May 2010

This, from Martin Wolf of the Financial Times, is the clearest and most succinct explanation of the financial crisis I have yet seen, completely accessible to the economically challenged. Well worth reading.

The grasshoppers and the ants – a modern fable

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General Motors’ return to profitability had to jostle for attention with other big stories in last week’s newspapers, notably the burning of Bangkok, the resurgence of Iceland’s volcano, and the Greek crisis and bailout, but it stood out nonetheless. Here was a bankrupt company, delisted from the New York Stock Exchange and deprived of its 83-year place in the Dow Industrial Average, now owned by an unholy trinity of the U.S. and Canadian governments and the United Autoworkers, showing a respectable first quarter profit almost exactly a year after it filed for bankruptcy protection. Although axing various brands like Hummer, Saturn, and Pontiac, closing plants, and laying off thousands of workers played a big part, no less significant was a nearly 50% increase in GM sales, from $22 billion in the first quarter of 2009 to over $31 billion in the first three months of this year. [click to continue…]

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Attentive and loyal readers of this blog will recall that I wrote, almost exactly a year ago, about China’s proposal to replace the dollar as the world’s reserve currency with the special drawing right (SDR), a unit of account used by the IMF, which is based on a weighted basket of currencies that includes the dollar, the euro, the yen, and the pound. I wrote then that this proposal had virtually no chance of being adopted, one reason being that the Europeans would be loath to abandon their new currency, which already accounted for a growing share of world reserves, in favor of a faceless accounting unit. [click to continue…]

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One could argue that true genius in business is more about giving consumers things they don’t even know they want than about giving them what they want or say they want. I remember the first time I saw the Apple iPod. I went online immediately and ordered one, even though in those dark ages I had to purchase third-party software to make it run with my PC. I also remember when the Sony Walkman and the CD player and disk were both introduced, and although I was slower to get those, I marveled at the genius of the people who gave us such elegant solutions to problems most of us were only dimly aware we had. [click to continue…]

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