June 4, 2011

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.

Posted by jez at 8:04 PM

May 23, 2011

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.

Posted by jez at 8:07 PM

May 10, 2011

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."

Posted by jez at 9:12 PM

April 28, 2011

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?

Posted by jez at 10:17 PM

April 18, 2011

Is Facebook geared to dullards?

Nicholas Carr:

Are you ashamed that you find Facebook boring? Are you angst-ridden by your weak social-networking skills? Do you look with envy on those whose friend-count dwarfs your own? Buck up, my friend. The traits you consider signs of failure may actually be marks of intellectual vigor, according to a new study appearing in the May issue of Computers in Human Behavior.

The study, by Bu Zhong and Marie Hardin at Penn State and Tao Sun at the University of Vermont, is one of the first to examine the personalities of social networkers. The researchers looked in particular at connections between social-network use and the personality trait that psychologists refer to as "need for cognition," or NFC. NFC, as Professor Zhong explained in an email to me, "is a recognized indicator for deep or shallow thinking." People who like to challenge their minds have high NFC, while those who avoid deep thinking have low NFC. Whereas, according to the authors, "high NFC individuals possess an intrinsic motivation to think, having a natural motivation to seek knowledge," those with low NFC don't like to grapple with complexity and tend to content themselves with superficial assessments, particularly when faced with difficult intellectual challenges.

The researchers surveyed 436 college students during 2010. Each participant completed a standard psychological assessment measuring NFC as well as a questionnaire measuring social network use. (Given what we know about college students' social networking in 2010, it can be assumed that the bulk of the activity consisted of Facebook use.) The study revealed a significant negative correlation between social network site (SNS) activity and NFC scores. "The key finding," the authors write, "is that NFC played an important role in SNS use. Specifically, high NFC individuals tended to use SNS less often than low NFC people, suggesting that effortful thinking may be associated with less social networking among young people." Moreover, "high NFC participants were significantly less likely to add new friends to their SNS accounts than low or medium NFC individuals."

To put it in layman's terms, the study suggests that if you want to be a big success on Facebook, it helps to be a dullard.

Posted by jez at 8:08 PM

April 13, 2011

On The US Budget Deficit & Debt



Obama adds fuel to confusion but no resolution, Mohamed El-Erian:

A friend and former colleague of mine, Paul McCulley, once made the distinction between those who were "responsibly irresponsible" and those who were "irresponsibly irresponsible". The two notions explain why more unsatisfactory last-minute policy compromises are now likely, despite President Barack Obama's impressive speech on how America must move forward to tackle its debt ceiling, and its wider problem of budgetary reform.

Mr Obama proposed cutting $4,000bn from deficits over the next 12 years, reducing government outlays to Medicare and Medicaid healthcare programmes, and even considered tax increases. His speech therefore provides an important opportunity to advance this debate, but a much broader context is still needed if it is to succeed in overcoming both domestic political stalemates and growing concerns abroad.

Back in the final quarter of 2008 and the beginning of 2009, it was right for the US to behave responsibly irresponsible. At that moment every available part of the public sector balance sheet, from the Federal Reserve's to the Federal budget, had to be used to avoid an economic depression. And it worked.

The radical right and the US state by Martin Wolf:
What does the rise of libertarianism portend for the future of the US? This is not a question of interest to Americans alone. It matters almost as much to the rest of the world. A part of the answer came with the publication of a fiscal plan, entitled "Path to Prosperity", by Paul Ryan, Republican chairman of the house budget committee. The conclusion I draw is the opposite of its author's: a higher tax burden is coming. But that leads to another conclusion: much conflict lies ahead, with huge implications for politics, federal finance and the US ability to play its historic role.

An analysis of the Ryan plan by the Congressional Budget Office makes the point. Its "extended-baseline scenario" assumes that current law remains unchanged. Under that assumption, revenue would rise from 15 per cent of gross domestic product to 21 per cent in 2022 and on to 26 per cent in 2050. Spending would rise substantially, too, from 23¾ per cent of GDP in 2010 to 30¼ per cent in 2050. As a result, the deficit would fall from today's levels while debt held by the public would rise to 90 per cent of GDP in 2050.

As the CBO makes plain, this is an optimistic scenario. Current law includes, most notably, the assumption that the 2001 and 2003 tax cuts will expire, as legislated. Together with the impact of fiscal drag from economic growth and inflation, this generates the rising share of revenue in GDP. On the side of spending, the share of social security in GDP rises modestly, from 4¾ per cent of GDP in 2010 to 6 per cent in 2050. The share of all other spending (including defence), apart from that on health, is assumed to fall to close to its long-run average of 8 per cent of GDP. But health spending explodes, from 5½ per cent of GDP in 2010 to 12¼ in 2050.

Posted by jez at 7:49 PM

April 10, 2011

Facing Default, Publisher Lee Enterprises Sells 'Junk' to Foil Distressed Investors

Matt Wirz:

Newspaper chain Lee Enterprises Inc. is on the verge of saving itself from bankruptcy--and many of its debt holders are livid.

Lee, weighed down by about $1 billion of debt, has long been high on the list of potential bankruptcies. But thanks to the roaring market for debt of risky companies, Lee is preparing to sell junk bonds that would enable it to pay off its obligations and give it a new shot at survival.

But what is good news for the company has thwarted the plans of a flock of "vulture" investors--Monarch Alternative Capital, Alden Global Capital, Marblegate Asset Management and a unit of Goldman Sachs Group Inc.--which have been buying Lee's loans. The group had been betting the company would default, and that they could turn their holdings into an ownership stake, giving them access to the company's assets, which include St. Louis Post Dispatch and the Arizona Daily Star newspapers.

.....

Lee incurred much of its debt in 2005 when it paid top-dollar to buy Pulitzer Inc., a chain of 14 newspapers including the St. Louis Post-Dispatch. The combined company would have been a particularly valued prize because, unlike many of the other publishers that went bankrupt in recent years, the company generates over $100 million of free cash flow despite its debt load. The publisher's focus--running small and midsize papers and keeping a rein on costs--has insulated it from the worst of the decline in subscriptions and advertising affecting newspapers in metropolitan markets.

Lee owns half of Capital Newspapers, publisher of the Wisconsin State Journal.

Posted by jez at 9:14 PM

March 3, 2011

Oil & Water, Jet Fuel & Labor

William Swelbar:

On June 25, 2008 I blogged asking the question: Is Oil A Cancer Or A Cure? At that time, the price of a barrel of oil had not yet reached its apex of $147 per barrel, but was well on its way. Based on findings by the Air Transport Association's superb economic analysis team led by chief economist John Heimlich, the U.S. airline industry paid the equivalent of $174.64 per barrel [price of a barrel of oil plus the equivalent cost to refine crude into jet fuel (the crack spread)] on July 11, 2008. By December 23, 2008 the price of a barrel of West Texas Intermediate had fallen to $30.28 per barrel. So far in 2011, we've seen a similar surge in oil prices, but based on current geopolitical events, I am not expecting another $117 drop in the price of a barrel of oil like we witnessed in 2008.

I'm actually wondering what happens if the wave of Mideast political upheaval washes over Algeria? Or Saudi Arabia? Some economic experts say the price of oil could rocket past the $200 threshold.

In 2011, the industry has paid an average of $89.15 per barrel of crude and another $25.80 in the crack spread for a total cost of "in the wing" jet fuel of nearly $115 per barrel. Since February 22, 2011 the industry has paid more than the equivalent of $120 per barrel for jet fuel. On March 1, 2011 the industry paid the equivalent of $132.17 per barrel for jet fuel including the crack spread of $32.54. For all of 2008, the industry paid the equivalent of $25 per barrel to refine crude into jet fuel. In the last five days of trading the crack spread paid by the industry is nearly $30 per barrel.

Posted by jez at 6:04 PM

January 24, 2011

Where have all the thinkers gone?

Gideon Rachman:

A few weeks ago I was sitting in my office, reading Foreign Policy magazine, when I made a striking discovery. Sitting next door to me, separated only by a narrow partition, is one of the world's leading thinkers. Every year, Foreign Policy lists the people it regards as the "Top 100 Global Thinkers". And there, at number 37, was Martin Wolf.

I popped next door to congratulate my colleague. Under such circumstances, it is compulsory for any English person to make a self-deprecating remark and Martin did not fail me. The list of intellectuals from 2010, he suggested, looked pretty feeble compared with a similar list that could have been drawn up in the mid 19th century.

This was more than mere modesty. He has a point. Once you start the list-making exercise, it is difficult to avoid the impression that we are living in a trivial age.

The Foreign Policy list for 2010, it has to be said, is slightly odd since the magazine's top 10 thinkers are all more famous as doers. In joint first place come Bill Gates and Warren Buffett for their philanthropic efforts. Then come the likes of Barack Obama (at number three), Celso Amorim, the Brazilian foreign minister (sixth), and David Petraeus, the American general and also, apparently, the world's eighth most significant thinker. It is not until you get down to number 12 on the list that you find somebody who is more famous for thinking than doing - Nouriel Roubini, the economist.

Posted by jez at 2:22 AM

January 21, 2011

Avoiding a U.S.-China cold war

Henry Kissinger:

America's exceptionalism finds it natural to condition its conduct toward other societies on their acceptance of American values. Most Chinese see their country's rise not as a challenge to America but as heralding a return to the normal state of affairs when China was preeminent. In the Chinese view, it is the past 200 years of relative weakness - not China's current resurgence - that represent an abnormality.

America historically has acted as if it could participate in or withdraw from international affairs at will. In the Chinese perception of itself as the Middle Kingdom, the idea of the sovereign equality of states was unknown. Until the end of the 19th century, China treated foreign countries as various categories of vassals. China never encountered a country of comparable magnitude until European armies imposed an end to its seclusion. A foreign ministry was not established until 1861, and then primarily for dealing with colonialist invaders.

America has found most problems it recognized as soluble. China, in its history of millennia, came to believe that few problems have ultimate solutions. America has a problem-solving approach; China is comfortable managing contradictions without assuming they are resolvable.

American diplomacy pursues specific outcomes with single-minded determination. Chinese negotiators are more likely to view the process as combining political, economic and strategic elements and to seek outcomes via an extended process. American negotiators become restless and impatient with deadlocks; Chinese negotiators consider them the inevitable mechanism of negotiation. American negotiators represent a society that has never suffered national catastrophe - except the Civil War, which is not viewed as an international experience. Chinese negotiators cannot forget the century of humiliation when foreign armies exacted tribute from a prostrate China. Chinese leaders are extremely sensitive to the slightest implication of condescension and are apt to translate American insistence as lack of respect.

Posted by jez at 7:41 AM

December 23, 2010

2011: And Still No Energy Policy

Ed Wallace:

"First generation [corn] ethanol I think was a mistake. The energy conversion ratios are at best very small."

- Al Gore, speaking at a Green Energy Conference on November 22, 2010

"Ethanol is not an ideal transportation fuel. The future of transportation fuels shouldn't involve ethanol."

- Secretary of Energy Steven Chu, November 29, 2010

No one knows what brought on the blast of political honesty in the last eight days of November. Having been a rabid ethanol booster for most of his political career, there was former Vice President Al Gore reversing course and apologizing for supporting ethanol. Of course Gore's reason for taking that position was perfectly understandable -- for a politician. As he told the Athens energy conference attendees, "One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers of Iowa because I was about to run for President."

Translated from politics-speak into English, pandering to farmers gets votes. But if your claimed position is to plan some sort of energy policy for everyone else, then getting farmers' votes shouldn't determine what's the right thing to do for the nation's fuel supplies.

Posted by jez at 5:55 AM

November 1, 2010

Lands' End President discusses going the extra mile for the customer

Kathy Mance

From its beginning as a sailboat equipment company to its success in capturing the admiration and loyalty of legions of landlubbers, Lands' End has stayed true to its famous mantra, "Guaranteed.Period.®" In addition to the company's focus on quality, they have kept their eyes on their customer. In 2008 they were named to the NRFF-AMEX Top Ten for consistent excellence in customer service and retained that standing in 2009. To find out how this predominately catalog and Internet retailer continues to win accolades from consumers the world over, we caught up with Nick Coe, President of Lands' End. You'll find "quality" resonates through the answers of this top exec, who fell in love with retailing when he was intrigued by quality in "great tailoring or a perfect pair of jeans" - products he couldn't afford.

In the five years NRF Foundation and American Express have conducted the Customers' Choice survey, Lands' End has consistently been ranked in the top ten. How do you continue to delight your customers year after year?

Posted by jez at 9:29 PM

September 3, 2010

The enduring solitude of combat vets

Retired Army Special Forces Sgt. Maj. Alan Farrell
Retired Army Special Forces Sgt. Maj. Alan Farrell is one of the more interesting people in this country nowadays, a decorated veteran of the Vietnam War who teaches French at VMI, reviews films and writes poetry. Just your typical sergeant major/brigadier general with a Ph.D. in French and a fistful of other degrees.

This is a speech that he gave to vets at the Harvard Business School last Veterans' Day. I know it is long but a lot of you can't go outside anyway because of the hurricane:

--------

"Ladies and Gentlemens:

Kurt Vonnegut -- Corporal Vonnegut -- famously told an assembly like this one that his wife had begged him to "bring light into their tunnels" that night. "Can't do that," said Vonnegut, since, according to him, the audience would at once sense his duplicity, his mendacity, his insincerity... and have yet another reason for despair. I'll not likely have much light to bring into any tunnels this night, either.

The remarks I'm about to make to you I've made before... in essence at least. I dare to make them again because other veterans seem to approve. I speak mostly to veterans. I don't have much to say to them, the others, civilians, real people. These remarks, I offer you for the reaction I got from one of them, though, a prison shrink. I speak in prisons a lot. Because some of our buddies wind up in there. Because their service was a Golden Moment in a life gone sour. Because... because no one else will.
Posted by James Zellmer at 3:35 PM

June 22, 2010

"The Time We Have is Growing Short"

Paul Volcker:
If we need any further illustration of the potential threats to our own economy from uncontrolled borrowing, we have only to look to the struggle to maintain the common European currency, to rebalance the European economy, and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshaled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary.

As we look to that European experience, let’s consider our own situation. We are not a small country highly vulnerable to speculative attack. In an uncertain world, our currency and credit are well established. But there are serious questions, most immediately about the sustainability of our commitment to growing entitlement programs. Looking only a little further ahead, there are even larger questions of critical importance for those of less advanced age than I. The need to achieve a consensus for effective action against global warming, for energy independence, and for protecting the environment is not going to go away. Are we really prepared to meet those problems, and the related fiscal implications? If not, today’s concerns may soon become tomorrow’s existential crises.

I referred at the start of these remarks to my sense five years ago of intractable problems, resisting solutions. Little has happened to allay my concerns. But, of course, it is not true that our economic problems are intractable beyond our ability to react, to make the necessary adjustments to more fully realize the enormous potential for improving our well-being. Permit me a note of optimism.

A few days ago, I spent a little time in Ireland. It’s a small country, with few resources and, to put it mildly, a troubled history. In the last twenty years, it took a great leap forward, escaping from its economic lethargy and its internal conflicts. Responding to the potential of free and open markets and the stable European currency, standards of living have bounded higher, close to the general European level. Instead of emigration, there has been an influx of workers from abroad.
Posted by James Zellmer at 9:49 AM

June 18, 2010

THE VELLUVIAL MATRIX

Atul Gawande:
Half a century ago, medicine was neither costly nor effective. Since then, however, science has combatted our ignorance. It has enumerated and identified, according to the international disease-classification system, more than 13,600 diagnoses—13,600 different ways our bodies can fail. And for each one we’ve discovered beneficial remedies—remedies that can reduce suffering, extend lives, and sometimes stop a disease altogether. But those remedies now include more than six thousand drugs and four thousand medical and surgical procedures. Our job in medicine is to make sure that all of this capability is deployed, town by town, in the right way at the right time, without harm or waste of resources, for every person alive. And we’re struggling. There is no industry in the world with 13,600 different service lines to deliver.

It should be no wonder that you have not mastered the understanding of them all. No one ever will. That’s why we as doctors and scientists have become ever more finely specialized. If I can’t handle 13,600 diagnoses, well, maybe there are fifty that I can handle—or just one that I might focus on in my research. The result, however, is that we find ourselves to be specialists, worried almost exclusively about our particular niche, and not the larger question of whether we as a group are making the whole system of care better for people. I think we were fooled by penicillin. When penicillin was discovered, in 1929, it suggested that treatment of disease could be simple—an injection that could miraculously cure a breathtaking range of infectious diseases. Maybe there’d be an injection for cancer and another one for heart disease. It made us believe that discovery was the only hard part. Execution would be easy.
Posted by James Zellmer at 10:45 PM

February 5, 2010

How to Get Our Democracy Back: If You Want Change, You Have to Change Congress

Larry Lessig:
We should remember what it felt like one year ago, as the ability to recall it emotionally will pass and it is an emotional memory as much as anything else. It was a moment rare in a democracy's history. The feeling was palpable--to supporters and opponents alike--that something important had happened. America had elected, the young candidate promised, a transformational president. And wrapped in a campaign that had produced the biggest influx of new voters and small-dollar contributions in a generation, the claim seemed credible, almost intoxicating, and just in time.

Yet a year into the presidency of Barack Obama, it is already clear that this administration is an opportunity missed. Not because it is too conservative. Not because it is too liberal. But because it is too conventional. Obama has given up the rhetoric of his early campaign--a campaign that promised to "challenge the broken system in Washington" and to "fundamentally change the way Washington works." Indeed, "fundamental change" is no longer even a hint.

Instead, we are now seeing the consequences of a decision made at the most vulnerable point of Obama's campaign--just when it seemed that he might really have beaten the party's presumed nominee. For at that moment, Obama handed the architecture of his new administration over to a team that thought what America needed most was another Bill Clinton. A team chosen by the brother of one of DC's most powerful lobbyists, and a White House headed by the quintessential DC politician. A team that could envision nothing more than the ordinary politics of Washington--the kind of politics Obama had called "small." A team whose imagination--politically--is tiny.

These tiny minds--brilliant though they may be in the conventional game of DC--have given up what distinguished Obama's extraordinary campaign. Not the promise of healthcare reform or global warming legislation--Hillary Clinton had embraced both of those ideas, and every other substantive proposal that Obama advanced. Instead, the passion that Obama inspired grew from the recognition that something fundamental had gone wrong in the way our government functions, and his commitment to reform it.

For Obama once spoke for the anger that has now boiled over in even the blue state Massachusetts--that our government is corrupt; that fundamental change is needed. As he told us, both parties had allowed "lobbyists and campaign contributions to rig the system." And "unless we're willing to challenge [that] broken system...nothing else is going to change." "The reason" Obama said he was "running for president [was] to challenge that system." For "if we're not willing to take up that fight, then real change--change that will make a lasting difference in the lives of ordinary Americans--will keep getting blocked by the defenders of the status quo."
"Meet the new boss, same as the old boss"....
Posted by James Zellmer at 11:39 AM

February 2, 2010

In the Next Industrial Revolution, Atoms Are the New Bits

Chris Anderson:
The door of a dry-cleaner-size storefront in an industrial park in Wareham, Massachusetts, an hour south of Boston, might not look like a portal to the future of American manufacturing, but it is. This is the headquarters of Local Motors, the first open source car company to reach production. Step inside and the office reveals itself as a mind-blowing example of the power of micro-factories.

In June, Local Motors will officially release the Rally Fighter, a $50,000 off-road (but street-legal) racer. The design was crowdsourced, as was the selection of mostly off-the-shelf components, and the final assembly will be done by the customers themselves in local assembly centers as part of a “build experience.” Several more designs are in the pipeline, and the company says it can take a new vehicle from sketch to market in 18 months, about the time it takes Detroit to change the specs on some door trim. Each design is released under a share-friendly Creative Commons license, and customers are encouraged to enhance the designs and produce their own components that they can sell to their peers.

The Rally Fighter was prototyped in the workshop at the back of the Wareham office, but manufacturing muscle also came from Factory Five Racing, a kit-car company and Local Motors investor located just down the road. Of course, the kit-car business has been around for decades, standing as a proof of concept for how small manufacturing can work in the car industry. Kit cars combine hand-welded steel tube chassis and fiberglass bodies with stock engines and accessories. Amateurs assemble the cars at their homes, which exempts the vehicles from many regulatory restrictions (similar to home-built experimental aircraft). Factory Five has sold about 8,000 kits to date.
Posted by James Zellmer at 10:18 AM

January 7, 2010

Bill Gross Puts US On Notice over Debt Binge

Tom Petruno:
If the bond vigilantes are ready to ride again, there should be little doubt who will be leading the charge.

Bond guru Bill Gross at Pimco in Newport Beach this week has ramped up his warnings to the Obama administration and the Federal Reserve about the perils of unfettered government borrowing.

In an interview in Time magazine on Tuesday, Gross suggested that Pimco, which manages nearly $1 trillion in mostly fixed-income assets, now feels more comfortable owning German government debt than U.S. Treasury debt:

"There are a number of reasons to have doubts about Treasuries, not just because of America's sovereign risk but also from the standpoint of an over-owned currency [the dollar]. . . . At Pimco we would probably try and substitute for our Treasuries with sovereign bonds of potentially higher quality. Germany looks interesting to us. Germany has problems, but it's in a much better budget situation than the U.S. because of a constitutional amendment three months ago that forces a balanced budget in four years."
Posted by James Zellmer at 8:32 AM

January 1, 2010

Double Bubble & Built on Sand

The Financial Times - Cartoon.
Posted by James Zellmer at 11:05 AM

December 29, 2009

Neda Soltan: Person of the Year

Times of London:
Every few years a man, or a woman, whose name is often familiar to few beyond the circle of their family and friends, is ambling through a more or less anonymous life when they find themselves ambushed by history. For many of these people, their life changes forever. Frequently, tragically, it ends; leaving behind an image that haunts the world long after they themselves have gone.

Neda Soltan was such a person, a young beautiful woman who had studied philosophy, was now an aspiring singer, who found herself abruptly catapulted from the crowds of Tehran to become the face of protest against Iran’s repressive rulers; a symbol of rebellion against the fraudulent election that had just returned Mahmoud Ahmedinejad to power.

Like the nameless student who taunted that tank in Tiananmen Square, like Jan Palach, the Czech student who died after setting himself alight in Wenceslas Square in January 1969 to protest against the Soviet-led invasion of Czechoslovakia, Neda Soltan became the icon for the mutiny against Iran’s brutish regime as images of her face, and amateur footage of her murder by a sniper from the pro-government Basij militia, sprinted around the world. Like the photograph taken in South Vietnam of a bewildered young girl, the victim of a napalm attack, running naked down a road; and like the images of those skin-and-bones internees, standing semi-naked in the prison camp run by Bosnian Serb forces in Omarska in 1992, their ribs as prominent as xylophone keys, the image of Neda Soltan lying bleeding on a Tehran street has become the shorthand for the horrors of a conflict. With their beseeching eyes such images become, as the war photographer Don McCullin has pointed out, our modern versions of religious icons.
Certainly a superior choice to the Political Class bank's CEO: Goldman's Lloyd Blankein.
Posted by James Zellmer at 1:15 AM

December 16, 2009

Congress Travels, The Public Pays

Brody Mullins & TW Farnam:
The expenses racked up by U.S. lawmakers traveling here for a conference last month included one for the "control room."

Besides rooms for sleeping, the 12 members of the House of Representatives rented their hotel's fireplace-equipped presidential suite and two adjacent rooms. The hotel cleared out the beds and in their place set up a bar, a snack room and office space. The three extra rooms -- stocked with liquor, Coors beer, chips and salsa, sandwiches, Mrs. Fields cookies and York Peppermint Patties -- cost a total of about $1,500 a night. They were rented for five nights.

While in Scotland, the House members toured historic buildings. Some shopped for Scotch whisky and visited the hotel spa. They capped the trip with a dinner at one of the region's finest restaurants, paid for by the legislators, who got $118 daily stipends for meals and incidentals.

Eleven of the 12 legislators then left the five-day conference two days early.

The tour provides a glimpse of the mixture of business and pleasure involved in legislators' overseas trips, which are growing in number and mostly financed by the taxpayer. Lawmakers travel with military liaisons who carry luggage, help them through customs, escort them on sightseeing trips and stock their hotel rooms with food and liquor. Typically, spouses come along, flying free on jets operated by the Air Force. Legislative aides come too. On the ground, all travel in chauffeured vehicles.
Posted by James Zellmer at 8:27 AM

November 25, 2009

Overture

Madison is truly blessed to have such a fine facility, courtesy of Jerry Frautschi's landmark $200M+ gift. However and unfortunately, the financial spaghetti behind its birth is complicated and controversial, particularly at this moment when Overture's parent lacks liquidity to fund the project's remaining debt.

Yet, the facility is simply stunning. Have a look at these panoramic views.

Overture Hall Lobby:


MMOCA:


In an effort to preserve the pre-Overture scene, we shot panoramic images in 1999 and again, after construction in 2006.

I do have one financing suggestion. Give Goldman Sachs Lloyd Blankfein a call. After all, Goldman Sachs' record bonuses are a direct result of massive taxpayer intervention to prop up certain banks and other "too big to fail" entities such as AIG. GS is well connected at the very top of our Government.
Posted by James Zellmer at 10:06 AM

Playing with fire Forget China, the US Federal Reserve is the world's biggest currency manipulator

Andy Xie:
As US President Barack Obama glided through China, a chorus erupted in New York and Washington: the problem with the global economy is China's exchange-rate policy, and Obama's No 1 job is to slay it. It's sad that these people actually believe what they are saying: the same "logic" got the world into the current mess. In the feverish hallucination of salvation, they think that moving China's currency policy would right all wrongs.

The US Federal Reserve is the biggest currency manipulator in the world. Not only does it keep the short-term interest rate at zero through its vast purchase programme for mortgage-backed securities, it also keeps credit spreads and bond yields artificially low. Its manipulation stops money, bond and credit markets from pricing either the Fed's policy or the US economic plight. All the firepower is packed into the currency market, giving speculators a sure bet on a weaker dollar and everything else rising. Here comes the biggest carry trade ever: the Fed is promising no downside for shorting the dollar.

The US Treasury writes an annual report, judging if other countries are manipulating their exchange rates. It should look in the mirror. Even though the Fed is not directly intervening in the currency market per se, its manipulation is equivalent to pushing down the dollar by non-market means.
Posted by James Zellmer at 9:08 AM

November 19, 2009

Playing with fire Forget China, the US Federal Reserve is the world's biggest currency manipulator

Andy Xie:
As US President Barack Obama glided through China, a chorus erupted in New York and Washington: the problem with the global economy is China's exchange-rate policy, and Obama's No 1 job is to slay it. It's sad that these people actually believe what they are saying: the same "logic" got the world into the current mess. In the feverish hallucination of salvation, they think that moving China's currency policy would right all wrongs.

The US Federal Reserve is the biggest currency manipulator in the world. Not only does it keep the short-term interest rate at zero through its vast purchase programme for mortgage-backed securities, it also keeps credit spreads and bond yields artificially low. Its manipulation stops money, bond and credit markets from pricing either the Fed's policy or the US economic plight. All the firepower is packed into the currency market, giving speculators a sure bet on a weaker dollar and everything else rising. Here comes the biggest carry trade ever: the Fed is promising no downside for shorting the dollar.

The US Treasury writes an annual report, judging if other countries are manipulating their exchange rates. It should look in the mirror. Even though the Fed is not directly intervening in the currency market per se, its manipulation is equivalent to pushing down the dollar by non-market means.
Posted by James Zellmer at 7:00 PM

November 9, 2009

Fond farewell to a brilliant thinker

Stefan Stern:
The scene is Detroit, a training room at the headquarters of one of the three great US car companies. A group of corporate vice-presidents is attending a course being given by a distinguished management thinker.

“What you are telling us is great,” the VPs say, “but you are talking to the wrong level. You should be speaking to the next tier up.” The next week, working with more senior managers, he hears the same thing. “This is great, but you are talking to the wrong level. You should be speaking with the chief executive.”

The week after that, our thinker finally gets in to see the boss. “This is great,” the CEO says, “but you should be speaking with my subordinates – I’d need their support in order to do it.”

This is a true story, as told by Russ Ackoff, the management thinker in question, who died a few days ago, aged 90. Two key Ackoffian ideas emerge from this tale. First, do not wait for others in the business to start changing things. Go and do it yourself. But second, and more important: never forget that everyone in the business is interconnected, that they are all operating as part of a system, that tinkering with one part of the company is never really enough, and may even make things worse. You need to see the business as a whole, as a complete system, if you want to make lasting improvements to it.
Posted by James Zellmer at 10:13 PM

October 27, 2009

The Best Summary (to date) of Taxpayer Funded Events that Lead to Goldman Sachs' Survival and Recent Large Payouts

Joe Nocera:
A few weeks ago, shortly after Goldman Sachs reported its latest blowout quarter, the firm’s chief executive, Lloyd Blankfein, spoke at a Fortune magazine breakfast.

In normal times, Mr. Blankfein might have been forgiven for bragging a bit about the just-reported quarter — over $3 billion in profit on $12 billion in revenue. It had generated some $6 billion just in one division: fixed income. It had more than $160 billion in cash or cash equivalents on its balance sheet. And of course it had long since repaid, with interest, the $10 billion it had accepted from the Treasury Department during the darkest days of the crisis.

But of course those weren’t the numbers the media and the public had focused on in the wake of Goldman’s earnings. Instead, people were fixated on the $5.3 billion the firm had set aside for its executives’ year-end bonuses. Added to first and second quarter set-asides of $4.6 billion and $6.6 billion, the firm had put aside $16 billion so far this year for employee bonuses. Nearly 50 percent of the firm’s revenue was going toward compensation. And there was still one more quarter to go!

Was it fair, commentators kept asking, that barely a year after the taxpayers had essentially saved the financial system, this firm that took government capital should now be paying multimillion-dollar bonuses? Was it right? Which, not surprisingly, is what Fortune’s managing editor, Andrew Serwer, asked Mr. Blankfein within minutes of taking the stage.

In private, Goldman executives are scornful of the sentiment behind this question. Their view, in essence, is that they should be applauded for being able to pay such big bonuses, because it means their business is successful. People who want them to pay less, they believe, want them to fail.

But Mr. Blankfein, a charming, funny man who has been Goldman’s boss since 2006, is far too smart to say that out loud. Nonetheless, what he did say was revealing. Treasury’s original decision to use the Troubled Asset Relief Program to shore up the banks’ capital, Mr. Blankfein said, “was a sensible thing to do at the time.”
Posted by James Zellmer at 9:45 AM

July 6, 2009

Change You Won't Believe

Ed Wallace:
I don’t mean to slight Michael Jackson’s once-formidable talent, nor do I dismiss his troubled personal life. But have we become so frivolous as a nation that any entertainer’s tragic and untimely death warranted more news coverage — day after day after day — than the real issues that will confront each of us now and in the all-too-near future? Apparently so. Most of us know more about the last two days of Jackson’s life than we know about the negotiations in which Washington forced GM and Chrysler into bankruptcy. You certainly know more about Jackson’s death that the names on the list of the 25 individuals who destroyed the world’s financial system. Of course, none of the 25 has died; they still work at the same jobs.

Let Them Eat Cowboys?

Not to be overly dramatic, but this should remind any thinking person of the declining days of the Roman Empire. Its citizens refused to deal with the decay and legitimate problems of their cities and empire, instead demanding more and more coliseums be built for their personal entertainment.

Well, we do have a new billion-dollar stadium for the Cowboys. And it has certainly received far more press coverage than the recently passed House Bill that proponents claim will save the planet from global warming. Yes, forces are gathering to reverse our 100-year history of citizens’ free travel to work and for leisure – and of that freedom’s benefits to our economy.
Posted by James Zellmer at 2:14 PM

May 13, 2009

America's Triple A Credit Rating at Risk

David Walker:
Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.

That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding.

Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar.

The US, despite the downturn, has the resources, expertise and resilience to restore its economy and meet its obligations. Moreover, many of the trillions of dollars recently funnelled into the financial system will hopefully rescue it and stimulate our economy.
Posted by James Zellmer at 3:43 PM

May 1, 2009

The Political Elite.....

Woody Hochswender:
That is why it was all the more bewildering to have Sen. Dodd come to the gymnasium of the Cornwall Consolidated School on a beautiful spring afternoon for two hours and somehow manage not to utter a single word about the controversies surrounding his role as chairman of the Senate Banking Committee.

These are not exactly state secrets. There was the widely reported sweetheart or VIP mortgage loan from Countrywide Financial to the senator as well as the six-figure campaign contributions from the American Insurance Group whose executives, according to language Sen. Dodd wrote into a bailout bill, were entitled to large bonuses paid for with our tax dollars.

The organizer and moderator of Saturday's forum, Harriet Dorsen, a member of the local Democratic Party committee, told the Lakeville Journal newspaper last week, "I think there are going to be a lot of tough questions."

There weren't. They were all softballs. Instead of the usual give and take, with citizens speaking their minds, all the questions had to be written out in advance on index cards and then submitted to the moderators. A contingent from the Lakeville Journal (including my wife, Cynthia, who is the newspaper's executive editor) was on hand, armed with probing questions.
Posted by James Zellmer at 8:48 AM

April 9, 2009

Pirates and the CIA: What would Thomas Jefferson have done?

Ken Silverstein:
“It was the sixth such attack this week and one of 66 this year by Somali pirates, a collection of shrewd businessmen and daring opportunists who have pulled off a series of spectacular seizures using high- and low-tech gear, from satellite phones and rocket-propelled grenades to battered wooden skiffs and rickety ladders,” the Washington Post reported today about the attack on a U.S.-operated container ship. “In the past year, their booty has included the MV Faina, a Ukrainian ship loaded with tanks and antiaircraft guns, and the MV Sirius Star, a 300,000-ton, 1,000-foot-long Saudi oil tanker that is the largest ship to be seized in history.”

For months, a former senior CIA officer has been telling me that pirate activity off Somalia was a problem that needed to be aggressively dealt with. By chance, I had a meeting with him yesterday as the Maersk Alabama hijacking was unfolding. Here’s what he had to say (he updated his remarks today):

The American response to date has been incredibly naïve and woefully ineffective. Now, predictably, you have an American taken hostage. All of which should have been prevented. You’ve got a failed state in Somalia and pirates operating in an area of ocean that is larger than the state of Texas but we’ve been trying to deal with this from the ocean side, by sending the navy and with a limited application of technology, such as satellites and drones. We can’t afford to patrol that big a piece of the ocean; it’s too expensive to leave a naval task force out there.
Posted by James Zellmer at 11:31 PM

March 31, 2009

How Bailouts Can Butcher Capitlism

Rick Newman:
One unhappy hallmark of the Great Recession is a dramatic spike in financial distress. Moody's predicts that the default rate on corporate debt--which helps foretell bankruptcies--will be three times higher this year than in 2008. Home foreclosures are already at record highs, and going higher. Defaults on credit cards and other consumer debt will crest right behind mortgages.

The Obama administration is on the case, bailing out banks and homeowners and aiding dozens of industries either directly, through a financial-rescue scheme that could top $2 trillion, or indirectly, through the $787 billion stimulus bill. Automakers, furniture companies, real estate developers, and even porn magnates have their hands out.

[See a tally of the bailout efforts so far.]

Those efforts ought to help soften a sharp recession. But the unprecedented aid to the private sector may also unleash new problems, the way antibiotics have generated stronger strains of bacteria. "There's something fundamental about the need for failure," says Syd Finkelstein, a professor at Dartmouth's Tuck School of Business and author of Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You. "We're tinkering with the genetic DNA of a capitalist society."
Posted by James Zellmer at 11:31 AM

March 7, 2009

The Fed's moral hazard maximising strategy

Willem Buiter:
The reports on the evidence given by the Vice Chairman of the Federal Reserve Board, Don Kohn, to the Senate Banking Committee about the Fed's role in the government's rescue of AIG, have left me speechless and weak with rage. AIG wrote CDS, that is, it sold credit default swaps that provided the buyer of the CDS (including some of the world's largest banks) with insurance against default on bonds and other credit instruments they held. Of course the insurance was only as good as the creditworthiness of the party writing the CDS. When it was uncovered during the late summer of 2008, that AIG had nurtured a little rogue, unregulated investment banking unit in its bosom, and that the level of the credit risk it had insured was well beyond its means, the AIG counterparties, that is, the buyers of the CDS, were caught with their pants down.

Instead of saying, "how sad, too bad" to these counterparties, the Fed decided (in the words of the Wall Street Journal), to unwind ".. some AIG contracts that were weighing down the insurance giant by paying off the trading partners at the full value they expected to realize in the long term, even though short-term values had tumbled."

An LSE colleague has shown me an earlier report in the Wall Street Journal (in December 2008), citing a confidential document and people familiar with the matter, which estimated that about $19 billion of the payouts went to two dozen counterparties between the government bailout of AIG in mid-September and early November 2008. According to this Wall Street Journal report, nearly three-quarters was reported to have gone to a group of banks, including Société Générale SA ($4.8 billion), Goldman Sachs Group ($2.9 billion), Deutsche Bank AG ($2.9 billion), Credit Agricole SA's Calyon investment-banking unit ($1.8 billion), and Merrill Lynch & Co. ($1.3 billion). With the US government (Fed, FDIC and Treasury) now at risk for about $160 bn in AIG, a mere $19 bn may seem like small beer. But it is outrageous. It is unfair, deeply distortionary and unnecessary for the maintenance of financial stability.

Don Kohn ackowledged that the aid contributed to "moral hazard" - incentives for future reckless lending by AIG's counterparties - it "will reduce their incentive to be careful in the future." But, here as in all instances were the weak-kneed guardians of the common wealth (or what's left of it) cave in to the special pleadings of the captains of finance, this bail-out of the undeserving was painted as the unavoidable price of maintaining, defending or restoring financial stability. What would have happened if the Fed had decided to leave the AIG counterparties with their near-worthless CDS protection?

The organised lobbying bulldozer of Wall Street sweeps the floor with the US tax payer anytime. The modalities of the bailout by the Fed of the AIG counterparties is a textbook example of the logic of collective action at work. It is scandalous: unfair, inefficient, expensive and unnecessary.
Posted by James Zellmer at 6:33 PM

February 24, 2009

A Scion Drives Toyota Back to Basics

Norihiko Shirouzu & John Murphy:
Toyota Motor Corp.'s incoming president, Akio Toyoda, has a sobering message for the giant company founded by his grandfather: It has gotten too fancy for its own good.

On Monday, three top executives who helped lead Toyota the past four years -- including Mitsuo Kinoshita, one of the primary architects of the company's global expansion -- announced their retirement. The departures clear the way for Mr. Toyoda's planned makeover of the world's biggest auto maker.

He is expected to focus, most of all, on abandoning kakushin, or "revolutionary change," current president Katsuaki Watanabe's term for changing the way Toyota designed its cars and factories. It spawned technological advances, but led to cars that were often costlier to produce.

The 52-year-old Mr. Toyoda is also working to fix a pricing strategy that put the company at odds with some U.S. dealers, who felt its cars were getting too expensive, according to people familiar with the situation.
Posted by James Zellmer at 5:57 PM

November 12, 2008

The End of Wall Street's Boom

Michael Lewis:

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital--to decide who should get it and who should not. Believe me when I tell you that I hadn't the first clue.

I'd never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous--which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people's money, would be expelled from finance.

When I sat down to write my account of the experience in 1989--Liar's Poker, it was called--it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Posted by jez at 9:18 AM

September 22, 2008

"The Era of Leverage is Over"

Gillian Tett:

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.

Posted by jez at 6:13 PM

April 11, 2008

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.

Posted by jez at 6:46 PM

November 18, 2007

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.

C-SPAN Video.

Posted by James Zellmer at 12:10 AM

March 18, 2007

Airlines Learn to Fly on a Wing and an Apology

Jeff Bailey:
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.
Posted by James Zellmer at 9:28 PM

February 10, 2007

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.
Posted by James Zellmer at 7:10 PM

April 24, 2006

Microjets: Eclipse 500 Certification

Joseph Anselmo:
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.
Posted by James Zellmer at 10:21 AM

January 12, 2006

It's Not The Technology That Raises Productivity, But How it's Used

Hal R. Varian:
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.
Posted by James Zellmer at 8:22 PM

September 15, 2005

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.

Posted by James Zellmer at 10:30 PM