Wednesday, November 28, 2007

Severance Plan...Severance Package

Give some thought to the terms severance plan and severance package. Who's plan? What package? It sure isn't the plan of the employee who just got fired. It's the plan the corporation has for buying off a fired employee's promise not to sue. The term severance package just goes to show that a corporation is trying to deal with their firing an employee with a neat and clean strategy, again to buy off the employee. If you think a corporation is doing it out of some sense of loyalty, you're either super crazy or super naive. Get with it folks, severance has nothing to do with taking care of an employee and everything to do with managing their reaction to getting fired.

Tuesday, November 20, 2007

Severance Insurance

It must mean something, because www.severanceinsurance.com is now in the top spot when you Google "severance insurance", and I'm pissed, because up until now good ol' willy has been up there. So who's looking at the site? It sure doesn't look particularly special. But it does make a point and get all of the information across. and given its position on Google more than a few people are looking at it.

If nothing else, the severance insurance guys have got themselves on the map. So whyt haven't we heard, or better yet why can't I find anything material about it other than on their website? Maybe the reason it is flying under the radar is that corporations are using their captives as a way of securing the insurance so it doesn't hit the obvious radar screens. I'll bet I'm pretty close on that one...like I have been on a few other things.

Good on me! The problem is I still haven't found a job and that sucks.

willy

Tuesday, November 13, 2007

Severance Insurance

Things are a shakin'! Word on the street is that the severance insurance guys are about to make some announcement. Big placement? Fresh capital? Strategic alliance? Kissing corportions off and casting their lot with the folks who have gotten fired? I haven't a clue. I guess we'll just have to wait and see.

The one thing that I do have a clue about is this economy is in free fall (whether acknowledged by the pundits, or not) and going to generate a whole lot of folks who get fired. Whether caused by the global economy, the declining dollar, outsourcing, technology...you name it, real full time jobs held by real people are at risk.

I've talked about the similarities with disability insurance. The most obvious similarity is that whether injured, ill or fired they all have lost their jobs through no fault of their own. The disabled have all sorts of options. I still can't figure out why the displaced have none.

willy

Monday, November 5, 2007

Severance Insurance

On October 29th I got real cocky and started talking about what I called engineered severance. I acknowledged that it wasn't insurance. But what a weekend's worth of modeling has shown me is that I really can take most of the strategies that the insurance guys are using and use them to extend severance benefits...and not insignificantly. Rather than call it engineered severance which might freak soime people out, let's call it extended severance, because that is basically what it is.

Stick with me, and I'll figure out how to best explain how it works to you all.


willy

Severance Insurance

No question that Citi's and Merrill's CEO's deserve to lose their jobs. But what about the Boards of Directors? What were they doing. What reports were they reading? Why didn't they challenge management on the disproportionate portfolio growth in sub-prime mortgages?

What's really interesting to me is that there doesn't seem to be a lot of discussion beyond the reality that banks are taking hits to their earnings and will probably take more. No one seems to be focused on the overall impact that the increased number of foreclosed houses is going to have on the real estate market and the prices that these houses are going to have to be listed for in order to get them off the banks' balance sheets. It's already happening. My daughter pointed out a house over the weekend in one of suburban Boston's tonier areas that was on the market for $659k. A year ago that house would have been on the market for something above $850.

I've got to think that recession follows, and when that happens more jobs are going to be lost.


willy

Thursday, November 1, 2007

Severance Insurance

Remember the good old times back in the 1970's when inflation was out of control? Do you remember what we were told was the driving force behind it? The cost of oil. And back in those days you were accused of smoking dope if you thought the price of oil would ever get to $50 a barrel...EVER!

I guess "ever" is now synonymous with 30 years, because here we are. 50 bucks a barrel is a joke. Singapore's market closed this morning at over $96 a barrel. And yet nobody is talking about the impact this is going to have on inflation in the US. Since the price of oil is denominated in US dollars, and the value of the dollar against other currencies is weak, other countries aren't going to feel the pain the way we are. So what does that say? It says to me that the cost of US made goods is going to inflate. It says that foreign made goods will be even more competitive in the US than they already are. It says that a recession is just around the corner. It says that more US jobs are going to be lost not to outsourcing but to our inability to compete in a global market. AND NOBODY IS TALKING ABOUT INFLATION!! The only possible reason is that the really smart economists realize the extent of the problem for mortgage lenders and the fact that 2008 is going to put real meaning behind OREO (other real estate owned in the parlance of the banks). Do you suppose that significant deflation in the housing market is what is driving the economists' silence in inflation? Could be.

The proof of things beginning to unravel is what I've written about over the last couple of days. Merrill Lynch and Bank of America thinning their ranks (there's the finance side) and this morning Chrysler (the manufacturing side) drops the bomb that they're going to thin their ranks by 12,000!

It's clear that these job reductions are just the beginning. The way I see it is that the time is now for SEVERANCE INSURANCE. It would benefit the workers by giving them a more secure source of post employment benefits. It would benefit the corporations because it is cheaper than the way they fund severance now.

We all need to get on the bandwagon. These severance insurance guys are on the right track...in my humble opinion.

willy