• Obama’s Impossible Gordian Knot

Over 2300 years ago, birth was given to a myth which in time became a powerful metaphor that has served us well through the ages when addressing seemingly impossible or intricate challenges. Halfway through the current Obama Presidency we face a moment when reaching back for an ancient Greek analogy has become self evidently appropriate.

Legend tells us that Alexander The Great fulfilled a prophecy by bringing a creative solution to the Gordian Knot – he sliced the complex knot with his sword, thereby showing himself capable of thinking outside the box. Gordian, the mythological king of the Phrygians had tied his oxcart to a palace as an offering to Zeus, and an oracle had foretold that whoever untied the knot would conquer Asia. Although he died at the young age of 31, Alexander’s conquest of a continent started with a bold decision.

History has provided ample debate on the event of Alexander’s controversial “solution,” and whether it was actually any solution at all, however, Alexander’s omen, has remained a favorite metaphor.

The present moment in history finds a society struggling with overwhelming unemployment, as well as a worrisome personal and national level of debt. Productive employment is critical to sustenance of a vibrant society, and it is through that employment that the costs of all of society’s “structural and functioning” needs get paid. A majority of Americans also understand that it is business and industry, large and small, that create employment, and the basis for all other employment. Without such employment, government doesn’t get paid. While this should be abundantly obvious, the American taxpayer is being led by an Administration that seems not to understand.

America went to the poles during the midterm elections and emphatically voiced its displeasure with the way the Administration and Congress were treating its most serious and urgent concerns. America is looking for leadership capable of making bold decisions.

This week, Obama is facing his archetypal Gordian Knot, IMHO. The current debate over the maintenance of the Bush tax cut has been worthwhile, and pushes economic discussion to the fore, which serves to educate. The solution to America’s economic woes however, does not rest with an extension of the Bush tax cut. The solution rests in the aggressive stimulation of job creation, and leadership that will-not-sleep-until unemployment numbers have been halved.

On Wednesday we were treated to novel expressions from an American President such as this one uttered by Obama to 20 CEOs in a session held yesterday with the Administration, “I want to dispel any notion we want to inhibit your success.”

The fact that his grammar is questionable matters less than the fact that he would have to say anything remotely close to an attempt at denying he has and will continue to “inhibit” the success of all businesses. His actions precede him, so his words appear to come from a distant corner of the twilight zone. It is not in his DNA to either stimulate economic growth, or care what the fat cats (his own rhetoric) of corporate America need to see from their government in Washington. He does not understand, and cannot understand.

The MSM is even posting articles about “détente” between this Administration and business. Détente? As in, “he’s at war?” Who would have thought this concept remotely possible in twenty first century America? In the middle of an extended recession, who would have expected a question posed to a sitting President such as the one asked by CNBC’s John Harwood, “Mr. President, can you repair your relationship with business?”

Pretend all he wants at “dispelling,” Obama is incapable of providing a solution to his Gordian Knot, because he does not comprehend the most significant problem facing the country over which he presides.

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• More Erratic Economic Notions From Obama

After almost two years of demonizing corporate America, holding a “boot to its neck,” and doing nothing for small businesses, Obama suddenly pretends to reverse himself with a “corporate tax break.” This is political pandering, and at odds with what is required to set employment trends on an upward path.

In between teleprompter stopovers and golf games, Obama comes up with helter-skelter strategies aboard Air Force One that serve little but confuse the country he was elected to lead. Obama’s new one-year tax relief on capital investment looks like a stroke of genius in his mirror. Does he know that companies, from the local bakery to the coalmine, actually have plans - long term and mid term action plans? Evidently not. Your local dress shop spends more time on “planning” than this President. I also suspect that the owner of that dress shop spends less time holidaying, and more time struggling to keep the business afloat. The “I will not rest until . . .” incantations from the Oval Office not only ring hollow, they are overt lies.

This Administration’s disconnected actions assert that no cohesive economic plan is in the offing. Prolonged uncertainty will continue to limit hiring and minimize commitment to long-term capital expenditures. Only a very few large corporations with plans already on the books to expand capacity will take advantage of this temporarily accelerated tax break. This plan enables an acceleration of depreciation allowances which businesses would deduct over time, as such implementations fit into corporate long-term plans. It should be pointed out to this Administration that all companies develop and implement strategies which include capital expenditures constructed from outlooks on such elements as market expansion, market penetration, competition and product demand. Corporations set budgets that include major spending, years ahead of time.

Perhaps Obama has also not checked interest rates lately. If a successful company needs money to expand, its interest costs are minimal, and it will be able to deduct its capital expenditures over time. On the other hand if the company is feeling strain it won’t get the credit very easily. Either way, before getting a tax break, companies have to have decided on the expenditures, and acted on them – you have to spend before you can claim. This Obama tax credit will have little real impact on corporate America. When there is uncertainty, companies retrench, and hold tight. Only a fool of a CEO would run out and build a plant that wasn’t in the works just because of the sudden and temporary appearance of an accelerated tax break. Government should not insinuate itself into the efficiency with which corporations allocate their resources.

This stroke of genius will accomplish nothing for Middle America and the unemployment ranks. Evidently no one around this President has managed a large corporation, and he is ignoring any useful advice if he’s getting any. This announcement might be more palatable if it was one minor element in a broader strategy to inject confidence, stimulating businesses to action, particularly smaller businesses. Much like the Clunker For Cash program, this temporary manipulation of the tax code is a desperate political Hail Mary with no regenerative effect. It is also a manipulation that dares Republicans in Congress to react negatively to a “pro-business” pretense.

The President could announce something meaningful like restructuring the corporate tax code to drastically simplify the process for all businesses, thereby reducing their headaches and costs.

Obama’s other sudden stroke of brilliance, the Research Tax Credit, is a non-starter for the simple reason that the American economy will only get going again when small to medium sized businesses start hiring. If this sector of the economy isn’t with you, nothing is happening. As for the large corporations, they will not suddenly spend some “research” money that they aren’t already spending, just because there’s a tax break on the table. If that were true, any CEO making that decision should be fired for incompetence and poor planning. Small to medium sized businesses are the engines of a successful and stable Middle America. Those businesses don’t spend much on research. They find a need and they fill it. This $100 billion tax announcement panders to the education industry, and does little for the business environment where it counts. What it creates is a cash-bag whose contents will be dished out in allotments proportional to the political affiliation of the recipients. What a surprise.

Obama’s $50 billion stimulus package announced this week for roads and runways will be similarly designated in political vote-purchase-bundles which will create temporary employment, but create nothing for the long term. This could be momentarily seen in positive light, if it was capital invested from surplus funds. Such billions created out of intolerable debt is another toxic tin can being kicked down the road for our grandchildren to feed out of. This is not part of a cohesive long-term plan that will increase national productivity. It smells more like a haphazard “throw stuff at the wall,” and “make noise about how many jobs we’ve created,” deficit spending bill looking for Congressional approval. Obama may be deaf to his electorate, but Congress is getting the message, and we can predict this will not get passed even through the back door.

While the President is stomping and performing in the grand and absurd political theatre of the campaign trail, shouting about his opposition “talking about him like a dog,” or making strange comments about “blue skies,” and “fish in the sea,” (what audience does this appeal to?) Obama should ponder the structure of a firm policy statement to immediately table major cuts in government spending.

This, above any other announcement he might make, would inject renewed vigor, and confidence into the National landscape.

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• Tiger Woods – The Hazards Of Assumptions

The floodgates on Tiger Woods news opened and cannot be closed, as he remains the biggest story in all media. Notoriety and cash seeking alleged girlfriends surface by the hour, and rare factual tidbits eek out, tantalizing our celebrity obsessions with a daily fix. Are we actually learning anything from the circus that has become Tiger’s life?

To fuel the frenzy, as if that was needed, Associated Press assigned Woods the title of Athlete Of The Decade. This may simply be an attempt to confuse us at to what constitutes either a “sport,” or an “athlete.” Did Lance Armstrong, Roger Federer, Ronaldinho and Michael Schumacher not demonstrate enough dominance in their “game,” or sufficient superiority of character? Probably, but this isn’t about athleticism.

Woods has dominated Golf, and that undeniable fact has brought him acclaim which in turn has imposed the weight of $100 million in annual endorsements onto his life. The current meaning of endorsement is, “pretend you like our products so that those who idolize you will believe you enough to buy them. Your brilliance on the golf course means you are an upstanding, honorable and respected character. Your word is gold.” Well-crafted endorsements are swarmed by expectations, and tinged by assumptions.

The public assumes that if you are supremely great on the golf course, you must also be gifted with other assets such as intelligence, grace, maybe even a little common sense. No chance that you might be narcissistic or self absorbed, and no chance that you believe your own press. Yet, your biggest challenge is your own ego. It is that Achilles heel that will be exploited by your handlers. Whether or not this is Tiger’s problem, his current state of affairs suggests that he should be more attentive to his hired help. Some of his handlers may not be in his camp and more than a few might truly not wish him well. It doesn’t take a genius to predict that the public will soon be pandered with the required dose of apologetic “addiction” treatment, and sorrowful wistfulness of divorce proceedings as we witness “damage” control. His family, his children, don’t deserve the kind of exposure they will have to endure as they prevail over their uncertain emotional road ahead.

So where does that leave his sponsors? Unfortunately, what we have so far witnessed is not terribly encouraging. Knight, of Nike, has said, "When his career is over, you'll look back on these indiscretions as a minor blip, but the media is making a big deal out of it right now." This is not what anyone should expect from the head of major company. No need to analyze the inanity of this perception since there is little ambiguity in the obvious.

We cannot assume that because someone is the CEO of a company, that the position automatically imbues the occupant with wisdom, principles, ethics, or morals. We can hope, but that would be foolish. The insecure egos running some of our Wall Street financial institutions are currently providing ample evidence that such assumptions can be misplaced – and therein lies a lesson on making assumptions about power, wealth and celebrity.

We are also being reminded that we are in charge of our perceptions. We are in control of what we accept, or normalize as appropriate behavior. While we may not be in absolute control of the appropriateness of everything our children are exposed to, we have influence on what we embrace as the mores that will colonize our own lives and theirs.

Regardless what our mainstream media, or the corporate landscape has decided “sells,” wealth and celebrity are not anointments of “right.” The implosion of Tiger’s familial career reminds us that we should be very discriminate in the broader conditioning to which we accede on our percepts. We should unambiguously guard the nature and the influences that we affirm on behaviors – ours and those of our children. The Nikes and Tigers we venerate cannot do that for us.

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• Obama’s Not So Private Economic Conundrum

Having effectively been elected by a population believing in his redistribution of wealth promises, Obama has leaped into the fray of a game in which he has no experience. He arrived with an ideology, and seems to have learned little about the recession facing the Nation. Still he charges ahead. Along with millions of fawning supporters, Wall Street is quietly cheering and encouraging the moves of a neophyte CEO. You would too, if you controlled the game.

Many pundits and most of the mainstream media have intellectualized a rationality for the President’s actions with an unconvincing, “he’s a smart guy, he knows what he’s doing” or the very successful assignation, “the mess is Bush’s fault.” Others who once supported him now have stepped back a little with an abundance of “time will tell, give him some time,” brace-yourself sentiments. The American voters re-elected Bush to a rare second term, so this blames the voters, but more critically it is a disingenuous condemnation.

The anti-capitalism wave that swept the nation and elected Obama was a reaction to the financial sector’s abuse of influence and power. Within the reach of a compliant and not so watchful Congress, some players took absurd risks across the banking spectrum, breaking all rules of reasonable lending practices and leveraging. As Obama continues the out of control bailout of the financial services industry program Bush started, the problem America has faced for the past decade and continues to be saddled with, is the dearth of knowledge on the part of its President pertaining to its most critical challenge.

Any CEO who is perplexed when facing a balance sheet is incapable of effectively managing a large corporation, particularly one passing through a very turbulent and economically treacherous period. In such times, having in place an independent and objective Board of Directors is imperative, even if the CEO is aware. In the President’s case, Congress is expected to act as a balanced and diligent chamber, not an anesthetized rubber-stamping convocation. Both Republican and Democrats in Congress can take blame for having succumbed to the seduction of money, which led them to ignore the bubbles (housing and financial) that have imploded with worldwide ramifications. Congressionally mandated liberal (read: Standardless) mortgage qualifications, coupled with Greenspan’s loose money policies were the fuel that energized the bubbles. Bush was not responsible for the financial meltdown, and neither is Obama, although both can be accused of complacency. However, …

When the markets caved, Bush was in over his head facing challenges he did not understand, and he handed the hot potato to Paulson. Apparently Bush believed that a fox is the only one who has experience with chickens, and is therefore their inevitable overseer. It was evident that Bush had already vacated the White House premises mentally, and was running south for cover, hoping Obama would take over the reigns even before his time. In came Obama, with no more intimate knowledge, perhaps less, of the economic landscape and Wall Street than his predecessor. What did he do? Installed Paulson’s buddy and protégé of sorts to continue the good work of bailing out the financial community. Unfortunately for the taxpayers, Obama will continue to do whatever he is told to do.

At least Bush didn’t pretend he knew what he was doing. Obama’s ego on the other hand refuses to allow for such leak of doubt even in his private moments with the mirror. He is confident, and believes that he is intelligent, but the arrogance is leading him, and the Nation, overzealously into trouble. Problem is, the nation will pay for his ego and his lack of analysis or interest in educating himself.

As I’ve suggested previously he should shut the door of the Oval Office for a month, stay off Air Force One, and get a concentrated dose of education on the biggest challenges. He won’t. If America’s financial house is in order, every other challenge facing the country will be more easily remedied. It deserves his attention and intimate understanding of subtleties. A few phone calls will roundup all the teaching talent he can use. The objective is not to transform him into an economist. That would be just as disastrous. The goal it to get the CEO to become aware of what he doesn’t know, and get a grasp on some right questions to ask those that he has delegated authority to.

The U.S. Treasury and The Fed deserve his attention though they don’t want it. Who wants meddling when you’ve got yourself a key to the vault? They are happy to work with someone who doesn’t know enough to probe effectively with relevant examinations. They have been content for over a generation with residents of the White House who did not know what they didn’t know. Their jobs were made so much easier. Clinton might be the only President in recent memory who might have come close to being analytical and inquisitive. Have we so soon forgotten Allan Greenspan’s endless tenure and obscure meanderings who propelled the money markets over the edge? Why has Geithner’s failed role at the New York Fed garnered him ultimate power in the new Administration? Simple. His boss doesn’t know any different.

The occasionally heard rationalization, “we need those who brought us this mess to help clean it up,” is actually touted as if it made sense. … Not to American taxpayers, it doesn’t. With the bobbing head of the President, those who manipulated the fashioning of the worldwide recession are now tapping into the taxpayer pockets with schemes that will eventually surface, but to no avail. There will be no repercussions because there is no elected official who knows enough to dig, or has competence enough to conduct even superfluous due diligence.

When, for example, will taxpayers ever be apprized of the realities that will have allowed banks to market packaged toxic assets to funds, with the taxpayers, through the deft fingers of Geithner, guaranteeing the losses? ... The funds being pools of capital formed in partnership with Treasury where the taxpayer is fifty percent partner. Yes, you, the taxpayer will be a 50/50 partner, and that’s not good news because you are also the backstop on any losses incurred. Losses will represent much of the packages because we’re talking about mortgage loans that have been under water for some time and worse, these wondrous financial baskets include miasmal securities that were created by the geniuses running these now thrashed financial institutions. The outside independent fund “partners” have you to thank for their lack of risk. Don’t hold your breath waiting for transparency from Geithner. Geithner’s buddies will continue to be bailed, make billions, replenish their coffers, and taxpayers won’t know the hows, whens or whats. Ever. If you think you have a few bucks to invest, and want to get in on this action, good luck.

The big lie was that such radical measures were necessary if big lenders were ever going to lend again. Think about the absurdity of that statement. Your corner lemonade stand entrepreneur knows better than that. Oh, and the other sensible reason was that these giants of the financial world required their lost capital replenished. So, in go the taxpayers, threatened and squeezed into recapitalizing incompetent banks by overpaying for assets, … well, not assets so much as worthless toxic waste.

Thousands of banks across the country with solid financial statements could easily have been provided government backing to loosen some cash for loans, with deals and conditions pre-negotiated, etc., etc., etc., we could go on and on. The Geithners around him, by the way, could care less what Obama does with headaches like GM, Chrysler etc., so he plays pretend capitalist flexing his newfound CEO muscles, guided by an irresistible ideological need to change the rules of capitalism, another game far beyond his capacities and experience. He now seems to be an expert in the desires of the American public, which is apparently clamoring for electric automobiles, but is evidently doing it very silently.

The Administration’s bungling of the GM restructuring completely extinguished any possibilities of renegotiating the repressive union contracts that weighed heavily in the collapse of the auto industry. Obama’s support of unions, and his indulgence of their quid pro quo expectations will have detrimental effect on the taxpayer investment in GM. Obama is adding a whole new level of risk to investments – political risk. With GM and Chrysler as examples of overzealous government intrusion, and being very indicative of the overall climate in Washington, unionized companies and those encumbered with legacy liabilities, can expect to encounter serious difficulties raising capital in the foreseeable future. Unions have an important role to play in the economy, however, overstepping bounds of reason is detrimental to the “host.” The free market system needs oversight, however, Obama is taking the concept of oversight a little too personally, and his insinuation of government into the free market system is exceeding all constitutional expectations.

Meanwhile middle America awaits a positive outcome from its new President’s policies. It holds fervent hope that things will work out, and his wealth redistribution will magically trickle down to better jobs and higher incomes.

The money game and Wall Street are influenced by major players who never write tell-all books. There is no conspiracy, but there IS a game. Even Geithners are pawns in the game, but they play just the same. The vast independent pools of capital circling the globe, are directed by astute, quiet, effective and ruthless administrators. If you influenced the management of $500 billion and more, would you leave the investments to the vagaries and whims of markets? Would you risk the capital? Absolutely not. You would influence, and manage as much of the game as possible to achieve your objectives. You would do what you have to do to preserve capital first, and maximize returns second, to whatever extent possible, as would any mid sized, or small fund, or even minor investor.

As for Bushes and Obamas? They don’t know there is a game. Ideology is blinding, and with arrogance stirred in, the clustered aggregate, marketed and sold with masterful dexterity, will be detrimental to a whole nation’s economic well-being.

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• FBI’ Shifts – Counter-terrorism To Anti-Fraud

As the economy’s meltdown confuses politicians and economists, and stresses businesses and wage earners, the FBI has suddenly discovered a new path to career advancement. It has announced open season on the financial community with 530 corporate fraud investigations.

The FBI also claimed that 38 of these new investigations involve some of the biggest names on Wall Street, and that it has a record 1,800 investigations digging into mortgage fraud. Mortgage industry professionals, including the CEOs of companies, brokers, and lawyers are apparently being scrutinized for their roles in the evaporation of hundred of millions of dollars.

Some of the disappearance is related to the $700 billion Troubled Asset Relief Program’s cash distribution already dispensed. No-one was watching. What can really be expected for the stimulus money Obama and Congress will shortly be disposing of? Neil Barofsky, the special inspector general of the TARP program put it rather aptly, “History teaches us that an outlay of such money in such a short period of time will inevitably draw those seeking to profit criminally.” This is evidently a behavior newly discovered amongst these so-called pages of history. We can assume that anyone of the millions of taxpayers who are being asked to go into massive debt, could easily have lent a more watchful eye over the apportionment of cash than the amateurish efforts which the Administration and Congress have provided.

All of this, of course, is intended to allay, even anesthetize the public fears that its precious cash is, and will be, judiciously dispensed throughout the attempt to stimulate the economy. Taxpayers must be convinced that the trillions that will be borrowed on their behalf to bailout failing or troubled businesses, are in good hands. Every tactic, including fear and panic, is being applied to convince America that this unprecedented borrowing is justified, and execution of the cash distribution will be diligently overseen by government agencies. Taxpayers must also be persuaded that government intrusion in corporate America will, in time, have positive affect. How else can the emergence of future Madoffs be prevented? Shifting public consciousness is a slow multi-level, multi-dimensional process.

We can rest assured that the FBI investigation, along with an allegedly revived SEC, will not delve too deeply into any affairs of financially healthy friends of the Administration or Congress. Future results will be consistent with past inaction on abuses perpetrated by former executives of organizations such Fannie Mae and Freddie Mac. Where was the SEC’s oversight during the past few months or the past year? Where is it now?

America can look forward to being entertained by in-depth coverage of occasional culprits assembled into the coral constructed specifically for scapegoats. Sure, they will be guilty, and mountains of evidence will be collected then disgorged on their heads with flamboyance in the public square, but they will be bit players in the game. The new FBI initiative is another tool in the arsenal prescribed for taking the taxpayer’s eye off the ball. Fraudsters should be punished. All fraudsters, including the ones at the top of any fraudulent food-chain, even those whose cosy relationships provide insulation from prosecution. Delivering otherwise is repeating tired myths, and is a prolonging of past disrespect of taxpayers.

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• Obama’s Salary Cap Red Herring

In effort to appear attentive and accommodating to the crowd’s discontent, Obama has made a big deal of announcing an executive salary cap policy targeting financial institutions that receive exceptional government assistance. Then, the cap will spread.

Obama has every right to claim, “I will not tolerate it as president,” referring to abnormally high compensation during an economic crisis. This restriction will not affect past beggar recipients of taxpayer cash, but will impact future negotiated bailouts.

Why would I dare presume to call this, “a red herring,” when on the surface it seems to be a reasonable expectation?

Obama has been provided a perfect straw-man that presents him an opportunity for demonstration of righteous indignation, effectively used to inject government tentacles into corporate America, and to leverage the passing of an enormous and costly stimulus-bailout package. The stupidity of a few executives running failing companies has put executive pay into play. It has provided the fuel needed for a power-play by the White House and Congress to insinuate government into the Board Rooms of America. Obama could just as easily have made a statement, and required individual contracts to govern each bailout, affecting stipulations for each company. No such agreements will exist and the government is overstepping the bounds of reasonableness. This should be of concern to all, well, … other than to those dependent on government for income.

We all know Wall Street’s compensation is out of synch with common sense, but panicked reaction is absolutely not the right path to correcting the abuse. Exploitation of executive power has been the privy of the heads of Fortune 500 companies and has been exercised for years. It did not create the meltdown we are now enduring, but some corrective measures are needed to curb the excess in certain corners of the capitalist system’s underpinnings. Geithner, the Administration's favorite economist, is considering extension of salary caps to ALL U.S. companies. This, however, will not affect or control issuance of equity to compensate for lowered salaries. Obama has played to public outrage, but has ignored the rights of shareholders whose companies he is now sending the government to infringe on. There are specific actions he should have considered, or somebody in his crowd of experts should have thought of.

A year ago this post urged that consequential changes be made in Board Rooms and in CEO offices across the country. We also addressed a return to common sense on executive compensation and the elimination of stock options, … for good reason. A restructuring of the corporate body, and some of its processes, would be more advisable than government intervention such as Obama, Geithner, Pelosi and Barney Frank are demanding. They appear to lack basic understanding of corporate governance. They should be mandating a fix in the relationship between shareholders and management. There should be reconsideration of accountability – Management to the Board, and the Board to the Shareholders. There should also be an implementation of changes to Director elections. Shareholders should have very direct impact through affirmative votes on both Director election and compensation, as well as executive compensation. The current friends of the CEO, and pay-you-pay-me, style of Board compensation should be trashed, along with any determinations of government infringement.

There is a very uncomfortable incursion materializing into the foundation and fabric of the capitalist system by the White House and Congress. That intervention is misguided, and I suspect they are reading the electorate incorrectly. Red herrings get old quickly. The trend of this new Presidency, as short as it is, appears suddenly disturbing.

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• Should Bailout Beneficiaries Be Outsourcing Offshore?

Congress and the White House have left a moral dilemma for American taxpayers to resolve for themselves. Government has not shown diligence enough to install common sense agreements onto the multibillion dollar bailouts. Should recipients of taxpayer favors continue to send jobs offshore?

In the past year thousands of jobs, some very high paying jobs, have been eliminated across the country in companies receiving bailout money. The jobs have been terminated for U.S. workers, but they have reappeared in other countries. The benefactors? Hundreds of thousands in the Philippines and India, for example. These are beyond the usual consumer service and support types of jobs. These jobs are in research, bill payment and collection, credit analysis, and investment banking.

Why would Citigroup and Bank of America, among others, be gifted tens of billions by American taxpayers, without restrictions or conditions on use of the funds through contracts? Who is really handing out bailouts with no requests for the repatriation of jobs, where possible, such as all those jobs these companies outsourced? Are these stalwarts of American capitalism also receiving “bailout cash,” to swaddle their failures, from India and the Philippines perhaps? Not a chance. Why are senior corporate executives complaining about not being able to find necessary expertise when the competence was fired and replaced with talent on the far side of the globe? Any chance that this is rationalization by CEOs for the hiring of cheap labor?

Companies should be allowed freedom to manage as they see fit, …unless. When the Administration and Legislature decide to put taxpayers on the hook for trillions of dollars to bolster failing businesses, it is NOT right that those very same taxpayers be sent to the unemployment lines by those very same companies.

This lack of interest, ethics, humility, inquisitiveness, attention and duty by the Obama White House and the Pelosi Congress is confusing. Is no-one paying attention? Is leadership delinquent? Is pomp and circumstance the new prevailing flavor in Washington, overriding any expectation of thoroughness over such significant decisions? This leads one to become extremely suspect of the rush to implement stimulus packages. Nothing ever receives proper attention, or is ever effectively implemented behind the leadership of panic. This is not a welcome sign for the onerous road ahead. And don’t bother looking for any other signs pointing to creativity.

Of course, emerging markets have a right to continue flourishing, but this is not a debate on protectionism. This is a questioning of common sense. Taxpayers are not served well with the continuing export of jobs by the very companies they are sinking into debt for. Is the creation of JOBS not the principal objective of a "stimulus package?" It appears the navigators are too unfamiliar with the terrain, and diligence over the cordial doling out of billions is under the administration of extremely poor negotiators.

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• Disrespecting Taxpayers & Shareholders

As CEOs beg for Troubled Asset Relief Program (TARP) handouts, the new corporate mantra is, “maintain shareholder trust,” … sorry, make that the new corporate mantra is not, but should be, …”maintain shareholder trust.”

All Congress and White House promises of oversight on the bailouts don’t seem to apply to financial institutions. Bank of America received $45 billion from trusting taxpayers, and after its sloppily structured acquisitions of Merrill Lynch and Countrywide Financial, taxpayers watched helplessly as hundreds of millions were paid out in bonuses to the failed company executives. $2 billion went to the senior talent at Merrill for delivering $15 billion in losses for the last quarter. The excuse from B. of A., the 100 year old largest financial services company in the world, was that it couldn’t legally challenge the previously made promises for absurd payouts and bonuses to people who destroyed the companies they managed. Truth likely resides closer to lack of due diligence prior to the acquisition, and forgetting to impose much needed conditions upon closing.

How do The White House, Congress and B. of A. CEO Ken Lewis forget to make the cancellation of these extraordinary payouts part of the negotiation when the acquisitions of Merrill and Countrywide were being so brilliantly conceived? Now the Bank is looking for more bailout money from taxpayers. That’s after destroying one quarter of a trillion dollars in shareholder value. Why are taxpayers continuing to be so generous? Why are Obama and Congress not refusing to provide more money? Why are they not demanding removal of B. of A.’s Board of Directors and CEO? What has been perpetrated on taxpayers and shareholders is well beyond the bounds of abusive, and certainly not within the definition of “trust.”

Leaks of Merrill CEO John Thain spending over a million dollars to renovate his office pales compared to the $83 million he paid himself, before his company imploded, receiving $10 billion from taxpayers last October. Is anyone really paying attention? Handing out bailout money appears to be very easily done. Could it be dished out a little less sloppily perhaps?

The Citigroup version of abuse after receiving its $45 billion bailout from taxpayers includes a very visible $50 million executive jet. No flying coach for these managerial failures. Is there someone coaching these folks on effective PR? Now that the public distaste has become an impossible pill to swallow, Citigroup announces a decision not to take delivery of the plane. And this incompetence requires that it be paid millions in compensation so that it does not leave the fold for greener pastures? Who would hire these decision makers? Another bank adept at taxpayer and shareholder abuse?

Are Obama and Congress making good on their promises? It appears that such lack of interest is as extreme in disrespect of taxpayers and shareholders, as the extent of transparency, control and disclosure is lacking. Their response to the public outrage is disheartening and rather pathetic. What category of oversight does, “… (Citigroup) should not be spending its precious greenbacks on frivolous luxuries,” represent? Getting a Treasury Department official to ask Citigroup to rescind the decision after the furor became deafening was proof of incompetence in the execution of the duties to represent taxpayer interests. Should parameters for use of funds not have been decided on and agreed to before the cash bags were delivered?

Where in the rainbow of possibilities contained in the term, “accountability,” does the taxpayer-funded influence peddling of politicians by these companies, get such interpretation? Should taxpayers be grateful that B. of A. has decided to curtail its visible lobbying for bailout money? It will do so more privately from now on, and the rest of its lobbying activities will advance unabated. Politicians will continue to be influenced with taxpayer bailout money, but the manner of this manipulation will be much less embarrassing to taxpayers. Whatever partial non-lobbying the bank is not participating in, seems to be working. It’s expected to receive another traunch of TARP funds as its own exotic and toxic securities ferment into further billion dollar losses.

All of this has nothing to do with tightening regulations on the banking industry, though some is required. This is about setting in place firm agreements and conditions under which the hundreds of billions are to be accepted and spent on behalf of the taxpayers who will be on the hook for the money. This is about establishing a government agency that would, on behalf of taxpayers, become the guiding body watching over the complex intricacies of the whole financial system and its ability to create derivatives no one understands or analyses. This is also about showing respect for sweat that America’s broad middle class will endure to pay back all of this bailout money.

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• You’re Fired. Now, Where’s My Raise?

Today Microsoft announced a shaving of 5,000 jobs internally and a reduction of thousands of external jobs with its contractors or suppliers. This is rationalized by “economic conditions.” Did we read anything about wholesale compensation cutbacks? Not much.

This is not a condemnation of Microsoft, but a statement on Executive responsibility and attitude. Management in companies across this continent, particularly senior management, holds meetings on how and where to cut back roll calls, and diminish hard, non-discretionary costs weighing on the cash flow statements. The purpose of these thousands of meetings in fluorescence filled rooms is first, to save the most senior jobs, and second, to save the most senior jobs. Why? Because they can. Why? Because they’re more senior than the rest. If you are a senior executive in this economic climate you would have to commit evident fraud to get fired. The economy gives you all the rationalization for failure you will ever need, “It’s not my fault, and the economy sucks.”

None of these meetings are discussing the extermination of options from compensation packages. Starting with the CEO on down the layers of each corporate pyramid, each individual has been convinced that options are the way to riches. Middle and lower ranks dream of the day when they will get a taste. Wall Street pulled all of corporate America into its game. Brokerages influence companies through their prejudice of CEOs and Boards of Directors, and as well as through their control of the public trading markets of the companies these executives manage. Employee options are one key to that control. There are other schemes used to control CEOs, however, for the manipulation of the senior crowd, options are a perfect and very effective tool. Corporately, options can be argued to be effective in up-markets. The effectiveness argument looses fervency when options are under water, as is the case for many in the markets we are now experiencing. So why is no one arguing against them as an effective tool in the motivation arsenal? Options don’t work in a down turn. So why use them? DON’T.

Employees, including CEOs, should not be preoccupied with stock markets. Doing their jobs effectively will strengthen the company and that will, or should, satisfy shareholders. Forget the broker. This employee option business is a Wall Street subterfuge and everyone is familiar with the refrains that attempt to legitimize the practice. Any executive hiring a consultant who sings the “equity compensation” song to his board or to the shareholders, should be fired. Their rhyming couplet about, “aligning executive interest with shareholder interest,” is a fraud. Throw them out.

Middle America has been lulled into accepting that those at the top of the corporate food chain know something it doesn’t. Middle America has come to accept that the lofty layer of American capitalism somehow deserves hundreds of millions in annual compensation. The practice should be stopped and all shareholders should demand an end to it. The senior ladder of success should be compensated with salaries and bonuses structured around objectives intended on building the business. Objectives such as growth and profitability. You don’t need a complex algorithm to establish actuals against quotas for sales or margins that could be employed to dictate an employee’s compensation.

None of the above mentioned corporate meetings are having serious discussions on ethics, moral standards, sustaining the human community, or sustaining jobs through the recession by dramatic overall cuts in salaries and bonuses. Have any companies announced immediate 20% pay cuts to the top half of the employee spectrum? Is anyone making over $100,000 in total compensation getting chopped by 20%? Is anyone making over $250,000 getting a 25% haircut? As for anyone taking over $500,000, … hmm, OK, for you maybe we’ll, hang on, ... let’s talk about a loan back to the company, could we? You get the point. Implement major cut backs in salaries and bonuses, and save jobs. You can’t save all, but save as many as humanly possible. This will require an attitude shift in senior management.

Such a strategy would allow people to continue supporting their families, buy food, make car loan payments, and pay their rents or mortgages. I’m not suggesting that corporate America turn into Sally Ann, however, the whole economy needs creativity injected into its limbs if it is to by-pass a depression. Don’t keep positions that are not required or redundant, but most of the employees now being fired were hired for good reason. As markets shrink so too will payroll, but in these times of bailouts, the escalated compensations of senior staffs need revisiting. These senior levels must take compensation diet pills. Big ones. Such therapy can only be prescribed by those taking home the largest piece of the pie. All CEOs should make a visible and public effort to save the rank and file.

The economy does not need to read about any more cuts in work forces, as 3 million already lost their jobs last year, but it really needs to read that you, the CEOs, implemented drastic cuts in compensation. Even if you personally take one cut of $30,000 to save one job, that is a move in the right direction. Each company can do its part. The positive PR will do wonders for your frame of mind, for your company, and most importantly, you will be forever grateful. Really.

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• Cerberus Leveraging Billion Dollar Connections In Congress

It is agonizing to watch Congress publicly stumbling through its analysis and qualification of the auto industry, providing appearance that it is doing its homework on a bailout. Over 40% of Congress is made up of lawyers, with little grasp of finance, economics or business. Congress should not be negotiating the bailout.

Chrysler and Cerberus Capital Management are seeking an unholy bailout and Congress understandably struggles when Cerberus owned Chrysler CEO, Bob Nardelli, cannot explain why his bosses will not put up cash to bailout one of its many subsidiaries. Cerberus does not work that way, and it does not have to. Its political clout will do the heavy lifting on salvaging a failing investment.

Taxpayers won’t know any better since neither the current nor the incoming administrations will take oversight seriously and neither seems to understand Deal Structure. Unfortunately, neither will Congress which is simply lacking understanding of some critical components of business, wealth creation and negotiations. Certainly its actions suggest absence of such comprehension. American taxpayers have a particular interest in the outcome, and should be paying particular attention to the bailout, and to the Chrysler deal in particular.

In the shadows of enormous private equity investment firms lurk shareholders who remain anonymous, and who hire directors, senior staff and advisors who have political connections deep inside the private rooms of Washington decision makers (Congress & Administration), enriching the deals and enhancing ultimate financial returns. John Snow, the current Chairman of Cerberus and Bush’s former Secretary of the Treasury before Paulson, has apparently been earning his employer’s favor by lobbying directly, and through influential lobbyists at Treasury and elsewhere, for a Chrysler bailout.

The Cerberus investment of $7.4 billion in Chrysler is underwater. Their elimination of 30,000 jobs has not helped them or their former employees, so now Nardelli uses fear to energize congress into action. Most firms like Cerberus don’t acquire control of companies to turn them around, rebuild them and create wealth. They either acquire for position in an industry, then apply and leverage influence for strong ROI, or they pluck low lying fruit in the hope that political polishing and some finely tuned connections will enable a flip of the asset for a significant profit. Cerberus has for years had a nasty reputation on Wall Street as a fierce player and hard nosed negotiator, which is its right. Everything Congress is not. In this game of risk, connections and being ruthless make all the difference. In the Chrysler deal, these warm associations and substantial sphere of influence will bring access to taxpayer funds. Snow called his friend Paulson for the cash.

There may be media clamoring for transparency on the wealthy and secretive Cerberus, yet I feel this is an unwarranted forensic hunt for indeterminate ghosts. If Congress structured the deal properly, Cerberus and who owns it, how much it has, what companies it controls, all become irrelevant. Implementing a bailout program as delineated in this recent article on this post, would remove any Congressional concerns of the Cerberus share position, which would be drastically diluted to a minority in the event of any bailout cash injection. Unfettered, Cerberus could then slide back into the shadows, to await some future Congressional discomfort with its unnatural influence.

Should Chrysler take any money from the taxpayers, as it now appears it will, structure can be simple and effective as noted in the above referred-to article and “…take preferred share positions at the current market value for funds provided as and when the investments are made.” This, and other suggestions therein, such as clearing all Directors for the Boards, renders Cerberus shares inconsequential and provides taxpayer complete control over a company they will have funded, until all funds are repaid.

Congress, please pay attention. American taxpayers don’t need another blunder committed on their behalf.

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• CAPITALISM – A POLITICAL PUNCHING BAG

Capitalism is the heart of the American economic engine, and really the core the whole of American society, but capitalism regularly gets pummeled as a provenance of the nation’s moral disintegration. There are, of course, ample specimens selfishly pursuing purposes to the exclusion of other more lofty ideals, however, such are not the majority of individuals and businesses, which provide the sweat that builds a country. The elements in a society that blame the profit motive are those who leach from its successes directly or indirectly, either out of incapacity, laziness or from jealousy. Going after abusers of responsibility, including CEOs whose incomes vastly overreach their real value, or elected politicians who take bribes such as those who took cash from Fannie Mae, is necessary, just like jail terms are necessary for any criminal behavior in a society that seeks some level of security.

Capitalism and the business culture of all societies, it seems, are easy targets for the venting of frustrations that surface during financial crises, such as the current unstable state of affairs. It is abundantly obvious the general media has done its best to fuel these fires, while leaving the legislators to continue along their paths, unscathed, unrepentant, and unpunished. Defaming the business environment and disparaging corporate America may serve the campaign trail to the White House with moral bait for votes. It won’t serve the future well-being of American society, and its systems if such sentiments find their way through the legislative process stifling trade and asphyxiating the entrepreneurial spirit.

At stake is the freedom that was promised upon the founding of America. With all of its strength, America remains a fragile social experiment that requires, and will always require, care, attention and nurturing. While the current administration curtailed some of the assumed freedoms, the nation should not allow the political pendulum to swing so far in the other direction that a greater degradation of freedoms is instituted in plain sight while attention is being diverted to the “straw man” of corruption, the businessman or businesswoman, being pilloried.

Laws provide a country with ample guidelines that pertain to accepted behavior. Today we find ourselves with countries around the world rushing to seek new convoluted systems of “oversight and regulation” in efforts to reign-in capitalism. Some are even proposing the creation of international regulations and ruling bodies. Such efforts should instead focus on setting legal parameters establishing acceptable rules of conduct within America. Doing so, and setting severe punitive retribution for breaking the laws, as well as providing the courts with real teeth will minimize future abuse and corruption. Specific laws emanating from this economic debacle will retain the freedom required for a flourishing capitalistic system while protecting individual rights to pursue personal and corporate financial objectives. Global problem solving is impossible if your own house is not in order.

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• EDUCATION – THE DYNAMIC OF SOVEREIGNTY

The CEO of a large American corporation tells his Texan audience he can’t find employees educated enough to fill his ranks so he’s filling the void in India. That sounds very familiar, so … no really big deal. Didn’t you make a call yesterday on warrantee work for that new addition to your widget arsenal? You couldn’t recognize the accent but found out that you were talking to someone in the Philippines. Outsourcing has become commonplace as companies subcontract processes to reduce costs or divert the management of functions requiring competencies it did not hold internally. The current use of the term conjures up the procurement of services from another country, although the rarely used term offshoring provides a more authentic description. Either way, if you’re late on making any payments on that widget you won’t be talking to anyone from the Philippines or India, you’ll be explaining yourself to a individual skilled at making you squirm. Someone much more local.

Alright, so who cares? Everyone should.

North America’s larger corporations have been spreading the wealth. Recently hired employees in Jakarta are making a living, feeding themselves and their families. That’s a good thing. Of course, when you start aggregating manufacturing, design, servicing, telemarketing, market research, and engineering, the train heading out of town has a long tail. The complexities of the repercussions are deep and wide, however, the overwhelming signal the North American community should tune into is the statement this shift is making on education. Whether the corporate heads are rationalizing their decisions, and not really telling us that their plan is to use cheap labor, matters not. The objective is not to reverse the train, but to build new and better ones that remain closer to home. Only educated ingenuity will provide the energy.

The North American reality is that education has taken a back seat to almost every other significant sector requiring nourishment for the maintenance of a stable, free, successfully self sustaining and renewing sovereignty. Statistics in support of higher education abound, yet even the social trend leading State of California made peculiar decisions over the past twenty years to cut back educational funding. From Toronto to Texas, teachers purchase writing tools for their students. From Vancouver to Miami, the college and university doors of entry are shut tight to those who cannot, or will not, incur overwhelming debt to attend. So, no surprises on the current state of affairs. Offshoring we go.

We are each a member of the greater communities we inhabit. Commonalities provide us a belonging that unite us in purpose and in interest. While selfishness is a natural condition, awareness of our participation within the broader context reminds us to take heed. As a community succeeds and endures, so does the individual. Each generation wishes progress and greater success on the next. This can only be achieved if successive generations are more educated. Countries are living organisms whose life processes require amongst other viand, one of the most critical of all, education. Education imparts knowledge and stimulates exploration, leading to discoveries propelling greater achievements. Education can bring more to a country than self renewal, it can ignite a reach beyond the current moral, spiritual, scientific, artistic, cultural, or technological accomplishments and possibilities. Education provides a society with social and economic health, instilling mores and ethical values.

An educated population is a freer population in state of mind and more exigent in it’s social and political expectations. Through the industrial revolution, free public schooling was provided and a century ago high schools were built to meet the requirements of an evolving society.

A half century ago, secondary school education may have satisfactorily enabled a career and social cohesion. Today’s reality demands that all education should be provided to maximum capacity of individuals with conditions stimulating the pursuit with all roadblocks removed. With potentiality of perceptions raised a few degrees the current statistical trends on college and university attendance and graduation will be reversed. Once achieved, the example becomes the standard, flying in the breeze exporting this exhilaration of freedom through communication rather than armed insinuation. Universities and colleges are considerable engines fueling the economy. They should all be straining their capacities and enthusiastically expanding.

A wise American with a propensity for flying kites attached to keys, once wrote, “An investment in knowledge always pays the best interest.” Observing the wisdom, and applying it will quiet the expressions of regret and the excuses for offshoring.

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• LETTER TO CEOs OF FORTUNE 1000 COs

Dear Chief Executive Officers,

We, the shareholders of your companies, have held an extraordinary Internet meeting. We know that government oversight is burdensome, and is after all, an intrusion into affairs that you believe is none of its business. Apparently, it gives our free market the appearance of being somewhat un-capitalistic. At least, that is what your reports have suggested. But, never mind that, . . . it has been brought to our attention that you have been less than humble demonstrating questionable behavior while we were voting for the next American Idol and being mesmerized by CNN’s earnest coverage of something terribly important, . . . can’t remember quite what it was, but it was really important. OK, perhaps humble isn’t the right term, but you know what we mean? No? Come on now, you know what we’re talking about. It’s those absolutely astronomical, insane, through-the-roof-of-common-sense pay packages that you paid yourselves. The “perk” indiscretions are only slightly less annoying, but still, they emanate fumes we would rather not be exposed to. Having given the whole situation much thought we have elected to set some guidelines. Guilt can become very debilitating. Trust us on this. So, for your benefit, here are some rules. Please accept them as benediction favorable to your long-term good health and stress fee comportment.

• First a reminder: This company is not yours. It is ours. You are employees.

• The Directors didn’t do a very good job of keeping an eye on your activities, but then why would they? They’re all your friends and half of them are getting this letter anyway since they’re also CEOs.

• Effective immediately, you will no longer be Chairman. None of you. Nada. That’s it. Finished. We just feel that this business of “reporting to yourself” just isn’t right. We’re still trying to figure out when this objectionable conversion took place. It used to be that the Chairman was, THE CHAIRMAN, but slowly you sneaky guys changed the game and made all of yourselves, “Chairman, CEO.” No more. Do you remember Marshall McLuhan asking, “if the temperature of your bath rises one degree every ten minutes, how does the bather know when to scream?” That’s about what happened here. The change invaded all boardrooms and no one noticed. So we’re screaming now.

• You will not appoint anyone to the Board of Directors. We don’t care what you think. In fact, we hope you don’t particularly like them. We’ll decide who sits on what Board. Tell your friends to get lost. Your job is to manage the company.

• Your compensation package will be comprised of salary and bonus. That’s it. NO OPTIONS. The bonus will be directly related to corporate objectives. Long term objectives. Not what brokers demand. You don’t have any clue about the stock markets so take your eyes off the stock fluctuations and pay attention to doing your job. If the company does well over the long term, and pays attention to its customers, it will succeed and we’ll be satisfied. Please quit crowing every time your stock price goes up. You have nothing to do with its level. NOTHING. You don’t work for the company’s brokerage firm, you work for us. Stop answering its phone calls. They can get the news and announcements from the Board, . . . the NEW Board.

• Stop believing your own press and stick to your knitting. Do what you were hired for, ...managing the company and its employees.

• The new Board of Directors will be responsible for establishing your targets. Don’t meet the goals set, and you’re out of here. On your way out don’t expect any absurd ‘sweetheart deals’ from the Directors sending you off with golden parachutes, they'll no longer be your friends.

• Composition of the Boards and appointment of Board members will be based on the anticipated, expected, and demonstrated level of independence of the individual candidate as well as dimension of ethos. We will make sure all members are capable of reading a financial statement. Then of course, we will absolutely make sure they can understand them. Here we’ll also look for individuals with very discerning senses capable of detecting transgressions. If we can, we would really love to find the capacity of perceiving the fetid essence of arrogant illusions or chimera. OK, that’s a little over the top, but we’re trying to make a point. We have not been happy, so pay attention, we’re not done.

• No more “Poison Pills” strictly benefiting senior management. How this egregious strategy found its way into corporate America is another one of those aberrations implemented while we were languishing in our warming baths. If there is going to be any benefiting from a takeover, feigned or otherwise, ALL shareholders and employees will benefit, not just a few, and you’ve already read our note above on golden parachutes. That means no golden parachutes as part of any poison pill deal. In any case, if there’s a potential take over on the horizon, we want in on it.

• Please don’t let us catch you getting any more newly issued shares on the latest hot deals from the company’s Wall Street brokers. The company’s employees don’t get such bennies and we don't either, so from now on, neither will you. It’s the broker’s way of “hooking” you, you fools. How else could you have been so stupid as to purchase those companies that had no value . . . for billions? Particularly those new ones based offshore that the company's brokers had positioned themselves in. Two part-time engineers in their mothers’ basements could have achieved more for you. Just stop it. It’s unbecoming. And the rationalization, “well, everyone else is doing it,” sounds downright morally bankrupt. Plus, you’ll feel guilty one day. We want you to sleep well. Kick-backs are just indecent. OK, so they’re also illegal, but just because you’ve been getting away with taking them doesn’t make them right. Enough already. We’ll talk to the government flacks who let you get away with this later.

• Please stick to the facts and provide some truth in all your future management reports. We no longer need detailed accounts of your risk management exploits and the more flavorful ingredients of your regulatory compliance or your disciplined approach to effective management. Give us the facts and clearly stated strategies, with less smoke. Our lungs can’t take it anymore and we’d rather you leave the ambivalent dithering pronouncements to those with more waffling experience like the experts at the Federal Reserve.

• Now, about those undeclared offshore bank accounts under dummy companies some of you feel are absolutely essential. We know it’s been really convenient to access that extra cash when you’re on holidays, and it’s very handy when you need to provide a loan to a really dear friend, but no more. Do that when you retire. If you get caught, it doesn’t look good for us, plus it’s just illegal. We’ll talk to the brokers as well and make sure they don’t stack your private offshore company accounts with shares of companies of no relevance to us. Just pay your taxes and stop whining.

• Consider this notice that we will be looking for related-party transactions. Some of you think it clever to sell goods and services to our company, from your private company. Yes, we mean the one owned by your spouse. Those inflated prices you charge our company are grossly excessive, but that's not really the point here is it? The vague accounting practices on this need tightening up, and while we will not hod our breaths, until then we will be paying closer attention to all such transactions.

• We don’t want to hear any more tantrums about your needing a private jet. Particularly one you want personally as a gift because you work so hard. We hear the new Bombardier Jet travels at Mach 1. We don’t care. Learn to make more use of video conferencing. That gets you to Europe instantly. Much faster and so much more cost effective than Mach 1. Think of the gas you’re saving.

• You’re not moving the company headquarters offshore. Please don’t pretend that you want to be closer to your customers. Everyone understands how important it is to want be close to your own money. We realize the prying eyes of the IRS and other regulatory bodies is uncomfortable. But we are the shareholders and that is why we want headquarters to stay here, so NO moving vans.

• Consider this notice that we want you to demonstrate some ethics while managing the company. Treat all employees as human beings, as you would want to be treated. That includes those in foreign countries. If slave labor isn’t right here, it’s not right anywhere.

• While we’re dealing with ethics, could you pay attention to the pollution of water and air being unnaturally inflicted by corporate facilities and factories, here and abroad? Just a little. We’d feel so much better, and so would you.

• Show some decency and common sense, remembering where you live and the freedoms you enjoy, when treating with foreign governments, or foreign companies owned by foreign governments. Any of them. Placing your country at risk, or exposing trade secrets as some have done, particularly those technologies sensitive to your own country’s well being is, well, do we need to say it? Treacherous, and some have even called it, treasonous. By any other name this disloyalty stinks.

• Audit Committees will report to the newly independent Board of Directors. Not you. Sorry. This is just too personal. We have to take this one away from you, completely. It’s the price of no longer being Chairman AND CEO. And one more thing, NO Board Directors on the Audit Committee. Members will all be outsiders. Don’t ask why, that would be insulting to your intelligence. If good winds prevail and we’re extremely lucky, we’ll find a few Audit Committee members who will surprise us and actually be able to “smell” problems. Glory be that day. A member who can detect any delicate allusions of malfeasance and distinguish the subtle indiscretions, or discrepancies, insinuated ever so elegantly into the statements, well, that’s a real find. For that, we’ll pay even more than what you’re getting, . . . just kidding. Yes, we will make sure such capability also sits on the Board of Directors. Please ensure that any and all documentation provided to any outside accountants and auditors are also made available to the committee, . . . just because. All original Audit Committee reports will be provided to the Board of Directors first and management second. Why? Hmmm . . . let’s see, just because. Sounds strange? Excellent. Now listen up, one more thing.

• If something goes sideways on the path to candor we’ll accept the Audit Committee’s responsibility. Wrong again. No more passing the buck, tag you’re it.

• The recent demands made by the SEC requiring better disclosure on executive pay in proxy statements may have provided that distinguished and venerable body with a degree of self satisfaction and image polish. However, the requirement was and is, let’s be delicate here, moronic. It accomplishes NOTHING. This after-the-fact-reporting is intended to accomplish what exactly? Make you feel guilty for standing neck deep in green stuff?

• Please assume that any financial reports presented to the Board or issued to shareholders containing financial statements audited by one of the big four will be considered suspect. A few of us weren’t born yesterday and think that just maybe, an accounting firm that also does the audit, is well, let’s see, it’s exactly like a CEO reporting to let’s say, the CEO. What? Not funny? Exactly. We don’t trust them. We would rather have Uncle Bob do the books and have Auntie Irene run the audit. At least they’re not likely to risk the house on cooking something that leaves a trail of perplexing puzzles. Directors have been effectively bamboozled long enough. Size of these accounting auditors concentrated way too much power to the hands of too few. Pleadings to the contrary like, “we’re improving our methodology,” are just dumb. What also rubs us strange is that these guys also audit your brokers. An auditor should be just that. AN AUDITOR. Just suck it up. We expect some ethics and integrity, and we’ll do what we have to do to get it.

• Although it is too much to expect a cultural shift, though we’ll keep dreaming, we are prepared to give you some room for latitude on integrity. Oops. Not really, we’re just kidding.

• One more thing, did we already say that? . . . For those CEO’s of the companies you originally founded. We don’t care about that either. The bad news is, you’re now an employee, not an entrepreneur. The good news is, you’re employed. Once you go “public” and you have tapped into public money, you’ve leveraged your original asset a multiple higher than the number of years you’ve lived, so be grateful. Infinitely grateful. You got lucky. Good for you. Now pay attention to the above precepts. They apply to you just as much as they do to any other CEO. An employee is an employee. If you don’t like it, buy back the shares and go private.

We may not be the arbiters of good taste but we will attempt to be arbiters of good behavior. Perhaps on occasion we would enjoy finding ethical conduct demonstrating common sense and sensitivity to fellow human beings. We will trust that such sentiment finds widespread encouragement. Nevertheless, we’ll be watching. All the best in your new job.

Very Sincerely,
JAMES RAIDER

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• BOARDROOMS NEED RESTRUCTURING, … AND NOT IN A DECORATIVE SENSE

While wondering where the legal extremes of corporate abuse, or less legal malfeasance might next surface, there is one prevailing trend that has swept corporate America and led to Congress scratching its assembled intellect. A gradual shift of control of the boardroom. That is now complete.

For any system to succeed over the long-term it should be tended to and altered where improvements can be affected. Starting at the top the capitalist system is in very urgent need of adjustments and a few repairs. Let’s look at one such fissure in the realm of responsible governance affecting one cog of the system. The Board of Director structure and control.

A Board’s responsibilities, as representative of shareholder interests, are broad. They include oversight of business strategies, their implementations, as well as direction of corporate compliance with laws and regulations. The Board dispenses its fiduciary duties through a management it is supposed to control. Most Boards don’t. Whether they are active, interested or complacent does not really matter much. The shift that has swept through all boardrooms over the past thirty years has made directorships a primarily comfortable and financially rewarding posting.

Instead of Chief Executive Officers (CEO’s) reporting to a Board chaired by a Chairman, we have Boards reporting to CEO’s who are also Chairmen and therefore report to themselves. In a structure where the CEO reports to the Board with an independent Chairman who is only that, a Chairman and not a manager, you have a higher likelihood of Board independence and proper oversight. Directors are more likely to influence corporate direction and guide adherence to laws and codes of ethics. Impact of both subtle and overt pressures change when the Board is structurally the final arbiter of governance between the management of the enterprise and its owners. The Board can therefore more effectively and evidently demonstrate the trust and confidence with which it has been entrusted. Shareholders as well as society at large, employees, customers and suppliers expect it.

A Director should not be a CEO’s friend or associate first, and overseer second, as is currently the predominant situation. Although there is pretense to the contrary, North America’s corporations have become the purview and domain of CEO’s in an absolute and royal sense.

Congeniality as well as pandering to the requirements of a CEO is, for the vast majority of directors, the path of least resistance whether those solicitations are subtly delivered or outright demands. It is also the path to continued receipt of all commensurate benefits requiring little mental energy. Even less appetizing for most outside the boardroom is the fact that since there is widespread cross-pollination of Boards, the qui pro quo and indulgence on CEO remuneration results in the gross examples of unrestrained abuse to which America is being exposed. No need to provide examples here since publications, such as Forbes and Fortune, provide copious lists for stimulation of either aspiration or envy. We can also easily recall being treated to the impact that such ineptitude at the Board level can achieve.

Asking the difficult and right questions is never easy. Such exigence requires effort and knowledge. Demanding that such questions be answered is almost impossible in the current atmosphere of convivial boardrooms. This can only come from independence of appointment and independence of thought. Until that is achieved in the boardrooms, there will be little if any scrupulous and effective monitoring of management for signs of abuse, fraud, or the exercise of basic common sense on behalf of all stakeholders.

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• EXECUTIVE COMPENSATION – WHERE'S THE COMMON SENSE?

Peculiar and disquieting sensations vibrate as you observe members of Congress affably probe Captains of Industry. Well rehearsed executives blow back the smoke of confounding justifications at the confused and flustered countenances of congressmen. You stare, disbelieving, as rationalizations of gross abuse are met with timid and ambiguous commentary. There is no valid explanation for the fact that some executives are taking, not 10, not 50, not even 100, but up to 22,000 times the incomes of bottom rung employees. Occasionally your head involuntarily shakes as the prattle of outright support from an interrogator recalls memories of a bad meal.

Why so much reticence to take a stand or state the obvious? Could we not be treated to just a little taste of some indignance? Not much, just a little. No judicial canons have been breached by these well dressed and pressed managers, but the laws of common sense and basic human reason have been thrashed by narcissistic misanthropy.

Some CEOs have paid themselves even higher “wages” reaching stratospheric billion dollar amounts. The average is over the 600 multiple. These are employees we’re talking about. Not kings or lucky entrepreneurs managing private companies, but simply employees of public entities.

What rational and independent mind condones average income increases of 50% from one year to the next for CEO’s of the top 500 U.S. companies? I’ve never met a CEO or other senior executive who didn’t think he deserved what he was paid. Not one.

Whether or not the executives’ companies were directly related to current burnouts in the financial sector is not relevant, although scapegoats are sought wherever they can be found. The point, I believe, is that there has been too broad abuse right across the board.

One theme we have been exposed to in the rationalization movement is, “I took risks.” We all admire risk takers. An entrepreneur putting everything he or she owns at risk to go for the gusto … that’s a risk. Corporate managers are generally a risk adverse lot. They play with other people’s money and that game is SAFE. The other explanation of “hard work” as defense for excessive incomes is rather disingenuous. The life shortening and oppressive labor of a coal miner in Apalachia, is hard work. A soldier in full battle gear sustaining 115 degree temperatures as he or she battles the relentless assault of enemy fire, is hard work. Being hired through a head hunting firm to slide into a multi-million dollar position … not so much. That doesn’t mean there aren’t stresses attached to running large corporations. Ample pay will reward sustaining such stress, and the beautiful part is that there is no downside. Ask the soldier about down-side. CEO failure seems to be rewarded just as well. Abusive compensation is simply that … abusive. The boards of directors are to blame but there is no law against incompetence, lack of foresight or basic indolence.

Defenders of this abuse claim that anyone who has a problem with the existing system is “anti business,” “un-American,” “left-wing,” “how else can we attract competent management” and the always effective, “this is the way of the free market capitalist system.” 
No it isn't.
 I’m a staunch capitalist and I find this exploitation distasteful. I also wish we could find more intellectually stimulating arguments supporting the excess. There are none. It is a simple cash grab. How hard is it to execute the take down when you've stacked the board of directors with intimates who have everything to gain by making sure you dip in the well. The accomplices know you will applaud from the warm seats on their boards when its their turn. This is more than just abusive.
 To ensure the back door is covered, boards of directors delegate executive compensation to personnel and compensation committees. These committees do the board’s bidding. Only occasionally do some get burned as scapegoats. Some head hunting firms also play their roles. They get hired to further confirm and support sky rocketing senior executive pay beyond reason. NO ONE is accountable. Why? Because EVERYBODY's doing it who is in a position to do so. So Congress sits, seemingly emasculated, either willingly or from sheer impotence.
Laws? Maybe not, but perhaps a few rules?

How about returning to compensation effectively tied to corporate objectives established with lavish doses of common sense? How about some discerning understanding and a little less selfishness?

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• MINIMUM WAGE – Where's The Confusion?

It is regretable to observe the fact that CEO's of America's 1,000 largest corporations have demonstrated little restraint on their personal accumulation of wealth while too many of their own employees or subcontractors earn below subsistence wages. In the face of such minimal display of reason or wisdom, the answer defaults to “legislation” to minimize devastation at the bottom of the income spectrum.

Even the middle class has seen no increase in its real income for over 20 years, while the income for the top 5% of earners has been skyrocketing. The millions of low income earners don't need to read the current Forbes list of the wealthiest to know there is a fast growing imbalance. Let's pay attention.

Heeding that imbalance and reducing it will ensure there isn't a complete breakdown in our social system and our social contract. All arguments presented in opposition hold little logic, common sense, or reason. They also demonstrate an absence of compassion. Such assertions are usually misinformed and proffered by individuals too busy cashing monthly checks higher than the average annual Income to care. We all deserve what we get, after all, don’t we? Perhaps not.

Are we truly concerned that most of our goods are produced by people earning poverty level wages in distant foreign backwaters? Not much really, pass the ketchup. We're just thrilled to get our furniture or designer jeans at cheap prices. Are corporations making sure that the goods they import are made in safe conditions or assembled by people earning a reasonable wage? Nope. How can such companies know such things . . . they use sub-contractors, don't they? The rationalizations are endless.

Let's make sure that the minimum wage enables at least the human beings at the bottom of our own food chain to rise above the level of an indentured class. Slavery is neither legal nor politically correct . . . so why is it so present and pervasive? The statistics are overwhelming. Let’s not ignore them.

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