AIG: Arrogant, Incompetent, and Greedy
Posted by: Robert Hutchinson
October 23, 2008
Topic: AIG: Arrogant, Incompetent, and Greedy

Arrogance? How can anyone understand AIG begging for and receiving an $87 billion, now $12 billion, government bailout and then immediately throwing a $400,000 party at one of the most expensive resorts in the world? The amenities included "surf butlers." Who doesn't need those?

Continue Reading

ASLEEP AT THE SWITCH - THE ABJECT FAILURE OF SEC
Posted by: Robert Hutchinson
October 03, 2008
Topic: Topics

Chairman of the Securities and Exchange Commission Christopher Cox has offered up various excuses as to why the agency he heads is not really at fault.

Treasury Secretary Paulson has pointed out that the root problem is housing and the securitization of mortgages used to finance it. The subprime mess has dragged down investment bank after investment bank, created massive defaults, and posed systemic risk not only to the U.S. but the global economy. Estimates of losses range from $700 billion to $1.3 trillion. During the past several years, Wall Street has peddled these subprime securities issues, often with little understanding of their real risks, and in many cases making no meaningful disclosure of them - but always with its hand out for the fees. The Wall Street party was on, and it was at the investors' expense.

Continue Reading

BUBBLE, BUBBLE, TOIL AND TROUBLE The Subprime Mess ? Where Does It End and Can I Get My Money Back?
Posted by: Robert Hutchinson
July 09, 2008
Topic: The Subprime Mess ? Where Does It End and Can I Get My Money Back

This is not Wall Street's finest hour. It seems there was no end to the greed. The subprime bubble/bust, fraught with fraud, follows on the heels of another massive fraud, the dot.com bubble/bust. The losses seem to grow each day, with everyone wondering when the next shoe will drop. One set of figures put the losses at $170 billion for U.S. institutions and $200 billion for foreign investors. Goldman Sachs estimates the fallout could be as much as $1.2 trillion globally.

Continue Reading

THE STOCK OPTION BACKDATING SCANDAL:THE HEADS I WIN TAILS YOU LOSE STRATEGY
Posted by: Robert Hutchinson
January 02, 2007
Topic: THE STOCK OPTION BACKDATING SCANDAL:THE HEADS I WIN TAILS YOU LOSE STRATEGY

 Stock options came into favor for the reason that many thought greedy executives and chief executive officers were paying themselves too much.  The idea was to instead give them stock options that are tied to the company?s performance, and in that way, align their financial interest to the shareholders? interest.  It wasn?t long until that idea was twisted from using options to partially replace fat salaries to one of issuing options grants on top of fat salaries.  In the ten years leading up to 2001, the average value of option grants to CEO? of S&P 500 companies has increased ten fold.   

Continue Reading

RATES OF RETURN: THE REAL AND THE RIDICULOUS
Posted by: Robert Hutchinson
December 22, 2006
Topic: RATES OF RETURN: THE REAL AND THE RIDICULOUS

What is one way to detect that an investment is shaky?  The answer is by looking at what the rate of return is going to be.  Put another way, if someone tells you are going to get a fantastic rate of return, the general rule is run, not walk away. 

Continue Reading