subject: Where Are All The Customers' Yachts? [print this page] July 31, 2009 July 31, 2009
By Leslie Pratch
The title refers to an anecdote that occurred a century ago. A visitor to New York admires the yachts that the bankers and brokers had in the harbor. Naively, he asks, Where are all the customers' yachts? Naturally, there were none. Fridays New York Times reported that thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year.
The financial meltdown came because of the failure of too many senior managers in too many sectors to do their jobs. They failed to address core values and change corporate culture. Many in the financial sector still arent doing anything curative about the gaping flaws in culture and values in their enterprises. Apparently they think this is just fine. They made the meltdown possible, in fact inevitable, because they turned a blind eye to reality. And they still yearn for an unregulated and un-transparent market in some derivatives. It is astounding.
After the Hindenburg exploded in flames, we began to think it was not such a good idea to use hydrogen in airships. To this day the Goodyear blimp is not sailing around filled with hydrogenif there is, indeed, still a Goodyear blimp. Our major financial institutions seem to be floating still on hydrogen. The $5 billion in bonuses awarded by Citi (closely followed by its fellow blimp pilots) based on very short-term gains (and suspect gains at that, to my mind) is an affront to ordinary taxpayers like meit is our money that bailed out the blimps.
There are plenty of executives out of work; there are far more worker bees out of work5 million since the financial meltdown. That meltdown was a result of bad, reckless, irresponsible, greedy behavior, egged on by cheerleaders like a senior executive at the National Association of Realtors who predicted in 2004 that real estate prices were going to continue to rise (apparently without end). There are plenty of executives who deserve to be fired. I am fed up with bonuses paid to retain the sort of talent that worked as the sorcerers apprentices to push us to the edge of the abyss. Not that this was something that happened overnightit took time for the best and brightest to build this house of cards.
The Chairman of the Fed now says that we have to get rid of too big to fail and have an orderly process of taking over and gently, carefully dismantling toxic institutions in an orderly fashion (so as not to scare the marketsHeaven forbid)means, he claims, were not in place when Lehmann, AIG, etc., etc., had their little liquidity problems and counter-parties were engaged in a desperate game of trying to make sure that the hot potato wasnt in their paws.
There are plenty of Hindenburg pilots and enablers still in place. I lay the blame at the door of CEOs who lived quarter to quarter and paid no attention to realityjust to keep the analysts happy, to keep market value rising. If men like Sandy Weil, Bob Rubin, Larry Summers, Alan Greenspan, et al., and their personalities and values, and deregulatory cheerleading arent responsible for our financial crisis, then do we just blame it on the gullible and fleeced public?
