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  • Four Myths About the Obama / Geithner Plan  [View article]
    There are a couple of themes here: One is the Silver Bullet problem - we keep thinking there is a pill for all of this - there isn't. Crash diets don't work - at least not in the long term. The fundamentals of weight control will never change - aerobic, resistence training, and diet.

    Perverting the market is like playing the whack a mole game - you hit one and another pops up. The ironies in all of this are classic. The paradox of thrift is a nice bumper sticker ... some people leveraged their house, overspent, didn't save and now they have a hangover ... all the taxpayers get to buy them aspirin. I believe in personal responsibility for homeowners and clawback provisions for corporate excess. Equal opportunity.
    Feb 12, 2009. 07:16 PM | 1 Like Like |Link to Comment
  • Markets Plunge Following Geithner's Plan - And That's Not a Bad Thing  [View article]
    We all know the government can't really control the economy. We want to believe they can, but it's a complicated mix of factors. There are no silver bullets here. It is well-known, however, that specificity manages expectations and can inspire confidence. Platitudes and bromides only win the buzzword bingo game. I like the stress-test idea - we should do that with goverment as well, including zero-based budgeting. We can't go back to the same old consumerism, negative savings rate, and reckless risk management.
    Feb 11, 2009. 08:22 AM | 10 Likes Like |Link to Comment
  • U.S. Unemployment - Is It Really So Bad?  [View article]
    Per other comments, the demographic wave was quite strong over the period ... doesn't stand on all fours in the compare. I do think it's wise to have a more holistic context - worldwide, the tiers of employement are different - good in one region is bad in another.

    The issue of whether an employee is a cost or investment isn't as clear. In certain roles - consulting and sales, e.g., - it's pretty easy to put a margin on each head ... some are positive and others are negative using a full loaded cost. Many companies can cut certain heads and not have the top line blink. However, the intangible ramifications of rank and yank can lower productivity for those remaining.
    Feb 10, 2009. 03:56 PM | Likes Like |Link to Comment
  • Unintended Consequences of Four Government Policies  [View article]
    Many of these consequences have been debated ad nauseum ... the salary cap piece is political symbolism - most have been grandfathered and the main part of total comp has not been salary ... the best and the brightest comment is amusing, if not inane. If the salaries over the last few years at GS, Countrywide, BAC, ML, etc., etc., are directly related to the "talent" that was/is there, please define talent for me - get real specific. A talent for malfeasance and literally mortgaging one's future on specious bets and vegas-style risks is not "talent" in my mind. The best and brightest and the comp correlation is weak at best - think politics, business, sports, etc. Also, the bottom line on the mark to market is the underlying asset - it was often too risky, too opaque, and too hard to value. The mark is part of the issue in illiquid, hard to value markets (mark to model markets), but the other issue is the asset itself. Risky decisions have consequences - in the mark case, it's more immediate - hopefully, the bank's, etc. decisions are within a portfolio of decisions that balance risk and prudence. The mark issue seems like a false dilemma.
    Feb 8, 2009. 03:30 PM | Likes Like |Link to Comment
  • Compensation Caps Will Drive Away Talent? To Where?  [View article]
    For those who think the "talent" will go elsewhere, please define talent for me - if "talent" can't perform, what is it ... good luck going to other parts of the world - managing the cross-region regs, the legal diffs, the work councils - they'll be back to the States. Easy to think there are no friction costs - that's a fallacy. Again, I'm all for paying for "Alpha" performance vis-a-vis the industry/market.
    Feb 5, 2009. 05:10 PM | Likes Like |Link to Comment
  • Obama's Stimulus Plan: It's All About the Framing  [View article]
    OldLimey - your comment is spot on ... it's as if we are talking out of both sides of our mouths. We complained when we had a negative savings rate and now that we are deleveraging, the govt wants us all to spend. The country is addicted to consumerism and debt. We complain about the addiction, but when we the get the withdrawl symptoms, we revert back.
    Feb 4, 2009. 11:28 AM | Likes Like |Link to Comment
  • When Bonuses Aren't Discretionary  [View article]
    If you're in a field or function that has an high bonus or "at-risk" component, you should learn to live on your "base" salary. It's well-known premise in sales, consulting, or other fields that have some "risk" pay involved. The idea that a bonus is a right vs. earned is ludicrous. Maybe, just maybe, if a banker (single person) performed well that year - sold a lot of products, etc. - then they should be entitled to some payout -their individual component payout, which may be 50% of their entire payout.

    The problem is the executive ranks. The pay for performance contract has been harmed - people get upset when companies are cratering, taxpayers are making bad investments, and executives are making millions for poor performance. Their 500k to $1m salaries are more than enough to live on - at least at the Fortune 500 level (in terms of salaries). Let's agree on the peformance level and then we can talk pay. I'm willing to pay for real "Alpha" level peformance.
    Feb 1, 2009. 02:00 PM | 1 Like Like |Link to Comment
  • At Least 43,000 New Obamaconomy Workers Freed Up  [View article]
    This is not an either/or argument, which is ubiquitous on the blogosphere. I'm not in favor of rewarding incompetence, malfeasance or poor decision making, which ran the gamut - from homeowners, consumers, rating agencies, banking executives, government officials, etc. It seems that common sense is not common practice at all levels of society. Any government injection (taxpayer money recycle) needs to have a good business case and be an invesment vs. a feel-good, politically motivated check-writing exercise - see the last "stimulus" ... we know that temporary stimuli are not fully spent - esp. in an economy of uncertainty and job loss. Also, we can't go back to a consumer who has a negative savings rate and uses their house like a piggy bank. Any spending should be around USA R&D - education, innovation, entrepreneurial zones, incenting competitive advantages, etc. Some of the President's ideas are Ok and are clearly an investment - others are a wait and see. As anyone knows in business, the rubber meets the road when you have to implement and execute - then we'll see how good the check and balances are - think the Big Dig in Boston, which we all paid for.
    Jan 26, 2009. 09:05 PM | Likes Like |Link to Comment
  • Thain's Undoing: Thinking He's Worth It  [View article]
    Bottom line, smarts are not enough. There are plenty of high IQ people who make dumb decisions (at some point). In actuality, the higher your IQ - in general - the more likely you are to having a hardening of the attitudes - there is a relatively strong correlation with one's IQ and their willingness to incorporate contradictory opionions. What is means to be "smart" is another question. It's one thing to spend your own money on whatever you want - I don't really care - but when you spend taxpayer or shareholder money on excess, it calls attention. What makes you great can also be your downfall - many executives have hubris, ego and confidence. Like most things, some is good, but more is not necessarily better. Dose-response issue.
    Jan 26, 2009. 08:37 AM | Likes Like |Link to Comment
  • Banking Is Tanking Worse Than Ever  [View article]
    There a some similiarities to the Great D, at least in the peak to trough. However, as others have pointed out, there are some significant differences as well. We have quite a few more stabilizers now than before. The banking issue is basic financial analysis - how will they re-create their revenue streams from their previous model - high leverage, risky bets, equity lines, derivatives, etc. The top lines will be challenged and they will need to cut more people. They need to get their cost structures in line with their revenue, which will be challenged for a while. The question for bank stocks - as for any stock - is where is the catalyst, competitive advantage, and cash flow? I just don't see it in the near to medium term.
    Jan 25, 2009. 08:17 AM | Likes Like |Link to Comment
  • Running Strong Again: The Four Horsemen of Technology  [View article]
    We all know about the periodic table of returns ... sectors and industries rotate up and down the stack. However, we also know the data about chasing returns and mean reversion. I think we need to look at slices within certain industries - healthcare technology, bread-and-butter banking, greentech, etc.
    Jan 24, 2009. 03:16 PM | 3 Likes Like |Link to Comment
  • Google Slowly Pushing Business App Users Toward Premium Service  [View article]
    Seems like the classic "drug dealer" model - give them some stuff for free, get em hooked, and then start charging. Once you get people comfortable with the software, it's hard to just switch - you build up switching costs and then all the talk of "utility" computing or "apps on tap" is more marketing than reality.
    Jan 24, 2009. 03:11 PM | Likes Like |Link to Comment
  • John Thain Called Out by the President  [View article]
    Basically, Thain is emblematic of the rotten corpse. He at first asked for his $10m bonus - didn't see any issue with it - and then backed down given the public outcry. He then pays out bonuses early so he can get in under the BAC wire. I have no issue with paying for performance, but basically, ML, C, and others should, by all intents and purposes, be bankrupt. They gambled on some risky bets and lost. See long term capital management for another example. If you start perverting the risk-reward curve (more risk = potentially more return), then you might as well stop trying to predict, because the relationship breaks down.
    Jan 24, 2009. 11:37 AM | 1 Like Like |Link to Comment
  • Obama May Have No Choice but to Mimic Bush's Bank Bailouts  [View article]
    Hard to disagree w/ this anlysis on the face. Everyone seems to be making it up as they go along. The major problem is the lack of transparency so it's hard to know what's "worked" and what hasn't. It's like driving with your eyes closed - you'll never really know the best route - can't replicate it. The banks took undue risk, a lot of people made poor choices, and the taxpayers are picking up the pieces. There is no sidestepping the fact that risk works on both sides of the coin - more risk = higher upside, but also higher downside. It's the classic - private gains, public losses scenario, which is hard to swallow.
    Jan 22, 2009. 01:58 PM | Likes Like |Link to Comment
  • Restaurant Spending, Then and Now  [View article]
    It would be nice to see the trend line in terms of pops and drops. What it did during the 90's and then after 9/11. We have over a 50 year span from '55 to Present. I think it will continue to go down - look at the restaurant stocks.
    Jan 18, 2009. 08:10 AM | Likes Like |Link to Comment