Five years ago this month, a financial meltdown didn’t merely plunge America into the Great Recession, it drove the country into the worst economic crisis since the 1930s. It’s not hyperbole to call the 2008 meltdown one of the most critical events in American history.
This was a cataclysm far worse than any natural disaster in the nation’s experience and it has given rise to its own terminology.
Financial Meltdown: A biblical-style plague that drained nearly 60 percent of the stock market’s value and killed off other financial and credit markets in the process. Banks and other businesses either vanished into bankruptcy as the nation’s credit system froze up and forced the federal government to spend $2.8 trillion and commit another $8.2 trillion in taxpayer funds to bail out major corporations like General Motors, Chrysler, Citigroup, Bank of America, AIG, and a host of other “too-big-to-fail” private-sector institutions even as those taxpayers were themselves crippled by some $11 trillion of wealth and eight million jobs being wiped out.
Economic Crisis: What we seem to be stuck in right now. Middle America struggles with rising food and gas prices, finding or keeping a job and simply keeping their heads above water. The rich get richer and everyone else gets poorer. It is marked by an economy that can’t seem to grow its way out of a paper bag. Instead of early retirement, countless Americans will have to keep working until they drop because half the value of their 401(k) vanished into thin air. Paying for their children’s college education is entirely out of reach.
Lascivines: The CEOs of these firms were the modem equivalent of saloonkeepers in classic Westerns who paid the usual “gaudy ladies” to hover at the bar and sweet talk us into drinking overpriced, watered-down whiskey while their painted eyes promised that we can “take them upstairs” later.
Rocket Scientists: Bright young nerds with Ph.D.s in math or physics from major universities who found that earning a decent living in the academic world was tougher than earning a decent living by becoming the intellectual equivalent of Broadway actors. Their technical backgrounds let them quickly master the intricacies of”Quantitative Finance Theory” and engineer all kinds of wild derivative securities that are too complicated for most people to understand, but very profitable for their employers.
Master of the Universe (actually the reincarnation of 1980s terminology): An infantile term of “respect” for anyone in the financial industry who’s aggressive enough to generate big dollars for his firm (by hook or crook).
Is it any wonder that increasing numbers of outraged Americans are screaming that there ought to be laws against allowing just anybody to hold senior positions in industries so important to the public welfare? Shouldn’t they be required to possess licenses testifying to their qualifications, like physicians and lawyers? Accountants are prohibited from expressing formal opinions about the “adequacy” of corporate financial statements until they’ve passed the Certified Public Accountants exam and worked in their field for a number of years. Why not have the same kind of rigorous licensing requirements for top management jobs in critical industries, including administering competency tests to all graduates of MBA programs.
After all, the senior managers at Lehman Brothers, Merrill Lynch, Bear Steams, AIG and so many other financial-services firms were totally clueless to the dangers of undue risk, excessive leverage and abusing lax regulations, all while being more outrageously overpaid than top managers in any of the world’s other major industries.
Americans can’t forget the financial meltdown of 2008 because they are still dealing with its effects. Like any victims, two things that would help them process the trauma would be for those responsible for it to finally be brought to justice and for safeguards to be put in place to prevent a reoccurrence.
originally published: September 14, 2013
