I titled this post "rage" because it is only word to describe how I feel right now. Pure, unadulterated rage. Not anger. Not frustration. Rage.
Once again, the leaders and stockholders of an American business have failed in their legal and fiduciary responsibilities to their customers, their fellow citizens, and their government. The failure of AIG's leadership to do their own due diligence in the bond insurance they issued is horrifyingly massive. An $86 billion bailout? ARE YOU FRAKKING KIDDING ME?!?!
The free market is dead, and our government -- Republicans and Democrats, Congress and the President, State and Federal -- are the pallbearers. There is no free market when company executives and shareholders are allowed to collude and pass off their risk to the "beneficient hand" of government (as Herbert Hoover would call it), while these ratfucking little bastards collect massive bonuses and stock options.
There is no free market when company executives and shareholders are not held painfully accountable for their abject and absolute failure to guard the public trust they hold. And I am not just talking about losing profits. I am talking the abject, insufferable pain of penury. Making them bankrupt beyond measure. Making them suffer through poverty and penury. Stip them of every asset, property, and dollar. Let them line up at a soup kitchen, beg for pennies, or walk the streets at night.
The men and women that operate America's corporations do so in distinct public trust. They have an obligation to be honest, open, and direct. More importantly, they have an obligation to operate those companies in a manner that maximizes shareholder value, while treating the money of their customers, creditors, and shareholders as their own.
But the leaders of Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, Bear Stearns, Washington Mutual, Wachovia, and even Maryland's own 1st Mariner Bank have not done that. Instead, they have let themselves be infect by avarice, greed, and gluttony. They chased greater profits at the expense of due dilligence, risk management, honesty, transparency, and their own personal honor. They built elaborate financial empires upon rancid air, passing the lies and deceit ever upward. They are the latest version of the snake oil salesman, the multilevel marketing gurus, the pyramid scheme scam artists.
These great business geniuses wrote hundreds of millions of dollars in fraudulent loans. Loans that were written without verifying the simplest of details, like a job, or assets, or even credit worthiness. In many cases, the borrowers were themselves absolutely fraudulent. In some cases -- like those of 1st Mariner Bank's Virginia Office -- the loan officers themselves were guilty of writing these loans for their own benefit. And in many more cases, the borrowers were simply allowed to borrow far more than they should have.
In any of these cases, though, it is the responsibility and duty of a corporation's management to fully vet the loans being made. To enforce the due diligence that loans are being made honestly to honest borrowers, based on their ability to repay. Instead, they loaned money to sub-par borrowers based on the value (current and potential) of the home they were buying. It was pure stupidity, it was dishonest, and it introduce a horrifying level of exposure to our entire economic system. Up the chain, from the local bank branch and mortgage company, all the way to the executives at AIG and Bear Stearns, not one of these (apparently) overpaid and overvalued executives stopped to ask the question: "Does this make any damn economic sense?"
But our government made it worse. By structuring tax laws to favor leveraged investing instead of structuring tax laws to be bias-neutral, the government encouraged businesses to participate in high-risk capital investments. This isn't the first time. It probably won't be the last, given lawmaker's heroin-like addiction to doling out tax favors. In 1993, when Bill Clinton pushed through his first tax package, he eliminated the tax deductibility of cash salaries over $200,000. But he didn't address non-cash compensations -- stocks and stock options. And thus, the beginning of the internet bubble was born.
This time, we have politicians of ALL PARTIES, pushing this notion that every American needs to own a home. What unmitigated bullshit. I don't care if they are Democrats, Republicans, Socialists, Communists, Nazis, or Greens -- the notion that every family should own a home is downright stupid and idiotic. And so are the tax laws -- which favor home ownership, punish renters, and encourage horrific lending practices. Worst of all, tax policy at the state and local level is built on this foundation of sand, buying into the economic specious notion that home values -- and hence, tax revenues -- will always increase.
Everyone in government forget the simple concept of supply and demand. Demand can never be "always increasing" (which would drive values up), because market saturation eventually leads to oversupply. To continue increasing the demand curve, they gamed the system, driving companies to loan to even riskier borrowers. And that opened the door to bad decisions, fraud, and theft. And bankruptcy.
Before, I said the free market is dead. Why would I say that? Because in a true free market, you are free to win-- and lose. You are not protected by Hoover's "beneficient hand". Risk is mitigated by the threat of failure, and success is rewarded. Failure is punished -- viciously and brutally. And in a true free market, the people that run the companies are the ones putting their own capital at risk. The left in this country can decry the Vanderbilts, the Carnegies, the Morgans, the Rockefellers, and the Mellons all they want. But each of those own men -- and dozens of others like Henry Ford, Henry Clay Fick, and others -- put their own capital, their own genius, and their own reputations at risk. The Gilded Age was a golden age because the captains of industry in that time invested their own blood, sweat, tears, and money. And their lenders and their stockholders held them personally responsible. (And in the case of Henry Clay Fick, his unionized workers!)
Instead, we have a system now where the United States Treasury is the "lender of last resort". And let's be clear here: the United States Treasury is not just some building in Washington, DC that prints bills and strikes coin. The United States Treasury is YOUR wallet, and MY wallet. It's YOUR tax payments and MY tax payments. At the end of the day, responsible Americans will end up paying the bills for the risks taken by the complete and total ASSHOLES who are not ACCOUNTABLE to YOU AND ME. I don't get a say in what AIG was doing, why should I bail them out? Bear Stearns was not in the habit of calling me for advice or insight. Why should I bail them out? Ed Hale is not in the manner and asking if its a good idea to open a branch in Shrewsbury. Why should I be prepared to bail him out?
And that is why I feel nothing but unmitigated rage. IT'S MY MONEY, THE FRUIT OF MY LABORS, that these massive asshats and raftucking unpatriotic, scum-sucking bastards are taking to cover their ultimate failures. They didn't do their job, so now I will have to do mine harder. They failed to meet their obligations, so I have no choice but to work harder and longer to meet mine. While Mayo Shattuck of Constellation is off buying new plastic surgery for his cheerleader wife, I have to work harder to make montly insurance payments. Lehman Brothers reported a profit of $4.5 billion last year. What in the hell happened to that money? Ed Hale will make $522,000 this year, but he can't begin to pay off a $4 million loan while he flies back and forth from Canton to Easton in his little helicopter.
Meanwhile, I have to limp along in my 2002 Ford Taurus with 100k miles. And pay off the debts they accrued through their dishonest, lying, cheating business ethics.
And so I say this: everyone one of these executives who have been lapping up big bonuses, and massive stock option grants, and preferred insider company loans, and all that other excess. You should be demolished. Ground up into a fine dust and incinerated. You should be made to feel intense pain. Your name should be a course for the next hundred generations. You shouldn't be allowed to own a corner bar, much less run a company in the future. You should be banned from working in a public company FOR EVER.
And maybe then, the rage in my heart will start to fade. But not until I get my pounds of flesh.