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I have not posted an entry on my blog for more than six months now and I have no excuse. There are so many topics to write about and I regret not being more diligent. Today’s report in the New York Times, however, about the British resentment of US attacks on BP is enough to bring me out of my self imposed hiatus.
The idea that the British are upset about the economic effect that the decline in BP’s stock price is having on British markets and British investors is the height of selfish callousness. BP displayed an incredible lack of concern for the safety of its workers and the environment in which it operates, and it is now paying the price for that egregious omission. The worst part of the whole crisis is that BP clearly had no plan for dealing with the environmental calamity it has caused. The economic effects on the residents of the Gulf Coast, coupled with the environmental effects on the wildlife that inhabit the region far outweigh any negative economic effect on British markets and investors.
If I were the president, I would have already called for a permanent boycott on all BP gas stations, so that they cannot profit another penny from the US citizenry for whom they showed so little concern.
What has not even yet been discussed is what penalties will be imposed upon BP for their environmental and civil crimes in this matter. I did a quick check and found that Exxon was originally fined $5 billion for causing the oil spill in Alaska in 1989. It was recently ruled that the $507 million that Exxon has paid out so far to the victims of the oil spill and their families will be considered their total liability. Figures released today show that the amount of oil that has leaked into the Gulf of Mexico exceeds that which was released during the Valdez disaster by a factor of five, and the number is of course still rising. The economic effects on the residents of the Gulf Coast remain incalculable at this time because BP has not been able to establish any time frame for the containment of the spill and it is already clear that it will take years to mitigate its effects. Attempt after attempt has failed miserably, while Tony Hayward complains of the inconvenience it is causing him personally.
What matters most are the lives of the people who are most directly affected by this disaster. Just as we all felt anguish for the residents of New Orleans after Hurricane Katrina, we now have to feel it for the residents of the Gulf Coast who face a multi-year recovery in economically depressed times.
I feel nothing of the kind for the British investors who are upset about US criticism of BP’s conduct in this crisis.
The other major casualty that arouses my anguish is the effect on the wildlife of the region, which could cause the extinction of certain species or at least a major reduction in their numbers. Those species count on us, unknowingly, as the most evolved, to be the stewards of their environment. It is shameful for every human being on Earth to consider how we have let them down.
I would like to pose a question to our British allies across the pond. Would you be so forgiving of an American company that caused an oil spill which resulted in tar balls washing up on the shores of London? I think we all know the answer to that.
Thursday, June 10, 2010
Monday, December 14, 2009
The Good The Bad and The Ugly
When I first heard on Friday about the spending bill being put before the Senate, I felt a sense of disgust. Once again our elected officials are blatantly ignoring the needs of their constituencies for the sake of pork barrel spending. The current bill includes more than 5,000 pet projects, the most ridiculous of which have already been exposed by the major news organizations.
As I read more about the bill however, I realized that it has its good side. The main purpose of the measure, known as an omnibus bill, is to pay for vital programs in areas such as veterans, health and education. That’s the stuff we need. As much as I hate to admit it, a flawed government is still better than no government.
However, the ugly part of the situation is the most outrageous. This is the mindset of the Congress, which views profligate spending as a virtue to be praised. Senator Richard Durbin of Illinois reminded all of us that the individual spending bills were given bipartisan support by the Senate Appropriations Committee. Isn’t that wonderful?
Both parties agree that irresponsibly raising the national debt to reward campaign contributors is an admirable end.
As the New York Times reported yesterday, there is more of this behavior yet to come. The next major bill to come before Congress is a $600 billion measure that will pay for the operations of the Pentagon for the next year. Since no one in Congress would vote against keeping the Pentagon in business, there are plans being made to attach other wasteful spending projects to this measure.
Included in those measures is one provision to raise the federal debt limit by $1.8 trillion. What sense does it make to have a debt limit if Congress is just going to raise it every year to cover their own irresponsibility? Think about what would happen if the average homeowner was allowed to do that on an annual basis. In some sense, that’s exactly what did happen, and look where we are now.
I have to wonder if Congress is aware or at the very least cares about the ugly image it displays to the general voting public. Their approval numbers don't seem to mean much to them. They are mortgaging our future for the sake of the few and flipping the rest of us the bird at the same time. They only reasons they do it are because no one holds them accountable and because they are so insulated from the plight of the average citizen that they listen only to those who throw the most money at them.
Let’s hope that changes before the well runs dry, before the credibility of the United States turns into a impudent joke at a Russian vodka party.
*Source information for this article is from The New York Times December 13th edition
As I read more about the bill however, I realized that it has its good side. The main purpose of the measure, known as an omnibus bill, is to pay for vital programs in areas such as veterans, health and education. That’s the stuff we need. As much as I hate to admit it, a flawed government is still better than no government.
However, the ugly part of the situation is the most outrageous. This is the mindset of the Congress, which views profligate spending as a virtue to be praised. Senator Richard Durbin of Illinois reminded all of us that the individual spending bills were given bipartisan support by the Senate Appropriations Committee. Isn’t that wonderful?
Both parties agree that irresponsibly raising the national debt to reward campaign contributors is an admirable end.
As the New York Times reported yesterday, there is more of this behavior yet to come. The next major bill to come before Congress is a $600 billion measure that will pay for the operations of the Pentagon for the next year. Since no one in Congress would vote against keeping the Pentagon in business, there are plans being made to attach other wasteful spending projects to this measure.
Included in those measures is one provision to raise the federal debt limit by $1.8 trillion. What sense does it make to have a debt limit if Congress is just going to raise it every year to cover their own irresponsibility? Think about what would happen if the average homeowner was allowed to do that on an annual basis. In some sense, that’s exactly what did happen, and look where we are now.
I have to wonder if Congress is aware or at the very least cares about the ugly image it displays to the general voting public. Their approval numbers don't seem to mean much to them. They are mortgaging our future for the sake of the few and flipping the rest of us the bird at the same time. They only reasons they do it are because no one holds them accountable and because they are so insulated from the plight of the average citizen that they listen only to those who throw the most money at them.
Let’s hope that changes before the well runs dry, before the credibility of the United States turns into a impudent joke at a Russian vodka party.
*Source information for this article is from The New York Times December 13th edition
Wednesday, December 9, 2009
President Obama, Are You Listening?
In an announcement I loved reading this morning out of Great Britain, Chancellor of the Exchequer Alistair Darling proclaimed a 50% tax on all bank bonuses over 25,000 pounds, translating into $40,800. That low limit effectively captures the vast majority of bonuses that will be paid.
I found it very curious that within a half hour of that announcement, a member of the board of Goldman Sachs, William George, was quoted as saying that his firm is taking a “very hard look” at whether to pay people less because of public outrage over bonuses. My educated guess says they will do one of two things: One, they will impose a temporary restraint until the outrage dies down; Two, they will decide that their pay policy can’t be changed because it will result in a “talent exodus,” a matter which I have addressed before.
Indeed, the reaction of the US financial community supported the latter conclusion. “We don’t think it is at all likely that Treasury-IRS would impose a 50 percent tax on banker bonuses,” said David Schmidt, a senior consultant for New York-based compensation firm James F. Reda & Associates. “This pay cut would likely cause an exodus of talent.” I have stated repeatedly in the previous columns that while it may be true that there would be a temporary exodus of talent, the attitude that that talent cannot be replaced is utterly ridiculous.
The only voice quoted that agreed with the idea of a US bonus tax is the one I respect the most. Clyde Prestowitz, whose book, Three Billion New Capitalists, was a warning shot across the economic bow of the country when we still believed that what has happened could not happen, called the bonus tax “a great idea that is justified by the taxpayer supported bailouts.” He added, “There’s a lot of pain and agony out there because of their malfeasance.”
His statements are confirmed by a Bloomberg National Poll released today that almost two thirds of Americans rate bankers lower than Congressmen, lawyers and insurance companies. With polls released in the past few months showing favorable ratings of Congress hovering in the teens, I suspect that the true number of people who give bankers that low a rating is closer to 80%. Bloomberg’s study only polled 1000 adults, hardly enough to produce a completely accurate reading.
Is President Obama listening? Is Tim Geithner? Mr. Geithner recently paid lip service to the “irresponsibly high bonuses” being paid on Wall St. this year, but no further action is currently being contemplated, and it’s obvious that the people paid to watch the banking system also expect nothing to be done.
I suggest that Mr. Prestowitz is correct. It is time to follow the lead of the British and impose a bonus tax of at least 50%. This would accomplish two important objectives: First, it would show that those elected to govern are listening to the will of the people who elected them. Second, it would send a clear signal to Wall St. that their actions are wrong and completely out of touch with economic reality. This is something the majority of Americans already seem to know.
Finally, it is worth remembering that last year, in the immediate wake of the banking crisis that started this economic turmoil, British bankers apologized for their irresponsibility. American bankers had the nerve to blame “excessive regulation” for the crisis. It’s time to remind them that the fallout from their willful transgressions is far from forgiven.
**The source of all quotes in this article is Bloomberg.com
I found it very curious that within a half hour of that announcement, a member of the board of Goldman Sachs, William George, was quoted as saying that his firm is taking a “very hard look” at whether to pay people less because of public outrage over bonuses. My educated guess says they will do one of two things: One, they will impose a temporary restraint until the outrage dies down; Two, they will decide that their pay policy can’t be changed because it will result in a “talent exodus,” a matter which I have addressed before.
Indeed, the reaction of the US financial community supported the latter conclusion. “We don’t think it is at all likely that Treasury-IRS would impose a 50 percent tax on banker bonuses,” said David Schmidt, a senior consultant for New York-based compensation firm James F. Reda & Associates. “This pay cut would likely cause an exodus of talent.” I have stated repeatedly in the previous columns that while it may be true that there would be a temporary exodus of talent, the attitude that that talent cannot be replaced is utterly ridiculous.
The only voice quoted that agreed with the idea of a US bonus tax is the one I respect the most. Clyde Prestowitz, whose book, Three Billion New Capitalists, was a warning shot across the economic bow of the country when we still believed that what has happened could not happen, called the bonus tax “a great idea that is justified by the taxpayer supported bailouts.” He added, “There’s a lot of pain and agony out there because of their malfeasance.”
His statements are confirmed by a Bloomberg National Poll released today that almost two thirds of Americans rate bankers lower than Congressmen, lawyers and insurance companies. With polls released in the past few months showing favorable ratings of Congress hovering in the teens, I suspect that the true number of people who give bankers that low a rating is closer to 80%. Bloomberg’s study only polled 1000 adults, hardly enough to produce a completely accurate reading.
Is President Obama listening? Is Tim Geithner? Mr. Geithner recently paid lip service to the “irresponsibly high bonuses” being paid on Wall St. this year, but no further action is currently being contemplated, and it’s obvious that the people paid to watch the banking system also expect nothing to be done.
I suggest that Mr. Prestowitz is correct. It is time to follow the lead of the British and impose a bonus tax of at least 50%. This would accomplish two important objectives: First, it would show that those elected to govern are listening to the will of the people who elected them. Second, it would send a clear signal to Wall St. that their actions are wrong and completely out of touch with economic reality. This is something the majority of Americans already seem to know.
Finally, it is worth remembering that last year, in the immediate wake of the banking crisis that started this economic turmoil, British bankers apologized for their irresponsibility. American bankers had the nerve to blame “excessive regulation” for the crisis. It’s time to remind them that the fallout from their willful transgressions is far from forgiven.
**The source of all quotes in this article is Bloomberg.com
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