Parting Shot

Hectic day to say the least, but I am taking a break from it to return for a while to my second job, my blog. You know, the one that does not pay. But as I have always said, it is the work that does not pay that pays the most. You can quote me on that and you can pass it on to the few financial heads who are going without pay or bonus.

Auto Bailout?

Not so much a bailout as a short term lifeline. The government is throwing GM and Chrysler $13.4 billion in aid. This should allow GM and Chrysler to survive a few months though getting continuing aid after that will depend on the companies and their bondholders and union employees making some rather dramatic changes/concessions. I like it generally. It is certainly short term and it passes the buck to the next administration, but I would have done the same thing in W's shoes. I truly hate saying I would do the same thing as W, but I would in this case.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5s6IaFfulhM&refer=home

I will not begin to try to summarize this blog from Yves as there is too much to it (and I need to load bags in the car for attempting to travel tommorrow in a foot of snow). But the premise here is so very nice. News organizations, and their supporters, from both ends of the spectrum hate the TARP (count me in) and news outlets for both are looking to get to the bottom of it. And both are getting rebuffed. Go figure. Yves take is well worth the read. I especially like the J. Edgar Hoover line.

http://www.nakedcapitalism.com/2008/12/mirabile-dictu-fox-news-is-suing.html

Again, Good And Bad News

Oil down to $33 a barrel. This means pump prices should soon approach a dollar a gallon. While this is incredible, it will be only a medium term happening. Given the world-wide recession, it could last for a while, but sooner or later oil producing companies will do significant cuts in production realizing that it makes more sense to leave that Texas tea in the ground. Either way, oil this low spells out financial instability for Russia, so do not go popping the cork just yet. Their instability is our pain, eventuall.

Executive Pay(ola)

Here is a class assignment. Look for companies that seem to have done very well over time, including in the current financial crisis, and look at what their executives are paid in salary and bonus. I suspect that a lot of them will not be in the class of multi-million dollar salaries or bonuses paid to the failed financial company executives. Personally, I think they should be sued, but I am an attorney and that may be my natural tendencies taking over.

Nonetheless, these are people that should only do well in the long term when their companies do well in the long term.

Here is an idea. Let's set up shareholder meetings where the shareholders, much like the voters in California, can vote on resolutions about their executive pay. Now these executives have few more attractive options these days, so they are probably will just be happy to have a job. And here is another idea, do a resolution where most of the money each year is only paid if the company, and its stock price, continues to do well five or even ten years out. Heck, put in a claw back provision where the company can demand back past bonus payments. Easier yet, pay them bonus in stock options that can only be used after they retire. These are just suggestions, but the point is that we need to stop these insane salaries for executives because they simply try to pump up short term profit to inflate their own salaries.

We need to insure executives have a very long term horizon. Otherwise, just look for companies doing well where the executives are already taking reasonable pay and tying their fortune to their companies and invest in them.

Disclosure: None