Thursday, November 20, 2008

Music for our times...

The image of the Big Three CEOs flying their own private jets to D.C. (strange how the idea of jetpooling never crossed their minds) to beg for federal money somehow makes me think of an influential album released 40 years ago.

I'm speaking of Beggars Banquet by the Stones. If there's any beggars attending any banquets, it would be CEOs who know how to beg for cash like the best of the bums.

So with the image of fat cats sitting on leather seats in the privacy of their own jets in mind, let's take a look at how beggars fared at the banquet 40 years ago...

The first thing you realize as you listen to the songs on the album is that Beggars Banquet is unbelievably timely, in spite of its age. It opens with a bang: Sympathy for the Devil, a song about Lucifer, the Devil, a song loaded with a history of violence and rage. It was a song played during their Altamount concert, where a man was stabbed after he had pulled out a gun (though not necessarily played at the precise moment of the murder.)

With lyrics that cover the blitzkrieg, the assassination of the Kennedys, the murder of the Romanovs and the doubt of Jesus, it offers a timeless glimpse into the greed, hatred and misery that has been around for a long long year.

And I think these days, the nature of the game still has most of us puzzled.

Sympathy for the Devil segues immediately into No Expectations - with lyrics many can relate to today: Once I was a rich man and now I am so poor.

Later, we hear Mick singing songs about a tramp sittin' on my doorstep and strange stray cats and about how the famine swept the land - providing stark images of isolation and darkness.

The album also includes the Stones' rousing anthem to political upheaval Street Fighting Man and ends with an ode to The Salt of the Earth.

The ten songs on Beggars Banquet offer a stripped down honesty in the lyrics and some of the best rock 'n roll music ever laid down on tape, fusing blues and rock in a way that seems as fresh today as it was back when it was played for the first time.

1968, the year this album was released, was the year we lost Martin Luther King, Jr. and Bobby Kennedy; it was the year the city of Chicago waged war on the protesters who came to the Democratic Convention; it was the year Nixon became our president.

It is remarkable that something released 40 years ago at the height of the violence of the 60s is so relevant today.

Great art is timeless. So let's hoist a few and celebrate the auditory banquet offered by the Stones so many years ago.

Lets drink to the hard working people
Lets drink to the lowly of birth
Raise your glass to the good and the evil
Lets drink to the salt of the earth

Monday, November 17, 2008

BONUS! (Chrysler style)

Oh to be a highly compensated Chrysler executive! You get to run your company into the ground, hold your hand out in the hopes it will be filled with government bailout money AND look forward to a big bonus at a time when everyone else is worried about hanging on to their job.

According to this article in the Detroit Free Press, Chrysler plans to hand out $30 million in retention bonuses to its executives. And at least six Chrysler execs "are due to receive bonuses of more than $1 million a piece."

As they move to line their pockets with millions, Chrysler executives are joining with Ford and GM leaders to ask the federal government for $25 billion in loans.

Really? Seems that free markets are fab when you've got the feds to cover your losses.

This I do know: when I buy my next car, it will not come from Detroit. Maybe the feds feel compelled to support failed business leadership - but I won't.

Wednesday, November 12, 2008

Word of the Day: TARP

TARP:  A Word with Multiple Meanings

In layman's terms, a tarp is a piece of material used to cover and protect exposed objects or areas.

Here you see how my family employs a tarp to protect us from the elements during a camping trip.

In the current language of American economics, TARP is the acronym for the federal government's Troubled Asset Relief Program, led by the brilliant investment banker, Henry Paulson, who now serves as the nation's Treasury Secretary.  TARP is the Fed's attempt to protect the nation from the collapse of our economy.

TARP is also a shifting landscape – in a statement today, Paulson announced changes in how he wants to invest those billions of TARP-assigned tax dollars.  He's decided that purchasing illiquid mortgage-related assets is no longer "the most effective way to use TARP funds."  He's now looking at shoring up the consumer credit market (because consumers need more debt in their lives) and "exploring ways to reduce the risk of foreclosure."

You can see his remarks here. It's an interesting example of a story that ebbs and flows with optimism and concern.

Happy News
Paulson starts out on a happy note, stating that "the actions taken by Treasury, the Federal Reserve and the FDIC in October have clearly helped stabilize our financial system."  (Happy news for the banks, but I'm sure the people at GM and Motorola and other troubled non-financial organizations don't feel quite the same joy.)

He then goes on to assert that "we have taken the necessary steps to prevent a broad systemic event."  (Really?  I thought TARP was necessary because we're in the throes of a "broad systemic event.")

He also acknowledges that TARP set a "land-speed record from announcing a program to getting funds out the door" – the Fed had announced plans on October 14th to purchase preferred stock in federally regulated banks and thrifts - and had sent $115 billion out the door to eight financial institutions in less than two weeks.

Speedy is good, I guess.  I hope someone is just as swift at making sure these institutions are being held accountable for these funds - and that their executives are not jetting off to an expensive spa at our expense.

Thankfully, however, Paulson recognizes that "any future program should maintain our principle of encouraging participation of healthy institutions while protecting taxpayers."

At least the boss is aware there is a need to protect the people funding the plan.

Continuing Concerns
But then he ties up the package in a wrapper of worry by saying things like, "our financial system remains fragile in the face of an economic downturn here and abroad...." and "...banks and non-banks may well need more capital given their troubled asset holdings, projections for continued high rates of foreclosures and stagnant U.S. and world economic conditions."

(But, phew, we've prevented that "broad systemic event" we were all so worried about.)

A Blanket of Money
One point I hope the banking experts in the Fed understand:  that expanding credit to companies on the verge of collapse and to consumers facing layoffs doesn't really solve the problem.  We need more than healthy banks.  We need more than the ability to borrow more money.

Before we can buy, we need a paycheck.

We need healthy companies that can employ American workers, instead of lay them off by the thousands.

As it reads now, TARP is a big blanket of money covering up the exposed flaws in our system.  But in focusing almost exclusively on expanding our ability to borrow, it seems to be doing nothing to actually fix the flaws that got us into this crisis.

And that's a problem that will continue to haunt us well into the future.

Monday, November 10, 2008

Word of the Day: Sacrifice

In the early winter of 1918, after four years of a terrible war that destroyed much of Europe, the Allies and the Germans decided to stop hostilities on the 11th hour of the 11th day of the 11th month.

That they could be so poetic in their timing of the cessation of battle, after years of the brutality and horror brought by World War I, is astonishing.

The official end of World War I happened later, when the Treaty of Versailles was signed in June of 1919, but the day that marked the end of fighting was the day that President Wilson chose as Armistice Day, the national holiday to honor the soldiers who served in that war.

Of course, the "war to end all wars" did nothing of the kind. As time went on, we added more wars to history, more heroes to be mourned and remembered.

In 1954, after World War II and the Korean War, President Eisenhower changed Armistice Day into Veterans Day to honor the heroism of the veterans of all wars.

War Stories
My father was a veteran of the Korean War, the "forgotten war." He was the kind of soldier who spoke very little about his experiences on the front line of battle. It really wasn't until he drew near his own death that stories about his war-time experiences began to bubble up to the surface.  The presentiment of his own mortality freed him up to talk about the deaths he witnessed in a distant land so many years before.

What I wish I'd known then: I wish I had known to ask more questions when he shared the bits and fragments of his war stories.

What I know now: the experiences of a soldier in war are incredible, painful, incomprehensible sometimes, yet we need to remember these stories; we need to know these stories; we need to hand them down to the next generation with the hope that in doing so, we are doing a small part to ensure that no one has to endure those experiences again.

Today We Remember
Today is the 11th day of the 11th month of the year. Today is Veteran's Day, the day we honor all the people who have risked – and continue to risk – their lives in battle to protect our rights as Americans. I am filled with gratitude for their sacrifices.

America was born of war and is embroiled in war today. The bones of our soldiers lie scattered throughout the world. Today, we remember the sacrifices, the valor and the stories of all the American men and women who have fought and died for our principles.

As a nation, we are forever in their debt.

Giving to Get Back...

They came with tables...

They came with blankets...

They came in droves...

This was the scene you could find last Friday at Old Orchard mall in Skokie, Illinois.  And no - these are not Springsteen fans waiting in line to buy concert tix - these people are patiently waiting (some even pulling an all nighter in the chill of the midwestern winter) in the hopes of scoring L.L. Bean gift cards being given away as part of the grand opening celebration of the retailer's newest store.  

The Motivation of Money
While Volkswagen is hoping to lure consumers into showrooms with a strangely clever ad campaign, L.L. Bean is using one of the oldest promotions in the book - handing out money just for showing up.  

In a time when economic news seems woefully bleak, the appeal of L.L. Bean gift cards was enormous, with a large crowd of people lining up for the opportunity to draw a card worth anywhere from $25 - $500. According to Greg Elder, L.L. Bean vice president for retail stores, approximately 2500 people showed up for the chance to get one of the 500 gift cards being handed out. This is very similar to what Elder sees at other store openings.

L.L. Bean gave away a total of $17,875 in gift cards that day.

And that's not the extent of the L.L. Bean's investment in the new store.

As a company that has built a strong brand by supplying affordable outdoor gear to families, L.L. Bean takes pride in its commitment to environmental conservation.  The company invested in the design of the new store to ensure that it was built to US Green Building Council's Leadership in Energy and Environmental Design (LEED) standards.  By utilizing technology and systems that increase energy efficiency, L.L. Bean reduces the store's environmental footprint.

The company has also made the choice to invest in its new neighborhood as well.  As part of the grand opening celebration for the Skokie store, L.L. Bean will contribute $25,000 to Chicago Wilderness for the Illinois Backyard Nature Center.

Giving to Get Back...
The promise of money is always a powerful motivator.  And last Friday, hundreds of consumers had all the patience in the world to wait for the money L.L. Bean was handing out.  But will it build loyalty?  L.L. Bean is banking on that...but only time will tell. 

(Photos courtesy of Chip Williams, whose work you can find at

Friday, November 7, 2008

"The most important story of our time."

Okay, so I confess that I'm scratching my head over Volkswagen's new Routan Boom ad campaign, you know, the one where Brooke Shields informs us about a fertility boom caused by breeders in dire need of German engineering.

You can see the ad">here.

It's clever.  It's funny.  But it's weird.

Frankly, I'm uncomfortable with any ad campaign that promises to let us "witness the most important story of our time.  Ever."  (Check out the website, I'm telling you - this claim is front and center!)

Especially an ad campaign launched at this critical time in our history – and suggests people are having babies in order to buy a particular brand of car.

Pitching the Pitch
Just imagine how the agency pitched this idea to the folks at VW:

"The minivan is a car associated with breeders - and to make that point, we'll create a "documentary" on The Routan Boom - an explosion of babies being born to parents who have a hankering for the VW Routan.  Having babies now gives them license to buy into the breeders top choice for transport - the VW minivan!

"To hook people, we'll toss in phrases like "People have children as an excuse to get German engineering" because let's face it - it's a memorable phrase.

"Trust us - we know we'll find true success by linking an expensive purchase during a recession to the German engineering originated by Hitler's desire to develop a German family car.  People are always motivated to act when given powerful subconscious reminders of World War II. 

"To fully connect with our audience - people who intend to breed – we'll bring in Brooke Shields, a funny, beautiful actress who had a tough time getting pregnant – and who got into highly publicized pissing match with Tom Cruise over her use of anti-depressants when dealing with post-partum depression.

"It's got just the right zing needed to sell minivans!"

Creating Enduring Memories
You've got to hand it to Crispin Porter + Bogusky, the agency that created the campaign.  I have no idea how the pitch really went, but they did a phenomenal sales job.

And they've created an ad that is truly memorable.  

According to a story in Ad Age, the Routan ad was the most memorable new ad launched during the period from 9/15/08 - 10/12/08 - more than twice as memorable than the average new commercial screened at that time.

But I do wonder how effective it will be in selling Routan minivans, though right now, VW is doing well in comparison to other car manufacturers.  

This fall, when GM saw sales drop 45 percent from a year earlier, Volkswagen was able to prevent such a precipitous free fall, with sales for its cars dropping by less than 8 percent, according to Ad Age.

So who knows?  Maybe making a memorable ad is all that is needed to move product today.

Or maybe VW is able to capitalize on the brand it has built in the last few decades.

Or maybe consumers really do want to have babies just to buy a particular minivan, which if true, would be one of the most astonishing stories of our time.

Thursday, November 6, 2008

Word of the Day: Debt

I was an American Studies major in college, which I've lately realized does not give me the expertise in finance needed to figure out what has gone wrong with our economy.  Waiting until after the market crashes is probably not the best time for a crash course in new vocabulary terms like "credit default swaps" and "collateralized debt obligations."

If only I'd gotten an MBA instead of an MFA!

From my rudimentary research, credit default swaps (CDS) are contracts that promise to cover losses on securities in the event of default.  But apparently, as we have all learned, people who own these contracts don't necessarily have the money to cover losses should a default occur.   Apparently people bought and sold the idea of money without actually having any money to back it up.

Visualizing the Vague
In all honesty, I have not been able to uncover what it means to own a collateralized debt obligation.  But you can read more about it here in this nifty interactive explanation offered by

Here you'll see water flowing into buckets in ways that succinctly illustrate how mortgage defaults can create a devastating cash-flow drought.  And today, of course, the drought is severe - with money as scarce as rain was back in the 1930s dust bowl era.  

Which brings me to my word for the day:  debt.

The Strongest Fundamental
We keep calling this a credit crisis.  As the economy lurched into a freefall, we were told that massive infusion of tax dollars was needed to capitalize banks so they could start lending to each other without fear of failure.  Because in the post-millennial era, once the ability to lend and borrow is curtailed, business as we know it fails.  

To me, a writer without an extensive background in finance, credit is just another word for money you don't have.  It's a nice word for debt.

Debt is what happens when you buy things you can't afford; credit is what you use to pay for the spree. 

So when, exactly, did debt became the only fundamental of our economy to remain strong?  Viewing it through the prism of my liberal arts background, our crisis today isn't a "credit crunch" - our crisis today is one of overwhelming reliance on debt. 

I can only hope that the smart financial minds of our country are busy solving this problem in ways that strengthen all the pillars of our economy - not just our ability to add more debt to the ledger.

Wednesday, November 5, 2008

Word of the Day: Chicago


The City that Works. Urbs in Horto. City in a Garden. City of Broad Shoulders.

A city with a complex relationship to race.

A city that Martin Luther King, Jr. visited in 1966 in an attempt to bring the civil rights movement north.

A city where, during that same visit, Dr. King was hit by a brick thrown by angry whites during a march through Marquette Park.

"I've been in many demonstrations all across the South," said King after the march in Chicago. "But I can say that I have never seen – even in Mississippi and Alabama – mobs as hostile and hate-filled as I've seen in Chicago. I think the people from Mississippi ought to come to Chicago to learn how to hate."

Last night, in a Chicago park that had been a key battlefield during the 1968 Democratic convention, an enormous crowd gathered to witness history. White people. Black people. People of all ethnicities came to Grant Park to see Barack Obama.

They didn't come to hate. They didn't come to throw bricks. They came to celebrate.

Last night, a crowd gathered in Chicago and the world watched. And last night, when the whole world was watching, they looked to Chicago to see a black man stride onto the global stage as president-elect of the United States.

That such an event could happen in such a city exemplifies not just the "enduring power of our ideals." It showcases our ability to transform hatred into acceptance as we strive to achieve that "more perfect union" first described by our founding fathers.

We are fortunate to witness history in the making, fortunate to climb closer to the mountaintop, fortunate to live in a country that continually reinvents itself using blueprints drawn up more than 200 years ago.

"Out of many, we are one."
– Barack Obama to the crowd at Grant Park, November 4, 2008