Phil Gramm, U.S. Senator, McCain campaign advisor, investment banker, and dismantler of those pesky banking regulations that kept our financial system stable for more than half a century, was right: we are a "nation of whiners" suffering from a "mental recession." Consider the evidence:
At UBS, the international bank whose initials do not stand for "Used to Be Smart," executives are enjoying twenty to thirty percent pay increases. The bank itself is taking a bath on fifty billion dollars of reckless and stupid investments, but the bankers themselves are bathing in cash. Why the big increases? With caps imposed on annual bonuses, UBS is getting around the problem with increases in base pay. And who said bankers aren’t creative.
Meanwhile Goldman Sachs and JP Morgan are preparing to repay their TARP funds, the better to escape the associated modest restrictions on executive pay. Bank of America and Citibank, unable to return their own bailout funds, are gravely concerned. If Goldman and Morgan can pay whatever to whomever, they might steal all the talent from B of A and Citi. The same talent that led to losses of many tens of billions at both banks. The pressure is on the Treasury Department to allow the compensation taps to flow unimpeded once again and there's no reason to think Treasury won't cave. At the same time, all the banks are making billions in operating profits because the funds the feds hand them for free are earning income every second of every day. Recession among bankers? Don't make me laugh.
Nor is there a recession for the former executives of Countrywide Financial. The mortgage giant threw lending guidelines out the window and made many of the bad loans that precipitated the financial crisis. The company itself vaporized in a forced bargain basement sale to B of A. Don't worry about Countrywide's executive suite though. They got together to form a new company called PennyMac. Their business? Buying at fire sale prices the same distressed loans they made through Countrywide and repackaging and selling them for profit. That's like a doctor profiting from curing patients he sickened in the first place, but no matter. Business is crazy good, the PennyMac execs report, so there's no recession for them either.
The oil companies are enjoying more record profits. Insurance companies are rolling in billions upon billions of federal cash. Defense contractors continue to profit from our two endless wars; Forbes reports that giant SAIC of San Diego is making a handsome twenty-seven cents a share this quarter.
What's that? The local manufacturing plant closed? The county cut nursing, policing, park and recreation, education, transit, and every other kind of public service? Neighborhood rife with shuttered shops? Lost your own job, home, car? We've proven there's no recession, so stop whining. Either your woes are in your head or you simply chose the wrong profession.