Skip to main content

Home/ History Readings/ Group items tagged WSJ

Rss Feed Group items tagged

Javier E

Will We Forgive Amazon When This Is Over? - WSJ - 0 views

  • all is far from well in the kingdom of Bezos. At a defining moment for the company, it is letting customers down.
  • the promise to ship anything to our doorstep in a day or two that has gained it the trust of an astonishing 112 million Prime members in the U.S. (a nation of 129 million households) has evaporated nearly overnight.
  • it feels like Amazon is little better than any other retailer at getting us what we need, when we need it.
  • ...21 more annotations...
  • The fact that Amazon’s retail operations are functioning at all is a testament to the flexibility of the company’s infrastructure during a health crisis that few if any companies were prepared for.
  • But the crisis is laying bare the cracks in Amazon’s ability
  • Those cracks include times when up to half the workers in some of the company’s facilities haven’t shown up, with some saying it was due to their fear they wouldn’t be adequately protected from coronavirus.
  • It’s also due to Amazon’s just-in-time supply chain, reliance on third-party sellers and largely automated systems of buying and selling that were never designed to handle such a crisis.
  • Amazon shoppers are unable to get many of the essential products the company says it’s prioritizing now.
  • everything considered nonessential takes more time than the two days Amazon conditioned us to expect.
  • In the mid-2010s, Amazon initiated a program called “hands off the wheel,” which replaced many of the functions of Amazon’s white-collar retail workers—those responsible for managing inventory and negotiating with sellers—with AI and automated systems
  • One-third of respondents said the first time they had ever ordered groceries online was in the past 30 days, and 60% of respondents used Amazon to order groceries.
  • The infrastructure Amazon built pushed the entire e-commerce industry toward ever broader selection delivered ever faster.
  • as of March, 55% of Americans polled had ordered groceries online, compared with 36% two years ago.
  • Amazon’s systems respond more quickly to increases in demand than humans could, but it also leads to breakdowns when they encounter unexpected shocks—e.g., a global pandemic
  • In the week ending March 28, Americans spent 47% more on consumer packaged goods purchased online when compared with the same period a year ago, according to Nielsen and Rakuten Intelligence.
  • Amazon has hired 80,000 additional workers in just the past few weeks, as part of its pledge to hire 100,000 new permanent workers. It has also raised its base wage from $15 an hour to $17, through April.
  • with more workers pouring into Amazon’s facilities, and more forced to stay by the lack of alternatives, there could be more protests by employees and more concessions from historically union-averse management
  • Already, the company has instituted double pay for overtime, paid leave for associates with confirmed or suspected cases of Covid-19, a tripling of its janitorial staff and audits of its own facilities to comply with these measures.
  • Consumers felt, in good times anyway, that “I can trust the item, I know it’s a good price, I have transparency on when I’m going to receive it, and if I have issues Amazon will work on my behalf,” he adds.
  • A big edge Amazon holds over competitors is that it can cover losses or scant retail margins with a combination of good will from investors and a cross-subsidy from its booming cloud business, Amazon Web Services.
  • Of all cloud providers, Amazon is the best positioned to benefit both in the long and short term from surging demand, Eric Sheridan, an analyst at UBS, wrote in a Monday note surveying the industry.
  • All this increased usage means more revenue for AWS and more profit for its parent company. In turn, that means more opportunity for Amazon to, as Mr. Bezos famously put it, turn its retail competitors’ margins into Amazon’s opportunity.
  • for Amazon, a company that may already be too big for its own good, it could lead to more of the regulatory scrutiny that its success was drawing even before coronavirus.
  • An ever greater variety of customers will view Amazon as a basic utility but, wary of overreliance, will explore alternatives, too. The bill for Mr. Bezos’ possibly Faustian bargain with the universe—that everyone loves an innovative and ruthless competitor, even when it becomes dominant—may finally come due.
mimiterranova

GOP group 'Stop Stacey' targets Abrams ahead of expected 2022 run | TheHill - 0 views

  • GOP group 'Stop Stacey' targets Abrams ahead of expected 2022 run By Julia Manchester - 02/01/21 09:19 AM EST 863 17,083 AddThis Sharing ButtonsShare to FacebookFacebookFacebookShare to TwitterTwitterTwitter Share   Just In... Fauci: CDC will release new guidance for vaccinated Americans 'very soon' Healthcare — 2m 39s ago Veteran PAC slams Tucker Carlson for comments on female service members BriefingRoom BlogRoll — 24m 3s ago US officials debating sending millions of AstraZeneca doses awaiting clearance overseas: report Administration — 48m 11s ago Biden denounces hate, violence against Asian Americans: 'It must stop' News — 1h 29m ago Biden administration to implement testing programs in schools as part of reopening effort field
  • publican strategists aligned with Georgia Gov. Brian KempBrian KempGeorgia Senate votes to repeal no-excuse absentee voting Two Republicans can stop voter suppression Trump fires back at WSJ editorial urging GOP to move on MORE (R) on Monday launched an outside group aimed at stopping a potential 2022 gubernatorial run by Democrat Stacey Abrams.
  • "We will do whatever it takes to expose Stacey Abrams’ radical network, highlight her dangerous agenda, and ultimately defeat her — and her left-wing candidates — at the ballot box," the group's senior strategist, Jeremy Brand, said in a statement. "There is no time to waste: We must stand up, fight back, and Stop Stacey.”
  • ...1 more annotation...
  • In the two years since Abram's first run, her group Fair Fight has registered tens of thousands of voters in the Peach State and raised $100 million.
mariedhorne

Yellen Calls for More Aid to Avoid Longer, More Painful Recession - WSJ - 0 views

  • Janet Yellen, President-elect Joe Biden’s choice for Treasury secretary, plans to tell lawmakers that the U.S. risks a longer, more painful recession unless Congress approves more aid and urge them to “act big” to shore up the recovery.
  • “Economists don’t always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now—and long-term scarring of the economy later,” Ms. Yellen will say. “Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job.”
  • Mr. Biden’s $1.9 trillion coronavirus relief package, unveiled last week, provides for another round of direct stimulus payments, extended and enhanced jobless benefits, funding for schools and first responders and the creation of a nationwide vaccination program. It also includes longstanding Democratic priorities, such as raising the federal minimum wage to $15 an hour and expanding paid leave for workers.
  • ...3 more annotations...
  • The hearing comes at a time of growing uncertainty over the progress of the pandemic, which has killed close to 400,000 people in the U.S., as well as the state of the economy. Retail sales fell for the third straight month in December and employers cut jobs, ending seven months of employment gains.
  • Mr. Mnuchin said he couldn’t extend them beyond their Dec. 31 expiration, drawing criticism from Democrats who accused him of trying to hamstring the incoming administration.
  • Democrats and Republicans might press her on whether the Treasury would incorporate climate change into the broader financial regulatory framework, and whether she sees a more active role for the FSOC in the Biden administration.
mariedhorne

Indonesia Is First to Approve Sinovac Vaccine Outside China - WSJ - 0 views

  • Indonesia became the first country outside China to give emergency use approval to a Covid-19 vaccine developed by Chinese drugmaker Sinovac Biotech Ltd., despite findings that place the candidate’s efficacy among the lowest for new coronavirus vaccines
  • Indonesia’s food and drug agency said Monday that a late-stage clinical trial in the large city of Bandung showed Sinovac’s CoronaVac vaccine to be 65.3% effective. That compares to clinical trial results out of Brazil last week showing the vaccine had an efficacy rate of 78%.
  • A rate of 65% exceeds the 50% threshold that the World Health Organization and many regulatory authorities consider necessary for widespread use. Western vaccines developed by Moderna Inc. and jointly by Pfizer Inc. and BioNTech SE have reported their vaccines to be more than 90% effective; another developed by the University of Oxford and AstraZeneca PLC was at least 62% effective, according to the team.
  • ...3 more annotations...
  • Indonesia’s clinical trial for CoronaVac covered only 1,600 participants, compared with more than 12,000 health care volunteers in the Brazil trial. It isn’t known in either case how many people were infected; researchers usually only unveil data, including which participants received the vaccine versus placebo injections, when positive Covid cases reach a certain number.
  • 270 million, which has seen a surge in Coronavirus cases over the past few weeks, with around 9,000 new cases a day recently despite low levels of testing. Indonesia had already distributed hundreds of thousands of CoronaVac doses to provinces around the country last week in anticipation of the emergency approval, with the goal of quickly vaccinating doctors and nurses, many of whom have been sickened during the pandemic.
  • As of last week, the country had only 3 million Sinovac doses on hand. In a statement last week, Mr. Widodo said another 15 million doses were expected from Sinovac this week in bulk form, and they would be prepared for use by state-owned pharmaceutical company PT Bio Farma before being distributed around the country.
Javier E

Russia's Strike Changes Not Just Ukraine but the World - WSJ - 0 views

  • Russia’s military incursion deeper into Ukraine is one of those rare events that won’t merely affect the world. It will change the world.
  • By moving further into a sovereign state to bring it under his thumb, Russian President Vladimir Putin has shattered the security architecture that has prevailed in Europe since the end of the Cold War, and no one knows what will take its place.
  • fissures that have been lying just beneath the surface in American politics, separating internationalists and neo-isolationists, are becoming more visible, particularly in the Republican Party.
  • ...3 more annotations...
  • The ability of the U.S. to do what three consecutive presidents have pledged to do—clear away other international entanglements to focus on competition with China—has been undercut again. Military expenditures will likely increase in the West. Economic globalization will be set back.
  • American liquefied-natural-gas exports have begun to fill the gap left by declining Russian exports, suggesting the possibility of a new energy relationship with European allies.
  • China and Russia share a motivation to work together to build a kind of parallel international financial system apart from the dollar-denominated, American-dominated one that currently exists.
runlai_jiang

Banks Look to Break Government's Hold on Student-Loan Market - WSJ - 0 views

  • Private lenders are pushing to break up the government’s near monopoly in the $100 billion-a-year student-loan market.
  • The banking industry’s main lobbying group, the Consumer Bankers Association, is pressing for the government to instate caps on how much individual graduate students and parents of undergraduates can borrow from the government to cover tuition. That would force many families to turn to private lenders to cover portions of their bills. While that could mean lower interest rates for some, it could constrain funding to households with blemished credit histories.
    • runlai_jiang
       
      Private Lenders boom because of the CBA's pressure for the government to instate caps on student loan.
  • At stake is potentially billions of dollars in new business for private lenders, a group currently dominated by SLM Corp. , better known as Sallie Mae, Wells Fargo & Co., and Discover Financial Services .
  • ...11 more annotations...
  • Private lenders pushed for legislative changes in previous years to no avail, but now they’re receiving a more welcome reception from congressional Republicans and the Trump administration.
  • House Republicans, looking to revamp higher-education policies for the first time in a decade,
  • Private student lending has fallen in part because banks tightened underwriting standards after the 2007-2009 financial crisis. It also has dropped because of moves by Congress to allow students to borrow more directly from the government. Starting in 2006, most graduate students have been able to borrow unlimited amounts. Parents also face no restrictions on how much they can borrow under the Parent Plus program.
  • Promoting Real Opportunity, Success, and Prosperity through Education Reform, or Prosper, Act—calls for limits on the total federal student-loan amounts certain borrowers can receive. Many graduate students wouldn’t be able to borrow more than $150,000 in total federal loans for undergraduate and graduate studies. Parents in many cases would be limited to around $56,000 per dependent.
  • Critics say some of the industry’s proposals would hurt taxpayers and students who lack the credit to qualify for private-sector loans. Some schools and student advocates add that setting stricter dollar limits on federal loans would limit many students from attending schools of their choice.
  • Pushing more students to borrow private loans from banks without consumer protections is a terrible idea.”
  • has led to high default rates, runaway tuition inflation and taxpayer costs.
  • What we don’t want to see is continued nearly unlimited lending that has been fueling a rise in tuition costs,
  • Private student lenders target the most creditworthy borrowers. That includes parents of undergraduate students and graduate students with an established history of paying debts on time.
  • Several private lenders are offering lower interest rates than what the federal government charges the most creditworthy borrowers. And unlike federal loans, most private loans don’t charge an origination fee when borrowers sign up for the loan.
  • The government relies on interest payments from creditworthy borrowers to offset the money it loses on defaults from other borrowers and thereby keep the federal loan program solvent.
  •  
    CBA and House Republicns proposed to set a upper limit for Student Loan, for booming private lenders, reducing tuition inflation and reducing untrustworthy detors. Which may require students to have high debt credibility.
runlai_jiang

Spring Home Sales Could Be the Weakest in Years - WSJ - 0 views

  • The culprits: rising mortgage rates, a tax bill that reduces the incentives for homeownership and a growing weariness among first-buyers being priced out of the market—all of which are expected to damp demand for homes this year.
  • “It’s still going to be a tight market, but we’re moving from an extremely tight market to one that has some wiggle room around the edges for buyers,” said Daren Blomquist, a senior vice president at the housing-research firm Attom Data Solutions.
  • Lawrence Yun, chief economist at the National Association of Realtors, said he expects sales to be flat this spring from a year earlier. Roughly 2.06 million homes were sold between March and June 2017, up from about 2 million in the same period a year earlier, according to the National Association of Realtors.
  • ...9 more annotations...
  • Mr. Yun predicts sales will remain flat for all of 2018, due to inventory shortages and eroding affordability, as both prices and mortgage rates rise.
  • A homeowner with a median-priced home in the San Francisco area will receive $4,500 less in housing-related tax benefits in the first year of a 30-year mortgage this year, according to real-estate data company Apartment List. A homeowner in the same position in the New York metro area would receive $1,500 less annually.
  • Weakness at the high end is being driven by stock market volatility and the $10,000 cap the tax bill placed on deducting state and local property taxes
  • “People are being a little more cautious than they were before,” Mr. Glazer said. “Buyers have a number in mind, and they’re willing to stick their ground more than in the past.”
  • Kalena Masching, a Redfin agent in Silicon Valley, said she has seen a pickup in activity in recent weeks as buyers and sellers have digested the implications of the tax bill. Buyers are putting down larger down payments to bring the size of their mortgages below the new $750,000 cap. But that could be a challenge if the stock market continues to fluctuate, because buyers might want to hold on to more of their cash
  • s. Masching said she is also hearing more from older buyers who are thinking about selling their homes and using the proceeds to retire out of state, prompted in part by the changes to the tax law
  • “I’m hoping it’s going to be better. We never got any inventory last year,” said Ms. Masching. “The big concern for our sellers is: Where are they going to go?”
  • Rhian Daniel, a 50 year old who works for a medical startup, and his wife have been looking for a home for about four years, both in the Bay Area and further afield. The couple have largely given up for the moment, and are considering eventually moving to a place like Dallas, with lower home prices and property taxes.
  • Mr. Daniel’s wife is a therapist, and they both have student debt that limits the size of the mortgage they can get.
woodlu

Where Is Jack Ma? Alibaba's Founder Has Kept a Low Profile Since October - WSJ - 0 views

  • the billionaire businessman disappeared from the public limelight following brushes with Chinese regulators in recent weeks.
  • The 56-year-old former English teacher founded Alibaba Group Holding Ltd. from a small apartment in eastern China in 1999.
  • The startup grew from a fledgling internet business matching wholesale buyers and sellers into a fast-growing technology empire,
  • ...15 more annotations...
  • nnual sales in excess of $86 billion.
  • Until recently, Mr. Ma, who is a Communist Party member, was held up as a role model by the Party for his contribution to the “digital economy.”
  • Regulators regarded the speech as a direct attack against them, and Ant’s public debut was halted just two days before its big day, with Chinese leader Xi Jinping personally intervening to scuttle the market listing,
  • spoke at a financial forum in Shanghai.
  • delivered a speech that was highly critical of Chinese regulators, who he said had stifled innovation in the financial industry.
  • Shortly after the speech, regulators scrapped a planned initial public offering of Ant that would have been the world’s largest to date, raising more than $34 billion from listings in Hong Kong and Shanghai.
  • Mr. Ma last appeared publicly in late October,
  • Beijing is now looking to shrink Mr. Ma’s technology and financial empire and potentially take a larger stake in his businesses,
  • Alibaba is now facing an antitrust probe by Chinese market regulators, who are investigating claims that the company abused its dominant position in the e-commerce industry to pressure some merchants to work only with its platforms.
  • In November last year, Mr. Ma didn’t appear on an episode of a television show in which he was set to appear as a judge,
  • An Alibaba spokeswoman said his absence was due to a scheduling conflict, and declined to comment on Mr. Ma’s activities.
  • t isn’t uncommon for Chinese billionaires to disappear from the public eye for long periods during legal and regulatory investigations.
  • I
  • Its market capitalization dropped in the final days of 2020 to less than $600 billion, from a high of $859 billion just before the Ant IPO was scuttled.
  • Alibaba owns one-third of Ant. Its shares have fallen by a further 2% so far in 2021.
Javier E

Capitol Riot Shakes Pro-Democracy Campaigners World-Wide - WSJ - 0 views

  • “What has happened shows that nothing is forever, that history has not ended, and that even the foundations of the world are changing,” Mr. Siemoniak said
  • “We were fascinated by democracy, especially by American democracy,” said Mr. Siemoniak, who later served as his country’s defense minister and is currently an opposition lawmaker.
  • Then came the Nov. 3 election and an American president who sought to overturn the results with claims of systemic electoral fraud and egged on supporters who then stormed the U.S. Capitol in an attempt to prevent Congress from certifying Joe Biden’s victory. There has been no evidence of widespread electoral fraud.
  • ...4 more annotations...
  • With President-elect Joe Biden set to be sworn in on Wednesday behind a screen of heavy security, democratic leaders and those fighting for democracy around the world say the upheaval in the U.S. has left them shaken. And authoritarian governments, like those of America’s biggest strategic rivals China and Russia, are touting what they say is the superiority of their own political systems.
  • “The storming of the Capitol provides a lot of bullets for the pro-Beijing propaganda to stress that democracy is equal to chaos,”
  • China’s foreign ministry spokeswoman, Hua Chunying, has already drawn a parallel between the riot in Washington and Hong Kong’s protests in 2019, accusing the U.S. of double standards as she expressed her “hope that the people of America will enjoy peace, stability and safety soon.”
  • “These recent events have stunned everyone, and in particularly the Belarusians, who saw the U.S. as an example of a stable, orderly democracy where honest elections are followed by a lawful transfer of power,” said Franak Viacorka, a senior adviser to Mr. Lukashenko’s opponent in the disputed election, Sviatlana Tsikhanouskaya. “We hope it was an aberration rather than the trend.”
mariedhorne

Samsung Is Without a Leader as Jay Y. Lee Returns to Prison - WSJ - 0 views

  • Mr. Lee, the 52-year-old grandson of Samsung’s founder, received a 30-month prison sentence from a South Korean appeals court on Monday, in a retrial of his 2017 conviction for bribing South Korea’s former president. His prior time behind bars of roughly a year counts toward his new sentence. If granted early parole, Mr. Lee could walk free next year.
  • In a sign of his vast influence, Mr. Lee’s detainment triggered a selloff across Samsung’s affiliates, wiping away billions of dollars in market value. Samsung Electronics fell 3.4%, battery maker Samsung SDI Co. slid 4.2% and Samsung C&T Corp. , the conglomerate’s de facto holding company, dropped 6.8%.
  • Unlike in 2017, Samsung Electronics—the conglomerate’s crown jewel—isn’t in the middle of a historic run in memory-chip prices. That period was so fruitful that it negated the ill effects of the prior year’s embarrassing global recall of Galaxy Note 7 smartphones.
  • ...2 more annotations...
  • Going by “Jay Y. Lee” in the West, he has led the Samsung conglomerate since his father was incapacitated by a 2014 heart attack. But with his father’s death in October, Mr. Lee was expected to formally take the Samsung chairmanship, a transfer he will now have to navigate from behind bars.
  • His father’s death triggered a hefty inheritance tax under South Korean law. It puts Mr. Lee, his mother and two sisters on the hook for more than 11 trillion South Korean won, or roughly $10 billion, to inherit the patriarch’s shares in various Samsung companies. The tax must be paid over the next five years.
mariedhorne

Saudi Arabia Curbs Death Penalty in Move to Soften Image - WSJ - 0 views

  • Saudi Arabia Curbs Death Penalty in Move to Soften Image - WSJSaudi Arabia Curbs Death Penalty in Move to Soften Image - WSJRIYADH, Saudi Arabia—Saudi Arabia said Monday it had imposed a moratorium on capital punishment for drug-related offenses that led to an 85% reduction in executions, as the conservative Muslim kingdom seeks to soften its image to attract Western tourists and foreign investment.
  • The state-backed Human Rights Commission said 27 executions were recorded in 2020. That is down from 184 the year before, according to rights watchdog Amnesty International, when Saudi Arabia trailed only China and Iran globally.
  • Prince Mohammed, the 35-year-old de facto ruler, has previously said the government was working to change the law to reduce the punishment for some crimes from execution to life in prison.
  • ...2 more annotations...
  • “This is a required step and now we hope to increase alternative punishments after long years of increased killing,” Mr. Hajji said. “But we want that to be done in a lawful and disciplined way, not randomly and arbitrarily.”
  • The 2018 killing and dismemberment of journalist Jamal Khashoggi inside the kingdom’s Istanbul consulate sparked global outrage and government pledges of justice for the perpetrators. Five people convicted in Mr. Khashoggi’s murder were initially given the death penalty, but their sentences were reduced to 20-year prison terms after his son said he forgave them.
mariedhorne

Europe's Covid-19 Vaccination Campaign Off to Slow, Uneven Start - WSJ - 0 views

  • France has inoculated more than 45,000 people in more than two weeks since European regulators authorized the first coronavirus vaccine, made by Pfizer Inc. and BioNTech SE. Belgium launched mass vaccinations on Tuesday, while the Netherlands gave its first inoculations on Wednesday. Vaccinations in Italy stalled over the holidays and have recently started to pick up.
  • The U.S. has vaccinated more than five million people, the U.K. more than one million and Germany around 417,000. Israel has inoculated at least 16% of its population with the Pfizer-BioNTech vaccine.
  • “We lacked that kind of flexibility in our approach,” Mr. Rutte said. Dutch health-care workers started being inoculated as of Wednesday morning, with the government planning to increase vaccination to more than 60,000 a week.
  • ...4 more annotations...
  • France is aiming to give 15 million people two vaccine doses by July 1, though it has placed orders for enough doses to vaccinate 27 million by then, officials said.
  • The French authorities are facing a population that is among the world’s most skeptical of vaccines. In a global Ipsos poll conducted in December, just 40% of French respondents said they wanted the vaccine, the lowest acceptance rate among the poll’s 15 countries, which also included the U.S., Germany and China.
  • On Wednesday, about 61,000 people were vaccinated, according to government figures. Italy must vaccinate about 300,000 people a day until April 1 to reach the government’s goal of having 13 million of the country’s 60 million residents vaccinated with the second shot at that point.
  • The European Commission is in talks with Pfizer to buy additional doses, on top of the existing order of 300 million doses that would inoculate a third of the bloc’s 450 million people. The commission has also preordered 160 million doses of Moderna Inc.’s vaccine, which the EU’s main drug regulator cleared for use on Wednesday.
mariedhorne

U.S. Unemployment Claims Rise as Coronavirus Weighs on Economy - WSJ - 0 views

  • The total for the week ended Jan. 9 also was the highest in nearly five months and put claims well above the roughly 800,000 a week they had averaged in recent months
  • The U.S. labor-market recovery stalled last month with the December jobs report showing the U.S. lost 140,000 payroll positions. The economic recovery’s slowdown has included weakness in household spending, though economists expect the economy to rebound later this year as a Covid-19 vaccine is distributed through the population.
  • Employers cut 140,000 jobs in December, marking the first decline since the pandemic hit last spring. The leisure and hospitality industry bore the brunt of the decline, shedding 498,000 jobs as a surge in coronavirus infections forced many restaurants and bars to close or scale back operations.
  • ...4 more annotations...
  • So-called continuing claims rose to nearly 5.3 million for the week ended Jan. 2, from 5.1 million a week earlier, according to the Labor Department. That marked the first weekly increase since November.
  • Hunter Keegan, 27 years old, of Fairfax County, Va., said he lost his job as a corporate recruiter for a health-care company last April. He said he immediately began applying for work in the greater Washington, D.C., area as well as in other parts of the country where the labor market seems to be faring better.
  • Seasonal quirks and the passage last month of a $900 billion Covid-19 relief bill could have muddied the claims picture somewhat.
  • At the same time, the bill added the $300-a-week supplement for those receiving unemployment benefits through March 14 and extended two federal pandemic programs that otherwise would have paid out their final benefits in December. News of the relief package could also have contributed to an uptick in initial claims by encouraging additional workers to apply or previously eligible workers who exhausted their benefits to reapply.
leilamulveny

Biden Scores 14-Point Lead Over Trump in Poll After Debate - WSJ - 0 views

  • Mr. Biden, the Democratic nominee, leads the president, 53% to 39%, among registered voters in the new poll, which was conducted in the two days following the debate but before news emerged that Mr. Trump had tested positive for Covid-19. Mr. Biden’s 14-point lead compares with an 8-point advantage last month and 11 points in July, which was his largest of the campaign at that time.
  • evidence that an individual news event—the debate—is having a material effect on Mr. Trump’s political standing, at least for now
  • His support has never before fallen below 40% on the ballot against Mr. Biden.
  • ...7 more annotations...
  • support for Mr. Trump has softened among some of his most loyal groups, such as white, working-class men.
  • About three-quarters of voters said the event made no difference to their vote. But among the other 25%, a bigger share said the debate made them more likely to support Mr. Biden than Mr. Trump.
  • While 84% of Democrats said Mr. Biden did a better job in the debate, 54% of Republicans said so of the president. Overall, half of voters said Mr. Biden performed better, with a quarter saying Mr. Trump did. Some 17% said neither candidate did well.
  • voters by a two-to-one margin said Mr. Biden was better at displaying “the right temperament to be president,” 58% to 26%.
  • Mr. Biden leads two-to-one on which candidate can best handle race relations, and he holds single-digit leads on handling crime and making Supreme Court nominations, the poll found.
  • Mr. Trump’s bout with the virus will likely keep the public focused on the pandemic, an issue that voters believe Mr. Biden would be better at handling, 52% to 35%.
  • The survey of 800 registered voters was conducted on Sept. 30 and Oct. 1. The margin of error was plus or minus 3.5 percentage points.
leilamulveny

U.S. States Face Biggest Cash Crisis Since the Great Depression - WSJ - 0 views

  • “All you can do is grip the bar as tight as you can, make the smartest decisions you can in real time, plan for the worst and be surprised at something less than worst,” said Mr. Lembo.
  • Nationwide, the U.S. state budget shortfall from 2020 through 2022 could amount to about $434 billion, according to data from Moody’s Analytics, the economic analysis arm of Moody’s Corp.
  • States are dependent on taxes for revenue—sales and income taxes make up more than 60% of the revenue states collect for general operating funds, according to the Urban Institute. Both types of taxes have been crushed by historic job losses and the steepest decline in consumer spending in six decades.
  • ...13 more annotations...
  • Americans have since ramped up spending on everything from home improvements to bicycles with the help of stimulus checks sent to millions, though overall expenditures remain below pre-pandemic levels.
  • A nationwide decline in combined state revenue has happened after only two events in 90 years: following the Sept. 11, 2001, attacks and in the aftermath of the 2008 financial crisis.
  • The U.S. economy has steadily recovered since the spring, and more than 11 million jobs of the 22 million lost earlier in the year have come back. Still, the unemployment rate recently hovered at 7.9%, and there has been an uptick in permanent layoffs.
  • Economists warn a two-track recovery is emerging, with well-educated and well-off people and some businesses prospering, at the same time lower-wage workers with fewer credentials, old-line businesses and regions tied to tourism are mired in a deep decline.
  • After 2008, some states implemented or added to rainy day funds—cash reserves that can be used to fill revenue gaps caused by a potential shock
  • School systems also usually receive local funds through property taxes.
  • Schools received federal aid from the pandemic-stimulus packages passed by Congress earlier this year.
  • The money was quickly spent
  • The Ohio Education Association, a teachers union, said the state’s school districts could face budget shortfalls for the 2022 and 2023 budget years of between 20% and 25%.
  • Many states are pleading for more aid from Congress, which has so far sent money in its coronavirus relief packages to deal with the health crisis but not to offset revenue losses.
  • Congress has doled out about $150 billion in Covid-19 response dollars to state and local governments, plus some additional money to cover elevated Medicaid costs.
  • President Trump and Senate Majority Leader Mitch McConnell have said they don’t want Covid-19 aid used to address longstanding financial problems.
  • Community Health Resources, which offers mental-health and addiction services to 27,000 children and adults, is concerned it won’t receive its expected more than $40 million in state funding—62% of the organization’s annual budget—in the next fiscal year, which begins in July.
Javier E

China's Brain Drain Threatens Its Future - WSJ - 0 views

  • the trend of rising emigration actually predates the pandemic—and coincides with the emergence of several other important economic trends since 2017, including higher youth unemployment, the state’s renewed grip on the financial sector and an apparently structural downtrend in Chinese growth.
  • Rebounding emigration is also striking in the context of a declining overall birthrate, and suggests that Beijing must do far more to convince talent, both domestic and foreign, that China is a good place to put down roots if it wants to avoid a steeper growth slowdown in the years ahead.
  • China, unlike the U.S., has always been a nation of emigrants—its diaspora is among the world’s largest and most influential.
  • ...9 more annotations...
  • the scope of emigration has been highly variable over time. For most of the early 2000s around half a million residents, on net, were leaving every year according to United Nations data. But after 2008 that number fell sharply—probably in part due to China’s strong recovery from the global financial crisis while the U.S. and other major economies struggled. The early 2010s, a period of strong Chinese growth, also coincided with the slow erosion of China’s working-age labor force, creating opportunities for both ambitious Chinese citizens and foreigners willing to relocate there.
  • by the late 2010s, this trend had begun to reverse. Net emigration from China, which had fallen as low as 125,000 in 2012 according to U.N. data, had rebounded to nearly 300,000 by 2018
  • Net outflows of high net-worth individuals (with more than $1 million in assets) from China were steady at around 9,000 a year for most of the early 2010s. But in the late 2010s, that number started rocketing up: In 2017, net emigration by the wealthy was over 11,000 individuals, and by 2019 it was more than 15,000.
  • net emigration in 2022 at over 300,000 again, after a net drain of about 200,000 in 2021.
  • Higher numbers of wealthy individuals leaving could indicate faster wealth creation itself—and ambitious emigrants can help facilitate flows of capital and technology back to China.
  • this latest emigration wave is also taking place at a time of weakening growth and an increased populist tilt by Beijing. It is also happening during a fast rise in postsecondary education that is creating a growing supply of credentialed workers. Those same workers are facing anemic job growth in the service sectors where many of them would find employment
  • Since 2017, average annual service-sector employment growth has been just 0.4%, according to figures from data provider CEIC. Excluding 2022, when much of the economy was shut due to Covid-19 lockdowns, only moves that average up to 1.4%. In the five years through 2017 on the other hand, service jobs grew an average of 4.4% a year.
  • Rising net emigration also mirrors much smaller influxes of foreign talent in recent years—another trend that threatens to slow China’s climb up the technological ladder. Foreign residents of Shanghai and Beijing numbered just 163,954 and 62,812 in 2020, according to official data, down 21% and 42%, respectively, since 2010.
  • For much of the new millennium, China has been a place where the ambitious, hardworking and lucky could often get ahead. But in today’s China—more focused on security and control, less on growth—it is no longer clear how true that really is.
Javier E

Cleaning Up ChatGPT's Language Takes Heavy Toll on Human Workers - WSJ - 0 views

  • ChatGPT is built atop a so-called large language model—powerful software trained on swaths of text scraped from across the internet to learn the patterns of human language. The vast data supercharges its capabilities, allowing it to act like an autocompletion engine on steroids. The training also creates a hazard. Given the right prompts, a large language model can generate reams of toxic content inspired by the darkest parts of the internet.
  • ChatGPT’s parent, AI research company OpenAI, has been grappling with these issues for years. Even before it created ChatGPT, it hired workers in Kenya to review and categorize thousands of graphic text passages obtained online and generated by AI itself. Many of the passages contained descriptions of violence, harassment, self-harm, rape, child sexual abuse and bestiality, documents reviewed by The Wall Street Journal show.
  • The company used the categorized passages to build an AI safety filter that it would ultimately deploy to constrain ChatGPT from exposing its tens of millions of users to similar content.
  • ...28 more annotations...
  • “My experience in those four months was the worst experience I’ve ever had in working in a company,” Alex Kairu, one of the Kenya workers, said in an interview.
  • OpenAI marshaled a sprawling global pipeline of specialized human labor for over two years to enable its most cutting-edge AI technologies to exist, the documents show
  • “It’s something that needs to get done,” Sears said. “It’s just so unbelievably ugly.”
  • eviewing toxic content goes hand-in-hand with the less objectionable work to make systems like ChatGPT usable.
  • The work done for OpenAI is even more vital to the product because it is seeking to prevent the company’s own software from pumping out unacceptable content, AI experts say.
  • Sears said CloudFactory determined there was no way to do the work without harming its workers and decided not to accept such projects.
  • companies could soon spend hundreds of millions of dollars a year to provide AI systems with human feedback. Others estimate that companies are already investing between millions and tens of millions of dollars on it annually. OpenAI said it hired more than 1,000 workers for this purpose.
  • Another layer of human input asks workers to rate different answers from a chatbot to the same question for which is least problematic or most factually accurate. In response to a question asking how to build a homemade bomb, for example, OpenAI instructs workers to upvote the answer that declines to respond, according to OpenAI research. The chatbot learns to internalize the behavior through multiple rounds of feedback. 
  • A spokeswoman for Sama, the San Francisco-based outsourcing company that hired the Kenyan workers, said the work with OpenAI began in November 2021. She said the firm terminated the contract in March 2022 when Sama’s leadership became aware of concerns surrounding the nature of the project and has since exited content moderation completely.
  • OpenAI also hires outside experts to provoke its model to produce harmful content, a practice called “red-teaming” that helps the company find other gaps in its system.
  • At first, the texts were no more than two sentences. Over time, they grew to as much as five or six paragraphs. A few weeks in, Mathenge and Bill Mulinya, another team leader, began to notice the strain on their teams. Workers began taking sick and family leaves with increasing frequency, they said.
  • The tasks that the Kenya-based workers performed to produce the final safety check on ChatGPT’s outputs were yet a fourth layer of human input. It was often psychologically taxing. Several of the Kenya workers said they have grappled with mental illness and that their relationships and families have suffered. Some struggle to continue to work.
  • On July 11, some of the OpenAI workers lodged a petition with the Kenyan parliament urging new legislation to protect AI workers and content moderators. They also called for Kenya’s existing laws to be amended to recognize that being exposed to harmful content is an occupational hazard
  • Mercy Mutemi, a lawyer and managing partner at Nzili & Sumbi Advocates who is representing the workers, said despite their critical contributions, OpenAI and Sama exploited their poverty as well as the gaps in Kenya’s legal framework. The workers on the project were paid on average between $1.46 and $3.74 an hour, according to a Sama spokeswoman.
  • The Sama spokeswoman said the workers engaged in the OpenAI project volunteered to take on the work and were paid according to an internationally recognized methodology for determining a living wage. The contract stated that the fee was meant to cover others not directly involved in the work, including project managers and psychological counselors.
  • Kenya has become a hub for many tech companies seeking content moderation and AI workers because of its high levels of education and English literacy and the low wages associated with deep poverty.
  • Some Kenya-based workers are suing Meta’s Facebook after nearly 200 workers say they were traumatized by work requiring them to review videos and images of rapes, beheadings and suicides.
  • A Kenyan court ruled in June that Meta was legally responsible for the treatment of its contract workers, setting the stage for a shift in the ground rules that tech companies including AI firms will need to abide by to outsource projects to workers in the future.
  • OpenAI signed a one-year contract with Sama to start work in November 2021. At the time, mid-pandemic, many workers viewed having any work as a miracle, said Richard Mathenge, a team leader on the OpenAI project for Sama and a cosigner of the petition.
  • OpenAI researchers would review the text passages and send them to Sama in batches for the workers to label one by one. That text came from a mix of sources, according to an OpenAI research paper: public data sets of toxic content compiled and shared by academics, posts scraped from social media and internet forums such as Reddit and content generated by prompting an AI model to produce harmful outputs. 
  • The generated outputs were necessary, the paper said, to have enough examples of the kind of graphic violence that its AI systems needed to avoid. In one case, OpenAI researchers asked the model to produce an online forum post of a teenage girl whose friend had enacted self-harm, the paper said.
  • OpenAI asked the workers to parse text-based sexual content into four categories of severity, documents show. The worst was descriptions of child sexual-abuse material, or C4. The C3 category included incest, bestiality, rape, sexual trafficking and sexual slavery—sexual content that could be illegal if performed in real life.
  • Jason Kwon, general counsel at OpenAI, said in an interview that such work was really valuable and important for making the company’s systems safe for everyone that uses them. It allows the systems to actually exist in the world, he said, and provides benefits to users.
  • Working on the violent-content team, Kairu said, he read hundreds of posts a day, sometimes describing heinous acts, such as people stabbing themselves with a fork or using unspeakable methods to kill themselves
  • He began to have nightmares. Once affable and social, he grew socially isolated, he said. To this day he distrusts strangers. When he sees a fork, he sees a weapon.
  • Mophat Okinyi, a quality analyst, said his work included having to read detailed paragraphs about parents raping their children and children having sex with animals. He worked on a team that reviewed sexual content, which was contracted to handle 15,000 posts a month, according to the documents. His six months on the project tore apart his family, he said, and left him with trauma, anxiety and depression.
  • In March 2022, management told staffers the project would end earlier than planned. The Sama spokeswoman said the change was due to a dispute with OpenAI over one part of the project that involved handling images. The company canceled all contracts with OpenAI and didn’t earn the full $230,000 that had been estimated for the four projects, she said.
  • Several months after the project ended, Okinyi came home one night with fish for dinner for his wife, who was pregnant, and stepdaughter. He discovered them gone and a message from his wife that she’d left, he said.“She said, ‘You’ve changed. You’re not the man I married. I don’t understand you anymore,’” he said.
Javier E

The Arab Oil Embargo and Bad Energy Policy's 50th Birthday - WSJ - 0 views

  • The “second wave” of electric-vehicle buyers isn’t materializing, the Journal reported this week
  • To lure the first wave took thousands of dollars in taxpayer handouts to each buyer and thousands more in subsidies to encourage companies to build the EVs in the first place. And these buyers were the enthusiasts. How much more will have to be piled on the table to lure those customers who aren’t bewitched by EV cultural and technological appeal and care about having a useful car at an affordable price?
  • But this was always understood. In the fantasy life of greens, the next step would be to ban the sale of new gasoline cars altogether. Except Americans vote: Politicians who don’t get the votes of Americans don’t get to make policy, including the policy of denying them the choice to buy gasoline-powered vehicle
  • ...10 more annotations...
  • At some point, too, the public might look up and notice that subsidizing EVs is having no effect on climate or CO2.
  • the 50th anniversary of the 1973 Arab oil embargo in the latest edition of New Atlantis: “The worst effect was on U.S. energy policy. Whereas the embargo lasted about five months, the toll on U.S. policy has lasted five decades and counting.”
  • the 50-year-old fuel-economy regime devolved into a convoluted set of political trade-offs serving—as the Biden administration recently admitted—no legitimate cost-benefit goal. Boondoggles from synfuels to corn ethanol were launched in the 1970s to honor the false god of energy independence, though thanks to the still-functioning genius of the free-market system the U.S. nevertheless blundered into true energy security with the help of fracking.
  • The words “energy transition” are redundant. The energy economy is always transitioning. The transitions are additive. Wind, hydro and biomass all existed before fossil fuels arrived
  • Energy’s uses are unlimited. This is why, unless the world improbably adopts a carbon tax, the effect of green-energy subsidies (aside from enriching their backers) is largely to stimulate increased energy consumption rather than reduce CO2. This effect is already apparent in the numbers.
  • another ’70s legacy: our least-useful professors invoking big-oil stereotypes in pursuit of political goals.
  • Witness a New York Times op-ed this week combining adventurous antitrust reasoning with tired anti-Exxon tropes, claiming a proposed oil merger represents a “direct threat to democracy” by somehow blocking a solution to climate change that voters apparently crave even though it doesn’t exist.
  • Exxon controls less than 3% of the world’s oil and gas, most of which are in the hands of governments. The U.S. is responsible for less than 15% of global CO2 emissions.
  • What older Americans remember as the oil crisis was a product of domestic price controls, imposed by people in the Nixon administration who knew better.
  • Along the way, the country did manage to remove lead from gasoline and mandate catalytic converters, which improved air quality, showing that rational, economical policy outcomes are still possible amid the vast politicized waste that “energy policy” has otherwise become in the last 50 years.
Javier E

Suddenly There Aren't Enough Babies. The Whole World Is Alarmed. - WSJ - 0 views

  • The world is at a startling demographic milestone. Sometime soon, the global fertility rate will drop below the point needed to keep population constant. It may have already happened.
  • Fertility is falling almost everywhere, for women across all levels of income, education and labor-force participation.
  • Governments have rolled out programs to stop the decline—but so far they’ve barely made a dent.
  • ...49 more annotations...
  • It’s dropping in developing countries, too. India surpassed China as the most populous country last year, yet its fertility is now below replacement.
  • “The demographic winter is coming,”
  • Smaller populations come with diminished global clout, raising questions in the U.S., China and Russia about their long-term standings as superpowers.
  • Some demographers think the world’s population could start shrinking within four decades—one of the few times it’s happened in history.
  • A year ago Japanese Prime Minister Fumio Kishida declared that the collapse of the country’s birthrate left it “standing on the verge of whether we can continue to function as a society.”
  • Had fertility stayed near 2.1, where it stood in 2007, the U.S. would have welcomed an estimated 10.6 million more babies since
  • In 2017, when the global fertility rate—a snapshot of how many babies a woman is expected to have over her lifetime—was 2.5, the United Nations thought it would slip to 2.4 in the late 2020s. Yet by 2021, the U.N. concluded, it was already down to 2.3—close to what demographers consider the global replacement rate of about 2.2
  • He has found that national birth registries are typically reporting births 10% to 20% below what the U.N. projected.
  • China reported 9 million births last year, 16% less than projected in the U.N.’s central scenario. In the U.S., 3.59 million babies were born last year, 4% less than the U.N. projected. In other countries, the undershoot is even larger: Egypt reported 17% fewer births last year. In 2022, Kenya reported 18% fewer.
  • In 2017 the U.N. projected world population, then 7.6 billion, would keep climbing to 11.2 billion in 2100. By 2022 it had lowered and brought forward the peak to 10.4 billion in the 2080s. That, too, is likely out of date
  • the University of Washington now thinks it will peak around 9.5 billion in 2061 then start declining. 
  • The falling birthrates come with huge implications for the way people live, how economies grow and the standings of the world’s superpowers.
  • In the U.S., a short-lived pandemic baby boomlet has reversed. The total fertility rate fell to 1.62 last year, according to provisional government figures, the lowest on record.
  • In 2017, when the fertility rate was 1.8, the Census Bureau projected it would converge over the long run to 2.0. It has since revised that down to 1.5. “It has snuck up on us,”
  • Historians refer to the decline in fertility that began in the 18th century in industrializing countries as the demographic transition. As lifespans lengthened and more children survived to adulthood, the impetus for bearing more children declined. As women became better educated and joined the workforce, they delayed marriage and childbirth, resulting in fewer children. 
  • Some demographers see this as part of a “second demographic transition,” a societywide reorientation toward individualism that puts less emphasis on marriage and parenthood, and makes fewer or no children more acceptable. 
  • In research published in 2021, the University of Maryland’s Kearney and two co-authors looked for possible explanations for the continued drop. They found that state-level differences in parental abortion notification laws, unemployment, Medicaid availability, housing costs, contraceptive usage, religiosity, child-care costs and student debt could explain almost none of the decline
  • “We suspect that this shift reflects broad societal changes that are hard to measure or quantify,” they conclude.
  • while raising children is no more expensive than before, parents’ preferences and perceived constraints have changed
  • “If people have a preference for spending time building a career, on leisure, relationships outside the home, that’s more likely to come in conflict with childbearing.” 
  • Once a low fertility cycle kicks in, it effectively resets a society’s norms and is thus hard to break, said Jackson. “The fewer children you see your colleagues and peers and neighbors having, it changes the whole social climate,”
  • Fertility is below replacement in India even though the country is still poor and many women don’t work—factors that usually sustain fertility.
  • Urbanization and the internet have given even women in traditional male-dominated villages a glimpse of societies where fewer children and a higher quality of life are the norm. “People are plugged into the global culture,
  • mothers and fathers, especially those that are highly educated, spend more time with their children than in the past. “The intensity of parenting is a constraint,”
  • Sub-Saharan Africa once appeared resistant to the global slide in fertility, but that too is changing. The share of all women of reproductive age using modern contraception grew from 17% in 2012 to 23% in 2022
  • Jose Rimon, a professor of public health at Johns Hopkins University, credits that to a push by national leaders in Africa which, he predicted, would drive fertility down faster than the U.N. projects. 
  • Mae Mariyam Thomas, 38, who lives in Mumbai and runs an audio production company, said she’s opted against having children because she never felt the tug of motherhood. She sees peers struggling to meet the right person, getting married later and, in some instances, divorcing before they have kids. At least three of her friends have frozen their eggs,
  • Danielle Vermeer grew up third in a family of four children on Chicago’s North Side, where her neighborhood was filled with Catholics of Italian, Irish and Polish descent and half her close friends had as many siblings as her or more.
  • Her Italian-American father was one of four children who produced 14 grandchildren. Now her parents have five grandchildren, including Vermeer’s two children, ages 4 and 7.
  • The 35-year-old, who is the co-founder of a fashion thrifting app, said that before setting out to have children, she consulted dozens of other couples and her Catholic church and read at least eight books on the subject, including one by Pope Paul VI. She and her husband settled on two as the right number.“The act of bringing a child into this world is an incredible responsibility,” she said.
  • Perhaps no country has been trying longer than Japan. After fertility fell to 1.5 in the early 1990s, the government rolled out a succession of plans that included parental leave and subsidized child care. Fertility kept falling.
  • In 2005, Kuniko Inoguchi was appointed the country’s first minister responsible for gender equality and birthrate. The main obstacle, she declared, was money: People couldn’t afford to get married or have children. Japan made hospital maternity care free and introduced a stipend paid upon birth of the child. 
  • Japan’s fertility rate climbed from 1.26 in 2005 to 1.45 in 2015. But then it started declining again, and in 2022 was back to 1.26.
  • This year, Prime Minister Fumio Kishida rolled out yet another program to increase births that extends monthly allowances to all children under 18 regardless of income, free college for families with three children, and fully paid parental leave.
  • noguchi, now a member of parliament’s upper house, said the constraint on would-be parents is no longer money, but time. She has pressed the government and businesses to adopt a four-day workweek
  • If you’re a government official or manager of a big corporation, you should not worry over questions of salary now, but that in 20 years time you will have no customers, no clients, no applicants to the Self-Defense Forces.”
  • Hungarian Prime Minister Viktor Orban has pushed one of Europe’s most ambitious natality agendas. Last year he expanded tax benefits for mothers so that women under the age of 30 who have a child are exempt from paying personal income tax for life. That’s on top of housing and child-care subsidies as well as generous maternity leaves. 
  • Hungary’s fertility rate, though still well below replacement, has risen since 2010. But the Vienna Institute of Demography attributed this primarily to women delaying childbirth because of a debt crisis that hit around 2010. Adjusted for that, fertility has risen only slightly, it concluded.
  • The usual prescription in advanced countries is more immigration, but that has two problems.
  • With no reversal in birthrates in sight, the attendant economic pressures are intensifying. Since the pandemic, labor shortages have become endemic throughout developed countries. That will only worsen in coming years as the postcrisis fall in birthrates yields an ever-shrinking inflow of young workers, placing more strain on healthcare and retirement systems.
  • worsening demographics could make this a second consecutive “lost decade” for global economic growth.
  • The Institute for Health Metrics and Evaluation found little evidence that pronatalist policies lead to sustained rebounds in fertility. A woman may get pregnant sooner to capture a baby bonus, researchers say, but likely won’t have more kids over the course of her lifetime.
  • As more countries confront stagnant population, immigration between them is a zero-sum gam
  • Historically, host countries have sought skilled migrants who enter through formal, legal channels, but recent inflows have been predominantly unskilled migrants often entering illegally and claiming asylum.
  • High levels of immigration have also historically aroused political resistance,
  • Many of the leaders keenest to raise birthrates are most resistant to immigratio
  • As birthrates fall, more regions and communities experience depopulation, with consequences ranging from closed schools to stagnant property values. Less selective colleges will soon struggle to fill classrooms because of the plunge in birthrates that began in 2007, said Fernández-Villaverde. Vance said rural hospitals can’t stay open because of the falling local population.
  • An economy with fewer children will struggle to finance pensions and healthcare for growing ranks of elderly. South Korea’s national pension fund, one of the world’s largest, is on track to be depleted by 2055
  • There’s been little public pressure to act, said Sok Chul Hong, an economist at Seoul National University. “The elderly are not very interested in pension reform, and the youth are apathetic towards politics,” he said. “It is truly an ironic situation.”
Javier E

GE Powered the American Century-Then It Burned Out - WSJ - 0 views

  • General Electric Co. GE -1.39% helped invent the world as we know it: wired up, plugged in and switched on. Born of Thomas Alva Edison’s ingenuity and John Pierpont Morgan’s audacity, GE built the dynamos that generated the electricity, the wires that carried it and the lightbulbs that burned it.
  • To keep the power and profits flowing day and night, GE connected neighborhoods with streetcars and cities with locomotives. It soon filled kitchens with ovens and toasters, living rooms with radios and TVs, bathrooms with curling irons and toothbrushes, and laundry rooms with washers and dryers.
  • He eliminated some 100,000 jobs in his early years as CEO and insisted that managers fire the bottom 10% of performers each year who failed to improve, in a process that became known as “rank and yank.” GE’s financial results were so eye-popping that the strategy was imitated throughout American business.
  • ...25 more annotations...
  • The modern GE was built by Jack Welch, the youngest CEO and chairman in company history when he took over in 1981. He ran it for 20 years, becoming the rare CEO who was also a household name, praised for his strategic and operational mastery.
  • their most obvious problem. GE couldn’t live without GE Capital, still so big it was essentially the nation’s seventh largest bank. But investors couldn’t live with GE Capital and its unshakable shadow of risk, either.
  • it worked more like a collection of businesses under the protection of a giant bank. As the financial sector came to drive more of the U.S. economy, GE Capital, the company’s finance arm, powered more of the company’s growth. At its height, Capital accounted for more than half of GE’s profits. It rivaled the biggest banks in the country, competed with Wall Street for the brightest M.B.A.s and employed hundreds of bankers.
  • The industrial spine of the company gave GE a AAA credit rating that allowed it to borrow money inexpensively, giving it an advantage over banks, which relied on deposits. The cash flowed up to headquarters where it powered the development of new jet engines and dividends for shareholders.
  • Capital also gave General Electric’s chief executives a handy, deep bucket of financial spackle with which to smooth over the cracks in quarterly earnings reports and keep Wall Street happy
  • GE shares were trading at 40 times its earnings when Welch retired in 2001, more than double where it had historically. And much of those profits were coming from deep within Capital, not the company’s factories.
  • When the financial crisis hit, Capital fell back to earth, taking GE’s share price and Immelt with it. The stock closed as low as $6.66 in March 2009. General Electric was on the brink of collapse. The market for short-term loans, the lifeblood of GE Capital, had frozen, and there was little in the way of deposits to fall back on. The Federal Reserve stepped in to save it after an emergency plea from Immelt.
  • the near-death experience taught investors to think of GE like a bank, a stock always vulnerable to another financial collapse
  • At its peak, General Electric was the most valuable company in the U.S., worth nearly $600 billion in August 2000. That year, GE’s third of a million employees operated 150 factories in the U.S., and another 176 in 34 other countries. Its pension plan covered 485,000 people.
  • What if the GE Jack Welch built didn’t work any more?
  • Cracks in the performance of the company’s industrial lines—its power turbines, jet engines, locomotives and MRI machines—would now be plain to see, some executives worried, without Capital’s cash to help cover the weak quarters and pay the sacrosanct dividend
  • Most of the shortfall came from its service contracts, which should have been the source of the easiest profits. Instead, the heart of the industrial business was hollow. And its failure was about to tip the entire company into crisis.
  • Former colleagues compared him to Bill Clinton because of his magnetic ability to hold the focus of a room. He sounded like a leader. He was a natural salesman.
  • Immelt was so confident in GE’s managerial excellence that he projected a sunny vision for the company’s future that didn’t always match reality. He was aware of the challenges, but he wanted his people to feel like they were playing for a winning team. That often left Immelt, in the words of one GE insider, trying to market himself out of a math problem.
  • Alstom’s problems hadn’t gone away, but now its stock was cheaper, and Immelt saw the makings of a deal that fit perfectly with his vision for reshaping his company. GE would essentially swap Capital, the cash engine that no longer made sense, for a new one that could churn out profits each quarter in the reliable way that industrial companies were supposed to.
  • To the dismay of some involved, GE’s bid crept upward, from the €30 a share that the power division’s deal team already believed was too high, to roughly €34, or almost $47. Immelt and Kron met one-on-one, and the deal team realized the game was over. The principals had shaken hands.
  • The visions for the present and the future were both fundamentally flawed. As GE’s research department was preparing white papers heralding “The Age of Gas,” the world was entering a multiyear decline in the demand for new gas power plants and for the electricity that made them profitable.
  • When advisers determined that the concessions to get the deal approved might have grown costly enough to trigger a provision allowing GE to back out, some in the Power business quietly celebrated, confiding in one another that they assumed management would abandon the deal. But Immelt and his circle of closest advisers wanted it done. That included Steve Bolze, the man who ran it and hoped someday to run all of General Electric.
  • “Steve’s our guy,” McElhinney said in one meeting. If Bolze was elevated to CEO, those behind him in Power would rise too. “Get on board,” he said. “We have to make the numbers.”
  • Immelt, trapped in Welch’s long shadow, craved a bold move to shock his company out of the doldrums that had plagued his tenure. It was time for GE to be reinvented again.
  • In the dry language of accounting in which he was so fluent, Flannery was declaring a pillar of Immelt’s pivot had failed: GE had been sending money out the door to repurchase its stock and pay dividends but wasn’t bringing in enough from its regular operations to cover them. It wasn’t sustainable. Buybacks and dividends are generally paid out of leftover funds.
  • when GE spun off Genworth, there was a chunk of the business, long-term-care insurance, that lingered. Policies designed to cover expenses like nursing homes and assisted living had proved to be a disaster for insurers who had drastically underestimated the costs
  • The bankers didn’t think the long-term-care business could be part of the Genworth spinoff. To make the deal more attractive, GE agreed to cover any losses. This insurance for insurers covered about 300,000 policies by early 2018, about 4% of all such policies written in the country. Incoming premiums weren’t covering payouts.
  • Two months after Miller flagged the $3 billion, it was clear the problem was a great deal larger. GE was preparing for it to be more than $6 billion and needed to come up with $15 billion in reserves regulators required it to have to cover possible costs in the future. The figure was gigantic. By comparison, even after the recent cut, GE’s annual dividend cost $4 billion.
  • JP Morgan analyst Steve Tusa, who led the pack in arguing that GE was harboring serious problems, removed his sell rating on the stock this week. GE’s biggest skeptic still thinks the businesses are broken but the risks are now known. The stock climbed back above $7 on Thursday, but is down more than 50% for the year and nearly 90% from its 2000 zenith.
‹ Previous 21 - 40 of 924 Next › Last »
Showing 20 items per page