If you want to see a man's blood boil, just park me in front of a television.
Someone get my greened-up Lou Ferrigno body double on the set. I'm going postal!
However, I'm not getting worked up the way most people are apparently reacting to these outrages. I'm simply steamed that the lynch mobs are getting away with it.
Don't hate me, just yet
I'm no apologist for corporate greed. I find it ethically abhorrent that the words "bonus" and "bailout" -- or "makeover" and "bailout" -- are nestled in the same sentence.
However, I think it's important to break down the reasons for the outbreaks of contagious rage. The public isn't incensed because these things are happening. No one cared about Citigroup ordering a corporate jet in 2005, or Merrill Lynch's John Thain spending nearly $90,000 on an area rug for his office last year. It was only after billions in bailouts were doled out to Citigroup and Merrill Lynch parent Bank of America (NYSE: BAC ) that taxpayers were overcome with buyer's remorse.
Excesses that were once simply molehills as shareholder problems became mountains after they morphed into taxpayer problems.
Accountability is a good thing, but let's break down this week's triggers of rage. Citigroup is spending at least $3.2 million to consolidate two floors of top executives into a single floor. The hobbled banking giant expects the makeover to save $20 million in the long run. Even if the move ultimately costs closer to $10 million, as some are suggesting, it would still appear to be a good investment. However, instead of a bloodthirsty mob relishing the move of Citi's top brass into smaller offices, the public is incensed.
It gets trickier to defend the AIG payouts, but let's parallel the move to the earmarks-saddled stimulus package that was signed into action recently. President Obama condemned the earmarks, but played along because they were put into the spending bill last year and made up just 2% of the total. Now we have AIG with retention bonuses that were promised last year, making up less than 1% of the $170 billion, and the same lawmakers are incensed.
"How do they justify this outrage to the taxpayers who are keeping the company afloat," Obama argued.
Substitute "company" with "country" and show me the difference? Where is the backlash to strip districts with earmarks of 90% of the proceeds? Instead, we've got hypocritical lawmakers grandstanding this week with clever one-liners.
There is a happy ending, I promise.
Hooray! We're incompetent!
When you give the public a battering ram, you're never quite sure what they will destroy. Conservatives fear the worst. Nationalization fears have been realized, to the extent that the country now owns 80% -- and counting -- of AIG, 36% of Citi, and chunky slivers of so many other companies that could previously dish out retention bonuses or order parchment wastebaskets without recourse.
Isn't it obvious that this will be capitalism's crowning achievement? Any bellyaching that the country's economic collapse has turned us into a socialistic empire isn't looking out far enough.
If every company that swallows the bailout tablet is suddenly run by the whims of the angry masses, won't this create a greater performance disparity between the bailouts and the bailout-nots?
Citi is going to be blasted for every Aeron chair it orders and every performance incentive it introduces. TARP-free financial companies like Hudson City Bancorp (Nasdaq: HCBK ) and Charles Schwab (Nasdaq: SCHW ) will be free to recruit the industry's sharpest minds, promoting the freedom to take bar-raising chances and be rewarded accordingly.
I mean, just ask yourself who the heck would want to apply to work for AIG right now. Forget retention bonuses. I'm talking about attraction barriers. There are too many cooks in the kitchen, and the only recipe they've perfected is status quo consomme.
I used to pity companies like Ford (NYSE: F ) that haven't been as eager as Chrysler and General Motors (NYSE: GM ) to panhandle. Aren't bailouts leveling the playing field? However, seeing how already weak companies are growing even weaker under the heat lamp of ferocious public scrutiny, I've changed my tune. Today's economic malaise isn't a drama. It's a sit-com waiting for a laugh track.
The government-subsidized companies -- even those deemed "too big too fail" -- will likely collapse. They weren't the sharpest tools in the shed to begin with, and now their workshops have turned into 24/7 reality shows.
It won't be pretty. The country will be ripping up trillions in losing race tickets. There is going to be a heck of a lot of sweeping to do at that point. You'll be fine, once you limit your portfolio to companies that deserve your faith as an investor. We'll get over it. We'll simply shred those race tickets even more, using them as confetti for capitalism's victory parade.
See you there.
More on, as Jon Stewart puts it, The Notorious AIG: