A Week in Politics, a sage’s birthday week

They say a week is a long time in politics. The week of 25 August 2008 must rank as one of the longest in the US for a while. The US media moved from the Georgian crisis to the immediate spectacle of politics played out in primetime. The tension, drama and hope of the Democratic Party played out to a climax on Thursday night at the Mile High Stadium in Denver, Colorado after months of preparation, drawing the greatest numbers ever to watch a political convention since Nielsen started tracking in 1960 [also bigger than American Idol, Beijing Olympic opening and the Academy Awards - confirming Obama as celebrity?]. The Democratic Party is one of the two dominant political parties in the US, the majority party in the elected government legislature, but not in the executive office of president since Bush vs Gore in 2000. The presidential election happens on Tues 4 November, as it does every four years. For all its warts, it is hard to argue against the US as being in the top tier of democracies around the world in 2008. The past 500 days since Obama and McCain announced has seen the candidate fields whittled down to the two majors in a demonstration of democracy in action, sometimes ugly, sometimes pretty.

For the first time ever, and because one senses something of great importance in the shifting tides, I watched the entire acceptance speech by a candidate. Barack Obama spoke late Thursday night, covered live on the public television station, a great scoop for PBS. The Democratic Convention this week reinforced my reminder, since coming back from the year sojourn in Europe and travels in emerging markets, that the US remains a nation of competitive individuals where marketing remains a core competency, perhaps a birthright. Earlier this week I smiled when I drove by the iconic US marketing icon in Cambridge MA: the classic American image of young kids selling lemonade at a streetside table with hand-scribbled signs. Taught from a young age, the average American is a able to pitch ideas directly, especially to a camera. To watch the political event, with TV-scripted moments, is to watch a masterclass in events management only slightly less well-planned than the Beijing closing ceremonies. The Obama speech apparently drew the largest ever TV audience [38m] and was carried live on public service television. PBS is one of America’s great institutions, along with Prairie Home Companion! In a taste of Americana for me, I was invited over to watch with a small gathering of Democrats in a small town in New Hampshire not far from Dartmouth University, the local Ivy league university. NH is a state that the ’04 model McCain impressed. It also has the most impressive state motto: “Live Free or Die”. Mmm. No wonder this state liked the guy who the Russians most dislike!

For the generation that sees sustainability as the defining challenge and opportunity of our time, the Obama speech seemed to leave a little missing. I missed the live Al Gore speech for his party earlier, where he did offer some pithy observations, including:

...it just so happens that the climate crisis is intertwined with the other two great challenges facing our nation: reviving our economy and strengthening our national security. The solutions to all three require us to end our dependence on carbon-based fuels.

Sustainability will be best met by a government with a leadership agenda, like I have seen in Singapore or Iceland. One hopes that the government at federal and state level in the US may wield their fiscal directing power, direct investment capital, and enormous procurement and services footprint to move forward adoption of climate smart policies and improving the sustainability footprint of business as usual. Obama floated his 10 year plan, but he seemed to flip it out, not drive it in as Kennedy did for the Apollo program to the moon. Maybe Gore distracted him from the need for making his own case for sustainability as generational imperative, and in prime-time. Both the McCain and Obama campaigns have been seeking to influence impressions of how green they are, delivering on-campus debates by their advisors and visiting salon-type situations in major cities like New York in the past months, none of which bumped the US$20/month bike commuter credit through Congress and Senate this summer. On the grandest stage opportunities exist for “green” stories next to stories of economic, educational and discrimination stories. Floating into view was this journalistic pearl of eccentric Brits driving restaurant-by-restaurant across Europe in their bio-diesels!

The tone was substantive. The image was poignant. Obama is a celebrity, the next big thing from 2004 now the most interesting prime time phenomenon. The orator did seem to authentically present the American experience, the itinerant lifestyle, the making it happen in spite of challenges, of the step up from education made possible by scholarships and loans. As an outsider, he does seem to represent the American brand, and the opportunity in this country of all countries where the story is possible. Being different remains a challenge for humans, as even the fascinating BBC show reveals in describing socialization of growing kids bbc.co.uk/childofourtime. Diversity is a reality and a strength for those who understand how to encourage it in their lives, and their experience. Both major Democratic candidates seemed to offer diversity this year, on race or gender basis.

The week ended with a striking counter-move from the other major party. The Republican candidate John McCain selected a female running mate in part to pick up disaffected female voters in a bold move, with unclear risk/return payoff for his campaign. If nothing else it swept away the analysis of the Obama speech from the Friday morning talking heads, and recovered the attention lost for the week’s drama in Denver. The long week has a snappy ending. All candidates are striving to be the “change”. Like definitions of “sustainability” by some fine greenwashing marketing types, the follow-on questions haunt the statement: change from what to where by whom?

So my week’s tutorial in the US political marketing game ended pointedly. I left the US in 2007 before Fox had launched their long-awaited business channel, FBN. When I flipped over to FBN on this Friday morning, I was greeted by a familiar face from CNN International I watched for international news during my law school days, Richard Varney. His smooth British accent has more sharp American intonations that makes him sound New York. But it was what he said that illustrated the direct political action that Fox is renowned for in the US: strong right-wing, Republican support. Varney invited comment from some suited talking head after the announcement of Palin by trying a long-winded, roundabout hook by using language like “since the news was announced and she spoke it seems to me that the market may have responded positively and the market has responded”. Politics certainly moves markets, as the response to the Russian tank adventures illustrated [see SRI Extra 23 Aug 08] and the WSJ reports the Russians major firms seeking debt financing in September as usual will face increased costs from skittish foreign investors. I had just flipped over from CNBC [certainly not a Democratic mouthpiece] where the on-air anchors reflected no great movement attributable, and reflecting that the impending Hurricane Gustav held greatest market-moving potential for closing business especially oil & gas in the Gulf of Mexico. While maybe one should not be surprised, I was. Maybe I was hoping for business news from FBN, and maybe it exists in other 3 minute segments between advertisements. FBN seemed handily placed to cover the VP pick, re-running an FBN 25 June interview with Palin where she espoused opening ANWR [note how industry nailed the winning URL, anwr.org. But the blatant put was more than even Kudlow on CNBC may be expected to give. But not on Friday. The week ends with space for more news on the sustainability theme as tackled by the Republican platform this coming week [although the official Republican policy position discredits “global warming”], and with a larger dump of salt needed for any FBN coverage.

Less sound-bite like, but the new focus of all campaigns, is the economy. In the tiny village of Woodstock VT the major business owners are nervous of a slump, and over-stretched by borrowings in the good times. The US Treasury Secretary Hank Paulson continues to struggle with major financial system components: the Freddie Mac and Freddie Mae challenges. One may reasonably argue this challenge is the perhaps greater challenge than becoming most popular person voted for by more Americans. Integrity Bancshares of Alpharetta Georgia became the 10^th bank failure of this risky season this week, the FDIC picking up the pieces again. They will not be the last. A renowned value fund manager at a solid SRI shop Ariel Funds in Chicago has let go of Citi, even choosing to book the loss the portfolio rode down with C 42% since the fund first purchased the stock. More spicy, was it’s dropping of Moody’s, saying “it lost confidence in some of the company’s ratings”. Late, but frank. No word on how the ESG ratings shops like Innovest, KLD or ISS [the latter the only listed entity through Riskmetrics] have suffered the same loss of confidence. Warren Buffett discussing financial services firms impressed with the wisdom of his circumspection on CNBC last Friday.

QUICK: When people start looking around to find the next potential Bear Stearns, Lehman Brothers is the name that comes up again and again. Should people be concerned about what's happening at Lehman?

BUFFETT: I don't think it's appropriate, really, to talk about financials.

QUICK: Financials, in particular, banks.

BUFFETT: No. I think that--I really think that's inappropriate to talk about them.

Banks run a juggling operation, and have limits for minimum capitalization of 5%, incredible leverage, meaning more than 9 of ten balls is in the air at any time in the borrowing/lending cycles. The FDIC has increased to 117 the banks they identify as in danger of failing, largest since 2003. Saturday 30 August is the birthday of Warren Buffet, born in Omaha, Nebraska (1930). In February 2008, he was ranked by Forbes as the richest person in the world, worth about $62 billion. I like his frugal living style and the fact that he lives in his old house and drives his old car, squeezing by on an annual salary from his investment company of about $100,000. His wealth will transfer to the Bill & Melinda Gates Foundation, which he announced in 2006.

In 1988, Buffett said:

"I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die."

After the recent dusting off of histories of China, Russia, Malaysia and Brazil to update my reading of the major moving parts in geopolitics, I find myself looking forward to a bit more time with a business librarian soon, the unsung hero of many MBAs. Though the future may be as different as Obama text-messaging his VP pick versus McCain using the old media-leak standard, I prefer to know more about the history of business to interpret the future of business, especially dramatic changes intercepting ESG factors like asbestos or clean water. Machiavelli’s “Il Principe” remains a standard for a reason. The interpretation of business past to the future is the art with the science. And as Buffet is credited as saying, "If past history was all there was to the game, the richest people would be librarians."