Hey AR, Remember the scene from the classic 1983 movie with Al Pacino, "ScarFace" where the mob boss Frank Lopez (played by Robert Loggia) was bringing in the new guy Tony Montana? Big Frank told Tony with a vociferous voice, "never underestimate the extent of the other person's greed!" Wow, I can see Spielberg or Scorsese chomping at the bit waiting to see how things play out with AIG and the Feds. They are probably anticipating not only a huge movie blockbuster but more that likely a sequel to boot...Cha-Ching!
How about the scene from Wall Street where the great Gordon Gekko (Michael Douglas)is recruiting his next protege, Bud Fox (Charlie Sheen). Gekko is in his office where no expense has been spared right down to the cuban cigars on his desk. He get up on his soap box and begins pontificating to Fox. "The richest one percent of this country owns half our country's wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It's bull*@%$!"
With a smirk, Gekko's continued with his indoctrination. "You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you're not naive enough to think we're living in a democracy, are you buddy? It's the free market. And you're a part of it. You've got that killer instinct. Stick around pal, I've still got a lot to teach you." "Greed captures the essence of the evolutionary spirit," Gekko concluded.
Indulge me for one more example. One of my favorite movies was the Wizard of OZ. Yep, it is so metaphorically messaged besides it links to then Populist theory that I also utilize it to illustrate how we fall all so often for the smoke and mirror. Basically, I find the story to be an ingenious parable written by L. Frank Baum related to the effects of US Monetary policy on the American population. By the way, Baum was a shy and sickly guy who was also owned a newspaper, was a student of Shakespeare and the son of a oil tycoon.
In the Wizard of OZ Dorothy (representing American Values) was told that if she followed the yellow-brick road (which symbolizing the debate in the 1896 election to use gold as the standard for currency.) to the Emerald City (Washington DC) that she would be able to get to the great and powerful OZ ("0z" representing an ounce of gold) who would be able to send her back home, right. In the meantime on the road she met the Scarecrow (representing farmers) who wanted a brain, the tin man (the industrial worker) who wanted a heart, and the cowardly lion (representing Democratic presidential candidate Williams Jennings Bryan) that wanted some courage. Even Dorothy's shoes which were originally silver, representing the silver standard. Look at all the metaphoric symbolism.
Then when the group (Toto too) finally reach their destination (The Emerald City) they are gripped by fear because nobody has seen the wizard or even gone to his throne room. So there he was this big huge head with no body, red eyes a monstrous voice and it even spitted fire. They when Dorothy asked for the Wizard to help her get back to home the wizard conditionalized her request by telling Dorothy she had to kill the wicked witch of the west (President William McKinley). Of course, Dorothy got her wish to go back to Kansas and good ole Aunt EM through Glenda the Good witch (Grover Cleveland) but remember she had to give up the "golden cap." However what was also so intriguing was that eventually when we peeked behind the curtain, the Wizard of OZ was a fraud! He was just a regular man...but it was fear that gave him his power and influence. Sounds familiar?
To be honest folks, getting past the metaphors, and other cinematic similarities, we have some huge
problems to deal with in our country. Yes, the spotlight and mobs are all focused on AIG right now and maybe they should be. But if you really peep the wizard if the focus is on AIG you will find that the $135 million paid in bonuses pales in comparison to the $120 Billion AIG paid out to mostly European banks due to all the "credit default swaps" sold. What's a credit swap? Basically a credit default swap is insurance against a debt default. Now picture the magnitude of this product in the face of our current mortgage crisis.
As you know, Joseph Cassanos was the man behind the AIG debacle and was "retired" effective March 31, or 2008. Probably about the same time the retention bonuses were negotiated. The language regarding the bonuses did include mention that the bonuses could be withheld if fraud or a felony could be proven. But what you may not know is that Cassanos' golden parachute included a nine month contract for consulting services for $1 million per month.
I know what you are thinking folks. I can paraphrase your thoughts by coining another memorable quote from the movie Network, "I'm mad as hell and I'm not going to take it anymore." Well in that movie the
character Howard Beale was speaking about change too. He just felt you had to get mad enough first.
Not a problem, that seems to be the sentiment of Capital Hill...right Barney? But the real revelation here is that our economy is now global and interlocked with emerging economies like china playing a big role. As further proof AIG not only operates in 50 states but 140 countries! So, could the real flaws be in a collapse of disciplines in the private markets? Maybe even more so the global economic model.
Is monetary policy enough to end this financial crisis? What about the proposed Obama budget that would literally add on 1 trillion dollars to our debt for the next decade? Did you also know that the Treasury is planning to buy up more toxic assets? Is the currently financial climate going to allow for the partnering of investors and the Feds giving the same groups responsible for this crisis an opportunity to make even more money?
Again, just food for thought. By the way, stay tuned, President Obama is live in prime-time this week.
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