Current issues are a favorite with me.
So much is being said about the financial meltdown, I thought it an opportune environment to share my thoughts with people like yourself who are reading this and also who I am sure are seriously concerned with the economic uncertainty that has crept in slowly in the US and global financial markets, mimicking a worm virus with each day unfolding new predatory strains.
Article after article that one gets to read written by mature, grounded sane individuals from all walks of society & from the four corners of this global world all have one factor in common in their research, findings & writings:
That this catastrophic financial tsunami that has befallen the entire global community was man made, simmering as a broth on a low flame during the last six to seven years and could have been easily avoided. It was sheer greed of the lowest kind that made:
• Government regulators turn a Nelson’s eye to the flagrant & large scale violation of their own time tested fiscal & monetary checks & balances by Banks, NBFCs, quasi financial service providers & financial intermediaries.
• Wall Street investment bankers becoming regular visitors in the illusory gold paved lanes of shadow banking to achieve ballistic targets & incentivising themselves with bonuses fatter than a McDonald’s whopper, on deemed & imagined income & cash flows. Esoteric complex financial instruments camouflaged with layers & layers of imaginary comfort peels under the garb of securitization were being peddled as if they were going out of style. The irony was that at the end of the day, the sellers knew what they were selling (worthless paper) but the buyers did not know what they were buying. Financial deals were taking place based on it being the flavor of the season and time being of the essence as if the financial bus terminals were running out of buses.
• SEC & other regulatory agency mortals getting their highs & fixes by star gazing at the meteoric rise of the equity indices at regular intervals and deluding themselves into thinking that the loosening & or tweaking of fiscal & monetary controls & regulations by them were actually acting as a catalyst to fiscal & economic growth.
• Organized sector major housing corporations selling their packaged wooden structures at inflated prices in cahoots with lending institutions with collateral offering of sweet heart kickback commissions to the banking heads to make them allot larger fund allocations for near sub prime & sub prime mortgages at usurious rates of interest.
• Risk appraisal agencies fudging reporting systems to circumvent compliance & regulatory issues, resulting in enhancement of their churn ratios to fatten their fee flows. They were in effect telling time looking at other people’s watches.
• Housing Mortgage brokers salivating & mentally masturbating over their commissions & throwing caution to the wind and hoodwinking the plain, simple hard working Joe & Jane Does of America walking into their dens by making them sign papers with complex finance algorhythms and confusing them with legalese. And to add insult to injury giving them a false sense of comfort by making them drink placebo spirits laced with imaginary elixirs.
• Republican & Democratic senators enjoying the ride in the dubious finance Ferris wheels set up in well marketed fairs all over the country. All of them gathering momentum & speed at an unrealistic pace completely oblivious of the doomed crash that would take place decimating everybody, individuals, corporations, institutions, countries and systems in the process.
• Print & Electronic Media going into a frenzy pitching & circulating the feel good factor & giving Americans a false sense of comfort into making them believe that everything was hunky dory & that home prices could only go up & up & never down. The writing on American walls was everywhere; it was just that every one wore their blinkers with a passion because in the short run no one wanted to look at reality, the mesmerized effect of ownership had taken its toll.
A lot of efforts are now being invested in a blame game and & simulated lynching by members of the fourth estate has become fashionable. Anybody & everybody has become a potential fall guy, from the fiscal weather man to the predictable lot of usual suspects.
Yes, introspection needs to be done & the guilty identified & suitably punished. A total overhaul of the regulatory framework & mechanism is required so that such self inflicted fiscal suicides on such a mass scale are never allowed to ever happen again.
I quote from an article I came across recently “No Currency Left to Buy the Big Lies” by John Cusack of November 3, 2008 in the Huffington Post:
James Madison said when he put power in the hands of the business elite, he would be entrusting"enlightened statesmen and benevolent philosophers who would devote themselves to the welfare of all." Clearly, he believed this statement in the way I guess some modern Republicans do. The only problem was that he eventually realized this didn't work and in 1792, disillusioned and worried about the democratic experiment, condemned what he called "the daring depravity of the times." He went on to denounce the business elites who, given ultimate power, "become tools and tyrants of government...they overwhelm government with their powers and combinations and are bribed by its largesse." That's how he perceived the system he had helped design.
The global community’s faith in the US as a leader has been shattered. Not simply because of the financial meltdown but because of the betrayal being felt globally that even in a country like the US where leadership, democracy are the hallmarks, all it takes is a motley lot of special interest groups to commit such a bizarre fiscal crime of the century, meticulously planned & executed in a short time interval of six to seven years.
No punishment thought of would be commensurate to fit the crimes that been committed by people in powerful positions & committees. Toilet paper had been upgraded as a negotiable instrument and people become adept at coloring it and offering it in various sizes & strengths.
Atonement needs to be done by all of us. It has become quite obvious that simply going to church on a Sunday morning has not being doing enough to keep us grounded. Value systems need to be redefined.
Does one really need to go on a stress safari in trying to own a 50” plasma & a home with a two car garage on illusory projected earnings based on principles of leveraging & un-realistic capital appreciation. Everyone talks about fiscal leveraging, why not go in for human leveraging in domains related to helping your neighbors, the under privileged, the old and infirm, the sick and plain folks needing comfort and assistance.
In finance, leverage (or gearing) is defined as borrowing money to supplement existing funds for investment in such a way that the potential positive or negative outcome is magnified and or enhanced. There is a flip side.
Human leveraging simply implies borrowing & sharing your & other’s ideas and skills for the benefit of the self and the community and there is no downside.
I still have faith in the US as a country and what it has stood for in the past and stands for at the present. Its political leadership, leadership in its legendary regulatory & financial institutions and in the federal government unfortunately has become a marketable commodity to special interest groups.
As outsourcing has become a successful mantra in the US, maybe, just maybe the US should as an experiment also, outsource leadership and fiscal management to get the country out of the quagmire of quicksand that it has voluntarily got itself into.
Saving Grace:The recent election victory of Barrack Obama has come in as a breath of fresh air not only to most Americans but to the global community by & large. I hope the disasters that he will be inheriting can be suitably addressed by him & his new team members.
God bless all.
