continuing education

“What did you expect from a Harvard Graduate?”

[Part II, Part I]

I’ve got some upsetting news to share: a bunch of white collar criminals in-training have suffered a serious setback, their dreams of one day ripping off other people for sport and possibly–if cards were played correctly– serving time, shattered to pieces.

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Bond Trader Tapped To Coach Oregon State Basketball

Craig Robinson has gone from trading bonds for Morgan Stanley to coaching basketball at Oregon State, widely considered to be one of the toughest jobs in college basketball. The job was offered to at least three other top coaches before Robinson finally agreed to leave his spot as head coach at Brown.
Robinson graduated from Princeton, where he was a basketball star, and got an MBA in finance from the business school at the University of Chicago. After a stint at playing professional basketball in Europe, Robinson was a bond trader at Continental Bank, Morgan Stanley Dean Whitter and Loop Capital Markets, a minority owned investment banking firm.
Turning around Oregon State’s team will be a challenge for Robinson, perhaps harder than a bond trader trying to dig his way out of a portfolio heavily invested in adjustable-rate mortgages. Robinson, however, comes from a family with grand ambitions. His brother-in-law is Barack Obama.

The Unlikely Candidate

Opening Bell: 5.29.08

alanschwartzbear.jpgBear Stearns Neared Collapse Twice in Frenzied Last Days (WSJ)
Well we’re a little sad this is coming to an end… in all seriousness, knowing the third installment would be up when we opened our computer today helped us wake up to to the Opening Bell — always a difficult chore. This one is all about those last couple of days, which was of course covered in the famous “A guard lay out a buffet spread” article from March. No mention of whether they ordered Chinese food th time (why re-open old wounds?) but a good timeline of how JPM’s bid came down, and the reaction (none too pleased) at Bear Stearns. Anyway, a lot more good stuff in there, though obviously you’ll check it out.
Sears Holdings Reports First Quarter Results and Increased Share Repurchase Authorization
Even before you crack into an earnings report, it’s usually a little ominous when the headline trumpets an upcoming share repurchase — which is usually just designed to soften the blow of bad news. Though we’re not sure why it has that effect. When the market is selling, do you want your company spending its own money on its own stock? Anyway, the company that Cramer once compared to Berkshire Hathaway (‘you have to buy just one share!’) reported a net loss from the quarter, a decline in revenue amid a “difficult economic environment and intense competition for consumer business.” We’ve no doubt that that’s true. The comps were particularly terrible: “For the quarter, Sears Domestic’s comparable store sales declined 9.8% while Kmart’s comparable store sales declined 7.1%.”
Spam spam spam: Sales of Spam rise as consumers look to trim food costs (Star Tribune)
Courtesy of Barry… Now you’ve got to take Spam seriously. Not the email kind but the food kind. The spiced ham that comes in a can. It is, as an economist would suspect, an inferior substitute good, the demand for which rises when the established good gets too expensive. But of course the Spam also rises: “The price of Spam is up too, with the average 12 oz. can costing about $2.62. That’s an increase of 17 cents, or nearly 7 percent, from the same time last year.” For what it’s worth, here’s the chart for Hormel.
High Oil Prices Eroding Asian Manufacturing Advantage (Research Recap)
The actual cost of shipping stuff across the world doesn’t get brought up too much, probably because in recent history it’s just not that big of a chunk of an item’s cost. But with these high oil prices we’ve heard so much about, that may be changing. At least a report from CIBC predicts as such.

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Layoffs Watchs: Standard and Poor’s

From the files of the “maybe we never should’ve gotten into this in the first place” department: the RMBS group at the S&P has supposedly informed the would-be incoming Associate MBA class that their services are no longer required. Additionally, a “bunch” of research assistants, “some” MDs and one director have been downgraded from “career watch negative” to “dismissed.”

Irony: It’s Not Just for Breakfast Anymore

mbapast.jpgI really don’t know why we are spending any time worrying about these “victims” of the sub-prime crisis. Also, I really don’t want to be bailing out borrowers stupid enough to be under contract on new real-estate with financial plans that call for them to have 80% occupancy 2 months after closing, a 7% down payment and 7.5% interest rates.
So now their take-home falls 15%, their down payment requirement doubles and they have to pay 9.5% and I’m suppose to feel bad?
You will have to excuse me for not wanting to give taxpayer support for a borrower who wants to own a 160,000 square foot building to keep up with the Jones’ on a mere $41 million budget.
Housing Crisis Hits Its Own [Washington Post]

Are Investment Bankers Worse Than Television Writers?

We wonder if there is a direct relationship between the performance of investment banks and the public image of investment bankers. A few years ago, New York’s major publishing houses were fighting each other in a desperate bidding war for the rights to publish Dana Vachon’s Mergers & Acquisitions: A Love Story. (And, before the last financial crisis of this magnitude, Scott Fitzgerald’s The Great Gatsby was narrated by a young man who came to New York to work in investment banking.) But now all the sad young literary men have turned against investment banking, regarding it as perhaps the lowest occupation available to educated people. Lower, even, than television writers.
Here’s a guy who actually wrote a novel called All The Sad Young Literary Men lamenting that many of his college friends never became anything that counts. Instead, they became investment bankers.

Even worse than the temporary psychological distortion is, as [Dean of Columbia Journalism School Nick] Lemann argued in “The Big Test,” the permanent sense of entitlement the admissions game provides. Winners can plausibly claim they participated in a brutal competition (even if many potential competitors were never told about it). So we owe no one anything. Many of the people I went to school with became doctors, public advocates, television writers who bring laughter to the American people. But most of them became, like my friend who believed that getting into Harvard was the hardest thing in life, investment bankers. We meritocrats have not, generally speaking, used our fantastic test-taking abilities to build a more equitable world. In fact, buoyed by a sense of the fairness of the process, we may have done the reverse.

Admission Impossible [New York Times]

Real MBAs of Genius

This terrible video just about proves that business school makes comedy impossible.