Sunday, November 23, 2008

Unprecedented "Meet the Press" Highlights Change

Meet the Press hadn't seen this number of "unprecedented's" since September 2005. James Baker, Richard Daley and Joe Lieberman repeatedly called our economic free fall "unprecedented." Hurricane Katrina was the 2005 "unprecedented" event.

How unprecedented are they? FEMA drilled for a "Katrina like" event in 2004. They practiced on fictitious Hurricane Pam. Practice didn't make perfect.

Numerous financial guru's predicted the economic meltdown. America's financial stewards, from the Federal Reserve to the SEC to corporate board rooms, took down our fire walls. A decade of ramped up greed and leverage led to our economic conflagration.

Financial products that cranked up returns in an up market, turned into razor blades on the way down. Numerous vaporware products disappeared in a plume of smoke. So far, I don't hear many calls for change, other than to reduce leverage a tad. A failure to learn from mistakes means we are destined to repeat them.

The peppering of "unprecedented's" implied no real change. Senator Joe Lieberman kept his Homeland Security Chair. His regret over harsh words on candidate Barack Obama seemed as sincere as Lehman Brother's Dick Fuld before Congress. Tom Brokaw did his best to get Joltin' Joe to apologize, but Lieberman wouldn't fold.

The last "unprecedented" came from none of the guests. I uttered the derogatory word when James A. Baker, III called President elect Obama's appointments "center right" of the Democratic party. Seeing his happiness with the incoming Cabinet, I felt the victim of campaign bait and switch.

When a Carlyle Group insider is happy, I'm not. Baker and company don't need to make 30% annual returns on the taxpayer's back. Many of Carlyle's affiliates are government contractors. Private equity underwriters (PEU's) ride a government greased, gravy train via their preferred taxation on carried interest.

Mr. Baker may be worried his PEU tax benefit may disappear, but another fear had his immediate attention. Systemic risk hasn't fallen, despite $4.28 trillion in federal interventions. He urged President Bush and President elect Obama to take short term action to shore up America's financial sector. Financial failure remains on the table.

Disaster capitalists use economic risk to drive down employee wages and benefits. Richard Daley promised an Obama administration would create jobs. Mr. Daley threw a sandbag in for good measure, promising to "create or save 2.5 million jobs." How will job growth/stabilization express in the corporate race to a global common denominator on pay and benefits?

The job multiplier made a Rocky IV like comeback in the last year. In the 1990's economic developers used the multiplier to highlight the impact of new jobs. The statistic showed how many times a dollar washed through a community, creating more jobs. But the U.S. Chamber of Commerce sent the job multiplier to China and India.

It substituted the dollar extender for Americans. Cheap goods meant your dollar went farther. The dollar extender champ ruled from 2000 to just two months ago. Yes, 2.1 million jobs fled America for the siren song of cheap Asian labor. The job multiplier in reverse has the public's attention, but our elected leaders remain skeptical. Congress ignores big auto's request for $25 billion in bridge financing, even though 2.5 million jobs may be at risk.

Members of Congress vilified Big Three auto executives for their mode of travel. Funny, auto execs' private planes look surprisingly similar to the fleet of private jets at this summer's Democratic National Convention.

Citibank received $25 billion from Hank Paulson's TARP. Who gives a company that kind of money to cut 50,000 jobs? Despite American taxpayer's investment in Citi, Wall Street traders drove its stock down to three dollars and change. The market bets on CitiGroup's failure.

Change is coming, like it or not. Maybe the change I voted for will manifest when I find a quarter in a parking lot. If that's all I have, banks, new cars, and politicians are irrelevant. Now, that would be unprecedented!

No comments: