advice from a fake consultant

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Wednesday, September 24, 2008

On Crying Wolf, Or, Why I Don’t Want To Give You $700 Billion

As this is being written we are in the midst of the second day of testimony before Congress by Ben Bernanke and Henry Paulson in support of the Administration’s proposed financial rescue package.

The basic sales pitch is that the Nation’s financial problems are at this moment so severe that the only solution is to expose to risk $700 billion dollars of taxpayer money to buy assets with a currently unknown price…and to give the absolute and total power over what those valuations are, what should and should not be bought, what repayment terms will be sought—and additionally, what happens to any money recovered--to one man, Henry Paulson.

There are those who are not on board. They have critics, who continue to stress the dire consequences of inaction.

With all due respect to those critics…we have been down this road before with this Administration—and last time, they weren’t so big on telling the truth…or getting the job done effectively.

We’ll cover that ground, we’ll talk a bit about “mark to market” issues—and on a positive note, we’ll address the role of “warrants”, the negotiating power of Warren Buffett, and how the taxpayer could actually see substantial recoveries of money down the road.

So let’s start with the biggest elephant standing in the Plan’s way:

Weapons Of Mass Destruction.

This Administration flat-out lied to the American people to justify the current Iraq adventure. “Just trust us” was the basic message at the time, followed by “we absolutely know that Saddam is an imminent threat because of his Weapons Of Mass Destruction”, followed by “this will cost maybe $50, 60 billion…maybe as much as $200 billion”--which turned out to be possibly the worst estimate in the history of budgeting--followed by variations on The “I’m not the Commander-in Chief, General Petraeus is” Theme…followed by flag-draped caskets that the Administration still hides from public view.

All of this to find not one single operable WMD.

Now comes before us Federal Reserve Chairman Henry Paulson and Treasury Secretary Ben Bernanke, who tell us of imminent threat, who tell us to just trust them…who tell us that they are the most qualified people to understand the issues and take the appropriate action…and who, to top it off, must be left to the task unsupervised and uncontrolled, otherwise the plan will fail.

We are also being told that if we were just economically sophisticated enough we would understand why this plan must be put into place, and that our objections must be related to our economic ignorance.

To which I pose a question to the Joe Kernans of the world (well, one of them anyway): what if the public fully understands that the system is at risk…but we don’t trust the leadership?

(Ever watch “Sex And The City”? This would be the part where they would cut to Carrie’s laptop screen and we would see the words appear as she types them...)

…What if we think the Administration is lying?

I have heard so many lies from the President and his advisors that if Jesus Christ was Treasury Secretary and Mohammed (PBUH) was Chairman of the Federal Reserve I would have doubts about this proposal.

Back in March, Paulson (who, it turns out, is not a Deity) was telling us that “the worst is behind us”…meaning he either does not really understand what is going on here—or that somebody is trying to blow smoke up some unpleasant places, using Paulson as a sort of economic “General Petraeus” who is intended to divert attention from the real economic Commander-in-Chief.

So can this Administration be trusted to handle this without outside supervision?

“Trust, but verify”, Ronald Reagan used to say, and without outside oversight this proposal should be instantly dead on arrival to the Congress.

This might be the most critical issue surrounding this entire plan…and we must demand Congressional oversight. This is far too big a process for any single individual to manage—and too big for any single branch of Government, as well.

Go watch this satirical slap at Bernanke from a wannabe Bernanke.
It’s hilarious—and revealing.

That issue resolved, some economic education is in order:

What, you may ask, is “mark to market”?

Holders of assets are required, for accounting purposes, to report the value of those assets based on what they are worth at the current time. Normally you do this by seeing what “the market” thinks your asset is worth—something that is fairly easily done if the asset is, for example, your house.

On a larger, corporate scale, this marking to market each accounting period can cause the state of your company’s balance sheet to lurch around and gyrate from time to time—sometimes violently…which is the source of much complaint from corporate interests, but for the most part, it all works out. Recently, it has not.

The challenge in today’s economic environment is to figure out what an asset is worth when no market exists for that asset.

Banks are holding quibzillions © of dollars worth of paper that represent streams of mortgage payments that will continue for years into the future…but some unknown number of those mortgages will not be repaid.

The concerns about what can be repaid (or not) and who is holding how many of these “nonperforming” loans has caused virtually all the normal buyers of these kinds of assets to run away in fear, which is the simplest way to explain the “credit crunch” we hear so much about.

The Paulson proposal is based on you and I buying some portion of those assets, today, from the current holders and reselling the assets later. This will allow banks and other institutions to begin making loans, and will hopefully create the confidence needed to induce investors to again buy “pools” of those loans from those banks…after which, the lending cycle begins anew.

The hoped-for outcome, from the perspective of ordinary mortals such as you and I, is to minimize any losses to the taxpayer…or maybe, if we get lucky, generate a profit.

The hoped for outcome, for the current holders of these assets, is to minimize their loss.

So how do you decide what price the taxpayer will pay for these assets?

Picture, if you will, a $100 US Savings Bond. If you bought that bond today, it would cost you $50, and in 17 years the US Treasury will pay you $100, representing the interest income to you from that loan to the Treasury.

The “hold until original maturity” value of that bond is $100.
The “mark to market” value, if you’re “marking” it the day you bought it, is $50.

If you became convinced the Treasury might not pay back the loan, or all the interest, you might sell the bond for less than the original $50, just to recover something from the deal.

That process will work as long as someone else is willing to believe the bond will be repaid, and is willing to put up enough money on that bet to get you to sell.

If no buyer can be found, your bond’s value becomes either “unknown” or “zero”, your personal assets decline—and maybe, down the line, your credit score is affected by some small amount.

Picture that on a massive, quibzillion © dollar scale, and you can see what is happening in the mortgage market today—and to the investors, all over the world, that hold the debt from our collective mortgages.

When the Treasury prepares to buy a CDO or some other mortgaged-backed security from an investor in the near future, Paulson will have to decide, with no help from any market mechanism, if that paper is worth the “hold to maturity” value, zero, or somewhere in the middle…and he has no way to know if the pool of mortgages he’s buying with our money will be 100% repaid, 0% repaid, or something in between.

This issue will be one of the most contentious parts of the entire deal (and the most ripe for abuse…as it would be very easy indeed to reward friends and punish enemies in a system with no oversight), so watch carefully to see how it plays out.

Hint: when asked about this today, I heard Bernanke answer that he expected the Treasury to pay prices similar to what are seen “…in a more normal market…”.

Another satirical video: “Damn, it feels good to be a Banka”.

What’s a warrant?

It sounds all technical and tricky, but actually it’s not.

Warren Buffet invested $5 billion dollars this morning in Goldman Sachs, and as part of the deal he got the right to purchase up to $5 billion in Goldman Sachs stock, at a time in the future of his choosing, for $115 a share (roughly 43.5 million shares). That right is referred to as a warrant.

At this moment, the stock’s last trade was at $130.48. The difference between $115 and $130 is the current available profit to Buffett if he were to “execute” this warrant right now (which is just over $650 million profit in less than 12 hours)…but it’s not the maximum potential profit executing this warrant might bring.

In November of ’07 Goldman Sachs traded at $250 a share…and if Buffett is able to someday execute the warrant at that “strike price” (fancy technical term) the profit on his 43.5 million available shares would be $5.8 billion.

When we take assets from banks and other investors with depressed stock prices, we as taxpayers need to make the same deal Warren Buffet made—we need to demand warrants, and later, sell that stock back to the market, reducing the cost to the taxpayer over the long term…and maybe even making us actual profit….which could help to repay some national debt, perhaps?

There is precedent here. In the 1980’s the US did a bailout deal with Chrysler that involved issuing warrants…and the profit to the Treasury was substantial.

This is an additional huge part of the deal…and you can bet that there will be investor stockholder groups that will lobby—and lobby hard--to stop us from getting warrants.

We need to demand that we get our cut of the profit our tax dollars create…and to do that we need to get warrants as part of these deals…so bug your Member of Congress loudly and quickly on this one.

So, for the moment, let’s recap:

If the Administration wants to sell this plan they better acknowledge that it isn’t economic ignorance that’s the issue…that, instead, the problem is the basic element of distrust that they previously created by lying about matters of war and peace and Katrina…and if you want any plan at all, this is the issue you need to fix first.

Next, we need confidence that the prices paid for bad assets are not going to be excessive, we need oversight that allows us to be confident this isn’t another typical “reward and punish with taxpayer dollars” operation; and finally, we need to demand warrants, the tool that could make this something that turns the transactions, for a change, to the advantage of the taxpayer.

If we insist on these sorts of protections we have the chance to make this at least a fair deal for the taxpayer—and maybe even a good one. After all, if Warren Buffet can get good terms for a mere $5 billion investment…imagine the negotiating power $700 billion should be able to get us.

Even without the Priceline Negotiator, we should still demand the best deal possible…and if the currently frozen financial services industry doesn’t like that, perhaps they should borrow $700 billion somewhere else.

Tuesday, September 23, 2008

On A Way Forward, Or, Practical “Subprime Crisis” Solutions

AUTHOR'S NOTE: This was originally published on February 14th of this year, but it seems to be exceptionally timely today.

We had a lively discussion last week regarding the causes and possible future of the “subprime crisis” that is on everyone’s lips these days.

Having examined the sources of the problem, and noting the lack of holistic thinking about how things might be resolved, I’ve taken it upon myself to come forward with an idea that can actually get at the root causes of today’s difficulties…and do it in a way that offers a potential “win-win-win” outcome for homeowners, investors—and the taxpayer.

Paying attention, Presidential candidates?

Good—because time is short, and we need to get to work.

For today’s solution to make sense, we, like Sherman and Peabody, need to make use of the “WABAC Machine”. We’ll set the time dial to the late 1980s, and we’ll set the location as the headquarters of the Resolution Trust Corporation.

What we’d find is a governmental organization established at the height of the “savings and loan crisis” of the 1980s. The savings and loan companies had made a series of bad real estate investments (much like today), and many had already entered or were in danger of bankruptcy.

Perhaps not surprisingly, many of the same names we recognize today from the world of politics were also to be found “doing bidness” at the time of the birth of the RTC…and if you look it up, you’ll find such luminaries as John McCain, Barney Frank, and even Neil Bush doing things that they today wish we would forget.

In fact, there were so many people doing things they wish we would forget that the RTC was needed to find buyers for all the bankrupt savings and loans that had piled up across the nation. The way this was accomplished was to use regulatory pressure to politely force the bankrupt to accept offers from the more solvent.

As a result, the Silverados of the world vanished, and Keating Five became part of the lexicon.

And with the history lesson complete, let’s scoot on back to the “WABAC” machine and return to the present day, shall we?

Those who participated in our bond insurance discussion (and many who didn’t) may recognize that the biggest problem currently affecting the American financial sector (and beyond) is an inability to accurately determine the exact value of various financial assets.

As you may recall, we noted that one form of these assets are “collateralized debt obligations” (CDOs), which are fundamentally income streams from loans backed by real estate collateral. The original debt was incurred in the form of mortgages or equity loans. The current owners of these assets are not the originating lenders; but instead investors scattered across the planet which have purchased bundles of these loans, a process known as “securitization”.

Because there is a disconnect between an investor in Singapore who purchased a CDO and the borrowers back in the USA who are supposed to be making the payments; it is at the moment impossible to determine with any accuracy the actual value of any particular CDO. In other words, if you invested in loans and you don’t know who might fail to pay, how can you know what your investment is worth?

Lenders, regulators, and investors prefer clarity above all else. In a perfect world, borrowers who might be in trouble would promptly contact lenders to initiate a “workout”. Then everybody would know the status of every individual CUSIP, and life would again return to a state of near normality. (CUSIP is a fancy technical term: each individual loan that makes up a CDO is known colloquially as a CUSIP, and has a CUSIP registration number. Other types of debt instruments, such as bonds, also use the CUSIP registration process.)

But how is that supposed to happen when neither the borrower nor the investor know each other?

That’s where this proposal comes in.

Imagine, if you will, a new Resolution Trust Company that would be chartered with the purpose of creating a “clearinghouse” where investors and borrowers could reach accommodation—and where the status of individual CUSIPs could be determined, registered, made known to participating investors, and, in a privacy protected form, to the public at large.

On the investor side, the process would begin with each investor voluntarily “registering” their CDOs with the new RTC. The registration process would determine exactly which CUSIPs are associated with every registered CDO, and this data would be maintained in a public database.

On the borrower side, an advertising campaign that might look like the ads you see for “credit counseling” services would be run by the RTC…something like: “Are you facing foreclosure? We can help to keep you in your home. Call 800 NO FORECLOSE today”.

The RTC would be empowered to act under a limited power of attorney on behalf of the registered investors and would have the authority to negotiate payment arrangements that might include extending the term of the loans at lower payments, some form of delay on “teaser rate” ARM adjustments, or converting the ARM to a fixed-rate loan—or any combination of the above, as warranted.

In extraordinary cases, the RTC could facilitate direct negotiations between homeowners and investors—and in cases where the home is “under water” (the amount owed is greater than the home’s value) such negotiations will be needed.

Every day, as more and more homeowners call in and the status of their loans is determined (“current—no issues”, “default”, “in processing”, “resolution unsuccessful”, “unknown”, and “resolved” are examples of categories to which the loans might be assigned) they can be matched to their registered CUSIP. As the database fills, this creates the clarity that allows more accurate valuation of the CDOs associated with the CUSIPs…which should be the necessary first step in resolving the valuation issue that’s currently choking up the financial markets.

By publicly posting the loan status and the CUSIP number-without other personally identifiable information-it would be possible, to some degree, to protect the homeowner’s personal credit information from public view, while still offering an “open and public” assessment by an independent third party of the CDO to which the CUSIPs are associated…which means private financing can return to the mortgage market with renewed confidence in what they’re buying…which should also have a positive affect on the stock prices of some of the most beaten down companies in today’s market.

At the same time, as the foreclosure rate declines (if this proposal were successful, that could happen rather quickly) less surplus real estate appears on the market…making investment in land and homebuilding once again a reasonable business proposition. Fewer foreclosures also means less decline in the value of affected neighborhoods, which means the neighbors benefit as well.

All of this could be funded by a registration fee per CUSIP (or based on the amount of the loan) charged to the investors that covers the cost of the RTC’s operations.

You might have noticed that I have not referenced what might be the most daunting problem a new RTC might face: the problem of large loans for large projects. How does the $30,000,000 loan to the Florida land developer who has a half-finished condo complex as collateral get worked out?

I have no idea, but it seems to me that the role of the RTC might be best served by doing the high-volume, “cookie-cutter”, single-family home resolutions (and similar duplex, triplex, and other “small unit” properties), leaving the most complex solutions to be negotiated directly between borrower and investor, with loan servicers and bond insurers charged with facilitating resolutions of these problems on their own.

If solutions can’t be found, the bond insurers are on the hook for the income stream, but if the bond insurers default the investors will get nothing (even when they do get paid the cross-ownership is so convoluted that as we move through the process some of the investors will potentially have to work out deals with themselves), so everyone involved should already-or soon will-have what R. Lee Ermey once famously referred to as “the proper motivation”.

So with all that said, what do we have?

We have a proposal that creates a new RTC for the purpose of “clearing” CUSIPs, which allows CDOs associated with those CUSIPs to be valuated, which creates the conditions for private investment to return to the mortgage market.

We do this with the only cost to the taxpayer being limited to incidental costs (registration fees not collectable, and the cost of enacting the legislation, for example) and the burden of bearing the upfront costs of establishing the RTC and launching the ad campaign—which presumably will be recovered as the process moves along to conclusion.

We also do this without changing the “risk profile” of the loan portfolios held by Fannie Mae and Freddie Mac—a potentially huge benefit to the taxpayer.

The investors, bond insurers and loan servicers win because it suddenly becomes possible to credibly and independently valuate the CDOs, communities win if foreclosures return to normal levels, and homeowners get to keep their homes and credit ratings…and the larger economy benefits as the CDO market, for the first time, feels the “cleansing effect of sunshine” brought on by greater disclosure.

And to top it all off, the “moral cost” of the bad choices made are borne by the involved parties, rather than the American taxpayer: homeowners who made bad loan choices still have to pay off the loans, even if it takes longer than they originally thought…investors will lose or have delayed some portion of their interest income…and the best part—investors and “predatory lenders” who foolishly participated in sketchy loans to currently “under water” borrowers will probably lose some or all of the value of those investments as the true state of their CDO portfolio becomes known to the market at large.

Monday, September 22, 2008

On Distractions, Or, If You Hide In A Smoke Screen, Make Sure It's Not Toxic

It has been an extraordinarily bad week for John McCain, what with his interest in Sarah Palin’s boobs apparently keeping him from being sufficiently aware of the “fundamental soundness” of the economy...but luckily for McCain, the news cycle turns; and a hotel bombing in Pakistan might be the opening his campaign thinks it needs.

With that in mind, expect the next week leading up to Friday’s Presidential debate to be full of references to McCain’s favorite subject...“the transcendent challenge of our time—Islamofascism”...or something eerily similar.

His campaign is convinced this is the strongest place for him to make his argument for election—but what if it is not?

As we anticipate what is coming next from McCain, let’s remind ourselves just how much of a foreign policy expert McCain really is—and let’s do it using McCain’s own words.

McCain likes to talk about how he was the most vocal critic of the war...until January 2007, when Mr. Bush finally listened to McCain and adopted The Surge.

It’s a great story...and if it were true it would be even better.

“...I’ll teach you to kick me!”

“I don’t need you to teach me.
I already know how.”

--Edgar Kennedy and Chico Marx in “Duck Soup

Now I’m not as expert-y as John McCain, but here’s what I told my friends before the war started:

Try to imagine if the UK decided that our government had gone completely crazy, and that for our own good we needed their troops to remove our government and temporarily occupy the US until we could get ourselves back on the right track.

No matter how crazy our government had actually become, the instant that news was broadcast in this country it would become the biggest hunting season you ever saw on the beaches of New England, with millions of heavily armed Americans converging on the invading forces.

What makes you think Iraqis would act any differently?

McCain, the expert, was certain that Iraqis wouldn’t even fight...and he obviously never expected an insurgency:

"Look, we're going to send young men and women in harm's way and that's always a great danger, but I cannot believe that there is an Iraqi soldier who is going to be willing to die for Saddam Hussein, particularly since he will know that our objective is to remove Saddam Hussein from power."

--John McCain on “Face the Nation”, September 15, 2002

The guy who was supposedly such a critic of the war was also one of the co-sponsors of the Authorization for the Use of Military Force (AUMF) that got the war started in October of 2002.

And although he denies it now, during the runup to the war he wasn’t complaining about the number of troops to be deployed:

"But the fact is, I think we could go in with much smaller numbers than we had to do in the past. But any military man worth his salt is going to have to prepare for any contingency, but I don't believe it's going to be nearly the size and scope that it was in 1991."

--John McCain on “Face the Nation”, September 15, 2002

When Robert Byrd questioned the logic of the war on the floor of the Senate, McCain rose to respond: "...when the people of Iraq are liberated, we will again have written another chapter in the glorious history of the United States of America."

McCain was also very comfortable with how things were first:

"I have no qualms about our strategic plans. I thought we were very successful in Afghanistan..."

--John McCain, in an editorial he wrote for the Hartford Courant, March 5, 2003

“It’s clear that the end is very much in sight. ... It won’t be’ll be a fairly short period of time.”

--John McCain on ABC, April 9, 2003

When questioned, McCain even defended the propriety of the “Mission Accomplished” banner on the June 11, 2003 edition of Fox News’ Your World With Neil Cavuto:

NEIL CAVUTO: Senator -- after a conflict means after the conflict, and many argue the conflict isn't over.

McCAIN: Well, then why was there a banner that said mission accomplished on the aircraft carrier?

Later in 2003, despite being a self-described critic of the war, he remained certain we were on the right track:

“Let there be no doubt: victory can be our only exit strategy. We are winning in Iraq.”

--John McCain, speaking to the Council on Foreign Relations, November 5, 2003

Al-Qaeda supporters are Sunni; Iranians are predominantly Shi’a.
That makes it highly unlikely that Iranians are training Al-Qaeda insurgents.

I know that, you probably know that, Joe Lieberman knows that...but for some reason John McCain...the foreign policy expert...can’t seem to remember which is which...and now he doesn’t have Lieberman standing at his shoulder to set him straight.

Of course, we are told, that was just a “senior moment”.

“...The last man nearly ruined this place,
He didn’t know what to do with it;
If you think this country’s bad off now,
Just wait’ll I get through with it “

--Groucho Marx as Rufus T. Firefly in “Duck Soup

One way to be right about an issue is to take both sides of the same argument; and this is a technique McCain employs on a regular basis.

An example? McCain was confident in the Bush Administration’s team in September of 2004...

"I think he [President Bush] strengthened our national defenses. I think he has a good team around him."

--John McCain, September 3, 2004

...but three months later, describing his feelings about then-Secretary of Defense Donald Rumsfeld on MSNBC, McCain gave this assessment:

"I said no. My answer is still no. No confidence."

--John McCain, December 15, 2004

You may recall McCain said we could stay in Iraq for a hundred years...but you may not recall that in February of 2003, roughly a month before we went in, he said we can’t—and he said it as a way to justify the invasion:

"We cannot keep our forces indefinitely staged in the region. Were we to attempt again to contain Saddam, we would eventually have to withdraw them. The world is full of dangers and, more likely than not, we will need some of those brave men and women to face them down."

You used to be able to see the original quote on John McCain’s Senate website...but for some reason the record is today “inaccessible”. (Big thanks to the PERRspectives Blog for grabbing the quote.)

And for those who think McCain might finally have his diplomatic act together...ummmm...despite his saying he knows the leaders of Latin America (and that Obama doesn’t), Spain is not Venezuela, it is not in Latin America—and they’re our friends.

Let’s sum all this up:

It is more likely than not that McCain will attempt to use the Pakistan bombing this week to position himself as the candidate who has the judgment required to keep America safe from “noun, verb, transcendent challenge”.

This is an opportunity for us, however, to remind voters that the real McCain record has not been one that inspires confidence in his leadership...that he really doesn’t know what he’s talking about much of the time...and that we can’t afford another 50 years of this, or a hundred—or a million.

McCain will take jabs at the truth this week...and it is our job to meet those jabs with parries of our own—and then to follow up with counterstrikes of reality, using his own record to knock back his attacks.

Now get out there, Gentle Reader...and let’s win this thing.

Thursday, September 18, 2008

On Bucking A Trend, Or, Yes, Virginia, Sometimes Politicians Deserve Respect

We are all guilty, from time to time, of beating up on our politicians--and why not?

It only takes a moment to think of someone we elected who immediately went “off the rails”...who today can’t even remember the promises they are busy breaking...and who can’t wait to get out of elective office so they can move on to lobbying their former colleagues.

Occasionally, however, we come across officials who are bucking the trend: working hard, dedicated to doing a good job for the voters that put ‘em in office...and doing that good job even when all around them were working feverishly to bring on indictments.

Such a politician is the subject of today’s unusually upbeat story...and with that said, allow me to introduce you to Port of Seattle Commissioner Lloyd Hara.

Who loved the movie Pulp Fiction? For me, the thing that made the movie was that the story was not told in “linear” time; instead bouncing around a bit, with the end eventually becoming the beginning.

Today, telling the Lloyd Hara story, we’ll do the same.

The Port of Seattle is a public agency charged with operating the water terminals within its area of jurisdiction as well as Sea-Tac Airport. It has a real estate operation which leases certain assets to tenants, is involved in efforts to improve regional freight mobility, and has relationships with certain contract providers and vendors who, among other things, make available legal and consulting services.

The Port has a CEO, five Commissioners who serve as a Board of Directors (for the princely sum of $6000 a year...), and a staff who perform the daily tasks of running a Port’s operations.

When you think of Seattle politics I suspect you imagine people who look like they could be working at Microsoft mingling with people who are squeaky-clean idealists—and I’m here to tell you that this can occasionally happen.

But it might surprise you to know that Seattle is far from squeaky-clean in its political history. In an effort to write their own chapter in the history of local corruption, former Port CEO Mic Dinsmore and certain members of the Port staff seem to have run the Port as their personal fiefdom.

It appears that lavish personal entertaining on the taxpayer’s dime was considered a personal perk, along with lavish, no-bid contracts for the consulting and legal services (who appear to have been associates of Dinsmore) that were concealed from the Commissioners...the effort to inappropriately influence Port elections is also alleged...and in the case of the contract for the “cruise ship consultant/operator”, a deal was struck that guaranteed the consultant/operator profit no matter how the year’s business turned out--and most of the profit even if things went well--despite the fact that the Port put up virtually all the assets and took on almost all the liability.

Now I’m not saying everyone involved was trying to profit off the Port, but I will say that the Commissioners, for many years, didn’t seem to be noticing what was happening...and it was probably far too easy to conceal what was being hidden, if you get my drift.

We’ll return to this story in a minute...but first, let’s jump back to a moment in Rotary Club history that also features in Lloyd Hara’s history.

Rotary International was a men’s-only operation for many years, but the door was cracking open because of a court case involving a Rotary Club in Duarte, California that eventually found its way to the Supreme Court. In 1984 Hara, as the Rotary “Governor’s Special Representative” led the formation of the Seattle-International District Rotary Club...and the club was to eventually challenge Rotary International by being the first Rotary who sought from the time of its formation to initiate women (only Duarte had women members at the time); a challenge that resulted in Karilyn Van Soest attending the International Convention in 1989 as only the second woman ever to be the President of a Rotary Club.

By 1989 Hara had already served as the youngest Auditor in King County history and was in the middle of his 12-year run as Seattle City Treasurer, earning numerous awards for the effort, including being named to City and State Magazine’s Public Officials of the Year list in 1987 (the class of five includes Dianne Feinstein, who was mayor of San Francisco at the time) and, as he tells us, named the Nation’s Best Treasurer in 1987.

He left the Treasurer job in 1991 to become the Regional Director for FEMA (back when they actually hired for competence), and he had also been teaching at Seattle University...and then in 2005 he was elected Port Commissioner (a legally nonpartisan position) on a reform platform, earning a variety of endorsements, including that of the Sierra Club. In the same election John Creighton became the second half of the “Reformist Bloc” to join the Commission.

At about the same time, the Washington State Auditor’s office was charged by initiative to, for the first time, perform “performance audits” in addition to the financial audits they had always conducted...the Port had released “incomplete” results from an internal audit of their own...the pressure from all the sudden reform caused Dinsmore to leave (leaving a questionable sudden pay raise in his wake)...and in December 2007 the State’s audit report was released—causing lots of things to hit lots of fans.

Among the things: the Commission hired a former US Attorney to conduct an internal investigation, the current US Attorney is conducting a criminal investigation, and the Commission has revoked many of the powers previously enjoyed by Port staff.

The State Auditor’s office presented 51 recommendations, new CEO Tay Yoshitani, previously Executive Director of the Port of Oakland, California joined with the Commission in moving toward adopting the recommendations...and as of August the Commission reports 45 of the 51 recommendations will have been implemented.

A new emphasis on accountability is emerging, something Hara and fellow Commissioner Bill Bryant discussed in a February, 2008 Town Square conversation.

Time for another “non-linear time” moment: in 1972 Hara was named as a respondent to a lawsuit, in his capacity as King County Auditor, in which a Mr. John Singer and a Mr. Paul Barwick sought a marriage license, which Hara, despite his personal support for the request, declined to issue—the second such lawsuit in US history.

To make a long story short, Washington State had recently adopted gender-neutral language in its statutes and regulations, and the Plaintiffs felt that the new language could be interpreted to permit same-sex marriage. This interpretation was not shared by the appellate courts, however, and Hara’s decision to reject the application was upheld.

I really began to appreciate Hara when his “Port Notes” began showing up in my email. I can truthfully say that I have never received more detailed and useful reports from any elected official...this being one example:

“Lora Lake Apartments: This complex in the shadow of the 3rd runway progressed from scheduled demolition, to a bone of contention with low-income housing advocates, to a pending transfer to King County Housing Authority, to a toxic waste site. It's now unclear how severe the problem is, or whether the complex can ever be preserved as residential property. Needless to say, the transfer is on hold.

Eastside Corridor: After almost 2 years of negotiations, we authorized the purchase of the corridor from the BNSF and gave King County an easement for the trail. Every interested party has begun to weigh in -- hikers and bikers, adjacent home owners, rail and transit interests, eastside cities and Snohomish County interests, business people and the public in general. We plan public hearings this summer and expect to broker a dual use facility of transit/rail and trail. It's important to bring this corridor under public ownership, and the Port is probably the only government with funding capacity to make the $107 million acquisition.

3rd Runway: 20 years into the project, you may spot an FAA Learjet landing as testing continues this summer, looking forward to first commercial traffic in November. As you can see, siting a new airport in the region would be a very major undertaking.

T-30/91: We must complete the cruise terminal at T-91 in time for the 2009 season, and convert T-30 for container use shortly thereafter. Only T-91's electrical cables are slated for reuse - not the gangway, the terminal building or other assets - so this bears watching for cost overruns.

T-25: On a 3-2 vote, we approved surface improvements for potential use as an extended container facility. John Creighton and I voted against. We originally contemplated a cold storage facility here, and I wanted to make sure the intended use was properly bid."

--(Note: links are as they appeared in the original email)

As I said, this is far more detailed than the usual “Congressman So-and-so met with residents at the Senior Center” that I often see in my inbox—and as a taxpayer, it’s much appreciated.

All is not sunshine and rainbows, however. In 1991, Hara was investigated by Seattle’s Board of Ethics because of his relationship with Stuart C. Johnston. There were concerns that Johnston, Hara’s lead campaign fund-raiser and also a manager of City investment funds, might be inappropriately tied to Hara, who was the official responsible for overseeing the management of those same investment funds. He was later cleared of having committed any ethics violations.

Hara was fined $400 in March of 2008 by the State of Washington’s Public Disclosure Commission because his 2005 campaign failed to make certain filings in a timely manner.

Christopher Cain, who runs “The Port Observer”, was kind enough to offer this assessment of Hara and the Port reform efforts:

“Lloyd Hara runs a good campaign effort under the clever guidance of Sharon Gilpin, a campaign consultant. Effective campaigns are the key to remaining a Seattle Port Commissioner. As a Port Commissioner, and former accountant for the City of Seattle Mr. Hara has exhibited excellent qualities favorable to the public interest.

However, Lloyd has from time to time fallen prey to the old school ways of behaving badly. Numerous junkets to far off places will not make you a better steward of the public purse. Port CEO Tay Yoshitani's handling of the accounting scandals was typical old boy club style politics and Hara has cozied up only because he wants so badly to be a part of that club. But Lloyd’s loyalty to the public must wreak havoc in attempting to balance the two relationships...

...The last few years have revealed some amazing things that have always lurked beneath the surface, but the path to change has been focused on changing public perception (as usual) and not really on how things are done at the Port. You can take the criminals out of the port but you can't get corruption out of a system designed to be corrupt...Therefore, without someone willing to take on the establishment who understands this, all actions are futile exercises designed to get you re-elected. Lloyd understands this very well and likes to be a Port Commissioner.”

So that’s the story for today: despite what we often believe, there are politicians out there who are doing a good job for us, who have a history of working for the public good, and who like to keep us aware of where our money goes.

Not all is perfect...and some of his critics wonder if he is up for his current job...but all in all this is a politician I can surely respect, and in these times, that’s pretty good.

Friday, September 12, 2008

On Closing the Deal, Or, Preaching Beyond The Choir

With roughly 50 days to go, we find ourselves more or less tied in the Presidential election, if the national polls are to be believed.

We have succeeded in motivating our base, and Republicans have, as of today, done the same.

What we are not doing very well is bridging that gap and effectively spreading the discussion to the other side...which is the point of today’s conversation.

Where can our conservative friends be found?
What do we need to know about the culture to be found there?
What should we say when we get there?

Your friendly fake consultant has been on a mission...and I have some answers.

First, about the “mission”: for the past several months I have been posting and commenting at the Pat Buchanan website. This follows up on a similar mission I undertook in 2006 and 2007 to post and comment at RedState.

It has been an educational experience, indeed...but also a hopeful one.

Right off the bat, let’s talk about the culture. As you might expect, the tone and tenor of the discussion is far different than what you see on many progressive sites...although there are Conservatives (and Maryscott O’Connor) who will remind us that we are not always as high-minded as we wish we were.

As an example, the Buchanan supporters, among other things, are particularly distressed about the impact of World Zionism and the International Jewish Conspiracy that has created Neo-Cons who...

Well, the point is that you will have to deal with this stuff.

My advice: for the most part, you are not going to be successful with frontal attacks on the local belief system. If you want to move minds in this environment, look for the areas of agreement...and look to the disconnect between what the candidates say and the reality of what is happening daily—and down the road.

Another piece of advice: show respect, even in the face of provocative language.

I can tell you it works for fact, today, hardly anyone calls me a deluded bleeding-heart liberal—and that’s progress.

In this same vein, try to avoid personal attacks in these conversations. These are citizens who we are trying to speak to as people—and we are trying to show them that the Republican Party is acting against the best interests of all of us.

Which leads to my next point: the primary goal here is to reduce the personal identification of these voters as Republicans—and remind them of their own Conservative associations, which diverge considerably from the Bush/McCain/Rove Republican orthodoxy.

Another thing about Conservative culture that should be understood is that John McCain is not exactly as huge a hero figure as you might imagine. Remember the Neo-Con Jewish Conspiracy stuff? Many Conservatives see McCain as an extension of The Conspiracy...and many are just as upset about the Neo-Con vision and the Iraq foolishness as we are.

Evidence of this is found in the Sarah Palin selection, which was clearly intended to “lock those voters in” with someone who could be sold as “one of your own”.

(For those not aware, Conservatives are upset because they feel underappreciated by Republican “management”, who never seem to appoint “True Conservatives”, Antonin Scalia notwithstanding...and evidence of that is found in the size and enthusiasm of campaign crowds before and after the Palin selection.)

Beyond that, it’s a good idea to bring solutions to the discussion. Obviously, you won’t do that every time you speak, but on balance, you should be promoting workable ideas against unworkable ideas. People I talk to on the site seem to recognize (most of the time) that I’m not there to destroy the Nation, or crush anybody’s hopes or dreams by imposing Godless Communism upon them—instead they are beginning to acknowledge that we and they are both trying to make our country work better...even if we are trying to do it in different ways.

So let’s tie all this together by walking through a conversation from a visit to the No Quarter website. The topic under discussion was Obama’s use of the “lipstick” metaphor...and feelings have been running high. I came in after these this comment...

“Clearly the Obamabots are scared. Hence they’re going on offense and making an all out assault in the blogosphere in a desparate attempt to dig up a few bleating sheep they can bring back into the fold.”

...and this...

“Full panic/meltdown mode, for our late-night amusement.”

To which I offered this rejoinder:

“obama supporters are scared?

i think it’s more that the republican party leadership is scared.

they don’t seem to want you to be talking about your kids’ futures in a world of tax cuts and deficit spending...they don’t seem to want to talk to you about how they will end the waste of lives and money that has accompanied this war...and they most assuredly don’t want to acknowledge that talking about these pigs and madrassas and islam is intended to keep you from talking about issues that affect your wallet.

we went down this road in 2000 and 2004...and to quote ronald reagan: “are you better off now than you were four years ago?”

that’s the biggest thing mccain’s managers don’t want you talking about...and that’s the one thing they are really and truly scared of.

the past eight years have cost you and your children more or less $5 trillion dollars in new national debt...which, like it or not, you and i and your children will be paying for–in the form of taxes–for decades to come.

not to mention the change in the value of our homes and all the new tax obligations that will accompany the fannie mae/freddie mac mess.

and yet with all that money america better off now than it was four years ago?”

What came back was this:

“ ...Four years ago?

You mean when President Obama took the temp job in the U.S. Senate?

So... what’s he done for us?

How has his vaunted leadership helped?

Why didn’t he part the seas of red ink

- instead of voting for virtually every Bushbill that came across his desk?”

Followed by this:

“ do know that Bush is not running for President again don’t you?

uh, you do know that Democrat controlled Congress took impeachment off the table didn’t you?

uh, you do know McCain has a 100% record for not requesting earmarks don’t you?

uh, you do know that Palin has cut spending and championed reform in Alaska don’t you?

Doesn’t sound like more of the same to me.

You Obama supporters never mention that Obama sat in a racist, American hating church for 20 years or is friends with a terrorist. Funny how you leave that part out. He also has no executive experience and neither does Biden. How is that good for our future? You people are the ones who better wake up.”

Now notice, in my reply, how I do not personalize the issue...while still addressing facts:

“we do know democratic members of congress took impeachment off the table, and if you take a quick jaunt to dailykos you’ll quickly discover that it was not appreciated.

you need look no farther than the approval ratings of congress to see that lots of democrats are not at all fond of recent congressional performance.

but that said, take an actual look at the issues.

mccain talks about earmarks as a means to balance the budget...but he also says earmarks equal $20 billion annually.

the deficit is going to crack $450 billion this year, and might hit $500 billion.

all federal spending, except for defense, medicare, social security and interest on the debt is about $300 billion.

so even if all other spending were to be cut to still have a deficit.

on top of that, mccain proposes tax credits for health insurance, further increasing the deficit.

beyond that, he proposes more tax cuts. it is unlikely that reducing the government’s income will reduce the deficit.

all of that suggests that a mccain administration will follow the exact path of continued deficits followed by increased national debt that we have had for the past 8 years.

you may say to me: “obama will tax everyone under $42,000″.

two comments.

first, no he ain’t. as it turns out, it is possible to return the tax rates on the highest income earners to exactly what they were in 1999...and in the process, to pay for tax cuts for most wage earners making under $250,000.

which is obama’s propposal.

secondly, we are, like it or not, going to have to pay off the $5 trillion in new debt we accumulated these past 8 years.

if we do not raise taxes somewhere, somehow...then that burden will be passed to your children and grandchildren.

it appears mccain is finding problems in his own plan and projections. this, from the international herald tribune via yale university:

“...When McCain spoke about his tax plan in April, he cited the faltering economy in saying that it might take two terms to balance the budget, explaining that “economic conditions” are reversed. Since then, he seems to have refined some of his earlier tax cut plans. While his campaign once spoke then of repealing the alternative minimum tax, which is aimed at the wealthy but has increasingly ensnared middle-class taxpayers, his advisers now speak of “phasing out” the plan. And they now say that his proposal to let corporations write off their equipment expenses more quickly would be temporary...”

it seems to me that paying off your debts is the kind of thinking that would seem logical in this conservative if we are not going to pay off the $5 trillion or so in debt we recently have run up with taxes, then how should we pay it off?

that is the kind of question mccain seems unwilling to address; the “outrage of the day” strategy seeming to be more to his preference at the moment.”

Notice how we disconnected the Republican Party Establishment from these voters and Traditional Conservative Values...and you notice how neatly we were able to transition to a discussion of actual issues?

As of this writing there has been no reply, suggesting the weakness of the Republican position is something of a problem for these voters...and that it’s a problem for which they have no response.

This process is far from perfect, however.
Here’s an exchange from the Buchanan site.

First, not me:

“I just watched the national forum on service–did I hear Senator Obama correctly, did he say that it was more difficult for him to get a job as a community organizer than it was for him to get a job on Wall Street? Is that true? is there any evidence he interviewed for banking jobs?”

Followed by me:

“how about another question?

mccain suggests helping out in places like habitat for humanity...which is run by...guess organizers.

palin (and so many others at the republican convention...giuliani being just one example), on the other hand...seems to enjoy taking shots at community organizing and community organizers.

so the question is: which version of the mccain campaign\’s \”worldview\” should we believe...the one he presented tonight, the one they present every day on the campaign trail...or neither?”

Followed by one of those responses we talked about earlier, from a third party:

“I think that what Obama meant was — it is difficult for a mulatto to get a job in the Stock Market. These jobs are mainly reserved for Jews.

Community organizers are often involved in unsavory and manipulative functions. Obama is accused of using extortion threats on many businesses convincing them to contribute money to various Black causes. This is something that Jesse Jackson and other Black leaders are very adept at doing.”

This exchange actually brings me to another point I’ve been meaning to address: we are not writing between two people. Instead, we are writing for ourselves, the people to whom we respond...and also to the people who will read but not comment.

There will be curious voters who are not yet decided who visit Conservative sites who will read this and feel repelled by this kind of thinking...which can only help us. As we talked about earlier, it’s to no one’s advantage to attack the local belief system directly. Instead, I’m going to hang back, see what other responses appear, and try to again return the discussion to who is making the most sense...and who is looking foolish.

Here is an exchange in which I did not participate that demonstrates the doubts that Conservatives have about Palin:

Pat - even if she supposedly backed you in 96 - she\’s more akin to the Fox News Weekly Standard bunch in terms of her foreign policy.

This woman is JUST as bad as McCain in terms of wanting and pushing for war.

Can we trust her? Or is she Bush-Cheney redux?

...followed by...

“Stop worrying about McCain dying. He is not. He is just getting started.”

...the original poster responds...

“Oh I’m not worried about McCain dying. I’m just concerned about this being the broader foreign policy of his first-term administration.”

...a third person appears...

“Remember Palin will be Parroting McCains policies.”

...the third person adds a comment...

“Wait till she gets going on amnesty. It will make you puke!

Palin is not open borders but McCain is and the V.P. always has to adopt the nominees platform. After a while she will gross you out because she’s McCain’s puppet now. I just hope she doesn’t lose herself in all of the nonsense.”

What we can learn here is that these voters do not trust McCain in the first place, and as Palin begins to lose her “Goddess of All She Surveys” status they become less and less likely to vote for this ticket.

When you hear that Ron Paul and Bob Barr may siphon off McCain voters, it’s these voters you’re hearing about.

This is a superb time to go out and meet a few disenchanted voters of your own...and the more we remind them that the reality does not match the rhetoric, and do it truthfully, the more effective we can be.

So, you might ask, where can these voters be found?

A few suggestions: obviously, there’s the Pat Buchanan site, the aforementioned No Quarter, which seeks to link “anti-anti-Hillary” voters to the Republican movement, RedState, the largest of the Conservative spaces, and Little Green Footballs, which at the moment is quite upset with Charlie Gibson.

A couple more? Well, there’s Pajamas Media...and the Michelle Malkin site, where it turns out McCain is also a disappointment at the moment.

So that’s the story: the time is exactly right to go out and do this work, and there is a potentially receptive audience, but these voters speak in a language to which we have to adapt; and they believe things we don’t.

That said, by showing some respect and allowing a fair amount of insanity to roll off your back...and offering a few solutions that make can begin to show these same voters that McCain is not going to be the right choice for them—or their kids.

If you go and comment one day a week, that’s 7 visits between now and Election Day...and it’s seven chances to preach beyond the choir that we wouldn’t have otherwise.

So go out and preach.
Preach fairly, but preach well...and let’s close this deal.

Monday, September 8, 2008

On Making A Statement, Or, The Revolution Will Be Downloaded

We have been busy, these past two weeks...and we deserve a bit of a break before we get right back at it to that end I have two “mini-stories” for you that will give you a chance to be ahead of the curve, to jump in on something new—and in one case, to help pull a major public prank.

Along the way, I have some “don’t miss” video for you to see—including a 1960s classic that is utterly and completely disconnected from politics in every way...but is still the perfect thing for a Monday.

And just to show what a help I can be, I’m even going to leave you with a story idea you can run with that has been almost entirely ignored by the larger media.

There are few filmmakers in American history who have impacted American politics as much as Michael Moore. Fahrenheit 9/11, Bowling For Columbine, and Sicko have all recently changed the political dynamic...much as “Roger and Me” did almost 20 years ago.

And this month, a new Michael Moore movie is to be released: ”Slacker Uprising”.

So with times as tough as they are, wouldn’t it be great if the movie was...oh, I don’t

Hey, America (and Canada...), guess what—it is.

For the first time ever a major studio film production will be premiered on the Internet...and it will be free...and to make it even better you can download the film, and keep the copy, pass it around, or whatever.

Our first “don’t miss video” is a 30 second commercial that was put together by the Campaign for America’s Future for the delegates attending the Republican Convention this past week. Katrina, the price of gas, the housing crisis...and that “Mission Accomplished” moment—all reprised to the tune of “Thanks for the Memories”.

I love this video—and you will too.

The movie will “drop” September 23rd; and you can go to the Slacker Uprising website to register for the download today. Come the 23rd, you go back, download a “full” version of the movie—and it’s all free.

Now if you want the “deluxe” package...the DVD is also for sale at the’s $9.95...and it includes a presentation of “My Pet Goat” in case you need something to read the next time you want to re-create Presidential history.

Who loves the game “Grand Theft Auto”? Those who do will also love one of my favorite videos--Chuck D., Flavor Flav, and George W. Bush working together as though they were some sort of...Public Enemy...performing the song “Grand Theft Oil”.

It has a great beat, you can dance to it...and it excoriates the President.
What could be better?

I promised you a story heads-up, so here it is: while New Orleans might have survived the recent hurricane mostly unscathed, Baton Rouge is severely damaged. In fact, it could be three weeks before power is fully restored.

Go check this out...and get the stories rolling.
I can’t do them all, you know.

Now to close out today, I want to ask you to get involved in helping to advance a giant secret prank.

Giant secret prank, did you say?
Indeed I did.

Here’s the deal: I got an email the other day from my friends over at “The Yes Men”...and they are looking for donations because they are preparing another outrageous event.

Outrageous event?
Whatever do you mean?

Well, in the past they were involved in the formation of the Barbie Liberation Organization (the group swapped the voiceboxes from Barbies into GI Joes...and vice versa...and then placed the altered toys back on the shelves to be sold to unsuspecting customers).

They made Dow Chemical admit---very publicly—that they had no intention of compensating the victims of the Bhopal Disaster...and they did it by faking Dow’s admissions of guilt, announcing a fake compensation plan...on the BBC...along with the fake “requisite apology”...which forced Dow to announce that the Bhopal victims are getting nothing.

They also manage to get invited to conferences as representatives of the WTO from time to time (it all has to do with a confusing website they created back in the day...); proposing such things as “compassionate slavery” and the Halliburton SurvivaBall.

One of the greatest comedians ever: Buddy Hackett. Check out this video of Hackett, from the 1960s, explaining to Dean Martin how he found out his wife was pregnant. (She sent him for pizza pie...)

Retro-cool and absolutely hilarious, it is.

The clip has nothing to do with anything else in this story...and despite that, it could not fit into the context of the story more perfectly.

The last big prank for which The Yes Men raised funds had them (this time as fake representatives of Exxon/Mobil) proposing—at Canada’s largest annual energy conference--to use dead humans as an alternative energy source. During the event they handed out to the audience candles made from Vivolium, the new dead human fuel they had developed...and your donations paid for the candles.

Here’s the description from the email I received:

“Your donation [to this site] will make it possible for
us to print and distribute up to hundred thousand copies of, um,
something. We can't tell you what it is, but we can say it'll happen
well before the Presidential election, that it's fantastic and funny
and smart, and that it aims to change the discussion from just managing
the Iraq War, to ending it, with all that that would mean for the US as
well. Because this war has been a disaster not just for Iraq.

If you give us money (any amount is helpful), we'll make sure you get a
copy. And if you live in the New York area and would like to be part of
this action, please write”

So here’s your chance to get directly involved in...something...just in time to influence the election—and to have a lot of fun doing it.

Ever wish you had been a Merry Prankster?
40 years later, here’s your chance.

So that’s today’s story: there’s a free Michael Moore movie available in a few days...and there’s a fantastic opportunity to put the money you saved on movie tickets, jujubes, and popcorn to good use.

Having fun while doing good—who doesn’t love that idea?

Thursday, September 4, 2008

On A New School Year, Or, The Sarah Palin Drinking Game

Well, it is easy to tell it’s September.

BBQ smoke hangs thickly in the air, the rain is getting cooler than it usually is in the summertime, and the Mariners are securely in last place.

And it is also time to return to school. For the new voter about to enter (or return to) College, all the crazy living can make you forget about important things, like...oh, I don’t know...maybe an election or two.

To make sure this does not happen I’m going to put College and Politics together to create this year’s first...wait for it...synchronized Sarah Palin drinking game.

So start pairing up your shotglasses, find the Scotch tape, and when you get back I’ll tell you how it works. here’s what’s going to happen:

You’re going to make “pairs” of glasses that will have Sarah Palin’s “official story” on one glass, and Sarah Palin’s matching flip-flop on the other...which you can find right print this story, cut out the strips, apply a bit of tape, and you’re on your way.

Put them in a shoebox, and at the beginning of the game players pick one at random. (Or if you prefer, pick teammates...)

When you hear one of the pair on the TV, both glasses have to a synchronized manner. Extra points for style may be awarded.

As an example, one glass will say:

“Sarah Palin opposes

The pair to that glass will say:

“Airport Paving Project”


It turns out Mayor Palin sent a note to Wasilla City Council members to let them know about the nearly $800,000 in earmarks to the City that the local paper had reported upon. The paper missed some of the story, however, and in the margin, in her handwriting, she wrote:

“This does not include our $ nearly One Million Dollars from the Feds for our Airport Paving Project. We did well !!!”

Now if the TV mentions “earmarks” or the document with her handwriting on it...or the airport paving project—synchronized drinking!

You know what? I like that earmark theme so much I’ll do another.

“I was against The
Bridge To Nowhere”

“I was for The
Bridge To Nowhere”

Bridge to Nowhere? Long story short, one of the most offensive earmark efforts ever was just a couple of years ago when the (all-Republican) Alaska Congressional delegation tried to hustle $320 million in earmarks for a bridge to connect Ketchikan with the Island of Gravina (population 50), where the airport is located. (The locals have to make do with a ferry today...but they didn’t like having to wait for the boat.)

See if you can guess which 2006 candidate for Governor of Alaska was all for the earmarks that would make The Bridge To Nowhere possible? (Hint: It rhymes with Parah Salin.)

She’s so big on earmarks, in fact, that in 2001 and 2002 the Mayor of Wasilla was targeted for her love of pork by a national crusader who was trying to end the practice. Know who it was?

Wait for it...wait...OK, are you ready?

John McCain said Sarah Palin was a pork abusertwo years in a row.

Guess which candidate for Vice President is not only against earmarks today...but also Governor of the State that gets the most earmarks, per person, in America? (Hint: It rhymes with Parah Salin.)

Here’s another pair of glasses, and they’re pretty much self-explanatory:

“I’m for abstinence-only education

“How’s that abstinence-only thing
working out these days?”

You’re probably hearing that after 18 months in office she’s already being investigated by the State of Alaska to see if she has abused her powers as Governor, and now it looks as though she is trying to wriggle out of the cooperation that she promised investigators.

To make this happen, her own lawyer just filed an ethics complaint against her, hoping the Alaska Attorney General will take over the investigation from the Legislature. Which is how we get the next pair of glasses:

“Palin is an ethical politician”

“Palin files ethics complaint
against herself”

(For this pair, any mention of the word “Troopergate” also means synchronized drinking!)

That’s four pair, which should be enough, for now, to get you started...but let’s end with a challenge:

Send in your own pairs.

Make ‘em funny, make ‘em tough...but most of all, make sure they can fit on a shot glass.

Now get out of here and head to class...and be sure not to step in any big piles of Politics on the way.

Wednesday, September 3, 2008

On How The State Gave Me MRSA (Part III), Or, The "Let's Fix It" Edition

Imagine that you’re a Presidential candidate running for office in today’s electoral environment. Now imagine if you came before the American public and informed them that you were aware of an event that would kill as many Americans as died on 9/11...and that you had the knowledge in hand to stop it in its tracks.

And that you could do it again—six times a year—year after year after year.

And to make the story could save the taxpayer money doing it.

You think the voters would be in favor of that?

Well, voters, get ready to be in favor of that; because today I bring to you a relatively cheap, relatively easy plan that will save more than 18,000 American lives a year.

How do we do it?
By making MRSA in the healthcare system a virtual thing of the past.

Follow along and you’ll leave with useful facts, solid answers ...and examples of how the plan is already working.

So what is MRSA?

MRSA (Methicillin-resistant Staphylococcus aureus) is the name for a group of staph bacteria types that have become resistant to one or more antibiotics. All are resistant to penicillin.

MRSA, it should be noted, is not the only problem here. There are other drug-resistant organisms that lead to a variety of Hospital-Acquired Infections (HAIs), or if you prefer the technical term, nosocomial infections.

CA-MRSA are “community acquired” strains, commonly affecting people in jails, gyms and schools, and other “close contact” environments. These strains most commonly present as boils, pimples or blisters.

They are relatively easily spread, and cause almost 15% of MRSA fatalities.

“Health care–associated Community-onset “ or “Hospital-Onset” MRSA (the two of which can be referred to as “Hospital Acquired” or HA-MRSA), on the other hand, are less easily spread, but can infect the organs, causing organ failure, or the lungs, causing death by pneumonia, or the blood, causing blood infections and toxic shock syndrome.

While HA-MRSA bacteria cause 85% of all MRSA infections, as the two names imply, not all infections occur in hospitals. Other health care settings, such as nursing homes (the “Community” part of “Community-onset”), are actually responsible for about 2/3 of that total.

Those workers bring the bacteria home, by the way ...and about 1/3 of the family and roommates who come in close contact with an infected worker themselves become infected...which, in fact, is what happened to me.

(The Girlfriend is a nurse in the employ of the State of Washington; the Residential Habilitation Center where she works is the home of the poor infection control practices that caused our problem...and all of this is described in complete detail in Parts I and II of this story.)

Not only does MRSA kill with great alacrity, it’s expensive to boot.

How expensive?
Consider this, from the Committee to Reduce Infection Deaths...

A new study based on all the hospital infections reported in Pennsylvania in 2005 dramatizes this enormous economic burden. The average charge for patients who developed an infection ($173,206) was nearly four times as high as for patients admitted with the same diagnosis and severity of illness who did not contract an infection ($44,367). The 11,688 infections reported added over two billion dollars in hospital charges that year. That's in one state alone!

...or this, from the US Department of Health and Human Services:

On average, hospital stays for MRSA infections cost $14,000, compared with $7,600 for all other stays, and the length of hospitalization was more than double—10.0 days for MRSA infections versus 4.6 days for all other stays.

So up to this point we’ve covered the basics: what MRSA is, how it affects the body--and the fact that it diverts a lot of resources that could be used for better things.

But this was advertised as the “let’s fix it” part of the story...and it’s time to deliver on that promise. Which brings us to the good news.

This is a problem that can be stopped—or nearly so--and it can be done fairly simply...and in a way that pays for itself over time.

Here’s what we need to do:

First, you gotta treat MRSA and the other HAIs as soon as they appear in the healthcare system. That means screening each and every person admitted for treatment to hospitals.

The UK's National Health Service (NHS) is moving to adopt this policy nationwide; and their strategy calls for a staged approach: 100% testing for everyone admitted to Intensive Care Units and other “special” care units, all patients being scheduled for surgery, patients on dialysis, cancer patients, those with previous MRSA history, and those admitted to hospitals from nursing homes.

Not on that list? Emergency and other non-elective admissions. The NHS is recommending those patients be put in a “consider infected until proven otherwise” category. The idea is to treat those patients immediately upon admission with antibiotics and other treatments until negative MRSA test results can be obtained at a later time (a “rapid results” test exists that can return results in as little as five hours at a cost of roughly $10 per test...but it currently has problems detecting all MRSA strains).

Nursing home residents are also not on that list. Again, turning to the UK, there is data suggesting 20% of nursing home residents are “persons of concern”, for want of a better term; and that screening of all residents of nursing homes should be considered.

This costs money up front, because isolation facilities need to be provided for the new admissions that either tested positive or for whom test results are not yet received, but the NHS believes over the long term the savings outweigh the costs.

University College Hospital, London was able to reduce their infections by 38% in 12 months, just through screening...and they saved almost $400,000 after expenses.

A 38% reduction in infections could represent about 6000 lives saved annually in the US.

Once you are treating people with HAIs, you need to prevent transmission to others; which brings us to the obvious number two part of the solution: handwashing.

If just the staff in a hospital is diligent about handwashing, it is estimated HAIs would drop by 30%, even if no other treatments were applied to patients. Now hospitals are taking it one step further by introducing handwashing stations for visitors.

This is fantastic from a return on investment perspective: inexpensive handwashing could remove 30% of the cost of these infections from the national healthcare budget (estimated to be greater than $5 to $10 billion annually...which I’m guessing is a bit on the low side) ...and do it for the cost of keeping the hand sanitizer dispensers filled.

Not to mention you save another 6000 lives in the US every year.

Surprisingly, handwashing is hard to reinforce and compliance rates are hard to keep high, which is why so much research exists on the subject. One of the most interesting “reinforcements” I’ve seen to create compliance so far is the approach of Cedars-Sinai in Los Angeles, who took cultures from the hands of their doctors, photographed the results...and used the pictures as screensavers on the hospital’s computers.

The third leg of the infection control stool?
Keeping things clean.

Here’s a good example: your doctor has just finished examining another patient, enters your room, does a quick hand wash, puts on gloves...and then puts the same stethoscope on your chest that was just on that other patient without cleaning it first.

Another: the nurse enters the room, on go the gloves, and the gloved hand immediately grabs the privacy curtain, pulls it closed...and then touches you.

The curtains are likely contaminated (splashes and sprays of body fluids and airborne bacteria are the usual suspects) and equipment surfaces require rigorous disinfection. Because of the hazardous environment the types of materials used to make counters and cabinets in a hospital room affect infection control, and, because of budget pressures, the housekeepers that kept on top of all this in times past are often more “short staffed” than ever.

Gowns, gloves, and other protective equipment need to be in place as well and used properly by the staff, which also seems obvious, but for some reason, isn’t.

If we universally adopt these three concepts (screening, handwashing, and housekeeping) we can expect results...and we can expect them quickly.

At Allegheny General Hospital the rate of MRSA infection in their ICU was reduced to zeroin 90 days—by aggressively applying these recommendations.

The University of Pittsburgh Medical Center reached 90% reductions in their ICUs and includes outreach to patients in their efforts.

The Committee to Reduce Infection Deaths offers this tantalizing success report:

“Two community hospitals in Charleston, South Carolina, demonstrated that targeted surveillance—testing only patients deemed at high risk, such as patients recently hospitalized, living in a nursing home, or with kidney problems—produces more modest reductions in infection and lower financial returns. This is not surprising, because a significant number of patients carrying MRSA go undetected. The costs of targeted surveillance, including laboratory tests and supplies such as gowns and gloves, cost $113,955 and yielded just over a 10 to 1 return, saving the hospitals $1,548,740 in avoided treatment costs.”

Dramatic long-term success has been seen in reducing HAIs in the Scandinavian countries, but it is important to recognize that they have the advantage of universal health care; which means cost issues do not keep patients out of the system as they do in the US. Absent such a system of our own, near-zero is an unattainable goal.

That said, it is possible in today’s healthcare environment to reduce HAIs in hospitals by at least 50%, and to reduce them 90% or more in ICU settings.

Not only can it be done, it can be done in a way that returns money to the system instead of drawing it out.

There are 18,000 more reasons to move on this as well...every year...and in the end, that’s the cost we really need to consider.

Author’s Note: We’re not done yet. Next time I will encourage you to remind a Governor that this matters, point you to some of the States that are already acting on this issue, and direct you to a safety checklist you can use to protect yourself in the hospital.