Tom Sowell weighs in on exec pay via a Russian fable.  We are hearing much ado about limiting exec pay particularly in terms of the bailouts. While it is  a PR disaster in many cases, what the CEO is making is usually not the real problem. In the GM and Ford case, paying people literally not to work was one of the problems. Believing that magically telling Gm and Ford to build green cars is indeed a trip to fantasyland, GM and Ford are both working on this. The strength of the US Dollar keeps Ford from bringing its greenest diesel from England to this country, swell.

This is all about class warfare. And what does Congress know about building cars or supplying demand, look at how they handled Fannie Mae.

Dr. Sowell points out that the Recovery is more a power grab by politicians than anything else.

I suspect that most of the people that the govt will help are rather potential voters for the folks coming into office.  And frankly probably most of them were in trouble, like GM and Ford, before all thsi happened.

DLE

I see Barack is readying his 'rescue plan.To put such schemes in perspective we need go no further than right here in San Antonio. Page B1 of the sunday metro section reports the following.

Eight years ago SA voters approved a sales tax increase to build a network of trials along greenbelts that b order creeks and rivers.

(Note from the prof, 150 years ago San Antonio was nothing but a network of trails along rivers, what happened?)

Eifght years late the first 1.7 mile Huebner Blance segment of the Salado Creek Greenway opens. for a cost of a mere $2.45 M. My claculator says that is $1.44 million dollars a mile or $144,000 a tenth of a mile.  Not long ago it cost a million a mile to build interestate highways.. This is ridiculous but apparently no one thought to notice. Admittedly the trail is asphalt and concrete. Gee it could be plastic coated dollar bills at this price.

We will get, by the end of this year, one on the south side on the Medina river by the Toyota plant, I can't wait….

by the way for those of you that need to brush up on history, the US won World War II in four years….

Twilight was released Nov 21, yesterday. It has already done $752 Million at the box office. Now do you believe what I have been saying?  The new Twilight book series features a romance between young female Bella and vampire Edward. Similarly Sookie is smitten with vampire Bill  in HBO's True Blood.

Sunday night has always been a big television night. When General Electric owned NBC in the 1960s, it desired to sell the new technology, color television to the public. so it commissioned the family series Bonanza (how the west never was) in of course color. At the time it was a big deal to be invited to someone's home on Sunday to watch Bonanza on their new $400 color televisions. While the color in those days was terrible it set a trend. Bonanza was the story of Dad the his three sons on a Nevada ranch so successful that there was never, as I recall, a scene with anyone working cattle or anything else. The stock market was up reflecting the attitudes of the times.

tonight however America will be watching Desperate Housewives, Brothers and Sisters,  24, and True Blood. the first two are sex suggestive classic soap operas.  Brothers features a somewhat disfuncitonal family and their ever failing business, a sign of the times.  The Huxtables they are not.

24 is the Fox series about anti terror expert Jack Bauer, known to bend the rules whenever necessary. This time the action takes place in civil war ravaged Africa rather than America.

True Blood will conclude its first 'season' tonight. HBO has found a smash follow up to Sopranos. 

Okay you tell me, is all this coincidence? Hardly.  Now the stock market is down reflecting the emotions of people.

I have been writing that the public mood has turned  negative. This is beginning ot manifest in very open and obvious forums.

Five protestors in tiny Iceland went tp jail  after a demonstration in Reykjavik.  Iceland banks went bust promsiing all sorts of things to various European depositors.

Six people are dead in a Tijuana bar. Thrre people rushed Bar Utopia and began shooting, no suspect or motives. The article says that Bar Uptopis was popular with 'university students' presumably I guess from San Diego.

Britain is seeking to ban so called happy hour at bars noting the alcohol problems amony young people.

Protestors chanting End the Fed staged a loud but orderly protest It was the 965th anniversary of the creatihon of the FED. This protest drew little atention. One sign read, They Print You Pay.

And that protest was held, in downtown San Antonio. While such protests start quietly, you can expect the rprotests across the nation to grow much louder in 2009. As the unemplloyment rises amid massive government spending, protestors will express their displeasure that such measures are simply not working.

 Avbout a year ago I opined that the next grfeat disaster after housing would be casinos, gee I wish I had acted on that speculation by buying some puts  Check out LVS or MGM. Las Vegas Sands LVS owns casions both in Las Vegas and in are you ready, Macao, People's Republic of China. The stock has fallen from 150 to $3.23, no that is not a misprint.  How could it fall so far?  My answer is that the market realizes and is discounting that all these facilities are or will soon be operating at below their fixed cost levels, smoethign we study in cost accounting. If one falls below that level, only cash stand between the company and the end of opeartions as GM is coming to understand.

LVS ratios tell teh story. Debt is 4.5 tiomes equity.  They owe $10 B dollars. Does anyone thing they can make their debt service agreements? Las Vegas had been cited as the hottest economy in the US. Half a million dollar condos were going up all over town last summer, some in thirty story tall buildings.

trust me, Las Vegas will be tomorrow's monument to foolishness. America excahnged manufacturing for a 'service' economy. What could be more service oriented than a gambling casino? What asset does a shareholder own-a big empty building in the desert. And a lot of debt. We will continue to follow this story.

I ran across a great article on the market.  This hedge fund manager explains a lot about what is going on. I found the comments about Lehman particualrly interesting. It has restricted access to securities in their hands in england, forcing other sales in the US. Rarely does an article in the popular press get it this right.

Teh Big Three Failed their presentation, big time.   Even though Rick Waggoner started out in Treasury he could nto explain how the $25 B would be spent, or how long GM has or, well, they blew it.

On top of that, all three flew in separate private jets, from Detroit. Bad PR guys.  and when grilled, not one volunteered to sell the jets on the spot, the congressman was not impressed.

We have you do presentations in class so you will not blow the deal, like they did. this is going to make it much more difficult to get a bill passsed.

Larger universities are constructing so called 'trading rooms' for students.  Actually these are not much more than just a computer lab with say two instead of one computer screen. And the idea is that one can access some sort of database as though fundamental analysis will get a correct answer to stock value. Well in the current environment, one can throw the fundamental and technical analysis out the window.

I would suggest an environment where we could access

CNBC

Fox Business News

Bloomberg

stockcharts.com on a real time computer

As I write i am watching a very good discussion of the auto industry that includes the CEO of Autonation and Kekorian's former rep Jerome York on the GM Board. I think students could benefit from watching such discussions. Seems to me that would be a better us of the tv in the first floor than watching ESPN.

I might appoint John Stossel as Minister of Common Sense were I Barack.John examines the on and off again TARP plan.  He is certainly right that injecting uncertainty caused the Depression to be ongoing right to WW II.  And we can see that now. One day Paulson is going to buy mortgages, the next inject capital, and the next wait for the next administration.  As noted in the Depression, the government spends lots of money and nothing gets better.  

Housing prices will have to go to the point that people are buying and selling hosues of their own volition. If the govt is promising to 'guarantee' something to someone who cannot pay their mortgage

the house does not get its payments re adjusted

the occupant does not change his or her behavior

the mortgage holder does not know what to expect

no one wants to buy a house not having an idea what the real or artificial value might be.

And so we sit waiting for some clarity.