Moving On
Peggy Noonan writes about the effect Spetember 11th had on her and guesses that it might have had the same effect on White House Communications Czar Karen Hughes. Ms. Hughes announced earlier this week that she would resign her post and return to Texas, effective this summer. I'm not sure that Karen is leaving so much as she is relocating. But there's no question that her return to Texas will enable her to live a much less harried life. She'll still have to answer the phone when Caller ID coughs up 202-456-1414. But she won't if it's any other (non-family) number.
Karen Hughes is part of something that is beginning to happen in corporate America. People who can get out -- who have enough money to reengineer their lives without having to sacrifice their lifestyles -- are starting to get out. Good people getting out in small numbers is not a problem. Good people getting out in large numbers is a problem. It will be interesting to see if small numbers become big numbers over the course of the next three-to-five years.
Cooking The Books
What happens when a company's pension fund loses value? It gets counted as an increase in earnings. Really. Floyd Norris has a good piece on this particularly offensive accounting trick in today's New York Times (registration required). Here's a taste:
"So how did billions in losses turn into nearly $2 billion in profits? Verizon assumed that its pension plans would earn profits of 9.25 percent last year, and it reported income as if that assumption were true, something it was able to do under the current ridiculous accounting rules. Its earnings would have been even better had it assumed a 9.5 percent return, as General Electric did, or a 10 percent return, as I.B.M. did. In fact, both those companies lost money in their pension plans last year, as did most big companies."
"A study by Milliman USA, a benefits consulting firm, found that in 2001 the reported results of 50 large companies included $54.4 billion of profits from pension fund investments. In fact, the pension funds lost $35.8 billion from investments last year."
"The losses are buried in annual report disclosures that few can understand. Harvey L. Pitt, the chairman of the Securities and Exchange Commission, has promised to make annual reports more understandable. This would be a good place to start. Even better would be a new accounting rule requiring actual results to be used."
My most recent column for Fast Company magazine concerns funny numbers on Wall Street and the threat they pose to investor confidence. You can read it by clicking here.
Microsoft on the Case
Those who are interested in the ongoing battle between Microsoft and the state attorneys general, can click here to get a complete transcript of Chairman William Gates's testimony this week. It's long (150 pages out of my printer), but well worth reading.
A Perfect Ad
If you didn't see it, go to the Business Section of today's New York Times and (four or six pages in) check out the full-page Apple Computer ad with the familiar tag-line: "Think Different." There's no text. It's just a picture of Jay Chiat, who died Tuesday at the age of 70. The picture captures one of the great men of advertising, whose work on behalf of Apple was consistently extraordinary.
Peer To Peer Journalism
My take on blogging is that it is peer-to-peer journalism that reaches and resonates across a host of niche audiencess. I wrote about this in the April issue of Fast Company. A bunch of people wrote back and said, essentially, "what are you talking about?"
What is peer-to-peer journalism? The letter below was sent to me by a man who lives in Cupertino, California. I've never met him, had no idea he read my blog. He was responding to a couple of items I posted about New York City's precarious state. And he wrote:
John,
In focusing on the delayed effects of 9/11 and the possibility of a second event, I think you're overlooking the certainty that the decline of the investment banking/finance era of the last twenty years has arrived. With all due repect to the efforts in New York during the 80s and 90s to turn around the city from its low point, what has been accomplished could not have been done without the once in a century finance boom that enriched Manhattan. As Warren Buffett has pointed out, much of this wealth (as well as the money that gushed into such places as Silicon Valley) did not constitute wealth creation, but rather, wealth transferrance. Little old ladies in Dubuque who put their life savings into Janus funds and insurance companies holding bonds in companies that leveraged up their balance sheets paid for Fifth Ave co-ops and Palo Alto mansions.
If the vast income from Wall Street is greatly reduced, New York's ability to support itself will be dramatically reduced. The only other source of growth in recent years, tourism, will be hard to maintain without the tax base that pays for police, street cleaning, park maintainence etc. I'm not a Bob Herbert fan either, but dramatic cuts in spending plus some tax increases are almost certainly coming up. The unwillingness of New Yorkers to consider more than trivial spending cuts/tax increases, depending upon their political view is not a good sign.
Let me end by tying this subject to the voting patterns of the 2000 election. The tendency of the wealthier parts of the country to vote overwhelmingly Democratic while poorer areas voted Republican has been ascribed to the importance of social issues ("guns, gays, and God"). Some of that is true, but I think that old fashioned economics played a bigger role. The Clinton/Bob Rubin policies brought unimaginable wealth to those areas that voted heavily Democratic. I don't have 1964 voting results available, but flipping through the World Almanac's county results for 2000 makes me suspect that Gore ran more strongly in counties like Manhattan, San Francisco, Nassau, and San Mateo than did LBJ. Based on my teenage recollection of antipathy to Goldwater in Bergen County, this is truly a remarkable swing.
At the same time, the areas that swung most heavily Republican from 1996 to 2000 are those that benefitted the least during the 90s. The continual deterioration of manufacturing in particular has created a sense of unease and insecurity that national economic statistics did not capture well. Journalists from NYC and DC were not in a position to feel the lack of satisfaction in much of flyover country during the campaign. I suspect they will be feeling a sense of economic insecurity, just as they did during the 1992 campaign.
Paul B.
Cupertino, California
I've written columns more or less non-stop since 1993. I never got mail like this in all that time. I get mail like this routinely off the blog. Please keep it coming.
The New Look
One of my clueless Walker cousins sent me an email saying that he liked the "new look" of this site. It isn't a new look. Yesterday, the site was attacked by evil gremlins and the only way I could figure out how to fix it was to install a new Blogger template. I plan to launch the new site in early June.
New York City
My wife went down to Soho yesterday for a business lunch. From where she works, you take the Lexington Avenue line down to Spring Street and then walk over about six blocks to West Broadway. What took her back, as she walked to the restaurant, was the emptiness. The new DKNY store was empty. The Ralph Lauren store was empty. The cosmetics stores and furniture stores and boutqiues were all empty. Friends of ours run something called Eyestorm.com, a bricks-and-clicks art gallery, which has a storefront in Soho. No one was even looking in their window. Yes, it was a rainy Monday afternoon. But the emptiness was acute.
There's a disconnect between the reality and the perception of New York City. If you read the local papers, you get the impression that all of them are all doing everything they can to assure us that everything is okay. And then you read a column like Bob Herbert's (which you can read by clicking here -- registration is required).
I am ordinarily not a big Herbert fan and there are parts of yesterday's column that I think are nonsense. But the basic thrust of what he's saying is exactly right: New York is teetering on a tipping point, and if it "goes the other way" (if there's another terrorist attack or if the gains of the Giuliani era began to unravel under Bloomberg), then the city will be in for a very long and very difficult decade (at least).
Perhaps the weirdest thing about living in New York these days is the post-September 11th denial. I was talking to a friend yesterday who asked, in all seriousness, "you don't really think New York will be hit again, do you?" And I thought: "Of course I do. It's the target. It's the financial capital of the world. It's the media capital of the world. And it's the Jewish capital of the world. It's the bullseye of Isamo-fascism." What I said was: "I hope not."
The great unreported story of post-September 11 New York City is the exodus, the departure of people and businesses from Manhattan. It has begun and, in the event of another terrorist attack or a steady decline in the city's quality of life, it will accelerate. And if it does accelerate, then the city will deteriorate with astonishing speed.
Let's See: Bush is a Beady-Eyed Fascist and Chirac is Martin Sheen
Paul Krugman's column today comparing French politics to US politics is so awful that one hardly knows where to begin. You'll not be surprised to learn that French neofascists, in Krugman's rendering, closely resemble American conservative Republicans. Or that remarks by Rep. Tom DeLay (Neo-Fascist, TX) are twisted beyond recognition. Mr. Krugman's assertions and misrepresentations would be slanderous if anyone took him seriously. But he's become such a hack that he's lost whatever authority he once possessed.
Thunder on the Right, Maybe
When liberal media report on conservative politics, the result is often baffling. Mike Allen has a piece today about conservative unhappiness with President Bush. In it, he does not mention that the most important conservative voice in America, Rush Limbaugh, has been quite critical of the president in recent weeks. Instead, Allen quotes a bunch of Washington-based eggheads and busy-bodies who find Mr. Bush wanting in this way and that.
One of the chief failings of blogging, we are told by people who refer to themselves as journalists, is that bloggers have no editors. Fair enough. But does anyone edit The Washington Post? How is it possible to write an article about conservative dissatisfaction with President Bush and not mention Rush Limbaugh?
Investors Did Not Scurry To Buy The Company's Stock
The lead item in today's Online edition of The Wall Street Journal reads as follows: "Lucent Technologies announced a $495 million loss for its fiscal second quarter as its customers cut capital spending. The telecommunications-equipment maker said it can't offer an outlook for the current quarter." Or the one after that. Or the one after that.
Kurtz on Blogging
Howard Kurtz's take on blogging is unremarkable in every way except one: He doesn't mention Evan Williams, the man who wrote the code that is the infrastructure of the Blogosphere. This is like writing about personal computing and not mentioning Apple. Hiawatha Bray, the Boston Globe's great technology writer/columnist, has a good piece on Williams which you can read by clicking here.
AOL Items
AOL's stock will probably bump up today, with the Wall Street Journal's "Heard on The Street" column (subscription required) arguing that the sum of the parts is worth more than the whole. Elsewhere in the paper, the always excellent Thomas Weber notes that cable companies (like Cox) are introducing "price tiered" high-speed Internet access, with 256K speed being offered for just $3-a-month more than the cost of AOL's 56K dial up service.
It does seem likely that consumers will spring for a six-fold increase in speed for only a $3 increase in price. Especially since AOL is now so loaded with invasive and irritating advertising.
The French
Sebastian Mallaby has a good column today about anti-Americanism and the French election. Included in the piece is a wonderful sentence regarding the head of Vivendi: "Vivendi's boss calls himself J6M, meaning Jean-Marie Messier, Moi-Meme, Maitre du Monde (JMM, Myself, Master of the World); there are arguably good grounds to hate him." And you can't make this stuff up.
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