Day 318 – More Recruiter Craziness

Apparently I've learned to draw an expression that approximates eroded self-worth and an underdeveloped sense of entitlement. Nothing like experience to inform one's art.

          I got some more craziness from the recruiting profession this week. Is it that they are so overwhelmed by bad circumstances that they can’t rise to the occasion? Times may be difficult, but I just don’t understand what is going on that makes it impossible for recruiters to just follow up on what they say they’re going to do. The nature of what they do hasn’t changed at all. There may not be enough jobs to place everyone who is looking, but the drill from the recruitment standpoint is still the same: match a qualified candidate to an available job.

          I got a call on Thursday evening from a recruiter in Tampa. I was out riding my bicycle with my wife at the time. We’re on a diet together and trying to throw regular exercise into our regimen. If I succeed in losing a few pounds, at least I’ll have reduced the gross weight of the total unemployed. It may be my only contribution. Anyway the recruiter thought my skill set matched up nicely with a controller position opening up in the Tampa area. A sporting goods manufacturer is expanding and opening a new facility there. This was a new position—a rarity in the current economic climate and a welcome one.

          I was glad to have picked up my cell phone on the way out the door. I stopped the bike under some trees so I could talk to the recruiter without sounding breathless. She wanted to know if I was okay with relocating to Tampa. I am, of course. My kids and grandkids are over there. I told her so. Maybe I shouldn’t have said that. Maybe the grandkids date me, although anyone who can add and subtract can tell my approximate age from my résumé.

          We set up a time for an in-depth phone interview. She was to call me back Monday morning at 8:00. I had a good feeling. Something in the tone of her voice, the flow of conversation, the pace of our exchange made me feel confident that I was finally on the road to gainful employment.

I spent the next three days going over in my mind how I would respond to the likely questions. The usual questions I already know how to answer. It’s the new ones that are problematic for me—the questions that get at the core of my severely eroded sense of self worth—the ones about what I’ve been doing with myself in my long idleness—the naturally implied question under the veneer of sympathy that accompanies long-term unemployment—‘what’s wrong with you?’

I needn’t have worried as it turned out. No one called at 8:00 on Monday. No one called in the a.m. and no one called in the p.m. No one called on Tuesday either. I gave them a day to have got the date wrong in their calendar. I’m always ready to extend the benefit of the doubt. What else have I got to do?

Day 276 – Hood Ornaments

Lehman earnings before the collapse. Takes brass balls to make a hood ornament like this.

          There is nothing like a history of success as a basis upon which to build further success. By the same token, relying solely on past success to provide a clear path into a prosperous future is folly itself. Nothing persuades us quite so well as success that our instincts and abilities are sound, and nothing else is so quick to pull the rug out from under our feet.

          I have said repeatedly here that success is largely a matter of luck. There is no doubt that we can do things to capitalize on luck when it presents itself, but if luck does not present itself there is very little we can do to overcome the adversity that swallows our hopes in its absence. You can be ready for good fortune, but you cannot make it. You can even mitigate bad fortune, but you cannot unmake it.

          Still, we look to past success as an indicator of the probability of future success. We do this as investors. We do this as employers. We do this as humans. We are naturally drawn to what worked before. We are drawn to it, foremost I think, because it is familiar. We know that conditions change, and that, because of the mercurial nature of circumstances, the familiar may not serve us so well in unfamiliar territory. Yet the familiar attracts us because we do not have to think about it so much. This is a danger, but a natural inclination. We want to take the path of least resistance.

Successful executives, being for the most part human, are not much different from the rest of us in this regard. They just have a better recorded history of past successes on which to rely. This history may give them an occasional pass when they err, but it will not make them any more likely to perform up to their reputation when circumstances change. When their bubble bursts they will act and protest in the same ways and with the same results as the fools and charlatans in my past like Henry and Ivan. We have only to look at the events surrounding the collapse of our financial system to see that this is true.

          Dick Fuld, head of the ill fated Lehman Brothers, spent his time before the fall trying to get everyone to believe that Lehman’s problems had to do with irresponsible and predatory short sellers trying to profit off of lies and innuendo. He didn’t do anything to shore up Lehman’s cancerous balance sheet. He couldn’t. He’d been resting on his laurels until it was too late.

Lehman’s earnings were illusory. They were window dressing. They were like the hood ornament on a fancy car with bad valves and clogged injectors. They didn’t mean anything, and they didn’t have any substance. Still, Fuld kept touting earnings as if that should be enough to get the wolves off his back. The wolves did not desist. The scavengers among them were busy shorting his stock. The alpha dogs were demanding more and more collateral. Lehman was getting squeezed in the middle, and all the public hand wringing was just making it worse.

          The reason the wolves did not desist is that the wolves were mostly in the same boat as Fuld. They were all, and indeed they all remain almost two years later, deeply leveraged on overstated assets. An accurate valuation of their worth, individually and collectively, was problematic at best, impossible at worst. Certainly no one wanted to do it. A collective valuation that even approached accuracy would collapse the system. Everyone knew this...the bankers, the auditors, the regulators, Treasury. They just neglected to tell the rest of us. To forestall the collapse, Treasury and the Fed kept proposing ever more ridiculous mergers and absorptions to hide the mess. The NY Fed under Tim Geithner was determined to offload Lehman before it sank. Everyone Geithner approached, and indeed everyone who approached Lehman, wanted the same kind of sweetheart deal that JP Morgan got to absorb Morgan Stanley. Everyone wanted a dirt cheap price and a guarantee from the US taxpayers that they wouldn’t have to swallow any losses. All the potential buyers had enough losses of their own to worry about without buying billions more in a government sponsored fire sale.

          Eventually Lehman was hung out to dry. Treasury wouldn’t back anybody’s play. People are still arguing today about why this happened. Treasury was happy to sweeten the Morgan Stanley deal, and happy to bail everyone else out after the Lehman collapse. Why let Lehman go down the sewer?

I think it was to send a message to the rest of us, especially Congress, just how high the stakes were. In the ugly aftermath of a Lehman collapse no one was likely to question Treasury and the Fed colluding to prop up their buds and compadres at Morgan, Goldman and the rest. Certainly Paulson at Treasury used the prospect of financial chaos to shove TARP down everyone’s throat with little oversight and no accountability. There was even enough residual fear going into the first six months of the new Obama administration to have them looking like Republicans when it came to their treatment of the banks and markets. Of course when you think about it Democrats and Republicans alike use the same currency to get themselves elected.

          What we’re left with today is the same financial system that cleaned us all out two years ago, the same broken down heap with a spectacularly buffed and polished hood ornament. Admire it all you want, but don’t expect it to get you very far down the road.

Day 164 - Conspiracy Theories

          The job boards are bleak for the Treasure Coast area. I should have thought to check before we moved, not that it would have made a difference under the circumstances. We still would have come here because we’re needed. Still it would have been good to know how bad things are here. This is a depressed area. St. Lucie and Martin Counties have unemployment rates that are 40 to 50 percent higher than the rest of the state. There don’t seem to be any jobs listed around here at my level and damn few even at entry level. My thought had been to only look for work in this area so we can stay here as long as we’re needed. I might have to rethink that.

          We switched out the cable service when we got here so that my wife and I could have high speed internet service for our computers. Nelson had a satellite system, and we changed to a cable provider that also offers fiber optic internet service. They finally got the last of it hooked up today. It’s been a struggle with a series of contractors to get the cable run, buried, hooked up, and programmed. Apparently all those things have to be done by different people. Lean they are not.

Nelson’s been grousing through the whole process. He hates change. The new remote is giving him fits. None of the buttons are in the same location they were on his old remote. He doesn’t remember that he has a new device in his hand until he’s already pressed a button according to its placement on the old one. Then, when he gets an unexpected result, he gets peevish. I spend a lot of time listening to him cuss at Mother Angelica because he accidently got to EWTN and can’t figure out how to get back to the Western Channel.

          He was adamant about the Western Channel. He’s been talking about it all week. He likes his western movies, and he needs to see one every night or his day is incomplete.

* * * * *

          As I work through my career history in accounting it becomes increasingly obvious to me that I have spent a great deal of time working for fools, charlatans, thieves, and scalawags who seemed bent on bringing me low. Even so I have always been able to exert a certain amount of influence over my circumstances, and there as always been a certain amount of leverage involved in knowing, because of my familiarity with the books and records, where all the bodies were buried.

          You could argue (as I’m sure the guys who fired me would) that I had a hand in my own undoing at my last company. I wasn’t what they hoped I would be, although, to be fair to myself, what they hoped I would be changed over time as evidenced by two years of positive performance reviews leading up to getting fired. But even had I been what they were hoping for at the end, I don’t think the outcome for me would have been very different. My real problem, I think, was expressing aloud my opinion that our CFO was too prone to knee-jerk hysterics, and that our corporate accounting manager was an anal-retentive myopic who couldn’t see the forest for the trees.

          Of course all that is water over the dam at this point. My current problem is not that I lost a job, but that I can’t get a new one because 1) there aren’t any jobs to speak of in the area where I have chosen to reside, and 2) there aren’t very many jobs anyplace else.

When I first lost my job, I thought I would get another in fairly short order. I had a pretty good résumé, a stable work history, and a boatload of experience. When I lost my last job, the result of a wholesale reduction in force to reduce overhead pursuant to a pre-packaged bankruptcy plan, I found a better job in just a few months. I had the sincere hope that things would not be materially different this time. As the global economy crumbles around me however, I am being forced to give up the notion that I will get a job quickly and easily. My hope for another job depends on an economic recovery more than it depends on my acumen, credentials, and persistence. To make matters worse, the hope of an economic recovery seems to grow more remote every day.

I honestly don’t know how we got into this fix. I’m not sure anyone else does either. There are lots of opinions being floated in the financial media, but not very much of it makes sense to me. As an accountant I want to be able to make the numbers work. I want to be able to follow and quantify the logic. I can’t.

Many analysts are blaming the sub-prime mortgage debacle—too many bad loans made to borrowers who did not adequately demonstrate their ability to repay. The sup-prime problem has been with us for over a year now, and everyone is talking as if we’ve only seen the tip of the iceberg. If we’ve known about the problem for over a year, how is it that the smartest kids on the block—the MBAs and analytical wizards on Wall Street, graduates of the finest institutions of higher learning in the country who are knocking down salaries and bonuses that the rest of us can only dream of—weren’t able to foresee the collapse and mitigate its effect?

How is it that, of the total of all mortgages outstanding, the percentage that is actually at risk of default is sufficient to tank the entire global economy. How is it that a relative handful of bad loans—bundled and securitized with good loans, rated investment grade by respected rating agencies, discounted to accommodate a historically reasonable rate of default, collateralized by real estate, guaranteed with sophisticated derivative contracts, and purchased and held by the very investment banking institutions that had a hand in their creation and so should have clearly understood the inherent risks—how is it that those loans were sufficient to cause the complete collapse of some of the largest banks in the world?

None of it makes any sense to me. I don’t think we’re being told the truth about any of it. We’re being spoon fed bits and pieces that seem to make sense in and of themselves, but they don’t add up to a coherent and believable whole. We’re not getting the whole picture. We’re getting a cubist Picaso. It may be art and it may be genius and it may be distracting, but no way in hell does it look like what it purports to represent.

The guys responsible for this ‘art’ have taken the rest of us to the cleaners. They took huge profits in their firms and huge bonuses personally while they built a house of cards that collapsed on the rest of us. After the collapse they took bailout money to make themselves whole again while the rest of us are left wondering how we (and our children) will pay the bill.

I’m not looking for a grand conspiracy behind all this. My personal feeling is that the captains of Wall Street are just another enclave of venal, self-serving, socially inbred fools, charlatans, thieves, and scalawags. The only real difference between them and the bottom-feeders it has been my misfortune to work for is that the Wall Street bozos play with much bigger numbers.

Others of my acquaintance do see a grand conspiracy here, whether real or imagined. I’ll grant them that their theories are at least as logical as mine. My theory depends on a confluence of coincidence, a perfect storm as it were of events and circumstances that worked together to undermine the foundations of our economic systems. The conspiracy theories depend only on the collusion of a small band of bad actors who already know each other, who work in the same industry, came from the same schools, and reside in the same geographical area. A grand conspiracy is much easier to orchestrate in this instance than an unfortunate confluence of coincidence.

I’ve already mentioned my brother-in-law who believes that there is an effort afoot by the extremely privileged to eliminate the middle classes. I find it hard to believe that this is a coordinated enterprise with and agenda and regular meetings, but, whether or not there exists an actual conspiracy, it grows increasingly difficult to argue that the middle classes are not at risk of disappearing.

Another conspiracy theory has been advanced by author, Sara McIntosh, in her novel, Shell Games. McIntosh is a former accounting consultant and forensic auditor in Chicago who sold her successful business to indulge her love of writing. Shell Games is a laudable first effort. She calls it a financial thriller, and, unlikely as it may seem to those whose eyes glaze over at the mention of accounting issues, she makes good on her promise by delivering a sexy page-turner.

The premise of Shell Games is that the current financial collapse is the result of a large-scale and exactingly orchestrated fraud that has been effectively covered up by the sudden availability of TARP funds. Of course there is more to it than that, and I won’t spoil the plot by revealing it here. Suffice to say that McIntosh has worked out a cogent explanation for the gaps in logic that I have found in the explanations being offered up by our government and by the financial media. Who is to say that McIntosh hasn’t hit on the real deal?

What sets her novel apart from other novels featuring large-scale financial fraud is the author’s intimate knowledge of the details of searching for accounting anomalies in huge volumes of transaction data. It takes an unusual and focused mentality to get a thrill from the discovery of emerging patterns in financial records, but there is perhaps greater skill involved in being able to convey that thrill to the uninitiated. The excitement of accounting is not something easily conveyed to an audience that has largely been persuaded that accountants are a uniformly boring bunch of socially inept slugs. McIntosh is anything but, and her book may do much to dispel the myth. If my TV producer friend, Wendy, had found Sara McIntosh all those years ago when she was looking for ‘interesting’ accountants, she may have been able to come up with a show.

Day 125 - Return to Philanderville

          I’ve decided that I’ve run out of time to get a job before I have to move. Things are accelerating on all fronts now, except the job hunt. There is no acceleration there, nor even any movement. The job hunt is dead in the water, becalmed, no wind, no current, nothing. The up-tick I hoped for in the listings after the holidays has not materialized. We’ve decided to move in with my father-in-law rather than our son. This will be more difficult in some respects, but less complicated too. At Nelson’s place we will have a purpose. At our son’s, not so much. Purpose is good.

We’re having a garage sale to get rid of our excess stuff. There’s a lot of excess stuff. The garage is already full of stuff we don’t have room for in the house. We haven’t been able to put a car in the garage in years. I hate garage sales. I hate moving. I hate organizing and packing crap that, when I look at it, I wonder what the hell we were thinking when we bought it. I want to set fire to the whole lot of it, and run away. I’m not looking forward to any of this. It sucks to be me. It probably sucks even more to be my wife because in addition to all the crap I have to deal with, she has to deal with me.

          Another problem for me is the growing possibility that I’m not going to get a job at all—that the economy is so well and truly flushed that it will never recover to be like it was. That is not to say that there won’t be growth in wealth and income, or even that there won’t eventually be a return to something like full employment, but that the growth of wealth, income, and jobs will look completely different from what it did just a short time ago.

There is no question in my mind that certain things have changed permanently. For instance the transfer of manufacturing capacity and jobs from the U.S. to China is a trend that will not reverse. Even if the U.S. were to take drastic protectionist measures now, it would only slow the erosion of manufacturing base in this country and create an artificial respite from the inevitable. A better—that is more logical—tack would seem to me to be a quantum shift in our knowledge and skill base toward more technical and service oriented productivity.

Some of this may happen naturally and organically, driven by market forces, but a lot of people are likely to be displaced one way or another along the way. Some are going to lose their jobs. The less fortunate are going to lose their livelihoods. The pitiable are going to lose their homes, their utility, and their dreams.

A quantum shift in a population’s knowledge base is a long term enterprise. It will take years to accomplish. Even on an individual level—the level where it will begin and end—it takes a long time to change careers and get back up to speed in something new. For a guy over 60 who still doesn’t know what he wants to be when he grows up, there may not be enough time left. The problem on a personal level, my problem in other words, is to determine where all this is going to lead and to anticipate both the pitfalls and the opportunities that are going to be presented. Hoo boy! Tell me that’s not a tall order.

*****

          Like most places, there was sub-text at Albatross—stuff going on beneath the surface and behind the scenes that influenced and flavored the larger currents. Some of these had to do with the by now familiar bane of my working life, philandering. I’ve grown to hate philandering. Men and women who are seemingly at the mercy of their baser instincts, unable to resist the charms of the opposite sex, powerless to cool the flames of their own ardor, are willing in the end to crater their workplace and ruin the lives and livelihood of their co-workers, friends, and neighbors to sate their passions. That something as pervasive and banal as lust can undermine the flow of commerce and industry seems ludicrous to me, yet I’m sure it is so.

The principals this time were the corporate CFO and his secretary. Let’s call them Quentin Parks and Marjorie Tinn. Quentin was a distinguished looking gentleman, silver haired, ruddy complexioned, a sharp-dressed man. I never saw him when he wasn’t splendidly turned out.

Marjorie was much younger of course—a thirty something divorcée, exceedingly pretty, who spent most of her income on smart dresses, killer shoes, and a regimen of physical enhancements calculated to augment her appeal.

Together Quentin and Marjorie were a resplendent couple, the very picture of a titan of industry squiring arm candy like the spoils of war. Of course I had to imagine that. I never actually saw them together in public other than in the office where it was completely appropriate for them to be together performing their various work day duties.

          There were few people in the office who did not know or suspect what was going on. Marjorie would drive Quentin’s silver Mercedes around town on errands like picking up his laundry and getting lunch for the two of them to share in his office with the door closed. She spent way more time than one would have thought necessary in his office, bending over his desk, standing behind him with her hand on his shoulder, leaning against him, even occasionally rubbing his neck. When she wasn’t busy attending to his needs, professional and otherwise, she sat at her receptionist station in the middle of the finance department and played solitaire on her computer.

She was not a popular girl with the other women in the office. She was popular with most of the men because she was pretty, as I have already mentioned, and flirtatious and happy to describe the intimate particulars of her lingerie with anyone who would listen. But the women hated her.

I know this because they came to me about it, complaining and demanding that I do something. It wasn’t just that she didn’t do any work other than for Quentin. Ostensibly her job was to provide reception and support for the entire department. After she took up with Quentin, she pretty much refused to lift a finger for anyone else. And she didn’t just refuse. She copped an attitude. She let it be known in no uncertain terms that her station was improved and that any secretarial drudgery was now and forever beneath her.

If you’ve ever worked in an office, you know that women do not like that shit. They do not like a woman who doesn't pull her own weight. They do not like a woman who screws around because it seems to put their own husbands at risk. They do not like a woman who screws around with the boss, and leverages her intimacies into what looks like a better position. They may like all these things in soap operas and day-time TV, but they do not like them where they work. It's like the difference between a frog on the Discovery Channel, and a frog in your house. Too close to home is just wrong. I knew all this. It was painfully obvious to me, but there wasn’t a damn thing I could do about it. I knew that too.

Day 48 - Joblessness, Homelessness, and Other Scary Prospects

          Today I redid my résumé and boiler-plated a couple of cover letters. I checked the job boards and updated my profiles yet again. The last time I went looking for work I used Career Builder and Monster. I still have accounts set up on both those sites. I added a new one called Indeed that somehow combines listings from multiple boards including Career Builder and Monster into one super board. This seems like the way to go to me. The more they do to make finding a job easy, the more I’m going to like it. I did a search to see what’s available. I limited the search to jobs that contain the words controller, CFO, and accounting. I further limited it to jobs paying over $100,000 annually. No sense taking a cut—at least I hope not. Who knows how bad the economy is really going to get? Still it’s early in the game to be lowering my expectations. Last year I made over $132,000 including a nice bonus. I need to do that well again to maintain my lifestyle—not that my lifestyle is very lavish.

I’ve got a huge amount of credit card debt, and just making the monthly minimums has kept me from accumulating any appreciable net worth for the last 20 years. It’s a sad tale, best saved for another time. I don’t like to talk about it or think about it. It’s depressing as hell—especially if you consider I have paid Bank of America something like $180,000 in interest over that period of time, and have nothing to show for it. 


(If you find yourself in a like situation, you may want to consider visiting Dave Ramsey's Web Site and taking advantage of the many resources he has available to help you get your financial life back in order.)

          
          The search yielded about 7 jobs worth looking at. None of them were stellar. That was kind of troubling, but even more problematic—the less than stellar jobs all wanted an MBA and/or an active CPA. I’ve only got a Bachelor’s degree, and I let my certification lapse. I shouldn’t have done that, but it’s too late now. I applied to the two best jobs, hoping that ‘former’ CPA and 30 years experience will make up for the short credentials.

I have to say this didn’t leave a very good taste in my mouth. Hopefully what I saw today was an anomaly. The last time I was looking, the job listings ran hot and cold in spurts. I’m still just testing the waters. Monday I have to get after this job search. I’ve only got 3 months of severance left. I still hope to book two incomes for a while, but if I don’t have a job by the end of January I’m going to have to move. At the current amount I’m paying for rent and utilities I’ll last about 6 weeks. Then I’m in a cardboard box under a bridge somewhere. I’m not ready for homelessness. That’s a scary damn prospect. 

Day 36 - Trading Catatonia with the IRS

          I had lots of discomfort and lots of blood in my urine today. Thank God for the spanking new bottle of hydrocodone. Kelly Ripa was looking spectacular this morning, but not so good that I didn’t get up and go take a nap in the middle of the show. It takes a little medication for me to get interested in Kelly, but just a little too much and I’m right off her again. There’s a delicate balance involved.

In my wooly youth there was an underground comic I used to enjoy about a bunch of inveterate stoners called “The Fabulous Furry Freak Brothers.” At some point they developed a kind of life maxim that was repeated frequently in the comic and eventually became a cult mantra for the times: “Dope gets you through times of no money better than money gets you through times of no dope.” Leaving aside the relative truth or fallacy of that particular statement, there is often a relationship between dissimilar objects like dope and money or hydrocodone and Kelly Ripa or drudgery and leisure that needs to be maintained within a narrow range of ratios in order to work at an acceptable level of satisfaction. Now that I’m out of work and having to take medication to moderate my various pains, I’m finding a lot of my ratios are getting out of whack. Hopefully something will happen soon to reestablish some semblance of order and balance.

*****

I owe the IRS a million three?? I guess it could be worse.

I lost ten times that much in my trading account in the last 20 minutes.

          My reveries today went back to Henry and all the abuse and injustice associated with working for him. In spite of his affronts to good manners and decency he was always interesting, especially when considered next to the anal bozos I have worked for since. Henry was a megalomaniacal sociopath, but he was always direct and unapologetic about it. For this reason he was almost entirely predictable. For instance when he stiffed my wife on the $30,000 real estate commission I knew he was going to do it and warned my wife to get a written contract before she set out to sell his house.

“He promised,” she said, and so he did. In the end though, when he betrayed her trust, broke his promise, and cheated her out of her livelihood, it was just ‘bidness.’ It was entirely within the norm of Henry behavior not only to stiff her on the commission, but to be surprised and a little hurt when she got angry about it.

          When Henry said he loved me the day I almost killed him, I have no doubt that he believed it. Henry had no idea what love is, but, to the extent that he was capable of experiencing emotions and affixing labels to them, however bizarre to the rest of us mortals, what he felt for me and my wife was genuine affection. Now that we are not associated with him on a daily basis, he will not ever think of us again unless there is some immediate benefit available to him in the reaching out. When such a situation presents itself to him however, we will be the first people he thinks of. That’s about as much as one can hope for from Henry.

           Henry used to delight in telling people I was the only person on the planet that he trusted enough to grant power of attorney over all his affairs. That he had not actually done so did not trouble him very much, or me either for that matter. He had given me power of attorney over his income tax issues, and probably that was close enough to ‘all his affairs’ for Henry as tax matters occupied a large percentage of his psychic energy. Henry was one of those people who would rather lose a thousand dollars of real money to real crooks than give up a hundred dollars to the IRS. Fortunately for him I was able to pull his fat out of the fire several times when it came to his taxes.

Henry never really appreciated what I actually did for him, but he did appreciate what he thought I did for him, which was keep him from having to pay any taxes. I didn’t really have much to do with that happy state of affairs. The real reason Henry didn’t have to pay any taxes was that he never made any money. He was an appallingly bad businessman—completely clueless in the intricacies of managing his assets to generate profits and positive cash flow. He was however a master of leverage, and what he managed to do was build a huge and precariously balanced house of cards on credit. He was always one deal away from disaster, and he took us all to live with him on the bloody edge of the precipice.

          What I actually did for Henry was not nearly so exciting, but was, at times at least, immensely satisfying. One such occasion had to do with an IRS audit. No one likes to get audited—especially Henry. He was so completely and naturally larcenous at heart that he couldn’t imagine getting through an audit unscathed. In addition to that, he did not trust the IRS or any of the agents in its employ to deal fairly with him—not since he had admitted to a female agent (long before I met him) that he was knocking down cash, and she had the brass to bring him up on charges.

          The real irony in that particular incident was that Henry had admitted to the impropriety, not out of contrition or even because he thought that he was about to be found out, but rather because he believed that the female agent would be so impressed with his resourcefulness and temerity that she would consent to sleep with him. He did it to get laid, but instead he got screwed. That at least was Henry’s take on it. I would love to talk to the agent and hear what she has to say about it. I imagine that it is, for her, a tale that grows larger and sweeter with each telling.

          So when Henry got the notice that he was going to be audited again he rushed down to my office, threw the envelope on my desk, and told me to handle it. Henry did not want to confront or be confronted by anyone from IRS. He just wanted me to make the whole thing go away.

          The auditor turned out to be another woman. I’d dealt with a number of auditors in various capacities at that point in my career. I thought that I was batting a thousand with them. That is most of the audits I’d been involved in had resulted in a ‘no change’ finding, meaning no additional tax due, and those that had not, amounted to not more that a few dollars each—essentially the same result. My opinion of the process and of the agents involved was this: an audit is meant to be fair, and the auditors who conduct them are just regular people trying to do a difficult and tedious job in which they are usually regarded with fear and loathing. Always I had treated the agents and auditors with whom I dealt with consideration and respect. They had done the same with me.

          This new auditor however seemed to be cut from different cloth. She was as unattractive and disagreeable a person as I had ever had to deal with. She was not just unfriendly. She was imperious. She was beyond the reach of such charm as I had managed to develop to that point in my life. She would not be led. She would not be cajoled. She would not be persuaded by reason, logic, or even by beautiful reports. She was a plodder, so I let her plod.

          It took forever. She examined every aspect of our business for the previous three years. She looked at payroll records, bank records, financial statements, invoices, receipts, notices and minutes of the board of directors. If it was on a piece of paper she looked at it. She said not one word about any of it—not to me at any rate. I assumed that she had found nothing to discuss. I knew that our returns were true and complete and supported by the underlying books and records. I knew we were clean as a whistle because it was my job to make sure that we were. That was the only way I was going to keep Henry out of jail, and keeping him out of jail, if you will remember, had been his sole mandate to me.

          Still the agent plodded on, and I began to suspect that she was hiding out with us. She either didn’t want to go back to the office or she didn’t want to start the audit they had scheduled next for her, so she was going to drag our audit out until they reassigned her next job. I couldn’t imagine why else she was taking so long to conduct what should have been a routine examination.

          It took six weeks to get my answer. After an absence of several days the auditor called to tell me she had finished a draft of the final audit report, and wanted to review it with me. We made an appointment for the following day. She showed up in her usual grumpy mood and started off our meeting by telling me that her final additional assessment of tax was going to be $1.3 million. I pretended not to be alarmed, which was actually pretty easy because all of my synapses and all of my vital organs had shut down the second she mentioned $1.3 million. It is an easy matter not to register surprise when you are catatonic.

          She gave me a copy of her report. My immediate plan was to hide in a closet until after closing time, and then to get into my car and drive to Argentina. I didn’t know if the U.S. had an extradition treaty with Argentina or not. It was not a fully developed plan. I looked at the paper she had handed me. It was an IRS form, a fill in the blanks form with spaces for the essential findings, the applicable code sections, the amount of the related assessment, and so forth. I needed to get Henry to sign it to finalize the outcome. The entries on the form were made by hand in a tightly crabbed block print so tiny I needed a magnifying glass to read most of it. I looked at the assessment. $1.3 million is a huge number—maybe not to the investment bankers and Wall Street traders who are largely responsible for our current financial crisis, but then, to Henry and me at any rate, it was an astronomical sum. Henry was going to have a stroke.

I looked at the reason for the assessment. The auditor had asserted that Henry had taken deductions for losses in excess of his basis. I stopped and read that part again. I knew that was wrong. I sat down and waited for my vital organs to reboot. It took several minutes.

          I had set Henry’s company up as what is known as an S Corporation. An S Corporation is a special kind of corporation that is taxed as if it were a partnership. That means that instead of the corporation paying any income tax, the corporation’s income and losses are passed through to the stockholders and reported on their individual tax returns. Henry’s corporation had only spun losses, so Henry, the sole stockholder, had deducted the company’s loss each year from his other income to arrive at the adjusted gross income on his Form 1040. When I say that Henry deducted the losses, I mean of course that I did it for him when I prepared his annual returns.

Now there is a limit to the amount of losses that a stockholder in an S Corporation may take, and that limit is the amount of money the stockholder has actually invested in the company. This is called his basis. The basis is adjusted upwards for any profits passed through to the stockholder and downwards for any distributions of cash or property taken out of the company by the stockholder. The loss deductions taken by the stockholder in total may not exceed the stockholder’s adjusted basis. This sounds complicated but it is actually very simple. It is also something that I took a great deal of care to calculate correctly each year. I knew that the auditor was wrong.

          I went down to the office she was using, and asked to see her calculation of the adjusted basis. As soon as she showed it to me I knew what she had done. She had started with the adjusted basis at the end of the period under audit—a number from which the distributions Henry had taken had already been deducted. Then she deducted the total of all the distributions that Henry had taken. She had in effect reduced his basis twice by his distributions. Her math was wrong. I tried to put on a considered and avuncular air. This is hard to do when your ego is turning cartwheels as if you had just checkmated Bobby Fischer or stripped a basketball from LeBron James. Still, as gently as possible under the circumstances, I pointed out the error in calculation to the auditor.

She didn’t register any surprise or alarm. I suspect that this was because all her vital organs had just shut down. I knew just how she felt. She’d walked in there with a $1.3 million assessment under her belt. She thought she was going to be a big hero back at the office. She thought that she was taking down a big player who’d already copped to a felony evasion charge. Her career was made one minute, and then, thanks to me, in the next minute—not so much.

She sat looking at the offending calculation for about 30 seconds, after which she uttered a single word: “Oh.” Then she packed all her work papers and schedules into her valise and left. I got a ‘no change’ notice the following week. Henry thought that was just as it should be, and he was right.

Day 32 - Closing a Chapter

          Gary and I finished up the closing early today. I showed Gary where all the reports reside on the computer and how to access and update them. We even reconciled the borrowing base and submitted that to corporate three days early. I left at lunch time, happy to be shed of the place at last.

I’m anxious to get on with my life now. The last few weeks, winding down an already closed chapter, have been like wasted time to me. If I hadn’t been sick and drugged most of the time it would have been even more frustrating than it was. I shook Bill’s hand on my way out. It seemed like a mature thing to do at the time, but I didn’t feel any more mature for having done it. I wonder how Bill felt about it. We’ve actually been through quite a bit together in the relatively short time we’ve been associated. I thought we had a pretty good rapport right up until the end, when Bill decided to reveal his truer nature. I wonder if he really will miss me, or, in his alternative universe, if he’s told Threasher that he’d like to snatch me out of my car at a stop light and beat the crap out of me.

          My physical condition has improved modestly throughout the week. My fever is all but gone, and the pain is bearable without medication. I’ve got another lithotripsy next week—hopefully the last one. By the end of the month I should be feeling great and ready to tackle the job hunt with the energy it requires. At that point I’ll only have three months of severance left. It seems like plenty, but the economy is tanking all around me. Every day the news is full of economic woes of mind-boggling proportion. That can’t bode well for my prospects.

Day 12 - Good News Bad News

          A recruiter called today about a job with an aerospace firm in Tulsa. She, the recruiter, found my résumé on line. She thinks I would be a good fit. She wondered if I would be willing to relocate to Tulsa. I love Tulsa. I have a lot of close friends there. I’ve been telling people since I left Oklahoma that I would move back there in a heartbeat. We talked for a while and she agreed to submit my résumé to her client. This is a very cool development.

          At work there is still no word on my replacement. People were stopping me in the hallways to ask am I leaving or what. Everyone seemed surprised to see me walking around doing the same old stuff after all the rumors that I’d been shot dead. In response I just grin and nod. I don’t know what I’m supposed to say. What does anyone say in a situation like this? Probably best just to say nothing, and that’s pretty much what I did.

          There’s still no revised severance agreement to sign either. I’m in limbo. The closing is finished. All the reports are submitted. I spent some time with Helen going over projects she’s been working on. We have a physical inventory coming up at the end of October, which is also the end of our fiscal year. Auditors will be here to verify our counts. We have also just implemented a perpetual inventory system, so the physical inventory will validate the accuracy and efficacy of the new perpetual system.

I already know that it’s not going to be very pretty. The cycle counts are showing large shrinkages in key commodities. This means that our bills of material are wrong, that we are not assigning enough material cost to our products so that our margins are inflated from reality. I’ve been having a hard time convincing Fritz to take the adjustments now rather than waiting until year end. He thinks my assessment of our shortfall is too pessimistic. He thinks I’m stupid. To be fair, he thinks everyone is stupid. He doesn’t think there’s any way we could be using up as much unaccounted material as I say we are. I’ll be happy to be gone by the time they do the inventory counts. I hate physical inventories. They are always worrisome, and they always wear me out.

Lehman Brothers filed bankruptcy today. The government decided to let them fail. There’s been a lot of other activity since the beginning of the month, some of it scary, most of it curious. Seems to me that things must be way worse than they are letting on at the moment.

This was the beginning of the end--September 2008--when so many problems in the economy came to a head and the various bubbles and dams burst unleashing a flood of troubles. Follow the following link for a pretty good discussion of all the factors involved:  http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010