I am sure that everyone has been following Wall Street: lending institutions going belly up on a daily basis, Feds on the alert mode, and the scary scene of an economy falling into the unknown. This is one of the longest bear-market periods recorded in history, practically since 2001. The economy is on its knees. The indicators (Dow, Nasdaq and S&P 500) are swinging back and forth like reeds in the storm, a record 800 points the other day, thus allowing speculation over speculation, like termites eating termite waste. Meanwhile, gigantic financial institutions are in serious trouble, and, while the dim-witted continue to sustain that our economy is solid, evidence is pointing to the contrary. As, in perfect Russian style, I have been in line for half an hour to get gas at over $4.00 a gallon, the absence of a healthy energy policy threatens further price-increases and the collapse of the economy hangs like a dark cloud at the horizon of what used to be one of the most coveted assets of this country: the hope in a better future. And what are the Feds offering us to get out of this mess? A giveaway plan to bail out irresponsible institutions. Great!
But let’s back up a few years when fiscal irresponsibility first entered the White House. In my records – beware elephants! I have the memory of an elephant – before Ronald Reagan started a saga of reckless spending republican administrations, you would a have equity stake the moment you purchase anything, in other words, you would buy value. Even during Mr. Reagan’s giddy and optimistic administration, the economy was so strong that the effects of deregulation would not be seen for another decade and a half. He was milking the cow more than a cow can produce. But it took more of such presidencies, and eventually, the least gifted president of the Reagan’s chronicle to squander a huge budget surplus, waste our national wealth in made-up conflicts, all in order to show muscle (excuse me) instead of balls, export democracy to primitives fresh out of the cave, and plunge our nation in the biggest financial hole in its history. Please, don’t let me pull out the numbers here. I can cover you with sound statistics.
Two and a half decades after Mr. Reagan proved that an actor can make it all the way up to the White House, our national debt is bigger than life, and at the individual level, we are so leveraged out, buying everything on plastic money, borrowing 100% of the equity in our home, using up all our savings, all our margins, all our lines of credit, that it is not even believable that at the end of our lives we will end up with anything worth mentioning but debt. You may ask yourself, what is wrong with optimism and spending? Well nothing really, unless you are spending on borrowed money. Spending money you have not earned is like mortgaging your future. Maybe a credit crunch is necessary, after all, to slow all of us down. Our government is not doing better than us: it runs complimentary bills, oblivious that the economy is about to go belly up. What is going to happen to jobs when no one buys new cars or homes or armies of people get laid off? I know that I am not outlining the profile of every one of you here, but this behavior of spending, of changing everything every five years and sending your slightly used stuff to the dump, including demolishing perfectly fine houses to build ostentatious mansions, is a national syndrome of disturbing proportions, and unless we do something about it, this consumer’s head-in-the-sand mentality is about to meet its nemesis. Wisdom starts from the consumer, who by the way is also a voter, delegating a government to take care of the common good. Remember it, this November.
Incidentally, I see some side benefits in the bankruptcy of unsophisticated builders and developers. Their “pave the planet with concrete” motto does not account for the law of supply and demand, except when it is too late. What do developers know about the economy or quality of living, when their God is the bottom line? They built absolute horrors outside of suburbia where you must commute to go to, and in town, they overbuilt cheap condominiums, flooding the real estate market with property no one needs. It is good to the city that they are out of the picture. They will return, believe me, but this process has rid the market of the large majority of them. I also see benefits in the increasing cost of gas, the main one being that the city will fold unto itself and gather around its center, therefore greatly reducing commuting, which squanders both gasoline and time. This may happen everywhere in the U.S., thus mitigating urban sprawl, which is a cancer to the land. This will force some folks to consider living next to folks different than themselves, which may improve their perspective. Unfortunately, the increasing cost of energy affects everything that needs to be transported, including food and goods.
But even if you have not suffered significant losses, or have deftly maneuvered around them like I did, financial anxiety takes the oxygen out of the air, transforms you into a neurotic money-machine, makes you forget about the important things in life, even ages you faster. Any raised hands in the background? Apprehension is a killer, twisting into submission the mood of an entire nation. Now, as our future has been mortgaged and obscured by rampant financial malpractice and asset mismanagement and by an economy based on credit and thin air, we are witnessing an unprecedented rescue operation at the Federal level, for problems caused by deregulation, myopia, speculation and sheer greed. But how could a hole of this size be concealed for so long? And why are we rushing to cover it? Panic? Why? Is there more concealed? Why should we trust the Feds with their laissez-faire, when the Feds failed to prevent greedy lenders and financial operators from defrauding us of our savings and retirement funds? Are the Feds discharged by the fact that everyone is involved in this game? What control has the public against deceitful lending? Permitting banks to ramp up mortgage rates to 9.5% in a 5% environment is criminal. And what about 27% to credit card companies, called “default rate”, triggered not at default but at your first missed payment. One payment – read the fine print! That’s called usury – used to be illegal. Now crooks operate without restrictions. One of them, American Express practices it in your face, charging you $250 a year to hold a 3 cents piece of plastic in your wallet. This is what the Feds permit, among other “freedoms” of action ironically called “de-regulation.” But basing mutual funds on weak assets has been a common practice, known to everyone in the business, from home buyers to real estate agents, and from mortgage brokers to mutual fund managers. The lender’s bet was that the market would grow, therefore building equity above the underlying note. This happens in cycles, except when menopause hits the market. Some men, especially some presidents, have the ability to mess up periods. This may be why it is called men-o-pause. So – you may see my point now – are the so-called guardians suddenly to be trusted on the umpteenth happy-go-lucky operation? Small wonder the House rejected their proposal.
But the truth is always in grey tones, whereas I formulated my riddle in black and white. In reality the Feds had little idea of what was happening behind their back, or worse, they were hiding their head in the sand – neither one of which makes them look like a whiz, but at the least does not make them the bandits. So, why would the Feds rescue the bandits for free? Because of panic? Or because of empathy to protected species? Granted that our government does not have the capability of controlling financial institutions the size of AIG, it should be careful setting such precedents – a bail out simply endorses bad behavior. The fact is that, below the Feds bleak radar, wickedly sophisticated speculations (beyond the layman’s comprehension, and these feds are hardly above layman level) over stocks, bonds, and securities; illegal short sales, cooked books (ironically called creative financing), rampant mismanagement of assets supposedly set up for social security have created an economy largely based on assets of unquantifiable value. The lending and investment system has stretched these assets far beyond their natural limits and passed them down as gold to the gullible – ultimately the consumer. When financial institutions created certificates of investment out of trash securities, it was like printing money in order to solve the national debt. Wonder how they have been re-named toxic assets? If there was little equity to begin with on the first round – at the time Mr. and Mrs. Jones mortgage was granted – try to imagine what happened on the seventh passage, when there are retirement funds and bank securities involved. This is why the ripple effect affected everything. The recent peaking of the value of gold should give you a fair indication of where notes and certificates are nowadays. In all this, the dollar itself is risking to be severely downgraded. This is the biggest scare.
Now, on top of the evaporation of our equity, the consumers are called up to pay – please, notice, without their permission – the debt of private institutions and various insatiable blood-suckers, such as insurance companies and shady lenders – all river crocodiles, waiting for one failed payment to take over your property, or your first claim to ramp up your premium. We live among such pea-brained operators, who are ready to spend $250,000 on a foreclosure rather than offering you better rates and save your home together with their reptilian skin. They deserve to go bankrupt and become purses and boots. I will pop a bottle when I see them closing doors – bunch of narrow-minded parasites! Do we rescue them for free? How about over our dead bodies, folks? How about never? And, how in hell did losses of privately owned companies suddenly become public? Watch out, this dirty trickery is happening under your watchful eye. This is your money! Of course, the current bail-out plan – a behemoth 700 billion, dwarfing any previous government expense – is being presented to us like the war against Iraq, an inescapable reality without which we are all in extreme danger or doing more poorly than ever before. You heard that story before. Well, you can’t possibly expect a different pitch from a dumb pitcher, can you? Just don’t fall into the same trap twice. Here is why. When you are bleeding you don’t take aspiring, you stop the bleeding first, then numb yourself. And if you know where the bleeding is – don’t ask me to spell it out for you.
I agree with our Wall Street analysts about one fundamental aspect of the story: the storm is gigantic. We have just seen the outer fringes of it. Of course, the feds swear that this plan will solve the problem. In reality, the size of the core is largely unknown, and it can wipe us out. The reason is simple: you cannot value notes and securities based on real estate assets until you know the value of the underlying asset. And since real estate is overvalued and largely overbuilt, the reaches of the storm remain unknown until the real estate market sells its gigantic inventory, settles and stabilizes itself. With the current inventory and credit restrictions, give it a minimum of seven years, perhaps ten. So, what do we do meanwhile? Do we let AIG fall conflagrate and drag down all pension funds? Of course not. Do we privatize publicly owned companies? It is an idea. But how do we hold wrongdoers accountable and control them after they take our money? How to we protect public interest? Forgive me if I am visiting some of these issues in the notorious role of the straight shooter you are well accustomed to. You can sue me later. But if you are politically sensitive, you may avoid the torture by bailing out now, like AIG did. Rest assured, you won’t be held accountable. It looks like Uncle Sam pardons everybody.
But if you are as inquisitive as I am and less than convinced by the poor explanations of our administration when questioned about the plan, you may be asking yourselves if there are alternatives to the plan. I am no economist, but I happen to know the ABC of sound economy, and that translates in a few elementary principles: first, you always look at the law of supply and demand before you buy, build, sell or do anything; second, you always figure out how to produce value and equity before you start spending. Try also, third: spend less than what you earn. Fourth, you make sure that whomever borrows money, pays some interest on it. Four basic principles, apparently out of fashion. In fact, none of the former has been applied by our government, on top of which the largest spending bill in history is about to be voted without a shred of accountability. Once again, this is your tax money folks!
Of course, this crisis did not happen in one day and our unaccountable administration has plenty of reasons to tell you that it is not its fault. Yet, Bill Clinton handed out to this administration a budget in excess of 400 billion dollars. Now, thanks to reckless spending we are a few trillions in the negative. That is trillions! Fine, I agree that the root of the problem, which has to do with deregulation (see Mr. Reagan, but also policies set by the Carter administration) is older and three decades in the make. But the current administration, in the attempt to sell more optimism in times of slim pickings, rode the freewheel of the brilliant real estate market of the nineties, under the wrong assumption that the market can continue grow at the same rate, all while the profits were squandered abroad in inconclusive parades of our military power. Even without costly wars we would feel the crunch. The primary engine of the current debacle is the greed of unregulated lenders basing mortgages on thin air, the stupidity of the public enticed to borrow 110% of his equity, and the recklessness of behemoth institutions, like Freddy Mac and Fanny Mae, purchasing risky notes called “sub-prime”, repackaging them and selling them to mutual and retirement funds, under the illusion that there are backed. Even European banks bought them, and now they are dying like fruit flies. Forget our national debt – it looks like an ant in comparison to this hole – we are talking about over eleven trillions of dollars in notes and securities based on smoke. Seven hundred billion dollars are to cover the emergency, not to solve the problem. Every banking institution you know and have been banking with is involved in this game in some fashion, and is therefore in serious trouble.
Allow me to give you a small prescription: make sure that your savings are well insured, do not keep too much money with a single financial institution, and keep a minimal amount of cash in the safe at home! The reason: banks are running out of liquidity, and although the current return of the general public to savings (a.k.a. traditional banking) may reverse this scary conjuncture, banks may soon not be able to supply currency. Yes, your savings are federally insured, but the Feds are running out of money too and banks don’t know where to go, since your deposits are the primary source of their cash. Don’t wait until the Tillie is going to print out: sorry, we’re out of cash! Start saving some money, and don’t stash that one-month reserve under the mattress. If you don’t have a safe, buy one of those books that has a secret compartment. Remember, thieves don’t look at books; nor do the Feds. It’s a fashion! So, you are safe both ways. This safety maneuver won’t hurt any bank, as cutting spending and getting a little bit of cash out of circulation ultimately causes deflation and increases the value of our currency.
Now, how did we get into this mess? Well, without regulatory codes and no one watching the gate of our economy, it is no surprise that this got so far along. Greed rather than good sense runs this nation. What is truly unbelievable is seeing idiocy and lack of perspective and fiscal accountability piled up to damage. Based on what I heard last week, it is an established fact that we do not learn from history. We did not learn anything from the great depression. We did not learn a lesson from Vietnam. We did not learn from the S&L scandal, and we are not learning from the recent collapse of Enron, Lehman Brothers, or anyone else following. We keep repeating the same mistakes, just under new politicians who console us with the same soothing words: we are winning, everything is fine, we will succeed! They sound like a famous Italian dictator, except at the least he was financially responsible.
I claim that the 700 billion bail-out plan is financial suicide, although, like for smoke or alcohol, it is a slow form of suicide – a civil way to put off the end – coincidentally, the same method that Italy adopted thirty years ago to solve a severe cash crunch. Italy has run on credit and national debt ever since.
But if our Federal Government, the Treasury Department, the World Bank, the IMF and such financial authorities are wandering in the dark; if they are resorting to the illogical, if they are making history with a rescue operation of privately-owned companies at the expense of the public, then you can trust yours truly that the situation is far more complex and hard to comprehend than anyone could ever imagine. This conjuncture is also intricately connected at the international level. Let me give you a hint: John is borrowing money to buy the house of his dreams; a lending institution is giving John an adjustable mortgage at 6.5% interest (he will default when the interest raises to 9.5%, but that is a different story). The note is sold by the originating bank to a grouping mortgage institution for a small fee, then to Fannie Mae, for another fee. Fanny Mae puts it in a huge pool of similar assets, then sells securities against it to large financial management institutions, the so called “ Edge Funds” and “Mutual Funds” – a blend of various forms of securities, supposedly spreading out risk and making an investment safe and weatherproof. While the value of these securities was in the beginning in the hands of an unsophisticated, average Joe – your mortgage broker, your lending agent or his red-neck appraiser – please notice that they all have little more than elementary school education and a six month training – and while the value of the house was pumped up in order for them to procure a mortgage to John, earn a fee, run with the money and leave John totally mortgaged, i.e. without equity, often without his knowledge, the market has not grown a bit to compensate for the balloon affect of the air pumped in the system. Meanwhile those securities without collateral are set as collateral against other assets. Where are these dollars going? Not back to our treasury, but into the pocket of individual stock investors. Eventually the bubble burst and the market deflated, losing in average 30% and in certain cases 40% of its value. It permeated everywhere. For a sample, imagine the position of a mortgagee under a typical 90% LTV (loan to value) mortgage. For the first time, holding a mortgage is like buying a car. You drive it out of the lot and it is worth less than your note against it. Meanwhile, China and India, who have exceeding amount of dollars earned by out-sourced services and labor they offer to us at prices we cannot beat or even come close to, are purchasing securities left and right in our market, in such a manner as not to hold onto tons of foreign currency. Remember, assets are always better than currency, and China, India and the Arab Emirates own trillions of dollars of our securities. This is largely due to the cost of labor in America, but also to the fact that people would starve in this country rather than lifting a finger for less than $12 an hour, but then hates the Mexicans who do a great job for that amount. Do you see how complex is this matter? But this process is dramatically shifting the ownership-share of these assets, bearing a primary effect on John: it devalues his currency and his national production. Now, as the equity of these securities is vaporizing and the companies holding them are going bankrupt, the Feds are using John’s tax money to rescue these companies, without offering John a stake in those companies, future revenues, or any form of repayment guarantee. Let’s not confuse here government ownership with public ownership, otherwise there would no need for a U.S. Constitution to protect the individual against the government. Do you get my point?
Coincidentally, the infusion of foreign capital in our economy makes vital for foreign economies to keep America afloat. All markets are interconnected. America buys services and exports technology and know-how to them. America also purchases oil for its consumption. Foreign profits are partially reinvested in America, and the world goes around. This interdependence is a great safety mechanism, well known by our Wall Street speculators. It gives them margins of error they could never dream of. Our current administration is the champion of fiscal irresponsibility, resting its bet on a slim and absurd equation that “ by feeding the large fish, the money will trickle down to the small fish.” Well, it just doesn’t. It remains in the big fish’s pockets, duh! But let’s not bash big fish either. They know how to eat small fish and get fat: good for them! Fat fish makes tasty food, especially char grilled, and fat fish is going belly up. But food-chain humor aside, this administration is overturning all the good values that have made this country. Even old republicans know that this administration is a mutant that does not need anyone’s pronouncement to go down in history as a fabrication, a nightmare and a political oddity. Bear in mind readers, I have no qualms with the Republican ideals of our forefathers. They rest at the core of my beliefs. Notice that the republicans rejected the bail-out plan last week, and this makes me believe that responsible men of solid principle are still there. God bless them! What I have problems with is the mutant’s unaccountability, blindness, trickery, callousness and profound ignorance.
But I hope that this article goes beyond a protest against the greed and corruption of our institutions, beyond the inept and inefficient use of our national resources. What is truly troubling is the lack of perspective, the corruption of centuries-old principles and the distortion of reality of this administration – that one especially!
Instead of treasuring our amazing real estate pool by mandating all the banks to lower the rates and return foreclosed properties to their original owners; instead of relying on our intelligence and technology, we are devising bail-out plans and squandering more assets in a reckless fashion. It reminds me of the Romans before the fall of their empire. Decadence comes from indulgence in lifestyles and rates of growth no longer affordable. It is a cute form of ignoring reality. Every wealthy civilization eventually runs into it. Watch the Arabs and China – they are next! Our administration is sparing no department with its poor judgment. This article is indirectly about you, for we are the ultimate guardians of the Constitution and we are allowing these school drop-outs to perpetrate their cluelessness!
Unfortunately the gullibility of the public who followed the advice of greedy lenders to get the house of its dreams makes the public a partner in crime. Bad but inevitable. “Who is going to like a house he can’t afford?” You know who said that? Thomas Jefferson. That’s right! Exploiting the dreams of the public is understandable. But financing with public money private institutions that have earned millions behind the public back is perverse. Modern politicians seem prone to sell tickets that by pass ethics and common sense. The current federal maneuver to make the average taxpayer pay for the blunders and irresponsibility of a few predacious companies is unacceptable! The plan needs profound revisions. The ethical riddle laying at the basis of the current impasse can be reduced to a single issue: lack of accountability. The public is demanding it. I hope that the Houses will nail the Feds and follow a responsible course of action.
I have my own version of what happened to accountability, but it is a bit idiosyncratic, as it is based on the labor market. Do big fish behave like small fish? My answer is positively! This behavior is pervasive. It is so easy to blame some body else. Why taking responsibility if nobody does? Well, the first rule of leadership is: you are always responsible! Apparently not with these leaders. In this environment, asking what happened to principles becomes a bit naïve. It is far better to see how we can avoid further mistakes and, possibly, how we can reverse this trend. The public should never rescue private institutions that don’t share their profits with the public. I understand averting a snow-ball effect. But why don’t we get the hell out of the avalanche path and let some institutions go defunct, sell out their assets for pennies on the dollar and clear the market from double-dealers? How do we get rid of trash? If these lending institutions are capable of saving their precious behinds, why don’t we demand that Feds loan them public money at a dear interest, like these institutions did with their clients? Since we are not crooks, how about 7% a year? It beats the current economy, and it is a sound practice. Why using a different yardstick? Why don’t we lend these lenders money, mandate them to cut their scandalous salaries in a half, pay no dividends or take bonuses until they have paid off their obligation with the public? We should buy equity that gives the tax payer stake, shouldn’t we? Instead, we are doing the opposite. We are bailing out privately owned companies for free, and with our own money: no promise of future returns, not even an idea if this is going to work. Just saving the ship by taking the rower’s money, and in the process, sinking the whole ship. Only people without perspective can think that way.
The economy is enough of a disaster without the Feds. But this is a rather pernicious turn of the events. The proposed procedure is two week-old baby, with a willing Federal parent who is in part doing what the Government is dictating – saving their behind, not yours! So it does not have a proper name. Like many other fantasies from this administration, is a fabrication, an alchemy devised to confuse you upon what is truly being done. Please, allow me to call it reverse-economy. In Italy this procedure, saving the ship with public money, is known as “cassa integrazione.” It pays salaries on behalf of corporations that can no longer afford them. In essence, this mechanism, adopted for avoiding larger and more devastating storms (but, ultimately, only to put off such an unpleasant time) makes public the losses suffered by privately owned institutions – in other words, the citizens pay for it, while the corporate profits remain private. In a nutshell, if I win I keep the money, if I lose it you pay. Interesting logic, isn’t it? The additional twist in the bail-out proposed by the Treasury Department is that the government is obtaining a large equity share with the rescued companies, effectively controlling them. Who are these companies? Lenders, insurance investments, mutual funds, banking institutions, you name it. All private corporations. This is not very different in philosophy from its original model, invented in the sixties, by the dreadful Democrazia Cristiana, allegedly to save jobs, in fact to save the giants at the expense of the citizens. The procedure eroded from within and eventually sunk the Italian economy in the muck. The Italian economy never recovered from such course of action. This is undisputable. Coincidentally, the “cassa integrazione” was the mechanism that tipped the needle of the scale and made me leave Italy in search for greener pastures. This is my little personal history and it still leaves me at a loss.
The reasons why public sharing of private losses are wrong are multiple: by removing risk, this mechanism removes the competitive edge which is at the heart and soul of capitalism; it deprives the public of prospective gains, as the equity share obtained or rescued is never returned to the public. In addition, this procedure jeopardizes savings and loans; puts at extreme risk the national budget; has an inflationary effect on the economy, but more importantly, leaves in the hands of a few individuals the entire control of the economy. There is an additional corollary to this perverse equation: by allowing Exxon-Mobil to pillage the citizens with astounding oil profits, the current government has assured to virtually control the next presidency. It’s called lobbying: a dual game of unbelievable, almost science-fiction ramifications. This is the mighty dollar, finally ruling this country. I may sound facetious. I am not. You don’t believe me? Look at the profits of Exxon Mobil Corporation in the midst of this national crisis. They are record breaking, not for Exxon, but in absolute, for any corporation anywhere, any time in history. If we are all suffering, there is something wrong with this equation.
Well, we can’t control greed and private enterprise, can we? Nevertheless, through strict regulations, we can assure that profits are honest, proportional and well spread – also that losses are assigned to the originating party. Regulations, i.e. control, are typically originating from a democratic platform, whereas accountability is an old republican principle. Both parties have realized that a fiscal reform is not possible without control and accountability. So, here is a chance for a fruitful by-partisan collaboration.
Aside from the unethical basis of this maneuver, I have a legitimate question regarding guardianship: is the government the ultimate risk manager? Or does it have a limited mandate from the people? Isn’t the government overstepping the boundaries of private and public interest? What happened to checks and balances? This is why neo-Republicans are not to be trusted, certainly not with anything as technical and consequential as the economy. By the way, what happened to the Republican creed small government? This makes no sense. There is trouble at the horizon when the government is about to control everything, the war, oil prices, Wall Street, tax money, our phone lines, what else? Watch out, folks, this is the sneakiest form of oligo-capitalism passed out as a form of neo-democracy in which we all participate, and that is, by continuing to release any form of control, by relinquishing more and more constitutional rights, not even toward a fix but to plug holes, in the direction of the next foreseeable financial fiasco. This corresponds to handing what is left of America to a managing group that has piled up bad decision after bad decision. I don’t care what political color you are. You should care for your country!
Now, I understand if you have decided to dismiss this report. I am upset and I am speaking out of experience, trying to shed some light in this mess. I lost my beloved Italy out of the same procedure, and, did I love my country? You are welcome to turn your ears elsewhere. But, I was down right about my own land. It sunk like a stone and it did not come back to surface. Italy has not strength left of its own. Forget plus value, we are talking about survival. Only a few wealthy individuals have serious financial capability and they are not so stupid as to invest in lost causes. Of course, Italy is resourceful. Italians are amazing at floating in the mud, at making the best out of anything. So, even in this mess, you can go to Italy, travel, see its amazing countryside, taste its amazing cheeses and wines, drive its sport cars or wear its amazing fashion, but try to live in Italy. Try it, seriously! Financially speaking, Italy is in a permanent state of post-calamity. Rampant inflation and clogged bureaucracy, taxes everywhere, I mean taxes for the air you breathe. You can pick up the pieces yourself, if you wish. I left the moment it started behaving irresponsibly. I will do the same with this spectacular country if it does not regain its bearings. Politically speaking, Italy remains unmanageable and therefore exposed to smart and pedantic predators with lots of money, poor ideas and no culture whatsoever (sorry, I forgot to mention, with complete control of the media): Berlusconi sums it all! The U.S. already got a Berlusconi clone and are a step away from such an era.
I hope you get the color of my outrage right. This is no propaganda whatsoever. I am no socialist. No liberal. I believe in free enterprise and don’t fancy government over-management. The government has a mandate to guarantee the Constitution and to protect the citizen against crime, greed and wrongdoing. We should be busy producing the next generation of cars, or energy source, not worrying about Wall Street. I happen to be fit capitalist societies. I am a natural producer of value, and that is capital, politically located somewhere between old Republican values – such as “don’t breath down my neck and give me enough freedom of movement” – and Democratic concerns for our society, which are the grantor of justice and permeability of society, and that means, accessibility of its structure to anyone. I don’t believe in hand-outs but in hand ups. Everyone deserves a break; that is not a free ride. I also believe in accountability, beginning with the voters. Unfortunately we have got what we deserve. Accordingly I don’t enjoy dwelling on accusations of all-controlling governments. And, definitively, I don’t believe in conspiracy theories. Government are nothing without our endorsement. Nothing. We hold the power, you better believe it! Self-serving governments are ultimately self–defeating. Look at Africa. I therefore trust the U.S. public and its ability to see beyond the lies and trickery of a certain political class. This is, after all, a nation that ended a lost war in Vietnam and took Richard Nixon out of office. There was no qualm then with retreating from a costly mistake. Of course, I trust the public. This is exactly why we must not remain silent to further scandal and abuse. This is why I am speaking out to everyone without distinctions. Democrats and
Rebublicans, I appreciate all of you! We are in election time after all, and I am not recommending any candidate either. I don’t care who you vote this November. I am just warning you against a hastened, reckless and ethically perverse by-partisan decision, which is about to be made in the name of the same hurry and lack of planning that brought the economy to this – forgive my French – cul-de-sac. No need to translate that.
I agree that, in this incredibly complex crisis, avoiding a cascade effect is critical. Even George Bush understands it, and if he understands anything, for sure the rest of the nation gets it. But the market needs reform, not Tylenol. Only a regulatory reform of all financial institutions can prevent more damage, more greed, and more unregulated practices. It will take time do draft it. Yes, in the meantime we must prevent a financial meltdown, for it is true that the collapse of large security holders can drag down hundreds of affiliated companies and counterpart institutions, and a meltdown is far worse to the taxpayer than using commonwealth money to pay for private interest. But rush is not going to solve the underlying problem, which calls for new directives and parameters, not for a free hand out. Fear not, I am about to rest my point.
Speaking about clueless ness: so far, none of the promoters of this bill has been able to explain to our senators and congressmen how the bail-out plan is going to work and what are the risks and possibilities of success or failure of this rescue operation. Accountability is paramount to the public, a public stressed by raising costs of living, exploited by mounting interest rates, left out by the current credit restrictions. Rescuing the giants can be done without making the public pay for things that the public is not responsible for. It can also be done by making the giants pay interest for it. Let the corporations take responsibility for their blunders. And let valueless paper be dealt with by the creators of the paper, not by the indirect and unwilling bearers of the burden. The public should take stake, demand repayment and interest, establish deadlines and applicability of the funds, and ultimately derive profit from its wealth. These are not socialist demands, this is basic ABC protection of assets ¬– a well known practice to all republicans. The fact is: we are all together in this mess, all colors, all genders, all parties, all political affiliations. Accountability is the opposite of the open-ended “gift” and “amnesty” our government is proposing. But accountability is easily evaded by pointing fingers elsewhere, blaming your manager, the economy, the code, a liability issue, what have you. My job – design and construction – is infected by this type of spineless, irresponsible, jelly-fish behavior. Friday paycheck seekers. I hear the same tape every day. From workers to managers, and from directors to C.E.O., everyone engages in this stupid and unoriginal game. Deferral and unaccountability is the hallmark of an entire generation (I call it: the lost generation) whose self-entitlement, scant education, myopia and futility has ultimately produced this mess. Financial crises don’t come out of the blue. They are the result of lack of planning, unregulated lending and spending. We need intelligence and responsibility in our government. What is to be expected out of a bail-out plan?
Even at the small scale, how many friends or relatives have you rescued from difficulty? Did you help them? And did you expect repayment of your hard-earned money? Did you say how and when? Did you hold them accountable? Of course you did! And were you proud of them when they repaid you? So why should these foolish corporations be treated differently than our friends and beloved ones? Sue me for telling fact from fiction, but for God sake, get your voice across, until there is time.
I am yours truly, Arturo Giancarlo Pirrone