Power and Greed, #4 - AIG

What did I tell you yesterday? The wall street insiders make the rules, and under their rules they can't lose. Only society loses. Larry Summers calls it "outrageous", but where has Larry Summers been for the past 10 years, a period where this kind of stuff has been "par for the course". (A golf-related phrase seems appropriate, don't you think?) I'm talking about the $165 million in bonuses that AIG will be paying, or has paid, under its "contractual obligations".

This stinks! AIG executives should be paying back, not being paid! I don't care whether or not these individuals had anything to do with the divisions that lost all the money by taking crazy risks. I once worked for a large corporation that paid bonuses. If we, as an organization, lost money, nobody got paid. The survival of the organization takes precedence over the enrichment of the individual. This management practice makes everyone sensitive to the risks being taken anywhere in the organization, and it's a good idea. Unfortunately, it's just another good idea that the "financial wizards" at AIG didn't have in mind when they wrote their own contracts.

I told you yesterday that wall street is an insider's game. Got the picture? And, if the U.S. government can't find a way to stop this outrage, something is dead wrong. If nothing else, the congress should pass a special tax law applicable to AIG executives only - a 100% tax on any bonuses paid to them in 2009. That should do the trick. Anybody else like this idea?

Power and Greed, #3

Madoff comes clean...what a guy! After 20 or so years of running a major criminal enterprise, he's remorseful. And, he did it all himself. Not a single one of his family members, including a son who was his firm's "compliance officer", had a clue he wasn't on the up and up. Right. Madoff was a creep, is a creep, and always will be a creep. And it's likely the entire clan is complicit in the largest financial fraud in modern history. I want to see a large wing of a starkly-decorated federal prison prepared for their near-term occupancy, and I bet a whole bunch of investigators are working on putting them there as I write.

The Madoff episode is not an anomaly. It's simply the most visible aspect of the gluttonous financial culture in the Big Apple and environs. It's an insider's game. Insiders run the financial show, they make the rules, they pay the white shoe attorneys, and they can often intimidate or bribe employees of the federal government. Their ridiculous pay and bonuses are "earned" by their ability to keep all the firms and their customers feeding at the same trough. It's a culture that rewards failures with "golden parachutes". How can you lose?

I like capitalism. I think that people who work hard and create value should reap greater rewards than those who don't. What I don't like are "capitalists" who rig the game. And what I hate are the crooks. It's time for tougher regulations, greater scrutiny, harsher penalties for white collar crime, and higher tax rates on the "earned income" of millionaire managers. If these actions could be retroactive for ten years, I'd be a really happy camper.

We Don't Need More of Us

I was just enjoying an RWorld posting about updating our education process. Ron called for increased use of computerized learning tools, more individual attention for students who need specific help, and a new concern for linking education with life opportunities. I couldn't agree more. However, Ron concluded that we might end up with as many teachers as we now have. I don't think so. In fact, I don't think the world needs anywhere near as many of us humans as now exist.

The U. N. just concluded that by 2050 the world will have 9 billion people, up 2.5 billion from the 6.5 billion of us now alive. Can we really let this happen? I hope not.

If you watch such programs as "How It's Made", you know that mass production techniques have eliminated the great majority of jobs that humans once performed. The world will never again be able to provide employment for most humans unless "employment" is redefined. Moreover, the world will need to devise new paradigms for social politics, energy conservation and housing if we are to avoid ruining the environment by overuse. Moving forward on population control makes sense until, and unless, these new paradigms are established.

I predict we will not have 9 million humans on earth until at least the year 2100, if ever. If our population continues to grow at the predicted rate, a combination of catastrophic climate change, disease, and war will take perform the population control we were unwilling to do on our own. That will be very messy.

Phoenix!

Isn't it great that one can slowly shuffle into a big jet in Buffalo, NY, where it's 9 degrees, snowy, and windy, and just a few hours later shuffle off a big jet in Phoenix, AZ, where it's 80 degrees, sunny, and breezy!

I've been reading Jack Finney's classic novel "Time and Again", and its sequel, "From Time to Time". You'd never guess that time travel is involved in these stories. It seems appropriate, then, that going from Buffalo to Phoenix in early March almost seems like time travel; the scenes are radically different. One leaves hooded coats and lined jeans, arrives at shorts and t-shirts.

This morning I drove to Camelback Mountain and climbed it again. It's a hike! The climb is only 1.2 miles, but the elevation gain is over 1,200 feet. Many of the sections are very steep ravines filled with boulders that one must scramble up or down. Each time I go there I meet folks who try it, only to get part way up and realize it's time to turn around before they get hurt. Some silly people slowly make their way up to the top, only to find that coming down is harder and they are all tired out. But the view from the top is worth the climb, and it's a great workout. Take a look for yourself: http://phoenix.gov/PARKS/hikecmlb.html

The economy is not doing well in Phoenix. With the state budget in shambles, there are cutbacks in social services, schools, and even library hours. I understand the number of illegals in Arizona is way down because there isn't much work. Last night, on the news, they said that 35% of mortgages in Phoenix are "upside down", and that 40% will be that way before long. Home prices are down more than 30%. Although there are many well-off people in Phoenix, there are also many working poor. At the middle school where my son teaches eight grade math, almost all students get free breakfast and lunch; he hears there is often no food at home. This is not good.

This afternoon we toured a beautiful Japanese garden in the downtown area. It was perhaps two acres or more, with wonderfully-groomed trees and a large pond filled with large, multi-colored koi fish. A 12-foot waterfall filled the pond. The garden resulted from a "sister cities" project between Phoenix and a Japanese city.

After seeing the garden, we went not far to visit the modern downtown public library. Five stories of luxurious learning! It was open and welcoming, with high ceilings and many comfortable carels. The Good Witch, who is a first class library customer, was amazed by the scale of it all. And, of course, it is free. Learning is priceless!

"Gettting away from it all" is a luxury to be appreciated. It's especially nice to enjoy new surroundings and re-establish family relationships at the same time. Tomorrow we leave #2 son's home to go an hour southeast where we'll invade #3 son's space for a few days. The grandchildren will definitely be spoiled!

And that's all for today.

Writer's Block is Temporarily Suspended

The world has not been making much sense to me lately.

A good friend from the ambulance corps - a very talented and gentle man in his prime - has got sick. I feel powerless and sad. I believe God seldom intervenes in the world, but there are times when I sure do pray for some special consideration.

The economy is really in a mess. The big problem is that so many people are so much "poorer" than they were a year ago. It's not real estate price declines in most places; its the value of long term savings. My IRA is down more than the value of the home I live in. Who can expect me to run around buying stuff? It doesn't matter that the economy won't recover unless people like me start making purchases again. It's a vicious spiral.

More and more investment cheats are being surfaced. Madoff, Stanford Financial, and others. Don't ever forget that our conservative Republican friends thought regulation was bad for business! What they meant was that regulation was bad for their cheating buddies. I can't wait to see who shows up on the list of tax cheats provided by UBS, the Swiss bank of choice for cheaters. Somebody needs to check their party registrations.

I don't want to get started on the bankers and investment brokers. Many of them should be in jail. Yet we still have lots of healthy smaller banks in Western New York...banks where the managers actually had some integrity. Perhaps those guys and gals should be promoted and the Big Apple wise guys given pushbrooms on the night shift and hovels to sleep in during the day.

It's Lent. Time for more ardent prayer and more intentional self-denial. You know, we humans have really not been too bright about managing our society. The world could be a lot better if we paid more attention to the tenets of our faiths and less attention to figuring out new ways to kill each other or get each other's stuff. There would be more than enough for everyone if we got our act together. Unfortunately, the Bible doesn't seem to think we ever will. We can chat more about this, some day on the other side.

In spite of all the bad news, I have to keep remembering that life here in U.S. is still pretty good, relatively speaking. Let's share our blessings and enjoy the things money can't buy.

NY Unions Emulate GM - State May Fail Soon

The public employee unions in New York are following in the footsteps of the UAW. In past years, when New York had plenty of money, these unions won virtually guaranteed employment, fat guaranteed pensions, and healthcare, to say nothing of salaries competitive with or better than private industry. And, New York has more state employees per capita than almost all other states. What a deal!

Now, when New York is on the verge of financial collapse and private industry is on its heels, the unions have a simple answer to the governor's request for some givebacks - "get lost!". Soon many of these selfish brats may be following the UAW's footsteps down the unemployment line, which may be the best gift our state could get from the recession.

Unions are great organizations when they fight for employee rights and correct injustices. However, once in power they become as self-centered and corrupt as those they were formed to fight. It's clear that "big labor" in New York feels the state exists for the benefit of public employees rather than the opposite. Consequently, our taxes are sky-high and industry has no incentive to locate in our state. People are moving south in droves to escape the high taxes caused largely by having too many state employees who make too much money.

It appears the only way for New York's government to regain control over its employees is to declare bankruptcy, just like GM is likely to do before long. This will allow the state to re-open all its labor contracts and pension obligations. A sad end for a storied labor movement that has outgrown its usefulness.

Republicans Turn Over New Leaf!

"Obama is spending us into bankruptcy!" "The stimulus is full of pork!" Those are the cries of the republicans in the house of representatives. I guess they've got religion now that they're out of power. Perhaps we need a quick review of their performance - the performance of these same people during the six years they were in power with President Bush, 2000-2006.

In short, these guys set new records for pork and new records for increasing the national debt. Not just by a little, but by a lot!

These whores have no legs to stand on! Who cares how they voted on the stimulus!

Do you hear these facts on the national news? I don't. These people should be flayed in public, and I can't figure out why the media is letting them off the hook.

Do I love the stimulus package? I don't know. All I do know is that these republicans should have their mouths taped shut for at least two years. Maybe their other orifices as well...

Second Thoughts about the Culprits

The Good Witch talked with an old friend from far away today, a lady who is now elderly but active and who has had a good life. During the conversation her friend, who lives in North Carolina, mentioned that she had invested her life savings in Wachovia Bank stock. She has lost it all - $675,000. The good news is that her husband has some money, so they are not destitute. Is this just, as they say in golf, "the rub of the green"? I think not. Bank stock should not tank. The bad guys are getting away with financial murder.

We know what brought down the world economy. People, both individuals and officers in corporations and privately held companies, participated in a giant scam that needed no organization to succeed. The idea was simple: create and sell financial instruments that were worth much less than they were purported to be worth. Shady mortage brokers and bankers gave mortages they should not have given. Companies put together packages of these sub-prime mortgages, rating companies rated them as "investment grade", and brokers sold them to unsuspecting clients. The original offering of mortages to unqualified buyers fueled the real estate boom that went bust, and an unbelievable amount of this junk debt has been written down or written off.

Who did this to our economy? It's not that hard to find out. We know the mortgage brokers who produced the junk mortgages, we know the companies who packaged and sold them, and we know the rating agencies who mis-rated them. It's not all that many people, really. And, I bet most of them are doing really well right now. After all, they were the ones "in the know". They wouldn't be crazy enough to invest in the kind of junk they were producing or selling. While millions of unsuspecting citizens like the Good Witch's friend have seen their savings or retirements melt down, the majority of the perpetrators are likely living large. Why are we not raising hell?

Nobody can convince me that the heads of these banks, like Washington Mutual and Wachovia, didn't know their lending practices were way, way out of bounds. Nobody can convince me that sellers of these debt packages, like Lehman Brothers, didn't know they could be time bombs. And, I've seen evidence that government regulators knew the danger posed by the housing bubble and the junk debts. The only conclusion is that government can't go after the bad guys because government was a major enabler...government just watched this real estate debt train careen down the tracks, and government collected plenty of tax revenue on transactions with no real substance. I'm outraged!

There is no way to put Humpty Dumpty back together again. The economy is in a shambles, and it will be awhile until it turns around. Lots of people will suffer a lot because of the greed and inaction I've described above. But, doesn't it seem strange that our elected representatives are not crying out for the scalps of those who did this to all of us? Doesn't it seem strange that the heads of most financial institutions who made terrible decisions are still in their jobs? It seems to me that somewhere in our millions of pages of federal laws, there ought to be a few that would apply to the scum whose greed put us in this giant pickle. Where the heck is a good lawyer when you really need one?

Musings on the Inauguration

Watching the inauguration today, I couldn't help but think back to when I stood in front of the capital in 2004, protesting the Iraq war. Thousands (only) of us bussed to Washington in the night, arriving early in the morning and then taking the subway into the capital. We protested for a few hours, listened to speeches by all the usual suspects, had a beer and a sandwich at a nice local eatery, and then started out on the long way home. It was a long and hard day, but I felt I had to have my say in the only place where my opinion might make a difference. I did have my say, but I didn't make a difference. Being right didn't count much when Bush and Cheney held the power.

Today, I was not in front of the capital but in front of my TV, enjoying every aspect of the formal inauguration ceremony: Rick Warren, the quartet, the poet and her wonderful poem, Aretha Franklin, the botched oath (hilarious!), Obama's down-to-earth but powerful and inspiring speech, and Rev. Lowery's poignant benediction. I give the event a 9.9! So what if the security was incapable of moving enough people into viewing position...this event was just too big to manage.

I just watched a clip of Obama's walk down Constitution Avenue with Michelle. Yes, maybe it was not the smartest thing, but it made a statement about courage and about accessibility. For the next few years, Obama will need to be close to the people in order to keep their faith and trust during hard times. He'll also need their support to keep the congress (representatives of the special interests) in line. There will be some danger in that, as well.

Obama was gracious to his predecessor, a man who will have to live with his disgrace until he dies. Bush was a man apparently oblivious to his inability to comprehend the requirements of his job. He's said that he'll let history judge him; it will be brutal. Already the European press has administered the coup de gras! I will never be able to forgive him or his behind-the-scenes masters for the carnage they inflicted on our country and the world. But at last Bush's power is gone, and good riddance!

The next few years are going to be really tough. It will be worse, maybe much worse, before it gets better. The level of sacrifice required of Americans will be far greater than most can imagine. But, the forces of progress cannot be impeded for too long. Perhaps a major adjustment in our way of life is in store for us, which would not be all bad: our culture has got too attached to having things with little true value. I can't wait to hear Obama's call for us to get our heads on straight in many aspects of life, especially in the areas of people getting serious about education, civil behavior, and contributing to the common good. If anyone can use the bully pulpit to advantage, it's Barack. Good luck to you, young man! (I have one son older than Obama, and another who was 47 today).

As for me, I don't expect to make any more protest trips to Washington. I will spend my time trying to help Barack Obama and our country succeed. I'm just one person, but I will put my shoulder to the wheel, I will make sacrifices for the common good, and I will encourage others to do the same. I look forward to the challenge, for without challenge life is empty. Let's get busy, let's give Obama a chance, let's not pay attention to the nay-sayers and the bitter ones, and let's get the 21st century moving in the right direction again. If not us, who?

Increase the Fuel Tax

There's no doubt about it. We decide on a day to day basis what is best for us. When things we want are less expensive, we buy or use more of them. When things get more expensive, we use less of them and switch our preferences to good things that are relatively cheaper. This concept is called "marginal utility", if my memory of economics is correct.

Gasoline is now much cheaper than it was six months ago. Six months ago we rationed our travel, stepped lightly on the gas pedal, and dreamed of owning a Prius (but nobody had any to sell). Now, Toyota dealers have 56 days of supply and we hop in the car at the slightest provocation.

Six months ago everyone was talking about alternative energy, and investments in it were booming. Now, there's a big question regarding whether alternative energy can be cost-competitive with oil. Windmill farms and solar arrays may be planned, but will they be built? Not as long as oil is cheaper than their output.

So, we need to change the cost equasion so that that the price of oil doesn't go through the roof again. The way to do that is to replace the need for energy from oil by producing energy from alternative sources. But how will the investment in alternative energy be funded if private investment dries up? A fuel tax increase makes the most sense, say many economists. I agree.

We should start by raising the federal tax on motor fuels by $.50 per gallon, with the revenue going into construction of proven alternative energy sources and utilities such as solar arrays, windmill farms, and transmission lines. The government would own the constructed items and bid out their operation to private companies. When the price of oil rises (and it will), to the point where these items have a value greater than their cost, the government should put them up for bid and sell them.

This rather painful tax would have several positive effects. First, it would reduce current consumption, thereby tending to keep the price of oil lower than it would have been and reducing carbon emissions. Second, it would enable construction of alternative sources at a time when the economy needs to generate jobs. Third, when the new sources came on line, they would put downward pressure on the price of oil. Fourth, the alternative energy would provide some additional security when oil prices rise significantly or oil supplies are threatened. Lastly, these sources would provide new clean electrical power to fuel the new generation of plug-in hybrid vehicles.

If an additional fuel tax is proposed, be "selfish" - support it! It's one more step toward energy independence and a stick in the eye of global warming.

Looking Way Back to November 4th

Wow! It seems like a long time since that black guy won 365 electoral votes and the presidency. The rough and tumble of politics is a daily thing, so the guy who is not even president yet seems like someone we've known for a long time. People of all stripes are already sniping at him. What a job! Fortunately, Obama seems up to it. We'll see.

Back home, we got a new democrat in our congressional district - Eric Massa, a really bright ex-Navy officer who beat a rural republican lawyer for the job. Massa, who seemed like a very pragmatic guy when I met him on his first try for the job, has now become a full-fledged northern liberal democrat who can't say anything bad about a union, even though the public employee and teachers unions have ruined New York. There is a litmus test, no question about it. I'm hoping Obama has more backbone. But don't get me wrong...I like unions until they become more important than the companies or governments that they supposedly work for.

My Obama t-shirt came in the mail the other day. I'm still in his court. I like his rather centrist cabinet and his choices for other key positions. We need smart people who can get things done, more than we need ideologues from the right or the left. The latter provide a conscience, the former do the work. And I'm happy that the Obama kids are in a famous private school instead of the crappy schools of Washington, DC. Maybe someday the rich will not have to make such choices, but that day is far off.

But most of all, I'm happy that John McCain (the Impetuous) and Sarah Palin (the Clueless) are not leading us. Already the new president will have to deal with a middle east in chaos and an economy in shambles. Who knows what perils lie ahead? We need cool and smart people in charge if we are to weather the storm of the next couple years. I've learned that even the best leaders should be overjoyed if 75% of their decisions turn out to be right, so we can't expect perfection. With McCain and Palin, my guess is that somebody other than either of them would already be running the country from the sidelines...and that somebody would be a right-wing nutcase and his buddies. You know what that would result in, since we've had that for eight long years.

Obama should have his chance to lead. Congressional leadership, even during the past few weeks, has again proved its ineptness. For example, congress passed the bailout program and is now bitching constantly about "what happened to the $700 billion". Well, they passed the law! Whatever happened, happened on their watch. If they were smarter than Paulson, they should have come up with their own plan. Frankly, when times are at their worst, strong leaders are needed the most. Committees never won a battle.

Since I'm roving all over the place tonight, I'll just finish with my latest concept proposal. Our departing president will be building his own library before too long, funded by all the war profiteers and oil magnates that prospered during his disastrous term. Given the sack of shit that he's left on almost every American porch, we should honor him with what he really deserves - a Bush memorial library funded by average Americans. This library would have the goal of collecting and evaluating every tidbit of information about his background and his blunders, so that he is never forgotten and Americans can forever learn from him "how not to govern". Where can I send my contribution?

Israel!

So, you thought I was going to beat up on Israel for its beating up on Hamas? Not me. I've given up. There's no use losing sleep over people who will never change their ways - and that's both Israel and its bitter enemies. It's a fight to the death, and this is just another skirmish on the way.

In my view, the only way this will ever end is for Israel to tell its Arab neighbors that Armageddon is here: "fix our security permanently or we are going to go out with a bang and take you all with us!" That outcome is probably some years down the road, but I see it coming. In the meantime, there will be lots of these Israeli forays against those who provoke it repeatedly or in one-time successful operations.

Is this a good situation? No. Ugly. Can it be changed? No. Neither side will budge. Hamas (maybe) believes demographics and world opinion are on its side, but, then again, maybe these guys are just insanely certain that they can ultimatly win without losing everything. Israel will do whatever it takes to save itself, even to the extent of using its atomic weapons in a final act of vengeance.

The only solution? An imposed solution that neither party would be happy with. Perhaps the civilized world will, at some point, feel the danger is so great that such an imposition would be implemented.

There are lots of places where impositions sound good (Darfur, perhaps?), but none may be so important in the long run as in the middle east, where countries like Israel and Iran can cause chaos far beyond their normal stature in the world. Anyone want to bet how long it takes before this happens? It's Israel's only hope.

A Peaceful World

The news has been pretty rough lately. A bunch of guys trash Mumbai and kill lots of people, so India and Pakistan mobilize some armed forces. Rockets, jets, and ships send screaming hot metal into Israelis and Palestinians whose lives then end. Speedboats threaten ships in the Gulf of Aden, and some unlucky people are kidnapped for ransom. Russia threatens to turn off Ukraine's gas. It goes on and on. Will we ever have a peaceful world?

I heard an interesting discussion on NPR the other day. A former drug addict, who has written a book about accountability, rather convincingly made the case that people have no excuse for the adverse consequences of their own actions. She dispassionately tore apart the "victim-oriented" argument that some make - that, were it not for life experiences beyond an individual's control, the person would not have committed the destructive act. For example, the idea that a drunk driver who ran over a child is less accountable because he drank to excess because he had lost his job that day. Her argument was that such rationalization can ultimately eliminate accountability altogether. I agree.

One of the most powerful admonitions in the Bhagavad Gita is the instruction to make each decision based on the information immediately pertinent, and then go on without attachment to the results. In other words, to decide what action is likely to have the most "good" or "positive" result, and simply do it; repeat endlessly. This is accountability on steroids! Under this rule, almost any action is permitted under certain circumstances - even the action of killing someone - but selfish actions that generate a net "negative" consequence are proscribed. We're seeing far too many of the latter, these days. But in truth these days are just normal days in our imperfect world.

Recently I've been ruminating about the fabulous discoveries of our time, and about the discoveries that seem just around the corner. We routinely send people into space, we split and recombine genes, we communicate immediately with people around the world, and we collide protons at close to the speed of light just to see what's in the debris. If we can do all these things, why can't we make rapid progress toward creating a peaceful world? Isn't a peaceful world the dream of people everywhere? Perhaps the idea of accountability is the key to establishing some inertia in that direction.

I know what you're thinking...can this writer really be as naive as he sounds? Yes, and no. I believe, for example, that people make every decision based on what they think is best for them at the moment. The drunk driver, for example, made a conscious decision to get drunk in order to relieve the pain of losing his job. The dead Mumbai terrorist was committed to either exacting revenge or forwarding an agenda that would benefit his fundamentalist Muslim culture. Virtually every destructive act has been done by someone who saw it as a "positive", at least at the moment the deed was done. That's what needs to change.

One thing I like about Obama is his willingness to speak clearly about accountability, his willingness to set the bar high. That's what change is all about: setting a new standard and pushing through the obstacles that would nullify it. The baggage of history, the pernicious cancer of selfishness, and the often daunting complexity of evaluating competing "positives" stand firmly in the way of our achieving a peaceful world. Yet, at this beginning of another year, I hope that Obama and each of us will do our part to explain the world as it is in each moment, to perform or support the immediate actions which forward the "good", and thereby take us step by step closer to a peaceful world.

Hunkering Down

The stock market may be making some positive noises right now, but 2009 looks like a year of hunkering down. Those who have a secure job should be praying their thanks every morning and night. Many are suffering, and it's going to be awhile before smiles are the norm for most people.

One of my sons, a very competent guy, is going to be out of a job soon. That's the price of working in Michigan these days. Fortunately for him, he's marketable. For most in his locale, the outlook is grim.

Some people still have cash. Contributions to my volunteer ambulance corps in a wealthy suburb have far exceeded my expectations. Lots of wealthy people are also good people, contrary to some popular wisdom.

I'm doing some paring of non-essentials for 2009, since my IRA is still down over 20% from last year. And yes, I say thank-you morning and night for the privilege of not having to worry.

I took a whirlwind trip this week to North Carolina where I and my four younger siblings spent time together as a group with my 87 year old mother. First time in many years for a group love fest! Mom is perky, very healthy, and painting up a storm. Everyone should hope for such a wonderful autumn of life.

Since I do financial work for a bunch of non-profits, December and January are months from hell. Pardon my stress! Got to get some exercise during the short interludes of not being crazy!

Did two ambulance calls this afternoon...unhealthy people get old fast, and younger people can lose their health for purely psychological reasons. Lots of people could get a good education in life by spending a few hundred hours on an ambulance crew.

Life is short at best. Eternity is a long, long time. I'm betting on God. If I'm smart enough to comprehend the creator, perhaps the creator is kind enough to let me have a bit more information about what this was all about. You've got to admit the universe and everything in it is pretty amazing.

All the best to you and everyone! Let's hope that Rodney King's plea gets a bit more action in 2009.