RON SMITH TALK SHOW HOST COMMENTARY

Blaming and HunkeringThursday, September 18, 2008 -
Ron Smith wbal.com

I must admit to being a bit overwhelmed in trying to sort through the rubble from the implosion of the nation’s banking system. Talk about a big topic. Whew! This is BIG! Very few living people, it’s safe to say, have witnessed anything comparable to the events of recent days, unless that is, they are Japanese (more on that in a moment).

One analyst said, ‘Wall Street as we’ve known it is dead.” It has ceased to exist. It’s like the parrot in the Monty Python sketch. It is not resting. It is dead. Who or what killed the thing? Who’s to blame? Greedy Wall Streeters? Yup. Negligent and corrupt politicians? You bet. Do-gooder socialists? Them, too. Republicans? Uh-huh. Democrats? Oh, yeah. The Fed? Yesss!

There’s plenty of blame to go around and there are lots of people who tended responsibly to their own fiscal affairs who are now going to be saddled with paying for the excesses of the hustlers and the politicians they bought. The prudent must be taxed – indirectly through further cheapening of their money (inflation) – in order to bailout major financial institutions run by the geniuses who paid themselves billions in bonuses for structuring a system grounded in quicksand, who came to believe in the classic hustler way in the thing they were hustling.

This is yet another reminder – as though you needed it – that life isn’t fair. The ruthless and ambitious claw their way to the top of the heap and when it starts to fall apart, they leap to safety; their fall cushioned by “golden parachutes” and lush retirement packages. They retreat to their estates in the Hamptons while the people who depended on their companies for their livelihoods are left behind.

The Lehman Brothers secretaries from Queens and the A.I.G. clerks from Brooklyn and all the others employed by the Masters of the Universe are greatly screwed. They start networking after hauling their personal property out of their offices while police with dogs stand by to make sure none of the disgruntled workforce members causes any difficulties. But the networking is a slender reed, since the entire industry is melting away like river ice as spring approaches. Jobs will be scarce.

The most useful parallel is what happened to Japan nearly two decades ago when the Nikki Dow went south because of ridiculous real estate valuations that threatened the big banks in the Land of the Rising Sun. They were too big to fail, like our own big banks today, and so they were propped up leading to economic stagnation that has lasted all the years since.

The Japanese, however, were far better equipped to endure this kind of thing than are we. A nation of savers can continue to thrive even in a major slowdown. Ours is a nation of borrowers, ill prepared for hard times. Hunkering down is a skill many will have to learn.