Friday, November 6, 2009
The Importance of Discovering Your Plan B - John W.Mullins & Randy Komisar
www.changethis.com/62.05.PlanB/download
Wednesday, October 21, 2009
M-Commerce's Big Moment
http://www.businessweek.com/technology/content/oct2009/tc20091011_278825.htm
Thursday, August 13, 2009
Fed says economy is levelling out
http://www.reuters.com/article/topNews/idUSTRE57B4DF20090813?feedType=RSS&feedName=topNews
Thursday, March 26, 2009
Is the Economy Starting to Recover? Or Just Less Bad?
By Justin Fox Wednesday, Mar. 25, 2009TIME
Nope, no real chance of that. But a spate of somewhat better-than-expected economic numbers this week and last has forecasters declaring that the pace of decline seems to have slowed. Such a slowing has to happen before things start to improve. Which could mean that we're seeing the beginning of the beginning of the end of this nasty recession.
Then again, we might not be — and premature optimists have been punished several times already during this downturn. So the people who make a living calling the twists and turns of the economy have become almost comically cautious about declaring an inflection point. Some examples:
Wednesday's stronger-than-expected data on durable-goods orders (up 3.4% in February, but from a January number that had been revised downward) was a "slim silver lining on the horizon," UniCredit Research economist Harm Bandholz wrote in a note to clients. But, he was quick to point out, "investment and exports continue to plummet." (Read "How to Know When the Economy Is Turning Up.")
"The unexpected increase in orders in February marks a moderation relative to the incredibly weak data in January," wrote Michelle Meyer of Barclays Capital in response to the same durable-goods data. "However, we do not interpret today's report as a signal of the end of the downturn in manufacturing."
"We are prepared to hazard the view that the post-Lehman meltdown is now over and the market is stabilizing" is how Ian Shepherdson of High-Frequency Economics greeted Wednesday's reported rise in new home sales. "That's not the same as a recovery, but it is better than continued declines in sales." (See which businesses are bucking the recession.)
"While these developments provide some support for our expectation that housing will stabilize in coming months," declared Kent Michaels of Goldman Sachs on Tuesday after running through other positive real estate data, "they fall well short of what would normally signal recovery in the sector."
There are several reasons for all this caution among economists. One is that the numbers aren't all that positive, and a few good days could easily give way to a disappointing run. Also, there's a lot of noise in the data, and seeming turning points are sometimes just the product of flawed measurement and random chance.
Another issue is that while there are signs that housing and consumer spending in the U.S. are no longer in the free fall of a few months ago, other parts of the economy are still in sharp decline. To quote Shepherdson again: "The epicenter of the recession has shifted from the consumer to the corporate sector." And it's possible that corporate cutbacks could lead to a relapse among consumers. "The main downside risk probably lies in sharper-than-expected multiplier effects via the dramatic deterioration in the labor market," warned Goldman Sachs economist Jan Hatzius on Monday after predicting that consumer spending would rise for the rest of the year. "Both the weekly and monthly labor market indicators still show an accelerating employment contraction."
In other words, nobody really knows if we've hit a turning point yet. But it is at least ever so slightly encouraging that they're starting to talk about one.
Nope, no real chance of that. But a spate of somewhat better-than-expected economic numbers this week and last has forecasters declaring that the pace of decline seems to have slowed. Such a slowing has to happen before things start to improve. Which could mean that we're seeing the beginning of the beginning of the end of this nasty recession.
Then again, we might not be — and premature optimists have been punished several times already during this downturn. So the people who make a living calling the twists and turns of the economy have become almost comically cautious about declaring an inflection point. Some examples:
Wednesday's stronger-than-expected data on durable-goods orders (up 3.4% in February, but from a January number that had been revised downward) was a "slim silver lining on the horizon," UniCredit Research economist Harm Bandholz wrote in a note to clients. But, he was quick to point out, "investment and exports continue to plummet." (Read "How to Know When the Economy Is Turning Up.")
"The unexpected increase in orders in February marks a moderation relative to the incredibly weak data in January," wrote Michelle Meyer of Barclays Capital in response to the same durable-goods data. "However, we do not interpret today's report as a signal of the end of the downturn in manufacturing."
"We are prepared to hazard the view that the post-Lehman meltdown is now over and the market is stabilizing" is how Ian Shepherdson of High-Frequency Economics greeted Wednesday's reported rise in new home sales. "That's not the same as a recovery, but it is better than continued declines in sales." (See which businesses are bucking the recession.)
"While these developments provide some support for our expectation that housing will stabilize in coming months," declared Kent Michaels of Goldman Sachs on Tuesday after running through other positive real estate data, "they fall well short of what would normally signal recovery in the sector."
There are several reasons for all this caution among economists. One is that the numbers aren't all that positive, and a few good days could easily give way to a disappointing run. Also, there's a lot of noise in the data, and seeming turning points are sometimes just the product of flawed measurement and random chance.
Another issue is that while there are signs that housing and consumer spending in the U.S. are no longer in the free fall of a few months ago, other parts of the economy are still in sharp decline. To quote Shepherdson again: "The epicenter of the recession has shifted from the consumer to the corporate sector." And it's possible that corporate cutbacks could lead to a relapse among consumers. "The main downside risk probably lies in sharper-than-expected multiplier effects via the dramatic deterioration in the labor market," warned Goldman Sachs economist Jan Hatzius on Monday after predicting that consumer spending would rise for the rest of the year. "Both the weekly and monthly labor market indicators still show an accelerating employment contraction."
In other words, nobody really knows if we've hit a turning point yet. But it is at least ever so slightly encouraging that they're starting to talk about one.
IBM Cuts Jobs as It Seeks Stimulus Money
A plan to send more work abroad as the company angles for pieces of the high-speed rail and health-care handouts is stirring controversy
By Moira Herbst
Reports of deep job cuts at International Business Machines (IBM) come at a potentially delicate time for the company—just as it is hoping to secure money from the federal stimulus package. The company will lay off as many as 5,000 U.S. workers in its Global Business Services unit, transferring some of the work they performed to India, according to media reports.
IBM spokesman Mike Fay declined to confirm or to comment on any job-cut plans, which were reported on Mar. 25 by The Wall Street Journal (NWS) and Bloomberg News. The cuts will affect mainly information technology and consulting work in such areas as customer relations management and supply chain management, says Lee Conrad, national coordinator of Alliance@IBM, a group that is seeking union representation at IBM and is allied with the Communications Workers of America Local 1701.
Any job transfers IBM may make to India would occur at a sensitive time, as the recession deepens and as the U.S. unemployment rate climbs. Moreover, the company would be cutting high-skill positions domestically as it and others jockey for new business from the $787 billion stimulus package Congress enacted in February—primarily to help create U.S. jobs.
Workers Ignited
The news—even without IBM saying anything—provoked criticism from worker groups. "It's all about greed," Conrad said Wednesday. "They're moving work offshore to pay lower wages and lower taxes. IBM shouldn't have their hands on stimulus money if they're offshoring work." Alliance@IBM has been trying to organize IBM employees since 1999. It has 350 dues-paying members at IBM and 5,500 supporters, workers who have registered on the group's Web site but do not pay the $10 monthly dues.
Big Blue's efforts to trim costs by sending work overseas are not new. For several years the company has been working to improve its efficiency through a combination of computer automation, business-process optimization, and job transfers from expensive locations to offshore. Chief Executive Sam Palmisano has said those plans are part of an effort to make IBM a "globally integrated enterprise." Since 2003, the Armonk (N.Y.) company has hired approximately 90,000 people in India and more than 5,000 in Brazil to do IT and business-process outsourcing (BPO) services work.
In the meantime, the company has trimmed its U.S. workforce. According to its annual report, IBM had 398,000 workers worldwide at the end of 2008, up from 386,558 at the end of 2007. At the same time, U.S. employment has declined, to 115,000 at the end of 2008, compared with 121,000 a year earlier.
Blaming the Economy
Currently, 29% of IBM's workforce is in the U.S., down from 35% in 2006. The fact that IBM has built up large workforces in such low-cost countries as India allows it to shift work abroad more easily, says Ron Hira, assistant professor of public policy at the Rochester Institute of Technology. He says the current economic climate allows IBM to position itself as one of many firms squeezed by the recession and forced into layoffs. IBM "can now blame the layoffs on the economy, masking the reality that it is offshoring high-wage, high-tech jobs to low-cost countries," says Hira.
Martin Kenney, a professor of political economy at the University of California, Davis, says IBM is likely facing new financial pressures as large banks and financial firms—some of its largest clients—continue to struggle. "IBM is looking at its cost structure and making rational business decisions on what to do," Kenney says. "In a recession you start to get rid of high-cost people where you can."
But while offshoring has been on the rise for decades, the economics of the recession are creating a new political climate that makes such moves more controversial. That's because, as IBM and others continue global restructuring, they're working to secure pieces of the $787 billion stimulus measure enacted in February.
IBM is seeking a share of the $8 billion the U.S. plans to spend on high-speed rail and part of the $20 billion in the stimulus plan to digitize the U.S. health-care system. Palmisano was one of 13 executives who met with President Barack Obama in January in an appearance aimed at pressuring the House of Representatives to pass the economic stimulus bill. He joined the CEOs of Xerox (XRX), Motorola (MOT), and Google (GOOG).
Kenney says the political climate may make IBM's global restructuring touch raw nerves. Some economists have estimated that taxpayers are paying an average of $225,000 for each job created in the economic stimulus package. Says Kenney: "Taxpayers are saying, 'I don't want to give them money if they're moving jobs offshore.'"
Herbst is a reporter for BusinessWeek.com. With Steve Hamm in New York
By Moira Herbst
Reports of deep job cuts at International Business Machines (IBM) come at a potentially delicate time for the company—just as it is hoping to secure money from the federal stimulus package. The company will lay off as many as 5,000 U.S. workers in its Global Business Services unit, transferring some of the work they performed to India, according to media reports.
IBM spokesman Mike Fay declined to confirm or to comment on any job-cut plans, which were reported on Mar. 25 by The Wall Street Journal (NWS) and Bloomberg News. The cuts will affect mainly information technology and consulting work in such areas as customer relations management and supply chain management, says Lee Conrad, national coordinator of Alliance@IBM, a group that is seeking union representation at IBM and is allied with the Communications Workers of America Local 1701.
Any job transfers IBM may make to India would occur at a sensitive time, as the recession deepens and as the U.S. unemployment rate climbs. Moreover, the company would be cutting high-skill positions domestically as it and others jockey for new business from the $787 billion stimulus package Congress enacted in February—primarily to help create U.S. jobs.
Workers Ignited
The news—even without IBM saying anything—provoked criticism from worker groups. "It's all about greed," Conrad said Wednesday. "They're moving work offshore to pay lower wages and lower taxes. IBM shouldn't have their hands on stimulus money if they're offshoring work." Alliance@IBM has been trying to organize IBM employees since 1999. It has 350 dues-paying members at IBM and 5,500 supporters, workers who have registered on the group's Web site but do not pay the $10 monthly dues.
Big Blue's efforts to trim costs by sending work overseas are not new. For several years the company has been working to improve its efficiency through a combination of computer automation, business-process optimization, and job transfers from expensive locations to offshore. Chief Executive Sam Palmisano has said those plans are part of an effort to make IBM a "globally integrated enterprise." Since 2003, the Armonk (N.Y.) company has hired approximately 90,000 people in India and more than 5,000 in Brazil to do IT and business-process outsourcing (BPO) services work.
In the meantime, the company has trimmed its U.S. workforce. According to its annual report, IBM had 398,000 workers worldwide at the end of 2008, up from 386,558 at the end of 2007. At the same time, U.S. employment has declined, to 115,000 at the end of 2008, compared with 121,000 a year earlier.
Blaming the Economy
Currently, 29% of IBM's workforce is in the U.S., down from 35% in 2006. The fact that IBM has built up large workforces in such low-cost countries as India allows it to shift work abroad more easily, says Ron Hira, assistant professor of public policy at the Rochester Institute of Technology. He says the current economic climate allows IBM to position itself as one of many firms squeezed by the recession and forced into layoffs. IBM "can now blame the layoffs on the economy, masking the reality that it is offshoring high-wage, high-tech jobs to low-cost countries," says Hira.
Martin Kenney, a professor of political economy at the University of California, Davis, says IBM is likely facing new financial pressures as large banks and financial firms—some of its largest clients—continue to struggle. "IBM is looking at its cost structure and making rational business decisions on what to do," Kenney says. "In a recession you start to get rid of high-cost people where you can."
But while offshoring has been on the rise for decades, the economics of the recession are creating a new political climate that makes such moves more controversial. That's because, as IBM and others continue global restructuring, they're working to secure pieces of the $787 billion stimulus measure enacted in February.
IBM is seeking a share of the $8 billion the U.S. plans to spend on high-speed rail and part of the $20 billion in the stimulus plan to digitize the U.S. health-care system. Palmisano was one of 13 executives who met with President Barack Obama in January in an appearance aimed at pressuring the House of Representatives to pass the economic stimulus bill. He joined the CEOs of Xerox (XRX), Motorola (MOT), and Google (GOOG).
Kenney says the political climate may make IBM's global restructuring touch raw nerves. Some economists have estimated that taxpayers are paying an average of $225,000 for each job created in the economic stimulus package. Says Kenney: "Taxpayers are saying, 'I don't want to give them money if they're moving jobs offshore.'"
Herbst is a reporter for BusinessWeek.com. With Steve Hamm in New York
This Market Rally May Be for Real
Better policy and a shrinking trade deficit, in addition to clues from history, argue for muted optimism
By Michael Mandel
Predicting the stock market is a dicey game. Back in October 2008, when the Standard & Poor's 500-stock index was at 940, I announced on my blog Economics Unbound that I was moving some money back into equities. At the time, I wrote: "Even if the market and the economy keep going down for a while (including today!), this strikes me as a good time to invest."
After that ill-fated post, the market went into a tailspin, hitting a closing low of 677 on Mar. 9. Stock prices, adjusted for inflation, fell back to 1995 levels, wiping out almost 15 years of gains. Many investors wondered why they even bothered.
But now, with stock prices up 20% since the low, I'm ready to take another shot at calling the bottom. The reasons for muted optimism: better policy, small signs of economic revival, and a sense that we already have absorbed a punch of historic proportions. The downside: stubbornly high unemployment.
not as vulnerable
What are the arguments that this rally will not fizzle out soon? Since the low point, the Federal Reserve and the Treasury have unveiled plans to pour as much as $2 trillion into the financial markets. That's a lot even in an economy as big as America's. "I don't think anyone is doing backflips and saying 'mission accomplished,' " says Ethan Harris, co-head of U.S. economics for Barclays Capital (BCS). "But the basic difference is that policy has entered in full force."
Meanwhile, the economy has shown tentative signs of coming back to life. For example, on Mar. 25, the Census Bureau announced that new orders for durable goods, such as computers, rose by 3.4% in February, the first gain in seven months. Equally important, the trade deficit in January narrowed to an annual rate of $430 billion, or 3% of gross domestic product. That's down from 5% a year ago. As the trade deficit shrinks, the U.S. has to borrow less from China and elsewhere to finance imports. That, in turn, means America's financial markets become less vulnerable to turmoil in other parts of the world.
History also offers clues about the future. The positive news: The average financial crisis has resulted in a 55% real drop in stock prices, according to economists Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard University. If U.S. stock prices stopped falling now, that's almost exactly what our decline would be, putting us in line with experience. The bad news from history: The U.S. equity slide is only 17 months old, while most equity downturns triggered by financial crises last three years or more. "I don't think we can take too much encouragement in the fact the S&P 500 reached the typical fall of 55% so quickly," Rogoff says.
what could go wrong
Plenty of things could still go wrong. The sudden insolvency of a few governments in Eastern Europe or elsewhere could snuff out investor optimism. Joblessness in the U.S. poses a challenge, too. According to Reinhart and Rogoff, the typical financial crisis pushes up unemployment by some seven percentage points over five years. If the U.S. follows that pattern this time, the jobless rate would rise until 2012, eventually reaching 12%. With so many people out of work, companies would struggle to make good profits.
For sure, stocks could suffer another downward lurch. But despite the collapse that lies behind us and the undeniable problems ahead, this might be the moment when the market begins its next sustained climb.
Mandel is chief economist for BusinessWeek.
By Michael Mandel
Predicting the stock market is a dicey game. Back in October 2008, when the Standard & Poor's 500-stock index was at 940, I announced on my blog Economics Unbound that I was moving some money back into equities. At the time, I wrote: "Even if the market and the economy keep going down for a while (including today!), this strikes me as a good time to invest."
After that ill-fated post, the market went into a tailspin, hitting a closing low of 677 on Mar. 9. Stock prices, adjusted for inflation, fell back to 1995 levels, wiping out almost 15 years of gains. Many investors wondered why they even bothered.
But now, with stock prices up 20% since the low, I'm ready to take another shot at calling the bottom. The reasons for muted optimism: better policy, small signs of economic revival, and a sense that we already have absorbed a punch of historic proportions. The downside: stubbornly high unemployment.
not as vulnerable
What are the arguments that this rally will not fizzle out soon? Since the low point, the Federal Reserve and the Treasury have unveiled plans to pour as much as $2 trillion into the financial markets. That's a lot even in an economy as big as America's. "I don't think anyone is doing backflips and saying 'mission accomplished,' " says Ethan Harris, co-head of U.S. economics for Barclays Capital (BCS). "But the basic difference is that policy has entered in full force."
Meanwhile, the economy has shown tentative signs of coming back to life. For example, on Mar. 25, the Census Bureau announced that new orders for durable goods, such as computers, rose by 3.4% in February, the first gain in seven months. Equally important, the trade deficit in January narrowed to an annual rate of $430 billion, or 3% of gross domestic product. That's down from 5% a year ago. As the trade deficit shrinks, the U.S. has to borrow less from China and elsewhere to finance imports. That, in turn, means America's financial markets become less vulnerable to turmoil in other parts of the world.
History also offers clues about the future. The positive news: The average financial crisis has resulted in a 55% real drop in stock prices, according to economists Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard University. If U.S. stock prices stopped falling now, that's almost exactly what our decline would be, putting us in line with experience. The bad news from history: The U.S. equity slide is only 17 months old, while most equity downturns triggered by financial crises last three years or more. "I don't think we can take too much encouragement in the fact the S&P 500 reached the typical fall of 55% so quickly," Rogoff says.
what could go wrong
Plenty of things could still go wrong. The sudden insolvency of a few governments in Eastern Europe or elsewhere could snuff out investor optimism. Joblessness in the U.S. poses a challenge, too. According to Reinhart and Rogoff, the typical financial crisis pushes up unemployment by some seven percentage points over five years. If the U.S. follows that pattern this time, the jobless rate would rise until 2012, eventually reaching 12%. With so many people out of work, companies would struggle to make good profits.
For sure, stocks could suffer another downward lurch. But despite the collapse that lies behind us and the undeniable problems ahead, this might be the moment when the market begins its next sustained climb.
Mandel is chief economist for BusinessWeek.
Tuesday, March 24, 2009
Are We Home Alone?
By THOMAS L. FRIEDMAN Published: March 21, 2009
I ran into an Indian businessman friend last week and he said something to me that really struck a chord: “This is the first time I’ve ever visited the United States when I feel like you’re acting like an immature democracy.”
You know what he meant: We’re in a once-a-century financial crisis, and yet we’ve actually descended into politics worse than usual. There don’t seem to be any adults at the top — nobody acting larger than the moment, nobody being impelled by anything deeper than the last news cycle. Instead, Congress is slapping together punitive tax laws overnight like some Banana Republic, our president is getting in trouble cracking jokes on Jay Leno comparing his bowling skills to a Special Olympian, and the opposition party is behaving as if its only priority is to deflate President Obama’s popularity.
I saw Eric Cantor, a Republican House leader, on CNBC the other day, and the entire interview consisted of him trying to exploit the A.I.G. situation for partisan gain without one constructive thought. I just kept staring at him and thinking: “Do you not have kids? Do you not have a pension that you’re worried about? Do you live in some gated community where all the banks will be O.K., even if our biggest banks go under? Do you think your party automatically wins if the country loses? What are you thinking?”
If you want to guarantee that America becomes a mediocre nation, then just keep vilifying every public figure struggling to find a way out of this crisis who stumbles once — like Treasury Secretary Timothy Geithner or A.I.G.’s $1-a-year fill-in C.E.O., Ed Liddy — and you’ll ensure that no capable person enlists in government. You will ensure that every bank that has taken public money will try to get rid of it as fast it can, so as not to come under scrutiny, even though that would weaken their balance sheets and make them less able to lend money. And you will ensure that we’ll never get out of this banking crisis, because the solution depends on getting private money funds to team up with the government to buy up toxic assets — and fund managers are growing terrified of any collaboration with government.
President Obama missed a huge teaching opportunity with A.I.G. Those bonuses were an outrage. The public’s anger was justified. But rather than fanning those flames and letting Congress run riot, the president should have said: “I’ll handle this.”
He should have gone on national TV and had the fireside chat with the country that is long overdue. That’s a talk where he lays out exactly how deep the crisis we are in is, exactly how much sacrifice we’re all going to have to make to get out of it, and then calls on those A.I.G. brokers — and everyone else who, in our rush to heal our banking system, may have gotten bonuses they did not deserve — and tells them that their president is asking them to return their bonuses “for the sake of the country.”
Had Mr. Obama given A.I.G.’s American brokers a reputation to live up to, a great national mission to join, I’d bet anything we’d have gotten most of our money back voluntarily. Inspiring conduct has so much more of an impact than coercing it. And it would have elevated the president to where he belongs — above the angry gaggle in Congress.
“There is nothing more powerful than inspirational leadership that unleashes principled behavior for a great cause,” said Dov Seidman, the C.E.O. of LRN, which helps companies build ethical cultures, and the author of the book “How.” What makes a company or a government “sustainable,” he added, is not when it adds more coercive rules and regulations to control behaviors. “It is when its employees or citizens are propelled by values and principles to do the right things, no matter how difficult the situation,” said Seidman. “Laws tell you what you can do. Values inspire in you what you should do. It’s a leader’s job to inspire in us those values.”
Right now we have an absence of inspirational leadership. From business we hear about institutions too big to fail — no matter how reckless. From bankers we hear about contracts too sacred to break — no matter how inappropriate. And from our immature elected officials we hear about how it was all “the other guy’s fault.” I’ve never talked to more people in one week who told me, “You know, I listen to the news, and I get really depressed.”
Well, help may finally be on the way: one reason we’ve been sidetracked talking about bonuses is because the big issue — the real issue — the president’s comprehensive plan to remove the toxic assets from our ailing banks, which is the key to our economic recovery, has taken a long time to hammer out. So all kinds of lesser issues and clowns have ballooned in importance and only confused people in the vacuum. Hopefully, that plan will be out by Monday, and hopefully the president will pull the country together behind it, and hopefully the lawmakers who have to approve it will remember that this is not a time for politics as usual — and that our country, alas, is not too big to fail. Hopefully ...
A version of this article appeared in print on March 22, 2009, on page WK8 of the New York edition.
I ran into an Indian businessman friend last week and he said something to me that really struck a chord: “This is the first time I’ve ever visited the United States when I feel like you’re acting like an immature democracy.”
You know what he meant: We’re in a once-a-century financial crisis, and yet we’ve actually descended into politics worse than usual. There don’t seem to be any adults at the top — nobody acting larger than the moment, nobody being impelled by anything deeper than the last news cycle. Instead, Congress is slapping together punitive tax laws overnight like some Banana Republic, our president is getting in trouble cracking jokes on Jay Leno comparing his bowling skills to a Special Olympian, and the opposition party is behaving as if its only priority is to deflate President Obama’s popularity.
I saw Eric Cantor, a Republican House leader, on CNBC the other day, and the entire interview consisted of him trying to exploit the A.I.G. situation for partisan gain without one constructive thought. I just kept staring at him and thinking: “Do you not have kids? Do you not have a pension that you’re worried about? Do you live in some gated community where all the banks will be O.K., even if our biggest banks go under? Do you think your party automatically wins if the country loses? What are you thinking?”
If you want to guarantee that America becomes a mediocre nation, then just keep vilifying every public figure struggling to find a way out of this crisis who stumbles once — like Treasury Secretary Timothy Geithner or A.I.G.’s $1-a-year fill-in C.E.O., Ed Liddy — and you’ll ensure that no capable person enlists in government. You will ensure that every bank that has taken public money will try to get rid of it as fast it can, so as not to come under scrutiny, even though that would weaken their balance sheets and make them less able to lend money. And you will ensure that we’ll never get out of this banking crisis, because the solution depends on getting private money funds to team up with the government to buy up toxic assets — and fund managers are growing terrified of any collaboration with government.
President Obama missed a huge teaching opportunity with A.I.G. Those bonuses were an outrage. The public’s anger was justified. But rather than fanning those flames and letting Congress run riot, the president should have said: “I’ll handle this.”
He should have gone on national TV and had the fireside chat with the country that is long overdue. That’s a talk where he lays out exactly how deep the crisis we are in is, exactly how much sacrifice we’re all going to have to make to get out of it, and then calls on those A.I.G. brokers — and everyone else who, in our rush to heal our banking system, may have gotten bonuses they did not deserve — and tells them that their president is asking them to return their bonuses “for the sake of the country.”
Had Mr. Obama given A.I.G.’s American brokers a reputation to live up to, a great national mission to join, I’d bet anything we’d have gotten most of our money back voluntarily. Inspiring conduct has so much more of an impact than coercing it. And it would have elevated the president to where he belongs — above the angry gaggle in Congress.
“There is nothing more powerful than inspirational leadership that unleashes principled behavior for a great cause,” said Dov Seidman, the C.E.O. of LRN, which helps companies build ethical cultures, and the author of the book “How.” What makes a company or a government “sustainable,” he added, is not when it adds more coercive rules and regulations to control behaviors. “It is when its employees or citizens are propelled by values and principles to do the right things, no matter how difficult the situation,” said Seidman. “Laws tell you what you can do. Values inspire in you what you should do. It’s a leader’s job to inspire in us those values.”
Right now we have an absence of inspirational leadership. From business we hear about institutions too big to fail — no matter how reckless. From bankers we hear about contracts too sacred to break — no matter how inappropriate. And from our immature elected officials we hear about how it was all “the other guy’s fault.” I’ve never talked to more people in one week who told me, “You know, I listen to the news, and I get really depressed.”
Well, help may finally be on the way: one reason we’ve been sidetracked talking about bonuses is because the big issue — the real issue — the president’s comprehensive plan to remove the toxic assets from our ailing banks, which is the key to our economic recovery, has taken a long time to hammer out. So all kinds of lesser issues and clowns have ballooned in importance and only confused people in the vacuum. Hopefully, that plan will be out by Monday, and hopefully the president will pull the country together behind it, and hopefully the lawmakers who have to approve it will remember that this is not a time for politics as usual — and that our country, alas, is not too big to fail. Hopefully ...
A version of this article appeared in print on March 22, 2009, on page WK8 of the New York edition.
When Opportunity Knocks
On 24 Mar 2009, 0010 hrs IST, Jayadeva Ranade, The Times of India
By the time the ongoing international economic crisis runs its course, it will have wrought significant changes in the global geopolitical
landscape. While the US's strength or power projection capability will not have diminished and the country will continue to be a predominant world power, other centres of power and influence would have emerged. China will be one of these new centres. Unless the Chinese Communist Party's monopoly on power collapses, China will in all likelihood emerge wealthier and stronger. This will have serious implications for India and the region.
The global crisis has not left China unscathed. President Hu Jintao and premier Wen Jiabao, however, appear confident that their move in October 2005 to replace the policy of allowing 'some people to get rich first' with 'common prosperity' will pay off. Investments have since been channelled into schemes with long-term benefits such as rural health care, medical insurance and social security, targeted at the countryside where 70 per cent of China's population resides.
China recently unveiled a $587 billion (four trillion yuan) economic stimulus package and planned labour-intensive infrastructure projects. For example, 1,20,000 km of railway lines will be built by 2020 instead of 16,000 km. China's leadership now expects to maintain annual growth at around 7-8 per cent and weather the crisis without too much pain. China's huge foreign currency reserves of $2 trillion must contribute to this confidence.
China's leadership has traditionally been acutely conscious of the need to guard against social upheavals. After an unprecedented 87,000 'incidents' in 2005, party and public security authorities were trained in sophisticated crowd control techniques and security has been constantly tightened. As a result, the Chinese leadership considers any threat to internal stability or the Chinese Communist Party unlikely. It is now focused on achieving major national security and foreign policy objectives at a time the world remains preoccupied with the economic crisis.
China's major concern has been to secure assured supplies of natural resources essential for modernisation. Its quest for such resources remains unabated and the past few months have seen the biggest push since 2005 in investments in oil companies. China's policy has, however, shifted to investing in resource companies rather than outright purchase. China is equally active in investing in mineral and metal companies and, in the past few months alone, has invested over $55 billion. Most of these companies are strapped for cash and their share prices are down. But these will undoubtedly rise as construction picks up worldwide, enhancing the value of Chinese investments.
Earlier this year, China dispatched warships for anti-piracy patrols off Somalia ostensibly to safeguard its maritime trade, the fifth largest in the world, with 60 per cent of oil imports by sea. Chinese navy vessels have, for the first time in 600 years, sailed into action outside their territorial waters. The patrols will be a long-term feature and could use a Pakistani port for resupply. The next flotilla may include a nuclear-powered submarine. Significantly, Beijing took this decision when the rest of the world was otherwise preoccupied. The decision demonstrates the extended operational reach acquired by the Chinese navy right into the Indian Ocean and its determination to act to ensure the safety of its maritime cargo.
China's enormous wealth has given it a lot of heft in achieving major foreign policy goals. It secured a breakthrough when, in October 2008, the British foreign secretary jettisoned the concept of suzerainty as outdated and declared that Tibet is a part of the People's Republic of China. This was around the time British prime minister Gordon Brown made a pitch for infusion of Chinese funds into the IMF. US secretary of state Hillary Clinton, in Beijing recently, also downplayed references to human rights and Tibet. China will press this advantage further. On the Taiwan issue too, there was some forward movement when Clinton emphasised the role of diplomacy in settling the China-Taiwan dispute.
The Chinese leadership has sought to enhance its international profile in areas of its interest, including by disbursing financial aid in these difficult times to cash-strapped nations. Closer home, a Chinese military delegation visited Nepal and agreed to give aid. China has simultaneously positioned itself for a role in Afghanistan and the subcontinent. It has continued to maintain its investments in Afghanistan and links with the Taliban, and made clear that it closely watches developments in the region adjoining its troubled Xinjiang-Uyghur Autonomous Region.
The Italian foreign minister's mention that the G-8 would invite China for a conference on Afghanistan indicates that China is poised to play a larger role in the region. It has also consolidated influence in Pakistan, with the Chinese Communist Party signing an agreement with the Jamaat-e-Islami. This is the first time it has concluded an agreement with a political party with an avowedly religious orientation.
China is trying to assume a more assertive role in regions of its interest: Central Asia, South Asia and the Asia-Pacific. Picking up on a veiled suggestion Bill Clinton, then US president, in Beijing in 1998, Beijing will try and persuade the US to yield it a greater role in these areas. The implications of a stronger and wealthier China exercising such a role are far-reaching for India and the world.
The writer is a former additional secretary in the cabinet secretariat.
By the time the ongoing international economic crisis runs its course, it will have wrought significant changes in the global geopolitical
landscape. While the US's strength or power projection capability will not have diminished and the country will continue to be a predominant world power, other centres of power and influence would have emerged. China will be one of these new centres. Unless the Chinese Communist Party's monopoly on power collapses, China will in all likelihood emerge wealthier and stronger. This will have serious implications for India and the region.
The global crisis has not left China unscathed. President Hu Jintao and premier Wen Jiabao, however, appear confident that their move in October 2005 to replace the policy of allowing 'some people to get rich first' with 'common prosperity' will pay off. Investments have since been channelled into schemes with long-term benefits such as rural health care, medical insurance and social security, targeted at the countryside where 70 per cent of China's population resides.
China recently unveiled a $587 billion (four trillion yuan) economic stimulus package and planned labour-intensive infrastructure projects. For example, 1,20,000 km of railway lines will be built by 2020 instead of 16,000 km. China's leadership now expects to maintain annual growth at around 7-8 per cent and weather the crisis without too much pain. China's huge foreign currency reserves of $2 trillion must contribute to this confidence.
China's leadership has traditionally been acutely conscious of the need to guard against social upheavals. After an unprecedented 87,000 'incidents' in 2005, party and public security authorities were trained in sophisticated crowd control techniques and security has been constantly tightened. As a result, the Chinese leadership considers any threat to internal stability or the Chinese Communist Party unlikely. It is now focused on achieving major national security and foreign policy objectives at a time the world remains preoccupied with the economic crisis.
China's major concern has been to secure assured supplies of natural resources essential for modernisation. Its quest for such resources remains unabated and the past few months have seen the biggest push since 2005 in investments in oil companies. China's policy has, however, shifted to investing in resource companies rather than outright purchase. China is equally active in investing in mineral and metal companies and, in the past few months alone, has invested over $55 billion. Most of these companies are strapped for cash and their share prices are down. But these will undoubtedly rise as construction picks up worldwide, enhancing the value of Chinese investments.
Earlier this year, China dispatched warships for anti-piracy patrols off Somalia ostensibly to safeguard its maritime trade, the fifth largest in the world, with 60 per cent of oil imports by sea. Chinese navy vessels have, for the first time in 600 years, sailed into action outside their territorial waters. The patrols will be a long-term feature and could use a Pakistani port for resupply. The next flotilla may include a nuclear-powered submarine. Significantly, Beijing took this decision when the rest of the world was otherwise preoccupied. The decision demonstrates the extended operational reach acquired by the Chinese navy right into the Indian Ocean and its determination to act to ensure the safety of its maritime cargo.
China's enormous wealth has given it a lot of heft in achieving major foreign policy goals. It secured a breakthrough when, in October 2008, the British foreign secretary jettisoned the concept of suzerainty as outdated and declared that Tibet is a part of the People's Republic of China. This was around the time British prime minister Gordon Brown made a pitch for infusion of Chinese funds into the IMF. US secretary of state Hillary Clinton, in Beijing recently, also downplayed references to human rights and Tibet. China will press this advantage further. On the Taiwan issue too, there was some forward movement when Clinton emphasised the role of diplomacy in settling the China-Taiwan dispute.
The Chinese leadership has sought to enhance its international profile in areas of its interest, including by disbursing financial aid in these difficult times to cash-strapped nations. Closer home, a Chinese military delegation visited Nepal and agreed to give aid. China has simultaneously positioned itself for a role in Afghanistan and the subcontinent. It has continued to maintain its investments in Afghanistan and links with the Taliban, and made clear that it closely watches developments in the region adjoining its troubled Xinjiang-Uyghur Autonomous Region.
The Italian foreign minister's mention that the G-8 would invite China for a conference on Afghanistan indicates that China is poised to play a larger role in the region. It has also consolidated influence in Pakistan, with the Chinese Communist Party signing an agreement with the Jamaat-e-Islami. This is the first time it has concluded an agreement with a political party with an avowedly religious orientation.
China is trying to assume a more assertive role in regions of its interest: Central Asia, South Asia and the Asia-Pacific. Picking up on a veiled suggestion Bill Clinton, then US president, in Beijing in 1998, Beijing will try and persuade the US to yield it a greater role in these areas. The implications of a stronger and wealthier China exercising such a role are far-reaching for India and the world.
The writer is a former additional secretary in the cabinet secretariat.
ANGEL FOOD | Watermelon's Journey
On - 24 Mar 2009, 0010 hrs IST, JANARDHAN ROYE. The Times of India
I saw the season's first watermelons on my dog walk the other evening. I could hardly believe that Bangalore was already heading into hot sweaty
days. But there they were. Stacks of them, the sweet, crunchy juicy treat. "From Pondicherry, saar'', responded the vendor in a folded lungee, "Twelve rupees a kilo''. I hadn't seen this man before. But come summer, the spot on the pavement bordering an empty corner site gets taken by new sets of people. They set up shop under the cool shade of a pongamia pinnata tree, and beckon thirsty city-slickers with the tempting watermelon. Customers, invariably young working women winding their way home or men on two-wheelers and such, pull up to buy it or gorge on it on-site. For, the `food of the angels' is most tempting on sweltering days. The delicious red stuff is packed with vitamins, fibre, potassium and other nutrients. "It's low in calories too,'' went on a professorial-type treating a small girl from the playground. The chubby-cheeked one had eyes only for the large slice in hand. Absent-mindedly, she went "Huh, huh, thatha'' as she sunk little teeth into the crispy stuff. Like the little girl, other customers too were throwing inhibition to the winds, and went about freely spitting the seeds.
Seeds discarded? No way. They seem to have a life of their own. There in that safe and fertile haven under the spathodea tree, they plan their next move. Long after the vendor and his gang have rolled up their lungees and scooted, the seeds will take root, germinate and become dark green vines to sprawl all over the loose soil. Then tiny yellow flowers will sprout, to innocently flutter in the breeze. In time, they'll develop into watermelons. In the mid-1800s, David Livingstone sighted watermelons in the Kalahari Desert. Fascinated, the great explorer observed that the Bushmen of the region treated them with utmost respect. To the parched denizens, they were a vital source of water. The watermelon story, of course, begins much before Livingstone and goes back in time even before the mighty pharaohs. I couldn't help looking at the botanical family known as Curcurbitacae in new light that evening. This was one gritty, hard-working creation. With a little help from bees for pollination, and factoring in challenges of the day, it seemed ready for the next part of its journey into the future.
I saw the season's first watermelons on my dog walk the other evening. I could hardly believe that Bangalore was already heading into hot sweaty
days. But there they were. Stacks of them, the sweet, crunchy juicy treat. "From Pondicherry, saar'', responded the vendor in a folded lungee, "Twelve rupees a kilo''. I hadn't seen this man before. But come summer, the spot on the pavement bordering an empty corner site gets taken by new sets of people. They set up shop under the cool shade of a pongamia pinnata tree, and beckon thirsty city-slickers with the tempting watermelon. Customers, invariably young working women winding their way home or men on two-wheelers and such, pull up to buy it or gorge on it on-site. For, the `food of the angels' is most tempting on sweltering days. The delicious red stuff is packed with vitamins, fibre, potassium and other nutrients. "It's low in calories too,'' went on a professorial-type treating a small girl from the playground. The chubby-cheeked one had eyes only for the large slice in hand. Absent-mindedly, she went "Huh, huh, thatha'' as she sunk little teeth into the crispy stuff. Like the little girl, other customers too were throwing inhibition to the winds, and went about freely spitting the seeds.
Seeds discarded? No way. They seem to have a life of their own. There in that safe and fertile haven under the spathodea tree, they plan their next move. Long after the vendor and his gang have rolled up their lungees and scooted, the seeds will take root, germinate and become dark green vines to sprawl all over the loose soil. Then tiny yellow flowers will sprout, to innocently flutter in the breeze. In time, they'll develop into watermelons. In the mid-1800s, David Livingstone sighted watermelons in the Kalahari Desert. Fascinated, the great explorer observed that the Bushmen of the region treated them with utmost respect. To the parched denizens, they were a vital source of water. The watermelon story, of course, begins much before Livingstone and goes back in time even before the mighty pharaohs. I couldn't help looking at the botanical family known as Curcurbitacae in new light that evening. This was one gritty, hard-working creation. With a little help from bees for pollination, and factoring in challenges of the day, it seemed ready for the next part of its journey into the future.
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