Middle-class crunch: Who's to blame?
You're not imagining it: It's harder than ever to get into the middle class and stay there. Here's how you’ll succeed . . . and why many others will fail.
By Liz Pulliam Weston
Write about money, and you're going to tick someone off.
Write about poverty, affluence, whether the middle class is disappearing and if so, whose fault it is . . . and people go berserk.
Reader reaction to stories MSN Money has posted on these topics, including "Surviving (and thriving) on $12,000 a year," "I make $6.50 an hour. Am I poor?" and "Middle class living on the edge," has been overwhelming and mostly positive.
But each story has touched off vociferous debates on message boards and in e-mails about who's to blame for financial failure.
In one camp are the folks who are convinced that American workers are being squashed by the economy, the government, big corporations, lenders, the system in general. They see many, if not most, people as helpless pawns in a game that's rigged against them.
In another are those equally sure that there's no excuse for failing. If you've fallen down the economic ladder, or never figured out how to climb it in the first place, in their view it is solely and entirely Your Own Damned Fault.
The truth is somewhere in between. A decent job is no longer an easy ticket to a middle-class life. It's not just that things like health care and pensions are disappearing; it's that they're disappearing at the same time as our expectations about our lives have risen.
It's not your imagination, there is a squeeze on the middle class. MSN Money's Liz Pulliam Weston explains how it's possible for anyone to get in the middle class -- and stay there.
I believe a middle-class life is still possible for most people. But you have to be smarter, more cautious and faster on your feet than ever before. You have to obey some deceptively simple rules. And one thing is certain: Wherever you currently stand on the economic ladder, the surest way to rise is to pull yourself up.
What's middle class, anyway? "Middle class" is a squishy concept if ever there was one.
If we define it solely by income, then according to the U.S. Census Bureau, a household income of $36,000 to $57,657 in 2005 landed you squarely in the middle class. If you want to expand the definition to include "lower" and "upper" middle class, the range widens considerably, from $19,178 to $91,704. Here's the breakdown, with each "quintile" representing 20% of U.S. households:
Population group Lower limit Upper limit
1st quintile $0 $19,177 Poor/working poor
2nd quintile $19,178 $35,999 Lower middle class
3rd quintile $36,000 $57,657 Middle class
4th quintile $57,658 $91,704 Upper middle class
5th quintile $91,705 Bill Gates? Upper class
Of course, there are plenty of problems with using income figures, most notably because income alone doesn't reflect the huge variation in living costs across the U.S. Simply put, $50,000 might buy you a comfortable life in Iowa or Kentucky but keep you scrambling in San Francisco or Manhattan. And there are plenty of folks living in high-cost areas with nominally "upper middle class" or even "upper class" incomes who would adamantly reject those labels.
A more flexible definition for middle class would be having the resources to cover all your needs and some of your wants, plus the ability to save for the future.
That definition:
Doesn't necessarily mean homeownership, although it probably will; homeownership is still an achievable goal in most of the U.S., where close to 70% of all households own their own dwellings.
Certainly doesn't mean two new cars in the garage, or even one, although it probably means at least one reliable vehicle.
The middle-class crunch
MSN Money Special Coverage: How to hang on to what you've got. Doesn't mean being able to retire at 50, but it does mean being able to save for a retirement in which cat food is not a factor (unless you actually have a cat).
Sometimes, a middle-class life is out of reach Am I setting the bar too low? Some of you may think so. But inflated expectations about what constitutes a middle-class life lead many people into the kind of spending decisions that endanger their long-term financial security.
Those who are too eager to buy the trappings -- the "wants" -- are the ones who wind up with credit card debt and who overspend on homes
In other words, trying to look like you're middle class may well doom your prospects to actually be middle class.
And then there are those for whom the bar will remain too high. When I talk about most people being able to attain middle-class status, I have to carve out some exceptions. For example:
People not blessed with good, or at least decent, physical and mental health. It's hard to achieve much if you can't work. Illness, disability, addiction, depression and other afflictions can stop your economic progress in its tracks.
People who wait too long to start saving. If you hit your 50s, have never saved a dime and get bucked off the economic horse -- by a layoff, illness, disability, whatever -- your chances of being able to recover sufficiently may be dim.
People who can't or won't change. The alterations you need to make might be small, such as eating out less so you can put more into your 401(k). Or the adjustments might be big, like moving to another area or heading back to school to update your skills. Folks who are willing to consider their options, and then act, are going to be better off than those who insist it's the world that needs to change, not them.
Even if you're young enough and capable enough and willing to adapt, you've got powerful trends standing in your way. Don't expect them to be solved by politicians or to disappear in a puff of smoke.
Yes, the system is against you There are fewer good jobs for those who don't have college educations. A decline in manufacturing, waning union power and increased globalization mean it's tougher than ever to get into the middle class without a college education. But globalization and outsourcing are sniping away at white-collar jobs as well, and a fast-evolving economy mean few can be content to end their educations after four years.
The price tag for education is rising. Education was, and still is, the ticket to a more affluent life. Eight million vets grabbed this ticket in the wake of World War II, which helped fuel a huge expansion in America's middle class. Education is even more vital today, but the cost of a college education has skyrocketed and financial aid hasn't kept up, even as the comparative worth of a degree has shrunk. Loans have replaced grants as the primary source of financial aid, and too many students graduate with crippling debt.
Health care and health insurance costs are soaring. We have 47 million uninsured, and health care costs eat a big chunk out of the budgets of many who do have coverage. Two of five adults (43%) who buy individual polices, and one in four whose employers help pay for their coverage, spend more than 10% of their incomes on premiums and out-of-pocket medical expenses, according to the Commonwealth Fund.
Lenders don't care who can afford to borrow. Lenders were simply more conservative before the advent of credit scoring and securitization (the process in which most loans are bundled up and sold to investors). As lenders discovered more ways to manage risk, their willingness to extend credit soared, especially in the past 15 years. As a result:
The middle-class crunch
MSN Money Special Coverage: How to hang on to what you've got. Credit card debt exploded. The amount of money owed to credit card lenders at year end more than quadrupled, according to CardWeb.com, from $172.6 billion in 1990 to $710.9 billion in 2005.
Payday lending skyrocketed. The number of payday loan outlets zoomed, according to the Federal Reserve, from about 300 nationwide in 1992 to more than 22,000 last year. Payday lending is now a $40 billion industry.
Mortgages and other lending got riskier. That 70% homeownership statistic has been achieved, in part, by riskier loans, with lower down payments, adjustable rates and in some cases terms that allow your mortgage balance to balloon over time. Car loans, which used to average two or three years, now average five or more.
In short, it's never been easier to hang yourself.
There is a plan, and it's deceptively simple As complicated as the world has become, the middle class awaits anyone with an income and the strength to observe five vital steps:
Spend less than you make. The key to making any financial progress is to live within your means. Think it's impossible on your income? You're almost certainly wrong. And in the end, you really don't have a choice.
Limit your debt. It's costing you unnecessary interest and leaves you vulnerable to the slightest economic setback. The more you owe, the fewer choices you have.
It's not your imagination, there is a squeeze on the middle class. MSN Money's Liz Pulliam Weston explains how it's possible for anyone to get in the middle class -- and stay there.
Save for a rainy day. Even $500 in the bank could allow you to weather day-to-day crises like a car repair that could otherwise push you over the edge.
Plan for retirement. Start early, keep your mitts off the money and don't stop for any reason. Even a small amount, scraped together and invested over a lifetime, offers a much more comfortable retirement, if only psychologically, than Social Security alone.
Get the latest from Liz Pulliam Weston. Sign up to receive her free weekly newsletter.
Preferred format:HTMLPlain TextLearn more about newslettersStay sharp. You are the captain of your financial ship. You have to look for new opportunities and spot potential dangers. No one else will watch out for you and you alone, though, of course, MSN Money is here to help.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money.
Thursday, May 28, 2009
Thursday, May 14, 2009
Global warming? pt.2
By Jon Birger, senior writer
Last Updated: May 14, 2009: 12:29 PM ET
NEW YORK (Fortune) -- With Congress about to take up sweeping climate-change legislation, expect to hear more in coming weeks from John Christy, director of the Earth System Science Center at University of Alabama-Huntsville.
A veteran climatologist who refuses to accept any research funding from the oil or auto industries, Christy was a lead author of the 2001 Intergovernmental Panel on Climate Change report as well as one of the three authors of the American Geophysical Union's landmark 2003 statement on climate change.
Yet despite those green-sounding credentials, Christy is not calling for draconian cuts in carbon emissions. Quite the contrary. Christy is actually the environmental lobby's worst nightmare - an accomplished climate scientist with no ties to Big Oil who has produced reams and reams of data that undermine arguments that the earth's atmosphere is warming at an unusual rate and question whether the remedies being talked about in Congress will actually do any good.
Christy's critics in the blogosphere assume his research is funded by the oil industry. But Christy has testified in federal court that his research is funded by the National Oceanic & Atmospheric Administration and that the only money he has ever received from corporate interests - $2,000 from the Competitive Enterprise Institute for penning a chapter of a global warming book in 2002 - he gave away to a charity, the Christian Women's Job Corps.
His most controversial argument is that the surface temperature readings upon which global warming theory is built have been distorted by urbanization. Due to the solar heat captured by bricks and pavement and due to the changing wind patterns caused by large buildings, a weather station placed in a rural village in 1900 will inevitably show higher temperature readings if that village has, over time, been transformed into small city or a suburban shopping district, Christy says.
The only way to control for such surface distortions is by measuring atmospheric temperatures. And when Christy and his co-researcher Roy Spencer, a former NASA scientist now teaching at UA-Huntsville, began analyzing temperature readings from NOAA and NASA satellites, they found much slighter increases in atmospheric temperatures than what was being recorded on the surface. Clark and Spencer also found that nearly all the increases in average surface temperatures are related to nighttime readings - which makes sense if bricks and pavement are in fact retaining heat that would otherwise be dispersed.
In testimony to the House Ways and Means Committee in February, Christy displayed a chart showing central California temperature trends for both the developed San Joaquin Valley and the largely undeveloped Sierra foothills. "The daytime temperatures of both regions show virtually no change over the past 100 years, while the nighttime temperatures indicate the developed Valley has warmed significantly while the undeveloped Sierra foothills have not," Christy told the committee.
I recently spoke with Christy about his controversial research.
Why did you help write the 2001 IPCC report and the 2003 AGU statement on climate change if you disagreed with their fundamental conclusions?
With the 2001 IPCC report, the material in there over which I had control was satisfactory to me. I wouldn't say I agreed with other parts. As far as the AGU, I thought that was a fine statement because it did not put forth a magnitude of the warming. We just said that human effects have a warming influence, and that's certainly true. There was nothing about disaster or catastrophe. In fact, I was very upset about the latest AGU statement [in 2007]. It was about alarmist as you can get.
When you testified before Ways and Means, did you have any sense that committee members on either side were open to having their minds changed? Or are views set in stone at this point?
Generally people believe what they want to believe, so their minds will not change. However, as the issue is exposed in terms of economics and cost benefit - in my view, it's all cost and no benefit - I think some of the people will take one step backward and say, Let me investigate the science a little more closely.
In laymen's terms, what's wrong with the surface temperature readings that are widely used to make the case for global warming?
First is the placement of the temperature stations. They're placed in convenient locations that might be in a parking lot or near a house and thus get extra heating from these human structures. Over time, there's been the development of areas into farms or buildings or parking lots. Also, a number of these weather stations have become electronic, and many of them were moved to a place where there is electricity, which is usually right outside a building. As a result, there's a natural warming tendency, especially in the nighttime temperatures, that has been misinterpreted as greenhouse warming.
Are there any negative consequences to this localized warming?
It's a small impact, but there is an indication that major thunderstorms are more likely to form downwind of major cities like St. Louis and Atlanta. The extra heating of the city causes the air to rise with a little more punch.
Have you been able to confirm your satellite temperature readings by other means?
Weather balloons. We take satellite shots at the same place where the balloon is released so we're looking at the same column of air. Our satellite data compares exceptionally well to the balloon data.
During your House Ways and Means testimony, you showed a chart juxtaposing predictions made by NASA's Jim Hansen in 1988 for future temperature increases against the actual recorded temperature increases over the past 20 years. Not only were the actual increases much lower, but they were lower than what Hansen expected if there were drastic cuts in CO2 emissions - which of course there haven't been. [Hansen is a noted scientist who was featured prominently in Al Gore's global warming documentary, "An Inconvenient Truth."] Hansen was at that hearing. Did he say anything to you afterwards?
We really don't communicate. We serve on a committee for NASA together, but it only deals with specific satellite issues. At the Ways and Means hearing, he was sitting two people down from me, but he did not want to engage any of the evidence I presented. And that seems to be the preferred tactic of many in the alarmist camp. Rather than bring up these issues, they simply ignore them.
(Contacted by Fortune, Hansen acknowledges that his 1988 projections were based on a model that "slightly" overstated the warming created by a doubling in CO2 levels. His new model posits a rise of 3 degrees Celsius in global temperatures by 2100, vs. 4.2 degrees in the old one. Says Hansen, "The projections that the public has been hearing about are based on a climate sensitivity that is consistent with the global warming rate of the past few decades." Christy's response: "Hansen at least admits his 1988 forecasts were wrong, but doesn't say they were way wrong, not 'slightly,' as he states." Christy also claims that even Hansen's revised models grossly overestimated the amount of warming that has actually occurred.)
I know you think there's been something of a hysteria in the media about melting glaciers. Could you explain?
Ice melts. Glaciers are always calving. This is what ice does. If ice did not melt, we'd have an ice-covered planet. The fact is that the ice cover is growing in the southern hemisphere even as the ice cover is more or less shrinking in the northern hemisphere. As you and I are talking today, global sea ice coverage is about 400,000 square kilometers above the long-term average - which means that the surplus in the Antarctic is greater than the deficit in the Arctic.
What about the better-safe-than-sorry argument? Even if there's a chance Gore and Hansen are wrong, shouldn't we still take action in order to protect ourselves from catastrophe, just in case they're right?
The problem is that the solutions being offered don't provide any detectable relief from this so-called catastrophe. Congress is now discussing an 80% reduction in U.S. greenhouse emissions by 2050. That's basically the equivalent of building 1,000 new nuclear power plants all operating by 2020. Now I'm all in favor of nuclear energy, but that would affect the global temperature by only seven-hundredths of a degree by 2050 and fifteen hundredths by 2100. We wouldn't even notice it.
First Published: May 14, 2009: 11:15 AM ET
Last Updated: May 14, 2009: 12:29 PM ET
NEW YORK (Fortune) -- With Congress about to take up sweeping climate-change legislation, expect to hear more in coming weeks from John Christy, director of the Earth System Science Center at University of Alabama-Huntsville.
A veteran climatologist who refuses to accept any research funding from the oil or auto industries, Christy was a lead author of the 2001 Intergovernmental Panel on Climate Change report as well as one of the three authors of the American Geophysical Union's landmark 2003 statement on climate change.
Yet despite those green-sounding credentials, Christy is not calling for draconian cuts in carbon emissions. Quite the contrary. Christy is actually the environmental lobby's worst nightmare - an accomplished climate scientist with no ties to Big Oil who has produced reams and reams of data that undermine arguments that the earth's atmosphere is warming at an unusual rate and question whether the remedies being talked about in Congress will actually do any good.
Christy's critics in the blogosphere assume his research is funded by the oil industry. But Christy has testified in federal court that his research is funded by the National Oceanic & Atmospheric Administration and that the only money he has ever received from corporate interests - $2,000 from the Competitive Enterprise Institute for penning a chapter of a global warming book in 2002 - he gave away to a charity, the Christian Women's Job Corps.
His most controversial argument is that the surface temperature readings upon which global warming theory is built have been distorted by urbanization. Due to the solar heat captured by bricks and pavement and due to the changing wind patterns caused by large buildings, a weather station placed in a rural village in 1900 will inevitably show higher temperature readings if that village has, over time, been transformed into small city or a suburban shopping district, Christy says.
The only way to control for such surface distortions is by measuring atmospheric temperatures. And when Christy and his co-researcher Roy Spencer, a former NASA scientist now teaching at UA-Huntsville, began analyzing temperature readings from NOAA and NASA satellites, they found much slighter increases in atmospheric temperatures than what was being recorded on the surface. Clark and Spencer also found that nearly all the increases in average surface temperatures are related to nighttime readings - which makes sense if bricks and pavement are in fact retaining heat that would otherwise be dispersed.
In testimony to the House Ways and Means Committee in February, Christy displayed a chart showing central California temperature trends for both the developed San Joaquin Valley and the largely undeveloped Sierra foothills. "The daytime temperatures of both regions show virtually no change over the past 100 years, while the nighttime temperatures indicate the developed Valley has warmed significantly while the undeveloped Sierra foothills have not," Christy told the committee.
I recently spoke with Christy about his controversial research.
Why did you help write the 2001 IPCC report and the 2003 AGU statement on climate change if you disagreed with their fundamental conclusions?
With the 2001 IPCC report, the material in there over which I had control was satisfactory to me. I wouldn't say I agreed with other parts. As far as the AGU, I thought that was a fine statement because it did not put forth a magnitude of the warming. We just said that human effects have a warming influence, and that's certainly true. There was nothing about disaster or catastrophe. In fact, I was very upset about the latest AGU statement [in 2007]. It was about alarmist as you can get.
When you testified before Ways and Means, did you have any sense that committee members on either side were open to having their minds changed? Or are views set in stone at this point?
Generally people believe what they want to believe, so their minds will not change. However, as the issue is exposed in terms of economics and cost benefit - in my view, it's all cost and no benefit - I think some of the people will take one step backward and say, Let me investigate the science a little more closely.
In laymen's terms, what's wrong with the surface temperature readings that are widely used to make the case for global warming?
First is the placement of the temperature stations. They're placed in convenient locations that might be in a parking lot or near a house and thus get extra heating from these human structures. Over time, there's been the development of areas into farms or buildings or parking lots. Also, a number of these weather stations have become electronic, and many of them were moved to a place where there is electricity, which is usually right outside a building. As a result, there's a natural warming tendency, especially in the nighttime temperatures, that has been misinterpreted as greenhouse warming.
Are there any negative consequences to this localized warming?
It's a small impact, but there is an indication that major thunderstorms are more likely to form downwind of major cities like St. Louis and Atlanta. The extra heating of the city causes the air to rise with a little more punch.
Have you been able to confirm your satellite temperature readings by other means?
Weather balloons. We take satellite shots at the same place where the balloon is released so we're looking at the same column of air. Our satellite data compares exceptionally well to the balloon data.
During your House Ways and Means testimony, you showed a chart juxtaposing predictions made by NASA's Jim Hansen in 1988 for future temperature increases against the actual recorded temperature increases over the past 20 years. Not only were the actual increases much lower, but they were lower than what Hansen expected if there were drastic cuts in CO2 emissions - which of course there haven't been. [Hansen is a noted scientist who was featured prominently in Al Gore's global warming documentary, "An Inconvenient Truth."] Hansen was at that hearing. Did he say anything to you afterwards?
We really don't communicate. We serve on a committee for NASA together, but it only deals with specific satellite issues. At the Ways and Means hearing, he was sitting two people down from me, but he did not want to engage any of the evidence I presented. And that seems to be the preferred tactic of many in the alarmist camp. Rather than bring up these issues, they simply ignore them.
(Contacted by Fortune, Hansen acknowledges that his 1988 projections were based on a model that "slightly" overstated the warming created by a doubling in CO2 levels. His new model posits a rise of 3 degrees Celsius in global temperatures by 2100, vs. 4.2 degrees in the old one. Says Hansen, "The projections that the public has been hearing about are based on a climate sensitivity that is consistent with the global warming rate of the past few decades." Christy's response: "Hansen at least admits his 1988 forecasts were wrong, but doesn't say they were way wrong, not 'slightly,' as he states." Christy also claims that even Hansen's revised models grossly overestimated the amount of warming that has actually occurred.)
I know you think there's been something of a hysteria in the media about melting glaciers. Could you explain?
Ice melts. Glaciers are always calving. This is what ice does. If ice did not melt, we'd have an ice-covered planet. The fact is that the ice cover is growing in the southern hemisphere even as the ice cover is more or less shrinking in the northern hemisphere. As you and I are talking today, global sea ice coverage is about 400,000 square kilometers above the long-term average - which means that the surplus in the Antarctic is greater than the deficit in the Arctic.
What about the better-safe-than-sorry argument? Even if there's a chance Gore and Hansen are wrong, shouldn't we still take action in order to protect ourselves from catastrophe, just in case they're right?
The problem is that the solutions being offered don't provide any detectable relief from this so-called catastrophe. Congress is now discussing an 80% reduction in U.S. greenhouse emissions by 2050. That's basically the equivalent of building 1,000 new nuclear power plants all operating by 2020. Now I'm all in favor of nuclear energy, but that would affect the global temperature by only seven-hundredths of a degree by 2050 and fifteen hundredths by 2100. We wouldn't even notice it.
First Published: May 14, 2009: 11:15 AM ET
Thursday, March 26, 2009
Men, balancing work and family
By Geoff Williams
(Parenting) -- I've been on eight business trips in recent months. I'm away so much that my wife, Susan, searches for my photo on the backs of milk cartons, and I've been told my kids are looking to Elmo as a father figure.
Many people in the corporate world still aren't sympathetic to parents, particularly dads, author says.
It isn't just the business trips. No matter what happens, I always feel like I'm coming up short -- never spending quite enough time with my children and never being where I need to be with my career as a freelance writer.
I knew it would be a delicate dance, balancing work and family, but I was surprised at just how hard it can be.
While I know working moms have it tough because they usually end up doing the bulk of the childcare on top of their jobs, I can speak only for the working dads. And I have to say, for us, too, it's really tough.
The difficulty hit me the very day that our first child, Isabelle, was born. Since I'm self-employed, I didn't feel I could take off much time from work. Parenting: Can you afford to stay home with the kids?
In fact, I mentioned to Susan that it might be handy for me to have a laptop in the delivery room, to check e-mail during "downtime." She replied that I should be grateful we were having our baby in a hospital because if I tried to work while she was in labor, I might need medical aid myself.
So, ahem, I completely threw myself into the delivery process. But Susan was chagrined -- to say the least -- that I allowed myself only about 24 hours of parental leave after we brought Isabelle home.
I just didn't feel comfortable taking any more time off. Two weeks later, though, I attempted to give Susan a break by bringing Isabelle on an interview with me.
I was scheduled to talk to a lawyer who specialized in representing bicyclists. I thought it would make a nice, offbeat story and sold it to a regional business magazine. I suggested to the lawyer that we meet at a bike path because it would fit well with the story. Then I casually mentioned bringing Isabelle. "She's always sleeping -- you'll hardly notice her," I promised.
Except that it rained that day, and we had to do the interview in my car. The attorney held Isabelle while I scribbled his answers to my questions in a notebook. When Isabelle spit up on him, he didn't complain. When she cried, he even helped diaper her. And he didn't bill me -- much.
Another daughter (Lorelei) later, balancing work and family hasn't gotten any easier. Susan will never let me forget that one of the baby's first words was -- I swear -- "work." Parenting: Balancing when you work from home
Some of it's my own fault. I probably needn't bother trying to interest Lorelei in the articles I'm working on, as I often do. She can't even speak in two-word sentences, and there I am at dinner telling her about a story I'm writing on retaining good employees.
And because my home office is located near the girls' rooms, I've had a lot of phone conversations where the person I'm talking to suddenly asks, "Is that a baby crying?" "Sorry about that," I say. "I'm in a crowded airport terminal. Very loud, very crazy here."
Usually, the caller has kids as well and totally understands. But it's amazing how many people in the corporate world still aren't sympathetic to parents, particularly dads.
A double standard for dads
From what I've observed, if a mom leaves the office in time to be home for dinner, she's seen as an equally good mom and employee. But if a dad doesn't want to stay late, he's viewed as lazy or not a team player. Parenting: When the boss asks you to stay late
I'm not saying women have it easy; we all know the statistics about the number of men in higher positions versus the number of women. But just as the glass ceiling hasn't yet been completely shattered, neither has the 1950s model of dads as detached providers who demand a martini when they get home.
Men are still expected, in large part, to put in the hours and keep the "my-baby-smiled-for-the-first-time" talk to a minimum.
I went on two business trips with male colleagues earlier this year, and whenever I talked about missing my kids, or asked if they had seen a mailbox so I could send off a postcard to my girls (never mind that they can't read yet), I was met with baffled stares -- the sort of stares I got from the boys in my fifth-grade gym class, when we were picking sides for dodgeball and I was the last to be chosen. It was the look that said, "Wow, what a wuss."
Of course, it can't all be society's fault. Blame has to lie, at least in part, somewhere else. And it does. Some of my problems are...my wife's fault.
Hear me out. There is a side of me that resents it when Susan chastises me for thinking too much about work. I mean, I was 12 when I got my first rejection letter from a publisher. In other words, I was a writer long before I was a parent.
My career is part of my identity, and even when Susan's right about the times that I need to stop and smell the roses -- without trying to interview the gardener first -- I can't help but feel she's rejecting a part of who I am.
But passion doesn't excuse a dad from neglecting his family. I once interviewed a father who owned a company during the dot-com craze. He bragged that despite the 24/7 nature of his work, he always managed to get home in time to kiss his kids good night.
I thought, "You want a medal because you fit your kids into your life for two minutes a day?"
As one of my female friends pointed out, my struggles are nothing new. The push and pull of family, work, and personal identity has been dizzying women for decades. Now it's our turn as fathers to figure it all out.
So far, the only thing I've learned is that if my kids and my career ever do mesh seamlessly, I'll be close to some sort of nirvana. That's why I'll still send postcards from my business trips, why I'll keep telling Lorelei about the articles I write, and why I'm even pondering how another baby would fit into the mix.
After all, Susan's first labor lasted 36 hours -- more than enough time to discreetly check e-mail. So if we do go for a third, I just may sneak a laptop into the delivery room.
(Parenting) -- I've been on eight business trips in recent months. I'm away so much that my wife, Susan, searches for my photo on the backs of milk cartons, and I've been told my kids are looking to Elmo as a father figure.
Many people in the corporate world still aren't sympathetic to parents, particularly dads, author says.
It isn't just the business trips. No matter what happens, I always feel like I'm coming up short -- never spending quite enough time with my children and never being where I need to be with my career as a freelance writer.
I knew it would be a delicate dance, balancing work and family, but I was surprised at just how hard it can be.
While I know working moms have it tough because they usually end up doing the bulk of the childcare on top of their jobs, I can speak only for the working dads. And I have to say, for us, too, it's really tough.
The difficulty hit me the very day that our first child, Isabelle, was born. Since I'm self-employed, I didn't feel I could take off much time from work. Parenting: Can you afford to stay home with the kids?
In fact, I mentioned to Susan that it might be handy for me to have a laptop in the delivery room, to check e-mail during "downtime." She replied that I should be grateful we were having our baby in a hospital because if I tried to work while she was in labor, I might need medical aid myself.
So, ahem, I completely threw myself into the delivery process. But Susan was chagrined -- to say the least -- that I allowed myself only about 24 hours of parental leave after we brought Isabelle home.
I just didn't feel comfortable taking any more time off. Two weeks later, though, I attempted to give Susan a break by bringing Isabelle on an interview with me.
I was scheduled to talk to a lawyer who specialized in representing bicyclists. I thought it would make a nice, offbeat story and sold it to a regional business magazine. I suggested to the lawyer that we meet at a bike path because it would fit well with the story. Then I casually mentioned bringing Isabelle. "She's always sleeping -- you'll hardly notice her," I promised.
Except that it rained that day, and we had to do the interview in my car. The attorney held Isabelle while I scribbled his answers to my questions in a notebook. When Isabelle spit up on him, he didn't complain. When she cried, he even helped diaper her. And he didn't bill me -- much.
Another daughter (Lorelei) later, balancing work and family hasn't gotten any easier. Susan will never let me forget that one of the baby's first words was -- I swear -- "work." Parenting: Balancing when you work from home
Some of it's my own fault. I probably needn't bother trying to interest Lorelei in the articles I'm working on, as I often do. She can't even speak in two-word sentences, and there I am at dinner telling her about a story I'm writing on retaining good employees.
And because my home office is located near the girls' rooms, I've had a lot of phone conversations where the person I'm talking to suddenly asks, "Is that a baby crying?" "Sorry about that," I say. "I'm in a crowded airport terminal. Very loud, very crazy here."
Usually, the caller has kids as well and totally understands. But it's amazing how many people in the corporate world still aren't sympathetic to parents, particularly dads.
A double standard for dads
From what I've observed, if a mom leaves the office in time to be home for dinner, she's seen as an equally good mom and employee. But if a dad doesn't want to stay late, he's viewed as lazy or not a team player. Parenting: When the boss asks you to stay late
I'm not saying women have it easy; we all know the statistics about the number of men in higher positions versus the number of women. But just as the glass ceiling hasn't yet been completely shattered, neither has the 1950s model of dads as detached providers who demand a martini when they get home.
Men are still expected, in large part, to put in the hours and keep the "my-baby-smiled-for-the-first-time" talk to a minimum.
I went on two business trips with male colleagues earlier this year, and whenever I talked about missing my kids, or asked if they had seen a mailbox so I could send off a postcard to my girls (never mind that they can't read yet), I was met with baffled stares -- the sort of stares I got from the boys in my fifth-grade gym class, when we were picking sides for dodgeball and I was the last to be chosen. It was the look that said, "Wow, what a wuss."
Of course, it can't all be society's fault. Blame has to lie, at least in part, somewhere else. And it does. Some of my problems are...my wife's fault.
Hear me out. There is a side of me that resents it when Susan chastises me for thinking too much about work. I mean, I was 12 when I got my first rejection letter from a publisher. In other words, I was a writer long before I was a parent.
My career is part of my identity, and even when Susan's right about the times that I need to stop and smell the roses -- without trying to interview the gardener first -- I can't help but feel she's rejecting a part of who I am.
But passion doesn't excuse a dad from neglecting his family. I once interviewed a father who owned a company during the dot-com craze. He bragged that despite the 24/7 nature of his work, he always managed to get home in time to kiss his kids good night.
I thought, "You want a medal because you fit your kids into your life for two minutes a day?"
As one of my female friends pointed out, my struggles are nothing new. The push and pull of family, work, and personal identity has been dizzying women for decades. Now it's our turn as fathers to figure it all out.
So far, the only thing I've learned is that if my kids and my career ever do mesh seamlessly, I'll be close to some sort of nirvana. That's why I'll still send postcards from my business trips, why I'll keep telling Lorelei about the articles I write, and why I'm even pondering how another baby would fit into the mix.
After all, Susan's first labor lasted 36 hours -- more than enough time to discreetly check e-mail. So if we do go for a third, I just may sneak a laptop into the delivery room.
Monday, January 19, 2009
Global warming?
It's time to pray for global warming, says Flint Journal columnist John Tomlinson
by John Tomlinson Flint Journal Columnist
Monday January 19, 2009, 4:20 AM
Flint Journal'sJohn TomlinsonRead more by him
If you're wondering why North America is starting to resemble nuclear winter, then you missed the news.At December's U.N. Global Warming conference in Poznan, Poland, 650 of the world's top climatologists stood up and said man-made global warming is a media generated myth without basis. Said climatologist Dr. David Gee, Chairman of the International Geological Congress, "For how many years must the planet cool before we begin to understand that the planet is not warming?"
I asked myself, why would such obviously smart guy say such a ridiculous thing? But it turns out he's right.
The earth's temperature peaked in 1998. It's been falling ever since; it dropped dramatically in 2007 and got worse in 2008, when temperatures touched 1980 levels.Meanwhile, the University of Illinois' Arctic Climate Research Center released conclusive satellite photos showing that Arctic ice is back to 1979 levels. What's more, measurements of Antarctic ice now show that its accumulation is up 5 percent since 1980.In other words, during what was supposed to be massive global warming, the biggest chunks of ice on earth grew larger. Just as an aside, do you remember when the hole in the ozone layer was going to melt Antarctica? But don't worry, we're safe now, that was the nineties.Dr. Kunihiko, Chancellor of Japan's Institute of Science and Technology said this: "CO2 emissions make absolutely no difference one way or the other ... every scientist knows this, but it doesn't pay to say so." Now why would a learned man say such a crazy thing?This is where the looney left gets lost. Their mantra is atmospheric CO2 levels are escalating and this is unquestionably causing earth's temperature rise. But ask yourself -- if global temperatures are experiencing the biggest sustained drop in decades, while CO2 levels continue to rise -- how can it be true?Ironically, in spite of being shown false, we must now pray for it. Because a massive study, just released by the Russian Government, contains overwhelming evidence that earth is on the verge of another Ice Age.Based on core samples from Russia's Vostok Station in Antarctica, we now know earth's atmosphere and temperature for the last 420,000 years. This evidence suggests that the 12,000 years of warmth we call the Holocene period is over.Apparently, we're headed into an ice age of about 100,000 years -- give or take. As for CO2 levels, core samples show conclusively they follow the earth's temperature rise, not lead it.It turns out CO2 fluctuations follow the change in sea temperature. As water temperatures rise, oceans release additional dissolved CO2 -- like opening a warm brewsky.To think, early last year, liberals suggested we spend 45 trillion dollars and give up five million jobs to fix global warming. But there is good news: now that we don't have to spend any of that money, we can give it all to the banks.
by John Tomlinson Flint Journal Columnist
Monday January 19, 2009, 4:20 AM
Flint Journal'sJohn TomlinsonRead more by him
If you're wondering why North America is starting to resemble nuclear winter, then you missed the news.At December's U.N. Global Warming conference in Poznan, Poland, 650 of the world's top climatologists stood up and said man-made global warming is a media generated myth without basis. Said climatologist Dr. David Gee, Chairman of the International Geological Congress, "For how many years must the planet cool before we begin to understand that the planet is not warming?"
I asked myself, why would such obviously smart guy say such a ridiculous thing? But it turns out he's right.
The earth's temperature peaked in 1998. It's been falling ever since; it dropped dramatically in 2007 and got worse in 2008, when temperatures touched 1980 levels.Meanwhile, the University of Illinois' Arctic Climate Research Center released conclusive satellite photos showing that Arctic ice is back to 1979 levels. What's more, measurements of Antarctic ice now show that its accumulation is up 5 percent since 1980.In other words, during what was supposed to be massive global warming, the biggest chunks of ice on earth grew larger. Just as an aside, do you remember when the hole in the ozone layer was going to melt Antarctica? But don't worry, we're safe now, that was the nineties.Dr. Kunihiko, Chancellor of Japan's Institute of Science and Technology said this: "CO2 emissions make absolutely no difference one way or the other ... every scientist knows this, but it doesn't pay to say so." Now why would a learned man say such a crazy thing?This is where the looney left gets lost. Their mantra is atmospheric CO2 levels are escalating and this is unquestionably causing earth's temperature rise. But ask yourself -- if global temperatures are experiencing the biggest sustained drop in decades, while CO2 levels continue to rise -- how can it be true?Ironically, in spite of being shown false, we must now pray for it. Because a massive study, just released by the Russian Government, contains overwhelming evidence that earth is on the verge of another Ice Age.Based on core samples from Russia's Vostok Station in Antarctica, we now know earth's atmosphere and temperature for the last 420,000 years. This evidence suggests that the 12,000 years of warmth we call the Holocene period is over.Apparently, we're headed into an ice age of about 100,000 years -- give or take. As for CO2 levels, core samples show conclusively they follow the earth's temperature rise, not lead it.It turns out CO2 fluctuations follow the change in sea temperature. As water temperatures rise, oceans release additional dissolved CO2 -- like opening a warm brewsky.To think, early last year, liberals suggested we spend 45 trillion dollars and give up five million jobs to fix global warming. But there is good news: now that we don't have to spend any of that money, we can give it all to the banks.
Monday, December 22, 2008
6 Milestones before 30
By Emma Johnson, MSN Money
Some dread it. Some embrace it. Some use the big 3-O as an excuse to do that one last, precious keg stand. Others become an eternal 29 overnight.
Whatever your attitude about turning 30, experts say it's a good time to assess your personal financial situation.
For many of us, real life is well under way by the start of our third decade. Usually 30-year-olds have completed most of their education and have a few years of work experience. The Census Bureau tells us about half of us marry before 30 and that most Americans (56%) have children by then. The National Association of Realtors says the median age for first-time homebuyers in the United States is 32.
And while we all enter our 30s with unique backgrounds and varying goals, experts agree there are some fundamental rules that that can help every young adult participating in a market economy (yes, that means you).
1. Scale back the credit cards. "So many people are credit-carding it up," says Sarah Young Fisher, 53, president of financial-planning firm Kuntz Lesher Capital in Lancaster, Pa., and the author of "The Complete Idiot's Guide to Personal Finance in your 20s and 30s." "I'm an old lady. When I started out, you couldn't get a credit card without a job. Now they just mail it to you and people don't understand how long it takes to pay it off at 20% interest."
The average credit card debt among 25- to 34-year-olds was $5,200 in 2004, according to credit card research firm CardWeb.com. That is on top of the average $19,200 in student-loan debt carried by recent undergraduates.
Young Fisher says a 30-year-old needs to be "living on your paycheck" -- getting by without taking on credit card debt -- and saving at least 10% of total salary for the future. "If not," she says, "you're not going be able to retire."
She recommends investing in Microsoft Money or Quicken -- user-friendly software programs that track income, expenses and investments and can be programmed to help with taxes and goal-setting.
2. Own a home -- or have a plan. Young Fisher says that homeownership should be a top priority for those who rent. "Start saving for a down payment," she says. "If you find something you love, or a change of life comes along (like a baby or a relocation) and you don't have any money, you're going to borrow or get an interest-only mortgage -- which is ridiculous."
When you do buy, she says, "buy what you can afford, not what you love." And don't forget the new expenses that come with a house -- like a lawn mower, furnace repairs and snow shovel.
3. Have skills. Even for those who do not consider themselves entrepreneurs, most workers should expect multiple changes in employers and job titles throughout their careers. "By time you're 30, you should develop a set of marketable skills," says Gregg Fisher, 35, founder of Gerstein Fisher, a New York financial-planning firm. "Try to bring something new to the table."
The model of working for the same company for 30 years and retiring with a gold watch is now two generations out of date, says Fisher, who founded his firm -- which serves mostly clients under age 45 -- at age 21. Today's workers must differentiate themselves in order to survive and thrive, Fisher says. "Everyone's really self-employed. If you work for a company, you just have one client," he says. "If they fire you, you're out of business."
4. Give money away. No, not to the credit card companies, in the form of 24.99% interest-rate payments. Instead, establish a regular charitable giving plan, says Scott Hanson, founder of financial-planning firm Hanson McClain and the author of the recently published "Money Matters: Essential Tips & Tools for Building Financial Peace of Mind."
"I think it's financially healthy to give," says Hanson, who also co-hosts a financial call-in show out of Sacramento, Calif. In talking to clients and callers, he's come to believe that we are an emotionally deprived nation that spends to feel good. When we feel down, we head to the mall.
Hanson believes that the good vibes one feels from giving to a cause can also create that feel-good factor -- one with more significance than a new CD or an 80% discounted cashmere sweater. "Giving your money away puts it in perspective," he says.
5. Know thyself. Introspection is not just for middle-aged guys with ponytails living on a cliff in Japan. Having a firm grasp on your priorities and values is one critical component of a healthy financial life.
For example: Is impressing your friends and strangers one of your core values? No? Then why is that expensive leased SUV sitting in your driveway? "Start to know yourself and build parameters so your life and money line up with those parameters," Hanson says.
"People get so caught up that their goal becomes having another zero before they go. Once we have a roof over our head and food on the table, none of that other stuff is really going to bring that much pleasure," Hanson says. "Money is not the most important thing. You'll never have any fun with it if it is."
6. Know smart people. It is important to have strong advisers in your life, Young Fisher says. Knowing a good tax preparer, financial adviser, attorney and insurance agent can save you untold amounts of money and stress. "When you do need someone, get someone good," she says.
Some dread it. Some embrace it. Some use the big 3-O as an excuse to do that one last, precious keg stand. Others become an eternal 29 overnight.
Whatever your attitude about turning 30, experts say it's a good time to assess your personal financial situation.
For many of us, real life is well under way by the start of our third decade. Usually 30-year-olds have completed most of their education and have a few years of work experience. The Census Bureau tells us about half of us marry before 30 and that most Americans (56%) have children by then. The National Association of Realtors says the median age for first-time homebuyers in the United States is 32.
And while we all enter our 30s with unique backgrounds and varying goals, experts agree there are some fundamental rules that that can help every young adult participating in a market economy (yes, that means you).
1. Scale back the credit cards. "So many people are credit-carding it up," says Sarah Young Fisher, 53, president of financial-planning firm Kuntz Lesher Capital in Lancaster, Pa., and the author of "The Complete Idiot's Guide to Personal Finance in your 20s and 30s." "I'm an old lady. When I started out, you couldn't get a credit card without a job. Now they just mail it to you and people don't understand how long it takes to pay it off at 20% interest."
The average credit card debt among 25- to 34-year-olds was $5,200 in 2004, according to credit card research firm CardWeb.com. That is on top of the average $19,200 in student-loan debt carried by recent undergraduates.
Young Fisher says a 30-year-old needs to be "living on your paycheck" -- getting by without taking on credit card debt -- and saving at least 10% of total salary for the future. "If not," she says, "you're not going be able to retire."
She recommends investing in Microsoft Money or Quicken -- user-friendly software programs that track income, expenses and investments and can be programmed to help with taxes and goal-setting.
2. Own a home -- or have a plan. Young Fisher says that homeownership should be a top priority for those who rent. "Start saving for a down payment," she says. "If you find something you love, or a change of life comes along (like a baby or a relocation) and you don't have any money, you're going to borrow or get an interest-only mortgage -- which is ridiculous."
When you do buy, she says, "buy what you can afford, not what you love." And don't forget the new expenses that come with a house -- like a lawn mower, furnace repairs and snow shovel.
3. Have skills. Even for those who do not consider themselves entrepreneurs, most workers should expect multiple changes in employers and job titles throughout their careers. "By time you're 30, you should develop a set of marketable skills," says Gregg Fisher, 35, founder of Gerstein Fisher, a New York financial-planning firm. "Try to bring something new to the table."
The model of working for the same company for 30 years and retiring with a gold watch is now two generations out of date, says Fisher, who founded his firm -- which serves mostly clients under age 45 -- at age 21. Today's workers must differentiate themselves in order to survive and thrive, Fisher says. "Everyone's really self-employed. If you work for a company, you just have one client," he says. "If they fire you, you're out of business."
4. Give money away. No, not to the credit card companies, in the form of 24.99% interest-rate payments. Instead, establish a regular charitable giving plan, says Scott Hanson, founder of financial-planning firm Hanson McClain and the author of the recently published "Money Matters: Essential Tips & Tools for Building Financial Peace of Mind."
"I think it's financially healthy to give," says Hanson, who also co-hosts a financial call-in show out of Sacramento, Calif. In talking to clients and callers, he's come to believe that we are an emotionally deprived nation that spends to feel good. When we feel down, we head to the mall.
Hanson believes that the good vibes one feels from giving to a cause can also create that feel-good factor -- one with more significance than a new CD or an 80% discounted cashmere sweater. "Giving your money away puts it in perspective," he says.
5. Know thyself. Introspection is not just for middle-aged guys with ponytails living on a cliff in Japan. Having a firm grasp on your priorities and values is one critical component of a healthy financial life.
For example: Is impressing your friends and strangers one of your core values? No? Then why is that expensive leased SUV sitting in your driveway? "Start to know yourself and build parameters so your life and money line up with those parameters," Hanson says.
"People get so caught up that their goal becomes having another zero before they go. Once we have a roof over our head and food on the table, none of that other stuff is really going to bring that much pleasure," Hanson says. "Money is not the most important thing. You'll never have any fun with it if it is."
6. Know smart people. It is important to have strong advisers in your life, Young Fisher says. Knowing a good tax preparer, financial adviser, attorney and insurance agent can save you untold amounts of money and stress. "When you do need someone, get someone good," she says.
Thursday, December 18, 2008
Young People watch less tv
Study: Young people watch less TV
The older you get, the more you watch, report says
By Paul Bond
Dec 17, 2008, 08:44 PM ET
Young Americans just aren't watching TV like they used to.Put another way, the older you get, the more you watch, according to a report due out today from Deloitte indicating that "Millennials," the generation of 14- to 25-year-olds, watches just 10.5 hours of TV a week.That compares to 15.1 hours for those belonging to Generation X (ages 26-42), 19.2 hours for Baby Boomers (33-61) and 21.5 hours for Matures (62-75).Lest one assume Millennials are shunning broadcast and cable in favor of watching DVDs on their TV screens -- they're not. They spend less time watching DVDs of movies and TV shows on television sets, 4.8 hours a week, than do Gen Xers.They are, though, spending more time watching DVDs on a computer -- 1.9 hours a week -- than any other age group.But while Millennials are watching the least amount of TV, they are spending the most time with media in general, making that up with video games, music and the Internet.Just don't expect them to spend too much time worrying about such things as news and current events, according to the Deloitte study dubbed "The State of the Media Democracy."TV does remain the most influential advertising medium going, followed by magazines, the Internet, newspapers, radio and billboards.Social networking sites are considered separate from the rest of the Internet, and they are the seventh-most influential place to advertise, followed by in-theater ads, DVDs, blogs (again, distinct from the Internet), video games, mobile phones and virtual worlds.Other nuggets from the study are that Gen Xers are driving DVR usage and to a lesser degree video game usage, as that medium, once frowned on by parents, is more recently being used for "family time."And the older you get, the less time you spend in movie theaters. Millennials spend an average of 1.8 hours a week at the movies, while it's just one hour for Gen Xers, 0.9 hours for Boomers and 0.7 hours for Matures.
The older you get, the more you watch, report says
By Paul Bond
Dec 17, 2008, 08:44 PM ET
Young Americans just aren't watching TV like they used to.Put another way, the older you get, the more you watch, according to a report due out today from Deloitte indicating that "Millennials," the generation of 14- to 25-year-olds, watches just 10.5 hours of TV a week.That compares to 15.1 hours for those belonging to Generation X (ages 26-42), 19.2 hours for Baby Boomers (33-61) and 21.5 hours for Matures (62-75).Lest one assume Millennials are shunning broadcast and cable in favor of watching DVDs on their TV screens -- they're not. They spend less time watching DVDs of movies and TV shows on television sets, 4.8 hours a week, than do Gen Xers.They are, though, spending more time watching DVDs on a computer -- 1.9 hours a week -- than any other age group.But while Millennials are watching the least amount of TV, they are spending the most time with media in general, making that up with video games, music and the Internet.Just don't expect them to spend too much time worrying about such things as news and current events, according to the Deloitte study dubbed "The State of the Media Democracy."TV does remain the most influential advertising medium going, followed by magazines, the Internet, newspapers, radio and billboards.Social networking sites are considered separate from the rest of the Internet, and they are the seventh-most influential place to advertise, followed by in-theater ads, DVDs, blogs (again, distinct from the Internet), video games, mobile phones and virtual worlds.Other nuggets from the study are that Gen Xers are driving DVR usage and to a lesser degree video game usage, as that medium, once frowned on by parents, is more recently being used for "family time."And the older you get, the less time you spend in movie theaters. Millennials spend an average of 1.8 hours a week at the movies, while it's just one hour for Gen Xers, 0.9 hours for Boomers and 0.7 hours for Matures.
Who isn't a Madoff Victim?
Who isn't a Madoff victim? The list is telling.
Although many smart people seem to have been taken in, one expert argues that anyone who really did their homework would have seen the warning signs.
By Nicholas Varchaver
Last Updated: December 17, 2008: 10:14 AM ET
NEW YORK (Fortune) -- As the number of victims of Bernard Madoff, the criminally charged founder of the investment firm that bears his name, seems to multiply with the speed and force of a hurricane, certain types of investors seem to be absent -- so far, anyway -- from the casualty list.
That's no accident, argues James Hedges IV of LJH Global Investments, a boutique firm that invests in hedge funds and private equity for high-net-worth families. In other words, score one for the big institutions that stick to standard rules rather than allowing their managers to invest on personal connections or hunches.
"There's no Duke Endowment [among the list of Madoff investors]," Hedges says. "There's no Harvard management, there's no Yale, there's no Penn, there's no Weyerhauser, no State of Texas or Virginia Retirement system."
The reason is simple, in Hedges' view. Letting Madoff manage your money "wouldn't pass an institutional-quality due diligence process," he says. "Because when you get to page two of your 30-page due diligence questionnaire, you've already tripped eight alarms and said 'I'm out of here.' "
In short, in Hedges' opinion, any sophisticated entity that actually did its homework would have seen the warning signs.
Hedges got the chance to see those signs up close: In 1997, when he was advising the Bessemer Trust, the giant wealth manager, he visited Bernard Madoff to discuss investing with Madoff's firm.
"I found him stylistically like a lot of traders: fast-talking, distractable, not remarkable," Hedges says of Madoff. But during their two-hour meeting, Hedges says, "there was one red flag after another."
For starters, he couldn't grasp Madoff's investing strategy. "I kept saying, 'you've got to explain it to me like I'm in first grade,' " he says. To no avail.
Then there was the fact that Madoff was charging no fees other than trading commissions: "The notion that something is fee-less -- which is what they largely proferred -- is too good to be true."
The fact that Madoff's operation was audited by a microscopic accounting firm also worried him. "He was also so secretive about his asset base -- that was another red flag."
In the end, Hedges was uncomfortable and Bessemer decided not to let Madoff manage any of its money.
In Hedges' view, those that went with Madoff chose faith over evidence. "You've got people who were disintermediated [i.e., didn't have a professional representative], or unsophisticated, or went in through a personal relationship. That's what a con man is -- a confidence man is somebody that engenders a relationship and then subsequently lures somebody into doing something that they shouldn't do." (According to the federal criminal complaint against him, Madoff has confessed that he ran a "giant Ponzi scheme." His lawyer, Ira Sorkin, declined to comment.)
Certainly many of the institutions that turned to Madoff will challenge Hedges' views, as many will face litigation from their own clients. So far, two of the large fund-of-funds with the largest sums under Madoff's control, Tremont and Fairfield Greenwich, have already asserted that they conducted extensive due diligence before investing. Many others will take the same position.
Should Hedges' opinion be borne out and corporate and state pension funds remain absent from the roster of Madoff victims -- of course, there will be many more names added to the list -- it will only heighten the Madoff tragedy. Because, in the end, it would show that this was one investing disaster that could easily have been avoided.
Although many smart people seem to have been taken in, one expert argues that anyone who really did their homework would have seen the warning signs.
By Nicholas Varchaver
Last Updated: December 17, 2008: 10:14 AM ET
NEW YORK (Fortune) -- As the number of victims of Bernard Madoff, the criminally charged founder of the investment firm that bears his name, seems to multiply with the speed and force of a hurricane, certain types of investors seem to be absent -- so far, anyway -- from the casualty list.
That's no accident, argues James Hedges IV of LJH Global Investments, a boutique firm that invests in hedge funds and private equity for high-net-worth families. In other words, score one for the big institutions that stick to standard rules rather than allowing their managers to invest on personal connections or hunches.
"There's no Duke Endowment [among the list of Madoff investors]," Hedges says. "There's no Harvard management, there's no Yale, there's no Penn, there's no Weyerhauser, no State of Texas or Virginia Retirement system."
The reason is simple, in Hedges' view. Letting Madoff manage your money "wouldn't pass an institutional-quality due diligence process," he says. "Because when you get to page two of your 30-page due diligence questionnaire, you've already tripped eight alarms and said 'I'm out of here.' "
In short, in Hedges' opinion, any sophisticated entity that actually did its homework would have seen the warning signs.
Hedges got the chance to see those signs up close: In 1997, when he was advising the Bessemer Trust, the giant wealth manager, he visited Bernard Madoff to discuss investing with Madoff's firm.
"I found him stylistically like a lot of traders: fast-talking, distractable, not remarkable," Hedges says of Madoff. But during their two-hour meeting, Hedges says, "there was one red flag after another."
For starters, he couldn't grasp Madoff's investing strategy. "I kept saying, 'you've got to explain it to me like I'm in first grade,' " he says. To no avail.
Then there was the fact that Madoff was charging no fees other than trading commissions: "The notion that something is fee-less -- which is what they largely proferred -- is too good to be true."
The fact that Madoff's operation was audited by a microscopic accounting firm also worried him. "He was also so secretive about his asset base -- that was another red flag."
In the end, Hedges was uncomfortable and Bessemer decided not to let Madoff manage any of its money.
In Hedges' view, those that went with Madoff chose faith over evidence. "You've got people who were disintermediated [i.e., didn't have a professional representative], or unsophisticated, or went in through a personal relationship. That's what a con man is -- a confidence man is somebody that engenders a relationship and then subsequently lures somebody into doing something that they shouldn't do." (According to the federal criminal complaint against him, Madoff has confessed that he ran a "giant Ponzi scheme." His lawyer, Ira Sorkin, declined to comment.)
Certainly many of the institutions that turned to Madoff will challenge Hedges' views, as many will face litigation from their own clients. So far, two of the large fund-of-funds with the largest sums under Madoff's control, Tremont and Fairfield Greenwich, have already asserted that they conducted extensive due diligence before investing. Many others will take the same position.
Should Hedges' opinion be borne out and corporate and state pension funds remain absent from the roster of Madoff victims -- of course, there will be many more names added to the list -- it will only heighten the Madoff tragedy. Because, in the end, it would show that this was one investing disaster that could easily have been avoided.
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