Adam B. Weinstein » Blog

Bush’s “legacy” in Europe and the World

awworldwide — Sat, 18 Jul 2009 23:46:06 +0000

I am currently in Iceland.? Iceland is a country that has a sprawling and amazing landscape.? It is filled with large mountains throughout, an uninhabitable middle as it is filled with an enormous glacier, and friendly well-educated people.? It boasts all-day sunlight for much of the summer months?and almost all-day darkness for much of the winter months.? It has a population of approximately 300,000 people and is approximately the size of Kentucky or England.

The politics of Iceland are quite similar to other republics.? The president is elected to a four-year term and is more a figurehead?position which has limited powers. The president is not the head of the government, it is rather the?Prime Minister. There have been five presidents since Iceland gained independence from Denmark in 1944. The incumbent is Olafur Ragnar Grimsson, who is now in his fourth term as president having been first elected in 1996 and running unopposed in the most recent election.? His second wife is an Israeli-born woman, who has brought a middle-eastern influence to Iceland.? The President?swiftly criticized other nations for not coming to Iceland’s aid in the most recent economic struggle (the country’s “bankruptcy”) and has made bold statements on the topic stating that Iceland will pull out of this mess before the U.S. and Britain come out of their recessions.? As a tourist to this nation and spending over a week here already, this country is in no sign of distress and in fact, has more of a hustle and bustle than New York City seems to have today.?

I am not a person who believes that our world image is as high on the priority list as others, but I do think it is important.? The world continues to see us a bit as the laughing stock of the world because we elected George W. Bush to be our President.? I also saw this last year when I spent a week and a half in Croatia.? It’s not just that they disagree with his policies (which I am less sympathetic too, as I believe many of his policies were hard decisions, but necessary), more importantly, they mock him as a person.? In a nation where most people speak English fluently,?Icelanders really understand his communication blunders.? You can just get a huge sense of that from walking the streets of Reykjavik to the small northern towns where t-shirts insult him or bumper stickers mock him.? Take a completely?opposite?leader, President Obama.? Here in Iceland, people seem to love him.? While I disagree thusfar with many of his actions and most of his policies, his view worldwide seems to be that he is a visionary.? For one of the last industrialized nations to abolish slavery, so many are impressed that the United States has elected an African-American to its highest office.? He is well-spoken and academic.? There is something to be gained from this.? President Obama should use this influence to really enroll the nations of the world to help him in finishing Iraq, Afghanistan and really taking a stand on issues such as terrorism, AIDS and poverty and genocide in places such as Darfur.? At this point, he has not done so and I hope he uses this “political capital” effectively to bring about real policy changes throughout the World.? Otherwise, I believe ultimately, his legacy in the world will be no greater than George W. Bush’s.

Ahmadinejad Wins Disputed Election

awworldwide — Sun, 14 Jun 2009 18:04:25 +0000

In an unbelievable turn of events, Ahmadinejad won the Iranian Presidential election. The World was watching closely and most nations were hoping for his defeat. Moussavi, his opponent, was a reformist candidate who was open to real change in Iran. He stood for a renewed dialogue with America, did not support nuclear weapons and in fact believed in spending less on the military, and believed in expanding a whole host of civil liberties, from more freedom for women to a more fair court system. Moussavi stood for a dream that many Iranians have of getting out from underneath the oppressive regime that they have lived in for so many years. The young population represented the largest base of support for Moussavi. Moussavi took some tactics from the Obama campaign, mainly utilizing Facebook and other technology to mobilize the young vote. The median age in Iran is 27 and therefore the voice of the young is very loud and vocal. All of the analysts worldwide seemed to believe that Moussavi would win decisively or if he lost, it would be by a small margin. The result, Moussavi loses to Ahmadinejad by a landslide, nearly 30%. It is virtually impossible in my mind that this was a fair election. It was rigged from the very beginning and the fact that the defeat was so large, is testament to a corrupt government and an unfair “independent” monitoring system.

Now, Ahmadinejad has stated that he will not guarantee the safety of his opponent. Could you imagine if President Obama would not guarantee the safety of Senator McCain after Obama won the election? Ahmadinejad will most likely have Moussavi executed, will jail him, or Moussavi will simply vanish in the next few months. It all doesn’t matter so much anyway as the Ayatollah Khomeini is the Supreme Leader, a position created in the constitution as the highest ranking political and religious authority of the nation, until his death. He lead the Iranian revolution in 1979 which saw the overthrow of Mohammad Reza Pahlavi, the late Shah of Iran. He will always be the final say and the ultimate power leader of this nation until he dies and therefore the President is really only a figurehead. Either way, it would have said a lot to the World had Moussavi won. He may not have been able to do all of what he wanted (as Khomeini would put in many roadblocks), but it would have made a real statement that the Iranian people are ready for a new era.

Supreme Court Nominee

awworldwide — Mon, 08 Jun 2009 03:52:04 +0000

President Obama unleashed recently his pick for Supreme Court, Sonia Sotomayor.? The idea of a Hispanic woman representing us on the court is remarkable.? She is accomplished, smart and has a ton of relevant experience.? She was appointed originally through George H.W. Bush and has served her country for many years.? However, let us be realistic, she is a liberal leaning candidate.? President Obama deserves to appoint someone that represents his political views.? George Bush picked both Samuel Alito and John Roberts who are both committed conservatives, so I don’t think the criticism of her as a liberal is warranted as an argument against her.? I do, however, think there are two things that significantly trouble me.? First, she is an activist judge. Whether you are to the right or the left, the Supreme Court should be an interpretive body, not a legislative one.? I don’t believe in voting on the Supreme Court with your political party and based on your beliefs as an ideologue,?you should be voting based on your interpretations of law.? Secondly, her statement back in 2001 where she said her Puerto Rican heritage could cause her to see cases differently.? “Whether born from experience or inherent physiological or cultural differences . . . our gender and national origins may and will make a difference in our judging. . . .,” she said. “I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn’t lived that life.”? This is an extremely misinformed and non-productive statement.? Not just because she said it this one time, but because she repeated it over and over.? I believe it to be a racist statement.? If a white male ever made a statement like that, they would be chastised and branded a racist.? I don’t think that somebody who makes as irresponsible a statement should be on the highest court, its as simple as that.? However, this statement is most likely not going to cause any democrats (who control the debate) to railroad her out of the locomotive.? Therefore, I do think?that we deserve to have a legitimate and responsible debate on Ms. Sotomayor.? As a point for conservatives, I do think that there are significant issues where they could win some ground.? For starters, she is very hard on crime.? She supports harsh punishments for criminals and is a supporter of death penalty rights.? Secondly, on a few significant issues, i.e. abortion, her opinion is not known.? She is a Catholic and therefore she may have more sympathetic views towards the pro-life movement than many believe.? The Obama administration has stated that they have not asked and don’t know Sotomayor’s beliefs on abortion and therefore many people are “asking” questions.? The one thing that Obama did that was highly suspect was when he was pushing Sotomayor and said that nobody should be voting against her because of her political ideology but should based on her qualifications.? Considering that Roberts and Alito were highly qualified, but conservative leaning and Obama voted against them is very frustrating.? What do they say, practice what you preach.? We shall see on Sotomayor…I am pretty sure though that she will be confirmed without too much of a hitch.

Recovery in Sight?

awworldwide — Sun, 26 Apr 2009 15:17:19 +0000

The stock market has had a significant rally in the last few weeks and some believe that this represents?a leading indicator towards a possible recovery.? The stock market has proven itself in history to be a good leading indicator (meaning, the performance of the market predicts directionally the economy over the near term), however, I believe that this is just a bear market rally.? However, I do believe we may be hitting the low points of the economy.? Unemployment is a lagging indicator and definitely continues its momentum towards 10% (which it will most likely hit in late Spring or Summer).? Housing has seemed to stop its rapid and preciptious downturn and has started to stabilize at lower levels or only move lower at much less steep intervals.? Interest rates continue to be historically lead, which helps housing significantly.? We want to put the bad economy behind us and move forward, look towards the future.? The problem is that we often times focus too much on getting out of the mess now, rather then measure the real long term effects of our decisions.? The current administration’s policies WILL bankrupt our nation and therefore we need to be responsible on the choices we make today to get us through this period.? Trading one mess today for another mess tomorrow, is not fiscally sound for our nation.

Bonus Backlash

awworldwide — Tue, 24 Mar 2009 17:16:43 +0000

I understand Americans’ frustrations with the recent story of AIG paying large bonuses out to executives who helped bring the company to it’s knees. We, the taxpayers, are now staking our future on the idea of bailing out companies like AIG and we have a significant amount of skin in the game. I agree in theory with the idea that paying these large amounts out?is insulting to the taxpayers who are essentially subsidizing these incompetent leaders. It also comes at a time when many Americans are losing their jobs and struggling to pay their own bills. In private equity, as a control investor, you have to approve salaries of the underlying management teams and in essence, the U.S. Government is the control shareholder of some of these bailout companies (and an 80% shareholder of AIG). However, there are three significant points to understand: 1) We are being punitive and I believe that this bill will be struck down by the Supreme Court as it is a bill of attainder (assuming it passes which it seems it will). There are ways to do things and ways not to do things. It seems as if Senator Chris Dodd struck out the original parameters put around executive compensation in TARP and I believe that would have been a more level headed approach to address this issue. We could have limited or significantly tied compensation to certain turnaround benchmarks.; 2) We, the investors (U.S. Taxpayers), are never going to be able to recover our money unless we are able to attract smart, motivated talent at all levels of these companies at price points that are possible (over $250k bonuses); 3) There were a number of companies that were essentially forced to take the bailout money and are going to do everything in their power to repay it now rather than use the money to increase lending (which was its designed purpose). This could cause another tightening of the credit markets.

I am upset too, but this is not the way to deal with our frustrations. I think the President and Congress are pushing through this bill because of perception rather than spending time to really understand the implications. This just once again proves that Washington does not know or understand Wall Street.

Carried Interest tax to the front

awworldwide — Wed, 11 Mar 2009 23:24:39 +0000

Once again the “carried interest” tax (affecting alternative asset managers almost exclusively) has come to the forefront of the tax discussion and debate. To illustrate how this works, here is an example: A Private Equity General Partner/Manager traditionally puts up its own cash commitment to a fund (let’s say $20 million for purposes of this example). The Manager/General Partner seeks investors or limited partners and let’s say they put up $500 million in commitments. On the sale of an individual investment within the?Fund (let’s say representing $100 million of capital), after proportionate expenses are returned and an at least 8% annual return is met, the General Partner will get a disportionate share of the profits (20% of the Limited Partner’s profit typically).

Traditionally this “carried interest” has been taxed how ever the overall gains are taxed (typically long-term capital gains and therefore 15% today). The proposed legislation treats these amounts as ordinary income or compensation and essentially raises the rate to 39.6% (the proposed highest tax bracket). Private equity is responsible for the growth and building of thousands of businesses and the “carried interest” is seen and should be seen as additional investment income. The fundamental change to that concept (compensation from investment income) is not just harmful to the alternative asset community, but it is widely not supported by many of the largest pension funds as it changes the economics and prospects for attracting and retaining top talent to start and run firms.? Additionally, as was recently pointed out to me by somebody, the world could learn a lot from the Private Equity model.? No incentive compensation unless you meet the 8% preferred return hurdle.

New Budget Plan

awworldwide — Mon, 02 Mar 2009 01:18:15 +0000

Obama unleashed his new budget proposal last week. The aim was to try and calm the markets and the masses about the deep depths of our current ecomonic crisis. I used to laugh and even disagree with many when they would compare Mr. Obama to Jimmy Carter during the campaign. I believed that Jimmy Carter’s politics and policies were outdated and proven unsuccesful by history. Now, I feel as though not only is President Obama trying to bring back the policies of Mr. Carter, he is taking them a step further. He essentially spent last week blaming the wealthy for all of the economic struggles today. Now, it is true that irresponsible behavior is what landed us in our current state, but penalizing those who are successful today in order to promote socialist policies is not going to pull us out of this deep recession.

The not for profit world relies so heavily on wealthy Americans to donate and just like many other organizations, they are hurting today. Disposable and discretionary income is significantly less than what it was even six months ago. Now, under the new Obama budget plan, deductions for charitable donations will not be fully deductible. Additionally, his budget plan calls for the same reduced deductions for mortgage interest. The wealthiest Americans are the ones buying homes and the ones giving the most charity. As I have said before, raising taxes on anybody is irresponsible during a time when everyone is hurting.

Steroids

awworldwide — Fri, 20 Feb 2009 01:13:31 +0000

The other shoe falls in the steroids scandal that consumes professional sports.? As an avid baseball fan and a huge admirer of the game, I have such a problem with people like A-Rod coming out and admitting that they used steroids so casually.? The fact that individuals like A-Rod had their greatest seasons under the influence of these substances doesn’t just tarnish their record, it tarnishes any achievements of the team they played on.? If I were the Yankees, I would be suing him and trying to get out of that massive contract he received.? It spoils the game.? Mark McGwire, Sammy Sosa and Barry Bonds all contended for the home run title with such fan participation and excitement yet there is no question in my mind that each of them took steroids for much of their career.? Have you seen the size of them later in their career vs. the beginning of their career? ?What is the answer?? Do we put an asterisk next to their names in the record books or do we simply not put them in the record books?? I am unsure how betting on your team as a manager (Pete Rose) doesn’t allow you entrance into the Hall of Fame but cheating during the game does.? My vote would be to put in a mandatory drug test for ALL players at various points throughout the season.? If you cheat and are caught, you are gone for good.

Unwinding 20 years of work

awworldwide — Thu, 12 Feb 2009 13:42:56 +0000

As the Wall Street Journal this morning pointed out, the stimulus plan that is about to be passed is unwinding years and years of certain entitlements that mostly Republicans have been working to peel away.? Welfare benefits are being increased dramatically, how exactly does that stimulate the economy?? We should be putting people to work, not letting them stay at home and receive a “paycheck”.? We are setting up a system that is significantly increasing the power and reach of the?federal government.? Why is this bill contemplating other things such as health care and offshore infrastructure projects?? We are being very hasty with our future and trying to make huge decisions in very short periods of time.? The President has put pressure on Congress to get this done quickly.? We should trim this bill down to the few hundred billions of dollars that relate directly and solely to tax cuts and job creation.? I hope that I am dead wrong, but I believe that the passing of this bill?is going to be something we are going to significantly regret in the future.

Stimulus Plan and Wall Street Bonuses

awworldwide — Sun, 01 Feb 2009 21:49:23 +0000

The news just keeps getting worse.? Jobs are being lost in record numbers and the economy seems as if it is going into a deep dive?into the abyss.? As I wrote about?a few weeks back, this spending bill just keeps getting darker.? More and more things are being added to it and when all is said and done, I won’t be surprised if?it tops $1 trillion.? The bill contemplates so many things that won’t?even come to fruition?for years to come; these things have nothing to do with stimulating the economy today.? It is also saddled with unbelievable amounts of special interest pork.? Additionally, there are a whole slew of issues and causes in there that are misplaced.? While I agree we should be focusing on i.e. alternative energy, we should not be packaging it up with this bill.? That is a fight for tomorrow.? It is a bit telling that almost all of the Democrats and not one Republican in the House voted for this bill.? If we really want to stimulate the economy, why not do an immediate tax cut for the middle and lower class.? We can accomplish this through a reduction of the withholding tax.? Forget rebate checks, these are administratively difficult and take months and months to process and be sent out.? If we do a tax cut today, people will feel the effect and get the extra funds in their NEXT paycheck.? People need relief today- increasing spending is not going to pull us out of this recession in the near term, putting more money back in people’s pockets will do a much better job of that.? It will allow people to get back some confidence and start spending again.?

The Wall Street bonuses for firms like Merrill Lynch, Morgan Stanley, Goldman Sachs, Citigroup, Bank of America?and JP Morgan astonished the world this week.? As the crisis at these firms continue to unfold (some bigger than others), people can not fathom actually rewarding individuals there.? I am a bit annoyed as a taxpayer that?we have thrown Wall Street a life vest and now some?of that money is going to the very people who helped to create the current crisis.? The argument for large bonuses is usually retention, I am not really sure how that plays into it today.? The sixth largest bonus payout in history.? If we are paying these staggering amounts on the U.S. taxpayer’s dime, I would love to see what happens to bonuses when Wall Street recovers to profitability.