Archive: December, 2009
New Jersey business-publishing heir, flat-tax advocate and sometime GOP presidential hopeful Steve Forbes was in town plugging his book, How Capitalism Will Save Us, before the World Affairs Council, which let me ask him a few questions:
How can you, as an independent publisher, compete with Big Media, with Murdoch and Bloomberg? There is no 'big' anymore. That’s an old mindset, pre-Web. The only 'big one' is Google. Accept the reality that, in the digital age, you can’t corral information.
How do you get paid for giving info away? You not only have to create your own content. You have to create little communities. You have to learn to get content from outsiders, bloggers and the like. Editing now involves culling a lot of outside content. It’s done in nanoseconds. It’s a different mindset. You have to be multiplatform.
Two weeks ago we had an online conference to bring people physically together. We had 1,500 financial
planners there. For certain financial advertisers, 1,500 planners is gold. They know they’re not wasting their message.
We're doing sort of a mini version of what P&G used to do in the 50s, the original soap operas. Which means a proliferation of content but also you have to work hard and have value added. The Web is a relentless commoditizer.
So those who learn to tap into the membrane of various communities are going to do just fine.
Free Internet's not going away? Most people today look on information on the Web the way people do bread and butter at a restaurtant. It's supposed to be free. People don’t want to see it on the bill. We’ll see if these experiments in micropricing, pay after the first 10 articles, there may be something to that. It wont be one size fits all.
Obama raised a lot of money on Wall Street, but he called bankers 'fat cats' the other day. Is he moving left or right? He’s trying to appease the center where the Democrats are in trouble. They’ve lost a lot of support among independents. They’ve woken up to the fact they own the economy now. Saying 'it's George Bush’s fault' doesn’t cut it anymore.
Is the economy recovering? We're going to get some economic growth next year. But looking to (the next election) in 2012, it's not going to be very strong. They’ve got to strengthen the dollar. If not it’s going to be inflation, like in the 1970s. Bernanke doesn’t get it: when you debase your currency you will have misallocation of capital. You will hurt normal productive investment. A weak dollar means weak recovery. An unsustainable recovery. Bill Clinton understood it: a weak dollar’s poison.
Dynamic Defense Materials LLC, the military-hardware mini-conglomerate backed by Marlton investor Robert A. Lipinski, says it's sold 14 of its McCurdy's Armor kits and trailers, for $800,000, to the US Marine Corps, in a contract signed last week, for use as snap-together checkpoints in Iraq.
McCurdy's Armor is a "Lego-type system" of frames, connected with steel pins, that can be reinforced with armor plate, sand and "ballistic glass", according to Dynamic promotional materials. The parts can be trucked into place and assembled on site as outposts or shelters during "rapid deployment," to defend against bullets and fragments from grenades and bombs.
The armor plates are made by "different vendors throughout Pennsylvania, New Jersey and New York," says Joseph Dimond, product specialist and military liaison for Dynamic. He said this was the largest order to date for the system.
Wells Fargo (they own Wachovia Bank, biggest lender hereabouts) says here it's going to pay back the $25 billion it owes taxpayers under the Troubled Asset Relief Program, partly by selling stock.
We hope that means its loan losses aren't as bad as some bank-watchers feared. We expect the stock will go down like Citigroup's did today when it made a similar announcement.
Both Citi and Wells are paying back immediately following Treasury's attempt to limit boss pay at big-bank TARP recipients.
Exxon Corp.'s plan to pay $41 billion ($31 billion new stock plus $10 billion assumed debt) for natural-gas driller XTO Corp. of Fort Worth makes the oil giant a major landlord in Pennsylvania's Marcellus Shale drill country.
It's not in the press release, but check the merger presentation and you'll see the Pennsylvania-based region ranks fourth among XTO's nine major gas fields, with 280,000 acres leased for drilling (see chart on Page 7). That includes 152,000 acres XTO bought from Linn Energy LLC last year.
We've said it before: Pennsylvania is a Saudi Arabia of coal - natural gas, too. And we sure need the energy. But we'd better watch what they're going to do to get those b.t.u.'s to market. Who wants to live in a desert?
The Pennsylvania Public School Employees' Retirement Fund said today its "plan net assets" used for calculating future pension subsidies shrank to $43 billion at June 30, from $63 billion a year ago.
As a result, PSERS is calling for an 8.22% payroll surcharge on all school payrolls in 2010-11, to be financed by state taxpayers and local property taxpayers, up from this year's 4.78% levy.
Put another way, PSERS wants $1.1 billion next year, up from $617 Million this year, to supplement investment profits and payroll deductions taken from school workers' checks, so it can pay around $5 billion in annual pensions to retired school workers and administrators.
As the Democrats' bank-reform plan (HR 4173) was passing the US House, 223-202, bank analyst Tom Brown weighed in at bankstocks.com against Obama's proposed Consumer Financial Protection Agency, part of the plan.
"Bad idea," writes Brown, who bashes regulators and banks alike when they claim more than he thinks they can deliver. He's worried the CFPA is going to artificially hold down loan prices, keep consumers from paying fees and rates they're perfectly willing to pay, and make banks unwilling to lend, slowing the economy and crimping banks' profits. Read him here.
Bankers say it's ironic that the government, after pushing them to lend to the poor for the past 20 years, now wants them to pull back. But if the government is going to bail out Citigroup for financing subprime loans to people who can't afford them, it has every reason to try to limit future stupid loans, no?
It's weird, though, that Obama's Treasury Department is trying to make it harder for consumers to borrow more than they can afford, at a time when Democratic Governors like Ed Rendell in Pennsylvania and Jack Markell in Delaware are trying to get more retirees to pump their pension checks into slot machines and other gambling holes.
Penn's Wharton undergraduate business school isn't the typical staging ground for a career in the ministry. But for James Martin (''82), the road to Rome led through West Philadelphia.
A Jesuit priest, Martin is a rare mass-media intellectual in today's battered American Catholic church. He's a member of Philip Seymour Hoffman's LAByrith Theater Company at New York's Public Theater, and an occasional "chaplain" on Steve Colbert's popular TV show ("Colbert is very Catholic"). He's wrestled with angry liberal Catholic polymath Gary Wills in the secular-humanist New York Review of Books, preaches weekly to elite New Yorkers at St. Ignatius Loyola Church on Fifth Ave., served as an editor of the Jesuit magazine America, and written best-sellers (A Jesuit Off-Broadway; My Life with the Saints).
Last night, Martin walked a jammed Huntsman lecture hall up his career path. He grew up in an "irreligious Catholic family" in Norristown and Plymouth Meeting, hit the books as a typical Wharton "grind," stayed in bed Sundays at Speakman Hall and High Rise North dorms avoiding Penn's "touchy-feely" campus-ministry Masses, and graduated to an accounting job at General Electric headquarters in Connecticut.
"Business is a vocation for some people. It wasn’t for me. Everyone around me liked what they were doing. I was miserable. I was starting to get these stomach cramps."
Six years on, Martin saw a TV documentary about Thomas Merton, the mid-20th-Century Ivy League convert and Trappist writer. "He seemed so happy." Wharton-style, he went right to sources: books by Merton, C.S. Lewis and other mid-20th-Century Christian intellectuals. He consulted a psychologist, introduced himself to the local pastor, presented himself at the Jesuit community in nearby Fairfield, Conn, blew through the clerical bureaucracy ("It was like setting up an interview at Salomon Bros."), and shocked his old suitemates at a dinner at Brasserie in New York to break the news. "My Penn friends were horrified. I'd never talked about religion to them. At all."
The Jesuits sent him to Kenya, where "I thought I'd left all my Wharton stuff behind." But his Nairobi superiors assigned him "to help refugees start small businesses." Results: "Two Ethiopian restaurants, both called Blue Nile." Chicken and cattle farms, "which they don't teach you at Penn."A women's group making stuffed animals for exports. More women tailoring specialized clothing for "wealthy expats and tourists and foreign religious. They had the money. We had the people." He helped connect both sides. "That's the Wharton training."
Martin talked most about why religious people ought to be funny. He told death jokes and Wharton jokes and Jesus jokes. He said he'd found joy and God in unexpected people and places, but warned against the religious life as a bypass to easy happiness: "Once you get it, it's hard. That's the Cross. That's the Christian way." He laughed. His audience laughed, a lot. He sold some books.
After a 19% drop in investment values for the fiscal year ended June 30, the average college fund endowment showed just 4.2% in yearly investment returns for the past decade, according to a preliminary survey of 504 schools by the Commonfund investment fund and the National Association of College Business Officers.
That's not much ahead of inflation. But these guys can't stop hoping: Instead of abandoning high-priced private managers and their volatile strategies, colleges have bet more than half their current endowment money in "less-liquid" (hard-to-sell) corporate-buyout, hedge, real estate, commodity and venture funds.
"Senate Republicans accused Democrats of pandering to the pharmaceutical industry and putting off a vote on a bipartisan plan to allow the importation of cheaper medicines from Canada and other nations," Bloomberg reports here.
"Arizona Senator John McCain, the Republicans’ 2008 presidential nominee, said Democrats were protecting a deal President Barack Obama struck with drugmakers in June to win support for an overhaul of the U.S. health-care system. The proposal would be an amendment to that legislation.
“If it passes, as it should, and allows drugs to be imported into this country, it breaks the agreement that the White House made,” McCain said. The drugmakers' lobby, Pharmaceutical Research and Manufacturers of America, is “over here lobbying furiously."
Why, asks Special Inspector General Neil Barofsky in a new report, did the US Treasury give Radnor-based Lincoln National Corp. nearly $1 billion in Troubled Asset Relief Program money, when Lincoln's business has "little to do with lending to consumers and businesses?"
Barofsky also questioned the $3.4 billion TARP invested in Hartford Financial Services Group. Giving giving Lincoln and Hartford money "was incongruous with the spirit and intent" of the TARP capital program, which was to boost lending at a time when banks were cutting back.
If Treasury wanted to use the money for something else, like bailing out life insurance salesmen (and helping them compete with rivals that weren't bailed out), it should have written them into the program - as it did with General Motors and Chrysler, Barofsky wrote. Read his report here.