Sunday, February 6, 2011

Inept Bomber Sets Bomb off Early

Egyptian Update:

Egypt tells Iran to Mind Their Own Business

Here is a little noted headline from what is going on in Egypt that warms my heart. Egypt's foreign minister told Iran to mind their own business after Iran's top leader praised the Egyptian uprising as an appropriate response to dictatorial rule.

Ahmed Aboul Gheit said that Iran's Ali Khamenei seems to have forgotten about the crushing of widespread protests in Iran two years ago. He said Khamenei should be more attentive to calls for freedom in Iran rather than "distracting the Iranian people's attention by hiding behind what is happening in Egypt. "The Egyptian foreign minister said that "Iran's critical moment has not come yet, but we will watch that moment with great anticipation and interest." –and so will I ….

Attempted Suicide Bomber Killed When Spam Text Message Sets Off Her Bomb Early

Some things that I read when looking at the morning headlines just stand out from the others, not because they are earth-movingly important, but because they see, like a sort of cosmic justice in motion. One such headline came up reporting the untimely death of a female suicide bomber in Russia last month. I know, I know, it is inappropriate to laugh at someone’s death but there really are exceptions to every rule. So, when is it ok to laugh at someone’s death? How about when that person was an attempted suicide bomber and she was killed when a spam text message set off her bomb early.

The incident in question occurred on New Years Eve when the would be bomber planned on detonating her bomb right near Red Square in Moscow. She could have killed hundreds but, fortunately, she had made a slight error in setting up her cell phone as a detonator. It seems she forgot to turn the damn thing off before hand.

From The Telegraph:
“Security sources believe a spam message from her mobile phone operator wishing her a happy new year received just hours before the planned attack triggered her suicide belt, killing her but nobody else.

She was at her Moscow safe house at the time getting ready with two accomplices, both of whom survived and were seen fleeing the scene.”
Of course, there is a more serious side to this story (besides the fact that this very nearly was a truly horrific tragedy). Authorities believe that this woman was involved in the same terrorist organization that committed the terrible bombing in a Moscow airport in January.


Goldman Sachs has outdone itself yet again.

Pay? Sure. Performance? Not so much
I do not normally blog much about financial issues but this little piece of information was just too good to miss. If you had a management team for a year in which profits plunged, you spent $550 million of shareholder money to settle a fraud investigation and your stock ended up more or less exactly where it started, how do you think you’d compensate them? Cancel raises or withhold bonuses to send a message about linking pay to performance. Well, that’s apparently not how they do it at Goldman Sachs (GS).

It just had the year described above and instead of holding meetings to see how to increase performance they responded by tripling everyone's base salary while boosting bonuses by 40%. Is this a great country or what?

Goldman said in a filing that CEO Lloyd Blankfein will make $2 million this year, and his top lieutenants will each make $1.85 million. Top Goldman brass had been making $600,000 annually in salary since the firm's 1999 initial public offering.

All 470 of Goldman's partners will get higher salaries. The top five officers will also get $12.6 million each in bonuses, paid in restricted shares that can't be sold for five years. That's up from $9 million each last year.

That may seem like a high price to pay for a pretty lousy year – and one that ended with a Fed-inspired reminder that Goldman, just in case anyone forgot, took billions upon billions of dollars in bailout loans in 2008 and 2009.

But conveniently for the bankers at Goldman and many other firms, Wall Street's compensation goalposts have been moved in just as they were getting harder to reach.

Goldman and many of its rivals were hit in the second half of last year by weak trading numbers and rising costs, as they hired more people to gear up for tougher markets in 2011. Those trends naturally penalized profits. At Goldman, profit tumbled 38% from a year ago in 2010, on a 13% revenue decline.

But lucky for hot shot banking types, the big issue with banker pay nowadays is not linking pay with performance. It's keeping the bankers from blowing the economy up again.

Regulators led by the Federal Reserve are now pushing for higher salaries and lower, stretched-out bonuses in a bid to discourage the banks from gambling for huge short-term rewards, as they did so disastrously during the housing bubble that ended with the meltdown of 2008.

The idea is to limit the payment of giant, one-time bonuses that later turn out to have been based on fictitious profits, as was seen at places like Merrill Lynch during the bubble. Federal regulators issued 47 pages of guidance last June laying out the rules banks must follow in setting bonuses. They didn't issue any guidance on salaries.

"Banking organizations are responsible for ensuring that their incentive compensation arrangements do not encourage imprudent risk-taking behavior and are consistent with the safety and soundness of the organization," the document said.

After the bailouts of 2008, the focus on holding down risk-taking is understandable. But the history of executive pay is that every supposed reform leads to a new, unexpected abuse.


Live Long and Prosper...

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