The biggest controversey about today's news at my client's office comes down to this: who is actually the stupidest governor in the US, Blagojevich or Palin? The morning's events bring this important question to the fore.
Exhibit A: The governor.
On the issue of the U.S. Senate selection, federal prosecutors alleged Blagojevich sought appointment as Secretary of Health and Human Services in the new Obama administration, or a lucrative job with a union in exchange for appointing a union-preferred candidate.
Blagojevich and Harris conspired to demand the firing of Chicago Tribune editorial board members responsible for editorials critical of Blagojevich in exchange for state help with the sale of Wrigley Field, the Chicago Cubs baseball stadium owned by Tribune Co.
Blagojevich and Harris, along with others, obtained and sought to gain financial benefits for the governor, members of his family and his campaign fund in exchange for appointments to state boards and commissions, state jobs and state contracts.
"The breadth of corruption laid out in these charges is staggering," U.S. Attorney Patrick Fitzgerald said in a statement. "They allege that Blagojevich put a 'for sale' sign on the naming of a United States senator; involved himself personally in pay-to-play schemes with the urgency of a salesman meeting his annual sales target; and corruptly used his office in an effort to trample editorial voices of criticism."
U.S. Attorney Pat Fitzgerald's office put out a press release (pdf) that is worth reading.
Exhibit B: The newspaper.
Mr. Zell isn’t the only one responsible for this debacle. With one of the grand old names of American journalism now confronting an uncertain future, it is worth remembering all the people who mismanaged the company before hand and helped orchestrate this ill-fated deal — and made a lot of money in the process. They include members of the Tribune board, the company’s management and the bankers who walked away with millions of dollars for financing and advising on a transaction that many of them knew, or should have known, could end in ruin.
It was Tribune’s board that sold the company to Mr. Zell — and allowed him to use the employee’s pension plan to do so. Despite early resistance, Dennis J. FitzSimons, then the company’s chief executive, backed the plan. He was paid about $17.7 million in severance and other payments. The sale also bought all the shares he owned — $23.8 million worth. The day he left, he said in a note to employees that “completing this ‘going private’ transaction is a great outcome for our shareholders, employees and customers.”
Well, at least for some of them. Tribune’s board was advised by a group of bankers from Citigroup and Merrill Lynch, which walked off with $35.8 million and $37 million, respectively. But those banks played both sides of the deal: they also lent Mr. Zell the money to buy the company. For that, they shared an additional $47 million pot of fees with several other banks, according to Thomson Reuters. And then there was Morgan Stanley, which wrote a “fairness opinion” blessing the deal, for which it was paid a $7.5 million fee (plus an additional $2.5 million advisory fee).
Good times, good times.
The Tribune is reporting this hour that Illinois Gov. Rod Blagojevich has been taken into Federal custody in Chicago.
Blagojevich joins a long line of Illinois governors hosted by Club Fed going back to the early days of the Republic.
First, hoping to capitalize on their sterling reputation for honesty and good management, Tribune claims that the Cubs sale will continue as planned:
Tribune Co. did not include the franchise and Wrigley Field in its bankruptcy petition, allowing the media company to retain control of the sales process. Nonetheless, Tribune Co. will have to keep creditors informed about the auction, and the winning bid will have to be signed off by a bankruptcy judge, sources close to the situation told the Chicago Tribune.
Moreover, the bidders are unsure of how to proceed. "I really don't know enough to comment," said one bidder. "Some very complex issues have arisen."
Some issues, yes. I'm sure publisher Tony Hunter can clear things up:
What does all this mean for our readers, viewers and advertisers? As a practical matter, very little. Tribune is continuing to operate its media businesses, including its newspapers, television stations and websites. And, at Chicago Tribune, we remain dedicated to providing you with the level of service and news coverage you've come to expect from us every day.
The decision to restructure our debt was driven by the dramatic and unexpected operating conditions we've encountered this year. We have experienced the perfect storm -- a precipitous decline in revenue and a tough economy has coupled with a credit crisis, making it extremely difficult to support our debt. All of our major advertising categories have been dramatically impacted.
In other words, we had no way of knowing that taking on $8.2 billion in debt during a credit crisis while denuding our news departments of reporters under the direction of a man who doesn't actually read newspapers could, in any way, get in the way of us transferring vast amounts of wealth to our major shareholders. Hoocoodanode?
Sad. Very sad.
After eight years of having a president who could barely speak English, and having him say the most reactionary, anti-labor things possible when he did manage to croak out a polysyllable, this overwhelms me with joy:
"When it comes to the situation here in Chicago with the workers who are asking for their benefits and payments they have earned, I think they are absolutely right," [President elect] Obama said Sunday....
"Have we done everything that we can to make sure credit is flowing to businesses and to families, and to students who are trying to get loans? And to homeowners who have been making payments on their homes but are still finding their property values so depressed that it becomes very difficult for them to make the mortgage payments?
"That's where the rubber hits the road and that's going to be the central focus of my administration."
I could cry, I'm so happy. For the first time in, I think, ever, I feel like my vote wasn't a compromise.
Some of my friends and I have a running conversation about the differences between us in Gen X (born 1964-1978) and the two generations on either side of us (Boomers, 1946-1964; Millennials or Gen Y, 1978-2000). We've concluded that both display a sense of entitlement, in different ways, not present in other generations.
Thomas Friedman sees some of this, as well as how the Boomers are sticking us Xers with their bills, as are the Millennials:
What book will our kids write about us? “The Greediest Generation?” “The Complacent Generation?” Or maybe: “The Subprime Generation: How My Parents Bailed Themselves Out for Their Excesses by Charging It All on My Visa Card.”
Our kids should be so much more radical than they are today. I understand why they aren’t. They’re so worried about just getting a job or paying next semester’s tuition. But we must not take their quietism as license to do whatever we want with this bailout cash. They are going to have to pay this money back. And therefore, we have an incredibly weighty obligation to make sure that we not only spend every stimulus dollar wisely but also with an eye to creating new technologies.
But what Friedman doesn't quite get is that my generation is going to pay for the mistakes of his, and the succeeding generation (the Millennials) will enjoy the benefits of that investment a lot more than we will. We've seen it all their lives: Boomers got rich on computers; Xers did the grunt work to make them as common as light bulbs; Millennials have grown up taking the technology for granted.
I'll develop this further and write more at some point.
This morning the Bureau of Labor Statistics announced the economy lost 533,000 non-farm jobs last month, giving us a main-line unemployment rate of 6.7%. This is the highest since 1993, which, along with the usual credit-crisis indicators (like the 3-month Treasury now at zero), is quite sobering.
Appropriate, then, that today is the 75th anniversary of the 21st Amendment, repealing Prohibition.
Sláinte!
I mentioned earlier that having a President living in Chicago will change a few things. I'm hoping that the doomsday scenario outlined by local reporter (and private pilot) Phil Rogers doesn't come to pass:
The Secret Service declined to say how they would handle aviation security in the Chicago area, Rogers reported, but there is a model, which is how security is handled currently at the presidential retreat in Crawford, Texas.
Using that model, that would mean a three-mile no-fly zone around the Obama's home in Hyde Park, whether or not the president was there, and that would expand to a 10-mile no-fly zone when he is home. In a 30-mile ring, specific flight plans would be required, which are currently not required. That would severely restrict operations at a multitude of area airports.
"To make this 10 miles no-fly, and then 30 miles with all kinds of restrictions? It's just too much," said Phil Boyer of the Maryland-based Aircraft Owners and Pilots Associations.
Especially worrisome is flight instruction, as it would be severely curtailed, Rogers reported. Flight instructors only get paid when they fly.
A 10-mile no-fly would include the Loop, most of the South Side, plus Midway and Gary-Chicago airports. That won't happen. My guess, they'll keep the 2-mile no-fly over his house and require discrete transponder codes within 10 miles.
By the way, the "no-fly" around his house right now isn't prohibited airspace. In theory, you can fly right over the building with ATC approval.
I can't see any benefit to leasing out all the parking spaces in Chicago to a private company, even if my mayor and alderman can. In fact, it sounds quite appalling: street parking fees to double, profit motive over civic good in parking enforcement, no time for the Council to evaluate the proposal Mayor Daley handed them yesterday. Destroying Meigs was bad; this is much, much worse:
Parking meter rates will increase next month after the Chicago City Council today overwhelmingly approved Mayor Richard Daley's plan to lease the spots to a private firm for 75 years in return for a one-time payment of nearly $1.2 billion.
Some neighborhood parking meter rates will quadruple next month. Neighborhood spots that used to cost a quarter an hour will cost $1 an hour---and jump to $2 an hour in 2013. The top meter rates in the Loop will increase from $3 to $3.50 an hour, rising to $6.50 an hour in 2013. Chicago will have some of the highest parking meter rates in the nation.
Ald. Richard Mell (33rd), who backs the deal, said 72 hours was enough time to review it.
"How many of us read the stuff we do get, OK?," Mell said. "I try to. I try to. I try to. But being realistic, being realistic, it's like getting your insurance policy. It's small print, OK?"
Thanks, Dick, for another intellectually-stimulating rejoinder to an impertinent question.
Does anyone remember the awfulness that resulted in historical times to privatizing tax collection? Does anyone see the parallels?
First the good news: Al Franken keeps inching up in his recount for Norm Coleman's (R-MN) U.S. Senate seat. With 7% of the votes left to count, Franken now trails by only 3. Three. As in, "Four shalt thou not count, nor either count thou two, excepting that thou then proceed to three. Five is right out."
And the bad news. As predicted, Saxby Chambliss (R-GA) looks likely to win re-election in tonight's run-off.
But, you know, 57 isn't bad, nor is 58 if you count Joe Lieberman (RI-CT).