Where Are the Customers' Yachts?

The title of course refers to a question by a tourist to New York City a century ago. Admiring the yachts in the harbor owned by the bankers and brokers, he asks the guide, "Where are all the customers' yachts?" There are still none.

The New York Times reported, "Thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year" , an outrage to many ordinary taxpayers like me who helped bail out the companies who employed them. Morally, as Robert Skidelsky points out in his review of Martin Wolf's book, Fixing Global Finance, "the U.S. financial community has been living well beyond its means."

The 2008 financial crisis 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 are not 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 opaque market in "some" derivatives. It is astounding.

After the Hindenburg exploded in flames, we began in the US 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 hydrogen -- if 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 me -- it is our money that bailed out the blimps.

There are plenty of executives out of work; there are far more worker bees out of work -- 5 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 in 2004 predicted 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 overnight -- it took time for the best and brightest to build this house of cards.

The Fed Chairman 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 markets -- Heaven forbid) -- means, he claims, that were not in place when Lehmann, AIG, and etc. had their little liquidity problems and "counter-parties" were engaged in a desperate game of trying to make sure that the hot potato wasn't in their paws.

There are plenty of Hindenburg pilots and enablers still in place. I have a glimmering understanding of the complex macroeconomic and geopolitical forces that contributed to our recent economic crisis. But not for a minute do I concede that I am naive in laying the blame at the door of CEOs who lived quarter to quarter and paid no attention to reality -- just to keep the analysts happy, to keep market value rising. If agents like Sandy Weil, Bob Rubin, Larry Summers, Alan Greenspan, et (many) al., and their personalities and values, and deregulatory cheerleading aren't responsible for our financial crisis, then do we just blame it on the gullible and fleeced public?

Comments

[RightWingMarine]

another good question is where are the yacht builders jobs? We used to have a thriving yacht building industry on our East Coast but Sen Kennedy introduced a bill to make the rich "pay their fair share" on imposed a luxury tax on yachts. Now our yacht building jobs are in Europe, another example of govt coming to rescue the people and punish the rich.

[MajorKong]

Yacht building must be a conservative sacred-cow like timber and ranching. That's the first I've ever heard a conservative lament a job going overseas.