On May 8, 2013, Sohu Business picked up an article in the HK press about a JV ratings agency between SEC-designated Egan-Jones, a Chinese agency, Dagong, and a Russian agency, RusRating, targeted for listing June 25 in HK. It is called, appropriately, "World Ratings." Perhaps not coincidentally,...

Plus ça change, plus c'est la même chose….."  the more things change.. The rules have gotten more complicated and voluminous but has anything changed? Risk is back in fashion, five years after the March 2008 that Bear Stearns was taken over by JP Morgan Chase at a price of $1.00 per share. To be honest, I wonder if a lot has changed. Furthermore, I have noticed that there is growing number of voices raising similar concerns about the appetite for risk and the resurgence of products reminiscent of the heady days of 2005 and 2006.

This is the title of a classic on change "management," Leading Change, by John Kotter. The word management is in quotes because the premise of the book is that change cannot be managed, it must be led. Going in a straight line to get off the beaten path and on to a new one seems preferable, but it won't lead you there. You need leadership to change course. The essential value-add of Kotter's book is that he linearizes the process of institutionalizing change so it looks like a dotted line. He identifies eight characteristic errors of change leadership that are like the holes between the dots. Reading Kotter's book, I was nagged by one question, the same one that had bothered me in a change-offsite sponsored a large NY based bank in the early 1990s. The session leader put up a power point slide similar to this one and asked, how would you advise Red Arrow to motivate the Blue Arrows to change direction? Right there, he lost me. 
  1. why does Red Arrow want to turn at a right angle to the crowd of Blue Arrows? Is he really smart or incredibly stupid? 

In Brain Dead, Arianna Huffington asks, "[W]hat accounts for the epidemic of illogical thinking in Washington, where policy makers refuse to grasp what's plainly right in front of them?" She is talking about the employment crisis, of course. Denial is the answer, obviously. But, denial of more than the fact of an employment crisis. This denial goes deep, casting doubts on the capabilities of our brightest economic experts. Expertise in today's market means proficiency in a way of thinking. We have ample reason to believe this way of thinking is part of the problem.

Historical Preamble Around April of 1915, the Western Allies of WWI embarked on a campaign that would quickly turn into one of the costliest mistakes in modern warfare: the Battle of Gallipoli. This fiasco was largely motivated by a legitimate desire on the part of the Western Powers to resupply their ally Russia, as always cut off from the main European theater. Under the leadership of (First Lord of the Admiralty) Winston Churchill, the Allies decided to attack the Gallipoli peninsula on the edge of the Aegean Sea with some of the less capable warships in the British Navy’s then considerable arsenal. However, when combined Anglo-French naval forces proved unable to break through Ottoman defenses lining the Dardanelles, land forces were called in, ultimately with catastrophic results in terms of both material and human losses. This was carnage of hitherto unseen magnitude, whereby casualty rates routinely hovered around 90% on the Allied side. It was also the series of engagements via which Mustafa Kemal, himself a commander at Gallipoli, emerged decisively as the undisputed leader of modern Turkey, and during which he gave what is arguably the most celebrated order in military history: “I do not order you to fight. I order you to die.”

Deals coming up next: Structured Asset Securities Corp. 2005-WF4 (A4) and Countrywide 2005-BC5 (1A) [caption id="attachment_6051" align="alignleft" width="681"] R&R Fair Market Value, Market Price, Moody's and R&R's Ratings since Origination[/caption]   [caption id="attachment_6052" align="alignleft" width="682"] R&R Fair Market Value, Market Price, Moody's and R&R's Ratings since Origination[/caption]    ...

Introduction Have you followed the strange fate of the $14.8 BN merger involving ALCATEL, the French telecommunication conglomerate, and ATT's now-defunct spin-off, Lucent Technologies Inc.? That mythical transaction, which has been shedding red ink ever since it closed, was consummated on December 1, 2006, and with much fanfare, we might add. At last, ALCATEL had a pied ä terre in the USA. What could be better than this? Actually, bankruptcy would have been better. While the deal was effectively a take-over of Lucent by the French giant, it turned out, most likely for political reasons, that the former CEO of Lucent Technologies, the American Patricia Russo, was duly nominated as the first post-merger CEO. She did not last too long, as was to be expected from someone attempting to run a quintessentially French company-cum-government bureaucracy who doesn't speak French. The last happy day for shareholders of the “new” ALCATEL was the day the deal closed. Meanwhile, former Lucent shareholders have been ecstatic ever since. The smartest guy in the room was probably the ALCATEL CEO Serge Tchuruk, who bowed out gracefully after the deal was sealed. He has been thanking God ever since that he wasn't around to see so much value destroyed so quickly, by so few people, without a single shot being fired. During the last quarter of 2012, led by the Dutchman Ben Verwaayen, the company wrote off another $1.9 BN, bringing total write-offs post-merger to a staggering $16 BN. Frankly, weapons of mass destruction couldn’t do any more damage.