BNET1

• The Find: If Malcolm Gladwell is right and cockiness caused the financial crisis, than Business Insider thinks the bailout only made Wall Street’s problems worse.
• The Source: John Carney writing on Business Insider.

The Takeaway: Easy reading author and popular idea man Malcolm Gladwell’s latest piece for the New Yorker is bound to stir up debate in the business blogosphere with its conclusion that the real cause of the currently unfolding financial crisis was overconfidence on Wall Street. On Business Insider today Malcolm mania is already having its effect and Carney weighs in, suggesting that if Gladwell is right (and Carney thinks he is), than the bailout only made matters worse.  (more…)

• The Find: CEO confidence surged in the second quarter, according to new data, but the question remains as to why executives are suddenly feeling so hopeful.
• The Source: The Conference Board Measure of CEO Confidence.

The Takeaway: The Conference Board asks 100 business leaders from a wide selection of industries about their outlook for their business, industry and the economy in general each quarter. When the organization crunched the numbers for the second quarter they found something puzzling. (more…)

• The Find: Each economic crisis is different and experts argue that the current slump may be particularly brutal on managers in their 40s and 50s.
• The Source: An in-depth article from Knowledge@Wharton.

The Takeaway: As Tolstoy famously observed, “happy families are all alike; every unhappy family is unhappy in its own way,” and perhaps the same can be said of happy and less than happy economic times. Each recession is unique and has distinct causes and victims. For the latest downturn Knowledge@Wharton has identified one particularly hard-hit group: managers in their 40s and 50s. (more…)

• The Find: A number of Wharton professors are criticizing both the speed at which President Obama’s new regulatory plan was unveiled and some of the ideas it left out.
• The Source: Knowledge@Wharton.

The Takeaway: President Obama’s financial regulation proposal is only a few days old and already it has plenty of critics. On the left there are worries that the plan goes soft on the corporations that got us into the current financial mess, while the right worries that more red tape may stifle any recovery. But two professors from Wharton have a whole other complaint: the proposals, whatever their merits or limitations, were rushed. (more…)

• The Find: Two new sets of data indicate that the gloom hanging over hiring may slowly be lifting: both employee confidence and on-line job listings are up.
• The Source: The Spherion Employee Confidence Index and The Conference Board Help-Wanted Online Data Series (HWOL)™.

The Takeaway: Sure the US unemployment rate is at nearly 10 percent (a threshold that, as we once noted, can be used as an indicator that a recession has turned into a depression), but when looked at in light of other employment data, the numbers actually offer some small glimmers of hope. As the NY Times reports, the decrease this month was far less than expected, but there are other reasons to suggest it’s time for managers to focus less on preventing employee anxiety from getting out of control, and instead look at ways to prepare for a coming upswing in the economy. (more…)

• The Find: Microcredit may help people living in poverty expand their businesses. But don’t expect a miraculous effect on education, health or women’s empowerment.
• The Source: A randomized study by the Poverty Action Lab at MIT.

The Takeaway: If you are looking to make a difference in the world, you could donate your money to a nonprofit organization or lobby the government to expand programs that help those in need.

Another option is to partner with one of the booming microfinancing firms such as the Grameen Bank in Bangledesh (recipient of the 2006 Nobel Peace Price) that give tiny loans to people living in poverty.  Proponents claim that this method spurs entreprenuership.  And the World Bank has argued that it boosts education, eradicates hunger and empowers women.

But a large, randomized study on the effects of microcredit in the slums of Hyderabad, India suggests that while microcredit may help those who are in a position to expand a business, it isn’t yet performing miracles when it comes to education, health or women’s empowerment. (more…)

• The Find: Believe it or not, economists “failed to account for the critical roles that banks and other financial institutions play in the economy” and rejected common sense truths that did not fit their mathematical models, argue several business professors.
• The Source: An fascinating article from Knowledge@Wharton.

The Takeaway: Americans are known to be occasionally suspicious of experts and intellectuals, and sometimes, just sometimes, there appears to be a grain of sense in the view that the ivory tower is not the best vantage point for surveying the reality of life on the ground – at least when you read articles like the current piece on why economists failed to foresee the financial crisis in Knowledge@Wharton. (more…)

• The Find: Professors at one leading business school are reassured by President Obama’s calm governing style and willingness to tackle the big issues, but anxious about the debt his government is racking up.
• The Source: Knowledge@Wharton from The Wharton School.
  

The Takeaway: All day yesterday the media was atwitter with stories related to the President’s first 100 days in office. Across the country everyone was grading President Obama on his performance and that includes management professors at the prestigious Wharton School. They’re used to handing out grades to the best and brightest b-school students, so how do they rate the new President? (more…)

• The Find: The business press may see reason to hope that an economic recovery is on the way but, predictably, Dr. Doom says such optimists are fools.
• The Source: The latest report from economist Nouriel Roubini, aka Dr. Doom, excerpted on Clusterstuck.

The Takeaway: Amongst a business press understandably sick of churning out gloom and doom headlines for the last six or seven months, an outbreak of (limited) optimism is in evidence, at least according to the Economist: “For many commentators, a hunt for the green shoots of recovery is on. Search among a selection of British and American newspapers, for example, and mentions of ‘green shoots’ in articles about the economy have increased enormously in the past couple of months.”

But just as these tender buds of hope are daring to peak their heads above ground, here comes Roubini, the New York University economist famous for accurately predicting the current collapse, to stomp on fond but unfounded hopes:

This consensus optimism is, I believe, not supported by the facts. Indeed, I expect that while the rate of US contraction will slow from -6 percent in the last two quarters, US growth will still be negative (around -1.5 to -2 percent) in the second half of the year (compared to the bullish consensus of +2 percent).

Moreover, growth next year will be so weak (0.5 to 1 percent, as opposed to the consensus of 2 percent or more) and unemployment so high (above 10 percent) that it will still feel like a recession.

If you’d like more rain on your parade, the complete article by Roubini can be found here.

(Image of green shoots by pfly, CC 2.0)

• The Find: A rare bright speck in the automobile industry this week, as reports from China indicate that in March Mercedes-Benz had its best ever month in the country, and GM sold 23 percent more vehicles than the previous year.
• The Source: An interview with University of Pennsylvania political science professor Jacques DeLisle in Knowledge@Wharton.

The Takeaway: Good news in the car business may be as rare as hen’s teeth these days, but apparently Chinese consumers missed the memo about the global slowdown, offering a small ray of sunshine in the midst of the general gloom and doom hanging over the industry; Mercedes recorded sales and GM saw a 23 percent improvement on last year. In response to the news, Wharton has pulled together expert opinion on both what has held back car sales in China in the past and what’s spurring them on now. DeLisle explains the historically slow sales numbers in the market:

The real barrier to raising domestic demand in China is over-saving by Chinese workers, who sock away about 40 percent of their income because of the absence of a reliable safety net for social security or health care. Until the government can get people to start spending income, there will be limits to increasing domestic demand.

So what’s changed? According to Mercedes-Benz (China) chief executive Klaus Maier, “entrepreneurs in China are positive and are in a good mood.” The question remains though, how can we get a bit of that optimism back on our own side of the world?

(Image of no car sales sign by pochacco20, CC 2.0)