The Dow Is Not The Economy
Stock markets are based at least in part on emotion and fear. Fear is what sent it tumbling as much as 800 points today, and emotion is what saw it surge back to a close down 369. But there are some fundamentals wedged in there with the fear, and I think this suggestion that the executives would rather prevent their personal pay portfolios than save their companies is what's driving the downward trend even further:
Fears are mounting that many Wall Street banks and financial firms will refuse to participate in the US government's $700bn bail-out package, leaving global markets and world economies in a perilous state for months to come.
'There is a growing feeling that banks ... might instead decide to tough it out,' said Thomas Caldwell, chairman and CEO of Caldwell Financial, a $1bn-plus fund manager [...]
One of the least attractive elements is a section designed to curb executive pay at banks that participate in the bail-out package. These include limiting stock-related pay and banning 'golden parachutes' for executives.
'I think this hodge-podge of regulations and rules will be enough to put many [chief executives] off participating,' Caldwell said.
I don't know if this is designed to get Congress to change the rules through whining, employing yet another stick-up of the economy, or what. But if an ill-designed bailout in the first place is going to be rejected because executives don't want to give up their fifth house and third yacht, then it really is time for pitchforks and torches.
(Ultimately, I think that's a bit of a red herring. What's happening is the realization that money has been lost, and lost many times over, and even after the bailout, the stock market is overvalued, the housing market is overvalued, and the bad bets that were made cannot be recouped.)