Shots in the Dark

Sarah Palin poses for Runner’s World magazine. Your blogger can’t think of a thing to say about this which won’t somehow get him into trouble.

So I’ve now read Nina Munk’s article about Harvard in Vanity Fair, and it is, well…brutal. If you thought my Boston magazine piece on Harvard’s financial crisis was tough (and yes, I scooped Vanity Fair, ta-da!), multiply that by about three.

Munk is—how can I put it?—dismissive of Drew Faust, Jane Mendillo, Bob Rubin, Evelynn Hammonds, the Harvard press people, Harvard bureaudiction (a fusion of “bureaucrat” and “diction,” the BS language of “reshaping” and “resizing,” which makes Harvard look oh-so-stupid and equally guilty) and many others.

Munk is conspicuously flattering to Jack Meyer, which…hmmm…makes one wonder. Did Meyer talk?

Here are some of the naughty bits.

The coverline:

“Annals of Arrogance—Harvard’s Big, Dumb Financial Train Wreck.”

Quoting Evelynn Hammonds:

“I’d rather use the words ‘reduction,’ ’shifting things around,’ ‘reorganizing’—rather than saying something that says ‘cuts‘……

[Blogger: Bureaudiction! A wonderful example. Hammonds is a master of it.]

On the mood at Harvard:

Harvard is in trouble, and no one can decide who’s to blame, or what to do next. …Harvard’s hostile fiefdoms are pointing anonymous fingers…They disagree about who made the flawed investment decisions in the first place, insisting that they themselves had never been consulted on the matter, or had been overruled, or pushed aside and ignored…

On taking responsibility:

If Harvard were a publicly traded company, [the men and women who run Harvard] would have been fired by now….

[Blogger: Maybe. Munk has more faith in the private sector than I do.]

And again:

If Harvard were a serious business facing a liquidity crisis, it would have done something drastic by now: fired senior employees, closed departments, sold off real estate. But Harvard…is stubborn and inflexible….

On Harvard’s financial optimism:

While I was reading through Harvard’s financial reports from the past decade, the word “delusional” sprang to mind…

On Larry Summers’ relationship with Jack Meyer and HMC:

“… Larry is largely responsible for blowing up the place,” one Meyer loyalist told me. “Harvard Management Company worked perfectly when the board left them alone!”

On Bob Rubin and Jack Meyer:

Rubin…was contemptuous of Meyer’s daring investment strategies. As one person put it to me, Rubin was on the “warpath.” To anyone who would listen—Harvard’s board, Wall Street, Larry Summers—Rubin kept chipping away at Meyer’s credibility.

On Mohamed El-Erian:

According to a friend, El-Erian felt suffocated at Harvard and couldn’t wait to get out.

…El-Erian, an outsider, quickly became the subject of unsubstantiated attacks, many of them based on rumor and malice. Harvard tends to be like that.

On Jane Mendillo:

…pleasant…

…We do know that she’s laid off about a quarter of her staff and that she’s cautiously moved more of Harvard’s portfolio into cash even as the market climbs…

On the endowment:

It will probably take more than a decade for the value of the endowment to return to where it was in the heady days of 2008.

On Larry Summers’ tenure at Harvard:

As Summers recently remarked to one of his colleagues, “I held out the hope that Boston would be to this century what Florence was to the 15th century.”

[Blogger: I do not believe that Summers said this to a colleague; it's just not the sort of thing one says in normal conversation. I think he said it to Munk in an interview either on background or off the record, and Munk liked it—it's a money quote, just the kind of soundbite Summers carefully hones—and asked Summers if there was any way she could use it, and they decided to attribute it to him saying it to a colleague.]

On Harvard bureaudiction:

Earlier this year…construction at Allston was abruptly stopped. Not, mind you, that the verb “to stop” is part of Harvard’s current vocabulary—the project is being “re-assessed” and “recalibrated.”

On Summers’ firing:

“The fact that they fired him is  symptom of everything that’s wrong with Harvard,” one of Harvard’s big donors told me. “He’s not politically correct….”

[Blogger: Lame. It's a dumb quote, not to mention a wrong one, and isn't connected to any of the other arguments in the piece. Munk should have resisted putting it in. Also: Aren't we at the point where we can safely assume that anyone who uses the term "politically correct" is substituting jargon for thought?]

On Drew Faust:

Faust is not known as a visionary. In fact, outside of academia, no one I’ve spoken to has any idea who Drew Faust is or why she got the job in the first place. One undergraduate I spoke to described Faust as “expressionless.” An alumnus, having recently attended a dinner where Faust was the guest speaker, told me she was exceedingly dull—so dull he was reminded of those animated Peanuts cartoons from the 1970s, the ones where adults appear offscreen as so many disembodied, insubstantial “voices” that say nothing but “wa-wa-wa.”

[Blogger: I've been making this point more gently about Faust for years. Her response? Rather than recognizing the validity of the criticism, her flunkies and she refuse to talk to me...and then Vanity Fair comes along and makes the point far more viciously. The people who surround Drew Faust do not know what they are doing; they know only how to cover their asses, and as a result, her reputation has been deeply, perhaps permanently, damaged. But Faust ultimately has to accept responsibility. This is a time for the president to be bold, to make her voice heard, to separate herself from the puppeteers on the Corporation. (What are they going to do—fire her? She is un-fireable.)  Instead, we have "green is the new Crimson," blah-blah.]

On Faust’s “vision”:

To leave her imprint on Harvard, and possibly to distance herself rom Summers with his tight focus on the sciences, Faust has dedicated herself to elevating the arts. Last December, outlining her vision of the future, Faust released a written statement: “In times of uncertainty, the arts remind us of our humanity and provide the reassuring proof that we, along with the Grecian urn, have endured and will continue to do so.”

[Blogger: Oh, dear. Remind yourself that this is the president of Harvard, not a high school valedictorian.]

On Harvard’s PR machine:

…Harvard refused to cooperate when I was reporting this story. At first, the university’s public relations apparatus ignored me. Week after week, e-mail after e-mail, I’d be assured that someone or someone else was unavailable—in meetings, or on vacation, or away from his desk, or out of the office, ill. When I did manage to track someone down, I was thrown a sop of evasive prose. (”I don’t feel we’ve made a decision about how to best engage for your piece,” the vice-president for public affairs told me in an e-mail.”)

Blogger: Bureaudiction!

(I love the term “engage for.” Is this possibly the same person who ghostwrote Mike Smith’s, Evelynn Hammond’s and Allan Brandt’s embarrassing Crimson op-ed, “Our Plans for the Future”? Remind yourself that these are three deans of Harvard University, not high school valedictorians.)

Here is Harvard’s problem: Incompetent leadership.

(And this is one failing of Munk’s article: She does not address the problem of the Corporation at all.)

The Corporation is a disaster, and—I’m sorry, presidential defenders, but it’s true—so far, so is Drew Faust. Jane Mendillo is a question mark. The bureaucrats are leaving in droves. [FAS dean of administration and finance Brett Sweet—oh no he ain't!—being the latest.]

I think it’s time for the faculty to step up again, just as it did in 2006. The fate of your university is at stake.

What was the Washington Post thinking? The paper recently decided that it would host intimate dinners with lobbyists, politicians and its own reporters and editors at the chi-chi home of publisher Lally Weymouth.

The catch? The lobbyists had to pay to be there. The Post was selling access.

When word got out, Weymouth canceled the deal, and a flunkie took the blame.

Other news organizations do things that are sort of similar—conferences, basically—but those feel qualitatively different than a small dinner at the publisher’s house.

In any case, here’s an interesting tidbit [emphasis added] from the article:

In March, the Wall Street Journal brought together global finance leaders — including Treasury Secretary Timothy Geithner and Australian Prime Minister Kevin Rudd — for a two-day conference sponsored by Nasdaq and hosted by Robert Thomson, the Journal’s top editor, and other editors and reporters. Outside journalists were invited to the session, which was on the record and webcast by the Journal. Participants, who paid several thousand dollars to attend, also had a White House meeting with economic adviser Lawrence Summers, which was off the record at his request.

This is troublesome—the part pertaining to Larry Summers, that is.

I don’t see any problem with the Wall Street Journal hosting a conference, or with government officials appearing at it, as long as they’re not making anything off it.

But to sell a private meeting with Larry Summers? That’s not appropriate. It’s influence-buying—and selling—pure and simple. Selling a White House meeting is only barely different from renting out the Lincoln bedroom.

It’s things like this, and the millions he made from Wall Street banks, that worry me about having Summers in government.  The man does not give a damn about ethics. His arrogance supercedes any idea of appropriate behavior: He thinks the rules don’t apply to him. I would not be surprised if some similar behavior gets Summers in real trouble at some point—but only after the taxpayers pay a price.

(And for what it’s worth, the Journal shouldn’t participate in such an arrangement either: It leaves the paper feeling indebted to Summers, which will certainly affect its coverage of him, which Summers well knows.)

By the way, the White House published a list of staff salaries. (Good for Obama! The Clinton White House didn’t do this, and the Bush White House? Not a chance.)

Summers is making $172,000.

A poster below draws my attention to this Sports Illustrated blog post, which argues that David Ortiz and A-Rod are both having off years because they’ve turned 33, and, well, baseball players start to suck when they turn 33?

I’m not convinced….

She issued a response to the Vanity Fair article claiming that the endowment would be down only 22-23%.

According to the Boston Herald, Faust says 30% is still the magic number.

She writes:

… “the virtually unprecedented market conditions of the past year lead us to believe that, when the valuations on all of our illiquid investments come in and our year officially closes, our returns will be in line with our earlier projections of a 30 percent decline, and in line with our peers who are following similar investment strategies. Recently reported assertions about Harvard’s endowment performance are inaccurate.”

My guess is still 27-28%…with the caveat that the number is virtually meaningless, because you can’t trust the valuations of the illiquid investments. But it’s interesting that Faust felt compelled to respond to an anonymous quote….

I’m delighted that Al Franken has finally been established as a senator from Minnesota for a couple of reasons.

One, I can now say that I know a senator, which makes me feel important. I worked with Al, editing his stories, a decade ago at George, and talked him with about taking over the reins of the magazine after John Kennedy died and I was departing. He’s an idealistic man who truly believes in social justice, and I think he’ll make a good senator.

Also, he is funny.

But most important, Franken’s confirmation as senator means that I [finally] won the election night pool….

…I’ll be traveling most of the day tomorrow, so probably won’t have a chance to post, unless there’s wireless in the Miami airport….

Bear with me—it’s a one-man show here—and I’ll be back as soon as I’m back. And boy, do I have some good Monday Morning Zen photos.

A commenter below brought this Vanity Fair article on Harvard—it’s called “Rich Harvard, Poor Harvard”— to my attention. Sounds juicy—and sensational!

• [Writer Nina] Munk became persona non grata in Cambridge, as Harvard refused to cooperate with her on the story. But speaking on the condition of anonymity, administrators and other officials were happy to snipe back and forth. “Were the judgments we made reasonable ones?” asked a former top Harvard administrator. “At the time, I think they were reasonable judgments. It turns out, with the benefit of hindsight, you might have preferred less ambitious plans.” A member of the board of Harvard Management Company doesn’t buy it. “This story is about leadership. It isn’t about money,” the person said.

The article should hit newsstands tomorrow…

I’m not even going to try to unpack this….

In the Journal, Craig Karmin writes that “the markets finally found a way to stump the Ivy League.”

The fiscal year for most endowments ends Tuesday and nearly every one has had big declines, but smaller endowments are poised to outperform heavyweights like Harvard University and Yale University by significant margins. Endowments with less than $1 billion generally held up better by putting more money in fixed income and less in alternative investments like hedge funds.

Any predictions on Harvard’s number?

I’m going to say down 27-28%. Here’s why: The number has to be close enough to 30% to be credible—i.e., to avoid making Drew Faust look stupid for saying 30% all year long–but in order to put a positive spin on things, the value of the illiquid investments will have been sufficiently massaged so that Harvard does a little better than predicted.