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Wednesday, November 26, 2008

The Inefficiency of Director Pay at the Big 3

"Egotism is nature's compensation for mediocrity."

On the topic of the markets? The two things I'm watching during this trading day is the US Dollar (DXZ8) which is bounching off the lows of the last 10 days, and is starting to bounce up. I'm contrasting that two the DOW Jones, which is struggling to attempt to make higher highs.

Ok. Onto the topic of this blog entry. The Big three.

Some time ago I discussed the inefficiency of the Big 3; Ford, GM and Chrysler.

But I didn't specify exactly what I meant. What inefficiency? Some have risen to the defense of the Big 3, and pointed to specific programs that they put in place to become more efficient, and more competitive.

When I talk about the inefficiency of the Big 3, I could point to many factors. But one factor rises above them all. The sickness of inefficiency manifests itself quite clearly with director compensation.

I discuss that in this vlog entry ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)

Now when I said in the above vlog: "The should just fail"; I'm saying that's what others have said regarding the big three. I'm not saying "I" think they should fail. I'm saying that's what is being said. I think the main problem is inefficiency. And I also believe that the Catch 22 the economy has found itself in, is due to following Mercantilistic principles found in Mercantilistic Keynesian economics. Is that although they should fail; they cannot fail.

Tomorrow I'm going to discuss the concept I strongly disagree with. That we "need" dumb losers in the market to provide liquidity. I'll talk about that topic tomorrow ...

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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