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Javier E

Jack Bogle: The Undisputed Champion of the Long Run - WSJ - 0 views

www.wsj.com/...ion-of-the-long-run-1472855372

investment savings retirement financial economic

shared by Javier E on 03 Sep 16 - No Cached
  • Jack Bogle is ready to declare victory. Four decades ago, a mutual-fund industry graybeard warned him that he would “destroy the industry.” Mr. Bogle’s plan was to create a new mutual-fund company owned not by the founding entrepreneur and his partners but by the shareholders of the funds themselves. This would keep overhead low for investors, as would a second part of his plan: an index fund that would mimic the performance of the overall stock market rather than pay genius managers to guess which stocks might go up or down.
  • Not even Warren Buffett has minted more millionaires than Jack Bogle has—and he did so not by helping them get lucky, but by teaching them how to earn the market’s long-run, average return without paying big fees to Wall Street.
  • The mutual-fund industry is slowly liquidating itself—except for Vanguard. Mr. Bogle happily supplies the numbers: During the 12 months that ended May 31, “the fund industry took in $87 billion . . . of which $224 billion came into Vanguard.” In other words, “in the aggregate, our competitors experienced capital outflows of $137 billion.”
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  • Mr. Bogle has some hard news for investors. The basic appeal of index funds—their ability to deliver the market return without shifting an arm and leg to Wall Street’s army of helpers—will only become more important given the decade of depressed returns he sees ahead.
  • Don’t imagine a revisitation of the ’80s or ’90s, when stocks returned 18% a year and investors, after the industry’s rake-off, imagined they “had the greatest manager in the world” because they got 14%. Those planning on a comfy retirement or putting a kid through college will have to save more, work to keep costs low, and—above all—stick to the plan.
  • “When the climate really gets bad, I’m not some statue out there. But when I get knots in my stomach, I say to myself, ‘Reread your books,’ ” he says. Mr. Bogle has written numerous advice books on investing, including 2007’s “The Little Book of Common Sense Investing,” which remains a perennial Amazon best seller—and all of them emphasize not trying to outguess the markets.
  • That said, Mr. Bogle finds today’s stock scene puzzling. Shares are highly priced in historical terms; earnings and economic growth he expects to disappoint for at least the next decade (he sees no point in trying to forecast further). And yet he advises investors to stay invested and weather the storm: “If we’re going to have lower returns, well, the worst thing you can do is reach for more yield. You just have to save more.”
  • Mr. Bogle relies on a forecasting model he published 25 years ago, which tells him that investors over the next decade, thanks largely to a reversion to the mean in valuations, will be lucky to clear 2% annually after costs. Yuck.
  • Then why invest at all? Maybe it would be better to sell and stick the cash in a bank or a mattress. “I know of no better way to guarantee you’ll have nothing at the end of the trail,” he responds. “So we know we have to invest. And there’s no better way to invest than a diversified list of stocks and bonds at very low cost.”
  • Mr. Bogle’s own portfolio consists of 50% stocks and 50% bonds, the latter tilted toward short- and medium-term. Keep an eagle eye on costs, he says, in a world where pre-cost returns may be as low as 3% or 4%. Inattentive investors can expect to lose as much as 70% of their profits to “hidden” fund management costs in addition to the “expense ratios” touted in mutual-fund prospectuses. (These hidden costs include things like sales load, transaction costs, idle cash and inefficient taxes.)
  • He also knows the heartache of having just about everything he has saved tied up in volatile, sometimes irrational markets, especially now. “We’re in a difficult place,” he says. “We live in an extremely risky world—probably more risky than I can recall.”
  • Investing, he says, always is “an act of trust—in the ability of civilization and the U.S. to continue to flourish; in the ability of corporations to continue, through efficiency and entrepreneurship and innovation, to provide substantial returns.” But nothing, not even American greatness, is guaranteed, he adds
  • what he calls the financial buccaneer type, an entrepreneur more interested in milking what’s left of the active-management-fee gravy train than in providing low-cost competition for Vanguard—which means Vanguard’s best days as guardian of America’s nest egg may still lie ahead.
  • the growth of indexing is obviously unwelcome writing on the wall for Wall Street professionals and Vanguard’s profit-making competitors like Fidelity, which have never been able to give heart and soul to low-churn indexing because indexing doesn’t generate large fees for executives and shareholders of management companies.
Javier E

Hopeless and downbeat, Britain is the new France | The Spectator - 0 views

www.spectator.co.uk/...beat-britain-is-the-new-france

UK france crisis culture politics history

shared by Javier E on 24 Dec 22 - No Cached
  • British doom and gloom has been growing in recent year
  • , the use of antidepressants in Britain has rocketed, with only Iceland and Portugal among 18 European nations having a higher consumption. In 2010, 54 people per 1,000 in Britain were taking antidepressants, a figure that doubled to 108 in 2020; in contrast, France’s consumption has remained stable at 53 per 1,000.
  • And now look at that generation. One in ten intend never to start working and a third believe they won’t achieve their life’s ambition.
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  • tens of thousands of young people moved across the Channel, an exodus that caught the eye of the New York Times in 2014. One of the French people the paper interviewed explained that ‘in London, there’s this can-do attitude, and a sense that anything’s possible.’
  • ‘Britain’s young are giving up hope’, John Oxley described a ‘generation that has soured on ambition… the under forties [are] drifting towards professional apathy.’
  • French-bashing became de rigueur for British politicians and business leaders. Few were as withering as Andy Street, the managing director of John Lewis, who in October 2014 described France as ‘sclerotic, hopeless and downbeat’, a country where ‘nothing works and, worse, nobody cares about it.’
  • Within months of taking office Macron slashed the wealth tax and corporate tax rates have steadily fallen from 33 to 25 per cent. Last week the French government passed a budget for 2023 that includes an €8 billion tax cut on businesses. 
  • In Britain, the corporation tax rate has moved in the other direction, and last month Chancellor Jeremy Hunt announced it will rise in April from 19 to 25 per cent; the Daily Telegraph could barely bring itself to acknowledge that because of Hunt’s business tax raid, UK shareholders will now be ‘worse off than the French’. 
  • Tory Britain is no longer a friend of business and nor is it particularly pally with its young. More and more aspirational British twenty-somethings are doing what the ambitious young French did a decade ago and heading to countries where they feel they have more chance of fulfilling their potential.
cjlee29

British Companies Avoid Taking Sides in the Debate Over an E.U. Exit - The New York Times - 0 views

www.nytimes.com/...ndum-companies-neutral-eu.html

shared by cjlee29 on 02 May 16 - No Cached
  • Within hours it had contacted his office, insisting that it was not funding either side in the debate, stating that it had no plans to do so and requesting that he correct his message.
  • ne that could have a big impact ahead of a British referendum on June 23 on whether to leave the bloc. Polls suggest the vote could be close.
  • Many British companies have a direct interest in staying
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  • Concerns about taking sides on this divisive issue are prompting a significant number of high-profile companies to lie low. They worry that expressing any opinion about staying in the bloc or leaving could lead to backlash from customers or shareholders who hold the opposing view, or even split their own boardrooms.
  • There are legal constraints, too. Electoral law prevents companies from spending more than 10,000 pounds — the equivalent of about $15,000 — to influence the result during a referendum campaign, unless they formally register as advocates.
  • Yet so far, the voice of business has been less full-throated than many analysts expected.
  • single market of around 500 million peopl
  • Mr. Woolfe said he hoped to organize social media campaigns challenging high-profile companies that have warned against British withdrawal
  • In Mr. Woolfe’s sights now are two airlines: EasyJet and Ryanair. Carolyn McCall, the chief executive of EasyJet
  • has promised to “bore everybody to death” by repeating a pro-European Union message.
  • But consumer power was a factor in Scotland, too. When Bill Munro, the founder of the tourism company Barrhead Travel, warned employees about possible economic effects of independence, critics targeted the company on social media.
  • The atmosphere is very different from the Scottish referendum
Javier E

Come On, China, Buy Our Stuff! - NYTimes.com - 0 views

www.nytimes.com/...me-on-china-buy-our-stuff.html

chinal economic policy currency trade US balance unemployment

shared by Javier E on 29 Jan 12 - No Cached
  • In 2000, the United States forged its current economic relationship with China by permanently granting it most-favored-nation trade status and, eventually, helping the country enter the World Trade Organization. The unspoken deal, though, went something like this: China could make a lot of cheap goods, which would benefit U.S. consumers, even if it cost the country countless low-end manufacturing jobs. And rather than, say, fight for an extra bit of market share in Chicago, American multinationals could offset any losses because of competition by entering a country with more than a billion people — including the fastest-growing middle class in history — just about to buy their first refrigerators, TVs and cars. It was as if the United States added a magical 51st state, one that was bigger and grew faster than all the others. We would all be better off.
  • European companies have done much better than American ones because they’ve had to practice selling across borders and cultures for decades.
  • China’s households save more than a quarter of their money, while Americans save less than 4 percent.
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  • a successful professional in Shanghai knows that she will have to bear any future health care or retirement costs for herself and, because of the one-child policy, for her parents and grandparents too.
  • Every month, the United States buys around $35 billion in goods and services from China and sells around $11 billion back. That, of course, leaves a $24 billion trade deficit.
  • Every month, the United States is demanding a lot of renminbi and China is demanding few U.S. dollars. The natural result should be for the dollar to get weaker as the renminbi gets stronger.
  • China’s government prevents that adjustment by artificially increasing the demand for dollars, spending much of that $24 billion surplus on U.S. Treasury bonds. This sounds boring, but it effectively makes all Chinese exports somewhere around 25 percent cheaper and all U.S. imports to China, effectively, about 25 percent more expensive
  • all that easy money from China helped make the housing bubble much bigger and last longer, which created a far bigger crisis when the bubble finally burst.
  • The currency intervention also functions as a massive inequality-creation machine. U.S.-based behemoths, which own or use many of those exporting Chinese factories, benefit, as do their shareholders. And because more than 90 percent of U. S. stocks are owned by the wealthiest 20 percent, the spoils are disproportionately concentrated at the top. Meanwhile, lower wages, lost jobs and crippled manufacturing employment fall on the less wealthy.
  • The economists that I spoke to estimated that China’s currency policy has cost the U.S. between 200,000 and 3 million jobs
  • it may seem odd that China’s currency policy isn’t the beginning and end of every single political stump speech. After all, it’s probably the one thing that, if changed, could instantly bring both jobs and more equality to this country. I can’t think of any other economic agenda that would receive the support of unions and big business, free traders and protectionists, Wall Street Occupiers and Tea Partiers.
Javier E

In No One We Trust - NYTimes.com - 0 views

opinionator.blogs.nytimes.com/...in-no-one-we-trust

trust inequality banking economics history

shared by Javier E on 25 Dec 13 - No Cached
  • that doesn’t mean we should stop striving for a bit more trust in our society and our economy. Trust is what makes contracts, plans and everyday transactions possible; it facilitates the democratic process, from voting to law creation, and is necessary for social stability. It is essential for our lives. It is trust, more than money, that makes the world go round.
  • , as more and more people lose faith in a system that seems inexorably stacked against them, and the 1 percent ascend to ever more distant heights, this vital element of our institutions and our way of life is eroding.
  • But events — and economic research — over the past 30 years have shown not only that we cannot rely on self-interest, but also that no economy, not even a modern, market-based economy like America’s, can function well without a modicum of trust — and that unmitigated selfishness inevitably diminishes trust.
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  • Adam Smith argued forcefully that we would do better to trust in the pursuit of self-interest than in the good intentions of those who pursue the general interest. If everyone looked out for just himself, we would reach an equilibrium that was not just comfortable but also productive, in which the economy was fully efficient. To the morally uninspired, it’s an appealing idea: selfishness as the ultimate form of selflessness. (Elsewhere, in particular in his “Theory of Moral Sentiments,” Smith took a much more balanced view, though most of his latter-day adherents have not followed suit.)
  • Things didn’t turn out well for our economy or our society. As millions lost their homes during and after the crisis, median wealth declined nearly 40 percent in three years. Banks would have done badly, too, were it not for the Bush-Obama mega-bailouts.
  • This cascade of trust destruction was unrelenting. One of the reasons that the bubble’s bursting in 2007 led to such an enormous crisis was that no bank could trust another. Each bank knew the shenanigans it had been engaged in — the movement of liabilities off its balance sheets, the predatory and reckless lending — and so knew that it could not trust any other bank
  • bankers used their political influence to eviscerate regulations and install regulators who didn’t believe in them. Officials and academics assured lawmakers and the public that banks could self-regulate. But it all turned out to be a scam. We had created a system of rewards that encouraged shortsighted behavior and excessive risk-taking. In fact, we had entered an era in which moral values were given short shrift and trust itself was discounted.
  • THE banking industry is only one example of what amounts to a broad agenda, promoted by some politicians and theoreticians on the right, to undermine the role of trust in our economy. This movement promotes policies based on the view that trust should never be relied on as motivation, for any kind of behavior, in any context. Incentives, in this scheme, are all that matter.
  • So C.E.O.’s must be given stock options to induce them to work hard. I find this puzzling: If a firm pays someone $10 million to run a company, he should give his all to ensure its success. He shouldn’t do so only if he is promised a big chunk of any increase in the company’s stock market value
  • Similarly, teachers must be given incentive pay to induce them to exert themselves. But teachers already work hard for low wages because they are dedicated to improving the lives of their students. Do we really believe that giving them $50 more, or even $500 more, as incentive pay will induce them to work harder? What we should do is increase teacher salaries generally because we recognize the value of their contributions and trust in their professionalism. According to the advocates of an incentive-based culture, though, this would be akin to giving something for nothing.
  • Of course, incentives are an important component of human behavior. But the incentive movement has made them into a sort of religion, blind to all the other factors — social ties, moral impulses, compassion — that influence our conduct.
  • This is not just a coldhearted vision of human nature. It is also implausible. It is simply impossible to pay for trust every time it is required. Without trust, life would be absurdly expensive; good information would be nearly unobtainable; fraud would be even more rampant than it is; and transaction and litigation costs would soar.
  • When 1 percent of the population takes home more than 22 percent of the country’s income — and 95 percent of the increase in income in the post-crisis recovery — some pretty basic things are at stake. Reasonable people, even those ignorant of the maze of unfair policies that created this reality, can look at this absurd distribution and be pretty certain that the game is rigged.
  • Trust between individuals is usually reciprocal. But if I think that you are cheating me, it is more likely that I will retaliate, and try to cheat you. (These notions have been well developed in a branch of economics called the “theory of repeated games.”) When Americans see a tax system that taxes the wealthiest at a fraction of what they pay, they feel that they are fools to play along.
  • a deeper rot takes hold: Attitudes and norms begin to change. When no one is trustworthy, it will be only fools who trust. The concept of fairness itself is eroded. A study published last year by the National Academy of Sciences suggests that the upper classes are more likely to engage in what has traditionally been considered unethical behavior. Perhaps this is the only way for some to reconcile their worldview with their outlandish financial success, often achieved through actions that reveal a kind of moral deprivation.
  • As always, it is the poor and the unconnected who suffer most from this, and who are the most repeatedly deceived. Nowhere was this more evident than in the foreclosure crisis.
  • The banks figured out how to get court affidavits signed by the thousands (in what came to be called robo-signing), certifying that they had examined their records and that these particular individuals owed money — and so should be booted out of their homes. The banks were lying on a grand scale, but they knew that if they didn’t get caught, they would walk off with huge profits, their officials’ pockets stuffed with bonuses. And if they did get caught, their shareholders would be left paying the tab
  • But perhaps even more than opportunity, Americans cherish equality before the law. Here, inequality has infected the heart of our ideals.
  • I suspect there is only one way to really get trust back. We need to pass strong regulations, embodying norms of good behavior, and appoint bold regulators to enforce them.
Javier E

How Google Dominates Us by James Gleick | The New York Review of Books - 0 views

www.nybooks.com/...how-google-dominates-us

google evil social media transparency social networks privacy

shared by Javier E on 09 Aug 13 - No Cached
  • E-mail Single Page Print addthis_pub = 'nybooks'; addthis_logo = 'http://www.nybooks.com/images/logo-150.gif'; addthis_logo_background = 'ffffff'; addthis_logo_color = '666666'; addthis_brand = 'NYRB'; addthis_options = 'favorites, facebook, twitter, tumblr, reddit, digg, stumbleupon, delicious, google, more'; Share (function() { var s = document.getElementsByTagName('script')[0], rdb = document.createElement('script'); rdb.type = 'text/javascript'; rdb.async = true; rdb.src = document.location.protocol + '//www.readability.com/embed.js'; s.parentNode.insertBefore(rdb, s); })(); ← 1 2 3 It does not have to mean “Obey all the laws.” When Google embarked on its program to digitize copyrighted books and copy them onto its servers, it did so in stealth, deceiving publishers with whom it was developing business relationships. Google knew that the copying bordered on illegal. It considered its intentions honorable and the law outmoded.
  • Who, then, judges what is evil? “Evil is what Sergey says is evil,”
  • On all the evidence Google’s founders began with an unusually ethical vision for their unusual company. They believe in information—”universally accessible”—as a force for good in and of itself. They have created and led teams of technologists responsible for a golden decade of genuine innovation. They are visionaries in a time when that word is too cheaply used. Now they are perhaps disinclined to submit to other people’s ethical standards, but that may be just a matter of personality. It is well to remember that the modern corporation is an amoral creature by definition, obliged to its shareholder financiers, not to the public interest.
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  • The rise of social networking upends the equation again. Users of Facebook choose to reveal—even to flaunt—aspects of their private lives, to at least some part of the public world. Which aspects, and which part? On Facebook the user options are notoriously obscure and subject to change, but most users share with “friends” (the word having been captured and drained bloodless). On Twitter, every remark can be seen by the whole world, except for the so-called “direct message,” which former Representative Anthony Weiner tried and failed to employ. Also, the Library of Congress is archiving all tweets, presumably for eternity, a fact that should enter the awareness of teenagers, if not members of Congress.
  • Google+ gives users finer control over what gets shared with whom. Still, one way or another, everything is shared with the company. All the social networks have access to our information and mean to use it. Are they our friends?
  • The company always says users can “opt out” of many of its forms of data collection, which is true, up to a point, for savvy computer users; and the company speaks of privacy in terms of “trade-offs,” to which Vaidhyanathan objects: Privacy is not something that can be counted, divided, or “traded.” It is not a substance or collection of data points. It’s just a word that we clumsily use to stand in for a wide array of values and practices that influence how we manage our reputations in various contexts. There is no formula for assessing it: I can’t give Google three of my privacy points in exchange for 10 percent better service.
  • This seems right to me, if we add that privacy involves not just managing our reputation but protecting the inner life we may not want to share.
Javier E

The Battle for DuPont - NYTimes.com - 0 views

www.nytimes.com/...-battle-for-the-boardroom.html

DuPont delaware activism corporate

shared by Javier E on 09 May 15 - No Cached
  • DuPont is a pretty well-run company. Under the leadership of Ellen Kullman, a company veteran who became its chief executive in 2009, this once unwieldy conglomerate has undergone a great deal of change, with more still to come. It has cut some $2 billion in costs, eliminating a third of its management; announced the spinoff of its performance chemicals business; and “refreshed” its board with such corporate stalwarts as Edward Breen, who is best known for turning around Tyco International in the early 2000s. Since Kullman took over, the company has delivered 266 percent in total shareholder returns, easily outpacing the Standard & Poor’s 500-stock index. It is in the middle of a major restructuring designed to boost earnings growth.
  • Have we really gotten to the point where the activist now gets the benefit of the doubt, no matter how well run the company?
  • In the DuPont/Trian fight, the hedge fund is on record as saying that the company is not getting a return on its research-and-development spending. Yet R.& D. — science — is at the very heart of DuPont’s business model and always has been. And it can take years to turn a scientific advance into a successful product. A DuPont stripped of much of its R.& D. doesn’t just hurt the company; it hurts the country.
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  • Activist funds are now such a powerful force in the market that many companies — even good ones — have no choice but to offer them board seats.
  • “Activism has caused companies to cut R.& D., capital investment and, most significantly, employment,” he said. “It forces companies to lay off employees to meet quarterly earnings.”“It is,” he concluded, “a disaster for the country.”
Javier E

Problems at Volkswagen Start in the Boardroom - The New York Times - 0 views

www.nytimes.com/...en-start-in-the-boardroom.html

VW car governance industry germany

shared by Javier E on 25 Sep 15 - No Cached
  • I spoke this week to a longtime former senior Volkswagen executive, who agreed that a scandal, especially one involving emissions, was all but inevitable at Volkswagen. He cited the company’s isolation, its clannish board and a deep-rooted hostility to environmental regulations among its engineers.
  • Wolfsburg, where Volkswagen is based in Lower Saxony and the city with the highest per capita income in Germany, is even more remote and isolated than Detroit was in its heyday. “The entire economy is automotive,” he said. “People have a completely uncritical view of cars and their impact on the environment because they all make a living from the industry.”
  • Moreover, “there’s no other company where the owners and the unions are working so closely together as Volkswagen,” he said. Volkswagen “guarantees jobs for over half the supervisory board. What management, the government and the unions all want is full employment, and the more jobs, the better. Volkswagen is seen as having a national mission to provide employment to the German people. That’s behind the push to be No. 1 in the world. They’ll look the other way about anything.”
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  • “There’s an attitude among the German public that it’s very unfair for the U.S. to target the auto industry over emissions,” Professor Roth said. “If you have electric cars and a coal-fired plant producing the electricity, you gain nothing.”
  • maximizing employment shouldn’t be a primary goal of a board, whose purpose is to monitor management for a company’s investors and ensure the long-term health and profitability of a company.
  • The Volkswagen board has been especially slow to move on environmental issues, investing less in electric and hybrid engine technology than industry leaders.
  • From an employment standpoint, the company has succeeded. Volkswagen said it employed nearly 600,000 people last year to produce about 10 million vehicles. By comparison, No. 2 Toyota employed 340,000 to produce just under nine million vehicles.
  • The former Volkswagen executive said Volkswagen’s engineer-driven culture takes the notion even further. He said the engineers felt that the politicians were guilty of rank hypocrisy, especially in the United States, also grumbling that electric cars make no sense as long as power plants are burning fossil fuels.
  • That Volkswagen is nonetheless obliged to obey applicable environmental laws, he said, is a notion likely to fall on deaf ears in Wolfsburg, especially compared to demands to be No. 1 in sales.
  • Considering the damage to Volkswagen from the still-unfolding scandal, its attitudes and approach to governance may have to change. Volkswagen faces a staggering number of investigations and lawsuits. Volkswagen said it set aside $7.3 billion, which doesn’t seem nearly enough; legal fees are likely to run into the billions, and the Environmental Protection Agency alone could fine the company up to $18 billion
  • Volkswagen shares were trading at about €160, or $180, last Friday before the Environmental Protection Agency announced its investigation. They have dropped about 30 percent in the days after the news broke, wiping out over $26 billion in shareholder value
  • Given the serious financial and reputational damage, the long-term survival of Volkswagen is a real question
Javier E

Trump and Fiorina's Snake Oil Sales - The New York Times - 0 views

www.nytimes.com/...e-nocera-trump-vs-fiorina.html

election 2016 candidate

shared by Javier E on 22 Sep 15 - No Cached
  • By every metric that mattered, HP was in far worse shape when she was fired than when she was hired. The company’s stock price dropped more than 50 percent during her tenure, compared to a 7 percent drop in the S.&P. 500. And net earnings dropped to $2.4 billion from $3.1 billion during that same time. The Compaq merger, meanwhile, was a misguided fiasco; today, virtually all remnants of it have disappeared from HP. Fiorina’s me-me-me leadership style demoralized the company and its shareholders. When she walked out the door in February 2005 — with a $21 million severance package — the stock jumped nearly 7 percent.
  • As for the casino bankruptcies, Trump likes to characterize them as shrewd business moves, and stresses that he never filed for personal bankruptcy. But those corporate bankruptcies were costly; he wound up having to give up many of his real estate holdings, and was even put on a monthly budget for a time.
  • if, in 1988, he had simply put his money in a stock index fund, it would be worth $13 billion today. In effect, his post-1988 business career has cost him $5 billion.
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  • And with some $900 million in personal guarantees, he avoided personal bankruptcy by a whisker. Again, according to O’Brien, Trump borrowed millions from his siblings to keep his head above water.
  • “The company is a disaster,” scoffed Trump, referring to Hewlett-Packard, the iconic technology company Fiorina ran from 1999 to 2005. Trump continued: “When Carly says the revenues went up that’s because she bought Compaq. It was a terrible deal, and it really led to the destruction of the company.”
  • Fiorina responded by focusing on how Trump ran his three Atlantic City casinos into the ground. “You ran up mountains of debt, as well as losses,” she said, “using other people’s money, and you were forced to file for bankruptcy not once, not twice [but] four times, a record four times.”
  • They’re both right. Fiorina’s tenure at HP was indeed a disaster, and Trump’s casino interests did indeed file for bankruptcy multiple times.
Javier E

Inside Amazon: Wrestling Big Ideas in a Bruising Workplace - The New York Times - 0 views

www.nytimes.com/...s-in-a-bruising-workplace.html

amazon lifestyle career workplace

shared by Javier E on 18 Aug 15 - No Cached
  • At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, toil long and late (emails arrive past midnight, followed by text messages asking why they were not answered), and held to standards that the company boasts are “unreasonably high.” The internal phone directory instructs colleagues on how to send secret feedback to one another’s bosses. Employees say it is frequently used to sabotage others. (The tool offers sample texts, including this: “I felt concerned about his inflexibility and openly complaining about minor tasks.”)
  • The company’s winners dream up innovations that they roll out to a quarter-billion customers and accrue small fortunes in soaring stock. Losers leave or are fired in annual cullings of the staff — “purposeful Darwinism,”
  • his enduring image was watching people weep in the office, a sight other workers described as well. “You walk out of a conference room and you’ll see a grown man covering his face,” he said. “Nearly every person I worked with, I saw cry at their desk.”
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  • Last month, it eclipsed Walmart as the most valuable retailer in the country, with a market valuation of $250 billion, and Forbes deemed Mr. Bezos the fifth-wealthiest person on earth.
  • Others who cycled in and out of the company said that what they learned in their brief stints helped their careers take off. And more than a few who fled said they later realized they had become addicted to Amazon’s way of working.
  • Amazon may be singular but perhaps not quite as peculiar as it claims. It has just been quicker in responding to changes that the rest of the work world is now experiencing: data that allows individual performance to be measured continuously, come-and-go relationships between employers and employees, and global competition in which empires rise and fall overnight. Amazon is in the vanguard of where technology wants to take the modern office: more nimble and more productive, but harsher and less forgiving.
  • “Organizations are turning up the dial, pushing their teams to do more for less money, either to keep up with the competition or just stay ahead of the executioner’s blade,”
  • At its best, some employees said, Amazon can feel like the Bezos vision come to life, a place willing to embrace risk and strengthen ideas by stress test. Employees often say their co-workers are the sharpest, most committed colleagues they have ever met, taking to heart instructions in the leadership principles like “never settle” and “no task is beneath them.”
  • In contrast to companies where declarations about their philosophy amount to vague platitudes, Amazon has rules that are part of its daily language and rituals, used in hiring, cited at meetings and quoted in food-truck lines at lunchtime
  • “You can work long, hard or smart, but at Amazon.com you can’t choose two out of three,” Mr. Bezos wrote in his 1997 letter to shareholders
  • mazon, though, offers no pretense that catering to employees is a priority. Compensation
  • As the company has grown, Mr. Bezos has become more committed to his original ideas, viewing them in almost moral terms, those who have worked closely with him say. “My main job today: I work hard at helping to maintain the culture,”
  • perhaps the most distinctive is his belief that harmony is often overvalued in the workplace — that it can stifle honest critique and encourage polite praise for flawed ideas. Instead, Amazonians are instructed to “disagree and commit” (
  • According to early executives and employees, Mr. Bezos was determined almost from the moment he founded Amazon in 1994 to resist the forces he thought sapped businesses over time — bureaucracy, profligate spending, lack of rigor. As the company grew, he wanted to codify his ideas about the workplace, some of them proudly counterintuitive, into instructions simple enough for a new worker to understand, general enough to apply to the nearly limitless number of businesses he wanted to enter and stringent enough to stave off the mediocrity he feared.
  • Company veterans often say the genius of Amazon is the way it drives them to drive themselves. “If you’re a good Amazonian, you become an Amabot,” said one employee, using a term that means you have become at one with the system.
  • But in its offices, Amazon uses a self-reinforcing set of management, data and psychological tools to spur its tens of thousands of white-collar employees to do more and more. “The company is running a continual performance improvement algorithm on its staff,” said Amy Michaels, a former Kindle marketer.
  • As the newcomers acclimate, they often feel dazzled, flattered and intimidated by how much responsibility the company puts on their shoulders and how directly Amazon links their performance to the success of their assigned projects
  • Every aspect of the Amazon system amplifies the others to motivate and discipline the company’s marketers, engineers and finance specialists: the leadership principles; rigorous, continuing feedback on performance; and the competition among peers who fear missing a potential problem or improvement and race to answer an email before anyone else.
  • many others said the culture stoked their willingness to erode work-life boundaries, castigate themselves for shortcomings (being “vocally self-critical” is included in the description of the leadership principles) and try to impress a company that can often feel like an insatiable taskmaster.
  • “One time I didn’t sleep for four days straight,” said Dina Vaccari, who joined in 2008 to sell Amazon gift cards to other companies and once used her own money, without asking for approval, to pay a freelancer in India to enter data so she could get more done. “These businesses were my babies, and I did whatever I could to make them successful.”
  • To prod employees, Amazon has a powerful lever: more data than any retail operation in history. Its perpetual flow of real-time, ultradetailed metrics allows the company to measure nearly everything its customers do:
  • Amazon employees are held accountable for a staggering array of metrics, a process that unfolds in what can be anxiety-provoking sessions called business reviews, held weekly or monthly among various teams. A day or two before the meetings, employees receive printouts, sometimes up to 50 or 60 pages long, several workers said. At the reviews, employees are cold-called and pop-quizzed on any one of those thousands of numbers.
  • Ms. Willet’s co-workers strafed her through the Anytime Feedback Tool, the widget in the company directory that allows employees to send praise or criticism about colleagues to management. (While bosses know who sends the comments, their identities are not typically shared with the subjects of the remarks.) Because team members are ranked, and those at the bottom eliminated every year, it is in everyone’s interest to outperform everyone else.
  • many workers called it a river of intrigue and scheming. They described making quiet pacts with colleagues to bury the same person at once, or to praise one another lavishly. Many others, along with Ms. Willet, described feeling sabotaged by negative comments from unidentified colleagues with whom they could not argue
  • The rivalries at Amazon extend beyond behind-the-back comments. Employees say that the Bezos ideal, a meritocracy in which people and ideas compete and the best win, where co-workers challenge one another “even when doing so is uncomfortable or exhausting,” as the leadership principles note, has turned into a world of frequent combat
  • Resources are sometimes hoarded. That includes promising job candidates, who are especially precious at a company with a high number of open positions. To get new team members, one veteran said, sometimes “you drown someone in the deep end of the pool,” then take his or her subordinates. Ideas are critiqued so harshly in meetings at times that some workers fear speaking up.
  • David Loftesness, a senior developer, said he admired the customer focus but could not tolerate the hostile language used in many meetings, a comment echoed by many others.
  • Each year, the internal competition culminates at an extended semi-open tournament called an Organization Level Review, where managers debate subordinates’ rankings, assigning and reassigning names to boxes in a matrix projected on the wall. In recent years, other large companies, including Microsoft, General Electric and Accenture Consulting, have dropped the practice — often called stack ranking, or “rank and yank” — in part because it can force managers to get rid of valuable talent just to meet quotas.
  • Molly Jay, an early member of the Kindle team, said she received high ratings for years. But when she began traveling to care for her father, who was suffering from cancer, and cut back working on nights and weekends, her status changed. She was blocked from transferring to a less pressure-filled job, she said, and her boss told her she was “a problem.” As her father was dying, she took unpaid leave to care for him and never returned to Amazon.
  • “When you’re not able to give your absolute all, 80 hours a week, they see it as a major weakness,” she said.
  • A woman who had thyroid cancer was given a low performance rating after she returned from treatment. She says her manager explained that while she was out, her peers were accomplishing a great deal. Another employee who miscarried twins left for a business trip the day after she had surgery. “I’m sorry, the work is still going to need to get done,” she said her boss told her. “From where you are in life, trying to start a family, I don’t know if this is the right place for you.”
  • A woman who had breast cancer was told that she was put on a “performance improvement plan” — Amazon code for “you’re in danger of being fired” — because “difficulties” in her “personal life” had interfered with fulfilling her work goals. Their accounts echoed others from workers who had suffered health crises and felt they had also been judged harshly instead of being given time to recover.
  • Amazon retains new workers in part by requiring them to repay a part of their signing bonus if they leave within a year, and a portion of their hefty relocation fees if they leave within two years.
  • In interviews, 40-year-old men were convinced Amazon would replace them with 30-year-olds who could put in more hours, and 30-year-olds were sure that the company preferred to hire 20-somethings who would outwork them. A
  • A 2013 survey by PayScale, a salary analysis firm, put the median employee tenure at one year, among the briefest in the Fortune 500
  • Recruiters, though, also say that other businesses are sometimes cautious about bringing in Amazon workers, because they have been trained to be so combative. The derisive local nickname for Amazon employees is “Amholes” — pugnacious and work-obsessed.
  • By the time the dust settles in three years, Amazon will have enough space for 50,000 employees or so, more than triple what it had as recently as 2013.
  • just as Jeff Bezos was able to see the future of e-commerce before anyone else, she added, he was able to envision a new kind of workplace: fluid but tough, with employees staying only a short time and employers demanding the maximum.
  • “Amazon is driven by data,” said Ms. Pearce, who now runs her own Seattle software company, which is well stocked with ex-Amazonians. “It will only change if the data says it must — when the entire way of hiring and working and firing stops making economic sense.”
qkirkpatrick

Israel PM Netanyahu attacks Orange boss for pulling deal - BBC News - 0 views

www.bbc.com/...world-middle-east-33013390

israel palestine history crisis culture

shared by qkirkpatrick on 05 Jun 15 - No Cached
  • Israel's Prime Minister has attacked the boss of the French telecom giant Orange for looking to pull out of a deal with an Israeli partner.
  • Partner controls close to 28% of Israel's mobile market and while Orange has a licensing deal with Partner, allowing it to use the Orange brand name, it does not have a controlling stake in the company.
  • On 6 May, the International Federation for Human Rights (FIDH), a Paris-based NGO, said: "Partner is building infrastructure on confiscated Palestinian land and offers services to settlers and the Israeli army."
  • ...4 more annotations...
  • At a conference in Cairo on Wednesday, Mr Richard said: "I am ready to abandon this [partnership] tomorrow morning but the point is that I want to secure the legal risk for the company.
  • Jewish settlements on occupied territory are considered illegal under international law, though Israel disputes this. Neither Israel nor Partner commented on the FIDH report.
  • "We want to be one of the trustful partners of all Arab countries."
  • "Simultaneously, I call on our friends to say in a clear and loud voice that they object to any kind of boycott against the Jewish state."
  • qkirkpatrick on 05 Jun 15
     
    Company pulls deal with Partner Communications after finding out they build infrastructure on confiscated Palestinian land
Javier E

'The Last Train Home': Documenting China's Race to the Bottom - Ellen Ruppel Shell - Cu... - 0 views

www.theatlantic.com/...65239

china migration factory economics sacrifice

shared by Javier E on 27 Oct 10 - No Cached
  • Every year China's port cities erupt in chaos as 130 million migrant factory workers scramble to make their yearly pilgrimage home for the New Year.  This astonishing spectacle, the largest human migration in the history of the world,
  • Roughly 25 percent of the global workforce is Chinese. Given such enormous firepower, China inevitably sets the norm for wages and working standards in the global supply chain. Multi-national corporate interests have chipped away at those standards and wages in order to maximize profits and serve shareholders.  The chronic disregard for workers' rights in China's foreign-invested sector threatens wages and working conditions around the globe, so it really should be no surprise that ninety percent of Americans have since the 1970s suffered economic slippage--in wages, benefits, job security. 
Javier E

Wall Street's Dead End - NYTimes.com - 0 views

www.nytimes.com/...14Salmon.html

stock market economics us

shared by Javier E on 15 Feb 11 - No Cached
  • the glory days of publicly traded companies dominating the American business landscape may be over. The number of companies listed on the major domestic exchanges peaked in 1997 at more than 7,000, and it has been falling ever since. It’s now down to about 4,000 companies, and given its steep downward trend will surely continue to shrink.
  • the stock market is becoming little more than a place for speculators and algorithms to compete over who can trade his way to the most money.
  • What the market is not doing so well is its core public function: allocating capital efficiently.
  • ...5 more annotations...
  • the companies in which people most want to invest, technology stars like Facebook and Twitter, are managing to avoid the public markets entirely by raising hundreds of millions or even billions of dollars privately. You and I can’t buy into these companies; only very select institutions and well-connected individuals can. And companies prefer it that way.
  • A private company’s stock isn’t affected by the unpredictable waves of the stock market as a whole. Its chief executive can concentrate on running the company rather than answering endless questions from investors, analysts and the press.
  • That burden comes largely from the Securities and Exchange Commission, which was created in the wake of the 1929 stock-market crash to protect small investors. But if the move to private markets continues, small investors aren’t going to need much protection any more: they’ll be able to invest in only a relative handful of companies anyway.
  • Only the biggest and oldest companies are happy being listed on public markets today. As a result, the stock market as a whole increasingly fails to reflect the vibrancy and heterogeneity of the broader economy. To invest in younger, smaller companies, you increasingly need to be a member of the ultra-rich elite.
  • At risk, then, is the shareholder democracy that America forged, slowly, over the past 50 years.
Javier E

Using German ingenuity to fix our economy - The Washington Post - 0 views

www.washingtonpost.com/...AGdRJVWH_story.html

germany economy competitiveness

shared by Javier E on 16 Jun 11 - No Cached
  • Germany offers lessons in how an advanced economy can compete globally and actually raise, not lower, its living standards.
  • Germany owed its edge in global competitiveness to a range of policies that could not be more different than ours: limiting homeownership, improving education (including vocational and technical education) and keeping unions strong
  • these analyses still understate the crucial distinctions between Germany’s stakeholder capitalism, which benefits the many, and our shareholder capitalism, which increasingly benefits only the few.
Javier E

Biggest Scorer in World Cup? Maybe Univision - NYTimes.com - 0 views

www.nytimes.com/...world-cup-maybe-univision.html

TV channel spanish

shared by Javier E on 13 Jul 14 - No Cached
  • During a private equity boom in 2007, his group acquired Univision for $13.7 billion in a bidding war orchestrated by the company’s largest shareholder and former chairman, A. Jerrold Perenchio. Mr. Perenchio, a onetime Hollywood agent, saw the potential of Spanish-language television in 1992, when he bought Univision for just $500 million.
  • Univision, which was started in 1955 as a local San Antonio TV station, is now a sprawling media empire based in New York, reaching nearly 100 million television households across the United States.
  • “We’re seen as a Spanish-language broadcaster that mostly competes with Telemundo,” the company’s chief executive, Randy Falco, said. “But in my view, we should be competing with the English-language networks because increasingly we will have an audience that will surpass them.”
  • ...2 more annotations...
  • Mr. Ramos is also a co-host of Univision’s nightly news program, “Noticiero Univision,” which averages about two million viewers a night, a modest number compared with those of the Big Three English-language networks — but one that dwarfs those of cable news shows like CNN’s “The Situation Room with Wolf Blitzer” or MSNBC’s “Politics Nation.”
  • the number of eligible Hispanic voters in 2016 will total 27.7 million, a 17 percent increase from 2012. “From the numbers that we have, we see 800,000 Latino kids turning 18 every year,”
katyshannon

Yahoo to Keep Alibaba Stake but Spin Off Core Businesses - The New York Times - 0 views

www.nytimes.com/...yahoo-alibaba-spinoff.html

yahoo keep spin core businesses new york times economic

shared by katyshannon on 10 Dec 15 - No Cached
  • Even after the Internal Revenue Service refused in September to grant its blessing to Yahoo’s proposed tax-free spinoff of its $32 billion stake in the Chinese e-commerce giant Alibaba, Marissa Mayer was determined to go forward with the deal.
  • In late October, Ms. Mayer, Yahoo’s chief executive, told shareholders that the plan was on track, and the preparations were still continuing last month.
  • Yet last week, when Yahoo’s board met to review the planned January spinoff, it decided to call off the deal.
  • ...7 more annotations...
  • On Wednesday, the board announced that Yahoo would pursue a spinoff of its core Internet business instead, leaving the Alibaba stock in the old company
  • Although Yahoo’s board said it still believed that the company would prevail in any tax dispute, too many people on Wall Street were worried that challenging Uncle Sam over a possible $10 billion tax bill was just too big a risk, and those fears were depressing Yahoo’s stock price.
  • Mr. Webb said that after a day and a half of meetings, the nine-member board concluded that it could minimize the tax bill and achieve the same goal — separating the Alibaba investment from the rest of Yahoo — by reversing the direction of the transaction.
  • The new Yahoo will be two companies: One will have a 15 percent stake in Alibaba, and the other will have everything else, including search, email, the Tumblr social media service, various sites like Yahoo Finance, and Yahoo’s $8.7 billion stake in Yahoo Japan.
  • Many details of the new spinoff plan remain to be worked out, including who will run the Alibaba shell company and whether the new transaction will incur taxes.
  • The change in approach comes at a cost: It will add at least a year and a host of complexities to what was already a difficult process.
  • Mr. Webb said the board determined that another alternative — selling the company — was not the right choice.
katyshannon

The Rationale Behind Verizon's Interest in Yahoo's Web Business - Bloomberg Business - 0 views

www.bloomberg.com/...terest-in-yahoo-s-web-business

verizon interest rationale yahoo web business bloomberg economic

shared by katyshannon on 10 Dec 15 - No Cached
  • Verizon Communications Inc. wants to attract teens and millennials who are more used to watching videos on their mobile phones than on a TV in a living room. Yahoo! Inc., which is spinning out its main Web business, has been investing heavily in online-video content.
  • So it’s probably not a coincidence that executives at the largest U.S. wireless carrier were chattier than usual this week when asked the question: Would Verizon be interested in buying Yahoo’s Internet assets?
  • Chief Executive Officer Lowell McAdam and Chief Financial Officer Fran Shammo, using similar language, both said within the past two days that Verizon would look at a Yahoo deal "if it made sense," instead of declining to comment. 
  • ...6 more annotations...
  • Both Yahoo and Verizon have staked their future on mobile Internet and video growth. On paper, a deal would make sense. New York-based Verizon has already shown a willingness to buy Internet properties with its $4.4 billion acquisition of AOL in June. Yahoo’s Web business, which could fetch a price of $3 billion to $3.5 billion, based on analysts’ estimates, will be spun out as part of Yahoo’s tax-saving move to return the value of its $31 billion stake in Alibaba Group Holding Ltd. to shareholders.
  • Yahoo’s board has said that it’s not putting the company up for sale, and that the move is the best way to deal with the Alibaba holdings.
  • "Yahoo would help check several boxes in what Verizon is looking to build at the moment with a cross-platform ad strategy and new video offerings," said Jan Dawson, an analyst at Jackdaw Research LLC.
  • Yahoo’s mail, finance, sports and video sites attract more than 1 billion users, a prized asset that would add to AOL’s 2 million users. That kind of Web traffic, along with exclusive content, is just what Verizon, with more than 105 million wireless subscribers, needs to lure and retain a new smartphone-addicted generation.
  • A Yahoo deal would also give Verizon a new source of revenue, through online advertising, especially from Yahoo’s video-ad unit Brightroll. Verizon has introduced an ad-supported mobile-video service called go90 (named for tilting small screens 90 degrees to watch videos). By seeking users and marketers, Verizon is essentially bulking up to compete with the likes of Facebook Inc. and Google, which are starting to move into the Internet space as a way to drive more users to their online properties.
  • "Verizon is vying to get a larger share of advertisers’ wallets and adding Yahoo would help strengthen AOL as the No. 3 player," said Brian Wieser, an analyst at Pivotal Research Group. "Yahoo has a lot of users in a well defined environment. That is very valuable to advertisers."
Javier E

Opinion | The Deadly Soul of a New Machine - The New York Times - 0 views

www.nytimes.com/...ial-intelligence-machines.html

AI history

shared by Javier E on 07 Dec 18 - No Cached
  • it’s not too much of a reach to see Flight 610 as representative of the hinge in history we’ve arrived at — with the bots, the artificial intelligence and the social media algorithms now shaping the fate of humanity at a startling pace.
  • Like the correction system in the 737, these inventions are designed to make life easier and safer — or at least more profitable for the owners.
  • The C.E.O. of Microsoft, Satya Nadella, hit a similar cautionary note at the company’s recent annual shareholder meeting. Big Tech, he said, should be asking “not what computers can do, but what they should do.”
  • ...3 more annotations...
  • The overall idea is to outsource certain human functions, the drudgery and things prone to faulty judgment, while retaining master control. The question is: At what point is control lost and the creations take over? How about now?
  • It’s the “can do” part that should scare you. Facebook, once all puppies, baby pictures and high school reunion updates, is a monster of misinformation.
  • s haunting as those final moments inside the cockpit of Flight 610 were, it’s equally haunting to grasp the full meaning of what happened: The system overrode the humans and killed everyone. Our invention. Our folly.
Javier E

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

www.wsj.com/...then-it-burned-out-11544796010

corporate management leadership history

shared by Javier E on 17 Dec 18 - No Cached
  • 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.
Javier E

Opinion | The Fleecing of Millennials - The New York Times - 0 views

www.nytimes.com/...uttigieg-2020-millennials.html

millennials economics income wealth American dream

shared by Javier E on 28 Jan 19 - No Cached
  • the economy has now been growing for almost a decade. But the truth is that younger Americans have not benefited much.
  • Look at incomes, for starters. People between the ages of 25 and 34 were earning slightly less in 2017 than people in that same age group had been in 2000:
  • The wealth trends look even worse. Since the century’s start, median net worth has plummeted for every age group under 55
  • ...13 more annotations...
  • The biggest example is higher education. Over the past decade, states have cut college funding by an average of 16 percent per student.
  • Rather than starting new projects, companies are sitting on big piles of cash or distributing it to their shareholders.
  • Because the layoff rate has declined since 2000, most older workers have been able to hold on to their jobs. For those who are retired, their income — through a combination of Social Security and 401(k)’s — still outpaces inflation on average.
  • But many younger workers are struggling to launch themselves into good-paying careers. They then lack the money to buy a first home or begin investing in the stock marke
  • Given these trends, you’d think the government would be trying to help the young. But it’s not. If anything, federal and state policy is going in the other direction. Medicare and Social Security have been spared from cuts. Programs that benefit younger workers and families have not.
  • Why is this happening? The main reason is a lack of economic dynamism. Not as many new companies have been forming since 2000 — for reasons that experts don’t totally understand — and existing companies have been expanding at a slower rate.
  • First, the national debt, while manageable now, is on pace to soar. The primary cause is the cost of health care: Most Americans receive far more in Medicare benefits than they paid in Medicare taxes. The Trump tax cut also plays a role. It is increasing the debt — and it mostly benefits older, affluent households.
  • Second, the warming planet is likely to cause terrible damage and bring huge costs.
  • Young Americans favor aggressive action, now, to slow climate change. But the Republican Party — which wins elections with strong support from older voters — has vetoed any such action.
  • Today’s young Americans will be left to suffer the consequences and bear the costs.
  • Last week, one of those young Americans — somebody who qualifies as an older millennial — announced that he was running for president: the 37-year-old mayor of South Bend, Ind., Pete Buttigieg. A Navy veteran and Rhodes scholar who’s been praised by Barack Obama, Buttigieg (“BOOT-edge-edge”) is a rising star in Democratic politics
  • I think his candidacy is important, because it has the potential to influence the entire campaign. Buttigieg kicked off his run by talking about “intergenerational justice” and made clear that he would focus sharply on the future.
  • the country’s biggest economic problems aren’t about hordes of greedy old people profiting off the young. They’re about an economy that showers much of its bounty on the already affluent, at the expense of most Americans — and of our future. The young pay the biggest price for these inequities.
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