Market Mix Tape: 9/25/2008

Today's edition will be short and sweet, just a couple of things I'm reading and thought you'd find interesting:

An article from Forbes that asks the rather important question: "Who bails out the U.S. Government?" while discussing the bailouts, the moral hazards introduced,  and the likely negative impact from the government's recent actions.

While I think the bailout plan will get pushed through, at least there is some bipartisan opposition to the plan from high ranking members of Congress; in related news, the Congressional Budget Office told the house budget committee that the total cost of the bailout was impossible to estimate. Here is some additional coverage from the FT on the topic.

Again, while I think the plan will still be rushed through, the fact that there are some in the government who are fighting this ridiculous idea gives me "some" hope for a better solution.

A page from the FT with numerous articles and resources related to the current "row" on Wall St.

An article from Seeking Alpha that presents the idea that the U.S. has gone from capitalism to socialism: "privatizing gains and socializing losses." While statements like these often fell into the realm of knee jerk reactions to things we don't like, it's something that's hard to argue with in light of recent events.

However, on some level you have to admit that our economy has always had some cleverly disguised socialist elements - after all, weren't the mortgage GSEs nothing more than hybrids of socialism and capitalism? Ironically, the reasons the GSEs failed weren't because the two goals were in opposition to each other, but because the capitalist and socialist goals were both rather synergistic (in this case), and the companies overreached on both fronts.

An article discussing triple digit increases in foreclosures in some of the country's wealthiest areas.

Also from Forbes, here is a profile of recently deposed Circuit City CEO Phillip J. Schoonover; I wish someone would pay me that much to run a company into the ground. Hell, I'd do it for a mere $200k + a Maserati GranTurismo.  

The way certain CEOs are paid, you almost have to wonder if an incentive even exists for them to manage risk properly, manage the company well and generate solid results. When the choices are becoming a "multi-millionaire" vs. "a richer multi-millionaire," human nature seems to dictate that you won't always get the best results out of these individuals.

Speaking of which, an article from the Richmond Times discusses how Mr. Schoonover may walk away with a $1.8 million severance package, I don't know what's worse - the severance package or the fact that an individual interviewed for the article said that: "There is no blood on his hands. He gave a bad situation a good try," she said."

I guess she's ignoring the fact of how easy it is/was to make money selling electronics during his tenure, and how the companies that didn't only had bad management to blame, not to mention the slew of bad decisions that made the situation worse.

But at least he tried, right?

Sources:

The Richmond Times Dispatch: "Circuit City CEO severance" -- Louis Lloyd, September 24, 2008.

Disclosure: At the time of publishing, the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.