Wall Street CEOs have no idea how their firms make money

Justin, do you remember that story about the young rogue trader who "made" millions off a bug in hsi computer trading system? Essentially, it gave him a tiny profit every time he converted 50 1K T-Bills into 1 50K T-bill or something like that.
So he just sat around and did that all day. His boss was happy he was "making" so much money and gave him a big bonus.

There was some strange twist, like that the trader had appeared in some gay porn or something like that.

Great story. I can't remember the details. I think it was at Kidder Peabody.

Okay, I found it -- the guy's name was Joseph Jett. Wiki.

How come no one's made a movie about this yet? This has "Will Smith academy award" written all over it.

if this true, it does not suroprise me. See in the UK, the word "CEO" is equivalent to "Fat Cat" these days, meaning striggling compnaies hire all these CEOs who come to the company but not trying to do anything. Instead are waiting to be sacked so that they get paid 7 figures "sacking" fee!

Ridiculous!

Dr. Colin Fu
http://www.ColinFu.com

Regarding liquidity puts:

Maybe I'm not that bright but it seems to me that the idea of liquidity puts by CITI on these CDOs is really, really stupid.

Granted, you might have a holder of these CDOs that might get into trouble with a margin call or a bad bet that would change there financial situation to a degree where they'd want to return some CDOs to CITI, but isn't it also likely that holders of these CDO would return them at the price they bought them for if the market for them began to sink. And if the market for CDOs sank for one holder of the CDO, it is also the case that the market for ALL holders of CDOs would show the same trend.

Therefore, the liquidity put was literally an $85 billion bet by CITI that the market for CDOs would never, ever go down.

That seems like a really stupid bet.

I'm not a CEO or a businessman in the traditional sense. However, Liar's Poker really explained the MBS excitement pretty well. Of course, it probably helps that my wife worked in the MBS for a close to 5 years.

So, I ask ....What justifies these outsize salaries, bonuses, and perks these CEOs are pulling in? It seems to me they are compensated for failing miserably and wiping out shareholder value.

I'm convince us ordinary people are making to much of what it takes to make millions of dollars. It certainly isn't higher education. The majority of your mega wealthy simply got "An education" not an exceptional one. And it doesn't have much to do with working extremely hard. Just compare the wages of the hardest working people in our society to the least working.

I hate to be the one to quote from Dilbert, but:

2/23/2005

The only way to meet our sales target is by selling to customers who have bad credit.

That's okay. We'll get our bonuses before anyone realizes that receivables are worthless. The key to getting bonuses is acting surprised later.

I feel unclean.