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It is the close of the year and books are opened.  Companies, both private and public are looking at their ledgers.  They assess their assets, gains, and losses.  Periodicals are filled with reports of folly.  May I share just a few?  City Fails to Collect Millions for Water, Fannie Mae Ex-Officers Sued by U.S., Failed hedge funds make a big noise.  The list goes on.

My reaction; I am not surprised.  Years ago I was dating a man, a marvelous specimen of a person.  He was bright, personable, loving, and truly amazing.  I suspect he still is.  Tom was the Vice President of a small; yet successful business.  Millions of dollars passed through this company's hands perhaps daily, maybe it was monthly.  I know not for sure.  I am not much of a marketing person.  My mind travels elsewhere.  Nevertheless, I marveled at how the money flowed, what is was spent on, and what services were provided.  Perhaps you would have as well.

You might have contemplated, as I did, what was not occurring.  I trust you would have noticed in Tom's business, efficiency was lacking.  The man working in and managing the warehouse was a wonder.  I always felt as though without his leadership, the corporation would never continue to exist.  In truth, I was astonished that this operation not only survived; it thrived!  Perchance, you have seen similar.

This week, as in months past, I read articles that reminded me of my musing, "How do corporations, even communities function?"  How do they stay alive.  From what I observe the world is crumbling around us.  Incompetence permeates society.  Institutions house the ignorant or avoidant.  I hope it is the latter.  Nevertheless, whether people are unaware or uninformed they manage.  How can this be.  I offer the examples I see and saw.  I ask you to assess for yourselves.  What is going on in the business world?

GM Loss $2B Worse Than Thought
Automaker Now Estimates It Lost $10.6 Billion In 2005
Detroit, CBS News March 17, 2006

AP) General Motors Corp. is increasing its previously-reported loss for 2005 by $2 billion as the world's largest auto maker gets a truer picture of the costs of bailing out its former parts-making unit and revamping its loss-riddled North American operations.

GM said in a release after the market close Thursday that it now estimates it lost about $10.6 billion last year from its earlier preliminary report of a loss of $8.6 billion.

It expects to increase the charge for its exposure relating to Delphi Corp.'s Chapter 11 bankruptcy case to $3.6 billion from the previous estimate of $2.3 billion.

Additionally, GM will boost its North American restructuring charge to $1.7 billion from the previously reported $1.3 billion to cover higher expected costs for plants the company aims to close by the end of 2008.

Then there is Ford.  They thought they had a better idea; however, evidence shows that they do not.

Ford Losses Widen On Restructuring
By Annalisa Burgos.
Forbes. April 21, 2006

New York. Making news this morning, Ford Motor lost $1.2 billion in the first quarter, its worst performance in more than four years.  The automaker took a $1.7 billion charge for costs from its massive North American restructuring effort.  The company is cutting up to 30,000 jobs and closing 14 facilities over the next six years.

Investors are hurt by incompetence and short-range thinking; however workers suffer the greatest loss. Society as a whole endures greater pain when workers are no longer employed.  Those laid off from their jobs have little money to spend let alone devote to building a nest egg.  

Even when employees do prosper and their employers are doing well, people can be affected by the incompetence of business moguls.

Failed hedge funds make a big noise
By Len Boselovic.  
Pittsburgh Post-Gazette Thursday, June 09, 2005

In the pantheon of hedge fund blowups, the $215 million that Downtown money manager MDL Capital Management lost for the Ohio Bureau of Workers' Compensation is small potatoes.

Nor is Mark D. Lay, who built MDL into an influential $2.8 billion money management firm that has stumbled in recent years, the first investor to lose millions making an errant bet on interest rates.

But the loss will put increased scrutiny on hedge funds, an $875 billion industry that's growing about 20 percent annually, according to figures from The Hedge Fund Association.

The investments, which rely on such techniques as interest rates swaps, options, futures contracts and other complex strategies that typically involve borrowing money or putting down only a fraction of funds, were once strictly targeted at affluent individuals.

Now, pension funds and other institutional accounts are using them to offset risk and enhance performance, particularly at a time the stock market, coming off its steep sell-off earlier this decade, is struggling to generate the sort of returns that seemed commonplace in the go-go '90s.  While they are still off limits to most individuals, investors don't have to be as affluent as they once did to buy into the exotic funds.

In the right manager's hands, hedge funds can outperform plain vanilla stock and bond investments with less volatility and less risk.  This year, their performance has been less than spectacular.

Corporate and government business decisions as a whole cause me to wonder.  In truth, companies do not concern me; people in total, worry me.  I continue.  I offer more examples to better illustrate my distress.  Allow me to present two more circumstances.

School district tries to close the book on missing texts
By Don Jordan
Palm Beach Post. Sunday, December 10, 2006

In the last two years, the Palm Beach County School District has taken a hit of more than $1.1 million in lost or stolen textbooks, according to school records.

Even though that is half of what was reported five years ago, district officials are just now implementing a $515,000 program aimed at stemming the losses.  The school district reported $1 million in missing schoolbooks for the 2000-01 school year, according to a state audit.

High schools that recorded missing textbooks last year averaged about $17,000 in losses.  However, there were three schools - Boynton Beach, Suncoast, and Palm Beach Gardens high schools - that initially recorded no losses, despite a combined enrollment of more than 5,000 students and more than a combined $28,000 in textbook losses the previous year.

Officials at Boynton Beach and Palm Beach Gardens high schools changed their textbook loss figures on record with the school district after The Palm Beach Post questioned the numbers. Boynton Beach High officials changed their report Tuesday to include more than $39,000 in lost books, the second highest amount among all schools last year.

Boynton Beach High Principal Kathleen Perry said she's not sure what caused the mistake.
"We're trying to determine exactly where we had this problem," Perry said.

Palm Beach Gardens High changed its report to include more than $16,000 in lost books.

"For some reason, it didn't get keyed in," Assistant Principal Raymond Ranghelli said.

Students who don't return textbooks - and don't pay for them - can be denied participation in extracurricular activities and, in the case of seniors, the graduation ceremony.  They cannot be denied a diploma.

When a textbook is deemed lost or too damaged to be used, the school is responsible for paying 75 percent of the replacement costs, according to Meezie Pierce, director of the school district's instructional materials department.  If a student doesn't pay, school administrators must glean the money for replacement books from the school budget - supported by taxpayer dollars - or collect excess money from fund-raisers.
But the schools are charged only if they report the books as lost, a system that district officials admit is difficult to enforce and verify.

"I send out the reports from the principals, that's all I can do," Pierce said.  "I don't have any authority to do anything to a principal who doesn't pay.

"If they don't report their losses, then the books are not replaced," she said.

Eventually, when a school tries to purchase new books, district officials can compare the request to the school's reported inventory and identify unreported lost books.

"The system matches it up if they've not been reporting losses," Pierce said.

Neither the Martin nor St. Lucie County school districts report problems with lost textbooks.  The Martin district doesn't track lost or damaged textbooks; it's up to individual schools to replace them, spokeswoman Cathy Brennan said.  So far, it hasn't become a problem.  Students must pay to replace lost textbooks, and rarely do school officials find a student unwilling or unable to pay for them, Brennan said.

The St. Lucie district also does not track how much is spent replacing existing textbooks, district spokeswoman Janice Karst said.  She said those costs are budgeted along with the costs of new textbooks, which the district frequently orders to keep up with changing curricula. Karst said she doesn't know of any time when the costs of replacing textbooks has ever created a problem for the district.  "It doesn't seem to be an issue here," she said.

It is bad enough that student lose their textbooks.  I think it is worse when administrators lie when asked of the possibility.  We ask, and supposedly teach our children not to purposely misinform others; yet, we the educated and ethical; elders do as we profess not to do.  We say what satisfies our own needs and not what is morally correct.

There are times that we admit our deficits and do not expect others to pay for the problems we produce.  Please consider the predicament in New York City.  

City Fails to Collect Millions for Water
By Anthony DePalma and Jo Craven McGinty
New York Times. December 12, 2006

For years, New York City has failed to collect on millions of dollars in overdue water bills because its records are so riddled with factual errors and outdated information that pursuing deadbeats and delinquents has become virtually impossible.

An examination of the city’s water records by The New York Times revealed that, at least on paper, tens of thousands of property owners have not paid a penny for water in at least two years.  Officials insist that debtors collectively owe hundreds of millions for water they used but never paid for.

But whether they are true deadbeats or customers with legitimate disputes, all debtors enjoy a virtual immunity because the city, unlike Boston or Los Angeles, will not use aggressive collection methods like service suspension because its records are so unreliable.

The city’s records show a family that owns more than two dozen properties in Brooklyn and Queens owes more than $1 million in water charges.  The family blames it on broken meters and misunderstandings and has managed to make no payments in at least two years.

The owners of a 10-unit condominium building on East 50th Street, a few blocks from the Waldorf-Astoria, simply stopped paying their water bills about two and a half years ago.  The city says they now owe more than $16,175.  The owners say the meter readings are inaccurate.  The city just keeps sending overdue notices.

Two doors away, the United Nations Mission of the Republic of Niger has ignored every water bill it has received since 1998 for its elegant town house, accumulating a debt of nearly $120,000, including penalties.  It ignored repeated calls for comment.  Eight other foreign missions on the Upper East Side are also in debt, and collectively owe the city about $230,000.

Joseph Mannino, the owner of a small building on Staten Island has a water bill of more than $260,000, which represents some 200 years of water use.

“There’s no way I could have used that much,” he said.

What efforts the city has made to collect on thousands of water debts have been made all the more difficult by a broken record-keeping system that even city officials cannot make sense of.  Meters that were installed were never read.  Buildings that were demolished over the years continued to receive bills.  Water use that would have taken a century to run up was billed to one customer in a single year.

Deputy Mayor Daniel L. Doctoroff said in an interview that the city could not be proud of a billing and collection system with such “long standing and deeply ingrained” problems.

Yet, only in the past year have city officials begun examining ways to overhaul the system.  They hope to install a $200 million automated meter-reading system, but that will not be in place until 2010.

The city’s records of just how much it is owed — $230 million on debts more than two years old and $400 million accumulated in the last two years — are really just estimates.  The actual debts may be less, or more.  While city officials insist the debts are substantial and real, no one believes they will be collected any time soon.

The records — which the city provided only after it was sued by The Times under the Freedom of Information Law — showed that more than 21,000 water accounts have been in arrears for at least two years, with more than 4,650 of those accounts delinquent for a decade or longer.

One consequence of the faulty system is that New Yorkers who do pay their water bills are bearing the burden of those who do not.  In July, the city raised water rates by 9.4 percent, far more than had been projected.  While higher insurance and financing costs contributed to the increase, the city Department of Environmental Protection, which runs the system, explained that “by far the biggest problem that is causing this proposed increase are the deadbeat homeowners who don’t pay their water bills.”

Why would people think to pay their water bills?  Few truly pay attention to the details of their daily doings.  At work, they wallow in avoidance.  Some seek the solace of blame.  Excuses are abundant and this is at work.  Imagine what occurs in people's personal lives.  I invite each of us reflect, myself included.  What do we focus on and why?  When do we allow thoughts, words, and deeds to slide?  Will we ever stop to examine the repercussions and if we do, will we willingly take responsibility for the role we play in our own lives.

As I evaluate the entrepreneurial world, I wonder.  So much survives with little thought.  Businesses thrive while the workings wane.  Fault can be found in every enterprise; yet, we accept this.  Explanations are barely evident.  At times, people do not bother to place blame; although when they do, it is tentative.  Individuals only wish defer the focus from themselves.  They  want us to believe that they stake no claim in what comes.

I recall a poster that hung in the Miss Wellington's fourth grade classroom.  The message held meaning for me then, and it still does.  "Not making a decision is deciding!"  Please ponder the proclamation, then decide for yourself.  What will you do today, at work, as you travel the streets and avenues; what, more accurately, will you be at home?

Look through the ledgers and marvel . . .

  • City Fails to Collect Millions for Water, By Anthony DePalma and Jo Craven McGinty. New York Times. December 12, 2006
  • pdf City Fails to Collect Millions for Water, By Anthony DePalma and Jo Craven McGinty. New York Times. December 12, 2006
  • pdf Fannie Mae Ex-Officers Sued by U.S., By Eric Dash.  New York Times. December 19, 2006
  • Fannie Mae Ex-Officers Sued by U.S., By Eric Dash.  New York Times. December 19, 2006
  • Failed hedge funds make a big noise, By Len Boselovic. Pittsburgh Post-Gazette. Thursday, June 09, 2005
  • GM Loss $2B Worse Than Thought. CBS News. March 17, 2006
  • Ford Losses Widen On Restructuring, By Annalisa Burgos. Forbes. April 21, 2006
  • School district tries to close the book on missing texts By Don Jordan. Palm Beach Post. Sunday, December 10, 2006
  • Betsy L. Angert
    BeThink.org or Be-Think

    Originally posted to Bcgntn; BeThink on Tue Dec 26, 2006 at 11:21 AM PST.

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    Comment Preferences

    •  Business. Go Black or Bust! (1+ / 0-)
      Recommended by:
      keechi

      It is only the giving that makes us what [who] we are. - Ian Anderson. Betsy L. Angert
      BeThink

      by Bcgntn on Tue Dec 26, 2006 at 11:19:58 AM PST

    •  I suspect some of it is intentional.,, (3+ / 0-)
      Recommended by:
      Bcgntn, marykk, keechi

      it's more profitable to run a company into bankruptcy, looting it into the grave, than it is to run it as a going concern. Like Max Bialastadt from the Producers these criminals are laughing all the way to the bank.  

      "Weaseling out of things is important to learn. It's what separates us from the animals ... except the weasel" Homer Simpson

      by irate on Tue Dec 26, 2006 at 11:29:55 AM PST

      •  It can be n/t (3+ / 0-)
        Recommended by:
        Bcgntn, irate, keechi

        Don't forget the bonus before you turn out the lights.

        If you think you're too small to be effective, you've never been in the dark with a mosquito.

        by marykk on Tue Dec 26, 2006 at 12:01:42 PM PST

        [ Parent ]

      •  Tax policies promote this pattern. (1+ / 0-)
        Recommended by:
        keechi

        Dear irate  . . .

        F you mean intentionally self-centered, I would agree. After all, Ronny helped to affirm business owners are justified when they think of "me" alone.  Tax policies promote this pattern.  This philosophy has prospered for generations.

        It is only the giving that makes us what [who] we are. - Ian Anderson. Betsy L. Angert
        BeThink

        by Bcgntn on Tue Dec 26, 2006 at 12:41:57 PM PST

        [ Parent ]

    •  Yes, well, there's something weird (2+ / 0-)
      Recommended by:
      Bcgntn, keechi

      about a society that rewards failure and penalizes success.  The more profitable an enterprise, the more taxes it has to pay, even though a profitable enterprise is less costly to society.  When an enterprise loses money, on the other hand, it's taxes are substantially reduced, even though the social costs of unemployement, derelict buildings, etc. go up.
      There's also something weird about a society supposedly committed to capitalism (the accumulation and preservation of present surplus for future use) whose enterprises never actually accumulate their own capital.
      Perhaps it is this failure which accounts for or has spawned the large army of financial middlemen who spend all their time moving money from one failing enterprise to another.
      Failure is more profitable for the individual than success--that is, for those who aren't directly involved.  The same is true of the political enterprise.  Consultants earn more and have more repeat business from "losers" than from "winners."

    •  Where I live, (1+ / 0-)
      Recommended by:
      keechi

      the telephone company turns your service off after 30 days past due.  The water company turns your service off if you are two months late on payments.  I can't get propane delivered for home heat unless my bill is current.

      Seems to me that if corporations were treated like individual home owners, we would see a lot less of this.  Make the water or phone bill the problem of the debtor.

      I like conservatives. They're opposed to all questionable adventures abroad and for fiscal prudence . . . . It's right-wing nuts I can't stand.--Molly Ivins

      by Dar Nirron on Tue Dec 26, 2006 at 01:23:11 PM PST

    •  Not just business (1+ / 0-)
      Recommended by:
      keechi

      A number of your examples, the school in particular, are governmental agencies.  The sad reality is that mediocrity and incompetance is the norm.  There are a relatively small number of people who are a: competent at what they do and b: motivated to do their best.

      So, it's no big surprise that there are a lot of terrible mistakes made, both in business and in government.

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