John Carney

Posts by John Carney

  • 12 Jan 2007 at 4:32 PM
  • Amaranth

Yelling ‘Penis’ In A Crowded News Cycle

penisbonusamaranth.jpgMichael Lewis latest column explains what connects this year’s most popular stories on Bloomberg. But before he gets going on that he talks a bit about a very special penis.

“New Jersey Man Clips Penis in Vacuum Mishap.”
As recently as 1998, this headline on the Bloomberg was born to attract a crowd on Wall Street. That one sentence was equipped to win any battle of financial news stories, and it did. On the day the story broke, May 15, there was no shortage of harder news: mass riots in Indonesia, a spike in U.S. inflation, Sandy Weill’s announcement that he would like to buy Fidelity.
None of that news interested Bloomberg readers so much as the tale of the New Jersey man sucked into his own vacuum cleaner.

Last year’s biggest stories were a bit less, uhm, penisy.
Upon closer inspection, however, it wasn’t the useful financial news that captured Wall Street’s attention. You can count on one hand the stories that might move markets, or affect business: three items about the Federal Reserve and a pair of stories about giant corporate acquisitions.

News that implicated Wall Street jobs and paychecks, on the other hand, drew huge crowds: Goldman Sachs’s bonuses, Morgan Stanley’s bonuses, Credit Suisse’s trading losses, commodity traders’ losses, commodity traders’ booming pay — the list goes on.

And Amaranth. Amaranth. Amaranth. Amaranth. One reason you saw so many Amaranth stories last year is that you kept reading them. But not just any old Amaranth story.

What Wall Street readers wanted from their Amaranth stories was the answer to three simple questions: Who won, who lost and, above all, how much? The interest in Amaranth, in short, seems to have been the first cousin to the interest in Goldman Sachs’s bonus pool. After all, the $6 billion lost by Amaranth didn’t simply vanish. Someone on Wall Street was on the other side of those trades. Goldman’s bonus pool came from somewhere.


Why `Penis’ Will Make This a Most-Read Story

  • 12 Jan 2007 at 4:02 PM
  • Overstock

Sleazey McSleaze Admits To Sleaziness

Bagley.JPGYou remember AntiSocialMedia.Net, right? No? Yeah, we were doing out best trying to forget it also. It’s the website hosting what the New York Post describes as “bitter attacks … on the message board critics, accusing them of participating to various degrees in a conspiracy to malign the anti-naked short selling movement that Overstock.com supports.”
Well, it turns out that there was very good reason that AntiSocialMedia.Net was supporting the same causes as Overstock.com. It was being anonymously run by Overstock.com’s director of social media Judd Bagley.
Gary Weiss, who has been all over this story, wants to know:

Only one question arises in my mind: What laws were broken? Not “were laws broken?” but “what were the laws that were broken?” The new federal cyberstalking law comes to mind, obviously, but what others? Regulation FD is another good possibility, given the ASM Lie Machine was created after Bagley became a corporate officer. (And speaking of corporate disclosure, shouldn’t Overstock file an 8-K disclosing its involvement in ASM?)
Bagley is trying hard to distance himself from his employer, Patrick Byrne, which brought him on as “director of social media” in August with all the fanfare that you and I would use in buying a can of Raid cockroach spray. Nice try, but too late. Byrne himself promoted the site and contributed to it, and has indicated that he has advance knowledge of its disclosures. Once again, Byrne’s big mouth has landed him in deep doo-doo.

Judd Bagley Fesses Up [Gary-Weiss.com]

  • 12 Jan 2007 at 3:48 PM
  • CEO

Those Overpaid, Crooked CEOs

Everyone knows that chief executives at public companies are overpaid by the corporate boards they keep in their hip pockets. Afterall, the Pulitzer Prize winning New York Times business writer Gretchen Morgenson tells them so every chance she gets. In fact, they are so overpaid that a lot of them are fleeing to privately held companies…obviously out of embarrassment at their ill-gotten gains. Or, you know, maybe not.
Here’s Steven Kaplan writing on the Harvard Law School Corporate Governance Blog:

Consider what this exodus of talented public company executives to private equity-funded companies means. These executives can certainly get hired as CEOs of public companies. If they were so overpaid, they would not leave the public companies. The fact is that many of them are leaving to run private equity-funded companies.
This also suggests that CEOs do not control their boards and get the boards to overpay them. On the contrary, the fact that CEOs are leaving suggests that public company boards may not be paying their good CEOs enough. I am encouraged because it may finally have become apparent, even to the New York Times, that U.S. CEOs, boards, and corporate governance are subject to market forces. In addition to the fact that public-company CEOs can earn more as private-equity company CEOs, here are a few additional observations that suggest that the criticism of CEOs and boards may have gone too far.

Are CEOs of U.S. Public Companies Really Overpaid? [HarLaCorGov blog]

  • 12 Jan 2007 at 3:05 PM
  • Apple

Backdating and the Duke Lacrosse Scandal

stevejobs2.jpgThe early reactions to news that federal authorities are probing the backdated stock option grants to Apple CEO Steve Jobs are coming in. Not surprisingly, the best reactions are coming from the Backdating Dissident Crew (which now includes Jobs himself).
Larry Ribstein at Ideoblog makes the point that no-one negotiating their salary really gives a damn about when a stock option was priced. They care about what you’d care about: that you know the value of the grant and that no-one is going to game the grant by handing the options to you on a high-water stock price date. If you agree on the date of the past, you can understand exactly what the grant is worth. What Steve Jobs cared about was how much it was worth to him. This is an important point that bears repeating: it’s the level of compensation that an employee or an executive cares about. As in, “Show me the money!”
In the typical backdating situation (and there may be some cases of more serious abuse—the things that allegedly went on at Comverse seem far fishier than the typical backdating case), fiddling around with the grant date was not a way for employees or executives underhandedly inflate their compensation. It was an attempt by company to compensate its employees while avoiding having to expense the grant as an “in the money” option. This violated accounting rules (rules by the way that many people seem not to have understood very well) but, well, let’s let Larry ask the appropriate question:

My question: is this really the stuff of a criminal investigation? Which bad result are the screeching journalists and executive compensation moralists going to make us live with: trashing the career of one of the country’s most successful business executives? Letting him walk and ruining the life of a young lawyer who found herself in the middle? Or letting Apple off the hook because it’s successful and the journalists all have iPods, but sending backdaters at lesser companies to jail?

And over at Houston’s Clear Thinkers, Tom Kirkendall draws a comparison between the abusive, malicious and absolutely evil prosecution of the Duke lacrosse team with the mob mentality that seems to have arisen in the immediate wake of the first backdating revelations:

In the Duke lacrosse team case, it is particularly ironic that many in the media and on Duke’s faculty were enablers of abusive, dishonest law enforcement and prosecution tactics that are far more often used in cases against minorities that those enablers would decry. They now share responsibility for the continued use of such tactics long after the spotlight on the Duke lacrosse team case has moved on to the next fixation of the mob.

A report on the Apple investigation [Ideoblog]
Rabinowitz on the mob in the Duke lacrosse team case [Houston's Clear Thinkers]

  • 12 Jan 2007 at 11:41 AM
  • FOREX

NYBOT Introduces The Cocaine Coffee Currency Hedge

columbiancurrencyhedge.jpgBrokers and exporters of your favorite Colombian agricultural product are smiling this morning, as the New York Board of Trade is introducing a US Dollar-Colombian Peso futures contract. Colombia has no home-grown futures market, and until today currency hedging has been difficult challenge that could only be accomplished indirectly.
AFXNews explains why currency risk is such a major issue to Colombian exporters:

“Their costs of production — largely labor and land — is in local currency; what they sell is in dollars,” said Greg Anderson, director of currency strategy with Netherlands-based AMN AMRO. “If their local currency rises against the dollar, all of a sudden they become a more expensive producer than some other place.”
And the dollars they bring home buy less.”


NYBOT to trade Colombian peso
[AFXNews via FXStreet.com]

abc_congdon2_070110_nr.jpgVideo blog star Amanda Congdon is said to be totally addicted to her blackberry. No wonder she is apparently resorting to extreme things like Tasering herself to generate orgasms. According to Forbes, constant connection to the work world is ruining everyone’s sex lives.

According to therapists and psychologists, around-the-clock access to the office often results in fatigue, a lack of intimacy, resentment, increased conflict and even premature career burnout. All of which are enough to crater a less-than-solid marriage or relationship. Robert Reich, the former U.S. secretary of labor, popularized the term “DINS couples” (double income, no sex) when he discussed the hazards of work overload in a 2001 speech. While the comment drew laughs, it also brought to light a developing problem: People are working too much to have sex. In 2003, the Kinsey Institute reported that today’s women are having much less sex than their 1950s counterparts.

Is Your BlackBerry Ruining Your Sex Life? [Forbes]

  • 12 Jan 2007 at 10:03 AM

The Moron Theory of CEOs

icahnhatesceos.jpgA couple of days ago, our Bess Levin brought you the story from Avenue magazine of what happened when Carl Icahn on Apollo’s Leon Black’s private plane. DealBook points to another great anecdote from the Avenue article, detailing Ichan’s “anti-Darwinian” theory of chief executives.

The C.E.O. is the fraternity brother type who is great to have a drink with. He’s a survivor and maybe not all that smart, but he works his way up the ladder in the corporation. And if you’re a survivor, you never have someone beneath you who’s smarter than you. So you eventually work your way to C.E.O. You have someone a little dumber than you underneath, and eventually we’ll have morons running everything … which we’re getting closer to.

Hmmm. Maybe we wouldn’t have such an idiocracy of CEOs if we paid them better.
Icahn on Chiefs, Morons and Leased Jets [DealBook]

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