It takes a lot of chutzpah for a president who has zero experience in corporate America to suggest he knows the right way to structure employee compensation. Yet published reports indicate the administration is exploring ways of dictating pay at private financial companies, even those that have not been bailed out or received government aid. This isn t just scary: It s downright dangerous.
The basic issue is that of property rights. In a capitalist society, companies are privately owned, make their own decisions and deal with the consequences. If shareholders don t like the strategy, product line or compensation structure, they can simply sell the stock.
Most managers understand that it is in their best interest to pursue a rational, long-term outlook that creates wealth for their customers, investors, employees and executives. Yet today the prevailing belief in this country is that free markets are inherently destructive, that business is essentially suicidal and, if not for a smart and stern regulator, capitalism would collapse.
With that justification, government now owns a major insurance company, mortgage finance firms, auto makers and banks. It s choosing CEOs, boards of directors, favoring politically connected creditors and dictating terms of trade.
Companies can pay their CEOs whatever they want. The real injustice isn t a CEO making millions, but a government that now routinely takes taxpayers' money to prop up failing companies they wanted nothing to do with in the first place. It is estimated that government s bailout of AIG alone has cost every man, woman and child alive in this country today more than $600.
Determining pay at private corporations is a frightening step further down the Road to Serfdom, and away from the principles of freedom and individual rights on which this country was built.
Should you be sending money to the Middle East?
In a capitalist society, individuals are free to invest however and wherever they please. To that end, there is an assortment of socially responsible funds that invest based on religious or ethical principles. The Ave Maria Funds, for example, invest in companies that keep with the principles of the Catholic Church. That means no companies that support abortion, distribute pornography or undermine the sacrament of marriage . The Shariah-compliant Amana Funds adhere to Islamic principles, meaning they don t invest in bonds or interest-bearing instruments and avoid businesses such as liquor, pornography, gambling and banks.
You might have a problem with putting your money into Market Vectors Gulf States and (GULF),
|Middle Eastern Fund||Big Allocations||Largest Sectors|
|Source: Van Eck, WisdomTree|
|Market Vectors Gulf States (MES)||Kuwait, UAE, Quatar||Banks, finance|
|WisdomTree Middle East Dividend Fund (GULF)||Kuwait, Egypt, Morocco||Banks, telecom|
Every tiny step China has taken toward capitalism has resulted in massive wealth creation for both its investors and citizens. Similar reforms and economic freedom in the Middle East if it occurs would undoubtedly have the same prosperous result. While they account for only tiny portions of emerging-market indexes such as those tracked by iShares MSCI Emerging Markets Index Fund (EEM),
From Bahrain to the UAE
Market Vectors Gulf States (MES), WisdomTree Middle East Dividend Fund (GULF) 6 months
The other white metal
Platinum isn t just precious it s downright scarce. All of the platinum mined throughout history would fit into the average American living room, or barely covered your ankles if poured into an Olympic-size swimming pool.
A few months ago we reviewed the benefits of maintaining a position in physical precious metals. For those with the means to diversify beyond gold, adding platinum (usually traded in one-ounce bars or coins) should also be considered. There is no better way of fitting a lot of wealth into a discrete, durable and portable form.
Platinum - Gold Spread Since February 1968
The platinum-gold spread, which indicates platinum s price relative to gold, suggests the price remains on the high side of historical averages but well below the extremes seen just a few years ago.