Said Rep. Gary Ackerman of New York: “It’s almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo.… I mean, couldn’t you all have downgraded to first class or jet-pooled or something to get here?” The response to that inquiry was a blank stare from the pampered auto chiefs, for whom the idea of flying commercial is inconceivable, worse than standing in the deli line at the grocery.
You’d be hard pressed to find three guys more disconnected from Main Street and less qualified to talk about the plight of the average autoworker. According to The Washington Post, Wagoner’s total compensation from GM last year was $15.7 million. Mulally collected $21.7 million from Ford.
When asked by Rep. Peter Roskam of Illinois if he’d be willing to cut his salary to $1 a year, as Chrysler’s Nardelli has said he would do, Mulally replied: “I think I’m okay where I am.”
Spoken like a true capitalist. Now give that man a big fat government bailout! As for Nardelli’s benevolent offer to accept only a buck a year in compensation, he could surely afford it. In January 2007, he quit abruptly after six years as CEO of Home Depot, Inc., where he’d been paid as much as $38 million annually. Before leaving the company, Nardelli negotiated a “retirement” package worth $210 million, a stunningly obscene sum even in the surreal realm of corporate parachutes.
The amazing thing is that GM, Ford, and Chrysler all have sophisticated public relations departments that their executives obviously failed to consult before hopping in their Gulfstreams and Lears and zooming off to Washington. Nobody was asking that the CEOs apologize for their personal wealth and career successes. But when the corporation that rewards you so extravagantly is going down the toilet, a little humility and sensitivity is in order.
If one or more of the Big Three should collapse, the impact on the economic markets will be massive, the ripple extending far beyond Detroit. Labor experts estimate that as many as 2.5 million people could be thrown out of work nationwide. Nobody wants that to happen, but we also don’t want to throw our money at an industry that stupidly continued to crank out SUVs even as gasoline was hitting $4 per gallon.
When the Big Three belatedly decided to “retool” and go green, what did they do? They asked for, and have been promised, a $25 billion loan from Uncle Sam. Then the companies announced they needed another $25 billion as a cash float, to get through these rocky times. Boy, did they send the wrong bunch to make their pitch. The generosity of Americans doesn’t—and shouldn’t—extend to sustaining the ethereal lifestyles of multimillionaires. Lots of executives fly private, but not to their own pity parties.
Bailouts are meant to save jobs, not corporate chariots. The CEOs went back to Detroit rejected, if not chastened. While Congress is mulling a compromise loan package, the attitude toward the automakers remains deeply skeptical.
If the companies were smart, they would have benched the Fab Three and instead sent some Main Street faces to Washington—an assembly-line worker from a Ford plant, a transmission mechanic from a Chrysler dealership, an upholstery cutter from a GM parts supplier. In other words, men and women who would truly suffer if those companies folded; folks who might not be able to pay their mortgages, or keep their kids in college … or even fly Jet Blue, much less on a Gulfstream.
February 8, 2009
Bernie Madoff, the Prisoner of Park Avenue
Private reflections of Bernard L. Madoff, a prisoner on Park Avenue.
Dear Diary,
For hours I stand at the vast impact-resistant windows of this lonely penthouse and gaze down at the city that never sleeps. I don’t sleep much, either—not because I’ve ripped off and ruined thousands of people but because my electronic ankle bracelet has given me a beast of a rash that itches all night long.
Ruth? She has no sympathy. My whining drives her crazy, she says. Last night I caught her writing a letter to the judge, begging him to revoke my bail.
Nobody calls these days except for my lawyers and a few very angry investors, to whom I was once foolish enough to offer our home number. Consequently, I am now careful to answer the phone with an impenetrable French accent, like Inspector Clouseau.
Your miserable correspondent,
Mssr. B. Madoff
Dear Diary,
Unbelievable! A gang of hooligans has defaced my Palm Beach estate with miles of toilet paper!
The news is all over the television, and everyone seems to be getting quite a chuckle out of this senseless act of vandalism. Shockingly, the local authorities show no interest in pursuing the barbarians who did this.
To make things worse, I’ve now lost my permanent lunch table at the Palm Beach Country Club to Donald Trump’s son.
This is America, people! What happened to “innocent until proven guilty”?
Your persecuted Ponzi,
Bernard
Dear Diary,
The walls of this $7 million penthouse are closing in on me day by day, and I feel trapped like a rat. No, make that a chinchilla.
At breakfast this morning, it’s Ruth—again with the pocket calculator!
“How many zeros are in $50 billion?” she asks with that sly glint in her eye. “And tell me again, honey, where did it all go?” As if she doesn’t know!
Today my lawyers are petitioning the court so that I may spend one hour a week at the driving range in East Hampton. I sure hope the judge is a golfer.
Your 9-handicap detainee,
Bernie “Tiger” Madoff
Dear Diary,
Finally, some good news! Temporarily, I’m no longer the most despised human being in the United States.
Some knucklehead named John Thain at Merrill Lynch spent $1.2 million redecorating his office while he was failing to save the firm from financial ruin.
Among his many expenditures were $68,000 for a 19th-century credenza and $35,000 for a “commode on legs,” which actually sounds kind of nifty.
Maybe I could order one with wheels, so I could roll away from Ruth whenever she goes off on one of her rants.
Your humble Imodium addict,
B.L.M.
Dear Diary,
Don’t believe what you see in the media—“house arrest” is brutal. Every day I feel more and more like a walking zombie.
I get up early, eat my imported Norwegian lox, and mail out a few gold Rolexes and Tiffany tennis bracelets to distant family members.
Then I watch The View while I faithfully Tivo Ellen, and of course I never miss the new half-hour version of Deal or No Deal. (I really love that show—what a bunch of suckers!)
Nights are the hardest time, as I lie awake trembling in fear of another vicious toilet-paper attack. I suppose this is what prison will be like, except without my silk kimono and lamb’s-wool slippers and chamomile tea and $50 foot massages …
Ruth promises she’ll wait for me, although I notice she’s spending lots of time uptown with some forensic accountant. I’m bracing for the worst.
For inspiration in my darkest hours, I think of all those men who emerged from unjust incarcerations with strength and dignity to embrace full, vibrant futures—Solzhenitsyn, Mandela, Robert Downey, Jr.
At the very least, one helluva book contract should be waiting for me when I get out. As for the movie rights, can you say Slimedog Billionaire?
Your future bestseller,
“Papa” Madoff
February 15, 2009
Reaping the Fruit Planted by Greed
It wasn’t surprising that President Barack Obama came to Florida to push his economic stimulus package, because no place in the United States has fallen so hard, so fast.
And when the mega-recession finally ends, Florida will be one of the last places in the country to turn itself around. That’s because other states have actual industry, while our employment base depends fatally on double-digit population growth and, to a lesser extent, tourism.
Everything was going gangbusters when a thousand people a day were moving here, but now the stampede is over, and the jig?
??s up. Without fresh meat for the housing market, Florida basically hasn’t got an economy. Developers have controlled state and county governments for so long that no Plan B exists. Lost and clueless, lawmakers desperately hack away at public budgets while clinging to the hope that boom times will return.
For good reason, Florida has become the poster child for America’s fiscal disintegration. We stand at the top of the leaderboard in rising unemployment, foreclosures, and, of course, mortgage fraud. Where else could a man step out of prison and straight into a job peddling adjustable-rate home loans to buyers with virtually no credit?
As has been documented, more than 10,000 convicted felons were welcomed into the mortgage business under the unwatchful eye of the state’s Office of Financial Regulation. Believe it or not, many of those felons went on to perpetrate dishonest deeds and victimize gullible citizens.
The banks grabbed their piece of the action, too. Every major institution now standing in line for a taxpayer handout was an eager player in Florida’s real-estate frenzy, throwing money at just about anybody who asked for a loan. If you had a pulse and a checking account, you could find a mortgage.
For a while it seemed like everyone caught the fever. Couples who could barely afford one house rushed out and bought two or three more, planning to flip the properties for a quick windfall. Rabid speculation warped the market, and by 2005, the price of most homes bore no credible relation to their true value.
A few experts voiced alarm, but nobody listened. The history of Florida is that of greed run amok, and old habits die hard.
The most recent issue of The New Yorker features a scathingly accurate article about Florida called “The Ponzi State.” As one investment fund operator explained to journalist George Packer: “The Florida economy has been based on selling Florida. Our growth is all about population growth. When you take that away, what have you got?”
Today there’s a new wave of growth in the Sunshine State: Ghost suburbs. They’re springing up from one coast to the other—block after block of vacant, foreclosed homes, or houses that were built but never sold.
Obama’s visit to Fort Myers was meaningful for many who attended the town rally, but the president didn’t address the unique uphill challenges facing Florida’s path to recovery. For a state with 18 million residents, there are relatively few large factories or assembly plants and not much high-tech enterprise. Agriculture—the one major sector that’s not tied to population growth—has been waning for years, as vast tracts of groves and farm fields have been bought up by developers.
Yet besides orange juice, veggies, and cattle, we don’t produce much of anything that the rest of the country wants. The state never made an effort to diversify because it didn’t have to. As long as people kept pouring in, nobody worried. For the most part, those who migrated here wound up with jobs that directly or indirectly depended on more people coming.
It was, in fact, a Ponzi scheme of phenomenal proportions.
Now, lacking that daily fix of a thousand new warm bodies, Florida’s in deep trouble. This is inevitable when the mechanism of your economy is modeled on that of a cancer cell.
Who knows when, or if, all those ghost suburbs will become neighborhoods again, all those empty condo towers and boarded-up shopping centers will bustle to life. One thing is certain: Government can’t make it happen.
The state stands to receive billions in recovery funds from Uncle Sam, some of which might actually trickle down to people who need it. Still, the money will do nothing for the long-range dead-end plight of a place where growth isn’t the product of prosperous industry; it is the industry.
Nothing about Florida’s frantic real-estate boom turned out to be enduring or real, except the suffering of those now losing their homes and their jobs.
They bought in to a dream and wound up in a nightmare.
February 21, 2010
“All the Free Speech Big Money Can Buy”
Despite the public’s epidemic disgust with politicians, now would be a splendid time to run for office in this country.
That’s because the U.S. Supreme Court has made it infinitely easier for candidates to sell themselves to special interests, who in return will peddle those candidates to voters.
The court’s controversial decision allowing unions and corporations to spend as much as they want on political races essentially trashed a century of campaign-finance laws, saying they violated the constitutional right to free speech.
Of course, the five justices who signed the majority ruling have lifetime appointments to the high court and will never have to run for office. That means they won’t get to experience the challenge of trying to campaign against an opponent whose media attacks are anonymously funded by the telecommunications industry or the banking lobby or the AFL-CIO.
Here in Florida, where oil companies are pushing hard for offshore drilling, the Supreme Court’s decision opens bountiful opportunities to incumbent officeholders and newcomers alike. Although coastal drilling remains an unpopular concept in most beachside communities, any candidate for federal office who supports it could probably count on ExxonMobil or Shell to come up with some slick and persuasive commercials, which would be blared over and over and over …
The old campaign-finance laws had holes as wide as the Holland Tunnel, but there were limits. Now it’s a free-for-all.
Candidates who take a stand in favor of industry regulation are certain to become targets of those industries in election years. More significantly, special interests will be able to pick their own candidates and spend whatever their shareholders can afford.
For instance, now would be a great year to run as a pro–Wall Street candidate. Think about it. The whole nation is fuming about the federal bailouts, and the Obama administration is seeking to reinstate tough regulations on big banks and trading firms. Just last week, a group of senior and well-respected figures from the financial industry told The New York Times that strict reforms were necessary to prevent another crippling economic crisis.
Firms like Goldman Sachs, whose executives don’t like the idea, are eager to kill it. They have literally a fortune at their disposal during this election cycle, and would surely embrace any candidate who had nice, positive things to say about Wall Street.
A number of Republicans have already spoken out against the proposed banking regulations and are well positioned to receive boundless gobs of campaign money from Goldman and other “toobigtofail” companies. The only possible hurdle is public sentiment.
A new Washington Post–ABC News survey reports that a lopsided majority of Americans are seriously ticked off by the Supreme Court’s decision on election financing. The opposition cuts almost evenly across party lines. Of those polled, 85 percent of Democrats, 81 percent of independents, and 76 percent of Republicans think it was a bad move to remove campaign spending restrictions for companies and unions.
That’s an impressive consensus for a nation that’s supposedly divided.
Interestingly, on the issue of election funding, the Republican leadership appears to be orbiting a different planet than its conservative base. Senate Minority Leader Mitch McConnell of Kentucky and other GOP big shots have cheered the Supreme Court ruling, and they’ve made it clear that they would try to block any new legislation that would curtail corporate donations to political candidates. The reason is no mystery—the Republicans have traditionally been the party that snuggles up to Big Business, and they stand to gain the most from this opening of the floodgates.
Two Democrats, Sen. Charles Schumer of New York and Rep. Chris Van Hollen of Maryland, are leading an effort to pass a new campaign-finance law in advance of the November elections. They want to make corporations tell shareholders what they’re spending on political races, and they also want top executives to appear in campaign ads being funded by their companies.
Knowing who paid for political commercials would definitely make them more informative, but neither the corporations nor their stooge
candidates will be eager to advertise the cozy relationship.
Neutralizing the Supreme Court decision is practically impossible without bipartisan cooperation, which no longer exists in Congress. If nothing happens soon, special-interest windfalls will shape the upcoming elections as never before.
If you thought the airwaves were polluted during the 2008 campaign, just wait until the fall. Political ads will be even more deceptive, nasty, insulting, and abundant—all the free speech that big money can buy.
That’s dreary news for voters but good news for a certain breed of politician.
September 26, 2010
Someone Give These Guys Memory Pills
The myth of Republican frugality is graphically exemplified by an ornate new state courthouse, about six miles from downtown Tallahassee.
It will soon house the First District Court of Appeal, and it was financed primarily with a $35 million bond issue that was slipped into the 2007–2008 budget at the last minute.
Originally (before a splatter of bad publicity), plans called for the new courthouse to provide each of the 15 appellate judges with their own 60-inch mahogany-trimmed flat-screen televisions. Architectural features included individual bathrooms and kitchens, as well as a fitness room. A grand dome was installed, modeled on a Michigan courthouse that some of the Florida judges had toured, traveling there on a private jet paid for by the builder.
The $48 million judicial palace—now derisively dubbed the “Taj Mahal”—was constructed at $425 per square foot, compared with $250 per square foot for most state buildings.
To make matters worse, the new First DCA courthouse will cost the badly strapped state court system about $1.7 million a year in rent. The old court building was rent-free.
How could this happen?
It started with now–Chief Judge Paul Hawkes, a former GOP House member, and Judge Brad Thomas, who worked for years as a Senate staffer. Both men, who were appointed to the First DCA by then-Governor Jeb Bush, aggressively worked the halls of the Capitol, lobbying former colleagues to build them a swanky new courthouse.