I’ m watching the news today as the stock markets enter into free fall. Not a pretty sight is it’ It amazes me that the powers that be could not see these situations coming many months ago. Two years ago, when I was in New York one of the large investment banking firms announced their annual bonuses. The average, get this; the average bonus was over $600,000 per eligible employee. There were numerous complaints about a shortage of Lamborghinis and Rolls Royces. I felt really sorry for those guys, imagine having all that money and not being able to find a decent car in the entire city. It broke my heart.
Looking in our local paper this past weekend, I found 19 pages in the sports section and 6 in the business section. That should tell you something about our American mentality. We seem to be more obsessed over some pro football player’s girlfriend than we are with the leaders of our largest banks and investment institutions handing out huge bonuses and feathering their own nests.
And do they feather their nests. If you and I operated a business that was a loss, I venture to say that when we left the company or closed it down, there would not be much left in the till for us to take with us. Wall Street must operate on a different set of rules.
The majority of the high paid executives end up with multi-million dollar severance packages in spite of the fact that the companies they were leading lost millions of dollars. This makes zero sense to me. It’s almost as if we are rewarding people for inadequate behavior. Something along the lines of ‘ we’ll pay you more if you make our stock lose more value.’ What a deal. I wish I had one.
So, this week with the sky falling all around them, these corporate executives are running from pillar to post trying to stay in business. And it appears they aren’t having too much luck. I don’t know about you, but making a $750,000 house loan to someone with a $35,000 a year income doesn’t seem to be very smart to me. But what do I know; I’ m not a corporate executive who is savvy with Wall Street and its machinations. From my viewpoint it looks to me that as long as money was coming into the system, the things seemed to be alright.
It was when the money stopped coming that things started to go downhill in a hurry. I seem to recall some guy named Ponzi tried this back in the 1930’s and it failed then as well.
Now these bright, brilliant Harvard graduates are asking the taxpayers (you and me) to bail them out of their financial mess. They’ re telling the media that they are simply too large and too important to be allowed to fail. Imagine that.
If you and I go out on a limb and buy a grocery store that doesn’t make it, I can’t see good old Uncle Sam rushing in to write us a check which would allow us to stay in business. And I’d bet you and I would think we were pretty important and shouldn’t be allowed to fail. Our kids have gotten used to eating.
Don’t be standing too long in any one place, the finger pointing is growing in intensity and you could be singled out to be the culprit even though you might just be a New York City tourist. These guys remind me of rats leaving a sinking ship. Only this time, it was the rats who caused the ship to sink in the first place.
Greed and power will do it every time. While I have nothing against people making money, more power to them, I do take offense to those who are doing so at the expense of others or that profit by unsound business practices. I have applied for many bank loans in my many years of business, and all of them required me to prove a sound business plan as to how I intended to pay the loans back.
It looks to me as if the people on Wall Street should practice what they preach.