All posts by Jermaine Taylor

The Huntsman Paradox

Courtesy of Jon2012.com

What’s Jon Huntsman Jr. to do?

While the former Utah governor and U.S. ambassador to China seems to be roundly liked by many on both the left and right, his poll numbers suggest that he has little, if any, chance of winning the Republican presidential nomination.

The Wall Street Journal editorial board boldly supported Huntsman’s economic growth plan early in the primary season, calling it “as impressive as any to date in the GOP Presidential field, and certainly better than what we’ve seen from the front-runners.”

In November, the New York Times Magazine also threw its hat into the ring, selecting Huntsman as the most likely candidate to defeat President Barack Obama in a general election head-to-head.

Despite the hotly contested fight between former Massachussetts governor Mitt Romney and Texas Governor Rick Perry over whose state created more jobs during their respective tenures in office, it was Huntsman’s state that got the nod from Forbes magazine, which chose Utah as the “best state in the nation for business.”

“Utah’s economy has expanded 3.5% annually over the past five years, faster than any other state except North Dakota,” Forbes noted.

Even Haley Barbour, arguably one of the most conservative governors in the, has come to Huntsman’s defense when critics, such as radio talk show host Rush Limbaugh, have charged him with not being conservative enough.  “Jon Huntsman and I served together,” Barbour said, “and while we don’t agree on some issues, there’s no question that he’s a conservative.”

So why does Huntsman remain largely ignored by the conservative base?

Huntsman, quite frankly, is far too reasonable a candidate in a party that has ostensibly abandoned all reason.  Indeed, in a party where Newt Gingrich’s propensity for self-aggrandizement appears to know no limits and Mitt Romney seems willing to say anything and everything to win votes, Huntsman’s voice isn’t being silenced for lack of substance—as the WSJ and NYTM endorsement attest—it’s being drowned out due to a purposeful lack of hyperbole.

Like President Obama, who in 2008 tended to shy away from discussing the presidential election in terms of his being potentially the first African American to be elected president, Huntsman isn’t one to overzealously toot his own horn.

While Gingrich has lauded himself for helping to “defeat communism” and Romney and Perry have each accused the other of being dubious about their job creation records in Massachusetts and Texas respectively, Huntsman has stayed out of it.  Though Gingrich has actively sought to position himself as the adult among a group of cantankerous children, it’s Huntsman that has largely risen above the fray.

But that might not be enough to win over a GOP base that appears to hunger more for showmanship than substance.

Former New Jersey governor and Huntsman supporter Christine Todd Whitman may have summed up the Huntsman’s paradox best in a recent interview with POLITICO where she called on the candidate to abandon his bid for the Republican nomination and run as a third-party candidate.

“The problem that we have today is that small base of very active political partisans on both sides that control the process,” Whitman said.  Republicans, she added “feel like they have to placate or appeal to a more and more narrow base in order to get the nomination. The American people as a whole are not extreme.”

Neither is Huntsman, which doesn’t bode well for his chances in 2012.

Not Too Big To Fail

Flexibility and growth.  Those are the two words being repeatedly talked about as a chief justification for the Private Company Flexibility and Growth Act (H.R. 2167) currently making its way through Congress.  The legislation would strike down what Rep. David Schweikert  (R-Ariz) calls a piece of “burdensome regulation” mandating that all private companies with a minimum of 500 shareholders file with the SEC and go public.

The new bill, in helping entrepreneurs “grow their business, remain competitive, and create jobs,” said Schweikert, who sponsored the bill, would raise the mandatory minimum from 500 to 2,000.  Companies would then be able to remain private for a substantially longer period of time.

“This regulation severely limits the growth stages for companies, which need time and flexibility to develop,” Schweikert said in a statement, adding that the legislation would “unwind rep-tape on small business and allow for growth and job creation.”

While some of the nation’s most well-known private companies like Facebook will almost certainly be lobbying Congress on behalf of the legislation, missing from the uncharacteristically robust bipartisan support the bill appears to be garnering is any meaningful discussion of a principle sadly anathema to Washington these days: transparency.

Though it might benefit a company to remain comfortably behind the anonymity of, say, a Second Market, what does the lack of transparency cost would-be shareholders who might also benefit from discerning earlier rather than later the pitfalls of a potential investment.

Many of the belatedly revealed exotic accounting practices of Groupon Inc. (GRPN), for instance, weren’t brought to light until after the company filed its S-1 with the SEC, requiring that the agency closely scrutinize the company’s financial soundness before approving its bid to go public.  At that time, Groupon, which was valued by some at $30 billion, was a growth story darling on Wall Street, and the sky—at least if you asked any of the company’s A-List underwriters—was the limit.

But as it made its way through the SEC’s “burdensome” regulatory pipeline, people slowly began to gather that the company may not be what it had led everyone to believe.  Indeed, after an SEC review uncovered Groupon’s accounting shenanigans, many people started to ask questions and the company’s estimated value plummeted by half.  Even then, there were still some who vocally questioned whether Groupon was worth as much as $15 billion.  And while investor appetite was generally hearty for slices of Groupon’s IPO pie earlier this month, it would have no doubt been even more aggressive if the SEC hadn’t outed the company.

If we’re going to be a truly free market—as Rep. Schweikert and others openly advocate for—isn’t it only fair that we adhere to one of the most cardinal principles of any free market and let those companies that are unfit meet their Darwinian end?  Keeping a weak company safely within the bosom of the private market any longer than necessary only seems like an exercise in prolonging the inevitable.  Besides, if ordinary Americans are expected to pull themselves up by their own bootstraps, shouldn’t companies be expected to do the same?

Regulation: An Idea Whose Time Has Come

Goldman Sachs CEO Lloyd Blankfein/Saul Loeb/AFP/Getty Images

Take a look around.  Everyone’s  angry.  The 99% are upset that they haven’t been getting their fair share.  The 1% is angry at the suggestion that its own share has been much too large for far too long.  And Washington is engaged in a heated tug of war about how much regulation of the line of demarcation separating Wall Street from Main Street is too much.

While the Republican presidential field is content to point fingers at the White House, arguing that the 99% should be leveling their accusations of corruption and mismanagement not at Wall Street and the financial services industry but at the president, data suggests the American people are still hungry for their pound of flesh from banks and the larger financial services sector.

Indeed, according to a June Gallup poll, “thirty-six percent of Americans have ‘very little’ or ‘no’ confidence in U.S. banks—up from 30% last year and the highest on record.”

If anything, such robust cynicism on the part of average Americans suggests the moment is more ripe now than ever for both sides of the aisle to shelve their pro- vs. anti-Wall Street talking points and come to at least one inarguable consensus: in light of the catastrophe that was the 2007-2008 financial crisis, some form of regulation is necessary.

Yet since Dodd-Frank’s Volcker Rule was released by regulators for comment last month, some of the biggest players on Wall Street—including investment bank Goldman Sachs—appear more defiant than ever, amassing their sizable stockpiles of capital to lobby Washington to take the teeth out of the regulation, which is intended to reduce the systemically risky practice of proprietary trading on the part of banks.

Despite the gargantuan lobbying efforts of Wall Street, though, the hunger for a legitimate and transparent system of checks and balances on the rogue excesses of the few—not all—bad actors in the financial services industry is implacable.  No matter how much wailing or gnashing of teeth Wall Street exhibits, “something’s gotta give” if we’re to successfully reinstill confidence in Wall Street in the minds of those on Main Street.

As several of the Occupy Wall Street protesters professed in a Tuesday op-ed in the wake of the New York City Police Department’s eviction of the 99% from lower Manhattan’s Zuccotti Park in the wee hours of the morning on Tuesday, “you can’t evict an idea whose time has come.”

While many on Wall Street may have breathed a sigh of relief as they sauntered through a Zuccotti Park this morning free of protesters for the first time in months, any sense of respite or vindication they may have felt could ultimately prove short-lived if the issues and concerns raised by the occupiers—however cacophonous and diffuse they were at times—aren’t taken seriously and Wall Street’s overindulgences aren’t sufficiently addressed with all deliberate speed.

Indeed, as financial regulator turned University of Missouri-Kansas City professor William K. Black notes in drawing parallels between the largely unregulated financial services industry today and the “looting” that followed the deregulation of the savings and loans industry in the 80s and 90s, “The costs of regulation are trivial relative to the costs of [another financial crisis.]”

Consumer Lending Institutions Face Strong Headwinds

Bank of America CEO Brian Moynihan/Courtesy of Greater Boston Chamber of Commerce

It seems that banks have been taking a battering in the current post-recession climate as a potentially fatal cocktail of uncertainly arising from the European debt crisis and continued volatility domestically continues to push banks to the limit.

Some banks, like Bank of America, continue to deal with losses due to mortgage-backed securities. B of A’s recent fortunes have largely been tied to its 2008 purchase of home lender Countrywide, prompting new CEO Brian Moynihan to take sizable steps as he attempts to restructure and rebuild the image of the nation’s largest bank.

Even investment bank Goldman Sachs, once thought to be impervious to the elements that have traditionally given other banks fits, has been hit hard by losses as of late.  According to DealBook, Goldman, “weighed down by problems in its private equity portfolio and the broader global economic woes, reported a loss of $428 million, compared with a $1.7 billion profit a year ago.” Underscoring the magnitude of the loss, it was only the second time since the company went public in 1999 that Goldman suffered a loss.

It’s unclear whether banks will be able to collectively rebound from the malaise currently engulfing them, but their progress—or lack thereof—in doing so may be an important indicator as to whether the economy as a whole is righting itself or still teetering precariously close to yet another downturn.

What Every Start-Up Can (And Should) Learn From Groupon

 

Dan Frommer, Business Insider

Groupon was the latest Internet juggernaut to IPO this year after LinkedIn did so back in March, officially going public after a long-awaited, much-scrutinized and oftentimes much-maligned road to the stock market’s opening bell on Friday.

As expected, Groupon, the web’s most popular daily deals destination, which raised an estimated $700 million in what was the largest Internet company IPO since Google’s $1.9 debut in 2004, saw its stock surge straight out the gates.

The Chicago-based company’s stock climbed 30.6 percent from its $20 initial price to close the trading day at $26.11, making founder and CEO Andrew Mason an instant billionaire and earning early investors like Marc Andreessen and Ben Horowitz returns on their investment numbering in the tens of millions.

Yet while many will of course be fawning over the official birth of another promising tech company in the coming weeks, there are a number of valuable lessons budding start-ups—many of whom watched the delivery of Groupon’s IPO baby with a palpable sense of anticipatory glee—can learn from companies like Groupon.

Sadly, they’re not very good ones.

First, if you’re going to build a start-up, try as best as possible to distinguish yourself.  In the tech world, if you really want to break free of the herd, you’ve got to either enter into a venture with relatively high barriers to entry for competitors or, like Apple, offer the public an incomparable product (read: iPhone or iPad) customers are willing to scale to obscene price points to acquire.  Ideally, you want both of these conditions to be the case.

Groupon, as it’s become increasingly clear, fails on both fronts.  Besides not producing anything, the barriers to entry in the daily deals space are relatively non-existent, leaving the door behind Groupon wide open for any of its growing horde of rivals to crash its party.

While imitation is the greatest form of flattery in some circles, to a tech company—which depends on innovation and staying one, if not two, steps ahead of the pack—the ability of others to easily mimic you suggests you simply didn’t set the bar high enough from the outset.

Now, Groupon’s peers, which not only include LivingSocial and Bloomspot but a number of other portals too numerous to mention, may soon pose a serious threat to Groupon’s dominance.  For the time being, though, they seem content to slowly winnow away the company’s market share as they build their own customer bases, some of which, I’m sure, will necessarily culled from the ranks of disaffected Grouponers seeking even lower price points on deals elsewhere.

Skyrocketing marketing expenses, which Groupon has said it intends to curtail, won’t do all that much to save the company if rivals begin to undercut its price points en masse, since at the end of the day a better deal essentially sells itself.

Once you’ve realized who or what you are, the game you’re in and you’ve successfully assessed all of the other competitors in your field, it’s important to be real with yourself and investors about what you can capably deliver.

Over-promising, while it may earn you a few extra VC dollars today, will only hurt you in the long-run, as you’ll ultimately be punished by the markets when your company fails to meet overly ambitious earnings estimates quarter after quarter.  In fact, companies like Apple have made a practice of doing precisely the opposite, routinely outpacing its own stated earnings targets.

While Groupon’s 30.6 percent jump on its first day of trading isn’t a bad start, it’s a far cry from the 109 percent LinkedIn shares soared its first time out, closing at $94.25 a share after debuting at $45.

And LinkedIn, with decidedly less pomp and circumstance, mind you, already garnered over 100 million users before it hit the open market.  Facebook, still in the process of considering its own IPO, has already eclipsed 800 million.  Mason and company, by contrast, can claim just shy of 40 million.

Is Groupon overvalued?  Maybe it is.  Maybe it isn’t.  But looking over the sum total of its performance thus far, I would have expected more from a company with the largest Internet coming out party since Google.

But that’s just me.

 

Beyond Meredith Whitney

From a bird’s eye view of recent headlines, it seems an awful lot of people are focused on beating Meredith Whitney’s dire 2010 forecasts for the municipal bond market.

In a recent commentary, “Time’s Up Meredith Whitney, Muni Prediction Was Wrong,” CNBC’s Gary Kaminsky dismissed Whitney’s predictions as the “prognostications of the gloom and doom crowd.”

Well I’m not so sure if Mr. Kaminsky’s been paying attention to the news lately, but the situation state and local governments currently find themselves in is pretty gloomy from where I sit.

Indeed, while pointing out that Whitney’s forecasts have missed the mark, Bloomberg’s Alison Vekshin also notes that muni defaults fell last quarter chiefly due to the fact that “local governments reduced expenses instead of forgoing payments on debt.”

But at what cost?

According to a report put out by the National League of Cities (NLC) last year, “local government job losses in the current and next fiscal years will approach 500,000.”

“City cutbacks affect city employees, services to the community, and local economies,” Ron Loveridge, NLC President and Mayor of Riverside, California, said in the report.  “Every city employee lost means one more person in the community without work. Our communities suffer from lost services, whether it’s less police on the streets or the closing of a local library.”

Earlier this year, Camden, NJ, a city some argue is one of the most dangerous in America, laid off half of its police force in an effort “to cut spending to compensate for diminished revenue.”

Vice President Joe Biden even got into a heated back and forth with a reporter recently over his suggestion that crime statistics will trend upward if President Obama’s American Jobs Act—which provides financial support to cities to pay municipal employees like police, firefighters and teachers—isn’t passed by Congress. “Murder will continue to rise; rape will continue to rise; all crime will continue to rise,” Biden said.

But such stark realities seem lost on Kaminsky, who admits he’s “profited handsomely as a result” of ignoring Whitney and other naysayers and “adding to my non-taxable bond holdings.”  So I suppose it’s somewhat understandable why there’s not all that much doom and gloom from his lofty perch.  However, in his gloating, he diminishes the inestimable losses of hundreds of thousands of hard-working Americans who have been tossed overboard so that the beleaguered muni ship can continue chugging along.

What if… ?

What if Democrats and Republicans could come together to present as united a front on solving the country’s economic problems as they have, for all intents and purposes, on foreign policy?

If you recall, when Barack Obama defeated Republican John McCain for the presidency back in 2008, one of the biggest contentions of the right was that the young Illinois senator was not fit to be commander-in-chief. Indeed, many conservatives seized upon then New York senator Hilary Clinton’s suggestion, in a controversial ad that ran during the democratic primarily, that Obama was far too inexperienced to be the face of America’s military might and diplomacy as the U.S. dealt with unyielding terrorist groups like Al Qaeda.

Yet close to three years into Obama’s term and the success of his foreign policy agenda is hard to deny.  What’s more, Republicans have displayed an uncanny knack for basking in the glow of Obama’s foreign policy triumphs while being careful not to give the president himself all that much credit.

So emboldened by the death of Libya’s Muammar Qaddafi last week was McCain that he, with a smile on his face, used the milestone to send a shot across the bow of other “dictators” all over the world in an interview with the BBC.

“I think dictators all over the world, including Bashar al-Assad, maybe even Mr. Putin, maybe some Chinese, maybe all of them, may be a little bit more nervous,” McCain said, later adding, “It’s the spring, not just the Arab spring.”

McCain is just one of a slew of Republicans who has been critical of Obama’s foreign policy while at the same time being all too willing to revel in a spate of triumphs that have also included the assassination of Al-Qaeda leader Osama bin Laden.  And although generally critical of Obama’s handling of Libya and other efforts—with Republican presidential nominee in March calling the president’s handling of Libya “tentative, indecisive, timid and nuanced”—conservatives have primarily stayed out of his way, largely because he wields a certain degree of unchecked power as commander-in-chief but also because they have, by and large, supported the overall thrust of his agenda: to spread democracy to countries once thought to be strongholds of Muslim extremism and safe havens for terrorists like bin Laden.

The question this leaves me with is this: How much further along on the path to putting countless Americans back to work might we be if Republicans exhibited similar support of the president in his efforts to solve the nation’s current economic woes?

“Look at the progress the president can make when he doesn’t have Republicans obstructing him,” former Democratic spokeswoman Karen Finney told the AP recently.

Despite a survey of economists by Bloomberg concluding that passage of the president’s American Jobs Act would prevent another recession in 2012, Republicans remain staunchly opposed.  Even the wishes of the American people appear to be falling on deaf ears on Capital Hill.  According to a Gallop poll last month, a majority of Americans favor a bulk of the policy prescriptions in Obama’s plan.

Still, the right is apparently unwillingly to concede on any proposal that might give Obama even a modicum of political traction heading into next November’s elections.  While Republicans say they’re subject to the will of their constituents and not to the self-serving machinations of conservative mouth pieces like Glenn Beck and Rush Limbaugh—who famously said he hoped that Obama “failed”—their recent stonewall on Obama’s jobs plan make it almost impossible to take that assertion seriously.

It’s unclear whether conservatives will ever unshackle Obama’s hands on the economy and let him take the lead domestically as he’s done overseas, but there’s no denying that the success of the president’s foreign policy efforts makes the thought an interesting one to ponder—if only in our dreams.

Separate But Equal?

Courtesy of Flickr Creative Commons

In a op-ed last week in the Times, columnist Joe Nocera, in an article titled “Why We Need For-Profit Colleges,” comes to the defense of the embattled institutions, which have been increasingly up in arms since Secretary of Education Arne Duncan announced in June new steps to protect students from what the department terms “ineffective career college programs.”

“There is nothing inherently wrong with the idea of for-profit education,” Nocera writes. “The for-profits have flaws, but so do nonprofits, with their bloated infrastructure, sky-high tuition, out-of-control athletic programs and resistance to change. In a country where education matters so much, we need them both.”

I agree.  And I don’t, on the face of it, disagree with any of Nocera’s arguments for why this is so.

However, I do find some fault with Nocera’s assertion that for-profits and non-profits are essentially “separate but equal” institutions, both of them with inconsequentially different flaws.

For-profit institutions contend the new rules are unnecessary and unfair, and would limit educational opportunities for the primarily low-income and minority student bodies that make up the bulk of their enrollments.

While I hesitate to suggest for-profit institutions are either overplaying their victimhood or being deceptive outright, something about their argument that their works are, above all else, for the greater good of students generally—and students of color and low-income students specifically—smacks of disingenuousness to me.

According to Education Department figures, “students at for-profit institutions represent 12 percent of all higher education students, 26 percent of all student loans and 46 percent of all student loan dollars in default.”

If those numbers aren’t staggering in and of themselves, also consider the fact that for-profit institutions and their various advocates have spent an estimated $12 million to combat Duncan and the Education Department’s push for greater oversight of their industry since 2010.

Those hardly seem like the discretionary resources of a cash-strapped, systemically neglected public university or community college to me.

Unlike public K-12 schools, where teachers argue (justifiablly in some cases, admittedly) that a lack of resources, coupled with years of systemic neglect and mismanagement, should temper the degree to which they’re ultimately judged with regard to student performance, for-profit colleges and universities, given their most recent largesse, seem to have a wealth of resources at their disposal.

As Duncan has said: “We’re asking companies that get up to 90 percent of their profits from taxpayer dollars to be at least 35 percent effective. This is a perfectly reasonable bar and one that every for-profit program should be able to reach.”

Couple this with the fact that these institutions, which remain in the distinct minority as a share of the total number of post-secondary institutions across the country, receive, by themselves, 26 percent of all the financial aid (in the form of Pell Grants and other forms of support) issued by the federal government, and it’s hard to see their plight as being one and the same with that of public universities and community colleges, or feel sympathy for their claims that they’re being picked on unfairly by Duncan and the Obama administration.

On their website, the Association of Private Sector Colleges and Universities, an advocacy group for the interests of for-profit colleges and universities, states that its “core values” include, among other things, a “dedication to integrity, accountability and excellence in career and professional higher education.”

Those are undoubtedly respectable ideals I think for any education institution to pursue. But at a time when student loan defaults continue to rise, I believe it’s imperative that APSCU and its members not only embrace the value of accountability in its literature but earnestly live up to it in practice.

If APSCU and its constituents believe so genuinely in the education they’re offering their students, this should be a policy they can readily get behind. To be sure, if you’re already rigorously vetting your own processes for inefficiencies or areas where student interests might be better served, the new rules will merely have a placebo effect. If not, however, it will, if as effective as advertised, unmask those who seek to prey upon the most valuable yet vulnerable resource our society has: our young people.

We’ve already seen what can occur when institutions implicitly invested with the public’s trust take their eyes off the ball in the name of ever-engorged profit margins. Now, many experts believe that higher education student loan defaults may be another potentially disastrous bubble waiting to explode. I believe it would behoove us to not drop the ball twice.

What Answer Would Our Founding Fathers Choose?

In an August op-ed entitled “What is the stock market telling us?” in the Washington Post, Liaquat Ahamed writes:

When the stock market zigs and zags its way to a 12 percent loss in three weeks, wiping out $2.5 trillion in wealth, it is clearly sending a message. But what, exactly, is the market telling us? The most obvious answer is that it is simply agreeing with Standard & Poor’s, which in its Aug. 5 decision to downgrade U.S. government debt from a AAA rating to AA+ decried Washington’s “political brinksmanship” and said that the recent debt deal “falls short” of what is needed to bring U.S. finances under control. The implication of such an answer is clear: To turn things around, the administration and Congress will have to act more vigorously on the deficit, either by raising taxes or cutting spending.

Ahamed, who was awarded the 2010 Pulitzer Prize for History for his book Lords of Finance: The Bankers Who Broke the World, then goes on to provide an articulate and, I believe, thoughtful analysis of why he thinks austere spending cuts, given the precarious state of the moribund economic recovery, is not only inadvisable but could potentially push us back into the throes of another recession.

What Ahamed conspicuously fails to do, however, is discuss the former of the two options he claims government must earnestly consider if it’s to help the stock market—and, more important, ordinary Americans—regain their faith is the financial system: tax hikes.

Taxes, it seems, have become a topic about which the vast majority of Americans—in red states and blue states alike—refuse to speak of, the very thought of a shortfall in businesses’ bottom lines or workers’ bi-weekly paychecks arousing in them an incomparable sense of dread on the one hand and antipathy on the other.

Indeed, it appears the very suggestion of shared sacrifice, though undoubtedly a founding principle upon which our nation was based—as evidenced by the many ordinary and extraordinary Americans who stood together, fought together and ultimately died together on battlegrounds too numerous to mention in order to secure our nation’s freedom from British rule—has become antiquated.

That’s why I was heartened to learn that in Florida last month, an informal South Florida Sun-Sentinel poll asking the question “Would you take a pay cut to save co-workers’ jobs?” found that, of 1,373 total respondents, almost half (46%) said, “Yes. It’s the right thing to do.” Surprisingly, only 13% of respondents said, “No. People need to stand on their own merit.”

Courtesy of Sun-Sentinel
At a time when seemingly everyone appears to accept at face value the Darwinian rugged individualism of an undoubtedly mythic Wild, Wild West that posits that those who can’t survive by their own devices alone must somehow be deserving of the misfortunes that befall them, I was taken aback by the striking sense of oneness exhibited by those who responded to the poll.

Despite the fact that the article, by Sun-Sentinel reporter Marcia Pounds, goes on to detail the unenviable tribulations of municipal workers forced to take a pay cut—”For me, it’s going to be devastating,” one gentleman comments—respondents still overwhelmingly chose to put the well-being of their co-workers above their own self-interests.

While gratifying, however, the article and poll left me with a gnawing question: What’s stopping the American people by and large from making the same sacrifice?

While the present debate facing our nation seems to consist of an increasingly vitriolic back and forth surrounding who should have their taxes raised—Should it be the well-to-do? Should it be the middle-class?—I’d like to suggest for a moment that we consider the one option that has been sorely missing from the debate, the same option missing from Ahamed’s op-ed in the Post.

We should raise taxes on everyone.

Why? Perhaps we should ask the 46% of respondents who took the Sun-Sentinel poll and declared, in no uncertain terms, that shared sacrifice was, quite simply, “the right thing to do.”

“There is no overnight solution,” New York City Mayor Michael Bloomberg said in his weekly radio address on Friday, referring to the present state of the economy. “The only way you solve this problem is that everybody pays a little more and everybody gets a little less.”

I agree. And I think the founding fathers would as well.

The bigger they are…

You know what they say about things that sound too good to be true: they probably are.

In recent days, the trouble experienced by many in the economy, from the average American to institutional investors, can best be seen in the persistent drubbings being taken by many large cap stocks, or “blue chips.” Once thought by many industry insiders to be the market’s equivalent of the “smartest guys in the room” because of their long-term growth potential and seemingly indefatigable ability to surmount the most treacherous economic headwinds, some of the U.S.’s largest companies (as expressed by the Dow Jones Industrial Average) have shown that even the most stalwart companies have had to take their medicine.

While the Dow rallied today, closing up 44.73 points, or 0.40 percent, the picture for the index is a lot less rosy if you look back over its trajectory since the year began. Indeed, for the last six month’s, the Dow has taken a -5.68 percent tumble.

And if you think it’s just the U.S.’s biggest and baddest feeling the heat, think again.

Indeed, this Monday saw both London’s blue-chips down 1.6pc and Tokyo’s “first section”—Japan’s version of blue chips—down 3.73 points, or 1.82 percent. And in Mumbai, the Sensex, the Dow’s Indian equivalent, has begun experiencing spasms of its own, weighted down by concerns over the European debt crisis and skepticism about the U.S.’s resolve in getting it’s economy back on the rails, according to analysts.

According to Shanu Goel, Senior Research Analyst at Bonanza Portfolio:

“Concerns over US economic growth led to negative sentiments. The measures proposed by Barack Obama failed to infuse confidence in global investors as they resorted to selling amid concerns of global recession.”

And the markets in Israel aren’t doing much better, as blue chips there fell to a two-year low, falling below 1,000 for the first time since 2009. Said Tamir Fishman portfolio manager Adi Stern:

“The market hates uncertainty and question marks. It isn’t a sweeping panic, but total turnover [in Tel Aviv] wasn’t low yesterday.”

Of course, all of this is not to say the roller coaster ride that even large caps stocks have seemingly become given the economic downturn isn’t ultimately worth the price of admission. It’s just that under the current circumstances (After all, who would have imagined Lehman and AIG would go kaput?) and taking into account the paranoid gyrations of the markets, it’s advisable that you pack some Dramamine and expect a few bumps along the way, no matter how supposedly blue the stock.