Saturday, January 17, 2009

Robbing Sully To Pay Bernie

Two people have come out of nowhere recently and, by way of New York City, become national figures: Bernie Madoff and Chesley "Sully" Sullenberger, the pilot who landed the jet in the Hudson River. No long post needed on the obvious contrasts. But those contrasts are a good context for some larger issues. Sullenberger is everything this country -- and those who champion Wall Street as a pillar of patriotism -- likes to think it is about. Small-town Texas, top student, Air Force Academy, fighter pilot, distinguished career, family man, and ultimately a saver of lives. His counterpart in the news is, allegedly and apparently, a destroyer of lives. Without going into the separate issues of whether the Wall Street bailout is working, or what would have happened without it, there's a basic truth: it takes money from people like Sullenberger and gives it to people who sit in front of banks of computer screens all day making a living off flickering green dots. Sullenberger's not the only one who's had a TARP pulled over his wallet. The emergency workers who got those passengers out of the Hudson River will send some of the money they earned that day to Washington, which will send it to traders and investment bankers. So will teachers, doctors, farmers, truckers, scientists, and small business owners. (And as a final insult, their savings will be inflated away.) The people who make this country run are spending part of every day working for people like this -- those who have done fantastically well in recent years, many of whom made dubious or ill-gotten profits. This is the "soft slavery" I've written about before, and it's getting less soft with every new bailout.

The Sully-Madoff contrast also brings into stark relief a more existential national choice, one that's been building for years. Should we value things like the ability to get into the cockpit of an airplane and fly hundreds of people across the country, or teach kids, or actually make things? Or, the past year or so aside, are we going to continue as a society to encourage our best and brightest to become slightly more legit versions of Bernie Madoff? This is partly why I and others have criticized the Federal Reserve, which made that choice for the country in the mid-90's and since then has seen itself as Keeper of the Flame of National Purpose.

I wonder if people have become so inured to these bailouts that they've lost sight of the underlying dynamic. The architects and beneficiaries of it would welcome that. But I don't think the history books will be kind. I also wouldn't be surprised if some public officials eventually face bailout-related legal consequences, either for actions that are already public or ones that have been kept secret. As with torture, "emergency measures" have a way of being seen differently once heads clear with the passage of time.

16 Comments:

Anonymous Anonymous said...

Your bailout money at work:

"Now, former Goldmanite Peter Kraus is getting his $25 million bonus, according to people familiar with the situation, though he has been at Merrill only three months. Kraus left Merrill Friday, shortly after after his rich exit package was triggered by the Merrill sale. In a year when some bankers are being paid with junk, Kraus’s exit payment is a stunner that represents to about 0.1% of Bank of America’s $25 billion capital injection from the U.S. government.

Talk about your good timing. Kraus was hired in May–when Merrill Lynch was talking about expansion–but didn’t officially start until September, only a couple of days before Thain hurriedly sold the firm to Bank of America to avoid the bankruptcy-filing fate of rival Lehman Brothers Holdings. According to this Merrill release, Kraus’s responsibilities included “overseeing the firm’s business strategy and investments; global growth plans and opportunities, and corporate acquisitions. He will also lead initiatives to integrate the work of the corporate strategy and business development team with the efforts of the firm’s senior business leaders around the world to identify cross-platform synergies.” Still, it is unlikely he contributed too much to the sale just days on the job."

http://blogs.wsj.com/deals/2008/12/22/merrill-lynchs-peter-kraus-collects-25-million-then-resigns/

1/18/2009 4:56 AM  
Anonymous verc said...

CR,
these complainings about the Fed and the status quo ring a bit hollow.
You had an opportunity to endorse Ron Paul in your blog, and you didn't.
Continue endjoying normative U.S. politics.

Fools and their money will always be parted. Wall St. just facilitates this. No foul there.

1/18/2009 6:32 AM  
Anonymous Anonymous said...

Too bad Obama voted for the bailout...

www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=2&vote=00213

1/18/2009 12:26 PM  
Anonymous Anonymous said...

History's going to be very kind to the Madoff's and their ilk, because victors write the history books. And we're in the midst of creating the aristocracy that will govern the American "republic" until some superior power causes it to topple centuries from now.

1/18/2009 6:55 PM  
Blogger GoldenScrooge said...

centuries? Not a chance. We have one more bubble/crash cycle tops. Excellent post TCR. Sometimes you worry me...then you post something that makes me realize you really do understand what is going on.

1/18/2009 8:56 PM  
Anonymous Anonymous said...

Ron Paul?

What a moroon.

1/18/2009 9:38 PM  
Anonymous Anonymous said...

TCR, you think too much. Thinking is no longer in fashion.

See the latest trend in education:http://fish.blogs.nytimes.com/2009/01/18/the-last-professor/?scp=3&sq=education&st=cse

1/19/2009 9:42 PM  
Anonymous Anonymous said...

Will this change starting today?

1/20/2009 7:25 AM  
Anonymous Doug said...

Captain Sullenberger - union member, local air safety chairman for the union.

1/20/2009 8:35 AM  
Blogger Dave S. said...

I didn't realize that endorsing Ron Paul was the threshold for legitimate complaint. Guess I'll shut up now.

1/20/2009 9:42 AM  
Anonymous Anonymous said...

for some time, now, i've been saying essentially the same thing about health insurance in the u.s. many people who would rather get paid to 'make stuff' -- and who really have the skills to do so -- have to offer themselves as slaves to the corporate world in order to have health care for themselves and their families. does this country really only value the lives of the worker bees in the tall buildings? it sure seems like it.

1/20/2009 1:57 PM  
Anonymous Anonymous said...

There is room for Wall Street, but on a much smaller scale. I mean 40 people employed by one auto securitization just doesn't make sense.

1/20/2009 2:44 PM  
Anonymous Anonymous said...

Great entry!

The change in our retirement system isn't so hot either. Without regulations does anyone have a chance for a fair return and a quality retirement? As a country, do we really want everyone spending time staring at "flickering green dots", reading and trying to understand SEC and accounting documents from managers who manage "the number" more than the companies. Or would we rather have them become expert professionals in their careers? Take that extra time and read career related documents, go to career related conferences, talk to people in your career to learn more. Or, do we just want to turn everyone into money changers?

1/21/2009 3:31 PM  
Anonymous Thomas Daulton said...

Very nice to see TCR jump back into the fray after a long absence with such a strong post.

"Hammer of the Blogs" pointed out that, if the $800 Billion bailout is supposed to help Obama's plan to create 3 Million jobs, that works out to a quarter-million dollars PER JOB, tossed to the hungry jaws of bankers, in order to create jobs that will pay some poor sucker a few thousand dollars per year. And yet we have the nerve to accuse Madoff of a "Ponzi Scheme" ?!?!?

I'm not quite ready to buy into the... [Peak-Oil, Apocalyptic, Mad-Max] scenarios just yet, because human nature is what it is. But the scenarios these folks portray, however post-apocalyptic or even exaggerated from some points of view, at least have the benefit of sounding less implausible or irresponsible than the conventional ones that are being foisted upon us by our "agents of change". I don't see a Mad Max scenario developing, but it's more likely than AIG doing a f_cking thing to replenish a single job that the finance industry's shameless excesses have cost. Prove me wrong, you thieving Wall Street c*cksuckers.

1/22/2009 12:56 AM  
Anonymous Anonymous said...

Reference your 'people like this' link and their cohorts (ranging from Treasury, starting with Rubin and ending with Paulson, and Greenspan looking over their shoulders, to Enron's energy trading desk, to Wall Street compensation committees): This appears to be the same order of shit that gave Marxism its foothold.

To borrow from a prominent Texan political philosopher, "Heck of a job, ya'll."

1/22/2009 11:59 AM  
Blogger Rabbi Jason Miller said...

Rabbi Avi Shafran turns the Sully-Madoff contrast on its head arguing that he not impressed by Pilot Sullenberger, but is inspired by Bernard Madoff.

I comment on the Shafran editorial on my blog:

4/03/2009 2:52 PM  

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