Taxpayers Fund AIG Lawsuit Against US 784
AIG, now infamous for their executive bonuses, has decided that the $200 billion they received from the government is not nearly enough and is suing the government for the return of $306 million in tax payments. "AIG is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that AIG. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year."
Is anyone surprised? (Score:5, Insightful)
Obama says "blame me", which is political-speak for "screw you, it's done, get over it". He won't be saying "blame me" when the honeymoon is over and this escalates to a full scale popular revolt.
We KNEW AIG were crooks long before we gave them this money. Why did they do it? Where the fuck was the outrage when these bailouts were first suggested? I've been outraged since the beginning, because the whole game plan has been obvious to me since they robbed us of that first $700B. And yet polls suggest that Americans STILL think this is going to work somehow.
These people: the Congress, the President, AIG, are all just a bunch of god damned frat boys, scratching each other's backs and doling out our tax money to each other in such staggering volumes that it WILL be the end of this country if we don't stop right now.
Did you all catch Chris Dodd saying he had nothing to do with the change in the bailout legislation to allow these bonuses, then the next day saying oops, that was me. "Somebody should have caught it sooner" - yeah, right, if the bill had any chance of being reviewed by the legislators themselves, let alone the public, before if slipped past Obama's desk quicker than a greased turd. What happened to those 5 days, huh?
Seriously people, at what point do we get off the couch and take back this country? Obama can stimulate my ass.
today's xkcd (Score:5, Insightful)
New rule (Score:4, Insightful)
This is just beyond belief.
Why is this on slashdot? (Score:3, Insightful)
It shouldn't be. I was just thinking earlier that I was glad that media storms like AIG blow over slashdot, and I can get different news here then the stuff everyone else is talking about.
This has absolutely nothing to do with tech or nerdiness, and in the grand scheme of things, it isn't that important. I can see no redeeming value, and I hope in the future that /. manages to avoid being run over by "big" stories like this.
Re:Is anyone surprised? (Score:5, Insightful)
I think the problem is that all big numbers pretty much look alike to most people & it is easy to create mass outrage at something people understand (bonuses to AIG execs) than something that people don't get (payments to AIG's counterparties).
Re:Like Rolling Stone is honest... (Score:3, Insightful)
Sometimes bias is better than trying to be objective about something completely ridiculous. Call a spade a spade and get it over with.
Re:today's xkcd (Score:5, Insightful)
There are bigger issues, but letting future company managers know they can:
1. Make their company more money in good times by taking economically unjustified risks.
2. Get the tax payer to bail out the company when the unjustified risks backfire.
and
3. Personally profit either way.
Is a really bad idea. To pick an extreme example, if the same managers knew that their companies will be bailed out, but that they personally would spend the rest of their lives in jail, they would take a lot less risks.
We need to motivate managers to be prudent in the future. Letting them reward themselves does not accomplish that.
Re:what does this have to do with tech? (Score:4, Insightful)
It's Stuff That Matters. I would presume that most of the people here to pay taxes, so I would presume they have a vested interest.
Re:Is anyone surprised? (Score:5, Insightful)
"blame me", which is political-speak for "screw you, it's done, get over it".
No, it's political speak for "the buck stops with me." In other words, something may be the fault of his staff, but the ultimate responsibility is with him. He's saying he won't simply throw someone else under the bus like previous presidents.
We KNEW AIG were crooks long before we gave them this money. Why did they do it?
My personal, uneducated opinion is that Obama felt it necessary to continue the plan that started under the last administration. During an emergency it would be very unnerving for the plan to drastically change. My guess is the hope to restore general confidence overcame the desire to fix this bungle. Also at play is the "Wall Street insiders" who laid out the last plan and continue to work for the Treasury and Fed.
Re:today's xkcd (Score:5, Insightful)
Actually, you and XKCD are missing the point.
This issue is that we are rewarding the people in power for fucking us over. What we need to get the bad guys out and provide proper incentives for a new team to replace them. Instead what we're doing is paying them a handsome sum to keep doing what they're doing. Indeed, the cost to us is much larger than these individuals' compensation!
Re:Is anyone surprised? (Score:5, Insightful)
but that's everything (Score:1, Insightful)
Perhaps we should discuss rising income inequality in the US? Or the wars in Darfur? Lots of stuff is worth discussing, but I think having some focus on forums tends to make them a bit better.
Re:Is anyone surprised? (Score:2, Insightful)
And for someobody who is supposed to be as smart as he is, I have seen him do a LOT of stupid things, in his very short time in office.
Re:Is anyone surprised? (Score:2, Insightful)
The bonuses are unseemly, true, but they seem to be guaranteed by the employee contracts, and so all the yelling in the world by unhinged congressmen are not going to change anything. Plus, financially, they're an insignificant part of the bailout moneys. I wouldn't mind businesses reeling in the bonus amounts in the future, because of public wrath, but I fear that congress is preparing the public to ram through something like even more punitive taxes.
Re:Is anyone surprised? (Score:5, Insightful)
Not AIG's fault (Score:5, Insightful)
Don't blame AIG for trying to get their tax money back (perhaps the only money here that is rightfully theirs), or for paying their employees what is contractually due to them. Blame our politicians for bailing them out instead of allowing their failure.
Re:Is anyone surprised? (Score:1, Insightful)
Obama says "blame me", which is political-speak for "screw you, it's done, get over it". He won't be saying "blame me" when the honeymoon is over and this escalates to a full scale popular revolt.
FYI, this was a done deal before Obama got elected.
You could blame the previous regime for treating the bailout like a handout, but they were in a jam over this too. The contracts were already in place, so the administration's choices were -
a) give them the money anyway
b) refuse to give them the money
c) ask them to renegotiate the contracts
(b) was out because AIG was "too big to fail".
(c) was out because the administration didn't have any bargaining power. The guys getting the bonuses knew the feds weren't going to withhold the money, because if they weren't "too big to fail" the feds wouldn't have come around in the first place.
So we got stuck with (a). And we're still stuck with it; the Congress's silly trick won't stand up in court.
But why are we up in arms over this to begin with? $160,000,000 is pocket change compared to what the previous administration has been throwing around without accountability. The falsely motivated Iraq war is going to cost us two trillion dollars. (Even if you're part of the minority who still thinks the war was a good idea, we've lost track of billions of dollars that was sent over.)
Yeah, we're getting screwed. novem continuas fututiones. But this isn't in the top ten.
Aesop's Tales (Score:5, Insightful)
During the fridge winter months, a farmer happened upon a snake frozen upon his grounds. Taking pity on the creature, he took it into his home to warm it by the fireside. Perhaps he realized they eat the rodents who would dig up his crops, and thus provided a dire function. Perhaps it was just the plain goodness in his heart. As the snake warmed itself and became animate, it leapt to forth and bit the farmer. As the farmer lay in pain (perhaps poisoned) he cried out, "Why have you bitten me, snake?!" I do believe the obvious answer was "Duh, I'm a snake."
Re:Is anyone surprised? (Score:5, Insightful)
We KNEW AIG were crooks long before we gave them this money. Why did they do it? Where the fuck was the outrage when these bailouts were first suggested? I've been outraged since the beginning, because the whole game plan has been obvious to me since they robbed us of that first $700B. And yet polls suggest that Americans STILL think this is going to work somehow.
Were you high? The outrage was EVERYWHERE, eventually however people decided that the possibility of losing their bank accounts was worth the massive irritation in bailing out these losers. We've had this debate before and others, including myself; collectively decided to grit our teeth and do it because it was necessary. Remember the bailout was actually shot down the first time it was proposed.
These people: the Congress, the President, AIG, are all just a bunch of god damned frat boys, scratching each other's backs and doling out our tax money to each other in such staggering volumes that it WILL be the end of this country if we don't stop right now.
Wow, all of them; congratulations you've opened my eyes to the MASSIVE CONSPIRACY AGAINST YOU. Even the guy who wasn't around till 49 days or so earlier; he's in it too. Me I prefer the far more sane explanation, he and the rest of the cabinet are trying to prop up a bunch of retards determined to decimate themselves by any means possible. Really any sort of conspiracy would basically require the participants to be intelligent and wise; the idea that this bunch of idiots are actually part of anything more complicated than feeding and using the toilets is pretty far-fetched.
Re:today's xkcd (Score:5, Insightful)
So yea, a large amount of money next to an obscenely large amount of money is a small percentage, but it's still a large amount of money.
Re:Is anyone surprised? (Score:5, Insightful)
Look on the bright side, with this method, the governments of the world (led by the US) would be paying for the losses anyway (both the businesses mentioned above are too big to fail) so by leaving AIG intact they get to capture the cashflows from the life, P&C and other solid insurance businesses.
Re:Hello Capitalism?? (Score:1, Insightful)
Err hello, yes AIG is largely owned by the Govt, but does that mean it now must STOP being a responsible company?
You mean they were responsible up till this moment? Ok.
Re:Is anyone surprised? (Score:2, Insightful)
Which is more or less exactly what the US government is doing with smaller banks. They take over, give them the resources needed and then shuts the banks down.
Re:Is anyone surprised? (Score:5, Insightful)
AIG's counterparties were hardly gambling. They were buying CDS contracts from AIG effectively as insurance, believing AIG was big enough and creditworthy enough that this rendered their default risk close to zero.
AIG was certainly gambling, although the "risk" was the risk of a systemic collapse in housing prices. (Check.)
The counterparties believed they had insurance on their CDOs from a very reputable institution (AIG).
My, how different the world looks with hindsight.
Re:WTF (Score:5, Insightful)
"Get over your Dem hatred, the "bonuses" were part of the deal Bush set up last year when the financial fallout was starting"
Hint: Bush did not give them the money, Congress did.
And Congress is and was controlled by... Democrats.
Most of the people I saw opposing the bailouts were Republicans: the Democrats in Congress were more than eager to hand over any amount of money so they could avoid taking the blame for pushing big financial companies into bankruptcy.
No matter what Bush wanted, the bailout would not have happened with Democrat votes.
Re:Is anyone surprised? (Score:5, Insightful)
Bu..buh.. but nationalizing banks, why thats... that's socialism! Having everyone but the responsible parties foot the bill for the excesses of the rich and privileged is just the American way - we're keeping the free market going!
Re:Is anyone surprised? (Score:1, Insightful)
Yet your 10 minute analysis of fourth-hand, spoon fed media data has swayed me. Those other guys are wrong.
AIG should die. (Score:2, Insightful)
First of all, it looks like it's happening anyway so saving AIG isn't worth it.
Second, AIG was to protect the mortgage originators from the borrowers defaulting. Well, that's happened. And instead of the mortgage originators taking the loss, AIG is. In other words, the systemic losses are being concentrated at AIG. What I'm saying is that letting AIG go bankrupt wouldn't harm the system. The losses would just be spread over the system and individual banks and partners would be taking the hit. It's a zero sum game right now. AIG is irrelevant; except for the bonus that tis executives say they deserve. I say let'em die. It will have no net effect on the economy. The damage is done.
Re:Is anyone surprised? (Score:5, Insightful)
Oh, brave new world! Where "change" means "keep doing the same fucking thing"!
-Peter
We got what we deserved (Score:2, Insightful)
Re:Is anyone surprised? (Score:1, Insightful)
The solution is to not override the market. In reality what happened is that the US asked the world a question : "will you let us loan more ?", and the world responded, for the first time ever with "no" (well, for the first time since 1930 or so).
In effect, Obama is forcing the issue, upping the bet. The government still had credit so he's giving government credits (50% to his cronies and pet projects first obviously) to unworthy, untrusted borrowers.
Needless to say, the next big event is the world losing confidence in the US govt's ability to pay back. Unless Obama changes tactics, that's not going to take that long.
The solution would be to take the answer for what it is, and to fix the problem : let the houses default, let the prices drop, let people pay off loans, as to demonstrate to lenders that they're still trustworthy.
And everything will be fine once again.
Why pretend to be capitalist, and then when the system shows you a real problem (like in this case "americans borrowed too much to be realistically able to pay it back"), borrow so much more to ... does anyone know what the intention of bailouts are ?
The solution to having borrowed too much is NOT to borrow more, someone inform mr. Obama.
Re:Is anyone surprised? (Score:5, Insightful)
It was a distraction, while the Fed pumps another $1 trillion into circulation:
http://www.iht.com/articles/2009/03/18/business/fed.php [iht.com]
Which will either head off deflation (never in history been successful) or cause hyperinflation, while we are worried about 0.1% of AIG's bailout funds.
Re:Is anyone surprised? (Score:3, Insightful)
If Bush were still in office people would be talking about how Bush is just giving hand-outs to his rich buddies that head giant corporations.
I find it very curious that people aren't yet making these claims about Obama, even though he's continuing Bush policies on an even greater scale. Last night on the Tonight Show with Jay Leno, Leno asked Obama where the stimulus money was and Obama said, paraphrasing, "the banks are holding on to it" [huffingtonpost.com] ! Here's the exact transcript of that part:
"Q Well, when will the money -- this money was given out to the banks. I would have thought by this time it would have sort of trickled down to Main Street, to people wanting to get loans -- I mean, it all went out there months and months ago. Where is it?
THE PRESIDENT: Well, what's happening is a lot of these banks are keeping it in the bank because their balance sheets had gotten so bad that they decided, you know what, for us to stay solvent we need to maintain certain capital ratios; we've got to have a certain amount of capital in the bank -- and they haven't started lending it yet."
In other words the Banks are using tax payer money to pay off their debts. Lovely.
I'm not a conspiracy theorist but all of this is highly suspicious. While unemployment is rising rapidly in the US the only area to increase the number of jobs is the US government itself. And the people receiving the stimulus money are the giant investment banks ... who have members of their elite group inside of Obama's staff directing him on economic policy (talking about Tim Geithner [wikipedia.org] here). The American people should be very angry right now.
Re:Is anyone surprised? (Score:0, Insightful)
hey should have been allowed to fail
You do realize that allowing AIG to fail would have destroyed the US economy in addition to the Japanese, German, and UK economies? The collapse of the #1, #3, #5, and #6 economies of the world would very likely have decimated all economies in the world.
Remember that much of the wealth in the world is "fake". It is based on the perceived value of slips of paper or bits in a computer. The actual value of assets that back that paper is much less.
While the world would eventually recover. It would be a nightmare for years while things balanced out again.
80% Owned (Score:5, Insightful)
So the gov't calls a shareholder meeting, replaces the board, and the new board quashes the lawsuit. They own 80% of the equity in the company. The government can do whatever it wants with AIG because it owns them.
Why is this lawsuit a big deal? Or rather, why does it still exist?
Responsibility (Score:3, Insightful)
"President Obama said Wednesday he'll "take responsibility" for AIG executives receiving controversial bonuses while the company took $173 billion in government bailouts."
I'm sure that since he has taken responsibility for the bonuses, Obama will personally repay the American taxpayer the $160+ million dollars.
Oh wait, this more like that other type of responsibility that Rumsfeld took for the crimes committed at Abu Ghraib, where the guy responsible doesn't face any consequences. Rumsfeld didn't do jail time for Abu Ghraib, low level soldiers did.
Re:today's xkcd (Score:4, Insightful)
The government wants to tap our phones, we rally against it. On principle as much as anything; the odds are highly against it affecting us individually.
A company patent trolls and sues big name companies without warning, and we advocate patent reform. On principle as much as anything; the companies being sued are usually big enough to protect themselves and absorb losses even if they lose the case.
Why shouldn't we object to this kind of thing on principle too? When senators want to spend money directly on their electorate (essentially buying their votes) instead of for the good of the nation as a whole, why shouldn't we complain? When we give companies billions of dollars to fix their mistakes and they turn around and sue the IRS to recover 300 million on taxes, using our money to pay the court costs, why shouldn't we complain?
Maybe it isn't the major issue, maybe it isn't even a real issue at all (hell, if they were incorrectly taxed why shouldn't they get the money back?) but we fight on principle every day. If we don't stand up and be pissed off about this today, if we don't demand that companies receiving bailouts act for the good of the nation instead of the good of their pocket books, things will only get worse in the future. Yeah, it's .1% of the bailout money we're talking about, but I bet less than .1% of Americans had their phones illegally tapped and less than .1% of patents are held by trolls.
Re:Is anyone surprised? (Score:5, Insightful)
Thank God the Obama administration is trying to do something about our economic mess. I understand that very few people have any real grasp of economics and they also don't have any grasp of just what can happen when an economy deflates. We were on the edge of a real doomsday in this situation. It seems that the cash infusion has already caused a bit of an upturn.
Re:Is anyone surprised? (Score:2, Insightful)
Bottom line: Economics isn't really science and sometimes common sense is just as useful (or useless) as Nobel prize winning theory.
Re:Hello Capitalism?? (Score:2, Insightful)
It is actually, now more then ever, in the government's best interest for AIG to make every attempt to go after any and all money it can, from all sources.
People were ticked off when they viewed AIG's actions as SPENDING money. Now they are ticked off when AIG is trying to GET money.
Public perception is a b*tch
[disclaimer: I am not a fan of AIG, and I believe that all upper management should have been fired without severance packages. I just think this particular uproar is a case of "everything the bad guy does is evil"]
Re:Great Article (Score:3, Insightful)
Re:Is anyone surprised? (Score:1, Insightful)
If you finish reading the text at the bottom of that xkcd, it suggests that raping your daughter for 30 seconds is better than doing it all night. Either way, she's getting fucked.
The people aren't angry because it's *only* 165 Million. They are angry because they are getting fucked.
Re:Is anyone surprised? (Score:3, Insightful)
That's what some folks say.
Others say that the path we're on now leads to hyper-inflation, loss of liberty, plus what you mention. Except that it happens over a longer period of time. Keynesianism has never worked in practice.
Re:Is anyone surprised? (Score:5, Insightful)
The thing that pisses me off sooooo much is that if we had just LET THEM FAIL, AIG would have filed for bankruptcy and these contracts would have been nullified.
I've been against bailouts from the beginning. They've always appeared to me to be meant to keep the rich and powerful people (including the gov't) who SCREWED EVERYTHING UP in power and well off, while destroying everything and everyone else.
We have to endure this pain now. We have to let these giant corporations fail. We have to build everything back from the ground up. Trying as hard as the government is trying to prop up the failing companies and failed ideas that led to this mess is going to only make things much much worse.
Its hard and its not fun, but its time for the US to take its medicine. The bailouts and stimulus must stop. Hard as it is to say, I think we need to let everything fall down and then move in and start picking up the pieces and build something new.... I'm referring to the economy here, not necessarily the government. But I fear that it may need to end up getting scrapped and rebuilt too....
Re:Hello Capitalism?? (Score:4, Insightful)
You mean they were responsible up till this moment? Ok.
Lets not over-generalize here, looking at this whole issue unemotionally (yes that's hard I know, we're talking about accounting here, a very contentions topic) if you borrow money from someone you will use every method at your disposal to pay it back, including by offsetting previously unsettled amounts.
If you lent me $10 last week and now you borrow $20 from me am I wrong if I only pay you back $10?
Come on let's try for a moment to remove the emotion from this topic (yes that means you also moderator), and remember that the people working over at AIG are actually PEOPLE. Lets exclude that top few percent of (failed) execs who got the company into this position sure, but it could be my neighbor, your school mate, whoever who is left with the actual work of getting it out of this mess!
Anyone who has every worked in a big company knows exactly how hard it is to continue justifying those 50+ hour weeks you're pulling for your stupid manager when the company gets some bad press that reflects on your hard work! What needs to be advocated is more management change in AIG, not blaming Joe Plumber's neighbor because he's a good tax accountant working for AIG!
I gave up my mod points already assigned in this topic because it was clear nobody was willing to discuss the other side of this, hopefully some of the moderators left out there want to see some balance.
Re:Is anyone surprised? (Score:5, Insightful)
Re:Is anyone surprised? (Score:4, Insightful)
The problem isn't AIG failing, it's the domino effect. A lot of innocents would be crushed by AIG and its dependents falling over.
Solution (Score:5, Insightful)
There's a known solution to this problem. In the 1980s S&L collapse, the Office of Thrift Supervision established the rule that S&Ls taken over by the Government couldn't sue each other or the Government. It just burned up legal fees, since the money came out of the same pocket. Congress needs to enact something like that this time.
Re:Is anyone surprised? (Score:5, Insightful)
Bailout: $170,000 million
Bonuses: $165 million
There: even more context and even more comparison. Surely this is even more insightful!
The fact of the matter is that:
1) $165 million is still a lot of money
2) At least the bailout was ostensibly aimed at preventing a financial meltdown that would have wrecked the economy even more. Giving bonuses to the people who caused this mess in the first place is just a big, open "fuck you" to the American taxpayers.
3) xkcd isn't a such a good comic. Yes, I get the references, but merely referencing things your audience is familiar with is a cheap excuse for humor.
Re:Is anyone surprised? (Score:5, Insightful)
I think you're misunderstanding the outrage.
It's due to the fact that the very people in charge of messing up so badly they needed government help - are getting bonuses as though they had done exceptionally well.
It's an expression of the injustice that all of us grunts feel when the executives get all the credit when things go well, and the grunts get laid off when things go poorly.
Only in this case the overpaid executives are being rewarded as though they had done extremely well when in fact they've done so poorly they should be fired if not hanged.
Personally, I'd like to know how I could score a contract that will reward me with multi million dollar bonuses when things go horribly even after I'm no longer even employed by them. That sounds like about the sweetest gig imaginable.
Re:Is anyone surprised? (Score:5, Insightful)
When you make an investment with an uncertain outcome, it is gambling - which is to say, all investment is gambling. I have nothing against companies who bought/sold CDSs, CDOs, MBSs, etc - it was their money and they had the right to do whatever they wanted with it.
The problem I have is that when their bets went wrong - one of the bets being that AIG was a good counterparty - they should eat the losses. They sure as hell were not going to give you a share of the profits - why should you protect them from their losses?
Gambling is ok - as long as you can take the losses.
Re:Is anyone surprised? (Score:2, Insightful)
The only reason the taxpayers "enjoy all the risk" is because our government puts up our tax dollars to prop up these companies. If we let them file bankruptcy, the courts can oversee their operation properly. You're claiming that AIG is too large to let fall into bankruptcy--a claim Republicans won't necessarily agree with--and then blaming Republicans for how the taxpayers are the ones that lose.
You're accusing Republicans of being the problem just because they're Republicans. Please stop being a sheep.
Re:Not AIG's fault (Score:5, Insightful)
Re:Is anyone surprised? (Score:5, Insightful)
Yes, you are. You are betting on it burning down, while the insurance company is betting against that outcome.
Like any betting operation, the odds are supposed to be stacked slightly in favour of the house, and the operation must be big enough not to allow any individual gamblers to break the bank (or, if you'll pardon the pun, burn the house).
somewhat tricky (Score:3, Insightful)
Majority owners can't actually do "whatever they want" unless they actually own 100% of the company. The trouble here is that the 20% minority owners are something of an annoying fiction--- the company is by rights bankrupt and the shares worthless, but the government has unwound this mess somewhat ineptly and as a result on paper the company still exists and has value, and 20% of that value is owned in the private sector by people who technically the company has a fiduciary duty to.
Re:Is anyone surprised? (Score:4, Insightful)
At least the bailout was ostensibly aimed at preventing a financial meltdown that would have wrecked the speculators.
There I fixed it for you. The whole "systemic risk" crap we hear is nothing more than fear mongering. Fear so that the old "governing" elite stays in power at all cost. Had the US let AIG, Citi, JPG, GS, BoA and others drown in their own cesspool it wouldn't have changed much. There are plenty of very solid and well capitalized banks in the US, who could take over the clients of the current zombified giants. However, Paulson, ex CEO of GS managed to proxy bailout GS and keep GS as the top bank.
Re:Is anyone surprised? (Score:5, Insightful)
Keynesianism has never worked in practice.
... except between 1930 and 1945.
And for those who think that WW II spending wasn't Keynesianism, you misunderstand Keynesianism. Keynes never argued that the government shouldn't buy guns instead of butter, he just argued that the government had to buy something, anything, in order to get the economy moving. WW II spending was much more massive than New Deal spending, with greater government oversight (wages controlled by government regulators, that sort of thing).
Re:Is anyone surprised? (Score:3, Insightful)
It's not even near socialism. In a true socialist society, you can't have banks at all, government operated or not. If you need a new house built, you don't borrow money for it, you petition for why you need it, and get the land, materials and work assigned. Or declined, if your need is less than society's ability to provide it.
That said, social capitalism (as formerly practiced in the Scandinavian countries with success) could very well be an improvement on the current situation. And to a typical American, that looks like "socialism".
Re:today's xkcd (Score:5, Insightful)
These "bonuses" are basically their pay, and are the only reason they are working there. I don't see how it could possibly be the government's right to take the agreed upon pay away from these people.
It's simple. The company that agreed to pay them that can't afford to pay them that. A new entity (the government) came in which is not bound by those contracts. The people who obviously do not deserve any pay should consider themselves very lucky that they aren't stripped of every asset they own and then tossed out in the streets. That would be fair and just, but not many people are even suggesting it.
Once and for all people, these weren't bonuses the way most people think of bonuses. Management didn't decide to reward then, it was pre-agreed upon payment. And it would be horribly immoral for us to take them away from said recipients.
It would be perfectly moral and justified. Their employer does not have the money to pay them with. What they are paying them with is *my* money. That is fucking immoral. If you run a company into the ground, then you do not deserve anything. If you run a company into the ground and then demand that I be robbed to pay you for doing so, then...well the very idea that you're attempting to frame a moral debate with those thieves and failures as the moral entities doesn't speak well to your sanity or ethics.
Re:Is anyone surprised? (Score:5, Insightful)
Yes, of course that would work. Of course it would cost a little less money. The situation is not so different from the Great Depression. As all the idiots on Fox "News" were talking about this week: "the New Deal lengthened and deepened the Great Depression".
And they're right.
One way to solve these sorts of situations is just to let them fall down. Sure it hurts for a bit, but it's better to take the pain for a short time than suffer for a long time, right? Sure, times will be rough, but you just need to brace yourself and use a little common sense: don't buy a new car this year, hold off on renovating your beach house, and be a little more conservative in how you invest your disposable income.
Wait. What do you mean you don't have a beach house? You're only investment is your 401k? And your only car is already 12 years old? Well, that's gonna make it harder to stop that imminent foreclosure, but at least you can be kept warm at night knowing that your hunger is helping the country save a little bit of money.
It must feel good to be able to sit there, saying that the best solution is to let a section of the economy totally fail. I mean, its not like you're the one taking the hit, right? You're not losing your job or your house. You're not the one who actually has to endure hardship. And neither am I. I just bought a house. I'm going on vacation. I'm doing fine, but I'm not so much of an ass that I don't realize that many lower and middle-class people out there would lose many years of happiness in the name of helping the wealthy "suffer" through the economic troubles we're in.
Yes, the New Deal made the Great Depression a little worse, but it also kept people from dying of hunger or maybe only losing every bit of wealth and happiness they had been building up in their life.
Does AIG suck hardcore: Yes. Do the deserve help? Absolutely not, but the lower middle class does and they are the ones who would pay for your "let them fail" plan. I have zero sympathy for anyone in the upper-middle and upper classes who whines about how this is affecting their lives and how they feel their money is being wasted.
Re:Is anyone surprised? (Score:4, Insightful)
It's not a question of whether people intellectually understand how "billion" is related to "million". It's a question of perceptual impact.
Given what we know about how people process information, it is misleading to throw out large numbers without cnotext. The comic summarizes the context in a concise, visual way; a news outlet might instead provide context by pointing out that the bonuses account for ~0.1% of the bailout money in question.
Then if people still want to be angry, at least it's an honest reaction.
Re:Is anyone surprised? (Score:3, Insightful)
It must feel good to be able to sit there, saying that the best solution is to let a section of the economy totally fail. I mean, its not like you're the one taking the hit, right? You're not losing your job or your house. You're not the one who actually has to endure hardship. And neither am I.
Most of the time you can't even be sure of that. Lots of people have been surprised when some random bank fails somewhere and their employers suddenly have trouble drawing credit to cover payroll.
Re:Is anyone surprised? (Score:3, Insightful)
The thing that pisses me off sooooo much is that if we had just LET THEM FAIL, AIG would have filed for bankruptcy and these contracts would have been nullified.
And then the CDOs they underwrote would be marked down. And then those banks would take a haircut. And many of them would become insolvent, and so they'd go bankrupt. And then their counterparties would get screwed, etc, etc, etc.
They don't call is systemic risk for nothin'...
Re:Is anyone surprised? (Score:4, Insightful)
Sometimes you have to amputate a toe to save the leg. If you try too hard to save the toe, you risk losing the leg and possibly the whole body.
The problem is that nobody wants to amputate a toe, but sometimes we do it anyway.
Screw the toe, it isn't worth saving. The people working at those jobs aren't doing anything PRODUCTIVE. Trying to save jobs that aren't productive is just plain stupid.
If they were productive they can duplicate it elsewhere and make a living.
This is the problem with liberals, they want to save everyone and everything. You can't, it is impossible, so stop trying. Sometimes things aren't worth saving.
The weak must perish, or it makes the whole sick. CUT THE TOE OFF.
Re:Is anyone surprised? (Score:4, Insightful)
I'm not buying your reasoning. Yes 0.2 billion in bonuses is annoying, but it's mere pennies compared to the 170 billion given as a "gift" to save their asses, ~60 billion of which is being given to foreign nationals. (Why are U.S. taxes being handing money to foreigners???)
Furthermore, Congress has spent more time arguing about this 0.2 billion, then they spent debating the 700 billion TARP Bailout bill or the 800 billion Stimulus Bill. Congress is quibbling over mere pennies, and yet they spend billions of dollars with barely any consideration. It's like Benjamin Franklin said: "Penny wise; pound foolish."
Re:Is anyone surprised? (Score:4, Insightful)
Goodwill? A lot of those receiving the large 1/2 or 1 million dollar bonuses have now abandoned ship. I guess they figure they got their "golden parachutes" so why stay with a failing AIG? The only think AIG did was waste money, per usual.
Re:Is anyone surprised? (Score:3, Insightful)
Maybe Congress ought to pass a bill that requires all government employees to pay taxes, else not be eligible for the job. Also, I don't feel like paying 90% on any bonuses I might receive. Do you?
I guess that "bonus tax" is currently limited to just those who earn 500,000 or higher, but then so too was the income tax when it was originally conceived. And then it creeped downward.
Re:today's xkcd (Score:5, Insightful)
These are "bonuses" like the Union pensions and health care automakers are required to cut... you know legally and fairly negotiated years ago, right.
IF it was good enough to demand retired auto workers give up their contracted benefits, (actually worse because the current workers cut off their former union brothers) it's good enough for AIG people making million dollar salaries.. don-cha think?
Ok, ok, what does ownership mean? (Score:3, Insightful)
Perhaps I don't understand what "ownership" means. If I "own" an 80% share in a gas station, and the gas station is suing someone, I have the right to call up the station and say "drop the lawsuit, and fire whoever thought of the lawsuit". By the same logic, a representative of the Federal government should be able to personally order the person who is responsible for this suit fired immediately.
By a similar reasoning, if I own 80% of the business, and there is some question over whether an employee is owed a large bonus, as owner I can say "nope, don't pay the bonus". Even if my order violates a written contract, the employee would have to sue to get their money. And there's unlikely to be a single jury in the United States that would allow AIG execs to collect a few million dollars in return for making financial decisions that have destroyed the savings of millions of people.
Re:Is anyone surprised? (Score:2, Insightful)
There I fixed it for you. The whole "systemic risk" crap we hear is nothing more than fear mongering. Fear so that the old "governing" elite stays in power at all cost. Had the US let AIG, Citi, JPG, GS, BoA and others drown in their own cesspool it wouldn't have changed much.
And I suppose you have actual evidence to support your blind free-market ideology?
Huh, yeah. Didn't think so. Meanwhile, the government actually analyzed the counterparty risks associated with an AIG collapse. And guess what? They concluded that systemic risk was a real likelihood. So, what analysis have *you* taken part in?
Re:Not AIG's fault (Score:3, Insightful)
Re:Not AIG's fault (Score:4, Insightful)
Then maybe we should rethink how we've structured our economy.
We have a few very large points of failure that can bring down anything rather than a diverse ecosystem of smaller businesses.
You could call this capitalism or lassis-faire, but no, we have large corporations because of the laws that limit the liability of the officers and shareholders of the corporations. We have large corporations because of laws that give them tax breaks and dispensations and subsidies and other forms of largess. This isn't pure capitalism at all.
I think purity is stupid, but there is no getting around that the laws the government makes and more importantly, the subset of the laws that it decides to enforce shape the ecosystem of industries. As long as that is the case, we should write the laws so that small businesses are encouraged more than large ones are.
Re:Is anyone surprised? (Score:3, Insightful)
Yes, it's a damned shame that many lower-income people would be hurt by allowing AIG (and others) to fail. And it sucks. And no, I wouldn't feel as "good" about it if I were in that situation. But that's kinda beside the point: it may very well be what's necessary to *really* fix our economy, and not just patch it up for another 15 years until the same thing happens again with a different (or hell, maybe even the same) industry.
Do I know that that would be the correct course of action? No, of course not. But what we're doing now doesn't seem to be working.
Re:Is anyone surprised? (Score:3, Insightful)
The thing that pisses me off sooooo much is that if we had just LET THEM FAIL, AIG would have filed for bankruptcy and these contracts would have been nullified.
Along with the entire banking industry followed shortly by the remains of the economy.
I'm all for rebuilding and getting rid of the thoroughly rotten and corrupt financial industry (at least in its current form) but it has to happen in a more orderly manner.
Re:Is anyone surprised? (Score:4, Insightful)
When was the last time the total Paper dollar supply shrunk? 1932. If you think the U.S. government will magically fight devaluation of the paper dollar by shrinking the supply, think again. They haven't done that in almost 80 years. Since Nixon took us off the gold standard, there simply is no reason to bother - the U.S. can just keep printing more and more paper - and slowly but surely decrease your real wealth by 2-3% each year.
Re:Is anyone surprised? (Score:4, Insightful)
Re:Is anyone surprised? (Score:3, Insightful)
>>>I seem to be one of the few people who is capable of worrying about anyone but myself. Oh waaah. You're taxes are going up
I am worried about someone other than myself. I'm worried about my children and grandchildren, because the national debt will be around $170,000 per U.S. home (2020), and THEY will be the ones who have to pay it off. Everyone is thinking shortterm, and not longterm, the exact same mistake that got us into this mess (average American has $90,000 in mortgage and credit card debt). We are a debtor nation and don't know how to save. We want it now, now, now and forget the future.
You might be saving people today, but at the cost of selling-off your progeny's future. You spend the money; your children or grandchildren pay off your debt. (Thanks mom and dad, or grandma and grandpa.)
Re:Is anyone surprised? (Score:3, Insightful)
I agree with this, but I don't think you took it far enough. The government (via Fannie Mae and Freddie Mac) shouldn't have been encouraging bad loans in the first place. That would make it far easier to tell them to fuck off when they came around asking for money.
foreign money (Score:2, Insightful)
Why are U.S. taxes being handing money to foreigners?
May be because AIG owed them a buck or two?
Ummmm (Score:3, Insightful)
That's really misapplying the term "gambling". Gambling is defined as money, or anything of value, that is risked for possible gain. The important thing here is the "gain" part. You are betting something, hoping to make an over all gain. That's not the case with insurance. When you insure your home, you are not hoping to make a gain on it. If your home burns down, they don't pay you a hundred million dollars, they pay you the value of the home and its contents (or the limits of the policy, whatever is less).
You aren't gaining anything, and you certainly aren't hoping that it'll happen. What you are doing is transferring risk. You cannot afford to pay out the cost of a new house. Thus the risk of losing it isn't acceptable. So you purchase insurance. They agree to assume the risk. Should the house be destroyed, they pay for it, you don't. In trade for that, they collect regular monies and get to keep them if nothing goes wrong. Your insurer may in fact then do the same thing. They might assume the risk for small things, but transfer the risk for a large event to another insurance company that specializes in that.
That's all insurance is. It isn't gambling, it is risk transfer. That is also why there are cases where it is advisable to NOT have insurance. For example if you have a car that is old and has a low book value, collision insurance is a waste of money. If you wreck the car, you can afford to replace it. Thus there's no reason to transfer the risk, just assume it yourself. Also the amount they charge is such that after awhile, you have already paid out anything you'd get.
So no, it isn't gambling. Gambling is what you do in a casino. If you don't see a difference between that and insurance, well then you need to do a bit more research.