Economist Apologizes for Opacity

In what we can only hope is the beginning of a clarity outbreak among economists, Gregory Mankiw of the President’s Council of Economic Advisors apologized yesterday for having praised offshoring:

“My lack of clarity left the wrong impression that I praised the loss of U.S. jobs. It is regrettable whenever anyone loses a job. A job loss is always an awful experience and can lead to hardship for a worker and his or her family … I regret that I did not express my views on these issues of great concern more clearly.”

Of course, Mankiw originally said that offshoring was generally good for the economy, which he almost certainly still believes. So his clarity outbreak is reality an episode of contrition for having said what he really thinks. Once again, Kinsley’s law bites back: in politics a gaffe is when a politician (or, apparently, a political economist) accidentally tells the truth.

Disney’s Eisner Cracks Wise

Disney’s Michael Eisner, under fire for his company’s performance, and facing pressure over the hostile aquisition offer from Comcast, cracked wise this week at Disney’s investor & analyst conference in Orlando:

On aquisitions:

“Oh, yeah — we’re buying Comcast. No, terrible answer. Turn off those cameras!”

On Steve Jobs’ successes:

“He created the computer, or at least Windows, or whatever he created, and did a good job.”

Sam Waksal’s Revenge & Kermit the Frog

It is an ironic end to a bizarre story. ImClone’s Erbitux cancer drug was approved yesterday, but trading had to be halted before the good news because the drug’s company’s stock fell 21%.

Yes, fallen. Why the tumble? Because daytraders were diligently spreading the word that Erbitux was about to be rejected by the FDA.

It wasn’t rejected, of course. But the errant rumor-mongering triggered yet another ImClone-related investigation — number 7,732, I think.

I wonder who this investigation will bring low, alongside Sam Waksal and Martha Stewart. Perhaps Kermit the Frog. I’ve always thought he looked shifty.

Google Valuation

Interesting George Colony piece on Google’s upcoming IPO. He argues fairly convincingly that the likely $10-billion-plus market capitalization will be wrong and destructive.

George is right, but trust me, it won’t matter. This is the right confluence of IPO, market, awareness, and time to produce something truly otherworldly. We should all be so lucky as to have Google’s IPO stay at the “sane” levels of $15-billion.

Trump Gets Downgraded

While Donald Trump has been basking in the glow of the successful “The Apprentice” fake reality show, real reality keeps trying to intrude. His Trump Casino Holdings LLC had its debt downgraded this morning by S&P. The ratings firm put Trump Atlantic City Associates on notice that it too could see its debt rating cut.

The reason? A deal cut by Trump Hotels and Casino Resorts, the parent of the aforementioned companies, with Credit Suisse First Boston to “recapitalize” Trump Hotels. A CSFB unit will put in $400-million, and in exchange it will get majority ownership of the Trump’s company.


Comcast-Disney OpEd

I ordinarily find Andy Kessler’s market comments fairly savvy, so I was somewhat disappointed to read his editorial in today’s WSJ on the Comcast-Disney deal. He points out that cable is a municipal monopoly, and then argues Comcast is buying Disney so that it has more cable channels, like ESPN, on which it can raise prices to other cable companies. His solution? The FCC and Justice lets the deal go through, preconditioned on opening up local markets to more cable competition.

Parsing Paul Martin

Canadian Prime Minister Paul Martin is saying that the current financial scandal was limited to a small group of people of which he had no knowledge. That is possible, although it is hard to square with his concurrent tenure as Finance Minister, not to mention the warnings that there was something awry in the department that was eventually fingered.

Who to believe? Well, according this (unscientific) poll at the Globe & Mail site, Canadians are firmly convinced that Paul Martin knows more than he is telling. Whether founded or unfounded, that widespread belief is going to play electoral havoc if the ruling Liberals stick to their plan for a May federal election.

  Update: Not having seen a single story about this issue here in the U.S., I did a quick search under Canada at Google News. Here is one of the first headlines that came up:

“Vancouver tops in reported UFO sightings across Canada”


This Disney-Comcast tieup is the best thing that could have happened to Michael Eisner. He solves his board problem, his succession problem, and his share-price performance problem courtesy of Brian Roberts at Comcast. He should be sending Roberts a thank-you card.

Just for interest, here is the FT’s list of the ten largest such deals extant. Factoid: Five of the ten come from media & communications.

How Not to Manage the Press

The White House press conference today should be required reading among all crisis management consultants working with companies. Far from being an exemplar, it was instead among the worst-managed such things I have ever seen. Spokesperson Scott McClellan was fumbling and uncertain, and while it almost certainly wasn’t his fault, the press pounced on his unwillingness to answer simple questions.

Without taking a partisan tack, it is an interesting example of how violating Carville’s Rule of Scandals — tell it early, tell it all, tell it yourself — can turn even the most insignificant issue into a debacle. The current president is in good company in struggling to manage the media, and alongside him is a laundry list of ballooned business scandals, from the major, like Tyco, to the minor, like Martha Stewart.

Was Canada’s Enron Canada Itself?

The Canadian auditor general’s report is now out, and it is a whopper of a business scandal, albeit set in the public sector. A few quotes from A-G Sheila Fraser on the biggest faux pas detailed in the report, the government’s errant billion-dollar up-with-Canada advertising program:

“Our findings on the government’s sponsorship program from 1997 to 2001 are deeply disturbing. Most significant was the widespread non-compliance with contracting rules, …Rules were broken or ignored at every stage of the process for more than four years, and there was little evidence of value received for the money spent.”

 Ms. Fraser continues:

“In a small number of very troubling cases, sponsorship funds were transferred to Crown corporations by highly questionable methods. These methods were apparently designed to pay commissions to communications agencies while hiding the source of the funds. And the amounts were significant.”

Canadians have been congratulating themselves for having (largely) escaped having their own Enron. No longer. Not to put too fine a point on it, but it seems as if the Federal government nationalized the job.