Archived posting to the Leica Users Group, 2011/06/02

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Subject: [Leica] Abandoned Harvester factory
From: jayanand at (Jayanand Govindaraj)
Date: Thu, 2 Jun 2011 19:52:44 +0530
References: <> <> <>

None of us have seen it in our lifetimes (not even Ted's)!

It is telling that one of the bibles of financial bubbles called
"Extraordinary Popular Delusions and the Madness of Crowds" by Charles McKay
was first published in 1841, and nothing has really changed since. As it is
said, the most expensive four words ever spoken on Wall Street are "This
Time Is Different" - it just never is, everything eventually reverts to the

Coming to International Harvester, if I remember right, McCardell took home
a bonus of around US$2million in 1979, an unbelievable sum of money in those
days. Within five years, the company had gone belly up. That is why I
consider History and Psychology two of the subjects taught in college with
great practical use in life, but hardly anyone studies them. Unfortunately
our academia is wholly consumed by Economics and Business at the present
moment, two of the most useless subjects that one can ever study!

If I were in college now, with hindsight, I would only study three subjects
- History, Psychology and Mathematics.


On Thu, Jun 2, 2011 at 4:23 PM, Ric Carter <ricc at> wrote:

> jay--
> do i remember a time when the world did not revolve around the stock market
> and big bankers?
> or was i just too young to see it?
> ric
> On Jun 2, 2011, at 4:27 AM, Jayanand Govindaraj wrote:
> > I remember doing International Harvester's demise as a case study - what
> > killed the company was bad financial management, nothing to do with the
> > products. It is a real cautionary tale, but the world forgets these
> lessons
> > very fast. It was caused by a CEO, Archie McCardell, piling on debt in
> good
> > times to boost earnings per share (EPS) by diversifying into unrelated
> > areas, all for increasing the share price to maximize his bonus -
> encouraged
> > by every Investment Bank in sight. The contrast was provided by John
> Deere,
> > who raised equity in the good times, therefore protecting themselves
> against
> > a market downturn in the future, in exchange for reduced EPS and
> > consequently lower share price in the short term. I need not tell you
> which
> > company was the darling of Wall Street at that time! Well, we know now
> which
> > decision was correct, don't we? As is always the case in this sort of
> > bungling - if the diversification drive had taken place with equity the
> > company would probably have survived, though McCardell's bonus would not
> > have - the workers are the ones who suffer, seldom the senior management.
> > Remember this is a tale of the late 1970s and not 2008!
> >
> > Exactly the same problem caused the recent recession, only it was
> individual
> > balance sheets that had sky high leverage, and not corporations - except
> the
> > banks, of course, who did but were bailed out.
> >
> > Cheers
> > Jayanand
> >
> >
> _______________________________________________
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In reply to: Message from chris at (Chris Crawford) ([Leica] Abandoned Harvester factory)
Message from jayanand at (Jayanand Govindaraj) ([Leica] Abandoned Harvester factory)
Message from ricc at (Ric Carter) ([Leica] Abandoned Harvester factory)