A House Divided...
…Cannot stand.
Thus spoke Abraham Lincoln in an address to Illinois Republicans that he gave in 1858, two years prior to his assumption to the presidency. In his mind, the nation could no longer live half-slave, half-free. Shortly after Lincoln became president, the Civil War began, a terrible and bloody war waged to determine whether we’d live all slave or all free.
We know the outcome of that war. Slavery ended with the Emancipation Proclamation.
Today, this American house is again extremely divided... between the over-leveraged and the over-compensated.
On the one hand, much of our house exists in chaos. Highest unemployment in decades (a rate that doesn't even include those who've given up the search for a job.) Hundreds of thousands of jobs lost each month. Consumer side of the financial system in a shambles. Still loaded with toxic assets. Still crumbling from the weight of consumer loans that consumers can no longer afford.
Because as we’ve seen this year, with job loss comes the loss of income. For those in the trenches, the impact of the collapsing economy has trickled down to the consumer in ways that have been catastrophic for many.
Contrast that with the golden era today on Wall Street. Record profits. Record bonuses. Record compensation for many of the people who dragged the economy off the cliff.
The feds have clamped down by limiting compensation for the 25 most highly compensated employees at seven firms (Citi, BoA, AIG, GM, GMAC, Chrysler and Chrysler Financial.)
In other words, they placed compensation limits on 175 people who work at firms that employ tens of thousands of employees. For these few top wage earners, their cash salaries (excluding bonuses) are limited to $500,000. This in a year when the average family of four has an income of about $70,000 a year (if they're working).
Since everyone seems to recognize that the badly behaved business leaders cannot exist on half a mil alone, they get the rest of their compensation, which can head back up in the stratosphere, in stock options that cannot be cashed out for a number of years.
For those living day to day, wondering when the economy will get a jump-start on employment, that $500,000 cash “limit” would be a hefty pay day. On Wall Street, the limit is a federally imposed disaster. Apparently those who trash their businesses don’t feel compelled to hold themselves accountable for terrible business decisions that led to a massive federal bailout.
If you watched Frontline earlier this week, you saw middle-aged members of the middle class realizing that they'd been bumped from relevance. Unable to get a job. Discovering that all they'd worked toward, all they'd sacrificed over the years, all the skills they'd acquired meant nothing in today's job market.
They meant nothing in today's job market.
In the history of labor, this is a turning point. The middle class has been traditionally been protected from the punitive actions of capitalism. The middle class has thrived in capitalism. The middle class has grown fat on capitalism.
But not today. Not in this America. The middle class is just catching on to the fact that it has become an endangered species in 21st century America.
In speaking of "the house divided," Lincoln had borrowed from another source – the Bible.
“...Every kingdom divided against itself is brought to desolation... ” Matthew 12:25
There is wisdom in to be found in the experience of history. There is wisdom in that passage from Matthew. Let us not fail to learn the lessons of history.
The terrible divisions that separate Main Street from Wall Street must be healed. But they cannot be healed if those on Wall Street continue to suck billions of dollars out of the system and into their pockets. The parasite is in danger of killing the host.
What we've learned in the years since Paulson unveiled TARP is that investing in bankers is no way to heal a nation. In fact, that kind of investment is rapidly bringing us closer to desolation every day.
Thus spoke Abraham Lincoln in an address to Illinois Republicans that he gave in 1858, two years prior to his assumption to the presidency. In his mind, the nation could no longer live half-slave, half-free. Shortly after Lincoln became president, the Civil War began, a terrible and bloody war waged to determine whether we’d live all slave or all free.
We know the outcome of that war. Slavery ended with the Emancipation Proclamation.
Today, this American house is again extremely divided... between the over-leveraged and the over-compensated.
On the one hand, much of our house exists in chaos. Highest unemployment in decades (a rate that doesn't even include those who've given up the search for a job.) Hundreds of thousands of jobs lost each month. Consumer side of the financial system in a shambles. Still loaded with toxic assets. Still crumbling from the weight of consumer loans that consumers can no longer afford.
Because as we’ve seen this year, with job loss comes the loss of income. For those in the trenches, the impact of the collapsing economy has trickled down to the consumer in ways that have been catastrophic for many.
Contrast that with the golden era today on Wall Street. Record profits. Record bonuses. Record compensation for many of the people who dragged the economy off the cliff.
The feds have clamped down by limiting compensation for the 25 most highly compensated employees at seven firms (Citi, BoA, AIG, GM, GMAC, Chrysler and Chrysler Financial.)
In other words, they placed compensation limits on 175 people who work at firms that employ tens of thousands of employees. For these few top wage earners, their cash salaries (excluding bonuses) are limited to $500,000. This in a year when the average family of four has an income of about $70,000 a year (if they're working).
Since everyone seems to recognize that the badly behaved business leaders cannot exist on half a mil alone, they get the rest of their compensation, which can head back up in the stratosphere, in stock options that cannot be cashed out for a number of years.
For those living day to day, wondering when the economy will get a jump-start on employment, that $500,000 cash “limit” would be a hefty pay day. On Wall Street, the limit is a federally imposed disaster. Apparently those who trash their businesses don’t feel compelled to hold themselves accountable for terrible business decisions that led to a massive federal bailout.
If you watched Frontline earlier this week, you saw middle-aged members of the middle class realizing that they'd been bumped from relevance. Unable to get a job. Discovering that all they'd worked toward, all they'd sacrificed over the years, all the skills they'd acquired meant nothing in today's job market.
They meant nothing in today's job market.
In the history of labor, this is a turning point. The middle class has been traditionally been protected from the punitive actions of capitalism. The middle class has thrived in capitalism. The middle class has grown fat on capitalism.
But not today. Not in this America. The middle class is just catching on to the fact that it has become an endangered species in 21st century America.
In speaking of "the house divided," Lincoln had borrowed from another source – the Bible.
“...Every kingdom divided against itself is brought to desolation... ” Matthew 12:25
There is wisdom in to be found in the experience of history. There is wisdom in that passage from Matthew. Let us not fail to learn the lessons of history.
The terrible divisions that separate Main Street from Wall Street must be healed. But they cannot be healed if those on Wall Street continue to suck billions of dollars out of the system and into their pockets. The parasite is in danger of killing the host.
What we've learned in the years since Paulson unveiled TARP is that investing in bankers is no way to heal a nation. In fact, that kind of investment is rapidly bringing us closer to desolation every day.
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