Destruction of American Business, Government Regulation, Educate Congress, Pandering for Votes, Government Control, Bailouts
Monday, Tuesday April 13/14, 2009
Today's Zinger:
With education comes knowledge, with experience comes wisdom, with neither comes stupidity.
Morning Briefing:
Our government is placing restrictions on pay and bonuses of certain individuals that work for companies that receive government loans or bailout funds. Employees that once made hundreds of thousands of dollars, and a few that made millions of dollars, will be limited to $250,000 per year. Quite a shock to the employees. Sounds like justice to many Americans.
The New York Times reported yesterday that there is an exodus on Wall Street. Not just those that are being fired due to the decline of the financial services industry, but more importantly, the top talent on Wall Street. Top bankers have been leaving Goldman Sachs, Morgan Stanley, Citigroup and others in rising numbers to join banks that do not face tighter regulation, including foreign banks, or start-up companies eager to build themselves. Wall Street is losing the very talent that will be needed to rebuild the industry.
To the average American, $250,000 sounds like these people are millionaires. Some Americans view these people as the culprits that caused a worldwide economic disaster and deserve to be punished. Others envy the high income and are angry that they cannot have the same advantages.
Unfortunately, for these highly compensated individuals, there is a vast majority of Americans that cannot relate to their situation. They do not understand the cost of education required, the risk-taking that is required nor the long, stressful hours which often results in broken families and health issues that most of these people have endured. Many Americans want what these people have without the risk, sacrifice and hard work that is required to get it. All they see is the outcome and not the journey.
To be fair, there are many individuals at lower income levels that also endure long hours of work and live stressful lives just to make ends meet. The hope of American capitalism is that these individuals have the opportunity to improve their lives through hard work and building skills. Many have tried, many have succeeded and many have failed. There are no guarantees, only the unbridled opportunity. Until now, no one has limited an individuals risk taking or income potential.
For those that do succeed, rich or poor, it is probably because they have built a skill, through education, innate ability or wisdom through unique experience. The notion that someone is going to be successful without a special skill, wisdom or experience is naive. This is what a free market is all about. Unique value in the marketplace is rewarded. If the average American knew how to set up a financial services business, build unique offerings, market and sell these offerings then the value of this ability would be average which means that these executives would be earning closer to $50,000 per year and not hundreds of thousands or millions of dollars a year.
If only I looked and acted like Brad Pitt, I would make millions. The reality is I would be a better Hollywood extra. If only I could throw a ball like Roger Clements, then I could make millions, but I am better at tossing a ball to my son in the back yard. If only I could host a comedy/talk show like Jay Leno, then I could make millions, but I am better at family one liners in my own home.
If only....... We all think about what could be if only........ If only I was as fast as......., If only I could catch a football like.... If only. We all fill in the blank. The truth is we all have abilities that are untapped. Look at Opera Winfrey. From poverty to the richest women. Think of Wanda Sikes. From poverty to star comedian. Think of J.K. Rowling. From waitress to billionaire through her Harry Potter novels. Look at Barack Obama, the son of a single mom struggling to make ends meet. became Barack Obama President of the United States. Jack Welch is the quintessential business executive. The son of a railroad conductor, he started from meager beginnings to become one of the most influential business executives of the 20th century. He built his education, then his experience to become a unique asset at General Electric. He led GE to become one of the most admired companies in the world, and in the process he became one of the most admired executives of all time.
Yes it can be done. But is is never done by sitting back complaining about those that have achieved. It is only done by those that take action. Certain people on Wall Street did bad things that hurt our economy. If they knew what they were doing they should be punished. If they made a mistake they should be fired. But under no circumstance should we burden all employees or companies because of the actions of a few. You don't limit baseball pay because White Shoes Jackson was involved in cheating. Nor should the government get involved in business because of a few. The government can set laws and restrictions but should not insert itself in the business.
In the recent Wall Street loans and bailout and the car company loans, politicians pandered to Americans in order to gain power and get votes. All we heard about is the greatest economic crisis since the depression of the 30's, yet it is looking more like a bad recession and liquidity problem than the exaggerated economic crisis. Why....for votes. We had groups like ACORN organizing tours of AIG executive homes (not Hollywood stars homes, baseball players homes) to put a bigger wedge between the "greedy executive that makes too much money" and the poor to average American. Why... for votes. We had Barney Frank rant over the greedy Wall Streeter despite the fact he could have done something about it through his Congressional Chairman's role of the financial services industry and years of involvement with Fannie Mae and Freddie Mac.
Most of the Congressional Leadership was outraged at what happened at AIG. They were going to take action by taking control of these companies and limiting the pay of these greedy people. Was it outrage or just stage? Another act to put a wedge between the average American (say 60% of the voting population) and the 1.93% that earn $250,000 or more per year. Another Emmy performance for votes.
This is disgraceful. It is class warfare appealing to the many about the few in order to win votes and gain power. We should be encouraging our citizens to reach for their potential and provide the business and educational opportunities to become the next Jack Welch. We have enough Brad Pitts, Jay Lenos and Wanda Sikes. We need people that will take risk, create jobs and build businesses. This is how America has prospered in the past and offers a shining opportunity to its citizens for our future.
So what happened to those greedy executives? They are leaving Wall Street, and government intervention, for greater opportunity. Once again they will take risks, work very hard, create jobs, generate profit for their shareholders and themselves and probably lose a family along the way. All of this for the chance to build something special and to own those things that they feel make them happy.
So what happens to those companies that "greedy executives" leave? Probably the same thing that happens to any ship that loses its captain in the middle of the ocean during the worst storm ever encountered. The guy in the boiler room will take the wheel and the government bureaucrat in charge of nautical legislation (who has never been in a bad storm, let alone captained a ship) will talk him through it.
Abandon ship. The USS AIG is going down. The USS GM is going down. The USS Chrysler is running aground. All the captains are heading for deeper waters.
Today's Zinger:
With education comes knowledge, with experience comes wisdom, with neither comes stupidity.
Morning Briefing:
- Many in our government are more concerned about appearances than results. This is nothing new, but now the stakes are much higher than at any point in our lifetime. With rising unemployment, a stock market 40% off its high, unprecedented debt and a government intervening in business and American life as never before, Americans should be outraged and take action at the hypocrisy of bureaucrats.
- Most bureaucrats lack the education in the specific area that they are now legislating. Most lack any experience in the industries they now regulate. Without the proper knowledge, experience or training we can count on stupid legislation that is bound in politics rather than results.
- As citizens, we must be sure to hire/elect officials that have the right education or experience to understand the impact of their decisions or we will continue to get politicians absorbed in their own power. We now need results and action. Pandering for votes through political maneuvering will lead this country to a deeper recession and a future of mediocrity.
- The government has limited executives at companies that receive government loans or bailout money to a maximum pay/bonus of $250,000 per year. This restriction did not exist when the companies received the money.
- The government forced many companies to take the money despite a lack of need. Many of these companies are in the process of repaying the loans to avoid the government intervention in the management of their businesses.
- Only 1.93% (2007) Americans earn more than $250,000 per year and median household income was $50,000 per year in 2007.
- Secretary Geithner has requested even greater control over companies in the future. He has recommended that the government take control of any company that may have a negative economic impact on the country.
- Numerous economic indicators suggest that the economy is improving. Housing purchases have increased 50% from a year ago, as many homes are bought in foreclosure, clearing existing inventory, which will help correct the price of housing.
- President Obama, and many economists, are saying that we may have reached the bottom on the economy and should see continued improvement.
- The first tranche of stimulus money will hit the marketplace this month. The majority of the stimulus will not occur until 2010-2012.
Our government is placing restrictions on pay and bonuses of certain individuals that work for companies that receive government loans or bailout funds. Employees that once made hundreds of thousands of dollars, and a few that made millions of dollars, will be limited to $250,000 per year. Quite a shock to the employees. Sounds like justice to many Americans.
The New York Times reported yesterday that there is an exodus on Wall Street. Not just those that are being fired due to the decline of the financial services industry, but more importantly, the top talent on Wall Street. Top bankers have been leaving Goldman Sachs, Morgan Stanley, Citigroup and others in rising numbers to join banks that do not face tighter regulation, including foreign banks, or start-up companies eager to build themselves. Wall Street is losing the very talent that will be needed to rebuild the industry.
To the average American, $250,000 sounds like these people are millionaires. Some Americans view these people as the culprits that caused a worldwide economic disaster and deserve to be punished. Others envy the high income and are angry that they cannot have the same advantages.
Unfortunately, for these highly compensated individuals, there is a vast majority of Americans that cannot relate to their situation. They do not understand the cost of education required, the risk-taking that is required nor the long, stressful hours which often results in broken families and health issues that most of these people have endured. Many Americans want what these people have without the risk, sacrifice and hard work that is required to get it. All they see is the outcome and not the journey.
To be fair, there are many individuals at lower income levels that also endure long hours of work and live stressful lives just to make ends meet. The hope of American capitalism is that these individuals have the opportunity to improve their lives through hard work and building skills. Many have tried, many have succeeded and many have failed. There are no guarantees, only the unbridled opportunity. Until now, no one has limited an individuals risk taking or income potential.
For those that do succeed, rich or poor, it is probably because they have built a skill, through education, innate ability or wisdom through unique experience. The notion that someone is going to be successful without a special skill, wisdom or experience is naive. This is what a free market is all about. Unique value in the marketplace is rewarded. If the average American knew how to set up a financial services business, build unique offerings, market and sell these offerings then the value of this ability would be average which means that these executives would be earning closer to $50,000 per year and not hundreds of thousands or millions of dollars a year.
If only I looked and acted like Brad Pitt, I would make millions. The reality is I would be a better Hollywood extra. If only I could throw a ball like Roger Clements, then I could make millions, but I am better at tossing a ball to my son in the back yard. If only I could host a comedy/talk show like Jay Leno, then I could make millions, but I am better at family one liners in my own home.
If only....... We all think about what could be if only........ If only I was as fast as......., If only I could catch a football like.... If only. We all fill in the blank. The truth is we all have abilities that are untapped. Look at Opera Winfrey. From poverty to the richest women. Think of Wanda Sikes. From poverty to star comedian. Think of J.K. Rowling. From waitress to billionaire through her Harry Potter novels. Look at Barack Obama, the son of a single mom struggling to make ends meet. became Barack Obama President of the United States. Jack Welch is the quintessential business executive. The son of a railroad conductor, he started from meager beginnings to become one of the most influential business executives of the 20th century. He built his education, then his experience to become a unique asset at General Electric. He led GE to become one of the most admired companies in the world, and in the process he became one of the most admired executives of all time.
Yes it can be done. But is is never done by sitting back complaining about those that have achieved. It is only done by those that take action. Certain people on Wall Street did bad things that hurt our economy. If they knew what they were doing they should be punished. If they made a mistake they should be fired. But under no circumstance should we burden all employees or companies because of the actions of a few. You don't limit baseball pay because White Shoes Jackson was involved in cheating. Nor should the government get involved in business because of a few. The government can set laws and restrictions but should not insert itself in the business.
In the recent Wall Street loans and bailout and the car company loans, politicians pandered to Americans in order to gain power and get votes. All we heard about is the greatest economic crisis since the depression of the 30's, yet it is looking more like a bad recession and liquidity problem than the exaggerated economic crisis. Why....for votes. We had groups like ACORN organizing tours of AIG executive homes (not Hollywood stars homes, baseball players homes) to put a bigger wedge between the "greedy executive that makes too much money" and the poor to average American. Why... for votes. We had Barney Frank rant over the greedy Wall Streeter despite the fact he could have done something about it through his Congressional Chairman's role of the financial services industry and years of involvement with Fannie Mae and Freddie Mac.
Most of the Congressional Leadership was outraged at what happened at AIG. They were going to take action by taking control of these companies and limiting the pay of these greedy people. Was it outrage or just stage? Another act to put a wedge between the average American (say 60% of the voting population) and the 1.93% that earn $250,000 or more per year. Another Emmy performance for votes.
This is disgraceful. It is class warfare appealing to the many about the few in order to win votes and gain power. We should be encouraging our citizens to reach for their potential and provide the business and educational opportunities to become the next Jack Welch. We have enough Brad Pitts, Jay Lenos and Wanda Sikes. We need people that will take risk, create jobs and build businesses. This is how America has prospered in the past and offers a shining opportunity to its citizens for our future.
So what happened to those greedy executives? They are leaving Wall Street, and government intervention, for greater opportunity. Once again they will take risks, work very hard, create jobs, generate profit for their shareholders and themselves and probably lose a family along the way. All of this for the chance to build something special and to own those things that they feel make them happy.
So what happens to those companies that "greedy executives" leave? Probably the same thing that happens to any ship that loses its captain in the middle of the ocean during the worst storm ever encountered. The guy in the boiler room will take the wheel and the government bureaucrat in charge of nautical legislation (who has never been in a bad storm, let alone captained a ship) will talk him through it.
Abandon ship. The USS AIG is going down. The USS GM is going down. The USS Chrysler is running aground. All the captains are heading for deeper waters.
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