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Making
things happen - with integrity. A weekly CyberMemo designed to keep you on task. Monday January 8, 2001 Volume III Number 2 |
FOCUS - Leaders are Readers
I’ll never forget that Monday morning. It was October 19, 1987. An office-mate walked through my door and announced, “the stock market is in a free-fall.” We turned the radio on for confirmation.
Just a few months more than thirteen years ago the Internet was virtually inaccessible to the masses. We relied on radio and television for our news. And we had to wait until the station got around to talking about the story that interested us the most. No point and click. Today, whatever news you need to know is as far away as your mouse. Not so then.
It didn’t take long. The news-radio (All News All the Time) reporter confirmed it. If you combine the dismal performance of the previous Friday with the close on that fateful Monday, the Dow Jones Industrial Average lost a staggering 25% of its value. In two trading days. Investors were stunned.
All of us.
In January of that year, the Dow stood at just over 2,000. That was the beginning of a bull run that lasted nearly nine months. By mid-September the big-board index rose to over 2,700. Investors enjoyed a handsome gain of over twenty five percent in less than a year. Money poured into the market. Main Street discovered Mutual Funds. The economy roared ahead in the wake of substantial tax cuts, thanks to the Reagan reforms. The sunny second term President basked in the glow of extraordinarily high approval ratings. Some warned that earnings could not support these new inflated values, even though projected profits remained high. But everyone wanted in. And psychology played as key a role as economics in the bull run of 1987.
No one seemed to notice, or care, that a parallel trend also affected the economy. Interest rates. In that same period, from January through September, long-term government bond rates rose from 7% to 10% - a clear warning that inflation would take a substantial toll. In fact, inflation was heating up… to over 4%.
Today, it’s known as Black Monday. Once the market hit the precipice and prices began to fall, unregulated computer programs automatically kicked in massive sell orders. Spooked mutual fund owners call in switches, redeeming equity funds. Institutional money managers screamed, “Sell!” And Wall Street was asked to process a staggering volume of six hundred million shares in a single day – far more than the Market could handle.
Some feared that the devastation on Wall Street that day might trigger an even larger financial crisis. The downward spiral of the stock market (the NASDAQ existed in 1987 but in the larger scheme of things, was considered relatively inconsequential then) put enormous pressure on the banking system. Bank failures that might inevitably follow a market collapse left government and institutional insiders in a state of high anxiety.
A key player, the President of the New York Federal Reserve Bank, E. Gerald Corrigan, picked up the phone to speak to the newly appointed Chairman of the Federal Reserve Board. “Alan, you’re it,” he exclaimed, “it’s up to you. This whole thing is on your shoulders.”
He was speaking to Alan Greenspan.
The market crash hit shortly after his term began. With the dramatic decline in market values, and the decline in bond values caused by the rapid increase in yields, banks teetered on the edge of insolvency. Some already, were technically over the brink. According to long established rules of reserve ratios, creditworthiness fell to an all-time low. Without the ability to extend and utilize credit, the banks would freeze and the fall in stock values would only be a prelude to a full on economic collapse.
Dr. Greenspan, a new Reagan appointee, found himself in the vortex of a national firestorm. After round the clock committee meetings, and telephone conference calls, and high-level consultations, Greenspan crafted a single sentence policy statement published the week of Black Monday.
“The Federal Reserve, consistent with its responsibilities as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.”
It was a risky but bold move. Years later, it was the brilliance and courage of one man who stood strong in a moment of crisis who is credited with holding together the most powerful economy in the world. In just a year’s time, inflation cooled. Confidence returned. And in fifteen months, the market regained the value that vanished on that fateful day. And in the fourteen years of his tenure as Chairman of the Fed, the market has climbed to unprecedented heights.
Now, fourteen years later, they call him “Maestro.”
* * * * * * *
I was a Bible School student in the late sixties.
These were politically turbulent times. Vietnam embroiled the nation in controversy. Lyndon Johnson couldn’t take the heat. He bailed out as the heir apparent to the Presidency in the 1968 election. Martin Luther King and then Bobby Kennedy were gunned down in cold blood. The Democratic Convention in my Alma Mater’s hometown of Chicago exploded in violence under the iron fist of Mayor Richard A. Daley as demonstrators and armed police clashed in the streets that summer. National guard troops opened fire on a crowd of student protesters, killing some, on a grassy knoll on the campus of Kent State University. Many of those budding theologians I knew on my inner-city campus in those days theorized that these were all signs of the End Times – and frankly, it all seemed rather plausible then that indeed, these just may be.
I took an interest in a bright, attractive blond in my class that year. She was, at the time, seeing an off our campus University student at a large urban campus on the lakefront a few blocks down Chicago Avenue. I remember that she was fascinated by his political views. He was an activist, a philosopher type. And in her efforts to uncover his spiritual condition, she learned he was a covert atheist. He presented her with a paperback novel, a thick book, and challenged her to read it. “You are a Christian,” he told her. “You’ll understand where I’m coming from after you read this book.”
Not to be out-done, I confessed to her that I had never read the author. But I committed to read the book along with her. I’d even get my own copy. And we could discuss it. I wanted her to know that this pagan outsider she found so interesting was no smarter or wiser than me. And while she seemed to consider this guy a mission field, I didn’t want to lose her to some Bob Dylan type who might take her by the hand and lead her into the under-world of counterculture and everything that went along with that. So I prepared myself to do intellectual battle.
It was challenging reading, but I soon found myself engaged with the characters. It was a book written in the nineteen thirties when the world was concerned about Fascism and Socialism and Communism and when people talked political theory and the clashing values of individualism versus collectivism and totalitarian regimes and repressive governments and corrupt churches and assaults on human dignity and it surprised me because I thought that all these ideas were trumped up by my own generation of Baby Boomers, and here we were discovering that someone had talked about it all before… long before. And I found myself, as a Christian, challenged to think more broadly about what it all meant. And how to integrate our cherished beliefs with a world in turmoil and conflict. So the two of us would talk long into the night about wonderfully obscure and intensely potent ideas.
To this day, we still like to talk about our books. Carolyn is still with me. I can’t even remember that university student’s name. I repressed it. He’s long gone.
But I remember the book. It was a novel called We the Living. The author, Ayn Rand.
* * * * * * *
Gary Richmond is an author, a motivational speaker, a humorist, a former zookeeper and a pastor. In the mid-seventies, he attended a leadership workshop conducted by the Chief Executive Officer of World Vision International, one of the largest relief agencies in the world. Dr. Ted Engstrom, himself a best-selling author and much sought after executive mentor and coach, led a session called “leaders are readers.”
In a recent published article, Richmond talks about how Dr. Engstrom challenged a room full of other organizational leaders to establish a regular reading discipline. Engstrom said that readers are always fresh. Intellectually stimulating. Conversationalists. They have an appreciation for the proper use of language, and know how to express themselves both from a podium microphone and in writing. Readers are aware, alert. They are better listeners. They can understand concepts, and possess an enriched vocabulary. Readers are comfortable with the fine art of communication. Engstrom said, “When we interview leadership candidates, we always ask about reading habits.” And then he said, “I believe that good reading skills are even more important than a polished academic resume. It’s one thing to have achieved in the classroom, but too many good students set aside their study habits the moment they take their diploma. Some even manage to get degrees without study habits, come to think of it. But readers are learners. Readers are always growing. Readers are open to new ideas, new challenges. And they know how to synthesize information, and come to quality conclusions. If it came down to one candidate with an academic pedigree versus another with clear reading skills, I’d take the reader any day of the week.”
Richmond wrote, “I thank God for Dr. Engstrom’s challenge. He told us we should read five hundred pages a week. I decided then to beat the challenge. I like to read nearly a thousand pages a week. Our reading should cover a broad range of disciplines, including our own specialty. But, he told us, we should not limit our reading to our profession. We should broaden it to include works outside our discipline. Engstrom gave me permission to spend the last twenty-five plus years in books. My life has been enriched. My library is full of volumes I now think of as friends. I’ve tracked with some of the best minds who have ever lived.”
“I can not imagine a life without books.”
* * * * * *
When Alan Greenspan was a young student at New York University, he loved the arts. He played a mean clarinet. He liked to hang around the artists at the Julliard School. He married a painter who loved Greenspan’s philosophic mind. He was the son of a stockbroker. An economics major. He had long ago abandoned his Jewish religious roots, and became a skeptic. He loved life in the Big City, the color, the sounds, the bustling nighttime streets. And he reveled in university life. He was known as a debater, and finally met his match when his young wife introduced him to an old family friend, the author, philosopher, professor; Ayn Rand.
Greenspan was accustomed to winning. Not many could stand up to his piercing wit, his breadth of knowledge or his capacity for dismantling the flimsy case made by his intellectual opponents.
Fellow students would gather round just to listen to Greenspan and Rand converse. The best-selling author and playwright took a liking to Greenspan. He was one of the few with the courage to engage her oceanic mind. He would test his theories, social theories, economic theories, political theories, and she would challenge. Off they went, and in nearly every contest, Rand would checkmate the young scholar. In spite of her winning, he loved her commitment to individual achievement. A philosophy she called Objectivism. Her concept of personal freedom. Her easy rejection of traditional ways of thinking.
Many believe that Greenspan’s fierce independence and love of subtleties and shades of meaning stem from those early days when face to face with one of the most respected thinkers of an era, Greenspan’s world-view took shape.
When he was a Brooklyn high school kid, Alan’s father Herbert published his one and only book. An ever-optimistic stockbroker, his 1936 book entitled Recovery Ahead predicted a stock market rally in the wake of President Roosevelt’s New Deal. Greenspan kept his personal copy (which contained predictions that held true in the year it was published, but a market retreat in the following year made his book obsolete) as a sentimental treasure, primarily because of the handwritten inscription inside –
“May this
my initial effort with constant thoughts of you branch out into an endless
chain of similar efforts so that at your maturity you may look back and
endeavor to interpret the reasoning behind these logical forecasts and begin a
like work of your own. – Your
Dad”
One
wonders if Alan’s father Herbert had any notion that his son would one day
wield such enormous influence during the biggest economic boom in the history
of capitalism. One can also see in
his father’s run-on sentence the obscurantism and vagaries that have become
the hallmark of Greenpan’s reputation. A chip off the old block.
Alan Greenspan’s first marriage was short lived. Perhaps today, married to NBC Correspondent Andrea Mitchell, dinner conversation resembles, to some degree, those pyrogenic exchanges with Ayn Rand.
* * * * * * *
Few consider Greenspan’s tenure as flawless. Many believe he missed it this time. His reticence to lower interest rates in the fall of last year may mean last week’s surprise, unilateral, dramatic half point cut will turn out to be too little too late. The political turmoil produced by a thirty-five day hung presidential election took an enormous toll on the markets.
But few can debate the central role of the Chairman of the FRB all these years. There will never be another like him.
According to Bob Woodward of All the President’s Men fame, Alan Greenspan will always be Maestro.
* * * * * * *
It’s Monday morning. You are a leader. Like me, you are inspired by the likes of Greenspan.
Greenspan was a voracious reader. So was Engstrom. And Richmond.
And you, too.
Take time to read. Get yourself comfortable, somewhere away from the interruptions, and the distractions, and the noise. Sit there long enough to read for a solid hour… or two. Let the words sink in. The ideas challenge your mind. Think broadly. Out of the box. Track with the great minds. The real thinkers. Let them challenge you to new levels of awareness.
You’ll think differently. People will pay attention. You’ll get those ideas across with new clarity. Imagination. Vision.
Make it a habit.
It’s the right thing to do.
© Copyright Kenneth E. Kemp 2001
Special Thanks to my good friend David Belcher, owner of Rhino Media Group and creator of WisdomGram
LeaderFOCUS is a service of Good Stewardship Associates
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