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Let’s get this straight: AIG execs got bailout bonuses, but pensioners get cuts

No one has accused city workers in Chicago or Detroit of bringing down the economy, but they could face pension cuts

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A pensioner protests pensions cuts in Detroit

City of Detroit pensioner Donald Smith sits across the street from the Federal Court House, to protest cuts in city workers’ pensions. Photograph: Rebecca Cook/Reuters

As we passed the fifth anniversary of the peak of the financial crisis this fall, the giant insurance company AIG was prominently featured in the retrospectives. AIG had issued hundreds of billions of dollars of credit default swaps (CDS) on subprime mortgage backed securities. When these mortgage-backed securities failed en masse, AIG didn’t have the money to back them up.

This would have forced AIG into bankruptcy. However Lehman had declared bankruptcy the day before and the world was still engulfed in the aftershocks. The Bush administration and the Federal Reserve board decided that they would stop the cascade of failing financial institutions and bail out AIG. As a result, the government agreed to honor all the CDS issued by AIG and effectively became the owner of the company.

Chicago has been in the news recently because its mayor, Rahm Emanuel, seems intent on cutting the pensions that its current and retired employees have earned. Emanuel insists that the city can’t afford these pensions and therefore workers and retirees will simply have to accept reduced benefits.

If the connection with AIG isn’t immediately apparent, then you have to look a bit deeper. Folks may recall that AIG paid out $170m in bonusesto its employees in March 2009 with its top executives receiving bonuses in the hundreds of thousands of dollars.

These were people who not only shared responsibility for driving the company into bankruptcy; they also had been at the center of the financial web that propelled the housing bubble into ever more dangerous territory. In other words, the bonus beneficiaries were among the leading villains in the economic disaster that is still inflicting pain across the country.

The prospect of executives of a bailed out company drawing huge bonuses at a time when the economy was shedding 600,000 jobs a month provoked outrage across the country. President Obama spoke on the issue and said that unfortunately no one in his administration was smart enough to find a way that could keep the bonuses from being paid. The problem according to Larry Summers, then the head of President Obama’s National Economic Council, was that the bonuses were contractual obligations and they had to be honored.

This provides a striking contrast to what might happen to current and former city employees in Chicago and may happen to current and former employers of the state of Illinois and Detroit. In these cases, it seems that the contracts workers had with their employers may not be honored. Employees who worked decades for these governments, with part of their pay taking the form of pensions in retirement, are now being told that these governments will not follow through on their end of the contract.

The differing treatment of contracts in these situations is striking for several reasons. First, the AIG executives stood to gain much more money with their bonuses on a per person basis. In contrast to the six-figure bonuses going to top executives, pensions for Detroit’s workers average just $18,500 a year. Pensions for Chicago’s workers average over $33,000 a year, but almost none of these workers will get Social Security, so this will be their whole retirement income.

In contrast to the top AIG executives, who played a role in bankrupting their company and sinking the economy, no one has accused workers in Chicago or Detroit of doing anything wrong. These were people who taught our kids, put out fires, and picked up garbage. They did their jobs.

They also might be excused for thinking that they could count on the governments involved to fulfill their end of the contract. After all, both Michigan and Illinois have provisions in their constitution stating that pensions earned by public sector workers cannot be cut. Since cities like Detroit and Chicago are creations of the state governments, workers for these cities, like workers for the state government, might have thought the state constitution protected their pensions. Apparently they should have hired lawyers who could have explained to them why this is not the case.

There is yet another connection between the plans to cut pensions and AIG. The bond rating agencies played a prominent role in both cases. In the case of AIG meltdown, the bond rating agencies gave investment grade ratings to trillions of dollars of mortgage backed securities (MBS). They often gave these ratings to dubious issues for the simple reason that they were being paid. As one analyst from S&P said in an e-mail, they would rate a new MBS if it “was structured by cows“.

The bond rating agencies played a similarly disastrous role in the pension problems facing state and local governments. In the stock run-up in the 1990s, they green-lighted accounting that essentially assumed that the stock bubble would continue in perpetuity, effectively growing without limit. This meant that state and local governments didn’t have to contribute to their pensions since the stock bubble was doing it for them. States like Illinois and cities like Chicago clung to this habit even after the bubble burst.

There is one final noteworthy connection between AIG and the Chicago pension situation. Chicago’s Mayor, Rahm Emanuel, was President Obama’s chief of staff at the time that no one could figure out how to avoid paying the AIG bonuses. Apparently Emanuel has learned more about voiding contractual obligations now that it is ordinary workers at other end of the commitment.

 

 

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Ways to Show You Appreciate Your Customers

7650804342_9715bb425fYour business successes are the result of your own hard work, to be sure. But, you could not have built your business without the support of your customers.

Suppose you are already doing your part in your day-to-day business interactions with customers. You give them excellent service by proving that you are willing to make time for them. They feel important, knowing that you value their business. A customer who feels overlooked, rushed or senses that you would rather be doing something other than helping them is not likely to be among your loyal return customers. So, you treat all of your customers with respect, giving them the personal attention they need while they purchase your product or service.

However, your responsibility to your customers does not end with the completion of a business transaction. All individuals enjoy having their contributions acknowledged, and they will favor those who express awareness of their efforts. Recognizing how someone has supported your business and showing them that you appreciate them is crucial to your continued success. With the holidays fast approaching, your company has the opportunity to make a lasting, positive impression on your customers.

Here are a few simple ways to show your customers that you care about them:

  1. Give away materials with your company logo on them. Customers always love receiving free items. Order selections of small promotional materials such as pens, calendars and notepads. These materials are often inexpensive and will help to build your customers’ loyalty to you. You will also benefit from the added visibility to new potential customers.
  2. Send personalized holiday cards to your customers. Several companies offer attractive and professional designs that tell your customers you appreciate them. Sign the cards, or better yet, write a small note expressing your gratitude for their business. Customers will recognize the effort you put into mailing them the card, and they will be pleased that their loyalty is noticed and appreciated.

Do not limit your appreciations to the holidays. You may also want to send a card on other occasions to show your customers that they truly are important to you.

  1.  Offer special discounts to your customers. Sending a coupon or promotion along with a short note telling them you are grateful for their business is a great way to acknowledge your customers while simultaneously giving them an incentive to return.
  2.   Following up with your customers by sending them a personalized letter or e-mail after a transaction is complete is the best time to show your appreciation. Your customer will see no underlying motive for the letter other than you want to show your appreciation to them. A simple note or acknowledgement of their contribution to your business will certainly catch their attention and set you apart from other, more impersonal businesses.
  3. If you have the time or resources and it makes financial sense based on the dollar amount of products or services you offer, a brief “thank-you” phone call to your customers is very effective, especially directly following a transaction. The world of business has become very impersonal in many ways, so a human voice, even if heard merely in a voicemail or answering machine is very effective. In fact, some very successful companies hire customer service reps who have the single task of following up and thanking their customers. They also use this time to briefly survey each customer to find out how the company can improve.

Your customers are the lifeblood of your business. You must first earn their support by providing great initial service. But, do not make the mistake of passing by the chance to tell your customers that you appreciate them. Take the time to communicate with those who have supported you and reward their business with a personal note, phone call or gift. Your efforts to recognize them will be noticed, and they will be much more likely to return and recommend your business to others.

Mikkie Mills is a Chicago native and mother of two.  She occasionally blogs about DIY crafts and business. Show your customers you care through gifts by Vistaprint products.  Connect with her on Google + or on Twitter (@DollarHacks).

 

 

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What Is Google+ Local and Why Should My Business Care?

Google + logo spectrum

If you’re new to the online review site phenomenon, then you may not have any idea of what Google+ Local is, but don’t worry—you’re not the only one.

So what is Google+ Local?

Before, Google had its own little review site known as Google Places. This was a way for businesses to get their company listed on the search engine. For example, if you were to search on Google for a “Italian restaurant in Chicago”, then all the Italian restaurants in Chicago that were listed on Google Places would appear in your search results page. Patrons who visited these restaurants could also rate the business and leave their review for others to see, and other patrons could use this information to decide whether or not they were going to visit that company.

Recently, Google decided to change Google Places to Google+ Local, and along with the name change, they made a few additional changes.

One big change that they did make was incorporating the Zagat scoring system into their program. This scoring system is a special way for the ratings and reviews left by customers to be scored appropriately, giving the company one overall rating based on the collaborative scores from reviewers.

Since Google decided to incorporate Google Places with Google+, now anyone looking at these businesses can see the reviews that were left by those people who are in their circles. Instead of reading all the reviews by total strangers, you can now read the reviews from people that you know in real life.

Why should my business care about Google+ Local?

As a business, it’s very important that you use Google+ Local to your advantage. First, by claiming your business on this site, you are allowing your company to appear in search engine results pages when people in your area are looking for companies that sell your products and services. This allows you to easily reach your target audience in certain locations, making it a great way for you to market to a niche group.

Today’s consumers are also turning to online review sites before making a final purchasing decision, so you need to use Google+ Local to find out what your customers are saying about your company. You can read the reviews that are left and learn what your customers love about you and what they don’t love about you, and you can use this information to make your business better.

Google+ Local can also be used as a cheap marketing tactic. Along with your company’s name, you have the ability to add pictures, descriptions and other important information to your listing. This allows your customers to learn more about what you have to offer, and if you use keywords, your Google+ Local page can help boost your search engine optimization. Plus, you can also add a link back to your website, which can help increase web traffic and generate more awareness about your business.

Google+ Local can be a great online review site to benefit your business, so what are you waiting for?

Caleb Grant lives in Austin and works with a review management company.  He often blogs advice about review tracking and recently wrote about his findings after studying the Google+ Local review scale.

 

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Mexican Labor in California: can ya even still tuck your own baby in at night?

As much as we would like to bitch and moan at the fact that they’re “taking our jobs,” The undeniable truth is that we would be up a fecal creek without a paddle without our neighbors from the south.  I am not talking about having to order a McDonald’s double double in Spanish, or possibly saying “leche” instead of milk, I am talking about the backbone of the “AmericanService industry.  When was the last time you had an all white crew clean your office?

We just spent a long weekend with our relatives from Chicago. Brother-in-law who is an investment banker, with a great deal of knowledge about the workings of life itself, issued the following observation from a Chicago perspective:

Not only are they willing to do some of the things that we are not, they are actually more acclimated to some of the conditions that we are.  Can you imagine a gringo now days working on a roof at 120° with a tar mop, or a nail gun? We just had our roof completely replaced on an 8000 square-foot triplex, by a “American” contractor. The work was amazing, and the direction did come from Ryan Saber, but I guarantee that not one gringo lifted a hammer. Job well done, but if the truth be known, the actual work was done by the Latin crew.  The skill in acumen of these people has long transcended the ability to take our lettuce and strawberries.  I went on a sport fishing trip over the weekend, and guess what nationality the kid was who is taking care of all of the tackle in managing that none of our lines got crossed?

Of course, when the neighbor had to have four 100 foot palm trees removed from her property, a feat that was accomplished with amazing skill and precision, guess who was called again.  After the cleanup, guess who again was called to install the new landscaping.  As I sat on the porch watching this deficient machine in action (in the company of the two Mexican people that clean my house for me) I was again struck with the fact that it’s been a long time since I’ve seen a white boy bending over with a pick his hand.

What reminded me to post this blog is the following: after putting in an excruciating seven-hour day at my laptop preparing social media profiles and redesigning websites while watching last night’s football game on TiVo, I was relaxing on my front porch by 5 o’clock enjoying an adult beverage when a delivery truck arrived with the neighbors washer and dryer. Although slightly annoyed by the idling diesel and it’s combatant fumes which were interrupting the solitude of my egregiously exhausting day, I stopped to take notice. These guys showed up and performed an absolutely amazing job. It would’ve taken we gringos an hour to do what they did in about five minutes if we have had sense to do it.

Not only did they cut all of the boxes and drop the washer and dryer amazingly skillfully, they had the sense to put all of the attachments i.e. hoses and wires onto the appliances before they even bothered to wield them into the house.

This is not to mention the hundreds and thousands of quote “professional people” that happen to be of Hispanic descent.  The Dr. that I visited an emergency room last night, my Dentist and my Atty.  are but a few that come to mind.

I guess what I’m saying is “since we’re neighbors let’s be friends.” I grow tired of my “patriotic” friends complaining about other people who were not only willing to do things that we are not, but do them far better than we would be able to even if we were willing.

We as a country have lots of things to work out; including welfare, social Security, education, and (frankly) language skills… but the bottom line is that we welcome them into our country every day.  It might be skillful to realize that we do have  things to work out, and to get on with doing that instead of watching Fox news to find reasons to fear and hate.

Both of my children attended Adalante Spanish immersion school. I had a chance to see firsthand how many families were working three jobs, commuting literally hundreds of miles in some cases, and doing everything they could to better their families and contribute to their communities.

I can understand how some “every day working Joe’s” might feel that they are being treated unfairly, and have some resentment about “social benefits for illegal’s.” (I wont even go into the argument of whether they have just as much right to be here as we do). What I really can’t understand, is how some bloated trust fund politician that has never had a real job in their life could have the audacity to challenge the right of an oppressed people to come to America for refuge, and to work hard to make a living for there families, largely doing work that we cannot and are not willing to do any more.

 

What ever happened to …

“Give me your tired , your poor, your huddled masses, yearning to breathe free… “

Did that have an expiration date that I was unaware of?

Muchas gracias a mis amigos que trabajan duro!

 

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There is Nothing Like a Good Long Storm to Make You Appreciate The Sunshine

Joni Mitchell was right; you don’t know what you have till it’s gone.  The past couple of weeks it has rained pretty much nonstop.  I feel like we’re back in my wife’s hometown of Hazel Dell, a suburb of Portland.  Never knew how people could live there, too freeking rainy.  The big difference between here (San Francisco area) and there is that we get breaks between showers.  They can go for literally weeks without seeing the sun.

Today we had a break for a couple of hours and I took a walk.  There were kids out playing on their skateboards, women washing dogs, others taking walks or riding bikes.  It was like the old Chicago song:  Saturday, in the park… It felt just like the 4th of July.  All that was missing were the Mexican vendors with their push-carts full of ice cream.  It was T-shirt weather for that hour, even though the temperature read 49’.  In the sun it felt like we were back in Cabo San Lucas.  Funny, when we were down there I didn’t even go for a walk last time.  It seems as though we appreciate things when they are scarce, as the sun was today.

There is much to the texture thing.  Humans often don’t appreciate things without it.  Three years ago who would have thought that we would be ecstatic that the market was back up over 12,000?  When the Silicon Valley was in its “heyday”, a thousand dollar lunch bill just went into the Advertising and Entertainment budget.  Now Mary and I get excited by a free vendor dinner at the Fairmont.  There used to be secretaries and admins to do things like typing and filing.  The internet was a tool and emails were a means of communication, not a burdensome task to filter through in the morning.

Belt tightening can be a good thing.  People learn to do their own typing, publishing, and organizing.  It is a better head space for most of us to be responsible for all of our own actions instead of blustering through the day only to dump the follow-up on someone else’s desk.

Cigarettes used to be 50 cents, gas 29 cents a gallon and what did we do as a country?  More people died from tobacco than anything else, and the average car was a V-8 that got 8 miles to the gallon.  There was no concern for health, carbon footprint, global warming, or anything other than how much steak and potatoes we could fit into our bloated bodies.  Our businesses were every bit as bad.

The new era has brought about many changes:  My car is a Prius that gets 50 miles to the gallon, my office is a converted bedroom in my house, that (the house) is a tremendously downsized version of the one where my kids were raised (but it’s paid for), my business is on the internet helping other folks sell what they do, and my sirloin habit has been cut down from three days a week to once a month.

I actually appreciate it all now.  The walk in the sun, the occasional steak, that I can now type 50 words a minute, all came from necessity.  The contrast in life is what makes us appreciate what we have.

 

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You will not BELIEVE I carried this on an airplane – 10 times!

I tend to be a creature of habit.  When I travel, lots of little items end up in my shaving kit.  I noticed last night that one of them had leaked, and resolved to empty the thing out and wash it thoroughly.  What I found in there was scary:  one  5” nail file, two pairs of razor pointed scissors, a box of matches, a flashlight, and 3 oversized  tubes that could have held enough plastic explosives to … well you get the idea.

This by itself is not so scary.  What is scary is that I always have this shaving kit in my carry-on in case they “misplace” my checked-in luggage.   This same shave kit has made it through security at the following airports at least once in the last year:  San Francisco, Los Angeles, Las Vegas, Denver, Chicago, Houston, Los Cabos, San Jose and Ft. Meyers Florida.

I have no editorial comment to share on this one; it kind of speaks for itself.  The last time I got on a plane from SFO to Denver there was a gun in my backpack, but that’s a story for Friday’s blog.  You don’t want to miss that one.  

BTW you can subscribe to these articles via e-mail at: http://bayintegratedmarketing.wordpress.com/

 

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