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Monday, September 14, 2015

Trump = Berlusconi?

If Donald Trump has a political equivalent anywhere, it's Sylvio Berlusconi. There are striking similarities, as well as a few qualitative differences.

Both men are rich, though Berlusconi's reported 8.0 billion dollar net worth seems a bit more credible than $8.7 billion that Trump has laid claim to. (In 1987, when Forbes started its list of the 400 richest Americans, many on the list, not wanting the publicity, contacted Forbes to let them know that they had grossly overstated their net worths. Only one person contacted Forbes to say that they had understated his: Donald Trump.)

Both men have varied financial interests. Berlusconi made a small fortune in real estate, then got real rich by buying various media properties. Trump got rich through real estate. He has also controlled an airline, a casino, and two beauty pageants, though has never owned any media.

Neither man is apologetic about appreciating beautiful women. (Trump is also unapologetic for criticizing women's looks.)

Berlusconi didn't even draw the line at prostitutes. It's probably safe to assume that Trump's germaphobia (he has a well known aversion to shaking hands) would have precluded too much promiscuity, and it's highly doubtful that he ever consorted with prostitutes. (It's not hard to imagine him exercising a certain droit de seigneur with some of those Miss Universe contestants, though.)

Both men like living large, although you get the sense that Berlusconi actually enjoys himself more: he has a more ebullient cast to his personality. Berlusconi loved to throw parties on his yacht, and would regale his guests with amusing stories and funny jokes. You get the sense that Berlusconi -- a former singer on cruise ships -- was skillful at making others feel good about themselves.

Trump seems to lack that ability. Trump's driving need for validation means that all of the compliments in a room must flow in his direction, which must get tiresome for those around him. You get the sense that in his business life he surrounds himself with yes men; no other kind would be tolerated for long.

Berlusconi definitely would have been more fun to hang out with. As I wrote in the above-linked post:

When Berlusconi held a joint press conference with Danish leader Anders Rasmussen in 2003, he declared, "Rasmussen is the most handsome Prime Minister in Europe. I'm thinking of introducing him to my wife because he's much more handsome than Cacciari." (At the time, Berlusconi's wife was rumored to be having an affair with leftist philosophy professor Massimo Cacciari.)

But Berlusconi was also corrupt, all too willing to skirt the law should it prove convenient; and he was long rumored to be in bed with the Cosa Nostra (a rumor later proven true). Trump at least hasn't shown any overt evidence of outright corruption (despite his not infrequent use of bankruptcy law). It beggars the imagination to think that a New York real estate tycoon has somehow miraculously remained "pure," but at least there is no evidence of corruption.

After Trump's statement about illegal immigrants, his political opponents searched hard for illegal aliens working for the various Trump businesses, but they were unable to turn up a single one.

Neither Berlusconi nor Trump is an ideologue; being in business seems to have made both practical, willing to take positions from both Column A and Column B. (Trump has previously supported abortion rights and advocated a one payor national health care system as well as higher taxes on the rich.)

Trump may not have Berlusconi's charm, but at the moment, he is what America needs. Despite being the richest Republican running, he's the only one advocating policies which would actually benefit the middle class. Yesterday's comments about CEO's who stack their boards with pals who rubber stamp their ridiculous compensation packages were typical.

Even the Democratic candidates aren't talking about the corrupting influence of money on politics, or the outrageousness way the hedge funders only get their earnings taxed at the long term capital gains rate. They don't want to jeopardize their campaign contributions by doing so. A loud, brash, rich guy like Trump won't be silenced by the need for campaign contributions.

Trump's voice -- and the ego which accompanies it -- may suck all the oxygen out of a room, but that's actually a small price to pay for setting things right.

We can save the Berlusconi charm for another time.

33 comments:

Steven said...

Have you heard Bernie Sanders on immigration?

https://www.youtube.com/watch?v=vf-k6qOfXz0

John Craig said...

Steven --
There's a lot about Bernie Sanders I like. I'd vote for him over some of the Republican candidates. And I certainly favor him over Hillary.

Steven said...

What are his chances?

John Craig said...

Steven --
For getting the Democratic nomination, they're looking better and better, though I doubt anybody is betting big money on him yet. The latest polls actually show him leading in both Iowa and NH, the first two states to vote in the primary. If you're asking about his chances for the Presidency, I suspect they're pretty slim.

Steven said...

so you think you're getting a republican next, eh? Trump could actually become president?

John Craig said...

Steven --
I think it's a strong probability. Right now the polls show Trump beating Hillary in a head to head match up. Obviously, it's a long way to go until November '16, and anything can happen, especially with a loose cannon like Trump. But the electorate seems to be fed up with DC insiders.

Steven said...

The same is happening in Britain with the popularity of Nigel Farage of UKIP and now the election of Corbyn as labour leader. Corbyn is an old school socialist, a union man, the most left wing labour leader since I don't know when. Even though he is very different to Farage, he also appeals to the public's desire for a politician with principles who says what he means and means what he says and doesn't have to consult a focus group first. The public are fed up with insipid, incompetent careerists who wont answer a question directly and go whichever way the wind blows.

The public are basically fed up with the political establishment, right and left. Both seem to betray the principles they are supposed to hold so straight talking candidates who believe in something and seem like outsiders are appealing.

As for Berlusconi, there used to be quite a lot of moralizing about him but I never held his womanizing against him and he did look like a guy who knew how to have a good time.

John Craig said...

Steven --
Yes I saw that Corbyn was elected. The UK is radicalizing in both directions as is the US. I'll be rooting for Farage, but I have more respect for Corbyn than the usual run of the mill politician as you describe.

Taylor Leland Smith said...

I'm just a bit disappointed to see that you've endorsed Donald Trump. I find his political incorrectness a bit refreshing too, but that's about it. If you support Trump because he is against open borders / illegal amnesty and wants to crack down on the bankers, you should consider endorsing the openly socialist candidate Bernie Sanders too. The two of them are actually united on a number of fronts...

They are both:
a) anti immigration
b) in support of a crack down on wall street / corporate greed
c) anti free trade
d) in support of universal healthcare

I can understand social arguments for wanting to restrict immigration. But almost everything the two of them say about the economic consequences of immigration are at odds with the results of social scientists who've studied it. Immigrants' affect on the economy is similar to that of general population growth. They don't take jobs, they create them. Actually, most attempts to measure their impact on different economic factors clusters around zero, leaning positive. The only legitimate concern is that they may free-ride off of our welfare system. But the real issue isn't that immigrants may be free-riding on our welfare system. The issue is that we have a welfare system in the first place.

If we want to attract the kind of immigrants who currently populate silicon valley, we want to be a competitive capitalist country. If we want to attract the kind of immigrants who are currently flooding into Europe, we should keep moving towards European model. Walls and borders are just a band-aid.

Trump is more of the same in that in he is just another candidate who purports that he (and therefore government) will solve all of our problems. I don't buy it.

Anonymous said...

I enjoyed this post about Trump and Berlusconi. Both are interesting men.

-birdie

Taylor Leland Smith said...

Also, somewhat unrelated, you may enjoy this book review from my undergraduate advisor, Walter Block:


http://www.independent.org/publications/tir/article.asp?a=1091

(not all academics refuse to accept the evidence regarding genetic differences and race)

John Craig said...

Taylor --
Yes, I'm familiar with the fact that Trump and Sanders share certain positions. I agree with them whole-heartedly on both A and B, as yo unlisted them above. As far as C, free trade is one thing, but exporting jobs is slightly different. I'm philosophically a libertarian, but right now our middle class has gotten hurt so badly that I favor jobs protectionism, as opposed to goods protectionism, i.e, I don't believe in tariffs on goods, but I think American companies which export jobs, which hurts our middle class, should have to pay some sort of penalty. Also, keep in mind, to be a competitive capitalist country, we have to compete against China, which doesn't come anywhere near economic freedom. Their government does everything it can to undermine our companies, they pirate our products, don't respect intellectual property rights, and their government supports certain industries in an effort to undercut ours and drive them out of business. They commit industrial espionage on a large scale, and even hack our government's files. If we then play by Marquis of Queensberry (strict libertarian) rules against them, that puts us in a losing position. That's partly what Trump's talking about when he says we have to deal with them accordingly.

I agree, in general we want to attract high IQ immigrants, like those who go to work in Silicon Valley, not the kind who stream over the Rio Grande and immediately tax our welfare system (and also strain police resources). High IQ nations are almost always more productive and have higher GNP's and per capita incomes than low IQ countries. But even with the engineers who come over, I wouldn't favor unlimited immigration to the extent that it crushes our existing middle class.

I never got the impression from Trump that he believes in big government. Now that you mention it, I can't recall him talking about small government either, but I don't see him as a big government guy.

John Craig said...

Thank you Birdie.

Taylor Leland Smith said...

The decision of whether or not to engage in economic protectionism is akin to a prisoner's dilemma. Each individual country faces incentives that make protectionism seem better, but when every country engages in protectionism everyone loses out. The last major movement towards economic protectionism was the Smoot-Hawley tariff act. Following our lead, nations around the world reciprocated with additional protectionist policies. The consequences were pretty severe. Alternatively, prisoner's dilemmas can be slowly reversed through negotiation and the establishment of trust. I don't want to see us reverse all the progress we have made towards free trade. Our problems with China are real, but the solution is not economic protectionism.

John Craig said...

Taylor --
That was a fantastic review by Walter Block. It exudes common sense, something usually lacking in discussions of that topic.

John Craig said...

Taylor --
I think we have to distinguish between Smoot-Hawley-type tariffs on goods, and protecting jobs, which is what Trump is talking about. Also, I can't imagine ever trusting China, to tell the truth. They are ruthless, have no respect for us, have no respect for human rights, and certainly aren't going to play by our rules. We have to take that into account. "Smoot-Hawley" became a dirty word over time, and its spirit may be misguided, but protecting jobs is not the same thing as us taxing their cashmere exports vs. them taxing our lumber exports.

Anonymous said...

I want to respectfully introduce some competing thoughts. I like your blog and think you're insightful and entertaining, so much so that I've gone back to read almost all of your previous posts. I don't want you to waste time writing a response just because I wrote this. Agreeing to disagree is certainly a fine outcome, and you can write that if it saves you time and aggravation.

It is my impression, and you've admitted as much, that although you are critical of current liberal politics, you seem to easily embrace ideas that many conservatives would recoil at. Even so, it is hard for me to believe that you can even imagine voting for an explicit socialist. Sanders is running to the left of the current administration. Your praise for him seems very un-conservative and hard to square with your liberal criticisms. But maybe I'm just arguing with your hypothetical sentiment and not a real one.

The other position that seems to run contrary to your conservative stripe is your enthusiasm for Trump. To me, he seems wholly unreliable, and if he were to get power, would do what he and his ego wanted to do and not what his conservative constituents desired. It is the same type of unreliability that we see with John Roberts in the supreme court. This type of unreliability in government is getting worse. I think that the deterioration of rule of law is the result of the increasing levels of narcissism and progressivism in our culture, where judges and politicians use the post-modern dialectical technique of appealing to their own authority. Their narcissism precludes them from appealing to real authorities such as legal texts, history, or accepted etymology. The consequence is that legal and political outcomes become unpredictable, vindictive, and not based on justice. We end up with judges and politicians who have fiefdoms of power that are very difficult to avoid or overthrow. Laws end up lacking enforcement and legal authority is the result of whatever twisted definition judges and politicians contrive. This type of system is not conducive to freedom or prosperity. It makes criminals out of private citizens trying to mind their own business, increases fear, and reduces economic prosperity (look at the EPA, FCC, and eminent domain decisions). To counteract such a trend takes a hundred years, but one can start by choosing and promoting politicians who are committed to principles first, and don't believe that they can do whatever they think is expedient. Trump has proven himself to do whatever is expedient. If you don't want someone who is a political insider, there are others to choose from. The other candidates might have their own flaws, but their drawbacks aren't as severe or threatening as Trump's. His attitude and behavior is closer to that of our current president than not.

Anonymous said...

The other seemingly contradictory position you hold is the need to have higher marginal rates on people who make more than 250k, 1m, and 10m. The problem with that is, as a group, they don't have enough money to pay for the size of government we're building ( http://www.wsj.com/articles/SB123561551065378405 <-- this article only discusses annual budgets; it does not include entitlements). Higher tax rates for the very rich only end up foreshadowing and justifying higher rates on the middle class, which is where the the real revenue is. Because a higher rate for the "rich" cant be justified on budget grounds, it is then done on moral grounds. But those moral grounds are usually rooted in envy. That is not a moral case; it is immoral and vindictive because it's treating income as if it is stolen from others and not earned from a mutually beneficial exchange or from increasing GDP. It also allows the government to further divide it's population and use its power in a more uneven way. IMO, government needs to see less division in society and be restrained to applying its power evenly among a population of individuals. Justice is supposed to be blind. A steeper and more stratified progressive tax scheme is a brand of social justice that doesn't just remove its blindfold, it has a ruler and a rainbow of color chips by which to measure its population. Social justice doesn't have a balance, it has a carrot and stick. As we've seen with the IRS, complexity allows the government to bully its enemies and reward its allies. A simpler tax code takes that power away and immediately shrinks the government's footprint.

With respect to carried interest, I have less experience studying it, so correct me if I am mistaken. Yes, it seems like hedge fund managers are getting preferential treatment for almost all of their income. I believe the compensation packages are roughly called "2 and 20". The 20 percent being the carried interest, or capital gains and dividends they earn after they beat certain hurdle rates and after paying taxes. The unfairness seems to come from the fact that a manager can put in $1m and raise 10 or a hundred times that amount. He might put in 1% of the capital, but the deal gives him, essentially 20% equity (roughly), which is then taxed at a lower, capital gains rate. I don't think anyone would have a problem if the manager only paid capital gains in proportion to the percent of capital he contributes, and no more. That seems ok because he's using his own after-tax money. As a bonus, he gets to benefit from the staff, tools, and access a hedgefund provides to earn an higher than normal rate of return. But is that how other businesses are viewed? Isn't a hedgefund just a type of service business? And doesn't equity get split in business based on other things besides the amount of capital one provides at startup? Expertise, technology, personal networks, reputations, ideas, and yes, capital all affect how equity is divided. In real estate, young up-starts with no capital will put up no money and get minor shares based on their management expertise or market knowledge. Entrepreneurs will get big chunks of equity for coming up with an idea, organizing financing and finding employees with the technical know-how. So why should we discriminate against hedge funds? Because they're perceived to make money easily? If I recall correctly, the industry as a whole returns very average results, which is even less impressive because they take on more risk than passive investors. And if a manager has the reputation and expertise for returning outsize returns, why can't they negotiate bigger shares of equity in the fund?

Well, I think that's it. Thank you for you blog. I appreciate it.

John Craig said...

Anon --
First, thank you very much for your kind comments, and thanks for reading back in the blog. I had to copy and paste your comments so as to take out your email address (I'm unable to edit incoming comments, I can only hit "publish" or "delete.")

You've excused me from resounding at length, but let me just say a couple of things. I'm more critical of political correctness i.e., refusing to speak honestly about human differences, than I am of traditional liberalism, but they are not one and the same. And yes, I'm more of a libertarian at heart, I support abortion, gay marriage, and a few other things that good conservatives don't. In fact, I kiddingly ran for President on this blog back in 2011, and outlined my platform here:

http://justnotsaid.blogspot.com/2011/10/important-announcement.html

and here:

http://justnotsaid.blogspot.com/2011/11/more-planks.html

and here:

http://justnotsaid.blogspot.com/2011/11/even-more-planks.html

Sorry to assign all the homework, but it's not required reading. Anyway, it's an unholy mix of different positions, and there's probably no one other than me who agrees with that platform in its entirety.

I agree with you about Trump's personality -- he's a narcissist, in fact sort of a megalomaniac, and I've written about that a number of times in the past couple months, and have alluded to it again in this post. BUT, he is still the only candidate who, as unlikely as this might seem, is coming out in favor of policies that would help the middle class. And it's the middle class which needs to be helped in this country; if they disappear, our country -- as it has always been -- effectively disappears.

I've seen the numbers on taxing the rich, and you're right, in fact, I saw one study which pointed out that if you just confiscated 90% of the wealth of all of the billionaires in this country, it would barely make a dent in the national debt. So, yes, I understand your point. My point is that as long as you're going to have a graduated income tax on the theory that the rich can afford to pay more, it's silly to stop at 400,000 for the top rate, since in some areas -- like NYC or San Francisco -- that's not much above middle class. BTW, I don't think that higher tax rates for people who make over a million a year necessarily has to lead to higher taxes for the middle class (even if it has in the past).

Also, I don't believe in higher taxes on the rich as a punitive measure, merely as a practical one. And also btw, if you object to the increasing narcissism of our culture, I can assure you, there's a lot more of it among the very rich, I saw it firsthand when I worked at Goldman Sachs.

My understanding is that hedge fund managers can put absolutely no money of their own into a fund, and if they make money via the 2 and 20 standard fees, they have that money taxed at the long term capital gains rate (as long as their clients' money was kept in a stock for over a year). Yet it wasn't even their money; they're making their none through fees, not long term capital gains. So why should they get to pay 15% rather than the standard 38% plus?

Anonymous said...

A tax penalty for exporting jobs only raises prices on products for the middle class and increase unemployment here and abroad. If people are worried about how much the middle class earns, they should be equally worried about how much the middle class spends. There's no free lunch.

The point of libertarianism is to understand that freedom is its own reward, despite what one might want to engineer socially or economically. It's not a binary equation, but it seems to me the number of your positions that focus on social engineering tip the balance too far away from libertarianism.

I'm sure it's a cliche for me to mention this, but milton friedman has some wonderful interviews on youtube, and a documentary called "free to choose." if you're so inclined.

Cheers

John Craig said...

Anon --
True, saving middle-class jobs would come with higher prices on certain goods.

And yes, I'm far from a pure libertarian. I'm not really a pure anything, I'm more of a case by case guy.

I studied Milton Friedman long ago when I was in college, and yes, he's brilliant. But what works in theory and what's practical given a complicated set of circumstances are rarely the same thing.

Anonymous said...

Don't dismiss Milton Friedman because you think he only has theories. His ideas derive from specific, practical and historical examples. His talks and documentary are filled with them.

John Craig said...

Anon --
I'm not dismissive of Friedman. I'm merely saying that he never anticipated a situation quite like what we have today, with the middle class in shambles, income inequality where it is, the permanent underclass quite so well remunerated, with China as the formidable enemy it has become, and with the Third World effectively invading the First.

Anonymous said...

He tackles almost all of those topics. Income inequality, welfarism, middle class prosperity, illegal immigration, and just replace japan for china and he's spoken about that too.

John Craig said...

Anon --
I'll concede to you on this discussion, you're obviously more familiar with Friedman than I am, I haven't read him since college. But I will say that Japan was never nearly as unfair and sneaky in its dealings with the US as China is.

Mark Caplan said...

I'm eager to vote for Trump even though I've never before voted for a Republican. But, as you and others made clear, Trump is not really a Republican. He's an FDR Democrat. Nobody was stronger on immigration or harsher on Wall Street financiers than FDR. FDR refused to let a shipload of Jewish migrants fleeing Hitler to enter US waters. Now that's what I call tough on immigration.

My biggest problem is figuring out how to sneak off to a Trump rally without my wife getting wind of it. I hope she suspects I'm merely having an affair.

John Craig said...

Mark --
Ha! Very good.

I'm surprised you've never voted Republican before, given some of your other stances.

I think Trump will surprise a lot of people with the breadth of his appeal. And yes, some of his positions are straight out of the Democratic playbook. My son almost has my wife, a diehard liberal, convinced to vote for Trump.

Taylor Leland Smith said...

On protectionism, my point is that even protectionist rhetoric can cause serious retaliations worldwide. That's my fear. It's also very difficult to later get rid of those policies. We're still subsidizing auto manufacturers at the expense of the American consumer... That's a net loss to the American middle class.

I've also noticed that you keep pointing to a shrinking / stagnating middle class. That is a sort of Krugman-esque liberal myth, based on shotty statistics. We actually just invited the economist Don Boudreaux here to tech to give a talk on that subject. Here's a link to his article in the WSJ:

http://www.wsj.com/articles/SB10001424127887323468604578249723138161566

John Craig said...

Taylor --
I'm not sure I entirely agree with that WSJ article. He makes some good points about the cost of utilities, housing, and food, but he ignores the things which have outpaced inflation, such as medical costs and college tuition. And he doesn't refer to the fact that there's a smaller percentage of people in the work force than at any time in the last 40 years, which negates all of the recent unemployment statistics.

I'm actually going to write a post, probably in the next day or two, about whether or not America is a meritocracy, which is essentially what all of the above arguments are about. I started out as a libertarian too, maybe not a pure one, and I believe America SHOULD be a meritocracy, but there are a lot of ways it isn't.

Taylor Leland Smith said...

He didn't address college and healthcare in his article, but he did in his talk. With college, if you look at the statistics, the rising cost of college actually matches up with the rising value of a college education. In terms of an investment, (in a higher future income), the value of a college education has remained relatively stable. It's also worth noting that the measurements of healthcare costs over time do not consider the possibility that healthcare has improved. Healthcare has become more expensive, but it has also improved seriously in quality. It is difficult to compare qualities of healthcare over time, so that is just assumed away in those calculations.

It is also worth noting that these are two industries where we cannot export jobs... education and healthcare are service industries. Exportation of jobs is seen as a bad thing, and yet it is what has allowed us to spend as much as we do on education and healthcare. If anything, the fact that these two industries have become more expensive is an excellent argument for why we do benefit from comparative advantage (and the exportation of jobs).

Not to mention the evidence that suggests college education costs are rising because of the artificial availability of credit (student loans). Also, healthcare costs are not rising across the board. Cosmetic healthcare is wholly unregulated and the costs have declined year after year. That tells you something about rising healthcare costs.

What is particularly impressive is that we live in as much relative wealth as we do *despite* a shrinking work force. We have added 50 million people to the working age population since the early 90s, and added only 20 million jobs. Approx. 30 million people have left the work force altogether. We have an entitlement problem in the US. The bottom three quintiles (by income) of the American public are net recipients of government benefits. In other words, our middle class lives in relative wealth despite the fact they are not net contributors.










Anonymous said...

This was what I was referring to above when I said one should pay attention to what the middle class spends.

The author addresses medical costs directly in the article, saying that it's more expensive, but it's also better care. It's a similar issue to when the WHO ranks second world countries' healthcare systems ahead of the US's. It might be cheaper but it's doesn't have the same level of sophistication, technology or outcome.

The other issue is that medical costs and tuition are the result of specific bad policy that has little to do with middle class jobs. Cost increases began right after more government dollars started being spent in both domains and distorted normal economic forces. You had Medicare in 1966 and the Higher Education Act of 1965. If you increase government spending and access to credit (or subsidize credit) prices rise. It seems to me the correct way to fix the problem is to directly attack the cause of the problem, bad economics, rather than engage in a tangential problem of outsourcing.

The reason that there are fewer people in the work force is because we're subsidizing unemployment with federal dollars, making it more difficult for businesses to hire with burdensome regulations (ie healthcare, EPA, CPSC, CFPB...), creating a threatening business climate which calls for higher minimum wages, and a top income tax rate for corporations and individuals (most small businesses are pass through and pay at personal rates) that make the US less competitive than other countries. If you want more jobs here, lower the tax rate and deregulate. Other countries will move operations over here if it makes them more competitive. They did it with cars when they found that they could assemble cars in the non-union south while not affecting their CAFE numbers using imported parts (the recent stricter CAFE standards incentivized US auto companies to do the opposite).

The correct policy fixes usually don't have the same heartwarming narrative that incorrect policies with large, unintended consequences have. The right has always had a chronic deficiency in rhetoric compared to the left. But making decisions based on rhetoric doesn't fix problems.

Just my two tarnished pennies.

Cheers

B

Rifleman said...

Carly Fiorina. Is she a sociopath?

https://lionoftheblogosphere.wordpress.com/2015/09/18/todd-bartlem-on-carly-fiorina/

John Craig said...

Rifleman --
Thank you of resending that. Wow, she sure sounds like one. It's funny, I had vaguely remembered having that impression of her back when she was at HP, but had pretty much forgotten about her since. Then, when she announced her candidacy, i read her Wiki bio, looking for whatever it was that had given me that impression (I vaguely remember it had something to do with the way she ran, or rose through the ranks at, HP. But I couldn't find anything that spelled out sociopathy, so I sort of forgot about it again.

But that article lists about five or six or the hallmarks, some of them unmistakeable. The dropping people as soon as they're no longer useful, the sleeping her way to the top (if true, and I'd guess it is), the pathological narcissism, the false mythologizing of her background (rising from secretary), the complete absence of old friends. I'm convinced.

Then, when you think about it, she came across as if she had ice water running in her veins during the debate, she didn't appear to be affected by nerves at all, which is another hallmark. I'm sure more stuff will come out, most likely from people who knew her at HP.