UPDATE: The Dow is down 800+ as of 3:20 p.m. ET., a record point drop, bringing the Dow to below 10,000.
Investors around the world have come to the sobering realization that the Bush administration's $700 billion rescue plan won't work quickly to unfreeze the credit markets.
UPDATE 2: The Dow closed "at 9,955.50, dropping below 10,000 for the first time since Oct. 29, 2004." When George W. Bush took offiec the Dow was at a little more than 10,700.
UPDATE 3: Whose fault? Guys like Richard S. Fuld Jr., the Lehman chief executive who "conceded no errors or misjudgments in the chaotic period that led to the firm's bankruptcy. And he said a compensation system that he estimated paid him about $350 million between 2000 and 2007 even as the company headed for disaster was appropriate."
Meanwhile "on Sept. 11, Lehman planned to approve 'special payments' worth $18.2 million for two executives who were terminated involuntarily, and another $5 million for one who was leaving on his own." Lehman went under four days later.
Until there is management accountability for downside losses on Wall Street and in big business boardrooms, corporate America is in trouble.
5 comments:
I was skeptical of the bail-out bill for many of the same reasons highlighted by the press: it was rushed, it gives the executive branch unprecedented authority, it costs seven bleeping hundred bleeping billion bleeping dollars (I guess it's actually over $800 billion now), it seems to reward bad behavior, and (most importantly) its effectiveness is not clear.
With the stock market erasing close to a trillion dollars of value in a single day, this intervention may be essential, but I don't feel like the case has been made. The message, starting with the original three-page bill, seems to be: trust Paulson. I don't.
As a tax payer, investor, and home owner, I'm very anxious. The bail-out bill costs thousands of dollars per household. The market swings (down over seven percent so far today) show up as dizzying drops in my mutual fund balance. Am I going to take a hit when I sell my house too?
Only if you sell your house.
I had heard that the bank CEOs were going to decline to sell troubled assets to the Fed because it would require them to relinquish their golden parachutes.
This bailout is just one more example of the indivisible handjob stroking irresponsible CEOs and CFOs with billions so that they can run the American economy even further into the ground. So much for Keynesian economics. If the goal is to stimulate the economy, why not give the money directly to the American taxpayers? We could do twice as much good for the economy by giving half as much money directly to hardworking American taxpayers. A bird in the hand is worth two in the bush administration.
"I had heard that the bank CEOs were going to decline to sell troubled assets to the Fed because it would require them to relinquish their golden parachutes."
Perhaps the shareholders can sue the CEOs for breach of fiduciary duty in that case, and make an even larger recovery from the executives.
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