"Hope Is Not A Strategy....

...nor is it a goal."

I recall several years ago I was giving a quarterly presentation in front of my colleagues, Regional Manager, Regional V.P. and Division President on my business plan for my branch. Things were going well until I received a challenging question on my estimated sales growth. I begin the answer with "I hope to be able to..." then it went down hill. These words resonate with me until this very day from my Regional V.P. "Hope is not a strategy and definitely should not be your goal." I spent the next 30 minutes defending every aspect of my quarterly business review while my colleagues grimaced and some snickered(better you than me). I survived and learned a valuable lesson and so did they. Never use Hope as part of an answer. Yet we have allowed ourselves to believe that Hope is the panacea for our ailing economy.

Americans voted for Hope on November 4, 2008. And Hope is what everyone keeps talking about when it comes to our economy. Here is how Barack Obama defined Hope during a campaign stop in New Hampshire last January; “Hope is not blind optimism. Hope is not sitting on the sidelines or shirking from a fight. Hope is that thing inside of us that insists, despite all the evidence to the contrary, that there is something greater inside of us.” That was then this is now!

I waited patiently for Timothy Geithner to bring forth his plan to spend the balance of the TARP funds in Hope of shoring up our financial institutions. Yet I am still waiting. He detailed a plan of still planning. I watched his boss, President Obama, tell us on Monday evening that "my Treasury Secretary, Timothy Geithner, will present to you on tomorrow the plan..." Geithner did say that it would be costly, "This strategy will cost money, it will involve risk and it will take time." We Hope that all of this works!

Attacking the financial collapse on three fronts:

1.) Working to restart the flow of credit. I don't hear a detailed plan in this. Must be Hope.
2.) Removing bad debt from the books of troubled banks. He did give greater details on this front.
3.) Providing assistance for ordinary Americans and small businesses. I'll wait for the plan.

Hoping for the best is the same as not having a strategy. It is dangerous if you do not take into consideration that the worst could happen and act from that standpoint. The Obama administration along with our congressional leaders are not acting rationally. We are in for a tough and long haul. It is going to cost trillions to put this Hope into action.

The final stimulus package that will go to the president will be about $790 billion. It will include lots of spending that should be part of the normal budgetary process but because Obama believes he has to do something now it got rushed to completion. Yes, something had to be done but why did it have to be done so quickly without much thought and oversight? Why was Kruella D'Pelosi given so much latitude with which to comprise such a bill? Why did the entire Republican delegation vote against it in the House? Why did all but 3 Republicans not vote for it in the Senate? Mr. Obama insists that he has to do something. But things done in haste always end up with waste. Since I have no idea what the compromise package is I will reserve criticism until it is presented. But remember that if you borrow from the economy then put it back as spending you haven't added anything except debt. But remember this: Hope is not a strategy!

Yet the American people hold out for Hope! Its what keeps some us going each day.

Thats my word. Post yours!

The Maximum Wage II

“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president.” President Barack Obama

Will someone please inform the President that with great risk comes great responsibility, then comes great rewards. If you are challenged with performing a task and in the performance of that task you meet or exceed those expectations then there just might be some sort of reward in place. Bonuses are not just awarded because a corporation decides it wants to do so. The merits and the criteria are spelled out at the beginning of the fiscal year, quarter or month. If this then that. In many cases these rewards (bonuses) are contractual.

Let's use fictional company, IRun Enterprises, Inc. They have been losing money for the past 4 quarters and are projected to lose $6 million this fiscal year. The board of directors fire the current CEO, Imma Screwup. They initiate a CEO search for a true turn-around manager and find a candidate, Mr. Ican Dooit. Mr. Dooit studies the business of IRun Enterprises and presents a plan to the board of directors. The plan does not include returning to profitability this year but does show that he can reverse most losses and finish the year at a loss of $3 million dollars and return to profitability by end of year 2. The board prepares a hiring contract for Mr. Dooit. His representative negotiates that if he meets his target objective then he will be paid $500,000 base salary and a bonus 30% of the savings (That's $900K for the math challenged.) The board agrees and along comes Mr. Dooit and his plan. By the end of the first year, Mr. Dooit and his team of executives have not only met their plan but exceeded it and Irun Enterprises has only lost $1 million dollars. So Mr. Dooit's contract calls for a payout of 30% of savings as a bonus, which in this case would be $1.5 million dollars.

Now should you be outraged? Yes, if you are a wealth envy nut job. You see the stockholders would not have a problem with this because Mr. Dewit just increased their shareholder value by turning the company around. Many of the employees will not have a problem with this as because a worse case senario would have meant greater layoffs. The board of directors would be elated since they made a good decision and their shares of this company have been improved as well.

But Barack Obama would have you believe that any company which receives any "exceptional" assistance from the government then their executives should be paid a Maximum wage of $500,000 annually. While the average American is somewhere around $50K a year this does seem like a great amount of cash. Would any top notch CEO looking to advance his/her career want to do this job where there will be tons of government interference and oversight? Long answer is NO! So if he is successful in implementing this Maximum wage then companies that really need a top notch executive will end up with an mediocre CEO at the helm. The talent will go where they can be compensated on a comensurate scale with other CEO's and with no government intervention.

I commend Goldman Sach's and J.P. Morgan for initiating their own version of a poision pill. That pill is to pay back the TARP money early. Goldman Sachs indicated that their financial condition was sound. JP Morgan said they didn't need nor did they ask for any bailout.

"White House spokesman Robert Gibbs said the rules weren’t intended to be “overly punitive,” while a senior administration officials said their primary goal is to align the interests of top executives at bailed-out firms with those of shareholders, who now include U.S. taxpayers.

I thought that the Treasury Department purchases preferred stock and warrants from these troubled financial institutions. That would ensure that the US Treasury would receive payment before common equity shareholders would. And since it is non-voting preferred stock how does the Treasury get to vote on how a company operates?

I hope that these financial institutions get back to the business of lending and freeing up credit so that they can began to pay back the American taxpayer quickly and get government out of of the business of running corporations. And for the rest of you.....Don't do it! Just Don't do it!

That's my word. Post yours.

Talking Out The Side of Her Neck

Maybe it is just me or is this woman getting ready for the "Brainiac of the Year Award."

Nancy Pelosi stated that every month that the stimulus package isn't passed, 500 Million Americans will lose their jobs........errrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr.

How can that be? Are we now to run deficit job losses? One of the latest estimates of the total number of Americans in July 2008 was 304 Million people. So According to Nancy the Great we are going to lose an additional 196 Million jobs thus putting unemployment at 164% of the American population. Never mind that the total US population is not employed or employable since we would include children and retirees in that number.

Our unborn children, grandchildren and possibly great grandchildren will be born into a nation of the unemployable since we will have to pay this job loss deficit back just to get to zero unemployment.

I didn't make it up. She said it. 500 Million Americans will lose their job each month.

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I Love This Baby

This probably will not be shown during the Super Bowl, but you gotta love it.

Enjoy!



Let's Have Some Fun!

Not Time To Make Profits......

"There will be time for them to make profits and time for them to make bonuses. Now is not that time." President Barack Obama

When is the right time to make a profit? Did he really say that? Listen to it up to the very end.



Yep! He said it. Now is not the time to make profits. I thought that profits were a good thing in a capitalist society. I thought that a positive profit and even a lesser loss than previous periods were a good thing! Hmmmm. Am I over thinking this? Maybe government issues legislation to tell all companies when the time will be right again to make a profit and pay bonuses.

I think it would have been a responsible thing for the President to contact those Wall Street executives by phone to find out what is really going on. These bonuses were probably part of a legal contract with the executives that received them. Whenever I have received a bonus from my job I always had to meet certain levers to activate them to get paid. Bonuses are not always paid because you made a profit. They can be paid to an executive to limit the losses otherwise the company may be in worst condition than when it started. In order for these bonuses to be "shameful" as Mr. Obama has stated then we definitely need to know what the parameters were to trigger their payout. Pick up the phone Mr. President. I am sure that Mr. Lewis (Bank of America) or Mr. Prince (Citi Group)or any of the other financial institution leaders will take your call. You are not campaigning anymore. You are the President. Remember: "I won!" They will take your call. No need for the soundbites.

Never mind that not all of these companies asked for nor wanted any government bailout. Mr. Bush's Treasury Secretary, Henry Paulson, pulled them into a room and basically told them that they could not leave until they signed away part ownership of their company to the Federal Government in exchange they were forced to take bailout money.

C'mon Mr. Obama. Make a call. Pick up the phone!

That's my word. What's yours. Post your comment.