Friday, October 10, 2008

Flip This Economy

I can tell you the first person who knew in his guts that something in this economy was terribly, terribly wrong.
He was slumped over the wheel on I-80, stuck in a gridlock, halfway into the two hour daily lemming run into the city.
All around him, far as the eye could see, were people just like him. Blinking in traffic next to empty latte cups, idling away gas they couldn't afford to get to jobs they might lose, vainly trying to keep up with expanding mortgages on houses a hundred miles away from where they work. All because every single converted clothes closet in the city was going for a million bucks.
As he sat there looking over at the shadow faced driver in the lane next door, nodding, like himself, to the "Dink and Dork in the Morning Show", he must have thought:
"This can't be right. How much can one crappy apartment in San Francisco really be worth?"
Somehow, in between the "Flip This House" type TV shows and the late night no money down infomercials, we were convinced that selling real estate back and forth to each other at exponentially increasing prices qualifies as an industry. The entire ponzi scheme is based on the idea that someone even stupider than you will come along with a bigger wheelbarrow full of money and cash you out. That guy then paints the porch and waits for a bigger idiot, perhaps someone in a clown suit driving up the driveway in a shiny dumptruck full of money.
Yes, it was glorious. A balloon payment, fee encrusted, high interest, high profit gold rush--all paid for by the next guy. But if all those real estate players had no jobs, no credit ratings and no cash, then where exactly did all the money come from?
Enter woolen skinned men in tall glassy cubicles. Specifically AIG, the investment wizards to whom the US taxpayers are now handing our wallets. Only recently they liked to brag that they invented the investment vehicle by which both their fantastically wealthy clients and the banks where we all put our money made unbelievable profits on the real estate idiot chain. All you had to do is bundle up the "risky" high interest home loans (often mixed with safer stuff like your municipal bonds for schools and sewers). Then you just keep pouring money on them, kind of like gasoline on a nice toasty fire. Just put enough loose money into the hands of clowns pulling dumptrucks into the driveways of recently remodeled McMansions and the whole system works wonderfully. The money you dump onto the idiot chain comes flowing back to your investors from the unbelievably high interest rates on the loans. Meanwhile fees and consultation services and sales commissions can keep a company like AIG in the spas six months out of the year- good spas too, where young girls whip you with eucalyptus branches while they recite lines from "The Art of War".
Yes the whole system works beautifully until that last clown never comes up the driveway. You don't want to be the last idiot in the idiot chain.
Like every pyramid scheme it finally collapsed under its own weight.
If there's anything to be proud of in all this it is that we apparently suckered the entire planet in. Yep, its the biggest scam of all time.

Thursday, October 9, 2008

McCain Can't Catch a Wave, Uncle Ted for President

Did you know that Alaska's Senator Ted Stevens was a pioneering surfer?
Say what you will about Alaska's Senior Sourpuss, the man knows when to sit on his board and when to paddle. Since before statehood he has shown the knack for recognizing a rising groundswell and riding it well. Even now, sitting on his board in federal court with shoals of evidence all around him he is waiting for the right moment to start paddling. Sure enough, his prosecutors have bumbled him up a wave of mistakes. He may ride out of this one yet.
John McCain, on the other hand can't catch a wave. Eight years ago he tried "straight talk" and was obliterated by the Bush sleaze machine. This time he went to the dark side only to be swept off his board by a wave of hope and honesty. Whether its the war in Iraq, the economy, drilling our way to energy independance, or the idiocy of picking Governor Palingate, he always seems a day late, a dollar short.
Is it too late for the Republicans to run Uncle Ted?

Wednesday, October 8, 2008

Mr. Terry Goes to a Meetin'--Chapter Four

I'm sitting at the Sheraton sushi bar feeling angry and depressed.
St. Jude is slumped beside me. Even he seems a little put off.

The Fish Council's Advisory Panel, its members only too aware they are being carefully watched by bankers in sweat stained suits, crumpled the Crew Quota Proposal and kicked it under the table. The majority of the A.P. officially signed off on the Crab Ratz Program, saying "the crab program is achieving most of its objectives and that many of the major changes identified in the Council's April Motion would de-stabilize the harvesting, processing, and community sectors and are not necessarily based on the findings of the Council's 18 month and 3 year reviews."

The real truth is jammed between those lines like the sweet greasy middle of an Oreo cookie.

De-stabilize means nervous bankers.

Most of the resistance to making reasonable tweaks to the program lie in the fact that so many owners have "doubled down": using their initially allocated quota as collateral to borrow money to buy more quota. Banks extended the "priviledge" of using quota as collateral because halibut and pollock quota has been such iron-clad investments. What the bankers now know is that the law gives no guarantee of rights, and in fact explicitly states they can be taken away at any time. Any proposal that might redesignate even a small portion of the quota changes the numbers for the crunchers and that makes them nervous.

This is, of course, a terribly short sided view. The real danger to the program, and to every fisherman, banker and processor with a stake in it is in not fixing it. Its easy enough to fend off those of us who come to the Council and engage in the process in good faith. Looming clouds of lawsuits based on the program's parentage are the real danger. Crab Ratz was hatched because Senator Ted Stevens sat on it, in a nest built by his son, Ben, and a flock of cronies. Dissenting voices were ignored. Even the former Council Chair admitted, after Ratz was pushed through, that unresolved crew issues were her greatest concern. The Senator's system of marking ears for corporate lobbyists who hired his son has cast a shadow across the industry from Adak to the Southeast salmon grounds. A slight alteration of shares over time is a far cry from having the whole shebang thrown out in a federal court. A real effort to correct the program could pre-emp this by making it a moot point.

Four members of the Advisory Panel deserve recognition for their minority opinion, "that it is premature to assert that the Crab Rationalization Program fully meets its original objectives, conservation goals or community protection needs...we recommend that analysis of the 90/10 split continue, while additional analysis on crew shares, WAG issues and ROFRs be initiated."
Signed: Beth Stewart, Michelle Ridgeway, Chuck McCallum, and John Moller.
And is is worth noting the Fish Council is a near autonomous body. They are no more bound to listen to the Advisory Panel than they are the President of Somalia. Or me for that matter.

Meanwhile the ongoing struggle to keep Ratz unchanged (Ratus Quo) is centered on Data Suppression. At the direction of the Fish Council and NOAA General Counsel, a number of studies are in progress that tend to confirm evidence that Ratz has had quite dramatic consequenses for working fishermen and their communities. Owners groups like the Alaska Crab Coalition have spend a great deal of time and money begging the Council to ignore the data, on the basis that it is still being gathered and analyzed and because such a poor job was done gathering Socioeconomic data prior to the implementation of Ratz that there is nothing with which to compare it. I tried to answer this lame circular argument in my official comment to the Council, below:

Tuesday, October 7, 2008

At the North Pacific Fisheries Council Meeting

The Charter Vs Commercial Halibut Update

An army of fishermen and lobbyists stormed the latest meeting of the North Pacific Fisheries Management Council, all with a common word on their tongues: Halibut.

At issue: should increasing harvests by recreational fishermen be allowed to gobble up quota pounds from commercial users, some of whom have mortgaged their entire lives to purchase what they thought was a reliable share of the catch?In the end the Fish Council cleared its slate and concentrated its efforts on this single issue.

The eye of the mosh pit is in commercial area 2C, at the center of Southeast Alaska's tourism boom. Slower accounting methods on the Charter side caused them to overharvest by a million pounds, a number that must be accounted for in assessing next years quotas. This is alarming for commercial harvesters who have bought quota in 2C, often on credit, with the reasonable expectation that an unregulated Charter fleet will not be allowed to use this back door encroachment to draw an unlimited amount of the harvest into their camp.

In the end the Council set a cap on the amount of halibut that can be taken by charter vessels from areas 2C and 3A (with the assumption that charter pressure may well spill over into 3A, the larger halibut biomass on earth) as well as instituting a standard of "triggers" which would limit or increase the amount of fish taken per day by charter boats according to stock levels. Overall the Council took a well-measured view and acted decisively on an issue that has stumped former Councils for decades.
The Motion:
Wesley Loy on the subject:

Questions to ask include whether the accounting system can be upgraded in time for next year, and whether enforcement tools will be effective.

My Comment to the Council on the Crab SAFE Report:

Mr. Chairman, Members of the Council:
My name is Terry Haines I am a member of the Kodiak City Council and longtime commercial deckhand. As you know the City Council and a large number of our citizens have long voiced concerns about the effects of Crab Rationalization on our communities, working fishing boats, skippers and crewmen.

The SAFE (Stock Assessment and Fishery Evaluation) document is a testament to this Council’s continued commitment to responsible management of our stocks.

It is very relevant, however, to recognize what is not in the document, namely work that is still in the meta-data process that looks at the effects of rationalization on skippers, crew and the ability of working vessels to continue to provide an economic base in their homeports.

Don’t lock that data in the SAFE until next year’s report.
While recognizing the need to put data in the wider context, and to verify it, where data might be reasonably used to further measures being developed to help working fishermen and their communities, it should be used.

Where data can be replicated by parallel studies and reasonably put in the broader context they should be made available to the people who have, at the direction of this Council, been working very hard to take a rational look at the social impacts of rationalization.

Because if I see an elephant across the creek and everyone else standing there sees an elephant, it might not be necessary to build a boat and row it across to poke the elephant before we start making some phone calls to see who lost an elephant.
(Laughter and Applause)
Thank you.