The CEO of Wachovia just resigned. More as I learn more; it just came across BBC News, which, well, doesn't really care. First thought however is that this is actually sort of beautiful to watch, not because I have anything against Ken Thomson, but because the market is working without anyone but the participants ordering it to correct itself.
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He didn't resign, he was fired.
Before we get too teary-eyed at how beautifully the market works (and I am a big unfettered free-marketer), let's see whether Thomson was given a nice gazillion-dollar package as compensation for his years of meritorious service.
Why is that libertarians and other extreme free market advocates always seemed to be so amazed when the market seems to work.
By the way, what is this an example of the market doing? Replacing a manager that lost millions of dollars--i.e., misallocating millions of dollars of scarce resources -- and giving him a golden parachute? See, both the private and public sector can waste resources.
MM,
you've been a little slow on this topic..
see : http://www.bloomberg.com/apps/news?pid=20601039&sid=aGP25Nnw2JlY&refer=home
if this were a Ballgame, we're in the 3rd inning..of the first game of a double-header..
Eriver,
You are thinking of these packages from the wrong end. Very few CEO's are given nice compensation packages to reward them for years of service. What happens is that they are given nice compensation packages, including golden parachutes WHEN THEY ARE HIRED to induce them to take the job in the first place. And sometimes they get golden parachutes awarded to them during their tenure BECAUSE THE BOARD WANTS THEM TO STAY.
These packages are part of their normal pay; they are not misbegotten awards for screwing up or finally leaving.
Ah yes, watching homes be foreclosed and the economy grind to a hault is "beautiful to watch". And you wonder why libertarians are derided as intellectually bankrupt?
"Yup, saw some homeless people. Isn't the market a beautiful thing to watch? More wine and schadenfreud please."
Sure, Rex, but sometimes the golden parachutes are 'negotiated' to keep the departing CEO from making a stink, naming names, etc., and because the board has a lot of money to play around with that isn't theirs.
The point is that performance and compensation are only loosely coupled, because the CEO-board relationship is often very cozy, and the check on this particular system (shareholders voting down the suggested pay packages) is, shall we say, inadequate. Whether the likes of Robert Allen at AT&T, or Carly Fiorina at HP, or countless others negotiated their bonuses or packages before or during or after, lousy jobs are often amply rewarded.
I'd still like to have seen what would have happened if the fed hadn't backed the Bear Sterns deal. Then we might have seen some actual market forces at work. It wouldn't have been so "beautiful to watch".
Ah yes, watching homes be foreclosed and the economy grind to a hault is "beautiful to watch". And you wonder why libertarians are derided as intellectually bankrupt?
Well, I think it's beautiful to watch, and my business is even taking a bit of a hit from the whole downturn.
If you happen to think we were following a bad path to begin with, "beautiful" may mean that we are being forced to correct ourselves sooner than we thought, rather than facing a later, deeper correction. Soaring, unrealistic home prices; out-of-control spending; bloated government; a fiscally incontinent Congress; soaring trade deficit and consumer debt; and unrealistically high levels of immigration.
If the current downturn is what it takes to nudge us back on track then I'll take it (though I think we'll need more nudging). Beautiful, indeed.
Mark,
You are being intellectually dishonest. You are trying to say that a market correction is "beautiful" because we get back on track. While getting back on track economically is a good thing, there is no reason to say it is beautiful. Storming the beaches of Normandy was a good thing, in a historical sense. But watching it happen and stating it is a good thing makes you a deranged person. And watching the housing implosion and its fallout and stating it is beautiful is the equivalent.
Or, as I stated previously, libertarians are intellectually bankrupt.
I've hated Wachovia ever since they purchased "First Union". They renamed the "First Union Center" in Philadelphia the "Wachovia Center". It was so very fitting for Philadelphia sports teams to be playing in the "F U Center".