A while back I saw the CEO of GM on the Colbert show. It seemed pretty obvious the guy didn’t know much about cars. I wonder how many other CEO’s out there are just as clueless about whatever company they happen to be running.
Given the level of incompetence at the highest levels of management is it any wonder stock in these companies is losing value. It seems that some people forgot that the stock of a company is only as good as the company and some of these businesses are pretty clueless.
While no amount of government regulation can make companies hire competent management, government can pass regulations that at least require companies to disclose the real risk and value of the company and most certainly make sure social security is never invested in the largest most rigged casino on the planet.
Some are, but not as many as when maturity dates arrive, and there is no market willing to buy the rollover of that debt…a lot of companies could be in that situation where it’s only a matter of time.
That makes sense, I guess it is like the guy who has a balloon payment on his house and cannot re-fi.
That’s right, the same concept. Cash flows are constricted during a recession, which makes everything more difficult for businesses to manage, but the interest payments aren’t going to kill the ones that die this way. It will be that principal payment they can’t afford to make without selling off or killing parts of the company that will create the life or death decisions. This naturally creates a Darwinist reality in overdrive when it comes to the market.
This aspect of the business cycle will likely go as it should, since there are incentives built in to the process of acquisition that specifically allow for the aggrandizement of the decision-makers. Voting shareholders have a say, in theory, but not so much in reality.
somepplace I saw that GM and Chrysler are considering a merger, it seems that two bad companies would not be any better off as one, I wonder if they are just merging to try to generate some excitement about their companies.
Sort of like when Danny Manning(I think that was his name) thought changing his number would resurect his basketball carreer.