Language in the Financial Markets

Our economic markets are a mess. If you follow the noise on CNBC or regularly scan what passes for journalism in magazines like Smart Money, you might think the world is coming to an end. Beyond our fascination with the numbers, we forget that words play a powerful role in our financial markets. Consider the following statements with each happening approximately a week or so apart by the same person:

“Bear Stearns’ balance sheet, liquidity and capital remain strong.” (link)

“The past week has been an incredibly difficult time for Bear Stearns. This transaction represents the best outcome for all of our constituencies based upon the current circumstances. I am incredibly proud of our employees and believe they will continue to add tremendous value to the new enterprise.” (link)

Both statements, made by Alan Schwartz, President and Chief Executive officer of Bear Stearns, cover the recent action taken by the Federal Reserve (our central bank, spending our money). The Fed set up a buyer for Bear Stearns, JPMorgan, and took financial responsibility ($30 billion) for the most questionable liabilities. Note that The Wall Street Journal calls the Fed’s move “unprecedented.” (link)

Don’t Ignore the Words

While I take issue with the Fed’s actions from an economic standpoint, I’m most interested in how little attention is paid to the words surrounding the events. For example, JPMorgan, in an effort to appease both its shareholders and Bear Stearns’ shareholders positioned the purchase as a benefit for everyone involved.

“JPMorgan Chase stands behind Bear Stearns,” said Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase. “Bear Stearns’ clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns’ counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner.”

Dimon added, “This transaction will provide good long-term value for JPMorgan Chase shareholders. This acquisition meets our key criteria: we are taking reasonable risk, we have built in an appropriate margin for error, it strengthens our business, and we have a clear ability to execute.” (link)

Long-term, the deal may end up a great one for JPMorgan, but I’d argue that the language covers up a bigger issue pointed out by The Wall Street Journal:

Consider: The whole credit crisis largely reflects a lack of good information…A spectacular bankruptcy would shine a bright line on this mess. To start, Bear’s trading counterparties and other creditors would have to show themselves and explain their positions to a public examiner. And then bankruptcy lawyers would have to pore through each and every one of Bear’s assets and liabilities, making the full autopsy public.

Of course, such a full accounting would take at least a year and likely longer. But we’ve already endured almost a year of an opaque credit crisis. What if, in another year, we’re still in the middle of the crisis with no new real, third-party information to guide us out? The information provided by Bear’s bankruptcy would then be invaluable. (link)

Going back to an earlier post, I posit that our impatience with language and our pursuit of of immediate gratification impacts current monetary policy and not in a good way. When did we stop being a society that saw value in long-term investments? When did we start buying into the hype, as a group, that getting rich quick was not only possible but almost guaranteed to everyone?

Building Something

When was the last time you knew your money was being spent or invested on something bigger, something with a larger impact? In the movie It’s a Wonderful Life, Jimmy Stewart’s character, George Bailey while trying to convince depositors to not sell their Building and Loan shares to the “evil” Mr. Potter or to close their accounts, has a great line about why the money isn’t just sitting in the safe:

You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house…right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?…Now wait…now listen…now listen to me. I beg of you not to do this thing. If Potter gets hold of this Building and Loan there’ll never be another decent house built in this town…Can’t you understand what’s happening here? Don’t you see what’s happening? Potter isn’t selling. Potter’s buying! And why? Because we’re panicky and he’s not. That’s why. He’s picking up some bargains. Now, we can get through this thing all right. We’ve got to stick together, though. We’ve got to have faith in each other. (link)

I believe we’ve stopped thinking about our money actually working for something bigger and instead, we’ve focused on quick results that potentially leave us with liquid funds to fuel our consumer habits. What if we actually invested in companies that did things, measurable things? What if we looked around our local communities for investment opportunities? What if we picked companies that could explain, using easy words, what they do and why they add value? If companies could talk plainly about what they do, do you think we’d care as much about stock prices?

Comments?

Amazon’s Language Problem

I’ve debated for weeks whether to write this post (I apologize in advance. It’s long). I’m questioning my relationship with Amazon. How, you might ask, does my relationship with Amazon relate to this blog? Amazon’s language has crossed a point where I believe it warrants examination. Let’s start with a little background. I have an Amazon Prime membership, which gives me free two-day shipping and a discount on next day shipping.

From the beginning, I loved it. Then, something started happening. I started getting packages later than two days and via my postman. The shipping labels revealed that these packages were shipped via DHL. Curious, I did some checking and found that DHL didn’t deliver in my area, instead relying on USPS to complete delivery of their packages. The result? The earliest I’ll receive my package is three days, with the additional hassle of having to visit the post office myself if I’m not at home when the mail is delivered to sign for the package.

After this same chain of events happening multiple times, I decided to contact Amazon and see if I could remove DHL as a shipping option. Now, I am familiar with Amazon’s Shipping Policy, which doesn’t allow for specifying a particular shipper. However, I thought that it made sense that one could opt out of one shipper, leaving Amazon the option of all the other available companies. This idea seemed reasonable because of DHL’s inability to fulfill the expectation of an Amazon Prime Membership. I also saw I wasn’t the only one having issues with DHL via an Amazon customer discussion (link). It seemed worthwhile to contact Amazon.

First Message

Here was my first message to Amazon from last November (I wasn’t yet familiar with the official shipping policy):

I consistently have issues when anything is shipped via DHL. They do not offer delivery to my area, and any packages they receive they put in Priority Mail. UPS delivers regularly and without issues. Can I specify a shipper (UPS or FedEx) for my Prime Membership?

Here was the response from Amazon’s Customer Service:

Thank you for writing to us with your comments about DHL.

We are aware that our choice of delivery services reflects on our business as a whole, and we appreciate your feedback. I have passed your message along to our shipping department, as I know they will want to read about your experience.

Please note that, we use a variety of carriers which we have found provide the best service for our different shipping options. At this time, it is not possible to request a specific carrier for your order.

Our Standard Domestic shipping is done by the United States Postal Service, UPS, DHL, and FedEx. If you select Two-Day or One-Day Shipping, your package may be delivered by UPS, DHL, or FedEx. These shipments are delivered on weekdays only. Additionally, some exceptionally large or heavy items may be shipped by a specialty carrier such as Eagle Freight.

For more information about our shipping policies and prices, please visit our Help pages:

http://www.amazon.com/help/shipping

Thank you again for taking the time to send us your comments. We hope to see you again soon at Amazon.com.

Hmm. Ok. My comments are passed on to the shipping department. I start to see a steady stream of UPS 2nd Day, so I figure the shipping department took the hint. Then Christmas happened.

Second Message

Based on the number of my orders shipped via DHL and the less than timely delivery, I contacted Amazon in January:

Again, my issue isn’t with selecting any one particular shipper for my order. My concern is that I’ve identified one shipper in particular, DHL, that is unable to meet the expectations set by your Amazon Prime program when delivering an order to me. Otherwise, I have no preference as to who delivers my orders whether it’s FedEx, UPS, or USPS. I’m simply asking that you address the issue of where that leaves me with my Amazon Prime membership if I’m not receiving my orders in the 2-day window highlighted as a benefit of paying for a Prime membership. Does a limitation exist within Amazon’s system that you can’t flag delivery area issues related to specific carriers? I can’t believe that I’m the only one with this particular issue.

Here was Amazon’s response. This second message is where my interest in Amazon’s language perked:

Thank you for writing to us with your comments about DHL.

I apologize for the inconvenience this issue might have caused, regarding late delivery of your orders when shipped t[h]rough DHL.

We are aware that our choice of delivery services reflects on our business as a whole, and we appreciate your feedback. I have passed your message along to our shipping department, as I know they will want to read about your experience.

Thank you again for taking the time to send us your comments. We hope to see you again soon at Amazon.com.

Based on this email, I started wondering, does Amazon have a database of accepted phraseology for dealing with customer issues?

Third Message

Then, I decided to have an order shipped overnight at the end of January, and paid for the upgrade, again via Amazon Prime. My third message to Amazon explains what happened:

Again, I’ve still received no answer about Amazon’s response to ongoing service issues with DHL. I know there’s a user forum with well over 1,000 entries highlighting the issue. I also know that you’ve forwarded my previous emails to the shipping department. I’m afraid I still haven’t seen anything to indicate that Amazon is taking this issue seriously or how they plan to solve it.

Please, I would like to know why Amazon continues to ship my orders via DHL, knowing that DHL will NEVER meet the two-day Prime shipping benefit and that they rely upon a second vendor (USPS) to complete delivery. At the earliest, I won’t receive my package for three days when DHL 2-Day is used. When DHL Next Day was used for the order number I’ve included, the estimated arrival date was January 30, 2008. I didn’t receive the package until February 2, 2008. I know weather is a factor in deliveries, but please explain to me why you’re using a service that told me my package was out for delivery on January 31, and yet it didn’t appear until February 2 via USPS.

While the extra days required for a DHL delivery are frustrating enough, if I happen to not be available when the mail is delivered to sign for a DHL-shipped Amazon package, I have to travel to the post office to pick up my package. There’s no second delivery attempt made when you send my orders via DHL. I don’t care who else you send my shipments with as long as it’s NOT DHL.

And yes, I’m fully aware of your shipping policy that doesn’t allow for the selection of shipping vendors. Does Amazon care that the service practices of one of its shipping vendors reflects so poorly on it? Are there no solutions to this issue?

Amazon’s response:

Thank you for writing to us with your comments about DHL regularly not delivering within delivery estimates.

I read your complete message and we are aware that our choice of delivery services reflects on our business as a whole, and we appreciate your feedback. As you are already aware that we have passed your message along to our shipping department, who have responsibilities to look in to these issues and take actions accordingly.

Customer service is not in a position to make changes to web site features or functions. I hope you can understand customer service limitations in this regard.

Thank you again for taking the time to send us your comments.

Amazon’s Issue

If customer service isn’t actually answering customer questions, then what are they accomplishing? To be clear, I’m not angry with the individuals who had the task of responding to my emails. I’m not even sure that I’m angry at Amazon. Instead, I’m perplexed. Why have they trained their agents to NOT answer questions or solve problems?

The only acknowledgment I get about customer services limitations comes in the third message, and it’s on a topic I don’t believe I ever knowingly addressed, changing web site features. I get that scalability is an issue for any customer service department, but is Amazon’s so disconnected that its representatives can’t see they’ve told me basically the same thing every single time they’ve contacted me? Do these actions really meet Amazon’s definition of customer service?

Why isn’t Amazon talking to its customers? And why is the language that is used so obviously copy and paste? Perhaps Amazon’s size gives it a sense of invincibility. However, for a company that prides itself on a delivering a quality experience, my experience feels leaves something to be desired.

Consider the words of CEO and founder Jeff Bezos:

• “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” (link)
• “A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” (link)
• “And the reason I’m so obsessed with these drivers of the customer experience is that I believe that the success we have had over the past 12 years has been driven exclusively by that customer experience. We are not great advertisers. So we start with customers, figure out what they want, and figure out how to get it to them.” (link)

This language seems completely opposite to the responses I’m getting via email. Why the disconnect?

Lesson Learned

I suspect Amazon will never stop using DHL for my orders, and I’m willing to bet that any message I send them will inform me they’ve sent my comments to the shipping department. In an earlier post I wrote about predictability vs. consistency. I wonder if Amazon is wise enough to recognize that their customer service is falling into the trap of predictability and not in a good way.

Amazon succeeded where other companies failed because they were different, but it’s becoming harder and harder to see the difference as they start to sound like everybody else.

Comments?

Taking Language to the Extreme

Of late, the extremes that we use in language caught my attention: best vs. worst, highest vs. lowest, most vs. least, and always vs. never. The flexibility of language extremes makes them so fascinating. Sometimes, you don’t want the thing described as the most or the highest. Other times, you’ll refuse to settle for anything that isn’t the best.

When we choose extreme language, we’re saying something. We’re taking a position. In the political world, some people will never vote for certain candidates. In the business world, shareholders only want the highest return on their investment. In our personal lives, we only want the best for loved ones.

Extreme language can lead to extreme behavior. Consider the words of Robert F. Kennedy:

What is objectionable, what is dangerous, about extremists is not that they are extreme, but that they are intolerant. The evil is not what they say about their cause, but what they say about their opponents. (link)

Certain subjects and actions seem to attract extreme language and behavior (religion, politics, anyone?). But what are we really saying when we use extreme language or resort to extreme behavior? What wiggle room do we leave ourselves once we’ve crossed that line?

Growing up, I regularly told people, usually my parents, I’d hate them forever for some slight. Luckily, my parents ignored me and my childish certainty that I meant what I said. I appear to have discarded this habit and can’t recall the last time I told someone I hated him. While I can’t claim I’m totally above extremes, I do know what stops my tongue and my hand is the thought expressed so eloquently by Kennedy: extremism easily slides into intolerance. However, we can’t ignore the flexibility of intolerance, too. Should one ever tolerate racism or sexism?

That’s the underlying power of language. We have the ability to shape it into something of value. Language extremes have a place, but we’ve got stop pretending that using it doesn’t bear consequences. For example, doing a Google search for “I’ll never,” returned 1.4 million results. Of those 1.4 million, I wonder how many people had to take back their “I’ll never.” I think I might be of them. Are you?

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Language Crashes

I’m not a particularly patient person. I’m reminded of this shortcoming every time I get in a car. No, I don’t subscribe to out-of-control road rage, but I do tap the steering wheel and “yell” at the cars going under the speed limit or straddling the lane lines. (I offset this aggravation by singing along with the radio, but only if I’m alone. Yes, I’m weird.) I also try to avoid offensive gestures unless they’re directed my way first, which doesn’t happen very often.

On closer inspection, there’s something interesting that happens when we drive our cars: we’ve created another, mostly non-verbal language to effectively communicate actions and behavior. What does your driving language say about you? Do you use your signal? Do you yield to oncoming traffic? Do you run red lights?

Think about the judgment calls you’ve made concerning other drivers. For example, if there’s really as many idiots in the world as my driving experience would indicate, we’re in trouble. However, I suspect just like our verbal language skills, our driving language skills aren’t always adequate to the situation.

One day driving home from work on the freeway, I carefully checked my mirrors and went to move into the right lane. I’m not sure if it was a shadow or just a quick look, but I luckily saw the motorcycle previously in my blind spot just seconds prior to completing my move. A quick wave from myself and the motorcyclist made it clear that we were both aware of the close call. But what if I hadn’t seen him in that split second? Regardless of how carefully I checked my mirrors and looked around, there still could have been an accident.

Causing Language Crashes

I think these accidents happen in regular language, too. We know all the “rules,” we try to carefully consider all the circumstances, but sometimes it still isn’t enough and we end up making a gaffe, creating a language crash. Most of our individual language crashes don’t amount to much, unless we happen to be in the public eye.

Our fear of crashes can inhibit us from saying things of value. Modern day business and politics punishes crashes so harshly that our leaders have taken refuge in meaningless, lifeless rhetoric that tells us little but lowers their risk of a crash. I’ve said many times that I’d much rather engage in conversation with someone I disagree with 100%, if she is equally engaged, versus chatting with someone who completely agrees with me, but can’t tell me why he does.

No Patience for Language

We’ve run out patience with our language. I haven’t decided if it’s a time issue, where we think we shouldn’t have to listen as much or as closely to get the message, or if it’s a question of knowledge. I posted before about how I tend to use “big” words and some friends like to tease about my word usage. To me, it’s not a question of using big words. I’m using my vocabulary. It just happens that my vocabulary is a little larger than most.

Sometimes I feel sheepish when I get the “look” that I’ve used yet another “big” word, but at the same time, why are we so willing to put words into categories? I don’t think we should all be walking around with dictionaries, but I’m not convinced that words should go unspoken simply because they aren’t common. The same goes for the thoughts and ideas we share with one another.

Accepting the Language Challenge

Today’s politicians aren’t necessarily any worse or better than their predecessors. The same goes for CEOs of large companies and any other individual in a position of authority. Today’s leaders, however, face the dreaded sound bite and a public with an increasingly short attention span who has little interest in hearing an opinion that differs from their own. So we hear very little that challenges us and even less that interests or moves us.

You should be challenged when leaders, or anyone else for that matter, speaks. I’m not calling for adding unneeded complexity to our conversations. Rather, I’m pushing for adding new ideas that challenge the status quo, forcing you to determine what you really believe. Do you actually prefer hearing the same thing over and over again just because it’s easy to understand?

To break the cycle, we have to increase our patience for language and ideas. We have to embrace all parts of language, even the one’s we may not fully understand yet or that make us uncomfortable. We have to be open to crashing more than once as we pursue long-term ideas and results that take time and patience, two things that seem to be lacking in today’s society.

What about you? Have you crashed lately?

Comments?

(Image courtesy of Gaetan Lee. Some rights reserved.)

The Business of Incentives

Business incentives handed out by communities and states are interesting things. Government officials are quick to point out how such incentives benefit the area as a whole. Company officials are quick to highlight the benefit of working in a particular community and how much they appreciate said community (i.e., government) support. The language becomes very interesting in these cases.

For instance, last week I saw a story in The Salt Lake Tribune that discussed how Utah is offering Goldman Sachs up to $20 million to hire more employees in Salt Lake City. The goal? To add 375 more jobs with an average salary of $75,000. Goldman would receive payment of the $20 million in the form of a tax rebate over 20 years.

In an email from Goldman Sachs, the managing director wouldn’t comment on the specific situation, but he did say that:

Goldman Sachs has had an excellent experience in the state of Utah over the past seven years. We strive to be an employer of choice and look forward to growing our business here in the future.

The state explained why it offered the incentive this way:

…the large incentive is merited because of the company’s high wages. The company’s average wages are significantly higher than the Salt Lake County median wage of $32,828. In addition, the company is making a capital investment in the city of more than $20 million.

First, look at Goldman Sachs’ statement: it’s “had an excellent experience in the state of Utah.” Based on this “excellent experience,” couldn’t Goldman make certain projections about the value of increasing its presence in Utah, minus the incentives? Second, look at the state’s explanation. Its rationale is even more curious.

Notice the use of the word “average.” From that usage, one can speculate that some salaries will be more and some salaries will be less, potentially affecting the tax rate. Even more intriguing is the state’s expectation that Goldman will make “capital investments…of more than $20 million.” Ultimately, there’s no promises or guarantees associated with either party.

For example, what happens if the state pays out a tax rebate over three years, totaling $3 million, and then Goldman Sachs downsizes its Salt Lake offices? Do the potential taxes from those salaries over three years make up the $3 million paid to Goldman? I’m sure minds smarter than mine have already done the math, but incentives rarely benefit both parties because no guarantees exist. I’m inclined to believe that businesses usually come out ahead on a regular basis, otherwise they wouldn’t continue to take the incentives.

Incentives don’t make sense, at least not the way they are currently explained. If all involved parties admitted that a certain taint of bribery comes with the concept of incentives, I might find the whole thing more believable. Instead, everyone tries to make it sound as if they are really doing a favor for the other. In this case, the state is doing Goldman Sachs a favor, helping to cushion the overhead of hiring 375 more people. Goldman Sachs is doing the state a favor by hiring 375 more people, increasing the tax base.

Ultimately, Goldman Sachs, and any other business for that matter, should make decisions based on the validity of the value to the business, not on artificial money provided by government incentives. And governments shouldn’t kid themselves that these deals are always in the best interest of the community.

Comments?

Reporting A Scandal: When Everyone Knows

I came across a post today that related a story about a supposed scandal brewing concerning a presidential candidate. I don’t care about the scandal. I’ve mentioned before that personal antics are of no interest to me. However, the language used to describe the situation is interesting:

So I was down in DC this past weekend and happened to run into a well-connected media person, who told me flatly, unequivocally that “everyone knows” The LA Times was sitting on a story, all wrapped up and ready to go about what is a potentially devastating sexual scandal involving a leading Presidential candidate. “Everyone knows” meaning everyone in the DC mainstream media political reporting world. “Sitting on it” because the paper couldn’t decide the complex ethics of whether and when to run it. The way I heard it they’d had it for a while but don’t know what to do. The person who told me (not an LAT person) knows I write and didn’t say “don’t write about this”. (link)

These phrases stuck out to me: “everyone knows,” “sitting on,” and “complex ethics.” Everyone knows? If everyone knows, then how complex can the ethics can be? And when you add “sitting on” to “everyone knows,” the contradictions just keep piling up.

Maybe this kind of thinking has played a role in why we’re paying less attention to the MSM and  more attention to people who are invested in ideas bigger than “everyone knows.”

Comments?

Lowest Common Denominator

Ladies, this post is for you, although I have a sneaky suspicion guys can benefit, too. When you’re with girlfriends, how do you talk to each other? Even better, how do you talk about and talk to other women in general? Rachel Lucas posted her observations (warning: some language) on how women in their 20s address each other and behave in general. Suffice to say, I’ve heard and seen similar. And I will never understand it.

Crazy enough, all this has happened after the most liberating time in the history of women. Personally, while I suspect there are still plenty of men happy to hold women down, I believe women have become equal contributors to their own misery and lack of advancement.

For example, while I had plenty of male executives pat me on the head, I eventually gained respect from most. The women, however, mainly peers, were some of the most vicious, cutthroat adversaries that ever crossed my path.

Gossip was the order of the day, and it wasn’t limited to workplace events. Anything that took place outside of work was fair game, too. They didn’t want to see me, or any other women for that matter, succeed. Their version of success? Watching someone else fail.

Why? What drives such behavior? Why is such pleasure taken in bringing other women down? Beyond taking potshots at one another, why do women seem to revel in behavior (see Rachel’s post) that I suspect even most men would find disgusting?

For me, this issue boils down to a larger question: Who honestly believes the lowest common denominator is something to strive for?

We’ve gone from following in the footsteps of Rebecca West,

“I myself have never been able to find out what feminism is; I only know that people call me a feminist whenever I express sentiments that differentiate me from a doormat or a prostitute.”(link)

to girls trying to outdo each other by dancing on top of bars and making out in public.

How can women (or men) ever reach their potential when they settle? Some of the greatest changes in history happened because individuals said, “Enough. The bare minimum is no longer acceptable.” These individuals rose to the moment. I wonder what they’d say if they could see what we’ve done with the future they worked so hard to achieve.

Some might argue that I’m attacking women with this critique. I would argue that equal rights doesn’t require that you act with equal stupidity. Somewhere along the way, we started confusing equal rights with equal “bad” behavior. Will you really feel like more of an empowered woman if you get rip-roaring drunk, puke all over the bathroom, and fail to remember the name of the person in your bed the next morning?

I always thought the point of feminism was to demonstrate that women were, at minimum, the equal of men. I’m not so sure that goal included drinking an equal amount of alcohol and swearing like a sailor. The lesson I fear we’ve failed to learn as women is that just because you can do something, it doesn’t necessarily mean you should.

Comments?