I actually have a serious post ready to go, but it’s serious enough to not want it posted on April Fool’s Day since I don’t want the slightest doubt about whether or not I am really serious. Look for A MESSAGE TO THE RICH before the weekend.



[UPDATE: There is a chance that A MESSAGE TO THE RICH will also run simultaneously elsewhere… I’m holding it for another day or two until I get an answer] 


Until then, I have a few thoughts – questions, really – that might be used to stimulate some comments.


As usual, I have learned a great deal from the comments – especially regarding TONE DEAF. I was not aware – and I try to keep my ear close to the ground – of just how unfair an attack on the current AIG staff seems, given that (unknown to me previously) these are not in fact the same people that destroyed the company, but rather those hired to try and save it and who are sacrificing a lot to do so.


The fact that this is not common knowledge, even to someone with very good access to alternative media sources, tells me two things. First, I am again stunned at how one-sided the media coverage is, and second, I need to find a way to stop being stunned at how biased the news coverage is.


But the central fact remains: somehow a company was run into the kind of bankruptcy that requires a massive federal bailout. Somehow, a combination of government intervention into the marketplace, coupled with some of the very poor decision making and risk assessment that drives all bubble markets, sent the greatest wealth creation engine in the history of the world into a state of near ruin… not from the economic costs, which, though painful, could have been corrected by the operation of market forces. No, this failure was monumental enough to enable the election of the kind of government we have seen perhaps only once before, with the New Deal, and perhaps never before in the history of this nation. This government intervention will not resolve itself, as do all market corrections. This kudzu may never be cleared away.



So my question is, not who, but rather what has failed here?


My first thought is that the Boards of Directors have failed. My understanding is that the entire purpose of having a Board of Directors was to act as a circuit-breaker on irrational or overly-risky behavior. I have NO PROBLEM WHATSOVER with a successful CEO taking tens of millions of dollars in compensation… as long as that compensation is based on success. But for executives to be rewarded with millions in bonuses for driving their companies into bankruptcy? Where the hell are the Boards in all this? Who authorizes these rewards for failure? I expect the government to reward failure. I expected better from businessmen.


That’s the small picture.


The big picture seems to be this: over time, certain companies have grown so powerful, and have become so entwined in campaign donations, that they have been able to achieve a symbiosis with what should be their natural enemies: the government. It is this intersection of the public and the private that seems to have gotten us into this mess wherever we look.


Where large corporations have enough influence to achieve government subsidies, or guarantees that void the risk/reward relationship, bad things seem to happen – very bad things. Not the least of these is the fact that these subsidized giants use those subsidies as an unfair competitive advantage over newer, smaller, lighter companies that in the normal scheme of things would eventually have taken over their market share by providing better products at lower prices.



The meta-picture seems to be this: if capitalism does not police itself, it will be policed by people to whom policing is not a bug but a feature. Ask Wall Street traders if they would prefer to work in a world without regulation and they will recoil in horror. You can’t play any game without rules.


Somehow – and I know it has to do with this unholy union between government and commerce – the rules went by the board, and sound judgment, too. How many small banks went against the tide of profits and refused these debt derivatives as unsound, and therefore remain sound today? How did they manage to make wise decisions, while the biggest and – just ask them – brightest minds dove into this rabbit hole?


I am thinking deeply that it has to do with a fundamental morality. But the fact is, I simply don’t know. What do you think?


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