Thursday, September 08, 2011

More Disappointment Involving CNBC's Guests and Guest Hosts

This morning I happened to catch a few minutes of self-aggrandizing New York Times columnist Tom Friedman on CNBC. It seems he and a co-author are out with a new book which celebrates the decline of the US. I write celebrate because, despite what Friedman likes to portray himself as on CNBC- a champion of individual initiative- he is, after all, a liberal Times columnist who never met a government program he doesn't like.

Today, he was breaking the shocking news that globalization of competitions means that every worker is now subject to those forces.

What previously unthought insight will Friedman provide us with next?

Of course, I'm being sarcastic. I wrote this post in late June, spurred by Michael Spence's WSJ editorial, regarding how globalization has likely rendered a global lowest-ranking group of people unfit for competitive employment. Specifically, I contended,

"Every nation has some bottom quartile of adults in terms of intellect, skills and education. In fortunate times, the nation can employ those people in lower-value-added jobs like construction, basic materials extraction or simple fabrication of materials and goods.

But the days of America being competitive at producing commodities is long gone. And, with it, I believe, a brief, probably unreproducible period from 1945-1970, in which lesser-educated and -intelligent Americans could make middle-class wages and enjoy "30-and-out" careers with bountiful pensions and healthcare.

My late father's cohort, he being born in 1927, enjoyed this golden era. Those before did not, nor those who followed.

It seems to me that Americans have become used to two generations, my father's and the early baby-boomers, of economically-lucky circumstances and have cemented their financial life expectations at an unsustainable level.

Today, the only long term sustainably-competitive businesses and jobs are those which can continue to innovate, create value and move forward technologically and in terms of meeting consumer needs. Static professions and jobs are all seeing declining wages and benefits.

While I'm not happy to acknowledge this, I must admit that today's interlinked global economy can no longer inexpensively shield and support the lowest quartile, decile, or whatever economically-determined least-productive, -skilled and -employable portion of any nation's workforce.

Nobody's worried about the workforce at Google, Amazon or Facebook. But the marginal banker, auto assembler or generic factory worker is a real problem for all of us. If they can't be re-employed at anywhere near their historic standards of living, how does that affect and change the US?

Here's what the modern interlinked global economy has done. It's forced economically-mature, once-vibrant advanced economies to decide, with their antiquated mix of unions, defined benefit pensions and health care systems and raised expectations, how to deal with the costs of supporting the now-unemployable citizens who have been taught for one or two generations to expect lavish standards of living by historic comparison.

A well-educated, bright, risk-taking young person who is comfortable with a long, changing, working life will probably get a reasonable facsimile of "the American Dream." Others will not.

I think it's time we acknowledged that, in America, a high-school graduate with an average intellect and skill set has a near-zero chance of achieving "the American dream" of a good-paying, secure job leading to a comfortable, decent home, spouse and family, health care, pension, vacations and a pleasant retirement after age 70.

Thanks to the global ubiquity of better education, I would guess that even an average US college graduate can't count on that dream anymore, either.

America won't, as a nation, I believe, be able to protect and employ it's least-productive citizens without paying unaffordable social costs. The time for that has long since passed, and, absent another devastating, global-economy-wrecking war, natural disaster or crisis, I don't see it ever returning."

Friedman solemnly intoned that now every US worker must adopt two attitudes- that of an immigrant (being hungry) and of an artisan (provide unique skills).

I don't disagree with Friedman, but I've been thinking and behaving along those lines since 1983. That's when I left a dissolving AT&T. Looking up the management chain above me, I realized none of those self-satisfied, but mostly insecure executives were going to magically protect me or my job. When I went seeking other employment, and landed at Chase Manhattan, that view was reinforced, along with Friedman's second point.

Within just a year or so of arriving at the bank, it began its first rounds of hiring freezes, then layoffs. It was at that time that I began, with my late business partner, Debbie Smith, to create a body of intellectual property that was severable from my employer and transportable to other venues.

I view Friedman's current realizations as ones that I came to nearly 30 years ago. Rather than write about them, I, as tens of thousands of other entreprenurially-oriented Americans also have done, I behaved according to these understandings.

From his longstanding, cushy job at the liberal New York Times, Friedman seems so isolated from reality that his every thought seems, to him, worthy of a book informing us lesser beings of the truth he just discovered.

But I have another story of a fairly frequent CNBC guest which is interesting for another reason. It's in the vein of my posts about how the ethically-challenged network continues to use also ethically-challenged Steve Rattner as a guest-host and guest. Searching on "Rattner" on this blog will provide you with a list of posts, among which are some that detail his run-ins with the SEC and implicit admission of some pretty serious misbehaviors concerning 'pay to play' asset management.

On the theme of "it's a small world after all," I happened to make the acquaintance, on my recent hiking trip to the White Mountains of New Hampshire, of a criminal practice attorney whom I'll call Dave. Learning of my professional activities in equity investing, and one-time hedge fund partnership with a former Salomon Brothers partner of some repute, he asked if I knew a hedge fund manager whom I'll call Mr. O. O is a periodic guest on CNBC.

When I related my close 'degrees of separation,' but not personally-direct, connection to O through the former Salomon partner, Dave related the following story.

Dave has a client who was induced to participate in one of O's hedge fund investments. I should clarify that, when O appears on CNBC, he's always portrayed as a large-cap US equities investor. His background is one of being an equity strategist at a noted Wall Street firm some years ago. He usually speaks of specific US equities, effectively talking his book.

In this case, however, the investment was an energy project in either Russia or one of its former Republics. The investment went bad, and Dave's client's stake was entirely lost.

Dave then recounted some of the developments of the subsequent lawsuit over the investment. It seems that there were violations of the Foreign Corrupt Practices Act, which is the law that forbids US firms from paying bribes overseas in order to secure business. Dave told me that O escaped conviction but was pretty clearly involved. One of O's lieutenants, however, was not so lucky, was convicted, and did jail time.

Needless to say, O continues to appear on CNBC. This, and the use of people like Rattner, with whom Dave was also familiar, in the same manner as I am, was why, Dave explained, he doesn't even bother to watch the network anymore.

What struck me as interesting new information from Dave was that O's hedge fund apparently involves not-inconsequential investment activity in vehicles which are quite far afield from the traditional, liquid US equities with which he and his fund are typically identified. And they would seem to be fairly important as a proportion of the fund's activities, if members of the fund's management are being convicted of violating federal laws in order to operate said investments.

Maybe CNBC should do themed mornings with guest hosts and guests who all share a trait, like having entered into a settlement with the SEC, or having employees convicted of violating federal laws in the course of managing fund investments.

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