Issue November 26, 2008

Ignorant vacation

I’ve been on vacation, and I’m still technically not at work as I write this, although I am technically working because I am writing this, which is an antinomy for the backburner.

A lot worth ignoring has happened in the past week, and ignorance of world, national, state and local affairs was the stated goal of this particular West Coast sojourn.

I’ve tried. I cannot, given the stunning thematic consistency of The News.

 

I. The government of the United States bailed out another failing bank.

Citigroup, whose monopoly is a monument to Clinton-era deregulation, grew quickly and to a massive stature — as The New York Times reported Sunday — via a corporate culture that excluded accountability for high-risk trading of mortgage-related securities, instead rewarding said risk. Then it plummeted, as awesomely as it climbed.

The news of the second taxpayer-funded bailout sent jolts of confidence into the stock market Monday, causing a jump in Citigroup stock. Bank of America, JPMorgan Chase and Wells Fargo also saw gains.

That means analysts and investors are now deciding to add actual value to a company that ran itself without vital controls, is hopelessly broke and remains dependent on the government to proceed.

 

II. The government promises to bail out the auto industry.

A few days before all that, the CEOs of the nation’s three largest auto manufacturers — Ford, General Motors and Chrysler — had flown to Washington (famously, on separate private jets) to collect payment on their own buyout. Talking heads have been talking about and economic experts have been experting about what it will mean when the Big Three are forced into bankruptcy, and naturally, they all seem to be missing the point: From bankruptcy comes restructuring, which might mean some temporary hardship and renegotiations with autoworker unions.

Congress slapped those CEOs around a little because they failed to provide any sort of plan for what to do with the money, other than perhaps toss it down the same well they’ve used over the last decade or so for the rest of their surplus (far off the beaten path, that well is only accessible with an Excursion/Envoy/Aspen, and thus costly to reach).

Many Democrats, including President-elect Obama, are suggesting that the figurative Detroit ought not worry, because Uncle Sam/Big Brother/The U.S. Taxpayer will be here when these CEOs are ready to grow up, present a plan for the future that isn’t a bad reiteration of the past and take their Treasury money (granted they fly commercial — oh, the horror! — next time they drop inside the Beltway).

 

III. The government has not promised to bail out Kentucky, whose citizens will contribute approximately $10,329,101,388.28 (no joke) to the original federal bailout effort, not to speak of the others proposed or assumed.

While the transition teams of President-elect Obama and still-President Bush were discussing whom to give the next round of bailouts to, Gov. Steve Beshear announced that Kentucky’s suspected revenue shortfall is now $456.1 million. There will be dramatic cuts in spending, layoffs and presumably tax increases (Senate president David Williams’ idiotic refusal to raise taxes notwithstanding).

 

IV. Louisville takes one for the team.

Here we’re looking at a $20 million revenue shortfall for the fiscal year ending June 30. Along with his recent begging in Washington for more funding for cities, Mayor Abramson and senior staff are taking a 10-percent pay cut, and 4,500 employees will be furloughed for three days. Abramson said social services would not be cut, and he hopes to have a plan together soon to balance the budget.

Throughout the course of this utter failure of the capitalism experiment, people have sought parties to blame. Wall Street, yes. Predatory lenders, yes. Ordinary citizens rolling on credit, yes. And so on.

Amid this, it’s important to remember how interconnected these institutions are, and that in fact they should remain so, because our success as a country is predicated on the success of things like Wall Street and government, not one or the other. Hopefully, President-elect Obama sees this more clearly than his predecessors Clinton or Bush, and helps institute some real controls on exactly what kind of risk any of us, the blame-worthy, can take with other people’s money.