March 29, 2024

The Audacious Pragmatist

“Since then,” Mr. Bernanke told his audience, “I’ve developed a view that central bankers should not try to determine fundamental values of assets.”

Indeed, Mr. Bernanke’s academic work, largely at Princeton, helped shape the conventional wisdom that central banks couldn’t spot asset bubbles and shouldn’t try to pop things that looked like bubbles. In his first speech as a Fed governor in 2002, he reiterated that trying to judge the sustainability of rapid increases in housing or stock prices was “neither desirable nor feasible.”

Over the next several years, he said repeatedly that he saw no clear evidence of a housing bubble. And in 2004, the Bernankes paid a hefty $839,000 for a town house on Capitol Hill in Washington.

It took a great recession to change his mind. The recession, prompted by the collapse of the housing bubble that Mr. Bernanke — and most other experts — failed to see coming, ended an era of minimalism in central banking. And there is no better marker than the views of Mr. Bernanke, the world’s most influential central banker, who now argues that the Fed needs to consider a range of previously unthinkable actions, including trying to pop bubbles when necessary, because sometimes the cost of doing nothing is worse.

Mr. Bernanke, who plans to step down in January after eight years as Fed chairman, will be remembered for helping to arrest the collapse of the financial system in 2008. This shy, methodical economist who had been expected to serve as the keeper of Alan Greenspan’s flame — to preserve the Fed’s hard-won success in moderating inflation — emerged under pressure as perhaps the most innovative and daring leader in the Fed’s history.

But what Mr. Bernanke did after the crisis may prove to have even more enduring influence. For almost three decades, the Fed focused on moderating inflation in the belief that this was the best and only way to help the economy. In the wake of the crisis, Mr. Bernanke forged a broader vision of the Fed’s responsibilities, starting experimental, incomplete campaigns to reduce unemployment and to prevent future crises.

The Bernanke Fed has failed to fully achieve its goals. Growth is still tepid, unemployment still too high, inflation still too low. Some critics continue to warn — so far, incorrectly — that its efforts will unleash inflation or destabilize financial markets.

Yet many of the Fed’s experiments are already being emulated by other central banks. And Mr. Bernanke’s many admirers say it is hard to imagine that anyone else could have done more under the circumstances to restore the economy. Fortunately, they say, his lifelong study of central banking under stress meant that he not only knew the available options but also understood that those options weren’t enough. And he had the credibility necessary to convince a hidebound institution to change quickly.

“It’s hard to say that the Fed has accomplished what could have or should have been accomplished,” said Michael Woodford, an economist at Columbia University. “Yet in the context of the difficulty of the challenges, the likelihood is that few other central bankers could have been as bold as Ben has been.”

Throwing Stuff at the Wall

Mr. Bernanke was a rising star at Princeton in 1994 when he persuaded 953 people to elect him to a second job — as a member of the Montgomery Township Board of Education. “I did think he was a little crazy” to add that second role, said Mark Gertler, a New York University economist who was a frequent academic collaborator with Mr. Bernanke during the 1990s.

But the move was instead an early sign of Mr. Bernanke’s restlessness with the theoretical world of academia and his nascent interest in public service. And the experience helped to prepare him for larger things.

For six years, he spent several nights a month in the library of the local high school, usually dressed in a sport coat with elbow patches, calmly contributing to heated debates about building new schools in his rapidly growing community.

“When I met him he was shy and awkward,” Professor Gertler said. “It developed his ability to moderate meetings and interact with people.”

Kitty Bennett contributed research.

Article source: http://www.nytimes.com/2013/08/25/business/economy/the-audacious-pragmatist.html?partner=rss&emc=rss

News Analysis: Liberalizing Interest Rates Remains a Challenge for China

HONG KONG — As a rookie at the central bank in Beijing during the early days of China’s economic transformation, Joe Zhang considered it a foregone conclusion that the government would soon loosen its grip on interest rates.

It was the mid-1980s, and Chinese policy makers had been keeping a close watch on the United States, which was phasing out the mandatory caps on bank deposit rates that had been in place since the Depression.

In China, Mr. Zhang said, “the discussion in the government was quite serious. It was about liberalizing all interest rates within four to five years.”

“The Path to Interest Rate Liberalization,” the thesis he wrote in 1986 at the People’s Bank of China graduate school, ‘‘did not stand out in any way, because that was an accepted topic,” said Mr. Zhang, who is now an independent corporate adviser based in Hong Kong.

Nearly three decades later, China still struggles with the issue of interest rates. The new prime minister, Li Keqiang, has made liberalizing rates a priority.

On Friday, the central bank scrapped the floor on lending rates, freeing banks to issue loans as cheaply as they wished, a modest development that pointed to the challenges ahead. The full liberalization of rates, if it does take place, would be a partial but significant shift in the growth model that has come to define China’s rise in the last decade.

Analysts said eliminating the floor on lending rates (mortgage loans remain regulated) was a sign that Beijing was moving forward with promised overhauls. But the practical effect on lending would be minimal, given that almost 90 percent of loans in China are made at or above the benchmark rate.

Policy makers stopped short of removing the ceiling on deposit rates, which analysts say would have much broader repercussions for the profitability of the country’s giant banking industry and for the continued access of politically influential state-owned enterprises to low-cost financing.

“Removing lending rate restrictions is an important symbolic move, which signals the government’s intention to move forward with interest rate liberalization,” Wang Tao, an economist at UBS in Hong Kong, wrote in a research note. ‘‘The next and more important step is, of course, the ceiling on deposit rates. The central bank considers the removal of the deposit ceiling as the most critical yet most risky move in interest rate liberalization.”

Because China’s capital account is still largely closed and the cross-border movement of money remains tightly regulated, China’s savers have limited options for managing their personal finances. As a result, household deposits tucked away in banks have doubled during the last five years, and stood at 42.9 trillion renminbi, or about $7 trillion, as of May.

That trove — equal to 83 percent of gross domestic product last year — has been a low-cost source of financing for state-run banks, which they have tapped to issue loans, mainly to state-owned companies. At the current one-year benchmark rates set by Beijing, banks pay ordinary depositors a maximum of 3 percent annual interest on their savings, and — before the announcement Friday — were required to charge borrowers a minimum rate of 6 percent interest on loans. (Banks are allowed to offer a small premium on deposits, and before the floor was scrapped had also been permitted to give a discount on loan rates.)

Analysts said the tensions over interest rate overhauls highlighted a crucial aspect of China’s growth: The increased use of low-cost and abundant credit has bolstered state companies and fueled an unprecedented surge of investment, all made possible only by effectively holding ordinary Chinese savers hostage to low or even negative returns.

Measures to shift that balance in favor of ordinary savers — like doing away with the control of interest rates — are consistent with Mr. Li’s stated goal of getting China to switch from reliance on investment to a more consumer-driven growth model. But accomplishing this would require Mr. Li to take on powerful vested interests at the state-owned companies that dominate huge swaths of China’s economy.

Article source: http://www.nytimes.com/2013/07/22/business/global/liberalizing-interest-rates-remains-a-challenge-for-china.html?partner=rss&emc=rss

Confidence From Chief of SoftBank in Sprint Bid

But the next move by Masayoshi Son, SoftBank’s founder and chief executive, astounded corporate Japan. Mr. Son plunged deeper into debt to acquire Vodafone’s Japanese cellphone unit for about $15 billion — Japan’s largest leveraged buyout at the time — to muscle his way into the mobile market.

SoftBank is now one of Japan’s biggest companies — its market capitalization is three times that of Sony’s — and Mr. Son is confident that his plan to break into the American mobile market with a $21.6 billion bid to buy Sprint will be easy.

“We’ve fought far tougher battles than this,” Mr. Son told investors on Friday in Tokyo at SoftBank’s annual general meeting. Hours earlier, a rival bidder for Sprint had confirmed it was ending its pursuit of the mobile network, America’s third-largest. “It’s just been so much easier this time round,” he said.

Most analysts agree that Mr. Son, who seems set to acquire Sprint along with its Clearwire unit, faces long odds as he seeks to compete in the American mobile market. But his record for taking on giant companies — and coming out on top — bodes well for his chances, they say.

“Mr. Son is simply the most talented and audacious businessman Japan has ever produced,” said Kazuo Noda, chairman of the Japan Research Institute. “And when he goes into a new market, he doesn’t just take on the big guys. He changes all the rules.”

It is Mr. Son’s background as an outsider in Japanese society that makes him so willing to take risks, people who know him say, including Mr. Noda, who first met Mr. Son, then a college graduate, three decades ago.

A third-generation Korean-Japanese, a minority group that still faces discrimination in Japan, Mr. Son has spoken of his roots in a slum on the southern island of Kyushu. But after his family’s fortunes improved, he made his way to the United States.

At a San Francisco high school and then at the University of California, Berkeley, Mr. Son was dazzled by an entrepreneurial culture that he said he felt had been lost in Japan. And most of all, he was persuaded the world was about to experience a revolution in information technology.

Mr. Son founded SoftBank in 1981 first as a publisher of computer magazines, then as a successful distributor of computer software. Using money from that business, Mr. Son made a series of investments in the early 1990s, including a one-third stake in what was then a little-known American start-up named Yahoo. That bet paid off, giving Mr. Son money to expand his empire as Yahoo’s share price climbed.

But Mr. Son burst into the big leagues in the 2000s, buying a stake in a bankrupt bank, a small telecommunications company, a baseball team and a part of Alibaba of China, now the world’s largest e-commerce company

When SoftBank began offering fast DSL Internet service in Japan in 2001, it took on losses to undercut competitors’ prices by half. Government officials fretted that the price war would cripple the entire market. But consumers loved the sharp fall in prices, and the DSL market grew almost thirtyfold in two years.

Around that time, Mr. Son also started pushing the Japanese government to let SoftBank into the country’s highly regulated mobile sector, dominated by NTT DoCoMo, a subsidiary of the former state telecommunications monopoly. When his demands were snubbed, Mr. Son took the Ministry of Internal Affairs and Communications to court, accusing it of colluding with NTT to shut out competition.

The ministry eventually agreed to talks, but ultimately gave SoftBank a license to an inferior spectrum. Mr. Son, furious, turned to Plan B. In March 2006, SoftBank announced it would acquire Vodafone’s struggling Japanese unit, borrowing 1.2 trillion yen ($10.3 billion at the time) to finance the purchase. A day after the deal was announced, Mr. Son returned his original license to the government.

Article source: http://www.nytimes.com/2013/06/22/business/global/confidence-from-chief-of-softbank-in-sprint-bid.html?partner=rss&emc=rss

Enniskillen Journal: Northern Ireland Town Freshens Up Before Group of 8 Meeting

But the world’s most powerful leaders are unlikely to get much of an opportunity to appreciate these efforts. The site for the event, the plush Lough Erne Resort in County Fermanagh, lies three miles outside Enniskillen. The single approach road is now closed, the imposing security fencing is in place, and a five-mile stretch of lake the hotel overlooks will soon be patrolled by boats, surveillance drones and navy divers.

Despite the heavy security, this town’s 14,000 residents seem relaxed and eager for the international spotlight. Lodgings and restaurants are fully booked, and other businesses are likely to benefit from the anticipated onslaught of security personnel and media workers. The prospect of up to 20,000 protesters has not darkened the local mood, either.

“I don’t believe there will be very many protesters here at all or any trouble,” said a hotelier, Terry McCartney. “This place has few buses, no trains and on the whole is pretty inaccessible.”

But more international attention may be just what Enniskillen needs. Even after 15 years of relative calm that began with the Good Friday peace agreement, the memory of the Northern Ireland conflict, known as the Troubles, continues to deter tourists. For the neighboring Republic of Ireland, tourism has become an economic lifeblood, so business people here view the summit meeting as an opportunity to recover some of the ground lost to three decades of violence.

Mr. McCartney said he also hoped that a successful event would complete the reinvention of a town so closely identified with the conflict, largely because of an Irish Republican Army bombing here in 1987 that killed 11 people and wounded at least 61. Shortly after that attack, in a rare admission, the I.R.A. described it as “a monumental error.”

“Maybe people have heard about Enniskillen for all the wrong reasons, and after the G-8 they might take a look at just what we have to offer here,” Mr. McCartney said. “If anything, the bombing brought everyone in this town closer together.”

Certainly, besides some ragged British Union flags dangling from lampposts on one of the few main streets, the town has none of the divisive symbols found in other areas of Northern Ireland, like the so-called peace walls erected to separate Catholic and Protestant neighborhoods, the political murals that often glorify paramilitary groups or the footpaths painted in sectarian colors.

During the Troubles, Fermanagh did not gain the notoriety of similar counties to the east, like Tyrone and Armagh, which were hotbeds of I.R.A. activity.

But residents realize that it will be a difficult balancing act to present the region in its best light while ensuring the levels of security expected at such events.

Aside from scheduled protests in Enniskillen and Belfast, the task of the security forces has been further complicated by the activities of dissident Irish Republican militants opposed to the continuing peace process who are expected to use the event to highlight their armed campaign for a united Ireland.

One such splinter group claimed that a car bomb found 20 miles from Enniskillen in March was destined for the Group of 8 meeting site, and a senior police chief, Alistair Finlay, recently warned of the possibility of attacks during the summit meeting, though not in the immediate vicinity.

“I’ve got no reason to say that dissidents won’t do something during that period of time,” he said. “This is the normal backdrop. This has been the backdrop, the sad reality of Northern Ireland, over quite a period of time. People shouldn’t be surprised if there are incidents.”

Article source: http://www.nytimes.com/2013/06/11/world/europe/northern-ireland-town-freshens-up-before-group-of-8-meeting.html?partner=rss&emc=rss

Obama Pushes for Increase in Federal Minimum Wage

The proposal directly addresses the country’s yawning levels of income inequality, which the White House has tried to reduce with targeted tax credits, a major expansion of health insurance, education and other proposals. But it is sure to be politically divisive, especially given the weakness of the recovery and the continued high levels of joblessness.

The proposal would see the federal floor on hourly wages reach $9 in stages by the end of 2015. Tying the minimum wage to inflation would allow it to rise along with the cost of living. If enacted, the measure would boost the wages of about 15 million low-income workers, the White House estimated. The $9 minimum wage would be the highest in more than three decades, accounting for inflation, but still lower than the peaks reached in the 1960s and 1970s.

“Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong,” Mr. Obama said in his State of the Union address Tuesday night. “Let’s declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty.”

The White House said that the move would have profoundly positive effects for low-income families without unduly burdening businesses or raising the unemployment rate. It cited research showing “no detectable employment losses from the kind of minimum wage increases we have seen in the United States.” The White House also pointed to companies like Costco, the retail discount chain, and Stride Rite, a children’s shoe seller, that have previously supported increasing the minimum wage as a way to reduce employee turnover and improve workers’ productivity.

But the move would almost certainly face stiff opposition. Many companies that hire low-wage workers — both small businesses and large businesses — have in the past vociferously opposed raising the minimum wage, as it increases their cost of business. By making employees more expensive for companies to hire, some economists argue that higher minimum wages increase the unemployment rate — a particularly toxic possibility given the high levels of joblessness that remain long after the recession has ended.

Moreover, some economists, like David Neumark of the University of California, Irvine, have even argued that minimum wages are counterproductive at reducing poverty.

On top of that, conservatives have often argued that higher minimum wages burden job creators, especially during times when the economy is weak. House Speaker John A. Boehner voted against a 2006 bill letting the minimum wage rise to its current level of $7.25 from $5.15. The legislation ultimately passed with bipartisan support in 2007, though many Republicans voted against it.

But many centrist, labor and liberal groups have pushed for higher minimum wages, and left-of-center research groups praised Mr. Obama’s new push on Tuesday evening.

“The president said he was putting jobs and the economy front and center tonight, and that’s exactly what he did by calling for a minimum wage increase,” Christine Owens, the executive director of the National Employment Law Project, said in a statement. “A higher minimum wage is key to getting the economy back on track for working people and the middle class. The president’s remarks also cement the growing consensus on the left and right that one of the best ways to get the economy going again is to put money in the pockets of people who work.”

Many state and local government set their own minimum wages above the federal floor. Currently Washington is the only state that sets a minimum wage above $9 an hour, but several states exceed the current rate of $7.25.

The White House said that the $1.75 increase in the minimum wage would be enough to offset roughly 10 to 20 percent of the increase in income inequality since 1980. According to data compiled by the economists Thomas Piketty, at the Paris School of Economics, and Emmanuel Saez, at the University of California, Berkeley, inequality has worsened considerably during that time, and many metrics show that wages have stagnated or declined for millions of working families. The income share of the top 1 percent of earners has doubled, to 20 percent in 2011 from 10 percent in 1980. Between 1980 and 2008, according to analysis by the Economic Policy Institute, the top 10 percent of earners captured 98 percent of all income gains.

The proposal is one of several that the White House has put forward to tackle that inequality. In the speech, Mr. Obama also proposed expanding early childhood education programs — another path that experts say can tackle inequality by leveling the playing field and increasing mobility among children from low-income families. “Every dollar we invest in high-quality early education can save more than $7 later on by boosting graduation rates, reducing teen pregnancy, even reducing violent crime,” Mr. Obama said. “Let’s do what works, and make sure none of our children start the race of life already behind. Let’s give our kids that chance.”

In his 2008 campaign, Mr. Obama proposed lifting the minimum wage yet higher, to $9.50. Under the current proposal, the White House said that a family earning $20,000 to $30,000 would see an additional $3,500 of income a year.

“This single step would raise the incomes of millions of working families,” said Mr. Obama on Tuesday night. “It could mean the difference between groceries or the food bank, rent or eviction, scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while C.E.O. pay has never been higher.”

Article source: http://www.nytimes.com/2013/02/13/us/politics/obama-pushes-for-increase-in-federal-minimum-wage.html?partner=rss&emc=rss

DealBook: Michael Dell’s Empire in a Buyout Spotlight

Dell's founder, Michael Dell, at a technology conference in 2010.Justin Sullivan/Getty ImagesDell’s founder, Michael Dell, at a technology conference in 2010.

The computer empire of Michael S. Dell spreads across a campus of low-slung buildings in Round Rock, Tex.

But his financial empire — estimated at $16 billion — occupies the 21st floor of a dark glass skyscraper on Fifth Avenue in Manhattan.

It is there that MSD Capital, started by Mr. Dell 15 years ago to manage his fortune, has quietly built a reputation as one of the smartest investors on Wall Street. By amassing a prodigious portfolio of stocks, companies, real estate and timberland, Mr. Dell has reduced his exposure to the volatile technology sector and branched out into businesses as diverse as dentistry and landscaping.

Now, Mr. Dell is on the verge of making one of the biggest investments of his life. The 47-year-old billionaire and his private equity backers are locked in talks to acquire Dell, the company he started with $1,000 as a teenager three decades ago, in a leveraged buyout worth more than $20 billion. MSD could play a role in the Dell takeover, according to people briefed on the deal.

The private equity firm Silver Lake has been in negotiations to join with Mr. Dell on a transaction, along with other potential partners like wealthy Asian investors or foreign funds. Mr. Dell would be expected to roll his nearly 16 percent ownership of the company into the buyout, a stake valued at about $3.5 billion. He could also contribute additional personal money as part of the buyout.

That money is managed by MSD, among the more prominent so-called family offices that are set up to handle the personal investments of the wealthy. Others with large family offices include Bill Gates, whose Microsoft wealth financed the firm Cascade Investment, and New York’s mayor, Michael R. Bloomberg, who set up his firm, Willett Advisors, in 2010 to manage his personal and philanthropic assets.

“Some of these family offices are among the world’s most sophisticated investors and have the capital and talent to compete with the largest private equity firms and hedge funds,” said John P. Rompon, managing partner of McNally Capital, which helps structure private equity deals for family offices.

A spokesman for MSD declined to comment for this article. The buyout talks could still fall apart.

In 1998, Mr. Dell, then just 33 years old — and his company’s stock worth three times what it is today — decided to diversify his wealth and set up MSD. He staked the firm with $400 million of his own money, effectively starting his own personal money-management business.

To head the operation, Mr. Dell hired Glenn R. Fuhrman, a managing director at Goldman Sachs, and John C. Phelan, a principal at ESL Investments, the hedge fund run by Edward S. Lampert. He knew both men from his previous dealings with Wall Street. Mr. Fuhrman led a group at Goldman that marketed specialized investments like private equity and real estate to wealthy families like the Dells. And Mr. Dell was an early investor in Mr. Lampert’s fund.

Mr. Fuhrman and Mr. Phelan still run MSD and preside over a staff of more than 100 overseeing Mr. Dell’s billions and the assets in his family foundation. MSD investments include a stock portfolio, with positions in the apparel company PVH, owner of the Calvin Klein and Tommy Hilfiger brands, and DineEquity, the parent of IHOP and Applebee’s.

Among its real estate holdings are the Four Seasons Resort Maui in Hawaii and a stake in the New York-based developer Related Companies.

MSD also has investments in several private businesses, including ValleyCrest, which bills itself as the country’s largest landscape design company, and DentalOne Partners, a collection of dental practices.

Perhaps MSD’s most prominent deal came in 2008, in the middle of the financial crisis, when it joined a consortium that acquired the assets of the collapsed mortgage lender IndyMac Bank from the federal government for about $13.9 billion and renamed it OneWest Bank.

The OneWest purchase has been wildly successful. Steven Mnuchin, a former Goldman executive who led the OneWest deal, has said that the bank is expected to consider an initial public offering this year. An I.P.O. would generate big profits for Mr. Dell and his co-investors, according to people briefed on the deal.

Another arm of MSD makes select investments in outside hedge funds. Mr. Dell invested in the first fund raised by Silver Lake, the technology-focused private equity firm that might now become his partner in taking Dell private.
MSD’s principals have already made tidy fortunes. In 2009, Mr. Fuhrman, 47, paid $26 million for the Park Avenue apartment of the former Lehman Brothers chief executive Richard S. Fuld. Mr. Phelan, 48, and his wife, Amy, a former Dallas Cowboys cheerleader, also live in a Park Avenue co-op and built a home in Aspen, Colo.

Both are influential players on the contemporary art scene, with ARTNews magazine last year naming each of them among the world’s top 200 collectors. MSD, too, has dabbled in the visual arts. In 2010, MSD bought an archive of vintage photos from Magnum, including portraits of Marilyn Monroe and Mahatma Gandhi, and has put the collection on display at the University of Texas, Mr. Dell’s alma mater.

Just as the investment firms Rockefeller Company (the Rockefellers, diversifying their oil fortune) and Bessemer Trust (the Phippses, using the name of the steelmaking process that formed the basis of their wealth) started out as investment vehicles for a single family, MSD has recently shown signs of morphing into a traditional money management business with clients beside Mr. Dell.

Last year, for the fourth time, an MSD affiliate raised money from outside investors when it collected about $1 billion for a stock-focused hedge fund, MSD Torchlight Partners. A 2010 fund investing in distressed European assets also manages about $1 billion. The Dell family is the anchor investor in each of the funds, according to people briefed on the investments.

MSD has largely remained below the radar, though its name emerged a decade ago in the criminal trial of the technology banker Frank Quattrone on obstruction of justice charges. Prosecutors introduced an e-mail that Mr. Fuhrman sent to Mr. Quattrone during the peak of the dot-com boom in which he pleaded for a large allotment of a popular Internet initial public offering.

“We know this is a tough one, but we wanted to ask for a little help with our Corvis allocation,” Mr. Fuhrman wrote. “We are looking forward to making you our ‘go to’ banker.”

The e-mail, which was not illegal, was meant to show the quid pro quo deals that were believed to have been struck between Mr. Quattrone and corporate chieftains like Mr. Dell — the bankers would give executives hot I.P.O.’s and the executives, in exchange, would hold out the possibility of giving business to the bankers. (Mr. Quattrone’s conviction was reversed on appeal.)

The MSD team has also shown itself to be loyal to its patron in other ways.

On the MSD Web site, in the frequently asked questions section, the firm asks and answers queries like “how many employees do you have” and “what kind of investments do you make.”

In the last question on the list, MSD asks itself, “Do you use Dell computer equipment?” The answer: “Exclusively!”


This post has been revised to reflect the following correction:

Correction: January 18, 2013

An earlier version of this article misstated when an MSD affiliate raised money from outside investors for a hedge fund. It was last year, not earlier this year. The article also misstated which hedge fund and its focus. It was MSD Torchlight Partners, a stock-focused hedge fund, not MSD Energy Partners, an energy-focused hedge fund.

Article source: http://dealbook.nytimes.com/2013/01/17/michael-dells-empire-in-a-buyout-spotlight/?partner=rss&emc=rss

Richard Threlkeld, Award-Winning Journalist, Dies at 74

Mr. Threlkeld’s car collided with a propane tanker on a highway in Amagansett, N.Y., the police in East Hampton, where he lived, said. Mr. Threlkeld was alone in his car, the police said, and the driver of the truck was not injured. “Richard Threlkeld had the kind of name and kind of looks that could have made him a reporter in the movies, but unlike a reporter in the movies, he could write his own scripts,” Lesley Stahl, with whom he was co-anchor of “CBS Morning News” from 1977 to 1979, said in a statement. “In fact, he was one of our best writers and reporters.”

Mr. Threlkeld did two stints at CBS — from 1965 to 1982, and again from 1989 to 1998 — and the intervening seven years at ABC. Over those three decades, he covered seven presidential campaigns, the assassination of Robert F. Kennedy, the American invasions of Panama and Grenada, the Patricia Hearst kidnapping and trial, the war in Lebanon and the Middle East peace process.

On April 29, 1975, after covering the Vietnam War, Mr. Threlkeld was aboard one of the last helicopters to lift off from the American embassy as Saigon fell to the Communists. He was in Beijing during the Tiananmen Square demonstrations in 1989 and in Moscow as the Soviet Union crumbled in the 1990s. From that experience, he wrote a book, “Dispatches from the Former Evil Empire” (2001).

Mr. Threlkeld was among the first correspondents doing features for CBS’s “Sunday Morning,” which first went on the air in 1979. Three years later, Roone Arledge, then the chairman of ABC News, hired him as a correspondent for “World News Tonight.” There he began doing a regular feature, “Status Reports,” offering analysis of the week’s most important story. For seven of those reports, in 1982 and ’83, he received the prestigious Alfred I. duPont-Columbia University Silver Baton. In 1984, he won an Overseas Press Club award for his reporting on Lebanon and Grenada.

Born on Nov. 30, 1937, in Cedar Rapids, Iowa, and reared in Barrington, Ill., Mr. Threlkeld graduated from Ripon College in Wisconsin in 1960 with a degree in political science and history. A year later he received a master’s degree from the Medill School of Journalism at Northwestern University. Before joining CBS, he worked at WMT-TV in Cedar Rapids, and WHAS-TV in Louisville, Ky.

He is survived by his wife of 28 years, Betsy Aaron, a former CBS, ABC, NBC and CNN correspondent; a brother, Robert; two children, Susan Paulukonis and Julia Threlkeld; and two grandchildren.

When Mr. Threlkeld left CBS to join ABC, Charles Kuralt, the anchor of “Sunday Morning,” told The New York Times: “We didn’t want Richard Threlkeld to leave without saying that we think he has given us something more than 108 good stories. He has given us a demonstration that the news on television does not have to be cramped and constricted. It can be expansive and exalting if you make a little time on the air and then ask a good man to fill it.”

Article source: http://feeds.nytimes.com/click.phdo?i=a63f9b926b965078876e3ed8740b2124

Op-Ed Contributor: Crippling the Right to Organize

UNLESS something changes in Washington, American workers will, on New Year’s Day, effectively lose their right to be represented by a union. Two of the five seats on the National Labor Relations Board, which protects collective bargaining, are vacant, and on Dec. 31, the term of Craig Becker, a labor lawyer whom President Obama named to the board last year through a recess appointment, will expire. Without a quorum, the Supreme Court ruled last year, the board cannot decide cases.

What would this mean?

Workers illegally fired for union organizing won’t be reinstated with back pay. Employers will be able to get away with interfering with union elections. Perhaps most important, employers won’t have to recognize unions despite a majority vote by workers. Without the board to enforce labor law, most companies will not voluntarily deal with unions.

If this nightmare comes to pass, it will represent the culmination of three decades of Republican resistance to the board — an unwillingness to recognize the fundamental right of workers to band together, if they wish, to seek better pay and working conditions. But Mr. Obama is also partly to blame; in trying to install partisan stalwarts on the board, as his predecessors did, he is all but guaranteeing that the impasse will continue. On Wednesday, he announced his intention to nominate two pro-union lawyers to the board, though there is no realistic chance that either can gain Senate confirmation anytime soon.

For decades after its creation in 1935, the board was a relatively fair arbiter between labor and capital. It has protected workers’ right to organize by, among other things, overseeing elections that decide on union representation. Employers may not engage in unfair labor practices, like intimidating organizers and discriminating against union members. Unions are prohibited, too, from doing things like improperly pressuring workers to join.

The system began to run into trouble in the 1970s. Employers found loopholes that enabled them to delay the board’s administrative proceedings, sometimes for years. Reforms intended to speed up the board’s resolution of disputes have repeatedly foundered in Congress.

The precipitous decline of organized labor — principally a result of economic forces, not legal ones — cemented unions’ dependence on the board, despite its imperfections. Meanwhile, business interests, represented by an increasingly conservative Republican Party, became more assertive in fighting unions.

The board became dysfunctional. Traditionally, members were career civil servants or distinguished lawyers and academics from across the country. But starting in the Reagan era, the board’s composition began to tilt toward Washington insiders like former Congressional staff members and former lobbyists.

Starting with a compromise that allowed my confirmation in 1994, the board’s members and general counsel have been nominated in groups. In contrast to the old system, the new “batching” meant that nominees were named as a package acceptable to both parties. As a result, the board came to be filled with rigid ideologues. Some didn’t even have a background in labor law.

Under President George W. Bush, the board all but stopped using its discretion to obtain court orders against employers before the board’s own, convoluted, administrative process was completed — a power that, used fairly, is a crucial protection for workers. In 2007, in what has been called the September Massacre, the board issued rulings that made it easier for employers to block union organizing and harder for illegally fired employees to collect back pay. Democratic senators then blocked Mr. Bush from making recess appointments to the board, as President Bill Clinton had done. For 27 months, until March 2010, the board operated with only two members; in June 2010, the Supreme Court ruled that it needed at least three to issue decisions.

Under Mr. Obama, the board has begun to take enforcement more seriously, by pursuing the court orders that the board under Mr. Bush had abandoned. Sadly, though, the board has also been plagued by unnecessary controversy. In April, the acting general counsel issued a complaint over Boeing’s decision to build airplanes at a nonunion plant in South Carolina, following a dispute with Boeing machinists in Washington State. Although the complaint was dropped last week after the machinists reached a new contract agreement with Boeing, the controversy reignited Republican threats to cut financing for the board.

In my view, the complaint against Boeing was legally flawed, but the threats to cut the board’s budget represent unacceptable political interference. The shenanigans continue: last month, before the board tentatively approved new proposals that would expedite unionization elections, the sole Republican member threatened to resign, which would have again deprived the board of a quorum.

Mr. Obama needs to make this an election-year issue; if the board goes dark in January, he should draw attention to Congressional obstructionism during the campaign and defend the board’s role in protecting employees and employers. A new vision for labor-management cooperation must include not only a more powerful board, but also a less partisan one, with members who are independent and neutral experts. Otherwise, the partisan morass will continue, and American workers will suffer.

Article source: http://feeds.nytimes.com/click.phdo?i=67f914605b29865be4e6672243b982e1

Japan’s Disgraced Olympus May Rehire Ex-C.E.O.

Woodford, an Englishman who was a rare foreign CEO in Japan, went public with his concerns over crooked accounting at Olympus after his dismissal in October, leading to the uncovering of a $1.7 billion fraud that has left the company badly weakened.

He is now lobbying shareholders of the maker of cameras and medical equipment to support his reinstatement and replace the disgraced board with a new team that he is assembling.

“We saw a shameful state of the company’s finances yesterday, but not one Japanese shareholder stood up and said publicly ‘Mr Woodford is right, thank you Mr Woodford’, anything, a total, an utter silence,” Woodford said, a day after Olympus released its restated accounts on Wednesday.

His comeback campaign has highlighted the contrasting opinions of foreign and Japanese shareholders on the future leadership of Olympus, which has been found to have carried on a $1.7 billion fraud to hide investment losses for 13 years.

At least three big foreign shareholders have backed Woodford’s bid to return to the company where he spent three decades working his way up from salesman to CEO. But not one Japanese shareholder or lender has openly supported him since he blew the whistle, leaving him clearly frustrated.

Woodford also launched an emotional attack on the firm’s current Japanese boss.

“Should that man be the president and custodian of one of Japan’s iconic companies?” he said of Olympus President Shuichi Takayama, one of the directors who had voted unanimously to sack him after he had queried the firm’s dubious book-keeping.

“How dare he!” Woodford added, calling Takayama’s handling of the whole affair “Machiavellian.”

Woodford also said he had discussed refinancing options for Olympus with private equity firms and investment banks, and also voiced concerns that Takayama was planning to raise money by placing new shares with a third party.

That would dilute the stakes of existing owners and weaken their hand in a proxy battle between Woodford and whoever the existing board chooses as its next CEO candidate.

“It would dilute the existing shareholders, so then I could not win a proxy fight,” he said.

The existing board, led by Takayama, has said he and fellow directors will resign soon, to make way for a new board to be elected by shareholders at a meeting in March or April, and that the board wants to choose its successors before it quits.

It has set up an external panel to advise on board candidates and other management issues.

Takayama even suggested on Thursday the board would consider Woodford as a candidate for his old job, but few analysts gave the gesture any credence given the hostility between the pair.

Takayama, currently the most senior executive after several resignations since Woodford’s departure, said he had no plans to meet Woodford, who some major Japanese shareholders and lenders privately oppose, according to a banking source.

“As of now, I have no plans to meet,” he said.

Woodford says the board is discredited and has no right to choose its successors, and on Thursday expressed anger at signs that not all of the incumbent board would resign.

He is assembling his own team of candidates for a new board with himself at the helm.

NEED FOR FRESH CAPITAL OR TIE-UPS

Woodford also went public with a plea to meet the head of Sumitomo Mitsui Banking Corp (SMBC), the main lender to Olympus, a possible sign that he was having trouble getting access.

“My representatives have asked for a formal meeting with SMBC. I hope they at least give me the courtesy of listening to me,” he said. The bank, which is the core banking unit of Sumitomo Mitsui Financial Group, said it had not received the request and declined comment.

Article source: http://www.nytimes.com/reuters/2011/12/15/business/business-us-olympus.html?partner=rss&emc=rss

Recession Crimped Incomes of the Richest Americans

WASHINGTON—Hold the condolence cards, but the recession cost the rich.

The share of income received by the top 1 percent—that potent symbol of inequality — dropped to 17 percent in 2009 from 23 percent in 2007, according to federal tax data. Within the group, average income fell by about a third, to $957,000 in 2009 from $1.4 million in 2007.

Analysts say the drop largely reflects the stock market plunge, and most think top incomes recovered somewhat in 2010, as Wall Street rebounded and corporate profits grew. Still, the drop alters a figure often emphasized by inequality critics, and it has gone largely unnoticed outside the blogosphere.

By focusing on the top 1 percent, the Occupy Wall Street movement has made economic fairness a subject of raucous street protest and ubiquitous political debate.

“It’s very interesting that this has become such a big topic now when the numbers are back to where they were in the 1990s,” said Steven Kaplan, an economist at the University of Chicago’s business school. “People didn’t seem to be complaining about it then.”

In 2009 the average income of the top 1 percent, adjusted for inflation, fell below its 1998 level, but remained well above where it was in 1990: $662,000.

While the protests follow the worst downturn since the Great Depression, inequality has been growing for three decades, driven by both economic and political forces. Globalization created larger markets for those with scarce talents but hurt less educated workers by pitting them against cheap foreign labor. New technology also hurt unskilled workers, by replacing many with machines.

Unions declined, eroding blue-collar bargaining power. The financial industry grew, with paydays heavily weighted toward the top. Corporate culture accepted the growing gap between the executive suite and the factory floor, and pay for chief executives soared.

Falling tax rates on the highest earners added to the net income divide, by allowing top earners to keep more of their pay and increasing their incentive to maximize it.

In the decades after World War II, by contrast, the average income of the top 1 percent grew only marginally faster than inflation and significantly slower than middle-class incomes. That combination caused inequality to decline throughout much of the 1950, ’60s and early ’70s.

As recently as 1980, only about one-tenth of the nation’s pretax income went to the top 1 percent. By 2000, that share had grown to about 22 percent. It slumped to about 18 percent in 2003, after a market crash, only to rebound by 2007 to levels not achieved since the Roaring ’20s.

Pointing to the recent declines at the top, Mr. Kaplan argues the Occupy protesters have accused the wrong villain by focusing on inequality, which he called an inevitable byproduct of robust growth. “If you want to reduce inequality, all you need to do is put the economy in a recession,” he said. “If you want the economy to do well, as all of us do, then you’ll get more inequality.”

But Harry J. Holzer, an economist at Georgetown University, argues much of the recent growth at the very top reflects insider privilege instead of real productivity.

“The notion that the really high earners are earning it has become very questionable,” he said. “Look at outrageousness of the damage they imposed on the rest of the economy and the cost being born by middle-income Americans.”

“There’s been rising income inequality all over the world, but nowhere as much as in the United States,” he said.

Critics of the Occupy Wall Street movement say the falling incomes at the top show that concerns about inequality are outdated.

“We don’t want to spend years focused on income inequality, only to learn that the financial crisis fixed it for us,” wrote Megan McArdle in a blog post for The Atlantic, called “The 1% Ain’t What It Used to Be.”

“Get a time machine, Occupy Wall Street,” wrote James Pethokoukis, a blogger at the American Enterprise Institute.

But Jared Bernstein, a former Obama administration official, said that after previous market-related dips, income inequality only soared to new highs.

“If you believed the inequality problem had been solved in the early 2000s, you would have been proven terribly wrong,” said Mr. Bernstein, now of the Center on Budget and Policy Priorities.

While top incomes probably rose in 2010, most analysts doubt they returned to their 2007 peak, since stocks remain about 20 percent lower. Mr. Kaplan argues that new restraints on Wall Street will keep the income shares of the rich below those earlier levels, a view Mr. Bernstein disputes.

“The structural forces driving inequality remain very much in place,” he said.

The income shares of the top 1 percent became a common metric of inequality after a 2003 study by the economists Thomas Piketty and Emmanel Saez, which traced trends back to 1913. It peaked at 24 percent in 1928, just above its 2007 level. Mr. Saez, of the University of California, Berkeley, sides with those who think the rich will soon get richer.

“Barring an economic cataclysm ahead, top earners will be recovering faster than the other 99 percent,” he wrote in an e-mail. “The inequality problem is not going away and won’t until drastic policy changes are made (as happened during the New Deal).”

Article source: http://feeds.nytimes.com/click.phdo?i=4b31361778607a7ad5a67fc32ce32adc