*
People with more expertise and better analytical skills than me have gotten to the heart of the AIGFP Bonus Baby Affair, as I understand it, much more directly than I was able to. So this will be my last word on the AIGFP bonuses, at least for this week.
My concern about a retroactive targeted tax on the unethical bonuses, such as the one passed in the House today, would be its constitutionality. According to this authority, a Harvard law professor named Laurence Tribe, a tax of this sort could be crafted to comply with the Constitution. However, the first and only commenter on the Atlantic article in which Tribe is quoted suggests some chilling hypotheticals that could emerge from such a legal precedent, causing me to rethink my position on the Bonus Baby tax.
So here's an alternative approach I'd like to see, which differs somewhat from my previous suggestion. I'd like to hear President Obama say something along the lines of "OK, ya know, fuck it --- keep your bonuses. You're gonna need every cent of them when we turn the Justice Department, the SEC, and the FBI loose on your asses to fine out exactly what you've been up to for the past 10 years. And Geithner, Summers: clean out your desks by close of business tomorrow and return your keys to the four huge Secret Service brothers who will escort you to the parking lot."
Nothing will change until RICO Act investigations are initiated and the institutions of our Reaganomics-based phony economy are dismantled with extreme prejudice, brick by brick. At the moment, the count on Obama appears to be 0-2, and he's already fouled off a few. I really hope he's just presenting the illusion of impotence to fake us all out, just for dramatic effect before he pounds one out of the park.
Update before I'm done writing: OK, statements like this "Geithner is doing an outstanding job" shit from Obama on Jay Leno tonight are making me nervous. Fouled another one off; count remains at 0-2....
Showing posts with label Wall Street welfare. Show all posts
Showing posts with label Wall Street welfare. Show all posts
Thursday, March 19, 2009
Wednesday, March 18, 2009
Drop in a bucket
*
LuMac wonders aloud (email-wise, at least):
I... wonder what this relatively little (dollar wise, not symbolic wise) spat is distracting us from.
He is referring to the "mounting populist backlash" about the AIGFP retention bonuses that were given to executives after they had already bolted from the organization. I take his point, but I don't think the dollar amount of this corporate stunt-looting exhibition is relevant, and likewise I don't think it will really distract us from issues that schmucks like this want us distracted from.
First point: I agree that the dollar amount of the bonuses is trivial when compared with a trillion dollars or two. But in the case of a bankruptcy, a broken contract, a burglary, shoplifting --- whatever --- the law doesn't make many distinctions in how the loser or the guilty party is treated based on the amount of property involved. There are distinctions between "petty" and "grand", and undoubtedly some other ones I'm not aware of, but I find it unlikely that the courts are often admonished to look the other way because the value of property involved is trivial. No: these Bonus Babies are in fact being awarded mindblowing amounts of money for a highly visible and destructive failure in competence and ethics. If we're going to make financial comparisons, these bonuses amount to 10, 20, or more years of income even for a family earning $100,000 annually. The idea that the Bonus Babies are contractually entitled to these awards should be declared officially ludicrous by AIG shareholders and all parties who hold effectively void AIG contracts or the worthless "investment products" created by AIGFP. It is highly unlikely that the IRS, the Justice Department, the SEC, etc., could not find a large handful of airtight legal reasons to "abrogate" the AIGFP performance and retention bonuses; all they need are some facts and figures to wave in front of a few warty, sweating bankers sitting on card table chairs under bright lights.
Everybody knows that the most spectacular robbery of all times is unfolding in front of us. The U.S. Treasury is being looted by people who have mounds of money and influence that they simply assume they will get their way in the end. And why not? It now appears that people in Obama's Treasury Department and the Senate are complicit in granting these toads whatever wish is their command.
This kind of thing has been happening for decades, but somehow it has never initiated a critical mass of public fury. Mike Milken became the first superstar performance artist of financial fraud during the '80s, and the son of a sitting vice president --- Neil Bush --- was up to his eyeballs in the savings and loan collapse in the late 1980s. Financial crime sprees have been swept under the rug for 30 years, and I never sensed significant public outrage about it. But never has the pure cause-and-effect of it been this naked, and never has the economic collateral damage aproached these levels (with more to come, surely). One hopeful sign, to me at least, is that even the corporate media may be losing its ability to obscure these facts now, possibly because there are legions of unemployed, underemployed, and just plain scared and angry people who have ample time to watch Stewart and Colbert every night, and are motivated to make noise about it.
Second point: I don't believe that Bonusgate (let me be the first to use the term, thank you very much) is going to distract many of the key stakeholders in the U.S. economy for very long. I don't remember a more unstable political or legal situation since the Watergate era. The current epoch differs from 1973 because there is a large, educated, highly motivated segment of the population with powerful research and communication tools. The public was never in such a strong position to pressure both their elected officials and, even more importantly in my opinion, the corporate press. Information wants to be free: if the media don't release it to the public, then it will find its way to us (and eventually the media) via independent web-based journalists and bloggers. And I don't mean bloggers like me --- I mean bloggers who are working economists, attorneys, IT specialists, and reporters.
LuMac wonders aloud (email-wise, at least):
I... wonder what this relatively little (dollar wise, not symbolic wise) spat is distracting us from.
He is referring to the "mounting populist backlash" about the AIGFP retention bonuses that were given to executives after they had already bolted from the organization. I take his point, but I don't think the dollar amount of this corporate stunt-looting exhibition is relevant, and likewise I don't think it will really distract us from issues that schmucks like this want us distracted from.
First point: I agree that the dollar amount of the bonuses is trivial when compared with a trillion dollars or two. But in the case of a bankruptcy, a broken contract, a burglary, shoplifting --- whatever --- the law doesn't make many distinctions in how the loser or the guilty party is treated based on the amount of property involved. There are distinctions between "petty" and "grand", and undoubtedly some other ones I'm not aware of, but I find it unlikely that the courts are often admonished to look the other way because the value of property involved is trivial. No: these Bonus Babies are in fact being awarded mindblowing amounts of money for a highly visible and destructive failure in competence and ethics. If we're going to make financial comparisons, these bonuses amount to 10, 20, or more years of income even for a family earning $100,000 annually. The idea that the Bonus Babies are contractually entitled to these awards should be declared officially ludicrous by AIG shareholders and all parties who hold effectively void AIG contracts or the worthless "investment products" created by AIGFP. It is highly unlikely that the IRS, the Justice Department, the SEC, etc., could not find a large handful of airtight legal reasons to "abrogate" the AIGFP performance and retention bonuses; all they need are some facts and figures to wave in front of a few warty, sweating bankers sitting on card table chairs under bright lights.
Everybody knows that the most spectacular robbery of all times is unfolding in front of us. The U.S. Treasury is being looted by people who have mounds of money and influence that they simply assume they will get their way in the end. And why not? It now appears that people in Obama's Treasury Department and the Senate are complicit in granting these toads whatever wish is their command.
This kind of thing has been happening for decades, but somehow it has never initiated a critical mass of public fury. Mike Milken became the first superstar performance artist of financial fraud during the '80s, and the son of a sitting vice president --- Neil Bush --- was up to his eyeballs in the savings and loan collapse in the late 1980s. Financial crime sprees have been swept under the rug for 30 years, and I never sensed significant public outrage about it. But never has the pure cause-and-effect of it been this naked, and never has the economic collateral damage aproached these levels (with more to come, surely). One hopeful sign, to me at least, is that even the corporate media may be losing its ability to obscure these facts now, possibly because there are legions of unemployed, underemployed, and just plain scared and angry people who have ample time to watch Stewart and Colbert every night, and are motivated to make noise about it.
Second point: I don't believe that Bonusgate (let me be the first to use the term, thank you very much) is going to distract many of the key stakeholders in the U.S. economy for very long. I don't remember a more unstable political or legal situation since the Watergate era. The current epoch differs from 1973 because there is a large, educated, highly motivated segment of the population with powerful research and communication tools. The public was never in such a strong position to pressure both their elected officials and, even more importantly in my opinion, the corporate press. Information wants to be free: if the media don't release it to the public, then it will find its way to us (and eventually the media) via independent web-based journalists and bloggers. And I don't mean bloggers like me --- I mean bloggers who are working economists, attorneys, IT specialists, and reporters.
Tuesday, March 17, 2009
The sanctity of contracts [updated]
*
Today on All Things Considered I heard some New York Times reporter named "Andrew Ross Sorkin" try packaging a lame apologia for criminally incompetent executives as good old American contrarian horse-sense. His point seems to be that the government can't just "rip up contracts" because we have laws, and therefore AIGFP retention bonuses (for example) "must" be paid if we (we-who, he didn't say) are to retain the fabric of trust in society. Or something.
To her credit, ATC co-host Melissa Block quizzed this fool about the difference between ripping up AIGFP executive bonus contracts and ripping up union contracts as part of the in-progress auto industry bailout. But I wish she would have told him that nobody is literally expecting the government to "rip up contracts." By failing to follow up insistently to question Sorkin's premise, she allowed him to waste 3 minutes of my time in the car that I could have been listening to "Playground Psychotics." Meanwhile, Sorkin explained to all us rubes that "we" really need to keep these AIGFP execs on board because they're the only ones how know how to "unwind" the exotic derivative securities that they conjured. Yes: they need to be paid excessive bonuses in addition to their salaries so they will continue to do the jobs they are contractually obligated to perform.
See, the way I process this in my cinder of a brain, I am convinced that both parties to an emploment contract need to honor said contract. Therefore, before we hear any more horseshit like this from reporter Sorkin, he needs to employ the Google, Nexis and Lexis, his telephone, and his Outlook address book to find out for the American public (who is an 80 percent majority shareholder in AIG) whether the AIGFP bonus recipients did in fact fulfill the terms of their contract. If he's too frightened, lazy, or unskilled to do that, then he could at least check TPM a few times a day to keep up with the facts of the story... just for appearances.
When it's time to unwind" the AIGFP mystery securities portfolio for real, we AIG majority shareholders won't need to pamper and coax reporter Sorkin's smarmy MBA pals to do that job. We will go to the real experts: auditors, bank examiners, criminal investigators, and federal prosecutors.
Update: that cute little Ezra Klein addressed a similar topic today, referencing Sorkin's NYT column as source material. There's a bit of ambiguity in his point, however, possibly due to the lack of vetting his text through a simple country editor. To make up for the ambiguity, there are a number of interesting remarks in the comments thread below the post. No, we can't confiscate money from a small, specific group of people without any valid legal framework. Yes, there are many possible ways to approach the quashing of the AIGFP bonuses, such as legislation about executive bonuses working in corporations that have accepted TARP funds or giving AIG a friendly reminder that they're fucking bankrupt and must settle up with a long line of customers and shareholders before making good on contracts that rewarded gross mismanagement or worse. One commenter suggests freezing the accounts out of which executive bonuses are to be paid pending the outcome of a fraud investigation; I like that one.
Today on All Things Considered I heard some New York Times reporter named "Andrew Ross Sorkin" try packaging a lame apologia for criminally incompetent executives as good old American contrarian horse-sense. His point seems to be that the government can't just "rip up contracts" because we have laws, and therefore AIGFP retention bonuses (for example) "must" be paid if we (we-who, he didn't say) are to retain the fabric of trust in society. Or something.
To her credit, ATC co-host Melissa Block quizzed this fool about the difference between ripping up AIGFP executive bonus contracts and ripping up union contracts as part of the in-progress auto industry bailout. But I wish she would have told him that nobody is literally expecting the government to "rip up contracts." By failing to follow up insistently to question Sorkin's premise, she allowed him to waste 3 minutes of my time in the car that I could have been listening to "Playground Psychotics." Meanwhile, Sorkin explained to all us rubes that "we" really need to keep these AIGFP execs on board because they're the only ones how know how to "unwind" the exotic derivative securities that they conjured. Yes: they need to be paid excessive bonuses in addition to their salaries so they will continue to do the jobs they are contractually obligated to perform.
See, the way I process this in my cinder of a brain, I am convinced that both parties to an emploment contract need to honor said contract. Therefore, before we hear any more horseshit like this from reporter Sorkin, he needs to employ the Google, Nexis and Lexis, his telephone, and his Outlook address book to find out for the American public (who is an 80 percent majority shareholder in AIG) whether the AIGFP bonus recipients did in fact fulfill the terms of their contract. If he's too frightened, lazy, or unskilled to do that, then he could at least check TPM a few times a day to keep up with the facts of the story... just for appearances.
When it's time to unwind" the AIGFP mystery securities portfolio for real, we AIG majority shareholders won't need to pamper and coax reporter Sorkin's smarmy MBA pals to do that job. We will go to the real experts: auditors, bank examiners, criminal investigators, and federal prosecutors.
Update: that cute little Ezra Klein addressed a similar topic today, referencing Sorkin's NYT column as source material. There's a bit of ambiguity in his point, however, possibly due to the lack of vetting his text through a simple country editor. To make up for the ambiguity, there are a number of interesting remarks in the comments thread below the post. No, we can't confiscate money from a small, specific group of people without any valid legal framework. Yes, there are many possible ways to approach the quashing of the AIGFP bonuses, such as legislation about executive bonuses working in corporations that have accepted TARP funds or giving AIG a friendly reminder that they're fucking bankrupt and must settle up with a long line of customers and shareholders before making good on contracts that rewarded gross mismanagement or worse. One commenter suggests freezing the accounts out of which executive bonuses are to be paid pending the outcome of a fraud investigation; I like that one.
Monday, March 16, 2009
How to pay AIGFP bonuses and live happily ever after
*
I wish I could take credit for the following brilliance, but in fact it came from one Lucious MacAdoo or someone very much like him.
We're told that AIG Financial Products (AIGFP) is contractually obligated to pay almost half a billion dollars in bonuses to AIGFP execs and other "key personnel", and that there is nothing Uncle Sam can do about it even though the U.S. Treasury owns 80 percent of the corporation's necrotic corpus. Josh Marshall took aim at that concept today with bullshit detector blazing. Meanwhile, NPR dutifully spent the day explaining to us rubes that not even the federal government can force a corporation to "abrogate" a contract. (Inexplicably, NPR did not tell us why it's possible for a corporation to abrogate its contracts with unions and pensioners.)
Enter Lucious with a fine idea, possibly overheard from his own id: force the AIGFP execs to accept their bonuses in the form of the "innovative financial products" they created. In my opinion, this would represent the most elegant solution to any problem ever conceived since the dawn of human history. Think of how easily these wizards could sell their bonus portfolios at huge profits on the unregulated open market for financial derivatives, then spend the proceeds on goods and services crafted by American workers who, early every Saturday morning, spring out of bed and drive to big box stores to purchase massive amounts of swag using credit cards that are readily available with no questions asked.
I wish I could take credit for the following brilliance, but in fact it came from one Lucious MacAdoo or someone very much like him.
We're told that AIG Financial Products (AIGFP) is contractually obligated to pay almost half a billion dollars in bonuses to AIGFP execs and other "key personnel", and that there is nothing Uncle Sam can do about it even though the U.S. Treasury owns 80 percent of the corporation's necrotic corpus. Josh Marshall took aim at that concept today with bullshit detector blazing. Meanwhile, NPR dutifully spent the day explaining to us rubes that not even the federal government can force a corporation to "abrogate" a contract. (Inexplicably, NPR did not tell us why it's possible for a corporation to abrogate its contracts with unions and pensioners.)
Enter Lucious with a fine idea, possibly overheard from his own id: force the AIGFP execs to accept their bonuses in the form of the "innovative financial products" they created. In my opinion, this would represent the most elegant solution to any problem ever conceived since the dawn of human history. Think of how easily these wizards could sell their bonus portfolios at huge profits on the unregulated open market for financial derivatives, then spend the proceeds on goods and services crafted by American workers who, early every Saturday morning, spring out of bed and drive to big box stores to purchase massive amounts of swag using credit cards that are readily available with no questions asked.
Monday, September 29, 2008
Solution to Reaganomics: the NFL model
*
My blogworld pal Dan Solomon writes a column called Down and Distance for a separate blog. His general topic is the nexus between politics and football that endlessly invites people to draw metaphors between the two domains. In his latest column, Dan points out something completely obvious that only Senator Bernie Sanders could possibly grasp (assuming he's a Patriots fan): the NFL is a wildly successful business enterprise because it has transformed its business model to include a huge helping of Socialism while retaining its fundamentally competitive character. Check it out, because it has a certain amount of relevance to this.
My blogworld pal Dan Solomon writes a column called Down and Distance for a separate blog. His general topic is the nexus between politics and football that endlessly invites people to draw metaphors between the two domains. In his latest column, Dan points out something completely obvious that only Senator Bernie Sanders could possibly grasp (assuming he's a Patriots fan): the NFL is a wildly successful business enterprise because it has transformed its business model to include a huge helping of Socialism while retaining its fundamentally competitive character. Check it out, because it has a certain amount of relevance to this.
Wednesday, September 24, 2008
Bush bailout speech: I report, you decide
*
Coupla things struck me while listening to Bush's address to the nation about the financial crisis a few minutes ago.
First, as McCain "suspends" his campaign to chicken out of his first debate with Obama... um, I mean, fly to Washington and save America Herself, The President of the United States --- "our first MBA president", in fact, as NPR's Adam Davidson informed me --- could barely spare 14 minutes before his bedtime to read a canned speech about the proposed $1 trillion Republican Wall Street welfare package.
Second, President Bush spent almost all his time stumbling through his sanitized Republican textbook version of the origins of the investment banking collapse, but neglected to mention either the role of Reaganomics or the cost of his proposed giveaway. Neither omission is surprising, but large slices of his audience have at least some understanding of both those issues, and some citizens may consider the President (even more) cowardly (than usual) for not acknowledging their own intelligence regarding the salient facts.
Third, he sounded completely disinterested in what he was saying as if he already knew that he would be moving into his parents' cushy basement in Kennebunkport on 20 January 2009. (The got a big-screen TV down there, and five different kinds of beer --- in their own kegs!)
And fourth, he ended his speech with the plaintive closing, "Thank you for listening." To which I say, "You're welcome, man, you're welcome for wasting 15 of my precious minutes." Doesn't this fool understand that some of us have blogs to tend to?!?
I have no idea what Bush's handlers thought his speech might accomplish considering that 80-something percent of Americans think the country is on the wrong track, and by a margin of 2 to 1 they believe that Republicans are responsible for current U.S. economic problems, and 0% believe the U.S. economy is improving. My hypothesis is that Cheney made him give the speech just to "torture" him; just to submit him to a little more humiliation plus the unpleasantness of staying up on a Wednesday night past bedtime.
Update before I've even posted: Blogger's spell checker flags Kennebunkport as a misspelling. The options it offers for correcting the error are "Outspokenness" and "Drunkenness"!
Coupla things struck me while listening to Bush's address to the nation about the financial crisis a few minutes ago.
First, as McCain "suspends" his campaign to chicken out of his first debate with Obama... um, I mean, fly to Washington and save America Herself, The President of the United States --- "our first MBA president", in fact, as NPR's Adam Davidson informed me --- could barely spare 14 minutes before his bedtime to read a canned speech about the proposed $1 trillion Republican Wall Street welfare package.
Second, President Bush spent almost all his time stumbling through his sanitized Republican textbook version of the origins of the investment banking collapse, but neglected to mention either the role of Reaganomics or the cost of his proposed giveaway. Neither omission is surprising, but large slices of his audience have at least some understanding of both those issues, and some citizens may consider the President (even more) cowardly (than usual) for not acknowledging their own intelligence regarding the salient facts.
Third, he sounded completely disinterested in what he was saying as if he already knew that he would be moving into his parents' cushy basement in Kennebunkport on 20 January 2009. (The got a big-screen TV down there, and five different kinds of beer --- in their own kegs!)
And fourth, he ended his speech with the plaintive closing, "Thank you for listening." To which I say, "You're welcome, man, you're welcome for wasting 15 of my precious minutes." Doesn't this fool understand that some of us have blogs to tend to?!?
I have no idea what Bush's handlers thought his speech might accomplish considering that 80-something percent of Americans think the country is on the wrong track, and by a margin of 2 to 1 they believe that Republicans are responsible for current U.S. economic problems, and 0% believe the U.S. economy is improving. My hypothesis is that Cheney made him give the speech just to "torture" him; just to submit him to a little more humiliation plus the unpleasantness of staying up on a Wednesday night past bedtime.
Update before I've even posted: Blogger's spell checker flags Kennebunkport as a misspelling. The options it offers for correcting the error are "Outspokenness" and "Drunkenness"!
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