| I’m
watching the news today as the stock markets enter into free fall. Not a pretty
sight is it? It amazes me that the powers that be could not see these situations
coming many months ago. Two years ago, when I was in New York one of the large
investment banking firms announced their annual bonuses. The average, get this;
the average bonus was over $600,000 per eligible employee. There were numerous
complaints about a shortage of Lamborghinis and Rolls Royces. I felt really sorry
for those guys, imagine having all that money and not being able to find a decent
car in the entire city. It broke my heart.
Not really.
Looking
in our local paper this past weekend, I found 19 pages in the sports section and
6 in the business section. That should tell you something about our American mentality.
We seem to be more obsessed over some pro football player’s girlfriend than we
are with the leaders of our largest banks and investment institutions handing
out huge bonuses and feathering their own nests.
And do they feather their
nests. If you and I operated a business that was a loss, I venture to say that
when we left the company or closed it down, there would not be much left in the
till for us to take with us. Wall Street must operate on a different set of rules.
The
majority of the high paid executives end up with multi-million dollar severance
packages in spite of the fact that the companies they were leading lost millions
of dollars. This makes zero sense to me. It’s almost as if we are rewarding people
for inadequate behavior. Something along the lines of…… “we’ll pay you more if
you make our stock lose more value.” What a deal. I wish I had one.
So,
this week with the sky falling all around them, these corporate executives are
running from pillar to post trying to stay in business. And it appears they aren’t
having too much luck. I don’t know about you, but making a $750,000 house loan
to someone with a $35,000 a year income doesn’t seem to be very smart to me. But
what do I know; I’m not a corporate executive who is savvy with Wall Street and
its machinations. From my viewpoint it looks to me that as long as money was coming
into the system, the things seemed to be alright.
It was when the money
stopped coming that things started to go downhill in a hurry. I seem to recall
some guy named Ponzi tried this back in the 1930’s and it failed then as well.
Now these bright, brilliant Harvard graduates are asking the taxpayers (you and
me) to bail them out of their financial mess. They’re telling the media that they
are simply too large and too important to be allowed to fail. Imagine that.
If
you and I go out on a limb and buy a grocery store that doesn’t make it, I can’t
see good old Uncle Sam rushing in to write us a check which would allow us to
stay in business. And I’d bet you and I would think we were pretty important and
shouldn’t be allowed to fail. Our kids have gotten used to eating.
Don’t be standing too long in any one place, the finger pointing is growing in
intensity and you could be singled out to be the culprit even though you might
just be a New York City tourist. These guys remind me of rats leaving a sinking
ship. Only this time, it was the rats who caused the ship to sink in the first
place.
Greed and power will do it every time. While I have nothing against
people making money, more power to them, I do take offense to those who are doing
so at the expense of others or that profit by unsound business practices. I have
applied for many bank loans in my many years of business, and all of them required
me to prove a sound business plan as to how I intended to pay the loans back.
It looks to me as if the people on Wall Street should practice what they
preach.
©
Peary Perry
September 17, 2008 column
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