Randall Radic Takes On Commissioned Work. More

 

Please Visit Our Sponsors

WORKOUT DVDS

Natural Health

Try Health News for more interesting natural health news.

PARTNERS & FRIENDS

 

logo_blue.gif

 

 

 

 

 

 

 

 

 

 

 

Pluck

McClatchy-Tribune News

Google News

 

 


Inform


DeepBlog

 

Health Blogs - Blog Catalog Blog Directory


In compliance with the FTC, consumers should be aware that Basil & Spice reviewers occasionally receive books/products free of charge for reviewing purposes only from publishers, agents, and authors.  They are not compensated fiancially in any way.

Google Ad Privacy

 

banner
Powered by Squarespace
JUST PUBLISHED!!
READ US EVERYWHERE
Enter your Email


Preview | Powered by FeedBlitz


 

powered by free-ebooks.net

  Financial Well Being
Monday
08Feb2010

FirstLook: Career GPS: Strategies For Women (Amistad/Feb 2010)

Reviewed by David M. Kinchen

BOOK REVIEW: 'Career GPS' Offers Specific Advice for Career Women; Your Attitude, Clothing Choices Could be Holding You Back

It's pretty difficult for anyone to accuse Ella L. J. Edmondson Bell, Ph.D. of being politically incorrect when she offers career advice to women in her new book Career GPS: Strategies for Women Navigating the New Corporate Landscape (Amistad, an imprint of HarperCollins, 256 pages, $25.99,  written with Linda Villarosa).

Dr. Bell is a black woman, so when she advises black women to check their Angry Black Women (ABW) attitudes at the door to the executive suite, she's sure to get attention. If a white man had said something like that -- even stating that there often is an ABW behind the stereotype -- he'd be pilloried, at the very least. Not only does Dr. Bell discuss attitudes, she gives tips on what to wear at work. One tip: ditch the severe black "corporate" look and go for bright colors. You don't have to look like a guy, she says, as long as you don't overdo it with revealing garb better suited to a party.

Career GPS is written by an academic -- Dr. Bell is an associate professor at the prestigious Tuck School of Business at Dartmouth University in New Hampshire, but she also is a consultant to many Fortune 500 companies. She divides her time between Hanover, NH and Charlotte, NC, with feet planted in both the academic and "real" worlds.

The workplace is constantly in flux, and even now there are new opportunities open to women. But to take advantage of these possibilities, it's essential to know the current rules for corporate success. This isn't your father's or your mother's workplace anymore. It isn't even the workplace of two or three years ago.

It's not enough to be a competent employee, Bell says. You must develop workplace relationships that will advance your career. The relationships often include people in technical support positions, including jobs that once upon a time were considered fairly menial. The guys and gals from IT or the administrative assistant to a big-shot manager are important and a smart woman -- or man -- learns to treat them with the respect and friendship they deserve.

Each chapter ends with a summing up of the tips, with bullet points to make it easy to check off what you should do. Speaking of bullet points, here are a few from the good doctor:

  • Think working hard is enough to be recognized? It's not enough to assume your job skills and devotion will speak for itself. You have to socialize with the decision makers. It might not mean you have to pick up the golf clubs -- although Dr. Bell says to give it a try, you might enjoy a day on the links --  but you do have to figure out what works in your own organization.

  • Parlez-vous Francais? Learning Mandarin? If you work for a global company and aspire to an extreme job or higher, make it known that you would take an overseas assignment to advance your career. One hint: make sure there is an exit strategy, so you can make it back to corporate headquarters if that's your goal.

  • Nowhere to go right now? Even in hard times there are options. Learn a lateral skill—such as accounting—so when the company is firing on all engines again, you will impress through the breadth of your knowledge.

Career GPS is properly indexed, so it's easy to use. I recommend it not only for women seeking to improve their career opportunities and realize their potential, but also to corporate executives -- men and women -- to help them understand how their employees view today's radically changed corporate environment.

Author's web site: www.careergpsthebook.com

Ron Paul: Fed Threatens Depression, $100 Bills Worthless

Toyota 2010: A Widening Quality Crisis

Copyright © 2006-2010, Basil & Spice. All rights reserved.

Sunday
07Feb2010

Toyota 2010: A Widening Quality Crisis

BOOK REVIEW: 'The Selling of the American Economy' Explores Impact of Foreign Companies -- Including Toyota -- on U.S. Economy, Especially Manufacturing

Reviewed by David M. Kinchen

Toyota is in the midst of its biggest quality crisis ever, which is somewhat unfortunate for the latest book on the auto industry by New York Times senior business correspondent Micheline Maynard, The Selling of the American Economy: How Foreign Companies Are Remaking the American Dream (Broadway Business, a division of Random House, 272 pages, $26.00).

The widening recall crisis facing the Japanese auto giant -- a truly global country with a big manufacturing big presence in the U.S. and more than two dozen other nations -- shows a company famous for its quality reputation that is also infamous for its inept crisis management handling of recalls involving sudden acceleration and now problems with brakes in its halo Prius model.

Maynard's book came out late in October, well before the latest revelations of problems with many models of Toyotas, and -- to be fair to her, much of the book deals with three other foreign companies in the U.S.: Tata of India, Haier of China and the European Aeronautic Defence and Space Company (EADS), a French-German firm that manufactures helicopters in Mississippi. Also to be fair to her, she discusses the quality control problems of Toyota that antedated the latest ones.

Still, Maynard, who calls her book the continuation of a previous book on the American auto industry, The End of Detroit, comes across all too often as a cheerleader for Toyota. She drives a Prius and lives in Ann Arbor, the Berkeley of Michigan, an upscale community home to the University of Michigan and a far cry from the gritty streets of Detroit.

Maynard argues that despite the lingering xenophobia that colors American perception of foreign-owned companies, foreign investments are actually an overwhelmingly positive force. Not only do they create thousands of jobs and pump billions of dollars into national and local economies, she says, they reinvigorate and strengthen communities, foster innovation and diversity in the marketplace, and teach Americans new ways to live and work.

In the manner of her Times colleague Louis Uchitelle (The Disposable American, Knopf, 2006) Maynard
presents us with moving stories of workers whose lives have been transformed by the arrival of companies like Toyota, Airbus, and Tata. She also interviewed many government officials, including Michigan's Canadian-born governor, Jennifer Granholm, who have fought -- often against the will of their supporters -- to lure foreign companies to their communities and states. She also obtained a rare interview with Toyota's new president, Akio Toyoda, who has just apologized to one and all for the recalls and the damage to Toyota's reputation for building quality vehicles.

Akio Toyoda on Friday, Feb. 5, 2010  held a press conference, two long weeks since the U.S. gas pedal safety recall was announced. Toyoda tried to rescue the situation by apologizing for the inconvenience to customers around the world. The company ascribes the alleged brake problems to customers misunderstanding the feeling of the ABS braking system and says that only the 2009 model Prius is involved. Since January, the company has fixed the software so that the ABS responds more quickly.

Observers have said that the apology is too little and too late, that Toyota -- and Akio Toyoda, grandson of the founder, who was named president in 2009 -- still haven't gotten the need for a full-bore crisis management effort, on the order of the Tylenol recall.

As the cliche goes, only time will tell if Toyota will regain its stellar reputation. Its operation in Putnam County, West Virginia, which manufactures engines, has long been one of the firm's best operations and apparently has nothing to do with the problems involved in the recalls. Still, like all the other plants in the U.S., it's affected by the halt in Toyota production.

What does "Buy American" mean anymore, when Maynard's own publisher is owned by Germans (Bertelsmann), when the iconic Eight O'Clock coffee (my day starts with their Hazelnut flavor!) is owned by Tata of Mubai, India, which also bought Jaguar and Land Rover from Ford? Haier was thwarted in its attempt to buy Maytag, Maynard writes, losing out to Whirlpool of my native state of Michigan, which quickly shut down Maytag's Iowa plants, shifting manufacturing overseas.

How about Chrysler, along with General Motors forced into bankruptcy? Fiat, of Turin, Italy, is bailing out  one of our oldest and most iconic automakers, not out of altruism, but to gain access to Chrysler's extensive dealer network. If Americans can accept the view that Fiat's notorious quality control problems of the past ("Fix It Again, Tony" is what many Americans think Fiat stands for) are ancient history, Chrysler may soon have the fuel-efficient cars that Americans want.

Nestle, an American icon?  It's based in Switzerland. Budweiser, which commands more than half of the American beer market,  is now owned by a foreign company (I only hope that some day Budweiser would taste like Stella Artois, a premium beer from inBev).  In 2008 Anheuser-Busch sold the majority of their stock to Belgian-Brazilian beer giant InBev, to create the largest brewing company in the world.

Maynard mentions tiny Buffalo, West Virginia, where Toyota makes engines  and how its employees come from 27 of the 55 counties in the Mountain State. She also tells fo the revitalization of Georgetown, KY, just north of Lexington, and how Toyota's massive plant there has brought revitalized Georgetown's dying downtown.

Let me be a cheerleader for a moment, something I just accused Maynard of: I hope that Toyota will solve its problems and regain its reputation for quality vehicles. I believe in globalization as long as it helps the nation, as Haier's purchase of Maytag probably would have. My own vehicle, a 2001 Ford Ranger pickup, is manufactured by a global company that has overcome quality problems of the past and also avoided the bailouts of Chrysler and GM.
 
So, despite the continuing Toyota problems, I recommend Maynard's book for its insights into the positive side of globalization.

 
 

Micheline Maynard is the Senior Business Correspondent at the New York Times, and the author of the acclaimed book, The End of Detroit. The recipient of the 2009 Nathanial Nash award for excellence in business journalism, she has written for USA Today and U.S. News and World Report, and appears regularly on CNBC and NPR.


Ron Paul: Fed Threatens Depression, $100 Bills Worthless

Copyright © 2006-2010, Basil & Spice. All rights reserved.

Sunday
07Feb2010

FirstLook: Accelerating Out Of The Great Recession (McGraw-Hill/2010)

By Loyd Eskildson

David Rhodes and Daniel Stelter are Europe-based senior partners in the Boston Consulting Group. In Accelerating Out of the Great Recession they purport to offer solid advice on how American business can survive and thrive in these trying times. They begin by observing that it would take a 32% increase in China's private consumption to offset a 5% reduction in U.S. consumer spending - something they believe is not going to happen. Thus, when combined with various spending inhibitors, they conclude business leaders should instead look for growth in the U.S., albeit slower than in the past. Accompanying that slower growth will be unwanted increased efforts at government regulation, anti-immigration action, and trade protectionism.  Other economic drags include downward price pressure due to deleveraging, and bank reluctance to lend due to their failure to recognize the extent of their potential losses and recapitalize.
 
Continuing, the authors point out that U.S. household wealth shrank an estimated $13.9 trillion (22%) in the last few years, while the savings rate rose from -2.7% in 2005 to +5.9% in 2009. Both factors reduce demand. Meanwhile, the GDP-boosting U.S. trade deficit (4.6% of GDP) cannot continue, unemployment and underemployment remain high, and most surveyed business leaders are not optimistic about soon returning to record 'pre-recession' profits. 
 
Soaring U.S. health care costs (17.3% in 2009, expected to hit 25% in 2025 and 37% in 2050 without fundamental change - Congressional Budget Office) receive almost no attention in Accelerating, despite the obvious fact it cannot continue. (Suffice it to say, health care reform will not occur on its own, and will have major impact.) Rhodes and Stelter continue, finally concluding that consumers will become more "value-conscious," obvious old news to most. Eg. Guess what has driven Wal-Mart from nothing to become the world's largest public corporation in 40 years and the U.S. largest grocery retailer in 21 years, while department-store market share fell from 38% in 1995 to 19% in 2002? Home equity financing reached almost $1 trillion in 2006 (7% of GDP), before home values began tanking - guess what that does to demand, especially for big-ticket items? Up to 70% of homeowners are underwater on their mortgages in some areas - those homeowners will not lead any economic recovery, period. Just two years ago the U.S. finance industry generated 41% of corporate profits - that won't be repeated soon either.
 
Worse yet, Rhodes and Stelter are oblivious to the reduced impact and opportunity from today's consumer sales. Decades ago when Americans bought a car, toaster, toy, shirt, tank of gasoline, or a shrimp dinner they not only boosted retail sales, but generated added activity for the U.S. auto, appliance, textile, toy, oil, and fishing industries and their U.S. employees as well. Today, that second level of activity is largely gone, both in the preceding areas and many, many more - mostly off-shored to China. Thus, adding a dollar of U.S. consumer sales not only requires more credit than before ($1 in the 1950s, $3 in the 1990s, and $5 in the last decade - per the authors), but also far less impact on total GDP. Regaining that stronger impact requires protectionism, despite Rhodes and Stelter's unconvincing counter-arguments, unless one proposes ballooning the trade deficit - which they also oppose. What does this mean for business leaders - that major economic improvement requires government to reverse course on 'Free Trade.'
 
The second section of Accelerating covers suggested business strategies. Those looking for new, sophisticated strategies and insights, however, will not find any. The material is simply a superficial rehash of Finance 101 - protect your cash position, negotiate with suppliers, focus on inventory management and reduce debt levels, divest non-core businesses, focus on bloated R&D, focus on innovation, . . .. Easy to say, not so easy to do when surrounded by excess world production capacity (U.S. - 20%, Japan - 15%, European Union - 18%, India - 30%, China - 40%, Brazil - 30%), with Asian producers especially advantaged by much, much lower operating and capital costs. Clearly, America's economic future will not be found through just working harder at more of the same.
 
Bottom-Line: The U.S. cannot accelerate out of the great recession without creating a new, significant, sustainable, strategic advantage, or at least a similar defense - especially in the industries of tomorrow. The New York Times (1/30/2010) reports that China is already the world leader in green energy wind and solar power, and pushing hard to build nuclear reactors and more efficient coal-fired plants. It also is leading in electric bicycles, and the "smart money" (Buffett's Berkshire) is betting on a Chinese state-owned company developing electric cars and their batteries. Meanwhile, China is also significantly boosting R&D efforts in nanotechnology and bio-sciences.  All this while erecting trade barriers to outside competition in new areas, and refusing to revalue its currency - thus protecting old areas as well. Little, if any of these current (or former) initiatives occurred through purely private initiative, or simply across-the-board Chinese business tax-cuts. Nonetheless, Accelerating Out of the Great Recession ignores or takes a negative posture on the potential role of U.S. government, probably because many Americans believe it should have no role in private enterprise.
 
China became a modern power by facing down its anti-capitalist roots en route to a heavy government role in lifting private businesses; further, its on-going economic vibrancy is assisted by much, much lower health care costs (admittedly the government is working to expand this area) and an undervalued currency. The U.S. similarly needs to face down its anti-government roots to help maintain our modern status through government-led  health care reform, severely limiting illegal immigration, imposing tariffs to counter China's under-valued currency, and guiding/helping the development and protection of nascent industries.


David Rhodes is a senior partner and managing director of the London office of The Boston Consulting Group and the global leader of the Financial Institutions practice.

Daniel Stelter is a senior partner and managing director of the firm’s Berlin office and the global leader of the Corporate Development practice.

Loyd Eskildson is retired from a life of computer programming, teaching economics and finance, education and health care administration, and cross-country truck driving.  He's now a reviewer for Basil & Spice.

Review: Cornered By Barry C. Lynn (Wiley/2010)

Review: Too Big To Save By Robert Pozen (Wiley/Nov 2009)

Copyright © 2006-2010, Basil & Spice. All rights reserved.

Sunday
07Feb2010

Bernanke Has $1.1 Trillion Of EXCESS RESERVES In The Banking System (2/2010)

John M. Mason--

Looking at the Federal Reserve figures for Wednesday, February 3, 2010, one could argue that just about everything seems to be in place for the Fed to execute its exit plan. The Fed will still purchase some more Mortgage-backed securities and there are some other residuals left from the world financial crisis that still remain, but these are now relatively minor parts of the picture.

On Wednesday, February 3, 2010, the Total Factors Supplying Reserves to the banking system totaled $2,231.3 billion or a little more than $2.2 trillion. The Securities held outright by the Federal Reserve amounted to $1,911.6 billion or approximately 85.7% of the total factors supplying reserves.

To put these numbers in perspective, on Wednesday, December 5, 2007, Total Factors Supplying Reserves to the banking system equaled $920.4 billion and Securities held outright amounted to $779.7 billion or 84.7%. The Fed did have outstanding $46.5 billion in repurchase agreements which, if included, made about 89.8% of their balance sheet related to securities.

On February 3, 2010,the Federal Reserve had no repurchase agreements outstanding.

I go back to December 2007 because one has to go back that far to get to a Fed balance sheet that does not include “special” line items that were constructed to combat the financial crisis. In December 2007, the Term Auction Facility (TAF) was initiated. During the time the TAF existed total funds supplied through this facility reached several hundred billion dollars. On Wednesday February 3, 2010, funds supplied to the banking industry through the TAF were only $39 billion, down $37.4 billion over the past four weeks and down by $101 billion in the last 13-week period.

In preparing to remove excessive amounts of reserves from the banking system the Federal Reserve has been allowing the “special” facilities that have supplied reserves to banks to “run off” while the Fed has replaced these funds with open market purchases.

Another area in which this has taken place has been in central bank liquidity swaps. This facility was also started in December 2007. At one time central bank liquidity swaps were in the hundreds of billions of dollars. On Wednesday, February 3, swaps totaled $100 million.

In the last four weeks and the last 13-weeks, the other items on the Federal Reserve statement did not change dramatically. To me what I have presented in the last three paragraphs pretty well sums up what the Fed has been doing to get itself ready to begin removing excess reserves from the banking system…when it decides it is time to do so.

Over the past 13-week period, reserves have been removed from the banking system by a reduction in funds available through the TAF ($101 billion) and through a decline in central bank liquidity swaps ($32 billion) or a total of $133 billion.

During this time, the Federal Reserve has purchased open-market securities of $214 billion. Thus, total factors supplying reserves during this time rose by $81 billion from these factors.

Over the past 4-week period, the TAF has been reduced by $38 billion and central bank liquidity swaps declined by $10 billion or a total of $48 billion.

Federal Reserve purchases of open market securities totaled $66 billion. Total factors supplying reserves from these factors rose by roughly $18 billion.

I have not discussed the factors that have been absorbing bank reserves over the past 4-week and 13-week periods because they have been impacted by some wide swings in the deposits of the federal government, much of which are technical in nature. And, these factors should not play any important role in how the Fed removes reserves from the banking system.

The bottom line in this discussion is that it seems to me that the Fed has basically eliminated or reduced most of the facilities that it created over the past two years that can have a major impact on the creation or destruction of bank reserves. The two major facilities are, of course, the TAF and central bank liquidity swaps.

The Federal Reserve now has one thing to work with in withdrawing reserves from the banking system: its portfolio of open-market securities. The Fed’s balance sheet is composed of roughly 85% open-market securities held outright. (A shown above, as a percentage of the balance sheet this is not too far off what the composition of the balance sheet was in early December 2007.)

The Fed has already had some recent test runs using “Reverse Repurchase Agreements” (reverse repos), or, selling securities to securities dealers under an agreement to repurchase. The idea here is to test the market’s reception to the withdrawal of funds from the banking system. Since the reverse repos are only temporary, the funds withdrawn will be put right back into the system avoiding any disruption that might be caused by the sale of the securities.

In this way, the Fed can “feel” its way toward withdrawing the excess reserves from the banking system. On one side is the question about is how the Fed will react to a pickup in bank lending and a rapid rise in the growth rates of the money stock. On the other side, the Fed wants to avoid a catastrophe like the 1937-1938 period in which reserve requirements were raised at a time when banks seemed to have had a lot of “excess reserves” on their hands, but really wanted to keep excess reserves on their balance sheets.

Bernanke, a historian of the Great Depression knows this lesson all too well. That is why a suggestion like that of Andy Kessler, a former hedge fund manager, which appeared in the Wall Street Journal last Thursday morning, “Bernanke’s Exit Strategy: Tighten Reserve Requirements” seems a bit absurd.

My belief is that Mr. Bernanke and the Fed are going to, at least initially, take things slow. When they begin to exit they are going to engage in some reverse repos and see how the banking system reacts. Then they will do some more…and then some more. The strategy: basically stepping out into the river to see how deep the water is. And, then stepping out a little further…and then a little further. The hope is to avoid falling in over their head, causing a further contraction in the banking system that would lead to another financial crisis.

In doing this the Fed keeps the reserves in the banking system if the economy remains slow or if the banking system wants to hold onto the funds. However, in this plan they start to remove the reserves, testing the market all along the way, so as not to pull the reserves out too quickly.

The problem is on the “up-side.” If bank lending does start to accelerate then the banks will want those “excess reserves” for loans. And, the funds are already on their balance sheets. In such a case the questions will be “How fast will the Fed sell the securities on its balance sheet?” and “How high will the Fed drive up interest rates in order to avoid a credit inflation from breaking out in the United States?”

As we have seen in other periods of time, we can simultaneously be in a period of economic stagnation and still experience a credit inflation. Bernanke has not earned his “star” yet! He still has $1.1 trillion of EXCESS RESERVES in the banking system that must be removed.

John M. Mason writes on current monetary and financial events. He is a professor at Penn State University and has taught in both the Management Division and the Engineering Division. He formerly was on the faculty of the Finance Department, Wharton School, the University of Pennsylvania. Dr. Mason has been President and CEO of two publicly traded financial institutions and the Executive Vice President and CFO of a third. He has also served as a Special Assistant to the Secretary of the Department of Housing and Urban Development in Washington, D. C. and as a Senior Economist within the Federal Reserve System. Dr. Mason has served on the boards of venture capital funds and other private equity funds. He has worked with young entrepreneurs, especially within the urban environment, starting or running companies primarily connected with Information Technology.

Review: On The Brink By Henry M. Paulson, Jr.(Business Plus/2010)

Copyright © 2006-2010, Basil & Spice. All rights reserved.

Friday
05Feb2010

Review: On The Brink By Henry M. Paulson, Jr.(Business Plus/2010)

By John M. Mason

Henry Paulson lived this book On the Brink: Inside the Race to Stop the Collapse of the Global Financial System (Business Plus/ 2010) and he also wrote the book.  There is no indication, anywhere, that he had any help in producing the manuscript.  Right up front he states, “To write this book, I….” He tells us, that “I have been blessed with a good memory, so I have almost never needed to take notes.”  He claims, “I’m a candid person by nature and I’ve attempted to give the unbridled truth.  I call it the way I see it.”

I put so much emphasis on the fact that he wrote the book without any help because this is not what usually happens when someone as important as a Secretary of the Treasury produces his memoirs.  Robert Rubin didn’t.  As a consequence the book is very personal: a co-author would not have kept in the sections where Paulson had to excuse himself from meetings to take care of his “dry heaves”; a co-author would not have kept in the information that Paulson joined a conference call “still wearing the boxer shorts and T-shirt I slept in…”

It is also very personal when he is discussing what took place leading up to the government taking over Fannie Mae and Freddie Mac and removing their CEOs.  It is also very personal when he discusses the bailout of Bear Stearns and the efforts to find a buyer for Lehman Brothers.  It is also very personal when he describes the debates, negotiations, and conflicts that took place with the leaders of Congress as he attempts to mold legislation relating to the Troubled Asset Relief Program (TARP). 

It is also interesting to hear Paulson write about how he worked with Tim Geithner, then President of the Federal Reserve Bank of New York, and Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System.  For better or worse, these three men formed a team that was almost in constant contact with one another throughout an extended period of time beginning in August 2007 and extending until Paulson left office in January 2009.  It seems as if these three people made most of the decisions during this time.  And, at least from Paulson’s side of the table, the partnership of these three men prevented another Great Depression.    

Hank Paulson was George W. Bush’s third Secretary of the Treasury.  His name was given to Bush by Jim Baker, former Secretary of the Treasury and Secretary of State and a good friend of the Bush family.  Bush’s first two choices were not finance people and did not have significant ties to Wall Street.  The reason for staying away from Wall Street people: Paulson writes “he (Bush) had a genuine contempt for Wall Street and its minions….” 

Apparently Baker believed that Bush ultimately needed someone with Wall Street savvy because he (Bush) was just not getting very good financial and economic advice.  Paulson’s first response was to turn down the offer.  The response of his family and his mother was to turn down the offer.  Likewise with many of his friends.

Why then did he take the position?  Well, when the President calls you just don’t say no!

In taking the position he secured the promise of the President that he (Paulson) would become the primary spokesman on economic and financial affairs for the administration.  Then, he said, he set out to “restore credibility to Treasury.”  Obviously, he thought very little of what the Treasury Department had become in the first five years of the Bush (43) administration and under the leadership of the first two Bush Secretaries of the Treasury. 

Paulson contends that very early on in his tenure he began to prepare for the possibility of a financial collapse.  Just after joining the administration, at a meeting of the Bush (43) economic team at Camp David, he presented some ideas about crisis prevention.  “I explained that we needed to be prepared to deal with everything from terror attacks and natural disasters to oil price shocks, the collapse of a major bank, or a sharp drop in the value of the dollar.”  He continues, “If you look at recent history, there is a disturbance in the capital markets every four to eight years.”  He then listed the disturbances that had occurred in the past fifteen years or so, beginning with the savings and loan crisis in the late ‘80s and early ‘90s.

Still, the administration was not prepared.  “The crisis in the financial markets that I had anticipated arrived in force on August 9, 2007.  It came from an area we hadn’t expected—housing—and the damage it caused was much deeper and much longer lasting than any of us could have imagined.”

Paulson then delves into the crisis, in many cases on a day-by-day basis.  It is a very personal book with a very personal take on the individuals that were involved in the crisis.  It even gets into the personalities of the 2008 election, but I won’t go into that here. 

Much of the story is known and has been told by other authors.  The difference to me is that Paulson is able to convey to the reader some of the tension and the time pressure that was faced by everyone dealing with the crisis.  The only analogy that I can think of to describe this is professional football.  Everyone that plays professional football is fast, not only going forward, but backwards and side-to-side.  The speed and intensity at which the game is played is incredible. 

The same can be said of the financial crisis: things happened and they happened fast.  There was no let up.  People didn’t get enough sleep and they were tired and edgy.  Tempers flared and people shouted at one another.  Paulson captures some of the speed and intensity of this period.  To experience this, even from the outside, is a valuable aid for the reader toward understanding what happened.

There are two points that I would like to close this review on.  The first has to do with people doing something that they don’t believe in.  Paulson confesses: “I am a firm believer in free markets, and I certainly hadn’t come to Washington planning to do anything to inject the government into the private sector.”  But he did inject the government into the private sector. 

In this book, Hank Paulson gives us a chance to listen to the “inside story” and see what it was like going through the financial meltdown of 2008 and doing things that were not always tasteful.  The justification: if these things were not done the whole world would come crashing down, markets and all.  It was the justification then.  Hearing Geithner’s AIG testimony before Congress last week indicates that it is still the justification today.   

My experience with something like this was my participation in meetings of the Cost of Living Council and the Committee on Interest and Dividends in August 1971, running on into 1972.  Sitting there in the White House at the Cost of Living Council meetings it was apparent that there was only one believer in the room: John Connally, the Secretary of the Treasury.  Substantially less enthused participants in the room were George Schultz, Arthur Burns, my boss George Romney, and others.  They got the work done, but there was very little energy in the room as far as I could tell.  And, one really didn’t know what they were thinking except maybe, “Boy, I wish this were over.”  Many in the Bush (43) administration had this look on their faces as 2008 was coming to an end.

The other point has to do with Bush (43), himself.  The amazing thing in the story Paulson tells is the absence of the “Decider.”  He is almost non-existent, someone Paulson called to brief and to get his OK on what had been done.  But, for the most part, Bush is not anywhere in sight.  Regardless of how you feel about Paulson, the scary thing to me is that the Secretary of the Treasury during this time of crisis could have been someone named O’Neill or Snow.  Then where would the leadership have come from?

This book is packed full of information and yet it reads well and I could not put it down.  It gives us some insight into what went on by someone who was a major player in all the action. 

Henry M. Paulson, Jr. served under President George W. Bush as the 74th Secretary of the Treasury from June 2006 until January 2009. Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs since the firm's initial public offering in 1999. He joined Goldman Sachs Chicago Office in 1974 and rose through the ranks holding several positions including, Managing Partner of the firm's Chicago office, Co-head of the firm's investment Banking Division, President and Chief Operating Officer, and Co-Senior partner.

Prior to joining Goldman Sachs, Paulson was a member of the White House Domestic Council, serving as Staff Assistant to the President from 1972 to 1973, and as Staff Assistant to the Assistant Secretary of Defense at the Pentagon from 1970 to 1972.

John M. Mason writes on current monetary and financial events. He is a professor at Penn State University and has taught in both the Management Division and the Engineering Division. He formerly was on the faculty of the Finance Department, Wharton School, the University of Pennsylvania. Dr. Mason has been President and CEO of two publicly traded financial institutions and the Executive Vice President and CFO of a third. He has also served as a Special Assistant to the Secretary of the Department of Housing and Urban Development in Washington, D. C. and as a Senior Economist within the Federal Reserve System. Dr. Mason has served on the boards of venture capital funds and other private equity funds. He has worked with young entrepreneurs, especially within the urban environment, starting or running companies primarily connected with Information Technology.

2010 Heralds The Information Age: Let's Get Real People!

The Monetary Aggregates

Copyright © 2006-2010, Basil & Spice. All rights reserved.