Keep Your Friends Close, And Your Enemies Unarmed

Hillary is being strongly considered for Secretary of State -- possibly having already been offered the job.

Let's assume that President-elect Obama is fully aware that Mrs. Clinton wants his job. Let's assume he knows she may not plan to wait 8 years to make another go at it. We must then conclude that he believes he has more to gain from nominating her to this position than he has to lose. How can he believe this?

He is perhaps obsessing over this desire to prove that he is above politics and can persuade even his rivals to follow him. That his strength of leadership and his charismatic personality will overwhelm any ill intentions.

Having conquered the largest empire in human history, I can assure you that there are political battles to be won along the way. You cannot be above politics, or you will find yourself tumbling over it. And if his life ambitions do not include political battles, he has found himself in the wrong line of work.

So, who do you put in the position of Secretary of State, and where do you put a person like Mrs. Clinton? For the real power positions, the ones that put people in position to really threaten you, always place a person with absolutely zero possibility of upward movement. Someone who would be nobody without you, and will be nobody again when you are gone.

A quick look back will confirm this: Condoleezza Rice, Colin Powell, Madeleine Albright, Warren Christopher, and so on. I did not say these were unaccomplished people -- that is not the point. But none of them can achieve higher office. The first two are too liberal to succeed in their own party, the second two are simply not attractive enough to run for a higher office. And with the exception of Christopher, all owe most of their careers to the president who nominated them (or his father, ahem).

There is one position even more dangerous than Secretary of State, and that of course is Attorney General. The list: Michael Mukasey, Alberto Gonzales, John Ashcroft, Janet Reno. Again, long term loyalties and no hope for advancing.

6 of the first 15 Presidents were former Secretary of States, and 0 of the last 29! Did we learn something? Any bets on whether the 45th President will be a former Secretary of State? Attorney Generals have not fared so well, but prior to the last 50 years, that position has nothing like the power it has now.

Some readers have asked, "What can Hillary do as Obama's Secretary of State that will hurt him and help her?"

Rest assured, dear readers, you could spend years pondering that question, the Clintons can invent 10 new answers over tea.

If your rivals have potential, make them the Secretaries of Energy and Transportation. Places where they'll only be noticed in the event of failure. Better to name Bill Ayers Attorney General and Jeremiah Wright the Secretary of State.

Bad News For Bike Manufacturers

I am reading frequently that the closing of GM (executives claim, dubiously, that bankruptcy is not an option, that it's bailout or die) will cause complete devastation to the entire auto industry. Not just car manufacturers, but suppliers, dealers, repair shops, road construction crews, and so on.

I have bad news for Schwinn. As much as I'd like to see Americans get more daily exercise, this notion of the disappearing American car is complete fiction.

The story they feed the news outlets goes like this. GM goes down, and nobody can ramp up production to replace the GM cars. So the suppliers fail. When the suppliers fail, Ford and Chrysler (which is now a German company, not that anyone has noticed) fail because they have no more parts. So all the dealerships fail, and so does everyone else.

Let's assume that GM can't go into bankruptcy (a silly assumption, but let's assume it anyway). They would then sell all those shiny auto factories to ... who? To the highest bidder, as always. Probably not Ford, or Chrysler LLC, since they have no money. But Honda and Toyota could buy those factories, along with the trademarks, designs, patents, and everything else. Or maybe someone completely different. I suspect Mitt Romney could put together some investors. The point is that someone will pay something, however small, for GM's assets.

So now someone has the factories, designs, trademarks, and patents. What they don't have is the crippling debt, or the union contacts. Will they have trouble finding employees to work at a competitive (non-union) rate? Not a chance. And if Michigan law or union thugs get in the way, the factories will be torn down and moved to Ohio, or Georgia, or Alabama. (And now is a great time for disruptions -- demand is down and inventories are up.)

People want cars. They need them. They'll get them. They will be built.

I don't think many people realize that the conditions at the "Big 3" are preventing competitive forces from working across the industry. The North American Toyota and Honda factories don't experience anything like the competitive pressures that they would face if the factories in Detroit were forced to compete. This is the time for that to happen.

Demand it.

The Two Questions I Get Most Often

In the wake of the elections, I'm getting another onslaught of attacks by Ron Paul supporters blaming me for their candidate's failure to secure the Republican nomination, and thus for the success of the Democrats, and therefore everything bad that they believe will ensure over the next four years.

Ahem. I've been blamed for worse.

So the most popular question I get is from them. It is one version or another of, "Oh yeah, Mongrel, what's a dollar worth then? Isn't it just a promissory note to pay back another meaningless dollar?"

No. One U.S. dollar is, in essence, a share in the U.S. economy. It's the legal tender of U.S. economic activity. As the economy grows, the value grows. When more paper is printed, it is analogous to a stock split, only you don't get the split shares. At least not directly.

Now for the second question: "Why is there evil and suffering in the world?"

Evil is in the world for the same reason that Napolean was at Waterloo. This world is the chosen battleground for the destruction of evil. That is why it was made. Not for constant comfort and ease, but as a final battleground.

Do not shirk from the fight. I am your Khan. I am your Khagan. Be strong.

You want to spend $700 Billion on what?

Dear Genghis,
Is the Emergency Economic Stabilization Act of 2008 a good thing?

Having conquered the largest empire in all of history may not make me an expert on running an investment bank, but I know enough to fire (OK, in my day it was more like set on fire, officials who are either so incompetent or so corrupt, that they would ask to send $700 Billion to companies owned by their old friends.

Do you know what your government will be getting for the tidy sum of $700 Billion? It must be several million mortgages backed by houses, right? Hardly. The current text of the as-yet unfinalized bill refers to buying "residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages." Then there is further language authorizing Secretary Paulson to buy anything he wants from his old buddies. The point is that the stuff Goldman Sachs et. al. want to unload on the government are mortgage backedderivatives, not mortgages. These are instruments that very realistically may expire with absolutely zero value. You don't get to wait for the housing market to stabilize (as though $450k starter homes represent a stable value!).

Nobody -- nobody -- thinks these investments are worth what the government will pay if Secretary Paulson is allowed to buy them from his friends. How do I know? Quite simple -- the investment banks will see to the highest bidder, and Paulson is asking to be that bidder.

Secretary Paulson insists that the world economy will collapse tomorrow if his plan isn't enacted today. (Yes, just like he said over a week ago). The President has checked out, and Paulson can find dozens of investment bankers to back him up in saying that it's really, really important that they get that $700 billion check as soon as possible.

Pathetic.

Here's how an economy works. Somebody grows some tomatoes for you. You fix their plumbing. As long as you are willing to do something for someone else, and let someone else do something for you, the economy will continue. The final ingredient, of course, is money. And that is what the investment bankers want you to think we will somehow run out of.

First of all, a flood of restless capital is what got us into this mess, as I wrote 10 months ago. And I'm willing to bet that you're still getting letters in the mail asking you to borrow more money at a low interest rate for six months. Trust me, the money is still there.

There's one thing the Fed can do that nobody else can, and it isn't buy bad debt. They can control the money supply. They've gotten in this mess by printing cash in an effort to forever forestall a recession. Now Paulson wants out, but not before the most massive graft the world has every seen. Hey, everyone does it, why not do it big?

If the problem were really just at-risk loans "clogging" the balance sheets, the banks would call their customers and say, "That $400k house you bought that's really worth $220, yes, of course you can't afford $400k, but that didn't bother us. Tell you what, you only owe us $210 -- how does that sound?" Presto. A "bad" mortgage just went "good," you swallow the $190k loss, and the balance sheet is no longer clogged.

Yeah, they're in a bad spot. You can't do the above with a mortgage derivative. In some cases their loses are simply too high. That's why you have laws for bankruptcies and bank runs.

No, you wouldn't want to go belly up either. Not if you had a good friend with $700 billion in his pocket.

Coming in Second Place

While I will not be revealing Senator McCain's VP selection, I will now reveal the last runner up. And no, Senator McCain will not be releasing the name of the final selection early ... the campaign tactics (in part derived from the battle philosophies of your Khagan) are to repeatedly test the enemy with small tactical strikes, to learn how he thinks, how he reacts, what he is capable of. For instance, suggest that you might step all over his convention. See how he reacts. Instead of stepping on the convention, release an ad congratulating him; see how he reacts.


The 2nd place finisher in the race for Republican VP was Neil Diamond:

Technically, the first choice for VP was Rachael Muhammad Gonzales, as the $23 million dollar software they purchased insisted that the surest path to victory was to find a running mate of that name, however no such person could be found. So, the computer said, the next best thing was to find someone with great appeal to disaffected Hillary voters, primarily women 55 to 69. Thus, the Jazz Singer.

Neil Diamond is certainly no conservative, but was vacuous enough to fill the VP role on virtually any ticket (I'm largely echoing the opinions of the political class here, I'm no expert on these things, so I hope nothing is lost in translation). The fallout came over the campaign theme song. To nobody's surprise, Neil insisted that one of his songs be made the new campaign theme song. Senator McCain and the political class found a few that they thought could work. "America", "I'm a Believer", "Solitary Man", "The Boat That I Row", they were even to take a chance with, "Brother Love's Travelling Salvation Show", but Mr. Diamond would have none of them.

Neil insisted on using "You Don't Bring Me Flowers Anymore." That, it was decided, would sink the campaign, and nobody could understand why he would want to use it. He kept insisting, "It's my favorite song," and occassionally adding, "I think maybe I could bring Barbra Streisand onboard with it. Maybe."

I'm told someone finally told him what everyone thought of Babs, and maybe his music in general, leading to a blowup that threw out his voice. And that was that.

Congratulations, Senator Obama!

I absolutely had to write tonight to congratulate Senator Obama on this great achievement, becoming the first African American to win the nomination of a major United States political party. A fantastic accomplishment, on behalf of his party and his nation.

Now, regarding his selection for vice president, I'm not so happy. I find it personally offensive that of the 6+ billion people in the world, Senator Obama saw fit to select the one man known to be the least likely to be one of my descendants. Senator Clinton is a much stronger, bolder pick, and we are at this time attempting to document her direct descent from your Khagan.

I have spent much of the last 7 months repeatedly watching Mongol, easily the best movie ever made, starring the amazingly handsome Tadanobu Asano. I'm perhaps a bit biased, as I was used extensively as a consultant on this film. You should watch this movie at least once each week. I'm am your Khan. I am you Khagan.

Regarding the presidential process again, you will recall my involvement with Governor Huckabee, and to an extent with Senator McCain, see below. These contacts led to my introduction to the American commanders fighting the Iraq war, and thus the inevitable defeat of the evil enemies there. These efforts are nearly complete, and I will meet with Senator McCain again presently.

My best to you all.

Now I'm Getting Calls From McCain

I had not spoken to Senator McCain since our last discussion, in which he failed to received my endorsement, despite a certain mutual respect. So I was quite surprised to get a call from him yesterday, and even more surprised by the reason for the call.

"Genghis, help me out here. I'm doing everything I can to throw it to the kid, and nothing works. It's out of my control."

"The kid?"

"Huckabee. I saw that you endorsed him. Fair enough. It even got me thinking. Look, I had something to prove, it's true. After George W. Vader beat me in 2k, I really wanted to win. But now there's nothing left to prove. I can win this thing easily. So that's done.

"It's when I started thinking about putting the cabinet together, the first 100 days, all that. Honestly, it's exhausting. Hey, I'm up to it. I feel like I'm 68 again. But then I got to thinking about how I'll be remembered. About the funeral, you know. I mean, you've seen that handsome mug of me shaking Nixon's hand, right?

I assume he means this one:

"That's the picture I want on my casket. But if I win the presidency, I don't get that. I'll get a picture of me in office. Just look at those jowls. I look like I've been sucking face with a leaf blower."

"You'd give up the presidency because of a picture?"

"OK, you got me... it's really that I've got a lot of scores to settle in the Pentagon, and that's hard to do when you're the President. That's where the kid comes in. He's putty in my hands -- he'll make me SECDEF, no question about it. And that's the place to settle those scores -- Rummies old job, eh?"

To the best of my knowledge, Senator McCain had no way to know about my previous discussions with Governor Huckabee here and then here. So I wasn't particularly comfortable getting involved directly. As he pointed out to me, the Senator has already tried the basics: calling interviewers "jerks," telling a 13-year-old kid to shut up and sit down, talking about his age, telling people they can't get their jobs back, so forth. The problem is, as he puts it, "The more I do this stuff, the more they love me. It's a freight train, and I can't stop it."

I can't raze any districts in Michigan. I got away with it in Wyoming, but that's because nobody was paying attention. Assashoryu has already headed back to Mongolia, and Jimmy isn't a lot of help for this kind of thing.

Honestly, you people need to get you election mess straightened out. It's irrational. From here on I'm staying out of it. If you want to conquer Canada, let me know, but this whole election process rots.

UPDATE: McCain thought of a new one: touring a funeral parlor on primary day. Why didn't I think of that? Absolutely brilliant. I think I'll vote for him.