The migration has been skilfully handled and I see that our sites are all back up and healthy. For the past week, I had been limited to blogging at Vox and dared not even update this site with my presentations at Proton Business School at Indore. (An incredible, wondrous experience—at a school whose students will go incredibly far. More on this later.) I hope to upload the presentation pages once I have recovered a bit from jet lag.
One annoying thing is that all my email accounts no longer work, so if you are expecting a reply from me, please stand by. I have not been able to read any emails to my personal account since Boxing Day.
Rackspace has tested everything from their end and it works; I have tested everything from mine and nothing works.
To prove that the weirdest stuff only happens to me (yes, I know this is egotistical, but try to ﬁnd me someone else with this issue), here’s what’s going on:
• no POP3 account works;
• webmail works but only if the username has no punctuation in it—a bit of a pain at a company where the email convention is ﬁrstname.email@example.com;
• but client domains appear to work. Just not Lucire, JY&A and this domain.
I have the same effect on Linux as I do on Windows and on Mac. No one platform is more reliable than the other in my world. I can break them all, and most programs, just by using them and following the instructions.
Before you go through the regular stuff, I will say that the IPs are resolving correctly, and this inaccessibility has been the case in three countries so far. The ﬁrewall is set up to allow authorized users, and speciﬁcally people from this ofﬁce, to enter.
There is no logical reason for webmail to work and for POP3 not to—especially when the former works with some accounts. But nothing about my 25-plus years of using computers and programs has ever been logical. They are among the least logical things I have found, from failed loads on tape drives to Twitter telling me I am over 140 characters when I have relied on its very own counter to keep it under. (I have even checked to conclude that a human is superior at counting to 140 than a computer.)
Fortunately, a lot of the team use forwarding accounts so they are unaffected, but I don’t—plus I am the heaviest user. I shudder to think how many thousands of emails are trapped on the server. I know that in two of our accounts, there were nearly 1,100—if you’ve emailed to the general mailbox, your message actually has been read by my team. (The spam has been deleted, too.)
For the past few years, my last week of the year has been catching up with emails. Of course, it was a little tough to do that in India, since I chose to travel and work through the Christmas season—and I am totally thrilled to have done so, as those of you who followed my Vox blog or my Facebook page know. It was a fab Christmas. And the server problems would still have arisen whether I had been here or not.
Since in a typical week I personally get 2,000–3,000 emails, my return would still have been an ideal time to do the less urgent ones, usually around 200 that remain at year-end. It looks like that won’t happen this year, and I am annoyed—because there the least urgent of the 200 will not get a reply now till well in to 2009, possibly even a year from now. Yes, bad time management in a way on my part, but I still believe in furnishing replies whenever I can, even if it takes me as long as Ringo Starr in that early episode of The Simpsons.
Though with thousands compared to millions, I think I might just be done sooner. On the other hand, the dude did have a butler in the cartoon. Posted by Jack Yan, 13:24
[Cross-posted] Since India has been extremely kind to me—the people here are amazing—I owe it to this nation to bust a few stereotypes.
First, the food. It is excellent and in two days I have had no problems with my tummy. ‘Delhi belly’ is a cruel stereotype that I was given by some friends prior to my departure, though I knew instinctively it was cobblers. The same rule applies here as everywhere else: if you are careful about what you stick in your mouth, you are ﬁne. People do know that in rural areas things can be tougher. Nevertheless, I can make this conclusion: Indian food is fab and way better than expat Indian restaurants.
Secondly, this is certainly not a backward country, and anyone who has read books such as The World Is Flat would know that. Here I am, surﬁng on wiﬁ, and at speeds and with connectivity better than what I might ﬁnd in other parts of the world, and that includes New Zealand. There is a rich–poor gap and that does mean some poverty but that also generates invention. I saw booksellers yesterday with used books alongside new ones; we should be copying some of the recycling efforts that Indians undertake every day.
If your impression of an Indian car park is old colonial hand-me-downs, think again: the Daewoo Lacetti (Chevrolet Optra) is newer than what many countries sell, including Australia and New Zealand (above).
I accept I am living a more luxurious life here than many, but since I have walked around Delhi old and new, I reckon I have seen a good cross-section here. I didn’t opt to just be cosseted.
A public expression of gratitude from me to Stanley Moss for introducing Rajat and Sajanna, Pooja and Adil at Shanti Home, and for Praveen at Travelscope India, and Naveen who spent an entire day with me introducing me to his city. Posted by Jack Yan, 11:40
We are in the process of a server migration so, if on a future visit, this and any of my company’s websites look older than they currently do, do not worry: it’s not you or your computer. This should all be completed before Christmas. Posted by Jack Yan, 00:48
With my computer glitches this quarter, I have had a few friends advise me to ‘get a Mac’. More than a few. While I appreciate the sentiment, they don’t know me well enough. I can break any computer just by using it. Even a Mac.
The number-one reason for not switching is, of course, poverty. It’s not just that PCs are cheaper, but the thousands I would need to invest for software—notably fonts from my colleagues—would be too much. OpenType is cross-platform now but I have a lot on Adobe PostScript Type 1. And Macs had font management issues: it was one area where PCs made more sense.
Secondly, are Macs that much more reliable? If we were talking pre-OS X days, I would have said yes. I worked a lot on Macs then and loved them. The memory management wasn’t quite as good on the really tough stuff, but for everyday use, for the graphics processing, they were plain unbeatable.
These OS X machines have that fancy interface with programs enlarging down the bottom—the sort of fancy-pants gimmick I do not need. I know you can switch that off. But I remember one incident in 2005 that illustrates how computers sense I am near and go all funny. Think of it as the computer world’s Frank Spencer vibe.
That time, three people spent 90 minutes trying to burn a CD on a Mac. This is a very hard thing to do on a Mac. The blank CD icon plain didn’t show up and we went online, through the help pages, and even called Apple, who was of no help whatsoever (the usual crapola about ‘But it should be there’—yeah, no s***, Sherlock). Now, I know that with PCs there is plenty of advice on the web, most of it inapplicable to me since I am the only person on the planet that ﬁnds that one error that the programmers had bet that no one would ever ﬁnd. But at least all the bad advice gives me clues and I don’t have to call Microsoft or the program vendor. And the help pages are, for what it is worth, quite well written.
The owner of the Mac was calling Apple Australia (since New Zealand couldn’t help) to get an answer when one of us accidentally stumbled on some setting three menu hierarchies down. It was not something that we should ever have had to deal with, but there it was. Tada! Ninety minutes to burn a CD.
Of course I am not writing off Macs based on a single incident. There have been others with the Macs I have been in contact with, just that that one sticks in my mind. There have been missing emails, corrupted mailboxes in Thunderbird, networking issues, etc. In other words, just the usual computer fare that revolves around yours truly. And there is comparatively little help out there on the internet.
I am the very ﬁrst person to say that PCs do mega-stupid things. However, I wonder if the image of the more reliable Macintosh is due to the smaller user base. Per capita, I reckon that they are just as buggy, or they certainly would be for a person like me. Give me a Mac for a week and I will ﬁnd fault just as often as with Windows. Posted by Jack Yan, 23:56
Sonia Yee was kind enough to provide me with a preview of Part Three of her series, The Golden Tide (see earlier post here), which appears on Radio New Zealand National each Sunday at 2.30 p.m. from December 28. I’m thrilled with this episode, which airs January 11: she chose some of my better quotes and discarded my non sequiturs, for which I am very grateful. This is required listening: this is not “a Chinese programme” per se. The musical score is outstanding, as is the post work. It is a commentary about cultural identity, and about what it means to be a New Zealander. In a nation where everyone, including the Māori, can trace their roots to another land, we need to understand issues such as pigeon-holing, marginalization, stereotypes, assimilation and identity. Posted by Jack Yan, 10:42
The weeks after the US presidential election have been interesting.
First, certain Republicans wanted to make Gov. Sarah Palin the fall girl of their campaign. They failed. Bill O’Reilly tore in to her pretty quickly but faced a backlash from Republicans who saw the Governor as a heroine of their cause. Sen. John McCain took an entire week to respond, by which time it was “safe” for him to have done so, when the political meter had swung to Gov. Palin’s favour. We have Joe the Plumber now coming out and saying that he wasn’t that impressed with the Senator, but he was impressed by his running-mate.
Then, we have a shrewd President-elect who has sought to distance himself from the radical elements, the corruption in the Illinois governor’s ofﬁce, kept in touch with American people via YouTube, and attempted to go forth with a transparent transition process.
I am not going to get into politics deeply here. My point is that the behaviour of the two candidates speaks volumes toward the way they brand themselves, their notions of leadership and their motives.
I do not feel then-Sen. Obama’s campaign was the most transparent. There were questions to be answered, as I have stated on this blog. Vagueness is not a way to earn votes—but history has always shown that a campaign on change after years of one president in ofﬁce works: Clinton 1992, Blair 1997 and Clark 1999 are good examples.
I did feel Sen. McCain attempted to be more candid during the campaign. I was unimpressed, however, by points he ﬂip-ﬂopped on—when ﬁrst faced with the mortgage crisis, his ﬁrst words were in fact about letting laissez-faire economics have their way. Within weeks he spoke of nationalizing mortgages.
So much for the maverick who took a position.
Now elected, President-elect Obama has done right by his YouTube addresses, understanding that he needs to set a vision as well as a strategy. This is not a cynical exercise in PR. A leader knows that the most effective way to get an organization moving—and in this case a country—is to get stake-holders in on the act early, rather than impose a strategy on to them. I have said the same in any branding job for our clients.
Sen. McCain’s failure to defend his running-mate rates down there alongside Al Gore’s failure to endorse Sen. Joe Lieberman, as tradition might have suggested he should have done, going for Gov. Howard Dean instead. Gov. Palin was ﬁne at defending herself ultimately, but not before more damage was done to the Republican Party.
Whether one agrees with his Cabinet choices, Barack Obama’s moves in his transition have been pretty good, and among the most open I have witnessed since I began watching American presidential campaigns. He is using the playbook of modern communications to ensure that the ofﬁce of the President will continue to deserve respect. While in some respects he has gone against the ‘Change’ cry of his campaign by rewarding Clinton-era loyalists for the Cabinet positions announced so far, it’s another shrewd move to ensure stability from his party. With enough in place, let’s hope that he can get on with the real serious issues.
Am I going to give Barack Obama ﬁve out of ﬁve? No. I still hold concerns over his ideas. But those who questioned his experience—as those who questioned Gov. Palin’s—might be revising their thoughts today. For the most part, these transitional weeks have been well played by Illinois’s rising star. Posted by Jack Yan, 09:48
It just dawned on me that Monday marks my 21st anniversary in business. There is a press announcement going out tomorrow, strangely not about that—but it is funny that it is going out on our 21st birthday. It’s been a good 21 years, with a few hiccups but not serious enough to harm us. The high points would be scoring the ﬁrst font licensing deal; starting Lucire in 1997; and being recognized to contribute to the Medinge Group. Along the way I have met many good souls, too numerous to mention, but those who spring to mind right now include Stefan Engeseth, Stanley Moss, Chris Macrae, Paddianne and Don Neely, Camille Sanson, Ian Ryder, Demian Rosenblatt, Elyse Glickman, Christine Arden, Panos Papadopoulos, Hugh Derham, Don Roberts, Mike Parker, Alice Goulter, Andrew Cross, Johnnie Moore, Brian Willson, Edward Hodges, Simon Green, Nicky and Simon Casey, Christine Inwood, David Sanders, Bruce Newman, Brenda Newman, Jean-François Porchez, Bruno Maag, Stephen Ciuccoli, David Lemon, Clive Bruton, Sandy McLendon, Peter Singer, John Jones, Zuzana Licko and Rudy VanderLans, Nigel Dunn, Tim Kitchin, Ian Baillie, Nicholas Ind, Amanda van Kuppevelt, Sicco van Gelder, Merci Robles, Jure Stojan, Valerie Harper, Bill Shepherd, Erik Spiekermann, Rosie Kropp, Ali Sabbagh, Thomas Gad and Anette Rosencreutz, Tanya Sooksombatisatian, Miguel Kirjon, Tamsin Cooper, David Cooper, Emily Cooper, Ana Hickmann, Douglas Rimington, Valentin Lapusca, Mirella Lapusca, Paolo Zampolli, Sarah Garlick, Laura Ming-Wong and Adrian Owen, Paolo Vanossi, Ann Fryer, Donna Tulloch, Carolyn Enting, Phillip Johnson, Eddie Uken, Jason Moon, Angie Ruiz and Mark Tarbeek, Portia Holt, Mark Geard, Simone Knol, Megan Tuffery, Ingrid Kennedy, Richard Spiegel, Glenda Wynyard, Daron Curtiss, Merrill Fernando, Dilhan Fernando, Stevie Wilson, Matthew Breen, Andrew Bridge, John Challis, Dave Challis, Jennifer Siebel Newsom, Hilary Rowland, Corinne and Ted Davidov, Hayley Lynch Robinson, Dennis and Robbie Shinn, Benjamin Keith, David Philpott, David Patin, Matthew Carter and Cherie Cone.
There are many, many others, and please do not take an omission here as signiﬁcant. These blog posts are not as well thought through as you might think.
Here’s to the next celebration. Twenty-ﬁve? Posted by Jack Yan, 09:46
[Cross-posted] Half the country likes National Radio—or Radio New Zealand National, to give it its proper name these days—during the summer, and half the country dislikes it. The programming changes from the usual formula and I have often said that shows like Matinee Idle (not a misspelling) are among the highlights of the wireless year. While my loyalties still reside with Groove 107·7 here in Wellington, New Zealand for most of the day, National does some great stuff that’s worth tuning in to.
This summer, there is a new highlight, and not just because I have been interviewed for it. The Golden Tide is a series by Sonia Yee beginning on Sunday, December 28 at 2.30 p.m., running to January 25 (weekly). It will appear on the RNZ website, I believe, after broadcast.
Sonia wrote one article in issue 26 of Lucire (which also appears online) but our connection is that I was at school with her cousin; and, of course, we are both of Chinese ethnicity, which was one qualiﬁcation for being a subject in her series.
The Golden Tide ‘takes a fresh, contemporary look at the changing nature of the Chinese community in New Zealand,’ according to Sonia, and ‘interweaves interview material with poetry, short stories and scripted scenes to create a rich, textured documentary, with original composition by musician Riki Gooch (Fat Freddy’s Drop, Trinity Roots), and ﬁlm and theatre composer Stephen Gallagher.’
If we promote TV shows and ﬁlm on occasion in Lucire, then why not radio? And good radio, too—things which you feel richer for having listened to. Based on the questions that Sonia asked me, I think it will be a very insightful series that tell a story common to so many of us who have travelled and settled in a new country, or those who have had ancestors who have done the same. Most of us got here from somewhere, and it’s an interesting cultural experience to share. Posted by Jack Yan, 06:47
Earlier this year, before we found out just how bad Detroit’s ﬁnancial situation was, I wrote a paper for The Journal of the Medinge Group called ‘Saving Detroit, by Not Making the Same Old Mistakes’. My advice: don’t keep cutting back, because that would lead Detroit down the same path that British Leyland followed when things got dire there. Manage your brands. And stop the internal politicking.
But things are far worse today than when I wrote that paper. The Big Three are talking about running out of money to stay in business. And yesterday, the US Senate blocked the bail-out plan that Congress had OKed.
As the car bosses went to Washington, DC to ask for a bail-out—or, more accurately, loan guarantees and a credit line—few in the media have dealt with what the Big Three need to do now that things are so dire. Paul Ingrassia, in December’s Condé Nast Portfolio, is one exception, discussing the Chapter 11 option. I still dislike the idea of reducing brands because I saw what it did to BL; and when people bring up that Toyota only has one brand, or one line in a segment, they do so with a very narrow view.
Toyota has three brands Stateside; and in its own domestic market I don’t know of any size segment where it does not ﬁeld multiple models, apart from the very top end where it has the Century. In Japan, it has numerous sales’ channels, which have different models, and those channels are almost treated in the same way as GM treats its divisions.
Today, I wrote an opinion piece, which I put on to CAP Online—it’s too long for here, and it’s not brand-focused enough for something like The Journal—where I look at what the model ranges in the US should look like.
There are a few things I missed, such as what to do with Mercury, because I had covered that before. The emphasis was exposing something car buffs knew, but few in the ﬁnancial press do: that GM and Ford already have world-class models in their ranges, that they have spent billions developing. Politicking inside Detroit simply prevents these models being sold to Americans.
We are talking about cars that make Corolla, Camry, Civic and Accord look second-class.
But Detroit’s arrogance and its continued belief that it can pull the wool over American consumers’ eyes by pretending that these cars do not exist—it even pretends, for the most part, that Corolla and Civic don’t exist—has meant that these models never see the showroom ﬂoor in the US and Canada. (Some, however, appear in México.) American buyers get second-rate stuff, while these same American-owned companies sell some excellent cars abroad.
There are even segment-busting models that I reckon US buyers would love, such as the Brazilian Ford EcoSport, a subcompact SUV, or the Chevrolet Meriva, also from Brazil—think of a practical minivan on a subcompact platform and great gas mileage to boot.
Chrysler has the option of partnering with ﬁrms that would love to have a US presence to ﬁll segments it has failed to compete in. Peugeot of France, which owns its old European operations, could sell the 207 with a Dodge badge. The grille even reminds me a bit of the old Chrysler Concorde’s.
Opel’s Insignia, Car of the Year in Europe, sells in Red China as the Buick Regal—which it could do in the US, too.
And before you argue that European cars would be overpriced or the exchange rates would be unfavourable, the fact remains that Detroit had plenty of opportunity to tool up for them years ago, or to use some of the Mexican and Korean plants to supply the North American market.
I’ve said on this blog before that if I could forecast the fuel crisis at the beginning of the century, there’s no way that the Whiz Kids in Detroit’s employ wouldn’t have—but bosses chose not to listen and to keep the institutionalized little duchies as they were.
And in terms of how the brands should be run—well, I’ve stayed pretty consistent on these strategies for the last decade, and wrote warnings each time there was a wrong move. But, I’m not a Detroit insider. And politics-as-usual in Motown’s boardrooms have taken us to this point today—three decades after Japan, Inc. gave Detroit a major wake-up call.
While some of my opinion piece’s ideas are impracticable, and I speak in ideals, they do force Detroit—and Washington, and the American people—to look at just how the Big Three have operated without any notion of humility or consumer awareness for a long time.
In 2009, there is no such room for indulgences. We’re talking about emergency measures, and what Detroit needs to do in a stop-gap fashion while it genuinely restructures. I don’t mean piddly, lip-service types of rebranding within the ﬁrms, but serious, ground-up strategies that the current boards have shown little stomach to carry out so far.
• PDF version of ‘Save Detroit—Now’ (click here for HTML version)
• PDF version of earlier paper, ‘Saving Detroit, by Not Making the Same Old Mistakes’ (click here for HTML version) Posted by Jack Yan, 11:31
A typeface getting a lot of attention lately is the Ecofont (acknowledgements to Jim Donovan), a design from SPRANQ based on Bitstream Vera (which went open source under GNOME). The claim: that by putting dots into the characters, one can use up to 20 per cent less ink or toner.
The idea of omitting a part of a character or even manipulating outlines is not new, but what SPRANQ has done is, to my knowledge, original. Typeface designers have done ink traps for years—these are most obvious on designs like Bell Centennial, which are to be used at small sizes for phone books. Ink traps are where ink can go in a less-than-ideal printing environment (e.g. high-speed presses, low-grade paper) and “ﬁll in” the rest of the letter.
And people have been doing funny things to characters for ages, including putting holes in the design, but that was always for ornamental purposes, not for sustainable ones.
SPRANQ claims that the result of its roman-only design works at small sizes, and that it should display all right at 9 or 10 pt.
It’s not a bad idea and I am not surprised it has taken the Dutch, who have been turning out excellent type in the last 25 years, to have thought of it.
‘After the Dutch holey cheese, there now is a Dutch font with holes as well,’ jokes the website.
However, is it the best solution for the environment?
The company claims that it won’t do a serif version of Ecofont, because seriffed letterforms use more ink. I’m not sure if that holds true always.
A typical serif design has greater contrast between verticals and horizontals. Seriffed typefaces tend to be more compact when it comes to copyﬁtting (how many letters per line). There are, of course, many exceptions.
If you take in the contrast (knowing that the horizontal strokes are going to use less ink) and accept that seriffed characters are narrower (in general), you might still be helping the planet. Notably, better copyﬁtting means less paper. Ecofont, being wide, uses more paper.
The only way to test these claims about ink is scientiﬁcally—maybe someone with way more time than me can put it all to the test? (The problem: you use more ink or toner and paper doing it. Not good.)
So I hope SPRANQ might consider Ecofont Serif, with holes through the verticals, but keep the horizontal strokes more intact (or use smaller holes). It has already employed a similar idea, anyway: the holes in the horizontals in the existing Ecofont are necessarily smaller, because there is still some contrast between their and the verticals’ thicknesses. And they should make it more compact.
As for the sans serif, intuitively the idea works and it certainly makes for some deserved press. I only wonder if the rasterizers for computer printers will pick up that the holes are there and allow the ink or toner to cover them. I assume SPRANQ has that covered, or perhaps someone can inform me of how that process works.
All in all, I take my hat off to these guys. Posted by Jack Yan, 22:14
More media bias? In People’s report on the failure of Rosie O’Donnell’s variety show (big surprise there), it noted:
The night was dominated by an ABC televised interview with Barack and Michelle Obama by O’Donnell’s View nemesis Barbara Walters.
Um, no it wasn’t. The network and programme that won the evening in the US were CBS and its horrid Criminal Minds. And dominated is a strong word—especially when it’s untrue.
Someone needs to tell People that Barack Obama has already won the presidential election and it can stop campaigning to make him look good. Many people think he’s doing a pretty good job of that himself. Posted by Jack Yan, 09:14
5. Finance is broken.
I had an old issue (July–August 2008) of The Atlantic open on this advertisement’s page for months, wanting to share it with you, but one thing led to another and life got a bit busy. (Especially last week, if anyone wants to read about my Frank Spencer experience with technology.)
It’s an ad for a pamphlet—it does not say book—called The True Patriot.
The headline begins: ‘Global warming. / 50 million Americans uninsured. / Massive budget deﬁcits. / Failing public schools. / A tarnished national image. / These are not policy failures.’
The last line is a surprise but I think we can mostly agree that the other lines are relevant, and are issues that the US faces today.
The copy begins:
Actually, these crises are the inevitable result of the policies we’ve chosen. Today’s policies were designed to treat our dependence on oil as a given, our basic health as a luxury, an adequate education as a privilege, and our children’s wealth as our own.
No, our policies are working exactly as designed. The problem is, they all spring from a framework of principles and morals that is broken and bankrupt. American politics today is dominated by a morality of short-term over long-term, every man for himself, might makes right, the lowest get least, and actions without consequences.
If patriotism means “country before self,” today’s moral framework is not patriotic. We can do better—and in these challenging times, we must.
Stewardship. Shared sacriﬁce. Mutual obligation. Responsibility for the common good. Equality of opportunity.
These were the truly patriotic moral values that animated America’s founding generation, and they are the principles we must return to if America is to sustain its greatness. We’ve written a little book that chllanges each of us to answer the question: What is true patriotism? It’s not a question of policy. It’s a question of morality.
The authors are Eric Liu and Nick Hanauer, and they give a website at truepat.org.
Now, I haven’t read this pamphlet, but the issues the copy raises are poignant enough.
When in a week a Wal-mart worker back east gets trampled to death for the sake of customers’ shopping—let me say that again, shopping—and two blokes pull guns on one another at Toys ’R’ Us, the much-bandied idea that President George W. Bush is responsible for the declining American standard doesn’t hold much water. Want to restore American prestige? The buck might stop at the White House, but Dubya—or Clinton, or Bush 41—is not the cause. It’s the way much of life is now conducted—and the problem is hardly exclusive to the United States. (And now you also know why I resisted blaming the President for the decline in American soft power.)
I have often talked of the failure of the technocracy—a viewpoint that certain members of the new National government here, I might add, do not appear to agree with—so I can agree from a business perspective with Messrs Liu and Hanauer on their pamphlet’s rationale.
The idea of every man for himself is incompatible with a more connected world that demands that people see and do something about what is going on.
What is morally bankrupt is the continued decrease in substance behind words such as patriotism, honour and duty; responsibility seems to mean increasingly less.
While Messrs Liu and Hanauer talk about everyday American life, what I have seen of everyday American business certainly follows their concerns. The difference between the early 1990s and the 2000s is huge and this is not because I am looking back with a pleasing sense of nostalgia. This decade, American businesses alone have tried to cheat my company out of thousands in shipping, for example. And when I follow the matter up, it’s usually a blame game.
In business, the sub-prime comedy video from Bird and Fortune that I posted here on this blog, which actually dates back over a year, is eeriely accurate. It was about taking debts that had no real value on them and relabelling them as AAA-ranked bonds.
Writes Michael Lewis, one of America’s best business authors, in my view, in this month’s (December 2008) Condé Nast Portfolio:
[Financial analyst Steve] Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 per cent of the new total being rated AAA. But he couldn’t ﬁgure out how the rating agencies justiﬁed turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming that home prices would keep going up,” Eisman says.
These BBBs were traded even further:
Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. [collateralized debt obligation.] The reason they did this was that the rating agencies, presented witht he pile of bonds, backed by dubious loans, would pronounce most of them AAA. These bounds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities.
The big banks were all too keen to trade these even further. And when the collapse came, the losses were greater by many times than the original loans.
It may be time for recriminations and ﬁnger-pointing at the end of 2008 but it is irresponsible and dishonest to do what the ﬁnancial industry has done.
In 2001–2, my early work in my books and on the Medinge Group highlighted the problems surrounding branding and the failure of that industry to reﬂect realities. We talked about corporate social responsibility and branding’s potentially positive role in it. And in the 2002 meeting, Chris Macrae talked about how valuation was dead as far as the stock market was concerned. He was absolutely right.
We have made some impact on how branding is perceived and should be done, and highlighted how many people in our industry have no idea what they are talking about.
The ﬁnancial industry makes the worst of the branding industry look pretty good, because this mess shows that many people in ﬁnance did not know what they were doing. It makes the legal profession, the one I turned my back on after graduating with pretty good marks after law school, look very honourable indeed.
I once said that a Dow going over 10,000 was just crazy, but I felt like an idiot for years when the system just kept on and on. My knowledge then lay only in a simple knowledge of valuation. Little did I know just how bad things were. And why my instincts to stay away from the markets for most of my adult life have proved justiﬁed—a good part being this simple truth: if someone needs to bury his or her work’s rationale in jargon, then it cannot be a particularly good profession.
The ideas do need to start at education, but we have generations that have shown themselves to be selﬁsh. To quote Lewis again, speaking about his 1989 book, Liar’s Poker, where he exposed the dishonesty and nonsense of Wall Street:
I had no great agenda … but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to ﬁgure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become ﬁnanciers.” …
Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.
I can only hope those entering the business world today can see the mess for what it is, rather than be suckered in to “business as usual”. The crash of 1987 did not create a generation that became aware in some postmodern fashion about the nonsense of their world. Maybe this one can wake a few more people up—certainly when everyday Americans realize their entire 401 (k) has gone, or they are being kicked out of homes, it might. This time, a lot more people are involved, because they placed their trust in institutions that had a ﬁduciary obligation to be honest with them. In many cases, their only defence is that they never had any intention to deceive, because they were too daft to know just how insecure those AAA bonds were.
The lack of substance in today’s words rears its ugly head once more. Posted by Jack Yan, 04:46
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