Wednesday, February 04, 2009

Calling Their Bluff

Today the poker game came to an end.

I am talking about the one where failed-company executives kept bluffing there was no way they could accept a mortal's wage and still show up to work in the morning. The one where failed-company executives pretended they had options--that they "might leave" if not paid crazy sums despite their stewardship of spectacular failure. The one where they pretended they were somehow indispensable to their companies' success when in fact they were at best irrelevant to it and more likely inimical to it.

Today, President Obama--buoyed by Senator Claire McCaskill's proposal and a wave of popular revulsion--called their bluff. In the manner of a certain baseball-team owner from long ago who offered less money in a player's contract renewal after the team did rather poorly in the prior season, Obama in essence said to the tarnished titans: "We can finish last without you."

He told them that if they were going to accept government money to keep their companies from going under, they were going to have to cap their salaries at $500,000 per year. He called the offending high pay-rates "bad strategy". I would quibble with that (for instance, strategy for whom?), but I'd rather give him credit for finally saying "Show me your cards." Word is, they don't have a hand among them.

It was always a game of three card monte--without the cops. And while the profits were there, who'd have paid it much mind? We were all getting along okay. As Americans, we don't enjoy looking too closely at the other guy's ledger. But now we're all hurting. And the crafty executives, having arranged to be given billions by taxpayers, noticed no rules governing use of the money! They took it and socked it away in the Cayman Islands, many of them did. Those who took, don't have to give it back. Oops!

But that was then--under a different, long-gone administration (whose was it?--I've forgotten). And now the great leaders of finance have been put on notice: there's such a thing as the marketplace of ideas. And their ideas--the ones where they tank the economy and sock away bonuses as if delivering value--have been exposed as bankrupt. Kind of like their companies.

There's a certain symmetry to it.

Masters of the Universe: welcome to the world.