CEO Daily Brief – Oct. 20, 2010
Wall Street Bailout Returns 8.2 Percent Profit Beating Treasury Bonds The U.S. government has earned $25.2 billion on its investment [...]
October 20 2010 by ChiefExecutive.net
Wall Street Bailout Returns 8.2 Percent Profit Beating Treasury Bonds
The U.S. government has earned $25.2 billion on its investment of $309 billion in banks and insurance companies, an 8.2 percent return over two years, according to data compiled by Bloomberg. In fact, the U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than they could have made with U.S. Treasuries, high-yield savings accounts, money-market funds and certificates of deposit. Investing in the stock market or gold would have paid off better.
When the government first announced its intention to plow funds into the nation’s banks in October 2008 to resuscitate the financial system, many expected it to lose hundreds of billions of dollars. Two years later TARP’s bank and insurance investments have made money, and about two-thirds of the funds have been paid back.
One of the biggest investments produced one of the best returns. While Citigroup Inc. still hasn’t paid back $12 billion of the $45 billion it received, Treasury has already made $8.2 billion, or an 18 percent return, mostly as a result of selling its stake in the lender at a higher price, according to data analyzed by Bloomberg.
After collecting repayments, dividends and proceeds from warrant sales, the government earned a 14 percent return on the $10 billion it gave Goldman Sachs Group Inc. and a 13 percent return on the $10 billion that went to Morgan Stanley. For more on the Bloomberg report, please click here.
To Sell Custom Shirts, J. Hilburn Borrows Ideas from Avon, Amazon
Shoppers cannot buy shirts by J. Hilburn, a Dallas startup that sells custom-made menswear, in any retail stores, on Amazon.com, or anywhere else online, for that matter. Nonetheless, the company expects to sell 60,000 of them in 2010.
All the sales are made by commission sales reps who visit customers in their homes or offices to take measurements and suggest fabrics and styles. They send the selections to J. Hilburn’s factory outside Macau, China, where shirts are cut and sewn from Italian fabric. Buyers get them in two to three weeks. J. Hilburn’s custom shirts cost between $80 and $150, considerably less than garments of the same fabrics at high-end stores, the founders say.
Some 30,000 shoppers have bought clothing or accessories from J. Hilburn, and 93 percent of customers return for a second purchase. The 27-employee company’s sales have tripled each year and are projected to hit between $9 million and $10 million in 2010, from $1 million in 2008. To find out more about Bloomberg’s story about the shirt seller, please click here.
Sarkozy Moves to Address Fuel Shortages
The labor unrest plaguing France, which started when French workers heard officials would likely be raising their legal retirement age to pay off the government’s projected massive debt, has led to everyday Frenchmen being faced with fuel shortages and gas stations running out of fuel. French President Nicolas Sarkozy has ordered police to clear access to all fuel depots in France after strikes in the refining industry led to widespread fuel shortages.
Sarkozy said fuel shortages would create unemployment and hurt the country’s most vulnerable people.
Hundreds of filling stations ran dry this week after the country’s 12 refineries halted production following strikes, part of nationwide protests against government pension reforms seeking to raise the legal retirement age in order to reduce future budget deficits. To find out more about why the French don’t want to work later in life, please click here for The Wall Street Journal story.
How to Think Like Steve Jobs
Steve Jobs does "think different" from the vast majority of business leaders.
Jobs is a classic iconoclast, one who aggressively seeks out, attacks and overthrows conventional ideas. And iconoclasts, especially successful ones, have an "affinity for new experiences," according to the Emory University neuroscientist Gregory Berns. For example, when he started the Apple Stores, he purposely avoided hiring someone from the computer industry. Instead he tapped a former Target executive, Ron Johnson.
Psychologists have worked tirelessly trying to figure out what makes innovators different. In one of the most thorough examinations of the subject, Harvard researchers interviewed 3,000 executives over six years, and they found that the No. 1 skill that separated innovators from noncreative professionals was "associating"–having an ability to successfully connect seemingly unrelated questions, problems or ideas from different fields. The three-year Harvard research project confirmed what Jobs had told a reporter 15 years earlier: "Creativity is just connecting things."
To find out more about how to think like Steve Jobs, please click here for the story from Forbes.