Foreclosures

Supposedly, with the advent of mortgage backed securities, and all the other mortgage instruments, there are many parties owning various pieces of the mortgage. When the mortgage enters default, the explanation is that it is so hard to find/determine who all the owners are, that it is impossible to gather their input to help restructure a mortgage to stave off foreclosure.

So in the event of foreclosure, if it is so hard to determine who the creditors are, how can they get paid in the event of the foreclosure and subsequent sale? In fact, it would be an interesting scenario if there was a legal requirement that each owner of the mortgage had to personally approve a foreclosure and that the administrator of the mortgage could not enforce it by itself.

CEO Compensation Part I

CEO compensation does represent only a small fraction of the bailout money given. Nevertheless, some of is more than many people will earn in a lifetime.

I worked at a job where I was paid a salary and got a small bonus IF the company was profitable - not if my division was profitable. I was expected to work hard, do a good job and be a team player. That means - suck up the losses if the company doesn't do well.

So what is it about the Wall Street culture that there has to be such an incentive for upper management to do a good job. In some ways the bonus structure as it is implies several things:
1. That upper management are inherently slackers (worse so than the people below).
2. That upper management has trouble being the team players they preach that everyone below them should be. Otherwise how can you get a bonus when the company loses money. Shouldn't everyone else be getting a bonus because they are doing a great job too (but for external reasons e.g. like the economy, the company loses money).

But there is also another thing: the closer you are to the "bottom line" then, chances are the more you only care about in your compensation is the bottom line - unlike lets say a teacher who might derive satisfaction from seeing his/her kids learn. It would be a more interesting world if the only thing anyone cared about in the ranks below was how much money they got. I suspect it would have those at the top crying foul.

Next: my hypothesis that the labor competition for CEO/uppermanagement is far from perfrect.

Oops I've dropped the ball

Happy New Year, I guess I've been AWOL for a bit. Australia was fantastic! Recently I learned that the Commonwealth of Massachusetts passed a bicycler's bill of rights. It's a bit biased in my opinion, as if bicyclers have been victimized by automobiles. And perhaps they have. However I think it should have better addressed the whole bicyclers zooming through crosswalks during walk signals, and almost hitting pedestrians. I have no doubt that there are bicyclers who are competent and behave correctly but there are also many others (perhaps not a majority) who really need to have some kind of formal training on safe bicycling practices.

I hope people are doing well!

I'm in Australia

I'm here down under for several weeks - they are flying by...Melbourne, Australia is a really nice place! More details soon.

July 4, 2008 Pictures

Copyright 2008 Conan L. Hom

Surcharges

I'm wondering if, assuming the fuel crises subsides, do you think the airlines will remove all the "surcharges" that are in place? I have a feeling they won't. I also do think it is funny how subsidized the airline industry is (think of all the airports etc.) but then many expect AMTRAK to be self sufficient.

Iraq

I won't debate whether the U.S. should have gone and invaded Iraq or not. The U.S. military did however demonstrate how a well trained, well equipped small force could defeat a larger, less well trained and equipped force even if the latter is fighting on its home ground.

It is one thing however if you plan on just defeating the enemy and moving on, it is another if you plan on staying and rebuilding. It took a large force to stay and rebuild and occupy Germany after WWII. It took a long time also. Note that Germany didn't have insurgents or other countries like Iran supplying weapons to fight the occupation forces and also note that Germany didn't have a population that was vastly divided in religion, ethnic background etc.

Though I don't agree with McCain on many issues I think he is right that we need to expect to stay a long time.