Home > Jay Bookman > Archives > 2009 > January > 26
Monday, January 26, 2009
We now have a Treasury secretary
The Atlanta Journal-Constitution
Timothy Geithner was just confirmed as Treasury secretary by a 60-34 vote, the most votes against a Treasury nominee since World War II. You can’t say the opposition was unfounded, not with Geithner’s tax problems. In other times, that alone would have been enough to squelch his nomination.
But other times aren’t these times. Despite the 34 votes against him — at least three of which were Democrats — Senate Republicans made no real effort to try to block Geithner. To their credit, they understood that the stakes are too high; the consequences too serious to risk leaving Treasury without leadership. It would be like blocking a Defense nominee in time of war.
Personally, I’m not thrilled with Geithner’s nomination either. But I don’t know how you find someone experienced and knowledgable enough for that position who also isn’t deeply embedded in the culture that helped produce these problems. I suspect some of those “yes” votes were produced by a similar thought process.
Permalink | Comments (35) | Post your comment |
Bloody Monday on job front
The Atlanta Journal-Constitution
“Home Depot said Monday it will cut 7,000 jobs — including 500 at its Atlanta headquarters — and shutter all 34 of its Expo design centers.
The company, battling the recession and housing industry collapse, said about 5,000 of the cuts will come from the closings of the Expo stores and another 14 outlets specializing in yard or bath remodeling supplies.
Another 2,000 will come from a restructuring of “store support” functions. Those will include the headquarters cuts.”
So today’s announced carnage:
Caterpillar: 20,000
Sprint 8,000
Pfizer/Wyeth 26,000
Home Depot 7,000
Total: 61,000
And those workers have spouses and children and mortgages and other bills to pay.
Permalink | Comments (64) | Post your comment |
Congress ought to freeze its pay
The Atlanta Journal-Constitution
Yeah, it’s of purely symbolic value. But it ought to happen anyway….
“Lawmakers and budget watchdogs who support stopping an automatic pay raise for Congress next year see President Obama’s decision to freeze the salaries of top White House staffers as a huge boon to their cause.
“I hope it gives Congress a nudge because I think it really shows that the president understands what people are going through and that we all have the responsibility to tighten our belts,” said Rep. Harry Mitchell (D-Ariz.), who sponsored a bill that would deny lawmakers the automatic pay raise they receive every year.
As one of his first acts as president, Obama pledged to freeze the salaries of more than 100 staffers in his administration making more than $100,000 per year…
Mitchell sponsored a similar bill last year, but the measure, which attracted 34 cosponsors, failed to make it out of committee. As a result, members received an automatic $4,700 pay raise at the beginning of this year.
But with 82 cosponsors so far this year, and Obama’s parallel move in the White House, Mitchell is optimistic that his bill will pass if it makes it out of committee.”
Permalink | Comments (28) | Post your comment |
Fixin’ to pitch a fit over Wall St. greed
The Atlanta Journal-Constitution
If you’re looking for a place to put the pittance you salvaged from the stock market, I’ve spotted the next hot commodity, the next growth industry. Under these conditions, demand is going to soar for this item, and there’s money to be made.
You ready? I’ll whisper it in your ear, just between us friends:
“Pitchforks.”
Yup, pitchforks. With good solid handles and sharp tines. When the angry mobs start assembling to march on Wall Street and Washington, ready to take out their anger at the greed and excess of the last few years, they’re gonna need pitchforks and torches. We’ll sell ‘em by the thousands, like Obama buttons at the inauguration.
Tar-and-feather futures might not be a bad investment either.
I’m kidding of course, but only sort of. Like a lot of Americans, I’m aggravated and frankly astonished to see the sense of royal entitlement to other people’s money that developed over the years on Wall Street. And nothing seems to shake it.
The story of Bank of America, Merrill Lynch and Merrill’s former CEO John Thain illustrates that sense of entitlement all too well.
Last year, Merrill Lynch lost tens of billions of dollars —- $15 billion in the last quarter alone. Yet even after that performance, Merrill executives felt they were entitled to billions in bonuses paid with stockholders’ money.
It didn’t matter that Merrill’s losses were so bad that in effect the brokerage had to be rescued by taxpayers. It didn’t matter that the U.S. Treasury had to give Bank of America a total of $45 billion in TARP funds to help the bank buy Merrill and save it from bankruptcy.
Not even that was enough to shake the sense of royal entitlement. Late last month, just before the merger was made official and with Bank of America still finalizing the taxpayer subsidy, Merrill executives collected an estimated $3 billion to $4 billion in bonuses. They even accelerated the payment schedule by a month to make sure the money flowed their way before anybody could stop it.
Like I said: Pitchforks.
Thain, Merrill’s CEO, at first tried to include himself in the gravy train, pushing for a $10 million bonus even as the company collapsed. Public outrage prevented that injustice, but it did not stop Thain from pocketing a separate $9.7 million payment triggered by the change of ownership. That was on top of the $15 million bonus he received just for taking the Merrill job just a year earlier.
And as the cherry on the sundae, Thain had also spent an estimated $1.2 million just redecorating his office.
On the scale of threats to the economy, such sums are admittedly almost too minor to notice. Officials in government and on Wall Street are trying to free up the flow of credit; they’re trying to bolster confidence in the banking industry; they’re trying to save the jobs of millions of Americans. And the honest ones admit that they aren’t really sure what will turn things around.
“The answer is nobody knows. The economists don’t know. All you know is you throw everything at it …” Warren Buffett said last week. “What we do know is to stand by and do nothing is a terrible mistake or to follow Hooverlike policies would be a mistake.”
The American people seem to understand that. President Obama said in his inaugural address that it’s time to put away childish things, and most Americans have taken a pretty mature approach to a frightening situation.
However, their support for committing hundreds of billions of additional taxpayer dollars to corporate bailouts hangs on the belief that Wall Street shares their understanding of the gravity of this situation. People have lost half of their life savings, and perhaps their homes and jobs too, and they want some assurance that the greed and excess has ended. They want to know that they’re not being scammed again.
And if government officials aren’t willing or able to provide that assurance —- well, the public probably won’t respond with pitchforks. They’ll just insist the bailout be stopped in its tracks, and it’ll be hard to blame them.
