Bailouts and Myths

Following the Bear-Stearns bailout by the Fed this week, never again, never again, can I possibly hear the arguments of America’s free-market corporatocracy (AFMC) without the deepest sense of their utter hypocrisy and lack of anything even remotely approaching a reflective outlook, or for that matter, a conscience.

During the last 14 years Bear-Stearns CEO, James E. Cayne, led that company to the brink of disaster. The precipice is so deep that a panicky federal reserve board determined that a Bear-Stearns plunge could drag much more than just that one assemblage of greedy bastards over the edge with it, and warranted what is, at its root, a multibillion dollar publicly funded bailout.

Forbes reported in 2007 that the 5 year compensation for James E. Cayne was more than 150 million dollars. It is not unreasonable to estimate that during his tenure as CEO, a tenure in which his leadership set the groundwork for the ruin that prompted the Fed response, Mr. Cayne was compensated to the tune of about 300 million dollars: $300,000,000; 3x10^8 greenbacks! The standard argument of the AFMC for CEO compensation like this at a level of about 500 times the median household income, is the “extraordinary value” they create for their companies and the economy in general.

Where is that “extraordinary value” now? Where’s the perfection of the free market that “punishes” economic inefficiency? Where are the demands that business operate free of government intervention? I’ll tell you where: greedily reaching into the public pocket for a post hoc endorsement of business decisions that were ruinous and that, not incidentally, ballooned the obscene fortunes of executives who pursued policies that not only threatened their companies, but the entire economy.

I understand why the Fed had to do what it did – desperately scrambling to avert, or at least moderate the looming economic disaster, and that failure to act threatens the economic well-being of so many more than the 14,000 Bear-Stearns employees – but PLEASE, PLEASE, can’t we finally stop this stupid charade that recklessly unregulated American business practices, that obscene executive compensation, is in everyone’s interest. Can’t we please see that business, far from wanting no government intervention, desperately seeks government intervention on behalf of the rich and powerful. Can’t we please finally dispense with the myths of American business and on the way work toward something that does actually operate in the public interest?