Everybody and everybody's brother who does not even remotely understand corporate finance let alone (option arms, financial tranch, covered calls, credit default swaps, monetary policy, CDO's and SIV'S) is blaming someone or the other for the mess, trying to find the person who is responsible for the doom and gloom. What about all those business schools preaching their students that, the only goal of a company is to determine ways to increase shareholder wealth... Hmmm!!! Since the underlying assumption is to increase it over the long term and that companies are seperate entities which last forever... Until they stumble upon this amazing word (chapter 7 - Complete liquidation).. But then again.. dont we humans expect instant gratification (including me).. Technically all those Investment Banks did exactly what their shareholders wanted in the short run... Now.. after banking in millions and wiping out the common shareholder... (unlike institutional holders and ofcourse Warren Buffet, since these guys are pretty much happy getting prefered stock and getting a say on the board...hmmm!! guess who runs the company then..) These are those same prefered holders now cribbing that management is incompetent and fraudulent and greedy.. and on and on and on... cap their compensation... wow.. I can write an entire book about why capping someones compensation is the most dumb thing I have ever heard...
Where do I start!! my arguements in the finance class whether Lehman Brothers should have been saved... what about all those complex models that predict systemic risk and the potential impact. If we in America started saving ailing companies which we exactly are... then guess what.. Free market Capitalism is in the toilet!!! Let the Italians save ailing industries.... This is America!! WOW!! I got excited..
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