Lessons from billionaires on the right way to give away money

By macleans.ca - Monday, March 4, 2013 - 0 Comments

“The problem of our age is the proper administration of wealth.” So wrote Andrew Carnegie, the richest man in the world, in 1889. Carnegie’s solution to the problem of his age—what many today would call income inequality—was to give away his millions as wisely as he could.

Carnegie’s spirit of philanthropy is alive and well these days in the Giving Pledge, a commitment among the very wealthy to give away at least half their fortunes before they die. The pledge began as a private agreement between Microsoft founder Bill Gates and legendary investor Warren Buffett; since 2010, they’ve encouraged other U.S. billionaires to act likewise. And in good news for rich and poor alike, their commitment is now spreading around the world.

Last week, it was announced the Giving Pledge was “going global” with the inclusion of new philanthropists, including Richard Branson, founder of Britain’s Virgin Group, Patrice Motsepe of South Africa, India’s Azim Premji and Vladimir Potanin of Russia. There are now 105 pledgers ranging in age from 28 to 97.

Of course, the Giving Pledge has always had a strong Canadian flavour, despite claims it only breached America’s borders last week. Montreal-born Internet entrepreneur Jeff Skoll was one of the first signatories in 2010. Canadian business titans Charles and Edgar Bronfman both joined Buffett and Gates last year. Elon Musk, the South African PayPal founder who attended Queen’s University in Kingston, Ont., also signed in 2012.

Regardless of how one defines global, however, the recent expansion of the Giving Pledge is clearly a great benefit to all. Beyond the obvious advantage of making more money available to worthy causes, it also presents the opportunity to raise the quality of charitable work everywhere.

The average non-billionaire donor typically bases his or her charitable decisions on familiarity with certain causes and/or the emotional sway of pitches over the phone or at the doorstep. But is this really the best way to give?

One of the key motivators behind the Giving Pledge is a desire to harness the rigour and drive that has allowed pledgers to achieve great success in the private sector and apply this to the charitable sector. Such an approach shares much in common with the provocative new book, With Charity for All: Why Charities Are Failing and a Better Way to Give, by former National Public Radio CEO Ken Stern, who claims most emotion-driven charity is either wasted or used in inefficient ways.

Stern argues charities ought to act more like the private sector, putting greater emphasis on head-office oversight and a scrupulous focus on outcomes. Donors should act similarly, demanding provable, long-term results for their dollars. It’s a whole new way of looking at good works. The author suggests, for example, that the popular preoccupation with extremely low administration costs is entirely misplaced. The mark of a truly effective charity is the ability to self-scrutinize and innovate.

Stern offers up an example from the early years of the Bill and Melinda Gates Foundation when it decided, largely based on guesswork, that smaller-sized high schools would improve student outcomes. Grants of $1 billion were handed out to build small schools or restructure existing schools into smaller units. But five years and 1,500 schools later, a comprehensive review revealed that all this money had done very little for student results. Math scores actually suffered.

“From the ashes [of the small-schools scheme], the foundation developed new requirements that all Gates projects and grantees be subject to rigorous and veriﬁable measurement,” Stern writes. “The Gates Foundation now maintains a department whose sole function is to measure and analyze results.” In other words, the Gates Foundation substantially increased the size of its administrative overhead to ensure its efforts were cost-effective and productive.

What sets billionaires of Giving Pledge apart from the rest of us, besides their money, is the ability to ensure the charitable works they support yield high-quality, efficient outcomes. So now, when the Gates Foundation advocates low-cost bed netting to fight malaria in Africa, or new ways to fund health care, there’s plenty of evidence supporting these decisions. This sort of thoroughness is the reason Buffett is giving the bulk of his fortune directly to the Gates Foundation. And as the Giving Pledge gains traction around the world, it seems reasonable to assume a more results-based focus will filter out across the charitable world. We can hope.

Just as investors have long paid close attention to how Buffett invests his money, donors today ought to mimic how he gives it away as well.

Buffett’s firm completes sale of 2 short-line rails to avoid scrutiny of 2010 BNSF acquisition

By The Associated Press - Wednesday, December 26, 2012 at 5:00 PM - 0 Comments

OMAHA, Neb. – Warren Buffett’s company has sold two short-line railroads it recently discovered…

OMAHA, Neb. – Warren Buffett’s company has sold two short-line railroads it recently discovered it owned to satisfy regulators who might have reviewed Berkshire Hathaway’s 2010 acquisition of the Burlington Northern Santa Fe railroad.

Berkshire told the Transportation Department’s Surface Transportation Board earlier this month that it had completed the sale of both short-line railroads ahead of schedule.

If Berkshire had reported owning those railroads when it bought BNSF, the Surface Transportation Board would have had to scrutinize the deal. Berkshire first disclosed owning the railroads to the Surface Transportation Board in September.

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Warren Buffet has prostate cancer

By Erica Alini - Tuesday, April 17, 2012 at 5:50 PM - 0 Comments

Warren Buffett, the billionaire CEO of Berkshire Hathaway and an outspoken advocate of raising…

Warren Buffett, the billionaire CEO of Berkshire Hathaway and an outspoken advocate of raising taxes on America’s wealthy, revealed in a letter to shareholders on Tuesday that he has been diagnosed with early-stage prostate cancer. Here’s what he wrote:

“To the Shareholders of Berkshire Hathaway:

This is to let you know that I have been diagnosed with stage I prostate cancer. The good news is that I’ve been told by my doctors that my condition is not remotely life- threatening or even debilitating in any meaningful way. I received my diagnosis last Wednesday. I then had a CAT scan and a bone scan on Thursday, followed by an MRI today. These tests showed no incidence of cancer elsewhere in my body.

My doctors and I have decided on a two-month treatment of daily radiation to begin in mid-July. This regimen will restrict my travel during that period, but will not otherwise change my daily routine.

I feel great – as if I were in my normal excellent health – and my energy level is 100 percent. I discovered the cancer because my PSA level (an indicator my doctors had regularly checked for many years) recently jumped beyond its normal elevation and a biopsy seemed warranted.

I will let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off.

Contact Marc D. Hamburg 402-346-1400

Warren E. Buffett”
Jim Pattison, the Warren Buffett of B.C.

By Tamsin McMahon - Thursday, February 16, 2012 at 8:10 AM - 0 Comments

The octogenarian billionaire is still growing his Vancouver-based empire. His latest move takes him back to the business that started it all: selling cars.

Norm Betts/Getty Images

Jim Pattison is not a man known for taking years to make a business decision. The head of the Jim Pattison Group, one of Canada’s largest private companies, didn’t build a sprawling $7-billion empire of grocery stores, magazine distributors, billboards and museums by making lengthy deliberations about his next move. But last month, more than 50 years after he opened his ﬁrst car dealership in Vancouver, the 83-year-old billionaire ﬁnally decided to expand his auto business outside of British Columbia, buying a pair of dealerships in Winnipeg. Details of the purchase of Frontier Toyota, Frontier Subaru and a related autobody shop from the Thompson family weren’t made public, but auto industry insiders say the business likely went for between $5 million and $10 million and came with the condition that no employees be ﬁred.

At 83, Pattison is long past the age when most CEOs would have retired for the golf course. As one of Canada’s richest men, with a personal fortune estimated by Forbes at $5.8 billion, he owns both a 150-foot yacht and Frank Sinatra’s Palm Springs estate. But friends and former colleagues say, if anything, Pattison is busier than ever these days running a company that has grown to more than 400 locations and 33,000 employees. “A lot of people talk about one foot in the grave. Jimmy will have both feet in the grave and he’ll still be looking for deals,” says Graeme Roberts, a long-time friend who served on the board of Pattison’s Air BC in the 1980s.

Pattison still travels regularly and is due in China this week for a business deal he won’t discuss. “If you like what you do, why change it?” he said in an interview. “I’ve been going to work for a long time now and I have no plans for changing that in the foreseeable future.”

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Warren Buffett reveals tax bill

By macleans.ca - Thursday, October 13, 2011 at 3:12 PM - 29 Comments

Billionaire’s federal tax rate works out to 17.4 per cent

In his ongoing campaign to increase taxes on the mega-rich, Warren Buffett revealed he brought in $62,855,038 last year, with $39,814,784 of it qualifying as taxable income. His federal tax bill was $6,938,744, or 17.4 per cent, which Buffett says is too low compared to middle-class earners. His cause was recently taken up by U.S. president Barack Obama, who proposed tax hikes on incomes above $1 million. The tax increase has come to be known as the Buffett tax since Buffett wrote an op-ed for the New York Times this summer in which he argued that, “My friends and I have been coddled long enough by a billionaire-friendly Congress.” Details of Buffett’s income were included in a letter he sent to Kansas Republican Rep. Tim Huelskamp and obtained by the Associated Press.

http://abcnews.go.com/blogs/business/2011/10/warren-buffett-reveals-billionaire-friendly-tax-return/
The prosperity gap

By Aaron Wherry - Friday, September 23, 2011 at 9:00 AM - 5 Comments

Alex Himelfarb considers the ramifications of inequality.

When Warren Buffett argued that the rich should pay more than they do (heck, even Adam Smith believed in progressive taxation), across the U.S. media we were told what a dangerous idea this is. Why would we penalize productive folk only to give the money to the unproductive? Why do we penalize success, they ask? Here, in Canada, the language is softer. Why would we tax so-called job-creators? Of course there are important economic considerations in how much and whom we tax – but “job creators”? As though they do not benefit from earlier generations more willing than us to sacrifice and pay taxes to build and defend a country of opportunity? As though the rest of us somehow do not contribute to the growth in the economy through our labour, consumption and creative ideas?
Good news, bad news: August 11-18, 2011

By macleans.ca - Monday, August 22, 2011 at 1:00 PM - 0 Comments

Canada’s navy and air force are Royal once more, Syrian forces launch a brutal naval assault on its own people

Good news

Serena Williams celebrates winning the Rogers Cup. (Reuters/Peter Jones)

Military pride

Forty-three years after Canada adopted the ugliest of bureaucratic names for its military services, Ottawa has reversed itself. Now, Land Forces Command will once again be called the Canadian Army; the Royal Canadian Navy replaces Maritime Command; and Air Command returns to the Royal Canadian Air Force. While some opponents call the royal names divisive, the Canadian Forces calls them an “important and recognizable” part of our military heritage. But let’s hope it doesn’t put a crimp in the military’s budget: that’s a lot of letterhead to replace.

The oracle has spoken

Warren Buffett says it’s time to stop coddling billionaires. In an opinion piece this week, the famous investor argues ultra-wealthy Americans like himself should pay income tax at the same rate as the middle class. “People invest to make money, and potential taxes have never scared them off,” he wrote. It’s a useful counterpoint to anti-tax conservatives like U.S. presidential hopeful Rick Perry, who said recently that making the rich pay income taxes kills investment. Shared sacrifice, both in spending cuts and higher taxes, are needed to get the U.S. economy back on track.

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Do you agree with Warren Buffett that the rich should pay more taxes?

By macleans.ca - Wednesday, August 17, 2011 at 12:56 PM - 19 Comments

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Berkshire comes clean on Sokolgate

By Jason Kirby - Wednesday, April 27, 2011 at 6:37 PM - 1 Comment

Warren Buffett got a lot of things seriously wrong about the David Sokol-insider trading affair, starting with this: When Buffett announced the resignation of Sokol, one of his top-lieutenants, amid questionable stock trades, he declared it would be his last comments on the matter. Turns out, not so much.

Berkshire Hathaway’s Audit Committee authorized Buffett to release an in-depth report today which states in no uncertain terms that Sokol breached the company’s insider trading policies. (See our original story, Say It Ain’t So, Warren, for background.)

From the report:

His purchases of Lubrizol shares while serving as a representative of Berkshire Hathaway in connection with a possible business combination with Lubrizol violated company policies, includingBerkshire Hathaway’s Code of Business Conduct and Ethics and its Insider Trading Policies and Procedures. … By engaging in such questionable conduct, Mr. Sokol threatened Berkshire Hathaway’s reputation–or would have done so had he remained with the Company.

Given the huge uproar over Sokol’s actions, this report is an important first step to repairing the damage to Berkshire’s cherished reputation. The question is, will it be enough? The release comes just three days before Berkshire’s annual general meeting in Omaha, Nebraska, and a lot will depend on how Buffett handles the matter there. The key being whether he apologizes. While it was Sokol who placed the trades and kept information from his boss, Buffett trusted him and did not probe deeper into the matter. And as chairman and CEO of Berkshire Hathaway, Buffett is ultimately responsible for any actions by his employees that damage the company’s reputation. Buffett has a long history of saying sorry, but this could be the most important apology of his career.

Anyway, on to the report. There’s a lot that’s fascinating in the plainly-worded disclosure:

-Berkshire is contemplating legal action against Sokol “to recover any damage the Company has sustained, or his trading profits, or both.” The company says will also cooperate with any government investigation into the matter, though it doesn’t come out and say that there is an investigation.

-Last October investment bankers at Citi brought a list of 18 chemical companies to Sokol as possible takeover targets. It was Sokol who narrowed the list down to one name, Lubrizol. That was two months before Sokol made his first purchase of Lubrizol shares.

-On March 14, after Berkshire announced the takeover of Lubrizol, a banker from Citi congratulated Buffett on the deal and took credit for bringing it to Berkshire’s attention. Until then Buffett had just assumed that Sokol had owned his shares in the company for some time and thought it was a great company Berkshire could buy. Suddenly, on the day of the big announcement, Buffett gets sideswiped by the revelation the deal had been cooked up by investment bankers. One can only imagine what was going throug his head at that point.

-The statement Buffett issued at the end of March announcing Sokol’s resignation was absent a passage Sokol had objected to, but which makes it clear Buffett knew Sokol’s actions stunk to high heaven.

Mr. Buffett deleted from the release the one passage Mr. Sokol said was inaccurate: a passage that implied that Mr. Sokol had resigned because he must have known the Lubrizol trades would likely hurt his chances of being Mr. Buffett’s successor. Mr. Sokol told Mr. Buffett that he had not hoped to be Mr. Buffett’s successor, and was resigning for reasons unrelated to those trades.

-The Audit committee all but calls Sokol a liar. It notes that Sokol “left unchanged” key points in the draft version of Buffett’s statement about his resignation that were untrue. The final version of the statement said Sokol ”did not know what Lubrizol’s reaction would be” when in fact he knew full well the company was keen to be acquired by Berkshire.

-The report is also notable for what it doesn’t discuss. After Sokol resigned, he appeared on CNBC. In the interview he said he’d done nothing wrong, and that Charlie Munger, Buffett’s investing partner, had owned shares in Chinese electric car company BYD before Berkshire acquired it at Munger’s suggestion. The Audit committee doesn’t go into this trade at all. Having said that, the circumstance are much different. Munger had owned his shares for a couple of years, fully disclosed his shareholdings to Buffett and was in no way involved in the deal to buy BYD.

BTW, for what it’s worth, I see the latest episode of Warren Buffett’s Secret Millionaire’s Club, an Internet cartoon that aims to teach kids about business and investing, is all about the importance of keeping a good reputation. It’s oh-so-appropriately titled “Cancel My Reputation.”
Say it ain’t so, Warren

By Jason Kirby - Tuesday, April 19, 2011 at 9:10 AM - 3 Comments

With allegations of insider trading at Buffett’s Berkshire Hathaway, is the bloom finally coming off America’s favourite investor?

When 40,000 Berkshire Hathaway shareholders descend on Omaha, Neb., for the company’s annual meeting later this month, they can expect an awkward moment early on. Each year, Berkshire’s grandfatherly CEO Warren Buffett kicks off the event with a video montage of comedy skits and advertisements for his many subsidiaries, such as Dairy Queen and Geico insurance. And every year the movie features a classic newsreel from two decades ago, when Buffett went before Congress with a principled message for his employees: “Lose money for the firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.” Until a few weeks ago that was just one of many folksy aphorisms Buffett is famous for. But if the clip rolls on April 30, and the Buffett of 1991 utters those words, all eyes will be on the Buffett of 2011, who just sat by while one of his most high-profile employees put Berkshire’s reputation through an industrial shredder.

An uproar over questionable stock purchases by former senior executive David Sokol has put the world’s most famous investor on the hot seat like never before. Buffett has endured intense criticism from lawyers and financial columnists, while Wall Street types everywhere have suddenly discovered their moral outrage and gone on the attack. He’s been called a con man, a hypocrite and, perhaps most biting of all, “very unBuffett-like.” In short, the incident has sparked a wholesale reassessment of the Creamsicle-loving, ukulele-strumming billionaire. The cult of Buffett is in turmoil.

The question now is whether the crisis will leave any lasting damage. It’s hard to imagine those investors in Omaha, who Buffett has made exceedingly wealthy, ever giving up the faith. And there’s more than a little envy and resentfulness behind many of the attacks on his character.

But the fact is, Buffett is not just another billionaire with a keen eye for cheap companies. For people on Main Street America who understand the importance of the stock market but deplore the greed and dirty tricks associated with it, Buffett was the guy in the modest corner office they wished all CEOs could be. And now they’re left to wonder whether he’s really all that different. “People have elevated Warren Buffett into the god of value investing,” says Vitaliy Katsenelson, chief investment officer in Colorado’s Investment Management Associates. “Now we’ve found out that the god is not perfect.”

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Cola war revival

By Erica Alini - Wednesday, March 30, 2011 at 11:13 AM - 0 Comments

Coke and Diet Coke are now beating Pepsi in sales, but fresh ad spending suggests the fight isn’t over

Mike Segar/Reuters

The decades-old cola war that has seen Coca-Cola Co. and PepsiCo Inc. square off in supermarket aisles, restaurants and corner stores around the world saw a historic twist last week. Diet Coke overtook Pepsi as the second-most widely sold carbonated soft drink in the U.S. market, just behind regular Coke, according to industry figures. Diet Coke and Pepsi have each accounted for almost 10 per cent of U.S. sales (compared to 17 per cent for Coke), but in 2010 Pepsi-Cola sales slid back nearly five per cent, propelling Diet Coke up to the coveted second place, according to Beverage Digest, a trade publication.

The historic shift comes at a difficult time for the cola industry. In North America, sales of soda have been declining since the mid 2000s. Pepsi and Coca-Cola have long been retooling their arsenals, loading up on products that appeal to a health-conscious public like teas, energy drinks, and bottled water. Pepsi has invested heavily in Gatorade, while Coke owns numerous non-carbonated brands, including Vitaminwater and Minute Maid.

But neither side is giving up on cola just yet. Coke has been marketing heavily on television shows like American Idol and with commercials during the Super Bowl. And its efforts earned it an endorsement from long-time investor Warren Buffett, who told stockholders that dividends from the Atlanta-based company could “double within 10 years”—a rare prediction from the chairman of Berkshire Hathaway.

Pepsi, meanwhile, has been focusing on a hard-nosed marketing makeover of its cola brand. Last year, the company devoted the $20 million it usually spends for advertising on the Super Bowl to set up an online charitable initiative—a noble move, but one that analysts suggest didn’t help sell soda. This year, the brand that once counted Michael Jackson as a pitchman plans to spend 30 per cent more on television ads in the U.S., including $59 million to sponsor the television talent show The X Factor, reports the Wall Street Journal.

Coke may have won the latest battle, but the cola war is far from over.
Great expectations

By Julia Belluz - Thursday, November 11, 2010 at 10:00 AM - 1 Comment

After three years of searching, investor Warren Buffett may have finally found a worthy heir

Nati Harnik/AP; J. Gregory Raymond/Bloomberg/Getty Images

Since Todd Combs, a little-known fund manager from Florida, emerged last week as the likely heir to take over legendary investor Warren Buffett’s US$100-billion portfolio, tales of his prodigious hard work have been trickling out. A spokeswoman for the State College of Florida said Combs was earning credits at the community college when he was only 16 and still in high school. “Definitely a good indication of his ability at an early age,” she told Florida’s Herald-Tribune.

Former colleagues said the 39-year-old is a meticulous researcher, who takes a very detailed and analytical approach to his work, spending hours a day studying newspapers and obscure financial documents. Like his new Berkshire Hathaway contemporaries, he’s low key; after the announcement that he had joined Berkshire, the media couldn’t find a photo of him anywhere on the Internet. His own firm, Castle Point Capital Management LLC, doesn’t have a website. Even in dress, he opts for khakis and button-down shirts over flashy suits.

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The oracle of Tangshan

By Cameron Ainsworth-Vincze - Thursday, October 7, 2010 at 10:20 AM - 0 Comments

Li Lu helped lead the Tiananmen Square uprising. Now he’s in line to succeed Warren Buffett.

Carlos Barri/Reuters/ David Yellen

This week, billionaire Warren Buffett visited China, where he paid a visit to one of his more recent high-profile investments, BYD Co. Ltd. The Chinese car and battery manufacturer has hit a rough patch recently, with sagging sales and a stock down 35 per cent in the past 11 months. Still, it has been a big winner for Buffett’s Berkshire Hathaway Inc., which had seen its initial $230-million, 10 per cent stake in BYD swell sixfold in two years, resulting in profits of more than $1.2 billion.

The man largely responsible for those gains is Li Lu, a fund manager and investor who helped introduce BYD to Berkshire Hathaway, and who many now consider to be one of Buffett’s potential successors when the legendary 80-year-old investor steps down—whenever that may be—from his position as company chairman and CEO. It has been widely speculated that Buffett’s responsibilities will be split among at least three people at Berkshire when that inevitable day comes, and Li, just 44, has a remarkable life story, along with an intriguing financial background, to support his candidacy.

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Super-sized philanthropy

By Jane Switzer - Thursday, August 19, 2010 at 3:40 PM - 0 Comments

Bill Gates and Warren Buffett plan to give away half of their fortunes

Getty Images

How could giving away at least $115 billion to charity win anything but universal, flattering praise, especially in a post-recession age where many charities are in desperate need? Here’s how.

America’s two richest men, Bill Gates and Warren Buffett, plan to give away half of their fortunes (worth a combined US$90 billion), and last week announced they’ve convinced 38 other billionaires to do the same by signing what they’re calling the “Giving Pledge.” The list includes New York City Mayor Michael Bloomberg, media mogul Ted Turner, film director George Lucas and Oracle co-founder Larry Ellison.

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'We no longer live in a world of nations and ideologies, Mr. Beale'

By Colby Cosh - Tuesday, March 23, 2010 at 12:55 PM - 21 Comments

Bloomberg’s sphincter-tightening-news division reports that two-year U.S. Treasury Bonds now have a higher yield than notes of similar maturity issued by Berkshire Hathaway Inc., Procter & Gamble, Johnson & Johnson, and the Royal Bank of Canada.
Newsmakers of the week

By Lianne George - Thursday, May 28, 2009 at 9:30 AM - 2 Comments

Elizabeth Taylor tweets, Clay Aiken slams Adam Lambert, and a Shatnerquake

Dame tracking

Elizabeth Taylor, 77, who was in the hospital last week for a routine visit, has “fallen in love” with Twitter according to her spokesman Dick Guttman. From her bed, using the moniker Dame Elizabeth, Taylor told her followers (22,500 and counting) that she was “counting the days” until the opening of Michael Jackson’s concert series in London, that she recently enjoyed “delicious tomatoes” grown in her garden, and that she watched the movie Twilight on DVD and “wants more!” On Friday, in a personal tweet to her good friend, former Sports Illustrated model Kathy Ireland, she thanked her for the beautiful flowers and the prayers, and requested that Ireland find a way to sneak her puppy past hospital security. “It’s not true that I love animals more than people,” she wrote earlier that day of her famous love of animals. “They are a very close second.”

Of swastikas and good parenting

A couple in Winnipeg who drew international attention after their young daughter turned up at school last year with white supremacist symbols, including Nazi swastikas, drawn on her body, began their legal battle for custody of their children this week. The couple, who can’t be named under provincial law, will argue that Manitoba Child and Family Services had no right to seize their daughter and son from their home. “I believe there is no legal basis for the children having been apprehended,” the boy’s father (and the girl’s stepfather) wrote in an affidavit. But the government agency is seeking guardianship of the siblings, alleging that the girl told authorities that her mother had taught her that “black people just need to die because this is a white world,” and that if she ever made any non-white friends, her mother would disown her. Social workers also allege that the couple abuse drugs and alcohol and are physically abusive toward the children. But the father insists he and his wife are model guardians and that the seizure of his kids over the swastika incident is a violation of his freedom of conscience, belief and association under the Charter of Rights and Freedoms. “In my opinion,” he wrote, “both [their mother] and I were excellent parents.”

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The first step to recovery

By Jason Kirby - Friday, May 8, 2009 at 11:55 AM - 4 Comments

The free fall is over, but the comeback will be like nothing we’ve seen before

As Christina Romer settled in to provide the latest economic update for U.S. lawmakers last week, they no doubt braced for another round of brutally frank and frankly chilling discussion on the state of the world’s most powerful engine of wealth. Despite Romer’s clout within President Barack Obama’s inner circle—shortly after the election he asked the Berkeley economics professor and expert on the Great Depression to chart America’s path to recovery—few outside of Beltway policy wonks and Wall Street economists knew much about her. On the surface, her comments seemed to reinforce the grim outlook that’s become so pervasive since the economy went into free fall last autumn. “I’m sorry to say, but in the short run, we are still in for more bad news,” she told the committee members. “We expect to see continued declines in employment and rises in unemployment.” Then came a rare yet welcome but. “We are beginning to see glimmers of hope that the economy is stabilizing.”

Romer’s tone was hardly exuberant, but her comments stood in stark contrast to the utter despair that was de rigueur just weeks ago. What’s more, she’s been joined by a host of sage old voices of the American economy, who together are offering a more reassuring, if cautious, message to the world: we’re not out of the crisis yet, but the worst seems to be behind us. Paul Volcker, the 81-year-old former chairman of the Federal Reserve and the head of Obama’s economic recovery advisory board, last week said the downturn is “levelling off” even if the U.S. economy remains in “intensive care.” Then, over the weekend at the annual Berkshire Hathaway annual meeting in Omaha, Neb., the company’s legendary founder and CEO Warren Buffett tried out another metaphor to convey his sense of cautious optimism. “Our economy, back in September, was like finding a friend of yours in quicksand up to his chest and he’s going down,” Buffett said. The rescue attempt has been painful but necessary. “The important thing was to get out of the quicksand, and we got out.”

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