Tag Archives: economics

A Fox Guarding a Hen House Being Guarded by a Fox Already in the Hen House


Posted by Omnipotent Poobah
CURIOUS CONUNDRUM - How do we prevent the unethical from being unethical?

CURIOUS CONUNDRUM - How do we prevent the unethical from being unethical?

The corporate world isn’t where most people go to find model of ethical behavior – not unless they’re marketing a new product made of lead and margarine called, “I Can’t Believe It’s Not Ethical”. For many corporations, pretty much anything is “ethical” provided it turns a profit. Still, a company has to really suck to stand out amongst their fellow gougers, cheats, and soulless greedheads.

The Swiss firm Covalence has ranked the 12 least ethical companies in the world. The diabolical dozen contains the usual crapulent corporations. Phillip Morris, Chevron, and Halliburton all made the list as you might expect. In fact, the only thing odd is how Covalence managed to pair it to only a dozen and resist squeezing in candidates that didn’t even rank – AIG comes to mind, for example.

Despite popular belief, corporations – like governments – aren’t inherently unethical. They are run by people though, many of whom are as unethical as they come. Unethical business and government leaders – sometimes embodied in the same person – seem drawn to graft and greed like junkie moths to a flame. They represent the dark side of humanity and are roundly and justifiably called out when they can’t regulate their behavior.

But that’s no reason for the humanitarian and philanthropic to get on their high horses. Humans are a lazy bunch preferring shortcuts to the hard work of the direct route. Sometimes unethical behavior starts small and gets big – in a hurry. And as bad as charlatans are, even the worst have small bits of humanity still buried in their defective characters. It’s not as if Bernie Madoff rolled out of bed one morning, rubbed his hands like Simon LeGree, and chortled at the thought of stealing the life savings of some poor widow from Rancho Cucamonga. For example, he donated money to several charitable causes. True, it was stolen, but it’s the thought that counts.

gotethicsAnyone who believes unethical behavior can be legislated out of existence is smoking a pipe of conflagrated dreamweed. However, those who believe that lifting legal restrictions from proven unethical companies is taking a strong hit of heroin to boot.

The problem is, we’ve reached a point where the regulators are every bit as unethical as the regulatees. It’s like the fox guarding the hen house metaphor carried one step too far – the fox is guarding a hen house being guarded by a fox who is already in the hen house.

Our options to combat unethical behavior are few and the douchebags are many. As a country, we need to start regulating companies and the government so they become more ethical and serve the people rather than each other. We can only do this by withholding votes and sales from those who are the most unethical and who wouldn’t bat an eye at picking your pocket while you and everyone else is watching in slow motion on the Jumbotron.

But then, maybe I’m the one smoking the dreamweed and shooting the heroin – all while firing up the crackpipe for a long deep pull.

Related articles


Timmy Has Fallen Down the Well


Posted by Omnipotent Poobah
A GOOD SWIFT KICK - Between Wall St. greed and Treasury Tim Geithner, it's time to kick Timmy to the curb and do an America's Funniest Home Video crotch kick on Wall St.

A GOOD SWIFT KICK - Between Wall St. greed and Treasury Secretary Tim Geithner, America is hip deep in bull shite. It's time to kick Timmy to the curb and do an America's Funniest Home Video crotch kick on Wall St.

Through long and ignominious tradition, the US has selected people for cabinet and top departmental leadership positions based on a combination of nepotism and party loyalty. Products of this system include such luminaries as the hapless former FEMA director, Michael Brown, a man singularly unqualified for the important position he filled. But sometimes there are qualified cabinet nominees installed for all the wrong reasons. Treasury Secretary Tim Geithner is a useful example.

Not many people argue that he doesn’t have good qualifications, at least on paper. He is exceptionally well-educated and filled several top or near-the-top posts in a variety of capacities, including Chairman of the New York Federal Reserve. But, it’s precisely his former position as FedChair that is troubling.

Federal Reserve chairs are intricately tied to Wall Street movers and shakers. It’s inevitable that architects of monetary policy be on a first name basis with CEOs from Goldman Sachs or Citibank. In fact, this isn’t an altogether bad thing. A “friendly” suggestion sometimes goes farther than a kick in the pants when you’re trying to get something done. But sometimes, the relationship gets a little too chummy.

Lassie, Timmy’s Fallen Down the Well!
Unfortunately, Timmy fell down the well when he “solved” the financial crisis in favor of Wall St. After all, that’s the way he usually did things in his previous job. He relied on what he knew instead of what he needed to learn and left Main St. holding the empty bag. He forgot that those who regulate and those who are regulated need some semblance of an adversarial relationship. Otherwise, those being regulated will steal you blind.

Stop the Plunder

Stop the Plunder

Timmy has some other bad traits too. He frequently promises things and then fails to follow up. In the beginning, he agreed that the one thing that would happen for sure was cracking down on greedhead CEOs and making sure the money being handed out was being spent on increasing lending. Good promises maybe, but a distinct lack of meaningful execution.

Geithner also has a penchant for secrecy that would make the Bushies blush. It appears he’s made side deals and bad deals and protected himself by telling the beneficiaries of the deals to keep mum. Though there may have been some rational reasons for the secrecy – for example, preventing a run on banks – had he not made the deals there would’ve been no reason to hide.

Bring Us the Head of Timothy Geithner
Many are calling for Geithner’s head – as well they should, but not for the same reasons. Those in favor of a laissez-faire approach say can him because his policies are just wrong. Others don’t like his cozy relationship with Wall St. Still, others don’t like the secrecy. His fan base is dwindling rapidly and soon the Bailer-Outer-in-Chief will have to ask him to leave to “take on new challenges”.

It’s true that cabinet members serve at the pleasure of the President, but we might be better off if there wasn’t so much turnover from administration to administration. We’d certainly be much better off if cabinet members not only had the proper experience, but also the right mix of friends and adversaries.

Imagine it, a Treasury Secretary who did something other than rub elbows with the wingtips and remembered that he works for the people, not the corporations. We could even start with the no-brainer positions. How about a Labor secretary who was previously something other than a CEO – a labor representation, what a concept? Or, perhaps an EPA director who did something other than work as a lawyer for a strip mining company? And while we’re at it, let’s set some rules for how long key positions can remain open. Isn’t it a bit disingenuous to hold up a nominee for TSA head and then complain the confirmation is taking too long?

It’s time to start cleaning house and Geithner is a good starting point. Let’s just remember his successor should be a little more adversarial and a little less chummy with those who stand to benefit most.

Related articles


Meet Tony Soprano, New CEO of First Premier Bank


Posted by Omnipotent Poobah

First Premier Bank is making the leap into legalized loan sharking with a new credit card offering a $300 credit limit for $256 in first year fees, a $29 late fee, and a $75 annual fee thereafter. Oh, and they want to charge 79.9% interest on the outstanding balance just to sweeten the pot.

First Premier – who’s already paid a $4.5 million out of court settlement for preying on bad credit borrowers – said they designed the program for high risk, sub-prime borrowers and needed to “price [their] product based on the risk associated with this market.” Since these types of cards and loans – albeit at much lower rates – are a big part of our financial mess, it’s firstpremierloansharknice to see they’re moving to a risk-based model.

But, isn’t this risk management with extreme prejudice?

Potentially charging much more than $300 for a $300 loan is a counter-intuitive way to encourage borrowers to pay the money back. It makes it makes it dead-solid certain they’ll default. First Premier might just as well have sent mailers to potential customers telling them to fork over the money now and avoid the inconvenience getting your $300 bucks now and having their knee caps meet a baseball bat up close and personal-like later.

Of course, First Premier is only making this tremendous deal available out of their concern about their least credit-worthy customers. “Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Odysseas Papadimitriou, CEO of credit card search firm card-hub.com.

So, correct me if I’m wrong here Ody. If these borrowers need a quick $300 for an “emergency”, they probably wouldn’t have $256 to set up the account. Moreover, the prospect they’ll have an additional $29 per late payment, $75 for next year, and 79.9% to cover the outstanding balance just defers an “emergency” today into a big bigger “emergency” tomorrow.

Ody, you’re a real CPA (Certified Public Asshat).

Passing out huge executive bonuses is bad. Using TARP money to lobby for a loosening of regulations is loathsome. However, it takes some big stones – Gibraltar-sized ones – to be this greedy and arrogant.

With any luck, those huge stones will come together and roll swiftly down the mountain, directly onto your crapulent asses.

And, we’ll only charge you 79.9% on the balance of all your assets to dig you out.

Related articles
Reblog this post [with Zemanta]