Captain's blog: Stardate: 9/21/07
Alan Greenspan tells Fortune Managing Editor Andy Serwer: 'It's the fall of Communism, stupid.' Meanwhile , the U.S and Canadian dollar reach parity.
(Fortune) -- MARKETS: Well, I was one for two last week. Nebraska did NOT beat USC, but the Fed did cut rates. So there! Greenspan sooooo telegraphed that in his interview with me, right? So far I applaud Bernanke for not fanning the fire too early and hitting the bellows at a regular meeting. Let's hope it works. Obviously the markets think he's right.
Interesting to see how Bear (Charts, Fortune 500), Lehman (Charts, Fortune 500), Morgan Stanley (Charts), and Goldman (Charts, Fortune 500) are weathering this. Goldman is such a machine! Impressive how it makes big bets, and is right. Simple! Or simply amazing, actually.
I breakfasted with a Morgan banker today who told me he was just going to go forth and do business come what may. "If I worry, he told me, "it becomes self-fulfilling. So I don't." Words to live by, dude!.....The fact that the US and Canadian dollar are at parity now is mind-blowing, but you could have seen it coming miles, or years away....The U.S. is one big theme park. Think NASCAR.
TWO WISE MEN: It's interesting to me when people speak about trends. Geopolitical, markets, social, demographic. This is all very powerful stuff, usually staring us in the face, and yet we often just don't see it!! When I was talking to Greenspan the other day, I asked him if he deserved credit for the great run the capital markets had during his tenure. (Yes, yes I also asked if he deserved blame for the two bubbles, tech and housing. For the record: "No.") Greenspan demurred.
I thought he was going to say the great decline in interest rates from 1980 to 2005 was the big impetus for the good times, but no. Yes, it was an amazing event and the cause of much good tidings for us all. But what -- in part -- caused that decline? Greenspan suggested that the truly seminal event of the past 35 years was that capitalism defeated communism. Axiomatic? Maybe, but think about it.
This victory by capitalism, aka, the USA, meant the end of any competing economic system. In Europe, in Latin America (except fringies like Cuba and Venezuela) and N. Korea, Africa, and Asia. No more fear, worry, competition. That's HUGE. And of course the BIGGEST effect all, is that it helped swing Chinese leaders towards a market system. (Don't believe me? Imagine China today if the Soviet Union had triumphed?) So we are sitting pretty, right?
Well, what do you think NOW though about the so-called Clash of Civilizations (see Samuel Huntington's 1996 book which argues that conflicts are "particularly prevalent between Muslims and non-Muslims.") Does our conflict with radical Islam presage the next great difficult economic period? We will find out!
The second wise man I spoke with recently -- and this is not quite in the same league as Greenspan but it is extremely interesting nonetheless -- is Peter Georgescu, the former CEO of Young & Rubicam. He is an amazing guy with an incredible story which you should read at his website.
Peter's meta-point is this: In the U.S., and other mature economies, we have had this huge shift going from a period of excess demand to one of excess supply. What does that mean? It means that in the U.S., there is so much, too much, of everything. I remember growing up, sometimes you couldn't get stuff. A sled in the winter -- they'd be sold out. A good inexpensive stereo. Good bakery bread. That kind of stuff was actually hard to find sometimes.
Today, forget it. Think about fast food for example. It is 1000% ubiquitous. Supersized, dirt cheap, and everywhere. The implications for buyers (consumers) and sellers (stores) are very significant. Children get fat. We never cook. Margins become razor-thin. And we all become breathless waiting for the next big thing, which we know will come, because companies have to differentiate to survive. (As in: "I know, let's go to the Hawaiian Tropic Zone for lunch!") It's true with clothes, jewelry, sports, you name it. That's why in those unusual instances when stuff is rare, (ie there still is excess demand), we freak out! Do you have a Wii? An iPhone? Front row seats to the Lakers? A Shelby Cobra?
NY PHILHARMONIC: Went to opening night this past week, and it was fabulous! A Dvorak program that featured Yo-Yo Ma, who is really, really, really amazing (but you knew that....did you ever see him in China? Tee hee!) Just to see him sit down and play the Cello Concerto in B minor Op. 104, with no music in front of him was stunning. His skill and passion are unsurpassed. (Plus, he's a really, really, really nice guy, and a pal of fellow cellist Paula Zahn's.)
The crowd was A+ of course too. Sat right near Henry Kissinger, said hello to Marie-Jose Kravis, (Henry Kravis was next to her talking up some deal with Leon Black!) Lots of top-notch Credit Suisse (Charts) bankers too. Plus Chris Flowers, who is now a co-chairman. Love Lorin Maazel's conducting of course, though I do prefer an orchestra leader who dons black tie and tails. Ah, but I quibble. What a wonderful evening.....
LOOSE CHANGE: Sad to see that Howard Gittis passed away this week. I remember him as the cigar chomping (he later quit), consigliore to Ronald Perelman, (who of course controls Revlon and other companies.) Bloomberg notes that: "Gittis served as New York finance chairman for Republican Senator John McCain's campaign for president. In the mid-1970s he was the attorney for Philadelphia Mayor Frank L. Rizzo during a recall attempt." Howard could be a tough guy but in a charming kind of way. I always got a kick out of him. RIP Howard. (A tough stretch for Ronald Perelman, first Claudia Cohen passes, now Howard).
Football: Huskers Du recover this week, but the big games are Cocks versus Tigers, and Dawgs versus BAMA. (SEC Power!) Go with LSU of course and Alabama, (is back!!!)......As far as my 'who wears black' list from the other day, Tim S tells me I forgot Roger Federer. True, hanging out with Anna Wintour will do that to a guy. Even if he's Swiss and has a girlfriend.
I was thinking of Sinéad O'Connor the other day. Mostly I was thinking about the line: "I Do Not Want What I Haven't Got." Sometimes true, sometimes isn't it right? Personally, right now I DO want what I haven't got!!!!!) Remember this (from Wikipedia): "O'Connor's career received a significant blow -- especially in the United States -- on October 3, 1992, when she appeared on Saturday Night Live as a musical guest, on a season eighteen (1992-1993 season) episode hosted by Tim Robbins.
She was singing an a cappella version of Bob Marley's "War," which she later claimed protested sexual abuse in the Roman Catholic Church by changing the lyric "racism" to "child abuse." She then presented a photo of Pope John Paul II to the camera while singing the word "evil," after which she tore the photo into pieces, said, "fight the real enemy," and threw the pieces towards the camera. Almost immediately, NBC's switchboard was jammed with thousands of complaints. To this day, NBC refuses to allow the footage to be rebroadcast.
Hey, here's a sample of some watering holes in NYC. Where would you go: