In case you missed it, AIG recently announced that due to an internal accounting error, they understated their losses. Their Mistake cost them over $4 billion dollars in previously undisclosed losses, and sent the market reeling as another US bank 'fesses up for their mistake.
What was their mistake? I'm glad you asked. Like any financial bank, they have a number of investments, and just like almost every other bank in this country, they invested heavily in the Sub-Prime lending that took our economy by storm the last couple of years.
To mitigate risk (short hand for: reduce the chance that this exploitative lending practice would bankrupt them) they decided to chop up these crummy investments, then mix them in with Grade-A bonafide home mortgages and sell them off to investors like a butcher selling funky sausage.
But they aren't the first financial institution to fall prey to their own stupidity. They are just the latest and everyone is paying for it.
Damn you Mr. Biv.
Thursday, February 14, 2008
Monday, February 4, 2008
The Challenge
Have you ever sat down in a class room and had a brief moment of clarity? A moment where all the pieces seemed to fall into place. These moments are fleeting, and the more you try to focus on that sensation the harder it is to regain. However, if you give it over to your subconscious to puzzle over, you start to unlock pieces of the puzzle step by step. This is how it was when I first learned of Mr. Biv.
I had a feeling like this when I first learned of Mr. Biv in Prof. Young Son's management class in Baruch College. Mr. Biv is an acronym first used by the Ritz Carlton hotel to explain what problems they watch out for in their hotels. The five ways that poor operations can ruin a business are:
I had a feeling like this when I first learned of Mr. Biv in Prof. Young Son's management class in Baruch College. Mr. Biv is an acronym first used by the Ritz Carlton hotel to explain what problems they watch out for in their hotels. The five ways that poor operations can ruin a business are:
- M - Mistakes
- R - Reworks
- B - Breakdowns
- I - Inefficienies
- V - Variences
I've made it a point to expose and fight Mr. Biv ever since. I can't do it alone however, so I hope you'll join me for the ride. This blog is part of course requirements in my Business Policy class with Professor Kurpis, but I hope it will evolve into something more.
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