Bad news for Michael Ignatieff;
Harvard University’s failed bet that interest rates would rise cost the world’s richest school at least $500 million in payments to escape derivatives that backfired.
[…]
The annual report provides new details on Harvard’s derivative-related losses. Many were entered into in 2004, said Harvard spokeswoman Christine Heenan. Lawrence Summers, director of President Barack Obama’s National Economic Council, was the university’s president at the time. White House spokesman Matthew Vogel declined to comment.
Much more of this, and he’ll have no job to go back to.
KevinB, in the comments ;
What’s missing here is the truly ironic point. Through the 90’s, Harvard’s endowment was managed by Jack Meyer, who had spectacular success. Harvard’s endowment in 1990 was $4.4 billion; by 2000, it was over $22 billion. Meyer was paid on the usual “2 and 20” hedge fund basis – 2% of assets under management, and 20% of any gain over an agreed upon benchmark (usually the performance of the S&P500, although I don’t know what it was in Harvard’s case). Regardless of the benchmark, Meyer made huge amounts of money, with annual paychecks in the tens of millions.
Naturally, this annoyed all the learned professors no end, so they voted to cap Meyer’s earnings. Meyer advised them to fornicate amongst themselves, and quit to start his own hedge fund, along with four other Harvard investment managers. Since then, Harvard has posted flat or falling performance on its portfolio.
So, while greed is usually blamed for financial mistakes, in this case, it was envy, pure and simple. I wonder if Harvard is going to progress through all the seven deadly sins? What would be next? Sloth? Gluttony? My money’s on “pride”.
Harvard & Obamassiah’s Cabinet:
Where really arrogant stupid people end up.
Well, those progressives do not hire based on abilty. They do not promote staff based on skills. And when you do this, you have problems like this.
I’m sure some Gulf Arabs will step up in exchange for considerations to be named later.
Limbaugh should offer to set up an endowment.
It would appear that being Harvard educated is overrated – the coffee drinking public at Tim’s has more credibility (they didn’t lose 500 million on derivatives). Resume killer, listing Harvard Business School – definately a file 13 consideration for future employers. Cheers.
But…but…but…Keynesian economics works…reallllly,reallllllllly, well. You just have to be patient and, by the way, can I borrow a dollar? or trillion?
Well just in time for the Big O’s volunteer program. We should see all those tenured profs cheerfully donating their time to the school,for free.
I was laughing until this frm Kate:
“Much more of this, and he’ll have no job to go back to.”
He might have stay!?
Does that me he’s gonna try harder now, and the MSM will be spinning overtime?
Gag me.
Hahahahahaha
And Lawrence Summers was prez of the univ. at that time?
hahahahahaha
too funny!!!
MariaS (dodocanspell)
Wasn’t Iffy involved with this school?
The high interest rate bet seems logical enough, may even work next year. It appears they forgot to buy insurance against the Fed using the gambit originated some years ago by the Bank of Japan: set interest rate to zip but lend only to the favoured few.
Iggy was most certainly employed by Harvard at the time, just like Mr. Summers.
Maybe Barrack can arrange to have a few busloads of SEIU members to protest outside their homes like he did with AIG employees.
O, Iffy’s Harvard pal, gets bad press from Ass. Press.
This will not be published in the Harvard Crimson.
It appears here courtesy of the ITYS Department with the headline:
O’s Kabul Quagmire, aka The Beard of Allah/Mo.
Notice this is Times India; not the American/Canadian MSM.
…-
“The Kabul Quagmire
My closest Afghan friend held out his Taliban-era photo. A decade younger, he had a thick black beard that the oppressive regime forced men to
grow. My friend won’t grow one again. He is already thinking about when to flee.”
http://timesofindia.indiatimes.com/world/rest-of-world/The-Kabul-Quagmire-/articleshow/5134494.cms
No doubt Bam Bam will use this to justify a bail out for Harvard.
Larry Summers is a very logical choice for such an appointment given this record and that Hopey-Changey wants to make his mark with his War on Prosperity. Unlike his predecessor’s Wars on Drugs and Terror, he might just succeed.
William F Buckley said that he would rather be governed by the first 200 names in the Boston phone book than the elites from Harvard.It has never been truer than today.
proof of the old saying that the market can stay stupid long enough to bankrupt the smartest guy. If we had a free market economy, interest rates would have risen, but we don’t, so they stayed low and steered us into this mess. You would think somebody smart enough to run Harvard’s fund would know that.
Summers got into trouble at Harvard when he dared say something politically incorrect at a closed-door meeting. A lot of things are forgiven at a modern university, but not that: http://www.weeklystandard.com/Content/Public/Articles/000/000/011/913ykmyh.asp
Judging from Iggy’s donation record to the LPC my advice to Harvard is save the money on the stamp for Iggy’s donation request letter. He’s never found a cause he’ll back with his own coin.
What’s missing here is the truly ironic point. Through the 90’s, Harvard’s endowment was managed by Jack Meyer, who had spectacular success. Harvard’s endowment in 1990 was $4.4 billion; by 2000, it was over $22 billion. Meyer was paid on the usual “2 and 20” hedge fund basis – 2% of assets under management, and 20% of any gain over an agreed upon benchmark (usually the performance of the S&P500, although I don’t know what it was in Harvard’s case). Regardless of the benchmark, Meyer made huge amounts of money, with annual paychecks in the tens of millions.
Naturally, this annoyed all the learned professors no end, so they voted to cap Meyer’s earnings. Meyer advised them to fornicate amongst themselves, and quit to start his own hedge fund, along with four other Harvard investment managers. Since then, Harvard has posted flat or falling performance on its portfolio.
So, while greed is usually blamed for financial mistakes, in this case, it was envy, pure and simple. I wonder if Harvard is going to progress through all the seven deadly sins? What would be next? Sloth? Gluttony? My money’s on “pride”.
The August issue of Vanity Fair had a very good article by Nina Munk on this entitled “Rich Harvard, Poor Harvard”.
Worth a read at:
http://www.vanityfair.com/politics/features/2009/08/harvard200908
isn’t the idiot (millar) ruining (running) toronto a harvard economics grad:-)))))
I’m sure some Gulf Arabs will step up in exchange for considerations to be named later.
They already did…..
“Much more of this, and he’ll have no job to go back to.”
We can only hope.
50% of Harvard’s MBA graduates last year signed a pledge to “serve the greater good”…..
ACTION ALERT: Obama to Cede US Sovereignty in December:
Video and story at Atlas Shrugs. Climate change is being used as a springboard for the loss of sovereignty – taking precedence over the Constitution of USA – if Canada signs too, all the work done by Ezra Levant and Mark Steyn for our free speech rights will be for nothing.
http://atlasshrugs2000.typepad.com/
think of the impact on enrollment in the no longer famed harvard skool of bizznizz.
this is the equivalent of a jet in a tailspin.
Kevin b: I wonder what was meyers performance in the years after he left the fund. One of the great drawbacks to manage payscales like meyers was that there was nil
penalty for negative returns. Having them hold their pay in units of the funds they managed for a few years during AND after they leave as managers seems a better idea.
Harvard & Obamassiah’s Cabinet:
“Where really arrogant stupid people end up.”
amen
Gord:
Meyer had a lackluster 2006, failing to meet his benchmarks by 4.5%, which meant zero bonus for him and his team (no penalties for failure?). However, he bounced back in 2007 with a 31% gain. Couldn’t find figures for 2008 or 2009.
KevinB, Harvard and pride sounds about right. Bankruptcy may well be in their near future too, and it will look good on them.
“Naturally, this annoyed all the learned professors no end, so they voted to cap Meyer’s earnings….I wonder if Harvard is going to progress through all the seven deadly sins? What would be next? Sloth? Gluttony? My money’s on “pride”.”
I see only one sin: Socialism.
It is double irony that the Harvard mindset is now modus operandi in the Obama Administration. The Pay Czar has told General Motors to cap the CFO position. Result, more mutual fornication.
Google GM CFO. Those who cannot learn from history…
I’d like to see a study comparing the average HBC grad with the average of other business schools.
Harvard is a wonderful brand name which has had flaws exposed several times over the past few years and we’re findint out that Harvard is just another biz school.