Comments

Sorry to say but it may appear that Mr. Buffet may not have understood this particular market himself after purchasing stocks that have fallen precipitously since his purchase. But I must say that I really dunno. For many reasons, he's a hero.

Posted by Judith Ellis at January 22, 2009 12:48 PM

Occam's razor at work here.

The simplest answer is usually the correct one.

When I began reading stories about businesses investing in 'mortgage backed securities' and 'credit default swaps' (after the mess was in full swing) I started to think back to the book 'The Smartest Guys in the Room' about the Enron scandal.

The Enron crew were creating multiple 'special purpose entities' that resided off the balance sheet and ultimately helped doom the company.

Wild.

Posted by Joe Mescher at January 22, 2009 1:01 PM

Tom,

Unfortunately...we all invest in something we don't understand.

Let's take the government for instance.

www.droppingalmonds.com

Posted by Candy Man at January 22, 2009 1:05 PM

Completely agree Judith. Things have become so complex on Wall St. that banks can't even say what they have on the books. Crazy!

Posted by John Daley at January 22, 2009 2:02 PM

Judith, you've got a point, but if I were taking the long view, I might invest a buck or two in WB's portfolio.

Posted by tom peters at January 22, 2009 2:22 PM

Here's the beauty of Wall Street/Government today. They spent the first $350 billion (TARP) on what? They don't even know. Yet...if my cell phone bill is 2 days late to AT&T, I'm getting notices and people are calling to find out where my, and mean their, money is?????

$350 billion dollars...no accountability...I agree with John.

Posted by Candy Man at January 22, 2009 3:34 PM

John - They can't say what they have on the books because they don't know. These toxic
Structured Investment Vehicles are just that --toxic! How ridiculous it seems to buy such things? Now, I guess what is being considered is to have a bad bank to take these SIV’s Is off the book to restore liquidity. But what happens to the bad SIV’s? Do they simply disappear?

I agree, TP. WB would be the safest bet. A good friend has taken large amounts of money out and we have simply bought houses. Yesterday, he was in desperate search to find banks that would be secure some $500,000. He was successful. But he most certainly has not gotten out of the market completely.

Candy Man - I agree with you with regards to responsibility and accountability. But you can't hold one administration hostage for the irresponsibility of the former one. Although, Congress cannot be let off the hook. Senator Dodd's comments a few weeks back on Good Morning America disturbed me greatly. He spoke as if he was not responsible in any way as Chairman of the Senate Banking Committee. Ugh!

Yes, there needs to be guidelines, responsibility, and accountability across the board for sure. No one disputes this.

Posted by Judith Ellis at January 22, 2009 4:59 PM

Judith - the fact that a stock falls after Mr. Buffet invests in it does not prove the he didn't understand that business. It might suggest a) he didn't understand that even well run businesses fall in a bear market; b) he did understand the business but it and he were wrong; c) he thought he understood the business but in fact didn't; or d) various other options. Never the less, I applaud his long-term view on things and would back his judgement over just about anyone else's.

Posted by Mark JF at January 22, 2009 5:38 PM

Don’t know enough about economics to argue this academically but I love the simplicity of Mr Buffet’s words - sounds like a very sensible man!

Posted by Trevor Gay at January 22, 2009 6:37 PM

Mark JF - Thanks. Good points. Many options there.

As TP noted earlier and I affirmed, I too appreciate and "applaud his long-term view on things."

The greater point, perhaps, is that this time is truly extrarodinary and understanding often nil with such volatility.

Warren Buffet is a remarkable man. Period. For me, he would be up there with Jack Bogle.

Posted by Judith Ellis at January 22, 2009 6:49 PM

Like Tom, Buffett is a dino-fossil - too slow to move out of the way of an incoming asteroid recession - note the incredible recent losses - Wiki source!:

"Buffett ran into criticism during the subprime crisis of 2007-2008 that he has allocated capital too early resulting in suboptimal deals.

Buffett's Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008 and several of his recent deals appear to be running into large mark-to-market losses.

Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs at $123 only for it to fall to below $60.

Furthermore some of Buffett's Index put options (European exercise at expiry only) that he wrote (sold) are currently running around $6.73 billion mark-to-market losses. The scale of the potential loss prompted the SEC to demand that Berkshire produce, "a more robust disclosure" of factors used to value the contracts.

In addition to suggestions of mistiming, questions have been raised as to the wisdom in keeping some of Berkshire's major holdings including The Coca-Cola Company (NYSE:KO) which in 1998 peaked at $86."

And he advises 44 in the near term short term - when short term is all we have!?

Maybe he does Geithner & Kennedy tax & illegal employee advice too?!

A cool thing about this recession is notorious London financiers shall disappear & the Labour party is shrinking back to their vermin hooligan dens - while Conservatives take over - spot on!!! :>)

Posted by Contraire at January 22, 2009 7:29 PM

Buffet says that in a recession the tide goes out and you find out who is naked... A friend of mine who invests large amounts of other people's money says in a recession money/capital returns to its rightful owners...

Posted by Richard Lipscombe at January 22, 2009 7:48 PM

Not even Buffet can invest successfully with all of the greed, mongering, and other corruption that will be fleshed out by the new Admin.

While I'm in total agreement that new administration can't be held responsible for the debacle of today's economic environment, even though Hillary and Obama were part of the Senate, we'll see if they bow down to lobbyist and big business or stand up for my 401k and the economic health of the American people.

I find it very interesting, even though Billary is within her legal rights, that as Secretary of State she is refusing to open her books of the Clinton Foundation and disclose contributions. Very well known that Arab countries have contributed millions of dollars to the Clinton Foundation in return for...well, I'm not quite sure.

As Secretary of State, one would think that she would do the responsible thing and not hide her accounting practices with foreign countries. However, she has refused to disclose information with regard to contributions. Complete, 100% horseshit in my opinion.

How can we have confidence in a Secretary of State that could potentially be bought through charitable contributions from foreign countries? We'll see if Obama does anything about this, but he may stay out of the fray to not disrupt the monies available to him in time. In my opinion, this snubs his own comments about doing business in Washington in the light of day, so everyone may see what's happening with leadership. If Obama is everything that people have made him out to be, he should step in and direct Hillary to disclose her foreign contributions to keep the playing field level. Doubt this will happen though.

Boo Hillary!!!!!!!!!!!!!!!!!

Posted by Candy Man at January 22, 2009 11:19 PM

From "The Snowball: Warren Buffett and the Business of Life", by Alice Schoreder:

"In the short run market is a voting machine. In the long run, it's weighting machine."
[Warren Buffett]

BOTTOM LINE:
What we run now is a great fight with market obesity. Tom was right it might be greater problem than terrorism. Prepare for long diet.

Posted by Jakub Kokoszka at January 23, 2009 3:20 AM

More from "The Snowball: Warren Buffett and the Business of Life", by Alice Schoreder:

"Cash combined with courage in crisis is priceless."
[Warren Buffett]

BOTTOM LINE:
Cash.
Cash.
Cash.
Courage.
Courage.
Courage.
Period.

Posted by Jakub Kokoszka at January 23, 2009 3:25 AM

Candy Man - Are you and Contraire brothers? The obvious links that you both make are not so obvious or so righteous.

The extraordinary thing is that there was barely a peep spoken of the "appearance of evil" with certain foreign entities and certain past presidents', two to be exact, with regards to their relationships with Middle East royalty. The fact is I personally do not know anything about any of this. (And I suspect neither do you.) There are always rumors. We can always spin suspicions endlessly. Some of us like to spin others of us are actually doing. The President has lead incredibly well these past few days, making ethical decisions that no president in history has ever done. Let's get on with the job of doing. He has decisively.

You speak of Senator Hillary's contributions as if it is her foundation. The reality is that it is not her foundation it is her husband's and it appears that the Senate, Republicans and Democrats, has confirmed her. Did you, by chance, catch her confirmation hearing? Absolutely brilliant performance! It was nothing shy of stellar, her knowledge vast and understanding of complex issues matchless. She is an incredibly bright and able public servant.

By the way, you have said nothing new here or added nothing of great value to what has been going around in the media in my humble opinion. Repeating unconfirmed suspicions do not make them so. Senator Clinton has agreed to disclose her husband's foundation contributions yearly and this she did not even have to do. She did so to avoid the very appearance of impropriety. By the way, the former president is not the current Secretary of State. We call her Madame Secretary.

Another thing, the Clintons, President Clinton or Senator Hillary, do not benefit personally from these contributions at all. Instead, the benefit has been for countless of people in foreign countries who would not otherwise be feed or get medical attention. While doing good through bad means do not make the good right, it has not been confirmed at all that such is the case. All that has been confirmed are people’s opinions and we know what is said about this.

A final thing, you call for the President to insist that Hillary be more transparent is foolishness. He has done his duty through the vetting process, a written agreement of financial disclosure of her husband’s foundation, and made the nomination. She has complied with the wishes of the Senate and she has been confirmed. I think we are just going to have to live with the fact that she is Madame Secretary and will undoubtedly do a superior job, along with Holbrook and Mitchell. This is a great team.

Back to Buffett?

Posted by Judith Ellis at January 23, 2009 4:49 AM

Whilst I agree with the Buffet argument, long range innovation is surely about taking a punt on something that is either unknown or unknowable.

I also very much enjoyed the comment about investing in Governments! :-))

Keep on keepin' on

Peter

Posted by Peter Cook at January 23, 2009 5:40 AM

Can somebody tell me where this quote comes from? I'd dearly love to read the original article/book. I looked on the Berkshire Hathaway home page, which is the only link in the post, and didn't see anything new.

Thanks,

Caroline

Posted by Caroline Lundy at January 23, 2009 6:27 AM

Call me ignorant or naïve, but I wonder about this financial crisis. For 12 months, we have endured a constant communication of how bad the economy was by both parties trying to get elected. This self-fulfilling prophecy has taken away billions in savings and investments. Somehow we have spent trillions of dollars but I have seen very little of it.

Last night I asked myself a simple question: Am I worse off today than I was 1-2 years ago? On paper the answer is yes. If I listen to the media or the politicians then the answer is yes. My house may have gone down in value by 50% but it has no impact on me because I am not selling, buying or refinancing. My stocks have tumbled but I wasn’t going to sell for another 25 years anyway. Gas is cheap and there seems to be lots of sales these days. I wasn’t one of those people that thought they could live a million dollar lifestyle just because interest rates were low. I still have my family, health, friends, and I am not starving. I could cut back on some of those sweets but that as little to do with the economy. Sometimes I wonder, if no one told you the economy was bad would you think it was? Like I said, call me naïve.

Posted by Naive at January 23, 2009 6:59 AM

Spot on Candy Man, Richard & Naive as we say in London! Judith - keep trying to understand reality & near & long range fiscal planning! PS - Hillary has more balls than you, me & Tom combined (having endured slick Willie for decades) - she must seize the moment & kick some fat backsides, especially in Iran & the middle east - not to mention Putkin's tiny package! :>)

PSS: hilarious about Caroline - the Kennedy curse continues!

Posted by Contraire at January 23, 2009 7:23 AM

For one thing, our homes are something that provide shelter and warmth; they should have never become ATM machines, re-financed to the max. For another, some people that my partner and I put into our houses are indeed struggling, emotionally and financially; many struggle with issues of self-worth and dignity. They have lost their jobs and homes. I am immensely sensitive to this, and deal with each family differently. We are happy such is not the case for you.

Posted by Judith Ellis at January 23, 2009 7:36 AM

Judith,

I watched part of the Senate floor speeches regarding Hillary's nomination for Sec of State (CSPAN). There was some interesting information shared by several Senators. 2 declined to seat Hillary as Sec of State; 98 approved.

The reason you don't know much about the Clinton Foundation and some of the issues surrounding the coverage is that our liberal media prefers to dodge issues of certain individuals. I recommend that you read up on the events, as I believe this is a blemish to the current administration. By the way, never before have we had a wife of a former President take on such responsibility abroad (which makes things interesting). Usually they open up clinics for addicts and pursue less political endeavors post Presidency. Let's not forget that Hillary ran up a huge bar tab while she was getting beat up by Obama during the primaries...maybe she had her hand out for the first round of Tarp too!

Buffet is boring...brilliant, but boring...

Posted by Candy Man at January 23, 2009 8:35 AM

Judith,

So if there's nothing to hide, why not disclose contributions during her term as Sec of State? "With great power comes great responsibility"-----Peter Parker.

I can't think of a reason not to if the Foundation is completely clean...

Posted by Candy Man at January 23, 2009 8:40 AM

Candy Man - Would you be so willing to share with the community what the liberal media missed? This would be helpful. By the way, what might you call yourself? The Truth?

What are you talking about? Senator Clinton has agreed to disclose her husband's foundation contributions yearly. Are you asking for a daily briefing? What then would you do with it?

Labels are not usually constructive. But since you have done so let me ask this. Was the liberal press too liberal with Gibbs yesterday? Pretty brutal, I'd say--but good indeed.

If John Thain was more boring, Merrill Lynch might not be in such dire straights. Should this guy be fired immediately? Barf! Such indulgence of some $1.22 million for redecoration is disgusting when your hand is out. BUFFETT'S HAND IS NEVER OUT!

Thain's spending is reminiscent of AIG's $440,000 trip to a resort with spa services totaling some $23,000 dollars after its multi-billion dollar bailout. Will AIG be back for additional billions?

Bank of America, having acquired Merrill Lynch last year, was back to Treasury to receive an additional $20 billion after receiving its initial $25 billion. They got it.

The Parker quote is appreciated. Thank you.

Posted by Judith Ellis at January 23, 2009 9:19 AM

My understanding, from the hearings yesterday, is that the Clintons do not and will not disclose "contributors". Therefore, while they will disclose inflows and outflows and basic accounting information, they are not going to share from whom. The from whom is important as Senators, at least a few of them, were concerned that some foreign diplomats may try and win favor by offering monies to their foundation.

I remember two things about the Clintons in particular.

Their very shady land dealings in Arkansas that you and I would have likely been thrown in Federal prison for. Didn't they have to ask some of their fellow friends and politicians to "bail them out"?

"I did not have sexual relations with that woman." Boy was Monica villified by the press, White House, and anyone tied to the affair from a political connection. Seemed pretty liberal to me. If I go to work today, and invite one of the pretty interns to rub one off for me in the board room, I get fired and sued for harrassment. Clinton got off...literally, figuratively, and physically.

Buffet's hand was out when he was guaranteed a percentage back from GE regardless of performance of the stock (it's in the deal). Do you and I have the same luxury? No...becasue we don't have billions and billions to toss around. We're at the mercy of the market.

Buffet's still boring in my eyes.

I believe that you and I are debating, and in agreement on, several items.

Posted by Candy Man at January 23, 2009 9:36 AM

Candy Man - Regarding the Clintons, I get your drift and shall let it pass. Both are great public servants. Regarding Mr. Buffett, I simply disagree. Considering where we are on ethics and your own words here, I find it puzzling that you would focus on the demeanor of a great man, unless you are referring to his rather conservative portfolio which would be just as puzzling. He has done quite well consistently for his investors. Thanks for your responses, nonetheless, appreciated.

Posted by Judith Ellis at January 23, 2009 9:50 AM

Judith...I believe that Buffet is brilliant and awesome. He's lived in the same house for 50 years, drives a Caddy, and is humble in his words and actions.

When we have Madoff, AIG, and other "dirt" to flesh out, Buffet is boring. That's what I meant. In some respects, we're in the markings of history for a number of reasons. Obama, the end of capitalism to a large degree, and unprecedented greed and corruption are fascinating in my eyes. We are truly getting a good dose of what we've earned. This should I say, applies to the larger, broader, principles of business as well. The current unrest in the markets and corporations will redefine businesses forever...if it doesn't run them out of business first.

Truce...for now.

Posted by Candy Man at January 23, 2009 10:08 AM

Right on, brother! I agree with a lot of what you have just written, except the capitalism bit. Redefining any system is healthy and necessary. But I do agree that we will undoubtedly embrace a new form of capitalism which we will probably redefine yet again, as countries have done worldwide based on the U.S. system.

Posted by Judith Ellis at January 23, 2009 10:40 AM

I disagree with the premise that the crisis was caused by a lack of understanding. While it is likely that the firms who participated in these esoteric investment vehicles didn't understand the full extent of their potential loss, it is also likely that they knew they could lose a significant amount if not their entire company. They also assumed the probability that the conditions that would precipitate this loss would occur were small. They, therefore, made the business decision to participate. They played the odds and lost. It wasn't that these companies didn't fully understand the situation, it was that the investment analysts would have downgraded years ago them if they didn't participate in this market.

Posted by Jeff Warren at January 23, 2009 7:29 PM

Thanks Jeff - a neat paragraph describing greed perfectly.

Posted by Trevor Gay at January 24, 2009 3:58 AM

"Sometimes I wonder, if no one told you the economy was bad would you think it was? Like I said, call me naïve."

You don't spend enough time talking to store clerk or cabbies. In the grocery store yesterday, the checkout clerk, about 30, and I got talking. Her boyfriend had just been laid off after seven years of apparently satisfactory work. The unisex hair place I go to laid off three stylists--their first such act in 15 years. I hear this sort of thing with great regularity "at the coalface." Not real? The U.S. shed 500,000 jobs last month.

Posted by tom peters at January 24, 2009 9:20 AM

Agree with Trevor, Jeff. Very nice. They definitely would have been downgraded--that's why R Rubin took Citicorp into the risky stuff. On the other hand, where were the people, like the torture tale, who said "enough" and risked their careers on a courageous decision? (Read Michael Lewis in Portfolio on the topic of whether "they" understood what they were doing.)

Posted by tom peters at January 24, 2009 9:27 AM

Fear.
Fear of unknown consequences.
In particular, the banks who are sitting on all this TARP money afraid to loan it out.
They understand what to do,and how to do it. What they don't understand is their own fear to act.
This is where they need help.
And who is helping them? Who?

Posted by Ed Brenegar at January 24, 2009 10:53 AM

I think it is absolutely ridiculous to think that these guys didn't understand what they were doing! They most certainly did! Ten years ago I got into real estate working for a friend who was one of the youngest female brokers in Michigan. She was in her late 50's then and was very successful. She had been trying to get me in the business for some time as she wanted to retire, having been in business for 35 yrs. I listened to countless stories of people looking for a house; there were many walk-ins.

I was simply amazed at the people who came through her doors seeking to get homes. This was more than apparent. Many got them and many did not have jobs. Many verified incomes with the likes of utility and cell phone bills. I watched this with my very own eyes. I went along with the broker to mortgage companies and banks.

Everybody was in on it! I did not stay with that company. She was stunned as she wanted to hand over her business to me. I did not want it. The real estate brokers knew what they were doing. The mortgage companies knew what they were doing. The banks knew what they were doing! I sat there in amazement, true amazement! It was all about the fat fees!!!

Posted by Judith Ellis at January 24, 2009 2:02 PM

Judith - you are so right - the front line was especially in on it TOO - whether they were babysitters claiming $100,000 salaries, or bank employees, or mortgage makers, or real estate brokers, or real estate appraisers, or title company employees - far too much of the lower/middle class/front line also was going for it with "government" support & encouragement!

This radical negative bubble effect because no policy makers understood - except the very few on the sidelines. How can we NOT have multiple negative bubbles going forward given the Trillions being gambled that "government" knows what they are doing to alleviate this crisis?

The wealthy elite almost always thrive & become even more wealthy - but lower & middle & even affluent class people are falling furthur behind. BE the wealthy change part of this equation! >:)

Posted by Contraire at January 24, 2009 4:52 PM

"I don't invest in anything I don't understand." Warren Buffet... What an interesting statement this is for our times... Thanks Tom for raising it - it certainly got me thinking....

Most of what governments in Australia are investing in right now are things they do not understand. They claim these investments are needed but they never claim they understand what they are investing in...

Here are a few Australian government investments I do not understand nor believe in...

• Fighting the Afghanistan/Pakistan War.
• Printing money (expanding monetary supply) to support private company payrolls.
• Increasing middle class entitlements.
• Shifting the tax burden - through increased government debt - to future generations.
• Stimulus packages - cash hand outs - to stimulate consumer spending. We had one here at Christmas that was meant to boost consumer spending (it did little good because people paid down their debt rather than spend it).

Here are some government investments I could understand and believe in ....

• Infrastructure spending - roads, bridges, ports, and Broadband Internet upgrades...

• Educational spending - new funding for tertiary level institutions to stop the rapid decline in standards (Australian Universities are falling down the world scale).

• Health care spending - new funding for electronic data records, Internet based preventative health care delivery, fast turnaround surgery facilities, training facilities within hospitals for doctors directed at lowering mistakes on operating tables, etc. dramatically increased nursing care for those who need it most (ironically this initiative will save money too!)....

• Tax levies on carbon use throughout our economy - a specific tax to raise the cost of petrol at the pump to a level that will ensure alternative energy sources are viable.

• Government/Private cooperation to fund and to efficiently/effectively deliver 'big projects' in Space, Water Management, Social Cohesion (initiate modern version of 'head-start' programs), Electricity grids supplemented by wind and solar, etc.

• Raise our foreign aid levels - Australia is a constructive foreign aid partner with the people it gives to but we simply must do more....

My simple mind tells me that our world can be a better place if we are willing to invest more of our resources into the things we understand....

I am determined to do my bit with the people I know to make sure that Australians working in both the public and private spheres are investing more in things they (and we) understand.... I believe it is upto each and everyone of us (well at least those of us who care about our planet, nation, and/or neighbourhoood) to do our bit to make it a somewhat better place for all of us....

Posted by Richard Lipscombe at January 24, 2009 5:40 PM

Contraire - I also agree with your comment above regarding the front line. It was a nobel initiation by the government to provide programs for those who might not otherwise be able to purchase homes, but perhaps not executed well.

"Do grown men weep," Max DePree asks in Leadership is an Art? Should grown men weep? "Of course," he replied. "Anyone in touch with reality in this world knows there are lots of reasons to weep. We weep over triumphs and over tragedies. Most good people weep over admirable actions and deplorable one."

Considering our current crisis and rampant greed and lapses of ethics in government, it does not take a lot to understand why men and women are now weeping. (I have also been incredibly angry from time to time. Reading of the the former indictment of former GOP Senate Leader Joseph Bruno yesterday was maddening. What happened to Ted Stevens, by the way? The $3 million indictment figure of Bruno makes Stevens $250,000 seem like chump change in comparison, though no less egregious.)

What are we going to do about it?

Posted by Judith Ellis at January 24, 2009 6:06 PM

Judith - Richard has some fine activist ideas - I try to be a 2 hour per week radical activist to make things right. Your Powerful Brain & Laws of Earning Money are @ my name below - living well is the best revenge - that plus punishing evil! :>) PS - Richard - my $20M cousin was in NZ & Australia the past 3 weeks - maybe scouting places to live - he knows the USA future has limits!

Posted by Contraire at January 24, 2009 7:09 PM

I love vision boards!

Posted by Judith Ellis at January 24, 2009 7:24 PM

Contraire - I agree with Richard's ideas above as a solution. Many, if not all, President Obama has already spoken of. Implementation and fighting through bureaucracy, both public and private, is always the challenge. But we can do it.

Posted by Judith Ellis at January 24, 2009 7:33 PM

Contraire .... You should come on down to my home town - Melbourne - too and check us out. I must warn you though we have been invaded by a lethal band of Russian females. Yep, Rod Laver Arena is full of Russian women who continue to win matches at OUR Australian Open... We are so depleted these days that there is only one Aussie girl left to stand up to them - Jelena Dokic (if you know her personal story then you know that this is a bitter sweet result for us all) - and she needed a 'wild card' entry just to get into our national tournament. This once proud Tennis Nation (boasting Laver, Court, et al) has been invaded by the Russians, Serbs, Spaniards, Scots (well Andy Murray) et al. There is a recession going on down here - that's for sure!

Posted by Richard Lipscombe at January 24, 2009 8:31 PM

Wasn't there an international brawl at YOUR Australian Open this year?

Posted by Judith Ellis at January 24, 2009 9:27 PM

Chairs were hurled about by two warring groups - a young woman in the area was knocked out! Two rival tribal cultures clashed - they did it two days in a row... This is just further proof to me that Australia is a multi-national not a multi-cultural society. People (in Australia) proclaim loudly that we are a great multi-cultural success but in reality we are not that at all.

In fact, Australia has a long way to go if we are ever to become truly civilized. In Melbourne we also have drunken youths downtown in the night life areas who are running amok around 1am in the morning - these are people with nothing better to do than to fight each other and in the process to create mayhem. Melbourne is a great place in many ways but it also has its own special problems...

It is because we have our own pressing social and economic problems to address within Australia I want us to withdraw our troops from the barbaric and senseless Afghanistan/Pakistan War. No good will come from the continued occupation of those tribal lands. Read Charlie Wilson's War and then ask yourself why are we there?

In 2009 and beyond, I want Australian governments to invest in public policy and programs that will make my country a much more inclusive and cohesive society. I want Australian Governments at all three levels - National, State, and Local - to invest in those things all Australians understand and thus are better placed to derive some direct benefits from.

Posted by Richard Lipscombe at January 24, 2009 10:16 PM

Australia is a beautiful vast country. I was there for nearly 9 months. I especially loved Sydney, Melbourne, and the more rough and rugged places in the Outback, including Mt. Isa. I spent a lot of time there.

Posted by Judith Ellis at January 24, 2009 10:56 PM

R & J - Yes to beautiful Russian women vs. the amazing though plain Mr. Buffet!

That is all Russia has left - their elite women! Cousin & wife $20M are at the Open now & saw Lance Armstrong at that biking event earlier. Melbourne & Sydney are heaven compared to many US cities!

Tough love for the native people down under too or you'll lose another generation there - same here right J - tough love ala Cosby for US black men - 44 proves there are no more excuses (actually it is black men that underperform - women carry the burden)? PS - did you know Tiger is 25% black vs. 50% Asian - but marketing black is a better cash flow? I bet if he was light skinned like mom & Mr. Buffet he'd be known as the 1st Asian 14 time Major winner!

Posted by Contraire at January 25, 2009 7:35 AM

It's amazing how that language was echoed by almost everyone who chose to stay out of the kind of instruments we're not describing as "toxic."

Posted by Wally Bock at January 25, 2009 3:17 PM

I don't invest in anything I don't understand

Try and understand this:

With two different companies, in the past two months, I've seen a frightful trend. What some corporations are doing now is laying off people and providing severance. With the severance comes all of the ubiquitous legal "release of all future claims and lawsuits" documents. The employees are told that the company will not fight unemployment as well.

Employee signs the documents for severance, files for unemployment, and voila, the company, with documents in hand either "laterals" someone into the open position, or hires someone cheaper to fill the void. The former employee has relinquished the ability to take legal action because they accepted the severance and waived all legal rights to sue the former employer.

In the past, when employees thought they would be the first to get called back in a layoff situation, they relinquish rights and the employer moves on without calling the former employees back.

I read Jeff's comments and he's spot on. Trevor Gay, Simplicity Blog, has been sharing some broader and deeper blogs with regard to the inhumanity taking place right now in several corporations on different levels.

Posted by Candy Man at January 25, 2009 6:23 PM

2009 is getting very interesting...

The 'human decency' that Trevor Gay writes about here and on his Simplicity blog is being tested in the workplace. So too are most of the notions TP champions here. Tompeters! is all about 'the people' because this is at the core of what TP has been on about since the early 1980s.

I have always assumed that TP was right to be totally focused on 'the people' and thus on about leadership and training as key people issues. His relentless focus has been on people who need leadership, training, marketing tools, design and innovation primers, an organisational mantra based on 'wow projects'. management by walking about, tight yet loose controls, decentralised groups rather than centralised functions, design as an imperative, tactical actions not strategic or systems thinking, execution excellence by all workers, etc...

All those TP things have been truly worthy of our full and focused consideration. All those things we have all come to understand at the Simplicity level that Trevor Gay calls for and at the deeper levels that lead us to adopt the Professional Service Provider models that TP promotes.

BUT where 2009 has become really interesting is that this Global Recession has put the focus squarely on systems not people. It is about management system based on computer technologies not management systems based on people talent or skills. Governments around the globe are frantic in their efforts to hold together their people based systems - their consumer economies - but while they fully understand what they are investing in they also know that it is not a viable social or economic model for the longer-term future (say post 2015). The globe is no longer a series of Nation-States, Regions, Unions, etc it is rather an interconnected network of systems. The smart money wants to invest in this interconnected network of systems not the existing people-based systems of production and distribution.

Banks do not want to lend to people-based systems of production and distribution because they know that it is moribund. Managers do not want to be in control of these systems either. So there is a stand off between what the free market capital is prepared to invest in and where Governments around the world want that capital to be placed.

The free market will win this struggle in the end but it will take 5 years or so. I am thinking it will take that long because the tenure of current governments will last that long.

So around 2015 we will enter a new era of management - I tend to refer to it loosely as "getting beyond people". The great irony is that this coming era will probably make better use of all the talents of people than the old regimes of people-based management. Consumers will be part of the design process, part of the innovation cycle, part of the marketing process with their World Wide Raves, part of the facilitation process that is needed to cultivate and sustain online communities, etc.... cheap viagra on line mastercard

2009 may prove not to be the perfect time to invest in what we understand because what we are coming to understand is that the old people-based systems are no longer viable. Nation-State consumption-based economies are no longer viable. Whole chunks of the practice management and organisation we now so desperately want our Governments to continue to invest in are no longer viable.

The pathway out of this Recession may not be found by those who chose to continue to invest in what they understand....

Posted by Richard Lipscombe at January 25, 2009 11:27 PM

As an avowed optimist I keep hoping the increasing numbers of stories of uncaring management that I hear are just ISOLATED examples of a lack of concern for people on the payroll. I have to admit my optimism is being tested. I am hoping this recession will be a wake up call to business. Words like humanity, humility and care are not soft words in business – they are the evidence of excellence. Being ruthless and uncaring are easy options.

Posted by Trevor Gay at January 26, 2009 4:05 AM

In our global technological market the stocks that have increased in value and where there seems to be fewer layoffs, if any, are those people powered industries—not that technology is not powered by people. TP had a post here about two recession-free companies, Wal-Mart and McDonalds. Microsoft could shed as many as 15,000 jobs, Google some 10,000 jobs, and Yahoo some 2,000 jobs. All of these companies have dropped in earnings while Wal-Mart and McDonalds have increased in earnings.

There may also be something to be said for treasury bills and bonds that are without doubt driven by nation states and local governments, dependent upon the necessity of people, skills, training and management, without which they would not exist. Greed is a large factor that brought on the financial crisis; no technological system can cure this. Organization of any kind requires dealing with people stuff, no getting around this even if the model of production and distrubution shift.

Posted by Judith Ellis at January 26, 2009 4:07 AM

You don't need a software package to learn kindness, thoughtfulness, caring and respect. Systems are run by people.

Posted by Trevor Gay at January 26, 2009 6:34 AM

"People, people who need people - are the luckiest people in the world."

I picture Tom & Barbra Streisand rejoicing in song in a soon to be released YouTube video!

"We do not understand investments - oh investments - but people, people who need people are the LUCKIEST people in the world (what's left of it anyway)."

Flash to a million man bread line where they are serving watery gruel in the soon to be bankrupt U.K.! :>)

"Iceland, if only we had learned from Iceland, Icelanders were the luckiest leveraged Nordics in the world!"

Posted by Contraire at January 26, 2009 7:22 AM

"Wisdom is the principle thing; therefore get wisdom. And is all your getting, get understanding."

--Proverbs 4:7

Posted by Judith Ellis at January 26, 2009 9:11 AM

I don't doubt Proverbs in the least. However, we need to redefine wisdom as we know it today. Wisdom without honesty and integrity is useless.

I agree with Richard on a revolution, not evolution, of change that will sweep our world over the next 5-10 years; evident in the tired hands of Americans casting votes for Obama in the most recent election. I'm hoping that we won't arrive at Contraie's predictions of bread lines and gruel, but we seem to be regressing (America) into a nation with tremendous gun sales and doubt of government protection in the near term.

Yee haw...

Simple = honesty and hard work. I learned that from our eternal optimist and I can't disagree.

Posted by Candy Man at January 26, 2009 11:12 AM

Wisdom does NOT need to be redefined; it needs to be applied.

Wisdom without honesty and integrity is by no other name wisdom.

Posted by Judith Ellis at January 26, 2009 11:59 AM

"Adequate (read Wal$Mart & McDonalds) is the new age WISDOM." - Contraire

Posted by Contraire at January 26, 2009 6:34 PM

"serving watery gruel in the soon to be bankrupt U.K.! :>)"

Contraire - Not 'soon to be' but ALREADY bankrupt :-)

And to cap it all Andy Murray loses in the Australian Open ... I say thank God for Manchester United.

Cheers Candy Man ...yours always optimistically :-)

Posted by Trevor Gay at January 26, 2009 6:36 PM

New Age and wisdom is antithetical. Wisdom belongs to the ages.

Posted by Judith Ellis at January 26, 2009 6:47 PM

Judith,

The disciple Peter, now apostle, by my estimations was a pretty wise man. However, when tested, he caved to save his own bacon. He denied Jesus three times to save his own neck and our Lord knew this about him.

My how things haven't changed in 2,000 years. We need to redefine wisdom in my assessments, or else we'll be at the mercy of those denying employees of their dignity and integrity.

Bluntly said, many people haven't learned a damn thing!

Posted by Candy Man at January 26, 2009 9:18 PM

"Great men are not always wise, nor do the aged always understand justice."

--Job 32:9

(Peter is one of my favorites for his undeniable feet of clay.)

Posted by Judith Ellis at January 26, 2009 9:37 PM

Judith - please pay attention to how our great friend Trevor & I try to educate you! :>)

Wisdom is not needed now - plain & simple common sense rules the roost!

Picture 5 years ago & the rush to madness of getting an extra 6% of the US population into homes. Now see just 3% new homeowners with NO loans to deadbeats with no equity - fast forward to now & we are still cruising each year with moderate increases in real estate values - employment & real wages have INCREASED.

Simple math - no loans to those who can't pay - then there are no tranches, derivatives & such to package that are toxic & to sell worldwide!

And now current governance does the same thing - bailout those who robbed us & who can not pay it back - anti Buffetesque! viagra black

Posted by Contraire at January 27, 2009 7:22 AM

When has wisdom not lacked common sense? Wisdom that lacks common sense is by no other name wisdom.

Posted by Judith Ellis at January 27, 2009 7:58 AM

Science is organized knowledge. Wisdom is organized life. Immanuel Kant

Wisdom is the supreme part of happiness. Sophocles

Wisdom is choosing to be happy & giving of it freely. Contraire

Posted by Contraire at January 27, 2009 7:02 PM

Ah, very nice, Contraire. Thank you.

Posted by Judith Ellis at January 27, 2009 7:43 PM

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I think most things became to complicated. Governments, taxes - I'm sure that simplyfing these things would also help us overcome that crisis.

Posted by Manuel at January 29, 2009 10:19 PM

Quite the quote du jour there, WB!

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