Disincentive

 News  4 Responses »
Feb 252009
 

In an interesting article in the FT, Nassim Nicholas Taleb points out that while the rewards system on Wall Street incentivizes bankers who take risk, it does not have adequate disincentives to discourage a trader whose annual bonuses depends just on the returns he brought in during that period. So while the punt might prove unsuccessful down the line, the banker has already collected his bonuses for the year, and, at worst, only loses his bonus for the year when his long-term punt failed. So, while an entrepreneur lives and dies by the risks he takes (which is the general idea of capitalism), the banker takes the “free option”, so the taxpayer (in some form) is forced to cover the losses.

 Posted by Vijay Narayanan at 12:58 pm  Tagged with: , ,

Mean

 Miscellaneous  No Responses »
Feb 212009
 

Some “political commentators” are daring Republican Governors who opposed President Obama’s stimulus bill to not use the funds their states would be allocated. This is not just grossly stupid, but mean.

These commentators are more partisan than the House or Senate Republicans they trash everyday as playing partisan politics. Would they also tell the people in the states that voted for McCain on November 4 that Obama would not be their President? Do they even understand what a democracy is or how it works?

Shame on you, Rachel Maddow, and all your cronies.

 Posted by Vijay Narayanan at 2:07 pm  Tagged with: ,

Big Three Bailout

 Business, Miscellaneous  3 Responses »
Nov 202008
 

While I’m personally opposed to the US Government bailing out the Big Three automakers, I find one line of reasoning ridiculous. It runs something like this

Should taxpayers in Alabama be required to bail out automakers whose plants are concentrated in Northern states like Michigan and Ohio?

So when Louisiana, a Southern state, is hit by hurricanes, the Federal Government should use only taxpayer money from the South to carry out relief efforts?

 Posted by Vijay Narayanan at 1:58 pm  Tagged with: ,

John McCain: a failed leader

 Politics  1 Response »
Sep 292008
 

John McCain’s leadership credentials have taken a huge beating, after the “bailout plan” for which McCain claims all the credit (and totally undeservedly) was defeated in the House of Representatives.

McCain’s supporters and campaign managers had gone on every single news program claiming that it was the Arizona senator who had engineered bipartisan support for the bill, while also calling for the plan to be rewritten and expanded upon. This from a man, who had just a couple of days earlier claimed not to have read the original 3-page Paulson plan. And a man who openly agrees that he does not understand the economy.

Yes, quite a few House Democrats did not vote for the bill. But House Republicans, who Senator McCain claimed to have convinced voted “Nay” in large numbers. This is a huge failure for Senator McCain; it shows that neither does he have any knowledge of the economy nor does he have the leadership required to run a country in crisis. Damn, he doesn’t have his “House” in order.

 Posted by Vijay Narayanan at 2:07 pm  Tagged with: , ,
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