Stephen Fry on America

Stephen Fry on America:

If I were to run out of petrol in the middle of the night I would feel more confident about knocking on the door of an American home than one in any other country I know - including my own. The friendly welcome, the generosity, the helpfulness of Americans - especially, I ought to say, in the South and Midwest - is as good a reason to visit as the scenery. Yes, Americans are terrible drivers (endlessly weaving between lanes while on the phone, bullying their way through if they drive a big vehicle, no waves of thanks or acknowledgement, no letting other cars into traffic), yes they have no idea what cheese or bread can be and yes, strip malls, TV commercials and talk radio are gratingly dreadful. But weighing the good, the kind, the original, the enchanting, the breathtaking, the hilarious and the lovable against the bad, the cruel, the banal, the ugly, the crass, the silly and the monstrous, I see the scales coming down towards the good every time.

There is one phrase I probably heard more than any other on my travels: Only in America! If you were to hear a Briton say ‘Tch! only in Britain, eh?’ it would probably refer to something that was either predictable, miserable, oppressive, dull, bureaucratic, queuey, damp, spoil-sporty or incompetent - or a mixture of all of those. ‘Only in America!’ on the other hand, always refers to something shocking, amazing, eccentric, wild, weird or unpredictable. Americans are constantly being surprised by their own country. Britons are constantly having their worst fears confirmed about theirs. This seems to be one of the major differences between us.

I made a similar comment a while back about Americans being friendlier than most people, but it's all relative. I just had opposing counsel tell me this morning she moved from Long Island to California because New Yorkers were rough and rude (something Escape From Brooklyn mentions in her blog frequently as a reason to move to Minnesota). Personally, I liked most of the New Yorkers I met when I was in NYC. In any case, Mr. Fry is correct--as an older white male with a British accent, most Americans will fall over themselves to help him (Americans are suckers for British accents--how else can you explain Hugh Grant's popularity here?).
I think a more accurate statement is that American culture is generally less guarded than other cultures. The question is whether Americans sacrifice modesty and humility for their greater optimism and tolerance. "Whatevah," an American might say. Seems an oddly appropriate response, no?

By the way, Mr. Fry has a delightful blog:

http://www.stephenfry.com/blog/

NPR on Japan and Cars

Someone from NPR called me this morning. She asked my opinion about why the Japanese stock market had dipped when the auto bailout did not happen. Intuition would indicate that the Japanese car companies would be better off because of less competition.

I told her there were two major reasons for the Japanese stock market's dip.

1. The Japanese yen's strength. Yesterday, the American dollar dipped about 2.5% against almost all other major currencies (FXC, FXF, FXE). Basically, America's citizens lost about 2% of their international purchasing power overnight. This is major news, but you wouldn't know it from the lack of media attention. (Quite frankly, pictures of Weimar-Republic-branded wheelbarrows carrying the American dollar should be on the front page of every major newspaper.)

The Japanese yen is strong in part because Japan has a high savings rate and is the world's second largest economy; however, in a perverse result, Japan's high savings rate works against them because they export so many products to the United States, where our currency is becoming weaker. Basically, Japanese products are going to be too expensive for Americans, so Americans will either buy fewer Japanese cars, CDs, and Nintendos, or the Japanese will have to reduce their prices. Either action will cause lower profits for Japanese companies, which is one reason the Nikkei declined by over 5%.

2. A chain reaction disrupting the global auto market. Car companies are more connected than you might think. A GM bankruptcy impacts a wide array of other companies, like steel manufacturers, chipmakers, etc. Companies that had the Big Three as primary customers would have to lay off workers and stop hiring, which puts less money in the hands of potential car buyers worldwide.

Also, in addition to joint ventures, such as NUMMI, car companies buy materials from the same suppliers. If one supplier, let's say Delphi, loses a major customer like GM, their cash flow is reduced, and they may need to lay off workers, delaying projects, new orders, and even existing orders, further disrupting the auto market.

Globalization means more and more companies, especially large ones, are interconnected. This has advantages and disadvantages. One major disadvantage is that if one large company is reckless, it creates problems for numerous smaller companies. Delphi still exists, but has been in Ch 11 bankruptcy since October 2005. Delphi's bankruptcy filing was probably the writing on the wall for the Big Three.

3. I also said any value left in GM, Chrysler, and Ford was in their finance arms. In plain sight, American car companies became subprime banks. They were practically giving away their products in exchange for a stream of steady cash payments, with interest. All those 0% financing commercials? That's the equivalent of a "no money down," ARM home mortgage, but on a smaller scale. Car loan interest is where the Big Three receive a large chunk of their income, because margins on non-SUV autos have been consistently declining. Like the banks, GM and Ford took on too many subprime borrowers and overestimated expected income streams. The result is now all too predictable.

Washington Lawyer on Free Trade

I am currently licensed as an attorney in both California and Washington, D.C. It's not as impressive as it sounds--there are procedures for mutual cooperation between the two bar associations, so you can waive into D.C. if you meet certain criteria. The D.C. bar publishes a magazine called Washington Lawyer. This month's cover feature a story on free trade, by Sarah Kellogg:

http://www.dcbar.org/for_lawyers/resources/publications/washington_lawyer/december_2008/free_trade.cfm

While the majority of Americans favor trade, that majority has been shrinking. Fifty-three percent of Americans had a positive view of free trade in 2008, according to the Pew Global Attitudes Project, a public opinion survey of the Pew Research Center. That’s down from 59 percent last year and 78 percent in 2002. What’s shocking in the numbers is that the United States ranked last among developed nations in terms of public support for free trade. The next closest nation was Egypt at 57 percent.

Trade’s financial benefits and costs are constantly being debated, but there’s no denying exports play an important role in the U.S. economy. In 2007 exported goods and services accounted for 12 percent of the Gross Domestic Product. One of three U.S. acres is planted for export, and manufacturing exports have increased by 128 percent since the last multilateral- trade round more than a decade ago, according to the Office of the United States Trade Representative.

Wall Street to Reid: Cool Down

Senate Majority Leader Harry Reid was featured on every news channel last night, talking about how Wall Street would collapse this morning because the Senate rejected the auto bailout.

Well, the stock market was steady early this morning, and the Nasdaq was actually up around 8:00AM.

The White House just said it might step in to assist the car-makers, causing the market to move higher:

http://news.yahoo.com/s/ap/20081212/ap_on_go_co/meltdown_autos

Goshdarn it, if there's one thing Americans should know by know, it's that whenever George W. Bush gets involved, efficiency, financial stability, and prosperity follow. Right? Right?

Michael Malone in the Santa Clara Magazine

My alma mater's publication, the Santa Clara Magazine, continues to impress. This month's issue had a great essay by Michael Malone, who believes America's future depends on its continued willingness to encourage entrepreneurs:

http://www.scu.edu/scm/winter2008/entrepreneurs.cfm

Half of all new college graduates now believe that self-employment is more secure than a full-time job. Eighty percent of the colleges and universities in the United States now offer courses on entrepreneurship. Sixty percent of Gen Y business owners consider themselves to be serial entrepreneurs. And, most tellingly, 18- to 24-year-olds are now starting companies at a faster rate than 35- to 44-year-olds.

Don’t think that the rest of Generation Y is still dreaming of a gold watch: 70 percent of today’s high schoolers intend to start their own companies.

It looks like the new college grads aren't buying into the seniority paradigm. That's what I like about Santa Clara County--with all the new people here from so many different places, corporate seniority is less respected. Results, not tenure, are what count, which is the way a meritocracy ought to work.

Of course, I had to pick the one profession, law, where seniority does count. Sigh.

Where does America get its oil?

If you think America gets most of its oil from Saudi Arabia or the Middle East, you are wrong. ExxonMobil ran an ad in yesterday's WSJ (12/10/08, A10-11) showing the sources of America's oil imports:

55% = North American (includes Canada, Mexico)
16% = Africa
14% = Middle East
12% = South America (includes Venezuela)

The remaining 3% comes from Russia/Caspian, Europe, and Asia-Pacific (includes Indonesia).

Last time I checked, the top three suppliers of American oil were Canada, Mexico, and Venezuela.

Scott Burns on Social Security

Scott Burns on Social Security--skip the first question and go to the second one:

http://assetbuilder.com/blogs/scott_burns/archive/2008/12/10/what-others-are-doing-with-their-401-k-money.aspx

I didn't know how the Social Security system really worked until I read Mr. Burn's response to the second question.