As the financial crisis unfolds worldwide, it has become obvious that CEOs and financial experts were overpaid only for creating hype and doing very little actual work. It turns out that fancy degrees are no replacement for common sense.
The mainstream media was to large extent responsible for this as they gave a lot of coverage to their extravagance. Hopefully, this should lead to an end of the excesses and people should start leading a simpler lifestyle.
I always thought that investment bankers were overpaid, after all they are humans and make mistakes like every one else. With collapse of Lehman brothers and sale of Merill Lynch, the compensation for bankers will be rationalised in future.
Most of the large media networks worldwide are owned by big business houses. Since they provide most of the news that people read and hear, the common man blindly believes what they say , though the reporting is sometimes incorrect and biased. The media will always promote their own interests and businesses affiliated with them.
Information Clearing House often provides correct information about some of the biggest stories reported (or suppressed) in the mainstream media.
John Rigas was the former CEO and one of the founders of Adelphia Communications Corporation, which at one time was one of the largest cable companies in the United States with millions of subscribers. The company was publicly listed and traded for several years, but had a reputation that its controlling shareholder, the Rigas family, was more interested in using the companies funds for their own luxury.
In 2002, the company was forced to admit that the Rigas family had had taken more than $2 billion in loans that were not recorded on the books. They were charged with hiding billions in debt at the cable company, deceiving investors and stealing company cash to line their own pockets.
Some of the personal luxuries funded using public money include
$13 million to build a golf course in his backyard.
$150 million to buy the Buffalo Sabres hockey team.
$65 million to fund a venture capital group run by his son-in-law.
Spent thousands of dollars to maintain his three private jets.
$700,000 for a country-club membership.
had ordered two Christmas trees flown to New York, at a cost of $6,000, for the daughter of the CEO.
ordered 17 company cars for personal use.
purchase of 3,600 acres of timberland at a cost of $26 million to preserve the view outside the Coudersport home of the CEO.
Partial list of corporate chiefs who have fleeced their company (and indirectly their customers and employees) with their excesses:
Global Crossing founder and chairman Gary Winnick - $90 million mansion in Bel-Air
Stephen Hilbert, ex CEO of Conseco, an insurance company - house in Carmel, Indiana, with a personal basketball court that’s a full-sized replica of Indiana University’s Assembly Hall
Larry Ellison, Oracle CEO lives on a yacht named Sakura, the 192-foot, five-deck, $10 million floating mansion
WorldCom ex CEO Bernie Ebbers had a yatch named Aquasition, after the company he led hid more than $7 billion in losses
General Electric’s retired CEO Jack Welch - bought a couple of Boeing 737-700s . When the arrangement was made public in his divorce filings , Welch was forced to agree to pay $2 million a year to reimburse GE for the jet and a few other perks.
E*Trade ex CEO Christos Cotsakos - $15 million loan
Last month crude oil prices reached a record level of $147 per barrel . While some of this price increase could be attributed to increase in demand for oil in Asia and reduction in oil production, most of it was due to speculation.
If the price increase is due to a supply demand mismatch, the price remains fairly stable. However, speculation can result in significant fluctuations in prices. The end user suffers, while the speculators pocket the profits.
The Iraq war is one of the reasons for the high oil prices.Many believed that invading Iraq would increase the opportunities for American businesses, but this has not happened. Though American companies are still priority while contracts are being awarded, the unsafe environment makes it difficult for the corporations to make much money, as they have to spend large amounts on the safety of their personnel.
Billions of dollars have been spent to quell the insurgency, which continues. Millions of dollars were paid to people providing information on the most wanted Iraqis. Most of them have been captured, yet American soldiers continue to die. As soon as the US withdraws from Iraq, the insurgents will take over and all the taxpayers money spent on the ” war on terror” will be wasted.
One of the reasons that there is very little manufacturing or production in USA are the higher labor costs. The grossly overpaid CEO’s of US companies are one of the reasons why the labor costs remain high.
In all companies, the chief executive has more responsibilities and usually devotes more time on company related work than a junior level executive. However, the time spent is usually only a few hours more than the standard office timings and does not justify salaries which are many hundred times the salaries of an average worker.
Though company policies highlight the importance of “teamwork”, the inflated salaries of CEOs indicate that most of corporate America values the CEO much more than any one else. The pay is often not linked to performance and even CEOs whose contract is terminated make millions of dollars.
The main reason why the US economy is in such a bad state today is the war in Iraq. If the government had not wasted billions of dollars starting a war over the non existent weapons of mass destruction, the economy would be in a much better condition.
Oil prices would also be lower as the Iraq’s oil infrastructure would not be damaged during the war. Iraq was a major oil producer before the war. Though officially , Iraq has its own government, it is likely to collapse the moment the US troops are withdrawn.
About corporate greed and political corruption in America. Like most other democracies standing for elections in USA is expensive. And the corporates who finance the elections extract their pound of flesh at a later date.