New Newspeak

Years ago, as a consultant, I decided I would get the industry to start using the word "crisp" .... like a clean white shirt ... like a Monday morning ... with a colon.

Well, clients I've never met now say we need to be crisp and I secretly high-five my 2-year-ago self.

What could I possibly do to top that?

Here's my next 2-fer-1:

Shepherd (v) - Take responsibility for a "flock" (=set of business goals) and see it safely home to successful accomplishment ... and then butcher it and eat it with mint sauce at the last minute.
Nimble (v) - Not just agile. Not just quick-to-market. Not just flexible. All of that an more. Nimble like Jack Be Quick ... jumping over the candlestick ... not getting burned or even setting his underpants on fire. The ability to move quickly and change directions nearly instantly without losing the beat. Even if you're a hippo in a tutu. Nimble is the new grail of business.

Bingo ... Corporate Newspeak just got two new toys.

Mark my words - they're coming soon to a cube farm near you.

Talk Amongst Yourselves: Governmental .... Effectiveness??

Unlikely. But they are moving through the agenda at a pace which, adjusted for the fact that they are complete and utter idiots who live on another planet, is nearly mentionable. In fact, they're going so fast, I have not time to drawl on for paragraphs about each item. The following will have to do.

Sadly, they're going so fast, they also haven't time to hire a fancy Madison Ave team to sex up and connect the whole thing thematically. Fear not, Congressmen. I have a name for the whole agenda.

I dub this session: "the hour of our de-embarrassment."

Someone slightly less numb than average must have realized that some US policy is downright embarrassing ... just like good ole Cousin Eddie.

Health care:
Kudos. With universal (well, near as the US government will ever get to such absolutes) coverage, finally, arrogant socialist countries (cough, cough, Europe, cough) have one fewer reason to feel superior. Shame you forgot all about that whole cost containment/efficiency/quality bit. Maybe next time.

Discrimination:
Again, kudos on removing some of the most ridiculously embarrassing bits of 16th-century discrimination still enshrined in US law.

Legally preventing a gay man or woman on their death bed from seeing the one person who they love most was ... well ... maybe not such a solid idea. I know it was supposed to prevent the coming of Lucifer, but now, what with Bunker Busters and Missile Defense, I think he's less of a threat.

Discrimination makes a guy wanna kill someone. What better place to do that than in the Army? So, kudos again for taking the logical step to reexamine Don't Ask Don't Tell. Instead of making recruiters scrape the bottom of the barrel to meet their quotas, just let a few angry gays in. They always spruce up the place!

Now let's get rid of that whole blood donor ban thing.

Financial Regulation Reform:
Without injecting my own opinion (yet), allow me to predict the most likely outcome. Financial Institutions will once again be lobotomized. Divided into two classes:
- Utilities (aka retail banking)
- Casinos (aka everything else)

"Utilities" are done for as a for-profit enterprise. Just like Amtrack and Con Ed, they will require permanent and heavy subsidy verging on nationalization to survive the tonnage of regulations which will be piled on.

"Casinos" will have to escape to the Bahamas, Monaco, or Indian reservations. I would not be surprised to see these firms further subdivided into firms that are allowed to play with other peoples' money ("brokerages") and those playing with their own money ("proprietary dealers").

Over the past 10 years, the US Financial Services industry has made up more than a third of corporate profits, aka a third of the returns upon which the entire US equity market is based. Over the next 10 years, that entire industry will go the way of the Dodo and Bear Stearns.

Witch Hunting:
Exhibit A: the SEC's civil suit against Goldman. This thing is such a political charade. We're gonna end up in the Supreme court debating the definition of "is" again. GS is too smart to get caught red-handed. Even if they were fined a billion bucks, the 17% market cap drop is a ridiculous over-reaction, but they won't pay that either. Their max exposure SHOULD be the $15 million they charged for their services. Sadly, this court case isn't going to be decided in a court of law, but in the court of public opinion.

All of this ... for better or for worse. Talk Amongst Yourselves.

Yeah! What HE Said: Greenspan on the Hill (again)

They just won't let him alone. But Maestro is still too solid to be shaken by a few pols.

The surging demand for mortgage-backed securities was heavily driven by Fannie Mae and Freddie Mac which were pressed by the Department of Housing and Urban Development and the Congress to expand affordable housing commitments.
- Alan Greenspan, Congressional Testimony 4/7/10

Nuff said. If they don't want to know the real answers, maybe they should stop asking the questions.

Happy Reagan Day!

And I quote:

They say the world has become too complex for simple answers. They are wrong. There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right.

In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden.

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

It is time for us to realize that we're too great a nation to limit ourselves to small dreams. We're not, as some would have us believe, doomed to an inevitable decline. I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing. So, with all the creative energy at our command, let us begin an era of national renewal. Let us renew our determination, our courage, and our strength. And let us renew our faith and our hope. We have every right to dream heroic dreams. Those who say that we're in a time when there are no heroes, they just don't know where to look.

You and I are told increasingly that we have to choose between a left or right, but I would like to suggest that there is no such thing as a left or right. There is only an up or down — up to a man's age-old dream; the ultimate in individual freedom consistent with law and order — or down to the ant heap totalitarianism, and regardless of their sincerity, their humanitarian motives, those who would trade our freedom for security have embarked on this downward course.

You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we're not bound by that same limitation? We must act today in order to preserve tomorrow.

This is not the time for political fun and games. This is the time for a new beginning. I ask you now to put aside any feelings of frustration or helplessness about our political institutions and join me in this dramatic but responsible plan to reduce the enormous burden of Federal taxation on you and your family

The size of the Federal budget is not an appropriate barometer of social conscience or charitable concern

I am not worried about the deficit. It is big enough to take care of itself.

Freedom is the right to question and change the established way of doing things. It is the continuous revolution of the marketplace. It is the understanding that allows to recognize shortcomings and seek solutions.

America's best days are yet to come. Our proudest moments are yet to be. Our most glorious achievements are just ahead.

You and I have a rendezvous with destiny. We will preserve for our children this, the last best hope of man on Earth, or we will sentence them to take the last step into a thousand years of darkness

We will always remember. We will always be proud. We will always be prepared, so we may always be free.

Corporate Newspeak 7

Talk Around: (v) 1. Share opinions on tangents related to a topic on which decisions are pending without any expectation that any decisions will be taken, thus taking all pressure off the decision-making leadership at the table. 2. Tongue-in-cheek play on the literal interpretation of the term "talk about."
Also: Waste Time, Chat, Think On, Building a Base, Laying Groundwork
Usage: "Can we make a decision here today, boss?" / "Well, Johnny, of course - we do need to move on this, which is why I think we need to talk around the nuances of the constraints and dependencies to make sure we've covered off all that first."

Draw a Line Around: (v) Avoid talking further about once and for all. Usually used by someone who has argued their side of an issue unsuccessfully.
Also: Ring-fence
Usage: "But, but ... okay folks, clearly we need to think on that niche issue a bit more. I don't want it to keep us from moving forward on the overall strategic vision. Let's draw a line around that and continue the larger discussion."

Friction-Free: (adj) Of a mythical business process which produces economic value without any ongoing cost, often expected to move at the speed of light. Used only in the context of corporate sloganeering or in the context of empty sales promises.
Usage: "Don't worry about what it costs to implement, Donnie. By leveraging technology and enterprise synergies, this friction-free solution pays for itself."

Enterprise: (adj) Of a mythical type of business process which is entirely uniform across all groups, departments, lines of business, divisions, or other factions of a corporation, run under the direction of a single group, yet paid for by all groups. Used when one group starts to implement a new business process, and then realizes they don't have enough money to pay for it.

What Will Tomorrow (Today?) Bring: Private Spaceflight

Conservative gut-check. Can you stick to your conservative, limited-government guns, even for the "cool" stuff? Apparently Dick Shelby goes all bedwetty at the prospect:

"The president's proposed NASA budget begins the death march for the future of U.S. human space flight," said Sen. Richard Shelby (R., Ala.). - WSJ.com 2/1/2010

Maybe Dick should read January's Popular Science cover story, "Who needs NASA? This Year Civilian Space Indusrty Finally Takes Off."

Follow Up: Less is More

As if responding to the Kramer and Greenspan quotes I blogged about here in December, folks on today's Talk-Shops had the following to say:

"That's what I think people beyond the beltway find so hard to believe. Why can't you find things that they agree on and pass that into legislation? But somehow that never seems to happen." - Bob Schieffer, Face the Nation 1/31/2010

Okay, Bob, but now we have Hope and Change, right?

David Brooks tackled the same core issue from a very different angle:

"If you ask people, 'why aren't you investing? Why aren't you lending?' it all comes down to uncertainty ... If bankers and entrepreneurs don't have any sense of certainty, they're just not going to invest ... We've not only got this economic problem, but its compounded by a psychological problem, magnified by the fact that distrust of institutions is at its highest level in history." - David Brooks, Meet the Press 1/31/2010

Exactly.

I'm frequently asked, "As someone in finance, what do YOU think of the government's proposal on ... "

• New bank taxes
• New windfall taxes
• Bailouts
• Evil banker hunts
• Prop trading bans
• Goldman Sachs
• Too big to fail
• The National Debt

My uniform answer, no matter what topic they bring up: "I'm against it. Whatever 'it' is." Does that make me the exemplar member of the Party of No?

Nope. I'm against that too. And I'm in good company.

"Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny." - Thomas Jefferson

"And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude." - Thomas Jefferson

"That government is best which governs least." - Thomas Jefferson

"Government is not a solution to our problem. Government IS the problem." - Ronald Reagan

Bloated bureaucrazies, by definition, separate pieces of the incentive mechanism. He who makes the decisions is never he who must implement them, nor he who pays for them, nor he who is impacted most greatly by them. This problem is no less present in large corporations than it is in governments the world over. To me, the only cure for bureaucratic inefficiencies and mistakes ... is LESS bureaucracy. Second best is a paralyzed bureaucracy. That, at least, leaves individuals and businesses the liberty they crucially need to maximize their own happiness/wealth/utility/economic value. Least best is an erratically spasming bureaucracy.

As we all know, investors and entrepreneurs make a risk-vs-reward decision every time they choose what to do with their capital (money, ideas, and energy). As I've explained in past blogs, risk is equivalent to unpredictability. The more able one is to predict the future, the lower the risk and the more confidently one can make moves today which create a nice return tomorrow. Conversely, when the rules of the game may significantly change tomorrow or next year, risk is dramatically increased. This raises the risk-vs-reward bar such that fewer investment options are viable.

Governments can increase or decrease this risk. Those with the discipline to stick to a stable, sensible, transparent industrial policy over a long period build tremendous "trust equity" with investors. The benefit should be self-evident to the most causual observer: stability reduces perceived risk, which encourages investment, the fuel of economic activity. Ideas become businesses become economic value. Govermnents, too, reap the benefit by being able to borrow cheaply.

Unfortunately, being based entirely on intangibles (consensus expectations), this trust equity is a very fragile thing. Governments can quickly sabotage themselves, their economies, and thus their citizens by giving off even the whiff of erratic or ill-advised behavior.

Don't take my word for it. Look at successful economies the world over. There is ample empirical evidence that, while stability is not the only factor of economic success, its absence is certainly a factor of economic failure. Contrast North and South Korea. Contrast Argentina and Costa Rica. Contrast Greece and Germany. The success stories plodded quietly for decades, one reassuring yet boring step at a time, to amass their trust equity.

Let's be clear: governments do not create economic value. Governments limit (regulate) its creation in order to make sure one person or business doesn't take advantage of another. We grant them permission to exert this control based on some stew of goals which we've set for them.

Here's another one. Goverments don't own any economic value. Governments are simply temporary stewards of value which they've taken (taxed) from individuals and businesses. By definition, this regime of regulation and taxation reduces economic activity to the extent it limits and dis-incentivizes investors and entrepreneurs. Sometimes we accept this reduction because we understand that we're trading it for our social goals, such as stability, security, equality, or fairness.

But let's combine this with my earlier point. The dis-incentive of regulation and taxation is multiplied by a risk factor which captures its future volatility (=unpredictability). When the future amount of this dis-incentive cannot be confidently predicted, risk is higher and thus fewer opportunities are worth the risk-vs-reward dice roll. Money drifts to the sidelines and the whole economy slows down.

Sound familiar?

So, here's something I'm FOR: minimizing the risk multiplier while maximizing the return ... financially, socially, environmentally, and any other -ly.

Follow Up: Baseless Blames and Bangless Bucks ... oh, and Healthcare

Exactly 6 months ago on this blog, I said:

"David Axelrod, himself, said this week there was universal agreement on 80% of their ideas. Sounds like enough for a plan to me. Let's pass it and start to get at least a little relief. Would we delay a heart bypass in the ER until everyone had agreed what to do about the patient's high cholesterol? Of course not. That is not to suggest we should choose Band-Aid surgery over treating the insidious underlying problems. Its just a sensible triage. Nurse?"

Maybe the White House is finally listening:

"Mr Obama has instead hinted that he would like to build support for a bill “around those elements of the package that people agree on.” - Economist.com, 1/26/10

Sadly, the same article continues ...

"It is not clear what other elements the president believes could be agreed on."

What Will Tomorrow (Today?) Bring: Virtual War

Given China's love for child labor, these guys may be teens, but it's not idle curiosity that is motivating them. Nor individual malice. Make no mistake, this is Cyber Warfare.

Researchers identify command servers behind Google attack

The cyber-assault came to light on Tuesday when Google disclosed to the public that the Gmail Web service was targeted in a highly-organized attack in late December. Google said that the intrusion attempt originated from China and was executed with the goal of obtaining information about political dissidents ...

"The source IPs and drop server of the attack correspond to a single foreign entity consisting either of agents of the Chinese state or proxies thereof," the report says ...

http://arstechnica.com/security/news/2010/01/researchers-identify-command-servers-behind-google-attack.ars

This Isn't A Child's Game, Folks, but it Ain't Rocket Science

Surprise surprise a bloated, non-functioning, politically-motivated organization run by a revolving-door president is ineffective.

And I'm talking about the White House.

"The U.S. government had sufficient information to have uncovered this plot and potentially disrupt the Christmas Day attack, but our intelligence community failed to connect those dots,"
Barack Obama criticises CIA failures over Detroit bomb plot

Obama's own report, as paraphrased by Guardian.co.uk, said:

They said that the biggest US crisis in intelligence-gathering since 9/11 had
been brought about mainly because no single agency is in charge, with a dozen agencies fighting for their own turf.

Gee, last time we blew the dots game, I was just sure Washington would fix it:

A key congressional committee opened its investigation Thursday into the November 5 Fort Hood shootings with a pledge to find out if authorities failed to "connect the dots" and could have prevented the attack.
Senate panel seeks to 'connect the dots'

Must have gotten lost somewhere in the bureaucrazy. But that's OK, because the problem should have already been fixed. We realized we sucked at dot connection years ago and did something about it:

It is said that prior to the attacks of September 11th, our government failed to connect the dots of the conspiracy ... So to prevent another attack – based on authority given to me by the Constitution and by statute – I have authorized a terrorist surveillance program.
George Bush, 2006 State of the Union address

Maybe that, too, got drowned in bureaucrazy. Kinda like THIS one way back in 2002:

The Department of Homeland Security consolidates 22 agencies and 180,000
employees, unifying once-fragmented Federal functions in a single agency
dedicated to protecting America from terrorism

But back to the dot-connection game currently at hand. Last I checked, you had to have a visa to get on a plane to the US. Funny, I thought the State Department issued Visas into the US. I agree with Hill on this one:

We are, in the State Department, fully committed to accepting our responsibility for the mistakes that were made
Secretary of State Clinton on plane bomb blame

But, wait, we fixed visa procedures with THIS back in 2008:

The Visa Security Program was established in the Homeland Security Act of 2002 to increase the security of the visa process at U.S. embassies and consulates. The program enhances national security by preventing terrorists, criminals, and other ineligible applicants from receiving visas ... The program assigns experienced special agents to Visa Security Units overseas to review visa applications, initiate investigations, and provide advice and training to consular officers. Agents bring valuable resources to posts and add a layer of security to the visa process

No, wait, that one got lost in bureaucrazy too.

When the cause of failure is bureaucrazy, how can we keep expecting that bureaucrazy to fix it? Maybe more childish games should be part of the Civil Service Exam. Or maybe we'd be better at a different game. Tic-tac-toe, anyone?

"We can't solve problems by using the same kind of thinking we used when we created them."-Albert Einstein