Some Reality For The Reality Based

The WaPo actually makes the long trek to the Wilton office of AIG Financial products and speaks with the guy in charge (Gerry Pasciucco, another dollar a year man brought in with Liddy last fall):

The handful of souls who championed the firm's now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president.

"They've chosen to throw us under the bus," said a Financial Products executive, one of several who spoke on condition of anonymity, fearing reprisals. "They have vilified us."

They say what is missing from this week's hysteria is perspective. The very handsome retention payments they received over the past week were set in motion early last year when the firm's former president, Joe Cassano, was on his way out the door. Financial Products was already running into trouble on its risky credit bets, and the year ahead looked grim. People were weighing offers from other firms, and AIG executives feared that too many departures could lead to disaster.

So AIG stepped in with an offer to employees of Financial Products. Work through all of 2008, and you'd get a lump payment in March 2009. Stick around through 2009, and you'll get paid through 2010. Almost all other forms of compensation -- bonuses, deferred payments and the like -- have vanished.

"People are trying to do the right thing," the same Financial Products executive said. "Guys have worked their [tails] off to try to get value for the taxpayer. This isn't money that's being advanced to us. People have performed the work and done it exactly as we asked them to do."

Pasciucco cringed at the notion, articulated by many lawmakers and even President Obama, that Financial Products is a firm of nearly 400 reckless and greedy derivatives traders.

In actuality, he said, nearly all the troublesome sectors of the business -- namely, the risky credit derivatives written on mortgage-backed securities -- are now out of the equation, as are the people who worked on them. That leaves a small number of employees to untangle the remaining trades in four main areas: commodities, interest rates, currency and equities -- most of which were fully hedged and have caused little problem. The effort also requires a sizable number of "back office" staff, such as systems, computing, accounting, human resources and legal teams.

"Everybody, including my secretary and including the guy down the hall that serves lunch, gets a payment," said Pasciucco, who added that he received no retention payment and has no contract.

But what about the argument made by top AIG officials that the people receiving retention bonuses have unique skills and knowledge that make them indispensable?

"They are replaceable," Pasciucco acknowledges. "If we were running a long-term business, we could probably replace them over time, not all at the same time."

But it would be impractical at best, dangerous at worst, to get rid of everyone at Financial Products, according to AIG officials. If everyone leaves, Pasciucco said, "you don't have people that really, truly understand the book [of business]. We're still big enough that that matters."

If they did walk out the door, who would volunteer to work at the Chernobyl of the financial world? And what would become of the mammoth portfolio that remains?

"It would become the biggest naked position on Wall Street," one longtime Financial Products executive said, "and everybody would exploit it."

I am not going to tell you they need all 370 people to wind down their remaining activities but you can be sure of this - if key people leave, AIG won't be able to hire replacements.  Well, not without guaranteed compensation that will eventually outrage Congress.  Hmm, they drafted doctors during the Korean War (if I recall M*A*S*H correctly); maybe Obama could institute a draft call-up for derivatives traders to fight this economic war.

And this may be the first story I have noticed which emphasizes that AIG FP had other activities than credit derivatives, as I have noted in previous tirades.

Comments

[Charlie (Colorado)]

Pasciucco urged them to keep their heads down, to act professionally and to continue working to extricate Financial Products from its more than $1.6 trillion in outstanding derivative contracts. He acknowledged that the past few days have been like being "inside the piñata."

In reply, they told him that they worried mostly about getting shot, despite the guards now patrolling the parking lot, the front door and some of their homes.

There have been a fair number of people, even here, talking about how vile and reprehensible these bonuses were.

This is the result.

[kim]

Demagoguery is poor governance. So Obama is 'angry'? It's a good substitute for execution. God save us all.

C'mon, Bill Clinton, has the cat got your tongue?
========================================

[clarice]

Rush says we are treating these folks worse than the inmates at Gitmo.

[kim]

Someone in the Democratic Party has got to say 'Enough already'. Any bets on whom? Not Jon Stewart, thank you. How about George Mitchell? How about.....well, I've run out of names. Heh, I was going to say Howard Baker.

Bob Dole, c'mon, get with it.

By the way, it appears that Michael Steele has a clue about the climate. It's going to be a bigger and bigger issue. We ain't warmin' no more.
============================================

[Pofarmer]

There have been a fair number of people, even here, talking about how vile and reprehensible these bonuses were.

This is the result.

No, Charlie.

This is the road the bailouts took us on, it was almost inevitable, once we took that path. What did you honestly expect? Next, it's gonna crash the dollar, which was also pretty much inevitable once the Fed Govt decided to pretty much take on the whole world economy.

[ben]

"There have been a fair number of people, even here, talking about how vile and reprehensible these bonuses were."

They were vile and reprehensible, although the tax remedy is just an a ploy to justify more illegal usurpation and taxation schemes later. Focusing on the bonuses and not the bailouts is the problem. The bonuses are a red herring, you throw the public a $165 million bone while the crooks with the $ 2 trillion slip by unnoticed.

[steve sturm]

I find it amusing and troubling that people with absolutely NO experience in a particular area are so willing to second guess and condemn the managers on the scene... and often with incorrect and incomplete knowledge of the facts (for example, how many demagogues have been yapping about bonuses going to 'the people who made the mess' when in fact those people have long left the company?)

It happens, amusingly, when guys with nothing more to their name than having played high school sports act is if they ought to be running a professional sports team... and much less amusingly when people with no military experience start second guessing the guys who wear uniforms and when people with absolutely NO experience in business beyond the boundaries of their 4x6 cubicle start acting like they're Masters of the Universe.

'We' (as in the taxpayers) picked Liddy to run AIG. Absent allegations that he is corrupt, lazy or playing favorites, 'we' ought to let him do the job we asked him to do. If he thinks paying retention bonuses are the right thing to do in this situation, then 'we' need to stand by him and support his decision.

Gee, how I wish Liddy had fired back at Congress. It's one thing to suck up to the boss when you 'need' the paycheck, but what an opportunity for someone (other than Dogbert) to lay into Congress and expose them as the hypocrites and grandstanders that they are.

[bgates]

This is starting to follow a familiar pattern.

Point: "Rush is an asshole, and anyone who supports him is destroying America!"

Counterpoint: "No, he isn't."

Point: "Quit dwelling on Rush, America-hater! Here's another reason to hate Rush."
-----
Point: "The AIG bonuses are the single wisest public expenditure ever, and anyone who criticizes them is destroying America!"

Counterpoint: "No, they're not."

Point: "Quit being distracted by AIG, America hater! Here's another reason why the AIG bonuses are essential to our country."

[Charlie (Colorado)]

They were vile and reprehensible,...

No they weren't. That's the core problem. You're being gamed by the demagogues and you're falling for it.

You might ind the WaPo piece linked in this very post helpful.

[fsteele]

Obama pushed this bill through so fast that no one, including himself, had time to read it.

He signed something he hadn't read, and no one knows when it got put in.

Altzheimer's, anyone?

[Donald]

I played high school sports and I could run the entire country better than these clowns.

[Donald]

It would however be harder to run a professional sports team. There's JUDGEMENT involved.

[boris]

Comment repost from "Who Broke AIG?"

One way of looking at it: How wasteful it would be to pour in billions of taxpayer dollars to prop up AIG and GS then sabotage the effort so they fail anyway.

The other way to look at it is "faster please". FUBAR the system so bad that the electorate pushes the Reset Button in 2010.

I don't see it as a good thing for our side to be in a position to own a failure caused by bonus outrage. If the public owns it that's one thing, it still redounds to Obama for a wrongheaded policy that could only work on paper where public apathy is the default assumption.

[steve sturm]

You want someone to run the country, pick a name out of the phone book and I'd wager it would be an improvement over the current bunch of politicians (both sides of the aisle).

But run a company the size of AIG, that's another thing altogether, I'd prefer to stick with someone with some proven successes on his belt.

[matt]

the politicians are simply trying to deflect blame away from themselves....75% of Congress needs to leave Washington.

[Charlie (Colorado)]

This is the road the bailouts took us on....

Death threats against people doing their jobs?

Tell you what, Po. Say this had been structured as a regular bankruptcy -- which is what it's always been in effect, even though the current bankruptcy laws didn't fit very well. Would you expect the bankruptcy to be processed by people who would take pay cuts of 80-90 percent, followed by termination without severance, in order to do so? When they could instead move to other firms and make what they had been making?

If so, what kind of idiot employee do you think would take the job?

Assuming that you found your idiots employees to take the job, how many do you expect would be willing to continue once the death threats started?

Have you considered applying for a job at AIG? It kind of sounds like they may have some openings soon. You appear to be qualified.

[Cecil Turner]

I don't see it as a good thing for our side to be in a position to own a failure caused by bonus outrage.

The great thing about this one is that the Dems own the bailout (with the bonus restrictions) and the outrage. They're welcome to both of 'em; but I reserve the right to beat up on them for being unable to run a demagoguery program, even on their own terms.

[Lesley]

Last night, Glasater linked to Charlie Rose interviewing Hank Greenberg, Meredith Whitney, Carol Loomis (Forbes) and Gretchen Morgenson (NYT). All four interviewees agreed the retention bonuses were a bad thing and should be returned. It seemed to me that their reasoning was that anyone random person wandering the street could have been hired to unwind AIG's problems.

Frankly, it left me scratching my head.

Oh, and Steve Sturm - well said.

[bgates]

Charlie, if it were a bankruptcy de jure instead of de facto, we'd be spared the shrieks of outrage from the Congressmen who started the bailouts and now prefer demonizing their opponents rather than even attempting to understand counterarguments against their own position.

Speaking of which, when are you running for office?

[ben]

Charlie is there a bailout or give-away of taxpayer money that you would be against, or are you blindly for every bailout and giveaway that will ever be devised by the Obama administration. I think you are the one being gamed if you use the WaPo to base your arguments. There is nothing demagogic about being against bailouts or bonuses, although I don't agree on the taxation remedy because I think its a ploy to gather support for future taxes.

[MayBee]

Obama's accent has returned to him in CA.

[Fresh Air]

Ben--

This is a legal matter, not a political one. You can understand the rationale behind the perfectly sensible business decision to grant retention bonuses in a securities firm--where the assets go down the elevator every night--without being pro-bailout, either in the particular or in the general.

Moreover, if these folks do quit tomorrow, as I suspect many will do, who will defend the taxpayers' position in all the securities in which AIG makes a market? The amount of damage that can be done by predators will make the stay-put payments look like chump change.

Do I think the payments were excessive? Yes, probably they were. But it doesn't matter. The Treasury took this sucker over knowing exactly what the assets and liabilities looked like, including a liability of $165 million to be paid in March of 2009. If they had a problem with this, they should have worked it out before they made the taxpayers owners.

[DebinNC]

I wonder how Paulson's original 3 page plan now compares to the behemoth the Dem Congress produced.

[MayBee]

Do I think the payments were excessive? Yes, probably they were. But it doesn't matter. The Treasury took this sucker over knowing exactly what the assets and liabilities looked like, including a liability of $165 million to be paid in March of 2009. If they had a problem with this, they should have worked it out before they made the taxpayers owners.

Thank you, Fresh Air.
It's important to separate whether the bonuses were correct or desirable from what has happened here.
They were promised at a time before the true extent of the eventual government dependence was known.
They were protected by the very government giving the money to pay them. That protection was approved by two branches of our Government.

Now those same lawmakers want to punish the very people they'd passed a law to protect, all because their law turned out to be unpopular.

[DebinNC]

I wonder how many JL/MSM members will report that BO's 25 dvds turned out, according to The Telegraph to be unwatchable in the UK? The WH claimed that it had special ordered them a month (or more) earlier from The American Film Institute. Will the MSM follow up on how/why this happened? Will they all independently decide it's not newsworthy?

[Fresh Air]

DebinNC--

It's even worse if they special-ordered them. It means they had time to think about what to present to the prime minister and still chose an incredibly tacky gift.

[DebinNC]

The Telegraph link ..also LUN

[Ignatz Ratzkywatzky]

Charlie is there a bailout or give-away of taxpayer money that you would be against, or are you blindly for every bailout and giveaway that will ever be devised by the Obama administration.

Right or wrong, I was against the original TARP [although TCO agreeing with me eventually made me doubt my own good judgment] and every subsequent idiotic bailout, so my support of the AIG demon princes being paid their bonuses and keeping them has nothing to do with supporting bailouts.
They're doing their jobs as they're supposed to under the terms they were contracted to do them, period. The same goes for any schlemiel working at Fannie or Freddie.
Wasn't there some ideal about being a nation of laws not men [or Barney Franks] at one time?

[DebinNC]

I was wrong that the dvds were "special ordered".
Daily Mail on 3/6: "But the Mail has learned it included classics such as Star Wars, The Godfather and Citizen Kane and was produced by the American Film Institute as a 'special request' for the White House last month."

Somebody messed up. I'm interested in whether the echo chamber will attempt to find out who. And I'm still waiting for video of Obama thanking himself for inviting himself to the St. Patty's Party.

[DebinNC]

Sorry about interrupting this thread w/dvds biz. I meant it for the JL thread.

[bad]

Are there any US citizen AIG employees earning less than $250,000 per year after the bonus is added, who received a bonus?

If so, taxing this bonus at 90% means Obama will break his promise about "not one more dime of taxes if you earn less than $250,000."

[jimmyk]

Critics here of the bonuses seem to be conflating that issue with the propriety of the bailout. You can be anti-bailout, but given the bailout you would hope the value of AIG as an enteprise is maximized. It's hard to see how screwing the employees is helpful to us the taxpayers.

My concern, as expressed in the previous thread, is over whether there is excessive generosity to the counterparties. If the point of the bailout is to keep the counterparties from going bust, they should be getting the bare minimum to keep them solvent.

I made the same argument a year ago re Bear: Why did Timmy G give M-S $29B of taxpayer money for them to pay $10/share for B-S? That was basically a transfer of tax $ to B-S equity holders.

[bad]

It's okay Deb, I was locked out for about a half hour and when I could finally post, the same comment ended up on all the threads.

I must be a genius.... or something...

[Pofarmer]

Charlie, if it were a bankruptcy de jure instead of de facto, we'd be spared the shrieks of outrage from the Congressmen who started the bailouts and now prefer demonizing their opponents rather than even attempting to understand counterarguments against their own position.

What bgates said. This should have been kept OUT of the political realm, which the bailouts made impossible.

The thing is, for whoever approved those bonuses, it was INCREDIBLY POLITICALLY STUPID. Which is something that seems to be going aruond a lot. I dunno, I've been involved with companies that went throught bankruptcy. Pretty much, operations ceased and the lawyers divied it up. If these eggheads laid such a landmine, it'll probably STILL go off, even after we've shoveled HUNDREDS OF BILLIONS OR TRILLIONS of taxpayer dollars at it, tanking our currency and further damaging our economy. These are VERY BAD THINGS. There were never any gaurantee's. So I guess the question is, do you want an epic fail now, or an epic fail in November 08, or an epic fail 6 months in the future, cause the odds still ain't in this suckers favor, especially with the Fed cranking up the printing presses. Either way, we just lost big.

[Pofarmer]

They're doing their jobs as they're supposed to under the terms they were contracted to do them, period. The same goes for any schlemiel working at Fannie or Freddie.
Wasn't there some ideal about being a nation of laws not men [or Barney Franks] at one time?

I agree, however, at one point, we were also a nation that at one point beleived in honor and finishing a job. It would appear that that is no longer the case, unless we're sufficiently bribed.

[cahmd]

My feeling is that the House's vote to tax these "bonuses" at 90% is the 2009 equivalent of Smoot-Hartley: one was a confiscatory tariff on trade, the other is a tax or domestic confiscatory tariff. The end result I fear will help bring a repetition of the same calamity.

[ben]

"This is a legal matter, not a political one"

Sorry Charlie, rarely has there been anything more political. This is all politics. I agree the recipients of the bonuses have an excellent case to make in court, some lawyers are going to make a lot of money, I would bet the employees win. But the facts the bonuses were legal doesn't make either the bailout or the bonuses excusable in the first place. The argument that AIG had to be bailed out is extremely weak, based on emotion rather than fact (the whole economy was going to crash, the market was going to crash, etc., well they did crash anyway) and the bonuses were as Pofarmer so eloquently put, "incredibly politically stupid".

[ben]

"..although TCO agreeing with me eventually made me doubt my own good judgment"

Don't worry, the law of averages had to come into play sometime, although I would admit if it happened often it would be something to worry about.

[Ignatz Ratzkywatzky]

It would appear that that is no longer the case, unless we're sufficiently bribed.

Very few people on Wall Street above the mail room are paid anything more than a token salary. They are compensated via bonuses. It's not a bribe to pay someone what they agreed to do the job.
Everything these Dem assbite, never-waste-a-crisis creeps touch is designed to be a slippery slope. Who's next?
Why shouldn't farmers who receive ag payments have their salary above a certain arbitrary amount taxed at 90%? They receive a bailout every year whether they're profitable or not. Or people who take the mortgage deduction. The list is nearly endless.

[MayBee]

Everything these Dem assbite, never-waste-a-crisis creeps touch is designed to be a slippery slope. Who's next?
Why shouldn't farmers who receive ag payments have their salary above a certain arbitrary amount taxed at 90%? They receive a bailout every year whether they're profitable or not. Or people who take the mortgage deduction. The list is nearly endless.

Bingo.
I suspect this will be a big factor in cutting health care costs as well.

[kim]

Well, ben, we don't know what the crash would have looked like had not a step been taken in September, so your argument that they've crashed anyway is hypothetical. After one hundred repetitions, TCO is finally absorbing that one.
==================================================

[bad]

Any chance that tax the bonus bill will slip up and take 90% from unintended bonus recipients?

[RichatUF]

Maybee-

I suspect this will be a big factor in cutting health care costs as well.

Grandma and Grandpa are rich, they can afford to "sacrifice".

[MayBee]

Rich- I'm thinking about Doctor's salaries being tightly monitored once tax dollars are all over health insurance.

[bad]

Maybee, all of my health professionals are very concerned about that.

[qrstuv]

Po: "The thing is, for whoever approved those bonuses, it was INCREDIBLY POLITICALLY STUPID."

I'm getting really tired of this so-called argument. Please lay out an alternative that could have worked in the real world. Let me explain the constraints to you:

1) People with specialized skill sets can find jobs in other organizations if they want to.
2) When an organization goes out business, people tend to want to leave it.
3) Indentured servitude has been outlawed for a century and a half.

[Fresh Air]

...but the facts the bonuses were legal doesn't make either the bailout or the bonuses excusable in the first place...

Well what the hell else does a businessman have to do in this country besides comply with the law? Well....?

The managers of AIG entered into these arrangements, which are customary in the securities business (as I know from 12 years personal experience), in good faith March of 2008. One year ago--long before the taxpayers took over the company. That means Congress has no say in the matter today.

If the representatives of the Treasury wanted to deal with this issue, they could have asked the company to renegotiate the arrangements as a condition of providing equity. If Congress wanted to deal with this issue, they could have taken Chris Dodd's fateful clause out of the Spendulus Bill. But neither party did so!

At the time of their execution between the employees an AIG, the arrangements were certainly legal, possibly prudent and even arguably necessary. So what that means is that the adults of the country need to shut up about them and worry about the other $8.83 billion of pork that has just been shoved down our throats thanks to Washington Democrats.

We've got ACORN involved in the Census now, for chrissakes!

[bad]

I'm with ya, Fresh Air.

[Pofarmer]

in good faith March of 2008.

Are you sure of that date?

1) People with specialized skill sets can find jobs in other organizations if they want to.

How, the whole God Damn economy was gonna go down the tubes, remember? Somebody played this through like a harp, and it ain't the folks bein' played ya'll think it is.

[Pofarmer]

So what that means is that the adults of the country need to shut up about them and worry about the other $8.83 billion of pork that has just been shoved down our throats thanks to Washington Democrats.

Honestly, who gives a shit about that?

They've just passed a 412 BILLION dollar omnibus spending bill, on top of a 750 BILLION dollar spending bill, and they're proposing a 3.6 TRILLION frickin dollar govt. We're just rearanging the deck chairs on the Titanic folks.

[matt]

My president spent $2.5 Trillion and all I got was this lousy T shirt.

[Pofarmer]

1) People with specialized skill sets can find jobs in other organizations if they want to.
2) When an organization goes out business, people tend to want to leave it.
3) Indentured servitude has been outlawed for a century and a half.

Who really gives a flying fig?

Normally, when a company goes bankrupt, operations cease, and a skeleton crew cleans up whatever needs to be cleaned up, along with the Vultures picking through the bones. AIG really doesn't look or act like a company in bankruptcy. It pretty much looks and acts like a company that took a hundred BILLION or so of your tax dollars, and is pretty much continuing business as usual. If they were still a private entity, winding things down, then nobody would be saying a word. But, they aren't. This box NEVER should have been opened.

[Pofarmer]

And one other thing

I keep hearing about this "4 Trillion dollars waiting on the sidelines."

Folks, the govt is DISPLACING private dollars. The govt is making decisions that the market place should have made. The govt is DEPRIVING people of the opportunity to make a profit, and using your tax dollars to do it.

[qrstuv]

So Po, since you won't strain yourself to do the work, you think that AIG should not have offered these bonuses in the first place, and somehow, AIG would have retained enough people to do the job.

The 5% unemployment rate of last year would, in your opinion, have deterred these people from leaving. Is that what you think?

[qrstuv]

Well, Po, the box *was* opened, and you have to decide whether the rule of law means anything.

But why do I waste my breath since clearly you believe that the economy is facing apocalypse. The part I don't understand is why you're obsessing about what is to you only a minuscule detail.

[mark c]

here's a photo of Gerry Pasciucco. I guess it's a good thing his t-shirt hero isn't the one handing out the punishment. http://tinyurl.com/crnjyo

[Mark Turner]

With regard to the whole bonus issue, were these bonuses actually contractually agreed upon prior to AIG accepting any bailout money? If so, I can understand why they would be granted. However, it would also be possible, in theory, to get some ultra-liberal lawyer to twist contractual law in a way to get AIG to weasel out of paying them, if there was the will to do so. Instead, we have feigned outrage by a congress - particularly the Democrats - whose fingerprints are all over AIG and its bonuses. If there was a clause in the "stimulus" that nobody noticed or talked about, I think this oversight was intentional. It makes congress look too stupid to really be that stupid.

[jimmyk]

Critics here of the bonuses seem to be conflating that issue with the propriety of the bailout. You can be anti-bailout, but given the bailout you would hope the value of AIG as an enteprise is maximized. It's hard to see how screwing the employees is helpful to us the taxpayers.

My concern, as expressed in the previous thread, is not with the bonuses, but over whether there is excessive generosity to the counterparties. If the point of the bailout is to keep the counterparties from going bust, they should be getting the bare minimum to keep them solvent.

I made the same argument a year ago re Bear: Why did Timmy G give M-S $29B of taxpayer money for them to pay $10/share for B-S? That was basically a transfer of tax $ to B-S equity holders.

[Rick Ballard]

"I am not going to tell you they need all 370 people to wind down their remaining activities..."

Dunno about that. Lehman has a payroll of 500 in bankruptcy and is burning through $30 mil per month.

Apparently, breaking up is hard to do.

[mel]

If I may, a couple of points:

Po- Bernanke, in my opinion, has broken away from the administration and is fighting with the only tools he has to rescue the US economy. He knows the battle is joined, with the recent monetization gambit, and is striking to grow things before Congress can kill it with taxes (this is what killed the economy in 1934, new taxes). The Fed has the tools to inject (dilute is the term you're looking for) as well as siphon out dollars in times of crises, such as this. If Bernanke can start the momentum going, the overcorrected economy and markets, will respond strongly.

Next, the Dodd scenario has eclipsed his own abilities of Senatorial chutzpah. I think, and this is my own sense of it, he passed on an amendment written by a loyal lobbyist (who has time these days to write their own amendments, anyway) and injected into the bill, sight unseen. Biz as usual, here's that check.

Finally, Erin Burnett, of ordinarily, compliant CNBC fame, interviewed Charlie Rangel about the 90% tax bill he was working on. Specifically, she asked didn't he find it ironic that he was writing a tax bill against individual, when he, himself, was under an Ethics Committee investigation for failure to pay taxes on a number of fronts, and then proceeded to list them ALL. His response? Told her to quit reading the Republican Party's "newspaper stack", and it was all a big republican conspiracy to stop him from going after these AIG "guys".

The rubber band is getting awfully taut...

[clarice]

mark, the clothing on the assembled in those pics is molto molto expensivo (I've rarely seen so much expensive casual garb in the US)--I have a strong feeling he was wearing the Che T shirt as a joke.

[Mark Turner]

There is an interesting article in the Straits Times this morning (Friday, March 20 in Singapore, my time) titled "Obama must give Wall St His Full Attention. It cites the AIG debacle as the latest red flag and makes a comment about Obama's current performance and agenda as follows:

"...the world has already seen what happens when a US President becomes too fixated on his vision and grand plans at the expense of realities on the ground. Hint: Iraq"

Obama is too distracted by his other dreams of healthcare reform, clean energy and so forth ("stimulus", etc.) that his administration seems woefully incompetent or totally out of touch in dealing with the economy and the root causes of voter/taxpayer anger.

[mel]

jimmyk-

I think it's a blatant attempt to try and "get ahead of the herd" on the "bonuses amidst the bailout" so that they can run for re-election on the basis of them trying to "save taxpayer dollars from greedy traders" and leaving alone that distracting fact that they approved them in the first place. This is the reason for all the noise now, gotta put it all on the prior administration, whether culpable or not.

Vital for them to win the press argument now, then having to address it during "the campaign". The Democrats only need to win two more in a row, and then the Acorn census will kick in.

[bad]

Mel, you better have several drinks for me this evening. I need a couple of strong belts...

[Uncle BigBad]

Just saw a clip on Greta of O's appearance of Leno. O comes across as even more sophomoric than usual, swooning over "cool" Air Force One and the jackets with the presidential seal. Describing life in the White House like a child rescued from the Ghetto.

His juvenile behavior is really kind of scary. I believe it's pathological, but I don't know how to diagnose it.

If he didn't have our fate in his hands, I'd kinda feel sorry for him.

[Harun]

Devil's Advocate here:

If these employees can find work so easily in the financial sector, then it seems to reason there is no systemic risk. How else could there be so many choices for these guys in an industry which seems to be imploding? Last I checked unemployment was heading up, not down.

I also dispute that no one would be willing to work at AIG. Or really, is the job market in finance still so strong?

In my area, people are desperate to hang onto any job they have. (international trade.)

[Harun]

Maybe I would feel better about this if it was a bankruptcy team making these decisions instead of people trying to resurrect the dead.

[Uncle BigBad]

-- appearance ON Leno --

[mel]

bad-

You have dire need of a homemade slingshot and a bag o' marbles.

Especially if there's snow.

And keep heart, the battle is drawn, and quiet is noticed by those who dare not be wakened. Things are changing, it will get better. There may be more downside but the blinders are off. I'm getting more confident about it.

Not even going to bring up those who write for themselves (short list, thorn in side), and those who need the approval of others, as opposed to respect for their ideas.

I'm buried in my own research project, at the moment, and will be able to post more later. And, unfortunately for some others, at length. I've been building a "mental" outline for a big post for a while, and you might have been able to tell from my constant theme, lately.

No more teasing, and I've got to hit the rack. No booze for you lady, no messing with the meds, that's my job.

Night all.

[bad]

sweet dreams Mel

[Pofarmer]

Mel, Bernanke has misread the problem, IMHO. The problem isn't too little capital, the problem is too much DEBT.

From a Forbes article today.(Yes, it's Roubini)

By this standard, U.S. households whose debt relative to income went from 65% 15 years ago, to 100% in 2000, to 135% today were playing a Ponzi game.

And an economy where the total debt to GDP ratio (of households, financial firms and corporations) is now 350% is a Made-Off Ponzi economy. And now that home values have fallen 20% (and they will fall another 20% before they bottom out) and equity prices have fallen over 50% (and may fall further), using homes as an ATM to finance Ponzi consumption is not feasible any more. The party is over for households, banks and non-bank highly leveraged corporations.

LUN

Plus, he stands to CRUSH the dollar.

If Bernanke can start the momentum going, the overcorrected economy and markets, will respond strongly.

See, that's the thing, I don't think we've corrected ENOUGH yet, at least not at all by the measures which I'm familiar with. The Fed shouldn't be in the bottom picking, or in this case forcing, business. It hasn't worked out real swell so far.

[mel]

Po-

No, on a number of levels, and I can not go into them now. I meet with the Pres. of my little family run company (of which I am not family) tomorrow pre-dawn. Talk to clarice, glasater, or narciso, and I'll dump on you when you come back in for lunch. They know how to reach me.

Later, and change your shoes before coming in here.

Sheesh.

Night all, AGAIN.

[Pofarmer]

Well, Po, the box *was* opened, and you have to decide whether the rule of law means anything.

Rule of law is great, I'm all for it. It's the decision making leading up to this that sucked. I don't have a problem with folks keeping their bonuses, then being shown the door. I also don't have a problem beleiving the could find another 300 or so folks to come in and rathole another 100 BILLION or so taxpayer dollars. Like I said on another thread, if any of that money ever comes back, I'll owe you an apology.

But why do I waste my breath since clearly you believe that the economy is facing apocalypse. The part I don't understand is why you're obsessing about what is to you only a minuscule detail.

With good governance and a free market place we could adjust and adapt BUT we are getting kind of far away from both, no? I don't neccessarily oppose the bonuses, what I've been trying to point out is that this sort of stuff should have been easily foreseen when you inject the Congress we have into this mess. Then stack Obama on top and................

Never trust politicians to do what's in your best interest. The part I'm obsessing about is that people didn't realize that this kind of stuff would INEVITABLY happen.

If you find any economic indicators pointing up, let me know.

[Pofarmer]

Awwww, dangit mel.

I'll even hang up an air freshner.

Working through the manual on the new sprayer.

[Pofarmer]

Long, long, screed on AIG.

LUN.

[SWarren]

I haven’t gotten through all the threads yet, so don’t know if anyone linked this already. Maybe over the top but it's a scary scenario, can someone please poke some holes in it?

A look behind the wizard’s curtain
excerpt:

…….So, given the provisions of Basel II and the refusal of the BIS to lift or suspend the regulations when they are clearly the driving force behind the planet-wide credit crisis, and considering the lack of provisions in Paulson’s bailout bill to mandate that taxpayer funds given to banks must actually be lent, and given the added incentive in the bill for banks to deposit their bread with the Fed, one gets the idea that maybe, just maybe, these programs weren’t designed to cure this crisis; maybe they were designed to create it.

Indeed, my friends, this is crisis by design.

Someone planned the assassination and someone pulled the trigger.

THE RUBBER MEETS THE ROAD

All of which begs the question, How come?

Why drive the planet into the throws of fiscal withdraw—of job losses, vaporized home equity, and pillaged 401ks and IRAs?

Because when the pain is bad enough, when the stock markets are in shambles, when the cities are teaming with the unemployed, when the streets are awash with riots, when governments are drenched in the sweat of eviction and overthrow, then the doctor will come with the needle of International Financial Control.

This string of ineffective solutions put forth by people who know better are convincing bankers, investors, corporations and governments of one thing: the system failed and even the U.S. government—the anchor of international finance (which is blamed for causing the disaster)—has lost its credibility.

The purpose of this financial crisis is to take down the United States and the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority—a planetary financial control organization to “ensure this never happens again.”

Sound Orwellian? Sound conspiratorial? Sound too evil or too vast to be real?

This entity is being moved forward by world leaders “as we speak.” It is coming and the pace is quickening.

A year ago, I saw an article in which the president of the New York Federal Reserve bank was calling for a “Global Monetary Authority” or GMA to deal with the world’s financial crisis. While I have been following international banking institutions for some time, this was the clue that they were making their move. I wrote an article on it at the time.

By the way, as some may recall, the president of the New York Fed last year was a man named Timothy Geithner. Geithner was very involved in structuring the booby-trapped TARP bailout with Paulson and Bernanke.

Of course, now, he is the Secretary of the Treasury of the United States.

Change we can believe in…….

Read the whole thing at LUN.

[cathyf]

Ok, Po', fine -- what you are suggesting is that the AIG employees who have just received the second retention incentive for staying through March 13th should quit today and give up the third retention incentive. Leaving no one to keep the computers running, the payments going, answer the phones, pay off claims, cash checks, etc. Way worse than a bankruptcy.

[davod]

What does it take for Obama to stop trashing the economy:

"They've just passed a 412 BILLION dollar omnibus spending bill, on top of a 750 BILLION dollar spending bill, and they're proposing a 3.6 TRILLION frickin dollar govt."

Obama - Show me the money.

Don't forget the omnibus was from last year. Another campaign item the F....g Republicans didn't use.

[Pofarmer]

Ok, Po', fine -- what you are suggesting is that the AIG employees who have just received the second retention incentive for staying through March 13th should quit today and give up the third retention incentive. Leaving no one to keep the computers running, the payments going, answer the phones, pay off claims, cash checks, etc. Way worse than a bankruptcy.

The federal beauracracy is vast. They can just transport over a few folks from DMV.