September 20, 2013
Jefferson McCarley, a forty-two-year-old San Francisco resident, used to work at Gap’s headquarters, coordinating the logistics of moving merchandise to the shelves of Gap and Old Navy stores. Like the city itself, he has a knack for reinvention. He told me that when Gap laid him off during the recession, he became the general manager of a sleek independent bike shop in the city’s Mission District. Soon, he was voted vice-president of the local merchants association, and joined a group of mom-and-pop-business owners called Keep Valencia Local, which works to stop chain stores from opening locations on the street of that name. Back in 2009, merchants on Valencia Street had helped to kill American Apparel’s bid to move in.
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September 19, 2013
Moments after the Federal Reserve said Wednesday that it would keep going with its bond-buying stimulus program, the Wall Street Journal’s Sudeep Reddy blogged, “Wow.” He wasn’t the only one taken by surprise by the move, which came after the Fed had said in May that it might taper the program. Some of the strongest reactions—of relief, mostly—have come not from Wall Street but from the other side of the globe, where the currencies of several developing countries have been in free-fall since the May announcement.
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September 18, 2013
We can now start putting a dollar value on JPMorgan Chase & Co.’s responsibility in the “London Whale” trades of 2012, which lost more than six billion dollars: the bank will pay an eight-hundred-million-dollar fine, according to a settlement expected this week with the Securities and Exchange Commission and other government regulators, to settle charges in connection with the improper trades.
Because JPMorgan is expected to admit that its own lax controls made it possible for traders to build up risky positions and cover up their losses without detection, the S.E.C. is likely to tout the settlement as part of a new get-tough approach to Wall Street. An admission of wrongdoing would certainly be a step in the right direction, departing from the longstanding practice of banks settling with the S.E.C. without admitting or denying liability, and staining JPMorgan’s reputation as a bank that excels at managing risk. The bank would surely suffer from such an outcome—not only monetarily but in the form of strained relations with regulators and clients.
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September 18, 2013
Last Thursday, two days after voters tapped Bill de Blasio as the presumptive Democratic nominee for mayor and one day after the twelfth anniversary of 9/11, Mayor Michael Bloomberg delivered a speech about Lower Manhattan from 7 World Trade Center, which overlooks the busy construction zone at Ground Zero. Many observers expected Bloomberg to chime in on the mayor’s race and endorse the Republican nominee, Joe Lhota, the former Metropolitan Transit Authority chairman. But Bloomberg took a different tack. He endorsed himself.
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September 17, 2013
A bullet hole mars the window in the office of Yannis Stournaras, the finance minister of Greece. It is tempting to see it as yet another unpleasant outcome of austerity: in the face of crippling government debt, maybe he can’t afford to fix it.
But he insists that austerity has nothing to do with his decision to leave the window unrepaired; he’s kept the hole, a pot shot at a predecessor from a 2010 protest, as a “memoir” of the rough path he’s had to hew. The central figure in Greece’s economic maelstrom, Stournaras, a fifty-six-year-old economics professor, has become the face of painful deprivations—firings, tax hikes, slashed wages and pensions—as the country struggles to emerge from its fiscal troubles.
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September 17, 2013
This summer, Der Spiegel ran several stories revealing the extent of the N.S.A.’s large-scale monitoring of European communications. At the agency’s European Cryptologic Center, in Hesse, the paper reported, agents learned to use the controversial XKeyscore software to mine Web users’ private e-mails, online chats, and browsing histories with no prior authorization. One element stands out as particularly surreal: “To create additional motivation,” according to Der Spiegel, “the NSA incorporated various features from computer games into the program.” For instance, analysts who excelled at an XKeyscore training program could acquire “skilz” points and “unlock achievements.”
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September 16, 2013
Harvard Business School has been trying to improve the environment for female students, as Jodi Kantor wrote in the Times earlier this month. Women in the school historically have lagged behind their male classmates in academic performance despite entering on equal footing, but in the past two years, H.B.S. succeeded in closing the grade gap. What’s less clear is what impact, if any, the school’s efforts will have on the frat-house culture of its student body, which Kantor reports “many Wall Street-hardened women confided … was worse than any trading floor.” Which raises a question for ambitious young businesswomen: Why go to business school at all?
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September 13, 2013
On Tuesday, the Alliance for Bangladesh Worker Safety—made up of twenty U.S. and Canadian apparel companies, including Wal-Mart, Gap, and Macy’s—quietly issued a statement saying that the group had achieved a series of “critical milestones” to improve conditions in Bangladeshi clothing factories. To demonstrate its progress, the Alliance published a fifty-five-page draft set of standards for fire safety and the structural integrity of buildings.
Examine the details, however, and it seems that the Alliance is short of some of its own goalposts. In July, the group vowed publicly that, by this week, it would adopt a training curriculum on worker safety and “engage third parties to develop [a] training program”; Tuesday’s statement said representatives are “working to identify third parties in Bangladesh that can implement these training programs.” The Alliance also promised to compile inventories of the factories they contract with in Bangladesh and send those lists to the Fair Factories Clearinghouse, an industry-funded nonprofit that helps apparel companies share data on factory audits. On Tuesday, the group said it was “in the process” of meeting that milestone; the executive director of the clearinghouse, Peter Burrows, told me in an e-mail that he has received supplier lists from seventeen members of the Alliance, and that new members have sixty days to comply. Meanwhile, the building standards themselves are incomplete: the section on electrical safety is unfinished, and other important elements are missing, such as the allowed heights of buildings and a timeline for factories to install automatic sprinklers.
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September 13, 2013
Ever since the announcement last month that Steinway Musical Instruments agreed to sell itself to the hedge-fund firm Paulson & Co. for five hundred and twelve million dollars, panicked piano lovers have taken to the forums at Piano World, a large online community, to express their dismay. “The wolves have won again,” one posted. “America takes another slap in the face from Wall Street.” Another wrote, “Whatever his interest in Steinway is, it’s probably not musical.” While some Internet commenters expressed hope that Paulson would be a good shepherd of the company, others predicted that the instruments would change for the worse—that Steinways would be built by machines, or outsourced to other countries where labor comes cheaper. On his blog, the cultural commentator Norman Lebrecht pronounced Steinway “in its death throes.”
Steinway has an ardent following among musicians and collectors. Volumes have been published on the company’s history, detailing its manufacturing practices, and cataloguing every known Steinway variety. Fans exchange notes on the tonal quality of particular models and years of manufacture the same way oenophiles compare vintages. It’s uncommon for a concert pianist to perform on anything other than a Steinway.
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September 13, 2013
When Twitter announced yesterday afternoon (via tweet, naturally) that it was planning to file an I.P.O., the company said it had started the process by “confidentially” submitting an S-1 prospectus to the Securities and Exchange Commission. That led to a parade of headlines saying that the I.P.O. would be “confidential,” “secret,” and even “supersecret.” If you didn’t read carefully, it’d be easy to think that Twitter was somehow going to be able to sell shares to the public without disclosing any of its financial data.
Needless to say, that’s not the case. When a company wants to go public, it first files a draft prospectus with the S.E.C. with some details about the planned offering. Typically, there is then a back-and-forth with regulators about the document (dealing with things like accounting questions, disclosure requirements, and so on), and it goes through a number of revisions before the official S-1 is released. Historically, all of those filings were public. But the 2012 Jumpstart Our Business Startups (JOBS) Act changed the rules for small companies—those with less than a billion dollars in revenue. These companies are allowed to keep their draft filings confidential. Then, once the drafting process is done, the S-1 has to be made public at least twenty-one days before the company starts its road show, when it goes out to pitch investors.
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