The 5 Dumbest Things on Wall Street: Sept. 10


5. Obama's $50 Billion Highway to Nowhere

The New Deal. Sending a man to the moon. "Mr. Gorbachev, tear down this wall...." And what does President Obama come up with to inspire our national malaise? Jumpstart the stalled U.S. economy by spending $50 billion to ... pave roads.

Not exactly cover material for The Audacity of Hope, Volume 2.

Clearly, Obama Stimulus 2.0 is merely a bid for positive press during a midterm election fight -- and lord knows it doesn't ring as hollow as, say, President Bush's vague and farcical call for manned spaceflight to Mars. But for a president who came into office promoting a new era of innovation, a warmed-over retread of the New Deal ain't exactly the time machine we had in mind.


Granted, some of the money in Stimulus 2, Electric Boogaloo is intended for rail systems that will connect the country coast to coast. The plan also intends to fund itself by cutting off oil and gas industry tax breaks. That should play well in Peoria, as will the part of the infrastructure spending plan aimed at improving runways so that there are fewer air travel delays. That will play well just about anywhere with flying machines.

But what is truly needed -- and the opportunity Obama has squandered -- is to present a comprehensive plan to overhaul our transportation infrastructure for a greener future. Photo-ops for the President at a wind turbine plants or at solar company assembly lines aside, a true energy plan appears to have fallen off the Obama "To Do" list. Indeed, energy legislation introduced earlier this year to enact modest reforms of the energy status quo and lay the groundwork for a real federal push to build a nationwide network of natural gas vehicles and fueling stations failed miserably.

It's fitting that on Wednesday, Ernst & Young's latest Renewable Energy Country Attractiveness Indices showed that China had finally surpassed the U.S. as the best country in which to pursue renewable energy projects. Among the reasons for China taking the top spot: the U.S. failure to enact a federal renewable energy standard.

TheStreet Says: We were kind of hoping for 2035, Mr. President -- not 1935.

4. HP Unleashes Hurd, Gets Trampled by Hurd

Employees apparently loathed him. The company he worked at for five years abruptly ushered him out and now wants to block him from his plum new job. He even had to pay a female contractor to dine with him.

But boy, oh boy, does Wall Street love Mark V. Hurd.

And what exactly is the value of that unconditional investor love, you ask? Apparently, about $6.74 billion.

On Tuesday, when rival Oracle ( ORCL) -- helmed by super-special tennis buddy Larry Ellison -- said Hurd was joining the company, Oracle shares jumped 6%, boosting Oracle's value by $6.74 billion.

And believe it or not, he's depreciating. Indeed, just a month earlier Hurd had apparently been worth $8.5 billion to Hewlett-Packard ( HPQ) (proving that unlike a fine Malbec, Hurd's value doesn't have a great shelf life). On Friday, August 6, Hewlett-Packard's board had decided it needed to distance itself from Hurd's "ethical malfeasance," and tossed him out like a bad expense report. By the end of Monday's regular trading session, HP had fallen 8%, making Hurd's departure from HP worth an eye-bulging $8.5 billion in market value lost.

But of course the dumbness had only just begun.

Now happy to see him go -- but not happy that he's going to a rival -- HP claims Hurd will violate his trade secrets agreement, and filed a Hail Mary lawsuit Tuesday to block Hurd's move to his new $11 million job at Oracle. Oracle's Ellison quickly fired back, saying HP will lose a valuable business partner if the company sticks with its lawsuit.

It sure is much ado about a man that nobody can seem to stand. But for now, Hurd has at least one tennis buddy with benefits -- and the stock market -- on his side.

TheStreet Says: Anyone care to wager how long it will be before Ellison and Hurd are slicing backhands at each others' heads?

3. AIG Execs and Cockroaches: 2 Things That Refuse to Die

After two years of what we can only guess was a deeply trying exile in, say, Bimini, former American International Group ( AIG) CEO Martin Sullivan, who oversaw the loss of $94 billion in shareholder value at that insurance giant, is back in the game.

Hide the women, the children ... and the economy.

On Wednesday, the $5.2 billion insurance brokerage Willis Group Holdings ( WSH) announced Sullivan's appointment as both deputy chairman of the broader firm and head of its global division. The new role puts the 56-year-old insurance titan in charge of the same type of business that brought AIG to its knees.


Joe Plumeri, chairman and CEO of the London-based firm, was positively giddy about Sullivan's arrival: "We get a twofer here," Plumeri said on a conference call Wednesday morning. "We are paying him once, but we get a twofer."

You see, Willis needed someone who could tie together the firm's diverse global business lines to offer an array of products and services to large, multinational firms. Plumeri said that the large accounts within Willis Global Solutions face "a world that is fraught with risk today." Sullivan will be charged with helping them "mitigate those risks."

Wait ... what?!?

During his few years at AIG, Sullivan managed to plunge the company so far into risk that it ultimately required a $182 billion bailout from the federal government, the largest for any individual company during the financial crisis. When he left the insurance giant, it had nearly 300 individual companies within it, with dozens of subsidiaries. His work in tangling them together in a complex book of derivatives helped tie the Gordian knot that AIG has spent the last two years attempting to unwind.

During his first year as chairman and CEO of AIG in 2005, Sullivan grew the financial products division to represent 10% of revenue and 28% of operating income, from 8% and 15% the previous year. By the time he left in 2008, he'd helped build another neat number: AIGFP had posted a $40.8 billion operating loss.

"Frankly, in my 25 years I've been in awe of Martin Sullivan," said Willis Group President Grahame Millwater. "He has huge experience in the business, a huge knowledge of all the ingredients that make up the pieces that you have to bring to bear on a global multinational client." Can't argue with that. Sullivan's losses at AIG were certainly huge and awe inspiring.

TheStreet Says: Is it possible for a CEO to actually fail down these days?

2. BP: "We're So Sorry ... That Everyone Else Messed Up"

Just when you thought it was safe to go back in the water, here comes BP ( BP) again -- with its Alfred E. Newman smirk, its Eddie Haskell demeanor and its sociopathic lack of shame.

On Wednesday, BP issued the results of its four-month investigation in a 200-page report. And as expected, the key takeaways for the company were that BP is far from the only one to blame and that there was no single cause for the Deepwater Horizon rig disaster and Gulf of Mexico oil spill. BP found that "multiple companies, and work teams contributed to the accident." Evidently, BP ( BP) would have us believe that explosions on oil rigs are a simple case of force majeure. NASA may be able to track the destruction of a shuttle down to the failure of the smallest part, but BP is going to chalk up loss of life, a $20 billion tab and one of the worst environmental disasters in U.S. history to a shrug of the shoulders and a "Meh, these things happen. There were just so many people involved."

For "multiple companies" investors can read between the lines to rig operator Transocean ( RIG) and deep-sea engineer Halliburton ( HAL), responsible for cementing the Macondo well.


To state that BP is not exactly an impartial oil spill investigatory commission would be an understatement as obvious as the infamous understatements from outgoing BP CEO Tony Hayward that the environmental impact from the oil spill would be minimal, and that BP didn't have all the tools in its toolkit that it would have liked to contain the oil spill. Still, a new analysis released by Fitch Ratings on Wednesday estimated that BP may face total pending liabilities of between $35 billion and $67.5 billion. That's 35 billion to 67.5 billion potential reasons for BP to do everything it can to make sure that other companies share in the penalties resulting from the oil spill.

Congressman Ed Markey (D. Mass.), summed up BP's report nicely on Wednesday. "Of their own eight key findings, they only explicitly take responsibility for half of one. BP is happy to slice up blame, as long as they get the smallest piece," said Markey.

TheStreet Says: A few things BP might be short for: Blame Provider, Buck Passer, Baseless Propagandist, Beyond Pathetic.

1. Disney Ruins Everything

On Monday, when ABC News President David Westin announced that he was leaving the news operation that he had helmed for the past 14 years, the story served as one yet more proof of a time-honored thesis: Disney ruins everything.

Westin's abandon-ship came on the heels of the announcement in February that ABC News would eliminate up to a quarter of its workforce, or some 400 employees. According to a report by The New York Times, Disney had been pressing Westin to increase the division's profitability. An unnamed staffer in the report was quoted as saying that Disney was unhappy with the 5% profit margins that ABC News had recently delivered -- during, need we remind you, arguably the worst advertising downturn in, well, ever -- and was demanding that Westin deliver 15% margins.

There's corporate greed, and then there's just corporate stupidity. We'll be charitable, and call it both.

But what else, you ask, has Disney ruined?

Perhaps you're of an age at which you can remember what ESPN once was -- a hip, irreverent network with a stable of brilliant and delightfully unpredictable talent, including the likes of Keith Olbermann, Dan Patrick, Kenny Mayne and Craig Kilborn. During the early and mid-nineties, ESPN was vital and edgy; Sportscenter was referred to, without irony, as "the most dangerous show on television."

Then, in 1997, Disney bought the network. And began its own unique brand of creative suffocation. And the kindest thing one can now say about Sportscenter is that it is best appreciated with the sound off.

Or consider the manner in which Disney actually ruined ... itself. Yes, while once upon a time the Walt Disney Animation Studios was synonymous with the family-movie market (see: Sleeping Beauty, Peter Pan, Cinderella, Alice in Wonderland, Lady and the Tramp, The Jungle Book...), the studio had been rendered so irrelevant for a decade by Pixar ( Finding Nemo, The Incredibles, Cars, Toy Story, Monsters Inc...) that it was forced to buy it in 1996 at a cost of $7.4 billion. From a corporate standpoint, that's the equivalent of admitting defeat -- a costly defeat.

In case you haven't quite caught the pattern, we'll render it as simplistic as a modern-day Sportscenter anchor's banal patter: Disney's days as a creative force appear to be going, going ... gone.

TheStreet Says: Please, oh please, make the bad mouse stop.

In light of all this dumbness, we now ask you: Which is this week's dumbest of the dumb stories? Take the poll below to see what TheStreet has to say.

Which is this week's dumbest of the dumb Wall Street stories?

-- Obama's $50 Billion Highway to Nowhere
-- HP Unleashes, Gets Trampled by Hurd
-- AIG Execs and Cockroaches: 2 Things That Refuse to Die
-- BP: "We're So Sorry ... That Everyone Else Messed Up"
-- Disney Ruins Everything

This article was written by a staff member of TheStreet.

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