113
   

Where is the US economy headed?

 
 
cicerone imposter
 
  1  
Reply Thu 23 Apr, 2009 10:16 am
@Foxfyre,
So did most of the big bosses who ran our banks and finance companies.
0 Replies
 
old europe
 
  1  
Reply Thu 23 Apr, 2009 10:27 am
@Foxfyre,
Foxfyre wrote:
Those with little to lose are certainly more likely to take greater risks than otherwise would be the case. But to assume that any executive wants to 'retire' as a failure or with the stigma that he drove his company into the ground flies in the face of everything I know about human nature.


I'm not accusing each and every CEO of being a psychopath. However, I think that if we're talking about companies that, due to their size, can almost single-handedly bring down an entire sector of the economy when they fail, I don't want trust in human nature to be the only safeguard against these things.


Foxfyre wrote:
And what is the CEO to do? Just ignore the massive profits and prospering stock of their competitors and lose their own stockholders who are impressed by those big profits? Or do they get on the bandwagon and ride the tide?


Well, you're essentially repeating Marxist arguments here when you're saying that a CEO doesn't even have a choice when faced with the decision of whether to act morally or to make bigger profits.


Foxfyre wrote:
I do not think I am misplacing the blame at all. Yes we could expect all those executives to ignore assurances from their government that all was well.


I'm not sure you want to go down that road. Are you really arguing that it is the duty of the government to make accurate predictions about the way the markets and the economy are going, and that business consequentially has no other obligation but to rely on those government predictions?


Foxfyre wrote:
We could expect them to be smarter are more on top of things than the people we elect to provide oversight. Or we could expect the government to do its job and tell it like it is and THEN blame the executives if they ignored the warnings.


So in your opinion the government should issues warnings about economical development. Business, presumably, is free to either follow or ignore those warnings, but if a company ignores the warnings and then fails, then we all get to blame the executives.

And this would prevent a financial meltdown how?
0 Replies
 
okie
 
  1  
Reply Thu 23 Apr, 2009 10:34 am
@Foxfyre,
Foxfyre wrote:

Those with little to lose are certainly more likely to take greater risks than otherwise would be the case.

Exactly. If people could go out and buy loans right now, knowing they could sell them to Fannie and Freddie at a profit, alot of people would do it.

If I could go out and buy junk cars and sell them to a junk dealer for a profit, why not? If the junk dealer later finds out he made a miscalculation and the junk cars weren't worth anything, is that the middle man, or is that the junk car dealer? I think its the junk car dealer. And in this case, the junk car dealer was the government, Fannie and Freddie, and the junk car dealer was paying huge bonuses to Franklin Raines, Jamie Gorelick, etc., and also paying big campaign donations to Obama, Dodd, etc.

And did I hear they are still paying out bonuses? When are these organizations going to be investigated in detail and the crooks thrown in jail?

P.S. Why is oe so hellbent on making the case it was not the Democrats fault? After all, he lives in Germany, and why should he actually care?
cicerone imposter
 
  1  
Reply Thu 23 Apr, 2009 10:37 am
@okie,
I guess you never heard of "derivatives."
0 Replies
 
old europe
 
  1  
Reply Thu 23 Apr, 2009 10:46 am
@okie,
okie wrote:
P.S. Why is oe so hellbent on making the case it was not the Democrats fault? After all, he lives in Germany, and why should he actually care?


I'm not "hellbent" on blaming a specific party. I'm just saying that you, out of partisanship, seem to ignore how a specific party contributed to the financial meltdown.

And sure, I could just say that I couldn't care less about all of this, but the global financial markets don't stop at the American border. Let me put this into perspective for you:

Quote:
The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.
0 Replies
 
Foxfyre
 
  1  
Reply Thu 23 Apr, 2009 11:21 am
@okie,
okie wrote:

Foxfyre wrote:

Those with little to lose are certainly more likely to take greater risks than otherwise would be the case.

Exactly. If people could go out and buy loans right now, knowing they could sell them to Fannie and Freddie at a profit, alot of people would do it.

If I could go out and buy junk cars and sell them to a junk dealer for a profit, why not? If the junk dealer later finds out he made a miscalculation and the junk cars weren't worth anything, is that the middle man, or is that the junk car dealer? I think its the junk car dealer. And in this case, the junk car dealer was the government, Fannie and Freddie, and the junk car dealer was paying huge bonuses to Franklin Raines, Jamie Gorelick, etc., and also paying big campaign donations to Obama, Dodd, etc.

And did I hear they are still paying out bonuses? When are these organizations going to be investigated in detail and the crooks thrown in jail?

P.S. Why is oe so hellbent on making the case it was not the Democrats fault? After all, he lives in Germany, and why should he actually care?


Yes, the problem with all those risky loans is that the people getting them were putting little or nothing of their own resources into the loan and therefore had nothing to lose if they defaulted on the loan. They were risking nothing and were offering no assurance or even incentive to repay their loan.

But what OE was talking about was that the CEO's who walked away with millions had nothing to lose if they risked their companies and bankrupted it. My point was that this flies in the face of human nature that any CEO would choose bankruptcy over a successful business and the prestige that is granted those who achieve excellence and success. People usually don't get into positions like that without achieving a certain reputation of competence.

But your point is well taken that lack of government oversight was absolutely a bipartisan effort. The impetus to irresponsibly provide cheap housing to the poor was pretty much a Democratic effort and initiative, but the GOP controlled Congress 2001 to 2006 nor the Democratic Congress 2007 through 2008 did anything to head off or mitigate the damage when the alarm was first sounded. To President Bush's shame, he was not able to convince those in charge to act; to his credit he did try to convince them for years prior to the bubble bursting.

0 Replies
 
realjohnboy
 
  1  
Reply Fri 24 Apr, 2009 03:27 pm
Good evening. I invoke the 24-hour rule under which the subject here can move on.
THE PAIN IN SPAIN
I note that numbers out today report that the unemployment rate in Spain has hit 17.4%. 4m people without a job vs 2m a year ago.
The govt intends to spend $100B in stimulus money, directed towards public infrastructure projects. Critics argue that there is lot of red tape that restrict employers' flexibility in adjusting permanent staff levels. As a result, employers are hiring "temps."
SO, I AM WONDERING how you in Europe (or elsewhere) feel about the situation there. Already strained relations between "natives" and "immigrants" can only get worse in light of the deteriorating employment numbers, I think.
I would appreciate yall's thoughts.
realjohnboy
 
  1  
Reply Fri 24 Apr, 2009 03:44 pm
@realjohnboy,
realjohnboy wrote:


SO, I AM WONDERING how you in Europe (or elsewhere) feel about the situation there.


"There" being Europe, not just Spain.
0 Replies
 
hamburger
 
  1  
Reply Fri 24 Apr, 2009 04:09 pm
@realjohnboy,
rjb :

re. the pain in spain
...............................
not really that surprising . mrs h likes watching a british realestate show on HG-TV .
the brits were buying houses and condos in spain (and portugal) like crazy - even before the houses were finished .
since the british economy went down the tube , the brits have had to stop buying a second residence in spain .
btw. the prices for those houses and condos were just really outrageous .
probably some good bargains now .

it happened before . germans were buying a lot of summer -residences in spain in the late 70's . but in the early 80's whole condo developments along the costa del sol were abandoned half-finished - the germans had stopped buying .

i understand that myrtle beach has also seen condo prices crash - 50% off seems not unusual a/t real estate ads .

sitting tight in ontario .
just rec'd my investment stament for march 31 : my mutual fund were up by about 5 % in two months - now if i forget that they had quite a tumble , i would be deliriously happy .
hbg

cicerone imposter
 
  1  
Reply Fri 24 Apr, 2009 05:09 pm
@hamburger,
There are now great bargain at costa del sol for vacationers; after paying for the original week that includes airfare, one can stay a week for about $250.
hamburger
 
  1  
Reply Fri 24 Apr, 2009 08:09 pm
@cicerone imposter,
here is hoping the airline doesn't go belly up and leaves you stranded - just happened to canadian vacationers in mexico - though the insurance fund paid-up after a few days of hassels .
cicerone imposter
 
  1  
Reply Fri 24 Apr, 2009 08:17 pm
@hamburger,
I still haven't made any travel plans for this year (a first time for me), but plan to visit our son in Austin in the fall. Got an offer on a trip to Bali at one of their high-tone resorts for $1800 for seven days that include airfare on Singapore Airlines, but have been sitting on it for a couple of days. For one, I need a roommate for that trip, and two, I'm not sure I want to go a such a long flight.
okie
 
  1  
Reply Fri 24 Apr, 2009 10:37 pm
@cicerone imposter,
Why don't you donate the $1,800 to the government to reduce the debt? That would be less greedy. Voluntary tax payments are allowed, ci.
cicerone imposter
 
  1  
Reply Fri 24 Apr, 2009 10:45 pm
@okie,
I would have, except you ruined the whole idea.
0 Replies
 
okie
 
  1  
Reply Fri 24 Apr, 2009 11:48 pm
"Debt Day: A Symbol of Washington’s Arrogant Culture of Borrowing and Spending
Washington, Apr 22 - Next week, the Obama Administration will mark its 100th day in power. The first three-plus months of this Administration have been turbulent, to say the least. Confronted with the most severe economic crisis in generations, President Obama and congressional Democrats have set out on a spending spree the likes of which our nation has never seen. In fact, the Administration has spent more in its first 100 days than all previous presidents have combined " hardly a distinction of which to be proud. "


http://republicanleader.house.gov/News/DocumentSingle.aspx?DocumentID=123296


cicerone imposter
 
  1  
Reply Sat 25 Apr, 2009 08:28 am
@okie,
okie, You, ignoramus; show us once when you shouted the same when Bush was in power and spent trillions, and put our country into more debt? Debt that was not for the American people, but for wars and spending to grow our government?

Obama has no choice but to spend billions now to save our economic lives, and that includes you and your family. I'm sure you and your family has been sheltered from a loss in home equity and retirement savings, and all of you still have jobs.

You're such a dork, I wonder where your brain resides?





cicerone imposter
 
  1  
Reply Sat 25 Apr, 2009 04:08 pm
@cicerone imposter,
Looks like banks and finance companies are back to playing games with derivatives and funny money games.

Quote:
After Off Year, Wall Street Pay Is Bouncing Back
By LOUISE STORY
Published: April 25, 2009

The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise.

Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits.

Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements.

If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay " much of it in bonuses " recover from the lows of last year.

“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”

Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”

In total, the banks are not necessarily spending more on compensation, because their work forces have shrunk sharply in the last 18 months. Still, the average pay for those who remain " rank-and-file workers whose earnings are not affected by government-imposed limits " appears to be rebounding.

Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation. The bank, which nearly halved its compensation last year, set aside $4.7 billion for worker pay in the quarter. If that level continues all year, it would add up to average pay of $569,220 per worker " almost as much as the pay in 2007, a record year.

“We need to be able to pay our people,” said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, and so the first-quarter reserves might simply be “sensible husbandry.”

Indeed, last year, when Goldman lost money in the fourth quarter, it did not pay out some of the compensation it had set aside when earnings were stronger.

At other banks, pay scales tilt in favor of particular units. JPMorgan Chase, for example, is setting aside what would total $138,234 on average for workers. But in the bank’s trading and investment banking unit, if revenue stays at first-quarter levels, workers are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006.

To try to blunt criticism of high pay, some banks have introduced reforms to take back bonuses from individual workers whose bets later lose money. Moreover, executives say that for many well-paid bankers, a good portion of their bonus compensation is in stock, whose value can decline if the performance of the bank lags.

Representatives of several of the largest banks said much of their compensation budget covered expenses other than bonuses, like salaries, health care, pension plans and severance.

Still, the compensation expense is the only publicly disclosed figure related to pay at the banks, and it is the best figure for calculating pay per worker.
au1929
 
  1  
Reply Sat 25 Apr, 2009 04:52 pm
@cicerone imposter,
CI
While the article speaks of workers and their average compensation it does not define the workers they are referring to. Add in the salary and compensation of the company officers and you get a distorted view of the pay scales. I would also add that much of it is in company stock which is dependent upon the health of the organization. I am not defending the the overpaid executives however the article is a distorted view of the facts.
cicerone imposter
 
  1  
Reply Sat 25 Apr, 2009 05:21 pm
@au1929,
We read that article differently; "average compensation" of over $500,000 tells me they are paid to "create" wealth out of nothing such as derivatives. Value must come from products and services that actually adds value without the manipulation of money. If they make money from the manipulation of money, that's not real value added; it's smokes and mirrors.

Real earnings come from loans provided to consumers who are able to pay both the short and long term interest and principal. Other manipulations of money from banks and finance companies that exceeds interest earnings from good loans cannot be sustained. It means they're adding money value where none really exists.

Paying salaries and benefits that exceeds those earnings cannot be sustained. Where does that extra earnings come from? They must also pay shareholders dividends on their investment.
au1929
 
  1  
Reply Sat 25 Apr, 2009 05:35 pm
@cicerone imposter,
Much of the money or wealth coming from wall street is based on the manipulation of money. When a stock is bought for say $10 and sold at $15 the profit is as you say a manipulation of money not real value added.
 

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