The Harvard Endowment Saga

Today's front page of the Boston Globe retraces the recent history of Harvard University’s endowment headaches. Despite warnings from some, former school president Larry Summers pushed forward an aggressive cash investment strategy up until he left in 2006. That approach “paid off handsomely for years" but probably should have been revamped when problems started showing up in the markets. For a year too long, “the cash policy went unchanged,” and, the article says, “The very thing that the former endowment chiefs had worried about and warned of for so long then came to pass. Amid plunging global markets, Harvard would lose not only 27 percent of its $37 billion endowment in 2008, but $1.8 billion of the general operating cash—or 27 percent of some $6 billion invested.”

Americans are increasingly reliant on food stamps, and, as a result, the stigma surrounding the government assistance program may be fading. According to the New York Times, the program now “helps feed one in eight Americans and one in four children.” The prevalence of food stamps is a telltale sign that people are still struggling from the downturn. But it also may be helping to make buying food this way less shameful. The paper says, “It has grown so rapidly in places so diverse that it is becoming nearly as ordinary as the groceries it buys. More than 36 million people use inconspicuous plastic cards for staples like milk, bread and cheese, swiping them at counters in blighted cities and in suburbs pocked with foreclosure signs.”

This morning’s Wall Street Journal discusses what Oprah Winfrey’s move from broadcast to cable in 2011 means for Discovery Communications.  Under the new agreement, Oprah’s show will continue on a channel called the Oprah Winfrey Network. Oprah is happy because she’ll get her own network, and Discovery is welcoming her with open arms. The “50-50 joint venture” offers plenty of perks.  The paper explains, “Discovery will share in the glory and gain control of Oprah.com as well as her show's archives. There also are the higher ad rates the cable company will likely command as a result of the cachet that comes with Oprah.” Besides, Oprah fits well with Discovery’s portfolio, which is “known for its ‘real world’ programming” and includes shows like the popular reality series Jon & Kate Plus 8.

Ben Bernanke sticks up for the Fed on the op-ed pages of today’s Washington Post. In light of proposed reforms that would reduce the central bank’s regulatory powers, he writes, “These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States. The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution's ability to foster financial stability and to promote economic recovery without inflation.”

The New York Times dashes any hopes for a full-fledged economic recovery in the near future. The paper cites an economist, Ian Shepherdson, who predicts that the growth in output for the next year won’t be more than 2 percent. The paper writes, “Mr. Shepherdson—whose economic forecasts have been more right than wrong throughout the credit crisis—says that while cost-cutting has produced enviable productivity figures and rising earnings at large companies, continued growth in corporate output will be much harder to come by.” While the stock market may tell one story for Fortune 500 firms, small businesses are still struggling. The article says, “Smaller banks are especially worried about their own balance sheets and aren’t making loans. This puts small businesses—important engines of growth—squarely on the brink.”

And finally, the Black Friday results are in, and, according to Bloomberg, shoppers scooped up “high-definition TVs, laptops, Zhu Zhu Pets robotic hamsters and winter coats.” The National Retail Federations said that store traffic was “strong,” and research firm ShopperTrak reported that sales were up .5 percent to $10.7 billion. “The surprise news is that they are actually buying for themselves as well, due to pent-up demand and frugal fatigue,” an analyst from research firm NPD Group told Bloomberg.  He continued, “They are saying ‘Let’s loosen up the purse strings a little bit,’ but it is still cautious spending.”