Here is David Harsanyi on the AIG bonus story:
Here's an idea: If you stop
nationalizing banks, there will be no need to engage in phony-baloney
indignation over bonus payments anymore.
This cockamamie populism in Washington really hit its stride
when Iowa Republican Sen. Charles Grassley suggested that AIG execs who
earned bonuses should "follow the Japanese example and come before the
American people and take that deep bow and say, I'm sorry, and then
either do one of two things: resign or go commit suicide."
C'mon. If suicide were a proper penalty for piddling away
taxpayer dollars, the National Mall would look just like Jonestown
after refreshments.
Read the whole thing. He gets it exactly right. Superb.
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". . . I'm sorry, and then either do one of two things: resign or go commit suicide."
Maybe the world would be better off with Japanese notion of committing suicide (seppuku) after gross failure.
Can anyone explain to me the difference between a corporate bonus paid by AIG and a federal economic stimulus plan packed full of transfer payments? I already understand the major difference is the recipients, so please feel free to leave that out of the explanation.
No one nationalized Madoff's hedge fund, and, his "investors" are nonetheless indignant about his bonuses. In fact, they'll be in court for years trying to get every last dime out of his estate, not to mention his wife's estate and any other estates possibly involved.
"I'm shocked, shocked to find that there is gambling going on here!"
JP,
That line comes into my head about once a day these days.
Maybe the world would be better off with Japanese notion of committing suicide (seppuku) after gross failure.
I agree. However, we would have the problem of having to quickly elect new representatives after everyone in the legislative and executive branch of government offs itself. It's unlikely the newbies would live through their term either.
Martin,
You can stretch for an analogy sometimes but you've stretched too far. There is exactly ZERO indignation over Madoff's "bonuses". 1.) There were no "bonuses" and 2.) It's a Ponzi scheme and the money they are reaching for is the investors who withdrew and the money generated by the legitimate business.
Methinks: "I agree. However, we would have the problem of having to quickly elect new representatives after everyone in the legislative and executive branch of government offs itself. It's unlikely the newbies would live through their term either."
The underlying presupposition of your statement is a problem.
The idea of hari kari is based on a moral foundation…namely that I have done something so wrong and shameful I no longer deserve to live, therefore I will take it upon myself to remove myself from this world.
Sadly, 90-95% of those seeking or holding political power have never demonstrated any such level of moral compunction. They don't usually even have the moral dignity to RESIGN when they've done something wrong!
Did AIG choose to get these bailouts? Did they put it to a shareholder vote? Did they have any say in the matter AT ALL?
Did taxpayers have a say? Were their opinions listened to at all? Could they have made it less clear that they opposed the bailouts?
AIG had NO say. Taxpayers had NO say.
All the decisions were Washington politician's, and so all the blame is theirs. AIG was not even allowed the long expected and lawful choice of restructuring to solvency, or entering bankruptcy.
If the AIG bonus recipients REALLY want to do the right thing, they won't return the bonuses. Instead, they will resign from AIG, keep the bonuses, and spend their newfound time and money campaigning against the scapegoating Constitution-shredding politicians who squander $165 million EVERY HOUR.
I would happily provide the Cool Aid.
How do you know? Madoff had employees, and his corporation could have award him bonuses as well. I suppose he was incorporated.
I have no idea why AIG needed a $100 billion (so far) bailout, really.
The point is that government bailouts and nationalization certainly are not the sole cause of indignation over bonuses or anything else.
I don't think that's true. I suppose officers of AIG, appointed by AIG's board, nominally representing AIG's shareholders, accepted the bailouts. If you have some evidence that they didn't, I'd like to see it.
Good point, CRC. The Nomenklatura always believes in its purity.
Madoff had employees, and his corporation could have award him bonuses as well. I suppose he was incorporated.
Nobody is going after Madoff's employee's bonuses. Most securities firms are not corporations but LLCs or LPs, not corporations.
Madoff had two businesses. There was a legitimate and very successful securities trading business which predated the investment Ponzi scheme. Based on the success of his customer stock trading business, he was asked to take accounts under management. At some point, he combined the accounts into a single fund, but for decades supposedly he managed separate accounts for people. That managed account business was the Ponzi scheme and he ran that without the benefit of his traders. I don't know what made people think that a customer trader would make a good proprietary trader, but that's not the issue.
When you are the Managing Member or General Partner in a trading company, you don't get bonuses. You may or may not receive a nominal salary and then you receive a cut of the profits of the firm that you own after you have paid the salaries and performance bonuses of your employees.
There has been exactly no mention of clawing back employee bonuses in the Madoff case, so I don't understand why you think this is in any way analogous to AIG.
I have no idea why AIG needed a $100 billion (so far) bailout, really.
AIG has profitable insurance businesses. Their CDS insurance business is where the losses are. They simply didn't have enough capital to cover their CDS obligations. A lot of the CDS they insured are held by United States and foreign banks. Effectively, the State has stepped in to make the CDS buyers whole. So, they got paid out at par on fixed income instruments that were actually worth about 40% of par. It was merely a way to funnel money to foreign banks and other institutions which the government doesn't have the political or legal ability to funnel money to otherwise.
The point is that government bailouts and nationalization certainly are not the sole cause of indignation over bonuses or anything else.
I don't know what you mean by that.
I replied to this statement.
"If you stop nationalizing banks, there will be no need to engage in phony-baloney indignation over bonus payments anymore."
I don't think that's true. Countless other reasons exist to engage in phony-baloney indignation over bonus payments as well as phony-baloney indignation over the withdrawal of bonus payments.
The U.S. stepped in to make itself whole? That's hard to understand.
To make the foreign central banks whole?
Needless to say, I don't want the state making anyone whole, but "bailout" is the name of the game here.
I can believe that, but I'm not shocked that taxpayers are indignant that AIG executives will pocket million dollar bonuses for engineering this scheme with the state. I just can't swallow the story that they're all a lot of innocent victims.
I completely agree that other statesmen, Paulson, Senators and others, are responsible as well, but you don't take the mark of the beast the day your elected or appointed to state office and shed it the day you leave. This view of the world is much too simple.
Maybe the world would be better off with Japanese notion of committing suicide (seppuku) after gross failure.
Posted by: Gil | Mar 18, 2009 9:48:56 AM
It sure would have ceased the comments by some of the users who post to this blog a long time ago. [/ducks out after snide remark and deep bow]
Remember Methinks, even when Martin is rong Martin is right.
I think it was Heinlin that postulated a society much like ours today, only his fiction was published in the 60s.
In his story the nation was interconnected by instant communications capabilities like we are today. TV for information, computerized networks for communication.
Presidents were elected in numbers, with a main one, and other possible replacements being elected at one time.
His presidents were implanted with a small killing explosive upon taking office. When the approval of a particular president slipped below an instant poll of 50% on any particular action or policy as measured by the public instantly polling via their computers, the little device "went boom" and the next replacement president took office.
We could wire the President, the speaker of the house, and the Senate Majority leader the same way with the same results.
Muirduck would be happy with the democratic means of administering approval, and the rest of us would be happy in that we would not have to suffer a crappy administration for four years before we could do something.
Yes Martin, I said "rong" it just fits your stuff best.
Interesting idea but the thermostat may be set to high. Why not set the explosives to detonate when the ratings fall below say sixty percent. That way you could save some time and make the system even more efficient. Might be a teency problem in getting new candidates however…
Andrew
Australia
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