Literal Mayhem » Politics

The New Policy Battlefield: All Eyes On Coca-Cola and Social Media PR

letterhead — Tue, 23 Feb 2010 04:04:38 +0000

If you want to see how future national policy wars will be fought, then keep your eye on Coca-Cola Company and the American Beverage Association. Over the next few years sugar will become the new tobacco – even as they try to quash the movement before it gets going.

"Fructose has nothing to do with obesity" is shaping up to be the "cigarettes don't cause cancer" debate for the 21st Century. Battle lines have been drawn; the fighting has started; the idea of a sugar tax has been getting more and more attention (in CA, NY, MA, MS, among others); and now that the First Lady has made obesity a national issue (calling out high-fructose corn syrup [HFCS] by name), the fighting will only get more intense.

Here we have a terrific case study in the making: the anatomy of a true 21st Century national PR/policy campaign (FYI… the bit about Coke comes at the end):

First Step: Fill The Coffers

The American Beverage Association, one of the primary conduits of sugar into the American bloodstream, is amassing a war chest that's unprecedented in its history.

Last year its lobbying budget swelled from a modest $1 million a year in 2006, 2007, 2008, all the way up to an eye-popping $20 million for FY 2009, with $17 million of that coming in the period October 2009 through January 2010. (According to the U.S. Senate LDA disclosure database.)

What are they getting ready for? All out war.

Step Two: Craft Your Messages

The Corn Refiners Association (CRA) made a good start with its “Sweet Surprise” website and ad campaign. The campaign tells us that high-fructose corn syrup is no worse for you than sugar. Which is like saying heroin is no more addictive than cocaine. But hooray for the effort at clarification.

And while corn refiners were busy on the biochemistry front, the American Beverage Association took a different tack. They added the tax issue to the "education" effort. Their message is that you can't tax people into better health. That's the role of education… helping people make better, smarter choices.

Seems like a reasonable position until you recognize that if the corn refiners succeed in their propaganda war, then refined sugar will remain ubiquitous and "educated" people will still make the same bad choices as before. See how nicely those two initiatives fit together?

The two-pronged approach is actually quite smart: While the aim of the overall program is to avoid taxation on sugar and sugar-heavy products, that goal can't be achieved unless people believe that sugar isn't bad for you – or at a minimum that it's "not that bad for you."

Without a benign public profile, all those sugar-heavy industries would have lost much of their defense against additional taxation. And with hundreds of industries, trillions of dollars, and millions of jobs on the line, we just can't have that. So…

image: fanpop.com

Step Three: "Educate"

Part A of the education program is getting your key representatives out there to talk up your messages. Like this webinar by President of the Corn Refiners Association Audrae Erickson, which is currently up on the website of Supply Side,one of the largest trade shows for the food additives industry (registration required). The goal is to leverage self-interest to recruit key supporters to the cause.

Part B is to get a Spokes-Guru. It appears that the corn refiners have gotten themselves a guy by the name of John S. White, an industry consultant who does business as White Technical Research and brings over 20 of experience in "nutritive sweeteners." (He co-hosted the webinar with Ms. Erickson.) Expect to see a lot of Mr. White blogging, writing articles, lecturing, appearing at government hearings and on TV morning shows as an "independent" analyst.

Part C is to have a whole book of half-true talking points that you can use to coax or cudgel your audience – as required.

Messages like "a calorie is a calorie." In energy content yes. But not metabolically. A calorie of glucose metabolizes differently and in different parts of the body than fructose, with very different results.

Step Four: AstroTurf

The Beverage folks are spearheading an effort called Americans Against Food Taxes, at the charmingly named URL "nofoodtaxes.com." According to the group's profile on the site:

Americans Against Food Taxes is a coalition of concerned citizens – responsible individuals, financially strapped families, small and large businesses in communities across the country – opposed to the Government's proposed tax hike on food and beverages, including soda, juice drinks, and flavored milks. The coalition has twin primary aims: 1) To promote a healthy economy and healthy lifestyles by educating Americans about smart solutions that rely upon science, economic realities and common sense; and 2) To prevent the enactment of this regressive and discriminatory tax that will not teach our children how to have a healthy lifestyle, and will have no meaningful impact on child behavior or public health, but will have a negative impact on American families struggling in this economy.

"A coalition of concerned citizens." Doesn't that sound so… grassrootsy? And if that's not enough, check out these background images lifted from the site:

Not a fat kid in the bunch. All beautiful white teeth. Great skin. Presumably they guzzle soda all day, and still they all look like the pretty, carefree, all-American teenager we all want to be.

And speaking of non-pimply teens… why is an anti-taxation website targeting 14-19 year olds? Because the Beverage Association believes 14-19 year olds are experts on tax policy? Because they're the next generation of Alex P. Keatons? Hell no. It's because kids are the primary market for soda and other sweetened drinks.

In reality — despite the fact that "big companies" comes last on their list of "concerned citizens — this AstroTurf group is bankrolled by more than 400 of the biggest names in food production and distribution, including:

National Association of Convenience Stores
Corn Refiners Association
American Beverage Association
Grocery Manufacturers Association
National Supermarkets Association
Florida Chamber of Commerce
Georgia Agribusiness Council
National Association of Theater Owners
National Retail Federation

It even includes these unlikely groups:

U.S. Hispanic Chamber of Commerce, U.S. Hispanic Leadership Institute, Hispanic Alliance for Prosperity, Hispanic Association of Colleges and Universities, Hispanic Federation, Hispanic Institute, The Hispanic Media Council, National Hispanic Caucus of State Legislators, National Hispanic Foundation for the Arts, National Hispanic Leadership Agenda…

Even the National Hispanic Medical Association! A medical association? Really?

How on earth did a medical association get behind a campaign to defend our kids' right to guzzle sugar? This is where we get to the part about The Coca-Cola Company.

Step Five: Mobilize Your "Communities"

Coca-Cola invests millions in Social Media. The company is so far ahead of the curve that it's getting top billing at this week's Ragan Communication's Social Media Conference and is even hosting the event at its Atlanta headquarters. (Feb 22-24).

And this, I believe, is going to be the most interesting part of the policy debate to watch: the Social Media mobilization. It will be the first real test of a corporation's ability to use social media PR not to sell product, but to mount a substantive defense of its business in a bare-knuckled policy fight.

Which brings us to the Hispanic Medical Association… this article from the L.A. Times reports that as part of its "minority marketing" efforts, Coke gives money to a lot of the Latin organizations mentioned above and even has executives on some of their Boards.

And a reporter from MinnPost confirmed with the LAT reporter that something got left out of his story: Bill Clinton spoke out against the sugar tax, but when the reporter checked the donor list for the Clinton Foundation: he found that Coke had given $5 million. Coke is even getting its workers into the act – protesting local sugar taxes.

Yeah so what. Most of this is old hat. No? Well, it is and it isn't.

Back in 2007, the head of Coke's PR department gave a presentation to the Georgia Chapter of the PR Society of America. In that presentation he showed the following graphic. (via O'Dwyer's, subscription required)

The key thing that's different today is that Social Media PR will give Coke the tools necessary to unite and mobilize all of its "communities" in business, government and civil society all at once in ways that "marketers" never imagined: as a PR army focused on fending off a threat to its business.

It will take the form of Facebook and Twitter and MySpace; contests, pages, groups, petitions, ringtones, and iPhone apps; it will be micro-targeted regionally, by age, by employment, by product preference, and by lifestyle choices like recreations and hobbies.

In short: this engine was built for marketing products. But now, it is about to be geared up and mobilized for another purpose: war. Specifically, to protect the profit interests of the corporation and maintain a business model that is potentially harmful to the "communities" that will be defending it.

The nofoodtax website has a few Social Media tools, but it pales in comparison to what a pioneer like Coke brings to the effort… not to mention Pepsi. From a PR point of view it will be a fascinating thing to watch.

If you're a parent worried about your obese pre-diabetic teenager… I'd have to imagine it'll be infuriating.

A Sugar Addict Confesses

sugar skulls by aliciapolicia.blogspot.com

I am a sugar addict. I love the stuff. Can't get enough of it. Takes all my willpower to walk past the dessert tray in the company cafeteria. I tend to cycle up and down and am currently about 180 pounds at 5'10" tall. This is my tipping point. The pants are a bit tight. The face feels a bit fleshy around the jowls… All the warning signs that I'm about to pork out. And yes even with a regular work-out routine and diet of mostly whole foods, sugar still does me in. (Could it be the eggs, butter and flour that the sugar is packaged with? You think?)

And yes, I love Coke. A big frosty glass of Coke with loads of ice. I like to wait until it's so cold it's almost frozen. And then I take little sips. Letting the caramel taste wash over my tongue before I let it slide down. So freakin' delicious.

But I also know it's a potential killer. I say "potential" because there are a lot of caveats to that statement. To get an idea of the content and temperature of the debate, do two things:

Watch this video (link)… in which Dr. Lustig makes a pretty compelling case that the metabolic pathways for fructose can create exactly the physiological effects that are the hallmarks of metabolic syndrome. (It's about 90 minutes)
Then read this post AND all the comments (link). In the comments Mr. Aragon debates Lustig. And Aragon makes a pretty compelling case that despite the chemistry, clinical research has yet to make a causative link between fructose and obesity. (Took me about 1 hour to read all the comments)

Notwithstanding the histrionics, both camps seem to agree on a couple of key points: the health effects of fructose are dose and context dependent; and excessive consumption of refined fructose really is bad for you.

So a few cents extra to make me think twice before I slug down a 16-ouncer is probably a very good thing. And if you don't drink soda then why the hell do you care if I'm paying a few cents extra in tax?

And if it makes soda more expensive, and kids drink less of it, isn't that the whole point? Foes of the tax need to explain how it's a "burden" on families to drink water and eat fresh fruit, as opposed to buying expensive sodas and sugar-laden, over-processed foods in a box. How can reducing sickness and healthcare costs be a burden?

It can't.

Who's Lobbying for You? Mobilize Yourself!

image: www.eatsugarmusic.com

And this is why a Social Media PR campaign on sugar will be so interesting to watch. All our incentive is to eat less refined fructose. Food companies have no such incentive. All their incentive is to get us to eat more of it.

To food companies, refined fructose (especially HFCS) is an important competitive advantage, in terms of taste, texture, shelf life, cost, among other things. It helps them sell. That's why they want to put more of it in more products, to get you to buy more of those products today than you did yesterday, last week, last month, last year. It's how they grow revenues and profits and generate returns for shareholders.

Their goals are to sell more and keep barriers at bay.

And to the latter point, Coke works with power-player Glover Park Group (GPG), a "strategic communications" firm in DC. It's no coincidence they picked GPG, which has had two consecutive assignments with the Grocery Manufacturers Association on ethanol… GPG knows corn.. and the Senators that support it!

For their part, the Corn Refiners have retained a lobbying firm called DTB Associates. Their home page explains what they do:

We are committed to helping our clients find and use the most effective legal, lobbying, or negotiating tools to respond to whatever obstacles stand in the way of achieving their objectives in the global marketplace.

The goal of food companies in the "global marketplace" is to sell more product, and if it takes more refined sugar to do that, then that's what they'll do.

It's why corn refiners want to sell you sugar… grocery stores want to sell you sugar… beverage makers want to sell you sugar… bakers and cereal makers and dairy producers and convenience store owners and Burger King and the Hospitality Association and vending machine operators and movie theaters owners… they all want to sell you sugar… as much of it as you'll eat.

Preferably a hell-of-a-lot more than you need. And preferably in food that you don't even know it's there. That's their goal in the "global marketplace" and they're not going to let any "obstacle" stand in their way, not even your health.

Will they be successful in harnessing Social Media PR to get customers (who should be eating less sugar) to mobilize in "communities" in defense of companies who want customers to do just the opposite and eat more sugar?

We'll come back to this in 12 months or so and deconstruct it.

In the meantime, when you get hit up to participate in a fructose community mobilization, before you dive in, ask yourself: when it comes to the negative effects of sugar on your health… Who's really lobbying for your interests? Coke?

Goldman Sachs About to Ditch its Golden Flack… for a bad PR strategy?

letterhead — Tue, 08 Dec 2009 02:51:48 +0000

No one seems to be dancing to Goldman's tune these days. No matter how hard they crank the 'ole gramophone. But they are trying a new approach, actually publishing dance steps to Goldman's Bonus Hustle… a 14-page presentation on why they make so much damned money.

First though… who's getting the blame for Goldman's missteps? According to Charlie Gasparino it's the highest paid PR guy in the business: Goldman PR chief Lucas Van Praag. (Well… it's hard to say in fact he is the highest paid. Maybe George Sard makes more. But $1 million + probably puts Van Praag close to the top.)

According to the Charlie:

"a much-needed shift in public-relations strategy is in the works, sources close to the firm say"

Hmmm… interesting that this news appeared on the same day that Bulldog Reporter's newsletter (The Daily Dog) reported that Goldman has put out a 14-page slide presentation explaining why its executives deserve to make so much money. And boy is it a dooozy!

DO THE HUSTLE!… THE NEW GOLDMAN DANCE CHART

If this represents the company's "much-needed shift" in PR strategy then it is in big trouble.

The charts and graphs are pretty, if entirely abstruse. Its main point seems to be that Goldman does much better than its peers, which is why its execs get paid more. What it doesn't address are all the issues that people actually have a problem with… like:

– Why does the entire sector suffer from bloated salaries and bonuses?

– Why is your bonus pool so stupendously huge… less than a year after you nearly went bankrupt?

– How did you TRIPLE firm revenues in just three years (2004 – 2007) after five years of relatively flat earnings?

– Could it possibly be that you attached a Hoover to the mortgage and derivatives markets — sucking out tens of billions in earnings and leaving the nation's pockets empty?

THE ZERO-SUM END-GAME

When this game of musical chairs is over, Mr. Van Praag may be without a seat at the Goldman buffet, but my guess would be that Goldman's C-Suite is so hidebound and tin-eared when it comes to reputation risk, that no one could talk sense to them. Even if one dared.

But it does show to go ya, you can bite your tongue in the presence of sr. execs and execute on all their bad ideas to save your job and not rock the boat. But bad ideas are bad ideas and they never work. And the one who ends up executed is you.

The short-term incentive is to shut up and salute. In the long-term it gets you the same place you would have if you'd spoken up and challenged them in the first place.

Kinda makes you think…maybe speaking up and challenging the powerful is worth the risk.

Who knows, you might succeed. At least you can say you tried. And you won't end up the scapegoat for all their bad ideas.

Palin & Stalin: What Do We Believe? That PR… Thou Art a Shameful Fraud

letterhead — Mon, 07 Dec 2009 00:04:25 +0000

It's tough to pinpoint when the PR profession "jumped the shark." But it has, and in spectacular fashion.

Outsiders are seldom privy to the inner workings of the global spin machine. But every once in a while someone leaves the door ajar and you can peer in to see just how twisted are its guts.

Such is the case with newly released documents in the ever-widening Sarah Palin ethics quagmire. Seems that Andree McLeod just won't give up, even if it is all the result of a "falafel fight." Well, 'tis her right. And accrues to our benefit.

Take the recent emails she unearthed. (Posted by Sam Stein on HuffPo)

Get the Pepto-Bismol ready and then read the following. It's from an internal email, from one of Palin's communications staffers, asking the campaign for clarification about what the candidate believes:

"On abortion, she is pro-life, but does she oppose exceptions for rape and incest? On sex education, does she favor an abstinence-only approach or does she allow for contraceptives?"

Here is one ~~PR staffer~~ flack asking another ~~PR staffer~~ flack to tell him exactly what Palin is supposed to believe. At least, in public.

This is how the game works folks. In black and white. Couldn't be any clearer. Many of Sarah's supposedly deeply held ideas about the moral issues of the day are a confection.

In reality, most public "messages" and images are manufactured to achieve a specific goal, and very rarely are: 1) the messages true to the speaker, and 2) the stated goal of the speaker and her true goal one and the same.

All the feigned certitude by politicians and business scions is just that, feigned with an institutional purpose. All thanks to the "conscience" of the world: its highly paid flack army.

CANONIZING SAINT STALIN, FOR A HEFTY RETAINER FEE

Jack O'Dwyer's Newsletter recently reported that Russia hired a PR firm to rehabilitate the reputation of one Josef Stalin. Yes, that one: he of the ruthless, repressive, dictatorial 30-year reign. He of the Great Purge, and Gulags, and secret Pogroms. 20 million dead. Maybe more… who knows.

According to Eurobserver.com, the program is being run by the state-owned Russian news agency in partnership with a private outfit called RJI Companies… which offers no definition of itself on its website, only that it provides "strategic communications" according to the following ideal:

"In the international game of strategy, winning is the result of global intelligence, expertise, and bold vision. Today, the stakes are higher, the strategies more subtle. With RJI on your team, you bring unparalleled experience, subtlety and integrity to the table."

Interesting that the word "subtle" is the only word (other than "the" and "and") used twice in this short primer. In other words: secret, hush-hush, under-the-radar propaganda. Visit the website and see if its clandestine look and feel doesn't give you the shivers.

Eurobserver reports that RJI has tried to recruit heavy-weight PR firms to the cause:

"A senior executive at the PR firm in question recalled one particular exchange with the RJI Companies envoy: 'I asked him "Do you want us to say that Stalin was not such a bad guy?" And he said "Well, I know it will be difficult." I said So, you want history to be rewritten? And he said "Yes, in a way."'

"'Expect to see more articles in European newspapers saying that Stalin had his good points as well,' the PR executive said."

Inside Russia, such efforts are apparently "well underway," including the rewriting of high-school history books. Outside Russia, it's all a lie or course, according to a flack for the Russian news agency. She told Eurobserver that no such PR contracts exist. Whom do you believe?

(And for the record, Russia's PR firm in the U.S. is Ketchum.)

ENOUGH ABOUT "CONSCIENCE" ALREADY

We need to stop lionizing the PR profession as some sort of "conscience." It's self delusion that only masks PR's terminal disorders and prevents effective treatment.

We've talked about how PRSA chairman Cherenson loves that sort of baseless happy talk. But even the admirable gadfly Wendell Potter still encourages PR professionals to consider themselves the "'conscience' of their employers," according to the Nov 18 issue of O'Dwyer's. Apparently Potter and Arianna Huffington were on a panel together at a PRSA event in San Diego and were of the same mind.

Sadly, as LiteralMayhem has chronicled, when a corporation (or any center of power) is pressed to the wall by outside forces, PR pros have little to no influence in how the powerful respond. Rarely does conscience enter into C-Suite or political decision making.

And all too often PR pros are eager to do any bidding, no matter how foul; say anything any create any image, no matter how stilted; and devise any talking point no matter how obfuscatory; in short, do anything necessary to serve the client/boss… and secure a fat retainer/pay check.

As a result of PR's Machiavellian misadventure, the public is all the poorer… Public discourse corrupted for a pfennig, a corner office, and a lucite memento of the deal. It's a shame really because there is such potential for good.

But maybe I am making a mountain out of a molehill. Perhaps it's just human nature. After all, manufacturing a vice presidential candidate or rehabilitating a vicious dictator is small potatoes compared to American conservatives' efforts to rewrite the Bible.

BS of the Month Award: Why I’m Not Fit For GoldmanFlacks

letterhead — Fri, 04 Dec 2009 02:33:51 +0000

Calling the Goldman Sachs $500 million small business initiative "philanthropy" or "lending" is like saying that frosted Pop Tarts are made with "real fruit filling."

Thankfully most media types called it for what it was: BS, BS, and more BS. But it got me thinking about my career in PR… I know two people who work at Goldman in PR. Both of whom are very smart and talented. One of whom actually has a conscience.

After my last in-house gig, I just couldn't take working in financial PR anymore and opted for a poorer but more low-key life of writing. ("Scrivnering" for those who insist on verbifying everything.) And as I was walking home from work one sunny, breezy day in San Francisco, I was cursing my decision.

A place like Goldman was the next step for me. I had even interviewed with the hedge fund arm of Citigroup in its heyday and walked away before the talking really started. (It would have been great money, even if it was a soul killer.)

On that sunny, breezy walk home I imagined that my life would have been much much easier (financially) had I just stepped up that one last rung on the ladder. The people I know at Goldman are probably making $400K a year, maybe even $500K or more. Cushy perks. Great benies. What a life.

But the PR debacle of the "loan" initiative, made me realize that I'm just not cut out for it. And all you PR students and wannabes listen up, because that initiative on its own should capsize any illusions you have about being "the conscience of the corporation" as PRSA ~~blowhard~~ chairman Cherenson put it.

IMAGINE… ALL THE MEETINGS, CLOGGING UP YOUR WORLD…

I imagined sitting in a meeting with senior Goldman executives trying to explain why the $500 million boondoggle wouldn't fool anyone and was just a total waste of 1/8 of the CEO's bonus money…

"We're going to give a million dollars to charity," says one.

"Brilliant idea," says another. "But better make it $5 million. Sounds more generous."

"I have it!" shouts another. "$500 million!! It will knock their socks off. Take all the heat off us. Make us look like we care. We've got to give til it hurts to show them that we're serious. We need to make it serious money!"

Eyes are popping. Hands are shaking. Smiles are beaming all around the room. I'd probably be sitting there with my head in my hands.

"Gentlemen, let me play devil's advocate here for a minute. $500 million isn't squat. From a PR perspective, it's dangerous. It's cynical. It looks like a payoff on the cheap. Especially since after the tax benefit it will only cost us $150 million. You might as well hunker down and keep all the bonus money because that piddling amount will NOT get you the absolution you're looking for. It will just engender more resentment."

Angry glares.

"Well, snot nose… how much should we give?"

I'd say: "All of it."

"ALL OF IT!?!?!?!"

"Yes all of it… The whole $20 billion… At the very least… half of it."

"HALF OF IT!?!?!?!! But that's OUR money!"

"Again… I say this as a devil's advocate gentlemen… not at all as a Goldman communications officer (though some might say they are the same thing)…

"Aren't you people rich enough already? Can't you forgo your bonus for ONE year??? Especially as MILLIONS of people and businesses are on the brink of financial extinction? Can't your… excuse me… OUR… exorbitant base-pay suffice for just ONE year? Just ONE year. That's all I am suggesting.

"Next year we can all go back to business as usual making (and keeping) trillions of dollars and say we've done our part. And the money will buy you, literally, DECADES of goodwill, not to mention the Secretary of the Treasury slot for all of eternity."

Imagine all the open-mouth stares.

"Gentlemen… seriously. This is a bad idea. If a wholesale change in perception is what you're looking for, it will only come from a wholesale departure from business as usual. This is not change. If anything it reinforces the perception of Goldman a bunch of greedy, manipulative shysters.

"Plus, you are ensuring that the next Secretary of the Treasury will come from… … a community bank… or worse… … ACADEMIA!"

AND THE AWARD GOES TO…

I wouldn't last 5 minutes at Goldman Sachs. I barely lasted the 20 years I did spend in PR, and I have very little of my tongue left… from biting on it all the time.

The Goldman initiative is pure, unadulterated bullshit. But what's most galling about it is that they really thought (or why else would they have done it), that it would buy them some goodwill. And my smart, talented friend in Goldman's PR department (the one with a conscience), probably just sat there… with a bleeding tongue. The one without a conscience probably thought it would be a good career move to champion the idea, no matter how bad it was, because the senior executives wanted it.

And you know what… in reality, championing a rotten idea because the C-Suite wants it is often the best career move in PR. Sad but true.

But it still doesn't make a rotten idea into a good one.

And so Goldman Sachs… for your corporate arrogance, your cynicism, your anachronistic faith in propaganda, and your outright shamelessness, we grant you the BS of the Month Award, for November 2009.

Use it liberally. Use it often. But just remember that it won't fool anybody, because it still…

Fuck You Barack Obama

letterhead — Thu, 05 Nov 2009 00:24:27 +0000

I quit you. I'm done. Last night killed it. I have been a registered independent since my first presidential election in 1980, in which I voted for John Anderson.

Yet, I marched for you. I gave money. I handed out posters to my friends. I volunteered. All for you. Because I believed, naively it turns out, that you would deliver on your rhetoric. And that you would do your best to fix what was wrong. The moneyed influence. The injustice. The political horsetrading with people's lives and livelihoods.

Yes, we all know that presidents have limited powers. (Less limited these days thanks to an ever-expanding executive branch and a neutered Congress that gladly hands over power to their guy in charge.)

But you…. YOU DIDN'T EVEN TRY!!!!

FUCK YOU ON GAY MARRIAGE

You had the time to travel to New Jersey — THREE TIMES — to prop up a failing governor with an approval rating in the low 30%. You sent Joe Biden to fight for Corzine. You even dispatched your own campaign staff to take over the wheel of his flagging campaign.

(Conspiracy theorists could have a field day with the fact that Corzine is ANOTHER former CEO of Goldman Sachs… but that assuredly had nothing to do with it.)

You were clearly so tired campaigning for Corzine that you had not an ounce of energy to lift a finger of help for your gay supporters in Maine… who were in a battle for their rights. Your campaign organization (now an arm of the DNC) went to the trouble of sending out emails to Maine voters reminding them to vote, without once mentioning the marriage referendum, or to Vote NO on 1.

No money. No resources. No support. Not even a whisper… not even a whimper. And this comes after speaking to the Human Rights Campaign just THREE WEEKS AGO!!

When you said:

"My expectation is that when you look back on these years you will look back and see a time when we put a stop against discrimination … whether in the office or the battlefield… I'm here with a simple message: I'm here with you in that fight."

Really? Turns out. No you aren't. You are an empty suit spouting empty words. A liar… plain and simple.

So, fuck you on that one.

FUCK YOU ON LAME HEALTHCARE "REFORM"

You got health insurers to agree to take on millions of new customers. Congratulations.

Either we pay into the protection racket, or get whacked by a federal penalty? Thanks a bunch.

The point, once again, is that you DIDN'T EVEN TRY for something better. You bargained away a public option from the get go, and then sought to kill it whenever it raised its stubborn head. You gave the drug company lobby, and the insurance lobby more attention and clout than the average middle class American that you purport to hold so dear.

So now millions more Americans will have the privilege of having what I have as a sole proprietor: expensive health insurance that doesn't pay for a damn thing except catastrophic care. I have to pay for all my ongoing medical care out of my own pocket. On top of my premiums.

Great. You didn't reform "healthcare." You simply expanded access to expensive useless insurance. All from the same people who brought to us the crappy outdated teetering-on-the-brink system we have to day.

All the same warped incentives are still in place… no incentive to keep people healthy, all the incentive is on denying care. And if you think that they won't, well just look at what the banks are up to.

So fuck you on healthcare "reform" too.

FUCK YOU ON FINANCIAL "REFORM"

On this one it's difficult to know exactly where to start. So let's try this. A 63-year old retiree saw her interest rate on her CD get cut in half when her bank failed and her deposits were bought by another institution. A contract, it turns out, is not a contract if you are a responsible, risk-averse retiree on a fixed income.

If you are AIG, then it's a different story entirely. Treasury Tim spent $32 billion in taxpayer money to retire retire swaps and acquire CDOs from AIG and insisted that contracts be honored at 100 cents on the dollar, even though counter-parties had already agreed to take less than half that.

Like the huge bonuses at AIG and Merrill and elsewhere… a contract is a contract… if you work for Wall Street.

On the foreclosure mess, your own oversight panel rebuked your consumer protection measure as inadequate. Sure lots of people got in over their heads. Wall Street got in over its head to the tune of several hundred percent. Many of the worst offenders in the financial crisis were leveraged 30- or 40-1. But Treasury Tim and Loophole Larry made sure THEY got bailed out.

Goldman even made billions shorting the mortgage market while it was selling tens of billions in worthless securities. Illegal? We'll never know because there will be no investigation.

But it's certainly unethical: Say you own a plant business. And some guy sells you a truck load of plants that he swears are perfectly healthy and a good investment. You get them to your greenhouse and not only do they die, but they bring a bug infestation that kills off half your inventory.

Later on, you find out that he was writing on his blog and sending letters to other customers saying that he was pretty darn sure those plants were carrying a dangerous infestation. Then the government gives this guy a bailout and leaves you fighting for your life with half your business destroyed. Sound fair or ethical to you?

And as for your "protections"… a plethora of industries are wiggling out of being covered by your signature consumer financial protection agency, which is being watered down by Barney Frank even as six dozen consumer and banking experts a law schools around the country beg you to preserve its teeth. And what have you to say?

Crickets… I hear… crickets… oh wait… you spoke at an industry event in NYC (a fundraiser was it?) and you "encouraged" Wall Street to cooperate with reform. Forgive me if I'm not impressed.

As for TARP, your own inspector general testified before Congress that $23 trillion could be the total taxpayer tab for the Wall Street bailout and there is woefully little transparency into how that liability is being managed by T-Tim. The proposal to fix what went wrong, put forth by Tiny Tim, has been dubbed "TARP on steroids." It's a crime to propose more of the same poison when we're not going to make any money on our current investment… even as… get this:

C.I.T. declares bankruptcy and Goldman Sachs makes ANOTHER $1 billion at taxpayer expense??!?!!? Excuse me but how the fuck did Goldman make ANOTHER billion dollars when the taxpayer just got screwed AGAIN???

Taxpayers have gotten nothing, and likely will get NOTHING from the trillions we used to backstop the billionaires from bleeding to death. They're not using TARP money to lend, or finance the real economy. Instead they're using it to bolster their balance sheets, generate trading revenue, and make acquisitions.

"Too big to fail" has gotten bigger. Loopholes are larger. Banks are hoarding cash. You knuckled under to big business and abandoned your pledge to crackdown on tax havens. Derivatives are still unregulated. Banks rake in tens of billions in profits that are a gift from the government, with NO demands for anything in return.

And now you and Rahmbo are even gutting the post-Enron protections in Sarbanes-Oxley?

Look, we all know that there's plenty of blame to go around for the mess we're in. Share the blame. Share the pain.

Except that you have made absolutely no effort… ZERO… to force Wall Street to share the pain. And THEY were the ones who dragged the entire global economy to the edge of utter disaster.

NO ACCOUNTABILITY… ONLY BILLIONS IN REWARDS? All for those idiots who fucked up the global financial system so badly that it's practically beyond any capacity to measure!

Who gets to share the pain? The average middle class American is getting screwed at every turn, while gigantor corporations use our tax money to stuff their pockets and then turn around and fight protections for the rest of us. (Case in point: squeezing in rapacious rate increases on credit cards before new protection measures go into effect.)

What the fuck are you thinking??? And why does Tim Geithner still have a job?! Maybe because financial industry lobbyists spent $224 MILLION in just the first six months of the year.

On financial reform you're not even trying. And this is just a small taste of the awesomely skewed priorities of your henchmen at the Fed and Treasury… not to mention the devastating results that are ravaging the have-nots, and even the sort-of-haves, nationwide.

So that gets a double "fuck you."

FUCK YOU ON… THE DALAI LAMA?

While we're at it… fuck you for dissing the Dalai Lama. The friggin Dalai Lama for Christ sakes. (Literally)

For the first time in almost 20 years, the Dalai Lama visited D.C. without getting an audience with the POTUS. As theologian David B. Hart recently wrote, it's easy to romanticize the Tibetan cause, when in reality the country's history is violent, theocratic and riddled with political intrigue.

But as he says of the current plight of the Tibetans, presidents meet with is Holiness the Dalai Lama as a gesture of conscience, done out of recognition of…

"the monstrous crime of China’s invasion of Tibet on the pretext of some fatuous historical claim to sovereignty over the region… [and recognition] of the rule of terror, torture, imprisonment, and disenfranchisement by which it governs there, or of its systematic policy of cultural destruction."

It is sheer lunacy to believe that after nearly 70 years of ceaseless and violent repression, that China will somehow be more compassionate toward Tibet because Obama dissed the guy in saffron robes. If anything it marginalizes the Dalai Lama and emboldens the Chinese.

It's hard to disagree with Hart when he says it was "an act of moral cowardice."

That gets a big "FUCK YOU"… all caps.

SCREED YES. ANGER? CHECK. DISENCHANTMENT? YOU BET'CHA

David Plouffe can kiss my ass. His defense of Obama rings hollow. On Obama's major efforts he has been a calculating establishmentarian and corporatist. His actions don't live up to his rhetoric, plain and simple… on healthcare, or financial reform, or net neutrality, or state secrets, or the Patriot Act, or transparency at the Fed, or NAFTA, or knuckling under to lobbyists, or any number of other issues.

Too many people are getting too screwed while a few rich, powerful interests are munching on federal bacon… or eating cakes with dollar signs written in green frosting. Choose your clumsy metaphor, they're all apt in describing the clumsy (if not callous) way Obama has downplayed or outright ignored the concerns of the people who elected him to enact "change we can believe in."

The issue is one of balance. Of shared sacrifice. Of fairness and justice. No president can make everything right. But Obama has made things "right" for the privileged few against whom he railed during the campaign. Somehow making things right for them at the expense of the people to whom he promised change.

Daily Kos has it right:

There will be much number-crunching tomorrow, but preliminary numbers (at least in Virginia) show that GOP turnout remained the same as last year, but Democratic turnout collapsed. This is a base problem, and this is what Democrats better take from tonight:

If you abandon Democratic principles in a bid for unnecessary "bipartisanship", you will lose votes.

If you water down reform in favor of Blue Dogs and their corporate benefactors, you will lose votes.

If you forget why you were elected — health care, financial services, energy policy and immigration reform — you will lose votes.

Tonight proved conclusively that we're not going to turn out just because you have a (D) next to your name, or because Obama tells us to. We'll turn out if we feel it's worth our time and effort to vote, and we'll work hard to make sure others turn out if you inspire us with bold and decisive action.

The choice is yours. Give us a reason to vote for you, or we sit home. And you aren't going to make up the margins with conservative voters. They already know exactly who they're voting for, and it ain't you.

READ MY….

I ditto that. You'll never get another vote. Never get another dime. Never get another minute of my time. I did that once already and what did I get from you and all your promises? Fuck all.

All the ~~empty~~ talking heads on TV say that Obama is the consummate, calculating pragmatist. Well, here, calculate this…

The White House News War: Forget Glenn Beck. Barack Obama is “Howard Beale.”

letterhead — Mon, 26 Oct 2009 03:00:34 +0000

Teeth are being gnashed. Gauntlets is gettin' thrown down like warm beers at a tea party. Over what? Beck, O'Reilly, and Limbaugh? Seriously?

Nobody saw this coming? Not since 1976 when the satire "Network" hit movie screens and won four Academy Awards?

More than 3o years ago, the fictional network boss Frank Hackett (Robert Duvall) cringed at the idea of putting a screaming, delusional nut-bag on TV. He said to Diana Christiensen (Faye Dunaway), head of the network's "Entertainment Division":

"For God's sake Diana we're talking about putting a manifestly irresponsible man on national television!"

Diana just smiles a creepy, glassy-eyed smile and nods gleefully… as if to say "Um… hell yeah. Isn't it GREAT!"

The movie is worth watching just for that one scene alone. It is the tipping point at which the network descends into "shrieking nothingness" and hysteria, all in pursuit of ratings.

The relevance to Obama is: just a year ago HE was the "anger candidate." He got elected because he channeled people's ANGER.

Whether he wants to admit it or not, it wasn't hope that got him elected. He harnessed the public's anger and discontent, essentially saying:

"Throw the bums out and make room for new people like you who understand your needs… and maybe you won't have to be so scared and angry anymore."

He promised to take it to "the man"… so to speak. And millions of American's of all stripes cheered him on his crusade. But once in office he forsook that anger in favor of pragmatism, and he left a huge swath of the "anger contingent" (which includes millions of independents) unrepresented and ripe for FOX to pick it off and gin it up.

"THIS VIOLATES EVERY CANNON OF RESPECTABLE BROADCASTING"

For those who have never seen Network: The nightly news anchor Howard Beale (Peter Finch) gets fired for lousy ratings and completely loses it on the air. He says: "Tune in next week for my last show when I will blow my brains out on national TV."

The man has clearly cracked up, but manages to convince his producer to let him say a brief farewell on the air the next day. He apologizes to viewers for saying he'd blow his brains, but he'd "just run out of bullshit."

He hits nerve of popular outrage and the ratings go through the roof. It was, after all, a post-war, post-oil-embargo, post-Watergate world of grinding economic distress.

Hackett, once he starts seeing dollar signs, lets Christiensen put Beale back on the air every night, frothing torment and all. And to whip up the public even more, she lards up the evening "news" with a Soothsayer (Tune in tomorrow to see if she was right!) and a viewer sounding board called Vox Populi (a foreshadowing of CNN's live audience-reaction graphs).

In short, Christiensen turns the "news" into a viewer-driven three-ring circus. The network's head honchos revolt against Hackett, lamenting:

"You're seriously considering putting on a pornographic news show… This violates every cannon of respectable broadcasting."

A LUNATIC ON THE AIR YELLING "BULLSHIT"

Wolf Blitzer may not be yelling "Bullshit" on the air, but his program might be better if he did. After all, the CNN Situation Room and all those shows like it are fast approaching the dazzling user-driven carnival show of the fictional Evening News with Howard Beale.

CNN's army of talking-head spokesbots are entirely predictable, rarely saying anything surprising, and usually just spar and whine and accuse each other of not fighting fair. All for the sake of ~~news~~ ~~entertainment~~ ratings.

The network might as well go whole hog and just put "a lunatic on the air yelling bullshit." (As Hackett says of Beale.)

As for the one-man/woman lunatic sideshows (Beck, Limbaugh, Malkin, et al.) and all the other mouthy anger-merchants, Christiensen nails it when she says:

"The audience out there obviously wants a prophet, even a manufactured one, even if he's mad as Moses."

Cue Laura Ingram and Ann Coulter.

THE AMERICAN PUBLIC: SULLEN, LIMP, AND ANGRY

Dunaway gives the following speech that could easily come from a FOX news programming meeting (or CNN, or CNBC, or MSNBC for that matter):

"The American people are turning sullen. They've been clobbered on all sides by Vietnam, Watergate, inflation, the depression… they've turned off, shot up, and fucked themselves limp and nothing helps.

"So this concept analysis concludes that the American people want someone to articulate their rage for them.

"I've been telling you that I want ANGRY shows! I want counter-culture! I want anti-establishment!"

Replace "Vietnam" with Iraq (now Afganistan). Replace "Watergate" with illegal domestic surveillance and Justice Department scandals and a host of other ills. Replace "inflation" and "depression" with foreclosures, bank bailouts, unemployment… you get the idea.

These shows are playing to an audience. A rabid and hungry one. Even among independents.

MEDDLING WITH THE PRIMAL FORCES OF NATURE

In the end, Beale turns his anger on the very network that made him a star, and the CEO of the network holding company turns on Beale:

"You have meddled with the primal forces of nature Mr. Beale… and I-WILL-NOT-HAVE-IT!!!"

Beale is charged with telling his audience the truth about corporate control of their lives — that they can't escape it. Not a happy message. And one that kills his ratings.

In response, Christiensen uses the cast of her terrorist reality show (The Mao Tse-tung Hour) to assassinate Beale in their season opener.

So in the end, what have we?

- A network that cares not a whit for anything other than its own corporate agenda

- An irascible public on a hair-trigger

- Young, conniving, bloodless whores who will put anything on the air as long as it will make a buck

- A powerless old-guard with no spine and even less influence

- A growing appetite for violence as a way of expressing political and economic discontent

And the Obama White House has waded into this firestorm carrying a #2 pencil and a legal pad, attempting to school the nation in "respectable broadcasting." Yeah… OK… Obama is right about FOX ~~News~~ Noise. (Good summary here.) So what?????

FOX has successfully co-opted people's anger in part because the Administration handed it over to them. The Administration pandered to big money in Finance and Healthcare and Big Business and many people — who once saw Obama as an ally — now see him as the enemy. Those who saw him as simply the enemy now see him as the anti-Christ.

"Americans are fed up," says Real Clear Politics. Independents are bolting the Obama big-tent faster than you can say Wall Street Bonus. "What does all this portend? Very possibly a Ross Perot moment — the emergence of someone with serious charts and serious language that angry Americans will see as more authentic than 'hope and change.'"

IS OBAMA HOWARD BEALE?

In a credible alternate reading of the Howard Beale story, Glenn Beck isn't Beale. O'Reilly isn't Beale. Limbaugh isn't Beale.

BARACK OBAMA IS HOWARD BEALE. (Of course, minus the ranting and frothing and mental instability.)

Obama ran for president crisscrossing the USA yelling "BULLSHIT!" He did it an an ever-so-gentlemanly way, of course. But that was essentially his message. Enough of the bullshit. Enough of the scamming. Enough of the taking advantage of the little guy. You're mad as hell and if you elect me you won't have to take it any more. "Yes we can!" was as much a metaphorical pitchfork and battle cry as anything else.

But Obama was meddling with the primal forces of nature. And America's corporate overlords quickly put the kibosh on it. Now Obama seems to preach an immutable corporate cosmology. Like he's placating the forces of corporate control… ceding to them control of government and the national commonweal. The audience hates it. And like Beale, the president's ratings are dropping.

If he continues down this path, his show will get resoundingly canceled in 2012.

I pray not. (And I especially pray not violently.) I campaigned and voted for the guy and want him to succeed. But entertainment is an unforgiving business. While America loved the pilot, it is showing little patience for the well-worn lines that the White House is trying to pass off as something genuinely new. And it's not just the FOX tea-party anti-government types who are seething. Even dyed-in-the-wool capitalists (e.g., Dylan Ratigan) are coughing up hairballs every night on cable "news."

Obama used to understand and channel the public's anger quite well. He re-directed it from cynicism into hope. "Yes we can." It's OK to be angry; but you don't have to resort to complete cynicism because you CAN do something about it.

But for some unknown reason, the president has given up trying to channel people's anger. Where is the champion? Where is the righteous outrage? Where is the "take it to them" spirit?

People are in pain, and feel like they really are just cogs in a corporate wheel. Contrary to the "Yes we can" mantra, it's looking more like, in fact, we probably can't. And that is even more cause for cynicism.

Criticizing FOX for giving voice to the very anger he used to champion, but now seems to ignore, only makes Obama seem more out of touch, and more of a sell-out.

Turns out the whole "green shoots" mentality and turn-toward-the-positive message program of the White House may have been a mistake. He should have stayed on the anger train for a while longer.

But he got off too soon and gave away that platform. That's the real danger here. And the White House seems deaf to it.

Brain-Dead PWC… Maybe I'm Not Cynical Enough

letterhead — Sun, 18 Oct 2009 23:13:12 +0000

After my last post on the total impotence of PR, I felt a twinge of guilt. “Am I just too cynical? Too bitter? Surely there are flacks with integrity out there. Surely someone somewhere in the dark corners of the profession cares about it. Somewhere, surely, some company takes it seriously.”

Then I did some reading up on the recent PriceWaterhousCoopers (PWC) debacle — i.e., the AHIP study. What a mess… and so instructive as to the points made in my last several posts, which spanked the PR profession for being so constantly impotent and wrong.

For those living under a rock, the issue is that PWC authored a report for the health insurance industry lobby (AHIP) — released on the eve of an important vote in the Senate — that claimed insurance costs would rise under the proposed legislation. (WaPo story here)

Since the report was released, it has backfired on AHIP and PWC. The report has become a rallying point for the bill’s proponents who decry the report as a biased hatchet job. (It was… CNBC story by way of Motley Fool here.)

And PWC is now backing away from the report, saying that — AT THE REQUEST OF AHIP — PWC only analyzed a small slice of the bill’s measures to come up with its conclusions. Politico has a good brief on PWC’s backtracking, but the ever humorous Donkelphant says it better than LiteralMayhem even could:

Allow me to translate, “AHIP asked us [PWC] to conduct an intellectually dishonest study and we did it because they paid handsomely. But we didn’t realize they were going to act as if this was iron clad evidence that premiums would skyrocket. That’s why we’re stepping in and calling BS on them so they don’t destroy our credibility.”

A SEEMING NO-BRAINER… EXCEPT FOR THE BRAIN DEAD

Imagine, as a PR pro, a business team lead at your firm comes to you — in the middle of the most bitter, vituperative, mud-slinging fight over government policy since Medicare — and says that he wants you write a press release touting the firm’s work on a report (sponsored by health insurers) that could scuttle the entire legislative process. You say:

a) “Why sure. Let me just get my handy guide to superlatives so I know how to make it sound really super-important.”

b) “No problem. I don’t care about having a job, or a career.”

c) “Alrighty then. Is this report accurate? Has this been vetted by legal, regulatory affairs, and compliance?”

d) “You’re a moron get the fuck out of my office.”

WHAT COULD THEY POSSIBLY HAVE BEEN THINKING?

The PWC affair illustrates a crucial point about the limitations of PR as it is currently practiced: business people don’t care about it and don’t even think about it until it’s too late.

One has to wonder what the fuck the “executives” at PWC were thinking. What could the head of PWC’s healthcare practice have been thinking… to take on an assignment like this in the first place?

The assignment… to assess the cost impact of an isolated number of provisions in an enormous and complex piece of legislation… is by definition biased.

Presumably a person with decades of experience in healthcare should have a teensy weensy inkling that such a report would be not just be explosive in its implications, but create a political firestorm with PWC right in the center. And where were PWC’s armies of legal experts, regulatory experts, communications people (internal and external), marketing gurus?

Anyone with three functioning neurons could see that AHIP was looking for third-party corroboration of it’s own selective calculations. Yet, not one of PWC’s in-house geniuses had the foresight to see this freight train coming from miles away?

Were the PR people at PWC involved in any of the deliberations about the release of this material? Did they see the report before AHIP released it? Were they involved in the decision to take on this assignment in the first place?

Here’s a thought… by way of analogy… before putting your foot on a landmine, call in a landmine expert to tell you if it’s armed.

The brain trust at PWC makes their living instructing people on how to run their businesses. They presumably OUGHT TO KNOW HOW TO RUN ONE THEMSELVES! What they have clearly showed here is monumental incompetence.

At the very least they have demonstrated a tin ear to the issues of reputational risk, and how to “integrate risk mitigation seamlessly into the business process”… to put in consultant-speak that even PWC can understand.

PR IS THE FOOTMAIDEN TO PROFIT

We see it time and time again. We’ve written about it time and time again. Honestly it gets exhausting.

Businesses are about business. They don’t give a flying fig about anything except business until the consequences hit them in the wallet. One would think with the demise of Arthur Anderson still visible in the rear view mirror, PWC would have been a bit more cautious. But no, sadly and predictably, they weren’t. The client got what the client wanted.

PWC signed on to disastrous piece of business, let it wend it’s way through weeks (if not months) of research and writing, editing and approvals, and not one person in authority had the sense to kill it before it saw the light of day.

And what of PWC’s handling of the mess? If you do a search for “AHIP” on the PWC website you get… nothing! If you search “America’s Health Insurance Plans” you get nothing more recent than July 2008. If you go to the “Press Room” there is no mention of the study or the statement that was issued on Oct 13. So much for transparency and values in PR.

Thank goodness for the bloggers in pajamas who keep track of such things. You can see the PWC statement at Firedog lake here.

All of this makes PWC’s corporate responsibility statements (here and here) sound like baloney, especially the statement onPWC’s global site:

Today, many people believe that business has a positive responsibility to operate in ways that benefit society and foster its well-being on a sustained—and sustainable—basis.

DEJAVU ALL OVER….

PWC, like so many companies before them, will likely have to spend millions more on repairing their reputation than they earned on one stupid project in the first place.

It will cost them gobs of time, money, energy and indigestion to overcome a perception that every piece of PWC business advice now comes with an automatic disclaimer: “We’re greedy idiots.”

So much for the value of PR as a corporate conscience…

Flashback: P.R. Pros on the Financial Meltdown… Impotent and Wrong

letterhead — Wed, 14 Oct 2009 04:50:05 +0000

Flashback!

We are now just a week or so past the one-year anniversary of the financial bailout. And as I was sorting through some old files over the weekend, I came across an issue of O’Dwyer’s from October 1, 2008… the week of the TARP vote, which was held on Oct 3, 2008.

In that issue, there was an article titled Wall Street Meltdown Rattles PR. In it, several p.r. heavy-weights discussed the affect of the crisis on clients. They also offered thoughts on how the financial services industry would react.

The titan who was most wrong in his prognostications was Manning Selvage & Lee CEO Mark Hass, who said that, “The economic crisis… will accelerate the trend we’ve been seeing among companies to be more authentic, and that’s a good thing.”

Hmmm… ‘authentic’ you say? Looking back on the past year, can anyone say that they have seen a single industry be more consistently and disastrously tone-deaf to public outrage than financial services in 2009?

From outrageous sales junkets, to executive pay, to bonus madness, to lack of financial transparency, to their opposition to consumer protections, to exorbitant fee hikes, to their cavalier return to business as usual in the derivatives market, to spending taxpayer money lobbying Congress to thwart regulatory reform, to a dozen other thumb-in-the-eye fiascos… the industry has been Exhibit A in bad corporate behavior.

OK YOU GOT ME ON THE VALUES THING

Where Hass was actually right, though unintentionally, was in his comment that, “The financial crisis will lead many companies to re-examine their own core values and further align those values with their business practices.”

In fact, they did. They brought their values down into the gutter where their business practices have long resided.

I leave it to the esteemed reader to evaluate Hass’s claim that in times of crisis, “… great brands and companies fall back on the values that defined them and made them great.”

Perhaps these are the values that made them great…

NAIVETE? OR AN INTENTIONAL FOG OF OPTIMISM

Michael Robinson, of Levick Strategic Communications, claimed that clients effort to “fine tune their messaging” will come “once the initial political uproar over the Bush Administration’s to bail out Wall Street subsides.” He attributed the uproar to the “blame game due to the political campaign season.”

He was assuming, of course, that the uproar would subside… assuming that the industry itself would not keep sticking its big swingin’ you-know-what into the hornet’s nest of public outrage.

Dave Senay, of Fleishman Hillard, was equally upbeat. And about as counter-intuitively correct as Hass:

“Smart companies know this is a transitory period and are using it to develop or extend a competitive advantage. [FH] is spending a lot of time helping clients seize the opportunity for greater separation. This is an era that rewards initiative. Rewards fall to the bold.”

Transitory? Here we are a year later and from an image stand point things have never been worse, except maybe in 1932.

And to the “bold?” Given the industry’s antics over the past year, “ballsy” would be a more appropriate word.

THE IMPORTANCE OF P.R. TO MOST CORPORATE EXECUTIVES

We hear a lot of noise in the p.r. profession these days about “authenticity” and “transparency” and “ethics” and “values” and a whole lot of other uplifting whimsy. We hear how these things are the driving force of the profession and that p.r. pros are the anointed speakers of truth to power within the corporation.

Back around October 2008… as the financial services business was imploding, and taking the entire world economy down with it… PRSA chair-elect Cherenson was quoted in O’Dwyers saying that the p.r. pro is “the antenna, conscience, and voice of an organization.” He said that p.r. pros are “keepers of the corporate DNA” and that we have to “fight to own a part of the corporation” because we are “trust-builders whose role is to forge collaborations.”

Yeah… that’s oh so clearly the role that p.r. pros have been playing at banks, brokerages, and investment houses for much of the past year. All their assumed entreaties to authenticity, transparency and ethics have had exactly ZERO impact. (If this were a “green” competition, such a zero-impact lifestyle would win them top honors.)

And if Cherenson is, in fact, counter-intuitively correct, and p.r. pros are the keepers of the corporate DNA, then the profession’s failure to influence corporate behavior one iota speaks volumes about p.r. pros’ impotence. Stubborn, tone-deaf, rapacious self-preservation has won out, as it so often does; it’s the defining strand of corporate DNA and in most instances p.r. pros are powerless to change it.

Most of the time all our happy talk doesn’t amount to a hill of beans.

It may initially make for tasty sound bites, but when mixed with corporate bile, it’s decidedly less flavorful on the repeat.

Taxpayers Choking on Detroit's Free Market Malarkey

letterhead — Tue, 18 Nov 2008 01:19:18 +0000

So Detroit wants a bailout. Wonderful. The question is, why?

Yeah, they’re waving the red flag of economic catastrophe to blackmail taxpayers and steamroll Congress. But let’s take a quick trip down memory lane and review the industry’s recalcitrance over the past few decades before we bite off a big chunk of what they’re now selling.

Detroit is on a PR tear, using the latest tools like web-based video, and old-fashioned media outreach. It was amusing to see a recent NY Times piece on the Chevy Volt, and how GM is trying to pump up the car’s mileage to 100 mpg. Presumably we should assume that Detroit has turned over a new leaf spring and is committed to a new way of doing business.

Um. Not so fast. Here is what the Volt article made me think of: the “Supercar.”

All Hail The Supercar

Back in 1993 Al Gore pushed Detroit into participating in a Federally sponsored program to build an 80 mpg passenger car and get it to market within 10 years (which would have been 5 years ago if the car companies had not killed the program.)

Gore offered to back off higher CAFE standards in exchange for a Supercar commitment. The Feds ended up spending more than $1.5 billion on the program. But in the end the car companies dragged their feet and Bush 43 killed the program in 2001.

The Chicago Tribune has an EXCELLENT three-part series on the life and death of the program… here.

It’s an eerie foreshadowing of today’s situation… optimistic liberal minded president takes office… amid energy chaos and sliding domestic auto sales… car companies resist and then capitulate to an aggressive technology program…politicians fail to keep Detroit’s feet to the fire… Detroit moans about how hard it is and then sticks in the shiv.

It’s even interesting, and a bit infuriating, to note that one of the main areas of technological development for the Supercar program was regenerative braking. It’s the exact same technology that Toyota uses in its category-winning Prius… technology Toyota is now licensing to Ford, among others.

1989 — Taking Credit While Killing CAFE

Following 10 years of success in raising mileage standards, Detroit was quick to claim credit for itself, denying that CAFE had anything to do with it, and at the same time pushing back on any further demands on their technological and managerial prowess… (NY Times):

Those car makers that oppose mandated mileage requirements contend that it was largely market forces in the form of high gasoline prices that led to their production of more efficient vehicles. But Clarence M. Ditlow 3d, executive director of the Center for Auto Safety, a Washington-based consumer advocacy group, insisted that the Government standards were ”a spectacular success” and were responsible for two-thirds of the improvement.

General Motors and Ford contend that satisfying a demand for bigger cars will make it very difficult to meet higher efficiency standards. William Nowack, a spokesman for General Motors, said that the efficiency standards ”restrict the production of full-size cars and that makes a buyer hang on to an older, less efficient car or maybe buy a truck or van.”

This is the “free market” position that Detroit will use for nearly two decades to fight any steps to force them to produce more efficient cars and trucks.

1996 — Killing Zero-Emission Vehicles (ZEVs)

California and other states (NY and MA) once had in place requirements for a certain percentage of cars to be zero-emission vehicles. What happened? California backed off its plans in 1996 (NYT). Oil and car companies killed it. They said that car companies needed more time to develop technologies. (Like, um, the exact same ones they were in the process of undermining in the Supercar program.)

And they claimed that consumers would not want the limited range vehicles. For an alternate take, watch “Who Killed the Electric Car.” Actual living breathing people who drove them loved them. (As opposed to the brain-dead auto CEO’s who bad-mouthed them.)

Industry claimed that the product just would not be competitive in its current state. By the way… this is the same year that Toyota begins road testing the Prius.

1997 — Killing CAFE… Again

In 1997 the Clinton Administration tried to force a foot-dragging Detroit to boost mileage on trucks. Domestic automakers were increasingly reliant on trucks for sales and profits, but selling more trucks lowered the companies’ overall mileage figures. In response Detroit howled…(from NYT):

The auto makers argue that Americans like their trucks sturdy and powerful, and that it would be too expensive to make engines for such vehicles burn less fuel. Further, the Big Three auto makers say, any stiffening in the regulations would hand a chunk of the light-truck market, which they dominate, to Japanese companies, which make more efficient truck engines.

Instead, the auto companies’ own research shows, it has become a nation of overprepared commuters, as millions of Americans use the rugged vehicles only to drive to work and haul youngsters and groceries.

“It’s utterly outrageous,” said Daniel F. Becker, director of the global warming and energy program at the Sierra Club. Because of the lower standard for trucks, he said, “we have more pollution, more oil consumption and a higher trade deficit in oil.”

The Big Three say that strengthening the truck mileage standard would benefit the Japanese auto makers, just as they contend that strengthening the car standard did in the late 1970’s. Then, the Japanese sold a higher proportion of fuel-efficient small cars, just as they now sell a higher proportion of fuel-efficient compact trucks.

In the end the industry killed higher CAFE standards with the argument that it would hurt competitiveness and kill jobs.

2002 — Killing CAFE… Again and Again
Detroit mounted a huge advertising campaign to defeat a Senate proposal to increase CAFE standards. As usual, Detroit won. But what was interesting was the position adopted by Honda, which refused to take part in the campaign. Honda told Senators that mileage standards should indeed be higher.

Detroit, as usual, howled about the Fed’s job killing, anti-competitive regulation. But the truth is not quite so neat … (SF Chronicle):

General Motors, Ford and Chrysler say they can remain profitable only by selling sport utilities and pickups because they lose money on their cars. By contrast, Honda is making money in the United States and elsewhere by selling mostly passenger cars.

Indeed, the company’s profit was four times that of GM, the most successful among the Big Three, even though its revenue last year was less than a third of GM’s.

The average new vehicle sold by Honda in model year 2000 got nearly 30 miles per gallon, about 6 miles more than the average American automobile and more than any other automaker.

2004 — Killing John Kerry

One of John Kerry’s campaign promises was a $10 billion program of incentives for Detroit to improve fuel efficiency of cars. In gratitude, the auto industry fought tooth and nail to keep him out of the White House. Why? Because the money came with strings attached: higher mileage requirements.

Only this time, Detroit had two friends in the White House. Once again Detroit trotted out the job-killing anti-competitive ruse, enlisting the help of the Bush Adminstration to come up with lots of scary numbers about how much Kerry’s plan would cost in jobs and lost productivity. (NY Times).

2007 — Still Whining, and Still Trying to Kill CAFE

I know… this is getting boring. But just last year Detroit was up to it all over again… (Ward’s Auto):

… fuel-efficiency improvement contained in the EPA report shows the gains are “incremental” and “hard-fought.” The clear suggestion, the GM spokesman adds, is that the Senate’s CAFE proposal is unreasonable.

“The standards proposed in the Senate far exceed what auto makers can attain in their timetable,” he says.

Meanwhile, The Whole Entire Time…

The entire time that Detroit has been fuming, fussing, and fighting any and all attempts from outsiders to push them toward new markets and new technologies, their market share has been in free fall. And now they are broke, can’t sell so much as a damn spark plug, and are about to take the whole economy down with them. Just look at these numbers from The Wall Street Journal.

The top three lines (from top down) are GM, Ford and Chrylser:

For years they have ignored the writing on the wall, designed uncompetitive products, weighted their product lines toward a vulnerable segment, and crushed anyone who dared challenge their wisdom. Now… tell me again who are the job-killing, anti-competitive zealots?

Over a Cliff, Without a Barrel

Every step of the way… for decades… Detroit failed to see market trends, failed to pay attention to their falling market share, made bogus claims about customer preferences, floated bogus free-market arguments to defend their misguided strategies, failed to see new product niches, failed to see new competition (e.g., Kia, Hyundai), stymied every attempt to increase efficiency, stomped all over those who would help them…

And now the rabid free-market loving Detroit CEO’s don’t think that government intervention is such a bad thing. But should we?

The blog The Truth About Cars put it this way:

“Detroit wants a re-do after chasing SUV profits off a cliff… clearly we haven’t lost our ability to create or manufacture things. After all, auto factories in America build competitive products for profitable companies every day. They just happen to have names like Toyota, Honda and BMW.

“The American ‘automotive sector’ has not failed. Nor have Americans forgotten how to make stuff. The Big 2.8’s plight is the simple, inevitable result of tragic mismanagement. Using tax money to enable them, promoting this policy, is not patriotic. It’s a complete betrayal of the principles of hard work and fair competition, and the necessary balance of risk and reward, that made this country great.”

Another choice quote:

“As anyone who’s ever worked for a company with its head up its ass will tell you, giving copious amounts of fresh capital to execs in charge of a dysfunctional corporate culture to ‘fix’ their business is like trying to extinguish a log fire with gasoline.”

From ABC News:

“Ford and GM really haven’t done a very good job of understanding what consumers want,” said Global Insight auto analyst Rebecca Lindland

And from the Cleveland Plain Dealer:

“They handed that market over to the competition. The Big Three really put no resources in the passenger car side of the market,” Merkle said.
Erich Merkle, an analyst with IRN in Grand Rapids, Mich.

Detroit Needs To Fail

The irony should not be lost on us that the free-market GOP is hanging their one-time ally out to dry. It appears that the labor friendly Dems — long the nemesis of Detroit’s freewheeling free-market-obsessed CEO’s — are offering the only friendly ear in Washington right now. Also no surprise that the unions are making no consessions. (Though they are far from innocents in this debacle.)

So we are faced with two questions:

#1) What happens if we don’t bail them out? They file chapter 11. They lay off hundreds of thousands. Retirees get dumped on the PBGC and other federal agencies. The companies stay in business, in smaller, leaner form. They limp along, probably with help from the taxpayer, until they have a competitive product to sell. And then the resurgence can begin. Likely cost is in the billions… but one day we just might see the return of American power in the auto industry.

#2) What happens if we give these chumps $25 billion? They limp along until next year when they comeback for $25 billion more. Then they file Chapter 11 in 2010 or 2011, and then we are back to option #1, above, $50 or $100 billion the poorer. And in the meantime we are treated to wonderful new products from the executive geniuses who brought all this down on our collective heads.

If past is prologue, then our taxpayer investment will bring all-new American vehicles that the world market will gobble up… more of the auto industry equivalent of spam we’ve been seeing for the last 20 years… behold America’s newest SUV:

The Spam Utility Vehicle!

How is this all relevant to PR pros?… More on that to come…

Financial Crisis for Dummies: Lies, Bailouts, and Hank “Fudgie the Whale” Paulson

letterhead — Sun, 21 Sep 2008 21:47:54 +0000

The financial crisis that’s convulsing Wall Street and Washington can be offered up as Exhibit A in what we mean when we say “Literal Mayhem.”

The situation is quite literally mayhem: economically and politically.

But there’s a bigger fish to fry here: what we might call mayhem of the literal.

This crisis is, in many respects, the culmination of years and years of “perception management” and manipulation of language (by powerful, monied, self-interested parties) around key public policy issues such as “regulation,” “free markets,” “ownership society,” and “private investment.”

Our common language around these issues — and taken-for-granted understanding of their meanings — shapes how we perceive (or don’t perceive) the current calamity (and it is a calamity), as well as our instinctive responses to the language of the proposed “solutions.”

That’s the “literal” part of Literal Mayhem. It’s this manipulation of language — and consequently perception — that leads to large-scale misunderstandings of purpose, apalling lack of foresight, and piss-poor decision making… all on the part of those who are most responsible for looking out for our interests… namely ourselves.

And the current bailout plan is nothing more than a continuation of the talking-point kabuki dance that has been going on for decades.

Exhibit B: Hank “Fudgie the Whale” Paulson

Knowing how fungible meaning is in this world, my motto is: pay attention to what people do, not what they say. And in this regard, understanding the Treasury’s current bailout proposal, as well as everything Paulson and his spokespeople say about it, you have to understand who Treasury Secretary Hank Paulson is from a psychologiocal perspective.

As former CEO of Goldman Sachs, he is… a whale.

According to the DoubleTongued Dictionary: a serious, heavily funded bettor; a high roller.

According to the Urban Dictionary: a person who spends extremely large sums gambling (from hundreds of thousands to millions of dollars). Hotel and casino management will go to great lengths in the perks and luxuries they will offer whales to entice them.

And as such Hank is… he himself, the man, personally… is among the worst offenders in this sub-prime debacle.

According to a Bloomberg news article from last November:

Goldman, the most profitable investment bank, was one of 14 primary dealers of U.S. Treasuries who contributed to a three- year binge as $1 trillion of subprime mortgages were packaged and sold to investors.

Goldman ranks 10th among 118 issuers, based on the amount of subprime loans still on the market. Bonds with a face value of $484.6 billion remain from those created in the years Paulson ran Goldman.

Goldman under Paulson created 58 mortgage pools branded under the acronym of GSAMP, which originally stood for Goldman Sachs Alternative Mortgage Products, starting in July 2002. The value of the loans at risk of default is almost 50 percent for one Goldman pool, according to Bloomberg data, which includes pools identified as containing home equity financings as well as subprime mortgages.

The average delinquency rate for subprime bonds sold from May 1999 through June 2006 is 19.3 percent as of yesterday, according to data compiled by Bloomberg. Among the top 20 issuers that have more than $5 billion outstanding, Goldman’s GSAMP ranks ninth with 21.7 percent for delinquencies of 60 days or more, foreclosures or real estate that has been taken away from borrowers.

Sec. Paulson sees this “market” challenge from a whale’s perspective, and no other: they made the market, and so to Hank, he and his cronies ARE the market.

Thus, providing “liquidity” and “relief” to the “market” means propping up their shaky investments with tax payer money until they can be unloaded. Then the whales can get back about the business of sensible lending and investing, with no scars, and none the worse for wear… because their health is a mandatory pre-requisite for America’s economic health.

I call him “FUDGIE the WHALE” because his entire plan is a “fudge”…

It avoids the real issue…

Reward the wrong behavior (leverage and mis-pricing of risk)…

Compensates the wrong people (speculators)…

and basically makes him U.S. Debt Czar, with a $700 billion dollar checkbook… and no oversight of Sir. Hank… one of the top-ten culprits in this whole mess.

I also call him “FUDGIE the WHALE” because he is full of fudge.

The Most Dangerous Lies of All

First, the best place I have found on the web for informed, rational, hype-free, breaking analysis of these issues is a site called NakedCapitalism, especially the post called Why You Should Hate the Bailout. (And the comments are well worth reading, too.)

I am not going to get into the details of the bailout proposal, only examine its fraudulent narrative underpinnings, the goal of which seems to be keeping the public anesthetized, so that “experienced leaders” in both political parties can ram through a “solution” before taxpayers know what hit us.

These are the three big lies… the three conceptual lies at the heart of current debate, and they are all summarized in a nice little quote from Czar Hank in his interview on ABC:

“Once we stabilize the market, we need to ask ourselves how did we get here and how do we avoid getting here again.” (Watch the clip only if you can stand watching Hank bloviate without serious challenge from Boy George.)

Lie #1: We Don’t Know Why It Happened and How to Avoid It.

We know exactly why it happened:

Since the early 1990s, the Feds (the President, Congress, and various regulatory agencies) steadily abdicated responsibility for imposing sane credit/risk standards on the market — for both lending and investing.

(In this regard, some of nakedcapitalism’s quotes from insiders about the casino-like atmosphere in the financial services industry are quite illuminating.)

And avoiding a repeat requires putting toothsome regulations back in place and then enforcing them.

Lie #2: We Don’t Know How It Happened.

We know exactly how it happened. In broad scope:

1) Investment bankers figured out how to game the system: selling below-investment-grade assets with investment-grade ratings through the magic of securitization — thus creating an enormous new market for something that once only had limited appeal due to its high risk.

2) Mortgage lenders and originators rushed to meet the huge new demand from investment banks for below-investment-grade paper… making hundreds of billions of $ in bad loans to people who had no more collateral than pocket lint and a pencil eraser.

3) The new rush of cheap money led to rapid house-price inflation — rising more than 3-times the rate of overall inflation in some markets (even higher in others) — and homebuyers got greedy. They bought more than they could afford… speculating either on flipping, or on ever increasing equity of their primary residence. They bought mortgages that left them vulnerable to interest rate increases. And as prices inflated, lenders and originators could write ever more and larger loans to keep the system (bubble) growing.

4) The Fed colluded by keeping interest rates at historic lows year after year.

5) All kinds of financial companies, including the shadow banking system, took the cash flow from these shaky loans and manufactured “securities” that were then sold to other institutions and hedge funds, which often bought them with borrowed money. Many of these buyers turned around and packaged their cashflows into new “derivative” securities and sold them to investors who bought those with borrowed money. And so on, and so on… with the ultimate buyer owning a cash-flow stream that had a frighteningly low level of real assets underlying it, and was leveraged to the hilt.

6) The ratings agencies colluded by rating the “security” of the senior cash flow holders as AAA, even though the ratings were based on poorly understood default scenarios, little in the way of real assets, and layer upon layer of leverage, which amounted to double- and even triple-digits. (The speed and scope of subsequent ratings declines showed how little the ratings agencies truly understood the “risk” they were rating.)

7) These crappy “securities” were sold back into regulated financial institutions as AAA-rated debt, and institutions far and wide gobbled them up because they thought they were getting a free lunch: i.e., higher returns, without taking on commensurate risk.

There was greed, froth, and reckless disregard for risk at every step of the game, by every player, with the government fanning the flames with persistent low interest rates and lack of oversight.

Lie #3: We Don’t Know What Needs to Be Done

The idea that we need to keep the bubble bouncing for financial institutions with a $700 billion bailout because we need time to figure out what to do… is complete BS. We know exactly what needs to be done. We just don’t have the stomach for it.

And we do ourselves a disservice by using spin to hide behind the tactical complexity, obscuring what is, in reality, a very simple conceptual problem.

The problem was best summarized (if somewhat erroneously) by Princeton economist Alan Blinder, who told the New York Times:

“It’s easy to forget amid all the fancy stuff — credit derivatives, swaps — that the root cause of all this is declining house prices. If you can reverse that, then people start coming out of their foxholes and start putting their money in places they have been too afraid to put it.”

Here is the core conceptual problem: you can’t “reverse” the problem of declining house prices.

This is a non-starter being peddled by the home-building lobby, the lending lobby, the securities lobby, and an army of other culprits. They are trying to sow and then exploit false hopes among the public that their houses are still worth what they think they are worth… when all these liars know that is not the case.

House prices reached all time highs based on increases that are ridiculous on their face. As one commenter on nakedcapitalism pointed out, at its peak, the implied rate of inflation for housing was for a compounded annual growth rate of 10% or more, which would mean that a home worth $1.5 million today would be worth $26 million by 2038.

To get back to historically rational price levels, house prices would have to fall another 15% to 20% on average. And so, the truth is, at the highest level of the problem we only have two choices:

1) The reality-based choice: bite the bullet and accept that much of the debt-fueled American economy is built on inflated housing prices; mark these underlying “assets” (houses) down to their “fair market value”; then sort out the impact.

There will be shock and pain in the financial system as layers and layers of debt unwind. A lot of firms and funds will go belly up when their “margins get called”… so to speak. And homeowners will have to take their medicine too.

But the dust would settle in short order, and we’d get a much clearer picture of where the pain is most acute. Then the Feds can structure a real bailout for legitimate victims, instead of speculators. This would ensure that taxpayer money (yours) recapitalizes the financial system in a rational way — i.e., allowing the healthiest, most sensible institutions to continue living. The benefit of this approach is that:

it’s HONEST… faces up to reality and fixes the core problem

it’s ADULT… makes each of us bear our respective and appropriate burden

it will cause sharper short-term pain but enable a faster and better targeted recovery

Then there is the other option…

2) The Mr. Hanky solution: continue the charade that housing prices will “recover”; buy a boat-load of assets that Paulson continues to assert will eventually be sold at a minimal loss; push this spiraling debt onto multiple generations; insulate his buddies from their bad behavior; and destroy the value of the dollar.

Once the dust settles on this one, we will find this “solution” to be inflated rhetoric, not reality. The whole reason that these assets are “illiquid” is because no one knows how much they are worth!! The market has been unable to accurately value them. That’s why they can’t be sold.

On the other hand, there is no shortage of liquidity for the circling vultures who are willing to buy them for pennies on the dollar. Asset holders just don’t want to sell that low. They think they ought to get more, but no one in the market is willing to pay more.

So along comes their buddy Hank (with our money), who agrees to pay them whatever they want. He says that he will eventually sell these assets, but he cannot honestly tell you for how much. Any claims in that regard are PURE SPIN aimed at reducing opposition to his plan.

But most important, this approach does not fix the underlying problem: asset prices are still inflated, and leverage remains in place. Those structural issues will sink the plan eventually… if not now, then a few years from now with the same, or even worse consequences.

This disadvantages to this option:

it’s INTELLECTUALLY DISHONEST

it’s IRRESPONSIBLE and PASSES THE BUCK

it virtually guarantees to drag out this disaster for years (potentially 10 years or more), solving nothing and causing even greater pain down the road

Now We Have Seen It All…

What we have been witnessing over the past week or so amounts to a lot of talking doo-doo. A great many terms are bandied about, like “illiquid assets,” and “market correction,” and “free market solution,” etc. But the simple reality is that the US financial system is built on a big pile of worthless debt that likely will never get repaid.

Like most financial catastrophes, it started with a financial genius who had a brilliant idea, and it went straight downhill from there.

The problem will not fix itself. We have to fix it, and the first most important step in that long, surely tortuous path is to admit the truth — about what caused it and what will be required of us (not our grandkids) to right the ship.

Continuing to blur the issue with mayhem of the literal sort — fraudulent frames of reference, false choices, and linguisitc half truths — will only exacerbate the current political and economic mayhem.

And short of total linguisitc and conceptual honesty, I can only make….

One Alternative Suggestion for “Market Discipline”:

BRING BACK THE GUILLOTINE!!