Notes from the Left Coast

Drummond Pike’s Blog

NOTICE: Due to a planned Presidio Park power outage, the blog will be down from Fri 2/19 8pm until Sat 2/20 8am (PT).

Europe. The word conjures things romantic and complex. The place where some of the worst atrocities ever have been committed is also the place that Will Shakespeare, Maria Callas, and Van Gogh called home. It is impossibly diverse, fraught with ethnic conflicts, and yet boasts the EU – a vital political union that translates its affairs into more languages than we have states. They are learning to speak as one in dozens of tongues, to act as one through dozens of legislatures, and to build an economic engine that rivals the US and China. What is so fascinating to me is that what they are doing so defies their own history of intolerance, mistrust, and conflict.

Last night, I walked through Prague on a brisk, clear night. Large downtown squares were lit up with lights and huge Christmas trees a  nd crowds thronged through wooden booths selling food, drink, and traditional gifts. Children and adults both sported little “devil’s horns” that lit up red or blue, while others dressed as angels or medieval knights – in reference to a tradition about which I was clueless, I’m sad to say. But the experience was transcendent. It is truly a magical spot, especially at this time of year.

So, what is motivating this diverse continent to come together in this way, difficult as it may be to do so. Is it just reactive? Is it in response to the history of the great World Wars of the 20^th Century that devastated so many? Was it the crushing competitiveness of the postwar American economy? Was it the failure of ideology that drove the US, China, and Russia to such wasteful and unproductive times in the Cold War, where Europe was the reluctant partner and likely battleground? Or, was it a choice? Did these people look at what they’d experienced and decide they wanted something different? Whatever it was, something very fundamental here changed over recent decades. Something worth figuring out if we are ever to learn how to sort through the complex array of issues and conflicts before us.

President-elect Obama,

Many of us in the progressive community are waiting to see how you shape the team to deal with the economic crisis that is affecting so many. So far, it’s not looking all that great, and I think we owe it to you to say so. You see, we all have so much hope that you will truly change the nature of politics in America. Your very election has been historic, but it will only become heroic if you face down those who have gotten us into this economic mess.

When you were elected President of the United States, you may not have realized that you were also elected CEO of the largest private equity “distressed asset” purchaser in the history of the world. You make those hedge funds guys pale in comparison to the kind of money you will be able sling around, and you can really make a difference if you do it right. The first thing, of course, is to realize that this is going to be half your job for the next 4 or 8 years. To do it well, you will need to begin by structuring these deals well. So far, on the other guy’s watch, that hasn’t really been the case.

Watching your appointments, I have to say I’m growing a bit worried. A buyer of troubled assets does a couple of basic things: one fires the managers, infuses the enterprise with equity or convertible debt, wipes out the shareholders, negotiates debt or other obligations, and then sells off, retools, or reforms the different parts of the enterprise. Those that are sold help pay for what the rest need. You install new management with clear accountability and metrics.

But with AIG, Citibank, and other deals being done right now, this is not what is being done. Instead, senior management is being left intact, shareholders remain largely undiluted, and even stock options are largely unaffected by the bailout packages. Where is the accountability in that? Big poorly run financial companies are using bailout money to purchase sounder, better run regional banks. Shouldn’t the opposite be happening?

Last July, Rob Johnson spoke to our Momentum conference and set forth an analysis that remains the best I’ve ever heard on the subject of how the bailout occurred. In a nutshell, it boiled down to big players chasing money in an unregulated environment, convincing themselves to overvalue complex assets in the process. Another friend, a former bank regulator, told me recently that one cannot penetrate these unregulated complex instruments to find the underlying mortgages to see whether Gertrude Stein’s there is actually there. In Johnson’s words, “it’s as though they put all these mortgages, or parts of them, into a blender and then told you that what resulted was good for you.” Anyway, it all makes me more than a bit worried about what you have to deal with.

More than anything, I hope that you find the kind of independent minds that can dispassionately analyze what they see and propose remedies without regard to their impact on themselves or those they know well. Many of those you have thus far recruited have better credentials for their contributions to what created the problem than ideas for how to remedy the results.

Why, for instance, are you all leaving Joe Stiglitz at Columbia undisturbed? Many suggest his is the most sanguine voice on both the problem and the solutions you might consider.

While this blog reflects my personal opinions, it is also an institutional vehicle for Tides and should reflect the institutional positions of the organization–which is why I am removing this post.

Buried away in our non-profit bunker, where things political are verboten, some of us struggle with how to hold true to our commitments and values. So, let me begin by saying that I do not advocate on behalf of either of the presidential candidates. This is my day job, and I’m simply not allowed to do that – a fair trade for all the privileges that accompany the non-profit status of my employer. But another tenet of my employment is that Tides has organizationally stood by the cause of racial justice for decades. It is with that in mind that I share these thoughts.

Over the weekend, a brouhaha emerged over John McCain’s assertion that Barack Obama had played the “race card” when, in a stump speech he’s used for some time, he suggested that the other side would “try to make you scared of me” by saying he’s “not patriotic enough,” he has “a funny name,” and that he doesn’t “look like a lot of those other presidents on dollar bills.” It’s a stretch (more…)

Sy Hersh’s recent piece (New Yorker Magazine, July 7 & 14 , 2008 Issue) is one of the most frightening pieces I have read in years. In it, with his deft storytelling, he paints a picture of a struggle between the military command structure and the White House (primarily Dick Cheney) that has been pursuing an independent strategy to destabilize Iran.

Two things astonish: first, what was long thought a settled matter about the ability of the military command structure to oversee all field activities involving the use of lethal force, particularly important in a theater of operations such as the Middle East where what happens in a neighboring country can have very direct impact on our troops on the ground, turns out not to be the case. After all the scandals involving White House sanctioned “special operations,” Congress finally locked down the ability for independent action outside the military lines of command via the 1986 Defense Reorganization Actl…or did it? Remember the Iran Contra debacle? (more…)

One of the perennial debates in the funding community revolves around the question of boundaries and role with regard to the groups we fund. Are we venture capitalists where, by virtue of the grants we have made, we have a seat at the table? Should we insist on an E.D. stepping down if we observe poor performance? Should we withhold further funding until changes we believe warranted become reality? Let’s call this the “venture” model, as many have done.

Or, should we see ourselves in a more passive role, financing the work of organizations, holding them accountable to stated goals and objectives, and observing weaknesses with constructive suggestions on what they might do? Let’s call this the “supportive” model.
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I’ve spent the last couple of months working harder, and more excitedly, on something than I ever have, at least so far as my aging, addled memory can recall. It is, believe it or not, all about a repurposed conference that Tides has done a couple of times before. Momentum. Now, you might ask, why in the world would a normal person get so exercised about organizing a conference? Here’s why.

I graduated from college in 1970 in the middle of Nixon’s first term (he was impeached during his 2nd). At the time, the Woodstock generation was in ascendancy and grinding through a social change agenda as though ordained by the gods. Civil rights had finally come to people of color, farmworkers had succeeded in forming a union (still hard fought by agribusiness), the women’s movement was emerging as a force to change seemingly intractable traditions, and the Vietnam War seemed to linger just to remind us why attaining and exercising power was so important. For me personally, Bobby Kennedy’s race in 1968 inspired a sense of what was possible, despite his tragic assassination. Looking forward, at 21, to the coming years, I was so certain that our generation was going to transform American society into an enlightened, tolerant, moral force in the world. How could it not? (more…)

I was amazed yesterday to learn that someone actually reads these blogs out there. Turns out that I’d tried to make a point - one that I believe in - but that I’d done so in a flip manner. Institutions, it turns out, are people. And people react to being criticized. All very normal. It would help, of course, if I could learn to remember this when writing about others.

So, I wrote a blog about the Chronicle of Philanthropy and the controversy about a column they published on structural racism - a relatively new and, in many circles, respected analysis. Its title included the name of Reverand Wright - the controversial former pastor of Barack Obama’s now former church. In both the column and in the lengthy response to numerous letters to the Editor, the author sprinkled quite liberally references to both Obama and (more…)

An interesting report in this morning’s NY Times: “Challenging the IRS” which describes an emerging aggressive strategy by the “Alliance Defense Fund” (described as “a conservative legal group”) that is recruiting 50 pastors across the country to engage in simultaneous electoral advocacy on September 28th. The purpose, it is suggested, is to raise the visibility of the issue of the IRS prohibition on tax exempt organizations, including churches, from express advocacy for or against candidates running for public office.

As we all know, over the past 28 years or more, we have seen a rising, often very conservative, element in the faith community engaging closer and closer to the line separating church and state. This time honored principle in American democracy seems to matter less to the likes of Bill Keller, the evangelist whose “Liveprayer.com” is under investigation because he admonished his followers that “a vote for Romney was a vote for Satan.” (more…)