Who wants to become an Alpha Male?

 

Pakistan and Khalistan have infiltrated Canada

 

General Electric’s accounting tactics bared in SEC settlement

 Industrial powerhouse underlines risk of short-term, market-orientated approach to management writes Sujeet Indap in The FT 

In 2015, Larry Fink, the BlackRock founder and chief executive, released a public letter pressing fellow CEOs to eschew making business decisions based on short-term considerations. 

“It is critical, however, to understand that corporate leaders’ duty of care and loyalty is not to every investor or trader who owns their company’s shares at any moment in time but to the company and its long-term owners,” he wrote. 

One company that BlackRock was a major shareholder at the time was General Electric with a stake of nearly 6 per cent. Around then, Jeffrey Immelt, the chief executive of GE, appears to have been overseeing just the kind of instant market gratification management effort that Mr Fink was condemning. 

The industrial group “misled investors” and “violated antifraud, reporting [and] disclosure controls”, according to a recent US Securities and Exchange Commission order. In early December, GE agreed with the regulator to pay $200m to settle charges that it had misled investors about its financial condition in between 2015 and 2017.  

In statement, the company noted that no financial statements required correction and that it had neither admitted nor denied guilt as a part of the SEC settlement. 

Five years after Mr Fink’s letter, there has been a continued rise in “stakeholder capitalism” and investing for better environmental, social and corporate governance standards. But this coda to the GE saga of the 2010s is an ugly reminder of the world these new principles are attempting to replace. 

The SEC’s order alleged GE pulled forward future profits and cash flow and, separately, delayed reporting big losses in order to boost immediate results. Damningly, the SEC described how Wall Street pressure and undue attention to the company’s stock price appeared to drive the company’s actions. 

In 2015, GE announced that its once high-flying but controversial GE Capital unit would shrink by $200bn worth of assets. While highly profitable at times, the banklike entity was volatile and its heavy losses during the 2008 financial crisis had nearly sunk the entire company.  

Mr Immelt wanted to reposition GE as an industrial powerhouse with aviation, healthcare, energy and oil and gas units that were supposed to help the developing world become urbanised. In late 2015, the group would close its $15bn acquisition of France’s Alstom to boost its power plant business. 

The power division, according to the SEC, would become the home of accounting mischief. Maintenance contracts with customers that ran several years required estimates of costs and the reduction of such inputs allowed GE to boost its book profits. Separate alleged manoeuvres included selling receivables to GE Capital, allowing for commensurate gains in cash flow. 

The company had announced in 2015 that it would seek to hit $2 per share of earnings in 2018. It appears that precise and ambitious figure effectively became the central organising principle of the company. 

“GE was aware of investor and analyst concerns that its cash collections were not keeping pace with revenue and that its unbilled revenue was growing in its industrial business,” wrote the SEC. 

It said executives at GE Power and GE Power Services cited analyst reports when they discussed internally the need to show improved cash performance. In one 2016 presentation to GE senior management, the SEC said, one executive posited that GE’s stock price could reach $40 if operating cash flow performance improved. It averaged about $30 during that year.

At the same time, the pieces of GE Capital the parent company had retained would prove to be another time bomb. GE kept an interest in long-term healthcare insurance policies that had been sold decades earlier. Those policies proved to be more expensive than had been anticipated, a reality that became clear in 2015. 

In 2016, as it became evident that higher losses were going to need to be realised, one executive called the situation in the insurance business a “train wreck”. 

It seems GE only came clean with investors about its accounting practices in the power division in 2017 while also eventually taking a $22bn impairment to goodwill related to the Alstom buyout. 

And it finally took a $9.5bn charge related to insurance liabilities in 2018 and committed to plug another $15bn of capital into shoring up the GE financial services unit. 

A spokesperson for Mr Immelt said GE sought to comply with all standards for financial accounting. “To achieve this goal, it put in place strong processes with multiple checks and balances,” the spokesperson added. 

BlackRock continues to hold a stake of about 6 per cent in GE shares, which currently hover around $10. A recovery to the peak of nearly $33 seen in 2016 will undoubtedly require a very long-term orientation.

The Map of Pakistan by Rahmat Ali

 

Interview with Sanjay Dixit

Interview with Pervez Hoodbhoy

The backlash against colonialism holds lessons in guilt and gratitude

 Descendants of conquerors and the conquered must move towards a universal account of history writes Mihir Bose in The FT 

In the tsunami of words on the poisonous legacy of slavery and empire generated by the death of George Floyd, an African-American who was killed in Minneapolis in May by a white police officer, two stand out: “gratitude” and “guilt”. 

Should descendants of those who built empires on the back of exploitation feel guilty for what their ancestors did? Or should the descendants of the colonised feel gratitude that their ancestors were conquered? 

My wife is a descendant of the conquerors, having been born into the British Cecil family which has produced prime ministers and great political leaders. I am one of “midnight’s children”, born a few months before India won its freedom from British colonial rule in 1947. While I joke that she is a child of the conquerors and I of the conquered, I do not expect my wife to feel guilty for what her ancestors did. But I do reject the idea that I should be thankful that my ancestors were conquered. 

That the conquered should feel gratitude was a view often expressed during the days of the British empire. It was not uncommon for the British to say that the Indians needed to be “civilised”. As Winston Churchill, who was then out of government and campaigning against self-rule for India, put it very bluntly in a speech in 1931, the vast majority of Indians “are primitive people”. 

Today, some historians imply I should be grateful for colonial legacies. Niall Ferguson, in his book Empire: How Britain Made the Modern World makes the argument that the empire “enhanced global welfare — in other words was a good thing”. He adds that it brought free markets and the rule of law. Other individuals are still as blunt as Churchill. 

While I do not think my ancestors needed to be civilised by Europeans, they had many faults. My family are high-caste Hindus and there is no denying the abominable way these upper echelons of society treated the so-called untouchable castes, now known as Dalits. My abiding childhood memory is of my mother giving the sweeper woman tea and sweets, thinking she was being generous, while telling us that nobody should ever use her cup and plate. 

Years ago, I visited Bangladesh, where my family is from. While very hospitable, the Muslims there made it clear they had not forgotten the dreadful way my rich Hindu ancestors had treated theirs. I know I need to acknowledge such historical truths, but I do not see why I should feel personally guilty. 

The same applies to my wife. For example, on a family trip (including nephews and nieces) to the National Portrait Gallery before the Covid-19 pandemic, we stopped before a portrait of Arthur Balfour, nephew of three-times prime minister Lord Salisbury and himself a prime minister. The potted history mentioned that, as foreign secretary, he was the author of the 1917 Balfour Declaration in support of “the establishment in Palestine of a national home for the Jewish people”. 

I pointed out that, a few months before, he had warned the British cabinet in a memo, that Indians would not be able to manage parliamentary democracy because they were not of the same race as Europeans. Even education would not bridge the racial divide. Balfour and his fellow cabinet ministers, presided over by Lloyd George, did not dispute Lord Curzon’s estimate that it would take Indians 500 years to learn to rule themselves. I said this not to make my wife’s family feel guilty, but to highlight that the history we have been taught is far from the complete picture. 

This is what we need to tackle: call it the “Machiavelli problem”. More than 1,500 years before the Renaissance diplomat and philosopher wrote his book on statecraft, The Prince, an Indian called Chanakya wrote a treatise on the same subject called Arthashastra, as a handbook for a great king. 

Niccolò Machiavelli may or may not have known about its existence but it cannot be disputed that, while Machiavelli was merely a theoretician, Chanakya helped build one of India’s greatest empires. Indian schoolboys know of both men and the diplomatic enclave in New Delhi is called Chanakyapuri. Yet Chanakya is often described as the Indian Machiavelli and he is hardly known outside India. 

The result of imbalances like these is that descendants of the conquered, like me, always carry two bags: one containing the conqueror’s history, the other that of the conquered. Descendants of the conquerors, like my wife, only have to worry about the first bag. 

Unless we can equalise these historical weights and start to move towards a truly universal history, the past will continue to divide us and we shall always be wrestling with the problems of guilt and gratitude.

Why Is an Ordinary Life Not Good Enough Anymore? – Alain De Botton

 

What we have learnt about the limits of science

Thiago Carvalho in The FT

Some years ago, on New Year’s Day, my wife and I noticed that our son, not yet two months old, was struggling to breathe — a belaboured, wheezing effort was all he could manage — and we decided to face the holiday emergency room crush. After assessing his blood oxygen levels, the pediatrician said: “Pack a bag, you will be here all week. He will get worse. Then he will get better.”  

Our son had contracted something called respiratory syncytial virus, and it was replicating in his lungs. In a scenario similar to Covid-19, most healthy adults infected with RSV will experience a mild cold, or no symptoms at all. However, some unfortunate infants who contract RSV may suffer a devastating pulmonary infection. For those kids, there are no drugs available that can reliably stop, or even slow down RSV’s relentless replication in the lungs. 

Instead, according to Mustafa Khokha, a pediatric critical care professor at Yale University, doctors first give oxygen and then if the child does not improve, there follows a series of progressively more aggressive procedures. “That’s all supportive therapy for the body to recover, as opposed to treatment against the virus itself,” says Khokha. Outstanding supportive care was what our son received, and the week unfolded exactly as his pediatrician predicted. (It was still the worst week of my life.)

For all the progress we have seen in 2020, a patient brought to the emergency room with severe Covid-19 will essentially receive the same kind of supportive care our son did — treatment to help the body endure a viral assault, but not effectively targeting the virus itself. The main difference will be the uncertain outcome — there will be no comforting, near-certain “he will get better” from the attending physician. 

Contrast that story with a different one. On a Tuesday morning in early December, in the English city of Coventry, Margaret Keenan, just a few days shy of her 91st birthday, became the first person in the world to receive the BioNTech/Pfizer Covid-19 vaccine outside of a clinical trial. The pace of progress was astonishing. It was less than a year since, in the closing moments of 2019, Chinese health authorities alerted the World Health Organization to an outbreak of a pneumonia of unknown cause in Hubei province.  

The Covid-19 pandemic has given us an accelerated tutorial on the promise and the limits of science. With vaccines, testing, epidemiological surveillance, we know where we are going, and we have a good idea how to get there. These are essentially challenges of technological development, reliant now on adequate resources and personnel and tweaking of regulatory frameworks. For other scientific challenges, though, there may be no gas pedal to step on — these include the prickly problems of arresting acute viral infection, or understanding how the virus and the host interact to produce disease. Science, as Nobel Prize-winning immunologist Peter Medawar put it, is the art of the soluble. 

In March, when, incredibly, the first human vaccine trials for Covid-19 were kicking off in Seattle, the WHO launched an ambitious clinical trial to try to identify existing pharmaceuticals that could show some benefit against Sars-Cov-2. In October, the WHO declared that all four arms of its Solidarity trial had essentially failed. The search for effective antiviral drugs has not lacked resources or researchers, but in contrast to the vaccine victories, it has yet to produce a single clear success story. The concentrated efforts of many of the world’s most capable scientists, relying on ample public support and private investment, are sometimes not enough to crack a problem. 

Perhaps nothing exemplifies this more clearly than what followed Richard Nixon’s signing of the National Cancer Act on December 23 1971. The act was cautiously phrased, but January’s State of the Union address declared an all-out war on cancer: “The time has come in America when the same kind of concentrated effort that split the atom and took man to the moon should be turned toward conquering this dread disease.” The war on cancer would funnel almost $1.6bn to cancer labs over the next three years, and fuel expectations that a cure for the disease would be found before the end of the decade. Curing cancer remains, of course, an elusive target. In 2016, then vice-president Joe Biden presented the report of his own Cancer Moonshot task force. 

The success of the Apollo program planted the Moonshot analogy in the science policy lexicon. Some grand challenges in biology could properly be considered “moonshots”. The Human Genome Project was one example. Like the race to the Moon, it had a clear finish line: to produce a draft with the precise sequence of genetic letters in the 23 pairs of human chromosomes. This was, like the propulsion problems solved by Nasa en route to the Moon, a matter of developing and perfecting technology — technology that later would allow us to have a genetic portrait of the cause of Covid-19 in under two weeks.  

The cancer context was rather different. In the countdown to the war on cancer, Sol Spiegelman, the director of Columbia University’s Institute of Cancer Research, quipped that “an all-out effort at this time [to find a cure for cancer] would be like trying to land a man on the Moon without knowing Newton’s laws of gravity.” And so it proved. 

We now know quite a lot about how the body resists viral infections, certainly much more than we knew about the biology of cancer in 1971. Over 60 years ago, at London’s National Institute for Medical Research, Alick Isaacs and Jean Lindemann exposed fragments of chicken egg membranes to heat-inactivated influenza A virus. In a matter of hours, the liquid from these cultures acquired the capacity to interfere with the growth of not only influenza A, but other, unrelated viruses, as well. Isaacs and Lindemann named their factor interferon. Interferons are fleet-footed messengers produced and released by cells almost immediately upon viral infection. These molecules warn other host cells to ready themselves to resist a viral onslaught. 

Viruses rely on hijacking the normal cellular machinery to make more copies of themselves and interferons interfere with almost all stages of the process: from making it more difficult for the virus to enter cells, to slowing down the cellular protein factories required to make the viral capsule, to reducing the export of newly made viral particles. Interferons are now part of our pharmaceutical armoury for diseases as diverse as multiple sclerosis and cancer, as well as hepatitis C and other chronic viral infections. 

Multiple interferon-based strategies have been tried in the pandemic, from intravenous administration to nebulising the molecule so that the patient inhales an antiviral mist directly into the lungs. The results have been inconclusive. “A lot of it has to do with the timing,” says Yale immunologist Akiko Iwasaki, “the only stage that recombinant interferon might be effective is pre-exposure or early post-exposure, and it’s really hard to catch it for this virus, because everyone is pretty much asymptomatic at that time.”  

This year’s scramble for effective antiviral drugs led to a revival of other failed approaches. In 2016, a team of researchers from the United States Army Medical Research Institute of Infectious Diseases in Frederick, Maryland, and the biotech company Gilead Sciences reported that the molecule GS-5734 protected Rhesus monkeys from being infected with the Ebola virus. GS-5734, or as it is more familiarly known now, remdesivir unfortunately failed in clinical trials. This was a bona fide antiviral, backed up by demonstrations that the drug efficiently blocked an enzyme used by viruses to copy their genome. Ebola was already remdesivir’s third dead-end: Gilead had previously tested GS-5734 against hepatitis C and RSV, and the results were disappointing. 

 In late April, National Institute of Allergy and Infectious Diseases director Anthony Fauci, a member of the White House coronavirus task force, proclaimed that the US remdesivir trials had established “a new standard of care” for Covid-19 patients. As has happened repeatedly during the Covid-19 crisis, the data backing this claim not been made public, nor had it, at the time, been peer-reviewed. 

Fauci explained that the drug had no significant effect on mortality, but claimed that remdesivir reduced hospitalisation times by about 30 per cent. It was the first piece of good news in a spring marked by global lockdowns. Unfortunately, results from a large-scale trial run by the WHO released in the autumn failed to support even the limited claims of the US study (Gilead has challenged the study’s design), and the WHO currently advises against giving remdesivir to Covid-19 patients.  

For those who do not naturally control Sars-Cov-2 infection, or who have not been vaccinated, the failure to repurpose or create effective antiviral agents leaves supportive care. We are only beginning to understand the interplay of this new virus and human hosts. It is also a protean affliction, as sex, age, and pre-existing conditions all affect outcomes. The single clearest way to reduce mortality remains the dexamethasone treatment for patients requiring supplemental oxygen initially reported in the UK Recovery trial. It is not a direct attack on the virus, but a way to ameliorate the effects of infection and the immune response to it on the human body. Dexamethasone is, in a very real sense, supportive care. 

So what have we learned about the limits of science? First, we were reminded that spectacular successes are built on a foundation of decades of basic research. Even the novel, first-in-class vaccines are at the end of a long road. It was slow-going to get to warp speed. We learned that there are no shortcuts to deciphering how a new virus makes us sick (and kills us) and that there is no ignoring the importance of human diversity for cracking this code. Diabetes, obesity, hypertension — we are still finding our way through a comorbidity labyrinth. Most of all, we have learned an old lesson again: science is the art of the soluble. No amount of resources and personnel, no Manhattan Project, can ensure that science will solve a problem in the absence of a well-stocked toolbox and a solid, painstakingly built theoretical framework. 

South Korea recorded its first Covid-19 case on January 20. Eleven days later, Spain confirmed its first infection: a German tourist in the Canary Islands. Spain and South Korea have similar populations of about 50m people. As of publication of this piece, South Korea has had 879 deaths, while Spain reports over 50,000. The west missed its moment. Efficient testing, tracing and containment of Covid-19 was a soluble technological and organisational problem. Here too, we can hear echoes of the war on cancer. The biggest single reduction in cancer mortality did not come from a miracle drug. It was the drop in lung cancer deaths, due to what we could call the war on tobacco. Perhaps Dr Spiegelman might concede that even if we don’t have a law of gravity, we do have a first law of medicine: always start with prevention. 

Covid-19 has pushed science to its limits and, in some cases, sharply outlined its borders. This century’s first pandemic finds humanity, with its transport hubs and supply chains, more vulnerable to a new pathogen. But virology, immunology, critical care medicine and epidemiology, to name a few, have progressed immeasurably since 1918. Unfortunately, in a public health emergency, the best science must be used to inform the best policies. In the seasonal spirit of charity, let us say that that has not always been the case in our pandemic year.