Let’s set aside the fact that Mr. Arpels—the grandson of one of the founders of the famous French jeweler Van Cleef & Arpels—was born on third base. And that he and Ms. Brown (“an actress and writer”) think that posing in front of a wood-burning stove in one’s country house for the Times’s Home & Garden section is a convincing way to establish one’s environmentalist bona fides. They’re still good people for giving Mr. Mackey a New York forum to spread his message of enlightened capitalism. This is the guy whose company is going to require labels on genetically modified food by 2018, after all.

Mr. Mackey’s book is a manifesto for the good that both companies and capitalism can do, and it uses as examples forward-thinking iconoclasts such as Southwest Airlines and Patagonia. The basic argument is pretty simple: there’s nothing wrong with being rich and successful, provided that you do something good for society along the way. Mr. Mackey’s authority springs from the revolution in healthy eating that he has wrought with Whole Foods, which started as a single vegetarian food store in Austin in 1978 and is now the largest organic and natural food retailer in the country, with 344 stores in 37 states.

And the juggernaut keeps rolling: the company announced better-than-expected quarterly results on May 7, and the stock popped 8.8 percent as a result. Sales were up 13 percent to $3.03 billion, net income rose 21 percent to $146 million, and gross margins are holding tight around 35 percent, despite concern about the effects of the economic downturn as well as competition from a bunch of copycats such as The Fresh Market. The chain, which has been opening about 20 stores a year over the past several years, is picking up that pace, and Mr. Mackey and his colleagues think the company could triple in size—to 1,000 stores across the country—before they’ve completely satisfied demand for 365 Everyday Value Organic Yogurt.

One wonders: why couldn’t Mr. Mackey have been a New Yorker? While he’s probably too crunchy, he is a truly great businessman. Instead, we get as our grocery chain magnate mayoral hopeful John Catsimatidis of Gristedes, a man whose supermarkets people will only go into if they have to. Mr. Catsimatidis recently said he’d resisted closing some underperforming stores because he didn’t want to put the employees out of a job—so even if his customers have nothing to thank him for, he can still lay claim to a conscious capitalism of another sort.

Whole Foods sets aside more than 5 percent of net profits for its community-giving initiatives, including economic partnerships with suppliers in poor countries and nutrition education programs. That’s good stuff. But you don’t win the game with charity. One of the secrets of Mr. Mackey’s success is that he has been able to exploit the guilty conscience of America’s wealthy class. Just like anyone, rich people enjoy feeling good about themselves. That can be hard when you’re spending money on an $1,800 Louis Vuitton messenger bag or a $3,300 baby crib from the Netto Collection. But buying organic food? Hell yes. If you shop at Whole Foods, the thinking goes, you’re not only buying a better banana, but you’re also helping some farmer in Honduras in the process. Everybody wins.

At this point in his career, Mr. Mackey is in full-on reflection mode (thus the book) and he uses phrases like the “higher purpose” of a supermarket and the “self actualization” of employees who spend their days rubbing vegetables to a high sheen. But it’s not that difficult to go along with him when he envisions a world in which capitalism is in harmony with the cosmic sea. The best companies set themselves apart by how they treat the people who work for them, and Whole Foods is in the corporate elite in that regard when it comes to its 74,000 “team members.” It’s been on Fortune’s Best Companies to Work For list for 16 years running.

Compare that with Amazon, which increasingly seems on the verge of employee revolt, or Walmart, which focuses solely on delivering the cheapest price to its customers. Interestingly, the Arkansas behemoth has watched Whole Foods’s success and even tried to emulate it, at least up to a point. The company recently trumpeted its goal of sourcing $1 billion of its $244 billion in annual grocery sales from small and medium-size farmers. You read that right: less than one-half of 1 percent. Baby steps, people. Some revolutions don’t take place all at once.

Even if you’re a critic of Whole Foods and the gentrification of supermarkets, the seven million people who shop in one every week aren’t going there because they don’t enjoy the experience. The stores are clean and spacious—the average Whole Foods is 38,000 square feet—and the product is high quality. Last fall, when I was instructed to bring pies to a Thanksgiving dinner, I decided that for once, I wasn’t going to slave over making them from scratch in the kitchen. So I bought both pumpkin and pecan pies from the Whole Foods store in Union Square. Both were extremely well received.

Organic also translates well over email, and the messages the company sends to customers are as cleanly designed as its stores. The one that hit my inbox last Wednesday was classic Whole Foods, too, with recipe ideas including ricotta-strawberry pancakes, herb biscuits with smoked salmon and chicken burgers with Brie. These people know their customers cold. That’s why they keep hitting their numbers and why the stock is trading near its all-time high, making the company worth $18.7 billion. Compare that with yesterday’s grocery chains: Safeway is worth just $5.8 billion and Supervalu a mere $1.7 billion. The difference is that Whole Foods isn’t just about where you buy your food; it’s about who you think you are.

(I love that last recipe, too, in which you cancel out the benefits of avoiding red meat by adding the Brie. It brings to mind the whole baked potato craze in the early ’90s, when otherwise sane people decided it a healthy idea to eat a baked potato for lunch, and nothing more. Except, of course, for the generous portions of sour cream, cheddar cheese and bacon that they piled on top. Ah, cognitive dissonance. It’s like ordering a Big Mac, large fries and ... a Diet Coke.)

Mr. Mackey hasn’t achieved total retail nirvana as yet. In January, he compared Obamacare to “fascism,” somehow forgetting that a good portion of his customers are well-to-do liberals. I’m also curious to see how the store Whole Foods is planning to open in Williamsburg does—on Bedford, between North Third and North Fourth. It’s taken a whole lot longer than people expected, but part of me is starting to think that was the plan from the get-go.

As recently as five years ago, Bedford really was hipster central, and the idea of opening a Whole Foods on that block would have been akin to opening a head shop selling one-hitters and bongs on 59th and Madison. Today? Gentrification proceeds apace, the hipsters have been pushed deeper into Brooklyn, and Bedford is like Bleecker Street—the tourists might still see hipsters, but those are $3,500-a-month one-bedrooms down the block. You know, the kind that are rented by people who shop at Whole Foods.

editorial@observer.com

Can he be serious? Actually, he can. I’ve interviewed dozens of CEOs in my career, and Michael Dell was unquestionably the most boring of them all—he can’t not be serious. In this instance, though, it’s more like he’s being duplicitous. The best-intentioned private equity deals seek to improve a flailing company’s fortunes by giving management a kick in the ass. But this isn’t one of those. This is private equity as vulture investor; Dell’s best days are long gone, and the game here is to start picking away at the carcass before it’s even dead.

In return for his blessing of the deal, Silver Lake has offered to increase the founder’s stake in his company from 15.7 percent to 75.9 percent, with Silver Lake owning the rest. Of course, he’s going to be behind some $15 billion in additional debt at that point. That added burden will surely expedite the company’s journey to its final resting place, but the players in this deal obviously think they’ll be able to extract their payoff through share buybacks, special dividends and the like before that happens. On that point they’re probably being truthful; the public markets wouldn’t countenance an insane leveraging of this sort. If you’re going to do something that stupid, you probably need to be doing it on your own dime.

Yes, I know that’s not exactly news. What is? The fact that Blackstone, which had entered the fray with a tentative $14.25-per-share offer—superior to Silver Lake’s $13.65 bid—dropped out of the running on April 19 after getting a look at the company’s books. Volume in the stock tripled that day, and the shares fell 3.9 percent to $13.40 per share. That left Dell and Silver Lake with the only “formal” offer for the company, and it has taken pressure off the consortium to raise it any further. (Carl Icahn is still sniffing around, but my bet is that he’ll decide that he doesn’t need the headache. He’s also probably too busy counting his profits from his well-timed investment in Netflix.)

Last Tuesday, Dell also approved $91.1 million in retention bonuses. We’ve all heard this noise before—the whole “holding onto key executives” being a life-or-death decision. I’d argue that there’s a real question about who at this company is even worth “retaining” considering that they missed the boat on both tablets and smartphones and have also overseen a multiyear decline in market share. But a man’s got to take care of his buddies when he can.

While Michael Dell did point out last week that the company was the only one of the top five PC makers to gain market share both sequentially and year-over-year in its latest quarter, that doesn’t change the fact that both HP and Lenovo have been eating its lunch for several years now. And while increased share is obviously better than the opposite, we’re also talking about gaining share of a shrinking pie. Overall, PC shipments fell 14 percent in the first quarter of 2013.

As for Michael Dell himself, his “retention bonus” is a quintupling of his equity stake in the company if the deal goes through. Theoretically, then, the equity value of Dell would have to drop by 80 percent before he’s in the red. Are you starting to see what he sees in this deal?

He’s certainly got a better vantage than some other people. A suggestion by PC magazine (which is obviously going down on that same ship) that Dell hire ousted JCPenney exec Ron Johnson and open up a bunch of retail stores might actually take the “laugh riot” prize away from Dell’s own inexplicable optimism. The story came two and a half weeks too late to be an April Fool’s joke, so columnist John Dvorak was apparently serious himself when he called the idea of opening mall-based stores Dell’s “biggest opportunity.” Like many of us, I have on occasion found myself ingesting the wrong substances out of a state of utter boredom, but I think someone needs to knock on Mr. Dvorak’s office door and see how he’s doing—because the idea has all the hallmarks of a mid-acid-trip epiphany that loses its punch when considered by someone still tethered to reality.

One serious reaction to the latest news: Oakmark Funds, a major Dell shareholder, sold out of its Dell positions in several funds after Blackstone’s withdrawal. In doing so, it offered some of the first honest words spoken about Dell’s prospects since this whole melee started. “We were surprised and disappointed when, after extensive due diligence of non-public information, Blackstone said that it was alarmed by Dell’s rapidly deteriorating financial situation.” It’s not often you get a chance to engage in legal insider trading, and the folks at Oakmark didn’t let this one pass them by.

But let’s get back to the secret plan. If Dell had anything real up its sleeve, those “key executives” should have played those cards long ago. The whole charade actually reminds me of Kozmo.com. That little gem of Internet-boom euphoria delivered candy, magazines and DVDs to customers in a handful of major cities, raising $250 million from a Murderers’ Row of VC and corporate backers before blowing up in spectacular fashion. The CEO, Joseph Park, had somehow convinced those investors that the company had a “secret” logistics algorithm that would allow it to make urban delivery by bicycle—a fairly straightforward business to model—profitable. It didn’t. (I spent the last summer of Kozmo’s existence ordering Jenna Jameson videos over the phone with an ex-girlfriend, so I was a fan of the service, even if I knew that it wasn’t going to last. The relationship, that is. Well, that and Kozmo.com. And you read that right: we ordered them on the phone, not over the Internet. Kozmo’s “secret” plan also included phone operators.)

In a letter to employees last week, Michael Dell reiterated what by now is a pretty ridiculous refrain. “First, I want to be very clear about what we’re trying to do and why. Going private will allow us to continue our transformation but do it much faster. We will have private investors that share our strategic vision and are willing to see it through, even if it means making some tough trade-offs today to position us for success down the road. If we were to remain a public company, I believe it would be more difficult to move fast and aggressively because of the short-term focus of the market.”

Why has no one called him out on this bullshit? What, exactly, is it about being a public company that would hinder the execution of whatever strategy it has in mind, other than the public markets’ aversion to crushing a company with debt? And while he talks about the short-term focus of the market, it would seem to me that in this instance, the market is squarely focused on the long term, which is why the stock has for quite some time been trading barely above what you’d get selling the whole thing for scrap. That said, at nearly $13.50, it’s now trading well above its January pre-deal-rumor levels of less than $12 a share. If I were a shareholder in this company, I would take the money and just give the goddamned thing to him and his pencil-pushing financiers.

“I am very confident we are headed toward a fantastic outcome for Dell, our customers and our team,” Mr. Dell also told his employees. Raising the question once again: Michael Dell, are you serious? Well, what else can he say at this point? As a noted singer-songwriter once wrote, “Too much of nothing ... can turn a man into a liar.”

editorial@observer.com

While China may have wider-ranging ambitions than most people realize, it has always been obvious to me that tin-pot dictators have but one objective, which is to remain in power. Kim Jong-un is just settling into his position as the top dog in North Korea. Why would he jeopardize that by doing something so stupid as starting a nuclear war? No matter what the particulars, every possible series of events that comes after that move has one thing in common: Kim Jong-un will be dead at the end of it. All the saber-rattling isn’t to scare us; it’s to scare his own people into continuing to do as they are told. It seems to work, too.

In other words, the threat of North Korea is what it’s always been, which is pretty much nothing. So don’t listen to the Pentagon. What’s the real Korean threat? The one that consists of someone actually doing something as opposed to just saying something? That would be Samsung.

While it’s unlikely that the giant South Korean conglomerate will launch any real missiles anytime soon, the economic warfare that the company has been engaged in for the better part of 30 years has been as successful as any military campaign in modern history. If you want to know who’s really taking over the world, I suggest you do as Xavier de Maistre would do and take a journey around your room. Look at everything—your TV, DVD player, cellphone, tablet, laptop, PC (if you still have one), printer, monitor, camera, washer, dryer, fridge, microwave, dishwasher, stove and vacuum cleaner. I’m sure I’ve left something out, but I’m also sure that Samsung will have made one of the above things in your house.

Read your news with a paranoid tilt, and pretty much any story about Samsung can sound like John Le Carre on the Korean Peninsula. When employees arrive in their “appointed” country, says the president of Samsung’s human resources center, “They don’t work.” What, pray tell, are they doing instead? “They are given three missions,” Tae Gyun Shin told Bloomberg BusinessWeek. “Learn the local language, learn the local culture, and become an expert in their specialty.” That’s the best kind of secret agent, right? The one that’s not secret at all, but who as a result is actually ultra-secret.

I haven’t seen that new Keri Russell spy show, The Americans, but they certainly have one thing wrong in it—the KGB isn’t much of a threat anymore. Warfare is economic now, and Russia is no danger to anyone’s GDP. Who is? China, Korea and Taiwan. Any questions? (While I do watch a lot of television, I try to keep myself to one spy show at a time. And let’s be honest here: there’s Archer and then there’s everything else.)

The chief concern of a number of Western commentators—particularly Mark Anderson of Strategic News Service—is that Samsung sits at the vanguard of a rolling army of mercantilist economies and their stalking-horse corporate entities. The “inventing” economies invent, says Mr. Anderson, and the mercantilist economies copy. Just don’t ask Samsung if that’s true. The company’s human resources development center is also called its “Creativity Institute.” It’s the kind of finger-in-the-eye nomenclature that Washington spin-masters adore—calling something the opposite of what it really is. Torture? Please. It’s called “enhanced interrogation” in these parts.

You have surely read, of course, of the increasingly one-on-one battle for smartphone supremacy between Apple and Samsung. It’s practically impossible to keep up with which company has the edge in their ongoing legal disputes, but let’s call a spade a spade: Samsung has been ripping off almost everything cool about the iPhone and the iPad for years now. Apple accused the South Korean company in court of “slavishly copying” its products. It’s not an overstatement. But does it even matter? Whatever the particular rulings, Samsung is just going to keep doing what it’s doing and pay the associated legal penalties along the way. It’s a cost of doing business. If you build those expenses into your model, the actual outcomes don’t even matter in the end.

Of course, Samsung does engage in some innovation of its own. But its product choices derive more from a throw-the-spaghetti-against-the-wall strategy than from some sort of design epiphany. When it came to figuring out what the right size for smartphones and tablets would be in different markets, Samsung didn’t do as Steve Jobs might have done and try to convince an Indian shaman to give him some peyote so he could look inside the mind of the modern consumer. They simply made every size and let customers decide. “Nobody had any idea what the right screen size was, so Samsung made all of them and saw which one worked,” Enders Analysis researcher Benedict Evans recently told Bloomberg BusinessWeek. “They’re not stopping to think. They’re just making more phones.”

We revere Steve Jobs in this country for his success, particularly in the 10 years or so before his death. But do you even know who runs Samsung Electronics? And do you know how long he’s been focused on global domination? We’re talking about the culmination of a 25-year plan. Since he took over in 1987, Lee Kun Hee, the 71-year-old chairman of Samsung Electronics, has had a single goal. And he’s reached it: Samsung is now the world’s largest electronics company, with sales of $179 billion.

But it really is a smartphone story when it comes down to it. Profits from Samsung’s mobile phone division top $5 billion annually, and it’s been creeping up the profit margin axis at the same time that Apple has been creeping down. Samsung’s Galaxy phones now outsell Apple’s iPhones by a significant margin. In the third quarter of 2012, Samsung’s Galaxy S III phone became the first smartphone to outsell the iPhone—18 million units to Apple’s 16.2 million—since Apple’s signature product took over the top slot years ago. In the first quarter of this year, some analysts think Samsung sold between 68 million and 70 million handsets (smartphones and otherwise), more than double Apple’s 30 million. Whereas Apple spent $235 million on advertising iPhones in the U.S. in 2011 to Samsung’s $78 million, last year those tables were turned as well: Samsung spent $401 million to Apple’s $333 million. Call it what you want, folks. This is war.

But it’s a war of the strangest kind. Amazingly, Apple is Samsung’s single-largest customer for displays and semiconductors. I cannot think of a better way to determine your enemy’s plans than to simply have that enemy send them to you.

Over the past five years, Apple stock has returned 195 percent to investors. Samsung? 123 percent. That’s called spitting distance. But shrink your horizon to one year, and you’re spitting in the other direction: Apple is down 30 percent over the past 12 months while Samsung is up 14 percent. That’s a blow to all of us, isn’t it—or at the very least to those who are slaves to our own iPhones? You don’t want to be the soldier in the wrong army. Because it’s not going to be pretty in the end: Samsung is going to be standing over Apple’s grave ’til it’s sure that it’s dead.

Can Apple take back the lead? I doubt it, but stranger things happen every day. My own brother rolled into town last week and told me that he was moving his entire family to Bali for the next two years. I certainly didn’t see that one coming. Of course, when the lucky bastard calls me on Skype this fall so I can see his new surfboard, it’s a good bet that one of us will be using a Samsung product at the time.

editorial@observer.com

A lot. Just as Apple itself has endured some bruising in the past year, Mr. Johnson’s performance at JCP tastes less like Honeycrisp in October than rotting-on-the-ground crab apple surprise. He’d have been better off preserving his reputation and leaving the game on a high note. But the chance to show he was bigger than Apple was too alluring to pass up. One wonders if he wishes he could take it all back now.

There’s no debate about his most colossal misstep, which was eliminating Penney customers’ “cherished” discounts in favor of more transparent pricing. Penney’s sales are down 25 percent since Mr. Johnson’s arrival, in large part due to that move alone. Shares are down 50 percent over the same period, and this while the S&P 500 has risen more than 25 percent. In short, Mr. Johnson hasn’t yet managed to turn J. C. Penney into something other than what it is—another K-Mart—but we’ve definitely been paying a lot more attention to its accelerating decline. Of course, it’s only been one year. Even Apple took longer than that to make us want our iPhones more than we want real human connection. Turnarounds are hard enough to pull off without a deadline. Has our tendency toward short-termism finally gone too far? Why the rush to judgment?

There’s a common logic to the guilty verdicts: instead of doing what he should have, which was ask Penney customers what they wanted, his
Apple-borne arrogance made him think he could simply tell them what that was. And there’s been a kind of enhanced glee at the comedown as a result: even if he really thought he was doing customers a favor by putting an end to the annoying game of the ever-changing discount, it seems that the masochists who shop there actually enjoy that particular kind of pain. Nothing goes down easier than when the highfalutin are brought down by their misreading of the mob.

At this point, no rock of potential criticism is being left unturned. Bloomberg lambasted Mr. Johnson last week for letting key hires—many from Apple—live a plane ride away from the company’s Plano, Texas, headquarters, and quoted an executive recruiter named Howard Gross saying that doing so sent “a very, very bad message.” Ouch! The article also quoted unnamed Penney sources moping about the emergence of the acronym DOPE—which stands for “dumb old Penney employees”—as evidence that Mr. Johnson has insulted not only his customers but also his staff. (Those poor DOPEs certainly have it better than the 43,000 people he let go during the year, but we’re all the center of our own little universes, aren’t we? Just ask David Foster Wallace. Remember: this is water, people.)

James Surowiecki deconstructed Mr. Johnson’s precarious position on the financial page of The New Yorker last week. And whereas being the subject of a traditional profile in that august magazine invariably signals that you’ve achieved a singular sort of fame, finding yourself on that particular page is more a sign of its diametric opposite. One of the tricks Mr. Surowiecki uses to generate thoughtful business-related output every single week is to run the profile process backwards. He does tell your story, but with the primary aim of identifying what’s not unique about it—in other words, he generalizes you. Rammed through that filter, Mr. Johnson emerged as nothing but another in a long list of beneficiaries of “the fundamental attribution error”—we gave him too much credit for Apple’s retail success, and so his failure to turn Penney around really shouldn’t be that big of a surprise. It certainly hasn’t surprised former Penney CEO Allen Questrom, who has of late been telling anyone who will listen that Mr. Johnson’s a bust. It’s a clear violation of the you-had-your-turn-now-shut-the-fuck-up rule of leadership, but it’s hard to ignore the conclusion.

So let’s tally the votes: customers, employees, investors and the media all vote guilty of a failure to deliver. At this point, there’s no one left to write him off but the company’s board, and it’s under growing pressure to do so. If universal bearishness is usually a BUY signal in the stock market, it doesn’t quite work that way in the corner office. Mr. Johnson is a goner, and there’s nothing left to do but wait for the white smoke announcing his replacement.

But let’s do as Mr. Surowiecki does and look at things through a more general lens. Meaning: whose judgment day comes next?

If you’d asked me a year ago, I would have predicted that Hewlett-Packard’s Meg Whitman would go down before Mr. Johnson. She’s been airborne on a little of that fundamental attribution wind herself, having received more credit for eBay’s early success than she deserved. But you’ve got to hand it to the woman: she’s somehow convinced HP’s board that it would be irresponsible to grade her performance before giving her five years from her hiring in September 2011 to do her thing. Mr. Johnson may deserve more than a single year to fix a broken company, but five? Ms. Whitman will have siphoned $75 million in compensation out of the place before someone realizes it’s the same story as Penney dressed up in Silicon Valley clothes: HP is toast, no matter who’s in charge. Not surprisingly, investors have shown less patience than HP’s board and marked the stock down 39 percent in 2012.

Yahoo’s Marissa Mayer—who bolted from Google for the top job at Yahoo last July—can also count on a little more time before her own Google-related attribution guilt will be decreed. Those seeking a speedier rush to judgment have floated both last week’s universally derided $30 million acquisition of some British teenager’s “newsreading” app and her controversial decision to end the company’s policy allowing employees to work from home as early evidence of future failure, but that jury is not quite ready to vote. Mr. Surowiecki himself ran her through the working-from-remote generalizer the week before his Johnson column. When she actually is canned, the odds are that he’ll take a woman-in-the-
corner-office approach. (My own policy is never to touch that third rail. Generalizing about women has never ended well for me.)

BlackBerry, of course, is another “turnaround” that’s about ready to fail. The difference? That company’s board didn’t go the fundamental attribution route when selecting CEO Thorsten Heins to succeed company founders Jim Balsillie and Mike Lazaridis in January 2012. Mr. Heins was an inside man, having been with the company since 2007. He hasn’t entirely escaped Mr. Surowiecki’s gaze, but a February 2012 column on the decline of the formerly high-flying company did stop short of mentioning him by name. Which means Mr. Heins has probably got more time than either Ms. Whitman or Ms. Mayer. It’s hard to sell postcards of your hanging if nobody even knows who you are.

UPDATE: An earlier version of this story mischaracterized the circumstances under which RIM founders left the company. The Observer regrets the error.

In one of the stupidest stories to come out of The Gray Lady in recent memory, reporters Susanne Craig and Jessica Silver-Greenberg took 1,500 words to accuse—and convict—JPMorgan Chase of the despicable crime of cross-selling. I’m a big fan of the Times, and of these two capable reporters, but the blame-the-banks-for-everything philosophy of the joint is endangering its credibility. Some bankers do bad things, that is true. But a bank trying to push its own products on its own customers—otherwise known as “doing business”—isn’t one of them. Someone who shops at Paul Stuart shouldn’t be surprised when the salesman tells him he looks good in a Paul Stuart suit.

The private client business is one of the fastest-growing at Chase, making it an obvious target for intrepid reporters seeking a new way to express the paper’s stock-in-trade outrage on behalf of the little guy. (If clients with $500,000 who choose to consolidate their banking and investment business with one provider can qualify as “little guys.”) In 2012, the unit added 84,000 clients who brought $9 billion in net new deposits and investments with them. And more than half of those new funds came from customers who’d previously held under $100,000 with the bank. In other words, the majority of the unit’s success has come from people who want Chase to handle more, not less, of their financial matters.

Let’s get back to the crime of pushing in-house product on this unsuspecting clientele. It seems Mr. Burris, whom the Times photographed in a starched white shirt outside the Chase offices as some sort of Gordon Gekko of Sun City West, couldn’t bring himself to sell Chase’s own product as part of the deal.

If you’re a Chase private client, you see, you have access to the offerings of JPMorgan Asset Management, which manages $1.4 trillion for investors. Mr. Burris apparently took one look at the unit’s offerings, which ranked third in Barron’s latest ranking of fund family performance, and ... hold up, now! It would be one thing if the company was encouraging its clients to buy crappy in-house product instead of superior third-party alternatives. But who, exactly, is getting the shaft when the bank offers its clients access to industry-leading performance? Yes, JPMorgan Chase makes more fee income if clients go with the in-house brand. That’s the whole point of the unit. But clients aren’t getting double-charged or anything—they’d be paying fees to whoever manages their money. Is it really so hard to believe that the company thinks the best way to make long-term money from their clients is to make long-term money for them?

The Times hedges its position on this scandalous state of affairs with this bit of fancy footwork: “While the practice [of pushing bank-branded investments] can be legal, competitors moved away from such investments after facing perceived conflicts. The concern is that, driven by fees, banks will push their own products over low-cost options with stronger returns.” First of all, what the hell does “can be legal” mean? It is legal. Period. And second, that “concern?” It’s called being a customer. Anyone buying anything has to keep in mind that the people selling it to them might be pushing their own product over better, lower-cost options. At what point does the Times—which clearly thinks we need to be protected from making our own dumb choices—allow for some responsibility to rest with the buyer? Apparently, having a $500,000 portfolio doesn’t make you worthy of your own judgment.

I could go on, but you get my point: the Times article took a cheap shot at a big ol’ bank and missed. What we are left with is one disgruntled former employee and the “scandal” that a financial services company might try to cross-sell its own product to customers who have chosen to be in a position to be cross-sold. Mr. Burris also secretly recorded conversations with colleagues—a move that “can be” illegal in some states—because he was worried about his job security. He was right about that. But it’s still a dick move.

Nelson D. Schwartz, an apparently less excitable Times reporter than Ms. Craig and Ms. Silver-Greenberg, wrote a related article a year ago, on March 10, 2012. But he actually nailed the real issue at hand. It’s not that those poor gullible folks with $500,000 entrusted to Chase might—quelle horreur!—find themselves being offered in-house product, but that the whole move to serve this “mass-affluent” segment of the population might come at the expense of services provided their less well-heeled clientele.

You will recall, of course, the government’s long-overdue crackdown on debit card and overdraft fees that banks (including Chase) had long used to enhance their returns on lower-margin (i.e., less affluent) customers. Mr. Schwartz cited a JPMorgan Chase investor presentation from last February that showed the new rules would slash 35 percent from the revenues the bank earned from customers with balances of $5,000 or less, versus just 5 percent from households with balances of $500,000 or more.

You guessed it. When that fee revenue was decimated, banks naturally went in search of greener customers. And why wouldn’t they? Chase insists that the increased focus on the affluent won’t come at the expense of resources dedicated to the hoi polloi, but could you fault the bank if it did? These are for-profit institutions, after all. You’ve got to make your money somewhere. Chase sees its private client business as a $1 billion opportunity, so this really is a big deal for the bank. But it’s not going to get there if the company doesn’t actually make its customers happy. “We have to deliver good products and services—which includes good investments returns—to our customers,” said Barry Sommers, who heads the division. “Two and a half years ago, we had 10,000 clients. Today we have more than 120,000.”

Before everyone gets their knickers in a twist for my audacity at defending a bank’s right to try to earn money from its customers, let me get a few things out of the way. Yes, I wrote a 2009 biography of JPMorgan Chase CEO Jamie Dimon that was criticized for being too positive about a banker in the midst of the financial crisis. Yes, I’ve written several articles about the company since. But I’m a freelance writer, for God’s sake—people pay me money to write about things I know. And I know more about JPMorgan Chase than I know about most things.

That doesn’t mean I’m blinded by closeness to my subject. I worked on Wall Street before I was a journalist, and I left it because I didn’t want to hang around a bunch of people who only cared about money. Being a financial writer didn’t actually solve that problem for me—I still have to hang around with them, the only difference being that I don’t earn as much as they do—but I hope it does at least suggest that I can write about them with perspective. The London Whale, you say? Now that’s a scandal. And mortgage fraud and abuse—some of which JPMorgan is guilty of—have no place in a decent society. I’m a fan of Elizabeth Warren, too.

But I’m also someone who doesn’t think that all corporations are evil and that everyone selling you something is trying to screw you over. Is it really a scandal to suggest to your private client advisers that they push in-house product on customers who are perfectly capable of making up their own minds about the merits of such a pitch? Give me a break. That’s the kind of argument only a broker who got fired would try to make. And that’s what Johnny Burris did. The real sucker in this story isn’t the Chase customer, but The New York Times itself.

editorial@observer.com

Which brings us to 2013: a couple of big transactions have the punditry in a tizzy about whether there’s a tidal surge of M&A headed our way. At Up & Down the Street, we’re not so excitable. But some of these deals are, well, big deals.

On February 5, Liberty Global announced a plan to buy Virgin Media for $23.3 billion. On February 14, Heinz agreed to a $23 billion buyout by Berkshire Hathaway and 3G Capital. In the middle of last week, we got news that even though the Department of Justice is trying to play spoiler, the $20.1 billion merger between beer titans Anheuser-Busch and Grupo Modelo may still be on track. And then on February 20, like the sound your iPhone makes when it’s dying, came news of the combination of OfficeMax and Office Depot for a relatively piddling $1.17 billion. Time magazine decreed that last deal a further sign of “the strong start to 2013’s M&A market.”

Okay, fine: the first two deals were both about big capital backing big deal-makers—John Malone and Warren Buffett, respectively. So there’s the whole financing-being-plentiful argument to be made—also referred to as “credit being cheap.” Gun-shy corporate executives (Warren Buffett included) have also seen their cash piles balloon in recent years, meaning there’s lots of dry powder in corporate financing arsenals as well. And yes, the balance sheets of American businesses are, on balance, in pretty good shape these days. So perhaps conditions are ripe for an M&A boom. No less august a publication than The Economist suggested exactly that. And it brought evidence to support the thesis: fourth-quarter M&A levels were their highest in four years.

Speaking of evidence, here’s some of the useless sort: The Economist also cited a survey by global consulting firm PwC in which 42 percent of American CEOs said they planned to make one or more acquisitions this year, roughly equal to 2012 levels. Setting aside the fact that nothing has changed, there’s the more dubious issue of asking executives about their “intentions.” A merger boom does not happen in the mind, people—it happens on term sheets. But then again, we’re talking about PwC here, part of the MBA-consultocracy complex that sees its mandate as “resolv[ing] complex issues and identify[ing] opportunities.” And nothing screams “opportunity” like a consultant with a PowerPoint presentation and a couple of acquisition targets.

Let’s think about one of the above deals for a second. Why did Heinz sell to Berkshire Hathaway? Because Warren Buffett came calling. Most managers want to be buyers—these are dominant folks, after all—but the arrival of Mr. Buffett on the scene can turn any executive top into a bottom without too much negotiation. Mr. Buffett wants to finance the deal with $14.1 billion in debt, you say? Heinz CEO Bill Johnson took a look at that leverage, noticed his possible $100 million payout from the deal, and saw nothing but harmonious logic. And hell, maybe Mr. Buffett will start talking about Heinz at his annual meeting, and then every investor in the country will buy a bottle of ketchup out of obeisance. You get the point. No one says no to Warren Buffett.

And let’s also return to the OfficeMax/Office Depot deal. Now, that transaction has nothing in common with what Warren Buffett does with his spare cash. This is a move born of desperation and nothing more—the result of the relentless assault of Amazon.com as well as the more successful big-box retail management of Staples and Walmart. Considered in that light, this deal is obviously more of the two-drunks-leaning-against-each-other-in-order-to-stay-standing-up sort. But maybe one of their CEOs was one of that 42 percent who talked to PwC. So maybe he’s not alone. Is a wave born of desperation still a wave? Or is it a particle?

Let’s be honest here. The reasons for M&A are as different as snowflakes. CEOs use mergers to achieve scale and to cut costs. They do deals out of boredom. They do deals to distract investors (or their directors) from a lack of movement in the “core” business. And they do them to increase company value and therefore paychecks. Do not underestimate how often this last reason is dressed up in the jargon of PwC and their Wall Street banker pals as something else.

Here’s another reason executives do deals: because they don’t like to be told what to do. Once you’ve reached the corner office, in other words, aren’t you supposed to be the one calling the shots? But because that cash is starting to pile up to obscene levels of $2 trillion-plus—see the contretemps between David Einhorn and Apple for a specifically intriguing example—there is an increased drumbeat among investors to give some of that money back via more share buybacks or increased dividends. But why should you do what the owners of the business want you to do? And what’s a share buyback compared with the derring-do of a surprising acquisition that has the market thinking you’re a company on the move?

As a great poet once wrote, “[I] love you more than madness, more than waves upon the sea.” The roots of M&A are and always have been both—the madness of megalomania combined with the waves that happen when our nation’s corporate “leaders” reveal themselves to be the followers they really are. What does it mean that we may be seeing a new M&A wave take shape? Nothing more than the fact that people are doing anything they can think of doing in order to seem like they’re doing anything at all. Because there’s nothing Americans hate more than a man of inaction.

David Einhorn.

When David Einhorn, the poker-playing hedge fund superstar, decides to publicly take on a company whose stock he owns (or has shorted), he usually gets results. Once you establish a reputation for astute calls on Wall Street—Mr. Einhorn’s most famous being his bearish call on Lehman in the spring of 2008—the lemmings can’t help but follow. His latest target: Apple.

Mr. Einhorn’s Greenlight Capital owns more than $600 million worth of Apple, but like others, he thinks the company needs to shake free of a months-long rut. To that end, Mr. Einhorn made clear last week his wish that the company become more flexible in how it thinks about returning cash to shareholders. It’s no small matter, considering that Apple has $137 billion of the stuff sitting on its books, and he sued the company over a possible violation of securities laws last week to make his point. The stock rallied 3 percent on Thursday as a result.

The question of whether or not Apple should do as Mr. Einhorn wishes is an interesting one. On the one hand, Apple has never kowtowed to the needs or wants of Wall Street. On the other, that was a legacy of Steve Jobs, and Mr. Jobs’s successor Tim Cook has to be somewhat concerned about the company’s precarious status as a stock market darling. Returning more cash to shareholders can only help in that regard. Smarty-pants commentators will of course point out that with no external financing needs to speak of, Apple need not pay any mind to Mr. Einhorn or any other institutional investor. But what of its employees? As singular as it may be, the company does have competitors. And when you’re trying to retain your people, a rising stock price beats a falling one.

My bet is that the company caves, but not in the precise way Mr. Einhorn wishes. These are proud people, after all, and there’s no way they’re going to let some guy from New York tell them what to do. But they’re also smart enough to know that $137 billion is too much, and that taking care of shareholders becomes a more nuanced challenge when growth begins to moderate.

In suing Apple, Mr. Einhorn took an issue everyone had already been talking about and put it on the front page. More interesting than the question itself is the fact that nearly every piece of coverage about it—in papers, on TV, in the blogosphere—invoked the label “activist investor” when describing Mr. Einhorn. The term, which is generally applied to hedge fund managers who buy a stake in and then urge companies into some sort of action, has never been explicitly derogatory. But the arrival of said “activism” is usually remarked upon (or typed) in a certain tone, as if someone had just farted at the dinner table.

Why? Perhaps it’s because its most effective (and self-promoting) practitioners have always been the most arrogant that Wall Street has to offer—from 1980s pioneers Carl Icahn and T. Boone Pickens to today’s most prominent, Daniel Loeb (he of the poison-pen letters to CEOs and boards) and his contemporary Bill Ackman. Mr. Einhorn is an unusual exception: he’s so self-effacing, it’s almost hard to believe he works on Wall Street at all, let alone as one of its most successful hedge fund managers.

The unspoken criticism of activist shareholders seems to be that they’re in it for themselves, that their activism is just Wall Street greed in one of its many costumes. That may have been true when it came to the old practice of greenmail, or when hedge funders end up profiting at the expense of others by exploiting companies’ capital structures to their sole advantage. But what about when it’s just another common shareholder like you and me? Such activism is great for everyone, isn’t it? If you own Apple stock in your IRA, Mr. Einhorn’s interests are aligned with yours. So why is this “activism” treated with distaste? Have the public equity markets become so disconnected from reality that no one expects the actual owners of companies to have a say in how they are run?

That’s not to say that activism is itself rare. Pershing Square’s Mr. Ackman has done a great—and captivating—job over the last few months of focusing other investors (and perhaps securities regulators) on a simple question: does multilevel marketing giant Herbalife have many—any?—customers beyond its distributors? If not, it’s a pyramid scheme. And if that is the case, Mr. Ackman’s short position in the stock will pay off big-time. Deride short-sellers all you want, but the man is just asking a question. Why the hell don’t more big investors do that?

(On the subject of Mr. Ackman, did you see the clip of him doing battle with Carl Icahn on CNBC? It’s a classic, and surely the first time I’ve ever told non-business types that a segment from the cable network is a must-see. Mr. Icahn came across as a bit of a jackass, particularly when he berated the reporter for the audacity of asking him questions, but in the end, he’s just an investor who actually tries to force companies into action. And he’s good at it. Thus, a mea culpa: in a previous column on Mr. Icahn and Netflix, I concluded that his agitation probably wouldn’t result in any movement in that stock. Shares of Netflix have, um, doubled since then. Whether or not it had anything to do with Mr. Icahn seems irrelevant at this point. Nice one, you old dog.)

Mr. Einhorn’s complaint is technical—he’s arguing that by bundling a proposal that would prohibit the company from being able to issue preferred stock without a shareholder vote with some other matters, Apple was somehow violating securities laws. But that’s the law for you—sometimes the only way into an issue is through the side door.

There are two reasons Apple’s other large institutional shareholders haven’t tried that door. One: Apple doesn’t give a shit what its shareholders want. It never has. So some investors have surely (and correctly) concluded that it wasn’t worth the effort. Two: institutional shareholders are a bunch of wimps. They don’t apply pressure on outrageous CEO pay, decry stupid mergers or acquisitions, or move for entire boards to be fired in instances of egregious failings of oversight. Most of them, in other words, are a CEO’s dream.

Shouldn’t an owner be able to ask questions about strategy or execution? Even CalPERS—the nation’s largest pension fund—which The Wall Street Journal referred to on Friday as “a loud voice on corporate governance,” isn’t really all that. It only became concerned about the Freedom Group—maker of the AR-15 Bushmaster, the favored gun of mass murderers—after  it was used to savage effect Newtown, Conn. That’s not activism. That’s covering your ass in the court of public opinion. Strangely, CalPERS supports Apple’s desire to restrict itself in the ways it can pay out cash to shareholders. Don’t ask me why.

Of course, if you don’t like what management is doing, you are free to sell your shares and take your money elsewhere. (Why anyone would ever own shares in Wall Street firms themselves, for example, which Andy Kessler described to me once as compensation schemes masquerading as publicly owned companies—“they literally exist to pay out half of their revenue as compensation”—is beyond me. But that’s a discussion for another time.)

And yet we still erupt in spasms of disbelief when activists make a ruckus. But really, people, which is more unbelievable? That some hedge fund guy has the audacity to ask a company to consider a change, or that the rest of us have come to accept the status quo? In an interview with CNBC last week, Mr. Einhorn said that when he finally got Apple CEO Tim Cook on the phone after failing to make headway with the company’s CFO, Mr. Cook told him that he hadn’t even been told about Mr. Einhorn’s concerns. Steve Jobs would be proud.

Blogger Barry Ritholtz chastised Mr. Einhorn in a post last Friday for trying to salvage a poorly timed investment in Apple stock by pushing the company to release more cash, and coined a “law of activist fund managers”—“No matter how much money a company makes for investors, they all eventually want more.” But why shouldn’t they? They own the damn thing.

Mr. Ritholtz knows how to get attention as effectively as the activists he mocks—he titled the post “The Colossal Gall of Bad Apple Investors”—and he decreed that Apple’s decision to sit on that obscene pile of cash is simply part of its genius. In his mind, Mr. Einhorn’s move is not a reasonable request from an owner of more than $600 million of stock but simply the sour grapes of a sore loser. But that’s absurd. By that reasoning, an owner of a stock that has gone up a lot before going down has no right to question management. The fact that we react with surprise when they do says more about us than it does about them.

You’ve surely read about Apple’s record-breaking revenues—$54.5 billion for the quarter. That nevertheless disappointed the market, the result of which was a 11 percent fall in the stock price last Thursday. That’s its biggest post-reporting decline in a decade. Yes, even your grandmother has an iPad now. But that’s not good enough, people. Because odds are it’s an iPad mini. Does that make no sense to you? Welcome to Apple’s 115th Dream.

In early December, I wrote about Apple’s last precipitous fall—a 9 percent decline to $533. In that piece, I suggested that the company’s biggest problem was its own stupendous success, and that it was now competing against its own record more than anything else. Sure, it was sticking to its habit of crushing its own records—this quarter’s “disappointing” $54.5 billion was more than $8 billion above the same quarter last year. But even the best record-breakers among us eventually run up against the limits of their own abilities. And the million-dollar question (more like $50 billion, actually) was whether Apple had finally run into its own. Well, the question has been answered.

The cratering has been described in any number of ways, but my favorite is the idea of a “healthy retrenchment” of the stock. That preposterous attempt to see a bright side to such immense value destruction takes as its premise that investors cared one way or the other why their stock was once at $705 a share. The theory is that they’d prefer that it be less about some unknown-but-possibly-awesome future and more about current cash flows. But what would be the fun in that? You might as well buy Treasuries. And $705 is $705, no matter how you slice it. Until you slice it nearly in half.

Interestingly, one of the best articles about Apple last week wasn’t about those disappointing results, but was more of a meditation on the fact that Apple’s valuation has actually been, for some time now, more about its ability to mint money in the present than about an even more wondrous future. Amazon, on the other hand? Did you know that founder Jeff Bezos’s net worth of $25.3 billion is more than four times the $5.4 billion that the online retailer has earned over its entire existence? Talk about betting on an unknown tomorrow. (Adding insult to injury, the late Steve Jobs was never worth anything close to $25 billion. I guess you really can’t win ’em all.)

“Apple makes so much money that investors are leery of whether it can continue growing,” Bloomberg’s Mark Gimein wrote. “In stark contrast, Amazon has made so little that, paradoxically, it continues to hold out the prospect of limitless growth.” In other words, the dream lives on, although it also seems to have moved to Seattle.

That leeriness about Apple’s prospects is really about two things. One, even if the company has secured a monopoly on breathless media coverage, its actual competition has not been sitting still. And two, the market for high-end consumer products has a limit to it. When growth requires a company—any company—to move down-market, margins will suffer as a result. For Apple, these two issues are exemplified in the form of Samsung and the iPad mini.

Samsung has taken dead aim at Cupertino’s phone and tablet franchises and is hitting both marks in a real and injurious way. According to analysts at Citi Research, Samsung’s share of the smartphone market in the fourth quarter of 2011 was 27 percent to Apple’s 20 percent. And both of those numbers are heading in a direction that can’t be pleasing to Apple’s investors—in the same period in 2011, Samsung trailed Apple, with 23 percent to Cupertino’s 24 percent. Whether or not Samsung has engaged in rank theft of Apple’s intellectual property is a question for the courts. But its theft of market share is a fait accompli.

And then there’s the iPad mini. Have you tried one? It’s great. But it’s also cheaper than the iPad itself, with thinner profit margins—just 25 percent versus the iPad’s 41 percent. So even as the overall number of tablets sold continues to skyrocket (22.9 million in the latest quarter, up 48 percent year-over-year), the average price has fallen 21 percent (from $593 to $467). The result: overall tablet revenues rose just 17 percent, to $11.1 billion, and the division’s gross margins are headed down. That’s fine if sales growth is all you want, but not so good if you’re a stickler for maintaining or enhancing profitability.

For years, it wasn’t that hard for the company to do both, as Apple customers (myself included) have had an ingrained habit of just sucking it up and enduring its preposterously steep prices because we just couldn’t resist. But what if Apple itself offers you a discount? You will take it. Who wouldn’t? Sure, bringing more people into the iPad fold can only be good for the company in the long term. But it’s coming at quite the short-term price.

There are bright spots. Sales in greater China, for example, rose 67 percent in the latest quarter versus year-ago results. But there’s competition in China, too. And even the expected strong sales in the region won’t be big enough to make up for an overall tapering in the company’s growth. Not unexpectedly, analysts are now calling for Apple to start increasing the cash return to its investors, whether through more share buybacks or increasing the dividend.

That’s the kind of thing a company does when forecasts of growth-without-restraint have come to an end, and when investors start to focus on astute capital allocation as much as they do anything else. There’s nothing wrong with that—companies like IBM have rewarded their shareholders handsomely while notching only modest revenue gains. But it’s also an adjustment that will put a cap on the stock price. (As I said in my previous column, in technology, you’re either a blockbuster growth story or you’re an art-house flick with a much smaller audience. If you transition from the one to the other, your box-office take—your market value—will come down as well. That’s simple mathematics, nothing more.)

What’s going to get this stock moving again? Analyst Toni Sacconaghi at Bernstein Research sums it up nicely: new iPhone carriers, more cash returned to shareholders and, of course, potential new products, including the still-a-pipe-dream Apple TV. The first two are likely to happen, but they won’t move the needle that much. The third? If and when an Apple TV ever hits the market, you better hope you’re not short Apple stock. But that’s a big if and an even bigger when. Until then, Apple’s best and brightest are going to be taking off their inventor’s hats and putting on the green eyeshades.

And let’s not forget the potential for further downside. How much, you ask? Don’t ask me, ask the analysts at Barclays. They’ll tell you that the upside case is $750 a share, and the downside case is $350. In other words, with 939 million shares outstanding, if everything goes right, the company could end up worth $700 billion. But if it all goes to pot, it’s worth just $325 billion. That difference—$375 billion—is greater than the value of any company in the country save Apple itself ($430 billion at press time) or Exxon ($417 billion). So the analysts are telling you that they think Apple’s future value could vary by almost as much as its entire value today. You will also live through tomorrow or die by nightfall. You never know.

But I digress. Yes, the company is going to sell more iPhones and more iPads in coming years than it has ever sold before, but the peaks in profit margins and market share might already be in the past. What’s left to dream about? What’s the X factor here? Something nobody has even thought of yet, a k a the future. And the really, truly aggravating thing about the future is that you just can’t know it for certain. Maybe Apple will waken its die-hard investors from their nightmares, and maybe it won’t. While we’re on the subject, how much is Amazon’s stock trading for again?

Photo illo: Ed Johnson.

Did you hear the news about Sears last Monday? Of course you didn’t. You’re not stuck in 1975, after all, so why would you absorb any news about the company? But this was worth a listen; it was pretty compelling stuff.

Here’s the gist: on January 7, Sears Holdings announced that Louis J. D’Ambrosio, the company’s chief executive of just two years, would be leaving in February due to family health matters. His replacement: Eddie Lampert, the hedge fund manager who engineered the merger of Sears and Kmart in 2005.

Mr. Lampert became majority owner of Kmart in 2003. While most people were initially at a loss to understand why the former Goldman Sachs star was messing around with yesterday’s retailer, the joke was (for a time) on them. Mr. Lampert wasn’t making a retail transaction, but a real estate play. The idea of even walking into a Kmart was so anathema to the East Coast financial and media elite that everyone had missed the gold mine of real estate sitting underneath the company’s stores, which were mostly located in densely populated urban areas.

Over the next several years, Mr. Lampert looked like a genius, as the value of that real estate continued to swell. And then he made his Sears deal. Crazy Eddie was at it again! As The New York Times pointed out this week, Fortune really laid it out there at the time, dubbing him the best investor of his generation. (He might have been, had he sold all that real estate, liquidated the company’s inventory and cashed out. Alas, no such luck.) Businessweek wondered if he was the next Warren Buffett. Maybe he was the next Bob Dylan!

Real estate machinations aside, the addition of Sears had the effect of turning the whole endeavor into a retail play again, and one that unfolded predictably: with a string of restructurings, a half-assed refreshing of stores and belated moves into e-commerce, none of which have prevented an inexorable slide toward extinction for both brands. The combined company’s same-store sales have declined for six straight years, and its market capitalization is one-sixth its level of early 2006. The company lost nearly $500 million in its most recent quarter alon

Yes, I know—they still do more than $40 billion in annual combined sales. But that’s down more than $10 billion since Mr. Lampert took over. And just as most Vegas casinos declined to make odds on the Mike Tyson-Buster Douglas fight in 1990, considering the result a foregone conclusion, I challenge you to find someone willing to give odds on sales recovering at this company. Sears might be the Buster Douglas of retailing, but I’m going to guess it isn’t.

While on the whole quite negative, coverage of the company nevertheless abounds with hogwash that’s apparently given some hope to the dwindling faithful, such as Sears’s recent “renewed focus” on its private-label Craftsman and Kenmore brands. Renewed focus? What the hell else were they focusing on? Someone else’s brands? (Don’t get me wrong: Craftsman makes some bad-ass tools. But so does Black & Decker.)

In December, one analyst was clearly reaching when he praised the company’s “improved in-store presentations and layouts.” I mean, what took them so long? Can’t they use the Internet to locate the nearest Home Depot or Walmart and go have a look-see? Actually, maybe they can’t. Because there’s also supposedly a new focus on something called “online sales” at the company. You don’t say! Are they sure that my credit card information will be safe if I send it over the Internet? Because if not, I think I want to give it to them over the phone. In 1995.

Now Mr. Lampert’s decided that he’s the man to run the retailer. Seriously, Eddie? I know that you talked your way out of a kidnapping in 2003, negotiating with bad guys who had guns, so you’re probably a pretty big fan of your own ability to find your way out of a tight situation. But this pickle is far more dire. And while you may think that being chairman of a company from afar for seven years while also managing your hedge fund qualifies you as an “experienced” retail executive, did you really think that you were the best man for the job? Or was it simply that no one else wanted it? Where’s Ron Johnson when you need him? Oh right, he’s on a similarly quixotic mission at JCPenney. If the guy behind Apple’s retail stores can’t turn things around, then nobody can.

Wall Street, of course, is a place where the ability to make money is often confused with an ability to run a company, as opposed to, well, moving papers around in an air-conditioned office. But you can’t save a terminally ill company with a spreadsheet, no matter what the geniuses in private equity might tell you. Even the folks at Mc-
Kinsey couldn’t turn Kmart around. And that was before Amazon came along.

If you need more convincing, I hereby offer you a statistically sound study of one consumer: me. I went into a Sears about four years ago, because my local Home Depot didn’t carry the model of cordless drill for which I was seeking a replacement battery charger. I left after 15 minutes because I couldn’t find anyone to talk to. Did I forget to mention that Sears has systematically underinvested in its retail locations compared with the competition in recent years?

Let’s just assume that it’s never going to get modern retailing right. Because why would it? Remember when Rudy Giuliani took it on the chin in 2007 for not knowing the price of a gallon of milk? I felt for the guy, because I buy milk all the time and couldn’t tell you the price. But a hedge fund billionaire running Sears? That’s like hiring a taxi driver as maître d’ at Le Cirque. There’s simply no way the man will feel it in his bones. I wonder if he’s ever even bought anything on Amazon. And that’s no insult: if I were a billionaire, I’d have someone else do it for me. But I’d also have someone else run Sears.

So here’s what’s left: more financial engineering of the sort that’s been keeping the whole thing afloat in recent years, such as spinning off units, renegotiating credit lines, and—don’t laugh—selling off that real estate. When that’s done, there’s going to be one hell of a going-out-of-business sale. Which will bring us all back into Kmart and Sears one last time.

editorial@observer.com

Photo Illo: Ed Johnson

Like sands through the hourglass, these are the days of our lives. Is that show even on TV anymore? And if it is, are Bo and Hope still together? (Note to self: ask Mom.) Meanwhile, on to another long-running melodrama, the madcap saga we call the market. Where will the Street lead us in 2013? One thing seems certain: it’s going to be a bumpy ride. It always is. Herewith, a few predictions for the year ahead.

Lloyd Blankfein, CEO of Goldman Sachs, will retire and be replaced by Gary Cohn.

You heard it here first. Actually, no you didn’t.But let’s put a date on it just to show that the Up and Down the Street team has predictive powers that go beyond the norm: the firm’s annual meeting will be in May, so Mr. Blankfein will announce the succession on April 15. Any questions?

Steve Cohen, overlord of SAC Capital, will take his leave too.

He knows the Feds are coming for him. He also knows that SAC’s code of employee omertà is beginning to crumble. It won’t take too many 10-year jail sentences to make those canaries start singing. If Mathew Martoma wants to go down as a martyr, that’s his choice, but as more indictments come out of the U.S. Attorney’s office, as seems likely, you can be sure that someone is going to find a plea bargain mighty attractive. Time to claim victory and retire, Stevie. (He also hates that journalists use the name “Stevie,” another motivation to hang up his spurs. My brother Steve, on the other hand, likes the name Stevie. More from him later.)

One who will hang on: Jamie Dimon.

The naive among us thought that whole “London Whale” episode might signal the end of Mr. Dimon’s grip on JPMorgan Chase. Not a chance. He’s a charming guy, that’s for sure, but Mr. Dimon can still throw underlings overboard with the best of them. Happy retirement, Ina Drew! There was a time when he wanted to be Treasury secretary. That time has passed. He’s going to stick around JPMorgan Chase for a while. Did I mention that my 2009 book about Mr. Dimon was called Last Man Standing? And that once Lloyd retires, he will be exactly that? Just saying. (I was informed by my periodontist the other week that his favorite teacher was Ina Drew’s husband. I promised to send him a copy of the book if he took it easy on my gums. No such luck for me. And no book for him.)

Wall Street and corporate America will finally get over their pouting and get back to the business of making money.

There is perhaps nothing I am looking forward to more in 2013 than a quieting of all the whining and moaning from the some of the richest people in this country about Barack Obama’s willingness to throw them under the rhetorical bus whenever it came time to rally the faithful. (Chrystia Freeland said it best.) It’s almost as if they’d never experienced a campaign season before! What’s more, his actions belied the strongest of his words. The president backed unprecedented government bailouts, which kept both Wall Street and the economy itself in business. He also kept global bond investors calm enough about the state of corporate hegemony in the U.S. that borrowing money on a large scale has never been cheaper. And the IPO market remains open, if not necessarily robust. So what’s the problem? Nothing but the hurt feelings of a bunch of people whose self-pity is nothing short of grotesque. I mean, seriously, Leon Cooperman. WTF? I hereby predict that everyone is going to take it down a notch over the next 12 months. Obama doesn’t need to demonize them anymore, and fractional tax hikes won’t take away their hard-earned piles of money. (Bonus prediction: the term “job creators” will be retired forever. Actually, that’s not a prediction but a wish. Pretty please?)

Gun control will go nowhere in Congress, but the market will speak.

As demonstrated incontrovertibly by the batshit-crazy Wayne LaPierre, the NRA will spend 2013 using its lobbying power to keep ridiculous weapons on the streets of America. And Obama will chicken out on serious gun control. But I see some cause for optimism. Although capitalism has showed more than enough of its dirty underside in the last half-decade, the market can also be a force for good. Consider this: With the surprising news that private equity powerhouse Cerberus Capital Group intends to unload its stake in gun maker Freedom Group (a wonderfully exasperating name), there is hope that a more powerful force than the NRA—i.e., the profit motive—could turn against our out-of-control gun culture. If big money shuns big gun makers, those gun makers will find their cost of capital on the rise. Investments in future production will drop, and maybe the next generation of schoolkids will be a little safer. Sure, somebody will fund the Masters of War. But it’s still going to be more expensive for them to do business. Which is change on the margin—probably all we can ask for.

Walmart and the Justice Department will collide for real.

I don’t know about you, but I find the sestoriesabout Walmart and the bribing of Mexican officials pretty shocking. And I don’t shock easy, especially when it comes to the morality of the Beast from Bentonville. According to recent news reports, both the Justice Department and the Securities and Exchange Commission are looking into whether the company violated the Foreign Corrupt Practices Act. Here’s my guess: yes, they did. But I’m no lawyer. Walmart has been reassigning various lawyers internally to show that it’s taking the investigations seriously. But things won’t get really interesting until some actual charges are filed ... this year.

The value of Facebook will remain a matter of hot debate, along with the value of you and me.

Remember the Instagram scandal in December? When everyone lost their minds over the possibility that Instagram was considering using their photos as advertisements—and usage droppedby 25 percent? While I do understand the outrage from a pure privacy standpoint, I think people really do need to get a grip. Did you really think that your photos were going to be sold as ads? Sorry, Fabio. At some point, delusional technology investors are going to realize that the fact that every aspect of our lives is being collected bit by bit doesn’t necessarily mean there’s any value in your status update or the number of “likes” elicited by some picture of a baby. Because really, people, what’s a digital life worth anyway? I asked my brother, an artist who lives in rural Ontario, what price he’d place on his own. “Anyone can have everything I have ever posted or will ever post on Facebook for $5,000,” he offered. (Ping me for his contact information.) Sure, I get the whole targeted advertising thing. And yes, I get that some people actually do click on banner ads, although I don’t think I’ve ever met anyone who didn’t do so by mistake. But at some point people will realize that the value of Facebook and its ilk has been one big digital hustle.

Apple will do something in 2013. And the stock market will do something else.

What? You want more specifics? Please. Despite my own recent rantings on the subject, Apple is a hothouse of creativity and market power, it has an almost unsurprising ability to surprise us. It will do it again. And the stock will rise as a result. And then it will fall for some other reason. Or something like that. Given the company’s bellwether status, that means that the stock market itself will also rise at points during the year and fall at others. I can’t offer you more details than that, because I save those for my $2,500-a-year investment newsletter, which I send out right after I finish this column. Actually, no I don’t. But if you really want a stranger’s advice, there are plenty of those newsletters eager for your business. (Ancillary prediction: investment newsletter sales will remain robust despite an utter lack of value within.)

The money will start flowing again.

There is more than a trillion dollars of cash sitting unused on the balance sheets of U.S. companies. If you don’t believe me, believe Lloyd Blankfein, who wrote about it in a November Wall Street Journal editorial. But the election is over. The time for whining has passed. Our swan dive over the fiscal cliff will have a surprisingly soft landing. Corporate paymasters are going to start spending again in 2013, if only for the simple reason that they’re bored with not doing so. Well, that and the fear that everyone else will, which is the greatest motivator of all. (Only don’t expect Mr. Blankfein to be around to help Goldman’s clients figure out how to spend their money. He’s retiring on April 15, remember?) So things are going to pick up this coming year, both for employment and the economy as a whole. Call me crazy, but I say I’m just an optimist. Happy New Year!

editorial@observer.com