First point, nobody at the Davos conference knows how to revive the world economy. Ya think?
Second point, all of us have lost our trust in money managers. Ya think? Stop the presses!
For point two Friedman calls Bernie Madoff, who admits he stole $50 billion, the emblem of betrayal. He also heaps his scorn on B. Ramalinga Raju, the Satyam chairman who admits he embezzled $1 billion.
Ya know, it sure is laid back easy vacation journalism to uncover such banalities from self-admitted crooks. Just my post Madoff lack of trust talking here but, it looks like Tom has been spending most of his time this week on the ski slopes at Davos. I'll bet he gets paid as usual for the column anyway. Maybe he'll get a bonus for uncovering new ways to invoke the names of sleazy crooks without actually lifting a finger to scrape up a single atom of any new value. Just the low level of trust in my life talking here. Sorry.
Part two of the op-ed:
Second, we’re going to have to get used to a loss of trust. All those rock-solid people and institutions that we trusted with our money, our pensions and our kids’ piggybank savings — like Citigroup, Merrill Lynch, Bank of America — do not seem trustworthy anymore. Never before in my adult life have I looked around at every bank in my town and said, “I’m not sure I wouldn’t prefer to put my paycheck in a mattress.”
The Bernard Madoff scandal, of course, has only reinforced that loss of trust. His degree of betrayal — his alleged willingness to embezzle the life savings of people whom he had known his whole life — is so coldhearted that it charts new territory in human behavior. He’s on his way to becoming an adjective. Money managers are already being asked prove to prospective new clients that their internal safeguards are “Madoff proof.”
I’ve written a lot about the Indian outsourcing community, so I knew B. Ramalinga Raju, the Satyam chairman accused of embezzling $1 billion from his own company. What’s really sad is that I didn’t get to know him through his business but through an interest in his family’s charitable work. They created India’s first 911 emergency system in their home state and call centers in Indian villages, so young people there could get service jobs. Was all that a fake, too? Or was he just an embezzler with a good heart? Don’t know. When you can’t even trust a person’s charitable work, you’ve hit a new low.
“We’re all going to have to learn to live with a lower level of trust in our lives,” an African banker friend said to me here. But the mind recoils at that, which may explain why so many people I talked to here are hoping that President Obama will turn out to be the guy.
Like Harry Truman, Obama is definitely present at the creation of something. He is arriving on the scene “not after a war but after the same kind of shattering of institutions that a war does,” said Peter Schwartz, chairman of the Global Business Network. “His job is to restore confidence to these institutions that have been at the foundation of our economy.”
That may be President Obama’s most important bailout task: to educate the country that there is no easy escape here, except taking our medicine, getting our fundamentals right again and working our way out of this, brick by brick, by getting back to making money — what was that old Smith Barney ad? — “the old-fashioned way” — by earning it.