Associates

2011

23

May 2011

Associates Breakfast with Brett White, CEO, CB Richard Ellis Group

Santa Monica

CEO Brett White has led CB Richard Ellis Group through one of the darkest times in commercial real estate. But the clouds appear to be lifting.

The world's largest real estate consultancy has returned to profitability after slipping into the red in early 2009, and its workforce is close to its 2007 peak. Revenue has continued to grow this year as property sales and leasing picked up in Europe and the United States.

Meanwhile, White seems optimistic about the market itself based on the company's performance and recent economic indicators. He offered his latest outlook on the commercial real estate and the state of the economy at this private breakfast for Milken Institute Associates.

White has been with CB Richard Ellis since 1984 and held various management positions before being named president of the company in 2001 and CEO in 2005. He is a member of the Business Roundtable, serves on the board of Edison International and Southern California Edison, and is a trustee of the University of San Francisco. White received the "Brokerage Executive of the Year" award in 2005 and "Real Estate Industry Executive of the Year" and "Brokerage Executive of the Year" awards in 2006 from Commercial Property News.

This event was open only to Milken Institute Associates. To join or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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03

May 2011

Associates Breakfast with David Bonderman, Founding Partner, TPG Capital

2011 Milken Institute Global Conference
Los Angeles

2011 Milken Institute Global Conference

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22

March 2011

Associates Breakfast with Paul Kusserow, Chief Strategy Officer, Humana

Santa Monica

Humana's Paul Kusserow
Humana's Paul Kusserow details how the insurer is using new approaches and partnerships to prepare for the effects aging baby boomers will have on the industry.

In so many areas, the demographic dividend of the baby boom is turning into a demographic deficit. Nowhere is this more accurate than in the field of health care.

The nation's 65-plus community grows by 7,000 people every day, according to a recent report from the AARP. As their medical needs escalate, so do the challenges for physicians, hospitals, and other care providers that are already working near capacity.

As senior vice president and chief strategy and corporate development officer at health insurer Humana Inc., Paul Kusserow is at the forefront of this sea change in the industry.

At this breakfast for Milken Institute Associates, Kusserow discussed the future of health care and how Humana is using innovative new approaches and strategic partnerships and acquisitions to position itself for success in a marketplace where aging will have a substantial impact.

Kusserow has vast experience in the health-care industry, particularly on the financial side. He has served as managing director and chief investment officer of the Ziegler HealthVest Fund, where he focused on early-stage investments in health-care services and IT; managing director of San Ysidro Capital Partners LLC, a health-care services consulting and investment advisory firm; and senior vice president of corporate strategy and Tenet ventures at Tenet Healthcare Corp.

Prior to joining Humana, Kusserow was managing director of private equity at the Chicago-based investment firm B.C. Ziegler and Co. He has also worked as an executive in strategic planning, new business development, M&A and marketing capacities at National Geographic and Reader's Digest, and as a management consultant at McKinsey & Co. Kusserow is a Phi Beta Kappa graduate of Wesleyan University and received an M.A. with honors from Oxford University, where he was a Rhodes Scholar.

This event was open only to Milken Institute Associates. To join the Associates or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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18

March 2011

Associates Breakfast with Joseph Dear, Chief Investment Officer, CalPERS

Santa Monica

Joseph Dear of CalPERS
CalPERS Chief Investment Officer Joseph Dear, center, shares a laugh with Milken Institute CEO Mike Klowden, right, and COO Paul Irving as he gives a group of Milken Institute Associates his economic outlook.

When the largest U.S. pension fund makes a move, the market listens.

With a total market value of $225 billion, CalPERS provides retirement, health and related benefits to more than 1.6 million public employees, retirees and their families. This past December, the fund announced new asset allocations, and approved a new investment classification system designed to hedge its portfolio against extreme market risks and rising inflation.

The man who will execute this strategy, Joseph Dear, shared his insights on where the markets are headed at this private breakfast with the Milken Institute Associates.

As chief investment officer of CalPERS, Dear oversees all asset classes in which CalPERS invests, including domestic and international equity, Treasury and agency debt, high-yield bonds, real estate, venture capital, leveraged buyouts and hedge funds. He is responsible for the strategic plan for the CalPERS Investment Office, including tactical asset allocation, risk management, business development, budget authority, new investment programs, trading technology, staffing and back-office operations.

Dear joined CalPERS in 2009 after serving as executive director for the Washington State Investment Board, where he was responsible for managing more than $67.6 billion within 38 funds. He received a B.A. in political economy from The Evergreen State College in Olympia, Wash.

This event was open only to Milken Institute Associates. To join the Associates or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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08

February 2011

Associates Breakfast with David Brooks, Columnist, The New York Times

Santa Monica

At a breakfast gathering with the Milken Institute Associates, David Brooks shared his thoughts on why our national discourse has become so bitterly partisan.

As an op-ed columnist for The New York Times, David Brooks gets paid to express his opinion. One of them is that Washington's general failure to find a path to political compromise is the fault of both parties.

"How can you love your country if you hate the other half of it?" Brooks asked in one recent column.

Despite the entrenched political divide, Brooks detects a "whiff of coalition-building in the air," pointing to negotiations on the Bush tax cuts and to the bipartisan fiscal commission process that recommended debt reductions and government reforms.

At this breakfast for Milken Institute Associates, Brooks offered his informed analysis of whether Washington has the political will to fix some of the nation's biggest challenges, from entitlements to energy policy, and his predictions for what the new Congress will — and won't — accomplish in the coming session.

Brooks is the author of "Bobos In Paradise: The New Upper Class and How They Got There" and "On Paradise Drive: How We Live Now (And Always Have) in the Future Tense" and the editor of the 1996 anthology "Backward and Upward: the New Conservative Writing." A commentator on the "PBS NewsHour," he also appears frequently on National Public Radio, CNN's "Late Edition" and "The Diane Rehm Show."

Previously, Brooks was a senior editor at The Weekly Standard; a contributing editor at Newsweek and Atlantic Monthly; and op-ed editor for The Wall Street Journal. His work has appeared in The New Yorker, The Washington Post, Forbes, The Public Interest and The New Republic, among many others.

This event was open only to Milken Institute Associates. To join or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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21

January 2011

Associates Breakfast with Pierre Beaudoin, CEO of Bombardier

Santa Monica

Successful multinational firms have to figure out how to cultivate talent in the emerging markets where they operate, said Bombardier's Pierre Beaudoin at a breakfast gathering of the Milken Institute Associates.

Globalization has brought companies unprecedented opportunities to tap vast new markets. But there's a flip side: The challenges of coordinating manufacturing, sales and logistics in dozens of countries worldwide can be mind-boggling.

Pierre Beaudoin, president and CEO of Bombardier Inc., knows this all too well. As the world's largest supplier of rail equipment, systems and services, and the third-largest manufacturer of civil aircraft, Bombardier employs 63,000 workers in more than 60 countries. During a private conversation with the Milken Institute Associates, Beaudoin shared his insights about doing business and capturing growth in emerging markets.

Bombardier has seen a dramatic shift in global demand. Emerging markets accounted for only 11 percent of the company's sales in 2005, but today they make up over a third of new orders. Beaudoin noted how quickly China is moving to build its transportation infrastructure. He saw that same decisiveness at work when Bombardier set up an extensive new factory in China: It was up and running in just 12 months.

While the Canadian and U.S. governments generally take a hands-off approach to business, government has a much more direct relationship with industry in emerging markets - a reality that can both help and hinder.

Most of the company's engineers are still based in Germany, but just as manufacturing went global, Beaudoin feels that multinational corporations will now have to determine the degree to which their international operations can serve as a source of product innovation and design.

This event was open only to Milken Institute Associates. To join the Associates or learn more about the program, please contact Mindy Silverstein, director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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2010

08

December 2010

Associates Breakfast with Jeffrey T. Mezger, CEO, KB Home

Santa Monica

Jeffrey Mezger, CEO of KB Home, told a gathering of Milken Institute Associates that it will be a long, slow process for the government to extract itself from the nation's housing market.

Everyone knows the first rule of real estate: Location, location, location.

Today that maxim sums up the state of the nascent recovery in housing markets, according to KB Home CEO Jeffrey Mezger, who recently appeared at a private breakfast session with the Milken Institute Associates.

Housing is extremely local, he said, and we are seeing regional recoveries. In California, prime coastal communities remain strong, but just 60 miles inland, it's a different story. Texas is going strong, but Florida is "a disaster," according to Mezger.

He believes it will be a long time before the nation's huge shadow inventory clears, since banks have been disciplined about metering their foreclosures to avoid crashing prices.

Though Mezger sees some positive signs, including a tick upward in consumer confidence, KB Home is adapting to the new normal of slow growth. Major adjustments have been made to the firm's product offerings: Gone are the sprawling 3,500-square-foot Tuscan McMansions of 2006. Mezger says that today's consumer is getting back to value rather than maxing out on payments. To that end, the company is having great success selling 1,800-square-foot, three- and four-bedroom homes.

It's not only about the consumer scaling down. "We decided to push the envelope on sustainability and eliminate waste," said Mezger. By building homes that are energy- and water-efficient, he hopes to set a new standard that will drive the entire home-building industry forward.

This event was open only to Milken Institute Associates. To join the Associates or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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18

November 2010

Associates Breakfast with Beh Swan Gin, Chairman, Singapore Economic Development Board

Santa Monica

Singapore is posting a year of blockbuster growth. In fact, its government is keeping an eye on overheating - certainly a problem the United States would love to have.

What has this island nation done right, and why is it a leader in the global recovery? Beh Swan Gin, managing director of the Singapore Economic Development Board, answered those questions and more at an interactive private breakfast with the Milken Institute Associates.

One factor is Singapore's commitment to investing in human capital and public-sector R&D. A highly effective education system is producing a skilled high-tech workforce, and its manufacturing sector is expected to grow by 30 percent this year.

The biomedical sector is a particular point of pride. According to Beh, Singapore has "attracted star scientists, but now commercialization is the challenge." Singapore is focusing on translational research, training clinician scientists, oncology and opthamology (not surprising because, as Beh noted wryly, "60 percent of Singaporeans wear glasses").

In the past, Beh noted, U.S. and European firms thought of Singapore in terms of offshoring. But in the last 24 months, the relationship has changed. Today they're interested in tapping new markets.

"Any CEO has to have an Asia growth strategy, and many companies are selecting Singapore for their Asian headquarters," said Beh, pointing to Unilever, P&G, Applied Materials and Rolls-Royce.

The financial services sector is growing as Singapore continues to attract fund managers and private banking operations. Beh noted Singapore's appeal to China's new elite and to Chinese firms seeking to go global.

Beh summed up Singapore as "an open global city" where 25 percent of residents are from other nations and luxury travel is on the rise. "It's our goal to be a stop in the circuit where you build your career."

This event was open only to Milken Institute Associates. To join or learn more, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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06

October 2010

Associates Breakfast with Barry Sternlicht, Chairman and CEO, Starwood Capital Group

Santa Monica

For investor Barry Sternlicht, history may be repeating itself.

In the 1990s, during the last real estate recession, Sternlicht began building a hotel empire by purchasing distressed properties. The result was major hotelier Starwood Hotels & Resorts Worldwide, which he founded in 1995 and led for a decade.

Today, as chairman and CEO of Starwood Capital Group, he's once again snapping up bargains and amassing another major portfolio, buying distressed condos in overbuilt cities like Miami and Las Vegas as well as hotels and resorts. His recent purchase of the troubled Corus Bankshares — one of the nation's largest condominium construction lenders — and its real estate loan portfolio has been the talk of the industry.

At a private breakfast with the Milken Institute Associates, Sternlicht discussed the commercial real estate market and today's investing environment, which he describes as "weird" and "distorted." With government spending replacing private demand, he said, "it's an economy on steroids."

The key to investing, he said, is ensuring a margin of safety and fully considering the wide range of outcomes that are possible. There are lots of worrisome signs out there, including high CDS spreads of European sovereign debt, the soaring price of gold and the continued listlessness of housing market. Sternlicht commented that we might be seeing the beginnings of a tectonic reshuffling in the wealth of nations, with the balance shifting from the developed to the developing world. His portfolio is global, and while he shies away from India and Russia, he is bullish on Brazil.

Despite the uncertainty hovering over the economy, Sternlicht has proven to be a master at timing the market. "One thing you can count on for sure is population growth," he said, and that driver will eventually send values up.

This event was open only to Milken Institute Associates. To join or learn more, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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20

July 2010

Associates Breakfast with T. Boone Pickens, Chairman, BP Capital Management

Santa Monica

July 20, 2010 Associates Breakfast With T. Boone Pickens
T. Boone Pickens briefs the Milken Institute Associates on China′s growing demand for energy and its implications for the global oil market.

"This country is gonna be stupid if we don't move toward using our own resources." That was the unvarnished message from legendary oil man T. Boone Pickens, who appeared at a private breakfast meeting with the Milken Institute Associates.

"We're paying for both sides of the war," insisted Pickens, referring to America's heavy reliance on oil imported from unstable regions of the world.

Pickens noted that every president since Nixon has pledged to phase out oil imports, but no one has ever held their feet to the fire for failing to follow through.

Today, however, Pickens believes that the discovery of new natural gas extraction methods leaves the U.S. on the cusp of a great opportunity to shift to cleaner domestically produced energy sources.

Pickens has been pressuring lawmakers into passing a revolutionary energy bill. He predicts that Senate leaders will not be able to corral the 60 votes needed to break a Republican filibuster on comprehensive energy legislation, but he remains optimistic that as elements are peeled away, the "Pickens Plan" for converting the nation's fleet of 18-wheelers to natural gas will survive and will pass with bipartisan support.

In a freewheeling interview with Institute Chairman Mike Milken, Pickens discussed the geopolitical undercurrents in the oil market as well as the strategies he's used to effectively mobilize public opinion and force Washington into action.

This event was open only to Milken Institute Associates. To join or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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03

June 2010

Associates Breakfast with Orrin Hatch, U.S. Senator

Santa Monica

The United States is standing at a crossroads on a host of monumental issues. But do we have the political will to make the difficult and perhaps unpopular decisions that will move us toward solutions?

The need for political courage was a recurrent theme as Sen. Orrin Hatch joined the Milken Institute Associates for a private breakfast briefing. Noting that Hatch has been willing to buck his own party lines on issues like stem cell research, Institute chairman Michael Milken engaged in a wide-ranging conversation with the senator, covering everything from mobilizing the nation's domestic energy resources to free trade agreements.

 

Sen. Orrin Hatch tells the Milken Institute Associates the growing federal deficit is one of his biggest concerns.

Both Milken and Hatch are passionate advocates for spurring innovation in medical research. While reiterating that he is no fan of the recently passed health-care reform, Hatch, who has worked to triple the NIH budget, insisted that we are on the cusp of profound breakthroughs in personalized medicine. He believes that investing in cures will be the most effective way to hold down medical costs.

The overriding concern for Hatch these days is the gaping federal deficit, which he views as unsustainable. Given the diminishing number of workers supporting entitlement programs, Washington is going to have to deal the unfunded liabilities in Social Security and Medicare. "Sustaining the current programs is putting us deeper and deeper into debt," he said. But it will take bold leadership to tackle the problem.

Hatch recalled his decades-long friendship with the late Sen. Ted Kennedy, a productive and genuinely collegial relationship that often resulted in legislative compromise. He bemoaned the lack of a true bipartisan spirit in Washington, calling it a "stultifying system," and warned that gridlock may get even worse if centrists are voted out in favor of candidates on the far left and the far right. It will take compromise and great ideas from both sides of the aisle, said Hatch, to move the nation forward.

This event was open only to Milken Institute Associates. To register, join the Associates or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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21

May 2010

Milken Institute Associates Economic Briefing

Santa Monica

The European Union and the International Monetary Fund made a dramatic move in mid-May: They made nearly a trillion dollars in loans available to EU nations in danger of default, signaling to the world's markets that the EU is committed to such troubled countries as Greece, Portugal and Spain.

Will the rescue effort save the PIIGS and, by extension, the Eurozone? In a week when jitters sent financial markets down sharply, Komal Sri-Kumar, group managing director and chief global strategist for The TCW Group and a senior fellow at the Milken Institute, provided a private economic briefing to Milken Institute Associates, outlining the scope of the crisis and its potential for contagion.

An expert in country risk analysis, Sri-Kumar drew parallels between the evolving situation in the Eurozone and the Latin American debt crisis of the 1980s. While Greece represents only 2.5 percent of the Eurozone's GDP, its struggles have much broader implications. The markets are already beginning to test other countries where they see similarities.

It is impossible for the United States to merely watch this crisis unfold from the sidelines, according to Sri-Kumar. Both European and U.S. banks have large exposures to questionable sovereign debts, jeopardizing the still-fragile recovery. He urged a greater realization that in a tightly interconnected global economy, government officials cannot work in isolation; more coordinated international responses are required.

Sri-Kumar detailed the considerable practical difficulties of implementing the hastily unveiled bailout plan, including the political backlash in Germany. Discussion ranged from the structural origins of the crisis to prospects for rising inflation and even an eventual restructuring of the Eurozone.

This event was open only to members of the Milken Institute Associates. To join, please contact Mindy Silverstein, director of Milken Institute Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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11

May 2010

Associates Breakfast with Gerald Parsky, Chairman, Aurora Capital Group

Santa Monica

Gerald Parsky is a big fan of independent thinking. He's also a champion of California. Parsky is optimistic that the two will someday meet.

Parsky - the influential chairman of Aurora Capital Group, a former University of California regent and an adviser to the governor and several Republican presidents - told Milken Institute Associates at a private breakfast meeting that without "independent thinkers" the state cannot address its biggest challenges.

Chief among those challenges, he said, is altering the current tax structure that fosters boom-and-bust revenue cycles. Tax reform was one of several goals undertaken last year by the governor's Commission on the 21st Century Economy, of which Parsky was chairman.

The task force settled on a set of interrelated proposals that would reduce and simplify the personal income tax, end the corporate tax and eliminate the state sales tax. To compensate for the lost revenue, the commission recommended a business net receipts levy that would tax not only goods but also services. This would broaden the tax base, offer a more stable source of revenue and reduce dependence on the personal income tax that fluctuates with each economic boom and bust, he said.

The commission issued its report in late 2009. While some reforms are appealing to Democrats and others to Republicans, Parsky said, they must be enacted in concert if they are to fix the state's financial woes. He said tax reform and the state's other big issues - including the required two-thirds vote in the Legislature to pass a budget or raise taxes, political districts drawn to favor one party over the other, and the initiative process - can't be solved by lawmakers who adhere to party lines.

This event was open only to Milken Institute Associates. To join or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

 

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18

March 2010

Associates Breakfast with Sam Zell, Founder, Equity Group Investments

Santa Monica

"Reports of the demise of the real estate industry are greatly exaggerated," declared Sam Zell. And with that, the self-described "professional risk-taker" let fly with hard-hitting opinions on everything from gridlock in D.C. to the future of newspapers.

Zell described the current state of play in residential real estate as "the beginning of the clearing process." He insisted that "we'd be further along if the government had stayed out of it," calling it fruitless to try to keep people in homes they can't afford. But given the long-term demographic trends in the United States, he is confident that the market will eventually bounce back, starting with multi-family units.

His outlook was considerably less upbeat for commercial real estate, particularly the hotel business and the office market, where most owners have no equity and transactions have come to a screeching halt.

Retail, too, is going through a painful contraction, Zell said, since "a lot of retail was created during the boom that was instantly obsolete." A number of strip centers and marginal malls are in real trouble, he noted.

Despite the shaky loans they hold, Zell predicts that lending institutions will experience relatively little pain, as private investors will scoop up distressed properties. "The animal instincts are out there," he said. "I'm still an optimist."

This event was open only to Milken Institute Associates. To join or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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10

February 2010

Associates Breakfast with David Baltimore, Nobel Laureate in Medicine

Santa Monica

David Baltimore called the many efforts to find a cure for cancer "a series of small victories, but no large victory."

Nobel laureate David Baltimore is considered one of the world's most influential biologists. He has had a profound effect on national policy on such issues as recombinant DNA research and AIDS and for nine years led the California Institute of Technology, where he still directs the Baltimore Laboratory.

As a scientist, educator and university administrator, Baltimore sees science and technology through a distinctive prism, giving him an almost unparalleled big picture view of the strengths and weaknesses of the nation's knowledge economy. While the United States remains a leader in this area, Baltimore says, other nations are gaining ground.

But the solution is not to advance the field of science in the United States alone, he says. Helping other countries expand education and technology improves their economies, counters terrorism and adds to the knowledge base as well.

"A good idea is a treasure, no matter what mind conceives it," Baltimore said in a 2008 essay. "The stronger world science is, the more ideas will bubble up, and the richer will be the brew of ideas and experiments that each of us can draw upon."

Baltimore shared his views on international science development, the state of funding for U.S. R&D and the status of stem cell research, among other topics, at this Milken Institute Associates breakfast.

Baltimore, who won the Nobel Prize in medicine in 1975 for his research in virology, is the Robert Andrews Millikan Professor of Biology at Caltech. He was founding director of MIT's Whitehead Institute for Biomedical Research, President of Rockefeller University and head of the National Institutes of Health AIDS Vaccine Research Committee. Baltimore received his Ph.D. from Rockefeller University.

This event was open only to Milken Institute Associates. To join the Associates or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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14

January 2010

Associates Breakfast with John Lechleiter, President, CEO and Chairman, Eli Lilly & Co.

Santa Monica

Eli Lilly CEO John Lechleiter talks about the future of his company and the pharmaceutical industry.

Very few of America's top pharmaceutical executives actually know their way around a research lab. But John Lechleiter is a rarity: He's an organic chemist who traded in his lab coat for a business suit. Today, as President, CEO and Chairman of Eli Lilly & Company, he brings a unique dose of scientific insight to the executive suite.

Lechleiter recently joined the Milken Institute Associates for a private breakfast meeting focused on the problems with the current drug development model, which he has described as "taking too long, costing too much, and producing too little."

Big Pharma is under major pressure in this era of the billion-dollar drug and growing competition from generics. "The industry has to change and adapt in a fairly radical fashion," Lechleiter acknowledged. He described Eli Lilly's increasing emphasis on partnerships and collaborations outside the company, including the use of external resources for clinical trials. Lilly has also developed a venture fund that invests in biotechs and research labs.

He also addressed broader issues of American competitiveness.

"We have to maintain a viable ecosystem for innovation and value scientific inquiry," Lechleiter said. "It's crucial to reverse our declining capabilities in math and science at the K-12 level."

He called for sustained investments in the government-academic infrastructure for research, noting in particular that NIH grant need to be long-term. "These basic research projects develop future scientists," insisted Lechleiter. Noting that 1 percent of Eli Lilly's workforce is foreign, he also called for immigration reform so the United States can attract and retain the best and brightest international grad students.

This event was open only to Milken Institute Associates. To join or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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2009

05

November 2009

Associates Breakfast with Steve Forbes, President and CEO, Forbes Media

Santa Monica

As the editor-in-chief ofForbes magazine and a former Republican candidate for president, Steve Forbes has plenty of strong opinions about what caused last year's markets meltdown and how government has handled the crisis. He recently joined the Milken Institute Associates for a private breakfast meeting to share those thoughts.

Forbes dismissed any attempt to blame the meltdown on the inherent nature of capitalism.

"Greed is the antithesis of entrepreneurial capitalism," he said. "Greedy people grasp for the moment, while entrepreneurs plan for the future. . . Don't confuse the moral failings of individuals with capitalism."

He believes that America needs to innovate its way back to health, noting that transformative companies such as Apple, Microsoft and FedEx were born during the deep recession of the 1970s.

Creative destruction is taking place throughout the economy, Forbes observed. His own company has been undergoing a painful reorganization to cope with the changes sweeping through the media industry.

Forbes was not shy about challenging the Obama administration's approach, calling for lower taxes, a stronger dollar, less government involvement in health care and greater resolve in dealing with Iran and Afghanistan.

This event was open only to Milken Institute Associates. To join, contact Mindy Silverstein, director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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06

October 2009

Associates Breakfast with John Chiang, California State Controller

Santa Monica

Too much borrowing, a tax structure created in an industrial era, and a lack of political cooperation have caused a giant fiscal headache for the state of California in recent years, state Controller John Chiang told members of the Milken Institute Associates.

But while some tax, regulatory and political reforms may help put the state back on sound footing, the bottom line, he said, is state lawmakers "don′t budget properly."

"We have to figure out a better way to finance state government," Chiang said.

But that means lawmakers from both sides must cooperate more, making compromises that lead to a truly balanced budget — not one that relies heavily on borrowing and other "gimmicks," as California's has for several years, he said.

"People are going to have to upset their bases — on both sides," Chiang said.

Chiang gave Associates his view of the recent state budget crisis, including his decision to issue IOUs this summer because lawmakers hadn't passed a budget. He also answered questions about the state's business climate, tax reform, regulations and other fiscal issues.

Chiang was elected controller in November 2006 after serving two terms on the State Board of Equalization. He began his career as a tax law specialist with the Internal Revenue Service and previously served as an attorney in the State Controller's Office.

This event was open only to members of the Milken Institute Associates. To join, please contact Mindy Silverstein, director of Milken Institute Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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23

September 2009

Associates Breakfast with Rebecca Patterson, Chief Markets Strategist, J.P. Morgan Wealth Management

Santa Monica

Trading in currency markets and commodities is not for the faint of heart. But Rebecca Patterson, a Managing Director and Global Head of Foreign Exchange and Commodities for J.P. Morgan Wealth Management, has an enviable track record.

She recently joined the Milken Institute Associates for a private breakfast to reveal the science — and the art — of staying one step ahead of world currency trends.

Patterson noted that over the last six to nine months, the dollar has been weakening. When consumer confidence ticks upward, she explained, Americans tend to buy foreign goods, creating a bigger current account deficit. And as risk appetite returns, investors are gradually pulling out of Treasuries and money market accounts. Right now they are seeing opportunities in emerging markets, so capital is leaving the United States.

"As long as the world keeps getting better, I think the dollar stays under pressure," she remarked. "But it's important to remember that sentiment is still very fragile."

Patterson discussed which currencies she favors for the next 12 to 18 months, including several in emerging Asian nations and commodity-based economies.

Patterson feels that OPEC learned a lesson last year: By raising oil prices too aggressively, they ultimately shot themselves in the foot. She feels that current levels of $70 to $75 per barrel represent a "sweet spot" for OPEC, returning oil-producing nations to surplus without harming global demand and recovery.

In an interaction question-and-answer session, Patterson also discussed natural gas prices, the U.S. deficit, inflation and the impact of stimulus spending by world governments.

This event was open only to Milken Institute Associates. To join, contact Mindy Silverstein, director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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14

July 2009

Associates Breakfast with Bill Lockyer, California State Treasurer

Santa Monica

California State Treasurer Bill Lockyer says lawmakers in Sacramento have to face up to necessary budget cuts and "just get it done."

"Here we go again," said California State Treasurer Bill Lockyer, summing up the recurring partisan gridlock that produced a 2009 budget impasse of epic proportions.

At a private breakfast briefing with Milken Institute Associates, Lockyer reminded the attendees that Sacramento didn't always work that way. During his tenure in the state legislature, budget negotiations were marked by discipline and compromise. But in recent years, the state increasingly relied on deferrals, gimmicks and borrowing. When revenues tumbled in the wake of the economic downturn, the day of reckoning finally arrived, he said.

Lockyer believes that term limits have worsened the stalemate, as freshman legislators are more focused on their donors and more rigid in their ideology. He feels that mediating skills are learned over time, and the constant churning of the legislature produces increased polarization.

"It's the Hollywood effect. Sacramento has become about fluff and PR, not the day-to-day grind of governing," Lockyer lamented. He called for policy to be driven by facts, not polls. "The plural of anecdote is not evidence."

While he supports the notion of removing the legislature's two-thirds majority rule for passing the annual budget, he feels it should be kept in place for approving new taxes. "I think we've bumped the ceiling of potential levies in California."

Tax increases just aren't going to get through, Lockyer observed. "It's going to have to be cuts," he said. "My message is to just get it done. We have to be responsible and reconcile these accounts."

His guiding principles are to make government more efficient, fix K-12 education and "don't chase business out of the state." Lockyer is particularly concerned that the state is cannibalizing higher education, a trend he referred to as "eating our seed corn."

This event was open only to members of the Milken Institute Associates. To join, please contact Mindy Silverstein, director of Milken Institute Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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