Comments on: Wednesday Night #1348

By: Diana Thébaud Nicholson

Diana Thébaud Nicholson — Wed, 09 Jan 2008 03:33:37 +0000

Cayne Quits As Bear Stearns CEO
Bear Stearns made it official Tuesday evening: James Cayne is resigning as chief executive following months of pressure to take responsibility for his role in steep mortgage-related losses.
Cayne will be replaced as CEO by Bear’s president, the well-regarded investment banker Alan Schwartz. Cayne is retaining the title of chairman. The news comes just weeks after Bear Stearns logged an $854 million loss for the fourth quarter, with its full-year profit nearly wiped out by billions of dollars worth of write-downs on its holdings of mortgage securities and derivatives.
“I believe this is the right time to implement our succession plan,” Cayne said in a statement Tuesday evening. “We are beginning a new year and are at a pivotal point in the development of our business at a time of rapid change.”
In other words, Cayne is taking the fall for losing billions in the mortgage meltdown.

By: Diana Thébaud Nicholson

Diana Thébaud Nicholson — Tue, 08 Jan 2008 00:24:24 +0000

Last Wednesday Night, some of the people appeared to miss my point about defined contribution pension plans. These plans are likely OK for many of the Wednesday Nighters. They are interested, know how to ask the right questions and will probably do better than most people, and maybe even better than a defined contribution plan. One advantage of defined contribution plans is that the company cannot steal the workers pension plan, as has happened in the past.
However, I have seen several real examples where the defined contribution system works against people. I know of one instance where the employees have a choice of four mutual funds into which their money is invested. Two of those funds were losing money every year and the other two were marginally profitable. The people putting in the money knew nothing about mutual funds or investments. Some of them had their money in the two losers, year after year. Fortunately for them, this was pointed out to them by a parent - the company did not seem to care whether or not the employee got good advice. The mutual funds the company chose for the employees to choose from are not ones I would have given a second look to.
It appears to me that there are a large number of people in this position. Doug Lightfoot
The people in the McGill pension plan are fortunate that people like Gerald Ratzer are asking the questions they do.

By: Diana Thébaud Nicholson

Diana Thébaud Nicholson — Wed, 02 Jan 2008 01:01:07 +0000

Africa aid wiped out by rising cost of oil
The rising cost of oil has wiped out the benefits many African countries were expecting from western aid and debt relief over the past three years, new research from the International Energy Agency has shown.
The situation is raising fears that, in spite of the strong growth many African countries have seen in recent years, there could be a repeat of the 1980s’ debt crisis in the developing world that was caused in part by the oil shocks of the 1970s.
… The IEA’s warning comes as Senegal’s President Abdoulaye Wade said “crippling” oil prices threatened to provoke “unrest and violence” in Africa.
Mr Wade, who has been among the most active African leaders on the issue, told the FT he was encouraging 15 non-oil-producing African countries to form a multinational energy corporation of their own to compete for oil concessions on the continent in order to hedge against further price spikes.

By: Diana Thébaud Nicholson

Diana Thébaud Nicholson — Tue, 01 Jan 2008 22:57:19 +0000

When Olivier was last with us in June, one of our topics was the ‘One Laptop Per Child project’. By curious coincidence, it is back in the news this week with a report on the successful introduction of 50 of the ‘little green laptops’ to a hilltop Andean village, where primary school children got the machines six months ago.