Thursday, February 26, 2009

That Kind of Guy.

I have been thinking a lot about Ryan, my son’s friend who at age 19 committed suicide last week. I believe, without one thread of doubt that I could have convinced him to change his mind. And I know that my son, whose heart and compassion mirrors mine and amplifies it to a level far beyond my capabilities, could have succeeded as well. Time heals, and for me, writing my thoughts does as well. The following is me projecting my feelings as if through my son.

You looked tired as we passed on the stairs that morning at school

You had just driven back from Houston

“He went there to help his friend who had OD’d on cough medicine” I would tell my Dad

“That’s the kind of guy he was” I would also say

And that’s what would be repeated many more times that Monday morning

“That’s the kind of guy he was”

As you lay there, did you hear it?

You would do that for your friend

But you would not let us do that for you

Instead you chose a rope and a branch

Instead of anyone of us fourteen,

who would receive on Monday the unwelcome title of “pallbearer”

Were you afraid we would try to stop you?

You would have stopped us

You would have been there

You would have come

You would have never let us go through with it!

That’s what friends do for friends

But you did not let us do that for you

You did not give us the chance

To be that kind of guy too

Tuesday, February 24, 2009

For every one you could have 33

What we have learned, according to the Ney York Attorney General

149 employees received a combined $858 million and 557 received at least $1 million each for a total of, conservatively, $1.415 billion dollars dived up between 696 individuals.

Now I do believe in that ol’ Reganism “a rising tide raises all boats”, but the reality is that only some boats get the lifts, and, if you look even closer you will notice that it seems to be the same boats at that.

I am all for risk and reward, but what risk did these 696 Merrill Lynch employees take? Maybe it was for a job well done, you know, thanks for your effort – we all benefited from your smarts! But that can’t be it, I mean Merrill Lynch had just posted a $15.31 billion loss in the 4th quarter.

So what is it that makes these 696 so much better than the rest of us that they deserve 1.415 billion dollars? They deserved it not for anything other than the fact that it comes with the position. When the money is flush, that is the normal. As long as we are getting a better return on out money than putting it in the bank, the caretakers can skim off the top whatever they deserve. We let it happen because we are happy with 9 to 12% returns. We are making money because of their effort, so we look the other way and we let them take care of themselves. Win-win!

Why this is ok is that it has been sold to us as a normal course of business. There is nothing wrong with it because there is nothing wrong with capitalism. There is no one mandating that they receive a bonus, no government law, no binding contract, nothing! We let them take it as part of the system we have told ourselves is the best one in the world. Any system that did not give a bonus would not give these returns, and would not be capitalism, which means…….socialism!

Why do they get 1.415 billion? Because of our fear of socialism, because if we do not make it nice for capitalism it will go away leaving in its place its slothy brother, government ownership. Say goodbye to innovation and an elevated standard of living!

Now I run the risk of having my point misconstrued, so I will try to make what I am driving at clear. It is not the bonus system that I am taking issue with, it is the idea that the ratio of effort is 1 to 33, that is - that their benefit to our society is the equivalent of the yearly effort produced by 33 other skilled individuals. Remember, we are only talking the bonus they received, their annual salaries are not counted in which would most likely double the ratio.

My calculation is looking at it from a strictly “in your pocket” format, that is the bonuses were received just like a paycheck would be received. All the other costs for the employee, whether an executive or a machinist, is not factored in. According to the USA Today

“GM says the average UAW laborer makes $29.78 per hour.”

@ 2080 hours in a year that is $61,942.00 per year per laborer.

1 billion is equal to a 1000 million, so $1.415 billion is equal to $1415 million or $1,415,000,000 dollars

With $1,415,000,000 dollars you could employee 22,844 UAW laborers for one year.

If you do the math, the indirect benefit from the buying power unleashed by 22,844 persons will far outpace that of 696 even if all of it would be invested in developing new business, which it will not.

Oh my God! Is he saying……..share the wealth?

Give it to 696 or give it 22, tell me?

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Friday, February 20, 2009

This too shall pass

I received a number of call waiting beeps on my phone. I should have put two and two together, but I thought it was just my wife, which it was, calling to rag on me about staying at work past 5:00. I was on the phone dealing with some trivial bit of nonsense that now consumes most of my 8 to 5 interactions. “What’s up” I asked my wife. Grief was in her voice and you have one of those oh shit lumps hit your gut. “Max’s friend Ryan just committed suicide.” She finally was able to tell me.

Now it gets a bit messed up at this point. I got Ryan confused with his other friend Blake, a kid I know pretty well. I had only met Ryan once or twice, and went camping with him about five years ago when they were in Junior High school. I did not realize my mistake until I got home, so the grief I was feeling over losing who I thought was Blake built up like a tidal wave and came crashing out in tears of relief. When I found out my mistake I felt …joy…. and then guilty that it came at the expense of my son’s friend. He deserves my grief too.

What makes this hard, this losing of a 19 year old kid, who was my son’s friend and with whom I went camping with, is that it happened eight days after the death, by suicide, of the brother of one of the kids in our Boy Scout Troop. I had to face his father, whom I know; I had to look him in the eyes and try not to lose it. His son was dead, laying there in a coffin at the age of 17. His brother, whom I have known for over five years, a man now at 20, stood there like a zombie. We hugged, and then I left. I got in my car and said I don’t ever want to go to another kids’ funeral again. The pain of the last one, almost ten years ago, still burns in my memory.

My son is on his way home from college, finally realizing the placement of where it all puts you. “I should not be having to worrying about what to wear to his parent’s house” he told my wife from his cell phone when they stopped in Waco. I should not be because he should not be dead.

So here we are, the living, left to make sense of it, to ask the question “why”, to speculate, to draw conclusions over what, or if, or when. Nothing...... just a feeling of “No!” I do not know what or why, only that it happened. What they felt at the time, what lead them to make a correction that was permanent, only they know. It is easy to make bold statements diminishing their feelings to less than what they were. How could a 17 year old know true pain or grief? But it is all relative, and as real to them as it is to anyone three times their age.

My grandma turns 100 in April. Her death is inevitable, just like it is for my parents, my wife’s parents, and for me as well. Life is finite, and at 51 years of age, I understand that all too well now. But it is the gift of youth that that knowledge is kept at bay. It was not finite for Ryan or for Keith; it was open ended, a journey that awaited them and one they had not quite started to take.

What they will not know is that what they felt, though real and powerful, was not felt entirely in the context of time. These feeling experienced will pass, both physically and emotionally, eventually allowed to become deminimis as time spent living is acquired. That is the tragedy, the thing that both boys never had a chance to contemplate, that it sucks now and it will suck later, but in context, which only can come from living through both the highs and the lows, does it become easier to handle and move past.

My son should be home soon, and his grieving will begin. It is safe here, and he will soon get to be with his friends that knew Ryan. It will suck for him, and will suck when it happens again, it will never, ever, ever stop sucking, but he will find that this too shall pass.

Sunday, February 1, 2009

Mood Swings

I will confess that economics, investing, and finance are not my strong suit. I have, for the last six or so years, been really troubled with the way it all works. Maybe it is my ignorance that makes me feel this way or maybe what I feel is actually based on some truth.

The idea that we invest in our future by purchasing stocks – the preferred method – has been promoted and bought into and made the cornerstone of how we prepare for retirement. I understand the principle behind it. Company A needs capital to start or grow, it sells shares as a way to get this capital. What I take issue with is how the value of my share is determined.

Oh yes, they calculate and put the numbers together and get a price to earnings and ratios and blaw blaw blaw. But what it all comes down to is finding someone who will buy my share for more than what I paid for it. All this ratio stuff and prospectus and business plan nonsense does nothing but sooth some other investor so he invests in the company buying my share for more than I paid for it.

Yea I know, over time, this has been the best way to make money, but it still is based on finding someone – a sucker? – to purchase my share for more money that I paid for it. They need to believe that the share I want to sell is worth the value they want to pay for it. It would be nice if it was based on something tangible – like price to earnings – but it is really based on the mood of the market. How many times have we heard the phrase “Investors are nervous’? Nervous about what? Not about the company and how it is operating but about the ability to find another investor willing to buy their shares. Fundamentally the company (i.e. Caterpillar) is strong as ever, but now dependent on the mood of investors which determines their fate by acting or not acting.

The money made on stocks is all about hype – legal hype – but hype nonetheless. We need a system that allows for investment to help companies grow and expand and we need a system that calculates risk and reward better and more evenly. Our current system is all about whims and moods of a handful of people we have put stock in – both in terms of our money and our trust in their judgment. What annoys me it that all of this will be summed up as “well that’s just risk – there is always risk involved.” I say no! – risk is investing in new technology that does not work or continuing to operate in the hopes that your product will out sell the competitions. That’s risk, not the investing we do now hoping that the bubble does not break too soon. That’s not investing – that’s gambling.