Wednesday, September 24, 2008
Jack Welch says U.S. faces "deep downturn"
NEW YORK (Reuters) - Former General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) Chairman and CEO Jack Welch said the U.S. economy faces a deep downturn in coming quarters, and he supports a proposed $700 billion government rescue package for the financial sector. "I now believe we are in for one hell of a deep downturn," Welch told the World Business Forum in New York on Wednesday, adding that the first quarter of 2009 would likely be "brutal." Until recently, Welch said, he had believed the U.S. economy could avoid recession, but he has now changed his mind. "I am now caving," he said. "Get ready for real tough times. They're coming. There is no credit available." Welch said mortgage lenders, legislators, investment bankers and others are all to blame for the crisis, which stemmed from easy credit and investors' appetite for yield. "The problem was money didn't cost anything," Welch said. "People took swings." Welch praised the actions taken so far by Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and New York Fed President Timothy Geithner, calling them "brilliant public servants" who have "not let ideology get in the way of taking action." "Thank God we have Bernanke, Paulson and Geithner," Welch said. "We have to act." He said the U.S. economy would eventually recover, but recovery would likely be gradual -- U-shaped rather than V-shaped. Asked whether the current crisis would change the character or shape of the U.S. capitalist system, he held his index fingers about 5 inches apart and answered, "For this long." Welch served as chairman and chief executive of GE from 1981 to 2001 and currently runs an advisory firm for business leaders. He has written or co-written two books on leadership. He said the biggest change since his GE tenure is that globalization has intensified and the world is more interconnected. As economies become more interdependent, he said, prospects for world peace improve. 'SMART PEOPLE' In the current environment, Welch said, business leaders should focus on their cost structure, reduce debt, and take care of their best employees. Leaders of organizations must also communicate as often as possible about their vision, he said, and should take advantage of investment opportunities as they arise. "If you have capital, you can do what (Warren) Buffett did this morning," he said, referring to the billionaire investor's $5 billion investment in Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz). "That's what smart people do in times like these." Welch said he supports Republican Presidential nominee John McCain and said he would work for $1 per year on a McCain task force to help the economy if asked to do so. He said McCain's policies were more likely to create jobs than those of Democratic nominee Barack Obama, in part because Obama was overly beholden to labor unions. The United States functions better when the executive and legislative branches are held by rival political parties, Welch added, so there is an exchange of ideas. (Reporting by Nick Zieminski; editing by John Wallace)
Tuesday, September 16, 2008
Monday, September 15, 2008
Bruiser of Wall St Dick Fuld looked after his people, but didn’t know when to quit
From The Times
September 16, 2008
Tom Bawden in New York
They called him the Gorilla – the brawler known as the scariest man on Wall Street. In a world where the top brass are generally suave, no wonder Dick Fuld stood apart.
Mr Fuld, 62, joined Lehman Brothers in 1969 after his first career as an air force pilot came to an abrupt halt when he got into a fist fight with a commanding officer. He tough-talked his way to the top and turned a $102 million loss in 1993, the year before he took over as chief executive, into a $4.2 billion profit last year.
Along the way, he made his staff both wealthy and happy: until yesterday, morale at Lehman Brothers was high – even though the immaculately groomed Mr Fuld’s withering looks put paid to the bank’s dress-down Friday tradition.
In that first fist fight, Mr Fuld was said to have been defending a young cadet who was being taunted by the senior officer, and he took that concern for the underdog with him to Wall Street. At Lehman’s he went farther than just about any other financial boss to spread among his staff the wealth created by the business.
This aggressive streak was translated to the office with great effect. Under his stewardship, Lehmans became more and more successful and in 2006, Institutional Investor magazine named Mr Fuld America’s top chief executive. Companies clamoured for his services, and he took positions on everything from the Federal Reserve Bank to the Robin Hood Foundation, a New York antipoverty group.
His activities brought him billionaire status and allowed him to indulge his passion for art collecting. He lives with his wife Kathleen and three children in Greenwich, Connecticut – home to many of Wall Street’s biggest players – and they also have properties on Jupiter Island, Florida, and in Park Avenue, New York.
Some say that the countless accolades encouraged Mr Fuld to take more and bigger risks, in particular piling into high-risk mortgages.
Over the past few months he refused to acknowledge that Lehmans was in difficulty – despite frequent warnings from leading analysts. Had he acted sooner, he would have been able to avoid bankruptcy. A series of interested buyers surfaced in recent months, but Mr Fuld would not sell at the prices offered. By the time he appeared to face up to the situation at the end of last week, it was too late: Lehman was past the point of no return.
Lehman staff say that Mr Fuld is broken and shell-shocked. He has lost a fortune, but for such an ambitious man, the biggest loss is to his pride.
Google search finds seafaring solution
TIMES ONLINE
Murad Ahmed, Technology Reporter
Google may take its battle for global domination to the high seas with the launch of its own “computer navy”.
The company is considering deploying the supercomputers necessary to operate its internet search engines on barges anchored up to seven miles (11km) offshore.
The “water-based data centres” would use wave energy to power and cool their computers, reducing Google’s costs. Their offshore status would also mean the company would no longer have to pay property taxes on its data centres, which are sited across the world, including in Britain.
The increasing number of data centres necessary to cope with the massive information flows generated on popular websites has prompted companies to look at radical ideas to reduce their running costs.
The supercomputers housed in the data centres, which can be the size of football pitches, use massive amounts of electricity to ensure they do not overheat. As a result the internet is not very green.
Data centres consumed 1 per cent of the world’s electricity in 2005. By 2020 the carbon footprint of the computers that run the internet will be larger than that of air travel, a recent study by McKinsey, a consultancy firm, and the Uptime Institute, a think tank, predicted.
In an attempt to address the problem, Microsoft has investigated building a data centre in the cold climes of Siberia, while in Japan the technology firm Sun Microsystems plans to send its computers down an abandoned coal mine, using water from the ground as a coolant. Sun said it could save $9 million (£5 million) of electricity costs a year and use half the power the data centre would have required if it was at ground level.
Technology experts said Google’s “computer navy” was an unexpected but clever solution. Rich Miller, the author of the datacentreknowledge.com blog, said: “It’s really innovative, outside-the-box thinking.”
Google refused to say how soon its barges could set sail. The company said: “We file patent applications on a variety of ideas. Some of those ideas later mature into real products, services or infrastructure, some don’t.”
Concerns have been raised about whether the barges could withstand an event such as a hurricane. Mr Miller said: “The huge question raised by this proposal is how to keep the barges safe.”
Thursday, September 4, 2008
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