Fiat denied any plans to invest directly into Chrysler, the heavily indebted US carmaker, or fund it in the future as it reported a wider-than-expected first-quarter loss.
Well, it was nice knowing you, Chrysler. I have fond memories of riding to Little League games in my parents' used Town & Country. That was a comfortable minivan.
WASHINGTON — The Bush administration applied relentless pressure on interrogators to use harsh methods on detainees in part to find evidence of cooperation between al Qaida and the late Iraqi dictator Saddam Hussein's regime, according to a former senior U.S. intelligence official and a former Army psychiatrist.
Remember how I was curious about how the need for 183 and 83 waterboarding sessions on two prisoners lined up with a former agent's claim that Abu Zubaydah gave everything up after his first session? Seems that those next 82 times in Zubaydah's case were not for information, but to get him to say that Al Qaedah had ties with Iraq so that we could invade. This is exactly analogous with how torture is generally used by oppressive regimes throughout history -- not to gather reliable information, but to force false confessions.
I guess that explains it.
Yes, that's a provocative statement. But consider this -- when compared to other NL teams, the Mets are the least efficient in turning offensive baserunners (as measured by hits (H), walks (BB) and batters hit-by-pitches (HBP)) into runs.
While the Mets have scored 55 runs -- more than 7 other NL teams, they are third in H + BB + HBP. Using a method of measuring efficiency called Data Envelopment Analysis and Excel's Solver function, we can score each team on the efficiency by which they turn inputs (H + BB + HBP) into outputs (runs). And the Mets are dead last in this efficiency score -- behind even the Nationals.
The chart below plots H + BB + HBP along the X-axis and runs along the Y-axis. If you were to drop a string down from the top of the graph, and imagine that each point is a peg, the pegs along which that string would lie when pulled taught are the most efficient teams. I've color-coded the points by efficiency, to make it a bit easier to see. Running your mouse over the graph reveals that the teams along the efficient frontier are the Phillies, the Marlins, the Dodgers, the Rockies, and the Diamondbacks. These teams have an efficiency score of 1. The Mets are furthest below the frontier, and have the lowest efficiency score -- 0.77. The next lowest are the Nats with a score of 0.80.
Obviously, it's not all about runs. And it's not all about efficiency -- if the Mets were collecting 50 hits a game to score 10 runs, nobody would be complaining, even though they'd be horribly inefficient. But what's so worrisome about the Mets is that it's not like people aren't hitting -- the team's not slumping, in the usual sense, and yet they still can't generate enough runs to win consistently. This crude measure of efficiency reveals exactly what Met-fans have been griping about -- the Mets are leaving a lot of runners on base. I didn't realize just how bad it was.
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This is really the critical point. According to the standard textbook model, an increase (or a decline) in the labour income of a given individual should be interpreted as a rise (or a fall) in his or her marginal product, i.e. his or her contribution to total economic output. That is, if Mr Smith's wage rises from $30,000 to $50,000, then it must be that Mr Smith has produced $20,000 of extra economic output. The beauty of the market system is precisely that the increase in Mr Smith's wage should in principle correspond to the creation of new economic value and well-being, and is not obtained at the expense of anybody else (i.e. even with fully selfish economic agents there is no externality on others that is not being internalised by the price system). This textbook model probably provides an (approximately) accurate description of 99% of the labour market. However it is extremely naïve—to say the least—to imagine that it adequately describes the pay determination process at the very top end of the labour market. Assume that the CEO of AIG or GM manages to get an increase in compensation, say a rise from a $5m to a $10m total annual compensation. It is truly heroic to conclude from this observation that his or her contribution to AIG or GM output has increased by $5m, and that the total output of AIG and GM has risen by that much. There is tremendous evidence showing that the invisible hand of the market simply does not work in this very peculiar segment of the labour market, and that top executives will keep setting their own pay to the highest possible levels (with no connection whatsoever with their marginal product, which nobody can properly estimate) as long as they are not prevented to do so. Historical evidence suggests that highly progressive taxation on very high incomes is the most efficient way to achieve this goal.
This from Professor Thomas Piketty in his Economist debate with Cato Institute's Chris Edwards about instituting high (like 80% marginal tax rates) on incomes over a couple million dollars. It's a good summation of the back and forth that's been happening among policy wonks over how to regulate executive pay.
In this paragraph, Piketty puts his finger on the central perceived problem with paying CEOs a lot of money -- they don't produce value equal to what they earn. But what I haven't seen anywhere is much discussion of the reasons for setting salaries beyond a worker's marginal product, and there are a lot of other reasons.
Most relevant for CEO pay is the way someone else's pay -- someone above me in the corporate hierarchy -- can affect how hard I work. When I am making a decision about how much effort to expend in the current period, I'm balancing the cost of my effort against the benefit I get not only from my current salary, but also from the improved probability of being promoted, and the concomitant salary boost. So if I'm an Executive Vice President at a Fortune 500 company competing with five other EVPs and innumerable outside candidates to become the next CEO of the company, the CEO pay package could incentivize me to work harder to win that promotion. Without that incentive, you may have to pay me more. Paying me and my five other competitors more may actually cost you more than what you saved by paying the CEO less. And it's not that you're paying the CEO for her work -- some of her pay is just to incentivize me.
Obviously, this effect may not explain all big CEO pay packages, but it's at least worth thinking about, because if you don't, you're really not thinking about the problem in a complete way, and could end up misclassifying good corporate policy as bad, or criminal.
To me, big CEO pay packages are not a root problem, but a symptom of weak corporate governance. If we could be reasonably certain that a company's board was truly independent and their CEO was still making a ton of money -- more than they earn themselves -- then we could be reasonably confident that the company had other good reasons, like providing incentives to others within the organization.
6:50 a.m.| Where’s December?: Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can.
How did it do that? One way was to hide a lot of losses in not-so-plain sight.
Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February.
The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million.
Would the firm have had a profit if it had stuck to its old calendar, and had to include December and exclude March?
How to run a profitable financial institution in five easy steps.
1. Shift the fiscal year so that it excludes a bad month (December) and includes a better one (March).
2. Stick all your write-offs in the bad month.
3. Report a big quarterly profit.
4. Sell $5 billion of stock to the suckers who believe you.
5. Pay back the government so you can give yourself that big bonus you deserve.
Lloyd Blankfein, everybody. It's also worth noting that Goldman Sachs has set aside $4.8 billion for salary and bonuses -- a larger percentage of revenue than it set aside last year. Also a number suggestively similar in size to the $5 billion in stock they want to sell.
I hope to God this doesn't work out for them.
