Business: February 2009 Archives

Netbooks killing off sickly Windows PC sales — RoughlyDrafted Magazine:

"That has hit Microsoft particularly hard, resulting in an 11% drop in profits over its year ago quarter and plans to cut 5,000 jobs over the next year and a half. On the other hand, Apple posted its best quarterly results ever, with 9% growth in its Mac sales over the previous year."

(Via RoughlyDrafted Magazine.)

This what happens when you have to focus on making great products in order to survive.

A Dark Age of macroeconomics (wonkish) - Paul Krugman Blog - NYTimes.com:

"There’s no ambiguity in either case: both Fama and Cochrane are asserting that desired savings are automatically converted into investment spending, and that any government borrowing must come at the expense of investment — period. What’s so mind-boggling about this is that it commits one of the most basic fallacies in economics — interpreting an accounting identity as a behavioral relationship... After a change in desired savings or investment something happens to make the accounting identity hold. And if interest rates are fixed, what happens is that GDP changes to make S and I equal. That’s actually the point of one of the ways multiplier analysis is often presented to freshmen."

(Via NY Times Blogs.)

Ouch. Fama and Cochrane made a freshman mistake. That's why political ideology is soft-think.

Bush overpaid banks in bailout, watchdog says - Yahoo! News:

"Overall, the panel and the analysts it retained to conduct the valuation study found that the Treasury used taxpayers' money to pay $62.5 billion more than the value of assets in the 10 transactions it examined. By extrapolating to the more than 300 institutions that received money, the panel concluded that the government in effect paid $78 billion more than the actual value of the assets at the time. 'Treasury chose to offer 'one size fits all' pricing in order to encourage all institutions to participate, and in so doing disregarded apparent differences in their financial condition,' the report states. 'A consequence is that Treasury effectively offered weaker participants greater subsidies than it offered to stronger participants.'"

(Via Yahoo! News.)

This was inevitable. Try to ram a plan that radically changed from day to day to fix a complex problem years in the making is going to make for "large" results. Depending on what Geitner puts out, we'll see how good or bad in comparison. Personally and I don't say this often, I'm with Newt Gingrich on this whole thing.

Obama’s cap on CEO pay strives to end era of excess | csmonitor.com:

"‘This is America. We don’t disparage wealth. And we believe that success should be rewarded,’ Obama said. ‘But what gets people upset – and rightfully so – are executives being rewarded for failure. Especially when those rewards are subsidized by US taxpayers.’ The cap on compensation marks a sharp pay cut for executives of some of the largest banks, such as Citigroup and Bank of America. ‘If these executives receive any additional compensation, it will come in the form of stock that can’t be paid up until taxpayers are paid back for their assistance,’ Obama said."

(Via Christian Science Monitor.)

Contrary to conservative noises about communism, this is quintessentially American capitalist. Now if only corporate boards were actually independent of the executives they are supposed to oversee, we'd have this kind of check and balance all the time.

Lawmakers Criticize Role of SEC in Madoff Scheme - WSJ.com:

"'You are both a captive regulator and a failed regulator,' Harry Markopolos said of the SEC in highly anticipated testimony to a U.S. House subcommittee. Mr. Markopolos detailed his nine-year effort to alert federal regulators about Madoff, who is accused of engineering one of the largest swindles in U.S. history. The SEC was 'unable to understand' the complex financial instruments involved in the alleged fraud, Mr. Markopolos said, and regulators weren't interested in pursuing investigations against influential firms and investors."

(Via Wall Street Journal Online.)

Whistleblower ignored. Surprise, surpirse. This is what you get when you have people who hate government, running government. The SEC had no defense either on this.

The group of SEC officials declined to speak specifically about the Madoff case, but said they were doing their best to protect investors. "I think I speak for everyone when I say we hate fraud," said Linda Thomsen, director of the SEC's division of enforcement, said. Lawmakers, however, weren't impressed. "Your job is to prevent fraud, not to hate it," Mr. Kanjorski said, alternately describing the SEC's testimony as "oatmeal" and a "traveler's guide" that didn't address the issues exposed by the Madoff case.

Bam!

Joe the Plumber advises GOP-ers - Yahoo! News:

"Wurzelbacher, who became a household name during the presidential election, will be focusing his talk on the proposed stimulus package. "

(Via Yahoo!News.)

Absolute comedy.

Will the Stimulus Work? | The FactCheck Wire:

"In the meantime, if you want to keep up with the experts and their (sometimes quite technical) arguments for and against the stimulus plan, we suggest Krugman and former Clinton Treasury official Brad DeLong on the pro side and Becker and George Mason’s Tyler Cowen on the con side. The Atlantic’s new Atlantic Business page helpfully breaks down the experts’ arguments for the layperson."

(Via FactCheck Wire.)

Check out both sides before arriving at an opinion.

Obama stimulus plan faces changes in Senate - Yahoo! News:

"WASHINGTON – A top Republican called for more mortgage relief and additional tax cuts in President Barack Obama's massive economic stimulus package as Democrats conceded privately they will drop items that have drawn bipartisan criticism."

(Via Yahoo! News.)

Finally, some sense from the Congress. I've been suspicious of them since the TARP fiasco. Whatever happened to good governance? Apparently, once you are in power, it fades into the background. I've seen tortured logic trying to justify "pork" projects that don't stimulate the economy. These projects are to vary degrees laudable and worthy of legislation all on their own, but let's get real here. Tax cuts and government spending that creates jobs is what is needed. Condoms are not stimulative in the proper sense!