”Whoever you are, I have always depended on the kindness of strangers”. The last line of Tennessee Williams’ A Streetcar Named Desire – uttered by its desperate heroine to the doctor taking her to a mental asylum – is an apt summary of the US financial sector in 2009.
As the crisis abated, banks took maximum advantage of the kindness of taxpayers and regulators to return to their core business: making money for shareholders and employees.
Ultra-low interest rates, dwindling competition and pent-up demand for their services sparked a renaissance in profits and share prices of the financial institutions that emerged from the turmoil in reasonable shape.
The question is whether history will repeat itself, or even just rhyme, this year. Here are my ten, utterly personal and non-exhaustive, predictions for the year ahead in US finance.
1) Strangers will be a lot less kind. With banks boasting about their new-found health, regulators will pull the plug on most of the measures they introduced to drag the financial industry back from the brink. A host of acronyms (Tarp, Talf, PPIP, TLGP) will be forgotten but not missed.
Category: Culture
15 “Huge” Ideas that Flopped This Decade
Nothing makes a person sound smarter than articulating some huge idea about how the world is going to change, or how they can change it, over the coming years.
A big idea can lead to countless books, TV appearances, and a nice stream of speaking fees at conferences across the country.
Big ideas — the likes of which you might hear from Malcolm Gladwell or the Freaknomics authors — make for excellent food for thought and intellectually stimulating discussion.
Neda Soltan: Person of the Year
Every few years a man, or a woman, whose name is often familiar to few beyond the circle of their family and friends, is ambling through a more or less anonymous life when they find themselves ambushed by history. For many of these people, their life changes forever. Frequently, tragically, it ends; leaving behind an image that haunts the world long after they themselves have gone.
Neda Soltan was such a person, a young beautiful woman who had studied philosophy, was now an aspiring singer, who found herself abruptly catapulted from the crowds of Tehran to become the face of protest against Iran’s repressive rulers; a symbol of rebellion against the fraudulent election that had just returned Mahmoud Ahmedinejad to power.
Like the nameless student who taunted that tank in Tiananmen Square, like Jan Palach, the Czech student who died after setting himself alight in Wenceslas Square in January 1969 to protest against the Soviet-led invasion of Czechoslovakia, Neda Soltan became the icon for the mutiny against Iran’s brutish regime as images of her face, and amateur footage of her murder by a sniper from the pro-government Basij militia, sprinted around the world. Like the photograph taken in South Vietnam of a bewildered young girl, the victim of a napalm attack, running naked down a road; and like the images of those skin-and-bones internees, standing semi-naked in the prison camp run by Bosnian Serb forces in Omarska in 1992, their ribs as prominent as xylophone keys, the image of Neda Soltan lying bleeding on a Tehran street has become the shorthand for the horrors of a conflict. With their beseeching eyes such images become, as the war photographer Don McCullin has pointed out, our modern versions of religious icons.
Certainly a superior choice to the Political Class bank’s CEO: Goldman’s Lloyd Blankein.
“Person of the Year” – Goldman Sachs’ Lloyd Blankfein: “Doing God’s Work”
Under other circumstances, this would have been a year to savour in the long, rapid ascent of Lloyd Blankfein. Goldman Sachs, the investment bank he has led for three years, not only navigated the 2008 global financial crisis better than others on Wall Street but is set to make record profits, and pay up to $23bn (€16bn, £14bn) in bonuses to its 31,700 staff.
For Mr Blankfein, a scholarship boy from the Bronx whose first financial job at Goldman was selling gold coins in its commodities trading arm, has prospered to an extent that was implausible even 10 years ago, when it became a public company. Its influence has spread throughout the world, from New York and London to Shanghai and São Paulo.
A good slice of its success is attributable to Mr Blankfein, a tough, bright, funny (everyone remarks upon his unpretentious, wisecracking manner) financier who reoriented Goldman. Under his leadership, trading and risk-taking have pushed to the fore, reducing the influence of its investment banking advisers.
In 2009, however, Wall Street faced a wave of public anger at how banks that survived only with the assistance of taxpayers seemed unchanged and unrepentant. Goldman’s profitability, and suspicions that its deep links with governments around the world give it unfair advantages, made it a symbol of Wall Street greed and excess. It was described by the Rolling Stone writer Matt Taibbi as “a great vampire squid wrapped around the face of humanity”.
Global Supply Chain for Boeing’s New 787: The DreamLifter in Action
With the recent first flight of Boeing’s new 787, I thought it timely to post a photo from it’s supply chain: a converted 747 freighter known as the “Dreamlifter” that flies parts from around the globe to Everett, Washington for final assembly.
Crunks 2009: The Year in Media Errors and Corrections
Perhaps that’s not the most polite way of putting it, but fact checking continues to emerge as a favorite practice of the public and certain elements of the press. (Though most of us in the press spend more time calling bullshit on each other than checking our own work.) In a recent column for Columbia Journalism Review, I stated that fact checking “is becoming one of the great American pastimes of the Internet age.”
Everybody loves to call bullshit. Thanks to the Internet, it’s easier than ever before.
The irony is that this trend emerges at a time when professional fact checkers, who traditionally worked at magazines, are being laid off. As a result, it appears as though the future of fact checking is in open, public and participatory systems and organizations, rather than the closed, professional systems traditionally used by large magazines. The Internet has made this shift possible.
Here’s a selection of fact checking-related news from the past year:
Berlin’s Class War
Twenty years after it was toppled, the area around the Berlin Wall is becoming a battleground again. In the streets neighbouring Berlin’s Todesstreifen – the once heavily guarded “death strip” on the east side – a new conflict is brewing. This time, it is between wealthy newcomers to the German capital’s regenerated core, and less monied residents, who fear being displaced.
Silvia Kollitz, an anti-development activist, is a resident of Prenzlauer Berg, a once dilapidated but now chic district of east Berlin. She feels her local area, with its pretty, tree-lined streets and sleek cafés, is being turned into a refuge for the rich. “The new buildings being put up are just for people with lots of money – who don’t use state schools and look at the rest of us as ‘local colour’ from behind their locked gates and high walls,” she says.
While Kollitz and fellow activists are seeking to halt these changes, they are fighting a strong tide. For the first time since the second world war, Berlin is attracting the international wealthy. Shaking off its gloomy cold war past, the city’s rebuilt centre is now packed with designer emporia, five-star hotels – Berlin has more than New York – and restaurants, sandwiched between Prussian palaces and new ministry buildings.
Will Big Business Save the Earth?
THERE is a widespread view, particularly among environmentalists and liberals, that big businesses are environmentally destructive, greedy, evil and driven by short-term profits. I know — because I used to share that view.
But today I have more nuanced feelings. Over the years I’ve joined the boards of two environmental groups, the World Wildlife Fund and Conservation International, serving alongside many business executives.
As part of my board work, I have been asked to assess the environments in oil fields, and have had frank discussions with oil company employees at all levels. I’ve also worked with executives of mining, retail, logging and financial services companies. I’ve discovered that while some businesses are indeed as destructive as many suspect, others are among the world’s strongest positive forces for environmental sustainability.
The embrace of environmental concerns by chief executives has accelerated recently for several reasons. Lower consumption of environmental resources saves money in the short run. Maintaining sustainable resource levels and not polluting saves money in the long run. And a clean image — one attained by, say, avoiding oil spills and other environmental disasters — reduces criticism from employees, consumers and government.
Much more on Jared Diamond here.
St. Stephen’s Cathedral Panorama – Budapest
Wikipedia entry on St. Stephen’s, or Szent István Bazilika in Hungarian.
Our trip was made possible through the incredible generosity of my parents. We are truly blessed!
Dubai’s Debt Default
Asking to delay repayment on your debt – or defaulting, as the world’s press is carefully not calling it – has turned out not to be a good way for Dubai’s Sheikh Makhtoum to win friends and influence lenders to Nakheel, the property arm of the state-owned conglomerate Dubai World. Markets have tumbled worldwide; investors, reminded that governments can be subprime too, have dumped the debt of other dodgy-looking economies (including Greece); and in Dubai… everyone is on holiday.
What is surprising here is not that Dubai is on the verge of default. It is that anyone was willing to lend them ludicrous sums of money in the first place. Calculated Risk points out that Sir Win Bischoff, then at the (US) state-controlled Citi and now, appropriately enough, at the (British) state-controlled Lloyds Banking Group, was raving about raising $8bn of loans for Dubai last year and as recently as December chose to go public with a “positive outlook on Dubai”. Another non-surprise: state-controlled Royal Bank of Scotland was Dubai World’s biggest loan arranger. In the UK, Dubai World has been buying up a long list of property, according to Anita Likus at The Source; the assumption is it will shortly be selling.
More here.