When we reviewed the carnage among Business Development Companies, or BDCs, when recapping February 2026's dividend decreases, its concentration within this sub-sector of the financial services sector of the U.S. economy really stood out.

BDCs make their money by loaning money they either raise from investors or borrow themselves to small- and medium-sized enterprises that can't raise money by going public and selling stock and also financially distressed businesses. The business models of most established BDCs involve borrowing money, then loaning it back out at higher interest rates, where they pocket the difference.

That makes the profit margins of BDCs vulnerable to rate cuts. Because their loans are tied to the Federal Funds Rate, when the Fed cuts that rate, it negatively impacts BDC profits. In the last three years, BDCs have gone from a rising or high interest rate environment (March 2023 through August 2025), to a falling rate environment (September 2024 through December 2025).

The performance of the VanEck BDC Income Exchange Traded Fund (ETF: BIZD), which includes over 30 BDCs in its market-cap weighted index, gives a good sense of how BDCs performed in these different environments. The following chart shows BDCs rising or flat in the rising rate environment, but then either stalling or falling as the Fed shifted gears into its rate cutting mode.

But that's not the whole story. During the rate cutting period, which initiated the pressure on BDC profits, BDCs have had to cope with the DeepSeek AI shock, peaking just ahead of that event on 19 February 2025. Then they faced the Liberation Day global tariffs shock event of 2 April 2025, plunging with the rest of the market, before going on to recover. That lasted until August 2025, when the return of rate cuts initiated a new downtrend that was followed in January 2026 with a new AI shock event that undermined the business prospects of the Software-As-A-Service (SaaS) firms. Many of which were getting their funding to grow from BDCs.

With AI technologies seemingly set to destroy any potential profitability these firms had, many BDCs were suddenly faced with having to write down large portions of their portfolios. But, not all BDCs are in that boat.

When we looked at the stock performance of individual BDCs, we found a clear characteristic that divided them. That characteristic is their governance and what quickly became evident was that internally-managed BDCs were generally outperforming BDCs whose investments are managed by external parties.

To illustrate that difference, we randomly selected six externally-managed BDCs to compare their performance against an equal number of internally-managed BDCs over the last three years. Here is a list of the BDCs in our performance sample:

Let's get to the results. The following chart visualizes the relative performance of the stocks of the two kinds of BDCs:

We've shown the 3-year returns for the benchmarks of the S&P 500 (Index: SPX) at 72.01% and BIZD at -10.79% to show how they compare against the range of the two categories. The externally managed BDCs range from a high of +2.79% to a low of -29.22%, with four of the six BDCs having a negative return.

By contrast, the internally managed BDCs range from a high of +44.22% to a low of -16.96%, with two of the six BDCs having a negative return.

But it's not just recent market events driving that outcome. In the next two charts, we show how the sample of internally managed and externally managed BDCs compare with the performance of the S&P 500 over the last three years. The first chart tracks the internally managed BDCs:

The next chart follows the externally managed BDCs over the same period.

We find the internally-managed BDCs have sustained better performance than the externally-managed BDCs over all portions of this three year period, which can be seen in their relative performance being closer to that of the benchmark S&P 500 index. That better performance occurred both in a period in which rising interest rates provided BDCs with a tailwind and the current period in which falling interest rates are providing fierce headwinds against the BDCs.

When we started this exercise, we thought we'd mainly be discussing the role of how changing interest rates have affected the performance of the BDC sub-sector of the financial services industry, leading so many of these firms to cut their dividends in recent months. We didn't expect to run into a more interesting question: how much does management matter in a publicly traded company? In the case of BDCs, whether the people managing their lending business work directly for the firm or are employed outside of it would appear to have a significant impact affecting the returns of the shareholders who own the companies.

Image credit: Microsoft Copilot Designer. Prompt: "A cartoon illustrating a Business Development Company that is internally managed versus a BDC that is externally managed", the result of would appear to succinctly explain at least one reason why the outperformance of internally-managed BDCs over externally-managed ones exists!

Today marks the anniversary of the most pivotal moment in New York Governor Cuomo's COVID nursing home deaths scandals. Because one year ago today, Governor Cuomo and senior members of his administration reached the point of panic as they struggled to address the greatest challenge of his tenure in office.

We originally presented that story on 12 May 2020. Today, we're re-running that original article, in which we recreated critical information that influenced the most consequential decision Governor Cuomo made on that day. The deadly repercussions of what resulted from that day of panic are still rippling through New York and making national news a year later. Let's get started....

We're fascinated with how politicians use data and models in setting the policies they pursue, where knowing both what they knew and when they knew it can explain a lot about why they made the choices they did at the time they made them.

To that end, we've been paying attention to how Governor Andrew Cuomo has been managing the difficult task of coping with the coronavirus epidemic in New York, and in New York City in particular, which has been the focal point for both the number of cases and the spread of the SARS-CoV-2 coronavirus across the United States. We've assembled a timeline of Governor Cuomo discussing the predictive models for how fast the coronavirus infection would spread within New York, which provides insight into how that information affected his decisions for how to allocate the limited health care resources over which he had influence during the worst part of the epidemic in his state.

We're going to pick up the action shortly after 7 March 2020, the date Governor Cuomo declared a state of emergency because of the coronavirus epidemic in New York, when the number of coronavirus cases within the state had 'soared' to 89. The following article is the earliest in which we find a reference to coronavirus modeling projections for New York City, which had been put together by New York City Mayor Bill de Blasio's staff:

9 March 2020: Coronavirus Cases in New York State Rise to 105:

Mayor Bill de Blasio said Sunday that the city had 13 confirmed cases, including a new case of a man in the Bronx. Based on modeling, his team estimated there could be 100 cases in the next two or three weeks, but for most people, the illness would result in very mild symptoms.

Three days later, New York City had nearly reached that total and was set to blast through it, prompting Governor Cuomo to ban all public events with more than 500 people in attendance and to require gatherings with fewer than 500 people to cut capacity by 50%. The faster than previously projected growth in the number of COVID-19 infections drove a change in public policy.

Four days after that, Governor Cuomo had clearly been presented with projections that showed the exponential growth in the number of cases that had gotten underway in New York.

16 March 2020 - Audio & Rush Transcript: Governor Cuomo is a Guest on CNN's Cuomo Prime Time:

"I see a wave and the wave is going to break on the health care system ... You take any numerical projections on any of the models and our health care system has no capacity to deal with it."...

"Yeah. I think you look at that trajectory, just go dot, dot, dot, dot, connect the dots with a pencil. You look at that arc, we're up to about 900 cases in New York. It's doubling on a weekly basis. You draw that arc, you understand we only have 53,000 hospital beds total, 3,000 ICU beds, we go over the top very soon."

At this point, Governor Cuomo was beginning to appreciate that the thousands of hospital beds across the state of New York were really a scarce resource. He expanded on that realization the next day after an overnight surge in the number of reported cases:

17 March 2020 - Video, Audio, Photos & Rush Transcript: Governor Cuomo Announces Three-Way Agreement with Legislature on Paid Sick Leave Bill to Provide Immediate Assistance for New Yorkers Impacted By COVID-19:

"There is a curve, everyone's talked about the curve, everyone's talked about the height and the speed of the curve and flattening the curve. I've said that curve is going to turn into a wave and the wave is going to crash on the hospital system.

I've said that from day one because that's what the numbers would dictate and this is about numbers and this is about facts. This is not about prophecies or science fiction movies. We have months and moths of data as to how this virus operates. You can go back to China. That's now five, six months of experience. So just project from what you know. You don't have to guess.

We have 53,000 hospital beds in the State of New York. We have 3,000 ICU beds. Right now the hospitalization rate is running between 15 and 19 percent from our sample of the tests we take. We have 19.5 million people in the State of New York. We have spent much time with many experts projecting what the virus could actually do, going back, getting the China numbers, the South Korea numbers, the Italy numbers, looking at our rate of spread because we're trying to determine what is the apex of that curve, what is the consequence so we can match it to the capacity of the health care system. Match it to the capacity of the health care system. That is the entire exercise.

The, quote on quote, experts, and by the way there are no phenomenal experts in this area. They're all using the same data that the virus has shown over the past few months in other countries, but there are extrapolating from that data.

The expected peak is around 45 days. That can be plus or minus depending on what we do. They are expecting as many as 55,000 to 110,000 hospital beds will be needed at that point. That my friends is the problem that we have been talking about since we began this exercise. You take the 55,000 to 110,000 hospital beds and compare it to a capacity of 53,000 beds and you understand the challenge."

Faced with the potential shortage of needing 110,000 beds and only having 53,000 to provide care to coronavirus patients in New York, Governor Cuomo lobbied President Trump for support, which resulted in President Trump ordering the U.S. Navy's hospital ship USNS Comfort to sail to New York City the next day, and also lobbied for the U.S. Army's Corps of Engineers to begin identifying public facilities in New York City to be converted for use as temporary hospitals to handle the projected overflow of coronavirus patients from regular hospitals.

USNS Comfort would arrive in New York City on 30 March 2020, and the Army Corps of Engineers would have 1,000 beds ready at New York City's Javits Center ready on 27 March 2020, and were working to expand it to a 2,500 bed temporary hospital facility by 1 April 2020. But during the time in between, the updated projections of the coronavirus models led Governor Cuomo to panic.

24 March 2020: Andrew Cuomo: Apex of coronavirus outbreak in NY two or three weeks away:

Cuomo, speaking at his daily COVD-19 briefing in Manhattan, said the state's projection models now suggest the apex of the coronavirus crisis could hit New York within 14 to 21 days, rather than the 45 days the state projected late last week.

He likened it to a "bullet train" headed for New York, urging the federal government to deploy as many ventilators and as much protective medical gear it can to the state as quickly as possible.

"Where are they?" Cuomo said. "Where are the ventilators? Where are the masks? Where are the gowns? Where are they?”

At this point, we should show what one of the more influential coronavirus models that Governor Cuomo was using looked like. The following chart is taken from the Institute for Health Metrics and Evaluation (IHME)'s 25 March 2020 projections showing its estimates of the minimum, likely, and maximum number of additional hospital beds that would be needed in the state of New York to care for the model's expected surge of coronavirus patients.

This is just one of several coronavirus models whose projections were being combined and presented to Governor Cuomo by consultants from McKinsey & Co., where the IHME's coronavirus model's projections for New York are consistent with the figures and timing of a peak cited by Governor Cuomo in the days preceding his panic.

Faced with what appeared to be an imminent shortage of hospital beds and other medical resources, the Cuomo administration appears to have adopted an emergency triage strategy, one that would have devastatingly deadly consequences. Here, to free up as many beds as possible in New York's near-capacity hospitals, the Cuomo administration would try to move as many patients infected with the SARS-CoV-2 coronavirus as they could out of these facilities into others, even though they could still be contagious and present the risk of spreading infections within the facilities to which they would be transferred.

25 March 2020: The facilities in which they chose to place them were predominantly privately run nursing homes, where a directive issued by the state's Department of Health on 25 March 2020 mandated they must admit them into their facilities, where refusals could mean the loss of their New York state-issued licenses to operate.

Flashing forward to the end of March 2020, the coronavirus epidemic forecast models Governor Cuomo was using in making his decisions were pointing to the peak still being ahead:

Cuomo said various predictive models being used by New York indicate the apex of the surge for hospitals will come anywhere from 7 to 21 days from now.

“The virus is more powerful, more dangerous than we expected,” Cuomo said. “We’re still going up the mountain. The main battle is on top of the mountain.”

Four days later, the coronavirus models were predicting the peak was almost upon New York:

While giving an update Saturday on the frantic work to ready New York hospitals for the most intense period of the coronavirus (COVID-19) crisis, Gov. Andrew Cuomo said that the state’s models put the so-called apex about four-to-eight days out.

“By the numbers, we’re not yet at the apex. We’re getting closer,” he said at his daily press briefing. “Depending on whose model you look at, they’ll say four, five, six, seven, days, some people go out 14 days. But our reading of the projections is that we’re somewhere in the seven-day range. Four, five, six, seven, eight-day range.”

“Part of me would like to be at the apex, and just, let’s do it,” Cuomo continued. “But there’s part of me that says it’s good that we’re not at the apex because we’re not yet ready for the apex, either. We’re not yet ready for the high point...the more time we have to improve the capacity, the better.”

But on 6 April 2020, the IHME model revised its estimates for New York and the U.S. downward, indicating the peak Governor Cuomo feared would overwhelm New York's hospitals was not going to come anywhere close to what it had previously projected. On 8 April 2020, it indicated New York had already passed its peak in number of daily new cases.

Ordinarily, that would be a good thing. Except, Governor Cuomo had taken an action by which he intended to avoid the spectacle of having pictures of sick New Yorkers not able to get medical treatment in the media, but instead ensured the state's death toll from its coronavirus epidemic would no longer be small. That part of the story has its own special timeline, which we've moved here from the bottom of the article where we had previously been piecing together this part of the story of COVID-19 in New York....

Image credit: Martin Sanchez

The explosion of Cuomo scandal news has prompted us to launch a new blog to host the timeline we had been updating regularly in this space! We officially launched the new site a week ago. If you haven't yet seen it, may we introduce A Timeline of New York Governor Andrew Cuomo's Nursing Home Scandals.

Now serving all your Cuomo nursing home scandal news needs!

When a scientist realizes that they've made a fundamental error in their research that has the potential to invalidate their findings, they are often confronted with an ethical dilemma in determining what course of action that they might take to address the situation. Richard Mann, a young researcher from Uppsala University, lived through that scenario back in 2012, when a colleague contacted him right before he presented a lecture based on the results of his research that he had a problem that called his results into question.

When he gave his seminar, Mann marked the slides displaying his questionable results with the words "caution, possibly invalid". But he was still not convinced that a full retraction of his paper, published in Plos Computational Biology, was necessary, and he spent the next few weeks debating whether he could simply correct his mistake with a new analysis rather than retract the paper.

But after about a month, he came to see that a full retraction was the better option as it was going to take him at least six months to wade through the mess that the faulty analysis had created. However, it had occurred to him that there was a third option: to keep quiet about his mistake and hope that no one noticed it.

After numerous sleepless nights grappling with the ethics of such silence, he eventually plumped for retraction. And looking back, it is easy to say that he made the right choice, he remarks. "But I would be amazed if people in that situation genuinely do not have thoughts about [keeping quiet]. I had first, second and third thoughts." It was his longing to be able to sleep properly again that convinced him to stay on the ethical path, he adds.

Mann's case represents a success story for ethics in science, where his choices to demonstrate personal integrity and to provide transparency regarding the errors he had made through the retraction of his work proved to have no impact on his professional career, though he may have feared it. Such are the rewards of integrity and transparency in science, where the honest pursuit of truth outweighs both personal reputation and professional standing.

Still, an 2017 anonymous straw poll of 220 scientists indicated that 5% would choose to do nothing if they detected an error in their own work after it had been published in a high-impact journal, where they would hope that none of their peers would ever notice, while another 9% would only retract a paper if another researcher had specifically identified their error.

According to Nature, only a tiny fraction of published papers are ever retracted, even though a considerably higher percentage of scientists have admitted to knowing of issues that would potentially invalidate their published results in confidential surveys.

The reasons behind the rise in retractions are still unclear. "I don't think that there is suddenly a boom in the production of fraudulent or erroneous work," says John Ioannidis, a professor of health policy at Stanford University School of Medicine in California, who has spent much of his career tracking how medical science produces flawed results.

In surveys, around 1–2% of scientists admit to having fabricated, falsified or modified data or results at least once (D. Fanelli PLoS ONE 4, e5738; 2009). But over the past decade, retraction notices for published papers have increased from 0.001% of the total to only about 0.02%. And, Ioannidis says, that subset of papers is "the tip of the iceberg" — too small and fragmentary for any useful conclusions to be drawn about the overall rates of sloppiness or misconduct.

There is, of course, a difference between errors resulting from what Ioannidis calles "sloppiness", which can run the gamut from data measurement errors to the use of less-than-optimal analytical methods, which can all happen to honest researchers, and those that get baked into research findings through knowing misconduct.

The good news is that for honest scientists who act to disclose errors in their work, there is no career penalty. And why should there be? They are making science work the way that it should, where they are contributing to the advancement of their field where the communication of what works and what doesn't work has value. As serial entrepreneur James Altucher has said, "honesty is the fastest way to prevent a mistake from turning into a failure."

The bigger problem is posed by those individuals who put other goals ahead of honesty. The ones who choose to remain silent when they know their findings will fail to stand up to serious scrutiny. Or worse, the ones who choose to engage in irrational, hateful attacks against the individuals who detect and report their scientific misconduct as a means to distract attention away from it, which is another form of refusing to acknowledge the errors in their work.

The latter population are known as pseudoscientists. Fortunately, they're a very small minority, but unfortunately, they create outsized problems within their fields of study, where they can continue to do damage until they're exposed and isolated.

Previously on Political Calculations

• The Examples of Junk Science Series
• The Rewards of Integrity and Transparency

One week ago, the Wall Street Journal broke the news that the World Bank had a serious problem with one of its most popular and useful products, its annual Doing Business index.

The World Bank repeatedly changed the methodology of one of its flagship economic reports over several years in ways it now says were unfair and misleading.

The World Bank’s chief economist, Paul Romer, told The Wall Street Journal on Friday he would correct and recalculate national rankings of business competitiveness in the report called “Doing Business” going back at least four years.

The revisions could be particularly relevant to Chile, whose standings have been volatile in recent years—and potentially tainted by political motivations of World Bank staff, Mr. Romer said.

The report is one of the most visible World Bank initiatives, ranking countries around the world by the competitiveness of their business environment. Countries compete against each other to improve their standings, and the report draws extensive international media coverage.

In the days since, Romer has clarified that he doesn't believe that the World Bank staff engaged in a politically-motivated strategy aimed at disadvantaging Chile's position within its annual rankings, but instead failed to adequately explain how changes that the World Bank's staff made in updating their methodology of its Doing Business index affected Chile's position within the rankings from year to year.

Looking at the controversy from the outside, we can see why a political bias on the part of the World Bank's staff might be suspected, where positive and negative changes in Chile's position within the annual rankings coincided with changes in the occupancy of Chile's presidential palace.

That's why we appreciate Romer's willingness to openly discuss the methods and issues with communication, including his own, that have contributed to the situation. In time, thanks to the demonstrations of integrity and transparency that Romer is providing today as the staff of the World Bank works to resolve the issues that have been raised, the people who look to the Doing Business product will be able to have confidence in its quality. That will be the reward of demonstrating integrity and providing full transparency during a pretty mild version of an international public relations crisis.

Not every matter involving correcting the record has the worldwide visibility of what is happening at the World Bank. We can find similar demonstrations of the benefits of integrity and transparency at a much smaller scale, where we only have to go back a couple of weeks to find an example. Economist John Cochrane made a logical mistake in arguing that property taxes are progressive, which is to say that people who earn higher annual incomes pay higher property taxes than people who earn lower annual incomes.

In search of support for his argument, he requested pointers to data indicating property taxes paid by income level from his readers, who responded with results that directly contradicted his argument. How he handled the contradiction demonstrates considerable integrity.

Every now again in writing a blog one puts down an idea that is not only wrong, but pretty obviously wrong if one had stopped to think about 10 minutes about it. So it is with the idea I floated on my last post that property taxes are progressive.

Morris Davis sends along the following data from the current population survey.

No, Martha (John) property taxes are not progressive, and they're not even flat, and not even in California where there is such a thing as a $10 million dollar house. (In other states you might be pressed to spend that much money even if you could.) People with lower incomes spend a larger fraction of income on housing, and so pay more property taxes as a function of income. Mo says this fact is not commonly recognized when assessing the progressivity of taxes.

Not only is Cochrane providing insight into the error in his thinking, his transparency in addressing why it was incorrect is helping to advance the general knowledge of his readers.

In both these cases, we have examples of problems that could have been simply swept under a rug and virtually ignored with nobody being the wiser, but where the ethical standards of the people involved wouldn't let them do that. Even in making mistakes while addressing the mistakes they made or discovered, they made the problems known as they worked to resolve them, and because they did so, we can have greater confidence in trusting the overall quality of their work.

In the real world where people value honesty, admitting or acknowledging errors is no penalty. In fact, there are solid examples where scientists have retracted papers because of errors they made that, ultimately, had zero impact on their careers. Which in some cases, involved going on to be awarded Nobel prizes in their fields.

Retracting a paper is supposed to be a kiss of death to a career in science, right? Not if you think that winning a Nobel Prize is a mark of achievement, which pretty much everyone does.

Just ask Michael Rosbash, who shared the 2017 Nobel Prize in physiology or medicine for his work on circadian rhythms, aka the body's internal clock. Rosbash, of Brandeis University and the Howard Hughes Medical Institute, retracted a paper in 2016 because the results couldn't be replicated. The researcher who couldn't replicate them? Michael Young, who shared the 2017 Nobel with Rosbash.

This wasn't a first. Harvard's Jack Szostak retracted a paper in 2009. Months later, he got that early morning call from the Nobel committee for his work. And he hasn't been afraid to correct the record since, either. In 2016, Szostak and his colleagues published a paper in Nature Chemistry that offered potentially breakthrough clues for how RNA might have preceded DNA as the key chemical of life on Earth - a possibility that has captivated and frustrated biologists for half a century. But when Tivoli Olsen, a researcher in Szostak's lab, repeated the experiments last year, she couldn't get the same results. The scientists had made a mistake interpreting their initial data. Once that realization settled in, they retracted the paper - a turn of events Szostak described as "definitely embarrassing."

What isn’t absurd is the idea that admitting mistakes shouldn’t be an indelible mark of Cain that kills your career.

Indeed it shouldn't. And for honest people with high standards of ethical integrity and a willingness to be transparent about the mistakes that they have made or that have occurred on their watch, it isn't.

Does your workplace have that one person whose personality is so toxic that you dread going to work? You know its something about them that transforms your office into a model of dysfunction, but can you put your finger on what it is that makes them so unpleasant to be around in a professional setting?

If it helps, here is Fast Company's listing of some of the more nasty personality traits that are commonly identified among the world's most toxic coworkers for their potential to unnecessarily create conflicts while on the job.

1. Aggressiveness. It undermines safety and requires people to divert resources from productive work into defensive operations such as fight and flight.
2. Narcissism. An excessive of self-focus interferes with the development of a positive and flexible culture of balanced negotiation and give-and take compromises.
3. Lack of credibility. When people don’t do what they say they will do, they lack credibility and breed mistrust.
4. Passivity. The opposite of the initiative and ownership needed for optimal performance.
5. Disorganization. Operational requirements for focus, structure, and discipline will not be met when people exhibit a lack of personal organization.
6. Resistance to change. Since the world is always changing and requires continuous adaptation, rigidity and resistance to change guarantee eventual obsolescence and failure.

The Fast Company article goes on to discuss how to prevent the bad behaviors from taking root in the office, but unfortunately, doesn't address what to do when these behaviors have become established, and worse, if they are ever reinforced.

Online jobs intermediator Monster gets into the psychology of what motivates the behavior among toxic employees.

In his 25 years as a senior administrative law judge for the state of California, Jim Tamm dealt exclusively with employment disputes. Now a senior consultant with Business Consultants Network and author of Radical Collaboration: Five Essential Skills to Overcome Defensiveness and Build Successful Relationships, Tamm says the bully is fearful about his own significance, competence, likeability or helplessness.

"They don't want to feel that way, so they behave in ways to let them avoid those feelings," says Tamm. "For example, a way of avoiding your own feelings of incompetence or insignificance is to become very critical of others, flood others with information to prove you are right, or jump to conclusions and personalize everything, hold a grudge, get hostile, think obsessively or any number of other inappropriate behaviors."

So what can be done with such toxic people and their inappropriate behaviors?

If you're their manager, the Monster article cites the advice of psychologist Janet Scarborough.

"The manager needs to find a way to motivate the bully to be different," says Scarborough. "There are two possibilities for how to do this -- either offer a reward of something valued by the bullying employee or create a negative consequence for the bully if he/she continues to be abusive. The manager just has to find out what would motivate the bully to change his or her ways, and since everyone is motivated by something, there is always a way."

Managing the bad behavior of toxic employees then comes down to incentives and consequences. The carrot and the stick. To be successful in modifying the bad behavior that's negatively impacting the workplace, both require consistency and credibility on the part of the manager, because if either of these is lacking, the bad behavior will only grow worse, where the lack of consistency and credibility of these countermeasures will let "the bully's boundaries and ego expand, and they impact more people than just the initial targets."

It is therefore in everyone's best interest to ensure that the bad behavior of the toxic employee at the workplace is arrested before it reaches that state.

Visually confirmed by a traveler at Chicago's Midway Airport (MDW), five days ago, but repeated many times in many places in the days since:

Here is what the hapless head of the U.S. Department of Homeland Security, Jeh Johnson, has to say about what he plans to do to fix the U.S. Transportation Security Administration's geographically expanding problems with has been described as "inevitable" recurring delays at security check lines, and what he believes that U.S. travelers should have to do:

The U.S. Department of Homeland Security will immediately increase the use of overtime and work to quickly bring in more screening officers to help alleviate long lines at airport security checkpoints, Homeland Security Secretary Jeh Johnson said Friday.

But Johnson warned that wait times are inevitable during the busy summer travel season.

“We encourage people to have the appropriate expectations when they arrive at airports,” Johnson said at a press conference at Reagan National Airport outside Washington. “Contemplate increased wait times as you travel.”

Wow. Who could possibly have foreseen that the busy summer travel season would be busy, year after year after year after year? Especially following the records for passengers traveling by air that were just set during the busiest spring travel season ever.

Why, that might take some kind of communication with the shrinking number of airlines that sell tickets to people doing that kind of travel often well in advance of their actual travel, wouldn't it?

But then, the people who would need to use that information to competently plan staffing levels for the TSA's air travel screening programs at the nation's airports would appear to have other priorities than paying attention to the needs of U.S. travelers.

Some would say that the chart above represents real world evidence that the senior management at both the TSA and the Department of Homeland Security are apparently incapable of planning their way out of a wet paper bag.

If only they had had more money to spend this year. Oh wait, they do....

The problem isn't money. It's priorities.

We'll soon return to our travel delayed regular programming....

If you are a leader, the example you set means everything.

Because it is the people in charge who have the responsibility for setting the priorities for those who work for them and also for shaping the environment in which they will do so. It is the people in positions of leadership who, by their policies and example, provide both the official and unspoken guidance that the people who work for them will follow in determining how they will act. Even when the boss is away - the cultural landscape they establish remains in effect.

In business, it's called "corporate culture". And it plays a massive role in how successful an organization can be. Especially during times of adversity, when challenges can become overwhelming in the absence of a solid organizational culture that can deal with them in a coherent, competent fashion.

As a case study of how important that aspect of leadership is and how much it is missed when it is lacking, let's consider a day in 2014 when the news of the death of 295 people aboard a Malaysian Airlines 777 commercial airliner became known around 11:30 AM EDT and how U.S. President Barack Obama handled it.

Here, we observe a large degree of disengagement on the part of President Obama that day, particularly after the news of the tragedy had become widespread. The White House press pool traveling with President Obama on that fateful day offered the following tidbit nearly an hour and a half after the news first broke:

At approximately 12:50 pm, the motorcade stopped at the Charcoal Pit, a popular, established restaurant just north of Wilmington, Del. Known for its burgers and sundaes. Obama shook hands and mingled with many of the diners, stopping at one point to pick up seven-month old Jaidyn Oates, and pose for a photo.

He invoked Vice Presiident [sic] Biden’s name a few names, noting to some diners, “Me and Joe, we share shakes all the time,” and to others, “Biden told me the burgers are pretty good.”

Just before hugging another young girl, whose mother lifted her across the booth to hug the president, Obama asked, “Do you give good hugs?”

At 1:01 pm Obama declared, “I’m starving!” He sat down to eat with Tanei Benjamin, who wrote the president a year ago. The president ordered a 4-ounce “Pit special,” which is burger with fries. He asked for it to be done medium well, and to have lettuce and tomato. He also asked for a water with lemon.

About an hour after lunch, President Obama finally noted the tragedy, inserting the following comments in a planned speech:

President Barack Obama offered his first public comments on Thursday about the Malaysia Airlines plane that crashed over Ukraine, saying his first priority is to find out whether there were any Americans on board the flight.

“Obviously, the world is watching reports of a downed passenger jet near the Ukraine border,” Obama said in brief comments before a planned speech in Delaware. “And it looks like it may be a terrible tragedy.”

Right now, we’re working to determine whether there were American citizens on board. That is our first priority. And I directed my national security team to stay in close contact with the Ukrainian government,” Obama said. “The United States will offer any assistance we can to help determine what happened and why. And as a country, our thoughts and prayers are with all the families of the passengers, wherever they call home.”

For the sake of context, here's the video of President Obama's remarks so you can appreciate how disengaged President Obama's first comments on the tragic events of 17 July 2014 really were, as the President gave them before going on to say that "it is great to be in the state that gave us Joe Biden":

Meanwhile, it was confirmed very early after the incident occurred that the lives of Americans had been claimed in the crash. In fact, the first reports of that fact were breaking at the same time President Obama was stopping for lunch, even though it would be some time for the exact number and their names were known.

But wait! Weren't there responsible people back at the White House to whom the President might have delegated the task of keeping up on tragic events as they occur? While President Obama's initial reaction was oddly disconnected, surely there were others that President Obama had placed into positions of authority who were on top of what the the President truly needed them to be doing.

Well, judge for yourself - our site saw the following site traffic at 9:08 AM PDT, or rather, 12:08 PM EDT, shortly after more extended news reports of the downing of the Malaysian 777 were hitting the airwaves:

Amazing the priorities that some have when commercial jetliners are shot down from the sky.

That odd level of extreme disengagement was also observed at other government agencies, including the State Department:

President Barack Obama is setting a very bad example of leadership. And it's showing all across the executive branch of the U.S. federal government.

We're not going to update our favorite chart this week, as we're still busy modifying it to cover the activity we anticipate into 2014. So instead, we thought we'd analyze the biggest market action, or non-action as the case really was, from last week!

Our story all begins with President Obama's interview with CNBC at market close on Wednesday, 2 October 2013 (transcript available):

By the next morning, the market had reacted in such a way to the President's comments that CNBC was compelled to report how investors were interpreting them, which is reflected in our original headline for this post. CNBC's Finance Editor Jeff Cox writes in Wall Street wonders if Obama wants a selloff:

In an exclusive interview with CNBC, the president warned Wall Street that this shutdown could be different. Previous halts in nonessential government activities have caused little market reaction, with major averages actually rising most of the time in the month after the shutdowns are settled.

Obama's remarks indicated to some observers that he is trying to push investors out of the relative complacency they have shown so far. Futures were broadly lower Thursday, indicating markets may be taking heed.

"They feel that a severe market selloff would be helpful to break the logjam," said Greg Valliere, chief political strategist at Potomac Research Group in Washington. "It would be helpful in making the Republicans sue for peace. Obama and [Senate minority leader] Harry Reid believe that."

If President Obama was looking to trigger a selloff for Thursday, he succeeded. The chart below shows the trajectory of the S&P 500 from Monday, 30 September 2013 through Friday, 4 October 2013. Note the movement on Thursday, 3 October 2013:

In the first hour after opening, the S&P 500 index fell 10 points in the first hour before stabilizing, holding at a level of about 1678 until 11:26 AM EDT. That was the point in time at which the news broke that Christine Lagarde, the head of the International Monetary Fund, who shares political connections with President Obama in Chicago, was warning of the potential impact that a debt default by the Obama administration would have on the world economy (the linked article was originally posted at 11:26 AM EDT).

That news was sufficient to take the S&P to its low of 1671 for the day, hitting bottom just after noon had keeping near that level until 12:26 PM EDT.

What happened next was perhaps the most remarkable event of the day. At 12:19 PM EDT, he New York Times reported that the Speaker of the U.S. House of Representatives, John Boehner, had told colleagues that he was "determined to avoid a federal default and is willing to pass a measure through a combination of Republican and Democratic votes", which investors apparently took several minutes to absorb before reacting.

Their reaction was sufficient to wipe out the effect of IMF head Christine Lagarde's comments, and the market bounced back up to the 1680 level before trading in a narrow range between 1678 and 1682 for the rest of the day, closing at the low end of that range. By the end of trading on Friday, 4 October 2013, the market had wiped out the negative impact of President Obama's threatened default altogether, as it recovered to its pre-Obama threatening warning level.

What we find interesting in all this is that there was so little effect on the market from the noise contributed by each of these political actors. The current President of the United States of America, Barack Obama, in seeking to create a market selloff to exploit for his own political advantage, couldn't huff and puff enough to make the S&P 500 blow down by much more than 10 points. Meanwhile, the comments of the head of he International Monetary Fund, Christine Lagarde, who owes her position to President Obama's patronage, only succeeded in pushing it down another seven points.

By contrast, the Speaker of the House of Representatives John Boehner's comments reassured the markets enough to recover by anywhere from 7 to 12 points. Put another way, his calming influence cancelled out the negative influence of head of the IMF and, for good portion of that Thursday afternoon, periodically exceeded the negative influence of the President in terms of total point movement.

Perhaps things will change and President Obama's negative influence will grow as we get closer to the President's planned default date. For now though, it's pretty plain that the market isn't reacting the way that President Obama wants, as the market's action on Thursday, 3 October 2013 indicates that it largely views him as a noisy irritant. That's not something that the President can long afford to continue if he wants avoid an early lame duck status, so we think it's likely that he'll instead increase his level of apparent irrationality in refusing to compromise on implementing his increasingly-troubled "affordable" health insurance initiative and his desire to sustain excessive levels of government spending.

Consequently, we expect the political noise affecting the markets to continue and grow louder. We're pretty sure that the markets would really rather get back to real business and not have to continue paying attention to irrational and ineffective executive leadership in Washington D.C. But then, that's the kind of leadership that emanates from the nation's capitol these days.