Episode 19: Mo Money Mo Problems
Ruth Bader Ginsberg passed away last Friday, leaving a nation mourning. The country lost a tremendous Supreme Court justice who dutifully served the court for 27 years. President Clinton nominated RBG in June of 1993, and the Senate confirmed her 42 days later as the 107th justice of the highest court. During her tenure, RBG was the liberal heart of the Supreme Court and was known for her sharp legal mind, fierce dissenting opinions and advocacy for equality and minority rights. Through the years, the five-foot Jewish woman was a powerful force that belied her diminutive stature, and she became a cultural icon and role model to many, with the nickname “The Notorious RBG." She is the first woman laid to rest in state at the US Capitol before being buried in Arlington National Cemetery beside her husband.
RBG’s death leaves an eight-member Supreme Court with the presidential election only 39 days away. Regardless of the outcome, there will be post-election controversy and lawsuits. President Trump is ramping up rhetoric that the Democrats are trying to rig the election. The Democrats are making similar claims about Trump and the Republicans. There’s little doubt that Biden will secure the popular vote in November, like Hillary Clinton in 2016. The unknown is which candidate gets the necessary 270 votes in the electoral college? In all likelihood, it’s going to be a tight race and will come down to several battleground states. If the election is close and disputed, then the Supreme Court will play an integral role in finalizing election results. Bush vs. Gore and the “hanging chad” controversy left the country in limbo and chaos for 36 days. The Supreme Court eventually ruled against a recount, and Bush declared the official winner. For similar reasons, the Republicans want to place another conservative juror on the Supreme Court before the election.
I’m not sure what RBG put in her Will, but the beneficiaries of her death are President Trump and the Republicans. RBG’s vacancy on the highest court created an opportunity to (1) shift the dialogue away from the pandemic and race relations where Trump polls unfavorably and (2) confirm another conservative justice to an already conservative-leaning court. Accordingly, President Trump will nominate his candidate this weekend. There are five female candidates, but only Amy Coney Barrett and Barbara Lagoa are legitimate contenders. Barrett is the front runner as she is the more conservative of the two. Barrett is somewhat of a Manchurian Candidate, being groomed from an early age at Notre Dame law school and clerking under former Supreme Court Justice, Anton Scalia. Barrett is 48-years-old, a US Circuit of Appeals judge in Chicago, mother of seven, a devout Catholic, and has the support of evangelicals. Senate Majority leader Mitch McConnel has made it clear that he would schedule a confirmation vote for the nominee but didn’t say it would occur before or after the November 3rd election.
Democrats argue that it’s appropriate to wait on the vote until after the election hoping that Biden is elected President. They claim (accurately) the Republicans made the same argument (successfully) back in 2016 when President Obama nominated Merrick Garland and the nomination blocked. The difference, of course, was in 2016, the President didn’t have the Senate majority. A President has attempted to place a justice on the Supreme Court in the same year as an election 29 times in history. SCOTUS nominations occurring when the Senate and President are the same party resulted in confirmation 17 of 19 times. Nominations, when the parties are different, resulted in confirmation only 2 of 10 times. In 2020, Republicans control the Senate 53/47. Therefore, the only way to block confirmation—whether the vote is before the election or before the inauguration on January 20th--is if four Republicans defected and voted against the nomination. (In the event of a tie vote in the Senate, the Vice President as President of the Senate would cast the deciding vote.) Two Republican senators favor waiting until after the presidential election to confirm the nomination, Susan Collins of Maine and Lisa Murkowski of Alaska. Corey Gardner of Colorado and Chuck Grassley of Iowa were on the fence given they face tight re-election bids, but both have offered their support to vote before the election. Therefore, the Republicans appear to have the numbers to confirm Trump’s nomination. Whether Trump is a one-term or two-term president, his lasting legacy (positive or negative) will likely be the confirmation of two conservative judges on the highest court.
The Grand Jury rendered a not guilty verdict for the officers in the death of Breona Taylor. However, one of the officers was indicted on wanton endangerment in the first degree (a class D felony) for firing shots into the neighboring apartment. The KY Attorney General, Daniel Cameron, who is African American, communicated the verdict to the public. The AG stated that under KY law, the officers were operating under a legal warrant. Breona’s boyfriend, Kenneth Walker, fired first at the officers, hitting one of them, which legally justified the officers to return fire. Protests and riots erupted following the ruling and resulted in two officers shot and at least 24 people arrested. Louisville is currently under a state of emergency, with most of downtown boarded up to protect property. There’s no denying Breona is a victim in the situation, and it’s heartbreaking for her family. I can understand the outrage, but given the circumstances, it would be virtually impossible to get a criminal conviction; earlier this month, Louisville’s city settled a civil lawsuit with the Taylor family for $12 million. I’ve thought a lot about this case and situation, and the four questions I keep asking myself are as follows: 1) how would I feel if Breona was my daughter? 2) If I legally owned a gun and someone busted down my door in the middle of the night, how would I respond? 3) if I was a police officer and given a “no-knock” warrant by my supervisor and asked to arrest a suspected criminal and upon entering their apartment, was fired on (and a fellow officer hit), what would I do? 4) Would my answer to #3 be any different if the suspect was white vs. black and the neighborhood suburban vs. urban?
House Democrats are putting together another coronavirus stimulus plan, which would cost about $2.4 trillion, which is $1 trillion less than the previous proposal. It appears the two sides are getting closer to a compromise, so relief may be coming to those in need. The unemployment rate has fallen in the last few months but remains at 8.4%. The Democrat bill would include enhanced unemployment insurance, direct payments to Americans, PPP loans to small businesses, and aid to airlines, among other provisions. The first presidential debate on September 29th will focus on six topics: coronavirus, Supreme Court nomination, racial equality, economy, the integrity of the election process, and Trump and Biden records. The debate will be held in Cleveland, Ohio, and moderated by Fox News’ Chris Wallace. There will be follow-on debates on October 15th and 22nd. A Vice Presidential debate between Mike Pence and Senator Kamala Harris will be on October 7th.
The housing market is feeling the push/pull of two trends. On the one hand, the pandemic has created a historic shortage of homes for sale, as buyers rush to make COVID-friendly domiciles, and record low-interest rates make homeownership a possibility for more buyers. The average rate on a 30-year fixed-rate mortgage was 2.8% last week. Refinancings in the second quarter rose more than 200% from last year. At the end of July, there were 1.3 million single-family existing homes for sale, the lowest count for any July going back to 1982. The shortage in inventory, combined with low borrowing costs, is pushing prices higher. The median existing-home price is above $300,000 for the first time, up 8.5% from the same period last year. New home construction is on the rise to meet demand, but the pace has not recovered to levels before the Great Recession of 2007-2009.
On the other hand, by the end of this year, several million borrowers who have received mortgage forbearance will have gone nine months without making a mortgage payment. According to HUD, 17% of the 8 million insured mortgages are now delinquent. The hardest-hit areas include New York City (27.2%), Miami (24.4%), and Atlanta (21%). And as reported in past newsletters, the private, non-guaranteed (non-agency) securitized mortgage market that targets sub-prime and other non-prime loans is still active. Since March of this year, delinquency rates for subprime mortgages reversed a 10-year decline and climbed to 23.7%.
In CA, over 18,000 firefighters continue to battle 26 significant wildfires. In a related story, California Governor, Gavin Newsom, issued an Executive Order directing state regulators to develop a plan that would require automakers to sell more zero-emission vehicles until they make up 100% of new auto sales in 15 years. In NYC, climate advocates have debuted the Climate Clock in Union Square. The clock shows the deadline in years/days/hours/minutes/seconds to curb greenhouse gas emissions enough to give Earth a two-thirds chance of staying below the level that scientists say if we exceed will become increasingly disastrous. The current clock reads a little over seven years.
On the lighter side, this week marked the Autumnal equinox and the start of the fall season. Michael Jordan announced a partnership with NASCAR driver, Denny Hamlin, to purchase a team charter and field cars for Bubba Wallace, one of the sport’s few African American drivers. Amazon’s RING announced a new security camera drone that flies around inside your house and can show you any room when you are not home. So now we can see who is really “working from home.” The product ships next year and will retail for $250. Dogs have already proven the ability to sniff out diseases ranging from cancer to malaria, and now those talents are being used on COVID. Helsinki Airport hired a team of dogs trained to sniff out COVID to screen passengers before flight. A dog’s sense of smell is 10,000 times more accurate than our own and, according to early reports, are detecting COVID instantly and with accuracy rates as high as 94%. Florida prosecutors dropped all criminal charges against New England Patriots owner Robert Kraft ending a case that began with a police prostitution sting that captured Kraft and 24 other men in the “massage parlor.” Video footage shows Kraft getting naked and paying in cash for sex acts with Asian women. And in what feels like a related story, police in Vietnam said they found about 320,000 recycled used condoms repackaged as new. I’m assuming sales of condoms with “spermicide” will decline as a result.
I. Below are the articles I found interesting the past week:
I’m nostalgic, and this article appealed to those sensibilities. The notion that rich and poor once stood side-by-side in public service is alluring. It feels at some point, as a nation, we abandoned that noble concept and migrated to something less inspiring and more individualistic. Today, the wealthy use their power to skip lines, avoid commitments, and delegate “undesirable” tasks to those less fortunate. And the crowds applaud their craftiness. We have a wealth gap in this country that is growing at an alarming rate and, more importantly, a culture war highlighted by a lack of connection between economic classes. We desperately need to find our way back to a world of social responsibility and shared purpose. It’s time for exemplary leadership!
What the old establishment can teach the new tech elite
Gas will fill whatever the size of the room that contains it. Work is similar because it will expand to fit the time you give it. I’m always amazed at how productive I can be when I have to get out the door for something I want to do. It’s as if I magically develop a turbo speed and can prioritize effectively and execute at the highest level. I find that people often measure the wrong things when working. They care more about inputs than outputs, more about time than effectiveness. Therefore, set boundaries when it comes to work--you’ll be happier and get more done!
Work expands to fit the time you give it
How many managers can relate to a troubled employee coming into your office and dumping their problem on your desk? Your initial instinct might be to fix it. You want to be helpful and viewed as a “good manager.” However, that’s counterproductive for you, the employee, and the company. Hopefully, it’s obvious why it’s a bad strategy for you. I have my work problems and don’t need to take on others. Plus, if you solve someone else’s problem guess what happens? Yep, you’ll get more issues on your desk. Positive reinforcement is funny that way. Managers are serving employees when they ask questions vs. offer answers. This article has some great questions to ask your employees when this occurs. Of course, the company will eventually be the beneficiary of this approach, as staff start to operate at higher levels of productivity.
Don’t solve problems if you want to be a great manager
II. The rest of the best
How to vote, an interactive guide
For Mitch McConnell, keeping his senate majority matters more than the Supreme Court
One-on-ones are my most valuable meetings; here’s how I run them
A grand strategy of resilience: American power in the age of fragility
III. Stats that made me go WOW!
- Small landlords have been devastated by the lockdowns. The percentage of landlords who received a full rent payment from their tenants plunged to 55% in June from 83% in February. There are at least 15 million properties owned by small landlords nationwide. If things don’t improve, millions of these investors could be wiped out and flood the market with inventory.
- Only half of Americans say they would get a COVID vaccine if scientists successfully created one.
- California Governor, Gavin Newsom, issued an Executive Order directing state regulators to develop a plan that would require automakers to sell more zero-emission vehicles until they make up 100% of new auto sales in 15 years.
- During Tesla’s “Battery Day,” Elon Musk announced next-generation batteries, the 4680, that will have 6x more power and increase driving range by 16%. As a result of advancements in battery production, Musk said the company would sell an electric car for under $25,000 in about three years. He also announced the “Plaid” version of its Model S sedan would be available next year. The $139,990 vehicle will feature a new powertrain, will have a range of 520 miles, and will be able to reach 60mph in under two seconds.
IV. Name that Tune!
As I write this email, I am listening to Mo Money Mo Problems by Notorious B.I.G.
Christopher George Latore Wallace, better known by his stage names The Notorious B.I.G., Biggie Smalls, or simply Biggie, was an American rapper and considered one of the greatest. His content was often semi-autobiographical, telling of hardship and criminality, but also debauchery. Biggie was born in Brooklyn and signed with Sean “Puffy” Combs label Bay Boy Records when it launched in 1993. His original album, Ready to Die, became a beacon in the East Coast hip hop scene and restored New York’s visibility when the West Coast hip hop scene dominated the genre. Billboard awarded Notorious B.I.G the prestigious Rapper of the Year in 1995. In 1996, the East Coast-West Coast hip hop feud culminated in the murder of Tupac Shakur in a drive-by shooting in Las Vegas, and reports circulated about Bad Boy Records involvement. A year later, in what appeared to be a revenge killing, Biggie died in a drive-by shooting in Los Angeles. Both assailants remain unidentified. In a twist of irony and perhaps fate, Biggie’s second album, Life After Death, was released two weeks after his death. Two more posthumous albums dropped, and the Notorious B.I.G. boasts 21 million albums sold. Earlier this year, Biggie was inducted into the Rock & Roll Hall of Fame, joining fellow hip-hop artists Grandmaster Flash, Furious Five, Run-DMC, Beastie Boys, Public Enemy, N.W.A., and Tupac Shakur.
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