Can a President Affect the Business Cycle? Yes.

The excellent graphic in the New York Times yesterday asked: "Can a President Tame the Business Cycle?" Provocative. Draws attention to the graphic. But it's like asking "Can a President End Poverty?" Unfair. Invites a shrug of the shoulders.

The text accompanying the chart - which depicts the consequences of the economic policies of rec ent presidents - asks a more reasonable question:

Today, Americans save less and earn a lower minimum wage — in real, or inflation-adjusted, terms — than at nearly any other time since 1950. Can voters reasonably expect these and other indicators to change significantly after a new president takes office in January?

But the appropriate question is not whether one can always “tame” a tiger. It is whether we have to feed people to it.

Voters reasonably can expect better policies than the disastrous laisser-faire policies of the last eight years.

By ignoring the unsustainable runup in asset values (especially housing values) that occurred under George W. Bush, recent policies have invited the collapse of these values in recent weeks. In Keynesian terms, Dubya had the furnace running during the month of August. Allowing and encouraging the extreme increase creates the probability of an extreme correction. Dubya is responsible for the economic hardships and inefficiencies that accompany the correction.

Starting in January under President Obama one can expect a move toward less inequality of income and a less extreme business cycle.

Letter from London - Big Bang Bugs British Banks

LONDON - It has come to this. London's Big Bang was to open up UK financial markets to stop the grousing by Oxford-Cambridge graduates about how much more money their Wall Street cousins earned. But opening up the UK markets also allowed in the U.S. subprime-CDO-CDS virus that laid low many U.S. institutions and now has more UK victims. Europe's more regulated financial sector has been relatively immune to the disease.

How the right and the left do converge in such a crisis. Dubya's administration with Phil Gramm's leadership was engaged in a methodical deregulation of the financial markets. But it showed no hesitation about swiftly seizing the commanding heights of the mortgage lending and investment banking industries.

In Britain, Gordon Brown's Labour Party - ideologically far more prepared to turn its banks into government bureaucracies - delayed taking action but is now following in Uncle Sam's tracks. The Financial Times calls the bank bailout a "part-nationalization".

Newspaper headlines this morning focus on a £50 billion UK bank bailout. The Times, Daily Mail, Telegraph and Independent have major headlines, all explaining that the number is an estimate of an initial infusion of capital by H.M. Government to buy equity primarily in three major banks - Royal Bank of Scotland, Lloyds TSB and Barclays. A fourth bank, the Halifax Bank of Scotland, is also involved because it is in the process of being absorbed into Lloyds. (The Royal Bank of Scotland has already absorbed National Westminster.)

The Evening Standard, however, perhaps because it has a later deadline, reports that the bailout is for much more, £500 billion or about $870 billion. The larger number is huge for an economy that is substantially smaller than that of the United States. It is also more realistic, because it includes £50 billion to guarantee bank bond issues, £200 billion for short-term lending and another £50 billion for recapitalization.

Besides the big banks that have been huddling with the Chancellor, four other banks are mentioned in the Evening Standard story - Abbey, Nationwide, HSBC and Standard Chartered. The list is still "in formation" as HSBC, for example, isn't convinced that it wants or needs the government's money.

The complaints over here are similar to the ones aired in the United States, except that in addition Her Majesty's Government is being called dilatory. Simon Jenkins of the Guardian describes as "dithering" by Brown's Chancellor Alistair Darling as "dithering" and Parliament as "useless" - postponing action because of a schedule "fixed by the grouse-shooting season." London traders are described by the Evening Standard as calling the new act "Too little, too late." Alistair Osborne of the Daily Telegraph headlines his story: "Action at last - but is it too late?"

Most of the commentary, of which there is much, focuses on the control that the government will exercise and the taxpayer perspective. The Daily Mail says the banks will "fall under state control, the biggest nationalization of modern times."A typical comment is by Alex Brummer, who says that "the heavy hand of government" will exercise "ever more control" over the banks.

The IMF is reportedly about to release a projection that the UK is the "biggest casualty of the world downturn", with bank losses reaching $1.4 trillion and the GDP growth turning negative in 2009 for both the United States and Britain. Brits are asking the same question as Main Street USA - "What do we get for our blank check?"

Armageddon-friendly theorists go further and predict that the financial crisis will be the death knell for the euro and some suggest raises questions even about the future of the EU itself.

Brand Expert Scores Obama v. McCain 7 Ways

Pat Cottingham

The Obama and McCain brands have been rated by branding-strategy expert Pat Cottingham of Genuine Imprints, Ltd. Her paper "Brand Obama or Brand McCain?" is featured this week on brandchannel. It's astute. Here's a summary she wrote for me:

On November 4 the American people will buy the Obama or McCain brand. I think the Obama brand is winning on seven criteria:

1. Logos. The Obama Campaign chose an icon that captured the feeling of sunrise over a field of red and white stripes. There is also a subtle "O" for Obama that is in play here though the name Obama is not used in the icon. This makes it a universal logo/icon to which anyone can bring his or her own meaning. It also communicates the Obama brand style. The McCain Campaign chose a logo that comes directly out of his family heritage of three generations in the U.S. Navy, as well as his prisoner-of-war-hero-status political leader. The colors of blue and gold are the U.S. Navy colors, the star icon comes directly from military-rank designations on uniforms. Graphic icons are more new-school in the branding world, indicating change. Names on logos are more old school, indicating traditional values.

2. DNA. The Obama brand has a clearly defined brand code delivered in a simple three-word line. "Yes We Can". McCain has not clarified his brand code. His brand has delivered multiple messages - "Change You Can Believe In", "Country First", "Reform Prosperity Peace", "Don't Hope for a Better Life, Vote for One", "Courageous Service. Experienced Leadership. Bold Solutions".

3. Benefit. Obama has a clear product benefit. "Hope". It is hard to discern from the variety of McCain's brand messages what his product benefit actually is.

4. Positioning. The Obama brand positioning is We/People based. The McCain brand positioning is more Me/McCain based. If you would like to see evidence of this go to the Brooklyn Art Project site and see their Visual Word Maps. These word maps reveal the Obama and McCain campaign strategies by the top words used.

5. Values. If a brand is to be trusted it has to shed light on its values. Obama conveys the values of hope and unity. The McCain campaign has attempted to undermine these values, starting with exploitation of the Rev. Jeremiah Wright's sermon on YouTube. This inspired Obama to give a well-regarded speech on race in America on March 18 at the Constitution Center in Philadelphia. This strengthened the Obama brand, as Obama showed he could stand up to adversity. McCain has clearly communicated that he values country and service but it's not clear how this message relates to current economic, energy, and environmental challenges facing America. Television coverage today showed Palin with "Country First" in the place of McCain's name on the campaign logo. These two words sound like implicature - a new word for the ancient practice of implying or suggesting something more than what it said. Saying that McCain puts his country first implies that Obama does not. It's as if Coca-Cola advertised "No Arsenic Added" - a statement that is surely true, but carries the (false) implication that other brands of soda do add arsenic. Sarah Palin at the same time was suggesting that Obama "pals around" with terrorists, the evidence being a long New York Times story on Bill Ayers that in fact concludes that the connection between Ayers and Obama, who both served on the Chicago Annenberg Project, was not very strong.

6. Mission. A brand must have a clearly defined mission so that its messages flow in one direction. Obama's mission is to bring "Change to America". The fact that he is the first African American running for the president of the United States is the embodiment of this mission. There could be no bigger change than an Obama administration and the Obama family in the White House. McCain's claim that he will bring reform to Washington with bold solutions is harder to buy into, no matter how much he positions himself as a maverick. The McCain brand simply hasn't demonstrated that his administration would be different from the last eight years under George W. Bush.

7. Vision. Finally, every great brand must have great vision. The Obama brand's "One Nation" vision is wrapped up in his quote "There is not a Black America and a White America and Latino America and Asian America; there's the United States of America." This viewpoint is the uniting principle that the Obama brand has promulgated throghout the country. The McCain brand vision is a world that is more threatening and fear based. He says: "We must win in Iraq. If we withdraw, there will be chaos; there will be genocide; and they will follow us home." A vision of fear in how we face our challenges here and around the world will diminish us. It will make us smaller and this is not the America that we want to see at home or how we want to continue to be seen around the world.

For a longer version of this post showing the logos and including links, go to HuffPost.

PORT AUTHORITY | Chris Ward Speaks Out

Chris Ward, 53, addressed a breakfast group this morning sponsored by the New York Law School and the Murray Goodgold Foundation. Governor David Paterson appointed Ward Executive Director of the Port Authority of New York & New Jersey earlier this year.

Ward served at the Port Authority under Governor Pataki and was then tapped by Mayor Bloomberg to head up the Department of Environment Protection, where his work was generally praised.

He left the City to work for a private company and then became managing director of the General Contractors Association. His appointment by Gov. Paterson to his $286,702/year Port Authority job is considered nonpolitical.

Ward's talk is focused around four questions: (1) What will the urban machine be that drives jobs and wealth creation in the NYC area over the next 30 years? (2) How does the development of port facilities help? (3) How will a regional rail system help? (4) How will the airport system help?

His biggest eye-opener upon taking the job, he says, is that "$29 billion doesn't buy you very much." The Port Authority must therefore prioritize. He is also looking to the Federal Government to support rail freight projects as they have supported passenger travel via the highway system and Amtrak.

He argues, switching the usual project ownerships, that New Jersey's planning for the ARC tunnel will rejuvenate the NYC railyards, while bringing rail freight access to NYC will help take many trucks off New Jersey's highways.


Ward credits Congressman Jerry Nadler for asking good questions about rail freight in the Congress. Nadler, who is in the audience, in turn praises Ward for the direction he is taking the Port Authority.

With a few pointed words, Ward takes issue with the Bush 43 Administration for understaffing the FAA and trying to promote market-based auction systems instead of addressing the capacity problems of airports in the NYC area and elsewhere. "We need a GPS-based system. The market is not going to solve the airport congestion problem."

In a movie released three weeks ago, I.O.U.S.A., I watched several New Yorkers (Doug Durst, Pete Peterson, David Walker and Robert Rubin) take issue with the string of federal budget deficits under Bush 43, after a sring of budget surpluses during the Clinton years. To my mind the doubling of the official federal debt (in round numbers, from $5 trillion to $10 trillion) is only part of the tragedy.

The two other big parts of the debt tragedy are (1) we borrowed the money overseas, avoiding debate at home about the war and putting power in the hands of our creditors, and (2) how little we have to show for the money we have borrowed.

Think what we could have got for $1 trillion of transportation infrastructure for U.S. ports, airports and rail. Look, as Ward tells us we should, what Dubai is buying now in international connectivity. Compare what we got in Iraq for $1 trillion and many thousands of lost lives.

Is the NY SUN about to set again?

Crain's NY online reports that the NY Sun, a revival of a long-defunct paper by the same name, could close by Oct. 1.

Investors reportedly have told editor Seth Lipsky to raise new money or shut the paper down by the end of the month.

The Sun has had an excellent cultural section, some fascinating obituaries and some excellent reporting in niche areas. It's sad that if the paper folds a lot of good writers will have one less outlet for their work.

But the paper has been getting thinner and thinner. Advertisers are spending more money on targeted ads on the Internet. Classifieds are shrinking. The Sun's target audience is already well supplied with publications. There is only so much anyone can read and an increasing amount of news is available instantly and for free online.

Yankees to Blame for Sluggish Economy, Too

This appeared in the NY Magazine Blog (www.nymag.com), The Sports Section, picking up on a NY Post story and taking it another step. In a half-trillion-dollar economy, the impact of the Yankees isn't a big deal - the permanent NYC-based jobs created by the presence of the MLB are more important. But psychologically - when the Yankees ought to be in the Playoffs without question every year given their gold-plated budget - the team's performance seems to fit with the flat performance of Wall Street.

If you're running out of people to hold accountable for the tanking economy, NYU adjunct professor John Tepper Marlin has a suggestion: Blame the damn Yankees. In a study commissioned by the Post, Marlin found that when the Yankees advance all the way to the World Series, the city stands to make $141 million, factoring in things like revenue earned by sports bars. But just by making the playoffs, the team earns the city $26 million, and with the Yankees poised to miss the postseason for the first time since the strike season of 1994, this previously taken-for-granted cash can't be counted on.

But don't buy that house in Tampa quite yet. The Mets, who are currently two games ahead of the Phillies in the National League East, can make the city some money, too: $21 million for a playoff appearance, and $147 million if they win the National League pennant. (The difference in numbers has to do with the fact that Mets fans are more heavily concentrated in the five boroughs than are Yankees fans.) So no matter your allegiance, let's hear it on the unemployment line: Let's go Mets! Let's go Mets!

CITY WILL $TRIKE OUT IF YANKS MISS PLAYOFFS, NYPost

Cited also in The Yankees Missing the Playoffs Could Cost New York City Millions, FanHouse and Fate Of New York Economy Rests With Yankees, Mets, The Business Sheet. See all stories on this topic.