« Economic Forecasting | Main | Building Storm Update II »
March 14, 2008
Black Gold, Gold and Cash
The New York Times summarizes the weeks movements in gas prices, gold and the dollar.
State budget troubles pile up in New Jersey (hat tip to Calculated Risk).
Paul Krugman is good but gloomy today:
"What if this initiative fails? I'm sure that Mr. Bernanke and his colleagues are frantically considering other actions that they can take, but there's only so much the Fed - whose resources are limited, and whose mandate doesn't extend to rescuing the whole financial system - can do when faced with what looks increasingly like one of history's great financial crises.The next steps will be up to the politicians.I used to think that the major issues facing the next president would be how to get out of Iraq and what to do about health care. At this point, however, I suspect that the biggest problem for the next administration will be figuring out which parts of the financial system to bail out, how to pay the cleanup bills and how to explain what it's doing to an angry public. "
Shareholders at the Pennsylvania based homebuilder Toll Brothers approved a bonus plan that moves away from awarding bonuses based on financial performance.
"Jennifer O'Dell, deputy director of corporate affairs for the Laborers' International Union of North America, whose pension funds own at least 200,000 shares of Toll Brothers, commented that the bonus plan "pays him simply for existing," and adding, "You should pay C.E.O.s for performance."
C.E.O Robert Toll made $23,408,911 in 2006 as net income declined by 15% and shareholder returns declined 22%.
Myron Scholes hedge fund manager and nobel laureate in economics is floating a bailout plan for financial markets. Scholes was also the co-founder of Long Term Capital Management (LTCM), a hedge fund that had to be rescued by the Federal Reserve after its working capital was wiped out by financial market volatility in much the same way that Carlyle Capital Corporation was wipped out this week.
Which brings us back to Krugman's column, somebody is going to pay for all this and it is probably not going to be people like Scholes or Toll who most likely benefited the most from the madness that got us into this mess.
--Mark Price
Posted by Price at March 14, 2008 08:22 AM