OK, might as well go ahead and employ (begin ital) crisis , that over-employed word. We have a full-blown financial crisis. Let's think about it.
Overall, the market has lost trillions. Practically every indicator is down, seemingly every chart and every index; the indexes are even below where they were in the post-9/11 plunge. Yet the president has given two speeches saying the economy is sound, and bro' Greenspan has echoed him - sort of - with monotonal opinings about an improving economy rife with uncertainties. None of those speeches seems to have helped much.
How did we get here? Sept. 11 certainly contributed, but what really did it was corporate big boys in cahoots with the auditors cooking the books and making off with the store. These people were gotten by greed, which breeds ruthlessness, and by hubris - the arrogance of thinking they were beyond the reach of law and reprisal. As with pederasts, pedophiles and predators in the priesthood, too many corporate swells impoverished thousands of employees and millions of stockholders as long as they felt they could get away with it.
It's enough to make one consider being a populist, or at least to come out sounding like one. Too many have been making fabulous money too fast through manipulation of accounts and financial instruments, instead of through the traditional pathways of wealth - manufacture and agriculture and transportation of the products thereby made or grown. And through the provision of services and the production of goods. When you and I have a hard time understanding what these people with suddenly stratospheric incomes actually do, and when they themselves have a hard time explaining, it may be time to head for the woods and make do with the basics and hard work that have always gotten people by.
No question, the income gap between top execs and the rest of us has grown too wide. How much does the richest corporate swell really need - how many pairs of Guccis, how many houses in Aspen, how big a crew on his boat, how many wines in his cellar, how many St. Laurent robes adorning the delicately fragranced flesh of his luscious trophy wife?
But when you add an inability to trust the numbers to a growing skepticism about the perceived needs of some of those running the show, things can get very bad very fast - as they have. The free market system, like everything from the church to government, begins to stumble when trust declines.
And the pols and ideologues rush in to make it, usually, worse.
The past weeks have seen Republicans and Democrats clawing one another with clamors for reform and legislation to implement it. All such legislation is premised on the inadequacy of existing laws, when the principal problem with existing laws is not their content but their implementation - prosecution tending to be directed toward those areas of greatest need. Recently federal prosecutors have been concentrating on terror, with white-collar crime coming in somewhere way in the back of the pack.
Let us not forget that some of the loudest caterwaulers for reform in the "media" are now rushing to cite the alleged misdeeds of the president and the vice president, when before these same moralists could detect nothing wrong in the various misbehaviors of the Clinton claque - misbehaviors on the part of President Clinton for which no Democratic senator could bring himself to find the nation's only impeached elected president guilty. Let us not forget, as well, that as senators go, those most adamant in their demands for reforms in "corporate governance" tend to be not only that great institution's richest but its most liberal. And let us note that they have sought to stymie the most important reforms - cuts in income, estate and capital gains taxes.
Two intellectual counselors, both anonymous from the corporate sector, provide some comfort amidst this crisis of confidence - for that is what it is.
One: "While there can be no argument about the erosion of ethical behavior and fair business practices in corporate America, it seems ironic that members of Congress have the unmitigated gall to hold business leaders to a standard which they individually and collectively cannot and have not maintained in recent years. After eight years of corrupt administration under Clinton, you would think that they would, at the very least, admit that their leadership, or the lack thereof, has engendered an atmosphere of greed and aberrant behavior in all aspects of American life, including business.
"Corporate executives who allow shareholders to be misled should be prosecuted for fraud and should be punished accordingly. While there can be no excuse for this type of conduct, we should not be surprised that it occurs when unethical behavior has been ignored and excused by legislators and shareholders who are primarily concerned with personal gain. Our elected officials need to look inwardly as well as outwardly if they expect to have a positive and meaningful effect on a general populace which has long been witness to a constant and gradual decay in the high principles on which our country was founded."
The other: "Thinking drifts around on (certain accounting]) issues. Just as companies were once applauded for linking their directors' pay to the stock price, now (they're beginning to move to the view that) such linking may have created inappropriate incentives. ... Ultimately, our free market may be a far more exacting disciplinarian (and will allocate the blame more accurately) than any new laws could ever do. Without investor, lender, employee and customer confidence, a business enterprise has no future."
Two other observations, directly attributable, are apt about the developing crisis of confidence.
One is by Andrew Grove, a man who grew up in the malign climate of Communist Hungary to become the president of Intel. "The chairman, board of directors, CEO, CFO, accountants, and analysts could each stop a debacle from developing. A systemic approach to ensuring the separation of powers would put them in a position where they would be free and motivated to take action. I am not against prosecuting individuals responsible for financial chicanery and other bad behavior. In fact, this must be done. But tarring and feathering CEOs and CFOs as a class will not solve the underlying problem. Restructuring and strengthening the entire system of checks and balances of the institutions that make up and monitor the U.S. capital markets would serve us far better."
The other, by the legendary corporatist Warren Buffett, is perhaps the best reminder that this crisis, too, shall pass. For 250 years, Buffett has said, those betting against the United States have not been noted for their success.