Corporate Confidential

At Least He Said He Was Sorry

So they’ve sentenced Bernie to 150 years.  Although in actuality I doubt he has more than five or ten left in him, at least in jail.  Someone has broken it to him by now that they don’t serve Château Pétrus with the spam, right?  It seems like it would be a more fitting punishment to make him keep “working” and see that every cent he earned went towards paying back the people he robbed.  Not realistic, I know.

It’s just that at this point in his life he’s had his fun.  He’s had the trips, the houses, the parties, the fancy clothes and the fabulous wines.  He’s 71.  He’s lived the good life and what time is left for him to serve will be paid for with the public dime.  Why not make him do some honest work from now on and try to pay some of his debt back?

Maybe we could at least make him pay his way in prison?

So much has been said about Madoff that I don’t really have anything to add.  I just wonder how many more like him are out there, quietly scamming us out of our money.  We’d be deluding ourselves to believe Bernie is the only one.  His fraud empire was stellar, to be sure and maybe that’s one of the reasons he got caught.  He grew too big and got too bold.

Madoff’s lawyer stood up and said that the government seeking a sentence of 150 years was absurd. What’s absurd is Madoff saying he’s sorry and expecting anyone to believe him.  You’re sorry when you knock over a vase.  You’re sorry when you’re late for an appointment.  When you perpetrate massive, systematic, purposeful fraud for twenty years sorry just doesn’t cut it.

The judge countered by pointing out that no one – absolutely no one – had written anything supporting Madoff or attesting to his character.  Not even his wife who said in a statement that: “The man who committed this horrible fraud is not the man whom I have known for all these years.”

There was an article in the New York Times a couple of weeks ago bemoaning the fate of Ruth (“The Loneliest Woman in New York”) who apparently can’t even go for highlights at her regular salon anymore.  I tried but I had a very, very hard time feeling sorry for her.  OK, I didn’t try very hard.  Besides, how good does your hair have to look for visiting day?

It was the worst of times...

Things are the worst they've ever been. I'm out and about and checked the market (why?) on my iPhone. Down again. Still. Always.

I'm wondering - can it go into negative numbers? "The Dow hit -3,258 today on more negative news about the nonconomy."

I talked to the owner of a consulting company here in Salt Lake I'm teaming with and the news was all bad. "Companies are trying to reduce the numbers of contractors they have on staff," she told me.

Potential clients are cancelling projects, cancelling implementations and delaying upgrades - indefinitely. I get the feeling they'd cancel life itself if they could.

Sigh.

Corporate America, I miss you!

Just to show my support for the masses I decided to quit my cushy contract job.  No, that’s not really why I did it.  It’s far more complicated and rash than that.

 

But the bottom line is I am voluntarily unemployed at possibly the worst time to be unemployed since 1933.  I have a house that’s been on the market since April 1, 2008 that I’m not even living in because I’ve rented another place to live in with JT.   (Hint: One of the reasons I quit my contract gig.)  How smart am I?!

 

Unfortunately, my nature seems to be that when the going gets tough I hide under a rock.  Or, in my case, a pillow.  Although I did drag myself to a networking event last night, God help me. 

 

It turned out to be really cool, which was a pleasant surprise.  I met some interesting people and it jazzed me up for awhile.  Through talking to people I found myself looking at things from a different angle and coming up with ideas.  Probably why they have social networking events.  Who knew.  I will probably go back again next month assuming I’m not living in a Maytag appliance box under an overpass somewhere.  At least it will be spring soon.

 

I met this man last night who told me when he was unemployed in 1982 – which was as  bad as now, according to him – he still got up, showered and dressed by 8 as if he was going to work.  I thought those stories were urban myths!  Good for him, I guess, but I don’t do that.

 

I wonder if I have the wherewithal to make something happen.  To make cold calls and ask for informational interviews and set the alarm clock to dress for an imaginary job.

 

Pride goeth before a fall they say, or they used to say a really long time ago when people used words like “goeth.”  I’ve been kind of high and mighty snarking at the masses and at corporate America and now it looks like I’m in for some tasty crow.  Which will be good on a cold night in the big appliance box!

 

Unemployment Creating Jobs

This can be subtitled, “Only in New Mexico.”  Here is a headline from this morning’s Santa Fe New Mexican:

 

“Deluge of unemployment calls has state hiring to keep up.”

 

Except it’s not only in New Mexico.  A Google search for articles shows that Michigan, Minnesota, Rhode Island, Tennessee, California, South Carolina – virtually every state in the country – is experiencing a similar phenomenon.

 

“Many state unemployment offices are backlogged processing claims, with some states reporting a two or three week delay. However, new staff is being added and the delay should ease up in the near future,” said one job search website.

 

In North Carolina the state’s Employment Security Commission web site is having technical issues and has crashed at least twice under a rush of claims as that state set one-day records for both the amount of benefits paid and the number of transactions.

 

State unemployment phone lines are buckling under unprecedented call volume, with thousands of calls going unanswered daily and hold times stretching to hours rather than minutes.  Colorado is moving to hire additional workers because currently their unemployment office is able to only handle about half of the estimated 5,000 calls it's getting daily.  In Maine the governor approved the hiring of dozens of new people to handle the deluge of unemployed workers despite having a hiring freeze in place.

 

The New Mexican article states that, “The department has 43 customer-service representatives, but Gov. Bill Richardson has directed the department to move ahead with 20 "emergency hires" and find about 30 state employees in other departments with similar skills who can temporarily help answer calls, starting as soon as next week.” 

 

If they’re adding 50 new workers to the existing staff of 43 that means New Mexico is more than doubling the department work force.  So in a weird kind of circular way unemployment is actually creating jobs.

 

Bailout Booty Denied!

Wow, the House rejected the bailout plan.  You could knock me over with a feather.  Really.

Now, there are two sides of me at the moment.  The woman who writes this blog and is thinking, right on!  And the personal investor who is terrified.  Over the last couple of weeks I sold anything in my portfolio that I considered even remotely marginal.  I asked myself, which companies do I think are fundamentally sound and will survive?  And I kept those.

Today however half of my split personality is thinking I should have sold everything.  Although even cash is not secure these days.  Not if it’s in a brokerage account because brokerage firms are looking anything but secure.

My blog-writing self is relieved because I was somewhat nauseated by some descriptions of the plan.  For example, that it would contain “limits” on compensation.  What limits exactly, I wanted to know. Because if a CEO was to receive $60 million and it got cut to $50 that could still be described as a limit.  And it would still stink.

So all of me will be watching avidly as bailout negotiations continue.  I guess if I had my way I would support a very conservative plan which gave taxpayers equity ownership of the firms they bailed out and which strictly limited executive compensation and took away any kind of bonuses.  After all, if you’ve driven your firm into the ground and sent the country into a panic why should you get a bonus?

Even though I may be eating Spam from now on I have to say:  Bravo House of Representatives!

Still Bailing

It looks like we may be close to a bailout deal.  Officials assure us that “the core” of the proposal put forward a week ago by Treasury Secretary Henry M. Paulson Jr. remains intact.  Wow, what a relief.

 

The gist of the plan is that the government will burn – oops – provide up to $700 billion in taxpayer dollars to purchase troubled assets from financial firms.  This will free their balance sheets of bad debts and help restore a healthy flow of credit through the economy.

 

“We must free up the flow of credit to consumers and businesses by reducing the risk posed by troubled assets,” said President Bush.

 

Just what we need.  More credit.  Isn’t credit what got us into this mess in the first place?  Hey, these guys have shown that they’re really, really bad with money so I know what to do, let’s give them more.  Billions more.

 

Instead, how about finding a way out of the quagmire financial institutions are in already due to the poor business decisions which led to the aforementioned “troubled assets?”  How about changing our ways?  How about figuring out what went wrong before we throw more money at it?

 

And calling these assets troubled is a little like saying Katrina was a light shower.  I think, however, that “assets” in this case deserves to be in quotes.

 

So, on we go.  The sky is still falling according to Senator Judd Gregg, Republican of New Hampshire, who said there was an urgent need for action: “Failure to do this will lead to a massive fiscal meltdown in the credit markets, which will lead immediately to a meltdown on Main Street.”

 

Senator Harry M. Reid, Democrat of Nevada and majority leader, said it was crucial to send a reassuring message to the financial markets instantly because, “We may not have another day.”

 

Yeah, that’s reassuring.  Immediately.  Meltdown.  No more tomorrows.  Way to stop a panic and inspire confidence, folks.

 

No word yet on whether the intact “core” of Paulson’s proposal still contains the provisions that would protect executive compensation packages and golden parachutes.  During the last week – as those pesky lawmakers risked Armageddon by not acting quickly – some of these issues were supposed to have been resolved:  Paulson and the Treasury would have to endure some oversight.  The $700 billion would not be forked over in one lump sum.  Limits on executive pay would be addressed.

 

And what about that amount?  Rachel Maddow wondered about it on her show:

 

Where the heck did this $700 billion figure come from in the first place? A Treasury Department spokeswoman told Forbes.com this week, quote, "It's not based on any particular data point, we just wanted to choose a really large number."

 

A really large number? That's the calculus among our nation's leading economic theorists and managers? We just need a ton of money; we don't know how much, just make the pile really tall? Isn't economics a science? Not reassuring.

 

Nope, not reassuring at all.

 

The Way to Get Published

Is apparently to be a politician.

These figures were originally reported in the Boston Globe.

Senator Hillary Clinton, a New York Democrat, made $872,891 from her memoir, "Living History." She has reported earning $8.7 million from the work in prior years.

And let's not forget the millions Bill Clinton hauled in for his book!  (And it didn't even go into the juicy bits.)

Senator Barack Obama, Democrat of Illinois, reported royalties and a book advance. He revealed that with permission of the Senate Ethics Committee, he agreed with Random House to a $1.9 million advance against royalties for writing two nonfiction books and one children's book. He intends to donate $200,000 to charity.

Democratic Senator Byron Dorgan of North Dakota received an advance of $42,500 to write a book titled, "Take This Job and Ship It: How Corporate Greed and Brain Dead Politics is Selling Out America." Senator John Kerry earned $5,175 in royalties for a reprinting of his 2003 book, "A Call to Service."

House Speaker Dennis Hastert, an Illinois Republican, received royalties worth $15,001 to $50,000 from publication of "Speaker: Lessons from Forty Years of Coaching and Politics." Senator Trent Lott, Republican of Mississippi, received a partial book advance of $106,210.

All these big book advances floating around out there.  As if the American public isn't already sick enough of these guys.  I write a blog on Corporate Greed...Any takers?  Anyone?

Guilty!

Falling off their phony pedestals at last, the kings of Enron, Kenneth L. Lay and Jeffrey K. Skilling were found guilty today of fraud in conspiracy in what the New York Times aptly called "a case that led the parade of corporate scandals in recent years that emerged from the get-rich-quick stock market excesses of the 1990's."  Read the complete article here.

The fat lady has sung.  Or, should I say the fat cat?

I almost don't know what to do with myself now that the greedsters at Enron, Tyco, Worldcom et al have been dealt with.

Lay's demeanor during his time on the witness stand could best be described as sneering royalty, as if it really was just too much trouble for him to appear, not to mention totally offensive for an individual of his status to have to be inconvenienced in such a manner.

According to observers, Lay appeared completely incapable of even faking humility and blamed the failure of Enron on everything from the 9/11 terrorist attacks to his former CFO Andrew S. Fastow to The Wall Street Journal.  About the only thing he didn't blame was sunspot activity.

He certainly didn't blame himself.  Self-doubt and reflection are not in Lay's emotional vocabulary.  Throughout this entire experience he has flat out refused to accept any responsibility for any decision that might have even contributed to the fall of Enron.

From his opening moments he made it clear that he, and he alone, would dictate his own stay on the stand.   According to an article in the Times, Lay even batted down questions by his own lawyer, George McCall Secrest Jr. "Where are you going with this, Mr. Secrest?" he said impatiently at one point on his first day of direct questioning.

The same qualities that served him well as a CEO proved to be his undoing on the stand.  I wonder if Ken'll find jail inconvenient? I sure hope he gets a nice roommate.

Corporate...Ethics?

Apparently not everyone thinks “corporate ethics” is an oxymoron.  This isn’t a joke, I swear!

Financial services firm Northern Trust, for example, was recently named one of the “100 Best Corporate Citizens” by Business Ethics magazine.  I didn’t know there was such a thing.  The survey is published in their Spring 2006 issue – apparently they don’t have enough business ethics to cover to publish monthly.  Sorry, I couldn’t resist.

The news release in which this was announced goes on to say that “the closely watched survey” has gained national recognition as an indicator of best practices in the area of corporate social responsibility.

There’s a set of words I don’t often hear in the same sentence:  corporate…social…responsibility.  Unless they’re prefaced by “complete lack of.”

The “100 Best Corporate Citizens” survey is based on a database maintained by KLD Research & Analytics, a Boston-based social research firm. The universe of companies considered for the list encompasses U.S.firms in the Russell 1000, the S&P 500, and KLD's Domini 400 Social Index. These firms are ranked on their performance in eight stakeholder categories including shareholders, community, governance, diversity, employees, environment, human rights, and product.

More details regarding the 100 Best Corporate Citizens list are available on the Business Ethics website. 

Founded in 1987, Business Ethics is the only U.S.-based business magazine focusing on ethics and corporate social responsibility.  I’ll bet they are.

But at least we have one!

Link to RockyWIT Discussion

Here is a link to the RockyWIT posts that I referenced in my latest article, "Sleeping With a Stranger."  Look for the subject "traveling on business."