hoover

Big Banks: The Consensus Is Cracking

Capatilism is failing precisely because mega monopolies are allowed to exist, reducing their need to compete in the market, while creating an impossible playing field for their competitors. The idiotic "too big to fail" lunacy reduces these worthless giant's need to compete to ZERO! Even a kid can see that a monoply game rigged toward one player (like, a rule that Joey is not allowed to lose) while the other three players have to compete with him, has a pre-determined winner. When you end the rewarding of those that produce the best product or service for the best price, it is the end of capitalism and prosperity.

Unintended Consequences of Four Government Policies

I disagree that enormous salaries must be paid to attract so-called superb talent for top executives. I would suggest its a bogus economic theory floated in the media and in academic circles by the very wealthy. Why do I think this? First, gross failure and incompetence have been obviously displayed by the overpaid heads of the biggest banks and auto companies. Obviously they are not paid for performance. Also, in the bowels of most big corporations (which I served for 33 years) there are talented people that perform most of the corporation's "thinking and managing" work. The range of pay in this large group of middle people (managers, engineers, supervisors, legal staff, buyers, department heads, project chiefs, sales managers, and many others) range from maybe $60,000 to say $300,000 or so at many corporations. If you look at manufacturing labor (another essential component) it may range from $25,000 to $50,000 or so. So, why do you have to pay $20 or $40 million (basically a lottery winner) for REAL talent for a hotshot CEO? The Chinese get talented very successful big biz CEO's for $100,000. Common sense tells me that CEO's are worth only a fraction of what they make and they should be fired regularly for incompetence like evryone else.

I'm Old School

Government policies are shaped by lobbyists, political calculations, opinions by over 500 congessmen, and a view from the top of government. It has the ear of the most useless part of the economy -- big irresponsible banks that are not even viable businesses, while ignoring useful productive businesses, well run banks, small businesses, and main street. Therefore, I would say the government's bailout effort is failure waiting to happen.

Earnings Estimates Collapse for Goldman and Morgan

Slightly off the subject, but Bernard Madoff (former NASDAQ Chairman) has just been charged with $50 billion in fraud. His hedge fund is said to be a Ponzi scheme and was supposed to have gops of money -- and he says it has nothing. Imagine that -- poof, $50 billion of perceived money disappears. Enron is going to get outdone yet. So, Goldman and Morgan Stanley are heading down. They were of course preceded by others that shrank almost overnight. Poor Lehman Brothers must have upset (or outfoxed) the wrong people along the way. And then the government is pouring, oh, a little $350 billion of borrowed taxpayer future collections, into banks supposedly to bail them out -- and won't tell the public where the money is going. And, trillions of dollars of derivative instruments that no one understands are imploding. Then there were the mortgage con games, and the ratings swindles. Of course there was Fannie and Freddie -- their debt and leverage is so huge it goes off the radar screan. But, their former caretakers tell Congress with a straight face they did a responsible job. Does anyone suspect that maybe-- just maybe-- Wall Street and bankers and insurers are perhaps all crooks, and widespread government corruption is their partner? Nope, not a chance.