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It's been a decade filled with CEOs with eyes wide shut

Posted Jan 11th 2009 4:10PM by Joseph Lazzaro (RSS feed)
Filed under: Management, Scandals

In the rush to and sheer scope of stabilizing first the financial system, and then key institutions in the financial system, and now jump-starting the U.S. economy, is the United States in danger of not correcting one other possible operational flaw?

One wise and successful CEO told yours truly that the nation might very well be doing just that. Full disclosure: the CEO is a friend of mine.

It starts at the top

The source problem: CEOs, the CEO said. In less than a decade, for reasons which are probably complex, the United States has produced a stunning array of CEOs whose actions have been, at minimum, selfish and unethical, and even fraudulent and illegal.

Now, in the context of a post-September 11 geopolitical world, the senior management flaws would appear to be minor. But from an American standpoint, certainly from a Protestant work ethic standpoint -- the genesis of the American system -- the errors/lapses have been gargantuan.

Continue reading It's been a decade filled with CEOs with eyes wide shut

Who or what caused this financial crisis?

Posted Sep 18th 2008 2:49PM by Joseph Lazzaro (RSS feed)
Filed under: Other issues, Politics

Investors and readers are no doubt aware of the benefits of the free enterprise system as practiced in the United States: entrepreneurship, innovation, ingenuity, dynamism, risk taking, wealth building, and commerce are chief among these benefits.

But readers also know that corporate capitalism has its drawbacks, including (but not exclusively) financial crises that have resulted in devastating economic and social upheavals.

1893, 1929, 1987, 20??

Moreover, despite technological change, productivity increases, and massive increases in wealth, it's remarkable how similar both the crises and the public policy responses have been over the hundred-plus year period: excesses occur, bad debts mount, some regulatory changes are implemented by the U.S. Government (and sometimes by state governments), and then corporate capitalism resumes.

Further, whether it's due to America's culture, its vast natural resources, something innate in Americans, human nature in general, or some other factor, or a combination, every time a crisis occurs, the American people, by and large, reach the same conclusion regarding what caused the crisis or problem: bad decisions or incorrect decisions. Basically, that people, mainly executives and other business leaders (sometimes federal/state regulators), made mistakes or bad decisions.

Continue reading Who or what caused this financial crisis?

High energy cost era suggests major changes ahead for the United States

Posted Jun 3rd 2008 6:54PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Other issues, Commodities, Oil

That the arrival of $4 per gallon gasoline has already propelled changes in consumer and corporate behavior would not be a revelation to most investors / readers.

Still, a prudent tack for investors -- or heads of households/husbands/wives, for that matter -- is to look beyond the short-term conditions and try to gauge longer-term trends -- trends that may uncover investment opportunities.
Short-term, oil is likely to correct, many economists agree. Oil at one-hundred-twenty-five bucks per barrel is well above what many economists and analysts believe is a price capable of sustaining adequate U.S. and global economic growth. Speculators have pushed oil higher than what it should sell for based on fundamentals, and a pull-back is likely in the quarters ahead. That will take some pressure off gasoline, diesel and heating oil prices.

But what about long-term? Short-term, gasoline prices should moderate, but is $4 gasoline a high point? Probably not, if current global oil consumption trends continue. What's more likely? Additional, steady rises in gasoline, diesel and heating oil prices in the years ahead, particularly if the U.S. economy shows signs of a recovery later in 2008.

Continue reading High energy cost era suggests major changes ahead for the United States

At downturn's start, hiring freezes, not layoffs, prevail

Posted Jan 24th 2008 3:52PM by Joseph Lazzaro (RSS feed)
Filed under: Competitive strategy, Employees, Economic data, Recession

There's an economic adage that says, "The economic cycle repeats itself, but never in quite the same way."

The current economic slowdown, at least initially, is providing evidence to confirm the above, as unlike the previous two slowdowns, corporations appear to be taking a more-cautious approach toward both eliminating and adding jobs.

During this cyclical downturn, many companies are adopting hiring freezes as they attempt to discern the likely direction for the U.S. economy in 2008 and beyond, The Wall Street Journal reported. (Subscription required.) Many economists expect the U.S. economy to register anemic growth in Q1 and Q2 2008 -- roughly 1.0-1.5% GDP growth, and the most recent monthly hiring total supports that prediction: the nation added fewer than 20,000 jobs in December 2007.

However, unlike the start of previous downturns in 2001,1990-1991, and 1981-1982, corporations have resisted -- at least so far -- major layoffs and operational cutbacks. Economist David H. Wang told BloggingStocks on Thursday that he believes two factors are behind the personnel balancing act.

Continue reading At downturn's start, hiring freezes, not layoffs, prevail

Bush-Rangel compromise possible on hedge fund/AMT bill

Posted Oct 26th 2007 8:55AM by Joseph Lazzaro (RSS feed)
Filed under: Other issues, Politics, Small business

Beltway Banter: The quick, initial read regarding U.S. Representative Charles Rangel's (D-New York) hedge fund/buy-out firm tax bill introduced Thursday is that the measure, as composed, would produce a certain veto from President Bush, but that the Bush Administration may be willing to work on a revised Rangel measure.

A revised bill, provided it successfully snakes its way through the U.S. Senate, may be legislation President Bush can work with, as a way to solve the alternate minimum tax issue. Designed to prevent wealthy Americans from paying no tax via tax shelters, the AMT -- due to inflation -- applies to a larger number of upper-middle-income Americans each year. Without an AMT patch, 21 million households will be obligated to pay the alternate minimum tax.

U.S. Rep. Rangel's measure would more than double the tax rate on carried interest, the executive compensation at buy-out and venture-capital firms, and would require hedge-fund managers to pay tax on income they defer in offshore accounts, among other bill features.

U.S. Rep. Rangel calls his bill "the mother of all tax reforms." Republican leaders disagree. In a statement, they called the bill, "the mother of all tax hikes" and assert that the bill would raise taxes by $1 trillion over a 10-year span, Reuters reported. Rep. Rangel countered by saying that U.S. Treasury Secretary Henry Paulson had recommended the business tax changes.

Continue reading Bush-Rangel compromise possible on hedge fund/AMT bill

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DJIA-19.9510,206.99
NASDAQ-11.752,142.31
S&P 500-4.781,088.30

Last updated: November 10, 2009: 12:42 PM

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