Comments on: On Risk & Solvency

By: wunsacon

wunsacon — Sat, 13 Dec 2008 03:05:07 +0000

^
|- I’d like to give a Keanu-Reeves-like “~~whoa~~” shout-out to debreuil.

By: debreuil

debreuil — Sat, 13 Dec 2008 01:14:00 +0000

Having been 20 years in the software industry, let me just correct the idea that software isn’t based on a ‘belief system’. Most never even get completed, what does tends to be crap, and the concept was usually useless to start with. Fashion is the number one element in the decision making process. What ends up being ‘good’ stagnates and is defended more by lawyers than improvement. There is good software that adds true value, but the money tends not to sniff that crotch, why would it? There is more money in software based on hype and ‘belief’.

If the dot com bust wasn’t a run on software, then that just means the writer has a narrow definition of ‘run’. It was the sudden realization that 99% of it was, at the core, shite scented vapor.

By: donna

donna — Fri, 12 Dec 2008 19:00:38 +0000

I think the question is what did they think they were financing. Finance companies ought to finance things that are real, not fictional. The expectations of impossibly high returns were the real problem, and the lack of any connections with a real, tangible product.

By: mkkby

mkkby — Fri, 12 Dec 2008 18:38:55 +0000

It is naive to think management was working for the good of the business. They manage for their own personal interests. If it was for the shareholders, they would pay most of their profits as dividends, like a royalty trust. They are NOT incompetent. They are deviously ingenious.

It is a no brainer to milk a company for all you can get, then cry bailout or “too big to fail” when it fails. Heads you win, tails you don’t lose. See?

The brokers all destroyed themselves when they went public. As partnerships, they were managed for the benefit of the owners, and never would have taken the huge risks they did.

By: mpavan

mpavan — Fri, 12 Dec 2008 17:41:00 +0000

Barry

what do these CEOs care ? They are making money beyond the dreams of avarice, if they do well or fail. They have none of their own skin in the game. Even if things go BK, they are sill fabulously weathly and set for a lavish life. Its all upside, no downside, and I mean that in monetary terms, not mean-nothing things that reputation. Contrast that to a small-business owner who won’t eat if his/her business fails.

really, let’s be serious. It is so brain-dead obvious it stuns me that people are shocked.

By: businessword.com

businessword.com — Fri, 12 Dec 2008 17:23:24 +0000

I don’t get why you think customers of chip companies don’t have to have faith in those companies? Why don’t investors in Intel and Texas Instruments have to have faith in all aspects of its management? Apple is all about belief and cult.

If I don’ believe in a company’s ” solvency, liquidity, profitability or risk management,” why would I work for that company, buy its products or services or invest in it?

So, I’m questioning the basic assumption of the opening post.

By: larster

larster — Fri, 12 Dec 2008 17:09:04 +0000

One of the big contributors that led to this bull market in incompetence is the concept of “team building”. All major orgs in the ’80s emphasized team building which resulted in managers surrounding themselves with an echo chamber. One need only look to the White House for an example of this. How many people on Wall St knew we were headed for disaster but did not speak up for being branded as “not a team player”. On the top mgt side a large bonus structure put the golden handcuffs on the disidents. Look at the Army and the Shinseki incident. Does anyone think that he was the only general to understand the need for more troops to maintain order after the war? Everyone sat on their hands dreaming of that cushy job w/ a defense contractor, as we bumbled and stumbled into a mess.

We need to develop some game changers but the “system” does not breed them.

By: semperfido

semperfido — Fri, 12 Dec 2008 17:05:31 +0000

Minsky’s cycle and incompetent CEOs aren’t mutually exclusive. The cycle is a given. Its severity is not. And its severity in this case is clearly related to reckless levering by CEOs who ought to have known better. What I wonder is: will the CEOs and their compliant boards and executive committees get blamed, formally? And how? Will they be charged? And will they have to pay? And how? I had a securities lawyer in my office the other day ranting that Fuld et al should go to jail. At the very least he wants a couple of bonus-bought vineyards ceremonially sold and the proceeds returned to their rightful owners. Maybe some new president should appoint Patrick Fitzgerald, out of Chicago, as a special prosecutor to hunt the bad ‘uns down.

By: VoiceFromTheWilderness

VoiceFromTheWilderness — Fri, 12 Dec 2008 17:05:03 +0000

The only problem with that comment is that the semi’s and the software companies are dropping like rocks — not just stock, sales, and profit as well. Meanwhile the ex-CEO of Goldman is now the dispenser of money for the US government. I’d be willing to bet anything that the CEO of Intel would much rather be in Paulson’s job, or better yet a ‘friend of Paulson’, than stuck selling pieces of sand that no one wants. As for Scott McNeally, ya gotta figure he’s thinking ‘how stupid of me to be making things, I should have been making money’.

By: wally

wally — Fri, 12 Dec 2008 16:44:19 +0000

The patient may have been done-in, but we have bailed out the disease.