October 4, 2013
And as president and CEO of the Federal Reserve Bank of Dallas, Richard Fisher helps make the money go round. Meet the Fed’s most unlikely central banker. ... Fisher, it quickly became clear, also had a knack for colorful anecdotes, which he often drew from time spent on his ranch, in East Texas (the family leases out most of the grazing land but keeps a few dozen Longhorns for breeding purposes and rhetorical flair). A good example of this comes from a speech Fisher gave last year, in which he explained to a group of North Texas businessmen and women that his breeding bull, Too Big to Fail, has “plenty of liquidity at his disposal” but that the bull couldn’t do his job if there was a fence between him and the cows. American businesses, he continued, are faced with a fence of their own—a “fence of uncertainty.” The talk got a mixed reception. “Some people in Washington were aghast,” he told me later, but he had received a nice message from one of the cattle ranchers in the audience, who said that for the first time he understood monetary policy.
- The Fed is sending a message that the unwinding of its extraordinary accommodation will be done with great care and patience, and will take time – a long time.
- In delaying a taper, not only did the Fed show markets it has little tolerance for any tightening of financial conditions, it also strengthened its forward guidance considerably.
- The Fed’s decision to delay a taper will likely relieve some of the upward pressure on longer-term interest rates.
To say Batista overreached would be to seriously undersell what has happened in the 18 months since that self-regarding presstravaganza of hubris and magical thinking. In what is shaping up to be one of the largest personal and financial collapses in history—if not the largest—Batista may be nearing bankruptcy. On Oct. 1, OGX missed a $45 million interest payment on bond debt it had racked up during its rise. Batista has sold his planes and his helicopter, and creditors are arguing over the remains of his companies. He’s no longer on the Bloomberg Billionaires Index and has become the butt of jokes in Brazil. One suggests that Pope Francis plans to return to Brazil soon and will again be visiting the poor, including Batista. … Brazil’s securities regulator has started an investigation into Batista and OGX after an investor alleged that Batista dumped 126.7 million OGX shares just before the company scrapped projects and warned that it may stop pumping crude next year. In a July op-ed for Brazil’s Valor Econômico newspaper, Batista said he would honor all of his obligations. In that same article, he put some of the blame on his auditing firm and executives for unreasonably building shareholder expectations. The company has denied it gave faulty advice. Once a staple on the airwaves and in print, Batista has mostly gone silent.
Our research shows that the emerging economies’ share of Fortune Global 500 companies will probably jump to more than 45 percent by 2025, up from just 5 percent in 2000. That’s because while three-quarters of the world’s 8,000 companies with annual revenue of $1 billion or more are today based in developed economies, we forecast that an additional 7,000 could reach that size in little more than a decade—and 70 percent of them will most likely come from emerging markets. To put this dramatic shift in the balance of global corporate power in perspective, remember that many of the world’s largest companies have maintained their current status for generations: more than 40 percent of the 150 Western European companies in last year’s Fortune Global 500 had been founded before 1900. … The rebalancing of the global business landscape will probably be even faster and more dramatic than the shift of economic growth to emerging regions. Large companies matter, and not just for their ability to create jobs and generate higher incomes; they are also forces for increased productivity, innovation, standard setting, and the dissemination of skills and technology. Their geographic shift will have profound implications for the nature of competition, including not only the race for resources and talent but also, more broadly, the emerging markets’ efforts to reach the next level of economic development and prosperity.
The Dread Pirate Roberts, head of the most brazen drug trafficking site in the world, was a walking contradiction. Though the government says he raked in $80 million in commissions from running Silk Road, he allegedly lived under a false name in one bedroom of a San Francisco home that he shared with two other guys and for which he paid $1,000 a month in cash. Though his alleged alter ego penned manifestos about ending "violence, coercion, and all forms of force," the FBI claims that he tried to arrange a hit on someone who had blackmailed him. And though he ran a site widely assumed to be under investigation by some of the most powerful agencies in the US government, the Dread Pirate Robert appears to have been remarkably sloppy—so sloppy that the government finally put a name to the peg leg: Ross William Ulbricht.
Prem Watsa was rushing down Bloor Street in downtown Toronto one morning in 1974 to get to a job interview at an insurance company called Confederation Life. He was fresh from earning his MBA and looking for his first job in finance in his adopted country. The street was filled with police officers searching for suspects in a bank robbery that had just occurred, and one of them grabbed Watsa, a 23-year-old Indian immigrant, and pinned him against a police cruiser. He protested his innocence, explaining that he was hurrying because he didn’t want to be late for an important meeting. A few minutes later, the cops let him go. … Watsa ultimately got the job and, after 10 years working as an analyst and a money manager at Confederation Life, began building a company that would become Fairfax Financial Holdings, now a C$9 billion ($8.8 billion) conglomerate.
A new book reveals the moment the NFL could no longer ignore concussion science … THERE HAS NEVER been anything like it in the history of modern sports: a public health crisis that emerged from the playing fields of our 21st-century pastime. A small group of research scientists put football under a microscope -- literally. What they found was not the obvious, as many people later would claim. We all knew that football was violent and dangerous, that one hit could break your neck or even kill you. No, what the researchers were saying was that the essence of football -- the unavoidable head banging that occurs on every play, like a woodpecker jackhammering at a tree -- can unleash a cascading series of neurological events that in the end strangles your brain, leaving you unrecognizable. … The researchers who made this discovery -- you could count them on one hand -- thought NFL executives would embrace their findings, if only to make their product safer. That is not what happened.
A football star, he is one of the best strikers in the world. In the past 12 seasons his teams have been champions of their respective countries 10 times. He has won titles in the Netherlands with Ajax, in Italy with Juventus, Inter and AC Milan, in Spain with Barcelona and, most recently, in France with his current team, Paris Saint-Germain (PSG). In clinching the French championship last year, he scored 30 goals in 34 games. His father came to Sweden from Bosnia; his mother from Croatia. Zlatan Ibrahimovic was born in Malmo and grew up in the city's tough Rosengard district. His autobiography, "I Am Zlatan Ibrahimovic," was released in June in English and on Oct. 1 in German translation by publisher Malik Verlag. Some 675,000 copies have already been sold in Sweden. Ibrahimovic is arrogant, eccentric and unwieldy.
The Land of the Free is starting to look ungovernable. Enough is enough … America enjoys the “exorbitant privilege” of printing the world’s reserve currency. Its government debt is considered a safe haven, which is why Uncle Sam can borrow so much, so cheaply. America will not lose these advantages overnight. But anything that undermines its creditworthiness—as the farce in Washington surely does—risks causing untold damage in the future. It is not just that America would have to pay more to borrow. The repercussions of an American default would be both global and unpredictable. … It would threaten financial markets. Since American Treasuries are very liquid and safe, they are widely used as collateral. They are more than 30% of the collateral that financial institutions such as investment banks use to borrow in the $2 trillion “tri-party repo” market, a source of overnight funding. A default could trigger demands by lenders for more or different collateral; that might cause a financial heart attack like the one prompted by the collapse of Lehman Brothers in 2008. In short, even if Obamacare were as bad as tea-party types say it is (see Lexington), it would still be reckless to use the debt ceiling as a bargaining chip to repeal it, as some Republicans suggest.
The party tries to rein in officials with a campaign of self-criticism … ONE official admitted he had sat on too many sofas and not enough wooden stools, and raised too many goblets but only a few simple teacups. The official, quoted in People’s Daily, a state-run newspaper, was taking part in a “democratic life meeting” run by the Communist Party in September in the northern province of Hebei, at which senior officials were required to criticise themselves and their colleagues. The meetings are the latest part of a “mass-line” campaign led by Xi Jinping, China’s president and party chief, to keep the party close to the people.
Corporate dealmakers should heed the lessons of past merger waves … WHY mergers and acquisitions (M&A) come in waves is not fully understood. Companies’ fortunes are affected by the economy’s ebb and flow, but this does not seem enough to explain why merger activity crests and breaks so dramatically. Yet crest and break it does. In America there have been at least five merger waves, in which the number of deals swelled, peaked then tumbled. The first, in the 1920s, ended with the onset of the Great Depression. It was less obvious why the following ones—in the 1960s and then in each decade since 1980—were so strong. Now, say some experts, a powerful sixth wave is forming.
Close scrutiny of Europe’s banks may turn up unexpected shortfalls … THE ink on the agreements that will hand supervision of the euro area’s biggest banks to the European Central Bank (ECB) is barely dry. Yet the ECB is already enmeshed in squabbles with national banking supervisors over the extent of its powers and the rigour with which it will undertake its first big task, a warts-and-all review of the balance-sheets of the banks it will take charge of in a year’s time. … Details over how the ECB will conduct this asset-quality review (AQR) will probably be released in the second half of October, but the outlines are already beginning to emerge.
Thinking about it makes you a better person, not a worse one … “THE love of money”, St Paul memorably wrote to his protégé Timothy, “is the root of all evil.” “All” may be putting it a bit strongly, but dozens of psychological studies have indeed shown that people primed to think about money before an experiment are more likely to lie, cheat and steal during the course of that experiment. … Another well-known aphorism, ascribed to Benjamin Franklin, is “time is money”. If true, that suggests a syllogism: that the love of time is a root of evil, too. But a paper just published in Psychological Science by Francesca Gino of Harvard and Cassie Mogilner of the University of Pennsylvania suggests precisely the opposite.
AT FIRST sight, Austrian voters chose business as usual in the election on September 29th. The Social Democrats (SPÖ) and centre-right People’s Party (ÖVP), which have governed the country together for all but seven years since 1986, retained their majority, albeit with fewer seats. Even though a coalition between the ÖVP and two right-wing groups is theoretically possible, another left-right coalition seems more likely. … Yet a closer look at the result reveals signs of turmoil in Austrian politics.
Professional chess has a chequered history. Fans hope to revive it … IN LONDON in April, a 22-year-old Norwegian turned cartwheels by the Thames. Magnus Carlsen, the world’s top-ranked chess player (and a model for G-Star RAW, a fashion firm) had just earned the right to challenge for the World Chess Championship in India next month. His battle against Viswanathan Anand, a 43-year-old Indian and world champion since 2007, is a long-awaited spectacle. Match organisers see a chance to turn a struggling sport into a global brand.