GREED

It isn't greed that is bad for any economic system; it's fraud and stealing. It's the inability of board members to limit CEO and officer compensation which defeats their fiduciary responsibilities to the investors and other employees. There is no rational reason for any CEO to be paid 400+ times more than the average pay of all the employees working for the company.

Greenspan not worried Chinese will dump Treasuries

By Pedro Nicolaci da Costa
Tue Jun 12, 2:28 PM ET



NEW YORK (Reuters) - There is little reason to fear a wholesale pullout by China out of U.S. government bonds, former Federal Reserve Chairman Alan Greenspan said on Tuesday.

While expressing concerns about China's runaway growth rate and what he described as overvalued stocks, Greenspan played down the prospect that Chinese authorities would sell Treasuries in earnest, forcing a sharp spike in U.S. interest rates.

Asked at a commercial real estate conference if investors should be worried about this oft-cited concern, Greenspan said: "I wouldn't be, no."

Still, Greenspan said the reason such a withdrawal was unlikely was that China would not have anyone to sell the securities to, hardly the sort of comfort jittery bond investors were seeking.

U.S. government debt has been under severe pressure over the past week, with yields rising sharply on anxiety over the likelihood that global credit conditions would tighten as the year progresses. Bond prices move inversely to yields.

Greenspan reinforced the nervousness, saying that a global liquidity boom which he traced back to the end of the Cold War would not go on forever.

"Enjoy it while it lasts," he told the audience.


Nobody in this world is capable of making assumptions about how foreign countries will not react or act when it comes to selling US bonds in the world market. If China finds that interest rates rise on US bonds, the prices will drop making their holdings worth less. At what point they may decide to sell those bonds is anybody's guess. Guru Greenspan isn't god. If these things were that predictable, Greenspan would be the richest man in the world.

I hear you, BBB!

This relentless pursuit of more & more profit (by folk who are already wealthy beyond the imaginings of most ordinary people) is completely obscene.
What justification can there be for creating such extreme divisions in society?

msolga


The cause is the title of this thread:

GREED!

BBB

Well of course!

I guess I can't imagine how anyone could justify such greed to themselves. I guess it isn't even a consideration.

msolga


They delude themselves with the entitlement syndrome.

It's gotten worse since boards of directors started using stock options. The incentive is to increase the value of the stocks, which results in ethical and management problems, lack of reinvestment in the company to improve it's product. Employees value and salaries are sacrificed to pursue stock options riches.

Another problem is the board of directors buddy system. Board members on other company boards look out for each other's compensation and perks so when it's their turn, they will receive the same benefits. The greed won't stop until the board member problem is corrected.

BBB

What Does CEO House Size Have to Do With Company Stock Price
Bigger Mansions, Worse Job Performances?
What Does CEO House Size Have to Do With Company Stock Prices?
By BOB ROSNER
May 9, 2007

CEO = rock star.

OK, it's not as bad as it was in the '80s, when even nonbusiness magazines had smiling CEOs on the cover. But I still think most of us want our CEO to have a certain amount of star quality. Call it the Trumpification of the corporate world.

Who would you rather have leading your company? Casper the friendly ghost or a genie who can make all of the company's wishes come true (even if he does have a comb-over)? Let's face it, shy and retiring just doesn't cut it when you're responsible for the livelihood of lots of people. When it comes to effective CEOs, bigger always seems better. Or does it?

Arizona State University's Crocker Liu and New York University's David Yermack have a really interesting take on rock star CEOs and how much they can cost a company. Even better is the creative way the two professors came up with to study this issue -- they compared the size of the CEO's home with corporate performance. Call it entitlement, focusing on the wrong things, an inferiority complex, short man's syndrome or a bunch of guys spending other people's money -- this study found that we all pay when the CEO literally lives in a castle.

Let's start with the numbers. In 2004, the median home price for CEOs was $2.7 million. Compare that to the median price for all homes in U.S., $195,200.

The average size of the CEO's home: 5,600 square feet. Heck, if you are a titan of industry, wouldn't you want 4.5 bathrooms? Actually I'm shocked the number isn't at least 7. If you're so darn important, how could you possibly be expected to use the same bathroom more than once a week? Come on, these are really important people. (OK, I'll attempt to reduce the sarcasm&)

But the study gets really interesting when it examines 12 percent of the S&P 500 CEOs with homes that were larger than 10,000 square feet or were on at least 10 acres of land. The companies that were run by this group of landed gentry lagged the S&P 500 by 25 percent over the three years following the home purchase.

That bears repeating. The biggest CEO houses significantly increased the odds of poor corporate performance. I'm guessing that those of you reading this article are in one of two camps right now. The first group is ready to storm the Bastille and scream about CEOs living large off the sweat and tears of the rest of us.

But I'm sure there are also readers who still believe that a big ego is a necessary part of the mix -- that these two professors are making a mansion out of a molehill. Maybe, but you may feel differently after you read this.

Approximately a third of CEOs exercised stock options and sold shares in the year before they bought a home. Consistently, the shares peaked right before the purchase. Given the brouhaha over backdating stock options, I find it fascinating that the stock prices tended to peak so consistently just before a mansion was purchased. Maybe that big house isn't something that was earned but rather something that was scammed.

Ironic isn't it. Putting a CEO in a mansion, more often than not, puts you in the poor house.


Quote of the Week
"We are what we pretend to be, so we must be careful about what we pretend to be." -- Kurt Vonnegut


Book Excerpt of the Week
"Up Is Not the Only Way" by Beverly Kaye (DB, 2001)

"The challenge of balance is the dual responsibility of organizations and individuals. When individuals and organizations understand and act on the need for balancing the four elements, they are moving together toward a holistic workplace, one that recognizes a range of employee needs, the interconnectedness of those needs, and the relationship of such needs with achieving organizational goals. Career development efforts in the future will address more and more of these last two elements. Practitioners, in the ideal, should seek this balance in their own lives and model it for others."
------------------------------------

Bob Rosner is a best-selling author, an internationally syndicated columnist, popular speaker, and a recent addition to the community of bloggers. He welcomes your comments at [email protected].

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

When the philosophy of "fair play" is lost at home, everybody suffers. That the CEOs and officers of those companies live on greed, they only harm their own economy by not sharing "the wealth." This happened because their parents and our schools do not teach ethics.

Hmmmm .....
I don't know how the schools could change things all that much, ci. Heaven knows we've tried.
I think it has more to do with advertising & the media in capitalist societies & the incredible hold they have over people.

msolga, For students who go through business school, they should be required to study ethics. It's necessary because many homes do not "teach" ethics which directly relate to business transactions which has many nuances such as "conflict of interest" issues. Why most of our CEOs see no problem with earning 100 times the earnings of all regular employees is a case in point. Ethics.

It's also what considered "successful" in the society, ci.

"Success" is in the eye of the beholder. I never earned millions every year, but feel my career was "successful." While working in management, I was ressponsible to cut management staff salaries when income was not good. When year-end bonus' were approved, everybody received the same percentage depending on longevity of less than one year. Nobody, even the Executive Director, received a bonus at mulitiple times annual salary. The way many company's pay a bonus to their CEOs is poor fiscal management IMHO. Many receive those bonus even when their performance is poor.

Exactly.
And the version we're being sold, over & over again is that it's all about ridiculously exorbitant profits. These CEOs make headlines. Like WOW! Isn't he (usually a "he") amazing!

(I have no doubt you're an ethical person, ci)

And if you watch the commercial media (eg Big Brother, etc) if you're not a winner then you're a loser. Everyone for themselves & bugger the rest.
This is what most of our young people are watching all the time.
I find it very dispiriting.

I also find it "disheartening," but as a retiree, my decision making days are over. I'm one of those lucky "buggers" who can travel any place on this planet several times a year. We are not wealthy, but comfortable enough where we don't have money worries like the majority of those now living.

Well you're fortunate then.

No problem with that.

But lots of people work hard all their lives and are not so fortunate. And the rest of their lives are a struggle. They deserve to be treated with respect, too.

The Bushites have outsourced our government to their pals
The Bushites have outsourced our government to their pals
by Jim Hightower

THE SPRAWLING $43 BILLION HOMELAND SECURITY DEPARTMENT (HSD) is known chiefly for being the agency in charge of America's color-coded terrorist-threat alarm system ("Good morning, Americans. Today is Yellow. Be vigilant. Report all suspicious people.") It's boogeyman nonsense, of course, doing absolutely nothing to make our country safe. But such falderal helps those in charge obscure HSD's real mission: to serve as a giant federal cookie jar for corporate America. Go to HSD's website, and you'll find a prominent section called "Open For Business." There, on any given day, corporate shoppers can scroll through the hundreds of contracts and grants available to them.

THE BLOATED PAY AND EGOS OF CEOS
Tuesday, June 19, 2007
Posted by Jim Hightower

They say it's lonely at the top - but, gosh, how can that be when you've got all those dead presidents to keep you company?

We know that runaway executive pay has left cubicle employees and shop floor workers far behind, but they're not the only ones eating the CEO's financial dust these days. The top corporate dogs are now so lavishly paid that their cohorts in the executive suites - the number twos and threes in the corporate heirarchy - are no longer in the same stratosphere as the number one.

In the 1970s, the CEOs of America's biggest corporations were averaging 80 percent more in pay than the third-highest-paid exectuives. Today, that gap has become a chasm, with the CEOs taking 260 percent more than their number threes.

This separation of the corporate elites from everyone else is a reflection of a pernicious new ethic of greed in our larger society. It's an abandonment of America's uniting ethic of egalitarianism - the notion that we're all in this together - replacing it with the notion of everyone for themselves.

In the past 20 years, while the middle class has seen its income level fall, those at the top are soaring. The top 10 percent had a 54 percent increase in real income. But the income of the wealthiest one percent shot up by 128 percent. And at the tippy-top of America's wealth pyramid, where CEOs dwell, the richest one-hundredth-of-one-percent saw their incomes skyrocket by nearly 400 percent.

Why has CEO pay zoomed away from everyone else's. Because they control the corporate boards and compensation consultants who set executive pay levels. It's the buddy system at work.

"More Than Ever, It Pays to Be the Top Executive," New York Times, May 25, 2007Of course, CEOs say they're paid so much because their jobs are tough, they're so smart, and they deserve it. See, it's really not so lonely at the top - CEOs are never alone because they always have their self-inflated egos with them.

"More Than Ever, It Pays to Be the Top Executive," New York Times, May 25, 2007

2 Tax Rates: 1 for Bigwig Investors, Another for us
Two Tax Rates: One for Bigwig Investors, Another for the Rest of Us
Amid Blackstone Deal, Congress Checks If Billionaire Investors Benefit From Tax Loophole
By JAKE TAPPER
ABC News
WASHINGTON, June 22, 2007

Tonight Blackstone Chairman and CEO Stephen Schwarzman will go to bed several billion dollars richer, after his elite investment firm became a publicly traded corporation this morning on Wall Street.

The tax rate for most Americans is anywhere from 25 to 35 percent, but guess how much Schwarzman will pay.

"Most of the money Schwartzman makes is going to be taxed at the 15 percent rate," said Dan Primack, editor of PEHub.com. It's "a much lower rate than the average American business person -- and more important, the average American investor."

Congress is debating whether there should be changes in tax code so that the people who run elite investment clubs, called hedge funds or private equity firms, have to pay the same tax rates as the rest of us. But that's easier said than done since these billionaires are flexing their newly-established political muscles.

While a person's salary, considered "earned income," is typically taxed at the higher rate, money made from investments is taxed at 15 percent because of the risk.

Executives from Blackstone and other elite investing companies -- private equity firms or hedge funds -- mainly invest other people's money. But they still claim the lower tax rate because the money they make is tied to the performance of the investments.

The industry's new lobbying arm believes that's entirely appropriate.

"The touchstone is not whether you're investing equity in it or investing labor in it," said Doug Lowenstein of the Private Equity Council. "It's whether you're taking a risk."

Last week the Democratic Chairman and the ranking Republican on the Senate Finance Committee, Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, introduced legislation that would ensure that private equity funds that go public are taxed at the same rate as other corporations, though the law may not take affect until 2012.

And more generally Congress will soon start looking into whether those who run heads funds and private equity firms that have not gone public are exploiting an unfair tax loophole. Hearings will be held this summer.

"I can tell you," Grassley told ABC News, "it's this simple: If it's earned income, these people are screwing the middle-income taxpayer."

Not that anyone should expect the presidential candidates to say anything about it. They're cozying up to hedge fund and private equity firm managers.

"Presidential candidates are like bank robbers," says Sheila Krumholz, executive director of the Center for Responsive Politics. "They go where the money is."

In leafy Greenwich, Conn., last night, Sen. Chris Dodd -- a minor presidential candidate and major lawmaker as chairman of the Senate Banking Committee -- was feted with a fundraiser by Scott Cohen, the billionaire who owns the hedge fund SAC Capital.

Republican former Gov. Mitt Romney -- who used to run the private equity firm Bain Capital, where he made a fortune -- raked in $257,525 from the industry last quarter, making him the No. 1 recipient of this cash. Unless, of course, you count former Sen. John Edwards, D-NC, who may talk quite a bit about poverty, but personally was paid more than $479,000 in 2006 for a part- time job at another such firm, Fortress Investment Group.

"Do hedge funds make America any better in any way?" NBC anchor Brian Williams asked Edwards in an April debate.

"Those people in New York who work in financial markets understand -- in some ways, at least -- what can be done and can play a significant role in trying to lift people up who are struggling," said Edwards.

Added Sen. Hillary Clinton, D-NY, "I think that America is a great place because we have an entrepreneurial economy."

But most of the action these days is on the Hill.

Forget immigration reform or the war in Iraq: By many accounts, the No. 1 issue members of Congress are being lobbied on is big money urging Congress not to increase this tax rate.

ABC News asked Baucus if he thinks the 15 percent tax rate is unfair.

"It's very complicated," he said, "and we're going to dig into it very deeply and, hopefully, come up with a result that makes sense."

Changing the tax code could bring to the U.S. Treasury $4 billion to $10 billion, which some in Congress want to use to reduce taxes for the middle class -- though it's unclear if anyone's lobbying for the middle class in Congress right now.

The Banality of Greed
The Banality of Greed
By Robert Scheer
Truthdig
Tuesday 26 June 2007

As the Iraq war that Vice President Dick Cheney created continues to shred American - and many more Iraqi - lives, further documentation has emerged proving that, even during failed wars, the merchants of death profit. No company has profited more from the carnage in Iraq than Halliburton, which Cheney headed before choosing himself as Bush's running mate. One shudders at the blissful arrogance of this modern Daddy Warbucks, who sees no conflict of interest over the blood-soaked profits garnered by the once-bankrupt division of the company that left him rich.

This week's evidence of the continuing corruption of Halliburton and its subsidiaries profiteering from contracts costing American taxpayers an unbelievable $22 billion stems from a report by the special inspector general for Iraq reconstruction. The report, only one of many about Halliburton's recently severed subsidiary KBR, focuses on work done in Baghdad's super-secure Green Zone. While parent company Halliburton insults U.S. taxpayers by relocating its headquarters to the tax shelter of Dubai, subsidiary KBR has been spun off to focus more directly on the American military contracts that form the core of its operations.

Those operations have already produced a litany of condemnation by congressional and administration oversight bodies, and the June 25 report hardly details the company's most egregious activities. However, the Green Zone, the site of this latest instance of taxpayer fleecing, is instructive because, safely removed from the risks of battle, it deprives these war profiteers of their favorite excuse: that construction in a battle zone is inherently more costly. While KBR's Green Zone shenanigans covered by this report may seem small in comparison with the enormous waste attendant to the U.S. reconstruction program in Iraq, they are illustrative of the feeding frenzy that has fueled the American effort.

The corrupt reconstruction project has left a wasteland of failed energy, water, educational and political reform plans. As report after report details, garbage is not collected, hospitals are not staffed, schools close soon after they are opened and factories sit idle in shocking refutation of the vaunted efficiency of the United States' political economic model.

KBR's role in this fiasco is easily exposed by a basic Google search, beginning with a stop at the website of Henry Waxman, the California congressman who heads up the House Committee on Oversight and Reform. Waxman deserves a Medal of Freedom for trying to figure out what happened to those $22 billion that KBR received but are now lost to U.S. taxpayers, as well as to the once hopeful but now bitterly disillusioned Iraqi people. Indeed, six months ago, the inspector general for Iraq reconstruction, Stuart W. Bowen Jr., termed the high level of official corruption in Iraq the "second insurgency," stating that the siphoning-off of U.S. dollars is a major source of funds for the anti-American fighters in the country. It was estimated that last year upward of $100 million in stolen oil funds went directly to the insurgents. In the context of that horrid record of waste and corruption amid the destruction of Iraqi society in which "democratic nation building" transmogrified into fascist mayhem, KBR's antics in the Green Zone seem petty.

But the fact that KBR played loose with our tax dollars even in the safety of the Green Zone is evidence of the company's contempt for the sacrifice of U.S. taxpayers. For example, concerning KBR's mismanagement of the fuel distribution program, the inspector general wrote: "We found weaknesses in KBR's fuel receiving, distributing and accountability processes of such magnitude that we were unable to determine an accurate measure of the fuel services provided." Yet, it was paid for by American taxpayers.

Or, take the extra $4.5 million spent on the company's food service and the cost of billeting 90 percent of KBR personnel in single quarters, as opposed to the doubling-up practiced by regular Army folks.

That was chicken feed compared with other examples of taxpayer rip-offs, as revealed in one case by the Army reducing payments to KBR by $19.5 million following Waxman's first "fraud, waste, and abuse hearings." It is hoped that there will be other efforts at forcing accountability for the billions of dollars that have been spent to advertise the efficiency of the United States' free-enterprise model to a skeptical Mideast public.

It is claimed by American officials that KBR's accountability issues are being addressed. In one instance cited, the U.S. Embassy in Baghdad - a spiraling enterprise well on its way to becoming a nation-within-a-nation akin to the Vatican in Italy - announced that, as a means of avoiding food theft, its personnel would no longer be allowed to bring large bags into the eating halls. Such sacrifice for the mission of securing Iraqi freedom.