Saturday, October 25, 2008

"There is no recovery from moral bankruptcy."

As I was bopping around Blogtopia this evening (Saturday, October 25), I was momentarily heartened at finding this simple and succinct description in an honest reaction to Alan "Greenspan's blind spot" (what I have come to see as his "willful blindness"), evident in his testimony to Henry Waxman's House Oversight and Government Reform Committee, which is investigating the Wall Street meltdown (from Tim Rutten at the Los Angeles Times):

The idea of loyalty -- or of just a sort of reciprocal obligation, for that matter -- simply doesn't operate on Wall Street or much of anywhere in American business any more. The notion that CEOs and other executives would forgo a chance to enrich themselves to keep their institutions solvent or their stockholders' investment whole seems quaint in today's environment. That's true even when the executives' good conduct is supposedly guaranteed by an equity stake, as it is in investment banks. What Greenspan and the rest of the aiders-and-abettors of Wall Street's greed spree don't want to admit is that there's something wrong in the economy and financial system that new regulations on trading and disclosure won't correct. Long before the financial system melted down, American business' share of the social compact melted completely away. The corrosion didn't begin at the top but at the bottom -- with the renunciation of any corporate loyalty toward working men and women. For nearly as long as Greenspan has hovered in the financial stratosphere, U.S. companies have been encouraged to treat their workers like any other "expense." Wall Street has rewarded -- indeed, lionized -- companies "tough enough" to treat workers like the electric bill. Presto! Layoffs became "cost management." No one begrudges a company about to go out of business the right to cut payroll, but now nobody blinks when a CEO throws people out of work for an uptick in the stock price or to ease the service of ill-considered debt. It's been a long time since anyone who analyzes the economy has been willing to say that it's immoral for a profitable firm to deprive families of their income and health insurance, to strip hardworking men and women of labor's dignity.
"I did not forecast a significant decline [in the housing market] because we had never had a significant decline in prices," Greenspan told the committee, adding that the Fed's record of economic foresight remains unequaled. "We can try to do better, but forecasting ... never gets to the point where it's 100% accurate."
Perhaps only an economic education prepares a man to draw as his conclusion from catastrophe the gnomic declaration that fallible human beings are not infallible. Some things, however, are true 100% of the time: Societies in which the few are allowed to fatten themselves without limit on the labor of many are not just; they aren't even particularly productive for very long. Countries -- like companies -- that cling to notions that allow some to pursue their own interests by behaving indecently toward others come to bad ends. There is no recovery from moral bankruptcy.
Read the rest here and weep again. Suzan


Bukko_in_Australia said...

Still blogging the good fight? The long-predicted collapse is upon us. We got back recently from a month in Europe -- concentrating on Italia this time, my first visit to Rome -- and it was extra-weird to be watching the wheels come off the cart from inside posh hotel rooms in various Old World cities. At least most of 'em had CNBC Europe or in a few cases, Bloomberg, which is better than CNBC by a long shot. For the first time, Carol was happy to be returning to Australia, which seems like an island of stability in this world of turmoil.

Not that it's safe for everyone. Our best local friends, who met us when we were on our scouting trip down here in April 2005 and found us interesting because we were loudly bagging Bush on the bus from the airport into town, have become casualties. They're recently retired 60ish white collar types, owned their home in a desireable suburb close to the city centre, looked to be set to live the good bourgeois leisure life. We knew the bloke dabbled in the market, and he was worried before we left on holiday. Got back, had them over for dinner, and found out they are having to sell their house and move in with his sister in the country! Shades of what's happened to you...

I don't know what the cause was. Perhaps buying on margin, maybe just because the Aussie stock market tanked and the local dollar sank (was at 93 cents to the U.S. dollar mid-year, now an Aussie buck is worth 61 U.S. cents. Sucks for the locals, but when we use our U.S. credit cards to buy anything, we get 40% off the nominal price. Woo-hoo!) People here aren't as "let it all hang out" as Yanks, and I don't want to pry. Especially because C and I are always talking about how well we're doing.

Relatively speaking, of course. The gold we bought in the $800 range is not looking so sweet, and other investments are down. But we're not leveraged, not even the slightest, have zero debt, and have patience to ride out a decade-long storm. My job's not going away until civilisation collapses and sick people are left to die in the street.

So we will continue to watch these interesting times. Hope times are better for you.

Suzan said...

Thanks for the comments, Buck!

Good to hear from you and since you had mentioned the "upcoming" visit to Italy, I was all agog to hear how it was. I saw Rome, Firenze and Venice in the mid '80s and the trip was awesome then. (Prices were also very low then due to the dominance of the U.S. dollar - never to happen again!)

So how was the Sistine Chapel? St. Peter's? I had my picture taken on the top next to one of the statues and I swear you'd think I was a Roman god(dess) too! (heh heh)

Shades of what's happened to you...

But we knew this was slated to happen didn't we?

And no, things are pretty awful here now - waiting for the other shoes to finish dropping. It will prolly be a 5 - 10-year recession/depression with no outs except leaving for other countries (which lots of people have already done like you guys) or suicide.

And we're only a little ways from this comment of yours here as you understand all too well already about the healthcare/insurance problems (emergency rooms routinely don't treat people without insurance no matter what they say publicly):

civilisation collapses and sick people are left to die in the street.

When I saw gold down my only thought was, but of course, everything's down in a recession. It will undoubtedly prove, however, to be much better long term than cash (which is why one invests in it, of course).

Take care of yourself and let me hear from you when you get a moment free!