Tell It To Al

The bridge that collapsed on Interstate 5 bridge over the Skagit River in Washington was listed as “functionally obsolete” and “fracture critical,” which means the whole sha-bang could come tumbling down if one major part fails.

Click here to read the details from USAToday. This sort of thing shouldn’t be happening in a modern, developed nation.

Barry LePatner, a New York construction industry lawyer, has been sounding the alarm about the sorry shape of America’s bridges for a long time. He says cash-strapped governments large and small been neglecting bridges for decades, and that failures like this are the inevitable consequence.

When I wrote about Mr. LePatner’s claims last year, I received a lot of emails from readers calling him alarmist. He’s in the construction business. He’d like to see his clients building bridges. He was just trying to drum up business, they said.

It’s a point well taken, but now another bridge has fallen. It only took a truck to take it down. You could blame it on the truck, or you could blame it on a bridge  built in 1955, that wasn’t adequately updated to handle modern traffic.

I count it as a sign Mr. LaPatner is right. Fortunately this time, there were no fatalities.

Click here to read the column I wrote last year on Mr. LaPatner in The Sunday Wall Street Journal.

Imagine you’re in Las Vegas, playing craps.

Several of your friends back home gave you money to play for them, too.

You lose track of whose money you placed where on the craps table. When you win, you say, Oh, that was my bet. And when you lose you say, Oh, that must have been theirs.

In the finanical world, this game is called “cherry-picking.”

The SEC recently filed a lawsuit against a Lisle, Ill., investment advisor, Charles Dushek, alleging that he allocated his winning stock trades to himself and his losing trades to his clients. Mr. Dushek’s attorney called the charges “unfortunately and misleading” and says Mr. Dushek plans to contest them.

Click here to read my column.

Michael Dorff, a professor at Southwestern Law School in Los Angeles, says CEOs are paid for performance – but it’s usually not their own performance.

They’re paid millions for the performance of the economy, their industry, their employees, and sometimes just for having good luck. For years boards of directors – often made up of CEOs who believe in their own press releases – have been going along with the fallacy that the more shareholders pay for a CEO, the better their stock will perform,

It’s just not true, says Mr. Dorff, who has been studying executive compensation for more than  10 years.

It’s funny. When companies get in trouble, there’s talk of cutting just about everything, from equipment to employees. Rarely do you hear talk of cutting management expenses – even when management is the source of the company’s troubles.

CEO stands for Cash Eating Organism – a beast that simply can’t be stopped, often eating up as much as 15 percent of a company’s profits.

Click here to read my column on Marketwatch.

David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy.

He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital Partners, for taking on too much debt and paying themselves too hefty a dividend.

American Securities says the company struggled in the face of increased competition, a recession, and Hurricane Katrina which sacked it’s manufacturing plant in Gulf Port, Miss., and that it did what it could to turn its fortunes around.

A bankruptcy court is sifting through the wreckage now, and Mr. Oreck hopes his family can buy the company back in a bankruptcy auction.

Mr. Oreck is also out with a book this month, “From Dust To Diamonds,” in which he details how to run a business the right way. He says he hopes his namesake company’s chain of private equity owners will read it.

Mr. Oreck, meanwhile, will turn 90 this year, and hopes he has enough time  left in his life to turn his namesake company back around. “At age 90, when they ask you, ‘what do you have to look forward to?” the answer is. ‘tomorrow,” he laughed in a telephone interview.

Click here to read my column in The Sunday Wall Street Journal.

And click here to watch me talk about the week’s business news with Will Ripley of Denver’s 9News.

Bernie Madoff tells CNNMoney he’s having trouble sleeping.

Click here to read more about that from CNN.

He doesn’t know how lucky he’s got it, living behind bars in America. In China this week, a 39-year old businesswoman received the death sentence for running a $70 million Ponzi scheme – pocket change next to the billions Mr. Madoff stole. Click here to read more from The Wall Street Journal.

“Society has been caused great harm and the crime deserves to be severely punished,” read a statement from the court.

Taking someone’s life savings is not far removed from murder. In the Old West, judges used to hang horse thieves because stealing one’s horse often meant stealing one’s livelihood, and sometimes even leaving one stranded in the wilderness.

The destruction Ponzi schemers leave in their paths often includes suicides. In Mr. Madoff’s case, one of those suicides involved his own son.

It’s tough sleeping in prison, but at least when Mr. Madoff goes to sleep he knows he’s going to wake up.

Bursting water mains are an everyday problem in America.

The American Society of Civil Engineers estimates about 240,000 blow every year. It gives America’s drinking water infrastructure a “D” grade, noting some pipes are more than 100 years old.

Municipalities have long neglected water system maintenance, often allocating scarce dollars to more pressing needs. The result is often a sink hole large enough to swallow cars.

Aqua America, a publicly traded water utility, offers a solution. The company buys up water systems and repairs them. CEO Nicholas DeBenedictis has positioned his company to prosper from the great infrastructure crisis that may lay ahead. Meantime, his stock has been climbing and his dividend has been growing.

Click here to read my column on MarketWatch.

You can’t lie to the Internal Revenue Service. But  can the IRS lie to you?

Congress spent much of the day grilling IRS  officials for the revelations that came out last week that the IRS was targeting conservative groups.  And some lawmakers didn’t like the answers they were getting and accused IRS officials of lying. Click here to read more from Reuters.

“I did not mislead Congress or the American people,” said  Steven Miller, the acting head of the IRS  who was fired by President Barack Obama on Wednesday. “I think what happened here is that foolish mistakes were made by people trying to be more efficient.”

The IRS is a big, lumbering organization that makes a lot of mistakes. It’s agents and officials are supposed to hold themselves to high standards, which includes not only telling the truth, but keeping their own financial houses in order.

The people they go after for tax fraud are often guilty of telling lies and screwing up their finances, so it makes sense that the IRS not do these two things. But, as they say, we’re all human.

Click here to read the column I wrote last year about the IRS agent whose finances got so bad she  squatted in her home.

When you meet a guy like Gary Kelly, CEO of Southwest Airlines Co., you have to wonder, what’s wrong with the rest of the airline industry?

Serial bankruptcies, layoffs, bag fees – crisis after crisis – Southwest has none of that. Mr. Kelly says it’s because he’s not afraid to love.

Click here to read my column on Marketwatch

They say inflation is under control, but beer prices are not.

Restaurant Sciences reports that many popular brands – including Budweiser, Coors Light, Miller Lite, and yes, even, Pabst Blue Ribbon — have seen a 3.5% to 6.8% price jump in the nation’s bars and restaurants over the past seven months.

“Across all restaurant and bar segments, and all beverage alcohol categories, the one constant is rapidly increasing prices in the fine-dining tier,” said the firm, which closely tracks food and beverage product sales throughout the food service industry in North America.  “This segment had some of the hardest-hit establishments in the last recession, and average drink prices there are increasing with a vengeance.” Click here to read more from Restaurant Sciences.

The Federal Reserve says it is holding inflation below 2%, but if beer inflation is as high as 6.8% there may be more froth in the economy than the central bank wants to admit.

Securities and Exchange Commissioner Luis Aguilar gave a commencement address at his alma mater, Georgia Southern University on Saturday, with some simple, but too-often unheeded advice: Do the right thing.

Here’s an excerpt from his speech:

“The importance of doing the right thing has become even clearer to me during my terms as a Commissioner at the U.S. Securities and Exchange Commission (“SEC”).  …

” SEC enforcement actions against people who engage in Ponzi schemes, insider trading, and other kinds of securities fraud and misconduct are essential to strong capital markets. This is important because if investors are confident that the securities market is fair, honest, and transparent, they will invest their money and provide the capital necessary to fund the growth of companies. As businesses thrive, jobs are created, and our economy grows.

“There are many reasons for bringing an enforcement action, but the most common denominator is simple: someone chose not to do the right thing. I am not so naïve as to think that simply telling people to do the right thing will get rid of every crook or fraudster, or avert the next global financial crisis. However, many of the cases that come before the SEC arise because otherwise decent people chose to turn off their ethical compass. Often, there were people who could have done the right thing to stop the fraud, but looked the other way or just didn’t want to get involved. Perhaps some future harm can be avoided, if all of us work to help maintain a culture of doing the right thing, even when it’s not the easy thing to do.

“At some point in your life, when you have a tough choice between doing what is convenient and doing what is right, I hope you will remember to do what is right. As Dr. Martin Luther King, Jr., once said, ‘There comes a time when one must take the position that is neither safe nor politic nor popular, but he must do it because conscience tells him it is right.’”

Click here to read a column I wrote about Mr. Aguilar in 2010.