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Wild Wild West
I feel as though I'm living in the Wild West when observing the economic events of recent years, reading about business scandals, or watching the biography of greedy scammers on TV. In the American Old West also referred to as the Far West, Old West or Wild West, there was no shortage of criminal gangs with weapons who took advantage of lawlessness to rob banks and innocent people. In recent years, the same old western mentality and behavior can be observed in our business environment whereby we witness a lack of total management integrity almost daily as well as lawlessness and unchecked controls. These have led to back to back corporate fraud scandals, management corruptions, ponzi schemes, investment fraud, skyrocketing healthcare fraud, mortgage fraud, and rising gas prices some of which have resulted in unforeseen stock price declines, sudden losses in property values, increased insurance costs, vanished retirement accounts, inflation, diminished buying power, and loss of public confidence. Isn’t it interesting that although demand for gas has dropped due to global economic meltdown and increased unemployment while oil supplies remain unchanged, the price of gas keeps going up? Some may blame the declining US dollar for the rising gas price, but I’ve seen the dollar go up and down yet the price of gas does not fluctuate relative to the changes in US dollar. It is worthy to note that President Obama ordered the establishment of a committee to look into the rising gas prices and I wonder whether the White House suspects another Wild West scam in action. More on gas prices later. Authorities who are charged with protecting the public against fraud seem to always be reacting after the fact and are as surprised as consumers in the face of scandals. Just take a look at the mortgage fraud that robbed many homeowners out of their down payment, good credit and property values. Although some of us played by the rules and purchased homes with reasonable payments relative to our "real" income and reasonable loan payoff timetable making sure we can make our payments each month and maintain our good credit, we ultimately paid the price for the actions of greedy bank executives who kept lending our money to the wrong people and for the wrong properties with inflated values, as well as nowhere-to-be-found government oversight agencies who failed to educate and protect consumers. Increasing unqualified homebuyers who by the way were encouraged to buy properties without income verification led to housing shortages and higher real estate prices which had to eventually come down. Ultimately, the disaster arrived upon us and many greedy banks went under leading to thousands of bank closures and lost jobs. Of course, the government once more came to rescue consumers after the fact and sold the failed banks for pennies on the dollar to other banks who not only benefited from buying failed banks’ undervalued assets with taxpayer money, but they also raised service fees soon after the acquisition. Thanks to the lack of government oversight and management greed, consumers will continue to pay the price for many years to come as they either lost their homes to foreclosures, have a mortgage higher than the value of their property, or, no equity to count on for retirement while the service fees will continue to rise in the wild west. Before the wild west mortgage fraud era, there were corporate financial fraud cases in which large companies collapsed leading to vanished retirement accounts once again which were heavily invested in failed company stocks and mass layoffs. Again, the independent auditors and the government failed to detect the financial fraud on time which led to some of the largest corporate bankruptcies leaving company employees and investors with nothing but empty accounts. Subsequently, the government introduced the Sarbanes Oxley act to improve corporate governance and independent auditor oversight. Now back to gas prices in this Wild West; why is it going up, who is profiting from the rising gas prices and why is it being allowed? With oil production and cost unchanged, recent gas prices have yielded huge profits for gas companies and their executives. My hope is that the government will detect any illegal gas price manipulation sooner rather than later this time before it’s too late. Otherwise, if and when fraud is detected, some oil executives will resign, be slapped on the hand and allowed to live outside of a prison cell similar to bank executives who walked away with millions of dollars for failing their banks and customers while our economy tanks to its lowest levels yet leaving our society with no middle class citizens. |
