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America is no longer in the business of building and making actual physical objects. Instead, all the energy and resources go into the kind of financial engineering that creates quarterly numbers that Wall Street buys into.

By now, the notion that business is a place built on accountability and performance should be as outdated as the one-room schoolhouse. Ask yourself, what would happen if American public schools were offered hundreds of billions in bailout money? One outcome is not in the cards: its leaders would not end up back at the trough so quickly, sucking up tens of millions in bonuses as Wall Street has.

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EDITOR’S COMMENT: Arrogance only results from intentional ignorance — the kind that filters out any feedback that says you are wrong. There is no magic or mystery as to what has happened and the eventual outcome is not so difficult to project even as our perceptions are manipulated into thinking or hoping otherwise. The numbers are simple: America was once the source of innovation, growth, consumption and capital. It isn’t anymore. With the financial sector being counted as part of GDP, only 60% or less of our economic activity is actually devoted to doing anything of value; yet we continue to prop up the myth of a mighty economy by pumping metrics into the picture that measure nothing of importance.

Whether we suffer from complacency, resignation or just apathy doesn’t really matter in terms of looking at the snapshot of our economy. It’s dead in the water. The only thing that could revive the fish that is starting to stink is confronting the truth in the marketplace where real people make real decisions doing real things. No policy-maker is going to change the whole picture here. Things have gone too far for that. This is a problem for the people to solve using the best means at their disposal.

What is needed is something that jump-starts what I hope is a vestige of Yankee ingenuity that resets the playing field — at least enough to give people a fighting chance. Surely the current trend in judicial forums tells us that the mortgage bonds are being revealed as worthless pieces of junk sold under obviously false pretenses that grossly misled buyers of the bonds, government regulators, and even rating agencies (who were somewhat complicit in the fraud). AND it tells us that however hard the megabanks try, the facts will be revealed about the origination of mortgages using procedures and documentation far outside the bounds of what the law allows.

The facts are clear that the intermediaries in the whole false securitization scheme were out for themselves ONLY. They stepped out of the role of intermediation of finance and capital and seized the capital meant for liquidity, reduction of risk, and production of products and services that added value to the ordinary guy on Main Street. Now it’s payback time and the question is not whether there will be chaos, but the extent of the consequences of a correction that is completely assured to occur.

Strangely enough I think the answer will come from the good players, the ones who didn’t get into “the game” and who were interested in value instead of illusion. The forces mounting from the homeowners who were defrauded to the investors who were defrauded, are now reaching  critical mass. If you do the numbers you can easily see that this inchoate strength far exceeds the collective power of the megabanks. A new day is arriving on  Wall Street and the people who think they have it all under control just don’t quite understand that a handful of people can have an effect on billions of people but they can’t control them. It seems to be a lesson that those given to arrogance won’t learn because they just don’t want to do it.

To most people this comment will not make much sense — yet. But just as surely as there were many of us predicting the collapse of finance and the markets in 2006-2007, and just as there are those of us who see massive government defaults on government obligations starting next summer, the unthinkable still happens. Yes it will get worse, a lot worse before it gets better. For the few who have the time and inclination to do the analysis, you also know that besides the bad tidings, there will be major upheavals in the markets and who drives the markets. At the end of the day, reality has a nasty way of spoiling the best and grandest of schemes.

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A Lesson for Wall St. About Failure

By DAVID CARR

It’s awards season again, and critics and the academy members are deciding on their top film picks of the year. But in many corners of the business community, the issue is already settled: “Waiting for ‘Superman’ ” is the year’s must-see film.

On Wall Street and on Silicon Valley office campuses, in hedge fund boardrooms and at year-end Christmas parties, it seems you can’t have a conversation without someone talking about the movie that finally lays bare America’s public education crisis.

“Waiting for ‘Superman’ ” is one thing that Bill Gates, Steve Jobs and Mark Zuckerberg agree on, Rupert Murdoch talks about to anyone who will listen, David Koch of Koch Industries promotes, and Paul Tudor Jones and many of his hedge fund brethren work to support.

“Waiting for ‘Superman’ ” follows five children and their parents as they run a gantlet to gain access to high-performing charter schools because the alternative — the public system — is a complete disaster. The film has caught the imagination of the business community because it represents a reckoning for public education and its chronic failures, making the very businesslike case that large school systems and the unions that go with them must be replaced by a customized, semi-privatized education in the form of charter schools.

Which is odd when you think about it. If you are looking for an American institution that failed the public, made resources disappear without returning value and lacked accountability for its manifest sins, the Education Department would be in line well behind Wall Street.

By now, the notion that business is a place built on accountability and performance should be as outdated as the one-room schoolhouse. Ask yourself, what would happen if American public schools were offered hundreds of billions in bailout money? One outcome is not in the cards: its leaders would not end up back at the trough so quickly, sucking up tens of millions in bonuses as Wall Street has.

If the captains of American business are looking for a holiday movie, I have another suggestion for them. I’m not talking about “Inside Job,” which is a scabrous take on the well-documented story of how the American economy was nearly tipped over by business greed and incompetence. Nah, I’d buy them a bucket of popcorn and sit them in front of “The Company Men,” a moody and elegiac feature film starring Ben Affleck, Tommy Lee Jones and Chris Cooper as businessmen who have a moment of clarity about how American business lost its soul.

As executives at GTX, a fictitious multinational corporation involved in the transportation business, among other endeavors, they watch as many of their colleagues are laid off to meet inflated earnings targets and as numbers get ginned up to keep the stock price growing and potential acquirers at bay. And then their turn comes.

At that point, “The Company Men” becomes a film about the loss of privilege: Porsches are sold and driven away, access to the private golf club is denied and suburban mansions go on the market. But the movie delivers, over and over, a message that far from being a center of American know-how and ingenuity, much of modern business is now preoccupied with goosing the share price and tricking up the year-end bonus — about getting over by getting by.

The film manages to use the tableau of a bunch of rich guys losing their jobs to reach a fundamental question of this economic age. How can it be that both corporate profits and unemployment are simultaneously high?

“When I made the film, I had hoped it would be a historical document, a portrait of a very bad moment in American economic history,” said John Wells, an executive producer of the television series “ER” and the director of “The Company Men,” who began working on the film in 2007. “Unfortunately, it didn’t turn out that way.”

“The Company Men” reflects that America is no longer in the business of building and making actual physical objects. Instead, all the energy and resources go into the kind of financial engineering that creates quarterly numbers that Wall Street buys into. Mr. Wells said that he spent a great deal of time talking with chief executives who run large concerns like his movie’s fictional GTX and said only so much of the blame can be laid at the corner office.

“They are responding to the needs of the market, to the institutional investors — the large mutual funds, the money market funds,” he said. “And when you think about it, that implicates all of us because we are all investing in the market one way or another.”

The movie resonates in the current moment because each day it becomes more clear that the guy at the bar who mutters into his whisky glass about the game being rigged is probably right.

On Dec. 12, my colleague Louise Story chronicled how nine men from various banks meet in secret every month to oversee, and in some aspects control, trading in derivatives, the arcane and often lucrative financial instruments that are used to hedge risk. As her article makes clear, the opacity and secrecy of the systems give banks the upper hand and leaves at their whim the market’s less pedigreed players.

It is a small slice of a large problem of self-dealing and self-enrichment on Wall Street, often at the expense of the rest of us. Decisions made there land hard in the middle places where most of America lives and works.

“You know that show ‘Undercover Boss?’ ” Mr. Wells asked, referring to the hit television show on CBS. “I’d like to see a show called ‘Undercover Investor’ where investors go undercover and get a good look at the companies that are being decimated by restructuring plays and roll-ups.”

He added: “I think so many people are seeing business and how it is conducted in the abstract that they have no idea about how these decisions play out.”

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