A one-time school project gone terribly, terribly wrong.

08 April 2008

Angry? Why Should the Average Worker be Angry?

Washington Mutual Inc. expects a $1 billion first quarter loss and said Tuesday that it will slice 3,000 jobs nationwide while also closing more home-loan centers.

[. . .]

WaMu also said it was closing its 186 remaining freestanding home loan offices and exiting wholesale lending by the end of June.

[. . .]

WaMu said it had raised $7 billion from the sale of stock to an investment group led by Fort Worth private equity firm TPG Capital. David Bonderman, co-founder of TPG, formerly Texas Pacific Group, will take a seat on the WaMu board along with Larry Kellner, chief executive of Houston-based Continental Airlines Inc.

[. . .]

WaMu CEO Kerry Killinger said the $7 billion injection "will position us for a return to profitability as these elevated credit costs subside. With the support of these investors, we have every confidence in our ability to deal with today's market conditions and restore shareholder value."
From the Houston Business Journal

According to, Mr. Killinger was the 83rd highest-paid executive in the United States in 2005, earning $48,679,000 over the five-year period, and more than $15 million in 2005. He also owns over $60 million in stock.

I'm sure Killinger is really feeling the pain of the economic downturn. I'm sure he can't sleep for the thought of all those jobs and homes lost. Nightly he paces the floor as his erstwhile employees get on with the business of finding new jobs--hopefully some that have health plans.

On his salary alone, Washington Mutual could save enough to keep 500 employees earning $30,000 per year employed. But presumably executives are seen as giving better "shareholder value"?

Meanwhile, I'm sure some of those workers will be trying to find work to make their predatory mortgage payments as the screw turns and foreclosures rise to levels not seen since 1931 or so.

In January I read a prediction that the economy was going to tank, led by a house-price "deflation". It was predicted that US unemployment would hit 7.5 percent.

Tighten your belts, save your pennies, and don't vote for anyone who'd bail out investment bankers before mortgage-holders. And hold onto your hats, it's gonna get rough.

Unless, of course, you're a CEO.


At 7:23 a.m., Anonymous PJ said...

And the era of cheap Chinese products is about to end.

This site links to a site where you can check out all the foreclosures in your (American) neighbourhood. It's creepy.

At 8:58 a.m., Blogger Slave to the dogs said...

The era of cheap Chinese products can't end soon enough for me.

My neighborhood has been pretty severely impacted by foreclosures. I'd say it's driven the value of my own home down 20-30K.

I was thinking about the CEO issue last night. I really think their pay should be performance/incentive based. It seems a CEO that does a bang-up job can have an extremely positive effect on their employees, other companies, and even the economy as a whole. They deserve big compensation for that. But I have a really, really hard time with the golden parachutes the poor performers are still handed.

At 9:05 a.m., Blogger Metro said...

The Wall St. Journal, now a FOX newspaper if I recall correctly, actually had an article a day or two ago that said something like:

"With mortgage foreclosures making headlines across the country, many of our readers have been writing in to ask 'Where can I find the best deals in my neighbourhood?'"

Those millionaires are all heart.

In another depressing development, Canada's food aid to developing nations is about to be cut just as world food prices hit a higher level than ever seen before.

Those conservatives, they're all heart.

Thanks to Bush's "ethanol incentive" (read: "farm subsidy AND oil company windfall"), corn tortillas have tripled in price.

Only a 'pro-free-market' republican could have managed to manipulate and distort the free market so that making theoretically green choices could result in people starving to death while agribusiness and big oil rake in the dough.

Those republicans, always helping the little guy!

At 9:19 a.m., Blogger Metro said...


Executive compensation has reached such ridonkulous heights that even the most rabid free-market pirates are blanching. The Economist actually called for reforms similar to what you're suggesting, and a return from personality-driven corporate governance to board control.

Me, I'm thinking we need to start looking at the regulatory structures of France and Germany.

I mean, the French have a 35-hour work week and seem to do fairly well. The country isn't collapsing or anything.

Germany has had to hammer out some kinks in its regulatory system, but it's doing alright.

I mean, why does the economy need to grow all the time anyway? And why are higher growth rates such a great big deal? What's wrong with one percent per year?

Of course, if your economy's shrinking, as in the US, then the point is kind of moot.

But there's a great irony in the fact that people of the nation that claims hard work and ingenuity alone can secure the national dream can work longer hours than much of the developed world, work harder, and still manage to lose their homes and go bankrupt.

And yes, bring on the expensive Chinese crap--we'll soon learn how much of it we really need.


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