August 2011 – Page 3 – artdiamondblog.com

“The Government Wants to Decide What We Eat”

“A rule against selling food with added vitamins and minerals, like canned pudding, prompted the removal of several popular products from Abigail’s, a shop in Copenhagen.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A6) COPENHAGEN — For the last seven years, Marianne Orum has owned a narrow store in a charming street in the heart of this Danish capital.

A sign advertises “British and South African Food and Drink.”
The shelves are lined with products familiar to most Americans, like Betty Crocker Pancake Mix, but also more exotic items, like Heinz’s Taste of Home Delightful Spotted Dick Pudding in cans, and bottles of Harviestoun Old Engine Oil porter.
But in January Ms. Orum got a phone call from government food inspectors. Tipped off by a competitor, they told her she was selling products that were fortified with vitamins or minerals, and such products require government approval, which she did not have, so she would have to take them off the shelves.
The culprits were Ovaltine; a shredded wheat cereal called Shreddies; a malt drink called Horlicks; and Marmite, the curiously popular yeast byproduct that functions in England as a sandwich spread, snack or base for a soup (just add boiling water), and is sometimes known as tar-in-the-jar.
“That’s four products in one go,” said Ms. Orum, clearly angered. “That’s a lot for a small company.”
Application for approval, she said, costs almost $1,700 per product, and time for approval can run up to six months or more; the fee is not refunded if the product is rejected.
“It’s a strange thing, this attitude in Denmark,” she said, in a tone of exasperation. “The government wants to decide what we eat and not.”

For the full story, see:
JOHN TAGLIABUE. “COPENHAGEN JOURNAL; Extra Vitamins? A Great Idea, Except in Denmark.” The New York Times (Fri., June 17, 2011): A6.
(Note: the online version of the story was dated June 16, 2011.)

In Britain Ice Is Often Dispensed “as if It Were on Prescription”

(p. 73) In England, Wenham ice was more talked about than used. A few businesses took regular deliveries, but hardly any households (other than the royal one) did. By the 1850s not only was most ice sold in Britain not from Wenham, it wasn’t from America at all. The Norwegians – not a people one normally associates with sharp practices – changed the name of Lake Oppegaard, near Oslo, to Lake Wenham so that they could tap into the lucrative market. By the 1850s most ice sold in Britain was in fact Norwegian, though it has to be said that ice never really caught on with the British. Even now, it is still often dispensed there as if it were on prescription. The real market, it turned out, was in America itself.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

Fannie Mae Execs “Resorted to Ad Hominem Attacks” When They Vilified the “Economic Pencil Brains”

Source of book image: online version of the NYT review quoted and cited below.

(p. C6) Although the financial crisis of 2008 has left a long trail of casualties, one group has benefited from the cataclysm: financial journalists. Several have already published books shedding light on the unprecedented events that caused investment banks to fail, global stock markets to plummet and borrowers to lose their homes. “Reckless Endangerment,” by Gretchen Morgenson, assistant business and financial editor and a columnist at The New York Times, and the financial analyst Joshua Rosner, is a worthy addition to the genre.
. . .
The book begins in 1994 with President Bill Clinton’s kicking off a public-private partnership to extend homeownership to more Americans. . . .
. . .
. . . the institution to which the authors devote the most ink is Fannie Mae, the government-supported enterprise created in 1938 to make home loans more accessible. And the person they hold most accountable is someone whose role in the “mortgage maelstrom” has until now “escaped scrutiny”: James A. Johnson, Fannie Mae’s chief executive from 1991 to 1998. Mr. Johnson was the “anonymous architect of the public-private homeownership drive that almost destroyed the economy in 2008,” the authors assert. “He was especially adept at manipulating lawmakers, eviscerating regulators and leaving taxpayers with the bill.”
The description of Mr. Johnson’s role is damning — and although the account lacks his perspective, it is thoroughly supported through scores of interviews with academics, government officials and industry executives, some of whom are granted anonymity. While Mr. Johnson didn’t respond to interview requests over five months, according to the authors, they overcome this obstacle with impressive use of public records and secondary sources, carefully attributed in the text or described in a two-page “Notes on Sources.”
. . .
A particular strength of this book is the number of doubters the authors unearthed: the unsung government analysts, public lawyers and private researchers who dared to question policy decisions and stand up to the formidable “housers,” as the true believers in government subsidies for home ownership are called.
The reader has a sickening sense of missed opportunity as these prophets are ignored or, worse, vilified, by those in a position to halt the mania. When a Congressional Budget Office researcher in 1995 reveals the multibillion-dollar extent of the government’s subsidy to Fannie Mae and its brother institution, Freddie Mac (and that one-third of these benefits never reached borrowers), he suggests that “Congress may want to revisit the special relationship.” Unable to assail the merits of his analysis, outraged Fannie Mae executives resorted to ad hominem attacks, calling budget office officials “digit-heads” and “economic pencil brains.”

For the full review, see:
PAM LUECKE. “BOOKS OF THE TIMES; Nation Goes on Its Merry Way to Ruin.” The New York Times (Tues., June 28, 2011): C6.
(Note: the online version of the review was dated June 27, 2011.)
(Note: ellipses added.)

Book being reviewed:
Morgenson, Gretchen, and Joshua Rosner. Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. New York: Times Books, 2011.

Much of U.S. Job Gains Are in Texas

(p. 1A) While the nation’s job growth has limped along since the economic recovery began two years ago, the Lone Star State is enlarging payrolls in Texas-size fashion.

From June 2009 to June 2011 the state added 262,000 jobs, or half the USA’s 524,000 payroll gains, according to the Federal Reserve Bank of Dallas and the Bureau of Labor Statistics. Even by a more conservative estimate that omits states with net job losses, Texas’ advances make up 30% of the 1 million additions in the 34 states with net growth.

For the full story, see:
Paul Davidson. “Need a Job? Move to Texas.” USA Today (Tues., JULY 20, 2011): 1A.
(Note: the online version of the article has the title “Texas bucks national unemployment trend.”)

Theft of Elderly Woman’s Air Conditioner Called “Murder”

Source of the “murder” quote is from:
J.D. Miles, reporter. “Elderly Woman Dies From Heat After A/C Stolen.” Dallas, CBS 11 News, August 5, 2011.
(Note: this report is the source of the “murder” quote which was stated by Mrs. Grissom’s neighbor Caroline Ware.)
(Note: Another version of the report with the “murder” quote has the title: “Texas Heat Wave.” CBS 11 News, August 5, 2011.)

Another report on the incident is:

Source:
Ed Lavandera, reporter. “Woman Dies After Air Conditioner Stolen.” CNN American Morning, August 5, 2011.

Entrepreneur Frederic Tudor Spent Family Fortune to Make Ice Obsession a Business Success

(p. 71) Lake ice was a marvelous product. It created itself at no cost to the producer, was clean, renewable, and infinite in supply. The only drawbacks were that there was no infrastructure to produce and store it, and no market to sell it to. In order to make the ice industry exist, it was necessary to work out ways to cut and lift ice on a large scale, build storehouses, secure trading rights, and engage a reliable chain of shippers and agents (p. 72) and, above all, create a demand for ice in places where ice had seldom or never been seen, and was most assuredly not something anyone was predisposed to pay for. The man who did all this was a Bostonian of good birth and challenging disposition named Frederic Tudor. Making ice a commercial proposition became his overweening obsession.
The notion of shipping ice from New England to distant ports was considered completely mad – ‘the vagary of a disordered brain’, in the words of one of his contemporaries. The first shipment of ice to Britain so puzzled customs officials as to how to classify it that all 300 tons of it melted away before it could be moved off the docks. Shipowners were highly reluctant to accept it as cargo. They didn’t relish the humiliation of arriving in a port with a holdful of useless water, but they were also wary of the very real danger of tons of shifting ice and sloshing melt-water making their ships unstable. These were men, after all, whose nautical instincts were based entirely on the idea of keeping water outside the ship, so they were loath to take on such an eccentric risk when there wasn’t even a certain market at the end of it all.
Tudor was a strange and difficult man – ‘imperious, vain, contemptuous of competitors and implacable to enemies’, in the estimation of Daniel J. Boorstin. He alienated all his closest friends and betrayed the trust of colleagues, almost as if that were his life’s ambition. Nearly all the technological innovations that made the ice trade possible were actually the work of his retiring, compliant, long-suffering associate Nathaniel Wyeth. It cost Tudor years of frustrated endeavour, and all of his family fortune, to get the ice business up and running, but gradually it caught on and eventually it made him and many others rich. For several decades, ice was America’s second biggest crop, measured by weight. If securely insulated, ice could last a surprisingly long while. It could even survive the 16,000-mile, 130-day trip from Boston to Bombay – or at least about two-thirds of it could, enough to make the long trip profitable. Ice went to the furthest corners of South America and from New England to California via Cape Horn. Sawdust, a product previously without any value at all, proved to be an excellent insulator, providing useful extra income for Maine lumber mills.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

Banker Rhodes Saved Murdoch from Bankruptcy

Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) In “Banker to the World,” Mr. Rhodes tries to distil the “leadership lessons” he has learned from his remarkable career on the “front lines of global finance.”
. . .
. . . , Mr. Rhodes does succeed in hammering home three lessons that we need to take to heart if we are to have any chance of navigating the troubled waters that lie ahead. The first is that there is no substitute for the human touch: For all banking’s bells and whistles today, it is much the same business it was in Florentine Italy. Consider one of Mr. Rhodes’s greatest exploits: coordinating the rescue of Rupert Murdoch’s News Corp. from bankruptcy in 1990. Mr. Rhodes was worried that the collapse of Mr. Murdoch’s heavily-indebted media empire would tip the world economy back into recession. But he decided to bet on Mr. Murdoch only after the two had sat down for a three-hour heart-to-heart over dinner in New York.

For the full review, see:
ADRIAN WOOLDRIDGE. “BOOKSHELF; A Conspiracy of Hunches; A rare master of both the financial and political realms reports on what a half-century of experience taught him.” The Wall Street Journal (Weds., June 8, 2011): A15.
(Note: ellipsis added.)
(Note: online version of article had the date JULY 13, 2011.)

Book being reviewed:
Rhodes, William R. Banker to the World: Leadership Lessons from the Front Lines of Global Finance. New York: McGraw-Hill, 2011.

Robert Lucas Sees Lower Growth Due to Too Much Regulation and Taxes

(p. A15) Robert Lucas, the 1995 Nobel laureate in economics, has spent his career thinking about why economies grow, and in particular about the effect of policy making on growth. From his office at the University of Chicago, Prof. Lucas has been wondering, like the rest of us, why, if the recession officially ended in the first half of 2009, there hasn’t been more growth in the U.S. economy. He’s also been wondering why this delayed recovery resembles the long non-recovery years of the 1930s. And he has been thinking about the U.S. and Europe.

In May, Bob Lucas pulled his thoughts together and delivered them as the Milliman Lecture at the University of Washington, an exercise he described to me this week as “intelligent speculation.”
Here is the lecture’s provocative final thought: “Is it possible that by imitating European policies on labor markets, welfare and taxes, the U.S. has chosen a new, lower GDP trend? If so, it may be that the weak recovery we have had so far is all the recovery we will get.”
. . .
“If we’re going to move to a European welfare state,” says Prof. Lucas, “we’re going to have to pay a European price.” And that price could be a permanently lower level of GDP per person. The U.S.’s amazing 100-year ride would slow.
Among the many things any such drop in GDP will siphon away is America’s relentless productive vitality. “So much new happens in the United States,” Prof. Lucas says. But will it still?

For the full commentary, see:
DANIEL HENNINGER. “The Disappearing Recovery; What if the weak recovery is all the recovery we are going to get?” The Wall Street Journal (Thurs., JULY 14, 2011): A15.
(Note: ellipsis added.)
(Note: online version of article had the date JULY 13, 2011.)

To Succeed in the Car Business, It Helps if You Care about Cars

Source of book image: online version of the WSJ review quoted and cited below.

(p. B1) . . . , General Motors embarked on a series of initiatives to overcome both the perception and reality of the growing import threat. The 1950s and ’60s marked the decline of the “product guy” at GM and the ascendancy of “professional management,” often individuals with a strong financial background.

It’s not that senior GM management disliked cars. It was more an atmosphere of “benign neglect,” a generalized consensus that we were, after all, primarily in the business of making money, and cars were merely a transitory form of money: put a certain quantity in at the front end, transform it into vehicles, and sell them for more money at the other (p. B12) end. The company cared about “the other two ends”–minimizing cost and maximizing revenue–but assumed that customer desire for the product was a given.
Responsibility for creation of the right product was delegated to lower levels in the organization, often to people with little understanding of quality design or great driving characteristics. I maintain that without a passionate focus on great products from the top of the company on down, the “low cost” part will be assured but the “high revenue” part won’t happen, just as it didn’t at GM for so many years.

For the full excerpt, see:
Bob Lutz. “Japan’s Advantage and How the Cadillac Lost Its Shine.” The Wall Street Journal (Mon., JUNE 13, 2011): B1 & B12.
(Note: ellipsis added.)

The excerpt is excerpted from:
Lutz, Bob. Car Guys Vs. Bean Counters: The Battle for the Soul of American Business. New York: Portfolio, 2011.

Refuting Claims of Bread Adulteration

(p. 67) . . . : The Nature of Bread, Honestly and Dishonestly Made, by Joseph Manning, M.D., . . . reported that it was common for bakers to add bean meal, chalk, white lead, slaked lime, and bone ash to every loaf they made.

These assertions are routinely reported as fact, even though it was demonstrated pretty conclusively over seventy years ago by Frederick A. Filby, in his classic work Food Adulteration (1934), that the claims could not possibly be true. Filby took the interesting and obvious step of baking loaves of bread using the accused adulterants in the manner and proportions described. In every case but one the bread was either as hard as (p. 68) concrete or failed to set at all, and nearly all the loaves smelled or tasted disgusting. Several needed more baking time than conventional loaves and so were actually more expensive to produce. Not one of the adulterated loaves was edible.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.
(Note: ellipses added; italics in original.)