As you can see, oil dependency has been an issue for America for over 3 decades. Yet we continue to increase our consumption and dependency on oil every year. Just think how different our American lives would be without oil? People use and consume oil every day, yet rarely think about how important this natural resource is to our everyday lives. If America were to one day go without oil, all hell would break loose.
With this in mind, you need to understand what the future looks like as of now. China, a rising global power, is continuing to grow at an exponential rate. However, this growth demands oil to keep their economy functioning. Currently, America is the largest consumer of oil in the world. This position gives America purchasing power because we buy the most. However, if China is to surpass the US in the future, America loses much of its’ purchasing power to China. Now, we would still be able to get oil, but this oil prices would start sky rocketing. Even more importantly, oil is depleting fast. As I mentioned earlier, growing developed countries are starting to demand more oil. With this increase in competition of a diminishing resource, prices will once again, sky rocket.
Since our economy depends on oil to function, the rise in oil prices in the future is going to impact America exponentially if we keep our oil consuming habits. Of the 6.7 billion barrels a year America consumes, 75% goes to our transportation sector. There lies the answer! We can find ways to reduce our consumption every day through transportation. Americans are in love with their cars more than any other nation. We have the lowest gas tax, drive the most, hell, we even invented the damn things. But our car culture has a price. We are currently seeing it now with the rising gas prices and depleting oil reserves. Wars are already being fought over this valuable resource. But we can change and I can show you how…
Merrill Lynch is another company that was briefly brought up in class as an example of a financial institution that was bailed out during the financial crisis. When Merrill Lynch was teetering on the brink of bankruptcy, the company’s CEO was not concerned about the future of the bank, the economy or what he could do to save the company. Instead he was worrying about whether his bonus and salary were going to be cut. John Thain was the CEO of Merrill Lynch in 2007 when the company started to experience major economic downfall. Merrill Lynch was eventually saved when it was purchased by Bank of America. Thain, like so many other CEOs in the financial sector at the time, convinced investors that the firm was performing great while it was majorly failing. In addition to tricking the public, he also milked the company for as much money as he could get his hands on. He is infamous for spending $1.22 million on redecorating his office using shareholder money while Merrill Lynch was taking a turn for the worse. At the time, the color of the rugs in his office was more important to him than the color of Merrill Lynch’s balance sheets. He wanted to make sure that he cleaned out the wealth of the company before it merged with Bank of America. Before his grand exit, it is reported that he tried to take a $10 million bonus. Thain genuinely felt that he earned this bonus when in reality all he earned was a lawsuit. At a time of instability and chaos in our society, an influential CEO was more concerned with his own financial stability then the future of the American economy. Is this really the people we entrust our money and the future of the economy with?
Even after all of Thain’s greedy and deceitful actions while he was CEO at Merrill Lynch, he was still given another chance to head a firm. In contrast to Jeffrey Skilling, Thain was not charged with any criminal or civil crimes and escaped the entire mess without a visible scratch on him. He was not even given a ban from working in the financial industry, like the two Bear Stearns’ executives. Not even his reputation was majorly harmed since he was given the opportunity to run another firm. I do not know how investors of this company felt comfortable with letting this man run another firm after running the previous one into the ground. The name of the firm is the CIT group, a company that lends to small and midsized businesses. CIT was also bailed out by more than $2 billion of government TARP money, failed for bankruptcy, and is now on the radar of the Federal Reserve. I do not understand how Thain who caused so much damage is allowed to run another company that deceived the public and was bailed out. Since he was not even given a slap on the wrist for his actions, who is to say that he will ever learn his lesson?
Reports have claimed that he has learned his lesson since his days at Merrill Lynch. Apparently he now spends a large portion of his time at CIT trying to enhance shareholder value. I am very skeptical that a man that participated in so many unethical practices is all of a sudden a changed man. And to make matters worse, Thain has a dream of returning back to Wall Street to run one of the big financial institutions. Right now it seems as if John Thain is laying low to wait for the perfect time to return back to Wall Street. Only time will tell if Thain will continue on the straight and narrow ethical path or whether or not he will return to his deceitful ways. I think that it is only a matter of time that Thain will show his true colors to the American public when he deceives the public for the second time.