President is going to kill free market

[Illum]

"This is a major power grab by the White House on the heels of another power grab from (Treasury) Secretary Geithner who asked last week for the freedom to decide on his own which companies are 'systemically' important to our country and worthy of taxpayer investment and which are not".....

....."This is a marked departure from the past, truly breathtaking,'' the Tennessee Republican said, "and should send a chill through all Americans who believe in free enterprise."

Sen. Bob Corker

 

[Pa(b)st Prime]

Quote from zdreg:

free markets went out the window when the interests of management diverged from that of the majority of shareholders. the balance of power shifted to the professional managers. management became greedy bloodsuckers and looters of the co's they worked for. they stopped caring about the long term interest of shareholders.

Since I've been around from pre-bull market days I'll take the other side of your argument.

I blame shareholders just as much. Until the early 80's most CEO's weren't judged by their stock price. Then tired investors who'd seen their shares trade sideways for years demanded dynamic leadership. CEO's who cut jobs (fat), shut down factories, expanded into glamour industries they knew nothing about, i.e. Jack Walsh buying NBC or deftly accessed credit markets became darlings of the marketplace. Shareholders were stoked! Who cares if you're selling off valuable assets or replacing it with shite, I want to see a solid Quarter!

In turn CEO's saw mutual fund managers making millions in comp because they bought high flying stocks run by performing management. CEO's said, "where's mine?" Should Peter Lynch make more from Fidelity for buying my stock than I make for running the company? Institutional shareholders agreed and voila' we enter the era of stock options. Then after the 2000-2003 crash management said "I'm tired of being at the mercy of the mercurial stock market, I want guaranteed comp." Finally exec pay became a hybrid of both.

Keep in mind Brian Williams makes close to Immelt's salary. Ad guys with GM as their account make more than Wagoner did. Hell GM paid Tiger Woods more for his Buick ads than management ever made.

I NEVER call another person greedy. Jeez I'm nothing but an unproductive, gosh darned SPECULATOR. Who am I to point a finger at another mans quest for riches?

 

[WaveStrider]

Quote from Pa(b)st Prime:

Jeez I'm nothing but an unproductive, gosh darned SPECULATOR. Who am I to point a finger at another mans quest for riches?

That's true - but the difference is, the gov't isn't bailing you out.

Being greedy with a gov't guarantee is different.

 

[MandelbrotSet]

Quote from WaveStrider:

That's true - but the difference is, the gov't isn't bailing you out.

Being greedy with a gov't guarantee is different.

... and there's the rub.

The Government is only taking an active hand in running companies to which it is giving bailout money to. If the leadershp of these companies were (even remotely) compenent they wouldn't need the Government money.

On top of that, it is well known that the financial institutions' risk management analysis were screaming bloody murder years before the shit hit the fan, and in return for their foresight, they were rewarded with being thrown out the door.

These companies brought this shit on themselves, and they are getting what they so justly deserve.

P.S. In the case of Wagner, he was just an incompetent bozo who was shown the door ... think of it as a coup brought on by rival shareholders who wrested control of the company from an incompetent idiot. And did you see the picutures of the CEO's of the major banks after their meeting with Obama?

LOL, I bet he put his foot in their ass 'sure-nuff and set them on the straight-and-narrow.

 

[Martinghoul]

In many ways I agree with Pabst and would even go as far as generalizing his idea to make a sorta philosophical point.

To me, as usual, it's a case of too much of a good thing turning out to be lethal. At its peak, the US system, more than any other, was the pinnacle of Pareto-optimal capitalism, with inordinate rewards allocated to entrepreneurship, risk-taking and good old ingenuity. That was what the American Dream was all about. However, everyone forgot that, fundamentally, a Ponzi scheme is also an example of ingenuity and entrepreneurship. So is giant leverage, option ARMs etc etc. All these things are examples of the flip side of the 'American Dream' that were completely forgotten while the euphoria lasted.

I suppose what I am really describing is the incentive/agency problem that people keep going on about when they talk about bank traders etc. And what I am trying to say is that this agency problem was actually all-encompassing, from the lowliest subprime borrower to the politician in the most senior position. This incentive problem is the dark ugly side of the 'free market' ideology and the American Dream.

Given all that, is it a huge surprise that it's time to pay the piper and swallow the bitter medicine? Not at all...

 

[Pa(b)st Prime]

I'd argue the auto companies are quite a bit different. Big Brother was hat in hand with the unions, emissions and consumption standards and turned a blind eye to Asian manufacturers "dumping" products in the U.S.

After GM fucks the UAW they'll be a solid play. Trouble is that will only occur in their next life as a bulletin board stock.

Quote from MandelbrotSet:

... and there's the rub.

The Government is only taking an active hand in running companies to which it is giving bailout money to. If the leadershp of these companies were (even remotely) compenent they wouldn't need the Government money.

On top of that, it is well known that the financial institutions' risk management analysis were screaming bloody murder years before the shit hit the fan, and in return for their foresight, they were rewarded with being thrown out the door.

These companies brought this shit on themselves, and they are getting what they so justly deserve.

 

[Pa(b)st Prime]

Along the same line people "losing" their homes is nothing new but in a rising real estate market what was then flipping is now called foreclosure.

Quote from Martinghoul:

In many ways I agree with Pabst and would even go as far as generalizing his idea to make a sorta philosophical point.

To me, as usual, it's a case of too much of a good thing turning out to be lethal. At its peak, the US system, more than any other, was the pinnacle of Pareto-optimal capitalism, with inordinate rewards allocated to entrepreneurship, risk-taking and good old ingenuity. That was what the American Dream was all about. However, everyone forgot that, fundamentally, a Ponzi scheme is also an example of ingenuity and entrepreneurship. So is giant leverage, option ARMs etc etc. All these things are examples of the flip side of the 'American Dream' that were completely forgotten while the euphoria lasted.

Given all that, is it a huge surprise that it's time to pay the piper and swallow the bitter medicine? Not at all...

 

[MandelbrotSet]

Quote from Pa(b)st Prime:

I NEVER call another person greedy. Jeez I'm nothing but an unproductive, gosh darned SPECULATOR. Who am I to point a finger at another mans quest for riches?

Speculation is one of the purest forms of making money in a "legitamate" fashion that <strike>this country</strike> any capitalist system has ever seen, and if you screw-up the only ones affected are yourself and your family.

Being senior management of a major company, whether it be the auto industry, banking industry, computer and electronics, communications, etc. has more ... constraints on what one can-and-cannot do in one's quest for riches.

Ultimately to achieve this wealth one has to manage your risk appropriately ... and no one seems to be too interested in doing that these days. :eek:

 

[Pa(b)st Prime]

We're both unabashed fans of trading and free markets-and yes I'll egotistically say we're purer but our motivation is the same as others. But I'll concede your point: If they want to be like us than take the same personal risk as us.

Quote from MandelbrotSet:

Speculation is one of the purest forms of making money in a "legitamate" fashion that this country has ever seen, and if you screw-up the only ones affected are yourself and your family.

Being senior management of a major company, whether it be the auto industry, banking industry, computer and electronics, communications, etc. has more ... constraints on what one can-and-cannot do in one's quest for riches.

Ultimately to achieve this wealth one has to manage your risk appropriately ... and no one seems to be too interested in doing that these days. :eek:

 

[JB3]

Quote from Pa(b)st Prime:

I'd argue the auto companies are quite a bit different. Big Brother was hat in hand with the unions, emissions and consumption standards and turned a blind eye to Asian manufacturers "dumping" products in the U.S.

After GM fucks the UAW they'll be a solid play. Trouble is that will only occur in their next life as a bulletin board stock.

The sooner we get rid of unions, the better our auto companies can compete and maybe....turn a profit. :eek:

But how many people really believe Obama is going to F the UAW? I think a lot of posturing and a token sacrifice of the CEO, but it'll be business as usual. Write another check, and it'll just keep going on. I would celebrate when UAW gets their asses handed to them for being lazy and greedy for too many years.