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links for 2008-11-25

25 Nov
  • Defenders of the free market are often accused of being apologists for big business and shills for the corporate elite. Is this a fair charge?
    No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes —because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.
  • The list of my failures is long and I am too self-conscious to talk about some of my most shameful personal and professional failures.
    The interesting thing is that, after each failure, I have smiled at the mirror privately or laughed at myself publicly, admitted that I failed and moved on to new iterations, or to new projects. The interesting thing is that something good has come out of each of these failures.
  • First, never underestimate the ability of a know-it-all journalist to get it wrong. And second, at some point good manners and civility become a liability rather than an asset.
    After three decades of covering the auto industry, I've learned that Ford (F, Fortune 500) executives tend to be scrappers skilled at bare-knuckle office politics, while the top brass at Chrysler traffic in bravado and charisma. Not at GM. Guys like Wagoner set the tone: smart, sincere, diligent – modern-day Eagle Scouts.
    But in working for the largest company in the industry for so long, they became comfortable, insular, self-referential, and too wedded to the status quo – traits that persist even now, when GM is on the precipice. They prefer stability over conflict, continuity over disorder, and GM's way over anybody else's. They believe that hard work will overcome adversity, and that tomorrow will be better than today – despite four decades of evidence to the contrary
  • Amazon's new wireless reading device, the Kindle, has been called everything from "amazing" to "revolutionary." It holds dozens of books, but it's the size of a paperback. It's also one of Oprah's favorite things… but is it right for you? Here's what Flashlight Worthy's co-founders, Peter and Eric, think:
  • One day back then, he convened a meeting with his team, and the discussion turned to a particular problem in Asia.
    "This is really bad," Cook told the group. "Someone should be in China driving this." Thirty minutes into that meeting Cook looked at Sabih Khan, a key operations executive, and abruptly asked, without a trace of emotion, "Why are you still here?"
    Khan, who remains one of Cook's top lieutenants to this day, immediately stood up, drove to San Francisco International Airport, and, without a change of clothes, booked a flight to China with no return date, according to people familiar with the episode.
  • Great list. Teach everyone!
  • CEO Richard Wagoner turned in a dismal performance during two days of congressional testimony.
    He served up the same kind of boilerplate that GM has been offering analysts and journalists for months: We promise to make better cars, more economical cars, more alternative fuel cars.
    And he presented a laundry list of steps the company has taken to regain profitability, like reducing manufacturing capacity, suspending dividend payments and eliminating health care coverage for salaried retirees.
    But with a straight face, he blamed GM's problems not on its products, its business plan or its long-term strategy but on "the global financial crisis." He didn't bother to acknowledge that GM has lost an astonishing $72 billion in the past four years on his watch – including $51 billion before the crisis hit in 2008.
    Wagoner also flunked the public relations part by arriving in Washington on board his corporate jet – and failed to step up when asked to demonstrate a sign of financial sacrifice.
  • If you had any doubt at all about the primacy of Wall Street over Main Street; the utter lack of transparency behind the biggest government giveaway in history to financial executives, and their shareholders, directors, and creditors; and the intimate connections the lie between Administrations and the heavyweights on Wall Street, your doubts should be laid to rest. Today it was decided the government will guarantee more than $300 billion of troubled mortgages and other assets of Citigroup
    not a particularly good deal for American taxpayers, but it is a marvelous deal for Citi. In return for all the cash and guarantees they are giving away, taxpayers will get only $27 billion of preferred shares paying an 8 percent dividend. No other strings are attached. The senior executives of Citi, including those who have served at the highest levels in the US government, have done their jobs exceedingly well. The American public, including the media, have not the slightest clue what just happened
  • Here is the gist:

    * Citi will carve out $300-billion in troubled assets, which will remain on its balance sheet
    o The first $37-$40-billion in losses on those assets will go to Citi
    o The next $5-billion in losses will hit Treasury
    o The next $10-billion in losses will go to the FDIC
    o Any more losses will go to the Fed
    * There will be no management changes at Citi, because, you know, they are all fine and upstanding people who have done nothing wrong
    * There will be some compensation limitations, but those have not yet been made clear

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Posted by on November 25, 2008 in Links

 

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