Motley Blog

A thumb's up for a new local online publication, Crosscut.

Publisher David Brewster is certainly already a member of the local establishment elite, but this is a publication that could shake things up - perhaps continuing his contributing record of societal progress through two generations, not just one.

A good case in point has been their excellent coverage of local transportation issues. Currently the most popular article is a piece by former UW Geographer/Demographer Professor Richard Morrill. (Disclosure - I studied under Dr. Morrill at the UW - this reference though is not so nepotistic as it might seem, but that is a longer story.) Besides Dr. Morrill, Emory Bundy, another local civic legend, has also contributed, as has Brewster himself. The topic in its entirety is referenced in a sidebar.

If you wish to educate yourself on these subjects there is probably no better an investment of time than that spent here. Perhaps most significant is the quality of the comments. Actual debate occurs - going into subjects honestly that are perhaps to sensitive for a prudent professional. An occassional raver will show up, but it is the exception, not the rule.

Among those contributors is David Sucher. Mr. Sucher is a published author himself, as well as a bit of a role model, por moi. I'd highly recommend his accessible and useful book 'City Comforts', now in its second printing. Urban Planning is a somewhat mysterious subject, but Sucher gets his hands on it - not to mention living his life, and business, by some of its principles.

The recently announced sale of Puget Energy struck me as curious - this is a major business event. The brevity, finality, and timing of this action all have drawn my attention.

There isn't much published detail out there - the proclaimed motivations about the need for capital may well be a factor, but these aren't folks with bad credit and they certainly aren't anywhere near bankruptcy. Their five and ten year stock performance is solid, slightly above the benchmark performance of the S&P 500, but significantly below that of other utility stocks.

PSE is highly regulated by the State Utilities and Transportation Commission - and their return is subject to law - their financials, to me, indicate a fair and effective regulatory environment - beating the S&P by 1% is certainly a good return and one not usurious, as other private utilities, in this era of Enron, may have been able to obtain. The sale will not effect this at all - it will however remove the SEC from the regulatory loop - which presumably has some relationships with local regulatory agencies.

The current chairmanship of the UTC by former Seattle City Attorney Mark Sidran is perhaps the most factually based red flag of this deal. Mark Sidran has been involved in other highly controversial public/private deals with Puget Energy legal representatives(Preston, Gates, and Ellis) - most notably the HUD distressed area financing for a downtown parking garage in an upscale shopping district.

As a blogger I am hopefully allowed a bit more room to speculate - using the motley tools of Occam's Razor (aka Keep It Simple Stupid) and my personal favorite, 'Follow the Money'.

My original thought was that this was some sort of global energy deal taking Enron's practices worldwide - perhaps with Chinese Money. Perhaps also part of the 'hedging' going on with Halliburton style engineering contracts now being considered as a part of a current proposal by another Preston, Gates, Ellis client - a potentially 157 billion 50 year deal to build light rail, and some roads based on local taxing/bonding authority.

Like me, the Wall Street Journal has published some investigative speculations into this matter. This got me to thinking about motivations of intra-family politics as opposed to global - and these factors may well be in the mix. The iconic former Puget Energy President, John Ellis, has a brother, Jim. Jim was, at the height of his game, legal counsel for Puget Energy, and perhaps the single most powerful attorney in private practice - he is the Ellis in Preston, Gates, and Ellis.

That position of status is now held by the firm's prior family law specialist, Bill Gates Sr. Microsoft is also within the firm's stable, and one has to wonder if there is perhaps some aspect of global dealings in order to build relationships that will help them stand up against the heavy oversight they are now getting in Europe. There may well also be some standing anonomosity whereas Gates was once subordinate to Ellis. Now, I'm not one to say that nepotistic legal representation should be outlawed by the SEC, but it is certainly an area worthy of investigation and a heuristic red flag for any regulator. I'd suggest looking into the relationship between Microsoft and another globally merged PGE Client, Airborne Express. Airborne (now owned by the state Monopoly, Deutsche Post and operating as DHL) held the MS air courier contract - a contract that may not have been in the best interests of MS shareholders (and certainly quite lucrative to Airborne).

I did some digging into this subject in order to quench my curiousity. Puget Energy's own statement reveals little, save perhaps the shallowness of press coverage. State Attorney General Rob McKenna's Public Counsel (a pfellow with a pfunny name, Simon ffitch) has released a statement which outlines future steps as I've done above.

Conclusion - it is not a done deal, it is still subject to regulatory and shareholder approval. Absent a more informed shareholder making claims to the contrary I will accept the assertions of Puget Energy Corporate that both steps are likely to be accomplished.

Continuing my research I looked into the lead partner, Macquarie Infrastructure. Macquarie is one of the few Investment Banks in Australia and are traded on the NYSE - stock symbol MIC. There holdings include a recently completed deal to aquire Pittsburg based Duquesne Light and a company called Atlantic Aviation Services who provide fueling services at 70 US Airports - curious of course due this being the home to Boeing Commercial. They do have some history of green power work - but nothing particulary innovative, nor for that matter is there anything particularly negative that showed up in my quick search.

Okay, so here is my conclusion as to what is going on. It is purely speculative, call it, if you will, a journalistic hypothesis, sent into the ether like a radar ping sent into the atmosphere:

There are certainly conversations among global energy providers - quite private as such are closely watched by, among others, the SEC. These business relationships probably reach into the engineering and construction firms building another Preston, Gates, and Ellis project, Sound Transit 2, and the timing may well be a power signal to those who watch, including the lower ranks in middle management (and Christine Gregoire and Patty Murray?). The removal of the SEC from regulatory link will allow a brief opportunity for PGE friend UTC Chair Mark Sidran to advance a profitable agenda in this post Enron era. The desirability of this outcome is still to be determined and close oversight will help to insure that it is positive. The UTC and the SEC, for different reasons, cannot be relied upon to provide that oversight. (The SEC loses jurisdiction when the company goes private.)

Based on my quick review I'd give Macquarie a preliminary 6 or 7 on a 1-10 scale of global corporate responsibility - maybe a shred better than the oil industry, and probably much better than companies like Haliburton and/or Blackwater. There doesn't appear to be Chinese money behind the deal, but the declining status of the US on world financial markets is noteworthy - as is the greater advantage of Chinese success accruing to Australia and British Columbia. Best case is that we will join in that advantage, but the better bet are the raising of prices to raise profitability of the utility to at least Industry standards. (Eastside Investors currently holding Puget Energy stocks or bonds may wish to investigate Macquarie as an investment.)

BTW - today(10/31) is the last day to get your free water conserving showerhead, sponsored by local utilities, including Puget Energy.

In the paper this Thursday (I read the Tacoma News Tribune, Carbon Footprint notwithstanding.) was an interesting article about an Italian Judge and the word 'Friday'.

Now I'm not one to question the moral authority of the Italians, but this is one to ponder, as I am doing still.

The case involved a couple naming their child, 'Friday'. (I don't recall if the article specified the sex of the child or not.) At first glance this seems perposterous, but if one bothers to read it through it becomes an interesting story.

The argument is this - 'Friday', as a name, is associated with the Dafoe novel where the native servant bears the name. As such the name would have negative connotations to it which would effect the child to the point meriting court action. Considered in the context of political correct language debates in this country the argument appears to gain merit - perhaps not so much for the actual facts of the case, but rather for the fact that the matter does merit discussion itself.

Political correctness in language is a tricky subject and restricting speech on any basis is dangerous business, no matter what the 'justification' might be. However when you are talking about a specific individual that is where the damage of language 'hits the road', so to speak. 'Talking' about such matters might seem silly, but I'm going to give this one an American 'thumbs up'. Call it an example of the law putting itself into the language in a way that is worth talking about...

Which brings us to Thursday, today.

The most distinguishing thing about the Tacoma News Tribune - in most regards a rather standard mid-sized market daily - is its Thursday 'Adventure' section. Sure the Times has more local columnists, including the outdoor oriented Ron Judd, but the mix of priorities, on this subject at least, is better at the TNT. (Which stands for Tribune and Tooley, eh?), Outdoor folks don't need a daily section like the sports jocks get, a weekly section is just right, as is the day.

I liked today's paper for another reason, but it would be a bit too circuitous to write about that here. As they say, there is always tomorrow. And as Seargeant Friday would say, "just the facts maam, just the facts".

Heyo!

Northwest Trek Animal Park

Eatonville, Washington

Getting to NW Trek is a slog, driving down 161 via Puyallup's South Hill is like driving Aurora from Shoreline to Sea-Tac. But it is worth it, all the more so if you plan to visit the Paradise side of Rainier.

I was there for the first time Christmas Eve with 3 Nephews. This is supposedly a great time to visit as the leaves are off the trees making visibility better - antlers are also still to drop though that won't be long. New to the Park are several Moose, and according to the guide we were the first to see them - on our dusk drive, starting at 3:00.

Unlike normal zoos the park specializes in NW critters - which makes the whole native habitat attempt work very well. The park puts the most publicity on its tram, but the predator displays are just as good. There are cages, but they are very well done - we saw virtually every species, save the Foxes, including both Grizzly and Black Bear. The smart use of water and electrical barriers bring the critters closer than you would think safe, and the covers at each area make a rainy day visit quite enjoyable for an acclimatized local.

I learned a new word on this visit -'kerpuscular" (sp?) - which means an animal that is active only at dawn and dusk. The last tram of the day, 3:00, may well be the best, in that regard.

I've just finished my most recent vehicle emissions test - an evolving process, but one that is still missing some key elements.

I failed my last test, two years ago, so took action to avoid the hassle this time around, based on my lessons the last time - it turned out that procedures have rightly gotten stricter, however bureaucratic obstacles also merit comment.

Current emmissions testing uses the 'On Board Diagnostics' computer on the vehicle to quickly and accurately diagnose engine. That is unless it is the computer which is broken - a not uncommon occurence on a Ford (my brand), and perhaps other brands as well. My OBD has now been fixed, but not without a whole bunch of bullshit in the meantime.

Two years ago Precision Tune in Renton gave me a diagnosis of a bad sensor in my catalytic convertor and wanted to charge me $600 or so to replace it. It turns out that was a false diagnosis, intentional or not they get a thumbs down. They did reset the computer, so at the time I was a happy customer, with a passed (but unfixed) vehicle.

This time around I had the computer reset prior to getting tested - however procedures have no rightly advanced to screen for this - so not only did I not get a pass on my first visit I had to burn another couple of gallons of gas to reset the COMPUTER before I could even get a fail.

After that I took the vehicle to Eagle Tire (a business scheduled for a Sound Transit relocation), within walking distance of my house. I've been to them a few times before and always a happy customer. They correctly diagnosed the problem, and fixed it at a cost not that much higher than the $150 requirement of Gregoire's old department, the Department of Ecology. That was all good - definitely a thumbs up for Eagle Tire.

I've since researched the OBD subject a bit further. Rationale is that the OBD testing protocol is supposed to make things easier. My experience has been quite the opposite, perhaps by an order of magnitude. One big thing I've learned is that emissions warranties are regulated by the EPA and California. EPA information is here.

Confirmed also is my large doubt about Ford's current marketing partnership with Microsoft.

This isn't a slam on Macy's - I think the company and it's service is great. It is a commentary on math education policy in this high tech state and, hopefully, some constructive criticism for Macy's management.

I do have some history with the company which does reinforce the point, however definitely old business. One of my first credit accounts was with their predecessor company, the Bon Marche. As you may know I've had a few tough years and during that time I incurred a $20 late fee on a $10 balance.

The point here is about applying mathematical judgement to a company's relationship with a customer.

The traditional Department Store business model is one of high service to the wives of successful men. I'm not saying that service is a bad thing, but value is important too, at every price point.

With changing demographics leading to increased working women there should be a corresponding wisdom towards the spending of earned income.

My particular experience involved an after Christmas visit to their local store. I am one to take advantage of sales, but I always buy at least one full price item. I won't go into details, but it definitely seemed that the sales people, very nice, didn't have a clue as to how to deal with an unusual situation. In addition pricing seemed a bit weird for their target market.

As you may know the company is having some troubles, recently shutting down some operations in Washington State. Here's the AP story.

Who is to say my thoughts would work for them? Certainly building a mathematically knowledgable service organization is not an easy task. But if it was me, that's how I'd do it.

My local paper, the Tacoma News Tribune, has an editorial on Open Government in this Sunday's edition. This is an editorial series of 12 this year celebrating the paper's 125th anniversary. This theme is also an important one within the remainder of the State, including the Seattle Times, which initiated the Coaliton on Open Government.

As the paper notes:

Advancing the cause of open government is a value, not a business model.

On a similar note the paper hosted a great forum last week on the role of newspapers in connecting with their community in the internet age. Panelists included Michael Fancher of the Seattle Times, David Brewster of the Seattle Weekly/Crosscut, Jack Hart of the Oregonian and two academics. This session was not about business either, however anyone who follows the business knows that the emergence of internet agebusiness models is a current major subject.

I don't have an answer to those related business questions, but I do have some thoughts.

An honest and transparent government may not a business make - however a dedication to same should be a goal of every business whatever their level of operation. As it is a paper's responsibility to advance same it should be a businesses 'responsibility' to support same.

But 'business' is not a monolith - it is merely a name assigned to a collection of very independently minded entities, at least in theory. Up north the Greater Seattle Chamber of Commerce led by the two big public finance firms, Foster Pepper Sheffelman and Preston Gates might disagree. In practice 'business' to them needs to stand together - both those who serve government (including, first, themselves) and those who work in a more traditional 'free market' sense.

Advertising in the ivory tower theories of Adam Smith is a double edged sword complicating what is otherwise so ideologically simple and clear. On the one hand for markets to be truly 'free' everyone must have access to all information. Advertising is the way to do exchange information, however it is very definitely NOT free.

As such advertising can actually be used to monopolize, to use the word loosely, the attention of the consumer.

Contrary to the opinion of the TNT I'm gonna put forth an idea here - that open competition AND open government SHOULD be the foundation for the next communications business model.

The foundation of such should not be traditional advertising, but rather the yellow page business model, a business which should be transferred from the telcos to newspapers. (or to the telcos, if they establish news organizations with integrity and credibility) This would mean that the advertising basis of every paper should be as broad as that of the historical yellow pages.

I'm imagining a situation where every subscriber continues to pay as well - however with greater revenue accruing to the paper through reduced printing costs. Curling up with a paper is not a bad habit, but it does also have big environmental costs as well.

Rates for inclusion by a business should definitely be higher, but for the smallest business perhaps no more than the differential between a private phone line and a business line. Rates should differ, and setting up an industry by industry pricing structure is the tough part of this idea, as well as is the issue of preferred placement. Google offers one example of how this might be dealt with appropriately.

Newspapers should also give high priority treatment to some businesses NOT based on how much they pay. Rather the paper should establish methods of evaluating businesses of integrity and credibility based on the evaluations of their subscribers.

Put simply this is a business model whereby the local paper becomes more of a trusted broker of information rather than solely a producer of it.

I don't know if this translates to the national market or not. FWIW, Google may already 'own' that market, deservedly. I don't think though that the Google model extends automatically to the local level.

The full feature TNT editorial is here.

An interesting trifecta of financial news this weekend - perhaps more significant than either 2008 VP choice, of the previous weeks.

First, the feds announced a takeover of Fannie Mae and Freddie Mac, the two competing federally created financial coroorations underwriting much of the residential owner occupied 'market'.

Perhaps more significant, at least locally, is the ouster of long time Washington Mutual President Kerry Killinger. I was doing some web research this morning on the recent history of the Killinger's relationship with WAMU, as well as that of its long time outside Counsel, Foster Pepper Shefelman.

It was my recollection that Killinger had recently been taken to task for giving himself a bonus as the firm was on its way from to 15% of it's all time stock price high. I also recalled some changes in the relationship with FPS. Although I was able to find plenty of references to shareholder lawsuits, I didn't find anything in my quick research.

This quote though, from FPS Senior Partner Judy Runstad in 2001 is particularly telling:

2nd item in Godden's Column

Any chance FPS will be held to account for their actions?

Does the de facto leader of this board look like he is up for 'class'?

Though he did pay up for his share of the Bill Gates Law School, I am personally not convinced his accounts are up to date - nor without retaliation against his 'collectors'.

The quick bio of this guy, as this lay observer has been able to determine, is that he was the family law/divorce lawyer for Jack Abramoff's firm, Preston Gates and Ellis. I'm guessing that his active board wife, the deceased Mary Gates, got him a fair number of his clients.

Mary Gates was on the national United Way Board, how Jr. got his IBM contract, a deal that didn't work all that well for IBM. One has to wonder if that relationship used senior's legal strategies in order to gain as much as possible.

IBM, karma-wise, did have something coming to them -as a Black S. African tracked by their apartheid legal computer system would tell you.

Two questions for you, my friends,

Is the legal profession's use of computer's any better than S. Africa's apartheid era system?

Is Bill Gates, Sr, any better for the campust football 'stars' who were committing rape with the implicit approval of the administration, circa his appointment to the Regents?

Stranger has a great clip from YouTube on Rep Marcy Kaptur, D-Ohio (Toledo)

Kaptur on Federal Response

Basically she is calling for criminal prosecutions, where warranted, and confiscation of assets.

FWIW, that's really the only option we have.

Curiously, she suggests going back as far as 15 years - a time frame similar to one that I'd use in Washington State for not unrelated problems.

Personally I think we should also look for civil recovery of assets, though we do need to be very careful about legal standards and precendents in such 'property rights' matters.

Tom Brokaw will be hosting the 2nd Presidential Debate tonight. He has the opportunity to make history, perhaps as much as the Lincoln-Douglas debates of 1859.

Now, I'm not suggesting that Brokaw do a 'Network' 'mad as hell' speech. I will definitely measure the man on his ability to hold not just Wall Street but all of Corporate America, including NBC's parent, General Electric, accountable.

Tonight's format will be 'town hall' style. There will be people who are definitely 'mad as hell' attempting to get questions into the debate, however the microphones will be cut off immediately after the question is asked, allowing no follow-up to an evasive answer. It is Brokaw who must do the follow up, honestly and constructively, even if it means someone in New York, or Seattle, actually has to pay for their mistake.

Though the hypocrisy of the Bush dynasty and Hank Paulson cannot be denied, the current plan to take a partial ownership stake in the bailed out companies is appropriate.

The current plan is for these ownership rights to be without voting rights. At first glance this might seem wrong, but it probably does make sense. However, do recall that the 'management' right of termination, for cause, is always open to the government.

And, FWIW, one that still needs to exercised against firms that the government does not have a stake in.

I am sceptical of those that call for 'regulation' as the solution. Frankly, the way things are working now we get to choose between getting defrauded by Wall Street republicans or Capitol Hill regulators.

The final solution is to put the control of assets in the hands of those best able to manage them, for an appropriate mix of public and private benefit.

Sure, Dems and Republicans are going to disagree on exactly what that balance is, and that is exactly what domestic issues in electoral races should be about.

Another of the benefits in a 'property rights' approach to economics is in the management of a corporate organization.

Historically we have represented the interests of individual laborers through collective legal representation - and there is nothing fundamentally wrong with that. Of course it can also be divisive and counter-productive as the distribution of profits needs to be 'argued'.

The most common left wing answer to this is employee ownership, and this can work, but it is also not without problems - for one, how do you make the tough personnel decisions?

A mix though of salary and ownership has many, many benefits.

Corporate 'Welfare' is a term that resonates well with the best of our Country, right, left, and everyone else.

What is important is that our system, including completely private businesses and welfare organizations, as well as the ubiquotous american corporation works in the way that best makes sense.

A property rights way of looking at these questions work well, just so long as everyone involved recognizes the need for both pure public rights and pure private ones, as well as the corporate mix.

'X-efficiency' is a term used for talking about the unmeasurable, the particular value of the organizational management practices of an organization. The price of labor, the price of land, the price of inputs, service or physical can all be handled by an accountant, as well as reported to a government economist.

Our system and it's over-reliance on national institutions, has problems. Sure, there is a need for large national corporations. Washington State's Boeing is among the top of that list, as to are our automobile manufacturers. These are necessary evils and they require federal regulation.

However there are many businesses where largeness is bad - perhaps first among them the community coffeeshop (which, btw, is where this blog is mostly written).

Subsidizing a bad organization means that failure is perpetuated, not mitigated. Right now, those failures are at the national level, and we need to bring much, but not all, of the property rights in our system back to the local level.

Will there be more 'failures'? You betcha. Will there also be successes that we can all learn from and emulate? I sure hope so!

I am reminded of my first publication, a compilation of research on the subject of Socially Responsible Investment - on the heels of an administration occupying expansion of my alma mater's pioneering South African divestment.

The Hampshire College Report on Socially Responsible Investment

Ed. by Doug Tooley,

April 1983.

Preface
In 1976, Hampshire College bacame the first school in the country to divest from companies in South Africa. This opened the door for us to a much larger idea, that of using investments to reflect our ethics instead of those of the capitalistic ideology.

My thrift store find, a pair of Nike 'Air' high top basketball shoes passed their first test in their new occupation - 'wet' canyoneering waders. Thanks again to Phil Knight!

Also a tip of the hat to the Emery County Road crew who paved the road here (Little WildHorse Canyon), the 'Nike' of Utah road operations!