Risky Business

“The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.” - Charles Tremper

Is it just me or have we entered a stage in American business life where corporations and in some cases entire industries have thrown risk management out the window and have decided that all risk is acceptable? There was a time when companies did a series of calculations where risk was measured against not just the corporate good but the societal good, but that time has passed. It has passed because as we have allowed corporations to undermine our political and regulatory bodies their exposure to risk has been greatly reduced not because of better management techniques or greater technological advances but by the corresponding greed of our elected officials. As more money has been deposited into the already murky waters of Washington and state capitals the American public has seen its share of risk underwriting increase in direct relation to the reduction of underwriting by corporations.

As the disaster in the Gulf continues to play out instead of having a real national referendum on the transition from fossil fuels to clean energy technology we are treated to elected officials apologizing to corporations for their having to pay for the worst natural disaster in American history. The sad part is that this was not some natural disaster that no one could foresee it was a calculated series of premeditated violations and oversights for the sake of cost cutting and profits. Once again Mr. Paul with all of your teabagging cronies we see what happens when corporate America is left to its own devices. According to Mr. Paul the free market will protect us from these types of disasters because it was not in BP’s interest to drill a hole in the bottom of the ocean that they could not plug up, just as it wasn’t in Goldman Sachs interest to market and purchase credit swaps and derivatives. The crazy part about the smaller government crowd is that even despite the massiveness of this disaster their lesson from this is that government doesn’t work because it can't plug up a hole in the bottom of the ocean? That's like the lesson from Vietnam was that we should have stayed longer.

What corporations have earned from all of that campaign cash and straight up bribes is that the new risk mitigation program is the American taxpayer. Bring the economy to the brink of another Great Depression, no problem the taxpayers will bail us out. Drill a giant hole in the bottom of the ocean, no problem the taxpayers will pay for it. Unless of course you have a gangster government from Chicago in charge that does shakedowns of poor innocent corporations who were just minding their own business when out of nowhere this giant hole appeared under their deep water drilling platform. So what does the Supreme Court decide? That we don’t have enough corporate money in the process let’s give them unlimited access to public officials.

The sad truth is that what we are watching is the same thing that other empires and cultures have witnessed during the days of their demise. It isn’t the American people who will bring about the final demise of America (although in a sense it will be but through apathy) it will be the greedy and immoral political and economic leaders. The same leaders who are willing to risk our long term future not only as a nation but as a species on this planet for their short term profit. It has always been the corrupt rulers of an empire or culture that has brought about the destruction of that empire or culture. The role that we play as citizens is that we become so apathetic and jaded that we quietly sit with our heads between our legs while the plane is crashing. Where is the uproar? Mr. Barton should have been tarred and feathered and ran out of Washington on a rail. Unfortunately for America it is going to take some greater disaster than this for us to finally realize that the cheap oil party is over. It will take gas going up to 5.00 a gallon and electricity prices doubling before we will take clean energy serious and demand that our political leaders pass real energy reform legislation.

Just like every other monumental change in American history it is never from the top down that things get done, it is always from the bottom up. There will be no good guy riding in with the white hat on the white horse to save us. As long as we continue to accept that Chevron is in the human energy business, that banks are in the rebuilding America business, and that corporations are our benevolent friends whom we could never survive without then we will continue to have messes like this to clean-up. We have to understand and accept that it is not the President’s job to get Mitch McConnell, Joe Barton, and the rest of the corporate apologists on board, it is our job. It’s not like the President is the only one who is elected in this country. We have an opportunity to change the debate and the direction of this country forever and that thought is scaring the hell out of all of the energy companies. Will we demand the future or will we continue to cling to the past? The choice is ours.

If we don't succeed we run the risk of failure. - Dan Quayle

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The Copperfield Dollar

What I have found interesting about the financial crisis of 2007-2010 as it is being referred to is that prior to the crisis there was a lot of money that was being invested in derivatives and other risky investments and yet after the crisis none of that money was accounted for. My question is where did that money go? I understand that some of the money was for loans that were defaulted on so there was no recovery there and there was the money that was built into the value of overvalued assets that will also never be recovered. However there was real money in the system that has never been accounted for. According to my crack research staff there was billions in profits made from selling these derivatives and other investment vehicles by the large trading companies. Those are the same trading companies that we had to bail-out. So again my question is where did that money go? What about all the billions the hedge funds made by betting short on the market?

It has taken me awhile but I have figured out what happened to all of that money. You see it wasn’t regular currency like we are use to using. No it was a special currency used only for these types of special transactions. You see these transactions were done using “Copperfield dollars”. For those who don’t know David Copperfield is a famous magician or illusionist who is famous for among other things making the Statue of Liberty disappear on television. So as you can imagine anyone who can make the Status of Liberty disappear would have no trouble making a few hundred billion dollars disappear. These Copperfield dollars on the surface appear to resemble ordinary currency however they have one unique characteristic that other currency do not have. These Copperfield dollars once placed in certain banks vaults disappear into thin air without a trace. You put them in the vault in 2006 and you go back in 2007 and they are gone. Poof like a puff of smoke, gone.

Now let’s be clear not every bank used these Copperfield dollars. They seemed to only have been circulated at the largest banks, investment houses, and hedge funds. So are we to believe that during this gambling frenzy that there were not profits being made. That would be like the casinos in Vegas winning all the bets but at the end of the night they have no money to show for the day’s receipts and yet there were no payouts either. So no one won any bets, but the house has no money either. How is that possible? Oh yeah I forgot they were using those pesky Copperfield dollars. Every time you think you see one you really don’t, it was an illusion.

I have to admit I have an economist friend who I think is a pretty smart guy and he has tried to explain to me what happened and the more he explains the less I understand. Finally I walk away just shaking my head with a headache. One thing he did tell me though that I thought was interesting and I believe it is something most people don’t know. Based on the terms of the bail-out loans ( yeah they were loans or stock options) it is estimated that in the final calculations it will have cost the American public around 38 billion is the figure I think he used (it may have been 48) but anyway that worked out to be about 280 dollars for each household in America to save the financial system. Now of course these were not Copperfield dollars because they came out of mine and your pockets and we are not allowed to use these special Copperfield dollars.

My question is this, why aren’t the armed tea-partiers at the offices of Goldman Sachs, Citi, and the others who used those Copperfield dollars to make 10% of our economy disappear? Who are the real terrorists here? Even the 9/11 terrorists did not shrink the economy by 10%. We started two wars behind that attack, but you’re telling me some folks can get away with stealing 10% of our economy and nothing happens? That 10% by the way is conservative because it only includes what we had to replace 700 billion not what actually disappeared in Copperfield dollars. We will never know the extent of that robbery I’m afraid. I understand people being angry, but what I don’t understand is this misplaced anger. Was it the overreach of the government that caused our economy to crash? No on the contrary it was the fact that government was not upholding its responsibilities to watch out for its citizens or is that a function of government? According to these folks it is everybody for themselves. I think these folks have been watching too many John Wayne movies because they surely don’t want that scenario.

Well, I have decided because the banks and others were so successful using those Copperfield dollars that I am going to replace my currency with them and I am going to paying all of my bills with them. Let’s see how the banks like it when they go to cash my checks and the money that was there yesterday is gone today. Poof!

“If you ever have to steal money from your kid, and later on he discovers it's gone, I think a good thing to do is to blame it on Santa Claus” - Jack Handy

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