Sunday, September 14, 2008
The United States of Crisis
Housing Crisis, Monetary Crisis, Fiscal Crisis, Healthcare Crisis, Budget Crisis, Trade Crisis, and now the Energy Crisis... I know it is a bit on the dramatic side... that aside, just how did we get here? Didn't we hire our best and brightest in Economics, the Law, Medicine, Economics, Finance, etc..?
Not only were they not so smart, but they lacked the ability to see right from wrong once admitted to "The Club". Most were born into "The Club", some worked, fought, and cajoled their way in. But any student of history would be hard pressed to see much of a difference between the U.S. now and the Soviet Union in their death throws. I love my country and the freedoms we enjoy.
I am reminded of that line from Al Gore's movie: "no man can understand something that his salary requires he NOT understand". These "Members of the Club" saw no reason to mention that the emperor had no clothes. Why risk being dismissed from "The Club"?
You don't know how much that fit Lehman Brothers and Bear Stearns.
I used to work for Bear Stearns. I watched the guys down in CMO (Collateralized Mortgage Obligations) trading make more money than I thought possible for a bunch of guys that get lost going out for a sunday drive. Not that they did not have PR firms to profess their brilliance to the masses - they did, and for the most part it worked. Unfortunately, they believed their own press. Actually, there WAS one really smart guy. Warren Spector sold his stock 2 years before the blow up in a political dust up at the firm - and it was his decisions that dropped the firm to the canvas!
So, here is MY idea. I say we need a NEW club. We should preclude from executive positions people trained at the institutions whose alumni were most represented at Bear Stearns, Lehman Brothers, Citigroup, Fannie & Freddie, AIG, Washington Mutual, (Should I throw in Enron and Worldcom?) etc... Harvard, Wharton, Columbia Business Schools... WHOEVER it is. This would be an easy calculation. Obviously these institutions failed in their mission, perhaps helping to aggravate the situation by compounding the failures of their ranks with their unwarranted status, which only compounded the poor thinking within these institutions. Think about it: How many times have you heard that the Harvard Business School is the "best"? Or Wharton?
OK, BY WHAT MEASURE?
Certainly not by the performance of their alumni.
Back soon on Lehman Brothers.
Mentatt (at) yahoo (dot) com
Posted by The Short Story Man at 12:35 PM