Reporting from the scene of the crime

Eric Fry, reporting from the scene of the crime, New York City…
Rude Awakening

Your California editor returned to New York City yesterday, his old stomping grounds. The place didn’t look much different than the last time he passed through, about three months ago. The sidewalks weren’t very crowded and the restaurants weren’t very full. Maybe the “green shoots” of recovery aren’t as green as advertised.

So let’s turn to the news…

A quick perusal of yesterday’s headlines revealed little news of great importance. Hmmm…let’s see…a Southern governor publicly confessed his sins and sought forgiveness. Wall Street firms publicly denied their sins and launched a massive P.R. campaign.

“Wall Street’s largest trade group has started a campaign to counter the ‘populist’ backlash against bankers,” Bloomberg News reports. “In memos of confidential meetings with top financial executives, the Securities Industry and Financial Markets Association said it began this month the ‘execution phase’ of the operation, which pledges to ‘embrace change’ and accountability.”

To conduct this campaign of “change” and “accountability” Wall Street will toss tens of thousands of dollars at pollsters, P.R. firms and other public-image managers.

A cynical observer might be tempted to deduce, “Oh, that’s nice, first these firms blow up the American banking industry, solely for the sake of enriching themselves, then they funnel a portion of their bailout monies toward P.R. firms, for the sake of repairing their reputations.”

But let’s not yield to cynicism. Instead, let’s step inside Wall Street’s Gucci loafers for a moment.

If you were one of the individuals who’s unbridled greed had helped bring the economy to its knees, wouldn’t you want the public to focus on something else? And if you were one of the folks who’s raw self-interest helped investors lose trillions of dollars and helped workers lose millions of jobs, wouldn’t you want to launch a campaign “against populist overreaction?”

Living a charmed life – financed by taxpayers – isn’t as easy as it seems…especially not when so many folks are struggling. Do you think it’s easy to continue receiving multi-million-dollar paychecks while the economy struggles to digest the poison you fed it?

But this situation brings us to the heart of the problem. Where is the gratitude? Where is the compassion for the tens of thousands of low-level Wall Street employees who have lost their jobs, just so that the executives who remain can resume paying themselves salaries and bonuses they do not deserve?

Wall Street’s new P.R. effort might work, but your editors here at the Rude Awakening would suggest an alternative approach. We would offer a two-part image-recovery plan, free of charge:

1) Fire the P.R. firms.

2) Stop acting like complete jerks.

“The best P.R. comes from doing good,” one professional investor observes, “not from having to manage your image.”

In fairness to SIFMA, the trade organization represents 600 securities firms, brokerages and asset-management companies. The overwhelming majority of these operations conduct themselves with honesty and integrity. The employees they represent usually show up for work sober, work hard for their clients, and rarely kick the dog when they return home from a tough day.

Unfortunately, SIFMA also includes pariahs like Goldman Sachs, Citigroup Inc. and JP Morgan Chase. None of their bailout activities would be such a problem if they did not consume so much of our precious national capital, reputation and most importantly, investment opportunity cost.

When we hand $170 billion to AIG (who, in turn hands billions to Goldman Sachs, UBS and others), we do not invest $170 billion in dynamic capitalistic enterprises that could multiply our return down the road.

When we toss billions of dollars into the Wall Street black hole, the investment expectation is merely to “get our money back” or to “not lose a cent.” What private investor would risk capital with such a grim expectation?

While we here in America pile up massive debts to bail out failing industries, the next generation of leading world economies is busy deploying its wealth in promising endeavors around the globe.

China recently invested $10 billion to help develop offshore oil reserves in Brazil. This seems like a MUCH better investment than buying $10 billion worth of Citigroup preferred stock.