A legacy of bursting bubbles
The free marketeers can talk all the smack they want about the efficiency of the private sector, but once again we are faced with an international crisis that resulted from the free market run rampant with little or no oversight to protect the broader economy and the national interest. The invisible hand has picked our pockets clean.
One major flaw with the American corporate model is clear. The imperial executive and his plutocracy of senior management no longer behave as if the shareholders are the owners of a company, so in fact they aren’t. In the financial sector, that’s reflected in the massive bonuses and salaries paid to senior employees at investment banks as well as other, more mundane financial institutions regardless of whether times are good or bad. And we all know this problem isn’t exclusive to the financial sector. Another example of the imperial executive trumping shareholder interests is at Yahoo! CEO Jerry Yang’s ego got the way of common sense and a good offer from Microsoft. Yang, in all his munificence, then engineered Yahoo!’s takeover by arch rival Google and the stock price tanked. Brilliant.
The federal bailout of the financial industry, while apparently necessary, fits in with the corporate model. No one is actually held responsible for monumentally bad decision making. Most of the real villains in this story will keep their jobs or walk away with hefty parting bonuses. Some of the least competent likely will be paid millions in retention bonuses by the companies they bankrupted, because Lord knows we don’t want to lose their “expertise.” Thousands of administrative assistants, junior traders and other frontline employees in the financial sector will lose their jobs in an economy that is producing few new jobs. Their livelihoods will be lost first, then perhaps their homes.
So the second major legacy of the Bush Administration appears to be forming, one of complete financial and economic mismanagement, the breakdown of the banking system and the likely reintroduction of regulation and oversight. How ironic is that? To be sure, Bush is not alone in his incompetence. Federal Reserve Chairman Alan Greenspan so mismanaged monetary policy over his two decades at the helm that we have endured on his watch the massive destruction of wealth through the bursting of first the tech bubble, then the housing bubble and now the financial bubble. These are calamities that everyone saw was coming.
Hopefully history will paint both Bush and Greenspan as harshly as deserved. And hopefully we as a nation can now stop demonizing government and get it working to protect our the national economy from the distortions created by unregulated capitalism.
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