Nov
30
My friend Dennis Daily is a talented radio broadcaster, adept at live air work, studio editing, and he even does voices. I met him in 1976 when we were both in our twenties, and over the years we worked together at an all-news radio station in Washington, D.C., then at the Mutual Broadcasting System, then at United Press International. Like me, Dennis then returned to local radio, and he has been working at a small radio group in Merced, Calif., where the economy is in depression.
A couple weeks ago the minister at the local rescue mission contacted him to say that his sources has told him to expect a lot more people than usual for his annual Thanksgiving meal at the American Legion. Instead of 3,000 homeless and poor people he should expect more like 5,000. And he had only 65 turkeys on hand.
Dennis said he would see if he could help. He recorded a message that began, “How would you feel if you were told you had 5,000 people showing up on your doorstep for Thanskgiving dinner?” His emergency appeal, which aired six times a day, was heard by a visiting executive of Foster Farms, one of the West Coast’s biggest producers of poultry products and the largest employer in the county. The minister got a call. “Can you use 500 turkeys?”
The same day the mission got the offer of the 500 free turkeys, Dennis lost his job at the radio station, a victim of the economic downturn.
Nov
29
There is an old joke in legal circles about the boy who, having murdered his parents, throws himself on the mercy of the court because he is an orphan.
No less ironic is the settlement of the Aloha Airlines lawsuit against Mesa Air Group, parent of the go! interisland service, which sets the stage for Mesa to acquire the Aloha name and rebrand go! as Aloha.
“We are extremely pleased to resolve all claims put forward in this litigation and look forward to rebranding service under the Aloha name in the near future,” said Mesa CEO Jon Ornstein, who added, “We intend to carry on Aloha’s proud tradition.”
The agreement also includes unspecified interisland travel benefits for former Aloha employees, though many former Aloha employees blame Mesa for the demise of their employer and refuse to fly go! under any circumstances.
How could Aloha management do this? The answer is that they didn’t. They thought they had an ironclad case for predatory pricing and wanted to pursue the suit.
Hawaiian Airlines, in a similar suit, won a $52 million out-of-court settlement just when it needed the money for jet fuel bills last spring. If it had not preferred to get cash right away it could have pursued the suit, which was headed for appeals court after an initial win for Hawaiian and a cash judgement above $80 million. The original judgment covered damages only up to the point where damages were toted up, so a win on appeal could have resulted in an even larger award. Hawaiian won the suit, though predatory pricing is usually hard to prove, because the chief financial officer of Mesa wrote an injudicious report outlining a predatory pricing strategy, a smoking gun that isn’t normally available in such cases. (Ornstein said the report, which came with charts and graphs, was merely a joke.)
The Aloha suit had the potential for even greater damages, the airline having died. But once it died the lawsuit and its potential for damages became an asset, and the airline sold it. Yucaipa Companies, the Los Angeles area investment outfit that had kept Aloha alive with cash infusions, and killed it by cutting off the tap after a United Airlines acquisition deal fell through and the management could not immediately find a new buyer, agreed to settle some of what Aloha owed it by taking the lawsuit. The lawsuit then belonged to Yucaipa. And Yucaipa has now settled it.
Under the settlement terms, Mesa pays Yucaipa a mere $2 million but gives Yucaipa 10% ownership of Mesa — not just go! — the entire national company. It agrees to the unspecified interisland travel privileges for former Aloha employees. And it wins from Yucaipa a promise that if Yucaipa acquires the Aloha name it will license it to Mesa.
Yucaipa is currently the high bidder for Aloha’s intellectual property.
Nov
26
A wartime consigliere for Obama
Filed Under Sunrise on KGMB9 | Leave a Comment
In “The Godfather” the Corleones discuss whether Tom, their hanai brother, is the right advisor, or consigliere, for a time of mob war. Maybe, one of the hotter-headed brothers says, we need a wartime consigliere.
This is an interesting concept — that optimal characteristics of personality and character may be different in normal times than abnormal ones. It is a concept that appears to be in Barack Obama’s mind, as he names what strikes me as a wartime economic team.
The war consigliere is Paul Volcker.
Volcker was Federal Reserve chairman during the Carter administration and the first Reagan administration. He and the other Fed governors reined in the money supply to bring inflation down from more than 13% to 3% in less than three years, at the cost of a recession which briefly produced the highest unemployment of any time since the Great Depression.
No one needs to trigger a recession to curb inflation now. We already have a recession. We learned this week that it started over the summer (in other words, total economic activity shrank during the third quarter) and it is surely still going on. But the point is that Volcker was in the Fed hot seat for the last major recession and knows more than most people about how one works.
By making Volcker head of his advisory economic panel, the president-elect obtains his advice without tying him down with duties by reappointing him to the Fed. In brief, the 81-year-old Volcker is his consigliere. Very smart.
Similarly, Lawrence Summers has been chosen to be head of the Council on Economic Advisors, which means he can be a thinker on the administration’s behalf without being a mouthpiece.
Summers is notoriously stupid at being a mouthpiece. He resigned the presidency of Harvard after remarking that women aren’t as good at math as men. He wrote a memo at the World Bank describing Africa as underpolluted. As a diplomat or politician he’s not ready for prime time and never will be.
Better to give him an office and direct access to the Oval Office from time to time and order him not to appear on “Face the Nation.”
Another choice also strikes me as smart.
A recessionary economy generates lower tax revenues, and the federal government has been pouring megabillions into a war on terrorism, the war in Iraq, the war in Afghanistan, and now the war on the economic crisis. Spending cuts cannot be avoided. ”Not an option…a necessity,” Obama said. Exactly. So how does one effectively cut so large and complicated a budget?
Obama is tapping someone who has run the Congressional Budget Office to be his budget director. Excellent. He’ll know where the sacred cows are and how sacred they are. An outside fiscal surgeon would think solely in terms of the economy and wouldn’t realize until the screaming started that certain comparatively affordable items ought to be left alone.
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