David Kirkpatrick

November 2, 2010

Need an explanation …

Filed under: Politics — Tags: , , , , — David Kirkpatrick @ 9:18 am

… for today’s electoral outcome? Here you go.

From the link:

The number of Americans who say things are going badly in the country, at 75 percent, is higher than it has been on the eve of any midterm election since the question was first asked in the mid-1970s, according to a new national poll.

A CNN/Opinion Research Corporation survey released Monday also indicates that the economy remains, by far, the top issue on the minds of Americans. Fifty-two percent of people questioned say the economy’s the most important issue facing the country.

“That’s more than the deficit, education, health care, terrorism, energy, illegal immigration and the wars in Afghanistan and Iraq combined,” says CNN Polling Director Keating Holland. “No other issue was named as the country’s top problem by more than 8 percent.”

The economy has been the issue most on the mind of Americans in CNN polling since the end of 2007.

 

October 28, 2010

Want to know where some of those missing jobs are?

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 6:56 pm

A great place to start looking is corporate balance sheets.

From the link:

US companies are hoarding almost $1 trillion in cash but are unlikely to spend on expanding their business and hiring new employees due to continuing uncertainty about the strength of the economy, Moody’s Investors Service said on Tuesday.

As the economy stabilizes companies are also more likely to spend on share repurchases and mergers and acquisitions, Moody’s (MCO: 26.60 ,-0.54 ,-1.99%) added.

Companies cut costs, reduced investment in plants and equipment and downsized operations in order to boost cash holdings during the recession.

As the corporate bond market reopened many companies also boosted cash levels by selling debt and refinancing near-term debt maturities.

Nonfinancial U.S. companies are sitting on $943 billion of cash and short-term investments, as of mid-year 2010, compared with $775 billion at the end of 2008, Moody’s said.

This would be enough to cover a year’s worth of capital spending and dividends and still have $121 billion left over, it said.

However, “we believe companies are looking for greater certainty about the economy and signs of a permanent increase in sales before they let go of their cash hoards, which they suffered so much to build,” Moody’s said in a report.

“Given low demand and capacity utilization within certain industries, companies are wary of investing their cash in new capacity and adding workers, thereby doing little to abbreviate the jobless recovery,” it added.

 

 

October 21, 2010

Latest Beige Book still bland …

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 8:48 pm

… but hints at Fed action to come.

From the link:

Economic growth continued at a sluggish pace over the past few weeks, the Federal Reserve said Wednesday, supporting views that the Fed might take action to spur the economy at its next policy meeting.

In its latest snapshot of regional economic conditions, the Fed reported some bright spots in manufacturing, travel, tourism and auto sales, but still saw weakness in the housing market.

The report, known as the Beige Book, summarized economic conditions in the central bank’s 12 districts across the nation. It will help set the tone for the Fed policy meeting set to take place Nov. 2-3. Investors are widely expecting an announcement of another round of asset purchases.

“The lack of meaningful improvements leaves investors anticipating additional action by the Federal Reserve to reinvigorate the economy in November,” said Kathy Lien, director of currency research for GFT, in a research note.

“If the Fed was worried about the recovery in September, they will remain worried in November as there was no major pickup in economic activity,” Lien said.

 

September 10, 2010

A glimmer of economic hope …

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 12:33 pm

… new jobless benefits claims down. Of course with this unemployment there’s just not that many jobs to lose thusly creating the newly jobless.

September 9, 2010

Latest Beige Book outlook not so bright

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 11:15 am

The Great Recession, the near-depression, economic downturn — whatever you want to label the economy of the last years with, it all comes down to it’s not good, hasn’t really gotten appreciably better for Main Street and doesn’t really seem like tangible recovery is even visible on the horizon. So it’s another fall of keeping the chin up and tightening the belt a little bit more once again.

From the link:

The mixed picture is in line with government data released last month that showed U.S. gross domestic product, the broadest measure of economic activity, was much weaker in the second quarter than previously estimated.

The nation’s GDP was revised sharply lower to an annual growth rate of 1.6% in the three months ending in June. The initial reading had been for a 2.4% growth rate in the period.

Fed chairman Ben Bernanke acknowledged in a speech late last month that the U.S. economic recovery has lost considerable steam. But he said the central bank is prepared to use “unconventional measures” to boost the economy if the outlook were to “deteriorate significantly.”

In its Aug. 10 policy statement, the Fed announced plans last month to begin reinvesting proceeds from securities in its $2 trillion portfolio in to U.S. Treasurys. The central bank had bought billions worth of government debt two years ago to keep interest rates low on home and other consumer loans. But minuets from the August meeting subsequently showed that Fed officials were unusually divided over the policy.

September 3, 2010

Christina Romer on solving the current level of unemployment

Short version? Cut taxes and crank up spending to give the economy a boost.

August 25, 2010

More economic gloom …

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 1:33 pm

… home sales at lowest point since 1995.

June 18, 2010

Line the nest, this recovery is gonna be slow

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 7:39 pm

Real slow.

From the link:

A gauge of future economic activity rose 0.4% in May, signaling slow growth for the U.S. economy in the summer and fall.

The private Conference Board’s leading economic index is designed to forecast economic activity in the next three to six months.

Economists had expected a reading of 0.5% in May.

May 25, 2010

This does not help …

… everyone out there still dealing with a rough economic situation.

From the link:

Led by increases in prices for meat and dairy products, the overall cost of items in the FOX Business shopping cart rose sharply in April — the sixth time food basket prices have increased in the last seven months.

The April increase — 56 cents, or 0.8% — was the largest month-month jump since August 2008.

May 14, 2010

Good news everyone, unemployment is rising

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 5:40 pm

Here’s the story behind that counterintuitive header:

It sounds dreadful. After drifting down consistently since last fall, the unemployment rate has suddenly shot up again, from 9.7 percent in March to 9.9 percent in April. But don’t despair: A rising unemployment rate is actually one of the best signs yet that the economy is bouncing back.

The unemployment rate rose for the right reason. Instead of shedding jobs, employers added 290,000 jobs in April, the strongest showing since 2007. The reason the unemployment rate went up is that a lot more people are suddenly looking for work. The government said that the labor force swelled by 805,000 people in April. That’s more than three times the number of new jobs, so the proportion of people looking for a job but unable to find one went up. Still, that big increase in the labor force marks an important shift in sentiment among people on the fringes of the economy.

May 13, 2010

CPAs see economic sunshine

For the first time in a couple of years.

From the link:

For the first time in more than two years, CPA financial executives were more optimistic than pessimistic about the outlook for the U.S. economy, according to a quarterly survey conducted by the AICPA and the University of North Carolina’s Kenan-Flagler Business School, but more than half don’t expect full economic recovery until 2012 or later, and 42% are now concerned about inflation.

Results from the AICPA/UNC Kenan-Flagler Business & Industry Economic Outlook Survey Q2 2010 found that 40% of respondents were optimistic or very optimistic about the outlook for the U.S. economy for the next 12 months. This is up from 25% who showed optimism during the first quarter of 2010, and a significant increase from record-low levels of 5% optimism in the first quarter of 2009. This quarter, 25% were very pessimistic or pessimistic, down from 38% last quarter, and the remainder were neutral.

The survey, conducted between April 13 and May 2, includes responses from 1,768 CPA executives in business and industry.

April 11, 2010

Maybe the economy is getting better

Filed under: Business, Politics — Tags: , , — David Kirkpatrick @ 5:44 pm

I’ve been pretty gloomy on the economy for a while, but I agree with this quote:

“We’ve had a phenomenal run in asset classes across the board,” says Dan Greenhaus, chief economic strategist for Miller Tabak + Co., an institutional trading firm in New York. “If Obama was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the President.”

But a major aspect of my economic mindset over the last couple of years is things aren’t really better on the ground at Main Street, so I also agree with this quote from Jon Chait:

I think the interesting question right now is not whether the economy is due for strong growth, but whether and when that growth will create rising living standards. The recovery from the 1991 recession took years before it began producing wage gains. The recovery from the 2001 recession basically never produced real wage gains — essentially all the gains went into corporate profits and gains for the very rich. Moreover, there’s very little consensus as to why that happened. So we have no idea to what extent growth and higher productivity will create conditions that people have any reason to recognize as real growth.

April 8, 2010

Economy may be improving, but unemployment still a drag

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 7:01 pm

There may be some economic pollyannas starting to make appearances, but don’t count Fed chief Ben Bernanke among them. His exact quote the current state of things? “Far from being out of the woods.” Those aren’t the words of someone who’s feeling real good about the economy right now.

From the second link:

Bernanke said he expects the Fed’s easy money policies and a gathering recovery “will be sufficient to slowly reduce the unemployment rate over the coming year” from its current level of 9.7%. But he admitted that the jobless rate remains a major concern.

“The economy has stabilized and is growing again, although we can hardly be satisfied when 1 out of every 10 U.S. workers is unemployed and family finances remain under great stress,” Bernanke said.

The Fed chief also noted that bank lending continues to be weak and inflation expectations stable. Those observations should allow the central bank to continue to hold short-term interest rates near zero percent for what the Fed has called an “extended period” while keeping prices stable.

March 7, 2010

Look for the Fed to raise interest rates this fall

The Federal Reserve has already borrowed $200 billion and parked it in the Treasury for just this move.

From the second link:

Most U.S. business economists expect the Federal Reserve to raise benchmark interest rates within six months by between a quarter and a half percentage point, according to a survey released on Monday.

A majority of economists in the National Association of Business Economists’ semiannual survey found the Fed’s current stance of rates near zero percent is appropriate. A growing number, however, believe the U.S. central bank’s policy’s are too stimulative, according to a poll of 203 members taken February 4-22.

“A majority believes that a rise in interest rates is both likely and appropriate in the next several months,” said NABE President Lynn Reaser.

March 4, 2010

Latest Beige Book outlines slow recovery

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 1:23 pm

The quick recap — yep, things are getting better, and no, not very quickly. And all that snow in February didn’t help things. The coming unemployment report is expected to show the rate rising to 9.8 percent.

From the link:

Of the Fed’s 12 regions surveyed, nine showed improvement. The Richmond district, which includes Maryland, Virginia and the Carolinas, was hurt the most by the bad winter. That region reportedeconomic activity had “slackened or remained soft across most sectors” because of the weather.

The economic setbacks from the weather come at a fragile time: The economy is struggling to recover from the worst and longest recession since the 1930s.

After a big growth spurt at the end of 2009, many economists believe the recovery lost steam in the first three months of this year. They predict it will grow at a pace of around 3 percent from January to March. That won’t be fast enough to drive down the unemployment rate, now at 9.7 percent.

The jobs market “remained soft throughout the nation,” the Fed reported.

Update 3/7/10 — If you feel the urge, or just want, to dig much deeper into this Beige Book report, hit this link for a 538 post full of charts and analysis.

February 21, 2010

Truly frightening unemployment news

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 3:14 am

Well, I suppose this falls more under conjecture than news, but quite frightening nonetheless.

From the link:

Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.

Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.

And:

Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.

We may have avoided a second Great Depression to date, but the long-term effects on the U.S. economy may be very severe. Hopefully the economists who see major downturns rebounding with equally major expansions are correct. If this recession creates a large class of the permanently unemployed and drives more of the middle class down toward, or into, poverty, the social, political and economic repercussions probably are beyond our ability to imagine right now. A sizable and battered lower class does not make for a stable society.

February 3, 2010

Recycling TARP funds for small business loans

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 5:51 pm

As much as I think the deficit is a significant issue, the ongoing credit crunch for small business is a much more pressing issue for the economy. Recycling money that bailed out Wall Street to give Main Street a leg up is probably good politics, but more importantly, it is good policy.

From the link:

President Obama called on Congress Tuesday to recycle $30 billion of the remaining Troubled Asset Relief Program (TARP) funds into a new government lending program offering super-cheap capital to community banks that boost their small business lending this year.

Touted last week in Obama’s State of the Union address, the plan is the latest incarnation of a proposal the president first floated in October. While credit conditions for large businesses have improved over the past year, small companies are still widely reporting problems finding the capital they need to fund their operations.

January 22, 2010

A tiny ray of economic hope

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 5:02 pm

It’s not much, but anything ought to feel pretty good right now. Especially with unemployment still dogging the economy.

From the link (bold text is my emphasis):

The number of newly-laid off workers seeking jobless benefits unexpectedly rose last week, as the economy recovers at a slow and uneven pace, but a forecast of future economic activity jumped 1.1% in December, suggesting that economic growth could pick up this spring.

Layoffs have slowed and the economy began to grow in last year’s third quarter, but companies are reluctant to hire new workers. The unemployment rate is 10% and many economists expect it to increase in the coming months.

Here’s more detail on the good news portion of the link:

Separately, the 1.1% increase in the Conference Board’s index of leading economic indicators was larger than the 0.7% rise that economists surveyed by Thomson Reuters had expected.

January 14, 2010

The latest Fed Beige Book sees …

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 4:58 pm

… well, beige. Things aren’t getting worse, but they aren’t really getting all that much better either.

From the link:

“While economic activity remains at a low level, [economic] conditions have improved modestly” according to the Federal Reserve’s Beige Book released in advance of the Federal Open Market Committee’s January 26-27 monetary policy meeting. The Beige Book said the “improvements are broader geographically” than they were at the beginning of December. The Beige Book reiterated concerns about the labor market.

The Beige Book was compiled on the basis of reports at the 12 Federal Reserve districts as of January 4. While the Beige Book provides an anecdotal snapshot of the economy, it is rarely cited in the minutes of the FOMC meetings, though the minutes note participants also refer to anecdotal reports.

The details of the report were less optimistic than the opening paragraph.

December 13, 2009

Banks v. homeowners

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 2:56 pm

I’ve already blogged about what banks are doing to small business, and the overall economy as a result. Here’s more of the same tight-fisted lending practices (with those tight fists wrapped around taxpayer’s money via the various bailouts) geared toward homeowners looking to refinance during this time of ultra low interest rates courtesy of the government.

From the second link:

Mortgage rates in the United States have dropped to their lowest levels since the 1940s, thanks to a trillion-dollar intervention by the federal government. Yet the banks that once handed out home loans freely are imposing such stringent requirements that many homeowners who might want to refinance are effectively locked out.

The scarcity of credit not only hurts homeowners but also has broad economic repercussions at a time when consumer spending and employment are showing modest signs of improvement, hinting at a recovery after two years of recession.

December 10, 2009

TARP costs coming in $200B under expectations

Looks like the Obama administration is going to put some toward the deficit and some toward Main Street. Given the facts on the ground, this sounds like fairly conservative fiscal policy to me. Quite a revelation after the last eight years.

From the link:

The government recently announced that the Troubled Asset Relief Program (TARP), established at the height of the financial crisis last year to recapitalize the nation’s banking system, will cost $200 billion less than expected. Obama wants that money redeployed into additional stimulus initiatives: “This gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street,” Obama said Tuesday.

Getting Main Street hiring again is key to job recovery: Small businesses have created 65% of new jobs in the past 15 years, according to government estimates. Obama’s latest set of proposals includes several brand-new measures, as well as extensions of existing stimulus acts.

TARP stopped an “economic panic” …

… as a starting point for the entire stimulus program according to a Congressional Oversight Panel audit, but the overall report card looks like a middling “cee” at best.

From the link:

The independent panel that oversees the government’s financial bailout program concluded in a year-end review that, despite flaws and lingering problems, the program “can be credited with stopping an economic panic.”

The Congressional Oversight Panel, which issued the report, was created in October 2008 by the same law that established the $700 billion Troubled Asset Relief Program. The panel has often been critical of the Treasury Department’s management of the bailout operation, especially at its start in the Bush administration but also under the Obama administration.

In the latest monthly report released on Wednesday, the panel again criticized the Treasury Department under Secretary Timothy F. Geithner for “failure to articulate clear goals or to provide specific measures of success for the program” as it has morphed over time from rescuing financial institutions to propping up securitization markets, auto manufacturers and home mortgages in danger of default. The panel also described the program’s foreclosure mitigation efforts as inadequate.

Mr. Geithner announced Wednesday that the administration would extend the bailout program until Oct. 3, 2010. In a letter, Mr. Geithner told lawmakers that the extension was needed to assist families and stabilize financial markets.

December 3, 2009

Wait a sec on that dire unemployment news …

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 1:55 pm

The most recent Beige Book from the Fed finds unemployment the big problem in the current economy, but maybe better times are coming sooner than later. I’m still not going to hold my breath.

From the second link:

The number of U.S. workers filing new applications for jobless insurance unexpectedly fell last week to the lowest level in more than 14 months, government data showed on Thursday, pointing to a moderation in the pace of job losses.

Initial claims for state unemployment benefits slipped 5,000 to a seasonally adjusted 457,000 in the week ended November 28 from a downwardly revised 462,000 in the prior week, the Labor Department said. Claims have dropped for five consecutive weeks.

Analysts polled by Reuters had forecast claims rising to 480,000 from a previously reported 466,000.

The report covers the Thanksgiving holiday and a Labor Department economist said both actual and seasonally adjusted claims were down.

Modest economic improvement according to latest Beige Book

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 1:44 pm

Of course unemployment remains the fly in this economic ointment.

From the link:

The US Federal Reserve has said that economic activities have improved modestly in recent months, primarily helped by better consumer spending.

However, the labour market situation continued to remain weak with rising layoffs and sluggish hiring activities, the apex bank noted.

The Federal Reserve’s Beige Book, which provides a snapshot of economic activities in the 12 districts, said “economic conditions have generally improved modestly” in recent months.

In eight districts, the activities witnessed improvement while it remained little or mixed in the remaining four.

December 2, 2009

We all know …

… the 2000s were a fiscal disaster — tough markets, bubbles growing to bursting by the end of the decade and drunken sailor federal spending by a GOP-led government. The party of fiscal conservatism? Hardly.

Things were bad, but look at the longer view to get an idea of exactly how bad using just one indicator — the S&P 500 index (emphasis mine):

With the ’00s about to flip the odometer to the ’10s, there has been a raft of commentary about how lousy a decade this has been. Stock investors can vouch for that: The ten years since Y2K are on track to produce the worst total returns for investors since the 1930s. And, after the roaring ’80s and ’90s, the disappointment of the last decade is all the more galling.

Indeed, it will be hard for investors to wash the taste of trillions of dollars of losses from their mouths.

In both the 1980s and the 1990s, the broad S&P 500-stock index index provided a total return (which includes dividends) of more than 400%, according to Capital IQ, a Standard & Poor’s business. The total return for the S&P 500 since New Years 2000 has been negative 10.8%.

Now the Bush 43 administration and GOP Congress are given a pass on the events of 9/11 and how that disrupted the entire American social structure, including commerce. But that event was over eight years ago, plenty of time for the party of fiscal restraint to get the economy back on track, right? Not so much. And where did the profligate spending go? Into half-assed and outright fraudulent foreign adventures:

Hirsch believes a key factor for stocks in the 2000s was the September 11 terrorist attacks and the U.S. government’s expensive involvement in wars in Afghanistan and Iraq. The Vietnam War hurt stock returns in the 1970s, he notes, while World War II kept the market down in the early 1940s.

Of course Bush inherited what is now considered a highly over-valued market that was ripe for a fall back to earth. September 11 was the balloon bursting sledgehammer and seven additional years of absolutely horrible fiscal policy and economic management has put us where we are right now, and leaving a steaming bag for Obama’s administration that will most likely dominate the bulk of his first term, if not much, much longer.

And right wing media is now happily blaming Obama for the economic conditions on the ground.

November 24, 2009

Bringing strategic management theory to bear on today’s economy

In surprising news, this release claims the current economy is too complex for macroeconomics. (Psst, it’s not really surprising at all.)

The release:

Strategic management theory offers fresh take on the economic crisis

New research published in Strategic Organization

Los Angeles, London, New Delhi, Singapore and Washington DC (November 24, 2009) – The recent financial crisis and resulting global economic downturn has been the most defining global economic event since the Great Depression. Now research which appears in the November issue of Strategic Organization, published by SAGE, illustrates new ideas and philosophies in economics from strategic management, uncovering the micro-level underpinnings of the macro-level events we witness today.

Macroeconomics experts have used traditional theories to understand the causes of the economic crisis and offer new schemes and ideas for recovery. These discussions about fiscal and monetary policy dominated much of the conversation about the crisis and what to do about it, according to one of the authors Peter Klein, from the Division of Applied Social Sciences, University of Missouri.

Klein and his co-authors argue that macroeconomics is not equipped to offer full solutions to this crisis. Its basic assumption is that factors of production, firms, and industries in the economy are homogeneous and interchangeable. Research in strategic management has consistently shown that the assumption that the economy is made up of homogeneous or interchangeable factors of production is incorrect.

Strategic management theory—with its emphasis on heterogeneously distributed and rather immobile and inelastic resources and capabilities—is ready to open the debate to new ideas for the recovery.

The idea that resources, firms, and industries are different from each other, that capital and labor are specialized for particular projects and activities, and that people (human capital), are distinct, is constantly encountered in strategic management theory and practice. That macroeconomic models assume factors of production in an economy are homogeneous is interesting, the authors point out, because this assumption creates problems for macroeconomics in both explaining the current crisis, and in deriving solutions.

The Bush Administration bailout and stimulus program in 2008 and continuing through the Obama Administration in 2009 represent a complex mixture of programs, designed to rescue failing banks, strengthen the financial sector, and appear to help homeowners. The same programs have been copied in the European Community throughout 2008.

The Obama Administration’s American Recovery and Reinvestment Act included both stimulus and infrastructure spending. The latter was designed to target particular industries, regions, technologies, and business practices for government support and to provide incentives for particular kinds of business and consumer behavior (e.g., to invest in new “green industries”. The EU plan copied this two-step approach on a smaller scale).

The article focuses on the macroeconomic stimulus itself, and—particularly in the US—the financial-sector bailout measures that followed. Treasury Secretary Henry Paulson told Congress in September 2008 that radical steps were needed “to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses both small and large, and the very health of our economy.”

The US government’s restructuring plans for the financial and automobile industries, and potentially for other sectors are likely to run into problems due to their basis in macroeconomic principles, the authors warn.

What should governments do during an economic downturn? The authors believe it is critical to avoid policies that generate poor investment in the first place. They argue strongly that basic heterogeneity of individuals, fiirms, industries, and regions cast doubt on the macroeconomic stimulus policies governments currently preach.

The authors discuss how just as strategic management theory has much to offer in understanding the crisis, the crisis has also thrown certain important weaknesses in current strategic management theory into sharp relief. Strategic management theory must extend its focus on heterogeneous capabilities to include the capabilities to handle major, anticipated shocks. Resourceful entrepreneurs and business managers urgently need us to do so, the authors state.

Adapting to external change is an important theme in strategic management research. Performance depends not only on resources and capabilities involved in production and market exchange, but also on the ability of business to influence political decision makers. In this climate, entrepreneurs may need to become skilled political lobbyists, taking advantage, and influencing the direction of the political debate.

Strategic management scholars have much to offer, and they must now engage in meaningful debate on how management theory can help resolve the current crisis, because the future, both immediate and long term, is at stake.

###

Heterogeneous Resources and the Financial Crisis: Implications of Strategic Management Theory by Rajshree Agarwal, Jay B. Barney, Nicolai J. Foss and Peter G. Klein is published today in Strategic Organization, published by SAGE. The article will be free online for a limited period fromhttp://soq.sagepub.com/cgi/reprint/7/4/467

SAGE is a leading international publisher of journals, books, and electronic media for academic, educational, and professional markets. Since 1965, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students spanning a wide range of subject areas including business, humanities, social sciences, and science, technology and medicine. An independent company, SAGE has principal offices in Los Angeles, London, New Delhi, Singapore and Washington DC. www.sagepublications.com

November 20, 2009

The T-bill collapse is troubling

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 1:58 pm

Very troubling, actually …

From the link:

IT’S THE CRASH YOU DIDN’T HEAR. Not in the price of any security market, but in short-term U.S. Treasury yields.

Treasury bills once again were trading at negative interest rates Thursday, a mind-boggling state of affairs that hasn’t existed since the panic late last year. That followed the collapse of Lehman Brothers and the assorted knock-on effects, notably the run on money-market funds after the Reserve Fund “broke the buck.”

More significantly, the yield on the two-year Treasury note — the most actively traded security on the planet — fell to 0.669% Thursday, within a hair of the low of 0.657% set in the dark days of last December, according to data on Barrons.com’s Market Data Center.

But now, the economy is supposed to be well on the way to recovery, in contrast to late last year when it seemed we stood on the precipice of a second Great Depression. The Dow is back above 10,000 and bulls claim all’s right with the world. Why, then, would any rational investor be willing to lock up money for two years for the paltry return of less than two-thirds of 1%?

November 19, 2009

More news from the “no duh” department

Filed under: Business, Politics — Tags: , , , , , , — David Kirkpatrick @ 3:19 pm

Today it’s from Treasury Secretary Tim Geithner:

“This credit crunch is not over,” Geithner at a small business financing forum in Washington hosted by the Treasury. “It may feel dramatically better for large companies, but it is not over for small businesses across the country.”

November 7, 2009

Do exchange-traded funds create investment bubbles?

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 6:30 pm

More specifically, bubbles in emerging markets — short answer, no.

From the link, a bit more behind the short answer:

So what does all this mean for investors? ETFs probably haven’t caused a bubble, and they might even help a bit to prevent one from forming. But many will remain superconcentrated bets on very risky markets. If you invest in an ETF with most of its assets in a few stocks and think you have made a diversified bet, the real bubble is the one between your own ears.

November 5, 2009

Fed sees overnight lending rates remaining around nil …

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 3:22 pm

for an “extended period.”

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