American business is getting an important lesson in civics as one of the world’s most beloved automakers dramatically and temporarily falls from grace. 

Toyota Motor Company is accused of delaying its response to countless service complaints about “sticky” accelerators. Millions of cars, including the wildly popular Prius, have been recalled in an effort to avoid more accidents, injuries and potential fatalities. To date thirty four deaths in the U.S. have been attributed to the sudden surge in acceleration.

U.S. journals wrote scathing reports claiming Toyota sacrificed quality for profits. Tough questions about motives for the negligence were fired at the CEO by a U.S. congressional panel. One represenative asked, “Where’s the remorse?”

The remorse was apparent as Akio Toyoda, grandson of the founder, repeatedly apologized to the families of victims, “I extend my sincerest condolences to them from the bottom of my heart. I’m deeply sorry …” His sincerity was palpable. Either because he was looking at hundreds of millions (perhaps billions) of dollars in losses, or because he was losing “face” as the leader of the company his ancestor built.

Apologies will never be enough for the families that lost loved ones. Yet the acknowledgment of responsibility offers some relief to those who held the company in trust. One lawmaker spoke of the almost mythological reverence he held for the Japanese car maker. He remembered those “like myself <who> have grown up in an atmosphere that we had a great deal of faith in something that was stamped Made in Japan.” 

Toyota was a brand held in reverence. The brand was built on reliability and integrity. The Toyota Way was the official name for the top of the line production quality and efficiency that Detroit envied, but could not repeat.

Toyota will undoubtedly right its sinking ship and get to the top of the industry heap again. The automaker has enjoyed a reputation for excellence stretching back for decades. Their downfall was to veer from the integrity model and focus instead on maximizing profits. A lesson for all businesses that your best profit model is to serve your customers first. To remedy the problem, the car company should use its own tried and true model for creating value for its loyal customers.

Professor Jeffrey Liker, an expert on the Toyota business model, summed it up this way, “Failure to follow all the principles of the Toyota Way led to this crisis. Now the Toyota Way is the only way out of it.”

Saving Face

Shame is a great burden in Japanese culture where honor has almost religious qualities. In America, where honorable business is often a quaint memory from our parents and grandparents, the U.S. financial industry could learn a thing or two from Toyota.

One Congressman revealed a document written to the chief of Toyota Motor North America, Yoshimi Inaba, celebrating the official agreement for a limited recall. The sentiment ignored public safety issues and focused on the bottom line. Inaba confessed, “It is inconsistent with the guiding principles of Toyota.” They have principles? How refreshing.

“Saving face” is a deeply ingrained principle in Japanese culture and business affairs. Unlike American business, Japanese corporate culture sees business as personal. Clark Roundy, VP of Marketing at Luxul Wireless, writes “When doing business in Japan, never underestimate the importance of personal relationships or the role that honor, loyalty, and saving face will play in your success.” American Roundy claims that to do business successfully in Japan, there must be a respectful relationship of mutual concern behind monetary goals. In other words, trust and honor are your bread and butter in Japan.

Clearly, things go wrong in business. Products malfunction and quality can be compromised in the rush to get products out to the market. How a company responds to a problem is the key to recovery.

The American Way

The remarkable aspect to Toyota’s tragic debacle is the glaring comparison to top corporate behavior in the U.S. this past year. We have seen former national treasures, including some of our largest financial institutions, not only shame and embarrass us around the world, but deliberately attack us where we live.

Through marketing predatory loans, hiding bad debt inside complex securities, hedging debt against worthless paper “swaps,” and unloading products on an unsuspecting public through Government Sponsored Enterprises, the actions of professionals and institutions were not due to neglect or oversight. Their actions were the result of a calculated strategy to market lethal quality loans to financially vulnerable citizens and sham securities to ignorant investors. The “shame” is on all of those who participated in this economic American tragedy, yet somehow those individuals feel little or no responsibility for their actions.

Apologies from some of those directly involved have been absent. Executives from now defunct subprime and predatory lenders such as, New Century Financial, Countrywide, Wachovia, and Washington Mutual have never admitted culpability nor offered any explanation or apology. Most of the executives at the top of these companies have found jobs in other banks or recreated new firms.

Investment and large commercial banks called before Congress offered lukewarm responses to the effect of, “I am sorry for my firm’s part in the industry’s negligence…” Always passing the buck to someone else and never acknowledging direct responsibility. To apologize with sincerity for an American financial firm would be to admit weakness. No company or manager wants to be that vulnerable. Denial goes a long way in corporate America. It minimizes legal and social costs and lets the deniers stay happily in their “not my problem” bubble.

Unlike the Toyota and Japanese business model, the American business model has been based on a “principle” of pure profit. The “rip-your-face-off,” “eat what you kill’ language of the financial industry reveals the whole story. As a culture, we have embraced and celebrated a model that leaves out any sense of moral decency or collective responsibility. Shame, embarrassment, or any other behavior modifying emotion are antithetical to the American business model.

In the wake of the economic collapse, we have begun to examine why this moral vacuum exists and how we got here. Pursuing profit without connection to the greater society that supports it is the primary misunderstanding of modern business. In the Japanese model, executives understand their direct responsibility to society, colleagues, and employees-hence the severe social consequences of their corporate actions. (Some executives are “shamed” enough to take their own lives based on professional missteps.)

Business and society are inextricably linked in Japan. In America, with the exception of conscious business leaders and companies, this link is remarkably absent.

The actions of the last decade, as well as the response to the crisis over the past 18 months, reveal that the overwhelming majority of America’s financial industry remains unconscious. They are seemingly unaware and indifferent to the enormous material and personal effects of their acts on the greater society.

The Toyota tragedy opens the window into deeper self-examination of the American business model. Toyota will rebuild itself in its own image-based on tried and true historical values. What values do we have to return to as we rebuild American business other than the principle of profits before people?

The continuing economic recession has (and continues to) put tens of millions of people out of work, forced millions of businesses to close, cost billions of dollars in savings and lost income, interrupted retirements, put millions out of their homes, destroyed marriages and families, caused heart attacks and suicides, and wrecked the American Dream for hundreds of millions of homeowners and ordinary citizens.

Shame is a useful thing if it propels one to better behavior or inhibits poor behavior. In Japan perhaps shame has too great a consequence. In America’s corporate boardrooms and everyday trading desks, there isn’t enough shame or simple conscience. There isn’t enough sense of commitment to the greater collective that would prevent our “best and brightest” from bringing down their own economy or compel them to build it back up.

Our continuing economic suffering is reason enough to re-evaluate our for-profit “value” system. Is it only money we are after? Or in the wake of the on-going Great Recession and all its inherent moral turpitude is there something like “human decency” we can add?

A dangerous moral vacuum exists in modern American finance and throughout large portions of American business. It propels us to do in the pursuit of profit what we would never justify in our personal lives.

If we don’t use the lessons of the Toyota Way to rebuild American business in the image of a morally responsible society, a for-profit model that understands its direct obligation to the greater collective, that would be the real shame.

The incessant chatter about financial industry legislation reveals more talk and less action. Opponents of financial reform stand to lose big bucks if the status quo is changed. Okay, so they have the right to free speech in the USA, but why would anyone of sound mind and independent means bother to listen to that tired old rant? If you are not working for the Big Four Banks that currently control monetary policy in America or any of its subsidiary arms or lobbyists, then logic should compel you to join the public campaign for financial reform.

For the sake of American economic security, the financial system needs to transition from anti-public to pro-public by ceasing to favor private interests over public concerns. What we need is a Ralph Nader of consumer financial products. (I nominate Elizabeth Warren, chairwoman of the TARP Oversight Committee and a staunch advocate of the new Consumer Financial Product Agency.) Ms. Warren’s activism aside, establishing an independent agency is vital for the health and welfare of consumer finance.

Back in the zippy American sports car hey day circa 1960s, the hot car of the decade was a jazzy little number called the General Motors Corvair. The car sold in record numbers allowing consumers to live out their American dreams of sexy convertibles and high speed travel. Yet the sports car’s poor safety record was hidden from the public and put unsuspecting drivers at risk. Enter Harvard educated lawyer Ralph Nader. The consumer superhero wrote an expose in 1965 entitled Unsafe at Any Speed detailing flagrant safety issues like unstable driver control, spinouts and rollovers.

While the report damaged sales for GM’s wundercar, it conceivably saved lives. Perhaps the most important advance from Nader’s activism was the establishment of the National Traffic and Motor Vehicle Safety Act in 1966 which transferred the onus of quality and safety from consumers to manufacturer.

The Act effectively changed centuries of English common law based on Caveat Emptor i.e. Buyer Beware. Caveat Emptor declares that if a seller withholds information in a transaction, it does not constitute fraud. The rule declares that buyers are responsible for their own due diligence. Nader’s law changed that perception in a dramatic way.

The concept of consumer protection was so foreign at the time of Nader’s activism that corporate executives such as W.R Murphy, the president of Campbell Soup, claimed that consumer advocacy was “a fad” that would disappear in six months. Nader was considered such a threat to the bottom line that he was harassed, coerced, and investigated by automakers. Rather than spend their money on building safer vehicles, top brass spent pots of gold trying to discredit Nader’s character including unsuccessful attempts to get him to solicit prostitutes. His passionate defense of the public welfare posed a genuine challenge to the profit and loss statements of the Big Three.

A New Day

The result of the changes in the auto industry literally shifted the way we think as a culture. The Lemon Laws that Nader’s work inspired made it illegal to defraud car customers by withholding information. It reinforced the view that sellers were responsible for product quality. CARFAX disclosure (used car history) and the recent Toyota recall are direct results of the changes in law established four decades ago.

The cultural support for consumer rights that escalated in the 1960s inspired drug and food testing, air and water pollution control, aviation, trading and commerce laws, and the environmental movement. We accept it as normal to regulate products for quality on the open market.

In 2010, we would not consider Nader’s consumer advocacy radical in any sense of the word. It represents the status quo. Standard operating procedure in 21^st century America guarantees public safety comes before private profits in the airline, food, pharmaceutical, medical and education industries. We created complex government departments like the Food and Drug Administration (FDA) whose sole job it is to protect your daily quality of life.

Yet somehow one enormously important area of society we have failed to adequately supervise is the financial industry. In the quest to preserve the sanctity of “free markets,” we continue to follow a buyer beware philosophy in finance. No where else in society do we sacrifice consumer rights to private interests except in the areas of banking, credit, lending, and mortgages.

Common myth dictates you should do your homework before you sign a mortgage document. If you don’t know that you are signing your own financial death warrant, well…tough luck. You shouldn’t be playing with the big boys.

Yet America is made up of ordinary folks like you and me. We should not be dodging bullets to buy a home, preserve our savings or safeguard our futures. That is the job of the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), Office of Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS).

Unlike the FDA and similar government agencies, the banking regulatory agencies OTC and OCC are not funded by the U.S government. Instead these “federal agencies” derive their income directly from the institutions they monitor. (That would be like the FDA getting paid by pharmaceutical companies to approve medicines.) One of the unfortunate blunders of the subprime years was that competition for market share was so fierce, it drove the two regulators to focus on profits rather than quality of mortgage lending.

The financial industry regulators, SEC and CFTC are funded by the government; yet their offices are stacked with so many industry executives they have become a revolving door for conflicting interests.

“Private” rating agencies like Moody’s, Fitch, and Standard & Poor’s, sell ratings to securities firms that ultimately affect the health and welfare of the entire financial system. An inherent conflict lies in the basic compensation structure of these companies. They are paid to rate client holdings. The subprime crisis revealed these “trusted” agencies sublimated standards to attract revenues. Despite this fact these agencies remain unregulated today.

The remarkable conundrum is that what is viewed as “reasonable” in finance would not be acceptable in any other area of society. For example, we don’t we allow Ecoli-tainted spinach on our supermarket shelves. Why? Because it is dangerous to our health. Vioxx was recalled when a connection to heart failure was discovered, because it endangered people’s lives. Who is held responsible when a drug is sold on the market? Certainly, not the patient. The presumption of society is that the patient relies on the expertise of doctors and pharmaceutical companies to prescribe the best medicine.

Yet in mortgage lending, an ordinary layperson is supposed to understand the 100 pages of legal and financial documents representing his or her family’s soon-to-be shelter. Do you sign a document forgoing your legal rights to product quality when you receive a doctor’s prescription? The legal system reflects that consumers are protected in medical matters.

The average homebuyer is not an expert in finance or loan products. They are relying on the mortgage broker or lender not to swindle them, but to advise them. Lenders and brokers are the experts. They should be held personally liable for withholding information or irresponsible counsel- just like a medical professional. After all, your financial health is at stake.

For example, lethal financial instruments like NegAm mortgages (zero down, low interest teaser rate balloon loan) or NINJA loans (no income, no job, no assets) were marketed to people deliberately without regard to their personal welfare or the economy as a whole. These dangerous financial products led to a defaulting mortgage epidemic that we continue to suffer from three years later. They should be outlawed under Lemon Loan Laws or pulled from the banking shelves like Vioxx.

As the laws of finance stand, who is responsible? Not the “experts” who hawked products they knew were deadly. But the lay public who were tricked by smooth talking, profit seeking mortgage “professionals” who would sell you anything in order to build a castle in Palm Beach.

A brilliant Madoff-Ponzi-like scheme without any legal protection or recourse for unsuspecting victims. The homebuying public were like lambs to the slaughter in the subprime decade. They didn’t know what hit them until the housing bubble created by unethical lenders and finance pros burst. Unlike Madoff, however, your mortgage broker or lender may have ruined your financial health, but he won’t go to jail.

Why? Because there is no adequate law protecting consumers from financial industry predators. Isn’t it time we created one?

editor@goodb.net

Small business will lead us out of the recession and fuel the recovery. That is the belief among many of the nation’s economists. To understand the role Small B plays in society, here are some basic statistics.

The Small Business Association reports that from 1993-2008, 64% of new jobs were created by firms with 1-499 employees.

“Small businesses employ just over half of U.S. workers. Of 119.9 million nonfarm private sector workers in 2006, small firms with fewer than 500 workers employed 60.2 million and large firms employed 59.7 million. Firms with fewer than 20 employees employed 21.6 million.”

The numbers reveal that supporting and strengthening our nation’s largest employer, Small Business, is a financial imperative.

The February 5, 2010 “jobs report” revealed that one million more jobs were lost in 2009 than was previously thought. The good news is the national unemployment rate decreased slightly from 10.3% to 9.7%. According to one economist, the unofficial unemployment rate is more like 17% when including all those ineligible for unemployment: sole proprietors, freelancers, consultants, long-term unemployed and temp workers. Another economist said the real numbers were closer to 22%* if underemployed workers were included (employees whose wages and hours have been substantially reduced). If we examined particular sectors like housing or retail, the numbers might double. Clearly, the state of unemployment in the U.S is in critical condition. Job growth reached its lowest level in 26 years in October 2009.

Something must be done to turn things around and fast.

Small Business Credit Frozen

Unlike big banks and big corporations, Small B does not have piles of excess cash to draw from. Limited access to liquidity is the nature of being “small.” Most owners draw capital for investment and expansion from business credit lines, corporate credit cards, personal assets, and bank loans.

Since the fall of Lehman Brothers in September 2008, small business owners are painfully aware that available credit has evaporated. For any business, other than big banks or large corporations who can simply issue debt for sale (bonds), the credit freeze is as dire in February 2010 as it was in October 2008.

Over six months, from April 2009 to October 2009, “The 22 banks receiving the most bailout money reported to the Treasury that they had decreased small business lending by $11.6 billion.” In October 2009, the U.S. Treasury reported another $1 billion for small business was eliminated,” as a consequence of the banking crisis.

While the global credit crisis compelled the United States government to take emergency measures to liquidate the nation’s largest financial institutions, small business was left in the cold. After three trillion dollars worth of government aid to the nation’s lenders, credit  is still not flowing beyond the top of the food chain.

Begging Banks for Money

In December 2009, President Obama urged TARP banks once again to investigate “every responsible way” to increase lending, claiming that rescued banks were “obligated” to help American business after being saved by taxpayers. They did not agree. No amount of noblesse-oblige would get “Fat Cat bankers” biting. “No matter what the President says, we are not lending,” claimed one banker anonymously.

Understanding that credit to Small B must be resuscitated as a matter of urgency for the nation’s employment rolls, the Big O is at it again with hopeful entreaties to the nation’s smaller banks.

“I‘m announcing a proposal to take $30 billion of the money that was repaid by Wall Street banks, and use it to create a new Small Business Lending Fund that will provide capital for community banks on Main Street. The more loans these banks provide to creditworthy small businesses, the better a deal we’ll give them on capital from this Fund…this will help small banks do even more of what our economy needs - ensure that small businesses are once again the engine of job growth in America.”     President Obama, February 2, 2010.

Yet community banks are not lending either. Why, you may wonder? According to finance blogger Barry Ritholz, because it is “rational.”

“Banks are not lending because the way the Fed/Treasury bailouts were structured, they are encouraged NOT TO LEND. Why? They need to rebuild their capital levels after 30 years of declining safeguards and capital ratios.”

Looking closer at the President’s “creditworthy small business” remark….If you were a bank would you lend to real-estate agencies, architect firms, housing developers, retail boutiques, or local jewelry shops? These are a few of the businesses in my neighborhood hanging on for dear life while waiting for the tide to turn. How long can they wait?

Americans are going to buy or rent homes again. Builders and architects will continue to create them. People will still want engagement rings. The neighborhood coffee shop will continue to feed the locals-in normal times at least. These are not obsolete business models, yet revenues and customers are scarce. What bank would/should risk lending to them in an uncertain economy? Yet should a recession allow us to turn our backs on businesses that have served the community for dozens of years?

Okay, there we have it. Big Banks refuse to lend. Little banks can’t afford to lend. (The FDIC has closed the doors on 140 regional banks in 2009.) Why would we try the dead-end approach of begging banks to lend one more time? From where I sit as a small business owner myself, begging banks to lend is a futile waste of energy and precious moments. Been there, done that. Time to move on. They will dance; they will murmur, but they will not lend.

“Mr. President, we are proud to be Americans and happy to collect any deposits given to us by our community, but Mr. President we are worried about the FDIC, regulation, and frankly going bankrupt. You see Mr. President. It’s either us or them. If we have to make a choice, we would rather it be them.” …yada yada.

The Real GDP

Question: How do we revive businesses and industries left hanging by a thread? Answer: With liquidity of course. The way we do for our big brothers and sisters.

Our real GDP in America is our labor market. Our best natural resources are people. Put our money behind our people and the engine will turn. Move money out of the top end of the capital markets and into the producing end where value originates. Money is derived in a capital market economy from labor.

For example: What is a mortgage? Thirty years of your labor. What is consumer spending? The fruits of your labor.  What are taxes? The spoils of your labor! We won’t have any money to spend if we don’t generate a healthy labor market. The Market System functions like this:  Work = production = consumption = distribution = investment.

Currently, “investment” is the only area fully functioning in the economic system (banks and investors who have been given large wads of taxpayer dollars). Limited liquidity is flowing through the other levels of the value chain. Supporting labor at its foundation is the most certain way to rebuild an economy and get the system back on its feet.

We don’t need another bank bailout-not even at the regional level. We need to support the nation’s largest employer directly. Small Business is simply too-big-to-fail. The big question is: What will resuscitate Small Business America?

Payroll taxes and health insurance costs have long been the bane of small business. For some inexplicable reason, small business pays 45% more than big business in employment taxes. Lowering these costs immediately and retroactively to the first of the year would relieve Small B of a continuing burden.

The cost of health benefits weighs smaller businesses down, especially in hard times. Many employers have opted for cheaper plans or dropped insurance altogether. The office of SBA Advocacy reports, “In 2007, small firm employees were almost twice as likely as large firm employees to be uninsured.” 

While cutting taxes and health care costs will help, these measures will not be enough to save the nation’s largest employer from collapse. Small business urgently needs capital.

Extraordinary Measures

Extraordinary times call for extraordinary measures. Credit is like oxygen for business. To remove small biz from the ventilator, thirty billion dollars of accessible credit would be a good start. Yet if banks refuse to lend, what is the solution?

The federal government needs to step in and rescue small business much the way they did for big business-through direct discounted lending. The Fed could create a Small Business Direct Lending Facility with 0-2% interest and ease of access to funds modeled on the same formula given to big banks.

Forget banks. Forget begging. The government has to step up to the plate and start Phase Two of the economic recovery - direct government lending to small business. Life support for the nation’s largest workforce. We did for the big banks; we did it for student loans; we can do it for small business.

What, you gasp? This is not capitalism? Neither is the three trillion dollar rescue for the too-big-to-fail institutions that rode to their glory on the backs of the nation’s middle class.

This is an urgent matter of life and death-the death of small business or its resurrection. Will we have a nation comprised only of Walmart megastores? Or will we save Mom and Pop and neighbor Joan.

We have created a socio-economic tragedy with the two-tiered bailout system-a socialized commercial banking system-where the too-big-to-fail institutions are given bottomless safety nets and long ropes of capital with which to hang themselves. All this is understood as necessary and vital to the health and welfare of the economy.

On the other hand, the remaining economy is left to die on the vine. We, ordinary entrepreneurial America, operate under “unfettered” capitalism. The big banks do not. (Not when they need a capital infusion, zero percent loan or backstop for bad investments-then they are glad for government intrusion).

The system of pouring money into the coffers of the nation’s largest banks has allowed capital to pool at the top. It has not trickled down, nor even dripped into ordinary hands. Without credit our financial system will not function. Credit is how we make payroll, buy supplies, expand, innovate, and generate revenues. Money must circulate in a capitalist economy. If it ceases to flow freely through all levels, the system is at threat of collapse-this time a collapse of labor and idea-driven entrepreneurs-the nation’s middle class.

Small Business America cannot compete on an even playing field with banking institutions that are given blank checks to suck wealth out of the system and lobby against any possible reform. Unfortunately the bailout was handled without lending or compensation restrictions from the start-leaving too little too late in the form of meaningless threats and clawbacks. No time to cry over spilt geld however. Rather, we must get the economic engine running again-by supporting its vulnerable workforce.

Democracy is about equal opportunity. We have abandoned our most cherished values to become a survival-of-the-luckiest economy. We must turn that inequity around and support the rock that big banks are built on-depositors and taxpayers. Translation: The Working Public.

We can’t lend directly to small business, you say? It would be unthinkable? As Joseph Stiglitz points out- capitalism in America was irrevocably changed with the bank bailout. The old rules no longer apply.

Too much money, you say? We can’t afford it? Princeton professor and economist Paul Krugman claims to stop spending would be “pure disaster.”

I seem to remember somewhere a guarantee by our forefathers to “life, liberty, and the pursuit of happiness.” Fighting with a bailout-out bank, capitalized with your taxpayer money, to give your business credit and stop foreclosure on your home is futile and unfair. It is more than unfair; it is undemocratic.

We are all born equal under the law; it is high time America’s economic system reflects that God-given right. Because after all, the nation’s largest employer is simply Too-Big-To-Fail.

Write to the President: Small Business Direct Lending Now.

To Contact Your Representative

To Contact Your Senator

editor@goodb.net

* Dow Jones Market Watch
*Additional Source: Bloomberg Radio, December 18, 2009,
Live Interview, Credit Analyst: David Goldman

Unrestrained greed among the investment banking elite has been blamed for much of the world’s suffering in recent years. In a remarkable shift from only two decades ago, greed in all its crude reality, is no longer “good” in the eyes of the world.

Maverick thinkers have warned of the perils of unbridled greed for centuries, yet few were listening. Not until the world turned dark on September 15, 2008 with the perfect financial storm did the rest of society take notice.

That was a day of economic infamy-the day Wall Street investment banking died. Lehman Brothers, one of the most respected and powerful financial institutions in the U.S., came crashing down in an economic shock heard round the world. With its demise, the remaining investment banks went on life support resuscitated only by woeful government rescues.

With the crash of the credit and securities markets in 2008, the relationship between business and the public irrevocably changed. No longer is the old adage, “it’s not personal, it’s business” an acceptable view. The crisis resulting from the misbehavior of bankers at the expense of ordinary folks unequivocally reveals that everything we do in business is indeed personal to someone.

The official theme of this year’s World Economic Forum (WEF) in Davos, Switzerland is “Rethink, Redesign, and Rebuild.” The unofficial theme could be called, “Greed is Ugly.” We traveled a long hard road to get here from the Ivan Boesky days of last century. With it, we endured a lot of economic pain. Yet as human beings we rarely change when things are comfortable. It is the advent of crisis, either personal or public, that forces us to reexamine our values and reinvent ourselves.

The Economic Crisis of 2008 has brought forth the Economic Epiphany of 2010. The sentiments last week among the world’s business leaders echoed the urgent need for a moral economic framework. Out of the halls of darkness comes the light. Mercy, mercy, hallelujah.

For all those skeptics out there, the 2010 Davos Forum focus on values signifies an enormous change for the year ahead. People are mad as hell and they don’t want to take it anymore.

Yet these are not ordinary angry mortals, like Joe the Plumber or moose shooting hockey moms. The outraged include the banking and business elite themselves. Members of a once admired fraternity hold errant colleagues responsible for destroying the good business model. Barclays’ President Robert Diamond said, “Those who stayed strong are angry at those who had poor management.”

Trust is your bread and butter in business. Banking is a respectable and honored profession when used to serve the community. Not a roulette wheel spun with the chips of pension-less factory workers, ninety-year-old widows, and the working poor. Where did common good values go?

Deutsche Bank CEO Josef Ackerman complained to the Davos crowd, “We should stop the blame game,” and “start looking forward.” His remarks were directed against the inevitable new taxes and industry regulation favored by those present. Ackerman did not realize that regulating banks is looking forward-toward creating a system that works for all, not just a self-serving few.

The German banking chief acknowledged the importance of public opinion. “If you lose the support of society, you are not going to realize your corporate objectives in the long run.” (A belief that seems not to be shared by all colleagues.)

As WEF’s official theme reveals, the new paradigm is to redesign the global economy to include world interest with self-interest. It is no longer okay to create suffering for others in the savage quest for more. French President Nicolas Sarkozy stated that for “those who create jobs and wealth” to “earn a lot of money is not shocking. But those who contribute to destroying jobs and wealth and also earn a lot of money (it) is morally indefensible.”

Survival-of-the-fittest naysayers have become like dinosaurs on the verge of extinction. The only ones who don’t know that seem to be employed by bailed out banks.

Yet “blame”, as distasteful as that might be on most WEF participant lips, is not altogether fruitless. If the perpetrators of this colossal calamity continue to ignore their personal responsibility, then the world will continue to point fingers and tighten the strings. Call it blame if you must, but the post-crisis behavior of unrestrained banker bonuses looks greedy to those looking on. And greed no longer looks good.

Mexico’s ex-banking chief pointed out that banks have “misjudged the deep feelings of the public.” The Wall Street Journal reported that banks returned to a “culture of high-risk-taking and lavish pay as soon as they were out of intensive care” and brought the anger on themselves.

The President of the European Central Bank, Jean-Claude Trichet, claimed bankers changed the game by using taxpayer money “to guarantee loans at banks…a gigantic amount” and could no longer dictate the new rules.

Sarkozy summed up the general sentiment of the conference stating that “indecent behavior will no longer be tolerated.” He claimed that capitalism could only be saved “by restoring its moral dimension.”

That morality is being discussed at all in the setting of the formally “greed is good” culture of Davos is extraordinary. Continuing global economic hardship is yielding remarkable changes in profit perspectives. Glimmers of hope are emerging from the depths of despair.

New economic thought has shifted to a world that cares for the poor, voiceless, and forgotten. The official message of the conference proclaims, “Now is the moment to rethink values as we rebuild prosperity. The interrelated fights against unemployment, global poverty and climate change are not just noble struggles: they are essential for long-term recovery and avoidance of future crises.”

It was not good to be a banker at the World Economic Forum this year. The chairman of Morgan Stanley Europe compared their social status to that of “terrorists.” The comparison is humorous until one thinks about the havoc reeked by what economist Joseph Stiglitz calls “negative value”. Traders, underwriters, lenders, analysts, salesmen bought and sold securities, loan products, and swaps that were based on mortgages that could/would never be repaid.

American Heritage Dictionary defines terrorism as a “state of fear and submission.” Considering the submission of millions of families to banks who took their homes and millions more who lost their incomes through no fault of their own, the fear gripping those facing foreclosure and unemployment, and the millions of investors who face uncertain retirement, the subprime mortgage debacle could undoubtedly be viewed as economic terrorism.

As we begin the second month of the year 2010, it seems clear that greed, defined as the accumulation of wealth and profit at the expense of others, is no longer ”good” to most of those observing. That is a great relief.

The outrage expressed by pillars of the global economy in Davos, as well as the general public, reflects that the new “good” is as much about serving the common good as anything else.  Now that is what I would call an epiphany!

editor@goodb.net

This week I am proud to be a Googlican.

GoodB is happy to report that Google continues to be one of the best models for Good Business around. No, we are not sipping Kool-Aid! As most of you know, Google, the internet search giant, has challenged one of its biggest clients, the money machine of the 21^st century Communist China, on the subject of free speech and ethics.

In all the hullabaloo this past year as the financial crisis enfolded and China stepped in to lend America piles of cash against a future of debt, little was mentioned about the communist government of China. People like brilliant policy shaper Tom Friedman waxed rhapsodic at the wonders of China with green-eyed envy. China had become the flat world’s wunderkind.

I marveled at the hypnotic affects of China’s “capitalism” in the past decade over respected and innovative thinkers. Friedman in “The World is Flat” listed China as a welcome addition to the global economy, a great commercial giant leveling the playing field.

In the U.S. love affair with China, as the Big O (and George Dubbya before him) shake their hands and money tree, otherwise smart people seemed to forget who our benefactor really is. It’s the Big Bad Wolf, folks and we are on our way to Grandma’s house.

For all the Red Scare of the 50’s through 80’s, the Soviet Union was the wolf. Russia continues to be vilified in the press and Public Square. The message is repeatedly clear. They are a communist dictatorship and do not value American-style freedom. They can’t be trusted.  Okay…so how did China slip through the cracks to become one of the most admired economies by the western world?

The affair with Big Red began with the smell of money. Back in the mid 1990s, top execs at Goldman Sachs were scouting the world for new opportunities. The economic neutron bomb, hedge fund Long Term Capital, had exploded and with it the Russian market.

All eyes turned to the East. CEO Hank Paulson turned for help to Goldman pal, Robert Rubin, who sat comfortably in the U.S. Treasury seat. President Clinton signed on and the stars aligned. China was open for business.

The belief in the early 21^st century among many of the “best” economic minds of the day (including Alan Greenspan) was that communism through capitalism would slowly transform into democracy.  Ahh, we were so young and foolish back then. We believed so many fanciful things, like capitalism actually has anything to do with democracy!

In the lust for profits in the developing nation of China, American businessmen and policy makers seemed to forget - they kill people there! They round up “dissidents” (anyone who does not agree with The Party), force them into kangaroo courts, torture them behind closed doors, break their spirits, and whisk them away forever. And we think Iran’s government is ”bad?” I guess they are not our trading partner, so we can afford to be preachy. As soon as China became a primary source of revenue we were up the creek without a paddle….

(Just a quick note, if the financial crisis had occurred in China, what do you think would have happened to the subprime mortgage industry titans who took the money and ran? It is doubtful a Chinese Wall Street could have run too far. Guess there are perks to living with the Green-Reds after all.)

I have not understood for the past decade how the U.S. government can crow loudly about the violations of individual freedom in parts of the Middle East and somehow remain non-committal on the ongoing human cruelty in China.

Last month, outspoken Chinese dissident and well-known member of the American civil rights group PEN, Liu Xiaobo, was convicted of “inciting subversion” for calling forth “greater human rights” in China and the end of one-party rule. He was sentenced to 11 years in a maximum security prison. His wife was held in house arrest by the Chinese police during the trial. So much for democracy, even worse, forget about basic human rights.

These are the people with whom we willingly do business. These are the folks whose fortunes are made by Walmart shoppers. These are the folks who now own the future of America. Isn’t business supposed to be based on trust?

Google’s recent challenge to the Chinese government’s hacking of private email accounts reveals the struggle between Chinese and American style commerce. When it comes to “free enterprise” in a non-free society, the limitations of capitalism are plain to see. In America, capitalism trumped democracy once again this year. In China, communism will always have the upper hand. 

China and Google have butted heads over user privacy and censorship before. In my book, Spiritual Capitalism, I detailed the complex ethical issues between Yahoo, Microsoft, Google, and Chinese authorities. In 2006, all three tech companies succumbed to pressure to remove any blog or website critical of the Chinese government. Yahoo shockingly turned a political activist’s email identity over to officials. He was never seen nor heard from again.

Google and Microsoft chose to allow censorship, yet refused to reveal private identities and moved all email accounts offshore. All three U.S. companies were summoned before a Congressional panel and summarily chastised for their actions. More than one congressman compared their actions to Nazi complicity.

Time Magazine ran a cover story in February 2006, “Can you trust Google with your secrets?” as the commitment of the tech giant to its mantra, Don’t Be Evil, was called into question. A Google spokesman stated the company was not “ashamed” of its action, but “not proud.”  Better to have limited Internet rather than none, he explained. The response never sat quite right with the rest of Free Speech America.

The current situation involves more than suppression of First Amendment values. The Chinese government stands accused of “hacking” into private email accounts of political dissidents. Hacking is the digital equivalent of breaking and entering. The issue at stake is the very essence of Google core values. It’s good to know that when Big Brother is watching you, your other Big Brother has got your back.

Google is considering pulling their search engine out of China - a country of 1.3 billion people, four times the population in the United States. An amazing action for any hugely profitable publicly traded company. The threat alone would make shareholders shudder and competitors gloat. It also can make their largest client, the People’s Republic of China, mad as a hatter.

Yet they are willing to put their money where their ethics are, potentially risking enormous profits, and raising the bar of corporate social responsibility to a new level most of us will have to leap to follow.

This week Google profits are down 13%. The toll of the recession and the threat of Chinese action are already weighing heavily on the tech giant. Yet Google stated in their 2004 IPO that they wanted to be a different kind of company, one that did not sacrifice their core values for short-term profits.

That is a tough call for any for-profit company. Business leaders meet ethical challenges daily. Little in the world of money is black and white. There is always a grey area where profits must be considered against human needs. This is what doing good business demands of us. Asking questions like, “How do you stay in business, answer to the bottom line, and still maintain the soul of who you are?”

These are the dilemmas faced by modern business -big, small, and everything in between. Wall Street has been called on the carpet in recent months. So far they have failed miserably to balance two essential values: profits and the human bottom line.

The key for managers and companies faced with difficult decisions is to have a clear foundation of principles from which to act. Like valuing quality of life and placing the welfare of people and planet before profits. That is a hard lesson for business. Yet it remains the fundamental test of good business for 21^st century enterprise.

However this issue rolls out, Google has made a profound statement with its current stance. Sergey, Brin, and all the Googlicans are saying simply, some things are more important than money- principles and people. In the process, they have renewed our faith in ethically responsible capitalism.

This year, we watched incredulously as one profitable firm after another justified reprehensible breeches of ethics as the cost of doing business.  Google’s actions set them apart from the pack by drawing a distinct line in the sand. They are in business to profit, but they refuse to sell their soul to do it. The search king reveals once again that trust in business is not a PR slogan, but an absolutely essential component in any contemporary business model. 

Just goes to show, there are some things in life you can still count on. It is good to know that Google is one of them.

Christmas might be over, but the Spirit of Giving seems alive and well - at least on Wall Street. Investment banking firms like Goldman Sachs are considering whether to require employees to “give back” to society with a mandatory charity clause. The purpose of the action would be to:  a) Do the “right” thing. b) Appease the common folk. c) A & B 

Really what difference does it make why? The real questions are, is it the right thing and will it diminish public criticism? After all, according to one CEO, these firms are doing “God’s Work.” 

Employees at the big bailout firms stand to make even bigger gains for last year’s debacle than previously imagined. With the help of friends in high places, the “too-big-to-fail” banks have roared back to the top of the charts and execs expect to be paid for it. Bonuses are to be announced in late January and early February and are guaranteed to stir up ire among the long-suffering public. Some of Goldman’s efforts to soothe public resentments have included earmarking $500m for “small business education in community colleges” and $61m more to build urban affordable housing. Global investment banks are considering making employee tithing an official part of their business model.

Wall Street firms, including the greed-is-good 1980s Solomon Brothers, have long given back to the community. Junk Bond King Michael Milken has been one of the financial industries largest philanthropists since his release from prison in 1993. George Soros who “broke the Bank of England” has been an unceasing benefactor for many of the world’s neediest for decades.

Financial firms have built schools, underwritten libraries, created poverty programs, fought deadly diseases, and supported environmental sustainability and social entrepreneurship - all in an effort to balance the scales of prosperity.

Three of the biggest contributors to the fallen firefighters’ widows and children funds after the September 11 attacks were Merrill Lynch, Lehman Brothers, and Goldman Sachs. All the big Street firms gave hundreds of millions of dollars to rebuild the city and honor its fallen heroes. No one in New York ever forgot that.

So what is different now? Isn’t this what capitalism is all about? Making a profit and circulating it back to the people? Of course. Yet any firm that used bailout funds to get back on its feet is no longer viewed as a pure capitalistic venture. With the official label of “too-big-to-fail,” the public sees these firms as government-backed. Therefore the old rules of capitalism no longer apply. Giving a portion of profits to personal charities does little for those losing their homes or the millions of middle-class jobless who took the fall for others.

Since the days of Andrew Carnegie, people have confused good business with philanthropy. The titans of yesteryear, like Carnegie and Rockefeller, established the big business standard of supporting the arts and other non-profits. These men forced people to work at subsistence level wages in subhuman conditions, and then built libraries and schools for the same folks. In the 19^th century selective philanthropy balanced the scales, in the 21^st century it does not.

Business has an obligation to give back to the community that supports it. Therefore, charitable giving is a basic reality for any profitable company. However, in the past year it has become unmistakably clear that business also has an obligation not to profit by exploiting that community.

A great example of this model is the former investment bank Bear Stearns. The Bear was one of the most reckless subprime mortgage securities houses leading to the financial crisis. In the 2000’s, Bear Stearns also set the trend for “giving” by requiring top executives to contribute 4% of their income to charity. Levered at over 40 to one, Bear’s flimsy underwriting standards and outsized trading risk brought the behemoth firm down. Following in its footsteps were Merrill Lynch and Lehman Brothers, both high flying mortgage market makers and generous patrons. The loss of Lehman and Bear to the greater New York not-for-profit community has been heart-breaking.

Yet charitable giving by these firms has not made up for the financial devastation left behind in their wake. Donating 4% to a favorite charity while crushing the working and middle classes has not satisfied stressed taxpayers. The same people who lost their incomes and perhaps their homes directly due to market mayhem are asked to accept charitable donations to quell their rage. Hardly a reasonable offering.      

While firms cannot earmark 10% of profits for philanthropy without enraging shareholders, they can invoke the “charity clause.” Setting aside 5-10% of earnings for top producers to support a special community fund might establish better relations with the public after all - if that fund is funneled into a program that supports those affected directly.

For example, Goldman has set aside $16bn in a 2009 bonus pool. What if $1.6bn of this executive fund was used to finance small business loans at zero percent, refinance at-risk homeowners, pay a portion of monthly mortgage payments for unemployed homeowners, or seed money to social entrepreneurship start-ups who guarantee they will hire U.S. workers? These may be highly unusual solutions for profit-seeking Wall Street, but these extraordinary times require extraordinary measures.

This week, the top banking chiefs expressed mia culpa for the industry’s part in the economic crisis. Apologies are due, but actions are imperative. Earmarking a portion of bonus checks to plaster your name above the public library door isn’t going to relieve suffering or reduce anger. Real and effective solutions to current economic dilemmas are expected from both the government and financial industry.

To calm the ire of the seething public, firms do need to acknowledge their part in the nation’s misery, but not by following the path of Gilded Age robber barons. The way to rectify ongoing economic fallout is not through subjective “charitable giving,” but through genuine proactive restitution and reform.

contact@good-b.com  © 2010

What is the point of all your great efforts these past few years you may be asking? In 2009, it was enough to just hold on, keep your business or income afloat, and try to make it through each month. There wasn’t a whole lot of growing to do unless you were one of the firms that grabbed onto the government’s life line to be pulled out of the hole you put yourself in. For the rest of us, we are left to our own devices to pull ourselves out of the hole others left behind.

All the progress made in 2008 by motivated entrepreneurs and optimistic working folk was flushed down the old porcelain convenience after Lehman Brothers’ collapse. 2009 was the year to hang on for dear life and hope you made it through. It was like standing on the Titanic watching all the Big Banks jump into the lifeboats leaving you two choices: sink or swim.  If you managed to swim in 2009 and not get pulled down with the ship, you might be asking, what do I do now?

The New Year 2010 has begun and with it green shoots of Hope have sprung in the hearts of the resilient. Larry Summers, President O’s Chief Economic Advisor, swears that “everyone agrees that the recession is over.” Those words ring false for the millions upon millions whose incomes have been cut in half or completely wiped out, or for the tens of millions more whose net worth is a fraction of its former value.  For the millions of jobless or financially devastated who feel abandoned or forgotten, these words inspire rage and despair. Those left to their own resources without lifeboats for the past 16 months do not agree, Mr. Summers - the recession is not over, not for ordinary folks, not by a long shot.

So what is it all about, Alfie? What was the point of all that? Where do we go from here?

We muddle through the day to day financial stress trying to make sense of the senseless and nothing rings true.  The need for financial regulation, the methods for resurrecting incomes, the possibilities of official support - all of it really means nothing in the face of bigger truths. For all the menial, trivial, and hard reality of paying the bills, and generating income to stay alive, it all comes back to one thing. What is the deeper meaning of all of this financial upheaval in your life?

Why are you or any of us here on this earth at this moment in time? Is it Chance or Coincidence to find ourselves in the middle of this economic drama? Is there a greater plan behind it all? These are the questions for millennia; these are the questions for the moment at hand.

I don’t know a deeper meaning to life if it is not to help others as we try to help ourselves - to serve a higher purpose by making the world a better place. While that may be an ultimate truth, it will not necessarily pay the bills.

The questions for 2010 then are how to do we make the world a better place, a world where human beings care for each other more than their wallets, where common folk are not left on the curb as “fat cats” step over their writhing bodies, where ordinary heroes rise up to take back the world they create every day in every way. When will the values of ordinary people who do the “right” thing consistently  without prompting reap earthly rewards for their humanity? Must we always be trumped by the overwhelming self-serving indifferent powers that be?

I ask all these questions of you, because I have been asking these myself.

It can get pretty hopeless out here in the wasteland of the devastated American economy. I look around and see misery and suffering, some of which the rest of the world has always known, but for my generation is new. What do I tell them, how do I bring them hope for a better future?

First of all, I remind everyone, even those facing homelessness and bankruptcy, it is never just about money. There is always a bigger picture.

Money makes the world go around only to a degree. It buys us food, shelter, clothing, perhaps medical care and education. Things we need to survive and thrive. But we already know it does not buy us love, nor does it buy us compassion, or sensitivity to the pain of others, nor relief from apathy. That comes from the heart. That comes from a greater place than can be explained easily in words.

So while you are going through your great financial challenges and hoping to pull yourself up from the boot straps for 2010, remember that there is always a greater plan. These difficulties shall inevitably pass and you will be once again back on your feet having learned important lessons along the way.

After all, it is only money. Money dictates your lifestyle, keeps you in your home and in the mainstream of the living. But it does not say who you are, no matter how much you have or don’t. More importantly it does not reveal how you are inside, your heart, your mind, your soul. No matter what, you always have that.

Sometimes we think, why is this happening to me? Haven’t I done so much for so many, shouldn’t I be rewarded for that?  Yes, absolutely. And so we are rewarded every day for our good deeds in the warmth and support we give and receive from others. Not necessarily in monetary terms.

What does all of this have to do with Good Business and earning a living? Everything. That is what we cannot lose sight of. We are not our bank books, portfolios, or careers. We are living breathing souls with Goodness on our side and a greater purpose guiding us through it all. The good don’t always die young; sometimes they live to be very old like Desmond Tutu or Mother Teresa. Financial reward is not necessarily in the picture.

So make your money and make your living, but don’t let it define you. Don’t let it determine your mood or self esteem. Don’t fall into the trap that got our society into the current bind of blind materialism it finds itself in, the trap that says money determines any part of your value other than numbers on a computer screen. Our deepest most valuable assets are our hearts and minds. We still have those. These are the assets we are remembered for; these will be the things that we remember ourselves for. How do we treat others in our climb to the top or in our quest for more? How do create our living in relationship to others? How do we view ourselves - as numbers or as souls?

Don’t forget to ask what your greater purpose in life might be. It isn’t money. It is never money. In the end, it is always how you make your money that counts the most, not whether you do. That is what we are really measured by.

As you navigate through the maze of making ends meet this year and work towards growing your business or income back to prosperous levels, you may have to lay people off; you may have to look for a job, you may not be able to pay all your bills.

Put these circumstances in perspective by remembering that these are inevitable realities of the human condition. There is no need to confuse them with greater meaning in your life or to let economic difficulties obscure the core of who you are.

Wishing you the Best in the New Year.

©2010   editor@goodb.net

A January 2010 Op-Ed in the Wall Street Journal accused a moderately progressive U.S. Congress of inadvertently creating a loan-sharking credit card interest rate. Congress enacted credit card reform to stop lender usurious abuses. In retaliation, credit companies are finding ways to get around the new law. WSJ Opinion claimed that Congress’ attempt to rein in excessive credit card fees led the First Premier Bank of South Dakota to raise its rates from 9% to 79%.

“The whopping rate increase is First Premier’s way of complying with the Credit Card Accountability, Responsibility and Disclosure Act of 2009. Among other provisions, that law prohibits fees of more than 25% above a card’s credit limit. First Premier has been offering an account with a $250 limit and annual fees of $256. By law the latter figure must come down to $75. To compensate for the lost $181 in fees, the bank is raising the rate by 70% of $250, or $175, a year.”

As the anonymous WSJ author points out,

“Banks can’t be expected to give money away, even if Congress is in the habit of doing just that. Unlike lawmakers, banks and other businesses can collect revenues only by offering something of value in return.”    

Hmmm…. To whom does Congress habitually give money away? Certainly not ordinary citizens. Why, banks of course - banks like First Premier. Deposit-taking interest charging banks want their cake and to eat it too. And they won’t stop there - they also want yours.

Money can’t buy you love, but it can buy you food, shelter, clothing, education, and healthcare - all the basics of living a good life that free market capitalism can offer. So what is the price of freedom? 79%.

First Premier, aka “America’s vulture creditor,” is there to help anyone desperate enough for credit to put the final nail in their financial coffin.  One consumer states, “The only difference between First Premier Bank and Jesse James was he did it with a gun. They advertise as trying to help people with bad credit, but really they are just taking advantage of the poor people and lining their pockets.”

To be truly free in America, you need access to credit for almost everything. The ordinary citizen-borrower is caught in a trap.  How free are you when you can’t have your phone turned on, apply for a job, or buy a car without “good” credit?

Freedom in America’s credit-trapped economy comes at a very high price. Thus some folks go for 79% as a last resort. Hungry banks sit in wait, ready to pick at the bones of the economically wounded. For a price, credit card companies will happily devour you alive - legally and with impunity. Like WSJ reports, they can’t be expected to do it for nothing - that is strictly the job of the Federal Reserve.

The discount window at the Federal Reserve is “giving money away for nothing” - not to you or me, but to banks.  The current rate for loans from the Fed is 0%, ZERO, nada, nichts, njet!  The same banks that get their money for free lend it to you for 24-79%.

(Riddle #1: What is the difference between banking in 2010 United States and loan sharking?  Answer: One is legal and the other is not.)

The Fed lending rate gives you a clue on how Bank of America, Citibank, and Wells Fargo managed to “repay” the government while continuing to swim in billions of dollars of unpaid debt.

In addition to borrowing at zero percent, banks are legally allowed to move “toxic assets” (money-losing debts) “off  balance sheet.” This would be akin to calculating your net worth by ignoring your entire loan, credit, and mortgage debt and counting only assets. In the dualistic system created since TARP, somehow you are in the red and your bank is in the black. 

Oddly enough this arrangement is loosely called the “free market.”  Although there is nothing free about being forced to pay unlimited interest rates-especially if the scales are tilted unfairly in one direction. Banks don’t have to pay their debts, but they sure as hell expect you to pay yours.

The Ancient World

Credit in ancient times, according to historian Paul Millet, began as “a process of neighborly reciprocity in rural societies.” Long before consumer societies or money itself was invented, there was credit.  Citizens traded their own labor (as well as that of their children and spouses) and their land to have access to credit, becoming enslaved and impoverished in the desperate effort to survive. Sound familiar?

Even Ancient Babylon had more credit laws than we do. The first recorded laws in human history, Hammurabi’s code, stipulated interest rate limits of 20% on silver-based loans and 33% on grain loans.

In 1763 B.C. in the Ancient Mesopotamian city of Ur, only a few years and few miles away from King Hammurabi, Dumuzi-gamil “the grain supplier to the King” acted as an ancient banker. 

The Temple under the King Rim-Sin collected rents (modern equivalent of taxes) from all citizens. Clay tablets written in cuneiform reveal that Dumuzi-gamil borrowed 250 grams of silver minas from the Temple and promised to repay 297.3 grams in five years - an annual interest rate of 3.78%.  Over the five year period, Dumuzi made a personal fortune by lending at rates as much as 20% per month to distressed farmers and fisherman unable to pay Temple rents or to feed their families.

Very quickly, the situation for ordinary citizens became unbearable and a severe credit crisis ensued as more citizens were shackled under the burden of debt.  The King felt there was no way to relieve the crisis other than cancel all debts. Thus King Rim-Sin created the first official act of “debt forgiveness” on record, nearly 1200 years before the Athenian Solon did the same.

The system of gouging blood money out of distressed borrowers is primitive and stealthy, worthy only of those without the moral or creative resources to generate profit in a non-predatory way. There is no honor in the exploitation of the desperate. It is not good business - no matter what the powers that be might claim. Perhaps it was in the second millennium B.C. however, not in the third millennium A.D. 

In theory, people are free to choose to borrow or not. However, in practice there is really no choice. We are enslaved in a system of credit and debt that has terrorized humanity for 4,000 years.

In this new year of 2010, as the banks that created the credit crisis for ordinary folks continue to rape and pillage the society they feed on, something must be done to turn the tide of vulture credit.

Senator Dick Durbin of Illinois introduced a bill in 2009 to limit interest rates to 36% (3% more than Ancient Babylon). It was shot down. Democrat and Republican Senators, in the pockets of powerful credit card lobbyists like the “Financial Services Roundtable,” do not want any limits at all on interest rates - even though until 1978 every state in the union had these.

Vermont Senator Bernie Sanders introduced another bill to limit credit card interest to 15%. It was defeated in a landslide of 33 votes for and 60 against.  Senator Sanders said, “When banks are charging 30 percent interest rates, they are not making credit available. They are engaged in loan-sharking.”

(Riddle # 2: What is the difference between mafia loan sharks, ancient lenders, and the present state of U.S. banking credit? Answer: The mafia takes your life; the ancients owned your life; modern banks destroy your life.)

The same distorted system of predatory lending that ended in the 2008 financial collapse and echoed in the Ancient world, continues with unlimited interest rates that prey on the poor and desperate. Perhaps 2010 will bring a more enlightened system of credit to modern finance - one that allows debtors the same protections and opportunities given to vulture creditors - true freedom of choice.

Haven’t we waited long enough?

editor@goodb.net  GoodB Blogger Monika Mitchell

This is our winter of discontent. The jobless seek a pay check; the almost-homeless pray for a miracle; the indebted seek relief. Throughout the nation and across the globe, human beings are locked in the battle for survival. Yet despite our struggles, this last week signifies a new season of hope for humanity.

Something miraculous happened on the way to the White House this holiday week. Sixty privileged and pampered U.S. senators dragged themselves out on Christmas Eve in the wee hours of the morning to push through historic health care reform.

Many Americans are against the reforms in the current health care bill either because they hold too much or too little change. Yet the miracle on Pennsylvania Avenue is so much more than the bill itself; the debate on healthcare reform represents a shift of consciousness from exclusive self-interest to inclusive world-interest.

Healthcare is an economic issue as we know in America. It costs too much for too little. The only people who benefit from the high costs of care are pharmaceutical companies, health insurance companies, those who pad the bills to Medicaid and Medicare, and their investors. Everyone else is out on a limb to pay for the outrageously expensive cost of maintaining our bodies.

The healthcare debate has revealed a clear dividing line in the consciousness of the public. The debate cuts across economic classes, genders, ethnicity, and social stratas. We are no longer separated in a battle between haves, have nots or have mores. The debate reveals a clarion call raging through society: The ancient struggle of self-service versus common-good.

Given the painful lessons of the last year, the mood of the nation seems to be shifting from a “what’s in it for me” cultural ethic to a newly emerging ethos of “If I flourish, so should you.” Battle lines are drawn between those afraid to lose what they have and those willing to share their fortune with others. A new day is dawning in America, because compassion for others has won a decisive victory-at least for the moment.

We are good people in this country; kind people, generous perhaps even to a “fault.” Yet fear of suffering can make even the gentlest of souls selfish and indifferent. A newly minted senior citizen, a woman of 65, is adamantly against health care reform. She states her objection to expanding care, “I don’t want a 45 year old to get my MRI.” The sentiment sounds petty and insensitive coming from someone receiving taxpayer supported Medicare. Yet her concerns are real. Would she get the required care needed or would she have to sacrifice her own health for another’s?

Some don’t want to see their already costly healthcare premiums increase. Others don’t want to pay tax on top level care. Still others fear their healthcare will be compromised in service to others. All these are real concerns for ordinary Americans. Some working, some not-all are understandably worried whether their survival and comfort will be threatened by “reform.”

Yet an extraordinary change of heart is underfoot, worthy of the era we find ourselves in: the era of shared concern.

The issues of universal healthcare go far beyond any legislation debated in Congress. The fundamental issue revolves around, “What is our obligation as human beings to care for others?” “Must I sacrifice any part of my comfort or share my good fortune with you?”

The big banks have answered this question this year by plowing ahead with bonuses at the expense of the American taxpayer. If we really believe in “raw survival-of-the-fittest capitalism” we should be okay with this. Yet most of us are adamantly opposed to this inequity.

The Fed Chief states the bailout he himself engineered is “distasteful and unfair;” yet only those who benefited from his actions agree. Anyone struggling financially to survive knows how misguided and undemocratic the 2008-2009 bailout programs truly are.

We have been in an on-going struggle in America since our founding between individualism, our personal sense of freedom, and a broader sense of justice and fair play. “What is our obligation to the greater public and at what cost does that come to ourselves?” is the key question consistently argued in our two century history.

I don’t know the answer for everyone, but for me the answer can be best told through a story. Several years ago I visited an American friend in Brazil. As we sat at an outdoor churrascaria gazing at the crowded sands of Ipanema, content in all our abundant perfection, a little boy of nine or ten peered at me through the restaurant gates. His huge brown eyes hungrily took in the bounty before me. As the waiters brought more food, I said to my friend, “Can we ask him to join us?” My friend seemed annoyed by the question and explained that Rio was not like the U.S. “Orphaned street children are common here,” he said. “You can give them a few coins, but not more than that because if you do you will never get rid of them.”

The callousness of his remark shocked me. I asked, “But we have so much food, can’t we give him some? He looks like he is starving.” My friend shook his head no, made a joke about life’s inequities and detailed the Brazilian social system to me. “People are just used to it here, you can’t help them. This is just the way it is.” My friend and I began a deep discussion on indifference, civic duty, and compassion. All the time the little boy’s eyes stared at the table of food through the gate. The discussion became heated as we both stated our increasingly diverse views. As my friend kept eating and talking, the limitless supply of meats flowing, my appetite and conversation diminished. “How can you eat while this child is starving?” I asked him. He laughed and stuffed a rare piece of Filet Mignon in his mouth and said, “Like this.”

When he got up to go to the restroom I signaled to the child to come and sit down. The boy ran through the gates to the table, only to be intercepted by angry waiters who shooed him away like a fly. The head waiter scolded me harshly for inviting “street urchins” into his restaurant. My friend returned to the chaotic scene embarrassed by my social faux pas and I decided to leave, but not before asking for a “doggie bag.” The waiter refused and I scooped up the meats untouched on my plate into a napkin, handed them to the boy who grabbed them and ran off.

My companion was as repulsed by my actions as I was by his. In my youth I judged him harshly. I left to go back to the States and rarely spoke to him again. In time, I recognized the real issue between us was not as cut and dry as one might suppose- it was the differing ways we viewed the world. I felt an obligation to help those less fortunate in any way I could; he felt he had no obligation to the “world,” only to a select few. His seeming self-interest belied the fact that he was deeply generous to a handful of friends in New York and Brazil. Yet his kindness did not spill over to the greater human population. “I cannot help everyone,” he told me, “and neither can you.”

In the years since, I understand his behavior more than I once did. He was a kind man who could not express that compassion to the greater community without overwhelming himself. That “is just the way it is,” he had told me. His statement marked an apathy and acceptance I did not share. That was the major difference between us more than any innate goodness on my part or his.

He was right of course in his mature wisdom. I cannot help everyone, nor can anyone. But we can do whatever possible to help others without sacrificing ourselves. I told my friend in Rio that it might be the way it is, “but I don’t accept it.” Neither should any of us, accept a status quo of indifference and apathy, not if we hope to create a better world.

While the healthcare bill is as imperfect as we humans are, it marks an important shift from apathy and indifference to shared responsibility. Healthcare in this country is an expensive commodity reserved only for those who are fortunate enough to afford it or old enough to qualify for it.

That might be the way it is, but we don’t have to accept it, because it is just not good enough.

The new vote on Healthcare brings Hope for a less indifferent and more responsible America in the year ahead-one where the basic necessities of life are not considered luxuries meant only for a lucky few.

Happy Holidays from all of us at GoodB!

editor@goodb.net  GoodB Blogger Monika Mitchell

Greed is destructive, cruel, primal. Yet it is nothing new. It has existed since time immemorial.

Respected journals and periodicals report that “nothing” has changed over the past year on Wall Street since the financial collapse. Some make the staggering claim that it is back to “business as usual.” In other words, surprise of surprises, greed still exists - particularly in the world of money.

Yes, greed does exist and will continue to until a transformation of consciousness takes hold of us. In fact, in the last year of our “Lord”- the Money God that is - a lot has changed.

Firstly, there is a growing recognition of the part that unbridled greed played in the destruction of venerable old firms like Lehman Brothers and Bear Stearns within the financial industry itself. AIG and Merrill Lynch exist in some form or other, but limp along as lifeless shadows of their former greatness.

Contrary to popular belief, most people on the Street, from top levels of high finance through the middle and bottom layers too, know that their coworkers are responsible in large part for the capitulation of a once celebrated -now vilified-free market business model. Too little, too late, they lament. We should have seen it coming.

Along with this private acknowledgement is the conviction that it won’t happen again-not on their watch anyway.

Perhaps ironically, much of the Street feels similarly to the public in one major area: the government did not do its job to oversee and regulate the safety and protections of the marketplace.  This is undisputedly true.

In 2002, after the World Com and Enron debacles, Free Market architect Alan Greenspan accurately stated that ”an infectious greed seemed to grip much of our business community.” He was referring, of course, to the copycat “creative accounting” rules for major shareholder companies that subsequently declared bankruptcy, bringing investors down with them.

In that same speech, the Former Chairman of the U.S. Federal Reserve stated, ‘It is not that humans have become any more greedy than in generations past. It is that the avenues to express greed had grown so enormously.” In this is the key to our current economic dilemma. Alan Greenspan’s recognition of the dangers of outsized greed did not compel him to petition for change-nor did it for the rest of us. Public officials and citizens turned the other way-they know what they are doing, we thought. They know better than we, was our flawed conclusion.  

As modern societies of the 21^st century, greed should no longer shock us-nor should it numb us. Like war, murder, rape, and any other sort of human action that infringes on the individual and collective rights of society, the reality of greed and the relentless human desire to find “avenues to express it” requires constant oversight and vigilance.

Greed exists; therefore laws to protect society from it must be created and enforced. It is as simple as that. We protect society from murderers and rapists with a legal framework of punishment. Although these human calamities still exist, we acknowledge the need to inhibit these actions with severe consequences. Protection of society from the destructive forces of greed necessitates similar deterrents.

While Wall Street and its students are nailed to the wall as evil incarnate, torn apart in every print publication, trashed and abused in media events, Congressional discourse, and public forums, are they really the source of our discontent or is it the human failing of greed itself?

We ask Wall Street to make money, move the economy, create wealth and prosperity for all. When they do so, we are happy - if we win. However, if we lose, they are villains, worse - criminals who broke no laws; we turn our backs on the very people and very system we formerly embraced. Because the cultural ethic of greed has been accepted as the Holy Grail for so long, we never questioned it until it turned against us.  Only then did we cry bloody murder.

So who is really responsible for the economic burdens we continue to bear?

You, me, Wall Street, and the government officials who are charged with protecting us from ourselves.

All of us have created the monster that now devours us.

Like the Greek mythological king, Midas, for years everything we touched turned to gold. Like Midas, his good fortune inevitably becomes a curse. Midas touches food and water and turns them to gold, destroying his own sustenance. His beloved daughter turns to gold when he touches her hand. Midas grieves the loss of his daughter and begins to hate the fruits of wealth he so desired. The old king did not realize the high price he would pay for his greed.

Neither did we in America, the United Kingdom, Ireland, Iceland, France, China, India, Japan, and any other partner of the raw and unrestrained capitalism that had no brakes, no limits, no protections. 

We have been betrayed by our own worship of money and wealth-by our own Greed.

The Money God, as Midas discovered, is shallow comfort in the light of real human need. We need love, family, friends, home, health, productive work, and financial security-all the things that are now threatened by our voracious appetite for more.

So despite those who gloomily despair that nothing has changed-much has changed. Our dependence on financial speculation for security for one. Our reverence for wealth as the epitome of success and accomplishment for another. Our innocence about the super human powers of money creation we endowed our former money gods with; now in the wake of the greatest economic crisis since the Great Depression, we know better. They are no more money gods than we; their feet are made of clay just as ours are too.

Like Midas, those in government (Congress, the Treasury, the Federal Reserve, and others in public office before this year) that contributed directly to this colossal mess have to hide their donkey ears. Yet there is no one to blame if we are all not to blame. The society of greed we encouraged and embraced is the real source of our suffering.

We are forever changed by the events of the past two years. Regulation is surely to come down the pike in heavy doses. Personal and individual freedoms will be diminished to protect the freedom of the whole. Inevitably, officials and money men will be weeded out and more cautious men and women will replace them. They are armed with the knowledge of their predecessor’s experience.

Those that came before will be unfortunate casualties in the evolution of consciousness that is taking hold of the world of money-a world that by our very existence, we are all a part.

An evolving consciousness is seeding within the modern mind that understands, after these last challenging years, that greed does indeed know no bounds. And the primitive belief in self-interest at any cost that dovetails with it, even to the destruction of the very society that supports it, also finds itself a wounded relic of an ancient past.

As we embark on the dawn of the second decade in the new millennium, the consciousness of greed and its high and painful cost colors all that we do going forward.

From this century on, a profound and necessary change has come to capitalist America—one that accompanies the knowledge that not all things that turn to gold are desired!