Mar 30, 2009

Hyprocricy en masse

Finally, a piece in CNN that I can completely agree with. I thought the day would never come. Everybody, including the Government have a easy punch bag with the Big 3. Though they are far from being innocent, nevertheless they provide the ideal outlet for people to vent their ires on: a highly paid CEO of a struggling company who goes on a leased jet to ask for money to run a company that fires people in thousands, the same people who are part of the infamous UAW and supposedly getting paid a fairy tale amount of $30/hour. It couldn't get better. It is a clear case of the bully picking on the weakest kid and twisting his arm. That is what is being done to the auto companies. Even though they deserve it, everybody should take responsibility instead of pointing fingers. For example, Wagoner is being accused of turning a blind eye to fuel efficient cars and instead focusing on SUVs and pick-up trucks. Well, who bought those pick-up trucks? Did people buy the pick-up trucks because that was the only vehicles in the market or did GM make those because it had the biggest demand? Naturally, a company would exploit the demand in the market. You want a big car? You get it. You want a retrofitted Corvette? You get it. Clearly, these are not the days when you can say, "you can order any color as long it is black" and get away with it. So why blame them now for having provided you with what you wanted all these years? Look within.

On an another note here is a piece from Paul Krugman, one of the most vocal critics of the way the current crisis is being handled:

Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and puréed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans — all went into the financial system’s juicer. Out the other end, supposedly, came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process.

But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption.

2 comments:

Filarial March 30, 2009 at 4:49:00 PM EDT  

I agree that the Auto CEO's are being targetted.. :D but if u look at it Wagnor was at the company for 8 years .. way before the crisis started.. Both CITI and AIG's CEOs are people who were brought in after the crash.. not necessary as is known to the public in septemeber October.. but in the last year.. CITI has been known to be bankrupt for the last year and half and that is why Vikram Pandit was brought in. So asking them to resign would be stupid because both have proven track records and have been brought in with the purpose of turing things aroound in the first place..:D

Mambalam Mani March 30, 2009 at 8:16:00 PM EDT  

I agree. I never said anything to the contrary too. They, like Wagoner are mere scapegoats. Even as I write this CNN (Lou Dobbs) was asking why Vikram Pandit is spared while Wagoner is fired.
I was only rambling about the real culprits for the downfall of the US auto industry, which we have discussed about many times already.
And, I quoted that CNN article because I was in agreement with the facts it stated. But I used it to stress on the fact that what they did with GM was wrong while the CNN reporter used it to say they should do the same to the Banking Sector.
And moreover.....
vidra indha saniyana. did u see what Buchanan did to dada? :D

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