Print Edition: November 15, 2008
A KICK IN THE PANTS
Ever feel like you’ve been kicked in the pants? Recent news in the financial sector is enough to make all of us feel like we’re being punted more than a Detroit Lions football.
In Washington, our fearless leaders are doing all they can to make sure the idiots at the top of the banking and investment food chain can continue in the lifestyles to which they are accustomed. Do you wonder why everyone at the top gets bailed out while the rest of us just get bailed on?
Nineteen banks taking taxpayer bailout money have spent a combined $32.4 million lobbying the federal government over the past nine months. The top ten spenders are: Merrill Lynch, Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, PNC Bank, U.S. Bancorp, and Capital One.
You know, this proves is that the old adages are right. It takes money to make money and you get what you pay for.
Now add to that the fact that the Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the assets the Fed is accepting as collateral. According to Bloomberg.com, "American have no idea where their money is going or what securities the banks are pledging in return."
In case you thought the $700 billion being tossed around was the real bailout number, or the extra $150 billion added to the $81 billion given to AIG was a pretty big number, please note that Bloomberg’s reported number is $2 trillion – that’s a number beginning with "T" which is a really, really big number (and ironically is also the same letter that kicks off "Taxpayer").
Starting to feel a cramp in the keister? Please, allow me to make the posterior pain even worse. According to the Washington Post, there are banks in the world that are not only doing just fine and do not need or seek a bailout, but these banks have been growing at 15% a year since the 1970s. They have so much cash on hand they don’t have outlets on which to spend it.
Where are these institutions? They are all located in Islamic countries, and the fact that they are doing so well has nothing to do with oil. Due to an Islamic law called Sharia, banks in Islamic countries are prohibited from trading in debt or using money to make more money (interest). Thus, they can’t trade in financial instruments like the derivatives that have caused the downfall of Western banks. All dealings in Islamic banks have to be tied to actual economic activity, like an asset or a service. Basically, it’s an ultra-conservative way to operate, one that makes it virtually impossible for a bank to fail.
Isn’t that just peachy? And do you know what’s even more amazing? American and European bankers are now going to Islamic countries in hopes of studying how Islamic banking principles could be adapted to Western banks.
Study? There’s no Islamic mystery here. Don’t operate your banks like casinos and don’t view your customers and investors as gambling chips. Any everyday American doing a family budget with a number two Ticonderoga could tell you that same thing. It’s just plain common sense, you golden-parachuted dimwit!
Slow down, you say? Neff, you’re being a bit harsh, are you not? After all, every American is feeling the economic constriction in the caboose, so don’t just single out the people at the top of the bailout pyramid.
I know, I know; I should be more magnanimous because things are tough all over. Why, I recently read in a Newsweek article where some of the super-rich in New York City were asked how they were cutting back, given the tough economic times. One lady said she was going to wear an old dress to the opening of the opera season, even though she had worn the dress once before and had been photographed wearing same for a spread in the society section of the newspaper. Getting that second use from the $10,000 gown was a sacrifice she was willing to make.
In the same article, a gentleman noted that he and his family had decided against chartering a private jet to take them to Aspen for the Columbus Day weekend and instead had flown first class on a commercial airline. "It’s not that we couldn’t afford the $80,000 for the charter," he said, "it just didn’t seem right in these times."
In USA Today, it was also reported that affluent brides are swapping $1000 centerpieces of white peonies from New Zealand for $300 arrangements of Netherlands hydrangeas. Some families that usually rent Christmas villas are planning to stay in hotel rooms at the Ritz-Carlton this holiday season. There are even women who are forgoing face lifts for less expensive Botox shots. And private chefs who charge $350 to come into your home and prepare a "home-cooked" dinner have seen a 30% drop in their business since July. Oh, woe is the calamity that is upon us! What inhumanity! Suffering is rampant all across the land! When will this madness end?
I don’t have a quick solution for the economic problems facing this country. I do know this, however. The solution will come when we common citizens decide we’ve been kicked us in the pants enough and start doing some pants kicking of our own.
Jim Neff is a local columnist. Comments to neffzone@gmail.com. Read Neff Zone columns online at www.neffzone.com/cadillacnews.
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