James Drogan

My habit is to not put my political feelings on this blog, but continuing developments in American finance and economics cause me to make an exception

There are aspects of the ill-named "bailout" that I would like to see changed, but I find the rollover of Congress by the voters to be  more disturbing.

While I want my  Representative and Senators to appreciate and consider my concerns, needs, and wants, I likewise expect them to have the larger context of American and global society in mind.  Furthermore, my expectation is, that with all the resources available to them, they have better knowledge and a deeper understanding of issues than I.

In other words, I expect them to lead and that sometimes means taking unpopular stands.

How naive I am.  How disappointed in Congress (and the Administration) I am.

Sitting in Congress seems to have become little more than a sinecure unless one counts assignment of blame as an effort worthy of reward.

Your attention is called to two Wall Street Journal articles on this matter; 'No' Votes Came From All Directions and Vote Presses Lawmakers at Home.

The editorial from the October 2, 2008 issue, Bailing Out Ourselves, is also worth a read.

'The next president will inherit leadership of a nation that is still the most powerful in the world -- a nation rich with the continued promise of its dynamic and increasingly diverse population, a nation that could, and must, again inspire, mobilize, and lead the world. At the same time, the next president will inherit a more difficult opening-day set of international problems than any of his predecessors have since at least the end of World War II. In such circumstances, his core challenge will be nothing less than to re-create a sense of national purpose and strength, after a period of drift, decline, and disastrous mistakes.

He will have to reshape policies on the widest imaginable range of challenges, domestic and international. He will need to rebuild productive working relationships with friends and allies. He must revitalize a flagging economy; tame a budget awash in red ink; reduce energy dependence and turn the corner on the truly existential issue of climate change; tackle the growing danger of nuclear proliferation; improve the defense of the homeland against global terrorists while putting more pressure on al Qaeda, especially in Pakistan; and, of course, manage two wars simultaneously.

To make progress on this daunting agenda, the president must master and control a sprawling, unwieldy federal bureaucracy that is always resistant to change and sometimes dysfunctional. He will also need to change the relationship between the executive and the legislative branches after years of partisan political battle; in almost all areas, congressional support is essential for success. So is public support, which will require that the next president, more effectively than his predecessor, enlist help from the private sector, academia, nongovernmental organizations, and the citizenry as a whole.

The presidency of the United States is the most extraordinary job ever devised, and it has become an object of the hopes and dreams -- and, at times, the fears, frustration, and anger -- of people around the world. Expectations that the president can solve every problem are obviously unrealistic -- and yet such expectations are a reality that he will have to confront. A successful president must identify meaningful yet achievable goals, lay them out clearly before the nation and the world, and then achieve them through leadership skills that will be tested by pressures unimaginable to anyone who has not held the job. A reactive and passive presidency will not succeed, nor will one in which a president promises solutions but does not deliver -- or acts with consistent disregard for what the Declaration of Independence called "a decent respect to the opinions of mankind."'

Richard Holbrooke, "The Next President - Mastering a Daunting Agenda," Foreign Affairs, September/October 2008

Re Conversations with Dave

The following is an excerpt from a long conversation with Dave and others regarding economic and financial developments. I'm not trained in any of these arcane arts, being but a simple homeowner with a mortgage and other bills. However, I do try to understand.

For other useful views I suggest Dave's blogs, bizzXceleration: Performance, Value and Profit and Parts, Structures, Systems and Outcomes.

Here's the excerpt.

One other musing.

One is willing to take on risks of increasing impact as the understanding of these risks improves. There is a frontier of maximum risk below which one is more or less warm and fuzzy, above which one ventures at his peril. It seems reasonable to me that this frontier is a function of company and/or regulatory policy. Further, it ought to be more or less easy to set (e.g., limits of purchasing authority is a somewhat complementary example).

Moving to the northwest is tempting fate and crossing the boundary ought to be penalized. On the other hand, moving to the southeast would tend towards conservative performance. The culture that sets the policy for operating in this area is a function of the company and the industry.

Intentionally rotating the boundary counterclockwise implies the need for new knowledge, skills, and experience. If the firm doesn’t have these or can’t get them, then it shouldn’t change the slope of the line. Further, as one moves northwest, the set of people with appropriate knowledge, skills, and experience becomes smaller. That is, not everyone can go who might wish to go.

Increasing impact comprises the costs of failure and the rewards of success. There is likely not a proportional relationship between these.

Hence, what has happened is that the unqualified supervised by the unqualified and regulated by the unqualified have crossed the frontier in search of the Holy Grail only to find the dragons. As you so eloquently put in an earlier note, the fortunes of others were tethered to these searchers and, consequently, they were unwittingly pulled across the frontier. A large portion of the global economy is northwest of the frontier, it’s not clear how it will get back to safety (and at what cost) and therein lies our problem.

Some real gems here.

Caution, translated by Google from Danish.