Now is the time at SDA when we juxtapose!
WSJ – Obama’s “Special Master for Compensation” orders 90% salary cut for execs at bailed out firms.
AP – Obama “to shift the massive bailout fund’s focus away from helping big financial institutions and toward homeowners and small businesses.”
More links at Drudgereport
Why I sold my US equity. You can’t properly appraise the risk/reward with the government changing the frigging rules every 3 or 4 months. What people that put their money up want is stability, as in the rules don’t keep changing at someone’s whim.
“They’ll claim they never saw it coming.”
Naw, they’ll shrug and say “What’s the big deal? Relax.”
Full disclosure. I’m a teacher and I used to tell my classes that the real difference between a third world country and a first world was property rights and stability of expectations. When it comes to , “how dare you earn more than me, you are to be punished for achieving”, then you are on the Third world road.
I understand that the Nazis also bullied German businesses like that. neo-Communists (China/Russia) do it, too.
Now, unless there’s something legal in writing that states that the state has the right to thusly treat bailout recipients, this is clearly illegal and un-American. Not to mention unconstitutional. Hell, might as well throw in “raaaacist”, just to make the Obamacrats look bad to guillible swing voters.
The state has no business dictating such things to the private sector.
It’s a good thing, now all of America can see central planning at work. The good people leave, the appointees take over and down the tubes they go. Ask any Conrad Black shareholder how well government appointees run a large corporation.
Obamanomics . . . borrow 43 cents of every government dollar you spend.
That should work out well in the long run.
If you only pretend to pay the piper, you can only pretend to call the tune.
“The state has no business dictating such things to the private sector.”
I completely agree in principle, Canadian Sentinel. The exception here is that private businesses sold their souls to the state in an attempt to save their skins. The state is now their master.
State control and dictates aside, crimping executive compensation might make for good copy for the politicians but it will kneecap the businesses.
KimW,
I think the difference between a 1st world country and a 3rd world country is one election.
That, and goats in the streets.
This will just result in the best (e.g. highest compensated) employees moving to companies without pay restrictions (e.g. Goldman Sachs).
Create a level playing field for all.
It’s like the union worker dilemma. If all workers worldwide belonged to unions, there’d be no competitive advantage, and consequently everyone would get higher pay, but the price of all goods would increase accordingly. The union employee would no longer have the capitalist benefit of receiving higher compensation than a non-union employee doing virtually the same job.
In my ethical world (which seems to be getting smaller and smaller), only an owner who owns 100% of the company (e.g. a private company) has the right to dictate comp for all its employees. Now as a lender, a person/entity may request specific concessions from the borrower at the time the loan is made, but these terms cannot be altered after the loan agreement is signed.
Can’t imagine that foreign owners of US debt like to see the US government changing loan terms after they’re contracted. Wouldn’t it be nice if the Chinese (and other US debtholders) decided to dictate comp for US government employees as a result of them constantly propping up that public “corporation”? Time to (literally) take the slow boat to China, Mr. Geithner. Better make that a climate friendly paddle boat.
I am actually happy. If this is a lesson to companies about idea that they can always run to the government for help, then good. They allowed the government into the boardroom through their own errors.
I shed no tears. And if the government screws them up further through these actions, I also shed no tears.
Stephen,
Unfortunately, the corollary to your statement is that the gov’t can make your (non-government) competitors extremely uncompetitive by putting restrictions on them by way of punitive legislation and enforcement. Thus, creating the “perfect storm” with respect to destroying capitalism.
Stephen, keep in mind that the government forced some banks to take money from the TARP. Does that sound like “running to the government for help?”
Stephen @ 850
The fact is, these banks were TOLD by the Obamabots, namely Paulson and Bernanke, that shoved the bailout down their throats, and told them, in effect, ‘we own you now’. They were scared the collapse of these large banks would be the final nail in Great Depression 2.0. No doubt their fears were real.
But there were some banks that didn’t necessarily need the money, Nonetheless, this was a non-negotiable deal. This was a de facto takeover of the US’s largest financial institutions, by this increasingly socialist administration.
So long as many of their Czar’s look towards Mao and the UN as their hero’s, the US is in deep sheep dip.
The real point everyone is missing on the New Paymaster Restrictions is this;
Look at the 7 companies affected.
AIG had a pay scandal that was resolved and it was found out that the Obama Administration approved then acted outraged at the payments ( I believe this was left as a populist outrage land mine to enrage the middle class and was done in full view of everyone via Chris Dodd and the Treasury), the rage was misplaced it should have been at the Government, not AIG or the people who were losing their jobs and getting payouts.The $1 CEO left over it.
GM and Chrysler just restructured in Bankruptcy and would be definition had to have re-negotiated the compensation plans. What we have here is a Gov retro-actively over-turning employment contracts based on a third party observer.
So lets play what would you do.
You work at GM, they fire your CEO, take the Company and give it to the Union, force courts to fast-track your bankruptcy. You stay on wanting to make a go of it, you sign a new reduced pay package, then in the 4Q of the year you get a memo that the President of the USA is via his Special Paymaster cutting your compensation 50-90%.
Would you stay in your job?
This is a limited test program if the citizens like it, meaning getting Dems votes and raising Obama’s Titanic impersonating approval ratings, look for it coming to all publicly traded companies near you. Finanacial and Insurance Companies first, Who is next?
Meanwhile, the perceived need to shift away from the Us dollar, marches on. After all, one can’t help but notice the new emerging banana republic that was the USA.
The banks did not do a good job of resisting the extra market directions. Banks were pressured to make NINJA loans. There was a southern bank that was told it could not operate by the regulators because it was making money. The regulators said they were not making enough loans that were bad. bambam and his ilk were going to the CEO’s and telling them they would be targets of the charge of racial discrimination if they did not make bad loans. Some with deep political connections didn’t care, they took the money and bailed. The SCC did not look into massive stock manipulation in the first failures. There were deep pockets pushing the failure (naked short selling) that has never been investigated. I suspect Soros but I will never know.
DanBC: “The fact is, these banks were TOLD by the Obamabots, namely Paulson and Bernanke ….”
Paulson’s an Obamabot? Bernanke too? Both appointed by George W. Bush? It’s news to me.
I have some problems with this discussion and they began when I read the remarks from my friend in Miss, Ontario. How many of us felt that the CAW was greedy and the workers wages had to be cut if our Government was to spend bail out money?
I read many columns including my own which argued that the Union greed had to stop. Having said that
I am not sure I would loan funds to a company that gave those funds to individuals who helped guide the organization into it’s troubles.
I don’t trust Mr Obama, mainly because we are known by who are friends are. His group has some really dangerous stinkers in the crowd. His biggest accomplishments to date has been to sow
hatred withing America and demonstrate intolerance toward anyone who has a different opinion.
But, If we argue; stay away from executive compensation, should we not say the same for big unions?
Well, no surprise, this is problematic. What does it mean in practical purposes to have “salary cuts”? Most of these guys get their money through BONUSES – remember – so that’s part of the genesis of the crisis – people were juicing profits because that increased their bonus. The National Post mentions that the CEO of Citigroup gets a $1 per year salary until the group returns to profit. “other stuff” added up to $10.8M last year.
Cut his salary by 50% – down to 50 cents? What about the bonuses? That’s the key.
Plus, what about all the underlings – will they get cut too?
It’s madness, I tells ya!
So I wonder. If GM took the bucks, can we also cut the pay of the head union guy.
You know it’s only fair. (-:
And when those banks can meet regulatory requirments on capital and pay back their loans then fine.
dont get me wrong, i dont like it, but if this keeps businesses from including government bailout as part of their plan then this is a good thing.
Its a useless tactic that leads to nowhere positive. But right now the government is an owner and they are acting like one. You dont want them as an owner dont put your company in the position that allows them to be.
Problem is right now the moral hazard around all the banks are still high, since the government has shown they wont let them fail. So actions like this are necessary in my opinion. I dont think it is how Obama intends it, but if everyone is disgusted, good.
I wonder how many of these executives voted for the Fascist-In-Chief? Seems so many of the elite were deluded by Ogabe’s flim-flam speeches and wanted on the ‘Popular’ bandwagon.
The government bailed out these failing businesses. It would be naive to think they wouldn’t rob them.
Just my thoughts.
Is that how it works, Erik? $10.8 million in bonuses?
You’ve just killed my CEO pity stone dead.
Which in no way detracts from my contempt for the Obama administration’s cynical, hammy populism.
What I’d like to know is why Goldman Sachs isn’t under the same restrictions??? Gosh, could it be because the white house is run by GS?
I wonder if Americans realize how absolutely pathetic their leadership is looking, observed by someone on the outside looking in??
It’s like the union worker dilemma. If all workers worldwide belonged to unions, there’d be no competitive advantage, and consequently everyone would get higher pay, but the price of all goods would increase accordingly. The union employee would no longer have the capitalist benefit of receiving higher compensation than a non-union employee doing virtually the same job.”
thus in a nutshell why I have no use and will never have any use for trade unionism.
they are gangsters resorting to bullying tactics, criminal acts like vandalism during strikes, illegal wildcat strikes and most of all, blackmail tactics during contract negotiations and exclusivity mentality when it comes to joining a union.
‘solidarity forever la la la’. uhuh, unless you’re out of the union and kept out by the union membership.