Will Large Financial Sector Compensation and Bonuses Continue in the U.S. Despite Political Backlash?

 On December 10, 2009, Goldman Sachs announced the elimination of cash bonuses for 30 of its top executives, despite record profits for the firm in 2009. The executives will instead be paid stock awards to be held for five years. The move comes amid increased political and public pressure on the firm to curb employee compensation after receiving US$10 billion in taxpayer money during the financial crisis. The firm also announced a non-binding, advisory vote to its shareholders on compensation principles in its 2010 annual meeting, following increasing pressure from investors to reform compensation principles before the the enactment of the say-on-pay legislation in Congress.

Jim Rogers on Why Gold Is Glittering So Brightly

siehe untenstehend die richtige Meinung zu Tim Geithner (hfk):

Business Week,Facetime November 25, 2009,

Maria Bartiromo talks to Jim Rogers, creator of the Rogers International Commodities Index

By Maria Bartiromo

I was on assignment in Singapore on Nov. 24 when gold hit an all-time high of $1,174 an ounce. That was fortuitous because Singapore is the home base of commodities guru Jim Rogers, creator of the Rogers International Commodities Index. Meantime, back in the U.S., reports were surfacing about growing discontent in the halls of Congress over the performance of Treasury Secretary Tim Geithner and the possibility he might be replaced by JPMorgan Chase (JPM) CEO Jamie Dimon. When I rang up Rogers, he was his usual low-key self, with quiet opinions about the future of gold prices, commodities to watch, and why Obama should dump Geithner.

Just Desserts and Markets Being Silly Again

From John Mauldin’s Outside the Box, 2/11 EXTRAORDINARY ANALYSIS!!! (hfk)

by Jeremy Grantham

Just Desserts

I can’t tell you how surprised, even embarrassed I was to get the Nobel Prize in chemistry. Yes, I had passed the dreaded chemistry A-level for 18-year-olds back in England in 1958. But did they realize it was my third attempt? And, yes, I will take this honor as encouragement to do some serious thinking on the topic. I will also invest the award to help save the planet. Perhaps that was really the Nobel Committee’s sneaky motive, since there are regrettably no green awards yet. Still, all in all, it didn’t seem deserved. And then it occurred to me. Isn’t that the point these days: that rewards do not at all reflect our just desserts? Let’s review some of the more obvious examples.

1. For Missing the Unmissable

Bernanke, the most passionate cheerleader of Greenspan’s follies, is picked as his replacement, partly, it seems, for his belief that U.S. house prices would never decline and that at their peak in late 2005 they largely just reflected the unusual strength of the U.S. economy. As well as missing on his very own this 3-sigma (100-year) event in housing, he was completely clueless as to the potential disastrous interactions among lower house prices, new opaque financial instruments, heroically increased mortgages, lower lending standards, and internationally networked distribution. For these accumulated benefits to society, he was reappointed! So, yes, after the fashion of his mentor, he was lavish with help as the bubble burst. And how can we so quickly forget the very painful consequences of the previous lavishing after the 2000 bubble? Rewarding Bernanke is like reappointing the Titanic’s captain for facilitating an orderly disembarkation of the sinking ship (let’s pretend that happened) while ignoring the fact that he had charged recklessly through dark and dangerous waters.

Catching the Argentinian Disease

aus John Mauldin’s Newsletter:

I have been in South America this week, speaking nine times in five days, interspersed with lots of meetings. The conversation kept coming back to the prospects for the dollar, but I was just as interested in talking with money managers and business people who had experienced the hyperinflation of Argentina and Brazil. How could such a thing happen? As it turned out, I was reading a rather remarkable book that addressed that question. There are those who believe that the United States is headed for hyperinflation because of our large and growing government fiscal deficit and massive future liabilities (as much as $56 trillion) for Medicare and Social Security.

This week, we will look at the Argentinian experience and ask ourselves whether „it“ – hyperinflation – can happen here.

The Ascent of Money

Bill Seeks to Shift Rescue Costs to Big Banks

aus der heutigen NYT: endlich – die Verursacher tragen die Kosten! Aber nur in den USA! Das erste positive Signal über Regulierung(wenn auch überhaupt nicht vollständig, weil es die systemischen Probleme nicht angeht!), das ich seit einem Jahr höre!  Mal sehen, ob es beschlossen wird, vor allem aber, wie es exekutiert wird???

By STEPHEN LABATON

WASHINGTON — The Obama administration and the head of an important House committee unveiled legislation on Tuesday to give the government broad new powers to shift the cost of rescues of big, troubled financial institutions from taxpayers to other large companies.

The legislation, drafted jointly by Treasury officials and Representative Barney Frank, the head of the House Financial Services Committee, would create a special fund, paid by assessments on financial companies with more than $10 billion in assets, to bear the costs of big firms that fail.

A statement by the committee said that the legislation followed a “polluter-pays model where the financial industry has to pay for its mistakes — not taxpayers.”

Liquor before Beer – In the Clear

Value Investing Congress – David Einhorn, Greenlight Capital One of the nice aspects of trying to solve investment puzzles is recognizing that even though I am not always going to be right, I don’t have to be. Decent portfolio management allows for some bad luck and some bad decisions. When something does go wrong, I like to think about the bad decisions and learn from them so that hopefully I don’t repeat the same mistakes. This leaves me plenty of room to make fresh mistakes going forward. I’d like to start today by reviewing a bad decision I made and share with you what I’ve learned from that error and how I am attempting to apply the lessons to improve our funds’ prospects.

Too Big to Fail: Why The Big Banks Should Be Broken Up, But Why The White House and Congress Don’t Want To

25. Oktober 2009, 16:49:35 |(Robert Reich)

And now there are five — five Wall Street behemoths, bigger than they were before the Great Meltdown, paying fatter salaries and bonuses to retain their so-called“talent,“ and raking in huge profits. The biggest difference between now and last October is these biggies didn’t know then that they were too big to fail and the government would bail them out if they got into trouble. Now they do. And like a giant, gawking adolescent who’s just discovered he can crash the Lexus convertible his rich dad gave him and the next morning have a new one waiting in his driveway courtesy of a dad who can’t say no, the biggies will drive even faster now, taking even bigger risks. What to do? Two ideas are floating around Washington, but only one is supported by the Treasury and the White House. Unfortunately, it’s the wrong one.

Is the WH Finally Taking Regulatory Reform Seriously? Gegen das „Hurenparlament“!

 Barry Ritholtz | Oct 19, 2009

With their Senate health care victory still fresh in the mind, is Team Obama finally getting serious about reforming Banking and Wall Street?  News reports that the White House is “growing frustrated that the banking industry is fighting President Barack Obama’s plan to overhaul financial regulations” seems to have been caused, in some part, by the mounting political backlash over big profits and bigger bonuses at Goldman Sachs and others.

Into the Fourth Turning

This week for your Outside the Box reading pleasure I am pleased to offer you the beginning of a very intriguing interview with Neil Howe he did with my friend David Galland at Casey Research. I think Neil is one of the premier forward looking thinkers of our time. His book The Fourth Turning is one of the more important books of the last two decades. 12 years ago, he and the late Richard Strauss basically outlined the psycho-social dynamics of our current time and his predictions have been uncannily accurate.

Was The G20 Summit Actually Dangerous?

Samstag, 26. September 2009, 15:07:47 | Simon Johnson – Baseline

It is easy to dismiss the G20 communique and all the associated spin as empty waffle.  Ask people in a month what was accomplished in Pittsburgh and you’ll get the same blank stare that follows when you now ask: What was achieved at the G8 summit in Italy this year?

Perhaps just having emerging markets at the table will bring the world closer to stability and more inclined towards inclusive growth, but that seems unlikely.  Should we just move on – back to our respective domestic policy struggles?

That’s tempting, but consider for a moment the key way in which the G20 summit has worsened our predicament.