Some Private Equity firms make purely finance deals where the main value is in the financing, but the frequency of these deals are on the decline.  So what are they counting on, and how do they make it happen?

Before we answer that question, let’s look at a related play that is still operative; breaking up the parts.  Many companies are so large that their public valuation is less than the sum of its parts.  Despite the delicious innuendo of the movie “Wall Street” often buying these companies and splitting them up is a good play in the long run.  If you have ever worked in a subsidiary allowed to languish hidden, unchallenged and unloved within a large corporate umbrella, and you have any aspiration at career development or in pursuing excellence in general, then you know that this is true.

Specialized and top industry knowledge in the sectors in which they operate.   Most Senior management in equity firms are high profile managers with intimate knowledge of the sector, able to bring their decades of experience to the table but also the benefit of an extensive list of industry insiders and vendor and customer contacts.

Especially with all that talent, operational improvement is a good possibility.  If you’re running your company 4-5% over industry cost structures, you can bet the private equity owners are going to be looking to shave that off.

At its best, more active and aware boards of directors.  Too often public company boards border on dysfunctional.  Many members not do not understand the industry in which they are serving, they really don’t have much business experience either.  Private equity firms can bring a very active board to senior management, with measurable, active targets and ongoing project reviews.  In that regard, they act not as some older brother looking over your shoulder; they are an added resource and an ear to discuss strategies, as well as keep senior management focused. 

Imagine a well informed Executive coming into your Senior management’s offices and one at a time, asking what the benchmarks of their jobs are, and the hard, measurable bottom line responsibilities they manage.  It’s quite energizing to the top say, 25 Senior Executives of the firm to realize they must justify the value of their existence, especially when the explicit implication that there be a synergism with the rest of the company.

This type of situation is really all too rare, and at least one of the reasons Enron situations can exist.  Think for a moment of Kenneth Lay’s defense; basically claiming he had no knowledge of the activity that brought the company down and therefore was ‘innocent.’  As CEO, he was implying he didn’t know what his right hand was doing, and also that his Board didn’t care either.  There is a huge fiduciary gap here which is almost ludicrous to ponder, not withstanding that one of the reasons we pay upper management millions of dollars a year is first and foremost to “take care.”  Claiming unawareness is like showing up at bank robbery with your friend and claiming in court that you didn’t realize that’s why you were there.  In my mind, Senior Management must be held accountable just because they were there.  It’s their job.  We’ll have more to say regarding fiduciary duty in other articles.

Incidentally, our example also brings up another aside worthy of a future article; the terrible record of the government deregulating industries.  A look at them, including energy, telecommunications, and the airlines is really a look at under-performing companies, still shackled by culture and regulation decades later, generally holding the entire sector back from stepping into the current century.  More on that later also.

At its best, a high performing Executive not only appreciates this kind of active, measurable accountability, she demands it.  How else can one gauge their and most importantly the firm’s success?  Private Equity brings a much better chance that the Board knows how to put such a process in place, and that the people they send to help have real specialized knowledge and value to the positions they are over seeing.

It seems that Sun has built ‘one of the best music similarity algorithms’ that’s based on the actual sound, with machine learning that analyzes features such as frequency and beats per minute to map out the rhythm structure, and determine the genre and which instruments are playing, Lamere said. Sun has taken advantage of prior research into speech recognition technology to tease out the features that correspond with the timbre of music and can be measured with computers, he said.”

A music store like Apple iTunes contains more than 5 million songs today. And there are plenty of similar music stores online. With people posting online their own creations or excerpts of the concerts they attend, it’s possible that a million new songs appear every day in a near future on the web. So how will you find new music you like? Right now, two approaches are prevalent: Amazon and other sites use collaborative filtering while Pandora and others use content matching. Both approaches are time-consuming, using both humans and computers. Now, according to Network World, Sun Microsystems is about to release an open source music recommendation technology far superior to current systems and totally automated. Read more…

A new music recommendation system from Sun | Emerging Technology Trends | ZDNet.com

http://blogs.zdnet.com/emergingtech/?p=737

Read the whole thing.

Robert Tracinski wrote an enlightening article on this special anniversary (read the whole thing):

The most important event of the past two centuries, with which artists and intellectuals ought to have come to grips, is the rise of capitalism and the Industrial Revolution–a social revolution that has radically transformed human life for the better. Free markets and industrialization have produced a previously unimagined wealth, which is enjoyed not only by captains of industry but by the common man, who is able to afford luxuries–large homes, automobiles, air travel, everything down to his caffe latte at the corner book store–on a scale that could not even have been conceived in earlier centuries. Capitalism has also afforded the individual a degree of personal independence and unlimited opportunity that has fully liberated men from the stultifying tyranny of previous aristocratic and feudal systems

The Historic Significance of Atlas Shrugged  Oct 2007

Atlas Shrugged illustrated in romanticized novel form the gifts that capitalism gives us.  She wrote it in a time when the world was neck deep in the allure of socialism, a grand experiment that western Europe has never given up, even as they grow poorer by the decade, and their governments inch towards bankruptcy.  But Tracinski draws associations not usually made:

A few decades later, a German intellectual named Karl Marx gave one of the most influential accounts of the new capitalist system–and he got everything wrong. An Industrial Revolution driven by scientific and technological advances springing from the minds of a few extraordinary individuals, he would describe as the anonymous, collective product of brute physical labor; an economic system of liberty, he would describe as a system of oppression; a system built on the right to property he would describe as a system based of expropriation–and then he would propose actual oppression and expropriation as the solution.

Of course Tracinski is correct.  As it turns out, Marx was a fascinating theorist, but fundamentally, tragically wrong.  The world is not a fight between the glorious worker and ‘evil’ capital.  If one is attracted to dichotomies, it is much more likely a fight between workers / entrepreneurs and government control.

I often draw the analogy of personal computing with mainframes.  For years mainframe manufacturers (sorry IBM, you’re the evil government in this story) viewed the PC as an expensive and irrelevant fad, not really useful for anything beyond an expensive terminal emulator.

Their management thinking was simple: mainframes are more efficient, cheaper per megahertz, easier to program and maintain, eminently more manageable and secure, and already had huge libraries of software (especially business) to run.  In our analogy, this is the central planning or socialist model.  The egalitarian central planning model implied by socialism is seductively more fair, efficient, safe, secure and moral than the capitalist model.

Except for one huge thing: the almost unfathomable power of millions of entrepreneurs, in our analogy allowed inside the computer itself to innovate, experiment, program and otherwise improve and proliferate.  They forgot the power of the solitary capitalist entrepreneur, in our model the programmer, whether he wants to make cash profits from his work or not.  The resultant explosion of innovation in computing power has literally rocked the world to its foundation.  And, like socialism, one of the most virulent backlashes has been by those who feel Microsoft, like any government, has attempted to control it.

In our computer analogy, every time we give government or any large organization more power over how our PC’s are built, or the Internet is governed or policed or managed, we give up some computing freedoms and our ability to innovate.  IBM’s mistake was huge.  All of Intel and Microsoft could have been theirs; they outsourced and sub-contracted their IBM chips and operating system to these companies because they didn’t think it was worth their time.

Mainframe computing, although retaining a place in our society, just as governments do, has been forever altered.  Before the capitalism of PC’s, no one could have envisioned how IT departments were stifling innovation and treasure (measured by money and happiness) and productivity.  They have been forced to open up and become more user friendly (Corporate IT departments still tend to force companies to run half as fast they could).  And this is the same indelible mistake socialists make; the power of entrepreneurs to innovate and create value.  Socialism stifles that creativity, just as surely as feudalism.

The analogy is a good one, and that is why Ayn Rand is absolutely right, and Marx is absolutely wrong.  Tracinski makes one more great point:

Throughout most of mankind’s history, moralists have warned that individuals driven by “greed” and left free to pursue their self-interest would plunge society into a destructive war of all against all, a system of brutality, plunder, and exploitation–precisely the qualities Marx projected onto the new capitalist system. Instead, capitalism produced a system of freedom, independence, prosperity, and super-abundant creative energy–while the societies most thoroughly dedicated to the sacrifice of the individual to the collective, the 20th century’s Communist regimes, were guilty of the greatest crimes ever recorded…

This has been the pattern of the artists and intellectuals in dealing with the most significant phenomenon of our age. While the world was transformed around them, they refused to grasp the real meaning of these events, choosing to ignore or denigrate the forces that were rapidly improving human life.

And so it continues to this day.  Where are the intellectuals espousing the greatness that is capitalism (innovative entrepreneurs)?  As the socialists grow more emboldened here in America, I see more articles questioning the merit of free trade, encouraging protectionist proclivities, and increasing numbers of articles urgently arguing the need of more government control.

It shall be the ruin of us.  More folks should be shouting from the rooftops celebrating the unfettered human spirit.

Technorati Tags: objectivism , Rand , socialism

The EnergyStar fridge costs $1329 and uses $41 of electricity per year while the conventional one costs $1029 and uses $48 per year. It would take about 43 years of energy savings to make up for the difference in cost between these two refrigerators. Many consumers might not think that’s such a good deal.”

This green lobby is out of control.  Why micro-manage production?  If, in Congress’ omnipotent view, all Americans should pay more for power, why don’t they just increase the price of energy?  The market will find the right payback for that, and Congress will have more money to fritter away, I mean, to explore more energy alternatives.

These laws are senseless, regressive and administratively horrendous for life and living.

UPDATE:

Aug. 20-27, 2007 issue – We in the news business often enlist in moral crusades. Global warming is among the latest. Unfortunately, self-righteous indignation can undermine good journalism. Last week’s NEWSWEEK cover story on global warming is a sobering reminder. It’s an object lesson of how viewing the world as “good guys vs. bad guys” can lead to a vast oversimplification of a messy story.

[Samuelson: A Different View of Global Warming - Newsweek Robert Samuelson - MSNBC.com]

Clearly an attempt to apologize:

Against these real-world pressures, NEWSWEEK’s “denial machine” is a peripheral and highly contrived story. NEWSWEEK implied, for example, that ExxonMobil used a think tank to pay academics to criticize global-warming science. Actually, this accusation was long ago discredited, and NEWSWEEK shouldn’t have lent it respectability. (The company says it knew nothing of the global-warming grant, which involved issues of climate modeling. And its 2006 contribution to the think tank, the American Enterprise Institute, was small: $240,000 out of a $28 million budget.) [Samuelson: A Different View of Global Warming - Newsweek Robert Samuelson - MSNBC.com]

As honest a review from the Left Wing journalism as I’ve seen.  But still in ultimate denial.

Similarly, we are fighting in Iraq a battle, one of many we have or will fight in the War on Terror. Play in your mind with the difference that concept battle makes in evaluating the struggle there over treating it as a war. To claim it is a war localizes it, raises questions of why we are there, and suggests we should get out and leave it to the Iraqi’s to settle. But, if we consider it a battle, then….

If you’re interested in debating forms of government, he wrote an interesting article on the connundrum of elected structures:

ABSTRACT : “The Nature of Belief Systems” sets forth a Hobson’s choice between rule by the politically ignorant masses and rule by the ideologically constrained—which is to say, the doctrinaire—elites. On the one hand, lacking comprehensive cognitive structures, such as ideological “belief systems,” with which to understand politics, most people learn distressingly little about it. On the other hand, a spiral of conviction seems to make it difficult for the highly informed few to see any aspects of politics but those that confirm the cognitive structures that organize their political perceptions.This is a troubling situation for any consequentialist democratic political theory, according to which what is crucial is the electorate’s (and subsidiary decision makers’) ability to make informed policy judgments, not their possession of willful but uninformed political “attitudes.” Any political theorist who does not take democracy to be an end in itself (regardless of its consequences) should be concerned about Converse’s findings.

In a review titled, “Is Voter Ignorance killing Democracy?” Salon makes further comments on the ideas Friedman has illustrated.  They’re off the mark, as usual.

Nevertheless, it’s an age old issue; by necessity, we need to have governments, or in the case of companies, we need managers, but we wish the ‘managers’ wouldn’t be so dumb.  But especially in issues of government, it is the nature of the discussions both by the politicians and the media, that are inappropriate, not the inteligence of the voters.  The public has never been wiser.

To illustrate, I do not need to understand computer systems to sit on the Board of Directors of a company.  Neither do I need to have a vast understanding of law, or financial instruments, or the latest in human resource theory.  But I do want to be afforded a good honest, and open debate of goals and direction, and be reasonably assured of where it is you and your party are meaning to go if we grant you public office.  For my purpose, and leaning towards a decidely libertarian, free market approach, I would humbly suggest you compare yourselves to the Constitution, and take a more active interest as politicians to amend it (rather than reading weird interpretations into it that are clearly not there) so that we can all have clearer understandings of where we’re going and better live the product of goal and strategy papers in our lives.

So I don’t think we need smarter voters.  I think we need smarter politicians with vision.  And smarter journalists.  Both have continued to sink to new lows over the last 200 years, and have immeasurably fouled the discussion in the process.  As a result we voters are frustrated beyond measure, and dearly wish to throw the whole lot of them out.

Picture a large and very important federal agency. It happens to conduct highly specialized work that requires close and attentive management. One of its basic assignments, for example, is to collect intelligence. Toward that end, it relies on twelve major stations from which it gathers data. The information thus assembled has to be reliable, meaning that those who collect it, and those who organize the collection process, must be both trustworthy and highly trained. And once the intelligence is gathered, it has to be analyzed. This process, too, requires a high degree of organization, and the men and women who engage in it must be top experts in their field. Their final product, hugely influential, and released to the outside world only at specified intervals, is by necessity wrapped in secrecy. Indeed, unauthorized disclosure is punishable by law.

The organization he’s talking about?  The Federal Reserve.  Read the whole thing.  Imagine an almost limitless technological budget, but in many ways less informative than the Internet.  Imagine a bureaucracy so byzantine no one knows what’s happening.  Imagine a culture where state top secret information is now commonly leaked to the press.  Imagine a spy agency with less than 30% of their agents in the field.  Imagine that the CIA says it will take at least 10 years to put it house in order to counter the ‘terrorist’ threat.

Related reading: When Mohammed Atta landed in the US, CIA’s Tenet was celebrating gay pride

Congress long ago sowed the seeds of the CIA’s destruction as an institution; not having clear goals is its foundational issue.  But this is a common mistake made by governments and its journalistic reporters; talking and legislating how things are done rather than debating and reviewing the Objectives (What you want) in the first place.  Businesses that take this approach live a short life, and people that live their personal lives in this way remain vaguely unhappy and unfulfilled.  Congress’s role should be to give them goals and the tools to let them win, along with only general lines they are not able to cross.  Micro-managing beyond these boundaries is inappropriate and inefficient.  Perhaps most importantly, they are almost singularly unqualified and ill suited as politicians (public servants with an established elective agenda, and huge incentives to sensationalize and publicize) to do so.

Once last thought: since bureaucracy in any institution, whether government or large business, or charity, inevitably slows its endeavors down, thwarts innovation, and rewards the status quo in its Associates, why would further bureaucracy as suggested by the 9/11 commission and implemented by Bush and Congress, have any chance of ‘fixing’ anything?

Because it matters not a whit what you thought of the country entering the war in Iraq.  It matters not a whit what you think of Bush, or your own chances of becoming President.  If you are an elected official, it matters not a whit whether your vocal minority back home wants our military to turn tail and run.  The fact of the matter is that we are in a war, right now and right here.  And people from all over the world, especially Iraqis and Americans, are dying.  And we must figure out a way to end that war and resolve the conflict without millions of people dying.  We are truly and well in it now.  And if you can not make rational judgments about that, and can not even bare to hear the real facts on the ground to better make up your mind on future strategy and tactics, then you should absent yourself from all discussion.  Because you are a whining child, and your thoughts only frustrate and obfuscate the situation, and generally distract the rest of the folks who must work towards the solution.

This reported from Kansas City:

Washington — Kansas Rep. Nancy Boyda is defending her decision to step out of a hearing room last week while a retired Army general testified about U.S. progress in Iraq…

Boyda, a freshman Democrat from Topeka, said she left the House Armed Services Committee hearing on Friday for about 10 minutes during the testimony of retired Gen. Jack Keane…

“There was only so much that you could take until we in fact had to leave the room for a while,” Boyda said after she returned, according to a transcript of the hearing. “So I think I am back and maybe can articulate some things — after so much of the frustration of having to listen to what we listened to.”

Keane had testified that since the troop surge began, U.S. forces “are on the offensive and we have the momentum.” He also said that security has improved in every neighborhood and district in and around Baghdad, and that “cafés, pool halls, coffee houses that I visited are full of people.”

When Boyda returned to the hearing, she ridiculed Keane’s description of Iraq “as in some way or another that it’s a place that I might take the family for a vacation–things are going so well–those kinds of comments will in fact show up in the media and further divide this country instead of saying, ‘Here’s the reality of the problem.’ ”

By the way, if you are actually interested in exactly what Keane said, here’s an interview with him at NRO.  He seems fairly realistic and is both positive and negative.  In fact, two scholars from The Brookings Institute are also surprised with the change in Iraq, and say so in The New York Times.

The Wall Street Journal has more, commenting on the fact that a major party in Washington is actually invested in us losing the war.  They cite this story in the Washington Post in which House Majority Whip James Clyburn (D-S.C.) said Monday:

“that a strongly positive report on progress on Iraq by Army Gen. David Petraeus likely would split Democrats in the House and impede his party’s efforts to press for a timetable to end the war…

Many Democrats have anticipated that, at best, Petraeus and U.S. ambassador to Iraq Ryan Crocker would present a mixed analysis of the success of the current troop surge strategy, given continued violence in Baghdad. But of late there have been signs that the commander of U.S. forces might be preparing something more generally positive. Clyburn said that would be “a real big problem for us.”

The Claremont Institute recounts even more instances of politicians “exulting in misfortune.”  Hugh Hewitt has gone so far as to commemorate ‘The Nancy Boyda Award’ for everyone who denies good news about Iraq or twists it to their negative end.  I like this portion of his article best, when recounting his interview with Andrew Sullivan:

“ODDLY ENOUGH, ANDREW SULLIVAN provides the perfect coda to our debut of the Nancy Boyda Award. Earlier today, Andrew was slightly miffled that I suggested that “the left and other anti-war figures like Andrew Sullivan have a lot invested in this war failing and failing miserably.” Andrew took delight when someone took my logic and inverted it, writing, “The right and other pro-war figures like Dean Barnett have a lot invested in this war succeeding and succeeding well.” Andrew commented with a portentous and approving “Hmmmmm.”

Probably unwittingly, Andrew has confirmed my theory that this war’s opponents have forgotten something basic and elemental: Every American, regardless of his party affiliation or political philosophy, has “a lot invested in this war succeeding and succeeding well.” Andrew Sullivan used to know that. Best to ask him why he’s forgotten it.”

Well said Hugh.  But it goes far beyond all of this now.  To see a war through the prism of partisan politics is to be party to a perspective of the most aggregious and petty.  To walk out on briefings of your government that are meant to aid you in making some of the most important decisions of a lifetime, much less a generation, is to back childishly away from your duty and responsibility as a representative of the United States and its people.  And you should be ashamed, and are not emotionally fit to lead our country. 

In our view, housing activity is clearly at risk, and we see no real recovery until 2009.  We believe that the economic costs of subprime loan defaults largely will be borne by lenders rather than borrowers because such borrowers have scant equity in their home.  Thus, the spillover risk to the economy depends on whether lenders tighten lending standards significantly further.  We do expect that the tightening in lending standards will crimp demand; indeed, the downdraft in June home sales to new lows suggests that the tightening in mortgage credit is already starting to bite.  The ongoing buildup in inventories of unsold new and existing homes points to a mismatch between supply and demand that will require at least a 20% decline in 1-family housing starts to correct; that drop is already built in to our forecasts.  In addition, we estimate that foreclosures over the coming year could add 7% to the inventory of homes available for sale and put further downward pressure on home prices and thus, potentially, on consumer spending.  Likewise, the increase in the cost of capital and tighter standards for business borrowers means that the sluggish capex expansion is also at risk. 

But there are also several reasons to be suspicious that such forces will materially weaken the economy.  First, magnitude and duration both matter for assessing the extent to which any such credit tightening will affect growth; this episode has been modest and recent — so far.  Second, other dimensions of financial conditions are moving in the opposite direction.  Third, and contrary to the pessimists’ claims that the US economy’s sole source of fuel is a high-octane credit market, we continue to think that strong overseas growth and hearty domestic income gains will support overall US growth in general, and consumer spending in particular.  Indeed, while market participants are ignoring past economic data on the theory that they don’t reflect the recent changes in financial conditions, initial economic conditions do matter.  In particular, net exports have added 0.4% to overall US growth over the past year for the first time in a decade, and prospects for global growth remain strong.  And US real disposable income rose by 3.2% over the past year — faster than the pace of spending. 

Exactly.  The economy needs one year’s grace for housing and consumer spending to get back in line.  That is what it needs, and happily, that is what it will have.  And the dollar will help.

In the long run though, government spending, especially in huge apportionment programs like social security, must be resolved to some semblance of sanity.  And there’s one other spending spree that’s really being hidden in the numbers; the politicization of the military.  What proportion of the military budget is really just politics finding a way to get a local income stream?  Put another way, if you were king for a year, how much could you shrink military spending and actually increase the effectiveness of the best men and women in the country while providing in capital and research and wages for their future?  Is it as high as 50%?  There’s some smart military folks around who could make a pretty good guess.

Tags: Economics, Globalization, Taxes

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Tags: GDP, Economics, Recession

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THINGS I LOVE ABOUT MY COUNTRY
by Jane Fonda & Cindy Sheehan
Illustrated by Michael Moore

MY CHRISTIAN ACCOMPLISHMENTS & HOW I HELPED AFTER KATRINA
by Rev Jesse Jackson & Rev Al Sharpton

THINGS I LOVE ABOUT BILL
by Hillary Clinton

Sequel: THINGS I LOVE ABOUT HILLARY
By Bill Clinton

MY LITTLE BOOK OF PERSONAL HYGIENE
by Osama Bin Laden

THINGS I KNOW TO BE TRUE
by Al Gore & John Kerry

AMELIA EARHART’S GUIDE TO THE PACIFIC

A COLLECTION OF MOTIVATIONAL SPEECHES
by Dr. J. Kevorkian

ALL THE MEN I HAVE LOVED BEFORE
by Ellen de Generes & Rosie O’Donnell

GUIDE TO DATING ETIQUETTE
by Mike Tyson

THE AMISH PHONE DIRECTORY

MY PLAN TO FIND THE REAL KILLERS
by O.J. Simpson

Luskin is the man. Tags: Joke

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I can usually read a book in about 4 hours.  I say this because I almost couldn’t bring myself to spend the time.  The good news is that I now understand Al Gore’s argument for global warming; he’s generally living on another planet with a whole sort of alternate reality evolved from a different set of facts and history than here on earth.  That single revelation helps me rest easier, and somehow makes the 4 hours less of a waste.

Here’s a pretty good review, since I am too frustrated to write one.  I also like this one by Michael Moynihan, “Free Speech for People Who Think Like Me.”  That is half our country now.  Scares the crap out of me.

Here’s some more thoughts by Henry Miller.

Just before we head back into the Dark Ages if we start listening to nitwits like Gore, read this.

Even a lefty moon bat can’t quite swallow all of it.  The funny thing is, the whole assault on democracy thing was fine, as well as the argument that the press (?) is all controlled by the right.  You have got to be kidding.  Oh never mind.

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But it seems that liberal activists are trying to organize a campaign to pressure advertisers not to use the network.  And they’ve got Moveon.org behind them, so there’s plenty of money there to spread around.

I don’t understand this kind of thinking.  Freedom of speech is by now so ingrained in our culture and an integral part of our constitution, that I am left somewhat flabbergasted by such a move.  I mean, you are your own censor, right?

Jeez, we reserve the right of Nazi sympathizers to spill their crap all over themselves.  It’s moves like this that mystify me.

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I believe that we are perfectly capable of staying the course in our war against Osama Bin Laden and his terrorist network, while simultaneously taking those steps necessary to build an international coalition to join us in taking on Saddam Hussein in a timely fashion. If you’re going after Jesse James, you ought to organize the posse first. Especially if you’re in the middle of a gunfight with somebody who’s out after you.

Nevertheless, all Americans should acknowledge that Iraq does indeed pose a serious threat to the stability of the Persian Gulf region, and we should be about the business of organizing an international coalition to eliminate his access to weapons of mass destruction. Iraq’s search for weapons of mass destruction has proven impossible to completely deter, and we should assume that it will continue for as long as Saddam is in power. Now, let’s be clear, there’s no international law that can prevent the United States from taking action to protect our vital interests when it is manifestly clear that there is a choice to be made between law and our survival. Indeed, international law itself recognizes that such choices stay within the purview of all nations. I believe, however, that such a choice is not presented in the case of Iraq. Indeed, should we decide to proceed, our action can be justified within the framework of international law rather than requiring us to go outside the framework of international law. In fact, even though a new United Nations resolution might be helpful in the effort to forge an international consensus, I think it’s abundantly clear that the existing U.N. resolutions passed 11 years ago are completely sufficient from a legal standpoint so long as it is clear that Saddam Hussein is in breach of the agreements made at the conclusion of the Persian Gulf War.

I just think that if we end the war in Iraq the way we ended the war in Afghanistan, we could very well be worse off than we are today. When you ask the administration about this, what’s their intention in the aftermath of a war, Secretary Rumsfeld was asked recently about what our responsibility would be for re-stabilizing Iraq in the aftermath of an invasion, and his answer was, “That’s for the Iraqis to come together and decide.” On the surface you can understand the logic behind that, and this is not an afterthought. This is based on administration policy. I vividly remember that during one of the campaign debates in 2000, Jim Lehrer asked then-Governor Bush whether or not America, after being involved with military action, should engage in any form of nation building. The answer was, “I don’t think so. I think what we need to do is convince people who live in the lands they live in to build the nations. Maybe I’m missing something here. We’re going to have kind of a nation-building corps in America? Absolutely not.” My point is, this is a Bush doctrine. This is administration policy. Given that it is administration policy, we have to take that into account as a nation in looking at the likely consequences of an overwhelming American military victory against the government of Iraq. If we go in there and dismantle them – and they deserve to be dismantled – but then we wash our hands of it and walk away and leave it in a situation of chaos, and say, “That’s for y’all to decide how to put things back together now,” that hurts us.

As you can see, Bush ended up getting very serious about nation building, which is what Gore counciled him to do.  We’re looking forward to Gore defending the Administration in this hour of need.

One thing further; I find it intensely interesting that as the years go on, the G8 is moving ever closer to Bush’s position, not the Left.

“This was all purely defensive. The battalion I’m embedded with here in Baghdad hasn’t suffered a single casualty – not even one soldier wounded – since they arrived in the Red Zone in January. The surge in this part of the city could not possibly be going better than it already is. Most of Graya’at’s insurgents and terrorists who haven’t yet fled are either captured, dormant, or dead.”

Read the whole thing.

And may God bless our soldiers, each and every one.

We’re hearing mixed signals regarding the economy despite the rather strong showing of GDP at 3.4% for the second quarter; a lot of folks are antsy regarding the looming sub-prime issue which hasn’t totally come home to roost yet, and personal consumption is a concern at only .89% of GDP growth.  Meanwhile, Greenspan is warning that the cost of capital won’t stay low forever and oh by the way, it’s already masking the effects of a slumping dollar.

That analysis may be correct, but I’m not sure it necessarily means we’re headed for trouble in the next 12 months.  First, government spending isn’t going to let up any time soon.  The war and Katrina will take care of that, ready to fill in any vacuum that personal consumption leaves behind.  And by the time it does settle down, the dust will be settling with everyone’s personal finances, and who knows where personal consumption will be.   Second, until countries like China untie their currencies from the American dollar, I don’t exactly see how the slumping dollar is going to affect us as much as the graphs show.  The not so dirty little secret is that even in many countries with free floating currencies, where theoretically we expose ourselves to inflation as our dollar gets cheaper, often the dollar is the predominant currency on the street anyway.  So what happens to us happens to them. 

Incidentally, I believe everyone who is bashing Greenspan for his easy money strategy for the last decade tends to miss a point that has a significant dampening effect: many of those dollars are ending up in fallen iron curtain countries and other parts of the ‘third world’ acting as their actual national currency.  This tends to minimize the effects in the US; those dollars just aren’t here.  Now there’s a brain twister for you.

I’m a Greenspan fan by the way.  But he never was a very great forecaster.  If you’re going to pay him $150,000 for his next presentation, you may want to remember that when you’re discussing topics with him.