Sunday, November 26, 2017

The Sexual Harassment Purge Trials of 2017 - ?


The very serious and likely criminal allegations against producer Harvey Weinstein have opened the floodgates for all sorts of sexual harassment charges in Hollywood, the media and politics. The charges range from child molestation in the case of Senate Candidate Roy Moore to groping in the case of Senator Al Franken. But given the mob mentality and the media firestorm most of the charges are being conflated.

However there are real differences and they range from what I would call petty infractions (boorish behavior) all the way up to felony rape. I am afraid that over the near term the very real distinctions are not going to matter. Thus the near innocent will be punished along with the really guilty.

In the case of the Congress, hypocrisy reigns; no surprise here. Pro-choice Democrats shouldn’t get a pass because they line up on the feminist side issues. If they do it would be akin the middle age practice of the Catholic Church where indulgences were sold to the highest bidder. Similarly conservative Republicans shouldn’t get a pass because they vote for tax cuts and support right leaning judges.  Simply put, sexual predators know no party labels.

Indeed my guess is that once we find out, and we will find out, where the $15 million paid out by Congress to settle employee disputes went, heads will really roll. Further it is my educated guess that both Speaker Paul Ryan and former Speaker Nancy Pelosi were informed. Both of them know where the bodies are buried.   What will happen to them? Instead of passing bipartisan legislation we are now witnessing a bipartisan scandal. All the while the head “pussy grabber” is still the president.


My fear is that a short run unintended consequence of the enveloping scandals is that many men will become reluctant to mentor women. As a professor, a leader in a mentoring program and as a managing director I have had the occasions to mentor many women who have gone on to do great things. However with the temperature rising the simple solution for too many men might be to adopt the Mike Pence and Orthodox Jewish rule of never being alone with a woman not their wife. As a result the mentoring of women by men would likely decline. That would hardly be a consequence that even most feminists would desire.

Friday, November 24, 2017

My Amazon Review of Steven Kotkin's "Stalin: Waiting for Hitler, 1929-1941"

From Passenger to Engineer on the Locomotive of History

This is Princeton history professor Steven Kotkin’s second volume in his magisterial biography of Iosif Stalin. The Stalin of the first volume is a Stalin who is a passenger on the locomotive of history and thus the first volume is more history than biography. (My review of the first volume appears at:  https://shulmaven.blogspot.com/2015/01/my-amazon-review-of-stalin-volume-i.html) In the second volume Stalin is in command making history and this is where the story bogs down. Simply put there is too much detail for the lay reader and the book runs 1173 pages in the print edition. You need a scorecard to keep up with all of the players and you have keep names like Sergo Ordzhonikidze (a Politburo member in the mid-1930’s) in your head. Hence I reluctantly give the second volume four stars.

Kotkin breaks up his book into three broad epochs, the mass collectivization of agriculture (1929 -1934), the purge trials (1934 – 1939) and the great three card monte game between the Soviet Union, Germany and Britain (1939 -1941) as war envelops Europe.  Throughout it all Stalin is omni-present; he seems to see all and know all, at least in his own mind, and his attention to detail and memory is phenomenal. For example he knows the specifications of most of the combat aircraft under his control.

In Phase I, Stalin fearing the more or less capitalistic agricultural sector is a threat to the regime, decided to collectivize all of Russian agriculture and along the way causes the mass starvation of at least five million people.  It is basically an anti-Kulak (wealthier peasants) pogrom. He uses the proceeds to fund industry to modernize the Soviet state. The reasoning is more political than economic because under the Tsars Russia was well on its way to becoming a modern economy until world War I and the revolution upended it.

Kotkin like everybody else does not have a complete explanation for why Stalin’s purges, coupes against the party and the army if you will, reached into every nook and cranny of the Soviet state. It hardly makes sense, that with war clouds looming and his foreign minister Maxim Litvinov travelling throughout Europe urging collective security. In June 1934 Stalin looked approvingly at Hitler’s Night of the Long Knives where Hitler took out both his left and right opposition in a swift coup.

The purges start with the assassination of Leningrad Party boss Sergey Kirov in late 1934. Contrary to other historians Kotkin makes the case that Kirov was the victim of a lone assassin not a Stalin plot. From there huge swaths of the party and the army are taken out including the Bolshevik triumvirate of Bukharin, Zinoviev and Kamenev. Why did Stalin do this? There is no sane explanation, but a partial explanation is that Stalin wanted to create a new nomenclatura that would be loyal to him. By taking out the older party members, Stalin opened up opportunity for a new leadership that was thrilled to be part of the state building process. It also allowed those of very humble origins to rise up and live the Soviet communist dream. During this period we also see the origins of the Soviet-Chinese split where Stalin supports Chiang Kai Shek over Mao. Put bluntly it was in the Russian state interest to keep Japan occupied in China rather than have it turn its forces on Siberia. For Stalin the Chinese revolution would have to wait.

The final section of the book deals with the power politics of the three card monte game (Kotkin’s words) being played by Russia, Germany and Britain. Although Kotkin doesn’t believe that Stalin was the all-knowing policy realist that Kissinger ascribed to him, Stalin did a pretty good job in understanding the correlation of forces. His big mistake was that he failed to recognize that Hitler would win a swift victory in the West leaving the Soviet Union open to attack. World War II was not going to be a rerun of the trench warfare of World War I.

It is at this point that Kotkin writes history like a thriller. We get a day by day feel of the tri-party diplomacy and the buildup of German forces in the East. All sides are putting out disinformation and all parties were thrown for a loop when Rudolf Hess ends up in the English country-side. Stalin perceives it as potential Anglo-German coalition against him. Stalin is continually warned by Generals Zhukov and Timoshenko that Hitler plans to attack, but Stalin ever the realist believes that Hitler would not want to fight a two front war and believes instead that the troop build-up is part of an elaborate blackmail plot.  But as Kotkin notes Marxism-Leninism never anticipated a Hitler and Stalin did not learn from his early 1930’s policy of equating social democracy with fascism. Kotkin is at his best here.


I have one last quibble. I would have liked to know Kotkin’s take on Stalin’s role in the intra-party split in American communism in 1929. Why would the great leader involve himself in such a petty squabble? Nevertheless I highly recommend “Stalin: Waiting for Hitler..." for those willing to slog through this very long book.

The complete Amazon URL appears at:  Because of a screw up on my part and the complete inflexibility of Amazon's rules I was unable to post this review on their website.
















for Hitler…” for all those willing to slog through this very long book.

Sunday, November 19, 2017

The Dice are Rolling in Mall Land

Last May we wrote "Thus if private equity or sovereign wealth funds don't come in soon to scoop up the apparent bargain, the Street, as I argued, is way off." (https://shulmaven.blogspot.com/2017/05/a-new-look-at-mall-reit-valuations-part.html) Of a sudden, after a long period of sustained discounts to Street estimates of net asset value the dice are starting to roll in Mall Land. First Brookfield Property Partners offered to take in the 64% of GGP that it doesn't already own with a  cash and stock offer valued at $23/share. To be sure the offer was well above the $19/share the stock was trading at, but still well below the $28/share of value ascribed by the Street. As of this writing GGP is trading about 3% above the Brookfield offer price.

We then found out that hedge funds Starboard Value and Third Point have taken a position in Macerich causing its stock to rise from the mid-50s to the mid-60s, still below the $73 valuation estimated by the Street. Further Elliott Management, a $30 billion hedge fund, has taken a position in Taubman that elevated its stock price from the high 40s to the mid-50s again well below the $85 Street valuation. Remember the hedge funds are intermediaries and are ultimately looking for a final buyer like Brookfield to take them out. If no final buyer appears they will find themselves with dead money positions that will be sold back to the market.

Sitting on the sidelines watching and waiting are David Simon of Simon Property Group, the largest mall owner and Jonathan Gray of Blackstone, the largest private equity firm in the real estate arena. How they respond could very well be despositive as to how the price discovery process works out.

My guess is that the potential buyers of mall companies and/or mall assets are looking for what they perceive to be a bargain and with the Street still estimating mall cap rates in the 4-5% range, they will not find a bargain at those prices. Simply put the bid-offer spread is too wide, and as result I do not foresee transactions at anywhere close to the offer side of the market. But again, as we noted in May, time will tell.





Wednesday, November 8, 2017

Donald the Destroyer

The Republicans are reaping what they sowed by getting into bed with Donald Trump in 2016. Simply put Donald Trump is systematically destroying the Republican Party. In Virginia a weak Democratic gubernatorial candidate won by 9 points and perhaps more importantly the Democrats wiped out a 36 seat Republican majority in the Virginia House of Delegates. In New Jersey the Republican leaders (Kean and Bramnick) in the legislature were reelected by unusually close margins and local Republican officials went down across the state as the Democrats reclaimed the governorship from Chris Christie's failed regime. And in New York the Republican County Executive lost his job in Westchester County.

What last night's election showed is that Donald Trump is not playing in the wealthy suburbs of of Washington D.C., New York and Philadelphia. His very unpresidential behavior against a backdrop of removing the state and local tax deductions and his opposition to gun control means that across America's suburbs the Republicans tied to Trump are going to lose big next year and no matter how artful the district maps were drawn the Democratic Party is now the odds-on favorite to take the House of Representatives in 2018. Thus instead of being its savior Donald Trump has become the destroyer of the Republican Party.