But the fact that $30 BILLION dollars of taxpayer aid went to European banks. Let their own damn taxpayers bail themselves out, why do we have to?
$165M in bonus money is absolutely nothing compared to this.
Yes, I know the world as we know it would end if the world banking system collapsed. But seriously let the European governments tax their constituencies like we are being taxed. This is just nuts.
asking the taxpayer for a bailout at all, when its a mess they got themselves into
is total horsehit
throwing bonuses on top of that, onto the execs that screwed up
HOOOOOLY shit
.
Um - these are contractual payments right? Are you suggesting that as soon as they receive baiolout money the car companies should stop paying foreign suppliers?
A lot of you have no idea what would happen in an AIG failure. Take peace in the fact, that AIG will very likely be a shell of its former self in 12-18 months. It will be picked apart and auctioned off to the highest bidders.
I actually do understand what would happen if AIG fails, my point is that the Europeans don’t seem to care. $11.5B to Societe Generale, $8+ billion to Bank of Germany, $8+ billion to Barclays, who knows how much to Bank of Scotland et al.
Yet at the same time Europe is rejecting any kind of bailout that stretches themselves.
Seriously, it is NOT my responsibility, nor my children’s, to bail out these foreign banks.
I don’t believe you do understand and I will just leave it at that.
Okay … I’ll play. What would have happened if AIG would have gone under? Would it have been as bad as leaving my kids and their kids on the hook for the irresponsible behavior of Wall Street and the Congress/Senate/Executive Branch? Nothing like throwing good money after bad. How about having the Wall Street types suck it up a bit and pay back the ill gotten gains from the past decade? They screwed up and now we are paying for it (along with the screw ups of the EU).
drn92
AIG effectively serves as a hedging agent behind the banks and financial institutions. If you allow that hedge to fail entirely and immediately, the ripple effects would have been catastrophic. Many institutional investors would have faced a complete collapse in value of their debt securities. We would probably have been in the midst of the second great depression, seriously. The value of the Dow would likely be 25%-50% what it is today and numerous corporations would be filing bankruptcy, notably banks and financial institutions. Take all that liquidity out of the market and force manufacturing companies to fund with the last remaining source of cash, operating cash flow and you have a recipe for complete and utter economic genocide. Unemployment would sky rocket within months and the cycle would be nearly impossible to break out.
If it sounds too unreal to imagine, it is. All the bitching and moaning in the world on this board and everywhere else is a small price to pay for the stability we salvaged. As I mentioned AIG will be a shell of itself once this economy stabilizes. Ultimately, the necessary regulation will come out of this, but allowing AIG to fail, from everything I have read simply wasn’t an option. Now that was then…
Okay, so you have some good points about why the company should survive. As for the executives who are taking home the bonuses, however, can you provide any compelling reasons why we should not form a mob with torches and pitchforks, storm their mansions and penthouses, and put as much as possible of their wealth and possessions back into circulation in the general economy?
According to AIG’s chairman, “We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses, which are now being operated principally on behalf of the American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.” My question: if the second string had been calling the shots instead, would it have been much worse?
"As for the executives who are taking home the bonuses, however, can you provide any compelling reasons why we should not form a mob with torches and pitchforks, storm their mansions and penthouses, and put as much as possible of their wealth and possessions back into circulation in the general economy? "
Correct me if I’m wrong, but isn’t AIG under a legal obligation to pay out each of those bonuses? Assuming each employee that got a bonus met the terms of their contract to be eligible for the bonus, AIG couldn’t really fail to pay those bonuses, legally. If they had, they would have opened themselves up to law suits from each non-paid employee.
Yeah, I know that the company is legally required to pay the friggin’ bonuses, and it would be expensive (legally) for them to fail to do it. I’m still thinking that a) the typical justification that this sort of money is required in order to recruit and retain top people just doesn’t hold water - I mean, how much worse off would we be if they’d hired a bunch of incompetents? and b) are there any major economic downsides to storming these guys houses and yachts, and forcibly liquidating their assets? Maybe even donating their kidneys and other organs for the public good?
**“Correct me if I’m wrong, but isn’t AIG under a legal obligation to pay out each of those bonuses? Assuming each employee that got a bonus met the terms of their contract to be eligible for the bonus, AIG couldn’t really fail to pay those bonuses, legally. If they had, they would have opened themselves up to law suits from each non-paid employee.” **
Without the bailout money there would be no AIG, so no money to give out for retention bonuses.
"Without the bailout money there would be no AIG, so no money to give out for retention bonuses. "
Yes, but there was a bailout, and so, AIG was obligated to pay the bonuses.
The bonuses are a red herring:
$165M out of $85B is only 0.2% of the bailout money.
I’d like to know why Pres-O pounced on this .2% today instead of the $30B!
To quote the International Herald Tribune:
A spokesperson for the U.S. Federal Reserve said: “The counterparties that received collateral payments from AIG received these payments pursuant to contracts – contracts that don’t differentiate domestic versus international companies.”
Hmmm… Seems to me that the same could be said about bonus contracts.
**Correct me if I’m wrong, but isn’t AIG under a legal obligation to pay out each of those bonuses? Assuming each employee that got a bonus met the terms of their contract to be eligible for the bonus, AIG couldn’t really fail to pay those bonuses, legally. If they had, they would have opened themselves up to law suits from each non-paid employee. **
Correct me if I am wrong but weren’t they under a legal obligation “to not fuck over their investors”? I’m sorry but you are not going to convince me that these worthless pieces of shit deserve anything other than a jail sentence.
****investors
did you have a legal contract with AIG that guaranteed x% return on your investment? Caveat emptor and TANSTAAFL should be taught in schools from grade 1, because it seems people somehow forgot that the stock market is not ‘a safe investment’.
We would probably have been in the midst of the second great depression, seriously.
But we have already been told we are, fear sells and you are buying into it.
The value of the Dow would likely be 25%-50% what it is today and numerous corporations would be filing bankruptcy, notably banks and financial institutions.
They already are.
**Take all that liquidity out of the market and force manufacturing companies to fund with the last remaining source of cash, operating cash flow and you have a recipe for complete and utter economic genocide. Unemployment would sky rocket within months and the cycle would be nearly impossible to break out. **
See my point about fear.
If it sounds too unreal to imagine, it is. A
I agree, it is unreal. If AIG like GM fail, other companies will pick up the pieces. It may take a while without the required liquidity, but they will rebound and then we would all be better off in the long run. People will still need insurance policies and someone who will actually know how to run an insurance company and stop investing in crap will come through, hire people and build another large company. That’s the way the free market works and your method of government bailouts are and always will be short term solutions done because people think short term.
"I’m sorry but you are not going to convince me that these worthless pieces of shit deserve anything other than a jail sentence. "
I don’t think I ever said anyone “deserves” these bonuses. I said AIG is legally obligated to pay them.
How did the U.S. allow any one company to become so large that their possible failure would cause such damage to the financial well being of the entire country?
If you allow that hedge to fail entirely and immediately, the ripple effects would have been catastrophic.
My question is simply, why wouldn’t many people swoop in and pick up the pieces? Obviously there’s money to be made and AIG had/Has many profitable pieces. The non profitable ones would have died taking some folks with them and the profitable ones would have been picked up at bargain prices. I don’t see this as being “Catastrophic” and nothing more than what happens on a daily basis to any number of thousands of smaller companies.
I think people “Exaggerate” the situations to the very worst scenario as if AIG would have simply disappeared off the face of the earth. In fact what would have happened would have been some long drawn out “Picking of the carcass” and the courts would have served as a buffer as they usually do during most bankruptcies or failures. Operations would have continued “Business as usual” until suddendly one day the workers came into work and it would haev had some other name on the door.
People don’t just let profitable business or large capital sit unless they have no purpose. If they have no purpose they are nothing more than a drain on the economy anyway. If they have a purpose someone is going to figure out how to make money off of it.
~Matt