1. Alcoa's Tin ManThere is no better time to troll for dumb news than on a Friday before a three-day holiday weekend. And there is no better time, apparently, to appoint Stanley O'Neal to your board. The mind pauses. Alcoa ( AA), the aluminum giant, slipped the news out there when they thought no one was noticing, but they could have shouted it in the public square at high noon on a Wednesday, and the mind would have taken a brief pause, made an attempt at sober contemplation, and then giggled uncontrollably at the very idea of O'Neal being named director of anything. As Simon Constable pointed out earlier this week: Isn't inviting O'Neal to advise you on the future course of your business a bit like sending your daughter out on a date with Dracula? It's bound to end badly...and probably before morning. When last seen in the public square, O'Neal was busy draining Merrill Lynch ( MER) of its lifeblood. Stan, you'll remember, is the purported bond man who let momentous losses in fixed income splatter a once-proud firm. Merrill's professional identity used to be the bull. Now it's just beleaguered shareholders who say "bull" after Merrill takes another $10 billion or so in write-offs and swears it's the last. One wonders, in the scheme of things, what this man has to contribute to a firm that already has a history of poor management. Perhaps it's a mad inversion of the concept of reflected glory, and the board thinks sitting next to O'Neal will help the other directors gain in stature. Or maybe they have a plan to mail him to the competition, like a letter bomb. One wonders how proud the company is of this move, as they all but announced the appointment under cover of night. But let's give them the benefit of the doubt and promise to reconsider if the aluminum giant suddenly starts making big bets on subprime loans. Dumb-O-Meter Score: 93. Said Alcoa Chief Executive Alain Belda in the top-secret press release announcing the appointment: "Stan is a straightforward leader who focused on improving the operations of the business during his tenure at Merrill as part of his broader strategic vision for the firm," To which my daughter, who would never be allowed out with Dracula, might respond: "Whatever."
2. Break In: Financial Stocks At RiskTiming is everything in life -- it's just not much for Wall Street analysts. Take the recent barrage of "thanks for nothing research" reports downgrading the financial guarantors. Some of these companies -- like MBIA ( MBI) and Ambac ( ABK) -- were selling for about $70 a few months ago, when they were favorably regarded by Bank of America analysts. And now that the stocks have dropped toward, into and around the single digits? Eh, they downgraded. "The macro environment," these analysts wrote in a report full of flummery, "is swiftly deteriorating." Call me a stickler for the correct tense, but I could have sworn that, what with the write-offs and ratings agency troubles, things have, uh, already deteriorated. That's why the stocks went from $70 to a few twitches from zero. But rest assured that the great analysts of Wall Street are still hard at work, America. Later in this report, they finally get on to the essential work of appraising risk ... in a section called (I kid you not) "risks to our downgrade." Follow these analysts and you will ride a stock from $70 to a mortally wounded price around $10. Then you "throw in the towel," as they so eloquently advise. And when the stock pops back up on word of a cash infusion or takeover and you call to complain, the analysts can say "we warned you about the risk to our downgrade." Other analysts at other firms, including Citigroup, pulled similar stunts on the bedraggled financials, but dipping our toes into one abomination at a time seems sufficient. Dumb-O-Meter Score: 88. "We continue to believe that the municipal bond insurance business model is viable in the long run for bond insurers not facing significant subprime losses," the Bank of America analysts also wrote, a line in the early running for the year's "Firm Grasp of the Obvious" award. Do remember, though, that these analysts get paid big bucks for their thoughts, which calls into question whether the dummy is them ... or any one of us who works for a living.
3. The Second Coming of LordWhat does it take to finally humble the Lord? (I speak of Sallie Mae's ( SLM) CEO Albert Lord, before you send the heresy emails.) Well, apparently it takes a $1.6 billion fourth-quarter loss and an increasingly curious Securities & Exchange Commission. As background, please realize that this column has no better friend than Lord, may he be granted a long and public life. For all of 2007, My Sweet Lord was given a first-ever
4. A Bridge Loan to NowhereIt's always fun to chew over the phrases that become popular as a way to explain inane and incompetent financial behavior. And this week I found one that stuck between my teeth like a sesame seed: pier loan. See, for starters, many banks make bridge loans, which help bridge the gap till deal closure. But when a bank finds itself incapable of syndicating the debt on that bridge loan, then guess what? The language mavens in the big bad world of business, where math skills normally rule, have taken to calling what results a pier loan. Got that? A bridge to nowhere is akin to a pier. If you take a long walk on a short pier, you eventually plunge off. This choice of phrase is almost poetic in the meaning it packs so eloquently into so little space. But ironies do still abound. It seems abundantly clear that an industry able to fix the perfect words to the perfect fix should be able to avoid trouble in the first place. But as someone who actually gets paid money to analyze the verbal side of the numbers -- well, maybe I should be careful what I wish for. Dumb-O-Meter Score: 79. Without quirky turns in business language, I'd be on my own pier to nowhere.