I am observing on the Dow Jones Indexes website the trend of the Industrial Average that at this very moment is 7516 points with a loss of 481 points. I recall some of the discussions I had in the last weeks and I remember a friend talking about the psychological barrier of the 8000 points. Well, I guess Dow Jones now plummetted below that barrier.
In the last days plenty of words have been said about the American cars crisis. People supporting the bailout idea and people that want the companies that are considered with “bad management” to go bankrupt. And an article on cnn.com captured my attention. I don’t want to replicate the article here, thus I will report only one paragraph:
“I don’t think they should bail them out because … obviously something’s not right in the way they’re running their business, and why should the American people have to bail them out if they can’t figure out how to do it right?” September Quinn, the busy waitress, said after the lunch rush at the Inn Between.
Right, it doesn’t seem the managers of those companies have been wise enough. And probably those companies, even with a money injection, are not prepared to change in a really short time. But then what? I was reading yesterday (or the day before) that the number of people directly or indirectly employed by the car companies that are in trouble are up to 1 million. And I am not an expert of how the American system works but it seems that there are also people risking to lose their pension.
I don’t know much about the behavior of the managers of these companies, besides that, according to Jay Leno, they arrived in Washington D.C. via their $25,000 round-trip lavish private jets. But I recall something I read a couple of weeks ago about salaries of presidents of banks. If I am remembering correctly the average salary was 32 millions of dollars a year (I remember a case of 84 millions). And maybe I should mention also Hedge Funds managers that gained in one year far more than 100 millions. Thirty-two millions of dollars a year. I guess this money are not only paying the time these people are working (and I am sure they are super clever…uh? let’s skip the fact that the market blew up) but they also are the counter part for the big risk of directing big financial institutions. Right, RISK.
And now I wonder, is it fair that when troubles come, their companies are bailed out, the community is paying and the “wise” managers keep getting incentives? All this probably firing a bunch of people too (otherwise how can you call it renovation?). And here I am not bringing up the moral issue (it is a shame that one person can gain 84 millions in one year, a big distortion as they are about $234,000 per day). I am talking about justice here, and it goes back to the age-old expression, the captain must go down with the ship. It would be so simple to start cutting costs of a financial institution: cut those salaries (safe millions of dollars saved).
In fact, if you own a business and you don’t sell, there’s no other options than making sacrifices (gain less or working more to reduce the paid workforce). Well “it seems” that in banks, if it doesn’t go well, employees lower down in the hierarchy are fired while the salaries and incentives of those reigning on top are maintained.
Wish I could hide my money in the mattress.