Everything is upside down these days. The folks with all the money and multi-million dollar bonuses are begging for a handout on the pretext that the economy will crash if they do not get one. We're not talking money for coffee or a snack, we're talking billions of dollars.It is crashing anyway, or at least sinking. It is just a matter of what it takes down along the way. Apparently, the folks at the Treasury and Federal Reserve are now convinced that it will be everything.
The survivors are pawing at the defeated as Wells Fargo tries to grab Wachovia despite its previous tentative agreement with Citigroup Inc. (NYSE: C). While Citigroup gained a point in Wachovia deal over the weekend, the balance has since tilted in favor of Wells Fargo again.
Bank of America (NYSE: BAC) gobbled up Countrywide (done) and Merrill Lynch (NYSE: MER) (a work in progress), while JPMorgan Chase (NYSE: JPM) corralled Bear Stearns and Washington Mutual (NYSE: WM).
Sadly, only the federal government was big enough to swallow the problems of American International Group (NYSE: AIG), Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). Otherwise,those in the know think world financial markets would have crumbled due to the collateral damage, (pun intended).
When I posted Congress is screwing up -- think backstop not bailout!, I was concerned with the psychological effect as much as the financial effect of not approving the funding, but no doubt the people suffering the most are not those who created the pain.
I feel for the middle class weakened by the economy and economic policy that allowed us to pretend we were better off then we were, and are. Very few people this election season are talking about the people at the bottom.
While I have lost money this year along with most of the people who will be reading this rant, I will not have trouble putting food on the table, filling my tank with gas or paying the mortgage. Some folks will...and worse!
This got me thinking recently about how often someone says that I should not be giving handouts to people in the street. Have you ever had an acquaintance tell you not to give to the panhandlers and homeless in the street because you are just supporting their laziness, addictions and afflictions?
What are we doing for the bankers right now? I find it ironic that the biggest beggars of all time have turned out to be the well-to-do and well-connected on Wall Street. Yet some will still spend energy denying a doughnut or a sandwich to a person in obvious need.
I would rather take the chance of being fooled by a person in the street, than deny someone truly hungry meager assistance. I guess Washington feels the same about the Wall Street gamblers. We need to support them in their time of crises. This may be sad, but true.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of JPM and WFC and I owned shares of BSC, and WM.
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Reader Comments (Page 1 of 1)
10-06-2008 @ 12:04PM
m mcgill said...
very insightful thoughts and true
10-06-2008 @ 12:26PM
Iridium said...
The beggar on the street and the beggar sitting with the title of CEO are the same.
They are both con men who through clever tactics part people with thier hard earned money.
The beggar who makes $20 an hour pretending to be a homeless man who needs help to eat gets in his '94 Cadilac and drives home. When times are hard people who have are even more likely to hand out money.
The beggar who makes $20k an hour pretending to be an upright citizen who has the best interest of the shareholders and employees in mind gets into his brand new Benz and drives home. When times are hard the CEO may get fired but at least he can walk away with millions.
Maybe on the way home he flips a $20 into the hat of the beggar on the street. A simple nod to his own kind. A con that takes peoples money to line his own pockets because he has no remorse and because he can.
10-06-2008 @ 1:17PM
feroze said...
It is time to think practical and leave behind the blame game politics.
Companies which have lost fortunes should face the consequences of their actions.
Nationalization of the financial sector is now necessary and all companies which take government help should now be owned by the taxpayer and all profits accruing from this extraordinary step should be utilized to reduce taxes in years to come.
10-06-2008 @ 1:58PM
mike said...
citigroup is on slae, best get some before it runs up!!
10-06-2008 @ 3:05PM
miamigypsy said...
Two questions...
Please explain the difference between:
1. Iraq and Vietnam
2. S & L Scandal and The Bailout
I think as Yogi said its "deja vu "...
But I am always anxious to learn....
10-07-2008 @ 2:23AM
Alexander Kordick said...
Oh my god, how much needs to happen that this boy comes to his grips!! The Wall Street sharks have put us in a situation where there was no other choice than to react otherwhise the whole banking system were to fail.
Its a bad and bitter medicine but it had to be done.What is due now is to establish rules and regulations to make sure that the sharks can t repeat it never again but I am scared that exactly this is not going to happen. We must follow suit after the bitter medicine with a successful surgery. This is utterly necessary.