Posts Tagged Capitalism
The Rich Make Majority of Strategic Mortgage Defaults
Posted by Lance Haley in BP oil spill, Business and Money, Capitalism, Cultural Issues, Economics, Ethics, Health Insurance Industry, Morality, Wealth Disparity & the Ultra Rich on August 4th, 2010
So you think it’s all those ”immoral” people who got sub-prime mortgages on a house that they could not afford who are mailing the keys back to the bank?
WRONG!
Statistically speaking, it is the wealthiest people who are making “business decisions” to walk away from mortgages when what is owed on the loan is greater than the value of the house. And the rich are doing so at almost twice the rate of the sub-prime and owners of lower-cost homes, according to data compiled by the real estate analytics firm CoreLogic.
In other words, sub-prime borrowers generally cannot make the payments, and involuntarily have to walk away; rich people can make the payments and voluntarily choose to walk away!
These are called “strategic mortgage defaults”, because the individuals do a complete cost/benefit analysis in order to determine if it makes financial sense to keep the home when it will likely never appreciate in value enough in the long run to pay for itself.
It’s not dissimilar to what health insurance companies do when denying coverage for that little bout of cancer your spouse is battling, or what BP did when deciding to take shortcuts while drilling on that rig in the Gulf of Mexico. Hey, it might cost them more in the long run, but they are willing to take that chance given that it will certainly save them money in the short-run. Thus giving them a better opportunity to make more money in the long run.
Amoral Capitalism. Risk/reward analysis. It’s just business, partner; you know, it’s all about ”the bottom line.”
Sam Khater, CoreLogic’s senior economist, said it best:
“The rich are different: they are more ruthless.”
No One is to Blame for the Oil Spill
Posted by Lance Haley in Uncategorized on May 13th, 2010
THE WRATH OF GOD
“He did it. No, he did it. No they did it . . . “
Legal Memorandum to Members of the U.S. Senate Energy Committee:
This is in response to testimony provided the other morning to your committee by executives from the three energy companies involved in that drilling rig that is currently spilling oil into the Gulf of Mexico. By way of this memorandum, we are giving notice that our law firm is providing legal representation for all three companies in this matter – BP, Halliburton, and Transocean – as well as the rest of the oil industry.
To clarify and correct the testimony provided to you thus far from our clients, we submit the following:
First: we acknowledge that our clients engaged in “finger-pointing”, blaming one another for the spill and then each denying that their company had any culpability in, or liability for, the disaster. We would respectfully assert to the members of the honorable committee that this is simple human nature; people often blame one another when something terrible happens that demands accountability.
After all, each one of us learned from the time we were about three years old that taking responsibility for doing something wrong will often have dire consequences. The lesson that some individuals took away from those experiences is that it is best to immediately deflect responsibility away from themselves, and blame someone else so that they can avoid becoming the target of the palpable wrath and inevitable punishment; we call them ”America’s Business Leaders”. By way of recent example, the Senate Banking Committee hearings involving executives from Goldman Sachs immediately comes to mind.
Second: after giving these circumstances their due consideration, as well as following the example provided by Wall Street, and finally by applying sound legal reasoning coupled with currently accepted American business principles, we have concluded that no one is to blame. At least not any of these oil executives, and certainly none of their companies.
This was simply an Act of God.
When American private enterprise engages in the pursuit of profits – as in “doing God’s work” – and something goes horribly wrong, it would be misguided to blame the shameless human beings who run these companies, or the heartless corporations themselves. This is just God’s will.
Think about it. These executives and their companies were following the Lord’s wishes by providing jobs for tens of thousands of employees at virtually the same wages they were earning thirty years ago – adjusted for inflation, of course. This results in huge profits for the corporations, as well as admittedly obscene salaries and bonuses for the executive management.
And in spite of the huge tax breaks you give the rich and the big corporations in order to protect and preserve the American way of life, they unfortunately still have to pay some income taxes. Fortunately, those taxes support the tax subsidies which you so generously give right back to the oil industry - talk about an “Oil Slick”? We like to think about it as a trickle-down theory for oil industry welfare. The oil executives pay taxes, and then they get that money back vicariously through their company coffers.
Isn’t it strange how the free market’s “invisible hand” and God’s hand work in concert with one another?
So if you expressly blame the oil executives, and then financially punish these companies, they will have to stop drilling for more oil off-shore because it will no longer be nearly as profitable. Oil exectutive salaries will fall. Along with large political campaign contributions from the petroleum industry. That is contrary to God’s will. You, in turn, will be blamed for taking gasoline out of the tanks of every American car in the country. Do you really want to answer to your constituents when they are waiting in long lines at the gas station this summer? Remember: mid-term elections are just around the corner (November). Getting voted out of office will simply be the consequences of you having incurred God’s wrath. This is just plain common sense to every good American – especially Sarah Palin.
Third: If you still are so inclined to make someone accountable, there really is only one group of people to blame: You. Washington. The Politicians. After all, Congress is the one that approved off-shore drilling. You were the one’s that insisted that our clients explore for oil anywhere in the United States, and that new technology made drilling for oil safer than ever. You said it was in the interests of our national security; that we had to stop buying oil from the Middle East, and vicariously supporting the terrorists.
It’s kind of like the War on Drugs (speaking of disasters): forget addressing the issue of demand for the product; Americans choose to focus on the problem of supply. Except in this case, Americans demand more oil, and simultaneously want a cheap supply, as well. Like drug addicts, they have no intention of taking responsibility for their behavior. They have been in and out of “oil rehab” numerous times over the past 40 years. We all recognize that relapse is very common among addicts, and we just have to accept that fact.
Let’s face it. Addicts are always deep in denial, and our clients are just opportunistic enablers, providing these oil addicts with the means to “chase the high” they get from driving their cars whenever they want, and wherever they want. Case in point: a new NBC/WSJ (Wall Street Journal) poll shows that 60% of these addicts still support off-shore drilling. Let’s just give them what they want.
Like any junkie, these American addicts can suffer the consequences of their behavior. OK. We are willing to concede that their children will suffer the greater consequences in the future. But hey, we all accept the fact that there will always be collateral damage in every war; it’s inevitable. Just go ask those maimed and wounded children in Iraq that George Bush “liberated” so American oil addicts would not be deprived of their “drug” (and real Americans did not want Uncle Dick Cheney to be deprived of obscene capital gains on his Halliburton stock – which God help him, he sold the minute that oil well “had heart failure“; he worked so hard to push us to war in Iraq so Americans could have their next ”fix” of cheap Middle East oil).
We rest our case.
In conclusion: we would once again encourage you to embrace our rational explanation for this environmental disaster, and re-frame the way you look at it; given the popularity of Congress right now – or rather the lack thereof – you guys may want to think carefully about this most recent poll (no, that is not a pole, Republicans), and reconsider your opposition to off-shore drilling.
We would suggest that when you are kneeling at your bedside tonight, praying for more political campaign contributions, you should ask God for guidance on this issue. We have faith and trust that you will come to understand the wisdom of his desires. For God only knows why he works in such mysterious ways.
Respectfully submitted,
Hugh Lewis Dewey (a.k.a. Hughie Louie Dewey)
The Law Firm of Dewey, Cheatem, and Howe (pronounced “Do We, Cheat ‘Em, and How”)
P.S. If God, in turn, shirks responsibility for this disaster, we’ll see you all in court. Including him!
UPDATE [5-14-10]: Watch “There Will Be Blame” – the segment which aired last night [5-13-10] - from Jon Stewart of The Daily Show – TOO FUNNY!
Thank Goodness Obama Healthcare Reform is Dead? Caveat Emptor . . .
Posted by Lance Haley in 2010 Election, 2012 Election, Bailouts, Banking, Budget, Budget & Deficit, Budget Deficit, Business and Money, Campaigns, Capitalism, Conservatives, Economics, Financial Crisis, Financial Terrorists, Government, Healthcare Reform, How and Why We Get Screwed, Medicare, Sarah Palin, Show Them the $$$, Wall Street, Wealth Disparity & the Ultra Rich, economy, financial industry on February 12th, 2010
This is the face of the future for Republican Health Care and Social Security Reform – memorize it!
Now remember all of those terrifying Town Hall meetings in the Summer of 2009, where all you heard about on a daily basis were “Death Panels” and Medicare cuts, and Big Brother’s government bureaucrats making decisions about both the quality and quantity of health care you were going to receive?
You have nothing to worry about. Obama’s Health Care Reform is likely all but dead, and many of you will try to vote the Republicans back into power in this Fall’s mid-term elections so that they can protect you from Obama’s scary Socialist Big Government. Hip, Hip, Hooray (or is that Horror?) for their brand of Capitalism and individual freedom.
Except for one thing. The Republicans do not intend to protect you from anything (remember, that’s the point of shrinking government support). Including going broke in your retirement years from either rising health care costs, or diminishing retirement income. Think I am kidding? This is not hyperbole!
Ignore what follows at your own peril . . .
At the 2009 CPAC (Conservative Political Action Conference) - this is the Superbowl of Conservative power-brokers, with Glenn Beck as their 2010 Keynote Speaker - Republican Congressman Paul Ryan (R-WI) proposed that Medicare be completely dismantled, and replaced by a system of vouchers for seniors to purchase health insurance in the private sector.
Make no mistake about it: this will be the platform for the Republicans’ answer on how to reform health care once they are back in power. Do you doubt that? Well, Fox News reported that Ryan has been annointed as “the leader of future of the conservative movement.” That’s code for Republican Presidential nominee. He is their visionary, and here is his vision for American retirees’ Medicare and social security safety nets.
According to The Economist magazine, and an analysis from the Congressional Budget Office (CBO), Ryan’s “daring plan” will stimulate both the health insurance industry, as well as the health care industry, while slowing the growth of government health care spending; which is great if you are a Republican rising star like Ryan, who receives almost 40% of his political campaign contributions from health-related industries and their beneficiaries.
What’s not so great for retirees is that the CBO analysis shows why this is so great for the government and those industries: the dollar value of those vouchers you are going to get under Ryan’s plan will not rise as quickly as the projected costs of health care. Which means retirees will have higher out-of-pocket expenses as time goes on. And you can be certain that if those costs are going up, your private health insurance will also be going up at an equally rising rate – after all, they have to make a profit. That’s Capitalism. Right?
Another great thing about this plan – but not so great for retirees – is that the cost to the government will continue to grow more slowly because, as the CBO projections show, people will use less health care when they have to increasingly pay more and more out of their own pockets. Remember last summer when Sarah Palin and the Teabaggers scared you about the government rationing health care? Now you can do it to yourself!
In essence, Ryan’s Republican plan would make the government go broke more slowly than American retirees will, while temporarily keeping this growing health care crisis at bay another decade or two, and increase the profits of health-related industries along the way, forcing you to resort to receiving less and less health care as you grow older.
Don’t believe me? Do the math. It’s really that simple.
And Remember: Under the Republican Healthcare Reform Plan you will NOT even have Medicare supplemental insurance to fall back on. You wanted government out of your life . . . you got it!
So be happy you are not going to get Health Care Reform from Obama. I don’t mean to alarm you – especially after the Republicans scared you sufficiently enough to ensure health care reform would not get passed. After all, now they are free to begin selling you their notion of a “free market” alternative. Caveat emptor (“buyer beware”).
And recall the proverbial admonishment: “Be careful what you wish for . . . you just might get it.”
Happy retirement, America. 
P.S. Ryan’s “free market plan” also calls for Social Security to be completely dismantled, and privatized. Surely the impact of that policy is not lost on anyone after the global financial markets collapsed for the second time in a decade – losing almost 40% of their value in both downturns, with average investment returns for the past ten (10) years of about 1%. What if your social security safety net was invested there? Hint: it’s not a “free market” proposal - the government will limit your choices on how you can invest your social security retirement. Are you really so naive as to think Wall Street won’t have their greedy fingers in that enormous financial pie? They own Washington, D.C.!
Obama Does Not Begrudge Wall Street Terrorists’ Robbing the National Treasury to make a Profit?
Posted by Lance Haley in Bailouts, Banking, Business and Money, Capitalism, Economics, Financial Crisis, Financial Terrorists, How and Why We Get Screwed, Politics, Show Them the $$$, Wall Street, Wealth Disparity & the Ultra Rich, economy, financial industry on February 10th, 2010
President Obama – you cannot be serious?!?
These Titans of Socialist Capitalism take the money we bailed them out with – including “rigging” the system with the help of Paulson and Geithner so that AIG’s TARP money was re-directed to them – go on to make an enormous profit by trading with that money (which was not the purpose of the bailouts), and you call them savvy businessmen?
Now almost a year ago to the day, you gave the following remarks at the White House:
“This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset – and rightfully so – are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”
So are they failures? Or savvy businessmen? Or both?
This author recently pondered your failure to immediately regulate and reign-in Wall Street after your election when they were still on the ropes. Here is the bottom line: They screwed up, then they screwed us, and then you screwed up?
Do you see the problem here, Mr. President. The cognitive dissonance regarding your words and deeds towards Wall Street is deeply disturbing to those who supported you in 2008, especially when you had the perfect combination of opportunity, power, and the political capital to reign in these financial terrorists right after you took an oath to protect the American people. You did nothing, and now it is too late. Was it intentional? Or are you being obtuse?
When political rhetoric collides with inaction, people become dismayed. Maybe the young voters who are stepping to the sidelines are correct?
Disillusionment is too mild a word for such a betrayal if it was just the “same old wine in a brand new bottle“, President Obama.
“Meet the new Boss . . . Same as the Old Boss . . .We Won’t Get Fooled Again!”
Shame on us for ever having the audacity to hope? I hope not.
Bank of America’s CEO Ken Lewis Will Play the “But We Made Lots of Money” Card in his Criminal Case?
Posted by Lance Haley in Bailouts, Banking, Business and Money, Capitalism, Crime & Punishment, Economics, Financial Crisis, Financial Terrorists, How and Why We Get Screwed, Legal & Justice, Politics, Show Them the $$$, Wall Street, financial industry on February 5th, 2010
There is plenty of blame to go around in Washington and New York for the financial meltdown and subsequent bailout debacle. These Wall Street financial terrorists – Wizards of Mass Derivatives (WMD’s) – with the assistance of their Washington lackeys, Paulson, Geithner, Bernanke, et al., robbed the national treasury to pay the piper for their incompetence and then left us standing alone on the dance floor. And do not even go there about the fact that they “paid the money back” in their defense.
That dog won’t hunt!
Since our federal prosecutors would not grow some testicles and bring criminal indictments against any of these guys – with President Obama’s U.S. Attorney General Eric Holder leading the “Charge of the Lightweight Brigade” – New York AG Andrew Cuomo has demonstrated that he has big enough balls to make at least a couple of them pay for screwing us.
Ken Lewis, former CEO of Bank of America (BoA), was charged with committing fraud yesterday in a New York state court for his failure to divulge to BoA shareholders the extent of Merrill’s losses, as well as an undisclosed agreement to pay former Lynch executives massive bonuses, and that he intentionally misled the government by threatening to scuttle the deal in order to get another $20 billion in bailouts from the Treasury.
Sources from Lewis’ criminal defense team have indicated that they may subpoena Henry Paulson, former Bush Treasury Secretary, as well as Ben Bernanke, Chairman of the FederalReserve, to testify at Lewis’ trial in an attempt to persuade the jury that Lewis did not mislead the government about the severity of BoA’s financial condition subsequent to the banks merger with Merrill Lynch. They will further argue that the bank made money after the deal, and repaid all of the TARP money it received from the federal government, so the government and shareholders were not harmed – and in fact benefited from his actions (or inactions, as the case may be).
What is so unnerving is the audacity of Lewis to claim that “they made the company lot’s of money” as a defense. Worse yet, the Wall Street Journal comes to their defense, claming among other things that “TARP was a gilded straitjacket that every bank, including BofA, wanted to flee as quickly as possible”.
Really? Let’ review this twisted and misleading logic.
We made some really, really bad bets, and the financial system will collapse if you do not give us unprecedented bailouts to fix the system. Of course we understand that the government is giving us this money to restore the necessary liquidity - a continuous flow of money to keep the economy running – so that businesses can continue to borrow money, and keep people working. Now we are not going to making any promises to that effect, but we will do what we think is right for the financial system . Also, we accept that we have to purchase/merge with some of the other failed financial institutions as a condition of getting our asses saved. But we will not be obligated to deal honestly, nor follow financial regulations, in these business dealings, and if we see an opportunity to squeeze more money out of this mess, we will. Moreover, we will probably accept this unreasonable condition that you may limit our pay structure while we are under the obligation to pay the government back, but once we retire that debt to the government, you have to get off our ass and we can transact business however we like.
How dare them now have the arrogance to say they made money as a result of some uncanny business acumen. As I have stated previously in this blog – give me $15 or $20 Billion, I can make a Billion or so investing in some very conservative financial instruments over the course of a year, pay you back, give myself an obscene bonus – and then tell you to go FxxK youself!!
Moreover, REMEMBER THIS: they did NOT have to accept the money. Furthermore, they were supposed to lend the money, not hold it in reserve while waiting for the markets to turn North, and then invest it in order to make a quick killing so they could line their fat pockets, all the while leaving many Americans and businesses hung out to swing in the cold, harsh winds of their utter malfeasance. How utterly disingenuous of both Wall Street and the Wall Street Journal.
This author has previously commented several times about the criminal malfeasance of BoA in this blog – in this entry and in this entry - and questioned the refusal of federal prosecutors to bring charges in this matter. A Federal District Court Judge was appalled by BoA’s behavior, and was obviously disgusted that the U.S. government – specifically the Securities and Exchange Commission (SEC) – was not doing more. If we have to wait for a New York Attorney General to act, this begs the question as to how deep in bed people at the top of this government are with Wall Street?
President Obama – you took money from Wall Street, and now you say you want them to be accountable? Prove it!
P.S. This same picture was used in a previous entry – it is the finest representative illustration of the BoA bailout I have seen on the Internet. Illustration by graphic artist David Dees of DeesIllustration.com
President Obama: Yes! It’s The Economy, Stupid.
Posted by Lance Haley in Bailouts, Banking, Business and Money, Campaigns, Capitalism, Congress, Conservatives, Credit Card Industry, Dick Cheney, Economics, Financial Crisis, Fox News, Glenn Beck, Government, How and Why We Get Screwed, Media & Communication, Politics, Sarah Palin, Senate, Show Them the $$$, Tea Party, Wall Street, Wealth Disparity & the Ultra Rich, financial industry on January 22nd, 2010
President Obama has been beyond a huge disappointment.
The reasons for his significant failure in the first year of his Presidency are varied, and yesterday I read a very insightful essay on MSN Money by Paul B. Farrell of the Wall Street Journal’s Market Watch that hones in on a number of opportunities Obama could have seized upon as a result of the financial collapse that would have allowed him to increase the already significant political capital that he possessed on the day of his inauguration.
In the simplest parlance - he blew it!
This writer will have more to say on the specifics of those issues, but that is for another entry posted here on this blog. More importantly for purposes of today’s entry, I offer a humble mea culpa for my idealistic beliefs that this man was really different from all the others. I pride myself on being intellectually honest enough to admit that I was wrong about Obama’s willingness to effectuate any substantial change in this country with acumen and finesse. How stupid of me to believe that he would really first focus on the one issue that was at the forefront of every voter’s mind since November, 2007 - one year before the 2008 election – and has continuously been the leading issue for the past two years.
In the words of James Carville’s famous political mantra for the 1992 Clinton campaign, “It’s The Economy Stupid!”
Suddenly this week, the President finally has this incredible revelation that he needs to place the issue of the economy, as well as attend to financial system reform, at the top if his agenda? President Obama – how could you and all of these ostensibly intelligent people you surrounded yourself with have possibly missed that most salient and readily available information? Why did you not immediately address the failure of our economic system in it’s present form to serve the interests of its citizens, and redress the ongoing transgressions by the men who were responsible for single-handedly wrecking the underpinnings of American Capitalism? Why did you not implement substantial changes in how our economy is managed by imposing strict accountability, transparency and limitations on how the banking industry operated? Why did you trust that these financial terrorists would not not rob the national treasury for their own personal gain, instead turning a blind eye to their obvious avarice and indifference to the economic welfare of the country? Why did you not instruct Tim Geithner and the Treasury Department to direct the lending institutions to focus all of that available financial capital at shoring-up businesses and home values in order to preserve the essential assets so critical to the future of the American people, instead of bailing out these corrupt and incompetent financial giants? Why did you not utilize the available “bully pulpit” to chastise both your party and the Republicans for their unwillingness to use their legislative powers to immediately reign in these predatory financial giants, because of the “river of dirty money” (campaign contributions) running through Washington, D.C.?
Instead, you choose to ignore the over-arching importance of these matters, and wasted all of your hard-earned political capital by rubber-stamping the bailouts, and then embarking on an agenda of reforming an equally complex and failed health care system – a pathway that was historically fraught with political pitfalls and epic battles against powerful wealthy corporate interests. Anyone studying the history of American health care reform would know that simple fact.
Now, before any of you Conservatives start hooting and hollering in celebration of my criticism of the President, or my ”concession” regarding his obvious failures, let me inform you that your intellectual dishonesty for the past decade has been nothing short of shameful. Lest you think you are blameless, your willful ignorance of, as well as refusal to admit, the abysmal failure of your leaders, party, spokespersons, and Conservative media to improve the status of this country and its people - particularly Bush, Cheney, Palin, McCain, Mitch McConnell, John Boehner, Rush Limbaugh, Glenn Beck, Fox News, etc. - is completely reprehensible, and gives you no standing to believe that you have something to crow about.
You don’t.
In fact, part and parcel of Obama’s inability to effectuate change has been due to the ”political noise” you either countenenced or participated in during the election campaign in the Fall of 2008 as a substitute for reasoned and measured dialogue about what was wrong with this country. Labeling him a Muslim – when nothing is further from the truth, and cheering on those who claimed that he was “palling around with terrorists“, willfully distracted the American public from what was really at stake for the future of our country. Many of you continued to increase the sound of that chorus to a deafening roar after he was elected with the most utter nonsense – first claiming he was not a citizen in spite of the overwhelming evidence to the contrary, as well as charging that he is a Socialist, hellbent on destroying the foundations of this nation, when in fact his predecessors that you supported, as well as their corrupt political business cronies, had already virtually accomplished that objective.
In so much as you have fostered and perpetuated these opinions by either expressed belief or passive silence as to the truth, you are partially responsible for the demise of this republic. Your behavior is utterly Un-American. It is an absolute certainty that history will be far less kind to you than it will be to President Obama.
Shame on you.
And if you happen to choke to death on your teabags, oh well . . .
Obama Meeting With Fat Cat Bankers Elicits Call for Guaranteed Loans?
Posted by Lance Haley in Bailouts, Banking, Business and Money, Capitalism, Credit Card Industry, Economics, Financial Crisis, Government, How and Why We Get Screwed, Lobbyists & Lobbying, Politics, Show Them the $$$, Wall Street, Wealth Disparity & the Ultra Rich, financial industry on December 16th, 2009
So President Obama chides the bankers on CBS’s 60 Minutes Sunday night, referring to them as “fat cats”. On Monday morning he meets with them – at least the ones who showed up – to tell them they need to step-up their lending. What was their response?
Some of those in attendance said the government should “cut the red tape” in lending requirements for Small Business Administration (SBA) loans.
WTF?
We just gave these guys trillions of dollars interest-free in March of this year to lend back to Americans in order to prop up the economy. Then they hoard the money, investing it in everything from bonds (very conservative returns), to credit card holders (then turned around and raised interest rates to all-time highs), to high-risk derivatives – you know, those insane and arcane financial instruments that broke the casino the last go around. Thereafter, they paid themselves handsome bonuses for their genius (listen, give me a boatload of $$$ interest free and I can make a profit on it investing in high-grade bonds – the “spread” of 2% interest is a no-brainer; let’s see, 2% of $35 Billion – wow, nice freakin’ bonus, Lance; you are such a genius).
Now when pressed to lend the money, they have the audacity to suggest that the government-backed SBA loans are the way to go about fixing this mess. Let’s see. I will loan the money you just gave me interest free to small businesses. You guarantee 80% of the loan. I get the borrower to pledge his business as an asset to back up the remaining 20%, of course, making sure that the appraised fire-sale value of the “hard assets” – real estate, equipment, etc, far exceeds the other 20% of the total loan. Even if the deal goes South, the government pays me 80% of the money back (which they gave to me interest free, anyway), and I sell the business for 20 cents on the dollar and recover the other 20%.
What a deal! I take NO risk, and get all of the rewards. Isn’t Capitalism great?
Mr. President. Wake up!!! These guys are sandbagging us. Good will has left the building. The last remnants of Capitalism are gone, buried along side Adam Smith, who is rolling over in his grave as I speak.
P.S. For those not familiar with Adam Smith, he was the author of Wealth of Nations – the book written in 1776 where he first forwarded the economic theory of Capitalism.
“CSR” – Corporate Social Responsibility and Capitalism
Posted by Lance Haley in Business and Money, Capitalism, Economics, How and Why We Get Screwed, Sports on December 11th, 2009
In a story not likely followed by most people, the sport of Formula One (F1) racing has forever been tarnished – maybe beyond repair. Many persons will think, so what? Who cares about a bunch of European snobs and their expensive race cars? Yet, this story has a much deeper message that is even more relevant today than ever before.
In the single most despicable act of cheating in sports, Renault, the French car manufacturer, was given a suspended sentence from competing in F1 racing by the World Motor Sport Council for ordering one of it’s drivers to intentionally crash his car. Yes, you read that right – intentionally! What, you may ask, would be the motive for such an insane order, and why would the driver follow that instruction?
Money, prestige, fame, and greed, just to name a few reasons.
The scandal which has now been designated as “Crashgate”, involved Nelson Piquet, Jr., the 23 year old son of a former 3-time World Champion Formula One driver. The young Piquet, Jr. had struggled in a dangerous and demanding sport where the fine line between talent and perfection is severely tested with each race. In F1, being really good is rarely good enough. And he was really good.
Piquet, Jr. was leading the race at Singapore when his team ordered him to “have an accident” in order to allow his fellow teammate, Spanish driver Fernando Alonso, to win the race. Alonso, a two-time F1 World Champion would accumulate more points towards a rare third world championship. And Alonso had no chance to win at this point in the race unless something drastic occurred. In other words, to Renault and it’s racing team, a victory by Piquet, Jr. was meaningless in the big scheme of things. A win by Alonso would bring Renault closer to another prestigious season in the exalted world of F1 motor sports. And damn the possible consequences – severe injury or death to their driver, other drivers, track workers, safety personnel, or fans. So Piquet, Jr., being “the good lieutenant”, crashed his car into a wall.
After later being fired from the team, Piquet, Jr. “blew the whistle” on Renault. The car company never challenged his claim, thus consenting by their silence to the judgment of the F1 sport, and racing world. This immoral and utterly irresponsible action brings into question the issue of Corporate Social Responsibility - a term often bandied about by companies in an effort to convince the public that they have every one’s best interests at heart. Here is Renaults’s CSR statement from their website:
“Renault maintains relations with a wide range of stakeholders, including customers, suppliers, local communities and residents, associations, and international organisations… These relations are based on two guiding principles: dialogue and transparent, loyal behaviour. Renault’s commitment also extends to the key social issues linked to the automotive industry, such as sustainable mobility and road safety (sic), and to initiatives for civil society.”
The hypocrisy herein, is self-evident.
As to the problem, one writer asks “whether this is an isolated example of a total loss of perspective . . . ?” Let’s be realistic. In an age where banks can almost destroy the global economy and then ask taxpayers to bail them out, where pharmaceutical and health care companies engage in fraud and deceit in order to increase profits at the expense of their customers and patients, and where businessmen will stop at nothing in order to succeed – even at the potential loss of human life – we have to question the notion of self-regulation of corporate behavior.
As for those of you in business who claim that that the concept of Corporate Social Responsibility is just liberal nonsense – go read this paragraph from Adam Smith’s little tome, Wealth of Nations - the basic treatise on Capitalism:
“Our merchants and master-manufacturers complain much of the bad effects of high wages . . . thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people. [Furthermore] the interest of the dealers . . . in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.”
What Smith refers to here is that Capitalism is supposed to serve the interests of the general population, and was not designed to generate profits at any cost, contrary to what many of it’s adherents claim. With each passing day, it becomes easier to understand why Capitalism’s failures are becoming more pronounced, and more importantly, how the original principles of Adam Smith’s economic theory have become twisted and distorted over the past two hundred and thirty years by large corporations, uber-powerful business interests, and their hatchet men.
Capitalism only works when it’s principles are not distorted by the prism of ill-gotten profit, power, or prestige gained at any cost. When a corporation places it’s interests ahead of the value of even one human life, and then hides behind the shield of Capitalism in defense of their behavior, it paradoxically diminishes the real virtue of free enterprise – it’s power to elevate the well-being of every human being.
Credit Card Issuers Game Now Patently Transparent
Posted by Lance Haley in Bailouts, Business and Money, Campaign Finance Reform, Campaigns, Capitalism, Economics, Financial Crisis, How and Why We Get Screwed, Lobbyists & Lobbying, Show Them the $$$, Uncategorized, Wall Street on December 11th, 2009
The brazenness of the largest American bankers is now so patently transparent that it is arguably criminal. Yet, when you own the local sheriff and prosecutor, it’s a sure bet there will never be any charges filed.
In a previous post I called out J.P. Morgan Chase’s commercial banking subsidiary for raising interest rates on their credit card holders in an effort to squeeze extraordinary profits out of their customers ahead of the reform coming out of Congress.
Now other banks are following suit and working at a frenzied pace in order to raise rates and fees to unheard of levels before the Credit Card Accountability, Responsibility and Disclosure Act becomes law. These are the very banks that we bailed out – and now they have the audacity to screw us. Compounding the problem was the U.S. Senate’s refusal to accelerate the effective date of the reform measures from February 22, 2010 to December 1, 2009, defying the U.S. House of Representatives’ attempt to stop these financial terrorists from exploiting us.
Ever wonder what is in it for the Senators? If you watched PBS ’s Frontline on November 23, 2009, called The Card Game, the banking consultants, lobbyists, and their shameless political minions are interviewed for this remarkable story and it’s exploration of the banking industry’s credit card business. There are numerous instances of individuals defending their practices of charging outrageous rates of interest on a “loan” – I mean the kind of rates that would make a loan shark shudder.
What is most surprising is how craftily the politicians dance around the notion that giving these financial terrorists another couple of months to screw as many credit card holders as possible in order to maximize their profits for years to come will be long forgotten in the next election cycle. Let’s face some simple facts. The enormous amount of money these politicians receive from the financial industry in the form of campaign contributions - both Democrats and Republicans collectively took in almost $500 Million from the financial industry in the 2008 election cycle – goes virtually unnoticed by the general public.
Moreover, their political consultants know that in spite of their transparent complicity in allowing the credit card industry more time to run up interests rates prior to the new law going into effect, most of the politicians’ constituents will not even likely know about this transgression of monumental proportions. Furthermore, even if a very small minority of us do know – as is evidenced by this post – they are confident that this fact will be long forgotten in the endless cycle of the “politics of distraction” fomented by the partisan rancor that occurs every day and is then reported in the media.
They right . . . and we will re-elect the incumbant based on our fear of the other party’s candidate getting elected – whether it be Democrat or Republican. They rely on that fact – to our detriment. Both parties in the U.S. Senate.
And that’s how we continue to screw ourselves.
P.S. to the Banking Industry: I WILL NOT FORGET!!!
Maybe Rome (America) Really is Burning
Posted by Lance Haley in Bailouts, Business and Money, Capitalism, Congress, Conservatives, Cultural Issues, Economics, Ethics, Financial Crisis, Government, Legal & Justice, Morality, Politics, Uncategorized, crime on December 8th, 2009
Do you think that maybe America shall reap what what she has sown?
This is not some biblical or religious condemnation nor commentary. It is obvious that the country is at a watershed moment in it’s history, and it does not bode well for the future. A speech given by a Senior FBI Special Agent in Charge John Gillies in Boca Raton, Florida noted that the seeds of widespread corruption in this society were sown by failures in personal ethics and integrity, and he further insinuates that greed is the driving force.
Agent Gilles said that cheating and corruption in it’s multitude of forms, whether by law enforcement and public officials, wealthy tax cheaters, sports stars like Tiger Woods, or business “fraudsters”, only undermines the moral fabric of our society, and is “the number one criminal threat” in the United States.
It is reasonable to argue that this social paradigm shift has occurred in an atmosphere of unrelenting hubris that this country has displayed in attempting to force the rest of the world to kneel to it’s whims and philosophies – particularly the notion that the United States is the standard-bearer of economic and moral values that all other nations and societies should emulate.
Nonetheless, some will continue to blame the lack of conservative values and the influence of liberalism as the root cause of this condition. If that is the case, then can anyone provide a logical explanation for the dominance of Conservatism from 2001 through 2008, and the concomitant rise in these problems? Special Agent Gilles noted that there was a 25% rise in corruption and fraud during the past five years – and that the scale of these crimes was unprecedented. Remember: Bush and the Conservatives had virtual control of the political structure throughout that period, and had gutted the regulatory and legal systems of the means to uncover these crimes.
Just food for thought.