Economic Crisis

Obama As Goldilocks: Now, About That Debt Ceiling . . .

Admit it. It’s OK today finally in polite circles. Because Paul Krugman woke up the other night.

And Lo! Verily. So cameth this divine vision down unto his Nobel winning noggin that truly, he who dost caveth before all hath no spine. ‘Why hast thou forsaken your flock?’, he cried. ‘Have we not offered Chenin Blanc and Brouilly both avec Camembert de Normandie‘?

What have they done with President Obama? What happened to the inspirational figure his supporters thought they elected? Who is this bland, timid guy who doesn’t seem to stand for anything in particular? (April 10, 2011)

Thus did Krugman hear the reply as if carried on the wind borne by a twin DR-103 stack. But without mid or presence controls and five pre-amp ECC83 and four EL-34 output tubes per head. For the reply did packeth punch without cascading gain sizzle:

“Pinhead.”

And it was good. Around the dried and empty barrels of Kool Aid and blogs, there was much weeping and gnashing of teeth. Down unto his Twitter followers’ great-great-grandchildren.

Bob Gates’ Sacrificial Lambs: Thrown Aside To Preserve Perpetual Pentagon Overspending

We should reject Bob Gates’s pre-emptive effort to lock in future defense budget growth with his PR statement declaring $100 billion in DoD out year budget cuts. Don’t fall for the flare off the back of the jet. He’s throwing Congress and the public a few meaningless sacrifices. His admitted long term goal? It’s not to cut costs per se but justify permanent 1% increases from this year’s already record defense outlays. This stunt is political kabuki intended to head off real defense cuts by offering a Potemkin facade of budget discipline.

Will Americans be deceived by his PR sleight of hand? Probably.

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A Glimmer Of Hope

President Obama’s speech today brought smiles to the Bunker. How nice to remember them again.

Admittedly, he gives er, good speech. And his policies to date are more cautious and Warlord-lite than we secretly hoped for despite our skepticisms during the primary and his appellation of ‘Boy King’. So as a summary of his first nearly 100 days it was not earth shattering by any means.

On style, elocution and intellectual presence, he as usual fires on all cylinders. Not only does he explain yet again the Ur Narrative of our economic collapse in accessible terms, but his own internal comprehension of the concepts deployed is palpable.

What we care about most were some of his ad libs. In one subordinate clause describing a post-recovery America (with a ‘c’ and an ‘a’, mercifully) he noted Americans would have to consume less and work harder at earning export currency. A fleeting meme quickly moved away from. Who knows if it was inserted by committee as an intended ad lib and meaningless in terms of actual presidential commitment. Nonetheless, finally, we are seeing someone in American leadership at least *edge* toward speaking an uncomfortable truth: our standard of living necessarily will be lower and debt service obligations onerous.

One Dream

His description of a post-recovery America restructured away from frivolous financial service ‘industry’ parasitism also welcome here — both from an outcome-determinative point of view (ours), but also for its McCain-speaking-in-Michigan “You know these jobs aren’t coming back” faux pas truthiness truthfulness.

It’s just a speech. And like the bank plan, DoJ in some respects and Gates’ DoD pronouncements, Obama’s execution often proves far less insightful, more tinkering at Warlord margins and cautious than his inspired rhetoric.

A useful barometer still might be how much Ron Insana from CNBC viscerally disliked it all. A future not centered on Wall Street ephemera without financial bubbles is unacceptable. A future with a chastened, reduced and even marginalized Wall Street is beyond his frame of reference. And as Insana and others noted, Administration words come and go often within a 24 hour news cycle.

But maybe Obama really does understand there is no going back to the bubble-fueled, foreign-subsidized binge consumer America standard of living. With all of the corruption, narcissism and corrosive effects it portends for a viable, stable liberal democracy. Even in his green techno utopia, Disney-esque ‘World of Tomorrow’. We could live with tacking to tactical prevailing political winds if he knows that’s a reality polestar to steer by.

How nice it would be to believe . . .

DoD Acquisition — A Bad Joke

There is broad agreement on the need for acquisition and contracting reform in the Department of Defense. There have been enough studies. Enough hand-wringing. Enough rhetoric. Now it’s the time for action.

Secretary of Defense Robert Gates

If only, as Hunter mentioned, there was more to it. And how sad to see Obama shills like Center for American Progress and former Reagan DoD minion Larry Korb herald Gates’ proposed budget increases and ancillary measures as real reform.

Much of this conversation is old hat for our merry band here. Together we’ve anticipated this procurement scissors crisis for the better part of 4 and 1/2 years or so. The defense industrial apparat’s inertial divorce from any reasonably coherent American strategy premised on both goals *and* means continues. We’re all adults here. We know how the game is played. Ramp up huge budget proposals before a new administration arrives to either box them in or force them to eat ‘soft on defense’.

Ignore The Strategic Bankruptcy Behind The Curtain

For all of that, Obama is Warlord-lite once again. Agitprop spinners and gullible U.S.-we-canners aside, the defense industry quite rightfully breathes a sigh of relief — as their stocks soar on the news. Indeed:

For one, defense spending is going up next year, by at least 4%, as Gates is proposing, to $534 billion (not counting $130 billion for Iraq and Afghanistan). That’s more than half of all spending Congress has a hand in deciding. The Pentagon budget is not being gutted, despite loud criticism to the contrary.

Long time readers know our take on specific programs i.e. ‘Jedi Knight’ platforms like the F-22, the still touted ‘economical’ (with more importantly stronger international political support) F-35, BMD, the Army’s ‘hey we can be as high-tech as the fly boys’ FCS boondoogle, etc. Over at STSOZ 1.0 we shared at length our general, safe for public/non-sensitive observations on the LCS and the catastrophe of *that* program from Art Cebrowki’s original vision. And let’s not even mention the absurd Zumwalts.

The alleged Gates “cutbacks” are merely a piece with the Potemkin nature of Obama’s budget and TARP/financial rescue plan. Essentially to anyone not still drunk from the Inaugural buzz, the Obama Administration’s claim to fame so far is ‘hey we’re slightly less whacked than those other guys’. Change yes, but less than meets the eye. The ‘vital’ Obama federal budget delivered less than a month ago is blown into vapor by their sudden admission (DOH! – as everyone outside the Administration knew) that the economy in fact wouldn’t grow and begin recovery this June as they claimed. Much less reachg 3.3. GDP next year.

If Obama can present such blatantly delusional, nay, knowingly outright deceptive ‘national priorities’ in a joint address to Congress then one can understand that Gates’ proposed but unsustainable ‘floor’ (read still massively bloated and making permanent as a benchmark the staggering increase since 2002) is similarly a chimera. Let’s just say it out loud: after a couple trillion dollars of printing non-existing money on a meaningless, fictional ‘national budget’ and half assed bank plan, why should the Pentagon be held to a different standard?

Oh there is the usual this-or-that about this-or-that system, platform, etc. True, long overdue outsourced contractor-trimming is *proposed* from insanely out of control to merely dangerously crazed, etc. It’s a real step forward to push out some of the 40% (yes, 40%) of the Pentagon workforce that the Warlord turned over to private contractors. The proposed reforms? To hire real government employees as full time program managers. To hire real auditors. For possible – one hopes – additional (but illusory) savings in 10 years.

All well and good. And we can talk about specifics on any of those issues if people here wish. As long time readers know, the Stiftung has represented about every single major defense industrial/technological/contracting entity at the VP/retired two star, retired three star level across Congress, in OSD, at OMB, HLS and OEOB. We’ve spent time on the Pol/Mil analytical side if that interests people.

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To recap 4 years of our conversations here, the U.S. is stumbling oblivious into the gaping razor blade jaws of procurement impossibilities without the financial-economic means (or even pretense to means) to paper over all the rampaging irrationality. And with a decadent political process to boot. A defense budget one can rightfully argue, like a CVN, doesn’t turn on the dime. But Obama unfortunately is far more status quo than his Kool Aid contingent will allow. (And would someone rid us please of that nauseatingly naive and smug Maddow? Her usefulness as an Oppositionist came and went long ago).

We’re still waiting for the Harvard-Larry Summers types and other whiz kidz there to glom on the fact we can’t afford any of it. Really. It is that bad. We’ll be waiting a long while. We maintain their ineptitude, American historical immaturity, financial illiteracy and obtuseness will require something like gaiatsu (Japanese for shock, usually a foreign imposed circumstance ala the Arab 1973 oil embargo or Baker at the 1985 Plaza Accords) to impose even a dazed recognition of empirical truth.

In the interim, we commend again to all the Obama drinking game. At every event each time he proclaims ‘Let me be clear’, ‘I can’t say this more clearly’ etc. — do a shot. Pretty soon he will start to sound clear if the proof is high enough. Maybe one day he really gets clear about reality, U.S. power and the cruelly inexorable, undeniable audit of means. If you think Obama’s hair is turning white now, just wait for that moment. As John Madden would say — “Boom!”

What’s worse? Scenario One — Bartlett et al. proclaiming they can make up reality and force the rest of us to chase after them; or Scenario Two — a bunch of self-convinced, complicit, financially self-dealing poseurs jury rigging an economic house of cards, grasping for a toe hold on any reality, trying to convince *themselves* they get it by constantly reminding *us* how clear they are?

A Psych 101 major at any junior college already knows what that means. And rightly so.

YGTBKM ! WIIFM?



Ah yes, London’s G-20 clearly means ‘the end of Anglo-Saxon capitalism’ as Carla Bruni’s husband put it. Quite. And as the near politically irrelevant Gordon Brown put it, London’s G-20 ‘marks the emergence of a New World Order’. Quite.

The scene just screams Dmitri, Barack and Berlusconi knocking back a few Stoli shots. With Hu the amused if exasperated designated driver.

There is still hesitancy to make a break with the old patterns. The Europeans for their part wanted to preen for their public while basking in the Obama halo. Check. Obama just wanted to get by without a fumble and make clear he’s not the Warlord. Check. Certainly, China is indeed the most interesting player, not Obama, in structural possibilities and ramifications. The mini G-2 by all reports occurred without incident. And Hu remains circumspect about pushing further for now the inevitable Chinese call on the ‘Obama Dollar.’

So chalk another confab up to inertia. For all the political improbability and outright operational economic impossibility, the Europeans have contrived to maintain their equally delusional belief that as ever since 1917, the Americans will take both the vitriolic abuse and responsibility for making things right. Leaving the Old World to pursue their lily-in-the-fields existence. Oh they may demand this or that or scheme for this or that, but who really cared then or now that DeGaulle pulled out of NATO’s chain of command? Or Sarkozy put France back in?

Off topic, Dmitri, apparently smitten, gazed into Barack’s eyes and . . . wished he got an iPod, too. As long as Dmitri plausibly can saddle Vlad with his public’s fury at the economy’s fallout he can indulge in smiles, however fleeting. Besides, they don’t have to deal with ‘Russian expert’ Cher Condi and her husband. What’s not to like?

We wonder who will fall to the floor first when the music stops in the months ahead. It won’t be pretty.

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Meanwhile, as noted in the comments here, this is cherry blossom week in the Imperial City. Today, in fact, the festival closed downtown. Here’s what it looks like not too far from the Bunker . . .

Springtime After 8 Years Of Winter

And two more, one from this morning . . .

A Thing Of Beauty Is A Joy Forever

Dusk

The Bondholders’ Blues

_____From the ‘Live Jive Stiftung Bunker Sessions”_____

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Whistling In The Dark

Mr. Prime Minister, the U.S. Special Representative is a . . . Bernie Madoff

It’s rarely the first pebble that people remember. Chinese concerns about the integrity – safety -of their U.S. holdings and their chief addict’s health (“unsustainable model of development characterized by prolonged low savings and high consumption”) come overlate.

In her defense, even China’s worst case mongers could not have envisioned so much irresponsibility created by so many for so few. So China is riding a proverbial tiger bloated on Tyvek housing insulation and utterly disposable knick knacks from Guangzhou. Whither the beast? It staggers now towards the hyperinflation savannah but it also is poised to tucker out and slough it all off in the stagflation lowlands.

Beijing’s three concerns are: what to do with over a trillion in currently held dollar denominated assets?; what to do with trade surplus-generated holdings going forward?; and finally, what about the bloated tiger’s appetite in the future? Some of the short term problem will take care of itself with export contraction and reduced pressure to recycle trade deficits. Beijing is unfortunately screwed should it wish to play an even semi-status quo role in the global economic order – to wit, its current holdings by almost Newtonian physics will depreciate regardless due to U.S. fiscal policy. Whether they are merely reduced or eviscerated will be determined by U.S. (in)ability to pull back from hyperinflation. Going forward, in for a penny in for a trillion – Beijing hesitancy to buy more U.S. paper to finance a soft landing is a gun to its own holdings.

All muted about today as Beijing ponders the ultimate wipeout – U.S. default (a concept people immediately dismiss now but which will become a common place analytical possibility quite soon). We happen to agree with Naked Capitalism that China is laying down a marker. To be called in later.

The Oval Office Behind The Curtains

You have been talking to the Doctor !  Explain ! Explain !

The immediate granular reactions to Obama’s budget, such as its ‘honesty’, education, EPA, armed forces personnel expansion, tax cuts, etc. are all important. We agree with the Center Left that the stimulus and budget are unlikely to generate the economic growth underpinning the budget’s out year projections. They are not audacious enough.

Geithner’s tepid approach to the banking crisis is probably a more revealing insight into the Administration’s psyche than the budget. He’s an odd pollyanna. His ‘worst case’ scenario of a 3.3% economic decline this year and flat 2010 followed by growth can only be a political prism divorced from economic reality. 2008 Q4′s over 6% decline merely highlights this.

AIG is on the precipice of tripartite tear down. CitiGroup and Bank of America/Merrill Lynch are insolvent as we speak for all practical purposes. Paul Volker correctly observed recently ‘some banks are too big to fail exist.’ The Administration’s expected increased government position in Citi is best seen as a band aid.

The Obama Administration is not nearly as honest as it needs to be. The banking/financial situation is far more important for future national expenditure possibilities than a budget. Which makes Geithner’s dithering on bank capitalization, ‘to nationalize or not dare use that word’ etc. all the more bizarre.

Our macro take despite the stakes is meh. Assuming American historical luck holds and we navigate a soft landing for banks and Obama’s budget is even 20% close to reality we believe American capacity for subsequent austerity to sustain deficit reduction is zero. American debt service obligations will be crippling by any objective standard. If the depression takes hold speed things up.

Sound American strategic foreign policy planning should begin to anticipate the existing and soon to explode ends means gap and adjust accordingly. Obama’s success or failure will only attenuate the timeline a bit.

Battlestar Obama

It’s an old geek conceit that their latest infatuation is genius for ‘the dude who rocks da eyballs to the skull, man he has a *plan*!’ All those seemingly disjointed false starts the last 9 episodes? Critics stop harshing! It’s in the plan, man. And if you disagree, shut up, you are a troll and hater.

We’ve all been there. Or stumbled across almost identical threads or flames.

It’s not wholly irrational. Tolkein had one. Books aside, the Kiwis delivered in spades for the screen. Several legendary Japanese manga do the plan/story arc well, too. It’s clear today LOST never did. But people – especially Americans — invested too much to cop to years of self abuse for naught. In science fiction terms, the late Babylon 5 truly did have a 5 year arc written out before the first episode filmed. And Joss Whedon created what must surely rank as some of the most sublime television — genre or not — ever achieved with achingly poignant (and funny) arcs each season for Buffy The Vampire Slayer.

There are many pinheads.  And they have a plan.

Why Obama And Geithner Are Following Battlestar Galactica To Disaster

Which brings us to Obama and his apprentice, Tim Geithner. They threaten to drag us all down the hype-saturated Battlestar Galactica (BSG) cul de sac. BSG as you may know currently clogs bandwidth everywhere as its gasps to its final episode expiration. BSG is an almost perfect mirror for our times of catastrophe, beers with Sean Hannity and bong hitting hypocrisy.

Why is BSG like Geithner’s ‘plan’? First, it’s unoriginal, too. The story and characters borrow from a super cheesy 1970s actioner with Lorne Greene. Did the Stiftung tell you we sat next to the real Commander Adama at the Reagan Inaugural? We kept prodding him to lower the blast shields but he just kept blinking (this was many champagnes into things – but more another time).

Second, BSG is a fitting Obama and Geithner template given its provenance. BSG’s head honchos have pedigrees from that most lamentable Star Trek fiasco, Deep Space (Sit & Spin) 9. BSG naturally suffers an ignoble birth twice over. (Btw, as some of you may know, Paramount famously stole the entire concept of DS9 after sitting through the Babylon 5 productions’ pitch meeting, turning them down, and pouring all the purloined ideas into their PC drenched, lethargic abomination. To make peace, Gene Roddenbury’s wife agreed to star on a later Babylon 5 episode — a lesson in geek shuttle diplomacy. This dishonesty makes BSG trebly appropo for Geithner today).

Obama and Geithner come to their bank rescue pitch in much the same way. Locked in by predecessors, using some ‘borrowed ideas’, they essentially dressed up the old Paulson er, battlestar with lipstick. But this time with a plan ! BSG honcho Moore, deludedly thinks his genius at ad hoc recycling puts him on par with Joss Whedon or other modern myth makers (he naturally scratched Tim Kring/Heroes from the to-do list). Moore claimed from his very first episode that the Cylons had a plan behind their genocidal nuclear Pearl Harbor on mankind. To the unwashed used to fare like King of Queens, BSG seemed to deliver the goods.

So, too, with Geither. How soon do you suppose he also starts making speeches flanked by massive gold flaked signs proclaiming ‘Plan For Solvency’? There must be plenty of supplies left over in OEOB somewhere.

Even the so-self-consciously-hip-we’re-just-plain-folks at Salon drool over BSG. Why? We don’t know. It’s so mediocre. But to cut them some slack, well, it is dystopian – a better world view outside of Japan and Blade Runner is hard to find. So it looks cool. But as far as acting, sloppy characterization, lack of plausibility, and zero- none -3 dimensionality (all of the characters are flat self parodies of their season one appearances) the show is a painful joke. And Salon swoons for all things Obama and his ‘plan.’

Take heed Obama and Geithner. Now, even the dimmest BSG fan realizes all along there has been no plan. Moore et al. were pulling out characters and story arc like monkeys from their posteriors. Crucial, vital items cutting to the show’s very raison d’etre from episode one made up on the fly this final year. Wounded geeks howling in betrayal are not for the squeamish. It seems politicos are no different.

Yet we pity geek pain. Moore et al. have been winging BSG; Heroes is an embarrassment ($4 million an ep?); Terminator: Sarah Connor Chronicles is so illogical, disjointed and feckless *within each episode* the Stiftung’s Aibo is chafing to go and just waste that Connor punk to end the misery. They face a wasteland.

It’s amazing Obama and Geithner don’t realize a serialized story with no plan is a train wreck. No clue. In the end, no real audience. Take this as an unkind studio note on your pilot script: get a script doctor. Or it’s no go. Why?

To mix geek references, Padawan Geithner tried to serve his Master’s bidding yesterday. But his Jedi mind tricks are weak. Did you notice the vague hand movement in front of him as he droned ‘All will be well, we will unveil our plan soon’? Fah. My dear Padawan, you can mind trick all of the American lemmings all of the time, but pundits, foreign creditors, foreign observers, ‘the Street’, and Hutts on the Hill are immune. He and his Master wish us to believe that like a multi year genre serial, all the little plots and twists we see ahead immediately will all make sense *when the story is revealed* at the end. Except the joke is on Geithner; we know he is creating BSG while Obama seems to seek higher fare.

A New Script Based On Reality

A script doctor would counsel that there are two distinct story lines for Geithner to establish now, at the pilot episode. He must choose. One is that we are essentially in a panic. Fundamentally sound assets are temporarily underwater or without valuation. Thus King Henry claimed he would buy up ‘toxic assets’, banks like the house in Poltergeist would be made ‘clean’ and King Henry would sell off the purchased at a profit. An elevator pitch at MGM – except the studio would want Clooney as Paulson, James Wood at AIG and Roseanne Barr in a foreclosed home surrounded by cubic zirconium.

The other story is that many if not most of the affected financial institutions are fundamentally and irretrievably insolvent. The IMF puts the insolvency rate at circa $1.4 trillion. Nouriel Roubini pegs it around $3.6 trillion. These institutions can not be made clean by buying toxic debt because there is no there, there. The elevator pitch here is Will Smith in I am Legend without the annoying woman and child; he makes it out to Darien, CT with some bearer bonds.

The Stiftung like others subscribes to this later view. Obama and Geithner (and the Hill, media and Wall Street) are all hoping for Geitner’s BSG script — the current geek heartburn is they haven’t seen enough ‘spoilers’ to know what the plan is not realizing there isn’t one. There is no arc, no plan for this BSG tact. Guarantees and buying some toxic assets here and there and $350 billion Son of TARP will give us George Romero Living Dead Banks for at least a Lost Decade if not more. That, dear reader, is no plan. It is, however, Ron Moore BSG classic. Yet who would claim 4 years hence this was meant to be?

Shoot The Wounded !

We have an involvency crisis, not a panic or business cycle. We need a new script. We are looking at either nationalization for recapitalization or massive debt for equity swaps on a level far above being contemplated now. Obama and Geithner would be advised to shoot the wounded. Let the bad banks die. Start with new good banks, with new management, with new ethos untainted by the ruinous gluttony of the bubbles.

We are actually serious when we suggest that should an existing tainted bank want recapitalization or a swap, it must relocate executive offices to an economic recovery zone. Youngstown, Ohio. Michigan. The Katrina inland wasteland. Pick another.

Technologically there is no reason for anyone to be on Wall Street anymore (banks and Cravath and others fled a while ago). There’s no reason for them to be in the City, either. We don’t have re-education farms yet in America. But requiring bankers on the federal dole to live among the hoi ploi and see reality is a small price to pay for their Walter Mitty daydreams that they still matter.

That’s a script, a plan and a ComicCon panel that will rock. And no one plausibly can scream ‘Curse you Timothy Geithner, you raped my childhood !!!’ Although he may get a couple of Michael Bay’s ‘I hope you die for destroying my sole joy in life, Transformers ‘Dude! You own my eyeballs!’ And Obama? He won’t have to be worried about being cancelled after 4 short seasons.

Microsoft, FDR And Escaping The Prison Of The Past

America still gropes for a generally accepted conceptual past template to explain the present and future. The most hegemonic meme is ‘The greatest crisis since the Great Depression’. The slogan is everywhere. It taps into a hazy Jungian collective memory and aligns American expectations for Obama. The meme’s 7 words are shorthand for 100 days, public works — the dimly recalled 3-4 pages from high school American history textbooks.

Redmond and the American Future

We’ve all seen how America’s soupy consciousness sucks it in from blog and cable micro channel niches, silos, stratifications and spam. The dominant meme itself then becomes a news story as contrarians fight for web hits and fleeting relevancy.

In 1933, as today, a new president stepped into the White House, vowing change and decisive action at a time when a banking crisis posed a grave threat to the nation’s economy.

The economic morass that confronted Franklin D. Roosevelt 76 years ago was undeniably deeper and more ominous than the trouble President Obama is facing. Yet, according to economists and historians, there are also some telling similarities and cautionary lessons to be drawn from the experience of the Roosevelt years in the 1930s.

And so on. One does wonder what FDR would have encountered had Hoover’s Commerce Department and then the newly created FCC not nationalized radio spectrum and protected government and incumbents with licenses and regulatory control. A small reason there to be thankful Obama is not following the Hoover-FDR thing too closely.

Beyond FDR

But we digress. We offer an alternative meme to FDR. One that resonates with today and looks foward with honesty.

Consider Microsoft and its latest earnings report. Microsoft’s setbacks were long anticipated by technology watchers (in fact most reported in December the layoffs would be 15,000, not the actual 5,000). Much like the American economy in 2008-2009, Microsoft is reaping the bitter harvest of its once seemingly permanent business model/license to print money. Redmond’s prognosis is a better template and cautionary tale than FDR when thinking about the post-Warlord economy.

The Microsoft Economy Is Not Sustainable

First, a short recap why Microsoft, like the American economy, suffers from structural flaws. Most know Redmond’s billions accrue from its strangehold on the desktop environment: (a) the operating system; and (b) office applications. Think of Microsoft operating systems as the American economic model – pervasive, loathed by some, and the epitome of the Davos set.

Unfortunately for them, Vista, Redmond’s latest operating system, is a fiasco. Now the recurring butt of Leno monologue jokes, it is the IT industry’s Edsel. It may go down as one of the biggest corporate blunders in American history.

Fine. That’s one product. More damning, however, the world environment changed. Customers and enterprises are migrating to web-based applications instead of the old Office Suite. It doesn’t matter so much which operating system is around. A surprising rise in the new ‘netbook’ segment of ultra portable notebooks in 2008-2009 caught Microsoft flat footed. The hot-selling smaller devices can not run the Vista bloatware — XP remained in demand. To Redmond’s alarm manufacturers for once had the upper hand — they could always turn to the free Linux alternative. Microsoft’s comical tilting at Google wind mills via the aborted Yahoo acquisition speaks for itself.

A slight confession here — the Stiftung is not ambivalent about Microsoft. We’ve dealt with Microsoft’s Chief Operating Officer, Vice Presidents, Directors and alarmingly smug managers over decades. In both a representative capacity and other ways. With the possible exception of one defense contractor, the Stiftung never met a more duplicitous, dishonest, mendacious, anger-filled and sociopathic corporate culture. But like a broken clock (or should that be Zune?) even Microsoft can be right.

Redmond warns investors and the market that the future will not rebound to 2007 or before. Based on current economic trends and its own business model (described in strictly revenue terms for the Street) the future will unfold on a significantly lower economic plateau. Is Microsoft finished? Doomed? Hardly, but it will have to fight harder and make do with less.

This is where the Obama Administration makes a strategic error. The ‘Stimulus Bill’ is a misnomer. Obama should ‘state clearly’ (his favorite phrase – it makes a great drinking game, try it) he is proposing a stabilization bill. This is in keeping with his ‘create or preserve’ jobs meme. It’s also more accurate regarding his plans for the States. A ‘stabilization bill’ also protects him from retroactive recriminations down the road for preserving what never cratered.

As we wrote recently, Obama should come clean with the American people that there is no going back to the economy and lifestyle fueled by the tech and real estate bubbles. This means resetting expectations to circa 1994 at best. Many of those jobs related to the bubbles are gone for good. Obama is wise enough to cloak this message in fairer, more palatable terms than say the Peanut Farmer’s malaise thing. It needs saying.

Regardless Dear Reader, don’t you think we need to move beyond the imperialism of the FDR meme?