person

Nancy Lublin: My Money’s Just Not That Into You

August 16, 2010

I’ve been waiting for a returned phone call or email or even a smoke signal from a potential corporate partner for the last 5 weeks. I flew to Chicago for one day, just to make the pitch. We had a terrific in-person meeting. I sent the proposal the next day. And now I can’t get an answer. Nothing. Total silence. A friend of mine has been sort-of dating this guy for the better part of a year. It is quite obvious (to everyone else) that he just isn’t that into her, but instead of ending things he keeps stringing her along with an occasional adorable text message or possible plan. Another friend has been in conversation with a potential investor for nearly six months. There have been multiple layers of meetings, term sheets, and “it’ll be there Monday” messages. In each of these scenarios, I’m sure that the louse (the company, the boy, the vc) thinks she or he is being “nice” by not letting any of us down with a clear “it ain’t happening.” But really, it would be far more kind to send a clear, firm message: I’m just not that into you. Rejection. Its awful to hear–from a boyfriend, a graduate school, an employer, anyone! But lately it seems like the only thing scarier than being rejected is actually doing the rejecting. Nobody likes saying “No,” especially to a charity. So I’ve decided to create some practical tips for making break-ups and rejections of all kinds, easier. 1. It’s me, not you. Afraid to tell the candidate that she or he isn’t right for the gig? Blame it on yourself or your own company. The “you’re too good for me” thing is so high school. I suggest the more modern, “we just aren’t ready for the kind of attention and opportunity you deserve.” 2. The timing isn’t right. There are other strategic decisions being made that would dramatically affect our ability to be a good partner at this time. And for extra measure, you can add the, “I’m not at liberty to disclose those changes right now, but suffice it to say that a lot is going on here.” Yeah. This is technically a version of the It’s Me, Not You, but its still a goodie. 3. The Joe Jonas. Just leave a voicemail. Short and sweet. Then go on tour with your brothers. 4. The Levi Johnston. Be so awful that the person you are rejecting actually feels relieved. Bonus: if you truly manage to achieve Levi Johnston levels of guttural idiocy, you might actually have a shot of later hiring/funding/dating/marrying because you can (in the pages of People magazine) label your extreme behavior as an aberration. 5. The economy. If you are really smooth, this one works in every economic climate–it’s the too much work, not enough work, too much instability, blah blah blah externalities excuse. I also recommend this one for getting out of family obligations because it has the side benefit of making you seem extremely fiscally responsible. I need a good final paragraph here. But I’m thinking maybe I should take the next six months to think about it.

Read the full article →

GM To File IPO Papers Next Week: AP Source

August 13, 2010

DETROIT — General Motors Co. is likely to file paperwork next week that describes its plan to sell shares to the public, a person familiar with the matter said Friday. The Detroit automaker had planned to file the papers on Friday but delayed the move to build distance between the filing and two major announcements it made on Thursday, said the person, who asked not to be identified because the company is not commenting publicly on the stock sale. GM said Thursday that CEO Edward Whitacre would step down as CEO Sept. 1 and be replaced by board member Daniel Akerson. It also reported a $1.3 billion second-quarter profit, its second-straight positive quarter. The board has not yet decided the date of the stock sale, the person said. However, experts say an initial public offering, or IPO, generally takes place three months after early paperwork is filed. GM got $50 billion in aid from taxpayers last year in exchange for 61 percent of the company. It repaid $6.7 billion that was considered a loan, and a stock sale would repay at least some of the remaining $43.3 billion. The person said GM’s board is weighing two desires: To shed government ownership quickly or wait longer and perhaps sell shares for a higher price if the automaker continues to do well. Whitacre has said that government ownership is hurting the company’s public image and sales. The Obama administration may be pressuring GM to sell shares soon to influence the November congressional elections and make the government’s controversial investment look smart, some analysts say. But Whitacre and the government have said GM is in charge of the IPO timing. ___ Associated Press Writer Ken Thomas in Washington contributed to this report.

Read the full article →

Robert Siciliano: Man Lived Under Stolen Identity for More than a Decade

August 12, 2010

Identity cloning generally encompasses all types of identity theft. In most cases, the thief is intentionally living and functioning as the victim. The thief’s motivation may be to hide from the law, evade child support, or skirt immigration. A man lived a quiet life with a steady job . But he wasn’t who he claimed to be. He was an identity thief. The ruse was so elaborate that his own girlfriend said she was unaware of it. His victim lived hundreds of miles away and for over a decade, he was unaware that his identity had been stolen. When the victim applied for a passport for the first time, he learned that someone else already had a passport under his name, and had since 1996. Prosecutors aren’t even sure of the perpetrator’s real name. The man claims he’s a German national who entered the country under his real name in 1983 via Mexico. He even got a birth certificate and a driver’s license. In cases of identity theft, generally, the goal is to commit financial fraud. Kind of like a smash and grab. The thief comes in, wreaks havoc, makes a mess, destroys your credit, and then moves on to another victim. But with identity cloning, the person may actually pay the bills and live a decent life. In some cases, though, that person may also be a sex offender or have other recurring legal troubles. Either way, at some point, there is inevitably a mess that needs to be cleaned up. Some people spend hundreds of hours, thousands of dollars, and face years of aggravation. Our systems of identification rely on antiquated paper and plastic documents, often without photographs, coupled with ubiquitous numeric identifiers. Since the beginning and especially today, all forms of documentation are easily counterfeited. This means anyone can simply copy, scan, manipulate, and print a document, obtain your digits, and become you. This means that your identity is anything but safe and secure. It is entirely vulnerable to attack, and may already be compromised. Your best option is to lock it down in a way that makes it difficult for an identity thief to use it undetected, and in some cases makes your identity useless to a thief. And if your identity is ever compromised, McAfee I dentity P rotection fraud resolution agents work with you to restore your stolen identity.

Read the full article →

Paul Loeb: What if Verizon Could Censor Your Telephone Conversations: Why Net Neutrality Matters

August 8, 2010

Imagine if you were talking on the phone and Verizon or ATT decided they didn’t like where your conversation was going. You’d be in the middle of a sentence and suddenly disconnected. Or maybe they didn’t like the person you were talking to, or the subject. You’d be unable to connect or your conversation would become so slow and poor quality you’d give up and call someone else. Or maybe you lived in an area of the country where they didn’t want to give you telephone service. So you’d be unable to call at all. The telecom companies would justify all this by explaining that the fiber optic lines or wireless frequencies were simply their private property. They had a right, they’d say, to do whatever they wanted with them. They can’t do this because telephone service has long been held to common access standards. The Internet has similarly developed and flourished as a commons open to everyone, through what we’ve come to call Net Neutrality. But Bush’s FCC ruled that all our new communications technologies were in a different category, effectively the property of their physical carriers. In the wake of this decision Verizon refused to distribute a text message alert from NARAL Pro Choice America and AT&T muted singer Eddie Vedder’s criticism of President Bush during a live Pearl Jam webcast. The telecom companies are also pushing to be able to sell the right for websites or applications whose owners wanted them to load faster, while relegating other sites to second-class service. Such a shift would devastate nonprofits, small businesses, and all kinds of political advocacy groups, which couldn’t afford the rates that the most lucrative sites could pay. As a candidate Obama spoke out strongly for reversing this policy, promising to “take a back seat to no one on Net Neutrality.” His FCC appointees were at first strongly supportive of extending the protections of equal access to online technologies (which would make moot a federal court decision based on the Bush-era rulings). But now, following massive telecom company lobbying, they’re seriously wavering. Google is now exploring a private deal with Verizon, where Google would pay for YouTube content to get higher priority delivery to consumers, shifting them from Net Neutrality advocate to de facto opponent. With a final FCC ruling coming any day now, an equal-access internet is now in serious jeopardy. In the Soviet Union, cultural commissars determined who would see what information and in what context. In the US, it’s corporations, and their choke-hold is about to get tighter unless we speak out and act. The fight to keep Net Neutrality has produced some important victories as when MoveOn and the Christian Coalition joined in an unlikely partnership to help block Congress from destroying Net Neutrality four years ago. FreePress.net , who’s led on this issue all along, is now organizing now to help people speak out before final FCC decision. But we’d better act while we still have a chance if we don’t want to be cut off in midstream from equitable access to all the new media whose promise and power we’ve come to take for granted. Paul Loeb is the author of “Soul of a Citizen: Living with Conviction in Challenging Times,” recently published in a wholly updated new edition after 100,000 copies and The Impossible Will Take a Little While: A Citizen’s Guide to Hope in a Time of Fear,” the History Channel and American Book Association’s #3 political book of 2004. For more information or to receive Loeb’s articles directly, see www.paulloeb.org . To sign up on Facebook visit Facebook.com/PaulLoebBooks

Read the full article →

Ron Ashkenas: Hire Senior Executives That Last

August 4, 2010

Cross-posted from Harvard Business Online Not long ago a C-suite executive left a major corporation after being there for only a year. Although the official statement said that she left “for personal reasons,” in truth she was not a good fit with the company and had alienated many of her colleagues and demoralized the function she was leading. Most disturbing, however, was that this same executive had a pattern of similar failures in previous positions — but somehow that history was either missed or ignored when she was hired. Unfortunately this is not an uncommon situation. Studies peg the failure rate of executives coming into new companies at anywhere from 30% to 40% after 18 months. The costs of this failure rate are enormous — wasted and duplicated recruiting fees, missed business objectives, unproductive employees, and distracted colleagues. It’s a significant but mostly invisible drain on corporate productivity. So what can companies do to improve the odds of hiring successful senior managers? Let me suggest three relatively simple steps: To start, ramp up the due diligence process . Most senior management candidates come through executive recruiters, and we assume that they’ve done their research. However, search firms have a vested interest in placing their candidates, and often rely on the candidates themselves for references. If you’re involved in hiring, you should supplement these reviews with your own investigation. Identify people in the candidate’s previous companies and give them a call; talk to people in the industry or function about the candidate’s reputation; and find people in your own company who might have crossed paths with this person previously. The more data you can get the better — which will hopefully uncover previous patterns that might have gone unnoticed. Once you have a candidate that you want to consider, the second step is to go beyond the typical interviews . Most recruits are subjected to a series of one-on-one meetings with other senior executives, many of whom are not trained in effective interviewing techniques. So they end up having pleasant meetings, exchanging impressions, and in the end making a decision based on relatively little data. To make this process more robust and revealing, create other mechanisms for seeing the candidate “in action.” Ask the recruit to make a presentation; give the candidate a problem situation and ask her to develop a range of solutions and a summary memo; conduct a role play on how to deal with a difficult employee; or ask the person to facilitate a meeting with several other managers on a particular topic. The range of possibilities is really unlimited once you liberate yourself from the constraints of traditional interviews. The key is to see how the person thinks on her feet and how adaptable she is to the culture of your company — information that is difficult to uncover in a series of friendly peer interviews. Finally, the third step that you can take to increase executive hiring success is to reduce the number of outside hires . While it is certainly important to continually enhance your company’s gene pool with outside DNA, for most companies it should be the exception rather than the rule. If you have a strong and consistent succession and development process, you will have good candidates for top positions — candidates who already know how to succeed in your company’s culture. So when it is necessary to fill a senior opening, consider whether it makes sense to hire from within. None of this is revolutionary or the equivalent of organizational rocket science. But if you can put these steps in play it can have a huge impact on your company’s success. What’s your experience with outside senior hires?

Read the full article →

Marcella Mroczkowski: Danger! Empathy and Psychopathy as Competing Value Systems in Politics and Economics

August 3, 2010

Four to five percent of the population is born without a capacity for empathy. It is a neurological lack. A psychopath may be a genius and become a multimillionaire, but he will never be able to understand empathetic values. In fact, because of the grandiosity of these personalities and consequent intense denial they have toward their shortcomings, they are arguably less capable of understanding empathy than a congenitally deaf person is of understanding music. Their minds are closed. Psychopaths treat the empathetic majority as the defective ones and seek relentlessly to remake the world in their own image, to proselytize their viewpoint and values and to “teach” their “defective” empathetic fellows to think like them. Unfortunately, they can. A psychopath can never learn to think like an empathetic person. The functioning brain tissue is just not there. But people with a normal capacity for empathy can turn off that capacity and think like psychopaths. To a certain extent, the empathetic do this as a matter of evolution. As studies of war, racism and genocide indicate, humans draw what Martha Stout called circles of empathy. They behave empathetically toward those in the circle and psychopathically toward those outside the circle. However, we are not hardwired for xenophobic violence like chimps. For us it is a function of learning and culture. Normally empathetic human beings need linguistic cues to switch to psychopathy mode. The alarm cry of the animal world morphed into the language of demonizing hate. The ancient Greeks and the Founders of our country understood the devastating destructiveness of the language of demonizing hate, particularly to democracies. They called the charismatic psychopaths who excelled at its practice “demagogues.” More recently, neuroscience has provided evidence how demonizing hate radically alters the way the human brain processes information, making subjects immune to reason, increasingly intolerant and even violent and easily manipulated. Most tragically, there is a drug-like pleasure aspect to this process. Subjects in its grip mistake this pleasure for proof they are right and righteous when the opposite is the case. This call to demonizing hate is supplemented by ideologies that substitute psychopathic values for compassionate values, including the remaking of accepted ideologies by gutting their compassionate content. Basically, the forces of compassion create the institutions and articulate the values and beliefs that advance civilization, and then the forces of psychopathy work relentlessly to take over those institutions and values and remake them in their own image and to their own advantage. This ideological tug of war is an essential dynamic underlying history and the rise and fall of civilizations. The calling card of the psychopathic value system is its Manichean worldview — idealized me versus demonized him , idealized us versus demonized them , reflecting the Echo-Other worldview of the pathological narcissist, of which psychopaths are the most pathological subset. This relentless effort to supplant empathetic values with psychopathic values is blatantly evident in the rightwing campaign to convince people that Adam Smith and Ayn Rand share the same beliefs. Nothing could be further from the truth. Ayn Rand’s Objectivism is basically a how-to manual designed to teach a normal person to think like a psychopath. First, Objectivism teaches the pupil the basic thinking of the pathological narcissist, to regard his own viewpoint as absolute, objective reality and any other person’s viewpoint, to the extent it conflicts, as a figment, a fantasy that he need not consider at all. Objectivism then proceeds to “elevate” the pupil to true malignant narcissism by demonizing “altruism” — Rand’s term of art for all the empathetic values — and lionizing sadism. Adam Smith was a deeply compassionate moral philosopher whose other great work besides The Wealth of Nations was The Theory of Moral Sentiments . His concept of the free market was not at all that of Ayn Rand or other laissez-faire advocates. Adam Smith did not regard an unregulated market as a true free market: the ruthless and powerful would quickly rig it. Like the Founders, Smith worked to expand and secure the rights of the less powerful. Though Smith and the Founders were minimalists as to government power — what’s the least amount and type of government power necessary to achieve desirable and legitimate ends — they were not anarchists. And they did not go to so much trouble to articulate and defend the rights of ordinary citizens and to design governments that would protect the rights of those ordinary citizens only to throw those citizens and their rights under the bus in the face of the abuse of private power. One problem we have in this study is that Smith and the Founders wrote and worked a century or more before the founding of modern psychology and psychiatry. The words “empathy” and “altruism” did not yet exist, although the concept embodied in those terms, in the form of the Golden Rule, is as old as human nature and appears in almost all cultures and religions. The language with which they spoke of these values is somewhat different than the contemporary idiom and this has posed some obstacles to scholarship. It is not difficult to overcome and it must be overcome. This minor linguistic obstacle has also unfortunately provided the advocates of the psychopathic worldview with another advantage. This difference between the deeply empathetic values of Adam Smith and the flagrantly psychopathic values of Ayn Rand is also reflected in devastating changes in this country’s business culture, particularly in the structures and values of the management of our largest corporate enterprises. The executives of the Greatest Generation, forged by their experiences in the Great Depression and World War II, were much more compassionate. The structures of corporate governance were built on a system of checks and balances that reflected the institutions of democratic governance. Truly independent boards of directors, empowered shareholders and union-empowered employees acted as a check on management. Liberal or conservative, Republican or Democrat, the executives of the Greatest Generation believed they were building a great nation, not just great companies, and that they had a responsibility to use their power to make this a better nation for all its people, not just line their pockets. Though we started from a much poorer place, the morality of their leadership helped make possible exponential growth in both prosperity and civil rights that uplifted the middle class, the working class and the poor. By contrast, today’s large corporations are run like banana republics by tin-pot dictators. The checks and balances are gone. The replacement of the Greatest Generation’s empathetic values with psychopathic values is evident in the manner in which executive salaries have skyrocketed past all possible justification while rank and file wages and benefits have been eviscerated and jobs ruthlessly outsourced. The devastation they have wrought on lives and communities is further exacerbated by their relentless corruption of government at all levels into a kleptocratic source of revenue. They have become intolerable parasites. And it is all empowered and reinforced by an ideological juggernaut of psychopathic values and the media machinery of demonizing hate — the very demagoguery that Plato’s Republic and the Federalist Papers warned us would destroy our republic. The contemporary right has also relinquished any claim to represent the original intent of the Constitution, because they are traitors to its value system. Whenever I despair, I remember that the way of truth and love has always won. There may be tyrants and murderers, and for a time, they may seem invincible, but in the end, they always fail. Think of it: always. Mohandas K. Gandhi Time wounds all heels. John Lennon

Read the full article →

Dodd Pushing FDIC Chair Sheila Bair To Run Consumer Financial Protection Bureau

July 30, 2010

Sen. Christopher Dodd approached Federal Deposit Insurance Corp. Chairman Sheila Bair in recent days to gauge whether she would be interested in running the new consumer-protection agency, according to people familiar with the matter. The chairman of the Senate Banking Committee’s behind-the-scenes courtship of Ms. Bair suggests he is trying to find a nominee who might win favor in the Senate. It will be Mr. Dodd’s job to move the nominee through a preliminary vote on his committee and then defend the person’s record on the Senate floor.

Read the full article →

Dwindling Retirement Savings ‘Undiscussed Explosive Bomb’ Of Recession

July 30, 2010

After working in executive management for over ten years with a steadily increasing salary, Rick Stephens, 51, was laid off from his job in June 2008. Two years of steady unemployment later, he has sold his car, moved in with his 75-year-old father and blown through all his retirement savings to stay afloat. “I pay my bills with what is left of the savings I accumulated by being frugal all my life, but I’m going through that pretty fast,” he said. “I have tapped my IRA, and the result of that is I will be heavily taxed on it next April. I honestly believe that there will be no recovery from this. If there is a recovery, it will be too late for me, as I will have exhausted my savings and my retirement that I had socked away by not living the high life.” Stephens’ predicament is an increasingly common one. Aside from stagnant wages, soaring unemployment and plummeting home values, the major tragedy of this recession is the havoc it has wreaked on the retirement incomes of millions of Americans who have planned and saved their entire lives, only to watch that money drain out of their accounts much sooner than they anticipated. Retirement statistics are grim. The percentage of American workers who said they have less than $10,000 in savings grew to 43 percent in 2010, according to a recent survey by the Employee Benefit Research Institute. Nearly a quarter of the workforce said they have postponed their planned retirement in the past year and a CareerBuilder.com survey reports that 61 percent of workers say they are now living paycheck to paycheck, as compared to 43 percent in 2007. With rapidly dwindling savings and fewer opportunities for jobs than their younger counterparts, many older Americans are facing a very uncertain economic future. “This is the undiscussed explosive bomb in all this, is all the pension benefits, all the 401(k) money that’s been drained out by workers trying to stay afloat until they find a job,” Rep. Jim McDermott (D-Wisc.) told HuffPost. “There are a lot of people who, when this is over, are going to have nothing. They will have lost their house, they will have used all their pension money.” Many Americans seem to be losing hope. Only 16 percent of respondents to the EBRI survey expressed confidence in their ability to retire comfortably, the second lowest point in the 20-year history of the survey. Marguerite DiGaetano, 58, says she is confident that after two years of solid unemployment, despite having worked her whole life, she will never be able to retire. “I think the person who invents the cubicle where you can discreetly hang your walker where it doesn’t trip anybody, that person will be very popular with the baby boomers,” she said. “Who’s gonna be able to retire at 65? That’s only seven years away. Not me. I’ll be working until I die.” Arthur Delaney contributed to this report

Read the full article →

Liz Ryan: Ten Ways to Explain Why You Want to Change Jobs

July 30, 2010

Dear Liz, I’m job-hunting and I need to be able to tell people why I want to leave my job. I’ve gone as far as I can go in this organization and I’m also pay-limited, but I don’t think I want to say those two things exactly. Any advice? Thanks, Avery Dear Avery, It is fine to say “I had reached a plateau in that job” or “I felt that I’d grown as much as I ever would in that organization.” Here are ten more reasons for leaving a job, expressed in Don’t Say and Do Say versions: TEN REASONS FOR LEAVING A JOB: “DO SAY” AND “DON’T SAY” VERSIONS Don’t Say My boss is Lord Voldemort. Do Say I’m looking to work more independently in my next job, in a company that needs people who can figure out what to do and do it. Don’t Say I was underpaid. Do Say I wasn’t going to be able to grow in that job. Don’t Say I was overworked. Do Say I’m very big on looking at my work and figuring out smarter ways to do it. I’m pretty flexible for the most part, I think, but mindless scutwork drives me crazy, and I’m looking for an organization that is oriented to make things simpler and smarter all the time. Don’t Say I got passed over for a promotion. Do Say Some organizations look at a person and say “What can this person do?” and they have that person work on different things, whatever he or she is good at, regardless of what the job description says. Other organizations are ruled by their policies and job descriptions. I was in the second kind of company, and I’m looking for the first kind. Don’t Say I got laid off. Do Say The big strategic issue in the company over the past year has been, “Do we want to continue to sell to both resellers and consumers, or pick one?” and the ultimate decision was to support the resellers exclusively. That is probably the right decision, but it made client-service coordinators like me unnecessary, and so our group was downsized. The silver lining is that I learned a ton about both B2C and B2B client service in that job, and I’m looking to use that knowledge in my next assignment. Don’t Say I’m looking for something closer to home. Do Say The job was an hour from my house, which actually would have been fine if the challenge and the intellectual stimulation gave me something to mull over and strategize about while I was on the train, but what I found is that the job itself was rote enough that the two hours per day were all but wasted, brain-activity-wise. All that thinking time made it clear that I need a job where I’m more engaged, that will use more of my gray matter and let me do more important work for the company. Don’t Say The company is about to go under. Do Say What’s fun about moving through different organizations is that you get to see how industries work and how companies survive and thrive in their competitive landscapes. In that organization, I felt that the attention to product quality and customer service weren’t at the level that it would take to compete against our competitors, but the strategy was to stay at the entry-level end of the market, where sales volume has been eroding fast. It was an incredible learning experience for me, but the signs were clear that it was time for me to make a change. Don’t Say I had a bad performance review. Do Say The organization’s goals were to grow market share and launch new products, so it was a great fit from that standpoint. My manager was pretty consumed with a Salesforce.com implementation, and my job had little to do with that project, but was very important to our sales team and its VP. I worked closely with those folks and loved it, but I’m interested in Sales Operations rather than in having a sales territory, so I decided to find something less focused on IT and more targeted at creating leverage for the sales force. Don’t Say The politics in that place could choke a horse. Do Say I found that over the last year most of my time was going to non-essential, internal procedural and who-needs-to-approve-this type issues. I am sympathetic to the leadership team navigating some difficult terrain in the marketplace, but I needed to find an organization that’s focused on its opportunities and clients, and a job that’s about the future and what is possible. Don’t Say My job was billed as one thing and turned out to be another. Do Say I took the job for the opportunity to work with a group of contract trainers around the globe — two of my favorite things, virtual teams and international work! As the company shifted to working with agencies rather than individual trainers, my work became more clerical, related to contract terms with those agencies, and was a waste of brainpower both for the company and for me — my strong suit is building teams, setting up processes to make the clerical stuff easy, and then keeping the remote teams happy, in the loop and looking forward. Cheers — Liz

Read the full article →

Michael Tasner: Five Guerrilla Marketing Weapons That Helped Increase My Business Without Spending Any Money

July 28, 2010

The end of 2009 and into 2010 was proving to be a very difficult year for my company, Taz Solutions, Inc. a web marketing, strategy, PR and design firm. I discovered that the old ways of doing business were just not working in the “new economy. ” I was used to charging $5000 or more a month on retainer without anyone batting an eye as they saw the massive value we provided. This, however, seemed to turn overnight. $5000 a month turned into $3000 which turned into $2000. Rather than simply lowering the prices, I knew I needed to think outside the box. I decided to turn to the most well known marketing brand in history — Guerrilla Marketing. I’ve been familiar with Guerrilla Marketing for years, but I had never really fully utilized its power. The whole essence behind Guerrilla Marketing is using time, energy and imagination rather then money, which was simply perfect as I was strapped for cash! Instead of just reading some more of the materials, I decided to take some massive action — I fly out to Orlando and spent several days with Jay Conrad Levinson to become a Guerrilla Marketing Master Trainer. They were so impressed with my style and commitment, they made me the Chief Marketing Officer for their whole company! Check them out! When I started delving deeper into the concepts of Guerrilla Marketing, I found that there were over 200 Guerrilla Marketing weapons that I could put into action. Rather then test out all 200, I tested about 30 of them. The following are my top five favorites that produced the best return. 1) Designated Guerrilla To keep our strategies organized and streamlined, I decided to make one person at my company the designated guerrilla. This person was responsible for the marketing calendar, and making sure that the Guerrilla Marketing weapons we were putting into place were being done correctly and tracked to the nth degree. 2) Extra Value I’ve never been a fan of dropping prices, especially since I never compete on price. Therefore, in order to make sure we started winning more deals, we began increasing the amount of value provided for clients. Here are some examples of what our clients now receive: a client-only event once a year (educational in nature), access to our training portal, and even a virtual assistant for ten hours a week at no cost. 3) Testimonials I had testimonials all over the place, but I wasn’t leveraging them. I also discovered that using video testimonials, as opposed to just text, worked much better. Rather then just letting the testimonials sit dormant on the web site; I integrated them into the marketing materials as well as the sales process. This took the social proof factor up to a whole new level. 4) Authoring a Book A book is the best possible business card you can ever have. It took a lot more work than I expected, but the results have proven to be invaluable. 5) Free Public Talks My favorite Guerrilla Marketing weapon is free public talks. I contacted various chamber of commerce organizations as well as some local business groups and offered to come and speak on various topics relating to web marketing, monetizing social media and web 3.0 marketing. They were thrilled because they were used to paying speakers, and I was happy because I was able to practice education-based marketing and contribute to the local business community. I did not even have to “pitch” my business to the crowd, which would have been a little tacky. People simply came up to me afterwards asking for my business card. If you’re looking to generate some business without spending a lot of money, Guerrilla Marketing has worked wonders for me and my businesses. © 2010 Michael Tasner, author of Marketing in the Moment: The Practical Guide to Using Web 3.0 Marketing to Reach Your Customers First

Read the full article →

Video: Mizuho’s Antos Says Bank of China Shares Are `Good Bet’: Video

July 26, 2010

July 27 (Bloomberg) — Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., talks with Bloomberg’s Haslinda Amin about his investment strategy for Chinese banks. Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation’s regulator. About half of all loans need to be serviced by secondary sources including guarantors because the ventures can’t generate sufficient revenue, the person said, declining to be identified because the information is confidential. (Source: Bloomberg)

Read the full article →

Fred Whelan and Gladys Stone: Bad Things to Say in an Interview

July 26, 2010

We’ve all been in a position where we wished we could take back what we said. In the case of an interview, the implications are huge in that saying the wrong thing could eliminate you as a candidate. Having conducted literally thousands of interviews, we’ve come up with a list of things to avoid saying: Didn’t think you’d ask me that – If it’s on your resume, be prepared to discuss it. Many candidates make the mistake of thinking they won’t be asked about a certain experience – either because it’s old or not as relevant as other things on their resume. Before I answer that… – This is perhaps one of the most frustrating things to hear if you’re an interviewer. You’ve asked a question and instead of answering it, the candidate wants to tell you something, either as a preamble to the answer or something entirely unrelated. Both are mistakes. Here’s my philosophy – If you’re asked about your philosophy, then it’s perfectly fine to give it. What we see too much of are candidates who focus on generalities and their philosophy rather than speaking about their specific experience. People get hired because of the experience they’ve had, not their views on how things should be done. After all, the best predictor of future behavior (and accomplishments) is what has happened in the past. Always talk specifics. I’m a big picture person – There isn’t a strategic position out there that doesn’t require some level of “doing”. Being a big picture person is important, but letting the interviewer know how you implemented that strategic vision is key to them envisioning you in the new role. My boss and I never got along – It’s impossible for someone to get along with everyone, but when you are discussing your relationship with a previous boss, it’s never wise to discuss whatever negatives passed between the two of you. If you and your boss had different styles of working, you can talk about how you turned those differences into a positive. Let me tell you one more thing – When the interviewer thanks you for your time, the interview has ended. Many candidates make the mistake of believing that they have a few more minutes to discuss some things that they want the interviewer to know. Recognize that when the interviewer brings the interview to a close, it’s your cue to shake their hand and thank them for their time. No more selling after the handshake. I did this and I did that – The lack of “we” in your answers can hurt your candidacy. What interviewers like to hear is how candidates are able to work collaboratively with other areas of the organization. The ability to draw the best efforts from others when they are working on your project will mark you as a team player. No project succeeds on the efforts of just one person and to imply that you were the only reason for its success will work against your candidacy. Do you think I’m right for this job? – By asking this question you put the person on the spot, particularly if they do not believe you are the best candidate. Most interviewers like to collect their thoughts after an interview and mentally review the answers they heard over the course of an hour or so. Give the interviewer the courtesy of time to reflect on the interview and perhaps meet with others on the interview team to come to a conclusion. Who am I up against? – While you may be curious about your competition, it is never appropriate to ask the interviewer this question. Anyone interviewing for a new job has the right to confidentiality. What’s the compensation? – If you are interviewing for just about any position, there will be a salary range within which your salary could lie. Don’t ask this question of the interviewer because s/he probably does not know at that point if you are going to be offered the position, let alone what compensation you might be offered. Impress the interviewer, become their #1 choice for the position and then you can deal with the compensation question. The best way to impress an interviewer is by knowing what to say and what not to say. You can’t unring a bell. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

Read the full article →

Donna Flagg: How to Train Employees for Less

July 23, 2010

Flickr // garethjmsaunders It’s easy to think of training as a seminar or workshop where employees are sent into a classroom-style session while a trainer stands in front of a room showing/explaining a series of PowerPoint slides. But there are many other ways to think about developing employees and their skills without adding costs and draining resources. Especially during these tough times, when training is considered a luxury — not a necessity — companies are finding themselves looking for creative alternatives to train “on the cheap,” or cut it altogether. The problem with totally eliminating training is that there is also a price to be paid when employees are unable to continue learning and growing because then their organizations can’t either. So… One of the first things that can be done is to trim the fat off existing training, (assuming any exists). To do this, you simply ask yourself, “What do our employees need to either know or do in order to be effective in their jobs?” Then, give them whatever information they need to either “know or do” along with a chance to process that information which involves some type of interactivity that shows evidence of either cognitive or behavioral learning. This will shave hours of wasted time and superfluous content off your training efforts and also make for far more targeted, relevant learning. But in addition you can create… Learning Plans: These put a little organization and structure around how employees can learn on the job. They are a combination of formal and informal activities that uses experience inside and outside the workplace to create opportunities to learn and avenues to apply that learning to work. Learning Teams: These are groups of people who learn together. They can choose a book to read and discuss. They can take turns teaching each other what they know. Or, they can simply have group discussions to talk about ways they can improve their jobs and subsequent contribution to the business and/or organization. And also, you can take advantage of implementing “training” through… Mentoring: Here you have learning by advisement, role modeling and the experience of another person through the use of one-on-one relationships. Management: And finally, a constant stream of feedback, both corrective and reinforcing, is one of the best ways to develop people and one of the most underutilized. I go back to teachers/coaches who develop artists and athletes all the time. Without a clear and balanced understanding of what they are doing wrong and right, employees (like athletes and artists) are unlikely to improve. That’s not good for the business or the people in it. So, give one or all of these a try and keeping the learning going in your organization – for less.

Read the full article →

Rosalia Gitau: Nuhu Ribadu Returns to Nigeria: So what?

July 20, 2010

I am speaking with an executive of a multi-national company with offices in Nigeria and I bring up the fact that Nuhu Ribadu, Nigeria’s informally exiled anti-corruption czar has returned to his position as head of the Economic and Financial Crimes Commission. He all but responded, “Nu, who?” and he wasn’t alone. I spoke with other similarly positioned executives whose responses likewise echoed a lack of enthusiasm. Anti-corruption campaigners around the world could not stop talking about Nuhu’s return. It was considered a victory, albeit it a small one, in the global war against corruption: one of its famed foot soldiers was being allowed to return to the battlefield, the narrative went. The fact that it perhaps did not send equally thunderous applause through the business community is telling. Are corruption czars ineffective in tackling corruption? Or does the anti-corruption movement expect too much of them whereas private actors rightly curb their enthusiasm? The answers is: a little bit of both. Corruption czars do not effectively tackle corruption because they only target half of the corruption problem. In all corruption transactions there exists a supply side and a demand side. The private side is said to be the ‘supplier’ of the bribe and the public side is the ‘demander’ of the bribe. The majority of anti-corruption efforts for the past 20 years, has focused mainly on the ‘demand’ side, i.e. going after corrupt government officials with police powers of investigation and prosecution. Nuhu Ribadu’s former role in Nigeria was in line with the traditional school of anti-corruption enforcement. The problem with this methodology, however, is that it only targets half of the problem: while certain government employees are pursued viciously (and sometimes for political reasons), private actors seem less fearful of such persecution as indicated by the response I received from all some Nigeria-based executives. Recent efforts by both national and international governments are moving to change this but such progress takes time. Whilst the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are doing all they can to target the supply-side of corruption by enforcing the Foreign Corrupt Practices, companies know that the reach of the FCPA can only go so far. The DOJ and SEC do not have the resources nor jurisdictional capacity to pursue all businesses engaged in bribery around the world. If the supply side of the corruption problem does not notice the return of one of Africa’s most notable corruption czars, perhaps such roles are not as effective as the anti-corruption movement would like us to think, and rightfully so. No corruption czar should be so powerful as to send shock through government and the business community alike by his or her mere presence — that’s a dictator’s job. Moreover, resting the hopes of a billion dollar movement on one person is too detrimental both to the movement and the person. The movement’s progress is put at risk when entrusting its ambitions to the faculties of one man. Corruption czars have not fared well in Africa, or the world over. If they are lucky, they will be exiled from their country under threat of death and be given an appointment at a Western university or think-tank; Mr. Ribadu was one of these lucky few. The unlucky ones end up six feet under or fade into obscurity as political and social untouchables. Nuhu Ribadu undoubtedly deserves a hero’s return. He has sacrificed himself and his family for his work and a greater cause. However, we all need to support his efforts by getting involved. We, as consumers, have the power to affect change with our purchases, I contend. Corporate Responsibility Magazine puts out an annual list of the best corporate citizens; conversely it has just published a black list of companies that lack the requisite transparency for laudation. Human Rights Watch also has a list of the best corporate citizens and the worse. The information exists for consumers to make conscious choices about their purchases vis-à-vis the corruption agenda. Do you think your next purchase will be a corruption-free purchase?

Read the full article →

Danny Schechter: The "War" On Wall Street May Be Over: Who Won?

July 19, 2010

By Danny Schechter Author of The Crime Of Our Time An unusual word crept into the lexicon of the New York Times op-ed page, the arbiter of approved thought in the age of economic collapse. The new conservative columnist Ross Douthat dusted off a key phrase associated with Marxism, “class war.” Of course, as you would expect, Karl was spinning again in his resting place at London’s Highgate cemetery by the Timesman’s spin. But in a country where, officially at least, the only classes are found in schools, the very idea of class war is not something you read about every day, even if the person writing about it is certainly on the wrong side. In fact, the current “war on Wall Street” seems all but over even before the President signs the financial “reform” bill. We have seen very few criminal prosecutions coming out of Obamaland. The recent settlement with Goldman Sachs was limited to one transaction, and quite affordable for the bank that’s been called a “vampire squid on the face of humanity.” Their shares went up when the slimy deal was done, and in any event, that $550 million they paid just represented 15 days of profit taking. This “war” had been notched up by the passage of laws that offended the sensibilities and modestly threatened the bottom lines of mega companies that rely on government as an enabler of their profitability, not an obstacle to it. Already the big health care companies are coming up with new “affordable” plans that limit benefits and choice despite the Administration’s promises when it was passed. The banks are slithering around the financial regulations with their usual fear campaigns, now pressing international regulators in Basel Switzerland to give them ten years to satisfy proposed new requirements, The New York Times reports “Wall Street is already working around the new regulations,” and “the ink is not even dry on the new rules, and the already, the bankers are a step ahead of everyone else.” The newspaper of record characterized the bill as a plumbing operation, “a catalog of repairs and additions to the rusted infrastructure of a regulatory system that has failed to keep up with the expanding scope and complexity of modern finance.” (Huh?) Weren’t they coping with the aftereffects of a deliberate scheme to deregulate and decriminalize a marketplace in the name of “modernization” and “innovation?” The Wall Street Journal explains: “The legislation empowers 10 regulatory agencies with the ability to write new rules governing all aspects of the financial industry — from the types of trades banks can conduct to the standards for mortgages, credit cards, and ATM fees. Many of these decisions will be made by regulators, and this has lawmakers on both the right and the left worried: Those on the right worry about government overreach, while those on the left worry about regulators becoming cozy with lobbyists. Indeed, the banking industry has been reaching out to regulators for months, and JP Morgan Chase has more than 100 teams studying the legislation.” When they say “studying” the legislation, they don’t mean studying in any academic sense. They mean figuring out how to game it, undercut it undermine it and sabotage it, for starters, by imposing new fees and restructuring to evade the law. They are masters of playing this game. So far they spent an estimated $600 million fighting the bill so they have a big investment in assuring a business climate they can dominate’ Economist Gerald Epstein told Real News. “It’s like a world cup game where one team only has a goalie with his hands tied.” While Republicans drool about the prospects of taking back the Congress and repealing laws they don’t like, Wall Street is hardly out of the picture. They have cut back on donations to Democrats while industry groups like the Chamber of Congress mount a major campaign to defend fat cats. Their lobbyists are in the trenches diluting what they can, revising what they must. James Kwak of Baseline Scenario thinks the bill was better than nothing, but adds, “it’s still a missed opportunity. And over the next couple years, as regulators (lobbyists) write the rules necessary to implement the bill, we’ll find out if anything really has changed.” What’s your guess? Leave it to Bill Gross, a top bond salesman to tell the Wall Street Journal bluntly, “Wall Street still owns Washington.” What do other majordomos on the Street think about the bill? Former Republican Treasury Secretary and bailout king Henry Paulson supported it. Most of the opposition comes from demagogues characterizing it as a Soviet-style “takeover.” Please! Lenin would have laughed at this watered down half-measure. And what about prosecutions? Goldman Sachs agreed to a settlement in just one transaction, a civil, not criminal action, while not admitting guilt. The Republicans on the SEC were against going after Goldman, natch, although it appears that Goldman was singled out not only because it was a symbol of public disgust with Wall Street but because it could afford to play the role of evil symbol. That play may have closed. A Times headline on Saturday gave that away: “Goldman Was Regulators First Prize and It May Be the Last.” Wall Street veteran Larry Chin asked, “Are we to think that the Goldman Abacus-CDO transaction is the only ABS-backed CDO that employed improper marketing? Do not be so naive. In fact, if Goldman employed improper marketing in one deal, are we to believe they did not do the same in many others? Do you ever find just one mouse? (Emphasis mine.) The Goldman Abacus deal was a $2 billion transaction. A sizable transaction, correct? Yes and no. We truly need to look at the Abacus deal in terms of the overall ABS-CDO market. How big was that market? Slightly more than $1 trillion in ABS-CDOs were underwritten by Wall Street from the beginning of 2006 until the market froze in early 2008 That seems like too much money to mess with. And that’s not all. Goldman has yet to be held accountable for many of other dangerous investment practices. A new report in Harper’s examines the role Goldman played in escalating the food crisis of 2008 when the ranks of the world’s hungry increased by 250 million. While the government doesn’t appear to have the fortitude to clean up more crime on Wall Street, the Supreme Court is trying to insure that prosecutors will not have the tools they need to jail wrong doers if and when they do. The Washington Post reports, “A Supreme Court ruling last month that gutted an anti-corruption tool favored by federal prosecutors is jeopardizing high-profile investigations into politicians and business executives…” So there you go, Wall Street has wriggled off the hook with a little help from their friends, and is winning the new “class war.” 2.1 million Americans — that’s the new number — can’t even get unemployment benefits extended. Why are no anti-war activists talking about stopping this war and “withdrawing” from Wall Street? The political environment seems grim, not only for Obama, but for all progressive change. That moment may have passed. This does not mean the public is not angry, only that’s its anger is deliberately being channeled by our media in a false direction, into bashing deficits and Dems, not the men in the shadows who are calling the shots. Let’s realize: The financial “spill” is just as devastating as the oil spill. And it has yet to be contained. So if you want to “fight the power,” the time for organizing and educating is here, with a vengeance. Don’t let it slip away. News Dissector Danny Schechter made the DVD “Plunder the Crime of our Time,” a film on the financial crisis as a crime story, now showing on LINK TV, (Plunderthecrimeofourtime.com) Comments to dissector@mediachannel.org

Read the full article →

Halsey Minor: Why I Fight

July 15, 2010

CHARLOTTESVILLE, Va. — Here in the shadow of Monticello, I often wonder what Thomas Jefferson would think of today’s America, a nation that is rapidly but silently abandoning the individual in favor of faceless corporations, rapacious banks and a collusive, unresponsive government. The Founding Father who envisioned a republic built on the unalienable rights of “life, liberty and the pursuit of happiness” would be sickened at how the very institutions built to protect average citizens from repression have instead become weapons of the rich, the powerful, and mostly the corporate. Whole branches of government have become enablers and enforcers for the corporations and banks that created the economic crisis out of greed and irresponsibility and now are exploiting the mess they themselves created to tighten their grip on America. Big bailouts of Merrill Lynch, Bank of America and AIG get the press attention. Far more corrosive are thousands of unpublicized, self-dealing transactions overseen by bureaucrats following laws written by a pliant Congress and enforced by lifetime-tenured judges trained to believe in the bank over the debtor. A prime example of how the common good is subverted can literally be seen from the gardens of Monticello. Prior to the financial crisis, I was building a hotel in my hometown of Charlottesville. As its own balance sheet faltered, Silverton Bank, the Atlanta-based institution funding the project reneged on its commitment to finance and simply cut off funding. I sued the bank; the bank sued me. Within two months, Silverton was taken over by the Federal Deposit Insurance Corp. in the largest bank failure in Georgia history. I am sure you would expect that the FDIC’s priority would be to maximize the value of the asset for the public by working with me to wrap up the problem caused by the failed bank. We could have put more than 100 people back to work, injected millions of dollars into the Charlottesville economy and finished a half-built structure that now stands as a nine-story testament to hard times. Instead, Chairman Sheila Bair’s FDIC did nothing of the sort. The FDIC accused me of defaulting on the loan, but unlike the actions banks usually take in a default, they did not foreclose. I thought that was extremely odd — until I learned that the loan had been split up among eight banks and as long as there was no foreclosure the banks could say the loans were “good.” In other words, the banks can say the loan is good even though the project is a see-through concrete-and-steel skeleton that has sat idle for more than a year. How fitting, then, that the person overseeing my project for the FDIC is Claire Cotter, a former employee at Ameriquest, which established a fund to settle accusations that it had engaged in unlawful mortgage lending practices during the real estate boom. When Cotter’s bank went belly up, she joined the FDIC knowing the ropes. She immediately went to work to protect the balance sheets of the eight lending banks by wasting millions of taxpayer dollars continuing to fight Silverton’s misguided legal battle, all so these banks don’t have write down my loan. (I’ve already won arbitration against the bank’s developer on the project; I face the FDIC in October.) Between the government and me, roughly $10 million already has been spent in legal fees on a dispute over a $10.3 million loan. Ridiculous, I know; so why do I fight? The simple answer is that someone must or we will emerge from this recession with wealth and power concentrated in a few tiny financial institutions representing a new ruling elite, not unlike the one that inspired Jefferson’s generation to revolution. The same day I heard Bank of America pledge to pay back its taxpayer-funded loan from the government my babysitter told me the interest rate on her Bank of America credit card doubled — from 14% to 28%. When the FDIC carves up the assets of failed banks, it cuts incredible deals with other financial institutions — offering loans for pennies on the dollar and even guaranteeing future losses. So banks bailed out because they were too big to fail get bigger as they swallow the portfolios of those smaller banks the government decides are expendable. And they are aided in this bulking up by the so-called regulators, who can clear pesky obstacles (formerly known as bank customers and clients) by just legally dismissing their claims or offering up threats of litigation funded by a bottomless federal purse. Countless projects like mine, with countless jobs attached, feeding countless people are considered collateral damage, if they are considered at all. Every time I called Claire Cotter, the FDIC official overseeing my project’s failed lender, to discuss a solution she told me to talk to her lawyer and hung up the phone on me. Litigation is expensive and very few people have the money necessary to fight a bank, let alone the federal government. That’s what they count on. Forget the notion of equal access to justice. A minor dispute can easily cost half a million dollars to try, not counting appeals which big companies and the government always take. Even then, it’s the individual who bears all of the personal risk: lose, and the court can seize possessions; win, and face the prospect of a draining appeal. That’s why small businesses have watched helplessly as their credit lines are unilaterally slashed or capriciously revoked, leaving them without the flexibility they need to hire or expand or order fresh inventory. Most can do almost nothing beyond cycling through the push-button responses on the customer service line and hope that things change. The first step toward that change is for people to know what their government is doing with their money in their name. When people hear terms like FDIC “financial protection,” they should understand that it doesn’t necessarily refer to their financial protection but to the banks that hold their mortgage or their credit card. All that FDIC sign in the bank means is that if the banks really screw it up, you and I will pay ourselves back. FDR would be appalled by the FDIC, created in 1933 and designed to help people. Americans are rightly suspicious of moneymen, and not just in the last few years. Jefferson himself once said “that banking institutions are more dangerous to our liberties than standing armies.” When it exists to support businesses and create jobs and fund innovation, finance is integral to a modern economy. But when finance becomes an end in itself and morphs from tool to master, it’s easy to imagine Jefferson’s fear realized in a system that deprives “the people of all property until their children wake up homeless on the continent their fathers conquered.”

Read the full article →

Bill Singer: Wall Street Reform: $5 Worth of No Substitutions

July 14, 2010

My wife and I were having lunch at a local diner and saw the above sign on the wall at the end of our table. She read it. I read it. She laughed. I laughed. Given that we’re both lawyers, we wound up spending much of the meal trying to figure out just exactly what the hell the restaurant meant to say. Okay, so maybe not the stuff of Jackson Browne’s Lawyers in Love but at least Lawyers at Lunch. Figuring that no one would believe me, I took a photo of the sign with my cellphone. I now offer Exhibit 1 for the Prosecution. I am a long-time critic of the tortured language that lawmakers employ when they draft regulations for Wall Street, or, for the matter, for virtually all laws by which we are governed. As best I can tell, the formula is to start off with bold slogans that are calculated to achieve sound-bite status in the media. Then the politico contacts all those in favor of the proposition and sees how much money they will donate to the upcoming re-election campaign or a somewhat shady non-profit organization. Then that same elected official contacts all those who oppose the proposition and determines how much these folks will donate to the same campaign or non-profit. Cash register politics! Next, the representative of the people takes out a calculator and adds up the total for the deposits from the pro’s versus the deposits from the con’s — of course, let’s not get silly here, it’s not as if so much as one cent is going to be returned to either side. Everything makes its way onto the deposit slip. You got your principles and then you got principal that earns interest. No point in confusing the two. After your bank deposits are cleared and you determine on which side your bread is best buttered, you make a choice. With your personal telethon completed, you either continue pressing forward with your original proposition, or, with the benefit of some persuasive bucks to the contrary, you suddenly tone things down. In fact, depending upon how well-financed the opposition appears, you may even have an amazing, religious-like conversion and suddently realize that your adversaries have some good points. And to prove your sincere change of heart, you might stand in front of the mirror, just before you call a press conference, and practice the various pained looks and oratorical skills that will convey your honest-to-goodness about face. I mean, geez, once you can fake sincerity, you have it made. At some point, when the phone lines are quiet and the flow of checks is a mere dribble, our elected officials tell us that we’re going to get a new law, a change for the better, reform — and it’s going to have teeth, and with a bite, and, you know, this time, seriously, no kiddin’, things are gonna be different. At first blush, the proposed law looks good, and if you weigh law by the pound, well, this one has heft. However, what we get for a law is so eviscerated with exemptions, exceptions and elastic language that it is nearly incomprehensible. You can read it but you can’t explain it to anyone, and you don’t really understand it. At best, it’s indecipherable garbage. Alas, we now arrive back to the sign that my wife found so hilarious at the local diner. ” $5 Minimum Per Person At Tables ,” is a straight-forward proposition. You want a seat at a table, then you have to spend at least $5. But that’s not all the language on the sign. Someone couldn’t leave well enough alone. They had to clarify it — add a few more words as a flourish and finishing touch. It’s akin to the handiwork at which the back-room, under-the-table, dirty-dealing politicians excel. It’s copywriting legerdemain. ” No Substitutions Please .” What exactly can’t you “substitute?” No substitution for the $5 minimum ? How exactly would I even attempt such a prohibited act? No substitution for the “per person” at the table ? Meaning what? If Jack and Jill sit down at the table and each orders at least $5, then Jill can’t get up before the order arrives and allow Joan to take her seat? No substitutions “at tables” ? Does that mean that I can’t switch my table for another one in the restaurant or that once I sit down and order from station 3 that I can’t move my party to station 4? Of course, since I’m ever the lawyer, what happens if I order the $15 lunch special and my wife orders only a $2 cup of coffee? Does that pro-rate out to $8.50 per person at the table, or have I illegally substituted in violation of the posted policy? If my wife isn’t hungry and I want a $6 hamburger, a $3 soda, and $3 slice of pie, can I order the hamburger for me; the soda and pie for my wife — but after it’s served, can I simply drink my wife’s beverage and eat her dessert? Otto Von Bismarck said that “Laws are like sausages, it is better not to see them being made.” Thankfully, the Iron Chancellor never sat down in a local diner for lunch. Of course, if he did, he would have had to order at least $5 without substitutions.

Read the full article →

Ron Ashkenas: How to Succeed When Everyone Is in Charge

July 13, 2010

Cross-posted from Harvard Business Online Do you have more than one boss? Reporting to multiple managers is actually a pretty common phenomenon, even though many of us still retain the image (or perhaps the fantasy) of the traditional hierarchy with a single wise senior executive sitting at the top. The reality, however, is that most organizations today have more than one chain of command, and to be successful you need to navigate between them. There are at least three variations of what we might call “multiarchies” (multiple hierarchies), and each requires different strategies. The first type is the professional multiarchy in which different professional groups have parallel hierarchies with little or no connection at the top of the organization. Hospitals are the classic example. Physicians report up through their specialties and then loosely to a medical chief of staff; nurses are ultimately accountable to the senior vice president of nursing; non-medical specialists heed to their department heads; and everyone else is part of the “administration,” which is run by the hospital president. While the hospital president is officially the CEO in this set-up, his or her power over the other hierarchies is limited. Universities and research organizations operate in much the same way; as do many government agencies which have parallel civil service, political, and professional hierarchies. A key management strategy for succeeding in these organizations is to build temporary alignment on specific issues between groups and individuals that often have different longer-term goals (e.g. research vs. patient care vs. teaching vs. publishing vs. funding). The second type of multiarchy is the matrix , which is present to some degree in most businesses. The matrix is a crisscross of business units and functions (portrayed as verticals and horizontals). The idea is that a functional specialist such as a finance professional will directly support a business unit but simultaneously adhere to the standards, programs, and priorities of the corporate finance organization. In essence the finance person has two bosses — the business leader and the company CFO. In some cases there are even more than two bosses (for example, a country or regional leader). The good thing about a matrix is that, at least theoretically, it provides checks and balances so that local (business unit) and global (corporate) issues are weighed against one another. It also provides broader professional development and career paths for functional specialists. The challenge is that often the different sides of the matrix don’t agree and the person in the middle (with more than one boss) feels compelled to choose sides. A key management strategy for these types of issues is to constantly work on clarifying decision rights so that when conflicts arise it is clear who has the final call. The third type of multiarchy is the temporary project team . In these situations people are “loaned” from their home organization and report to a project manager for a period of time. If the arrangement is part-time, then project team members are challenged to juggle their time and priorities to meet both the project requirements and the goals of their regular job. If it’s a full-time arrangement, the challenge is to make sure that there is indeed a home to come back to when the project is completed. A key management strategy for these situations is to establish the groundrules for the assignment ahead of time — how much time will be involved, what relief from other assignments will be given, what happens when the project is completed? Asking these questions and getting agreement from both the project manager and your boss is critical for making these arrangements work. Most people in organizations today live in multiarchies of some form and have to deal with multiple bosses. Assuming that these different bosses will all get together and figure things out for how you should operate in this complex world is probably not going to happen. To do well, you’ll have to take the initiative yourself. What’s your experience with multiarchies?

Read the full article →

Jack Myers: Ten Rules for Improved Response to E-Mails and Invitations

July 13, 2010

Republished from Jack Myers Media Business Report-4/12/10 Are your e-mails being ignored and phones calls not returned? Are you inviting clients to your events, parties and presentations and not receiving the simple courtesy of a response… not even a simple “no thank you?” Here are my Ten Rules for Improved Response to E-Mails and Invitations — ideas to improve the effectiveness of your communications and generate increased response to your e-mails and invitations. 1. Get to the point immediately. Include a clear message in the e-mail subject line and get immediately to the point in the first line of your message. Don’t beat around the bush or include extraneous background and introductory information. 2. Assume your message is being filtered by an assistant. Explain why your message is important and relevant. Assume the person reading it does not know you, does not know your company, and is responsible for deleting your message rather than passing it along. Incorporate an issue or opportunity of clear importance to your target and make a compelling case for its relevance. 3. Ask for a response. In Outlook, under “View” and “Message Options,” you can “Request a delivery receipt for this message,” and “Request a read receipt for this message.” While most people simply ignore these requests, you are inserting one more step into the process and sending a small warning signal to assistants and others before they delete or simply ignore an e-mail message. You’re also increasing the odds that you’ll at least know if your message has been received and opened. Additionally, if you receive no response, it provides an excuse to send a follow-up e-mail pointing out your first message was apparently never received. 4. Communicate simultaneously through multiple outlets. If you send an e-mail, reach out simultaneously through LinkedIn and Facebook, if available. Use those supplemental media to reinforce that you’ve sent an e-mail invitation or request to their standard e-mail address and are taking the liberty of also reaching out through their Facebook and/or LinkedIn because you know they are inundated and want to be sure they see your message. Reserve this strategy for important messages and communications. 5. Use Facebook, LinkedIn and Plaxo Outreach If your targets are registered in one or more of the social networks, reach out and invite them to become a friend/contact. While your invitation might be ignored or rejected, it’s one more way to register your interest in a relationship and one more opportunity to communicate. Always include a personal message with your request, explaining your connection and why you are extending an invitation. 6. Use a Cause Related Connection By doing a Google or Bing search on your target, and reading available bios and social media profiles, you can often identify a charity, organization or cause that your target supports. Within your message, incorporate an offer to make a contribution to the organization as “thank you” for their support, for joining you at an event, and/or for sharing their feedback. 7. Find a common connection. If you can identify a common friend or colleague, use that connection to facilitate an introduction. Reach out to mutual associates, explain your interest and request, and ask them to make an introduction or give you permission to use their name in your e-mail. Never use a common connection unless you have permission and know the relationship means something to your target. If you have their permission, use your colleague’s name in the subject line and explain the connection in the first line of the e-mail and why you reached out for an introduction. Always copy your colleague. 8. Impose Responsibility It’s okay to occasionally impose some guilt and let your targets (and especially their assistants) know that you’ve been asked by your boss – or have some form of responsibility — to reach out to them. Ask your target to accept responsibility for what is basically doing their job by learning about an opportunity or offer. Ask them to acknowledge with a response that they at least know of your company’s interest in a relationship. “I’ve been asked by my boss, so and so, to reach out to you and arrange a meeting so we can introduce you to our new service that has been designed especially with you and your company in mind. My performance is being judged in part by my success in arranging a meeting and ultimately delivering to you a service that I believe will be valuable to your company. I know your success is also determined in part by identifying valuable new resources and I’m very confident our meeting will be worthwhile. Can we please schedule a meeting in the next 60-days or, if not, please advise me how to best communicate with someone within your company who can review our proposal. It’s important to me to develop a relationship with (company) and I’d appreciate your feedback.” When you employ this strategy, copy your boss. 9. Copy your target’s boss. If you are not having success breaking through the clutter and capturing the attention of your target, copy their boss. There are many tactics for generating a response and this one needs to be used judiciously and cautiously. In some instances, the message can be sent to the boss and copied to your target, or sent to both. Here’s an example that’s targeted to Robin Young through her boss Anne. “Dear Anne. I’m reaching out to invite you and/or your colleague, Robin Young, to join us for a special private luncheon and meeting with our CEO.” The outreach can be followed up with a phone call to Anne’s office that should either result in a meeting with Anne (best case scenario) or result in a directive from Anne’s office to contact Robin directly. This then empowers you to follow up with Robin’s office and to get through the assistant’s blockade by using the boss’ imprimatur. 10. Use snail mail If you have an important invitation, question or opportunity, send a personal letter – even hand written. If handwritten, use a printed personalized message card. Assuming it’s a “typed” letter, use formal business design with your company logo and appropriate salutations. It’s good to include “From the desk of (name).” Because snail mail letters are often from charitable organizations or are direct mail pieces, accelerate the “snail” mail to “absolutely has to get attention mail” by sending it via Federal Express or UPS. Either fold the letter and place it inside an addressed envelope, ideally marked “Personal,” or place the letter unfolded in the envelope. If you’re sending an invitation, it’s often a good idea to include a stamped response card that requires minimal RSVP effort. If you’re a seller, more than 80% of your business communications typically results in no response. You need to resort to extraordinary measures to break through the clutter and increase the odds of a positive response – or any response. The above ideas and recommendations can help. Share your ideas, experiences and recommendations by commenting at http://www.jackmyers.com/commentary/jackmyers-think-tank/98245919.html . To communicate with or to be contacted by the executives and/or companies mentioned in this column, please email your information and the column headline to Jack directly at jm@jackmyers.com . This post originally appeared at JackMyers.com.

Read the full article →

Caroline Dowd-Higgins: Take Control of Your Job Interview Success

July 12, 2010

Job searching in this economy is more difficult than ever so if you land an interview, you want to be in control of your performance. Winging it is not advisable even for a very seasoned extemporaneous speaker. Spend some time practicing and speak your message out loud with a trusted advisor or alone in front of a mirror to give yourself a competitive edge. Videotaping your mock interview is the ultimate practice opportunity and allows you to see and hear where you need to improve. Keep in mind that some who conduct interviews are not well trained, so it’s up to you to drive your proverbial career car and deliver the message you want to be heard. No matter what questions they do or don’t ask, you can adeptly insert your points about why you will be a value-add to the organization. Here are some guidelines to help you ace the interview and leave a lasting positive impression. • Dress the Part. Bottom line, appearance counts. A Harvard Business School study found that the decision not to hire comes within the first few seconds of an interview which means the first judgment happens before you even open your mouth. Do your research on the organization and find out what the dress code is at work then dress a notch above that for the interview. Err on the side of conservatism with wardrobe. You can dress like your future colleagues when you get the job, but during the interview it’s better to play it safe. • Own Your Self Confidence. Exuding your humble confidence will put the interviewer at ease and help you establish rapport right off the bat. Carry yourself with poise, give a firm hand shake, and make eye contact with your interviewer. Don’t forget to smile (You want the job, don’t you!) and keep your energy level up throughout the entire session. • Show Authentic Enthusiasm . Employers want to know why you want the job. Show an honest interest in the company and the job opportunity. With the research you conducted pre-interview, you should be able to explain why you want the job and more importantly, why you will be a good fit. In a tie-breaker situation when 2 candidates are neck-in-neck regarding skills and experience, the person who exhibits enthusiasm will always win. Apathy does not play well in a job interview. • Behave Honorably. Never badmouth a former employer, even if you are led on by the interviewer. Always speak positively about past or current jobs and avoid the temptation to vent if you were laid off. You are never truly off the record and being positive and practicing discretion will always play in your favor. With 6 degrees of separation, your former boss just might know your future boss so play nice in the interview sandbox. • Do Your Research . With resources like LinkedIn, you can find answers to many of your questions before the interview. Consider conducting informational interviews in advance to learn about the culture of the organization from professionals on the inside. This will also score you points with the search committee showing that you took the time to really learn about the company beyond the job posting and the website. • Know Your Special Sauce . Be ready to articulate what distinguishes you for this opportunity. Back up your skills with specific examples and develop stories about your strengths. A great interviewer engages the listener by telling stories and not repeating canned answers. While strengths are very important, don’t be caught off guard by the weakness question. Be honest about what you find challenging so your interviewer knows you have humility but keep the focus on skills and not behavioral issues when discussing a weakness. • Mind Your Manners. Be gracious and polite to everyone you meet and plan to arrive 10 minutes early so you can breathe and focus before the interview. Keep your comments positive and your jokes rated-G. Turn off your cell phone and observe proper etiquette if you are invited to drinks or a meal after the interview. Send hand-written thank you notes to everyone you with whom you interviewed. A group note or email is a cop-out but writing a personal note is a dying art and will distinguish you favorably. If your interviewer doesn’t ask you key questions to let you showcase your skills and competencies for the position, take the opportunity to share this information before you go. You have the power to steer the conversation if you do it respectfully. Consider a practice scenario with a disengaged interviewer so you can be at your best in any situation. The interview is the ultimate opportunity for you to articulate why you are an excellent match for a job. Take the time to practice so you are ready for a variety of tricky interview situations. This dress rehearsal is well worth the investment for a grand performance when the time comes for the real interview. Practice does make perfect! Caroline Dowd-Higgins pens a career transition blog called “This Is Not the Career I Ordered” ( www.notthecareeriordered.com ). She is also the Director of Career & Professional Development at Indiana University Maurer School of Law.

Read the full article →

Fred Whelan and Gladys Stone: How to Find Out If the Company’s Culture Is Right for You

July 9, 2010

You’re looking for your next career opportunity and have made a list of the “must haves”. One thing you know for sure is that you don’t want to work in a bureaucratic or political environment. Been there and done that. The problem is how are you going to find out in an interview whether the culture is right for you or not? One of the mistakes candidates often make is to ask general questions about the company, job, people, etc. They may ask, “Is this a bureaucratic environment?” and get relieved to hear that it’s not. Only to take the job and find out it is! They asked the question but wonder why they didn’t get the real picture. The key is to ask specific questions that will give you the details. Asking broad questions leads to subjective answers. Here’s what to ask to find out if the culture is right for you: What kinds of people (personality traits, working style, etc.) typically succeed at your company? Listen carefully to the responses that are given. If the person tells you that people who “burn the midnight oil” are successful, or that they like to joke that “if you don’t come in on Saturday, don’t bother coming in on Monday”, you’ll know that this environment is one in which putting in a lot of hours is the norm and expected. If you are trying to find balance in your life between work and personal, this should be a red flag for you. Some organizations value people who win at all costs. As long as the deal gets done, they don’t care about the process or if people were alienated along the way. Ideally, the types of people who succeed are those who develop their teams, deliver results and work collaboratively. Which department is the most influential? This will tell you what drives the company. If you’re in marketing and you hear engineering, you might find this a frustrating environment. Dig a little deeper and ask from what department the CEO came from. If s/he came from the finance department, that may be a clue as to where the emphasis is for the company. Similarly, if the CEO came from marketing or manufacturing, that may be an indication of the perspective they would take on growing the company. How are conflicts resolved? This is a very important question to ask, because it gets at the heart of how a company runs and the culture it fosters. Preferably things are resolved between parties and then escalated if needed. If, however, the response you are given indicates that there are ongoing powers struggles between departments and that the battles are fought with the intent of determining which department is stronger (versus doing what is best for the company), be aware that you may be stepping into a volatile environment. And if you don’t like frequent conflict, better stay away from this company! How are ideas presented? Companies are always looking for good ideas. Is there a forum for presenting ideas, or is it less formal? How do ideas from all levels get funneled through the organization? In some companies formal written recommendations/ideas are channeled up through the organization, with modifications and changes being made by various people in senior management as the document works its way to the CEO. Ultimately, that recommendation may be presented to the CEO by the EVP, even though the idea came from a lower level management (or non-management) person. In other companies, an idea may be presented directly to the CEO from whoever came up with the idea, and it may be presented verbally without all the analysis having been completed. Which format are you more comfortable with? How are decisions made? Some companies are command and control. All decisions are made at the top and get pushed down to middle management. Other companies are consensus driven, which means decisions can drag out in the process of getting everyone to agree. Other companies empower people at multiple levels to make decisions that affect their area. During the course of your interviews, ferret out how decisions are made and ask about how the smaller decisions are made versus the larger, more strategic ones. This will be an indication of whether top management sets the strategy and then lets lower level management make the tactical decisions or whether all decisions are made through top management. Be honest with yourself about the type and style of company management you are most comfortable working in. How does the company deal with people who are not performing? Do they try to work with that individual to help them raise their performance to an acceptable level or do they very quickly attempt to weed out the underperformers and transition them out of the company? Or, do they try and determine what skills the person has and then find another place for them in the organization? This is an important element of a company’s culture, as it gets at the heart of how they view the individual and the success of the company. Are you the type of manager who wants to work with an underperforming employee and try to bring them “up to speed” or are you more comfortable cutting your losses more quickly and transitioning that person out of the company? How your interviewers respond to this question will provide excellent insight into the culture of the company. As recruiters, we know that the cultural fit for a candidate with a company is critical to long term success. Candidates and companies owe it to themselves to do their due diligence on the issue of cultural compatibility during the interview process. It’s worth the effort! Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

Read the full article →

Donna Flagg: Getting Respect in Management

July 7, 2010

I’ve seen it a lot and must say, I find it odd — ineffective managers struggling with the frustration of not being able to get their employees to perform the way they want them to and further, not knowing what to do about it. I can recall having conversations with my own direct reports over the years inquiring as to why things weren’t getting done or moving forward. They, in turn would complain that their staffers just didn’t give them the respect they “deserved.” It was such a distorted answer, and I got it all the time. For some reason, there was (and still is) an implicit assumption that because one person was “over” another, the “higher” person would automatically be treated with unconditional, unwavering deference. Maybe that was true during the agricultural and industrial ages, but even then, it wasn’t respect, it was control and those days are gone. In order to be effective, managers need to see the difference between deserving respect and earning it, because motivating someone has nothing to do with position and title, but rather how one behaves — period. That said, for managers who want respect, remember that it does not automatically come with the job. It’s the person, not the position that people admire. And it’s behavior, not title that impresses them to act. Consistency: You must be consistent. You can’t show one “face” to one group or level in the organization and another to the people who report to you. It screams “two-faced,” which quickly turns to lack of trust for anyone who witnesses it. Without trust, people will not feel safe working for you. As a result, you’ll get little from them and more likely, nothing at all. Fairness : Don’t play favorites. You must apply the same rules to everyone and give people the benefit of the doubt — equally. Freedom: Respect begets respect and trust begets trust. If you want people to trust and respect you, you must trust and respect them first. If you try to control people, they will resist your very presence. Healthy productive people don’t like to be constrained by someone who needs to exercise a false sense of power. So the next time you wonder why people aren’t listening to you, ask yourself what you’ve done lately to engage their attention. The belief that people should do something simply because “you’re the boss and you said so,” is just not enough.

Read the full article →

Dave Johnson: Too Old For A Job, Too Young For Medicare Or Social Security

July 7, 2010

This post originally appeared at Campaign for America’s Future (CAF) at OurFuture.org . I am a Fellow with CAF. Tell us your own story in the comments, please! Here is a fact: There. Are. No. Jobs. I’m in Silicon Valley where the official unemployment rate dipped in May to 11.2%. This dip was, of course, because of so many people just giving up trying to get a job, certainly not because of some wave of hiring. The under employed figure, known as “U-6,” is 21.7% in California , 16.7% nationally. You have to know someone to get a humiliating job standing on a corner waving a sign. And if you are over 40, things are even worse than that . Don’t give me any conservative Rush Limbaugh-Ayn Rand dehumanizing nonsense about parasitic lazy people who won’t look — there are no jobs. I know so many people here who are over 40, were laid off in the 2000-era dot com crash, still haven’t found a regular job and aren’t going to. They have had occasional “contract” positions–which means no benefits, no security, a 15% “self-employment” tax and no unemployment check when the job ends. And now, 10 years later they’re a lot over 40 and are not going to find a job because so many employers here won’t hire people over 40. And now there are so many more who lost their jobs in the mass layoffs of 2008-2009 and can’t find a job. So many of them are also over 40. In fact, many were laid off in obvious purges of over-40 workers, offered a small severance that they could only receive if they promised to take no age-discrimination action against the employer. (I don’t say “company” because some of these worked at nonprofits.) Most of these people will not find another job, but are too young for Medicare and Social Security. One Person’s Story I ran into a friend this weekend who I hadn’t seen for a couple of years. He had been a computer engineer who had been making 6 figures in the dot-com years. Laid off in the 2000 crash, he moved in with his parents back in the Midwest and worked in a bakery. He came back out here when things picked up a bit and worked in one “contract” job after another. (Contracting is just a scam to get around employment laws–but the government doesn’t enforce the rules.) But now he just can’t find anything. He managed to get unemployment but now that is running out. He has no health insurance. He can’t afford a place to live; he “house sits” for people or visits friends, and doesn’t know what he is going to do even two days from now. What is he going to do? Can you tell me? He has gotten a few interviews, and when they are computer-related is always told he is way overqualified, doesn’t seem energetic, probably won’t be willing to work 20 hours a day, doesn’t look like he is up to date on things that are happening with computers, etc. (How many ways can you say “too old?”) He’s about 45. If things pick up he will get another job. But people just a few years older will not. Blatant Age Discrimination Age discrimination is a thing with me because it is so blatant here. It’s the culture here, some even say that for programmers it is “35 and out.” At various times looking for work I’ve been told I “seemed tired” and things like that. I was even told once that I wouldn’t be able to market some software because I “wouldn’t be able to get my mind around” how it worked– when I had designed and written part of it in a previous life. One company here is said to have only 200 over-40 employees out of 20,000. But it certainly is not a problem that only exists in Silicon Valley. Tell your own story in the comments, please, get this discussion going! What are people supposed to do? You can’t get Medicare until you are 65, and Social Security until 67. But it’s near-impossible to get a job or health insurance if you are over 50. I wonder what the effect would be if the government started again enforcing its own rules on age discrimination and contracting. Among other things Congress needs to get things going by passing the George Miller “Local Jobs for America Act .” Sign up here for the CAF daily summary .

Read the full article →

China’s AgBank IPO Raises $19.2 Billion In Possibly The Biggest IPO Ever

July 6, 2010

NEW YORK – The Agricultural Bank of China’s initial public offering has raised more than $19 billion in what could turn out to be the largest IPO ever. The last of China’s big four state-owned banks to go public, AgBank is selling 25.41 billion shares in Hong Kong and 22.24 billion shares in Shanghai. Based on Tuesday’s pricing, the rural lender would raise about $19.23 billion, according to a person familiar with the deal. The person requested anonymity because details of the IPO have not yet been released. If underwriters buy up about $2.89 billion more shares to sell to investors, the dual-listing deal could raise $22.12 billion – the most funds ever for an IPO. Industrial and Commercial Bank of China raised $21.9 billion in its October 2006 IPO. Original forecasts had put AgBank’s proceeds at a whopping $30 billion. But investors appeared unprepared to pay that much for shares in a bank whose profitability is viewed as weaker than its urban-focused competitors. Mainland Chinese shares have slumped in recent weeks on worries that the huge IPO may overwhelm demand, pulling prices lower. The global IPO market also has suffered this summer as stock markets tumbled around the world and uncertainty over the economic recovery increased. In Hong Kong, shares priced for HK$3.20 each (41 cents), the midpoint of the expected range, the person said. In Shanghai, shares priced for 2.68 yuan (40 cents), the top of the expected range, the person added. Proceeds would total HK$81.31 billion ($10.44 billion) in Hong Kong and 59.58 billion yuan ($8.79 billion) in Shanghai. The bank said in its Hong Kong prospectus that major foreign investors in the Hong Kong offering include Qatar Investment Authority ($2.8 billion), Kuwait Investment Authority ($800 million), Britain’s Standard Chartered Bank ($500 million), Dutch bank Radobank Nederland ($250 million), Australia’s Seven Group Holdings Ltd. ($250 million) and Singapore’s Temasek Holdings ($200 million).

Read the full article →

Brett King: Compliance and Social Media – Friends or Foes?

July 6, 2010

A consistent theme keeps popping up as I discuss social media innovations with bankers these days. It is increasingly frustrating for innovators who want to use mobile, social media, the web and other such tools to get these past hyper-risk-adverse compliance specialists. It seems as if many of the banker’s I’m meeting are saying that the favorite word of the compliance officer of today is simply “No”. That needs to change… Compliance holding up social media adoption In a recent American Banker’s Association survey they reported that 74% of participating banks confirmed that all ‘social media efforts were to be vetted by compliance first’. In an environment where minutes matter, and the response is key, such a logjam to social media participation is a frustrating mismatch with the realities of dealing with customers in todays uber-connected world. On Sunday I enjoyed brunch with Matt Dooley who heads up Direct Customer Experience for HSBC’s Commercial team in Asia, and his wife Maria Sit who runs Heath Wallace’s Asia division. Over lunch the issue of culture, compliance, philosophy and the reluctance to experiment to broadly with social media, mobile engagement and other such issues came up. Matt used a brilliant illustration to identify the problematic compliance hurdles we face today as bank innovators. He asked me whether or not a compliance department of a major financial institution would approve “snail mail” as a new initiative if it was proposed today? Let me explain. If snail mail did not exist today, what would your average compliance officer think if you came along and explained you wanted to use this great new technology for distribution of bank material like statements, new credit cards, PIN #’s, etc. You’d have your PowerPoint deck ready to go explain the process where you stuff an envelope, hand it on to someone you don’t know in the bank (likely a very junior staff member), he then puts it in a bag which is picked up by a truck with another person you don’t know, they take it to a large warehouse and sort it according to Geography, etc, etc… There just ain’t no way that snail mail would make it through the compliance check list of today’s modern financial institution. The compliance officers would no doubt quote scenarios like this to justify why it would be absolutely impossible for the bank to consider using this new ‘snail mail’ technology. This is the dilemma. Today there are those of us trying to improve customer experience, knowing full well that compliance departments are citing risk mitigation, regulations and laws, bank policy and procedures, and other such issues as reasons why innovators can’t release a new mobile app, engage in social media conversations in real-time with customers, and so forth. In the meantime, there are existing processes, procedures and systems that are far more riskier than things like social media, but they are immune to the compliance department’s gaze because they are already in place. Is it riskier to do nothing? Let’s take Twitter as an example. Today it’s rudimentary to do a Twitter search on major FI brands to see topics trending that in the old days if they were carried by mainstream media would turn a banker’s hair on end. In many cases, however, such interactions are simply ignored because there are no dedicated resources listening and responding to such social media conversations. The processes internally around getting compliance approval for a formal response simply make any such response useless by the time it is approved. But aren’t social media free form responses risky? Take for example the very public Twitter faux pas recently committed by a Westpac employee who stated “Oh so very over it today…”. Honestly, this is probably about the worst that it could get on Twitter – and it just isn’t that bad. I hear Compliance departments the world over rejoicing and justifying their stance at the next Social Media strategy review meetings – saying, ‘See, see – we told you so!”. The reality is, that this particular faux pas actually ended up humanizing the Westpac team and probably won them new supporters more than anything else… It is far more likely that a serious breach of customer trust, a poor service or policy decision, or some other very public social media trending topic could do far worse brand damage if left unanswered out in the social media conversation. Classic examples are those of Ann Minch with Bank of America and Citibank with the Fabulis debacle . In observing the Facebook and Twitter effect of such PR nightmares, the lack of timely response by the bank across the social media landscape made these issues far more impactful and damaging than they needed to be. So the real risk is in not responding quickly enough. The reality is that banks are increasingly likely to face a major PR disaster and have it escalated more rapidly than they can every imagine through social media networks. Take the example of BP and the recent Gulf Oil Spill – their lack of maturity in handling PR issues over social media has absolutely punished their brand . The spill is bad enough, but BP’s response to the social media conversation has simply made it much worse than it had to be. No amount of brand advertising and traditional PR can ever undo the sort of reputation damage that is possible to your brand in the social media landscape. Compliance as an enabler Compliance needs to understand the negative risk of increasing workload on the frontline in respect of customer service perception, and decreasing the ability of the organization to respond to social media events in real time. They need to start thinking about their function as an enabler of the core business with customers, rather than just risk mitigation. They can also be lobbying regulators to help regulators adapt and make their processes more user-friendly, while retaining security of identity and the assets of the customer. Customer experience is being hampered by compliance heavy processes that look to reduce risk, but make the engagement unnecessarily complex. Translating the Terms and Conditions from a paper application form onto the first 7 pages of a web-based application process might seem legally sound, but is quite ridiculous from a Usability and Customer Experience perspective. Compliance departments need to learn to stop saying no, and be embedded within social media, customer advocacy and customer experience teams so they understand the implications of ‘risk’ and ‘legal’ decisions that actually hamper the organizations ability to respond to customer needs.

Read the full article →

Nelson Davis: Feeding the Hungry

July 1, 2010

This is a subject that has been written about for thousands of years. For starters, the Bible has many references to feeding the poor and less fortunate as a fundamental way of demonstrating our humanity. The drive to my Hollywood office on a recent morning brought a new perspective on the subject for me. I don’t often think of a California freeway as a temple of enlightenment and insight, but I’ll accept it whenever it comes. While exiting the Santa Monica Freeway I was greeted by the all too familiar sight of an able bodied young man standing at the ramp’s edge holding a cardboard sign. Regardless of the actual wording of the sign, he did deliver on the stereotype by asking for a cash contribution to help him “get something to eat.” With a smile and a “not this time” I drove on. However just around the corner and fifty feet up the street was another young man standing on the median next to a bucket of flowers and he was holding a bouquet in his hand which was for sale. It dawned on me that both people were in effect asking to be fed but with two different approaches. So, I asked myself why one man was begging for money while the other was being entrepreneurial and offering something of tangible value in exchange for a few dollars. In that set of circumstances my actions are often guided by the old phrase “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” Though many people think that comes from the Bible, it is actually a Chinese proverb. In my opinion giving a person money to buy a meal is simply doing them a favor while teaching them to use their abilities to earn money is really teaching one of life’s most valuable lessons. Which one leaves you with a better feeling long after the moment has passed? Personally I’m most fond of the people who want to learn to fish. I believe that self reliance can be taught and learned. Our non-profit corporation The Making It Institute for the Advancement of Business ( www.MakingItInstitute.org ) recently produced a live event that brought together a group of accomplished small business superstars with newer business owners who are hungry to learn how to grow their enterprises. I’m a strong believer that the best way to learn is to learn from the best and that knowledge equals freedom. Our criteria for being a superstar business owner was that you had to have started with very little money and built the business to an annual gross of $10 million or more. There was a wonderful surprise when I invited a diverse group of entrepreneurs to give of their time and share knowledge with ambitious growing business owners. They all responded with an enthusiastic yes! Their impressive businesses range from sales of about $20 million to $750 million. There were no get rich quick stories, no shortcuts to success, and no quick fixes for problems. They nourished the attendees with the truthful real life business experiences that their successes were built on. What the superstar entrepreneurs said was like water to a parched desert plant as the attendees perked up, took a lot of notes and applauded the speakers. That entrepreneurial spirit and thinking can change lives and I’ve seen it happen. Some years ago I sat with a Los Angeles grandmother who lived in the Jordan Downs housing project, a pretty tough area. She had been accepting welfare assistance for years but had decided that kind of charity didn’t match with the image she had of herself. She was hungry for something better. There was a lot of emotion as she told me of how she’d taken a bus to the wholesale district downtown and found an importer who would sell her athletic socks at wholesale prices. Back in the housing project, she went door to door selling packages of the socks! That was indeed the beginning of an important change in her life, self reliance and freedom from the drug of welfare money. Heralded government programs such as “The War on Poverty” didn’t change her life, but starting her own micro-business did. One of the reasons that I’m totally devoted to promoting the entrepreneurial spirit in America today is that I see a great hunger in people across the country who want to learn how to transform their lives in successful ways. That yearning that I observe goes far beyond just tallying up dollars. People want to feel good by bringing principled leadership to their business and family lives. They want to feel hopeful and the kind of real security that comes from self reliance and freedom of choice. Part of the general anger we have with most politicians these days and with some mega business CEOs is the absence of principles and values driven leadership. Our group of superstar small business owners got to their special place by embracing those principles along with their persistent pursuit of a personal vision. Thinking of those two men standing at the Crenshaw Boulevard exit of the Santa Monica freeway, I wonder about the self images that each carries around with himself. Obviously they were both hungry for something because you generally don’t work street corners unless you are truly motivated. Did the person holding the cardboard sign see himself as a helpless beggar or as a victim of societal influences? When someone told him that he couldn’t succeed, did he begin to believe it? Why did he lose a sense of hope? Was the man waving a bouquet of flowers holding onto an inner vision of building a much larger business by learning to hustle no matter how humble the enterprise? Who convinced him that selling flowers on the street was an opportunity and potential pathway to a better life? Since I know that our inner picture of ourselves drives our outer actions, my goal is to help people see their true personal potential through our Making It! television program and the work of the Making It Institute. Food for the soul and human spirit is perhaps the hardest meal to find, consume and fully digest. I believe that entrepreneurial thinking is the plate on which that meal is well served. Everyone has dreams and yearnings that can be turned into goals to be passionately pursued. When we as a nation learn how to care for and feed that hunger, we become truly unstoppable.

Read the full article →

Liz Ryan: How Deep a Salary Markdown for Changing Industries?

July 1, 2010

Dear Liz, I am an inch away from a job offer with a good company but in an industry I haven’t worked in before. My feeling is that they’re going to offer me the job at a pretty big drop in salary from what they were talking about paying the person they selected, with the excuse that it’s a new industry for me. I want to be in a position to counter that argument if I get the offer as I expect to. How do I explain away my zero experience in the industry to negotiate a better salary? Thanks, Geri Dear Geri, Hurrah! I am so happy for you. Here’s the thing: they’re going to hire the best person they can find for the job, right? Why would they hire someone they didn’t believe was qualified? You can open up the salary conversation with some discussion about just who’s getting the job offer: BOSS: So, Geri, we’re very excited to offer you the Procurement job. YOU: That’s outstanding. I’m very eager to get started. Thanks so much, Ron. Can you please fill me in on the details? RON: Sure, the title is Senior Procurement Manager and the salary is $64,000 to start, with three weeks vacation and our other benefits. YOU: Thanks very much, Ron. I’m so pleased that you see me as the right person for the role. RON: Yes, indeed. So you’re accepting? YOU: I’m thrilled to be having this conversation, that’s for sure. The job sounds like a great fit and a really fun challenge. We’re a ways apart on salary. Is this a good time to talk about that? RON: Well — you know, you’ve got so many skills and we are all very impressed with you, but you don’t have any experience at all in our industry. I couldn’t justify the $70K base we talked about when I told the committee you’ve been in banking for almost all of your career. YOU: Thanks for letting me know, Ron. I can see the difficulty. The thing is, I would really wary of taking a job where there seemed to be other candidates who were more qualified. RON: I didn’t say that. We all thought you should get the job. YOU: Oh gosh, thanks for letting me know that, Ron! In that case, I’m a bit confused. Did you say everyone in the selection group thought I was the best candidate? RON: Yes, we did for sure, except you don’t have any experience in our industry. YOU: So I’m thinking that you had other candidates who did have industry experience – you must have had, right? RON: We did, but we all wanted you in the job. YOU: Thanks! You know Ron, I’m so grateful for this conversation, but I am very nervous about taking a job where the hiring managers didn’t feel that I could do the job as well as someone who had all the industry experience in the world. That is, if I can do the job and I’m the person you selected, I’m trying to understand why the offer wouldn’t be at the same level as your, well, dream candidate. I mean it would be hard for me to take the job with the sense that I had a provisional green light – you see what I’m saying? RON: Er — yeah. I’ll talk to Boris, our CFO, tomorrow and get back to you. I’m not saying it will play out exactly this way, Geri! But you see the idea. If you’re the guy (“guy” being a unisex term) for the job, then you’re the guy. You get the salary the guy woulda gotten if they woulda hired the guy. Or da guy. With all the industry experience in the world. You see what I’m sayin? Bada bing, bada boom. Cheers, Liz

Read the full article →

Fred Whelan and Gladys Stone: Interview Your Potential Boss Without Blowing It

June 30, 2010

Your old boss is gone and there’s someone in the conference room who could be your next boss. Later that day, you are scheduled for a one-hour interview with him or her and you’re nervous about how it will go. Yes, technically you’re interviewing them, but in a very real sense they’re sizing you up. It’s important that you get your questions answered, but also important to make a good impression. Here’s what to find out: Their Style – What is their management style? Do they like to give the overall objective and then let their employee get it done, or do they like to give very specific direction on how to do things? Do they have weekly one-on-ones? How do they help the team to work more effectively together? These questions are all excellent vehicles for ferreting out the work style and personality of your potential boss. How They Develop People – The key to your success may very well depend on how your new boss grows people and to what extent they enjoy this part of the job. Ask them for an example of how they typically help people grow. Things you want to hear are that they have a track record of giving stretch assignments, raising people’s visibility through high profile projects, attendance at key meetings, presentations to senior management and committee appointments. Also look for a boss who enjoys coaching and mentoring and who typically sends their employees to seminars, training programs and events to further their careers. Let them know what area you need to grow in and ask how they can help you. Their Best Employee – Ask them who their best employee was and why. This will be your roadmap to success with this person. Listen carefully because this will tell you what they expect from you. For example if they highlight someone on their team who consistently delivered results, but don’t mention the importance of the process when getting those results, that may mean results trump everything else. Conversely, if they describe someone whose product failed, but their processes were right, this will tell you that s/he defines success more broadly. Succession Planning – Most people are looking to advance their careers. Given this, it’s important to ask your potential boss what criteria they use for choosing their successor. If they’re looking for someone who is eager to take on some of their responsibilities, this would be good for you to know. Ask them what they do to help people get promoted. How They Set Goals – Part of your boss’s job will be to establish your goals. Ask them how they generally do this. What is the thought process behind setting goals? Do they start out with goals that people will likely achieve in order to build confidence? Are they the type that just takes last year’s number and bumps it up 10%? That might indicate they are not as creative as they could be. Do they set goals mutually with the employee? If the answer is yes, that’s good news for you as you’ll have input on how you will be measured. Are they flexible – changing the goals when the situation warrants? This is another question you’d like to hear them answer “yes” to. Keep Things Positive – When answering questions about how you feel about your job, the people you work for and the company as a whole, focus on the positives. If there is a negative you feel should be mentioned, position it as an area of opportunity. After all, the company you work for is a decent place to work or else you wouldn’t be there. Sometimes the mere thought of interviewing your potential boss can make your stomach churn. It may help to remember that you both have the same goal: to make a good impression and to find out if you’d work well together. Use the time you have to best advantage by focusing on what’s most important to you. Your potential boss will appreciate your preparation and you’ll walk away feeling like you have a good sense of how they would be to work for. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

Read the full article →

Fred Whelan and Gladys Stone: Interview Your Potential Boss Without Blowing It

June 30, 2010

Your old boss is gone and there’s someone in the conference room who could be your next boss. Later that day, you are scheduled for a one-hour interview with him or her and you’re nervous about how it will go. Yes, technically you’re interviewing them, but in a very real sense they’re sizing you up. It’s important that you get your questions answered, but also important to make a good impression. Here’s what to find out: Their Style – What is their management style? Do they like to give the overall objective and then let their employee get it done, or do they like to give very specific direction on how to do things? Do they have weekly one-on-ones? How do they help the team to work more effectively together? These questions are all excellent vehicles for ferreting out the work style and personality of your potential boss. How They Develop People – The key to your success may very well depend on how your new boss grows people and to what extent they enjoy this part of the job. Ask them for an example of how they typically help people grow. Things you want to hear are that they have a track record of giving stretch assignments, raising people’s visibility through high profile projects, attendance at key meetings, presentations to senior management and committee appointments. Also look for a boss who enjoys coaching and mentoring and who typically sends their employees to seminars, training programs and events to further their careers. Let them know what area you need to grow in and ask how they can help you. Their Best Employee – Ask them who their best employee was and why. This will be your roadmap to success with this person. Listen carefully because this will tell you what they expect from you. For example if they highlight someone on their team who consistently delivered results, but don’t mention the importance of the process when getting those results, that may mean results trump everything else. Conversely, if they describe someone whose product failed, but their processes were right, this will tell you that s/he defines success more broadly. Succession Planning – Most people are looking to advance their careers. Given this, it’s important to ask your potential boss what criteria they use for choosing their successor. If they’re looking for someone who is eager to take on some of their responsibilities, this would be good for you to know. Ask them what they do to help people get promoted. How They Set Goals – Part of your boss’s job will be to establish your goals. Ask them how they generally do this. What is the thought process behind setting goals? Do they start out with goals that people will likely achieve in order to build confidence? Are they the type that just takes last year’s number and bumps it up 10%? That might indicate they are not as creative as they could be. Do they set goals mutually with the employee? If the answer is yes, that’s good news for you as you’ll have input on how you will be measured. Are they flexible – changing the goals when the situation warrants? This is another question you’d like to hear them answer “yes” to. Keep Things Positive – When answering questions about how you feel about your job, the people you work for and the company as a whole, focus on the positives. If there is a negative you feel should be mentioned, position it as an area of opportunity. After all, the company you work for is a decent place to work or else you wouldn’t be there. Sometimes the mere thought of interviewing your potential boss can make your stomach churn. It may help to remember that you both have the same goal: to make a good impression and to find out if you’d work well together. Use the time you have to best advantage by focusing on what’s most important to you. Your potential boss will appreciate your preparation and you’ll walk away feeling like you have a good sense of how they would be to work for. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

Read the full article →

Penny Herscher: When "Sealing the Deal" Doesn’t Involve a Beer

June 28, 2010

We all sell, all the time, and there are endless jokes and ads about how knowledge of the person you are selling to (whatever you may be selling) can help you seal the deal. Everyone’s been there — figuring out the likes and dislikes of someone we want to impress before we meet them, researching a professor’s political position before writing a paper — and for a sales person in the Internet age it’s time to know about each customer before we pick up the phone and call. Here’s the objective — when you pick up the phone to talk to a customer (whether you are a business owner or a sales person) you must be talking to the customer about THEIR business. The days of calling up and hawking your wares down the phone are gone. If you don’t immediately make your conversation about them it’s a) rude, b) dumb, and c) unacceptable when you and they both know plenty of information about their business is available on the web. It would be like walking up to someone you find attractive in a bar and talking about yourself (sadly, this does happen). So before you pick up the phone to hawk your wares to a prospect — ask yourself: What is the thing you are going to talk to them about that is about them, not about you? Have you done a quick review of: Their customers — what major changes in their customer base could be creating opportunity or risk for them — maybe one of their large customers is divesting a division, or has been bought, or is experiencing rapid growth in one of their business lines? Their competitors — are there any recent contract wins and losses which change their market, any new product introductions your customer may be having to react to that you could help with? Their financial results — how are they doing — growing or contracting — how can your offerings help with their growth, do you need to work with your customer on their contract pricing or more favorable terms? Any management turnover — have executives or middle managers changed jobs, joined or left your customer and does it affect the person you are about to call? The industry they are in — what are the major developments impacting them — maybe litigation, or a new standard being approved, or changes in regulations and grants creating opportunities for new business? If you have, then you probably have something interesting to say. If not, you are in danger of talking about you, not about them. Good sales people know this — but time is the enemy. But now, in 2010 the great news is that most of the information you need is available on the web today — in blogs, industry sources, filings, local news and social media sites like LinkedIn. And the tools and technology are available to find the information for you immediately (no more lengthy searching) and present it to you in an easy to digest way. It’s worth the few extra minutes before each call to figure out what’s hot to help you be the guy (or gal) that not only seals the deal but beats quota and goes to president’s club.

Read the full article →

Bank of America Debt Sale Shows Contagion Ebbs Credit Markets

June 18, 2010

By Tim Catts June 18 (Bloomberg) — Bank of America Corp. , JPMorgan Chase & Co. and HSBC Holdings Plc raised $7.65 billion in the bond market as investors grow more confident Europe’s debt crisis will be contained, averting another credit freeze for lenders. Bank of America’s $3 billion offering was its first benchmark issue of dollar-denominated 10-year notes in a year, according to data compiled by Bloomberg. New York-based JPMorgan boosted its sale by 25 percent to $1.25 billion as relative yields on U.S. bank debt fell for a fourth day, the longest streak since March, while HSBC raised $3.4 billion in the biggest global issue of undated dollar notes since October 2008. The banks’ offerings come as Spain sold 3.5 billion euros ($4.3 billion) of bonds yesterday and announced a plan today to issue new 10-year notes via banks, easing concern the nation will struggle to finance looming debt maturities. Even as potential regulations loom, U.S. banks are taking advantage of “very attractive financing rates and a receptive marketplace,” said Wells Fargo Funds Management’s James Kochan . “There’s a lot less fear among investors than was true a week ago or a month ago,” said Kochan, who helps oversee $179 billion as chief fixed-income strategist for the firm in Menomonee Falls, Wisconsin. “Things are calming down a bit in world markets.” Deutsche Bank AG , Germany’s biggest bank, issued 1 billion euros of so-called lower Tier 2 bonds that were priced to yield 210 basis points, or 2.1 percentage points, over swaps, according to a banker involved in the deal. Credit Suisse Group AG added 550 million euros to its existing 4.75 percent bonds due August 2019, according to data compiled by Bloomberg. The additional notes yield 180 basis points more than similar- maturity German debt. HSBC Sale The 5.625 percent, 10-year issue from Charlotte, North Carolina-based Bank of America priced to yield 248 basis points more than Treasuries, Bloomberg data show. A benchmark offering is typically at least $500 million. JPMorgan’s 3.4 percent, five-year notes pay a spread of 145 basis points. HSBC, Europe’s largest bank, sold the perpetual securities that are callable after 5.5 years with a coupon of 8 percent today, at the lower end of the marketing range of 8 percent to 8.125 percent, according to a person with knowledge of the deal. The issue was the largest of its type since Credit Suisse sold $3.5 billion of 11 percent notes in October 2008, according to data compiled by Bloomberg. Ally Bank Elsewhere in credit markets, the extra yield investors demand to own corporate bonds instead of government debt fell 1 basis point to 197 basis points, Bank of America Merrill Lynch’s Global Broad Market Corporate Index shows. Yields averaged 4.068 percent. GMAC Inc.’s Ally Bank boosted the size of its offering of bonds backed by auto loans to $1.2 billion from $792.3 million, according to a person familiar with the transaction. The largest top-rated portion, a $448 million slice maturing in about 2.2 years, will yield 25 basis points more than the benchmark swap rate, said the person, who declined to be identified because the terms aren’t public. Benchmark indexes of corporate credit risk in the U.S. and Europe fell. The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 3.3 basis points to a mid-price of 110.25 basis points as of 12:06 p.m. in New York, the lowest since May 31, according to Markit Group Ltd. In London, the Markit iTraxx Europe Index of 125 companies with investment-grade ratings decreased 4.7 basis points to 117.4, Markit prices show, the lowest since May 18. Bondholder Protection The indexes typically fall as investor confidence improves and rise as it deteriorates. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt. Bank of America and JPMorgan’s offerings led $7.35 billion of U.S. corporate bond issuance, the busiest day since April 21, when $12.3 billion was sold, Bloomberg data show. That tally of straight bond sales doesn’t include HSBC’s perpetual notes issue. The offerings from the two largest U.S. banks by assets and Europe’s No. 1 lender follow a $750 million sale by Radnor, Pennsylvania-based Lincoln National Corp. on June 15 and a $1 billion offering June 16 from Prudential Financial Inc. of Newark, New Jersey. ‘Positive Tone’ “Both JPMorgan and Bank of America are coming on the back of a couple good days of a positive tone in the market,” said Brian Machan , a money manager at Aviva Investors North America in Des Moines, Iowa. “Seeing Prudential do well and Lincoln National come earlier this week set the precedent.” Spreads on financial company bonds fell to 277 basis points, the lowest in two weeks, according to Bank of America Merrill Lynch’s U.S. Corporates, Banks index. Relative yields reached 286 basis points on June 11, the highest since October. Banks are making the most of investor demand before regulatory changes that could reduce profitability, said Scott MacDonald , head of credit and economics research at Aladdin Capital Holdings LLC in Stamford, Connecticut, which oversees $12.5 billion. Congress is debating sweeping changes to financial regulations that may hamper bank profits after the collapse of the housing market caused the worst recession since the 1930s and the loss of more than 8 million U.S. jobs. ‘Floodgates Have Opened’ “The floodgates have opened and banks are taking advantage,” MacDonald said. “From a strategic standpoint, they’d rather come in ahead of the curve than play catch up.” Spain sold its debt at an average yield of 4.864 percent, less than the 5.04 percent its 10-year bonds traded at yesterday before the sale. Demand was 1.89 times the amount on offer. It also sold 479.2 million euros of 30-year debt at 5.908 percent, and the bid -to-cover ratio was 2.45, higher than the 1.38 at the previous sale on March 18. Spain’s finance ministry said today the government will sell bonds in the third quarter through a group of banks, without naming the managers of the issue. It also announced auctions of debt with maturities ranging from 2015 to 2041. “The strong demand for Spanish bonds should help restore confidence,” said Ciaran O’Hagan , fixed income strategist at Societe Generale in Paris. “The good demand was only possible after considerable cheapening of Spanish bonds over the past days.” To contact the reporter on this story: Tim Catts in New York at tcatts1@bloomberg.net

Read the full article →

Fred Whelan and Gladys Stone: What All Good Mentors Do

June 18, 2010

Most people we know have benefited from having a great mentor, someone who has helped accelerate their career. Because of that, they’re now in a position to be a mentor themselves. While companies encourage mentoring there’s often little guidance on how to do it well. Whether you are a novice or an experienced mentor, here is what all good mentors do: Set Goals – It’s important to set expectations around the relationship. Be clear as to what you can do for them and what you expect from them. They should have a defined goal that includes what they would like to accomplish in what time frame and a plan to make that happen. For example, a finance manager at a Fortune 500 company wanted to learn how to work better cross functionally. Her mentor gave her a number of suggestions on how she could achieve this. In addition, she made it a point to include her in a meeting with multiple departments so the finance manager could learn who the players were and what their perspectives were. The mentor made sure her goal tied to a long-term one. In this case, the finance manager wanted to be a general manager someday. Working cross functionally was key to achieving that goal. Have an Honest Interest in the Person – Sometimes people are arbitrarily assigned to a mentor. If the match isn’t a good one, lack of chemistry, etc, asked to be reassigned to a different mentee. It’s important to have a connection and care about your mentee’s success. Be Accessible – In addition to your formal meetings, let your mentee know that you are available between meetings, especially if they need your assistance in a pinch. This could be a quick call or email. The time you’ll be expending is minimal but the impact could be significant. Actively Look for Ways to Help Them – Maybe they would benefit from listening in on a call or meeting you’ll be attending. The relationship you have is a two-way street. Don’t wait for them to come to you. If you are aware of resources (e.g., seminars, training, etc.) that could be of help, be proactive and let them know about it. Talk Them Up – When you’re in meetings, let your peers and boss know how well your mentee is doing. That will help their visibility and ultimately their career. It will also help to increase their self-confidence knowing that key people in the organization are aware of their contributions. Mentoring is a great way to give back and can make all the difference in someone’s career. Useful advice at the right moment can provide the spark to help someone through a rough patch or deal with a major project which has key implications for a potential promotion. The wonderful aspect of mentoring is that it is the gift that rewards the giver as well as the receiver. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

Read the full article →

Global Stocks Extend 8-Day Gain Euro, Gold, Spanish Bonds Rise

June 17, 2010

By Michael P. Regan and Kelly Bit June 17 (Bloomberg) — Stocks rose, with the MSCI World Index extending its longest advance in 11 months, as a late-day rally in technology shares helped the U.S. market reverse an early drop. The euro gained as a Spanish bond sale eased concern the region’s debt crisis will worsen. Gold rallied. The Standard & Poor’s 500 Index climbed 0.1 percent to 1,116.04 at 4 p.m. in New York, reclaiming its advance for the year along with the Dow Jones Industrial Average. The MSCI World, a gauge of equities in 24 developed markets, increased 0.2 percent for an eighth straight gain. The euro strengthened 0.6 percent to almost $1.24, while gold futures rose 1.5 percent to $1,248.70 an ounce, approaching a record. Treasuries surged. Apple Inc. climbed to a record and paced the advance in technology shares that helped the S&P 500 recover from a 0.8 percent drop spurred by a lower-than-estimated reading in the Federal Reserve Bank of Philadelphia’s factory index and an unexpected jump in jobless claims. Spanish bonds rallied as the nation sold $4.3 billion in debt, the maximum set for the auction, bolstering optimism Europe’s crisis is contained. “Although the initial reaction to the claims numbers and the Philadelphia Fed number was a kneejerk negative, a little bit more thoughtful reflection on the numbers led to a more positive conclusion,” said Hugh Johnson, who oversees $1.85 billion as chairman of Albany, New York-based Johnson Illington. “When investors had a chance to digest and assess the news, they should have reached the conclusion that the economy continues to expand, albeit at a slow pace.” Apple Hits Record Apple rallied 1.7 percent to a record price of $271.87. The customer base for the iPhone may top 100 million users next year, with demand for the soon-to-be-released iPhone 4 helping to persuade more buyers to embrace the smartphone, Morgan Stanley said. First Solar Inc. jumped 3.9 percent to lead industrial shares higher after Credit Suisse Group AG advised buying the stock. The S&P 500 tumbled 14 percent from a 19-month high in April through June 7 amid concern Europe’s debt crisis and the worst oil spill in U.S. history will stifle the economic recovery. The index has risen 6.2 percent since and may extend its rebound to 12 percent, said Ralph Acampora, whose career as a technical analyst began in 1966. “The damage in price and the damage in psychology has set us up on a very short-term basis for a good recovery,” Acampora said. Technical analysts view pessimism as a sign that stocks may rise, because it indicates investors have capacity to buy shares after avoiding the market. 200-Day Moving Average The S&P 500 today remained above its 200-day average for a third day after sinking below it for about a month. Tomorrow’s expiration of stock options, coupled with the S&P’s quarterly index rebalancing on the same day, resulted “in massive technical noise today,” said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York. The late-day rally in stocks came after U.S. bond markets largely closed. Treasuries rose, pushing two-year yields to as low as 0.69 percent, after the increase in jobless claims and a drop in consumer prices spurred bets the Federal Reserve will keep interest rates low. The yield on the 10-year note fell 7 basis points, or 0.07 percentage point, to 3.19 percent. The Federal Reserve Bank of Philadelphia’s general economic index slid to a 10-month low of 8, less than half the median estimate in a Bloomberg survey of economists. Initial U.S. jobless claims rose to 472,000 last week, indicating firings remain elevated even as the economy recovers. The index of leading indicators, a gauge of the outlook for growth, climbed 0.4 percent in May, according to the Conference Board. Consumer prices decreased 0.2 percent in May, the government said. ‘Somewhat Concerning’ “The economic numbers are still somewhat concerning,” said Brett Hryb , part of a group that manages $2.6 billion at MFC Global Investment Management in Toronto. “We have a very long-tailed recovery as opposed to a V-shaped bounce back. The gain in Treasuries and gold fall into the flight to safety. Gold is the net beneficiary every time the market is unsure.” General Electric Co., through its finance arm, sold $850 million of bonds backed by credit-card payments, GE’s biggest such sale in nine months, according to a person familiar with the offering. The top-rated securities, maturing in about three years, yield 75 basis points more than the benchmark swap rate, said the person, who declined to be identified because the terms aren’t public. European Stocks The Stoxx Europe 600 Index rose 0.2 percent, paring a 0.7 percent rally. Spain sold 3.5 billion euros ($4.3 billion) of 10-year and 30-year bonds at yields lower than the prevailing market rates, attracting bids worth as much as 2.45 times the securities on offer, assuaging concern that it would face difficulty meeting bond repayments. Spain’s gauge of 35 stocks increased 0.7 percent. Spanish bonds rose, with the yield on the 10-year note falling from the highest level in almost two years. The yield dropped 11 basis points to 4.77 percent. The difference in yield, or spread, between German and Spanish 10-year government bonds narrowed 10 basis points to 211 basis points. Spain is trying to convince investors it can cut the euro- region’s third-largest deficit, while propping up the country’s savings banks and lifting the economy out of a two-year slump. Spain, which faces 24.7 billion euros of maturing debt in July, had seen the risk premium on its 10-year bonds rise to a decade high on concern it may need to tap a European rescue fund. Hayward Testifies BP Plc, battling to contain the worst oil spill in U.S. history, rallied 6.7 percent in London then lost 0.4 percent in New York. The shares have tumbled more than 45 percent on both exchanges since the April 20 explosion that triggered the spill. The company’s Chief Executive Officer Tony Hayward was denounced by U.S. lawmakers today for stonewalling as he failed to answer questions about the causes of the spill. BP scrapped dividends and pledged asset sales to meet President Barack Obama ’s demand for a $20 billion fund to help victims. The U.S. Chemical Safety and Hazard Investigation Board will look for the causes of the explosion, Chairman John Bresland said. The euro rose 0.6 percent to $1.2389 and earlier topped $1.24 for the first time in almost three weeks as Spain’s bond sale bolstered confidence in the currency. The dollar weakened against 13 of 16 major currencies, led by a 1.7 percent drop versus the Swiss franc. The Swiss franc approached an all-time high against the euro after the central bank softened its stance on fighting franc gains as deflation risks ease. The Swiss National Bank, which has been buying foreign currencies since March 2009 to counter the threat of deflation, said today that those risks have “largely disappeared.” Emerging Markets, Commodities The MSCI Emerging Markets Index rose 0.4 percent, climbing for an eighth day in the longest stretch of gains in two months. Benchmark indexes in Turkey, Indonesia, Egypt and Romania climbed at least 0.9 percent. Crude oil fell for the first time this week, slipping 1.1 percent to $76.79 a barrel. Copper futures for September delivery slid 8.95 cents, or 3 percent, to $2.924 a pound on the Comex in New York. The Reuters/Jefferies CRB Index of commodities retreated for the first time in nine days, losing 0.3 percent and snapping its longest streak of gains in three years. To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Kelly Bit in New York at kbit@bloomberg.net

Read the full article →

Stocks Worldwide Extend Eight-Day Gain Euro, Gold, Spanish Bonds Advance

June 17, 2010

By Michael P. Regan and Kelly Bit June 17 (Bloomberg) — Stocks rose, with the MSCI World Index extending its longest advance in 11 months, as a late-day rally in technology shares helped the U.S. market reverse an early drop. The euro gained as a Spanish bond sale eased concern the region’s debt crisis will worsen. Gold rallied. The Standard & Poor’s 500 Index climbed 0.1 percent to 1,116.04 at 4 p.m. in New York, reclaiming its advance for the year along with the Dow Jones Industrial Average. The MSCI World, a gauge of equities in 24 developed markets, increased 0.2 percent for an eighth straight gain. The euro strengthened 0.6 percent to almost $1.24, while gold futures rose 1.5 percent to $1,248.70 an ounce, approaching a record. Treasuries surged. Apple Inc. climbed to a record and paced the advance in technology shares that helped the S&P 500 recover from a 0.8 percent drop spurred by a lower-than-estimated reading in the Federal Reserve Bank of Philadelphia’s factory index and an unexpected jump in jobless claims. Spanish bonds rallied as the nation sold $4.3 billion in debt, the maximum set for the auction, bolstering optimism Europe’s crisis is contained. “Although the initial reaction to the claims numbers and the Philadelphia Fed number was a kneejerk negative, a little bit more thoughtful reflection on the numbers led to a more positive conclusion,” said Hugh Johnson, who oversees $1.85 billion as chairman of Albany, New York-based Johnson Illington. “When investors had a chance to digest and assess the news, they should have reached the conclusion that the economy continues to expand, albeit at a slow pace.” Apple Hits Record Apple rallied 1.7 percent to a record price of $271.87. The customer base for the iPhone may top 100 million users next year, with demand for the soon-to-be-released iPhone 4 helping to persuade more buyers to embrace the smartphone, Morgan Stanley said. First Solar Inc. jumped 3.9 percent to lead industrial shares higher after Credit Suisse Group AG advised buying the stock. The S&P 500 tumbled 14 percent from a 19-month high in April through June 7 amid concern Europe’s debt crisis and the worst oil spill in U.S. history will stifle the economic recovery. The index has risen 6.2 percent since and may extend its rebound to 12 percent, said Ralph Acampora, whose career as a technical analyst began in 1966. “The damage in price and the damage in psychology has set us up on a very short-term basis for a good recovery,” Acampora said. Technical analysts view pessimism as a sign that stocks may rise, because it indicates investors have capacity to buy shares after avoiding the market. 200-Day Moving Average The S&P 500 today remained above its 200-day average for a third day after sinking below it for about a month. Tomorrow’s expiration of stock options, coupled with the S&P’s quarterly index rebalancing on the same day, resulted “in massive technical noise today,” said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York. The late-day rally in stocks came after U.S. bond markets largely closed. Treasuries rose, pushing two-year yields to as low as 0.69 percent, after the increase in jobless claims and a drop in consumer prices spurred bets the Federal Reserve will keep interest rates low. The yield on the 10-year note fell 7 basis points, or 0.07 percentage point, to 3.19 percent. The Federal Reserve Bank of Philadelphia’s general economic index slid to a 10-month low of 8, less than half the median estimate in a Bloomberg survey of economists. Initial U.S. jobless claims rose to 472,000 last week, indicating firings remain elevated even as the economy recovers. The index of leading indicators, a gauge of the outlook for growth, climbed 0.4 percent in May, according to the Conference Board. Consumer prices decreased 0.2 percent in May, the government said. ‘Somewhat Concerning’ “The economic numbers are still somewhat concerning,” said Brett Hryb , part of a group that manages $2.6 billion at MFC Global Investment Management in Toronto. “We have a very long-tailed recovery as opposed to a V-shaped bounce back. The gain in Treasuries and gold fall into the flight to safety. Gold is the net beneficiary every time the market is unsure.” General Electric Co., through its finance arm, sold $850 million of bonds backed by credit-card payments, GE’s biggest such sale in nine months, according to a person familiar with the offering. The top-rated securities, maturing in about three years, yield 75 basis points more than the benchmark swap rate, said the person, who declined to be identified because the terms aren’t public. European Stocks The Stoxx Europe 600 Index rose 0.2 percent, paring a 0.7 percent rally. Spain sold 3.5 billion euros ($4.3 billion) of 10-year and 30-year bonds at yields lower than the prevailing market rates, attracting bids worth as much as 2.45 times the securities on offer, assuaging concern that it would face difficulty meeting bond repayments. Spain’s gauge of 35 stocks increased 0.7 percent. Spanish bonds rose, with the yield on the 10-year note falling from the highest level in almost two years. The yield dropped 11 basis points to 4.77 percent. The difference in yield, or spread, between German and Spanish 10-year government bonds narrowed 10 basis points to 211 basis points. Spain is trying to convince investors it can cut the euro- region’s third-largest deficit, while propping up the country’s savings banks and lifting the economy out of a two-year slump. Spain, which faces 24.7 billion euros of maturing debt in July, had seen the risk premium on its 10-year bonds rise to a decade high on concern it may need to tap a European rescue fund. Hayward Testifies BP Plc, battling to contain the worst oil spill in U.S. history, rallied 6.7 percent in London then lost 0.4 percent in New York. The shares have tumbled more than 45 percent on both exchanges since the April 20 explosion that triggered the spill. The company’s Chief Executive Officer Tony Hayward was denounced by U.S. lawmakers today for stonewalling as he failed to answer questions about the causes of the spill. BP scrapped dividends and pledged asset sales to meet President Barack Obama ’s demand for a $20 billion fund to help victims. The U.S. Chemical Safety and Hazard Investigation Board will look for the causes of the explosion, Chairman John Bresland said. The euro rose 0.6 percent to $1.2389 and earlier topped $1.24 for the first time in almost three weeks as Spain’s bond sale bolstered confidence in the currency. The dollar weakened against 13 of 16 major currencies, led by a 1.7 percent drop versus the Swiss franc. The Swiss franc approached an all-time high against the euro after the central bank softened its stance on fighting franc gains as deflation risks ease. The Swiss National Bank, which has been buying foreign currencies since March 2009 to counter the threat of deflation, said today that those risks have “largely disappeared.” Emerging Markets, Commodities The MSCI Emerging Markets Index rose 0.4 percent, climbing for an eighth day in the longest stretch of gains in two months. Benchmark indexes in Turkey, Indonesia, Egypt and Romania climbed at least 0.9 percent. Crude oil fell for the first time this week, slipping 1.1 percent to $76.79 a barrel. Copper futures for September delivery slid 8.95 cents, or 3 percent, to $2.924 a pound on the Comex in New York. The Reuters/Jefferies CRB Index of commodities retreated for the first time in nine days, losing 0.3 percent and snapping its longest streak of gains in three years. To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Kelly Bit in New York at kbit@bloomberg.net

Read the full article →

Deutsche Bank’s Peter Babej Said to Leave German Firm to Join Citigroup

June 17, 2010

By Serena Saitto June 17 (Bloomberg) — Citigroup Inc. hired Deutsche Bank AG ’s co-head of financial institutions, Peter Babej , marking at least the seventh departure this year of a senior investment banker from the German firm, a person briefed on the move said. Babej will work in New York, the person said, declining to be identified because the move is not public. He joined the Frankfurt-based bank in 2007 and was a key member of a team that prepared an initial public offering, which was later put on hold, for American International Group Inc. ’s biggest Asian life insurance unit. He previously worked 11 years at Lazard Ltd, where he was a managing director for insurance-industry clients. Deutsche Bank spokesman John Gallagher and Citigroup spokeswoman Danielle Romero-Apsilos said they couldn’t comment. Babej didn’t return a phone call seeking comment. Nomura Holdings Inc., Japan’s largest brokerage, said this week it hired Deutsche Bank’s Mark Epley as co-head of a unit that advises buyout firms. Nomura also recruited Michael Hill and James DeNaut as co-heads of global natural resources, two people familiar with the situation said June 2. Morgan Stanley hired Jonathan Cox and Michael Johnson from Deutsche Bank’s energy group, people briefed on the moves said this month. The departures come amid a shift in leadership at Deutsche Bank’s corporate and investment bank, the company’s biggest money maker . Anshu Jain , co-head of that business since 2004, was appointed this week to be its sole leader, assuming responsibilities for the corporate finance and transaction- banking units on July 1 from Michael Cohrs , who plans to retire. Last year, New York-based AIG picked Deutsche Bank to be co-global coordinator of an IPO for AIA Group Ltd. The offering was put on hold earlier this year in favor of a $35.5 billion sale of the business to Prudential Plc. That deal collapsed, leaving AIG to develop a new plan for divesting the business. To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net .

Read the full article →

SocGen, BNP Paribas Said to Consider Bidding for Allied Irish Unit Stake

June 15, 2010

By Ambereen Choudhury and Brett Foley June 15 (Bloomberg) — Societe Generale SA and BNP Paribas SA are among banks considering a bid for Allied Irish Banks Plc’s stake in Bank Zachodni WBK SA of Poland valued at about $3 billion, according to three people with knowledge of the matter. Poland’s PKO Bank Polski SA and OAO Sberbank of Russia are also interested in making an offer for the 70 percent stake, said the people, who declined to be identified because the matter is private. Indicative offers are due later this month and at least two private-equity firms are also interested in making bids, another person said. Bank Zachodni, based in Warsaw, has a market value of 14.6 billion zloty ($4.4 billion). The international banks may be seeking to increase exposure to Poland’s economy, which was the only European Union nation to avoid a recession last year. The economy may expand 3 percent in 2010, according to a government forecast. Dublin-based Allied Irish said in March it plans to sell stakes in banks in the U.S. and Poland to help meet its bank regulator’s requirement to raise 7.4 billion euros ($9 billion) of capital. Proceeds from the disposal of businesses in the U.S., Poland and the U.K. are expected to meet a “substantial part” of the capital needs, Allied Irish Chairman Dan O’Connor said April 28. Spokeswomen at Societe Generale and BNP declined to comment. Allied Irish spokesman Ronan Sheridan declined to comment, as did Sergei Rachkovsky, a spokesman for Sberbank in Moscow. Bank Zachodni spokesman Piotr Gajdzinski declined to comment. SocGen CEO Societe Generale Chairman and Chief Executive Officer Frederic Oudea said earlier today the price of Bank Zachodni seems “too high.” Oudea was speaking to reporters ahead of a presentation to investors in Paris. Bank Zachodni’s shares have more than doubled in the past 12 months. PKO Bank Polski’s “strategy for 2010 to 2012 is based on organic growth,” Chief Executive Officer Zbigniew Jagiello said in an e-mail when asked about a possible bid. Still, “no potential acquisition that could lead to an increase of the bank’s assets or its market position should be excluded.” Polish law requires an investor that buys more than 66 percent of a publicly traded company to bid for the rest of the shares. Allied Irish is among lenders transferring loans at a discount to the country’s National Asset Management Agency. Ireland’s banking system began unraveling two years ago after the economy entered a recession and the real-estate market collapsed. To contact the reporters on this story: Ambereen Choudhury in London achoudhury@bloomberg.net ; Brett Foley in London at bfoley8@bloomberg.net .

Read the full article →

Euro Company Yield Spreads Rise to Record Versus U.S. Debt Credit Markets

June 10, 2010

By Bryan Keogh and John Detrixhe June 10 (Bloomberg) — The risk of owning Europe’s corporate bonds is the highest on record relative to U.S. company debt as investors lose confidence that lawmakers and central bankers can tame the region’s worsening fiscal crisis. Yields on investment-grade bonds in euros rose to a 10- month high of 239 basis points, or 2.39 percentage points, more than government debt, according to Barclays Capital index data. That’s 43 basis points more than the spread for U.S. company fixed-income securities, near the record 44 basis points reached May 27. European bond spreads were below those on dollar debt as recently as February, the indexes show. Yields suggest debt investors are concerned that Europe’s sovereign debt crisis will stifle growth and curb profits even after European Union President Herman Van Rompuy said today that a 750 billion-euro ($908 billion) rescue package will be increased if it fails to quell volatility. About 75 percent of investors and analysts expect some governments in the region to default or for the 16-nation euro area to break up, according to a quarterly poll of Bloomberg subscribers. “It’s largely fear driven,” said John Milne , the chief executive officer of JKMilne Asset Management, who oversees about $1.8 billion in Fort Myers, Florida, and favors U.S. corporate bonds. “People like ourselves are holding onto positions, watching the market like a hawk.” Standard & Poor’s raised the ratings on 198 U.S. companies and cut 152 this quarter, a ratio of 1.3 to 1, according to data compiled by Bloomberg. That compares with 49 upgrades and 125 downgrades in Western Europe, a ratio of 0.39 to 1, the data show. Selling Buyout Debt “Deficits in Europe remain massive and are going to weigh down the economic recovery,” Juan Esteban Valencia , a London- based credit strategist at Societe Generale SA, said. He predicts Europe’s corporate bonds will continue to underperform their U.S. counterparts. Elsewhere in credit markets, Bank of America Corp. and Goldman Sachs Group Inc. are seeking to unload as much as $5 billion in debt from the 2007 buyout of Hilton Worldwide. Fannie Mae sold $3 billion of benchmark notes. TransUnion LLC, the credit-reporting company owned by the Pritzker family, boosted the size of a term loan it’s seeking even as prices of bank debt headed for their fifth straight weekly decline. Emerging-market bonds rallied the most in two weeks. Bank of America and Goldman Sachs may package into securities a $3 billion piece of a mortgage taken out by Blackstone Group LP to finance its acquisition of the Hilton Worldwide hotel chain, according to people familiar with the negotiations. The banks are marketing more than $2 billion in mezzanine debt to precede the bond offering said the people, who declined to be identified because the discussions are private. Fannie Mae Sale Fannie Mae , the government-supported mortgage-finance company, sold five-year notes at a yield of 2.437 percent. The spread of 39 basis points more than similar-maturity Treasuries compared with a gap of 33 basis points in the Washington-based company’s last sale of five-year debt in October. TransUnion increased the size of the term loan its seeking by $10 million to $950 million, according to a person familiar with the negotiations. Proceeds will be used to help fund Madison Dearborn Partners LLC’s purchase of a majority stake in the company. Deutsche Bank AG , Bank of America Corp. and JPMorgan Chase & Co. are arranging the seven-year debt at an interest rate of 5 percentage points more than the London interbank offered rate and a 1.75 percent Libor floor, said the person, who declined to be identified because the terms are private. Libor is the rate banks charge to lend to each other. Loan Prices TransUnion’s margin over the lending benchmark will drop to 4.75 percentage points if its senior secured net leverage ratio is below 2.75 times, the person said. The company’s current ratio is 3 times, the person said. Prices of high-yield, high-risk loans declined 0.6 percent this week to 88.4 cents on the dollar as measured by the S&P/LSTA U.S. Leveraged Loan 100 Index , the lowest since Jan. 4. That’s down from 92.9 cents on April 26, a 27-month high. An indicator of corporate credit risk in the U.S. fell from an 11-month high as reports showing economic growth in China, Japan and Australia boosted optimism that Europe’s sovereign debt crisis won’t derail a global recovery. Credit-default swaps on the Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, dropped 6.2 basis points to a mid-price of 125.7 basis points at 5:09 p.m. in New York, according to Markit Group Ltd. European Credit Risk The Markit CDX index, which ended yesterday at the highest since July 14, according to CMA DataVision, fell as a report showed China’s exports last month jumped the most in six years, Japan said its economy expanded more in the fourth quarter than initially estimated and Australia employers added more workers than economists had forecast. The cost of protecting European corporate bonds from default declined to the lowest in almost a week, with credit- default swaps on the Markit iTraxx Crossover Index of 50 mostly junk-rated companies dropping 8.2 basis points to 606, according to Markit prices at 5:11 p.m. New York time. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt. In emerging markets, yield spreads narrowed 19 basis points on average to 319 basis points, according to JPMorgan Chase & Co.’s Emerging Market Bond index. That’s the biggest decline since the gap shrank by 22 basis points to 317 on May 27. The spread has ranged from a low this year of 230 on April 15 to a high of 346 on May 20. Argentine Dollar Bonds Argentine dollar bonds rose for a second day as a U.S. stock market rebound bolstered demand for higher-yielding, emerging-market assets. The yield on Argentina’s 8.28 percent dollar bond due in 2033 fell 22 basis points to 13.09 percent at 5:10 p.m. in New York. The price rose 1.17 cents to 64.5 cents on the dollar. Before this year, spreads on European company bonds traded at an average of 64 basis points tighter than the yield premiums on U.S. debt , according to Barclays Capital’s U.S. and euro aggregate corporate bond indexes dating back to 1998. The debt in Europe has traded at or above U.S. bonds since Feb. 23, the data show. European notes, which carry an average maturity of five years, half that in the U.S., traded wider for the first time in December. ‘Sick Patient’ Banks in the U.S. are better bets than those in Europe because of their deposit bases, plenty of near-term liquidity and improving balance sheets, said Mark Kiesel , global head of corporate bond portfolio management at Pacific Investment Management Co. in Newport Beach, California. “The U.S. banks look very compelling on a global basis relative to other banks,” said Kiesel, who oversees about $300 billion of credit investments for the firm, which also manages the world’s biggest bond fund. “In contrast, Europe looks like the sick patient.” The pace of bond sales in Europe has slowed more than in the U.S. In May, companies sold 14 billion euros of bonds in Europe, an 89 percent decline compared with the same month last year, according to data compiled by Bloomberg. U.S. issuance totaled $35 billion last month, a 75 percent drop from the same period in 2009, Bloomberg data show. Europe’s rescue fund for nations struggling with spiraling budget deficits, which is backed by 440 billion euros-worth of national guarantees, has had a “muted impact,” according to Jamie Stuttard , head of European and U.K. fixed income at Schroders Plc in London. ‘No Meaningful Impact’ Stuttard, who oversees the equivalent of about 25 billion pounds ($37 billion), cited rising European government bond yields, led by Greece and including so-called Club Med nations such as Italy and Spain. “If the bailout was formed to prevent contagion to larger and more serious peripheral economies such as Spain, then the package seems to have had no meaningful impact,” Stuttard said. Lenders are being affected and “the market perceives that European banks are riskier than at any point in 2008,” he said. Van Rompuy, a former Belgian prime minister who became the EU’s first full-time president in January, was the first EU official to say the rescue fund may be expanded. He voiced confidence Greece won’t default and that no country will be forced to quit the euro. ‘Incomprehensible’ Sovereign bond spreads have surged on concern over the nations’ debts. The 10-year Greek bond yield reached 12.46 percent on May 7, the highest since the common currency was introduced in 1999. The yield plunged to 6.3 percent on May 10 after the rescue program was announced, before rising to 7.68 percent. Skepticism about euro-area rescue funds is “incomprehensible” and they are “significant programs,” European Central Bank Governing Council member Axel Weber said at a conference this week in Berlin. The Frankfurt-based ECB kept its main refinancing rate at a record-low 1 percent at today’s monthly policy meeting to avoid stamping out the fragile economic recovery. Spreads on company bonds in Europe and the U.S. are also widening even as the World Bank raised its forecast for global economic growth this year and next, while acknowledging the risks posed by strained government budgets. The world economy will expand 3.3 percent this year and by the same amount in 2011, up from January predictions of 2.7 percent for 2010 and 3.2 percent next year, the Washington-based World Bank said in a June 9 report. At the same time, the bank said it saw a “high probability” of a “more muted recovery” because of an acceleration to trim deficits. Risks to the global economic outlook have “risen significantly” and policy makers have limited room to provide support to growth, International Monetary Fund Deputy Managing Director Naoyuki Shinohara said. To contact the reporter on this story: Bryan Keogh in London at bkeogh4@bloomberg.net

Read the full article →

Goldman Sachs’s Hudson Mezzanine CDO Subect Of New Probe By SEC

June 10, 2010

June 10 (Bloomberg) — Goldman Sachs Group Inc.’s $2 billion Hudson Mezzanine collateralized debt obligation, sold in 2006, is the target of a probe by the Securities and Exchange Commission, according to a person with knowledge of the matter. The inquiry into the CDO may not lead to any additional actions against the New York-based securities firm, said the person, who declined to be identified because the investigation isn’t public. Michael DuVally, a spokesman for Goldman Sachs, declined to comment, as did SEC spokesman John Nester. The Financial Times reported the probe yesterday.

Read the full article →

Goldman Sachs $2 Billion Hudson CDO Said to Be Target of Second SEC Probe

June 9, 2010

By Joshua Gallu and Christine Harper June 9 (Bloomberg) — Goldman Sachs Group Inc. ’s $2 billion Hudson Mezzanine collateralized debt obligation, sold in 2006, is the target of a probe by the Securities and Exchange Commission, according to a person with knowledge of the matter. The inquiry into the CDO may not lead to any additional actions against the New York-based securities firm, said the person, who declined to be identified because the investigation isn’t public. Michael DuVally , a spokesman for Goldman Sachs, declined to comment. The Financial Times reported the probe earlier today. Goldman Sachs shares have lost 26 percent of their value since the SEC filed a fraud lawsuit against the firm on April 16 that related to its 2007 sale of a CDO called Abacus. In that suit, the SEC said Goldman Sachs and one of its employees, Fabrice Tourre , didn’t disclose to investors the role played by hedge fund Paulson & Co. in devising and betting against the securities. The U.S. Senate’s Permanent Subcommittee on Investigations, led by Michigan Democrat Carl Levin , released e-mails in April related to Goldman Sachs’s mortgage-linked deals, including the Hudson Mezzanine transaction. In one October 2006 e-mail, a Goldman Sachs employee describes how the Hudson deal might be viewed by investors as “junk.” The Hudson Mezzanine 2006-1 CDO contained credit default swaps that referenced $2 billion in subprime, BBB-rated residential mortgage-backed securities, according to the documents released by Levin’s committee. While Goldman Sachs selected the assets in the deal, the firm was also the only investor buying credit protection on the entire transaction, the documents show. ‘Ethical Issue’ Goldman Sachs created and sold the Hudson CDO in late 2006, near the time documents released by Levin show senior executives wanted to reduce the firm’s exposure to subprime mortgages. “The CDO imploded within two years. Your clients lost; Goldman profited,” Levin said in an April 27 hearing during which he questioned Goldman Sachs Chief Executive Officer Lloyd Blankfein about the Hudson deal and other CDOs. “To go out and sell these securities to people and then bet against those same securities, it seems to me, is a fundamental conflict of interest and is — raises a real ethical issue.” Blankfein responded that “we are one of the largest client franchises in market-making in these kinds of activities we’re talking about” and that “they know our activities, and they understand what market-making is.” While Goldman Sachs was short on the Hudson Mezzanine CDO, meaning it stood to gain from a collapse because of the credit protection it had purchased, a marketing document for the deal released by Levin’s committee states that “Goldman Sachs has aligned incentives with the Hudson program.” To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net . Christine Harper in New York at charper@bloomberg.net

Read the full article →

Boaz Weinstein Profits From Credit Market Distress Handing Paulson Losses

June 9, 2010

By Shannon D. Harrington and Pierre Paulden June 9 (Bloomberg) — The biggest swings in credit markets since 2008 are boosting demand for hedge funds that avoid bets on which way the economy is headed. Saba Capital Management LP, started by former Deutsche Bank AG trader Boaz Weinstein in 2009, surpassed $1 billion in assets this month after gaining 1.6 percent in May, said an investor with the New York-based firm who declined to be identified because the information isn’t public. Weinstein, a chess life master, is one of a growing number of hedge fund managers profiting from differences in prices between bonds, loans and derivatives as investors betting on sustained growth report losses. The rise in popularity of such long-short funds shows how the easy money has disappeared after junk bonds gained almost 70 percent in the 13 months through April. Gracie Credit Opportunities Fund LP and Claren Road Asset Management LLC, run by former Salomon Brothers traders, have about doubled their assets in the past year, people with knowledge of the firms said. “Investors had an easy trade to do,” Weinstein, 37, said in an interview at the firm’s offices on the 58th floor of New York’s Chrysler Building, where the Art Deco eagle gargoyle that hovers above the firm’s balcony inspired the logo on Saba’s letterhead. “Now it’s done.” Hedge Fund Losses Hedge funds, or lightly regulated private pools of capital that allow managers to participate substantially in gains on the money invested, had their worst month since October 2008 in May as more investors questioned the strength of the economic recovery and the health of banks while nations in Europe grapple with rising debt. The European Central Bank said the region’s lenders will need to write off 195 billion euros ($233 billion) of bad debts by 2011. The HFRX Global Hedge Fund Index lost 2.6 percent, as the MSCI World Index of stocks fell 9.9 percent and junk bonds as measured by Bank of America Merrill Lynch’s U.S. High Yield Master II Index declined 3.52 percent. The Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index tumbled 3.61 cents on the dollar, or 3.89 percent, to 89.11 cents. John Paulson , 54, who oversees $35 billion in hedge funds and made $15 billion in 2007 betting against subprime mortgages, lost 4.2 percent in his Credit Opportunities fund last month, said a person familiar with the results. The fund is up 5.3 percent in 2010. His Advantage fund was down 4.9 percent through May, resulting in a year-to-date loss of 1.3 percent, the person said. ‘Opportunity Is Limited’ Paulson told investors last month he expects a V-shaped recovery in the U.S. and that Europe can manage its debt. Armel Leslie , a spokesman for Paulson, declined to comment. “Many people will start to shift their exposure from long credit to more relative-value credit,” said Ermenio Schettino , a partner at London-based Falcon Money Management LLP, which manages $4 billion including money invested in long-short credit funds. “When you look at the price level of credit now, the opportunity is limited.” Saba was up 5.8 percent through May, the investor in the fund said, compared with 3.39 percent for junk bonds and an increase of 2 percent in the S&P/LSTA loan index. Weinstein ran an internal fund at Frankfurt-based Deutsche Bank before spinning off Saba, the Hebrew word for grandfather, in April 2009. The Deutsche Bank fund, which managed about $10 billion, lost about 18 percent in 2008, Weinstein’s only losing year out of 11 at the firm, a person with knowledge of the results told Bloomberg last year. The fund earned between $600 million and $700 million in 2007. Claren, CQS Claren, started in July 2005 by Brian Riano , John Eckerson and Sean Fahey , senior members of Salomon Brothers and then Citigroup Inc.’s global credit-trading department, has grown to about $3.7 billion from $1.8 billion in May 2009, said a person with direct knowledge of the firm’s assets. A $120 million long-short credit fund managed by CQS U.K. LLP, the London-based manager with $6.9 billion in assets, gained 1.35 percent in May and is up 8 percent this year, said an investor in the fund. Suzanne Murphy , head of strategic development at Claren, and a spokesman for CQS declined to comment. “The rally was so short, and now we’re back to this very unsteady foundation again,” said James Palmisciano , chief investment officer at New York-based Gracie. “You need to be a lot more nimble as opposed to just believing that we’re back into a pro-cyclical investment environment.” Price Swings Gracie gained 3.6 percent this year through May, and has almost doubled its assets over the past 12 months to $1.7 billion, said an investor familiar with the fund. Palmisciano and Gracie partners Michael Robertson , Manbir Singh and Alex Koundourakis joined the fund in 2005 from Calyon’s proprietary trading desk. Palmisciano worked for Weinstein as a lead analyst before leaving for Calyon in 2003. Credit markets are experiencing the biggest price swings since October 2008, as measured by realized volatility of the Markit CDX North America Investment-Grade Index, a credit derivatives index that is a benchmark indicator for perceived risk in the corporate bond market. The index’s volatility for the previous 30 trading days climbed to 113.5 on June 4, up from 33.9 on April 1, data compiled by Bloomberg show. “We wouldn’t advocate right now any sort of market directional position,” Andrew Feldstein , BlueMountain Capital Management LLC’s chief executive officer, said last month at the Bloomberg Markets Hedge Fund Summit in New York. “There are huge opportunities — massive opportunities — totally independent of market direction.” BlueMountain, whose founders helped pioneer credit-default swaps in the 1990s and oversees about $4 billion from New York, said in April it raised more than $250 million, including for a long-short credit fund. Sancus, Highland Sancus Capital Management, manager of a long-short fund with about $80 million and started in August by former JPMorgan Chase & Co. proprietary traders Olga Chernova , Svetlin Petkov and Jason Chen made 4.9 percent this year through April and was up 0.02 percent in May, another investor said. Highland Capital Management LP, the $24.1 billion investment firm specializing in leveraged loans, plans to start a long-short fund that will seek to capitalize on price swings, according to Mark Okada , chief investment officer of the Dallas- based firm. Investors are willing to give up some potential gains to hedge the risk of a downturn, he said. “We had this major reflation of risk assets across the board,” said Okada. “We’re kind of coming to an end of that trade. Markets are now trading in range and I think that’s where we’re going to be in the foreseeable future.” Expanding Pessimism The expanding pessimism follows unprecedented government intervention to unlock debt markets. The cash pumped into the financial system by central banks and through government spending gave banks the confidence to lend to each other. The London interbank offered rate for dollars declined to 0.25 percent in December from 4.82 percent in October 2008, one month after Lehman Brothers Holdings Inc. filed for bankruptcy. Corporate bond yields fell to within 1.42 percentage points of Treasuries in April from 5.11 in March 2009. Prices of high- yield, or leveraged, loans soared to 92.9 cents on the dollar two months ago from a record low 59.2 cents in December 2008. Last month’s sell-off has sparked optimism that the rally will resume after corporate profits jumped 31 percent last quarter from a year earlier. Earnings have surged as fast only six times in the past 60 years, according to Barclays Capital. Each of those periods was followed by gross domestic product growth of at least 3 percent the following year. Fears ‘Overblown’ “Fears of a broader European bank funding crisis appear overblown,” fixed-income strategists led by Srini Ramaswamy at New York-based JPMorgan said in a report dated June 4. “While volatility may remain high over the near term, robust U.S. economic fundamentals will likely emerge as the more important driver of risky assets over the medium term.” While underscoring investors’ concerns about the strength of the U.S. recovery and Europe’s sovereign debt crisis, the trend toward long-short funds also shows how traders who developed the market for credit-default swaps continue to profit even when markets are in distress. Swaps are derivatives, or contracts whose value is tied to assets including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather. Weinstein’s Saba bought ArvinMeritor Inc. bonds due in 2012 at 102 cents on the dollar while simultaneously buying credit- default swaps that hedged against losses on the auto-parts maker’s debt, according to a letter sent to investors in March. The trade returned 7 percent after the Troy, Michigan-based company offered to repurchase its debt in February for 109.75 cents on the dollar, the letter said. BlueMountain’s Gains BlueMountain gained in April by purchasing enhanced equipment trust certificates, bonds sold by airline carriers to finance planes, and hedging them with credit-default swaps. The strategy, known as a basis trade, profits when there is a larger-than-usual gap between the price of the two instruments. The investments are designed to gain in value even if markets decline. Many long-short credit managers started on proprietary trading desks of Wall Street’s largest banks. As Wall Street reduces proprietary bets, new firms are forming, increasing the managers’ focused on the strategy. While companies sell bonds to refinance loans, “banks’ balance sheets haven’t expanded,” said Simon Finch , chief investment officer credit at CQS and senior portfolio manager for the CQS Credit Long Short Fund. “It’s likely to continue to place the market under pressure as that change occurs. That will lead to heightened volatility as these larger flows are digested.” To contact the reporters on this story: Shannon D. Harrington in New York at sharrington6@bloomberg.net ; Pierre Paulden in New York at ppaulden@bloomberg.net ;

Read the full article →

Microsoft May Augur Convertible Revival Altria Taps Debt Credit Markets

June 9, 2010

By Tim Catts and John Detrixhe June 9 (Bloomberg) — Microsoft Corp. ’s sale of $1.15 billion of convertible notes may help the market recover from a two-month slump. Sales of debt in the U.S. that can be exchanged for stock dropped 41 percent last month to $2.24 billion from this year’s peak of $3.79 billion in March, according to data compiled by Bloomberg. The three-year notes from the world’s biggest software maker, located in Redmond, Washington, don’t pay a coupon and can be handed over for shares if the stock rises 33 percent from the current market price, according to a statement distributed by PR Newswire today. Investors rocked by rising volatility stemming from Europe’s expanding government debt crisis may be attracted to the securities by Microsoft’s AAA credit rating, according to George Douglas , the chief investment officer of SSI Investment Management Inc. The company said it will use the proceeds to repay commercial paper, or debt due in nine months or less. “There’s a lot of demand for investment-grade convertible bonds,” said Douglas, whose Los Angeles-based firm manages $1.4 billion in assets. “Market sentiment has changed. You’re seeing a preference for higher quality, lower risk,” he said. Douglas said before the sale that he was “interested” in the Microsoft offering. Microsoft had $2.25 billion of short-term debt outstanding as of March 31, according to a filing with the U.S. Securities and Exchange Commission. The highest ranked dealer-placed commercial paper due in 30 days yields 0.31 percent, up from the low this year of 0.14 percent on Jan. 14, Bloomberg data show. ‘Low Cost’ The refinancing shows “they think short rates will be moving higher,” Douglas said. “It’s a very low cost source of funds for them, even if they don’t do anything particularly dynamic with it.” Elsewhere in credit markets, Altria Group Inc. sold $800 million of notes as the largest U.S. tobacco company prepares to repay bonds this month. Altria ’s 4.125 percent debt due in September 2015 were priced to yield 4.213 percent, or 225 basis points more than similar-maturity Treasuries, according to Bloomberg data. The Richmond, Virginia-based maker of Marlboro cigarettes may use proceeds from the sale to refinance debt or for working capital, according to a regulatory filing. The company has $775 million of 7.125 percent notes maturing June 22, Bloomberg data show. The debt, issued in December 2008, helped fund Altria’s acquisition of snuff maker UST Inc. in January 2009, which made Altria the nation’s biggest snuff producer. Default Risk Falls The cost of insuring against a default on European corporate bonds fell, snapping a two-day advance, with the Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated companies dropping 16 basis points to 619 at 1:11 p.m. in London, Markit Group Ltd. prices show. The Markit iTraxx Financial Index of contracts on 25 European banks and insurers declined 6 basis points to 194, compared with the all-time closing high of 210 basis points set in March 2009, JPMorgan Chase & Co. prices show. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt. Lenders’ overnight deposits with the European Central Bank rose to a record yesterday as banks hoarded cash rather than lend it. Banks lodged 362 billion euros ($432 billion) in the ECB’s overnight deposit facility, up from 351 billion euros the previous day, the Frankfurt-based central bank said. That’s the most since the euro currency started in 1999. Bank of England Speculation the region’s government debt crisis will hurt company earnings prompted corporate bond holders to try to offload a record number of securities to the Bank of England under its debt purchase program yesterday. Investors tendered 507 million pounds ($730 million) of debt to the BOE, the most since it started the purchases in March 2009. The central bank offered to buy 384 million pounds of notes under its twice-weekly debt purchase program and ended up buying bonds with a face value of 94 million pounds. Bond sales in Europe continued to be dominated by financial companies and agencies today. Erste Abwicklungsanstalt, the German organization that’s winding down some of WestLB AG ’s holdings, plans to sell 500 million euros of three-year bonds, according to a person with knowledge of the sale. The proceeds will be used to fund the assets in Erste Abwicklungsanstalt, said the person, who declined to be identified because the details are private. WestLB moved 77 billion euros, or about a third of its assets, to the winding- down vehicle in April to help shrink its balance sheet . Swiss Re Swiss Reinsurance Co. , the world’s second-biggest reinsurer, raised 500 million Swiss francs ($435 million) from the sale of five-year bonds, according to data compiled by Bloomberg. The notes were priced to yield 80 basis points more than the benchmark swap rate, data show. Credit Suisse Group AG, UBS AG and Zuercher Kantonalbank managed the sale. Nordea Bank AB , the largest lender in the Nordic region, is selling 1 billion euros of floating-rate notes in its first benchmark issue of the debt this year. The three-year securities for the Stockholm-based bank will have a coupon of 75 basis points more than benchmark rates, according to two people with knowledge of the sale, who declined to be identified before terms are set. Nordea sold 500 million euros of three-year floaters in December at a spread of 45 basis points, according to data compiled by Bloomberg. U.S. Sentiment Sentiment in the U.S. improved yesterday, as seen in the difference between yields on two-year Treasuries and the rate to convert fixed payments to floating. The spread, a measure of bank risk, narrowed as much as 5.38 basis points yesterday to 41.25. “The absence of news has become news itself,” said Christian Cooper, a senior rates trader at Jefferies & Co. in New York. “We’re not out of the woods yet and we’ll certainly see some additional volatility, but not to the magnitude that we saw before.” S&P said it’s reviewing for downgrades the ratings of Transocean Inc., whose Deepwater Horizon rig exploded April 20 and triggered the biggest U.S. oil spill on record, and Anadarko Petroleum Corp., owner of a 25 percent stake in the BP Plc well that’s leaking into the Gulf of Mexico. Energy Companies S&P also said it cut the ratings on four oil and gas companies, citing the U.S. Department of the Interior’s extension of a six-month moratorium on drilling permits. S&P lowered Helix Energy Solutions Group Inc., Hornbeck Offshore Services Inc. and Hercules Offshore Inc. one step each. It cut ATP Oil & Gas Corp. two levels to CCC+. PHI Inc.’s rating will also be reviewed for a possible downgrade, S&P said. In emerging markets, the extra yield investors demand to own corporate debt instead of government securities narrowed 1 basis point to 338, according to JPMorgan’s EMBI+ Index. The index has risen from the low this year of 230 basis points on April 15. SACI Falabella SA’s consumer credit unit sold half of the amount planned in a bond sale in Colombia as the European debt crisis dries up demand for higher-yielding, emerging-market assets. CMR Falabella, a unit of Chile’s largest retailer by market value, sold 50.35 billion pesos ($25.7 million) of bonds. It planned to sell as much as 100 billion pesos of debt, according to an offer published June 4 in Bogota-based La Republica newspaper. Top-Rated Convertible Microsoft is the only issuer of convertible bonds to boast a top rating from Moody’s and A&P, allowing it to benefit from investors seeking to boost the average ratings of their funds. Convertible bonds are typically sold by companies that are unrated or graded below BBB-, the lowest investment grade. Besides Microsoft , the only other U.S. companies S&P ranks AAA, its highest rating and the same grade it assigns to U.S. government debt, are Exxon Mobil Corp., Johnson & Johnson and Automatic Data Processing Inc. Convertible bonds are debt securities with an option to exchange the notes for common shares at a premium to the market price. They pay lower interest than bonds that can’t be exchanged. They’re typically attractive when companies don’t expect a gain in their equities to trigger a swap, adding to outstanding stock and cutting the stake of existing shareowners. Microsoft declined 18 cents to $25.11 yesterday in Nasdaq Stock Market composite trading. It traded at $25.01 on May 26, the lowest since October. Hedge Funds Hedge funds typically invest in convertible bonds and then short the stock, seeking to profit from price differences between the securities. Shorting involves selling a borrowed security to profit if the price falls. Convertible bonds have fallen 2.4 percent this month after losing 4.5 percent in May, according to Bank of America Merrill Lynch index data. They have returned 0.29 percent this year, compared with a 5.6 percent loss for the S&P 500 stock index and a 4 percent gain for bonds globally. “There’s been a lot of demand relative to the modest supply coming through,” said Venu Krishna , a Barclays Capital analyst, said in a telephone interview. “It makes sense for issuers to come to the market when volatility is up and credit spreads are wider.” The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell 2.87 points to 33.7. The index, which measures the cost of using options as insurance against losses in the S&P 500 index, has risen from 22.05 on April 30 and averaged 21.7 points in 2009. To contact the reporters on this story: Tim Catts in New York at tcatts1@bloomberg.net ; John Detrixhe in New York at jdetrixhe1@bloomberg.net

Read the full article →

Many U.S. Hotels Lack Fire Sprinklers Under Legal Patchwork

June 4, 2010

MONTGOMERY, Ala. — A fast-moving fire that killed four college students in a suburban Birmingham motel illustrates a deadly problem facing travelers around the country: Many older hotels and motels can legally avoid installing sprinklers that stop blazes before they kill guests. Since a catastrophic fire killed 87 at the MGM Grand Hotel in Las Vegas in 1980, a national push to require sprinkler systems in new hotels and motels has helped bring fire deaths down significantly. Yet federal officials say an estimated 3,900 hotel and motel fires are reported to U.S. fire departments each year, causing on average 15 deaths, 150 injuries and $76 million in property loss. The National Fire Protection Association says it’s rare for a guest to die when a fire breaks out in a room with sprinklers, and that there hasn’t been a documented fire in a sprinklered hotel that killed more than one person. “It’s much safer to stay in a sprinklered facility. It’s unfortunate most travelers don’t give that a thought,” said Robert Duval, senior fire investigator with the NFPA. While newer hotels must install sprinklers, older ones do not, and they take in travelers around the country. A study by the U.S. Fire Administration for 2005-2007 found that about 60 percent of hotels and motels reporting fires lacked sprinklers. The National Fire Protection Association also found every single fire death from 2002 to 2005 was in a motel or hotel that lacked a sprinkler system. More recent statistics weren’t available. If the Birmingham-area hotel had sprinklers, Duval said, the fire “would have been a non-event. Everybody would have gotten to go home.” The Days Inn Motel in Hoover, a wooden structure built in 1964 to resemble an old South plantation, wasn’t required to have sprinklers. State Fire Marshall Ed Paulk said four college students from Mississippi who died in the Jan. 19 fire would still be alive if the motel had been equipped with sprinklers. “That would have prevented the loss of life,” Paulk said. Safety advocates and industry officials say travelers often aren’t aware of whether their hotel has sprinklers. The president of the Greater Birmingham Lodging Association, Mairs Baxter, said it is “very rare” for customers to ask. “The only ones I’ve noticed that do that are representatives of government associations,” said Baxter, who is also general manager of a Birmingham-area LaQuinta Inn. Anecdotally, the presence of sprinklers doesn’t appear to be something the older and less-expensive places advertise. In a spot check of older and cheaper hotels and motels, a reporter saw that their websites generally note amenities such as Internet access and cable TV, but not sprinklers, even if they have them. In phone interviews, fire safety equipment wasn’t mentioned by clerks, unless asked. The check included about 20 hotels in nine states. Federal government employees are required to stay in hotels with sprinkler systems on business trips. FEMA provides an Internet search engine – – of approved accommodations. http://www.usfa.dhs.gov/applications/hotel Steve Muncy, a spokesman for the American Fire Sprinkler Association, said many older hotels do not install sprinkler systems because of the cost. “It’s not cheap,” said Muncy, whose trade group represents sprinkler installers and manufacturers. “The older the building, the more expensive it is. The cost varies depending on the size and age of the building. Obviously it’s cheaper in a one- or two- story motel than in a high rise.” Nationally, sprinkler systems are required by local ordinances and building codes in most hotels built or remodeled within the last 10 years, but those laws generally don’t apply to older facilities. It’s also hard to track where sprinklers are required, partly because sprinkler regulations are often in local ordinances and not state laws. In Alabama, all motel and hotel rooms must have smoke detectors, but sprinkler requirements vary by city. They were not required at the Days Inn in Hoover, where the Mississippi University for Women students checked in for a day of shopping. The four – 18-year-old cousins Alondan “Angel” Turner and Catherine Ann Muse of Cordova, Ala.; Jamelia Brown, 18, of Grenada, Miss.; and Joslynn McGee, 19, of Corinth, Miss. – were staying in a room upstairs and a few doors down from the room where a maintenance worker, Dhirajlal Bhagat, 55, had been burning incense in a makeshift Hindu shrine. The fire began after he left the room. Without sprinklers, there was nothing to slow the fire as it spread up the outside walls. The two-story building had firewalls, but Paulk said those were mostly ineffective since the fire spread on the outside. The blaze blocked firefighters from reaching the women, who sought shelter in a bathroom. There was a far different outcome on Nov. 8 at a Clarion Suites Hotel in Yuma, Ariz., where an occupant started a fire while using an appliance to heat cups of liquid. After the person left the room, the device overheated, catching the surrounding counter and wallboard on fire, said Yuma fire spokesman Mike Erfert. But a sprinkler head kept the fire from spreading to other rooms. The MGM Grand fire on Nov. 21, 1980, that killed 87 is the second-worst hotel fire in modern U.S. history. It prompted the adoption of strict fire codes in Las Vegas and elsewhere. There has not been a fatal high rise hotel fire in Las Vegas in at least 15 years, partly because of ordinances adopted by the city following the MGM fire, including one requiring sprinklers in all high-rise hotels, said Tim Szymanski, public information officer for Las Vegas Fire and Rescue. Most times, high-rise hotel fires are confined because of sprinklers by the time fire fighters arrive. “They are worth their weight in gold, Szymanski said.

Read the full article →

Covered Bond Sales Rise Amid Sovereign Deficits Credit Markets

June 3, 2010

By Sonja Cheung and Caroline Hyde June 3 (Bloomberg) — Sales of covered bonds are accelerating as investors seek debt backed by collateral amid concern about the creditworthiness of governments and banks. About $7.7 billion of the securities have been sold or are being marketed this week worldwide, more than double last week’s total, according to data compiled by Bloomberg. Bank of Montreal , Canada’s fourth-largest bank, sold $2 billion of the bonds due in 2015. Demand for securities backed by mortgages and public-sector loans with top ratings is rising as European governments from Greece to Spain struggle to cut record budget deficits, threatening the region’s banks. Covered bonds returned 0.25 percent in May, compared with a 0.4 percent loss on global investment-grade company debt, Bank of America Merrill Lynch index data show. “In this new world where volatility is high,” it’s “certainly an advantage to be holding bonds that have collateral backing,” said Georg Grodzki , head of credit research at Legal & General Investment Management in London. The company, which oversees almost 300 billion pounds ($439 billion), is a “selective buyer” of covered bonds, favoring notes sold by northern European issuers, he said. Yields have risen at a slower pace relative to government securities than corporate debt. Spreads on euro-denominated covered bonds have widened 9 basis points to 153 basis points since May 6, compared with an increase of 28 basis points to 196 for company debt, Bank of America Merrill Lynch indexes show. Company Bond Sales The increase in covered bond sales contrasts with a decline in corporate debt issuance to $70 billion last month, less than half April’s tally and the least since 2003, according to data compiled by Bloomberg. Elsewhere in credit markets, BP Plc bonds rose the most since March 2009, rebounding from a record low, as investors assessed liabilities stemming from the worst oil spill in U.S. history. The 4.75 percent notes due in 2019, issued by the company’s finance unit, increased 2.7 cents to 92.9 cents on the dollar as of 12:28 p.m. in New York, according to Trace, the bond price reporting system of the Financial Industry regulatory Authority. The debt fell to 90.1 cents yesterday, the lowest ever. BP bonds had fallen as the London-based company’s efforts to plug its gushing well failed and the U.S. Justice Department said it’s investigating whether any criminal or civil laws were violated. The leak began after an April 20 explosion aboard the Deepwater Horizon rig, which BP leased from Vernier, Switzerland-based Transocean Ltd. BP Rating Cut “Investors are starting to get their hands around the potential exposures the spill companies may have,” said Joel Levington , managing director of corporate credit at Brookfield Investment Management Inc. in New York. BP’s credit ranking was cut one step to Aa2 by Moody’s Investors Service and is on review another possible downgrade, the New York-based rating company said today in a statement. Fitch Ratings cut BP’s ranking one notch to AA from AA+. A gauge of U.S. corporate credit risk fell for a second day as factory orders rose and the service industry expanded in May for a fifth straight month. The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, dropped 0.3 basis point to a mid-price of 117.1 basis points as of 12:01 p.m. in New York, according to Markit Group Ltd. The index typically falls as investor confidence improves and rises as it deteriorates. European Risk Falls The cost of insuring against non-payment on European corporate bonds fell the most in a week today, according to traders of credit-default swaps, while indexes in Asia also declined. The rally in credit coincided with gains in Europe and Asia stock markets, with the DJ Stoxx 600 Europe index rising 1.4 percent. Default swaps on the Markit iTraxx Crossover Index of 50 mostly high-yield European companies fell 24.4 basis points to a two-week low of 558.8, according to Markit data. The decline signals an improvement in investor perceptions of credit quality. Credit-default swaps on European sovereign notes snapped three days of increases, with contracts tied to Italy dropping 10 basis points to 223, declining from a record, according to CMA DataVision. Default swaps linked to Greece’s government bonds fell 21 basis points to 717, Spain dropped 12 basis points to 238 and Portugal was 15 basis points lower at 330, CMA prices show. SovX Europe Index The Markit iTraxx SovX Western Europe Index of credit- default swaps linked to debt of 15 governments fell to 147 basis points, from yesterday’s all-time high closing price of 154.5, according to CMA. Credit-default swaps on BP’s debt were 13 basis points lower at 246. In emerging markets, spreads narrowed 7 basis points on average to 307, according to JPMorgan Chase & Co.’s Emerging Market Bond index. Argentina’s new 2017 bonds sank in their first day of trading as the government began turning over the securities to investors as part of its restructuring of $18.3 billion of defaulted debt kept out of a 2005 settlement. The 8.75 percent notes tumbled to 80.85 cents on the dollar from their issue price of 90.11, Stone Harbor Investment Partners said. Argentina began issuing $738 million of the bonds yesterday to institutional investors who participated in an early tender period. The government is distributing the securities as compensation for past due interest. “Argentina came up with an issuance price which isn’t really in line with reality,” said Jim Craige , who helps manage $12 billion of emerging-market debt, including defaulted Argentine bonds, at Stone Harbor in New York. Covered Bond Sales Bank of Montreal yesterday sold U.S. dollar-denominated covered bonds in the first transaction in the currency in more than a month. BNP Paribas Home Loan Covered Bond SA, a unit of France’s largest bank, sold 1.5 billion euros ($1.8 billion) of five-year notes that yielded 42 basis points more than the swap rate, Bloomberg data show. Dexia SA in Brussels sold 500 million euros of 10-year bonds with a 15 basis-point spread. Bank of New Zealand , a unit of National Australia Bank Ltd., is meeting with investors this week before a possible sale of covered bonds, according to a person familiar with the plan. The lender has completed the documentation it needs to sell the covered notes, the person said, asking not to be named as the plans are private. A sale would be the first issue of such securities in New Zealand. ‘Flight to Safety’ “Investors are buying covered bonds rather than unsecured notes as a flight to safety,” said Florian Hillenbrand , a Munich-based senior analyst at UniCredit SpA, Italy’s biggest bank. Banks are “tapping the market now because it’s a nice window of opportunity and investors have money to put to work,” said Hillenbrand, who recommends buying German, French and Scandinavian covered bonds. Jose Sarafana , the Paris-based head of covered bond strategy at Societe Generale SA, said he expects another 60 billion euros of sales this year. “Covered bonds offer safer, more liquid assets than senior unsecured notes and therefore we’re seeing plenty of demand for new issues,” he said. Issues in the $2.9 trillion covered bond market get higher ratings than regular notes because they are backed by a pool of assets that can be sold in a default. The extra security typically allows lenders to pay less interest. Covered bonds, which date back to the 18th century, are mostly sold by banks and tend to originate from Europe. Lenders in the region are facing 195 billion euros of bad debts by the end of 2011 as governments cut spending to reduce budget deficits, the European Central Bank estimates. “Bond issuance was very low in May, so we’re now seeing banks looking to covered bonds to meet their growing refinancing needs,” said SocGen’s Sarafana. Borrowers are rushing to sell debt before the ECB’s year- long purchase program ends on June 30. The Frankfurt-based ECB said yesterday it has spent 55.1 billion euros of the 60 billion it set aside a year ago to support credit markets by buying covered bonds. To contact the reporters on this story: Sonja Cheung in London scheung58@bloomberg.net ; Caroline Hyde in London chyde3@bloomberg.net

Read the full article →

RBS Securities Said to Hire Credit Suisse’s Achoa for Debt Capital Markets

June 1, 2010

By Drew Benson June 1 (Bloomberg) — Charles Achoa is joining RBS Securities Inc. as head of Latin America debt capital markets after 13 years at Credit Suisse Group AG, according to a person familiar with the situation. Brazilian-born Achoa is slated to start with the unit of Royal Bank of Scotland Group Plc, Britain’s biggest government- owned bank, in August, and he will be based in Stamford, Connecticut, said the person, who declined to be identified because Achoa hasn’t started his new job. RBS Securities spokesman Michael Geller declined to comment. Credit Suisse spokeswoman Karen Laureano-Rikardsen confirmed that Achoa left the company last month. E-mails and a phone call to Achoa weren’t returned. To contact the reporters on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net

Read the full article →

AIG Negotiates to Salvage AIA Deal as Thiam Seeks to Cut Price

May 30, 2010

By Hugh Son May 31 (Bloomberg) — American International Group Inc. , the bailed-out insurer, remains in negotiations to salvage the sale of its main Asia unit after Prudential Plc requested a lower price to win shareholders’ approval. Prudential asked that the $35.5 billion price for AIA Group Ltd. be cut to about $29 billion to $30 billion, and New York- based AIG is seeking at least $32 billion, said a person with knowledge of the talks who declined to be identified because they are private. The Sunday Times reported that Prudential won backing for the deal from investors provided it can cut the price by more than 10 percent. AIG was forced to reopen negotiations when some of London- based Prudential’s biggest shareholders said they may reject the transaction at a June 7 meeting. The U.S. Treasury Department, which helped rescue AIG in 2008, said it hadn’t considered alternatives to the original terms as of late May 28, and AIG signaled it has other options for AIA, according to a person briefed on the stance of management. “They need to get the price down, otherwise there’s no deal,” Julian Chillingworth , who helps manage $21 billion including Prudential stock at Rathbone Brothers Plc in London, said in a telephone interview yesterday. “We’re looking for a meaningful reduction. The market’s roughly 10 percent lower than when they started the deal, so you need a reflection of that plus a bit more.” ‘Valuable Business’ Andrew Williams , a spokesman for Treasury, said May 28 that the department hasn’t weighed alternatives to the $35.5 billion contract announced in March and that “AIA is a valuable business for which there is significant interest.” AIG’s board met that day and hadn’t considered a reduced offer, according to a person with knowledge of the meeting. The board will ultimately decide if it will accept a new deal, the person said. Joe Norton , a spokesman for AIG, didn’t return a call seeking comment. Prudential’s Edward Brewster declined to comment. Prudential Chief Executive Officer Tidjane Thiam , 47, needs 75 percent of investors to support a rights offer at the insurer’s annual general meeting. Prudential investors including BlackRock Inc. and Fidelity Investments said the takeover was too expensive, a person with knowledge of the matter said last week. Rescue in 2008 Prudential’s biggest investor , Los Angeles-based Capital Group Cos. , is expected to vote in favor of the deal if the price for AIA Group Ltd. drops to between $31 billion and $32 billion, the Sunday Times reported, without saying where it got the information. The U.S. government, which took a stake of almost 80 percent in AIG after the 2008 rescue, is willing to allow the insurer to lower the price, people familiar with the matter have said. The $35.5 billion deal announced in March included about $25 billion in cash and the rest in securities linked to Prudential shares. Prudential’s latest offer of about $30 billion mostly reduced the amount of securities AIG would receive, said a person with knowledge of the discussions. Under the original terms of the sale, the 162-year-old British insurer had to pull off a $21 billion rights offer, the biggest for an acquisition in history, at a time when Europe’s sovereign debt crisis was sidelining corporate fundraisings worldwide. ‘A Very Aggressive Price’ At least 19 companies have postponed or withdrawn $5 billion in U.S. debt sales since April 13, data compiled by Bloomberg show. Investment banking fees from acquisition advice, share and bond sales in Western Europe dropped 17 percent in the first four months of 2010 compared with the previous year, New York-based research firm Freeman & Co. said. AIG had negotiated “a very aggressive price” for AIA, CEO Robert Benmosche told the Congressional Oversight Panel on May 26 during a hearing into the company’s bailout. The unit may be valued at slightly less than $30 billion in a public offering, according to an analysis done before the March announcement by Angelo Graci , managing director at Chapdelaine Credit Partners Selling AIA, which operates in 13 markets from China to Australia and has 23 million customers, would be AIG’s biggest step to repay U.S. taxpayers for loans within its $182.3 billion government bailout. If the Prudential deal fails, it could delay that effort. The insurer planned to use proceeds from the sale, and a separate deal to sell American Life Insurance Co. to MetLife Inc., to repay a Federal Reserve credit line . Public Offering The insurer could hold a public offering for AIA should the sale to Prudential fail, Jim Millstein , the Treasury’s chief restructuring officer, said May 26. AIG had previously planned on a public offering for AIA until Benmosche, 66, decided to accept Prudential’s offer. “The deal’s not dead until it’s dead,” Eamonn Flanagan , a Liverpool, England-based analyst at Shore Capital Group Plc, said in an interview. “Treasury could just be playing hardball here. There will be a lot of posturing from both sides.” He recommends buying Prudential shares. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Read the full article →

Tom Doctoroff: China’s New Middle Class: Constants and Variables

May 29, 2010

China’s middle class, a modern force with timeless cultural imperatives, will reshape the world. To harness its spending power, marketers must realize that becoming modern and international is not tantamount to becoming “Western.” The following discussion outlines the core motivations and conflicts that drive middle class consumption in China. How would you define the Chinese Middle Class, who are they, where are they and when did they emerge? Nobody has yet to really come up with a suitable definition, but for our purposes, if we define the lower edges of the middle classes as households earning 5,000 RMB a month (around USD 1,400 on an adjusted Purchasing Power Parity (PPP) basis) and the core middle classes as those earning 20,000 RMB a month (about USD 5,700 on an adjusted PPP basis), then we see that this is a very penny pinched middle class. There are around 125 million people that probably fall within the category, basically, anyone that is not struggling for day to day survival. It is certainly a fallacy that this class exists in the primary cities only; they are to be found in every city across China, as can be seen in the growth of car ownership across all the cities. The question is, however, what proportion of them exist in each city? The middle classes as a demographic only really came about at the start of this decade. In 1992, Deng Xiaoping made his famous tour of the south, uttering his famous catchphrase “to get rich is glorious”, his economic reforms unleashed capital, but the impact on people’s lives was not really felt until the late 90′s, making the Chinese middle classes a very new phenomenon. The sheer scale and magnitude of this transformation and in the context of the Chinese world view, marks a spectacular inflection point for China and the world today. How is the Middle Class growing in China and where is growth strongest? We are seeing two different curves emerging here, growth in the primary cities, where a critical mass has been reached already and growth in lower tier cities, which has barely even begun, but where growth is by far the strongest due to targeted government policies. Every year more and more people will join the rank and file of the middle classes, being able to afford their lifestyles. It’s important to note, however, that China is still far away from being a middle class society. How do the Chinese Middle Classes view themselves ? As a quick aside, there is a bit of a labelling issue here as ‘middle class’ is not really a politically correct term, very few would want to classify themselves as middle class. But back to the question at hand, the Chinese middle classes believe that with the right competitive tools, an opportunity will come by which will allow them to transform their lives, in contrast to a blue-collar labourer, who will see his social and economic status as more or less fixed. The middle classes believe in social mobility, their environment can now offer them the chance to change and improve their lives. This is what being middle class is really all about, to transform lives and improve physical wellbeing, it’s a move beyond the already satisfied lower levels of Maslow’s hierarchy of needs of survival and physical safety requirements towards a need to satisfy social status requirements. The middle class engages with society to get recognition for their (financial) successes. It’s important to note though that this is not about arrival, it’s about being on the right journey, they see theirs as an arduous, perilous, continuous struggle upwards and there is an acute awareness of the precarious and unpredictable slipperiness of this journey, that all could be lost and taken away in the bat of an eyelid. There is a need to project how high you have climbed, but also to protect that ascent. Insecurity abounds. Insecurity based on cultural, economic and political factors. The Chinese have an understanding with their ruling classes that government must be responsive to people’s needs, the middle classes trust that their government will protect their interests, otherwise the contract they have with them will unravel. People are not protected by civic institutions, there is no political representation, and wealth is not protected institutionally. The middle classes are wracked with anxiety, it’s a very tough world out there and unless they carry on generating, it is all too easy to slip back to the bottom. What goes up can and often will come down. What are the challenges facing the Chinese Middle Classes? On an economic level, there is a sense that wealth is not protected and that individuals need to fend for themselves as they will not be provided for otherwise. More subtly, on an emotional level, there is a sense that there are certain, essential rites of passage to middle classdom, such as homes, diamond rings, education, car ownership and other expenditures that are needed in order to cross that threshold. But these items are expensive, incomes are limited and disposable incomes remain low, yet these are necessities and need to somehow be paid for, so what to buy? As we said earlier, this is a very penny pinched middle class, who do not have much flexibility on how they spend their money. There is a very rigid, set way of how you become middle class; you will be required to posses certain hallmarks, but which ones to choose as incomes are so limited? There is a lot of anxiety about how to make progress up the mountain, the question is, how to arrive at something more sustainable, particularly for men who carry a great burden as the person responsible for the family; men do not feel in control of their destiny, there is great anxiety, how do you defuse that sense of loss of control? In Confucian society the burden on men to be the providers is very absolute and very heavy, its not just a question of providing, society will judge you on whether you are an upstanding member of society by your ability to provide; your value is derived from whether you have lived up to your masculine obligations to provide and here, its not the individual who is the productive unit, but the clan and as a man, you are responsible for the overall wellbeing of your clan, this places an enormous burden on men. Individualism in the western sense, although aspired to, does not exist in China. In the west we admire those who have transgressed the constraints of societal norms and broken free of its shackles and rules, thriving beyond and independently of these, achieving success on ones own terms. In China, what is big are egos, it’s the opposite of western individualism that no longer cares about how they are judged by society, in China, individuals are incredibly conservative and conventional and derive all their value from how they are perceived by society. The individual is looking for society’s endorsement and qualified stamp of approval that they have mastered the rules and have been able to climb society’s predefined hierarchy. This yearning to be recognised as having conformed exactly to society’s expectations puts an enormous pressure on individuals. This stifling need to conform can be seen in how a child is raised, the education system and the relationship between teachers and parents. We see this all the time in advertising, we have to work so hard to get creativity and individualism, individual initiative is seen as a high risk threat and is discouraged here. Very tellingly, a westerner’s typical fantasy of escape is usually very horizontal, being on an island for example, whereas the Chinese transcendence is vertical, flying, or being on a mountain, being in total control of what is beneath you, i.e. the definition of success is to master your surroundings, or really, to master society’s rules and hierarchy. How are the Chinese Middle Classes evolving? Historically, the Chinese are incredibly price sensitive when it comes to products for the home, these items will not be seen by outside society and given the need for conspicuous consumption outside the home, cost savings for items within it are required, as the home is rarely visited by outsiders and is considered to be a private sanctuary. As incomes are increasing, this is changing, people do now place more value on quality and are prepared to pay a bit more for the home, but predominantly even these more expensive home items are still used as markers for success. Travel is now also a marker of success and is a new dimension of what it means to be middle class, showing that you are on the journey, literally and figuratively! The range of goods that will be consumed are changing as the middle class evolves. There is now much more of a need and a growing desire for self-expression and to liberate oneself, which is one reason why digital has become so fundamental, the new generation is using digital to have a more expressive life. These outlets, seeing the need for self-expression, will become more pervasive as time goes on. Individualism is eve’s apple, the allure is intoxicating, but if you bite into it you will be banished. Companies will need to decide how to play with the aspiration of individualism and the reality of social conformity. But, what is absolutely not happening, is the Chinese middle class becoming western, they are becoming modern, they are becoming internationalised, but they are not becoming western. The structure of Chinese society is very different than western society. There is one underlying truth in Chinese society that says the only absolute evil is chaos and the only absolute good is stability and order, this is a prerequisite for progress on a national and individual level and why the unit remains the clan and not the individual. Every strand of Chinese thinking reinforces the supremacy of stability and order, this is inculcated from a young age; China is unique for its conflict between ambition and conformity, from abiding to the hierarchy to pulling yourself up the hierarchy, this only exists in the Confucian footprint, in Japan this conflict is not nearly as severe, but in China this conflict defines the topography of the Chinese heart. What are the aspirations of the Chinese Middle Classes, what do they want? A key insight here is that Chinese people will say that all they want is to be happy and to be in control of their destiny, but actually, this ideal is not truly practical for them. People will talk about it, it’s an ambition, but it’s important not to oversimplify. The Chinese know how tough it is out there and they know that they will need to struggle to advance; therefore their practical goals are to keep on struggling up the hierarchy, the Chinese are not truly interested in taking it easy. ‘All I want is to be happy’, is a dreamt escapist desire, as opposed to a concrete aspiration. How does the State view the Middle Classes and how is the State providing for them, are they hindering or helping them? The Chinese have an extraordinary ambivalent relationship with the State; they see the central government as there for them to advance and to make order from chaos. They would never trade in the Chinese system for democracy. On the other hand there is a frustration with the slow pace of reform and evolution of the structure that should protect the interests of society. Everyone wants institutional reform, but no one wants rebellion, they want a continuation of the status quo, the State is the lynchpin that holds society together. People do expect that government will become more responsive to their needs and they also see the enormous progress that has been made and are content that things are getting better. Corruption, however, is a problem and is very dangerous for the government, people see corruption as the government not being responsive to their needs. But people need their strong government as they still have an underlying fear that things could fall apart at any moment. The Chinese culture increases tolerance for a government that has continued power to frame the current issues of the day and to issue top-down commands. Due to cultural imperatives, the tolerance is far greater than we would like to admit to in the west. The speed of reform compared to what people can tolerate is merely a question of degree. Because per capita incomes are still at such low levels and because urbanisation still has such a long way to go, it will be decades before the basic current structures of power become a critical contradiction. When China has moved from low level manufacturing to service based economic growth, if by that stage society does not advance, once there is a solid middle class base, then there might be problems, but this is still decades away from happening. How can companies reach out to the Chinese Middle Classes and connect with them? Examples of successes and failures? Success in China is rooted in having insights that uncover fundamental motivations and bringing your product in alignment with these. Every product that charges a premium needs to be a tool for social advancement. Examples of success would be De Beers diamonds, in ten years of entering the market, the penetration of diamond engagement rings has gone from 8% to 80%. They were able to do this by understanding the motivations; marriage in China is different then it is in the west, in the west we like to believe that passion and romance will last forever, in China, however, it is commitment that lasts forever, not love as such. De Beers sold themselves as giving the Chinese man a tool to demonstrate his reliability. Ford is another example that is doing better than everyone expected. It does not sell itself on how good it is to drive its cars, but by how they can transform people’s lives. Of course it depends on the model and which societal class you belong to, but fundamentally the allure is how the cars will help you to advance up the hierarchy in some shape or form, this in fact is why China has overtaken the US in the growth of automobile ownership, not because the Chinese need cars, but because it’s a threshold of middle classness – companies who want to succeed in China need to bring their products in line with the Chinese world view and structure of Chinese society. Rejoice Shampoo, from P&G, has also done a very good job at maintaining its position within the market, it has done this through its ‘confidence through softness’ advertising, i.e. that the beauty of your hair will be noticed by other people. Häagen-Dazs moved to outdoor consumption as they knew this was the only way to get people to pay the premium on their ice cream, it’s a great way for a boy to impress a girl by taking her to eat at such an exclusively expensive indulgent venue. Starbucks is doing much the same thing. In China the product is a means to an end, the message driver has to be that this product will make you noticed and help you on your journey upwards. The Chinese have no excuse to be buying luxury goods, given their level of income, but luxury is so externalised it enables inconspicuously conspicuous consumption, i.e. to show off without being seen to do so. There is a craftsmanship to selling products in China, it’s communicating how your product will help the owner solidify their status, but avoiding clichés. Is there a difference in how Middle Classes live at home and in Public and if so, why? Home is a retreat, your private castle; Chinese do not throw dinner parties, home is a private domain and needs to be respected as such. You will not see people spending money on expensive bedspreads. However, comfort is important and the willingness to indulge is growing, but not fast, foreign, premium priced items for the home are still going to struggle a lot more with their lower priced, domestic counterparts. Chinese consumers are becoming more educated about quality and are ruthless quality hunters; they are becoming much more demanding about quality, which is normal as the middle class evolves. The digital revolution is also becoming so fundamental to the way the Chinese express themselves and define their identity. In the west, digital is functional, we use it to make transactions and find things, in China it is much more emotional, they use it to chat and for entertainment. What products and services do the Middles Classes aspire to have? Growth in home ownership, DIY, car ownership etc Service industries will explode in China over the next few years, from Banking, to Investments, to Healthcare. There is a dearth of good service here, which is often very unpredictable. On the one hand the Chinese have been conditioned not to demand service, but needs are needs and they are now starting to demand better quality services. However, there seems to be an ever widening gap of what’s available and what is being demanded. The time is absolutely ripe for foreign companies, with more knowledge and experience than their domestic counterparts, to enter the market. The question is though, will the government recognise the need for foreign competition and that domestic companies are simply not equipped to meet expectations? Will they allow sectors to liberalise and open up? If not, resentment will surely grow and there could be a real struggle ahead. Originally published in Chamber Eye, the magazine of the British Chamber of Commerce of Guangzhou

Read the full article →

U.S. Treasury, AIG Signal Their Commitment to $35.5 Billion Price for AIA

May 28, 2010

By Hugh Son May 29 (Bloomberg) — The U.S. Treasury Department and American International Group Inc. , asked by  Prudential Plc to lower the $35.5 billion price for the bailed-out insurer’s main Asia unit, signaled they are committed to the original terms. “Treasury has not considered any alternative other than the existing contract,” said  Andrew Williams , spokesman for the department, in an e-mailed statement late yesterday. The insurer won’t be hurried into accepting less than what company executives think AIA Group Ltd. is worth, according to a person briefed on the stance of New York-based AIG’s management. The person declined to be identified because the negotiations are private. The insurers are discussing the terms of the deal in the last weeks before a Prudential shareholder vote on the transaction set for June 7. Prudential said yesterday it had asked AIG to change the terms. Investors in the London-based insurer including BlackRock Inc. and Fidelity Investments said the takeover was too expensive, a person with knowledge of the matter said this week. Prudential spokesmen Edward Brewster and Robin Tozer didn’t return messages left on their cellphones after business hours. ‘Aggressive Price’ In March, AIG announced that Prudential agreed to pay $35.5 billion, about 70 percent in cash, for AIA, which operates in 13 markets from China to Australia. The deal would be AIG’s biggest step to repay U.S. taxpayers for its $182.3 billion government bailout. AIG could hold a public offering for AIA should the sale to Prudential fail, Jim Millstein , the Treasury’s chief restructuring officer, said this week. AIG had been planning such an offering for the unit before striking the Prudential deal. Robert Benmosche , chief executive officer of AIG, told the Congressional Oversight Panel in Washington this week that he had negotiated “a very aggressive price” for AIA. The unit may be valued at slightly less than $30 billion in a public offering, according to an analysis done by Angelo Graci , managing director at Chapdelaine Credit Partners in New York, before the March deal announcement. AIG executives believe $30 billion would be too low a price for AIA, said the person familiar with the managers’ thinking. AIG, once the world’s largest insurer, is divesting assets after soured housing bets pushed the firm to the brink of collapse in September 2008. A week after announcing the sale of AIA, the company said that MetLife Inc. agreed to pay about $15.5 billion for another non-U.S. unit, American Life Insurance Co. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Read the full article →

Morgan Stanley Smith Barney Cuts About 200 Jobs in Brokerage’s Integration

May 28, 2010

By Michael J. Moore May 28 (Bloomberg) — Morgan Stanley Smith Barney, the world’s largest brokerage, cut about 200 jobs as the joint venture moves closer to full integration, according to a person with knowledge of the reductions. The cuts were mostly from product support areas and didn’t involve brokers, said the person, who declined to be named because the reductions aren’t public. The brokerage also plans to hire about 150 private bankers and 35 employees for the unit’s capital markets operations, the person said. Chief Executive Officer James Gorman , who led the unit before succeeding John Mack in January, said earlier this year that the joint venture expects to realize $1.1 billion of cost savings by the end of 2011. The division reported pretax income of $278 million for the first quarter, compared with $119 million in same period a year earlier, before the deal was completed. The brokerage, which has $1.6 trillion in client assets , was formed last year when Morgan Stanley purchased a controlling stake in the joint venture with Citigroup Inc.’s Smith Barney. The joint venture will probably close about 120 additional U.S. offices to eliminate overlapping locations, Charles Johnston , the unit’s president, said last month. Morgan Stanley Smith Barney had 18,140 advisers as of March 31, and Johnston said that figure will likely stay around 18,000. “As we near our one-year anniversary, we are well along in the integration of the two firms,” Morgan Stanley spokesman Jim Wiggins said. The brokerage’s pretax profit margin was 9 percent in the first quarter, up from 7 percent in the fourth quarter. Gorman has said the firm expects to increase that margin to 15 percent by the end of this year and more than 20 percent by the end of 2011. Fox Business Network reported the job cuts earlier today. To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net .

Read the full article →

Prudential Discussing Price Cut for AIG Asia Unit After Slump Soured Deal

May 28, 2010

By Kevin Crowley May 28 (Bloomberg) — Prudential Plc , the U.K. insurer seeking to buy American International Group Inc. ’s Asian unit in a $35.5 billion acquisition, said it’s talking with AIG about changing the terms of the deal. Discussions between the companies “may or may not lead to a change in the terms of the combination,” Prudential said today in a statement. Chief Executive Officer Tidjane Thiam, 47, was in New York yesterday to make his case to executives that the price for AIA should be cut, a person with knowledge of the situation said. Thiam is facing criticism from major investors as he asks for $21 billion, the biggest rights offer for an acquisition on record. Prudential’s market value is 13.8 billion pounds ($20 billion). The deal has already been delayed by the U.K. regulator over concerns about the insurer’s capital reserves and the biggest decline in equity markets since the financial crisis has dampened investors’ enthusiasm for the takeover. “It’s probably the least ideal market to raise capital,” said James Buckley , a London-based fund manager at Baring Asset Management Ltd. who helps oversee $44 billion, including Prudential stock. “The market is not completely closed for small rights offers, but for major deals like Prudential, it’s inevitably tough.” Investors owning as much as 20 percent of Prudential stock plan to vote against the takeover at the annual general meeting on June 7, Neptune Investment Management Ltd. , a London-based shareholder, said this week. Thiam needs 75 percent of investors to support the rights offer for the deal to succeed. BlackRock, Fidelity BlackRock Inc. and Fidelity Investments are among major Prudential shareholders that have voiced concern the deal is too expensive, said the person, who declined to be identified because the discussions are private. Some shareholders are demanding a reduction to as low as $30 billion, a price AIG’s board is unlikely to approve, the person said. “We have a signed agreement with Prudential, and we expect them to use their best efforts to live up to it,” Mark Herr , a spokesman for New York-based AIG, said late yesterday. Speculation the deal would collapse was “unfounded,” Prudential spokesman Ed Brewster said earlier this week. “The acquisition of AIA by Prudential represents a compelling combination that can deliver very attractive long-term returns to our shareholders,” he said. Public Offering Option The U.S. Treasury Department, which helped fund the $182.3 billion bailout of AIG, hasn’t asked the company to find a compromise on the AIA deal, spokesman Andrew Williams said in an e-mail. He commented after the Daily Telegraph reported that the Treasury encouraged the insurer to negotiate to preserve the takeover of AIA. AIG, which is selling assets to repay the U.S. bailout, had been planning a public offering of AIA until announcing the Prudential deal in March. AIG could return to the public- offering option if Prudential shareholders reject the deal, Jim Millstein , the Treasury’s chief restructuring officer, said this week in Washington. “It would certainly be a mistake to not be willing to renegotiate,” said Angelo Graci , managing director at Chapdelaine Credit Partners in New York. “There are meaningful risks to going back and pursuing an IPO; it would take longer, and the valuation would have a significant amount of uncertainty.” AIG is being advised by Blackstone Group LP, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley, according to data compiled by Bloomberg. Prudential is being advised by Credit Suisse Group AG, JPMorgan Cazenove, Lazard LLC and Nomura Holdings Inc., the data show. Funding Plans Prudential plans to fund the AIA purchase through the $21 billion rights offer, including fees to banks, $10.5 billion of new shares and other securities and by selling debt. The offer is the biggest in U.K. corporate history. Capital Research & Management Co., Prudential’s biggest shareholder, would have to pay about 1.89 billion pounds to take up its rights in full, data compiled by Bloomberg show. The next three biggest holders, Blackrock, Legal & General Group Plc and Norges Bank, would pay a total of about 1.96 billion pounds for their full allocation of shares. Not all Prudential’s directors plan to take up their rights in full, Chairman Harvey McGrath said this week. Michael McLintock , CEO of Prudential’s fund-management unit, would have to pay about 3.4 million pounds to fully back the transaction. “In uncertain times investors aren’t as willing to take as much risk, and it makes it harder to raise funds for expansion,” said Peter Braendle , who helps oversee about $51 billion at Swisscanto Asset Management AG in Zurich and hasn’t decided whether he’ll back the rights offer. “Investors prefer to have a bit more cash.” Market Concern Prudential, which yesterday posted its steepest increase since August, was down 0.8 percent at 543 pence as of 9:43 a.m. in London trading. The insurer’s share price was 602.5 pence on Feb. 26, the last trading day before the deal was announced. Prudential shares were suspended in Hong Kong earlier today before the company’s statement. The combined Prudential-AIA would be the largest life insurer in Hong Kong, as well as in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam. Paying $35.5 billion for AIA will create an entity worth $60 billion by 2013, Thiam said this month. “The deal raises the question why the company is trying to pursue it if a substantial number of shareholders are opposing it,” said Tom Kirchmaier , a fellow at the London School of Economics. “For me the concerns in the debt market just mirror those in the equity market, and the market might just kill a deal which it considers a bad deal.” To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

Read the full article →

Prudential Discussing Price Cut for AIG Asia Unit After Slump Soured Deal

May 28, 2010

By Kevin Crowley May 28 (Bloomberg) — Prudential Plc , the U.K. insurer seeking to buy American International Group Inc. ’s Asian unit in a $35.5 billion acquisition, said it’s talking with AIG about changing the terms of the deal. Discussions between the companies “may or may not lead to a change in the terms of the combination,” Prudential said today in a statement. Chief Executive Officer Tidjane Thiam, 47, was in New York yesterday to make his case to executives that the price for AIA should be cut, a person with knowledge of the situation said. Thiam is facing criticism from major investors as he asks for $21 billion, the biggest rights offer for an acquisition on record. Prudential’s market value is 13.8 billion pounds ($20 billion). The deal has already been delayed by the U.K. regulator over concerns about the insurer’s capital reserves and the biggest decline in equity markets since the financial crisis has dampened investors’ enthusiasm for the takeover. “It’s probably the least ideal market to raise capital,” said James Buckley , a London-based fund manager at Baring Asset Management Ltd. who helps oversee $44 billion, including Prudential stock. “The market is not completely closed for small rights offers, but for major deals like Prudential, it’s inevitably tough.” Investors owning as much as 20 percent of Prudential stock plan to vote against the takeover at the annual general meeting on June 7, Neptune Investment Management Ltd. , a London-based shareholder, said this week. Thiam needs 75 percent of investors to support the rights offer for the deal to succeed. BlackRock, Fidelity BlackRock Inc. and Fidelity Investments are among major Prudential shareholders that have voiced concern the deal is too expensive, said the person, who declined to be identified because the discussions are private. Some shareholders are demanding a reduction to as low as $30 billion, a price AIG’s board is unlikely to approve, the person said. “We have a signed agreement with Prudential, and we expect them to use their best efforts to live up to it,” Mark Herr , a spokesman for New York-based AIG, said late yesterday. Speculation the deal would collapse was “unfounded,” Prudential spokesman Ed Brewster said earlier this week. “The acquisition of AIA by Prudential represents a compelling combination that can deliver very attractive long-term returns to our shareholders,” he said. Public Offering Option The U.S. Treasury Department, which helped fund the $182.3 billion bailout of AIG, hasn’t asked the company to find a compromise on the AIA deal, spokesman Andrew Williams said in an e-mail. He commented after the Daily Telegraph reported that the Treasury encouraged the insurer to negotiate to preserve the takeover of AIA. AIG, which is selling assets to repay the U.S. bailout, had been planning a public offering of AIA until announcing the Prudential deal in March. AIG could return to the public- offering option if Prudential shareholders reject the deal, Jim Millstein , the Treasury’s chief restructuring officer, said this week in Washington. “It would certainly be a mistake to not be willing to renegotiate,” said Angelo Graci , managing director at Chapdelaine Credit Partners in New York. “There are meaningful risks to going back and pursuing an IPO; it would take longer, and the valuation would have a significant amount of uncertainty.” AIG is being advised by Blackstone Group LP, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley, according to data compiled by Bloomberg. Prudential is being advised by Credit Suisse Group AG, JPMorgan Cazenove, Lazard LLC and Nomura Holdings Inc., the data show. Funding Plans Prudential plans to fund the AIA purchase through the $21 billion rights offer, including fees to banks, $10.5 billion of new shares and other securities and by selling debt. The offer is the biggest in U.K. corporate history. Capital Research & Management Co., Prudential’s biggest shareholder, would have to pay about 1.89 billion pounds to take up its rights in full, data compiled by Bloomberg show. The next three biggest holders, Blackrock, Legal & General Group Plc and Norges Bank, would pay a total of about 1.96 billion pounds for their full allocation of shares. Not all Prudential’s directors plan to take up their rights in full, Chairman Harvey McGrath said this week. Michael McLintock , CEO of Prudential’s fund-management unit, would have to pay about 3.4 million pounds to fully back the transaction. “In uncertain times investors aren’t as willing to take as much risk, and it makes it harder to raise funds for expansion,” said Peter Braendle , who helps oversee about $51 billion at Swisscanto Asset Management AG in Zurich and hasn’t decided whether he’ll back the rights offer. “Investors prefer to have a bit more cash.” Market Concern Prudential, which yesterday posted its steepest increase since August, was down 0.8 percent at 543 pence as of 9:43 a.m. in London trading. The insurer’s share price was 602.5 pence on Feb. 26, the last trading day before the deal was announced. Prudential shares were suspended in Hong Kong earlier today before the company’s statement. The combined Prudential-AIA would be the largest life insurer in Hong Kong, as well as in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam. Paying $35.5 billion for AIA will create an entity worth $60 billion by 2013, Thiam said this month. “The deal raises the question why the company is trying to pursue it if a substantial number of shareholders are opposing it,” said Tom Kirchmaier , a fellow at the London School of Economics. “For me the concerns in the debt market just mirror those in the equity market, and the market might just kill a deal which it considers a bad deal.” To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

Read the full article →

← Previous Entries

Next Entries →