Friday, March 20, 2009
I can't let the AIG spectacle go with only a couple of quick links. If you haven't been chilled watching video of Congress berating Edward Liddy you aren't paying attention. A more frightening spectacle of a mindless demagoguing government out of control in dangerous times I don't think I've ever witnessed in my lifetime. A true disgrace, with Massachusetts Rep. Stephen Lynch a particular standout in that respect intentionally insulting a man working for nothing and trying to pick up the pieces on our behalf. Joseph McCarthy (yes, I said the word) had nothing, NOTHING, on this Congress (and neither party is covering themselves in glory). Have they no decency?
Do you or do you not believe that contracts should be honored? How would you like to take a career dead end job for the promise of payment, perform the work, then be told you're not going to be paid? Illegal. Immoral. And Congress and the Administration knew about it (and lied about it in the case of Chris Dodd) and now they play Shakespeare? And threaten obviously unconstitutional taxes aimed at individuals?
The power of a Government unleashed like a mob is something that every American should recognize as a fearsome thing to be despised. The power has gone to their heads and they're making matters worse, not better, for all of us.
The Government didn't let the company go Chapter 11, instead they stuck their fat noses into it and repeated the same old Washington solution to everything: throw money at the problem. Well now you know why centralized economies don't work. The Government is not only incompetent, it's despicable.
Here are some links: Power Line: Minority View
Stephen Spruiell: Inside AIG
Ian Bremmer and Sean West: AIG and 'Political Risk'
Charles Krauthammer: Bonfire of the Trivialities
Mona Charen: Barney Frank as Madame Defarge
Michelle Malkin: Look Beyond the Bogus Bonus Smokescreen
Linda Chavez: Defending AIG
The National Journal poll (which I have been asked to be a regular participant in) has some pithy comments attached: Obama's Team Gets Low Marks On Crisis PR. I like what Volokh's David Kopel says:
Like McCain, the Obama team is right that the economy is not nearly as bad as the hysterics contend. But the Obama team itself was a prime promoter of hysteria -- not only during the campaign, but also during the push for the so-called 'stimulus,' which was based on aggressive use of the politics of fear. So at this point, some people are understandably skeptical when Obama now tells us: 'Never mind. The economy is fundamentally sound. Trust us. Stop all those Tea Parties.'
We'll be lucky if a few tea parties are as bad as it gets once two branches of our government are finished trashing two centuries of institution building.
I was shocked too. That the idea of singling out individuals for taxation could even occur to a legislator is surreal.
People/companies try to break contracts all the time. I don't know how successful they are.
I find it outrageous that executives recieve a bonus for failure.
That executives recieve massive checks while little guys lose their jobs and their homes and their livelyhood.
I have ZERO compassion for these bloodsucking executives.
There has to be some way to stop those bums from profitting from their failure.
Any company that rewards incompetence should be avoided like the plague.
Regular employees have performance reviews and their raise, their jobs, depend on the review.
How fairness, how stopping the profitting from failure is blocked, I'll leave that to more knowledgeable people.
Eddie, you need to read up on just who is getting this money:
The handful of souls who championed the firm's now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president. [I welcome correction if this is not the case.]
And anyway, it doesn't matter. The company and the government made an agreement with these people for their work. They owe the money.
If they can conspire to tax people in order to punish them through this overly contrived kowtow to populism, what will stop them from invoking taxes for what ever reason suits their immediate purposes e.g.: imposing ursurious taxes on groups who disagree with them, on companies who own radio stations who host talk radio, etc.
They could have just as easily attcked the individuals as Fannie and Freddie, the difference being one of magnitude only, since fewer people were involved in Fannie's and Freddie's case. Then there's Chris Dodd's, Barney Frank's, Maxine Waters' and others' demonstrated incompetence - so they could have single themselves out as well. But instead of internal reforms and hard hitting critiques directed at the source of the problem - a huge amount of it requiring intra-party discipline and critiques - we have this class warfare malignancy simply because it represents an easy target, in terms of the regressive populism and a repudiation of rule of (contract) law - along with accompanying death threats directed at AIG employees, threats that apparently included such lovely themes as piano wire around the neck - all of it fed by Obama's, Reid's, Pelosi's, et al. leadership, such as it is.
This is worrisome:
http://www.nytimes.com:80/2009/03/20/nyregion/20siege.html?emc=eta1
People shouldn't be getting personal threats from their neighbors -
A lot of things went wrong - it wasn't just the fault of AIG or the housing industry - personal scapegoating certainly won't help fix the problems.
Oh swell:
http://blogs.tnr.com/tnr/blogs/the_plank/archive/2009/03/20/lift-your-pitchforks-to-the-sky.aspx
Some of the worst elements are seeing this as a great opportunity. Every crisis brings them out.
The government should be worried about it, instead they're encouraging it. They're stirring up the worst elements and it ISN'T DOING ANYONE ANY GOOD.
Bonus vary according to how well the company did.
AIG had a bad year.
The bonuses these executives should reflect the success/failure of the company.
The execs should receive a bonus of $0.00
Bonuses are also used to hold onto employees who could possibly get a better job elsewhere.
In this job market, they can't get a better job. Formerly high-paid execs from the financial industry are getting jobs delivering pizzas.
Since the taxpayers own part of this company, we should have some sort of say in how its run. That also goes for the government. If people aren't doing their jobs in a proper way, it would make sense to write into a contract a means of withholding pay, or substituting bonds or stock that will pay off when Obama, Pelosi and AIG's labor begins to show positive results.
No results, no pay. Those are the conditions that most of us labor under every day. It's the way America works.
But none of us sign a contract, do our work, then have the beneficiary of our labor decide they don't want to pay us. If they were so sure these people wouldn't find work elsewhere, they shouldn't have promised to pay them something up front (salary) and something when the job was done (a "bonus"). The government DID agree to it, and now they're reneging on the agreement. No one is alleging anyone has failed to perform. In fact, the only thing I've heard is that the recipients of this money have performed well. They should be paid.
These people are now perfectly justified in walking out, and no one should do any work for a company that receives government funds. Is that what we want?
Even Kevin Drum at Mother Jones thinks they should be paid: http://www.motherjones.com/kevin-drum/2009/03/taxing-bonuses
But none of us sign a contract, do our work, then have the beneficiary of our labor decide they don't want to pay us
True. We have to stick with the conditions of the old contracts. But, the situation does indicate that the old contracts need to be rewritten, for governments and for businesses.
Our government and our corporations have become a financial black hole, and people do not want to throw any more money in. The fact that we can't stop either system from mulching our money generates a lot of the lunatic, incoherent rage we're seeing. I think we all need to agree that the system is broken, and we need to work on fixing it.
As a nation and as a capitalist system, we also need to work on our problem-solving techniques. Corporations and government have a terrible habit of thinking that blame-placing and CYA should be the first response to a problem. This behavior guarantees that the problem will never be fixed.
I don't know enough about finance to make any good suggestions, but I used to manage, and I do know that appearing to listen to input (even if the suggestions are unworkable) usually keeps people from losing their tempers. Maybe the gov. could set up a website for people to vent their opinions?
Another thing that helps is for the people in charge to just say "it's all MY fault, ok?, so let's stop fighting and move forward" or some other version of "the buck stops here" to stop the CYA and finger pointing.
If the government and the corporations could agree that the money should be paid, but that the contracts and the system are broken and they need to be thoroughly rehauled, that could start us on the way to a solution.
BREAK the contracts.
Contracts are broken all the time. It is not impossible.
NO REWARD FOR FAILURE.
Failure, in academe via tenureship and otherwise, in political arenas high and low, in the election process itself, in business environments large and small, by means of the legal system, in labor unions, etc. - is rewarded all the time. The very manner in which politicians - and their constituencies - are letting themselves off the hook is a particularly prominent example presently.
Populist sentimentality and its regressive implications should be resisted and the rule of law, even when it hurts, should be upheld.