As I’ve noted in some prior blog entries, Bill Gross, the world’s preeminent bond manager from PIMCO, also happens to be an excellent writer. I read his monthly comments as much for their style and wit, as I do for their content. His piece this month Don't Care, although primarily about the sovereign debt crisis, seques into the topic using the experience we’ve all had, the vapidity of cocktail conversation, the inherent disinterest of people in other people, coming to the conclusion that “the careful discrimination between sovereign credits is becoming more than casual cocktail conversation. A deficiency of global aggregate demand and the potential impotency of policymakers to close the gap are evolving into a life or death outcome for the weakest sovereigns, with consequences for credit and asset markets worldwide.”
But I am not going to discuss sovereign debt here (perhaps the most serious one ultimately being our own) but, instead, the experience he so eloquently and hilariously describes as the blather of the social gathering. He even incorporates a graph entitled the “Cocktail Party Empathy Chart,” the X-axis being “Seconds Into The Conversation” and the Y-axis being “How Much I Really Care About What You Are Saying.” As one might imagine, there is a diagonally dropping line from ten to zero in about ninety seconds.
Although Gross covers the five topics such conversations normally wander off to, I’ll use his general observation as my own seque into a very recent experience relating to my last entry , in which I said I was happy to see the preview performance of American Buffalo as it gave me an opportunity to form my own opinion of the production. Since then, three professionally written reviews have appeared, one in the Palm Beach Post which was positive but, I thought, could have been more enthusiastic and two unconditionally excellent reviews, one in The New Times, Broward/Palm Beach and the other from Skip Sheffield’s blog.
We were at a social gathering recently and someone asked whether anyone had seen this new production of American Buffalo so I began to glowingly describe the production and was interrupted by the comment that the Palm Beach Post didn’t seem to be overly enthusiastic. Exactly my point I began to say, and before I could expand upon that it was pretty clear to me this person was more interested in talking about something else relating to one of those five “unbearable minute-and-a-half” topics, not really wanting a thoughtful reply. On Bill Gross’ X/Y graph, I hardly lasted the 90 seconds!
But why should this be a surprise? We don’t even listen to each other on the bigger issues. Look at the recent hyped meeting on healthcare between the President and leaders of Congress, each party pushing its own agenda, preening for their constituents in the all-day televised meeting. Hey, it makes no difference whether we will bankrupt the nation, as long as I look good! Who cares what the other has to say?
But I digress. Thanks, Bill Gross, for reminding us that we need to listen to each other, although I guess he might agree it all seems pretty hopeless.
Monday, March 1, 2010
Thursday, February 18, 2010
American Buffalo Soars at Dramaworks
One of the benefits of having a preview subscription to the performances at Dramaworks is the ability to see this uniquely focused regional theatre’s productions before reviews appear. Dramaworks dares to produce mostly classics such as the recent Ibsen's A Doll's House, Frayn’s Copenhagen, O’Neill’s A Moon for the Misbegotten, and one of my favorites, Ionesco's The Chairs, simply serving up the very best in theatre, in a highly professional manner. One has to thank William Hayes, Dramaworks’ Producing Artistic Director, for his vision and his ability to consistently achieve Dramawork’s mission of being “a professional not-for-profit theatre company that engages and entertains audiences with provocative and timeless productions that personally impact each individual.”
And, indeed, American Buffalo is provocative, a nearly two hour run time going by with such pacing and great acting that the evening seemed to be compressed into mere minutes. David Mamet’s play is presented as he probably intended, with a perfect set design of a 70’s junk shop, the microcosmic universe where three small-time crooks, inherent losers, but ones with the needs of everyman for respect, friendship, even love, bungle their way through a botched job of stealing a coin collection from a “mark.” It is darkly humorous throughout.
Mamet’s staccato dialogue, although stark and profane, is pure poetry. It has a cadence that carries along the characters’ interaction and the plot. This is how people talk, and Donny, Teach, and Bobby become vividly real. An amusing sidebar is the fourth character in the play, Fletch, who we, the audience never see, but we join the characters in the play, questioning what kind of guy he might be, first thinking he’s the “brains” and then thinking he is nothing but a card shark and cheat, but then learning he was assaulted and is in a hospital with a broken jaw (ironic as he can’t speak in the play anyhow). It’s an interesting conceit that Mamet employs to bring us, the audience, further into the heart of the play.
And on a smaller scale the play is emblematic of today’s Madoffian barbaric business world, and the collapse of moral values. A constant refrain of the play is “hey, we’re talk’n business here.”
All in all, this is great theatre and if any review is less than excellent, I will be surprised.
.
And, indeed, American Buffalo is provocative, a nearly two hour run time going by with such pacing and great acting that the evening seemed to be compressed into mere minutes. David Mamet’s play is presented as he probably intended, with a perfect set design of a 70’s junk shop, the microcosmic universe where three small-time crooks, inherent losers, but ones with the needs of everyman for respect, friendship, even love, bungle their way through a botched job of stealing a coin collection from a “mark.” It is darkly humorous throughout.
Mamet’s staccato dialogue, although stark and profane, is pure poetry. It has a cadence that carries along the characters’ interaction and the plot. This is how people talk, and Donny, Teach, and Bobby become vividly real. An amusing sidebar is the fourth character in the play, Fletch, who we, the audience never see, but we join the characters in the play, questioning what kind of guy he might be, first thinking he’s the “brains” and then thinking he is nothing but a card shark and cheat, but then learning he was assaulted and is in a hospital with a broken jaw (ironic as he can’t speak in the play anyhow). It’s an interesting conceit that Mamet employs to bring us, the audience, further into the heart of the play.
And on a smaller scale the play is emblematic of today’s Madoffian barbaric business world, and the collapse of moral values. A constant refrain of the play is “hey, we’re talk’n business here.”
All in all, this is great theatre and if any review is less than excellent, I will be surprised.
.
Tuesday, February 16, 2010
eBook War of Words
A follow up to Publishers in the Crosshairs, hopefully a more carefully considered one. The eBook wars are far more complicated than imagined. I quoted Mike Shatzkin from the Financial Times piece, but since then I’ve had enough sense to venture into his blog, specifically his expert report, The wild weekend of Amazon and Macmillan, which in turn led me to Tobias Buckell’s Why my books are no longer for sale via Amazon and Charlie Stross’ Amazon, Macmillan: an outsider's guide to the fight. These lengthy pieces, with their fascinating threads of responses, are must reading, something I might have done in the first place.
I should have known that publishers would find ways to make things hopelessly complex. Any industry that can base its selling strategy on first publishing a high-priced edition, overprinting the same in the hope a lower unit cost will justify a lower list price, and then take back the majority of what has been printed as returns, trying then to resell them on the bargain books table for pennies on the dollar, while, at the same time, issuing a lower-priced paper back edition, has to be suspect to begin with. The eBook wars have become enmeshed in legacy marketing practices such as “agency plans” and inconsistent methods of compensating authors on the sale of such editions (percentage based on “list price” or the net selling price, and/or whether the “agency” discount figure into the same). Then, digital rights management further complicates the issue.
When things become hopelessly complex, simplify. One option is to go to a “net pricing” scheme for eBook editions sold to the retail marketplace through intermediaries and then let the marketplace work; perhaps that price being similar to the eventual paperback list price. Of course, marketing structures and royalty arrangements would have to be engineered with that approach in mind, so there is no short-term silver bullet, and it does not "prevent" Amazon from pricing at less than it is paying the publisher. One has to wonder whether such a publishing practice is even legal or Amazon’s pricing is sustainable. But, I defer to the blogs mentioned above on this subject, following them with great interest, as the eBook wars no doubt escalate. As a society, we can only hope that a negotiated peace does not come at a price too steep for the publishing industry.
I should have known that publishers would find ways to make things hopelessly complex. Any industry that can base its selling strategy on first publishing a high-priced edition, overprinting the same in the hope a lower unit cost will justify a lower list price, and then take back the majority of what has been printed as returns, trying then to resell them on the bargain books table for pennies on the dollar, while, at the same time, issuing a lower-priced paper back edition, has to be suspect to begin with. The eBook wars have become enmeshed in legacy marketing practices such as “agency plans” and inconsistent methods of compensating authors on the sale of such editions (percentage based on “list price” or the net selling price, and/or whether the “agency” discount figure into the same). Then, digital rights management further complicates the issue.
When things become hopelessly complex, simplify. One option is to go to a “net pricing” scheme for eBook editions sold to the retail marketplace through intermediaries and then let the marketplace work; perhaps that price being similar to the eventual paperback list price. Of course, marketing structures and royalty arrangements would have to be engineered with that approach in mind, so there is no short-term silver bullet, and it does not "prevent" Amazon from pricing at less than it is paying the publisher. One has to wonder whether such a publishing practice is even legal or Amazon’s pricing is sustainable. But, I defer to the blogs mentioned above on this subject, following them with great interest, as the eBook wars no doubt escalate. As a society, we can only hope that a negotiated peace does not come at a price too steep for the publishing industry.
.
The Ancient Library of Celsus
Thursday, February 11, 2010
Publishers in the Crosshairs
Maybe it’s because I’ve been on the periphery of the industry for a while, the salad days of my publishing career behind me, but being a firm believer that information, especially vetted information, has value, publishers seem to be having a chicken-little moment at this stage of technology evolution. I can’t help but hark back to the 1960’s when publishers and libraries were fearing that Ultrafiche, a microfiche that holds up to 1,000 pages per 4x6" sheet of film, would make the printed book redundant. So fast-forward to the brave new world of the 21st century.
No doubt today’s technology is a form of creative destruction that Ultrafiche was not. But the operative word here is creative and publishers bring something valuable to the table, gathering and authenticating information at the higher end of the information pyramid and editing, designing, promoting and distributing trade books at the lower end. I’ve always thought of publishing as an information pyramid, the top of which is “must have information” – mostly scientific and professional – and at the bottom, the kind of publishing which is mostly the mass market stuff competing with movies, magazines, and other leisure-time activities. In the information pyramid there are various categories in between, such as educational publishing, serious trade publishing, etc. The higher in the pyramid, the less price sensitive and visa versa. To a great extent, this applies to electronic distribution as well.
Monday’s Financial Times presented an interesting analysis of the publishing industry’s present predicament, eye opening because it made clear that Amazon, to build market share and ward off the rapid encroachment of Apple and Google, was selling their $9.99 eBooks at a loss. Macmillan’s move to delay eBook editions of new titles by six months was to “force” Amazon to charge more, which Amazon capitulated on, not because of one publisher’s demands but because the announcement of Apple’s iPad threw down the gauntlet of real competition for the Kindle. I thought competition was supposed to drive down prices. Otherwise, the whole matter suggests a form of price fixing.
While publishers might find a $9.99 electronic book unsustainable (if that is their own list price) as, after all, the vast majority of the costs are those incurred in creating the first copy (paper, printing, and binding being a minor part of the expense in publishing), Amazon’s selling at that price is another matter. How long can Amazon sustain pricing that is less than publishers’ charge Amazon, particularly as Apple and Google enter the competitive fray? Aren’t publishers playing a dangerous collusion game “forcing” resellers to charge a particular price? Publishers need to set their list prices for printed and electronic editions, establish a sensible discount schedule to resellers (both price and discount dependent on where the book/information stands in the information pyramid), and then let the marketplace work. Their control of copyright allows them to have this power. It’s not a matter of “negotiating” prices with resellers, but, instead, ensuring they (publishers) don’t fall into the same trap as the music industry, taking safeguards with distributors to guard against unlicensed replication of eBook editions.
According to Mike Shatzkin (quoted in the FT article), “Legacy publishers still want bookstores to last as long as possible. Their business model is built on their expertise in navigating that industry.” No doubt that is true; even though that legacy system is fraught with its own economic problems such as allowing “returns” of unsold copies for up to a year, an archaic business practice that bookstores and publishers seem to be addicted to. However, be it legacy publishing, electronic, or forms yet to be discovered, it is the publishing industry’s need to adapt, not to retard progress. Otherwise, “their failure to recognize that their industry’s economics is of no concern to the marketplace [will be] another nail in their coffin.”
Perhaps the trade book publishing industry needs to be led out of the woods by more innovative independent publishers, with important, influential authors seeking those venues, deserting the present publishing oligarchy that imagines it can control how the resellers should price their publications. Instead, control the timeliness, presentation, and relevance and accuracy of content, bringing together the author and the reader, in any form the marketplace needs.
Of course it is a more complicated matter, within an even larger picture if you take into account the desirable survival of the independent bookstore, the strategic deployment of on-demand publishing by publishers, and how authors, particularly the best-selling authors, look at the eBook – is it a subsidiary right of which they require a larger piece of the action, such as they receive from the sale of movie rights, or even hold the right to themselves to negotiate their own deals with Amazon, Apple, etc.?
Independent bookstores could be compensated for eBook downloads in their own Wifi hotspots – provided publishers and electronic distributors cooperate and agree to give up a little of the pie, as sellers do to Google for eyeballs that lead to sales. It is in the best interests of the industry to ensure the independents’ survival and they can have a role.
Publishers could more often deploy on-demand printing, especially for the so-called mid-trade edition, or do shorter edition runs and then opt for on demand subsequent editions if warranted. This strategy would reduce part of the publisher’s risk.
Authors have to realize that having a multiplicity of publishers and distributors is in their best long-term interests. Reserving eBook rights for themselves to negotiate with electronic distributors will have an impact on publishers’ ability to produce and promote printed editions. Are we, as a society, better off without legacy publishing in any form?
One of my friends and mentors, the late Len Shatzkin (Mike Shatzkin’s father) said it best in his book In Cold Type; Overcoming the Book Crisis (published in 1982 – the industry has always been in crisis!): “Any misfortune for book publishing is a misfortune for all Americans. Books are too important to our lives; we cannot be indifferent, or even casual, about what happens to the industry that produces them.”
.
No doubt today’s technology is a form of creative destruction that Ultrafiche was not. But the operative word here is creative and publishers bring something valuable to the table, gathering and authenticating information at the higher end of the information pyramid and editing, designing, promoting and distributing trade books at the lower end. I’ve always thought of publishing as an information pyramid, the top of which is “must have information” – mostly scientific and professional – and at the bottom, the kind of publishing which is mostly the mass market stuff competing with movies, magazines, and other leisure-time activities. In the information pyramid there are various categories in between, such as educational publishing, serious trade publishing, etc. The higher in the pyramid, the less price sensitive and visa versa. To a great extent, this applies to electronic distribution as well.
Monday’s Financial Times presented an interesting analysis of the publishing industry’s present predicament, eye opening because it made clear that Amazon, to build market share and ward off the rapid encroachment of Apple and Google, was selling their $9.99 eBooks at a loss. Macmillan’s move to delay eBook editions of new titles by six months was to “force” Amazon to charge more, which Amazon capitulated on, not because of one publisher’s demands but because the announcement of Apple’s iPad threw down the gauntlet of real competition for the Kindle. I thought competition was supposed to drive down prices. Otherwise, the whole matter suggests a form of price fixing.
While publishers might find a $9.99 electronic book unsustainable (if that is their own list price) as, after all, the vast majority of the costs are those incurred in creating the first copy (paper, printing, and binding being a minor part of the expense in publishing), Amazon’s selling at that price is another matter. How long can Amazon sustain pricing that is less than publishers’ charge Amazon, particularly as Apple and Google enter the competitive fray? Aren’t publishers playing a dangerous collusion game “forcing” resellers to charge a particular price? Publishers need to set their list prices for printed and electronic editions, establish a sensible discount schedule to resellers (both price and discount dependent on where the book/information stands in the information pyramid), and then let the marketplace work. Their control of copyright allows them to have this power. It’s not a matter of “negotiating” prices with resellers, but, instead, ensuring they (publishers) don’t fall into the same trap as the music industry, taking safeguards with distributors to guard against unlicensed replication of eBook editions.
According to Mike Shatzkin (quoted in the FT article), “Legacy publishers still want bookstores to last as long as possible. Their business model is built on their expertise in navigating that industry.” No doubt that is true; even though that legacy system is fraught with its own economic problems such as allowing “returns” of unsold copies for up to a year, an archaic business practice that bookstores and publishers seem to be addicted to. However, be it legacy publishing, electronic, or forms yet to be discovered, it is the publishing industry’s need to adapt, not to retard progress. Otherwise, “their failure to recognize that their industry’s economics is of no concern to the marketplace [will be] another nail in their coffin.”
Perhaps the trade book publishing industry needs to be led out of the woods by more innovative independent publishers, with important, influential authors seeking those venues, deserting the present publishing oligarchy that imagines it can control how the resellers should price their publications. Instead, control the timeliness, presentation, and relevance and accuracy of content, bringing together the author and the reader, in any form the marketplace needs.
Of course it is a more complicated matter, within an even larger picture if you take into account the desirable survival of the independent bookstore, the strategic deployment of on-demand publishing by publishers, and how authors, particularly the best-selling authors, look at the eBook – is it a subsidiary right of which they require a larger piece of the action, such as they receive from the sale of movie rights, or even hold the right to themselves to negotiate their own deals with Amazon, Apple, etc.?
Independent bookstores could be compensated for eBook downloads in their own Wifi hotspots – provided publishers and electronic distributors cooperate and agree to give up a little of the pie, as sellers do to Google for eyeballs that lead to sales. It is in the best interests of the industry to ensure the independents’ survival and they can have a role.
Publishers could more often deploy on-demand printing, especially for the so-called mid-trade edition, or do shorter edition runs and then opt for on demand subsequent editions if warranted. This strategy would reduce part of the publisher’s risk.
Authors have to realize that having a multiplicity of publishers and distributors is in their best long-term interests. Reserving eBook rights for themselves to negotiate with electronic distributors will have an impact on publishers’ ability to produce and promote printed editions. Are we, as a society, better off without legacy publishing in any form?
One of my friends and mentors, the late Len Shatzkin (Mike Shatzkin’s father) said it best in his book In Cold Type; Overcoming the Book Crisis (published in 1982 – the industry has always been in crisis!): “Any misfortune for book publishing is a misfortune for all Americans. Books are too important to our lives; we cannot be indifferent, or even casual, about what happens to the industry that produces them.”
.
Thursday, February 4, 2010
Witch Hunt Feeding Frenzy
In the interest of full disclosure, we own two automobiles made by Toyota and have owned others in the past. I’m amused by some of the ads from competitors, one comparing its car to the Camry but “admitting” their automobile fails to have one feature of the Toyota: “self propulsion.” (Rimshot drum roll, please.) General Motors is offering an “extra” $1000 rebate on any traded-in Toyota. Transportation Secretary Ray La Hood said that Toyota owners should stop driving recalled Toyota vehicles (later “retracted” but damage done). Open season on Toyota, let the witch hunt begin!
It will be interesting to watch the Congressional Hearings later this month on the topic, the perfect opportunity for our representatives to preen and put a protectionist spin on the “facts.” How convenient to have a foreign car manufacturer to bash while being a business partner of GM. Detroit must be having a field day. Where were the Congressional Hearings when the Ford Pintos were exploding in the 1970s?
Forgotten in all of this is the paucity of incidents leading to the recall. According to Consumer Reports, analyzing complaints for the 2008 model year, there were 52 stuck accelerator issues with Toyota, vs. 36 for the next nearest offender, Ford. (Ford has actually recalled some of its vehicles in China for the same problem.) Both car makers had the same market share so, statistically, Toyota does have more of an issue than Ford, 16 more but we’re talking about millions of cars!
The Toyota issue mushroomed after a widely publicized crash of a Lexus that lead to the tragic death of a family, and that then led to a spike of similar reports, not because there were suddenly more faulty accelerators, but because of the publicity. This is how a witch-hunt is spawned.
I once had the exact same issue with a VW Dasher Wagon, but the National Highway Traffic Safety Administration simply ignored the complaint. I also once had a Jeep Grand Cherokee that would suddenly lose power. After repeat incidents, several near accidents, and multiple trips to the Chrysler dealer, they finally said they couldn’t fix it and as the car was no longer under warranty, it became my problem. (The car was towed away to an auction for parts.)
Of course the present recall and concern is warranted and hopefully Toyota will fix all involved automobiles. But it needs to be put in perspective as anecdotal problems with cars will always occur and the scope of the present issue is fairly limited. Let the so-called “Hearings” begin!
"I have seen too many frightful proofs in court - the Devil is alive in Salem, and we dare not quail to follow wherever the accusing finger points!" -- The Crucible by Arthur Miller
It will be interesting to watch the Congressional Hearings later this month on the topic, the perfect opportunity for our representatives to preen and put a protectionist spin on the “facts.” How convenient to have a foreign car manufacturer to bash while being a business partner of GM. Detroit must be having a field day. Where were the Congressional Hearings when the Ford Pintos were exploding in the 1970s?
Forgotten in all of this is the paucity of incidents leading to the recall. According to Consumer Reports, analyzing complaints for the 2008 model year, there were 52 stuck accelerator issues with Toyota, vs. 36 for the next nearest offender, Ford. (Ford has actually recalled some of its vehicles in China for the same problem.) Both car makers had the same market share so, statistically, Toyota does have more of an issue than Ford, 16 more but we’re talking about millions of cars!
The Toyota issue mushroomed after a widely publicized crash of a Lexus that lead to the tragic death of a family, and that then led to a spike of similar reports, not because there were suddenly more faulty accelerators, but because of the publicity. This is how a witch-hunt is spawned.
I once had the exact same issue with a VW Dasher Wagon, but the National Highway Traffic Safety Administration simply ignored the complaint. I also once had a Jeep Grand Cherokee that would suddenly lose power. After repeat incidents, several near accidents, and multiple trips to the Chrysler dealer, they finally said they couldn’t fix it and as the car was no longer under warranty, it became my problem. (The car was towed away to an auction for parts.)
Of course the present recall and concern is warranted and hopefully Toyota will fix all involved automobiles. But it needs to be put in perspective as anecdotal problems with cars will always occur and the scope of the present issue is fairly limited. Let the so-called “Hearings” begin!
"I have seen too many frightful proofs in court - the Devil is alive in Salem, and we dare not quail to follow wherever the accusing finger points!" -- The Crucible by Arthur Miller
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Friday, January 29, 2010
Who wants flowers when you're dead?
A couple of days ago, my friend Bruce and I were exchanging some brief emails regarding Salinger, not for any particular reason other than wondering what he might be up to in his reclusive self-imposed exile, and then the news he died the very day we were having those thoughts. As Bruce said “Are the mystical forces of the universe visiting the readers and men of letters? I'm scared.” There is a special place in our generation’s literary consciousness for the particularly honest, direct, voice of Salinger’s writing. I remember reading Catcher in my late teens thinking how can this guy know what I was thinking?
Salinger also lived in Westport CT for a while, before we settled in that town, and some think Catcher could have been written there.
Salinger also lived in Westport CT for a while, before we settled in that town, and some think Catcher could have been written there.
Strange to be in a world without, now, Holden Caulfield, as well as Harry “Rabbit” Angstrom.
“Boy, when you're dead, they really fix you up. I hope to hell when I do die somebody has sense enough to just dump me in the river or something. Anything except sticking me in a goddam cemetery. People coming and putting a bunch of flowers on your stomach on Sunday, and all that crap. Who wants flowers when you're dead? Nobody.” --The Catcher in the Rye
Speaking of dead, Florida is known as “God’s waiting room,” and this is no more evident than in the deluge of advertisements and mailings here about estate planning, not outliving your money, etc., but my very favorite came in the mail yesterday, the “opportunity” to “win a pre-paid cremation!” Just more “crap.” RIP, Holden.
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“Boy, when you're dead, they really fix you up. I hope to hell when I do die somebody has sense enough to just dump me in the river or something. Anything except sticking me in a goddam cemetery. People coming and putting a bunch of flowers on your stomach on Sunday, and all that crap. Who wants flowers when you're dead? Nobody.” --The Catcher in the Rye
Speaking of dead, Florida is known as “God’s waiting room,” and this is no more evident than in the deluge of advertisements and mailings here about estate planning, not outliving your money, etc., but my very favorite came in the mail yesterday, the “opportunity” to “win a pre-paid cremation!” Just more “crap.” RIP, Holden.
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Monday, January 25, 2010
Volcker, Stiglitz, Hussman….
Here’s some positive news from or about people who can help point us in the right direction. First there was the big news that Paul Volcker will finally take a key role in addressing economic reform, particularly with the reinstatement of some of the key features from the Glass-Steagall Act. Joseph Stiglitz touches upon that need as well as other issues in an extract from his new book, Freefall; Free Markets and the Sinking of the Global Economy in a piece entitled “Why we have to change capitalism”
We now know the true source of recent bank bonuses: “free money” profits: According to Stiglitz, “the alacrity with which all the major investment banks decided to become ‘commercial banks’ in the fall of 2008 was alarming – they saw the gifts coming from the federal government, and evidently, they believed that their risk-taking behaviour would not be much circumscribed. They now had access to the Fed window, so they could borrow at almost a zero interest rate; they knew that they were protected by a new safety net; but they could continue their high-stakes trading unabated. This should be viewed as totally unacceptable.” Also, Stiglitz puts the bailouts in the context of the bigger picture: “the failures in our financial system are emblematic of broader failures in our economic system, and the failures of our economic system reflect deeper problems in our society. We began the bailouts without a clear sense of what kind of financial system we wanted at the end, and the result has been shaped by the same political forces that got us into the mess. And yet, there was hope that change was possible. Not only possible, but necessary.” As a consequence he argues for “a new financial system that will do what human beings need a financial system to do.”
Meanwhile, the Financial Times carried an excellent piece on Paul Volcker now that he is again front-and-center, Man in the News: Paul Volcker. For too long now Volcker inexplicably had been pushed off the center stage. Last March, as the market was in complete free fall, my tongue-in-cheek piece about “the new era of the 177K” asked, “Where is Paul Volcker to lead the way back to the 401K?”. Per the Financial Times: “this week the towering former Fed chief stood by Barack Obama’s side as the president embraced what he dubbed the “Volcker rule” banning proprietary trading – over the reservations of some of his most senior economic advisers.”
.
Then, John Hussman, the economist who runs his own mutual funds, and each Monday blogs about his views, published, today, a lengthy, carefully reasoned Blueprint for Financial Reform.
This is an extraordinarily detailed eight point plan/proposal and rather than giving the bullet points here, go to the link. It deserves careful consideration by our elected officials. Needless to say, he sides with Volcker. Hussman for Chairman of the Federal Reserve or bring back Volcker?
.
I've argued that in addition to financial reform, the main economic focus must be job creation: “a true recovery requires jobs, jobs, jobs – and how are they going to be created – by banks trading energy futures? What happened to the commitment to the infrastructure? Our roads, utilities, and public transportation are falling apart. Alternative energy seems DOA. Aren’t these the areas our financial recourses should be focused on, ones that will create jobs, in construction, technology, and finance, and can lead a true economic recovery we can pass on with pride to future generations?”
Green shoots first, then…..
.
We now know the true source of recent bank bonuses: “free money” profits: According to Stiglitz, “the alacrity with which all the major investment banks decided to become ‘commercial banks’ in the fall of 2008 was alarming – they saw the gifts coming from the federal government, and evidently, they believed that their risk-taking behaviour would not be much circumscribed. They now had access to the Fed window, so they could borrow at almost a zero interest rate; they knew that they were protected by a new safety net; but they could continue their high-stakes trading unabated. This should be viewed as totally unacceptable.” Also, Stiglitz puts the bailouts in the context of the bigger picture: “the failures in our financial system are emblematic of broader failures in our economic system, and the failures of our economic system reflect deeper problems in our society. We began the bailouts without a clear sense of what kind of financial system we wanted at the end, and the result has been shaped by the same political forces that got us into the mess. And yet, there was hope that change was possible. Not only possible, but necessary.” As a consequence he argues for “a new financial system that will do what human beings need a financial system to do.”
Meanwhile, the Financial Times carried an excellent piece on Paul Volcker now that he is again front-and-center, Man in the News: Paul Volcker. For too long now Volcker inexplicably had been pushed off the center stage. Last March, as the market was in complete free fall, my tongue-in-cheek piece about “the new era of the 177K” asked, “Where is Paul Volcker to lead the way back to the 401K?”. Per the Financial Times: “this week the towering former Fed chief stood by Barack Obama’s side as the president embraced what he dubbed the “Volcker rule” banning proprietary trading – over the reservations of some of his most senior economic advisers.”
.
Then, John Hussman, the economist who runs his own mutual funds, and each Monday blogs about his views, published, today, a lengthy, carefully reasoned Blueprint for Financial Reform.
This is an extraordinarily detailed eight point plan/proposal and rather than giving the bullet points here, go to the link. It deserves careful consideration by our elected officials. Needless to say, he sides with Volcker. Hussman for Chairman of the Federal Reserve or bring back Volcker?
.
I've argued that in addition to financial reform, the main economic focus must be job creation: “a true recovery requires jobs, jobs, jobs – and how are they going to be created – by banks trading energy futures? What happened to the commitment to the infrastructure? Our roads, utilities, and public transportation are falling apart. Alternative energy seems DOA. Aren’t these the areas our financial recourses should be focused on, ones that will create jobs, in construction, technology, and finance, and can lead a true economic recovery we can pass on with pride to future generations?”
Green shoots first, then…..
.
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