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Obama Blasts Wall Street's Bonuses

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Joe,

The differences in values of those CEO pigs and ordinary folks who are trying to get by in this consciousness is way beyond comprehension. Obama is an amazing individual. I knew I would vote for him 2 years ago simply by reading the title of his book that I just read, the audacity of hope. Thats courage.

Steve

 

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Joe,

The differences in values of those CEO pigs and ordinary folks who are trying to get by in this consciousness is way beyond comprehension. Obama is an amazing individual. I knew I would vote for him 2 years ago simply by reading the title of his book that I just read, the audacity of hope. Thats courage.

Steve

 

 

I voted for him as well, and hope that he can make a difference. However, I really don't care whether or not these CEO's get scolded - who is going to DO SOMETHING about it.

 

I am sure there is a reason, and I am being naive. But, why do the banks and CEO's that dropped the bag, and now continue to show no concern for taxpayer money need to be the ones to get the economy going?

 

I would love to see them come out and say - " These 10 banks (if there are 10) relied on solid lending practices, have a good business model, did not sell their soul for greed, gave out reasonable bonuses and as a result really do not NEED any bailing out. And, that is why we are going to invest the bailout money with them, while we let some of these others go under. We are confident that they will make the best use of the taxpayer's money going forward to get the economy back on track, and free up credit."

 

It makes me so angry to see this going on. It is criminal. And yet, if you have a nice suit and more money than you can count, it is ok to steal - STEAL - from other people. How is it what is going on any different than fraud or embezzlement when it comes right down to it. If you walk in off the street and demand money from a bank cashier, you are put in prison. If you run the bank, lie about its viability, construct deceptive lending processes and then write yourself checks while the ship sinks, well, that is ok????

 

There is only one thing that the really rich fear - going to jail. These people need to be put in prison. REAL prison, for a long time. That is the ONLY way any of this will ever stop. New laws and policies just make new loopholes - more intricate and difficult to find than before.

 

I find all of this so depressing.

 

Is there an investment vehicle that has returns which hinge on the level of corruption in business, banking and government? Because that is really the only thing in the market that I have faith in right now - corruption growing and expanding.

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Hi Kev,

One observation is beyond doubt, public schools have a difficult time educating children from poverty environment where as the justice system has a difficult time indicting, successfully prosecuting and jailing of individuals who are in privileged social economic positions. The exact opposite is also true: public schools have no problem educating middle and upper middle class students and the justice system has no problem indicting, prosecuting and jailing poor people of all ages. Its more complicated than just that rich can hire the best defense attorneys than poorer people; because certain wealthy individuals are institutions of themselves and when their prosecution affects thousands of others, the justice system cannot deal with the implications. While its never admitted publically, there have been a handful of people who are above the law. I can think of two world leaders, one US president and the emperor of Japan during and after WWII who were above the law, neither was prosecuted nor jailed. Sure, there are exceptions, but the violation has to be very clear and political such as Madoff and a few others.

 

I bet not one of the CEOs will go to jail. Heck, the worst of them all Madoff is out on bail!

2 cents worth,

Steve

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I take a different view. CEO's have every right to pay whatever bonuses they want. How on earth can Congress effectively legislate something like pay and compensation? Are we going to nationalize decisions like this now?

 

My complaint is with:

 

1) The boards of directors who blindly go along with this kind of compensation, and

2) Institutional investors who do not raise a stink about it.

 

Consider #2. If institutional investors dumped the stock of companies who pay exorbitant sums of money to people who are doing a poor job, the stock of those companies would go down the toilet. That would be a far better deterrent than having the morons in Congress try to legislate something like pay and compensation.

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I take a different view. CEO's have every right to pay whatever bonuses they want. How on earth can Congress effectively legislate something like pay and compensation? Are we going to nationalize decisions like this now?

 

My complaint is with:

 

1) The boards of directors who blindly go along with this kind of compensation, and

2) Institutional investors who do not raise a stink about it.

 

Consider #2. If institutional investors dumped the stock of companies who pay exorbitant sums of money to people who are doing a poor job, the stock of those companies would go down the toilet. That would be a far better deterrent than having the morons in Congress try to legislate something like pay and compensation.

 

 

 

Oh, I agree there. I don't really want congress to begin legislating their pay. I guess I am just frustrated with the concept that it is fine to lie and deceive average people out of their money (taxes or investors) if you are rich. It is definitely also the fault of the boards, and other higher up's as well. But, they are all doing the same thing too. A collective handful of people have brought our country's economy to its knees, all the while enriching themselves and their friends. And, ultimately, they will never have anything to answer to. Average people will lose everything they have worked for their entire life. But those responsible will simply have to figure out which of their houses they will visit this weekend, and whether to take the private jet or the boat to get there.

 

One of the big complaints about Obama was that he wanted to "redistribute" wealth. Anyone who does not think that plenty of wealth was not "redistributed" over the past decade is kidding themselves. It is just that it was getting distributed to those who already had a lot of it.

 

I also agree that the best solution is to no longer "buy" the shares of these companies. However,the vast majority of average people cannot really "sell their shares" in bad companies, because most that invest use mutual funds. I mean how do I go about selling my shares without sacrificing my ability to invest at all??? I don't know what the answer is, but right now, our country has a total lack of integrity. Personal greed in unimaginable quantities is commonplace in all areas that have any ability to do anything about this at all. No one, and I mean no one has done anything about the problems. Money has been thrown at the symptoms, but no one is willing to fix the problem. That is what frustrates me about the idea that Obama is "mad" at wall street. So what? Give me 50 million dollars and he can be mad at me too. If no one will do anything other than give them a stern talking to, while handing them another bag of money, why on earth would you expect that anything will ever change.

 

Like I said, it is all very demoralizing.

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AP and Kev,

At the end of the day, it falls back on the individual to educate themselves financially to be their own adviser. When investers use low cost indices, those "bad companies" become a tiny part of the portfolio because the risk is spread all across the economy. Indices have extreemly low costs, no commissions, no 12b fees and no trading costs, so those pig CEOs are not making any money off of index investors. There are no managers period. Why? because managers add NO VALUE! Add on a portion of your portfolio with bonds equal to your age or more and BANG you have a plan that you can stick with through thick or thin.

 

During this crisis, not one piece of bad news linked either Vanguard or TIAA CREF to any improper behavior.

High ethical behavior with the values of long term thinking, patience, good diversification plan geared with one's risk tolerance, thinking of the greater good does pay off quantitively. These qualitative values produce a good quantitative investment plan. Its interesting how both these seemly opposite values are linked.

 

Steve

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Kev, Steve and others,

 

I concur that these SOBs at the top of the food chain are part of the problem. It's frustrating to know that we can do so little about it. On the other hand, it's been worthwhile to realize that around here the credit unions and small, local banks have not been party to these shenanigans.

 

It may sound twisted, but I think that often those large amounts of $$ in the paycheck lead TO eroded human values and more irresponsible behavior. It doesn't seem that the companies he paid their leaders smaller but respectable salaries ended up needing bailouts.

 

As evidence of my belief that high pay for CEOs leads to irresponsible behavior, here's an article about the ###### Scouts selling off forested land across the country for the $$$$. And way deep in the article you find the rather astronomical amounts being paid to the leadership all of a sudden. And maybe with the pay hikes the value system was thrown out the window?

 

http://seattlepi.nwsource.com/specials/sco...gingmain29.html

 

JudyS

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Like a broken record...

 

If you invest through a mutual fund (e.g. one of Vanguard's index funds), you can encourage those fund managers to put forth resolutions and use their votes to improve corporate governance.

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Like a broken record...

 

If you invest through a mutual fund (e.g. one of Vanguard's index funds), you can encourage those fund managers to put forth resolutions and use their votes to improve corporate governance.

 

 

If one uses an index fund, there are no managers to encourage. Its a moot point. I don't really care about corporate governance. The CEO packages are passed with the corrupt and conflict of interest, yes-men boards. Many members are CEOs of other companies, its the good ole buddy system.

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Actually, index funds do have managers.

 

For instance, if you are on the Vanguard site, once you select your fund, you may find the fund manager by selecting the Portfolio and Management tab. For example, the Vanguard 500 Index Fund Investors Shares (VFINX) is managed by Michael H. Buek, CFA.

 

Managers of index funds may make proxy votes.

 

Vanguard managers do vote. See for example these two articles (I think the second article is particularly pertinent):

 

http://news.morningstar.com/newsnet/ViewNe...1A47E0_univ.xml

 

http://articles.latimes.com/2004/sep/07/business/fi-proxy7

 

This website provides a quick overview of how often fund managers vote.

 

http://www.proxydemocracy.org/data/funds/62

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I'm not defending Wall Street, after all I refer to them in my blog as "Hubris Street", but they aren't all bad and some good people work there (many of them no longer because of idiot risk managers (read: CEO')).

 

I find it hard to take the President's complaints seriously considering the amount of pork and non-stimulus spending in the "stimulus" bill. Congress can complain about executive compensation all they want, but at the end of the day who is borrowing and spending more of OUR money? Congress. That is about all they've done for the past six years, nothing changed two years ago when the Dem's took over and now again nothing has changed. It appears that the Republicans and the Democrats have much more in common than people think - they both agree on one thing.......Spend, Spend, Spend......let the grandchildren pay for it. Now that's bi-partisanship!

 

ScottyD

 

 

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Mr. Buek "manages" 7 funds. But you make it sound as though his management activities are similar to a manager who is an active fund manager. Not in your life. Lets not confuse people, there is a huge significant difference not only in costs, commissions and fees, but the to the very heart and philosophy of investing.

More about Buek: http://www.whartonfinanceconference.com/fin2006/p_Buek.asp

 

Scotty,

If the government can't, or shouldn't because of their own greed, to save capitalism from itself, who will? Read on I watched the Davo's debate with great interest.

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If the government can't, or shouldn't because of their own greed, to save capitalism from itself, who will?

 

Is this really what the federal government is doing? I don't see a whole lot of effort at saving capitalism, but I sure see a good deal of effort at socializing the economy.

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