From the monthly archives:
Trick or Treat?
The Dow is up around 180 points – today – the commodities market is in the toilet, and we are in the middle of a mostly announced “Mother of all Currency Crises”
This is the start of grumble week where Doctor Dogshit lets it all hang out, and growls at anything that’s standing still…but in the meantime, get ‘yer scare on tonight. Go scream at homeowners about their mortgages (oh, the imagery that creates…priceless!).
In the meantime, enjoy;
Here’s another!
Starting tomorrow, we at Dogshit Industries are going to begin snarling & grumbling.
We don’t mean this in a general “grumpy old men” manner, but venting about aspects of the “management” of the current financial crisis, and the flawed perceptions of those who are tasked with communicating the methods of management to you and me; their constituents, you and me - taxpayers.
Perhaps a purely gratuitous reminder, but this is not going to be approached from a partisan basis. We don’t do partisan here. Nor shall our spleen be vented because of that famous emetic called ideology. In plain language, the hell with that and all it represents.
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I had to do this. There really wasn’t much of an alternative 
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From Mediashift, Simon Owens has a penetrating article on how the mainstream media missed the boat (completely) during these recent months of market upheaval. I want to buy the guy a beer, but in lieu of that, here’s the article he wrote, that honestly brought a smile to my face, as well as thinking again about the apparently diminishing role of the traditional press……
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As expected, the Federal Reserve cut the Federal Funds Rate by 50 basis points this afternoon, bringing the rate down to 1%, the lowest level since 2003. Is money finally “affordable”? Yes it sure is, but that’s not the focus. The availability of credit is the key issue here.
The statements after Federal Reserve policy meetings have always had a special place in our hearts for their typically mysterious wording. Today’s statement certainly didn’t pull any punches, though it may leave readers – as always – scratching their heads over the Fed’s word choices, which were interesting this time around, not just what was said, but what wasn’t……
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With ongoing grateful thanks to the Wall Street Journal for kindly providing such a neat summary, so for Saturday October 25th 2008, here’s what’s hot…..and what’s not;
I’ll kick this one off……
“More phones, we need more fucking phones”
A colleague just suggested;
“Why are we all on hold? the Dow isn’t on hold! Why are we ALL ON HOLD?”"
As I’ve written previously although in a markedly different context, I think it’s absurd to reward corporate executives with wildly excessive compensation packages (think “stratospheric” and you’re getting close). As a shareholder I would find this issue to be troublesome, and in that role would welcome any motion before the board to cap executive compensation to some (sane) extent. As a voter, I might even support an increase in marginal tax rates to help fund some needed public investments. (yes, I said that) I wouldn’t, on the other hand, do this (Bloomberg):
House Financial Services Committee Chairman Barney Frank said there should be a freeze on Wall Street bonuses until companies find a way to keep the year-end payouts from encouraging excessive risk-taking.
“There should be a moratorium on bonuses,” Frank, a Massachusetts Democrat, told reporters yesterday in Washington. “They have a negative incentive effect because they are the ones that say if you take a risk and it pays off you get a big bonus,” and if it causes losses “you don’t lose anything.”
The five biggest U.S. securities firms paid out a record $39 billion in bonuses last year even as the credit crisis began to affect investments in mortgage securities and leveraged loans. One of the firms, Lehman Brothers Holdings Inc., went bankrupt this year and two others, Merrill Lynch & Co. and Bear Stearns Cos., were rescued in emergency sales. The two largest firms, Goldman Sachs Group Inc. and Morgan Stanley, became bank holding companies and are receiving $10 billion each of government money.
The moratorium “ought to be for all firms” and not just for those eligible for the Treasury financial-rescue program, Frank said. The halt on bonus payments should last “until they can get a better structure without that perverse incentive,” he added.
Bad Bad BAD idea! If the government takes a shareholder stake and thinks the best way to maximize taxpayer return is to alter the compensation structure of the firms it owns, then fine. As shareholders, government has the same right as any other shareholder to put a motion before the board and let the votes decide. That’s the way things work in a free society Congressman Frank. If the government thinks it should start setting industry compensation levels, then we need to step back and take a timeout or something.
This is a hugely inappropriate role for the government. There is plenty of room to examine structural flaws in markets that apparently encourage excessive firm risk-taking, but there’s a reason we allow companies to determine compensation rules for themselves, namely, that the market is more likely to achieve the right labor force allocation and incentive structure on its own than under the hand of a central planner. That’s not only the heavy hand of the State, but also stinks of Marxism!
Arguably now more than ever, the financial industry needs to attract top talent into failing and discredited businesses. That will be very hard to do if Congress dictates the elimination of bonuses.
