logicalsinger

Financials: Cleaning House Is Always Better

<< A financial system which measures success by how much it enables the creation of production of goods and services of utility is efficient. >>

So if I borrow money from the bank and invest it in the creation of "goods and services of utility" but I don't generate any profits in that effort, we can call the system 'efficient'? Er...not exactly. I destroyed wealth in the process even if the goods and services had utility

On Mar 20 01:04 PM John Lounsbury wrote:

> Simon - - -
>
> I read your NY Times article. Among the reasons discussed for why
> keeping the same management and operatives in place is a bad idea,
> the strongest for me is the motivation of the perpetrators to:<br/>
>
> 1. Cover their tracks;
>
> 2. Try to protect and advance their own financial interests over
> those of the company; and
>
> 3. Continue to obtain obscene compensation for "working out the problem"
> after receiving obscene compensation for creating the problem.<br/>
>
> Add this to the perception that taking risks that blow up has no
> penalty if you can construct a big enough bomb to convince your hostages
> (the U.S. taxpayers) that you are the only one competent enough to
> deconstruct the bomb, you can get rich building the bomb and then
> add to your riches by deconstructing the bomb. It is a big problem
> for this to happen from the enrichment of the bomber perspective.
> It is an even bigger problem that the rest of the world will never
> learn all the details of the bomb if both the building and deconstructing
> process are done behind closed doors.
>
> It is becoming ever more apparent that allowing the "smart people"
> to "work out" this crisis is doing nothing more than enabling an
> innefficient financial system. A financial system which measures
> success by how much money its minions can make is inefficient for
> the 99.9% of the population not among the minions.
>
> A financial system which measures success by how much it enables
> the creation of production of goods and services of utility is efficient.
>
>
> We have lost the latter measure of success in the past couple of
> decades.

Financials: Cleaning House Is Always Better

I think most people in the financial industry, including most people at AIG, are honest upstanding people. There were some rogues (Madoff etc.) and there were some risks which were poorly understood, but I don't buy the idea that we are waking up now and finding out that everyone was a thief all along.

Financials: Cleaning House Is Always Better

Cleaning House, in particular the House of Representatives, is a great idea. Pelosi and co. are demonstrating their incompetence on a daily basis.

Why Citi's 11% Coupon Doesn't Mean It's Paying Junk Rates

Felix the dividend does not look safe, even after ADIA's cash injection. Cash out is over $10 billion a year just for dividend payments. It will be an easy place for Citigroup to cut if it gets into more trouble. The 11% interest reflects the risk that, should the stock fall below $31.83 at the time of conversion, ADIA has to eat the loss. You really can't call it a vote of confidence on the part of ADIA that they wanted such a high rate. They are assuming a further fall in the stock, or further dollar weakness.