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Genesis Posts: 71358 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/897-Cr....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-03-24 14:50:47
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Risingcream Posts: 2540 Incept: 2007-09-07 
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Moral hazard, water hazard? No problem use a taxpayer mulligan.
---------- Civilization...ancient and wicked. --Subotai The trees in Siberia are miles apart, that is why the dogs are so fast. -- Bob Hope
2009-03-24 15:04:25
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Curbyourrisk Posts: 1888 Incept: 2008-08-19 Long Island, New York Online
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Completely agree. That is the same beef we often have here with salesmen and the commodity traders. It is all about the sale to them, get their commission an dmove on the next sale. I have often asked to re-shape the pay scale of the sales guys here. Give them some of their commision at time of sale, a little more at time of delivery, but hold atleast 50% until the transaction is paid for. These are not small transactions. We often have $5 - $10 million credit lines with companies. I am OK with risk also.....but having some skin in the game is HUGE! When their company goes **** up, it falls on my head. When I reject credit limits or recommend lower amounts....then get over ruled by departments heads, because the business is important...it still falls on my head. Sometimes...this job just ain't worth it.
---------- Hopium: hope filled delirium preached by the White House and Swallowed whole by the American Sheeple. Why is Franklin Raines a free man? "We saved the world from disaster" - Ben Bernanke - Jackson Hole 08/21/2009 
2009-03-24 15:04:44
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Genesis Posts: 71358 Incept: 2007-06-26
KD^2
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Quote:When I reject credit limits or recommend lower amounts....then get over ruled by departments heads, because the business is important...it still falls on my head. Sometimes...this job just ain't worth it. I would not work under those conditions. When I worked for other people part of the deal negotiated before I took the job was that if someone over my pay grade overruled my discretion they did so in writing and took full responsibility for the outcome, and I was released from all responsibility at the point that my decision was overruled. No deal, I'm not interested in the job. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-03-24 15:07:13
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Boshaugh Posts: 1886 Incept: 2008-08-08
Northern Virginia/DC Metro Area
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i have a feeling that 5 years down the road you will see much fewer public companies. shareholders are starting to feel like bagholders, costs of being public are too high, and more companies will opt to stay private. since this means they have skin in the game its probably a good thing for business.
2009-03-24 15:13:16
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Gmak Posts: 10176 Incept: 2007-07-27 
Re-inventing the future at the speed of time.
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Except these smaller firms are lining up to play the "put the taxpayers' skin in the game" game, as they trough down with the Fed's latest burnt offering to fund 93% or more of the hedge funds' purchases of toxic assets. What risk is there when the whole financial system will be gaming the results with fees and fake prices that in the end get the waste off of their balance sheets and into YOUR wallets.
2009-03-24 15:18:15
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Curbyourrisk Posts: 1888 Incept: 2008-08-19 Long Island, New York Online
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Currently "stuck" here. When things open up, trust me...I will be the first out the door.
---------- Hopium: hope filled delirium preached by the White House and Swallowed whole by the American Sheeple. Why is Franklin Raines a free man? "We saved the world from disaster" - Ben Bernanke - Jackson Hole 08/21/2009
2009-03-24 15:22:18
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Alanha Posts: 2087 Incept: 2008-12-30
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http://www.last.fm/music/Bing+Crosby/_/T....
2009-03-24 16:58:31
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Phirang Posts: 8822 Incept: 2008-10-25
bar khoba's revenge
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Quote:I am all about people taking risk - innovation is how we became a great nation, and there's nothing wrong with it not only in industry but also in finance - but you cannot allow risk-taking where the person taking the risk is divorced from the person who bears the consequence when the bet goes bad. Isn't that what they teach you to do in business school: risk nothing yet get paid? ---------- The Treasury can issue debt on your behalf because the State can and will stomp the wealth out of you and your family.
2009-03-24 17:12:17
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Markytom Posts: 217 Incept: 2009-02-19
Online
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I think everyone should read these two articles if they haven't already. The first is Charlie Munger's "THE PSYCHOLOGY OF HUMAN MISJUDGMENT" describing his 24 standard causes of human misjudgment: http://www.vinvesting.com/docs/munger/hu.... And this one from Marc Andreesen and his thoughts on Charlie's first 6: http://blog.pmarca.com/2008/03/the-psych.... There has been quite a bit of talk on gaming the systems and that is what the #1 cause is about: Under-recognition of the power of what psychologists call 'reinforcement' and economists call 'incentives.' I think it was Andy Grove who said that for every goal you put in front of someone, you should also put in place a counter-goal to restrict gaming of the first goal. So, for example, if you are incenting your recruiters on the number of new employees recruited and hired, you need to also give them a counter-goal (and tie it to their compensation) that measures the quality of the new hires three months in. Otherwise the recruiters are guaranteed to give you what you don't want: a lot of mediocre new hires. This is why I want to see top execs at and others related to AIG, Lehman, Citi, Fannie, etc. put in jail. Not only did they not set up counter-goals to ensure the long-term success of their companies, they encouraged and rewarded the bad behaviors up and down the line. It wasn't an accident. It wasn't ignorance. It wasn't incompetence. It wasn't a series of mistakes. It was outright, all-knowing fraud.
2009-03-24 21:14:51
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Lkruvant Posts: 4430 Incept: 2008-03-13
DC - VA
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Phirang, you have a way with words, and with thoughts. Well said.
2009-03-24 23:34:49
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Mesawboy Posts: 1 Incept: 2009-03-24
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Finally! Root Cause Analysis. Yes, why is it that CEO's and boards do NOT represents shareholders?!?!? CEO's are just another level of employee of the firm ... no ownership stake and no skin in the game. As an auditor I wondered why the owners of the firm, the shareholders, were allowing actions that were clearly so harmful to them. Then I understood the game ... the cozy relationship of CEO and board. The laws of incorporation and 'limited liability' that somehow punishes the 'firm' and not the individual managers who made the decisions. Consider M&As and the destruction of shareholder value that occurs after about 2 years ....the data is overwhelming. Consider CEO pay in the USA being 30 times higher than in Japan! Consider the 'golden parachutes'. All this evidence that the free market is being seriously distored! The first suspect should always be govt. The laws of incorporation need to be revisited ... shareholders are getting screwed! Execs and the Boards are NOT acting in the interest of the shareholders!
2009-03-26 21:35:42
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Pensicostreet Posts: 719 Incept: 2007-06-26
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Simple, don't be a shareholder, nobody has to invest in a public company. Its a conflict of interest the moment a corporation incorporates as public company. In a correctly managed corporation. Shareholders, employees, and management should all benefit but its so out of wack now. Sharelholders are chumps now. Before this is all over, public should have a different view of public companies. Hell half of the companies are nothing more than perpetual debt machines, constantly refinancing themselves.
2009-03-26 21:54:54
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Laura Posts: 3153 Incept: 2008-05-05
Florida Space Coast
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Shareholders and employees are the bag holders for the execs and boards. The boards are incestuous and that's another reason why they do not restrain the execs.
---------- Karl's just a shill for Big Math. 1LumpSum Honey, where's the AK ? Tyler Durden My Ford focus can get me from point A to point B just as good Tigger's Cadillac. And my back door window is not broken. Mliu
2009-03-26 22:07:03
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