Outrage Pays Off

Someone in government finally came to their senses. The executives of AIG are being asked to return millions in compensation. The money should be taken and given to the communities in which AIG operated. That would leave a lasting legacy that might help to overturn the perception of greed that has been burned into people's consciousness. Of course, the government will probably return the money to the pool being dug for the bailout of financial institutions. Which means that its possible positive effect will be negated. I understand why that statement might be questioned, but the government is allocating $700 billion for the bailout, so a few million dollars will not make a major difference to the bailout effort. The construction of a new park or a new wing on a school would probably help a lot more. The government seems to be very resistant to these kind of ideas. It represents the idea of socialism that they seem to be afraid of and that I think we need a lot more of. It would restore faith in government as a caring institution instead of this cold, faceless behemoth that is unresponsive to society's needs. The government seems to have no problem handing out tax breaks for business which they then abuse. I think its time to funnel money directly into people's hands. I don't advocate giving money away with no obligation. I think there should be some sort of education requirement to qualify for government subsidy. I don't want to use the word handout but that is exactly what it would be. The time has come for Americans to admit that everyone deserves an equal shot at a comfortable life, not having to live from paycheck to paycheck. Spreading money out this way would strengthen and widen the middle class, which has always been the backbone of American society. In previous generations, although they may not have been the intellectual leaders of the country, they were the moral leaders, providing stability order and a sense of community security. We need to return to these ideas if America is going to resume its position as a moral arbiter. The world is waiting for our example.

Socialism Is Not A Dirty Word

Nicholas Kristof's column the other day recounted a conversation he had with a woman in Beijing regarding the election of Barack Obama. It summarized the perception that many people abroad have of the United States and the state of our race relations. The point made was that the election of Barack Obama will send a sorely needed signal to many corners of the world that the United States is capable of electing someone besides a white man to its highest office. I am also hoping that it will signal a new era of change in the United States.
The word that has been tossed around on the campaign trail in the last week is Socialism. John McCain has done his desperate best to paint this as a dirty word that Americans should avoid at all costs. Barack Obama has not made such a strong statement, but it is clear that he does not want the word associated with his economic plans. I disagree. Maybe it is wrong of Mr. Obama to use the word Socialism because of the connotations that it stirs in the American mind, but Socialism is something this country needs, and now more than ever. With the gap between rich and poor growing ever wider and the apparent abandonment of moral principles that Wall Street has demonstrated in the pursuit of ever higher bonuses, the trickle down theory of ecnomic redistribution has shown itself to be a flawed idea.
The idea is simple but its effects would be profound. The redistribution of wealth would give the poorest among us added security. It would allow them to secure a better future for their children. Even if money is not given directly to people, it should be allocated to towns and cities on the low end of the economic scale for civic improvements, resulting in better schools and community facilities. There is no reason why millions of people should have to live a tenuous existence while others are paid ridiculous amounts and contribute nothing to the overall welfare of society. It's time for America to fulfill its promise to all its people and show the world that we have the compassion and the courage it takes to shine as an example of equality. I just hope that Mr. Obama can demonstrate the kind of vision it will take to return America to the position of moral leadership that it so easily abandoned in the past 30 years.

Fall of the Maestro

I can't blame Alan Greenspan for doing what he did. He made the assumption, like I did, that the people who invented these unregulated derivatives knew what they were doing and could control the markets they created. Unfortunately, we were both wrong. The people who invented these derivatives and the people who traded in them without fully understanding them had no moral compass and no concern for anything except the generation of a stream of income. This is a perfect example of lack of self respect. If you can act so selfishly and have no concern for the consequences, you have no respect for yourself. Of course, these titans of finance don't care whether they respect themselves. They use can use their millions of dollars as a salve to soothe their hardened consciences. Just look at how the executives of AIG were able to absolve themselves so easily, blaming the regulations for their problems. Their lack of introspective ability is shameful.
That is why I give kudos to Alan Greenspan for being able to publicly admit that his perception regarding the state of derivative markets was incorrect. The man was raised in a different America, when your word was your honor, before we became the largest debtor nation in the world and sold our integrity to the highest bidder. The situation we find ourselves in now is a result of our tendency to give people the benefit of the doubt, to believe that people are basically good inside, when we have really lost our soul. It's no wonder the world has lost its respect for us.

The Disciples of Nihilism

What a week for accountability. AIG needs more money, but their executives are so out of control, they hold a getaway for themselves and spend half a million dollars. And what happens to them? Nothing. There are no sanctions announced. No public condemnation reaches the ear of the average listener. And why? First, because Congress doesn't have the backbone to take a firm stand, and second, our elected representatives, who are supposed to be representing us, are probably jealous as hell that they can't do the same thing.
The President, the most incompetent man on earth, tells us that everything will be fine, but does he really know? We now have whole countries hitting the skids and Iceland doesn't even come to us to help them out. What does that say about our reputation abroad?
Maureen Dowd talked about the similarities to Rome in her column today, including a section in incomprehensible Latin. (Note: I took Latin for two and a half years in high school, but I hardly remember a word.) I've had the same thought for years. Admittedly, I was in love with the idea of derivatives when I worked for a Wall Street firm, but mostly because I thought there was at least someone with their hand on the controls. I believed in the system.
Okay, while you're laughing, I will say this. I was wrong. The system was inspired and run by Gordon Gekko types with no concerns except for the size of their wallets. In the spirit of un-accountability, they were happy to pass off the responsibility to someone else, comforting themselves with the fact that they could easily find someone else to blame if things went wrong.
This brings us back to AIG. In Congressional testimony this week, the executives of AIG flatly denied responsibility for the failure of their company. They actually had the nerve to blame the framework of regulations that they worked so hard to circumvent. One columnist I read put it so well; he said that's like blaming the fever on the thermometer. Even Maurice Greenberg, who spent years building AIG into a global presence and was at the helm when these derivatives became popular, sent a letter to Congress saying it was his successors' fault, which, as I said, they denied.
I think it's easy to see my point. Someone is responsible, and it's not the shareholders who got wiped out.
Here's what should be done: First, the executives who went away for the retreat and completely ignored their moral responsibility should be billed by the government, and the bill should be payable immediately, in cash.
Second, the executives who authorized the retreat should have to work without compensation for five years to help clean up the mess they made. Third, they should also have to stand on a stage in front of a national, primetime TV audience and apologize to their shareholders and the American people.
I know what you're thinking; don't hold your breath. But recommending this kind of public sanction by a member of Congress would show some real leadership and would lift their public ratings out of the high teens where they now reside. And we all know why they won't do it; because all they care about is getting re-elected and corporations and lobbyists pump much more money into Congressional coffers than Joe or Jane sixpack.
So what we have are elected puppets, whose noses are drawn to the dank smell of fresh money, whose eyesight is clouded by the comfortable blanket of indifferent, "objective" media, and whose ears are deaf to the cries of the people they are supposed to represent. The epitome of impotence. And yet they carry themselves with egotistical swagger based on a dying reputation for relevance.
Let's see how many incumbents get re-elected next month. Then we will see if the American people have the courage to hold their elected representatives accountable. It's got to start somewhere.

That Giant Sucking Sound

To say this has been a tumultuous week would be an understatement. First, we start with a loss of $1.3 trillion in value in the stock market, more than the value of the much discussed bailout package. I shudder when I think about it: In one day we lost more than the value of the bailout package that is supposed to save the financial system of this country, and the entire world for that matter. It puts a couple of things into perspective. Number one, if the financial system ever passes the point of no return there is no way to stop it. We cannot just keep pouring piles of money in sums that no one can actually envision into a poorly regulated system forever. Someday, the well will run dry. Second, all the assurances and the advertising of the financial sector meant absolutely nothing. When it came right down to it, the court jesters were at the wheel of the sinking ship, milking the investing and hard working public for every dollar they could while they paid themselves obscene bonuses for poorly executed diligence. The sucking sound in this case was the noise of wealth disappearing into thin air.
Second, we have the total absence of leadership in Congress. Our elected representatives could hardly have shown their lack of character more than by the partisan wrangling that took place while the bailout package was being debated. What was crystal clear was that they were in uncharted territory. Most of them had no idea what they were talking about. I don't necessarily blame them for this. Only the people who invented the derivative products that brought us to this point understand them. These derivatives were invented to circumvent regualtion in the first place.
What was also clear and tragically laughable were the reports of constituents who were calling to protest the fact that the bailout package rescued the very people who put us in this predicament without providing direct relief for the people most affected by it. They undoubtedly have a point. However, the vast majority of the people calling in have no idea what they are protesting and the people they elected to represent them have no idea of the scope of what they were contemplating. The whole thing is downright Shakespearian. The sucking sound this time was the notion of credible government evaporating.
The next perfect example of tragic theater was the vice presidential debate. Sarah Palin and Joe Biden stood on a stage and made a wonderful show of their egos, but they didn't discuss the solution to a single substantial problem facing this country. No wonder you couldn't find any objective analysis of the debate in the papers. The liberal papers said Biden won. The conservative papers said Palin won. The big loser was you and me.
The sucking sound this time was the sacrifice of meaningful discussion for the sake of empty entertainment.
Yesterday, there was a small piece of good news. As I read in the New York Times yesterday, a joint venture between PSE&G and a company called Deepwater Wind was approved to build a wind farm off the coast of New Jersey. The turbines will be placed 16 to 20 miles offshore, avoiding the complaints of idiots who say the sight of turbines damages their precious ocean view. I will state this emphatically. I love the ocean. I would never want to live anywhere that prevents me from getting to the ocean in a few hours. Sitting next to the ocean is an inspiring reminder of the power of God and Mother Nature and it should remain that way forever. But to complain that the view is spoiled because forward thinking people take advantage of an infinite resource to solve a pressing social problem is well beyond stupidity. I would love to sit in the sand and see turbines constantly whirring. It would be a reassuring sign that we have discarded our complacency and selfishness for the good of others and future generations. The sucking sound this time is wind being used to power homes, a sound I want to hear for the rest of my life.
So where do we find ourselves at the end of the week? In a position that remains just as insecure as it was at the beginning. Without leadership, without the courage to stand up and say that things are going to be changed in a meaningful way, we are nowhere. The financial industry, unless it is brought to heel, will find a way around any regulation and attempt to place us once again in a position of impending crisis. Unless the American people can shed their shortsighted approach and get that message to Congress, our problems will keep us in crisis or near crisis mode for generations to come. The sucking sound this time is the hope of future generations being blown into space.