http://norris.blogs.nytimes.com/2011/01/28/the-american-economy-bigger-than-ever/
***************
"Great works are performed, not by strength, but by perseverance." (Samuel Johnson)
***************
Let's look at some good news while Nouriel Roubini is over in Davos depressing everybody. Floyd Norris uses "We're back" to describe the official numbers for 4th quarter GDP growth in the U.S.
As measured by GDP in the fourth quarter of 2010, the American economy grew to an annual pace of $13.383 trillion (measured in 2005 dollars). This number is better than the $13,364 trillion posted for the fourth quarter of 2007 - the peak before the recession.
Setting aside other issues for the moment, Norris points out that the severe 1973-5 recession ended when the economy returned to peak output in the eighth quarter after the recession began. This time it took 12 quarters.
Fourth quarter 2010 vs fourth quarter 2007:
Personal consumption expenditures, up 1%.
Private investment, down 18.1%.
Government spending, up 5.3%.
The decline in investment is largely caused by the collapse of the construction industry. Businesses are spending 16.6% less for industrial equipment. Businesses are also sitting on record amounts of cash.
The increase in government spending is entirely at the federal level. State and local spending has declined in the fourth quarter, and is 2.3% below where it was four years ago.
Norris adds: "The Fed's easing makes more money available to businesses if they wish to borrow it. Tax cuts do the same for individuals and companies. The extent to which "they" seek to spend it, and on what, will determine how fast we recover."
How about the rest of the world?
Measured by GDP, the U.S. recovered more rapidly than Japan or any major member of the European Union (Australia never had a recession, and Canada and Switzerland exceeded their old highs in the third quarter). Britain is still 4.4% below its GDP peak.
Through the third quarter, these are the changes from "peak" GDP in each country:
Japan, -3.4%
France, -1.9%
Germany, -1.8%
Italy, -5.4%
Netherlands, -2.8%
Spain, -4.1%
Portugal, -1.5%
And, countries that need international assistance:
Greece, -7.2%
Iceland, -14.1%
Ireland, -12.4%
So, by one measure, "We're back." But, as any examination of the "jobs" trend lines will show, the most recent jobless recovery took from 2001 to 2005 before it returned to pre-recession numbers. And, the jobs trend line for this "recovery" is so much lower than the last one that it's "arc" does not even look like it will return to a pre-recession level anytime soon.
We recall one estimate by Roubini that it could be as long as 2018 before a complete recovery occurs - and that's if there is no double-dip in housing. The most recent numbers from the national Case-Shiller home price index are actually back down again - not a good sign.
But, we love "GDP" and we're glad to see those numbers up!
Friday, January 28, 2011
A Teachable Attitude
http://johnmaxwellonleadership.com/2011/01/24/how-do-i-maintain-a-teachable-attitude/
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"The most important skill to acquire is learning how to learn." (John Naisbitt)
***************
Quoting John C. Maxwell: "Teachability is not so much about competence and mental capacity as it is about attitude. It is the desire to listen, learn, and apply. It is the hunger to discover and grow. It is the willingness to learn, unlearn, and relearn."
More Maxwell: "When I teach and mentor leaders, I remind them that if they stop learning, they stop leading. But, if they remain teachable and keep learning, they will be able to keep making an impact as leaders. Whatever your talent happens to be - whether it's leadership, craftsmanship, entrepreneurship, or something else - you will expand it if you keep expecting and striving to learn."
Pursuing Teachability:
1. Learn to Listen
Listen to others and remain humble, and you will learn things that help you expand your talent.
2. Understand the Learning Process
The goal of all learning is action, not knowledge.
3. Look For and Plan Teachable Moments
Read books, visit places that inspire you, attend events that push you to change and spend time with people who stretch you.
4. Make Your Teachable Moments Count
Take action steps that make teachable moments count: points that mean something to you, changes you need to make, lessons you need to apply...
5. Ask Yourself, "Am I Really Teachable?"
All the good advice in the world won't help if you don't have a teachable spirit. Am I open to other people's ideas? Do I listen more than I talk?
We all need to soften our attitudes and learn humility. From John Wooden: "Everything we know we learned from someone else."
Good stuff.
***************
"The most important skill to acquire is learning how to learn." (John Naisbitt)
***************
Quoting John C. Maxwell: "Teachability is not so much about competence and mental capacity as it is about attitude. It is the desire to listen, learn, and apply. It is the hunger to discover and grow. It is the willingness to learn, unlearn, and relearn."
More Maxwell: "When I teach and mentor leaders, I remind them that if they stop learning, they stop leading. But, if they remain teachable and keep learning, they will be able to keep making an impact as leaders. Whatever your talent happens to be - whether it's leadership, craftsmanship, entrepreneurship, or something else - you will expand it if you keep expecting and striving to learn."
Pursuing Teachability:
1. Learn to Listen
Listen to others and remain humble, and you will learn things that help you expand your talent.
2. Understand the Learning Process
The goal of all learning is action, not knowledge.
3. Look For and Plan Teachable Moments
Read books, visit places that inspire you, attend events that push you to change and spend time with people who stretch you.
4. Make Your Teachable Moments Count
Take action steps that make teachable moments count: points that mean something to you, changes you need to make, lessons you need to apply...
5. Ask Yourself, "Am I Really Teachable?"
All the good advice in the world won't help if you don't have a teachable spirit. Am I open to other people's ideas? Do I listen more than I talk?
We all need to soften our attitudes and learn humility. From John Wooden: "Everything we know we learned from someone else."
Good stuff.
The Real Davos
http://www.businessinsider.com/the-truth-about-davos-what-happens-when-you-dont-get-invited-to-any-parties-2011-1#
***************
"It's what you learn after you know it all that counts." (John Wooden)
***************
The most important thing to know about "Davos" is how unimportant it is. And, Henry Blodget has written an outstanding post this week that I would not have read if it weren't for Andrew Ross Sorkin and his team at "DealB%k" (NY Times): "THE TRUTH ABOUT DAVOS: What Happens When You Don't Get Invited To Any Parties."
An absolute must: once you read Blodget's post (attached), click on "Let's go to the McKinsey party!" at the end.
Whether or not Blodget had planned to go to the McKinsey party, he ended up trying to go after Nouriel Roubini walked by and said he was headed there.
Some Priceless Data:
1. An annual membership to the World Economic Forum (required if you want a ticket to Davos) costs $52,000.
2. A ticket to Davos itself costs $19,000, plus tax (that's $71,000 for one person to come).
3. If you want to go to the private industry sessions (most think that's where the real value is), you have to become an "Industry Associate," which costs $137,000 per year.
4. If you want to bring a colleague, you can't just buy another ticket for $19,000 -- you have to upgrade your membership to "Industry Partner," which costs $263,000 (vs. $52,000). Then you have to buy the two tickets, for a total cost for two people of $301,000.
5. If you want to bring a bunch of colleagues (max. 5 per company), you have to upgrade the membership to "Strategic Partner," which costs $527,000. Then you have to buy the 5 tickets for $19,000 a piece. So, bringing 5 people costs $622,000.
(And, none of this takes into account "jet fuel", hotel costs and whether you want to throw your own party)
All this, just to go listen to Bill Clinton or schmooze with Nouriel Roubini about economic disaster!
What a deal!
***************
"It's what you learn after you know it all that counts." (John Wooden)
***************
The most important thing to know about "Davos" is how unimportant it is. And, Henry Blodget has written an outstanding post this week that I would not have read if it weren't for Andrew Ross Sorkin and his team at "DealB%k" (NY Times): "THE TRUTH ABOUT DAVOS: What Happens When You Don't Get Invited To Any Parties."
An absolute must: once you read Blodget's post (attached), click on "Let's go to the McKinsey party!" at the end.
Whether or not Blodget had planned to go to the McKinsey party, he ended up trying to go after Nouriel Roubini walked by and said he was headed there.
Some Priceless Data:
1. An annual membership to the World Economic Forum (required if you want a ticket to Davos) costs $52,000.
2. A ticket to Davos itself costs $19,000, plus tax (that's $71,000 for one person to come).
3. If you want to go to the private industry sessions (most think that's where the real value is), you have to become an "Industry Associate," which costs $137,000 per year.
4. If you want to bring a colleague, you can't just buy another ticket for $19,000 -- you have to upgrade your membership to "Industry Partner," which costs $263,000 (vs. $52,000). Then you have to buy the two tickets, for a total cost for two people of $301,000.
5. If you want to bring a bunch of colleagues (max. 5 per company), you have to upgrade the membership to "Strategic Partner," which costs $527,000. Then you have to buy the 5 tickets for $19,000 a piece. So, bringing 5 people costs $622,000.
(And, none of this takes into account "jet fuel", hotel costs and whether you want to throw your own party)
All this, just to go listen to Bill Clinton or schmooze with Nouriel Roubini about economic disaster!
What a deal!
Saturday, January 22, 2011
GE & The New Jobs Tsar
http://economix.blogs.nytimes.com/2011/01/21/jeffrey-immelt-101/?nl=todaysheadlines&emc=tha2
http://www.nytimes.com/2011/01/22/business/economy/22obama.html?nl=todaysheadlines&emc=tha2
***************
"I love deadlines. I like the whooshing sound they make as they fly by." (Douglas Adams)
***************
For many, GE has been the U.S. economy over the last 40 years. Simply put, GE competes in so many sectors of the global business environment that they (as a company) represent how well the American business community is meeting those challenges.
The formal announcement yesterday in Schenectady, N.Y. by President Obama that Jeff Immelt (GE's CEO) will be Chairman of the President's Council on Jobs and Competitiveness was smart and politically savvy. Schenectady was the original home of GE and is currently where they make steam turbines. Part of the President's trip to India to encourage exports recently was a deal for GE to sell $750 million in steam turbines to Reliance Power Ltd. Jeff Immelt was with the President on that trip. Immelt was also with the President when he met with President Hu Jintao of China during their key export and trade discussions over the past few days.
GE recently announced a joint venture with the Aviation Industry Corporation of China, sharing technology for aircraft computers, communications, and cockpit displays from GE's aviation systems division. The fast-growing Chinese market for commercial airliners is expected to generate estimated sales worth up to $400 billion over the next 20 years. We see good news and bad news there. Currently, Boeing and Airbus are competing in that market. That's good and GE will be in there for engines and technology. But, eventually, China will be making it's own commercial jets based on GE's technology. Long term, where are Boeing, Airbus and GE?
The change in the "name" (see above) of the President's advisory board from the Economic Recovery Advisory Board was also politically savvy because the new title emphasizes "jobs."
The "Economix" post attached invites clicking to various references to GE and "jobs." One of those references points out that, "Like any company of a certain size, its (GE) focus is on efficiency and productivity not job creation. And, especially not job creation in high-cost labor markets like the United States:
*In 1980, GE employed 405,000 people.
*In 2,000, it employed 304,000 people.
*In 2005 (4 years into Immelt's tenure) the number was down to 307,000.
*Today it employs 304,000 people, of whom fewer than half are in the U.S."
Jeff Immelt told Fareed Zakaria during Zakaria's Top 500 CEO survey (2010) on why capital from key companies is not being spent at all and certainly not in the U.S. (that number is now over $2 trillion in cash), that he wanted more US government investment in R&D to help firms such as GE create jobs over the long term. The problem is that two of GE's three research centers are in Bangalore and Munich.
We like the change in title and emphasis of the President's Economic Advisory Board. We hope it works. It was good to see that GE has just reported a 51% increase in fourth quarter profit and its highest level of new orders since 2007. If, indeed, GE continues to be a good proxy for the U.S. economy, then things are looking up. And now for jobs...
http://www.nytimes.com/2011/01/22/business/economy/22obama.html?nl=todaysheadlines&emc=tha2
***************
"I love deadlines. I like the whooshing sound they make as they fly by." (Douglas Adams)
***************
For many, GE has been the U.S. economy over the last 40 years. Simply put, GE competes in so many sectors of the global business environment that they (as a company) represent how well the American business community is meeting those challenges.
The formal announcement yesterday in Schenectady, N.Y. by President Obama that Jeff Immelt (GE's CEO) will be Chairman of the President's Council on Jobs and Competitiveness was smart and politically savvy. Schenectady was the original home of GE and is currently where they make steam turbines. Part of the President's trip to India to encourage exports recently was a deal for GE to sell $750 million in steam turbines to Reliance Power Ltd. Jeff Immelt was with the President on that trip. Immelt was also with the President when he met with President Hu Jintao of China during their key export and trade discussions over the past few days.
GE recently announced a joint venture with the Aviation Industry Corporation of China, sharing technology for aircraft computers, communications, and cockpit displays from GE's aviation systems division. The fast-growing Chinese market for commercial airliners is expected to generate estimated sales worth up to $400 billion over the next 20 years. We see good news and bad news there. Currently, Boeing and Airbus are competing in that market. That's good and GE will be in there for engines and technology. But, eventually, China will be making it's own commercial jets based on GE's technology. Long term, where are Boeing, Airbus and GE?
The change in the "name" (see above) of the President's advisory board from the Economic Recovery Advisory Board was also politically savvy because the new title emphasizes "jobs."
The "Economix" post attached invites clicking to various references to GE and "jobs." One of those references points out that, "Like any company of a certain size, its (GE) focus is on efficiency and productivity not job creation. And, especially not job creation in high-cost labor markets like the United States:
*In 1980, GE employed 405,000 people.
*In 2,000, it employed 304,000 people.
*In 2005 (4 years into Immelt's tenure) the number was down to 307,000.
*Today it employs 304,000 people, of whom fewer than half are in the U.S."
Jeff Immelt told Fareed Zakaria during Zakaria's Top 500 CEO survey (2010) on why capital from key companies is not being spent at all and certainly not in the U.S. (that number is now over $2 trillion in cash), that he wanted more US government investment in R&D to help firms such as GE create jobs over the long term. The problem is that two of GE's three research centers are in Bangalore and Munich.
We like the change in title and emphasis of the President's Economic Advisory Board. We hope it works. It was good to see that GE has just reported a 51% increase in fourth quarter profit and its highest level of new orders since 2007. If, indeed, GE continues to be a good proxy for the U.S. economy, then things are looking up. And now for jobs...
Tuesday, January 18, 2011
That Vision Thing
http://johnmaxwellonleadership.com/2011/01/17/finding-a-visions-true-north/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+JohnMaxwellOnLeadership+%28John+Maxwell+on+Leadership%29
***************
"...the last thing IBM needs right now is a 'vision'..." (Lou Gerstner on taking over at IBM)
***************
For those of us who follow John C. Maxwell regularly, the occassional email we get with his thoughts is always welcome. Today's (attached) is no exception.
His beginning asks if we've ever been a part of a team that wasn't making any progress. I think the answer for most of us has been "yes."
Maxwell's answer is that, in many cases, this is caused by a lack of "vision." He says that every team needs a compelling vision to give it direction: "A team without vision is, at worst, purposeless. At best, it is subject to the personal (and sometimes selfish) agendas of it's various members."
So, how do we measure how compelling a vision is? Maxwell's answer is that we need to check our "visionary compass." For Maxwell, there are five compasses that need to be checked:
A team's vision must be aligned with...
1. A moral compass (look above)
This brings integrity to the vision - it helps all the people on the team check their motives.
2. An intuitive compass (look within)
A vision must resonate deep within the leader of the team. Intuitive passion fires up the committed.
3. A historical compass (look behind)
Tell stories. Principles may fade in people's minds, but stories stick.
4. A directional compass (look ahead)
Henry David Thoreau: "If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours." Goals give targets to aim for.
5. A strategic compass (look around)
A goal won't do the team much good without steps to accomplish it. The value of strategy is that it brings process to the vision.
For Maxwell, if you can confidently measure the vision of your team according to the above compasses, then you'll know that the vision is worth stretching for.
These are words to go by.
***************
"...the last thing IBM needs right now is a 'vision'..." (Lou Gerstner on taking over at IBM)
***************
For those of us who follow John C. Maxwell regularly, the occassional email we get with his thoughts is always welcome. Today's (attached) is no exception.
His beginning asks if we've ever been a part of a team that wasn't making any progress. I think the answer for most of us has been "yes."
Maxwell's answer is that, in many cases, this is caused by a lack of "vision." He says that every team needs a compelling vision to give it direction: "A team without vision is, at worst, purposeless. At best, it is subject to the personal (and sometimes selfish) agendas of it's various members."
So, how do we measure how compelling a vision is? Maxwell's answer is that we need to check our "visionary compass." For Maxwell, there are five compasses that need to be checked:
A team's vision must be aligned with...
1. A moral compass (look above)
This brings integrity to the vision - it helps all the people on the team check their motives.
2. An intuitive compass (look within)
A vision must resonate deep within the leader of the team. Intuitive passion fires up the committed.
3. A historical compass (look behind)
Tell stories. Principles may fade in people's minds, but stories stick.
4. A directional compass (look ahead)
Henry David Thoreau: "If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours." Goals give targets to aim for.
5. A strategic compass (look around)
A goal won't do the team much good without steps to accomplish it. The value of strategy is that it brings process to the vision.
For Maxwell, if you can confidently measure the vision of your team according to the above compasses, then you'll know that the vision is worth stretching for.
These are words to go by.
Tuesday, January 11, 2011
The Rock Star Economist
http://www.boston.com/bostonglobe/ideas/articles/2011/01/09/that_guy_who_called_the_big_one_dont_listen_to_him/?page=full
***************
"The devil doesn't have to steal anything from you, all he has to do is make you take it for granted." (Max Lucado)
***************
When we first saw that Nouriel Roubini was graciously accepting credit for calling the worldwide financial crisis in 2007, our reaction was that anybody that predicted that level of "doom" for 25 consecutive years was bound to find a year when his predictions would actually come to pass.
Now we have Joe Keohane's article in the Boston Globe about "Dr. Doom" (Roubini) where Keohane happily points out that Roubini has picked up where he left off continuing to spread "doom" but unaffected by the fact that he's wrong. In October of 2008, he predicted that hundreds of hedge funds would fail and that the government would have to close the markets for a week or two to cope with the shock. Oops: did not happen.
In January of 2009, he predicted that oil prices would stay below $40 for all of 2009 arguing that car companies should rev up production of gas-guzzling SUVs. By the end of the year, oil was a hair under $80, Hummer was on the way out, and auto makers were tripping over themselves to develop electric cars. Oops: did not happen.
In March of 2009, he predicted the S&P 500 would fall below 600 that year. It closed at over 1,115 which was up 23.5% year over year, the biggest single year gain since 2003. Oops:did not happen.
Keohane goes on to point out that a recent study concludes people who successfully predict extreme events ... don't do so because their judgment is so sharp. They do it because it's so bad.
A study of the semi-annual WSJ Economist Survey concluded that "economists" who had a better record at calling extreme events had a WORSE record in general. Analogously, this becomes the situation where the broken clock is right twice a day.
So, those who correctly predict extreme events have a greater tendency to make extreme predictions; and those who make extreme predictions spend most of their time being wrong.
Keohane has so much more to say, especially about studying "success," but for today lets settle for Dr. Doom being not quite as perfect at predicting as he and others think.
***
Paranthetically, we would like to thank Myles Reilly, an outstanding graduate of our business school for remembering how I feel about Dr. Doom and bringing this article to my attention! It's people like Myles that continue to inspire me to share what I can with students.
***************
"The devil doesn't have to steal anything from you, all he has to do is make you take it for granted." (Max Lucado)
***************
When we first saw that Nouriel Roubini was graciously accepting credit for calling the worldwide financial crisis in 2007, our reaction was that anybody that predicted that level of "doom" for 25 consecutive years was bound to find a year when his predictions would actually come to pass.
Now we have Joe Keohane's article in the Boston Globe about "Dr. Doom" (Roubini) where Keohane happily points out that Roubini has picked up where he left off continuing to spread "doom" but unaffected by the fact that he's wrong. In October of 2008, he predicted that hundreds of hedge funds would fail and that the government would have to close the markets for a week or two to cope with the shock. Oops: did not happen.
In January of 2009, he predicted that oil prices would stay below $40 for all of 2009 arguing that car companies should rev up production of gas-guzzling SUVs. By the end of the year, oil was a hair under $80, Hummer was on the way out, and auto makers were tripping over themselves to develop electric cars. Oops: did not happen.
In March of 2009, he predicted the S&P 500 would fall below 600 that year. It closed at over 1,115 which was up 23.5% year over year, the biggest single year gain since 2003. Oops:did not happen.
Keohane goes on to point out that a recent study concludes people who successfully predict extreme events ... don't do so because their judgment is so sharp. They do it because it's so bad.
A study of the semi-annual WSJ Economist Survey concluded that "economists" who had a better record at calling extreme events had a WORSE record in general. Analogously, this becomes the situation where the broken clock is right twice a day.
So, those who correctly predict extreme events have a greater tendency to make extreme predictions; and those who make extreme predictions spend most of their time being wrong.
Keohane has so much more to say, especially about studying "success," but for today lets settle for Dr. Doom being not quite as perfect at predicting as he and others think.
***
Paranthetically, we would like to thank Myles Reilly, an outstanding graduate of our business school for remembering how I feel about Dr. Doom and bringing this article to my attention! It's people like Myles that continue to inspire me to share what I can with students.
Monday, January 10, 2011
BP Again
http://www.nytimes.com/2011/01/10/business/energy-environment/10oil.html?ref=business
***************
"Bureaucracy is the death of any achievement." (Albert Einstein)
***************
A small oil leak at a pumping station has shut down the Trans Alaska Pipeline System. The leaky pipe connects a "huge" storage tank to a pump that pushes oil down the pipeline (which is 800 miles long and carries 10% of the oil used domestically).
While the leak was not large (10 barrels of oil), officials could not say how long it would take before the piping was secure enough to increase pressure down the pipeline: "The significance is having to shut the pipeline system down," said a spokesperson. Adding that, "We want to make sure we can restart the line safely and without damage."
And, what company owns the largest share of the consortium that runs the pipeline?
Answer: BP
Amy Myers Jaffe at Rice University: "The market is already in a mood for oil to go to $100 per barrel so any disruption of a major size - like stopping Alaskan oil from coming to market - is going to give instantaneous momentum to prices."
Wait, wasn't it March, 2006 when "corrosion" in BP's network of north Alaska feeder lines caused a spill of 260,000 gallons of oil, the worst in the history of the North Slope? BP eventually paid more than $20 million in fines and restitution for that event.
Just an added thought: "corrosion" is preventable. A good system of management process safety and priority capital deployment pays for itself.
Ms. Jaffe sees $3.50 per gallon as the average gasoline price at the pump by this coming summer. Traders are looking for any excuse to jump gasoline futures higher. Odds are the price per gallon at the pump will jump today.
A rhetorical question: how long did the spokesperson say the Alaska pipeline would be shut down?
***************
"Bureaucracy is the death of any achievement." (Albert Einstein)
***************
A small oil leak at a pumping station has shut down the Trans Alaska Pipeline System. The leaky pipe connects a "huge" storage tank to a pump that pushes oil down the pipeline (which is 800 miles long and carries 10% of the oil used domestically).
While the leak was not large (10 barrels of oil), officials could not say how long it would take before the piping was secure enough to increase pressure down the pipeline: "The significance is having to shut the pipeline system down," said a spokesperson. Adding that, "We want to make sure we can restart the line safely and without damage."
And, what company owns the largest share of the consortium that runs the pipeline?
Answer: BP
Amy Myers Jaffe at Rice University: "The market is already in a mood for oil to go to $100 per barrel so any disruption of a major size - like stopping Alaskan oil from coming to market - is going to give instantaneous momentum to prices."
Wait, wasn't it March, 2006 when "corrosion" in BP's network of north Alaska feeder lines caused a spill of 260,000 gallons of oil, the worst in the history of the North Slope? BP eventually paid more than $20 million in fines and restitution for that event.
Just an added thought: "corrosion" is preventable. A good system of management process safety and priority capital deployment pays for itself.
Ms. Jaffe sees $3.50 per gallon as the average gasoline price at the pump by this coming summer. Traders are looking for any excuse to jump gasoline futures higher. Odds are the price per gallon at the pump will jump today.
A rhetorical question: how long did the spokesperson say the Alaska pipeline would be shut down?
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