Saturday, April 27, 2002

An interesting thing is happening in investment markets. An endowment that I follow closely added a bunch of growth managers back in 2000, the absolute worst time. They bought all the big names, many of which have fallen 90% or more. Now a number of those stocks are being picked up by this endowment's value managers - which adds new resonance to the term "averaging down."
Speaking of Endowments, in the late column a few months ago, I ventured the guess that Yale, which has 35% of its unreally-good-performing portfolio in unconventional and lock-up investments whose value is set by committee say-so and not the market, might be the Enron of big investors, a monument to fiat valuation. I expected a yelp of reproach from New Haven. Not a word. This may be a case where no noise is bad noise.
For quite a while now, I've been beating the drum for the view that our extraordinary 90s "boom" was largely the consequence of the dollar's hegemony. A power that in scope and absoluteness has been matched by no currency in the history of the world. An interesting view is offered by Henry Liu in Asia Times Online. The link is:

Friday, April 26, 2002

The explosion of a drum of lacquer yesterday on Manhattan's West 19th St. has everyone (led by the Post, naturally,) looking over their shoulders and making nervous "9/11" whimpers. I want to suggest a theory I've been mulling over for some time, which is that 9/11 was a work of one-off entrepreneurial terrorism confected mainly by Mohammed Atta. Why isn't it likely that he worked out the details on his own? He would have seen where the first WTC bomb attack went wrong, and the Egyptair "suicide" crash could also have rovided inspiration. Having come up with a "business plan" or "model," he then pitched it, the way you or I would pitch a venture to a VC firm, to Al-Qaeda. They bought in, agreeing to supply money and possibly some muscle, but told him to see if he could also get Saddam Hussein to invest (the Rockefellers will take a deal, but they like it better if the Phippses are in, too, or Kleiner Perkins). This could account for Atta's trip to Prague and the meeting there with an Iraqi intelligence honcho. My guess is, things being as they are, Baghdad thought it over and decided not to invest, but the Osama people thought it too good to pass up as a bang-for-the-buck play (I am not making light, this is exactly how a terrorist investor must think!) Once you've achieved the first bang, all it takes are rumors and hints to send disabling ripples through your targets. And to set other Attas dreaming over their keyboards.
If someone wants to make a 9/11 movie, this is the plot to use - and you read it here first.

Speaking of Atta, one reason I quit the Observer was my absolute disgust with its year-end 2001 issue. You may recall that the cover illustration was a reworking of the famous Bourke-White 1930s photo showing a bunch of high iron workers perched on a girder suspended from a crane cable high over Manhattan eating their sandwiches. In the NYO rework, the central figure is still Bourke-White's. but he's flanked by a bunch of heavyweights on the order of Christy Turlington and Dominick Dunne, who inside are only too anxious to tell us how they spent September 10! Just so you know, all spent it with their three best friends: Me, Myself & I.
Now here's the fun part: a week after the NYO take appeared, it was revealed in a marvelous Newsweek piece by Evan Thomas that the only image that hung on the walls of Atta's minimal Hamburg apartment was the Bourke-White photograph!

Thursday, April 25, 2002

Occasions where life imitates art, especially the art of parody, are to be treasured. Recently warnings have been issued to banks and other U.S. financial institutions to be on the alert for terrorist depredations. Honestly, though: is there a terrorist in the world capable of wreaking the sort of damage to our banking institutions that their own managements have? What has Osama Bin Laden got that J.P.Morgan (Chase) Chairman Harrison hasn't? Actually, I published a novel some years ago called The Ropespinner Conspiracy of which the premise was theat the Russians planted an economic mole, not unlike then Citicorp CEO Walter Wriston, inside the nation's flagship bank, not unlike Citibank as it was at the time, and engineered their agent's way to the top, whereby he proceeded to bring down the U.S. banking system by doing what American banks at the time were doing in real life in the way of reckless lending, conflict of interest etc.

Sunday, April 21, 2002

I have to say I'm intellectually amused by the apparent "business plan" confusion at AOL-Time Warner, although I'm not in the least bit amused financially, since I've inherited the stock.
What to do, what to do, what to do?
Well, here's a thought.
AOL is subscriber-based. It's looking for Time-Warner synergies. Why not allow AOL subscribers, working through AOL proprietary software, to build their own composite Time-Warner online magazines? Select the bits of Time, SI, EW, People etc they're interested in (by category) and furnish these once a week in a printer-friendly format for the armchair crowd; all the graphics bells and whistles would be available online. Price this as a premium service, based on a minimum plus formula. Make the composite E-Book downloadable. For example, I'd pick Time's news and science coverage & Bob Hughes art reviews; People's book reviews; EW's movie reviews etc etc. "My Magazine." What would I pay for this? $5 a week? Very possibly. More if AOL/TW reached out to Conde Nast etc. And then if there was a proprietary interface between, say, a travel mag and an expedia ("Like this trip? One-click it for $X") that's a combination of insight, info and convenience worth a subscription add-on.
What this all means is that the media have painted themselves into a corner by forgetting that it's readers and viewers, not a bunch of 30-something media buyers spouting dubious demographics. Go back to the customer and treat him or her as something more than a survey quantum.
Tomorrow, Monday, April 22, my old friend Alfred Taubman will find out into what size pieces the mills of justice intend to grind him. Until last week, I personally felt that jail time would be ridiculous, not simply because of age and infirmity, but because Al had been found guilty of something that has been going on for years, with a constantly changing cast at the institutions involved, and has been a crime on the statute books for all that time, but which the Government suddenly decided to prosecute. The "crime," to the extent there has been any, has been purely financial in its effects; money damages were all that justice really called for.
I feel differently today. Why? Because last week a Federal brief on Taubman's behalf recommended mercy based on "character' testimonials from the likes of the despicable Henry Kissinger, whose hands figuratively drip with the blood of innocent millions his venial grandstanding condemned to slaughter and starvation, and the equally loathsome Barbara Walters, a a much "worked"-over TV personage who routinely puts infanticides on TV to plead, tearfully, for public sympathy. Clearly, anyone who has such people for friends should not be allowed loose in the streets.
If Al is sent to the sneezer, his sentence will be testimony to the stupidest defense strategies ever devised. Devised, I say in sorrow, by the great white-shoe firm of Davis, Polk - to which I can claim some slight kinship: an ancestor on my mother's side, Francis Bangs, was a founder of the firm of Bangs & Stetson, Davis, Polk's father firm. His son harried Boss Tweed into collapse, which may be why I like to stick pins into swine like Kissinger. It's genetic. In the event, Davis, Polk's defense strategy was to try to convince a jury that a man who is palpably one of the cleverer and more creative businesspeople in the country was, when it came to Sotheby's, a narcoleptic oaf who seldom knew what was going on and entrusted everything to the dire machinations of his #2, Dede Brooks, herself descended from a line of crooks (see under JWP Corp).
Having with this brilliant strategy secured a conviction for their client,Davis, Polk now seeks amelioration in the penalty phase by soliciting character testimonials from persons of no character. God, I wish Gilbert & Sullivan were alive to get this all down in words and music!