Wednesday, March 18, 2009

AIG Exec Bonuses: "Logic" Critiques (post 2 of 2)

Click HERE to get to Part 1 of this blog post.

Hey, all:

I am a contributor to this blog, and am writing about and critiquing in this blog post the "logic" contained in the article "Summers: Pushing AIG Might Have Sparked Lehman-Style Crisis," written by Ed Hardy and posted on Anderson Cooper's blog.  This article reviews the "logic" of Obama's senior economic advisor Larry Summers and the US Treasury Secretary Timothy Geithner for why corporate execs should get bonuses.  

Prepare yourself for the bull**** contained below.  It smells particularly pungent today.

1.  Apparently, according to Summer, Geithner has 'used all legal authorities' to do what he can to put a stop to giving execs bonuses, but simply can't 1) because of the employment contracts these execs signed and 2) because not giving these people bonuses and breaking their contracts will somehow put the entire financial system at risk.  Quote:

Larry Summers suggested that if Treasury Secretary Timothy Geithner had pushed the insurance giant too hard on the bonuses, AIG could have collapsed just like Lehman Brothers and sparked an even bigger crisis.

“Secretary Geithner has used all the legal authorities that are open to him to contain and limit the payment of bonuses,” said Summer, chairman of the National Economic Council. “What he did not do, and what would have been irresponsible to do, as outrageous as these payments are, would have been to put at risk the stability of the financial system. To have courted the kind of disaster that followed the decision to let Lehman Brothers simply collapse might have felt good briefly but it would have touched the lives of a huge number of Americans who would have unnecessarily become unemployed or seen destruction of their lifetime savings.”

Summers said Geithner was notified about the bonuses last week and tried to stop them but ran up against a legal contract. 

2.  According to Summers, Geithner: "courageously has gone after these bonuses and will continue to go after these bonuses in a very aggressive way but we can’t suspend the rule of law and we can’t put the whole economy at risk,” said Summers.

3.  Guess what, even though they are giving millions of dollars in taxpayer money, the government is still willing to give AIG MORE OF OUR MONEY!!!!!: 

Asked whether AIG could get more bailout funds down the road, Summers suggested the door is open to more taxpayer money — despite the bonus controversy.

4.  Summers is clearly in touch with his inner Tao because this article concludes with the following zen-like quote:

“It is wrong to govern out of anger,” said Summers. “We have to recognize what we are angry about, do something about it. That’s why we are focused on a new resolution regime as part of a sweeping overhaul of the financial system … But we can’t let anger stop us from taking the steps that are necessary to maintain the stability of the financial system, keep credit flowing.”


1.  How is it possible that not giving bonuses to executives will cause an economic meltdown?  It seems infinitely more logical that not giving them money will help prevent economic meltdown by leaving more money for AIG to use on whatever it needs the money for = keeping more credit flowing for AIG by keeping the credit in the system rather than putting it in the personal bank accounts of greedy executives.  Perhaps the logic is the same as the last article, which implied that not giving bonuses will mean that 'top talent' will leave AIG, leaving them worse off than before.  But, as stated in Post 1, it again makes NO SENSE to call these people 'top talent' as they are the ones that screwed everything up in the first place.  HOW DO THEY STILL HAVE THEIR JOBS AT ALL, NEVERMIND MILLIONS OF DOLLARS IN BONUSES????

2.  I am not convinced.  These are empty words.  Courage was obviously not involved in this Geithner's negotiations, or these bankers would no longer be employed.  If Geithner or ANYONE for that matter in top levels of the US government had any courage at all, this bonus business would be a complete non-issue. 

3.  This makes me LIVID!!!!!!!  If these bonuses pass, these bankers should be required to GIVE THEM BACK IN FULL to the US government, perhaps in the form of tax breaks for low, lower middle, and middle income Americans.  Or maybe in the form of temporary housing for people living in tents.

4.  Summers obviously has a skewed understanding of 'anger' and the causes of 'anger.'  Anger is how I feel right now.  It makes no sense to say that STOPPING this madness of giving the people responsible for US and world economic meltdown MILLIONS OF DOLLARS for their own, personal, private use is 'governing out of anger.'  Governing out of anger would be to publicly humiliate these people by pasting their faces and addresses in every media outlet imaginable.  Governing out of anger would be sending these people to Guantanamo Bay.  Governing out of anger would be stripping these people of everything they have and dumping them in a homeless tent camp in Minnesota during winter.

That's all.  Hope you enjoyed reading these posts.  I don't know how America is going to actually change, but I hope that something does happen because this system is so unsustainable, I don't see how it could possible continue in the way that it has been for another 5 years nevermind 60.

I think Obama needs to stop trying to court big business and the American people, and needs to step up into his role as President and STOP this madness.  He or SOMEONE in the administration needs to put their foot down and say NO to these financial sector ***holes.  No! Enough is enough!  If they can't....what can we do?  Nothing maybe.  Something hopefully.  Who knows what will happen...

That's my piece.  Love it or leave it.  

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