The Epicurean Dealmaker notes that the stock market "game" is irrevocably rigged against the individual investor, and the best thing anyone can do is realise that is so:

I believe [Leo E. Strine Jr, vice chancellor of the Delaware Court of Chancery]'s analysis should conclusively disabuse participants in the current debate over financial regulatory reform of two related notions....The second is the canard that all public shareholders are alike, and they all share the same interests and motivations.

Realizing that the second of these is false, and that Fidelity Investments and SAC Capital do not have the same investment timeframe and objectives as Aunt Millie or even the Ohio Teachers Pension Fund, would have a highly salutary effect on the beliefs and behavior of truly long-term shareholders.

If nothing else, getting Aunt Millie to realize she is the only one in the shark tank without a safety cage should do her a world of good. [emphasis mine]

Read the whole thing, as well as Mr. Strine's piece in the NYT's DealBook that inspired it, for a glimpse of the soft, white underbelly of corporate governance and management.

My Loyal Reader sends another example of those glorious, worthy individuals about whom "we do not have time" to worry:

Former [AIG] Chief Executive Officer Maurice "Hank" Greenberg may try to end government involvement in the company "as prompt [sic] as possible," his attorney David Boies said in an interview this week. Greenberg...has said the takeover might have been avoided if AIG got a bridge loan, tapped private investors and sold assets.

"Aye, and if my grandmother had wheels, she'd be a wagon!"

Did I mention that Greenberg has frequent contact with AIG's Board of Directors of AIG, so assuming that he's stupid enough to only be suggesting this now is a real stretch? Did I mention that the Fed Rule cited specifically restricts their action to "unusual and exigent circumstances"?

Did I mention that the odds that Hank Greenberg was deliberately deceiving some reporter (and that his deception was cited as reality by a rather optimistic Bloomberg scribe) probably approach infinity?

The sainted 83-year-old Trilateral Commission member continues:

"How can it be the right move if shareholders lose 80 percent of their equity?" he said in a Sept. 17 interview. Greenberg, the CEO for almost four decades until [he was ousted in] 2005, controlled about 11 percent of the shares through personal holdings and investment firms he runs before the takeover agreement, the largest stake.

Yep, I really want to bail this guy's company out, since clearly shareholders "losing 80% [or 79.9%] of their equity" would never happen to any public company. (Yes, I picked obvious ones.)

Apparently, Maurice "Hank" Greenberg believes we have time, and he's a lot more involving in the genesis and exigesis of the current crisis than we are. So why would we disagree with him? The return to the "good" intertemporal equilibrium may be at stake.

My Loyal Reader sends another example of those glorious, worthy individuals about whom "we do not have time" to worry:

Former [AIG] Chief Executive Officer Maurice "Hank" Greenberg may try to end government involvement in the company "as prompt [sic] as possible," his attorney David Boies said in an interview this week. Greenberg...has said the takeover might have been avoided if AIG got a bridge loan, tapped private investors and sold assets.

"Aye, and if my grandmother had wheels, she'd be a wagon!"

Did I mention that Greenberg has frequent contact with AIG's Board of Directors of AIG, so assuming that he's stupid enough to only be suggesting this now is a real stretch? Did I mention that the Fed Rule cited specifically restricts their action to "unusual and exigent circumstances"?

Did I mention that the odds that Hank Greenberg was deliberately deceiving some reporter (and that his deception was cited as reality by a rather optimistic Bloomberg scribe) probably approach infinity?

The sainted 83-year-old Trilateral Commission member continues:

"How can it be the right move if shareholders lose 80 percent of their equity?" he said in a Sept. 17 interview. Greenberg, the CEO for almost four decades until [he was ousted in] 2005, controlled about 11 percent of the shares through personal holdings and investment firms he runs before the takeover agreement, the largest stake.

Yep, I really want to bail this guy's company out, since clearly shareholders "losing 80% [or 79.9%] of their equity" would never happen to any public company. (Yes, I picked obvious ones.)

Apparently, Maurice "Hank" Greenberg believes we have time, and he's a lot more involving in the genesis and exigesis of the current crisis than we are. So why would we disagree with him? The return to the "good" intertemporal equilibrium may be at stake.

Via Drs. DeLong and Black, the WaPo reports that this version of the S&L crisis will repeat the mistakes of the last one:

Instead of giving each company a big capital infusion upfront, the government could make quarterly injections as the companies' losses warrant, the sources said. This would be an attempt to minimize the initial cost of the rescue. [emphasis mine]

And why are they doing this? Who gets protected while the hemorrhaging continues?

The value of the companies' common stock would be diluted but not wiped out, while the holdings of other securities, including company debt and preferred shares might be protected by the government.

So who are the major individual holders of the stock? Why, the directors of the company, the five of whom listed hold over 2.1 million shares.

That is, the same people who were tasked with ensuring that the company was well run—and have failed miserably at it—are being saved by the form of the bailout, while the cost—again, judging by the lessons of the slow-motion S&L meltdown—will be increasing for the taxpayers.

The next time someone asks me if I believe in "free-market capitalism," I'm going to ask if they believe in the Easter Bunny.

Via Drs. DeLong and Black, the WaPo reports that this version of the S&L crisis will repeat the mistakes of the last one:

Instead of giving each company a big capital infusion upfront, the government could make quarterly injections as the companies' losses warrant, the sources said. This would be an attempt to minimize the initial cost of the rescue. [emphasis mine]

And why are they doing this? Who gets protected while the hemorrhaging continues?

The value of the companies' common stock would be diluted but not wiped out, while the holdings of other securities, including company debt and preferred shares might be protected by the government.

So who are the major individual holders of the stock? Why, the directors of the company, the five of whom listed hold over 2.1 million shares.

That is, the same people who were tasked with ensuring that the company was well run—and have failed miserably at it—are being saved by the form of the bailout, while the cost—again, judging by the lessons of the slow-motion S&L meltdown—will be increasing for the taxpayers.

The next time someone asks me if I believe in "free-market capitalism," I'm going to ask if they believe in the Easter Bunny.

Since I'm cash-strapped for the next few years, I'm looking for ways (legally, semi-legal, other) to make money.

Thank the L-rd for WaMu.

Let's see: HELOC is at Prime - 0.76%, currently 4.24%. So I can:

1. Take $25,000 from HELOC.
   
2. Invest in FDIC-insured WaMu CD for 12 months at 5.00%.
   
3. Profit until the fourth 0.25% rate hike, which should be at least a year.

Make $190, give or take, risk free if nothing changes.

Hmmm, maybe I should make that $50K. In the form of my new motto: WWTD? (What Would Tyler Do?)

Since I'm cash-strapped for the next few years, I'm looking for ways (legally, semi-legal, other) to make money.

Thank the L-rd for WaMu.

Let's see: HELOC is at Prime - 0.76%, currently 4.24%. So I can:

1. Take $25,000 from HELOC.
   
2. Invest in FDIC-insured WaMu CD for 12 months at 5.00%.
   
3. Profit until the fourth 0.25% rate hike, which should be at least a year.

Make $190, give or take, risk free if nothing changes.

Hmmm, maybe I should make that $50K. In the form of my new motto: WWTD? (What Would Tyler Do?)

25*30 = 750

104/750 = 13.9%

For those more conversant in the "disincentives of enforcement" literature than I, can you back into the Rational Expectation of Enforcement Practices that would lead nearly 14% of a population to conclude it is maximizing utility?

And, given your calculation, what would that say about the Management Practices of the organization?

25*30 = 750

104/750 = 13.9%

For those more conversant in the "disincentives of enforcement" literature than I, can you back into the Rational Expectation of Enforcement Practices that would lead nearly 14% of a population to conclude it is maximizing utility?

And, given your calculation, what would that say about the Management Practices of the organization?