To Eric Bolling of FOX Business Network, Michael Jackson will be remembered as a “fantastic, amazing singer, great entertainer,” but also a “financial dummy.” At the time of his death the King of Pop was $400 million in debt, the consequence of a flashy, unsustainable lifestyle. Bolling’s assessment stands out, given the media’s general reporting on personal debt.
Jackson’s story and the immense debt he left behind are a metaphor of the times – individuals racking up debt for lifestyles they cannot afford, government spending furiously in unsustainable debt, and all hoping to delay the consequences and eventual collapse. With a savings rate hovering at zero before the recession, living beyond one’s means has become the norm, not the exception.
Frequently politicians and mainstream media blame the businesses that do the lending and ignore the responsibility of those that voluntarily took on that debt. A 2007 study by the Business & Media Institute and the Culture & Media Institute looked at 156 news stories about debt and “found that ABC, CBS and NBC overwhelmingly blamed business for 'luring' consumers to make bad decisions,” “ignored personal responsibility,” and “portrayed borrowers as helpless victims.”
Bucking the mainstream trend, Bolling and all but one of the analysts on FNC’s “Bulls and Bears” agreed that Jackson bore significant fault for his legacy of debt. On Jun. 27 the analysts reached a consensus that Jackson’s debt can be blamed on both the borrower and the lender – a combination of Jackson’s lavish spending habits and his reliance on scheming financial advisers.
Tobin Smith, ChangeWave research editor, absolved Jackson of fiduciary responsibility for his debt and instead blamed the star’s financial advisers for taking advantage of him. Citing 16 percent fees for refinancing his hedge funds and high fees for financial advisers, Smith claimed, “It is malpractice. He should have been put on a budget; he should have been run like a normal person. But they took advantage.”
But Bolling was adamant: “M.J.’s to blame … Spent 25 or 30 million dollars per year more than he was taking in.”
Gary B. Smith, Exemplar Capital managing partner, said that malpractice may be the case but the ultimate problem was Jackson’s extravagant spending, like renting a house for $100,000 a month. “The man was just spending, and he and he wasn’t working right now, so he’s just spending an enormous amount, far more than he was making. That was ultimately what, what really got him in all this debt,” Smith reasoned.
Pat Dorsey, Morningstar.com director of stock research, concluded that Jackson and his financial advisers shared blame for the debt. “To what extent it was [Jackson] spending like a billionaire when he’s actually just a millionaire?” he said. “Ya know, I don’t think we’ll ever know.”
