A few years ago, senior officials at the Bank for International Settlements started ringing alarm bells about the scale of leverage that was quietly building up in the financial system. Back then, though, it was fantastically hard to get American policymakers – let alone bankers – to listen.
In the go-go days of the credit bubble, Washington policymakers blithely assumed that the Western financial system had plenty of capital to cope with any potential risks. Consequently, as one former BIS official admits: “Worrying about leverage wasn’t fashionable at all – no one wanted to hear.”
Fast-forward a couple of years and, my, how those Western financiers are having to eat humble pie (even to the point of accepting a helping hand from the once-ailing Japanese). After all, the events of the past year have now made it patently – horrifically – obvious that the Western banking system has become dangerously undercapitalised in recent years, to the point where even the Federal Reserve is having to shore up its defences.
Moreover, it is now also clear that Western policymakers are belatedly trying to correct this state of affairs. The days when high leverage, mega bonuses and wacky instruments were equated with financial virility have gone; instead a more humble, back-to-basics and slim-line approach is what investors are demanding. Thus, deleveraging is now all the rage – in whatever form it might take.
Category: Leadership
Waterloo’s Crave Brothers Featured on NBC Nightly News
Roger O’Neill video takes a look at the Crave Brothers use of methane – from their cow poop – to power the farm and 120 neighboring homes. The farm includes a cheese factory.
Sarkozy’s Speech to Congress
French President Nicholas Sarkozy [8.5MB mp3 Audio File]:
From the very beginning, the American dream meant proving to all mankind that freedom, justice, human rights and democracy were no utopia but were rather the most realistic policy there is and the most likely to improve the fate of each and every person.
America did not tell the millions of men and women who came from every country in the world and who–with their hands, their intelligence and their heart–built the greatest nation in the world: “Come, and everything will be given to you.” She said: “Come, and the only limits to what you’ll be able to achieve will be your own courage and your own talent.” America embodies this extraordinary ability to grant each and every person a second chance.
Here, both the humblest and most illustrious citizens alike know that nothing is owed to them and that everything has to be earned. That’s what constitutes the moral value of America. America did not teach men the idea of freedom; she taught them how to practice it. And she fought for this freedom whenever she felt it to be threatened somewhere in the world. It was by watching America grow that men and women understood that freedom was possible.
What made America great was her ability to transform her own dream into hope for all mankind.
Airlines Learn to Fly on a Wing and an Apology
Airlines are getting serious about saying they’re sorry.
After a spate of nightmarish service disruptions, American Airlines, JetBlue Airways and others are sending out more apologies, hoping to head off customer complaints and quell talk of new consumer-protection regulations from Congress.
But no airline accepts blame quite like Southwest Airlines, which employs Fred Taylor Jr. in a job that could be called chief apology officer.
His formal title is senior manager of proactive customer communications. But Mr. Taylor — 37, rail thin and mildly compulsive, by his own admission — spends his 12-hour work days finding out how Southwest disappointed its customers and then firing off homespun letters of apology.
Fascinating look at Southwest Airlines’ culture. I hope they fly into Madison soon.
Cheeseheads’ Taste of Chester
Frank Fitzpatrick pens a Philly view of UW basketball coach Bo Ryan (Ryan is from Philadelphia):
Ryan peddled the cards until he got the camera. Forty-nine years later, the big picture hasn’t changed much. He’s still fighting and selling relentlessly.
“You’ve got to sell,” he said, “because a lot of times you’re a perfect stranger trying to convince somebody to do something they might not want to do. If I wasn’t a coach, I’d probably be a salesman. I’ve got to have that competition.”
Now Ryan sells Badger basketball – to recruits, to his players, to boosters, to the media, to the nation. With that slick exterior abetted by street smarts, he has transformed Wisconsin, once an off-the-rack program, into one of the hottest items on college basketball’s shelf.
Microjets: Eclipse 500 Certification
an a former copy machine repairman who happens to be friends with Bill Gates reinvigorate the general aviation industry by adopting the low-cost, mass production model used for personal computers? The world is about to find out.
Not long ago, it appeared the answer was a resounding “no.” Eclipse Aviation founder Vern Raburn gathered his team on a dismal Saturday morning in November 2002 to figure out whether the company had a future. Raburn, a pioneer in the personal computer revolution, was aiming to develop a six-seat jet that would sell for less than $1 million, bringing jet ownership within reach of thousands of new customers. But his penchant for risk had put Eclipse in big trouble.
The Albuquerque company, with funding support from NASA, had bet big on the development of an advanced, radically cheaper turbine engine. The technology wasn’t panning out in time, however, and there was no Plan B. Investors, lured by Raburn’s earlier successes at Microsoft, Lotus and Symantec, were running out of patience. Eclipse had two options: stick with the balky engine and pray for a miracle, or delay launch of the aircraft by several years and try to hang on while it found a new engine.
It’s Not The Technology That Raises Productivity, But How it’s Used
Just dropping a bunch of new personal computers on workers’ desks is unlikely to contribute to productivity. A company has to rethink how business processes are handled to get significant cost savings.
As the Stanford economic historian Paul A. David has pointed out, the productivity effects from the electric motor did not really show up until Henry Ford and other industrialists figured out how to use it effectively to create the assembly line. The same is true for computers: just as the early industrialists had to learn how to use manufacturing technology to optimize the flow of materials on the factory floor, companies today must learn how to use information technology to optimize the flow of information in their organizations.
Bill Steinberg on the Katrina Debacle
My good friend Bill Steinberg has published, via business partner Mark Baker a very useful look at the leadership vacuum that is the Katrina Response:
so for the mayor, the governor, the president and how many of the president’s men, those so-called law-makers on the hill, what goes around, comes around, we’re still left with the same unanswered question, how could you be so ___ stupid? all will ask ‘what happened?’ only so long as it takes them to find out who’s to blame – then they’re done learning anything from it that will give us a different outcome the next time it happens. and, as someone once said, doing the same things but expecting a different outcome is the definition of insanity. welcome to ‘one flew over the cuckoo’s nest.’ keep everyone sick, it’s easier to get them to do what you want them to do that way.