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Goodman’s Money Game
This stories by Barbara Fox were published in U.S. 1 Newspaper on March 31, 1999. All rights reserved.
If and when interest rates start to rise, start to worry.
"We may be living in a fool’s paradise," says billionaire
financier George Soros. "We may now be in that boom phase
that makes us feel good, and eventually when the price is paid, it
will be too late."
Soros is interviewed by Adam Smith on a public television special,
"How to Survive and Prosper in the World Financial Crisis,"
to be aired on WNET on Friday, April 2, at 9 p.m.
Smith, a.k.a. George J.W. "Jerry" Goodman, will preview
that program at Princeton University’s Woodrow Wilson School on Thursday,
April 1, at 4:30 p.m., in Robertson Hall, Bowl 1. He will be joined
by Robert Hormats, vice chair of Goldman Sachs and former assistant
secretary of state for economic and business affairs and also senior
economic adviser to Henry Kissinger, Brent Scowcroft, and Zbigniew
On the television program Goodman and cohost Linda O’Bryon,
executive editor of Nightly Business Report, investigate how global
ills might affect American business and/or create opportunities for
personal investments. They interview such power brokers and experts
as United States Secretary of the Treasury Robert Rubin
Krugman of MIT;
of the International Monetary Fund, and economic ministers from Malaysia,
Russia, Singapore, and Argentina. Also among the guests is Rocky Hill
resident Ron Hill
Brown Brothers Harriman and Company.
A Harvard alumnus and a Rhodes scholar, Goodman was a portfolio manager
when he adopted the pseudonym of the 18th century economist and titled
one of his books "The Wealth of Nations." Other well-known
titles are "The Money Game," "Supermoney," and "Powers
of Mind." Goodman is the host and editor in chief of "Adam
Smith’s Money World," an Emmy-winning weekly PBS show that ran
from 1985 to 1998 and continues now as an occasional special. In 1990
the show had the distinction of being the only American public affairs
series to be regularly broadcast to the Soviet Union. Goodman is also
a founder of New York magazine, the founding editor of Institutional
Investor, and the husband of Sallie B. Goodman
As a television essayist on the economy, Goodman has seen his audience
grow from a limited circle of investors to an amazingly large crowd
swelled by the ranks of baby boomers buying mutual funds for their
retirement accounts. The investors, says Goodman in a telephone interview,
"have multiplied like rabbits — there are so many more of
them than there used to be."
The age of the new investing crowd could cause a potential problem.
Goodman’s book "The Money Game" gave both an historical and
a psychological perspective on the market, and he points out now that
"lack of historical memory can definitely lead you to euphoria
at the end of a long bull run."
This euphoria is particularly troubling when one-third of the world
— from South America to Asia — is floundering. These ills
briefly affected Wall Street in a period starting last July, when
the financial crisis became acute in Thailand and then spread. "One
country fell into hard straits, and then another, and even the American
market went into a temporary cardiac arrest," says Goodman, noting
that the Dow Jones Industrial Average dropped 20 percent in a matter
"The treasury secretary was saying this is a new phenomenon, the
first of the post cold war financial phenomenon, related to the globalization
of the world, computerization, and telecommunications and instantaneous
communication," says Goodman.
When Hill was interviewed for the special, he suggested that the average
investor should keep a sharp lookout for rising interest rates. "We
have been floating on the sea of liquidity," explains Goodman.
"Central banks were afraid that the world would tip into a very
deep depression, and not just our country but 37 different countries
cut interest rates. That creates a lot of money."
The result of lower interest rates is that more money is available
than the various economies of the world can use. "A lot of this
flow goes into securities markets. If this money begins to evaporate
— if the interest rates start to tick up, then the party is over."
"Ironically, the end of the crisis is the possible beginning of
trouble for markets," says Goodman. It’s one of those economic
truths that is counter-intuitive: "If the economy is doing well
— so well that you have drained the money out — then the markets
will go down even as the economy booms and the money will go into
the real world."
— Barbara Fox
Builders know that the "set-aside" provisions
for affirmative action in the construction industry are churning.
For many years, any federal construction contract required from 10
to 17 percent of the work to be done by a "disadvantaged"
subcontractor, a firm owned by a minority person, a woman, or even
just a small company.
But because those old government guidelines for "set-aside"
contracts have been struck down in recent court decisions, it’s getting
to be a whole new ball game. The government is replacing ethnic, sexual,
and racial qualifiers with economic standards. Now gross sales or
net worth will be determining factor for certifying an individual
or a business as disadvantaged.
And even though progress has been made, construction is still very
much an "old boy network" industry. "If there aren’t some
incentives to open this up to new players then you get a closed construction
society," says Bill Brooks, director of New Jersey operations
for the Regional Alliance for Small Contractors. His clients range
from the small and minority contracting organizations, to government
agencies, to mega construction firms.
"The Regional Alliance has a wide spectrum of clients, many minority
and women-owned firms whom we try to assist in a very difficult marketplace,"
says Brooks. "I also have government clients who are struggling
to create a level playing field for all businesses, including minority-owned,
and trying to hold onto these programs when they see the challenges."
Yes, these programs are still needed. "If I thought that all the
discrimination had come to an end, I suppose I could be 100 percent
in favor of neutrality in these programs. That simply is not the case,"
says Brooks, who is an African-American.
Brooks focuses on performance rather than a simple formula based on
quotas. "We assist all small businesses to meet the performance
standards of the industry," says Brooks. "We have long focused
in this area because we never had faith that the preferential programs
would remain intact for long."
A native of Chester, Pennsylvania, Brooks served in the intelligence
branch of the Air Force in the early ’60s, earned a business degree
from Temple, studied dispute resolution at Harvard, worked for INA,
Cigna, Penn Mutual, and Prudential, and joined the Regional Alliance
for Small Contractors in 1994. It is headquartered at the World Trade
Center and has an office at 150 West State Street in Trenton (609-392-5600).
The alliance offers some 32 training programs, each running 16 to
18 hours, around the state, and one starts at Mercer College’s James
Kerney Campus in Trenton on Wednesday, April 21, at 7 p.m. Tuition
for all eight two-hour workshops is $50, $25 for businesses located
in Mercer County. It is underwritten by the New Jersey Economic Development
Authority and the county. Anyone may register but do it soon because
the class is limited to 25 people; call 609-392-5600.
Topics range from marketing, contract law, and estimated,
to insurance and bonding, project management, and accounting principles.
Instructors include Patrick Guidotti of the state commerce department,
Nancy Myers of Qualified Women and Minorities in Construction,
Jack Sheak, an attorney with Sheak and Korzun, Greg Ryan
of Turner Construction, Lisa Post of Edward J. Post Company
Inc., Dan Anderson of Don Todd and Associates, Dennis Cornick
of Gilbane, Adam Mukeri of the New Jersey Economic Development
Authority, and Sy Henderson of Summit Bank.
The alliance also offers the Loaned Executive Assistance Program (LEAP),
which has 25 experienced professionals to troubleshoot specific management
or operational problems, helping contractors qualify for work and
providing preconstruction and on-site assistance to successful bidders.
A loan assistance program, Financing Small Contractors, helps prepare
applications for loans and bonds. "Through our participating banks,
sureties, and public lenders, contractors can receive working capital
at market rates," says Brooks. "Many loans have been approved,
and the aggregate value of bonds issued to small contractors exceeds
Another resource: the Opportunities Center, which distributes news
of public and private construction contracts through RASCAL, a database
of information on small contractors provided to project owners, construction
managers, and developers.
Some contractors are gifted in trades and skills but don’t have a
background in running a business, and others have a lot of technical
knowledge but little actual construction experience. "Those two
client groups perform differently in the industry and require different
support services to survive," says Brooks, who offers these tips:
are built over time and must be sustained.
of others but you should be willing to give, because others will expect
that of you. Prime constructors delight when subcontractors who find
jobs too large to bid on can direct them to new work," says Brooks.
"There is rough and tumble in this industry, but if your integrity
is damaged, you will find it a very tough row to hoe. Banks and surety
firms look closely at reputation."
Brooks quotes data provided by Emmons Drive-based Construction Financial
Management Association: To do well firms need to be on a growth curve.
by the federal transportation department in January. In response to
a 1995 Supreme Court decision, the department’s affirmative action
program will be more narrowly tailored and are likely to be based
on monetary and geographic categories.
Potentially, individuals exceeding $750,000 in personal net worth
will be excluded from the set-aside program. Businesses can qualify
for the program if they meet certain size standards: Some white males
who are socially and economically disadvantaged will also be able
to participate as SDBs, particularly those from extremely rural areas
such as Appalachia.
The contractors are getting a break too. Under the new rules, no contractor
is penalized for failing to make a particular numerical target of
SDB subcontractors. The low bidder can get the contract if it can
be determined that he or she has tried to make a good faith effort
to bring on a disadvantaged business enterprise.
Brooks points out that many private firms have strong internal policies
on affirmative action that will survive any changes the government
"Whether you represent a construction company, a union, or a subcontractor,
if you adopt a policy position that artificially constrains competition,
you are asking for special privilege," says Brooks. "The prevailing
interest of government is to assure that there is free and open competition
in commerce and society."
— Barbara Fox
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