The Little Bighorn and Custer Revisited

Very interesting... I've probably done 5-6 paintings of Custer and always had that.... "but, please General Custer, I don't want to go!" running through my head. I see him and his mission quite differently now. I have visited the "Battle Field" and viewed the re-enactment in Harden, MT.

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The Little Bighorn and Custer Revisited

Col Mike Walker, USMC (retired)

All,

As a change of pace, a little historical "nonpolitical/national security" food for thought. 

When I grew up, the Errol Flynn "They Died With Their Boots On" Custer was definitely passé. In its stead, Custer was treated as a one-dimensional... well… idiot, clown, buffoon, etc. More a caricature than a human.

I have not gone back to Errol's version but after studying Custer in the Civil War, he was not the "horse's behind" that I had come to accept. 

The Little Bighorn and Custer Revisited

A. THE FACTS

I. Where Are They?

In June 1876, none of the Army commanders knew precisely where Sitting Bull was located. As they conferred at the confluence of the Yellowstone and Rosebud Rivers, scouting parties were sent out. No one found Sitting Bull but the scouts were able to determine where he was not and where he had been.

Based on that information, the Generals knew he had to be somewhere south of the Yellowstone and between the Rosebud and Big Horn/Little Bighorn Rivers. 

Unlike the simplistic legend that Custer was an “unguided missile,” Terry gave Custer written orders just before he struck out at noon on 22 June. Given the lack of accurate intelligence, Terry informed Custer “it is of course, impossible to give you definite instructions.” 

Terry had ordered Gibbons to advance west along the Yellowstone to the Big Horn River and then south along that river until meeting the Little Bighorn River and Custer. 

Custer was to drive south down the Rosebud to the location of Sitting Bull’s abandoned Sun Dance campsite and near the headwaters of the Tongue River, locate Sitting Bull’s trail as best he could and follow it westwardly to the Little Bighorn River and then north to meet Gibbons.

Terry then wrote: “It is hoped that the Indians, if upon the Little Bighorn, may be so nearly inclosed [sic] by the two columns that their escape will be impossible.”

Terry also gave Custer leeway to operate in that he would “not impose on you precise orders which might hamper your action when nearly in contact with the enemy.” There were no written directives telling Custer to wait for Gibbons or not to attack until ordered so. 

[As an aside, during the earlier scouting to find Siting Bull, a few Gatling guns had been brought along. They were unwieldy and easily stuck and proved so cumbersome that the cavalry lost heir ability to maneuver and just sat around waiting for the crews to get the Gatling guns on the move again. The cavalrymen wanted nothing to do with them and afterwards they were sent to the various unit pack trains, to include those of the 7^th Cavalry.]

II. The fiercely independent Sioux warrior culture changed everything

From afar, Custer’s scouts had spotted the smoke and dust signature of Sitting Bull’s camp on 24 June but it was late afternoon and Custer did arrive at the look out point until near dusk and could not see the signs in the fading visibility. He knew there was a camp but did not realize just how big. Here again, past experience worked against Custer.

Not just Custer but Sheridan and most all the veteran Indian fighters knew that it was not possible to keep a large encampment for long as the thousands of horses would soon exhaust the nearby grasses forcing movement and even with a fresh supply of river water, the natural accumulation of waste created immediate hygiene problems.

As a result, large camps like Sitting Bull’s only lasted a few days before they broke up into smaller groups. Having uncovered the remains of the massive Sun Dance camp by the Rosebud, it was assumed that the Sioux and others were likely moving in two or more groups.

The assumption was wrong; Sitting Bull still retained a huge single force of warriors on the Little Bighorn. At that day’s end on 24 June, veteran scout Mitch Bouyer told Custer the signs indicated the largest camp he had ever seen. Bouyer was relatively new to working with Custer having previously served with the 2^nd Cavalry and apparently Custer did not have enough confidence in Bouyer to act based solely on the scout’s word. 

Bouyer wound up with the 7^th Cavalry because Custer, who traditionally used Ree scouts, needed a Crow speaker to communicate with the Crow scout-guides assigned to him by Terry for the campaign. [Note: scouts were experts at reconnaissance while guides knew the local terrain, it was boon to have the Crow who could perform both jobs, although the language barrier proved problematic]

After finding Sitting Bull, Custer’s original plan was to go to ground, remain hidden and rest for one day and then fix and attack Sitting Bull’s camp on 26 June.

Earlier on 24 June, however, the 7^th Cavalry and a small band of Sioux spotted each other. Having no interest in returning after opting to leave Sitting Bull’s camp and having avoided the 7^th Cavalry, the band continued on their way. Such was the Sioux warrior way. 

The cavalrymen saw it differently. Knowing they had been discovered, they believed the band would warn the others of the regiment’s presence and time was of essence. Custer decided to move up the attack to the following day.

Had Custer attacked on 26 June as originally planned, he would have been able to scout out the camp on the 25^th and obtained a much more accurate picture of the enemy. Additionally, Gibbon’s forces would have been a day closer and it should be recalled that his column reached the Little Bighorn battlefield early on 27 June.

That chance 24 June encounter with the Sioux band changed everything.

III. The Battle Formation and Opening Maneuver of the 7^th Cavalry on 25 June

Much has been written about the manner in which Custer divided his forces and most of it derogatory. That criticism is too simplistic. 

US Army Cavalry regiments in 1876 were organized into in companies (not troops) with no formal battalion structure. Battalions (not squadrons) were, however, routinely used on an ad hoc basis, in peacetime for administrative purposes and in wartime for battle.

On 25 June, Custer had twelve companies of cavalry, an armed pack train and a large contingent of scouts and guides. He divided the regiment into four three-company battalions under Yates, Keogh, Benteen and Reno. 

Custer was stickler for readiness and the last company to be fully saddled was assigned to guard the pack train. On that morning, Yates, who had been with Custer since the Battle of Gettysburg, would only have two companies as the tardy Co. B under Lt. McDougall went with the packs. McDougall was, nonetheless, a solid combat commander.

[A short note on the battalion commanders (officially three captains and a major): Like Captain Yates who had been promoted to brevet Lt. Colonel for bravery at Gettysburg, all had distinguished Civil War records: Major Reno had risen to become a Cavalry Division chief-of-staff in the war with the brevet rank of Brig. General, Captain Benteen was a Colonel of Volunteers and regimental commander by 1865 while Captain Keogh distinguished himself with Buford’s cavalry at Gettysburg and ended the war a brevet Lt. Col.]

Because of the uncertainty over the location and number of camps, Terry had ordered Custer to constantly guard his left flank. The fear was that the 7^th Cavalry might reach the Little Bighorn River to north – not the south - of Sitting Bull’s Camp.

In other words, there was a concern that Sitting Bull might not be trapped between Custer and Gibbons. Another concern was that Custer and Gibbons would converge on one camp to the north and then be surprised by an attack from second camp to the south (behind) Custer on the Little Bighorn.

On the morning of 25 June, the flank guard duty fell on Benteen who was told to sweep to the left (south) and make sure there were no hostile forces on that flank. Custer advanced with the three battalions of eight companies along with most of the scouts towards Sitting Bull’s camp.

As is well known, enroute to Sitting Bull’s camp the regiment spotted a mounted party of warriors who quickly raced back towards the camp to the northwest. Custer told Reno to take his battalion and pursue them down the river into the camp. Custer would swing north several miles, fall on the camp by crossing the Little Bighorn River and join with Reno. As an added measure, he immediately dispatched a messenger to Benteen to collect the pack train and join the fight so the entire regiment would mass on Sitting Bull. In less than an hour the battle would be won.

Nothing of the kind ever happened.

B. The Hypothesis

No one who fought with the two battalions under Custer on 25 June survived to relate what happened. The Sioux and other Native American participants related their reminiscences of the battle with a cultural tradition that focused primarily on individual bravery. That provides an extremely vivid and detailed picture of the close combat. The Native American accounts also offer an accurate sequence of events for the “last stand” of the two Custer battalions. 

However, even when combined with the US cavalry burial sites made at the time and detailed archeological records from the 1980s, the ability to turn the myth into a precise history of what occurred on 25 June 1876 remains elusive. Assessing the actions of the two 7^th Cavalry battalions and their companies directly under Custer remains inaccessibly difficult, i.e. which units went where, at what time, under whom and most of all, why?

This author makes no claim to have uncovered the truth. What follows is the best hypothesis this author can posit given the imperfect number of “knowns.”

Much of what follows hinges on the testimony of one Sioux warrior, White Cow Bull.

Like all Sioux warriors, White Cow Bull earned his name through personal exploit, in his case by marksmanship both with a bow and arrow (by killing a bull at great distance) and with the rifle. On 25 June, White Bull Cow was with a Cheyenne warrior friend in the Cheyenne camp at the north end of Sitting Bull’s encampment.

Perhaps thirty minutes earlier, Reno had hit the Sioux at the camp’s south end and drew the bulk of the warriors towards him. At that moment, the Custer battalions rode down a ravine (Medicine Creek Coulee) and started to charge across the Little Bighorn into Sitting Bull’s camp. White Cow Bull rushed to fight, took aim at the foremost charging cavalrymen and fired at and hit a rider on a sorrel horse with four white stockings.

Only Custer rode such a horse. By some accounts the rider fell into the river. Regardless, two things quickly happened. The charge faltered and other cavalrymen rode to Custer and helped him back across the river, either by getting him remounted or guiding the horse and wounded (or possibly dead) rider away from the danger zone.

Why the now retreating battalions did not retrace their steps southwardly back towards Reno, Benteen and the armed pack train with McDougall’s company is not clear. Perhaps that part of the ravine was still crammed with tail end of the advancing 7^th Cavalry and the head of column with a seriously wounded Custer had to take the route that led further north.

In any event, from that point forward it appears that the two Custer battalions were fully engaged in a fighting retreat that ended in their complete destruction.

Calhoun’s Company L of Keogh’s battalion established the first delay line at the high ground atop the ravine. The final V-shaped defensive stand closely followed the order of march after Reno left the regiment: At the far end (north) stood Custer with Yates battalion followed by Keogh and lastly Calhoun.

The puzzle is: Why did they stop? 

Custer had led dozens of charges and skirmishes in Civil War; most comprising of forces much larger than the five companies he led at the Little Bighorn. Many battles went his way but as the Confederate cavalry often gave as good as they got, some went the way of the enemy. 

Three things were consistent in these battles. First, Custer led from the front unlike many senior cavalry commanders in the war. Second, he never cultivated a strong second-in-command. On 25 June, Custer’s deputy 7^th Cavalry commander was back at Fort Lincoln in the Dakotas. Third, Custer valued the lives of his men, when he got in a jam he personally led the rearguard until his command was out of harm’s way and able to regroup.

 

So what happened on 25 June?

 

Custer did not stay with the rearguard (Calhoun) nor did he order the battalions to ride hard and fast to get them away from Siting Bull’s camp as the “last stand” battlefield was only a few minutes ride from the encampment.

If Custer was in command then he never would have halted where his battalions did. It was totally out of character. It seems clear that Custer was out of the fight and without a strong second, the battalions lost their way making White Cow Bull’s claim very credible.

 

In that chaos, Calhoun, Custer’s brother-in-law, would have eagerly volunteered his company to try to stop the advancing Sioux to protect a wounded or dying Custer. That forced a weakened Keogh to mount a defense on poor ground between Calhoun and the “Last Stand Hill” defended by Yates with Tom Custer, the extraordinarily decorated brother. 

 

It seems a plausible conclusion that the quick halt on the high ground above Sitting Bull’s camp was timed to provide the earliest perceived moment of safe respite to regroup a confused leaderless command.

It proved a fatal decision.

Finally, Benteen and Reno acted prudently. If Custer with five companies hit a deadly wall of fire at the village that forced a retreat then Reno with only three companies who initially faced the bulk of the warriors was in a hopeless position.

When Benteen got Custer’s message and drove north along the Little Bighorn, he first ran into Reno’s desperate defense. He had to come to Reno’s aid and when one company subsequently left to find Custer by following his trail towards the village, they were quickly beaten back. 

How Many Are There?

The inescapable fact is that no US soldier had ever run into such an assemblage of skilled and determined Plains warriors.

The Indian Bureau estimated that Terry was facing about 500 warriors. Sheridan estimated 500-800. The rough math of era estimated that one lodge equated to a little over two warriors. The earlier Sun Dance site left traces of approximately 1,500 lodges and tipis. Given that a number of warriors had drifted away, like the party spotted on 24 June, Custer certainly faced over 1,000 well-armed professional combatants and more likely 1,500. This was an unprecedented number, a number none of the commanders believed possible.

Even accounting for those left to guard the camp and occupied fighting Reno and later Benteen, Custer with his 242 soldiers and scouts were confronted with an overwhelming force. There were simply too many rock solid warriors to handle. That, more than any other factor, sealed Custer’s fate.

Semper Fi,

Mike

What is going on? The caliphate of the Islamic State

What is going on? The caliphate of the Islamic State

Col. Mike Walker, USMC (retired)

All,

In the wake of the Paris and San Bernardino massacres, many people ask: What is going on?

One reason for the confusion over this war is our collective failure to understand the threat we face.

A good place to start is to understand what Abu Bakr al Baghdadi means in declaring himself the caliph of the Islamic State. That understanding hinges on two words: caliph and caliphate.

A caliph is the successor of Muhammad, a deputy of God, of Allah, here on earth. You do not have to believe any of that but you must accept that millions do believe it and will kill for and die in the caliph’s cause.

A caliphate is what the caliph leads. In its complete form, the caliphate embraces a dualistic rule over geography and Islamic ideologically, i.e. both the lands and peoples throughout the world.

Once you understand that then you understand that the killers in Paris and San Bernardino were every bit full-fledged members of the caliphate as any adherent living within the confines of Islamic State holdings in Syria, Iraq or Libya. 

That is the dualist nature of the caliphate in a nutshell.

Our Western bias is to see only the geographic component, as ideology is too fuzzy a concept to take seriously. 

If you add in a denial of the Islamic ideological underpinning the caliphate then you understand how leaders in Washington and elsewhere can wrongly conclude that the Islamic State is contained.

Unfortunately, a conclusion based solely on geography will always be in error.

That is the strategic mistake made by too many: The refusal to admit that the Third Fitnah, the third great Islamic civil war, is wracking the Muslim world and Abu Bakr’s caliphate is one terrible manifestation of the Fitnah.

That leads to this tragic truth:

Those who are persecuted and murdered across the globe (Hindus, Buddhists, Christians, followers of other non-Islamic religions and the nonbelievers) by the Islamic extremists are victims of this conflict but those enduring the greatest suffering at the hands of the Islamic extremists are the Muslims who fight back.

Semper Fi,

Mike

THE DOG THAT WON’T QUIT BARKING

THE DOG THAT WON’T QUIT BARKING

Scott Johnson, Powerline

The evidence continues to accumulate that the Bonnie and Clyde massacre in San Bernardino yesterday was a case of jihad. We’ve got the home armory. We’ve got the pilgrimage to Mecca. We’ve got the contact with foreign terrorist subjects. Sherlock Holmes solved the case in the story “Silver Blaze” with the clue of the dog that didn’t bark. The San Bernardino dog won’t shut up. 

President Obama was talking about gun control before the bodies had turned cold. He now prefers to avoid the obvious for as long as possible, holding out hope that he can resort to the laughable “workplace violence” dodge that he has found useful in the past

This particular case of jihad comes at an inconvenient time for Obama politically, with his lectures regarding the claims of Syrian refugees sitting in the background and the new wave yet to land on our shores. It makes the critics he has obnoxiously disparaged as heartless ingrates seem like prudent guardians of our fellow citizens. Obama has an entirely different agenda and it doesn’t take an observer with the deductive powers of Sherlock Holmes to figure it out either.

‘Degrading’ ISIS Is Not a Serious Strategy

‘Degrading’ ISIS Is Not a Serious Strategy


Douglas J. Feith & Mario Loyola, National Review

Over a year ago, President Barack Obama ordered a military campaign against the Islamic State (a.k.a. ISIS) in Iraq. He expanded it to Syria. Yet ISIS remains strong and wealthy. Its following and capabilities appear to be growing.

In his White House broadcast the day before Thanksgiving this year, Obama reaffirmed his faith in his own efforts. But after Islamist terrorists murdered 130 civilians in Paris on November 13, opponents and friends alike, here and abroad, increasingly questioned the president’s credibility. It didn’t help him that, on the very morning of the attack, he said on NBC News that ISIS was “contained.”

To be sure, not every sound strategy appears successful at all times. But ISIS in recent days has been threatening Washington, D.C., and New York City, and it is governing large areas of Syria and Iraq, running a global recruitment campaign, and conducting terrorist operations in Libya, Egypt’s Sinai Peninsula, France, and elsewhere. Even Obama’s most steadfast news-media supporters, such as CNN’s Christiane Amanpour, asked whether he realized that his anti-ISIS strategy has not been working.

Is the president’s approach to ISIS actually strategic? His goal is ill-defined. His plan is not systematic or comprehensive. Is “strategy” the right word? Is the president’s approach to ISIS actually strategic? His goal is ill-defined. His plan is not systematic or comprehensive. It lacks historical perspective and insight into the nature of the enemy and, in particular, its ideological motivation. The means committed to the task are clearly inadequate.

For perspective, recall the aftermath of the September 11, 2001, attack. President Bush ordered his team to give top priority to preventing another mass-casualty attack, wherever it might come from and whatever group might launch it. The primary goal was not to punish, but to preserve our way of life as a free and open society.

This was far more difficult than finding those responsible for 9/11 and striking them. The Bush strategy called for countering not just one terrorist group, but a vast, amorphous international network of Islamist organizations and their state and non-state supporters.

The first step was striking al-Qaeda in Afghanistan. The force the U.S. deployed wasn’t large, but it combined all kinds of power: air, sea, and land, and regular and Special Operations forces. It overthrew the Taliban regime and forced the elements of al-Qaeda to scatter.

Dispersed and on the run, they found it increasingly difficult to organize their operations. To coordinate, they had to communicate over long distances. Their communications and travel were vulnerable to detection and interdiction. They were forced to devote time and attention to playing defense rather than plotting terrorist attacks.

With President Bush’s guidance, defense officials produced a strategy based on evolving insights about how terrorist networks work. The National Defense Strategy (2005) and the National Military Strategic Plan for the War on Terrorism (2006) asked what the enemy needed to operate and survive.

To operate, Bush-administration officials concluded, the terrorists need leadership, finances, safe havens, weapons, and communications. Ultimately, however, the key to the enemy’s survival is ideological support. The ideology is crucial for recruitment and indoctrination. Ideas are the defining element of the global Islamist-extremist movement.

The immediate goal of the Bush strategy was to prevent the terrorists from operating. The ultimate goal was to destroy their movement by countering the appeal of their Islamist ideology.

The National Military Strategic Plan described a five-step process: map network nodes, identify their connections and sources of support, develop an action plan, tie the plan to metrics, and track progress.

The strategy was effective in preventing large-scale follow-on attacks against us. In the case of al-Qaeda, U.S. forces promptly killed or captured more than half of its senior leadership. The United States led worldwide efforts to curtail the flow of funds to terrorists, detect key communications, interdict operatives at borders and elsewhere, conduct maritime interdiction operations, interdict weapons supplies, and generally keep them on the defensive. It imposed variously severe costs and pressures on state sponsors of terrorism — from Iraq to Libya, Syria, and beyond.

The Bush administration crafted tough rules of engagement. It sought to protect non-combatants but didn’t allow terrorists to escape by using human shields. The U.S. also did not permit terrorists to administer territory, as ISIS is doing now.

The Obama administration’s campaign against ISIS takes bits and pieces out of the Bush strategy but lacks the vigor of a systematic approach. A clear example: Over the last year, as ISIS has been funding itself largely through oil sales, the Obama administration has refrained from destroying oil-truck convoys. Why? Because President Obama said the drivers of ISIS trucks should be deemed civilians, and his rules of engagement prohibit any harm at all to civilians, even if an operation has an important, proper military objective.

In a recent attack on a large oil-truck convoy, U.S. aircraft dropped leaflets urging the drivers to flee their trucks before the aircraft returned to drop bombs. Administration officials then boasted of how many air sorties pilots have flown against ISIS. Over the last year, the Obama administration’s approach, half-hearted at best, has given ISIS the chance to build formidable capabilities. Not only does it control substantial territory, including large cities, but it also collects taxes, provides public services, and conducts lucrative businesses in oil, sales of antiquities, and kidnappings. It operates prisons, conducts public executions, and maintains centers for the enslavement of women and children. It can fight military engagements on multiple fronts while perpetrating terrorist attacks in multiple countries.

Obama’s key formulation — “we will degrade and ultimately destroy ISIS” — is a sign of what’s wrong. The president can achieve “degrading” by almost any amount of effort, however meager. Meanwhile, “ultimately” destroying ISIS can remain forever over the horizon, as we see from the news, daily and painfully.

— Douglas J. Feith, is a senior fellow at the Hudson Institute, and he served as under secretary of defense for policy from 2001 to 2005. Mario Loyola is an NR contributing editor, a former counsel for foreign and defense policy to the U.S. Senate Republican Policy Committee, and a former special assistant at the Pentagon. 

Michael Ramirez lobs in another...

John Bolton Unveils Foreign Policy Test for Candidates

Jazz Shaw -  Hotair

The timing for this probably couldn’t be better. It’s not that we don’t have plenty of domestic issues requiring attention, but we’ve reached a moment in the campaign where the focus of the nation is drawn to terrorism and affairs across the ocean. With that in mind, former United Nations Ambassador John Bolton is rolling out a new campaign to ensure that all of the 2016 candidates understand what’s at stake and push them to articulate their positions. But rather than leaving it up to the typical, vague talking points which campaigns love to roll out, Bolton is getting down to specifics. (Washington Post)

“You don’t make strategy by throwing a bunch of pick-up sticks on the table and seeing what emerges,” he said in an interview. “Tactics flow deductively from a real strategy. It’s not enough in my view for my candidates to deliver stump speeches written by their expert staffs. It’s not enough to download 50 ‘tough’ talking points and an ‘act natural’ algorithm.” 

Bolton, one of the few national Republican figures to pass on a 2016 bid, is kicking off a six-figure ad campaign, starting online to introduce a “Bolton Test” to the 2016 race — even though he really doesn’t want the debate to be about him. “I’m a policy wonk, not a PR person, but I acknowledge in a PR battle here,” he said. “My op-ed average is one a week. I’ve got appearances on Fox News God knows how many times per month. What I’m interested in is less affecting the candidates than affecting the discussion.”

Hopefully we’ll be seeing all of the candidates weighing in on “The Bolton Test.” This is one of the more concise sets of questions on foreign policy you’re going to run across and is fairly typical of Bolton’s style. Here’s a sample:

What is America’s proper place in the world? 

Do the candidates see a strong U.S. international presence as important to international peace and security? Or do they see American power as the cause of tension and conflict? Obama believes that America should apologize for its past foreign policies. 

What are the primary threats and opportunities America faces abroad? 

President Obama’s weakness encourages our enemies. We face threats from aggressive Russian and Chinese behavior, weapons of mass destruction and international terrorism. Candidates need to do more than answer questions with memorized talking points. They need the intellect and character to detect, analyze, and respond to threats and opportunities. 

How should America respond to those threats and opportunities?

Blaming Obama’s failures isn’t enough. We must restore the confidence of our allies while showing we are ready to protect our interests. How do the presidential candidates propose to do this? Unclear answers are not enough. For example, do the candidates understand the urgent need to restore our national missile defense system? After the Iran deal and years of ignoring North Korea’s nuclear threat, we are not prepared.

Nothing hyperbolic and completely lacking in inflammatory rhetoric. It’s a Just the Facts, Ma’am approach. And that’s pretty typical of Bolton. Last winter, when he was still mulling over the idea of running for president himself, the Ambassador gave us an interview where he expressed many of these same concerns. He’s a very focused guy, but he’s still got an interesting sense of humor. When he’s evaluating the current crop of candidates I have to wonder if he’ll be checking to see how many of them went to Yale Law. During our interview he dropped in the following gem:

“Everybody at Yale Law School thinks that they can become president and should become president if only the peasants would agree.”– John Bolton

Not too much to pick from in the current crop. Carson went to Yale, but it was the medical school. George Pataki studied History there but he went on to Columbia for his J.D. On the Democrat side, of course, Hillary Clinton went to Yale during the same era as Bolton, though they were not friends. (He talks about that in the interview.) Clearly both she, her husband and Bolton all had thoughts of moving into the Oval Office so… who knows? Perhaps there’s something to his theory.

The Stench of Freddie Mac Is Back -- An $18 Billion Spree Of Crony Capitalist Thievery

Shared by Col Mike walker, USMC (retired)

The Stench of Freddie Mac Is Back -- An $18 Billion Spree Of Crony Capitalist Thievery

 

By David Stockman, Former White House OMB Director and Congressman

 

Washington’s capacity to foster crony capitalist larceny and corruption never ceases to amaze. But according to the Bloomberg story below, Wall Street’s shameless thievery from US taxpayers is about to get a whole new definition.

 

To wit, Freddie Mac is handing three private equity billionaires deeply subsidized debt financing in order to undertake $18 billion in rental apartment deals. According to no less an authority than Morgan Stanley, the subsidy embedded in this cheap financing amounts to 150 basis points or roughly $150 million per year on the loan amounts in play.

 

Yet this largesse will serve no discernible public purpose whatsoever. Indeed, over the 10-year term of these loans the bonanza will amount to billions, but it will not generate a single new unit of housing. Nor will it provide a single dollar of incremental rent relief to any low or moderate income tenant.

 

That’s because the purpose of these giant loans is not to fund new construction of rental housing—– for which there is currently an arguable shortage. And it’s not even to incentivize owners to convert existing apartment buildings to so-called “affordable” housing.

 

Instead, its sole effect will be to put the taxpayers in the business of highly leveraged Wall Street deal making. That is, it will fund what amounts to apartment company LBOs being undertaken by the largest players in the private equity world including Barry Sternlicht's Starwood Capital Group, Steve Schwarzman's Blackstone Group and John Grayken’s Lone Star Fund.

 

Each of these cats are billionaires many times over and their remit most definitely does not include bolstering the social safety net. What they are doing is buying giant apartment companies in high priced takeover deals. These LBOs will shower sellers and speculators with windfall gains, and Wall Street dealers and themselves with prodigious fees now and the prospect of pocketing double, triple or quadruple their modest cash equity investments not too far down the road.

 

Freddie Mac, of course, is the one and same crony capitalist monstrosity that helped push the US financial system to the brink in 2008. If Washington had any common sense and gumption at all, it would have taken it out back and shot it years ago.

 

But the K-Street lobbies kept it alive during the dark days after the crash and have now invented a new mission to purportedly facilitate affordable rental housing. But that’s a crock, and the true purpose could not be more blatantly obvious than in the three deals described in the Bloomberg article.

Thus, Freddie Mac will loan the Lone Star Fund $5 billion to finance an LBO of Home Properties. Folks, the latter is a rental housing REIT that is publicly traded, more than adequately financed and in no need of help from the nation’s taxpayers whatsoever. In fact, it already has about $2.4 billion of plain old market debt.

 

But it can be well and truly said that the punters and hedge funds which own the stock have made out like bandits. Its share price has tripled since the March 2009 bottom, but more importantly, was up by 35% just in the 18-months prior to the June 2015 LBO announcement.

 

Did Home Properties earnings take-off in the last year or so, thereby warranting the stock price surge shown above?

 

No they didn’t. 

 

During the 12-months ended in June 2015, Home Properties earned $177 million or 4% less than the $185 million of net income it posted two years earlier for the June 2013 LTM.

 

So here is what was accomplished by putting US taxpayers in harms’ way in this instance.

 

A rental housing REIT with more than 100 communities and 40,000 apartment units, and which currently is comprised of about 30% “affordable” units under Freddie Mac’s elastic definitions, has been shuffled from public to private ownership.

 

The transaction was accomplished at the bubble era price of 25X net income—–a vastly inflated valuation which had been reached in June and which reflected the fact that the fast money boys had earlier piled on for the rumored takeover ride.

Yet without Freddie Mac’s funding of the takeout at this absurdly inflated price, the arbs and speculators who sold their stock into the recently completed deal would not have had a snowball’s chance of retaining their winnings.

 

That’s some public policy accomplishment, and its all there is.

 

Its proud new billionaire owner won’t be required to add a single additional unit of so-called “affordable” housing, and that term doesn’t mean much anyway. Freddie Mac’s definition includes about 60% of US households!

 

Well, there is one aspect which has changed, and not in a good way. What was a public REIT with $4.4 billion of equity market cap and $2.4 billion of debt has become a private LBO with $5 billion of debt and a deal fee tab in the order of $300 million.

 

As to the latter, it was some kind of Wall Street feast. Yet all of the deal commotion implied by this listing amounted to dead weight cost to society. This pointless LBO deal never would have happened on the free market:

 

BofA Merrill Lynch acted as financial advisor to Home Properties. BofA Merrill Lynch and Houlihan Lokey provided fairness opinions to the Home Properties Board of Directors in connection with the transaction. Goldman, Sachs & Co. acted as exclusive financial advisor to Lone Star. Hogan Lovells US LLP acted as legal advisor to Home Properties. Gibson, Dunn & Crutcher LLP acted as corporate legal advisor, Hunton & Williams LLP acted as real estate legal advisor, and Skadden, Arps, Slate, Meagher & Flom LLP acted as tax legal advisors to Lone Star Funds. Sidley Austin LLP acted as legal advisor to BofA Merrill Lynch, and Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to Goldman, Sachs & Co.

 

In other words, the fools in Washington have descended so far down the rabbit hole of “help for housing” that they have managed to double the debt on these 40,000 rental units in order to cash out public equity investors who had no claim whatsoever to taxpayer support. Oh, yes, and to pay enormous fees to the deal banker, Goldman Sachs, which by all rights should be paying back taxpayers for its 2008 bailout, not scalping them yet again.

 

But when it comes to lunacy in the rabbit hole nothing comes close to another deal mentioned in the article—— the $5.3 billion LBO of Stuyvesant Town-Peter Cooper Village by Blackstone. It appears that Freddie Mac will provide $2.5 billion of the takeover financing, meaning the annual subsidy will be in the order of $40 million.

 

Let’s be clear about “Stuy Town” as its called. It has absolutely nothing to do with poor people or any plausible notion of a social safety net. It is a monster housing complex on the lower east side of New York which encompasses 80 acres, 11,000 apartment units and upwards of 35,000 middle class inhabitants—–a good sized city in most of America.

 

It also happens to be ground zero for one of the more spectacular housing debt crashes last time around. It had been a $5.4 billion leveraged buyout in 2006 by Tishman Speyer and a BlackRock fund. The deal predicate was that this legendary rent-controlled complex originally built by MetLife for returning servicemen after WWII would slowly return to free market pricing as grandfathered tenants passed away or moved on.

 

But the Greenspan credit bubble expired before the rent-protected tenants did or before mysteriously failing heating, plumbing and electrical services could induce enough of the remaining rent-protected tenants to move along on their own two feet in order to make the pro forma financials work.

 

Not surprisingly, the deal blew sky high during the financial crisis and resulted in billions of losses for the mortgage lenders. For the past five years it has been operated by a consortium of creditors whose foolish investments in this fiasco deserved no quarter whatsoever from the nation’s hard-pressed taxpayers.

 

Indeed, as time passed the creditors consortium had become desperate to find a mullet stupid enough to buy them out at a premium to their written down loan values, but the going was exceedingly tough. After all, the giant complex was still financially radioactive after upwards of $3.5 billion of losses from the 2006 LBO.

Moreover, additional headwinds arose from the fact that Stuy Town is a perennial object of local politicians demagogueing on behalf of “affordable” housing.

Then again that’s why we have oily politicians like Senator Chuck Schumer. As a real estate industry publication described it:

 

Their proposal was almost the exact opposite of Tishman Speyer's 2006 bid: They would take on little debt and keep the apartments as rentals, eyeing steady returns instead of swift profits. And they deemed it essential to win over the city, tenants and local politicians -- perhaps in part to New York's senior senator, Chuck Schumer.

 

At a tenant meeting at Stuy Town last week, Schumer said the Tishman Speyer saga had taught him the need for "outside leverage." "And I found a way," he added. "I realized that to get such a huge mortgage, you need the backing of Freddie Mac and Fannie Mae.

 

So here is what’s going to happen. The busted lenders to the 2006 deal are going to make a killing by getting $5.3 billion for positions which are not remotely worth that.

 

At the same time, Blackstone will get subsidized financing from Freddie Mac, $225 million worth of benefits from New York City through an additional loan and uncollected taxes and the rights to sell the complex’s 700,000 square feet of air rights, which could be worth hundreds of millions.

 

Why all this largesse?

 

At the end of the day it will mean that a mere 500 units out of the 11,000 will be reserved for families making no more than $62,000 per year, and another 4,500 for families making up to $128,000 per year.

 

That’s right. The taxpayers of America are being dragged into a $5 billion LBO on the very site where an identical one blew up less than seven years ago—–purportedly to help families that are in the top 10% of income earners in the nation.

 

Needless to say, there is a simple alternative. Abolish Freddie Mac, Fannie Mae and all the rest of the Washington’s crony capitalist machinery and turn housing finance over to the free market where it belongs.

 

If there are citizens in need who can pass a means test and can’t work owing to age or genuine disability give them cash to fund their own shelter choices. And if they are able bodied and willing to work, top up their wages with earned income tax credits or similar cash transfers.

 

But let’s stop being stupid. Blackstone is not the United Way.

SHELL-SHOCKED BY PC WORLD

SHELL-SHOCKED BY PC WORLD, UNIVERSITY OF MISSOURI PRESIDENT STEPS DOWN

Paul Mirengoff, Powerline

University of Missouri president Tim Wolfe resigned yesterday after the school’s football team threatened to go on strike. The threatened strike was in support of student protests over alleged “systematic oppression” of blacks at the school.

As at Yale, I have seen no reports of violence directed at any African-American at the University of Missouri. The “systematic oppression” appears to consist of a few incidents of racial slurs directed at a couple of black students (as I understand it, the main offender who was identified, a drunken student, was removed from campus pending formal disciplinary action).

Approximately 35,000 students attend the University’s Columbia campus. How can the University guarantee that no student will ever utter a racial slur?

Rich Lowry argues that the black students are really complaining about not being sufficiently coddled. I haven’t been on campus, but Lowry’s claim finds support in complaints like this one from the Student Association: “In the months [following the Michael Brown shooting], our students were left stranded, forced to face an increase in tension and inequality with no systemic support.”

Why the shooting of a thug who attacked a police officer required the University of Missouri to provide “systemic support” to students is unclear. What was the University supposed to do, postpone exams?

The Student Association also declared:

The academic careers of our students are suffering. The mental health of our campus is under constant attack. Our students are being ignored. We have asked the University to create spaces of healing and it failed to do so.

Translation: coddle us. Oh, and President Wolfe, give us a handwritten apology that acknowledges your “white privilege.”

Concluding that it was no privilege to preside over the infantile, Wolfe resigned.

He never stood a chance in the deranged environment of the politically correct modern university. Unlike so many college presidents, Wolfe made his bones in the real world.

According to his Wikipedia page, Wolfe began his career as a sales rep for IBM in 1980. He worked his way up the industry ladder, becoming president of Novell Americas in 2007. It’s unlikely that anyone demanded coddling from Wolfe during his corporate career.

Wolfe was named president of the University of Missouri in 2011. I imagine that he saw his mission more as maintaining the financial viability of the institution than as promoting “the mental health of [the] campus,” which he probably assumed was okay. Little did he know.

With his resignation, Wolfe can enjoy a return to the sane world, the football players can get on with the business of losing football games (the team is 1-5 in SEC play), and the University can find a spineless career administration who will hire minority counselors to provide “systemic support” to the fragile and the hysterical.

However, the mental health of the campus seems beyond repair.

Carson, West Point and the Media

Carson, West Point and the Media

Col Mike Walker, USMC (retired)

All,

Ben Carson averred he had been offered a free ride to West Point when looking to go to college.

He was a teenager and exceptionally qualified student, one that the “best of the best” colleges and universities would seek out.

He had also joined JROTC in high school, making it inevitable that someone talked to him about going to West Point. 

He also wanted to be a doctor and ROTC and West Point at that time did NOT allow cadets to graduate and go directly to medical school so Dr. Carson never seriously pursued entry into West Point.

Given his age and low interest (he admitted a number of times over the last decade or so that he never formally applied), it is completely believable that he never mastered the specific application process.

He simply recalled that he was told he was a shoe-in, a lock, it was a done deal, if he applied. Given his background and resume that is absolutely correct. 

The Marine Corps, in which I served as an officer, has no academy but the Officer Selection Officers who recruit Marine officers would have crawled naked over broken glass to get Ben Carson to sign up.

Carson may not have total recall but he accurately presented reality.

So what about the journalists who wrote the story? 

They are professional investigators yet they got the facts wrong. They, like teenaged Carson, also miscommunicated the complex admission process to West Point and committed other errors.

So who is being either dishonest, incompetent or both?

It is not Carson. In looking closely at the retelling of a brief event from his late teenage years, everything Dr. Carson says rings true.

How about the professional investigators? 

They blew this story and were clearly either dishonest, incompetent or both.

What does it mean?

Over the decades, news reporters have gone from purveyors of the facts to advocates. They start with a preconceived answer and then cherry pick, ignore, and twist the facts to fit their narrative even when it is patently false.

That is what happened here.

Semper Fi,

Mike

TIPTOEING (Past the Graveyard of Formerly Free Speech)

THOUGHTS FROM THE AMMO LINE
Scott Johnson, Powerline

Ammo Grrrll goes TIPTOEING (Past the Graveyard of Formerly Free Speech):

Way back in my misguided leftist days in San Francisco, I knew two families with wildly-varying child-raising philosophies. One couple had a lively little boy who ran barefoot in damp, chilly, meeting halls that exhibited the same standards of hygiene as many radicals did personally. He ate hot dogs, chips and candy, some picked up off dirty floors. He was bright and energetic and never sick.

Another couple had a little girl who was a hothouse flower. She was fed organic baby food and kept far far from other ragamuffin children and any adult with even a sniffle. As anyone who knows anything about immunity would guess, she was sick most of the time.
My mother was a clean freak of the first order, but her sister (of blessed memory) bordered on the insane on the subject. She boiled her children’s Monopoly pieces and tried to put the board in the oven to sterilize it. (That didn’t work out.) Her kids (my cousins) couldn’t play in a sandbox. Every letter we ever got from them mentioned one or more of the kids being down with the flu.

When I was a young mother, I tried to chart a kind of middle course. I had learned by that time from observing others’ experiences, that it was a yuge mistake to tiptoe around when the baby was napping, whispering to everyone, “Shhhh…the baby’s asleep.” Consequently, our son learned to sleep through piledrivers on the street outside his bedroom and knock-down/drag-out (or more accurately, drag queen) fights coming from the apartment above us. That flat was occupied by two large, high-strung gay men. I gathered from the shrieking, this was not a monogamous couple, yet at least one person was not on board with that, or as the saying goes, “comfortable” with it. They may have been gay, but they still fought like men. It often sounded like a saloon fight choreographed by John Wayne.

A couple weeks ago, I opined on the horrendous damage to our language and our freedom by the cossetted SJWs and Pajama Boys who are allowed to have speakers disinvited, CEOs fired, and entire subjects closed because they feel “unsafe.” Everyone around them is forced to respond to “microaggressions,” a meaningless synonym for “nothing.”

The damage to our Republic by caving to this utter nonsense is hard to calculate. But what about the damage to the shrinking little violets themselves? I am totally serious. What happens to those around whom people are forced to tiptoe?

I know for a fact that if you always tiptoe around an infant, she will never sleep through a night and will startle at the drop of a pin. She will be anxious and fearful.

Life, my dear friends and readers, is very, very tough. Nobody escapes unscathed. I am not talking here about the extraordinary courage necessary to storm the beaches of Normandy, go house to house in Fallujah, or raise a flag at Iwo Jima. I am talking about ordinary life. If you can’t stand to have a speaker on campus with whom you disagree – for a speech you aren’t even going to attend! – you are going to fold like a cheap card table at the first sign of any real trouble. How are you going to survive a layoff? Where will you find the strength to take chemo? How are you going to deal with the sudden death of a spouse, the incomparable pain of the loss of a child, the very real possibility of some day ending up with a serious disability?

We pamper our children at their peril. It’s tantamount to denying them vaccinations to shield them from all adversity, challenges, and differences of opinion.

Not even to mention the peril to a legal system wherein the standard for a tort has traditionally been something that would be offensive to someone “not unusually sensitive” when EVERYONE is “unusually sensitive” and must be catered to.