The Wall Street Journal has an article today entitled, Mack and Thain Lose ‘08 Bonuses.
We’re neither sympathetic nor antagonistic towards Mr. Thain, who has only been in his position for a year; so, we take no glee in his being shut-out.  Hopefully, he’ll be able to make-do with his $750,000 salary, $15-$20 million signing bonus from […]

In the thirty-five years since the first “energy crisis,” have Chrysler, Ford, or GM avoided a single management fad?
Have their collective managements through the years embraced of any single fad that led to sustainable improvements anywhere?
Now, it is true that many fads—and we are using that word pejoratively—contain useful recommendations and are consistent with effective and efficient management.  However, […]

Does the Sum of Idiosyncratic Decisions Mean Anything?
There’s an article in the weekend edition of The Wall Street Journal, entitled, It’s a Done Deal: Merrill and BofA.  It is subtitled, “At Thundering Herd’s Last Meeting, Thain Presides Over Sadness and Anger.”
In previous posts we’ve already commented on a variety of related topics, including our dislike of mega-mergers, which […]

The Curious Case of Robert Rubin
The weekend edition of The Wall Street Journal has a front page interview with Robert Rubin: Rubin, Under Fire, Defends His Role at Citi.
We’ve criticized Citi’s board in the (recent) past, and we’re still particularly fixated on the fact that few directors had financial industry experience.  That seems neither wise nor even prudent for a financial […]

Note: We’ll likely expand and edit this post in the morning, but wanted to circulate the idea before bedtime.
We’re rather diligent—but not obsessed— about keeping up with financial new.1  We’ve heard many financial firms announce lay-offs and have read how at a few, like Goldman, senior managers have decided to forgo bonuses.
As we recall, most banks have […]

We hope that his earlier actions haven’t caused irreparable damage, but we’re doubtful.
This is a longish post that covers several aspects of the ongoing financial crisis and, for the convenience of new visitors, contains plenty of reference links to earlier posts.
In our mind, until last week, the current Treasury Secretary had an incredibly long and unbroken string of wrong […]

…And Your Mother Wears Combat Boots!
Back on Halloween we wrote that Sarah Palin’s experience as mayor of a small town was greatly under-appreciated, and that lack of appreciation said more about her critics’ inexperience and lack of empathy than did it about her.
In fact, we related her experiences to Henry Kissinger’s quote about academia: the (in)fighting is so vicious precisely […]

Analogously: The Gangs That Can’t Shoot Straight
Last week in The Understatement of the Year! we wrote, “The problem, dear reader, is that few senior managers (and almost no board members) understand the valuation and risk models used for securitizations…”
Today, there is an article in The Wall Street Journal, Citi Directors Mull Replacing Chairman, that provides additional evidence to support our claim.
To be frank, unless it […]

Recently, we’ve seen many op-ed essays calling for more transparency in financial statements, particularly with respect to mortgage-related securities.  Many of these essays have been written by famous and esteemed individuals or their staffs.
In our own idiosyncratic, round-about way, we’ll explain the empty silliness of such arguments, and we begin by criticizing the notion that “more […]

Why only $25 Billion for the auto-makers?  Why not $30 Billion more?  That would be about billion per year for each year since the first energy crisis on top of the previous loan “guarantees.”
Does the reader realize that at least some of those GM and Ford’s retirees hadn’t begun to work for the “Big Three” when […]

We think that the current turmoil in the markets provides an atmosphere for independent thinkers and adviser such as ourselves to gain some attention (and more clients) by commenting on current issues and by offering free and useful advice, especially if said advice is difficult to implement without us.  For that reason, we’re in the middle of writing a […]

Did SOX Exacerbate the Crisis? and…
The Best is Yet to Come, Oh Yeah!
We don’t mean any baseball teams, we mean the Sarbanes-Oxley Act of 2002, which President Bush said at the time of its signing was “the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt.”
Here is a description from Wikipedia: “… in response to a […]

Today’s (September 30) Wall Street Journal contains a front-page article, Industry Is Remade in a Wave of Mergers, which reports that the three largest banks now control over 30% of the nation’s deposits.
We’re writing because we take issue with the paper edition’s blurb: “For the economy and government officials, the very size of these banks means […]

We doubt it.
But maybe cicadas or General MacArthur.
With Goldman Sachs and Morgan Stanley becoming commercial banks, many commentators are noting the demise and extinction of investment banks.  We’re not so sure.
This is clearly a highly-speculative and long-term prediction but we think private investment banks, circa the 1980’s, will be back.  Why?  They provide control mechanisms and levels of oversight and scrutiny […]

We’re a few days late, but we think that five days without electricity is a worthy excuse to cover our tardiness.
There was a nice article in Tuesday’s (9/16) WSJ about Best Buy’s use of internal prediction markets: Best Buy Taps ‘Prediction Market.’
The goal behind the program is to elicit employees’ private information about the probabilities (and estimated magnitudes) of […]