Summit Notebook

Exclusive outtakes from industry leaders

AUDIO – The costs of war


Wars have numerous costs and most of those are unimaginable for most of us not in the middle of one.

But, aside from the tragic cost of death or injury, wars also cost a lot of money to finance and President-elect Barack Obama will be facing some of those costs (as well as a whole mess of other stuff) when he takes office in January.

As the United States grapples with a severely struggling economy, a number of federal bailouts and questions about our overall financial shape, Obama will also have to decide rather quickly how he will prosecute the wars in Iraq and Afghanistan and the staffing of the military.

On Monday, Loren Thompson of the Lexington Institute and Richard Aboulafia of the Teal Group spoke at the Reuters Aerospace and Defense Summit about the kinds of challenges Obama will face and just how much this is all going to cost.

AUDIO – Teddy Roosevelt had it right


The world is a more dangerous place because of the global economic meltdown, according to Northrop Grumman Chief Executive Ronald Sugar, whose company provides specialized aircraft, radar and other electronics to meet that threat.

Sugar was the kick-off speaker at the annual Reuters Aerospace and Defense Summit on Monday in Washington, D.C.

Diller to profitable companies: Lay off the layoffs


IAC Chief Executive Barry Diller took several groups to task at the Reuters Media Summit, but he reserved special disgust for CEOs at profitable companies who add to the country’s rising unemployment rate.

Also targeted by the former Hollywood executive were “incredibly, shockingly stupid” Big 3 auto executives, the Internet’s strange and growing dictionary, and Hollywood’s lack of creativity.

No LUV for China real estate, SOHO says

China’s real estate sector has a chilly winter ahead, said Pan Shiyi, chairman of Beijing property developer SOHO China Ltd. And he had interesting, alphabetical way of describing it.

“I look at the shape of the real estate market and I imagine it bottoming out as a letter “L”. If after the snows earlier this year, China had loosed up its monetary policy, we would have seen a “V”-shaped market. If they had loosened up before the Olympics, we would have seen a “U”. But for them to release new policies now, like reducing the interest rate, it’s already an “L”. I don’t know when the market will come back up.”

Chinese online execs say no to M&A

The Reuters China summit in Beijing had two internet executives speak about their business. Kevin Wang, CFO of software maker Kingsoft, and Charles Zhang, the chairman and chief executive officer of Inc. both discussed growth and weathering the financial storm. The companies they lead have some similarities and differences, but both are seen as being less exposed to market fluctuations because after all, a lot of their business is based on people going to their computer, sitting down, and logging onto the internet.

So how do they expect to grow their businesses? Not through acquisitions, both executives said, at least for the time being. They seemed to be happy to grow by beefing up their existing operations and partnerships. Or, as they in executive speak, they’re content to keep growth “organic.”

For a banker, no panic in China

“Well insulated” China, though suffering from sharp drops in its own equities markets, doesn’t have the sense of crisis that exists in the U.S., says Philip Partnow, managing director of UBS Securities Ltd in Beijing. UBS, the first Western bank to assume management control of a domestic mainland brokerage, points out the fact that what’s hitting companies is not subprime-related securities gone bad.

“I think there’s nothing here we feel is toxid,” he told Reuters on Wednesday at the Reuters China Summit in Beijing. He goes on:

How wealth managers manage their own wealth


lamere.jpgPrivate bankers are guiding their rich clients into safer investments as financial market turmoil spreads, but when it comes to their own money they often take a different tack.
“I don’t have a very well diversified portfolio,” admits Timothy Vaill, chairman and chief executive officer of Boston Private Financial Holdings , which owns 15 independently operated financial services firms.
“The majority of my investments are in my own company,” he told this week’s Reuters Wealth Management Summit.
“And I invested additionally this quarter in my own company again because I really believe what we are doing is the right thing to do and it is a very strong company. And I’m there all day, every day, watching it like a hawk.”
David Lamere, chief executive of The Bank of New York Mellon’s wealth management unit, said his money is managed by his own company.
“I’m a big shareholder in BNY Mellon, and the rest of my assets is managed by our organization,” Lamere told the Reuters Summit. But his investments were “very diversified”, he added.
How much do they own?
According to Thomson Reuters data, Vaill owned 201,794 shares of Boston Private as of mid-August valued at about $1.8 million. As of Thursday afternoon, his stake would have retained its value at $1.8 million.
Vaill also said he does not borrow against his stock and does not invest in hedge funds.
Lamere owned 255,820 shares of Bank of New York Mellon as of May 9, valued then at about $11 million. As of Thursday afternoon, that was notionally valued at about $7.5 million.
Lamere said he was at a lunch on Sept. 18 when Bank of New York Mellon stock briefly fell 35 percent along with a slump in shares of other trust banks and asset managers.
“It all happened within about an hour in the middle of the day and I was in a lunch. I got called six times,” Lamere added.

For wealthy men, the grass ceiling


taylor-two.jpgWomen have long bumped up against glass ceilings as they try to advance to upper level executive jobs.
According to research from the Harrison Group, a market research and strategy firm in Waterbury, Connecticut, when it comes to housework wealth men are dealing with barriers too, although it’s unclear where those barriers come from.
“Women handle the household’s employment, treasury and other functions” and are making real money for the family, said Jim Taylor, the group’s vice chairman who regularly researches how rich people behave.
Men work long hours at their jobs and at home they are now allowed only to care for lawns, shrubbery and maybe the swimming pool. That gives rise to the new term “the grass ceiling,” Taylor said at the Reuters Wealth Summit.

–Svea Herbst

Be very afraid — the wealthy are


taylor2.jpgHow worried are the richest Americans by the current economic turmoil?
It’s fair to say, “very.”

Forty-six percent of the wealthiest U.S. families believe they can lose everything, said Jim Taylor, vice chairman of the Harrison Group, a market research and strategy firm in Waterbury, Conn.

The credit crisis is affecting us all…


rtr1pjb9.jpgSpare a thought for the mega-rich.

While the man or woman on the street cuts back on non-essential spending as the value of their home falls and they worry more about whether or not they will keep their job, so too multi-millionaires are feeling the pinch.

Javier Arus Castillo, general manager of Santander Private Banking International, explains.