13 April 2009
Mr. President: Treat Bailout Companies Like You Treat Your Kids
Mr. President, you're a pretty good parent. Although it's pretty obvious that your wife and mother-in-law have pulled double duty the last few years, you seem to pitch in readily when you are home. You've raised your children to look out for each other. You've constantly reminded them that "they are all in this together." You've showed them how their interests, as separate as they may seem to them as individuals, are all intertwined. You've punished them when they are selfish and refuse to share with each other. You've trained the older, stronger, wiser child to care for the younger, weaker one. You've taught them, when there is a family crisis, to rely on one another's strengths and battle their weaknesses as a unit. This is not just an American phenomenon, it is a human one, practiced all around the globe.
So here we are, with a banking industry so far underwater you could call the mortgage derivatives they wish they'd never seen ".357 magnum liabilities", because the hole these debts would make in their balance sheets upon exit would be much, much larger than the holes they made going in - this is the very same banking industry who is now ready to turn around while we are still giving them their own bailout money and become "holier than thou" about the few billion dollars worth of their corporate brethren Chrysler's debt they control.
You couldn't do a more thorough job of destroying money than our bankers on Wall Street if you backed hundreds of dump trucks piled full of cash up to industrial furnaces and dumped their payloads straight into the red hot kilns. The convenient fiction these bankers want us to believe is that they did not do this intentionally, nevertheless, turning junk bonds into triple A rated securities was a whole lot like playing with matches. Keep it up long enough, and you are sure to get burned.
But the field of high finance has almost as many euphemisms for playing with matches and starting a fire as the military does when they kill people during peacekeeping missions. If you use this kind of lingo long enough, phrases like "mortgage backed securities" start to sound like they are describing sleek, elegant bundles of gilt edged securities instead of what they really were - unstable rocket fuel whose combination with the hot sparks of poor risk management decisions have exploded, creating a blaze that is curling billions of dollars worth of greenbacks into ashes right in front our eyes, the same way the phrase "collateral damage" has a smug knowingness about it that almost completely divorces the loss of human life from the act of firing deadly weapons.
Chrysler is in the same boat. They and GM use the phrase "we need to restructure our legacy costs" with so much vigor and flag waving, you are almost convinced that these companies could have really achieved all their success with a few hundred key people pushing the right buttons on their computers, as if the parts would formulate themselves and assemble into cars without any human intervention, the way things happen in a Disney movie.
If you're a parent, you know what to do when you have a child who is delusional, and given to believing in imaginary characters. It takes awhile with a kid like this, because he's got a really active mind that will concoct new fictional friends as fast as you neutralize the old ones. But eventually, between your perseverance and the passage of time, your kid will grow out of this as you teach him the difference between the things that actually exist and the things he wants to believe are true. Which means, Mr. President, that you are going to have to let the remaining execs in the auto industry know that there is no Tooth Fairy, and Santa Claus doesn't really live in the North Pole. You are going to have to insist that the only reason that these companies got as large as they did was because of the people they employed who actually did the work, people who have earned their retirements.
You know instinctively as a parent, Mr. President, that if you've got two children who both keep throwing rocks at your neighbor's window until it one of them breaks it, you have to punish them both the same way. Right now, the nation's masses are your metaphorical middle child, the kid who can recall with annoying certainty exactly how much the oldest received for their allowance when they were twelve. They are the kid who can regurgitate at a moments notice what kind of punishment you meted out to their siblings, broken down by type of offense, method of reprimand, and duration of punishment. They are the kid who has memorized in chronological order, down to the day, date, time of day, and location, each and every instance in which their youngest sibling received an extra helping of dessert.
We've seen what New Age parenting has done to our nation's children. In its quest to promote self awareness and high self-esteem, these kinds of parenting techniques have devalued the importance of authority, reduced the significance of achievement, and disavowed the notion that struggle and sacrifice are an integral part of success. I guess you and Mrs. Obama understand this yourselves, because you two seem to have gone back to the basics in raising your own children. Which means, Mr. President, you need to discipline the banking industry and the auto industry the way you appear to discipline your own daughters - sternly, fairly, and without showing favoritism to one over another.