Budget for Trouble Ahead

I've watched with disgust lately as the financial aristocracy and the banking establishment work their magic to save our fragile confidence and economy. I have come to accept that there is no transparency or ethical basis to all of this but please, when will this credit, subprime mortgage-busting cycle ever end?

With the wreckage of the credit market and their corporations' weakened balance sheets at their feet, the deans of this Graduate School of Greed are taking their millions in entitlement winnings and golden parachutes and walking. But why so few captains of industry are getting the boot for this mess? It sure smells of the Savings and Loan fiasco of years back.

Again, the feds have to come to the rescue to save our collective butts and buy back our confidence with our own money. I'd prefer they use 'their' money, as in 'the guys who started this free-fall'. I had hoped the era of privilege and double-dipping had ended with Enron and Worldcom but clearly that's not to be. The tax payer and shareholders will be screwed.

While we wait out this delayed implosion of financial irrrationality it gives us all the leisure to consider our own spending habits. Even the most dedicated consumer's indiscretions, debt accumulation, and modest exuberance is unworthy of comment by corporate comparison. Yet, the key personal constraint is one of degree; we can't print money to solve our problems. Government can. Corporations have creative accounting and IPOs.

By our membership in a free society, we are at liberty to choose the way we spend our income and borrow against our future earning power. But to think that our excesses only harm ourselves is short-sighted, even delusional. While we tolerate extremes by giving creditors remedies (e.g. foreclosure, bad credit ratings, etc.) some of us still follow our impulsive and compulsive spending habits.

Now that bancruptcy laws have tightened, we have a much more difficult time escaping $40,000 in personal debt than CEOs have in vaporising $40 billion even when its shareholders' money. And Boards of Directors reward this performance. Go figure.

When our actions harm others what should be the consequence when there is no stigma to personal bancruptcy or corporate self-dealing and executive greed? While we tolerate these actions because we believe in freedom, law enforcement should play a balancing role in a liberal society when collective harm is the end result.