Something All My Wall Street Friends Should Read

Charlie Gasparino's column today is a must read for everyone in the financial industry. You can view it here.

The gist: you have no clue what's going on in the Democrat party and you are nuts if you think Hillary Clinton will be your friend. Learn, live it, know it.

Socialist Man

Bill de Blasio wanted to raise taxes on the rich to pay for universal pre-K. Now Governor Cuomo says he's going to make it happen without any tax hikes, but de Blasio wants his tax hike on the wealthy anyway. Because.

Yesterday, in the season's biggest snow storm, the upper east side was plowed last. Coincidence? This is a page right out of former DC mayor Marion Barry's playbook. He would always plow Georgetown last, if at all.

Can there be any doubt who and what this guy is? A one-man economic development program for the state of Florida. (I already know my first person bound for Miami, specifically because of de Blasio.)  Get used to seeing de Blasio use the government as a political tool, much as Obama has done at the federal level. That this will go badly may be the most predictable political outcome since Obamacare.

Natural Gas Cars Are Better than Electric

We feel good about ourselves in my town, yes we do. We have installed six electric car refueling stations. If you could see us right now, we are giving ourselves a well-deserved pat on the back. We are thinking globally and acting locally!

In case you weren’t sure, that was sarcasm. What kind of bizarre logic thinks this is a good way to spend taxpayer money? No one, I mean no one, is going to use these things. First, do you know long it takes to charge an electric car? I'll answer that: four to six hours. I’d like to know who’s going to sit around for that long while their car charges. The town, perhaps realizing this, is putting them places like train stations so people can leave them to charge while they commute to the city. But…think. Someone arriving at the station has presumably spent the night charging their car, so it’s already full. Okay then, for argument's sake, let’s say that they forgot. They plug their car in and head to the city. Then what? No one else can use that pump for the whole day?

One wonders if anyone bothered to actually count the number of electric cars in town. I personally know of one. Oh, I know the argument, if you build it, “they will come.” Except they won’t because there are good reasons no one is buying electric cars and their makers are going bankrupt. The technical term is they suck. Long recharging times, poor range, and big price tags. No wonder consumers only bought 23,000 Chevy Volts last year, despite a passel of incentives from the government. (Not just money, either, but things like access to HOV lanes. In my town, you get cheaper parking.) The massive Ford F150 pickup, on the other hand, sold 763,000 units last year.  

But nothing will match the smug self-righteousness of a someone driving a Nissan Leaf fifty-five in the fast lane, usually right in front of you. He's saving the world, so you can damn well wait.

Do greens ponder, I wonder, where the electricity to power these cars comes from? Usually, it's from from coal-fired plants, something we’re not supposed to like one bit. In our case, though, most of it comes from a nuclear plant. While I love nuclear power, the green crowd detests it, even though it is carbon-free. Are you following this?

What we should be doing is building out the infrastructure to support cars that run on CNG, or compressed natural gas. Here's one you can buy right now:

 2014 Honda Civic Natural Gas

Natural gas is abundant, sourced in the U.S., and amazingly cheap. Right now, the average price per gallon in the U.S. is $2.12. Cars using it require less maintenance. It also runs cleaner than regular gas, which should make the greens happy, but it doesn't. They immediately think of "fracking," and Yoko Ono has told them that fracking is bad, so it must be.

The U.S. should be building out its natural gas infrastructure now. It actually won't be that difficult, because there is already a whole network of natural gas pipelines. What we need is to get it to the pump, like in the picture above. Right now, you can see if there are any pumps near you here. There are currently 660 stations selling CNG. The nearest to me is 15 miles away, so unfortunately, a CNG car is not an option for me yet.

Is it for you?

Of Fat Men and Frenchmen

I am always amused that Republicans think they can be friends with Democrats and their media toadies. They think back to best buds of yesteryear, like Sam Nunn or Scoop Jackson, or when Ronald Reagan and Tip O'Neil drank beer together. There is an air of desperation about it all, like so many Sally Fields: "You like me, you really like me!"

Except they don't. Oh, they will pretend to be pals when it's politically expedient, like when they're setting up a softie candidate for the presidential nomination, only to commence evisceration the very next morning (hello, John McCain, are you there?). Or when, say, a Teddy Kennedy needed George Bush on board for No Child Left Behind. He was all sweetness and light, but as soon as the ink was dry, he reverted to form as the poster boy for Bush haters everywhere.

And then there's this:

Arguably, Christie gave the election to Obama with the famous bro-hug. Note that this weird, sideways facing posture is surely the result of both men wanting to face towards the press corps. What Obama gained is clear enough, but Christie? He thought he had a new friend, and it never hurts when that friend is POTUS, right?

How naive, and now Christie knows just how much so. The Justice Department, which has been nothing if not Obama's lapdog, is now probing not one but two Christie-related scandals. (They apparently have plenty of time on their hands given their indifference to the IRS scandal, among others.) One, of course, is a traffic jam, clearly a matter of federal import. The other is the possible misallocation of Hurricane Sandy funds. (I happen to view the latter somewhat more seriously, but that's another matter.)

The point is, Republicans, I'm talking to you. Stop being such idiotic fools. Hellooo, McFly. Democrats are not your friends. They hate you and think you're evil. Get over your Stockholm Syndrome and grow a pair.

And so the Frenchman, Hollande. They play by a different set of rules in France, don't they? Imagine a place where absolutely no personal judgements were passed on any sort of personal behavior. A liberal paradise, non? Welcome to modern France, where matters libertine are confused with sophistication.

A little background is called for. For the moment, let's look past the fact that Hollande, a bespectacled socialist class-warrior, has five, count 'em, five names. Francois Gerard Georges Nicolas Hollande. For the moment.

For a long time, Hollande dated this woman:

Segolene Royal

They had four kids together, but marriage seemed like a hopelessly provincial thing to do, so they never bothered...

Then, Hollande started cheating on Royal with this woman, a political journalist (cue bad John Edwards memories):

 

Valerie Trierweiler

Soon, he blew off Royal and Trierweiler moved in. None of this bothered the French, because they then elected Hollande as president. Trierweiler became First Lady, because in France being the president's main squeeze is close enough (see marriage, provincial). Trierweiler receives all the perks that any First Lady would, including staff, cars, all expenses paid travel, etc.

Now, it seems Hollande is cheating on Trierweiler with this woman:

Julie Gayet

Still with me? I hope so, because it gets better. It is now unclear whether Trierweiler gets to keep playing First Lady. That appears to be up to Hollande. I'm sure that conversation will go well. Hey, Val, got a minute? I'm dumping you for someone else, and, oh, would you mind moving out of the palace by tomorrow?

Does Gayet get to become the new First Lady? Hell if I know. What I do know is that Hollande's approval rating has actually ticked up, a possible referendum on Gayet's hotness. Or maybe the French are just a nation of dissolute layabouts and we should try very hard not to be like them.

Harumph (Music Today Sucks)

I'm sure many of you, if you're over the age of 40, have had the "music" argument with your kids, the one that starts with you complaining about how awful today's popular music is. I personally believe that today's pop music is mostly wretched and will be forgotten in 10-15 years. It is bland and disposable, auto-tuned, as if written by machines. On the other hand, I believe music from, roughly, 1963 to 1979 will be studied centuries from now and will be regarded as a golden age, not unlike the late 18th century.

When was the last time someone wrote a song as ominous and wonderfully ominous as "Gimmie Shelter," as soaringly beautiful as "God Only Knows," or with the exquisite craft of “Hotel California?” If I'm missing something, please tell me, because I'd love to download something fresh.

My kids tell me that I simply like the music of my youth. This is a reasonable argument since every generation romanticizes its teenage years. But no, I think those of us who were young in the ‘60s and ‘70s just got lucky. Musical greatness is not linear, and some periods simply stand out, while others are forgotten. 

Quick, name a song from the 1910s. How about one from the ‘30s? How about anything at all from the second half of the 19th century? 

I'm waiting…

A number of factors came together in the ‘60s and ‘70s that conspired to produce greatness. Technology certainly played a part, with 4 and 8-track recording becoming available for the first time. 

A friend of mine who runs a record label says a big part of it was actually drugs, particularly LSD. It spurred creativity, the argument goes. While there may be something to this, it's not as if drugs have disappeared. Perhaps LSD use has waned...

The cultural backdrop of the ‘60s almost certainly played a role. And while the flower-power generation was grossly narcissistic, and its societal impact almost entirely negative (in my view), there's no arguing that all that social experimentation paid off in spades when it came to music. Landing on the moon after starting from scratch in 1961was no more remarkable than evolving from "The Twist" to "Sympathy for the Devil" in the same time frame.

And, of course, there's luck. Perhaps no age was as rife with musical genius, from Lennon and McCartney to Dylan to Brian Wilson to Keith Richards to Jimmy Page to Lindsay Buckingham. And more. These brilliant artists were thrown onto a canvas of experimentation, drugs, and technology, and incredible art was the result.

Then there's...today. Really, it started to go downhill in the ‘80s and seems to have accelerated ever since. The art of writing a hook has been lost, as has any ability to harmonize. I can’t remember the last time I heard an interesting chord progression (many songs today are played entirely in one key!). Lyrics have reverted back to treacly ‘50s simplicity or, in the case of rap, vulgar journeys through rhyming dictionaries. Nothing is implied through suggestion or imagery, it is simply said. "My Life Would Suck Without You," screeched Kelly Clarkson in her recent hit. Bob Dylan weeps for you.

Much of it also just sounds the same, which is odd as there's more technology than ever with which to experiment. Garage Band, which comes free with any Mac, has exponentially more technology than any studio in which the Beatles recorded. Any sound you can imagine, you can create. But ironically, the absence of boundaries has tempered any desire to find and smash through them. 

John Lennon once challenged the Beatles’ recording engineer, the great Geoff Emerick, to make his voice sound like the "Dalai Lama shouting from a mountaintop." He did, with only the primitive tools available at the time. (The results can be listened to in the song "Tomorrow Never Knows.”) Today there's probably a button you push that says "Dalai Lama Effect." 

The contemporary artist is not challenged, so he does not challenge himself. 

I've been pondering getting this off my chest for some time, but there's a reason I'm writing about it now. It turns out there's proof that I'm right! Actual data. Michael Cembalest, a JP Morgan executive, wrote the following to his son as he left for college this fall:

I arrived at college in 1980 (the inception of a decade-long musical graveyard) when many people turned off the radio and instead listened to classic rock and rhythm & blues; blues produced from 1965 to 1978. I notice you like this music as well. Now you can substantiate to today’s generation why that era’s music was objectively “better." 

The Million Song Dataset is a database of western popular music produced from 1955 to 2010. As described in Scientific Reports (affiliated with the publication Scientific American), researchers developed algorithms to see what has changed over time, focusing on three variables: timbre, pitch and loudness. Timbre is a proxy for texture and tone quality, terms which reflect the variety and richness of a given sound. Higher levels of timbre most often result from diverse instrumentation (more than one instrument playing the same note). Pitch refers to the tonal structure of a song: how the chords progress, and the diversity of transitions between chords. Since the 1960’s, timbral variety has been steadily declining, and chord transitions have become narrower and more predictable...

 

(Source: "Measuring the Evolution of Contemporary Western Popular Music," Scientific Reports, Serra et al, May 2012)

The researchers also found that popular music has gotten a lot louder. The median recorded loudness value of songs by year is shown in the second chart. One illustrative example: in 2008, Metallica fans complained that the Guitar Hero version of its recent album sounded better than it did on CD. As reported in Rolling Stone, the CD version was re- mastered at too high a decibel level, part of the Loudness Wars affecting popular music. 

Overall, the researchers concluded that there has been a “progressive homogenization of the musical discourse”, a process which has resulted in music becoming blander and louder. This might seem like a reactionary point of view for an adult to write, but the data does seem to back me up on this. All of that being said, I do like that Method Man-Mary J. Blige duet.  

So there it is. We are being assaulted with loud, bland music. The scientists say so.

Excuse me, while I turn the dial on my radio back to Classic Rock…

Earthquake for Unions in Detroit

To residents in New York, or California, Illinois or others, who wonder why their property taxes are so high, the answer isn't complicated: it's the wildly generous pensions we pay to our public employees, particularly teachers. The typical teacher where I live is able to retire at age 57 with a (present value) retirement package worth $1.6 million (see "Your Kid's Teacher, Millionaire"). Some of us have been arguing for years that this is an unsustainable tax-and-spend death spiral that will result in New York's gradual slide towards bankruptcy, like Detroit.

Not surprisingly, public unions are not particularly accommodating of this argument; after all, in many states, such as here in New York, state constitutions protect retirement benefits from ever being touched or modified in any way.

Except, no. In a remarkable ruling last week, a federal court ruled that federal bankruptcy law trumps state constitutional law, and that existing pensions in Detroit could be cut or even eliminated.

If this isn't a wake up call to public sector unions and their political enablers, I don't know what is. Your pensions are not safe, and it's a problem of your own creation. Your members, many of who don't even want to be but are forced by state law, will be the victims of your decades of overreach.

It would be nice if this could be calmly fixed before the inevitable crisis, but don't hold your breath.

The Obama Ex-Presidency

You weren't thinking he'd retire to a farm and chop wood, were you?

We have a pretty well established tradition in this country of retired presidents leading quiet lives, having passed the mantle on to others. Our very first president established this tradition by relinquishing power to be a gentleman farmer at Mount Vernon.

In particular, ex-presidents are expected stay out of political affairs. There's only room for one guy at the top, and that person has to be free to make their own way. George Bush has become a painter, like Churchill. In a recent rare interview, he was served up the opportunity to criticize Obama on a silver platter, but he politely demurred. (Must have been difficult, considering how much blame Obama continues heap on Bush for just about everything, but he seemed quite peaceful about it.)

Jimmy Carter was the first to break the mold, offering his acidic opinions for anyone who would listen, which fortunately is almost no one. I have to give Bill Clinton some credit, though. Irrepressible as ever, there was no way he was going to hang out all day gardening in Chappaqua. Instead, through the Clinton Global Initiative, he has found a "third" way - staying relevant on the world stage while not interfering too much politically. (Okay, he interferes, but it could be much worse.)

Normally, it would be way too soon to think about how President Obama will spend his retirement years, but Obama himself has forced the conversation by suggesting that he won't leave Washington in 2016. The last time this happened was Woodrow Wilson, and that was only because he was dying.

I will call this now: Obama will be the most meddlesome and irritating ex-president in our nation's history. For starters, he'll only be 55, and looking at another 30 years or so to fill. He will become the community organizer again, this time writ large, a roll he will arguably like better than actually being president. Think about what a community organizer actually does: disrupts, argues, and hectors, constantly jabbing at existing power structures. This is, in essence, how Obama has tried to run his presidency. The tiresome process of consensus building is something with which he has no experience, and it holds no interest for him. This has resulted in not just zero lines of communication with his opponents, but, remarkably, his allies as well. Not surprisingly, leadership as Scold-in-Chief isn't very effective, and actually being responsible for the outcome of things like Obamacare is an annoyance.

But how much fun it will be on the outside! No responsibility! No more boring meetings or stupid heads of state to meet with! The press, ever idolatrous, will provide a mic as needed. Watch out, in particular, if there's a Republican in the White House. Obama will be asked for his opinion on every policy, and he will gladly give it, even organize actively in opposition to whatever warms the hearts of the MoveOn crowd.

There will not be the slightest hesitation. This is a man who decides what laws he wants to enforce and which he doesn't, and even makes new law himself. This is a man who cheered the nuclear option last week after saying it was a fundamental threat to our democracy when he was out of power. This is a man who lied about Obamacare because, with a compliant Fourth Estate, he knew he could. This is a man who has blown off scandals that would have felled others because, again, he knew he could. To suggest that over two hundred years of tradition, starting with George Washington, will give him any pause is about as likely as Self Magazine running a cover story titled, "Get a Large Ass Just Like Michelle."

Somewhere, Saul Alinsky is smiling.

Don't Go to Law School

 "The minute you read something you can't understand, you can almost be sure that it was drawn up by a lawyer."

    - Will Rogers

All the smartest students in my college class went to law school. They didn't do it because they had the concrete notion that they actually wanted to practice law. No, it was more that they didn't know what they wanted to do, and law school was perceived as a logical extension of a liberal arts education. It was an easy way to kick the can on making a hard decision, and it didn't seem as, well, self-interested as a business degree.

Fast forward to my 10th reunion. All the long faces, those that already looked beaten down by life at age thirty-two, were the lawyers. Much to their surprise, going to law school actually results in becoming a practicing lawyer. Somehow that wasn't the plan. Heck, the plan was to change the world, but no one came to interview for that, so the job at Cravath sounded really prestigious, and their moms were really proud, but how come no one told them that being a lawyer was so bone-crunchingly tedious, a world of endless minutia and reams of time sheets?

What they were told was you could "do anything" with a law degree. In theory, there's something to this. A knowledge of the law is useful, and some do escape the confines of law firms. But here's the thing: legal training is all about risk aversion, and that's where I take issue. As a lawyer, you're been hired by others - people actually taking risks - to cover their backsides. Usually, this involves endless amounts of time considering contingencies that have less than a 1% chance of actually occurring.

Is this a necessary process? Yes.

Does it sound like fun? It's not.

Should our country's brightest minds be doing it? Absolutely not, at least not in the numbers that they are.

Seriously, if you're young, go build skyscrapers, cure diseases, start the next Google - solve some interesting problems. Fail at some stuff. Be one of the risk takers that make our country great. If, for some reason, you're hell-bent on becoming a lawyer, for God's sake, I beg you to first go get a job as a paralegal. Get inside a law firm and see what it's like for yourself. Perhaps you're the type that likes to proof read endless documents that only a handful of people will ever read. Then by all means go for it. You've done your due diligence.

Most of you will seek a different path and will be happy that you did.

Ted Cruz Is Electable

Scott and Ted

Could Ted Cruz be the One? Yes.

Conventional wisdom, generated inside the Beltway and the media, says he's a crazy conservative and could never be elected to be president. John McCain called him a "wacko-bird" (a moment of immense eloquence, that). The filibuster was said to be the death sentence for the Cruz brand.

I had lunch with Cruz today and about 25 others, and I'm here to tell you it's hogwash. This guy is the real deal. For starters, he will be the smartest guy in any field. Alan Dershowitz, no conservative, called Cruz the smartest student he's ever had at Harvard Law. He was a legendary debater there, and at Princeton. Son of a Cuban immigrant who was tortured by Batista's henchmen, he memorized the U.S. constitution when he was thirteen. The left generally likes to frame conservatives as "dumb," but I don't see how that's possible here. They will go with crazy. And he most definitely isn't.

Cruz is an articulate and passionate conservative, but more than that, it turns out he's very funny, charismatic, and good on his feet. Every answer was precise and spot on, and frequently sprinkled with a great anecdote. Of course, he was speaking to a very conservative bunch, but it's clear he won't change a word of what he says to suit a different audience. This is where Romney had so much trouble; since he wasn't informed by any particular philosophy, he always had to think about his answers and they always seemed carefully calibrated to the room in which he stood.

Here's where we get into the great Republican debate about "electability." You know who was electable? Here's a list:

Gerald Ford
George H.W. Bush
Bob Dole
John McCain
Mitt Romney

So, I don't have to piece this together, do I? They all LOST. (Note: Bush 41 did win the first time when he ran as Reagan's heir. He lost the second time when it became apparent that he wasn't.)

Seriously, how many data points do Republicans need? The conventional wisdom, promulgated by consultants and dismissed by Cruz, holds that you run to the right in the primaries and then move to a spot just a smidge to the right of the Democrat in the general. Nixon first said this. The problem is, as a strategy this DOESN'T WORK, because you're not giving Republicans a real reason to turn out. What was Mitt Romney trying to sell us? I still don't know, other than he "wasn't Obama." What did he, or any of the failed candidates above, really believe in? Who knows? Liberalism light? Points of light?

Ronald Reagan, on the other hand, made it clear what he was selling, and as a conservative, he was naturally written off by most as a cowboy with an IQ slightly above room temperature. Perhaps not all there. And this is what the mainstream Republicans were saying about him!

Of course, Reagan beat the establishment candidate, Bush, in the primaries, and then, not changing his tune one bit, eviscerated Jimmy Carter in the general, much to the shock of the intelligentsia everywhere. His first term was then the most conservative four years from the executive branch since Coolidge, and this resulted in winning 49 states against Mondale.

Why has it been so difficult for Republicans to follow this playbook? Well, that's a longer blog post, but one thing is clear: Cruz is following it to the letter. He is basically ignoring the media and the party elders, and he's taking his message straight to the grass roots. You need a spine of steel to do this, but from what I saw today, he's got one.

To Republicans who still think we need a moderate to win, consider this: the press will turn on our guy no matter what. You really think they'll go easy if we nominate Chris Christie? Think again, it's a set up. They played nice with Romney right up until the convention, then they turned on him like hungry sharks. When Romney was accused of being a "murderer" by the Obama campaign, where were they? Nodding their heads in agreement. It was the same with McCain, who was a "maverick" and a "war hero," right up until the general. Then he was just the enemy.

I'm not endorsing Cruz, at least not now. It's way too early for that, and the Republicans have a deep field. Scott Walker and perhaps Rand Paul look interesting. Rubio, we'll see. But I am endorsing the idea that we have to nominate a principled conservative. After the disaster of the Obama years, a very clear and different vision must be articulated by our standard bearer.

No more moderates, my friends.

Harvard - Life Inside the Cocoon

In the past, I have often made snarky comments about the political hegemony of our nation's faculty lounges. Recently, I spent a couple of days at Harvard with a friend of mine who's a fellow there, and yes, we even spent time in the faculty lounge (in Harvard's case, a faculty "club"). I went into the heart of darkness.

And what a pleasant existence it is. We audited a class (immensely entertaining, if odd, and featured on 60 minutes). A Kennedy sat behind me. We wandered over and checked out Widener Library and lunched at the business school across the Charles (excellent food). We then popped over to the Law School where there was a 40th Anniversary retrospective of the Paper Chase (great movie, if you've never seen it). And yes, we fit in coffee at the Faculty Club.

The evening was spent having fun debates over beer with a variety of students about the sort of stuff you only talk about in college. An astronomy PhD candidate and an aspiring documentary film maker hotly debated the probability of life elsewhere in our galaxy. I really got into it over tort reform and "stop and frisk" with an American Studies kid.

The coccon is more pleasant than anyone can imagine from the outside. My friend says this is not an atypical day for him. Of course, many of us get to experience it firsthand during our college years. University life is a reassuring womb, where your every need is taken care of. There's a reason we all called life after the "real world."

The days and nights are perhaps most pleasant for the professors because here's a dirty little secret: teaching is not that tough. It doesn't take much time, and once you've taught a course once or twice, you can do it in your sleep. I know this from personal experience, since I taught as an adjunct at Yale. The first time I gave the course, it took some real thought and preparation. By the next year was a piece of cake. Oh sure, you tweak here and there, but nothing that's terribly time consuming. Mostly, you get to spend your days like my friend, gliding between the faculty club, lunch with interesting people, and cultural events.

There's a vast ecosystem of professors, fellows, visiting scholars, perpetual grad students, and administrators that never venture out of the cocoon. Why would they want to? And this is a problem, I think, because they all think alike. 96% of Ivy League professors donating money in the last election gave to Obama. That kind of uniform thinking is horrible if you believe in free discourse and independent thinking.

Sadly, in places isolated from the burdens and responsibilities of the real world, one can take on irresponsible positions without consequence, and everyone around you will have your back.

The cocoon will provide.