Spend nearly a billion bucks on advertising, and what do you get? Politicians' new seats

By DAVID MOON, Moon Capital Management
November 10, 2002

Some political and other business related potpourri from the week:

' I know a billion dollars isn't what it used to be, but it is still a pretty decent chunk of change. The Campaign Media Analyst Group reports that more than $900 million was spent on political ads this year, almost twice the amount only four years ago. I wonder how that much investment might have improved the productivity of the general manufacturing sector? Or research into heart disease or diabetes? Instead, we got to see 1.4 million television ads, in addition to even more radio and television exposures.

' It seems to me that local candidates must have spent about a billion dollars on road signs. I will be anxious to see if all of the candidates who claimed to favor the environment and historic preservation will return all of the local intersections to their pre-campaign state?

' Tennessee Governor-elect, Phil Bredesen, was criticized by his opponents for being a millionaire. His crime was to pocket more than $40 million from the sale of his business. I like the idea that my next governor achieved a level of business success experienced by less than one percent of new businesses. And if my elected officials are going to be millionaires, I would much rather they acquire those millions in the private sector ' before running for public office ' than to somehow become a millionaire following decades of being on the public's payroll, often in government provided housing.

' Given the outcomes of the governor and lottery races, it must be hard for Al Gore to blame his 2000 home state presidential loss on a fundamental Tennessee voter shift toward republican or conservative ideology.

' Harvey Pitt, Chairman of the Securities and Exchange Commission, (SEC) resigned this week following a tenure in government service almost completely devoid of focus, effectiveness or competence. When investors' trust of Wall Street plummeted this summer, then-chairman Pitt tried to fix the problem by increasing the power and authority of one of the few groups in America trusted less than Martha Stewart: government beaurocrats. After dozens of high profile corporate executives were discovered as lawbreakers, Pitt responded by creating more entities to create more regulations. (Apparently, if folks don't obey the law, the problem must be a shortage of laws.) Chairman Pitt's choice to head a new blue-ribbon panel to oversee the auditing industry was William Webster, a guy with no accounting or finance background. Well, almost. Webster was the head of the audit committee of U.S. Technologies - a company under investigation for audit irregularities and fraud during Webster's watch. According to the New York Times, Pitt was aware of the investigation at the time he selected Webster.

' Have you ever wondered about the terms 'bull and bear?' The earliest reference we could find was from a 1785 book entitled Every Man His Own Broker, by Thomas Mortimer. He describes the most pessimistic investors as bears. These bears weren't just pessimists, they were short sellers. A short seller sells a stock he doesn't own, hoping to buy it back later at a lower price. The term "bear" probably comes from the term "bear skin jobber," a person who would sell the skins of bears he had not yet caught. Once sold, he would then go out to catch the bear (and the skin) he had already sold. Because "bull and bear baiting" were once popular sports, it was presumed that the opposite of a bear must be a bull.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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