Streetwise
Lauren Rudd
Sunday, July 20,
2008
We Are Not The Whiners
“Sticks and stones will break my bones but words will never
hurt.” Ummm, no I do not think that little ditty would resonate with much
success on Wall Street these days...or for that matter with a man of the cloth
desirous of practicing surgery...or a former senator and now former economic
advisor to a certain political campaign who is living proof that an economics
education does not an economist make.
Former senator Phil Gramm pronounced the United States a
"nation of whiners" wringing their hands and moaning about a recession that's
all in their pointy little heads. Those last three words, although they capture
his meaning, were not Gramm’s but were added by Alan Abelson of Barron’s.
Regardless, Gramm is dead wrong on the state of the economy. Just ask anyone
trying to cope with runaway prices and standstill wages.
To paraphrase Abelson, if the ongoing demolition of the
housing industry, the vicious credit crunch, rising price of crude oil, $4.00
plus gasoline, the inexorable rise in the cost of such existential items as food
and medical care, 5.5 percent unemployment by even Uncle Sam's skewed reckoning,
rapidly declining consumer confidence and the dramatic losses on Wall Street
during the first half of the year are all figments of a febrile imagination,
just what kind of economic hell would qualify in Gramm's eyes as a recession.
No, in my opinion Phil Graham had it backwards, it is not
America that is full of whiners it is the corporate elite who whine the most.
Corporate executives, those whose positions of authority and exorbitant
compensation are supposed to reflect their experience, intelligence and
professed accountability, cry foul when called to task for failure and
incompetence.
Take General Motors for example. I have on an occasion called
GM the most unenlightened company on the planet. Recent comments from its
illustrious head, Richard Wagoner, only reinforce that belief. Amid speculation
on Wall Street that GM was headed towards bankruptcy, Wagoner called comments
from Street analysts "not at all constructive...”
Anybody remember that analysts have had their feet held to
the fire to ensure they meet their responsibility to the investing public and
voice their views objectively. Executives like Wagoner should keep in mind Harry
Truman’s legendary comment, “If you can’t stand the heat, stay out of the
kitchen.”
Doctored photos and misleading statements from Iran’s recent
war games shook the oil markets, sending the price of crude to a record $147 per
barrel, resulting in an additional $25 million per day to Iran’s economy. As one
expert put it, the Iranians are tweaking our noses. Sounds familiar...you could
probably paint a number of corporate executives and politicians with the same
brush.
During World War II there was a saying, “Loose lips sink
ships.” John Reich, the director of the Office of Thrift Supervision, blamed
IndyMac’s failure on derogatory comments made by Sen. Charles Schumer. Schumer
had nothing to do with IndyMac’s failure. The failure was brought about because
the mortgage industry played fast and loose with the rules, while regulators
like Reich turned a blind eye. After all, this is the era of deregulation,
laissez-faire and minimal government oversight or intervention. Yes, once again
the fat cats dine and the average taxpayer is left paying the check.
Note to readers: Streetwise recently celebrated its 20th
anniversary, having appeared in newspapers for over 1,040 consecutive weeks. To
the thousands of you that have written in over the years telling me you enjoy
and benefit from my sanguine comments, I thank you. Naturally, there have been a
few letters with a contrarian comment or two. Interestingly, compliments are
usually a few lines, while calling me a dolt requires a page or two. Such is the
life of a columnist.
