SalemNews.com, Salem, MA

Opinion

April 2, 2013

Column: The financial dilemma

On March 3, 2012, Switzerland voted on a citizens’ petition titled the “Rip-off Initiative.” The feeling throughout that country was that the bill’s passage would be a forgone conclusion. It passed with 67.9 percent of the vote.

The Rip-off Initiative, using common sense, completely restructures the way that corporate executives and board members of publicly traded companies are compensated. No more golden hellos, golden goodbyes or excessive bonuses; compensations are now set with reasonability and transparency. Any violations initiate immediate, automatic draconian penalties; three-year jail terms and triple payback fines are the new order of the day.

Brazil, a number of years ago, restructured the responsibilities of both public and private corporations so that if there are any negative financial stresses, the persons responsible pay for it by having their own assets liquidated, immediately. No more huge financial rewards for reckless, careless and illegal behavior such as executives at major financial institutions are enjoying in America today.

It’s taken eight months, but it has been announced that J.P. Morgan Chase CEO Jamie Dimon will be called back in front of the Senate Investigative Committee sometime in the near (or distant) future to explain missing multiple billions of dollars on his watch.

Last summer, economist and author James Henry, using data from the International Monetary Fund, major international central banks, the United Nations and the World Bank, revealed that $21 trillion in cash is being hoarded by the super-rich to avoid (or evade) taxes. These vast liquid assets are mainly located in financial institutions of the Caymans, Bermuda and Switzerland. So now that they know where all the money went, when are they going to do something about it?

There seems to be a celebration in the financial markets with record numbers in trading, but that doesn’t seem to coalesce with the employment dynamic around the world. On March 2, the Eurozone released its unemployment figures. The unemployment rate has been increasing steadily, and is now at 11.9 percent. On March 3, “60 Minutes” did an extensive piece on China’s real estate bubble, which also suggests increasing unemployment, but it’s hard to get the real figures from the Chinese. In the U.S., unemployment seems to be decreasing, but actually the rewards for working are decreasing as wages have slipped. For instance, a former $28-an-hour job now only pays $12, with fewer (or no) benefits.

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