Archive for the ‘war’ Category
Chicken Little Syndrome
Aug29
By John Feehery
A mighty wind blew in over the weekend. Television anchors were stretched to the limit as they desperately sought ways to fill airtime. Emergency workers looked far and wide to fill in their time cards. And plenty of people suddenly freaked out over the possibility that they might get wet.
New York City Mayor Mike Bloomberg decided to close down the city’s mass transit system a full day before the storm was supposed to hit the Big Apple. When the rainstorm finally hit (without any of the promised flooding), a lot of the Mayor’s critics wondered in loud and not very pleasant voices, if he was over-reacting.
He said that he would rather be safe than sorry, and that is a very common reaction among politicians. “We must be safe, not sorry,” should be the catchphrase of the 21st century.
That sounds completely rational in the abstract. It makes perfect sense to be cautious, especially when it comes to a major storm like a hurricane.
But being overly cautious is not without its own risks. I call it the “Chicken Little Syndrome”. If political leaders continually warn that the sky is falling, and the sky does not fall, it can cause a huge problem with voters.
We live in an era when political leaders are consistently scaring the shit out of voters. We can’t board airplanes without being frisked because of the risk from terrorists. Every piece of luggage left behind in the subway causes widespread panic. The food we eat either causes cancer or worse causes us to be so obese that we can’t get our blue jeans on.
The American people are getting tired of being freaked out.
They are tired of the war on terror. They are tired of politicians. They are tired of dire warnings. They are tired of being scared.
It only gets worse when those warnings don’t pan out. When Hurricane Irene turns into “Come On Eileen”, widespread panic turns into widespread cynicism.
Bloomberg and others are taking the wrong lessons from Katrina.
Katrina was a perfect example of what happens when a perfect storm of complete political incompetence joins forces with a citizenry that borders on savagery with a real, catastrophic weather event.
New York couldn’t have replicated the sheer incompetence of the New Orleans and Louisiana if it wanted to. It just isn’t in the bones of the political leadership there.
As a result, Mr. Bloomberg shouldn’t have over-reacted. Sure, he had a bad snowstorm earlier this year, but hey, it happens. New York’s snow emergency didn’t match Katrina in any way, shape or form.
Yes, it is better to be safe than sorry. But it is also better to be smart than stupid. And it is better to be calm than to panic.
We need more calm efficiency from our politicians and less of the “Chicken Little Syndrome”.
Gaddafi and Obama
Aug23
By John Feehery
Muammar Gaddafi
If and when Muammar Gaddafi is finally deposed in Libya, President Obama probably deserves some credit. He backed Nicholas Sarkozy and NATO’s efforts to aid the rebels (whoever they are). He authorized the Navy and the Air Force to bomb the hell out of the bad guys. And of course, he has been boldly predicting that Gaddafi’s days are numbered, a nice counter-balance to the Libyan dictator’s assurances that he was going nowhere.
Will Obama get that credit? Probably not.
Most Americans don’t care what happens to Mr. Gaddafi. They are worried less about the economic future of Tripoli and more worried about jobs in their own community. Why should we spend our hard-earned tax dollars deposing a far-away dictator when we have a huge budget deficit and a struggling economy back here?
For the conspiracy theorists out there, there is a persistent rumor that we went into Libya to bailout Goldman Sachs.
Goldman lost 98% of Libya’s Sovereign Wealth Fund in 2007 (which amounted to $1.3 billion, a lot of it personal Gaddafi money, undoubtedly), and the Libyans were not very happy about it. Goldman could never come up with a solution to this problem that could make the dictator happy.
Here is an excerpt from a story from the Wall Street Journal about the relationship between Goldman and Gaddafi:
“When they arrived in Tripoli that July, the Goldman partners got a warm greeting from senior fund officials and a cadre of inexperienced employees who hoped to make the fund one of the largest of its kind in the world. Goldman’s team included its head of fixed-income sales in Europe and its executive in charge of clients in northern Africa.
To the Libyans, though, the main attraction was Driss Ben-Brahim, Goldman’s Arabic-speaking emerging-markets trading chief, who ran one of its most profitable trading desks and was rumored to be among its highest-paid employees.
“We were in awe of Driss,” one former Libyan Investment Authority executive recalls.
“He was like a rock star…while we were making peanuts. We felt honored by his presence.”
Goldman subsequently offered the Libyans the opportunity to invest $350 million in two funds run by Goldman’s asset-management unit, according to people involved in the transactions. Access to the funds usually is offered only to the firm’s best clients, along with Goldman partners. The Libyans accepted.
Youssef Kabbaj, the Goldman executive in charge of North Africa, became a frequent presence at the Libyan Investment Authority as the investment bank worked to expand the relationship. He worked with the fund’s management on investment ideas and encouraged younger employees to deepen their financial knowledge by attending Goldman training sessions, these people said.
Goldman soon carved out a new business with the Libyans, in options—investments that give buyers the right to purchase stocks, currencies or other assets on a future date at stipulated prices. Between January and June 2008, the Libyan fund paid $1.3 billion for options on a basket of currencies and on six stocks: Citigroup Inc., Italian bank UniCredit SpA, Spanish bank Banco Santander, German insurance giant Allianz, French energy company Électricité de France and Italian energy company Eni SpA. The fund stood to reap gains if prices of the underlying stocks or currencies rose above the stipulated levels.
But that fall, the credit crisis hit with a vengeance as Lehman Brothers failed and banks all over the world faced financial crises. The $1.3 billion of option investments were hit especially hard. The underlying securities plunged in value and all of the trades lost money, according to an internal Goldman memo reviewed by the Journal. The memo said the investments were worth just $25.1 million as of February 2010—a decline of 98%.
Officials at the sovereign-wealth fund accused Goldman of misrepresenting the investment deals and making trades without proper authorization, according to people familiar with the situation. In July 2008, Mr. Zarti, the fund’s deputy chairman, summoned Mr. Kabbaj, Goldman’s North Africa chief, to a meeting with the fund’s legal and compliance staff, according to Libyan Investment Authority emails reviewed by the Journal.
One person who attended the meeting says Mr. Zarti was “like a raging bull,” cursing and threatening Mr. Kabbaj and another Goldman employee. Goldman arranged for security to protect the employees until they left Libya the next day, according to people familiar with the matter.”
If Zarti was a raging bull, imagine how mad Gaddafi (who was mad in a different sense) would have been.
Of course, we don’t go to war to bail out our big investment banks, right?
That is way too cynical. But questions do arise as to why we were so adamant to get rid of Gaddafi and much less adamant about getting rid of Assad in Syria. Both are killing their own people to stay in power. Libya actually was a better partner over the last couple of years in the war on terror than Syria.
Obama might see the downfall of Gaddafi as a big political winner for him, but I have my doubts. It seems the only clear-cut beneficiary of this regime change was Goldman-Sachs.
