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Edited on Thu Aug-09-07 08:50 AM by Tandalayo_Scheisskop
That invest the company's money in market instruments. The derivatives market has been very, very fashionable. Many of these derivatives are based on tranches of mortgage debt, for verily, this has been a very fashionable instrument. Note: Many financial decisions, at every level of investment, are made on the basis of what is in "fashion", not what is sane and prudent.
Some of these companies get they asses in that hoary and time-honored position of "When you are up to your ass in alligators, it is hard to focus on the fact that your original objective was draining the swamp". One case in point is a very well-known computer build-to-order giant. A couple of years ago, it was in real danger of going into a position, described in many of your finest business schools, as "tits up". They had to being their old CEO and presiding president of the board BACK as CEO. He came in, did what he should have done long before that and fired all the former Pepsico executives who were running the company(There is a saying in the computer industry that the best way to bring a company down is to hire executives from Pepsico) and waded into the books. The story I heard, from a VERY knowledgable insider was that said CEO returnee found, and I quote: "Mountains of funny paper". It seems that these executives had essentially left the company to flounder in its core competencies and had instead turned all their energies to investing company funds in thew highest-risk markets they could find.
Which was hardly one of their core competencies.
I suspect that you can find that this vignette is echoed across businesses around the country. With the mortgage market and hedge fund problems growing at what looks to be daily orders of magnatude, Dear Leader must turn his awesome energies and intellect to bailing his fellow financial morons out, in the only way he, and any neo-conservative knows: "Hey kids! My dad owns a barn! Let's rape the treasury!". I mean, these are our best and brightest, our betters, America's de facto royalty. Why should they sully their shining countenances by rolling up their sleeves and working their way out of the messes they created. That would be so beneath them and they might miss a few tee times. The horror.
And as usual, this all will be followed by a hearty "fuck you" to everyone else.
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