The Drobny View

Two weeks on the left coast, traveling from San Francisco to L.A., provides a breath of fresh perspective outside the Beltway. The conversation shifts from the partisan political bickering of Washington to the weather (rain, mostly,) the Adventures of Arnold in the statehouse and, of course, the ongoing debate over immigration.
But it was in Santa Monica, at a two-day conference of hedge fund managers organized by Drobny Global Advisors, that I was exposed to a genuinely different way of looking at the world.
These exceptionally bright men and (a few) women, who among them manage billions of dollars of other people’s money, try to view the world as it is, not as they think it should be or wish it to be. They are realists who set aside their personal political views and suspend judgement in an effort to take a hard-eyed look at the economies of different countries.
They are gamblers, of course, but gamblers who do a prodigious amount of research and analysis before they place their bets (or those of their clients) on the Argentine peso or the Japanese real estate market or the fluctuating price of palladium versus platinum.
At the semi-annual Drobny Global conferences, a panel of the best and brightest share with their colleagues what they call their favorite trades, their assessments of what is going up and down in the next six months or a year. There is no concern about sharing proprietary information, because if they are right, and the other hedge fund managers in the room make similar trades, everybody benefits.
It is a refreshing perspective, devoid of the triangulation and three-cushion billiard shots that characterize Washington policy debates.
On each table at the conference, was a copy of a new book, “Inside the House of Money,” by Steve Drobny, that seeks to unravel the mysteries of the hedge fund universe through interviews with some of its most accomplished practitioners. It makes fascinating reading.
The keynote of the conference was given by Jared Diamond, the Pulitzer-prize winning author and UCLA professor, who took the long view in trying to assess why some societies collapse and others survive. The population of Easter Island, for example, was decimated by its own actions. They cut down all the trees, destroyed the native economy and ultimately descended into civil war, starvation and canibalism.
To succeed, Diamond argues, a society needs to be able to anticipate and perceive its major problems, separate long term trends from background noise and short-term fluctuations (think global warming,) and resolve conflicts of interest between different segments of society (think haves-versus-have nots.)
Apply those standards to the Roman empire, and its downfall was inevitable. Now apply them to the United States society today and decide for yourself whether we’ll be still be king of the mountain in a century or two.
As I say, a refreshing perspective.

Please click on the link below to learn more about Steven Drobny’s book, “Inside the House of Money”

Inside the House of Money



Everybody knows that sailboat racing is a boring spectator sport — as exciting as watching paint dry, the old cliche goes. And mostly that is true. Why then are thousands of people turning out to greet and watch the seven yachts currently competing in the around-the-world Volvo Ocean Race? The answer, I think, is that these boats and these sailors are living on the edge, literally, between survival and disaster. They have already come 25,000 miles over the last seven months through the world’s most treacherous seas at speeds of up to 40 knots, rocketing off waves 30 feet high, dodging icebergs and enduring exhuberant parties at every stop. These boats are too light and too fragile to do what they are doing — and that’s the appeal. In our seatbelted, risk-adverse, liability-protected, politically-correct, over-insured world, these seventy sailors are among the last true adventurers.

Can You Believe the News?

The Edwards Lecture in Politics and History honors former Democratic Congressman Don Edwards, who represented San Jose for 32 years in the U.S. House of Representatives with uncommon commitment to civil rights, decency and the plight of the disadvantaged.

By Terence Smith

“Can you believe the news?” That’s our topic here tonight. There are two ways to read that title, of course, credulously and incredulously…as in …“Can you believe the news?”…and … “Can you believe the news?” Either way, it is a fair question.

It is a relevant and even vital question if you accept, as I do and I know Don Edwards does, that democracy functions best when its citizens know what government is doing in their name and with their tax dollars. If you accept that, and the notion that independent, fair-minded, professional news organizations are essential to keep people informed, then I would argue that we are in trouble.

We are in trouble, because of worrisome trends on two scores: what the government is doing…. And what the news business is doing to itself.

On the first score, in the wake of 9/11, government has been on a secrecy binge, drunk with the notion that in the presidentially-declared war on terrorism, more and more information must be kept from the public and the Congress. Bob Woodward of the Washington Post argued recently that government secrecy poses a greater threat to American liberties today than Al Qaida.

An exaggeration? Consider some recent headlines:

Item: In secret, without warrants and beyond the knowledge of all but a handful of members of Congress, the Bush administration has been using the national security agency to tap the phones and e-mail of American citizens. Despite all the outcry and demands for an investigation that followed this disclosure in the New York Times, this program continues.

Item: In secret and without explicit Congressional authorization, judicial review, or knowledge of the International Red Cross, the Central Intelligence Agency has been operating a network of so-called “black” prisons in foreign countries where they incarcerate third-country nationals without trial or recourse.

Item: In secret until it was recently revealed, the Bush administration has been reclassifying thousands of documents that previously had been declassified and publicly released by the State Department and other agencies. One example was a 1950 intelligence estimate, written 10 days before Chinese forces crossed into North Korea, stating that Chinese involvement was “not probable.” It was declassified years ago and published in the official State Department papers. Now it has been reclassified.

Is it embarrassing to intelligence agencies to have such a report out there? Yes. Is it a threat to our national security today? Hardly. Reclassifying such a document is the bureaucratic equivalent of trying to put toothpaste back in the tube. It would be funny, if it did not reflect a larger mentality at work in the government today.

Item: According to a recent report from the Government Accountability Office, the Bush administration spent $1.6 billion between 2003 and 2005 on pre-packaged “news.” It signed 343 contracts with public relations firms, advertising agencies, media organizations and individuals.

Some of these you may know about: Like the $186,000 paid to conservative commentator Armstrong Williams to promote the merits of the “No Child Left Behind” act…. Like the millions spent by the Lincoln Group to pay Iraqi editors and journalists to publish “good news” stories about the reconstruction of Iraq …Like the so-called video news releases applauding government programs that are routinely sent out free to local television stations around the country. These have been written about, but many more of these contracts never come to light.

Again, it would be funny, if it were not so pathetic. Do we really believe that we will convince ordinary Iraqis that the war is going well with pre-packaged news reports written by Army public relations officers? News reports about their own country? As the old saying goes: “What are you going to believe? What you see with your own eyes or what I tell you is going on?”

None of these items in themselves jeopardize our democracy (although they do threaten to make us a laughing stock abroad.) But they reflect a mindset that has taken hold in the Bush administration and in some quarters in Congress that says in effect:

– The war on terror justifies violating the Geneva Convention, signed and ratified treaties on the treatment of prisoners, prohibitions against domestic surveillance of U.S. citizens and the civil rights of persons brought before our courts of law
– Further, it justifies to the true believers, the establishment of extra-legal military tribunals, the so-called “rendition” or secret transferring of suspects to foreign countries where they may be subject to torture and, of course, harsh treatment of prisoners held by the U.S. in Guantanamo Bay and elsewhere.

– Further it argues that the injury to our image abroad is acceptable collateral damage for the world’s sole remaining superpower.

– The Bush White House believes — genuinely believes — that the president can do whatever he considers necessary to protect the safety of the country and its citizens without prior approval from Congress or the courts.

– Just last week, the Attorney General, Alberto Gonzales, told your old committee, Don, the House Judiciary Committee, that he … “would not rule out” using secret, warrantless wiretaps to monitor phone calls and emails between American citizens within this country. Previously, of course, he said the NSA was only taping communications that originated abroad. Mr. Gonzales argued that the president has the right to expand that to calls and emails in this country. The age of Big Brother is truly here.

– What is dangerous here is the mindset, the absolute conviction in the White House that they know best. That is when important constitutional principles get set aside and vital civil liberties are abridged.

– Finally, in this atmosphere, there is a full court press underway against reporters who cover sensitive national security subjects. Prosecutors are increasingly inclined to subpoena, interrogate and, if necessary, jail reporters who resist demands to turn over their notes and identify their sources. According to the committee to protect journalists, there are currently more than two dozen reporters under subpoena or facing contempt citations around the country. The Valarie Plame and Wen Ho Lee cases are only the most notorious, the ones that get the most attention. Many others go on beneath the radar.

It was telling that the Bush administration’s first reaction to the NSA wiretapping story was to order an internal investigation into who leaked the information. Not to brief Congress, not to explain the program to the public, but to track down the leaker and then go after the leakee.

In another time and with another leadership, the Congress would be investigating these developments, to say nothing of the use and abuse of intelligence prior to the Iraq war. Independent commissions would be empanelled. Reports would be delivered and made public. Names would be named

If Don Edwards were in Congress today, or if people like him chaired the relevant committees, our system of checks and balances might actually check and balance. But when one party controls the White House and Capitol Hill, it is a different story.


Now to the second worrisome trend, namely, what news organizations are doing to themselves. Back in the 1960s when “swinging London” was the home of the Beatles and ever-shorter mini-skirts, it was said that Britain was going “giggling into the sea.”

I fear something similar is happening in the news business today. Serious news is being shortchanged and crowded out by the frivolous and downright silly. More and more news broadcasts provide what is cynically known as “infotainment.”

Why? The reason has to do with dollars and cents. Newspapers, network news divisions, cable news networks, even the news magazines are being buffeted by a perfect storm of economic pressure, consolidation of ownership, fragmentation of audience and self-inflicted ethical crises. A new study by the project for excellence in journalism describes what it calls “a seismic transformation” taking place in the media landscape.

A few statistics make the case: Newspapers around the country are closing, being sold off and cutting editorial staff. A total of 2,100 newspaper jobs were eliminated in 2005 alone, 3,500 since the year 2000. Circulation is declining, advertising is being lost to the Internet and shareholders, used to sky-high returns, are demanding a greater reward for their investment.

The best example of that, of course, is here in San Jose, where the Knight-Ridder management decided it had no choice but to sell itself to the highest bidder. So the Mercury News and the 31 other papers in the chain went on the block, were snapped up by McClatchy, which is turning around and selling off a dozen piecemeal, including the Merc. Did Tony Ridder have the ability to resist when the largest shareholders insisted he sell? He says he did not.

Moreover, this is a national phenomenon, despite the fact that publicly-held newspaper companies returned 20.5 cents on the dollar in 2004, compared with 11.4 cents on the dollar for the 500 companies in the Standard & Poor’s index. Twenty percent profit apparently is not enough.

The net result is a nationwide reduction in news-gathering. We may have more news outlets than ever, with thousands of Internet sites and millions of bloggers, but we have fewer and fewer reporters on the street, less and less actual digging into the affairs of government and business.

An especially threatened species is the major, big city newspaper. In Philadelphia, for example, another Knight Ridder town, the number of working reporters out gathering the news on any given day has declined from 500 to 220 in the last 25 years. The two major papers are both on the block.

Print is not the only sector that is hurting. Network evening news ratings declined six percent in the last year and the number of network correspondents is a third lower than it was in the mid-1980s, when I first went to CBS News. The major broadcast network news divisions are no longer worldwide news-gathering organizations. They are news-packaging organizations. Increasingly, they take in footage from a variety of sources and package it for 30-minute evening news broadcasts that include about 20 minutes of actual news content. Very often the correspondent narrating the piece is miles or countries or even a continent away from the scene of the story.

Incidentally, Katie Couric is a fine addition to CBS News in my view, and I expect her to succeed as the first solo woman in the male-dominated world of network anchors. But it is not reasonable to expect her to single-handedly reverse an industry-wide trend.

The median prime-time audience for cable news is up four percent over the last year, according to the project on excellence in journalism report. But most of that is attributable to the increase in Fox News. The project study faults cable for focusing relentlessly on a handful of breaking stories, creating what it called “an odd hyperbole in which anchors endeavor to create a sense of urgency over small things.”

Natalee Hollaway is an example. She is a pretty young woman who disappeared on vacation in Aruba. But she is only one of thousands of missing-persons cases in this country at any given point. Cable news, in its hunger for audience and its desperation to fill 24-hours-a-day, elevates her sad story to national crisis status.

Another recent and worrisome development, in my view, is the growth of “pseudo-news,” which is to say made-up news, or opinion masquerading as news. Bill O’Reilly is the chief practitioner and profiteer in this field, but he is not alone.

O’Reilly and others offer a kind of advocacy programming, a journalism of assertion in the guise of news that is designed to reinforce peoples’ biases. More and more today Americans seek out and watch news that reflects their preconceptions. They favor that which confirms and conforms to what they already believe.

Is it really surprising that surveys show that a significant percentage of Fox viewers believe that Saddam Hussein was behind the attacks on 9/11? They absorb that from the innuendo that is implicit in the comments of national leaders and presented as straight news by Fox.

What else is the implication of the oft-repeated suggestion about the war in Iraq that “we are fighting them there so we won’t have to fight them here?” It plays on peoples’ worst fears and sense of insecurity.

Beyond the cutbacks and the pseudo-news, media organizations have suffered in recent years from self-inflicted wounds, from the Jayson Blair fabrication scandal at the New York Times to Jack Kelly making up stories in USA Today to Judy Miller’s deeply erroneous articles about Iraq’s supposed weapons of mass destruction. There has been no shortage of ethical and professional failures in the media.

The bottom line of these worrisome trends, of the government’s aggressive attitude on secrecy and the internal problems of news organizations themselves is that the public’s flow of reliable information is jeopardized. You are right when you wonder whether you are being told the truth. You are right when you wonder whether the truth is being manipulated for political advantage. I know that concerns Don Edwards and I think it should concern us all.

So what is the answer to the question we started with: Can you believe the news? Yes –some of the time. But don’t take it for granted.


The extraordinary coverage and attention generated by Katie Couric’s move to the anchor chair at the CBS Evening News is precisely the kind of buzz that the CBS managers, Leslie Moonves and Sean McManus, sought in the first place. When Moonves famously said of the CBS News division that he “wanted to blow up the whole building,” he meant he wanted to shake the institution out of the doldrums and downward spiral it has been in for the last decade or more.
This appointment will accomplish that. Katie’s arrival in September will bring in new people and ideas to a broadcast that has enjoyed some rejuvenation in the last year with Bob Schieffer at the helm, but is still third in the ratings.
Having known Katie for more than two decades, back to the days when she was a national correspondent for Today, I have no doubt that she will do a fine job as anchor. She has the background, intelligence and practical experience necessary for the job. She is also remarkably at ease in front of the camera and able to establish a personal rapport with the audience.
Katie has another great asset as she aproaches this challenge that she may not yet fully appreciate. Rome Hartman, the veteran CBS producer who was recently named executive producer of the Evening News, is one of the best in the business. He is already producing a more newsy, thoughtful broadcast — you can sense it in the story selection and pacing. Katie would be wise to keep him in place.


As this is written, the humor columnist Art Buchwald is defying the odds in a Washington Hospice.

He went in on Feb. 7th, with the doctors telling him that he had perhaps two or three weeks to live because of the kidney failure and vascular disease that has already cost him one leg to amputation. Despite this, he made the affirmative decision to reject kidney dialysis that would possibly prolong his life. “We have choices,” he said, “and this is mine. I want to enjoy the time I have left. ”

Now, nearly two months later, he remains strong and alert, full of irrepressible humor and, to his delight, a mystery to modern medicine.

I went to visit him the other day, and it prompted me to send this letter to the Washington Post, which published it on April one on its editorial page. It was a story worth telling, especially while Art was around to read it.

To the Editor:

Typically, Art Buchwald is converting his stay in a Washington hospice into a celebration of life, receiving awards and a steady stream of friends who come away awed by his optimistic attitude. His heroic performance reminds me of a little-known story of one of his many quiet acts of generosity:
After my father, the late sports columnist Red Smith, died in 1982, his alma mater and mine, Notre Dame, established an annual Red Smith Lecture in Journalism. At the same time, my sister, Kit, and I set out to raise $100,000 to endow a scholarship in our father’s name at ND. Despite many generous gifts, it was slow going until Art pitched in.
He agreed to give the 1988 Lecture, which normally carried a modest honorarium, funded by Coca-Cola USA. Art scoffed at the sum. Instead, he launched what he described as his patented corporate shakedown, demanding his full lecture fee, which was $15,000, a princely sum at the time. Coca-Cola swallowed hard and came through.
Art, who attended the University of Southern California, packed the house for his lecture and reduced the audience to tears of laughter with a talk entitled: “While the Gipper Slept,” part of which he devoted to explaining “Why USC hates Notre Dame,” as a result of the then current string of Irish victories on the football field (those were the days.)
When the applause died down, Art promptly donated his entire fee to the scholarship fund. His generous gift attracted others and today, thanks in part to Art, a deserving Notre Dame junior or senior receives substantial tuition assistance each year from the Red Smith Writing Scholarship.

Art remains what he has always been: a class act.

Terence Smith


San Jose State University

presents the

The Spring 2006 Don Edwards Lecture


Terence Smith
Special Correspondent
Former Senior Producer and Media Correspondent

The PBS NewsHour with Jim Lehrer

“Can You Believe the News?”

A Lecture and Conversation

7 p.m., Wednesday, April 12, 2006
Barrett Ballroom, SJSU Student Union

This event is free thanks to the sponsorship of

The Departments of Political Science, History and Anthropology
The School of Journalism and Mass Communications
Pi Sigma Alpha
The Institute for Social Responsibility
The Commonwealth Club of California/Silicon Valley


As somebody who has spent a long time in the news business, I tend to follow breaking stories pretty closely. I read the papers, watch at least two news broadcasts, surf news sites on the web and listen to NPR intermittantly throughout the day.
So it was a cold-turkey news withdrawal when I boarded a sailboat in St. Lucia and set sail through the Grenadines for Grenada. For eight days, we were totally divorced from the news. We read nothing, heard nothing, saw nothing. The only news we picked up from the locals on the islands was the latest price of lobster (dear,) and the fact that Cuba was doing well in the World Baseball Classic.
But when we emerged from this news vacuum and caught up, I was frankly surprised to see how little had changed on the front pages. Iraq was still a mess, Bush and Cheney were still insisting that the war was going well, Republicans were still unhappy with Bush and the Democrats were still in search of a message.
The whole experience made me wonder how much of the news business is actually new. It reminded me that news is incremental, like life, I suppose. You can look the other way for a while, and not all that much has changed when you look back. That is either comforting or frustrating, depending on your point of view and metabolism.



It is that time of year again, not quite spring, not really winter, when the self-indulgent, like me, turn to the Caribbean for solace.
This year, it is a sybaritic cruise through the Grenadines, starting tomorrow in St. Lucia, on a bareboat charter with four other friends that will take us to Bequi, Mustique, Tobago Cays, Union Island enroute to Grenada, the spice isle that The Gipper made safe for democracy back in the ’80’s. I suspect that if W. knew the history of that invasion, or took the time to read it, he’d suffer pangs of jealousy. Now THAT was a cakewalk. No nagging issues about missing WMD, no disputed intelligence, no annoying insurgency…just Big Brother to the north enforcing an overnight regime change. Grenada, incidentally, is significantly better off as a result.
Anyway, this is the third consecutive year this gang of super-annuated pirates of the Caribbean has sailed a boat somewhere through the islands. If you are curious about the earlier adventures, pick up the just-out April issue of Cruising World magazine and you can read about the self-indulgence of 2004. That year the target was the annual Antigua Classic Race week: a vintage example of what unlimited money and a sense of romance can accomplish, as long as price is not object.
If you miss it, I’ll post it on the site as soon as it is on the newstands.
I’ll be back in two weeks.

DUBAI DISNEYLAND: Terence Smith commentary on NPR

Click here to listen to Dubai Disneyland Commentary.

ATC Commentary
Terence Smith

“Ski Dubai,” the billboard read as we descended the stairs from the plane into the 80-degree, December night air. “Ski Dubai, Where it Snows Every Day.” And indeed it does, inside a 25-story, windowless building that rises out of the sprawling Mall of the Emirates. The interior is air conditioned down to 29 degrees and fresh, man-made snow covers the short, steep slopes.
Indoor skiing in the desert is just one more eccentric, nature-defying contradiction in gilt-edged Dubai, which also boasts air conditioned golf, chilled swimming pools, over-the-top resorts and scores of skyscrapers, including one, under construction at 160 stories, that is to be the world’s tallest.
An Aspen Institute conference on U.S. and Arab media brought me to Dubai for my first visit two months ago. This was before the state-run Dubai Ports World Corporation caused a furor by trying to take over the management of half-a-dozen east coast U.S. seaports. Like many Americans, I had given little thought to the Disneyland in the desert that is rising along the western shore of the Arabian Gulf. I certainly wasn’t prepared for what I found.
With the price of oil around $60 dollars-a-barrel, hundreds of billions of dollars are flowing into Dubai, which is one of the seven city-states that comprise the United Arab Emirates. Russian mafia money has found its way there as well.
A trillion tons of sand has been dredged up from the sea and arranged offshore to create three new housing developments in the shape of palm trees. A shimmering, shorefront hotel that resembles a spinnaker filled with breeze offers rooms for $1,500 dollars a night and up. Nothing that can be built by man is too grand, too costly or too much for Dubai.
It is a glittery, fashion-crazy metropolis that the designer Giorgio Armani recently dubbed “the new New York.”
An American friend who lives there explained how business works, Dubai-style. The luxurious, seafront apartment he was renting was sold out from under him by the owner, who had paid a million dollars for it a couple of years ago. The Russian buyer arrived for the transaction, inspected the premises quickly and paid on the spot with two-and-a-half million dollars in cash he carried in a suitcase. With that, the Dubai real estate boom edged up another notch.
Beyond ostentatious wealth, Dubai has become a major banking center. It has granted landing and naval visiting rights to the U.S. The Dubai government, which is to say Sheikh Mohammed bin Rashid al-Maktoum, is pro-western and free-market . Dollar-by-dollar, the Emirates are becoming a strategic counter-weight to the more radical Arab regimes in the region and to Iran across the Gulf.
Suddenly, Americans are paying attention to Dubai, trying to decide whether it is friend or foe or something in between. What is clear is that the Emirates are becoming a force to be reckoned with and that the U.S. —Congress included — had better decide what kind of relationship we are going to have with this new economic powerhouse.

TERENCE SMITH is a former media correspondent for The NewsHour with Jim Lehrer.