TRUST BREAKERS
Mid winter of this Leap Year, the
Bears contrary to natural law emerged from hibernation to populate Wall Street.
This as well as a few lines included in a biographical sketch of Louis Auchincloss, (New Yorker Magazine
Auchincloss is a name most will recognize as the author of dozens of books, many of
which are notable. He was born almost 100 years ago into a family of wealth and
privilege that secured its position firm in the belief that God, Freedom and
Capitalism were interwoven and that Capitalism could succeed only so long as its Nobility governed with honor. These principles seemingly
embedded in their
Two friends, both bankers are
conversing. One chides the other about making too much money. “Banking isn’t
just money making. Banking is starting new businesses and saving old ones.
Banking is helping the right man over a bad time. Banking is keeping the heart of the economy
pumping. If you don’t feel that way you ought to quite banking and become a
stockbroker.”
We live at this moment amidst the
rubble of the menage a trois
that developed between bankers, brokers and insurers after the Glass Steagall Act of 1933 that prohibited such a ménage, was
verturned in 1999.
For the past 20 or so years
“Reaganomics” aka supply-side economics has presided over the market place and
been justified by the ensuing prosperity. Conservatives from the Reaganites to the myriad talk-show hosts have been layering
his memory with wreaths of praise at the same time bleating about the threat
that government interference of any sort that might blight the freedom of the
market place. But now after abusing the
marketplace they pray for government interference.
For capitalism to work capital needs
room to change hands, buy and sell, swill and swagger. But minus probity and
character at the top it can’t succeed.
We pride ourselves on being decent and honorable. But we are also endowed with a preponderance
of Greed that
paradoxically seems proportionately present more often and more prodigiously in
the wealthy than in those in need of money.
The same “conservative” voices
carping continually about how the system is being undercut and destroyed by
Welfare and the Welfare State cheer the exorbitant salaries and pensions that
our Captains of Industry have extracted from the system as examples of
successful capitalism. Millionaires who
so often earn more millions by getting fired or walking away from their
failures are held up
as the prized products of the free market. It is hard to understand the psyche
of those extremely wealthy individuals who continually want “more” and since
they hold the reins of power are capable of getting “more”. Money may be the only game they know and
understand. We need them around to churn the system, but some of that money
should be returned because it is really not theirs. It is a product of a system
that consumes and often discards labor.
The excess produced by labor should be returned to the country. Not
necessarily as taxes to be abused by the Congress and Administration, but to
funds consecrated to rescuing the infra structure of our country, so much of it
needs renovation and repair. This is a plea for high earners to pool some of
their moneys to refurbish our place here. They are purported to be good
managers. Make them prove it. Perhaps some of this wealth can be used to
replenish pension funds destroyed by mismanagement and lack of foresight.
As for the present crisis, the
sponging up of capital and drying up of the money pool was crazy to begin with. All bubbles will
burst, but a real estate “bubble” of this magnitude can’t happen all by itself.
Sensible people won’t drive up prices all by themselves. But people can be lured into irresponsible behavior
as happened this time. The Internet Bubble was rational because it was built on
the reality of science that was boosted by dreams and hope. But to incrementally increase the cost of a
building far beyond the ability of a purchaser to pay it off in a lifetime, or
for an investor to make money on it because no business could afford the rent,
is ludicrous if not madness. Buildings have a finite value
that do not lend themselves to dreams and hope.
The following quote from Franklin
Roosevelt’s first inaugural address in 1933 says it all..
“The rulers of the exchange of mankind’s goods have failed. There must be an
end to a conduct in Banking and in Business which too often has given to a
sacred trust the likeness of
callous and selfish wrongdoing.” The article then points out that
soon after the inaugural