Barack Obama « Power And Dollar

Is Obama To Re-Start The Nuremberg Trials Next?

Is Obama ready to re-start the Nuremberg Trials? Or forget Dufar trail in ICC? His decision of not prosecuting CIA officers employs the “I am only following orders” argument which is the exact defense employed during the Nuremberg Trials. Obama’s goal is to protect the civil servants, i.e. to preserve their loyalty to his administration, future Democratic presidents, future presidents in general. Obama transferred a legal issue (defending the officers in court) to a political issue and may in fact undermine these officers’ defense.

During the Nuremberg Trials, war crime defendants like Wilhelm Keitel used this “following an order” line. However, Allies pre-empted those arguments by Nuremberg Charter, created before the Nuremberg Trials.

Obama’s interests are to assure the civil servants to work for him. Therefore, Obama is spending his political capital to shield the legal liability of those officers. Employing the “following an order” line now gives legitimacy of the war crimes, thus weakening the authority of Nuremberg Trials. Is Obama increasing the doubt from the Jewish voters?

Obama is eroding his extreme left base. Will Obama gain any votes from the defense hawk voters in 2012 as a result of this? If not, he is making an electoral loss out of this.

Obama is also weakening the International Criminal Court since ICC mainly prosecutes war crimes. A legal event is now not only an electoral factor, but also a political risk premium to the international community, which Obama claimed during campaign to want to.

Obama could have chosen to use state resources to defend them in United States courts. Does Obama consider the defense to have a poor chance? By not prosecuting, Obama cedes the initiative to choose the court of battle. The federal government can still provide defense wherever the trail will take place since the officers’ conduct were by the state. Any country can choose to prosecute them in any court, whose legal proceedings will be unfamiliar to the defendants. Would arguing the case in an American court provide better legal defense than in a foreign court for these officers?

Obama probably does not gain any vote from defense hawk voters, alienate his left base, make Jewish voters more doubtful, breaks his promise to mend the international community’s trust toward the States, weakens ICC and future trials (say Sudan’s Dufar trial), weakens the defense of the officers by provoking the case to be argued in a foreign rather than a domestic court. All for buying 4 (or eight) years of honest work for Obama?

April 20, 2009 Posted by royho | Barack Obama, Democrats, Republican, activism, advocacy, obama, opinion, politics, wordpress-political-blogs, 美國 | | No Comments Yet

Veto The Pork? Thought About The Cost Of Business?

Fourteen Senators are calling Obama to veto the budget (until 2009.09). Will Obama veto? If these 14 Senators are truly against the pork, they could eliminate the bill themselves. They would rather say they are against it, rather than calling the President to veto it.

Polosi says it is less than 1% of the bill. If CNN’s $8B figure is correct for this $410B bill is correct, then it amounts to 2% (1.95%, if you really want 2 more decimals).

Let’s check back on the bailout bill. $787B. How much was the pork there? According to Republicans, it was 19.05B. That would make it 2% again (2.42%, 2 more decimals).

From 2.42% to 1.95%, that is 1/5 reduction! Do you have to pay your real estate agent for commission? Is this the commission for legislators? Cheaper than our real estate agent! The only problem is that if it were an annual ritual, then this is pretty expensive.

Are these 14 Senators going to go through the process to vote against the $410B? Maybe they did not get their proper share in that bill!

March 5, 2009 Posted by royho | Barack Obama, Current Events, Democrats, Republican, activism, advocacy, legislation, obama, opinion, politics, wordpress-political-blogs, 美國 | | No Comments Yet

Gimmick? What Difference Does It Make?

Obama did not actually ask for pay limit. Obama pretty much asks for pay through options: exercise to sell the stocks when you pay back the money to the government. Obama also asks for more say for the shareholders. Some will say such an ask is ridiculous. Some will say if you want the money this badly, then this is the price to pay.

Obama will likely get his way, not because of media bias, but because he is likely to get the votes for this one.

Ideologies aside, what is really at stake? This proves American economy is increasingly political. Very soon, America will have a government with hands so full in the operations of the economy that it is not too different from China or India.

Pay limit takes the headline. However, if you read the content, the other point is the more important one: “bank shareholders will have a greater say about the salaries paid to company heads. The measures will put in place greater transparency for costs such as holiday parties and office renovations.” This actually follows the same concept of SOX.

Obama is actually addressing quite a few things here.

In large corporations, small shareholders never get a say. The big shareholders usually end up being mutual fund companies. Mutual fund companies tend to be silent partners. So, they do not say much. In fact, they do not even want a seat on the board. Boards are still running the way it used to be 50 years ago, 100 years, old boys club. However, the number of shareholders these days is: way too many. However, 100 years ago, a large corporation did not have hundreds of thousands of shareholders. These days, if you count the mutual fund holders, you easily have millions of shareholders. Large shareholders get ways to take care of themselves, preferred shares or even board compensations for the lucky dozen. The theme of transparency in this issue is actually consistent to one of his campaign messages.

Annual reports are informative. For a large publicly traded company, say 100 million operating budget or 1000+ employees, tucking in ridiculous expenses on executives is too easy. Even though SOX asks for any small thing that is “material”, what is half a million to a 100 million? Obama essentially is having one stepping further: SOX is about relative to the nature and complexity of the business, let’s have it relative to ordinary people.

Impact on economy? For people who have >500k, do they spend all the money and let the money circulate in the economy and create jobs? No, they tuck half of it in their 401k anyway. In a way, Obama is actually tying up all their 401ks into their own company’s stocks. Now, since these executives will have no diversification of the assets, they now have complete vested interests in the survival of the company.

So, political gimmick or not, this move actually does make a difference.

February 4, 2009 Posted by royho | Barack Obama, Current Events, Democrats, activism, advocacy, banking, business, economics, legislation, obama, politics, wordpress-political-blogs, 美國 | | No Comments Yet

Obama Administration Begins! (Or ?)

Obama settled on his economic team late Friday afternoon, sending Dow 400 points higher, just above 8,000 points. Then, news about Citi’s (NYSE:C) bailout came about. This news probably marks the beginning of Obama administration. Here is also why this signal is important.

A plan like Citi is facing must have been laid in advance. What has been in the dark is if the plan gets proper continuity through its execution. Therefore, the first priority is people. The people had to be properly identified. The team had to understand what is involved. Geithner’s appointment had a lot to do with his familiarity in the financial crisis as well as the solution already in place. He probably had a hand in the solution as well. For an announcement that spans through two administrations, Obama had to approve. Bush had to approve this plan as well since Obama is doing to take the credit for its success but Bush will take the blames if it fails. Geithner’s appointment is an additional (in addition to James Jones’ appointment) indication of the desire for smooth transition.

Of course such a “smooth” transition means a blend of old and new, ie some more of Bush people, and some of Bush ideology gets carried over. However, media is very willing to forget about these things, when it is done by Obama.

The importance of the news, in addition to sending DJ and S&P up another 3% in the first 2 or 3 hours of a Monday morning, is this: Obama already replaced Bush; expect more consequential news from now on. Obama’s administration is not going to begin on 2009.01.20. His administration starts now. Therefore, if you thought your decisions could wait until 2009.02, then you may want to re-juggle your vacation schedule. Your Q4 board probably is going to get busier than usual, not only the economic news and your company financials matter, but also Obama will deliver statements earlier than previous presidents. Decisions about your public relations firm, lobbyists, policy research contracts will have to be revisited now rather wait after Christmas.

Fund managers have to get busy too. Just look at Citi’s stock this morning: 2 hours and 66% increase. Obama’s statements will make big swings. So, don’t slack.

November 24, 2008 Posted by royho | Barack Obama, Current Events, Democrats, Republican, banking, business, economics, obama, politics, wordpress-political-blogs, 美國 | | No Comments Yet

Who Just Financed The Auto Bailout? What Do They Really Want To Buy?

How much money are GM (NYSE:GM), Ford (NYSE:F) and Chrysler asking? $25B. What if someone already lent more than that $25B money to America 2 months ago? Should America use that money for the auto industry or something else? Like the new stimulus people talked about?

Back when Treasury Secretary Paulson was having his stunt show of $700B domestically and internationally, China became the largest lender to the largest debtor (from the second largest). While most (16) of the reported 29 markets shrank their lending to America, China actually made the biggest increase in lending this year in September (the latest data available) both in dollar amount as well as in proportion of the portfolio.

China lent an addition of $43.6B, from $541.4B to $585B, largest in the year for China, as well as the largest increase in the world. This is 8.1% increase for China. China is actually taking a much larger portfolio risk on America. If China had any portfolio risk management, China must have broken all their portfolio risk controls by now.

China is of course serving its own interest at the same time. Propping up US economy for a while will assure that US currency slows down its decline, slows down its decline in imports, that the pressure on currency exchange rate is dampened.

This is another angle to this irony. Competitors or not, China and America are dependent on each other. If America is indeed in decline, as CNN reports and National Intel Council finds, then America may want to learn a lesson from England.

UK has been experiencing a decline for a long time. However, they continue to enjoy a greater influence than their economy can support. They managed to find a buyer for their asset, political asset. This is no different than a retiring accountant (doctor, lawyer, real estate brokerage owner) selling his book of business to a younger partner through an earn-out model.

When you sell your business, you can sell the whole business up front, in cash. Say 2 years, 3 years of the profit. However, the buyer may have a hard time to take everything in one go, especially we are talking about a young business partner. The young business partner needs a certain time to get acquainted with the clients to prevent client attrition, especially if the business is a relationship heavy business, like politics. So, have two partners in the firm at the same time, the young partner gradually increase its shares over the years as the old partner reduces his work load and introduces the younger partner to the existing clients.

This is what England did. England maintained a “special relationship” with America by serving American interests since WW2, transforming its political assets to the benefit of America, re-aligns its own interests at the same time. England did not suffer the decline France had. If America perceives this “decline” as reality (rather than another ploy from the intelligence and military community to get more budget), then the next question is: Who will secure our future interests? Who is the buyer? What is our inventory? At what price? Who is our rep?

With that in mind, how consequential is Sudan or Tibet or even Taiwan in this bilateral relationship?

November 21, 2008 Posted by royho | Barack Obama, Current Events, Democrats, Republican, economics, obama, politics, wordpress-political-blogs, 中國, 美國 | | No Comments Yet

How Long Can You Wait For A GM Bailout?

GM (NYSE: GM), Chrsyler and Ford (NYSE: F) are asking for a nagging for an auto industry bailout. This is what should have been expected once the $700B bailout flood gate is open. After the auto industry will be the steel industry, the building industry. If you bailed one, you need to bail all.

Obama said the auto industry is important. That may be an electoral language. It may be too early to tell if he will deliver or break the promise. However, one thing is certain: he should focus more on transition than governing. For that reason, he is likely to remain mute on this issue.

What about Bush? Bush already said he will not bail out. Some think Bush is using that to bait Senate to rectify trade treaties. It is more likely Bush is being a prudent and a responsible out going president – do nothing. This is best described by Treasury Secretary Paulson’s article on NYTimes. During a transition period, the stunt show could have been to advocate for McCain (“who else can steer us through this mess?” Not that it worked). Once the election is (or was) out of the equation, the job (Paulson’s job) is make sure the ammunition is available for Obama and hope that Paulson does (did) not have to use the ammunition or use all the ammunition. Here is why: Paulson’s reputation will be the first for crucifixion under the Obama administration when Obama is up for a recovery failure. The best Paulson can offer is to recommend the best talent he can find.

The starting point to any bailout is the House. Will House give the money? Even if Pelosi wants it, she is unlikely to get the ammunition to push it through, given the controversy of the $700B and the margin that vote had. Suppose it passes, it does not have enough votes to override Bush.

Will Obama ask for it? Who will take credit for the bailout? Or the blame? Who will have to be accountable to the execution of the bailout, if the money actually goes through? Obama administration or Bush administration? Obama wants no ambiguity. Bush is unlikely to want to create another potential mess for a Democrat to manipulate against him. The $700B stunt show is already enough for both Bush and Obama.

So, the story is then: forget about trading auto stocks based on political news or even the hearing. No matter how appeal the hearing will turn out to be, the earliest possible actionable news is after Obama’s cabinet becomes clear, if not after inauguration.

November 19, 2008 Posted by royho | Barack Obama, Current Events, Democrats, Investment, Money, Republican, business, economics, legislation, obama, politics, stock, wordpress-political-blogs | | 1 Comment

Prudent Obama Prolongs Uncertainty

Obama is not going to G20 because there is only one president at a time. This is prudent. This also makes him safe. He should not be responsible for anything Bush commits. By being next to Obama, he either has to say sorry to Bush or to the other leaders or he has to acquiescence to the conditions. Alternatively, if he takes a more active role, then he would be taking Bush’s last thunder. Bush deserves to have the last ride before he leaves.

Great that Obama is doing all that. What about the rest of us?

These prudent actions actually prolong the uncertainty in the financial world. The financial world is now waiting for Obama. Who is the new Treasury? What is his view on the bailout? What is his view on Detroit? What is his differ from Obama’s?

The financial market cannot bring in too much good news in the near future due to political uncertainty. Where is your 401k’s fund manager going to place his bets? Dump GM or not? What about your uncle’s pension fund manager? What can he do about it? Keep Citi or not? They are all waiting. Other presidents took more time to do all that. It’s just Obama got a really bad deck of cards. And if he plays bad, we will have to sweat for it.

November 13, 2008 Posted by royho | Barack Obama, Current Events, Democrats, Republican, economics, obama, politics, wordpress-political-blogs | | 1 Comment

Powell, What Makes A Good Endorsement?

An endorsement is similar to an advertisement. The endorser would want to make a difference. What is the difference to an election? Win or lose. You can win by 1 vote (W) or by a landside. They all give you the presidency. An endorsement that takes a black horse to the main field is a good endorsement. An endorsement that pushes the last block of voters to tip the scale is a good endorsement. Anything after it is tipped over is an accessory. Measuring the impact of an endorsement is to measure the size of votes it affects. For that reason, you and I probably can save the time, in terms of endorsements.

Analysts give their opinions about what Powell’s endorsement means. An endorsement can mean a lot of things. “What is the meaning” is a fun question to ask by media. It is an interesting content. It is not an important question to ask. The good question to ask is: is this endorsement consequential? is this endorsement relevant?

Is Powell’s endorsement a good endorsement? Did Powell push Obama to the main field to compete against Hilary Clinton? Oprah did that. If the race is already tipped over, then this endorsement is an accessory. Therefore, the impact of Powell’s endorsement is very questionable. Powell may end up merely making a public statement about his differences with Republicans rather than making an impact to the race, or grabbing a 3 second media attention for no self gratification (I do not believe Powell has that self gratification need), or showing his political misjudgement or miscalculation (not knowing that the race may already be over). Powell’s endorsement may end up being no more powerful than John Edwards (Edwards endorsed after it was crystal clear that Hilary Clinton was going to lose).

Powell may not have had polling results to inform him the value (votes) of his endorsement. Therefore, he is unable to draw a dividend out of this endorsement effectively.

The only thing that can make such an endorsement into an incentive is to secure a political appointment in the back room. However, Powell does not need that, even if Powell were to cleanse his past actions.

Is Powell making this endorsement to reach a resolution for himself before the world (repentance is between Powell and God. No one else can have that privilege to know)? What is to gain by exposing Powell’s own differences with Republicans?

October 20, 2008 Posted by royho | Barack Obama, Current Events, Democrats, Election 2008, Electioneering, John McCain, Palin, Republican, Sarah Palin, election, mccain, obama, politics, wordpress-political-blogs, 美國 | | 2 Comments

Market Concurs Pollsters

It is now less than 3 weeks to the voting day. Electoral vote spread is 128 (Obama vs McCain : 286 vs 158). Even if McCain takes the rest of the toss up states, he is still 34 votes behind (94 toss up). Short of Osama (not a typo) surprises, opposition dramatic tricks and voting irregularities, Obama’s path is fairly clear. In fact, Obama has to tell his supporters not to be “cocky” .

Obama’s searches at google are already double of McCain’s. Of course the news volumes of the two are about the same. People are already expecting the result.

The market seems to suggest the same. Yesterday was the final debate. Today would be a check to see if the market likes what the pollsters are saying. Pollsters are saying Obama won. Market finally went up for a bit.

The next check is November 5’s market closing. What industries go up on that day? What industry do down on that day? These would directly reflect the market sentiments regarding the new administration’s policies.

However, given the state the economy is in, everything should go up, not only because of Obama, but some sense of certainty.

A lot of commentators gave out long to do lists for the next administration. This is only an example. However, I have not seen one mentioned about America’s future creditors. What future creditors, you ask. Well, someone has to finance the $700B. Half of the US bonds are bought by foreigners. China takes 10%. Gulf states take another 8, 9%. With the saving rate close to 0% in America, these foreigner lenders will work like credit card companies. How much flexibility will the next administration have?

October 16, 2008 Posted by royho | Barack Obama, Current Events, Democrats, Election 2008, Electioneering, John McCain, Republican, election, market, mccain, obama, politics, wordpress-political-blogs | | No Comments Yet

Financial Crisis Now Carries A Political Premium

The financial crisis in America has over rode the presidential election to carry the most political risk in the global economy. While the American presidential election is a cyclical event and its political risks are more within control than many other political events, such as change of leadership in China. However, the risks associated to the financial crisis have not only spoiled into arena of political risk, but its impact is immeasurable yet. This is because its impact is now beyond the financial impact.

The first impact is the presidential election. This financial crisis is now driving the voter emotion, which is of course in favor of Obama. The scarcity of information coming out from the candidates implies the candidates are literally clueless – They do not even attempt to own the issue. This scarcity of information by itself carries a risk premium to any organization that has a budget to be executed in, revenue or input driven from America.

The second impact is American financial industry is now so dependent on the government that its operational independence is questionable. How far are they from being a “for profit organization”? Why would a company’s compensation be political for it not because its owner is now a government? AIG is the perfect example. How much time will it take for these organizations to get political appointments? These are unlikely events within a foreseeable future. However, they are at least academic questions at the table rather than unimaginable.

The third impact takes even a longer horizon. Who is financing the bailout? Do you think this $700B is coming out from cash? This money is financed. Who is lending the money? Japan, China, Taiwan, Middle East oil producing countries are all big lenders to America. All exporting countries will take a beating, however not because of their control weaknesses in their financial industry but because the demand in America is weakened. A smaller pie in America will make the rest of world economy larger in proportion to the States. Countries like China have a big domestic economy that can sustain a good hit. Bush asked “Is UN relevant?” A post 2008 financial crisis world may start to wonder “Is US relevant?” How much influence from America will be reduced not only by the reduction in moral authority of Bush Administration but also by the scale of US economy in relation to the rest of the world.

A corollary of this impact is the influence of global institutions. A lot of the existing global institutions are founded on the premise of asserting American influence. A good example is G7. Who were the G7 countries? The non communist Security Council holders of WW2 and the losers of WW2 plus the most American loyal country Canada. This set was to assure that the strongest industrialized nations can be voted to affirm America’s wishes. World Bank continues to take the most money from the States, not that no other country is willing to offer more. And money drives the votes in World Bank. Head of UNICEF is appointed by America to an American citizen because of budget contribution. All these institutions will see an erosion of America influence.