Thursday, March 25, 2010

The big lie from Wall Street and the Automakers regarding compensation has always been,If you cut our salaries, our talent will leave and the firm's value will take a substantial hit. I have always maintained this was a big lie, with no basis in fact for the following reasons:
  • Talent is overrated- if one is truly superstar talent, people will knock on your door and try to poach you regardless of the economy
  • Talent is in abundance-there are more talented people without jobs who sit in Starbucks all day than people who are employed.
  • The unemployed talent would love to take your job for less money.
  • Executives under pay scrutiny have basically two options- take a haircut in pay or start your own firm. Option 2 costs money which most don't have

Today's NY Times confirms this big lie. Here are some excerpts:

“For months, Wall Street banks and the troubled automakers feverishly protested that their top executives would flee if they were not lavishly rewarded for their talents. New data, however, suggests the departures were more of a trickle than a flood.

Of the 104 senior executives whose pay was set by the federal pay regulator in the last two years, 88 executives, or nearly 85 percent, are still with the companies even though their pay was drastically cut back, according to people briefed on the government data.

The relative stability, at least within the executive suite, suggests that a soft job market, corporate loyalty and personal pride helped deter the feared management exodus at the companies hardest hit by the pay rules.”

Friday, September 18, 2009

Just as the GE hammer bottom we talked about in our March post was a great time to buy, now is a great time to sell. Middle to late September should be the ultimate time to get out. Yesterdays action was indicative of a short to intermediate term top. Leaders like GE made major reversals yesterday, forging into new high territory and closing lower on volume. Will this be a pause that refreshes or the beginning of the double dip to test the lows? No one knows for sure, if they claim that, they are liars. But I can smell profit taking.

Monday, September 14, 2009

One year after Lehman and nothing has changed. Banks will not lend you money but they will charge you exorbitant fees for overdrafts and late payments. Bank management will award themselves elaborate bonuses while laying off their underlings. Foreclosures continue to set records, NFL stadiums are not selling out, ticket sales on Broadway are down. The average persons life sucks whether or not the banking system was saved.

Monday, September 07, 2009

The 2009 Jerry Lewis telethon raised $60.5 million, $5 million less than last year, another sure sign that the economy is still in the pits, with no sign of meaningful recovery. Some multi decade trends have been reversed--first the State of Florida has lost population this year. This was the first year over year drop in over 60 years. Now, donations to the MDA telethon have waned. Further evidence that there is no money out there anymore.

Wednesday, July 01, 2009

Citibank aka Citislime, is fattening the salaries of its employees and at the same time raising the interest rates on 15 million credit card customers. They are able to be so bold because the government has their back. If the increased credit card rates lead to higher default rates, the government will bail them out again. There is no risk to Citislime so they are pushing the envelope. Either way they will get their money, either directly from you the credit card customer, or indirectly from you the taxpayer.

Friday, June 26, 2009

While walking my dog early this morning, I saw all my neighbors who work in finance very chipper as they headed for work. Banks are very busy pushing loans to close before the quarter ends on June 30th. They will report great earnings and pat themselves on the back with bonuses which they think they deserve, but we know they don't. After this "comeback" quarter, the economy will lapse back into a coma this summer. Bankers know how to strike when the iron is hot, and they really know how to get paid! They know how to rip off the consumer and they know how to overpay themselves. America is a great country! Nothing has changed. They may have been humbled for a couple of months, but they are now as arrogant as ever. Those that still have jobs that is.

Friday, June 19, 2009

Apple is trading around $138 today. It is a sale, and if you are aggressive, it is a short for two reasons: 1. It has rallied over 75% in a little over 3 months; more importantly, it unveiled the next generation I-phone, but the buzz was muted. No lines outside most Apple stores; Blackberry and Palm are also more formidable alternatives.