Archive for May 2006

Bill Moyers On The Economics of Bread

We’re not used to turning to Bill Moyers for insight into anything, much less economics. But maybe we’ve been too harsh, turned off by the dopey earnestness and knee-jerk politics of his PBS specials. This piece from his commencement address at Hamilton College is actually very good stuff.

Bread is the great re-enforcer of the reality principle. Bread is life. But if you’re like me you have a thousand and more times repeated the ordinary experience of eating bread without a thought for the process that brings it to your table. The reality is physical: I need this bread to live. But the reality is also social: I need others to provide the bread. I depend for bread on hundreds of people I don’t know and will never meet. If they fail me, I go hungry. If I offer them nothing of value in exchange for their loaf, I betray them. The people who grow the wheat, process and store the grain, and transport it from farm to city; who bake it, package it, and market it–these people and I are bound together in an intricate reciprocal bargain. We exchange value.

Pass the Bread: Text of Bill Moyers’ Address at Hamilton College
[ via blog]

Greek Diner Denizens as Counter-Cyclical Market Signs

lobster_roll.jpgJeff Matthews describes his encounter in his local Greek diner lunch spot with a hospital worker looking for investment advice. Since we find ourselves in similiar situations, we really like his response: play psychologist.

She: “Which fund should I buy?”
Me: “Which fund do you want to buy?”
She: “I’m not sure. Which country should I buy?”
Me: “Which country do you want to buy?”

In their next encounter, the hospital worker informs Jeff she’s selling everything. His natural response: does this mean it’s time to buy?
The last time we got asked for investment advice was over brunch at the new West Village spot Ditch Plains. It went like this.

Her: What should I be buying?
DB: Try the lobster roll.
Her: That’s not what I meant.
DB: If you’re not hungry, then just go with the shrimp salad.
Her: Are you always like this?
DB: Usually. At least until we get our first bloody mary.

Panic at the Greek Diner [Jeff MatthewsIsNotMakingThisUp]

  • 23 May 2006 at 9:13 AM
  • MBAs

Big Guns For Biz School Commencements

gradcap.jpgDealBook this morning runs down which business schools have landed which commencement speakers. The clearest win is Harvard’s grab of Goldman Sachs CEO Hank Paulson. Sloan MBA’s will get to hear from Federal Reserve Chairman Ben S. Bernanke, but Sloan loses points since it is sharing him with the rest ofr MIT at the university-wide graduation ceremony. Columbia pulled NBC Universal’s Bob Wright.
More at DealBook.

For Some M.B.A.’s, It’s Pomp, Circumstance and Hank Paulson

  • 23 May 2006 at 8:50 AM
  • Economics

Freakonomics Can’t Jump?

iverson.jpgIs Malcolm Gladwell a “freakonomist?” A freakonomist might be defined an economics writer who has the ability to transform contrarian arguments into conventional wisdom almost overnight. Steven Levitt and Stephen Dubner, for instance, created a popular consensus that abortion cuts crime. Unfortunately, the trip from contrarianism to consensus is often a result of psychology rather than the merits of the arguments. We like contrarianism because contrarianism is, well, kinda cool.
Fortunately, we have Steve Sailer around to deliver sharp reality checks against these freakonomics claims. Way back in 1999 he pointed out that abortion didn’t actually cut any crime in the first cohort of young men from whom legalized abortion supposedly culled the worst criminals. Serious crimes actually went up among this group. Most recently Sailer’s aimed his reality guns at Malcolm Gladwell’s New Yorker article touting a book by a couple of economists who argue that, among other things, that far from being the top NBA player in the season he won the Most Valuable Player award, Allen Iverson was only the ninety-first-best-play in the league.

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Opening Bell: 5.23.06

euronext.jpgEuronext Backs Merger Proposal By NYSE Group (WSJ)
The courtship of Euronext won’t be as smooth as the NYSE would like. The Deutsche Börse anow has a bid in (as we predicted yesterday), which they claim will be superior for Euronext shareholders. One disadvantage that faces the Deutsche Börse is that they can’t offer the possibility of being a trans-Atlantic exchange, the way NYSE can. At the moment Euronext still favors the NYSE, but it would be unfathomable for The Deutsche Börse to not make another offer. And it wouldn’t be a surprise to see a third get into the mix.
And Now For The Vonage IPO (GigaOM)
The market is bracing for the IPO of Vonage, the first good old-fashioned unprofitable tech and consumer giant we’ve had in years Like Google, lots of people including the non tech-savvy have heard of them. Unlike Google, they’re not pulling in mountains of cash. If there’s a parallel from the .com years, perhaps it was the IPO of Louis Borders’ WebVan, which promised to delivery the groceries. Eventually, some companies have fulfilled its vision, but at the time the company had spent too much on distribution centers around the country, without much hope of profitability. Now with all of the cable and telecom giants offering cheap IP phone calls, not too mention free phone calls from more exotic offerings like Skype, Vonage faces the same profitability questions.
Large-Cap Internet Courtships: Do They Make Sense? (PaidContent)
The answer is probably no, they don’t make sense. JP Morgan is out with the report exploring the possibilities for some of the large internet players (MSN, eBay, Google, Yahoo) to tie the knot with one another. Take one that gets bandied about from time to time, MSN-Yahoo. There’s some idea that if the two of them teamed together, they could possibly take on Google in search. But let’s ask a practical question: How do you merge two search engines? Do you make a page with two searchboxes? Do you just redirect MSN visitors to Do you just merger their databases and server farms? Do you just tell MSN users to try Yahoo now? It can’t be done, unless we’re really missing something. The same phenomenon would be true to a lesser extent in some of the other tie-ups, though perhaps eBay is unique enough to complement another player. Should prompt some chatter today.
Stock options probe extends to Seattle company (Seattle Times)
Depending on your perspective, the widening net of the stock options investigations will either demonstrate the need for even tougher regulations like Sarbanes-Oxley, or prove that they’re a useless albatross that doesn’t really make shareholders any safer. Arguably, not only don’t regulations protect shareholders (much), but they make the situation worse, as companies find more exotic ways to disguise payments. The problem is not the payments themselves, but rather the difficulty shareholders have in measuring the operations of a company. The idea that financial trickery can be outlawed and then stopped is a flawed one, but there’s no doubt that the continued escalation in regulation and compliance costs will continue to burden many legitimate operations.

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  • 22 May 2006 at 4:35 PM
  • Banks

Yoel Zaoui=Sole Head of Goldman’s European I-Banking Division

From today’s announcements in Reuter’s “Move” column.

Goldman Sachs said on Monday that Yoel Zaoui is to become sole head of investment banking in Europe, in a reshuffle of the U.S. investment bank’s top European management.
Zaoui, who has played a key role in building up the firm’s European M&A business, was previously co-head of investment banking in Europe alongside Chris French and Matthew Westerman.
French is to become chairman of European investment banking, while keeping his job as head of investment banking services.
Westerman will continue as sole head of the bank’s European financing group, within the investment banking division.

The Zaoui (which we really hope is pronounced “Zowy!”) family is really something to behold. Yoel’s brother Michae holds the equivalent position at Morgan Stanley. So, basically, if you’re doing a big M&A deal in Europe, the odds are pretty good one of the Zaoui brothers has a hand in it.
Moves [Reuters]
Zaoui takes helm for Goldman in Europe [Financial Times at MSNBC]

  • 22 May 2006 at 4:21 PM
  • MBAs

DealBreaker (Hearts) Dilettantes

townley-gemma.jpgBusiness Week interviews Gemma Townley, novelist and soon-to-be MBA.

Like her characters, Townley has undergone many transformations over the years. She started out editing Financial Management, a magazine for finance directors, and having her work appear in the Sunday Telegraph. Then she headed communications, first for the Charter Institute of Management Accountants and then in a government department.
Finally, in 2003, she began the MBA program and launched her career as a novelist virtually at the same time. Unafraid of a busy schedule, Townley also got married just as her first module for the MBA was starting. Recently she decided to give up her corporate job to work full-time from home as a writer. She’s also close to earning her MBA degree once and for all.

We hate her and love her already for all the same reasons.
The Lives and Loves of a B-School Co-ed [Business Week]

GV.jpgAccording to Planespotter [but not otherwise confirmed], the IAC Bombadier (tail number N393BZ) is on the move. This time from Germany’s Bremen Neueland airport to Van Nuys in Los Angeles. Also unconfirmed: a Lear registered to Denise Rich, whose husband Marc famously recieved a lame-duck pardon from President Bill Clinton, today flew from New York’s Westchester Airport to Arkansas’s Rogers Municipal Carter Field and back again.