Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are the 8 most fascinating ones I read this week.
1. Don't discount how important this is
America's oil and gas boom is getting more impressive and important by the day. The Wall Street Journal sat down with energy analyst and Pulitzer Prize winner Daniel Yergin for a must-read interview. An excerpt:
Until a couple of years ago, people didn't focus on the economic impact of domestic energy production. Over one million jobs have been created by the development of unconventional gas. It makes the U.S. more competitive. You can see how the growing recognition of the economic impact is changing the political discourse about energy in the U.S., including, very clearly, in the presidential campaign. You would not have had this kind of discussion about energy in 2008.
[The new flow] changes the geopolitical perspective about energy. The U.S. is going to be relatively more self-sufficient and less dependent on foreign energy. We're already independent in terms of coal and natural gas; greater reliance on regional and domestic supplies increases our sense of security.
2. You'll be hearing more of these stories
The New York Times published a great piece on the deplorable state of the Chicago Teacher's Pension Fund. Alas, these stories aren't unique:
Having skipped its pension contributions for many years, Chicago is supposed to start tripling them in another year under state law. But the school district has drained its reserves. And it cannot easily turn to the local taxpayers because of a cap on property taxes. Borrowing the money would be difficult and expensive as well, because of a credit downgrade this summer. One of the few remaining choices would be to make deep cuts in other services.
3. Yep, still worth it
The Hamilton Project published a chart showing the probability of having a certain level of education given annual incomes. If you're rich, you probably went to college:
I took a deep breath and walked into the large conference room at the Treasury Department. I was apprehensive and exhausted, having spent the entire weekend in marathon meetings with Treasury and the Fed. I felt myself start to tremble, and I hugged my thick briefing binder tightly to my chest in an effort to camouflage my nervousness. Nine men stood milling around in the room, peremptorily summoned there by Treasury Secretary Henry Paulson. Collectively, they headed financial institutions representing about $9 trillion in assets, or 70% of the U.S. financial system. I would be damned if I would let them see me shaking.
5. Workin' hard for the money
Former Treasury Secretary Robert Rubin joined Citigroup (NYSE:C) in 1999, taking a role as chairman of the executive committee. By most accounts, he was then paid more than a $1 million a month to do very little. This bit, by William Cohan in Bloomberg, pretty well describes the insanity of the revolving door between Washington and Wall Street:
In October 2007, as Citigroup was imploding, Rubin went to South Beach to visit his father, who died a year later at 101. In line at an upscale grocery, he met Iris Mack. ... Over the next 14 months, Rubin pursued her romantically. They would meet, according to Mack, in his Ritz- Carlton Hotel suite, where he would stay after flying in on the Citigroup corporate jet. "It's one of the perks," Mack says Rubin told her.
This is not news, but it does call into question how hard Rubin was working for his $15 million annual salary. Mack ... decided to go public after watching Rubin testify before the FCIC. "I really think he was in a vacuum, a little bubble," Mack says now. "I don't think all these people start out as evil creatures, but you get in this environment, like we were in Wall Street and Enron, and it's so much stuff thrown at you. ... If you don't have your head on straight, you can get totally screwed."
Former Federal Reserve Chairman Alan Greenspan has defended his legacy as someone who warned everyone early last decade of a looming financial crisis. And he's right -- sort of. The Wall Street Journal explains:
Mr. Greenspan ... told Congress in February 2004 that Fannie and Freddie posed "very serious risks" to the U.S. financial system and that their growth should be curbed "sooner rather than later."
Yet even he didn't get things quite right. In April 2005, Mr. Greenspan said at a hearing of the Senate Banking Committee that the main risk facing the companies was the threat of sharp fluctuations in interest rates. ... Mr. Greenspan played down the idea that Fannie and Freddie could succumb to a plague of mortgage defaults and foreclosures.
"The risk is not credit risk," Mr. Greenspan told the committee.
7. More on education
Former Treasury Secretary Larry Summers minces no words on college:
I think a college education is expensive, but it is very cheap compared to ignorance. Very cheap compared to ignorance. One of the great threats to the American middle class is that that trend (toward education) seems to be stagnating. Those who suggest the irrelevance of knowledge in a knowledge economy are very much barking up the wrong tree.
8. What innovation looks like
Apple's (NASDAQ:AAPL) iPhone 5 goes on sale this morning. In celebration, enjoy this hilarious video showing what cellphones were like 23 years ago:
Enjoy your weekend.