The more I think about this country the more I realize that we are in the midst of a Perfect Storm. It is as if something new and disastrous happens every day. The current gust of the storm is AIG and it’s bonus payments.
But, has anyone actually looked into the bonuses? Listened to CEO of AIG Edward Liddy’s testimony about them? Heard Geithner’s response?
I read about Thomas Freidman saying we are an Immature Democracy and Ian Bremmer saying that this focus on the bonuses is a Luxury We Can’t Afford. It seems that neither of them have.
It’s as if this is a zero sum game. Do they not understand how people work. Yeah, Geithner and the president have to focus on AIG, but do they really think that is taking away from fixing this country. Do both of them just not fix things until this blows over…seriously that is ridiculous. And, Congress, by all means they should be focusing on this. Someone failed, money is lost, they need to be our nitpickers. If they are playing politics it is because that is the way the Constitution designed our system. Let them have their hearings and tell AIG and Wall Street: we are annoying and we are watching.
The real story behind the bonuses, can be quickly summarized: Liddy sent out a company memo asking for them to be given back, many already have. Geithner said that whatever they don’t get back they will make the company pay back. In the business of money, its simple, and these folks are keeping it simple with the eye on the prize.
Which has led me to wonder why are folks so focused on Wall Street or the individual moves of one bank? Is this not a game of chess like Mark Drapeau says?
It is all bullsh$t. Sorry, for saying that but all of these high minded folks are wrong. There are people actually suffering. Not wall street bankers who lost their 100k salary. But people in Michigan, California, and our children. All of these people are going through tough times.
And no, it’s not becuase of ‘bad mortgages’ or ‘banks’. Anyone who says that is the cause of this recession is just plain ignorant or wearing horse blinders. This is a perfect storm. We have several massive, country supporting industries going under. They are not going under because banks failed them. No, they failed in their business.
GM, Chrysler, Ford they are just not making cars people will buy. Then there is textiles, electronics, and any other number of manufacturing companies that have been outsourced or out-competed in Mexico, China, Vietnam. Farmers and the farming industry is making money but not for the average person, the average farmer (what used to be the bedrock of our nation) is broke and dying.
Seriously, get out of your McMansions and go visit the rustbelt, midwest, and inner cities…you think they are worried about their 401k’s?
Then take a step back and think a chess-like four moves ahead. Are we really going to be shocked when banks get start leveraging themselves up to pre-recession levels. Are we going to be shocked when they again hand out bad loans. Believe me, it is inevitable.
Then you could say this is a crisis of leadership, regulation, and bad bets, but it is also a crisis of credit. Our economy is moving almost entirely into the credit world. New consumers, long deprived are going to live through credit. They are going to jump at the chance to have the American Dream, a home. They are going to buy everything they want and believe in minimum payments.
Oh, wait, that already happened.
These consumers are still there. The need for them to have credit is still there. The mathematical models will always find ways to give them credit. And they deserve it. Get used to these bad credit lenders, they are not going anywhere.
Ok, now so I’ve touched on the fact that this perfect storm includes financial failure, industrial depression, and a new credit/service economy. Their is much more going wrong in this country and its perfect storm (2 wars!). But, their is hope and frankly it angers me that not one of these pundits sees it.
So, let me call it out. Because, even though I am a huge Obama fan, I can also see that he is playing out the perfect strategy. Take a look:
- Come into office in Jan and lay it all on the table. Describe the problems and how long it is going to take.
- Markets drop to lowest levels, worst news yet comes out, everyone faces the reality (which was not happening under Bush).
- Change the game. First begin building trust. Obama has a trillion to spend and his first move is to announce that he will save your job and your mortgage.
- Fix the financial system: Bernanke/Geithner both at the same time announce several plans designed to get credit going (lowest interest rates ever) buy up toxic assets (take over banks who have them), and then offer government backed loans (TALF).
- Obama slips out of town and as Emily from Slate Political Gabfest puts it: shows America that its okay to have fun despite all these problems.
Anyone who understand the psychology and politics of this country understands what is going on. Obama knows that credit relies on trust. He knows that our entire economy can ride on sentiment. You have to have both trust and hope. What he is doing is perfect to get that back for our country.
Then, simultaneously, he is rebuilding the economy any way he can. Stimulus, green technology, cap and trade, education. He is getting railed for taking on too much when really he is pushing hard for new growth in our economic sectors.
Don’t take my word for it, either. Do some research and you will find that the deeper the rabbit hole the smarter the strategy.
We are in the midst of a Perfect Storm and if you can see through the rain there is a Perfect Strategy being executed in step by patient step.