January 11, 2016

Does it even matter who the parties nominate this year?!

In 2016, U.S. politics has become so polarized and partisan that (at least based upon the polls), it doesn't seem to matter who the Democrats or Republicans nominate for President.  The table below compares the RealClearPolitics average two-way matchups as of January 11, 2016:

RCP Average for 2016 General Election Matchups as of 1/11/2016

Clinton 45% vs

Trump 43%
  45% Cruz 46%
  44% Rubio 47%
  45% Carson 45%
  45% Christie 44%
  46% Bush 43%

 In each of these matchups versus the various Republican candidates, Hillary manages to get the support of between 44 and 46% of the electorate.  Versus Hillary, the various Republican challengers score between 43 and 47% of the votes.  Changing the name of the Republican candidate only varies the Republican vote by a total of four percentage points. (In all of these cases, the results are within the margins of error for the underlying polls.)

 Sanders  44% vs  Trump  42%
   43%  Rubio  44%
   45%  Cruz  42%

Similarly, Bernie manages to get between 43 and 45% of the votes against each of the Republicans, who get between 42 and 44% of the hypothetical votes. In each case, the number of voters preferring Sanders vs the Republican alternative varies by a range of only two points, which is exactly the result that Hillary obtained.

This seems odd, and it appears to be different than what the polling showed about the Presidential matchups during 2012, when different potential Republican challengers faired very differently against Obama:

RCP Average for President Obama vs. Republican Candidates in 2012 Race

Obama 49% vs

Romney 48%
  50% Santorum 42%
  52% Gingrich 39%
  48% Paul 40%

In 2012, the range of outcomes for the various Republican challengers vs Obama varied by nine percentage points, from a low of 39% supporting Gingrich to Romney's almost tie at 48%. (Of course, Obama went on to victory in 2012 with  51.1% of the actual votes to Romney's 47.2%.)

It may be worth noting that Florida Senator Marco Rubio is the only candidate who manages to beat both Hillary Clinton and Bernie Sanders in a head-to-head matchup.  I hope some Republican primary voters are paying attention.

January 11, 2016 at 07:24 PM | Permalink | Comments (0)

March 22, 2009

What the hell IS an investment banker, anyway?

Who are these greedy bastards that have destroyed our financial system and cost the taxpayers billions? What do these Wall Street guys (and girls) do to command such exorbitant bonuses? Well, I'll tell you.

First of all, you need to understand that there are four major functional areas in an investment bank, all with very different jobs and responsibilities:

  • Senior management: the top 15 or so executives who run the company and make strategic decisions (like how to allocate capital and resources),
  • Sales & Trading: the folks you see sitting in front of rows of screens, yelling into headsets, this group can also include retail brokers and research analysts,
  • Investment Bankers: the people in suits who get hired by other corporations to help them raise capital or advise them on acquisitions and other financial matters, and
  • Operations: the "back office" people who support the rest of the firm in clearing trades, IT, accounting, facilities management, etc.

Senior Management

When people rail against greedy investment bankers, these are generally the people they are thinking about. These are the CEOs that have been called in to testify before Congress and the heads of divisions who authorize major commitments of the firm's capital. They are also the recipients of big company perks like cars and drivers, use of the corporate aircraft, etc. In publicly held companies, the total compensation of the top five corporate officers is published in the annual proxy statement, which can be found on the SEC's Edgar site. If anyone is "responsible" for having caused this mess, it is these senior managers. However, many of the executives who were in charge during the bubble period have been fired or otherwise lost their jobs.

Sales & Trading

The guys on the trading floor who devised many of the financial products that have become "toxic" assets (CDOs, credit default swaps, etc.) also bear some of the responsibility for the mess we're in. But the number of people involved in these esoteric securities was fairly limited. Most traders, salesmen, and brokers spent most of their time on "plain vanilla" products like stocks, bonds, currencies, futures and options and commodities. And while many of these "Master of the Universe" types were paid multi-million dollar bonuses, they also worked very hard for their money; putting in long, stress-filled days on the trading floor, and hours of research and reading at home.

Investment Bankers

The banker's job is to call on corporate clients seeking to be retained for financings (debt or equity) or for financial advisory assignments like mergers and acquisitions or restructurings. They bear little responsibility for the current financial crisis. In fact, their job has remained largely the same for the last quarter century; 70 to 90 hour weeks spent building financial models and preparing presentations for senior management at client firms. These folks usually travel extensively (3 to 4 days a week on the road is not uncommon) and spent many (most?) nights and weekends in the office or on a never ending series of conference calls with clients and colleagues. While the level of activity among their clients is down, this business remains highly profitable since it makes only limited use of their firm's risk capital.


These employees had virtually nothing to do with the current problems. They perform jobs similar to their equivalents in non-financial firms, though their compensation levels (and hours worked) tend to be higher than in other large corporations.

*** Bonuses ***

Nothing is less well-understood than Wall Street's compensation system. In most American businesses, workers receive a salary based on hours or weeks worked. In some companies, at the end of the year, some or all employees may be paid a "bonus" based on their individual performance or the firm's level of profitability. In addition, people in sales related jobs are often paid on a commission basis, based on sales volumes. However, on Wall Street, things are completely different.

In virtually all investment banks, only senior management have large annual salaries (with large bonuses often contractually specified as well). Mid and lower-level professionals are paid standard, modest salaries based upon their titles; for example, all Managing Directors might have base salaries of $200k and all VPs might have base salaries of $125k. At the end of the year, based upon their individual performance, the profitability of their group and the profitability of the firm as a whole, they are awarded a bonus which comprises the bulk of their total compensation. These bonuses are typically paid in January or February of the following year. Managing Directors (a title awarded after 7 to 10+ years of increasing responsibility in an "up or out" hierarchy) typically receive total compensation of between $1 and $5mm per year, based upon the net revenues they were able to produce for their firm. MD level compensation in many firms is approximately 10 percent of the net revenue generated by each senior professional.

Of course, especially for senior bankers, a significant portion of their annual bonus is paid in restricted company stock. This stock typically vests over a three or four year period and is forfeit if you leave to join a competitor. For investment bankers who were unfortunate enough to have worked for firms receiving TARP funds, this stock is generally worth a small fraction of its original value.

Finally, most Americans don't understand the cost of living in the NYC area. In most parts of the country, if you are earning $250k per year, you are living in the best part of town in a big beautiful house. In Manhattan, it is hard to buy a 3 bedroom apartment for less than $2mm. In most of the country, the suburban public schools are considered excellent. In Manhattan, most middle class professionals try to send their kids to private schools where annual tuition is $30k. While there are a few excellent public schools, this is not a viable option for most people. Renting a parking space for your car in Manhattan costs $500 a month -- in many parts of the country you can rent an apartment for less. One could go on and on (but I won't.)

This is not to say that we should feel sorry for those poor, misunderstood investment bankers. Most of them are doing quite well. However, if you are an employee of a firm receiving TARP investments from the feds and you had nothing to do with the activities that caused these massive write-downs, you can be forgiven for not understanding why you should have to hand over to the government more than 100% of last year's bonus. (The House bill that passed last week called for taxing bonuses above $250k at big TARP firms at 90% (plus Medicare tax of 1.45% and NYC state and local income taxes of 10.5%), bringing the total for NYC residents to 101.95%.)

March 22, 2009 at 07:05 PM | Permalink | Comments (0) | TrackBack

September 02, 2008

Plausible Deniability?

It was an exciting night at the Repub's convention. Fred Thompson made a good speech endorsing McCain's character. The last Democratic nominee for Vice President, Joe Lieberman, made a solid speech endorsing McCain as the man to trust with the Presidency.

Yeah, yeah. However, I am underwhelmed by the choice of Sarah Palin as McCain's understudy. Sure she's cute. A bonafide MILF. And a good shot. But a stone cold light weight. The "bridge to nowhere" flip flop. The limited profile in the public eye. Of course, she does have more executive experience than either Obama or McCain. But a heartbeat away from the Presidency? I don't think so.

I'm not an Obama fan. He is an old-school liberal dressed up in post-partisan camouflage. He is also seriously in love with the sound of his own voice, which is not an attractive quality. That said, there may be some advantages to having him in the White House these next four years.

Firstly, the next four years promise to be very difficult from an economic point of view. The fallout from the real estate bubble will take time to work itself out. The impact on financial institution's balance sheets will provide a real drag on any recovery. As will the overstretched state of household balance sheets. In short, the American consumer is hitting up against the limits of debt availability, and our financial institutions are facing massive pressures to reduce their lending exposure.

If you buy this premise, being the next President of the US of A is not going to be a fun gig. Yeah, sure, you will be able to appoint a Supreme or two, as well as sign into law provisions that will make it very hard for large businesses to avoid unionization. But overall, it is likely to be a bummer.

On the plus side, if Obama wins, GWB has nearly two months in office as a legless duck. (Think Lame Duck to the 3rd power.) This is a golden opportunity for Dubya to go medieval on Iran's nuclear program. The US can commit multiple sorties to take out all of the Iranian nuclear enrichment sites, while the incoming Administration wrings its hands and protests ineffectually. After the damage is done, Obama becomes President and apologizes sincerely.

Problem solved. September 2, 2008 at 11:16 PM | Permalink | Comments (0) | TrackBack

June 06, 2006

Bush as the new Truman?

The NY Sun has run OpEd columns comparing Truman's weak standing in contemporary polls and strong position in history to that of President Bush for the last two days. Maybe they have a point there.

Here is a sample of Paul Greenberg's effort in today's Sun:

A stubborn president, determined to end a war that has bogged down, watches his standing in the polls slip month by month, year by year. His dramatic victory in the last presidential election now seems long ago; his popularity sinks to historic lows for an American president. He has become an object of derision and even a little pity. As one wit put it, "To err is Truman."

Yesterday was Michael Barone's turn:

. . . Speaking last week at the commencement at West Point - above the Hudson River, where revolutionary Americans threw a chain across the water to block British ships - Bush noted that he was speaking to the first class to enter the U.S. Military Academy after the Sept. 11 attacks.And he put the challenge these cadets willingly undertook in perspective by looking back at the challenges America faced at the start of the Cold War 60 years ago.

“In the early years of that struggle,” Bush noted,“freedom’s victory was not obvious or assured.” In 1946, Harry Truman accompanied Winston Churchill as he delivered his Iron Curtain speech; in 1947, communists threatened Greece and Turkey; in 1948, Czechoslovakia fell, France and Italy seemed headed the same way, and Berlin was blockaded by the Soviets, who exploded a nuclear weapon the next year; in 1950, North Korea attacked South Korea.

“All of this took place in just the first five years following World War II,” Bush noted. “Fortunately, we had a president named Harry Truman, who recognized the threat, took bold action to confront it and laid the foundation for freedom’s victory in the Cold War.”

I don't think anyone is listening right now. But -- if we ultimately prevail in the GWOT (and hence get to write the history of this era) -- they will.


LAT columnist Max Boot jumps on the Bush as the new Truman bandwagon.

June 6, 2006 at 01:53 PM | Permalink | Comments (0) | TrackBack

May 24, 2006

For the Wall Before He Was Against It

It's hard to separate reality from parody where John Kerry is concerned. Here is his position on the construction of a border wall between the US and Mexico:

Sen. John Kerry joined most of his Democratic colleagues last week in voting to build a wall along 370 miles of the U.S.-Mexican border.

But he now says that after the wall is built it should be taken down as soon as possible.

"I voted for it," Kerry acknowledged Friday while speaking to the New England Council breakfast.

But in quotes picked up by the Boston Herald, the Massachusetts Democrat added: "If I were making the long-term decision, I’d announce, you know, hopefully it’s a temporary measure, and we can take it down as soon as we have enough people" to guard the border.

Unbelievable. (Hat tip to Alarming News.)

May 24, 2006 at 10:24 AM | Permalink | Comments (1) | TrackBack

May 03, 2006

Enough jackassery on gas prices

The LAT has an interesting piece on a rural Texas county whose board of commissioners called on residents to boycott Exxon Mobil until gas prices drop to $1.30 a gallon. This sounds like business as usual for politicians during an election year, but what makes this story interesting is that local people appear to be rejecting this simple-minded attempt to demonize "big oil" for the vagaries of supply and demand. In addition, the main person who stands to lose from this boycott effort is a local businesswoman and recent grandmother who owns and operates the only three Exxon Mobil branded retail stations in the County. Fortunately for her, the people of Bee County appear to have more common sense than their local pols.

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May 3, 2006 at 08:15 AM | Permalink | Comments (1) | TrackBack

March 23, 2006

Bush Bounce?

I watched GWB's press conference the other day. I was actually quite impressed with his performance. He was pretty funny, engaged the press directly, and looked a lot more comfortable than he has in a while. Not much of it made the news broadcasts, except for his first question to the fifth estate's crazy aunt Helen Thomas and his comments about US troops remaining in Iraq for the foreseeable future.

If you have 50+ minutes to spend, you can watch the video or read the transcript here. I found it fairly encouraging and think the President should do more of this kind of thing. I know he hates doing it, but it can't hurt and might help his poll numbers.

I'm off to Greece, so light blogging for a while.

March 23, 2006 at 04:54 PM | Permalink | Comments (0) | TrackBack

March 13, 2006

A Sistah Souljah Opportunity

Peter Beinart, proving once again that he is the smartest Democratic strategist out there, has an excellent suggestion for Hillary: embrace the USSC's unanimous decision in the Solomon case and take the lead on bringing the ROTC back to elite campuses, beginning with Columbia University in her adopted home state. Like her hubby's "Sistah Souljah Moment," taking on the extreme left wing of the Democratic party to endorse a decidedly centrist (and popular) pro-defense position would gain her a lot of credibility with the middle-of-the-road voters she will need to attract if she wants to actually be elected President. (Hell, leadership on this issue might even persuade me that under certain circumstances (say, if the Republicans were to lose their collective minds and nominate Pat Buchanan or George Pataki) that even I might vote for her.)

Of course, taking a step like this (even though it has nothing to do with supporting the war in Iraq) would only further inflame the Kossacks and Deaniacs who are already off-put by Hillary's relative sanity on defense issues. But is there a better issue out there for her to forcefully establish her credibility as someone who can be trusted to defend this country from our enemies? I doubt it.

March 13, 2006 at 09:43 PM | Permalink | Comments (0) | TrackBack

March 01, 2006

Standing Fast

It has been a tough week or two for those of us who continue to believe that the war to depose Saddam was the right thing to do. Exploding shrines, roving death squads, executed journalists and harbingers of civil war in Iraq have made even guarded optimism seem hopelessly naive. More broadly, radical Islam appears to be on a roll of late; rioting over Dutch cartoons, torturing to death the odd jew in Paris, and working industriously to develop nuclear weapons in Iran while following Saddam's playbook on gaming the UN, EU and US on its intentions. On the domestic front, Cheney's shooting spree, port deals with Arab firms, fears about secret NSA wiretap programs, and plummeting Presidential approval ratings have most conservatives feeling pretty uneasy. There is a whiff of panic in the air.

Fortunately, some people aren't ready to declare defeat just yet. Victor Davis Hanson, the blogger and scholar, writing in today's Opinion Journal observes:

Conservatives who insisted that we needed more initial troops are often the same ones who now decry that too much money has been spent in Iraq. Liberals who chant "no blood for oil" lament that we unnecessarily ratcheted up the global price of petroleum. Progressives who charge that we are imperialists also indict us for being naively idealistic in thinking democracy could take root in post-Baathist Iraq and providing aid of a magnitude not seen since the Marshall Plan. For many, Iraq is no longer a war whose prognosis is to be judged empirically. It has instead transmogrified into a powerful symbol that apparently must serve deeply held, but preconceived, beliefs--the deceptions of Mr. Bush, the folly of a neoconservative cabal, the necessary comeuppance of the American imperium, or the greed of an oil-hungry U.S.

I agree with Hanson that there are reasons to be positive in Iraq. As I wrote last week, the bombing of the Askariya Shrine in Samarra is a sign that Al Queda in Iraq is getting desperate. Now is not the time for us to go all wobbly.

Yes, George Bush is no Winston Churchill, but he is the only war leader we've got. I only wish that the "progressives" who are overjoyed at the sight of Bush's political weakness would recognize that the "enemy of your enemy is your friend:" and the radical Islamists who carried out the attacks of 9/11, 7/7 and 3/11 and would readily subjugate women, end freedom of expression, flog homosexuals, and "wipe Israel off the map," are the enemies of us all.

March 1, 2006 at 09:44 AM | Permalink | Comments (0) | TrackBack

February 24, 2006

We've Come A Long Way, Baby

Obituaries are not just windows into the lives of others, but also upon our society and recent history. For example, this obituary from today's LAT surprised the hell out of me:

Joel Dorius, 87; Educator Convicted, Exonerated in '60s Gay Pornography Case
By Dennis McLellan, Times Staff Writer
February 23 2006

Joel Dorius was teaching Shakespeare, classic English literature and poetry at Smith College in Northampton, Mass., when his quiet life as an academic was shattered in 1960.

The victim of a federal crackdown on obscenity in the mails, he was arrested, dismissed from his job at the elite women's college and left feeling like a "criminal" for decades.

Dorius, one of three teachers at Smith College who lost their jobs after being convicted of possessing gay pornography but were later exonerated in the headline-making case, died Feb. 14 at his home in San Francisco after a battle with bone marrow cancer. He was 87.

I was shocked that this kind of thing had gone on, in Northampton, of all places, as recently as 1960. (Now Northampton, for those who don't know, is considered to be the lesbian capital of North America.) Of course, this was back in the day when Lenny Bruce was arrested for using language on stage that today would probably not raise an eyebrow on late night television, but still, it is amazing the degree to which societal attitudes have changed over the last 50 years.

Perhaps Professor Dorius would be cheered to know that even in death, he continues to teach us all.

February 24, 2006 at 10:30 AM | Permalink | Comments (1) | TrackBack