Ford’s CEO pay package and the Bailout
November 19th, 2008In April, Ford reported Mr. Mulally received $2 million in base salary, a $4 million bonus and more than $11 million of stock and options in 2007. His base salary was unchanged over 2006. Mr. Mulally has earned nearly $50 million in compensation since taking the helm of the auto maker.
Why exactly are we listening to a man who has been paid $50 million while his firm is going down the toilet?
Here is the Wall Street Journal article, where I got this data: Ford’s CEO obscene pay package
In the same article it mentions that the GM CEO got a 33% bump in salary to $2.2 million while GM lost $38.7 billion.
Are you kidding me? Why should I pay my hard earned tax dollars to these bloodsuckers?
Why the Big Three Shouldn’t Bailed Out
November 19th, 2008This is an excellent blog post from Mark Perry’s Carpe Diem blog on how Honda is actually expanding in this country:
New Yorker Article on Agriculture
November 17th, 2008This is a good article from the NewYorker highlighting the problems with agriculture that I’m worried about.
Agriculture Efficiency article
Who owns these stocks?
November 17th, 2008After months of internal debate at Goldman, the seven top executives at the firm, including Chief Executive Officer Lloyd Blankfein, asked the board’s compensation committee to grant them no bonuses. The board approved the request on Sunday.
The executives will only be eligible for their base salaries, $600,000 for each. A firm spokesman said the executives felt it was “the right thing” to do.
So says an article from the Wall Street Journal: Goldman Execs give up bonuses
I want to ask a different question than the article is answering. My question is why would you own a stock where earnings are made up at of thin air, executives get bonuses no matter what the results of the company is, and execs reluctantly give up bonuses despite the stock being down 70%.
The problem here is not the executives. The problem is the institutional shareholders and investors who let this compensation go on. Its one thing to make an investment where your stock goes down and you make a mistake. It is quite another thing when you are investing in a company that is screwing shareholders and you just ignored it. If anyone of the following firms were managing my money I would pull my money and terminate the relationship:
Barclays Global Investors UK Holdings Ltd
MARSICO CAPITAL MANAGEMENT, LLC
STATE STREET CORPORATION
FMR LLC
VANGUARD GROUP, INC. (THE)
WELLINGTON MANAGEMENT COMPANY, LLP
AXA
JANUS CAPITAL MANAGEMENT, LLC
PRICE (T.ROWE) ASSOCIATES INC
Bank of New York Mellon Corporation
These firms are the top holders of Goldman Sachs. I would do this because if they aren’t worried about executives giving themselves egregious and undeserved bonuses and salaries, they are probably not good stewards of your money and are probably charging you an arm and a leg for their services. And if you own these firms yourself, I would recommend you read the following book:
Where are the Customers’ Yachts?
Adversity and Underprivilege
November 17th, 2008There is a fascinating article in the New Yorker by Malcolm Gladwell on how outsiders and the underprivileged sometimes have an an advantage. He profiles Sidney Weinberg, the guy who transformed Goldman Sachs into a powerhouse, and how he came from a very poor upbringing. Its a really good read.
Excellent Video on Car Bailouts
November 13th, 2008This is an excellent video interview by Thomas Friedman on the proposed bailout of the auto industry. The end is excellent.
The End of Wall Street?
November 11th, 2008A very good article by Michael Lewis, asking that very question:
Michael Lewis and the End of Wall Street
Driving Habits Revert Back to Normal
October 29th, 2008This New York Times article has broad implications for oil and gas prices and companies. Drivers are going right back to driving as normal and not permanently altering their habits.
New York Times article on gasoline and driving
Tom Kloza, chief oil analyst at the Oil Price Information Service, said: “Demand is trickling back among everyday people.” He added that gasoline retailers around the country were telling him “they are probably past the bottom of demand destruction for 2008, meaning they see subtle signs that gasoline demand is increasing.”
So proud
October 29th, 2008I’m a Georgia Bulldog. On Saturdays I bleed red and black. I cannot tell you how proud I am that Mark Richt is our head coach. I actually have had the opportunity to meet with him when I threw a charity flag football event for the Athens, GA Boys and Girls Club. And I can tell you, he is a truly great, genuine man. For those of you that don’t know him watch this video and you will see what kind of person he is:
Food Supply Catastrophe of 2009
October 28th, 2008You can stop driving and use less oil and gas. You can buy less things and use less copper, cotton and steel, but it is pretty hard to stop eating. It is in that simple thought that guides me to believe that we are heading to a global food catastrophe in 2009. How do I arrive at a conclusion that makes the energy crisis a walk in the park?
Let’s start with supply. Global inventories are at 30 to 40 year lows, despite the world having record harvests in 2008. Global inventories of grains (corn, wheat and soybeans) will be at 67 days of consumption before next year’s harvest.
Global demand continues to rise faster than production growth. It’s simple, world population keeps growing and large parts of the world are slowly starting to eat more like the Western world, with more meat and higher calorie content food.
Consider just China.
“If the Chinese people had consumed the same amount of meat, per person, in 2007 as in 1995, there would have been enough grain left over to support 927 million hungry people with enough grain for an entire year,” said Lane (Jim Lane is the editor of the Biofuels digest). The growth rate is so intense that, even if the US ethanol industry were completely shut down tomorrow, increased Chinese demand would soak up the excess grain by 2011.
“Even with all the growth, Chinese meat consumption is still 45 percent less than the average consumption in the US,” Lane warned. “An additional 277 million tonnes of grain would be needed to support China at parity with the US. That would take 68 million acres to grow. There isn’t that kind of arable land available anywhere is the world, whether we grow grains for renewable energy or not.”
This is from an article from Biofuelsdigest.com: China’s impact on corn
Now let’s get to why we may have a crisis next year. The credit crisis is hammering South American farmers, to the extent that they cannot get fertilizer. No fertilizer, no planting of crops.
Further, suppliers are asking farmers in the U.S. for more upfront money to make sure they aren’t holding delinquent debts, causing farming to be a bit more uncertain this year. Read all the details in a very important article from Bloomberg about how the credit crisis is affecting farmers in Brazil, Argentina and to a limited degree the US.
We had riots in dozens of countries in early 2008 due to shortages, what will happen with much lower production? What happens if combined with lower production, we have a drought? Markets aren’t exactly acting efficiently lately. I’m really getting worried that we could see a major spike in food prices in an awful world economy.
Starvation will become a major problem. Governments could easily fall when people can’t afford food. This may be the biggest issue of 2009, bar none. People have to eat.