News What is wrong with the US economy?

[Astronuc]

Thats a loss only on paper, realized only if you panic or are otherwise forced to sell your house. Inflation and earnings are the metrics to watch, as that's what really effects your ability to send the kids to college, etc.

Well then there is the slight increase in default rates and foreclosures -

Foreclosures up 60% in February
http://money.cnn.com/2008/03/13/real_estate/foreclosures_feb/index.htm?postversion=2008031410
The number of filings jumps year over year but decreases modestly over last month.

NEW YORK (CNNMoney.com) -- Foreclosure filings nationwide jumped 60% in February compared with the same month last year, but they decreased slightly versus January, according to a report released Thursday.

RealtyTrac, an online marketer of foreclosure properties, said 223,651 homes got hit with foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. 46,508 of those were lost to bank repossessions, which more than doubled over last year.

The report also indicated that foreclosure filings in February fell 4% compared with January, similar to a 6% decrease that occurred during the same time-span in 2007.
. . . .

In California, foreclosure activity was up 131% year-over-year with a total of 53,629 filings. Florida reported 32,447 foreclosure filings, up 69% over the same period last year.

. . . .

BTW -

Slowdown could have been avoided
http://money.cnn.com/2008/03/20/news/economy/recession_forecast/index.htm

Lakshman Achuthan, a well-respected economist and the managing director of the Economic Cycle Research Institute, says the U.S. is now in a recession...and that Congress and the Federal Reserve could have stopped it.

Achuthan maitains that the Fed should have acted more aggressively last fall.

But Bush stated that his administration anticipated this slowdown or crisis, and they took prompt action - two weeks ago.

 

[mheslep]

Well then there is the slight increase in default rates and foreclosures -

Foreclosures up 60% in February
http://money.cnn.com/2008/03/13/real_estate/foreclosures_feb/index.htm?postversion=2008031410
The number of filings jumps year over year but decreases modestly over last month. BTW -

Slowdown could have been avoided
http://money.cnn.com/2008/03/20/news/economy/recession_forecast/index.htm

Achuthan maitains that the Fed should have acted more aggressively last fall.

But Bush stated that his administration anticipated this slowdown or crisis, and they took prompt action - two weeks ago.

The President and the Fed are two different things; the former doesn't tell the latter what to do. Why didn't Spkr. Pelosi and Congress 'anticipate' and take prompt action?

 

[Gokul43201]

It's not fair to blame Congress - they were busy dealing with another crisis: Is Roger Clemens lying?

 

[Astronuc]

The President and the Fed are two different things; the former doesn't tell the latter what to do. Why didn't Spkr. Pelosi and Congress 'anticipate' and take prompt action?

Good point. But, the Fed is independent of the administration and Congress! Bush was trying to claim some timely corrective action - which apparently it wasn't - which is further proof the Bush doesn't get it. http://en.wikipedia.org/wiki/Federal_Reserve#Independent_within_government

Pelosi and Reid are as effective as leaders as Bush. I don't expect much of the current Congress, and even less from the Whitehouse.

 

[Astronuc]

New Book Predicted Mortgage, Credit Crises
http://www.npr.org/templates/story/story.php?storyId=89123972

All Things Considered, March 26, 2008 · Many people, with the benefit of hindsight, say they saw the credit crisis coming. But Charles Morris can prove that he knew what would happen long before others did. In his new book, The Trillion Dollar Meltdown: Easy Money, High Rollers and the Great Credit Crash, Morris lays out pretty much exactly what would and did happen.

Morris, a banker and lawyer, is the guy whose company developed the software that investment companies, e.g. brokers and hedgefunds, use to do complex transactions. He says the software has been misused!

https://www.amazon.com/dp/1586485636/?tag=pfamazon01-20

Paul Steiger, former Mng Editor, Wall Street Journal
"[The Trillion Dollar Meltdown] is an absolutely excellent narrative of the horror that we have in the credit markets right now... It's a wonderful explanation of how it happened and why it's so rotten, and why it will take a long time to unwind."

The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash
http://www.publicaffairsbooks.com/publicaffairsbooks-cgi-bin/display?book=9781586485634

The sub-prime mortgage crisis is only the beginning: A more profound economic and political restructuring is on its way.

We are living in the most reckless financial environment in recent history. Arcane credit derivative bets are now well into the tens of trillions.According to Charles R Morris, the astronomical leverage at investment banks and their hedge fund and private equity clients virtually guarantees massive disruption in global markets. The crash, when it comes, will have no firebreaks. A quarter century of free-market zealotry that extolled asset stripping, abusive lending and hedge fund secrecy will come crashing down with it.

"The Trillion Dollar Meltdown" explains how we got here and what is about to happen. After the crash our priorities will be quite different. But things are likely to get worse before they get better. This book will be indispensable to understanding the gross excess that has put the world economy on the brink - and what the new landscape will look like.

Investors should probably read this book.


Newsweek interview with Morris: http://www.newsweek.com/id/124231

NEWSWEEK: The Federal Reserve has now lowered the short-term interest rate two percentage points since December. Is this a smart move ?
Charles R. Morris: The Fed's emphasis seems all directed to keeping consumers spending and borrowing, and to keep asset prices high. That is just more of the "hair of the dog," or exactly the opposite of what we need. It will also feed into the collapse of the dollar, which has been a big cause of the recent uptick in inflation, especially in energy. The Fed can't stop a recession; it's already underway. We have to switch gears from a low-saving, high-spending country to nearly the opposite. It's impossible to make that switch without going through a recession. The current strategy will just drag out the process.

NW: So you're saying, Why make it cheaper for consumers and banks to borrow now?
Morris: I can't imagine why they want to encourage more borrowing. I think it's because when you have a hammer everything looks a like a nail … But what we need to do is to cut consumer spending. You have consumers stretched, really overleveraged. Then we need to mediate an orderly reduction of asset prices—an honest deleveraging. I'm talking about prices of homes, bonds. And it's better to do that sooner than later … We also have to help low-income people who could be badly hurt, but we're not helping them by propping up investment banks.

NW: How much could home prices fall?
Morris: Home prices will probably fall another 15 to 20 percent, if you look at differences between rental and mortgages. [Average monthly rents in many areas are now about 15 to 20 percent lower than average monthly mortgage payments for a comparably sized home.]

NW: You estimate that once the dust settles, investors will have lost about $1 trillion in defaults and write-downs from mortgages and other loans. How did you come up with that estimate?
Morris: That encompasses residential mortgages, corporate debt, commercial mortgages, credit cards and several others. About half of it will be on the books of banks. It's actually a very conservative estimate, based on the losses and write-downs that have already taken place. It also takes full account of likely recoveries, from defaulted mortgages and loans. But the trillion-dollar estimate assumes that the de-leveraging goes smoothly—as if we could have a big meeting and agree on reasonable numbers. If we continue this crazy crash-a-month cycle, we're more likely to overshoot by two to three times.

. . . .

Save the economy - stop spending!

 

[Astronuc]

UBS Writes Down $19 Billion; Chairman to Leave

UBS, the largest Swiss bank, said Tuesday that it would write down another $19 billion related to "U.S. real estate and related structured credit positions" and said Marcel Ospel, its chairman, would step down.

In addition, the bank announced it would seek new capital of about $15 billion in what would be its second plan to raise new funds since the credit crisis began. With Tuesday's announcement, the total write-downs at UBS in the last year have surpassed $37 billion.

The news came as Deutsche Bank, the biggest German lender, said that it expected a first-quarter loss of about $3.9 billion on write-downs of United States real estate loans and assets.

Ouch!

http://www.nytimes.com/2008/04/02/business/worldbusiness/02ubs.html

There fear is that more banks have lost money and have yet to report it publicly. UBS apparently had $12 billion from Asian sovreign funds, which have now lost money and may be reluctant to lend to western banks. So this is not over, and could even get worse.

 

[Astronuc]

Bernanke Sees Little Growth for U.S. Economy
http://www.npr.org/templates/story/story.php?storyId=89303477

NPR.org, April 2, 2008 · The U.S. economy is unlikely to grow in the first half of this year, says Federal Reserve Chairman Ben Bernanke.

Testifying before Congress' Joint Economic Committee, Bernanke said, "It now appears likely that gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly."

The GDP measures the value of all goods and services produced within the United States; it is seen as the best barometer of the nation's economic health. Under one interpretation, six straight months of declining GDP would constitute a recession.

In his prepared testimony, Bernanke didn't use the word "recession." But it's the closest he has come to date to suggesting that possibility, given that a trio of crises — housing, credit and financial — has pummeled the country.

Many private analysts believe the economy contracted in the first three months of the year, signaling the start of a recession.

Meanwhile -

In Economic Drama, Bush Is Largely Offstage
http://www.nytimes.com/2008/04/03/washington/03bush.html

WASHINGTON — The first hint that President Bush might be detached from the nation’s economic woes was in February, when he conceded that he had not heard about predictions of $4-a-gallon gasoline.

Bush has been detached from reality for a long time, certainly since the beginning of his presidency.

 

[Astronuc]

ATA shuts down; budget flights to Hawaii in peril

Airline ceases operations while filing for bankruptcy, the second airline in two weeks to do so. Passengers left stranded again.

• Southwest halts plans to outsource maintenance to El Salvador

That's good news. Apparently there are questions about the maintenance.


Regarding the economy - there's a whole lot a shakin' goin' on.

 

[edward]

One in ten home mortgages is upside down. The owners owe more than the home is worth. With the price of homes still in a free-fall that ratio is going to increase.

Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater.

http://www.nytimes.com/2008/02/22/b...nted=1&hp&oref=slogin&oref=slogin&oref=slogin

 

[Astronuc]

And -

Banks deep into unregulated 'gambling'
http://marketplace.publicradio.org/display/web/2008/04/01/credit_default_swaps_q/

Treasury Secy. Paulson's plan to get the financial system under control doesn't address a once-obscure kind of credit insurance that's become an enormous money-maker for some of the country's biggest banks and other rich investors. Bob Moon explains.

Soros: Financial crisis worst since '30s
http://marketplace.publicradio.org/display/web/2008/04/03/soros_book/

Investor and philanthropist George Soros says the financial system as we know it is broken.

Of course, Soros has a book to sell, but he made some interesting comments, particularly about the complex financial instruments out that the were based upon increasing value of property and randomness of downturns. But there may be negative feedback loops (e.g. overleveraging) that force stronger downturns in the economy, such as we are now experiencing.

 

[edward]

Death of a bond insurer

There seems to be plenty of blame to go around for this financial crisis. There was a lot more involved than just people buying more house than they could afford. The problem appears to have come from the top down.

For years the bond insurers operated in relative obscurity. They mostly sold guarantees on basic municipal debt, paying out claims in the rare case a bond defaulted. But as competition increased, companies moved into more exotic products with bigger profits, including the risky securities known as collateralized debt obligations that invested in subprime loans and other assets. ACA—the fledgling outfit that got a new lease on life back in 2004 from an investment by Bear Stearns—took it to extremes. By 2007 CDOs and other types of exotic securities accounted for 90% of its portfolio, compared with 36% for MBIA, the nation's largest bond insurer

Emphasis mine

http://www.businessweek.com/magazine/content/08_15/b4079024463824.htm?chan=top+news_top+news+index_investing

If the bond insurers have problems it is going to adversely affect states and municipalities.

 

[Astronuc]

America for Sale
2 Outcomes When Foreigners Buy Factories
http://www.nytimes.com/2008/04/07/business/07sale.html

The company, Electrolux, sent production to Mexico, eliminating 2,700 jobs from a town of 8,000 people.

. . . .

Foreign capital is putting more American businesses in the control of major enterprises based in Europe or Asia. It is also creating jobs, some of them in emerging areas like alternative energy, where prospects for expansion may be greatest. And it is aiding the growth of American exports, a source of vigor in an economy hobbled by a collapsing housing market.

More than 200,000 Michigan residents worked for subsidiaries of foreign companies as of 2005, according to government data.

Yet in a state that has lost 300,000 manufacturing jobs since 2000, foreign investment has not been enough to compensate; indeed, it has sometimes exacerbated the erosion.

Gov. Jennifer M. Granholm, a Democrat, was bitterly disappointed by Electrolux’s decision to abandon Greenville.

She had promised to persuade the company to stay, assembling a package of more than $120 million in state and local tax credits. The city offered to build a new plant. The local union agreed to give up as much as $33 million a year in wages.



“They said, ‘There is nothing you can do to compensate for the fact that we are able to pay $1.57 an hour in Mexico,’ ” Ms. Granholm recalled during a recent interview. “That’s when I started to say, ‘Nafta and Cafta have given us the shafta,’ ” she added, using the acronyms for the North American and Central American free trade agreements.

The economy is certainly going great for some folks - but not for many others.

 

[Jimmy Snyder]

Astronuc, that article seemed a little bit scattershot to me. According to the title of the article, it was about what happens when foreigners buy factories. Of course, since it only gives two examples, it is difficult to ascertain what the overall effect is. However, the part that you emboldened, was about wage disparity. The wage disparity exists whether foreigners buy factories or not and has nothing really to do with the thesis of the article. So why did the wastewater treatment equipment factory go one way, and electolux the other. It seems that Nafta and Cafta can't be called upon to explain electrolux's problem. The article also fails to compare the outcomes. In one case 2700 jobs were lost. What about the other case. What is the point of this article except to raise the blood pressure of the careless reader?

 

[BobG]

America for Sale
2 Outcomes When Foreigners Buy Factories
http://www.nytimes.com/2008/04/07/business/07sale.html

“They said, ‘There is nothing you can do to compensate for the fact that we are able to pay $1.57 an hour in Mexico,’ ” Ms. Granholm recalled during a recent interview. “That’s when I started to say, ‘Nafta and Cafta have given us the shafta,’ ” she added, using the acronyms for the North American and Central American free trade agreements.

The economy is certainly going great for some folks - but not for many others.

Granholm's comments are a little misleading. I can't find how the relocated jobs were distributed, but at least some of them went to South Carolina, not Mexico. In fact, the refrigerator factory in South Carolina has cost Greenville, MI even more jobs than just at the factory closed in Greenville: Company to hire 120 people at new Duncan manufacturing plant

Bronsink said the Duncan plant initially will assemble water dispensers and plastic and glass shelving for refrigerators made at the AB Electrolux refrigerator plant in Anderson County. But the company didn’t come to South Carolina just because of the refrigerator plant, but because of business opportunities it sees in the Southeast, he said.

Of course, if you're from Michigan, news only gets worse, never better: Electrolux tax appeal. Electrolux says the property's value dropped from $27 million to around $3.7 million after the factory closed and wants a refund of excess property taxes it paid in 2006 and 2007.

Michigan's problem is that not only can't they compete against Mexican workers, but they can't compete against South Carolina workers, either.

 

[Astronuc]

Astronuc, that article seemed a little bit scattershot to me. According to the title of the article, it was about what happens when foreigners buy factories. Of course, since it only gives two examples, it is difficult to ascertain what the overall effect is. However, the part that you emboldened, was about wage disparity. The wage disparity exists whether foreigners buy factories or not and has nothing really to do with the thesis of the article. So why did the wastewater treatment equipment factory go one way, and electolux the other. It seems that Nafta and Cafta can't be called upon to explain electrolux's problem. The article also fails to compare the outcomes. In one case 2700 jobs were lost. What about the other case. What is the point of this article except to raise the blood pressure of the careless reader?

It's unfortunate that the media tend to be sloppy. But I'm not concerned about who did what as the two important matters:

1. The US is loosing manufacturing jobs.

2. US labor cannot compete against workers in other countries who are paid $1.57 an hour. And workers who make $20/hr cannot compete against workers who are paid $10/hr who can't compete workers who make $2/hr.

OK - that's economics.

But who bats an eye when a corporate executive makes $100/hr or $500/hr or $1000/hr? Do corporate managers really work 5 times or 50 times harder during 8 hrs than they guy on the shop floor? I think not. And it's usually not even the executives/managers money, but the money of stockholders and bondholders.

The problem with the economy is not labor as much as it is lousy and excessively (even obscenely) overpaid management. IMO.

 

[mheslep]

It's unfortunate that the media tend to be sloppy. But I'm not concerned about who did what as the two important matters:

1. The US is loosing manufacturing jobs.

2. US labor cannot compete against workers in other countries who are paid $1.57 an hour. And workers who make $20/hr cannot compete against workers who are paid $10/hr who can't compete workers who make $2/hr.

Perhaps, but JimmySnyder's and BobG's posts show that the NY Times piece doesn't demonstrate that #1 or #2 are true.

But who bats an eye when a corporate executive makes $100/hr or $500/hr or $1000/hr? Do corporate managers really work 5 times or 50 times harder during 8 hrs than they guy on the shop floor? I think not. And it's usually not even the executives/managers money, but the money of stockholders and bondholders.

The problem with the economy is not labor as much as it is lousy and excessively (even obscenely) overpaid management. IMO.

Well two points:
1. If the salaries of top executives were capped by law how would that help the guy on the shop floor?
2. When looking for justification of the salary multiplier CEO/Shop floor, the decisions made by the CEO have enormous economic impact - that's where the justification comes in (or not). What is the value of an Andy Grove at Intel deciding to get the company out of the the ultra competitive commodity RAM market and to concentrate instead on CPU's making Intel for awhile into the most profitable enterprise on the planet? Is any guy on the shop floor capable of having that insight and vision into the semiconductor industry? I don't think so. What do you pay a guy like that, if the consequence of losing him may be to become another forgotten and failed Silicon Valley relic where all the guys on the shop floor lost their jobs.Edit: BTW, if you are looking for a highest paid for least work target of wrath, skip past the CEOs and go straight to the big tort attorneys.

 

[Jimmy Snyder]

The problem with the economy is not labor as much as it is lousy and excessively (even obscenely) overpaid management. IMO.

You got that from the article?

 

[Astronuc]

You got that from the article?

No - from the last 40 years of watching the economy in the US.

 

[Art]

I agree with Astronuc regarding the greed of top executives. For every successful CEO there are a myriad of underperformers who pay themselves obscene salaries to the detriment of the company it's workers and it's shareholders.

One need only look at the number of companies which record huge profits each year and yet never pay a dividend because the profits are siphoned off by the senior execs through stock options or those companies that make a loss and yet still pay huge bonuses to it's execs.

I don't think many people would argue with top performances being well rewarded but that isn't the case, terrible performances are also being well rewarded.

 

[Astronuc]

Even better!

http://stanleybing.blogs.fortune.cnn.com/2008/03/27/two-tales-from-the-tough-economy/

The former Bear Stearns co-president was one of the first heads to roll in the credit crisis when he was ousted last August. But being fired could have saved Spector’s fortune. As part of his resignation (a move suggested by then-boss Jimmy Cayne), Spector was forced to vest most of his stock options and restricted stock by December 28, 2007, when the shares closed at $87.35. That amounted to a little more than a million shares, according to the bank’s 2007 proxy statement, which would have been worth about $91.1 million.

Warren Spector gets fired. Ends up with $91 million. Even after taxes you’d have to say that was a nice payday.

But wait -

Story #2: This morning the cafeteria workers who labor in the neighborhood lunchrooms are demonstrating outside a local building. Their employer has been resisting their demands for higher wages and benefits for quite some time, . . .

So -

The corporations whose lunchrooms are served by this Union rear high above the street around here, each home to any number of guys who will get more when they are fired than the entire group now out on the street will earn in six lifetimes.

So a corporate manager gets fired, and walks with $91 million, but the folks at the bottom can't get better pay. I bet they don't have corporate expense accounts either. And I bet if they get fired, they don't get a generous severance package.

 

[turbo]

Those of us who are older and/or disabled have a very disturbing view of our economy. The Fed has reduced the interest rates over and over again, so that my money-market account has dropped from producing about $750/month to about $500/month. In the same time, stocks have tanked so that in the first quarter of this year, my IRA has decreased in value by over $10K. Bush and his neo-con cronies are intent on stealing the wealth of average conservatives and distributing it to speculators who are apparently free of any kind of reasonable regulation.

 

[WheelsRCool]

But who bats an eye when a corporate executive makes $100/hr or $500/hr or $1000/hr? Do corporate managers really work 5 times or 50 times harder during 8 hrs than they guy on the shop floor? I think not. And it's usually not even the executives/managers money, but the money of stockholders and bondholders.

The problem with the economy is not labor as much as it is lousy and excessively (even obscenely) overpaid management. IMO.

Remember though that you are not paid according to how hard you work, you are paid according to what you produce. If you only work one hour a day and somehow can make $30 million a year working one hour a day, then you are doing something in that one hour that produces something that the economy values enough to pay you $30 million a year.

What you produce is what counts, not how hard you work, for the most part.

If cafeteria workers want higher wages, they need to get a higher education. A cafeteria worker is an easily replaceable job I am going to guess, so it isn't going to command a high wage.

Personally, I blame the economy (which overall has done quite well I think) on greed amongst the American people, too many people spending themselves into credit card debt, using their home equity to finance purchases of SUVs and other expensive items that they should only buy if they can actually afford them, too many people took out mortgages they could not handle, and too many banks allowed them to, etc...thus crashing the housing markets and causing the credit crunch, and so on.

 

[Evo]

So a corporate manager gets fired, and walks with $91 million, but the folks at the bottom can't get better pay. I bet they don't have corporate expense accounts either. And I bet if they get fired, they don't get a generous severance package.

Well, yeah, that would be because of his contract. He can be a complete loser, but he somehow got to that level were he has a deal and the company has to honor that deal.

My company's former CEO was a complete loser and was ousted by the stockholders for nearly bankrupting the company. He got his multi-million dollar salary for a year, plus $52 million in severance and untold other perks. Because of his mistakes, thousands of people have lost their jobs to compensate for his errors.

I don't, however, see what this has to do with hourly workers or even salaried management. Obviously, if you are low on the totem pole, you have what you have. This has been the case since the beginning of time. Cerfs and land baron's. Royalty and commoners. Merchants and workers. Is there something surprising here?

 

[Poop-Loops]

I don't, however, see what this has to do with hourly workers or even salaried management. Obviously, if you are low on the totem pole, you have what you have. This has been the case since the beginning of time. Cerfs and land baron's. Royalty and commoners. Merchants and workers. Is there something surprising here?

The fact that you think it's alright is surprising to me. Astronuc is pretty pissed that the backbone of any corporation gets pissed on while the people who profit the most end up profiting even more, simply by getting fired!

 

[Evo]

The fact that you think it's alright is surprising to me. Astronuc is pretty pissed that the backbone of any corporation gets pissed on while the people who profit the most end up profiting even more, simply by getting fired!

I'm not naive and I happen to understand business. I have a degree in Business Management and have been put through ongoing education in business management. But one does not need to have a degree in business to understand that there are people that run the business and those that don't.

Like it or not, people that head big business get very lucrative contracts. The reality is that it is very hard to sever these contracts, regardless of how incompetant the person is and the costs to try to take away what that person has can be very costly and very detrimental, easier and cheaper to just get the loser out and try to turn the business around.

It is how things work, unless you want to try Communism, but ooops, that doesn't work does it? People in power have more than those not in power and that has always been the case.

Would it be better for these companies to not exist and thus no jobs?

Also, I never said I think it's all right, I said that is how it is. I think if the person is responsible for running the company into the ground they should not only get nothing when booted, they should be made to repay what they cost the company. But that's not how it works in the real world, that's just wishful thinking.

If we are going to discuss business, then we need to understand how business realistically operates.

 

[Astronuc]

Well, yeah, that would be because of his contract. He can be a complete loser, but he somehow got to that level were he has a deal and the company has to honor that deal.

My company's former CEO was a complete loser and was ousted by the stockholders for nearly bankrupting the company. He got his multi-million dollar salary for a year, plus $52 million in severance and untold other perks. Because of his mistakes, thousands of people have lost their jobs to compensate for his errors.

I don't, however, see what this has to do with hourly workers or even salaried management. Obviously, if you are low on the totem pole, you have what you have. This has been the case since the beginning of time. Cerfs and land baron's. Royalty and commoners. Merchants and workers. Is there something surprising here?

Not surprising - just unacceptable to me, and it's immoral and it's wrong. Just like mugging is wrong, but then mugging is illegal as well, but being greedy and incompetent isn't.

Like it or not, people that head big business get very lucrative contracts. The reality is that it is very hard to sever these contracts, regardless of how incompetant the person is and the costs to try to take away what that person has can be very costly and very detrimental, easier and cheaper to just get the loser out and try to turn the business around.

I fault the idiots who make those contracts. Whatever happened to oversight and fiduciary responsibility.

Most corporate managers are replaceable, or so it seems from the fact that companies find replacements.

 

[Jimmy Snyder]

Just like mugging is wrong, but then mugging is illegal as well, but being greedy and incompetent isn't.

You would make greed and incompetence illegal?

 

[WheelsRCool]

Not surprising - just unacceptable to me, and it's immoral and it's wrong. Just like mugging is wrong, but then mugging is illegal as well, but being greedy and incompetent isn't.

I fault the idiots who make those contracts. Whatever happened to oversight and fiduciary responsibility.

Corporate managers who command those kind of contracts have to be skilled at first to be able to demand that type of pay, it isn't just given to them. They get the contract, and if they bomb at running the corporation, then they lose the ability to command such high pay in the future. I'd imagine it's like actors/actresses in Hollywood. If you command $20 million per movie, you have to have worked your way up to that amount, but if your movies start bombing, your pay per movie goes down.

Not surprising - just unacceptable to me, and it's immoral and it's wrong.

I disagree. If that's what the contract was, that's what the contract was; but word will go out that they are a bad manager and the pay they can command in the future will decrease until they get better results.

 

[Astronuc]

I disagree. If that's what the contract was, that's what the contract was; but word will go out that they are a bad manager and the pay they can command in the future will decrease until they get better results.

After the damage is done.

 

[Jimmy Snyder]

A company never needs a good manager as when times are tough. The difference between losing $100 million and losing $200 million is worth, well, $100 million. If the manager is paid $50 million because they can make that kind of difference, then they are cheap, not expensive. You can't ignore the jobs that are saved by such a manager.