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Kogod in the Media/June 2010

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Faculty, Programs, & Quotes

Professor Mark Clark Quoted on
The world is still in shock over the surprising defeat of France's soccer team in the World Cup.  Why did they lose?  MSNBC's Eve Tahmincioglu maintains that the same principles that create an organized, productive workplace also hold true for sports teams - respect and communication.  Tahmincioglu asserts the lack of these aspects in the French team lead to their downfall. 

Professor Mark Clark, Kogod's expert on managing teams in the workplace, added, "When you're looking to solve a problem, it's not just the talent you have but how the talent is configured."  Furthermore, Clark also states that "everyone on a team has the capability of influencing others…but true leadership is influence."  In order for a team to be effective, they should act like a business and vice versa.  Because as France demonstrated, the harmony of a team is critical to its success not unlike in an office. View full article (06/28/10)

Warren Buffet Places a Large Bet, Finance Professor Gerald Martin Weighs in Opinion

Warren Buffet can rest easy. The Berkshire Hathaway Inc. chief executive officer told CNBC last March that the company sold insurance to pay a client if France won the World Cup tournament.  On Tuesday June 22, France lost 2-1 to South Africa. If France won, Buffet said he would lose the hefty sum of $30 million dollars "or something like that." Gerald Martin, a finance professor at Kogod, stated that "The odds of any one team out of 32 winning is very small, so you could determine the odds and see what the payoff would be… From a numerical standpoint, it was probably in his favor to take this bet. I'm sure he'll smile when he sees the results." View full article (06/24/10)

Professor Robin Lumsdaine Interviewed on C-Span Radio - Listen now
Robin Lumsdaine, Crown Prince of Bahrain Professor of International Finance was recently interviewed by C-Span Radio. With the U.S. deficit approaching $13 trillion, Professor Lumsdaine was consulted for her expertise in the financial crisis, both in the U.S. and on a global scale.

Lumsdaine explained, "Historically our monthly deficit fluctuates between months of deficit and months of surplus but …we have had a string of 19 straight months where our outlays have exceeded our receipts". She added that on average overspending has been more than $100 billion a month during the past two years, four times that of the five years preceding. When asked how to bring down the deficit, she emphasized the key was finding ways to stimulate the economy, noting that this can be achieved via a combination of cutting spending and raising revenue simultaneously. "It's difficult to bring down the deficit by spending cuts alone, especially for a deficit of the magnitude we have." She additionally commented on the fact that interest on the debt is about $4bn/day. "One of the things that becomes difficult – and this is why we should be concerned with an increasing magnitude of the debt – is that we have increasing interest expenses…money that can't be used elsewhere."

The conversation then turned to the current crisis in Europe and what lessons the US can take from the situation in Greece. She noted, "Some of the key lessons come back to fundamental risk management…the importance of not overextending in terms of borrowing and in terms of the leverage that we take, managing liquidity and cash flow appropriately…accepting that hard decisions need to be made on how to cut back spending to avoid increasingly large deficits or unpalatable tax hikes." Lumsdaine dismissed the idea that the problems in Europe might ironically be helpful to the US via depreciation of the euro and greater demand for US assets. "We have to balance the short-term and the long-term – in the short-term we might get a bit of a bump as we saw in the flight to quality in the fall of 2008 with a lot of investors running both to the dollar and to US Treasuries but in the long term this is not good for our friends in Europe or the US at all – we really globally need to work on getting the financial system back to a healthy state."

Finally, Lumsdaine was asked about the prospects for future debt reduction. "It's one of those things that is very difficult to navigate – I'm hopeful, but I think it’s a challenging thing to have to deal with." Listen now