… at least, that’s the only reason I can think of for ABC News to run a story on the effects of the financial crisis containing the following:
“A lot of those people will have to sell their homes, they’re going to cut back on the private jets and the vacations. They may even have to take their kids out of private school,” said [Robert] Frank [of the Wall Street Journal]. “It’s a total reworking of their lifestyle.”
He added that it’s going to be no easy task.
“It’s going to be very hard psychologically for these people,” Frank said. “I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he’s ever done.”
I mean, seriously, what am I supposed to think about this? They’re either trying to get the masses to rise up in bloody revolution, or trying to put Stephen Colbert out of a job.
Incidentally, if you’d like a good run-down of what went wrong in the finanacial system from someone on the inside, you could do much worse than this op-ed.
We need to get someone to write a eulogy for satire, it’s officially dead.
Well, to be fair, the article is about the financial “woes” of the super duper rich, not us normal folks. Though notice that only at the end of the article does it mention the real life woes (i.e., losing retirement money with no second home or NYC pied-a-terre to fall back on). They quote some poor woman who just lost $7K as saying she has no sympathy for the “poor” investment banker who just lost his private jet. Gee, ya think?
Oh yeah, let me just say that I sincerely hope the dude who thinks losing his private jet was “the hardest thing he’s ever done” is a) unmarried/unpartnered and b) never sires children to which he is allowed access.
This is no doubt the same reason why so many members of Congress were consistently blocking attempts to reform and downsize Fannie Mae and Freddie Mac, which are essentially giant, undercapitalized hedge funds. These two entities have been huge money machines for Democrats in both the House and the Senate, many of whom recently had the gall to ask why these companies hadn’t been reformed in the past. Nor should several Republican congressmen and Senators who likewise contributed to watering down legislation aimed at reforming these institutions be let off the hook.
Bi-partisan corruption at its best.
An important note that the article missed is this: By doing something about Fannie Mae and Freddie Mac, much less the larger issue of mortgage re-packaging (which is not in itself evil) the nearly instant result would have been a reduction in mortgage availability for sub-prime loan seekers. Which is another way of saying that it would have slowed or halted the growth of the home ownership rate, which is not something any politician would want to be associated with.
So the corruption and bribes from that sector were perfectly aligned with the Congress’ natural survival instincts. How could the result be anything other than what it was?
In a similar but less damning vein, as to why Treasury Secretaries didn’t intervene, it’s probably because no one knows where the right point to intervene in a bubble is. Remember, the cost of lancing every bubble as soon as it forms is much lower growth and less employment in order for stability.
“one guy who had to give up his private jet recently…”
Didn’t Cindy McCain say that the only practical way to get around in Arizona is by private jet?
Oh, I guess that she expects to have Air Force One. Problem solved.
Except in Alaska, a state so huge that it takes snowmobiles to race, and helicopters from which to shoot caribou.
Me, I drive a bashed-up Chevy Cavalier and don’t get paid for my September high school teaching until October, and so can’t yet pay for the night classes that I’m taking. I’m also behind on paying the hospital bills for the emergency surgery that saved my life in January, and a collection agency is bugging me about that. At least yesterday’s snailmail from the state Department of Social Services confirms the results of the appeal I had in February, that the state has stopped trying to get me to refund an alleged overpayment on my 2002 food stamps.
Private jets? “hardest thing he’s ever done”? What planet are these people from?
Hand me a number for the line of people waiting for a turn playing the World’s Smallest Violin for the dude who is giving up his private jet. So now he’s going to have to travel the way the rest of us (at least, those of us who can still afford to travel) do. He can still fly coast to coast within a day, or to Europe overnight. Compared to how my parents lived in their working years (my father went to Europe only once, when he was in the Army, and he travelled by boat both ways), that’s still a high standard.
And while I realize that Manhattan real estate is expensive, who needs a $5M apartment? By historical standards, you need an annual income of $1.7M to afford that mortgage. I can remember a time when that was CEO-level income, and I’m not that old. (Well, maybe our investment banker paid cash for the place, but upkeep is still a killer when your income plummets.) I hope you saved some of that money, Mr. Investment Banker; you will need it to pay for your much-reduced standard of living which is still far beyond anything I might aspire to in my wildest dreams.
Oh, pity the poor Joads of Wall Street with no Steinbeck to tell their story.
The (initial) $700 billion Wall Street bailout (in addition to the ~$200 billion already “loaned”),
http://blogs.wsj.com/economics/2008/09/20/treasurys-financial-bailout-proposal-to-congress/
“Decisions by the Secretary [of the Treasury] pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
“Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.”
US GDP 2007 = $13.84 trillion
http://www.whitehouse.gov/omb/budget/fy2007/overview.html
Budget of the United States Government, FY 2007
“For 2007, the Budget forecasts a decline in the deficit to 2.6 percent of GDP, or $354 billion.”
It’s always a good time to buy ammo.