Tuesday, December 30, 2008

Fortune's dumbest 21 in 2008 (FD2108)

Fortune magazine put together the 21 quintessentially dumbest moments in business of 2008. My favorites include: 1, 2, 3, 4, 6, 11, 12, 16, and 18. If you have any additions for the list, please send me an email or comment below. BTW, I use the word stupid in excess in my comments below.

From Fortune (including excerpts):

1. Detroit pleads poverty - in style:
Like someone arriving at a food bank in a limousine, the chief executives of the three major U.S. automakers spark outrage when they fly their corporate jets to Washington D.C. to beg Congress for a multi-billion dollar bailout.
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2. Lamest road trip ever:
Let's see...corporate jets are a no-no...the subway doesn't go that far...A bike ride might just kill us...I know! Let's drive the 10 hours from Detroit to D.C. - in one of our cool hybrid cars! … Given a second chance after the private-jet fiasco to plead their case before Congress, the Detroit 3 take to the road (separately, of course) in a company fuel-sipper.
RW: = Several seriously stupid CEOs that are not deserving of our hard-earned $ mullah.

3. Paulson's 3-page plea for $700B:
All of three pages, the proposal seeks carte-blanche access to $700 billion in government funding to buy up troubled mortgage assets at the root of the financial crisis - with scant details on how or where the money will be spent.
RW: He should have just been “not so stupid” when drafting his slap in the face to the American taxpayer…

4. Bloating up the bailout:
Maybe three pages wasn't such a bad idea after all...When Congress is done with it, Paulson's proposal for saving the U.S. financial system balloons to 451 pages and is loaded with pork barrel spending - including, unbelievably, a cut in taxes on toy arrows and an extended tax break on "wool products."
RW…because we ended up paying $ billions more in mostly new and unecessary spending packages.

5. Mozilo's 'disgusting' reply-all:
Mozilo instead hits "reply all" and sends a response calling the beleaguered homeowner's request "unbelievable" and "disgusting."… Mozilo's heartfelt reply makes its way onto the Internet - and the onetime real estate king finds himself out of a job after Bank of America acquires Countrywide in July.
RW: Okay, the CEOs get ousted – why not the firms themselves (ahem, AIG)?

6. An iPhone app for just $999.99:
But one application sneaks past Apple's gatekeepers and onto the company's new App Store: "I Am Rich," a $999.99 screen-saver whose sole feature is a glowing red jewel. Apple gets blasted for making the application available for sale and then quietly removing it, but the real losers? The eight suckers who bought it.
RW: Wonder if they got a refund? Who would be stupid enough to buy a screen-saver worth $1,000?

7. Paulson's 'bazooka' backfires:
Treasury Secretary Henry Paulson assures Congress that merely promising to give the beleaguered mortgage lenders access to Treasury funding would calm market fears - at no cost to Uncle Sam…. Two months later, Treasury takes over both companies in a move that could cost taxpayers billions of dollars.
8. Fannie's delusions of grandeur:
In May, [Fannie Mae CEO Dan] Mudd predicts that the government-sponsored mortgage lender will "feast" on weakened competition in the mortgage market.
RW: Feast? If he means on American $ 200 billion + in American taxdollars, then he was right on!

9. Sex for oil:
The agency's [Department of Interior] Inspector General finds that staffers were taking gifts, having sex and engaging in illegal drug use with employees of some of the oil companies they oversee.
RW: This probably made FOX news – you know, the classiest of all papers.

10. Global warming? What a 'crock':
The General Motors exec behind the Chevrolet Volt electric car hands environmentalists another twig to beat GM with when he reportedly calls global warming "a crock of sh-t."
RW: Again, stupid CEOs. No wonder the American auto industry has been slowly deteriorating.

11. Housing rescue comes up short:
Remember Hope for Homeowners? We didn't think so. In July, Congress passes the only housing rescue to date: a plan to guarantee up to $300 billion worth of mortgages and prevent more than 300,000 foreclosures.
RW: I didn’t forget about it – this plan was too complicated and doomed to failure right from the get go. I do seem to remember a provision of $2-$3 billion to help foreclosure-ridden cities. Wonder what happened to that? AIG?

12. Cox's short-selling ban:
SEC chief Christopher Cox finally institutes a temporary ban on shorting, or betting against, 799 financial stock… some investors say the short ban hastened the flight of capital from stock and bond markets, by showing the government could intervene in markets in unexpected and troublesome ways.
13. McCain's economic denial:
On the morning of Sept. 15, as Lehman Brothers declares bankruptcy, Republican presidential candidate John McCain declares "the fundamentals of this economy are strong." …By day's end, the Dow falls more than 500 points, the date becomes known as Black Monday, and McCain starts backpedaling fast.
14. Obama's tough talk on NAFTA:
In a rare off-message moment for Barack Obama's presidential campaign, a top economic adviser privately assures Canadian officials in February that his candidate didn't really mean it when he threatened to renegotiate the North American Free Trade Agreement, which U.S. blue-collar workers complain has shifted jobs to Canada and Mexico.
15. Microsoft overbids for Yahoo:
Microsoft makes a $44.6 billion play for Yahoo in yet another bid to catch up to Google. The $31-per-share offer represents a 61% premium over Yahoo's price at the time of the February overture.

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16. Yahoo turns down payday

RW: = more stupid CEOs

17. SEC's Madoff miss:

Leave it to the markets to do the SEC's job for it.

RW: Ahem, number 12?

18. Rage against oil speculators:

Oil traders, hedge funds, Wall Street types...they're all to blame for artificially inflating the price of crude….Or so the thinking (and Congressional hearings) goes until prices suddenly collapse throughout the fall, bringing oil down to about $37 a barrel. The culprit this time? Softening demand amid a reeling global economy. So much for thinking fundamentals.

19. Jobs' 'greatly exaggerated' death:

In August, Bloomberg News accidentally releases an obit for Apple CEO Steve Jobs, who - despite a well-publicized brush with pancreatic cancer - is still alive and kicking.

RW: I seem to remember another slip up with UAL.

20. Phil Gramm's 'mental recession':

In early July, as the financial crisis spreads to Main Street, McCain campaign co-chair and former senator Phil Gramm appeals to voters and their economic anxieties by calling them a "nation of whiners" and dismisses a troubled economy as a "mental recession."

RW: That is classy! Almost as classy as FOX News' reporting.

21. Bill Miller's bad bets

RW: Thank you Fortune for a spat-on representation of 2008's biggest bloopers! Rebecca Wilder

4 comments:

  1. Good list. I'm laughing on the outside, but crying in the inside.

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  2. Great list and a very good blog, one that that I keep track of...

    Personally, I think the following....

    The possible success of Quantitative Easing would mean an important shift in investor psychology.

    After all, by that time- interest rates are low, corporate health has improved, borrowing is increasing, inflation is kicking in, regulatory standards are likely to have improved, trust is low, USD is weak, government is intending to spend more, tremendous growth opportunity in emerging markets... the situation looks very similar to that back in 2003, just that the National Debt would have increased, the T-Bill yields are much lower and the Fed is holding a huge amount of toxic assets and a huge huge budget deficit.

    By this time, I believe that the Bulls would have the upper hand and would state all of the above as bullish reasons to get long, while the Bears would highlight the weakness in the US national debt, the Fed's balance sheet & its relation to the USD, the weakness in emerging markets amongst the political rumblings of Russia and China (they hold a lot of US T-Bills) and lastly, a huge Social Security and Medicare bills coming.

    As Louise Yamada, a renowned technical analyst, pointed out in November, 13 of the Dow 30 stocks have already broken their 2002-2003 lows. She likens it to the fact that with 13 of the 30 bricks in the wall broken, it is unlikely that the wall will be able to take more hits; a retest of 7500 on the Dow would likely be unsuccessful- the wall will not hold another assault.

    However, she also mentioned that stocks were deeply, deeply oversold and will not be surprised to see a rally unfold in the first half of 2009. Personally, I think it is well likely for that to happen given the new President, his new policies and as mentioned earlier, the possible success of Quantitative Easing and the effects it brings to the economy.

    Given the deeply entrenched culture of "Stocks always go up in the long run" (100 years of existence for the stock market qualifies as a past, not history and it is not reliable), an obsession with Obama, a belief in technology, mankind's will, evidenced by a trail blazing China and all the Hoo-ha about alternative energy.... it is likely that the bulls will win.

    It is possible that the double top on the S&P 500 becomes a triple top- the first top resulting from the NASDAQ/Tech bubble, 2nd from the globalization/housing/credit bubble and the 3rd top resulting from the exploding budget deficits of the many govts around the world as one problem leads to the next and ultimate "BOOM!".

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  3. Like the last scenario. have been hearing it more lately. Keep your powder dry!

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  4. I find it funny that it took an extra 448 pages of pork for congress to pass the bailout bill. I was proud of congress for a couple of days when I thought the first bill was shot down on principle. Apparently it wasn't a big enough waste of taxpayer money at only 3 pages.

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