Newt and Callista Gingrich on the U.S.S. Yorktown

I just returned from a long weekend of political-tourism in Charleston, South Carolina. It didn’t start out as a Newt-Mitt chocolate kind of trip, it just happened.

My oldest son Ari challenged me to lose 25 pounds. I said, “Okay, if I lose 25 and you drop 15 we’ll go on a trip, just the two of us without wives to a place of mutual interest” (that Southwest flies to). I lost 23 pounds (close enough) and Ari ran the Chicago Marathon and slimmed down in the process, so we decided a few months ago to go to Charleston, South Carolina.

Ari is a foodie, so I challenged him to pick the restaurants. I’m an eater, so I knew we’d be compatible. But the bonus we hadn’t planned for was that the South Carolina Republican Primary was last weekend with the Thursday debate in Charleston. We both love politics almost as much as biscuits, so this was going to be our equivalent of Seinfield’s George Costanza making love, watching TV, and eating a pastrami sandwich simultaneously.

An aside to this: When I was in the ICU after heart surgery Ari came into the room to visit. I had an intubation tube so I couldn’t talk, but we could communicate if I wrote notes with my fat Sharpie. Ari broke the news that John McCain had picked Sarah Palin to be his Vice President. I wrote, “Who is she?” He told me she was the Governor of Alaska that nobody had ever heard of. I wrote, “McCain just blew it.” This was the day after my quadruple bypass plus valve surgery, so you can infer that politics is our “inside baseball.”

We checked into the Market Pavilion Hotel last Thursday and planned our schedule around the debate and our dinner reservations. We went to a classy restaurant named McCrudy’s at 5:30 p.m. so we could be ready for the debate. The food was brilliant, especially my dessert, an intense dark chocolate goo with a thin layer of beets. Sounds ridiculously gourmet, but it was divine.

Newt Gingrich after a Fox News interview in front of the aircraft carrier.

We hoped to watch Newt dunk on Mitt at a bar, but they all had ESPN on, not CNN, so we hustled back to the hotel.

The warm-up shows were all about the ABC interview with Marianne Gingrich (wife #2) nailing her ex about this 1999 mistress (wife #3, Callista) and Newt asking her for an “open marriage.” The excitement built, and John King of CNN, the inquisitor for the debate, did not wait to pop the question of the “open marriage.”

Newt was ready. Wow, was he ready. “I’m SHOCKED” you would ask such a despicable question about my personal life, he glared. And launched into a redmeat diatribe against the ELITES of New York and Washington.

It was right out of the movie Casablanca, when the wonderful Claude Rains (Captain Renault) enters Rick’s establishment and says, “I’m SHOCKED” that there was gambling going on,” just as Peter Lorre comes by and hands him his winnings.

Newt clobbered King, and then Mitt answered the question about whether he would release his tax returns with a “maybe.” Game on. Game lost in minutes. I said to Ari when Romney flinched, “We just saw history.”

The next day we got up early and trekked over to the Mills House Hotel where Morning Joe, the entertaining MSNBC Show with former Republican Congressman from Florida Joe Scarborough and Mika Brzezinski host politicos of all stripes. They were interviewing satirist Steven Colbert, a South Carolina native who was lampooning everybody. Colbert was funny, though not nearly as brilliant as Ari and everybody else seem to think. After the show we took a photo with the show’s hosts Joe and Mika, who were warm and charming, and then looked for our next meal (excellent sweet potato pancakes with a latté at Eli’s).

Next stop was the College of Charleston for a Colbert/Herman Cain rally. Cain was out of the race, but close to 10,000 people showed up on the campus square to be regaled by the Cougarettes (the University’s cheerleaders), a pep band, a marching band, and a gospel choir.

Colbert sang the Star Spangled Banner gospel-style, and Herman Cain strode in elegantly with his stylish black Indiana Jones hat. The crowd was the most all-white group of college kids I’d ever seen. You would have thought you were in a Charleston country club. Maybe we were.

Colbert did his shtick. Cain was friendly but dumb, and one of the gospel singers fainted. But the brass bands were loud and good.

Ari wanted to schlep out to the Romney rally in North Charleston, but I wanted to save my energy for Newt’s rally later at the U.S.S. Yorktown, a retired aircraft carrier, so we walked back to the hotel to prepare for an early dinner at Fig, and later the Gingrich. Dinner was again superb with Ari’s sorghum walnut cake with cinnamon ice cream being the absolute “bomb.”

We then hailed a Jordanian cab driver named “Eddie” who hauled us to the Yorktown, where we had the chance to watch Newt answer softball questions by Sean Hannity of Fox News.

Left to rt.: Joe Scarborough and Mika Brzezinski of "Morning Joe," with Lloyd Graff, and Ari Graff

Whether it’s Kobe Bryant or Tom Brady or Newt Gingrich, it’s fun to watch somebody who is a real pro get on a roll. And Newt was definitely on a roll that night. He had enough magnetism to reset a compass. The man glowed. He hit all the high notes on Obama, and brought up “Lenin’s disciple,” Saul Alinsky (a community organizer in Chicago in the 1950s whose son, David, I went to high school with). He described Obama as the “food stamp” President and then double backed to those evil New York and Washington ELITES.

Later at the rally on the aircraft carrier, after being anointed by General James Livingston, a Congressional Medal of Honor recipient, Newt pounded the same themes, and the crowd, other than the members of the media elites, loved it. Frankly, I loved it. This was history. This was America. This was an earthquake in American Politics and it was breathtaking, whether Gingrich is a huckabee or Abraham Lincoln incarnate.

Saturday was Primary day. History. But it was also the Hominy Grill for brunch and a chocolate pudding “to die for” (oh, I hope not). We also looked for presents for our wives. Every vacation has its moment of pain, I guess. We finally found the requisite baubles and headed back to the hotel for the results of the election. Ari and I knew Gingrich was going to smite the MITTEN Man. Romney had been pathetic and he had a Cayman problem, too. Rick Santorum seemed tired and Ron Paul was, well, Frank Perdue.

Gingrich won by 12 points. We had a creamy Key Lime pie with grahame cracker crust. Newt’s two daughters stood by their Dad. I believed that the Republicans had their MAN.

Sunday we watched football at the airport and sat next to a Tea Party regular who had come to Charleston from Austin, Texas, to follow the election. Nice man. I think he was ex-CIA. Also sat next to a beautiful young African American woman who did makeup for Fox TV. She had also been working the Primary.

America. Ain’t it wonderful? Another fork for the key lime pie, please.

Question: Would Newt’s record with women stop you from voting for him?

Benjamin Netanyahu, former and current head of Israel, met President Barack Obama on Monday, and the big topic was what to do about Iran’s atomic weapon program.

Stephens feels that the U.S. must stop Iran now because it will have a weapon which can be placed on a missile by 2011 at the latest. He thinks that the U.S. should place severe sanctions on companies who sell refined gasoline to Iran. This action would kill the country’s economy because although Iran produces a lot of crude it lacks refining capacity, making it dependent on imports.

If the gasoline sanctions do not force cessation, he believes the United States or Israel must attack the three primary atomic development sites. I asked Stephens if he thought that such an attack would be successful. He said that the sites are heavily defended and hardened but they are still essentially big industrial factories which are vulnerable to a daring attack with the right weapons and creative sabotage.

An Iran attack could mean turmoil in the Persian Gulf and a confrontation in the Straits of Hormuz. The consequence of a nuclear armed Iran would probably be a nuclear Saudi Arabia, Egypt and Turkey—an even uglier scenario to contemplate.

With the machining community so riddled with woe at the moment, the guns and ammo boomlet is manna from heaven.
    It’s a great time to be in the gun business. The buzz on the Web is that Barack Obama is going to push for a ban on assault riffles, something households need more than refrigerators.
    Evidently, Obama’s campaign reference, that “bitter” small-town Americans “cling to guns or religion,” has fueled a tremendous surge in gun and ammo sales. People are buying AR-15s, the civilian version of the M-16 military rifle, like 42” HD televisions. At $1000 a pop (sorry) they are pumping out of the gun shops and gun shows. Wal-Mart is struggling to keep ammunition in stock because the NRA is implying that a big tax will soon be coming on each ammo box.
    The high profile mass murders in Binghamton, N.Y. and Pittsburg are reinforcing a sense of insecurity, even panic, while right wing commentators foment unease as the economy slides.
    But the gun run is a great boon to the Swiss CNC business as manufacturers rush to cash in on the gun bubble. While hunting rifles are currently dead, hand guns are the new Rolexes as folks look to show off their fancy shooting hardware.
    It is still quite doubtful that Obama is going to risk his political capital in a quixotic joust with the gun lobbies. But the power of fear, for the moment, trumps rationality.

At least three times per summer we hear the sirens blare, signaling the possibility of a tornado in our vicinity. We take cover in the basement or the safest corner and wait for it to pass over. We listen for the “all clear” signal and the absence of thunder.

For the machining industry, particularly in the Midwest, the tornado sirens keep shrieking and the all clear has yet to sound. Since September a lousy recession has become a depression worthy event for anybody who cuts or bends metal. The only hiding places have been in guns which are going nuts as people fret about an Obama weapons law, and medical which has held up partly because people shoot at each other occasionally. The big winner is still orthopedic implants which save the bodies of aging baby boomers.

The stock market has been signaling that the financial system is stabilizing. Houses are selling with the huge price drops and the inducements of low interest mortgages and assorted subsidies. The stimulus package, though diluted by transfer payment funding is going to kick in soon. The Fed has poured liquidity into the banking system and the corporate bond market has strengthened. Inventories are paltry in the bins and semiconductors, the guts of electronic tools are making a comeback.

It appears that the economy is beginning to get its legs back. Auction prices are in the toilet. Much of the equipment that goes to sale does not meet the reserves which ultimately depresses prices further. It seems like it cannot get worse and then it keeps getting worse in machining. We probably will get no clear bottoming signal. Some very sharp economists who know our world are predicting an uptown—next March.

Hang in there. Unfortunately I have no economic Doppler radar. It will get better, but we won’t hear any “all clear” horns go off.

Question: Do you think the tornado will ease up soon?

Last week I went to Detroit to shoot a video spot for an advertiser of Today’s Machining World. A melancholy vibe permeated the city that I can only compare with the one I felt when I was last in New Orleans. When I arrived there were only three taxies and two limos sitting outside. Five vehicles to serve the entire Detroit Metro airport? I decided to query the empty rental car buses driving by to see if they had any cars available. I asked Hertz, Avis, and Budget, and every driver claimed that there weren’t any cars. Evidently so few people are traveling to Detroit Metro that the rental car companies have transferred their fleets to other more bustling cities.

Yet amidst all of its depression and desperation, Detroit now has an unexpected grassroots movement, attempting to revitalize the city’s housing market. At this moment, artists from around the world are buying houses in the Detroit ghetto for a few hundred dollars each.

Four years ago, artists Mitch and Gina Cope, bought a broken down house on Detroit’s North side for $1900. The house had been ravaged by scrappers who stole everything from copper plumbing, radiators to electrical lines. But the Copes bought it anyway and decided to turn it into what Mitch Cope calls the “Power House Project.” “Our idea — instead of putting it all back and connecting to the grid, we wanted to keep it off the grid and get enough solar and wind turbines and batteries to power this house and power the next-door house,” Cope says.

He thinks he can make the whole place operate “off the grid” for around $60,000, a cost he hopes to help cover with grants. He plans for the first floor to be a neighborhood art center and the second floor to be a bedroom for traveling artists. Of course, his grand vision is for the entire neighborhood to transform itself into an artist community using dirt cheep real estate as a magnet for new settlers. Cope has already convinced around a dozen artists from countries around the world such as the Netherlands and Germany to buy houses. Jon Brumit, a prominent artist from Chicago just bought a house in the area for $100.

You may find this story uplifting yet then put your nose up when you remember only 12 homes have been bought. But maybe manufacturers can learn from what these artists are doing. The bottom line is that the real estate in Detroit is going for practically nothing, Michigan is going out of its way to give tax incentives for new development, and there is an abundance of laid-off, skilled workers who potentially would jump at the chance to work at a job shop, even for a modest wage. Sounds like an opportunity for some creative types.

Listen to a podcast of the story at NPR.org

What if instead of giving all the bailout money to the reckless, untrustworthy banks and incompetent automakers our government just gave the money to the people? I’m not talking about 500 dollar “stimulus” checks. Say all of this aid money, maybe about $10,000,000,000 ($10 trillion!), was distributed to 100 million tax paying units in the U.S.? The people – our people, rich and poor, would get $100,000 each, and surly they would do some awesome things to stimulate the economy. Think about what people might use the money for – cars, houses, college educations, stocks, bonds, starting new businesses – not to mention depositing the money in the bank. So the banks would get their liquid too! What if people got half that amount, a quarter? What would you do with $25,000?

Personally, I’m very skeptical that the recipients of the current bailout plan are going to use the money wisely. Like so many people, I am scared that they will not learn from their mistakes. I fear we may be throwing our hard earned dollars into a black hole.

I say let the people fix the economy!

Question: Would giving $100,000 to every U.S. tax payer be a better way to save our economy?

For years, China has had a surplus of money, which its national bank gleans from its high export to import trade imbalance. It takes the dollars it makes from U.S. consumers and then needs a reliable place to invest them, and it has historically invested heavily in U.S. treasuries along with private U.S. assets.

But now many of China’s investments in the U.S. have gone awry, as they were screwed by Freddie Mac and Fanny Mae, and reckless derivative trading. Naturally, like most people in the world, they have lost some trust in the once supposedly rock solid U.S. economy.

I believe that Americans will keep buying Chinese goods for a long time – although maybe slightly less because people here are struggling. Nevertheless, at least 90 percent of the goods Americans take for granted in their daily lives are made in China. Read the book, A Year Without Made in China, (reviewed by Today’s Machining World) and this concept is clear.

China’s government should have plenty of money to invest overseas for years to come. The question is … has the U.S. economy gotten so bad that they will put a lot of it elsewhere. Personally I don’t think so.

A recent column in the Wall Street Journal made a comparison of U.S. government policies in the present economy to those in the classic novel, Atlas Shrugged, written in 1957 by the anti-government, ultra capitalist Ayn Rand. Rand’s dogma which transcends all of her works has the fundamental principle that when government steps in to “bailout” incompetent businesses for the sake of the “common good” it causes a tumultuous domino effect.

Wall Street Journal Columnist Stephen Moore summarizes the book’s moral as the following: “Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs … and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.”

Sound kind of familiar? Tarp? Auto company bailouts? A bunch more “stimulus plans”? I know. It’s scary right now. Desperate times. And I believe the government must step in somehow to stop a catastrophic loss of jobs and halted workflow that a bankruptcy of the Big Three would entail. And yes, it has to create liquid for the banks. But just like in the book, large companies are getting a free pass on their incompetence in management and law breaking. A money infusion gives them an opportunity to change their ways, but there is a definite chance it could create a downward spiral just as Rand envisioned. Does GM have a plan for how to spend the new money, other than to survive the next few months? Do the banks know what to do with their new capital? All of a sudden they have to figure out new ways to lend it, because now we know that the ways they were using it — such as granting sub-prime mortgages and trading recklessly with high leverage won’t work. The economy can only stabilize when these companies get their act together, and then, when the people regain trust in them. I don’t see either one happening soon.

Question: Do you have faith that the U.S. government’s new stimulus plans are going to create economic change for the better in the near future, or will they exacerbate our problems by allowing incompetents and crooks to continue their ways?

What a day for Detroit. Old John Dingell, the pugnacious congressman from Motown lost his Jewel, the chairmanship of the Energy and Commerce Committee.

Dingell is 82, he succeeded his father in 1955 in the House — so the Dingells have been in Congress, virtually forever.

He lost his job to Henry Waxman of Los Angeles who is Mr. Environmental in Washington and a headline-hunting pain in the ass to the Detroit automakers.

The odds of the Big 3 getting a Washington rescue package were fading anyway, but the Waxman ascendancy was a dagger for the rust belt. Waxman’s defeat of Dingell is emblematic of the lack of clout mustered by Rick Wagoner’s last ditch attempt to circle the wagons.

Now the terms of the Detroit bailout will be dictated by an Obama Administration, with Henry Waxman having a significant impact. This bodes well for Elon Musk and Tesla Motors (see Today’s Machining World’s feature, July 2007), but it is curtains for the status quo. In the real world a bankruptcy filing is going to be ugly and disruptive for the supply chain and workforce. This is a very dark day for Detroit. There will be better days to come, but the Waxman for Dingell trade may mark the end of Detroit as we have always known it.

Question: Are you glad John Dingell is no longer in charge?

I talked to Paul Eisenstein, TMW’s resident auto guru in Detroit. He is pessimistic about a bailout for the domestic car builders. He sees the legislation caught in a food fight between the lame duck Republicans and the Democrats who find themselves defending a bailout for big business.

I asked Paul if he thought a Chapter 11 bankruptcy approach would work for General Motors. He felt the stigma of a filing would kill the sales of GM’s vehicles for years. He also says that Rick Wagoner, GM’s president, does not accept the fact that he is part of the problem. Wagoner is determined to gut it out as head of the company, which also mitigates against a Chapter 11 filing.

Eisenstein says that the big irony is that GM has made major progress in the last few years with the negotiation of a reasonable rollback settlement with the UAW. They have been ambushed by high oil prices and the current economic gloom, two things out of their control.

Eisenstein concedes GM has a crappy product line aside from the Malibu and the Escalade, but he thinks the option of allowing GM to fail is too awful to accept.

Question: Is declaring bankruptcy the worst possible course of action for General Motors?