Mr. Hall (from Citigroup) is in the news. Should receive his 100 million dollar bonus for good performance. Difficult question these days. In today's climate, this might be a problem. Mr. Hall seems to think so. He is currently looking for an alternative job, probably at a company who did not receive bailout money.
I have a simple solution. Capitalism, which I support, should support companies paying bonuses in proportion to the money earned. However, the percentage of profit should be moderate. Mr. Hall generated 5 billion in profits for Citigroup in the past 5 years. 100 million is 2 percent of this total. This seems reasonable, *if* the profit is for work done in the past 5 years.
However, what if he loses money for the company one year? In that case, I believe the salary should be decreased by the same percentage, or he should owe money accordingly. Thus, if he lost 5 billion for the company one year, he would have to return 100 million dollars. In that way, it is the employee who pay the company for failure. This kind of rule would give the manager incentive to take less risk. Less gain, but also less loss. On the other hand, it would not prevent some managers from taking continued risk: the managers who truly believe they are good.
Sunday, August 2, 2009
Friday, July 31, 2009
Health care overhaul
In principle, I am against government-run health care because the government has a poor record of running programs efficiently and on budget. On the other hand, I fully understand that health services in this country are out of control, are rising at a yearly rate much higher than inflation, shut out many people from reasonable health care. Of course, one could ask: why should we live beyond 70 years old? Some people stay healthy longer. Of course. So why must we keep people on life support or keep treating people who are terminally ill once they can no longer take care or themselves? What is the point. Ok, so we do not like euthanasia. So let us work within the current system.
There is too much partisanship. Our congressmen (of both parties), make decisions based on electability rather than on what is good for the country. How do I know? Because if they were given a quiz on the health care bill, I would wager good money that they could not answer questions as to content.
Before any statements are made as to our current system (whether by the president, or by our representatives), and before I decide what is best, let us get the answer to the following questions:
1) How much do all the insured pay per year to health care insurance providers (total, per insured inhabitant, and per inhabitant, whether insured or not)
2) How much of health care insurance is disbursed to court proceedings to handle suits (frivolous or not), pay lawyers, give rewards, etc.
3) How much of health care is actually given for doctor salaries
4) How much of health care pays hospital procedures
5) How much of health care pays for senior centers, long term care facilities, etc.
6) More breakdown that I have not considered
Only once we know the answers to the above questions, can we answer objectively:
1) why is health care increasing much more than insurance?
2) why should people on government insurance have access to the latest technology that people with expensive health care packages have access to?
3) what are the projected rise in costs over the next 20 years
(I doubt that projected cost increases take into account suing for example)
Given that these questions are not asked or answered shows me how non-serious everybody is about health care reform, and I include the president in this group.
There is too much partisanship. Our congressmen (of both parties), make decisions based on electability rather than on what is good for the country. How do I know? Because if they were given a quiz on the health care bill, I would wager good money that they could not answer questions as to content.
Before any statements are made as to our current system (whether by the president, or by our representatives), and before I decide what is best, let us get the answer to the following questions:
1) How much do all the insured pay per year to health care insurance providers (total, per insured inhabitant, and per inhabitant, whether insured or not)
2) How much of health care insurance is disbursed to court proceedings to handle suits (frivolous or not), pay lawyers, give rewards, etc.
3) How much of health care is actually given for doctor salaries
4) How much of health care pays hospital procedures
5) How much of health care pays for senior centers, long term care facilities, etc.
6) More breakdown that I have not considered
Only once we know the answers to the above questions, can we answer objectively:
1) why is health care increasing much more than insurance?
2) why should people on government insurance have access to the latest technology that people with expensive health care packages have access to?
3) what are the projected rise in costs over the next 20 years
(I doubt that projected cost increases take into account suing for example)
Given that these questions are not asked or answered shows me how non-serious everybody is about health care reform, and I include the president in this group.
Thursday, July 23, 2009
President's stupid comment
I did not hear President's news conference Wed night, but reading the news reports I must say that he made a very stupid comment when asked to comment on the events surrounding the arrest of Henry Louis Gates Jr., a Harvard professor, in his home Monday, Mr Obama reportedly said:
"Cambridge police acted stupidly in arresting somebody when there was already proof that they were in their own home."
What makes your remark stupid, Mr. president, is that you did acknowledge not knowing all the facts surrounding the arrest of Mr Gates, yet you issued your judgment about the work of those particular law enforcement officers involved in the incident. Very, very bad and shamefully stupid remark, Mr. President, regardless of anything else involved. You should know better than that!
"Cambridge police acted stupidly in arresting somebody when there was already proof that they were in their own home."
What makes your remark stupid, Mr. president, is that you did acknowledge not knowing all the facts surrounding the arrest of Mr Gates, yet you issued your judgment about the work of those particular law enforcement officers involved in the incident. Very, very bad and shamefully stupid remark, Mr. President, regardless of anything else involved. You should know better than that!
Tuesday, May 19, 2009
Buying vaporware
So, there is all this hoopla about unfair banking practices, customers lured into contracts attractive at first, but with unsustainable conditions later on causing people to default, etc., etc. And the vendors are usually blamed for greed, conning, etc.
But, what about our individual responsibility to make informed buying decisions? I can understand if the language is really obscure. But sometimes language is right there starring us in the face and yet, we still go for it.
For example, I just today purchased an item on line and dutifully signed away any vendor's responsibility for the product by agreeing to the following language:
If things go wrong, I deserve no sympathy for my unwise buying decision.
How many times did you agree to such conditions or signed a long tightly typed document without reading it?
But, what about our individual responsibility to make informed buying decisions? I can understand if the language is really obscure. But sometimes language is right there starring us in the face and yet, we still go for it.
For example, I just today purchased an item on line and dutifully signed away any vendor's responsibility for the product by agreeing to the following language:
Because each application is unique, XXXXXX makes no warranty as to the merchantability or suitability of any product for a particular use, nor will we be liable for any indirect, incidental or consequential damages that may arise from the use or sale of our product.
If things go wrong, I deserve no sympathy for my unwise buying decision.
How many times did you agree to such conditions or signed a long tightly typed document without reading it?
Sunday, March 15, 2009
A whole lotta B.S.
After being gone for three weeks and two weeks back in the country, I watched the Sunday talking heads series on ABC/CBS/NBC. Various government officials are being questioned mostly about the on-going economic/financial crisis. And, did I learn anything new? No! I heard just a whole lot of hot air, excuses, insinuations, pretense, politicking. Well, what did I expect?
One thing that sticks out in my mind is this issue of the so-called bonuses paid out to various financial institutions executives. My government dished a whole lotta dough in our name to these institutions and we are getting a whole lotta B.S. back.
We ask how come execs are personally getting millions from our money for running those businesses into the ground. We are told, you know, it's all these contracts and such which need to be honored; we honor contracts in this country; we are a country of laws.
Well, that may be so, but let me see. A bonus, in my book, is what you get for something you did well! A so-called bonus is not a bonus if it is contractually guaranteed and not being performance related, no?
What am I missing in this picture? For example, I am told that my government owns 80% of AIG on my behalf and is not empowered to force it to behave! Something is really, really rotten in this historic scam.
One thing that sticks out in my mind is this issue of the so-called bonuses paid out to various financial institutions executives. My government dished a whole lotta dough in our name to these institutions and we are getting a whole lotta B.S. back.
We ask how come execs are personally getting millions from our money for running those businesses into the ground. We are told, you know, it's all these contracts and such which need to be honored; we honor contracts in this country; we are a country of laws.
Well, that may be so, but let me see. A bonus, in my book, is what you get for something you did well! A so-called bonus is not a bonus if it is contractually guaranteed and not being performance related, no?
What am I missing in this picture? For example, I am told that my government owns 80% of AIG on my behalf and is not empowered to force it to behave! Something is really, really rotten in this historic scam.
Wednesday, November 19, 2008
change vs experience
As Pres-elect Obama is gathering his team, there are cries out there that he is betraying his "change" mantra by considering and appointing seasoned Washington operators for key cabinet and staff positions. What those voices are forgetting or choose to forget if the the President is in charge of the vision and direction and tom a large extent the implementation of those.
What he needs is a team of folks who can get things done, not folks who would be "yes" men and women. So, in the nutshell it is perfectly reasonable to bring into the executive branch those who know how to execute plans. In my view, Hillary Clinton would be a welcome addition to the cabinet. Details can be worked out.
What he needs is a team of folks who can get things done, not folks who would be "yes" men and women. So, in the nutshell it is perfectly reasonable to bring into the executive branch those who know how to execute plans. In my view, Hillary Clinton would be a welcome addition to the cabinet. Details can be worked out.
Friday, November 14, 2008
believe it or not
A friend asked me the other day:
"Perhaps you could explain the following:
"From newspapers and radio:
"More and more people have mortgages that are worth less than the worth of their house, so that these people have negative cash flow. As if that were a bad thing, and I do not even understand. If your job has not changed, and you could afford your mortgage, then nothing has changed. The value of your home decreasing would decrease your taxes (theoretically), and if you had to sell, so what? This is a great opportunity to purchase a home as well. Now, if you have lost your job, then it is another matter, but it has nothing to do with the decreasing value of your home. People should not be borrowing against their home as a matter of principle. It is probably those people who are in dire straits, and they should be!"
And, so I said:
It is mostly those who risked and took out mortgages at the adjustable rate, lured by low monthly payments to start with which then went up beyond what they could afford, thinking perhaps that they could re-finance, scoop up some resulting cash (if the prices kept going up), and thus keep on riding the wave. Well, the wave receded and they fell flat on their backs.
Additionally, even if mortgage payments did not go up, prices of other items did, thus reducing the available cash for other purposes (repairs, medical costs, entertainment, transportation, etc. etc.).
In my view, unless I can be reasonably certain to be able to afford future higher payments or be able to sell the home at a higher price, I would be really stupid to get into the variable rate mortgage deals I can not afford. In my view, those who did should lose their homes.
The reality is that all this hubbub about rescuing homeowners is another lie and deception. It has nothing to do with being humane but has everything to do with keeping the top echelons afloat and opening huge holes for future speculation and huge rip-offs of our money. How can you explain huge daily ups and downs in the stock market? Some, possibly those who actually have an influence on the direction market goes, are pocketing huge, unheard of super-profits.
These times are fantastic for speculators who also dare to manipulate the market as our attention is being kept elsewhere, they are reaping gigantic profits (4-6%, or even 1-2% daily is huge). If I had the desire to gain in this way I would be a very happy guy these days. You don't hear Buffets and the like complain, do you? I've got nothing against him and his ilk, more power to them!
This is like some whales fish. First they circle and circle tighter and tighter around and below a school of herrings, frighten them into a "corner," and then just scoop them up with open mouths without them even knowing what befell them. Like sheep running behind a blind ram and peacefully falling off the cliff. Except this ram is not blind but pretends he is and has a golden parachute attached to his back.
I could go on and on about this. I am not angry about it. I just continue to be disappointed in human race, disappointed in those who are willing to follow false prophets, follow something without knowing what it is they are really following. But, you know that's how I am. I want to understand before I accept. I am not much of a believer, which sometimes drives you mad.
And then he said:
"True. However I do agree with your analysis. I believe very little of what I hear. I ask questions as well. However, tango* is different from economy. And related to economy, one can be frozen and do nothing. I like you, have no sympathy for those who made poor decisions or were conned into doing so."
"Perhaps you could explain the following:
"From newspapers and radio:
"More and more people have mortgages that are worth less than the worth of their house, so that these people have negative cash flow. As if that were a bad thing, and I do not even understand. If your job has not changed, and you could afford your mortgage, then nothing has changed. The value of your home decreasing would decrease your taxes (theoretically), and if you had to sell, so what? This is a great opportunity to purchase a home as well. Now, if you have lost your job, then it is another matter, but it has nothing to do with the decreasing value of your home. People should not be borrowing against their home as a matter of principle. It is probably those people who are in dire straits, and they should be!"
And, so I said:
It is mostly those who risked and took out mortgages at the adjustable rate, lured by low monthly payments to start with which then went up beyond what they could afford, thinking perhaps that they could re-finance, scoop up some resulting cash (if the prices kept going up), and thus keep on riding the wave. Well, the wave receded and they fell flat on their backs.
Additionally, even if mortgage payments did not go up, prices of other items did, thus reducing the available cash for other purposes (repairs, medical costs, entertainment, transportation, etc. etc.).
In my view, unless I can be reasonably certain to be able to afford future higher payments or be able to sell the home at a higher price, I would be really stupid to get into the variable rate mortgage deals I can not afford. In my view, those who did should lose their homes.
The reality is that all this hubbub about rescuing homeowners is another lie and deception. It has nothing to do with being humane but has everything to do with keeping the top echelons afloat and opening huge holes for future speculation and huge rip-offs of our money. How can you explain huge daily ups and downs in the stock market? Some, possibly those who actually have an influence on the direction market goes, are pocketing huge, unheard of super-profits.
These times are fantastic for speculators who also dare to manipulate the market as our attention is being kept elsewhere, they are reaping gigantic profits (4-6%, or even 1-2% daily is huge). If I had the desire to gain in this way I would be a very happy guy these days. You don't hear Buffets and the like complain, do you? I've got nothing against him and his ilk, more power to them!
This is like some whales fish. First they circle and circle tighter and tighter around and below a school of herrings, frighten them into a "corner," and then just scoop them up with open mouths without them even knowing what befell them. Like sheep running behind a blind ram and peacefully falling off the cliff. Except this ram is not blind but pretends he is and has a golden parachute attached to his back.
I could go on and on about this. I am not angry about it. I just continue to be disappointed in human race, disappointed in those who are willing to follow false prophets, follow something without knowing what it is they are really following. But, you know that's how I am. I want to understand before I accept. I am not much of a believer, which sometimes drives you mad.
And then he said:
"True. However I do agree with your analysis. I believe very little of what I hear. I ask questions as well. However, tango* is different from economy. And related to economy, one can be frozen and do nothing. I like you, have no sympathy for those who made poor decisions or were conned into doing so."
I thought this was sufficiently interesting, so -- here it is.
* my friend and I share passion for tango.
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