Bashing good solid results is just idiotic.
It's amazing how much of the 'economy' is mere perception.
Dow just dunked under 10k. When does it reach its actual value? 200?
Well if the fraudulent economy is inflating at such a rate as it's been, you need more than 10% growth just to break even, right?
Our "leaders" are purely foul. Hanging's too good for them.
How about using "an unneccessarily slow dipping mechanism" into acid?
I'll have no pity should the country rise up and kill them all. I'd be hard pressed to even pray for their souls after the fact.
My grandfather had a saying. Don't bite off more than you can chew. I've seen a couple of businesses get screwed up when they forget this basic tenet.
Very insightful post today Nate. Too bad the overschooled MBA'ers don't have a clue anymore.
For the last say, 20 years, the manufacturing company where I work has implemented a shareholder value method for measuring success. Prior to that period we would make 5, 10 and 20 year plans to forcast customer needs and plan for new products, inspiring new design and focus on actually improving the business of manufacturing. Now we look out 6 months and base decisions on potential shareholder value. Our business has always been cyclical but now, based on wall street ratings and short term projections we ride a constant series of irratic waves that are impossible to predict and result in huge stock fluctuations and knee jerk corporate decisions. I'm sick of this ride and want off but after 30 years the lap bar seems to have rusted in place and I am compelled to ride this coaster till it either crashs or stops.
I do believe you hit the nail on the head this time Nate.
Son shines on a dog's ass some days Cat. Blind squirrels and nuts... ya know?
Truer words rarely spoken, Nate. Not only do I agree logically, but aesthetically. It's hard to find beauty in a culture that pursues business this way. Just look at every downtown of every city since the 1940s.
No, No, Nate, you must have been asleep that day in class, if the Oark General Store doesn't become a franchise and have "Super Oak General Stores" in every city with over 10K people than they've failed!
I was taught in business school that basically, if you're not growing, you're dying. I agree to some extent, but when you get down to the micro-management level of fanatical profit-driven explosive growth, you quickly take short cuts that can be dangerous down the road.
4 years worth of Fed-created growth in the US economy (main just inflation) has now been wiped away in 1 month. This lesson is what should be taught in business school. Spend 4 years doing things the wrong way and it can be gone in a month.
I'm reluctant to call it "growth" when its effects are short-term at best.
About time for a Conan O'Brien classic moment:
In April 2003, Federal Reserve Chairman Alan Greenspan underwent surgery for an enlarged prostate. "Doctors say the prostate showed moderate growth in the last quarter," Conan O'Brien joked, "but not the growth they had predicted."
Blind squirrels and nuts... ya know?
Yeah, more like a blind nut looking for a squirrel. The few ivy league MBA's I've dealt with are a darn sight better than the bush league MBA's. The problem not MBA's per se, but any company that starts hiring them is well past trouble. It's like saying the firemen ruined your house with all that water.
MBA people DO NOT SET POLICY. This growing vs dying mentality is the one that the owners of the company have, and they hire MBA's to milk the thing. The owners of such companies, really, truly, don't look beyond the next few fiscal years, they have a five year plan at best. Beyond that planning horizon they see themselves setting on a beach and the rest of the world can go hang. A good MBA can really help a company, but you need like one or two of them for every 50 million in sales (really rough thumb-nail guess). You get your basic 100 million company with 20 MBA types running around... that's a sure sign the boss is doing a pump-and-dump. You can give an MBA any goals you want - maximize profit, minimize inventory, minimize G&A, reduce staff turnover, improve customer satisfaction, reduce scrap rates, blah blah, whatever the goal is. All an MBA is gonna do is figure out how to accurately measure the thing, and how to mark progress against the goals - but they don't set the goals.
There's lots of good companies, but there's a really good reason that most companies only last about 40 years. As soon as someone gets in charge that's interested in turning a personal profit, not in having a healthy business... you got MBA's... and you got trouble.
But let's start with identifying the problem.
The Fed: for turning unloading tons of paper currency onto the banks and slashing interest rates.
Bush and his Democrat buddies for trying to put every poor or fiscally-irresponsible person in a house and using Fannie and Freddie to prop it up.
Oh....and HGTV for making EVERY WOMAN WANT A NEW HOUSE!
Bruce Bethke seemed to have similar feelings about Harvard, as you can see in The Nixon Interview: Part 3.
"But in America, in the 20th century, nothing epitomizes that worker-be-damned bottom line über alles mentality like the teachings of the Harvard Business School. There is no faster way to produce lots of cranky little socialists than to put them under the direct control of a Harvard Business School graduate!"
Brilliant post, Nate.
Same thing happens in government. You reduce a planned 10% increase in spending to a 5% increase in spending and while you're still increasing spending, you're said to be "cutting" spending.
Why? Because you're reducing growth, as you said.
...
I'm reading S.M. Stirling's latest, "The Scourge of God", which takes place in a post-apocalyptic U.S., where the country has split up into a variety of little kingdoms, all taking on the character of their founders during "The Change".
Two things: I wonder how the reality will match up to Mr. Stirling's vision, and I wonder how Nateland will turn out. 
"MBA people DO NOT SET POLICY. This growing vs dying mentality is the one that the owners of the company have, and they hire MBA's to milk the thing."
So they don't even influence policy? Consider the MBA who works his way up to being partner in the company, then CEO:
Henry Paulson (Harvard MBA) became partner of Goldman Sachs, then CEO, and we know where that all went.
George W. Bush is a Harvard MBA, and I suspect he's been known to set a policy or two.
OK, I'm not playing fair, but you get the idea. Yes, many companies "bring in an MBA" to be their Sherpa guide in the modern world of high finance, but there are plenty MBAs who go way beyond just being the hired hand, and they have left their imprint on our country.
Bill,
What the hell are you talking about? I am criticizing the attitude and business concepts of the leadership of corporate america. I didn't specify anything else.
I am talking about big dog CEOs... and the ivy league go-getters that try to impress their bosses by finding new and creative ways to apply this assinine theory.
I'm not talking about the guy down on 3 in accounting.
The owners of such companies, really, truly, don't look beyond the next few fiscal years, they have a five year plan at best.
I don't think some look beyond the next quarter.
We shouldn't criticize people with MBA's. After all, they're smarter than us, they have a b-school degree!
Now, I'm guessing, an MBA accountant offed himself and his family out in Californicate.
Coward.
I've got a Harvard b-school type story for ya.
I live in a small Oklahoma town, not much bigger than 20,000 people in it.
A few months ago Starbucks came to town. They put up a brand new stand-alone store. I guess Starbucks has been on a faster than normal expansion kick over that last few years.
Starbucks posted some losses recently. They announced that they were going to be shutting down the lower performing stores and I think the stores in the smallest markets. This included the just opened store in my town. This news broke literally weeks after the store opened.
Right at the beginning of October it closed.
It was opened for less than a year. It is now boarded up and making no money for nobody.
With planning like that it's no wonder businesses get run into the ground by these b-school wunderkind.
I also think the whole thing is powered by fear. You never know the value of a dollar next year, or whether you will even be allowed to do something next year, so you throw everything into NOW NOW NOW. Between constantly-changing economic policies, unpredictable regulation and inflation, there's not much incentive to look 20 years ahead.
I know this is OT a little bit, but I was listening to Glen Beck this morning, and he was relating that Charles Rangel has fixed it so now if someone wants to leave the US and live somewhere else, the US can now take HALF of your assets. Talk about a door being slammed shut. Just thought I'd bring that up given how many here would like to leave this country.
Excellent analysis Nate.
Let me give another small town example.
This was about 5 years ago. We live near a town of about 600. Six miles away is a town of about 3000. For over 20 years the Pizza Hut Corporation operated a company store in that town. There were Pizza Hut's in similar sized town throughout north Iowa.
I knew the lady who was the store manager. The local store had a consistent (over ten years) profit of 8% per year. Very similar for the other area stores. Some were 7, some about 9.
In the fall of 2003 the company remodeled the store, put in new carpet, chairs and tables. They gave the fixtures to charity, we even wound up with some of the chairs.
In the spring of 2004, some dumb ass corporate numbers cruncher decided that any store not returning 10% was not worth keeping open.
So, Pizza Hut Corporation closed all of their company stores in the small towns of North Iowa. The brand new furnishings were again given to charity, my friends church got all the booths for their youth center.
The building and property were sold off, and guess what,
Pizza Hut reported in 2005 that company sales were down.
How many of you would take a consistent 8% return on your money for 20 years. Not Pizza Hut, they believe the theory that Nate was talking about.
It's a cancer. And it's not just consistent growth it's become a push for accelerated growth with growth and cost savings rates being interchangeable so that 2% savings/growth that yielded a bonus for ivy league idiot last year is considered failure next year when a 3% savings/growth is set as a goal. Another 5% the comes due the year after that. It's a manufactured and designed "bubble".
A friend of mine, the CEO of a large international mining/excavation equipment manufacturer, was complaining to me the other day about expectations for accelerated growth rates by his board of directors. This idea has soaked in deep.
Way OT, but apparently Jamie R. gets around:
http://www.foxnews.com/story/
0,2...,434511,00.html
I didn't even know there were that many lesbians in Adelaide, they must keep a low profile. I can't say I've seen a homo couple walking around the city or beaches before.
Adelaide must be a far contrast from Sydney.
All you have to do is look at the Dow for a great example of HBS genii.
I've seen homo couples here..mostly lesbos. I even pet a dog a couple lesbos were walking. They wouldn't have known I was a "homophobe" from how sweet I was. You'd think I didn't hate homosexuals or something. (*rolls eyes - that was sarcasm for any idiot lefty lurkers that may not know the difference, so no need to call the anti-free speech commission)
Yeah, you have to be careful of that in canuckistan.
I think the whole problem stems from people thinking they should be able to get money, without really working for it. For, the workman is worth his hire.The idea that you can put your money in a closet. And get more out than you put in? Is like thinking you should be paid more than once for the same work.
Well, hey, they acquitted Mark Steyn, so there may be hope yet...
Profit margins...are evil.
"Only 53% of American adults believe capitalism is better than socialism."
http://www.rasmussenreports.com/
..._than_socialism
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