Just in Time for Christmas

As day after day of misery goes by in the lives of the little folks crushed by the financial crisis, one question lies in the back of their minds. Who did this to us? Who’s looking for them and when will they be punished? We have known the answer to the first question for some time. The Wall Street investment banks’ sophisticated (read Crappy) investment packages whipped up a perfect storm.

They sold this Crap (their term not ours) to people who should have known better based largely on stellar ratings from the agencies charged with vetting these investments. The ratings agencies were pushed by their customers (big banks)  and did not look – as hard as they should – at the packages.

And it turns out that the bailout bucks we knew about (TARP) were nothing when compared to the zero interest loans the Federal Reserve was handing out to keep the banks afloat, trillions in secret loans. Bloomberg Markets Magazine blew the lid off this program. It was ten times the size of TARP.  By far the biggest hunk of these bucks (63% of the daily average) went to the same gang that got us into this mess – six humongous banks.

How did these half-dozen too-big-to-fail banks position themselves to come out of any crisis they might create covered in gold? Over a couple of decades they conned Congress into repealing the laws designed to prevent things like the 2008 crash. They even got “The Fools on the Hill” (AKA the Congress) to exempt banks from State Lottery laws. Who helped this along?  Clinton’s Secretary of the Treasury, Robert Rubin, fresh from 26 years and the top job at Goldman Sachs.

When the house of cards collapsed, who came up with the plan to save the banks? Bush Secretary of the Treasury Hank Paulson, fresh from the top job at Goldman Sachs, led the charge to save his comrades.  It gets even better; in 2006 Goldman Sachs was able to foresee that the crap was really crappy and likely to crash. Did they sound the alarm? Of course not, that might have interfered with their efforts to sell crap to their customers. Instead they bet it would crash and reaped a huge profit.

What ties this all together? Two of the key players, Rubin and Paulson, both came from Goldman at just the right moment to get rid of the pesky banking laws. So in addition to the efforts of all the banking lobbyists, you might say it was an “Inside Job.”

However, our wait to make those responsible pay may be nearly over. The SEC has charged six former Fanny Mae and Freddy Mac executives. More important, New York State Attorney General Eric Schneiderman and other State AGs are looking at criminal and civil charges. It would be nice to see a few of the arrogant bankers on their way to jail?  When you think about it, what they did was harmful than Bernie Madoff’’s scams. “Pants-on-Fire” Goldman CEO, Lloyd Blankfein has another view; bankers, he says, are “doing God’s work.”

A New Path?

The unemployment rate in the United States dropped precipitously last month (11.11) to 8.6%, the lowest it’s been since the early days of the recession in 2009. The disturbing note, however, is the contributing factor of those “no longer looking for work.” In addition to giving the merchants of gloom something to point to, it raises the issue that we would hope would concern us all. What happened to all those people? They didn’t just fall off the edge of the earth.

If they are still receiving unemployment benefits, they must be near the end of that lifeline. Odds are they have other family members who are still working, and while they may be tightening the family budget, they are not out on the street. In some cases they and perhaps their families are headed for disaster, loss of their car, even their home. That raises an ethical question for those cutting funding to our safety-net programs. How ethical is that effort? Is that the kind of nation we have become? Times are tough, crush the poor.

On the brighter side, maybe those no longer hunting for work have found it, at home: on the computer, in the basement, in the garage. History teaches us that tough times are when new enterprises are likely to be launched. Counterintuitive as it may seem, even comfortably employed individuals will leave their employer during dark times to launch the business they have been thinking about for years. And of course others, who have been thrust into the world of the unemployed unexpectedly, think “What the heck, I might as well give my dream a try.”

A series of articles in the business journal Fast Company got us thinking that there may be more going on in the current episode of lean times. Launching a business is never as easy as it looks, but it’s a whole lot easier today than ever. Depending on where you live, you can get set up with your local governing entity for a few bucks and open a bank account in the business name. Then your major problem is having something to support you and your family until it catches on.

A century ago, your prospects for customers when you opened a shop were those who happened by as they walked down the street, or those who heard that you offered sewing services from your home. These days, with a tad of social network skills the world is your marketplace. You can do business with someone a world away as easily as your next door neighbor. There are services that will connect you and guarantee that you get paid. You can even take credit cards without a major investment in technology.

And some of those with manufacturing skills that seem unwanted in today’s work force are finding that they can use those skills to create things in a world where handcrafted quality is appreciated. From welding to woodwork, handmade goods are in demand. So perhaps those who are no longer looking for work have created their own little corner and are very happy there, thank you very much. And if they do well, they may hire a helper or two. That’s where jobs are created.  

 © 2011 GLG

British Tabloid Culture

British Tabloid Culture

There’s a celebrity “A” list from Hugh Grant to JK Rowling parading before Lord Justice Leveson in London. The ongoing Leveson Inquiry is investigating media ethics in Britain centered on the Murdoch phone hacking mess. The celebs, along with lesser known folk, are laying out the damages the phone hacking, celebrity stalking, tabloid press has inflicted on them. Yes, it’s not just the Murdoch papers that employ these pond scum techniques. Nor is the damage limited to the crimp that it puts in the lifestyles of the rich and famous. Much sadder are the tales of everyday folk, most notably the family of murdered schoolgirl Milly Dowler. 

In an effort to keep the headlines coming Murdoch’s minions repeatedly emptied the voicemails from Milly’s mobile phone, leading her parents (and the police) to believe that she was alive and picking up the messages. Actually the 13-year-old had been lured into the hands of "predatory" nightclub bouncer Levi Bellfield on her way home from school and lay dead in a field at the end of that day. Bellfield was subsequently charged with the murder of two more young women. Witnesses are laying out stories of inconvenience, embarrassment, and tragedy before Lord Justice Leveson, all brought on by the telephone hacking, police bribing, peeping Tom, high speed chase stalking style of journalism favored by the British tabloids.

The lurid stories gained by these methods dim in shock value to the testimony of one former Murdoch editor, Paul McMullan, once a deputy features editor at The News Of The World. According to published reports, McMullan admitted that all these "worthy tools'” as he called them, were not only routinely used at the paper, they were aggressively urged upon him and his colleagues by their bosses.

McMullan even called out two former Murdoch executives, Andy Coulson and Rebekah Brooks. Coulson was the chief spokesperson for Prime Minister David Cameron by the time the firestorm hit, while Ms. Brooks headed all the Murdock newspaper holdings in Britain. McMullan said they could have been the “heroes” of journalism; instead they became the “scum,” apparently for their failure to take responsibility for the use of the worthy tools at The News Of The World.  He also calls Ms. Brooks an “arch-criminal.”

McMullan’s testimony was particularly hard to swallow when he described a culture that not only used these “tools” but believes they are “worthy tools.” He hotly defended a wide range of behaviors that we find ethically repulsive. When asked to define public interest, McMullan replied, “If the public is interested,” adding that if they don’t approve they could stop reading these stories. This culture seems pervasive among British tabloids and within the Murdoch Empire. Unlike McMullan we do not see these “tools” as “worthy,” we see them as disgustingly shameful.