Pension spiking is an apt term. The average public servant’s salary trends upwards unremarkably over the years until retirement or other separation from service looms on the horizon. Then, some workers, or in this case executives, manage to double and even triple their last two or three years pay, which dramatically boosts their pension payouts. The techniques vary jurisdiction to jurisdiction but who pays for all those golden parachutes does not – ordinary taxpayers who pay more and deserving recipients of public programs who get less.
Watch the Edgy Ones
The pantheon of edgy CEO’s includes TYCO’s Dennis Koslowski whose sales tax dodge on artwork he purchased mirrored a fast and loose corporate stewardship that resulted in jail time. New research suggests Koslowski was not unique, those prone to pushing the boundaries – legal and otherwise – seem as likely to do it in the corporate suite as behind the wheel of a speeding car. Keep an eye on those edgy acheivers, even if (maybe especially if), their foot seems never to come off the accelerator in pursuit of outsized results.
Downside of Privatized Government
Where to start? Corporate operator of the U.S. half of the Detroit – Windsor, Canada tunnel wants to reorganize under bankruptcy. A potential buyer of this asset in any bankruptcy sale is the fellow who operates the Ambassador Bridge over the same waterway and has Windsor city officials nervous, perhaps because of his opposition to a proposed U.S. – Canadian connection that would compete with the one he runs. So, Windsor officials’ don’t think it’s too far-fetched to fear that the wrong buyer might cement up the US side of the tunnel. Moral of the story: Government borrows, taxes and collects fees to build and operate critical infrastructure for good reasons, which this story of foundering and politicking private operators is sure to underscore.
The Seven Year Interview
So the Senate finally gets around to appointing a permanent ATF director after seven years. Oftentimes when agencies seem inept and ill-managed, the fault lies with wizards in the legislature willing to play such games for political ends both specific and global. Here, the specifics are an ATF the NRA would rather see dead and the global is a Republican Senate Super-Minority willing to hobble government administration at any turn so as to better run against “the beast” in future elections and show loyalty to Godfather Grover Norquist, the anti-tax crusader who has decreed a starvation diet for the federal government.
The Producers
Life imitates art–in the case Mel Brooks’ classic “The Producers”–which I’ll bet was imitating life to start with. Although this is about Broadway, the ease with which theatrical financiers can be fooled joins is of a piece with the high finance sleight of hand I’ve been commenting on of late.
Ex-Ethics Officer
The fired ethics officer allegedly kept bad records and while stepping on some big Cook County toes. So off she goes, while the nepotism she had targeted lives on.
Bad Management at CIA–Still
Forget the specifics–the point is the agency doesn’t, or can’t, do much to change what is reportedly a chronic problem. Entrenched cultures tend to do this–downside be damned.
Detroit Files for Bankruptcy
Detroit’s critical fiscal condition represents a structural cancer growing in a number of U.S. jurisdictions, including states such as Illinois. The bankruptcy court may well sign off on radical surgery that will fracture existing notions of what’s due bondholders, civil service pensioners and current employees. So it is not surprising that Detroit’s story will be closely watched by those involved, both directly and, in other jurisdictions, by proxy.
Shell Games III
Profiteering manipulations of the California energy market, a practice Enron pioneered, this time allegedly by JP Morgan Chase. Electricity traded around via “schemes” that picked the pocket of state authorities, according to the Federal Energy Regulatory Commission. So, yet again, fast-talking, sleight of hand, contractual labyrinths and doctored documents–cautionary emails allegedly morphed into endorsements–pass for productive economic activity, which very likely earned the masterminds kudos and bonuses at the time. An empty-calorie economy!
Shell Game Redux
Yesterday LIBOR (see “Makers v. Fakers” below), today the Tribune Corporation. Just how many high-priced accountants and attorneys did it take to craft an impregnable income tax shield for this teetering corporation–which went bankrupt anyway. And in bankruptcy, how many more attorney/accountants did it take to wipe the corporation’s debt slate clean, largely at the expense of the “owner workers,” whose role from the get-go seemed more about exploiting tax loopholes than running the show? And finally, after the bankruptcy, how many more lawyers and CPAs did it take to come up with a sale structured to avoid and/or defer for years any taxes on the capital gains realized by the key investors who apparently did run the show? Shell games, indeed, though it looks as if the IRS is ready to pounce–but, of course, the attorneys and accountants stand ready to bill more high-priced hours fighting back.