What is wrong with the US economy? Part 2

[mgb_phys]

There's been a lot of work done on explaining what people are likely to do with increased income.

Sensible people will use it to pay off any credit card/mortgage debt and save the rest = bad.
Idiots will see this as more money in their pocket and buy imported consumer goods = bad.
Somebody will spend the money on local economic generating activates (like going to a restaurant) or invest it in wealth creating companies = good.

You are going to need a pretty accurately targeted tax cut!

 

[jal]

Tax breaks/cut are the most beneficial to the rich/wealthy/ in two ways.
1. They get to keep more of their profits.
2. They realize that an infrastructure spending plan may not benefit them and that it will eventually mean that they will get to pay a higher tax to pay back the gov. deficit spending.
jal

 

[Astronuc]

Tax breaks/cut are the most beneficial to the rich/wealthy/ in two ways.
1. They get to keep more of their profits.
2. They realize that an infrastructure spending plan may not benefit them and that it will eventually mean that they will get to pay a higher tax to pay back the gov. deficit spending.
jal

Warren Buffett made the point that he is undertaxed. His primary source of income is capital gains which are taxed at a much lower rate than income tax.

What some have done is move their cash/capital off-shore and then that is lent back to the US government, and so the gains are not taxed at all.

Here's an interesting commentary by Stiglitz:
http://www.cnn.com/2009/POLITICS/01/26/stiglitz.finance.crisis/index.html

Summary:
The bank bailout has failed to restart prudent lending by banks
Stiglitz says banks made reckless loans and were burned as a result
They borrowed so much money that they couldn't handle a downturn
Economist says it's time to consider government takeovers of weaker banks

. . .
Every day brings further evidence that the losses are greater than had been expected and more and more money will be required.

The question is at last being raised: Perhaps the entire strategy is flawed? Perhaps what is needed is a fundamental rethinking. The Paulson-Bernanke-Geithner strategy was based on the realization that maintaining the flow of credit was essential for the economy. But it was also based on a failure to grasp some of the fundamental changes in our financial sector since the Great Depression, and even in the last two decades.

For a while, there was hope that simply lowering interest rates enough, flooding the economy with money, would suffice; but three quarters of a century ago, Keynes explained why, in a downturn such as this, monetary policy is likely to be ineffective. It is like pushing on a string.
. . . .
Remarkably, Bush administration Treasury Secretary Henry Paulson and company simply didn't understand that the banks had made bad loans and engaged in reckless gambling. There had been a bubble, and the bubble had broken. No amount of talking would change these realities.
. . . .
Then came the idea of equity injection, without strings, so that as we poured money into the banks, they poured out money, to their executives in the form of bonuses, to their shareholders in the form of dividends.

Some of what they had left over they used to buy other banks -- to pursue strategic goals for which they could not have found private finance. The last thing in their mind was to restart lending.

The underlying problem is simple: Even in the heyday of finance, there was a huge gap between private rewards and social returns. The bank managers have taken home huge paychecks, even though, over the past five years, the net profits of many of the banks have (in total) been negative.

And the social returns have even been less -- the financial sector is supposed to allocate capital and manage risk, and it did neither well. Our economy is paying the price for these failures -- to the tune of hundreds of billions of dollars.
. . . .
Leverage, or borrowing, gives big returns when things are going well, but when things turn sour, it is a recipe for disaster. It was not unusual for investment banks to "leverage" themselves by borrowing amounts equal to 25 or 30 times their equity.

At "just" 25 to 1 leverage, a 4 percent fall in the price of assets wipes out a bank's net worth -- and we have seen far more precipitous falls in asset prices. Putting another $20 billion in a bank with $2 trillion of assets will be wiped out with just a 1 percent fall in asset prices. What's the point?
. . . .

Meanwhile - Tens of thousands more layoffs are announced
http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/business_outlook

A new survey by the National Association for Business Economics depicts the worst business conditions in the U.S. since the report's inception in 1982.

Thirty-nine percent of NABE's forecasters predicted job reductions through attrition or "significant" layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase.

The recession, which started in December 2007, and is expected to stretch into this year, has been a job killer. The economy lost 2.6 million jobs last year, the most since 1945. The unemployment rate jumped to 7.2 percent in December, the highest in 16 years, and is expected to keep climbing.
. . . .
Thousands more jobs cuts were announced Monday. Pharmaceutical giant Pfizer Inc., which is buying rival drugmaker Wyeth in a $68 billion deal, and Sprint Nextel Corp., the country's third-largest wireless provider, said they each will slash 8,000 jobs. Home Depot Inc., the biggest home improvement retailer in the U.S., will get rid of 7,000 jobs, and General Motors Corp. said it will cut 2,000 jobs at plants in Michigan and Ohio due to slow sales.

Caterpillar Inc., the world's largest maker of mining and construction equipment, announced 5,000 new layoffs on top of several earlier actions. The latest cuts of support and management employees will be made globally by the end of March. An additional 2,500 workers already have accepted buyout offers, and ties have been severed with about 8,000 contract workers worldwide. In addition, about 4,000 full-time factory workers already have been let go.
. . . .

Caterpillar says to cut 20,000 jobs
http://news.yahoo.com/s/nm/20090126/bs_nm/us_caterpillar

Home Depot to cut 7,000 jobs, close Expo chain
http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/home_depot_job_cuts

Pfizer to buy Wyeth for $68B; cut 8,000 jobs
http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/pfizer_wyeth_acquisition

 

[turbo]

Fallen Lehman Brothers Chief Executive Richard Fuld sold his $13.3 million mansion to his wife for just $100 last November, according to Florida real estate records.

Par for the course...

http://www.reuters.com/article/newsOne/idUSTRE50P04A20090126

 

[mheslep]

...l]

Summary:
...
Economist says it's time to consider government takeovers of weaker banks

Stiglitz cites the Swedish example? Sweden did indeed nationalize many banks. Why does Stiglitz not mention that Sweden later re-privatized those banks? Why, when proposing such a solution, does he not feel obligated to address the elephant in the room problem with nationalizing banks: politicians will want to personally direct who and who does not get loans. They already http://www.boston.com/news/nation/washington/articles/2009/01/23/frank_tried_to_get_hub_bank_a_bailout/" when given the opportunity.

 

[jal]

Economist says it's time to consider government takeovers of weaker banks

The US gov./tax payers does not have enough money. The system is bankrupt!
jal

 

[mgb_phys]

Meanwhile - Tens of thousands more layoffs are announced
http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/business_outlook


Caterpillar says to cut 20,000 jobs
http://news.yahoo.com/s/nm/20090126/bs_nm/us_caterpillar

Home Depot to cut 7,000 jobs, close Expo chain
http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/home_depot_job_cuts

Pfizer to buy Wyeth for $68B; cut 8,000 jobs
http://news.yahoo.com/s/ap/20090126/ap_on_bi_ge/pfizer_wyeth_acquisition

But it's not all bad news, citigroup bank just bought a new $50M jet
http://www.nypost.com/seven/01262009/news/nationalnews/just_plane_despicable_152033.htm

 

[Potential]

I think C is trying to back the $50M jet deal out after a senator began to take action.

 

[mgb_phys]

I think C is trying to back the $50M jet deal out after a senator began to take action.

Idiots, you don't buy a Jet in a recession, you lease it through a dozen intermediate subsidiaries registered in different Caribbean tax havens while claiming tax relief on all the money transfers.
These crooks (sorry banks) have just got lazy - what happened to proper organised crime ?

 

[Potential]

LOL. I wouldn't worry too much about the layoffs. Once the $1B M3 issued via private corporation Federal Reserve hits our pockets, start looking for the next bubble. A hyper-bubble, like no bubble we have seen before. Bubble went from Japan, to US, to China, in almost successive decades. The next bubble may be India. Or it could be precious metals. Price peak around 2014. All the cash has to go somewhere, right? Once the momentum starts in an investment vehicle, all the cash seems to be sucked by that vehicle. Could be like a hyper-Hoover vacuuum cleaner on steroids.

 

[Astronuc]

Stiglitz cites the Swedish example? Sweden did indeed nationalize many banks. Why does Stiglitz not mention that Sweden later re-privatized those banks? Why, when proposing such a solution, does he not feel obligated to address the elephant in the room problem with nationalizing banks: politicians will want to personally direct who and who does not get loans. They already http://www.boston.com/news/nation/washington/articles/2009/01/23/frank_tried_to_get_hub_bank_a_bailout/" when given the opportunity.

I don't necessarily agree with any solution that Stiglitz mentions. I'm not thrilled with the bailout, the way it was handled, or the results, or the next stimulus package. The people involved in this seem to be the same people who didn't see this coming, so why should they be trusted to develop an effective solution.


But 9 out of 10 bank CEOs are still employed despite the loses and the need for government bailout.
AP IMPACT: Bank layoffs mount as execs get bailout
http://news.yahoo.com/s/ap/20090127/ap_on_go_ca_st_pe/meltdown_executives


Meanwhile - Corning cuts 3,500 jobs as 4Q profit slumps
http://news.yahoo.com/s/ap/20090127/ap_on_bi_ge/earns_corning

or - Corning slashes up to 4,900 jobs to cut costs
http://news.yahoo.com/s/nm/20090127/bs_nm/us_corning

DuPont posts fourth-quarter loss, trims 2009 outlook
http://news.yahoo.com/s/nm/20090127/bs_nm/us_dupont

NEW YORK (Reuters) - DuPont Co posted a bigger-than-expected fourth-quarter loss on Tuesday, hurt by restructuring-related charges, a widening global recession and a slump in consumer spending, and the chemical maker lowered its 2009 earnings outlook.

 

[Astronuc]

The Commerce Department is set to release a report Friday expected to show the economy shrank at a pace of 5.4 percent in the October-December period, a much faster descent than the 0.5 percent decline logged in the prior quarter. If economists' forecasts are correct, it would mark the weakest quarterly showing since an annualized drop of 6.4 percent in the first quarter of 1982, when the country was suffering through a severe recession.

. . . .

http://biz.yahoo.com/ap/090130/economy.html

The report be out in the next couple of hours.


Update: Economy shrinks at 3.8 percent pace in fourth quarter, worst showing in quarter-century

WASHINGTON (AP) -- The economy shrank at a 3.8 percent pace at the end of 2008, the worst showing in a quarter-century, as the deepening recession forced consumers and businesses to throttle back spending.
. . . .
For all of 2008, the economy grew by just 1.3 percent. That was down from a 2 percent gain in 2007 and marked the slowest growth since the last recession in 2001.
. . . .

 

[Gokul43201]

I finally heard something on NPR a couple days ago about setting up a "bad bank". I never actually got to hear that news story (I was driving), but I guess this is something like the RTC of the post S&L era. If this is true, why has it taken so long to propose an RTC-like plan? I remember mheslep suggesting it here several months ago (Oct 08?), and I thought it was a (relatively) good idea back then. But I'm a layman when it comes to economics.

So what are the disadvantages of setting up such a "bad bank" to absorb toxic assets? Is it just the slippery slope argument or is there a bigger criticism (I think we've embarked on a slippery slope of a different kind with bailouts anyway)?

 

[Astronuc]

I finally heard something on NPR a couple days ago about setting up a "bad bank". I never actually got to hear that news story (I was driving), but I guess this is something like the RTC of the post S&L era. If this is true, why has it taken so long to propose an RTC-like plan? I remember mheslep suggesting it here several months ago (Oct 08?), and I thought it was a (relatively) good idea back then. But I'm a layman when it comes to economics.

I think the delay was due to the national election - new administration, and new congress - and perhaps some belief that the $700 billion + $300-400 billion spent on Fannie Mae, Freddie Mac, AIG, . . . would do the trick.

So what are the disadvantages of setting up such a "bad bank" to absorb toxic assets? Is it just the slippery slope argument or is there a bigger criticism (I think we've embarked on a slippery slope of a different kind with bailouts anyway)?

I guess it comes down to who pays what, and how does one recover the investment. There is also the matter of conflicting philosophy about how much the government gets involved in micromanaging the economy.

What is the magic formula?


I would have thought that if people can't pay on a 30-yr mortgage, then set it to 40 year or whatever they can pay. I think the problem is that too many people got hit with high interest rates on their mortgages (from adjustable rate mortgages), a problem compounded by higher prices for basics, like fuel, food, medicine, . . . .

I'm not sure the magnitude of the problem, but I think a lot of the overleveraging is related to financing lifestyles on high interest credit cards, i.e. > 10% APR, and more like 18 - 30%, i.e. the 'subprime' credit card. The bust came when too many people could not pay (service) the cumulative debt. Many were forced to stop spending, which had an adverse impact on an economy that is about 2/3's consumer spending.

 

[mgb_phys]

I'm not sure the magnitude of the problem, but I think a lot of the overleveraging is related to financing lifestyles on high interest credit cards, i.e. > 10% APR, and more like 18 - 30%, i.e. the 'subprime' credit card. The bust came when too many people could not pay (service) the cumulative debt. Many were forced to stop spending, which had an adverse impact on an economy that is about 2/3's consumer spending.

And ironically now if everyone starts behaving responsibly - saving and not buying junk, the economy goes into a depression!

 

[mheslep]

...I would have thought that if people can't pay on a 30-yr mortgage, then set it to 40 year or whatever they can pay. ...

No! We want people to build more wealth, not bleed their futures dry with interest payments. The total interest paid on a $100k/30 yr/6% loan is ~$116k. The same loan over 40 years costs $164k in interest, i.e. it puts the lender $50k further out of pocket and probably still paying off a mortgage well into retirement. The thing to do if these mortgages must be renegotiated long term is to force a lower rate. That will give the mortgage backed securities a haircut, probably all of them since the blasted things are opaque.

 

[Astronuc]

Wall Street Bonuses May Go Way of Dodo Amid Bailouts
http://news.yahoo.com/s/bloomberg/20090130/pl_bloomberg/assovtyss6g8

Jan. 30 (Bloomberg) -- The Wall Street bonus, considered a sacred ritual, may become the industry’s biggest casualty as governments worldwide bail out financial institutions.

UBS AG was told to reduce bonuses after the Swiss government gave the country’s biggest bank a $59.2 billion lifeline. Bank of America Corp. is under pressure to scale back payouts after New York Attorney General Andrew Cuomo subpoenaed executives earlier this week for information on compensation and President Barack Obama said just yesterday that bonuses handed out by banks represent “the height of irresponsibility.”

The current system of “asymmetric compensation,” in which people are rewarded when they do well and aren’t required to return the rewards when they lose money, is detrimental to society and needs to change, said Nassim Taleb, a professor at New York University and author of “The Black Swan: The Impact of the Highly Improbable,” in an interview.

The worst economic crisis since the Great Depression, a $700 billion taxpayer bailout in the U.S. and the demise of three of the biggest securities firms -- Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. -- didn’t deter investment banks from offering year-end rewards to employees on top of their salaries.

Financial companies in New York City paid cash bonuses of $18.4 billion last year, the sixth-most in history, even as they posted record losses, according to data compiled by the office of state Comptroller Thomas DiNapoli. The payouts are split among everyone from managing directors to secretaries.

. . . .

That's good for NY State. Then on the other hand, the state was spending more based on the assumption the bonuses (and tax revenue) would be greater.

 

[Astronuc]

No! We want people to build more wealth, not bleed their futures dry with interest payments. The total interest paid on a $100k/30 yr/6% loan is ~$116k. The same loan over 40 years costs $164k in interest, i.e. it puts the lender $50k further out of pocket and probably still paying off a mortgage well into retirement. The thing to do if these mortgages must be renegotiated long term is to force a lower rate. That will give the mortgage backed securities a haircut, probably all of them since the blasted things are opaque.

Or people can just wait, and rent, until they can put down 10% or 20%, eh?

How about limits on maximum interest rates for mortgages and credit cards? Or people should just not borrow money.

Certainly the consumers want lower interest rates and to build wealth. But the people who loan the money want high rates of return so they can build even more wealth. It's the trickle up theory of money and capital. Those with the most money collect more money.


Update: Freddie Mac to rent foreclosed properties
http://news.yahoo.com/s/ap/20090130/ap_on_bi_ge/mortgage_giants_renters_3

Freddie Mac offering rents to foreclosed borrowers
http://news.yahoo.com/s/nm/20090130/us_nm/us_freddiemac_foreclosure_policy_1

No equity, but a place to live.

 

[Astronuc]

Stocks stumble as investors fear worsening economy
http://biz.yahoo.com/ap/090130/wall_street.html
Friday January 30, 6:41 pm ET
By Sara Lepro, AP
Stocks finish lower as investors fear worsening economy, worry 'bad bank' idea has hit snag

NEW YORK (AP) -- Wall Street ended its worst January ever by stumbling again over the banking system and the economy.

The major indexes all fell sharply for the second straight day, leaving the Dow Jones industrial average and Standard & Poor's 500 index with record percentage drops for January -- 8.84 percent and 8.57 percent, respectively. Some market watchers believe that's a bad omen for the rest of the year, as the market usually ends a year down after having fallen in January.

. . . .

Eleven months to go.

 

[jal]

If you thought that your ideas to fix the economic problems were not being considered or your solutions not being considered, then read the following from Reuters.
http://blogs.reuters.com/great-debate/2009/01/27/turning-the-tables-can-you-help-davos-leaders/
Turning the tables: Can you help Davos leaders?
======
Here is the web site:
http://www.weforum.org/en/events/AnnualMeeting2009/index.htm
Annual Meeting 2009
Davos-Klosters, Switzerland, 28 January - 1 February
"Shaping the Post-Crisis World"
=======
Obama is furious at Wall Street executives giving themselves billions of dollars in bonus.
The delegates at the Davos meeting feel the same way.

There is no law against giving yourself millions of dollars.
There is no way Obama can stop it. He cannot take away the TARP money and have the banks go bankrupt.

A new world order would make it against the laws for anyone to make more money than the man who has the most responsibility. No one can demonstrate that they have more responsibility than the president of the USA. Therefore, bonus etc. should be lower than that of the president of the USA.

A reporter asked the question to the White House Press secretary. duhduhduh
Cnn has also opened up a discussion on "fair pay/compensation" being no more than the president.
jal

 

[Astronuc]

January 31, 2009
Steep Slide in Economy as Unsold Goods Pile Up
http://www.nytimes.com/2009/01/31/business/economy/31econ.html
By LOUIS UCHITELLE

The economy shrank at an accelerating pace late last year, the government reported on Friday, adding to the urgency of a stimulus package capable of bringing the country back from a recession that appears to be deepening.

The actual decline in the gross domestic product — at a 3.8 percent annual rate — fell short of the 5 to 6 percent that most economists had expected for the fourth quarter. But that was because consumption collapsed so quickly that goods piled up in inventory, unsold but counted as part of the nation’s output.

“The drop in spending was so fast, so rapid, that production could not be cut fast enough,” said Nigel Gault, chief domestic economist at IHS Global Insight. “That is happening now, and the contraction in the current quarter, as a result, will probably exceed 5 percent.”

. . . .

The current quarter should reflect the reduction in production.

 

[russ_watters]

No! We want people to build more wealth, not bleed their futures dry with interest payments. The total interest paid on a $100k/30 yr/6% loan is ~$116k. The same loan over 40 years costs $164k in interest, i.e. it puts the lender $50k further out of pocket and probably still paying off a mortgage well into retirement.

One important caveat, though: virtually everyone makes more money as they get older, so buying a house on terms like that may be intended as a temporary thing for, say, 5 years, until a person is making enough money to afford a higher payment, at which point they refinance. One of my coworkers is 40 and after something like 7 years in his 30 year mortgage, just recently refinanced with a 20 year mortgage.

 

[Proton Soup]

believe it or not, people used to buy much smaller houses. and the prices of autos were not doubled with a bunch of gizmos that have nothing to do with propulsion.

 

[turbo]

believe it or not, people used to buy much smaller houses. and the prices of autos were not doubled with a bunch of gizmos that have nothing to do with propulsion.

My wife and I used to own a large house - more room than we needed, on a cul-de-sac in a nice neighborhood. The town started jacking up our property taxes, so we looked for a much smaller house in a town with reasonable tax rates, and unloaded the big house while the real-estate market was still pretty hot. We bought that big place simply because it was available at a VERY reasonable price, and I was working shift-work, so my wife was home alone at night a lot. I felt much better about her being alone in a very quiet neighborhood with neighbors we knew all around us. Our little log cabin is on a single floor, with no steps to climb, and it's easy to heat with reasonable taxes. All good things as we get older.

 

[OmCheeto]

There is no law against giving yourself millions of dollars.

There might be on Monday.

http://www.deccanherald.com/DeccanH...foreign20090131115733.asp?section=updatenews"
Deccan Herald
Saturday, January 31, 2009

Senator Claire McCaskill from Missouri yesterday introduced the legislation in the Senate in a bid to cap the top executives' salary at USD 400,000, which is also the pay package of the US President.

A Democratic lawmaker has introduced a legislation in the US Senate proposing to limit to USD 400,000 the salary of top bosses of any company that accepts federal bailout money, a day after President Barack Obama blasted Wall Street firms for their "shameful" act to dole out USD 18 billion in bonuses to CEOs.

If I recall correctly, there is a law in India that says no one can make more than the president there. Someone should do the math on how much the Forbes 400 would be worth collectively if this law had passed 20 years ago.

But what a silly idea.

 

[russ_watters]

believe it or not, people used to buy much smaller houses. and the prices of autos were not doubled with a bunch of gizmos that have nothing to do with propulsion.

Yes, I know. I have a better TV than my parents ever had too. Progress is great!

 

[mheslep]

There might be on Monday.
If I recall correctly, there is a law in India that says no one can make more than the president there. Someone should do the math on how much the Forbes 400 would be worth collectively if this law had passed 20 years ago.

But what a silly idea.

Well the proposal is not for everybody, just for "any company that accepts federal bailout money."

Edit: Many executives might actually jump at that presidential salary cap if it also came with the associated benefits, a four year lease on a private 747 jet (2), bullet proof limo (2), fleet of helicopters, world class security detail and communications, mansion on ~10 acres in the middle of DC with a residential staff of ~100, office staff of another ~100, 100s of acres for Camp David, etc. In other words, the value of the President's compensation is at least several $100m/yr, probably over $1B/yr.

 

[OmCheeto]

Well the proposal is not for everybody, just for "any company that accepts federal bailout money."

I thought they all were?

 

[turbo]

I would like to see some sort of salary caps for executives that are based on the average wages at their company. Something like "CEO's cannot be paid more than X times the compensation of the average compensation paid to all workers." It would also be a good idea to forbid the granting of stock options to executives - that promotes short-term thinking, stock manipulation through inflated or deflated earnings reports, and insider-trading. None of that activity actually produces wealth for our country - it's pretty much organized crime.

 

[mgb_phys]

Yes, I know. I have a better TV than my parents ever had too. Progress is great!

But in real dollars your 4" plasma cost the same as their 1970-20" color, which cost the same as their first 1950 B+W.
Whereas in cars the real dollar price keeps going up and is justified with bigger engines, DVD players and cup holders. Why can't I buy the equivalent of a 2CV, original mini or VW beetle.

 

[mheslep]

I would like to see some sort of salary caps for executives that are based on the average wages at their company. Something like "CEO's cannot be paid more than X times the compensation of the average compensation paid to all workers." It would also be a good idea to forbid the granting of stock options to executives - that promotes short-term thinking, stock manipulation through inflated or deflated earnings reports, and insider-trading. None of that activity actually produces wealth for our country - it's pretty much organized crime.

I've asked this before: why just CEOs? Why not big tort lawyers, professional athletes, movie stars? Why the continual call to arms only against business leaders? That is the people, at least some of them, that actually build things?

 

[mheslep]

I thought they all were?

From your link:
"...A Democratic lawmaker has introduced a legislation in the US Senate proposing to limit to USD 400,000 the salary of top bosses of any company that accepts federal bailout money,"

 

[turbo]

I've asked this before: why just CEOs? Why not big tort lawyers, professional athletes, movie stars? Why the continual call to arms only against business leaders? That is the people, at least some of them, that actually build things?

Because they are employers, not employees. If Carl Icahn can land a big movie deal or pitch for the Yankees, let him pull in a big contract as an employee. If he wants to make a ton of money every year, let him take his company(s) private and make his own rules. Publicly-traded companies should be subject to rules and regulations, for the good of our country, and salary-caps, elimination of stock-options, would be a fair way to accomplish this. If the big boys like Warren Buffet, T Boone Pickens, etc, want to go private, they should be able to make their own rules regarding compensation. If they want to keep their companies in the stock market, there should be limits on their compensation. Companies that are traded publicly should be treated as a public resource that cannot be raided and looted by excessive compensation, golden parachutes, insider trading, and short-term stock-price manipulation. We have had enough of this unfettered socialist "pretend" capitalism in which profit is privatized and risk is socialized.

 

[Proton Soup]

Yes, I know. I have a better TV than my parents ever had too. Progress is great!

that's really not the point. people are buying much more than they need. more than they can really afford. with smaller families to boot. it's not at all about progress. more often than not, it's about trying to maintain an image of prosperity, or putting on airs as people would once say.

also, for those of you that are environmentally-sensitive, it's a huge step backwards. it takes a lot of energy and resources to go on like this.

 

[mheslep]

Because they are employers, not employees. If Carl Icahn can land a big movie deal or pitch for the Yankees, let him pull in a big contract as an employee. If he wants to make a ton of money every year, let him take his company(s) private and make his own rules. Publicly-traded companies should be subject to rules and regulations, for the good of our country, and salary-caps, elimination of stock-options, would be a fair way to accomplish this. If the big boys like Warren Buffet, T Boone Pickens, etc, want to go private, they should be able to make their own rules regarding compensation. If they want to keep their companies in the stock market, there should be limits on their compensation.

Ok, that's an additional detail from the earlier post: you're restricting the cap to just publicly traded firms. Of course every big movie star, every big lawyer is an employer. They all have staff which may or may not be well paid.

Companies that are traded publicly should be treated as a public resource ...

Whoa. A public resource? Like water and parks? I start a company and play by the rules. It does well and a I then decide to sell some shares publicly, then the company becomes public resource by declaration? By that logic, any non shareholder, is then entitled to come take a part of it? Pitch a tent in the office?