A Curious Case of Optimism

Ed Wallace:

I first started reading biographies of men of great accomplishments in high school; the first was that of Eddie Rickenbacker. I haven’t stopped, either; the most recent was that of Steve Jobs. Sometime after I’d started my career in the automotive industry, I took to reading books about the men who had created that industry. One thing you learn quickly about these individuals is that most had suffered serious financial setbacks before they finally succeeded. In fact the setbacks they encountered would have stopped the average individual in his tracks; but those who finally succeeded to greatness seemed to brush off defeat even faster than they accepted their ultimate success.

The other fact one notices in reading great car guys’ biographies is that many of the greatest names in business history actually started in the absolute worst of economic times. Others, such as GM’s Alfred Sloan, made their reputations in periods of horrendous economic activity.

History and Evaluation of the Policy Response to the Great Recession: Summers BGP-266M Crisis Economics Syllabus

Larry Summers @ Harvard

Course Overview: This course will examine the American policy response to the recent financial crisis
and associated Great Recession. The objective is to illuminate (i) the changes in macroeconomic thinking necessitated by recent events (ii) the relationship between analytical macroeconomics, finance and policymaking in a political context (iii) lessons of recent experience for public policies directed at preventing crises in the future and responding to them when they come. The lectures will draw on the professional economic literature to the minimum extent necessary to facilitate understanding of the issues involved. The primary focus will be on the process of policy choice and the factors entering into actual policy decisions. Each lecture after the first introductory lecture will cover a different aspect of the policy response to the crisis. Sections will take up relevant analytical economic aspects.

World power swings back to America

Ambrose Evans-Pritchard:

The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.

Assumptions that the Great Republic must inevitably spiral into economic and strategic decline – so like the chatter of the late 1980s, when Japan was in vogue – will seem wildly off the mark by then.
Telegraph readers already know about the “shale gas revolution” that has turned America into the world’s number one producer of natural gas, ahead of Russia.

Less known is that the technology of hydraulic fracturing – breaking rocks with jets of water – will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

Money Quotes, Steve Jobs-Style

Owen Linzmayer and Ryan Singe:

One of the things the world will miss most about Steve Jobs, now that he’s officially retired for a second time as Apple’s CEO, is his mouth.

Jobs is a master of hype, hyperbole and the catchy phrase — and his cocky performances, while clad always in jeans and turtleneck, were as entertaining as the products he was shucking.

Here’s a selection of some of the most entertaining things the man has said, organized by topic: innovation and design, fixing Apple, his greatest sales pitches, life’s lessons, taking the fight to the enemy and Pixar.

On Android vs. iOS

“It is worthwhile to remember that open systems don’t always win. Open versus closed is a smokescreen. Google likes to characterize Android as open and iOS as closed. We think this is disingenuous.”
— In October 2010, talking to analysts about the challenge from Google’s Android, which Apple perceived as a stab in the back by Google’s then-CEO Eric Schmidt — a member of Apple’s board of directors. Hark Oct. 18, 2010.

“Don’t be evil is a load of crap.”
— In January 2010 townhall with Apple employees, Jobs tore into Google for getting into the smartphone business, saying Google got into smartphones, and Apple didn’t get into search. Wired Jan. 30, 2010.

SPIEGEL Interview with Mikhail Gorbachev

der Spiegel:SPIEGEL: Mikhail Sergeyevich, you turned 80 this spring. How do you feel?



Gorbachev: Oh, what a question. Do you have to ask me that? I’ve gone through three operations in the last five years. That was pretty tough on me, because they were all major operations: First on my carotid artery, then on my prostate and this year on my spine.



SPIEGEL: In Munich.



Gorbachev: Yes. It was a risky procedure. I’m grateful to the Germans.



SPIEGEL: But you look good. We saw you before the operation.



Gorbachev: They say you need three or four months to get back to normal after an operation like that. Do you remember the book “The Fourth Vertebra,” by the Finnish author Martti Larni? It is a wonderful book. In my case it was the fifth (vertebra). I’ve started walking again, but every beginning is difficult.



SPIEGEL: And yet you are back in politics, and you’re even making headlines again. Why don’t you finally sit back and relax?



Gorbachev: Politics is my second love, next to my love for Raisa.



SPIEGEL: Your deceased wife.

It’s Negotiation Time


It doesn’t seem like it’s been four years since the last time Detroit automakers and the United Autoworkers Union negotiated a new contract. You may remember the discussions and agreements that, from the date of that contract, gave the automakers the right to hire many categories of workers and pay them $14 an hour, plus lesser benefits. Of course, the auto companies were facing the same issues as any other major industry in America; the issue squeezing their corporate bottom lines most painfully was the incredible rise in the cost of workers’ health care.

Then many national media outlets were reporting that Detroit was paying their workers more than $73 an hour for their labor. Yet not only did an influx of autoworkers not buy new homes in Westover Hills or Monticello, but that simplistic look at the net cost of factory work ignored more pertinent realities of car production and corporate accounting.

Well worth reading.

The Dilemma

Ed Wallace:

If there is one most frightening thing that war always exposes, even if one is on the winning side, it’s weakness in the supply logistics. While most never consider it, official policy often changes during a war because supplies that are critical to the war effort seem in danger of being disrupted. Such jeopardy, moreover, forces the accountants, economists and politicians waging the conflict to start thinking about how the world will be changed once the fighting has ended.
Few today appreciate the fact that our foreign policy, particularly as it is tied to the Middle East, came about because of just such concerns in the first years of the Second World War. As one might expect, that official policy was based on real fears that America would one day run out of oil.
“The European War”
It was the summer of 1941 and the State Department had requested that the White House include Saudi Arabia in our Lend Lease program. It wasn’t because the Saudis were going to become a direct ally against the European Axis Powers, but because we were about to embargo U.S. oil shipments to Japan. Many believed – correctly, as it turned out – that this would probably lead to hostilities with Japan that would draw us into the war.
Standard Oil of California, which had been drilling for oil in Bahrain for over a decade, now had oil concessions granted by King ibn Saudi. The first six wells Standard drilled into the Arabian desert were nothing to write home about, but when Well No. 7 came in on March 4, 1938, the engineers and wildcatters all knew that Saudi Arabia was going to be an oil bonanza.
Yet on July 18, 1941, Roosevelt refused the request for Lend Lease for Saudi Arabia. He saw no immediate benefit to diverting U.S. dollars overseas simply because Standard had oil concessions there. In any case, the outbreak of the European War in 1939 had reduced oil production in the Kingdom to an insignificant volume — a trickle, considering that American oil amounted to 60 percent of the world’s crude at the time. Instead Roosevelt asked Federal Loan Administrator Jesse Jones to look into the possibility of having England deal with the Saudi King’s pressing needs.

Lessons from war’s factory floor

Tim Harford:

The lowest point of the US occupation of Iraq was about five years ago. American forces had no effective strategy in the face of a street-level civil war and a particularly vicious insurgent group, al-Qaeda in Iraq. At Haditha, frightened and frustrated marines had killed 24 civilians. At Samarra, the Golden Dome mosque had been destroyed – a potent symbol of conflict between Shia and Sunni Muslims. Donald Rumsfeld, then defence secretary, appeared to be in an advanced state of denial, breezily waving away good advice, and in a notorious press conference shortly after the atrocity at Haditha, refusing to use the word “insurgent”, or to let the chairman of the Joint Chiefs of Staff use it either. The US strategy was failing and its leadership was determined not to change direction. It was a case study in organisational dysfunction.
Yet by 2008, the situation in Iraq had improved radically. Al-Qaeda in Iraq was in retreat, and the number of attacks, American and Iraqi deaths had fallen dramatically. Although the success remains fragile and there were other factors involved, a complete transformation of US military strategy deserves much credit.
How did it happen and what are the lessons for other organisations that need to turn around? The easy answer is that the solution was a change of leadership. Thanks to behind-the-scenes campaigning and a drubbing in the midterm elections for President George W.?Bush, Mr Rumsfeld was replaced, and General David Petraeus was put in charge of the war in Iraq.

The Most Interesting Man in the Senate: Rand Paul reshapes the national debate.

Matt Welch:

“What is so great about our bloated federal government that when a libertarian threatens to become a senator, otherwise rational and mostly liberal pundits start frothing at the mouth?” the old New Left columnist Robert Scheer wrote at Truthdig. “What Rand Paul thinks about the Civil Rights Act, passed 46 years ago, hardly seems the most pressing issue of social justice before us. It’s a done deal that he clearly accepts. Yet Paul’s questioning the wisdom of a banking bailout that rewards those who shamelessly exploited the poor and vulnerable, many of them racial minorities, is right on target. So too questioning the enormous cost of wars that as he dared point out are conducted in violation of our Constitution and that, I would add, though he doesn’t, prevent us from adequately funding needed social programs.”
The dead-enders of the Beltway left, however, continued to treat Paul like a mental patient. “By nominating a lunatic,” Center for American Politics blogger Matthew Yglesias wrote after Paul’s primary victory, “Republicans have suddenly taken what should be a hopeless Senate race and turned it into something Democrats can win. At the same time, by nominating a lunatic, Republicans have suddenly raised the odds that a lunatic will represent Kentucky in the United States Senate.” Nor was this sentiment confined to the left. “Rand Paul’s victory in the Kentucky Republican primary is obviously a depressing event for those who support strong national defense and rational conservative politics,” former George W. Bush speechwriter David Frum wrote at the time. “How is it that the GOP has lost its antibodies against a candidate like Rand Paul?”
Paul parries these attacks with a bemused but direct engagement; you can see he thinks he’s going to win a long-overdue David vs. Goliath argument. A good portion of his book is spent examining and decrying how the Republican Party became “tainted by neoconservative ideology,” mistaking “national greatness” for a willingness to intervene willy-nilly into the affairs of foreign countries, while tolerating big spending projects at home. “The Tea Party,” Paul claims, “is now a threat to the old Republican guard precisely because its stated principles prevent it from being brought into the neoconservative fold.”

Seven tricky questions for Mr Buffett

Andrew Hill:

Until this week, only one topic was off-limits for questions to Warren Buffett at Saturday’s annual gathering of Berkshire Hathaway shareholders in Omaha: how serious is the Dave Sokol affair?
On Wednesday, however, the company issued an 18-page report from its audit committee about the former star executive’s trading in shares in Lubrizol, a chemicals group later bought by Berkshire, and declared open season for all questions to Mr Buffett.
Here are my seven:
1. How serious is the Dave Sokol affair?
You are the world’s most famous long-term investor. Recently, Berkshire’s shares have lagged behind the S&P 500, but your record of outperformance over more than four decades speaks for itself. Even big, conservative bets, such as the 2009 investment in Burlington Northern Santa Fe railway, have been well timed. But Mr Sokol was a frontrunner to succeed you as chief executive. You lauded him regularly in your annual letter to shareholders. His abrupt resignation and the circumstances surrounding it seem to suggest that this is more than just a blip.
2. Do you love some of your managers too much?