Saturday, January 31, 2009

THE STRUGGLE FOR PATIENCE IN AN IMPATIENT NATION

It seems time to climb back into the saddle at Opinion-Columns after a sojourn afoot, leading my no longer trembling horse back toward the home stable. The election has been won and, with it, my almost psychopathic need to gallop off in this or that direction, dispensing opinion like scattered shots at disappearing rabbits. I’m on foot. I’m relaxed, as my president seems to have not yet put a foot wrong.
And yet . . .
It’s my hunch that we are not 10% into the economic bad news to come and my concern is not that we will be unable to deal with the collapse—Americans are good at that—so much as unwilling to wait.
We are not good at waiting. We are a nation of doers and sometimes the work that needs to be done is less productive and requires more of a steady hand. I am reminded of the photos from post-war Germany. While Europe largely stood around in shock, kicking its toes in the dust and waiting for rescue, the Germans cleaned mortar from rubble and neatly piled the bricks. They would need bricks. It was certainly not enough, there was no such thing as enough in a nearly destroyed Germany. But it was what was there to be done and they did it.
It remains a question if Americans are sufficiently stoic to pile the bricks that have come cascading down during the last year of the Bush administration. In fairness, the stage was set for collapse decades ago. Pick your administration of choice; Johnson with his great society, Nixon taking us off the gold standard, Jimmy Carter and his inability to deal with 22% interest rates, Reagan deregulating, Bush Senior adventuring in Panama and the Persian Gulf, Clinton allowing Alan Greenspan to loose the dogs of Wall Street, Bush the Younger privatizing essential government services. And the walls came a tumbling down.
The celebration of Barack Obama has not yet peaked. The promise of his message has not yet lost its ring of truth and call to action. The bipartisanship alluded to in the Congress of the United States has not yet been tested. We are eager, perhaps even inspired by this man.
But will we pile bricks for him?
The Dow Jones Average dropped 332 points on the day Obama was sworn in as 44th President of the United States. The audacity of hope, offset by the reality of markets gone to hell—and as Randy Bachman sang, "you ain't seen nothin' yet." We have yet to deal with nearly $60 trillion in credit default swaps out there somewhere, essentially insurance policies with no financial backup. That alone is sixty times the much vaunted bailout fund allocated to the Federal Reserve/Treasury. Thus far, the $350 billion thrown at banks has yet to produce a loan to a consumer or businessman. Not much into brick-piling, the banks merely paid themselves dividends and bought other banks.
That sounds grindingly true to the attitudes that got us into this mess, but the guys and the institutions into which we are pouring (and printing) money, all have familiar names;
·        Citigroup, Vikram Pandit, $45 billion
·        AIG, Martin Sullivan (fired) Robert Willumstad (ex Citigroup) $40 billion
·        J.P.Morgan Chase, (Jamie Dimon) $25 billion
·        Wells Fargo, (John Stumpf) $25 billion
·        Bank of America, (Kenneth D. Lewis) $25 billion
·        Goldman Sachs, (Lloyd C. Blankfein) $10 billion
·        Morgan Stanley, (John Mack) $10 billion
and on and on and on . . .
Ten months ago, (March 2008), Wells Fargo CEO John Stumpf said the financial crisis is presenting the bank with more acquisition opportunities. How’s that workin’ out for you, John?
Lloyd Blankfein over at Goldman kicked off this year with a ‘letter’ to investors that opened,
“At Goldman Sachs, we regard diversity as a business imperative – it is at the very core of our ability to serve our clients well and to maximize return for our shareholders.”
Diversity, in Goldman-speak, no doubt includes ten-thousand-million dollars in taxpayer bailouts to maximize Lloyd’s return for shareholders. The guy who signed the check was Treasury Secretary Henry Paulson—ex CEO of Goldman. Nice lateral pass as you work your way downfield, Henry.
This whole thing appears to be about acquisition opportunities and maximized return for shareholders, when it was sold to we doddering taxpayers as a way to bring equity to Main Street and scrub Wall Street with a wire brush, like a derelict in a bathtub. Equity—fairness in the common language of common folks. Derelict—a person without home, job or property—a ship abandoned on the high seas. Wall Street, having swindled us out of homes, jobs and property and then abandoned us on the high seas of an economic hurricane, talks of acquisition opportunity and maximized profits as if it was not on life support. Brain-dead, its heart and lungs operated by endless cash infusion, there appears to be no cure outside of grand jury indictments and prison terms.
Bernie Madoff swindled his friends out of $50 billion and isn’t even in the news today, six weeks after his arrest. Madoff is not an anomaly, he was Chairman of Nasdaq, a major American stock exchange. Listing over 3,000 companies, it has more trading volume each and every day than any stock exchange in the world—and its chairman is a thief, a crook and a swindler. It’s rumored that he may even evade jail time, plea-bargaining his way to a soft landing in his twilight years. Certainly he is not today in the slammer. Bernie is a letter-writer as well, penning this mea-culpa to his fellow occupants at 133 E. 64th Street in Manhattan;
Dear neighbors,
Please accept my profound apologies for the terrible inconvenience that I have caused over the past weeks. Ruth and I appreciate the support we have received.
Best regards,
Bernard Madoff
Apologies for crowding the elevator with the cops on duty to watch his sorry ass, but not so much as a quick scrawl to those who trusted him personally and are now left holding the bag. In true Wall Street egocentricity, the fault is all forces beyond Bernie’s control and he’s but a hapless victim of circumstance.
When there are bricks to be piled against the long, hard work of reconstructing our blown-apart economic structures, don’t look in the streets for Bernie or Hank. Nor will you find Vikram, Bob, Jamie or John dusting off and stacking blocks of clay. Feet of clay perhaps, but Ken Lewis, Lloyd Blankfein and John Mack will all be viewing the destruction they caused from the decks of yachts and villas in Europe.
There is no Nuremberg Trial for financial crime, but the patience of this historically impatient nation is soon to become threadbare as the true breadth and depth of what has been stolen reveals itself. Financial advisors—those same idiots who were unable to see the coming train-wreck, are now declaring the tracks to be clear if only the taxpayer would take these terrible toxic investments off their hands. Barack Obama will have to deal with that, among his thousands of other crises.
Will we have the patience?