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Anger

Plea$e Mr. Feinberg! $ay it ain’t $o!

Posted October 22, 2009

richie richSo it’s finally coming down. The pay czar has studied the situation. Thought about it. And declared his intention to send a message. Pay for the top 175 executives at the financial institutions that took a bailout are to have their base pay cut by as much as 90%, and total comp by 50%.  Seven companies will be affected. Of course, we don’t know precisely which executives are on the hook, but I think we can draw our own conclusions.

America has been waiting for quite some time to see some green blood in the water, and this move only begins to address the underlying rage our nation feels at Wall Street and its minions. Still, you have to feel a twinge of empathy for these 175 individuals who are the first to shoulder the blame for all that our financial institutions have done to screw up our economy. Thousands were involved, of course, but these 175 must stand in the forefront of their cadre, trembling, as their golden parachutes are folded up and put away, their ceremonial swords broken over the knee of the government.

Think of the sacrifices that these few, unlucky individuals will have to bear! Here are just a few:

  • Significant and immediate cutbacks in philanthropic activity.
  • The new yacht will have to be canceled. Last year’s model will have to do.
  • The private jet will have to go. At best a Netjet time share will fill in the gap, but it’s quite possible that from here on in some of these folks will have to fly commercial. That’s huge.
  • That third home in East Hampton or Malibu will be put on the block; some executives will even be down to just one primary residence.
  • No Easter break in St. Bart’s for the entire extended family, and the compound in Martha’s Vineyard will have to be leased out for the entire month of August.
  • Taxicabs instead of car and driver. While the occasional limo may be a possibility, waiting time is out of the question.
  • Some club memberships will have to be winnowed out, leaving perhaps only one golf and one beach and tennis club for the foreseeable future.
  • Support payments to former spouses will have to be renegotiated.

Obviously, dire times call for dire measures. Whether the radical actions contemplated by the Federal Government are warranted, or are too much, too soon, has yet to be ascertained.

To follow Stanley Bing on Twitter, go to twitter.com/thebingblog.

Bad guys

Imagine no foreclosures (it’s easy if you try)

Posted October 20, 2009

All it would take would be a little legislation.

How about this. Let’s have a federal bill that states that any bank that took a bailout loan and hasn’t paid it back yet isn’t permitted to foreclose on anybody’s primary residence. In addition, bonuses for senior officers at lending institutions will be reduced by a factor tied to its foreclosure record for that year. High rate of foreclosures would mean low bonuses.  At the same time, institutions that refrain from foreclosing on people’s homes would be granted tax abatements on their profits indexed to the amount they are putting at risk by allowing homeowners to renegotiate their loans and remain in their residences.

Of course, passage of such a law would also involve responsibilities on the part of defaulting borrowers. For instance, no resident would be permitted to simply walk away from a house simply because its market value had fallen 10% below the size of its mortgage. That seems to be happening all over the place right now. That’s not good. Lenders have rights, too.

In short, a  spirit of enlightened responsibility and mutually assured destruction must be re-established on both sides of the equation — lender and borrower alike. They say you can’t legislate these things, but they’re usually wrong. Just about everything can be. They say that short-term, mechanistic fixes aren’t organic to the system and can’t be sustained. Really? Tell that to the guy I just gave five bucks on the way to work. He’s having breakfast on that right now. Not to mention all the banks that just reported record profits, who got their own handouts not long ago.

The situation as it exists is dire. People are out on the street. Banks own a bunch of worthless real estate that is flooding the market, just sitting there. Stupid banks made stupid deals with hopeful people. Together, they made their bed. Now they should be forced to lie in it, side by side, until this long night is over.

Any lawyers out there are invited to improve on the basic structure of this concept.  And any politician who wishes should feel free to appropriate it and take credit for it. Isn’t that what you people do?

Bailouts

A happy day in American business!

Posted October 14, 2009

pig.jpgFall is just busting out all over. You can hardly stand up safely the good news is just flying around so fast.

The Dow, for instance, is about to go over 10,000 again. Won’t that be nice? Sure. It shows that no matter what’s really going on underneath our economic system, investors want to make money and think they can still do so by buying and selling stocks and sometimes even bonds. Yay for those cockeyed optimists! They make the world go ’round!

Oil has hit a high for the year. You might think this is bad, and it is, if you have to buy gasoline every day. But it’s good as a leading indicator of where we might be going. It means that really smart guys in Saudi Arabia and Texas have decided that the spending power of your average American citizen is improving, and so they can gouge us a little bit more every day until we stop buying so much gasoline again or cars that eat it up so fast.  They have confidence that we’re all going to be able to suck it up and get to that magic $5 per gallon price they’re definitely pumping for, so to speak.

And in perhaps the most stunning proof of economic life, Wall Street is set to pay out its biggest payday ever — about $140 billion to the guys who broke the machine and then got the assignment to fix it. What’s that?  Don’t seem fair? Nonsense. JPMorgan profits are up sixfold! A whole bunch of others can’t wait to pay off their TARP money! Reports give several reasons for the big payday — melting credit markets, an improving stock market, lingering positive vibes from the bailouts… but we know it’s not that, don’t we? We know that Wall Street is paying itself $140 billion… because it can! That’s why!

All hope for ridiculous future wealth for each of us resides with the rampant, uncontrolled, irrational exercise of organized greed that drives the markets. It looks like we’re well on the way to total recovery in more ways than one, ladies and gentlemen.

Bailouts

The big bailout of ’08, or hindsight is blind

Posted September 24, 2009

dogSometimes you just don’t know what to think.

On the one hand, there’s Michael Moore’s new movie, Capitalism: A Love Story, which takes an outraged look at the havoc that the financial crisis has caused on your basic, working (or now non-working) American citizen. Yeah, I know, a lot of you folks would drop Mr. Moore off a mountain made of his own money if you had the chance. But the guy can make a case.

His point is that our economic system is controlled by idiots, con-men and selfish, greedy SOBs who don’t give a damn about us and run the system for their own benefit. I don’t think you have to be a flag-waving leftie like Mr. Moore to agree with that one. I think a lot of Glenn Beck people would sign on to that premise.

The fat man in the hat is also righteously peeved that the Government bailed out all those big banks and insurance companies that nearly brought us all down. And again, there’s a fair chunk of right-thinking America that’s hopping mad about that, too. So maybe Moore’s anti-capitalist screed is actually an interesting nexus at the point where right and left converge in hatred of the system that rewards failure and lets the bad guys run the next iteration of the machine. Nobody ever lost money at this point underestimating the anger of the American people.

And of course we all have plenty to be angry about. We could spend the next decade yelling at, prosecuting and punishing the moral morons and stupid geniuses who gave us our recession.

But then there’s James B. Stewart’s exhaustive, exhausting look at the “Eight Days” that shook the world back in September of 2008, in the September 21st, 2009, issue of The New Yorker. It’s a tick-tock about the week that the guys who run global capitalism bumbled their way toward the decision to go socialist for a while and bail out the system that pays for their limos.  

What you see is how close we all came to losing pretty much everything — our collective life savings, our homes, the insurance that protects us from disaster (subject to acts of God and any other consideration they can think of to avoid paying you).  We get a worm’s-eye view of familiar figures like Paulson, Bernanke, Geithner, Bank of America’s Ken Lewis, Lehman’s clueless Dick Fuld, pre-bonus John Thain of Merrill, the gang from AIG, thrashing around trying to figure out how to prevent the entire mess from going down the drain it was circling.

If you haven’t looked it up, you should. If it shows nothing else, it demonstrates how in a crisis the false divisions that separate one global behemoth from another, and private enterprise from Government, dissolve, leaving a management team all working for the same big corporation. You know it. You work for it too.

So that’s where I’m stuck, another year older and deeper in debt, as the old song goes. On the one hand, you’ve got to hate the fact that the miscreants wriggled off the hook, and that in many ways — just like after the fall of Communism in eastern Europe — the same creeps who screwed things up are back running the store, the new boss same as the old boss. All those big bailouts make a lot of people want to scream, and truly, there are so many things to despise about Wall Street. On the other hand, where would we be if the so-called free-marketplace had been allowed to go down, to be righteously allowed to fail? Every single person now reading this, and even those losers who aren’t, would be up the creek.

I don’t know where I come out. I’m confused. So I guess I’ll just handle that like everybody else these days. I’ll get mad! Ah, that feels better!

Bailouts

BingCo. announces plan to pay back debt

Posted May 18, 2009

180px-alfred_e_neumannNEW YORK, May 18 – Stanley Bing said on Monday that he plans to sell an undesignated amount of stock in his formerly privately held BingCo., and also plans a note sale to help repay funds he has borrowed from various sources. He also announced that he was taking a $872 million charge against earnings. The notes are being designed by his friend Stu right now, according to Bing, and will be very attractive.

The charge reflects losses on quite a few assets, mostly due to bad investments made after consultation with the best advisors in the business world.

These losses have been a drag on BingCo.’s cash position, which has declined since June ’08.  The New York-based content company also announced the slashing of weekly dividends to children and pets, and an elimination of bonuses to all employees, of which there really aren’t any. At the same time, BingCo. management hopes the message will resound with Wall Street, which has shown virtually no interest in the Company since it went public some 18 months ago.

“We have no idea what it is the company does,” said Reed Barfinger of Barfinger & McGuffin, a firm that makes itself available for quotes to reporters who call it. “This lack of clarity used to be a huge asset, particularly in the online content world, but now people want at least an ounce or two of steak along with their sizzle.”

This could spell potential trouble for BingCo. In pre-market trading, the company’s shares fell about 2 percent to $0.14. Their 52-week high is $0.15, set last July 23.

BingCo. Executive Chairman and Chief Everything Officer Stanley Bing said in a statement that he will use the proceeds from the sale of shares and notes to pay back the $23,000 loan he received from CitiBank to finance the construction of a paved driveway at company headquarters.

Bing did not specify the size of the debt offering but said it would not be backed by the federal government, to which he also expects to owe some money very shortly in the form of a quarterly estimate.

Bing was among the institutions that recently underwent a “stress tests” of their ability to handle a deep recession, and was among those found to be quizzical. 

BingCo. does not give guidance. The company did however indicate it expects to be alive at the end of the year, mostly by accumulating more debt in order to pay the debt that comes with responsibilities and consequences.

Bailouts

Good news for the surprisingly not very stressed

Posted May 8, 2009

bluebirdThe sky is blue. The trees are green. The birdies is on the wing. And the majority of our banks have flunked their stress tests. Does that make them sad? Nope. Are we worried? Not at all. Because while they are stressed, they are not stressed as badly as we might have feared. Two facts leap out. First, while 10 of 19 of our fiduciary institutions require some form of additional cash to keep from fainting, all they need, in aggregate, is a measly $75 billion.

Compared to the numbers we’ve been seeing lately in bailouts and fearful predictionary bloviage, why, that’s a mere bag of shells! And it turns out they don’t even want the money! “No thank you, Uncle Tim,” they are saying. “We’re gonna be okay after all.” Can you imagine?  

Best of all, it turns out that even if you take the very worst-case scenario, potential losses in this formerly fetid corner of our financial sector would reach only $599 billion. Not a T? Only a B? Ha! We sneeze at such numbers. 

Speaking of sneezing, it also turns out that we’re all probably not going to die of swine flu, at least this week. 

The fact is, there’s just so much darned good news around that I think we should all open our hermetically sealed windows right now, lean out over whatever avenue we work on, and no, not jump, just breathe in that nice spring air, which appears to be not quite as badly loaded with toxic hydrocarbons as we had feared. 

Who knows? We may have a panic gap here all of a sudden. What should we freak out about next, do you think? Should we look back once again to ascertain which was the worst in our lifetime, so that we can use that knowledge of the past, as economists do, to prognosticate the future? 

To examine this issue scientifically, I visited a cool new website that helps those trying to determine hierarchies of just about anything, scientifically, you know. My assessment of the worst panic of our collective time can be found here.  See if you agree.

Bad guys

War is over if you want it

Posted April 7, 2009

optimismOkay, I hear you. You’re sick of the bad vibes. You want to get your collective head out of the community toilet. Stuff you’re tired of hearing about: bailouts, stinky hedge fund shenanigans, executive compensation, retention bonuses for guys who weren’t retained, criminal excesses by shady Wall Street buttheads, economic prognostications offered by those who didn’t prognosticate anything when it needed to be prognosticated.

You’re ready to move on. The innate optimism of the American spirit is beginning to bubble bigtime within your breast. Enough of this gloom and doom! It’s time to have a burger, down a couple of brewskies, hit the new ground running.

You’re not stupid, of course. You see the unemployment rate. You see the sales figures for the first quarter. You know that if you look, there is dismal swamp as far as the eye can see. But maybe not. Not for those who see just beyond that grim horizon. Over that rim, there is dawn, the kind of light that only those who look can perceive.

Proof of this fact comes in a new poll from CBS News and the New York Times. The Times reports that:

“… the number of people who said they thought the country was headed in the right direction jumped from 15 percent in mid-January, just before Mr. Obama took office, to 39 percent today, while the number who said it was headed in the wrong direction dropped to 53 percent from 79 percent. That is the highest percentage of Americans who said the country was headed in the right direction since 42 percent said so in February 2005…”

This tiny new embryo of optimism is fragile. A vast majority of people are still worried about their jobs and are cutting expenses back as much as possible. That’s just common sense.

But you know how it is. One of our national characteristics is a certain kind of creative Attention Deficit Disorder. We can’t stay any one way for very long. And we’ve been in the dumps for quite some time now.

Disregarding stupidity and evil for a moment, a huge element of what got us here is pure psychology and decay in attitude. Repair that, ladies and gentleman, and the rest will surely follow. And you know. Even if it doesn’t, getting there just might be a whole lot more fun.

Adult ADD

Hey, Mr. Geithner! Over here!

Posted April 3, 2009

On April 1, Tim Geithner, speaking from the big G20 love fest, told Katie Couric that he would certainly consider replacing the CEOs of any bailed-out entity that the administration felt wasn’t performing up to snuff. I don’t think there’s anybody out there who doesn’t think that’s a good idea. You take the money. You do the job. If you don’t, so long Charley, right? Right. 

This will undoubtedly leave a huge CEO gap in a number of large institutions. In many cases, the government will probably try to fill the void with an executive who has been on the corporate scene before, as they did at General Motors. There’s certainly a rationale for that. The anointed one knows the company in question. He has some experience in the trenches. At the same time, isn’t that individual likely to be as much part of the problem as the solution? The Who said it: “Meet the new boss, same as the old boss.” Is that what we’re really after?

I submit that there are many qualified individuals from outside each of these banks, car companies, insurance behemoths and other corporate states that are now at least partially owned by We, the People. I believe I am one of them. 

Following are my qualifications to be a New Bailout CEO: 

  • I have many nice suits and would not need government help to acquire any before ascending to my new post; 
  • I have lost some hair over the years and now am required, on bad days, to do a moderate comb-over; 
  • I don’t really understand a lot about the economy, relying on others for their wisdom, and would therefore not put up any resistance to virtually any plan that Mr. Geithner, Mr. Ratner or Mr. Ed, for that matter, might have in mind; 
  • I can read a Teleprompter very well, and will not go off-point, ever, no matter what; 
  • I can still button my jacket when I sit down, which is more than I can say about a lot of these guys; 
  • I believe that Business can come back and am willing to say so; 
  • I have Adult Attention Deficit Disorder, which is clearly a qualification for haute executive status; 
  • I am a big fan of Mr. Obama and all his guys; 
  • I don’t mind taking a Town Car to appointments and have been doing so for many years, and would by no means insist on a stretch limo like some of these other bozos; 
  • I fly commercial all the time and would promise to continue to do so; 
  • I’m good at a cocktail party; 
  • I like to delegate the important stuff. 

Of course, the compensation would have to make sense. I know the limits, which have been well-publicized. But what’s the upside?

AIG

The scapegoat game

Posted March 20, 2009

edliddyYou guys aren’t going to like this, but you know who I feel sorry for? Edward Liddy. That’s right. He’s the guy the government appointed to run AIG after Hank Greenberg and his gang set it up to crash and burn. Today Greenberg popped up on television like a vicious Mini-Me to pile on the dead bunny.

Greenberg left in a scandal in 2005 after setting up the business unit that got AIG into all of its trouble. You know that operation. The Financial Products group that came up with all those cute derivatives backed with now-toxic instruments. And here he is this morning, jabbering away like a wise elder statesman. Pfui.

hankgreenberg1

This was only slightly worse than the drubbing that Mr. Liddy took at the hands of the suddenly irate congressmen in Washington on Wednesday. Many of our senior legislators had good points to make, no question about it. The situation is dire, and certainly subject to Federal review, as it was years ago when the SEC was supposed to be regulating the industry. Most of the politicians acquitted themselves well. But at times the hectoring got out of hand, to the point where you might have thought, if you were a cynical type of person, that these members of Congress were trying to come up with the quintessential sound bite that would land them on the evening news. Sure enough, at the end of the day, it was the showboat from Massachusetts whose “have you no shame!” diatribe did get the most airtime. I guess he knows his business, too.

Of course, Edward Liddy isn’t blameless. He obviously made some very bad decisions. But he is only the last in a series of managers – both at AIG and elsewhere – who has done so. It’s pretty evident noxious stuff has been going on everywhere for years. The culture of compensation of which he was a part is so deeply ingrained in corporate culture now that even Tim Geithner, the guy who is supposed to oversee the bailouts, didn’t pop up a huge red flag when he first heard about AIG’s contractual obligations to its disgraced lunkheads. 

Worst of all, for the poor doofus on the stand, is the thought that you’ve got to know is running through his head as everybody is saying nasty things about his mother: “I’m doing all this for one dollar a year.” 

Man. I would do it for less than five. As long as it came with a guaranteed bonus.

AIG

Newton’s Third Law of Human Dynamics

Posted March 18, 2009

So now Congress is going to go after the AIG bonuses, responding to the rage that most sentient beings are feeling right now about the whole question. One suggestion is that the Government simply impose a 100% tax on the sums received by A.I.G. bonus heads. This would seem to be a logical extension of the Government’s current policy of taking about 52% of all my income. Still, it’s a dramatic solution to the problem.

I’m just as mad any anybody else at those numbskulls at A.I.G., of course.  It really stinks. You have to wonder how a “retention bonus” is meant to affect the performance of a manager who has already left the organization. Like, that’s just stupid.

If you want to give me some bulls**t rationale for why you’re going to suck up billions of dollars and spew it out to your colleagues and pals, come up with something credible or at least appropriately truculent, like “We did it. We’re keeping it. If you don’t like it, fire us and pay us our contractually-mandated severance packages.”  That at least is a truthful presentation of the executive mind-set.

Still, you have to worry a little about the policy implications. Does the government – even in pursuit of fairness and equity – have the right to implement new, punitive laws against individuals who have displeased it, and Us? New laws that prevent such things happening in the future, no question. But laws that retroactively impose justice kind of make me nervous for some reason. 

In the case of A.I.G., the government owns 80% of the company now, so it’s easy simply to assert that We the People can pretty much do what we want. And maybe we should. There’s no question that taxpayers didn’t fork over all that money so that individuals could haul it away in shopping bags as they exited the building they helped to wreck.

But you’ve got to think that Business is in for a really rough ride from here on in. Sweeping in on the heels of what all these moron financial types and other brain-damaged economists have wrought will be  a host of new laws, new regulations, new ways to protect the nation and its citizens from the greed and collective criminal mind of Wall Street, its denizens and its running dogs. And we deserve whatever we get.

Newton’s Third Law states that every action produces an equal and opposite reaction. He was talking about physics. But it’s equally applicable to less scientific stuff as well.

Terror, for instance, breeds repression and a more surveillant society, one more concerned about safety and security and less about personal liberty.  In the wake of 9/11, this country did many things out of anger, fear and a desire to hold those guilty accountable. Some were reasonable. Others, in retrospect, were not.  Equal and opposite reactions are not always as good as they first may appear. 

Bernie Madoff is not the only criminal who prowled Wall Street. In many ways, he’s just the fall guy, a dramatic extension of the way business was done every day in the big craps game. In these A.I.G. guys, we have a perfect example of the global business culture that ran things for a long time and still does. Their very presence cries out for retribution, and Newton must be served.