What Microsoft Did For Cantor Fitzgerald After 9/11 (MSFT)

When Cantor Fitzgerald lost 658 of its 960 employees on 9/11, it wasn't expected to survive. 

The firm, which occupied space on the 101st-105th floors of One World Trade Center, also lost most of the "files, hard drives and technological capability that make a brokerage firm tick," reports the Los Angeles Times. 

But amazingly, within a week, the firm was back to trading online -- thanks to companies like Microsoft, which "flew out some 50 employees to help Cantor break into the password-protected computer accounts of all the workers who were gone," and Cisco Systems, which "sent a dozen 18-wheelers full of routers, cables and other hardware to Cantor's office in New Jersey." 

Cantor's reemergence may be one of the greatest comeback stories on Wall Street. According to the LA Times: 

At the same time that [CEO Howard] Lutnick was shuttling between funerals, he was also bringing on new employees to begin rebuilding Cantor. On the weekend before the memorial, Lutnick had interviewed and hired 35 people from temporary office space in midtown Manhattan.

The expansion has rarely stopped since then. Lutnick, who oversaw 2,100 employees before Sept. 11, when Cantor was known primarily for trading bonds, now oversees 4,500 employees and has grown his company into a full-service investment bank.

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Of Course, Eric Cantor Is A Total Hypocrite

In a way, I may be wasting my time doing any kind of rational analysis of Eric Cantor’s demand that any disaster aid in the wake of Irene be offset by spending cuts elsewhere. Cantor is, of course, being totally hypocritical; where were the demands for offsets to the cost of invading Iraq?

Still, it may be worth talking about just how bad an idea this is in terms of basic economics — and in this case, regular economics, not fancy-schmancy macro.

Think of the government budget as involving tradeoffs similar to those an individual household makes. On one side, there are all kinds of things the government could be doing, from dropping freedom bombs to providing children with dental care; think of each of these things as involving a certain marginal benefit per additional dollar spent, with the marginal benefit declining in the total amount spent on each concern. On the other side, raising revenue has a cost, both the direct cost of the money taken from taxpayers and the possible reduction in incentives from higher tax rates.

What the government should do, in this case, is set all the marginals equal: the marginal benefit of an additional dollar spent on bombs, dental work, national parks, soup kitchens, etc, should all be equal, and this common marginal benefit should equal the marginal cost of raising an additional dollar of revenue.

Now suppose a disaster strikes. What this does is raise the marginal benefit of spending on disaster relief. The appropriate response is to move all the marginals to get them in line: spend less on everything else, and also raise more in taxes. So even there it shouldn’t be all offsetting spending cuts.

But wait: even more important, the government can borrow (or, in principle, lend, if it pays off all its debt). So it should balance its budget in present discounted value terms, not year by year. This means that the tradeoffs should include future spending and taxes as well as this year’s spending and taxes. And a natural disaster, like a war, is a temporary event; it should be met largely through higher taxes and lower spending in the future rather than right away, which is another way of saying that it should be paid for in large part by a temporary increase in the deficit.

This isn’t some novel idea, by the way — it’s the standard theory of public finance during war, going all the way back to Ricardo. And the logic of wartime finance applies equally to natural disasters.

So the bottom line is that basic, regular economics says that Cantor isn’t making sense. Are you surprised?

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.