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What the hell is going on when the beneficiaries of the TARP Program pledge not to loan any of the proceeds. That's right.  They are pledging to their shareholders in the splendor of a luxury resort that they will not even consider using the money for the purpose it was originally intended.  This is the tip of the iceburg.  It is time we begin to yell out loud.  The US has the worst executives in the world.

The NYT had a front page article on the bailout in the Sunday edition.  See Times Article
The essence of the article was about the proud proclamation on the part of CEOs running these banks that they would be looking to use the proceeds of the bailout as a rainy day fund or for future acquisitions, but that actually lending this money was way down on the priority list if on the list at all.  

After leaving the business world in disgust a few years back, and spending many hours wondering how and why business leaders (my peers) had become so amoral if not outright corrupt, I thought I would not be surprised anymore at the amazing lack of any sense of responsibility shown by these greedheads.  But I was completely taken aback upon reading this article at how truly warped these people are.  One of the sponsors of the junket for bankers in Palm Beach said that the priorities being expressed by these executives, "might not conform to popular expectations that the money would be immediately lent to consumers.".  How is that for the understatement of the century?  Is there anyone out there who thought that this money was for anything but immediately lending to people who needed and qualified for credit?  Remember the "credit freeze"?  So what the hell happened?

The answer, of course, is nothing happened.  And that is a big part of the problem.  After the Enron disaster, I remember the outgoing CEO of Medtronic being asked what went wrong and he gave a simple answer.  He basically said, "The wrong people are running companies."  I believe he was onto something, but it was not as simple as that.  The big question is why are the wrong people running companies?  

It all started with Reagan and Milton Friedman who basically spread the new gospel of deregulation and tax decreases for the highly paid along with a war on unions and working people at large.  This changed the game in terms of the operating culture of the corporate executive suite.  In a recent diary by tasini he points out that worker productivity has been steadily increasing without pause even after Reagan.  What changed was that after 1980 this no longer translated into wage gains.  As there was an evaporation of rules and taxes the balanced executive was slowly replaced by those who valued short term personal wealth above all including workers. It took about a generation for this new culture to permeate the executive suite, and since boards are typically comprised of other executives it spread completely.  Soon, bonus plans, exit plans, and golden parachutes were the only things being seriously being considered instead creating lasting great companies.  Obviously, there were exceptions but they were becoming a small minority. In my career as an executive, I saw the transformation of the board room ethos from trying to balance the needs of all the stakeholders to one of situational ethics, short-term thinking, and self dealing.  This happened over the last 30 or so years, but really kicked into high gear when the Bush II administration came into office with its utter disregard of any sense of civic responsibility and its embrace of lying, cheating and stealing at the highest levels.

In case you are not convinced yet, let me entertain you with some facts.  William Mcquire, former CEO of United Healthcare, was forced out in 2006 for backdating stock options which enabled him to take compensation of $1.6 billion out of the company over a ten year period before he was canned.  For you math retards, that's $160 mil per year to keep his company benefiting and to "make health care more affordable".  He couldn't live on a regular $10 mil or so a year, so he felt compelled to cheat his employees, caregivers, customers, and shareholders to get these astronomical payouts.  United Healthcare is recognized as a cheapskate among medical practitioners and many groups are not accepting patients with United coverage anymore.  Do I need to point out that none of McGuire's ill gotten gains were paid back nor was he ever held accountable for his cheating?  This is not an exception.  Most of the insurance companies are paying their CEOs big bucks for keeping costs down by denying claims, or as it used to be called--committing insurance fraud.

I did a financial study of Pfizer Corporation a while back to see if there was any truth to the myth big Pharma spreads.  Namely, that without making 3X the profits of other manufacturing firms, they would not be able to carry on the research necessary to give us our sorely needed wonder drugs.  I found that they spend about 6% of revenues on research and around 20% on selling and marketing expense.  It is easily within their capability to cut prices in the US in half, and still make good money without compromising research funds.  In other words, their executives lie to us to excuse their price gouging.  They are lying, cheating, and stealing.

I don't need to bring up WalMart, Halliburton, Big Oil, and Defense Contractors since these stories are well known.  Lying, cheating and stealing is endemic among executives in the US.

Most recently, I am reading about Microsoft planning to layoff a bunch of people while continuing to rack up profits (about $4 bil last qtr)and sitting on $20 bil in cash.  While threatening the layoffs of US workers, they are working like crazy to keep thousands of low cost foreigners on H 1B visas here in the US.  That is outright sociopathic.    

So with all crap going on at the executive level, it always amazes me when the US workforce which is perhaps one of the most productive in the world is usually disparaged in the press and the executive pool which is perhaps the worst in the world receives nothing but adulation.  The recent bashing of the United Autoworkers comes to mind.  Of course, most big company executives are good at self promotion.  Often they hire firms to do nothing but that.  That should not keep us from shouting the truth about one of the really damaging situations facing us as a nation.  When taking a broad look at the other industrialized countries, we have grown the most undeserving, greedy, unethical, and unpatriotic  executives in the world and we need to point this out every way we can.  Sure there are bad apples in other nations, but nowhere is greed such a factor, and in much of Europe there is union representation at the board level which changes the game.  Re-regulation can help, but it won't be enough to reform a group of people where lying, cheating, and stealing are accepted ways of behaving and offshoring or layoffs are the remedies for all problems.  The sooner we face facts and begin to recognize this rot in our culture the sooner the recovery can begin.

Originally posted to deweydog on Tue Jan 20, 2009 at 09:38 PM PST.

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Comment Preferences

  •  Whatever reason they give is code for... (4+ / 0-)

    insolvent.

    I don't think many will be going on an aquisition binge anytime soon unless it's treasury ordered.

    We said we want change, and they gave us a handful.

    by MouseOfSuburbia on Tue Jan 20, 2009 at 09:42:19 PM PST

  •  Nice Diary deweydog... (12+ / 0-)

    You've touched on one of but many reasons behind why America's companies have been screwing their customers (us!) for several decades now. Ironically, seemed to start around the time Regan got elected.. Hmmm...

    (Please post a tip jar - sorry I jumped in before you did)

    We, the people, have spoken. Barack Obama is OUR President.

    by dagnome on Tue Jan 20, 2009 at 09:48:24 PM PST

  •  When Obama talked about responsibility today (13+ / 0-)

    I was looking at YOU ... Halliburton, AIG, Citigroup ... the whole stinking lot of you.

    We have the most disingenuous, overpaid, undereducated, greedy bastards in the world at the helm of the corporations we "need to save."

    It is way past time for rules, regulations, and responsibility for business in this country.

    •  It's way past due for bringing charges.... (6+ / 0-)

      against these guys, for malfeasance among other things, and conspiracy to commit fraud.

      If even a small handful of them get sentenced to prison terms of, say, five years, that will set an example and have something of a deterrent effect.  

      If most or all of them had to serve even a year, that would have a greater deterrent effect.  

      What's important in deterring crims isn't how stiff the sentence is, but that justice is swift and sure and does not back down.  

  •  Hear, hear! n/t (4+ / 0-)

    "Our Founding Fathers...drafted a charter to assure the rule of law and the rights of man.... Those ideals still light the world...." -- President Barack Obama

    by dconrad on Tue Jan 20, 2009 at 10:11:33 PM PST

  •  I don't get it (10+ / 0-)

    Are you saying that when my company declared bankruptcy and I lost my pension, took a 45% paycut and lost all of my stock in the company, they were cheating me?  When the CEO had his pension protected because of his contract, I was cheated since my contract was nullified during BK?  When the CEO took stock options of $39 Million upon exit and "I got a rock", I was cheated?  Hmmm, weird.  Nope, don't know what you are talking about.

    "Money trumps, uh, peace sometimes." -George W. Bush

    by Dahankster on Tue Jan 20, 2009 at 10:16:06 PM PST

  •  The Rapture :: proof (1+ / 0-)
    Recommended by:
    shmuelman

    Here's proof that The Rapture has happened.

    Plouff!

  •  And this is a surprise why? (11+ / 0-)

    I sure as hell don't want to hear "Nobody could have predicted..." because this is more or less exactly what I predicted would happen with all that taxpayer money being given away no strings attached:  seven and eight-digit bonuses, or orgy of mergers and acquisitions, corporate slush funds, and the part nobody wants to talk about yet, how much of the TARP money ended up in the Caymans.  I predicted all this in late September while donkeys (including plenty right here at dailykos) and elephants alike were braying how we needed to pass the bailout that day or working people wouldn't get their paychecks (a nasty piece of social extortion that was, too.)

  •  United Health Care is in bed with AARP (1+ / 0-)
    Recommended by:
    quotemstr

    Such a huge ripoff for the elderly that trust AARP.

    I am sure that the people who run AARP are getting large amounts of money funneled to them from United Health Care.

  •  Excellent summary and 100% on the mark. Thanks.nt (2+ / 0-)
    Recommended by:
    johnfire, DBunn
  •  Cheating is contagious (3+ / 0-)
    Recommended by:
    alizard, quotemstr, Zydekos

    as illustrated by this recent study on student cheating.

    NEW YORK (AP) — In the past year, 30% of U.S. high school students have stolen from a store and 64% have cheated on a test, according to a new, large-scale survey suggesting that Americans are too apathetic about ethical standards.

    The survey found that 35% of boys and 26% of girls — 30% overall — acknowledged stealing from a store within the past year. One-fifth said they stole something from a friend; 23% said they stole something from a parent or other relative.

    "What is the social cost of that — not to mention the implication for the next generation of mortgage brokers?" Josephson remarked in an interview. "In a society drenched with cynicism, young people can look at it and say 'Why shouldn't we? Everyone else does it."'

  •  Criminal Govt. Produces Criminal Corporations (4+ / 0-)

    It used to be said that the purpose of a corporation was to earn money for its owners--the shareholders. That is probably still true.  However, in order to earn the money, the company had to continue to exist.  And, in order to exist, the corporation had to meet some norms of behavior and social responsibility.

    As a result, we used to see more of what appeared to be corporate altruism, but was actually self-serving public relations to assure their continued existence.

    With significant deregulation, the need to maintain good relationships with community and employees has diminished. We now have many corporations behaving as you describe, deweydog. Not fearing the toothless watchdog of government, nor being exposed by the controlled media, nor challenged by unions, the corporations have had tremendous opportunity to focus on short-term profit, and high rewards for top executives.  

    I hope today marks the beginning of change for the better. We must realize that the people permit corporations to exist. And the people must insist that corporations act as good citizens, or disappear.  

    We must insist on having wise and appropriate regulation, and just enough of it.  And we need labor's participation in management. Otherwise, I fear continued expansion of the corporatocracy which is focused on their own profits and not at all on people.

    Bush hijacked the US with lies about 9/11 and crashed it into Iraq, killing over 500,000 human beings. So far, he's avoided arrest and prosecution.

    by Zydekos on Wed Jan 21, 2009 at 12:18:47 AM PST

    •  And criminal corporations produce criminal govt. (2+ / 0-)
      Recommended by:
      Zydekos, prettygirlxoxoxo

      Especially when the corporations are given control of the
      information(/propaganda!) media, and keep the little
      people in line.
      We now have a military/corporate state. And the parasites
      use the state power abroad to bully others for the purposes
      of the corporations.

  •  some have suggested America's economic decline (7+ / 0-)

    is due to precisely this.

    Ever read Immanuel Wallerstein's "Decline of American Power"?

    He argues that the US is losing ground to the rest of the world because of declining productivity. This sounds like it doesn't make any sense because the figures say "productivity" keeps going up. But he notes: that's because they only measure the productivity of wage labor - and yes, they exploit wage laborers more and more so "productivity" goes up. No one ever figures in the productivity of salaried workers and specifically executives. In America, these are the least productive in the world. You need two or three American executives to do the work that one French or Chinese one can do, and of course, you have to pay each of those American executives ten times as much.

    So as the US economy goes down, drained by this parasitic class of people who produce little or nothing and demand fortunes in compensation, and Europe and especially East Asia spring ahead, what was the US government response? To demand "economic reforms" in the rest of the world, which generally meant, creating a similar parasitical class everywhere else to slow them down a little.

    Gig is up. They have to come up with a new trick now I'm guessing.

  •  Where is the tip jar? n/t (0+ / 0-)

    Renewable energy brings national security.

    by Calamity Jean on Wed Jan 21, 2009 at 05:50:28 AM PST

  •  Tax reform idea: Excess salaries s/b from profits (0+ / 0-)

    Fooey on Friedman. What a non-human. Thanks for writing, & glad this got rescued.

    I got into an arugement about Exxon -- 8% profit isn't outrageous.

    I answered: what were the CEO salaries?

    Food isn't a full deduction, ... it's only 50% deductible. I think entertainment is the same.

    It should be that any salary more than 3 times local median wage is only partially deductible (say, 80% deductible). A 7 digit salary should be like 10% deductible, or somesuch.

    That way, a company can pay what it needs to to get the best people ... but corporations don't get to use CEO salaries as a tax loophole.

    (A refinement suggested by ChakraTease) is that underpaying could also not be fully deductable -- because the employee is more likely to be getting food stamps, etc.)

    I'm for single payer universal health care

    by stargaze on Wed Jan 21, 2009 at 10:21:51 PM PST

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