Fresh Take / Fresh Talk : Deborah Siegel

This is the first in a series of interviews I'll be posting with thought leaders on a variety of hot topics. I invite your comments and suggestions on areas of interest to you.

The Challenge: Common ground among women across generations seems lost. Has the women's movement stalled?

The Take:

Deborah Siegel, PhD is the author of Sisterhood, Interrupted: From Radical Women to Grrls Gone Wild, co-editor of Only Child: Writers on the Singular Joys and Solitary Sorrows of Growing Up Solo, co-founder of The Scholar & Feminist Online, and a blogger at Girl with Pen (http://www.girlwithpen.blogspot.com/). She has written about women, sex, feminism, contemporary families, and popular culture for a range of venues. She is currently a Fellow at the Woodhull Institute for Ethical Leadership.

Why did you write a book called Sisterhood, Interrupted?

I wanted to better understand why older women and younger women weren't always talking to each other—or at least weren't talking in the same language—when it came to the question of what so-called modern, liberated women these days are supposed to want. I saw a number of clashpoints out there—the alleged "opt-out revolution," Girls Gone Wild, and now, of course, the election. What it comes down to is that women of different ages often have different understandings of what it means, in this country, to be powerful, or empowered. We often have different ideas of what power is and how to achieve it, of what sexism looks like and how to fight it, and what the word "feminism" itself even means anymore.

Did you find in your research that Generation Y and X women identified with the term Feminism?

A lot of younger women will say "I'm not a feminist, but…" and then go on to finish that sentence with a statement of strong feminist belief or values. What comes after the "but" is important, but I also believe that feminism is a word worth reclaiming. Words give us common ground. Without such a word it becomes difficult to unite in common cause. Words not only express, but shape the way we think. They have the power not just to name, but to change.

Why did Feminism become such a dirty word?

In part, we can blame it on the media, which gave us the oh-so-sexy image of the bra burning man hater—an image many of a younger generation absorbed. But I also think that social movements constantly need to reinvent themselves. Until recently, feminism hasn't always done such a great job.

I personally feel, and have others comment recently, that that women's progress is stalled, even moving backward. Do you agree?

There's been an illusion of progress that is unsubstantiated by the numbers. Women are still earning much less than men, only 16% of Congress is female, the number of women on corporate boards and in state legislatures has gone down marginally…and so on. And yet when you consider that women are over half the population, graduate from college and some graduate programs in rates that match and sometimes exceed men, and make most of the household purchasing decisions when it comes to consumer goods, there's a disconnect here. Women collectively have such power. But are we using it? Among other things, I think what's happened is that women are less likely to see our challenges in a larger political context than we were in the past. Tragically, we've lost the sense that so many of our remaining problems are shared.

Is it time to make the personal political, again?

Definitely. And I think younger women are starting to do this again. I've been traveling to college campuses with an intergenerational group of feminist authors this year, and it astounds me how much activism is going on at campuses these days. Younger women are searching for ways to make feminism their own, and even among the young people I talk to who support Obama, I find that the sexist response to Hillary has lit a fire. Women in leadership are still few and far between, and it's a real wake-up call. It'll be interesting to see how her example plays out for women who aspire to leadership positions across the board.

The Take-Aways:

- How do you relate to the word "feminism"? What does it mean to you?
- Do you see yourself as part of any movement for the continued advancement and empowerment of women?
- Does sisterhood have a future?
- Take this quiz.
- Read Sisterhood, Interrupted for a historical overview of the fights and frenzies around feminism in America over the past 40 years, and where the movement is today.

Stay at Home Moms Returning to Work

I received this question to PursePundit from a television news researcher - “I'm working on a piece related to the recession and full time moms forced back into the workforce (as husbands lose their jobs or take pay cuts). Could you offer some insight?”

Absolutely this is happening, as intuition would tell us, but the question is are they successful? The likely answer to that is, no.

Overall, unemployment is on the rise, with drastic hits in housing related industries, areas dominated by men. This not only includes construction, but also finance areas like mortgage banking. Finance more generally has been hit hard losing tens of thousands of jobs with more to come. Decreasing consumer spending is leading to broader based job cuts across sectors and across industries. In general demand is not very good, for men or women. Additionaly, the numbers of women that are trying to reenter the workplace is likely not captured in the unemployment numbers we get reported to us, thus understating the unemployement situation.

Women entering the job market, after years of absence, face huge challenges coming back in, even in good markets. There is a proven mommy discount, which researchers like Sylvia Ann Hewlett and others have noted in discussions about 'on ramping'. I recently read a piece in the NY Times which made me wild. It almost celebrated the big opportunity for employers in hiring women who have been at home because they can pay them up to 40% less then they are 'worth' based on their skills and experience because of the time out. The author went on to say that these women were just grateful to have a job, almost at any price.

Leslie Bennetts, in her book “The Feminine Mistake”, highlights the risks that women are taking in making that choice to leave full time employment to full time motherhood, a risk that becomes reality in economic downturns. She advises women, strongly, to weigh these risks very carefully before choosing to leave. Women who have stayed at work, even part time, will be in a much better position to step-up their financial contribution to the family should the family be in need.

So back to the question. How are women doing when forced to return to the workplace after years of absence due to economic need? Most women who are forced back in to the work place out of economic need in bad economic conditions will likely have to take jobs that are well beneath their abilities, and accept pay that is not in the same ballpark of what they earned prior to leaving. Many will find the limited options not doable, and instead opt to downsize their lifestyles drastically. This is clearly already happening and is what contributes to the downward economic cycle. For others, particularly those who have kept their skills current and their professional networks, success is more likely.

Though I was not able to easily find research on this subject a good place to look would be The National Council for Research on Women, a network of over 100 Womens research and Policy Centers.

Engaging Today’s Generation to Find Tomorrow’s Cure: The PINK Agenda

Marisa Renee Lee lost her mother to Breast Cancer and she is making it her mission to find a cure. In an eloquent essay on the Huffington Post she shares her story, hoping to inspire other young women to take action. “Worldwide, breast cancer is the second most common type of cancer after long cancer, and the fifth most common cause of cancer death,” according to Wikipedia. As an impassioned young woman who would not accept “defeat as an answer”, she created the Pink Agenda, to bring awareness and resources to the fight against Breast Cancer. She chose to do more then write a check, but to bring her collective resources to bear. That inspires me. Each of us, bringing our collective resources to the needs and injustices that matter most to us, is the force that will change the world for the better.

The Pink Agenda is having their second annual benefit in New York City on May 15th, and it is not to join in. If Breast Cancer is a cause you care about, and you want to be connected with like-minded young professionals, The Pink Agenda is for you.

Proceeds from the event will be directed to two leading Breast Cancer Research Organizations, The Breast Cancer Research Foundation and the Susan G. Komen Foundation. I am a Board member of BCRF, an organization founded by the most passionate Evelyn Lauder. BCRF recently commanded a top in the category endorsement by Oprah Magazine.

WFN and "Unfinished Business"

Late last year I decided to join the board of the Women’s Funding Network after careful deliberation of how I was going to use my resources: my time, my treasure, and my talent, to make a difference in the lives of women and girls, globally. Last week they held their annual conference in Washington D.C. which brought together women leaders from around the world. As a network of over 125 funds, these leaders collectively grant over $50 mm a year with most of the money going to grantee partners that help women survive and someday, thrive. We heard a representative in Latin American that women struggle with issues of poverty, gender related violence, as well as economic and financial security. In Africa the affects of violent conflict hit women and children hard. In Asia, the lack of political representation of women is driving their fund in to action. Around the world women are working, tirelessly and collectively to make for a better world. As one African leader put it, “Fighting for Women’s Rights is Unfinished Business.”

I had the pleasure of meeting Cheryl Saban at this conference, a regular writer for the Huffington Post and an amazing woman philanthropist. In a recent blog she states that “it's been proven that women who are provided with basic resources can make the difference between a family rising above poverty, or being trapped by it. “ Amen to that sister!

Lady in Black

“What’s better than being in a room full of women?” declared the auburn-haired blue-eyed woman in the front of the room. No, this was not “The Vagina Monologues,” and the woman was not Eve Ensler, nor was it Hugh Hefner. It was First Lady of American Magazines, Cathie Black.

I had met Cathie a few years back at one of the FORTUNE Most Powerful Women in Business Conferences, a list she has been on each on every year since its 1998 debut. This time around the venue was much more intimate, a salon gathering in an apartment overlooking the East River. I have occasionally found such senior women to be aloof and unapproachable, but not Cathie. She was funny, warm and real.

She was there to talk about her book and share war stories about 30 something years in the industry. In Basic Black: The Essential Guide for Getting Ahead at Work (and in Life), readers are offered candid personal stories, teachable moments, and straight-up advice from a woman who has seen it all. Hired as the advertising manager at Ms. magazine in its early days, Cathie was charged with winning over skeptical advertisers. Her sales team often showed up with promotional materials printed on hot pink paper. It was a heady time. Because a feminist magazine seemed a risky—and controversial—venture, potential advertisers sometimes pushed them straight out the door. As Cathie notes, "Adversity is a great teacher."

Cathie went on to become publisher of New York in 1979—and the first woman publisher of a weekly consumer magazine. Currently, she heads up Hearst Magazines and manages the financial performance and development of publications from Cosmo to Esquire to O, the Oprah Magazine.

In Basic Black, Cathie asks readers to ponder what "having it all" really means, to them, today. She explores the idea of creating what she calls a "360-degree Life" for oneself, encompassing work, relationships, home life, and family. ….Though the book is a great read for any professional woman it is especially good for those just starting out. Imagine having a career coach like Cathie to tell you how to handle job interviews, which rules to follow and which ones to break, and why you should make your life a “grudge- free zone”.

When, in an effort to defend Hillary Clinton, Saturday Night Live’s Tina Fey declared “Bitch is the New Black!”, clearly she had not yet met Cathie. Cathie is the legendary Black – just like your perfect little black dress she had advice for every occasion.

Subscribe to the New 85 Broads Magazine

Few women have done more to create community for women then Janet Hanson, the founder of 85 Broads. This network, which now boasts to have over 15,000 of the smartest women on the planet as members, existed long before we ever heard the term 'online social network.' Started 11 years ago as a way for Janet to remain reconnected with the fabulous women she worked with at Goldman Sachs, it has since taken on a life of it's own. The membership is now available to alums at over 250 schools. Once you sign-up you become a part of this powerful network.

The immediate news is that Janet has decided to launch a new magazine! So here is what you can do. Subscribe. It will be the best $12.95 you ever spent.

https://secure.85broads.com/magazine

Catch me on FOX Business News 10 to 12 this AM

Today is my second appearance on FOX BIZ as a market expert and I am waiting anxiously for the email to arrive announcing the topic areas. Having followed the business headlines so religiously since the start of the year it is amazing how much they have changed, despite the fact that none of the problems that were the early focus have gone away. The Media just moves on. The last time I appeared you could not escape the news on the Monoline Insurers, and despite no solutions to their problems, are we hearing about it anymore? Nope. It is not surprising that the election, the price of oil, massive write-downs, surprising earnings reports and global food shortages are now the focus, but I wish someone, somewhere, would keep a list going of what we were talking about yesterday and now today. ( and this could include good as well as bad news) That list would highlight the issue/concern/reason for headline, then map the evolution of the problem/solution, and could even feature the current administration's ( and candidate's) responses. The voters last night responded so clearly that the issue for this election is the ECONOMY and the media could do a much better job in keep America informed not only of the issues of the day, but the bigger picture.

If you have limited time on your hands their are two weekly must reads to stay relatively informed - the Economist and Barron's. I also try to scan the Journal, The NYTimes, and the FT - but given the intensity of the what is going on right now, just reading what catches my eye is quickly becoming a full time job. It is not surprising that many are likely suffering from "Overnewseditis."

Warren Buffet and Investing Like A Girl

One of the many projects I have been working on for a while is the writing of a white paper that takes a comprehensive look at women as investment professionals, with a focus on women as traders, hedge fund managers, and portfolios managers. In collaboration with a good friend Carrie McCabe, a true goddess in the institutional hedge fund space, and the National Council for Research on Women ( http://www.ncrw.org/ ) we hope to uncover some of the reasons why women are so underrepresented in these important areas. As many of you know, I was a trader and have for almost twenty years been actively involved with promoting investment careers to women. I participated in countless recruiting events while at Goldman, and today still enjoy speaking at University gatherings on the topic.

I was very excited to hear about an upcoming book on Warren Buffet in a piece appearing in Motley Fool, and online investment news source. It seems that one of the greatest investors of all time has been accused of investing like a girl! The article hints at sound research that is out there and our upcoming paper, which we hope to release in the fall, will provide you with the full bibliography of such research. For now here is what the writer, Lou Ann DiCosmo, has to say:

“So how exactly do women invest? Check out these characteristics of female investors that distinguish them from their male counterparts.
- Women spend more time researching their investment choices than men do. This prevents them from chasing "hot" tips and trading on whims -- behavior that tends to weaken men's portfolios.
- Men trade 45% more often than women do, and although men are more confident investors, they tend to be overconfident. By trading more often -- and without enough research -- men reduce their net returns. But by trading less often, women get better returns and also save on transaction costs and capital gains taxes.
-A study by the University of California at Davis found that women's portfolios gained 1.4% more than men's portfolios did. What's more, single women did even better than single men, with 2.3% greater gains.
- Women tend to look at more than just numbers when deciding whether to invest in a company. They invest in companies they feel good about ethically and personally. And companies with good products, good services, and ethics tend to have better long-term prospects -- and face fewer lawsuits. “

I look forward to the day when like a girl is no longer used in a derogatory sense and books like these will no doubt help that day come sooner.

An Epic Evening

Tonight I will be attending an event I have been looking forward to for some time, the EPIC AWARDS, which will celebrate the 10th Anniversary of the White House Project. Those of you who know me would not be surprised to learn that this is an organization I have supported for years, and encourage you all to do the same. “The White House Project is a nonpartisan, nonprofit, 501(c)(3) organization that aims to advance women’s leadership in all communities and sectors—up to the U.S. presidency—by filling the leadership pipeline with a richly diverse, critical mass of women. “ I like that. We need that. The organization is run by one of the most incredible women leaders of the non-profit sector, Marie Wilson. Before starting this organization (with others) Maria was head of the Ms. Foundation, another noteworthy organization I am proud to support. For over 30 years Marie has worked on behalf of women and girls in this country and beyond. I am truly honored to call her a friend. To get a sense of Maria read her latest post on HuffPo.

This year the WHP will be honoring, among others, Abigail Disney who is responsible for the new documentary Pray the Devil Back to Hell, a film about the extraordinary story of a band of Liberian women who came together in the midst of a bloody civil war, took on the warlords, and brought peace to their shattered country. I believe it is premiering soon so be sure to put that one on your list.

They will also be honoring a group of 10 women, for their extraordinary contributions, including many I know well: my dear friend and mentor, Barbara Dopkin, my new friend and powerhouse at Best Buy, Julie Gilbert, the head of human capital management at Morgan Stanley, Linda Reifler, and the two Goddesses who are behind the “Women Moving Millions Campaign” , Helen LaKelly and Swanee Hunt. It will be an absolute and complete feminist party and I cannot wait to be there.

Hmmmm …. Though I was planning on wearing a red dress, I just might have to break out my Wonder Woman Costume. I cannot think of a better occasion.

The Global Fund for Women

Kavita Ramdas believes that the world would be a better place if women’s basic human rights were strengthened, protected, and advocated for across the globe.

A few weeks ago I had the opportunity to have lunch with Kavita, the President and CEO of the Global Fund for Women, to discuss why investing in her fund makes a difference. For over 20 years this organization has been identifying women’s groups around the world that are meeting local needs in the areas of economic justice, ending gender-based violence, advancing health, providing access to education, and expanding civic and political participation. In funding them, I would be funding over 500 different groups a year that have been carefully screened for maximum impact. I suddenly felt a weight off my shoulders. Having struggled to find the time to search out organizations that were serving in the most underserved places in the world, I felt my prayers were answered. Kavita spoke passionately of so many programs that were impacting lives, real lives, people she had met and touched. Kavita’s home base is in San Francisco, but we all have an opportunity to meet her at their upcoming benefit in New York on June 5 th, in honor of the Liberia President Ellen Johnson Sirleaf. Though she is not particularly fond of glitzy fundraisers, she realizes that people need to be exposed to their work here on the East Coast, and this is a great way to do it.

The Global Fund for Women is an A ranked charity by the American Institute of Philanthropy and three stars on Charity Navigator. They are also a member of the Women’s Funding Network.

Consider being a donor to this amazing organization. Visit their website.

On June 5th they will be having a gala in New York City to both raise funds and build awareness. For more information and tickets email gfwtwenty@gmail.com .

For an insightful recent oped by Kavita visit HuffPo.

“China Shares Fall on Beijing Rate Signals”

Shares in mainland China dropped 5.6% yesterday. ( according to WSJ) To put that in context that would be equivalent to a 690 point drop in the DOW. 690 POINTS. Could you imagine what the fed would be doing if we had a day like that???? What set it off according to the journal? Continued bad news in the US ( note that stocks in the US barely moved yesterday) including a poor earnings report by GE, as well as a year over year 16.3% increase in money supply. Excuse me, but can you spell inflation? To put that in even greater context the “Shanghai Composite Index is down 46% from the high reached last October, and down 37% so far this year.” That makes our down 8% ish market look like a blessing.
Now the real question is why? Why are Chinese equities performing so poorly given that there economy is so much stronger than ours? I have not read about a Chinese Sub-prime problem, nor have I read about a credit market meltdown. In fact, I am not sure they really even have any mortgages over there to speak of, and certainly not securitized ones. I seem to recall that people in China actually do save up to buy homes, which for many takes a lifetime. So why? The most common answer I have gotten is because there was a speculative bubble in Chinese equities. After years of off the charts performance it was just time for a breather. A 46% breather.
So now the question is if you were not one of the people caught in the frenzy, is it time to buy? I am not sure, but I am certainly working my way to figuring it out.

Market Post - The Pain is Far From Over

March was an interesting month for the markets. After a really bad January, and a bad but better February, March closed out barely in the red. The equity markets bottomed out on March 10th, and spent most of the month making a recovery. That sentiment continued in to April. Many seem to feel the worst is now behind us, at least until last Friday when GE reported majorly disappointing earnings. The week ended solidly in the red. Dow Jones 12,325 down 2.3%, Nasdaq 2,290 down 3.4%, S & P 1,332 down 2.7%.

So is the worst over? I say, hardly, and I can give you a long list of people who are still firmly on that side of the wall. I predict that GE and the others that reported this week will be but the first few of a long list of companies reporting earnings disappointments. The bad news is not likely to end there. Peeling back the layers of the poor employment report will likely reveal even more bad news, and so will be true for inflation numbers. The FED is most certainly doing their best to keep the wheels turning, but the problems in the US economy are much deeper then the FED can solve on a timely basis. Their hope, I believe, is that they can do enough to help the financial firms attract more capital to sustain substantial losses yet to come.

The most alarming news I heard this week was reported in Barron’s. Ed Hyman, of ISI Group said that “banks hold $4 trillion or so in unsecuritized loans on their balance sheets, much of which is home-equity, interest only loans, option arms”…. And the like. Let me say it again, unsecuritized. Combine that with the a few tidbits reported by John Burns, a US housing market expert that recently did a piece for John Mauldin, that 8.8 mm homeowners will have mortgage balances equal to or less then the value of their homes by the end of March, and you have to ask, how could the worst possibly be over? He goes on to say that at the end of 07 5.82 % of all mortgages were delinquent, and it takes an average of 15 months from the date of the first missed payment by a homeowner to a liquidation of the house. The pain is far from over.

Meeting Jane

I had watched her tapes, read her books, bought the appropriate leotards and leg warmers. I was 18, and I was a fitness nut. Jane Fonda was my fitness role model. I knew she was an actress first, but I had not watched any of her movies that I could recall. Then in 1982, came the multiple Academy Award winning movie, On Golden Pond. She was now beyond a tight-bunned Goddess to me. Although I was not yet 20 years old, I remember how the film moved me to consider the importance of my relationship with my father. Then last night, at an intimate living room gathering, I heard Jane Fonda read from her memoir. I was sitting in the front row. Before me was this stunning, fit, 70 year old woman, and I thought to myself, boy, those millions of leg lifts have really paid off.

The purpose of the gathering was to thank donors and introduce potential new ones to the work of the Women’s Media Center. Founded in 2004 their mission is to “make women visible and powerful in the media.” Jane was one of the founders of this organization, together with Gloria Steinem and Robin Morgan and generously supports the cause.

Jane embraced the podium for her reading. “I DON’T LIKE YOU!” she belted with a pointing finger and a quivering head, mimicking Katharine Hepburn’s first meeting with her. Jane was trying to convince Katharine to except the role, opposite her father, the late and great Henry Fonda. She went on to read, act, the entire 18th chapter of her book, in which she shares the most intimate details of not only making the film On Golden Pond, but of her complex relationship with her father. She closed her reading with tears, and the words: “Dad died five months later.” She was brave, vulnerable and real, and I wanted to give her a hug.

Jane invited questions and I raised my hand. ” How do you feel at this very moment about the role women are going to play in shaping our future?” With clenched fists she unleashed her response. It was a had-to-be-there kind of moment. In a nutshell, she said, the time is now.

Although I had already thanked her and said good-bye, I couldn’t leave. I turned and walked back to her. I grabbed her hand and looking in to her eyes, I said “We are sisters.” With a big, beautiful smile she agreed.

For Girl with Pen's take click here

The Quarter Comes to a Close, Thank Goodness

The first quarter of 2008 will most certainly go down in history as one of most turbulent ones in modern financial history. Think about what has happened? ( in no particular order) The credit markets seized up leading to the collapse of the fifth largest investment bank, Bear Stearns. Banks and other financial institutions reported unprecedented losses. The stock markets around the world got rocked. The Federal Reserve went to uncharted territory through massive rate cuts, opening their window to investment dealers, and supported a bank purchase of an investment bank. Large private equity deals have and are going bust. Investors in ‘safe’ securities called auction rate securities lost access to their funds. Housing values continue to tumble. Thousands upon thousands of people across the country are and will face foreclosures on their primary residences. The US economy is most certainly in a recession while the dollar continues to lose value against other currencies and inflation and unemployment are on the rise. Sadly I could go on and on. No wonder people are not happy?

So what lies ahead? Most are just hoping that the worst is behind us but sadly, I do not think it is. The problems are big and it will take a while for it all to work out. In the mean time it makes sense to play it safe financially, investment wise and spending wise. That does not preclude looking for opportunities for long term investments, but it does mean that one should be sure to maintain enough liquidity to ride through the storm. And a storm there will continue to be.

I would like to offer a few words about the announcement today regarding a BLUEPRINT for overhauling the financial regulatory system. The timing of this announcement seems a little crazy to me. The government is clearly trying to send a message of ‘being in control’ but releasing a 200 page document which throws in to question the roles of all the regulatory groups that need to be focusing on the current crisis seems irresponsible. Knowing a little bit about human psychology I would suggest that threatening to change, if not take away, peoples jobs at the same time as you are requiring them to work harder then ever is not a smart thing to do. Hank Paulson said moments ago on CNN that it is his and the authorities number one priority to help manage through this financial turmoil and housing market downturn, and to me, they should be staying focused on that goal. Do we need massive restructuring of the regulatory system to create better alignment with the realities of today’s complex financial system, of course, but now is not the moment to throw the blueprint for that out there.

Is the Bear Stearns Deal "Fair?"

Case studies will be written on went wrong at Bear Stearns. There will be other studies about just what led to an unprecedented move by the Fed to broker the sale of the firm to JP Morgan on March 16th. Reams will be written about how a few days later that bid increased five fold to $10 per share. Though this deal looks likely to stick, the question of whether it is fair remains.

To whom should this deal be fair? Is there such a thing as a collective fair? And is that even the right question to ask? For the 14,000 employees who owned one third of the company, it would seem that $2 was the wrong price, and $10 is a better one, but with time what could that price have been? The authorities determined that their company was toast (unemployment), which is the only course of reasoning that could have led to the any-price-is-a-good price price. But when only one buyer is brought to the table, it seems virtually impossible for anyone to suggest that the price was fair.

To be sure, the buyer was given a weekend to do the impossible: determine a value of a complex financial institution at the center of the network of complex derivative transactions worth trillions. That process alone was likely not fair to the employees of Bear Stearns, but in those famous words spoken by Margaret Thatcher, “Life is not fair.”

As for the surviving banks and investment dealers, was $2 or $10 per share fair to them? If you were to apply the valuation metrics imposed on Bear to any of the many financial firms still standing and forced them to accept whatever price that implied, how would they have reacted? The same way Bear’s employees and shareholders reacted: they would be outraged! Luckily, by selling Bear off quickly, this outcome is unlikely, and you can be sure the survivors are breathing big collective sighs of relief.

What about JP Morgan, was it fair for them? My trader handbook tells me that if you know you are the only bidder, bid low. Period. There is simply no way Jamie Dimon would have done the deal had he not thought he was buying Bear cheap, and that, after all, is his job. He reports to the shareholders of the bank, and not the general public. His job was to secure the best deal possible for his company, and at $2 per share, even $10 per share, he has likely done that. Of course that does not mean that success is guaranteed, but a good trader assesses the risks and prices accordingly.

What about to the FED who backed the deal, was it fair to them? Are we kidding? They may well have pulled off the trade of the century. If the alternative, Bear going immediately down the drain, was the sure consequence, then a $30 billion guarantee was a steal. A few billion here or there is nothing compared to the economic consequences of a financial market meltdown. It is truly impossible to measure the cost of a failure of a financial institution the size of Bear Stearns and that is what continues to be cause for concern. The FED’s job is to protect the integrity of the overall financial markets, and that they did.

And what about the public? Please refer again to the paragraph above. If the financial markets collapsed, billions if not trillions of wealth would have evaporated in a heart beat. The US and arguably the world would have been thrown in to a recession. So yes, if the outcome was in fact the bank’s failure, this is a good outcome for the public.

These are difficult times. The Fed and other government authorities are clearly doing the best they can to ensure that financial markets stay fully functioning but this is not without consequence. Tough and thoughtful decisions are going to be needed when deciding who to save, and who not to. Save too many and you destroy the integrity of the financial markets, save too few, and we could yet experience a market meltdown. As we learned in the movie Bruce Almighty, you simply cannot answer everyone’s prayers even if you are God. What helps some often hurts others. Not only is life not simple, but often it is just “not fair”.

More on Bear and What is Happening with the Financials

As last week began, we heard that the Fed was stepping in to help JP Morgan buy Bear Stears for $2 per share after closing the prior week at $30. Prices for other financial firms initially skidded, in contemplation of who would be next to fall. Further, if Bear was only worth $2 per share, implying a market cap of less then one third of the value of their building, then what did that mean for the valuation of like firms? Not good. But that concern was short lived. By the end of the week, market participants had given the news an entirely different spin.

That spin went like this: The sacrifice of Bear meant that others would be saved. Hmmm… sounds a little like the message of EASTER? Bear, however, is unlikely to be resurected but existing shareholders did still get some good news today with JPM announcing they are now willing to pay $10 per share.

Many great commentaries have been circulating this week listing the reasons why we witnessed an unprecendented move by the Federal Reserve to fasciliate a buy-out. In “Let’s Get Real about Bear,” a commentary by John Mauldin,which you can only find via an email subscription which I highly recommend.( www.investorsinsight.com ), he suggests that “if Bear had not been put into sound hands and provide solvency and liquidity, the credit markets would simply have frozen this morning…Hit the Wall. The end of the world. Impossible to fathom how to get out of it type of event.”

The Fed clearly “got that”, and as the week played out, market forces grabbed a hold of the Fed as the lifeline not only for the financials, but for the market in general. (With the exception of commodites, which suffered a brutal pull-back this week.) They were clearly doing everything in their power to help stablize the financial system, and they did a good job. The questions still remain however, and I for one continue to have my doubts that the troubles are over.

For me, the biggest issue is that we are still very early in the default cycle of the laundry list of assets that are in fact in trouble. It started with sub-prime, but the list now includes all residential mortgage product, commercial real estate loans, construction loans, credit cards, student loan debt, home equity loans… and the list goes on. I have heard some alarming statistics including that 30% of all homes bought in 2005 and 2006 are underwater (meaning, home is worth less than the value of the loan). Mauldin, in an earlier newsletter, suggested that in order for housing inventories to find clearing levels over a reasonable time frame, prices would have to fall another 15% from here, wiping out over $5 trillion in home equity. The banks have already taken some big write-offs but it is unlikely that they are done. With the Fed’s help to boost prices, it is hopeful that they can raise the capital they need to not only weather more write-offs but to keep the lending machine going.

The other issue that continues to worry me is counterparty risk. Bear was too big of a counterparty to let fail given that they were a huge player in the derivatives space, but others will fail, and it is unknown what will happen when they do. The bet is, of course, that the Fed will continue to do everything in their powers to keep stability in the system, but can they? I believe that the Fed can and will prevent any sort of systemic collapse which they may have witnessed had they not come to the rescue of Bear. But there will be more problems. Exactly how and where is a difficult bet indeed.

Last note. Be sure to pick up a copy of The Economist this week to catch its feature on Wall Street. This magazine is simply the best way to keep up with what is happening in the world and I would highly recommend a subscription. They also found the Fed’s mover reassuring but “the nature of liquidity in today’s ready-cash funding model of investment banking is that it is strong until suddenly it is not.” I share the sentiment reflected in their closing statement that “with housing prices still falling, credit deterioration spreading and derivatives markets deeply unsettled, is anyone willing to bet that Bear Stearns is the last of the $2 sales?”

JP Morgan takes Over Bear Stearns and More………..

As I sit down to write this piece news just hit the tape that JP Morgan will buy Bear Stearns for $2 a share having closed on Friday at $30 down 47% on the day. “The deal marked a 93.3 percent discount to Bear Stearns' market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29… or 1% of what the company was worth 16 days ago” reports Yahoo.com. (http://biz.yahoo.com/ap/080316/jpmorgan_bear_stearns.html ) Bear was too big to fail and the FEDERAL RESERVE came to the rescue. Barron’s reports that it is “tough to say what Bear is worth” but they highlighted two spots of value, their prime brokerage business which “generated $566 million in pre-tax profits last year. At six times earnings an appropriate multiple would be $26 a share.” Add to that the value of their office building which they say is worth $12 a share and it might seem that JPM is getting a bargain. Not so fast. What this more likely means is that the value of their asset base is at least $36 a share worse then people think. Bear’s asset base at the end of November was $395 bln, with only a $12 bln book value that implies some 30 times leverage.

The folks who spent the weekend at the firm trying to ascertain the value likely had no easy task and it is unclear what will happen to those assets this week. Though the language is sketchy it appears that JPM has a made a deal with the FED for ‘special financing,’ which may mean there will be no forced selling which could have made problems even worse. From everything I read over the weekend, and listening to Treasury Secretary Hank Paulson’s on FOX NEWs today, it was clear that the FED and the Treasury will continue to do everything they can to stabilize the markets. The question remains, can they do enough to prevent further problems? The answer clearly has to be NO WAY and the most they can hope for is to try to keep it somewhat orderly. The massive deleveraging has to run it’s course, and we are not even close to the finish line. I applaud both institutions for what they are doing, but it won’t be enough.
The reason for saying this is because FED loans, albeit helpful, do not solve the core problem. The lack of transparency coupled with the incredibly complexity of financial instruments has rendered balance sheets nearly impossible to analyze. Free markets can only function in a system where a company’s credit worthiness can be assessed independent of a letter grade supplied by a rating agency. However, the truth is that this is simply no longer the case. And, in times of stress, any prudent buyer will charge a huge discount to compensate them for uncertainty, especially when a company leverages it equity twenty or thirty times. Is Bear Stearns worth $2/share. Who knows? I’m not sure that even JP Morgan knows. However, before one can declare that this financial crisis is over, the markets have to be able to make this kind of assessment. Unfortunately, we are not there yet.

Weekly Market Performance and Benchmarks
DJ Indus close 11951 +57.40 +.48% -9.9% ytd
S& P 500 close 1288 -5.23 -.40% -12.2% ytd
Crude Oil 110.21 last week 105.16
Gold 998.10 last week 972.20
10 Yr Treas 3.43%

What To Watch This Week
- Other investment banks are reporting earnings – Goldman, Lehman and Morgan Stanley. Question is, how bad will it be? The market will be watching all financial institutions closely, worrying about who might be next to go.
- There have got to be other hedge funds in trouble, I am sure they will start to surface.
- The FED meets on Tuesday for an expected cut of the fed funds rate to 3%.
- The Fed is clearly going to continue to pump the system with liquidity which should be good for Gold and bad for the US Dollar.

WSJ - A Must Read

David Roche wrote an exceptional OPED called "Recession Is Inevitable" which articulates the response of the FED to problems in the system. Though doing all they can do, they cannot stop what is happening now that we are in "the contractionary (bear) phase of the cycle." His outlook is quite negative as a result. "Globally, total credit losses of $1.4 trillion will cause a contraction of world GDP of 2.5 percentage points, or half the current rate of global growth. So the global economy will become a gray, dull world of semi-recession and sticky inflation that will last a long time. Without major policy blunders, however, it won't be a 1903s-style depression."
For the whole article http://online.wsj.com/article/SB120545591912235239.html

HOLY BEAR!!!!

Was it not a couple of days ago that the head of Bear Stearns went boldly on CNBC to say everything is ok? Bear Stearns stock is down 45% on the day (as of 11 am) on news that they are unable to fund themselves.

The term auction facility that is suppose to provide the likes of BEAR STEARNS with liquidity does not open until March 27th and they found themselves in an immediate need so they had no choice but to go to the FED immediately. JP Morgan is a conduit for the funding, as being a bank, they have access to the FED window. According to CNBC they are taking no credit risk by serving as the go between.

"The most unbelievable, selective action by the FED that he has every seen." Says Cramer on CNBC, the guy is going even more crazy then usual. But what choice did the fed have?

This is bad, very very very bad…….and sheds a very dark shadow about the problems likely being faced but a large number of financial institutions. ( banks, broker dealers, hedge funds, insurance companies .... and so forth)

The problems are far, far, far from over.

US Equity Markets Take Off -

If I would have been writing this piece yesterday I would have been telling you about what a horrible week the credit and equity markets had. The worst yet. There were "convulsions in the credit market" with firms being unable to fund regular business deals. Thornburg Mortgage and Carlyle Capital caught the headlines, but be sure there were others. On the equity side the economic news also got worse, with the headline that 63,000 jobs were lost in the US in Feb. Some noteworthy economists finally threw in the towel and said yes indeed, we are likely in a recession.

As far as I can tell, and granted I did just spend the day skiing with my kids, the only thing that has really changed is that the FED said they are going to inject as much liquidity as they can in to the system to keep the financial markets from blowing up. That is the same thing they have been saying forever. It looks now like they are making more money available to more players, which is a GOOD thing, but the problems are not going away. Bad assets are still bad assets, and they are still going to have to work their way through the system. What they said by this action is that things are SO SO SO BAD that we need to come to the rescue even more then we thought last week. Again this is a good thing, and should help stablize the markets from a free fall, but does it suggest that all is ok in Wonderland? Not at all.

I do absolutely congratulate the FED for this program and it makes a lot more sense to me then continuing to rachet down short interest rates. It also makes a lot more sense then the government throwing handfuls of cash out an airplane window. The FED is acting responsibly but my point is that it is not enough to stop the workout that has to take place, they are just trying to help it be more orderly.

Goldman's 10,000 Women Initiative - New on the Hufffington Post Piece

There is so much to say about Goldman's new initiative that it has taken front and center stage for me over the nightmare that is unfolding in the markets. For reasons to smile follow the link.

http://www.huffingtonpost.com/deborah-siegel-and-jacki-zehner/goldman-leads-with-1000_b_90448.html


The economic news continues to be horrible and the markets are reacting accordingly. My view continues to be incredibly defensive.

Goldman, Meet Chris Grumm

On the heels of that last post, I must share something written by a woman I believe to be one of the most amazing people in the social justice movement, Chris Grumm. Chris did not have to work very hard to get me to join the Board of the Women’s Funding Network. She is one of the many women I have met over the past few years who has been walking the walk and talking the talk for a very, very long time.

Chris writes:

“We have an open window at this point and time in our history. We see the building of popular interest in investing in women and girls. Examples of this are Oprah’s school for girls in South Africa, Care’s worldwide campaign “I am powerful”, UNIFEM spokesperson Nicole Kidman talking about women around the world and Tyra Banks, US former model and TV host, work on supporting young women of every race, class and beauty. Even the Millennium Goals for Development have started to realize the need to focus more on women and girls if they want to reach their stated goals....Women have more education, money, influence and political power than any time in history. And people around the world are dissatisfied with much of their current leadership, and are calling for something new. The world is ripe for change."

So BRAVO Goldman. BRAVO for launching something symbolic in the women’s space and for so boldly joining our club, the Women (and Men) of the Social Change and Social Justice Movement, we are happy to have you. May we work together for a long, long time to come.

10,000 Women : A Goldman Sachs Initiative

Yesterday was a day I will remember for a very long time. A few days earlier I received a phone call inviting me to a special press announcement by Goldman Sachs at the Low Library at Columbia University. I was told very little except it was ‘right up my alley’ and was something that would make me very proud of the firm. With a certain degree of skepticism, and a slight bit of annoyance due to having to arrange my schedule, I said, “sure, I'll be there.” I would not have missed it for all the bags at Bergdorfs.

Walking up the commanding steps of this most magnificent structure I entered unprepared for what unfolded next. As I worked my way through a maze of people and cameras, the stage opened up, and staring at me were the faces of the most beautiful women, and the number 10,000. The brilliantly designed set,merged the ticker tape style of Wall Street with more personal and grass-roots images of women from all over the world.

10,000 Women , A New Goldman Sachs Initiative

I quickly spotted many familiar faces. The middle few rows were occupied by the handfuls of senior women at the firm, many of whom I knew well from the time I was there. Other retired partners had been called back for this very special announcement as well.

Within a few minutes, and after about 30 people paraded on stage behind him, Lloyd Blankfein, CEO of Goldman Sachs, took center stage to tell us why we had been summoned. Goldman Sachs was announcing a brand new initiative that “will provide 10,000 underserved women, predominantly in developing and emerging markets, with a business and management education.” Why? Because he, they, Goldman Sachs, the firm that gave me my start in the business, the firm I worked with for fourteen years and gave me the honor of being a partner, had come to believe that the way to change the world for the better was to economically empower women. Here they were making a considerable and creative commitment to do just that. Damn right that was "right up by alley.” I was floored.

For the next hour, we heard more about this ambitious program from the people that were going to make it happen. The deans of Business Schools from the global North and South talked about their programmatic partnerships. A few women who would would benefit from the opportunities Goldman was creating for them shared their stories about what having a business education would mean for them.

You see, by providing a woman with a business education and other resources you enable her to not only improve her life, but her family’s, her community’s, her country’s and thus the world. As an activist and donor in the women’s space, of course I had heard this logic pattern before, but the power of witnessing it behind a Goldman Sachs podium was deeply personal and incredibly powerful. Goldman Sachs, the pre-eminent Global Investment Bank, called all these people together to tell them, and the world, that we MUST invest in women not only because it is the right thing to do, but because it makes good business sense. Though they had made this case internally to themselves for years and years prior--indeed, this message has been the primary driver for their diversity efforts--they were now saying it in a broader context, and on a world stage.

I remember reading a quote not long ago that left me deeply annoyed. It went something like, “It will take a man to lead the next wave of the women’s movement.” The sentiment, I believe was that what the women’s movement needs is for someone to put it where it belongs, front and center; given the style of leadership that it would take, that someone would likely be a man. Internally I thought WRONG, big WRONG, our movement doesn't need a man. But I do believe we need men, to work alongside women leaders, to lead the next wave of the women’s movement that is already well underway. We need both genders at the table to lead the kind of change that makes this world a more just and equitable place for all. Moreover, we need institutions in the public, corporate, and non-profit space to work together for change.

Philanthropy and social change is not something to do after you leave your business life. It's something you can combine with your business life. Leave it to Goldman to help show us the way.

"Leveraging the Power of Race & Gender"

This is the title to a piece written by Kavita Ramdas, President and CEO of the Global Fund for Women, ( http://www.globalfundforwomen.org/cms/ ) for the NATION. This piece is a must read ( http://www.thenation.com/doc/20080310/ramdas ) in the context of the current Presidential election. Kavita is a brilliant leader of the social justice movement and I am honored to serve with her on the Board of the Women’s Funding Network. ( www.wfnet.org ) She so eloquently expresses what many of us our feeling about the missed opportunities in the current political debates. Both Clinton and Obama have an incredibly opportunity to talk a very different kind of leadership, pulling from the richness of their personal histories and perspectives. Why are they not doing that? Let me leave you with the last paragraph in hopes it will inspire you to follow the link and read the whole piece. Bravo Kavita!

“The next President needs the ability to demonstrate the inner courage and conviction that comes from owning his or her "otherness." As a woman and a mother, Hillary Clinton could bring insights and perspectives no other President in US history could have brought to the negotiating table of war and peace. As the stepson of an Indonesian Muslim and the son of a Kenyan and a white woman from Kansas, Barack Obama manifests what it means to be a global citizen. What is at stake in this election is not merely the historic first that would be accomplished if either a black man or a woman became the next US President. What is at stake is the fragile future of our shared world. “ – Kavita Ramdas.

The Bad News Continues

Alan Abelson from Barrons called the news this week a continuation of the “extraordinary litany of woe” and I would have to agree. Though the equity markets tried to enjoy a bounce at the beginning of the week off good news about the monoline’s credit ratings, the economy once again took center stage on Friday. Although the President and his advisors are still in denial that we are in fact in a recession, the rest of the world seems to be of that belief. Given the evidence, it would be tough to argue. More and more we are reading about the possibility of stagflation which I have written about a few times over the past two months. To quote Alan- “Gold.. has proven a much better gauge of inflation that any of the laughable official measure our blessed government uses.” In case you missed it GOLD hit a high of $978 this week and more and more people think it will break $1000. I happen to agree. Over the past year oil is up 62%, soybeans up 88%, and wheat is up 164%. Sugar a staple in American’s diets is up 30% in the past two months alone. No inflation? Ya right….

And what about the credit markets?? The stories keep getting worse, much worse. The municipal markets are still a mess, pretty much all credit products is trading at it’s widest spread levels in forever, and hedge funds are starting to blow up left, right, and soon to be center. Lucky for them many of them can say “sorry you cannot have your money back.” I guess if they can do that in the muni market these days, why not hedge funds. I think everyone is going to start reading the small print.

A couple of headlines that I found particularly noteworthy this week:
- A USA Today headline on Friday that said – “More Americans are using credit cards to stay afloat.” People are forgoing paying their mortgages in order to keep their credit cards current. That has never really been the case before but because housing prices have dropped so fast, and people living at the margin have so much debt as it is, they are thinking that they need to keep their credit cards or they cannot buy everyday necessities. I have said it before but I will say it again, every type of credit product will experience record delinquencies in the coming year, and credit cards will be one of them.
- The Economist reported that “8.8 m mortgage holders, 17% of total, have home loans greater then the current value of their home.” ( Mark Zandi of Moody’s – www.economy.com) This number is BEYOND shocking. BEYOND.
- Fannie Mae and Freddie Mac – Please do not get me started! Despite them both recording record losses in the billions regulators decided that they should be able to grow their portfolios as much as they want. According to BARRONS Fannie’s portfolio is 81 times it’s net work and Freddie’s is 167. Remember that although these agencies do provide a valuable service by reducing the cost of mortgages to American homeowners, they are also operate very much like hedge funds. One might even suggest that they are a government sponsored hedge fund. With leverage of 20 to 1 and 30 to 1 respectively, compared to the average hedge fund in the single digits, if they were private investors would have pulled out their money a long time ago and the regulators would have shut them down. But NO … let’s tell them to buy more.

Only in America.