Mish (and Minyanville’s Mr. Practical) Comment on Wells Fargo
September 6, 2008
Mish’s post can be found here, which liberally quotes form Mr. P of Minyanville.
Mish is definitely a cynic about the current economic situation however he is very LOGICAL in his deductions and does a great job in explaining his thought process especially when it comes to market commentary (rather than more general economic issues).
It seems beyond clear to me that Wells Fargo is baldly lying about their reasons for the dividend increase (in THIS climate??).
What’s worse, this could be a product of the exact type of reasoning that puts a company (or economy) in a crisis: Taking actions that have narrow (as in, a few executives benefit) or extremely short-sighted (as in, structuring policy to accommodate a housing bubble that can’t possibly last forever) goals, contrary to the most basic logic. Whatever insidious reasons Wells Fargo had to increase their dividends, I only hope they don’t persist. Perhaps the company can weather an ass-backwards capital dilution, but it cannot continue to do so for long. Any organization or system that offers incentives for such irrational behaviour is very dangerous.
… and the cow goes moo
[...] retained earnings, rather than being invested in other companies, effectively delever. I believe this post of mine, discussing (and, more importantly, linking to superior discussions) the recent paradoxical $2 [...]
[...] a policy change to write off home equity loans after 180 days instead of 120 days” and I have a previous post that once again, links to Mish, and the discussion about their dividend [...]