RealClearMarkets Articles

The 'Curse of Smallness' Is the Biggest Threat to Our Wellbeing

John Tamny - November 13, 2018


“Bud Light: For the Many, Not the Few.” Those are the concluding words of Budweiser Light’s latest television ad campaign. One ad mocks the singular desire of a rather eccentric customer for “autumnal mead,” as opposed to the crowd-approved Bud Light. Depending on your sense of humor, the ad is funny.

Crucial here is what the ad says about successful businesses more broadly. It’s a very important reminder that big businesses are that way precisely because they meet the needs of the greatest number of people.

If anyone doubts the above tautology, they need only Google any list of the most valuable companies in the world. What they’ll see very clearly that is that the ones with the highest market capitalizations aren’t the ones that cater to the needs of a tiny sliver of the marketplace.

Goodness, Google’s best-known feature (search) is free to anyone with access to computers and internet that are increasingly accessible to individuals of all income classes. If anyone doubts this, they need only witness the internet-enabled smartphone/supercomputers that people are endlessly staring at in every U.S. zip code. Facebook alone can claim over 2 billion global users.

Farm Bills: When 'Free Market' Types Are Revealed As Hypocrites

Daniel Savickas - November 13, 2018


One of the biggest tasks for the lame duck 115th Congress will be for it to pass a reauthorization of the Farm Bill. The latter provides five years' worth of funding for the nation’s agricultural programs. The current one expired on September 30 of this year, and has yet to be reauthorized. Many of the programs will continue unmolested despite this fact. Despite the previous (and rather sad) truth, whether the next Farm Bill is a short one-year reauthorization, or a full five-year bill, it will have to be addressed before the year is out.

Whenever it does get addressed, pay close attention. The Farm Bill debate is where hordes of supposed free marketeers expose themselves as hypocrites. This debate is where members of Congress who bill themselves as “small government conservatives” fight tooth and nail to preserve millions in subsidies for a program that was started as part of FDR’s woefully mis-characterized "New Deal." They try to distract the people by talking about how much these programs help the "poor, struggling farmers" in rural America, but it’s all an elaborate facade.

A whopping 94 percent of farm support under the Farm Bill goes to only six commodities: corn, wheat, soy, cotton, rice, and peanuts. Interesting is that these six commodities only account for 28 percent of agricultural production in the U.S. That means that roughly two-thirds of the agricultural sector functions just fine with little to no support from the federal government. The “struggling farmer” trope is an outrageous myth used to justify millions in spending that artificially alters the market for American crops.

These subsidies prop up commodities if prices fall below a certain benchmark, which is set by an almost entirely arbitrary metric. This is government price support, plain and simple. No proponent of the free market could ever get behind such proposals that were, again, ushered in by FDR in his radical New Deal plan. However, when presented with an amendment to phase out these subsidies completely over time, only 34 Republicans backed the proposal.

'Confession of Judgement' Is Crucial for Small Business Growth

Stacy Washington - November 12, 2018


This month, roughly 500,000 Americans will start their own businesses. Sadly, many of these entrepreneurs won't succeed. About 20 percent of new companies fail in their first year. Only half survive five years.

Some states are making entrepreneurs' lives even harder by weakening legal contracts known as "confessions of judgment." Without the ability to sign confessions of judgment, small business owners may be unable to obtain merchant cash advances, a popular form of financing.

This interference is uncalled for. Business owners are perfectly capable of making their own financial and legal decisions.

Jumpstarting a business is exhilarating. But it's also challenging, especially since many banks won't lend to young firms. In July, big banks rejected 75 percent of small business loan applications. Even community banks rejected more than half of applications.

To Yearn for Manufacturing Jobs Is Like Pining for Reincarnation

Allan Golombek - November 12, 2018


President Trump has made it clear that manufacturing jobs matter a lot to him. He is committed to corralling as many as possible to the United States. There are only two problems: Many manufacturing jobs have already been eliminated by efficiencies or are on their way to being eliminated. And the jobs we will need to fill in the future do not depend on tougher national demands or deals. They depend on a constant modernizing economy, and a constant flow of people with the necessary skills to participate in it.

The jobs of the past are not part of our future. Indeed, they are not even part of the present. There was a time, not that long ago, when high school dropouts could walk into a factory and come away with a well-paid, secure job. By the early 1970s, one quarter of Americans worked in manufacturing, more than twice the proportion as today. What has turned that around is not a sudden flight of jobs to China or Mexico. In fact, when manufacturing began its steep climb down as a job provider, neither country was a manufacturing powerhouse. The countries at the manufacturing table were advanced economies in which workers were paid as much as they are in the United States. What happened to the jobs were technological improvements that allowed manufacturers to produce more stuff with fewer workers. Of course, that meant the workers had to be highly skilled.

As a consequence of technological advancement, overall employment in manufacturing stands at its lowest level since before World War II. Today, the jobs that are most vulnerable, according to data gathered by the Bureau of Labor Statistics, are those that pay reasonably well but require less than a tertiary education - such as assemblers, fabricators, and machinists.

Quite simply, there has been a shift from humans to robots and other technologies when it comes to manufacturing production. But people are still needed in a manufacturing industry in which production is dominated by robots and other forms of artificial intelligence. The jobs that will be most needed in the middle of the next decade will be in computers and electronics, electrical equipment and components, transportation and materials.

Proxy Advisory Firms: Don't Trust Them and Try to Verify Them

Sean DiSomma - November 12, 2018


The modern world of investing is built on a series of “trust-but-verify” relationships. Most average investors – such as those contributing to pensions or 401ks – must trust that investment managers are making wise choices with their money, but can verify decisions based on required financial statements, realized returns, even regulatory oversight. But another powerful player has emerged in this system, with one essential ingredient missing: there is no verification of trust in sight.

While investors expect institutional managers to do the right thing with their savings, many managers have abdicated a key element of their responsibility to this third-party player, proxy advisory firms. As institutions must vote on every shareholder proposal at the hundreds if not thousands of companies in which they hold positions (through and on behalf of their clients’ investments), many outsource the analysis of those proposals to the two largest proxy advisors, ISS and Glass Lewis.

To better understand this trend, the American Council for Capital Formation looked at historical voting records to see where asset managers lined up with recommendations from ISS, the largest of the U.S. funds. Their finding:  while the recommendations of ISS may not be followed by their clients 100% of the time, they are followed nearly 100% of the time by many of the largest fund managers in the country. A review of historical voting records of 175 asset managers with more than $5.0 trillion in assets under management finds these funds have historically voted consistently with ISS recommendations 95% of the time, whether the matter at issue was a management proposal or a shareholder proposal. Of this group, nearly half – or 82 of the asset managers with over $1.3 trillion of assets under management -- voted in light with ISS’ recommendations 99% of the time.  As the report concludes, these results mean billions of dollars are being voted in line with proxy advisor recommendations, no matter what.

Retail investors have no relationship with these companies; their relationship is with the manager overseeing their investments. Yet new research finds many institutional investors aren’t verifying the accuracy or fiduciary judgment of the advisors’ guidance before voting their clients’ shares. Instead, fund managers are “robo-voting,” or automatically following the guidance of proxy firms without conducting their own assessments.

Democrats Emerge From Election 2018 As the Party of the Rich

Ira Stoll - November 12, 2018


Maybe it’s time to rebrand the Democrats as the party of the rich.

This month saw the election of Jay Robert “J.B.” Pritzker as governor of Illinois. Pritzker, an heir to the Hyatt hotel fortune, is worth an estimated $3.2 billion, and spent $171.5 million to get himself elected, according toMoney magazine.

Another winner was Edward M. “Ned” Lamont Jr., in the Connecticut governor’s race. Lamont, an heir to the J.P. Morgan banking fortune of his great-grandfather Thomas Lamont, estimated his assets in 2006 at between $90 million and $300 million, and showed reporters tax returns last month with income totaling $18 million over 5 years.

The winner of the election for governor of Colorado, Jared Polis, filed financial disclosure forms as a member of the House of Representatives indicating estimated wealth of more than $300 million.

The Average Investor Is Unprepared For the Next Market Downturn

Randy Swan - November 9, 2018


The last month has been a particularly choppy one for markets, with the CBOE Volatility Index (VIX) spiking more than 80% during October. It’s apparent that the combination of rising interest rates, mounting trade tensions and early-stage recession fears are setting in. But what’s more unsettling is how unprepared the average client is to navigate the next market downturn.

Harry Markowitz’s modern portfolio theory, which stems from his groundbreaking research in 1952’s Portfolio Selection, has led generations to believe that a well-diversified portfolio includes a 60% allocation to stocks and a 40% allocation to bonds. This cross-section of believers includes the 10,000 baby boomer investors who turn 65 each day and need their investments to generate stable income upon retirement.

The harsh reality is that the investible universe is radically different today than it was during the 2008 crisis – let alone during the middle of the twentieth century. It’s increasingly difficult for investors to achieve true diversification in a world where asset classes and investment styles are highly correlated. As evidence, the S&P 500 and Bloomberg Barclays US Aggregate Bond Index each fell more than a percent during the first quarter of 2018.

If stocks and bonds are moving in the same direction when the next downturn hits, it will create significant problems that have no quick fixes. Central banks are not in a position to rapidly intervene to restore investors’ confidence given how their balance sheets are tapped out, not to mention that interest rates remain well below historical averages. Plus Japan reminds us that the ability of central banks to stimulate markets with low rates is quite a bit more theoretical than real. This absence of a safety net – via either accommodative monetary policy or fiscal stimulus – means the destruction of capital may be permanent when a bear market wreaks havoc.

CAFE Standards: The Most Obnoxious Regs of the Obama Era

Daniel Savickas - November 9, 2018


With American voters having pretty decisively voted for divided control of Congress, it seems as if the next two years will be fraught with legislative gridlock. This presents the Trump administration with a great opportunity to keep satisfying its promise of repealing two regulations for every one implemented. A lack of legislative activity will give the Administration the time to focus on unraveling the central planning that’s taken place away from Congress for the past eight years and beyond.

One of the most absurd examples of this was the Obama administration’s Corporate Average Fuel Economy (CAFE) Standards for cars and lightweight trucks. The Environmental Protection Agency (EPA) and the National Highway Traffic Administration (NHTSA) recently closed a comment period on a proposal that would roll back some of the CAFE standards imposed during the Obama era. The agencies should now move forward to execute this rollback before these regulations warp the market even more than they already have.

The Obama administration aimed to raise CAFE standards from a combined average of 24.1 miles per gallon in 2011, to a whopping 54.5 miles per gallon by model year 2025. The goal was to reduce emissions and to save consumers money at the gas pump. As with all government interventions, however, these intervention were not all that they seemed to be. Indeed, a slew of unintended consequences that come along with them.

First, they will raise the cost of new cars significantly. In order to achieve the astronomical efficiency demanded by Obama's planners, automakers will have to use different, more expensive technology to manufacture their vehicles. They won’t, out of the goodness of their hearts, take those losses themselves, nor should they. They will offset the extra costs by raising the price of new cars. This is the market at work, and a pretty predictable consequence of expensive rulemaking.

Central Bankers Are Always the Last to Find Out

Jeffrey Snider - November 9, 2018


Way back in September 2012, the day after Ben Bernanke panicked into QE3, the IMF and World Bank announced that both organizations’ annual board meetings for the year 2015 would be held jointly in Lima, Peru. The concurrence of those two events may not have been intentional but the juxtaposition was poignant. It had become conventional wisdom, thus yet another QE, that though the developed world economies would continue to struggle the future was assured in emerging.

Officials would make a big deal out of it, creating The Road to Limaas a multi-year, major project. The last time these annual meetings had been held in Latin America was 1969 in Rio. They hadn’t been back largely because the seventies didn’t turn out the way it had been hoped. People back then struggled to realize what was going on, though a good many others had foreseen the future. Nobody wanted to listen.

Earlier in 1969, the Federal Reserve’s policymaking body, the FOMC, was trying to come to terms with one major monetary change pointing more and more toward impending uncertainty. There was this thing called a eurodollar creating all sorts of havoc. Worse, foreign central banks were starting to get agitated about it.

This eurodollar disruption was partially an outgrowth of outdated (and misapplied) government intervention. Regulation Q had prevented banks from paying competitive money rates. It hadn’t mattered up until the late sixties because rates remained low. By 1968, however, most had reached their statutory max.

When Conservatives Bemoan Globalization, They Embrace Victimhood

John Tamny - November 8, 2018


“Why do they, while enjoying the well-being capitalism bestows on them, cast longing glances upon the ‘good old days’ of the past….?” – Ludwig von Mises, The Anti-Capitalistic Mentality, p. 3

Imagine for a moment 100 able-bodied individuals stranded on a deserted island, with no access to any production or people off the island. The island’s inhabitants would be intensely poor in consideration of how little 100 people could produce in isolation. Life would be defined by endless drudgery.

Imagine then, the prosperity-surge that would result from the arrival of 200 more of the able-bodied. Does any reader seriously think that the arrival of 400 new “hands” would render the original inhabitants idle? Not a chance. Work isn’t finite, rather it’s infinite. 400 extra hands wouldn’t impoverish anyone as much as it would enable all of the deserted island’s inhabitants to further specialize their work. The more that toil is divided up, the more that people of varying talents can do the kind of work that most suits those talents.

It’s all a reminder that the entrance of billions around the world into the workforce isn’t a threat to “American jobs” as much as it’s a huge opportunity. Same with the rise of “robots” and other forms of automation. Whether human or mechanical, the mobilization of “hands” is what enables the individuals who comprise what we call an “economy” to do what they do best. Work divided improves us. 

NATO and 'Fair Share': Trump Should Be Careful What He Wishes For

Allan Golombek - November 8, 2018


The Trump presidency has ignited a debate about western military power in Europe. But the debate shouldn’t be so much about how it is paid for, as why it is deployed in the first place. What are the true economic costs and benefits?

President Trump seems to see the U.S military as a band of roving mercenaries, to be leased to long-time valued allies in return for a form of financial tribute. This notion threatens to undermine not just global security, but also tear away at the very characteristics that have undergirded impressive economic growth for the western world as a whole, and for the United States in particular.

Those who favor a shift in the current military paradigm should be careful what they wish for. Americans may bear some grievances and complaints about the existing world order, but do they really want to see a return to the dark, dangerous and less prosperous order of the past - when no one assumed the role, and the attendant costs, of being a global superpower?

The question is especially important for the world’s largest economic power, which has benefited enormously from the current paradigm. Americans should think long and hard before sacrificing, at the altar of short-term political expediency, the enormous long-term economic and social benefits that its commitment to global partnership has engineered and maintained.

Cable Conversion Is Increasing Competition In Wireless Space

Michelle Connolly - November 8, 2018


Over the last year, more than 100 million consumers have gained access to a new option for a mobile service provider, as Comcast and Charter (and soon Altice) are now providing competitive mobile phone and broadband options. Any analysis of competition in the wireless industry must reflect these new entrants and new service offerings available to consumers.

In the near future, consumers will be gaining even more connectivity options as 5G will continue to move mobile broadband closer to becoming a possible full substitute for fixed broadband service. Cable operators will also be able to leverage their millions of miles of existing low-latency fiber and coaxial cable networks, along with 5G and WiFi hotspots to be even stronger competitors for mobile services.

Assuming that national policy allows for the rapid and efficient deployment of 5G, these advances will play a key role in helping to reduce the digital divide between rural and urban communities. 5G deployment will also enhance the price competition between mobile and fixed broadband services, further benefiting consumers.

So how have cable operators all of a sudden started offering mobile services? Comcast and Charter just activated what is called a Mobile Virtual Network Operator (MVNO) agreement with Verizon. This allows the cable operators to offer guaranteed wireless service with a national footprint (on Verizon’s network), while also being able to rely on their existing fixed broadband network and millions of WiFi hotspots (through a Cable Consortium) to offload a majority of mobile data traffic and -- for many wireless communications -- bypass the cellular network altogether. These companies combine fixed wireless (via WiFi hotspots) with wireless services (via MVNO agreements).

Why the ITC's Bizarre Interpretation of Property Rights Matters

Dan Schneider - November 7, 2018


A recent ruling at the International Trade Commission (ITC) just put all American companies on notice: “We are all socialists today.”

Since our founding, the protection of intellectual property has been the bedrock of America’s freedom and the engine of our nation’s prosperity. It is the source of creativity, innovation, and ingenuity which has made America the envy of the free world. Unfortunately, we have taken too many actions in recent years to undermine intellectual property. Just this month, the actions of an administrative law judge at a little-known agency – the U.S. International Trade Commission – sent a harmful signal that big and powerful companies can willfully violate the property rights of others without consequence.

America became the world’s superpower due to its unsurpassed economic growth — fueled in no small part by strong intellectual property rights. Our success reflects a deep-rooted conviction that property rights drive competition, invention and ingenuity. The fact that patent rights appear in the U.S. Constitution (Article 1, Section 8, Clause 8) reflects the importance of this principle to our Founding Fathers. They understood the power of innovation.

One agency that has been tasked with protecting IP rights is the aforementioned U.S. International Trade Commission (ITC), which hears complaints over patent infringement for products that are being imported into the United States. The ITC offers recourse for companies whose property is being stolen.

As FDA Contemplates Strict Vaping Regulations, Lives Hang In the Balance

Jason Pye - November 7, 2018


Amazing Vapes is a small e-cigarette shop nestled between Conyers and Covington, Georgia. Opened in 2014 by Elizabeth Langbecker, the retailer is one of many that serve Metro Atlanta. Sadly the livelihoods of Mrs. Langbecker and her staff (including store manager Magen Moore) are threatened, along with the health of Amazing Vape customers, by overreaching bureaucrats at the Food and Drug Administration (FDA).

In a relatively short time, the e-cigarette and vaping industry has rapidly changed. “The products are better and we’re expanding on flavors all the time,” Ms. Moore said on a rainy day last month. “Lower nicotine content has happened throughout the years. Most premium juices don’t go up higher than six milligrams now. A lot of people have access to juices with lower nicotine rather than starting off super high. It’s helping with nicotine craving better than when someone starts off with a juice that has a stronger nicotine level.”

The delivery systems have also improved. “Everyone used to start on little basic pens. Those aren’t even our top seller anymore,” she explained. “People like sub-ohm now. They’re getting a more airy feel, and they’re dropping the amount of nicotine they consume more quickly.”

Although Amazing Vapes has grown and is offering a wider range of juices to satisfy just about everyone’s pallet, Ms. Moore believes that there is another purpose to what she does for a living.

“Our role is to help people get off cigarettes, to give them healthier alternatives, and make them more comfortable with it. We like to give people as much information as possible so they know exactly what they’re getting into,” said Ms. Moore. “If you don’t have that information then you don’t know about vaping, you don’t know how it works, and it’s not going to help you.”

'If I Were a Rich Man?' Economic Lessons from Fiddler On the Roof

Matthew Rousu - November 6, 2018


“I'd fill my yard with chicks and turkeys and geese and ducks … As if to say "Here lives a wealthy man."

With summer in full swing, many families are planning a trip to New York, and with it, a trip to a Broadway musical.  (Or, if you are like my family – several!) While musicals can be a great way to relax, they can also be educational.  In fact, there are hundreds of show tunes that can help us learn economic concepts.  For an example, let’s look to one of the most beloved musicals of all time, Fiddler on the Roof.

Fiddler on the Roof’s original run set a Broadway record by going for 3242 shows.  After it closed in 1972, it was later revived five times on Broadway.  It has played in dozens of countries and thousands of U.S. high schools.  It also has one of the most popular songs from any musical, “If I Were a Rich Man”, which is a great song for thinking about economic growth.

In “If I Were a Rich Man”, Tevye dreams of what it would be like to be rich.  He sings that he wants three staircases – one going up, one for walking down, and one that is “just for show." A poor person dreaming of becoming rich is a common pastime.  But the lyrics of the song provide a powerful lesson on the importance of economic growth to society. 

Whatever You May Think of Republicans, Don't Call Them 'Stingy'

John Tamny - November 6, 2018


Republicans are greedy. They’re “out for themselves” as evidenced by their reflexive support of “tax cuts for the rich.” According to New York Times columnist Paul Krugman, the GOP is the party of “hate.”

Conversely, it’s safe to say that the Democrats are rather charity minded. Figure that their voting habits are invariably informed by compassion for the have nots. Democrats feel, and their intense emotions are deep when it comes to correcting what they see as societal injustices of the economic variety. It wouldn’t be surprising if Krugman were to describe them collectively as the political party of love.

No doubt most readers are familiar with at least one of the previous narratives, while many are likely familiar with all of them. Based on what’s accepted wisdom, it’s not unreasonable to extrapolate from generalized perceptions that Democrats are rather charity minded. As for Republicans, they’re likely quite miserly.

Except that such an impression about charity and charitable giving would be incorrect. My source? The New York Times. (Editor’s Note: I’m a registered Independent who has not voted Republican since 2000 mostly based on disappointment in the presidency of George W. Bush, but also disappointment with the party leadership's disawoval of small federal government principles. Call me a small l libertarian when it comes to philosophy). This charitable divide between Democrats and Republicans rates attention on election day from an economic perspective. Please read on.

As Voters Go To the Polls, Economic Growth Is Still In Play

John Chapman - November 6, 2018


Voters are going to the polls today with a mixed outlook. On one hand, consumer confidence has reached its highest levels in 18 years, as U.S. equity markets reflect the longest bull-market run in U.S. history. 2018 is also bringing forth a full-year of 3% GDP growth for the first time in 13 years, real wages rising are rising at the fastest clip in a decade, and the unemployment rate is well below 4%.

But per recent polling, whether blaming “Trump” or the “Democrats,” more than half of the electorate seem fearful of a future not as bright as the past. Data from October’s NBC News/Wall Street Journal survey confirm that jobs and the economy, health care, bolstering the middle class, and reining in a corrupt and profligate Beltway, all reduced to concern aboutsustainable prosperity and future financial security, dominate voter concerns.

Both major parties and the media, curiously, seem tone deaf to these primordial pocketbook worries. President Trump seems not to apprehend any popular angst in the slightest: instead he asserts this is the “strongest economy in history,” and has openly proclaimedthis election to be a referendum on him. In stump speeches and on Twitter he’s rattled off the campaign themes he thinks voters care about most: crime, borders, the military/vets, 2nd Amendment, and sometimes tax cuts. Immigration control, security, safety, and law and order are GOP mantras now.

Nancy Pelosi, meanwhile, says her number one priority as Speaker will be campaign/ethics reform, followed by price controls for pharmaceutical drugs and infrastructure spending. Cable news outlets in turn churn out endless hours of airtime with foreign policy, national security, and warfare coverage that collectively are in the low single digits of voter priorities in surveys such as Gallup’s research on the “most important issues.” 

Money Alone Doesn't Buy Happiness, Work Does

Isabel Sawhill & Christopher Pulliam - November 5, 2018


The lead-up to the midterms is gripping the nation, but so is the lottery. The Mega Millions jackpot was in record territory last month—reaching $1.6 billion. Many Americans asked themselves, “what would I do with all that money?”

Such a large sum makes work unnecessary. So, it may be reasonable to assume that most would quit their jobs.

Survey data show otherwise. The General Social Survey, a nationally-representative survey from the University of Chicago, asks respondents, “if you were to get enough money to live as comfortably as you would like for the rest of your life, would you continue to work or would you stop working?” In other words, if you won the lottery would you quit your job?

Seventy percent of Americans reported that they would continue to work. This strong majority holds across Democrats, Independents, and Republicans. No matter one’s political stripes, people value work beyond its direct economic benefits.

Despite All Their 'Cheap' Labor, the Chinese Embrace Robots Too

Allan Golombek - November 5, 2018


Those who still think China has a never-ending army of cheap labor should think again. Chinese wages are rising, the population is aging - and China’s government is promoting a robot revolution in manufacturing.

Over each of the next three years, the growth of the use of robots in China is estimated to exceed 20 percent. Rising wages - driven by decades of growth - are eating into profits, pushing companies to shift manufacturing to Southeast Asia. Shanghai’s minimum monthly wage is two-and-a-half times what it was a decade ago.

Meanwhile, China’s aging population is declining, leaving companies with fewer workers to draw on - projected to decline from almost a billion today to as few as 800 million by the middle of this century.

At the same time, China is pushing to enter manufacturing sectors that require industrial robots, such as semiconductors.

Books: A Most Enjoyable History of a Most Remarkable Bank

Alex Pollock - November 5, 2018


This is a colorful book, full of great stories and forceful (if not always admirable) personalities, who deserve to be remembered.  It gives us repeated lessons of how banking is a business always intertwined with the government, demonstrated in the long history of Citibank, a very important, very big, often quite creative, and sometimes very troubled bank.  It reminds us of the theory of Charles Calomiris that every banking system should be thought of as a deal between the bankers and the politicians.

According to then-Treasury Secretary Henry Paulson’s instructive memoir of our most recent financial crisis, on November 19, 2008:

“Just one week after I had delivered a speech meant to reassure the markets, I headed to the Oval Office to tell the president that yet another major U.S. financial institution, Citigroup, was teetering on the brink of failure.

          ‘I thought the programs we put in place had stabilized the banks,’ he said, visibly shocked.

          ‘I did, too, Mr. President.’”

This exchange led to the instructions from the President which appear on page 1 of Borrowed Time:

“Don’t let Citi fail.”

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