This is my column today.
The crisis that has the whole world in its grip today is no longer just a financial crisis. It has become so much more complicated as we begin to see its residual effects on the rest of the world, particularly developing countries whose economies are dependent on the developed world. For instance, the crisis has now evolved into a human development crisis and countries are now in a tight race to find viable ways of addressing the needs of their people, foremost among them gainful employment. Perhaps more importantly, the crisis has now evolved into a values crisis as the world tries to come to terms with what had been widely seen as the main causes of the crisis - recklessness, unabated greed, overdevelopment, etc.
A number of news stories that came out last week in various media brought to the fore concrete indicators of this crisis of values.
Locally, there’s been the series of horrendous stories about how the Legacy Group victimized thousands of people of their hard-earned—in many cases, lifelong - savings.
How Celso De los Angeles and his lackeys were able to pull off one of the most brazen Ponzi schemes ever, and how they were able to victimize people, illustrate how greed and the enticement of a quick profit often gets the better of us. We know of course that greed feeds on greed and that very often greed knows no limits.
What De los Angeles did was unconscionable, that’s for sure. But he and his lackeys were able to get away with it because the sad truth is that there are just too many people in this country that want to make money the easy way. Notice the long lines of people at lotto outlets when the pot money balloons to hundreds of millions of pesos. Many bought into Legacy’s phantom double-your-money schemes despite being aware that savings rates were hovering at lower than 1 percent and time deposit interest rates were hovering at around 2.5 percent. A promise of a 100 percent return on investment in a few years was simply incredible and should have triggered alarm bells. Like I always tell my friends, if an investment scheme offers you ridiculously fantastic returns be scared— be really scared.
The Legacy imbroglio is not the first of its kind to happen in our country—there’s been a number of these things that have been victimizing people for years, some cleverly masqueraded as network marketing schemes. For as long as there are people who subscribe to the “jackpot mentality,” there will always be a De los Angeles out there who will prey on their greed.
And then there were all those news stories about how executives of the beleaguered American Investment Group appropriated for themselves hefty bonuses at a time when their government was spending billions of taxpayer money to bail them out. AIG posted $61.7 billion in losses for the fourth quarter of 2008—the largest quarterly loss ever recorded in corporate history. AIG is being provided a lifeline by the American people through a bailout plan that costs every American citizen—young and old—about $600 each, and yet about 400 employees of the company had the gall to appropriate $165 million in bonuses for themselves. Naturally, this did not sit well with government people, legislators, and the media. As Whoopi Goldberg in the popular talk show The View put it quite eloquently “You can’t bend us over!”
A furious Barack Obama was seen fulminating about the “recklessness and greed” of the AIG executives. One newscast had him saying “I am choked up with anger here.” Of course, the remark was really meant as a joke to cover for his coughing, but a lot of people still saw it as clear denunciation of the greed of AIG executives.
There’s a large part of me that joins the whole chorus of people crying out against the reckless band of financial wizards who have made a huge fortune making bets they could not afford and creating a huge bubble that couldn’t be sustained—because it was built on nothing. But as a banker and senior executive of a major bank, I draw the line at indiscriminate bashing borne out of ignorance of the nature of financial and management transactions. It seems to me that a number of people have jumped into the orgy of bashing without making distinctions about what kinds of financial transactions are questionable and which ones are valid and viable to begin with. Not all banking transactions are shady, not all bankers are greedy, and certainly, not all executive bonuses are unwarranted.
At any rate, there seems to be valid basis for Obama’s displeasure in this particular instance. The AIG executives happened to have employment contracts that were so airtight even the President of the United States has no power to rescind the bonuses stipulated therein. And what’s more, the traders in question can’t even be sacked because their particular expertise is needed to unravel the whole complicated mess. They happen to be the only ones who could unmake the crisis. So in short, not only are they being greedy, they are acting like hooligans who are keeping everyone hostage.
If there were stories that made blood pressures shoot up to the stratosphere and made people wonder what have happened to good old traditional values of caring and being concerned for the welfare of others, there were also news stories that provided a contrast and proved that not everything is wrong with the world.
In reaction to my column last Monday (People are capital, not cost), six people sent me links to the same story. While the links were about the same news story, they led me to four different sites, which indicated that a number of news agencies and quite a number of bloggers as well picked up this particular story. In fact, the story eventually found its way into two of my professional e-mail groups.
The news story was about Paul Levy, Chief Executive Officer of Beth Israel Deaconess Medical Center (the training hospital of Harvard University) and his proposal to stave off a mass layoff at the hospital which was met with enthusiasm by most of the people who worked at the hospital.
The story narrated how Levy “looked out into a sea of people and recognized faces: technicians, secretaries, administrators, therapists, nurses, the people who are the heart and soul of any hospital. People who knew that Beth Israel had hired about a quarter of its 8,000 staff over the last six years and that the chances that they could all keep their jobs and benefits in an economy in freefall ranged between slim and none.” To protect lower-wage earners who were receiving less to begin with and who could end up suffering more as a result of the recession, Levy asked everyone else for a “bigger sacrifice.” He asked that others give up more of their salary and benefits. His proposal was met by “thunderous, heartfelt, sustained applause.” And then he appealed to people to send him their ideas on how the scheme could work.
Levy was stunned by the sheer number of suggestions he received, all saying they were willing to give up part of their pay and benefits just to make sure no one loses his or her job. Some volunteered not to receive a raise, others suggested working one less day a week, and still others volunteered vacation and sick leaves. The moral of the story of course is that in this day of materialism and consumerism, there is still space for kindness and empathy.
What Levy stumbled upon is not entirely new, of course. We Filipinos do variations of the same thing in many different ways everyday. We call it malasakit, bayanihan, pakikipagkapwa, pananagutan, etc. In this country, there are many companies that were hit by the crisis which are exploring various schemes to save jobs. What we know is that even crises offer opportunities. This particular crisis may be doing all of us a favor by reminding us of the things that really matter in this world and in our lives.