Author: David S. White

Wednesday, the Media had a field day with a story as old as the presidency of Thomas Jefferson and as new as the presidency of Barak Obama. Pirates off Somalia, getting greedier and bolder as they took ship after ship in gigantic areas of the ocean off East Africa, finally took a US-crewed, container ship flying the US flag.

The container ship, the Maersk Alabama, has a 20-person American crew and is operated and owned by Danish shipping titan A.P. Moller-Maersk Group’s US subsidiary, Maersk Line Limited. News broke very early in the California morning that the ship was taken by pirates, at sea some 280 miles southwest of the Somali city of Eyl, a haven for the modern pirates.

A US destroyer, the Bainbridge, was headed for the scene, but, due to the vast distances at sea involved, many thousands of square miles of water actually, it is not expected to arrive for at least another day. As is often the case, Media reports have varied wildly all day as any tidbits of information are seized, not vetted at all, and then broadcast to get the scoop. What is real and what is not will all be sorted out later. Stay tuned.

Last week ended with the new March job loss numbers; national unemployment is now at 8.5% after another 663,000 jobs were lost, leaving 5.1 million Americans now out of work, officially counted, since the Recession began almost a year and a half ago. We need to add, not lose, hundreds of thousands of jobs per month, just to stay even with population growth and normal turnovers. Bleak is the word as some are calling for 10% national unemployment by this year’s end.

That’s 5.1 million Americans who did not go to the Mall last weekend to buy things after cashing their paychecks, who probably stayed home and ate at home and are now wondering how they will continue paying their mortgages, their rent and their other bills. The effects continue to ripple through the worlds of retail, travel, restaurants, and all the other places in our tightly interlocked economy which are starving for dollars.

The week opened with another financial stunner: The US Government seems to now be in the US Auto business. According to President Obama’s statements Monday, GM’s CEO, Rick Wagoner, joins America’s ranks of the unemployed, and Chrysler seems headed for a Shotgun Marriage with Fiat – just business as usual in another week here in Great Depression II.

Not that they didn’t have it coming. Since all the BailOut frenzy of last Fall and their private jetting into Washington to beg, hat in hand, for money to Congress, only to be unceremoniously kicked out to return via Amtrack, US automakers have been treading on the thinnest of thin ice. We all debated whether or not they should be left to the forces of nature and then something of a compromise was reached whereby US automakers were given some BailOut dollars, much less than they said they needed, and told to come back with a real plan for how they would get themselves out of the financial black hole that is swallowing them up. Well, those plans underwhelmed the Obama Administration, to say the least.

The parade of new, bombshell financial plans included a new one Thursday, from ultra-busy, Treasury Secty. Geithner. Leaving no doubt as to the breadth and scope of these proposed reforms, Geithner explained in testimony Thursday before the House Financial Services Committee, that this is “comprehensive reform. Not modest repairs at the margin, but new rules of the game.” Wall Street groaned.

Geithner’s bold new plan would require registration with the SEC for hedge fund, venture capital fund, and private equity fund advisors. Then, confidentially, these advisors would have to share information with the SEC about their borrowings, the leverage involved in their investments, and, hitherto sacrosanct, information on their trading partners and investors.

This would enable the SEC, hopefully, to provide enough information for a yet another new czar, called a “Systemic Risk Regulator,” who would be able (again, hopefully) to guide our financial system like a lighthouse guides ships on dark nights tossed on stormy seas away from running aground on the rocky shores.

Elizabeth Kubler-Ross (with those two, little horizontal dots over her the U in her middle name), in her 1969 book “On Death and Dying,” named the five stages of dying as: Denial; Anger; Bargaining; Depression, and Acceptance. Las Fall, while the economy drove off a cliff, we saw plenty of Denial as our investment portfolios melted like the proverbial cake left out in the rain (with apologies to Richard Harris’ ‘MacArthur Park’ song).

This Spring, Denial is moving into the Anger stage, big time. What is dying is our old economy; what may be being born, I hope, is our new 21st Century economy, offering sustainable, real growth instead the Masters of the Universe on Wall St. pumping up what looked like growth by taking wild, risky, largely unregulated bets that have now all failed so spectacularly. Can Bargaining, Depression and Acceptance be far behind?

While I was hiding late last week through last weekend in the Mendocino redwoods with friends celebrating anniversaries and times spent there in the simpler world of the early 70’s, America shifted into full-on Populist Revolt-time. Maybe it was the AIG-bonus massacre, maybe Madoff, maybe Geithner’s still unready for primetime presentations of this and that staggering new program, maybe the Cable News and Talking Heads’ onslaught of video clips from protesters with those Anti-FatCat signs (I particularly like the Oliver Twist – ‘Please Sir, May I have Some More,’ one).

Perhaps it is the drumbeat, starting softly last Fall, and growing in urgency with revelations of wretched excess and corporate risk-taking madness, growing even louder since, but my return from a four-day trip feels like I’ve been away for months and have returned to something which once again feels like we are caught in the throes of another B-Movie screenplay, splashed across American Media.

Despite last week being Wall Street’s best so far in this still-new year, China signaled its anxiety about its $1 Trillion-dollar investment in US Treasury bonds and perhaps opened a new chapter in Sino-American relations. Last year, China passed Japan to become the largest holder of US Treasuries.

No less a personage than China’s Premier, Wen Jinbao, at the National People’s Congress in Beijing at the end of last week, made statements which were instantly picked up worldwide by the ever-hungry Media and that are now being studied the way the former Fed Chief Alan Greenspan’s comments used to be scrutinized every which way to find tea leaf readings and other cryptic messages.

AIG rumbled back into the news last weekend again when it announced plans to bonus its people to the tune of some $165 Million, despite being on life-support after inhaling some $170-plus Billion of your and my tax dollar BailOut bucks. These guys just don’t stop!

Their justification, per the Sunday AM Cable Talking Heads, is that they are obligated under existing contracts to bonus their key producers; they call it ‘retention pay’ – that’s what Larry Summers told George Stephanopoulos Sunday morning. Give me a break.

Rewarding failure is maddeningly counter-productive and is not exactly a morale booster to a nation staggering under the load of unrelenting bad economic news. AIG has been the poster-boy for rewarding failure, having drunk deeply of Federal largesse to keep its heart beating, and whenever anybody lifts a finger or raises a voice of complaint, they remind us that AIG is simply Too Big to Fail and that, if we let it go down the Lehman road to oblivion, we will so upset the economic world and so de-stabilize AIG’s trading partners that chaos will reign and life as we know it will end. While some of that parade of horribles may actually, and regrettably, be true, it does not justify AIG’s actions and somebody needs to put a halt to paying bonuses to people who ran their company into the ground.

The parable goes something like this. Three blind men were trying to figure out what they had encountered when they met an elephant drinking from a stream. The first touched the elephant’s leg and thought it was a tree. The second touched the elephant’s tail and thought it was a rope. The third touched the elephant’s trunk spouting water and thought it was a water hose. A venerable American political party, which shares the elephant as its long-time symbol, is also having this problem right now.

Louisiana Gov. Bobby Jindal ran into the Media brick wall when he spoke on Prime Time TV (which he was not ready for) recently and came across as a wooden and strange fellow who was delivering a message that simply did not resonate.

Newly crowned Chairman of the Republican National Party (for now), former Lieut. Gov. Michael Steele, seems to have Foot in Mouth Disease and may experience an early crib death unless he can learn to corral his tongue and focus his message.