Welcome to the one spot where you will find the truth (in my opinion) about current events and the state of our Country. Please read at your own risk, I am not one to worry about being "PC" and I dont care about anyone's feelings. This is the real world where politics are corrupt, life is not fair, and the world aches for change but no one is actually willing to work to make a difference until now! I am Savago and this is......Savago Says!

Saturday, April 4, 2009

Executive pay and bonuses a failure before they were paid

One of the most controversial topics in the news right now is Executive pay and bonus. First, in order to perform a full analysis we need to break Executive pay into two buckets; those that got money from a bailout and those that haven't.

Any company that came to our goverment and asked for a bailout using my hard earned money should have very intense oversight and Executive pay should be regulated. You see if you are an executive and are at the helm of a company and that company has performed at the same level as if say my dog was running the company. Don't bitch and complain about your pay being limited. The truth of the matter is you are dumb, a horrible manager, a failure as a leader, and why you still have your job baffles me. Your shareholders and board should have thrown you out on your ass and shamed you for life. An executive's job is to lead an organization and to improve its operations, if you need a bailout then obviously you did not meet your job description. This is so elementry, so why are bailout executives still getting huge bonuses and pay?

As embarrassing as it is to say it is because of our elected government officials. Now, even I have to take some ownership in this. We live in a democratic society the most popular candidate wins. I voted, although not for many of the jokes we have in office, so therefore I am somewhat accountable. You see when we are signing and moving forward on all of these bailouts ie. $700 BILLION TARP, almost $800 BILLION second spending I mean stimulus plan, $1 TRILLION TALF, your elected officials didnt even take the time to read the bill. The second spending bill of almost $800 BILLION was a 900 page bill. Here is how it works our elected officials never read this. They have some 22 year old new college graduate, who got hammered at "Off The Record" the night before, write a brief summary of the bill. Our officials read the summary and ensure their personal piece of spending is still in the bill. Then they for for it. So basically we are making $800 BILLION decisions based on a 1 pager from a drunk 22 year old. Here is an idea how about holding our gov't officials accountable for their decisions. Everyone is bitching and complaining about things such as AIG bonuses. Well these wouldn't even be a problem if it was addressed before the money was handed out. We could have put any restrictions we wanted on the bailout money, companies didnt have much of a choice. The everyone in congress just dropped the ball on that.

The second bucket of executive pay is for companies that didnt need a bailout. When it comes to these individuals it is none of your business unless you are a shareholder. If you are a shareholder you elect the board of directors and they decide pay. It is a competitive free market and that is what salaries are based on. If you dont like the compensation decisions your company's Board of Directors is making elect a new board or simply sell your shares. That is your choice.

Some would say that the outrageous pay still effects them as it might encourage an individual to commit fraud or to utilize risky business decisions to meet preset goals. They worry this is in fact a risk to the entire economy and they should have a say in pay matters. What you dont understand is we have the most highly regulated markets in the world. There are several things in place to ensure that business are safe including, SEC, PCAOB, OTS, Public Audit Firms etc. etc. That is who should be held accountable in this instance. The oversight agencies that are in place should catch all of these things. I mean Enron, Worldcom, Madoff all easily should have been caught. Basic audit and oversight procedures should have caught all of these issues. We do have the controls in place, however, once again our gov't and its agencies failed us and proved they are asleep at the wheel!

Next time I will give you my opinion of our current governmental officials!!

Wednesday, April 1, 2009


For my first post I am going to tackle a big issue: The foreclosure crisis in America and who is responsible. I might be the biggest supporter there is of a free market and capitalism so it should come as no surprise that I am sick and tired of hearing about how the big banks got us into this and how everyone is a victim. Here are the actual facts

1. You and the bank entered into a contract they gave you money to buy a house and YOU are responsible to pay them back.

2. No one forced you to sign the contract (otherwise it wouldn't be enforceable) and you should have read the fine print.

3. Ignorance is no excuse!!!! Every mortgage application should have a big disclaimer on it that reads: If you need someone to explain how a mortgage works then you are DENIED and are deemed too stupid to ever buy a home!!! THANK YOU PAY ATTENTION IN SCHOOL IN YOUR NEXT LIFE!!

All of these contracts were different, some were 30 year fixed and some were adjustable. Now in a good market everything was gravy the people with 30 year fixed mortgages kept paying and if they fell behind they sold their house. The people with ARM's paid a lower rate and then refinanced when they needed to because the homes were worth more.

In a bad market there is trouble, people lose jobs and struggle to pay and ARM's can't be refinanced because there is not enough equity in the underlying asset. Now I understand the recession is bad and I feel for everyone out there struggling. My family has been hit just as hard as everyone else. However, what happened to personal integrity and pride. How is it that it is viewed as OK to walk away from your home. What has happened America? Are we satisfied with being a nation of deadbeats?

The other problem is our Country's sense of entitlement. I admit I come from the generation that has a very bad case of it. As my mother always says "if you want something, work for it"! I mean honestly you are 27 and make $70,000 a year (I live in DC I know it sounds crazy) do you really think you can afford the $800,000 home you financed 100%, the Beamer in the driveway that you put nothing down on, or how about the furniture and TV you bought at Best Buy with no payments for 12 months. Seriously, I mean $70,000/ year minus $48,000 in home interest, 12,000 in principal, $600 a month for a car payment, plus regular expenses............you are BROKE!!!! If there is anything about this that is a shocker, you should probably never have children.

Now I will be honest the bank bailouts piss me off too. Banks got overly aggressive and gave credit to way to many people. I honestly think they should suffer too. However, the loans the banks made were typically good loans. You see it isn't the loans that were bad. If people held up there end of the contract then this would never be a problem. It is us the American people that are the problem, banks failed to realize that there has been a major culture shift in the U.S., Today people will take a loan and as long as it benefits them will pay it. However, when things get tough it is socially acceptable to just walk away. In my grandfather's day (the age of the great U.S.) he would starve himself before he would have defaulted on a loan and was shamed. Where is the shame America? Now don't get me wrong I am a proud American, I love my country and I am doing my part to hold up my end of the bargain. But is it really a shocker that we are beginning to fall behind other countries and it is predicted in the future the U.S. wont be the super power?!?

In my next segment you can hear me rant and rave on what is wrong in corporate America, particularly Executive Pay, and what is wrong with Politics!