Options Trading Tutorial - Is this the legacy of Ronald Regan, the Republicans, and the GOP?

Is this the legacy of Ronald Regan, the Republicans, and the GOP?

http://finance.yahoo.com/career-work/article/107069/pay-dirt-the-executive-pay-system-is-broken?mod=career-salary_negotiation The Regan Administration took away the majority of restrictions on corporations. This led to rampant corruption at the corporate level and unreasonably huge CEO compensation. Here is a quote from the article; "It wasn't always like this. From the Great Depression until the late 1980s, CEO pay levels stayed fairly constant. Adjusted for inflation, a CEO in 1988 earned as much as one did in 1934, according to research published in 1990 by Michael Jensen and Kevin Murphy. 'We are confident that the causes are systemic,' they wrote. Without 'the creation of a new regime in compensation practice' more companies could get into trouble because of skewed incentives, they added. So why has CEO pay surged so dramatically since the late 1980s? Many experts blame the following: Golden parachutes, annual stock-option grants, peer-group comparison surveys and reaction to new government regulations. The two compensation experts re-visited the issue in 2004 in the wake of the Enron scandal and concluded that things had changed "dramatically" for the worse." So the question. Is this whole financial crisis the result of "Reganomics"? Of rewarding the rich and expecting to have the billions of excess CEO compensation trickle down to the average worker? Bill G. That is not how a free market is supposed to work. A free market is based on supply and demand, not CEO compensation and corporate bonuses. Besides, if you read the article, you would understand that the problem is systemic. All CEO's do this, thus, it is impossible to stop buying their products as you suggest. To all, I refer to Reganomics, or the economics of rewarding the rich with the belief that they will bring up the rest of the country. OH, and by the way. That community reinvestment act which you trumpet so loudly never caused this problem. That act accounted for less than 2% of the total bad loans given by banks. Stop blaming the poor on the problems the rich caused. The problem was that CEO's had too much incentive to dish out loans. This cause them to leverage more than they had. They did this so they could get their golden bonuses. Sorry. I am right! And so is Warren Buffet, who argued this very same thing.

Public Comments

Reaganomics sucked then, and they suck now.
The rich get rich and the poor get poorer. In the meantime, In between time, Ain't we got fun?
If you don't like their executive pay practices then don't buy their products until they change. That is how a free people fixes things in a free market. What is your alternative? Having some faceless bureaucrat arbitrarily setting compensation? edit: That is exactly how a free market works. If you disagree with the company then reduce the demand until it performs as you wish. The customer makes the rules of the transaction by choosing whether or not to participate. I did read the article and I understand that it is systemic. However, there are ALWAYS alternatives if you feel that strongly about the subject. If enough people agree then the companies will be forced to change their practices if they wish to stay in business.
OK the link you gave NEVER once mentioned Regan or the GOP. YOUR pushing Democrat Propaganda. Just who are you working for? Hmmmm Are you trying to detract from the facts the Jimmy Carter wrote the very legislation that ruined our Economy? He wrote the Community Reinvestment Act in which Bill Clinton tightened the legislation to the point that Lawyers could sue banks for not giving loans to those who couldn't afford them. Sorry but you wrong!
a CEO in 1988 earned as much as one did in 1934. Reagan 81-88. Reagan had nothing to do with it, and I fail to see the problem with people spending their own money. I have a problem with government doing these same thing on our dime.
Blaimng it on Regan, this is a first. Despite claims that the economic cirisis is largely the fault of Bush and his evil tax cuts, the facts say otherwise. The blame lies nuch further back. It starts with Jimmy Carter. Now Im not saying that CRA is bad except the fact that it doesn't work. But we see time and time again that social programs aimed at correctig what we call "social inequality" doesn't work. CRA was expanded and greatly expanded under Clinton. And even with Bush attempting to overhaul regulations to help the situation, congress blocked his attempts. I still partly lay the blame on him and the other republicans for not screaming at the top of their lungs that shit was about to hit the fan. But when you want to put the blame on someone, don't listen to CNN or the NY Times. This crisis does not soley rest on the shoulders of one president or one administration. 1977: Pres. Jimmy Carter signs the Community Reinvestment Act into Law. The law pressured financial institutions to extend home loans to those who would otherwise not qualify. The Premise: Home ownership would improve poor and crime-ridden communities and neighborhoods in terms of crime, investment, jobs, etc. Statistics bear out, it did not help. How did the government get so deeply involved in the housing market? Answer: Bill Clinton wanted it that way. 1992: Republican representative Jim Leach (IO) warned of the danger that Fannie and Freddie were changing from being agencies of the public at large to money machines for the principals and the stockholding few. 1993: Clinton extensively rewrote Fannie Mae and Freddie Mac's rules turning the quasi-private mortgage-funding firms into semi-nationalized monopolies dispensing cash and loans to large partisan voting blocks and handing favors, jobs and contributions to political allies. This potent mix led inevitably to corruption and now the collapse of Freddie and Fannie. 1994: Despite warnings, Clinton unveiled his National Home-Ownership Strategy which broadened the CRA in ways Congress never intended. 1995: Clinton orders Robert Rubin's Treasur Dept to rewrite the rules as Congress is about to change from a Democrat to Republican majority. Robert Rubin's Treasury reworked rules, forcing banks to satisfy quotas for sub-prime and minority loans to get a satisfactory CRA rating. The rating was key to expansion or mergers for banks. Loans began to be made on the basis of race and little else. 1997 - 1999: Clinton enlisted Andrew Cuomo, then Secretary of Housing and Urban Development, allowing Freddie and Fannie to get into the sub-prime market in a BIG way. Led by Rep. Barney Frank and Sen. Chris Dodd, congress doubled down on the risk by easing capital limits and allowing them to hold just 2.5% of capital to back their investments vs. 10% for banks. Since they could borrow at lower rates than banks their enterprises boomed. With incentives in place, banks poured billions in loans into poor communities, often 'no doc', 'no income', requiring no money down and no verification of income. Worse still was the cronyism: Fannie and Freddie became home to out-of work-politicians. 384 politicians got big campaign donations from Fannie and Freddie. Over $200 million had been spent on lobbying and political activities. During the 1990's Fannie and Freddie enjoyed a subsidy of as much as $182 Billion, most of it going to principals and shareholders, not poor borrowers as claimed. Did it work? Minorities made up 49% of the 12.5 million new homeowners but many of those loans have gone bad and the minority homeownership rates are shrinking fast. 1999: New Treasury Secretary, Lawrence Summers, became alarmed at Fannie and Freddie's excesses. Congress held hearings the ensuing year but nothing was done because Fannie and Freddie had donated millions to key congressmen and radical groups, ensuring no meaningful changes would take place. "We manage our political risk with the same intensity that we manage our credit and interest rate risks," Fannie CEO Franklin Raines, a former Clinton official and current Barack Obama advisor, bragged to investors in 1999. 2000: Secretary Summers sent Undersecretary Gary Gensler to Congress seeking an end to the 'special status'. The Democratic Congress raised a ruckus as did Fannie and Freddie, headed by politically connected CEO's who knew how to reward and punish. "We think that the statements evidence a contempt for the nation's housing and mortgage markets" Freddie spokesperson Sharon McHale said. It was the last chance during the Clinton era for reform. 2001: The Bush Administration tried repeatedly to bring fiscal sanity to Fannie and Freddie but the Democratic Co
Reaganomics had nothing to do with what companies did with their money, nor should it. A capitalist free market open trade system should work that way. Reaganomics lowered income taxes giving more money back to the people to give them the choice where and how to spend their money as well as lowered marginal tax rates. It also took away government regulation from interfering with the economy. Nothing in ANY original document written by the founding fathers of our nation gave the government the power to regulate the economy. Reagan's conservative movement wanted to go back to small government and no regulatory policies forced down onto the companies because of all the corrupt regulation that was put on companies by administrations before him. Under Reagan, EVERYONE was given the chance to do as they please in the economy and it gave us the longest time of peace and economic growth our country has ever had. The government should NOT be in control of the economy. EDIT: What makes you think that Reaganomics only rewarded the rich? Income tax and tax rates were lowered for all! Why do you liberals constantly attack those who worked hard or got lucky to get rich? What about "the PURSUIT of happiness" do you not understand? Do you think that the you should be guaranteed happiness in life? Do you think the government should provide you with your job, income, house, and happiness? That's delusional, because that's socialism, which has proven NOT to work in ANY country. EDIT # 2: Haha, you say you are right becuse you agree with Warren Buffet who said he was right. Your brain works on funny logic. If Buffet is so right, then why is his net worth down? Why did he say that our economy would turn around sometime this year but we have now hit a stagnant stage in our economy, consumer spending was no where near what was predicted for this year thus far, we are still in the ever increasing housing crisis (which you claim only 2% is Clinton's fault), unemployment is still on the rise, banks are still corrupt without money, the auto industry has still yet to fully explode, and economists and investors are saying "not so fast" in regards to an economic rebound? The delusion that the Obama bailouts followed by crazy, off the chart spending has proved not to do anything for the economy. The bailout was about liberal democrats using our own money to buy themselves more power. Wake up.
You have a bit of it. The concept of "Reaganomics", dubbed voodoo economics by his Republican opponent and later vice president George H.W. Bush, was a federal ponzi scheme. It wasn't Reagan's fault. He was just the salesman, picked by corporate America to sell the idea. He didn't understand or even think about what he proposed. He simply read his lines, like any half decent actor.
Yes, I agree with you, but don't expect any rational answers from the right, after all, you're criticizing their God, Ronnie Ray-gun.
True. Reaganomics has lead to the current train wreck that is our economy. You notice the cons mercifully don't talk about it anymore.
What BusinessWeek at the time dubbed the "deindustrialization of America" marked a decisive shift of American capital from productive forms of investment to purely speculative forms of wealth accumulation. It is highly noteworthy that the previous bourgeois offensive against the American working class that began after World War I and lasted into the first years of the Depression coincided with a continued expansion of US industry. That was during the rising arc of American capitalism. The new offensive took place within the context of an accelerating decline, and in the critical respect of America's industrial base took the opposite form. The Reagan administration intensified both the assault on the working class and the turn to financial speculation. Reagan's firing of 13,000 PATCO air traffic controllers in August of 1981 was the signal for a wave of corporate union-busting and wage-cutting in every sector of the economy. This was accompanied by sweeping cuts in social spending and the gutting of legal restraints on corporate profit-making, including the weakening or lifting of banking regulations. The decade of the 1980s saw the elimination of 10 million jobs, on the one side, and an explosion of new forms of financial speculation on the other. There was a marked increase in leveraged corporate buyouts. The phenomenon of junk bonds emerged, along with the beginnings of securitization, in which various forms of debt, including mortgage debt, were packaged as bonds and sold to banks, brokerage houses, pension funds, insurance companies and other big investors. The stock market assumed an ever more central role in determining the investment policies of corporations and banks, demanding immediate and high returns at the expense of research and development and long-term planning. The result was an ever-greater accumulation of paper values and debt, which provided the basis for the enrichment of the uppermost social layers at the expense of the vast majority of the population. To cite one statistic: In 1970, wages and salaries comprised 75.4 percent of national income. By 1986, that figure had fallen to 61 percent. The narrowing of economic disparities that had been under way for several decades was reversed. All of this was given legitimacy by the media and academia, which hailed the emergence of the "post-industrial society" and the "Reagan Revolution." In reality, the 1980s saw a catastrophic decay in the foundations of American capitalism. Between 1981 and 1986, the US share of world exports slumped from over 20 percent to 13.8 percent. Between 1973 and 1983, US steel production fell 44 percent. The national debt more than doubled under the Reagan administration. In October of 1987 Wall Street suffered its greatest ever single-day crash in percentage terms, as equities lost 23 percent of their value. The decade ended with the savings and loans collapse, in which more than 1,000 institutions failed and the government organized a bailout costing $160 billion. The sharp decline in the global position of American capitalism was summed up in the transformation of the US in the 1980s from a creditor nation, a status it had maintained since the end of World War I, to a net debtor. The so-called financialization of American capitalism continued and accelerated in the Clinton and George W. Bush years. Amidst waves of corporate downsizing, financial speculation played an ever-greater role in economic life and assumed new and more parasitic forms. One speculative bubble succeeded another: the East Asian collapse was followed by the rise and fall of the dot.com bubble, and was quickly replaced by the subprime mortgage bubble. Securitization of debt became the new model of American banking, based on the conception that high-risk and high-yield investments, sustained by an exponential growth of debt, could continue to expand without limit, since the banks could offload much of the debt to other investors around the world. The indices of the growth of financial speculation in the US economy are staggering: In 1982, the profits of US financial companies accounted for 5 percent of total after-tax corporate profits. In 2007, they made up 41 percent of corporate profits. Between 1983 and 2007, the share of the financial sector's profits in US gross domestic product rose six-fold. The United States, by far the world's largest debtor nation, with a current account deficit of nearly $800 billion, is today sustained by the importation of $1 trillion in foreign capital every year, or over $4 billion every working day. http://www.wsws.org/articles/2008/oct2008/bgr1-o13.shtml
You're way too frothy for me this early in the morning. You might consider changing your name to 'LesS of a thinker'.
Bill G. gave the best, most concise answer. However your own biases will clearly keep you from picking it as the best one. Consumers can and do speak with their pocketbooks. I haven't respected General Motors in 20 years and I am talking mostly about their management. I haven't bought a GM product since 1987. While I am not SOLELY responsible (obviously) for the road that company has traveled, clearly the arrogance with which they treated their customers has shot them in the foot. My story is very common among the car-buying public. Hot Pink, I am perfectly willing to discuss Reagan. IMO, he's been the best President we have had during my lifetime. But I don't expect anybody who is politically liberal to agree with that. (And he isn't my "God," but that aspect of your answer is another discussion for another day and possible on another forum.....(wink)).