Barrett Sheridan

Stories by Barrett Sheridan

  • Investment Drops Sharply In Clean Technologies

    As oil shot up to $150 a barrel last year, venture capitalists (VCs) poured money into clean technologies like NASA-caliber fuel cells, on the belief that their costly, sci-fi-inspired advances would remain competitive even if oil fell to $50 a barrel. Now that it has, closing at $52 last week, VCs are showing just how committed they are to the green revolution: not very. While VC investments were down 47 percent overall last quarter, investments in clean tech fell by 84 percent —the sharpest drop for any sector. Last year, clean tech attracted a record $4.1 billion; this year, it's projected to be just $600 million. It's gone from being the second most popular sector to invest in (after software) to the second most reviled (after media/entertainment). Obama is trying to reinflate clean tech with $83 billion in his stimulus plan. But VCs may have moved on to new prey: financial services was the only industry to see an uptick in investment last quarter.
  • Breakfast Buffet, Friday, April 24

    Sinking...Like a Rock: The auto industry's woes continue. Chrysler will likely file for bankruptcy next week. Meanwhile, Ford lost $1.4 billion last quarter, on top of a $14.6 billion loss in 2008, but says it still won't need a government bailout.What's His Motivation?: A Madoff movie is already in the works. Elsewhere, the Daily Beast has a photo gallery of its dream cast, with Dustin Hoffman in the lead role.All That Glitters: China revealed that its gold reserves have risen by 75 percent in the last few months, another sign that the country is starting to diversify away from the dollar. Why Innovate When You Can Shop?: The Economist is troubled that in 2008 the U.S. granted more patents to foreigners than to its own citizens.Echoes of Dickens: Bad times in the UK mean boom times for vermin, "with shuttered shops and half-built...
  • Why Is Jeff Bezos Smiling?

     Because this quarter, in the midst of -- say it with me now -- the worst global recession in 70 years, profit at Amazon.com grew by 24 percent, to $177 million. You read that right. Amazon's financials didn't stagnate, hold steady, or even increase slightly -- they flew off into the stratosphere. Sales also grew by a whopping 25 percent, ignoring currency fluctuations, according to the quarterly results announced today.Although these particular numbers come as a shock, it's no surprise that e-commerce is benefiting from the downturn. Anemic consumer spending is choking off the weakest brick-and-mortar retailers. Circuit City, Linens 'n Things,  The Sharper Image, CompUSA and other major chains have joined the extinction list in the last year and a half, and online vendors like Amazon are wooing their former customers.However, I do wonder how much of this stunning performance is due to a one-time Kindle Effect. Amazon released the second generation of its...
  • The Wondrous Life of Hu Jintao

    You've got to hand it to Jim Owens, the CEO of Caterpillar -- he knows how to craft a provocative sentence. Like this one, for instance: "I'd rather be President Hu than President Obama." That's what he told a gathering of the Council on Foreign Relations in Washington, DC today. (Hat tip to Real Time Economics.)The reason he'd prefer a seat of power in Beijing over Washington right now is that the task for China's leaders is to encourage consumer spending, telling their citizens, in effect, to "Enjoy a little more." Obama, of course, has the opposite task, and "is going to have to encourage Americans to save more." Selling swimming pools is a lot more fun than selling mutual funds.Obviously Owens is exaggerating somewhat. I, for one, would probably take Obama's spot over Hu's. China has plenty of problems other than a too-high savings rate. Around a third of the country's 1.3 billion people live on less than the...
  • "Don't Mark Our Love to Market"

    Merle Hazard is the self-proclaimed "first and only country singer to write about mortgage-backed securities, derivatives, and leveraged buyouts." His latest ditty is "Mark to Market," dedicated to "the courageous men and women of the Financial Accounting Standards Board." Hat tip to our illustrious photo editor Kathy Jones.
  • Just Charge It

    Today in encouraging news: Obama has called credit card CEOs to the White House. They'll meet on Thursday and, according to McClatchy, Obama will "stress the need for greater clarity in the way that credit cards are marketed and administered."This of course is a preliminary step in reining in shoddy lending practices, which extended not just to mortgages but credit cards and other consumer loans. And it's a good sign that the Administration is willing to expend some political capital on reforming sectors not quite as toxic as subprime mortgages. Of course, the bears and pessimists might view this as evidence that credit card debt is about to explode and take down a bank or two, and the Administration is starting triage. As I wrote a couple of months ago, I think this is a red herring. Banks have already taken writedowns on their credit card debt holdings (although in the credit card biz they're called chargeoffs). And the credit card sector is less than one...
  • Has Any Good Come From Financial Innovation?

    Is financial innovation good for society? In a speech last week, Federal Reserve Chairman Ben Bernanke gave a qualified yes. Financial innovation really picked up after 1980, and "I don't think anyone wants to go back to the 1970s," he said.Ryan Avent, the new blogger-in-chief over at Portfolio's Market Movers, thought that statement rather funny:According to Bernanke, no one, "wants to go back to the 1970s," but...
  • Breakfast Buffet, Monday, April 20

    America Is "Fill in the Blank": We've already heard that America is Russia, America is Japan, and America is a developing country. Here's another hat to try on: Krugman says America is Irish. (And it has nothing to do with how much Guinness we drink.) Really? Another One?: Bank of America is the latest bank to post strong first quarter earnings. When will the backlash against bank profits begin?Don't Blame the Engineers: The financial crisis is just a pothole on the road to technological progress! Writing in the Wall Street Journal, L. Gordon Crovitz says, "The innovators who thought up the elevator, the cotton gin and space...
  • Breakfast Buffet, Friday, April 17

    Me Too!: Citigroup follows in Goldman Sachs's footsteps and says it had its best quarter since 2007. Is it just coincidence that the banks sprung to sudden health as soon as mark-to-market rules were relaxed? Things didn't look nearly so good at GE, where profits plunged 35 percent. And Google ended its 11-year growth streak.Party Pooper: In honor of the tea parties held on Wednesday to protest U.S. tax policy, Forbes looks at the historical tax rates and concludes that Americans are undertaxed relative to the citizens of other countries and relative to the past. Dept. of Odd Opinions: Financial-data provider Bloomberg finds its sleazy side in a column that somehow compares the U.S. economy to Tara Reid's breast implants. The Sincerest Form of Flattery: Just like the U.S., Russia is moving to put a strict cap on executive salaries at state companies and firms receiving government aid.
  • Breakfast Buffet, Wednesday, April 15

    Green Acres: Two-thirds of Japan's full-time farmers are 65 or older, and some are hoping that mounting job losses in the corporate sector result in younger workers going back to the fields. Crime and Punishment: Do economic hard times lead to more crime? Yes and no. Burglaries, thefts and the like tend to rise with unemployment, but violent crimes show little to no correlation. In the Department of Scary Sentences: Bankrupt bank Lehman Bros. "is...
  • Goldman's Gold

    Floyd Norris blogged the Goldman Sachs conference call this morning. For those that don't know, Goldman is in the news this week for making a reported $1.8 billion profit in the first quarter of 2009. This has been interpreted as a sign that the ailing financial sector might be ready to leap from its sickbed. But some suspicious smells still hover over the patient. For one, Goldman switched its reporting schedule from a fiscal year ending Nov. 30 to a calendar year ending Dec. 31. The first quarter of the reporting year, which normally would have been Dec.-Feb., became Jan.-Mar., in other words. That left December as an "orphan month," and it was a terrible month indeed -- Goldman suffered a $0.8 billion loss in December. Some suspected foul play, surmising that Goldman squeezed its writedowns and losses into December, making January, February and March look better than they actually were.In addition, Goldman was the beneficiary of $12.9 billion of government money...
  • Is the Financial Sector Too Big?

    Many think so. Former IMF chief economist Simon Johnson wrote in the Atlantic recently that "from 1973 to 1985, the financial sector never earned more than 16...
  • Breakfast Buffet, Monday, April 13

    Scrub Up: The Treasury Department is preparing General Motors for a fast, "surgical," bankruptcy.Earnings Season: Some big names announce earnings this week, including Goldman Sachs and Citigroup. Markets are expected to sink today on worries over the financial health of major companies. Wrong, Wrong, Wrong: More than a year into the financial crisis, Der Spiegel looks at which world leaders, business minds and pundits were right in their economic predictions -- and which were blindingly wrong. Bush, Bernanke, Trichet, and Merkel fall into the latter category; Buffett, Soros, Greenspan, and Roubini get bragging rights. Money Managers Are at Fault, Too: It's not just the banks, mortgage brokers, and borrowers that sank the economy. Blame your pension fund and university endowment, too. Big funds own 70 percent of large public companies, and they failed to police them. "These managers arguably played a major role in allowing the managers of...
  • Rebranding Recession Lingo

    As the financial crisis evolves, so does the vocabulary being used to describe—or obscure—it. Looking to neuter some of the most loaded terms, policy wonks and businessmen are feeling the urge to rebrand. Last week NEWSWEEK's Dan Gross noted Treasury Secretary Tim Geithner's transformation of toxic assets into "legacy assets"—and that's just the most salient tweak. A bailout, for instance, sounds much friendlier when it's deemed "exceptional assistance," as Geithner recently phrased it. Federal Reserve chairman Ben Bernanke and British Prime Minister Gordon Brown have backed international financial regulation, though they prefer to call it "macroprudential oversight."The private sector is also getting in on the word games. Goldman Sachs's head of mergers and acquisitions, Tim Ingrassia, recently announced that the title "M&A banker" carries too much baggage, so now his cards read "adviser to the free flow of capital." And those layoffs at Nokia last fall? Those were actually ...
  • Advice for AIG Executives

    It's Friday afternoon and there's little chance you're interested in another probing, insightful blog post, so how about a little satire from McSweeney's instead? To: AIG Executives From: AIG Corporate Security Subject: Updated Security Notification Due to a growing sense of public attention fueled by increased media scrutiny, AIG Corporate Security would like to highlight certain protective measures all employees can take in order to increase their overall safety and security. This memorandum is specifically tailored toward our top-level executives, and contains information unavailable to regular AIG employees.Be mindful at all times of your surroundings, especially if you are surrounded by a large group of very angry people you do not recognize. These are taxpayers.Be smart! In a "fight or flight" situation, it is almost always best to retreat. Do not take unnecessary risks. For many of you, this will be impossible. Read the rest here.  
  • Breakfast Buffet, Thursday, April 9

    Green Shoots Turn to Weeds: Or at least that's how the Financial Times interprets the minutes from the last Federal Reserve meeting, which were bleaker than expected. Warren Buffett is feeling a bit of the bleakness himself, now that Moody's, a ratings agency he part-owns, downgraded his investment vehicle, Berkshire Hathaway. Felix Salmon doesn't think this is such a bad thing.Rotting Apples: The Treasury Department wants to regulate venture capitalists as if they were hedge funds in order to protect against systemic risk. But a Wall Street Journal editorial asks, what systemic risk? VCs fund companies like Apple and Google in their early years; they don't engage in complicated derivatives transactions with multiple counterparties. Will regulation choke a vibrant source of innovation? "Lehman Shock" in Japan: Unemployment has always been low by world standards in Japan -- even during the country's "lost decade" unemployment never broke 5...
  • Dismal Datapoint of the Day: The H-1B Visa Lottery

    The H-1B visa is one of those policies that everyone loves to hate. It gives skilled immigrants -- scientists, engineers, researchers, etc. -- the right to live and work in the U.S. for six years, so nativists hate it right off the bat. But in fields that attract too few American citizens, such as computer programming, it has become an essential part of the hiring process. But tech executives and globalization advocates loathe it because the cap is too low, and it's devilishly hard to get one. The U.S. gives out only 85,000 each year, and 20,000 of those are reserved for applicants with advanced degrees. The demand for these visas is so strong that generally all 85,000 are given out within the first couple days of filing, which begins April 1.But not this year. Today U.S. Citizenship and Immigration Services took the rather unprecedented step of announcing that, after a full week of accepting applications, it still hadn't reached the cap. There are two ways to look at this...
  • Imelda Marcos Agrees: She's "Guilty" of Greed

     Two weeks ago our crack digital team released a package on the history of greed, which included a photographic parade of some of the greediest figures of all time. Nestled amongst the likes of Genghis Khan, Charles Ponzi and Bernie Madoff was the Philippines' own Imelda Marcos, the widow of former dictator Ferdinand Marcos, who ruled the country from 1965 to 1986. During that time, Ms. Marcos achieved notoriety for her fashionable taste -- while the average Filipino lived on less than $2 a day, Ms. Marcos jetted to New York and Rome for $5 million shopping sprees, and built up an impressive collection of 3,000 pairs of shoes.It seemed fitting, then, to open the gallery with the above image of Ms. Marcos, her rouged cheeks, jade earrings and blinged-out ring fingers a perfect glimpse into modern materialism.Apparently, Ms. Marcos doesn't disagree. NEWSWEEK's selection of her provoked a bit of controversy back in the Pacific island nation, enough that Ms. Marcos...
  • Is China the New America?

    This piece in Foreign Policy says yes. Those that agree like to point out that after World War II, Great Britain, glorious empire though it may have been, was extravagantly in debt; the U.S. was a net creditor to the world, and Britain's most important source of financing. When Egypt nationalized the Suez Canal in the 1950s, Britain wanted to fight back. But the U.S. made clear that its financial support was contingent on the UK's withdrawal from the canal. Britain had to choose between financial ruin and geopolitical power. And so the mantle of global leadership was passed from debtor to creditor.Now, of course, the U.S. is leveraged to the hilt -- the national debt recently surpassed $11 trillion -- and the world's top creditor nation is China, which sits on about $2 trillion worth of reserves. According to the FP, the story of today's financial crisis has the U.S. "playing the role of Britain -- the exhausted debtor economy -- and China taking the place...
  • Breakfast Buffet, Tuesday, April 7

    Happy Days Are Here Again?: Obama's still got it: Two-thirds of Americans approve of his job performance, according to a new New York Times poll. And though 70 percent of respondents said they were worried about layoffs affecting their families, the percentage of people who thought the country was on the right track jumped from 15 percent pre-inauguration to 39 percent today. That's the highest it's been since early 2005.Prodigal Son: The son of ex-Treasury Secretary Henry Paulson is staying busy during a down economy trying to bring a Major League Soccer franchise to Portland, Oregon. He's committed $50 million of his father's fortune (which he earned in his pre-government role as CEO of Goldman Sachs), but he wants the city to pony up $65 million. He's finding it a tough sell, especially since Oregon, as we learned yesterday, is the saddest state in the nation.Reverse Offshoring: The head of Sallie Mae, a U.S.-based student lending company, has said...
  • The Saddest Places in the United States

    MainStreet.com (a personal-finance-oriented offshoot of TheStreet.com) just released its Happiness Index, a Prozac-addled tweak on the famous Misery Index. The latter, which combines unemployment and inflation statistics, captured the prevailing worries of the stagflation-prone 1970s; now that inflation has been tamed, MainStreet.com clearly felt it was time to throw housing into the mix.  The list ranks the fifty states and Washington, D.C. on three measures: unemployment, foreclosures and non-mortgage debt. It's a bit silly to call it the "Happiness Index," since, as we all know, money doesn't buy happiness (although maybe credit card debt could...). But it does provide a quantitative and fairly substantive accounting of the states hardest-hit by the housing bust.So which states were most miserable? Not surprisingly, Sunbelt States like California, Nevada and Florida make up most of the bottom 10, largely because of their high foreclosure rates. The most...
  • Why Smoot-Hawley is Like a Melting Glacier

    The Smoot-Hawley Tariff has become a bogeyman in economics circles, a piece of misguided, Depression-era legislation that raised tariffs to exorbitant rates and choked the world trade system near to death. I was surprised, then, to find this piece in Prospect magazine, by highly regarded development expert Ha-Joon Chang, who teaches economics at Cambridge, arguing that Smoot-Hawley actually did little to worsen the Great Depression. "The '1930s: never again' story assumes that protectionism is always bad," Chang writes. "But this is not true."...
  • How To Count Hoovervilles?

     This is a sentence you don't ever want to read:"The quality of the US census may be undermined because of rising numbers of people living in garages, tents, basements and motels as the financial crisis deepens." That's from the Financial Times, which says that "there is little data on the rise in 'non-traditional' housing, which is something the Census Bureau will generate for the first time as it seeks people out this year." The Bureau will hire 2,000 additional census-takers to deal with this population, which is usually small enough to fly under the radar.And if the rise in "non-traditional" housing in the U.S. is large enough to impact a census that will count over 300 million people, I wonder what the impact has been in hard-hit developing nations like those in Eastern Europe? For more on the human impact of the housing bubble's burst, view our photo gallery.
  • Breakfast Buffet, Friday, April 3

     G20 Recap: The biggest win was an additional $1.1 trillion in funding for international aid agencies, and Jeffrey Sachs said simply that the results were "deeply heartening." Dani Rodrik called it a "a victory for the Europeans." Felix Salmon at Reuters said the resultant statement was "more substantive and harder-hitting" than most. Paul Krugman, who had veered toward pessimism lately, called the results  "substantive and important ." But a New York Times editorial felt the whole thing "fell short." Across the pond at the Guardian, Mark Thoma said that the failure to arrive at an international stimulus package was "bad for the US, and bad for the world more generally." Slowdown? What Slowdown?: McKinsey expects China to have more than four million "wealthy" (i.e. an annual income greater than $36,500) households by 2015, up from 1.6 million last year. That would give it the fourth-highest number of wealthy...
  • Denial Is a Powerful Force

    Former AIG CEO Maurice "Hank" Greenberg is clearly still in the first of the Five Stages of Grief. As he told the Wall Street Journal:  "I don't feel any responsibility at all."That's a bold statement for a man who spent 38 years building AIG into an international powerhouse, started the financial-products unit responsible for its implosion and left the firm only in 2005 -- at which point "the unit had already sold about half of the swaps that caused the biggest problems."
  • The Solution to Future Housing Bubbles: Religion

    I just came across a fantastically interesting paper from Christopher Crowe, an economist at the IMF. (Hat tip to Zubin Jelveh at Economix.) Citing Robert Shiller's work on "irrational exuberance," Crowe sets out to test the hypothesis that "the housing cycle should be more muted in areas with high concentrations of households whose beliefs or 'values' make them less prone to participating in a speculative mania." And who better to test the idea on than evangelical Protestants, whose fervent belief in Scripture, one would assume, dampens the human greediness necessary for rampant speculation. Evangelicals "embrace a unique set of economic values that is suspicious or even hostile toward wealth accumulation," writes Crowe. He finds that in areas with a higher proportion of evangelical residents, the variability in housing prices is less extreme. In other words, less boom, but also less bust.  
  • Breakfast Buffet, Wednesday, April 1

    The economy is back on track and economists expect global growth of four percent this year. Happy April Fool's Day!Apocalypse Now: On the eve of the G20 Summit in London, protesters take to the streets. "Four marches, led by representations of horsemen of the apocalypse,...
  • Greenspan: Free Markets to the Rescue!

    Often when I turn on CNBC or open the Wall Street Journal I'm greeted with a headline or statement about "how the market reacted to" this or that, with the "this or that" often being a speech by Obama, Geithner, et al. Occasionally I can't help myself: I snort and say aloud, "Who cares?" I have some money in mutual funds and the like, so certainly I care whether the markets are up or down. But when did the Dow and the S&P 500 become the sole barometer of success or failure? There must be constituencies other than day traders and broker-dealers and equity salespeople with which to concern oneself....