On Message, finally!!!

I don't know if it's the Brain or if it's Karen Hughs back on the job, but "W" is finally getting on message! President Bush, from the same Brian "Barbie" Williams interview mentioned in the last post:

"My strategy and my plans are these. I will listen to the commanders. I understand that war is objective based, not time table based, and we will complete this mission for the good of the country."

YES! "Objective based." They're reframing the discussion to be about how to WIN, not when we're going to exit. This is positive.

I'm Chris Matthews, and you're not

Ugh, Chris Matthews is such a bore. Tonight on Hardball they keep showing and totally HARPING on the Brian Williams interview on "does the President read?"

So the questions from Williams went like this... (paraphrasing) " Here is Time and Newsweek, do you read these magazines." Answer, "no I really don't." Then "How much of the network news do you watch?"

First of all - Time and Newsweek are pretty much crap! These are MASS market magazines that have some fine articles, but are really just People Magazine level consumption of the news. Sure, they have some good articles, but other times it's "McNews magazine-ed down." The same goes for the Nightly News on any of the networks! It is produced for mass consumption. If you want to be a truly informed person in this country, you MUST read from multiple sources (I'd say three or more a day- probably more). And at least five or six different sources a week- probably more.

Then Matthews asked something totally asinine of Brian Williams, "Did you get the feeling Brian that he really wanted to do this interview or his uh, public relations people said you have to get out there and kill the idea that you're isolated." Then followed a very serious reply by Brian Williams to this silly question. UGH! I like Hardball, I watch it all the time, but oh my God! Chris Matthews is such an arrogant ass! Just come out and say you hate the President! Having these totally random, unimportant, and completely pointless conversations about whether the President felt like having an interview with Brian Williams - a male Barbie doll - is ridiculous. Of course he didn't! Who wants to talk to an overly-biased thick head who is paid to basically try and trip you into saying something dumb?

I am SO SICK of the insuation that the President of the United States is uninformed or stupid. It is way too hard to become the President of the United States of America - one in 300 million people each election (well, less considering the number of elegible candidates) to be a STUPID person and get elected. Just get over it. Stop the silly media machine.

When the President answers Barbie Williams that yes in fact he does read the papers, what Paper do they show in the produced-by-a-liberal-member-of-the-media news story. USA TODAY -- the nation's "McPaper." Give me a break.

Only in America

I love the Arnold Schwarzenegger story. You need go no further than his speech to the Republican National Convention in 2004 to understand why this is a great American story. This is a man who grew up in the shadow of communism and made himself into a world class athlete, a powerful movie star, and finally a voice of the people in the form of the Governor of “Kali-FORN-ya!” What a perfect example to the rest of the world – in America, anything is possible, anyone can make themselves a success. Only in America.

My admiration and love for the story aside, I will admit to just a little bit of a surreal feeling to see Arnold Schwarzenegger deciding the fate of inmates on death row. Today the governor denied clemency for Stanley Tookie Williams. Mr. Williams is one of the founders of the Crips street gang, and the convicted murderer of four people. Mr. Williams cause has been taken up by several Hollywood movie stars, as well as many anti-death penalty advocates.

It would seem that Mr. Williams has worked tirelessly since his incarceration in the late 70s to reform himself. He has written multiple children books warning of the dangers of street gangs. He has even been nominated by a Swiss legislator and some college professors for a Nobel Peace Prize (only in America!)

I am not surprised by Governor Schwarzenegger’s decision to deny clemency. Only in America would a death sentence be drawn out for twenty-four years while the condemned is allowed to exhaust every single avenue in his or her defense. I think that’s a good thing for our system, and actually shows our humanity. At the same time, that’s twenty-four years that the four people Stanley Tookie Williams murdered never will have.

See, I told you so ;-)

"By the way, Governers get elected president I’ve noticed the pattern, Governor Romney. "

-Chris Matthews on Hardball tonight. Interviewing your next President, Mitt Romney.

Predators serve a purpose

Chances are as an individual investor, you don’t have much say in the management direction of your favorite publicly listed company. Sure, you may be a billionaire, or even an “A” list hedge fund manager, but chances are (given my small readership) your biggest equity investment doesn’t include much in the way of voting rights. I bring this up because of the latest in Wall Street dramas to hit the business press.

Every so often a story comes up that is worth reading every episode. Eighteen months or so back it was Oracle’s fight to acquire Peoplesoft. Today the most interesting soap opera of the business world is Carl Icahn versus Time Warner. This is a story that promises to play out for a good portion of the New Year. Essentially, Carl Icahn is a corporate raider who is angling for the ouster of Time Warner CEO Richard Parsons, as well as for the break up and sell off its cable assets.

Ever since Barbarians at the Gate, I’ve loved a good buyout story. Partly I enjoy them for the drama, but I also appreciate how some of them are illustrative of how free markets and the “profit motive” benefit the greater good. It’s almost cliché that any time Hollywood wants to portray a businessman as “evil” it reaches for the a fat cat CEO or for the stock “Corporate Raider” persona. Gordon Gecko, as portrayed by Michael Douglass, in the movie Wall Street was a Corporate Raider, as was the “bad” Richard in the movie Pretty Woman. (Don’t get me wrong, as portrayed in the movie, Gordon Gecko was a cheater—not part of a positive free market). I wonder if Hollywood understands that corporate raiders are the bane of the “fat cat” CEO’s existence.

In reality, corporate raiders serve a purpose. Motivated by financial gain for themselves and their investors, corporate raiders cull the herd of the weakest competitors. In doing so, they weed out bad management teams, they add transparency into the finances of public companies, and unlock unrealized market value. It was profiteer short-sellers, among others, that brought the Enron house of cards crashing down. It is buyout artists that find companies that are being abused by their management teams.

Let’s go back to my starting premise. Say you’re an individual investor that is approaching retirement and have held Time Warner stock in your 401k account since 1995. Basically, you got screwed. Time Warner made what is widely called, the worst business deal ever, by overpaying for America Online. Your stock lost a considerable amount of its inherent value in this transaction. If you stuck in there and are still holding the stock you may in fact get some of that value back. One way that might happen is that the company may actually deliver on what it says it’s going to do. Another way is to have Carl Icahn or someone like him come along.

Carl Icahn is smarter than you (probably – certainly smarter than me). He’s also a pretty powerful guy, able to control billions of dollars. Mr. Icahn has made his fortune opportunistically. When he finds a company that he believes is not managing its assets properly, he steps in. He does that by taking a position in a companies publicly traded securities (either stocks or bonds). In effect he becomes a large owner or holder of the company’s debt. Then he becomes and “agitator” for change. Rightly or wrongly, he pushes for changes in the company that he believes will increase the value of the company.

In the current situation, Mr. Icahn believes Time Warner investors should have the choice of owning either cable assets or content assets (both currently owned by Time Warner in a single entity). He thinks the parts are worth greater than the whole, and a part owner of the company is pushing to split them up. Furthermore, he thinks management is overpaid. He points out, “At Time Warner they spend $500 million a year for the top layer of executives, and it’s unnecessary.” Maybe that is a reasonable number, but it does sound like a lot, doesn’t it?

I doubt very much that Carl Icahn is thinking much about your little Time Warner position in your 401k. I could be totally wrong. Maybe he is motivated by helping the little guy. The point is, it doesn’t matter. “Corporate Raiders” have just as much influence on keeping the management of public companies honest as does the SEC. This isn’t to say that corporate raiders have a monopoly on the right way to run businesses. Mr. Icahn could be completely wrong. This could be a play for “greenmail,” essentially an agitator financier’s way of getting paid off to go away – not positive for the company or your 401k.

I don’t want to give the impression that I think everything that results from the break up of a poorly run company is positive. Individual lives are often affected. People get laid off sometimes. Pension funds get raided sometimes. (Both of these happen through management teams sometimes as well). Sometimes the buyout artists are overleveraged, or incorrect in their estimates of unrealized value.

My point is not to paint corporate raiders in a good light as wonderful people. The point is that it doesn’t matter. Their self interest acts as one of many driving forces in an overall free market, and some of those affects have a decidedly positive affect. How will the Carl Icahn versus Time Warner drama end? Only time will tell.