Category: ethics

Microsoft Is A Dying Consumer Brand

On By southwerkIn business ethics, ethics2 Comments

After I bought a new computer some years ago with Windows Vista on it, my attitude toward Microsoft changed.

I swore revenge. That’s right. Whether you call it a Jihad, a crusade, or a revival of the Lincoln County Cattle War, I’m on board.

Night after night as my operating system imploded destroying my data, I got angrier and angrier. Than came the ultimate humiliation. It’s two o’clock in the morning and I’m busy at work. Suddenly the computer shuts down and loads updates. That’s right! My robodatakiller computer operating system went Hal on me.

Then Microsoft responded to the complaints. Their spokesman explained that these problems were temporary and basically added that they weren’t going to make any real changes and people like me should learn to suck it up.

Now, I challenge you to find anything with a microsoft label in my home.

So, the article in CNN Money was not unwelcome to me.

However, it acted like Microsoft’s problems were just a matter of poor timing and products not being competitive.

Apparently the writer doesn’t understand hatred.

James Pilant

Andrew Comments On The Post – HAMP (Home Affordability Modification Program) Disastrous!

On By southwerkIn business ethics, Capitalism, ethics

The original post was “HAMP (Home Affordability Modification Program) Disastrous!”

Here are Andrew’s thoughts –

Part of the reason I didnt vote for Obama is because he is a good orator, but I dont think he understood any of what he was actually saying.

Its not the “political system”. Its the inexperience and incompetence of the president that is causing this.

I think part of the problem is that our government is so complicated that the average layman cannot take the time to fully understand how it even works. This creates a smokescreen that allows these politicians to do as they please. Its easier to snatch cookies out of the cookie jar when noone can see you, right?

The financial industry is the same way. Worse if you ask me. There is so much red tape and smoke being blown that it seems like most banks EXPECT the average working man to not have a clue as to how banks and financing work. A perfect example of this was when I applied for the mortgage on my home. The loan officer was going through the paperwork with me (she was a very nice lady, by the way). When we got to the interest rate, I stopped her and asked her “Is this number here (pointing to the sheet of paper) the nominal or effective interest rate?” She seemed utterly astonished at this! She said in the 8 years that she has been a loan officer, she has never run across anyone else, who did not work in the banking industry, who understood that distinction. That suprised me.

If the American people dont even understand the problem, then how can we effectively judge how well the administration is doing to actually fix the problem. This creates an environment so that the President can attend to his own agenda and, like you said, let good PR cover up the fact that he doesnt seem interested in actually fixing the problem.

Andrew Responds To The Post – The Vast Majority Of Foreclosures Were Done Correctly?

On By southwerkIn business ethics, ethics, Government Failure

My post, The Vast Majority of Foreclosures were done Correctly?, received several responses.

As always, Andrew provides an excellent thoughtful addition to the discussion.

In my personal opinion, the number of botched foreclosures is not the issue. The issue is that it has happened beyond the scope of being a rare isolated incident.

In one of my sophomore level engineering classes, called Mechanics of Deformable Bodies, our final exam was to select the proper materials and geometries for each member of a standard, run of the mill, truss bridge. Each member was to be designed with a given safety factor in mind to protect against cyclic fatigue of the truss members.

I was about 3/4th of the way finished with my exam when one of my classmates got up, and turned in his exam. The professor had the proper design right in front of him. He quickly compared my classmates design with the proper design, and then told my classmate that he received an F on the exam. When my classmate challenged this, my professor pointed to one of the truss members and said “Your bridge will fail, you get an F.”

My classmate raised his voice in protest. He said,”Professor, I messed up on TWO truss members! TWO out of 24! I shouldn’t get an F for that!”

By this time, the whole class had stopped working on their exams and were all staring at the student and the professor. I will never forget what the professor told my classmate. He looked at the boy and said, “Tell that to the people who were on your bridge when it failed.”

Colleges, Universities and Alumni Associations Were Paid 83 Million Dollars To Push Credit Cards On Students

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business

Do university administrators feel guilty about encouraging their students to sign up for credit cards that Handful of cut-up credit cards.provided kickbacks to their schools?

Of course, these administrators should. Over the year, hundreds of colleges gave student credit card issuers amazing access in return for cold cash. Colleges surrendered such personal information as student emails, addresses and phone numbers so these companies could pelt students with promotions. And schools allowed credit card issuers on their campuses where they lured kids into signing up for student credit cards in return for t-shirts or other freebies.

Of course, they don’t. Guilt is for suckers. Winners take their opportunities as they come. After all, those students are adults (most of them). They make their own decisions, right?

Looks to me like shooting fish in a barrel.

For years, colleges pushed credit cards on to their most vulnerable students, often those without income and certainly those without financial savvy. The colleges made a tidy sum. A few of their students committed suicide and a great number wound up in debt that fifteen or twenty years will be required to pay it off.

Of course, they don’t feel any responsibility. It was just business.

Average student credit card debt – $3173.

Hook ’em and Cook ’em.

And the colleges, universities and alumni associations weren’t protecting their students. They were exploiting them.

Business ethics – You don’t rip off your customers. (Apparently this is hard for some people.)

James Pilant

The Big Short

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business

The Big Short is a new book by Michael Lewis. It is reviewed by Larry Swedroe in CBS Money Watch.

From the review –

Lewis has done an incredible job researching the origins of the financial crisis. He then provides a great service by making a very complex subject easily understood. He turned what could have been a dry text on the crisis into a character-driven story that reads like a great novel. In addition, he shows clearly how the interests of much of Wall Street are not aligned with those of even their clients, let alone those of investors in general. Lewis demonstrates this by filling the book with tales no Hollywood writer could even dream up. The following, just one of many, demonstrates this point and shows why Wall Street must be required to provide a fiduciary standard of care.

Danny Moses was a hedge fund trader who related the following tale. “When a Wall Street firm helped him into a trade that seemed perfect in every way, he asked the salesman, ‘I appreciate this, but I just want to know one thing: How are you going to f**k me?’ The trader hemmed and hawed but Moses persisted. ‘We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it [the trade], but only after you explain to me how you are going to f**k me. And the salesman explained how he was going to f**k him. And Danny did the trade.”

Here’s the Amazon.com page for it as well as some further reviews. This book looks interesting to me.

James Pilant

Who’s The Most Profitable Dead Celebrity?

On By southwerkIn ethics

During this period of economic insecurity and multiple crisis. It is always surprising to turn to the novelty part of the news to see something odd. Those parts of the newspaper, magazine or web publication are clearly labeled.

They tend to go with descriptive names, “News of the Odd,” or “Strange News,” you know, stuff like that.

Well, it’s definitely clearly marked on the CBS web site.

They call it “Money Watch.”

Today, the top number one item on Money Watch asks “Who’s the Highest-Earnings Dead Celebrity?”

I (being the fool I am) am worried about the foreclosure crisis that is gathering steam with new revelations day by day. But that’s not newsworthy. Newsworthy is dead people earning money. Strangely enough, that has never made it onto my radar as a major issue (or a minor one).

So, once again I call attention to the ability of modern media to transfer our attention from the important to the trivial.

It’s not a big deal except it cripples democracy, damages thinking, and elevates the statistical anomaly to a kind of temporary annoyance.

James Pilant

(It’s Michael Jackson.)

The Definition Of Success Depends On Whether Or Not You Work For The Treasury Department

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business, White Collar Crime

President Obama said the program would help three to four million people modify their mortgages. But through September, 728,686 struggling homeowners have been kicked out of the program; just 640,300 remain, the Treasury Department reported on Monday.

That doesn’t strike me as a success. If the intention was to keep people in their homes, it doesn’t seem to be working very well.

“The most specific of TARP’s Main Street goals, “preserving homeownership,” has so far fallen woefully short, with TARP’s portion of the Administration’s mortgage modification program yielding only 207,000 (out of a total of 467,000) ongoing permanent modifications since TARP’s inception, a number that stands in stark contrast to the 5.5 million homes receiving foreclosure filings and more than 1.7 million homes that have been lost to foreclosure since January 2009.”

That little quote is from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).  He has some more to say though –

“SIGTARP, along with the other TARP oversight bodies (GAO and the Congressional Oversight Panel), has long argued that Treasury should adopt meaningful benchmarks and goals for HAMP – permanent modifications that offer secure, sustainable relief to the program’s intended beneficiaries.  Remarkably, Treasury has steadfastly rejected these recommendations, and now finds itself defending a program that is failing to meet TARP’s goal of “perserving homeownership”.  As a result, a program that began with much promise must be counted among those that risk generating public anger and mistrust.”

But it gets better – at a meeting with administration officials for bloggers – Well, read the following –

On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those.

You see, HAMP is designed to help the banks not the homeowners. It enabled the banks to manage their foreclosures during a period in which it would have been difficult to keep up the pace.

So, success is defined as making sure the banks are successful.

Gives you a warm feeling doesn’t it?

James Pilant

The Vast Majority Of Foreclosures Were Done Correctly?

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, White Collar Crime3 Comments

We have been told over and over again during the last few weeks that the vast majority of foreclosures were done correctly. The White House and the various cabinet departments have echoed this claim.

This is all very odd. Since, the foreclosure documents were in hundreds of thousands of cases not even looked at, how would the banks or the Obama Administration know how many were done correctly?

They can’t. It’s impossible for them to have such knowledge.

Why would they say so? I suppose it’s a matter of faith, a belief that these huge institutions are run by competent, moral people. Faith is not a good substitute for factual data.

Well, new information is coming in. I have predicted that this kind of data would be coming in and here is the first.

From the New York Daily News –

Thousands of foreclosures across the city are in question because paperwork used to justify the seizure of homes is riddled with flaws, a Daily News probe has found.

Banks have suspended some 4,450 foreclosures in all five boroughs because of paperwork problems like missing and inaccurate documents, dubious signatures and banks trying to foreclose on mortgages they don’t even own.

So, 4,450 botched mortgage foreclosures have been found in five boroughs. That hardly squares with the idea that virtually all foreclosures were done correctly.

Here’s what one of the judges said, (again from the article) – Schack told The News he expects to see more paperwork snafus. “It’s like an onion we keep peeling,” he said. “It seems to be layers and layers of problems.”

Do you believe that the vast majority of foreclosures were done correctly?

I expect much more data to come out and it will not be to the foreclosure industry’s benefit. Nor will the Obama administration escape blame for its ridiculous unsupported claims about the crisis.

James Pilant

To My Turkish Readers! Welcome!!

On By southwerkIn business ethics, ethics

I want to extend an especially warm welcome to my readers from the great nation of Turkey.

Originally I was not sure anyone would want to read my stuff, but I have discovered a sizable and often critical (that’s what I want) audience.

But it’s amazing to discover people from other parts of the world reading my stuff. I have readership in Australia and India. (I find India fascinating.)

But my Turkish contingent is most welcome!

James Pilant

HAMP (Home Affordability Modification Program) Disastrous!

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business, White Collar Crime3 Comments

What a shock!

The Administration’s signature program to help homeowners is not working.

The banks get a 700 billion dollar bailout with no questions asked and the homeowner goes through mountains of paperwork and winds up getting nailed for late payments and fees they didn’t even incur!

From the article –

The Obama administration’s signature anti-foreclosure effort, unveiled in 2009 with the promise of helping three to four million homeowners modify their mortgages, is such a failure that it now risks “generating public anger and mistrust,” according to a federal audit released Monday.

Far from helping at-risk homeowners, the Home Affordable Modification Program has actually made some homeowners worse off, according to the Special Inspector General for the Troubled Asset Relief Program — also known as the Wall Street bailout. The Treasury Department set aside $50 billion from TARP, plus another $25 billion from taxpayer-owned Fannie Mae and Freddie Mac, to give mortgage servicers thousand-dollar incentives to reduce monthly mortgage payments by modifying eligible homeowners’ loans. But more people have been bounced from the program than have been helped by it.

People who apply for modifications via HAMP sometimes “end up unnecessarily depleting their dwindling savings in an ultimately futile effort to obtain the sustainable relief promised by the program guidelines,” the report notes, putting the imprimatur of the federal government on a claim long made by housing experts and homeowner advocates. “Others, who may have somehow found ways to continue to make their mortgage payments, have been drawn into failed trial modifications that have left them with more principal outstanding on their loans, less home equity (or a position further ‘underwater’), and worse credit scores.

“Perhaps worst of all,” it continues, “even in circumstances where they never missed a payment, they may face back payments, penalties, and even late fees that suddenly become due on their ‘modified’ mortgages and that they are unable to pay, thus resulting in the very loss of their homes that HAMP is meant to prevent.”

But don’t worry. The administration has a defense.

Treasury officials are adamant that not only is the program helping those homeowners who remain in it, but it also has helped those homeowners who have been bounced. In fact, those homeowners who ultimately fell out of the program benefited from the equivalent of a “free tax cut” while they were in the program because over that period, they were paying less on their mortgage than was otherwise required. And, officials say, this came without cost to the taxpayer.

That’s right. Even if it didn’t work out for you and we threw you out of the program like yesterday’s garbage (You still lose your home.), you got a “free tax cut.” That makes it all better.

Let’s be clear. There is no amount of evidence, no lack of effectiveness or intelligence, that the current administration does not believe cannot be washed away by good public relations.

I don’t get it. Why even bother to create this program? It’s about ten percent of what the banks got. So, already you knew immediately, average Americans are at best an afterthought.

I supposed it’s better to demonstrate over time you generally loath the American people, than to tell them immediately?

“Oh, you say,” James, “You’re overreacting, the President is constrained from helping these people. It’s the political system.”

No, it’s not. These people are the real victims of an orgy of speculation and they only thing they’ve been getting for two years, is a continuous, mile thick, wall of lectures on personal responsibility.

The President has within in his authority, dozens, hundreds of actions he could take to help these people out, and those things are not being done. At the very least, the mortgage industry could have been held to the simple legal procedures necessary for a proper foreclosure and this administration was not only unable to do that, they see no crisis now.

Where are out political choices?

James Pilant