We Are So Angry That We've Lost Our Minds
I remember reading news about the race riots in Detroit and Los Angeles when I was growing up during the '60s. It was confusing to me at the time because I could never understand why enraged mobs would vent their anger by killing people and destroying businesses and homes in their own neighborhoods. I could understand the rage, but the actions it prompted seemed totally counter-productive.
Now, more than 40 years later, self-destructive mob rule has come to Capitol Hill. The same members of Congress who were either complicit or clueless while our financial system self-destructed are now so angry over the outrageous bonuses granted to a handful of AIG employees that they have passed legislation that threatens the underpinnings of our whole system.
More than anything else, what has made America unique and great over the years is that we are ruled by laws and not by men or women. If the laws need to be changed then we change them but we never take a Mulligan. We never go back and change the rules retroactively or in the middle of the game because we are angry. Until now.
Last week, in its first bipartisan vote of the year, Republicans and Democrats in Congress were so angry at bonuses that were paid to a few managers at AIG that they overwhelmingly passed a bill that would retroactively punish thousands of employees of several other financial services companies.
A government bond trader or research analyst at Goldman Sachs or Morgan Stanley who was told six months ago that he or she would get a bonus (which on Wall Street is really part of their annual salary structure and not something special) and received the check three months ago may now have to give much of that money to Uncle Sam.
The legislation passed by the House calls for all income over $250,000 earned by any employee of any of the top investment firms to be taxed retroactively at a rate of more than 100 percent (counting Social Security and Medicare). That is not just for bonuses earned at AIG -- which is 80 percent owned by the government -- but at all firms that took TARP money.
Some of these firms have behaved recklessly in recent years and many executives have become rich by exploiting the system. Anyone who broke the law should be pursued aggressively and pay a heavy price for their transgressions.
But outrage, even justifiable outrage, is no excuse for vengeful, destructive legislation which would have a chilling effect on our economy going forward. What business executive in his or her right mind would commit capital to a venture if they thought the rules of the game might changed by the government after the contract was signed?
Halliburton and defense contractors have admitted that they defrauded and overcharged the U.S. government in the past. Should Congress pass a law today taking back bonuses paid to all employees of those companies years after the fact? That the kind of logic they're using to justify the more than 100 percent tax on Wall Street bonuses they just passed.
Fortunately it seems that some sanity is working its way through the anger and outrage in the Senate and White House. It now appears likely that the bill that sailed through the House with huge support will come under closer scrutiny in the Senate and cooler heads will prevail.
President Obama says we should stay angry but express our outrage in productive ways. I say we should get rid of the anger altogether. We don't have the time or energy to waste on villains -- even if they deserve to be punished. That's the job of the legal system -- not our legislators. We need to focus on results -- not revenge.
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We should be more angry!These banks are stealing our kids future and leaving us a mountain of debt that they will then charge us interest on.We need to take to the streets!
WE ARE TO COME TO OUR RESCUE APRIL 11 A NEW WAY FORWARD William Greider on Bill Moyers Journal tonight -- watch! http://www.pbs.org/moyers/journal/03272009/watch2.html HE TELLS YOU HOW AND WHY http://www.anewwayforward.org/demonstrations/
Thanks carolab!
They talk and Yell a "GOOD STORY" on CSPAN and then when it comes time for the Bill to pass they do EXACTLY what Wall Street Wants!
I guess that is what happens when each Congress member get $3.5 Million from Wall Street every Four Years and the ones on Wall Street related Committees get FAR MORE!
We are in a Vice Grip by Wall Street!
Guess that is why all the WS Bank Executives have not been Fired, Fined, Investigated, Prosecuted, or Convicted!
What if the coach who screams at the ref gets results? His players already know their jobs.
See Larry Gellman's Profile
That makes sense if the refs are the only problem. But in most cases, the players need help as well. I think it's fair and even smart to let the refs know that you're upset and that you think they screwed up, but if there's still time left in the game, the players, not the refs, will have more to say about whether you win or lose. If you think the refs went was over the line and took money to throw the game, then you should alert the proper authorities and hope they go to jail. But it's probably not smart to wait outside the gym with a tire iron and take matters into your own hands.
Mob rule? what utter nonsense. These SOBs have been ripping off the American worker for years. Executive compensation is ridiculous. They so called traders ( I call them traitors) should be in jail. Over the last 20 years we have seen a new aristocracy of the rich created that have controlled and destroyed the destiny of this country with their greed. Our forefathers fought a revolution to rid the country of the tyranny of an aristocracy. It's
Even IBM which stood for so many years for treating their employees fairly announced today it was letting 5,000 .more Americans go and shipping their jobs oversees. T.J Wat son the founder of IBM must be spinning like a dervish in his grave, as he refused to let ONE person go during the great depression. The management of our major corporations have lost their commitment to our country and society as a whole and only think of the short term bottom line. The US is supposed to be a country dedicated to all its people, not just the greedy upper class.
See Larry Gellman's Profile
I'm not saying that there aren't a lot of people who have abused the system and help get us into this mess.
But it is always counter-productive to focus on venting our anger and exacting revenge against villains when we still have work to do. It reminds me of a basketball coach who spends a whole time out screaming at the refs and never gets around to coaching his team. The refs may deserve it but it's still not smart.
We should sue Halliburton for breach of contract and get all the money we paid them back, nevermind the bonuses!
No Mr. Gellman, I think you may be the one who should worry about your mind if you want me to believe the continued health of the world financial system is dependent upon the IRS confiscating my paltry wages to pay the bonus pool for a bunch of losing derivative traders that bankrupted an otherwise profitable company which now survives only due to the largess of the US taxpayer.
Did it slip your sound mind Mr. Gellman that the House bill only affects people at companies receiving over 5 billion in TARP funds, or people making over $250,000 a year, or did you just chose to leave out the parts of the bill that don't suit your plea for sanity?
I feel sane, calm and quite fine.
You?
The implications of the bill are what brings down the capitalist model. If that's the way the majority of Americans think we should go, good enough. But we need a plan before we start or we'll end up with anarchy.
What brings down the "capitalistic" model is the socializing of these firms losses in the first place.
The rules of the game have already been changed mid-game for the taxpayer. We were sold free-market fundamentalism as the magic-ticket to prosperity. Yet know we're paying the fee for the ride of the super-wealthy.
So, I weep no tears for those poor poor bankers and ceos, for having the rules of the game changed on them.
Posts like the above, and by Gellman show just how out of touch some are from the reality of what we're doing. We are no longer engaging in free-market capitalism when the firms are being bailed out. We are no longer engaging in free-market capitalism when these ceos and execs are gaining fat bonuses for failing.
All the wailing and fear-mongering about a supposed brain-drain if people are actually held accountable is laughable. Where are they going to go? Away from finance, where they burned and looted our system? And left us holding the tab?
Don't the door hit you in the ass on the way out, chums!
See Larry Gellman's Profile
It is an interesting notion that when our democratically elected representatives spend money on our behalf to keep us safe, provide emergency relief, health care, and a variety of services we want and expect we think that's what government should do. But when we are called upon to pay for it through taxes, you describe it as the IRS confiscating your wages.
If you order a meal at a restaurant, is the waitress "confiscating your wages" if she brings you a bill and expects you to pay it?
Reasonable people can disagree about the quality and size of the expenditures that are made, but in a democracy I don't understand how grownups can argue that we should have to pay our bills.
By the way, I did mention that the House bill only applies to employees of TARP recipiennts.
The problem is that the legal system won't do anything about this. It can't because it was all legal. It was legal because Bush deregulated everything. Since it was deregulated, the unscrupulous ones took advantage. Since their unscrupulous competitors were taking advantage, the scrupulous ones had to either take advantage as well or else watch their market share dwindle. So in the end, the firms who understand that you shouldn't cheat just because cheating is legal were run out of business. The firms who cheated anyway ran THEMSELVES out of business and either went bankrupt or had to beg government for our money. I'm not sure who to blame this problem on, because I don't know who caused it: letting companies become too big to fail. I remember some of this while it was happening and I remember people saying that it was dangerous but not a very good articulation of why it was dangerous. Now we know why, I just can't remember who.
I agree, that our anger is misplaced. I say we SHOULD stay angry but focus our rage at those who are actually responsible. Phil Gramm, for leading the charge at repealing Glass-Steagall; and George W. Bush, for championing the cause of deregulation. I would say to also focus on Milton Friedman for writing the books that made Gramm & Bush think they were doing the right things; but since he's dead, well, you can't kick a dead economist. Well, you can, but he won't feel anything.
I agree completely. The time for anger is past; what's done is done.
Now let's roll up our sleeves, nationalize, investigate, prosecute, punish and where possible, seize all assets gained from the time the first incident of illegal activity occurred to present.
Spare no one. If politicians and "untouchable" plutocratic CEOs were involved, no matter how far up the food chain, prosecute and imprison them.
Why should we have anything less than a zero tolerance policy when the consequences are so horrid?
they are going to whine that it was 'all legal'... AT LEAST CHARLES KEATING WAS CONVICTED of RACKETEERING and went to jail...THE ONLY person who has successfully prosecuted these jerks was SPITZER and I want him working for us.
Spitzer IS one of the few good guys . . . no doubts about it!
It just sucks that he was done such an injustice . . .
as he .w.a.s. watching out for our interests.
FalconerHK - all GREAT points!
I would forgo (reasonable) huge taxation and limits on pay
IN EXCHANGE for complete investigations and
appropriate actions and prosecutions for
the many crimes committed.
Simple term.
Cuomo in New York is working on that, the FBI and Secret Service are investigating. But that takes time, we won't know all the details until the indictments and sub subpoenas are handed out.
What do you expect? Really?
How many Americans can define what a Global Economy is?
1 out of 4 Americans hold a passport?
Disregard the fact that Americans world ranking is not even in the top 25. I guess since it is a global ranking, that is irrelevant. Americans are always right, aren’t we?
Let them fail? Explain why Republicans are such a fan of Corporate Bankruptcy?
What does the American Taxpayer know about Corporate Bankruptcy?
What do Americans know about DIP Finance TOOL, Debtor in Possession, created in the late 80’s by a BANKER.
Who are the losers in Corporate Bankruptcies?
I haven't heard of Debtor in Possession, can you provide some links?
Wonderful writing.
Yes, we are a country of laws. Even though they dismantled many of the protections against excess leveraging and creation of financial instruments of illusory value, there are still laws on the books to address some of the most eggregious cases. Prosecutions, both civil and criminal, would be supported by the public. The problem is that we need to find the public will to address the misappropriation of public funds from a criminal perspective. So far the only prosecutors who have been interested have been in New York - Cuomo and Spitzer.
The advantage of seeking retitution through the legal process of trial is it is even handed and fair. It allows us to investigate the facts in court and come up with a solution.
Cuomo and Spitzer are running for office. So that doesn't count. And the rest of the prosecutors know that there is no crime if there is no law. So they are actually adhering to the foundations of our system of law.
"The advantage of seeking retitution through the legal process of trial is it is even handed and fair."
Only if the law does not change after the fact. Which is why the Founders wrote this rule into the Constitution.
But rules HAVE changed after the fact. This country once allowed slavery. The former slave owners were not compensated one penny when the slaves were set free, even though they were bought (I hate to call it legal, but) legally. When we changed the rules and refused compensation, the logic was this: You Should Have Known Better Than To Think You Could Morally Own A Human Being.
Well, now the logic should be this: You Should Have Known Better Than To Think You Could Practice Adverse Selection And Moral Hazard And Get Away With It.
Pretty simple, yes?
Is there a law against ponzi schemes? No. Is there a law against fraud? Yes. That's why Maddoff is sitting in jail right now.
So what if Cuomo is running for office? He's also doing his job and pursuing fraud investigations.
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