‘Beware your sins will always find you out.’
The wisdom of my late mother’s counsel becomes more apparent with each passing year.
Harvey Weinstein. Bill Cosby. Rolf Harris. Jeffrey Epstein. Their sins have found them out.
They all have common characteristics. Lies. Deception. Money. Abuse of power.
And these traits are on display in yet another public naming and shaming.
As reported by The Guardian on 22 May 2020 (emphasis added):
‘[US Actress] Lori Loughlin and her fashion designer husband, Mossimo Giannulli, pleaded guilty on Friday to paying $500,000 to get their two daughters into the University of Southern California as part of a college admissions bribery scheme…
‘Under the proposed deals, Loughlin, 55, hopes to spend two months in prison and Giannulli, 56, is seeking to serve five months…
‘They were among dozens of wealthy parents, athletic coaches and others charged last year in the bribery scheme. The parents paid hefty bribes to get their kids into elite universities with bogus test scores or fake athletic credentials, authorities said.’
What were the parents thinking or, more precisely, not thinking?
Little Johnny or Mary graduate with a degree they did not have the intelligence to acquire on their own merits.
What happens when the child takes their phoney degree into the real world? How long will it be before they’re exposed as duds?
Only people with more money than sense could NOT see the (rather obvious) flaw in this outcome.
Why would you set your children up for failure?
The potential harm caused by these pampering parents was a topic for discussion in Gowdie Family Wealth in May 2019:
‘How we live our lives is the reality TV show our children are glued to every day.
Watching how the characters handle the (mini and major) dramas that come into our lives.
‘Through our actions we demonstrate to them what we truly stand for and believe in…good and bad.
‘In the US, it was recently revealed the lengths wealthy parents would go to in their efforts to secure a place at prestigious colleges/universities for their children.
‘This is from the 12 March 2019 edition of The New York Times…
Source: New York Times
‘Here’s an extract…
“In a major college admissions scandal that laid bare the elaborate lengths some wealthy parents will go to get their children into competitive American universities, federal prosecutors charged 50 people on Tuesday in a brazen scheme to buy spots in the freshman classes at Yale, Stanford and other big-name schools.”
‘[one] of the more extreme cases of alleged college entry fraud was (emphasis is mine)…
“A teenage girl who did not play soccer magically became a star soccer recruit at Yale. Cost to her parents: $1.2 million.”
The New York Times
‘Photo-shopped images. Pay offs to coaches. Examiners taking bribes to turn a blind eye.
‘Parents possessing the means and dubious values — together with the assistance of professional scammers — went to extraordinary lengths to game the system for their little Johnny…
‘The public naming and shaming of the parents is, in itself, highly embarrassing.
‘But what about the negative impact this must undoubtedly have on their “less than talented” children?
‘Deception can work for a while…but not forever. Just ask Lance Armstrong and Bernie Madoff.
‘Life has a way of squaring up the ledger…as has been the case in exposing the college entry frauds.
‘…by not allowing children to determine their own true worth there’s the risk of profound psychological consequences.
‘The child could struggle with a range of issues…lack of self-esteem; relationship problems; inability to keep a job; habitual lying; fraudulent activities; getting on the wrong side of the law; drug dependency; suicidal tendencies.
‘Why on Earth would you risk that future for your child?’
The answer to that question is…short-term gain.
Little, if any, consideration was given to the longer-term consequences of their actions.
It was all about immediate gratification.
The US college scandal has an all-too-familiar ring about it.
The ABC News coverage of the Banking Royal Commission in March 2018 (emphasis added):
‘The commission heard from customers who said banks and brokers falsified home loan documents.
‘People also complained banks and brokers intentionally failed to verify their income for home loans.
‘The whistleblower also alleged that [NAB] bank staff were being promoted for “smashing” their home loan targets, but the numbers were false because they were based on fake documents.’
Falsified. Failed to verify. Fake.
Looks, sounds, feels and smells the same to me.
An illusion built on delusion
Eventually the truth wins out.
And when it does, the perpetrators of the lie/con/scam are publicly shamed. Some face a custodial sentence. Others — like the banks — are punished financially.
I wonder whether this culture of conceit, corruption and greed is a reflection of society’s obsession with growth?
Bank managers of old — 40, 50 and even, 60 years ago — would rarely, if ever, have falsified documents or incomes. They were old school lenders. Prudence. Thrift. Honesty. These traits no longer have the currency they once had.
The modern-day banker is under pressure for loan growth. An increasing loan book generates earnings growth. Those earnings determine whether a company’s share price is rewarded or punished.
To avoid the market’s wrath…
Standards fell. Blind eyes were turned. The once unthinkable was accepted practice.
And if we follow the trail, the ‘growth at any cost’ culture has been a central bank construct.
GDP growth — irrespective of how falsified the numbers are — is the altar before which all central bankers kneel and pay homage.
In The Australian on 21 May 2020, there was the headline ‘Lowe urges banks to lend again’.
‘Reserve Bank governor Philip Lowe has called on the banks to increase their lending to support the economy.’
Seriously, how much debt is enough?
But when you are trapped in this ‘do whatever it takes’ mindset, you are oblivious to the harm caused by your short-term thinking.
Over the past decade, the RBA — via continual lowering of interest rates — has encouraged more and more lending.
Our nation’s increased debt load produced fake GDP numbers and fake employment figures.
This phoney data encouraged people to borrow even more…setting them up for failure.
According to Digital Finance Analytics (DFA) (emphasis added):
‘ …mortgage stress is assessed on a cashflow basis, where income and outgoings for households (including mortgage repayments) are measured. DFA defines it [mortgage stress] as when household cashflows are negative.
‘Stressed households…are more likely to draw upon their savings, put money on a credit card or simply hunker down and not spend anything.’
Mortgage stress (yellow line) in Australian households rose in tandem with the RBA’s much coveted GDP number.
Source: Digital Finance Analytics
According to DFA, almost 40% of households (four out of every 10) are experiencing varying degrees of mortgage stress — outgoings exceed incomings.
And we have the RBA calling for more lending?
How is this any different to the US college bribery scandal?
Borrowers were bribed with ultra-low rates to buy things (homes, cars, holidays) that were — in the longer term — beyond their financial capability.
The RBA’s obsession with phoney growth set borrowers up for failure in the real world.
And when the stressed borrowers are exposed to the new, harsh real world, will this equally apply…
Could they struggle with a range of issues…
‘…lack of self-esteem; relationship problems; inability to keep a job; habitual lying; fraudulent activities; getting on the wrong side of the law; drug dependency; suicidal tendencies.’
Why on Earth would you risk that future for large parts of your society?
For obvious reasons, the RBA and other central banks are desperately trying to avoid the shame of having their sins found out.
More money printing. More propping up of zombie companies. More interest rate cuts.
More calls for increased lending. More hare-brained stimulus packages.
They will do whatever it takes to keep this giant Ponzi scheme from collapsing.
But as my late mother said, their sins will find them out.
And when that happens, we can only hope it is they who face the wrath and ridicule of a society duped by their fake economic model.