Piracy Shakes America

Today we’ve got faster computers, improved medicines, new HD TVs and awesome titanium drivers. No doubt America’s capitalism breeds ingenuity, progress and raises our collective standard of living over time. But every once in a while our capitalistic drive brings out the darker side of human behavior. And we are living through that period now.

Most of us were brought up with the ideal and belief, “Thou shall not steal.” However, if we look around today, we’ve seen a lot of greed, thievery and “piracy” going on in our society. We’ve seen billions of dollars extracted, by some for personal gain, at the expense of many. The “pirates” have once again invaded and robbed our financial system.

History seems to repeat itself or so we’re told. Many of us remember the rise and fall of the leveraged buy-out era of the 1980s. That’s when Michael Milkin and Ivan Boesky made-out like bandits. Most of us also recall the IPO and dot-com bubble of the late 1990s. That’s when a company selling no more goods or services than a local

Seven-Eleven had a market cap equivalent to a Fortune 500 company. It’s the time when underwriters, analysts and “founders” scammed the system and extracted billions from a misled, misinformed and hyped-up naïve investing public.

Today, some financial corporate executives have blatantly enriched themselves at the expense of shareholders. Why was Richard Fuld chairman of Lehman Brothers able to extract over $500 million from a company that is now bankrupt? Why was Franklin Raines able to siphon-off over $90 million in compensation from Fannie Mae and now the stock trades at about 50 cents? Those numbers are unimaginable – but they pale in comparison to Bernie Madoff’s ingenious $50 billion Ponzi scheme that crushed peoples’ lives and rocked charities to the core. Yes, human greed is alive and well in this country. It will always be – it’s just human nature. I don’t think Gordon Gekko (portrayed by Michael Douglas) had it right in the 1980s movie Wall Street when he proclaimed, “Greed is good.” Well, I think he was way off-base.  And, maybe we’ve learned this time around that it’s bad for our society?

Today, the only questions that remain are: when, where and how the pirates will act again to fleece Americans? No doubt, as adults, we must come to grips with the fact that the common shareholder and worker will again be short-changed. However, we must learn from this current episode of piracy. We need to find a way to limit lavish corporate pay at shareholder expense which has now become a taxpayer’s burden.

There is no justifiable reason why Richard Fuld was able to extract some $500 million over a few years.  We must institute a system of accountability, oversight, and checks and balances inside corporations and government which really works. We need to level the playing field just a little bit for the common man. And that can only happen with sound safeguards in place which protect us from the next generation of pirates – out to put their slippery hands in our pockets. #

 Mr. Lux, formerly an Account Executive with Morgan Stanley, is a graduate of UCLA and holds an MBA in finance and has been involved in real estate lending in the Los Angeles area for over 20 years. He is author of the investment book, Exposing the Wheel Spin on Wall Street. To reach Ted please visit: http://wwwluxlends.blogspot.com