Chapter 639: Be Greedy When Others are Afraid

[Chapter 729: Greed When Others Feared]

That was just how things worked. Good neighborhoods got better while bad neighborhoods got worse.

What about the police?

Well, with property values plummeting like this, it looked like there would be no property taxes either. Since there was no money, shouldn't the police department be closed down too?

Don't think I'm joking; that was true. The communities with the most trouble had the fewest cops. The nearest police station was several blocks away.

The Rodney King case was resolved, and it seemed that the community got a bit of satisfaction. But you all seemed to forget that the cops were also victims. They were just trying to catch criminals, and now they might end up behind bars. Heh, you still expect these people to keep the peace?

"Alright then, if it isn't safe, I won't go. I'm leaving; there's nothing left here."

"Sounds good."

...

William White took a stroll around downtown Los Angeles, and those paparazzi looked pretty gloomy. "Man, we've been following you all day, and you didn't even step out."

When they followed other stars, those folks would get right up close to snap pictures, and even if they pulled some dangerous stunts, nobody could touch them.

Not so with William White's security; those guys would really shoulder you aside.

If it were just like that, they didn't even care; that was still news after all. But when those lawyers came after you, it became a hassle. It wasn't about who was right or wrong; you simply didn't have the time to get tangled up with them.

...

After a quiet night, William White arrived at the White Center the next morning. Unless something significant was going on, he usually spent most of the day there.

"Morning, sir."

"Morning, Filson. How did the stock market do today?"

"The newly released non-farm payroll data looked good, but due to concerns over the Big Blue's massive losses, trading has been pretty light."

"So, the Nasdaq must not have done too well either."

"Yeah, food and healthcare got some positive news, but other sectors performed pretty average. By the way, we recalculated the Big Blue's losses; they were looking at around $8 billion."

William was taken aback; $8 billion was a staggering amount in this era. Even for the world's richest man, that was a lot to digest.

Having a net worth of that much didn't mean you had that much cash on hand. If you asked William White to come up with $8 billion right away, he'd probably be in quite a bind.

Even if your assets were measured in hundreds of billions, you still couldn't pull together that cash. It was simple -- you were all playing the capital game. Your assets might appreciate, and fine, you could always get a little more from the bank.

Your business might be thriving, which was great. You could increase loans at any time. If that didn't work, you just sold off a bit of stock.

But when it came to oil and iron ore, you could forget it; banks would be very cautious. Don't even mention loans; if it weren't for your other profitable businesses, banks would push you to repay early.

"Filson, how much cash do we have on hand?"

"If we squeezed a bit, around $500 million."

"Five hundred million? That seems a bit low. Their market value is under $30 billion; if I need about 5%, I should need around $1.5 billion."

"True, that amount's going to be tough to gather in this market. Though their stock's dropping, trading volume hasn't noticeably increased. Clearly, the major shareholders are optimistic about the upcoming changes."

"Legendary World and Viking Comics are both having trouble. How about this -- let's use Tesla shares as collateral. If that doesn't work, we'll have to brainstorm from the bottom."

"Sir, isn't that a bit risky? The losses in oil are still substantial; the desert tycoons have gone mad and are ramping up production in a reckless frenzy."

"Fortune favors the bold! If there are issues with the oil companies, I'd consider selling off our Hong Kong properties."

"Alright, it looks like that's the only way. Sir, you won't be making any major investments soon, right?"

"Nope, for the next few films, they'll all be clawing to hand over money."

Filson had no idea about IBM's potential, but how could William be clueless? In just a few years, the Big Blue's market value soared past $160 billion. That guy named Gerstner absolutely earned his hefty salary.

Some said that after Gerstner left, the Big Blue slid back into mediocrity.

But honestly, that wasn't quite right. Gerstner was a remarkably capable manager, plain and simple.

There was a common flaw among these folks -- they preferred quick, short gains. Projects that offered immediate profits became their obsession. Long-term development plans rarely entered their minds.

Big earnings two or five years down the line?

"Well, we'll all be gone by then; what good does it do you if the successor walks off with the profit?"

It was hardly surprising; this was the way with professional managers, including those under William White.

Just look at where all the R&D was happening -- Bell Labs.

It was the only workable solution; if you forced them to kick off R&D projects, most of those professional managers would bail out.

Compensation and benefits? Those weren't top priorities. The company's profits and market value growth had to be rewarded. Their contracts seemed much more like business agreements than actual employment deals.

On snapping up shares of the Big Blue, Filson and his think tank were on the same page. They had been busy with that; as long as they could resolve the excess employee issue, achieving profitability wouldn't be too challenging.

A lifetime employment system that passed from father to son? What a ridiculous notion for a high-tech company! It was downright absurd.

Sound familiar?

Right, companies in Japan looked up to IBM like a deity. Those successful businesspeople were desperate to replicate the Big Blue's success.

Many people said that after the bubble economy burst, companies in Japan abandoned the lifetime employment system and began learning from the American model of professional management. Companies like Sony and Nissan even had foreign CEOs.

In reality, they were still trying to learn from IBM. Those folks stubbornly believed that since IBM could succeed, they could too.

"What's the big deal if you just had to pay a price? The shareholders stand to gain the most anyway."

The facts showed that they were thinking too naively. Professional managers often lacked integrity; if you wanted these people to work hard, you needed to have some accountability mechanisms in place.

If one thing didn't go well, they would resort to MBO (Management Buyout).

Such situations happened in America, in Europe, and all over the world. Without effective controls, why should you believe that they couldn't pull a move like that in Japan as well?

Look at Paramount's acquisition; Barry Diller's failure still hurt Paramount significantly. He had been gone too long; had he sat in the CEO's chair today, who knows if Redstone would even have had a chance.

Even if he failed now, he could always set up a rival operation of his own.

...

"Is someone accumulating shares quietly? Whose account is it?"

"The White Fund. Initially, we thought they were trying to push the price up to sell, but it seems that may not be the case. They've bought far more stock than they've sold."

"Charlie, has he sold any Coca-Cola shares?" Buffett didn't fancy the tech industry; he preferred the familiarity of traditional sectors.

"I'm afraid you'll be disappointed again, old buddy. I uncovered an interesting issue -- this guy's investment strategy appears to be long-term as well. The so-called speculation maestro outside -- clearly doesn't align with reality."

"Of course, he isn't some kind of speculative trader. Everybody knows what the problem with IBM is. Rather than saying he believes in IBM, it's more accurate to say he believes in Gerstner. I mean, outsourcing the cutting jobs to outside firms -- what else could one do?"

*****

https://www.patreon.com/Sayonara816.