Motley Moose – Archive

Since 2008 – Progress Through Politics

The Follies of Ourselves

Open a newspaper, turn on the computer and the brutal economic news comes at you like an asteroid storm.  Now no doubt some of it is true.  But am I the only who feels the fear-mongering coming on a bit too strong?  

Instilling fear has so far been working with company after company laying off workers, even when its absolutely not necessary. Hey why not lay people off when we can get the others to work twice as hard?  Yet we read and hear more and more of these stories, and shake our heads in disgust…

Perhaps what pisses me off the most though is that we continue to let it happen.  Case in point is everyone’s favourite CEO Richard Fuld of Lehman Brothers who now can proudly claim to be the poster boy for the global economic meltdown.

(cross posted at kickin it with cg)

Sure, he’s at least nominally responsible for the biggest bankruptcy scandal in banking history. He feasted on the subprime market until it folded in on itself and ripped the economy a new bottom line. He set the tone for a Wall Street culture that rewarded ruthlessness and bullish behaviour with a lifestyle of tawdry wealth and taste. He set new standards in ethics-lite investment practice and paid himself over $480 million in his seven years as CEO of Lehman Brothers. And when the company tanked, he washed his hands.

But perhaps, we the people are as much to blame as the Dick Fuld’s of the world.  After all – we enable and give a mandate for corporate greed to flourish don’t we?

In Fuld’s case, he was given a mandate to screw the market for every penny he could get. Dylan Young:

For six and half years that’s exactly what he did. And he was loved for it-by the market, the hedge funds, the executives, the pension plans, the shareholders, and the press. But these aren’t the fairest of fairweather friends. The instant Lehman Bros. started to go south, Fuld had to know he was going to wind up taking it in the neck.

In early 2008, he forwarded a proposal that might have kept Lehman Bros. out of the shithole but the investors flinched and the blitzkrieg raged-bankruptcy, bailout, fire sale, you name it. Fuld had killed the very company where he had risen from an intern 42 years earlier to a corporate general’s rank. And CNN, which had lauded him as the top CEO of 2006, put a warrant on his head as one of their 10 Most Wanted: Culprits of the Collapse.

But this is not really about the Dick’s of the world is it?  Rather isn’t it about us?  As long as the money keeps rolling in no one cares whether its done by ‘unscrupulous opportunists or high-minded philanthropists.’

As we ask ourselves who helped to kill the economy, maybe its time for us to look in the mirror.


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/ 18 Comments

18 comments

  2. John Allen

    the people who ran these schemes from their ill-gotten gains. They should be left penniless. Bernie Madoff is only the latest of these greedy bastards that think they are above it all. He’s probably got lots of money in offshore banks, but everything else should be taken from him. I’d love to see some of these bastards left with nothing except Social Security.

  3. Peter Jukes

    It’s not all their fault. We bought into this. We believed their spin. They believed our belief

    I remember someone trying to sell me an endowment mortgage in the late 80s. (Not sure if they have them in North America, but basically it’s an insurance rather than repayment product). The salesman kept on telling me that more than just paying off the mortgage, I’d have a bigger lump sum at the end to spend on Jetskis or something.

    I’m innumerate, so I kept getting the guy to explain why I’d make more money on an endowment. He drew a lot of graphs. I still didn’t understand. I asked friends – even had a row about it with my brother in law businessman. They all said it was a win-win.

    Finally, I got to the bottom of it. It was a win-win if the stockmarket went up – they only provided projections from the previous years when the stock market had risen. It was a lose-lose if the stockmarket went down.

    I’m glad I didn’t buy – but currently I’ve got a self certifying mortgage. It’s probably built on complete lies by my financial advisor. I feel a bit vulnerable, but just thank god my kids are nearly grown up, and college fees are not such an issue over here.

    For parents with young children, the anxiety of the financial crisis must be overwhelming

    I’m sorry it keeps you awake at night CG. The only comfort I can offer is that or governments are aware and – unlike the 30s – doing all they can

    Caveat Emptor of course about all these financial products. But the problem with the debt and derivatives market is that it’s so complicated, not even the experts know where the bad debt is stored. If no financial advisor could clearly explain endowment mortgages to me in the 80s, what hope is there with default credit swaps now.

    And like Joseph Stiglitz, I do blame those in the know more than punters like me. We trusted people like Greenspan to make the right decisions. After all, that’s why they get paid so much. And with power comes with responsibility

    They screwed up. The Reagan-Thatcher-Friedman model of the economy is in ruins.

    Let’s hope nothing nasty grows up out of the rubble.  

  4. KLRinLA

    for some of this mess.  I’d argue that it is not an equal share, nor even that close, as the average American is rather unsophisticated in finance (though that alone could be blamed on ourselves).  Here is my theory:   America being a consumer society in general, in fact so much that our very existence depends on consumption.  We need to consume, however, we do not need to consume so much that we become overwhelmed with debt.  That is where deregulation and greed comes into play.  This is where our government has failed by encouraging overconsumption, this is where the corporations (and all business) has completely saturated us with advertising, appealling to our more selfish characteristics and and encouraging our desires to have everything we want, and now.  I think on a cetain level the increased technological inventions which have provided us with instant access to essentailly anything and evrything, has a psychological bearing on this as well.  We open our computers, see a desirable product and with instant access can have it at our doorstep within a day (shit I can get flowers for my girl same day without leaving my office, If I should perhaps be a bit deficient in my recollection of say, a certain special event, sshhhhh).

    So we lose restraint and commonsense, which has been encouraged as well, because that doesn’t make anyone nay money.  In a capitalist society, having money (or toys or nice cars or nice clothes) is power, while knowledge and reason is an afterthought that doesn’t automatically get one any higher in our group determined hierachy of achievement.  This too leads to an uninfomred or unsophisticated people.

    We have to take better care of ourselves, buyer beware, and take a second to breathe before we lay our credit card down, do more research on potenial expenditures, learn damn it!  And now that we are doing that, we are crumbling our economic environment, because it is almost too late, we still need sconsumption.  A vicious cricle indeed that will eventually get back into balance, ideally and hopefully, but not before many people suffer through unemployment, not obtaining  necessities, and possibly losing our homes.

  5. creamer

     Gives a good overview of how Friedman/ Greenspan economic theory and practice led us to today. Also does a good job of exploring the conservatives goal of making government a money machine for the rich and powerful.

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