What Duke’s endowment loss means

Ed Rickards (T ’63 and Law ’66) is an attorney and former Chronicle editor.

Just days ago, at the end of its December meeting, Duke’s Board of Trustees failed refused to release actual, current numbers about its investments.

Last evening Duke reversed course (I wonder why). President Richard H. Brodhead acknowledged a 19 percent loss in the value of the endowment, a total of $1.2 billion gone poof.

He issued the statement himself. Trustee chair Bob "Wachovia" Steel was no where to be found.

Brodhead could have included in his statement – an email address to faculty and staff - the words "lost so far."

Like Harvard, whose president recently explained its giant holdings in hedge funds and private equity still have to be re-evaluated, Duke has focused its holdings in these turbulent areas.

In fact, Duke has focused more in these areas than Harvard. As of July 1 Duke had 42 percent of its money in hedge fund; and 23 percent of its money in private equity.

There is no ready market for these: the Wall Street term is how these investments are "marked" -- that is -- how you estimate their value. These estimates can vary widely.

Harvard’s President Drew G. Faust correctly warned that its numbers will be adjusted downward when all the dust settles; President Brodhead did not

In November, Barrons, the weekly magazine of the Wall Street Journal, estimated that such holdings in university endowments have already lost half their value. If that's true for Duke, its reported loss of $1.2 billion will prove to be $2.5 billion.

In his only formal statement before tonight, Brodhead reassured us that Duke was "stable and secure" with a "strong financial foundation." A sunny island in the tempest. That was misleading to say the least.

Let's look at what $1.2 billion -- the acknowledged loss in the endowment -- means so far to Duke:

-- In recent years, Duke has gotten contributions of about $125 million per year for new endowment. That means a whole decade of giving is wiped out.

-- It took Brodhead one "quiet" year and three years in public to eke out $300 million for the Financial Aid Initiative. This wipes out this gain -- and four others just like it.

-- When the full impact of the loss is felt, Duke will have $60 million less to spend in its annual budget. The highly touted increase in this year's financial aid budget amounted to only $11 million.

In the past 24 hours, there was one other set of numbers with ominous implications for Duke. Sixty-six percent of the young people who were given early admission to the class of 2013 said they needed financial aid.

Statistics for the class of 2012 were not released a year ago, but in the two years before that, only half as many -- around 32 percent -- said they’d need financial aid.

It's clear Duke's budget will not only have less money to spread around, but its highest priority -- need based undergraduate aid -- will be crying for more.

Tonight's statement by Brodhead touched only Duke's endowment. Duke Management Company invests all of the university's funds, huge amounts of money.

-- There will be similar losses in the two Duke Pension plans; perhaps driving their value to the point where Duke will have to increase contributions from its annual budget to keep them fully funded.

-- There will be similar losses in the cash account. For example, money that parents paid last summer for tuition for the fall semester just ending was in the same pool -- where at least 19 percent has been lost.

There is much more that needs to be said in the interests of informing the Duke community.

But for now, I’ll just end with this: What I missed most in President Brodead’s statement was any sense that the financial plight of Duke is a responsibility and burden for all of its. There was no invitation for ideas to save money, no suggestion there be a dialogue to adjust priorities.

Brodhead's statement is consistent with his way of operating -- to deny information to students, faculty and alumni so that their effective participation in university governance is emasculated.

The Churchill Series - Dec. 17, 2008

(One of a series of weekday posts about the life of Winston S. Churchill.)

I first published this post three years ago. It still makes me smile, as I hope it will you.

For most of World War II, the noted Oxford historian Isaiah Berlin served in the Foreign Office; assigned to the British Embassy in Washington, where he wrote dispatches assessing current American political and social matters.

Churchill became a regular and admiring reader of Berlin's dispatches. He told aides if ever Berlin was in England, he wanted to meet him.

The Prime Minister's wish was swiftly passed on to Foreign Office staffers and others.

Not long afterwards, word came back to Churchill's aides that Berlin was indeed in England. They arranged an invitation for him to join a luncheon the PM would be hosting at 10 Downing Street. On the seating plan, Berlin was placed close to Churchill.

Now, readers, our story comes to one of those "bumps in the road."

Not for the first time, eager government staffers here, there and in other departments didn't get it all quite right. Which is why a surprised and honored Irving Berlin received a luncheon invitation just days after arriving in England with a USO show.

Author Stefan Kanfer tells about the luncheon:

Berlin showed up at Number 10. The PM addressed him as Professor and grilled him about the progress of the war.

Bewildered, the composer answered in monosyllables, until a frustrated Churchill gave up and turned to the guest on his left.

Later, (Churchill) commented: “Berlin’s like most bureaucrats. Wonderful on paper, but disappointing when you meet them face to face.”

Perhaps the aides later comforted each other with something like, "Simple enough mistake. Both I. Berlin, you know."
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Stefan Kanfer, "The Americanization of Irving Berlin." City Journal (Spring, 2002)

Brodhead to faculty & staff: “Duke’s endowment … has declined”

From The Chronicle tonight - - -

Duke's endowment has lost 19 percent of its value as of early December, despite assurances from University officials in recent weeks that Duke's financial situation is secure.

President Richard Brodhead attributed the drop to the ongoing recession and financial turmoil in an e-mail sent to faculty and staff early Wednesday evening and obtained by The Chronicle.

According to the Web site of the Duke University Management Company, which manages Duke's endowment, the value of the endowment June 30 was $6.1 billion. That would put the current value at approximately $4.9 billion.

"Duke is not immune from the powerful forces that are buffeting the economy. Duke's endowment, like virtually every other investment fund, has declined over the past few months," Brodhead wrote in the e-mail. "In addition, research universities such as Duke are also uncertain about the future of other funding sources, including federal research support."

Endowment spending typically comprises 15 percent of Duke's annual budget. Spending policies call for a payout of 5.5 percent of the endowment's three-year average value, and these policies are intentionally structured to compensate for difficult economic times.

In light of the endowment losses, senior administrators will begin drafting plans and recommendations to adjust to lower revenues, Brodhead wrote in the e-mail.

The rest of The Chronicle story’s here.

Comments:

The full text of President Brodhead’s email follows below.

On a first read, it looks to be long on puffery and very short on critical information concerning Duke’s endowment, finances and decisions influenced by them.

Brodhead tells us, for example, that “a Duke student won the Rhodes Scholarship, and two others were selected as Marshall Scholars.”

Those students have brought honor to Duke and earned our admiration and cheers for their outstanding achievements.

But President Brodhead knows their achievements were announced weeks ago.

Tonight, faculty, staff and the broader Duke community, especially students and parents, wanted and needed to hear things much more substantial and specific than that Duke’s “[i]dentifying cost reductions, savings and efficiencies in all school and administrative budgets.”

Or that Duke’s seeking “resources for our most strategic priorities while continuing to protect our core commitments.”

Doesn’t Duke do those sorts of things all the time; not just now?

On Dec. 1 a Bloomberg report mentioned Duke:

”Crippled financial firms such as American International Group Inc. and bankrupt Lehman Brothers Holdings Inc. are joining strapped endowments such as the ones at Columbia University in New York and Duke University in Durham, North Carolina, in trying to sell private-equity stakes.”

President Brodhead did nothing tonight to explain why Bloomberg would call Duke’s endowment “strapped” and lump the university with “[c]rippled financial firms.”

Perhaps he will tomorrow. But I'm not betting on it.

Hat tips to those who gave heads-ups regarding Brodhead’s latest email and to the commenter who sent the Blomberg link.

Now, what are your reactions to Brodhead’s email tonight?

________________________________________________

Text of President Brodhead's Message

Dear Faculty and Staff Colleagues,

As the year comes to an end, I want to update you on the impact of the global economic situation on Duke.

By many measures, Duke continues to enjoy great strength and stability. With help from generous supporters, we crossed the goal line of our $300 million Financial Aid Initiative, which will help ensure that a Duke education will remain affordable for all.

Last month, a Duke student won the Rhodes Scholarship, and two others were selected as Marshall Scholars. And student interest in Duke has never been higher, with a 23 percent increase in early decision applications this fall.

At the same time, Duke is not immune from the powerful forces that are buffeting the economy. Duke’s endowment, like virtually every other investment fund, has declined over the past few months. In addition, research universities such as Duke are also uncertain about the future of other funding sources, including federal research support.

As of early December, the market value of the endowment was approximately 19 percent lower than it was on July 1. This is a serious concern, but the news could be worse. First, Duke’s investments have been skillfully managed. Over the past 10 years, only one university endowment has outperformed Duke’s, and the decline we have experienced this fall has not been as sharp as many of our peers have reported. Second, it is important to remember that spending from the endowment has historically made up about 15 percent of the University’s annual operating budget – again, a lower proportion than many of our peer institutions. And finally, the impact of this decline on our activities will be tempered by our spending policy, which calls for paying out 5.5 percent of the average value of the endowment over a three-year period.

This policy has kept us from overspending in years when the endowment earned large returns, and lessens our exposure to a sharp downturn now. (For more information about Duke’s endowment and investments, click here.)

Duke is fortunate to have responsible, prudent and creative leadership of both our investments and operations, which has shielded us from some of the worst aspects of this crisis and makes it possible to continue our forward momentum. We need to draw on those same virtues now to face the new facts around us.

While we will have a clearer picture of the future as the winter progresses, I have asked the university’s senior administrators and deans to plan for various scenarios as we develop the budget for the next fiscal year. The specifics will vary by school and program, but our overarching approach includes:

-- Identifying cost reductions, savings and efficiencies in all school and administrative budgets;

-- Recognizing that the current downturn may be of sustained duration and that we must look for both one-time and more durable interventions;

-- Reviewing and potentially delaying proposed capital projects until funding sources are clearly defined; and

-- Seeking resources for our most strategic priorities while continuing to protect our core commitments, including faculty excellence and student financial aid.

We need to regard this as a time of challenge, not of retreat. All of us have been through a mix of better times and leaner times. When leaner days come, a family cuts back on less essential expenses and concentrates on what matters most. That is what Duke must do now, and I ask for your cooperation as we do it. If we do it right, I’m confident that we can make this a time of opportunity, a chance to further strengthen this great school.

Duke’s strong sense of community is its most valuable asset, and this source of wealth continues intact. With deepest thanks for all that you do for Duke and the community, I send my best wishes for the holiday season,

Richard H. Brodhead

Duke’s endowment, budget reporting trails Harvard’s & Yale’s

I’m a Duke alum so I like to see Duke excel.

But when it comes to timely, detailed reporting of the financial downturn’s effects on endowments and budgeting, Duke’s reporting lags that of Harvard's and Yale's.

Just 2 days ago Yale President Richard C. Levin released a lengthy Budget Letter

Following release of his letter, Levin participated in a Q&A with the Yale Daily News. (see here)

On Dec. 2 Harvard President Drew G. Galpin released a Financial Update, one of a number of recent letters she's released and interviews she's granted in which she's sought to keep the Harvard community informed as to the current value of Harvard's endowment and specific budgeting plans for the university.

It was back on Oct. 23 that Duke President Richard H. Brodhead released his most recent letter on "Duke and the economy." On Dec. 8 Brodhead and BOT chair Robert Steel granted an interview to The Chronicle. Judging by what The Chronicle published, their goal was to simply reassure the Duke community that everything's being well-managed. (Chronicle story here)

Brodhead's letter contains a good deal of back-patting and failed to inform regarding the then current value of Duke's endowment.

Here's a representative excerpt from Brodhead's letter :

Duke’s endowment has been one of the most successful among all U.S. universities. For the fiscal year ending June 30, 2008, the endowment recorded a 6.2 percent increase in market value – this at a time when many comparable funds actually declined in value.

Indeed, though the past few months’ results have not been positive, over the past ten years the Duke University endowment has grown at an average annual rate of 15.6 percent, which places it among the top performers of all university endowments.

President Brodhead and the trustees owe the Duke community a current, detailed explanation of the value of the endowment and of current budget planning, particularly as regards student aid, salary and benefits, and major projects currently in the planning stage.

Hat tips: a number of you who are sending on links and info

The Churchill Series - Dec. 16, 2008

(One of a series of weekday posts about the life of Winston S. Churchill.)

During late January and early February, 1932, Churchill was on a speaking tour in America. He warned of "communism and the disintegrating forces of a disunited Europe."

He argued that Britain and America should ally to keep order in the world. "Why should we not frankly recognize that there must be some source of doctrine and authority to rescue nations from confusion?"

Quite apart from the political controversy his remarks engendered, it took physical courage for Churchill to stand before his audiences. He knew there were a number of plots by Asian Indian extremists to assassinate him.

Host cities went to great lengths to protect his life . Detroit, for example, assigned a special detail of 12 detectives to accompany him while he was in the city. Another dozen plainclothes officers were in the audience when he spoke while many uniformed police officers watched the lecture hall.

Churchill was stoned twice during the tour; and in one case an armored car was put at his disposal. But he completed the tour, having refused to cancel any engagement in the face of threats.
________________________________________________________________________
Martin Gilbert, Churchill and America. (pgs. 136-139)

Harvard, Duke & Yale report on their endowments

First, excerpts from Harvard's, Duke's and Yale’s student newspapers' most recent stories reporting the status of their universities’ endowments and their boards' and presidents’ plans for dealing with drops in endowments caused by the current financial crisis. After that, my comments follow below the star line.

On Dec. 2, The Crimson reported: “Harvard Endowment Fell 22 Percent in Four Months”

Harvard’s endowment—the largest in higher education—fell 22 percent in four months from its June 30 value of $36.9 billion, marking the endowment’s largest decline in modern history, University officials announced yesterday.

The precipitous drop will require Harvard’s faculties to take a “hard look at hiring, staffing levels, and compensation,” wrote University President Drew G. Faust and Executive Vice President Edward C. Forst ’82 in a letter informing the deans of Harvard’s losses.

The decline, which amounts to more than $8 billion, is larger than the endowments of all but four other universities—Yale, Princeton, Stanford, and MIT.

In the same period, the S&P 500 fell 24.6 percent. The index has fallen an additional 12.4 percent since then.

The estimate of 22 percent may not fully capture the actual losses from this period, Forst said in an interview yesterday, as some of Harvard’s money is invested with external managers that have yet to report their latest figures. Faust and Forst wrote in yesterday’s letter that the University should plan for a 30 percent drop-off in endowment value for the year ending June 30, 2009.

The news comes during the worst economic turmoil in decades. University endowments across the country have begun announcing unprecedented losses and instituting hiring or construction freezes in an effort to save funds.

The Faculty of Arts and Sciences placed a freeze on staff hiring last week, following a cautionary letter from Faust a month earlier that warned of cutbacks ahead. ….

____________________________

On Dec. 8 The Chronicle reported: “BOT reviews Duke's fiscal structures”

As other universities announce cuts for budgets impacted by the economic crisis, Duke's Board of Trustees spent the weekend culling information about-rather than passing resolutions on-the underlying structures that have kept its finances relatively secure.

"There is a fact that we are in a very challenging financial time for everyone," Chair Robert Steel, Trinity '73, said in an interview with The Chronicle Saturday.

[Steel continued:] "The good news is that Duke has been very prudently and conservatively managed from a financial perspective for quite awhile. No. 2, we also have very, very good day-to-day controls. And the combination of having been managed prudently and having good controls puts us in a position of having to work through the current challenges as well as one can." …

President Richard Brodhead and Steel said there has been no discussion of tuition changes; last March, the Trustees approved a tuition increase of 5 percent. Actual budgeting across the University will come in January.

The agenda for this meeting was more than a year in the making, meant to deeply analyze financial modes for the University, health system, DUMAC and strategic planning and fundraising.

"As it turned out, that was a really good thing to be doing at this meeting," Brodhead said. "We just want to make sure that we match our resources with our mission and aspiration in the right way going forward."

Brodhead and Steel did not disclose specific numbers, noting that Duke has had to be adaptive but relies less on its nearly $8 billion endowment than some peers.

DUMAC's most recent quarterly report for fiscal year 2008 showed the endowment had increased by 6.2 percent-still a much more conservative gain than typical-but Executive Vice President Tallman Trask told The Chronicle in October that he expected much of that had been lost in the ensuing economic crisis. Other streams of revenue for the University include tuition, gifts and grants.

"In some ways, it's a good thing to be the richest of the poor kids, or the poorest of the rich kids," Michael Schoenfeld, vice president for government affairs and public relations, said in an interview Thursday.

__________________________________________________

Today, Dec. 16, The Yale Daily News reported: ENDOWMENT FALLS 25 PERCENT

Its story, updated at 7:12 p.m. eastern begins - - -

Yale’s endowment lost roughly a quarter of its value since the start of summer, and several capital projects — possibly including the two new residential colleges — will be delayed as a result, University President Richard Levin announced Tuesday.

Yale will not implement a formal hiring freeze or reduce financial aid even as its endowment has plunged in value to approximately $17 billion today from $22.9 billion on June 30, Levin said. But in a letter to the community and an interview with the News, the president called for budget cuts and postponements of many high-profile construction projects, including the new School of Management campus.

“In recent years, we have been in the fortunate position of being able to pursue many new ideas and exciting initiatives,” Levin said in the letter. “Now we will have to make harder choices.”

From the start of the fiscal year to Oct. 31, Yale’s marketable securities lost 13.4 percent of their value. But Levin noted in the letter that those losses grew in November and December, adding that it is difficult to know exactly how much the University has lost in investments that “are not traded on a daily basis and are difficult to value with precision.”

Given all this, Levin estimated the endowment’s value at $17 billion, representing a 25 percent decline since June 30.

Harvard University announced earlier this month that its marketable securities had fallen in value by around 22 percent; its endowment likely fell far more, however, because that figure did not include updated valuations in Harvard’s real estate and private equity investments.

“We are less hard hit than some other institutions,” Levin told the News Tuesday afternoon. “That’s because of the excellent management of our endowment by David Swensen.”

Even still, Levin wrote that he anticipates flat endowment returns in the 2009-’10 year and positive growth thereafter. He said the losses would create a budget shortfall that will stand at $100 million in 2009-’10 and is projected to rise to over $300 million in 2013-’14.

For that reason, Levin announced five policy changes — effective immediately — in response to Yale’s dramatic losses. [The five policy changes are identified in Levin’s letter linked to above. – JinC]

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Comments:

The three stories' titles above link to their entire stories.

Harvard and Yale alums received specific, current accountings of their universities endowments' values.

Presidents Faust's and Levin's letters to their communities and comments to their respective universities’ student newspapers were impressive for the detail the presidents shared regarding how their universities will respond to the drops in their endowments.

Duke alums were told the “good news is that Duke has been very prudently and conservatively managed from a financial perspective for quite awhile. No. 2, we also have very, very good day-to-day controls.”

But they were given no accounting of Duke endowment’s current worth.

Duke Chronicle’s reference to Vice President Trask’s October statement regarding the worth of Duke’s endowment has been so overtaken by further market declines as to be worse than worthless; it’s downright misleading.

More tomorrow.

Meanwhile, if you’ve not already done so, I invite you to take this Quick Duke Quiz.

McClatchy Baghdad journos approve shoe throwing

McClatchy journalists in Baghdad post at Inside Iraq. Here are excerpts from the Dec. 15 post (Readers note: The “word on the street is McClatchy may “edit” what its journalist wrote.) - - -

Like any event happens in Iraq, the incident of throwing shoes at the President Bush became the main topic of all the nation. When I arrived the office, the useless discussion was already started.

Some of our guys started making jokes about the incident. I

Some of the guys were happy and they were talking about the bravery of the journalist who threw his shoes at the American president.

When I tried to explain my opinion, I was trying to tell the guys that I don't agree with the way the journalist behaved, but I was attacked by them.

One of them said "come on Laith, Bush destroyed Iraq". Another said "he deserves more" while a third one said "he is an occupier." I tried to tell to tell the guys that this is an inslut for Maliki.

As a journalist who believes that his job is to find truth and defend it, I can't blame the journalist for hating the U.S. president because I agree with all the Iraqis (not to politicians of course) that Bush's policy destroyed our country. But we can't just blame the Americans for everything. …

_____________________________________

Again, the entire post’s here. but when you get to it it may have been “edited.”

That McClatchy’s Baghdad news bureau is filled with Bush-haters is no surprise.

It’s a safe guess that in McClatchy newsrooms and other news orgs’ newsrooms here in America a lot of journos were happy to see the shoes thrown at President Bush.

I mean, if you’re a leftist, you’re just not going to like Bush.

George Soros and Will Ayers are the kind of guys who get high approval ratings in newsrooms.

McClatchy, of course, insists its journalist are unbiased news gatherers. (Wink!)

Hat tip: McClatchy Watch

Durham’s lax frame contributes to probation problems

In today’s Raleigh News & Observer - - -

City Councilman Eugene Brown on Monday night called on the state of North Carolina to get "the will and the wallet" to fix its failure-ridden criminal probation system.

The current system, he said, is "putting our own citizens in harm's way."

During the comment period at the council's regular meeting, Brown praised The News & Observer's recent series on the system, "Losing Track," which revealed that, since 2000, probationers have committed almost 600 homicides.

"Its conclusions were a shock to many, but less so to those in Durham," Brown said. "We have been working on the front line of public safety here in the Bull City for many years, and for many years ... fought to get the governor and the General Assembly ... to pay attention."

Among North Carolina's 100 counties, Wake and Durham have the worst track records for keeping tabs on probationers, The N&O investigation found.

The well-publicized killings of a Duke graduate student and the University of North Carolina student-body president last spring put a spotlight on the probation system. The people accused of the killings in both cases were on probation at the time. …

The entire N&O story’s here.

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Comments:

The N&O’s story fails to point out that for most of the last three years the Durham DA’s office, Durham police, and city officials have wasted huge amounts of time and money that should have gone to improving Durham’s probation system.

Instead of keeping track of probationers and promptly arresting probation violators, we’ve had some prosecutors, police and public officials who instead libeled and slandered members of Duke 2006 Men’s lacrosse team; then attempted to frame three team members for gang rape and other felonies; and then, lest the truth come out, began working a cover-up that continues to this day.

The victims of the Duke/Durham hoax, framing attempt and cover-up have filed massive suits against Durham city and police.

Durham's spending millions to try to squash the suits.

Citizens don’t really know who all the people are who worked the hoax, framing attempt and are working the cover-up. We don’t know why they did those things and have only a partial understanding of how they did them

Ideally, Durham’s City Council would act to settle the suits as soon as possible at the least cost to the taxpayers and with full disclosure of all that happened.

I’m sure that won’t happen.

But can’t the Council at least stop blaming the state for all the probation system problems when it’s failed to lead effectively in fighting crime problems in Durham?

The following is from a Sept. 2006 post: Johnsville’s Questions. Text in plain is from the Johnsville News' post; the text from the ABC report is in italics.

Durham has real problems - gang problems. How are Mike Nifong and the Durham Police Department able to justify in their minds expending the time and effort on prosecuting a hoax against three innocent lacrosse players, when gang violence is erupting in the Durham courthouse? ….

ABC reported:

The first-degree murder trial of 17-year old Calvin Nicholson is on hold. He is accused of gunning down an 18-year-old Hillside High School student on Bacon Street in 2005. Police say it was gang-related.

Tuesday's courthouse melee erupted on the fifth-floor, after key witnesses backed out of the Nicholson trial. They said they were being threatened.

"An incident occurred when information came up that caused people from one courtroom and gang to come to the other courtroom, where members of a rival gang were involved," said Durham District Attorney Mike Nifong.

Durham police are investigating the threats, which are a major challenge in prosecuting gang-related trials.

"You can't really conduct trials in an atmosphere, where there is intimidation of witnesses, or where there is fear that something might happen," Nifong said. "The District Attorney's Office is not equipped to protect witnesses in any situation. There aren't any local witness protection programs, or anything of that nature. The fact is people are to some extent on their own, in terms of their protection." (bold JN)

People are on their own in terms of their protection? So that’s what DA Nifong has given us. Well, at least it’s more truthful than most of what he’s been saying.

Paving Caroline Kennedy's way to the Senate

Caroline Kennedy’s way to the Senate is being paved by a skillful, coordinated and expensive PR campaign long on nostalgia and images.

Issues? Policy details?

She’ll avoid them except to say things like: “America has to be ready meet the health care needs of all our citizens. If I’m fortunate enough to be appointed, the first thing I’ll do is consult with Gov. Paterson and Sen. Clinton about how I can work with out new president to make health care affordable for all. That was my father’s dream.”

We see a good example of the PR paving in a New York magazine article today following Kennedy’s announcement yesterday she’s interested in filling Hillary Clinton’s Senate seat.

The article leads:

The Cinderella Kennedy

Suddenly, it seems possible that David Paterson will pass the torch to a new generation of Kennedys. But is this really a good idea?

Is “this really a good idea?”

New York and writer Chris Smith surely know they’re not fooling many people with that “question.”

But keeping up appearances is important, something Gov. Blagovock never learned. The Kennedy’s and their media flacks have known that for more than 50 years.

When the Kennedy’s and their flacks are at work, PR isn’t really PR. We’re all magically transported to Camelot where the brave and brainy are creating a better world.

As to whether it’s a good idea for Kennedy to be appointed to the Senate, I think the question has already been decided in her favor.

What we’re seeing now if the playing out of the PR campaign to paint Caroline Kennedy as highly qualified to serve and a popular choice for Gov. Paterson to make.

Chris Smith and New York help set that up with this closer - - -

In one respect, Kennedy’s flirtation with the Senate isn’t totally out of character: Relatives say she’s always been politically astute and competitive, just quietly, and that she greatly enjoyed her campaign trips for Barack Obama.

It’s also true that Caroline’s curiosity has been piqued by the decline of her Uncle Teddy, but not in the way conventional wisdom has rendered it. Yes, the man who became the closest thing to a father figure after JFK’s death is nearing the end of his days in office, but Caroline isn’t interested in a Senate seat because she thinks it is a family heirloom.

She genuinely, cornily, wants to advance the ideas the family cares about, and she knows better than most that only so much can be accomplished through symbolism. An actual seat at the bargaining table is still more valuable. This is also the way in which her choice makes the most sense for New York, and elevates her candidacy beyond her thin résumé and mere sentiment:

Kennedy’s Democratic patrician values and her power-elite connections are not negligible assets. And of course, there are all the sword-in-the-stone connotations, the political magic (fantasy?) that a new Kennedy in the Senate conjures.

But the plot has some weaknesses. Perhaps it’s still possible to be a different kind of senator, in the Paul Simon–Pat Moynihan mold: a legislator-intellectual, above and in the fray at the same time, who leaves office with his good name intact.

Caroline Kennedy’s desire to deploy her brains and her celebrity on a grander stage, primarily in service of public education, is admirable. But even if her motives are pure, and even if she’s able to navigate the swamp of modern politics, there’d be something sad about seeing her subjected to all the grubby gossiping and money-hustling that the job inevitably entails. We’d be gaining a senator, possibly even a good one. But we’d be losing an icon.

Smith’s entire article’s here.

I thought the last two grafs were outstanding shilling: Smith works in a reference to one of New York’s great senators, Daniel Patrick Moynihan; suggests Kennedy might be another Moynihan: hails her as an idealist above the money-hustlers (note he says nothing about the power-hustlers); worries the real world may sully her; expresses admiration for her willingness to lend her brains and celebrity to the greater good; and frets we could lose “an icon” in the process.

Oh, dear.

If I thought Smith didn’t realize he was shilling, I’d say, "Someone get the man a chair and a glass of water."

Meanwhile, the Kennedy's pave on.

Hat tip: Realclearpolitics.com

The Churchill Series - Dec. 15, 2008

(One of a series of weekday posts about the life of Winston S. Churchill.)

Let's start with an amusing exchange I'll bet you know.

George Bernard Shaw telegrams Churchill just before the opening of his latest play: "Have reserved two tickets for first night. Come and bring a friend if you have one."

Churchill wires back: "Impossible to come to first night. Will come to second night, if you have one."

Amusing, yes, but I'm not sure it ever really happened.

A number of reliable sources don't mention it, while most unreliable sources do.

But I've confidence in what follows.

The cartoonist David Low once observered:

"Churchill is one of the few men I have met who... give me the impression of genius. Shaw is another. It is amusing to know that each thinks the other is much overrated!"

By October, 1950 Shaw and Churchill would no doubt have agreed that the public was low rating them both. Shaw was then often ridiculed by critics while Churchill was seeking to regain enough public confidence to assure him a return to the Prime Minister's office.

In those circumstances, Churchill learned that Shaw'd been hospitalized. He sent him flowers and a warm note.

Shaw sent back a copy of his newest book, Sixteen Half Sketches, along with his own note:

"You need only read (a bit of it) as you and I are officially classed as ignoramuses."

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For the Low quote see The Churchill Centre, Contemporaries. (Here and scroll down)

For the exchange of notes ending with "ignoramuses" see Randolph S. Churchill, Winston S. Churhcill: Young Stateman. (p. 1)

Arabs hail shoe attack; MSM coos. So what’s new?

The AP reports - - -

Iraqis and other Arabs erupted in glee Monday at the shoe attack on George W. Bush. Far from a joke, many in the Mideast saw the act by an Iraqi journalist as heroic, expressing the deep, personal contempt many feel for the American leader they blame for years of bloodshed, chaos and the suffering of civilians. ….
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Comments:

Of course “many in the Mideast saw the act … as heroic,” just as many there saw the 9/11 attacks as “heroic.”

I’d bet many millions of Arabs and Muslims in the Middle East and elsewhere who cheered the 9/11 attacks also cheered the shoe throwing. What about you?

Do you think the AP will do a follow-up story about that?

I don’t.

The AP and other left-leaning news organizations (yes, that’s most of them) never tire of working references to Abu Ghraib into their stories.

But when was the last time you saw an AP reference to Arabs and Muslims dancing in the streets in response to the 9/11 atrocities?

The entire AP story's here.

Coleman-Franken update @ 1 PM ET on Dec.15

A Google search with the entry “Coleman Franken” turned up the following UPI report as “the latest news” @ 1 PM ET today - - -

Both candidates in Minnesota's protracted U.S. Senate race have pledged to reduce the number of ballot challenges headed to the board overseeing the results.

Incumbent Republican Norm Coleman said he would have no more than 1,000 challenges and Democrat Al Franken promised to pare his total 500, the St. Paul Pioneer Press reported Monday. The campaigns together lodged more than 6,000 challenges as part of a statewide hand-count undertaken after the Nov. 4 election.

The state canvassing board is scheduled to convene Tuesday and has given itself until Friday to decide all challenges.

The board criticized both campaigns for the number of challenges they made. Franken spokesman Andy Barr said in a release Sunday that the pledge to reduce the number of challenges shows "we are taking to heart the good advice of the canvassing board and the best interests of Minnesotans who want to see this process move forward efficiently."

The Coleman campaign complained of a lack of uniform standards in the recount process.

"We continue to have concerns," Coleman campaign attorney Fritz Knaak said.

"Nonetheless, we are committed to a process that is efficient and reasonable."
The standards for accepting or rejecting ballots are presented in state law, the Pioneer Press said. In addition, Secretary of State Mark Ritchie gave local officials a 3,200-word set of instructions.

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Comments:

Secretary Mark Richie was elected with strong support from ACORN and George Soros.

Scott Johnson at Powerline is concerned political considerations are influencing Richie’s judgement.

Johnson also suspects there’s back-channel communication between the Franken camp and Ritchie’s office. He explains in “Minnesota’s recount goes south.”

Bush meets the troops - YouTube video

The press stories I've read this morning about President Bush's trip to Iraq (AP and AFP) have stressed how unpopular he is and all but praised the Arab journalist who threw shoes at him.

Neither story mentioned how our troops in Iraq received the President, but you can see and hear that for yourselves in this 2 minute YouTube video.

The sound track when Bush is speaking is poor, but the roar that greets him and the visuals throughout are so tremendous they must dishearten many in the press.

Pundit: “Softly, softly oust Mugabe”

Some Western and African leaders have reacted to the horrors in Zimbabwe by condemning that country’s wretched dictator President Robert Mugabe and his henchman. Some of the leaders are now urging military intervention to remove Mugabe.

In today’s Guardian Jonathan Steele argues nothing will come of the condemnations.

As for military intervention, he says it could fail for a variety of reasons and leave Zimbabwe in a worse state than at present.

If you agree with Steele, you’re left with the questions of what to do to get rid of Mugabe and his henchman and how to bring measure of desperately need safety, health care and economic stability to the people of Zimbabwe.

Here’s what Steele recommends - - -

... The power-sharing deal that Mugabe and the opposition leader, Morgan Tsvangirai, struck in September after mediation by [South Africa's Thabo] Mbeki and the Southern African Development Community (SADC) is still the best solution, precisely because it offers a transition through peace.

Mugabe is haggling over the distribution of ministries between his party and Tsvangirai's, refusing to abandon all control of the police. But he has not repudiated the pact. He would rather provoke Tsvangirai into doing so - a trap which the opposition leader must avoid at all costs.

Threatening Mugabe and his army and police commanders with criminal proceedings at The Hague … is only likely to entrench them further. This summer's indictment of Sudan's president has complicated the already difficult search for peace in Darfur.

A similar move would have no better effect in Zimbabwe.

The opposite tactic would be to offer Mugabe and his friends a soft landing. Distasteful though it is, allowing Mugabe a quiet departure and judicial immunity is more likely to persuade him to go than a cascade of threats.

The Southern African Development Community's mediation proposals make no mention of prosecution, so the offer may be interpreted as being on the table by default. It would be better to write it in explicitly.

That is the lesson from the collapse of virtually every dictatorship over the past 30 years. Whether it was the Shah of Iran or Nicaragua's strongman Anastasio Somoza or Ferdinand Marcos of the Philippines or, as recently as this year, Pervez Musharraf in Pakistan, the lever which got these discredited men to relinquish their grip was not the threat of a jail cell, let alone invasion. It was a guarantee of retirement in safety.

Zimbabwe should follow this model. In the case of Mugabe's cronies, offers of jobs in the new coalition government may also help to split them from their current boss. The power-sharing pact provides a mechanism, which is why it is still Zimbabwe's best hope.

Force is the wrong answer.

Steele's entire column's here.


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Folks, I don't know enough about the situation in Zimbabwe and its surrounding region to say much about what Steele proposes except that he lays out his case carefully and seems himself to be informed.

I'd like to hear what others of you think.

Krugman's Car Calumny

That’s what Jonathan Adler titles his post today at NRO.

It follows in full. Then I ask a question below the star line.

On ABC's "This Week" this morning, Paul Krugman repeats the left talking point that Senator Bob Corker led the opposition to the auto bailout because he's the "Senator from Nissan." Nissan has two plants in Tennessee, Krugman noted. Left unsaid is that General Motors — the company leading the push for a bailout — has a plant in Tennessee too. [Also unsaid during the discussion was that, with ten Republicans on-side, Senate Democrats had the votes to push the GM bailout through.] (emphasis added)

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Given that Krugman took $50 thousand from Enron during its glory days for what turned out to be a one-day "consultanship," and didn't disclose he'd done that when he wrote an article recommending Enron, why is he often so quick to question other people’s motives?

Glenn Reynolds notes AP’s Obama change

An AP story today begins:

“President-elect Barack Obama, relatively young and inexperienced, is facing a rapidly growing list of monumental challenges as he prepares to take the reins of a nation in turmoil.”

Instapundit’s Glenn Reynolds comments:

He’s young and inexperienced? Now they tell me. I thought he was fresh and dynamic!

During the recent campaign the story’s reporter, Liz Sidoti, was one of the most “rah-rah” of then Sen. Obama's MSM cheerleaders.

Sidoti’s story today is headlined: "Obama faces heady challenges, and they're growing."

Local media mum as Duke’s endowment drops $1 billion

Last evening I posted Despite Duke endowment's $1B hit, Steel & Brodhead "very, very" positive. It includes a link to yesterday’s Triangle Business Journal story headed:

Duke endowment suffers $1B hit

Doesn’t that sound like a story media in the Duke/Durham area would pick on?

But I could find nothing about Duke’s huge endowment loss in today’s print editions of the Durham Herald Sun or the Raleigh News & Observer.

I also visited the Web sites of WTVD and WRAL. Nothing about the endowment loss at either site.

I read trough the list of news stories at both stations through Dec. 6, the day before Duke’s trustees began their most recent quarterly meetings. No headline suggested a story reporting the $1B loss.

I also found nothing concerning the loss when I searched the H-S and N&O achieves.

If I’ve missed something, please let me know.

The hit Duke’s endowment’s taken is an enormously important story not only for Duke and Durham, but for our entire Triangle region.

Hat tip: Ed in NY who called my attention to the TBJ story.

Sen. Chris Dodd should resign

Graham Crowe in a letter to Johntown, Pa’s Tribune-Democrat explains why - - -

Sen. Christopher Dodd, chairman of the Senate Committee on Banking, Housing and Urban Affairs, suggested on CBS’ “Face the Nation” that Rick Wagoner, the chief executive of GM, “has to move on.”

Where does Dodd get the temerity to make such a proposition in light of his own incompetence and scandal? Dodd is in charge of the committee that could have kept us from entering the current credit crisis. He’s the same man who is in charge of regulating Fannie Mae and Freddie Mac, and is No. 1 on their list of donations.

When Congress approved $25 billion to bail out Fannie Mae and Freddie Mac, Dodd denied rumors these firms were in financial crisis. He called the firms “fundamentally strong,” said they were “in good shape” and to “suggest they are in major trouble is not accurate.”

Dodd also received preferential loans from Countrywide Mortgage Bank, and then said he wasn’t aware that he was getting a “special” deal. How is that possible?

The bottom line is that Dodd received special treatment from a company that he was in charge of regulating and to this day he has refused to release details of those transactions. If Dodd has done no wrong, then why not release the documents and dispel the accusations?

Just when you think you’ve seen the height of hypocrisy, leave it up to a politician to take it to the next level.

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Comments:

Well said, Graham Crowe.

Dodd’s resignation is the best service he can render the American people.

Dems and their MSM flack keep talking about “reassuring markets.”

Dodd’s resignation would be cheered by people who want to operate sound businesses free of government “special interest” interference and by people who want to invest in such business.

And we could all hope Dodd’s resignation would set an example for Reps. Frank and Rangel and others like them.

One of the biggest problems we’re facing trying to work through this mess is many of the same people who helped create it are the ones working on “solutions.”

Hat tip: Instapundit

Pelosi's stimulus' true color

Under the headline - Pelosi sees bigger, greener stimulus - Politico reports - - -

House Speaker Nancy Pelosi (D-Calif.) has increased the size of the economic stimulus package she will support when Congress reconvenes next month, saying it will need to be $500 billion to $600 billion.

That’s up from the $400 billion to $500 billion that House Democrats had been expecting. ...

The rest of the story’s here.

Comments:

“Greener stimulus” package?

The package will be financed by debt.

In truth it’s a “red ink” package that adds to the debt of a government trying to work its way out of a crisis brought on in large part by massive debt.

A more accurate headline for the story - Pelosi seekss more deficit financing to fight debt crisis.

Despite Duke endowment's $1B hit, Steel & Brodhead "very, very" positive

James Gallagher reporting Dec. 12 in Triangle Business Journal - - -

Duke University’s endowment, which funds about 15 percent of the university’s annual operating budget, has lost $1.1 billion since June 30 and now stands at $5 billion.

School officials are tight-lipped about the status of the endowment, but a source familiar with the university’s investment returns says the endowment portfolio is down by about 19 percent from the fiscal year ended June 30, when it stood at $6.1 billion.

Those losses are in line with what other universities have reported to the National Association of College and University Business Officers. Ken Redd, NACUBO’s director of research and policy analysis, says endowments generally have lost 20 percent to 25 percent of their value this year.

Of Duke’s $1.93 billion annual operating budget, about $300 million, or 15 percent, was supplied by endowment returns in 2007-2008.

Tuition payments provided 14 percent of the operating budget, according to Duke’s annual report, with the university’s remaining revenue coming from grants and contracts, donations and other enterprises and investments.

In general, private universities fund between 15 percent and 20 percent of their operations from their endowments. Public universities, by contrast, rely more on state funding than endowments for their operations, says Redd.

Though its losses have been severe, Duke doesn’t feel they will severely crimp its operation. The university averages its endowment funding contributions over three years to smooth out any major ups or downs in investment performance.

Other private universities battling similar losses, including Harvard, Dartmouth and Brown, have cut their budgets or imposed hiring or wage freezes. So far, Duke has not taken such action.

“We’re obviously being very prudent and careful with our expenses,” says Michael Schoenfeld, Duke’s vice president for public affairs. “We’re going to be taking a very close look at our expenses and other expenditures to preserve our focus on students and faculty.”

Duke has been looking to unload about $100 million worth of private equity investments, which sources say is a small portion of the endowment’s private equity investment.

Harvard University, which is facing even greater endowment losses, also has been trying to sell some of its private equity stakes.

The Cambridge, Mass., university is trying to unload about $1.5 billion worth of private equity investments as its endowment has lost more than $8 billion since June 30, when it stood at $36.9 billion.

Harvard President Dawn Gilpin Faust wrote in a letter to deans this month that the endowment had fallen by 22 percent over the past four months and was likely to be down 30 percent before the end of the year.

Harvard’s endowment provides as much as 40 percent of the university’s annual operating budget.

Schoenfeld says Duke will detail its endowment’s performance when it releases its annual financial report after the fiscal year ends in June. Still, NACUBO is preparing a survey of its members to gauge exactly how much impact the market has had on university endowments.

Besides the university endowment, Duke also operates the Duke University Health System endowment, which at last report stood at $1.4 billion.
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Last Monday, four days before publication of Gallagher's TBJ story, Chelsea Allison, editor of The Chronicle, Duke’s student newspaper, reported on Duke’s BOT’s just completed meetings and BOT chair Bob Steel and president Dick Brodhead’s praise of the "very, very good day-to-day controls" they say they've used to manage the University - - -

As other universities announce cuts for budgets impacted by the economic crisis, Duke's Board of Trustees spent the weekend culling information about-rather than passing resolutions on-the underlying structures that have kept its finances relatively secure.

"There is a fact that we are in a very challenging financial time for everyone," Chair Robert Steel, Trinity '73, said in an interview with The Chronicle Saturday.

"The good news is that Duke has been very prudently and conservatively managed from a financial perspective for quite awhile. No. 2, we also have very, very good day-to-day controls. And the combination of having been managed prudently and having good controls puts us in a position of having to work through the current challenges as well as one can."

Although officials have said they anticipate that more students may seek financial aid, this need will be cushioned by the 2005 Financial Aid Initiative, which has reached its overall $300 million goal.

President Richard Brodhead and Steel said there has been no discussion of tuition changes; last March, the Trustees approved a tuition increase of 5 percent. Actual budgeting across the University will come in January.

The agenda for this meeting was more than a year in the making, meant to deeply analyze financial modes for the University, health system, DUMAC and strategic planning and fundraising.

"As it turned out, that was a really good thing to be doing at this meeting," Brodhead said. "We just want to make sure that we match our resources with our mission and aspiration in the right way going forward."

Brodhead and Steel did not disclose specific numbers, noting that Duke has had to be adaptive but relies less on its nearly $8 billion endowment than some peers.

DUMAC's most recent quarterly report for fiscal year 2008 showed the endowment had increased by 6.2 percent-still a much more conservative gain than typical-but Executive Vice President Tallman Trask told The Chronicle in October that he expected much of that had been lost in the ensuing economic crisis.

Other streams of revenue for the University include tuition, gifts and grants.

"In some ways, it's a good thing to be the richest of the poor kids, or the poorest of the rich kids," Michael Schoenfeld, vice president for government affairs and public relations, said in an interview Thursday.

Steel added that University management is not a contest, but a matter of the individual execution of a University's priorities.

Brodhead and Steel noted that current projects may be completed at a different pace or in a different order, depending on how each is funded or on the current economic outlook.
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Folks, just so you’re all sure I’m not making any of this up, Gallagher’s TBJ story’s here and Allison’s TC story’s here.

I’ll be posting again soon on both stories.

Tonight I just want to get the stories to you, and encourage you to pass them on to others.

But I can't help adding this: The last time Steel and Brodhead sounded so positive they were misleading us all about their disgraceful response in Duke University's name to the lies of Crystal Mangum and Mike Nifong.