Friday, October 10, 2008

Post No. 53: Are We Really Interested in Crafting a Solution to Our Financial Mess?

© 2008, The Institute for Applied Common Sense

Washington, we have a problem.

Now, I am neither an economist nor a rocket scientist, I am just a consumer, and as such, along with the rest of you, I am responsible for two thirds of America’s economic activity.

And, along with the rest of you, I don’t have much trouble defining the problem:

In the last ten years, the cost of energy has gone through the roof, taking the price of everything that moves, from food to flashlights, along with it.

Similarly, the cost of housing is up more than 50%.

Unfortunately, our real income has actually declined, along with the value of our homes… and in the last two weeks, the value of our retirement savings has declined more than 20%… some two trillion dollars worth of evaporated wealth.

But, if you had turned on the television and watched C-Span, as I did while generating this article, you would have seen the hearing, conducted in the House of Representatives on October 7, 2008, regarding the collapse of AIG Insurance.

Several former CEOs testified during that hearing. Probably most of us think that both corporate America and our politicians, on both sides of the aisle, have failed us.

Apparently, the feeling is mutual. In corporate think, the above problems seem to be our fault.

I strongly suspect that if you asked the average citizen, he or she would tell you that they feel that both corporate America and our politicians, on both sides of the aisle, made out like bandits during the period of high flying and free wheeling, without much in the way of restrictions or regulation, or concern for the American public for that matter.

Virtually every nickel we contributed to the growth of the American economy, through productivity improvements and cost reductions, was channeled to the occupants of America’s executive suites.

Less than ten days after borrowing $85 billion from us to keep from going broke, the executives of AIG spent $400,000 on themselves at a management retreat at an ocean front resort. (One of the Representatives even had pictures of the resort, and a breakdown of the costs of the rooms!)

That’s FOUR HUNDRED THOUSAND DOLLARS… and it obviously occurred to no one running that company that this might not be the best time to continue business as usual, as is their right and due. What good is being a Master of the Universe if you can’t enjoy the perks?

To borrow a notion from Ross Perot, perhaps we should reconsider who we put in charge of our financial well-being.

Perhaps we should reconsider allowing lawyers to become elected officials.

Perhaps we should do the same with CEOs.

Because what was to be witnessed during this hearing was not an effort to get at the truth and underlying causes for our current economic emergency, but lots of posturing, blame assignment, and defense of the status frigging quo.

You can’t really blame these guys; if any of us were trousering (oops, my bad, or skirting) $60 million a year, we would also mount the best defense that money could buy in support of our right to haul home such lucre.

Yesterday, we posted a poem by Pablo Neruda ( Apparently neither the former CEOs nor any of our politicians have read You’re the Result of Yourself. It’s well worth a read.

Lawyers, particularly experienced ones, develop a skill for asking the right questions to get to the heart of the matter. They also know how to make arguments in favor of their positions, and against those of others.

That’s what they get paid for.

What should concern us now is that none of this is appropriate in connection with the current financial mess in which we find ourselves as a nation. And time’s awasting....

What we need now is for our politicians, leaders, and the members of our government to “dig deeper,” and try to expose the underlying causes of this situation (no matter who’s at fault), and how we might best prevent it from occurring again.

What we do not need is yet another PR campaign, pointing to a light at the end of the tunnel, and pretending that it is not an oncoming freight train. (By the way, the laws of physics repeatedly suggest that you will not beat that collision.)

I’m one of the few people who actually enjoys listening to hearings before governmental bodies. Any sensible person would not. Frequently, those being questioned present prepared statements, exculpating themselves from liability, and then proceed to provide responses more concerned about liability than solutions. In many instances they are accompanied by counsel who coaches the witness.

Even more disturbing is the manner in which the “questions” are posed, if you can really call them questions. During the House hearing, for example, we witnessed Representatives essentially make speeches, reflecting their positions, and condemning the conduct of AIG. They chose the words to characterize the conduct, and they injected emotion into the issue, when and where they saw fit.

It was more than clear that the purpose of these self-serving speeches had more to do with elections than economic enlightenment.

Once they had almost used up their allotted time, they would ask a very short question, which would be very difficult to answer considering the 3 minute monologue preceding the question. When the witness tried to answer, he was frequently interrupted by the Representative, only to have the time expire without the witness having said anything of real value or substance.

Now we know that many of you will simply say, “That’s the way these things work.”

However, in this period of economic uncertainty, that’s just frankly, unacceptable. That any of our politicians would place their continued occupation of a political position above our need to know and the financial interests of the American people is not only sad, but something in which we should no longer acquiesce.

This is ridiculous folks. Even I, an insignificant nitwit, could pose a series of questions designed to get to the bottom of this mess. Why can’t our highly compensated, highly educated, highly sophisticated, highly experienced elected officials pose questions that really matter, without consideration of their interests?

What’s more disturbing is that the ineffectiveness of conducting a hearing of this sort, at least in terms of getting to the root of the problem, is fairly obvious, even to the casual observer. That our politicians think that this is appropriate, and acceptable to us, is, quite frankly, pissing me off.

This is the question we need to have asked and answered until it makes sense even to an insignificant nitwit:

“You gentlepeople have managed to hitch this great country’s economic star to a wagon, and the mule just died. How do you propose we fix that, this week?”

© 2008, The Institute for Applied Common Sense


  1. FYI - That $400,00 was not for AIG Executives. It was for Independent agents as a reward for meeting some very high sales goals (the kind of thing AIG should be encouraging). Of the people tht attended, only 10 were AIG employees there to represent the company, and not 1 of those 10 was an executive.

  2. I also wanted to agree with you that the members of Congress should have spent less time grandstanding in these hearings, and more time actually focusing upon the issues at hand.

  3. The biggest problem with our economy, and one that is not addressed, is that biggest debtor in this country is the country! Politicians feel taxes are poison, as they should be, but are totally irresponsible when it comes to spending money. This mess would not be nearly so drastic if the mint could quit printing excess money. The bailout plan is a band-aid, but it's infected because it will just add to our debt. And this bailout was a cooperative effort between the major parties! So much for bipartisanship.

    Happy blogging.

  4. Jonathan:

    Thanks much for posting a comment on my blog regarding the seeming disinterest on the part of our politicians to craft a solution to our economic mess, as reflected by their behavior during the AIG CEO hearing. I think that you are pretty much spot on. Only in the government do we find leaders who feel that it is appropriate to spend more than the country generates in income. Thanks as always.

  5. Sebekiz: Thanks for bringing to our attention the status of the attendees at the much publicized retreat about which many have criticized AIG. We'll do some digging around in connection with that event and provide additional info. Thanks much for setting us straight. Thanks also for the additional comment regarding the grandstanding speeches in Congress.

  6. FYI - That $400,00 was not for AIG Executives. It was for Independent agents as a reward for meeting some very high sales goals (the kind of thing AIG should be encouraging). Of the people tht attended, only 10 were AIG employees there to represent the company, and not 1 of those 10 was an executive.


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