Evaluation of 1st Month of Bailout

End of the first month of the New Year. A brief evaluation of my “bailout plan” against the actuality. 

My prediction on the economy and the news cycle has been extremely accurate, no prize there, the news on the economy has been universally terrible. Job losses topping the news on a daily basis, actual GDP numbers dismal, with no good news in any direction. Perhaps one of the worst signs was when the respected Banking analyst Meredith Whitney proclamated in the FT, that her current forecast for the banking industry had been too optimistic. Yikes! 

There was one positive sign for the US, in “a its all relative segment”, the rest of the developed world’s economies ( based on GDP) will shrink around 3% whereas we in the US will only shrink 1.9% in 2009. So I guess we could Say it’s almost “twice as bad everywhere else!” 

I managed to obtain and get fired from 2 “low or no skill jobs”. Total hours worked, approx. 35 hours. Fired may be a strong word but I did have 2 jobs, now I have none.

My business surprisingly, did better numbers than I anticipated. I had very low expectations, but this was good news. 

I also managed to overly aggressively pursue some new business opportunities in what I would consider the consultancy arena. One was with the AIG subsidiary that operates the ski mountain, and one was with the Trapp Operation. While I know I may have come across aggressively I believe in the value of my concepts and ideas, I couldn’t sell them in these cases. AND that is always my fault! However the 2 individuals I dealt with I would characterize that one was incompetent and a product of large a corporate culture and the other a product of nepotism with no intellect. You can figure it out from there. 

News cycle and internet use. 

I’d give myself an F or a c-. Uh? Well it was still too much, but definitely not having access except when I had to make a physical effort did reduce my use. Improvement needed. 

The Stowe Derby.

 Training has begun in earnest. My V1 and V2 are improving, my time on skis needs to increase. I need to spend more time on x-country skis to increase my comfort level on the skinny skis. I’m also getting a decent jog in 4 or 5 times a week, some outdoors. So my physical fitness should be good for my “attack” on the Derby. 

Romance & The Alaskan.

 Managed to meet a few fabulous girls, K especially, a couple taken, had a brief interaction with the Alaskan, to what end I’m not sure, but I don’t have any control of that situation. 

Housing

The GCH ( Gingerbread Crack House) has been an eye opener. The landlord did ZERO to clean out the place, the tools and building materials that I moved to the mud room are all where I left them. The ladders for the roof are still where they left them, leaning against the front of the house.  80% of the time multiple pipes are frozen, and I have now experienced frozen broken pipes. The roof leaks through the walls in any sort of thaw. On top of that at any time the landlord may just show up. This is unacceptable.

Unexpected Joys

The folks around Stowe are interesting and refreshing. My morning coffee group are a stellar group, interesting and quirky. The other folk I’ve had the pleasure to interact with from the unskilled work folk, from the jobs I got fired from, have all contributed a new and refreshing change on my perspective.

The true prize on folks go to the various political operatives, from selectman, to state senators, to JP’s. And of course my newly found goal of becoming a fence viewer! I can also understand how they can get quite frustrated with interlopers who come up for the weekend.

 The Valley

 The Valley around Stowe is quite beautiful. I can understand how people do fall in love with the area. The vistas that open up from the surrounding hills show that large swath of snow covered fields, that give Stowe the real valley field. And yes you do feel insulated from the travails of the outside world.

 

Merrill and BofA - doesn't this smell funny?

I think someone’s getting robbed Blind.

 Merrill loses $15b in a quarter.

Merrill Pays out $15 b in Compensation down only 5.7% from the year earlier. ( uh? the company went broke and  total compensation is down only 5.7%???)

Merrill distributes Bonus’ 2 months earlier than normal and 3 days prior to closing with BofA

Because of Merrill the US Gov puts in $20 b additional into BofA for a $45b total since October 2008.

Not including guarantees on loans etc.

 WTF???? Surely even a moron finds this “troubling” What other industries pay any form of bonus in a prepackaged bankruptcy, let alone the early payout, let alone 3 days prior to close....etc etc...

 From Multiple Sources.

 According to a securities filing last week, Merrill's overall compensation and benefit expenses were down by 5.7%, to $15 billion in the year ended Dec. 26, from $15.9 billion a year earlier. The average Merrill employee got $247,423 in compensation and benefits in 2008, down just slightly from 2007.

Merrill had decided to pay bonuses in December ahead of their usual payout time in February, and just three days before the merger with Bank of America closed. What is more troubling is that the shell of a company had allocated a total comp pool for distribution that was $15 billion or just 6% lower than 2007. 

Merrill Lynch reported a $15.31 billion fourth-quarter loss, and Bank of America has warned its shareholders to brace for even bigger losses in coming quarters.

The government plans to transfer the $20 billion to Bank of America by the end of the day in exchange for preferred stock shares with an 8% dividend. That will bring the government’s total investment in BofA up to $45 billion dollars. The company received $15 billion in government funds in October and another $10 billion last Friday to assist with its takeover of Merrill Lynch.

The government will also guarantee $118 billion of Bank of America assets, including commercial and real estate holdings and credit default swaps. Bank of America will be required to absorb the first $10 billion of losses from its pool of assets, the “large majority” of which were assumed with the purchase of Merrill Lynch. BofA will cover just 10% of any losses incurred beyond that point, and the U.S. Federal Reserve and the Federal Deposit Insurance Co. will split what’s left of the tab.

Aussie Open 2009- Murray Out

The good news, Andy Murray knocked out of the Aussie Open. I’m not a fan of his, and I’m sick of the English papers touting him as the next bug thing. The weight of expectation is just too much, and frankly, Nadal, Federer, Djokovic and a slew of other players are just better…I like del Porto…big, tall guy with talent and a bunch of these other guys…Murray won’t ever win a Grand Slam!

Solstice bar watching Aussie Open

K, her mom and dad. 

So what is it that I’m meeting fabulous woman with there parents? Is this the new trend? You can just see the question posed…”so how did you two meet?” …”thru her folks”

 At Stowe Mountain Lodge sitting at the Solstice Bar Sunday afternoon, watching the Aussie open,( Federer down 2 sets to Byrdych comes back to pull out the victory) I’m enjoying a pleasant afternoon talking with a couple of interesting people from Mass, they got married at The Green Mountain Inn 2 years back almost to the day. They had to get on the road as they were driving back to Boston, we said our goodbyes and I was left with a European gentleman in his 70’s and a quite attractive blonde, 30’s, it happened to be Father and daughter. They were joined by her Mom. The 3 of us soon started conversation. He was Austrian, immigrated to Montreal in the 70’s and his ex- wife, ( 28 years ex) were entertaining their daughter up visiting from her home, lower East Side of NYC! She K, was blonde, attractive, funny & smart. Had lived in LA, NY and Montreal and was well traveled, and a graduate of Columbia Journalism. She was an on screen TV talent for A&E and had hosted a show a few years back that my ex-x-x was involved with. The xxxx ( yes, a while back but the 6 year relationship) had arranged a “Breakfast with the Arts” in the SVG back a few years and she was the on screen talent! She currently was working at Reuters but I got the impression that this is a temporary sojourn while she gets back into an on screen vehicle of her choosing. 

We talked tennis, the lack of sexiness in skiing, all lamenting the lack of après ski. Mr & mrs all thought skiing back in there day (the 70’s) was so much more fun  and exciting. We discussed Euro après ski, Austrian of course, and I found out in passing K’s skied Zeramtt among other places, proud of her après ski exploits till 5am. Her Mom asked if I was a good skier, I thought with intent to fix-up her daughter. I though K was single, her behavior, laughter, flirting and conversation led me along that path, she…in fact we were all having a great time… a BF apparently exists, but not in Stowe. Whoever he is, he’s not here in Stowe, and I don’t know if the folks would mind if she traded him in! I don’t think the absent BF skis.  

We arranged to meet for coffee at Jamies’ Monday at 9am. Lets see if that occurs, and if it does she and I are going skiing Tuesday, the forecast is pretty good …that’s my plan. Maybe head to Jay Peak. My expectation is that she’s a great skier…and if we get to the slopes, we’ll end up in the hot tub. 

They had to leave, and I ended up in  a brief conversation with Josh, who was sitting next to me. He thought that the K and I were out with her folks. He’d been listening to our conversation and he definitely confirmed all the signals I’d received from K.

 

 

NFL at the Whip

Next to me at the bar this late afternoon…kevin, who I soon find out is a NE patriots Defensive tackle, ( or something like that) he and his girlfriend were up here for the weekend, staying at the Spruce lodge, snowboarding today, spa-ing later, and sleeping by 10pm. he’s a great guy, funny, intelligent and a great listener. I suggested watching some rugby youtube moments, Jonah Lomu specifically, and I know he’ll watch them. His girlfriend was equally funny, quite gorgeous and beautifully dressed. Vermonters take note. I wish him the best in his career and life, I believe he’s sort of earned it. I think he’ll contribute to life in a bunch of ways.

 

We talked about Cardio workouts and athleticism.,  

Disgusting Abuse by Merrill Lynch exec John Thain

Memo to the banking/ Brokerage industry you are in a prepackaged bankruptcy. Collectively you are broke. The only reason that you are still in existence is because the US Government will not allow you to go under. The US Financial system can not be allowed to go bankrupt, is the edict from the US Government. Respected analyst Meredith Whitney’s view in the FT on Tuesday summed it up eloquently and succinctly when she said the only reason that US bank stocks are not at ZERO is because the US government will bail them out all the way. 

She wrote “I am more bearish today than I have been in the past 18 months. In so far as the market has impacted on the economy, capital destruction has been so intense that multi-trillions in capital raised by institutions through both private and public capital has gone to plug holes and not stabilise the effects of shrinking liquidity to corporations and consumers. More than $3,000bn (€2,365bn, £1,955bn) of available credit has been expunged from the markets and therefore corporate and consumer borrowers so far this year.”

This makes the actions of this past week at Merrill Lynch even more distasteful. The Merrill lynch bonus’s  paid out, CEO Thain’s ridiculous $ 1.2m decorating binge, and then his drivers $230,000 expense just shows the lunacy & misplaced sense of self that revolves around wall Street. As CEO he is responsible for managing revenues and Expenses. Surely even as big an idiot as this should realize that means counting paperclips, managing the Telephone expenses, T&E, and more importantly absolutely spurious expenses like office décor.

Any fool should know that these actions are just plain wrong. Where is this guy’s sense of the simplest idea of right and wrong? You don’t need to learn this in business school, its something that’s ingrained in every well adjusted adult. Isn’t it? What exactly does a Wall St CEO do at the moment? Surely “strategic direction” is surviving? Does he and his team look every day at cost containment? Doesn’t a bunch of smart people figure out every day how to cut expenses? Doesn’t he sit there and figure out how to make his company profitable every day by getting rid of the “fat” and making the organization “leaner”? Or is it just too difficult? Isn’t a “simple matter” of going thru every piece of crappie paper asset you have and figuring out what exactly its worth? I mean every piece? Every underlying toxic mortgage has some value, every CDS has some risk or reward? Every obligation on the books have some associated monetary value? 

Where do is accurate and timely accounting? If the latest information is true it would appear BofA was defrauded into the purchase of Merrill by parties that overstated the position of the company. Are accountants unable to un-fathom the complexity of the banks accounting systems. Off balance sheet companies, enron-esque entities all over the place. What is wrong? Lack of transparency? How can this be? (Well I was an auditor for a big 8 ( when there was 8) and I didn’t know anything. When you’ve got some big experienced CPA CFO telling you this is how we do it, don’t you think a greenhorn just minted CPA is going to cave?) 

The justification for this daupinesque lifestyles and the supposed immunity from the realities are insane. All Thain needs for an office is a friggn sheet of plywood for his Bloomberg, a high speed internet connection and a Herman Miller chair. Total a couple of grand. Anything other than that does not justify what should be a period of total austerity and complete cost control. 

The bonus, surely comes out of the bonus pool. Pool means we share. Total availability for pool is LESS than ZERO. It is unconscionable to pay bonus’ at all. If the company can’t afford to pay them & employees feel unappreciated let the guys walk. That’s free enterprise. The fact that Merrill paid bonus prior to the completion of the merger is surely malfeasance. Merrill should be bigger than anyone individual, or several. Shareholders and stake holders, that means the taxpayers and the Government as stewards of “OUR” stake should revolt. 

It is absolutely unconscionable for Thain to spend this money. It is unconscionable for him to approve these bonus’. The compensation committee should be hauled in front of congress and the court of public opinion. Who is on the compensation committee. And how was this decision made? I want to know. 

These bonus should be pulled back, the compensation committee fired, and if possible charges of conspiracy, larceny, RICO statutes whatever can be bought should be. And no manner of slap on the wrists should be acceptable. 

Fence Viewer

Today at the suggestion of Charlie the Justice of the Peace I went to the Municipal hall to apply to become a Fence Viewer, speak to Susan he said.

What pray tell is a fence viewer? According to wikipedia or some other internet site…

“A Fence Viewer is a town or city official who administers fence laws by inspecting new fence and settlement of disputes arising from trespass by livestock that have escaped enclosure. The office of Fence Viewer is one of the oldest appointments in Vermont.”

Perfect it’s all about livestock! I am eminently qualified.

I meet with Susan and much to my disappointment there’s no official form to fill in. There is no stipend. Then I find out that Susan is a fence Viewer so I wonder if she’s holding out on me to protect her position?

The Fence Viewers are appointed by the towns selectmen, therefore a strategy of serious sucking up is in order. The appointment is at the end of April. I must start my campaign.