Do it Like an Eagle Scout: ‘Be Prepared’ if the Recovery Fails

Thumbnail image for angry bear.jpgEditor’s note: This is part one of a two part interview. Look for part two tomorrow.

I recently had the absolute honor of interrogating Michael Panzner, 25-year veteran of the global stock, bond, and currency markets who has worked in New York and London for such leading companies as HSBC, Soros Funds, ABN Amro, Dresdner Bank, and J.P. Morgan Chase.

If you are familu know that to call him a doom and gloomer might be a tad of an understatement. Besides his body of literary work which includes Financial Armageddon and most recently When Giants Fall, he maintains blogs by the same name (Financial Armageddon and When Giants Fall), documenting each stage of our continued unraveling.

What struck me upon first finding his work was that though he wasn’t exactly subscribed to the “unicorns and rainbows” school of thought for our inevitable future, he managed to present his vision for our destiny in a way that even the most misguided sheep among us could understand.

To call him your average doom and gloomer does a disservice to his ability to paint our path in detailed horror. Trust me kids, to borrow Panzner’s own parlance, it’s always better to know than not to know and we’d much rather you know where we might be headed instead of stumbling along blindly towards slaughter.

Keep in mind that I already knew how Panzner would answer but I do it for you kids who have no idea just how bad things might be out there. But you’re in public accounting so you should already be more than aware. Panzner isn’t trying to scare you and neither are we, it’s all about preparing for the worst and hoping for the best. Hope can only get you so far but preparation can get you a whole hell of a lot farther when the two are combined.

So the first important question is how the hell did we get here?

His answer is simple: negative incentivisation (or an absolute lack of reasonable punishments for unreasonable behavior) and an enabling mentality. He paints the analogy that Wall Street behaves like a bunch of crack addicts; instead of cutting them off of the financial crack pipe, the powers that be fed their addiction with easier money and more securitization, essentially handing over the dope to the dope fiends instead of serving their regulatory purpose and saying “enough is enough, now give me your keys and sleep it off.” The combination has, of course, proved to be deadly, at least in the financial sense.

Says Panzner, “The many imbalances that still exist in the U.S. economy and the aggressive actions that Washington has taken so far means that policymakers will find it harder and harder to keep the ship afloat without resorting to maneuvers, like cranking up the proverbial printing presses, that lead to even bigger problems down the road. Meanwhile, it’s only a matter of time before already stretched individuals and bottom-line-focused businesses either run out of resources or patience — or both — and decide to cut and run.” Meaning the dealer is running out of product, leaving the addicts stumbling around in the street unable to get their next fix.

“Constant stroking out of Washington” can only lead to a let down later on, he says, pointing out that Wall Street appears to have run out of hands to juggle the balls in the air.

“The problem now,” he says, “is that all the bullets are gone.” Monetary policy and political ammunition have left the powers that be with nothing in the chamber now that they’ve shot their load. Figuratively, we hope.

The mistake we appear to be making now is in assuming that this is your average downturn or a series of events that we’ve seen before, the sort of economic slump that academic brainiacs like Ben Bernanke penciled out on worksheets in their early doctorate years.

What they seem unable to wrap their big heads around, he says, is that this is not your traditional sort of recessionary episode. Until they accept that tiny detail, we will only exacerbate the issue, digging a deeper hole and merely staving off the real fallout when we could be better spending our time working towards picking up the pieces. Adding fuel to the fire, Panzner points out, “no one got fired and people think they beat the system.” Where’s the punishment in that?
So where does that leave us now? I guess you’ll just have to wait for the second part of our interview to find out.

Thumbnail image for angry bear.jpgEditor’s note: This is part one of a two part interview. Look for part two tomorrow.

I recently had the absolute honor of interrogating Michael Panzner, 25-year veteran of the global stock, bond, and currency markets who has worked in New York and London for such leading companies as HSBC, Soros Funds, ABN Amro, Dresdner Bank, and J.P. Morgan Chase.

If you are familiar with Panzner, you know that to call him a doom and gloomer might be a tad of an understatement. Besides his body of literary work which includes Financial Armageddon and most recently When Giants Fall, he maintains blogs by the same name (Financial Armageddon and When Giants Fall), documenting each stage of our continued unraveling.

What struck me upon first finding his work was that though he wasn’t exactly subscribed to the “unicorns and rainbows” school of thought for our inevitable future, he managed to present his vision for our destiny in a way that even the most misguided sheep among us could understand.

To call him your average doom and gloomer does a disservice to his ability to paint our path in detailed horror. Trust me kids, to borrow Panzner’s own parlance, it’s always better to know than not to know and we’d much rather you know where we might be headed instead of stumbling along blindly towards slaughter.

Keep in mind that I already knew how Panzner would answer but I do it for you kids who have no idea just how bad things might be out there. But you’re in public accounting so you should already be more than aware. Panzner isn’t trying to scare you and neither are we, it’s all about preparing for the worst and hoping for the best. Hope can only get you so far but preparation can get you a whole hell of a lot farther when the two are combined.

So the first important question is how the hell did we get here?

His answer is simple: negative incentivisation (or an absolute lack of reasonable punishments for unreasonable behavior) and an enabling mentality. He paints the analogy that Wall Street behaves like a bunch of crack addicts; instead of cutting them off of the financial crack pipe, the powers that be fed their addiction with easier money and more securitization, essentially handing over the dope to the dope fiends instead of serving their regulatory purpose and saying “enough is enough, now give me your keys and sleep it off.” The combination has, of course, proved to be deadly, at least in the financial sense.

Says Panzner, “The many imbalances that still exist in the U.S. economy and the aggressive actions that Washington has taken so far means that policymakers will find it harder and harder to keep the ship afloat without resorting to maneuvers, like cranking up the proverbial printing presses, that lead to even bigger problems down the road. Meanwhile, it’s only a matter of time before already stretched individuals and bottom-line-focused businesses either run out of resources or patience — or both — and decide to cut and run.” Meaning the dealer is running out of product, leaving the addicts stumbling around in the street unable to get their next fix.

“Constant stroking out of Washington” can only lead to a let down later on, he says, pointing out that Wall Street appears to have run out of hands to juggle the balls in the air.

“The problem now,” he says, “is that all the bullets are gone.” Monetary policy and political ammunition have left the powers that be with nothing in the chamber now that they’ve shot their load. Figuratively, we hope.

The mistake we appear to be making now is in assuming that this is your average downturn or a series of events that we’ve seen before, the sort of economic slump that academic brainiacs like Ben Bernanke penciled out on worksheets in their early doctorate years.

What they seem unable to wrap their big heads around, he says, is that this is not your traditional sort of recessionary episode. Until they accept that tiny detail, we will only exacerbate the issue, digging a deeper hole and merely staving off the real fallout when we could be better spending our time working towards picking up the pieces. Adding fuel to the fire, Panzner points out, “no one got fired and people think they beat the system.” Where’s the punishment in that?
So where does that leave us now? I guess you’ll just have to wait for the second part of our interview to find out.

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Related articles

Public Accounting Firms, Ranked by CEO Hotness

*ranked from the Accounting Today Top 100 #10: BDO Wayne Berson has done wonderful things for BDO but I definitely wouldn't do wonderful things to him. Nope. Sorry Wayne but… just no. The good news is you're one makeover away from being Eric Cantor, in which case, email me. #9: CliftonLarsonAllen It's a known fact […]

Are Today’s Accountants Already Occupying Wall Street?

Caleb and I had a talk last night and it made me think about this whole Occupy Wall Street thing. More importantly, it made me think about what I am and am not doing to support it. I haven’t been to a rally, even to take pictures (last time I tried to do that, I was the only one out in front of the Federal Reserve Board at 6 in the morning except for the lone Fed cop patrolling the perimeter).

I get that people are pissed off. I’m pissed off too. I’ve been pissed off, don’t tell me about being pissed off. I was lugging around aFed sign made on top of “Ron Paul ’08” acrylic three years ago, you don’t have to tell me about being pissed off. (Here I am in 2009 on SF Citizen in a “Bernanke 00%” t-shirt at an anti-Iraq war rally)

And I get that for some people, all there is to do is go downtown with a drum and some poorly-written signs on cardboard ripped from your mom’s Costco packages in the recycle bin. That’s totally fine, everyone has their own way of sticking it to the man.

For a lot of Going Concern readers, sticking it to the man means showing up every day in business casual pretending to give a fuck about COSO but actually knowing that it’s all a lie. They work you to the bone until you leave or submit and get promoted to manager. Partner if you’re lucky. Run on that hamster wheel, here have this bonus, keep going and one day you can beat your own subordinates into submission. Go, go, go… Many of you get that this is bullshit but keep showing up every day anyway, and to me, you are your own special kind of protester. Same as last year, motherfucker, it’s the ultimate form of rebellion.

Too much?


Point being, everyone has their own way of screwing the establishment. Francine does it railing against the Big 4. Bill Sheridan and Tom Hood do it at the MACPA with professionalism. Tom Selling does it by riling up fellow academics. Professor Dave Albrecht does it by being seen in public canoodling with known incendiaries like yours truly.

I do it by ripping on the IASB as often as I am allowed to, infiltrating the Hill to sniff out what’s the latest in CPA lobbying efforts and getting in as many F bombs as I can on the dry subject of accounting. That’s all I can do. I can’t abandon my day job to hang out in Manhattan eating vegan paninis. I can make and distribute offensive Bernanke fridge magnets.

I completely understand why people are attracted to Occupy Wall Street; the part I’m struggling with is why so many of the 99 Percenters seem obsessed with this thing called “fairness” that does not, in fact, exist. Is it fair that any of us have to drag our asses to work every day and do what we do? Is it fair that Becker costs $3,000 and doesn’t pass the CPA exam for you? Is it fair that many of you are drowning in student loan debt and seemingly forced to get Master’s degrees just to work in your field? Is it fair that Caleb gets listed in all the accounting publications and I’m stuck as the sidekick hack who always manages to piss people off? This world is unfair, sorry to be the bearer of bad news. I have to write about accounting every day of my life, it’s un-fucking-fair, we get it.

In my view (for whatever that is worth, which is probably not more than our company pays me to write this post), the ultimate rebellion is assimilating and infiltrating the establishment to enact real change from the inside. Are partners scared as shit of this website? Yes. If they’re threatening you with termination if you even dare to write us for advice, we’re doing something right. And I didn’t even have to not shave my armpits to accomplish that (but Caleb probably shaved his).

Are any of you going to independently revolutionize the accounting industry? Probably not. But collectively, you have scared the pants off of lazy ass recruiters and partners across this country who thought you didn’t have it in you. They read us because they feel like they have to or else they’ll lose touch with what you guys are thinking, and it scares the living shit out of them. In my mind, that’s a far more effective message to send the The Establishment, whoever the hell they are.

I fully support the fundamental sentiment of Occupy Wall Street but much prefer fulfilling my incendiary duties here trying to get accounting kids riled up and questioning why they put up with the shit they do. Working mothers in public accounting should be allowed to have children. Interns should be allowed to ask questions (even dumb ones). Auditors should be expected to question last year’s logic. It’s not complicated but it’s important work that a lot of you do, and I hope that you get that.

It is not your fault that we’re here. Many of you just followed the rules.

Thanks for letting me be a part of that. Beats standing around with a fucking sign, that’s for sure.

Earlier:
Wanted: Accountants for Large Protest; Organizational Skills and Experience with Anything Slightly Resembling a Expense Reimbursement Policy a Plus [GC]