Obama's Kissinger

Dr. Henry Alfred Kissinger is a naturalized citizen of the United States. His foreign birth prevents him from seeking the presidency or the vice-presidency. Dr. Kissinger became Secretary of State, the third most powerful position in the United States executive branch. In certain respects, Dr. Kissinger had more power then the presidents he served. President Nixon resigned in disgrace. President Ford's short presidency was in the shadow of Watergate and its aftermath. In contrast with Vice President Agnew and other Nixon aides, Dr. Kissinger was curiously untouched by the scandal and remained Secretary of State until President Carter took office. A quirk of federal law, Mr. Nixon's resignation letter was addressed to Secretary Kissinger.

Senator Hillary Rodham Clinton failed to secure a presidential or a vice-presidential nomination. She is designated to become Secretary of State. Irrelevantly for Dr. Kissinger, but intriguingly for Sen. Clinton, Secretary of State is 4th in order of succession for the presidency.

Talk to Chuck About the Uptick Rule

When the uptick rule was invented 70 years ago, stocks were quoted in fractions of a dollar. The smallest "tick" then was typically $1/8, plus another $1/8 in commission. For almost a decade now, US stocks have been quoted in decimal dollars and cents. The minimum uptick now is $.01, and they happen more frequently because of their smaller size and larger volume. Whatever effect the rule had then, good or bad, it has but nostalgic value today.

This observation is lost on Charles R. Schwab, who has joined the campaign to reintroduce the uptick rule in his WSJ op-ed:

In the wake of the Great Depression, the uptick rule was established to eliminate manipulation and boost investor confidence. The rule said that short sales could be made only after the price of a stock had moved up (an "uptick") over the prior sale. This slowed the short selling process making it more expensive and limiting the ability of short sellers to manipulate stocks lower by piling on, driving the share price quickly down and quickly profiting from the downdraft they created.

I expect that many of Mr. Schwab's customers find comfort in blaming manipulators for their poor performance in recent markets, and what businessman argues with his customers? But I say, why stop at half-measures? We could prohibit short-selling the way it's prohibited in China. Or better yet--we could prohibit selling altogether. Quoting Barton Biggs in Wealth, War & Wisdom:

[C]oncerned about the ebbing of confidence, the Nazi government imposed controls on stock prices for the remainder of World War II which concealed the damage. No German legally could sell shares without first offering them to Reichsbank, which had the option of buying them at December 1941 prices in exchange for government bonds, which remained in the bank's possession. Not exactly an attractive proposition, particularly since bond prices collapsed.

The Royal They

I received an email recently from a website that read, in part:

This is a reminder that on <date>, <person> sent you an invitation to become part of their professional network at <site>.

The administrators at <site> were quite certain that <person> is a single individual; they were less sure of his sex. (I happen to know <person> and that he is a man.) I think that this increasingly common attempt to co-opt "they" (or worse, "it") to fix a perceived deficiency in English is ugly.

The <site>'s editors' problem is not that English does not have a gender-neutral, third-person, singular, animate pronoun. Hell, some languages don't even have a gender-neutral "they." In Hebrew and Arabic, for instance, only "I" and "we" are are sexless, all other pronouns have gender, and speakers address groups of men and women differently. Gender-specific "you" allows endless gay jokes when translating "I love you"s from English or when covering, in a male voice, songs written from a woman's perspective.

There are any number of ways to rephrase this invalid of a sentence that are grammatical. "His or her network" works as does "<person>'s network." Paraphrasing Mark Twain, only kings and people with tapeworms are entitled to a royal "they."

One Night at a Time

Jeffrey McCracken and Alex Frangos report what they believe is a leading indicator for commercial real estate:

Extended Stay Hotels Inc. is in early talks that could result in turning the hotel chain over to its lenders, a sign of the deep trouble awaiting the commercial real-estate business.
[..]
Hotel landlords typically are the first to feel the pain in a downturn because hotels have the shortest leases in real estate -- one night at a time.

What, $1?

President's Commission on Restoring Our Trees to Springtime

Ed Seykota observed a couple of weeks ago:

The official government response to Autumn is to declare it a crisis and then to authorize billions to form an agency to try to stick the leaves back up on the trees.

Why Congress Should Rescue GM--and When

The automakers are begging Congress for a $25 billion handout. I see no reason why Congress should refuse. Specifically, I think members have incentives to make it happen before the lame-duck session ends, but not before showing the companies who is the boss.

Why $25B in lame duck session

Members are debating a $500B stimulus package; next to that, $25B is small potatoes. On the other hand, $25B is also small potatoes next to GM's $60B negative equity--or its $6.9B/month burn rate. At this rate, GM will burn through the $25B package in 3 and a half months, just in time for 111th Congress to debate the issue again. A larger majority and a president from the same party should make it easier to work out a more comprehensive (i.e. larger) solution then. $25B is bridge money.

Who's boss

Congress has the power to ruin GM, by doing nothing, but why should it? The downside is a meager $25B. The upside is an opportunity for more legislative involvement in running and regulating private business. Executive pay is one issue that has been debated recently. In the same way the Congress checks and balances the executive by holding the proverbial purse strings, it wants to check and balance business. It should give automakers their bone, but it should first make them bow their heads, Burghers-of-Calais-like, and display a newfound humility before Congress that will be a lesson to captains of industry.

The upshot

If this speculation is correct, Congress will make angry sounds for a few days. GM's stock should fall on these threats, and then rise promptly when the eventual handout comes. The higher price may not hold, but GM could be a good flip later this week or early next.