“By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn’t put money directly into the stock market, but he didn’t have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. The dollars he cranked out didn’t go into the hard economy, but instead into tradable assets.”
— “The Bernanke Market,” Wall Street Journal, July 15, 2009
“In the last week alone, the European Central Bank allocated the record sum of $619 billion to 1,1,00 financial institutions – at a paltry 1 percent interest rate. And yet the money is not going where the central banks want it to go, namely into the pockets of businesses and consumers – at least not at reasonable interest rates.”
— “How German Banks are Cashing In on the Financial Crisis,” Der Spiegel, July 1, 2009
Two weeks ago, in meetings with their North Texas dealers, both Toyota and Honda voiced concern about how the economic recovery was going to hold up over the next few quarters. It wasn’t public news yet in the States, but Japanese executives already knew that their imports and exports had fallen sharply through the summer. And, while our business media were cheerleading because the Dow Jones was once again flirting with 10,000, in Japan their exports had just fallen 36 percent; metal shipments to the U.S. were down by more than 80 percent, automobile shipments by 50 percent. This was a problem here, too: In August America’s dealers seriously needed Japanese vehicles to restock their depleted inventories.
Toyota and Honda took different tacks for the fourth quarter. Toyota said it will spend $1 billion in advertising to move the retail market. Honda, always more cautious in difficult times, said it would spend nothing during the same period. Honda added that it will keep dealer inventories at a 30-day supply of unsold vehicles, half the inventory considered normal.
Category: Business
The Ghost Fleet of the Recession
The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination – and is why your Christmas stocking may be on the light side this year.
The tropical waters that lap the jungle shores of southern Malaysia could not be described as a paradisical shimmering turquoise. They are more of a dark, soupy green. They also carry a suspicious smell. Not that this is of any concern to the lone Indian face that has just peeped anxiously down at me from the rusting deck of a towering container ship; he is more disturbed by the fact that I may be a pirate, which, right now, on top of everything else, is the last thing he needs.
His appearance, in a peaked cap and uniform, seems rather odd; an o fficer without a crew. But there is something slightly odder about the vast distance between my jolly boat and his lofty position, which I can’t immediately put my finger on.
Then I have it – his 750ft-long merchant vessel is standing absurdly high in the water. The low waves don’t even bother the lowest mark on its Plimsoll line. It’s the same with all the ships parked here, and there are a lot of them. Close to 500. An armada of freighters with no cargo, no crew, and without a destination between them.
Paranoid Survivor: Andrew Grove
EARLIER this year Andrew Grove taught a class at Stanford Business School. As a living legend in Silicon Valley and a former boss of Intel, the world’s leading chipmaker, Dr Grove could have simply used the opportunity to blow his own trumpet. Instead he started by displaying a headline from the Wall Street Journal heralding the recent takeover of General Motors by the American government as the start of “a new era”. He gave a potted history of his own industry’s spectacular rise, pointing out that plenty of venerable firms—with names like Digital, Wang and IBM—were nearly or completely wiped out along the way.
Then, to put a sting in his Schumpeterian tale, he displayed a fabricated headline from that same newspaper, this one supposedly drawn from a couple of decades ago: “Presidential Action Saves Computer Industry”. A fake article beneath it describes government intervention to prop up the ailing mainframe industry. It sounds ridiculous, of course. Computer firms come and go all the time, such is the pace of innovation in the industry. Yet for some reason this healthy attitude towards creative destruction is not shared by other industries. This is just one of the ways in which Dr Grove believes that his business can teach other industries a thing or two. He thinks fields such as energy and health care could be transformed if they were run more like the computer industry—and made greater use of its products.
Dr Grove may be 73 and coping with Parkinson’s disease, but his wit is still barbed and his desire to provoke remains as strong as ever. Rather than slipping off to a gilded retirement of golf or gallivanting, as many other accomplished men of his age do, he is still spoiling for a fight.
Documenting the decline of two US industries
Eirik Johnson’s quietly theatrical photographs carry the sense of a way of life and work that is on the cusp of slipping away. For four years, Seattle-born Johnson travelled through Oregon, Washington and northern California, around the former boomtowns that were built on the now-declining salmon and timber industries.
He describes the resulting series, published as Sawdust Mountain, as “a melancholy love letter of sorts, my own personal ramblings”. Many of Johnson’s works are informed by the epic, picturesque 19th-century landscapes of Carleton Watkins, who took some of the earliest known images of the region. In others, his use of space and colour pays homage to several living photographers.
Johnson’s images are rendered all the more intense by his palette, through which he uses the region’s faded light to emphasise the down-at-heel tones of the man-made environment. His muted colours are a counterpoint to William Eggleston’s photographs of the American south, whose “harsh bright light and colours … seemed like the mirror opposite of what I saw present in the northwest,” says Johnson.
The Iraqi who saved Norway from oil
When he boarded his flight from London to Oslo, Farouk al-Kasim, a young Iraqi geologist, knew his life would never again be the same. Norway was a country about as different as it was possible to imagine from his home, the Iraqi port city of Basra. He had no job to go to, and no idea of how he would make a living in the far north. It was May 1968 and al-Kasim had just resigned from his post at the Iraq Petroleum Company. To do so, he had had to come to the UK, where the consortium of western companies that still controlled most of his country’s oil production had its headquarters.
For all its uncertainties, al-Kasim’s journey to Norway had a clear purpose: he and his Norwegian wife, Solfrid, had decided that their youngest son, born with cerebral palsy, could only receive the care he needed there. But it meant turning their backs on a world of comforts. Al-Kasim’s successful career had afforded them the prosperous lifestyle of Basra’s upper-middle class. Now they would live with Solfrid’s family until he could find work, though he had little hope of finding a job as rewarding as the one he had left behind. He was not aware that oil exploration was under way on the Norwegian continental shelf, and even if he had known, it wouldn’t have been much cause for hope: after five years of searching, still no oil had been found.
But al-Kasim’s most immediate problem on arriving in Oslo that morning was how to fill the day: his train to Solfrid’s home town did not depart until 6.30pm. “I thought what I am going to do in these hours?” he says. “So I decided to go to the Ministry of Industry and ask them if they knew of any oil companies coming to Norway.”
A Not Positive Outlook on Land’s End Parent Sears Holdings
For many investors, the ultimate value of Sears resides in its liquidation value rather than the cash flow it can generate as a going concern. Much hidden value is seen in its valuable brands, like Kenmore, Land’s End, Craftsman and DieHard, and the 73% interest in Sears Canada. A major holder “conservatively” estimates the retailer’s breakup value at about $75 to $100 a share. (A confession: In an Oct. 22, 2007, article in Barron’s, I surmised that there might be more than $300 a share in hidden value in Sears stock.)
Given the recent performance of the company and the agonies of the U.S. consumer and credit markets, these sum-of-the-parts estimates have plummeted. In a May report, Morgan Stanley’s Greg Melich came up with a value of $33 a share. Last week, he said that the new value would be somewhat but not dramatically higher when he releases his latest calculations in the next few weeks.
Nonetheless, the entire exercise is somewhat academic, according to Melich. Sears, for example, couldn’t dump all its 250 million square feet of retail space without destroying the values of retailing properties for years to come. Likewise, who knows when shell-shocked mall-owning real-estate investment trusts and once-expansion-minded rivals like Target, Kohl’s and Lowe’s will be buying again, particularly with the current glut of space on the market and the drying up of mortgage financing. And the Kenmore, DieHard and Craftsman brands (but not Land’s End) are so closely identified with Sears that it’s difficult to ascribe much value to them if they are offered independent of Sears.
Britain’s National Medical Records Project – “No money spent on training”…
“If you live in Birmingham,” declared Tony Blair when he was UK prime minister, “and you have an accident while you are, for example, in Bradford, it should be possible for your records to be instantly available to the doctors treating you.”
Not any more. Or not, at least, if the Conservatives win the next general election. For the Tories have pledged to scrap the country-wide version of the National Health Service’s electronic patient record.
Back in 2002, the idea of a full patient record, available anywhere in an emergency, was the principal political selling point for what was billed as “the biggest civilian computer project in the world”: the drive to give all 50m or so patients in England (the rest of the UK has its own arrangements) an all-singing, all-dancing electronic record. Roll-out was meant to start in 2005 and be completed by 2010.
Under a Conservative government, development of the local record – exchangeable between primary care physicians and their local hospitals – would continue. Nationally, clinicians would still be able to seek access to it when needed from the doctors who would hold it locally. But the idea of a national database of patients’ records, instantly available in an emergency from anywhere in the country, would disappear.
This may or may not matter, depending on your point of view. For many clinicians, the idea of an instantly available national record was always something of a diversion. It is access to a comprehensive record locally that is crucial for day-to-day care.
Nonetheless, the Conservatives’ decision to scrap the central database is a symbolic moment for a £12bn ($20bn, €14bn) programme that has struggled to deliver from day one. It is currently running at least four years late – and there looks to be no chance in the foreseeable future of its delivering quite what was promised.
…..On top of that, while there was a £6bn budget for the 10-year central contracts, no money was earmarked for training, in spite of the lesson, from the relatively few successful installations of electronic records in US hospitals, that at least as much has to be spent on changing the way staff work as is spent on the systems themselves.
2009 Wisconsin Farm Technology Days VR Panorama Scenes
View five vr scenes from “Tent City”: Scene 1 / Scene 2 / Scene 3 / Scene 4 / Scene 5. After clicking, place your mouse in the image and pan in any direction.
View a still image library here.
More photos and vr scenes from the Craves Brothers farm, taken last fall.
Crave Brothers website and the Wisconsin Farm Technology Days website.
The Rise and Fall of Henry Ford’s Forgotten Jungle City By Greg Grandin
We revere Henry Ford: the inventor of modern mass production; the man who put Americans on wheels; the stolid Midwesterner whose ingenuity, common sense and hard work built an empire. Yet this same man was a bundle of contradictions: a pacifist who built tanks and warplanes, and who unleashed frightful brutality against his own striking workers; a hardheaded tycoon who strove to restore a sentimental vision of small-town life. He was, in short, the quintessential American: a hero and a fool.
“Fordism” also became a beacon for the world. Lenin’s Russia, Hitler’s Germany and many poor countries looked to the magic of mass production – and the magic of automobiles – to catapult their way to prosperity. Still, it’s a little surprising that Greg Grandin wants to explain Henry Ford’s America by taking us up the Amazon, where an old-fashioned water tower rises out of the jungle, hinting at a lost utopia.
Grandin, author of “Ford-landia,” has rediscovered one of Ford’s most ambitious but least known ventures. In 1927, Ford obtained a Connecticut-size chunk of the Brazilian jungle. His immediate goal was to establish a rubber plantation to supply his factories’ insatiable demand for tires and gaskets, but he also saw an opportunity to bring Brazil the same blessings that he prided himself on bringing to his Michigan workers: good wages, plus the standards of middle-class propriety that spelled the difference between civilization and chaos.
Who Switched the Playbooks
When I was starting up in China, many experts cautioned me on what I would encounter. “It’s not a free market and there’s no rule of law, they told me. “The government controls the courts, the companies and the banks. Central planners in Beijing, not the marketplace, decide what goods to produce and which companies should produce them.”
“Decisions are made for political, not economic reasons,” they went on to explain. “The heads of China’s state-owned enterprises serve at the pleasure of the Party, the banks are told what loans to make, and making a profit is secondary to ensuring employment. That’s the reason why China’s banks are a mess and full of non-performing loans.”
Occasionally, I would push back, noting the economic progress that China had made since Deng Xiaoping opened the economy in 1978. “You don’t believe the government’s numbers, do you?” they would ask incredulously. “Everyone knows they’re manufactured to convey whatever message the government wants. And, when it comes to financial statements, forget it. Chinese companies have at least three sets of books, and you can’t believe any of them.”