Monday, August 5, 2013

The Tough Life of the Fed Chairman


The poor Federal Reserve.  I mean it.

Here imagine this: you are the best contractor in all of America.  You have a crack team of workers who can build even the most complex things, and you can do it under budget and ahead of schedule.  One day you get the biggest job you've ever had--a once in a lifetime gig.  This could change the world.  But you are a bit wary heading into it.  The job isn't starting from ground zero.  Instead, there was another contractor working on it previously, and he did a really crappy job.

Not intentionally mind you.  Just that the previous contractor wasn't as good at predicting future costs and you got stuck cleaning up a lot of the mess.

So now you are on a job that is already over budget and behind schedule.  You show up to the construction site to survey what's going on and to your dismay there is almost nothing ordered by way of supplies.  Sure you bring in your own equipment usually, but for something to be so radically off budget you were expecting at least a pile of wood and maybe some cement.

Instead you find some poorly built one story homes on the lot that are really falling apart.  You are told that the project is actually a renovation job and a new construction job.  First you have to rebuild the disintegrating homes and then you can renovate up.

No big deal, you've done jobs like this before.  Your team is really good at this.

You get to organizing your team, they are all ready to start in when the property owners tell you that there is another problem. The homes are privately owned. The land is ok to work on, but through a weird arrangement set years ago each private home has to be either bought out or they have to hire their own private contracting team.  Ok, you think, team work is good. Many hands make light work.

When you start surveying these homes, just to get a sense of what this greater renovation will finally look like you get a distinct American Psycho feel from some of the owners. You aren't allowed in many of the rooms and a lot of the damage you can see appears to be self inflicted. On the homes that you were allowed to buy out, it looks worse. You got a rotten deal. What you thought were homes falling apart turns out that the were cardboard cutouts. The previous owners had more or less already scrapped everything of value and run away with all your cash.

You start getting frustrated. You aren't really a real estate broker. Shouldn't it have been the job of the property owner to sort this stuff out in the first place? Your job was to just build.

Oh well, eventually you will be able to do your job. And your job is what you are good at. So now everyone is building and fixing. This is great. The other contractors are a bit slower but everything is looking good on the outside.

One day the owner of the lot comes by to check everything out.  Things start out great. The owner has a lot of power and even gets you some access to the private homes so you can take a peek.  You get into one of the homes and you are appalled. The insides look the same as the day you started work.  Worse. Instead of seeing tangible renovations there are big piles of cash all over the floor. The money you gave the other contracting teams is literally stacked up, they just buffed out the facades.

It's frustrating sure, but you know that you have done good work.  You and the owner go look at what your team has accomplished so far and you are feeling pretty good.

The houses have their foundations shored up and you are almost ready to start the main renovations that you were originally contracted for.  But then the owner's wife comes in. She is pissed off. She disagrees with everything that the owner says.  Some of the stuff she says makes a lot of sense, but most of it is out of your scope of work.  Stuff you can't do a lot about.

She is really mad that the owner is so far over budget. Eventually she starts yelling at you. How could you let the budget get so crazy, she asks.  Fair point. You explain the unprecedented nature of the task, how hard it is to work with such an odd property and the houses. You explain the contractors of the other homes and how you suspect they might not be doing their jobs. You suggest more oversight.

This gets her even madder. Turns out she trusts all the other contractors way more than you. Many are personal friends. To suggest they are capable of wrongdoing or even slight mismanagement is a slap in the face.

You finally calm her down a bit and insist that you will work to the highest standard.  Good, she says, and drops another bombshell, all the funding for the project has been cut to bare minimum levels. The owner will only pay wages and what was left in the scope.

You try to explain that being over budget is a product of the previous contractors and the--well you can't talk about the private contractors so you try to sidestep it a bit.

As the two walk away you hear the wife mutter that you are a shifty shyster. A little offended you resolve to try to make amends and really explain the project better next time.  Maybe it was just a bunch of misunderstandings.

The next day the owner calls you and says that he confiscated all your tools except your hammer and nails.  Good luck.

Then it gets worse. Every month the owner and his wife drag you in front of them to talk about why the place isn't built yet. you try to explain that without more tools and funding it is going to take a while but the wife insists that unless they take away the hammer the place will never get built.  Meanwhile she screams at the owner during these monthly meetings for taking out a loan in the first place to pay for the construction.

One meeting it gets really awkward because you have to explain to the wife the importance of building materials to make a building.  Her reply is that the private contractors seem ok.  You bite your tongue about the empty facades and try to keep plugging along.

Finally, you get a lot of work done. Progress is moving and it seems like the huge project will actually get done. The owner and wife are anxious though that you are still working on the project and start phasing in new contractors.  It is a bit hurtful that the job hasn't panned out and they don't want you but nevertheless you want them to get what they want. Happily these guys seem to do a decent job, albeit slowly.  So you help them along while trying to transition yourself out.

But every time you pull away they have a mental breakdown and can't get any work done.  So you go back to the owner and wife every month trying to detail a plan for you to leave. They scream at you again, insisting you should already be gone and refusing to give you any of your tools or at least give them to the new contractors.

And this happens for five years.

That is what it feels like to be the fed chairman right now.  Yelled at, constricted, the butt of everyone's rage, limited in ability, and utterly alone.

So no matter how you feel about the guy, try to at least understand how stuck he is.