I just don't get it. I must be a very stupid person. Reporting makes it seem as if this economic mess we are is very complicated and is somehow difficult to explain, and in my view it is pretty easy to understand why we are in the shape we are in. In my view, the explanation is simple to define and how we got here is even easier to know. Yet even if you know why we are here it has little to nothing to do with resolving the problems. The issue is not how to fix the mess; it is however all about how to reorganize our priorities, to put reality in our expectations and how we as a nation should define going forward what is good for America in the first place. This mess however makes the Enron meltdown look like a kids T-ball game, to put it in perspective.
Just ask yourself a couple of questions.
How is it that a corporation can make millions of dollars per year and pay millions more in bonuses and then is justified in laying off thousands of people in their company in order to bump up the share price for the shareholders, even when the company just had a year of record sales and profits and the CEO personally made more money than he's ever made? Don’t the shareholders realize that at some point they could grow their own share price by investing directly in their own companies and make more profit by having a nimble, trained and staffed company, with a CEO that has their eye on the future and not on his own bankbook? At least they would realize it if it wasn’t the same 2000 people on every corporate board in every major company in America who are all seemingly more worried more about their own personal fortunes than anything else. There is no glass ceiling anymore, it’s an ass ceiling. Sarbanes Oxley is a joke and did not help at all. It is still the same good old boys network running everything, and they still have all ten fingers in the till. In the same train of thought, why is it that the media will report that a company laid off thousands of people, or closed a plant or sold a whole division and on that news alone the share of stock in that company gets a price bump? It is then spun, managed and reported to us that news just like this is somehow a positive outlook, that somehow this is a good thing? Bad news equals higher profits?
It seems to me that this kind of "bad news", defined as less capacity and less employees to do more work in less time at a reduced cost -("read move our operation to a cheaper foreign country"), should key the directors and the shareholders and even the general public that they have the wrong upper management in the first place. It seems to me that they ought to hold the CEO responsible for the problem and not the hourly staff. The CEO can hang on however for 10 years or more of poor results and can decimate a company’s capacity and then they have a contract that has to be bought out to get rid of him that eventually will cost that company millions and millions of dollars in order to change him out?
What about the common worker? What about Us? It’s a greased banana and don’t let the door hit you in the butt on the way out. You have just been "right sized", or Out placed, or were part of an RIF campaign, or were Efficiency placed. Your butt was just fired. C-YA wouldn't wanna be ya. Sucks to be you.
I know people who have 750-800 credit scores who run successful businesses, and the banks will not loan money to them right now for any reason. Why? Because they are afraid to, because they view it as their duty to protect the bank (read "protect their income" as corporate executives are almost always large shareholders of the institutions they manage and they benefit from higher share prices before anyone else does), and not their duty to protect their depositors, their communities or the people in it. Thank the FED and Ben Bernanke for that. Thankx a lot Mr. Greenspan. I appreciate it Warren. Way to go Mr. Gates. Keep pumping up the banks; somebody has to protect the billionaire’s money I guess.
Are these people that stupid?
Or are we?
Was the current crisis was caused by credit swaps or subprime loans or by subordinated debentures or by packaged mortgage securities? My opinion is that anyone who thinks so is wrong! (And generally mistaken) and here is why I think so.
This crisis started because we are allowing our companies to not pay taxes due to tax loopholes big enough to launch the space shuttle through. It is because we are allowing our employers to grow their own bank accounts by merging with each other and then firing thousands of workers at once to manage their share price. It’s because we allow analysts to predict what a company's earnings "should be" and then a company is expected to react to that news. It was caused because a company is allowed to have "Earnings Guidance calls" with reporters and analysts. Fannie mae and Freddie mac failed because the price of food went up, because ethanol increased the price of everything that is made with corn, oil and plastic by huge numbers. They failed because we sat idly by and watched our auto makers pay workers almost 100$ per hour (averaged including retirement benefits based on the average price of a car) and then we wonder and fret about why they lost money and cannot sell cars. They failed because the price of a gallon of gasoline doubled in 8-12 months and a fill up was 2-4 times as expensive at the end of the year as it was on the first day of the year. They failed because electricity, natural gas, jet fuel, diesel fuel and heating oil rose to levels never seen before while we did nothing but wring our hands, if we reacted at all. It failed because it was and is legal to raise the interest rate on your credit card to absurd rates and on your home loan to more than a 40% higher payment per month in less than one year. It failed because we allowed insurance companies to price their policies based on your credit score. This current crisis wasn't caused by a bank, it was caused by classic greed, and its name is Wall Street greed and we stood idly by and let them do it.
The rules were made up by people lining their own pockets with our money. What sense does a 25 point different in a complicated credit score mean when it is based on obscure reasoning and then please consider and explain to me how it really does lead to fairly being charged thousands more dollars to buy a house or a car than your next door neighbor? You wonder why nobody is buying houses or cars right now? You wonder why credit card companies and banks are going under? Simple, the people they gave credit to, have lost their jobs. They are in foreclosure, their cars have been repossessed, their bank accounts are empty and most are contemplating some form of bankruptcy, suicide, divorce or all three.
And now to the rescue, our politicians are going to help us? Please explain how and when. By giving me a tax break that amounts to about $20 a week more on my paycheck? Gee thankx, thankx a lot. It was my money to begin with and it took you 15 months to give it back to me after I earned it? That will help a lot. I couldn't be more grateful. Does anyone else see how stupid this is? Global warming is something I should be worried about? Yeah right, I'll worry about this one after I burn all the couches and chairs and dinner tables to keep warm maybe. You think I am worrying mostly about how much my 401 K declined? Not my biggest worry right now, I can assure you. I could care less what the price of a share of Ford, GM or Chrysler is right now as long as I can afford a gallon of gas to get to work, I'm good thanks. Heck, I care more about what a loaf of bread or a gallon of milk costs right now than an automakers share price. Hundreds of Thousands or more people have lost their jobs since January 2007 and many of them have now had to take work at less than one-half the salary they used to make or they still do not have jobs. You wonder why banks failed. Not me, I wonder how I'm going to eat and how I'm going to afford to get to work as I have to drive 3 times as far , to make half as much, on gas that is twice as expensive. You want me to feel concerned for a bank or an auto maker? Be real. You think I really care about a corporate bailout? Explain to me how a corporate bailout really helps me or my family or my community and I'll care. Until then, don't speak for me as I really couldn't care less. If my house can be foreclosed upon, all of them can fail for all I care. If my kids are starving, Chrysler can go belly up tomorrow as I can't buy their product anymore, anyhow.
The numbers these analyst idiots and our politicians ought to be focused on is the jobless number. Fix the jobless problem and you have just fixed everything else. If I have a job, I'll pay my mortgage, my credit cards, my bank loans etc and I might buy a car sometime in the near future. In the last 15 years I have bought 5 new cars. In the last three I have bought no cars at all, new or used. You do not have to "fix" anything else. Just quit screwing with my job! Stop rewarding CEO's who think they have to trim expenses by firing thousands of workers to make analysts happy so their share price doesn't drop, so they can reap the reward of a multimillion dollar bonus! Stop rewarding the so-called banking titans that caused this mess in the first place with their endless buffet line of increased fees, fluffed up charges and "financial products" that no one (not even a lawyer) can understand. Just what is a future derivative anyway? A banker used to be an upper middle income job. How did it suddenly become a job that is worth millions of dollars a year plus bonus? I'd love to ask the average middle income earner how many credit card offers they got in the mail last year.
In companies like the ones I just alluded to, the CEO’s of those firms have one common personality type. They think, for some strange reason that laying off thousands of people, constantly firing and constant criticism will shake up the place and make people more productive. What really happens when you constantly shake up the place is that the staff starts looking for a way to protect their job and then keeps their head down to try and stay out of the line of fire, with the end result that really very little effort is going towards getting any productive work done in the first place. For some years now corporate America has been chasing a share price at the expense of everything else. In the last 30 years, we have almost wiped totally out our ability to manufacture everything from tube socks to washing machines in our quest for the holy grail of lower costs and higher share prices.
Large retailers like Wal-Mart have contributed greatly to this idiocy for a long time and I’ve yet to hear anybody ask the one that is pretty obvious to ask. How are we going to be able to buy anything in this new “World Economy” , if we don’t have anywhere to work that pays a decent wage and if there are no companies or jobs left to be loyal to? What in fact are we supposed to be loyal to anyway, a brand?
I can hear it now, “Yes ma’am, I’d like one TIDE t-shirt and two pairs of Viagra socks please”. We will not be able soon to buy anything made in China because we won’t have any money to buy it with. Who are all these poor so called third world nations going to sell to if they can’t sell it to us?
Just stop the stupidity and please just stop yapping incessantly about the big picture. I can't even afford the gasoline to mow my lawn and you think we care about GM, Or Freddie Mae? It makes no sense. I never want to hear the words "Economic Stimulus package" again, as it is all smoke and mirrors and generally, no one but a select few will ever be helped by it. My 90-pound dog makes a lot of "shovel ready" projects too, OK?
Me? I must be stupid as I just don’t get it and Dilbert makes more and more sense every day.
It makes very little practical sense to fire the older workers because of higher wages, and then just hire more younger workers because of lower wages, because to do so makes the purchasing power of the money they are paid (the younger worker) worth less. You earning power is less and because of that everything else then costs more and your dollar doesn’t go anywhere as far as it used to. See the thing is, we are in the middle of a fallacy that is a fractured story tale made up of a downward spiral and everything we are doing right now is managing that spiral downwards. We are doing nothing more than managing the decline, because less jobs = less money. Less money = less purchasing. Less purchasing = negative economic trend and means much lower tax revenues and lower tax revenues means reduced social services and slashed municipal budgets. This is exactly where we are right now and it is not that hard to figure out.
It’s amazing we put up with this crap. If I can figure it out, anybody can.
Here is a word of advice. Even if you have to eat crap with a serving spoon at work right now, keep your job no matter what you do. You lose your job today and you are screwed. Another one at the same money is highly improbable. You better stay focused on keeping that paycheck coming right on in, if you have any sense at all. Can't pay your mortgage? I hear Sears has big cardboard boxes, because no one and I mean no one running any of the Fortune 1000 cares if you are homeless.
