Tuesday, October 30, 2007



Maybe Stan O’Neal didn’t blow up Merrill Lynch. Maybe he merely didn’t do his job while the kids on the trading desk lost Merrill $7.9 billion, at last count. So what does Merrill’s ever vigilant Board do? Fires O’Neal. Good. Then what does it do? Negotiates an exit (not severance…no, no, no) package for the bumbling (at best) Mr. O’Neal that could total $160 million!!!

Okay, some of that consoling going away present is the result of restricted stock and stock options (the most lucrative of which, by the way, were conveniently dated 9/24/01). But, still, $160 million? For going ahead with major merger negotiations without the consent of the Board, as if the firm were called “Stan O’Neal” rather than “Merrill Lynch,” and crippling, or conniving while others crippled, a venerable U.S. business icon? It is not a question of whether, but rather when, the Merrill Board had taken leave of its senses.

This post is not designed so much to lambaste Merrill. I’m not a Merrill shareholder, and if the Merrill board wants to betray its shareholders and make a laughingstock out of itself, that is the problem of the Merrill shareholders. I bring up the case of Mr. O’Neal to point out that this is yet another example of how far we have strayed from the free enterprise system that made this country the economic juggernaut it once was.

Free enterprise, you see, includes the possibility of failure. This tempers wild risk taking and counsels prudence. Not excessive prudence, but measured risk taking. But now as capitalism is being replaced with corporatism, there is no accountability. There is no price to pay for failure. There is no reckoning for taking wild hindquartered risks with other people’s money. There is no way to lose once one finds himself in the corporate club.

This used to be a country of innovators and people who took risks fully mindful that there would be a price to be paid for failure and willing to pay that price in order to get rich. It also used to be composed of people with morals and principles, people who could think, read, and reason. Now we have an economy run by corporate titans who know nothing of personal risk, who are already rich and seek only to get richer by gambling with other people’s money, and have no sense of accountability. Capitalism, free markets, and accountability are being replaced with corporatism, tilted playing fields, and buck-passing. Meanwhile, the citizenry laughs and consoles itself with tacky trinkets, cotton candy for the mind, and endless self-congratulation. It injects its collective brain and soul with healthy doses of novocain while indulging in one of the classic definitions of decadence: spending money it doesn’t have on things it doesn’t need, that, indeed, contain the seeds of its destruction. The citizenry is thoroughly anesthetized while being sodomized by the forces that are steering our economy and society toward ruin.

It is indeed over. This is a hopelessly decadent society and economy living through its final death throes. The good news is that Marcus Tullius Cicero, one of the Pontificator’s idols, warned of the decadence of Roman society even before the Republic was thrown over the side for the Empire. It took almost another 500 years for Rome to rot from within. Further, the last 100 or so years of this decay were, by and large, thoroughly enjoyable. Squandering the stored up treasures of one’s forbearers can be quite pleasurable for those doing the squandering, provided they have no sense of history, no sense of responsibility, no principles, no consciences, and no genuine concern for the generations that will follow. So the present American society may be in for a hundred year party. Whoopee!!! Or not. Things move much more quickly than they did 2000 years ago.


Piso Mojado said...

Given the field of both Republican and Democratic presidential candidates, I am hard pressed to argue that you are wrong about the general direction of our civilization.

The Pontificator said...

As usual, piso mojado, great thought.

The Pontificator