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.
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:Is anyone surprised? (Score:5, Insightful)
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: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:4, Informative)
Incorrect.
No homeloans, no loans for shipping(which exist on loans), no small business loans, no large business loans, no spending and then we ahve all the secondary markets drying up.
There is no bank in the US big enough to handle AIG assetes as a whole.
I think if the just absolved the toxic assets we would be better off.
The value of these companies would diminish, a lot but they would continue to exist and be able to make loans to the remaining good providers.
The business and people that suddenly have more money every month; which they would spend helping business and strengthening the economy.
Then put proper regulation into place to prevent this kind of lending market, and cap the size business like this.
You can argue 'fair' that people not paying there loans getting off the hook, but that is a different issue. I mean, we're going to pay the money one way or another, why not choose a way that puts money immediatly and directly into the hands of consumers? Money moves bottom up, not top down.
I thought the same thing you have, but when something big happens I delve into it. I have talked(emailed mostly) several economic experts. By that I mean people who study and look at economies, not some jack ass on tv telling you when to buy and sell.
AS much as we despise them, AIG broke no law.
Re: (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.
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."
How about the 9.7 trillion? (Score:3, Informative)
There at least some public debate about the 700 billion.
How about the 9.7 trillion? 9.7 trillion is a lot bigger than 700 billion.
http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aGq2B3XeGKok [bloomberg.com]
Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed
Re:Is anyone surprised? (Score:5, Insightful)
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:5, Interesting)
In any case, this lawsuit seems very strange. If AIG "wins" the lawsuit, then the IRS pays AIG - but since AIG is 80% owned by the government, then 80% of that money would essentially go to support the government's investment in AIG (and could conceivably be used to pay dividends back to the entity from which the money was taken!).
I suspect that the lawsuit is really about specific business practices that AIG would like to continue using in the future (assuming AIG continues to operate in the future) and would like to establish the tax-free status of those practices.
Re:Is anyone surprised? (Score:5, Interesting)
Or about 20 bridges to nowhere
Re:Is anyone surprised? (Score:4, Insightful)
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: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: (Score:3, Informative)
They won't eat their losses; Berkshire Hathaway underwrote a number of 2nd payment CDS. I.e., if your bond defaulted, and your primary CDS defaulted, Berkshire would cover it. If you can buy a bond and insure it several ways over and still earn more than a treasury, it seems less like gambling and more like arbitrage investing.
The people who were really gambling here was AIG. Normal counterparties are limited by the amount of capital they can raise to collateralize the insurance agreement, but as an AAA com
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).
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)
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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:4, Informative)
>>>Thank God the Obama administration is trying to do something...
>>>It seems that the cash infusion has already caused a bit of an upturn
Boy they sure fooled you. The stimulus bill passed during Obama's term hasn't even been spent yet, and most of it (~90%) won't be spent until after January 1, 2010!!!
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:4, Interesting)
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.
Then is it just me that noticed a 90% tax rate bill actually get passed just a while ago; 90%, specifically to tax these bonuses. It looks like their anger is changing quite a bit.
Re:Is anyone surprised? (Score:5, Informative)
This is probably the most disturbing thing about the whole AIG mess.
The house just passed what is in all likelihood a Bill of Attainder: http://www.techlawjournal.com/glossary/legal/attainder.htm [techlawjournal.com]
We all know that the average Congressman is an idiot. However, they almost all lawyers too, so they should know better. In fact there was more than one speech on the House floor mentioning this fact. But still the House leadership went ahead.
It goes without saying that they did this for political expediency. The news says they voted to tax the bonuses, and that all anybody will remember. When it fails in the Senate or fails the final vote or is ultimately found unconstitutional, it probably won't be front page news.
On the other hand, if they are serious, what does that say about the current leadership? The Constitution is very clear and unequivocal about this. That they would even attempt it suggests a contempt for the Constitution that at the very least meets the same level of which Bush is often accused, if not exceeds it.
And if they are ultimately successful, then look out.
Re: (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: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:5, Interesting)
>>>Which will either head off deflation (never in history been successful) or cause hyperinflation
I wish economists would call this phenomenon with a better description. If a government starts printing tons of paper money, it doesn't cause inflation of prices. It causes *devaluation* of the paper until soon people are walking around with wheelbarrows to buy a loaf of bread.
To use the word "inflation" is akin to a doctor claiming illness is caused by a runny nose. No, the nose and the price inflation is the symptom. The cause is the bacteria and the devaluation of the paper, respectively.
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: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: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: (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: (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 car
Re: (Score:3, Interesting)
You're not losing your job or your house.
Right, so that's the rub. We aren't talking about people losing their houses. The houses belong to the banks until the lien is off of the title and they've been paid off. When you say things like that, you are being the problem.
The problem is our credit-hungry economy. It's simply not "their house" if they can be foreclosed on. And the job belongs to the employer, to be quite honest.
Tell me people are on the streets, you get my sympathy. Tell me they bought a house they couldn't afford and then conseq
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Yes, it's a damned shame that
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you imply some connection between aig demise and poor people suffering. the connection is apparently so obvious that no one so far was able to actually explain it. would you care to?
If that offer's open to anyone, I'd like to take a shot.
What it comes down to is that AIG is currently insuring a large part of the world's banks. If you're poor then you don't really have all that much money, presumably what there is of it is in a single bank account. One of the ones insured by AIG. If AIG goes down all those banks are no longer such safe bets, which is likely to make a run on at least some of them. The banks themselves don't have nearly enough money to pay off everyone who thinks it has
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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'...
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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)
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)
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.
Re: (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)
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: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:5, Funny)
Seriously people, at what point do we get off the couch and take back this country? Obama can stimulate my ass.
That might make your prostate happy but what about the rest of us?
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:Is anyone surprised? (Score:5, Insightful)
Oh, brave new world! Where "change" means "keep doing the same fucking thing"!
-Peter
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 ti
Re: (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 mo
Re:Is anyone surprised? (Score:5, Informative)
In other words the Banks are using tax payer money to pay off their debts. Lovely.
Banks are required, by law, to maintain a minimum ratio of capital vs risk-weighted assets.
Capital is not just money in the bank. Capital is also shareholder equity, reserves, general provisions (aka losses), and term debt (and other things). Many banks are currently falling below the required capital ratios because of the housing loses, erosion of asset values, and the slowing of the economy.
Legally, many banks cannot loan money at this time.
Re: (Score:3, Funny)
Re:Is anyone surprised? (Score:5, Insightful)
Re:Is anyone surprised? (Score:5, Interesting)
I don't think you understand the term "systematic danger". Lets do it in computer science speak:
You have a run away critical process somewhere in your critical system. It is eating memory like mad. It will take down the whole system when you run out of memory. Do you
1: Try to expand the memory for it, even at the cost of less critical applications, while you sort out the problem.
2: Do nothing and wait for the whole thing to come crashing down.
3: Begin looking for who ever wrote the crap to take away his bonus for successfully completing the project last year.
Basicly, letting AIG fail would not just crash the American economy. It would crash the world economy. As in NO MONEY IN THE ATM crash. As in NO FUEL FOR YOUR CAR crash. It might cost billions, but the alternative is far worse. Think Zimbawe. They have been allowed to grow too large to fail, and there is no way out of it except to keep them alive until they can be split up and sold.
What you should be asking is why the Republican party is still against nationalization of banks... Because currently, the taxpayers get to enjoy all the risk, while the owners of the banks gets the profits. And that is not a matter of a few million dollars to the executives. That's a matter of many billions. Being too large to fail is very very profitable.
Look at the Swedish bank crash of 1992. Notice that the Swedish taxpayers actually came out of it with a profit, after nationalizing several failing banks. But that is not what the US is doing. While you are busy arguing about a few millions billions are being pulled from under you.
Please stop being a sheep.
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: (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
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:Is anyone surprised? (Score:4, Informative)
he and the rest of the cabinet are trying to prop up a bunch of retards determined to decimate themselves by any means possible.
They aren't trying to decimate themselves: they're trying to enrich themselves at whatever the cost, which currently is decimating everyone else.
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.
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Why did they do it? Obama received a lot of campaign contributions from AIG for his presidential campaign.
ABC news [go.com]
Re:Is anyone surprised? (Score:5, Informative)
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Seriously people, at what point do we get off the couch and take back this country?
Are you crazy? American Idol is on.
It's taxpayer money no matter how you look at it (Score:2)
today's xkcd (Score:5, Insightful)
Re:today's xkcd (Score:5, Funny)
How dare you consider using perspective and logic? This is about anger and screaming and smashing stuff!
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: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: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:today's xkcd (Score:5, Informative)
Actually, these bonuses are required pay and they were not performance based. Why are people calling them bonuses then? I have absolutely no idea.
You see, back in 2007 when the CDO market started to bottom out, several of their top traders were considering leaving AIG because they were paid almost entirely basic on a bonus which was a percentage of their earnings for the company. AIG wanted them to stay to help unwind the problem and cut their losses. If they'd known what was going to happen to the entire industry they might have taken another route, but AIG didn't know and they thought these traders were worth keeping.
So AIG struck a deal, that they would continue to get the bonuses they received in 2005/2006 until 2012, as long as they stayed with the company to help cut their losses.
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.
Can we complain about this whole deal? Yes. Can we complain about the state of the economy? Yes. Can we complain about inflated pay? Yes. Can we complain about bonuses and all the incentive based connotations that go with it? No. Yet that is what most people are doing.
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.
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: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?
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.
This is Completely PROPER!! (Score:5, Funny)
What as stupid article!!
The US government, although the largest shareholder is not the ONLY shareholder. Minority shareholders have rights and a successful lawsuit benefits them too.
I wish people would give their heads a shake!
Re:This is Completely PROPER!! (Score:5, Informative)
Since the only reason these minority shareholders even hold stock right now that isn't simply fancy-looking toilet paper is because of the Government's involvement. I'd say to the minority shareholders "You have 35 seconds to stop this lawsuit or we're going to let you lose your miserable little shirts."
As it is, I think the more we understand about AIG's role in the collapse, the more I'm thinking that it should simply be dismembered.
WTF (Score:5, Interesting)
Are these guys intentionally trying to force Congress to shut them down? Too much more of this, and economy or no economy, lawmakers are just going to say "Fuck you, die die die" and let the international banking system take a nosedive.
I have been (somewhat) onside for giving Wall Street a helping hand, but between the sheer incompetence of the Democrats and the sense of entitlement of these guys, I think it's time to say "Screw it", let them all sink, and then rebuild it properly, with laws requiring all bonuses be voted on by shareholders, all executives and managers be forced to convert their stock to non-voting, requiring complete replacement of any company's board and senior executives the second they take a single penny of taxpayer money, and putting their legal departments under direct Treasury control.
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.
In other news... (Score:5, Funny)
Great Article (Score:5, Informative)
There was a great article in Rolling Stone [rollingstone.com] today that lays out exactly what has happened at AIG in terms most people can understand. It makes my blood boil!
Re: (Score:3, Informative)
I'd moderate this up, but it's already +5. So I'll just concur. The article is indeed excellent, and even if it's only half true, I don't even know where to begin on the implications. I'd say it's bad enough that the only way to crawl out would be to immediately disband the guilty corporations, disperse their assets to smaller community banks, declare the FED illegal and oust it, all while restarting the dollar from scratch.
Of course, doing that would instantly render so many worldwide investments worthless
Re: (Score:3, Funny)
From the article you linked...
"These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout,...
Wait... what was that? That must be a misquote or something...
..., a serious look on his face, apparently not even half-kidding. "They don't function well without them."
I guess not.
Re: (Score:3, Insightful)
Re: (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.
Garbage in garbage out (Score:3, Interesting)
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.
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: (Score:3, Interesting)
If they had failed, a dozen other companies would have risen to offer the same services, but in competition with each other. There would have been a short period of pain - the birds that nest in the tree would have been put out, the apes that ate its fruit would have to look elsewhere, etc, but it would have been okay.
Sometimes the old trees in the forest get rotten and need to fall, so that the new saplings can flourish.
Hey, at least it's not a car analogy.
Re:Not AIG's fault (Score:5, 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: (Score:3, Insightful)
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."
It's just like... (Score:5, Funny)
It's just like the story of the grasshopper and the octopus.
All year long, the grasshopper kept burying acorns for winter, while the octopus mooched off his girlfriend and watched TV.
But then the winter came, and the grasshopper died, and the octopus ate all his acorns. Also, he got a race car.
Is any of this getting through to you?
They weren't bonuses (Score:3, Informative)
They weren't bonuses - they were retention contracts. AIG didn't want everyone to jump ship so they offered retention contracts to key people. It's a VERY normal thing to do. The dollar amount may have been crazy - but they were NOT bonuses.
Bad will (Score:4, Interesting)
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?
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.
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.
If a dog bites the hand that feeds it... (Score:4, Interesting)
Seriously, if you have a sick and injured animal, you try to help it recover. But if that animal is deemed unfit to coexist with people and other animals... like food aggression, attacking people, or literally biting the hand that feeds it...
Well, that animal needs to be put to sleep.
It's irrelevant what the $$ amount is, if the sole purpose of the company now is to keep sucking money into it's expenditure hole and apparently tossing back up this kind of behaviour.
Even if the company survives the economic issues we're living in, would the company itself be viable as a service company, given the kind of image/pr suicide it's been committing?
Forget about too big to fail. Let's start looking at companies that are too tained/corrupted to be allowed to succeed.
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: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: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:I cannot believe the hubris... (Score:5, Funny)
Or, at the very least, a televised kick in the balls.
We could make it a game show, with a national lottery at dollar a ticket for the chance to be the one doing the kicking. Ad pricing could start at Super Bowl levels for the first episode, and double for each subsequent show. The money from the lottery and ad buys could be used to buy up the toxic assets, or buy out the predatory mortgages and relocate the victims into something actually affordable (in Florida).
It'd be a multi-win scenario. The public would get to vent its anger, the CEO's would learn a sharp, public and valuable lesson, and the corporate glass ceiling would be shattered as a host of women get sudden promotions to positions of power.