31 Jan

Are “temporary” federal unemployment program extensions really all that temporary?

Not so much, according to Michelle Malkin. She’s got some great information that was fed to her by a House Ways & Means staffer, in light of the “economic stimulus” package that politicians are currently arguing about.

The Senate is arguing over whether or not to extend the normal 13 week unemployment benefits to add another 26 weeks of eligibility. Sounds nice, right? Wrong. It doesn’t do anything. It doesn’t improve unemployment figures. If anything, it just keeps people on their couches longer.

Here’s what the extension of similar benefits in the past got us:

  • The extensions went on years longer than originally promised
  • It cost taxpayers billions of dollars
  • It didn’t reduce unemployment

Here are some snippets from the staffer: Read More

30 Jan

Overstock.com Still Makes No Money

Once again, Overstock.com (NASDAQ:OSTK) loses money. During the fourth quarter…. you know… the quarter that is supposed to be the best quarter of the whole year? Yep. Still couldn’t pull out any profits there.

But don’t worry… it’s a smaller loss than the previous year, only $4.3 million, for a loss of 18 cents per share. Apparently analysts thought there would be earnings of 13 cents per share, but no dice!

So for all of 2007, Overstock.com posted a loss of $44.1 million. Way to go Patrick. I think you’re shoring up your place in the list of worst CEOs… at this rate, you’ll never get off that list!

28 Jan

Cynthia Cooper’s book – Extraordinary Circumstances: The Journey of a Corporate Whistleblower

cooper.jpgCynthia Cooper, WorldCom whistleblower, is releasing her book in just few days. Extraordinary Circumstances: The Journey of a Corporate Whistleblower is her story. If it is anything like the speech I heard her give a few years ago at the Association of Certified Fraud Examiners Fraud Conference, it will be fantastic.

Unlike other so-called whistleblowers of the Enron, WorldCom, and Tyco era… Cynthia is the true hero. She stood up for what she knew was right and she suffered for it. Make no mistake that she was in danger as she and her team attempted to get to the bottom of accounting shenanigans at WorldCom.

Publishers Weekly writes:

In Cooper’s thorough and efficient narrative about the fantastic collapse of telecommunications giant WorldCom there are two distinct themes: her insider’s view of the corporation’s widespread wrongdoing and the life experiences that led Cooper to becoming a courageous whistleblower. Cooper, former vice president of WorldCom’s internal audit department, is most successful with the former. She brings us into the boardrooms, the backrooms and, somehow, into the heads of key players as some struggled with and others embraced the deceptions that would bring WorldCom down.

I’ll be reviewing the book in the next couple of weeks and can’t wait to share my thoughts.

28 Jan

Overstock “Executive” Playing on the Internet Again

I put the word executive in quotes because I don’t think anyone in their right mind really considers Judd Bagley an executive at Overstock.com (NASDQ: OSTK). He is the smearmeister for Patrick Byrne. They like to call him an investigative reporter, but his investigation skills lack one critical element: accuracy.

This weekend, Judd, “Director of Communications” at Overstock.com was patting himself on the back for what he thought was a good bit of investigative work. Turns out he took a few facts, threw in several falsehoods, and drew erroneous conclusions that he’s now proclaiming as truth around the world wide web. Read More

24 Jan

MPS Losing a Good Teacher Over Residency Rule

Don’t read the title of this and make a mistaken assumption about my opinion on this case. I think the teacher deserves to lose his job….

Dan Bearss teaches science at Custer High School, part of the Milwaukee Public Schools. The City of Milwaukee has a simple rule: City employees must be residents of the city. The rule was implemented in the 1970s, and is still alive today. Read More

24 Jan

Massive bank fraud found in France

Société Générale in France has reported a fraud of over US$10 billion, perpetrated by a trader in European stock futures. The trader accused of the fraud is Jérome Kerviel, who has been with the bank since 2000. He first worked in the back office, and then two years ago he was promoted to the trading desk.

It’s unclear how the fraud really happened. The bank says the trader bought huge long positions in “plain vanilla futures hedging on European equity market indices” that were “beyond his limited authority”.

That really doesn’t give us a clue to how a fraud occurred. Is the fraud simply the fact that he made purchases he wasn’t authorized to make, and now the bank is suffering losses because they were bad trades? Or did this man somehow profit personally from the scheme?

Société Générale says that the long positions were found and analyzed on January 19 and 20, and that all the positions have been liquidated. They also say that this loss doesn’t mean that they have a bad risk-management process or poor controls over employees.

How could the situation say anything else? Of course an employee exceeding his authority at this high of a level exposes weaknesses in the bank’s systems!

23 Jan

KMPG associates apparently tired of the firm’s lame technology

This one comes from Dennis Howlett’s blog, and to me, it’s hilarious. I’m not sure if you have to be a an auditor or not to think it’s funny. Apparently there are some emails from KPMG associates circulating and here’s an excerpt:

The best question is: 4. Do you feel like KPMG’s lack of technology is slowing down your development and progress in your career? My response: Absolutely. The use of morse-code telephones, word processors and telegraphs is a hinderance to my auditing ability. My developement has suffered too – I cannot speak in full sentences, have forgotten my colors, and can no longer put shapes into their apporpriate slots. My career has suffered as well. After looking around for another job, I am only eligible for jobs at Taco Bell and McDonald’s because they have an automated beeper when to take the fries out. I don’t know how to use this thing called a telephone, and is there a little man living inside, what people refer to as, a “computer”?

Read the rest at AccMan.

22 Jan

Today on WalletPop

The day has gotten away from me, so it’s time for one of those cop-out posts where I tell you what I’m writing about elsewhere. I hope to get back here later today or sometime tomorrow with some original content. I’m actually looking forward to addressing a question posed to me last week by Dennis Howlett, about audit effectiveness and options to audits. As you can imagine, I’ve got some strong opinions (really?) and I love to hear his and Francine’s take on those opinions.

But for now… today on WalletPop, I wrote about…

To hire or not to hire – Deciding if and when to hire employees for your small business

Does advertising really work on consumers? – Lots of money is spent on not-so-memorable television advertising. Is it worth it?

Stocks and Investing: The sky is falling!…or is it really? – My take on all the cries of “recession” and “inflation,” and what those with stock market investments should not do right now.

Symphony DVD Micro Music System for iPod, $107 – A little dock for your iPod to turn it into a home system. Not the greatest quality, but seems worth the price.

Tax Tips: What’s the story on Capital Gains? – A little primer on short and long term capital gains and how to make them work for you at tax time.

Millionaires beware: More IRS audits for you – More audits are on the horizon, especially if you make more than a million dollars a year.

You can own a yacht! Yes, you! – “Fractional ownership” gives people the chance to own a piece of a yacht, a jet, a mansion, and more.

And a couple from yesterday…

Layoff in your future? Plan now. – Some tips for preparing ahead of time for a layoff that you hope never happens.

You have to work for your money! – A company pays a guy for almost five years. He was never their employee. And he kept the money.

Get $25 or more from the Currency Conversion Fee settlement – If you travel over sees, you may be entitled to part of a class action settlement with the credit card companies.

21 Jan

Airlines likely to increase fares due to “congestion fees”

Last week I posted on WalletPop about a proposed “congestion fee” that airlines would have to pay at airports. Right now they pay a landing fee based upon the weight of the plane. With the congestion fee, they would instead pay a fee based upon the day of week, time of day, and congestion at the airport during landing. Simply put: During peak travel days and times, airlines will pay more for each plane they land.

Several comments have been left on the post, with readers generally arguing about why airlines charge so much to fly, why they’re not profitable, and what the lowly consumer can do about it.

One reader left this excellent comment that I think does a marvelous job of summarizing the problem with the U.S. airline industry:

Two issues were noted in previous posts:
(1) Airlines treating us like cattle because it maximizes their profits. (2) Airline costs are high because of labor costs.

Let’s address these problems – unions exist because labor organized to fight management abuses – many of them salary related. (And we all know cases of rotten management somewhere!) Businesses (in theory) exist to return profits to stockholders. Simplify the equation to a single boss and a single worker – a boss offers a salary for a given unit of work, and a worker offers work for a given unit of salary. If the worker asks for too much, the boss hires a different worker. If the boss offers too little, then the worker tries to find work elsewhere. Looking at the problem from the point of a single boss and worker, it’s simple….

But we are not looking at a simple equation. Workers are expecting pay scales based on airlines past successes. Airlines have costs imposed on them due to past regulations and contracts which no longer are sustainable. Government has not defined the markets in a way that natural forces check and balance both airline management and labor. Nor has it managed resources well (landing slots, transport to airports, etc.). Couple this with an American culture that rewards false economies (such as buying things at the lowest price without regard to quality), and we’ve seen air travel go to blazes.

How should we address this in a way to save real money, and yet use markets to our advantage? For me, it’s choosing not to use airlines for shorter trips. It also includes choosing my airports carefully (and I can do so in the NYC region), which may include driving out of my way to avoid airports with excessive congestion. If we start acting rationally, both airlines and their labor will start doing the same. And we may see realistic, sustainable, reasonably inexpensive fares with quality service return…..

I couldn’t have said it better. The airlines have a cost structure that they can’t support and real customer service is practically non-existent. How long can the airlines tread water?

I think a large-scale overhaul of the industry is necessary, but it will inflict great pain on the consumers while it happens. It may even require the airlines to “start over”… essentially completely overhauling their process and their sales force. While they do that, I expect that flights will be in short supply and prices will be very high.