Monday, October 17, 2011

'Occupy Chapel Hill: Be Part of Something Too Big To Fail'

We saw this sign in front of the US Post Office this past weekend on an absolutely glorious 'If God is Not a Tar Heel, then why is the Sky Carolina Blue' weekend.

And right off the bat, we wondered:  'What will happen when the skies turn gray and the temperature drops to 20 degrees? (for about the 3 days per year it does get cold in Chapel Hill)

But this sign does evoke a lot of emotions and thoughts so we thought we would share them with you:
  1. First of all, we agree with them 100% about the Wall Street and Detroit bailouts.
  2. But we also extend that sentiment to the state bailouts in the first stimulus package, the 'cash for clunkers' program, the Fannie Mae and Freddie Mac whitewashes and any other attempt by the Obama Administration. 
  3. 'Where do these people think the money comes from to pay for all these bailouts and the social programs they want more of in the first place?'
  4. 'Be part of something too big to fail' indeed.  Like the United States of America, the free enterprise system and the democratic republic that allows it all to happen.
Let's take these in order:

Wall Street/Detroit  We can, and should, all agree that any executive on Wall Street, in Detroit or in any management level decision that led to these egregious bailouts in the first place should have been fired, thrown into prison or hung in stocks on the Washington Mall like they did in colonial days to shame malefactors and criminals.

And none of them should have been offered any golden parachute, retirement package or any benefits after the companies they led essentially became bankrupt.

'Why? you ask.  'They had a contract.'

Their businesses went bankrupt!  Have American free enterprise mavens and hawkers forgotten what capitalism is all about in the first place? You make reasoned risks so you and your company can make profits so the company can grow and prosper.

You make the wrong guess or bet?  You lose.  You lose it all; you file Chapter 13 bankruptcy and try to reorganize and start all over again.

That is the 'real' American Way that Ronald Reagan and other conservatives such as Barry Goldwater talked about and extolled.  Not this 'run to the government for help' mindset that most of Wall Street and much of America corporate business has adopted over the past 25 years.

'Privatize the upside and socialize the downside' is the mantra for current business leaders in America.

Or more aptly put when speaking in private:
'Allow us (me) to take full advantage of the private enterprise system when things are going great so we (I) can get rich beyond the wildest dreams of Kings Croesus and Midas of yesteryear lore. When things go bad, we (I) will run to Washington to ask the government and the Federal Reserve and any other sucker to pay for our (my) mistakes. Oh, and pay ME a multi-million bailout parachute package with taxpayer support worthy of any parting gift from 'Wheel of Fortune'
One well-respected CFO and CEO we know well had this to say when asked if he would have ever gone to Washington hat-in-hand if his business had 'failed' in the 70's/80's:

'I would have rather had a hot poker from the fireplace stuck into both eyes!'

That must have been when men were men and business people of all genders recognized the ups and the downs of the free enterprise system. And respected them. Like the rules of golf.

You never see a professional golfer go whining to the PGA Commissioner appealing some ruling, do you? Golfers call penalties....ON THEMSELVES! 

Wouldn't that be wonderful to see in the business world of today?
'Members of the Board, shareholders and Members of Congress and President Obama, I screwed up. I made bets on the subprime mortgage markets with checks I could not cash and which went south pretty damned quickly in 2008. I hereby resign my lucrative position and will work for the rest of my life to try to repay every cent I lost...unless I go to prison first.'
Second, a bailout is a bailout, no matter how you slice it or what the government spends TARP money on. States across the nation have spent money like drunken sailors (which Ronald Reagan said was an 'insult to drunken sailors!) over the past decade and they were completely unprepared to handle the downturn in loss of tax revenues when the recession hit in 2008.

At least 50% of the Obama stimulus package was not designed to stimulate new investment and private sector job creation.  It was designed to satisfy the teacher unions and other public sector unions across the nation and keep them at work when the states could no longer pay their salaries. It is about to expire at the end of this year...and then what? In the absence of a healthy growing private sector, these jobs can not be sustained and will be cut back again next year at the state level.

Which gets us to our third point: 'Where do these Occupiers think all the money comes from to pay for their IPhones on which they Twitter their 'Glorious Revolution'? (Google the Glorious Revolution of 1688 and see what that was all about)

Computer says: 'The private enterprise system!'

That is where all the money comes from to support the social safety net, the defense budget and Medicare and SS, NOT the government! American free enterprise capitalists and conservatives in general have done a spectacularly terrible job of teaching the next generation of the virtues of the free enterprise system. Mostly because all they have seen in their formative years for these past 15-20 years has been year after year after year of corporate giants taking advantage of every loophole in the law they can find and then paying their executives enormous sums of tribute in the form of compensation even after they fail miserably.

Companies need to closely tie compensation to job performance and success. Period. Stock goes down. Mr. CEO gets wiped out. Just like his shareholders. And then fired. That is fair and that is justice. And it will also help teach the next generation that life in the free enterprise system is not just a bed of roses designed for a select few elites.

But here is what we really agree with the Occupiers of Chapel Hill:  'Be Part of Something Too Big To Fail.'

It is called 'The United States of America'. Be a part of it. Don't run from your civic duties and obligations. Run TO them. As fast as you can. Run for office. Contribute lots of money to those souls who are braver than you who do decide to run for public office. Vote. Volunteer to help your cause or side of the argument.

And if you are a businessman, please. Please don't run to the government and ask for a bailout no matter how stupid your decisions have been. One analyst has said that if either of the two large banks in Charlotte had not bought either of the two major subprime mortgage companies, Countrywide or Golden West, their stock price would now be $500/share instead of in the low single digits or gone.


We, the American taxpayer, would have preferred that both had not made the same wrong fateful decision. Be a man, Mr. American Business Person, and do it on your own from now on, why doncha?

Stay away from Washington bailout money. Show some self-respect and respect for the free enterprise system you say you 'love' and which has been very, very good to you and yours.

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