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Current Affairs Frustrations Living

Is This the Best You Can Do?

Years ago, I remember reading a memoir of Henry Kissinger. Frankly, my memories are probably more apocryphal than factual at this point – but the story’s still a good one – so read on! I’ve told this story at least a thousand fifty times to friends and colleagues. The theme of this particular story is about how you get to the best possible result. Steve Jobs also seems to know a lot about this – but he hasn’t written his memoirs!

In the book, Kissinger tells a story about how he dealt with new senior staffers at the State Department. At some point, they’d have to bring forward to the Secretary of State a briefing document on their particular area of focus. Kissinger’s brilliance was how he handled those initial document reviews – setting a special tone for that new relationship.

Instead of just reading the briefing document, Kissinger wouldn’t bother to read it at all – instead, he’d simply write on the first page: “Is this the best you can do???” and send it back to the staffer.

You can imagine the new staffer’s reaction when the briefing document came back with that comment on the cover. So, that staffer would get immediately to work to make it even better, refining their arguments, double checking the facts, etc. And, then, send it back up to Kissinger.

Kissinger would, of course, notice that the follow-up briefing document had arrived. This time, again not bothering to read it, he’d simply write on the cover “Is this REALLY the best you can do???”

Wow, you can imagine the staffer’s deflated ego when that briefing document arrived back on their desk. That staffer would again, in earnest, go back to work to make this briefing as perfect as they could make it. And, this time, the staffer would actually schedule an appointment on Kissinger’s calendar to hand deliver the briefing to Kissinger in his office.

In his office, Kissinger would ask the staffer verbally one more time – “Is this the best you can do???” “Absolutely,” the staffer would respond. Kissinger would reply: “Good, then now I’ll read it.” Wow!

I’ve been upset about the whole AIG bonus situation – and have posted here earlier about it. But I do think that Gerald Seib has a good point in his column in tomorrow’s Wall St. Journal when he says:

When the House passes, as it did Thursday, a tax bill designed specifically to extract money from 73 individuals who took large bonuses from AIG’s financial-services unit, it’s pretty clear that things have gotten out of hand.

Obama seems to be ready to sign this legislation – assuming it survives in some form in the Senate. There’s a huge wave of citizen anger that’s descended on our representative in Washington about the AIG bonus situation. No surprise that.

But, instead of just signing this legislation, I think Obama should send it back to the Hill – a veto – with a scrawled note on the cover: “Is this REALLY the best you can do???” Because it’s not their best. Clearly and simply, it’s not. And the representatives of the people in this representative democracy need to do better – much better indeed.

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Current Affairs Frustrations

How to Reduce the US National Debt

Rep. Barney Frank’s House Committee on Financial Services is holding a hearing this Wednesday, March 18: “American International Group’s Impact on the Global Economy: Before, During, and After Federal Intervention” featuring AIG CEO Ed Liddy.

The committee should move the venue to the Kennedy Center and sell tickets to the highest bidder. The event will obviously be a complete sell out!

The committee could then take the circus event on the road, booking the biggest venues in cities and towns across the country. Since the Feds own and control AIG, they can simply change Mr. Liddy’s schedule to ensure his full and complete participation.

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Business Current Affairs Frustrations

AIG: Inmates Running the Asylum

Bob O’Brien has a great Stocks to Watch column on Barrons.com this morning titled “Inmates Run The Asylum: The AIG Story“. I particularly enjoyed this part:

Congress said it is upset. Repeat: Congress is upset. Representative Carolyn Maloney said she has been ”asking for this information for months.” And then characterized the disclosure as, effectively, a good start? This is the equal of a guy falling off a 30-story building commenting, as he passed the 20th floor, ‘’so far, so good.”

Well said!

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Business Current Affairs Frustrations

The AIG FIrestorm Leaps the Firebreaks

Earlier today, I suggested the sun needed to shine on AIG and its counterparty dealings. Late today, AIG disclosed an initial list of its counterparties – see this NY Times report.

Now that the sun shine has begun peeking through the AIG fog, what do we learn? Essentially, that a significant chunk of the US government’s bailout funding of AIG was passed through in the form of billions of dollars to AIG’s counterparties.

At the top of the list – Goldman Sachs which received $12.9 billion. Next, Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion. Barclays (UK) received $8.5 billion, Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), UBS of Switzerland ($5 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

The article goes on to note that “A.I.G. also named the 20 largest states, starting with California, that stood to lose billions last fall because A.I.G. was holding money they had raised with bond sales.”

On tonight’s 60 Minutes broadcast, Federal Reserve Chairman Ben Bernanke commented about the AIG situation and how it provoked in him the most outrage of any of the issues in this financial crisis. From the transcript:

“Let me just first say that of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG. Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system,” Bernanke said.

Our government – indeed, us – has had to provide over $160 billion in funds to AIG – so that AIG could pay off its counterparties – at full price. It’s absolutely unconscionable how this a) could have ever happened and b) was allowed to continue to operate in this fashion.

Unfortunately, today has been a very sad day for America – among too many others heretofore in this crisis. We finally know a bit about where our bailout money has gone – and it really doesn’t feel very good.

I’m not really sure who’s running the show these days with respect to providing AIG management oversight. The AIG website still lists this board of directors as being responsible for corporate governance. Perhaps they’d like to provide us all a deeper perspective on the current AIG situation? And, why do they feel that Ed Liddy continues to be the right leadership for this firm at this time? How about giving us all an AIG State of the Union message – to the public shareholders who now own 80% of this company?

Frankly, I’m firmly in the camp with our Fed chairman – very angry at how AIG was allowed, by its board and management, to get us all into this ridiculous situation. Lots of difficult questions remain to be answered and many adjustments need made to prevent anything like this happening again in the future.

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Business Current Affairs Frustrations

The AIG Firestorm Spreads

Wow, there’s a real firestorm spreading among the public following last night’s news about AIG paying hundreds of millions in bonuses to members of its Financial Products team (the group that got them into difficulty).

Watching Twitter this morning was pretty amazing – a steady, real-time stream of complaints and anger at the sheer tone deafness of this action.

Listening to KGO this morning, host Brian Copeland was re-telling the story of how his grandmother got taken to the cleaners by American General, an insurance subsidiary of AIG. Reactions from his listeners were predictably angry.

Meanwhile, the New York Times picked up the theme from a week or two ago – asking again why we still don’t know who the counterparties have been that received billions of the bail-out money the government has provided to AIG. The editorial was blunt:

The secrecy is unacceptable. Taxpayers have a right to know how their tax dollars are being spent.

Gretchen Morgenson writes in her article titled “At A.I.G., Good Luck Following the Money” in the Times today that “the counterparties have received 30 percent of the $170 billion allocated to A.I.G.”

It’s time to let the sun shine in on this mess.

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Current Affairs

Oh So Tired!

It’s Friday night – and, frankly, I’m tired after a busy day today in an otherwise relatively unbusy week.

Lots of neurons firing from today’s meetings with entrepreneurs and investors. For me, it was a great but somewhat exhausting day! Almost feels like the whole negativity thing of late about the economy is in the midst of turning – or at least trying to turn!

But, tonight on Washington Week, I watched a video clip of Obama speaking earlier today. Wow, is he looking tired and exhausted – almost like an automaton mouthing the words. I can’t remember the last video of Obama that I’ve watched in the last couple of weeks – but in tonight’s video he just looked really wiped. Definitely not a good thing…

Let’s hope he heads for Camp David and some rest or basketball or… this weekend – or something!

Categories
Business Current Affairs

A Market Bottom?

Have we just experienced the stock market’s bottom? Or, is there more to come?

The psychology of all of this is interesting. Earlier today, I actually bought a few stocks – financials (which, unfortunately, I tend to know the most about).

Last night, I watched a replay of Warren Buffett’s comments on CNBC’s Squawk Box from early in the day on Monday. Then, I watched Charlie Rose’s interview of Barton Biggs. Did both of them swing me too much to the positive? Time will tell.

Let’s hope the rumors about the uptick rule being reinstated along with a resolution of the mark-to-market issue are right. Otherwise, today’s gains could evaporate yet again.

Categories
Current Affairs Frustrations

More on AIG

Last Friday I expressed my anger at the AIG situation.

In the Financial Times last Friday was a much more thoughtful critique of the AIG issue by Willem Buiter, Professor of European Political Economy at the London School of Economics and Political Science.

He calls it “The Fed’s moral hazard maximising strategy.” Indeed it is.

Categories
Current Affairs Living

What Was It Like? – Way Back in 2008? – Weren’t You There?

From Tom Friedman’s column in today’s New York Times:

In the meantime, says Gilding [Paul Gilding, the Australian environmental business expert], take notes: “When we look back, 2008 will be a momentous year in human history. Our children and grandchildren will ask us, ‘What was it like? What were you doing when it started to fall apart? What did you think? What did you do?’ ”

We’re indeed making notes here – fluctuating between our quiet enjoyment of everyday life and our deep frustrations with our current global predicament!

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Current Affairs

About That $2,000 American Gift Card Idea

The American Gift Card

Dan Newman is back today in the Washington Post with a follow-up article to his original op-ed last month about his idea that a more effective stimulus (er, economic recovery) plan would be for the federal government to simply mail out gift cards preloaded with $2,000 on them – and encourage us to “just go shopping”. I blogged about Dan’s original idea here – and he commented on my post.

Today, he responds to some criticisms about whether the idea would be effective:

Classical economists are right that consumers could choose to save the money that gift cards would provide, just as any behaviorist or Weight Watchers leader admits that it is, in theory, possible to ignore food on the counter. But in practice, convenience exerts a strong pull. That’s why items by the cash register tend to be among the highest-margin items in a store.

Amen! Or, instead, the Feds could just give more money to AIG