, Salem, MA

April 2, 2013

Column: The financial dilemma

Joseph F. Doyle
The Salem News

---- — 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.

Attorney General Eric Holder’s testimony on March 7 before the Senate was more like an apology for the continued enabling of the financial world’s brightest lights to take our money, and they don’t even have to run. He pontificated that it would adversely affect both the national and international economies and the employment situation worldwide to hold the criminals accountable for their criminal actions. When your top law enforcement officer is opposing his own job description, we’re in trouble. A prosecutor, by definition, considers only how to get a conviction of a criminal.

The American government was formed to prevent a privileged few from controlling everything. However, something has gone wrong. The many are now supporting the few. Almost 90 percent of all the wealth in America is owned by the richest 2 percent of the entire population. Obviously, common sense has been put aside. In reality, we should be realizing that something needs to be fixed.

Since the late ’70s in the United States, there has been a continuing complaint about the compensations of CEOs and board members of publicly traded companies. Their ever-increasing compensation has been gleaned from the pay packages and medical benefits and the elimination of the defined pension plans of the people upon whose shoulders they ride, who just happen to be all working-class Americans.

Now, Brazil and Switzerland seem to be using common sense and taking care of their working-class citizens, and making those who are actually responsible for the situation responsible in reality. In the United States, we are still being slowly squeezed to death, and that’s why everyday Americans need more help. The reverse welfare created by and prevalent in our system squeezes out the resources of the masses, and feeds so much to the already wealthy that the government doesn’t have enough left for programs to help the people being squeezed.

We’re past too big to fail, and have moved on to too big to prosecute, so it’s not even a question anymore that many of these major financial entities need to be broken up. Those in Congress and the White House who don’t move to do this with swift dispatch can only be interpreted as self-interested and criminally complicit.

Dodd-Frank, with its multiple thousand pages and multiple loopholes, should be scrapped, and the simple, concise, 37-page Glass-Steigall should be reinstated. Also, derivatives as packaged now are obviously fraudulent and should be made illegal. The financial markets should be boring and stable, and not a roller-coaster ride in darkness.

Actually, we need people in Washington to realize that the government was made to represent the many, that is, all of us, every man, woman and child, with equal justice for all, and that includes financial justice.


Joseph F. Doyle is a freelance writer based in Salem.