some of my advertising ideas:

I lost it before, and I can lose it again.

We lost $27 billion of our own; now we want to lose yours too.

27 billion reasons to invest your life's savings with us.

Seriously, we really think we can lose less than $27 billion this year.

Don't you think I'm cute? Please give me your money.

Eighty Four: Merrill Lynch

I have an idea for an ad headline for ML: "Give Your Money To Us Because We Lost $27,000,000,000 Of Our Own Last Year." Sallie Krawcheck, who most recently helped to drive Citigroup into the ground, is now the head cheerleader for ML sales. They call it "wealth management," but of course it really just a sales team. The people who bring in the dough don't manage anything, as I can personally attest to. My financial advisor, Mark Thorndyke, out of the Chicago office, presided over a 54% decline in my account and actually tried to shift the blame onto me. In reality, of course he doesn't have a clue why investments go up or down. From my infrequent discussions with him I get the sense that his reading is limited to the daily sports page. A deep thinker he is not.

ML of course is not alone in seeking to be rewarded for failure. The list is pretty impressive - GM, Motorola, UAL - all companies which should be in the grave, but because governments, customers, shareholders, have given money to these losers, they do not die. Then there are companies like Cisco, a company which currently makes money, but also makes incredibly stupid decisions, such as hiring the former MOT IT chief whose steadfast belief was that touch tone phones would never catch on. This is a sure sign that CSCO has passed the tipping point, and is likely to become another MOT or GM.