May the mass lynchings begin. Nobody is happy about the AIG bailout, but the hysteria surrounding it is insane. People are bitter, I get that; however, the reason we have representative government is to remove ourselves from the rule of the mob. Looking back at history, consensus outrage is often wrong - or at the very least not very forward looking. Roughly four score years ago, mass outrage at international trade led to the Smoot Hawley Tarriff Act to protect American farmers and the American people. The bill passed the Senate 44-42 and 245 to 177 in the House - mostly along party lines (Republicans pushing it through) and signed by Republican President Hoover. Lots of people supported then - it seemed like a good idea. Throw tarriffs on over 900 products to protect the average American. Wall Street hated it. The Head of JP Morgan, Thomas Lamont, begged President Hoover not to sign it. It wasn't long before the bill sent the U.S. further into the Depression. The name Smoot-Hawley (other than being a great Ferris Bueller movie quote) is solely tossed around now like no one would ever make a dumb mistake like that again. But circumstances of the time didn't have the benefit of 20/20 hindsight. Lots of people thought it was a good idea in June 1930.
The taxation of bonuses at 90%, or the breaking of contracts to claw back a meager $165 million (yes, I say "meager" when it's put into context of a $130 billion AIG bailout), is just plain D-U-M-B! It could turn to be the Smoot-Hawley of the 21st century. If it HAS to pass, I can only hope its called the Dodd-Frank Act. At least history will then remember these two for the buffoons they really are.
2 comments:
Thank god somebody else I know reads the Wall Street Journal.
The image I have in my mind is of The President (Barack Robspierre Obama) and Congress lighting the torches of the masses encouraging them to slash and burn the "evil rich." Never mind that they are going to make themselves worse off because those people employ them and fund their public schools and public works with taxes on their expensive homes and who donate a lot of money to non profit organizations from which the benefit.
In general these people worked hard to earn the money they have, in industries where you make a lot of money.
This is an opportunity for people to express their rage at the idea that ANYONE makes that much money, because they don't.
These evil bankers and CEOs of major corporations are the people that make or break prosperity. How does anyone not understand NOW that the only way anyone on Main Street does well is if Wall Street does well...because Wall Street trades the stocks of EVERY major employer (aka company) in the country.
What this is really about, why people are really mad is that the average person found out how much money people in Finance make and it pisses them off.
Why are they not mad at athletes who have contracts for millions of dollars in pay whether they play well or not and that that has driven the ticket prices so high the average person cannot afford to go. Tom Brady didn't play last year. That cost the Patriots millions of dollars in lost revenue. Should they break the contract and not pay him?
Why are they not mad a actors who are guaranteed 14 million dollars if they star in a movie whether it does well or not. The cost of the actor, the marketing of the films have driven ticket prices to unaffordable levels.
Why stop at bankers since this is really all about the vast majority of Americans who will never make a lot of money getting a chance to spit venom at the people who do.
I hope its cathartic for them because that is all they are going to get out of it. Punishing the peopleth making over $250Kt at the banks the government has invested in is THE stupidest thing they could possibly do. No one is going to do the same job for a third of their compensation, especially people who could get hired in a nano second by someone who didn't take government money. They are all going to quit those banks. They are all going to go to boutique banks, hedge funds and money management firms that have not taken a penny of government money. Or, they will retire and do something else. The government funded banks are going to lose all their top talent. It's all ready happening. Top people are quitting in droves to go to places where the can get "paid" and the government can't tell them what to do.
The infantile, emotional, dangerous populist reactions by both the federal and legislatives arms of the government has and will continue to make things worse, polarize the nation, ignite class warfare and guarantee that the government will never make the money back.
All these people who love and follow George Soros, do a google search to find out how he made his BILLIONS...it wasn't through humanitarian efforts.
Let us not forget, that these rotten tomato throwers being bused around have maxed out credit cards, no savings and are stretched to pay mortgages and car loans they can't afford. They are collectively, long term more of a tax burden than any of the banks.
well said
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