Only a man as steeped in Wall Street wisdom as Henry Paulson could have diagnosed our problems as one of nonavailability of credit and proceeded to set up a bailout plan that remedied this perceived problem.Even if this works,it is my belief that it will be a short term solution to a long term problem and the same problem will keep recurring on a regular schedule.
The fundamental problem in our economy is that somewhere in 1980,our economy was handed over on a silver platter to the financial manipulators sidelining the wealth creators in the real economy.
This is sadly seen in the episode of Robert Stempel,the engineer in charge of General Motors being swept aside by John (Jack) Smith in a palace coup.Since then GM has been on a downhill slide from which it does not appear to have a chance to recover.That is because the financial manipulators like Rick Wagoner,the current CEO, have no interest in producing a superior product that the market needs or wants.They only want an ever rising bottom line to appear miraculously every three months so that they can take home fat bonuses.
In the compensation end of the game, the manufacturing executives are now playing second fiddle to the financial executives.In another example,Richard Fuld, the greedy snake oil salesman at Lehman Brothers, after conning millions of investors for the past ten years with his worthless derivatives,took home nearly half a billion dollars worth of loot,all legal,of course.Compare that to the measly 15 million dollars a year that Rick Wagoner takes home.
The ascension of financial executives in the American corporate landscape and the disparity between the compensation of manufacturing and financial managers makes it inevitable that many “real” corporations will fail in the coming years.It is the death of the “real” economy that will cause another meltdown.That is a problem Hank Paulson,himself a financial executive,is incapable of diagnosing let alone cure.
Our economy has now been transformed from dealing in real goods and services such as a good reliable car giving plenty of gas mileage to one that deals in the metaphysical numbers cooked up by accountants who assure you that they know the value of a corporation and that your wealth is increasing.Until,the value collapses,of course,giving rise to another opportunity for the same criminals to get into your wallets for another looting.
As the man says: “What’s in your wallet?”