LandAmerica. From Sea to shining C-minus

Then on to BBB-minus, ending with an "F." Come on boys and girls, Fortune 500 companies are hard to come by and nice to have around. Richmond Times-Dispatch, today:

The chairman and chief executive of the bankrupt LandAmerica Financial Group Inc. is stepping down and the Henrico County-based company will sell its remaining business units, it said today.

...

What was once a top employer in the Richmond area and won "most admired" recognition from Fortune magazine for the past two years filed for Chapter 11 protection Nov. 26.

The Dirt Lawyer (a Chicago commercial real estate attorney who's worth keeping up with) gave us the name of the poison in November.

The skinny? LandAm apparently had a toxic exchange subsidiary that invested about $290 million in auction rate securities that may take forever to get rid of. And you need to access that money to faciliate the exchanges. In short? Liquidity crisis.

Yeah, something's all wet. Or maybe too cut and dry? Saying "liquidity crisis," as so many are, is like blaming the fork for your high cholesterol level. A quick Google offers us (via a Deloitte management guy no less) something [from 2006] that might be viewed as irony, what with all this gate-keepered "sudden news":

Fortune 500 blog project: #500 LandAmerica needs blogs

Oct 23, 2006 ... I love your explanation of why LandAmerica needs a blog (or multiple blogs!). I' ve said the same thing over and over of several blogless ...
it.toolbox.com/blogs/blogpotato/fortune-500-blog-project-500-landamerica-needs-blogs-12452 - 66k - Cached - Similar pages -

Come on Genworth, we're rooting for you!

Diller: Beating (Wall Street's) expectation of earnings is yesterday's game

Reuters Media Summit

Barry Diller: “It’s not that you don’t want to earn as much money as you can — it is your obligation, of course — but companies have obligations beyond that and they certainly have obligations beyond that at certain times, in the times in which they operate. And they also certainly ought to know that meeting and beating expectations is probably yesterday’s game and it will be increasingly so, which would be by the way very healthy for companies. Running a company that meets and beats expectations, and that runs their company accordingly, are companies that I would question why anyone would invest in.”

Here's a quick clips of Diller saying the above.



This second clip has Diller parsing the utility of saving 20, 30 or 40 million dollars (about what many job cuts aim for at mid-cap sized orgs) in a year "when nobody's counting."



I don't know what Diller's positions have been in the past when QVC or other outfits he's run have encountered the fainting spells of Wall Street analysts agog over his quarterly numbers. My guess is he's less than pure on this front if he's a pure-bred American CEO. Regardless, there's a whole bunch of epiphanies happening out there.

No doubt, much of what's coming to pass is thanks to the damaging effect of a singular idea of the last 30 years, when the spadework of doing, as our parents did, became unsexy and unfulfilling: Profit became "the product"--The Moonshot--of many companies and the near-myopic focus of many leaders and our network of value-measuring and dictating institutions. Any sense of the power of work--and profit as meaningful proof of any work's worth--long since went out the window as a passe mark of the goofy or unsophisticated person. Well, reality is back in vogue and, let's hope, not too late.

###

This reminds me of something from Shalom Schwartz and Amir Licht that's useful as an executive measure when pondering corporate governance and direction. I'll dig it up and post something on it later.

Credit Markets: "Complexity" is French for "I got mine."

Remember the old saw about the Chinese symbol for crisis being a hybrid of the icons for Danger and Opportunity?



It's bullshit borne of some business consultant looking for a profound-sounding moment or 'take-away."

Likewise, the Securitization of Debt and it's hoary babysitter, Hedge Funds, have little to do with Fiduciary Responsibility mated with Risk Management and everything to do with a different, old combo thing that gets us into trouble: Boredom and Greed. And it's yet another example of the search for feeling boost of Hyperrealism because the actual realism thing seems so damn stodgy what with it not having CGI and a crescendo-building soundtrack by Celtic waifs or chanting Monks or, by Nickleback.

Damn, I'm such a cynic. Too many boardrooms. But Tanta, of Calculated Risk, ain't buying it either.

Wharton on the Future of Securitization:

"The lurking concept here is 'leverage.' You want to make the big bucks investing in MBS? You leverage them. That's where those CDOs came from. A whole lot of this complexity is driven by the 'need' to goose the yield, not by some essential opacity of the underlying credits or the failure of originators to retain residuals--which, in fact, they actually did quite a bit of in there. The complexity came in because you can't get a tranche paying 12% out of a bunch of loans that pay 8% unless you create complex cash-flow structures hedged by complex rate swaps leading to re-securitization of tranches in new vehicles (parts of the MBS become CDOs, for instance).

So are all the rest of you convinced that market participants are going to give up on the chase for mo' better yield without regulation?"

One of my favorite clients wants me to believe this (Credit Swaps, SIVs, Bear Stearns, the whole thing) is about liquidity. No, it's about runaway human nature fire-walled from accountability by over-complicated jargon and 'cleverness,' and practiced by people who love to tell other people they just don't understand complex systems.

"Complexity" is, too often, French for I don't really understand it myself, but it helps me make a buck and it hasn't hurt my interests yet, so we'll worry about it later.

Why do I get so animated about this shit? Because me and mine, we're the clean-up crew once the "pros from Dover" get done self-actualizing themselves into others' oblivion. Yes, we try to fix the damage. And we get paid something for it. But I much prefer the other side of our business, where we deal in hope, humility and curiosity and opportunity. Because it's a sorry day when a Child Protective Services worker hopes for more customers.

You never know who's swimming naked til the tide goes out

Today's offering is on economics with zing, particularly on the dangers of nano-slicing what Grandpa would have quaintly called common-sense and its money-cousin, credit-worthiness. We owe the cool skinny-dipping title to a nice metaphor attributed to Warren Buffet on the topic of transparency and not letting yourself get suckered by soothing strategems and wishful thinking in the Financial Services fields. Economist Robert Kuttner liked the imagery enough to use it in his very informative and enjoyably readable piece posted over at Truthout. Read it, and see if you can agree with me that we'll be reregulating several wheezing sectors come 2012 or so.

On to another sage of teh dollar-sense and business-savvy, via AP:

You know, when you give a man more money in his pocket -- in this case, a woman -- more money in her pocket to expand a business, they build new buildings. And when somebody builds a new building, somebody has got to come and build the building.

"And when the building expanded, it prevented (sic) additional opportunities for people to work. Tax cuts matter. I'm going to spend some time talking about it...

Pretty good, yeah? Read more of his particular brand of wisdom to see why, yes, we'll be reregulating several wheezing sectors come 2012 or so.

And finally, we have The Maestro. In interview with France's New Observer, Alan Greenspan slips, and endorses socialism in certain cases - the industries that stack and push money around. The link leads to the Google translation and, aided by high school French, I've cleaned up a few of the algorythmic burps below but the gist is clear.

New Observer.

The New Observer. - You were lauded when you left the FED in 2006. Today you're branded with having nourished the real estate bubble with a policy of artificially low interest rates…

Alan Greenspan. - I find that extraordinary nonsense, revisionist history. Some critics ... label me to have encouraged Adjustable Rate sub-prime loans. That's completely false. One also reproaches me for having gone to the help of the investors, even of those which had taken enormous risks, each time there was a danger of crash. The problem is that, during such a time, the monetary policy must act quickly to lower the interest rates and to keep the system “liquid”. By doing this, we give the impression of [coming] to the rescue of people who took ill-considered risks - and it is indeed what we [do]! All the persons in charge for central bank will say to you that they are confronted with the same choice: to punish these people taking foolish risks and see the economy breaking down, or considering that a monetary policy protecting the economy and stability will profit to them - what is certainly regrettable - as it will profit with those which were careful, too.

The Oracle speaks. Yes, you can be too big to fail. And yes, free markets can be too free. And, of course, some will benefit in this denial of gravity and the other laws of financial physics. Yes, it's a minor inconvenient abberration in an otherwise pretty tale. But rest assured, according to Greenspan, we are still a merit-based system. Like Ayn Rand said. Like Milton Friedman got to prove, when allowed, and when unfettered. Like Brazil. Like, see you in 2012.