You are correct, ramrocks. We have too many people in government postions who haven’t the slightest clue about economics or how business works. Throw out the lawyers.

Biden has positioned a placeholder in his Senate seat until his son can assume his entitlement. Is the son equally dumb? Are we at the mercy of his DNA?

Here is a repeat of an idea addressing the economic crisis that focuses on a root cause of the meltdown (overleveraging) while offering a solution and making the perpetrators eat their bad decisions and forcing them to act responsibly. This citation appeared in WSJ’s “Best of the Web”.

A Financial Innovation Everyone Should Love
“Credit Suisse Group AG’s investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees’ year-end bonuses,” Bloomberg reports:

The bank will use leveraged loans and commercial mortgage- backed debt, some of the securities blamed for generating the worst financial crisis since the Great Depression, to fund executive compensation packages, people familiar with the matter said. The new policy applies only to managing directors and directors, the two most senior ranks at the Zurich-based company, according to a memo sent to employees today.

“While the solution we have come up with may not be ideal for everyone, we believe it strikes the appropriate balance among the interests of our employees, shareholders and regulators and helps position us well for 2009,” Chief Executive Officer Brady Dougan and Paul Calello, CEO of the investment bank, said in the memo.

The securities will be placed into a so-called Partner Asset Facility, and affected employees at the bank, Switzerland’s second biggest, will be given stakes in the facility as part of their pay. Bonuses will take the first hit should the securities decline further in value.
This is such a great idea, we’re surprised it took this long for someone to think of it. And contrary to the memo, this does seem “ideal for everyone.” Shareholders gets relief from the risk associated with imprudent investments. Credit Suisse executives get their bonuses despite having made those imprudent investments–and if the risk pays off, they get the reward. What’s not to like?

Our anger and sense of betrayal lie in the realization that those in government and finance will not ever have to suffer the consequences of their misguided actions.

onlineanalyst on December 20, 2008 at 3:34 AM