Michael Bloomberg Part 3 – a prediction
In the previous two posts on this subject we reviewed the successful career of Michael
Bloomberg as mayor of New York City, both in public and private domains. We also discussed Bloomberg’s decision to change parties twice: first from the Democrat Party to the Republican Party and when he was confident of not requiring a blessing of Rudy Guiliani to win from Republican independents.
The switching of parties does help classify Bloomberg as a political opportunist
and the real question becomes what is Bloomberg up to now?
By chance, I happened upon the July 11, 2011 issue of Bloomberg’s BusinessWeek. In the opening remarks of that magazine, there is an article by Charles Kenny which comes out for naturalizing illegal immigrants. As summed up by BusinessWeek: “Laws against immigration make little economic or moral sense. So why punish the brave citizens who break them?”
Those of us who actually favour liberal immigration policies sometimes have to draw the line regarding people who break the law. However, this isn’t a critique of the article or of the position. It’s more a view on how Bloomberg views the world. However, someone else who has a similar view would be the current President of the United States, Barack Obama.
This edition of BusinessWeek also discusses the regulation of derivatives. The article quotes Senator Mitch McConnell in a declaration that anything to slow down the regulator’s agenda would be “good for the country.” The writer claims that McConnell is wrong. Once again the issue is not the position the writer takes or the position that opposes the new regulations. But guess who favours the new regulations? US President Barack Obama.
Another article in the magazine comes out with the usual liberal point of view that the middle class should pay more in income taxes. The issue again isn’t whether you are for that or against it. A significant number of Americans are for it. In a country in which 50% of Americans pay no income taxes, it’s not surprising that a group would be in favour of taxes on anybody, middle class and above. Once again, who is in favour of middle class income tax hikes? US President Barack Obama.
In subtle ways, we are seeing a meeting of the minds between the Bloomberg voice choices and the White House. Obviously Bloomberg didn’t say any of these things and can maintain deniability in many of these areas if he so wishes.
I am going to make a prediction here. Michael Bloomberg claims to be an independent. By the time the 2012 election rolls around Barack Obama will be claiming the same thing. Obama has no loyalty to anybody but himself. Joe Biden has become, in some eyes, a bit of a bungler and certainly does not serve the original purpose of reassuring the American people of his competency against the potential rashness and inexperience of the current president.
A prediction: Biden goes under the bus and Bloomberg becomes the VP candidate for
In the first part of this post we reviewed the career of Michael Bloomberg as mayor of
New York City and his succession to the office previously held by the popular
Mayor Rudy Guiliani. Bloomberg is a wealthy, charitable and competent administrator
as well as a successful businessman.
Bloomberg is not the first wealthy man to run for public office. To make sure that he was successful, he is rumoured to have spent $100 million of his own money on his
initial campaign for mayor. In 2005, Bloomberg was re-elected by a huge margin – no doubt aided by his $100 million self-financed war chest.
When faced with the city’s term limits, Bloomberg led a campaign to change those limits and once again ran for another term. Perhaps the use of financial clout to change the basic rules of election had an effect on Bloomberg’s popularity and he was only able to win his third term by a smaller margin of 4%.
As we can see, the normal rules which usually govern candidates for election do not
always hold in the case of Michael Bloomberg. Using his enormous economic clout
he has shown the ability to reposition the goal post when it is convenient and
in his interest to do so.
Bloomberg was always a Democrat. Realizing that to run for mayor in 2001 he required the support of Rudy Guiliani, Bloomberg made what for many would be an impossible decision when he decided to register as a Republican in order to make it easier to obtain Guiliani’s endorsement. The case could be made that Guiliani could have endorsed practically anyone and they likely would have been successful in 2001. This is a measure of Guiliani’s popularity and not necessarily the clout of his political machine. Bloomberg recognized this and maintained his political affiliation as a Republican when he ran for a second term in 2005.
By now Bloomberg and his $100 million per term campaign fund were starting to feel confident enough to distance himself from being a Republican. Perhaps influenced by the unpopularity of George Bush, Bloomberg made a decision to run as an independent candidate in 2009. He also allowed rumours to coalesce that he was a potential independent party candidate for the presidency in that same period. This tends to be good politics whether you are bluffing or not as both political parties court favour to keep you out of the presidential race.
Michael Bloomberg is mayor of New York City. Currently he has a net worth estimated at $18 million and ranks among the ten wealthiest people living in the United States.
Bloomberg is the founder and 80% owner of Bloomberg LP, an information services company which provides data to Wall Street. In more recent years the company has branched out into financial news and media. They own the Bloomberg Television channel, a financial news outlet on cable television, and now also own BusinessWeek, which Bloomberg bought last year.
There is no doubting Bloomberg’s ability in business. While he has probably spent the
last dozen years involved in politics his record of business achievement is enviable. It should also be stated that Bloomberg would rank as one of the more generous Americans. In the last decade he has probably donated in excess of a billion dollars to various non-profit organizations. Some of the statistics are astounding. Bloomberg reportedly gave $254 million in 2009 to 1,400 non-profit organizations and there are statistics available online that he gave $136 million in 2004, $144 million in 2005 and $165 million in 2006. One has to assume that similar amounts were also given in other years.
This is an impressive record and while there have been rumours of personal inde
Bloomberg is divorced and presumably free to make whatever sort of decision he
wishes to make regarding his personal life. While there have been rumours about
His record in New York City is also the subject of positive comment for media and
he is considered to be an effective and competent mayor in the country’s
largest city. He followed the two-term reign of Rudy Guiliani, whose claim to
fame as New York’s attorney was to clean out the mafia and followed that effort
by cleaning up the crime in New York City itself. Guiliani had a popularity
based on his success as an administrator and a reputation for being tough on
crime. To his credit, Bloomberg has maintained the aura of the Guiliani era and
is perceived to possess the same positive attributes of his predecessor.
Derek Jeter reached his 3,000th hit in July. This is a remarkable achievement
that primarily came in a span of 16 seasons. While Jeter’s production has
started to decline, he still carries a career batting average of .312 with an
on base percentage of .383.
Jeter was never a homerun hitter of any consequence although his longevity has
enabled him to hit his 237 homeruns. He has an OPS (on-base plus slugging) of .831.
Even more remarkable, Jeter has participated in 147 post season games and continues to maintain a .309 batting average. He is a sure-fire hall-of-famer.
Jeter has signed player contracts totalling $205 million to date, which I believe
does not include his $16 million salary for 2012 and $17 million salary for
2013. After accepting the well-deserved accolades of his momentous feat, Jeter
decided to beg off attending the All Star game, even though he only made the
team because other, more worthy, players decided not to go, either through
injury or a decision to take a rest. Jeter had a $500,000 bonus that kicked in
for making the All Star team. Apparently you don’t have to play in the game to
collect the bonus.
So what did Jeter do? The rumour in the New York papers is that he spent his resting period signing “3000th-hit” baseballs, probably at $100 a crack in
order to take advantage of his new celebrity.
One can legitimately question Jeter’s priorities but I guess they don’t pay enough to
appear in the All-Star game. Is this another case of the “fans be damned?”
Three or four years ago, when the Canadian dollar was at a discount and NHL players
demanded compensation in U.S funds there was a great fear among the “swells”
that they could lose their hockey team. No one really questioned where these
teams would go. There didn’t seem to be a great line up of takers in the U.S.
Owners of the teams had their hands out and there was pressure on the politicians,
obviously created by these owners, for subsidies for the honour of hosting these
teams. One presumes that there was already an element of subsidy for the arenas,
if not in capital costs, at least in the area of reduced municipal taxes.
That program wasn’t enough. They wanted real subsidy, and it’s called cash. It
wasn’t long before the politicians created the “climate” that enabled the teams
to mooch off the public trough. Even the Vancouver Canucks, who probably made
$25 million in their last playoff run, were divvying up lottery money with
healthcare and educational needs in order to pay Luongo $10 million US a year. I
guess it’s only $9.7 million now.
In the Vancouver case, it comes through a lottery subsidy. An educated guess is that
we’re talking about at least $2 million a year and it’s possible that the other
hockey teams are drinking the same milk. I’m sure there are other cases and
even less visible programs. But now the Canadian dollar is $1.05 compared to
the US dollar. You would think that the owners, grateful for the support in the
past, would offer to reduce or eliminate any subsidies.
What do you think the chances are that this will happen?
Some of you may know Chuck Schumer. He is the mouthy senior Democratic
Senator from New York, first elected in 1998. He is the third ranking
Democratic senator and is Vice Chairman of the caucus. He ranks behind majority
leader Harry Reid and Senate Majority Whip Dick Durbin.
Schumer was born in 1950. His political career began as an Assemblyman
in New York State in 1975. Schumer has been a legislator for 36 of his 60
years, obviously a ‘professional’ politician.
Among the committees that Schumer serves on, his sub-committee on
taxation IRS oversight and long term growth may be his most important.
Schumer supports higher taxes on the wealthy – which by Schumer’s
definition may be any one earning more than $60,000 a year – and yet the
Democratic stalwart ‘tax-and-spend liberal’ seems to have the support of every
Wall Street big wig in the state and there are a lot of them.
If you look at the donations to Schumer’s campaigns and compare it to
his Republican opposition he would dwarf their total which is unusual as
Schumer is potentially vulnerable since Republicans have won senate seats in
How can Schumer, while mouthing off anti-capitalist rhetoric, still have
the support of the Wall Street crowd? What is his secret? I suggest it’s his
membership on the sub-committee on taxation.
I’m not sure whether Schumer is responsible for one of the largest tax
breaks handed out to the rich in the United States but I have never seen any
evidence that he opposes it. This is a man who supposedly opposes all tax breaks.
So what is this tax break? In layman’s language, money management fees
earned on a success basis are taxable as capital gains. Again, in layman’s
language, if you’re a money manager and you charge a 1% management fee, you pay
regular income tax levels. If your bonus for success is 20%, the 20% is taxable
at capital gains rates, which in the U.S. is currently 15%.
Need I say more?
The Bruins won the Stanley Cup. What did they win?
Well, we know they won the cup. Their names will be put on the trophy and there seems to be a tradition that each of the players can take the Stanley Cup back home with them, no matter where home is. Isn’t that exciting?
Did they win any money? The Boston Bruins and Vancouver Canucks played 21 or 22 games – a gruelling month and a half – yet the monetary compensation is never talked about. No wonder. It hardly exists.
Let’s look at baseball. The World Series champions, the San Francisco Giants, divided $19,700,000 among 50 players, coaches and whoever else they decided to put into the deal, giving full share players $317,000. The losing Texas Rangers gave full share players $246,000. Bengie Molina, who played for both teams, may have actually received a share of both prizes.
In major league baseball 60% of the gate receipts for the first four games of the World Series, league championships, and the first three games from the four divisional series are split on a formula basis, with the World Series winning team getting 36% of the revenue and the losing team getting 24%. The balance is divided among the other losers. On top of it all, the World Series champions get championship rings probably worth about $25,000.
The NHL players’ representatives seem to have forgotten about this lucrative pool of cash flow and allowed the owners to keep the bulk of the proceeds. If I am right, and there is no serious monetary compensation for hockey players, it looks like Don Fehr has some low-hanging fruit available in the next NHL contract negotiation.