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The failures of Lehman Brothers, Merrill Lynch, and Bear Stearns, the three biggest financial management firms in the US paints a picture of how organizations fail.  

Unfortunately, it also casts a reflection of our government for the past eight years.

But most importantly it offers us an opportunity to explain how the Obama administration will make government work again, prevent failures in the future and contrast against continued Republican orthodoxy.

First, the Triangle of failure.

These financial giants failed for three basic reasons:

  1. Opaque Disclosure: These companies were a black box to financial analysts.  They would not share their true financial status with their investors, analysts, and regulators.
  1. Gambling with other people's lives: These companies were willing to take on massive amounts of risk because they were using other people's money and livelihood to do it.  It's easy to gamble with other people's money.
  1. Incompetent, management at the top with ulterior motives: The companies that survived this financial crisis (BofA, JP Morgan, etc.) all did so because of VERY good management that was dedicated to taking care of the interests of their shareholders and customers.  NOT taking care of the interests of people outside the company.

Do any of these sound familiar?  The Republican mantra for the last 8 years has been to hide things from the American People, to gamble on a risky foreign policy using other people's money and lives as the chips, and to employ incompetent leadership at the top who are there not to serve the interest of their stake-holders but to serve the interest of their friends.

The failure of Lehman Bros is a very real example of what can happen with a mix of bad management, lack of transparency, and taking risk with other people's lives and money.  McCain's economic policies offer more of these:

  1. Bad Management - McCain himself has said he doesn't understand the economy.  Does it get any less competent than that?
  1. Gambling with other people's money  and lives - McCain promises turning over the public trust to continue to spend money in Iraq, it's OUR money, not his.
  1. Opaque disclosure - Where are Palin's Financials?  McCain's medical records? What would McCain do about opening the meetings of energy task force to public review (a la Dick Cheney).  What do the lobbyists running his campaign have to say about why John McCain won't talk about his economic policy?  The ultimate example of lack of transparency is the fact that McCain refuses to talk about issues and instead uses the smoke screen of controversy.

Granted, everyone isn't going to find an analog between the current financial situation and their person situation.  But the fact is, a LOT of American's are invested in 401Ks, and invested pensions.  You may know someone for whom this financial crisis looms large.  When you talk to them remember, there are very concrete reasons why these companies failed.  Those mirror the Republican governing model.  This is another concrete example of how large organizations fail and hopefully we can use it to our advantage.

Originally posted to gossamer on Mon Sep 15, 2008 at 09:04 AM PDT.

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Comment Preferences

  •  tips, recs etc. thanks nm (3+ / 0-)
    Recommended by:
    TooFolkGR, LillithMc, Johnny Rapture

    "We are the ones we've been waiting for"

    by gossamer on Mon Sep 15, 2008 at 09:05:39 AM PDT

  •  Here You Dropped This (3+ / 0-)
    Recommended by:
    gossamer, LillithMc, Johnny Rapture


    Of course, Enron wasn't a financial company... but the same pillars of secrecy, risk, and intentional deception brought them down.  We apparently didn't learn much from them either.

    --- It's SPELLED "TooFolkGR" but it's pronounced "Throat-Warbler Mangrove."

    by TooFolkGR on Mon Sep 15, 2008 at 09:06:10 AM PDT

  •  So You Got Your Guns But Can't Pay Your Mortgage (2+ / 0-)
    Recommended by:
    Johnny Rapture, Luthien Tinuviel

    So you got your guns but you can't afford your mortgage, what then?  When will Americans wake up from the illusion of the GOP Wizards? Republicans are terrible on Economics and they are terrible on National Security and they have been terrible stewards of the Earth. They have Led us into a Fake & Phony war and have yet to fully implement the recommendations of the 911 Commission to keep this country safe and secure. That is not being Strong on National Security!  Ground Zero is still a Dark Hole and an open Wound and a symbol of Republican failed polices!  We are in an Economic meltdown and Enough is ENOUGH!  Let’s expose the myth, deception and lies of the Wizards—GOP (Grand Opposition Party)! Let’s get off the Yellow Brick Road of lies and deception and realize that the power lies within the people to so produce a working government for the people not a government hiding behind a Curtain of corporate greed and special interest groups! They have failed the American people and they have failed themselves. There is no lasting prosperity for thieves and liars and the wrong one does will eventually come back to be reckoned with. This is their reckoning. Even Alan Greenspan has said Americans cannot afford the $3.3 trillion dollar tax cuts proposed by Senator McCain which is not surprising since McCain has admitted knowing nothing about the Economy and told Detroit auto workers their jobs would not be coming back.  He cannot even envision a future of 21st Century cars run on solar or another greener more cleaner alternative fuel?  Yikes!  That is not Change we can believe in!

    Now the Grand Wizard, McCain, who is 72 years old has allegedly put his Country First and nominated for V.P. someone totally lacking in national and foreign policy experience, who would be a heart beat away. Woodward in his recent book "The War Within" states that the two sleeping giants when someone takes the oval office come January 2009 will be Iraq and Afghanistan, something Bob Woodward says Bush was disconnected from. Can you imagine that, a President so disconnected from a war he asked Americans to die for?  Sadly, there will also be another Giant to face—that of the economy. Brokaw said to Sen. Schumer on Meet the Press Sunday past—I thought when one picks a V.P. pick that they pick the most qualified candidate, referring to Obama not picking Clinton and choosing Biden instead. This goes both ways and McCain did not pick the most qualified person in fact he picked the least.  A president will have the Weight of the World on his or her shoulders.  Unfortunately for this Country McCain has made a very bad judgment call and a terrible risk. May be he did not use his good judgment in this pick but something less honorable. Barack and Biden are ready to lead and to take up that weight. I do not think McCain and Palin are ready for such a daunting task. We need true leadership and not a false and deceptive wizard giving lip service to lies and deceit instead of truth and light. If we pull the Curtain back from our eyes, we will see he has no Power and McCain the Grand Wizard, is not the person he says he is!

    And lastly, all those who fear if they pick Obama/Biden will have to give up their guns is a false/negative.  What does having a gun and hunting mean, if their are no jobs to go to?  If gas at the pump is $7.00 a gallon?  What does it matter if food is sky high and one is unable to prepare even the most basic meals.  What does it matter if you get sick and you have no health care—unable to afford a doctor or even medicine?  What does it matter if you have your Gun but yet cannot afford the mortgage payments on your home?  What does it matter if through a war mentality World War III breaks out and possible nuclear annihilation?  Will your guns matter then?  We must deal with real issues and not superficial things that will not matter to us in the end and we wished we had of chose wisely instead of through fear, beguilement and deceipt!

  •  Fivethirtyeight (2+ / 0-)
    Recommended by:
    gossamer, Johnny Rapture

    As per Nate Silver, this won't have as much of an effect on the elections as some people think.

    People nevertheless seem to think that this will be some sort of linchpin event in the campaign. I don't necessarily buy that, because I think that most voters grasp intuitively that markets are markets, and that policymakers have less to do with their direction than they might with something like job creation.

    •  well (1+ / 0-)
      Recommended by:

      I don't recall saying it's any kind of a lynchpin.  Like I said, it's a concrete example of these three fatal flaws and how they cause suffering for people, how they lead to ruin.

      Obama offers the opposite, transparency, well-managed leadership with an interest in putting people in charge of their own government (oversight) and solutions that don't gamble with other people's lives and money.

      "We are the ones we've been waiting for"

      by gossamer on Mon Sep 15, 2008 at 09:25:22 AM PDT

      [ Parent ]

  •  The Bank of Amerika with some bush Neo pushing (2+ / 0-)
    Recommended by:
    westsyde, gossamer

    is rolling the dice aka McCane....! If BOA fails, its fukin over for at least a decade..

    Stocks posted big losses in markets across much of the globe as investors absorbed bankruptcy plans at Lehman and Merrill Lynch's forced sale to Bank of America for $50 billion in stock. And perhaps most ominously, American International Group Inc. is asking the Federal Reserve for emergency funding. The world's largest insurance company plans to announce a major restructuring Monday.

    The deal would not come without risks, however. Merrill Lynch, like many of its Wall Street peers, has been struggling with tight credit markets and billions of dollars in assets tied to mortgages that have plunged in value. Merrill has reported four straight quarterly losses.

    Bank of America's own finances are far from robust. As consumer credit deteriorates, the bank has seen its profits decline, and the company is still in the midst of absorbing the embattled mortgage lender Countrywide Financial, which it acquired in January.

    Hold onto your asses its going to be along bumpy ride and we already know who wins and who loses..Thats Capitalisim 101, taught at all the best WASP Ivy League Skools

    "Better a little late, than a little never"..Julian Winston

    by Johnny Rapture on Mon Sep 15, 2008 at 09:18:50 AM PDT

  •  BA will be bailed (2+ / 0-)
    Recommended by:
    alefnot, Johnny Rapture

    That is how this game is played. JPM and BA are not well managed companies at all - look at their marked to fantasy level 3 assets. Look at who they recently took over, Bear Sterns and Countrywide. Bear's Credit Default Swaps would have unwound it all in March if Bernake didn't arrange the shotgun wedding (funny how its always done over weekends when the markets are closed).

    They are being bloated at Bernake's request, with the implicit guarantee that Paulson will come through and save all his Goldman Sachs buddies. Say goodbye to the US Dollar.

    •  Agreed (0+ / 0-)

      BoA and JPM are as much caught up in debt as the rest of the industry. And Lehman Bros, Bear Stearns, and Merrill Lynch are by no means the three largest financial firms in the US. They're not even the three largest investment banks (but they ARE big). The great deleveraging is by no means over.

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