2009 archive
Abe Lincoln and the Blogs 0
Dick Polman decodes an old back-up tape from when the internet was Western Union.
“You Can Pay Someone Like a Mercenary, or You Can Pay Someone Like a Marine” 0
Harvard Business School professor Rakesh Khurana analyzes executive pay, pointing out that “there’s no distinction any more between value creation . . . and value extraction . . . .”
If you want to understand what’s wrong with Wall Street and American business, you will learn more from the seven minutes of this interview that from a year of reading the Wall Street Journal. His conclusion: Wall Street has been paying executives like mercenaries, who sell themselves to the highest bidder, not like Marines, who have a sense of duty, loyalty and a greater good.
And, no, he’s not talking about the size of the paychecks, but rather about the philosophies behind them.
Follow the link to listen (web quotation updated):
It’s the kind of news that raises the hackles of Rakesh Khurana, who teaches at Harvard Business School. He tells host Scott Simon that the highest paid person isn’t always the best.
Read Professor Khurana’s article in the Washington Post here and his subsequent online chat here.
Implications 0
If a woman has to choose between catching a fly ball and catching an infant, she will unhesitatingly choose to catch the infant, without even considering whether there’s a man on first base.
From Click and Clack.
Dustbiters To Come 0
Ronald D. Orol and Alistair Barr of MarketWatch analyzes Geithner’s “stress test.”
Note the list of “banks” which may be taken to the lab for the test–it’s almost all the biggies (I use quotation marks because some of them haven’t been “banks” for long):
Treasury is expected to allocate at least $100 billion of the remaining $350 billion from the Troubled Asset Relief Program to a bank bailout fund to buy preferred shares in banks that can be converted into voting common equity “if needed.” According to Treasury, banks can convert securities into common shares in a “worse than expected economic environment.”
(snip)
“Depending on how much capital an institution needs under this program, you could see a high percentage of its common equity, more than half, be issued to Treasury,” said David Brown, partner at Alston & Bird LLP in Washington. (Owning more than half the stock equals government ownership with equals nationalization–ed.)
If needed, the convertible securities will be converted into common shares at a “modest discount” to banks’ stock prices on Feb. 9.
Robert Klingler, attorney at Bryan Cave LLP in Atlanta, points out that most financial institutions were trading at historic low valuations on that date, which means the government stakes could be converted into massive controlling interests.There are 17 institutions, representing roughly three-quarters of the assets in the banking system, which may be required to take the stress test.
These are: J.P. Morgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, American Express, Morgan Stanley, State Street , Bank of New York Mellon, U.S. Bancorp, SunTrust Banks, Capital One, PNC Financial , Regions Financial, Fifth Third, and KeyCorp.
Stiglitz on TARP 0
“They’re in fundamental denial about their insolvency . . . . The financial sector wants to get as much for itself as it can.”
Translation: The banks are lying to themselves and to us. And we’re screwed.
They are not “too big to fail.” They have already failed.
Proposal: Nationalize them, liquidate them, and dress their executives in orange jumpsuits and have them pick up litter along the highways.
If they miss Greenwich and the Hamptons, let them pick up litter in Greenwich and the Hamptons.
Video via TPM.
Swampwater Redux 0
Jesus.
Typical American marketing. If the contents smell, change the packaging; keep the contents.
Mercenaries by any other name are still mercenaries beholdin’ to no one other than the person who signs their paycheck.
Blackwater is not a security company, for heaven’s sake.
Brinks, ADT, and Simplex are security companies.
Blackwater is a private army for hire, a plaything for someone who never outgrew his GI Joes, and it has no place on American soil.
Just Deserts 2
For the owners. Not for the workers.
Watch the owners walk away protected by the bankruptcy statutes.
Watch the workers learn how to live in their cars.
H/T Bill for the link.
More Dustbiters (Updated: Another One Bites the Dust) 0
FDIC still on its average of three a week (in one form or another–merger, liquidation, seizure). Repubican Economic Theory continues to bear fruit.
Loup City, Neb.-based Sherman County Bank, Cape Coral, Fla.-based Riverside Bank of the Gulf Coast, Pittsfield, Ill.-based Corn Belt Bank and Trust Company, and Beaverton, Ore.-based Pinnacle Bank were closed by regulators Friday, bringing the number of U.S. bank failures for 2009 to 13 and 38 total since the start of the credit crisis, the Federal Deposit Insurance Corp. said.
Nebraska has not seen a bank failure since 1990, according to the FDIC. However, Riverside Bank follows Fla.-based Ocala National Bank, which failed on Jan. 30. Prior to Corn Belt Bank, the last Illinois bank to fail was National Bank of Commerce on Jan. 16.
“If a Thing Isn’t Worth Saying, You Sing It” 0
Up against the Wall Street II 0
Margaret Carlson on Bloomberg dot com asks a question (emphasis added):
I would very much like to locate Employee 697. If 696 people who helped destroy the company still got at least $1 million each for their effort, imagine what No. 697 must have done NOT to get it.
Killed by the iPod? 0
Muzak goes Chapter 11. I don’t know whether they are responsible for the sound track in my local super market, but, if they are, good riddance.
Via Skippy the Bush Kangaroo, where there’s an interesting capsule history of the firm.
Just the Time to Venture into Retail 0
The Once and Final Word on Judd Gregg for Commerce Secretary 0
Three weeks from now, no one outside of his home state, politics, the news business, or political blogistan will remember his name.
Up against the Wall Street 0
Time nominates the 25 persons most responsible for the crash. (They include the “American Consumer” as one, rather than as 300 million. Guess that would have messed up their “top 25” thing.)
Via the Huffington Post.
Financial Analysis 0
TerranceDC takes a stab at figuring out what’s wrong with Wall Street.
Alexander Graham Bell’s Worst Nightmare 0
Brendan makes a phone call.
Ignoring the Obvious: Press Coverage Dept. 0
I recently listened to this segment of Talk of the Nation (follow the link to listen to it):
One of the callers referred to Deborah Howell’s November 9, 2008, column, in which she analyzed the Washington Post’s campaign coverage (follow the link for the full column, which includes a lot of numbers and covers much more than the op-ed page):
The caller posited that, since the number of stories favorable to Obama was greater than the number of stories favorable to McCain, the press therefore wanted Obama to win. (Read Ms. Howell’s column; the caller put words in her mouth. The caller’s word-twisting was positively Rovian and, laudably, the panel politely called him on it.)
His reasoning is purebred invalid syllogism:
The panel on the show took issue with the caller’s assertion of favoritism on two points:
- Reporting a more favorable story doesn’t mean that the reporter is rooting for the subject of the story.
- Reporting a more favorable story may reflect who’s in the lead; winners tend to get better coverage than losers.
Note that, in the U. S. press, George Washington gets more favorable coverage than King George III of England. Left unsaid in the discussion:
Reporting a more favorable story, whether it’s a story about a football team, a restaurant, a television show, or a political candidate, may reflect nothing more than that the subject of that story is better than the competition.
Furrfu.