I'm Rich!

THE RICHEST MAN (OR WOMAN) IN TOWN
[businessweek.com - May 09]

In his new book, The Richest Man in Town, Worth magazine founder W. Randall Jones writes about his search to identify the richest men or women in 100 towns across the U.S. "Every town has a richest person and I wanted to find out who they were. I started out with the largest cities but wanted to make sure that I included as many states as possible," he says. "The people on my list have a net worth ranging from $40 billion down to $100 million. Of course, for most Americans $100 million would go pretty far in my hometown of Carrollton, Ga., or pretty much anywhere in the U.S." What these people all had in common was that all of them plainly enjoy what they do—and that all of them are self-made. "Everyone needs to find their perfect pitch," Jones says. "These people have found it. These are people who have no concept of retirement and, most important, most of them don't believe in leverage. As the richest man in Wichita, Phil Ruffin, puts it: "There are a lot of people who have a couple of billion in assets, but when you see that cash in the bank every morning, then you know you're really rich." Read on to find out who the richest men or women are from Akron, Ohio, to Woodside, Calif.

Albany, N.Y.
Karthik Bala
30
With his brother Guha, Bala founded the video gaming company Vicarious Visions, which created such games as Tony Hawk's Downhill Jam, Spider-Man 3, and Nintendo's Guitar Hero III. The studio has created more than 100 software titles selling more than 20 million units and accounting for over $800 million in retail sales. Bala is the CEO and chief creative officer of Vicarious Visions. He holds degrees in computer science and psychology from Rensselaer Polytechnic Institute.

Atlanta
Bernard Marcus
79
With partner Arthur Blank, Marcus founded Home Depot in 1979 and in 28 years grew it to more than 2,000 stores. In addition to being Atlanta's richest man, with a fortune estimated at around $1.2 billion, he is also the city's greatest philanthropist.

Austin, Tex.
Michael Dell
43
From humble beginnings in his University of Texas dorm room, Dell has grown his eponymous company into the world's second-largest computer maker. He is today worth more than $12.3 billion. The Michael & Susan Dell Foundation, which has an endowment of more than $1 billion, supports education and health initiatives.

Baltimore
Stephen Bisciotti
48
Bisciotti founded staffing company Aerotek (now Allegis Group) when he was 23 to provide engineers to the aerospace industry. Today Allegis is the third-largest staffing firm in the U.S. and the sixth-largest in the world. Worth more than $1 billion, he is also the owner and CEO of the Baltimore Ravens football team.

Bangor, Me.
Stephen King
61
By scaring the bejesus out of people. Since his first book, Carrie, appeared in 1973, King has sold between 300 million and 350 million books and written, under his own name as well as a variety of pen names, more than 70 novels. In addition, his books have spawned dozens of Hollywood hit movies.

Boulder, Colo.
Judi Paul
61
Paul, co-founder (with husband Terry) and chairman of Renaissance Learning, started in the basement of her family home, where she developed a quiz-based program to help her own kids learn to love reading. Today, it is the nation's leading reading management and progress program, and its Accelerated Reader program is taught in 67,000 schools around the U.S.

Carrollton, Ga.
Robert J. Stone
The former college professor was the only person in town who knew how to program computers, so what started out as a favor to help out the local Family & Children's Services Dept. soon blossomed into Systems & Methods Inc. During the 1980s and the '90s, SMI was the largest private issuance provider of food stamps in the nation. Today the privately held SMI is a $40 million business.

Columbus, Ohio
Leslie Wexner
70
Wexner has been the Limited's chairman and CEO since founding the company in 1963. In addition to lingerie manufacturer Victoria's Secret, the company also owns Bath & Body Works and New York department store Henri Bendel. His net worth is estimated to be $1.7 billion.

Danbury, Conn.
Fred DeLuca
60
Starting in 1965, Fred DeLuca turned a $1,000 investment from his friend and partner, Dr. Peter Buck, into Subway, one of the biggest sandwich chains in the world. With more than 31,000 franchisees, DeLuca now has a fortune estimated at $1.6 billion.

Dayton
Clayton H. Mathile
67
Mathile was the former owner and CEO of Iams, the premium pet food maker, before selling to Procter & Gamble in 1999 for $2.3 billion. He is passionate about education and has founded the Center for Entrepreneurial Education just outside his hometown.

Denver
Charles W. Ergen
56
Ergen is co-founder, chairman, and CEO of EchoStar Communications and satellite company DISH Network. A keen poker player, Ergen's biggest bet came in 1995 when he launched the first direct-broadcast satellite into orbit on a Chinese rocket. Today, he has an estimated net worth of $3.9 billion.

Fisher Island, Fla., and Troy, Mich.
Bharat Desai
56
Desai is the co-founder and CEO of Syntel, a multibillion-dollar information technology company headquarted in Troy, Mich. The Kenyan-born, Indian-educated Desai was one of the early technology outsourcing leaders and divides his time between Troy, Fisher Island, Mumbai, and Syntel's new 1,800-acre campus in Pune, India. Desai has a fortune estimated at $1 billion.

Fort Lauderdale
H. Wayne Huizenga
71
America's most serious serial entrepreneur, the former trash hauler has hauled a $2 billion fortune by building three of the country's biggest companies: Waste Management, Blockbuster, and AutoNation. He is also the owner of the Miami Dolphins.

Harrisburg, Pa.
Alex Hartzler
41
A triathlon-running, house-renovating, tech-savvy master networker and real estate developer, Hartzler founded Harrisburg Young Professionals. He made his first fortune on the sale of Webclients, which he sold to ValueClick in 2005 for $141 million. He is currently president of WCI Partners, a real estate development company.

Hollis, N.H.
Patrick McGovern
71
The founder and CEO of International Data Group, the largest technology publishing, research, and event management company in the world. Using $5,000 from the sale of his car, he started the company to provide information to the computer industry. Today the company has grown to more than $3 billion in revenue derived from publishing more than 300 magazines, including its flagship, Computerworld.

Los Angeles
Kirk Kerkorian
91
Activist investor Kerkorian may be 91, but he is showing no signs of slowing down. With a fortune estimated at around $5 billion, Kerkorian got his start in the airline business after World War II. From there he moved into the casino and film businesses, buying and selling MGM Studios three times. His private investment corporation Tracinda is majority owner of the MGM Mirage resort in Las Vegas and has at various times also owned large stakes in General Motors, Chrysler, and Ford.

Meridian, Miss.
Hartley D. Peavey
67
The founder and CEO of Peavey Electronics, Peavey got his start making guitar amplifiers after realizing that he was better at making guitars sound louder than he was at playing them. Today, Peavey has more than 2,000 items in its product line, including microphones, mixers, and computer-controlled audio processors. The company does an estimated $271 million in sales annually.

Minneapolis
Richard Schulze
68
Schulze started a modest stereo store called Sound of Music in St. Paul, Minn., in 1966, renaming the store Best Buy in 1983. It went public in 1985 and by 1992 was doing $1 billion a year in sales. Today it is the largest specialty retailer of consumer electronics in the U.S., accounting for 21% of the market. His personal net worth is thought to be as much as $2.3 billion.

New York
Michael Bloomberg
67
After being fired from investment bank Salomon Brothers in 1981, Bloomberg used his $10 million severance package to set up his own financial software services company, eventually making him the richest man in New York—as well as one of the richest men in the world. Today closely held Bloomberg has more than 150,000 global subscribers for its eponymous terminals, which rent for $1,500 a month and up, as well as a cable network, radio station, Web site, and magazine. Bloomberg stepped down as CEO of his company when he was elected mayor of New York in 2001, and he is now making a bid for a third four-year term in office. In addition to his mayoral duties, Bloomberg, often cited as a potential presidential candidate, is an active though frequently anonymous philanthropist and has given away hundreds of millions.

Palo Alto, Calif.
Sergey Brin
35
Ever heard of Google? This former Stanford student co-founded the Internet search powerhouse with Larry Page in 1998. Today it is considered to be one of the greatest business success stories of all time. The son of Russian Jewish immigrants—both of whom are professors—he is worth around $12 billion. Google has a market cap of $123.1 billion.

San Francisco
Larry Page
36
Like his future business partner, Sergey Brin, Page was born the son of professors, but it wasn't until the two brainiacs met at Stanford that their fate was decided. In 1998 they founded Google, which would soon become the dominant Internet search engine and make them both billionaires many times over. Google has a market cap of $123.1 billion, and Page has a personal net worth estimated at $12 billion.

Portland, Ore.
Philip Knight
71
The founder and chairman of Nike is an accountant-turned-marketing guru who has created the world's leading supplier of athletic shoes and accessories. A former track star at the University of Oregon, Knight worked with his former coach Bill Bowerman to create a waffle-pattern running shoe tread that would provide better traction. He is today worth in excess of $8 billion.

Philadelphia
Josh Kopelman
36
The founder of Infonautics, Half.com, Turn Tide, and First Round Capital, Josh Kopelman's big windfall came in 2000, when he sold Half.com to eBay for $350 million. He then remained with eBay for three years to run Half.com. During that period he expanded eBay's Media marketplace to almost half a billion dollars in annual sales. He has since founded First Round Capital, a seed-stage venture capital fund, and writes a tech blog called Red Eye VC.


Rodeo, N.M.
John McAfee
63
The founder of McAfee Software, the largest anti-virus software company in the world, John McAfee sold the company in 1999 and now spends his time flying air trikes—contraptions that look like motorcycles with wings. In addition to writing several books on yoga, he has also built a new town in New Mexico, complete with a coffee shop and movie theater.

John McAfee (born September 18, 1945) is a computer programmer and founder of McAfee. He was one of the first people to design anti-virus software and to develop a virus scanner. He was born in England and raised in Salem, Virginia. He received his bachelor's degree in mathematics from Roanoke College in 1967, and he received an honorary doctorate from Roanoke College in 2008.

John was employed as a programmer by NASA's Institute for Space Studies in New York City from 1968 to 1970. From there he went to Univac as a software designer and later to Xerox as an Operating System architect. In 1978 he joined Computer Sciences Corporation as a software consultant. Later, while employed by Lockheed in the 1980s, McAfee received a copy of the Pakistani Brain computer virus and began developing software to combat viruses. He was the first to distribute anti-virus software using the shareware business model. In 1989, he quit Lockheed and began working full time at his anti-virus company McAfee Associates, which he initially operated from his home in Santa Clara, California.

This company later became Network Associates, a name it retained for seven years until it was renamed McAfee, which remains today as one of the largest anti-virus companies in the world. John McAfee teaches yoga and has written several books about yoga.

Other business ventures that he founded included Tribal Voice, which developed one of the first instant messaging programs, PowWow. [Wikipedia]



Providence
Jonathan Nelson
52
Brown University and Harvard B-school grad Nelson is the founder and CEO of Providence Equity Partners, the private equity firm that currently owns movie studio MGM, sports channels Yankees Entertainment and Sports Network, and online streaming video-on-demand service Hulu. He recently completed the largest leveraged buyout in history, purchasing Bell Canada for $50 billion. He also made huge profits selling off Western Wireless (now AllTel) and Voice Stream Wireless, which became T-Mobile.


(l-r) Creamer, Salem and Nelson

INSIDE A RECORD-BREAKING $51 BILLION BUYOUT
[money.cnn.com - May 08]
Bagging Bell Canada put Providence Equity Partners into the top tier of private money firms. Now Jonathan Nelson has to keep it there.

(Fortune Magazine) -- Alarms sounded all over Wall Street in March of last year when word leaked that BCE, parent of phone giant Bell Canada, was in buyout talks with Kohlberg Kravis Roberts. The news that such a rich prize - BCE had a market cap of $25 billion - was in play set KKR competitors like Blackstone, Cerberus, and Carlyle scrambling to get in on the action.

Watching this drama unfold with a measure of both confidence and concern was Jonathan Nelson, CEO of Providence Equity Partners, a smaller and considerably less flashy firm based, yes, in poor little Rhode Island's capital. Providence had been quietly courting BCE, paying friendly visits to the management team since 2004. (Providence had put money into MetroNet, a Bell Canada rival, and had seen firsthand how dominant the larger firm was.) Providence also knew that local law required the company to be majority-held by Canadians, and in 2006 it had started exploring a BCE buyout with the Ontario Teachers' Pension Plan - a longtime Providence investor and also BCE's largest shareholder. The fact that KKR was now in the hunt did not surprise Nelson - naturally BCE was going to shop itself to drive up the price. But he immediately got on the phone with Jim Leech, the head of Ontario Teachers', to review their strategy. "Of course we were concerned," he tells Fortune, in a rare interview. "But we had spent two years studying the company, we had the ideal partner in Teachers', we had three times before invested in a national phone company, and our banks were underwriting all the debt financing. For these reasons we believed that we should come out on top."

Sure enough, most of the other major equity shops soon backed away when they were unable to secure sufficient Canadian backing. And in late June of last year BCE agreed to be acquired by Providence, Ontario Teachers', and a third partner, Madison Dearborn, for a record-setting $33 billion, or $48.5 billion including debt. The decline in the U.S. dollar has raised the total to $51.5 billion (as of May 8).

The deal was a triumph. Not only had Providence pulled off what would be the biggest leveraged buyout in history, it had outmaneuvered KKR to boot. The coup validated Nelson's strategy of focusing on media and communications and cultivating deep, long-term relationships with the industry's key players. And it launched Providence into the top tier of private equity firms.

But don't schedule the victory parade just yet. Just as Providence snagged its prize, the credit markets started to unravel. With the deal slogging through a regulatory review, Providence's partners have had to reassure investors that their newly cautious lenders, folks like Citigroup, Deutsche Bank, and RBS, will honor commitments to finance the huge buyout (The New York Times reported Monday, after press time, that the Wall Street banks are seeking new loan terms, possibly imperiling the deal).

Meanwhile Nelson has his own headaches. Providence had to sue one of its lenders, Wachovia, to ensure financing of its $1 billion acquisition of 56 television stations from Clear Channel Communications. And he has been working overtime on Metro-Goldwyn-Mayer, the movie studio that Providence bought in 2005 with Sony, Comcast, and other partners. MGM has missed financial targets, struggled to find a winning strategy, and released bomb after bomb, a streak that could well continue with the forthcoming Valkyrie, in which Tom Cruise plays an eye-patch-wearing Nazi.

So Jonathan Nelson finds himself at a crossroads. His firm has morphed from boutique to megafund: It now ranks No. 9 on Fortune's private-money power list, ahead of well-known names like Cerberus and Thomas H. Lee. And it's a major player in the media business, with a portfolio of 41 companies, including MGM, television network Univision, and several cable TV and wireless phone companies. Nelson, 51, a mild-mannered man who has enjoyed working in relative obscurity far from the bustle of Wall Street, concedes that he will no longer be able to maintain the low profile and underdog status that was a competitive advantage for so many years. Moreover, Providence's strong track record and mega-investment pool (at $12 billion, its newest fund is three times larger than the previous one) brings intense scrutiny and outsized expectations. Will Nelson thrive under this unaccustomed pressure? One friend, media billionaire (and Univision chairman) Haim Saban, thinks the answer is yes. Don't be fooled by his "gentle, soft-spoken" style, says Saban. "This is a guy who goes helicopter skiing in Greenland, who once dove under his boat because a propeller got caught in seaweed. This is a guy who enjoys a real challenge."

An Unexpected Path
You could call Jonathan M. Nelson the accidental investment banker. He didn't plan on becoming a master of the universe à la KKR's Henry Kravis or Blackstone's Steve Schwarzman. In fact, he says proudly, he didn't plan to do much of anything at all. "You can't at the outset connect the dots," Nelson told a group of students and parents at a Brown University parents' weekend last year. "Life does not and should not work that way." This surely dismayed some parents, who probably had hoped a successful financier would have more practical advice for the young Ivy Leaguers. But the random path certainly worked for him.

The son of an orthodontist, Nelson grew up comfortably middle class in Providence. When it came time for college, he didn't go far, choosing Brown, where he was Mr. Liberal Arts, supplementing his economics studies with music courses and a stint at a local radio station as a jazz deejay. After graduating in 1977, he stumbled into a job at Wellman, a Boston-based specialty-chemical maker. A friend who worked there set him up on a job interview - Nelson claims he just went to practice his interview skills - and he ended up spending about three years helping manage the company's Asian operations.

He left Wellman, lived in Europe for a year, and decided to go back to school. After earning an MBA at Harvard in 1983, Nelson landed at a private equity firm called Narragansett Capital, where his first deal was having Narragansett buy his former employer, Wellman. Founder Bud Wellman was ready to cash out, and the deal was a huge success: Narragansett made 20 times its original investment in about three years.

After several years at Narragansett, during which he focused on local media companies, Nelson decided to strike out on his own - but not too far, of course. In 1991 he and a few Narragansett pals, including Glenn Creamer, formed Providence with a plan to concentrate on telephone and cable companies, which were fragmented at the time and just starting to consolidate.

It was a tough time to raise money. The U.S. economy was in the tank, and while Creamer and Nelson had a strong track record at Narragansett, they nonetheless were asking investors to take a risk on a specialized firm. Most pension funds and institutions were more comfortable with big generalist outfits with diverse portfolios. But the ones that took a chance on Providence - including Ontario Teachers' and Calpers - were well rewarded. Providence would not provide the data and won't comment on returns. But according to documents seen by Fortune, its first four funds notched annual returns of 47%, 111%, 21%, and 56%, respectively, before fees (the typical Providence fund lasts about five years). One fund-of-funds manager says these results put Providence in the top decile of private-money players. "They have some of the best returns of any of the megafunds," this manager says. "It's a damn fine performance."

In its earliest days Providence mostly provided growth capital to growing businesses such as upstart cellular company Western Wireless or Brooks Fiber, a local phone company trying to take on the monopoly operators. Those young companies certainly enriched Providence. For example, it put $63 million into VoiceStream starting in 1992 and reaped more than ten times that amount when Deutsche Telekom bought the company in 2000. But the burgeoning firms also provided inspiration. Watching entrepreneurs like Western Wireless CEO John Stanton as they strove to build a business spurred Nelson and his partners to think about themselves as more than mere financiers. "It isn't just about money; it is about creating an enduring franchise," says Creamer earnestly, as we sit in Providence's modest offices, adorned with nautical paintings, in a downtown high-rise. "We think we've done that."

Uncommon Courtesy
A key part of building that franchise has been maintaining an atmosphere of collegiality. Indeed, politeness seems to be a core value. Providence is only 180 miles from New York City, but it is light-years from the rough-and-tumble mentality of most Wall Street trading floors. Paul Salem, a senior managing director who joined the firm in 1992, tells the story of a CEO who was rude on the phone to one of the office assistants. "That's not a guy we want to do business with," Salem says.

But as the firm grows - it now employs 65 investment professionals in offices in New York, Los Angeles, Hong Kong, London, New Delhi, and of course Providence - Nelson frets openly about maintaining the more-than-moneymen culture he's tried to achieve. During our first meeting, at Providence's New York City offices in Lever House on Park Avenue, the word "institution" keeps coming up. So I ask if he'd be melancholy if, say, he came back 20 years after retirement and found Providence had become a big, faceless institution like a Goldman Sachs or a J.P. Morgan Chase. He thinks for a moment and says, "If I stopped someone in the hallway to ask directions and the person had no idea about my prior role at the firm but was polite and helped me out, I'd say, 'I am absolutely okay with this.'"

Providence's clients certainly seem to be okay with the firm's low-key vibe - indeed, it's something of a competitive advantage. "Those of us in regular business tend to think of private equity as having the mentality, 'What's mine is mine, and what's yours is mine,'" says Howard Stringer, CEO of Sony, which partnered with Providence in the MGM buyout. "The thing about Jonathan is that he maintains relationships, and that's what generates a level of trust for him that others don't enjoy."

Nelson's self-effacing style has won him friendships with media elite such as Stringer and News Corp.'s Peter Chernin. "Jonathan is somebody who is comfortable in his skin," says Dick Parsons, chairman of Time Warner, Fortune's parent. "He doesn't have that mogul or movie star gene that drives him to be the show, the story, the centerpiece." That probably is a competitive advantage too. "These big egos are not looking to partner with another big ego," says James B. Lee Jr., vice chairman of J.P. Morgan Chase. "They are looking to partner with someone who will work well with them." Indeed, Nelson is one of the few outside bankers invited to mingle with the media heavyweights at Allen & Co.'s annual retreat in Sun Valley, Idaho. Of course, controlling companies with combined annual revenue of $55 billion, Providence is arguably as significant a presence on the media landscape as, say, Time Warner or Viacom.

He's a familiar figure in that rarefied orbit, but Nelson is surprisingly anonymous in his hometown; he says he has never once been interviewed by the city's paper, the Providence Journal. "In Providence, among people who follow business, everybody of course knows about the firm and its success and that he's the top guy there, but that's about it," says Ralph Wales, headmaster of the Gordon School, a private school Nelson attended. "Jonathan is a very private man." He declines, for example, to talk about a particularly difficult period in his life when his first wife died and he became the primary caregiver for his three young daughters (he remarried in 2004).

That's not to say Nelson doesn't have any ego, especially where his firm's track record is concerned. "He's not an ostentatious guy who likes having his name on the front page of newspapers," says an executive who knows Nelson well. "But Jonathan flies in a private jet, and he wants you to write an article that says he's the smartest media and telecom investor in the world." Is he? "He's pretty darn good," the executive says.

And he's raising his profile in his hometown. In 2010, Brown University will open the $45 million Jonathan M. Nelson Fitness Center. Nelson, now a Brown trustee (are you surprised?), donated the lead gift for the facility. Nelson, who says he might have been a carpenter or architect if he hadn't become a media investor, also is playing a hands-on role in its design. "This whole area needs to be improved," he says. It is a warm afternoon in Providence, and we are standing in a parking lot in front of the existing athletic complex, which consists of personality-free concrete buildings. "I am confident that you'll come back here and smile," he says. A fitness buff who works out five days a week, Nelson clearly believes a healthy body and a healthy mind go together: Before the Brown fitness center, he helped the Gordon School build a new gymnasium.

Lately, Nelson may have moments when he wishes he'd become a carpenter. While he insists he loves the job, especially the stimulation he gets from working with smart colleagues, he also acknowledges that as Providence Equity has grown, his gig has become much tougher, the problems more public.

Legal Battles
Take the fight with Wachovia. Providence prides itself on maintaining friendly relationships with its partners, so insiders were surprised when Wachovia sued Providence without warning. Providence had renegotiated the price of its Clear Channel television acquisition, and the bank said the price reduction violated the terms of the lending agreement. Providence countersued. The parties eventually dropped the suits and the financing went through, but it seems unlikely that Providence will do business with Wachovia again. "There were three banks involved, and two of them handled this difficult situation very well," Nelson says plainly. "We appreciate that, and we will remember their behavior."

Similarly, three of the four lenders backing the BCE buyout also are trying to renegotiate loans to the parties seeking to buy Clear Channel's radio stations; some analysts suspect the banks might try a similar tactic with the BCE deal. "We are engaging with the company and the banks and expect everyone will honor their commitments," Nelson says.

While the credit crisis is taking a toll, Providence isn't only an LBO shop, and it doesn't rely on debt markets for all its investments. It recently put $100 million into Hulu, the web-video joint venture of News Corp. and GE's NBC Universal. It is pushing deeper into Internet investing, and many of its international investments involve companies seeking growth capital, not buyouts. Indian wireless operator Idea Cellular, for example, sold a 16% stake to Providence last year for $400 million. Neither Hulu nor Idea really needed Providence's money; what the companies sought was external valuation of their business, as well as the expertise and cachet that Providence brings. "It means a lot when someone of Jonathan's stature puts his firm's money into Hulu," says Jason Kilar, CEO of the venture.

Nelson says that the tough times in the markets will not lead him to alter his basic strategy. Providence certainly will do more big deals; after all, it has $12 billion to put to work. But while some peers look for distressed companies to bail out or bad debt to buy, Nelson plans to stick with what he knows best. Asked how he plans to weather the economic slowdown, for example, he trumpets the virtues of BCE: "Bell Canada looks like a great business to us, in part as a defensive position in a possible economic downturn," he says. "People don't shut their phones off." Similarly, Providence has recently been pouring money into one of its original businesses, cable television, albeit in places such as Ukraine. It may not sound all that glamorous, but it makes perfect sense for a guy who built a private equity powerhouse by sticking with what he knows.

Woodside, Calif.
Larry Ellison
64
The Bronx-born billionaire founder of Oracle, a major enterprise software company, and is reputedly the fourth-richest man in the world. The thrice-divorced Ellison has all the billionaire toys: the yacht, the $200 million Japanese mansion complete with a reproduction 17th century Kyoto teahouse. He is also a passionate sailor and is the second-biggest backer of BMW Oracle Racing in the 2007 America's Cup bid.

Being Larry Ellison
[Business Life - Jul./Aug.01]

In a phone interview the week before the shoot, Ellison was as upbeat as ever. Asked what advice he had for startups going through their first market downturn, he said, "You can't worry about it, you can't panic when you look at the stock market's decline, or you get frozen like a deer in the headlights. All you can do is all you can do." Ellison talks at least twice as fast as the average intelligent person, and his sentences tend to pile up, words bumping into each other as they race out of his mouth. "If your cash is about to run out you have to cut your cash flow. CEOs have to make those decisions and live with them however painful they might be. You have to act and act now, and act in the best interests of the company as a whole, even if that means that some people in the company who are your friends have to work somewhere else."

Ellison is known as a ruthless businessman, firing senior executives days before the last of their stock options is due to mature and, most notably, denigrating Oracle's chief rival Microsoft at every opportunity. Last June, the U.S. press had a field day when it was discovered that Oracle had paid private investigators to snoop through the trash of a supposedly independent research group it suspected of being funded by Microsoft during the antitrust trial. "It's absolutely true we set out to expose Microsoft's covert activities," he said in a press conference. "I feel very good about what we did.… Maybe our investigation organization may have done things unsavory, but it's not illegal. We got the truth out." [...]

Ellison has said on several occasions that he reached where he is today by doing the opposite of what was expected of him. "The most important aspect of my personality, as far as determining my success goes, has been my questioning conventional wisdom, doubting the experts and questioning authority," he said in 1997. "While that can be very painful in relationships with your parents and teachers, it's enormously useful in life." [...]

Ellison deserves most of the credit for the success. But not all. One of his strengths, says Don Lucas, a venture capitalist and Oracle boardmember who has known Ellison since 1979, is that he "delegates almost totally." [...]

True, Ellison does leap at any opportunity to lambast Microsoft. Before the garbage incident, he was one of the rare Silicon Valley CEOs brave enough to testify personally in Microsoft's antitrust trial. He told the U.S. Senate that "consumers are free to choose a Microsoft PC from Dell, a Microsoft PC from Compaq, a Microsoft PC from Gateway...You get the point. Feels to me a little like a Soviet supermarket."

There is another way of looking at his Microsoft obsession. All competition, he has said previously, is just as much about self-exploration as it is about winning: "There's a wonderful saying that's dead wrong. ‘Why did you climb the mountain?' ‘I climbed the mountain because it was there.' That's utter nonsense…You climbed the mountain because you were there, and you were curious if you could do it. You wondered what it would be like." When I asked him if he would be satisfied to see Microsoft's possible punishment for its monopolistic crimes by being broken up into separate companies, he sputtered, "Absolutely not! I don't feel good about Microsoft passing us on the way down. We'd like to pass them on the way up." [...]

There's one more arena that Ellison wants to test himself in: biotechnology. At some point, he says, he will probably retire from Oracle and devote himself full time to Quark Biotechnology Inc., a gene-based drug developer focusing on cancer research, whose board he chairs. This is not a whim. Ellison has been interested in the life sciences for years: in addition to a longtime investment in SuperGen, a developer focusing on drugs for cancer and blood cell disorders, he took a two-week holiday to work in the molecular biology lab of his friend Josh Lederberg, a Nobel laureate. Through the $250 million Ellison Medical Foundation he established in 1997, he has already funded numerous studies into age-related diseases and disabilities; last year the EMF added infectious diseases like malaria and tuberculosis to its focus.

Typically, the U.S. media has been cynical about Ellison's motives for anti-aging research. But "I've never gotten the impression that Larry's interest is in prolonging his own life, rather than in understanding the biological process of aging and improving the world's quality of life," says Richard Sprott, the foundation's executive director. [...]

That is the essence of Larry Ellison, the contradiction that fuels so much of his critics' ire. When he says that he prefers "strategic" philanthropy, the media look at his total wealth and call him parsimonious. But perhaps it's just that like most people, whether billionaires or janitors, he prefers not to be told how to spend his money. He is generous to a fault with friends and family, reportedly buying a house for one ex-wife's ailing parents. When an Acura NSX zooms past you in Silicon Valley, there's a good chance it was paid for by Ellison; he buys several each year as gifts. His personal pilot drives one of the $100,000 cars.
But his friends have learned to keep quiet. Few were willing for their compliments to be on the record, fearing like Ray Lane that they would be twisted out of context. Even Apple CEO Steve Jobs, who Ellison refers to frequently — and touchingly — as his "best friend" and "idol," did not respond to requests for comment.

A clue to Ellison's complicated worldview can be found in his love for the 1984 movie The Natural, in which a middle-aged baseball player (Robert Redford) comes out of nowhere to take a 1930s team to the championship. "It's the one movie I watch over and over. It's an amazing combination of idealism confronted with reality," he says. That theme can be found in another of his favorite films, the Dian Fossey biopic Gorillas in the Mist. (He is also a longtime boardmember of the Dian Fossey Gorilla Fund.) [...]

In spite of his dedication to flouting convention, Ellison admits to at least one universal sentiment. When I jokingly asked him if he would agree with Machiavelli that it is better for a leader to be feared than loved, he answers, "Oh no, it's much better to be loved than feared. Being feared is terrible. Dentists are feared. Everyone, everyone wants to be loved. We kid ourselves and pretend that we don't, but we all do." That can be a problem for a CEO, or, say, a world leader like Bill Clinton, I answered. He laughed: "Well, you can't be prevented from seeking love, but you can be carried away by that, by wanting to be liked and loved by too many people."

Ellison, it is safe to say, will never sacrifice who he is — mercurial, enthusiastic, risk-taking, and occasionally tyrannical — in that pursuit.

What the Hell is Cloud Computing?

Larry Ellison's Fake Blog

Q + A with Larry Ellison

BusinessWeek Magazine - Oct.20, 2008

THE BUSINESS BOOM UNFOLDING DOWN ON THE RUSSIAN FARM by Jason Bush (excerpt)

Farming in the area (ie.Usman, rural district 300 miles south of Moscow), and across Russia's traditional grain belt, is making a comeback. Commodities traders, food processors, shipping outfits, and others are buying up farms, hoping to cash in on high global grain prices. These new investors are pouring billions of dollars into land, then revamping management and technology in operations that span thousands of acres. Today, large agricultural holding companies control some 10% of Russia's farmland, up from 4% in 2003—though in the most productive areas they have more than a quarter of the land, according to the Institute for Agricultural Market Studies in Moscow. "There's huge potential here," says Robert Coleman, a South African who oversees farms in the region for Agro-Invest, a Moscow group that owns 100,000 acres around Usman. "We've invested in big machines, are applying Western ideas, and are getting great results."

It's easy to see why there's so much interest. The U.N. says Russia has some 480,000 square miles of arable land—an area more than twice the size of France. That's 8% of the world's total, much of it highly fertile "black earth." But owing to decades of agricultural mismanagement, Russia accounts for less than 4% of global crop production and is a net food importer.

THE NEW AGE OF FRUGALITY by Steve Hamm (excerpt)

On a shady lane in New Hope, Pa., a quiet revolution in American culture may be taking shape. Here, a family of four lives in a white, colonial-style house in a manner that once would have been considered All-American but more recently has been seen as just plain weird: They're frugal.

Meet Leah Ingram, Bill Behre, and daughters Jane, 13, and Annie, 11. They walk most everywhere, they rarely eat out, they sometimes buy clothing at consignment shops, and they turn the lights off when they leave a room.

Theirs is no hard-luck-in-a-recession story. The Ingram-Behre family is solidly middle-class, fully employed, and not especially threatened by the conniptions gripping Wall Street. Behre, 43, is a dean at the College of New Jersey, while Ingram, 42, is a successful freelance writer and etiquette expert. They have no credit card debt.

That's now. A little more than a year ago, the family was ensnared in America's consume-at-all-costs culture. During the days of soaring home prices and easy credit, they took out a $101,000 home-equity loan on a previous house and spent lavishly on a lifestyle upgrade—going on three cruises in two years and taking the kids on annual pilgrimages to Disney World. "After 9/11 it became patriotic to shop, and we became as patriotic as anybody," laments Behre, sitting in the dining room after a meal of chicken stir-fry—washed down with tap water.

Ingram and Behre are harbingers of a dawning Age of Frugality. People who overconsumed during the past decade are now rejecting extravagant lifestyles. They're spending less, and more wisely. Some are getting their finances in order. Others are fearful of losing their jobs, shocked by investment losses, or hunkering down amid the general uncertainty.

The penny-pinching is already showing up in the numbers; this quarter could mark the first fall in personal consumption in 17 years. And with credit tight and Americans loaded down with $2.6 trillion in personal debt, consumer borrowing dropped in August, the first such contraction since 1991. Menzie D. Chinn, who teaches economics at the University of Wisconsin, figures consumers won't be in a position to spend freely for five years.

Which brings us to what John Maynard Keynes called the paradox of thrift. What's good for the individual, argued the famous economist, can ignite or deepen a recession. But that won't deter the newly thrifty. "I can't help the economy," says Kim Schultz, a resident of hard-hit Avoca, Mich., who with her husband, Jon, owes $40,000 in credit-card debt. "I've got to help myself." On the other hand, this newfound austerity could—emphasis on could—rewire Americans as savers rather than spenders. And that would help put the economy on a sounder footing over the long haul.

COSTCO'S ARTFUL DISCOUNTS by Jena McGregor (excerpt)

At Costco, where more than 29 million households pay $50 to $100 a year to shop, low prices aren't just a nice-to-have. They're a way of life. Not only does Costco's famously frugal CEO James D. Sinegal cap margins at a sacrosanct 14% on branded goods, he's constantly pushing his buyers to find creative ways to lower prices and add value while getting his managers to crank up their efficiency efforts. Besides the buy-in strategy, Costco has been redesigning product packaging to squeeze more bulky goods onto trucks and revamping processes for moving goods through its depots. Even small tweaks to its well-oiled operations can have a big impact. "If that stuff doesn't really turn you on," says Sinegal, "then you're in the wrong business."

Such tactics are keeping customers' shopping carts full—the $72 billion retailer's sales have been one of the only bright spots in today's brutal retail economy. But they've also been pinching profits. As commodities surged over the summer, Sinegal's call to hold the line on pricing helped prompt Costco to warn in July that its fourth-quarter earnings would be "well below" expectations. On Oct. 8, it announced quarterly net income of $398 million, slightly lower than Wall Street's revised expectations.

But to Sinegal, the short-term earnings pain is worth the potential for long-term market share gain. For one, holding prices low is the best way to protect profits: About 75% of Costco's operating earnings come directly from membership fees, and if prices rose too quickly, some members could flee. In addition, the 72-year-old warehouse club veteran knows that in this environment, Costco's reputation for bargain prices and surprise designer goods could inspire a new crop of warehouse chic devotees. "We should shine at a time like this," he says. "We have always believed that great companies build market share in really tough times."

What Sinegal isn't doing is wavering from the basic model that helped him and co-founder Jeffrey Brotman build Costco into a retail phenomenon. The Issaquah (Wash.)-based company's warehouse model relies on selling core items at rock-bottom prices while scooping up excess inventory from high-end brands. The here-today, gone-tomorrow nature of Costco products tends to foster carts full of impulse buys. The average store does $137 million in annual sales, a volume so high that Costco turns its inventory 11.9 times a year, meaning it often sells goods before it technically has to pay its suppliers. Combine that with high-income customers—the average Costco household makes upwards of $75,000—and "what they're doing is really high velocity retailing," says Boston Consulting Group Managing Director Michael Silverstein, who has studied Costco.

Even CEOs who'd rather not find their designer brands discounted in a warehouse are happy to say they shop there. "I think they have a terrific concept," says Eric Wiseman, CEO of VF Corp., which owns the North Face and 7 For All Mankind clothing lines. David Novak, CEO of YUM Brands, says he buys wine and cleaning equipment there. And QVC CEO Michael George is a proud card-carrying member of one of the first Seattle stores. "You don't just go there for bargains," says George. "You go there for the treasure hunt."

Lately, the loot in that treasure chest is getting even more high end. Over the last year, Versace dinnerware, Waterford crystal, and pastel girls' Lilly Pulitzer dresses have all made their way into Costco's stores, either through new direct selling agreements or diversions from distributors. As consumers cut back, Costco is finding more available inventory and fielding more calls from companies hungry to boost slumping sales. "I think their store will probably look like Saks pretty soon," says an executive at one popular high-end fashion brand. "Their ability to sell stuff is staggering."

"In a tough economy, the ability to change your assortment towards products that are selling more is a huge advantage," says Michael Clayman, a former buyer for Costco and the editor of trade publication Warehouse Club Focus. "If the item isn't a value anymore, or isn't generating the sales hurdles, it'll be deleted."

To hedge against price increases, the giant retailer is even taking the unusual step of commissioning its own pumpkin patches. For years, Costco has offered customers a pumpkin pie for $5.99, selling more than a million of the store-baked pies in the three days before Thanksgiving. Despite margins getting whacked by higher prices on canned pumpkin prices, Costco has opted to maintain its price. So this year, Jeffrey Lyons (head of fresh-food buying) began testing a way to get around the food processing companies' high prices, asking some of the farms that grow its melons to cultivate pumpkins. It will experiment with using the pumpkin in some of next year's pies. "It's not beyond us to figure this out," Lyons says. "We won't be held hostage."

Costco has even gotten vendors to redesign product packages to fit more items on a pallet, the wooden platforms it uses to ship and display its goods. Putting cashews into square containers instead of round ones will decrease the number of pallets shipped by 24,000 this year, cutting the number of trucks by 600. By reshaping everything from laundry detergent buckets to milk jugs, Costco has needed 200,000 fewer pallets a year overall.

Sinegal acknowledges that he can't hold back the cost increases forever. Indeed, within the past six months Costco has twice raised the price of its popular rotisserie chickens, by a total of 20%, to $5.99. But he isn't giving in to higher costs without a fight. "The biggest concern to me is that we lose our way and start thinking it doesn't matter if you charge another dime or another dollar or another hundred dollars," he says. "Without those disciplines, we don't have anything."


WINMARK: A BRIGHT SPOT IN DARK TIMES by Jane Porter

Hard times have been pretty good to Rita Cortese. Since 2006, she has owned a Plato's Closet used clothing store in Deptford, N.J. In recent months, Cortese says, business has exploded as people descend on her store to buy or sell castoff shirts, dresses, and jeans. Cortese is so busy she recently built a shed out back to contain her overflowing inventory.

Winmark, the Nasdaq-listed company that sold Cortese her Plato's Closet franchise, is a rarity in a scorched retail landscape: It's growing rapidly and making money. Sales at Plato's Closet outlets open more than a year were up 19.6% in August, vs. 1.7% for the industry as a whole. "I don't wish this economy on anyone," says John Morgan, Winmark's chief executive. "But we're going to make hay while the sun shines."

The company that would become Winmark was born 25 years ago as Play It Again Sports, which sold used hockey sticks, baseball mitts, and so forth. Ten years later the company went public as Grow Biz. But by 2000, it was suffering the usual ills of overexpansion. Enter Morgan, who renamed it Winmark and focused on four franchises: Play It Again Sports, Once Upon A Child (kids' apparel), Music Go Round (used musical instruments), and Plato's Closet (which, like the other franchises, also sells some new items). Today, Winmark has 861 stores nationwide.

Franchisees pay a $20,000 one-time fee, plus 3% to 5% of weekly sales. In return, Winmark provides the business model, training, and marketing. "All the risk falls on the franchisee," says Graeme Rein, research analyst for Bares Capital Management, which owns 14% of the company. "It's on their shoulders to create a profit." Because franchisees pay cash on the spot, they have powerful bargaining leverage. For example, Cortese pays $6.80 for a pair of Hollister jeans and resells them for $18.

Since consumers are going to be hurting for a while, it's a fair bet that Winmark, whose stock has suffered this year along with the rest of the market, will continue to outperform the retail sector. Not that Morgan, who owns a quarter of the company, is standing pat. He's plowing Winmark profits into another franchise operation he expects to do well in hard times—leasing office equipment to credit-parched small businesses. And guess who he's recruiting to run the franchises: managers who've lost their jobs.

ZARA THRIVES BY BREAKING ALL THE RULES by Kerry Capell

ARTEIXO, SPAIN Many U.S. apparel retailers are choking on slow-moving inventories as consumers hold back on spending. But Spain's Inditex, whose Zara chain pioneered cheap chic, is zipping ahead. The $13.8 billion company, which is closing in on Gap for the title of world's biggest clothing retailer, has nearly quadrupled sales, profits, and locations since 2000. This year, Inditex plans to expand by up to 640 stores. "They will weather the storms better than most of their rivals," says Michael Lewis, a supply-management professor at University of Bath's School of Management.

Inditex's secret? Besides selling relatively cheap clothes, which fit the times, the company maintains an iron grip on every link in its supply chain. That enables it to move designs from sketch pad to store rack in as little as two weeks. This "fast fashion" way of doing things has become a model for other apparel chains, such as Los Angeles-based Forever 21, Spain's Mango, and Britain's Topshop, which is set to open in New York next year.

Inditex has spent more than three decades perfecting its strategy. Along the way it has broken almost every rule in retailing. At most clothing companies, the supply chain starts with designers, who plan collections as much as a year in advance. At Inditex, Zara store managers monitor what's selling daily—and with up to 70% of their salaries coming from commission, there's a lot of incentive to get it right. They track everything from current sales trends to merchandise customers want but can't find in stores, then shoot orders to Inditex's 300 designers, who fashion what's needed instantly.

Typically, apparel chains outsource the bulk of production to low-cost countries in Asia. Inditex produces half of its merchandise in factories in Spain, Portugal, and Morocco, keeping the manufacturing of the most fashionable items in-house while buying basics such as T-shirts from shops in Eastern Europe, Africa, and Asia. Wages are higher at Inditex—its factory workers in Spain make an average of $1,650 a month, vs. $206 in China's Guandong Province. But the company saves time and money on shipping. Also, Inditex's plants use just-in-time systems developed in cooperation with logistics experts from Toyota Motor, which gives the company a level of control that would be impossible if it were entirely dependent on outsiders.

In addition, Inditex supplies every market from warehouses in Spain. Even so, it manages to get new merchandise to European stores within 24 hours, and, by flying goods via commercial airliners, to stores in the Americas and Asia in 48 hours or less.

Air shipments cost more than transporting bulk packages on ocean freighters. But Inditex can afford them. The company produces smaller batches of clothing, adding an air of exclusivity that encourages customers to shop often. As a result, the chain doesn't have to slash prices by 50%, as rivals often do, to move mass quantities of out-of-season stock. Since the chain is more attuned to the most current looks, it also can get away with charging more than, say, Gap. "If you produce what the street is already wearing, you minimize fashion risk," notes José Luis Nueno, a marketing professor at IESE Business School in Barcelona.

For rivals hoping to mimic Inditex's results, analyst Luca Solca of Sanford C. Bernstein has a bit of advice: Don't follow the Zara pattern halfheartedly. "The Inditex way is an all-or-nothing proposition that has to be fully embraced to yield results."

READER COMMENTS:

Zara is a interesting case study. Together with Apple, they seem to be redefining the process of delivering consumer products. Both exercise tight control over process and are optimized to meet customer demands rather than mere supply side cost management. The freedom, store managers enjoy at Zara to get the stuff they expect their customers to pick up, and Apple stores that allow customers to walk-in and talk face to face with service people, reasserts that the "human" acting as the bridge between customer and company can still make a difference on customer experience and profits. -Ajay

In the Zara model, who in the supply chain holds the raw materials inventory (fabric, zippers, trims, etc.)? How far in advance to they have to commit to it, and how do they know how much to buy? -mark erickson

I wonder if it is sustainable? As they open even more stores is their supply chain scalable enough to sustain the model and keep their tight processes on track? They certainly know how to run a value chain and make it hum but I have some concern that it may start getting too big to properly manage as they face more constraints. -TR

Thanks very much for your responses to the story. @TR: Yes, the challenge Inditex faces is as it expands further from Spain will it still be able to wield the tight control over its supply chain. I think it is sustainable as long as like-for-like sales are growing--if these fall for say, several consecutive qrts and Inditex's costs rise, it could be difficult. @mark erickson: Inditex owns 100 other companies that handle various parts of its supply chain. So for instance, Zara sources around 40% of its fabric from another Inditex-owned company, Comditel. Fabric is purchased in grey so that it can be dyed in season to react more quickly to trends. Prof. Nueno says Zara commits to 35% of raw material purchases and up to 50% of purchases of finished products once the season has already started. -kerry

Zara has excellent products, but the service in its stores is terrible - long lines at the cash register, the runaround for simple returns, etc. I've stopped shopping there. -Kay

It was about time Inditex entered the US market. Here in Europe we've been studying ZARA strategies as a very good example of SWOT analysis and Competitive Advantage. Thumbs up Inditex, break the american rules ;) -Ermela

Zara has another interesting thing. They spend ZERO on marketing. No advertising, no marketing stunts, nothing. Just good prices and word-of-mouth. -Lucio

Sounds like a standard model for success. Give 'em what they want, don't pick up deadwood, stay lean and flexible, be adaptable and move fast. -Christopher H

Although Zara's clothes are fashionable and very cute, I believe they also keep their costs low by producing low quality clothing. I have bought several items there, only to have them fall apart in a matter of weeks. A friend and I who bought the same sweater weeks before me, were in amazement as our sweaters fell apart in unison week after week, until while travelling in Austria in dead winter, I was forced to buy a new one...Never shop there if you would like your clothes to last for the season...Never... -Former Zara Shopper


A CONTRARIAN'S GUIDE TO UGLY MUNIS by Aaron Pressman
Oppenheimer Funds' Ron Fielding likes to find gems among tax-exempt bonds that others dump—and often winds up scoring big

"They do take on a lot of risk," says Morningstar analyst Greg Carlson. "But they've got a pretty impressive research team, and they've gotten so many calls right over the long term."

Contrarian's Guide


BusinessWeek - Oct.20,2008

Comments on America's Financial Crisis

Henry Paulson & Ben Bernanke testifying before Congress
Sept.08
(gawker.com)

nytimes.com

Sept.29-2008

This "compromise" is between Wall Street billionaires and their Washington lap dogs ONLY. Working Americans were not seriously represented at the bargaining table.
If you doubt this, just read their proposed bill.
But because the election is approaching, we little guys can stop the bailout at least temporarily. This is one of those increasingly rare cases where democracy really will work.
Contact your Senators and Congressmen and tell them to vote NO on the bailout, or you won't vote for them on November 4th.
Future generations will thank you.
Do it for your children and grandchildren.
— B. Mull, Irvine, CA

Bailout shreds our first principles of equality and fair play. The innocent of limited means are to repair the greed and recklessness of the perpetrators, many of whom possess staggering wealth. If anything trumps the notion that some institutions are "too big to fail," it ought to be that some principles are too basic to be pushed aside.
— EW, Tucker, GA

I see a similarity between Iraq and WMD and the Fed and Toxic assets.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity!
Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Shoot down the bailout. Seize their assets, liquidate the malinvestments and throw them in jail.
I promise my vote to either party that stops this from happening.
The fed must be relieved of duty for either dereliction of duty or treason and be brought up on charges and fired.
Eliminate the federal reserve.
Let interest rates self-adjust.
It will be a tough year or two, better than a decades long international global financial collapse.
— Earl E, The City Time Forgot

1. What the U.S. economy needs is a recession. Historically, recession has been the best medicine to cure the excesses of an overheated economy, especially following a bubble. If the weak, the reckless are not weeded out then the next rescue package will be even bigger. A financial package in an effort to stamp out an upcoming depression is fine, even though I don't it will work. But it should not try to smooth over the natural selection process of the capitalist system.
2. Ultimately I don't believe the rescue package will achieve its intended goal. After a short period of false cheer, the reality will sink in -- when the Chinese and Japanese are forced to face the reality that they are holding a few trillion of worthless paper, the dollar, U.S. stock market, and U.S. interest rate will crash in a spectacular fashion as to make Japan's "lost decade" look benign.
3. Hank Paulson should not preside over the implementation of this bailout. He needs to resign after (a) being incorrect in every government intervention so far this year (b) arrogantly demanding monarch-like power in his initial request 2 weeks ago. This is absolutely not acceptable in a democracy (if people still value such quaint concept). (c) His obvious confliect of interest as former CEO of GS must be explored and exposed. Any judge in much more vague connection will have long since recused himself.
— Harry Huang, Philadelphia

The bill is a big fake. Current CEOs are to keep their golden parachutes, oversight is limited to the 'old boys network' and everything else in it is not even close to give the tax payer any insurance or hope of recovery.
Most Americans would rather accept some hardships to clean WallStreet instead of having to pay a truly unbelievable amount of money to those who created the problems in the first place - remember - even with the 'bail out' there are no guarantees that everything will turn out 'just fine' and it won't. Next up are the worthless credit card debts, our completely old-fashioned and almost dysfunctional automobile industries - all in need for a 'bail out'. We are already unable to maintain international levels in science, our infrastructure, roads, bridges, power lines are crumbling. What has happened to our country? We used to be strong, proud, we used to take on problems with determination. We used to have politicians we can trust - all our pride, all our self respect, our philosophies and our strength - all gone? All abandoned to support greed and big business?
What we should do is - help our country. Tell those politicians in DC and in your State that we won't play that game anymore. I will shift my support to Ralph Nader. Vote green and send a message to Democrats and Republicans.
Folks - we're just experiencing the beginning of the end. Main street is being sold out to the highest loser.
— Ela, Texas

Looks like the Titanic's about to get a really expensive deck chair.
— Kevin, San Francisco

I can not believe this is actually happening; I'm just sick to my stomach that this, George W Bush's White House, is getting in one more sucker punch to the Citizens of this nation when we thought we were seeing the light at the end of the tunnel.
When President Carter called this "the most corrupt administration in the history of the nation" he had just come from post Katrina New Orleans where he picked up the phrase. It was common to our speech long before, having dealt with cronys stealing the clean up money ect.
This is just more of the same. Subprime was a national Katrina and this administration ignored it until it came to this- one last cash grab on the way out the door. A homeless, ruined middle class means nothing as long as the vultures stay well fed.
— missbike, New Orleans

Its the derivatives, not the mortgages.
The US already has 6 trillion owned and guaranteed in Fannie Mae and Freddie Mac of the 12 trillion US mortgage market. More with AIG and WaMu.
The companies and hedge funds that sold insurance on mortgage insurance are the black hole where this bailout money is going.
— Matt, Portland, Oregon

In a rush to spend money, Congress has done a horrible job of explaining to the American citizenry specifically WHAT companies are having difficulty securing credit right now, and I've not yet seen ONE executive from a company come forward to say they are having a difficult time getting credit for their company.
If this has happened, it sure isn't getting much coverage. All I'm seeing is Congress rolling over and believing the Executive Branch yet again without doing its homework, and being told how the financial markets will collapse if they don't act now, now, now. (Does any of this sound familiar?)
Congress will pass a bill, and the American public will hate them for it. Expect a revolution in November that will unseat a lot of Representatives and Senators, and shake many who thought they were safe.America is a shadow of its former self, and we have only ourselves to blame for not paying attention and forcing our government to be accountable and do its job. Shame on us all.
— Gregg, San Francisco

This bill could have been written under Henry VIII. It is overly complicated and misses the chance to correct predatory lending practices by allowing the government to renegotiate individual mortgages on fair terms (e.g., saving people from sudden balloon payments or unreasonable rate adjustments). Section 119 (b) (1) "Treatment of homeowner's rights," actually enforces the "rights" of contract holders not to re-negotiate, since it says "The terms of any residential mortgage loan that is part of any purchase by the Secretary . . . shall remain subject to all claims and defenses"--an open invitation to endless lawsuits.
— Charles Ross, Battle Ground, Indiana

Executive pay limits continued to be "a concern for Mr. Paulson, who worried about discouraging firms from participating in the rescue plan" -- Paulson has been consistent in pushing this point. But it can't be right. How can any responsible board of directors allow a financial institution to fail to save itself from the credit crisis because its CEO wouldn't accept a pay limitation?!
— pechmerle, California

Notwithstanding the essentially cosmetic items that have been included since McCain’s intervention last Thursday, this deal is simply very bad news for America and the American taxpayer and will do nothing to assure Americans that they are not being subjected to the most outrageous scam ever.
Why should Americans be forced to dig into their own pockets that the fat cats have been cleaning out for years to bail out the already over bloated fat cats?
Why should working Americans be held liable for this bottomless pit that will eventually cost them trillions of dollars in extra taxes?
Why is there no attempt to confiscate from the fat cats the loot that they have accumulated over the past fifteen years and more and use it instead of fleecing working Americans?
The reason is simple: Our so called politicians from both sides of the aisle serve not the interests of the American people but the interests of the powerful vested interests.
Indeed the most remarkable thing to observe over the past week is the weakness and lack of any moral backbone in our politicians as they meekly followed orders from Paulson and the rest of Bush’s henchmen.
— Mike Strike, Boston

All I have to say is this; I will actively campaign against anyone who votes for this abuse of taxpayers’ money. If the votes are not by roll call, than I will work diligently against any incumbent. I pledge this not just for this year nor in my own State nor my own party, but until everyone involved is removed from office. If possible I will work for their impeachment and conviction on abuse of power and embezzlement by statute.
I believe there was a man called Robin Hood who took it into his own to redistribute the taxes appropriated by questionable authority; I ‘d hate to think that we have gotten to that point with an elected (vs. aristocratic) government.
— kjm1102, slc, utah

I think this is the biggest act of theft in world history, and far and away the most irresponsible and corrupt thing that Congress has ever done. I'm so angry about it I can barely contain my rage. Suffice to say that if this goes through I will never, ever vote for either a Democrat or Republican again, no matter what.
In particular I am quite disturbed that virtually no professional economists were invited to comment and testify on it, or appear to have been involved in planning it. And I have to point out that virtually all of the people involved, including those in Congress who are voting on it, are millionaires who have major investments in the markets. Especially Pelosi, who appears to be the ringleader. They all stand to make major fortunes off of this, millions and maybe billions. Paulson in particular. I've heard he owns like $600 million in Goldman Sachs stock alone. So if the stock goes up he stands to make an enormous fortune, possibly a billion or more. It's beyond disgusting that someone so intimately connected to Wall Street should be involved in deciding what to do.
This won't improve things. On the contrary, it will make them worse. Much worse. Public opinion is overwhelmingly against it, and it is beyond scandalous that this will pass despite all of the opposition. This truly marks the end of American democracy. A sad day indeed.
— mike, Los Angeles

I have one question: If the government is too "broke" to finance Medicare and Social Security, where is the money coming from to bailout Wall Street at the expense of workers?
— John Jaros, Philadelphia, PA

My husband and I refuse to allow our federal taxes to be used for the bailout of a bunch of greedy bankers. Next filing season, we will pay our state and local taxes, but we will not file a federal return. This is not the first time we've had to save their behinds and it surely won't be the last. Our decision is final. As for the rest of you taxpayers, it's your call. Our votes mean nothing anymore.
— Heather, Milwaukee

“For what shall it profit a man, if he shall gain the whole world, and lose his soul.”
This then is the task for America; no less that to reclaim its soul. But, where to start, and under whose direction? Seems to me that you need a leader. Another Lincoln or Kennedy perhaps? But where to find them? On Oprah? 'Idol' perhaps? Or 'Survivor'? Get real folks - the fantasy is over.
— Robert, Melbourne

I cant help but look at the reaction of the market during all this and think that they're acting like willful, spoiled children: if they dont get their money, they're going to make financial life miserable for everyone. The fact that Congress wanted to think about this before just lobbing money at them caused Wall Street to drop a few hundred points -- which strikes me as the kind of short-term, me-first thinking that got the investment houses into this kind of mess in the first place. I'm sure that, even now, we're looking at two inevitabilities: (1) 700 billion wont be enough (Has Congress ever passed a financial package that stayed on budget?) and (2) the entire sum will be gone by Christmas, at which point we'll be back to where we are right now.
— Sean Martin, Mebane, NC

Has the time come to haul the US flag on the New York Stock Exchange down and replace it with a white one?
— Listohan, Sydney Australia

If this passes, America will be having its turkey early this year. The bill only gives us borrowed time because politicians don't want to make the hard decisions like living within their means. Yes, there is plenty of blame to go around between DC and Wall St, but throwing good borrowed money at this problem will not solve it. The politicians will have to learn to say no.
— Tom Paine, Windham, NH

hope that people understand what brought us here. It began with deregulation of the industry (compliments of Pres. Clinton) and congressional oversight of Fannie, Freddie and the banking industry (chaired by Rep. Barney Frank and Sen. Christopher Dodd...both liberal Democrats). The result of this fine mess was the granting of many, many variable interest loans to low income recipients who had no chance of repaying them.
Therefore, pointing fingers at Bush is simply pointless at this point.
— Jason B., Massachusetts

I would like to hear President Bush and the many member of congress who embraced the free-for-all deregulation that got us into this mess apologize to the American people. We elect them all in good faith to represent our interests but their oversight was irresponsibly driven by the special interests of high rolling financiers. I'm not impressed by the lip service they give to "saving main-street." We are long overdue for a major priority shift that values and rewards the hard work of average citizens struggling to make ends meet each month.
— JMS, New Mexico

This crisis is already hitting Main Street. My friend owns a small manufacturing firm in Chicago. He needs to buy a new machine to increase sales, so that he can fight rising input costs. A month ago, he could have walked into a bank and gotten the loan - now no one will lend to him. He's a respected businessman with great credit and collateral. Now instead of buying the machine, he has to lay off three of his workers. This is just the start.
— JC, CJ

Something is bothering me today.....With the banking industry now consolidated into 3 behemoth institutions - who is left to sell these assets to the Treasury? Seriously - what percentage of the toxic assets are now concentrated with JPMorgan, BofA and Citi? If they are so sound as to be able to take on all the problems of Merryll, WaMu and now Wachovia - do they even need this bailout? Something is not right here.
— Morgan, New York

Does any commentator, economist or the like think the the bail out plan coupled with low interest rates could be a catalyst for hyper inflation? Obviously, it won't have the same effect as printing money (which I presume the gov't would not even dream of doing), but wouldn't it have similar effects? The administration and Congress together are failing the American public. Nobody has come out and tried to explain in coherent terms why the bail out plan is the best alternative. The bill has failed b/c our government has treated the people like a bunch of morons. Don't just tell us "something has to be done." If you can't explain why the current plan is the best alternative, then, perhaps at the risk of worst case scenario, they should consider different alternatives. The last time this administration forced us into doing something for the sake of doing something, our troops got stuck in the Iraq quagmire.
— rlee, New York

People are reacting as if this doesn't impact them--it's insane that some people think that Wall St. needs to bail itself out...it's not about Wall St. it's about all of us. The credit markets are frozen, no money is being loaned, how do you expect the market to self-correct under these conditions?
— tina, boston

Consider that there may be some voters, like myself, who understand that a correction, driven by the government, is necessary. Consider that those same people may simply reject the methodology that his bailout represents. How can we be so irresponsible as to give over this sum of money to people who have proven themselves incapable of properly managin their own finances? What do you think they will do with free money from the taxpayers? Why have we not heard ANYTHING about jumpstarting the economy and securing jobs through government civic works projects like those that saved our grandparents from starvation 70 year ago? If the diseased banks are going to die, let them. There are other ways to help America than corporate and financier handouts.
— Michael, Chicago

When the populism of " class warfare" runs its overheated course, the average person or business will find, literally overnight, that their access to credit or capital is gone. Lives balanced by moving around debt will go into free fall. Companies will fire older employees, contract, and slash benefits. Leisure expenditures and luxuries will disappear as cash in pocket will be the only source of purchase. Millions will forgo homeownership, second cars, and college as the prospects for jobs after graduation will decrease. So, while the commentaries today are filled with passion, the other shoe is about to drop. Listen carefully to the Treasury and the Fed. As we contract, the Chinese will suffer as well and servicing our debt will no longer be so attractive in the world. Be careful what you are wishing for.....
— Jlevine, Northampton Mass and Quebec

someone please explain why we cant follow the sweden example? It seems so simple...
— Fred, LA

I've been following this with some rigor, but I'm still confused: What's the goal? Free up credit? Get cash out there? Are there other ways of doing this that don't reward stupidity and greed? Where can we find some sort of comprehensive ideas on how to deal with this situation? Is there any way we can get better ideas out there and get a groundswell going for them?And, has anyone thought about taking $700 billion and putting it into our infrastructure? That would get money out there, and the American people would actually have something to show for it! Would this fulfill the goal (remember I don't know what it is), even if NOT rescuing those dudes from their toxic debt?
— Francis, Brooklyn

House Rejects Bailout Package


gawker.com
Sept.29-2008

Shit, and we need a car loan in the next few weeks. Looks like it's hitchhiking and Segways for us!
-psych101

Somehow, even as the Empire falls, I just wanna go buy a big-ass TV while I stil have money left. 'Cause with the end nigh, few things seem as important as watching "Mad Men" in high-def.
-DaeSu

I'm opening up an apple stand down here near Wall Street. If anyone wants help me diversify into pencil sales, I can be reached at howardroarklaughed@holyshitimfucked.com
-HowardRoarkLaughed

This is great news. The bailout is a bad idea. Unless you fancy paying $5 for a roll of toilet paper because of hyperinflation (which would be a result of dumping $700 billion worth of monopoly money into the economy).
Listen to Peter Schiff, people. He's been right all along.
-icantdrive55

And who were the 2 fucks who didn't vote? I wanna know, dammit, so that I can deduct your salary from my taxes.
-HowardRoarkLaughed

By the way, I'd like to report on a little unforseen effect of all this incredible financial idiocy south of the border.
Canadian Prime Minister Stephen Harper's boneheaded and relatively useless Conservative party is going to get re-elected because while other parties staked certain campaign promises on advancing technologies and improving the environment, Harper's Conservatives have now sat back and are terrifying people with "well, world finances are in the shit, do we REALLY want to advance into the future? Why don't you just cower back into your safe, stupid little Canadian cages."
Which of course, we're doing. By the fucking crateful. So thanks America, I'm chalking up our inevitable new government of shitty, inbred, power crazy Conservatives to you.
We used to be a good country before we started getting Fox news. We're on the decline now. So Americans who thought Canada might be a good place to escape to - just fucking pack it in for Brazil.
-Pope John Peeps II

I don't know if I should be relieved that I have no money to lose or depressed that I graduated (May '08) into the worst economy since the depression.
Law school is looking pretty damn good right about now.
-AAAnonymous

Saying no to the extortion, they cast the right vote, folks.
Giving the private, unconstitutional Federal Reserve and their Wall Street/international banking patrons even more ungoverned control over the economy they've handled oh-so-wonderfully to date is not the move, to say the very least.
Meanwhile, Hanky has already handed out more than $900 billion of your money to banks in the last week or so anyway, according to Reuters--because, hello, they do whatever they want pretty much regardless. They're just trying to get rid of what little remaining limitation exists on their self-dealing consolidation efforts.
Meanwhile, the new annual military budget is over a trillion dollars, half of our GDP.
Feel safer?
Well, what's a little more looting of the country in the last few months of the Bush administration?
-GuyBitchy

I've decided to run for office. My campaign slogan:
"Seriously, could I fuck this up any more?"
-uninspired

Seriously: The bailout should include the following provisions.
No one at the banks may derive profit from having taken part in kleptocratic lending. The people who are in default will get some time to get back on their feet--6 months, a year. CEOs of said companies will forfeit all salary from this year, and turn over any stock and options, as partial restitution for their irresponsibility.
Paulson and Bernanke will step down once the deal is brokered.
Bush and Cheney will resign, once they have accepted resignations from the two public officials named above.
I did that in 30 second. How fucking hard can it really be?
-JacquesPaysan

Ted Kopple is on NPR right now talking about how the Chinese are about to start buying things up all over Wall Street.
-themediatrix

I work for a nonprofit and upper management is shitting their pants right now. Ah to have dimished hope. AND I JUST BOUGHT A CAR!!!! FUCK!!!!!!
-contradicto

Can't we just sell Bush to the Chinese? I'm sure we could get a good $25,000. It's a start!
-tammyfey

Dear Congress: If $700bln roughly translates to $400,000.00 per person in this country, and it's taxpayer money anyway, just give us our $400,000.00. We know what to do. kthxbai.
-AldoraHippolyta

So I live on "Main Street", make $30,000 a year (before taxes! yay social work), rent, lease my car, and have a little bit squirreled away in a savings account. I'm in no worse shape then before,right? Wow, I never thought I'd be so happy to be poor.
-jerrica

Ok, seriously, fuckity-fuck-fuck. I am currently unemployed and have $119,000 in student loans and about $7000 in credit card debt. Yeah, I know people, the credit card debt is stupid. But seriously, am I going to be looking for a cardboard box soon? Am I glad this bill didn't pass? Please help the totally clueless.
-boobaloob

Pareene brought up the fact that mess will be heaped on President Obama. Yes, it will. And I guarantee that today at least one Republican biggie turned to another and said "let the n****r clean this up. That's what they're good for."
As the American financial system spits its last breath, let it be in the face of the first black president. I'm positive that a LOT of Wall Street thinking today has been along those lines. Oh well. This will take care of Obama. He'll have four useless years and leave office in disgrace. And then we'll get the White HOuse back.
-Weegees bored

And make no mistake about it: there have been major crimes committed leading into this mess, and a major facet of the bailout legislation is de facto retroactive immunity for the most prominent "perpetraitors."
In other words, no investigations, no jail--just gives us a $700 billion broom and we're gonna sweep this up behind closed doors, thank you.
-GuyBitchy

And, an artist friend of mine with almost no income and a terrible credit rating was on the phone with Chase yesterday as she was having trouble accessing their website to make her bill payments.
The Chase rep told her that they had pre-approved her for a new credit card.
WTF???
-LilyBlue

I'm sorry did something happen today?
-souplines

Who Set Your Money on Fire?


gawker.com
Oct.1-2008

Welcome to October! You just witnessed the tip of the iceberg or the global warming of the fabric of America. We are just putting the finger in the dyke but the stupid ice caps keep producing more water. Enjoy pointing fingers and getting elected. Don't get distracted by lightning rods or ignorance. Not much of it will matter in the months ahead. Just don't make any major purchases and learn to live with less. This is the end of an era of mass consumption as we forgot what we do best, produce. We got sucker punched into chasing funny money. We all thought that is what we needed to do with our cheerleader in charge sounding the mating call. Now everyone is angry. Angry at ourselves, Scared for our future. We deserve it, we decided to go to sleep when we needed to be on watch and our lunchbox was stolen from us.
-souplines
Jim Cramer's Sorry


gawker.com
Oct.10-08

Things you kids will want to know in the next few months:
1) You cannot cook a can of soup by putting the whole un-open can in the fire. The can will explode, possibly in a way entirely undesirable to you, especially since there won't be any doctors willing to take care of you if you can't pay up front.
2) Assume the locals are armed. When you are making your way from shantytown to shantytown assume that those who are there already are fortified and willing to defend themselves against any perceived threat. Be non-threatening and deferential. This especially applies to farmers and their attractive daughters/wives/sons/livestock.
3) Enforced deprevation of material wealth is not the same as surrendering an attachment to the material world. Being poor is neither enlightening nor broadening. This will suck.
-skippywasserman
The Bank Holiday


Two Christmases ago, I ended up in my bedroom closet, curled in a ball, as my father yelled at me through my bedroom door. My mother later treated me to a lecture on how I was breaking my father's heart. And they wonder why I refuse their offers to move home permanently.
Sweet Baby Jeebus, don't let the economy get so bad that I have to move back in with my parents. I don't think my horribly expensive health insurance transfers to their state, and that means I'd be sent to a state loony bin when I have a psychotic break after having to listen to my mother talk about the cats and/or nothing for five hours straight.
-mockingbird

We're all in this together until you try to snatch the last can of tomato soup off of the rack right in front of me. Then I cut you. I cut you fuckin' deep.
-bringmemyTofu

The rent parties concept is a bit spurious... Even if you live all the way out in Brooklyn, rent is at least $1200, and you can't possibly fit more than 25 or so people in a New York apartment...So what kind of idiot would pay $50 to drink cheap liquor at someone's crowded apartment? Oh, it was a joke? Sorry...my bad.
-winniemc

Guide to Your Recession


This is one of those office e-mails, but, um, it fits:
If you had purchased $1,000 of AIG stock one year ago, you would have $42 left.
With Lehman, you would have $6.60 left.
With Fannie or Freddie, you would have less than $5 left.
But if you had purchased $1,000 worth of beer one year ago, drank all of the beer, then turned in the cans for the aluminum recycling REFUND, you would have had $214.
Based on the above, the best current investment advice is to drink heavily and recycle.
It's called the 401-Keg
-OlMuckyTerrahawk
New Great Depression Stories


You know, I get AIG's argument that it's a different branch of their company that's going on these trips and blah blah blah, but it still looks bad and there's a lot of people who won't understand that. For them to stand there and be like, "No, we're going to continue to have these trips and do business as usual and, oh, can we have another $35 billion dollars?" is so insane. It's right up there with "Let them eat cake." Actually, that's a pretty good analogy. Marie Antoinette was not responsible for the crushing debt and famine, her spending didn't help, but it certainly wasn't the cause, but she was all showy and clueless about public perception and look where that got her. So it's like, yeah, AIG, keep making sure your execs get flown to the Ritz to get pedicures while people are getting laid off all over the place. No one's going to start throwing bricks through your windows or punching people in the face at the company gym or anything.
-Triphena
Angry About AIG


washingtonpost.com
Dec.8-2007

Is it just my realization or are our universities printing advanced business degrees as licenses to steal? Pearlstein's explanation seems like a description of a New Yorker cartoon as a couple of guys at a Manhattan bar discuss how to peel a buck from their client's pocket. It seems as though most big advances in the stock market are scams; in the early nineties it was savings and loans, early in this decade, dot com. Wall Streeters are schemers and behave like alchemists to devise ways to grow two dollars from one, tack on their fees and watch from the back of the wagon as the towns people dig in their pants for a crumpled buck to buy the latest magic potion. The sad part of it is many of us who shepard our dollars, stand aside and pay, yet again, to pull people from the brink. I used to think those elected and otherwise powerful and wealthy individuals in well paying positions were smarter than me and that's why they were there, now I realize that they are just as clueless as the rest of us, are dishonest and motivated by greed.

-tsorwglang

Steve,

Great article. I even understand the general concept of tranchs. Similar to tinker bell but believed by adults.

Now, how does one who bought a small house, drives an old car, buys only what he can afford, shelter his modest savings from the storm now breaking?
-kaygeejay

"This may not be 1929

True, it may be worse. Once this is set in motion, it can't be stopped. Deflation is ahead, and that is the worst scenario for the US. I can't help but notice a lot of officials (fed, banks, etc) are starting to take great interest in how 1929 and the 1930s progressed. Lots of questions on what happened, how did they react, etc.

I've been around awhile, I've never seen so many people asking these types of questions
-steve831

Actually this crisis more than just resembles 1929. The parallels are uncanny and exact.

I recall my grandfather, he was a professor of economics at the London School of Economics, explained how the great depression happened and his explanation was easy to follow. First there was a bubble in stocks, then a spreading liquidity crisis, then a recession and job losses, then people who could not pay on their mortgages lost their homes and just "walked away" from mortgages with balances greater than the reduced value of their homes. Liquidity froze as banks failed. A deflationary spiral set in as the money supply contracted.

George Bush is doing a pretty good imitation of Herbert Hoover failure to take decisive action.
-custos

...find out who made money during this debacle then tell Cookie to get a rope... -dwinrow

Pretty good article. Lays out some of the basics very well. I think it clearly explains how the responsible risk was restructured.

I wonder more about peoples comments than the article. Why do people keep insisting we didn't see this coming (with we meaning the government). I started working toward selling my house as soon as the recent bankruptcy reform was passed. Both that and the current bailout are band-aids designed to slow the crash. They won't stop the crash. Some people may foolishly track each blip up and down of the stock market and housing sales and argue day to day what comes next. Take a longer term view and it becomes obvious.The government (the Fed, Bush and company, etc.) saw this coming, a number of individuals saw this coming. You all have choices. Stick your head in the sand and believe the stock market and real-estate can continue to rise indefinitely if you want. Please do, in fact. I have been making more money off of your mistakes than at my full time job.
-amccoy1

It's Not 1929, but...

BusinessWeek
Oct.20-2008

It was pure greed, based on exploitation. (Some subprime lending) is just the same as organized crime.
-Frank Jackson, Mayor of Cleveland

gawker.com
Oct.26-2008

Lets not forget that these are the people who voted for Bush and have benefitted enormously from his tax cuts. They had a big role in creating this whole mess. They made their bed and now they have to lie in it. I'm not going to feel too much sympathy for them, since it's still a much more comfortable bed than most of us will ever have. -hummingpenguin

This reminds me of a great line from the film In the Heat of The Night:

"I got used to better." -Lysergic Asset

@souplines: As a, now former, small business owner (perhaps again in the future, let's see), I can tell you, small businesses are taxed extremely unfairly. It is often more advantageous, from a tax and insurance standpoint, for the owner of a business to take on more work personally than hire people to do said work. Likewise, it is more advantageous to take out lines of credit, or to lease equipment, than it is to pay COD or purchase goods outright.

The net effect of this is that it often makes more sense for the owner of a business to keep money out of the economy than it is to put that money back into the economy.

I won't give the Republicans much, but I will give them this. Republican tax policies favor small businesses far more than Democratic policies. Back in '02 Bush tried to push a comprehensive small business tax reform package through congress. A package that would have roughly tripled the amount I could write off in capital expenditures. The then Democratic Senate killed the legislation. The immediate result of this for me was that I just didn't make those capital improvements. Thus keeping approximately $50k out of my local economy. That's just one example from one year, there are many others.

Now, this doesn't mean my vote is going to McCain (no fucking way), but it does mean I have to somewhat vote against my own economic interests as a potential employer of people.

Don't pile onto someone who wants to start a business that employs people. We small business people take our responsibility as employers very seriously, but a business is not a charity, we have to have incentives to put people on payroll, and too often the Democrats have taken the small business community and our needs for granted. I'm not sure why this is, but I suspect it has to do with some built-in left wing biases that view all businesses large or small as being roughly the same from a moral standpoint, an unfortunate and patently untrue generalization.
-lionel-mandrake

@lionel-mandrake: This is not piling on. When confronted with the truth of an anemic economy, don't blame tax policy. Warren Buffet pays less tax percentage wise than the woman who cleans the bathrooms. This is an unjust and unfair policy that has done nothing to increase value or savings for this country. You cannot believe at this point that supply side economics (or voodoo) as it was called by Bush 1 has had a positive effect on the economy. There is more poverty and richer people in the world right now than ever and this inbalance has toppled the economy. Taxes spent correctly create jobs by building bridges, infrastructure. Plus they keep you safe and educated. Oh yes and by the way I do have a small business that employs 25 people. Do not lecture me on your right wing ideology. You had 25 years to prove supply-side and neo-conservatism. Now we are paying the price for your destruction. This is not left-wing as you call it but common sense. You cannot pay for a war with a credit card. -souplines

@souplines: Hey Jackass, read my other posts, I'm about as far from right wing as you can get.

I wasn't advocating supply-side economics, only making the point that on this one particular issue, the Democrats are often not responsive.

That's all.

Lordy, you are fucking nut-job. -lionel-mandrake

Wall Street Wives

consumerist.com
Oct.31-08

@AMetamorphosis: Actually, no, this is bad. Do you honestly think that the higher-ups, the ones making all the money, will feel any of this? No, it'll be everyday working people that get canned, and then can't pay their mortgage, end up getting foreclosed on, losing their family, and having to eat out of the McDonalds dumpsters (and McDonalds won't even give them water anymore). Meanwhile your house plummets in value since they happened to be your neighbor, a gang occupies the house, and there's a drive-by shooting every other day. -howie_in_az

@howie_in_az: That is why I will be trying to buy any holiday presents I do buy from individuals or smaller businesses. That way I feel like I am more directly doing something to help someone else rather than help some CEO pay for his house in the Caymans. -bohemian

The signs have been there for a long time. Party's over,time to pay the piper.
This will be good for some folks...Folks that have lived within their means,saved and invested (not gambled,invested)and generally not gone overboard with a bunch of rapidly depreciating consumer toys. Those people will do fine.
Some however...Well, live by the easy payment plan,die by the easy payment plan. I take no joy in what's about to happen to these people.There is going to be some real pain and heartache. Broken marriages,split families,alcoholism,etc. But...
But. Some have been warning for years that our government and their citizens are overextended.Credit has been too easy. Credit card pushers and the 200 channel 24/7 wishbook that people stare at every day has sold them a bill of goods.You don't build welth this way. Deep down inside,I think everyone knew it was a mirage,that the whole "boom" we saw was just borrowed prosperity.Now ,it's the morning after and we feel kinda queasy. -Snarkysnake

I'm just glad credit card companies will be forced to appreciate people who pay off their balances each month. They're getting their come uppance for calling people who pay in full "deadbeats" for all these years. Really, when something's that broke, this kind of thing is inevitable. -stevejust

If they could only fathom giving people good interest rates and only giving a moderate amount of credit to consumers they wouldn't have people defaulting at this rate. Lower the interest and people can pay, it's pretty simple really. Instead they charge 30 dollar late fees and over credit limit fees and jack the interest rates up sky high. If you are late making one payment what makes them think they are helping you by charging a late fee and then raising the rates? They are simply trying to make their money off you as quickly as possible and then when you go into full default they can write you off on their taxes as they destroy your credit. -Gokuhouse

I won't lie... there was a time in our lives where we needed our credit cards. I was ill, not working, his car broke down, I lost my job, etc. But we did everything in our power to keep our cards from defaulting, even if that meant asking the parents for help, and now we've cut all of our cards up and I'm in the process of snowballing the debts. It'll take a while, but we'll get there. -citnos

Consumers Have Thrown in the Towel

gawker.com

Oct.28-08

Maybe the Time: Person of the Year can be, "The 600 We laid off who are forced to feed their children Fancy Feast and their fellow wives who've had to become hookers."

But in all honestly this is getting sad. 1,500 are going to be laid off at Yahoo, I heard Hearst is about to get ready and lay off some more... I watched something about a 20-30% unemployment rate in our country over the next year to 18 months. It's looking pretty legit... pretty legit. -mishappenstance

Not to put too fine a point on it, Ryan, but I would like to suggest that being laid off is a "shave" when it happens to someone else, and a fucking "amputation" of your most precious bodily parts when it happens to one's self. -The Warrior-Poet

Time Layoffs

gawker.com

Oct.29-08

Good Fucking Times! Keep these heart-warming vignettes coming.

Excuse me while I reach to my deck-side gun rack and contemplate living. -ElvisWorley

I stayed late every day for two weeks working on reports for my boss to justify his job and our department. After all that, my boss came in one morning beaming and telling everyone how he single-handedly saved our department, and how it was going to be smooth sailing from here on out.

Later that day he got rid of me and a few other people. I was really tempted to delete every file on my computer so he and his BRAND NEW assistant couldn't get their grubby hands on all my work. -ohthisoldthing

@Our Lady of the Massacre: I am sorry to say that on at least one occasion that (usually) idle threat was carried out. I was the temp who came in soon after the disguntled ex-employee wiped all the sales information for the past two years, and that means I was the one who had to try to recreate the data from bits and pieces of old sales reports, receipts and so forth. The point is, you never hurt "the company" when you do sabotage, you just pass along a shitload of worry onto someone else even lower than yourself on the food chain.

Not to get all advicey here, but there may well be a time when you will need someone at that old job for a reference, or (given the way most industries work) you'll find yourself employed at a new firm next to one of your former colleagues. Do you really want to go down in history as"the guy who erased the hard drive?"
(PS: this is one of the reasons people are terminated and then have only an hour or so to clear the premises, to avert this kind of childish revenge.) -La Cieca

@ohthisoldthing: Yeah, when I got laid off, I wanted to just change the project folder of what I was working on to "r:/gofuckyourself." That would have been awesome. -idratherbesailing

Something similar to the second story happened at my ad agency.

They fired 15 people, and the next day had a meeting to discuss the new departmental structure. Someone noticed that a coworker wasn't on the list (she was in the middle of a week-long vacation), and asked "what about so-and-so?"
The silence was deafening as they tried to avoid saying that she'd be fired the minute she walked in the door. -BaconBits

I am going to regret typing this but I almost wouldn't mind getting laid off. I'm so close to burn-out in my current job and I have very little free time to search for a new one. But I should be grateful for what I still have. :-/ -Our Lady of the Massacre

@Our Lady of the Massacre: The division president, HR supervisor and various other important-looking people have shown up at our office today. I'm somewhere between hope and dread right now. -Triphena

@Our Lady of the Massacre: You're going to regret typing that. I've been searching for four months, and it's a full time job, one that's much lonelier and scarier than my last, hellish, 70-hours-a-week stint. I've had four interviews in the last week and still worry ... I even learned how to bake my own bread, and I console myself when the groceries look meager that if I lose ten pounds, I'll be ready for the pole. -SylviaPlathWasFramed

@Triphena: They're checking your websurfing habits and reading your comments right now. -it takes a lot to laugh

@steveholtsmother: I had to go to a "career counseling" session at the Unemployment Office, and it was soooo depressing. The room was full of people that clearly hadn't had to look for a job in years and years, with graduate degrees and all, and the woman running the session tried to encourage people by saying that Target and Kmart are hiring for the holiday season. -ohthisoldthing


My hubby is a graphic designer and was tasked with making the "death chart"--a family tree of who worked for whom in what department of a majorly huge company, complete with ID card photos, so that the two Bobs they hired to trim the fat could have an easier go of it. The chart wrapped around three walls of a huge conference room. I told him to leave his name and face off of there, if they don't know you work there they can't fire you, right? -misslinda

I started my career in the early 90s, during the dot com boom. I'd join a start up, and about a year later they'd run out of money and lay everyone off. It went on like that until the dot com bust in 2001, which was basically a huge cull of useless companies and barely-qualified employees. There is a true art to layoffs, both on the part of the employer and the employees.

My rules for employment are thus:
- Never bring anything personal into the office that is larger than your handbag.
- Listen to the company announcements and start removing personal files from your computer as soon as you get a whiff of losses.
- Be honest about how valuable you are to the company. If there are other people with the same job role as you, know that the most ass kissy, cheapest, or hardest-working person will survive.
- If your boss doesn't like you (and vice versa), kiss your ass goodbye.
- Volunteer to be laid off if you want to move on. Then ask for a decent severance. You'll get it.
- Never, ever drink the Cool-Aid that is "company loyalty". The company is only loyal to its stakeholders. -Rosweeta

@Rosweeta: I've been around that same dotcom block too many times too. Now I work for myself from home doing the same stuff I did before but I split up the work by doing it for three to four different companies.
One slashed my workload in half but that means I'm still secure with 87% of my income. I'm on my husband's insurance so I'm the cheapest option some of them have. -ouiserboudreaux

@Rosweeta: right servicey of you! i would add: don't accept stock as a substitute for compensation from most start-ups. -thatgirlinnewyork

@thatgirlinnewyork: Oooh, ya, I forgot that one! Bought my stock options at $15/share and still have them - they're now worth $2.50/share. -Rosweeta


Actual story: Called into the boss' office one morning.
"I'm sorry to hear that you have decided to pursue other opportunities."
Me: "I have?"
"Yes. You have." -Truculent

Layoff Stories

gawker.com

Oct.30-08

Were it not for the fact that I systematically and regularly break numerous drug laws, I'd possibly go into one of two true, recession-proof industries - either political office or law enforcement. -overunderover

Compared to Japan and Europe, America is still way behind the automation process and shedding administrative jobs.

You go to any grocery store, coffee shop, or even some clothing stores in Japan and it is completely self service and you just pay on your own on your way out. (They do have employees monitoring the situation.) I guess that wouldn't work here since most Americans are hardened criminals. -Master_of_Ceremonies

Are we at the point in this economic deathspiral where it's cool to start stealing shit? -Sarcastro

I think the sounds of staplers, pens, and paper clips rattling in people's purses and backpacks is pretty much a given at this point. I'm just worried about the copier. How do you steal a copier? -steveholtsmother

@steveholtsmother: If there's no actual boss in the office--just a bunch of disgruntled, unpaid worker bees, some of whom are actually living in the live-work loft/office, because they can't afford an apt, not having been paid for weeks--you advertise it on Craigslist, take the $$$ when a dude shows up, and let him wheel it across the carpet and down into the elevator. heh. -piequeen

A bunch of years ago, I used to work for a subsidiary of a major music company (name rhymes with Bony) and things were starting to get bad in the industry. But our office managed to avoid several rounds of lay-offs, so we thought we were safe. Anywho, I go on vacation and my buddy calls me and tells me a bunch of people were laid off. "Aw, that sucks." I said. Then he went on, "I think you're going to get laid off too." "Whaaaaa?" I said. "Yeah, I called your line to leave you a voice mail and it was disconnected."
A few hours later my boss calls me and asks if I can come in. So I come in, on my "vacation", and he lowers the boom. It was quite sad. He was almost crying and I had to console him.
Then I packed up one of the platinum plaques in the hallway and went home. Ta-da! -BankerHardcore

Layoff Stories

gawker.com
Nov.11-08
THREAD: The auto industry should be allowed to fail and have a better more efficient company fill the niche. -Nemesisesq
Rahm's Knife Marks?

Nov.12-08
THREAD: I really don't understand the gloom & doom... -drunkenexpatwriter
Media Doom Forecast

Nov. 20-08
In 1997 I hadn't saved any money because I was a student. 11 years later, all the money I had saved and put on my 401(k) is gone. Result: I have no retirement savings. wheee this makes me feel young again. -Henifer Hropes
>I picked the worse case scenario. Unless you timed trades well or picked good stocks, I can assure you that you lost money, but if I had to guess, I'd say 25%. -sample032
The Lost Decade