A Pilot Considers the Steve Fossett Mystery
First let me say that I pray for a good outcome. But the odds worsen with each passing hour. Fossett faces a grave risk of dehydration, even if he survived a crash in the Nevada desert.
Now let me ask, as a fellow pilot, an uncomfortable question. Is Steve Fossett a good pilot?
Whoa! Of course he’s a good pilot, you will say. Richard Branson, who backed Fossett on his record nonstop flight around the world calls Fossett "the number one gliding pilot in the world, as well as the number one aviator in the world ... If anybody could have glided [this plane] down, it would have been him."
Sir Richard is right, to a point. Fossett was an exceptionally well-trained and careful pilot for his record-breaking missions.
But on Monday, Fossett hopped not into the Virgin GlobalFlyer but into a little Citabria Super Decathlon. The Citabria is a slow plane of simple construction, but it is not an easy plane to fly. The Nevada winds, howling on Monday, would blow the Citabria around like a kite. Another crucial point: The Citabria is designed as an aerobatic trainer. (Citabria is airbatic spelled backwards.) Aerobatic planes are not as stable in the air as non-aerobatic planes. That’s because a plane designed for rolls and loops must sacrifice stability for maneuverability.
I'm not implying that the Citrabria is unsafe. It is safe, but it demands specific skills.
The Citabria that Fossett hopped into on Monday was not owned by Fossett. It belonged to Barron Hilton's Flying M Ranch. So when Fossett hopped into the Citabria on Monday evening, one might fairly ask: Was Fossett really prepared to fly this (somewhat demanding) airplane on this (windy and therefore demanding) day?
The safety record of solo pilots in single-engine planes is not great. It’s equal to the safety record of motorcycles, and both are about 5-10 times less safe than driving a car. With planes, you can reduce your risk considerably by flying a well-maintained airplane in daylight, in good weather, and by not running out of fuel.
Another safety risk is what is called "time in type.” The more one flies a particular model of airplane, the safer one becomes in that plane. Conversely, when one does not have many hours in a particular plane, one is at greater risk. Familiarity breeds safety. Unfamiliarity is a risk.
I don’t know how familiar Steve Fossett was with the Citabria Super Decathlon. Did he know the Citabria well? It was not his airplane. So maybe not.
These are uncomfortable questions. But good outcome or bad--and let’s pray for good--they must be asked.
What are your thoughts? What happened to Steve Fossett? Post below.
September 06, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (38) TrackBack (0)
Is Al Gore Running?
This Vanity Fair valentine slyly opens the door.
At the story's end, VF poses the question:
Thanks to his newfound status, speculation about Gore's entering the presidential race has refused to die down. Alas, he's not going to announce his candidacy in the last paragraphs of a Vanity Fair article. "Modern politics seems to require and reward some capacities that I don't think I have in abundance," says Gore, "such as a tolerance for … spin rather than an honest discussion of substance. … Apparently, it comes easily for some people, but not for me."Tipper says he has made zero moves that would suggest a run for the presidency, but adds that if he turned to her one night and said he had to run, she'd get on board, and they'd discuss how to approach it this time around, given what they've learned.
My bet is no, Al Gore will not jump in. Hillary Clinton is proving to be one very crafty candidate. She triangulates easily between the Daily Kos left and the Democratic Leadership Council center with nary a stumble. How Hillary will match up against Rudy Giuliani (presumably) is another question. But in her party’s primary, she’s left no room for Al Gore to jump in.
What do you think? With Barack Obama fading and John Edwards getting little footing beyond Iowa, is there room for an anti-Hillary candidate in the Democratic primary? Will Al Gore jump in? If the Democratic candidates were stocks, whose shares would you buy?
Post your thoughts below.
September 05, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (46) TrackBack (0)
Tackling The Michigan Problem
Is there a connection between the poor state of Michigan's economy and the Wolverine football team's laughingstock loss to Appalachian State on Saturday?
Call it a stretch, but I think so.
Here are three commonalities:
--InsularityWhy were the fifth-ranked Wolverines, with their glorious football history, playing an NCAA Division IAA team? To artificially pump their record? This smacks of unwillingness to benchmark against the best. Similarly, for years and even now, Detroit's Big Three have benchmarked against themselves and not the world's best. Spend any time in Detroit and you discover how insular it is.
--Lack of InnovationA wonderful memory of mine is the 1972 Rose Bowl, when underdog Stanford kicked a last-second field goal to beat top-ranked Michigan 13-12. What made the upset delicious was the complaint of Michigan fans that Stanford didn't play "real football"--i.e., Stanford passed the ball. The Michigan economy is locked into an old-world combination of union labor and high taxes--and pays the price.
--Loss of TalentThe Wolverines and the Big 10 had one huge advantage during the 1920s to 1960s. Most southern colleges were segregated. Top African-American high schoolers from the South would head north. Now they don't have to, which is why the SEC has become the top college football conference. Similarly, the state of Michigan has suffered losses of talent: Google's Larry Page and Eric Schmidt, Sun co-founders Scott McNealy and Bill Joy, and Microsoft's Steve Ballmer all have Michigan roots.
What do you think? Is there a connection between the Wolverines' upset loss on Saturday and the chronic ill-health of Michigan's economy? How would you fix Michigan's economy?
Post your thoughts below.
September 04, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (33) TrackBack (0)
Sarkozy’s Secret Weapon
That would be the French finance minister, Christine Lagarde, profiled here by George Will:
Lagarde, 51, has a more informed affection for America than anyone who has ever risen so high in this country's government. She was an exchange student at a Washington prep school and a Capitol Hill intern during the Nixon impeachment proceedings. As a partner in a large law firm based in Chicago, for several years she lived in, and loved, the most American city.
Lagarde has undertaken to subvert the 35-hour restriction, which has been enforced by government agents snooping in companies' parking lots for evidence of antisocial industriousness. Overtime work will be exempt from taxes and social insurance charges. For this, she has been abused in parliament by socialists--their invectives are as stale as their doctrines--who compare her to Marie Antoinette.
Why not just repeal the law? Because, Lagarde says, the left considers this "an accrued right." Think about that--a right to be forbidden, the right to chose to do something elemental (work). French intellectuals are adept at thinking themselves into such tangles. "They," Lagarde says, "want to bring people down to solidarity." And "they regard work as alienation in the old Marxist understanding."
I agree with Will. Christine Lagarde is the real deal. Before entering government, Lagarde was the first woman chairman of the Chicago-headquartered international law firm Baker & McKenzie. She is a good friend of The Capitalist Tool, having spoken at Forbes CEO conferences in Copenhagen (2006) and Doha (2007). Last year, we ranked Lagarde 30th on the Forbes list of World's Most Powerful Women.
This year, Christine Lagarde moves up to No. 12 on the Forbes list.
Nice profile by Will, and I think Nicholas Sarkozy was right to install Lagarde as France's finance minister. It shows Sarko's serious about pulling France away from statism.
What do you think? Are you confident in France's economic future? Will Sarkozy prove to be France's Margaret Thatcher--an economic reformer and reliable U.S. ally?
Post your comments below.
August 30, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (19) TrackBack (0)
Obama Steals A Page From FDR
"Fine the lenders!" writes Barack Obama here.
Hoping to prop up his poopy presidential primary campaign, Obama says we should round up "the unlicensed, unregulated, fly-by-night mortgage brokers who are hoodwinking low-income borrowers into taking on loans they cannot afford" and treat them as "the criminals they are."
Who, exactly, are these criminals? How does one identify them? What laws does one use to punish them? Obama, the lawyer, oddly never answers these questions.
In her wonderful book, The Forgotten Man--the book of the year--Amity Shlaes writes how FDR would tell his minions to ignore or retroactively change the law when going after wealthy businessmen such as Andrew Mellon.
Shlaes writes:
The president told Congress that though Washington had raised its tax rates, the Treasury was still short $600 million. Roosevelt blamed not the arrangement but the wealthy themselves. Roosevelt, [Treasury Secretary Henry] Morgenthau would tell Treasury officials, "wants to say flatly that our estimates and our methods of estimating are correct, but the citizens--that's the word he used--found a trick way of finding loopholes." Roosevelt insisted that these "loopholes be closed and that they be retroactive."
If revenues were wanting, Roosevelt didn't mind investigating, prosecuting or legislating his way to them.
Panicked for cash, Morgenthau now had his Treasury set about trying to create dozens of Mellons. Roswell Magill of the department audited individual returns in New York and found, according to Morgenthau's diary, that citizens were using old tax breaks--legally, mostly. But Roosevelt was now set on erasing the old distinction between evasion and avoidance that the Treasury had danced around for so long.
Roosevelt also set out to prove that the intention of the taxpayer who failed to complete complex returns correctly was malign: Where there was ambiguity, taxpayers ought to be presumed guilty.
By 1937, investors and businessmen were sick of FDR's capriciousness. Capital went on strike. Businessmen stopped investing and hiring. The 1932-1936 recovery collapsed, leaving "a depression within a depression," writes Shlaes. Consequences were dire. In Brooklyn, in 1937, a 13-year-old boy named William Troeller hanged himself. The boy worried that his parents and five siblings weren't getting enough food.
When Obama calls mortgage lenders criminals but doesn't specify the laws broken, he's playing with fire. Retroactive prosecution, hinted by Obama, is tyranny, plain and simple.
What do you think? Post your comments below.
August 29, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (150) TrackBack (0)
300 Years Of American Declinism
Short blog today as I am Cary, N.C., to give a speech at a SAS Institute global managers strategy meeting. The conference and speech season has begun! It runs from now and until Thanksgiving, and again from mid-January to Memorial Day. That's how this blogger piles on 250,000 miles a year of air travel.
If the Dow's dog days have you down, read this. Long piece, so you might want to print it out and read at your leisure.
Carping about America's future is not new, as Alan Dowd nicely shows.
After you've read it, post your thoughts. Why is it easier to complain than to see opportunity? Human nature? Modern media? Something else?
Post below.
August 28, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (26) TrackBack (0)
Liquidity Crisis or Credit Crunch?
I'd love to hear your opinion on this.
In my Forbes magazine column, which closes today, I play ever the optimist. My take is that we don't have a deep global liquidity crisis. We have a short-term credit crunch--which the markets are already handling quite well.
Here is my argument:
The liquidity "boom" that drove financial events up until July was always the result of two causes, one good and one bad. The bad was loose money/lax lending standards that got imbedded like a virus into mortgage-backed securities. In July, the market woke up to this fact and reacted as you might expect.
The other cause of liquidity is a good one. That would be the "Laffer to Google" global boom of the last 25 years. The world has enjoyed a tremendous run of innovation, technology, productivity, prosperity and profits during the last quarter-century. Few dispute the essential fact of this boom beyond a few left-wing fossils.
To say, then, that in 45 days the world has gone from global-liquidity surplus to drought is to believe that the 25-year boom was a mirage, or else that all its profits were tossed into Miami and Las Vegas construction holes. You'd have to believe that no economic miracles had occurred in China, India, Southeast Asia, Eastern Europe and Ireland during this time; that none of the wealth created, at home and abroad, was saved and invested; and that no new financial technology was available to turn wealth into lendable resources.
That's baloney, and you know it.
What do you think? Do we have a deep liquidity crisis or a temporary credit crunch? Post your thoughts below.
August 27, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (23) TrackBack (0)
The Shakespeare Way To Read Business News
Our friend Jerry Bowyer posts a novel way to read the business and financial press. Bowyer:
William Shakespeare taught me how to read financial newspapers. ... One way to keep track of [his] complicated comedy-of-errors plays is to take a blank sheet of paper and draw a line down the middle of it.
In the left column you write facts like "Hero is faithful."
In the right column, you write feelings like "Claudio thinks that she is not faithful."
Winter's Tale, Much Ado, Twelfth Night, whichever of the misunderstanding comedies you read, you'll find this a helpful tool. If Shakespeare is too advanced for you, try it with old reruns of Three's Company. ... Next time you read a newspaper, I want you to try the Much Ado about Nothing Analytical Tool. In the left column you put sentences with stats based on an actual count of something real--jobs, dollars, interest rates, prices. Quotes, if they are substantial, go in the left column too. Actual events like hurricanes, elections, wars and terrorist attacks are definitely left column material.
Your right column is for sentences with words like "worries," "concerns," "expectations" or "believes." Unattributed quotes go on the right, as do short quotes. Opinion polls go on the right. This includes opinion polls masquerading as economic stats like consumer confidence, or business confidence. Elections and futures markets, however, go on the left. "Subprime jitters" is a left column thing.
Now step back and compare your two columns. The first column is a glimpse, however incomplete, of the world as it is. The second is a glimpse, no matter how distorted, of the world as people perceive it.
There is almost always a gap between the outlook of the two columns. Eventually, the right column catches up with the left, as reality gradually forces itself into people's minds. In the meantime, there is a gap between fact and feeling--a zone where you can see the world clearly and see just as clearly how public opinion is clouded by emotion. That zone, my friend, is where leaders are made.
Money, too.Good job, Jerry. I’m trying your method.What do you think? Using Jerry Bowyer's analytical tool, can you document the gap between fact and feeling? Is there money to be made (long or short) in that gap?Post your comments below, and have a nice weekend.
August 24, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (23) TrackBack (0)
Only The Bad News Is Fit To Print
The story of the last 24 hours has been Bank of America's plan to invest $2 billion in Countrywide Financial.
Here, at last, was the event the financial world sorely needed. A big buyer, a smart buyer, had stepped in and set a price for damaged subprime paper.
This morning's Wall Street Journal and Financial Times ran the story on the front page, above the fold--appropriately.
But the New York Times barely gives it a mention. Not a word on the front page. Barely a word on the business page!
Rather, the top business story in today's paper-version NYT is "Scandal and Suicide in China: A Dark Side of Toys." Oh my. Be afraid. Be very afraid.
Other NYT biz page above-the-fold stories include: "Lehman is Shutting Loan Unit" and a funny story of how the bad old U.S. is trying to shut down Internet gambling sites from Antigua and Barbuda.
Way on the right, below the fold, is a Gretchen Morgenson story titled "Assurances on Buybacks Cost a Lender." Here, buried in paragraph four, we finally get news about Bank of America's $2 billion plunk into Countrywide.
The skinny, of course, is that Bank of America wrecked the New York Times' story line. You know, the story line about how the Bush economy finally got what it deserved.
Whatever you think of the New York Times, its editors and writers are smart folks. So when they bury the week's most important financial event, it isn't because they failed to recognize its importance--I'm sure they did. They just didn't like its implication of good news.
What do you think? Is Bank of America's $2 billion investment in Countrywide as important (and positive) as I've claimed it is? Why do you think the New York Times buried it?
Post your comments below.
August 23, 2007 in byline=Rich Karlgaard, section=Opinions, storytype=Digital Rules by Rich Karlgaard Permalink Comments (23) TrackBack (0)
Loving Entrepreneurs
When it isn't fanning global warming hysteria, USA Today's Money section is consistently good. Here is a nicely done story titled "Companies, Investors Tend To Prosper When Founders Remain At The Helm."
USA Today:
Apple has become the most celebrated example. Its stock was $2.03 in 1985, adjusted for splits, when founder Steve Jobs left, according to market data provider CSI. When Jobs returned in 1997 after 12 years, shares traded for $3.95. Fast-forward 10 years, with Apple's shares at $127.57.
Apple isn't alone. USA Today reports 15-year stock gains for 63 companies still led by their founders. The companies include:
Apollo Group(John Sperling)6,340%
Amazon(Jeff Bezos)4,381%
Pre-Paid Legal Services(Harlan Stonecipher)4,302%
Dell Computer(Michael Dell)3,389%
Oracle(Larry Ellison)2,650%
The S&P return over the same period? Only 222%.
Well done, USA Today.
Question for the day: When you invest in stocks, do you go strictly by the numbers, or do you also consider management quality? And when thinking about management, do you like companies still led by their founders?
Post your comments below.
