Only 22 more letters to go

First, President Obama campaigned on a platform of Hope, and now he warns us of Catastrophe. I suppose this is an improvement over his predecessor, who couldn't even pronounce that word, but he isn't living up to my expectations, at least not yet. I suppose it was too much to expect, that a man who accepted large contributions from Wall Street would actually clean up Wall Street.

And there's a lot of cleaning up to do. My personal favorite is John Thain, formerly known as the savior of Merrill Lynch. That was before the company reported a fourth-quarter loss of $15.2 billion that Bank of America supposedly did not know about before it agreed to acquire them. The popular myth is that BoA had avoided the disasters that befell Citigroup, WaMu, Wachovia and the other insolvent money center banks. The simple truth is that everyone knew Merrill was a disaster waiting to happen. BoA went ahead with the purchase anyway, because this moved them into the "too big to fail" category. BoA is loaded with toxic paper just like everyone else in the financial industry; bad loans and asset- or mortgage-backed paper that isn't worth anything. But on their own, they might have been allowed to fail, just like Lehman. Now, they receive a $20 billion bailout from the government so they can go on make more bad decisions, and losing more money.

But that's not why John Thain is my favorite, not because he supposedly withheld material information from BoA. John Thain spent $1.2 million redecorating his office. That tidy sum included $1,405 for a trashcan. He must be real proud of his trashcan, huh? It also included $88,000 for a rug. If I spend $88,000 on a rug, it had better be a flying carpet. Otherwise, it isn't worth it.

He considered asking for a $10 million bonus before he left the company, but then thought better of it. Good decision. He really didn't deserve another $10 million for running a Wall Street colossus into the ground. But in fairness to Thain, that's the environment he worked in. Last year, the worst year ever in the history of the fiancial industry, Wall Street handed out a cool $18.4 billion in bonuses. Let me say that again, $18.4 billion!

Where do you suppose the money came from? Profit sharing? Did anyone make a profit on Wall Street last year? All I remember hearing about it one $10 billion loss after another. Of course we all know where the money came from: the taxpayers. Now we know where the bailout money went. And that is why I propose the radical suggestion that companies not hand out bonuses unless they are actually making money. But that won't happen because the men running the Treasury, the SEC, and the CFTC came from Goldman Sachs. President Obama has hired foxes to guard chickens.

Back to the economy. Originally we were told the economic recovery would be V-shaped. A downturn, followed quickly by an upturn. Then they told us it would be U-shaped; maybe it would stay down for a while before it turned up again. Then they said it might be L-shaped. I don't like the looks of that one. That's a Japanese-style recession that goes on and on for the next ten years. Now they say it will be W-shaped. The stimulus package will boost the economy in 2010, in time for the mid-year elections, followed by another dip, and then another boost in 2012 in time to get President Obama re-elected.

It could be worse, though. There's still 22 more letters to go, and some of them look really scary. When they start telling us the economy could be M-shaped, then we're really in trouble.