The Reign of Hollywood Harvey Ends, The Nightmare Continues

In the New York Times, this week, there was another story concerning the remaining funds set aside for the TARP fund. You know what I mean, that whole finance industry thing which was past back in September. Citigroup, which has already recieved $45 billion dollars in money from that fund, taxpayer money, looks like it might be splitting into pieces in order to ensure it's continued existence. If you either read or take a look back at the previous entry to this blog, you can get an idea exaclty how I feel about the $45 billion dollar bill taxpayers are footing for Citigroup. In total, banks have received $200 billion dollars. Yes, I am talking in billions here.

The current Secretary of the Treasury, is subtly warning the Obama team that using any of the remaining funds is a bad idea, because banks continued losses are going to dictate that we turn the rest of the money ($350 billion dollars yet to be dispursed) over to the crumbling financial giants. Obama is suggesting some serious help be provided for people caught in the housing nightmare and facing foreclosures. Paulson, seems to think these banks are in such a precarious position that they will falter and possibly collapse should we not shore up these failing institutions. The shock waves of these institutions failing could cripple the economy. This, is actually true.

Is Citigroup splitting necessarily a bad thing though? Would a split like that be a good recipe for survival for some of these other megacorp banks? Considering the fact that the initial argument for the TARP fund to be created was that many of these companies are just too big to fail, would it be bad for some of them to get smaller? And how about this, if $45 billion dollars isn't enough to restore security to the solvency of your company, how do you expect to be able to consistently keep a business that size agile enough to be able to take the necessary steps to keep the company from buckling, and effecting consumers, stockholders, and financial markets as a whole, in an environment which is as unusual as that which we face now? Let's also not forget the question that has yet to be answered by every financial institution we have already provided, what did you do with the money we gave you already?

Americans have been asleep at the wheel when it comes to many things which have brought us to this point. Our attitude toward the corporate world and the executive class has been very different than the one we have toward just about every other aspect and area of our society. Take into account the fact that Bernie Madoff is sitting in his multimillion dollar penthouse right now, waiting for his trial to begin. Bernie Madoff is accused of absconding with many peoples entire life savings, leaving some of them destitute. And I'm serious, destitute. Nothing left. If I had stolen millions of dollars from peoples homes, from their bank accounts, and any place else I could find it, and still had a number of those assets at my disposal, I'd be sitting in a cell somewhere. Madoff's crime though, is a white collar crime, so you know, it's different. It's not really dangerous crime. He might be a bad guy, but he's not "EVIL", like a drug dealer or bank robber. Give me a fucking break with this shit already. Sure, the crimes Madoff is accused of aren't related to violence in any way, and that really should be taken into account, but the sheer scope and the effects on the victims are incredible. In the past, criminal enterprise of this scope has been related to organized crime, the Al Capone's and so on. This could possible be something completely new in American crime, and for that alone, anyone accused of this kind of thing should be sitting in a cell. This guy has the kind of money, in property, sitting around his penthouse, to disappear for a long time. I don't think that's going to happen, but laws are supposed to be based on principles of harmony and equality.

Let's take something else which has hit the news in the last week, and a little close to home for me. From 2005 to 2007, Starbucks attempted to corner the market on the coffee industry by opening 1400 stores. Take into consideration that Starbucks cheif competitors are the thousands of small, mom and pop run coffee shops across the country, not another multibillion dollar corporation. It was a bold move, to put it mildly, and created a mountain of debt for the company. Starbucks has closed six hundred stores in 2008, that's a lot of lost jobs, it's earnings have been far from forecasted, and in response it's stock is dropping, creating a need for the company to do something to settle the worried nerves of stockholders. The response to that need was a 3% cut in labor, specifically in it's lowest level management positions, and declining to continue to match in the employees 401k plan. These are people who got those postions because they were deemed responsible and to have excelled in their previous positions. Starbucks customers, as a result, are facing a drop in levels of service, simply because there are fewer people in their stores, and the best people in their stores are there less often. Starbucks has also laid off a number of it's low level corporate employees and replaced them with contract, non-benefit labor, in order to cut costs as well. Then, this week news surfaced that in December, during the holiday season, the busiest part of the year in the retail sector, as Starbucks was cutting labor (therefore income for it's employees) it was taking possession of a corporate jet estimated to cost $45 million dollars. Now, for a company which has to have a working knowledge of many of it's suppliers practices, I don't have a particular hatred or distain for the idea of a corporate jet. If a farm in Guatemala should suffer some fire or freeze or some other kind of crop destroying issue, it's going to be good for farmers, and the entirety of Starbucks company and labor base to be able to send people who will be able to help find solutions, immediately. But, this is jet number 3, and this jet spent it's first two weeks in the Starbucks fleet in Hawaii, where Starbucks does no business with farmers, they carry no Hawaiian grown coffees. In fact, that jet was in Hawaii, so CEO Howard Schultz could spent the holidays there with his family. Starbucks statement related to the procurement of the jet says the jet was ordered three years ago, when the company was in a better financial position and not taking possession of the jet would have cost too much money in penalties and lost deposits, etc. to not do so. Well, this sounds good right? Not so fast. The investment community is not convinced. Apparently, the jet could have been sold, prior even to completion, at a profit because of the three year waiting list, and the investment community is not looking very favorably on this revelation. When you're losing money, you sell the things you don't need, especially if you could make a profit. For the more practical minded in the investment industry, you take care of your workers and your stockholders first, then you can have all the toys you want. Somehow, corporate culture in America has gotten the idea that this kind of thing is perfectly acceptable. I don't know exactly what's going to wake people up to the idea that we've had a wild west environment going on in the upper echelon of corporate America in which a very wealthy and powerful few have a continuous record of looking specifically at personal gain, personal wealth (to a degree which is practically vulgar), and personal status, that have wide ranging effects on the people not only in their company, but also across the economy.

I know a Starbucks employee who's spouse was a building contractor, who's business had evaporated in the last year, and was in the earliest stages of foreclosure when her own income was cut as a result of the labor cuts. They have five children, and now, because the foreclosure market is in high gear, moving things as quickly as possible in order to beat any possible legislation which would prevent foreclosures, they have thirty days to find a new place to live. Think about the number of different things which had to happen to put these people in this position. There's the housing bubble, combined with the sub-prime mortgage fiasco, two things the finance industry absolutely created through a blatantly greedy, completely insane creation of various financial products promising to turn turds into gold. Alchemy through equations. There's a lack of interest by law makers to address the position home owners have been put in by the actions of people whom they've had no contact with, whom they've often done no business with, and whose actions they have neither supported nor berated. As a result of the housing market collapse, the entire economy goes wobbly at the knees, and people start losing their jobs, companies start cutting back on labor etc. At this point, the people taking the hit aren't only people who tried to buy too much house.

One in fifty four homes in the USA is under foreclosure. That's a 225% rise from last year. Homes which aren't in foreclosure, aren't worth the mortgages people are paying because the market has tanked. People are losing jobs, income, homes, and everything. And what's going on in the halls of power and influence across the country? Jets are being bought, those responsible for this mess are being rescued, two and three times, on the credit of future generations of the people who are being most effected and losing the most, with little help, no bail out, nothing. It's time to wake up kids, the class warfare which the Republicans were accusing Obama of during the election, has been going on for thirty or forty years, except it's been war on the middle and lower class, waged by politicians and corporate greed mongers using the weapons of indifference, ignorance, and misinformation. The health of the entire nation is now at risk because of it. It's time we no longer accept the simple rhetoric, purposefully misleading, and techniques of distraction which have kept our lower and middle classes from focusing on the truth and consequences related to the actions of the people who can make decisions which effect the whole of the nation.