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…

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One of the more popular posts on this site is one I put up on ghost writing ethics. It’s still getting lots of regular hits even after several months.

But yesterday I saw a posting on Salon about a squirrelly little ghost writing project by the McCain campaign. And I was actually kind of stumped as to whether it’s unethical, or just one of those things that feels totally wrong, but isn’t technically unethical.

It goes like this:

an intern writes a “letter to the editor” in whatever assumed identity she wants

she makes up all the details, none of which are true… for her

the details would technically be “lies” if the letter was signed either by her or with a fictitious name

But here is the squirrelly bit:

the campaign shows these letters to actual real people, and if the letter sounds like something they would have written themselves, then they sign it and send it in

[the article does not say whether any incorrect details are corrected to reflect the truth of the new “author”]

but in fact, there is now a real person willing to put his or her name to a piece of fiction, to drag it back into the realm of “truth”

So, my dear friends in PR land… assuming that all the “facts” square with the “author’s” reality, is this ethical?

My gut reaction is that as long as the person is real and there are no lies in it, relative to the real life of the signed author, then it’s not unethical.

Squirrelly? Yes. Cheap? Yes.

But technically unethical? No.

And you would say… ???

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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!!

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The mailing is a hot topic… Editor & Publisher recently wrote an article called “Delivering Propaganda, As If It is Toothpaste.”

So I did some digging to see who might be ballsy enough to mail 28 million copies of this “film” only six weeks before a presidential election.

The folks at Popular Progressive and The Ballot had already unmasked the main player in this drama: Raphael Shore,  “a Canadian living in Israel,” who apparently wrote and co-produced the “film.”

Unfortunately, the online availability of IRS Form 990 for The Clarion Fund (the 501(c)3 responsible for the movie and distribution)  was limited. The only listing was for a legal contact. So… I looked him up.

Ladies and Gentlemen, Please Meet…

Eli D. Greengerg.

Mr. Greenberg is a partner at a large NY-based law firm called Wolf, Haldenstein, Adler, Freeman & Hertz. He is the partner in charge of the firm’s healthcare practice. Sounds pretty boring actually, and far from anything to do with radical Islam.

And the firm itself is pretty run-of-the-mill, with a predictable repertoire of corporate, securities, healthcare, and non-profit stuff. Not much interesting there.

But here is something interesting.

One would think that the guys behind this gnashing of teeth would be closely tied to the (GOP) candidate that the distribution initiative is designed to help. Especially since, as reported by Popular Progressive, the group is sending them out only in swing states, and the group’s website for a while was running this quote:

“McCain’s policies seek to confront radical Islamic extremism and terrorism and roll it back while [Barack] Obama’s, although intending to do the same, could in fact make the situation facing the West even worse.”

SURPRISE, SURPRISE!!

Imagine the surprise when I went to OpenSecrets.org and looked up Greenberg and his law firm “Wolf Haldenstein“… you can see the results for yourself here (just check the box “search all cycles” and then “submit”).

Turns out that the main legal contact for this broadside against Barack Obama is a partner in a law firm where the partners give almost exclusively to DEMOCRATIC candidates!

Yup. Mr Greenberg himself was a John Edwards man in 2004. A few of the other partners were squarely behind John Kerry.

Propaganda from the home team? This election gets curiouser and curiouser…

And just for giggles, here is the tax ID# for the non-profit Clarion Fund, which produced and distributed the movie…

EIN: 20-5845679

The Clarion Fund

c/o Eli Greenberg, Partner

Wol, Haldenstein, Adler, Freeman & Hertz

270 Madison Avenue, 9th Floor

New York, NY 10016

Someone more industrious than me can go to the corporate registrar’s office in NYC and look up the Board of Directors for this 501(c)3… Might be very interesting to see that list.

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And the kind of “lie” I am referring to is not about economic growth, or tax cuts paying for themselves, or nowhere bridges, or the war in Iraqnistan… it’s a big lie, the worst biggest lie, the lie that the person speaking actually believes what they are saying, and that we should believe them because they know what they are talking about.

In fact, they spin wildly from one p.o.v. to its direct opposite without missing a beat.  As if they never believed what they said in the first place, and can be trusted only to spout whatever meaningless bullshit happens to best support the position of the moment.

This kind of gyration creates a lasting, gut impression among the public that any talking head, on any issue, for any organization can’t be trusted to tell the truth… only to fudge the stats and game the refs.

Whom does it help to undermine the idea that objective reality even exists? No one, least of all our own profession, which REQUIRES objective references and authoritative sources to establish credibility.

By undermining shared reality, these people undermine the validity of PR itself.

Why do they even get airtime?

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What follows here (in red text) is an email written by a middle-age woman from New York City who would have voted for Hillary (”with reservations”), but is now supporting McCain/Palin… for the reasons (or lack thereof) outlined below.

The talking points have all been debunked — e.g., Obama only supports “one or two” energy solutions; in fact, he supports all options including drilling for natural gas, and even “clean coal”… against the environmental wing of his party.

The most interesting way to read this, though, is as a mash-up of campaign talking points. This is the way a campaign’s message platform is digested and regurgitated by the public.

The scary thing is that this is the tenor of the debate right now all across America — rabid, ill-informed, and mud slinging. And when the national dialogue sinks to that level, the GOP usually wins because they’re better at it.

ALL OF THIS TEXT IS PRESENTED JUST AS IT WAS WRITTEN…  yes, including the part where she claims that Obama is trying to get himself assassinated to be more like the “do-nothing” JFK who “got us involved in the Russian missile crisis”…

[All that stuff] is a bunch of bullshit clearly written by a one sided left leaning elitest media organization or a smear campaign emanating from the Democratic party.  Both parties are capable of this.  It is also blatantly sexist and insulting for me as a woman to read and receive.

While I do not buy into many of the causes of the Republican party, one thing I can say for sure is:

1.  McCain is infinitely stronger than Obama as a presidential candidate - because he has a record, does not flip flop and is not condescending

2.  Palin is a rock star in my mind and many other voters’ minds.  And yes, I would have voted for Hillary but with reservations.

3.  Alaska is not a sophisticated, cosmopolitan state, like most of the country.  Newsflash:  NY, SF and CHI do not make up the vast majority of our country.  The media is not based in small towns either.

4.  Palin has a terrific track record as a reformer and has made many enemies within her own party in order to do what was right for her constituency.

5.  Palin and her family have every right to CHOOSE to have Downs Syndrome babies and go through with Teen pregnancies.  It has nothing to with what this woman is capable of or how many kids she has elected to have or her personal choices in life.  Do you realize she gave birth and was back on the job as Governor in 3 days?  Sometimes timing is off for things.  She chose to move forward, just like many people would have abortions here in NYC.  I don’t think Roe V. Wade will be rescinded and to me we have many more important issues to discuss.

.6.  Energy policy and a free flow of OIL, Clean NATURAL GAS, CLEAN COAL, NUCLEAR POWER, WIND AND SOLAR are the only ways that our vast country can become energy independent in the near future - not just one or two of these items.

7. FACT:  Alaska has more OIL AND NATURAL GAS THAN SAUDI ARABIA.  We have established pipelines before and that’s what supplies the US along with foreign oil, nuclear power and electric from coal and waterfalls.

8.  Wolves and bears are dangerous when you live in the country - they invade homes when they are hungry and over populate.  Clearly Alaska has a different lifestyle than we have in NYC and has different issues.  Ask any suburbanite about their deer situation and they will tell you they hate them clearly.

9.  Joseph Biden’s sons are all being investigated for HEDGE FUND FRAUD.  THERE ARE SEVERAL LAWSUITS AGAINST THEM.

Joe Biden is part of the Washington Political machine - and he’s as filthy as they come - don’t kid yourself .  While Obama was on the way to becoming a media darling and a wonderful legacy for the Black community he was busy courting slumlords in Chicago in order to finance his bid for Illinios’ state legislature.and befriended Weather Underground members who killed people in the 1960’s and were on the run until they were pardoned and decided to teach at the University of Chicago.

10.  Obama’s tax and spend policy is an ABSOLUTE DISASTER.  It will fuel inflation, decrease business investment, raise the price of Oil, devalue the dollar even further and put us further into debt.  McCain’s economic policy is much more sound only if we are able to fuel growth.  If you ask me, we’re in a pickle with either of these candidates unless we can get America working again.  CHEAP ENERGY FUELS AND ENCOURAGES PRODUCTIVITY.  Read the Wall Street Journal about the economic policies of BOTH CANDIDATES.  Either way we are going to be feeling a lot of pain in the coming year and two.

11.  EUROPE DOESN’T PRODUCE MUCH.  THEY PAY nearly $10 A GALLON FOR GASOLINE AND ARE ON STRIKE ALL OF THE TIME - look at the striking record for the TGV and Europe’s rail system and the airlines and mail delivery in France.  That says it all.  The Euro is being manipulated by the German Central Bank.  France, Italy and Spain are on Germany’s back BEGGING the Chancellor to lower interest rates.  The average European cannot afford a very simple vacation or to go out to eat to a restaurant!!!  Spain is having a major housing deflation and so is Ireland and the UK.  You can read all of these articles in the NY Times

12.  Palin was poised, articulate and informed considering the firestorm of controvery prior to her speech and is UNIQUELY QUALIFIED TO BE VICE PRESIDENT in my opinion.

I would much rather have Palin running the country than Obama.  Chances are, he seems like he wants to be shot as he’s modeling his entire campaign based on another do nothing president, JFK who got us involved in the Bay of Pigs/Russian Missile Crisis.

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OK… this is not a political question. It’s a strategic communications question: Where the fuck is Hillary???

In a post on his blog for the New Republic (”The Flack”), Hillary’s former communications director Howard Wolfson sates that Hillary will not get into a “cat fight” with Palin. Huh?

He also states that Obama/Biden will make a mistake if they run against Palin instead of McCain. Double huh?

Haven’t the Dems learned anything since Gore and Kerry both tanked because they didn’t kick their opponent in the balls after getting whacked in the back of the head with a 2×4?

Just Imagine

Let’s say this was a corporate control contest, and your opponent was behind for months and months. But then they added a new candidate to their slate of directors who is vocal and energetic (a hypocrite and dissembler to be sure, but also smooth and appealing to a big chunk of shareholders).

Suddenly it looks like you might lose.

Do you ignore the catalyst who just changed the game? Or do you turn her into an anchor who will sink your opponent’s ship?

Wolfson is completely wrong when he states that people are looking for a cat fight.  What people want to see is Hillary fighting for what she believes in… which is pretty much everything Sarah Palin DOESN’T belive in.

Surprisingly, there are plenty of women voters who are quite content to replace Hillary with Palin, as if the two are interchangeable. The GOP has co-opted the “women in the White House” message and Hillary/Obama have let it go unchallenged. 

All it would take from Hillary is one good punch on the issues to knock that misnomer into next week.

It doesn’t have to be a “cat fight” between two women… in fact the appropriate mesage is that this is NOT about gender. Hillary would be the ideal surrogate to take gender OFF the table, opening up McCain/Palin to a full-scale assault on the issues, where polls show the Dems to be more in step with voters.

One Good Punch

Wolfson says:

“If anything, Democrats should be talking about McCain-Bush, not McCain-Palin.  Every day we are focused on Palin is a day we are not amplifying the Obama campaign’s message that Senator McCain simply represents four more years of President Bush.”

Here is where he’s wrong.

The McCain campaign has somehow been able to spin Sarah Palin as confirmation of McCain’s “maverick” status. They have used her to support the narrative that he will “shake things up.” And indeed she has “shaken things up.” So as the new “game changer” her presence on the ticket supports the notion that McCain can be an agent of change.

She has quickly become the proof in his pudding.

To ignore her would be a suicidal mistake. The Democrats need to neutralize that “game-changer” message ASAP… like yesterday. If they don’t attack that Palin spin — hard and fast — it will soon become an unassailable trope/meme whatever you want to call it.

Hillary should have made a major policy address the day after the GOP convention, nipping that little fantasy in the bud, rather then letting it gain momentum day after day, and now having the Dems squirming about what to do about it.

The Proper Linkage

The linkage has to be Bush-Cheney/McCain-Palin.

Dems have to play the “extremist” card, as well as the “politics of hate” card. They should also adopt the GOP’s signature posture of “patriotic umbrage” and turn it against McCain, for running a typical patrioticker-than-thou Bush-Cheney campaign.

Sarah Palin is, quite literally, the pink elephant in the room.

And the one person who could convincingly and QUICKLY rip all the stuffing out of the Palin-as-game-changer message would be Hillary. The fact that she hasn’t yet landed the fatal blow makes me wonder what she’s planning for 2012.

And Wolfson’s pedantic soft-shoe makes him look about as sensible and savvy as the photo above of the rabbit wearing a pancake on its head.

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The roasting of McCain and Palin continues. Just this afternoon former GOP strategists (now media commentators) Peggy Noonan and Mike Murphy were caught on an “open mic” disparaging the Palin pick.

Murphy calling it “gimmicky” and “cynical.”

Noonan calling it “political bullshit:”

“I think they went for this, excuse me, political bullshit about narratives. Every time the Republicans do that, because that’s not where they live and that’s not what they’re good at, they blow it.”

It didn’t take long for pundits, bloggers, and other riff-raff to call Peggy out on her blatant hypocrisy, having penned an op-ed in the Wall Street Journal this very day which states bluntly:

“…[Palin] is a real and present danger to the American left, and to the Obama candidacy.”

What we see here is the blatant dishonesty that has come to define our national public dialogue on a whole range of issues, because people like Noonan (and PR pros, and CEOS alike) get paid millions to essentially lie to the public.

The “narrative” is that she and others like her are “commentators.”

In reality, they’re just hacks who deliver whatever message the outlet is paying them to deliver. On MSNBC she gets paid to be a “conservative analyst.” On the WSJ editorial page she gets paid to be a good GOP soldier.

Only when she is off-mic do we get to hear what the REAL Peggy Noonan thinks.

One would be right to suspect that this is true of ALL commentators — e.g., Paul Begala comes off as just as disingenuous as Peggy Noonan.

PEGGY NOONAN AND THE TWO-HEADED BOWLING BALL BABY

The image is graphic, intentionally.

Ms. Noonan recently decried on MSNBC the Democrats’ penchant for sob stories, and she used as her example the hypothetical story of a “child born with two heads that they used as a bowling ball.” The TV hosts guffawed.

But when you encounter the reality it’s different. A little less amusing. A little more shocking. It quickly diverges from the humor, shows up the joke to be a little more than macabre.

In full relief we have the spin next to the reality.

Noonan’s partisan and well-crafted op-ed can be seen right next to her shockingly honest and unscripted remarks.

And the enormous gulf between them is as startling as the difference between the joke about a two-headed baby, versus a picture of a real baby with two heads.

THE POWER OF NARRATIVE: MORNING IN AMERICA

One thing that Peggy got wrong — woefully wrong — is that Republicans are no good at “narrative.”

In fact, since Ronald Reagan’s “Morning in America” win over Walter Mondale in 1984, the Republicans have been superb at narrative. It’s pretty much how they’ve won all their battles.

George Bush’s “Compassionate Conservatism” campaign turned out to be completely hollow but it helped win him the election. The “Saddam attacked us and is a danger to the US” narrative, while totally false, helped him start a war.

The “national security” narrative helped him win a second term. Just as the “unfit for command” narrative fatally wounded his opponent.

THE DANGER OF NARRATIVE: WHEN FACTS GET IN THE WAY

The issue with the Palin pick is that McCain crafted a specific narrative he thought could win:

national security is the top issue

gotta be ready on day one

gotta be ready to be the next commander in chief

experience matters

youth and inexperience are a detriment

the war is important

patriotism is good — people who hate America aren’t

straight talk and bucking the status quo are good

character counts

There are others, but this is a pretty good list. And the issue is that Palin comes up short in just about all of them. And that’s not attempt to score political points — it’s a gimlet-eyed assessment of how well the VP candidate reflects the stated narrative of the campaign.

She is young, inexperienced, with no foreign policy credentials, who knows little about the war, who spoke to a secessionist group in Alaska on several occasions, whose husband was a member of that group, who is under investigation for abuse of power, who was nearly recalled as a mayor, whose teen daughter is pregnant, who took money from the same group that is under investigation for bribing a US senator, yada yada yada…

Just like the chasm between Noonan’s op-ed and her unscripted comments, the difference between McCain’s narrative and Palin’s reality is startling. (A view in line with even conservative pundit Ben Stein.)

The chasm, in fact, is so huge that the campaign has lost control over the narrative. The question has now become, “How did this decision happen?”

The “decision making” question got so hot that the campaign issued a fiery rebuke to the press for even asking. Then they angrily stopped answering questions about it. (Like that will make the questions go away.)

THE NEW NARRATIVE: HERDING CATS

When the facts get out of control, the whole narrative breaks down. Just ask…

The National Association of Realtors was able to keep spinning their web of talking points well into the worst housing bust since the dust bowl.

The financial services industry was able to keep all its balls in the air, spinning the CDO and securitized markets as healthy and safe until the bombshells started dropping one after the other… Bear Stearns, IndyMac, Fannie & Freddie…

The U.S. auto industry kept its hot-air balloon aloft for decades, blocking reform on emissions and mileage standard, all the while touting their ingenuity and profits, until oil prices poked a hole in it.

(Now, of course, they are singing a different tune, asking the government for $50 billion to fund research into new fuel technologies, as well as for exemption from crash testing to improve mileage — because the geniuses who brought you the Lincoln Navigator and the Hummer just can’t do both safety and economy).

SEPARATED AT BIRTH? BRISTOL PALIN AND MARY CHENEY

Fact is, the GOP got spoiled, just like a lot of people do when things go their way for too long.

They thought they had unruly facts under control. Somehow they started believing their own hype that facts are controlable.

It even looked for a while like they had perfected the Orwellian game of perception management. During the 2004 election, they were positively awe inspiring as they successfully argued two contradictory points:

Americans should amend the Constitution of the United States to forbid homosexuals (ordinary tax-paying citizens in every way) from marrying because it’s a moral issue mandated by God.

At the same time, they argued that the homosexuality of the Vice President’s daughter was off the table as a vehicle for discussing this issue, because that was a personal matter.

And somehow they bullied their way to success.

It seems now that the Almighty has a sense of humor, giving them a chance for an encore. And remember folks, the Lord never gives us a challenge he doesn’t think we can handle.

Once again a key issue is, quite literally, front and center in the election: The GOP’s morals platform of Christian conservatism specifically states that they are opposed to sex education, and that abstinence-only “education” is the way to go.

Their public policy position is based on the purported morality and efficacy of this approach, and it will rule how they govern not just their children, but ours too.

And yet at the same time, they are arguing that Exhibit A — a case of a high-profile pregnant teen — is off limits because it’s a personal matter for the very candidate who espouses these views.

Will they succeed?

WATCH OUT FOR THAT… REALITY CHECK

According to Howie Kurtz, the McCain camp is spitting mad at all the people “on a mission to destroy” Alaska Gov. Sarah Palin by displaying “a level of viciousness and scurrilousness” in pursuing questions about her personal life.

Kind of like Bush did to McCain with the black child push polls? And to Max Cleland, the triple-amputee war hero, whom they successfully portrayed as sympathetic to the terrorists?

But the real issue is that McCain steered his campaign right into the path of an oncoming moose.

The “narrative” was derailed by his own choice, one that subverted almost every talking point he had been slinging (successfully) at the opposition for months. McCain had been making strong headway in polls, and had closed the gap. Until…

WHAM!

The jokester was confronted with a picture of a real two-headed baby. Not so funny after all. The liar was revealed for who she is. Discomfiting her patrons. Out-of-control industries were humbled by the facts they denied. To everyone’s financial pain and loss.

A campaign gaining momentum has hit an immovable object called reality.

Eventually, that’s what always happens when you start believing that you can impose any narrative you want on any set of facts… no matter how bad the mismatch.

At some point there’s a big, messy, come-to-Jesus, narrative-train-wreck moment that is just… well… literal mayhem.

For all of us watching the show, that’s the “experience” that counts.

Let us learn from this, and other, teachable moments.

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Vogue has caused a bit of a stir with the August issue of Vogue India.

The issue contains a fashion spread with pictures of destitute Indians posed with exorbitantly priced luxury goods, like this child in a $100 bib from Fendi… probably about three months salary for the woman holding him. (Yep… three months salary just for the kid to spit-up on it.)

The views of Vogue’s critics are best summed up by Pavan K. Varma, a former diplomat and author of ‘The Great Indian Middle Class,’ who told the UK Independent:

“People [in India] who have money or who aspire to have money become totally immune to the deprivation around them. The problem is that the wealthy in our country have become blind to the poverty. To use people like this shows a complete callousness to genuine suffering. These people have been used as commodities to sell fashion.”

The editor of Vogue India, Priya Tanna, responded with two points, telling The New York Times:

“Lighten up,” she said in a telephone interview. Vogue is about realizing the “power of fashion” she said, and the shoot was saying that “fashion is no longer a rich man’s privilege. Anyone can carry it off and make it look beautiful,” she said. “You have to remember with fashion, you can’t take it that seriously,” Ms. Tanna said. “We weren’t trying to make a political statement or save the world,” she said.

And she told the Independent:

“For our India issue we wanted to showcase beautiful objects of fashion in an interesting and engaging context. We saw immense beauty, innocence, and freshness in the faces of the people we captured. This was a creative pursuit that we consider one of our most beautiful editorial executions. Why would people see it any other way?”

GIVE THAT MAN A BURBERRY UMBRELLA

Well actually Priya, fashion is a rich man’s privilege — especially the fashion that Vogue is selling. That’s the whole friggin point of luxury goods isn’t it???

And when you put a $200 umbrella in the hands of a pauper who can’t afford teeth… the image is a political statement in and of itself. Duh.

As for extreme poverty being an “interesting and engaging context” with “immense beauty, freshness, and innocence”… I was under the mistaken impression that “primitivism” went out with the 1930s. Civilized, educated people no longer idealize and romanticize the lost innocence of the natives.

In fact, let’s do a test. Can a NYC bum “carry it off” with a Burberry umbrella?

How about a “Ladies of Appalachia” photo spread for Hermes or Coach?

No? Not interesting or engaging enough? Not innocent enough? Don’t look happy enough about being poor? The poverty not charmingly “foreign” enough?

What if I could find you some smiling American bag-people with striking silhouettes who wouldn’t prick your conscience by frowning? Would they be fashionable enough for Vogue?

MASSAGING THE MESSAGE: HUMILITY IS A WESTERN LUXURY

In the NY Times piece, Nick Debnam, chairman of KPMG’s consumer markets practice in the Asia-Pacific region is credited with the following enlightened views:

The idea of being able to afford something but not buying it because you do not want to flaunt your money reflects a “very Western attitude,” he said. In China and other emerging markets, “if you’ve made it, you want everyone to know that you’ve made it,” and luxury brands are the easiest way to do that, he said.

Oh personal restraint is just soooo… Yankee.

Like the Washington lobbyist who wraps her gifts in money? (Yes folks, real dollar bills that she buys in sheets from the U.S. mint and cuts up like wrapping paper.)

The Western world… from ancient Rome, to the kings and queens of old Europe, to the titans of American capitalism (and lobbyists too)… is just the epitome of restraint. No opulence. Nary a hint of indulgence. Because Las Vegas would NEVER want to flaunt anything, least of all its money.

Vogue’s critics are just guilty of western cultural chauvinism by trying to deprive the natives of their natural custom to flaunt their wealth by buying shiny objects… fueled by aspirations of mimicking a western luxe lifestyle that hates showy expressions of wealth?

Do I have that right Nick?

Because I really can’t figure out what the fuck you’re saying with that bullshit contradictory quote of your’n!

DISCLOSURE: I LIKE MONEY TOO

I live in NYC, how could I not? You gotta make a boat load just to pay rent and still be able to splurge on a peanut butter sandwich once in a while.

I also kinda like fashion; I’d have a whole closet full of Paul Smith suits if I could afford it. And I get up early twice a year, just to get to the head to the line for the Barney’s warehouse sale. (Hey, I was raised a New England Yankee with a penchant for good-stuff-cheap.)

What I don’t have is patience for stupidity.

The fetishizing of money – and the callousness it engenders towards other people and the common good – is one of the chief sins of the West, yet it’s one of our chief exports to the developing world.

That’s what Vogue is selling with this photo spread, and it’s precisely what Vogue’s critics aren’t buying.

They see the crisis of consumption we face here at home — the ravages of financial irresponsibility, the sheer physical destructiveness of gluttony, the numbness of mind that comes with the overcommercialization of everything, our reactionary aggressiveness when our entitlement is threatened — and they are rightfully scared.

SPIN HAS CONSEQUENCES

It’s the theme of this site. And in this little dust up half a world away we are concerned with BIG-spin. Cultural spin.

Not a cover up of some diddling company misdeeds. Not a shoddy press release. Nor a bloated quote from some corporate gas bag.

The issue here is much bigger. Mr. Debnam (a gas bag to be sure) may have been a little more revealing than he intended when he said of the poor:

“Most of the luxury companies don’t consider these people,” when they’re thinking of selling products, he said, “and even the consumer product companies don’t look at them.”

Yes, he’s right.

And what happened in this Vogue incident is that they got called on it. Vogue used these un-named non-people… put them front and center to exoticize their products, forgetting that some people don’t take the poor for granted… that some people can’t look at them (the way Vogue does) and not really SEE THEM.

On the one hand:

For now, the Indian middle and upper class — and the companies that aim to cater to it — are just getting used to having new money, said V. Sunil, creative director for advertising agency Weiden & Kennedy in India, which opened its first office here last September. “No one thinks they need to do something deeper for the public,” like address India’s social ills, he said. (NYTimes, emphasis added)

Yet at the same time:

An Indian company like Aravind Eyecare, which is the largest ophthalmic hospital system in the world, does more than a quarter-million procedures a year… and does 60% of them for free.

And in a new book on globalization a senior executive of India’s Tata Group says, “The Tata Group’s fundamental belief is that you have to create wealth in the communities you serve.”

Say the book’s authors: “Many executives in [emerging market countries] deeply believe that they are working for the good of their countries and for their future.”

So, Messrs. Debnam and Sunil be damned. And Ms. Tanna to boot.

They are wrong. And not just in a small pr-spin kind of way. They are wrong in a big cultural-sense kind of way. (And isn’t it funny how it’s three spokespeople from a western fashion magazine, a western management consultancy, and a western ad agency all telling us we shouldn’t be concerned about how Indians feel about their poor?)

Says Pavan K. Varma: “Right now in India money is fashionable…”

The big question, and danger, for much of the “developing world” is whether they will buy into Ms. Tanna’s spin, and whether her brand of empty-headed, self-indulgent, callousness will become fashionable along with all the money.

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Stepping back from all the broo-ha-ha over the “experience factor” in the Palin VP pick, as well as the irony of announcing the choice at “Nutter Center,” McCain’s choice fatally punctures one of his key talking points:

It should finally put to rest the idea that McCain is a man who will “stand up to his own party,” which is a line I have heard from many moderate, sensible Republicans (with lots of money) who want to rationalize voting for him mostly on the notion that he’ll (further) lower their taxes.

Picking Sarah Palin is a clear pander to the most extreme wing of the GOP: she’s an ultra-right, creationist, gun-toting, evangelical, Big Oil Mama who does not believe global warming is man-made, subverts science when it conflicts with policy, and uses the levers of government for personal vendettas (!)… albeit in a charming, small-town, pulp-fictiony kind of way.

Take away the Bible and she’s Dick Cheney in a dress.

If you believe that’s the decision of a straight-talking centrist who can stand up to his own party, then you’re being buffaloed in the worst possible Alaskan way.

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