Devaluing Our Own Investment
In my mind, the sign of a good article is that it sticks with you. The first time you read it maybe you thought it was moderately interesting, but then you find yourself repeating it’s points to other folks. That’s what I’ve been doing with Joe Nocera’s New York Times piece about the government pounding on AIG (two Nocera references in one week … whoa). The kicker of the article comes in this paragraph:
In other words, it is in the taxpayers’ best interest to position A.I.G. as a company with many profitable units, worth potentially billions, and one bad unit that needs to be unwound. Which, by the way, is the truth. But as Mr. Ely puts it, “the indiscriminate pounding that A.I.G. is taking is destroying the value of the company.” Potential buyers are wary. Customers are going elsewhere. Employees are looking to leave. Treating all of A.I.G. like Public Enemy No. 1 is a pretty dumb way for a majority shareholder to act when he hopes to sell the company for top dollar.
Yeah, that kind of sucks. Related: American Grandstand on The Daily Show.
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The pounding of A.I.G. is from the government people who promoted the investment in A.I.G. They are intelligent enough to understand you don’t build a brand and value in that brand by continually trashing it. They must have another motive. Do they want A.I.G. to fail?
The AIG memo in yesterday’s NY Times from the guy who was resigning supports the excellent Nocera piece. His pay was $1/year. Obviously he needed a bonus of some sort. Negotiating complicated employee issues on the front page of every newspaper just doesn’t get you where you need to be.