Friday, April 25, 2008

Hobson's Choice

The drums of war have been beating more loudly lately. Our military commanders have been ramping up their accusations of Iranian mischief, and today the oil market spiked on reports that a U.S.- chartered ship in the Persian Gulf fired a shot at an Iranian patrol boat. Evidence is piling up, they say, that Iran is responsible for the deaths of American soldiers. And of course, it is received truth that Iran is developing nuclear technology not, as they say, as a potential power source but as a step on the road to a weapon of mass destruction.

Most of the politicians have taken up their own drums. John McCain’s hawkishness is well known, and now Hillary Clinton warns that, were Iran to mess with Israel, the U.S. would “obliterate” that nation. (I have no doubt that the U.S. would rush to Israel’s defense. That’s the political reality. But is there a treaty somewhere? Did I miss that?)

That brings me to the dilemma confronting some voters this fall. It is likely that the choice will be between (1) a Republican who will look for any excuse to escalate the Middle East War and (2) a Democrat whose redistributionist, populist impulses will destroy what’s left of our free-market, free-trade economy.

This is not the first time voters have faced this Hobson’s choice. The far right apparently believes that our freedom rests on our willingness to project our military power. The far left is hostile to a capitalistic, meritocratic system that creates winners and losers. And that’s where we are (again) in 2008, with candidates playing to the most hawkish and most socialistic fringes. It tells us something about ourselves that politicians can win votes, and maybe elections, by threatening other countries with obliteration or demonizing “big business.”

It’s hard to be optimistic, but there is a possibility that Barak Obama would be less likely than Hillary to launch the B-2s and less likely than his rhetoric suggests to declare war on business. The choice of running mates will tell us a lot about the candidates. And they say that, once the primaries are over and the general election campaign begins, all candidates will rush to the center. Maybe. But I am not likely to forget that back in 2000, George W. Bush convinced me that he was firmly against trying to remake other countries in our own image.

Tuesday, April 15, 2008


The perfect lunch, for me, is a nice hot bowl of soup. Fortunately, my wife’s notebook is filled with recipes for scrumptious soups. Her fish chowder, among those who have dined at Chez Van Veen, is legendary, and I have already blogged about her crab bisque. She also makes soups that defy naming but that are heavy on onions and mushrooms and mysterious spices. Scraps from dinners past often wind up in Jill’s soupy concoctions, and the results are always delicious.

All this is a blessing to me. Others not so fortunate must rely on the likes of Campbell, which was once considered the gold standard of soups but which has lately decided to mail it in, depending on the familiar red and white can to keep the flywheel running, even though the product itself is tasteless at best and virtually inedible at worst.

The other day, with Jill out shopping, I was forced to search the cupboard for a can of soup. There were three choices: Cream of Mushroom, Curly Noodles, and Split Pea with Ham. I chose the pea soup, opened the can, and found a cementitious mass of sickly green – something. With some effort, I pried it out, shoveled it into a pan, and added a canful of water. The instruction suggested that I whisk the stuff now sitting in the pan. Whisk? What I needed was a jackhammer.

Eventually the green mixture was liquefied enough to heat, and I had my lunch. It was awful. I am sure the cream of mushroom and the curly noodles would have been as bad, for Campbell just doesn’t care any more.

Then why, you ask, do we even have it on the shelf? One reason is to serve in emergencies. (We also have some Spam stored in the cellar.) Reason two is that the others (Progresso, the house brands, etc.) are no better. Campbell makes some higher-priced, “Select” soups, and some of these aren’t bad. I suspect that the plan is to offer tasteless soups in the red and white cans to force customers to upgrade to the premium brand.

One of the delights on cruise ships is the assortment of creative soups on the menu. These include a number of chilled soups, often fruit-based (e.g., pear and ginger, blueberry-banana). No split pea and ham slime here; the ships’ chefs have flair, something wholly lacking in the Halls of Campbell. The cruise fare will also include a zesty French onion soup under a heavy matting of mixed cheeses. We have noticed a slight slippage in the over-all quality of cruise-ship food in recent years, but in soups, they’re still at the top of their game.

In a free-market economy, you’d expect some entrepreneur to rush to fill the vacuum left by Campbell and the other soup heavyweights. The situation cries out for someone to do for soups what Starbucks has done for coffee. It would not necessarily require exotic, expensive makings. Just a dash of imagination is all.

Monday, April 07, 2008

Calling a Spade a Spade

In The Importance of Being Earnest, two young ladies are meeting for the first time in a garden, and they are verbally jousting for position. Cecily Cardew lays down her marker by declaring,” I always believe in calling a spade a spade.” Gwendolyn Fairfax responds by saying, “I am glad to say I have never seen a spade; it is obvious our social spheres have been quite different.”

The evidence is now overwhelming that the U.S. economy is entering a recession. Jobs are disappearing, mortgages are being foreclosed, and the dollar is in free fall, sending the price of oil and other commodities skyward. But the government apparatchiks will not use the “dreaded R word.” Instead, we are told by President Bush, Secretary Paulson, and others that we have entered a “slowdown,” a “rough patch,” and “period of economic difficulty.” Fed Chairman Bernanke conceded the other day that a recession was a possibility, and that concession made headlines the next day, though in reality he was simply stating the obvious.

Having worked for many years in the field of investor relations, I know something about the drill that attends the onset of a recession. And I can tell you that, ten times out of ten, the reaction of securities analysts, the financial press, and the afflicted companies is that all will be well in six months. Not three months, because that would not be credible, not two years, because that would put recovery beyond the time horizon of most investors, but six months. If the slowdown hits early in the year, the gurus will tell you that a second-half rebound is in the cards. And thus it is right now, as the eternal bulls, forced at last to admit that the economy has soured, turn to the nearest available crutch: Yes, the economy has slowed, but the recession will be short and mild, and by Christmas we will all be filled with good cheer.

Since WW2, the six-month rule has generally worked, because, as we are repeatedly told, our economy is resilient, and recessions reduce inventories and force companies to get rid of fat, so that even a tepid recovery generates earnings growth. But this time there are wild cards – China, India, the Iraq War – and it is hard to be as sure about our economic future. One can make a case for the six-month rule, but one can also make a case for a deep, 30’s-style depression lasting years. You won’t hear the latter prediction, though, because no one wants to ignite an investor panic.

But the government has just bailed out Bear Stearns, and in the congressional testimony given by the CEOs of Bear Stearns and its white knight, JP Morgan, there were frequent allusions to what might have happened had Bear Stearns filed for bankruptcy. It didn’t take a genius to figure out that what everybody was talking about was a doomsday scenario. The terms being thrown around were euphemistic – “there could have been severe and possibly uncontrollable consequences “ – but the meaning was clear: The Fed rushed in to save Bear Stearns in order to avoid the financial equivalent of nuclear war.

What are we to make of it when we are told not to panic when the titans of Wall Street have so obviously just panicked?

In the world of finance, confidence is everything. Without it, no one lends anything to anyone, people sit on their savings, and companies don’t build plants or hire workers. That is the dilemma facing the Fed, the SEC, Congress, the banking system, and the financial press. The financial system is broken, but nobody dares say that for fear of making things worse. Instead, they all say that the economy will get back on track in six months. That’s a sliding prediction; in six months, if the economy hasn’t recovered, there will be a new six-month forecast.

Financial reporter: “When I see a recession, I call it a recession.”

Treasury Secretary Paulson: “I am glad to say I have never seen a recession. It is obvious our social spheres have been quite different.”