It has been an interesting couple of weeks of world watching. There are three stories of particular note that I have found completely fascinating while abeing absolutely appalled at the response from the media and our political leaders in Washington.
The first is the Jon Stewart and the Daily Show's attempt at getting the media to pay attention to the role of the financial reporting media complex in creating/encouraging the behavior that has led us to this Great Recession. Stewart did a fantastic job in presenting the argument and as this clip shows, he ate Jim Cramer's lunch. However, what I find appalling is that the only reaction has been - "wow, it took a comedian to point this out". While Stewart/Cramer itself should not be a story, the fact that no journalist or media institution has taken on the cause before or after Stewart is appalling. As the stewards of public knowledge, financial networks like CNBC need to take a critical eye towards the actions of companies, not toss them softall questions. And, when they failed in that job, their peers should be the first to call them out on it. Instead, they give sympathy and call Jon Stewart unfair.
The second story that I find equally fascinating and appalling is the story of the AIG bonuses. I am truly embarrassed that this is a story and not for the reasons many of you might think as I am not appalled by the bonuses but the reaction to the bonuses. In saying that I can understand that it appears inappropriate and the amount of compensation over-the-top, we need to keep two things in mind: 1) retention bonuses are a reality when it comes to a crisis situation; and 2) these employees signed a legally binding contract to stay with AIG and see it through this epic disaster. The administration initially recognized point #1 and the rest of us should recognize #2. Consequently, none of the other details of this situation matter.
Since I am not appalled by the bonuses, what does make me cringe about this story ? That would be the grandstanding by the members of Congress and now the administration about their perceived "outrage" over these payments. What they fail to recognize is that their outrage and actions are trampling on one of the most basic foundations of our system of government - written contracts are legally binding.
For those of you who disagree with my position ,think for a moment about how you would conduct your business or how outraged you would be if Congress or the courts told you that the legally binding contract you entered into with good faith won't be honored because Congress was "outraged" over the terms. I doubt any of us would be happy or would be willing to sell a product or perform a service without cash in hand. Why then, should we be outraged by this company (which we as taxpayers own 80% of) or their employees doing what they need to do to save this business? As AIG's CEO noted, spending $165 million to save $1.6 trillion seems like a pretty good deal, especially since we've got $170 billion invested into it!
Unfortunately, what our political leadership doesn't seem to understand is that their actions do not save the U.S. taxpayer money, all they do is cost us money. If our government has no respect for a legally binding contract, how can an investor be confident in the institution they are investing in? Why should investors put money in our financial institutions when we cannot be confident that contracts or promises will be honored? The bottom line for me is that "backed by the full faith and credit of the United States Government" has a lot less value to me today than it did last week.
Lastly, I'm not sure how much of a story it will turn into, but President Obama made a comment last night about his bowling being consistent with the Special Olympics. Appropriate to say? Absolutely not. Something that most Americans would probably say? Absolutely. Is the comment ever said with true malice? Probably not. Yet, I imagine that this will be quite a story, or members of the media or Obama critics will try to make it a story. Why?
Because we would rather fiddle.
The first is the Jon Stewart and the Daily Show's attempt at getting the media to pay attention to the role of the financial reporting media complex in creating/encouraging the behavior that has led us to this Great Recession. Stewart did a fantastic job in presenting the argument and as this clip shows, he ate Jim Cramer's lunch. However, what I find appalling is that the only reaction has been - "wow, it took a comedian to point this out". While Stewart/Cramer itself should not be a story, the fact that no journalist or media institution has taken on the cause before or after Stewart is appalling. As the stewards of public knowledge, financial networks like CNBC need to take a critical eye towards the actions of companies, not toss them softall questions. And, when they failed in that job, their peers should be the first to call them out on it. Instead, they give sympathy and call Jon Stewart unfair.
The second story that I find equally fascinating and appalling is the story of the AIG bonuses. I am truly embarrassed that this is a story and not for the reasons many of you might think as I am not appalled by the bonuses but the reaction to the bonuses. In saying that I can understand that it appears inappropriate and the amount of compensation over-the-top, we need to keep two things in mind: 1) retention bonuses are a reality when it comes to a crisis situation; and 2) these employees signed a legally binding contract to stay with AIG and see it through this epic disaster. The administration initially recognized point #1 and the rest of us should recognize #2. Consequently, none of the other details of this situation matter.
Since I am not appalled by the bonuses, what does make me cringe about this story ? That would be the grandstanding by the members of Congress and now the administration about their perceived "outrage" over these payments. What they fail to recognize is that their outrage and actions are trampling on one of the most basic foundations of our system of government - written contracts are legally binding.
For those of you who disagree with my position ,think for a moment about how you would conduct your business or how outraged you would be if Congress or the courts told you that the legally binding contract you entered into with good faith won't be honored because Congress was "outraged" over the terms. I doubt any of us would be happy or would be willing to sell a product or perform a service without cash in hand. Why then, should we be outraged by this company (which we as taxpayers own 80% of) or their employees doing what they need to do to save this business? As AIG's CEO noted, spending $165 million to save $1.6 trillion seems like a pretty good deal, especially since we've got $170 billion invested into it!
Unfortunately, what our political leadership doesn't seem to understand is that their actions do not save the U.S. taxpayer money, all they do is cost us money. If our government has no respect for a legally binding contract, how can an investor be confident in the institution they are investing in? Why should investors put money in our financial institutions when we cannot be confident that contracts or promises will be honored? The bottom line for me is that "backed by the full faith and credit of the United States Government" has a lot less value to me today than it did last week.
Lastly, I'm not sure how much of a story it will turn into, but President Obama made a comment last night about his bowling being consistent with the Special Olympics. Appropriate to say? Absolutely not. Something that most Americans would probably say? Absolutely. Is the comment ever said with true malice? Probably not. Yet, I imagine that this will be quite a story, or members of the media or Obama critics will try to make it a story. Why?
Because we would rather fiddle.
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