With all the talk of a United States recession looming, the ex-President took his share of licks in the past year, and Obama is looking to bring in some exciting new bits to an already messed up economy. However, a lot of the blame is being placed on George Bush, but not all of it – he seems to be sharing it with many big company CEOs.

People generally look closer to home to start the blame game before jumping to the President; but does any of this blaming carry any merit? It may if… How soon should ol’ George Bush have seen it? Should he have stopped the largest housing boom in US history? He could have implemented rules that would have stopped banks from offering loans; he could have had the Federal Interest Rate raised, right?

I’m sure he could have, but people likely would have tore him up that way too for not letting people cash in on the “American Dream”. If he’d have halted loans he would have caught flack. “What if” is a fun game, right?After the CEO blame game, the next logical step is the American Government.

People have rode Bush for months and years that this is his fault and he followed up with a Stimulus Package that, as far as I’ve seen, hasn’t stimulated much more than the desire for another stimulus package.

People love free money, and I’m no different, but realizing the impact of it on our global scale isn’t something that the person who just lost their job cares about – they want to be shown the money!

So without further adieu, I present the 5 signs your CEO may suck:

5. Your boss’s boss’s boss makes 344 times more than you do.

Some 77 percent of Americans polled last year felt that corporate executives “earn too much.” Most corporate boards apparently disagree. Last year, although the nation’s economy was already in trouble, they gave the chief executive officers of the Standard & Poor’s 500 largest companies on average a 2.6 percent pay hike to $10,544,470.Relative to past raises, this is not a big income jump.

Nonetheless, that sum is still 344 times the pay of typical American workers, says Sarah Anderson, an analyst at the Institute for Policy Studies (IPS), a liberal think tank in Washington.

If you’re trailing your boss by that much and the economy is still sitting in a slump like this – how can they deserve to get paid nearly that much? CEO pay packages 30 years ago averaged only 30 to 40 times the average American worker paycheck.

I don’t see a problem with that, but it may have gotten a bit out of control. I say that from the salary I’m currently making, but if I was on top, would I want more? I imagine so, but there needs to be a line…

4. I still can’t get over the big 3 from the auto industry “begging” for money and flying private jets over to start the begging.

“There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they’re going to be trimming down and streamlining their businesses,” Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee. “

3. The little guy is forced into subsidizing excessive CEO compensation

“Two weeks after the Government Accountability Office reported that “two-thirds of corporations operating in the United States did not pay taxes” between 1998 and 2008, The Institute for Policy Studies (IPS) released a new study revealing that the American tax payer is subsidizing “executive pay excess” to the tune of $20 billion a year.

In fact, “the more that corporations shell out for executive pay, the more they pocket in profit at the expense of average taxpayers.” Through a series of bureaucratic rules and loopholes, the federal government is transferring billions of dollars to the most privileged Americans.”

2. You’re likely looking to get cut in 2009, but not know about it.

“WASHINGTON — The majority of U.S. CEOs say they expect to cut workers in the next six months, according to a survey out Thursday that showed a rapid deterioration in the economic outlook from the nation’s top executives.
The Business Roundtable said its CEO economic outlook index, which shows how CEOs believe the economy will perform in the six months ahead, plunged to 16.5 in the fourth quarter, down from 78.8 in the prior quarter. It was the lowest since the private group began doing the survey six years ago.”

This is the one that really irks me. I understand it from a business perspective, but it sucks. They keep you on as long as they have a “need for you” and then once they’ve figured out a way to get rid of you, zing, you’re out. From a business perspective this makes sense because you don’t want to stick yourself by announcing that you “may” have to make cuts, or your people will go running.

1. If they’re taking a bonus this year, (or they did last year).

“Trouble in the economy made it difficult, if not impossible, for even the best managers to meet goals that corporate boards set for chief executives at the start of 2008. And even if corporate boards want to reward CEOs for doing a good job in a bad environment, it doesn’t look good to give something extra to executives while employees are being laid off and shareholders have seen stock prices plunge.The latest example is Merrill Lynch (MER) Chief Executive John Thain. The Wall Street Journal reported on Dec. 8 that Merrill’s board is resisting Thain’s request for a bonus of up to $10 million. In 2008, Merrill’s stock price plunged, it had to sell itself to Bank of America (BAC), and thousands of employees face layoffs. But Thain can argue he helped avoid an even worse crisis for the firm.”

Yes, I think the “little guy” should get their bonuses; you’re the head honcho, make a big boy/girl decision and take one for the team, you’re the leader after all.

Conclusion

Times suck right now pretty much across the board – what I’d like to see from a leader is very close monitoring of all parts of the business. I’d like to see the CEO chatting with the employees personally to keep them abreast of the situation. Let everyone have a say in ways to fix it.

From what I’ve seen the corporate board rooms are packed with 10 or 12 people that know how to run a business when it is cooking. We haven’t had a drawn-out recession like this since World War II. “The U.S. economy may be headed for its deepest and longest recession since World War II as mounting job losses take their toll on consumer confidence and spending.

Employers cut payrolls last month at the fastest pace in 34 years as the unemployment rate rose to 6.7 percent, the highest level since 1993. The 533,000 drop brought cumulative job losses this year to 1.91 million, the Labor Department said yesterday in Washington…

…At 12 months, the recession is already the longest since the 16-month slump that ended in November 1982. The recession is the 11th since a downturn that occurred in 1945, the year that World War II ended.

I’d like to see the CEO’s taking a pay cut – yea, if I was there I’d find it hard to cut the yacht budget, but at 344 times what I make, it is a bit ridiculous. I’m sure that the upper-echelon is barking back down the ladder at me saying that they’ve climbed their way to the top and they deserve it, but let’s be honest, the current “top” is much (much, much, much) higher than it was in the past.

No related posts.

I’ve mulled this over for a while now – yes, I’m in the personal finance realm and am supposed to tout the benefits of owning a home, but if you really step back and look holistically at the entire process, is it in your best interest?

I’m going to play the Devil’s Advocate on this one and say that it is quite possible that we’ve been brainwashed into thinking that owning a house with a white picket fence is the “American Dream”. I will argue that it isn’t; that it is the dream of the government and corporate America for all of us to propagate that dream.

No, I’m not out to get America and its systems. They work. I’m speaking from a business perspective though. Government whether you like it or not, is a business. It needs money in (taxes,etc), and money out ($700BIL bailouts, etc). They have run it pretty well for the past 220 years (well, 219 anyway).

Break It Down To The Simplest Form

Somewhere near the beginning of EVERY country’s establishment, banks are introduced. They worked and made perfect sense. You let them house your money in their big safe, feeling comfortable that you won’t get robbed of everything in a train robbery.  True, putting it in the bank is much better than the “coffee can in the backyard” and “under the mattress” ideas people are returning to these days.

Banks were good at that. They’d charge you a small fee to house it there and everyone was happy. Well, like any good business, you then need to have new ways of making money. They’ve got all that money just sitting there in their banks, there’s got to be a better way to put that money to use – in comes the loan and mortgage structure.

TheHistoryOf says that the beginnings of a mortgage system have been found, as mentioned, as early as 1190. English common law included a law that would protect a creditor by giving him an interest in his debtor’s property. According to this law, the mortgage was a conditional sale. Although the creditor held title to the property, the debtor could, in the event the debt wasn’t paid, sell the property to recover his money.

As pioneers moved from Europe to settle in America, they brought their systems with them. As land ownership increased, so did the need for mortgages; so much so that by the early 1900s, they were already widespread and readily attainable.

However, not everybody could get a mortgage. In those days, those seeking to buy property were often required to pay a 50% down payment on a 5-year mortgage.

So, to buy a $10,000 house (wouldn’t that be nice today), the borrower had to have a $5,000 down payment and pay interest for 5 years.

At the end of that 5 years, the unpaid (and unchanged) balance of $5,000 would have to be either paid or refinanced. This system continued through to the Great Depression, when lenders had no money to lend, and borrowers had no money to pay. The whole system collapsed with thousands of foreclosures. Mortgages were just not available.

As It Relates To The Subprime Crisis

So yes, the statement really does have some weight when our current government says the markets, mortgages, and government are tied to the subprime crisis; how can this obvious apparent contradiction be reconciled?  Get more money in the banks by the people that are taking it out.

How do you do that when people are just getting over the Great Depression and convince them that banks are safe investments again?  Maybe a little reverse-psychology?  Plaster throughout the media outlets that owning your own home is the ‘American Dream’.  Don’t tell them that in reality it is the bank owners ‘American Dream’.  Let the people think that because of the Depression people were homeless and what better way to have a failsafe against that and OWN your home!

That was the first step, and I’m sure there were several people that could afford to get into houses for cheap, but for many, mortgages were their way into buying that ‘Dream’.  Now where in the world would we get a mortgage?  You guessed it.

After All, It Is “Just Business”

As Killing Sacred Cows author Garrett Gunderson puts it:

1.  Financial institutions want our money.
2.  They want it on a regular, systematic basis (preferably through automatic withdrawl).
3.  Once they have our money, they wan tot hold on to it as long as possible (hence early withdrawl penalties).
4.  If they have to give it back, they want to give back as little as possible.

There’s nothing wrong with that method.  It’s just a business model, and it works.  They’ve got money, you want money, easy case.  Offer you a little carrot that will increase your money by letting them have it, and then they shop your money out to the next highest bidder.  Can’t lose if they strap 75MILLION people into 30 year mortgages.

Tack on an ARM loan, and get as much out of them as you would in 30 years in a much shorter time!  When they can’t pay, make a few more bucks off it.  From a business standpoint, they’ve certainly figured out the “art of the upsell”, and has worked well for many years.

Is The Government Involved?

The Government has an interest in it as well as you’ve seen this past year.  They don’t want the economy to fall either and having the ultimate choke hold of taxes in their back pocket, they can spend 700 billion fairly easily and squeeze the little guy for a few more drops during tax season.  I’m not against taxation, I think it’s a necessary evil and I am very thankful to live in these United States, but I’ve got to hand it to the government for helping in the propagation of the American Dream mindset.

They preach it from on high just like bankers; the White House even has some good bits of information to share, “President Bush has declared June as “National Homeownership Month,” and HUD will be celebrating by visiting communities across America. At homeownership fairs and other events, we’ll meet with families and provide them with information that will help them decide if homeownership is right for them.

Homeownership is called “the American Dream,” and we want more families to realize the transforming power of homeownership. Homeownership leads to financial independence and the accumulation of wealth, and has a positive impact on a child’s development. That’s why I’m so pleased that more American families own their homes today than at any time in our nation’s history. Nearly 75 million Americans are homeowners, and minority homeownership is at an all-time high.”

American Dream Downpayment Initiative

The American Dream Downpayment Initiative (ADDI) was signed into law on December 16, 2003. The American Dream Downpayment Assistance Act authorizes up to $200 million annually for fiscal years 2004 – 2007. ADDI will provide funds to all fifty states and to local participating jurisdictions that have a population of at least 150,000 or will receive an allocation of at least $50,000 under the ADDI formula. ADDI will be administered as a part of the HOME Investment Partnerships Program, a formula grant program.

ADDI aims to increase the homeownership rate, especially among lower income and minority households, and to revitalize and stabilize communities. ADDI will help first-time homebuyers with the biggest hurdle to homeownership: downpayment and closing costs. The program was created to assist low-income first-time homebuyers in purchasing single-family homes by providing funds for downpayment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase.

Conclusion

SatireWire provides a similar thought of how it has become dispersed through our mindsets over time, with a bit from their humorous post:

“Ever since I was a little girl, I’ve wanted to (deceive myself into believing I could) be a homeowner,” said Doogan, 35. “Well, look at me now! Me, little Stephanie Doogan, I actually have a place I can call 100 percent (minus 80 percent) my own!”

Nobody wants the economy to fail (well, mostly nobody) so it is in our best interests to keep “The Dream” alive in everyone’s mind.  I don’t want everyone to start hiding their money again and keeping it out of our government.  It greases the wheels and keeps trade and business moving.  I just wish there was a better way to disseminate the information than to tell everyone that we NEED to own a house, when in actuality, we don’t OWN the house until well into our retirements when the final loan paperwork is sent.

The bank loves your money, business loves the bank’s money, and the government loves the business’s money.  Just like a well oiled machine that has been churning since 1776.

I like the first version (before it was slung to include home ownership) of “The Dream” coined by historian and writer James Truslow Adams  in his 1931 book Epic of America:

“The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

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So I just finished up the book 4-Hour Workweek by Tim Ferriss.  It has the standard self-promoting fluff that you have to dig through and weed out, but once you get through that, he’s actually got some pretty ingenious ideas that I think I may find myself implementing in the very near future…

Introduction

Let me first state that I’m not a book reader.  I don’t do it because I often find myself spacing out and forgetting what it is I just read, it happens.  But I finished this book nonstop in about 5 hours cover to cover.  It kept my attention, and that, in itself is a success! 

If you want to just skip to my evaluation and score rating the book, skip to the Conclusion at the bottom of this post. 

If you can get over the initial stomach-ache feeling you get when you hear “outsource” and work for a big company, outsourcing can certainly be your friend.

My knees trembled a bit at the first sound of it because there is a lot of talk about outsourcing in my day-to-day I.T. world and quite frankly, I’d rather not train the guy that will eventually take my job.  Call me old fashioned.

So the format here is based on the notes I took while reading the book.  I’ll italicize and bold what I wrote down while reading and comment on it afterward the note if I find the need for elaboration…

On With The Show

“Who are the NR?  The employee who rearranges his schedule and negotiates a remote work agreement to achieve 90% of the results in 1/10th of the time.”

I like it – The “NR” are the New Rich – a sleeker and more laid back version of someone that’s made it rich.  It doesn’t take an 8-5 job for 25 years to reach it.  You can get to it now.

“I can’t give you a surefire formula for success, but I can give you a formula for failure:  try to please everybody all the time.  – Herbert Bayard Swope first puliter prize winner”

I’m a people pleaser.  I like to make people happy, but sometimes it appears that it just isn’t the answer, and it makes sense.  I get hate mail here at the MiB.  I know, hard to believe when I’m so super awesome, right?  But I do. Some people just have it in their veins to pick you apart.  You’ve got to learn to deal with it.

“Retirement is worst-case-scenario insurance.  Like life insurance, it should be viewed as nothing more than a hedge against the absolute worst case scenario: in this case, becoming physicallly incapable of working and needing a reservoir of capital to survive.“

Loved this quote.  Definitely geared towards new entrepreneurs.  Yes, it’s nice to have the backup plan, but try to tell that to the people that are 60 and trying to retire with the hit their 401k retirement plan took this year.

“Most people are good at a handful of things and utterly miserable at most.  I am great at product creation and marketing but terrible at most of the things that follow.”

Absolutely agree here.  I never thought of it that way, but I really am NOT good at a lot of things.  Do I put my time to better use getting decent at those or perfecting the things I’m REALLY good at?  I vote for the latter.

“Focus on better use of your best weapons instead of constant repair.”

Ditto.

“Busy yourself with the routine of the “money wheel”, pretend it’s the fix-all, and you artfully create a constant distraction that prevents you from seeing just how pointless it is.  Deep down, you know it’s all an illusion, but with everyone participating in the same game of make-believe, it’s easy to forget.  The problem is more than money.”

A lot of people get in the mindset of getting money from work because they need to pay bills; they need to pay bills so they have to work.  They see a symbiotic relationship with the two and the secret is to break those apart and realize that they can be separated.

“If you are nervous about making the jump [to quitting your job and starting something new] or simply putting it off out of fear of the unknown, here is your antidote.  Write down your answers, and keep in mind that thinking a lot will not prove as fruitful or as prolific as simply brain vomiting on the page.  Aim for volume.”

Brainstorming is always a good answer when you’re trying to solve a problem.  No wrong/bad answers, just dump it all out on the page.  I’ve used this method for several things in my past, it works.

“Define your nightmare, the absolute worst that could happen if you did what you are considering.  What steps could you take to repair the damage or get things back on the upswing, even if temporarily?”

You quit your job and try a new one.  What about the kids?  Mortgage?  Insurance?  Lots of “what ifs” in the scenario.  But really, think about it, what would happen?  How would you go about trying to fix it if so?

“What are the outcomes or benefits, both temporary and permanent of the more probable scenarios?  If you were fired from your job today, what would you do get things under financial control?”

I’ve asked this one before.  First thing would be unemployment for me certainly, and more recently I’ve decided if it’d happen, I’d bust my hump to try to find something I could do on my own for 2-3 months and if nothing panned out, I’d be back to the job hunt in big biz…

“90% of people in the world are convinced they are incapable of achieving great things so they aim for the mediocre.”

And 75% of all statistics are 20% false 45% of the time.    But a good point is made – is this your mindset?  Do you think you’re mediocre?  I’m not a self-help blog, but honestly, if you think “mediocre” is “good enough”.  Well then the book might not be for you.

“Parkinson’s Law dictates that a task will swell in importance and complexity in relation to the time allotted for tis completion.”

Keep tasks simple, to the point, and most of all timely.  It’s a method used in writing good goals and cna certainly carry over to finding improvements in your life.

“Problems, as a rule, solve themselves or disappear if you remove yourself as an information bottleneck and empower others.”

I wrote about this in a work delegation post a few weeks back.  It may be hard to take yourself out of the equation, but try it, it might help.

“Don’t respond to things that take more of your time – if it takes less than $100 to fix it, fix it.”

This was in regards to when he was talking about being the bottleneck in decisions.  He’d spend several hours fixing things that would have cost less than $100, and ultimately cost him more than that because he was the bottleneck.

He put a method in place to fix the issue right away if it cost less than $100.

“Set an hour cap for tasks so they don’t overcharge chasing their tails.”

In regards again to Virtual Assistants (VA) – if you’re going to use them, make sure you put a time limit on what you want them to do in that time frame.

“Use a business of VA’s not just one.”

If you’re going to go down the path of using a VA, make sure you get more than one person helping if you can.  If they get sick or are unable, there’ll still be someone to help you when you need them 24/7.

“Use brickwork.com, YMII.com, and Elance.com”

Eh, I’ve heard that both Brickwork and YMII have been slammed since the book and raised up their rates to account for it.  Nothing wrong with that, but I’ve got an ad out on Elance.com right now that is searching for someone now just to see the experience (8 VAs have applied so far).  Will let you know how that part goes.

“Requirements for outsourcers – english speaking is a must.”

If email doesn’t always drive the point home, you need someone that can talk the talk too.

“The Indian outsourcers cost between $4 and 10 US per hour.  My domestic outsourcers are paid on performance on when product ships.  This creates a curious business phenomemon: Negative cash flow is impossible.”

So the Indian outsources he uses create product to be shipped.  The domestic outsourcers only get money when the sale is actually made.  The secret here is to have a product that can be sold for more than you can outsource for.  Indeed a good problem to have.

“Never automate something that can be eliminated, and never delegate something that can be automated or streamlined.”

I’ve heard this a lot in my day to day job and it really does make sense.  To trump them both, don’t outsource OR streamline anything that can be automated.  Automation is free.

“It is critical that you decide how you will sell and distribute your product before you commit to a product in the first place.”

Makes sense, haven’t had a product to sell yet though.  Working on it.

“Find a market, define your customers, then find or develop a product for them.”

This one intrigued me a lot.  I never thought of it that way before.  I’ve always thought of an idea and tried to fit it into a niche.  Certainly a new way of looking at it.

“Invent, let someone else do the rest, and cash checks.”

Preach on Tim.  I would like to be in that position certainly; sign me up!  Basically though he is saying to utilize your outsourcing abilities.  Come up with the idea and let them do the legwork.

“Our goal isn’t to produce a business that is as large as possible, but one that bothers us as LITTLE as possible.”

Really liked this quote.  This is the TRUE passive income definition.  Passive means that you aren’t doing anything.  Bothering you as little as possible fits right in there.

“Lose-win is the new win-win – stand out and reap the rewards.  Fffer them MORE back than their investment, most people are honest.”

So for example you’re seeing this a lot these days.  People want you to try the product and if you don’t like it, they’ll give you back 110%.  Conveniently, 110% isn’t THAT much more when you really put the numbers to it, but it is enough in the initial buy that makes people think, “Whoa, this really MUST be a good product then!”

“Don’t be the CEO or Founder – for negotiation purposes, remember that it is best NOT to appear to be the ultimate decision-maker.”

This helps in the sales role I’m sure.  When you’re driving home a potential sale, you can get caught up in it if you’re the final buyoff on it.  Make it seem like you need to go back to the office to get the final verdict on things.

Conclusion

Outsource until outsourcing can be outsourced by outsourcing. The point is indeed valid and carries weight (and less cost). Being savvy to the business entrepreneurship, I can most certainly see a need (and use) for it.

On a scale of 1-10, I give the book a very solid 8.  I could have done without the self-promoting fluff and he hammered on the outsourcing bit a LOT, I could have used about 20% less “outsourcing chat.”  I got the point, I’ll use it if I go into business for myself, but the point is valid.

Good book, I would read another offering from the pen of Mr. Ferriss!

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