The Economy


Normally open July 4th only---the one day a year when partisan politics, religion, etc. are acceptable topics on this Board (within reason). The forum is now closed.

Postby paulthefan » Fri Sep 19, 2008 9:49 pm

lonewolf wrote:Where do you draw the line?


investment bank CEOs have been deemed entitled to millions of dollars by other bank CEOs.
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Postby Kurt Francis » Sat Sep 20, 2008 3:31 am

DELETED - Accidental quote instead of edit from above
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Postby Kurt Francis » Sat Sep 20, 2008 3:53 am

bad hammy wrote:Kurt,

Wow, did you have maybe too much coffee today??? All of that just because I used the word 'worker'???? Last time I checked anyone who earns a living, generally with a resultant paycheck, was by definition a worker. Get a grip . . .


Bad hammy,

Like I said, my comments were not directed at you personally. The term "worker" is a term used by those who promote class warfare in the political arena. The underlying assumption behind it is that there are certain people who "work" and those above them don't.

I AM NOT A WORKER. I have been an EMPLOYEE, freely choosing to trade my time and labors in return for monetary rewards. I make no claims to rewards other than those that I have duly earned.

I have now moved into the role of OWNER, having recently begun my own business. I will engage in activities that I freely enter into, as I did as an employee, with greater risk now in hopes of greater rewards. However, I still make no claims to rewards other than those I agree to that I have duly earned with my customers.

Sorry, Bad hammy, but the term "worker" is a perjorative word with me, and no, I have no coffee this morning, yet. Just getting warmed up in the bullpen :D
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Postby Kurt Francis » Sat Sep 20, 2008 4:19 am

rasb wrote:
malmo wrote:
rasb wrote:and their home values are plummeting, )


Do you really believe that over-priced homes shouldn't fall in value? What are you smoking?


Smoking nothing - just sipping some fine Canadian home brew.
But, malmo, you know what I am saying. Don't just pick out one snippet, and try to make your point, please. My impression is that the average, hard-working American family, who are just trying to keep their jobs, and raise their kids, and have a life, are being buffeted (no pun intended) by forces which are totally beyond their control or comprehension, really, because who can comprehend that the Feds will jump in and bail out this or that, and then change their minds, and then change them again. My sense is that the worst is far from over, and you honestly don't believe that the little guy on the street is responsible for this mess, do you? Or can somehow immunize themselves to avoid what's going on?


Yes, the "little guy" on the street is to blame, also, for ageeing to loans that were well beyond their means to affordably pay off. Nothing is guaranteed in this life, nor should it be, as we are all human beings with inherent flaws. Much wisdom has been passed down from the ages with regard to how to conduct oneself in financial matters, yet people, including myself, fail to heed such wisdom from hard learned lessons of the past. For instance, the wisdom of not agreeing to loan terms that would make housing more than 30% of your take home pay. Or buying a home when your credit is less than very good and ending up paying sub-prime interest rates.

Both lenders and borrowers have been at fault to the same degree in this mess. Both are guilty of greed. Both should suffer the consequences for their actions. I made my own mistakes financially in the past, and I paid everything I owned plus MUCH interest on the principal. I went through my own particular financial hell, and so should those suffering today. Unfortunately, this is how we learn as human beings. Without consequences for poor decisions, nothing is learned, and decisions like what have been made this week in the Fed have done little to change behaviors among enough people.

Kurt
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Postby Pego » Sat Sep 20, 2008 5:14 am

malmo wrote:Those who gave mortgages to people without verifiable income or credit then repackaged them into undecipherable CDOs and shipped it off in "traunches" to institutional investors, all of them with MBAs from top schools, lost their asses. They SHOULD lose their asses. It was "totally within their control and comprehension" too.


I don't think, there would be much sympathy from any corner here for those predators, or people that bought homes well beyond their budget, but.....
Once are these potentially disasterous financial instruments repackaged into all sorts of mutual funds, owned by retirement funds and tank, the value of those mutual funds nosedives.
These are the people (current and potential retirees) that get hit without a fault of their own. I think, these are the "little guys in the street" of rasb and bad hammy.
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Postby tandfman » Sat Sep 20, 2008 5:49 am

I'm guessing that the very high end of the real estate market is going to fall apart soon. You've got all of these financial hot shot types who made a few million bucks a year for a few years and just assumed that they'd be doing that for the rest of their careers. So they went out and bought houses that they thought they could afford. Now quite a few of them are out of jobs, and many others are looking at having to live on their base pay (which may be a small fraction of what their total comp has been). They're going to have to reduce their housing costs, and there will be a whole bunch of multi-million dollar houses on the market.

If you're among the survivors of this mess and can afford to put that kind of money into your personal residence or second home, you may find some real buying opportunities out there. This would be a great time to trade up your house, if you have enough money to do that without otherwise compromising your lifestyle. There will be bargains.
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Postby jazzcyclist » Sat Sep 20, 2008 6:46 am

One idea that I've heard that I believe would have bipartisan support, would be that any company that gets bailed out by the government could pay no one in that company more than a GS15 for so many years or until the government gets repaid.
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Postby tandfman » Sat Sep 20, 2008 7:04 am

jazzcyclist wrote:One idea that I've heard that I believe would have bipartisan support, would be that any company that gets bailed out by the government could pay no one in that company more than a GS15 for so many years or until the government gets repaid.

I am as disturbed by excessive bonuses as anyone, but I'd be concerned that a restriction like that would cause talented and valuable executives to leave and seek appropriate comp elsewhere.
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Postby paulthefan » Sat Sep 20, 2008 7:31 am

tandfman wrote:
jazzcyclist wrote:One idea that I've heard that I believe would have bipartisan support, would be that any company that gets bailed out by the government could pay no one in that company more than a GS15 for so many years or until the government gets repaid.

I am as disturbed by excessive bonuses as anyone, but I'd be concerned that a restriction like that would cause talented and valuable executives to leave and seek appropriate comp elsewhere.


I have a talent too: Golf, lets go for a round and discuss how I can vote to give you a 10million dollar bonus while your company is soaring like a frozen turkey if you will vote on my board to give me a 20million dollar bonus, we can hire someone else and give him a GS15 salary to ensure that those bonuses do not show up on the balance sheet
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Postby jazzcyclist » Sat Sep 20, 2008 7:39 am

paulthefan wrote:
tandfman wrote:
jazzcyclist wrote:One idea that I've heard that I believe would have bipartisan support, would be that any company that gets bailed out by the government could pay no one in that company more than a GS15 for so many years or until the government gets repaid.

I am as disturbed by excessive bonuses as anyone, but I'd be concerned that a restriction like that would cause talented and valuable executives to leave and seek appropriate comp elsewhere.


I have a talent too: Golf, lets go for a round and discuss how I can vote to give you a 10million dollar bonus while your company is soaring like a frozen turkey if you will vote on my board to give me a 20million dollar bonus, we can hire someone else and give him a GS15 salary to ensure that those bonuses do not show up on the balance sheet

The bonuses would be considered part of the compensation under my plan and the the GS15 salary restriction would only apply to companies that had to be bailed out by the government, not all companies. Other companies would still be free to pay their executives whatever they want. The truly gifted executives would look at these companies as opportunities. If they're really good, they will be able to turn the company around and get paid anyway. The incompetent executives will stay stuck at a GS15 salary. Remember, Lee Iacocca agreed to work for a one dollar salary until he turned Chrysler around, but he didn't leave Chrysler empty-handed.
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Postby Vince » Sat Sep 20, 2008 8:56 am

jazzcyclist wrote:
paulthefan wrote:
tandfman wrote:
jazzcyclist wrote:One idea that I've heard that I believe would have bipartisan support, would be that any company that gets bailed out by the government could pay no one in that company more than a GS15 for so many years or until the government gets repaid.

I am as disturbed by excessive bonuses as anyone, but I'd be concerned that a restriction like that would cause talented and valuable executives to leave and seek appropriate comp elsewhere.


I have a talent too: Golf, lets go for a round and discuss how I can vote to give you a 10million dollar bonus while your company is soaring like a frozen turkey if you will vote on my board to give me a 20million dollar bonus, we can hire someone else and give him a GS15 salary to ensure that those bonuses do not show up on the balance sheet

The bonuses would be considered part of the compensation under my plan and the the GS15 salary restriction would only apply to companies that had to be bailed out by the government, not all companies. Other companies would still be free to pay their executives whatever they want. The truly gifted executives would look at these companies as opportunities. If they're really good, they will be able to turn the company around and get paid anyway. The incompetent executives will stay stuck at a GS15 salary. Remember, Lee Iacocca agreed to work for a one dollar salary until he turned Chrysler around, but he didn't leave Chrysler empty-handed.


I don't think the government should regulate an Exec.'s salary, but it should prosecute them for malfeasance if they're given bonus's when the company is tanking. Also, what idiot company would hire the idiot who just ran a company into the ground.
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Postby tandfman » Sat Sep 20, 2008 9:03 am

jazzcyclist wrote:
paulthefan wrote:
tandfman wrote:
jazzcyclist wrote:One idea that I've heard that I believe would have bipartisan support, would be that any company that gets bailed out by the government could pay no one in that company more than a GS15 for so many years or until the government gets repaid.

I am as disturbed by excessive bonuses as anyone, but I'd be concerned that a restriction like that would cause talented and valuable executives to leave and seek appropriate comp elsewhere.

I have a talent too: Golf, lets go for a round and discuss how I can vote to give you a 10million dollar bonus while your company is soaring like a frozen turkey if you will vote on my board to give me a 20million dollar bonus, we can hire someone else and give him a GS15 salary to ensure that those bonuses do not show up on the balance sheet

The bonuses would be considered part of the compensation under my plan and the the GS15 salary restriction would only apply to companies that had to be bailed out by the government, not all companies. Other companies would still be free to pay their executives whatever they want. The truly gifted executives would look at these companies as opportunities. If they're really good, they will be able to turn the company around and get paid anyway. The incompetent executives will stay stuck at a GS15 salary.

That's my concern. The good execs will flee, only the incompetent will remain, and the company will never survive.
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Postby jazzcyclist » Sat Sep 20, 2008 9:34 am

tandfman wrote:That's my concern. The good execs will flee, only the incompetent will remain, and the company will never survive.

What about Lee Iacocca?
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Postby tandfman » Sat Sep 20, 2008 9:49 am

I doubt if he could have done what he did if his entire corps of execs had their comp capped at GS-15 level. CEO's are important, but one of the most important things they do is hire and retain excellent lieutenants--senior executives who lead different business units and departments. Lose too many of them and you're in trouble, no matter who the CEO is.
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Postby scottmitchell74 » Sat Sep 20, 2008 9:54 am

If you're among the survivors of this mess and can afford to put that kind of money into your personal residence or second home, you may find some real buying opportunities out there. This would be a great time to trade up your house, if you have enough money to do that without otherwise compromising your lifestyle. There will be bargains.


This is definitely the time to NOT panic and keep your head. The above is going to happen quite a bit, I suspect.

I try not to worry. My low-brow take is simple....in 10 years my family and I will either be just fine or eating out of a garbage can.
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Postby tandfman » Sat Sep 20, 2008 10:10 am

scottmitchell74 wrote:I try not to worry. My low-brow take is simple....in 10 years my family and I will either be just fine or eating out of a garbage can.

I think the thing that worries a lot of people is that they increasingly fear that their fate will depend on factors totally beyond their capacity to influence. You can do all the right things--work hard, be thrifty, have good values, etc., and still end up hurting.
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Postby paulthefan » Sat Sep 20, 2008 10:14 am

jazzcyclist wrote:
tandfman wrote:That's my concern. The good execs will flee, only the incompetent will remain, and the company will never survive.

What about Lee Iacocca?


Ah yes, Lee... proof that the best execs are the ones that can put a good spin on their companies failed strategy while prying cash from the tax payer to bail them out and guarantee themselves million dollar bonuses going forward.
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Postby jazzcyclist » Sat Sep 20, 2008 10:55 am

paulthefan wrote:
jazzcyclist wrote:
tandfman wrote:That's my concern. The good execs will flee, only the incompetent will remain, and the company will never survive.

What about Lee Iacocca?


Ah yes, Lee... proof that the best execs are the ones that can put a good spin on their companies failed strategy while prying cash from the tax payer to bail them out and guarantee themselves million dollar bonuses going forward.

Chrysler was a sinking ship before Iacocca arrived, and not only did he put Chrysler in the black, but he paid back the government-backed loans seven years earlier than expected.
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Postby malmo » Sat Sep 20, 2008 11:59 am

tandfman wrote:I'm guessing that the very high end of the real estate market is going to fall apart soon. You've got all of these financial hot shot types who made a few million bucks a year for a few years and just assumed that they'd be doing that for the rest of their careers. So they went out and bought houses that they thought they could afford. .


Generally, that's not the case.
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Postby tandfman » Sat Sep 20, 2008 12:13 pm

Are you saying that they went out and bought houses that they knew they could not afford?
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Postby malmo » Sat Sep 20, 2008 12:17 pm

The bought houses that they can afford. What else would it mean? They're not rap musicians.
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Postby tandfman » Sat Sep 20, 2008 12:33 pm

No, but I suspect some of them over-extended themselves. They assumed that since they had gotten x-million dollar bonuses for the past two or three years, that would be their normal income level in the future, and so made sense to them to go out and buy a house that they could comfortably afford to pay the mortgage and taxes on under that assumption. And I'm not saying that this behavior is necessarily irresponsible.

I know some relatively young guys in the financial biz who have recently bought huge, expensive houses. I don't think they paid cash. I wish them luck.
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Postby paulthefan » Sat Sep 20, 2008 2:32 pm

jazzcyclist wrote:
paulthefan wrote:
jazzcyclist wrote:
tandfman wrote:That's my concern. The good execs will flee, only the incompetent will remain, and the company will never survive.

What about Lee Iacocca?


Ah yes, Lee... proof that the best execs are the ones that can put a good spin on their companies failed strategy while prying cash from the tax payer to bail them out and guarantee themselves million dollar bonuses going forward.

Chrysler was a sinking ship before Iacocca arrived, and not only did he put Chrysler in the black, but he paid back the government-backed loans seven years earlier than expected.





Lee Iacocca:

"We've got a gang of clueless bozos steering our ship of state right over a cliff, we've got corporate gangsters stealing us blind..."
"You can't call yourself a patriot if you're not outraged."


roll the tape back to 1983:



http://www.heritage.org/research/Energy ... /bg276.cfm

Myth No. 4: Chryslerls top manaqement has taken deep salary cuts until Chrysler's financi'al problems are resolved When Chrysler was petitioning the federal government for the financial assistance it wanted, in 1979, the company announced its Salary Reduction Program. Under this, executive salaries were cut between two and ten percent; Lee Iacocca's salary was reduced to one dollar a year (although it was made clear that, under the program, Iacocca would collect the balance of a recruitment bonus due to him in 1980 If Chryslerls financial performance was ade quate after two years, the executives would be eligible to receive retroactive salary payments to make up for these reductions.

Despite the fact that Chrysler lost nearly 500 million in 198.1, the Salary Reduction Program ended that year, and executive salaries were restored to their 1979 level. Moreover, the company House Report No. 96-690, December 6, 1979 7 5 made retroactive payments to its executives for about two-thirds of the income they lost while the program was in effect, on the theory that its stock price in 1981 was about two-thirds of its 1979 price. Iacocca himself received over $360,000 in salary supplemental payments, and director's fees in 1981--including Ilamounts paid in accordance with the Salary Reduction Program according to documents filed with the Securities and Exchange Commission. All of this despite the fact that Chrysler was still losing money. Not that there is anything inherently wrong in paying high salaries; Iacocca probably could be making much more money at a much healthier company. But the much heralded sacri fices made by Chrysler executives did not last long--just about long enough to secure federal support for the company.



now fast forward to 2008:


... where today Lee would and should be considered a National Saint, The truth is that we have been in a downward spiral to total MORAL bankruptcy in this country since WWII, accelerating through the 60s and 70s and at warp speeds from the 80s to the present..

just remember that things can get bad, and then really bad, and when you think they cant get any worse that is when the bottom falls out.
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Postby jazzcyclist » Sat Sep 20, 2008 4:25 pm

Paulthefan, I appreciate your research on this matter. The thing to remember is that Chrysler did pay off its loans, so that us taxpayers weren't left holding the bill. I just think that corporate welfare should come with strings attached. Individual welfare has strings attached, so why should CEO's be treated any different. I get the impression that tandfman doesn't want to hold the CEO's accountable, for fear of companies being unable to hire competent executives. After the Enron collapse, there were federal laws passed that held CEO's criminally liable for books that had been cooked. In Japan, the idea of personal accountability is much more prevalent among CEO's than it is in the U.S. Maybe we can learn something from them.
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Postby tandfman » Sat Sep 20, 2008 4:41 pm

jazzcyclist wrote:I get the impression that tandfman doesn't want to hold the CEO's accountable, for fear of companies being unable to hire competent executives.

Not at all true. I certainly want to hold CEO's accountable. But when we get rid of them, and have the government bail out their companies, I don't want their successors to be placed under limitations that may make it impossible for them turn their companies around. They need to be able to hire and retain good people and compensate them reasonably. But what is reasonable comp for a good senior executive of a large corporation is far in excess of what a GS-15 is paid.
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Postby jazzcyclist » Sat Sep 20, 2008 5:03 pm

tandfman wrote:
jazzcyclist wrote:I get the impression that tandfman doesn't want to hold the CEO's accountable, for fear of companies being unable to hire competent executives.

Not at all true. I certainly want to hold CEO's accountable. But when we get rid of them, and have the government bail out their companies, I don't want their successors to be placed under limitations that may make it impossible for them turn their companies around. They need to be able to hire and retain good people and compensate them reasonably. But what is reasonable comp for a good senior executive of a large corporation is far in excess of what a GS-15 is paid.

What about only holding the CEO to GS15 pay, but paying everyone else fair market value?
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Postby paulthefan » Sat Sep 20, 2008 5:18 pm

jazzcyclist wrote:.... After the Enron collapse, there were federal laws passed that held CEO's criminally liable for books that had been cooked......


I dont see how a new law had to be written, their pay is criminal, It is larceny pure and simple. If I stuff my pockets at work and fix the books to cover it up I am a thief. If a CEO fixes the books and stuffs his pockets with millions why should there need to be a law written to cover it. It is because the rich have placed themselves above the law for the explicit purpose of stealing from the middle class.
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Postby tandfman » Sat Sep 20, 2008 5:47 pm

paulthefan wrote:
jazzcyclist wrote:.... After the Enron collapse, there were federal laws passed that held CEO's criminally liable for books that had been cooked......

I dont see how a new law had to be written, their pay is criminal, It is larceny pure and simple. If I stuff my pockets at work and fix the books to cover it up I am a thief. If a CEO fixes the books and stuffs his pockets with millions why should there need to be a law written to cover it. It is because the rich have placed themselves above the law for the explicit
purpose of stealing from the middle class.

Some of the Enron folks committed crimes. That does not mean that all rich people have placed themselves above the law so they can steal from the middle class.
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Postby tandfman » Sat Sep 20, 2008 5:50 pm

jazzcyclist wrote:What about only holding the CEO to GS15 pay, but paying everyone else fair market value?

What about giving the new CEO reasonable CEO base pay, but making sure that any really significant comp is tied to the profitibility of the company on a long term basis. There are ways to do that through stock and stock options.
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Postby jazzcyclist » Sat Sep 20, 2008 6:45 pm

Should there be laws to ban the golden parachutes for CEO's who are being runoff because they ran the company into the ground?
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Postby jazzcyclist » Sat Sep 20, 2008 6:50 pm

paulthefan wrote:
jazzcyclist wrote:.... After the Enron collapse, there were federal laws passed that held CEO's criminally liable for books that had been cooked......


I dont see how a new law had to be written, their pay is criminal, It is larceny pure and simple. If I stuff my pockets at work and fix the books to cover it up I am a thief. If a CEO fixes the books and stuffs his pockets with millions why should there need to be a law written to cover it. It is because the rich have placed themselves above the law for the explicit purpose of stealing from the middle class.

What happened at some of these companies is that CEO's like Ken Lay would pass the blame onto the CFO and claim ignorance of how the books were being kept. This law eliminated that loophole.
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Postby paulthefan » Sat Sep 20, 2008 7:29 pm

tandfman wrote:Some of the Enron folks committed crimes. That does not mean that all rich people have placed themselves above the law so they can steal from the middle class.


ouch, sorry about that, you are correct. I should have been more careful since 85% of the US population would consider me to be rich.
Last edited by paulthefan on Sun Sep 21, 2008 8:04 am, edited 3 times in total.
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Postby malmo » Sat Sep 20, 2008 7:47 pm

jazzcyclist wrote:What happened at some of these companies is that CEO's like Ken Lay would pass the blame onto the CFO and claim ignorance of how the books were being kept. This law eliminated that loophole.

Actually there was no evidence that Lay was involved in any criminal activity. His conviction was almost certain to be overturned upon appeal.
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Postby jazzcyclist » Sat Sep 20, 2008 9:07 pm

malmo wrote:
jazzcyclist wrote:What happened at some of these companies is that CEO's like Ken Lay would pass the blame onto the CFO and claim ignorance of how the books were being kept. This law eliminated that loophole.

Actually there was no evidence that Lay was involved in any criminal activity. His conviction was almost certain to be overturned upon appeal.

Are you saying that Ken Lay was guilty of nothing more than incompetence? What about when he encouraged company employees to buy Enron stock while he was dumping? What should be the punishment for CEO's who have such larceny taking place under his/her regime? Wasn't it Harry Truman who said that the buck stops here?
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Postby BruceFlorman » Sun Sep 21, 2008 6:24 am

tandfman wrote:Some of the Enron folks committed crimes. That does not mean that all rich people have placed themselves above the law so they can steal from the middle class.
It was quite late in my life before I understood why "old money" is considered better than new.
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Postby Vince » Sun Sep 21, 2008 8:07 am

malmo wrote:
jazzcyclist wrote:What happened at some of these companies is that CEO's like Ken Lay would pass the blame onto the CFO and claim ignorance of how the books were being kept. This law eliminated that loophole.

Actually there was no evidence that Lay was involved in any criminal activity. His conviction was almost certain to be overturned upon appeal.


Oh, I see you said "was" almost certain to be overturned....which I thought was unlikely since he was dead.
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Postby malmo » Sun Sep 21, 2008 11:23 am

Vince wrote:
malmo wrote:
jazzcyclist wrote:What happened at some of these companies is that CEO's like Ken Lay would pass the blame onto the CFO and claim ignorance of how the books were being kept. This law eliminated that loophole.

Actually there was no evidence that Lay was involved in any criminal activity. His conviction was almost certain to be overturned upon appeal.


Oh, I see you said "was" almost certain to be overturned....which I thought was unlikely since he was dead.


Wow, you certainly are a quick study.
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Postby Vince » Sun Sep 21, 2008 2:26 pm

malmo wrote:
Vince wrote:
malmo wrote:
jazzcyclist wrote:What happened at some of these companies is that CEO's like Ken Lay would pass the blame onto the CFO and claim ignorance of how the books were being kept. This law eliminated that loophole.

Actually there was no evidence that Lay was involved in any criminal activity. His conviction was almost certain to be overturned upon appeal.


Oh, I see you said "was" almost certain to be overturned....which I thought was unlikely since he was dead.


Wow, you certainly are a quick study.


Yes, thank you, but not as quick as you making a prediction that can't possibly be proven.
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Postby Double R Bar » Tue Sep 30, 2008 2:35 pm

Once Congress finally agrees on a bailout plan, do you think the stock market will gain back most of its losses? Also, how much of this mess could have been prevented had most Americans saved money the way the Chinese or Japanese do?
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Postby lonewolf » Tue Sep 30, 2008 2:39 pm

The market rebounded 500 points today and will work its way back when something is settled, one way or the other. This was a hiccup, a big hiccup but not on the magnitude of 1929 and even 1987.
True, American do not save to the extent Japanese do but the problem is many American's savings are affected if they were directly tied to the companies involved in this boondoggle
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