I have three reasons for saying this. First, it feels good to vent. Second, if you have experienced similar frustrations, my venting may make you feel good, too. Third, if you are not yet a Verizon customer, it could be fair warning.
I say this even owning VZ shares – that I am thinking of unloading, except that the company has so much room for improvement, that alone might be a reason to hang on. (I also say it recognizing that similar stories could doubtless be told about competitors; not least AT&T and its infamous dropped calls.) But this summer Verizon left hundreds (thousands?) of my fellow beach dwellers and me with no land-line service all weekend, and then all Monday (how long could it take to repair a cable that had apparently fared poorly in Point o’ Woods, several miles down the beach?), and all Tuesday (it’s not as though there had been a hurricane or anything), and all Wednesday and Thursday (what are we, Albania?) – and all Friday and Saturday and I think service was finally restored Sunday afternoon or maybe it was Monday morning, after about 10 days with no service.
All of which accentuated the frustration with Verizon wireless, because when word went out they had built a cell tower atop our community center, quite a few of us bought Verizon cell phones specifically for that reason, only to see the July 4th expected “switch-on” date delayed for months – I think it’s still not on – so when the land lines went out, there was no cell back up, either.
But that’s not why I write. I write because Charles’s land line in Manhattan no longer has the ability to receive calls – try him, you’ll see – though, peculiarly, he can call out just fine. And when I phoned Verizon yesterday to get it fixed, and was assigned “the earliest possible appointment,” that appointment was for a 7 days hence, so long as someone 18 or older would be home between 8am and 5pm. Which is better than having to wait two weeks and having to be available from 6am to midnight, say – but do you see my point?
WHAT IF WE HAD MORE SERIOUS OUTTAGES?
Wayne Seibert: “Discussing the film “Wall Street Money Never Sleeps” yesterday, you again mention how close we came to disaster, which appears to be the conventional wisdom across the entire political spectrum of economists and politicians. Many of us in the layman camp, including those that support the tea party, just don’t see it. The economy has shown solid productivity growth in the last couple of decades, which I thought was the bedrock of economic advancement. The problem has been with the allocation of that productivity dividend. Many of us see the interventions of TARP and the industrial policy initiatives of the last two years as policies designed to block that reallocation. At the time of the meltdown after Lehman Brothers’ collapse, many of the redwoods and sequoias in the economic forest were shown to have dry rot and would have caused a lot of damage if they fell. But the overall ecology of the economy was strong, and would have recovered a lot quicker and in a more healthy manner if we had allowed Citi, AIG and GM go through the established bankruptcy procedures. I agree the pain would have been sharp and severe, much like an amputation, but allowing markets to work would have punished the malfactors and let a new generation of competitors arise. Can you refer me to an article or book that can explain why I’m wrong?”
☞ Fair question. In addition to Andrew Ross Sorkin’s Too Big To Fail, there’s Treasury Secretary Hank Paulson’s On the Brink: Inside the Race to Stop the Collapse of the Global Financial System, which I have not yet read, and doubtless lots of other things readers may point us to. But here are a couple of thoughts.
First, do note that at least the shareholders of Bear Stearns, Lehman, Citibank, Washington Mutual, AIG, and GM, among others, got largely or entirely wiped out – and awful lot of shares were owned by management. So it’s not as though capitalism’s rough hand was entirely restrained, or that business continued as usual.
But more to your question, imagine that Congress had not passed TARP on its second go around, and that the government had steered clear. The crisis of confidence was such that the global financial institutions that normally trust each other would have stopped trusting each other. (Would you have been comfortable wiring billions to a bank that might collapse?) Global commerce would have frozen. Exports would have stopped; just-in-time assembly lines would have been disrupted; layoffs would have been massive. The stock market would have crashed. The individuals and businesses that trust their money to banks and money market funds – and can theoretically withdraw that money with a few mouse clicks – would in a panic have pulled their money out, collapsing all but whatever few institutions the mob moved to – all crowding to one side of the boat. The ATMs would have stopped dispensing cash, loans would frantically have been called, the commercial paper market (by which the nations’ largest employers finance their day to day operations) would have frozen up, so payrolls would not have been met, so rents would not have been paid, so landlords would not have the money to pay the utility bills, so electricity would have been shut off, so martial law would have been imposed, but would that really have been enough to keep starving people from doing what they had to for food? So crime would have soared, but police would have been laid off (no tax revenues to pay them) . . . and to all this (and I was just getting warmed up) you can rightly say, “Oh, nonsense. The government would have intervened somehow.”
And that’s true. But that’s the point. Government did intervene, and early enough to succeed, however imperfectly. It was expensive, but the taxpayers will get a lot of that money back. Had the Government waited longer, it might well have been impossible, or at least a lot more difficult. The best time to put out a fire is when the flames first become visible.
Of course, the fire could have been averted at virtually no cost at all, simply by having had in place wise legislation and vigilant regulators with the tools they needed (and that henceforth they will a lot more nearly have) to oversee “nonbank banks” and to keep “liars’ loans” from being written and banks from speculating on 30-to-1 margin and all the rest. Indeed, just not having repealed Glass-Steagall would have gone a long away to avert the crisis.
There are still worrisome systemic problems; but Dodd-Frank puts us in a better place than we were. And global commerce has not stopped and the stock market has not crashed, people trust that their bank deposits are safe, and – as awful as it is, the economy is nowhere near as bad as it was in the Depression. What we need to d now is elect people who have their eye on the big picture: the need to invest in infrastructure, education, and energy independence so we can compete and prosper in tomorrow’s vibrant world economy.
Quote of the Day
The people who sustain the worst losses are usually the ones who overreach. And it's not necessary: steady, moderate gains will get you where you want to go.~John Train
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