Ward on Words

In February, Frontline aired a documentary "Inside the Meltdown, " a documentary on the financial crisis. I was very busy with work and missed it when it aired on TV, but watched it last night online. I recommend it as a great resource for anyone looking for information about the collapse of our economy. At one point, Senator Dodd recounts the moment the Treasury Secretary informed an elite group of Congressmen about the situation. After being told that Congress needed to hand over vast sums of money or the global economy would collapse, says Dodd, "there was literally a pause in that room where the oxygen left." We were all left gasping for air when we were told that "the system" was drowning in toxic assets and the great titans of capitalism needed socialism to save them. Money from the feds was needed - vast sums of money, trillions of dollars had to go to these Wall Street firms to "bail them out" - no strings attached. That ...

According to a story in yesterday's NY Times, those who work at Wall Street firms "are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits." I have to wonder - where is this money coming from? Aren't these firms clogged up with toxic assets? Didn't the negative balances on the books of these companies drag down the country's economy? So why aren't profits for this quarter being used to recapitalize after the losses of last year? Have we reached a point in American capitalism that only the taxpayer responsible for the losses on the books of the Wall Street firms?

"Love your neighbor as yourself," the Bible tells us, but if you're a member of the Catholic hierarchy like Cardinal Francis George of Chicago or Bishop John D'Arcy of Indiana, love means never having your president speak at Notre Dame. Or at least, not having President Obama speak - because he's a pro-choice guy and that doesn't swing with the Catholic pro-life doctrine. I'm sure they love the president like they love themselves - they just don't want to hear him speak on hallowed, Catholic soil. According to the Chicago Tribune , Cardinal George apparently called Obama's selection "an extreme embarrassment." In a statement , Bishop D'Arcy wants Notre Dame to ask itself "if by this decision it has chosen prestige over truth." Thankfully, the president of Notre Dame has not caved to the pressure (yet.) I want President Obama to speak at Notre Dame - I want him to talk about the morality of the pro-life stance. And...

I have previously expressed my puzzlement at Tim Geithner's desire to create a market for toxicity by using tax dollars to snap up the toxic assets clogging the pipes over on Wall Street. Of course, he'll give "the market" the chance to buy these "assets" too, but if there are losses to take, it looks like, under his plan, the taxpayers will take the biggest hit. The guys over at Baseline Scenario are promoting a better use of these funds - let's use these toxic assets to fund the bonuses of the Wall Street executives who worked so hard to accumulate them. I like this idea. I like it very much. The guys on Wall Street worked very hard - and earned so very much - as they accumulated these poisonous assets on their books. Let that work pay off - use those funds to pay their bonuses - not taxpayer dollars from the feds. The good news - I'll bet there'd be no regulatory strings attached to those bonuses.... The Baseline Scenario folks a...

I launch my computer this morning to learn that NBC, which used to make the nation laugh a lot on Thursday nights, has asked Rod Blagojevich, the disgraced governor facing federal corruption charges, to appear on a reality TV show. It is a program in which "celebrities" are taken to Costa Rica, where they must endure "fun and comedic challenges designed to test their survival skills." Oh NBC. Really? I suppose at first glance, it seems like NBC's golden opportunity - the chance to bring a Kipling-quoting shyster to a jungle to see him spar for survival with other entertainment types. (And with Blagojevich coming to the jungle from the swamps of Illinois politics, he's got to be the odds-on favorite of the bookies.) But if you think about it, he's a man asking a judge to postpone his trial so he can get paid to frolic in the jungle. Blagojevich is not a celebrity. He's a crook. He's a man who was forced to resign his post after ...

I read this in a story that appeared in yesterday's Wall Street Journal: "Goldman Sachs posted a $1.7 billion profit today — and with it, Goldman set aside $4.7 billion for salaries and bonuses." As with most of what happens on Wall Street, I find myself bewildered by the math involved here. I'm just not clear on how $1.7 million in profit is transformed into $4.7 billion for salaries and bonuses. Apparently, the $4.7 billion number is 50 percent of their revenues for the quarter. Good deal for the executives at Goldman. Still not clear what the return on the taxpayers' investment will turn out to be.

The Washington Post is reporting that Goldman Sachs has had a highly profitable quarter: "...Goldman said its profits were $1.8 billion, or $3.39 a share, compared to $1.5 billion, or $3.23 a share in the same period a year earlier. That was more than double the $1.6o a share, analysts had been expecting on average." The company is now promising to return the TARP funds they were given when Hank Paulson, one of their own, was the Treasury Secretary. Some experts, however, are not happy to hear that profitable financial institutions want to pay back the money. Seems it will expand that separation between healthy and diseased banks we've been so worried about. Diseased banks will remain diseased - and like lepers of old, they will be shunned and isolated, causing them to eventually collapse. So the theory goes. I wonder just how long these experts think the US government should keep diseased firms on life support. I think Goldman should pay back the TARP lo...

Not long ago, I wrangled a bunch of parents to volunteer for the school's annual carnival. A lot of work, but it's a volunteer position that gives me the chance to talk with people I'd otherwise never get to meet. One of the moms who helped out is a flight attendant at American Airlines. During some down time at the carnival, she shared her frustration about the great divide between executive compensation and the pay scale for the rest of the people who work for American. She had no problem with executives earning significantly more than other employees - her problem was that the executives who negotiated hard for union concessions in a number of areas - including compensation - then turned around and paid themselves an enormous bonus. The flight attendant was outraged that leaders who asked for shared sacrifice apparently felt entitled to remove themselves from the opportunity to sacrifice with the rest of the company. According to this story in the Washington P...

As part of Paulson's Troubled Asset Relief Plan, JP Morgan Chase received $25 billion from the feds last October, making it one of the largest recipients of TARP funds. In his October 10, 2008 press release defining the plan, Paulson assured the public that "this is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything." Paulson, of course, was referring to the investment costs of TARP - and apparently felt that his plan would be a good deal for consumers. As he said in his press release: "We expect all participating banks to continue to strengthen their efforts to help struggling homeowners who can afford their homes avoid foreclosure. Foreclosures not only hurt the families who lose their homes, they hurt neighborhoods, communities and our economy as a whole." Back in those days, the housing crisis was the great issue confronting the Treasury Secretary - all those many loans handed over to consum...

David Brooks' recent op-ed piece in the NY Times takes a look at what happened to the global economy. Why has all hell broken loose? Was it greed or stupidity? In that he is a conservative Republican, Brooks does not agree with the "greed narrative" being used to answer the question, most notably defined in "The Quiet Coup" by Simon Johnson. In this narrative, greedy oligarchs usurped our democracy and took over our government. Instead, Brooks finds comfort in the "stupidity" narrative, in which "overconfident bankers didn't know what they were doing." Brooks see logic in the idea that the steady stream of Ivy League MBAs that populated Wall Street were too stupid to understand what was going on under their noses in their businesses. Too stupid to realize that they had no capital supporting their loan policies. Too stupid to understand that the insurance devices they were selling were insufficient to cover the potential l...

Rick Wagoner, newly retired CEO of General Motors, is driving away from his career with a $20 million retirement package. That's what's being reported in the MSM (see here for one of the stories.) Wagoner had been CEO at GM since 2000 - so had nearly a decade to make an imprint on the company. Prior to that, he had been COO and CFO for the company - meaning he spent at least 15 years in the C-suite at GM. His company exists today thanks only to the largess of the American taxpayer. And thanks to the brilliant retirement package he negotiated sometime ago, Wagoner will never again have to work a day in his life – nor will his children. His time at GM was spent building up massive generational wealth that the autoworkers who worked for him cannot even fathom. (It's funny when Detroit talks about the expense of building cars, they never factor the enormous compensation package of the CEO into the equation.) The employees built cars - the CEO built wealth - for ...