This morning while chatting after a 5k race, my father-in-law told me a story about a guy he knows who came to the U.S. from Cuba years ago. During this gentleman’s first Christmas get-together in the states he cried when he saw all the food on the table because he knew his mother was back in Cuba eating measly rations.
While listening to Dennis Miller interview podcasts from this week a few gems brought a smile to my face. First, Carly Fiorini said of Barbara Boxer:
Let me tell you after having debated Barbara Boxer, this is a woman unencumbered by the facts. She is unencumbered by the facts of her own record. She is unencumbered by the devastating unemployment that is in California today.
Second, Ken Blackwell said:
We have become a culture where earning money doesn’t entitle you to it, but wanting it does.
Blackwell also said:
Our [Republicans] problem in the 90s, once we got the brilliant opportunity to be the dominant and governing party, we campaigned like Ronald Reagan and we governed like Jimmy Carter.
On leadership, if you aren’t spending a good amount of time surrounding yourself with honest and sharp people and doing your best to take care of them, it will very likely backfire on you someday.
Economist, author and blogger Steven Landsburg asked today on his blog, The Big Questions, why Hewlett-Packard’s stock dropped due to the unexpected departure of its CEO. He thought a $10 billion loss of value seemed big for the loss of even a CEO.
That reminded me of some wise advice I read about long ago from successful growth investor Philip Fisher. It took me awhile to find it, but I had posted on the subject a couple years ago. In this post, How to Run a Business, I quote from Philip Fisher’s book, Common Stocks and Uncommon Profits.
This passage came from a section of the book called Conservatives Investors Sleep Well (p. 188):
Here is an indication of the heart of the second dimension of a truly conservative investment: a corporate chief executive dedicated to long-range growth who has surrounded himself with and delegated considerable authority to an extremely competent team in charge of the various divisions and functions of the company. These people must be engaged not in an endless internal struggle for power but instead should be working together toward clearly outlined corporate goals. One of these goals, which is absolutely essential if an investment is to be a truly successful one, is that top management take the time to identify and train qualified and motivated juniors to succeed senior management whenever a replacement is necessary. In turn, at each level down through the chain of command, detailed attention should be paid to whether those at this level are doing the same thing for those one level below them.
Businesses I’ve been involved with tend to take a program or project approach to running the business. Whether it’s in their core value proposition (the business line putting most of the profit on the bottom line) or in developing or finding Continue reading
As you may know, the Bush tax cuts are set to expire next year. You may also know that Democrats generally favor the increase in the tax rate that those with the highest incomes will experience.
You may not know, however, what three Democrats from New York are doing to exempt their constituents from this. From the press release on Nadler’s website:
Congressman Jerrold Nadler (NY-08), Congresswoman Nita Lowey (NY-18) and Congressman Steve Israel (NY-02) announced their introduction of the Tax Equity Act of 2009, an important piece of tax legislation designed to adjust federal tax rates to account for the actual cost of living in major metropolitan areas.
Here’s what today’s Wall Street Editorial had to say:
One irony of the tax increase that arrives on January 1 is that the it will hit residents of high-income, Democratic-leaning states like California, Connecticut, New Jersey and New York the hardest. This is a problem for pro-tax Democrats.
Enter New York Representative Jerrold Nadler, Continue reading
I got a kick out of this news piece. My local station ran it this morning.
The story is about Derek Costello, a Canadian man who converted a 1938 Jaguar to an electric vehicle for $15,000. Costello gets 125 miles out of a charge and says that batteries that would allow him to drive in winter would cost an additional $7,000.
Right after that, the news reporter Lindsey Clark asks, “So why are car companies not building electric cars?”
Lindsey: I’m not sure if you’ve been watching the Tour de France coverage this year, but Nissan has sunk some advertising into its new all-electric vehicle, the Leaf. Also, GM is getting ready to roll out the Volt. And, a simple Google search on ‘electric vehicle history’ will turn up plenty of information about tried and failed attempts to produce and sell electric vehicles.
Instead, Lindsey offers this answer:
The critics say it’s because the oil companies are putting up roadblocks because they fear they’d lose revenue. And governments are dragging their feet because they would lose tax dollars.
It annoys me Continue reading
I’m enjoying reading Steven Landsburg’s book, The Big Questions. I like his use of playground logic. The following is from Chapter 20, The Economist on the Playground, where he discusses some of our ideas about fairness.
1. Don’t take things that aren’t yours. Whenever a politician proposes to make the tax code more progressive, we hear rhetoric about how the rich have too much, the poor have too little, it’s only fair to spread the wealth more equally, and so forth. To me, the interesting thing about that rhetoric is that nobody believes it. Of this I am certain, because in all the years I took my daughter to the playground, I never once heard another parent tell a child that if some kids have more toys than you do, that makes it okay to take some of them away.
I’d add that if you attempted to impose this rule on the playground to the very people who support a progressive tax code, you could meet with a violent response. But, that’s pure speculation. They may calm down after you explain that you are simply doing what’s intended in society through a progressive tax code.
Here’s another one:
2. Live with your choices. I once took two children to dinner. Each had a choice: ice cream now or bubble gum later. Alix chose the ice cream; Cayley chose the bubble gum.
Canada: Land of the Free, an interview with Canada Finance Minister Jim Flaherty appeared in the weekend edition of the Wall Street Opinion Journal and was surprisingly interesting. Here are some interesting tidbits:
Canada did not have a banking crisis in 2008 and, despite its vulnerability to U.S. economic weakness it emerged from recession in the third quarter of last year.
Mr. Flaherty was in New York this week talking up the Canadian economy at the consulate, where I cornered him for an interview. I started by asking him how his country avoided the mistakes that led to the housing and banking crisis in the U.S.
“One of the fundamental reasons is that Canadian banks, the lenders on residential mortgages, lend and hold,” he begins. “Someone getting a mortgage normally meets with a live human being in a bank branch and [the bank] will know something about the person before it makes the loan.” Banks don’t sell them, either, he adds; “there wasn’t that repackaging securitization—selling the loans—that happened a lot elsewhere.”
A friend sent me a link to Richard Posner’s column in the Washington Post, From oil spill to the financial crisis, why we don’t plan for the worst.
For the most part, I agree with Mr. Posner’s column, but I do have some thoughts.
I think Posner misses the role government played in the financial crisis. I agree with Russ Roberts’s take that there was a feeling government would step in if things got bad. Robert’s makes the case that the precedence of bailouts had been set for 30 years. Government officials were deeply entwined in the debacle by setting public goals to expand home ownership and directing Freddie and Fannie to buy bad mortgages to fulfill their goals of expanded home ownership. They had a horse in the race. Why would they let if fail?
Government involvement distorted price signals in the market – something that gets no attention in the media. Instead of buying a mortgage based solely on the economics (can this guy pay it back, will the house be worth this much?) they were also buying an implied option of a government bailout (if the guy can’t pay back or housing prices go down, government will step in and I’ll get something back).