Last week’s most inescapable story involved New Jersey Governor Chris Christie and the unfolding scandal dubbed ‘Bridgegate’.
How could anyone miss it? Christie hosted a 108-minute press conference to answer and exhaust a hungry press corps. That was likely the longest press conference anyone could remember dating back at least a half-century. Hell, America had a shorter press conference to announce the end of World War II.
Bridgegate will ensure that the rotund governor from the State of New Jersey will never see the inside of the Oval Office, that is, unless a sitting president invites him over for a drink or a meeting.
Some believe that Christie will survive this disaster and after all, 2016 is a lifetime away. NBC’s Chuck Todd almost put his finger on the answer. The left-leaning Todd said that Christie’s press conference made him look like “just another politician.” Before going further, I want to note that Todd’s statement about what constitutes “business as usual” is a terrible truth about the reality of what passes for “politics” inside the Washington Beltway these days. But there are bigger truths that Christie can never overcome.
And that is this: Christie is the leader of one of the largest states in the country—one that sits right next to New York City and is considered to be very strategic for a host of reasons. Christie is finished because he is stuck in a Catch-22 that will bury him no matter what happens from here.
What Catch 22? One of the following has to be true, and either way, it spells doom for the New Jersey Governor:
1. Everything he said in his press conference was the truth. He had no knowledge of anything before he saw it on cable television the morning before his press conference [right after he had his workout].
2. Christie is lying: He knew something that we will eventually find out. Nixon showed us four decades ago that the truth always comes out, no matter what. You can’t erase the truth like some tape. There are now permanent paper trails, thanks to today’s technology. Even without a smoking gun, we have yet to hear from all of the people who surround Christie—-particularly the insiders he fired.
Which of the above is more likely? #2, but even if he knew nothing until the day before his press conference, it is difficult to believe that he knew absolutely nothing about the Bridge-related events—and this excuse does not pass the smell test. Christie—prior to this crisis—has been a no-nonsense, rude, but very strong leader (Hurricane Sandy showed us that). This is a guy who runs a ship as tight as any in the country which explains, at least in part, why he just won re-election in a landslide. His culture is “do it my way or I will cut you to pieces” (or stop traffic so that it backs up into your town). That was the culture he fostered over months and years. I have always asserted in all of the books I have authored, especially the Jack Welch books, that culture is something that takes months and years to build, not days or weeks. It is almost impossible to fathom that people under Christie’s leadership would do something that is not in accordance with the thinking and method-of-operation of this hard-charging leader.
And that is why Christie is finished.
Because both #1 and #2 above are career-ending realities. Either he was a clueless putz or he promoted this type of petty, dangerous politics. Think about it for a moment: If you are working for a boss who has a tight reign over his or her department, chances are you spend your day thinking how to “please the boss.” I have had tough, but good bosses and that was the way I always viewed my job. As long as I was never asked to compromise my values then the boss’s goals came first— Even before my own. So that means that the people under Chris Christie felt like they had a green light (pardon the pun) in doing what they did. And that is why Christie deserves to be finished. Bridgegate wreaked havoc on thousands and thousands of people each day lanes were closed on the George Washington Bridge, ostensibly due to some mythical traffic study. People were late for work, kids never got to school, and most important, first responders could not get to the people who needed them.
There is the story of the 91-year-old woman who died before the ambulance could ever get to her. The woman’s daughter said that it was her time to go. But what about the stories we have yet to hear? I believe that this will eventually lead to criminal prosecution and the end of any chance Christie had to become the 45th president of the United States. [His chances were never that good, in any event: his bullying-antics would play poorly in states like Iowa and South Carolina.]
Perhaps history will show this to be a watershed moment that revealed the feet of clay of someone who had a chance to be leader of the free world. Better to know now, while stuck in traffic, before the same person responsible for that traffic practices his dangerous tactics on a worldwide scale.
—Jeffrey Krames, January 12/13, 2014
In the last few weeks, as we have all witnessed the absolute meltdown of the Obamacare Website, there has been much talk—mostly by President Obama—about the “best and the brightest” he has brought in to fix the problem. That term, “best and brightest” was made part of the leadership vernacular not by Obama, but by another president, JFK.
It was Kennedy’s “whiz kids”—the best of academia and industry—who became associated with the term “the best and the brightest.” JFK of course had his brother, Bobby Kennedy, as his attorney general. There was also Ted Sorenson, Kennedy’s special counsel, adviser, and legendary speechwriter, and Arthur Schlesinger, Jr., the Pulitzer Prize Winner who served as special assistant and “court historian” to JFK, among many others.
However, all of this talk about the best and brightest by Obama, did get me thinking about JFK (precisely one month away from the 50th anniversary of his assassination). I am afraid Obama is no JFK, but truth be told, JFK was not quite the legendary JFK we have built him up to be. He was beloved and charismatic, but intellectuals like Peter Drucker asserted that his legislative feats were not quite as impressive as he was.
Before I wax on too long, this piece is about the 44th president, not the 35th.
When Obama trod out the words “best and brightest,” I immediately thought of Kennedy and instantly knew why things have gone so wrong for Obama since he was sworn in for his second term. It got me to think about Obama’s presidency in a much broader sense than a failed healthcare Website or a misstep or two.
It hit me. Like a ton of bricks. The answer was so obvious.
In his first term, Obama took great pains to bring on the smartest, most capable people he could find. He even appointed his foes, if he felt that person was the strongest candidate for the job. He hired the best, and not only in his cabinet, but in other key posts as well. I thought back to the people he surrounded himself his first time around as president: there were outstanding leaders like Secretary of State Hillary Clinton. But as important, he made sure to have the best political advisors of his day. There was the two Davids—Plouffe and Axelrod—two of the greatest political minds of his day (Plouffe was so good that he was later paid $1.5 million+ for a political non-fiction book).
The “Davids” not only helped Obama to win elections, they advised him on a great number of things. Obama also had the feisty, but imminently clever and ruthless Rahm Emanuel as his chief of staff for most of his first term as well.
That really got me wondering about one recent specific event in particular. When Obama was on the verge of launching missile attacks against Syria [for using chemical weapons on a massive scale], he took a 45-minute walk with his “new” chief of staff Denis McDonough. According to the official White House Website, Obama said that “Denis has played a key role in every major national security decision of my presidency…from ending the war in Iraq to winding down the war in Afghanistan.”
Could it be that it was the same man that helped Obama to end two wars that talked Obama into calling off those strikes at the last minute? I wonder about what would have happened if that walk was taken with ruthless Rahm Emanuel instead. Whether it was good policy or not, it was Obama’s own “red line” that was crossed and his inaction diminished the United States in the eyes of the rest of the world. The buck stops with him, not his chief of staff. But advisors can play huge roles in the success—or lack thereof—of any leader.
When Obama failed to take action in Syria, after declaring that red line, He looked weak and indecisive. And that was not only the view from foreign capitals, it was the view from inside our borders as well. And for any leader, especially the one at the helm of the free world, there is great danger with looking weak and indecisive.
It invites miscalculation—both home and abroad.
Could it be that the Republicans—who felt that Obama would back down as had been his method of operation up to that point—would not have shut down the government had Obama had a reputation for standing up and doing exactly what he said he was going to do? Of course, we will never know the answer to that, but it certainly gets one thinking. And regardless of who is responsible (and the American public mostly blames congressional Republicans), it is Obama’s economy. And in his economy, the U.S. dollar is not worth as much as it was worth before the 16-day shutdown and near default of the full faith and credit of the United States. Not when Chinese leaders come out—and they never come out—to call for the “de-Americanization” of the world.
Right now we are in the thick of the Website disaster that is the face of Obamacare. The optics for the president are disastrous. But the Website is merely a symptom of a much larger, systemic problem. And that is that Obama has surrounded himself with a cabinet—and a team of advisors—that rates no better than a “C” and really much closer to a “C-.” How else can you explain the fact that no one even bothered to tell the president that the Website for his one signature piece of legislation was in trouble before he could do anything about it?
I need not name names (and of course there are exceptions like Secretary of State John Kerry—his speech arguing for the bombing of Syria was a portrait in courage), but there isn’t a doubt in my mind that Obama is in trouble. Between the lack of action in Syria and the latest budget debacle that took us right to the brink of insolvency, this is a White House in crisis, whether they know it or not.
Is crisis too strong a word?
No. We are a country that has been weakened by this president. There is a crisis of confidence that has attached itself to this administration like the stench that sticks to a particularly odorous garbage landfill.
Let’s take Saudi Arabia as an example of how leader’s minds are changing across the globe toward the U.S. The Wall Street Journal reported that Saudi Arabia would no longer cooperate with the United States on arming and training Syrian rebels. That declaration came after Saudi Arabia surprisingly renounced its seat on the U.N. Security Council. The delegation explained it away by saying that it was upset with the Security Council’s lack of action toward Syria, but Prince Bandar Bin Sultan al-Saud allegedly told others that “this was a message for the U.S.”
The lesson is clear: the bigger the job, the greater the need for top minds and top talent. Hire people that do not measure up and your leadership will be crippled—and once you lose it, there is simply no place to go to get your reputation back. And this lame duck president still has three years to preside over a crippled America that he himself cut off at the knees with his own poor decision-making. Peter Drucker taught me a great deal [when I interviewed him for my book Inside Drucker’s Brain]. He told me that the best leaders know how to hire, who to fire, and who to promote. If you measure second-term Obama against those Drucker leadership criteria, Obama fails on just about every level.
—-Jeffrey A. Krames, October 23rd, 2013
9:52 AM EST: KRAMES UPDATE: After a weak opening due to bad earnings from such firms as IBM, we have recovered a bit. But that is not what this update is about. It is about how much worse the deal that was made last night really is. Here is the latest: as part of the bill passed at midnight, both chambers of Congress must come up with a new grand budget by January 15th, 2014. That is three months away—time enough to come up with such a deal, right? That is, until you hear the following: even though there are two-and-a-half months left in the year, Congress will be in session for only 18 days in what is left of 2013. That’s right. While the rest of us work at least five days a week to make ends meet, Congress will work—on average—about one day a week for the remainder of the year. I know we have the best system of government and democracy in the world, but we are at an all-time low in the way we manage our government. This is bound to effect the markets in the weeks and months ahead.
Well, here we are, about six hours after the House, Senate and President ended the government shutdown after 16 painful days while averting economic disaster. This was a self-inflicted unmitigated disaster that did great harm to the Republican brand, and much, much worse, made the United States—and it currency—a less safer bet in the eyes of the rest of the word (and remember, China and Japan hold about 45 percent of U.S debt).
First, a word about the timing of the vote. This thing came down to the wire. After the Senate took up the vote in the mid-evening hours, it would take several additional hours before the House voted on the bill. At 10:21 pm, with less than 100 minutes to go before default, the House had their vote on the bill. You cannot cut it closer than that and that is why we are seen as a superpower that is governed like a banana republic. As a result, I would be shocked if Fitch elected not to downgrade The United States in similar fashion to the Standard & Poor’s downgrade of 2011.
Next, the numbers: according to Standard & Poor’s, the 16 day-shutdown cost our economy dearly: $24 billion and six-tenths of growth (or 20% of our forecasted GNP growth—a significant number). That is a chunk of change and a growth haircut that we could ill-afford at this very delicate time in our slow-moving recovery. We have also lost at least tens of thousands of jobs as a result of all of this tumult, and that number will surely increase when the government provides a concrete tally.
If that is not bad enough, both business and consumer confidence is down, and the entire woeful affair only kicked the can down the road for a couple of months (I have come to hate the phrase “kick the can.”). We will be right back here in January, for the government shutdown, and early February, for the Debt Ceiling.
For those of you who read me, you know how I feel about the junior senator of Texas, Ted Cruz. There is little doubt that it was this hard-right, self-appointed emperor of the Tea Party that sparked the government shutdown, with much help from his far-right caucus and powerful organizations like the Heritage Foundation. It is rare indeed for one member of congress to wield such power, especially one this fanatical, but there is no escaping the truth. And don’t take my word for it. Fellow members of the Republican Party, moderates like Representative Peter King, among many others, blamed Cruz from the start. Former presidential contender, Senator John McCain, called the Cruz crusade “the wrong ground, the wrong premise and the wrong fight to have.”
Despite the fact that about 20% of the country considers Cruz a tireless crusader, I believe he represents the worst of our government and our country. A demagogue who blames the rest of the world for the deeds that he himself set in motion. And, unfortunately for Wall Street, K Street, and Main Street, he is not going away anytime soon (although his fellow Republicans have threatened him privately to cool it lest he reap the wrath of smart and powerful Republicans like Mitch McConnell—who has no love lost for Cruz, to say the least). Perhaps worst of all, some credible pundits are calling Cruz the de-facto leader of the Republican party—a frightening thought. But who else is the leader of the GOP? That leadership vacuum is the Republican’s party greatest challenge in governing in a functional manner and worse for them, a real problem for the 2014 mid-terms and more important the 2016 presidential election. Can you imagine if Cruz actually gets the GOP nomination? He would be crushed in the general election, which is why it is so unlikely that he will be a contender in ’16.
What Wall Street is Focused on Today
Yesterday, Wall Street was focused like a laser on just getting the deal done. Today, comes the aftermath—the hangover. Like some fraternity beer-bash that trashed a dorm room while everyone got drunk and broke the furniture, Wall Street is waking up to an unruly mess that is the aftermath of the third longest government shutdown in U.S. history. The aforementioned numbers are sobering and likely to affect fourth quarter earnings and bleed into the first quarter of 2014.
That is why I believe that many Wall Street insiders will be focused on the implications of the 16-day government shutdown. Many fear that this latest episode will have a profound effect on our country