Over the last couple of weeks Fiat has gone on a shopping spree. It aims to create a new European automobile giant. At the helm of Fiat is Sergio Marchionne, Fiat’s now legendary manager who saved the company from bankruptcy.
Fiat is controlled by the Agnelli family of Turin. It was them who handpicked Sig. Marchionne to save the sinking company back in 2005. The Economist wrote two different articles about Fiat’s recent acquisitions. In the first one titled “Pedal to the medal”, it portrays Marchionne as a trouble-shooter. It writes he is known to sort out problems, but question his ability to be an empire builder. The second article titled “The Italian solution” continues to question his ability to build a group. Towards the end of the article there is a quote from Marchionne in which he states he has no intention amassing power, but only to create a well functioning company. The article also notes Fiat is one of very few carmakers that has the financial and technological means to acquire GM Europe and Chrysler. The Economists’ articles present facts in an apparent objective manner. They do not predict the outcome of Fiat’s new venture, nor do they have any bias between the lines.
In Sweden there has been a lot of press about Fiat’s acquisition of GM Europe. Dagens Nyheter, Sweden’s biggest daily newspaper, has unbiased presented the process from a Swedish perspective. GM Europe owns Saab, which is produced in Trollhättan. Saab was founded in the same city and was sold to GM in 1989. Leftwing newspapers in Sweden are more direct in their writing. They blame Wall Street and greedy American managers for Saab’s problems.
In Italy papers were first excited about Fiat’s expansions. However, now the focus is more on what will happen with Italian workers and where will the new Fiat be able to save through synergies. Il Corriere della Sera, a conservative paper, wrote in an editorial Marchionne needs to reassure Fiat will preserve Italian jobs. It is odd Corriere take such a pro worker stance. It is normally its rival La Repubblica, with a centre-left readership, which asks for corporate reassurances of Italian jobs. Corriere’s editorial might reflect a growing Italian fear of losing jobs to foreign countries.
Last week Tesco presented its 2008 results. Tesco is a phenomenal retailer, always able to find new ways of improving its results. In 2008/09 it increased underlying pre-tax profits by 10% to £3billion.
Tesco’s press release includes its profit, revenue and highlights other important numbers. The release begins with revenue and profit, which are indeed impressive in an economical environment as this one. It continues to quote Sir Terry Leahy, CEO TescoPlc, saying; “At a time when customers everywhere are feeling the economic strain, we are responding to their changing needs in all our markets by lowering prices, introducing more affordable products and offering even sharper promotions.” His statement highlights Tesco’s aim, which is to be a major food retailer of all the segments of the market but at a cheap price. He further on in his statement expresses satisfaction with Tesco’s expansion abroad and its Personal Finance division. Sir Leahy’s positive picture is reflected in the numbers and their admirable feat of doing well in the midst an economical crises. The press release is written to inform investors and to advertise Tesco's good shape.
Financial Times is very positive about Tesco’s results. The paper spends both the first and second paragraph writing nice sentences with almost no numbers and instead using superlatives describing Tesco. If the journalist was told to write the most important first she has made it very clear the retailer is a sound and attractive company. The paper’s Lex column concludes “Tesco shares should not be a discount brand.” The column is written for business people and is read by everyone who wants to know the big story of the day. The difference between the article and the column is however wide. The article is expected by people to be objective while Lex is known to have a strong opinion. However the day Tesco released annual results this difference seems to have been erased.
Bloomberg’s article about Tesco’s results is more factual and objective, which its readers expects it to be. It puts forward numbers and referenced sources and their opinions. The sources are also positive to Tesco, but it is clearly stated who has the opinion. Further down in the article it mentions a few disappointments but on a whole the article’s view is positive.
The Sun agrees with all the other papers and news providers the results were very good. Interestingly it is more the only one who quotes Sir Leahy saying “a number of people have more spending power in their weekly budget”. The Sun’s journalist might be unaware that he is the only journalist to offer an argument to why supermarkets in general are doing well. FT mentions competitors are also performing well, but it is this comment that explains why, because thanks to falling interest rates people with jobs have more money in their wallet these days. The article is written in much simpler words. The Sun's readership is not likely to ask for a full analysis, but prefers the story to be written in a simple way.
Over the last couple of weeks there has been a big debate about internet piracy. The big Hollywood production companies and the music industry have seen their sales plummet as a direct effect from people downloading products illegally. On the other side there are the internet users and internet service providers (ISP) who directly or indirectly support downloading. Users get a hold of “free” music and the ISP convinces customers to buy a faster internet service as to facilitate downloading.
Sweden is the country in the world which has become synonymous with downloading. The recent ruling in a Swedish court sent the four founders of The Pirate Bay, an internet search engine, to jail for one year and fined them £2.5 million. The news of the verdict spread all over the world and is proclaimed a huge success by Hollywood production companies (to whom the fine was awarded). New York Times writes it was a landmark ruling and cites industry people’s joy over the ruling. The article is not biased, but does end with a quote from The Pirate Bay, saying “But as in all good movies, the heroes lose in the beginning but have an epic victory in the end anyhow”. Il Corriere della Sera, an Italian newspaper, also features the story on the first page. However instead of ending with that quote they end with a quote from Fini, an Italian music industry lobby group, saying the verdict is a success. The same type of coverage is given in British and Swedish newspapers. The most striking about newspapers coverage around the world is not what they put in their articles but that they all acknowledge the massive attention this story gets from ordinary people.
Most people have at least once downloaded illegally. Many continuously download illegally and have therefore bought a fast internet connection to do so. In contrast to the newspapers, people think pages like The Pirate Bay should be allowed to exist. They are not alone. ISPs are another stakeholder who benefits from illegal downloading. They sell faster (and more expensive) internet to customers wishing to download. I am one of them. If downloading would drastically decrease (as has happened in Sweden) ISPs would feel the pain.
The first lawsuit against an ISP in Sweden was filed two weeks ago. The lawsuit is not targeted to fine the ISP, but to make them hand over the identity of IP address user. The company refuses to do so, citing in their press release integrity would be violated if they did. I spoke to a person well connected with this ISP provider, who hinted that the press release was more of a marketing tool than anything else. He also claimed that if the ISP had handed the users identity, they would have lost business.
I think if the productions companies would really want to stamp out illegal downloading they would need to buy the ISPs. It is a farfetched idea, but only then would all business stakeholders work in the same direction.
This week I am writing about a very special couple, President Christina Frenández de Kirchner and ex-Predident Néstor Kirchner. She is Argentina’s president since December 2007, when she took over from her husband. Back then she enjoyed massive support, however today her popularity stands at only 30%. She has not only managed to destroy her popular support but also the once booming economy.
Argentina defaulted on their sovereign debt in 2001, in what is the largest default ever. The peso was before the crisis pegged to the US dollar at 1 peso = US$1, now it costs over 3 pesos to buy a dollar. Thankfully the Argentine economy recovered very quickly, much thanks to the soft commodities’ boom. Néstor Kirchner imposed high export tariffs on commodities exported from Argentina in order to get the state budget on track again. Whilst he managed to sort out the economy he did not settle with the holders of the defaulted bonds. This means Argentina can still not tap international debt markets for funding.
Mr Kirchner did however manage to issue new bonds domestically which paid a variable coupon calculated upon inflation. When servicing these bonds became expensive and public pressure at home to bring down inflation he fired the head of the government agency in charge of measuring inflation. He replaced the old head with a person with ‘better’ understanding of economy. In reality the new person only changed the weightings of the products making up the inflation calculations, as to include more products put under government price controls. This obviously lowered the inflation dramatically. For the last couple of years it has lingered around 1.5%, unofficial figures points more to the mid- to high teens.
Christina’s mismanagement of Argentineans trust is even more stellar. Last year she tried to push through a rise in export tariffs on soybeans – already standing at 35%. Only after a public outcry with massive demonstrations and her own vice president voting against her in the senate’s vote of the bill did she drop the proposal. This year she has pushed up the federal elections from October to June, citing the economical downturn as the reason. Her husband and ex-President, Mr Kirchner, passed a law in 2004 that all federal elections has to be held on the fourth Sunday of October, as to avoid any future incumbent leader to hold elections at their will.
The list of the Kirchners’ use of power for their own good is much longer than only these episodes. However how do they manage to do it?
Firstly one has to look at the media coverage. Outside Argentina we only read occasional news about the country and its politicians. Apart from the Economist and some Spanish speaking news magazines no one highlights the flagrant misuse of power the Kirchners commits. The Economist does not present an objective view, but it informs its readers of its stance over the Kirchners. The Economist strongly dislikes them. However they use accurate facts allowing the reader to critically evaluate the magazines view (see for instance The Kirchners make a dash for it, The Economist).
Bloomberg also covers Argentina but in a more objective way. Their articles are more factual and usually try to present both sides to a story. That is way I was so surprised to read an article this week which had clear anti Christina view expressed between the lines (see Argentina Downgraded to Kazakhstan on Foreign Fund Restrictions). This article will also be published in Bloomberg’s monthly magazine. I personally dislike Christina, but I still think it is important Bloomberg maintain its objective view. The exhaustive article explains how Argentina got into the mess it now finds itself in. It is highly recommendable reading for anyone wanting to understand the country’s current problems, despite the slightly subjective view of the journalist.
In Argentina itself most newspapers are pro government. Papers like El Nacional do publish some news not favouring the government. Sadly it still prefers to publish government tampered inflation figures than questioning way independent observers argue inflation is much higher than official figures. To one extent it is understandable way the Argentinean newspapers cannot criticise Kirchner. The president never holds press conferences. Since she took office she has never held a press conference. Her husband only held one during his five years in office, and that was held abroad not allowing the domestic papers a chance to attend. Instead Christina holds long speeches only allowing papers to cite her from self composed speeches, rather than to responses to questions made by a reporter. She holds her speeches without notes and they can be very long. It has even happened senators fall asleep during them. Something also happening to her buddy Hugo Chávez.
The last week we have read about the enourmous bonuses that has been paid out to managerse all around the world. The most famous case last week was the payout to executives at AIG, the now state-owned American insurer. Mostly the media coverage highlights executives greed and the poor taxpayer is the one who pays. However what media (and politicians) all around the world fails to acknowledge and highlight is the executives self-interest and low beliefs in their company. Let me explain by using a couple of examples.
In Sweden newspapers last week featured every day a new ‘villain’, or in other words an overpaid executive. These included Christer Elemhagen, CEO AMF Pension, Kerstin Hessius, CEO 3rd Swedish Pension Fund, and Annika Falkengren, CEO SE-Banken to name but a few.The Swedish press usually have a field day every year when companies publicises their annual reports, since these includes the sizes of executives pay. This has partly to do with the Swedish socialist thinking that everyone is equal and that Swedes are love to read about fat salaries which they themselves would like to receive. 2009 has however brought a third reason to way the Swedish newspapers splash-out on executives pay, which is that these companies has either lost astronomical sums or received state aid.
For instance Christer Elemhagen is the CEO of AMF Pension, a pension fund provider. His pay (inc. his pension payments) has over the last couple of years amounted to circa £10mn. The media writes tonnes of articles of this and argues he should be stripped of the major part of it due to losses which has occurred. The media fails to highlight the major issue though; many of these executives move their pensions from their company to another provider when they accrue losses as to protect their pension. It is surely a logical choice every logical person would do, BUT if you are an executive of a pension provider and you cock-up then you should also stand by your decisions and take the hit for it. Not like now when they cash-out fat bonuses while at the same time John Smith has to pay up in order to protect his pension scheme.
In America there has been a big row over AIG managers receiving big bonuses since the company is now state owned. The question in America has turned into a personal issue for the President who now is promising to do everything he can to block the payouts. I think this is a dangerous and stupid quest to pursue. The American media will most likely continue to support Obama. Most of the American coverage does not point out that the terms for the payouts being made now were set out in contracts made years ago. Hence these contracts should be honoured otherwise confidence will be eroded and the most talented people will walk away and AIG will be stuck with its least talented personnel. It would be disastrous if all that money spent by the taxpayer would be in vain. That scenario is far worse than allowing the total payout budget to increase 1% to honour old contracts. Like last week the most objective coverage I have found on this topic was provided by Bloomberg.
Regards,
Fede
*'Lagom' is a Swedish word which does not have a translation in any other language. It roughly means "not too much, not too little, the golden middle way"
Money corrupts. Money makes people blind. Money makes people do things they usually would never do. Sadly money can also ruin peoples’ lives (and media’s credibility).
Over the course of two decades Bernad Madoff ran the biggest Ponzi scheme the world has ever seen. He managed to make $65bn disappear. What I find interesting and truly astonishing is not that he managed to do it, but investors’ reaction and the medias coverage of it. The astronomical amount which Madoff swindled deserves all the media attention it can get. In my opinion the media has done a good job in doing it. The best coverage in terms of giving as full picture as possible is Bloomberg. The media should also scrutinise the people and feeder-funds which are connected to Madoff, something which takes more effort and knowledge about finance than just covering the story. Bloomberg published a long article about this matter a couple of weeks ago. I would highly recommend anyone interested to read it. However what I was disappointed by was the victimisation of investors in the general press. Let me explain.
Last week Madoff pleaded guilty to eleven charges in a Manhattan court. The charges span from securities fraud to money laundering. As The Economist commented about his guilty plea “[he is] all but certain to spend the rest of his life behind bars”(14th March, 2009). I could not but agree. Anyone who steals such a staggering sum should get a life sentence. However, my biggest impression from that day was the media’s coverage. Instead of highlighting the flaws in the legal system, such as Madoff guilty plea gives him the right to refuse any co-operation with investigators, the media victimised the investors. Most airtime in the US was given to investors gathered outside the courthouse and their heartbreaking stories about how they now could not afford to pay the rent or their bills. It is obvious this kind of stories will be aired, since it looks good on television. However, when financial programmes also give airtime to it, I see a lost opportunity to educate people about the dangers of financial investments. I am not saying financial broadcasters should be used for educating the public, but I would argue their excessive airtime given to these poor investors damages the credibility of the programme and its content. A serious programme would explain the flaws in the legal system allowing Madoff to get as far as he did.
The subject of victimising investors is a touchy one. I absolutely agree Madoff should be behind bars and media should cover it. I do not agree with victimising rich people who by law are only allowed to invest in hedge funds if they meet certain wealth standards. People get easily carried away when they think they can make easy money. Their blindness allows people like Madoff to carry out their scams. However it is commonsense not to put all your eggs in one basket, as the expression goes. If I would have been a news broadcaster I would have found it more profitable (both in terms of sales and morally) to question the investors decision to invest all their money in one fund.
In all financial crisis investors and the public will be looking for scapegoats. Sadly this time it also showed the flaws of financial media coverage, predominately in the US.
Regards,
Fede
I would like to apologise again for not publishing the second part of the article on Hedge Funds future, however I will the coming week meet an ex-HF manager and feel it would be not appropriate to include his views. Hence it will be delayed one more week.
We are in the middle of the worst financial crisis since the Great Depression. We listen to companies everyday who blame their poor financial state for it. It is widely used as an excuse to cut back investments and R&D. The naked truth is however companies have to cut back on R&D due to their directors’ stupidity and greed. The fall in R&D will hurt the development and enrichment of society.
The financial sector facilitates the transfer of surplus funds to entities in need thereof. Other than that, it does not benefit the society in general. There were many before the crisis who had forgotten the sectors actual purpose. They saw it as a money machine which paid over 40% of London’s taxes and the generator behind improved living standards. What believers failed to realise is a new fancy name for what was in fact a loan will not improve the life of human beings in general. What does improve our living standards to the greatest degree is research and development of new tangible products and inventions. A new name of a financial paper might enrich the inventor and early investor but not the general public, however a new drug or a new type of building material does. The financial markets are there to facilitate the flow of funds to companies doing this type of research or want to expand. Before the crisis too many industrial companies got caught up in the banks willingness to provide cheap capital for expansion, thus overvaluing acquisition targets and their know-how. Only the smartest and most long-term planning of managers opted out of this buying frenzy. Today they stand not only as the champions, but more importantly as the carriers who will bring development and prosperity forward.
A great example of this argument is the energy sector. Last week Exxon released their results for 2008. It is the only major energy company in the world who is not reducing their R&D budget. In stark contrast it is increasing it by 11.1%. They are able to do it thanks to conservative expansion during the last buy-out boom and long-term planning. The worlds other four oil majors (BP, ConocoPhillips, Chevron and Royal Dutch Shell) however overbid each other for companies leaving little money for R&D in downturn. Analysts also argue Exxon will be able to acquire high margin/high risk assets at step discounts since the other majors have less disposable means to put up a fight. Furthermore, Exxon returned many times more capital to investors than the other majors in 2008. The future in energy looks “Exxonerated” (7/3/08, Lex column, FT).
To conclude I want to emphasise the relationship between debt and wealth. Debt is not wealth, but the exact opposite. Anyone who thinks differently is wrong. It was this relationship that got mixed up before the crisis and sadly to a great extent still is. We are in this mess because of excessive borrowing. More borrowing will not take us out of this crisis. Real and sound economic fundamentals will, in other words, saving and development will.
Note. I apologise for not being able to publish the second article about Hedge Funds. It will be published next week.
If I told you there is an industry in which the more crowded it gets, the more expensive the industry’s products get. You would think I was ignorant. This is however what used to be the reality in the hedge fund industry. Sadly for the overpaid managers, it is not anymore.
In 2007 hedge funds around the world held over $2 trillion under management. If you account for the leverage they used the figure could be tripled. This staggering amount of money had been attracted from investors all around the world in the belief that hedge funds over a longer time period generate superior returns, also know as alpha. Hedge funds told their clients that even if returns would not be exceptionally high in good years, they would not lose money in bad years. In other words they would “hedge” their bets. Last year was a great testimony this was utter BS.
Any student studying economics learns that if supply of product X increases, the price of product X will decrease. The theory of supply and demand is the very essence of economical theory. All business and economics students know this. For some reason the alternative asset management industry seemed to defy the law of economics. How was that possible? The answer is simple, Greed.
All rational people are driven by maximising their potential gain, whether it is money or number of days off from work they can get. I know that not everyone agrees with me on this, but to explain why investors poured trillions of dollars into overpriced and poorly performing (even measured by their own industry standard) alternative asset managers one has to understand what makes people tick.
The worlds first hedge fund was created in the late 1940’s. The idea was that long positions in stocks were “hedged” by short selling other similar stocks. The manager would always make money as long as the long position did relatively better than the short position. Today hedge funds can take many different shapes and do any type of investments. Many argue their only common feature is the ridiculously high fee structure. Hedge funds charge first a fixed fee on total assets under management and on top a performance fee on profits. Typically they charge 2% on assets and 20% on profits, called 2/20. In some extreme cases a 5/44 structure was in place. The argument went that paying that much in fees would give investors superior talent. Before the crisis there were 9000 hedge funds around the globe. However, a sane person would question if there really exist 9000 people of superior talent able to make superior returns. Please bear in mind almost all funds have more than one manger. The answer is obviously no.
In a bull market it is difficult to not make money. In a bear market however only the best will survive. The industry benchmark index Credit Suisse Tremont was up in January for the first time in six months, figures released last week showed. Many prime brokers, hedge funds contacts at the big banks, and mangers argue they still performed well last year since they generated alpha, in other words did not fall as much as indices. In my opinion any manger defending their result by such an argument should close down. A hedge fund should always make money. The whole idea of the industry is to make money regardless of market conditions. I can agree that all managers will eventually have a bad year, however the extent of last year’s industry meltdown only testifies to one thing; there are not 9000 extremely intelligent fund managers in the world.
In the midst of the credit crunch investors are starting to realise this too. Redemptions have soared and are likely to continue. Many funds have to close. Fee structures have to be revised or investors will walk away. The very best will be able to continue to charge very high fees, but the average manager will have to change or get whipped out. Industry assets have shrunk to circa $1.1 trillion and will to continue to fall. This brings us to the questions what is the future of Hedge funds, what shape and form will they take? One thing is sure, as long as there are astronomical amounts of money to be made on the manager side just for managing money, they will always come up with a new idea of keeping it. I will discuss this topic in next week’s blog.
South America's most controversial and soon-to-be most autocratic leader have just managed to cling on to power, but for how much longer and at what cost?
Venezuela is a spectacularly beautiful country. I was fortunate to spend two weeks there in January. The trip left two big impressions; firstly, the extremely difficult climate companies work under, secondly, peoples' mistrust against politicians due to grave mismanagement of state resources for the last 50 years.
During my trip I had the benefit to visit a foreign owned factory. It is a manufacturing plant producing the most elementary of products, plastic bottles. When showed around the plant I was struck by the labour intensiveness of the production. The manager told me that they used many times the amount of workers necessary in any of the company's factories around the world. This had to do with that the mother company was not willing to invest in new machinery. The unwillingness to invest in Venezuela was shared by all foreign managers of companies I met. The companies they worked for had all arrived decades ago, in what was then a prosperous country with the biggest industrial capacity in South America. Companies made astronomical profits and the spirit then was cheerful and optimistic. Today it is all gone.
A developing country stands and falls with its leaders. Venezuela has now the biggest clown of a president of any country of the world. I am personally disgusted by his rhetoric. His mismanagement of state finances and plundering of state resources for personal objectives is mind-blowing. I learned for a source that only a third of Venezuela's oil output is sold at market prices (to the US). Circa 40% is sold to countries loyal to Chavez under a special development programme. These countries are charged market prices but will pay over a 30 year time-period (at 0% interest rates). The remaining 30% is sold in Venezuela. With the heavily subsidized petrol prices it only costs USD 0.5-1 to fill up your car.
Chavez voter base is based upon the 4 million people who has got improved living standards under his regime. They constitute circa 40% of the electorate. They are extremely loyal to him, hence Chavez habit of turning every election to an election about himself. The latest election on the 15th was about an amendment to the constitution allowing him to stay in power for unlimited time, which he won.
There are signs Chavez is under pressure. According to an article in the Economist three weeks ago Haiti, along with other countries in the Caribbean has stopped receiving subsidized oil from Venezuela. Furthermore Venezuela's oil revenues has plunged from USD92.3 million (2007) to USD 26.5 million (2008). Due to Chavez spending spree on social programs the budget deficit for 2009 is calculated to reach 9% of GDP. He as already snatched USD 12 million from the central bank to cover deficits, however since the reserves now stands at little above USD 26 million there is not much more to grab. Independent observers argues that if the oil price does not pick up in early 2010, Venezuela will go bankrupt.
Venezuelans are an unlucky bunch. They are blessed with one of the most beautiful countries on earth, but cursed to have corrupt politicians. Price controls, stringent labour laws and grave mismanagement of state finances has eroded foreign trust in Venezuela. If the country does not have the trust of foreigners no money will be invested and it will sink deeper. Crime has increased threefold since Chavez became president and it did not exactly start from a low level. Inflation is higher today then 1999 and FDI's has virtually stopped (with the exception of FDI from Iran, who hopes to buy Venezuela's uranium).
I do not wish Venezuela to go bankrupt. Sadly right now it seems as the only thing that can dispose Chavez from power is if he (read Venezuelan state) runs out of money. Lets hope it is sooner then later.
Welcome to the New World ! It is with great interest and concern I listen to voices all over the world promoting "our jobs for our workers". In any economical downturn there is an increased support for it. In America politicians use slogans such as "America for Americans" and in Great Britain we hear "British jobs for British workers". Typically these two countries are the ones we associate with liberal economies and economical ingenuity. If there was a downturn in the past pressure groups would urge the government to protect jobs at home and not like now forge a dangerous split in the home community. The trend this time around is much more alarming than ever before.
"British jobs for British workers" was a phrase Gordon Brown used back in 2007. His ill-chosen wording has been taken up by workers on strike over the last couple of weeks. Three weeks ago workers at the Lindsey oil refinery went on strike. Their grievance was a contract made by Total, the refinery's French owner, to Jacobs, a US engineering firm, for an expansion of the plant. They in turn subcontracted the job to an Italian company who would carry out the expansion. The Italian company, IREM, has since brought in its full-time employed staff to carry out the work. Its employees are mainly Italians and Portuguese. This has upset the workers and their union, which claims Britain already has the skilled workers for the job.
To me this is beside the point. We are now part of the EU, in which we have signed up to a free movement of goods, people and capital. The fundamental idea of the EU is to promote peace and stability. It has since it was created been taking up other causes too, but one cannot forget the fundamental idea. The three pillars of the Union promotes this cause. The Italians working in Lindsey is a product of it and helps integrating Europe. In fact there are more British workers working outside the UK than Europeans working in Britain.
When British workers start screaming "British jobs for British workers" a dangerous undertone is heard, "we are not like them". Any type of "Us against Them" mentality opposes integration and breeds xenophobia. If it is allowed to continue it can very likely prove contraproductive for our workers abroad and seriously damage our economy when foreign workers leave the UK.
Yesterday Bloomberg published an article discussing Americas answer to the "British jobs for British workers" row, which is the H1-B visas. Last week Chuck Grassley, Republican senator form Iowa, asked Microsoft "If they lay people off, are they going to think of Americans first or are they going to think of the world first?". He wrote it in a letter to Steve Ballmer, Microsoft's CEO, and also demanded the company to fire visa holders first. According to statistics Microsoft is Americas biggest employer of visa holders. It is therefore an easy target for populist politicians to attack. I think it is irresponsible to do such a thing, since it will certainly only spur on the racial tensions in society and within the company.
Last month a blogger running the Mini-Microsoft blog angrily argued the company should first fire visa holders before Americans. The blog's author has since had to block all messages since the debate "got downright nasty". According to Intel's CEO, Stancy Smith, the industry needs to be able to hire the best people in the world otherwise it would not go forward.
I want to finish this weeks blog by citing the Economist. In an article about the strikes in Lindsey they foresaw the new era in politics; "The cosy prosperity of the past decade was barren ground for political extremes; the coming years might not be true."
