Charlie Rose

thefinancial411  12/20/2008 11:35 PM Report

If only we could add Bill Ackman's incredible clarity and perpespective to the new administration's economic team. The numbers don't lie, and with the new proposed package - and the additional dollars likely to follow - an equally absurd solution would be to disburse those same funds directly to every household and have them buy a new car with the money? At least there would be something to show for it in a few months time when the Big 3 still go belly-up.

The greater perpspective illustrates that we looking at a dinosaur industry the way Detroit goes about it. This trainwreck was long in the making, but it took a meltdown of this proportion to bring those in charge out of denial, and fully expose what was being swept under the rug for a long time.

In the larger framework, this country and its laborers need to re-tool and re-train to keep pace with a 21st century global economy. Manufacturing is not our way out. The indsutrial revolution took place over 100 years ago.

RiskAverseAlert  12/05/2008 03:12 AM Report

Yeah, the auto industry re-org "sounds" all hunky dory ... cut the debt, gut the union, winner, winner, chicken dinner ... but not enough was spoken about how to stop the nightmare from reoccurring. (He did mention infrastructure investment. But will this be pursued via public-private partnerships -- the fascist way -- or via such Hamiltonian solutions as are laid out in HR 3400?)

This is the critical matter about all these rescues ... bailouts ... recapitilizations ... reorganizations ... whatever ... that everyone is missing. With the balance sheet of the lender of last resort being led closer to being "all in" -- I believe Mr. Ackman overstates the voracity of the Treasury's power to generate tax revenues, and the parabolic rise in the national debt supports this conviction -- we as a nation appear to be moving closer to the ultimate crisis in confidence, which is the very viability of the United States of America.

So, Ackman's clear statement of various financial circumstances is appreciated. However, this interview's omission of matters of principle touching upon the history of the United States as a bastion against financial tyranny is sorely missing. In other words, we never should have gotten to this point in the first place.

krishna  11/26/2008 03:21 AM Report

very good

rahulkjha  11/20/2008 01:52 AM Report

I found it very informative and am really impressed by the depth of understanding and confidence he exhibits. Thanks Charlie for this interview.

Alex_Paidas_Clarion_Group_PR  11/13/2008 04:52 PM Report

Hedge fund managers should do serious interviews like this one much more often. Unfortuntately, thanks to years of preferring anonimity, not speaking to the media and not asserting their powerful voice in the public dialog about the structure of our financial markets, they have exposed themselves to unwarranted criticism, scrutiny and, inevitably, regulation. Look at the ban on short-selling, for example. A prepared industry and one that had credible front people (like Mr. Ackman) would never have been subject to not only such a half-baked measure, but one that had unmeasurable negative financial consequences. Mssrs. Ackman, Einhorn, Paulson and other leaders in the industry need to be more in front of the camera and in front of the issues.

NoPardonForMilken  11/13/2008 04:10 PM Report

Very well spoken, calm, assured, knowledgeable, and clearly talented.

I wouldn't trust him with a nickel.

"Pershing Square Capital Management is a $2.4 billion+ activist hedge fund managed by Bill Ackman that has had 40%+ returns over the past 2 years."

TRANSLATION: Ackman is obscenely wealthy. Charlie must please Ackman. A happy Ackman makes a contribution to PBS.

"Ackman cut his teeth in the real estate business, working for his father at commercial real estate mortgage brokerage firm Ackman Brothers & Singer."

TRANSLATION: Another Silver Spoon product of Nepotism, the single greatest threat facing our nation today. Ackman seems to be something of a cross between Eliot Spitzer and John P. Normanson.

And guess what? Ackman's been a naughty white-collar boy.

"In 1993, he launched Gotham Partners, eventually growing the hedge fund to over $300 million in assets. Gotham imploded in 2002 amid a series of lawsuits related to a failed merger between one of the firm's holdings (a court had blocked the merger, but a higher court later overturned the ruling) and investigations by the New York State Attorney General and the Securities and Exchange Commission into the fund's trading and research practices. The investigations yielded no findings, but investor redemptions forced Gotham to close its doors."

Either we regulate hedge funds and make them open their books to all - or the Bill Ackman's of the world will be only too glad to enrich themselves - and their PBS public relations types - at our expense.

He who short sells always plots to drive down the stock, the company, its employees, and their communities, and then laugh his way to his offshore bank and UBS AG tax gimmick.

Almost  11/12/2008 10:44 PM Report

Ditto what Steve said: I am no financial expert and even I could tell Ackman is the real deal {"Ackman knows what he's talking about. Few professionals could offer such a lucid, cogent and rational analysis..."), not to mention understand what he was saying. Yep, he should definately be Secretarty of the Treasury but then again, why would he want to...

Nancy_MI  11/12/2008 09:40 PM Report

I'm a fifth generation Michigander, just outside Detroit. I was glued to the words of Mr. Ackman. My gut reaction to his perspective and much appreciated advice was that I so dearly wished and hope this mans words reached the ears of the new administration as well as GM and Ford Executives. Sounds to me like Mr. Ackman would make an excellent consultant to the automotive heads. I like this young mans back to basics way of thinking, he’s not the first to say it, but he gets why things need to go back to the model that did work.

As Ted Turner just said on Charlie Rose the other night, life is going to change, we’re probably going to be going back to the days of going over to our neighbor’s hours to play bridge in order to have a night out. America is headed into a new era.

Today I logged onto the Detroit News Free Press site, Detroit's largest news paper and posted that others visit Charlie Rose and listen to Mr. Ackman. I'd also like to make mention that on our local news stations (11/11/08) it was announced that a major GM parts supplier, Delphi, has just released word on its third straight month of making a profit. Delphi had filed for bankruptcy nearly three years ago.

c2roses  11/12/2008 04:57 PM Report

A most impressive interview. Mr. Ackman's ability to explain complex industry concepts was key to the value of this interview. More importantly was the opinion's of Mr. Ackman on alternative approaches to addressing the auto industry "rescue" and investments of the billions of taxpayer dollars that Secretary Paulson is spending with too little oversight and input from a diverse team of experts. My hope is that these opinions will be vetted in the public arena, especially in light of Secretary Paulson's announcement today that he will give the auto industry funds - contrary to the opinions offered by Mr. Ackman.

I am a long time viewer of the Charlie Rose show and will continue to use this source as a way of better understanding and knowing our world.

ToddR  11/12/2008 04:41 PM Report

I found this interesting and Mr. Ackman's suggestions certainly sounded sensible. However, there were two things that seemed to be missing:

#1 GM is having many of the same problems that it had during the earlier oil crisis, in 1973. They were making cars that relied on cheap gas to be salable. This year, when gas prices went up and the economy went down, they found themselves in the same position. They don't seem to have learned anything in the past 35 years ... or they forgot the lesson.

#2 For the umpteen billion dollar bailout - a lot of that money ISN'T available to be loaned out. Much of it, it turns out, is going to paying salaries and bonuses to executives of the companies that are being bailed out. In addition, it recently came out that AIG sponsored an event at a luxury spa, to the tune of several hundred thousand dollars.

mtp  11/12/2008 03:41 PM Report

I agree with vegasquixote.....BA is mesmorizing with his intuitive voice, but he's a millionaire who has made much $$$$$ managing his company. Does he teach or help others learn how to make money in his field ???? It's been a while since I've heard the work "shill". Charlie thanks for your effort. I am looking forward to revisiting your interview with the late Michael Crighton tonite

Phil  11/12/2008 11:23 AM Report

That was a most amazing interview. Bill Ackman is absolutely brilliant in his analysis of the corruption in and lack of oversite of the rating agencies. Also, thanks to Bill for pointing out that the banning of short selling was an insane and shameful act by those who haven't a clue about same. Charlie Rose's depth of understanding of the issues helped make this interview the valuable piece it is. I can't wait for the video and transcript to be posted. My hat's off to Mr. Ackman and Mr. Rose for having him!

Toni Chasmar  11/12/2008 10:50 AM Report

I have been a fan of Charlie Rose's show for several years. He has some of the most interesting guests I have ever heard. And the best conversations I have ever listened to.

Bill Ackman's analysis was ever so eye opening! To have someone analyze and discuss solutions to this world economic problem gives me a great deal of hope for the future. As a Canadian investor, I am always looking for solutions to investor problems that the average person faces. I salute Charlie Rose for showcasing these intelligent people and providing a window for us to experience. Keep up the good work!

Toni Chasmar  11/12/2008 10:49 AM Report

I have been a fan of Charlie Rose's show for several years. He has some of the most interesting guests I have ever heard. And the best conversations I have ever listened to.

Bill Ackman's analysis was ever so eye opening! To have someone analyze and discuss solutions to this world economic problem gives me a great deal of hope for the future. As a Canadian investor, I am always looking for solutions to investor problems that the average person faces. I salute Charlie Rose for showcasing these intelligent people and providing a window for us to experience. Keep up the good work!

John  11/12/2008 09:58 AM Report

The SEC did more than ban selling on financial stocks. It included over 600 stocks in its ban including companies like CVS.

As for Ackmans point on short selling Mr. Hamber missed the point. Like Mr. Ackman said he is far more short than long but if you are using shorts as a hedging instrument (as a lot of people do) you are forced to sell/buy positions prematurely when you are not allowed to hedge.

The point was that a ban with no notice is can cause all kinds of distortions.

bill seifert  11/12/2008 09:53 AM Report

After reading the above comments about Mr Ackman it occurs to me that the broadcast should have had a warning label like the one that is on most prospectuses...i.e. the following comments are speculative and may change dramatically depending on the future. P.S. Why didn't Charlie ask what Mr Ackman's positions in Target were?

David Hamber  11/12/2008 05:13 AM Report

Hedge funds account for up to 50% of daily trading volume on US markets (One fund alone has accounted for 3% of average daily trading activity in London, New York, and Tokyo.) It is disingenuous to claim that they have no role in seriously distorting and disrupting our markets. Additionally, hedge fund managers through their political influence have actively supported this environment of lax regulation and monumental disinformation that has brought them extraordinary wealth while the mass of hard-working Americans have lost trillions.

David Hamber  11/12/2008 04:29 AM Report

Bill's distortion of the SEC rules on shorting is telling.

The SEC only temporarily banned short sales on financial stocks.

It also issued rules "to protect investors against naked short selling abuses."

Praxeologist  11/12/2008 04:24 AM Report

Mr Hamber (below) has it partly right. Mr Ackman may have made money from a corrupt system. That is Mr Ackman's function. By CORRECTLY ANTICIPATING market moves he makes them less extreme and provides liquidity. The money he makes is the reward for his services. But Mr Hamber also has it partly wrong: the distortions in the economy are caused by government intervention through manipulating interest rates, corrupting the monetary system, and over-regulation.

Mr Ackman's analysis and actions are spot-on.

J. Valencia  11/12/2008 04:20 AM Report

Comment by RJD ::: When he discussed bankruptcy as a solution for GM, I think he needed to add some caveats. First off, you don't want to buy a car from a company that is not going to be around to provide parts and service during the life of the warranty. It is a long-term relationship. BK ends that. Second, auto companies spend $billions to develop new models. No one is going to lend BK auto companies billions for product development that takes 3-5 years. Third, market share is critical to get the scale economies to make a new model profitable. But BK would scare many customers to buy from Toyota instead. So as market share implodes, the scale economies would not be there for a BK auto company. Fourth, the auto compnies going BK would bankrupt scores of suppliers and virtually deindustrialize the country. Massive unemployment (real Depression) would result. :::

RJD - i may have to respectfully disagree with you on this. i believe you might be underestimating the loyalty and support of the american people for a company that is an institution in this nation. just as the world underestimates the technological prowess and determination of americans. GM and the auto indsutry do need to change though as does our energy policy.

new energy technologies will tilt the balance back our way and as bill said, for this to work BK might have to take on a different meaning in the mind of investors.

J Valencia  11/12/2008 04:06 AM Report

are you people kidding? this guy is a freaking genius - he was right on. United States Treasury Secretary Ackman anyone?

Pat  11/12/2008 03:17 AM Report

Does this guy dye his hair _gray_ to look older and more credible?

David Hamber  11/12/2008 03:01 AM Report

Bill has made use of all the corrupted elements in our financial system to make hundreds of millions (or more) for himself. His slant on the crisis is elegantly self-serving and distorted. The hedge funds themselves have help create vast distortions in the markets that have a role in the current collapse of equities. They have thrived on the climate of reckless deregulation and the abundance of misinformation, disinformation, and lies pumped out by our media. It's astonishing how uncritically Charlie accepts the self-serving pronouncements of the billionaires (and multi-millionaires) who grace him with their august presence.

vegasquixote  11/12/2008 02:44 AM Report

Did anyone believe what Ackman was saying? He sounds like all the other fast talking shills on Wall Street, urging people to buy into all the great bargains. Compare his comments to William C. Durant, Jesse Livermore, and Charles Mitchell circa 1929.

FLS  11/12/2008 02:17 AM Report

RJD thoughtfully points out major pitfalls in simply reorganizing GM under current established bankrupsy/receivership rules which Mr Ackman recommends. Much like the environment, well intentioned interventions often have unforseen negative consequences.

Overall, Mr Ackman's insights make great intuitive sense, and he seems to see the whole playing field well. He'd make a good unofficial adviser to the Obama administration if conflicts of interest can be removed.

London  11/12/2008 01:37 AM Report

Make this guy the CEO of my personal economy! I loved this guy and this segment. Great job Charlie!

Preston  11/12/2008 01:22 AM Report

It would be interesting to have Mr. Paulson on with this guy, and have them discuss why this and why that.

Preston  11/12/2008 01:17 AM Report

If this guy is right, he's a genius. If he is wrong, he's just like all the rest.--- And I too want to thank Mr. Rose for his consistency.

RJD  11/12/2008 01:04 AM Report

As a finance MBA myself, I found Mr. Ackman's comments quite interesting and on target, especially when he pointed out the role of the ratings agencies in the credit crisis. I agree that the Fannie Mae bailout is likely to flounder, and that filing for bankruptcy ("BK") might be a better solution.

When he discussed bankruptcy as a solution for GM, I think he needed to add some caveats.

First off, you don't want to buy a car from a company that is not going to be around to provide parts and service during the life of the warranty. It is a long-term relationship. BK ends that.

Second, auto companies spend $billions to develop new models. No one is going to lend BK auto companies billions for product development that takes 3-5 years.

Third, market share is critical to get the scale economies to make a new model profitable. But BK would scare many customers to buy from Toyota instead. So as market share implodes, the scale economies would not be there for a BK auto company.

Fourth, the auto compnies going BK would bankrupt scores of suppliers and virtually deindustrialize the country. Massive unemployment (real Depression) would result. So would a huge trade deficit and further

trashing of the dollar as car imports double overnight.

So what is the solution? A virtual hybrid bankruptcy where the debt lenders get equity in GM for forgiveness of debt, AND the US govenment makes an equity investment as well so GM could continue to pay suppliers and fund new fuel efficient models. As part of the deal, the overly generous union contracts get reset to market levels. This is announced as a done deal, not strung out over months or years like a traditional BK.

This virtual hybrid bankruptcy would have the following advantages over traditional BK:

(1) The government's equity investment would restore customer confidence in GM's long term viability, thus preventing a huge loss of market share.

(2) GM's parts suppliers would not be dragged down into BK as they would still get paid in full. This limits the damage and prevents the massive unemployment that would result from GM doing a traditional BK and setting off the automotive equilvalent of a bank panic.

(3) The government might have more leverage in getting the UAW to reset wages and benefits to sustainable market levels.

I think this virtual hybrid bankruptcy would work better tnan a traditional BK or a AIG style bailout.

I'd be happy to discuss this with Mr. Ackman if he wants to suggest it to Congress.

syd  11/12/2008 12:57 AM Report

Yeah, i was fascinated at this guy's depth of the issues, his confindence made me respect the wisdom he was droppin'.....Thanx Charlie

RE Mant  11/12/2008 12:57 AM Report

While I agree that short-selling isn't the problem the easy money that allowed over-leveraging was, the CDS business looks either a lot like gambling to me, or irrelevant, and I sure wouldn't spend any taxpayer money on it. As was suggested, the best insurance is a good credit assessment. I think he's right, too, that corps should be reorganized by converting their debt into equity rather than bailed out. It's a sensible move like restructuring mortgages. But the predominant mood is still like the Lehman management's, and unfortunately the monetary and fiscal authorities are on their side. For instance, today's FHA announcement suggested extending terms, lowering rates, and postponing principle repayment, but made no mention of adjustment to the value of the property. I suspect that the new admin will try to take the same position, though they will say they are thinking of the workers and elderly investors. That's one reason why I don't think the mkts will turn around very soon no matter where the Fed sets interest rates. Maybe bankruptcy is the best solution for the homebuyers, too. No matter how much evidence is staring them in the face that their problems were caused by too much debt, there are ppl who will say that they really didn't have enough credit. Not even Las Vegas runs that way. I am not as sanguine about the govt's, or the country's, overall strength, either. To bring some sanity back into this picture I decided the public should take a look at the dates on their money and make a tacit agreement not to accept any bills newer than, say, 1998. Whimsy aside, a good move that went largely unnoticed, I think, is China's fiscal stimulus, which may prove to be a big help to American capital goods mfrs. More stuff of this kind would be a big help. Although nowhere near as good, infrastructure improvement here is at least an investment in plant and equipment, and that's a start.

Steve  11/12/2008 12:32 AM Report

I just retired after 27 years in trust/investment banking and I can assure you that Ackman knows what he's talking about. Few professionals could offer such a lucid, cogent and rational analysis of what's gone wrong and how to fix it. Obama needs this guy!

Patrick  11/12/2008 12:09 AM Report

Ackman is a big get. Not many people can explain the underpinnings - while also being a central player - in the way that Mr. Ackman can. Terrific segment Charlie!

Anthony  11/11/2008 11:37 PM Report

I just gone done watching this broadcast. Mr. Ackman was very straightforward and I learned alot of details about the crisis, etc. I am a 25 year old, college educated investor and having watched this converstation has made me a more knowledgeable investor and optimistic market watcher.

Thanks to Charlie Rose for asking great questions and facilitating such a great conversation. It truly gives an insider's persepective into hedge funds, banking, and the credit crunch of 2008.