Many of the stories I have read about India in the business press note its inadequate infrastructure. While companies can feel confident about the labor force that might built a product, it might feel uncertain about its ability to move the product from one place to another, from the factory to the port. Our first day in Delhi gave credence to such concerns.
It was 78 degrees out when our plan landed in Delhi at 12:35 a.m. on Sunday, Oct. 20. Upon deplaning, it took an hour to get through the immigration station and collect our luggage. We were greeted warmly by the staff at the Hyatt Regency, where we are staying, but it was 3 before anyone got to bed.
By 8 the next morning, we were on a bus, headed 120 miles southeast to Agra, the city of the Taj Mahal. What an education I received, simply looking out the window during the five-hour trip. I saw nine people sleeping under a bridge, wrapped from head to toe in blankets. There were lots of animals, including elephants, camels, monkeys, orangutans, oxen, donkeys and cows. Some were tethered to posts, others roamed free, but none of them seemed to move too fast. The traffic, already disorienting to this American because everyone drives on the left side of the street, was intense, with little attention seeming to be paid to road signs, including stop lights and lane markers.
A four-lane road leads to Agra and about half way there, we see thousands of people marching in the opposite direction, many of them carrying flags. They are taking up a full lane, forcing traffic on that side of the street down to a single lane. Our guide explained the protestors are marching to Delhi, where thousands plan to meet Oct.29 for a massive demonstration against the government. The issue has to do with the confiscation of their land by government for economic development purposes. V.K. Singh, of Mercury Travels Limited in Agra, gave us an example. He said the Tata Group, a large Indian manufacturing company, worked with the government to acquire land in Calcutta in order to build an auto assembly plant. The construction displaced many locals. They do not believe they were fairly compensated for their land, and so now they protesting. Apparently, this is going on all over the country.
During the bus ride, our host Gov. Tim Pawlenty, worked the crowd, stopping at each row to talk to at length. I am told this is a significant change from the behavior of the previous governor, Jesse Venture. When he led a trade mission to Mexico, he apparently never visited with any of the people accompanying him. I talked to the governor about the sister city agreement he is set to sign with Haryana on the trip. I ask what he thinks of the idea of a neighborhood, like the one I live in, arranging for a sister neighborhood relationship. Linden Hills, I commented, might be interested in such a thing. Gov. Pawlenty said he liked the idea and encouraged me to contact the India Center at the University of Minnesota to pursue it.
The Taj Mahal, or simple “The Taj” as locals call it, is spectacular. There apparently are concerns about pollution in the area near the landmark, so we get off the bus a mile or two away and get on electric buses, which take us the final distance. We are given about 90 minutes to explore. It is a cloudless, warm day, and the Taj stands magnificently on the horizon. It is built atop two platforms, which the guide said makes it appear taller than it actually is. Four towers on the corner of the building give the monument additional visual appeal. They are constructed to lean outward at a 2 degree angle so that if an earthquake ever struck the area, they would fall outward rather than onto the Taj itself.
The area is crowded, the number of people increasing the near to the Taj as I advance. We are required to remove our shoes, or to put slipper-like coverings over our shoes. I feel a little bit like an astronaut slipping the big blue cloth coverings over my black Rockports. I took many pictures of the building – probably 25 or so – and so is everyone else. They say the Taj is the most-photographed building in the world and I believe it, based on what I see.
A door far too small to accommodate all the people, lets visitors in and out of the Taj. Upon entry, however, I am disappointed. I expected more. It is dark inside, and all of the walls are white. This is a magnificent building, but inside it does not compare to the great cathedrals of Europe like Notre Dame in Paris, or St. Peter’s Basilica in Rome.
Time goes quickly and we have to return to the bus. Dozens of vendors approach me to buy souvenirs, mostly little wooden statues, books and jewelry. They name a price and then a lower price. Eventually they ask me to name my price. I have no interest. I am not going to buy anything here. They are very persistent, continuing to lobby for my attention through the window even after I have found my seat on the bus.
We exchange stories on the bus; a couple of people in the group saw Mick Jaggar, accompanies by a very tall women. Sam Roy of Mankato even got a picture of them.
On the way back, we stop at the home of Ararati and Vishnu Lall. They are in the jewelry business, selling all over the world. They have a beautiful home in Agra, and treat the entire delegation of refreshments, consisting of tea, other drinks and cake. Vilash Lall, the sixth generation son, tells us a little bit about doing business in India. He noted the instability of the state governments. “They last only eight or nine months,” he said. Many organizations get around the law by setting up phony “front” businesses, while the real unauthorized work goes on “in the back.” He did not provide details, but one can imagine.
He also expressed some concern over a certain amount of greediness, saying that a typical hotel room in India might cost the equivalent of $300 or $400 per night, when then exact same room can be had in other major cities around the world for $150. “People are going to find it too expensive to come here,” he lamented.
The Lalls are relatives of Gopal Khanna, commissioner of the State of Minnesota’s Office of Enterprise Technology. I asked him what he thought about the country’s prospects for continued growth. “India has three things going for it,” Khanna said. “First, the people here have a genuine interest in learning and education. Second, the people here are entrepreneurial. It is in their DNA. It has always been that way, for thousands of years. And third, the country is willing to accept people of different philosophies and religions. We are a true pluralistic society. This is the mark of a true democracy.”
“Do you think the economy will lift a half a billion people from the ranks of poverty to a middle class lifestyle?” I ask.
“It is a 100-year project,” he said.
It is about 6 p.m. when we begin our ride back. I am tired, having slept only a few hours the night before. The drive is going smoothly until 7:50 when we come to a complete stop on the highway. The two lanes of traffic going northwest are not moving, and some vehicles have cross the median and are attempting to advance on the road going the opposite way. That two-lane portion of the highway has been reduced to one lane to make way for on-coming traffic. Even with this accommodation, however, nobody is moving.
There is uncertainty about the situation. What is the hold up? How long will it last? People in other cars are getting out and walking around. Finally, it is determined that the road is being blocked by those protestors we saw on the way out. They have set up camp on our side of the road and no one can get through. We have no idea how long we will be tied up, and at one point many people get off the bus and walk over to a restaurant for something to drink. A couple of times, it looked like we were going to advance, but after a few feet of movement, those hopes were dashed.
Everyone on the bus seems good natured about it. We are told that if you plan to do business in India, you have to “roll with the punches.”
At 10:15 p.m., we finally break through the log jam and traffic starts moving again. We are 98 kilometers or about 60 miles from Delhi. I spend the remainder of the ride talking to Sam Roy, president of EPS Technologies in Mankato, Minn. His company is bringing a new product to market which will vastly increase the efficiency of diesel engines. The product already is in use in Thailand, and he wants to bring it to India. He said truck and bus owners can save big money with his product, in addition to substantially reducing green house gas emissions. He was looking forward to the remainder of the mission trip, during which he planned to meet with potential Indian partners.
At about midnight, we roll into the hotel driveway. It has been an amazing day. India is a land of great potential, I can see. But logistics are a problem. If a major highway can be shut down by a protest, how reliable is the transportation system? Companies that set up here to manufacture need to be able to count on moving their products in a timely fashion. They need to be able to rely on the road systems, train system, airports and seaports. Perhaps they can, but the delays on the highway would really concern me if I had to rely on them on a regular basis.
Sunday, October 21, 2007
Saturday, October 20, 2007
Travel
Sitting in coach for 15 hours is not a particularly pleasant experience, although it is the price of admission to India for any Minnesotan. My journey started Friday evening at Minneapolis/St Paul airport, where more than 400 people loaded onto the Northwest airline flight to Amsterdam. The flight was oversold and when they offered people travel vouchers worth $750 to exchange their seat for the same flight the next day, I considered if for a moment. I would like to take my family to Florida this winter. Seven hundred and fifty dollars would pay for at least two airfares. But I stuck with my original plan. Going a day later would mean missing an opportunity to see the Taj Mahal.
It took seven and half hours to fly from Minneapolis to Amsterdam. I sat next to a guy who sells pipes. He said he had been to India, and that he had mixed feelings about it. He said he had a hard time adjusting the Indian cultural norms in business where for the sake of politeness, people usually say “yes” even if they really mean “no.” Like most Americans, he would rather have clarity than politeness.
The pipe salesman asked me if I was traveling to Calcutta. He said “there are a lot of beggars, many of them don’t make it through the night. In the morning you see dead bodies on the street.” No, I am not going to Calcutta, but perhaps on another trip I will.
The first people I see on the jetway coming off the aircraft are two soldiers dressed in black carrying machines guns – on has black skin, the other white. I wonder why they are there. They make no expression as I pass.
The Amsterdam airport is busy, and I immediately locate the gate where I need to catch my connecting flight to Delhi – F4. As I walk through the corridors, past the coffee shops and small stores, I notice something: people can smoke here. Living in Minnesota, I don’t think I have seen a person smoke indoors in a public building since the mid-1970s. I look out the window and see flatness. There are not mountains or hills on the horizon.
There was only an hour scheduled between flights, so I had to hustle. The line for boarding is a mile long, but there is a separate line for people who hold an “elite” flying status. A while back, Northwest Airlines mailed me a silver status membership card. Apparently it gets me into the shorter line. I actually feel a little guilty as I look back at the line that goes back and around a corner. But not too guilty. I use the shorter line.
When everyone is boarded on the KLM DC-10, we are informed of a mechanical problem. We were told we might have to change aircraft. What a disappointment! As it is, we were going to get into Delhi late, giving us only a few hours of sleep before the all-day excursion to see the Taj. Now we would be getting in even later. Some two hours later, we left. Never had to change planes. We were told they fixed the problem.
It was difficult sleeping on either of the flights. I may have gotten some sleep on the first leg, but no more than a few minutes on the second. I am passing the time journaling and reading a book by G.K. Chesterton. I had read Othodoxy 20 years ago, and I selected it off my bookshelf at home because the books size (150-page paperback) made it easy to carry in my briefcase. When traveling, you have to consider the difficulty of carrying everything. Chesterton’s wisdom is illuminating. I had forgotten most of his message, which centers on the idea that there is a God; there is objective right and wrong. We are not to make up the rules as we go; if we do, we will destroy ourselves.
Before I left home, John, my 10-year-old gave me his medal of St. Michael the archangel. “He’ll keep you safe” John said.
“You couldn’t do much better than to have St. Michael’s protection,” I said, thanking my incredibly sensitive boy. I love my wife and children. The only downside taking a trip to India for business is the extended time away from family. I will miss them. I do already. But this blog makes it a little easier for us to stay connected.
It took seven and half hours to fly from Minneapolis to Amsterdam. I sat next to a guy who sells pipes. He said he had been to India, and that he had mixed feelings about it. He said he had a hard time adjusting the Indian cultural norms in business where for the sake of politeness, people usually say “yes” even if they really mean “no.” Like most Americans, he would rather have clarity than politeness.
The pipe salesman asked me if I was traveling to Calcutta. He said “there are a lot of beggars, many of them don’t make it through the night. In the morning you see dead bodies on the street.” No, I am not going to Calcutta, but perhaps on another trip I will.
The first people I see on the jetway coming off the aircraft are two soldiers dressed in black carrying machines guns – on has black skin, the other white. I wonder why they are there. They make no expression as I pass.
The Amsterdam airport is busy, and I immediately locate the gate where I need to catch my connecting flight to Delhi – F4. As I walk through the corridors, past the coffee shops and small stores, I notice something: people can smoke here. Living in Minnesota, I don’t think I have seen a person smoke indoors in a public building since the mid-1970s. I look out the window and see flatness. There are not mountains or hills on the horizon.
There was only an hour scheduled between flights, so I had to hustle. The line for boarding is a mile long, but there is a separate line for people who hold an “elite” flying status. A while back, Northwest Airlines mailed me a silver status membership card. Apparently it gets me into the shorter line. I actually feel a little guilty as I look back at the line that goes back and around a corner. But not too guilty. I use the shorter line.
When everyone is boarded on the KLM DC-10, we are informed of a mechanical problem. We were told we might have to change aircraft. What a disappointment! As it is, we were going to get into Delhi late, giving us only a few hours of sleep before the all-day excursion to see the Taj. Now we would be getting in even later. Some two hours later, we left. Never had to change planes. We were told they fixed the problem.
It was difficult sleeping on either of the flights. I may have gotten some sleep on the first leg, but no more than a few minutes on the second. I am passing the time journaling and reading a book by G.K. Chesterton. I had read Othodoxy 20 years ago, and I selected it off my bookshelf at home because the books size (150-page paperback) made it easy to carry in my briefcase. When traveling, you have to consider the difficulty of carrying everything. Chesterton’s wisdom is illuminating. I had forgotten most of his message, which centers on the idea that there is a God; there is objective right and wrong. We are not to make up the rules as we go; if we do, we will destroy ourselves.
Before I left home, John, my 10-year-old gave me his medal of St. Michael the archangel. “He’ll keep you safe” John said.
“You couldn’t do much better than to have St. Michael’s protection,” I said, thanking my incredibly sensitive boy. I love my wife and children. The only downside taking a trip to India for business is the extended time away from family. I will miss them. I do already. But this blog makes it a little easier for us to stay connected.
Looking for the future in India
Perhaps the greatest economic development challenge of our time is India. I am traveling there this week with a business contingent of 70 Minnesotans to see for myself.
A group of people about the size of the population of the United States lives what we would consider to be a middle-class lifestyle in India, leaving the remaining 800 million people in poverty. That’s a lot of poor people but the country’s annual GDP growth rate of 9 percent offers great hope. Banashri Bose Harrison, the minister of commerce for India at the U.S. Embassy in Washington, D.C., says the ranks of the middle class are growing at a rate of 5 percent per year. At that rate, about 500 million of the country’s poor could advance to middle class lifestyles within 35 years.
Gov. Tim Pawlenty is leading the group of about 50 business leaders, six journalist, a dozen state officials and four travel professionals on the first India mission ever led by a Minnesota governor. Pawlenty wants to promote business between the countries. He says that while the population in the United States is holding relatively flat, the population in India is growing. If Minnesota-based companies are to expand their markets, they are going to have to consider selling in countries that offer growing populations.
Last month, Ashok Kumar Attri, an Indian diplomat living in Chicago, addressed the business delegation during a pre-mission briefing. He described GDP growth of 9.3 percent during the last two years, a rate that he claims is accelerating. During the first three decades after the country gained its independence in 1947, the country’s economy grew at a rate of about 3.5 percent – comparable to the current rate of U.S. GDP growth. It grew to 5.7 percent in the 1980s and it averaged 6.0 percent between 1990 and 2005. Attri says the country expects growth topping 10 percent in the coming years.
He makes that claim based largely on a robust work force – 52 percent of the country’s population is below the age of 25. Even as far into the future as 2025, the median age of the population will only be 30 years old. The total workforce, that is, people between the ages of 15 and 59 currently is 696 million people. That figure is expected to grow to 1.02 billion by 2050.
The country has a solid intellectual base on which to build. Literacy is not confined to the middle class; with a literacy rate of 61 percent, a significant portion of the country’s poor can read. And, among the country’s better-off folks, 380 universities and 11,200 colleges produce more than 50,000 computer professionals per year, and more than 360,000 engineers.
Attri identified eight business sectors that he said offer the greatest prospects for propelling the economy: infrastructure, real estate, retail, IT, pharmaceuticals, biotechnology, entertainment and automobiles. Pawlenty would like Minnesota businesses with expertise in those areas to make the most of the opportunity.
Economists, however, worry about the country’s high rate of inflation, the effects of which have been masked in recent years by the extraordinary economic growth. Rising real estate prices have fueled a good part of that growth. The same easy credit that led to the housing bust in the United States is facilitating a lot of real estate deals in India. If the country were to experience a real estate collapse anything like what the United States is experiencing, it could hurt the country’s economy.
The information packet that Minnesota delegates were given by Pawlenty’s administration noted other problems that plague the country, including a robust human trafficking industry. “India has been on the Tier 2 Watch List since 2004 for its failure to show evidence of increasing efforts to address trafficking in persons,” the state’s briefing states.
The Minnesota delegation will get a whirlwind tour of the country, beginning in New Delhi, the country’s capital, with 12.7 million people. The visit will open with sight seeing at the Taj Mahal, four hours away by bus in Agra. Monday and Tuesday morning are devoted to business in New Delhi, with a reception Monday night at the U.S. Embassy hosted by the U.S. Ambassador to India. Tuesday evening, the group travels to Bangalore, the country’s I.T. center. After two days in the city of 5.7 million people, the group travels to Bombay, which took the name Mumbai in 1995. The island city of 16.4 million is features one of the most dense urban populations in the world.
Pawlenty noted that $129.5 million of the state’s $15 billion in exports go to India, making it the state’s 22nd-largest export country. About half the state’s exports to India are computers made by IBM in Rochester. Pawlenty also noted increasing investment in Minnesota by Indian companies. The Essar Group, for example, is investing $1.6 billion in the Iron Range to open a new mining and steel manufacturing plant. .
Tony Lorusso, the executive director of the Minnesota Trade Office, said: “This trip is just a start of what I hope will be a long relationship with India.”
While the business opportunity is motivating most of the people in this trade mission, I am intrigued by the possibility of a half a billion people moving up and out of poverty over the next 35 to 50 years, grace of a robust economy. Can it really happen? What role can Minnesota companies play in developing India’s economy? More business for Minnesota companies could mean a stronger economy for Indians. One retired businessman I talked to who has been to India several times said he is skeptical. “There are so many people living in poverty, I don’t see how they can do it,” he said.
Certainly there are obstacles, but certainly there is hope. Tom Friedman writes in his book, The World is Flat, that India is the future. It’s educational system, population growth and British-based legal system give it the edge over China, another country experiencing amazing economic growth. I have some expectations about what I will see here: congested traffic, overcrowded sidewalks, beautiful new buildings next to shanty-towns. But what I am going to be looking for is the future. If the country cannot grow its middle class, then perhaps when I look all I will see is the past. But I am going to look really hard to see the future.
A group of people about the size of the population of the United States lives what we would consider to be a middle-class lifestyle in India, leaving the remaining 800 million people in poverty. That’s a lot of poor people but the country’s annual GDP growth rate of 9 percent offers great hope. Banashri Bose Harrison, the minister of commerce for India at the U.S. Embassy in Washington, D.C., says the ranks of the middle class are growing at a rate of 5 percent per year. At that rate, about 500 million of the country’s poor could advance to middle class lifestyles within 35 years.
Gov. Tim Pawlenty is leading the group of about 50 business leaders, six journalist, a dozen state officials and four travel professionals on the first India mission ever led by a Minnesota governor. Pawlenty wants to promote business between the countries. He says that while the population in the United States is holding relatively flat, the population in India is growing. If Minnesota-based companies are to expand their markets, they are going to have to consider selling in countries that offer growing populations.
Last month, Ashok Kumar Attri, an Indian diplomat living in Chicago, addressed the business delegation during a pre-mission briefing. He described GDP growth of 9.3 percent during the last two years, a rate that he claims is accelerating. During the first three decades after the country gained its independence in 1947, the country’s economy grew at a rate of about 3.5 percent – comparable to the current rate of U.S. GDP growth. It grew to 5.7 percent in the 1980s and it averaged 6.0 percent between 1990 and 2005. Attri says the country expects growth topping 10 percent in the coming years.
He makes that claim based largely on a robust work force – 52 percent of the country’s population is below the age of 25. Even as far into the future as 2025, the median age of the population will only be 30 years old. The total workforce, that is, people between the ages of 15 and 59 currently is 696 million people. That figure is expected to grow to 1.02 billion by 2050.
The country has a solid intellectual base on which to build. Literacy is not confined to the middle class; with a literacy rate of 61 percent, a significant portion of the country’s poor can read. And, among the country’s better-off folks, 380 universities and 11,200 colleges produce more than 50,000 computer professionals per year, and more than 360,000 engineers.
Attri identified eight business sectors that he said offer the greatest prospects for propelling the economy: infrastructure, real estate, retail, IT, pharmaceuticals, biotechnology, entertainment and automobiles. Pawlenty would like Minnesota businesses with expertise in those areas to make the most of the opportunity.
Economists, however, worry about the country’s high rate of inflation, the effects of which have been masked in recent years by the extraordinary economic growth. Rising real estate prices have fueled a good part of that growth. The same easy credit that led to the housing bust in the United States is facilitating a lot of real estate deals in India. If the country were to experience a real estate collapse anything like what the United States is experiencing, it could hurt the country’s economy.
The information packet that Minnesota delegates were given by Pawlenty’s administration noted other problems that plague the country, including a robust human trafficking industry. “India has been on the Tier 2 Watch List since 2004 for its failure to show evidence of increasing efforts to address trafficking in persons,” the state’s briefing states.
The Minnesota delegation will get a whirlwind tour of the country, beginning in New Delhi, the country’s capital, with 12.7 million people. The visit will open with sight seeing at the Taj Mahal, four hours away by bus in Agra. Monday and Tuesday morning are devoted to business in New Delhi, with a reception Monday night at the U.S. Embassy hosted by the U.S. Ambassador to India. Tuesday evening, the group travels to Bangalore, the country’s I.T. center. After two days in the city of 5.7 million people, the group travels to Bombay, which took the name Mumbai in 1995. The island city of 16.4 million is features one of the most dense urban populations in the world.
Pawlenty noted that $129.5 million of the state’s $15 billion in exports go to India, making it the state’s 22nd-largest export country. About half the state’s exports to India are computers made by IBM in Rochester. Pawlenty also noted increasing investment in Minnesota by Indian companies. The Essar Group, for example, is investing $1.6 billion in the Iron Range to open a new mining and steel manufacturing plant. .
Tony Lorusso, the executive director of the Minnesota Trade Office, said: “This trip is just a start of what I hope will be a long relationship with India.”
While the business opportunity is motivating most of the people in this trade mission, I am intrigued by the possibility of a half a billion people moving up and out of poverty over the next 35 to 50 years, grace of a robust economy. Can it really happen? What role can Minnesota companies play in developing India’s economy? More business for Minnesota companies could mean a stronger economy for Indians. One retired businessman I talked to who has been to India several times said he is skeptical. “There are so many people living in poverty, I don’t see how they can do it,” he said.
Certainly there are obstacles, but certainly there is hope. Tom Friedman writes in his book, The World is Flat, that India is the future. It’s educational system, population growth and British-based legal system give it the edge over China, another country experiencing amazing economic growth. I have some expectations about what I will see here: congested traffic, overcrowded sidewalks, beautiful new buildings next to shanty-towns. But what I am going to be looking for is the future. If the country cannot grow its middle class, then perhaps when I look all I will see is the past. But I am going to look really hard to see the future.
Thursday, October 18, 2007
Goodbye to an old friend
My friend Ben Haller died on Monday. He was 88.
Ben sold the Northwestern Banker magazine in 1988 to Paul Blackburn, who merged it with his magazine, Commercial West. Both of the magazines were started a century earlier, Northwestern Banker published out of Des Moines, and Commercial West originating out of Minneapolis. Upon the merger, Blackburn renamed the magazine NorthWestern Financial Review.
I was the editor at the time of the merger. I had competed against Haller and his staff the three years prior, and for the next year or so, I edited columns that he continued to contribute. He was an awesome writer. Nobody had banking industry knowledge like Ben Haller. When he wrote about something that happened in the late 1980s, he could compare it to similar events in the 1950s or the 1960s. Whenever some crisis arose that we all thought meant the end of the banking industry as we knew it, Haller would say the exact same thing took place three or four decades earlier.
I respected Haller because he seemed to know everyone in the industry and everyone seemed to know him. He started working at the Northwestern Banker upon his discharge from the U.S. Army in 1945. He eventually was named editor, then bought into the magazine, and then became the magazine’s sole owner in 1981. There aren’t very many people who stick with the same company for 43 years, as Ben did.
Ben Haller was born in 1919 in Omaha, one of 14 children. I wrote a feature on him when the magazines merged and at that time he told me about his military service. He was training with a company of soldiers, but one afternoon he tore ligaments in his knee playing touch football. The injury was so serious that he couldn’t keep up the pace of his Army training, and he was pulled out of his company and placed in the class behind. Years later, he did some digging around to find out whatever happened to some of his old buddies in that original company and he discovered that nearly everyone in the company was killed in the invasion at Normandy.
Haller had always been a devout Catholic, but this realization really got him to thinking about why God had spared his life. Clearly, he thought, God had something important in mind for him to do with his life.
Haller saw combat in World War II himself, flying 19 combat missions. At one point, his plane was shot down over Yugoslavia. The entire crew was presumed dead. Officials informed Haller’s young bride, Peggy, that he had been killed in action. Months later, the crew was discovered, rescued and Haller turned up in a hospital in Italy.
After the war, Ben and Peggy had five kids and eight grandchildren. They were married for 63 years.
I just returned from Ben’s wake; the funeral is tomorrow morning. Peggy asked about my kids. I said they were fine, adding that four kids sure keep my wife and I busy. Peggy said: “They keep you busy but you know it’s worth it. At times like these, it is obviously worth it.” Her kids and grandkids were among the many people remembering Ben at the Sacred Heart Church Parish Center in West Des Moines.
By the time a colleague and I bought the magazine from Paul Blackburn in 1992, Haller had stopped contributing columns, but we stayed in touch. I would see him annually at the Iowa Bankers Association convention in Des Moines every September. The IBA has a club for people who have worked in the banking industry for 50 years or longer. These “50-year bankers” have a luncheon at the convention, and Ben would always attend. He was so close to the group that they made him an honorary member, the only non-banker ever to be welcomed into the ranks of the 50-year banker group.
I got a little worried last month when I went down for the convention and Ben wasn’t at the luncheon. I had talked to Ben last spring. In fact, I invited him to consider contributing columns again. After taking a couple weeks to think about it, he wrote me a letter saying he’d like to do it, that he would get to work on it right away, and that he would send me the first column as soon as he was done with it. I never received a column.
At the wake, it was noted that he lived the last several months of his life in great pain. I never knew, but I should have guessed. He would have submitted a column or two if he were doing okay; he wouldn’t have missed the 50-year banker lunch if he hadn’t been pretty bad off.
I’m going to miss my friend.
Ben sold the Northwestern Banker magazine in 1988 to Paul Blackburn, who merged it with his magazine, Commercial West. Both of the magazines were started a century earlier, Northwestern Banker published out of Des Moines, and Commercial West originating out of Minneapolis. Upon the merger, Blackburn renamed the magazine NorthWestern Financial Review.
I was the editor at the time of the merger. I had competed against Haller and his staff the three years prior, and for the next year or so, I edited columns that he continued to contribute. He was an awesome writer. Nobody had banking industry knowledge like Ben Haller. When he wrote about something that happened in the late 1980s, he could compare it to similar events in the 1950s or the 1960s. Whenever some crisis arose that we all thought meant the end of the banking industry as we knew it, Haller would say the exact same thing took place three or four decades earlier.
I respected Haller because he seemed to know everyone in the industry and everyone seemed to know him. He started working at the Northwestern Banker upon his discharge from the U.S. Army in 1945. He eventually was named editor, then bought into the magazine, and then became the magazine’s sole owner in 1981. There aren’t very many people who stick with the same company for 43 years, as Ben did.
Ben Haller was born in 1919 in Omaha, one of 14 children. I wrote a feature on him when the magazines merged and at that time he told me about his military service. He was training with a company of soldiers, but one afternoon he tore ligaments in his knee playing touch football. The injury was so serious that he couldn’t keep up the pace of his Army training, and he was pulled out of his company and placed in the class behind. Years later, he did some digging around to find out whatever happened to some of his old buddies in that original company and he discovered that nearly everyone in the company was killed in the invasion at Normandy.
Haller had always been a devout Catholic, but this realization really got him to thinking about why God had spared his life. Clearly, he thought, God had something important in mind for him to do with his life.
Haller saw combat in World War II himself, flying 19 combat missions. At one point, his plane was shot down over Yugoslavia. The entire crew was presumed dead. Officials informed Haller’s young bride, Peggy, that he had been killed in action. Months later, the crew was discovered, rescued and Haller turned up in a hospital in Italy.
After the war, Ben and Peggy had five kids and eight grandchildren. They were married for 63 years.
I just returned from Ben’s wake; the funeral is tomorrow morning. Peggy asked about my kids. I said they were fine, adding that four kids sure keep my wife and I busy. Peggy said: “They keep you busy but you know it’s worth it. At times like these, it is obviously worth it.” Her kids and grandkids were among the many people remembering Ben at the Sacred Heart Church Parish Center in West Des Moines.
By the time a colleague and I bought the magazine from Paul Blackburn in 1992, Haller had stopped contributing columns, but we stayed in touch. I would see him annually at the Iowa Bankers Association convention in Des Moines every September. The IBA has a club for people who have worked in the banking industry for 50 years or longer. These “50-year bankers” have a luncheon at the convention, and Ben would always attend. He was so close to the group that they made him an honorary member, the only non-banker ever to be welcomed into the ranks of the 50-year banker group.
I got a little worried last month when I went down for the convention and Ben wasn’t at the luncheon. I had talked to Ben last spring. In fact, I invited him to consider contributing columns again. After taking a couple weeks to think about it, he wrote me a letter saying he’d like to do it, that he would get to work on it right away, and that he would send me the first column as soon as he was done with it. I never received a column.
At the wake, it was noted that he lived the last several months of his life in great pain. I never knew, but I should have guessed. He would have submitted a column or two if he were doing okay; he wouldn’t have missed the 50-year banker lunch if he hadn’t been pretty bad off.
I’m going to miss my friend.
Thursday, October 11, 2007
Beardsley shares history of triumph and tragedy
Long-distance runner Dick Beardsley is a well-known personality on the local speaking circuit and I was privileged to hear him address a business group Monday night in Bloomington. He shared the thrill of being one of the world’s leading marathoners and the agony of struggling with a drug addiction that nearly killed him. The likeable, 6-foot-2 runner invited us to support his foundation, which offers support to chemically-dependent people undergoing treatment.
After washing out of football, Beardsley tried out for his high school’s cross country team, a much better fit for the 135-pound junior. He had never run competitively before, and at the first practice of the season, he found himself walking the last mile of a three-mile run. With practice and persistence, he became a steady runner for his senior year season in 1974.
“There are no short cuts to success,” he said. “You’ve got to believe in yourself. If you are willing to put in the work, the sky is the limit.”
Beardsley graduated from high school never having run in the state high school championship. His college career, at the University of Minnesota-Waseca, did not bring him fame, although he was encouraged by his coach who repeatedly told him he “could be as good as he wanted to be.”
In 1981, he ran Grandma’s marathon in Duluth, Minnesota. He was feeling well prepared and, mysteriously, picked up subliminal messages that he would run the course in two hours and nine minutes. He recently had recorded a time of 2:12 in the London marathon. Amazingly, he won Grandma’s with a time of 2:09:36.
The pinnacle of Beardsley’s career was the Boston marathon, ten months later. Six miles into the race, running shoulder to shoulder with Cuban-born Alberto Salazar, Beardsley told himself he could win the race. He felt terrible those first miles of the race, but a quarter of the way into the marathon, he knew he could compete with Salazar, the world’s top runner at the time.
Beardsley found himself about two blocks behind Salazar with a little over three miles to go. Beardsley sprinted forward to catch up. On the last left turn before the finish line, one of four motorcycles escorting the leaders turned in front of Beardsley, forcing him to take several extra steps. The difference was too much to overcome. Salazar won the race with a time of 2:08:51; Beardsley came in about a second and a half behind at 2:08:52.
Although others said it was clear the motorcycle cost him the race, Beardsley refused to blame anyone for his second-place finish.
Beardsley’s career, which had sky-rocketed him to international fame, took a dive after that. An injury prevented him from competing in the 1984 Olympics. Then, on Nov. 13, 1989, he suffered an accident on a farm that changed the course of his life. The broke several bones in the accident, and nearly lost his leg.
Over several years of treatment, he became addicted to pain-killing drugs. He said by the mid 1990s, he was downing 80 to 90 pills per day. He said he would go from doctor to doctor, seeking prescriptions. When he couldn’t get them, he would forge his own.
Beardsley eventually was caught and locked up in a drug ward in Fargo, N.D. He went through a lengthy, painful, and expensive rehabilitation process.
“Good things can come from bad situations,” Beardsley summarized, noting the launch of his new foundation, which is accessible through www.DickBeardsleyfoundation.org.
“You can live forty days without food, seven days without water and a few minutes without air, but not one moment without hope,” said Beardsley, who would like to bring hope to chemically dependent people in need of treatment.
I got the opportunity to meet and talk with Beardsley before his presentation. He is bright-eyed and personable. He is very likable and he tells a compelling story. I am sure he will succeed in bringing hope to many people who otherwise would not have any.
After washing out of football, Beardsley tried out for his high school’s cross country team, a much better fit for the 135-pound junior. He had never run competitively before, and at the first practice of the season, he found himself walking the last mile of a three-mile run. With practice and persistence, he became a steady runner for his senior year season in 1974.
“There are no short cuts to success,” he said. “You’ve got to believe in yourself. If you are willing to put in the work, the sky is the limit.”
Beardsley graduated from high school never having run in the state high school championship. His college career, at the University of Minnesota-Waseca, did not bring him fame, although he was encouraged by his coach who repeatedly told him he “could be as good as he wanted to be.”
In 1981, he ran Grandma’s marathon in Duluth, Minnesota. He was feeling well prepared and, mysteriously, picked up subliminal messages that he would run the course in two hours and nine minutes. He recently had recorded a time of 2:12 in the London marathon. Amazingly, he won Grandma’s with a time of 2:09:36.
The pinnacle of Beardsley’s career was the Boston marathon, ten months later. Six miles into the race, running shoulder to shoulder with Cuban-born Alberto Salazar, Beardsley told himself he could win the race. He felt terrible those first miles of the race, but a quarter of the way into the marathon, he knew he could compete with Salazar, the world’s top runner at the time.
Beardsley found himself about two blocks behind Salazar with a little over three miles to go. Beardsley sprinted forward to catch up. On the last left turn before the finish line, one of four motorcycles escorting the leaders turned in front of Beardsley, forcing him to take several extra steps. The difference was too much to overcome. Salazar won the race with a time of 2:08:51; Beardsley came in about a second and a half behind at 2:08:52.
Although others said it was clear the motorcycle cost him the race, Beardsley refused to blame anyone for his second-place finish.
Beardsley’s career, which had sky-rocketed him to international fame, took a dive after that. An injury prevented him from competing in the 1984 Olympics. Then, on Nov. 13, 1989, he suffered an accident on a farm that changed the course of his life. The broke several bones in the accident, and nearly lost his leg.
Over several years of treatment, he became addicted to pain-killing drugs. He said by the mid 1990s, he was downing 80 to 90 pills per day. He said he would go from doctor to doctor, seeking prescriptions. When he couldn’t get them, he would forge his own.
Beardsley eventually was caught and locked up in a drug ward in Fargo, N.D. He went through a lengthy, painful, and expensive rehabilitation process.
“Good things can come from bad situations,” Beardsley summarized, noting the launch of his new foundation, which is accessible through www.DickBeardsleyfoundation.org.
“You can live forty days without food, seven days without water and a few minutes without air, but not one moment without hope,” said Beardsley, who would like to bring hope to chemically dependent people in need of treatment.
I got the opportunity to meet and talk with Beardsley before his presentation. He is bright-eyed and personable. He is very likable and he tells a compelling story. I am sure he will succeed in bringing hope to many people who otherwise would not have any.
Friday, September 28, 2007
Pope Benedict XVI’s book is insightful look at the life of Christ
I have been meaning to write for quite some time about “Jesus of Nazareth,” the book by Pope Benedict XVI, which was published last May. I read the book in early summer and found it to be wonderful. A second reading is in my plans.
The book is a series of reflections on the Gospel stories presented in 10 chapters. The chronology of the book takes us from the Baptism of Jesus through the Transfiguration. A second volume is set to be published which will include, among other things, commentary on the infancy narratives.
Pope Benedict gave me several “Ah hah!” moments with is explanation of many Gospel stories. Chapter 2, for example, which deals with the temptations of Christ, foreshadows the Passion with a reference to Barabbas. When Pilate offers the crowd a choice between freeing Jesus or Barabbas, they choose Barabbas. Pope Benedict notes that Jesus offers the people spiritual freedom, whereas Barabbas, imprisoned for insurrection, offers political freedom. The people chose the political solution; it is the same choice people always make.
Chapter 5 is devoted to The Lord’s Prayer. This chapter has changed forever the way I will think as I recite this familiar prayer. He looks at each line. Reflecting on the phrase: “Hallowed be thy name,” Pope Benedict notes the importance of names. He notes that knowing someone’s name is the first step for entering into a relationship with them. By authorizing us to call him Father, “God established a relationship between himself and us…He enters into relationship with us and enables us to be in relationship with him.” Pope Benedict notes that the Incarnation began with the giving of the divine name to Moses. “What began in the Sinai desert comes to fulfillment at the burning bush of the Cross.”
I also like the reflection on the line: “Give us this day our daily bread.” Jesus acknowledges our earthly needs. He “invites us to pray for our food and thus to turn our care over to God.” It is so easy to think that we provide for ourselves, but this is a reminder about who really provides for us. Nonetheless, “we have the right and the duty to ask for what we need. We know that if even earthly fathers give their children good things when they ask for them, God will not refuse us the good things that he alone can give.”
Chapter 7 deals with parables. Pope Benedict writes about the older brother as he discusses the parable of the prodigal son. The older brother gives into the temptation of self-righteousness, triggering jealously toward the younger brother. Pope Benedict notes that for the older brother and others like him, “more than anything else, God is Law; they see themselves in a juridical relationship with God and in that relationship they are at rights with him. But God is greater: They need to convert from the Law-God to the greater God, the God of love.” Pope Benedict writes that the bitterness of the older son indicates the limitations of his own obedience. He would have liked the “freedom” that the younger brother enjoyed. “There is an unspoken envy of what others have been able to get away with,” Pope Benedict writes. Folks living in a manner pleasing to the father have real freedom, yet bitterness turns that freedom into slavery.
It is pretty easy for us folks who take our faith seriously to feel as if we are living by the rules. Perhaps we get a little jealous when we look at those flaunting the rules, especially if we see no earthly consequences. Pope Benedict gives us a reminder to check our heart and reconsider whether we really love God, or merely the idea of self-righteousness. Of course we should rejoice whenever someone makes a commitment to their faith, no matter what their stage in life.
Sections of this book will impact readers differently depending on where each individual reader is in their own faith journey. If you are interested in advancing on that journey, however, you can get a real boost by reading “Jesus of Nazareth.” I suspect I will be giving copies of this book at Christmas time.
The book is a series of reflections on the Gospel stories presented in 10 chapters. The chronology of the book takes us from the Baptism of Jesus through the Transfiguration. A second volume is set to be published which will include, among other things, commentary on the infancy narratives.
Pope Benedict gave me several “Ah hah!” moments with is explanation of many Gospel stories. Chapter 2, for example, which deals with the temptations of Christ, foreshadows the Passion with a reference to Barabbas. When Pilate offers the crowd a choice between freeing Jesus or Barabbas, they choose Barabbas. Pope Benedict notes that Jesus offers the people spiritual freedom, whereas Barabbas, imprisoned for insurrection, offers political freedom. The people chose the political solution; it is the same choice people always make.
Chapter 5 is devoted to The Lord’s Prayer. This chapter has changed forever the way I will think as I recite this familiar prayer. He looks at each line. Reflecting on the phrase: “Hallowed be thy name,” Pope Benedict notes the importance of names. He notes that knowing someone’s name is the first step for entering into a relationship with them. By authorizing us to call him Father, “God established a relationship between himself and us…He enters into relationship with us and enables us to be in relationship with him.” Pope Benedict notes that the Incarnation began with the giving of the divine name to Moses. “What began in the Sinai desert comes to fulfillment at the burning bush of the Cross.”
I also like the reflection on the line: “Give us this day our daily bread.” Jesus acknowledges our earthly needs. He “invites us to pray for our food and thus to turn our care over to God.” It is so easy to think that we provide for ourselves, but this is a reminder about who really provides for us. Nonetheless, “we have the right and the duty to ask for what we need. We know that if even earthly fathers give their children good things when they ask for them, God will not refuse us the good things that he alone can give.”
Chapter 7 deals with parables. Pope Benedict writes about the older brother as he discusses the parable of the prodigal son. The older brother gives into the temptation of self-righteousness, triggering jealously toward the younger brother. Pope Benedict notes that for the older brother and others like him, “more than anything else, God is Law; they see themselves in a juridical relationship with God and in that relationship they are at rights with him. But God is greater: They need to convert from the Law-God to the greater God, the God of love.” Pope Benedict writes that the bitterness of the older son indicates the limitations of his own obedience. He would have liked the “freedom” that the younger brother enjoyed. “There is an unspoken envy of what others have been able to get away with,” Pope Benedict writes. Folks living in a manner pleasing to the father have real freedom, yet bitterness turns that freedom into slavery.
It is pretty easy for us folks who take our faith seriously to feel as if we are living by the rules. Perhaps we get a little jealous when we look at those flaunting the rules, especially if we see no earthly consequences. Pope Benedict gives us a reminder to check our heart and reconsider whether we really love God, or merely the idea of self-righteousness. Of course we should rejoice whenever someone makes a commitment to their faith, no matter what their stage in life.
Sections of this book will impact readers differently depending on where each individual reader is in their own faith journey. If you are interested in advancing on that journey, however, you can get a real boost by reading “Jesus of Nazareth.” I suspect I will be giving copies of this book at Christmas time.
Friday, September 07, 2007
A gracious host passes away
In June of 2005, I got to spend an afternoon with Edward M. Gramlich, the eminent policy analyst who died of leukemia on Wednesday at the age of 68.
Gramlich was a governor on the Federal Reserve Board from November 1997 to August 2005. He hosted a group of students from the Stonier Graduate School of Banking at Georgetown University in the board room at the Federal Reserve Building in Washington, D.C., two months before he left the Fed; I was among the students. Hanging on my wall at my office is a picture of the group – Gramlich front and center, me in the back.
We talked about housing, which was his specialty. He warned of the impact of the subprime lending craze before other members of the Fed Board saw it as a problem.
Gramlich was an economics professor at the University of Michigan, where he returned after leaving the Fed.
Gramlich was a governor on the Federal Reserve Board from November 1997 to August 2005. He hosted a group of students from the Stonier Graduate School of Banking at Georgetown University in the board room at the Federal Reserve Building in Washington, D.C., two months before he left the Fed; I was among the students. Hanging on my wall at my office is a picture of the group – Gramlich front and center, me in the back.
We talked about housing, which was his specialty. He warned of the impact of the subprime lending craze before other members of the Fed Board saw it as a problem.
Gramlich was an economics professor at the University of Michigan, where he returned after leaving the Fed.
Saturday, September 01, 2007
A look at the subprime mortgage picture
Foreclosures are up as the subprime mortgage market bottoms out. Politicians are weighing in, expressing concern. President Bush issued a statement yesterday about the importance of housing. Here’s what’s going on, from my perspective as a journalist who covers the banking industry.
The subprime mortgage phenomenon was supply driven. Investment firms like Merrill Lynch figured out how to sell questionable credit from high risk borrowers to pension fund managers and other typical bond buyers. Investment bankers figured out they could create a bond out of very good, or “A,” credits, mixed with questionable, or “C,” credits, to produce a bond with an overall quality of a pretty good, or “B,” credit. Pension fund managers, who typically buy B-rated bonds, showed interest after independent rating agencies blessed the new recipe. This created a new market for C credits in the form of subprime mortgages.
The investment bankers went to the mortgage brokers with the new product and the brokers sold the product like mad. You remember hearing all those ads on the radio and on television, where mortgages were promised to anyone, regardless of credit history. People with marred credit, who otherwise could not get mortgages, responded and bought homes with the easy credit. In many cases, they didn’t even have to put money down.
In the third or fourth year of this game, those C credit borrowers are beginning to show why they were C credits in the first place. They aren’t keeping up with payments and the mortgage holders are foreclosing. That’s the phenomenon that is making so much news lately. But remember, a good number of people losing their homes weren’t in homes prior to the availability of subprime mortgages, and they also aren’t losing much, if any, equity.
The people who are losing money are the people who bought the bonds made up of these mortgages. They are not likely to get all of their investment back, let alone any kind of a market rate on their principal. I feel bad for these guys, but not too bad. Investments, especially those including C credit components, are risky.
Decades ago, when someone wanted to buy a house, they went to the bank or savings and loan to borrowed money for the house. The lender held onto the loan for the life of the mortgage. The lender and borrow stayed closed to one another. If the borrower got in trouble – lost a job or incurred substantial medical expenses – the lender was there to consider the situation. They usually tried to work something out. In the absolute worst cases, the lender might foreclose, but in most cases, the borrower and lender worked something out to keep everything on track.
Today, there are many more players between the borrower and the lender. An investment banker finds a funding source. They then work with a mortgage broker, who finds borrowers. Brokers also find mortgage servicers, who handle the paperwork. The mortgage ends up being a complicated legal document which binds the borrower to the servicer, who is tied to the funder. The broker, who initially works with the borrower, is out of the picture. Consider what incentive the broker has to get the right product for the borrower when they disappear the minute the final papers are signed. The servicer rarely knows the borrower and if the borrower falls behind, the servicer usually has no option than to initiate foreclosure as prescribed by the legal agreement it has with the funder. It’s a much tougher arrangement for the borrower than the mortgage arrangement of decades ago.
But there’s no going back. Access to equity markets for mortgages has a substantial upside as well. Many more people have access to mortgage credit than did under the old direct lending system. But the downside is that over-eager players come up with shaky ideas and sell them to others who don’t look close enough at the product. In the end, it’s the way the market has worked for centuries, and overall, the market always self corrects. That is what is happening now with the subprime mortgages. The politicians really don’t have much of a role in all this.
The subprime mortgage phenomenon was supply driven. Investment firms like Merrill Lynch figured out how to sell questionable credit from high risk borrowers to pension fund managers and other typical bond buyers. Investment bankers figured out they could create a bond out of very good, or “A,” credits, mixed with questionable, or “C,” credits, to produce a bond with an overall quality of a pretty good, or “B,” credit. Pension fund managers, who typically buy B-rated bonds, showed interest after independent rating agencies blessed the new recipe. This created a new market for C credits in the form of subprime mortgages.
The investment bankers went to the mortgage brokers with the new product and the brokers sold the product like mad. You remember hearing all those ads on the radio and on television, where mortgages were promised to anyone, regardless of credit history. People with marred credit, who otherwise could not get mortgages, responded and bought homes with the easy credit. In many cases, they didn’t even have to put money down.
In the third or fourth year of this game, those C credit borrowers are beginning to show why they were C credits in the first place. They aren’t keeping up with payments and the mortgage holders are foreclosing. That’s the phenomenon that is making so much news lately. But remember, a good number of people losing their homes weren’t in homes prior to the availability of subprime mortgages, and they also aren’t losing much, if any, equity.
The people who are losing money are the people who bought the bonds made up of these mortgages. They are not likely to get all of their investment back, let alone any kind of a market rate on their principal. I feel bad for these guys, but not too bad. Investments, especially those including C credit components, are risky.
Decades ago, when someone wanted to buy a house, they went to the bank or savings and loan to borrowed money for the house. The lender held onto the loan for the life of the mortgage. The lender and borrow stayed closed to one another. If the borrower got in trouble – lost a job or incurred substantial medical expenses – the lender was there to consider the situation. They usually tried to work something out. In the absolute worst cases, the lender might foreclose, but in most cases, the borrower and lender worked something out to keep everything on track.
Today, there are many more players between the borrower and the lender. An investment banker finds a funding source. They then work with a mortgage broker, who finds borrowers. Brokers also find mortgage servicers, who handle the paperwork. The mortgage ends up being a complicated legal document which binds the borrower to the servicer, who is tied to the funder. The broker, who initially works with the borrower, is out of the picture. Consider what incentive the broker has to get the right product for the borrower when they disappear the minute the final papers are signed. The servicer rarely knows the borrower and if the borrower falls behind, the servicer usually has no option than to initiate foreclosure as prescribed by the legal agreement it has with the funder. It’s a much tougher arrangement for the borrower than the mortgage arrangement of decades ago.
But there’s no going back. Access to equity markets for mortgages has a substantial upside as well. Many more people have access to mortgage credit than did under the old direct lending system. But the downside is that over-eager players come up with shaky ideas and sell them to others who don’t look close enough at the product. In the end, it’s the way the market has worked for centuries, and overall, the market always self corrects. That is what is happening now with the subprime mortgages. The politicians really don’t have much of a role in all this.
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