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ritr54
33 Comments
Surprising Call for Return to the Gold Standard
On Nov 19 08:25 AM Black Rain wrote:
> My theory is our current mess is GREED! It appears to me that risk
> has been mis-aligned with senior executive compensation. There is
> simply too much incentive to drive corporate earnings at any cost.
>
>
> Most compensation is in the form of stock options. When you are a
> CEO you only care about driving the earnings of your company during
> your tenure. There is no long-term consequences to taking outsized
> risks -- all of the risk lies with the shareholders if you put the
> company on a path to destruction that will play out years down the
> road.
>
> When you retire, the guy behind you (next CEO) has to take even bigger
> risks in order to keep driving earnings upward at an increasing pace
> to make HIS stock options pay off. Rinse and repeat as you go through
> multiple CEO's and you have a perfect recipe for overleveraging your
> balance sheet and taking unwarranted risks to drive as much short
> term earnings as you can.
>
> I think this is what caused Alan Greenspan to question his belief
> in the system. His view of the system was that companies would have
> a motivated interest in their own survival that would prevent them
> from doing the absurdly stupid. But how can that be when you are
> going to increase top CEO compensation from the normal $5M - $10M
> to $10s or 100s of millions for a few extra nickels and dimes of
> earnings today? The only way to achieve this would be to increase
> the risk your company is taking . . .
Credit Markets and the Price of Gold
Cramer's Lightning Round - Ceasefire on Northrop Grumman (11/12/08)
Don't Let Bulk Shippers Sink Your Portfolio... For Now
On Nov 10 05:10 AM antwillant wrote:
> An article like this might have been worth reading several months
> ago when stock prices were still high. In other words, its a bit
> late and using only hindsight as a measure of the value of the industry.
> As usual.
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