Economic Recovery or a Government Poison Pill

The New World Order – Will socialism will fix the problem?

Tattered and shaken, the sick American economy has given the world a terrible cold.
Tattered and shaken, the sick American economy has given the world a terrible cold.

The Economic Meltdown and the Economic Recovery – Is now the time where we have to trust the federal government to get us out of this situation? Or is it more like “there’s no one else out there to trust” and we have no other options.

The great thing about blogging is that we get to write down things and publish them so that others who’re having  thoughts on the subject  might have a place to share their ideas & their frustrations. Maybe we can discuss this and find some comfort knowing that they’re others out there that share common opinion. Maybe not…let’s see.

What went wrong?

What a ridiculously complex puzzle. But before we hand this over to the Harvard Business school to debate, there are some of us who need to vent while others need to learn. Let’s start with who’s culpable?

How about we start the blame with those who got into mortgage contracts and later defaulted on their obligations. Can you just blame those who didn’t pay their mortgage and say they’re to blame? Not exactly, since they definitely shouldn’t have had a mortgage in the first place. But that doesn’t mean the federal government is supposed to prop them up and keep them in that house that they couldn’t afford to begin with. While this smells  like a new wave of low income housing subsidized by the federal government, which lately seems to be subsidized by countries like China and our American future generations, it just doesn’t seem right. But what else can be done?


What about Legislation?

Can legislation fix a free market economy…it rarely does. Or maybe we shouldn’t be a free market economy. Not that I’m not looking to sue anybody, but I’ll bet there’s a whole bunch of people out there that should be sued (after they get out of jail). I just need someone to put them in jail first!

Can anyone figure out who’s accountable, or was this just one big ponzi scheme where everyone was out for a joyride and the car just crashed? Those who survived the crash get to walk away from the scene saying “I wasn’t driving but I did go along for the ride.” I see legislators and former fed chairmen on TV, and they act like it was all someone else’s doing. And where was the SEC? Again, where was the SEC? Looks like there was fraud being committed all over the place.

Whats Greenspans role in all this? Did he just sell the gun and or is he responsible for putting the gun in their hands?
What was Greenspan's role in all this? Did he just sell the gun and or is he responsible for putting the gun in their hands?

Government Oversight

So, what value did Sarbanes Oxley have on the government agencies and the corporate overseers? Barney Frank, Christopher Dodd, do they really believe the stuff that comes out of their mouths? Didn’t we learn anything from the bank bailout scandal and Enron?

What about Greenspan? Some defend him. Others denounce him. He certainly did lead the rally to bring interest rates to the lowest level I thought I’d ever see (until now). Was anyone looking for a zero fed funds rate anyway? Not me. So did he just put the loaded gun into the hands of the mortgage underwriters while all the other agencies sat back and said “It’s America-Have at it” I guess.

I’ve spent over a decade working for investment banks that today seem to be on life support. While some of the CEO’s don’t seem to understand the public perception of their perceived wrong-doings and bad behavior, I can’t help realizing that our global banking systems will be forever changed. So what, “Hi I’m Morgan Stanley and I’m now a holding company.” I just don’t want to wait to hear the solutions come out of some Harvard Business School case study! Isn’t that where they’re all from?

And why can’t the ratings agencies be held accountable? Moody’s Investor Service, Standard & Poors, Fitch and the like. They were all in it together. Independent research and opinion? Who’s looking out for the investor? No one. They’re all part of the problem. What happened to that bumper sticker “Question Authority”? Not that I’m looking for a “bumper sticker” solution.

The Dodd and Frank Show
The Dodd and Frank Show

Looks like more of the “fox watching the hen house”. We’ve all heard the term “Wall Street infected Main Street”. Is this really true, or did those who lived on those leveraged mortgages on Main Street, treating their houses like ATMs,  inject so much poison into the financial system that the derivatives market caused a catastrophic super-leveraged  tsunami that will be pounding on us for decades just because they agreed to borrow money and defaulted? How bout that term – a “super leveraged tsunami”. Chicken or the egg…who cares. The salmonella is EVERYWHERE!

So if Fuld, Cayne, or Thain and the rest of the super leveraged hedge fund guru’s were the chicken (broiled chicken for that matter), does that make Dodd and Frank the egg? What a mess. Can’t we just bring back public hangings and get it over with? At least it’d be a start (maybe a good one).

Is it best to just let the free market economy correct itself or will an infusion and intrusion of the federal government simply prolong the agony or shift economic variables to the federal government.

“Dear President Obama, America has this problem and we need your help.” Maybe we’re all writing this letter in our minds, but are you doing this just because you have nowhere else to turn? Or maybe we just need to look at ourselves and blame ourselves? I want to say no, it’s not me, but then again, I grew up seeing New York City going down the tubes in the 70’s and blamed society for it’s shortcomings. But I then saw someone like Rudy come and and restore order (so I have seen it done).

Maybe I’ve just lost faith….what options do we have?

Where do we reengineer? For cryin’ out loud, I’m in the reengineering business and I can’t even begin to say where to begin. But I do see that there are tremendous opportunities and things will have to be reengineered in whatever economy we end up with. Will government have to reengineer government? Will government have to reengineer business? Regulation….what regulation? Just how far is the government going to go this time. Regulation can be good, but is it going to swing to the extreme. Probably. Give a politician a chance to legislate and watch them get excited (they are lawyers remember).

We need help. Someone please help. Don’t give us a poison pill. I love America too much.

Post your thoughts. Click the Add Comment below and “have at it”.


5 thoughts on “Economic Recovery or a Government Poison Pill

  1. There is no specific reason we have all been forced to look at ourselves in the mirror and place a realistic value on who we are verses what we have. It boils down to greed, an innate part of our nature. Those who claim never to be greedy are still FOS because if they had to take from something to sustain something else they believed in………They would! and they would rationalize the reasons to reflect something bigger than they are: i.e. religion, the good of society, whatever. Regardless of the motive, greed is in everyone.

    The problem I have with the public reaction to this meltdown is no one has had the balls to address the fundamental issues that have presented this result. I believe the American public is bitching about a problem they contributed to. It is like sitting in traffic and complaining about the traffic you are helping to produce.

    The poorer people in America today, are less affected by this melt down then the middle class. Why? They are accustomed to doing without. They have never lost sight of the things they can and cannot afford. If it is so important to have something, they know how to do without something else. This is life 101. Just because we live in a country with a system that allows personal wealth, doesn’t mean every one deserves it. Paying dues has nothing to do with money; it has everything to do with sweat blood and tears.

    In my youth my mother took care of the home, and dad went to work 2 jobs. That worked well because we made it work, and we did without the things we wanted, but always had the things we needed. There were no standards to maintain in so far as the cars we had, the televisions, the computers, or granite counter tops. None of that stuff mattered to the people who collected friendships, good times and knowledge.

    People have to enjoy the world they are capable of providing, not self destruct trying to have something they think they deserve but can’t handle. That is what happened to our economy, it has nothing to do with money. Money was just the weapon of choice.

    My economic situation has been a bear for 5 years now. I lost my job in July of 2003 and things have been different for my family and I ever since.

    The first year was an economic crisis. Why? My overhead was too high; a direct result of me thinking that I was more valuable than I actually was to both my employer, and to society in general. On top of the world, big fancy parties, the best cars, plenty of friends to impress. Where are they now? All my fancy stuff went for pennies on the dollar on EBAY. Once it was all gone, I looked around and all I can see was my family. WOW that is what it took to realize I have a family who loves each other regardless of the house we live in? That reality made me understand that I was a very wealthy man regardless of how much money I had.

    Once I realized that I may never be safe again, I reengineered my thought process and although I may not have a high profile career, or a big fancy car, I am the happiest I have ever been because I have placed appropriate value on myself and I now know what I have to work with.
    I fear the future to present an even bigger problem than the effects of an economic melt down. Personal economic recovery is easy; just dig ditches for money when you thought you were over qualified to do so in the past.

    The hardest times we face are getting our children to learn from our mistakes.
    What mistakes?

    Having things we haven’t earned.

    Spending 6 hours polishing the classic car instead of one hour reading with your kid.

    Confusing privileged with deserving.

    Not reinventing ourselves when we need or want to.

    We can only fix our own camps, we can’t fix the world. Money was the bullet, but people pulled the trigger.

    Joe Abbate

  2. Here’s an email submission from an IT Infrastructure Partner at a large global consulting firm born overseas and now a US Citizen.

    This is good. The key thing to remember is that regulation is like the law. We all debate the thin line between what we really need to protect ourselves and maintain our freedoms at the same time. When it comes to the market system it is the best but its also has its limits –read Black Swan and its will help you understand why these things happen and what we should be looking for.

    My thoughts

    1. We need to beef up the regulators and pay them a salary that makes it a worthwhile position that they don’t feel the need to move to Wall St. If that seems to be an expensive solution lets see what we have just lost and if they had saved even 10% of that we could have made them billionaire’s and we would still be up on the deal.
    2. If we don’t do that we have to make it easier to litigate in this space as the people behind this bare no responsibility for not managing the situation.
    3. We need to wake up to the fact that not all government is bad. This has led to legislation falling short and being written for those that can afford to lobby for their interests.
    4. We need a social system that focuses on needs and not just profit. If you look to other market economics – e.g. Britain, France and Germany – they are providing Education and Health Care much more effectively than here in the US. We need to turn our thinking to align our interests with the wider population. Look who complains about high taxes and government the most. The people that got us into this mess.

    This became the greatest country in the world because of how we have addressed our greatest threats – Great Depression and WWII. We did not complain about what it cost us to fight Nazi Germany and Imperial Japan.

    If we took the same energy and put it to use on the ‘War on Irresponsibility’ our high performers would still do well but we would expect them to be patriotic and pay their share of taxation to support the greater good. They fool us into thinking they are entitled to their wealth, this is the same as the other people who are perpetual welfare recipients who also say they are entitled. This means that the majority of us in the middle get screwed every time. I say wake up America, vote for people who send people to college based on their ability and not their wealth. Vote for people who put restrictions in place to prevent people from borrowing money when they can’t afford to pay it back. If you think that’s nuts then look at what it’s costing us now and who benefited – not you and me. Vote for people who will provide Universal Health Care – its works pretty well everywhere else. We pay Rolls Royce prices for something that can be cut off or refused by Health Care (sorry ‘You’re on your own’ care) companies it’s ridiculous and we are crazy to put up with it. Why should I pay what I pay when it can be cut off for a list of read the small print reasons that no-one knows about or understands. I’m sick just friggin treat me. It’s a lot cheaper and a lot better. We are burdening our labor costs with this and its b/s. This end up in the pockets of Health Care CEO’s.

    I know that sometimes both Rush Limbaugh and Michael Moore get it right. Michael more than Rush to be honest. We need ideas from everyone.

    Obama is not perfect but at least he is working to get as much input as possible. He is trying to be Bi-partisan so we need to support him. We need Nancy, Harry, Mitch and Steney to lead not laden things with pork or have the audacity to say oh sorry I ran up the debt and now you have taken my credit card away we need to stop or lets re-do the lawn or build a Frisbee golf course. Get on and do the people’s work, bring in the bankers, the businessman, the academics and tell them to leave their ego’s and philosophy at the door and produce solutions.

    Sorry about the rant but this is serious no matter what your politics are. We need to be a team and work on build the next generation economics solutions, government solutions and energy solutions for our kids. That’s who I care about – yours and mine.

  3. The problem as I see it is not that Obama is without Hope or Promise, he never gave us his plan, so many are wondering what the hell he is up to. In my view this guy has no plan, he was handed the presidency on a platter, because Bush has a 22 percent approval rating and a pile of crap would have beat him if that’s what the Democrats put up against him. Instead, they put up a man with no experience whatsoever, trained him on what to say, sent him to acting school with the George Clooney’s and Barb Streisand’s coaching him all the way. Making him sound nicey nice for the public, who was sick and tired of Bush’s verbal nightmare’s in speeches, and he looked Golden. Combine that with the Political Perfect Storm, the economy and the banks crashed to hell, and no one was going to elect a republican no matter what.

    SO, we got what we deserved, a different kind of dope, named Barack HUSSEIN Obama, who knows nothing and to prove it, puts a Clinton back in power, drags the same old crap he campaigned against right back in his cabinet, all the dopes that let 911 get planned under their noses as they told us “the world is safe and the CIA needs to fight the war on drugs, not go overseas and prevent terror”. And now we got Leon Penetta, the dope of dopes, back in power with Nancy Pelosi, who never met a plastic surgeon she did not like’, who calls herself a Catholic yet never goes to church. Will pay for planned parenthood and abortions in Europe for the tune of 1.2 billion dollars while we fight unemployment on our home soil.

    Proof perfect of the people who are running this country really are, is the amount of Hollywood celebs that surround this President, like JFK he will self destruct as he hangs with these morons, morons that tell me how to live and conserve, as they live in limos and snort coke every five minutes.

    Obama is not a socialist, his friends all are, and he’s the puppet, manufactured by Hollywood, groomed by them, placed in office and now he lets Hollywood choose his cabinet, and get all the Good Ole Boyz from the Clinton Days back in office so that Barb Streisand can now sleep at night and feel good.

    She (Barbara) and all the other asses in Hollywood can go kiss my ass.

  4. Submitted by a Investment Bank Executive who was recently laid off.

    There is nowhere to start regarding the blame, fault or cause. I agree with one of the bloggers that it boils down to greed…But hey greed is something we all understand. To me the issue goes beyond that… it goes to the ability, on a large scale, to push risk around without encumberence…to assume risk without responsibility and to do this we used what basically was engineered by Wall Street at the behest of certain areas of our government as a Risk Free Superhighway that in retrospect was one road with ONE BIG CLIFF at the end of it. Everyone zooming along and then realized they had no brakes just gas to push them further and further towards the abyss.

    Look – I’ll take responsibility for taking a loan out above and beyond my means as an example but I will not take responsibility for someone at a bank, mine or anyone elses, for going down that superhighway through securitization, and in direct correlation to their bonus expectation in turn causing many persons to lose their jobs. Why ? because Wall Street for the most part is ‘first come first serve’, ‘pound foolish and penny wise’.

    Along this train of thought – isn’t it clear that all Wall Street is doing now is waiting for their handout. The market will not settle until firms fall, opportunists who didn’t get on the Superhighway and have cash to play would like pounce and conquer but why pay a premium. It seems everyone is waiting to get bailed out and so…- this will be a long, long recovery because the laggards are being rewarded at everyone’s expense.

    Its funny – I used to work for someone – in my view a narrow-minded person – who called me “risk adverse” as if it were a detriment to my career. It may have been…but look at us all now – where is the value today ? Risk adverse – why not ?

    America’s dream is not dead – but it may take a little while longer to get there !

  5. Submitted by collegue

    On this one I did not see it. The important thing to understand is that we have a de-leveraging going on and we are not used to that scenario and therefore have little experience of dealing with it. We probably have no-one left alive who can really describe it for us. I think that people have to remember that we have private investors who are on the sidelines because they have no way to assess what is going to happen either. We cannot let the effect of that come to fruition.

    We cannot take the money from them so we have to push it into the system via the toolsets the government has available. This is not ideal just no other way I am afraid. The free market is not showing any leadership except – let everyone eat cake – disappointing but true. The sad part of the last 30 years since Reagan came to power is that we did not get spending under control as we reduced tax revenue from the wealthy.
    This has never worked and by definition cannot work no matter what economists of any color tell you. Paying taxes is part of being patriotic especially if you are wealthy. It is not a deterrent to people trying to make money never has and never will be, No-one lives on a desert island.

    For me most people – the middle classes (you and I) – bare the burden of this. We only need:

    A job
    A better live for our kids (Good Education)
    Well being of our family (Better Health Care)
    Security (A sufficient National Defence)

    Its not that complicated. What we get is:

    Job Insecurity (read trickle up economics)
    Poor Education (read provider rather than consumer focused). Needs reform and more money. It can’t get better with dong both.
    Health Care is a social responsibility paid for via the individual and corporate tax system. The profit system we pay for many times over by whoever decides what we get helps no-one. Think – who benefits from the current system. It is focused also on providers and not consumers (you and me).

    Security.
    An expensive system that is still geared to fighting the Soviet Union and can’t beat the current threats we have. We put our bravest and finest in harms way and don’t provide them with what they need and provide them with poor benefits and in some cases inadequate health care when they return. That’s not how we should treat the people who preserve the freedoms that let me write this e-mail.

    I don’t ask anyone to change their politics, just challenge their thinking and demand better leadership from their politician’s. I want to see ideas from the Republican party that meet ‘our’ needs not an ideology that does not provide answers to the problems we face now and in the future. They can do better and we deserve it. Please ask them.

    I also expect the same from the Democrats, Independents and other great thinkers in our world. We need it.

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