reform Archives - Don Kasprzak

A financial crisis is a terrible thing to waste. Treasury Secretary Henry Paulson faced the largest crisis in our country’s modern history with a great opportunity. His first hand account of the near collapse of our financial economy is detailed in On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.
His strongest writing are the 20 pages in the book’s Afterward, written one year after his departure from Treasury with the opportunity to look back and reflect upon the events and the solutions including TARP and the role of the G20.

Paulson was certainly the right type of person for the job having served as the former Chairman and Chief Executive Officer of Goldman Sachs. He previously served in the Nixon administration as an assistant to John Ehrlichman during the Watergate scandal.

Although reluctant to accept the job as United States Treasury Secretary under George W. Bush, Paulson acknowledged upon his arrival in Washington a credit crisis was on the horizon. Clearly Paulson notes he was naive of regulatory powers in Washington and any suggestions of financial reform in an election year were all dead on arrival.

It’s worth repeating that between March and September 2008, eight major US financial institutions failed — Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Washington Mutual and Wachovia. Six of them in September alone.
Paulson jumps right out of the gate on page 1 as all Americans would have wanted:

Do they know it’s coming Hank? President Bush asked me. “Mr. President we’re going to move quickly and take them by surprise. The first sound they’ll hear is their heads hitting the floor….For the good of the country I proposed we seize control of the companies, fire their bosses and prepare to provide $100 billion of capital support for each.”

Regrettably its not Wall Street but rather Fannie Mae and Freddie Mac, the government backed lending institutions (GSEs) that Paulson is addressing. Paulson should could have done the same for Lehman, Bear Stearns.and ALL the other institutions since they received taxpayer money to keep them afloat….on their yachts.
–When you learn that someone at a financial company made a 1 Billion bonus (yes a billion for one person) you can see where the ship was heading…right into the rocks.

Tectonic Economics? Robyn Meredith has written a must read book, The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us. Take a look at Wall Street lately? Then think about oil, the environment and the post cold war shift in the global economy. Its time for business and education to take note…and fast.
Tectonic Economics is about the impact of the two fastest growing economies who have embraced capitalism AND globalization at the same time.

And by the way America and Europe have been left out of this economic growth spurt since 9/11.

Actually at the rate China and India are rising you just need to look at both countries since 9/11 to see their immediate impact.

Meredith has done a great job of helping understand these two transformations. There is no more waiting for a new generation they have arrived and instituted global change in less than a decade. For most Americans they still do not see changes occurring at this speed affecting the global economy.

Meredith makes the hard salary figures easy to understand why companies around the globe have jumped to China and India. But this will not be easy for IT professionals in America. India’s InfoSys hires computer science graduates (some also have an MBA) to be a VoIP specialist in Bangalore with an annual salary of $5,000. Yes, five grand a year for a VoIP specialist. This similar type job in California via InfoSys pays $120,000.

This should be really easy to understand why hundreds of tech companies including Cisco, Apple, IBM and HP have moved operations (some larger than others) to Bangalore. Remember you have to please your stockholders. The changes already underway (and under the radar) will continue to add stress to America’s middle class.