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  • 07:39 - 12.09.2009 News >> Latest

        How the collapse of Lehman Brothers averted a second depression It’s about time the self-serving myth about Lehman Brothers was exploded, says Jeremy Warner.   By Jeremy Warner
    Comments 18 | Comment on this article     No one would seriously argue that, but for the assassination of Archduke Franz Ferdinand on June 28, 1914, the First World War would not have happened. At the time, Europe was a tinderbox: the shooting in Sarajevo provided the spark, but it could equally well have been something else.Yet as we approach the first anniversary of the collapse of Lehman Brothers, it is still fashionable among bankers and commentators to argue that had Hank Paulson, then US Treasury Secretary, acted to save the stricken investment bank, the world economy wouldn't be in the mess it is in today. It's about time this self-serving myth was exploded.The Lehman collapse was admittedly a huge – and, to policymakers on both sides of the Atlantic, largely unanticipated – blow to confidence, which profoundly damaged credit markets and trade finance. The speed and globally synchronised nature of the subsequent economic contraction were almost without precedent.So was letting Lehman go to the wall the greatest economic policy error of the modern age, or would we have ended up in much the same place regardless of what Mr Paulson had done? Many bankers argue the former, but then they would, wouldn't they? The same applies to central bankers, all of whom failed to see the recession coming until it was too late. For them, it is convenient to think that, but for the stupidity of Mr Paulson, everything would have been just fine.In one of the myriad interviews to mark next Wednesday's anniversary of the collapse, John Thain, the chief executive of Merrill Lynch, claims that it would have taken "only" another $30-40 billion of public money to have fixed the problem – a mere bagatelle, when set against the damage eventually inflicted. Leaving aside the arrogance of the suggestion that any public money, let alone a sum equivalent to the GDP of a smallish nation, should have been be applied to rescuing the detritus of Wall Street, I find Mr Thain's suggestion deeply implausible.The starting point for Mr Paulson's defence is to recognise the political constraints he was under. American taxpayers had already bailed out another leading bank, Bear Stearns, as well as the country's two biggest mortgage lenders. What's more, Mr Paulson knew that within days, he would be forced to come to the rescue of AIG, an insurance company that had been behaving like a bank, and which posed an even greater systemic risk than Lehman.The public would only tolerate so much assistance for the fat cats of Wall Street. In the view of Congress, there had already been far too much. The mob wouldn't be satisfied until there had been a public hanging. Dick Fuld, the chief executive of Lehman, was a cartoon caricature of the…

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  • 06:27 - 25.09.2009 News >> Latest

       From The Times of London September 25, 2009 President Obama must look to home agenda despite adoration overseas Bronwen Maddox, Chief Foreign Commentator 9 Comments It has been a good week for President Obama — apart from the moment when Colonel Muammar Gaddafi called him “my son”. He has won the support of Russia, and maybe China, on pressing Iran to curb its nuclear ambitions. The remarks by President Medvedev were conditional, to be sure, but solid enough that Obama could stand smiling by his side and announce his success to the world. In opening the UN Security Council session yesterday he called for “the day when nuclear weapons have been banned”. He put this theme, toxically eccentric a few years ago, right at the top of his personal agenda. His magical appeal to other leaders was intact. They clustered round him, Gordon Brown managing almost half a minute of face time before the superhero turned away, and a beaming David Miliband securing a handshake in the seconds before the session. But there have been shadows. Afghanistan is a black hole — Obama barely mentioned it, and no wonder, given that he is in a quandary about whether to scrap the “surge” he announced just six months ago. He has only a handful of loose sand to show on the Middle East, even though Tony Blair said yesterday that Israeli-Palestinian talks would restart within weeks. Obama did reassert, in front of the UN General Assembly, that Israel must halt expansion of West Bank settlements, trying to counter speculation that he had backed down in the face of Israeli intransigence. He said the US did Israel no favours by indulging it — but also that the UN did the Palestinians no favours by refusing to accept any responsibility for the solution. But such careful symmetry may not translate into progress. This week’s briefings by George Mitchell, his special envoy, were revealing — and dispiriting — in showing his taste for oblique anecdote and exposition. They did not inspire confidence in America’s ability to drive hard for a result. In Pittsburgh today, as Obama opens the G20 meeting of countries that make up 85 per cent of the world’s economic output, he can take comfort from the apparent success of his $800 billion stimulus and $700 billion bank bailout. They may yet prove his most solid triumphs. But his decision last week to slap tariffs on Chinese tyres will let poorer countries brand him a hypocrite in his call for free trade. It also leaves him on the back foot with China. Most uncomfortably for Obama, while this week has reinforced foreign adoration, it has fired up with even more passion those Americans who detest him. The home front remains his toughest battleground: healthcare, then carbon emissions, then the economy again. A President whose trademark is speeches of perfect balance, aiming to unite warring factions, is powerfully divisive within America. If he fails to…

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  • 08:09 - 12.11.2009 News >> Latest

     The Golden State of Fender guitars Professional musician Steven McMorran examines a bass guitar in the Fender guitar manufacturing plant in Corona. (Don Bartletti / Los Angeles Times)  

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  • 06:04 - 01.05.2009 News >> Latest

      Severin pulled off air for comments about Mexican immigrants Jay Severin, the fiery right wing talk show host on Boston's WTKK-FM radio station, was suspended yesterday after calling Mexican immigrants "criminaliens," "primitives," "leeches," and exporters of "women with mustaches and VD," among other incendiary comments. (By David Abel, Globe Staff)

    Audio Hear Severin's comments  |  More of his remarks  

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  • 14:58 - 19.03.2010 News >> Latest

     The Secret to Having Happy EmployeesBy JAY GOLTZAbout 10 years ago I was having my annual holiday party, and my niece had come with her newly minted M.B.A. boyfriend. As he looked around the room, he noted that my employees seemed happy. I told him that I thought they were.Then, figuring I would take his new degree for a test drive, I asked him how he thought I did that. “I’m sure you treat them well,” he replied.“That’s half of it,” I said. “Do you know what the other half is?” He didn’t have the answer, and neither have the many other people that I have told this story. So what is the answer? I fired the unhappy people. People usually laugh at this point. I wish I were kidding.I’m not. I have learned the long, hard and frustrating way that as a manager you cannot make everyone happy. You can try, you can listen, you can solve some problems, you can try some more. Good management requires training, counseling and patience, but there comes a point when you are robbing the business of precious time and energy.Don’t get me wrong. This doesn’t happen a lot. There’s no joy in the act of firing someone. And it’s not always the employee’s fault — there are many bad bosses out there. Bad management can make a good employee dysfunctional. On the other hand, good management will not always make a dysfunctional employee good. And sometimes people who would be great employees somewhere else just don’t fit your company, whether it is the type of business or the company culture.In the worst cases, the problem of a bad fit can have a bigger impact than just one employee’s performance. Being in charge does not necessarily mean you are in control, and being in control does not necessarily mean being in charge. Have you ever seen a company or department paralyzed by someone who is unhappy and wants to take hostages? It is remarkable how much damage one person can do. If you haven’t seen it, I suggest you watch “The Caine Mutiny.” Basically, one guy takes apart the ship. He was unhappy. It only takes one.This is only my opinion. I don’t have a Ph.D., an M.B.A., or even an economics degree. What I do have is a happy company. And that makes me happy. Now I know some people argue that business is about making money, and not everyone has to be happy. That is also an opinion. Everyone has a right to his or her opinion. When you own a company, you also have the right to surround yourself with the people you choose.I have spent the last year and a half focusing on cutting costs, figuring out how the market has changed, and worrying about the economy. Things seem to be getting better, or perhaps I am just getting used to it.Either way, I had a good day today. Not because I got…

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'Tea Party' movement has given a powerful voice to the US Right's protests Print E-mail

 

The Tea Party, Sarah Palin and mutiny

"Tom Tancredo, a former Republican congressman and anti-illegal immigration campaigner, told the audience in Nashville that Obama was elected by people "who could not spell the word vote or say it in English".
Sarah Palin

Shall I be mother: Sarah Palin voices the fears of American conservatives

Photo: AP

Just a year ago "tea party" was, for Americans, a term stuck in history, associated only with the glorious 1773 uprising in Boston. Now it pertains to a movement whose supporters – and their champion Sarah Palin – believe they can deliver another revolution against forces also seeking to ruin the country with high taxes and the big boot of intrusive government.

A loose, grassroots coalition of disaffected conservatives, evangelicals and a smattering of libertarians, they have already helped derail Barack Obama's health care reform and kill plans for a carbon tax. Tea party volunteers and canvassers aided the capture by a little-known Republican of a cherished Senate seat vacated by the death of the liberal potentate Edward Kennedy, so denying the Democrats the 60-seat majority that makes governing so much easier.

Their first events were not even held until last April, when pockets of the disgruntled minority – they would call themselves the silent majority – who did not share in the joy of Barack Obama's historic election appeared at rallies against the President's high-spending agenda. Some demonstrators split open sacks of tea in honour of their forefathers' rebellious dumping of British leaves into the Boston harbour. Fuelled by the internet – as Obama's own rise had been – the name caught on.

Initially dismissed by the media, with the exception of the cheerleading Fox News, the protests – organised town by town, state by state by a variety of groups – started to attract thousands, gathering a momentum that reached a watershed over the weekend in the form of the first National Tea Party Convention.

Fittingly for its ambitions to change the nation, it was held in the grand setting of the Gaylord Opryland Resort in Nashville, the largest hotel in the US without a casino. What it lacks in roulette tables, however, it makes up for with five swimming pools, an indoor river with its own Delta flatboat and two or three jungles, all contained under a giant atrium roofed by an expanse of steel and glass.

A leading Right-wing blogger who introduced Mrs Palin, the headline act on closing night, joked that he had never expected his first meeting with his hero to be on the set of Avatar. Given the message the former Alaska governor delivered in her inimitably raw and folksy style, it was an appropriate crack.

Like the planet Pandora in the hit film, the Tea Party world is one of black and white, pitting good against evil, and Godly Americans against closet communists.

If and when conservatives recaptured Washington, Mrs Palin said she would call for "America's spirit to rise again, to go back to our roots as a God-fearing nation" that would "start seeking some divine intervention". Paraphrasing Ronald Reagan, who on the 99th anniversary of his birth was honoured by successive speakers as the conservative exemplar, she said: "The Cold War applies to the war on terror – bottom line: we win, they [the enemy] lose."

The former vice presidential candidate unerringly taps into America's conservative psyche. She voices – indeed embodies – their fears and anger that the culture of family, church, low taxes and small government is being lost. "We just want our country back," said Jim Linn, uttering a refrain heard over and over.

Back from what? "From a government that is taking us further and further down toward socialism, and further and further away from the constitution," he said, fully clad and bewigged as Samuel Adams, the early revolutionary.

Jeff McQueen, laid off a year ago from his marketing job in Michigan's benighted car industry, had started the USRevolution2 website. He has redesigned the country's first flag, placing a roman numeral II inside the circle of stars representing the first 13 states.

Mr Obama, he said, was "a Marxist" for taking car giants General Motors and Chrysler under the government's wing rather than giving them a loan. "That's what socialists do," he said.

A notion of America at the verge of apocalypse is widely shared. "We are truly on a precipice, looking down at disaster," said Walter Backes, one of few to attend from the liberal stronghold of California. "For the first time in my memory people are afraid for their country," said Phil Valentine, a talk radio host. "Very afraid."

"They argue the size of government isn't in keeping with the constitution, isn't consistent with the intent of the founding fathers," said John Geer, a political science professor at Vanderbilt University in Nashville. "But this argument is as old as the union itself. Thomas Jefferson wanted small government, while Alexander Hamilton [the first secretary of the treasury] wanted a strong federal government."

In Nashville, Washington is seen as a corrupt, over-bearing monstrosity that has stopped listening to the people and is determined to bankrupt the nation. Franklin Delano Roosevelt faced similar criticism when he pushed through the New Deal, so did Lyndon Johnson when Kennedy's death allowed him to pass the civil rights legislation and free health care for retirees in the mid-1960s.

The frustrations of the Right had been brewing before Mr Obama took office. God was long ago taken out of the classroom and the courthouse. Morality was sinking. Federal government was expanding, no matter which party was in power. But the presence of a liberal President trying to spend his way out of a recession has fired up a resistance that has stunned Washington and has both established parties scratching their heads.

Critics say an undercurrent of racism propels the tea partiers' animosity to the President. Tom Tancredo, a former Republican congressman and anti-illegal immigration campaigner, told the audience in Nashville that Obama was elected by people "who could not spell the word vote or say it in English". If only segregation-era literacy tests had been in place, this "committed socialist" would not have won. Another speaker, Joseph Farrah of WorldNetDaily.com, questioned whether the President was born in the United States and was qualified to hold the highest office. A lifelong Republican who has worked for two presidents, told me that "race is part of it, especially down South". "These are people uncomfortable with the country becoming more diverse, more mulatto, and Obama represents that."

The Nashville crowd was 99.9 per cent white, and 90 per cent middle aged and above. The charge of racism is, of course, denied. Offensive banners that were common if not prevalent at rallies – Obama with a bone through his nose, a target on the back of his head, and lampooned as Hitler or the Joker from Batman – are now rarely seen, as the movement has matured.

"There is not a racist bone in my body," said Bonnie Sachs, a primary school teacher from Alabama. "Give me a Condoleezza Rice or Colin Powell any time. It's not the colour of Obama's skin, it's what he and this liberal Congress are doing to our nation. He took over a mess but he has added trillions to our national debt."

Like other delegates, Mrs Sachs, in bright red knitwear with salon-prepared hair, didn't look much like a revolutionary. But come November, when the House of Representatives and dozens of Senate seats and state governorships are up for grabs, she and her cohorts plan to upset the equilibrium of American politics.

Tea party factions have already started bickering and some boycotted the convention for profiteering – tickets to see Mrs Palin were $350. There are purists who fear the movement's energy will be co-opted by the Republican Party.

But most are united in their desire to reform the party from within, and to become a political force for candidates who meet their tough conservative criteria. Sitting Republicans deemed too moderate will be challenged by Right-wingers who are the partiers' cup of tea. This may lead to split votes in some places, but it is more likely to be a shot in arm for a party dismissed as moribund after the Democrats' clean sweep in November 2008. The aim is to win back Congress, then the White House in 2012.

"He is a one-term President, I can tell you," declared Mrs Sachs, who is happily brewing a nightmare for Barack Obama.

 

 
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