Photo courtesy of Carlyle Group

I interviewed Carlyle Group’s Sandra Horbach, who heads the private equity giant’s consumer and retail group, at the Women’s Alternative Investment Summit in New York last week. I shared a few highlights, and since the session drew terrific audience feedback, it’s worth giving you more of Horbach’s smart talk about managing through the recession, investing into the recovery, and navigating a career in private equity, where few women dare to tread.–Patricia Sellers

If you had to hand over your job to someone else tomorrow, what would you tell them?

Horbach: Be really good to your people. Develop a vision. Inspire confidence because at the end of the day, they must follow you. Listen well, and give them the resources and developmental tools they need. One of the things we do not do well in private equity is develop junior talent.

What’s the lesson of the last couple of years?

Horbach: Bubble bursts, for sure. There is too much of a good thing. There was too much leverage and not enough checks and balances.

Did you make investment decisions you shouldn’t have?

Horbach: We bought a company called Oriental Trading that had 30 years of predictable growth. It’s a direct marketer, and it had years of success and dividends and free cash flow. It looked like the most predictable business you could buy. But there was a dramatic shift in the industry. The U.S. Postal Service, which is essentially bankrupt because of the Internet, raised the price for catalogs 20% in one year. When you mail 350 million catalogs, that’s a very big nut to swallow. We had to take a lot of costs out of the business. We’re not going to have stellar returns. But in general, Carlyle stayed away from the mega-deals in the ‘07 time frame. Knock on wood, we have a very solid portfolio.

You bought Dunkin’ Brands for $2.5 billion in 2006 from a liquor company, Pernod Ricard (PDRDY), where it had been orphaned. How is Dunkin’s strategy now shifting?

Horbach: We went on an aggressive expansion plan. Since we bought the company, we’ve given the cash flows back to the business. We’ve doubled EBITDA.  We’ve added almost 2,500 new stores in the U.S. alone. For every Dunkin’ Donuts store we open, we create 25 jobs.

In a tough category–competing against McDonald’s (MCD) and Starbucks (SBUX).

Horbach: We hold our own. We’re No. 1 in coffee. We’re also investing internationally.  Most people would be surprised to know that Baskin-Robbins has 4000 stores outside the U.S. Dunkin’ Donuts has several thousands. We just opened our first 20 stores in China.

There’s a belief that the consumer is never going back to the level of spending of the past. So, how do you deal with that?

Horbach: The consumer sector accounts for two-thirds to 70% of our economy. You can’t ignore it. We’re shifting to areas where consumers have to spend. Retailers that are value-oriented can still be very attractive. You look for great brands that are under-penetrated. We own a brand called Philosophy, a personal-care business, and we’re growing our top line double digits as we expand distribution and grow awareness–in a very tough economy. You have to pick your spots.

Philosophy is the last company you bought. That was in 2007. Why have you not acquired anything since then?

Horbach: We looked at a lot of things, But credit dried up completely. You couldn’t even find a banker. They wouldn’t return your phone calls. And we weren’t sure where the bottom was. No one was. Now we’re seeing multi-billion deals with high levels of leverage, at attractive rates. We’re back in business. We’re excited about playing offense again.

Do you feel confident that we’ve hit bottom?

Horbach: I believe that we’ve hit bottom.

What have you learned from Lou Gerstner, the former CEO of IBM (IBM), who is on the Carlyle investment committee?

Horbach: I talk to Lou a lot. His office is right next to mine. Very early on, Lou and several other members of our senior team were very aggressive about how bad it was going to get. “You have to take action now! You have to start cutting now! You have to evaluate your CEOs!” He said, “There are good-time CEOs and bad-time CEOs.” Good-time CEOs look good when the market is going up and everyone is acquiring things. But they don’t look so good when markets do down. We probably turned over 40% of our CEOs.

What is Lou saying now?

Horbach: Six months ago, Lou said, ‘Okay, now we have to start playing offense.” So, we are. The management teams that start to play offense will be so much better positioned when things start to pick up.

So you’re not looking for good-time CEOs yet, but rather, hybrid CEOs?

Horbach: Well, none of us expect a robust revenue environment. We’re calling it “the revenue-less recovery.” We’re thinking that there’s going to be a lot of M&A activity. Everyone is looking for share and global opportunities.

How might the private-equity industry attract more women?

Horbach: In order to be successful at anything, you have to love what you do. I think a lot of women have gone into private equity because it’s the right thing to do, or they think, “I’m going to make a lot of money.” Hedge funds, same sort of thing. Women have to step back and know what skills they need.

So, what are those skills?

Horbach: You have to be able to work in a very male-oriented environment and not take it personally. Women have to be adaptable–actually, that’s a strength women bring. But you need to be tough. You need to speak your mind. And you have to be realistic about how hard it is. Women often think that when they’re doing a great job, people will notice. Women don’t self-promote as much as men do. You have to network. And if you’re doing great work, make sure that your bosses notice.

by Patricia Sellers

Have we really hit bottom? Sandra Horbach, who heads the consumer and retail group at private equity giant Carlyle Group, says we have.

Horbach and I chatted on stage this morning at the Women’s Alternative Investment Summit down on Wall Street. “Trailblazers Discuss the State of the Market,” the organizers called our session, suggesting that we both have survived cycles and seen a lot. Yes, we have. Horbach, who started her career at Morgan Stanley (MS), spent 18 years at Forstmann Little before moving to Carlyle in 2005. (Meantime, I’ve been at Fortune for 25 years.)

At Carlyle, where she oversees a portfolio that includes Dunkin’ Donuts, Horbach operates out of an office right next to one of the all-time maestros of managing through tough times: Lou Gerstner, who turned around IBM (IBM) after stints atop RJR Nabisco (RAI) and American Express (AXP). “There are good-time CEOs and bad-time CEOs,” Gerstner has told Horbach many times–and yes, she heeds his advice.

As a senior advisor at Carlyle, Gerstner was gloomy and cautious earlier than most investors, Horbach explained. And in line with his thinking, Horbach’s consumer/retail group has bought no companies–zero–in the past couple of years. While credit was tight and asset values were tumbling, “bad-time CEOs” ruled the roost. Or at least these sorts of take-no-prisoner cost-cutters were favored to run Carlyle’s portfolio companies.

But about six months ago, Horbach says, Gerstner and a few others at the firm began urging a shift from defense to offense–to look for growth and start doing deals again. So, yes, the “good-time CEO” is back in vogue. Though, importantly, a new breed will be in demand. That is, CEOs who understand how to build the top line and do add-on acquisitions. Horbach predicts that we’re in for a “revenue-less recovery.”

Later on Postcards: more insights and outlook from Horbach. Stay tuned!

“If previous crises provide any indication of what lies ahead, FY2011 may be even more challenging than 2010.”

– Meredith Whitney, or Meredith Whitney Advisory Group, in a report on mounting fiscal troubles for state governments. After riding the boom and bust in real estate, 48 states are underfunded for fiscal 2010, she notes. State and local government spending accounts for 12% of U.S. GDP. Whitney’s conclusion: When state governments lower costs to balance their budgets, they’ll be cutting spending programs and jobs that will weigh on overall GDP.

Meanwhile, the Pew Center released its own dire analysis of the states’ fiscal conditions. With the Dow hitting another 13-month high today, it might be prudent to swallow a dose of caution by reading “10 states face financial peril.”

“If you buy a railroad, you can’t move it to China or to India or anyplace else. You are betting on the United States. I can’t think of a surer bet.”

- Warren Buffett, explaining Berkshire Hathaway’s (BRKB) $44 billion buyout of Burlington Northern Santa Fe (BNI).

Click here to see Buffett talking about his biggest deal ever with CNNMoney anchor Poppy Harlow.

While the size was a surprise, the bet on America was not. In September, at the Fortune Most Powerful Women Summit, Buffett said he was busy buying stocks and had lots of faith in the U.S. “Our genius in the U.S. is not avoiding problems. It’s overcoming problems,” he told my colleague Carol Loomis.

Their on-stage conversation–recalling the collapse of Lehman (BCS) and its awful aftermath, and also looking ahead–was terrific. We ran snippets earlier on Postcards. But since Buffett is back in the news, we’ll share all 22 minutes:

And if you’re curious to know what it’s like to work for Buffett, read “How Warren Buffett manages his managers.”

“The lesson of today is that you’re working for yourself.”

–Janice Bryant Howroyd,  founder and CEO of staffing company Act 1 Personnel Services, in The New York Times. Howroyd’s advice is yet another take on the the advice that in these uncertain times, it’s smart to stay flexible and adapt. As the employment landscape transforms and companies try to keep pace, workers have to do the same. This can mean refreshing skills, considering temporary or part-time work, and even accepting lower pay to stay in the game.

“Most people say they’re giving their lives to the company, but it’s more of a cooperative process. Companies have tasks to perform and you must put in your best effort and identify yourself with that job,” not with the company,” Howroyd says. If you can’t be your own boss, at least be the boss of your career. –Jessica Shambora

“Progress comes in fits and starts and we’re going to need to grind out this recovery.”

–President Obama, responding to today’s dismal jobs report that showed much greater losses than expected. The reported net loss of 263,000 jobs for September was up from 201,000 in August, and the unemployment rate of 9.8% hit another 26-year high. “I’ve made the point that employment is often the last thing to come back after a recession, and that’s what history shows us,” the President said. “But our task is to do everything we can possibly do to accelerate that process.”

Meanwhile, the teen unemployment rate hit a record high 25.9%, with young minority workers disproportionately affected. At 37%, the rate of unemployed African American teens is four times the national average. “The full effects of that lost opportunity will be felt for years to come,” says Kristen Lopez Eastlick, Senior Research Analyst for the Employment Policies Institute. –Jessica Shambora

Our post, “Why CEOs should do housework,” drew a bunch of interesting comments, including one from Dr. LPC in Canterbury, England, who cites research showing that “couples where husbands contribute to housework are also more likely to have additional children.” Dr. LPC surmises that this “must result from all that additional sex they get…”

Whatever.

That August 11 Postcard was about a new book, due out next month, called Women Want More, by Boston Consulting Group senior partner Michael Silverstein. The book is a Women’s marketer’s guide to capturing “the world’s largest and fastest-growing market.” Last week I had lunch with Silverstein–who labeled me a “fast-tracker,” which is one of his six consumer categories. And I guess it’s the best one to be in since fast-trackers, 24% of the female population, comprise 34% of female earned income. Fast-trackers seek adventure and learning, the marketing man says.

Okay, as I sought more learning on this topic of female buying power (women spend over 70% of consumer dollars globally, I learned, and are outpacing men in income growth), I dove into the data he left for me. One chart, in particular, struck me as practically as interesting as Silverstein’s stats about where in the world husbands do housework and where they don’t.

Practically as interesting–and much more practical, if you’re a marketer.

When Silverstein and his BCG colleagues asked 12,000 women in 22 countries about her “favorite brands,” here are the ones that got the most mentions, in order: Nike (NKE), Apple (AAPL), Sony (SNE), and Banana Republic and its retail sister, Gap (GPS). After those came Adidas (ADDDF), Target (TGT), and Dove (UL).

Investment companies and banks and automakers, Silverstein says, don’t stand a chance in this “favorite brand” tally because women, the BCG research shows, say those businesses don’t understand their needs. “The providers effectively diss women,” Silverstein says.

Hmm, I would add that financial firms and car companies often confuse customers more than simplify. They complicate their offerings. Nike, Apple and the other favorites score because their pitches are clear and direct, even when the products are complex.

And what do women want more of most of all? Time.

That, we all could’ve guessed!

“The United States economy is now out of the emergency room and appears to be on a slow path to recovery.”

–Warren Buffett, today in a New York Times op-ed. The Berkshire Hathaway (BRKA) CEO writes that while mistakes were made in the recovery effort, a “gusher of federal money” prevented a meltdown. He goes on to caution that “enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects.” If we don’t, the Oracle of Omaha warns us (and Congress): “Unchecked greenback emissions will certainly cause the purchasing power of currency to melt.” –Jessica Shambora

She still has her mojo.

A lot of people were surprised, even confounded, when analyst Meredith Whitney, the bear of all bears, stuck her neck out early yesterday and put forth the Street’s highest estimates for Goldman Sachs’ (GS) second-quarter profits. Whitney predicted that Goldman would report $4.65 a share. The consensus estimate was $3.48. Goldman announced this morning that it earned $4.93.

And you’d think the stock would pop on that news, wouldn’t you? Attesting to Whitney’s mojo (which, as I noted in yesterday’s Postcard, we’d been questioning), CNBC’s Jim Cramer wrote this morning that “Meredith Whitney pretty much ruined the Goldman Sachs trade” by putting that super-high estimate ahead of the earnings call. Goldman shares rose seven points yesterday to nearly $150. It’s down slightly  today. “Whitney wrecked it,” Cramer griped about the do-nothing stock.

Whitney thinks Goldman stock has plenty of room to run. Ever bearish on the economy, she’s convinced that Goldman, above all financial-services firms, will benefit from global woes, which are rising. In yesterday’s report, she says that Goldman will make out big on the surging muni market. Goldman is a major underwriter of muni debt–albeit behind Citigroup (C), Bank of America (BAC), JPMorgan Chase (JPM), and Morgan Stanley (MS)–and the No. 1 book-runner of Build America Bonds. These are a new type of municipal bond, part of the Obama administration’s $787 billion stimulus plan. Cities, states, universities and government entities use BABs, as they’re known, to finance infrastructure projects. This is a potential $50 billion annual market, Whitney says, and Goldman currently holds a 25% share.

Meanwhile, state budget gaps are sure to balloon as tax revenues fall faster than expected–and  unemployment rises to 13%, Whitney predicts. Goldman is poised to benefit from the widespread pain. With her upgrade yesterday (making Goldman her only “Buy” as well as her sole upgrade since she quit Oppenheimer in February), Whitney lifted her estimate of Goldman’s full-year 2009 profits to $16.59 per share, from $10.80. In 2010, she expects Goldman to earn $19.65 a share. That’s substantially above the Wall Street consensus.

Her price target that accompanies her new “Buy” recommendation on Goldman: $186. That’s 25% above the current price. One Postcards reader, Matt in Baltimore, commented yesterday that it “would have been impressive if she had declared a ‘buy’ rating for Goldman back when it bottomed out at 52$ a share in Nov. 2008.” True. Whitney said precisely that yesterday morning on CNBC’s Squawk Box, adding that she’s only recently gained clarity on how Goldman is making money–the fixed-income bonanza. And once other analysts recognize it too, they’ll raise estimates.

So there she stands, a bull on Goldman Sachs, though still in bear clothing. Whitney’s husband, meanwhile, has been running with the bulls, literally. Six-foot-seven, 260-pound John Layfield, best known as onetime pro-wrestling champion JBL on WWE Monday Night Raw, is in Pamplona, Spain. While she was shaking up the market, he was doing the famous run. Another kind of mojo entirely.

All eyes are on Goldman Sachs (GS), which announces earnings tomorrow. What goosed the stock…and then the banking sector and then the entire market today? Meredith Whitney’s upgrade.

It mattered–and helped send Goldman up nearly 5% to $149–because the famously bearish financial-services analyst, who helped bring down Citigroup and the banking sector two years ago, has been negative ever since. She announced her upgrade of Goldman at 2:24 a.m. At least that’s when the email from her company, Meredith Whitney Advisory Group, popped into my inbox this morning. This is Whitney’s first upgrade since she broke away from Oppenheimer in February to go on her own. It’s also her only “Buy” rating among eight stocks she follows.

So yes, Meredith Whitney finally turned…on one stock only. Don’t dare call her a bull on the market. She says in today’s Goldman report that her positive outlook “is deeply rooted in our sustained bearish stance on the U.S. economy and state of U.S. financials at large.”

She likes Goldman because she’s predicting “a tsunami of debt issuance” from federal, state, and local governments to shore woefully underfunded budgets. That, plus a surge in corporate debt issuance (to at least 60% of peak cycle levels, she says) will benefit Goldman, which along with Morgan Stanley (MS) is the last Wall Street giant standing. Survival of the fittest, precisely. The weak fall and the strong get stronger.

As for Whitney, she’s showing her muscle. Last week here at Fortune, we were talking about her as we began to assess the crop of candidates for this year’s Fortune Most Powerful Women in Business list, due out in mid-September. Last year Whitney ranked No. 35 on the list. We were wondering if she’s still got her mojo. Guess she does.

P.S. Whitney has sells on three stocks: Wells Fargo (WFC), Capital One (COF), and Citigroup (C).

A gloomy outlook as we head off for the long weekend. Today’s monthly jobs report was worse than May’s, worse than expected, and worse than we’ve seen in 26 years. The U.S. unemployment rate rose to 9.5%…and is bound to go past 10%.

So when will the pain ease? Microsoft (MSFT) CEO Steve Ballmer told me last week: “I don’t think we’re in a recession. I think we’ve reset. It’s very different. A recession sort of implies a recovery…I don’t assume there is a recovery.” Here’s the video of Ballmer and me on stage at the Cannes Lions International Advertising Festival, where he was named Media Man of the Year.

While in France, I caught up with another CEO, WPP Group’s (WPPGY) Martin Sorrell, who’s long been one of the more wise and worldly forecasters. (His company owns ad and marketing agencies that serve global giants like IBM (IBM), American Express (AXP), Ford (F), and Nestle (NSRG.Y), as well as Microsoft.) I asked Sir Martin is he buys Ballmer’s belief that media spending might decline as a percentage of GDP in the next 10 years. “I think advertising and marketing services as a proportion of GDP will be flat or rise,” he replied. “Any flatness or decline in the developed markets will be outpaced by growth in the BRICs and next 11.” Next 11? He means the major developing countries beyond Brazil, Russia, India, and China.

As for that broader question of how we’ll “reset” or otherwise emerge from this global economic downturn, Sorrell has an artful way of envisioning it: “It will be like an italic, lower-case letter “L” with a little bit of a flip up,” he says. “The recovery will not be a ‘V.’ And it will not be a ‘W.’ The little flip up will come in the first half of next year.”

Noodle that, and leave your worries behind this weekend!

P.S. In case you missed them, here are two more video clips from my conversation with Steve Ballmer in Cannes: Ballmer on Bing and Yahoo and Ballmer on Windows 7 and lessons from Vista.

On Friday I told you about Microsoft (MSFT) CEO Steve Ballmer’s riff on Bing and Yahoo. I asked him: How much market share do you need to gain in search to not need to do a deal with Yahoo (YHOO)? Ballmer called my question “back-handed” and went on to give a really interesting answer. Check out the video or my Friday Postcard if you missed the Microsoft boss’s take on Bing and Yahoo.

Ballmer nobly engaged and sparred in our on-stage Q&A at last week’s Cannes Lions International Advertising Festival. He batted back my question about the global recession this way: “I don’t think we’re in a recession. I think we’ve reset. It’s very different. A recession sort of implies a recovery.” He added: “For planning purposes, I don’t assume there is a recovery.” Here’s more from Ballmer on the “reset” and how Microsoft is adjusting to it:

The Festival’s 2009 Media Man of the Year wasn’t afraid to sock the ad community with bad news. Ballmer proposed that media spending might decline as a percentage of GDP in the next 10 years. “We live in a funny Internet world,” he told the crowd of 1,000 or so. “As soon as all information and content is digital, and the marginal cost of production can look pretty close to zero, you get all kinds of changes in the monetization models.” Innovators will invent new ad-funded models, he said, “yet at the same time, the amount of time that people will be spending in relatively advertising-free environments could continue to increase.”

Not a happy outlook. Though, as I noted to Ballmer and the audience: Who can predict, really? I mentioned that I’d last been to this Lions Festival in 1993—and read aloud this prediction from a 1993 Fortune story titled “How Bill Gates Sees the Future”:

“I think the intelligent-corded phone will catch on faster than the PDA (personal digital assistant). We can take today’s office phone system with all those features you can’t figure out how to use and put a screen on it, and even do simple video conferencing. Also, in four or five years, you’ll have wild advances in flat-screen technology that will really change what makes sense to be on paper versus what makes sense to be on that screen.”

Ballmer’s reply to his famous partner’s outlook: “Well, he was right on 50% of the predictions!” Indeed, and the art of business is betting big on the right 50%.

Greetings from France. I’m at the Cannes Lions International Advertising Festival, where the skies are sunny and the industry outlook is dark. This morning, Marcel Fenez, managing partner of PricewaterhouseCoopers’ global entertainment and media practice, laid out the dismal details. He called the current recession in ad spending “not cyclical but structural.”

Which means that the advertising business has permanently changed. And it’s going to be rough sailing for a long while. Global ad spending will decline 12.1% this year, Fenez estimated. Next year will be another bad year — down 2.7% — before an upturn begins in 2011.

That’s the worldwide view, and the U.S. picture looks even worse. Fernez forecast a 14.8% drop in spending this year and 3.3% next year.  Hardest hit: TV, newspapers and consumer magazines. (That’s us at Fortune!)  Stealing share as the total pie shrinks: Video-game companies and the Internet. (That’s us at CNNMoney.com!)

“The upturn will be all about structural change,” says Fenez. So what’s a big fat media company to do? In lieu of getting more ad revenues, media outfits will try to get consumers to pay for content, particularly digital as the world goes in that direction. PricewaterhouseCoopers’ 2009 survey of consumers across the globe indicate that they’re game to pay for quality and premium content. So, says Fenez, we’ll see lots of experimenting with micropayments, stored-value cards, and “all you can eat” subscriptions. But it won’t be easy getting people to pay for what they’ve gotten used to getting for free.

To take a deeper dive into the global outlook and the challenges, you can go to pwc.com/outlook and see the full report, executive summary and video….Now heading to the Cannes Lions Tweet-up with Twitter co-founder Biz Stone and Hill & Knowlton. More later! — Pattie Sellers

by Jessica Shambora

The drama continues apace in banking. Yesterday we shared a CNN interview with Citigroup (C) CEO Vikram Pandit, as he struggles to hang on, while Pattie last Friday gave her take on the fall of Bank of America’s (BAC) chief risk officer, Amy Brinkley — a veteran of Fortune’s Most Powerful Women list.

Another top woman in banking — one of the few still standing — swung by our office here at Fortune a few days ago. Ellen Alemany is chairman and CEO of RBS Americas (RBS) and Citizens Financial Group, an RBS unit with $6 billion in revenues and branches in 12 states. Alemany, who joined UK-based Royal Bank of Scotland in June 2007, had just finished a run of 13 town halls with thousands of her employees across the U.S.

Though you may not know her name, Alemany is very much at the center of the banking world. She’s the only woman to head a top-10 U.S. commercial bank. And as the representative for the Boston district (and only woman) on the Federal Advisory Council, she regularly consults with Fed chair Ben Bernanke and the Board of Governors.

So what is Alemany’s outlook? “There will be more small bank failures in the next six to nine months,” she told us, noting that she’s concerned about declining real-estate values and rising unemployment. She sees the negative trends in her own backyard. Citizens’ headquarters are in Rhode Island, where the jobless rate is 11.1%. And the bank operates in Michigan, where the unemployment rate, 12.9%, is the highest in the U.S.

Recovery seems so far away that businesses aren’t even looking to expand. “We have money to lend, but the loan demand isn’t there,” Alemany says. “It’s going to be difficult for the remainder of this year through the first half of next year.”

As for her own career, Alemany has come to understand “difficult.” After 21 years at Citigroup, where she ran Global Transaction Services, a profitable $8 billion unit in some 100 countries, she moved to RBS. It might appear that she was seeing safer ground. But the British government has had to shore RBS and now owns 70% of the business. And if you think that Citi is the worst-performing bank stock, think again. RBS’s shares have sputtered 87% in the past 12 months. Citi is down a mere 83%.

“The world’s looking for a new business model.”

– Citigroup (C) CEO Vikram Pandit, defending his leadership, in an interview with CNN Tuesday. During the past week, news media outlets have reported that FDIC Chair Sheila Bair thinks Pandit lacks the retail banking experience to revive Citi and wants him out. Meanwhile, others speculate that Treasury Secretary Tim Geithner believes that Pandit deserves a shot at the turnaround and that a management change could do more harm than good.

Both Geithner and Bair play key roles in the approval of a $58 billion conversion of preferred shares into common stock, intended to shore up Citigroup’s capital. Announced in February and scheduled to occur in April, the conversion was held up by negotiations with federal officials. But it should happen this week, according to Citi. With that, the government will own as much as 34% of the bank. That’s a dicey investment. The stock, trading at $3.41, is down 83% in the last 12 months.

So what sort of new business model does Pandit forsee? “When you look at the last five, 10 years, there were two engines of growth. There was the U.S. consumer and credit creation. None of those are likely to be the engines of growth going forward…I’m optimistic that we might start seeing stability in the financial markets, but that’s stage one. Stage two is about what kind of world we want to have going forward, what’s the new business model? And that’s what we’re really focused on at Citi.”

And the question for you: Should Citi shareholders, including the government, give Pandit more time to deliver? –Jessica Shambora

by Patricia Sellers

You might call Al Koch the world’s biggest trash collector. As bankrupt General Motors (GM) splits into two parts — New GM, containing Chevrolet, Cadillac, Buick, and GMC, and Old GM, containing designated bad assets such as Pontiac, Saturn, Hummer, Saab — Koch is the hired gun who’s supposed to create value from that latter lot.

Bringing “New GM” out of bankruptcy will be difficult enough. Why would anyone take the tougher slog at “Old GM”?

This is what Koch does — the toughest turnarounds. He’s vice chairman at restructuring consultancy AlixPartners, which works on saving sick comapnies globally but has been a Detroit mainstay for decades. AlixPartners’ clients have included DeLorean’s creditors in 1984, Detroit (the city itself) in 1994, and Kmart in 2002.

Koch, now 67 and a 14-year veteran of the firm, has served as interim CEO of crippled companies such as video-game distributor Handleman (HDLM) and manufactured-home builder Champion Enterprises (CHB). But his most memorable job was at Kmart in 2002. Kmart was the largest retail restructuring in history and, as it turned out, one of AlixPartner’s big successes.

As Kmart’s interim CFO through its bankruptcy, Koch got lucky. When I interviewed him in late 2005 for a story about investor Eddie Lampert, he said that he and his restructuring-expert colleagues had never heard of this young investor who had swooped in and bought Kmart bonds at 40 cents on the dollar. “To most people, Kmart looked like a pile of trash,” Koch said. “We were told that this hedge fund guy had bought a huge portion of Kmart and wanted to get it out of bankruptcy fast.”

Lampert pressed Koch and the other restructuring pros, who were earning $10-20 million a month during Kmart’s bankruptcy, to exit Chapter 11 quickly. Lampert argued that neither customers nor management talent would be attracted to a bankrupt Kmart. The company emerged from bankruptcy in May 2003, a year ahead of schedule. Lampert, who had invested some $800 million for a 54% ownership stake, merged Kmart with Sears two years later to form Sears Holdings (SHLD).

Old GM won’t be as smooth or as quick as Kmart was. As my colleague Alex Taylor notes, “new GM” will have an incentive — from the U.S. government, new owner of a 60% stake –  to exit Chapter 11 rapidly, possibly in 60 to 90 days. The Old GM restructuring, meanwhile, could take years.

As Old GM’s chief restructuring officer, Koch will be negotating separation agreements with New GM and commandeering efforts to unload or liquidate those dud brands such as Saturn and Hummer.

His influence could turn out to be broader than his marching orders designate. After all, he’s worked with GM several times over the years. These past few months, he’s helped negotiate the sale of New GM assets to the government. Now he’s reporting to CEO Fritz Henderson and to GM’s board as well. As a guy who lives and dies by finding value in junk, Koch surely won’t take his shot at making history lightly.

“Betting on the Future.” That’s the 2009 theme of Fortune’s Most Powerful Women, who convened in New York City last evening for a mega-celebration and some very smart conversation. I’m not sure I belong on stage with three superstars under 40: Bank analyst Meredith Whitney, Google’s (GOOG) Marissa Mayer, and Goldman Sachs’ (GS) Dina Powell. But there I was (at age 49), talking with them them about how they’ve navigated their careers and how they view the future.

It was an insanely inspiring evening, thanks also to 32 young women from 23 developing countries. This happened to be the last night in the U.S. for these participants in this year’s Fortune/U.S. State Department Global Women Leaders Mentoring Partnership. These international women are nominated by the State Department’s embassies in developing countries and chosen by Fortune to shadow American women leaders each May. Some of this year’s mentors — including Time Inc. (TWX) CEO Ann Moore, Fidelity Personal Investing president Kathy Murphy, American Express (AXP) execs Joan Amble and Susan Sobbott — were with us last evening.

So were plenty boldfaced names: Tina Brown, Nora Ephron, CNBC’s Becky Quick, CNN’s Christiane Amanpour. My Postcards colleague Jessica Shambora sat beside Sheri McCoy, Johnson & Johnson’s (JNJ) Worldwide Pharmaceuticals chairman, who is No. 44 on Fortune’s Most Powerful Women list.

A few Best Moments from the evening:

Best Career Lesson: Mayer, Google’s vice president of search products and user experience, talked about juggling 14 job offers after she graduated from Stanford. She interviewed with Google founders Sergey Brin and Larry Page and guessed that their start-up had “a 2% chance of succeeding,” she said. But she also figured, “I’ll learn more failing at Google” than succeeding at a well-established, stuck-in-its-ways company. She took a risk, And look at where it got her. At 33, Mayer is the youngest person ever to make Fortune’s Most Powerful Women list.

Smartest Industry Outlook: Meredith Whitney, who is No. 35 on our MPWomen list and made Fortune’s cover last August, said that more banks will fail as the economic recovery stumbles and some giants fail to adapt. The survivors: nimble companies that revamp their business models. One that she bets will succeed: American Express. (Click here to see Whitney talking with CNNMoney’s Poppy Harlow.)

Most Dynamic Duo: Gayle King, O magazine editor at large and Oprah Winfrey’s best friend, who brought as her “rising star” guest her daughter Kirby. A 23-year-old Stanford grad, Kirby Bumpus is pursuing her Masters in Public Health — and this summer doing an internship with teens in Harlem, teaching them about sex education.

Most Moving “Greatest Mentor” tribute: Rica Rwigamba, who runs an eco-toursim company in Rwanda, spoke about her mother and drew tears and standing ovations. This charismatic entrepreneur, who was one of the 2009 mentees, told a story about her mother returning to Rwanda after the country’s genocide and finding a new home for her husband and children. After Rika’s tribute, CNN”s Christiane Amanpour, sitting beside her, talked about her “Greatest Mentor.” She started by citing the remarkable success of women in a revived Rwanda today: Women hold 56% of the seats in Parliament. CNN’s chief international correspondent segued into a tribute to her mentor: Ted Turner, who built CNN.

Best Party Crasher: Cecilia Attias, who divorced French President Nicholas Sarkozy in 2007, remarried and has moved to Manhattan. She came with Jocelyne Attal, the former CMO of Avaya who now has her own marketing firm, JAgency. Surprise! Attias’s arrival was particularly dicey since the only dinner seat we had for the former First Lady of France was at a way-in-the-back table. Frantically, we tried to make the necessary switches. We couldn’t do it in time before everyone was seated. I have to say, Attias was lovely and most gracious. She thanked us and said she was thrilled that we were able to accommodate her.

We were happy to have her with us…along with 180 other extraordinary women who define power broadly and reach out globally to try and make the world a better place.

Stay tuned to Postcards for video from the evening. Meantime, have a good weekend!

“Any effort to restore confidence in our economy must start not on Wall Street but in Main Street, and that’s what the credit card situation is all about.”

– Senator Harry Reid of Nevada, the Democratic Majority Leader, speaking before a Senate vote on Tuesday that put new restrictions on the credit card industry. The bill is supposed to make card terms more explicit and be fairer to customers, providing safeguards against rate increases and late fees.

The vote did not cap interest rates, so the card-issuers can continue to raise them. This is exactly what banks including American Express (AXP), Citigroup (C), Bank of America (BAC) are doing as they cut risky cardholders from their rosters. The banks may also look at adding other fees back in and cutting rewards programs. So while the bill may spell relief for some consumers, those who regularly pay off their card balances may lose out. Three words: no more miles. –Jessica Shambora

Meredith Whitney, the influential bank-industry analyst, gathered a dozen women leaders from across the developing world for breakfast yesterday. I wrote yesterday’s Postcard about their “View of the World.”  The global economic outlook from Whitney’s and these women isn’t real pretty.

We asked our friends at CNNMoney.com to videotape the conversation and interview these women, who are participants in the Fortune/U.S. State Department Global Women Leaders Mentoring Partnership. This year, Whitney — who, by the way, landed a spot on Time’s 2009 list of the World’s 100 Most Influential People — is a mentor, along with three dozen other American women leaders who attend Fortune’s annual Most Powerful Women Summit.

Take a look at this video featuring three mentees who are rising stars in their developing nations. Rica Rwigamba, who runs a tourism company in Rwanda, talks about how Starbucks’ (SBUX) struggles globally have have dampened coffee exports from her country. Vera Valievna Tkachenko from Kazakhstan notes that strong human capital — and education to build it — is more critical today than ever. And Anna Ipangelwa of Namibia says that her country is upping its food production as aid to Africa suffers in the global downturn.

It’s conversations like these that remind us how like-minded and interconnected we all are, spanning the globe.

Lots of people are now seeing light at the end of the global recession, but it pays to keep the dark clouds in sight. My Fortune colleague Shawn Tully does that in his just-published story about Ireland. As he notes, Ireland’s economy is suffering the deepest plunge of virtually any country outside of Iceland. And it’s not over yet.

To get a broader view of global risk, I called Ian Bremmer, the president of the Eurasia Group. Bremmer is an expert on geopolitical risk around the world, and his firm advises lots of well-known companies including Citigroup (C), NYSE Euronext (NYX), and PricewaterhouseCoopers. I don’t know Bremmer well, but when I saw him speak at a launch party for his new book, The Fat Tail, I was impressed with his finesse at describing a world at greater risk than ever in our lifetimes. Sallie Krawcheck, the former Citi exec who hosted the party for Bremmer and co-author Preston Keat, connected us. And we talked about danger and opportunity around the world. Here are excerpts from my chat with Bremmer:

What are fat tails?
Fat tails are one-in-100-year storms that increasingly happen every 15 minutes. They are extreme outcomes that normally you wouldn’t have to worry about.

Do thin tails become fat tails?
Yes. You had all these risks – thin tails – before the financial crisis hit. Now they’re fat tails.

Like what?
If you‘re an investor in Russia, six months ago you didn’t have to worry too much about that country going hard-authoritarian. That’s something that you now have to worry about.

What should investors in Russia watch for?
Public disagreements between liberals and hard-liners on policy. Social discontent in the rural regions.

You list 10 fat tails. How likely are they to happen?
These are not all things that we think are going to happen. But I would bet that a couple of them will happen.

Which ones are highest on your “likely” list?
Pakistan. I don’t think we’re close to having a failed state, as [Richard] Holbrooke recently said. The Taliban aren’t going to take over. Nukes aren’t going to end up in the hands of terrorists. But radicals taking over the tribal regions, combined with the economic crisis, could lead to enough social discontent that the military takes over.

Chances of that?
I’d say 30%.

What would that mean for global investors?
Investors might like it, short-term. It would lead to temporary stability. But this would not be a happy situation for the long-term stability of the region. It would mean more fractious relations with India and a constraint on Pakistan’s economic reform long-term. Military takeovers tend to be buffers against the worst scenarios, but also against the best scenarios.

Can fat tails be positive in the long term?
Yes. Political risk is not necessarily about things that can blow you up. Take Argentina. The fat tail there is actually an opportunity. The global recession is undermining the economy, and the government can’t handle the fallout well. As poll numbers continue to fall, you could see the President [Christina Fernandez de Kirchner] lose the election in June, and the Kirchners could be out. If the current Vice President [Julio Cobos] comes in as President, there will be much less state intervention in the markets, more openness in agriculture, and an improvement in market sentiment.

Resilience is more critical than ever—for people and countries. What countries look most resilient?
The U.S. is not going to lead the world out of the crisis. China will. It’s important to recognize that China didn’t have a banking crisis. There was a financial crisis in less than half the world, and there is a global recession. China has had an economic downturn. But China has put a massive stimulus in place. And they’ll come out of this fast.

Who else is resilient?
The Persian Gulf countries. They’re helped by small populations, cheap access to natural resources, and cohesive governments that can deal with a downturn. Brazil and Indonesia also have cohesive governments, which helps.

What about India?
Interestingly, India benefits from its decentralized government. The government is not being blamed for India’s economic problems—and that’s an advantage.

My Fortune colleague Shawn Tully just wrote a story about Ireland on the edge. How scary it is to see developed countries at risk of default this year. How do you see risk in Europe right now?
We’ll see very anemic growth there for a long time. I’m not an expert on default risk. But I will say, there’s increasingly more stability in the system. We’re no longer at risk of broad contagion.

In Friday’s Wall Street Journal, you wrote an op-ed that said Gordon Brown might not survive as Britain’s prime minister. What are the chances that he’ll be out this year?
I think it’s 50-50, honestly. There’s a real possibility. He’s not going to go easily. The underlying situation has gotten so bad that a strong conservative leadership – or any strong leadership – would be better than they have now. Britain should be one of the strongest supporters of the U.S. on collective security and climate change. But right now, Britain is in absolute nowhere-land.

Any more power shifts you care to talk about?
Everyone talks about Wall Street vs. Main Street. K Street has taken over both. New York used to be the financial capital. Now Washington is. Washington will determine who’s a winner and who’s a loser. Power has shifted from Dubai, the financial capital of the UAE, to Abu Dhabi. From Shanghai to Beijing. Mumbai to Delhi. The state is the principle economic actor. It’s a repudiation of the free-market system around the world.

Sounds like the end of capitalism.
It’s a problem for investors and for the robustness of economic growth. This system isn’t as efficient as the free market is.