Doing Due Diligence and AIG

When buying a company you should always conduct your due diligence in examining how that company operates, is financed and what ongoing contracts or obligations it has. In other words you ask for their financial books and you begin your due diligence discovery. On May 1, 2008, Delta Airlines and Northwest Airlines agreed to create the world's largest airline through a merger of the two companies. At some point prior to this announcement they both had to open their books for financial review to see if this potential marriage would work.

Along comes our Federal Government with its gotta get something done now mentality and buys $170 billion of American International Group, Inc. better known as AIG. Former Treasury Secretary, Hank Paulson, called the Wall Street company to Washington D.C. to iron out a proposed bailout of AIG which had gotten into deep money troubles with the collapse of our financial industry. What Paulson and the rest of the Washington knuckleheads did not do was ask all of the banks that were being bailed out to allow the government to examine their financial books thoroughly. $170 billion dollars later everyone is an uproar about $165 million in bonuses being paid out by AIG. In other words all of these intellectual dimwits did not do their due diligence for the American taxpayer. You and I spend more time reading our escape clause in our cell phone contracts than what was done here.

If this had occured just maybe someone would have seen the contracts for these bonuses. Because we are a country based upon the rule of law there is nothing anyone from Barney Franks, to Chris Dodd, to Nancy Pelosi or even Barack Obama can do. These bonuses are contractual and were already in place prior to the sky falling in for AIG. One way that these bonuses could have been eliminated is to have allowed AIG to go into a controlled bankruptcy and then the people who were slated to be paid bonuses for 2008 would have to get in line with the rest of the creditors as AIG tried to emerge from bankruptcy. Another way would have been to ask that the bonuses be deferred as long as the company was in trouble and owed the taxpayers.

Now that everyone on Capitol Hill is ranting about the timing of these payouts; they should look in the mirror. They are responsible for this not AIG. Had they taken the necessary time instead of rushing to the rescue there would have been better opportunity to review all of the operations of AIG and others. Paulson also set up the bailout so that these companies did not have to report how they planned to spend the monies lent to them. No court in this land will override the decision of AIG to pay these bonuses. Contracts are binding unless there was fraud by one party and since the recipients are getting what they expected and AIG indicates these bonuses are due then who was defrauded? Not the Federal Government. They never did their due diligence.

AIG is a holding company for many different companies. AIG has businesses in general insurance, financial services, asset management and life insurance & retirement services. And because we do not know who exactly will receive these bonuses and how each of the many companies under the AIG umbrella performed; it is not prudent to assume that someone is not deserving of their bonus. Nor do we know how each of the many companies performed individually. Some divisions of this organization may have been performing well above expectations and that is what helped trigger their contractual bonus payout. If it turns out that AIG is just paying bonuses to pay bonuses without the necessary performance triggers then shame on them and they deserve the intense scrutiny they are receiving. But our government set it up that they did not have to report as to how they are spending your money. Due Diligence not done! Necessary precautions not taken! No common or business sense. Government at its very best! You see what happens when Congress does things in haste. The good thing is that Obama and his team did not set these arrangements up but he did vote yes to the $750 billion bailout as Senator and Presidential candidate.

I am not opposed to anyone at AIG or any other bailout company receiving bonus payouts that were agreed to as long as the terms of the performance were met. Mr. Obama issued more of his rhetoric today, that Treasury Secretary, Timothy Geithner would be using any legal means necessary to stop or reverse these payments. This is the same Mr. Geithner that has yet to produce the plan for shoring up our financial and banking industry. The same Treasury Department that has yet to get a Deputy Treasury Secretary to assist Mr. Geithner. When is he going to have the time for this assignment? I'll wait......

That's my word! Please post yours!

Cuban Missile Crisis, Part Deux

Think back to yesterday, well O.K., back to October when Sheriff Joseph Biden shot off his six gun mouth while on the campaign trail and said the following:

"Mark my words, It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year-old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy."

Coming on the heels of the Hillary Overcharge Button gaffe, the Russian government says that it may deploy strategic bombers in Cuba and Venezuela. So much for the reset of relations, huh Hillary! Now as Secretary of State what will you do? Looks like the Sheriff was right. Obama's mettle will be tested within six months of taking office.

In my estimation, Russia is no longer content to watch as the United States flexes its muscle and power around the world. How dare we have the "audacity" to be the most powerful nation on the planet. Now Russia wants to check us on this. Being numero uno has its consequences wouldn't you say. Just like the Pittsburgh Steelers will find at the start of next football season, everyone wants to knock you off your perch. Russia is a proud former super power and they want to regain that honor at our expense.

How will Obama handle this crisis? Remember that his administration's mantra is "not to let a good crisis go to waste." Trying to pretend to be a world leader will not work. He will have to tackle this one head on. Just like JFK, will he be able to stare into the eyes of an enemy and get him to blink. This crisis will require that he and his State Department bring their "A" game. That is if they have an "A" game to bring. Our country has recently shown that we have no idea how to deal effectively anymore on the world stage. Snubbing the British Prime Minister, presenting Russia with the Easy Button and promising $900M to help rebuild Hamas controlled Gaza even though we did not destroy it. Since he is still in the early days of his administration he can just claim that he inherited this mess too.

Cuba already has the long landing strips necessary for these bombers to land and take off. With Cuba being only 90 miles from Florida you can easily see why this is a potential problem and embarrassment for the administration. I guess Hillary wanted to reset the Russian-U.S. relationship back to 1962. With everything else going on in this country will the Obama administration, more importantly the State Department, be able to navigate this crisis. I think not. Let's just Hope that they do not have 14 days in October to deal with it.

Sheriff Joe, you called it and here it is. Have your boss answer the test. Deal with it now before we have Russian and Cuban paratroopers landing in our backyards ala the movie "Red Dawn". And we do not need another trillion dollars spent on this crisis. Maybe once again we will remove our missile defenses out of Turkey or some other place to close this out. We will wait!


That's my word! Please post yours!

It's Over Now! "The Economy is Sound..."

...despite the temporary "mess" it's in, so says the White House economic adviser, Christina Romer.


Is this deja vu? Did I hear this somewhere before? Did someone get ridiculed for making this statement some time ago? Short answer is yes.



Then Republican Presidential Candidate John McCain made these statements on Monday, September 15, 2008: "the fundamentals of our economy are strong"even though as he described "tremendous turmoil in our financial markets and Wall Street." Although at the time the U.S. economy was experiencing relatively low unemployment (6.1%) and had seen some modest growth. On this same day the Dow Jones Industrial Average plummeted by 498 points or 4.4%. Barack Obama's campaign issued this statement to those comments:

"Today of all days, John McCain's stubborn insistence that the 'fundamentals of the economy are strong' shows that he is disturbingly out of touch with what's going on in the lives of ordinary Americans...apparently his 26 years in Washington have left him incapable of understanding that the policies he supports have created an historic economic crisis."

Now the Obama administration would have you believe that the economy is sound? We have lost over 12% off the DJIA since January 20, 2009. Unemployment currently sits at 8.1% and we are to believe that the economy is sound! This from the same president who wrote in an op-ed piece in the Washington Post that the "recession could linger for years and our economy could lose 5 million jobs." Did something happen this week that I missed? Was it because we had the best week in many months on Wall Street they came to this conclusion? That I doubt since our President told us to not look at the "gyrations" of Wall Street as a measuring stick. I can't understand it. What a difference a day makes.

There is a silver lining is this announcement though. And that is finally this President and his team of "know-it-all's" have finally wised up and ceased with the FEAR tactics. I blogged about Obama's Hope over Fear a month ago. But it seems as though someone somewhere finally got to them and gave them a clue. If you keep saying its bad then it will continue to be bad. They may be trying a little psychology here with this sound economy strategy. Let's see, it just might work. I want to think that he is now trying to lead instead of scaring us into believing that it will get better even though he has now used FEAR on our food supply, but that's a story for another day. And maybe Santa Claus will come down my chimmney on April 15th too!

That's my word! Please post yours!

Presidents Only: New Employee Orientation

In order for a new employee to get off to a successful start they are usually required to attend "New Employee Orientation." This is necessary for several reasons. It first allows the new employee to understand what their role is and what opportunities are available for them within the company. It also allows for the organization to indoctrinate the new employee into the different cultures and history of the company. The new employee is usually given a handbook, benefit summary and code of conduct material.

Even the National Football League offers a rookie symposium to all newly drafted and free agent employees. The purpose is to make certain that their new crop of millionaire players learn how to make the right choices in business, money, conduct and women. The NFL even requires rookies to tour the Football Hall of Fame in Canton, OH to learn about the roots of the league and the players that came before them.

Then why does the President of the United States not attend a similar orientation or seminar. Mr. Obama has made several mistakes as the neophyte leader of the country. You would think that the President would have surrounded himself with adequate advisers that would be able to ward off these missteps early into his presidency since he is the "smartest person in the room." His latest flap was the snub of a long time ally, British Prime Minister Gordon Brown. Big "O" showed little interest in this visit, declined to do a joint press conference and extend the visiting leader a state dinner at the White House. A part of the President's duties include entertaining heads of state and ambassadors. I checked and the Prime Minister of Great Britain is a head of state as well as a longtime ally!

Better to Receive Than to Give!
The Big "O" made another mistake with the Prime Minister by presenting him with a gift of 25 DVD's of classic American movies. This is after Mr. Brown gave the President a pen holder that was crafted out of oak from the HMS Gannet, a naval vessel that served on anti-slavery missions off the coast of Africa. He was also presented with the framed commissioning papers of the HMS Resolute, the sister ship to the Gannet and a ship that was rescued by the U.S. and given to Queen Victoria. Obama also received the seven-volume biography of Winston Churchill. Mrs. Brown presented the First Children with outfits from Topshop, a British chain of clothing stores. She also gave them several books from British authors that have yet to be published in the United States. Mrs. Obama gave the Prime Minister's boys toy replicas of Marine One. Orientation classes on gift giving and reciprocity would have been ideal here. The DVD's may not even play in Great Britain as they were probably in NTSC format not the PAL fortmat for most of Europe. Even the smartest person in the room could gain some insight from new employee orientation.

I'm So Tired
Sources in the White House say that the Big "O" and his staff have been "overwhelmed" by the economic meltdown and that the president is not getting enough rest which is why he did not give Mr. Brown the time a visiting head of state would normally get. This is where that new employee orientation would have been useful. Mr. Obama would have been told that the job is 24/7, the worries are 24/7, the responsibilities are 24/7. He would have had the option to decide if this was a job that he truly wanted to do and would he be up for the challenge. Yet there was no orientation and less than 60 days into the new administration there is a sense that the president is already tired. Well partner you signed on for at least 4 years of this.

Even if his staffers did not know protocol there is always someone the new employee could have called upon for guidance. Mr. Obama has four predecessors that he could have called upon for help. I am sure that Slick Willie(Clinton) or Skippy(Carter) would have been eager to offer advice.

Aging Already!
We all know that when a president enters office he has a optimistic outlook and demeanor about himself. Years later they look ravaged and haggard. Does the new employee look tired already to you? The US News did a piece on the aging of presidents but what should concern most of you are the messianic comments of the readers as to why Big "O" will not age like previous presidents. I think his lifestyle of smoking and the stresses of the job will cause him to age more quickly than even he would have thought. But an orientation that included age enhanced photos of himself as well as pictures of previous Presidents, before and after serving, would have been worthwhile. Maybe he would have just said "this is too much to take and I respectfully tender my resignation. My health is more important than the job." Big "O" would do well to put the Blackberry down and get on the patch. Aging is a process but lifestyle and stress does accelerate it.


Thats my word! Please post yours!

Boycotting Barnes & Noble?

The beauty of the internet and the digital world is that we can get information at a moments notice. No longer are we confined to wait for the local nightly news to bring us what we need to know. With that, the dangerous side of the internet and the digital world is that we can get information at a moments notice. Erroneous or inflammatory information can be disseminated instantaneously. The current Barnes and Noble flap is what brings this to mind.

Below is a copy of an email that has been circulating and sent to my email inbox several times this week along with the picture of what the email is explaining. Some of you may have it already.

FW: Barnes & Noble - Racism???

Subject: Racism still exists obviously

Let us not be lulled into a sense of complacency, due to the recent political success of President Obama.

Racism still exists in this country. Like all things, nothing is perfect on this planet, in this world.

We have an obligation to be active on issues that simply cannot be ignored.

Along these lines we should all actively spread the word of how Barnes and Noble apparently feels about black people or at least our President.

Please forward this to as many people you think should be aware of this and would be offended by this.

Boycotting Barnes and Noble will show the economic effect of people who will not tolerate racism.

Barnes and Noble had this as their store front display in Coral Gables FL in the Miracle Mile Mall. I am totally disgusted and I think it is important that we all find a different place to buy our books. Obviously this is a place of extreme ignorance. How far have we really come? God bless.

Barnes & Noble does acknowledge that this event did occur, albeit not by their store staff but by a customer who was probably still upset over the election. I even go so far as to speculate that it was someone who got tired of the race baiting regarding the N.Y. Post editorial cartoon that depicted a dead monkey who had wrote the stimulus package. Barnes & Noble even expressed outrage over the character reference to the President. Liberals often have "knee-jerk" reactions to anything that "offends" them and often calls it racism. Racism can exist if you have been harmed by a "racist" act. So who was harmed by this display?

Many of the threads of emails that I received called for an immediate boycott of Barnes & Noble bookstores. "Knee-jerk" reaction. Please explain to me why Barnes & Noble should be penalized for something that they indicated was not of their doing and have issued an open apology for it. [Then why apologize? Because some of you will not let it go at all.] Please explain why any of the cashiers at the Barnes & Noble in Atlanta or any other city have to suffer because of something that occurred in Coral Gables, Florida.

How you ask? Let's say that the boycott is successful and it results in a 30% decline in total revenue for Barnes & Nobel as a company. Successful boycott you would say! Management's reaction is to pare down expenses to offset the resulting losses in sales. So the company starts to manage is biggest expense of operation; that is payroll. That is the human side of your supposed boycott. Now the company decides that it no longer needs to employee 45 people per store but will make do with only 25 - 30. So at max 15 people go to the unemployment lines and that is just the stores. But your boycott was successful. Now multiply that number by the 799 stores that Barnes & Noble operates plus add in the distribution centers and joila! Now you see the total human toll. The young worker that utilizes this job to pay his college tuition, the warehouse associate that feeds his family, the stock associate that supplements her income are now for the worse. But you were successful because of a book about monkeys.

In these "tough economic times" Barnes & Noble seems to performing well. You race baiters should do some thinking before sending email chains to your friends and relatives. Barnes & Noble just declared a quarterly cash dividend for it's stockholders, yet you seek to punish them. If you own 1000 shares of their stock you would see a $250 check coming your way by the end of March of this year. You may not own any Barnes & Noble stock outright but your 401K or mutual fund may as part of its mix. The Chairman of Barnes & Noble, Leonard Riggio, currently serves as the Finance Chairman of the Host Committee of the NAACP's Centenial Convention slated for New York City. His family is still helping to build homes for Hurricane Katrina victims (17,000 New Orleans evacuees are still living in hotels at taxpayer expense). If you want these things being done by this company to stop then go ahead with your boycott and I wish you all the best. By the way Barnes & Noble is not seeking any government bailout money and in my opinion tends to lean to the left for its political views. Conservative thought books are often hard to find and are not displayed as prominently as those of more liberal authors.

Barnes & Noble has not offended me and if the store associates were responsible for the display then I am still not offended because, I am not a Monkey neither is the President. Get over yourselves already. Every criticism of Obama is not racist.

That's my word! Post yours!