Dana Blankenhorn

The Chengdu Boom

I have become a student of booms.

I grew up in the boom of New York's Long Island during the 1960s. I moved to the Houston boom of the 1970s, joined the PC boom of the 1980s, covered the Internet boom of the 1990s, and watched the housing bubble of this decade.

I know what booms look like.

Chengdu is a boom town. (To the right, an image of Brazilian soccer star Kaka hawking Chinese-made throat lozenges in Chengdu's Airport.)

Celebrate Your Troubles

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Think of this as Volume 12, Number 21 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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When we got our  current cats, back in 2006, we decided they would be indoor meows. 

They have no problems. Their needs are all taken care of. They eat, they play, they sit by the windows or lie on our beds. 

Their placidity is in stark contrast to the neighbors' cats, both of whom are allowed outside. Those cats eye the world warily, and attack one another with ferocity. They know a truth our cats do not, that there is trouble in life, and you need to pay attention. 

What's true for cats is true for people.

Most kids today are raised with a minimum of trouble in their lives. Their playmates and playdates are chosen by their parents. They are hustled from karate to soccer to dance. They are protected and nurtured like flowers, usually in suburbs where the problems of real life are kept as distant as possible. 

People aren't cats. A lot of these suburban kids become teens and seek out trouble of one kind or another. They get cars and crash them. They feel hormones and act on them. They play at hurting one another. The best of them do as they're told, they cause no trouble for anyone, they graduate with honors, and they go on now to big-time colleges where they will experiment with sex, drugs, music, thought, and each other before settling down to lives of quiet desperation.

I didn't intend it to be like this, but there's another way to go.

Rachel is Wrong

Visit msnbc.com for Breaking News, World News, and News about the Economy

I admit to being a Rachel Maddow fanboy. I love the way she giggles when dealing with subjects that cause Keith Olbermann to spin the outrage dial to 11.

But she can also get outraged, and sometimes for the wrong reasons, as on the clip above, where she and guests protest the President's plan for "prolonged detention," outlined in his Constitution Hall speech.

I expected to be highly critical of the President's talk. There are areas here where I disagree with him. But on the critical issue of the detainees, and torture, a clear understanding of what he actually said tells me he's right.

Credit Where It Is Due

The passage of a credit card "bill of rights" has banks acting like what we liberals call WATB, Whiny Ass Tittie Babies. 

The final bill is not all it could be. But it's pretty good. Especially when you look at how the credit card economy works for the banks.

Every credit card purchase is a loan. But it's not a loan for which the bank pays out cash immediately, like  a car loan. Instead you get what you bought, and the money goes to the merchant after the transaction is settled, less a "discount" based on the merchant's past history.

The amount of the discount varies. With Discover it can be as low as 1.5%. With Visa it's usually 2.5%, although it jumps substantially in "card not present" transactions like Internet purchases. For AmEx transactions it usually starts at 5% and goes up from there. I'm barely counting the cost of processing the transaction because that comes to just a few pennies, although if your average sale price is very low (if you're a $1 store) those pennies add up fast.

For these reasons some merchants illegally limit credit card transactions to purchases of a certain size. At the same time some high-volume merchants, like fast food joints, allow small purchases and don't even make you sign for them. That is an innovative "product" of the industry, specifically for high volume merchants. All that really happens is that the card number is run against a "hot card list" in the store. Settlements are made overnight on a "batch" basis, the credit card computer calling up the store's terminals, uploading the day's transactions, downloading the new hot card list.

There's another way the bank gets back at merchants. Chargebacks. If you return the merchandise, or change your mind and cancel within a few days (a big risk for Internet merchants) the bank takes that money back. Oh, and the more chargebacks you have the higher the merchant's discount.

Because of this, a customer who pays their balance off each month makes a lot of money for the bank. Say you pay off a $1,000 balance on your card every month, within the grace period. That's $12,000 on which the bank has earned discount fees and transaction fees, from the merchants, for the year. If you're going to nothing but the best merchants, that's still $300 plus transaction fees, that was earned off your business. 

You're not a freeloader. Anything but. 

Take What You Can Get

The President seems to frustrate his supporters at every turn.

• Rather than confront the military over its misadventures, he tries a Petreaus plan in Afghanistan. 
• Rather than confront Wall Street over its failures he appoints bank regulators whose experience includes the season of crime. 
• Rather than confront the Bush Torture Regime he seems to dither, refusing to endorse either a special prosecutor or a "truth commission," giving the former Vice President and the Republicans every opportunity to defend what they did in public. 

This is just as true regarding The War Against Oil as anything else. "Mr. Obama’s “new” energy policy is more of the same old pandering," writes Bob Gordon of The Auto Channel. He doesn't call us to a war against oil. He just negotiates higher mileage standards. 

Of course as frustrated as liberals are conservatives are, squared. They're mad as hell, but to them it feels like they're raging against the wind. He borrows trillions, literally trillions, he remakes the economy and all the rules, yet he remains enormously popular. It drives them crazy, and we can only pray the Secret Service can do its job.

But there is something else going on. It's something the media is only barely conscious of, so intent are they on triangulating him, on trying to pin him down. 

The War Against Oil is a War for the Economy

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Think of this as Volume 12, Number 20 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Want to get the economy out of the ditch? 

Make something. Make something new, something valuable, something real, something with a ready market. 

Despite what critics felt there was something real about the Internet, which defined the 1990s. The Internet accelerates the transfer of knowledge, and of any knowledge-based value store. It's the most powerful economic accelerant since the creation of the telegraph.

By contrast there was nothing ever real about the economic drivers of this decade, financial services and homes. Not that homes aren't real. But the value of a home has nothing to do with its cost or even its location. It is a measure of the economic value left out there to buy homes. A home sucks money, it only creates money for those who build, assuming someone buys. Thus homes became a natural sinkhole for the confederate money of this decade, soaking up as much as the banksters could create from thin air.

Now that the economy has stopped falling this question becomes vital. On what will we base the next boom? 

The answer is obvious. Energy. 

Honeymoon Over

No President is perfect. 

To be elected takes a broad coalition. It is going to include elements of the business community. It is going to include rich and powerful people, and interests which grassroots voters find anathema.

That said, recent actions by the Obama Administration have ended their honeymoon with me. 

1. Refusing to release the torture photos.
2. A policy that is too soft on big banks to be credible. 
3. The appointment of a Bell shill to the FCC. 
4. Justice Department support for copyright extremism. 

In the case of the first two bullet points I thought of naming this post "the playa gets played." While he ran as a firm opponent of the Iraq War, President Obama has allowed himself to be manuevered into supporting policies that contradict his promises. He has even sent up his own Bush-like war supplemental. While he ran as a skeptic over bank power, he has staffed his Administration with Wall Street favorites, who treat big banks that built casinos as "too big to fail"  and close small banks that did not take those risks.

In his defense, I know that Barack Obama is, temperamentally, an incrementalist. Like Lincoln, like FDR, he moves as cautiously as he can, waiting to be pulled into the more radical actions for which he will go down in history. I think those Bushies and proto-Bushies who are now directing policy will be overthrown if their policies don't work -- you couldn't say that in the Bush era.

There are also lobbies which are equally as adept at playing Democratic politics as Republican, which is why so many of us believe there is no real difference between the parties. Pharma companies, media companies, and phone companies have always given to both sides, raising their support for the incumbent side but never cutting the other side off. 

While Barack Obama ran a "tech" campaign, he did not run as the Netroots candidate. He never brought liberal bloggers into his tent as equals. He merely allowed them to be part of his larger coalition. 

The biggest bad  decision Obama has made was to make Rahm Emanuel (above) his chief of staff and push Howard Dean to the sidelines. 

233 Years of Torture Logic

What kind of country are we?

It seems simple enough but it's a question that has bedevilled us since the founding of the Republic. 

Are we strong because we're good or good because we're strong? Each generation has had to face that question, and the answers have varied.

Our first war was fought by Thomas Jefferson, against North African pirate city-states. In Jefferson's War, Joseph Wheelan describes this as a war chosen on the basis of a principle, that being America would not succumb to blackmail even if the Old World felt it was OK.  

That was T. Jeff all the way. A claim of moral good masking naked self-interest. We stormed along the shores of Tripoli for ourselves, not our principles. 

Since then many Presidents have wrapped wars of choice in principle and gotten away with it in American history books. 

The Mexican War was a war of choice that opened vast territories to American conquest, and brought us out of debt through the discovery of gold in California. It remains a curious footnote in our own history books, but Mexicans are taught it as it was, a naked war of aggression for territory that made permanent America's pre-eminence on this continent. The Halls of Montezuma also reflected American self-interest. Semper Fi. 

The Spanish-American War was another war of choice which brought us an empire, but Americans were told then (and are probably told now) that it was a war of liberation for Cuba, even though it was immediately followed by our first Vietnam-like conflict, against the Filipino people. 

Most of our conflicts in Latin America have been colonial wars of choice, fought because we were strong, they were weak, and we wanted to exploit their assets. Few American schoolkids are taught any of this history (my son was an exception) but when you find yourself with South American friends there are curious silences only historical tensions can explain.

Big, Rich and Ignorant

Frank Rich of The New York Times has offered a thoughtful, provocative piece about The American Press on Suicide Watch. 

There's only one thing wrong with it. 

Mr. Rich still  doesn't know how his employer's business works.

I, on the other hand, actually took a publishing course at Medill, so let me state this as clearly as I can. No one pays for their newspaper. They pay for its delivery, for the infrastructure of trucks and men who get that paper from the printing press to your door. 

Newsgathering costs have always come from advertising. Always. That's how it was in Joe Medill's day, and that's how it is a century later. 

Where newspapers screwed up was in forgetting the purpose of advertising and their business role. The purpose of advertising is to sell stuff. A publisher's job is to help the businesses he is advocating for and organizing to sell stuff. 

The ad space on any page, whether real or virtual, is just the last piece in this puzzle. The ad space is a billboard which the advertiser fills. 

Why does he fill your empty billboard? This is the question newspapers used to be very good at answering. He fills it because the medium can prove that an ad placed with it will reach his target market, and that some of the people in that market will act on the ad. 

Print newspapers, and magazines, long answered this question with surveys. Not just surveys of their readers or their advertisers, but surveys of the target market. These surveys would show, for instance, that "46% of the people who will buy a new car next year in New York read The Times," or that "you can reach 50,000 millionaires for less with The Times than with any other medium."

Ad agencies used these kinds of surveys in planning campaigns. They would say, "we have to reach X number of people who have Y characteristics Z number of times," and if their creative was right it would result in $ worth of sales. 

Newspapers, in the print era, were never just at the billboard end of the sales funnel. They actually went deeper down the funnel than that. 

Torture

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Think of this as Volume 12, Number 19 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Everyone who has been a parent, or a child, knows something of torture.

As my son John prepares to graduate high school this month, my parenting career enters a new phase. I will try out this new role on a trip to China, Taiwan and Japan starting May 23rd. Posting will be sporadic.

It is not easier for someone with ADD to parent children who have it. It's harder. My son's ADD is much like mine, only sometimes it's on steroids, and our long-term efforts to treat it have left different scars on him than my own long-term denial left on me, coming up.

I must admit here that there were times when I hit him. Hard. He could be, can be, infuriating. He has the same buttons I have, and has known how to push them since he was a small child. Parenting him has helped me deal with my own ADD, for which I'm thankful. 

But there have been times when we tortured one another, both mentally and physically.