Thursday, January 29, 2009

A Message For Education Secretary Arne Duncan

I doubt anyone was paying attention to anything you were saying today because the only news that made the news was that Wall Street execs gave themselves $18.4 billion in bonuses last year. You know, so they could all buy waste baskets that cost $1,405 and credenzas that cost close to the GDP of Lesotho. But for the record, you did say, "If we want to stimulate the economy, we need a better-educated workforce. That’s the only way, long-term, we’re going to get out of this economic crisis."

Frankly, I'm just appalled by these words. A better-educated workforce? I'm sorry Mr. Duncan, but WHAT THE FUCK PLANET ARE YOU LIVING ON? Have you not been paying attention to the fact that the investment bankers who got us into this economic mess, that might ultimately end up costing $4 trillion to clean up (if you believe NY Senator Chuck Schumer), all went to Harvard and Yale and Stanford and got their MBAs from Harvard and Yale and Stanford? How much better-educated do we need our financial leaders to be to get us out of this economic crisis? Better educated than Harvard and Yale and Stanford? Are we not already in a financial hell hole? Or do you not understand this because you yourself went to Harvard and can't afford to offend your classmates? This economic crisis did not happen because our leaders were POORLY EDUCATED, you idiot! It happened because those Harvard-educated minds got twisted by pure unadulterated greed that obliterated all notions of morality and ethicality and legality.

With the government spending $800 billion on this new stimulus package, you'd think there'd be enough money to buy the new Education Secretary a clue.

Now, if the argument you were making was that a lot of the money in this stimulus package is going to help poor, underserved kids in inner-city neighborhoods and keep their teachers from being fired (never a popular sell in Washington D.C. with the Republican assholes), then have the balls to say so. Don't confuse the American public into thinking that it was a lot of stupid people that got us into this mess. Immoral, unethical and criminal, all yes. Stupid? Definitely not. After all, it takes a lot of brains to cause a $4 trillion mess and then find a way to reward yourself for it to the tune of $18.4 billion.

15 comments:

dannie said...

ah...he should get his head straight. our government is epic failure.

good to see you got the strike code to work :]

Rob said...

Is the flame thrower off? Ok ... now I can comment :)
The most f...ed up incentive we've had for a very long time is that the biggest payoffs in our society have gone to speculators. Witness the hedge fund managers who could pocket a few hundred million and up to a one billion in a good year through their "performance fees".
That was the place to be for the past few years. Even the "masters of the universe" in the investment banks have been the traders who do make from $10 million up to perhaps $60 million in bonus vs. the more visible Senior Managing Director in the investment banking division who may make a "paltry" $4 million or $5 million.
So where do the "best and brightest" go ... to play at a high stakes casino where we are very much capitalist when it comes to profits but unfortunately socialist when it comes to losses and potential bankruptcy.
Even in truly respectable fields such as medicine, who do we reward most? Is it a family doctor who might work in a small town or inner city? No ... in fact who wants to be a family doctor who is forced by insurance companies to treat patients like cattle. It's best to be a plastic surgeon and cater to the rich (or aspirational) and make a bundle.
Don't even get me started with corrupt (and inept) politicians, corporate lawyers and others lol
If we want a more balanced economy with less inequality, we need a very different set of incentives - and by that I don't mean socialism which only works to make almost everyone poor and miserable.

J.T. said...
This comment has been removed by the author.
J.T. said...

Right, so how would the new incentives work? The only incentive that drives a person in the workplace is money. Even if you have a big heart and work for a non-profit that helps blind babies, chances are you won't do that job for $10,000 a year working 6 days a week, 8 hours a day.

I'm afraid the banking industry is going to have to be VERY heavily regulated (until they can prove that they can be responsible corporate citizens) and that includes monitoring pay scales. McCain wants to cap the salaries of people who work at banks that take the bailout money at $400,000. If bankers bitch and moan, they can simply find another industry to work in. Chances are they're not going to be able to find other positions that pay up to $400,000. Bankers have to come down to earth, or rather, to the hell that they created.

It's only a matter of time before medicine and law are regulated as well. There's already a growing shortage of general practitioners--everyday people are having trouble finding a family doctor. Government is going to have to step in and clean up that mess as well.

Until money is no longer the ALMIGHTY in America, selfishness and shortsightedness will pervade and prevail. We're digging our own graves.

Raven said...

I don't think it's just the people at the top who are to blame for this mess. Many ordinary people were carrying incredible amounts of debt and kept on shelling out money they didn't really have for things they didn't really need. If we all paid cash for almost everything and bought only what we knew we could afford, I can't help thinking the economy would be in better shape.

Rob said...

Rave,
I agree. The problem has deeper roots to just blame Wall Street. The truth is too many people deviated from it's hard work and thriftiness to become lazy (why work when you can make a bundle speculating whether it be in the stock market or flipping homes?) and obsessed with wanton consumption and showing it all off (what happened to "gentile poverty"?).
Having a government that was also fiscally irresponsible over the past 8 years did not help. Also the obsession with the dropping interest rates to extremely low levels (below inflation) at any sign of economic trouble was like providing free booze to alcoholics. Of course not paying attention to the asset bubbles on the way up has proven to haven a disastrous choice.
Now we want to get "the economy going" quickly (again no pain) but this time it won't work and we'll have to slough it out just like other countries were forced to once their bubbles burst and it will be a lot more painful due to all of the "miracle" cures the Fed applied in the past.

Rob said...

JT ... be careful with what you ask for. The compensation cap if enacted will only apply to institutions where the government has invested billions but not to non-recipients.
The bankers who are left in those institutions that are running profitable franchises would most likely leave and join other institutions (or create new ones) that won't have those restrictions.
Of course, if the profit centers at the government supported banks disappear, the government will be stuck with a crappy franchise which will generate more billions in losses (say take away the asset management profit center at Merrill and what are you left with if the brokers go elsewhere?).
In the end while pay will adjust to a new lower reality. In the current market you can't run an institution like a casino or hedge fund, and therefore you won't generate massive (and unsustainable) profits which are the basis of mega bonus payouts.
Imposing a compensation cap is a price control and they never work (ask countries that try price controls to stop inflation).
Finally, let's say the $400k cap does work ... I would have to admit that NYC and NY state's tax base would collapse and we'd be back to the 70s (which some people look at with some nostalgia - how much fun will it be to have tent cities in parks with heroin addicts getting their fix there! muggings will add a sense of excitement to the urban experience).

Raven said...

Rob, I think you're right, there is no "quick fix" for the economy, and truthfully I don't want one. I'd prefer we start spending responsibly. I really hope we don't end up with runaway inflation, though. Deflation - and lower prices - I could deal with better.

J.T. said...

I hear you about being careful what I wish for. I already see the effects in downtown Manhattan--emptier streets, more small businesses closing, landlords of high-priced buildings giving away three months of free rent to try and attract renters. I talk to my banking friends and they all tell me you can kiss 2009 good bye. No one is lending money this year, housing will continue to look for a bottom, and when it finally does find it, the confidence of America will be kaput.

This is no fun at all. All I know is that the system has to fundamentally change this time--we can't afford to revisit this kind of recession on a cyclical basis.

Rob said...

Raven,
I agree, we do need to have a "cure" vs. the quick fix we got after the internet bubble / post-9/11 funk that just got us out of a mild potential recession and led us to a much more noxious housing bubble.
I am thankful enough I was raised by my Grandfather who did live through the Great Depression and made me pretty conservative when it comes to my finances - pay off credit cards at the end of the month, save, think before you buy.
The pain will come if everyone does what I usually did due to all of the "excess" production capacity, shopping malls, restaurants, car dealerships and so on which will have to shut down (as we are seeing).
I think I need to start reading fiction (rather than news) in order to be happier!

Rob said...

J.T.,
I agree, the slowdown is a bit too obvious in NYC. Any conversation with friends seems to have a "so and so got laid off", "sales are down", "my boss is considering selling his business", the planned city cutbacks, etc. (at least NY state is not planning to pay tax refunds with IOUs unlike California!
I think we are all afraid to get into the topic when we meet with friends because once it starts it just seems to make things worse.
And yeah, rentals in downtown are on sale. I even feel weird when I see Related Rentals advertising their apartment buildings in NY1 and other channels (I mean before they'd just raise rents and people would beg them to get them in).
It is also pretty shocking how mortgage rates are working a bit like "price controls" - there's low rates! but, you need to have great credit AND put down at least 25% (I've heard of BofA asking for 50%) down payment and pay higher mortgage insurance (if the lender requires it) so in effect the low rates are very misleading.
And yes, we do need real change, but can we first send Rush Limbaugh and his band of Republican morons to another planet? The only thing we are getting out of them is "no" and their tired "lower taxes" mantra. There's just no new ideas or proposals coming from them, they just seem to stand in the way of any change.

Raven said...

Rob,

Yeah, I live in California and I'm not thrilled at the idea of getting an IOU. It's my money. If they're not going to give it back to me after they've had it interest-free all year, then maybe they should quit taking this year's taxes out of my paycheck. If I end up being owed a state refund this year, I may adjust my withholdings so it doesn't happen next year.

Re: fiction instead of news, I just heard that it's been a record January in terms of movie ticket sales.

JT,

Last weekend I was out and about and traffic was so amazingly light that I couldn't believe it wasn't a holiday weekend. This weekend I didn't notice it as much, but still. It's been light on the way to work, too. I've heard rumors that people are moving out of L.A. If that's true, I wouldn't blame them. This is hardly a good place to live if money is tight.

J.T. said...

Raven,

I can't say I'm surprised that Cali is losing people. Real estate was unrealistically unaffordable for too many years. Seriously, it was just wrong. Now there's a tragic irony at seeing so many Cali neighborhoods with nothing but boarded up homes. It's just really, really sad.

Rob said...

Raven,
The IOU thing in California is pathetic. I think that soon someone will think about creating "California dollars" to meet state obligations - why not print monopoly money vs. IOUs? at least monopoly money would be fungible vs. IOUs.
Maybe the currency might be called the "Californicator" :D
As per inflation vs. deflation, I did grow up in Mexico and 10% a month inflation (plus devaluations) is pretty scary. My family's savings got confiscated with no permission by a corrupt and inept government. However, I am afraid Bernanke will opt to print money and not "sterlize" this in order to ease the burden of debtors at the expense of creditors (China, Japan, Saudi Arabia and the rest of the world will be "thrilled" I'm sure). Sadly, anyone who was responsible (say I) will be "robbed" if the Fed does this.
As per deflation, while our savings won't get eroded, I'm not sure we want a Japanese style zero economic growth for a decade or so (in the U.S. it would be more painful since the population here is growing unlike Japan where it's shrinking, so a 0% growth in the U.S. would be a -2% or -3% per capita vs. a 1% growth per capita in Japan).
There's no quick nor painless solutions to this mess.
Ugh I hate having studied economics, if I were ignorant about all this shit I might be happier.

Raven said...

JT,

I haven't seen those boarded-up neighborhoods, but then I haven't been out of LA proper very often lately, specifically the Westside/BH/K-town/Los Feliz parts of LA (okay, BH isn't LA, but I'm lumping it in there anyway). What I've mostly seen (besides better traffic) is a lot of "for rent" signs.

Rob,

I saw the results of inflation and devaluation in Russia in the mid to late nineties, so I hear you on how scary it is and how completely unfair it is to people with savings. That's a lot of what scares me about it: the idea of being wiped out in one fell swoop and having to start over with nothing. Not like I have a lot now, but at least I have a fraction more than nothing. So if I have to choose I still vote deflation and zero economic growth. Not like anyone is going to ask me...