Tuesday Zen

With $100Bn in market cap being wiped out in Shanghai today and the Dow down nearly 500 points as potentially the start of a "modest correction," here's something to take our minds elsewhere:
Miles Davis, John Coltrane and the Red Garland Trio (Philly Joe Jones, drums; Paul Kelly, bass; Wynton Kelly, piano) perform "So What" sometime in 1958.

Sirius and XM “merge” for $13B

Per this press release, the two cash-hemorrhaging satellite radio giants are combining in a tax-free, all-stock "merger of equals." I use quotes here because there's no such thing as a merger of equals. We know Sirius is the de facto acquirer because XM stockholders will be paid in Sirius stock and Sirius CEO Mel Karmazin will be the CEO of the new entity. Yes, XM Chairman Gary Parsons will be chairman of the new company, but that's getting into the realm of splitting hairs.

So is this a good thing?

From a consumer perspective: As a subscriber to neither of these offerings, I'm glad to be relieved of going through the tradeoffs between the two. I'm sure the cost of a subscription will go up, but having all of that content under one roof will be a good thing, although I'm sure there'll be a reduction of content where there are overlaps. Plus, the additional bandwidth could be used either to improve existing channels (I understand there's some noticeable compression for music channels), create new channels or add more interactive features.

From a stockholder perspective: The press release says analysts project $3B-$7B in cost synergies and, presumably a few of those analysts worked for the investment banks who earned a percentage on this deal. Still, obviously there's got to be quite a mother lode of synergies between two companies as asset-intensive as these. Per the terms, XM investors get 4.6 shares of Sirius for every XM share they own. Currently, XM shares are trading at $13.98 and Sirius shares are trading at $3.70, so, if the effective date were today, XM investors would be getting $17.02 apiece for their shares, which is a 22% premium. Not bad for a company that lost $666.72M last year. For investors in Sirius, which lost $863M last year, I dunno, I'd tolerate quite a bit of dilution if you could eliminate my only direct competitor and get even a billion in red off my income statement.

From a regulatory perspective: Depending on how you define the market and its competitors, this could reek of monopoly. But the fact is that there are still countless other ways to get radio content – for free. Plus, mobile devices such as iPods can carry free and subscription syndicated content in the form of podcasts. And, unlike satellite radio, you can listen to your iPod at 30,000 feet or in a tunnel. Sirius and XM have known for a long time that they were competing with a much larger universe than simply companies who can afford to broadcast from space. Frankly, if these companies aren't allowed to merge, it's not clear to me how they're supposed to survive without seriously jacking up subscription costs, which would probably kill them as well.

The Enemy of My Enemy

In my view, the two-party system has been the bane of American politics for close to a century, but it’s been particularly cancerous in the television era. The primary pursuits I see Democrats and Republicans engaged in are fund-raising and one-upmanship. Ideology stopped being a differentiator a long time ago and it’ll continue to be irrelevant in the absence of meaningful campaign finance reform. Bill Clinton is no more a liberal than George Bush is a conservative. They’re just two salesmen with really savvy handlers in Carville and Rove.

And, at the risk of digression, can we shitcan this linear view of political thought as being a single axis with the words “liberal” at the left end and “conservative” at the right? How can one axis possibly account for a person’s views on fiscal policy, domestic policy, foreign policy, etc.?

So with that preamble out of the way, I’m always mystified when someone tells me they’re registered as a Democrat or a Republican. I mean, I understand if you plan on working in politics, because you need to declare your allegiance up front. But if you’re just a voter with no other dog in the fight, why make it easy on the bastards? If I register as a Democrat, I’ve basically told Howard Dean, “Go ahead and sell out to other interests, because I’m already in your back pocket come November.” Instead, I want Dems and Pubs competing for my vote all the way down the stretch, for the same reason that I want Apple and Microsoft to keep improving their products every year. And I want third, fourth and fifth parties competing with Dems and Pubs for the same reason that I want Linux, Google/YouTube and legions of startups around to hold Jobs’ and Gates’ feet to the fire.

I’ve often thought it’s a real irony that the U.S. has taken it upon itself to be an active proponent of democracy worldwide, because our own political system has, at best, never been more than an oligarchy. The word “democracy” connotes an open marketplace of political thought. Two parties deeply beholden to corporate interests doesn’t even faintly resemble such a marketplace. Moreover, the recurrence of names like “Adams,” “Clinton,” “Kennedy” and “Bush” in the American electoral process makes our version of democracy seem like something slightly more competitive than a monarchy. Lastly, “democracy” is the idea that we all take a vote, tabulate a majority and someone lands in office as a direct result of that majority. But the U.S. has a built-in middle man in the Electoral College, whose position is, “Yeah, we’ll probably vote the wishes of the proletariat, but not necessarily.” See 2000.

Fellow Georgia Bulldog and Columbusite Doug Gillett of Hey Jenny Slater has extended an invitation to Libertarians to reconsider the Democrats, arguing that Republicans no longer carry the flag for small government, fiscal prudence, Constitutional freedoms and all the other goodies that Libertarian-leaning blokes like myself hold dear. And good on him for trying.

While I did hold my nose and pull the lever for Kerry in 2004, it was mostly a protest vote and calculated, low-risk one at that, given that I reside in Texas, where Kerry can probably count on one hand the number of votes he pulled outside of the 512. It was the same kind of what-the-hell vote I made in 2000, when, living in North Carolina, I wrote in Ralph Nader’s name in the 2000 election. I took grief from a lot of misguided Democrat friends for that one.

“You’re voting against Gore,” they said.

“Uh, yep,” I said.

“So you might as well have voted for Bush,” they said.

“No, I’m pretty sure I voted against him, too,” I replied.

“But you’re helping split Gore’s base,” they said. “You’re hurting Gore more than you’re hurting Bush.”

“Bro, I live in the home state of Jesse Helms and Tobacco Road,” I responded. “As far as Gore’s concerned, this state was a write-off from Day 1. So I’m free to do whatever the hell I want, which, in this case, happens to be to express my disgust with the two-party system.”

This last time around, I stopped short of pulling the lever for the Libertarians, because, in 2004 and even today, I can’t take seriously anyone who argues that we should pack our things and skylift ourselves out of Iraq right this nanosecond, although the idea grows more appealing by the hour. Nader has some nutty ideas as well, but nothing of his stood out as sack-of-rabid-weasels crazy as leaving Iraq to become the next Rwanda.

So I appreciate the invitation to get under the Democrats’ tent, but all I’m ever gonna do is hang by the keg and eat the finger food. Democrats recruiting Libertarians on the premise that we’re disenfranchised conservatives is like Catholics recruiting moderate Muslims because they’re not down with beheadings: there are still too many fundamental differences to make this anything more than a marriage of convenience.

If I want both of these parties competing for my vote, then I want to send a semi-coherent message about how either of them can win it.

If I vote Democrat, I have no idea what kind of message I’m sending to Republicans. To the infinitesimally small extent that either party gives a damn about ideology anymore, am I telling Republicans that winning my vote requires more social programs, nationalized health care or unlimited punitive damages for medical malpractice suits? I hope not, but the risk is substantial.

Or am I telling them that I think we should allocate our resources in Iraq towards training Iraqi security and that our immigration policy should recognized the difference between someone educated at the Indian Institute of Technology and someone schooled at a Saudi madrassah? I’d love to think so, but surely not.

Or am I telling them that government has no business proselytizing on the sanctity of marriage and that it’s time to quit farting around with gay marriage amendments and just balance the Goddamned budget before we become one big vacation home for China, Japan and Germany while we’re stuck trading dollars for pesos on a 1:1 basis? Again, love to think so, but doubt it entirely.

Basically, all I get across to Republicans by voting for Obama, Edwards or Clinton in ’08 is me throwing a shitfit, cutting my nose to spite my face.

So I appreciate the invite and I appreciate how far Dems have evolved from LBJ’s “Great Society” and what they’ve done to keep the Pubs honest, but the enemy of my enemy isn’t always my friend.

A lot of people view elections the same way they view a football game: there are two sides duking it out and, if the side I voted for wins, I win. And, if I win, I must be right. As in, “yes, I know politics is a subjective matter, but, then again, over half the country sided with me, so …uh, scoreboard, bitch!”

And if you look at things that way, then third partiers like me have big red Ls on our foreheads. So, perhaps out of self-rationalization, I reject that view. Instead, I view an election in terms of desired outcomes. If you voted for Bush in 2000 because you liked what he said about it not being the U.S.’s job to go around nation-building, guess what? Bush won, but you didn’t. And if you voted for Clinton because nationalized health care and gays in the military were your hot-button issues, then you lost even though Bill won.

So in the absence of a viable third party, all that’s left for folks like me (and I suspect there’s a lot of us) is to wield our votes as carrots and sticks to guide candidates towards outcomes we desire.