Norman Solberg

I very much like bankers as a profession and as people. As a general rule, persons in the finance industry are well educated, well spoken, and well dressed. Some have a great sense of humor - it always seems that they are inventing clever new terminology for what they do. Investment bankers in particular always seem to know the latest jokes. They also present themselves as highly expert in valuing the quality of investments and how to make money, which is one of the supreme skills.

If that image is wrong, then the actions they take can have dangerous consequences that affect us all. While the industry has a reputation of being conservative and low risk, the reality is quite different. Let me give some examples. Read more

Subprime Lending Crisis—Another Perfect Storm?

"Subprime loans" are loans to low quality, high credit-risk borrowers. Because of that higher risk, lenders of such loans always charge higher rates of interest and demand stricter terms.

At this moment (March 2008), certain elements of such loans have caused a crisis in the United States economy - and thus in other world economies as well. We cannot yet know how bad it will be, but it is quite serious and it affects all kinds of financial institutions. Here is a short explanation of why this happened, based on my years of experience with such loans. Read more

Challenges of a Global World For Japan Real Estate

“Everyone wants economic growth, but nobody wants to change.” Thomas L. Friedman in The World Is Flat, the Globalized World in the Twenty-First Century.

We know change is necessary, but in a global world, often we do not realize how urgent it is and how quickly we must abandon current business methods. Here in Kansai (central Japan), this is especially important if we are to bring the economy back to its historic prominent role in Japan and the world. After all, this has been the business and creative center of Japan for centuries. There is no reason why it cannot be that again.

One area we need to examine is making more efficient use of land and buildings in Japan, discussed below. Read more

Irasshaimase Dozo!

Enter, please! Japan has officially decided to attract foreign investors.

Prime Minister Koizumi's administration has officially accepted the idea that Japan needs more capital investment, as well as foreign management and business concepts, to stimulate the still-lingering bad economy. Despite there having been 15 years since the end of the so-called good days of the bubble economy, only now does it seem that the government recognizes that many existing fiscal and business practices are no longer valid and new ones, perhaps from outside Japan, are needed.

The failure of such practices, in my view, shows most dramatically outside Tokyo, in areas such as Kansai that have suffered more greatly. Local governments are in a terrible state, hopelessly in debt for expensive projects that no one other than bureaucrats (and interested parties) could believe were proper. Read more

The Rules Apply In Both Golf and Takeovers

A talented, attractive young woman has instantly changed the sport of golf. Michelle Wie of Honolulu, barely 16 years old (in October 2005) and able to drive a golf ball over 300 yards, has elected professional status, beginning with $10 million of endorsement contracts from Nike and Sony, far higher then ever seen before in women's sports.

This event reminds me of a subject on which many in Japan are focused today. Companies in Japan are seeing a wave of both friendly and hostile takeovers. Managers are looking at ways to defend their companies.

As with Michelle, we are seeing errors that should have been avoided. This is especially striking to those of us involved in the takeover battles of the past 30 years in the United States and who understand how the rules developed there. Even the smartest, most talented businessmen would be apt make mistakes about the much more complex rules of takeovers - especially in a period in which the rules are changing. Read more

The Landmark Poison Pill Case

A wave of corporate takeovers is about to sweep across Japan. Now is the time to examine how to deal with it and to implement procedures, because management decisions now can forestall mistakes later.

It was my fortune, good or bad, to be in the center of one of the most significant takeover battles in the United States. The outcome was finally settled in the Supreme Court of the State of Delaware, where many large American corporations are incorporated and which has the best-established case law on a company law matters. Our case, which we won, validated the Poison Pill anti-takeover device, later adopted by thousands of other American companies. It also provides an excellent example of how to build valid protections that will withstand challenges. Read more

Who Invented Financial Derivatives?

Some authorities view derivatives as the most significant financial development of the 20th Century. Many people contributed to this complex and enormously successful range of financial products. However, the key moment seems to have been in a London conference room in the mid-1970's, when four American and British lawyers took the vital steps that led to a multi-trillion dollar industry. Read more

Employee Inventions In Japan

Why is Japan suddenly facing a problem as to company liability for employee inventions? Within the past several months, some rather startling court judgments have issued, awarding very large amounts of money to employees of companies like Hitachi, Ajinomoto and Nichia for compensation for important inventions made in the course of working for such companies. In the case of the famous blue light emitting diode, patented by Nichia, a relatively small company, the inventor was awarded 20 billion yen.

How do Japanese companies find themselves in such a threatening situation today, while companies in other countries seem to have avoided this? Read more

Spalding Restructured Again

On September 4, 2003, a United States federal bankruptcy court approved the sale of the assets of Top-Flite Golf Corp. Top-Flite, the former Spalding Sports Worldwide and the first American manufacturer of golf clubs and golf balls, was sold to Callaway Golf Company, currently the world's largest golf club manufacturer.

This puts an end, at least for the foreseeable future, to the independent operations of one of the most famous American manufacturers of sports equipment. In reality, Spalding has changed owners many times before, but the current sale was done under a court’s supervision to accomplish certain results available only under the United States bankruptcy laws. Read more