Maurice R. Greenberg

It was recently noted that Maurice R. Greenberg, the man who built the American International Group (AIG), is at it again. To fill the ranks of his new venture, C.V. Starr & Company, he is hiring some people he once employed at AIG. Mr. Greenberg’s success may be at the expense of taxpayers. It might be a matter of time before AIG’s business gets siphoned off along with its people. That would impact AIG’s ability to repay its debt to the government.

While Mr. Greenberg is AIG’s largest shareholder aside from the government, it’s clear that Mr. Greenberg’s intent is to build an AIG 2. His new firm seems to be focusing on specialized lines of business insurance that once made AIG stand out. In my opinion, Mr. Greenberg was key in the demise of AIG; from his accounting scandal to risky trading of derivatives. How can taxpayers sit by and watch as the government props up AIG, only to watch a “new” AIG develop with no liability to taxpayers? Only in America can a crook build a business and trump the government at the same time. It’s amazing what money and greed do to people. Somehow, government officials need to either let AIG fold (something they will not do given the investment made) or develop incentives and controls around AIG’s current business model. If the government is unwilling to do this, then once again it’s been duped by a person who’s motive is money; not the wellbeing of the American economy. It’s great to live within a “free enterprise” system where businesses can be built to drive economic growth. It’s unfortunate that being a “crook” doesn’t really make any difference in this process.

Wall Street’s expectations?

Stocks ended mostly unchanged on Monday. There is much anticipation with quarterly earnings reports due on the financials and many other benchmark companies. The question on everyone’s mind is will corporate America’s performance continue to fuel the stock rally by beating Wall Street’s expectations? But the bigger question is, while the recession has depleted trillions in household wealth, can the American consumer drive economic improvement?

Do not underestimate the American consumer. The American consumer will lead us out of this recession and fuel economic growth. Earnings from corporate America for the most part have been very encouraging with many companies reporting top-line sales growth. This reflects consumer demand is there in a number of segments. While consumers have become more price/value driven, they are willing to spend if the right deal is presented. In addition, with the stock markets continued push toward a 10,000 Dow, consumers are feeling better about their 401(k) accounts and portfolios. This will translate into more consumer spending which in turn will fuel job growth. Do not underestimate the American consumer. The dynamics in how they purchase may be different but his consumer will buy – and that’s a good thing.

Robert B. Zoellick, World Bank

The president of the World Bank recently issued a statement suggesting that America’s days as an unchallenged economic superpower might be numbered and that the Dollar was likely to lose it’s favored position. Additionally, it was suggested that the euro and Chinese renminbi would assume bigger roles in the world’s economy. The World Bank, which is financed by governments around the globe, has no say over the economic policies or large nations or over currency matters.

While World Bank president, Robert B. Zoellick’s comments might seem unusual, his experience as a trade representative and deputy Secretary of State provide a creditable backdrop. When you dig deeper into his comments, he’s clearly taking a shot at Obama’s financial policies and the role of the Federal Reserve. His underlying comments suggest that the U.S. government will struggle as it tries to strengthen the financial system. This is the same government, through lax and failed policies, has allowed the country to fall into one of the worst recessions in history. What Robert B. Zoellick is alluding to is the government has a poor record of accomplishment in fixing anything, so why should they start now? Given the growth potential in the international markets, especially in China, Zoellick’s comments seem well founded. While Obama and the government wrestle with ways to improve our economy, growth is well underway around the world. Is Obama playing for the short-term or long-term? Does he understand that U.S. economic growth depends on the free market system with incentives to grow business, not more government policies and higher taxes? The jury is still out but maybe Robert B. Zoellick knows more than we think.