Sunday, March 29, 2009

Blame the victim

Journalist Ruben Navarrette Jr. In a article on the CNN website wrote about talking to a Las Vegas Nevada construction worker who was complaining about illegal workers driving down wages. Mr. Navarrette opined “And of course, he never thought to look in the mirror and blame himself for not taking steps to improve his skills in the last 20 years. Maybe he could have gone into a different line of work long ago. He decided not to. I suppose illegal immigrants were to blame for that, too.”

I for one am sick and tired of the top 28% of the country blaming the bottom 72% for not being as smart as the top 28%.

Say what?

According to the US Census bureau 28% of the US population has a college degree and if you believe the college entrance exams, they are the “smartest” of each year’s high school graduating classes. So now a construction worker who didn’t get a degree is being blamed for not being born as smart as the author. When I googled his name I found out that Mr. Navarrette has two (2) degrees from Harvard. That puts him in some small percentage of that top 28%.

Now I’m sure Mr. Navarrette worked hard for his degree, but three quarters of the population can’t match his performance. If they could, we wouldn’t have entrance exams, anyone who wanted to could just sign up and attend college. The exams are used to limit who can attend college to the people that the school expects can actually do the work and learn the material. I’m sure that some percentage of people who don’t get good enough scores on the college entrance exams just goofed off and didn’t study, but the majority did the best they could and still couldn’t make the cut.

Like the construction worker who is the subject of the article, they went on and got the jobs that they could and made the best of their talents and abilities. Along comes this writer in the top 1/4 and blames the construction worker for circumstances beyond his control.

Chaps my hide!

Tuesday, March 24, 2009

Just a little common sense

I’ve been watching the growing mortgage crisis with awe and admiration for the consummate stupidity of the entire banking industry. If that sounds harsh, look at what they are doing.

People who were paying their mortgage on time until the adjustable rate mortgage (ARM) adjusted up now can’t pay. So rather than adjust it back, they foreclose and loose even more money by selling the house at a huge discount.

As job loss grows, the number of home owners who had been paying their mortgage and now need a quick fix can’t get bankers to work with them. All they need is a one or two or three month mortgage holiday. So allow them to skip the payment for a month or three and add those payments on the end so it’s not a 20 or 30 year mortgage, it’s a 20 or 30 year plus the extra one, two, or three month’s payments that were missed. The lender misses a very small amount of interest but they don’t have to foreclose.

How about a home owner who gets fired and takes a lower paying job because that’s all they can find? Better to cut the interest (the biggest part of your monthly payment) and keep the loan active than allow it into foreclosure.

There is an old saying - “When you are in a hole, stop digging”.

When the banks add late fees and demand an interest payment to “skip” a payment, they are digging the hole deeper and making it that much more likely that the loan will default!

Any banker that can’t see taking a $1,000 paper loss in fees or interest is so much better than taking back a house mortgaged at $250,000 and selling it at a foreclosure auction for $150,000 is a bad idea shouldn’t be allowed to walk around with out adult supervision.

Making money is better than loosing money, but when the choice is between loosing $100,000 at a foreclosure sale and loosing $1,000 in lost interest payments which would you pick?

And, are you sure that you want to trust your savings account to a banker that thinks foreclosure is better than a small loss to work out a way for the owner to keep paying?

Saturday, March 21, 2009

More euphemisms to hide the truth

In September of 2007 I wrote a blog post titled “Call it what it is” about euphemisms.

The latest word game is the use of “laid off” for fired. Traditionally you are considered laid off only when the company really intends to bring you back when business picks up. During the annual model change over shut downs at the automakers, the workers are laid off for a couple of weeks while the factories are retooled for the next year’s models. The company and the workers both understand that the workers will be back at work once the change over is completed.

Does anyone really expect the workers now loosing their jobs to be rehired within a few weeks" A month? Six months? Next year?

If recalling those workers is not part of your business plan when you let them go, their not laid off, they’re fired! At least have the honesty and integrity to tell the truth and not play word games.

Monday, March 16, 2009

Global or national?

One problem with the United States government’s response to the “global economic crisis” is their focus on the word “global”.

In an episode of the TV show West Wing, one of the characters asked the president “Why is an American solder’s life worth more than a ...” and inserted the name of the fictional country they were talking about. By the end of the episode the president answered, “It’s not”.

While that may appeal to our sense of honor, it misses the point. The President of the United States was not elected to preserve and protect the lives of what ever country is under discussion, he was elected to preserve and protect the lives of Americans!

We did not elect our President, our Senators, or our Representatives to support the global economy. We did elect them to take care of the citizens of the United States of America.

Events have proven that they worried so much about the impact of their decisions on “global” markets that the forgot the impact of their decisions on their own citizens.

Monday, March 9, 2009

"Mister" or President

I have CNN on in the background as I write this and just heard yet another aone of their reports refer to the President of the United States as “Mister”.

Simple courtesy demands that reporters use the correct honorific - President!

Calling the President mister seems somehow disrespectful. You may not like him and you may not like his policies, but he is the President and deserves to be addressed by and referred to by his title.

Perhaps it’s just the casual times we live in but it leaves me with the impression that it’s an attempt by the reporter to inject their personal political agenda into a news story.

Tuesday, March 3, 2009

The truth about compensation.

The US congress is talking about limiting compensation for Wall Street managers. By all reports the financial community thinks this is a bad idea and will be counter productive since the managers get large bonuses for creating profit.

A great idea if they actually had created big profits!

Unfortunately those big profits that drove big bonuses were illusory. We know they were illusory because the companies that paid those bonuses for generating those big profits are the very companies with their hands out to the government. If they really had made big profits, they wouldn’t be begging for government bailouts.

The real problem is that the companies linked compensation to SHORT TERM results and this led to only looking at how big the sale was without regard to the long term quality of that sale.

If you want to share in the rewards for good times, simple honesty demands that you be equally willing to share in the costs of the bad times. Maybe the better way to structure bonuses would be like the commission on insurance policies. You get an upfront commission for the sale but the rest is paid as a residual for as long as the policy payments are continued.

Managers would get their bonus with some percentage up front and the bulk in relationship to each successive year’s profitability, so that if you make short sighted decisions you’re residual income is directly impacted. While the details might take some time to work out, it would force the decision makers consider both the short term gain and the long term cost.

Severance pay for top executives should be the same as anyone else in the company. If the janitor gets 2 weeks severance pay for every year they worked for the company, why shouldn’t the president? The senior executive of a bank might get $1,000,000 a year while the janitor might make $20,000 so if each worked for the company for 5 years the janitor gets $20,000 divided by 52 equals $385 times 5 or $1,923 severance pay. The senior executive gets $1,000,000 divided by 52 equals $19,230 times 5 or $496,153.

Before you bring up the argument that the senior executive is more valuable to the company and harder to replace than the janitor, remember that severance pay has nothing to do with relative value. Severance pay is supposed to be compensation for good and faithful service and both employees gave good and faithful service or they would have been fired for cause and be ineligible for severance pay.