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Administration: Rein in pay in US private sector

celticlord said:
No, just corporate CEOs. He most assuredly has come for them. He fired Rick Waggoner, remember? And now he's targeting every other exec's pocketbook.
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You know better than this. Stop with the dishonesty. He did not say anything about limiting compensation, only suggested that compensation should be based on long term performance as opposed to short term.

Dear Leader has come for the corporate CEOs. Dear Leader has come for automobile companies. Dear Leader has come for foreign companies seeking to do business in the US.
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The auto industries came to him(well, President Bush and congress actually originally), not the other way around.

Next he will come for energy companies. Next he will come for doctors and healers. Next he will come for small business people. In the ineptitude and evil of his agenda he has explicitly stated his intent to come for all of these, and more.

When he finally comes for you, who will be left to hear your complaints?
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Speculation and paranoia.
 
phattonez said:
Fascism is a lot like socialism, despite what the revisionists say.
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The real difference must lie in the where the profits go - to the corporations or to the state.

Since corporations are evil and the state is kind and benevolent, socailism must be FAR better tha fascism.

:roll:
 
Redress said:
The auto industries came to him(well, President Bush and congress actually originally), not the other way around.
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Big business likes big government. Doesn't mean though that it's not intervention.
 
Redress said:
The auto industries came to him(well, President Bush and congress actually originally), not the other way around.
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Who fired Waggoner?
 
Redress said:
President Obama. What does that have to do with what you quoted?
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Proves the analogy. Dear Leader did what no President has a right to do.

And so it begins.....and so you run and hide (for now).
 
celticlord said:
Proves the analogy. Dear Leader did what no President has a right to do.

And so it begins.....and so you run and hide (for now).
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There is nothing wrong with putting conditions on loans. If GM did not want the interference, they did not have to come to the government for help.
 
Redress said:
There is nothing wrong with putting conditions on loans. If GM did not want the interference, they did not have to come to the government for help.
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Was that an original condition in the loan, or did the government make it up as it went along?
 
Redress said:
You know better than this. Stop with the dishonesty. He did not say anything about limiting compensation, only suggested that compensation should be based on long term performance as opposed to short term.
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So you don't know better than that.

When the Secretary of the Treasury by direction of the President makes "suggestions" to Congress and the SEC, those suggestions are listened to and often enacted.

Explain the Constitutional authority the government has to set wages at any level of the private sector. Don't cite the interstate commerce clause, because that does not allow the government to intrude on wages.
 
Obama is appointing Czars for everything

why?

He gets to appoint them and they get to do whatever and nobody has any say in what they do.



Byrd: Czars are power grab by exec

By JOHN BRESNAHAN | 2/26/09 4:47 AM EST

West Virginia Sen. Robert C. Byrd, the longest-serving Democratic senator, on Wednesday criticized President Barack Obama’s appointment of White House “czars” to oversee federal policy, saying these executive positions amount to a power grab by the executive branch.

Byrd complained in a letter to the president that his decision to create White House offices on health care reform, urban affairs policy, and energy and climate change “can threaten the constitutional system of checks and balances. At the worst, White House staff have taken direction and control of programmatic areas that are the statutory responsibility of Senate-confirmed officials.”

While it’s rare for him to criticize a president in his own party, Byrd is a stern constitutional scholar who has always stood up for the legislative branch’s role in checking the power of the White House. He repeatedly clashed with the Bush administration over executive power, and it appears he won’t spare the Obama administration either.
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Byrd: Czars are power grab by exec - John Bresnahan - POLITICO.com
 
phattonez said:
Was that an original condition in the loan, or did the government make it up as it went along?
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I'm curious about something. What do you make of the current financial crisis, and what do you think caused it in the first place?

It seems that many folks are ignoring the fact that the industry failed to self-regulate (ie, AIG). When greed starts driving the market and subsequently causes widespread economic chaos, what's the government supposed to do? Stand back and watch as every person who has a 401(k) account loses 35%-50% of it? These are not made up percentages by the way..I am a pension analyst and this is a reasonable range based on the large numbers of gain/loss calculations I've performed since the crisis hit.

Yes, I understand the housing bubble bursting was a major contributing factor.

Yes, irresponsible consumers are to blame, too.

Yes, Frannie and Freddie..I get it, really.

However, I feel like every time this sort of issue is brought up, proponents of a pure free market seem to gloss over this major issue: the government didn't go to the companies offering to buy them out. They came to the government - and, many of them did it to request that the government save them from a mess that they themselves created! It's with jaw-dropping disbelief I read comments about how terrible government is at managing companies - right, like these companies did such a bang-up job on their own?

They shouldn't have received one red cent in my opinion, but since the government did pay up it now has every right to set restrictions and have a say in how those companies are run. Yes, even after the fact. I'd have kicked ALL of the CEO's and the entire executive group of these failed companies out on their keisters - frankly, I thought they were treated with far more concern than they deserved. They are fortunate to still exist at all.

I didn't support the bailouts and I don't support the stimulus package as it's written, but I strongly question some of the exaggerations and omissions of fact in many comments of this thread. The market failed to self-regulate, contributing to the catastrophic crash. Companies came to the government with hat in hand, and were rescued.
 
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Analyst said:
It seems that many folks are ignoring the fact that the industry failed to self-regulate (ie, AIG). When greed starts driving the market and subsequently causes widespread economic chaos, what's the government supposed to do? Stand back and watch as every person who has a 401(k) account loses 35%-50% of it? These are not made up percentages by the way..I am a pension analyst and this is a reasonable range based on the large numbers of gain/loss calculations I've performed since the crisis hit.
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What most people fail to realize is that the markets and industries did not "fail" to self regulate. Given the nature of government regulations in place and the willingness of government to cover huge losses, AIG's behavior in particular was extremely rational, predictable, and predicted.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=227162

It costs $5 to download Akerlof's paper from the 1980's S&L crisis, but his analysis of thrift behavior then dovetails almost perfectly with the derivatives market behavior today.

The players knew they were betting with house money, so the entire risk/reward scenario was distorted. Instead of contemplating risk of capital (since the players had no real capital at risk because the government would backstop their losses), their risk contemplations were about the likelihood of going to jail after extracting however many millions they could.
 
celticlord said:
What most people fail to realize is that the markets and industries did not "fail" to self regulate. Given the nature of government regulations in place and the willingness of government to cover huge losses, AIG's behavior in particular was extremely rational, predictable, and predicted.

SSRN-Looting: The Economic Underworld of Bankruptcy for Profit by George Akerlof, Paul Romer

It costs $5 to download Akerlof's paper from the 1980's S&L crisis, but his analysis of thrift behavior then dovetails almost perfectly with the derivatives market behavior today.

The players knew they were betting with house money, so the entire risk/reward scenario was distorted. Instead of contemplating risk of capital (since the players had no real capital at risk because the government would backstop their losses), their risk contemplations were about the likelihood of going to jail after extracting however many millions they could.
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Ah, now I'm beginning to understand your position.

What you are saying is that these free marketers you support knew a government handout was assured and so their self-sabotaging behavior was rational - yet, at the same time you want government to stay out of private industry?

Can you see the inherent flaw in that reasoning?

Do you have any moral compunctions about industry cheating others (ie, the government and therefore the American people) out of their money, or is pretty much anything fair game?
 
Analyst said:
What you are saying is that these free marketers you support knew a government handout was assured and so their self-sabotaging behavior was rational - yet, at the same time you want government to stay out of private industry?
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What I am saying is that their behavior was not self-sabotaging. How many AIG execs went broke? They scored, made millions, and are around to play the next game of beggar-thy-neighbor. That's success, not self-sabotage.

What government needs to do is remove the expectation of bailouts. Remove that expectation and the risk/reward calculation returns to the normal mode of profit maximization.

Analyst said:
Can you see the inherent flaw in that reasoning?
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You have not shown any. The flawed reasoning is in the bailout/regulatory justification. Look at what AIG did with its bailout: paid huge bonuses to the very folk who caused the crisis. In essence, the government rewarded AIG for needing a bailout, and AIG rewarded the executives. That makes the executives successful, not failures.

When you reward people for looting, how is it surprising that they loot?

Analyst said:
Do you have any moral compunctions about industry cheating others (ie, the government and therefore the American people) out of their money, or is pretty much anything fair game?
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"Cheating" in business is a fiction. There's legal and illegal. Everything else is a question of who sweats the details more.

Unlike the S&L crisis of the 1980s, bankers are not going to jail over derivatives. What they did was legal, or so it seems.
 
Analyst said:
Ah, now I'm beginning to understand your position.

What you are saying is that these free marketers you support knew a government handout
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If they were free marketeers, they wouldn't be taking or using or even relying on taxpayer money to back them up.

Guess again.

They're yours, not ours.

Analyst said:
Can you see the inherent flaw in that reasoning?
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Yep, as you can see, I spotted it right off.

The flaw is letting the government get involved at any time.

Fannie MAE and Freddie MAC, to abortions created by that socialist FDR, have done their deed and helped damage the US economy.

Can we finally dump them?
 
Scarecrow Akhbar said:
If they were free marketeers, they wouldn't be taking or using or even relying on taxpayer money to back them up.

Guess again.

They're yours, not ours.

Yep, as you can see, I spotted it right off.

The flaw is letting the government get involved at any time.

Fannie MAE and Freddie MAC, to abortions created by that socialist FDR, have done their deed and helped damage the US economy.

Can we finally dump them?
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Um, what? That really didn't make any sense, nor did it in any way reply to what I posted. Quite the opposite.

I'll let you reread my post, and rethink yours before I'll be bothered to respond to it.
 
celticlord said:
What I am saying is that their behavior was not self-sabotaging. How many AIG execs went broke? They scored, made millions, and are around to play the next game of beggar-thy-neighbor. That's success, not self-sabotage.

What government needs to do is remove the expectation of bailouts. Remove that expectation and the risk/reward calculation returns to the normal mode of profit maximization.

You have not shown any. The flawed reasoning is in the bailout/regulatory justification. Look at what AIG did with its bailout: paid huge bonuses to the very folk who caused the crisis. In essence, the government rewarded AIG for needing a bailout, and AIG rewarded the executives. That makes the executives successful, not failures.

When you reward people for looting, how is it surprising that they loot?

"Cheating" in business is a fiction. There's legal and illegal. Everything else is a question of who sweats the details more.

Unlike the S&L crisis of the 1980s, bankers are not going to jail over derivatives. What they did was legal, or so it seems.
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So, just so I'm clear, what you saying is that AIG deliberately positioned themselves so that they would go bankrupt without a government handout? That's a...bit...hard to swallow. Even were I to concede that it was strictly a risk v. reward proposition while completely ignoring the PR aspects of such a position, there was no certainty that they would receive a bailout prior to the events of the past 6-9 months.

It does sound at though we are at least partially in agreement, however - I can absolutely agree bailouts should be off the table altogether.
 
Analyst said:
So, just so I'm clear, what you saying is that AIG deliberately positioned themselves so that they would go bankrupt without a government handout? That's a...bit...hard to swallow. Even were I to concede that it was strictly a risk v. reward proposition while completely ignoring the PR aspects of such a position, there was no certainty that they would receive a bailout prior to the events of the past 6-9 months.
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Read Akerlof's paper. The AIG execs, the Goldman Sachs execs, Citibank execs, CountryWide execs....they all essentially looted their enterprises. They didn't plan bankruptcy as a specific goal for a specific time frame, but they never worried about their bets going wrong because they were playing with the house money in their minds.

As for PR....AIG doesn't sell to people, so why would they care what the public thinks? Ditto for Goldman Sachs. Citibank and Countrywide were hawking mortgages to people who had no business taking them out--until after the collapse, who was going to say bad things about them? After the collapse, as the execs have already skimmed their money, why would they care?

Regarding the lack of certainty of a bailout, while there was not mathematical certainty, the pattern of governance in this country since FDR has been to bail out distressed "too big to fail" entities: New York City, Chrysler, the S&Ls of the 1980s, LTCM in the 1990s. It was not nearly the gamble you suggest it was. In all probability, the reason Lehman's collapse had the shock value it did was because no one actually believed they would not get bailed out.
 
MrVicchio said:
Administration: Rein in pay in US private sector - Yahoo! Finance

Obama knows best children.
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Does it bother you that he's right?

Interestingly enough, a number of companies are moving towards this. Several companies have always done performance pay through long term criteria.

I'd be interested to see what Kandahar and his MBA have to say given the sheer lack of people with business backgrounds here.

AIG's London office where most of the CDS were made had a pay system where the London office kept 50% of its profits and sent the rest to the AIG HQ. Thus, driving them towards incentives to ignore the long term implications of the companies they were giving CDS to and focus on the pure short term bottom line. The focus was sell, sell, sell. Long term steady performance with little or no losses was not the key. Before regional banks went bonkers, many had performance pay packages where CEOs were paid according to how well a bank did over a course of several years. Stock options with time lines five, ten, fifteen years down the line also attempt to fix this. Anyone who's worked in a manufacturing plant will tell you that managers who are paid on sales will push products on customers while telling them they can return them later. How does that help the company's long term growth when all the manager is focused on is short term sales?

In my realm, that's channel stuffing, and it's highly illegal. But that's what you get when you focus on short term selling and ignore long term performance.
 
Analyst said:
I'm curious about something. What do you make of the current financial crisis, and what do you think caused it in the first place?
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Malinvestment because of the Fed, overregulation, expectation of government intervention.

It seems that many folks are ignoring the fact that the industry failed to self-regulate (ie, AIG). When greed starts driving the market and subsequently causes widespread economic chaos, what's the government supposed to do? Stand back and watch as every person who has a 401(k) account loses 35%-50% of it? These are not made up percentages by the way..I am a pension analyst and this is a reasonable range based on the large numbers of gain/loss calculations I've performed since the crisis hit.
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You can't just claim greed without saying how greed caused it. Also, what was the impact of the Fed's artificially low interest rates and what about the CRA? Were these all greed?

However, I feel like every time this sort of issue is brought up, proponents of a pure free market seem to gloss over this major issue: the government didn't go to the companies offering to buy them out. They came to the government - and, many of them did it to request that the government save them from a mess that they themselves created! It's with jaw-dropping disbelief I read comments about how terrible government is at managing companies - right, like these companies did such a bang-up job on their own?
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These companies went to the government, and the government gave them what they wanted. That's the problem.

They shouldn't have received one red cent in my opinion, but since the government did pay up it now has every right to set restrictions and have a say in how those companies are run. Yes, even after the fact. I'd have kicked ALL of the CEO's and the entire executive group of these failed companies out on their keisters - frankly, I thought they were treated with far more concern than they deserved. They are fortunate to still exist at all.
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They can only do what was allowed them in the original loan contract. Anything else is a breach of contract and immoral.
 
obvious Child said:

Does it bother you that he's right?
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He's not right. It's not his place to say what private companies should do.
obvious Child said:
Interestingly enough, a number of companies are moving towards this. Several companies have always done performance pay through long term criteria.

I'd be interested to see what Kandahar and his MBA have to say given the sheer lack of people with business backgrounds here.

AIG's London office where most of the CDS were made had a pay system where the London office kept 50% of its profits and sent the rest to the AIG HQ. Thus, driving them towards incentives to ignore the long term implications of the companies they were giving CDS to and focus on the pure short term bottom line. The focus was sell, sell, sell. Long term steady performance with little or no losses was not the key. Before regional banks went bonkers, many had performance pay packages where CEOs were paid according to how well a bank did over a course of several years. Stock options with time lines five, ten, fifteen years down the line also attempt to fix this. Anyone who's worked in a manufacturing plant will tell you that managers who are paid on sales will push products on customers while telling them they can return them later. How does that help the company's long term growth when all the manager is focused on is short term sales?

In my realm, that's channel stuffing, and it's highly illegal. But that's what you get when you focus on short term selling and ignore long term performance.
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That's the problem for the Company, not the US Government.
 
MrVicchio said:
He's not right. It's not his place to say what private companies should do.
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Come again?

So you're saying that emphasis on long term performance as a measure of pay is not correct over emphasis on short term performance as a measure of pay?

Obama is dead right on favoring long term performance as a measure of pay as being better than short term performance.

I'd ask you for a reason why he's wrong, but I know you will not have anything substantial to say and it's likely you don't understand the differences. So I won't.

His place to say and his statements are two different things. It's not his place to say it in general. But that does not change that what he said was correct. Short term pay systems have been linked to all kind of fraud. Long term performance measures generally do not have that kind of problem.

That's the problem for the Company, not the US Government
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It is when it leads to AIG's problem. If we have to bail you out because your performance measures all favored short term which directly caused to your problems, we have a right to at least inform you of your screw ups and suggest some advice.
 
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