Apologies and a Salute to Portland’s Green Industries


I was supposed to be flying off to Portland, Oregon tomorrow to speak to the Portland Business Alliance on Friday on the subject of America’s “Green Trade Deficit.”
I very much looked forward to the trip not only to see a great friend, Jonathan Williams from Intel, who helped set this up but because I got a good dozen emails from folks who wanted to show me the green urban planning of the City and to do a Washington Note coffee chat on DC politics, policy and gossip.
Here are some of the “green accolades” Portland has received:

* No. 1, “Most eco-friendly big cities in America” – SustainLane.com (September 2008)
* No. 2, “Top 25 Green Cities in America” – Country Home (March 2008)
* No. 1, “Greenest City in America” – Popular Science (February 2008)
* No. 1, Cityscape / No. 1, “Environmental Awareness” – CNN/Travel + Leisure (October 2007)
* Best Cycling City in the U.S. – Bicycling magazine (March 2006)
* “Best Towns in the U.S. – The New American Dream Towns” – Outside magazine (August 2005)
* America’s “Best running town” and “Best urban running trail: the Leif Erickson Trail” — Runner’s World (May 2003)
* “America’s most unwired city” (best wireless Internet accessibility in the nation) — Intel Survey (March 2003)
* “The City of Portland has a nationally recognized reputation for green building innovation and outreach.” — U.S. Green Building Council (2003)
* “Top Recycler Among the Nation’s 30 Largest Cities” — Waste News (2001)
* “North America’s No. 1 Cycling City” — Bicycling magazine (2001)
* “Portland’s Forest Park ranked “Best urban park” in the nation — Outside magazine (Oct. 2001)

I have had to postpone the meeting because of an urgent and unexpected alternative meeting in the Middle East that I had to get to. I thank my friends in Portland for their flexibility and understanding.
I will be off to Amman, Jordan and Damascus, Syria tonight — if I get all of the visas needed within the day.
More on the Middle East trip later.
— Steve Clemons


15 comments on “Apologies and a Salute to Portland’s Green Industries

  1. M.T. Stein says:

    Sorry to hear, Murder, sounds like your 401K got murdered by a banker.
    Alan Grayson: “Which Foreigners Got the Fed’s $500,000,000,000?” Bernanke: “I Don’t Know.”


  2. Mr.Murder says:

    My bank got bought out. The big sign is off the wall, the people at the bank are still going.
    My 401 k lost like 600% in it over the Bushco. years.
    My banks’ transaction provider is diebold.
    Funny that.


  3. Jolene says:

    Hey, the beat goes on. . .it’s almost comical!
    WASHINGTON (AP) — A Goldman Sachs executive has been named the first chief operating officer of the Securities and Exchange Commission’s enforcement division.
    The market watchdog agency said Friday that Adam Storch, vice president in Goldman Sachs’ Business Intelligence Group, is assuming the new position of managing executive of the SEC division.


  4. M.T. Stein says:

    Lawrence H. Summers, Director of National Economic Council, uttered this week,
    “There is much in the way the financial system functions in America and around the world that is essential to preserve. And yet the events of the last two years are the culmination of a remarkable sequence of financial problems. Roughly every three years for the last generation a financial system that was intended to manage, distribute, and control risk has, in fact, been a source of risk – with devastating consequences for workers, consumers, and taxpayers.”
    “Think about it. The last generation has seen:
    The Latin American debt crisis
    The 1987 stock market crash
    The savings and loan debacle
    The Mexican financial crisis
    The Asian financial crisis
    The collapse of LTCM
    The bursting of the dot-com bubble
    And now the financial crisis that began in 2007.”
    “One crisis every three years.”
    “Surely a system that produces this many accidents and accidents this severe is a system that is in very much need of reform.”
    “There is no financial institution
    that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system. This has direct relevance on the changing nature of the social compact between the financial sector and the broader economy.”
    “The time has come for fundamental change in the financial sector
    of our economy – both in how financial institutions conduct their business and how they are regulated.”
    “Financial institutions that have benefited from government support can, should, and must use this moment to think about what they can do for their country – by accepting the necessary regulation to protect the American people.”
    “The events of the past two years should serve as a wakeup call for the financial industry.”
    “Wall Street was no small part of the cause of the crisis and Wall Street needs to be part of the solution.”
    “President Obama came to Washington committed to change the way business in government is done. What we are able to do with financial reform now, in the wake of the financial crisis, is an important embodiment of that commitment. In order to usher in the “new era of responsibility” that the President called for at his Inauguration, we must ensure that we do not go back to the kinds of abuse that helped cause this crisis in the first place.”
    “The House Financial Services Committee took an historic step in this direction yesterday when it voted to bring previously unregulated derivatives under the regulatory umbrella.”
    “We in the Administration are determined to create economic expansion and growth not based on financial bubbles, but instead on real production and distribution of goods and services for the benefit of all the citizens of our country. That is a lesson not just of this most recent crisis, but of the agonizing pattern we have witnessed eight times during the past three decades.”
    “It is our duty – for the government, the financial sector, and everyone else in this debate – to break this cycle and build a new, stronger, and more inclusive foundation for the American economy.”


  5. Jolene says:

    Who’s spinning the story to citizens that the economy in Portland or in the entire country is somehow improving? MSM does it daily, but where are their sources? Why it’s from the DC’s liar’s den, wouldn’t ya think?
    When the U.S. economy and banking is really starting to collapse totally just as I think the big players here and internationally want it to happen, here’s a very interesting piece on Goldman Sachs and how NOBODY with guts or morals from the liar’s den wants to reign them in.
    Some may want to re-read the following just to get the full meaning.
    Happy bail-out day everyone!
    “At first glance, the top line number for Goldman Sachs’ third quarter performance looks spectacular: Net Revenue of $12.37 billion, and $3.19 billion of Net Income. These numbers were multiples larger than the results for the third quarter last year, at the peak of the credit crisis, when Goldman converted itself into a commercial bank. It’s when you look into the details you realize that Goldman didn’t make its numbers this quarter as a commercial bank, nor even as an investment bank (which is what it used to be), but as a hedge fund.
    The spectacular part of the performance came from Trading ($5.99 billion in net revenue – mostly from trading credit products and mortgages); Equities ($2.78 billion in net revenue, mostly from equity derivatives), and Principal Investments net revenue of $1.28 billion. The image one gets from the word “trading” is that Goldman Sachs has hundreds of very bright and aggressive young men sitting in front of screens and making brilliant decisions on what to buy and sell, and when. Traders are supposed to live by their wits, making judicious bets on the market. Good traders who don’t have inside information tend to win about 55% of the time and lose money 45% of the time, the difference being their profit resulting from their trading acumen.
    Goldman Sachs doesn’t work this way. They have bright people no doubt, and somewhere on the trading floor these people on occasion make good and bad judgment calls. From what it looks like, however, their traders are benefiting from two things: information not available to the market, and muscle. These two things give the firm an edge that almost guarantees substantial “trading profits” quarter after quarter.
    The information part comes from a variety of sources. We’ve seen this year the scandal over High Frequency Trading, where Goldman and other firms have computers positioned at the New York Stock Exchange getting information on trades a millisecond before they are posted publicly. Goldman sees where the market is going second by second, positions itself for very short term profits, and in effect extracts a tax on trading by individual investors and mutual funds. Goldman Sachs is the biggest player in this business, and no wonder they are lobbying in Congress to prevent the government from shutting this down, and/or imposing its own transactional tax on trading.
    For credit products, mortgage securities, and equity derivatives, Goldman Sachs extracts similar information from its clients interested in buying or selling these products. Goldman can tell when a particularly large deal is going to move market prices, and the firm can piggy back along with the client by doing its own trading. In these businesses, dealers also hold a trading position for liquidity purposes, and given Goldman’s enormous size in the market, they can use this position to muscle prices in the direction they want. This bullying tactic works short term, usually intraday or over one or two days, but that is sufficient to generate hundreds of millions in trading revenue.
    None of these information sources or uses are illegal at this point, unless Goldman were positioning itself before the client’s order was placed in the market. Also, Goldman is smart enough not to allow its traders to know if Goldman is bringing an equity or bond issue to market, because this would breach “Chinese Wall” restrictions.
    How do we know all this revenue is based on information and muscle? Because Goldman Sachs does not show any of the performance measures typical of a trading firm. Its Value at Risk measure, which calculates how much it could lose on a given day under very adverse market circumstances, went down from $245 million to $208 million. VAR should be sharply higher reflecting the increased risk necessary to generate so much more trading revenue. Similarly, Goldman had a record number of “$100 million revenue days” and very few days in the quarter when they lost money trading. This is hardly the profile of your typical day trader pitting his wits against the fickleness of the market; this is the profile of a hedge fund with critical information and size advantages, using them to maximize profit.
    Notice that the firm made $1.26 billion from Principal Investments. The firm holds a pool of $21.08 billion in its own investments that are not related to client activity, and that can be held for short or long periods of time. This is speculation pure and simple – the sort of thing a hedge fund would do with its investors’ assets.
    Now let’s look at how well Goldman Sachs performed in its traditional investment banking business. All these results are for the quarter, compared to the dreadful third quarter of last year.
    · Investment banking: $899 million in revenue, down 31%
    · Financial advisory: $325 million in revenue, down 14%, mostly due to a decline in merger activity
    · Underwriting: $574 million in revenue, down 15%
    · Asset management: $1.45 billion in revenue, down 29%
    · Securities services: $472 million in revenue, down 48%
    As an investment bank, Goldman Sachs is doing very poorly, or the economy and market for investment banking services is doing very poorly. After all, Goldman and Morgan Stanley are the only two traditional investment banks in business; all the rest collapsed last year or were merged into commercial banks.
    Don’t bother looking for Goldman’s results from commercial banking. They don’t exist. Goldman has resolutely stated that it has no intention of changing its “banking model”, which means no intention of getting into the traditional banking business of making loans to companies and individuals. This despite the fact that it probably owes its very survival to an agreement from the government in September last year to allow it to convert into a commercial bank.
    This begs the critical question: Why is the government allowing Goldman Sachs to function this way? It now has access to the Fed discount window and lender of last resort facilities, it gets funding from the Fed at close to zero percent, it is no longer subject to market runs on its stock because the FDIC backs up its deposits, and supposedly it is now visited routinely by Fed examiners who can see exactly what is going on. Yet there is not a peep of objection from the Fed, the Treasury, the White House, or even Congress about a soi-disant investment bank now converted into a commercial bank, which openly disdains any suggestion it should act like a commercial bank, which is struggling in its traditional investment banking businesses, and which is still allowed to make money hand over fist through outright speculation and what we might call “trading with advantages.”
    It is also allowed to keep its own peculiar VAR model, very different from the ones used by commercial banks, and which is probably understating in comparison the true risks it is taking. It is allowed to peg its compensation pool not to net income, like a commercial bank does, but to the much larger number of net revenue. This explains in part why of its $7.58 billion in total expenses for the quarter, $5.35 billion was spent in salaries and bonuses. This is not necessarily against accounting standards, but it is much more on the scale of compensation found at a hedge fund, not at a commercial bank.
    Maybe the Fed has difficulty deciding what to do about Goldman Sachs because other large commercial banks, like JP Morgan Chase and Citigroup, have investment portfolios and proprietary trading just like Goldman, only on a smaller scale. Still, Goldman Sachs even before the credit crisis was an anomaly in the investment banking world, since it was acting increasingly like a hedge fund. It is now a much bigger anomaly in its new home of commercial banking.
    Most of the talk about Goldman Sachs is about its outsized bonus pool and insensitivity to the role taxpayers played in saving the firm from destruction. This misses the bigger point, which is the fact that the outsized bonus pool comes from the firm’s conversion into a hedge fund, when its legal status as a commercial bank should forbid this activity.
    It is time for somebody, somewhere in government with authority to give Goldman Sachs’ shareholders an ultimatum: you have 90 days to decide what you want to be: a commercial bank, or a hedge fund. If you choose to be a commercial bank with access to all the taxpayer-funded benefits, you will present to the government a plan for divesting all of your “trading” and proprietary investment activity, and you will show how and when you will begin building up a credit culture and start making loans to American businesses and consumers.
    If you choose to be a hedge fund, adios and good luck, and don’t come running to the government ever again if you get into trouble. Oh, and by the way, as a hedge fund, divest yourself of the investment banking, advisory, underwriting, asset management, and securities services businesses. We hear Wells Fargo is looking to get into these businesses, and there are no doubt other banks that would take a serious look as well.
    Until such time as someone in government delivers this ultimatum to Goldman Sachs, it will continue to thumb its nose at each and every taxpayer in this country who saved its hide.”


  6. Mr.Murder says:

    Parallel contingencies must be in place in the event of winter storms. This would be an addendum to a relief package and would probably be enacted at the same time a flu response was in full swing.
    Thus another wintering response aid bill could end up serving as stimulus.
    Made right this could ride out the economic window to strengthen a recovery and last our nation until tax return time. Then the recovery deepens and sees through another transitory stage.
    PS- Biden deserves major credit on the cash for clunkers item that helped jump start a lot of retialing in the auto industry. It had dramatic result for blue collar buyers, sellers, employers, and workers, in many an instance.


  7. Mr.Murder says:

    This is the most recent of domestic thread topics.
    For that reason I’ve added the following item to what should be reviewed or detailed upon the “Ogenda” for our nation’s chief executive.
    Contingency plans for flu response to the level of pandemic or epidemics. This would include emergency approriations and additional items to make the health care overhaul more urgent.
    Included should be another stimulus response to the actual flu season with grant money to make up for lost work hours to families and to industry in the form of short term loan relief.
    It’s inherently a national security issue as well. Some DoHS items can skip the legislative review process if need be….


  8. anirprof says:

    Portland is a great city, but be wary of the green boosterism there. I know the city well, and the Portland story does have its downside too.
    On the economic front, the city has seen the most rapid growth in income inequality and the most rapid rise in housing unaffordability of any major metro area over the last 20 years. Portland used to be a great place for working class / middle class families. Today, it’s great if you’re a single 25 year old hipster with a comp-sci degree from MIT and/or a trust fund from daddy, or retirees who made a fortune owning property in California, not so much if you’re a middle-class, middle-age native of the town.
    Actually, what the whole state of OR found is that the backbone of their economy was not so much sustainable hi-tech or green jobs, but real estate / 401k – wealthy CA retirees moving there and paying all those 25 year olds to serve them beer, coffee, and organic food, and with the 2008 crash killing that cycle you now have cities like Bend with unemployment >20% and the state as a whole at 13%.
    Also, while the elites have been lavishing taxpayer money on green projects and public art and other things that look great to visiting journalists, lots of civic infrastructure has been allowed to starve, most especially the public schools. If you’re curious about the full story, ask tough questions about education, crime rates, transportation, business development, etc.
    I still love the place and it beats most US cities, but behind the cute trains and Euro-looking urban planning there are some very ominous long term trends.


  9. Outraged American says:

    Steve, “spinning” IS the operative word. DC “spins” at least as
    well as Hollywood.
    “Spinning” means propaganda to make people believe the
    unbelievable, like that Iran’s a threat to the US, which 61% of
    Americans believe according to a recent PEW poll, or that Tom
    Cruise and whatshername are madly in love and conceived
    anything without a common Thanksgiving kitchen tool. That’s
    all “alleged” Tommy boyo — don’t sic your liars on me.
    Washington tells THE BIG LIE every time anyone there opens
    their mouth.
    Steve, my trip to the Middle East fell through, but I might be
    going in the spring so please let me know what shade is au
    courant in burkas.
    JohnH, I read somewhere, actually maybe I was the person who
    made it up, that Cali is yet again experiencing a huge out flux.
    Live in fear for your weight, because, after the Californians,
    especially the Northern Californians, who are their own race,
    invade Portland, you’ll soon be on a strictly imposed macrobiotic
    diet composed of healing crystals and incense with a little wheat
    grass thrown in for protein.


  10. ... says:

    portland is a great city… i really like it! i like powells books, which is worth the trip in itself.. alberta st, or ave. hawthorne and other funky parts of portland with what appears like a very large number of young people wandering around are some of the reasons i like portland…
    on the other hand, maybe the middle east is nice too! i have never been their..


  11. Whistec says:

    Portland Or is right across the river from me. Sound’s like all is well with you.
    Take care and enjoy the day.


  12. Steve Clemons says:

    Outraged – Hope all is well. You know that the gossip is part of the
    fun here in DC and keeps this place spinning. You know…like
    Hollywood. all best, steve


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