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On Sweet Deals and No Deals
On Sweet Deals and No Deals
Courtesy of Bruce Krasting
I’m sure that everyone will be glad that executive compensation at Fannie and Freddie (F/F) has been cut. These are public companies that exist at the whim of the taxpayers. As such, the compensation for the folks pulling the levers at F/F should conform to salaries that the president gets, right?
Well, not quite right. The President makes a cool $400 grand. Congressmen get $175K. The 2012 compensation for the senior executives at F/F tops these numbers by a wide margin:
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The F/F top brass get nice cushy salaries plus incentive compensation (annual bonuses). Given that F/F are losing money hand over fist, you would think that some of that incentive comp might not get paid. Most of it is. In 2011, 82% of incentive comp was paid.
A large portion of total compensation is paid in the form of a retention bonuses. If the top folks stay in their jobs, they get paid this amount. If they quit before their contracts are up, they still get paid most of their retention bonus. There is a formula that sets the payout that discounts the contractual amount by 2% per month for each month prior to January 2014.
Not surprisingly, both Charles Halderman Jr. and Michael Williams, the CEOs at F/F, have both announced their resignations. As a consequence, they will only be getting 60% of the combined $5.8 million of their deferred comp. amounts. Basically, they will each be getting $1.8mm for not working. A very sweet deal indeed.
Note: The 2012 total compensation package for the CEO's at F/F is down 74% from what it was before the SHTF in 2008. So I guess we should be happy that we are paying folks to lose money at only one-quarter of the rate we once were.
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No Deals
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As of noon on Monday the NYSE is headed for the lowest daily volume of the year. The Vix is falling with the low turnover. It’s pushing the levels last we saw in May – August of last year. (See Zero Hedge for details Link)
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I can’t imagine a worse status quo. We have complacent markets. Turnover and liquidity are drying up. The market's ability to absorb a shock of any kind is weak.
There is going to be a shock; there always is. The vulnerable stock market is due for a correction. I’m just wondering what the shock will be that brings it on.
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Bruce remember when you wrote that the Swiss are definitely going to vote in favor of a minimum wage? Well, it's still too early to know for sure (although I'd be willing to bet you a shit ton of money that they'll reject it), but guess who rejected an initiative (67% no votes) to raise the annual holiday entitlement from 4 to 6 weeks?? Still convinced you can forecast Swiss referendum outcomes?
Somewhat off-topic but...
Consider selling GBYJPY, as the pair has created a short Gartley pattern on the Daily chart. The Japanese yen is in a severely oversold position against most majors (I'll exclude USD in this one because the Fed will announce no new easing on the morrow...) and the retracement is most likely to appear against the European currencies.
Mid-range target: GBPJPY 123.7.
:D
P.S. If anyone has a good muffin recipe, please let me know!
They have to have zombie freddie and zombie fannie to offload all the shitty mortgages that TBTF banks and the Fed need to get off their books and have someone that knows how to forge the paperwork. A toxic dumping ground...why does'nt the EPA investigate...?
Bruce
You'd be the one to probably have an answer to my curiosity:
IS NYSE ABOUT TO GO OUT OF BUSINESS?
- No volume for many years already
- Merger with Deutsche Boerse is kaput
Are they making any money?
If not enough money, is NYSE too big to fail?
These fine folks at f&f were all vetted by bwaney fwank at the hotel cornholio
The 'shocker' will be;
Benny says "no more just yet" to mountains of counterfeit wealth (what a tease, you know he's lying)
Greek CDS's trigger Wall Street shitting their nappies (Nanny Ben is waiting in the wings to buy the toxic MBS's WS can't offload to anybody on the Planet... Ben buys MBS, WS bailed out for their toxic CDS's. Nice circle jerk eh?)
American-Jew Foundation leads/lies the US into yet another deranged, illegal, murderous foreign war (only a coincidence it's when India starts paying for Iranian Oil in Rupees, not USD)
Black Swan event (you'll never in a million years see this one coming): Ireland, Spain and Portugal says if Greece can have a haircut, "Why Can't We???" ...SHTF across Europe, US catches Swine Fever
I wanna know what the asshole makes who guarantees all these gubmint-backed student loans... now there's an asshole operating underground and out of sight.
SLM quacks and waddles like a gubermint guaranteed duck, but isn't ?
http://en.wikipedia.org/wiki/Sallie_Mae
These entities would not only survive but prosper without these chumps sucking at the teat.
I'll not work for a cool $3ook.
What the hell is the matter with you. Aren't you in the union? Get that figure back up to 7 digits.
Back the truck up! Aren't F&F the same gurus who's bonds would have been worthless if Turbo-Timmy hadn't gratuitously guaranteed them? Public benefit? Of course its completely negative. And you know, they probably didn't really provide a benefit during the boom - as Countrywide proved, your loans did not need to conform to FNM standards to get sold and it appears that even conforming loans mostly didn't conform anyway. But the real question here is - did these men provide return on investors investments? I doubt it, but given Geithner's giveaway and returns from putbacks and lawsuits, it isn't impossible. I don't have the time, inclination, or talent to determine whether these two private banks are providing a good return on investment, but I'd bet Bruce could.
“These are public companies that exist at the whim of the taxpayers.”
Congress has kept F/F alive and well in order to finance lobbying donations.
When any big hitters from D.C. are out of work they don’t go on unemployment – they go to Fannie and Freddie – like Rahm, Newt, et al., and WE foot the bill. Franklin Raines is collecting some $100,000 per month in Bermuda on US.
Boxer and Feinstein, my Senatepersons, have refused multiple of my direct requests as to how much they have received from F/F over the past 10 years.
And don't forget Jim Johnson who Morgenson & Rosner say (correctly, in my opinion) was the founding father of quantity over quality in Fannies operation and adjusted executive compensation to reflect his line of graft, errr, thinking...making 200 million for himself.
By the way, they have not been sued for slander or asked to clarify or retract anything.
He is now with Perseus LLC.
http://www.perseusllc.com/bios.htm#johnson
The book...
http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Armageddon/dp/0805091203
What are the normal odds on any given state ever having 2 Jewess Senators? But wait....things are no longer normal in Isramerica, less still in Mexifornia.
I dunno what the shock is gonna be, but I am wondering if CVN-65 is going to be involved.
CVN-65 will be the false flag operation conducted by Israel to force a war with Iran just like the Liberty was the intended operation to draw the US into a war with Egypt and USSR it failed but not due to the US intervention as that was stopped by presidential order this time ??? it may succeed due to presidential order/collusion with the most active terrorist state in the middle east (other that the US)
I'll be glad to not work for the bargain basement price of $1.5 million US.
"In 1965, US Chief Executive officers earned 26 times more than the typical worker. By 2000, they were earning 310 times more..."
And by 2010? You don't wanna know.
The whole executive comp thing, at corporate and government, academic, and psuedo-government agency levels is so out of hand surreal as to boggle the mind.
And the rich get richer...
http://stateofworkingamerica.org/who-gains/
But Bruce:
"That's what good talent costs."
'We're just paying/bonusing th emarket rate."
"They would all quit if we paid less....."
..and so on....the BS never stops....each CEO sitting on each other's compensation Boards slapping backs and padding pockets.
Gee, they could retain me for 60% of that, and my fund was up 12% each of the last two years ... I'd even be willing to switch to Democrat if that is a job requirement.
likewise, up 12% YoY since 2008. No way their labor has that kind of value. Sign me up.
Long black markets as these guys retire.
The labor of these political cronies clearly has NO value, in fact probably negative value.
Have physical cash and anything of physical value? same as it ever was. Love my oil puts and will buy the VIX under 15.0. Would hate to be a pensioner about now. When moral hazard reaches this kind of level and since it has been 30+ years since the rule of law and contracts have been upheld, no one trusts anyone else. As this percolates to the top of all organizations (but especially those with no powerful politician in their pocket, liquidity and trading in the real economy stop. As usual the government puppets will "fix" this with more capital controls and price fixing. We all know how that will turn out.
Know the value of your labor, you fucking better, because aside from whatever physical assets you have, that will be the only thing you can rely on for most. Will be a boon for local economies and black markets. Same as it ever was.
Market just ate at a shitty all-you-can-eat Chinese buffet. It's only a matter of time now before shit gets real.
Sweet
+5