Friday, July 29, 2016


This morning on KGET 17 News Sunrise Cathy Abernathy and I discussed the Democratic National Convention. I had fun, as you can see by clicking here.

The segment was largely dominated by Cathy trying to paint a picture of doom and gloom (the GOP has nothing else) while I tried to set the record straight and focus on the positives (I am, by nature, a nice guy). 😉

Specifically, I explained why the Democratic National Convention was such a success for democrats. Cathy Abernathy, on the other hand, went straight for the "Donald's a businessman - so we need to elect him" argument. Then she went for the standard GOP line that there is no worth in public service, so Hillary Clinton is little more than a state bureaucrat, with no accomplishments. Nice.

Leaving the tired state bureaucrat argument alone, for the moment, I went after Donald Trump's businessman credentials. I pointed out that Trump's a silver-spooned trust fund kid who inherited $200 million and still had to declare bankruptcy, 4 times.

From there I explained - and borrowed from President Reagan - that we are better off today than we were 8 years ago under President Bush. Remember him? He's the one who left an economic disaster and trillion dollar deficits as far as the eye could see.

Sticking to her "the sky is falling" theme, Cathy then trotted out the hackneyed argument that there are a record number of people on food stamps, while millions more could be in the labor force but are no longer looking for work. She never explains what's behind those numbers. I was too busy going after Trump's business incompetence to take the time to set the record straight, so I'm going to do it here.

I'm working on another project so I won't delve (be sure to follow the links). But know there are some very good reasons that many people are not looking for work today. Attending school, enjoying retirement (especially early boomers), taking care of a relative, etc. all contribute to a larger workforce that no longer looks for a job (a distinction Cathy never makes).

When it comes food stamps, the number of food stamp recipients has actually declined over the past two years. President Obama's record at "adding people" to the food stamp rolls stands at about 13.2 million. This number seems high (and it is if you're a recipient) until you look at 14.7 million people that President Bush added during his two terms in office.

Over all, though, President Obama's record in the food stamp arena is better than Bush's; an amazing feat considering President Obama was saddled with a recession of epic proportions when he walked into the White House.

In all cases, if we're going to acknowledge rising food stamp figures we need to acknowledge that, yes, it's worse. But it's a bi-partisan development, not an Obama issue.

There's more - I also discussed the Clinton surpluses - but you can watch the KGET clip if you want to see how that went.

- Mark


- Mark

Thursday, July 28, 2016


The segment that captured the difference between the visions for our future embraced by the Democrats and the Republicans was the speech given by Khizr Kahn, who's son, Army Captain Humayan S.M. Kahn, was killed in Iraq ...

Below the picture of Khizr Kahn and his wife is the entire DNC segment, with the powerful and moving introduction of Kahn's son, Captain Humayan S.M. Kahn, by Hillary Clinton ...

Click here for the story of Kahn's son.

- Mark


I don't have much to add to what's happening at the Democratic National Convention that you already haven't heard. The speakers in the line up yesterday - Bloomberg, Biden, and Obama - hit it out of the park. They made it clear that Donald Trump's sanity is in doubt, that he doesn't support working people, and he's not worthy of the American traditions that come with the presidency.

The real incredible part of the speeches is that, while all the speakers went after Trump in their own way, they also offered a positive and even patriotic tone that spoke to America's capacity for rejuvenation at home and inspiration abroad. The spirit of hope and inclusiveness reminded us all what's made American democracy a beacon of light the world over.

This stands in stark contrast with the dark paranoia and fear mongering that Donald Trump wrapped around the Republican National Convention. The divisiveness and hate we saw at the RNC inspired little more than the ghosts of exclusion and hate that we saw in America's past and, now, see in other parts of the world.  

My concern today is - and this should be every Americans concern - what's up with Trump encouraging the Russians to hack into and share U.S. emails? The idea of encouraging another nation to meddle in America's information infrastructure and our electoral process is, quite simply, nuts.

Trump can speak all he wants about transparency (while he continues to hide his tax returns), but he should at least play it straight and tell the American people why he needs to curry favor with the Russians.

Just because Trump can't get U.S. banks to loan him money (he's also seriously in debt to Deutsche Bank) doesn't mean he needs to cozy up to Putin so he will help convince Russian oligarchs to loan him money. Well, on second thought, maybe Trump does have to kiss Putin's ass to secure loans from Russian oligarchs. But why does the rest of America have to pay the price for his inability to secure credit from America's financial institutions?

Then there's the treason issue.

If Trump is ready to throw Hillary Clinton and the American political process under the (Russian) bus because of his personal business interests, what does this tell you about what he'd do as president when Russian oligarchs start backing away from their loan promises (or demand payment)?

Who would Trump share information with in an attempt to shame or paint Russia into a political corner?

Worse, would a "President Trump" start rattling sabers with Russia to distract America from the emails and exchanges that the Russians begin releasing. I'm not simply talking about the Russians blackmailing Trump; I'm talking about Trump using the U.S. military to distract us all from his shady practices and business failures.

And the Republican Party is fine with all this? Sigh ...

At the end of the day, Trump adds nothing to the betterment of the human condition or America's well being.

The fact that Trump has made it this far should tell us all that there are serious issues with both the Republican Party and, yes, politics in America.

- Mark 

Wednesday, July 27, 2016


In the past I've explained how bailouts, artificially cheap money, and favorable legislation have created an environment where a monkey with darts could make money in our economy (here's the link explaining how that worked). Wealth manager and market analyst extraordinaire Barry Ritholtz agrees.

Below is his Bloomberg article which explains how CEOs don't always earn what they get because the state of the economy - which is impacted significantly by bailouts, cheap money, and favorable legislation, among other factors - actually determines what market players can earn. Put another way, without the trillion dollar bailouts, and other market saving gimmicks, there would be no soaring stock market and the compensation of many CEOs would have collapsed ... and, yes, there would have been no bonuses.

For the wonks out there, Ritholtz finishes with a nice discussion on how CEOs should be compensated. I added the graph in the middle.



Verizon’s purchase of Yahoo! for $4.83 billion, while an interesting exercise in combining content, networks and mobile services, highlights the broken norms for paying executives of U.S. corporations.
The short version is that issuing and repricing of stock options compensates executives for bull markets rather than their own performance is absurd.
When the deal is complete, Yahoo Chief Executive Officer Marissa Mayer will walk away with more than $200 million for doing little more than keeping the seat warm for the past four years. Or consider the billion dollars Jack Welch was paid for being brilliant enough to start as General Electric’s CEO when the bull market began in 1982, and then leaving in 2000 when the bull market ended. It didn’t hurt either that he cashed in his stock options just before a huge earnings scandal blew up, revealing how the numbers had been massaged for years. The accounting fraud led to a Securities and Exchange Commission settlement related to hedge accounting and revenue recognition and other disclosures.
Research has shown that external influences account for the majority of a given company’s share price [my italics]. A rule of thumb is that the company itself is only responsible for about a third of its price movement. The market gets credit for about 40 percent, while the performance of the company’s industry drives another 30 percent.
There are of course exceptions. Apple’s incredible share run-up on the iPod, iPhone and iPad is hard to match. But most companies’ share price gains and losses largely reflect things beyond the control of the company or its executives.
Do you have doubts about this thesis? Ask yourself: How the best-run companies’ share prices did from January 2008 to March 2009? How have the worst-run corporations done from March 2009 to present? Consider industries such as home builders in 2005, mortgage underwriters in 2006, and investment banks in 2007; no matter how well managed they were, shares of those companies all got shellacked.
Many factors go into how well a company’s stock performs:
  • State of the economy
  • Company’s internal rate of return on capital investment
  • Inflation and interest rates
  • Management team
  • Industry trends
  • Global events
  • Company revenue and profit
  • Secular bull and bear markets
  • Intellectual property
  • Federal Reserve policy
This is hardly an exhaustive list.
The key point is that many things can and will affect the price of any one company’s stock.
The market surges every time the Federal Reserve makes cheap money available. In these instances a soaring market, or successful stock, has little to nothing to do with CEO performance.
The counterargument is that you want a steady hand on the tiller when a storm strikes. I don’t disagree, but I am suggesting that paying that steady hand for achieving a market-based performance is foolishness plain and simple.
What makes more sense? If shareholders are compensating CEOs and the rest of the management team for how well they are managing the company, then there should be some metrics that are easy to agree upon on advance. All of them can be readily identified and tracked versus peers. Consider these five things on a relative basis to the business’s competitors:
  1. Changes in revenue and earnings
  2. Return on invested capital
  3. Development of long-term strategy
  4. Execution of current strategy
  5. Innovation and intellectual-property development
Share price isn’t a very precise way of compensating for value delivered. Indeed, share price may be one of the worst ways to judge an executive’s performance. It rewards executives for positive events beyond their control, and doesn’t do an effective job of measuring the impact of management on a company’s overall performance. It transfers money from shareholders, the actual owners of a company, and gives it to management regardless.
In recent years, and especially after the financial crisis, many analysts and investors have recognized that most money managers deliver returns that are no better than -- and often worse than -- the market averages. The result has been the growing popularity of funds that minimize management costs while aiming to achieve returns that simply match the market.
There should be a similar reform in corporate pay policies; executives who deliver returns that match the market or industry should be compensated like low-cost service providers. It’s long past due that this happens.

- Mark

Tuesday, July 26, 2016


So, the Russians had a hand in hacking the Democratic National Committee's (DNC) emails, which show that the DNC was actively working to defeat Bernie Sanders in the primary. Because most of us have known for quite a while that the DNC was effectively working for Hillary Clinton the story of DNC collusion isn't a real bombshell. In fact, I expressed surprise that this was even a story yesterday morning on KGET 17 News when asked about the "leaked" emails.

As we are now learning, the real story is how and why this information emerged so suddenly, and right before the Democratic National Convention. 

This is where Donald Trump's past business incompetence and his current dealings with Russian money becomes a pretty big deal. Specifically, is Donald Trump - who can no longer secure credit from major U.S. banks - so dependent on Russian money that the Russians believe it's in their best interests to try and influence the American electoral process so that Donald Trump becomes the next U.S. president? You be the judge. 

Below is an edited version of TPM's story on "Trump & Putin. Yes, It's Really a Thing," which lays out some of the details that make the Trump-Russian-Putin political web an intriguing one. 


1. TRUMP'S IN DEBT, BIG TIME (AGAIN)/CAN'T GET LOANS FROM U.S. BANKS: Trump's debt load has grown dramatically over the last year, from $350 million to $630 million. This is in just one year while his liquid assets have also decreased. Trump has been blackballed by all major US banks.

2. TRUMP'S DEPENDENT ON RUSSIAN MONEY: Post-bankruptcy Trump has been highly reliant on money from Russia, most of which has over the years become increasingly concentrated among oligarchs and sub-garchs close to Vladimir Putin. Here's a good overview from The Washington Post, with one morsel for illustration ...
Since the 1980s, Trump and his family members have made numerous trips to Moscow in search of business opportunities, and they have relied on Russian investors to buy their properties around the world.
“Russians make up a pretty disproportionate cross-section of a lot of our assets,” Trump’s son, Donald Jr., told a real estate conference in 2008, according to an account posted on the website of eTurboNews, a trade publication. “We see a lot of money pouring in from Russia.”

One example of this is the Trump Soho development in Manhattan, one of Trump's largest recent endeavors. The project was the hit with a series of lawsuits in response to some typically Trumpian efforts to defraud investors by making fraudulent claims about the financial health of the project. Emerging out of that litigation however was news about secret financing for the project from Russia and Kazakhstan. Most attention about the project has focused on the presence of a twice imprisoned Russian immigrant with extensive ties to the Russian criminal underworld. But that's not the most salient part of the story. As the Times put it,
"Mr. Lauria brokered a $50 million investment in Trump SoHo and three other Bayrock projects by an Icelandic firm preferred by wealthy Russians “in favor with” President Vladimir V. Putin, according to a lawsuit against Bayrock by one of its former executives. The Icelandic company, FL Group, was identified in a Bayrock investor presentation as a “strategic partner,” along with Alexander Mashkevich, a billionaire once charged in a corruption case involving fees paid by a Belgian company seeking business in Kazakhstan; that case was settled with no admission of guilt."
Another suit alleged the project "occasionally received unexplained infusions of cash from accounts in Kazakhstan and Russia" ... Trump's tax returns would likely clarify the depth of his connections to and dependence on Russian capital aligned with Putin. 

Then there's Paul Manafort, Trump's nominal 'campaign chair' who now functions as campaign manager and top advisor. Manafort spent most of the last decade as top campaign and communications advisor for Viktor Yanukovych, the pro-Russian Ukrainian Prime Minister and then President whose ouster in 2014 led to the on-going crisis and proxy war in Ukraine. Yanukovych was and remains a close Putin ally. Manafort is running Trump's campaign.

Trump's foreign policy advisor on Russia and Europe is Carter Page, a man whose entire professional career has revolved around investments in Russia and who has deep and continuing financial and employment ties to Gazprom. If you're not familiar with Gazprom, imagine if most or all of the US energy industry were rolled up into a single company and it were personally controlled by the US President who used it as a source of revenue and patronage. 

Over the course of the last year, Putin has aligned all Russian state controlled media behind Trump. As Frank Foer explains here, this fits a pattern with how Putin has sought to prop up rightist/nationalist politicians across Europe, often with direct or covert infusions of money. In some cases this is because they support Russia-backed policies; in others it is simply because they sow discord in Western aligned states. Of course, Trump has repeatedly praised Putin, not only in the abstract but often for the authoritarian policies and patterns of government which have most soured his reputation around the world.

The Trump Camp was totally indifferent to the platform. So party activists were able to write one of the most conservative platforms in history. Not with Trump's backing but because he simply didn't care. With one big exception: Trump's team mobilized the nominee's traditional mix of cajoling and strong-arming on one point: changing the party platform on assistance to Ukraine against Russian military operations in eastern Ukraine. 


For those of you looking for more, you can access the rebuttal to the TPM article I've posted here, and TPM's response to the rebuttal here.

But, again, let's not lose sight of one thing: the fact that the DNC was working for Hillary isn't a story. I can assure you Democrats, and especially Bernie Sanders' supporters, have known about this for some time now. The real issue is who's behind the hacking, and why is evidence of collusion suddenly so important?

Getting to the bottom of this might also help explain Trump's position on NATO, his constant praise of Russian foreign policy, and his seeming bromance with Vladimir Putin.

- Mark

Monday, July 25, 2016

Saturday, July 23, 2016


Stephen Colbert invited Jon Stewart to do one of his classic segments. Even if it's only for a few minutes, it's to good to see Stewart back, discussing the GOP's sudden embrace of everything they once criticized President Obama about ...

- Mark 

Friday, July 22, 2016


The GOP's convention of fear and paranoia finished up last night. I was on KGET's 17 News Sunrise program this morning with Republican Cathy Abernathy for some post-convention analysis, which you can access by clicking here.

After countering Cathy Abernathy's notion that Trump has a message that resonates with middle America - by pointing out that Donald Trump is the GOP's new Prince of Darkness - I made it clear that Trump's campaign is all about fear and paranoia. This, as we all know, is the wrong message for America.

After Cathy went back to the "let's all be afraid" theme because of the raging violence on the streets of America I had to chuckle (and I did). I told her that she and the Republicans are peddling a "paranoid perception of America" that just doesn't fit the numbers. Cathy replied, curtly, "I've looked at the numbers."

Did Cathy really look at the numbers? Is the paranoia and fear justified? I have an idea. Let's take a look ...




2. VIOLENT CRIME IN AMERICA, from The Brennan Center:

* Be sure to check this and this if you want to have a really informed discussion on violent crime in America.

3. THE ODDS OF DYING BY TERROR ATTACK are so low that it doesn't even make the top 20 causes of death in the U.S., according to the National Safety Council (click here for ginormous bubble graph). In fact, your odds of dying in a terror related attack in the U.S. are about about 20,000,000/1, and have been declining for well over 40 years. Yes, you read that right. Terror attacks and attempted terrorist attacks in the United States have actually declined since 1970:


What all of this means is you have a greater chance of being attacked by a shark or dying in a tornado (but watch out for Sharknado) than dying in a terror related attack.



There's more, but you get the point. The idea that we need to be afraid is a political tool used by those who are, quite frankly, intellectually weak and naturally afraid of things that go bump in the dark. The fact that the GOP is using the fear factor and sensational police killings to get people riled up about people of color is entirely political and, as I've pointed out elsewhere, does not speak to our better angels.

So the next time someone tells you to be afraid because of all the out of control crime, terrorism, and people of color, tell them the numbers aren't on their side and that you have better things to do with your time.

If they won't quit, and persist in embracing their inner paranoia, try changing the game. Numbers might not be their thing. For the really stubborn you would be within bounds to approach it like this ...

Just saying ...

- Mark

Thursday, July 21, 2016


After watching Donald Trump's angry Republican acceptance speech I thought we could easily have changed the time and place and arrived at a Bavarian beer hall political rally in 1923. Seriously, if your go-to convention chant is "Lock Her Up!" you're not in a good place.

Trump tried to convince (or reassure) his audience that America is mired in a dark and ugly place, where Mexicans and other scary immigrants are on the verge of taking over the country. This turned what should have been an inspiring moment into clarion call of fear, bigotry, and scapegoating.

Trump didn't speak to the values and ideas that made America great as much as he remade the case that without a wall America would be run over by gangs, violence and drugs.

At the same time, Trump made few specific policy proposals - except for when it came to trade - choosing, instead, to talk about what he wanted to do, all by himself.  In this respect, what we saw was the emergence of a cult of personality, where the individual rather than a nation's values and its people make a country great.

I'll be talking about this, and more, with the KGET 17 News Sunrise team tomorrow morning at 6:30 am.

- Mark  

Update: You can access our morning exchange, and the numbers I referenced in the exchange, by clicking here.