OT: What’s the deal with NPR?

[Allan from Fallbrook]

[quote=briansd1]
As a society, we greatly benefited from Wall Street. Without Wall Street and the lending they created, our economy would have been a fraction of what it is now.

Without credit cards, retailers would suffer, restaurants would close and the economy wouldn’t be as vibrant.

Without Wall Street, America would not be the capitalist society it is today.

BTW, CA renter complains about the 7%-9% annual returns that Wall Street did not deliver, but she forgot that relying on those returns allowed the compensation largesse to begin with.

[/quote]

Brian: I’m as much of a money-grubbing capitalist as the next guy, but I’d also be the first to say that Wall Street has fundamentally failed in its primary mission: The proper allocation of capital to profit-making ventures.

While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. Of course, this was also back when America actually produced things of value and didn’t really on a wage-stagnant service economy papered over with commercial credit that masked the true ills.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[davelj]

[quote=Allan from Fallbrook]
While we don’t have the space to get into all of the details, I think its safe to say that Wall Street’s mission and priorities became tied to short-term bonuses and compensation and thus we saw the explosion of investment products, like CDOs, MBS, etc, that produced the largest bonuses for groups like Lehman, Bear and Goldman Sachs. Combined with the insane amount of leverage that was present and the inherently poor quality of the products themselves, the meltdown became inevitable.

I think if you go back in time and look at groups like Goldman, Merrill and Bear Stearns when they were partnerships and not publicly floated corporations and back when leverage was reasonable and controllable, I think they did a much better job of allocating capital. [/quote]

Incentives matter.

When you combine huge financial companies with legions of employees for whom the present value of their cash compensation is greater than the present value of their ownership stake… you’re begging for trouble.

[briansd1]

I agree Allan. On Wall Street, there were excesses and failures at different times.

But overall, over time, we could say that Wall Street has been good to the US economy.

Accusing Wall Street of causing state and local government fiscal problems is a stretch, IMHO. Private pensions were affected also.

Back the original topic, I’m all for continuing to fund NPR.

[briansd1]

I agree Allan. On Wall Street, there were excesses and failures at different times.

But overall, over time, we could say that Wall Street has been good to the US economy.

Accusing Wall Street of causing state and local government fiscal problems is a stretch, IMHO. Private pensions were affected also.

Back the original topic, I’m all for continuing to fund NPR.

[briansd1]

I agree Allan. On Wall Street, there were excesses and failures at different times.

But overall, over time, we could say that Wall Street has been good to the US economy.

Accusing Wall Street of causing state and local government fiscal problems is a stretch, IMHO. Private pensions were affected also.

Back the original topic, I’m all for continuing to fund NPR.

[briansd1]

I agree Allan. On Wall Street, there were excesses and failures at different times.

But overall, over time, we could say that Wall Street has been good to the US economy.

Accusing Wall Street of causing state and local government fiscal problems is a stretch, IMHO. Private pensions were affected also.

Back the original topic, I’m all for continuing to fund NPR.

[briansd1]

I agree Allan. On Wall Street, there were excesses and failures at different times.

But overall, over time, we could say that Wall Street has been good to the US economy.

Accusing Wall Street of causing state and local government fiscal problems is a stretch, IMHO. Private pensions were affected also.

Back the original topic, I’m all for continuing to fund NPR.

[briansd1]

And the NPR saga continues:

GOP prepares new assault on NPR funding as questions over video flap remain
A House committee schedules an ’emergency’ session Wednesday to consider a bill that would permanently bar NPR or its affiliates from receiving federal funds. The move comes even though the video that brought down the broadcaster’s chief fundraiser and CEO was apparently manipulated.

http://www.latimes.com/news/nationworld/nation/la-pn-npr-questions-20110315,0,3081513.story

[briansd1]

And the NPR saga continues:

GOP prepares new assault on NPR funding as questions over video flap remain
A House committee schedules an ’emergency’ session Wednesday to consider a bill that would permanently bar NPR or its affiliates from receiving federal funds. The move comes even though the video that brought down the broadcaster’s chief fundraiser and CEO was apparently manipulated.

http://www.latimes.com/news/nationworld/nation/la-pn-npr-questions-20110315,0,3081513.story

[briansd1]

And the NPR saga continues:

GOP prepares new assault on NPR funding as questions over video flap remain
A House committee schedules an ’emergency’ session Wednesday to consider a bill that would permanently bar NPR or its affiliates from receiving federal funds. The move comes even though the video that brought down the broadcaster’s chief fundraiser and CEO was apparently manipulated.

http://www.latimes.com/news/nationworld/nation/la-pn-npr-questions-20110315,0,3081513.story

[briansd1]

And the NPR saga continues:

GOP prepares new assault on NPR funding as questions over video flap remain
A House committee schedules an ’emergency’ session Wednesday to consider a bill that would permanently bar NPR or its affiliates from receiving federal funds. The move comes even though the video that brought down the broadcaster’s chief fundraiser and CEO was apparently manipulated.

http://www.latimes.com/news/nationworld/nation/la-pn-npr-questions-20110315,0,3081513.story

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