How Greed Stole Christmas
This is a tale of how the Bonus Boys of Wall Street stole Christmas.
It came to pass that the Bonus Boys were concerned that the economic reality of the median hourly wage steadily decreasing was inhibiting workers ability to qualify for conventional financing to buy houses which was depressing sales; a trend that would eventually halt rising real estate values. Stagnation or worse decreasing real estate values would translate to lower commissions and bonuses for the Bonus Boys. To circumvent the problem of economic reality the Bonus Boys came up with new types of loans. The beauty of the new types of loans were that they could almost guarantee that they would have to be refinanced in a few years yielding more fees for the Bonus Boys; good for them, bad for the consumer. The first generation of loans worked for a while but reality would begin to set in so the Bonus Boys had to come up with increasing bizarre generations of loans in shorter time frames to keep reality at bay eventually coming up with derivatives that nobody could understand but as the pace built they could not create fast enough to outdistance reality so the damned up reality burst through. The first signs that the damn was cracking was a decline in the stock market from the November 2007 high. Even with the warning signs of the continually declining stock values the Bonus Boys refused to desist from milking the system.
When the damn burst the Bonus Boys still refused to recognize reality. They appealed to their buddies in the political world to rescue them because the reality of the financial liquidity crisis is undermining the entire world economy. Having secured the federal TARP funds it appears that instead of addressing the liquidity crisis that they contributed to the Bonus Boys have used TARP to maintain their status qua. The financial liquidity crisis translates to the overall economy as decreased purchasing power; first in the big ticket items that are generally financed like houses and cars, then to discretionary items like vacations and high ticket items such as big screen TVs and electronic toys, and finally even Christmas sales.
I am very perturbed by the hard time that domestic auto industry has had getting credit help from the federal government after the fairly easy deal that the Bonus Boys of Wall Street received. There appeared to be a suggestion that Detroit's credit problems were all of their own making not part of the general liquidity crisis. It is true that the domestic auto industry has lost market share to the competition but it is also true that overall auto sales have plummeted because of the economic crisis; bottom line if people can not get financing they can't buy cars, if they are afraid they may lose their job because of the failing economy they won't buy a car. Detroit does have the problem of legacy costs impacting their overall costs of their products. The major problem is not that the wages of current UAW employees are that much higher than other producers but that past employees are costing companies almost as much as current workers. We may in the future have to address the issues related to making the retirement years Golden opposed to the survival of the domestic auto industry but the immediate need is to deal with the liquidity crisis not harp on a political dogma that the UAW is Detroit's major problem. I find it distasteful that certain politicians think that the autoworkers should take pay cuts when the did not insist that the Bonus Boys of Wall Street take pay cuts. Saving the domestic auto industry is not just about the economic impact it is also a matter of national security. Who do you trust to build the tanks and hummers?
Had all of the TARP money gone to address the liquidity crisis instead of fixing the balance sheets of the Bonus Boys of Wall Street it could have moderated the impact of the economic downturn on various sectors of industry and possibly saved Christmas sales. There is a ray of hope with the Federal government passing money to some of the regional lending institutions which have been providing financing to keep the economy afloat.
It came to pass that the Bonus Boys were concerned that the economic reality of the median hourly wage steadily decreasing was inhibiting workers ability to qualify for conventional financing to buy houses which was depressing sales; a trend that would eventually halt rising real estate values. Stagnation or worse decreasing real estate values would translate to lower commissions and bonuses for the Bonus Boys. To circumvent the problem of economic reality the Bonus Boys came up with new types of loans. The beauty of the new types of loans were that they could almost guarantee that they would have to be refinanced in a few years yielding more fees for the Bonus Boys; good for them, bad for the consumer. The first generation of loans worked for a while but reality would begin to set in so the Bonus Boys had to come up with increasing bizarre generations of loans in shorter time frames to keep reality at bay eventually coming up with derivatives that nobody could understand but as the pace built they could not create fast enough to outdistance reality so the damned up reality burst through. The first signs that the damn was cracking was a decline in the stock market from the November 2007 high. Even with the warning signs of the continually declining stock values the Bonus Boys refused to desist from milking the system.
When the damn burst the Bonus Boys still refused to recognize reality. They appealed to their buddies in the political world to rescue them because the reality of the financial liquidity crisis is undermining the entire world economy. Having secured the federal TARP funds it appears that instead of addressing the liquidity crisis that they contributed to the Bonus Boys have used TARP to maintain their status qua. The financial liquidity crisis translates to the overall economy as decreased purchasing power; first in the big ticket items that are generally financed like houses and cars, then to discretionary items like vacations and high ticket items such as big screen TVs and electronic toys, and finally even Christmas sales.
I am very perturbed by the hard time that domestic auto industry has had getting credit help from the federal government after the fairly easy deal that the Bonus Boys of Wall Street received. There appeared to be a suggestion that Detroit's credit problems were all of their own making not part of the general liquidity crisis. It is true that the domestic auto industry has lost market share to the competition but it is also true that overall auto sales have plummeted because of the economic crisis; bottom line if people can not get financing they can't buy cars, if they are afraid they may lose their job because of the failing economy they won't buy a car. Detroit does have the problem of legacy costs impacting their overall costs of their products. The major problem is not that the wages of current UAW employees are that much higher than other producers but that past employees are costing companies almost as much as current workers. We may in the future have to address the issues related to making the retirement years Golden opposed to the survival of the domestic auto industry but the immediate need is to deal with the liquidity crisis not harp on a political dogma that the UAW is Detroit's major problem. I find it distasteful that certain politicians think that the autoworkers should take pay cuts when the did not insist that the Bonus Boys of Wall Street take pay cuts. Saving the domestic auto industry is not just about the economic impact it is also a matter of national security. Who do you trust to build the tanks and hummers?
Had all of the TARP money gone to address the liquidity crisis instead of fixing the balance sheets of the Bonus Boys of Wall Street it could have moderated the impact of the economic downturn on various sectors of industry and possibly saved Christmas sales. There is a ray of hope with the Federal government passing money to some of the regional lending institutions which have been providing financing to keep the economy afloat.
posted by candy at 8:27 AM
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