Class divisions, AIG bonuses...

[urban_achiever]

The recent AIG bonus controversy really has me miffed. I understand and agree that top talent delivering quality results to a large company should be rewarded with bonuses. However, when the company is failing, how is this acceptable? This is not just at AIG, but at many corporations where the executive pay and company performance are way out of synch.

Recently, members of auto unions had their contracts negotiated (for them) so that they earned less pay. Those that seem to work the hardest in this country have seen their wages decline (with respect to COL/inflation) over the past 30 years. Yet, somehow, it is accetable for execs of failing companies to walk away with golden parachutes of mammoth proportions. It is capitalism run amok...the poor and middle class get poorer while those at the top continue to horde all the money.

[wordsmith]

Not acceptable. Positively reinforcing the problematic behavior does NOT have the effect of curbing said behavior. Psych 101. But that's how we do business in this country (for certain populations, at least).

[vinsanity]

I can't speak too much to the issue of executive compensation except to speculate that maybe the struggling companies need to shell out the big bucks to lure the talented top brass to lead the company into the black. Case in point would be Ford Motor. Alan Mulally's base salary is $20MM, but you could argue that he's worth it because his company is the only one of the three who's not asking for government bailouts. Maybe Bocheezu can share his thoughts on this particulr case.

As for the auto union workers, it's been known for years that their wages and benefits were severely inflated compared to the rest of the industry, which played a big part in turning the other two into corporate zombies, and leaving Ford a breath away from dead man walking. The latest negotiations brought their wages in line with the rest of the industry.

[Schecter_Guy]

They could take the advice of one Iowa lawmaker and kill themselves :?:

[Bsig84]

You do realize that Dodd added an executive-compensation restriction to the stimulus bill right? It makes me sick that the government is now acting pissed about the bonuses when they are the ones that wrote in the exception so they could receive those bonuses. I don't think those executives should have gotten bonuses but to have the government say they are going to take that money back is ridiculous.

And unions...I could go on forever about them. Did you know a glass worker (like caulking windows) makes $57 an hour in Vegas? Are you kidding me? Union workers are not paid based on merit. There is no way a glass worker should make more than an engineer working on top secret projects.

[larry52]

Of course it's morally and logically wrong by any definition one can possibly use.

The wealthy classes in the US controls the wealth, and the people who make and enforce the laws (also wealthy) enable them to do so.

This will not change until the lower classes revolt either with violence or organized peaceful demonstration like a refusal to pay taxes, etc.

There are truly no consequences to failure or criminality by the wealthy anymore. To give an example, the fact that Bernard Madoff hasn't been already executed after a short trial or better yet assassinated by one of his victims makes me ashamed to be an American. Truly ashamed. This man was enabled to remain free while living in a $7 million penthouse for weeks to transfer and shuffle hidden assets before his imprisonment.

[Bsig84]

The wealthy also create millions of jobs and give a lot of money to charities. They spend a lot of money on millions of products which then puts money back into the economy.

However, those that steal or con others should be punished.

[vinsanity]

Of course it's morally and logically wrong by any definition one can possibly use.

The wealthy classes in the US controls the wealth, and the people who make and enforce the laws (also wealthy) enable them to do so.

This will not change until the lower classes revolt either with violence or organized peaceful demonstration like a refusal to pay taxes, etc.

There are truly no consequences to failure or criminality by the wealthy anymore. To give an example, the fact that Bernard Madoff hasn't been already executed after a short trial or better yet assassinated by one of his victims makes me ashamed to be an American. Truly ashamed. This man was enabled to remain free while living in a $7 million penthouse for weeks to transfer and shuffle hidden assets before his imprisonment.

How cute, it's Karl Marx wearing a Che Guevara T-shirt :p

[Bocheezu]

This sums things up much better than I could myself.

http://www.msnbc.msn.com/id/29731049/

There's not nearly enough oversight involved and the bank companies don't have any requirements to meet in order to receive the money. They just get it. That's swell, way to make them work for it.

As far as Alan Mulally goes, I would much rather have the company pay him $20 mil to possibly turn the company around than pay Jac Nasser $12 mil to run it into the ground.

[Samwell]

I have to admit this old hobo/wobbly (http://en.wikipedia.org/wiki/Iww) lyric has been running through my head lately...

The bum on the rod* is hunted down
As the enemy of mankind;
The other is driven around to his club
And feted, wined and dined.

And they who curse the bum on the rods
As the essence of all that is bad
Will greet the other with a winning smile
And extend him the hand so glad.

The bum on the rods is a social flea
Who gets an occasional bite;
The bum on the plush is a social leech,
Blood-sucking day and night.

The bum on the rods is a load so light
That his weight we scarcely feel,
But it takes the labor of dozens** of men
To furnish the other a meal.

As long as you sanction the bum on the plush,
The other will always be there,
But rid yourself of the bum on the plush
And the other will disappear.

Then make an intelligent, organized kick,
Get rid of the weights that crush;
Don't worry about the bum on the rods,
Get rid of the bum on the plush!

* The "rod" was apparently a metal rod on the underside of train cars a hobo could cling to in order to catch a ride. Crazy dangerous...

** Hundreds, adjusted for inflation.

[wordsmith]

You do realize that Dodd added an executive-compensation restriction to the stimulus bill right? It makes me sick that the government is now acting pissed about the bonuses when they are the ones that wrote in the exception so they could receive those bonuses.

Pretty sure "the government" was fairly divided on that.

[redav]

As this relates to all the usual trickle-down debate:

Giving money to those (individuals & companies) who can create jobs and therefore grow the economy does help the economy; however, this is the side-effect. It is the Golden Rule: He who has the gold makes the rules. While the economy does grow, and as Kennedy said, "A rising tide lifts all boats," it leads to a concentration of wealth and power at the top.

The concentration of power is a problem. CEOs and corporate boards are looking out for each other not the company as a whole, hence the golden parachutes. Unless you are in the club, you can't affect or change what they do. Concentration of power is opposed to the principles this country was based on (democratic govt with checks and balances). In general, we don't need laws or intervention from the govt except when people demonstrate that they are unwilling or unable to govern themselves. AIG is screaming at the govt to come in and 'regulate' them, and I'm sure the govt will. I have no problem seeing many execs at AIG getting reamed.

An occasional shake-up and revolution is good for the system; it helps bring things back to the center, to balance.

[pisces2473]

You do realize that Dodd added an executive-compensation restriction to the stimulus bill right? It makes me sick that the government is now acting pissed about the bonuses when they are the ones that wrote in the exception so they could receive those bonuses. I don't think those executives should have gotten bonuses but to have the government say they are going to take that money back is ridiculous.
Dodd's a jerk and the biggest leech of them all. I can't WAIT until he's up for reelection...they're already predicting he's going to lose.

Oh, I guess I should disclose that he's my senator...:rolleyes:

Regarding the exception...I don't know how true this is, but I did hear this morning on NPR that the lawmakers didn't have enough time to read through the entire bill (surprise surprise) so they didn't catch that line.

I don't think they'll get the money back...that is pretty ridiculous.

[pisces2473]

The wealthy also create millions of jobs and give a lot of money to charities. They spend a lot of money on millions of products which then puts money back into the economy.

However, those that steal or con others should be punished.
I think you might be exaggerating a bit...they do make jobs and give away money, but that doesn't totally fuel our country. What about the wealthy who put all of their money into the market, and then lost it all? They won't have the millions to give away or to use to purchase items?

Plus, I think that it was pretty bad, the way that for so long, our economy was based on buy-buy-buy. Consumerism had gotten WAY out of hand. WHY do people need so much stuff?

I'd rather see the rich people give more money away, vs. buying a new car every year or whatever.

[wordsmith]

I'm not impressed with giving "a lot" to charities when it's still such a tiny percentage.

[Samwell]

The concentration of power is a problem. CEOs and corporate boards are looking out for each other not the company as a whole, hence the golden parachutes. Unless you are in the club, you can't affect or change what they do. Concentration of power is opposed to the principles this country was based on (democratic govt with checks and balances). In general, we don't need laws or intervention from the govt except when people demonstrate that they are unwilling or unable to govern themselves. AIG is screaming at the govt to come in and 'regulate' them, and I'm sure the govt will. I have no problem seeing many execs at AIG getting reamed.

An occasional shake-up and revolution is good for the system; it helps bring things back to the center, to balance.

I totally agree with the above. All I want to see is balance.

I also agree with the thoughts below:

This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. To whom should they be accountable? As long as taxpayers effectively own a large portion of them, they should be accountable to the government.

But if our very own Secretary of the Treasury doesn't even learn of the bonuses until months after AIG has decided to pay them, and cannot make stick his decision that they should not be paid, AIG is not even accountable to the government. That means AIG's executives -- using $170 billion of our money, so far -- are accountable to no one.

-Robert Reich (http://robertreich.blogspot.com/)

[pisces2473]

I'm not impressed with giving "a lot" to charities when it's still such a tiny percentage.
Agreed.

[wordsmith]

It's just a tax writeoff, anyway.

[Bsig84]

It's just a tax writeoff, anyway.

Not for long. Obama wants to take care of that.

I find it funny that conservatives generally give more money to charities than liberals do (about 30% more).

[Bocheezu]

Hey, maybe they shouldn't give a fucking cent at all. I know I wouldn't.

[Bsig84]

I just don't think we should tell people what to do with their money. If someone works hard and becomes wealthy good for them! They are HEAVILY taxed and many wealthy people do give to charities. Who are we to tell them how much they SHOULD be giving? Everyone should have the freedom to spend their hard-earned money the way they want to without the government or anyone else interferring.

[wordsmith]

Interesting points in Business Week. (http://news.yahoo.com/s/bw/mar2009db20090317032819)

[pisces2473]

I just don't think we should tell people what to do with their money. If someone works hard and becomes wealthy good for them! They are HEAVILY taxed and many wealthy people do give to charities. Who are we to tell them how much they SHOULD be giving? Everyone should have the freedom to spend their hard-earned money the way they want to without the government or anyone else interferring.
I don't think we should tell people what to do with their money, either. I don't think anyone in this thread was. But I do think some people could be more generous...and that needs to come from within.

By the way, not all people are wealthy b/c they worked hard, just as not all people are poorer b/c they didn't work hard.

[pisces2473]

I forgot where I heard this (TV, radio) this morning, but some guy was saying how AIG should now be giving US perks since WE bailed them out...be it free insurance, or discounted insurance, whatever.

Funny idea, but it'll never happen.

[wordsmith]

I just don't think we should tell people what to do with their money.

Companies like AIG should DEFINITELY be told what to do with "their" (re: the public's) money, when they've proven incompetence and had to rely on a publicly funded bailout to continue to exist. Particularly when it's so crystal clear that their judgment is so very poor. Like the article notes, you need massive bonuses to retain your "best and brightest?" Looks like your faulty assessment of "best and brightest" has done wonders for your company and its growth. :rolleyes:

In terms of charitable giving, no, of course, nobody is required to. Still doesn't mean I'm impressed by it.

[Bsig84]

Companies like AIG should DEFINITELY be told what to do with "their" (re: the public's) money, when they've proven incompetence and had to rely on a publicly funded bailout to continue to exist. Particularly when it's so crystal clear that their judgment is so very poor. Like the article notes, you need massive bonuses to retain your "best and brightest?" Looks like your faulty assessment of "best and brightest" has done wonders for your company and its growth. :rolleyes:

In terms of charitable giving, no, of course, nobody is required to. Still doesn't mean I'm impressed by it.

And I was incredibly against bailing them out. We should not bail out companies that are failing. Free market. Let the ones that are failing fail. Don't bail them out with my money! If the government wanted to bail out failing companies, they should have done it better. They should have written provisions that prohibited them from giving bonuses or giving money to foreign companies. But they didn't.

[wordsmith]

I don't think we should tell people what to do with their money, either. I don't think anyone in this thread was. But I do think some people could be more generous...and that needs to come from within.

By the way, not all people are wealthy b/c they worked hard, just as not all people are poorer b/c they didn't work hard.

I also have to roll my eyes at the whole, "liberals don't give" conceit. Nonprofit and full-time volunteer programs, public and private (charities, human services programs, community outreach programs, poverty programs, in particular) are largely supported, staffed, and filled by people who identify as Democrat, of those who affiliate with a particular party at all. And charities and human services need hands-on manpower in addition to monetary contribution, and they need it free or at low cost. Giving your time is an EXTREMELY valuable commodity in charity and human services. That's how people who aren't grotesquely wealthy can "give."

[pisces2473]

Just want to clarify--I do agree w/ the govt telling businesses telling AIG, et al, how to spend the money that the govt and taxpayers gave them. I wasn't inferring that the govt should tell private citizens how much to give and to which orgs.

To tag on to what Words said, yes, there are many types of ways to "give" to orgs...and there are more ways to support said orgs than financially.

I don't give a lot of money to charities b/c I don't have the resources TO give...but I do donate things I no longer need, I have given my time, etc...

[Bsig84]

The big problem here is not the AIG bonuses. AIG was failing. In the past, companies that failed were allowed to fail. If a company is failing they are doing something wrong. What did we do? We just handed them more money. Democrats wrote the stimulus bill the excluded the bonuses and Democrats passed it. They need to take responsibility for that.

I am WAY more upset about the millions my money is funding to bail out people that bought houses they couldn't afford. That really pisses me off. The entire bailout was ridiculous. The fact that the goverment wrote in exclusions for the bonuses is ridiculous. The fact that members of the government are bickering over who wrote in those exclusions is ridiculous. The fact that I am funding individuals who are irresponsible with their money is ridiculous.

That is just my two cents.

Also, does government tell people on welfare how to spend their money? Isn't that taxpayer money as well? Did they tell people how to spend their stimulus checks? Wasn't that taxpayer money?

[Samwell]

I also have to roll my eyes at the whole, "liberals don't give" conceit. Nonprofit and full-time volunteer programs, public and private (charities, human services programs, community outreach programs, poverty programs, in particular) are largely supported, staffed, and filled by people who identify as Democrat, of those who affiliate with a particular party at all. And charities and human services need hands-on manpower in addition to monetary contribution, and they need it free or at low cost. Giving your time is an EXTREMELY valuable commodity in charity and human services. That's how people who aren't grotesquely wealthy can "give."

Pretty sure that 30% figure comes from a book called "Who Really Cares" that came out a couple years ago. I recall there was some debate about how that figure was arrived at since the data sets you decide to use and the variables you choose to control for (age, education, religiosity, COL, etc) result in very different results.

I also seem to recall the correlation with charitable giving (self-reported) was really with religiousness (self-reported) not with political identity (conservative or liberal). Also, they included all money given to churches as charity, even though much of that goes towards church expenses and not directly to charitable programs.

But anyways...

[vinsanity]

The problem with AIG is that their Financial Products division was effectively a huge ticking time bomb in that they were a huge seller of credit default swaps, the largest stakeholder being Goldman Sachs, who many believe our Treasury Secretary stil has close ties to.

[vinsanity]

It's just a tax writeoff, anyway.

Would you rather the corporations and wealthy individuals not be encouraged to give to charities?

[capella]

I just don't think we should tell people what to do with their money. If someone works hard and becomes wealthy good for them!
That sort of assumes that working hard equates to becoming wealthy, which is false.

[capella]

I am WAY more upset about the millions my money is funding to bail out people that bought houses they couldn't afford. That really pisses me off. The entire bailout was ridiculous. The fact that the goverment wrote in exclusions for the bonuses is ridiculous. The fact that members of the government are bickering over who wrote in those exclusions is ridiculous. The fact that I am funding individuals who are irresponsible with their money is ridiculous.

That is just my two cents.

Also, does government tell people on welfare how to spend their money? Isn't that taxpayer money as well? Did they tell people how to spend their stimulus checks? Wasn't that taxpayer money?
You know what, I'm pissed that my taxes are going to bail out irresponsible folks who bought a house they couldn't afford. BUT they were loaned that money by irresponsible banks. If we let everything fail, we are surely heading to a Great Depression again. Many homeowners need help now, not because they themselves were irresponsible, but because others around them were. People who were laid off and then can't sell off the home because the market failed around them. My home has lost 40-50% of its value in the last year and a half. I can afford it and always could, but I couldn't sell it now if I needed to. I'm thankful that I don't currently need to. Here in Florida, the tax rolls are falling so dramatically from the foreclosures that our public schools are being sliced wide open. Thousands of taxpayer teachers will be jobless, further exacerbating the problem. I suppose many repubs would love to see public education torn wide apart so it can be privatized (that works really well as we can see). Many people are being pulled under by those who were not responsible. Doing nothing to stem the tide will sink us all.

And, yes, a lot of government assistance is earmarked for specific uses only. The stimulus monies for individuals were REFUNDED taxpayer dollars (except for those who didn't earn enough to begin with... but I will not begrudge someone their piddly "refund" when the people in those tax brackets are going to sink the money back into the economy by default. Those ain't the kind of people who are saving the bucks. Businesses need consumers, or there is no business.

[wordsmith]

Would you rather the corporations and wealthy individuals not be encouraged to give to charities?

I don't really care, one way or another, myself. But my post was in response to another post stating that it's worthy of admiration. I don't necessarily admire giving...it depends on the motive. Giving can be done in self-interest.

[wordsmith]

That sort of assumes that working hard equates to becoming wealthy, which is false.

Absolutely. I know not one single person on earth personally who works physically harder than my father, longer hours, or a more gruelling schedule, and he's done so in his current field from the age of 30 to his current age of 62. And he's definitely not wealthy. Hard work definitely doesn't necessarily equal wealth, or migrant agricultural workers would run the country.

[vinsanity]

That sort of assumes that working hard equates to becoming wealthy, which is false.

I don't see the assumption. Of course working hard doesn't automatically equate to wealth, but I didn't jump to that conclusion from Bsig's post.

[Bman120]

I wouldn't trust any figures for giving or charity. In the end, giving really can't be fully quantified. It's true value is something that's felt, not really valued. Poor and wealthy, liberal and conservative, all of that means nothing when you give. What matters is you tried to help someone in need and to show them that they are not alone in this world, which is something more powerful than what was given up by the gift-giver.

As for AIG, normally I am against the government intruding into private enterprise, however, considering how the feds own the majority of AIG at this point, I think the government has every right to do anything it wants that is legal to the company.

I don't think the government can legally stop the bonuses, but they may be able to make the company hurt enough for giving them that a message will be sent to AIG and other companies in trouble that this is not appropriate behavior when you are in financial distress and in the case of AIG, are threatening to drag the rest of us down with you.

[wordsmith]

I wouldn't trust any figures for giving or charity. In the end, giving really can't be fully quantified. It's true value is something that's felt, not really valued. Poor and wealthy, liberal and conservative, all of that means nothing when you give. What matters is you tried to help someone in need and to show them that they are not alone in this world, which is something more powerful than what was given up by the gift-giver.

I can get behind this, pretty much. Especially the point that it can't be quantified. I've given people swipes on my bus farecards in the past. Can't say I've noted such charitable contributions at tax time - wasn't why I did it.

I don't think the government can legally stop the bonuses, but they may be able to make the company hurt enough for giving them that a message will be sent to AIG and other companies in trouble that this is not appropriate behavior when you are in financial distress and in the case of AIG, are threatening to drag the rest of us down with you.

This makes the most sense to me, and I really hope it happens.

These points from the Business Week article I posted earlier were interesting to me:

TAX IT BACK: Congressional Democrats vowed on Mar. 17 to pass heavy taxes on bonuses paid to employees of firms receiving federal bailout funds if AIG doesn't return some of the money given out as bonuses. "Recipients of these bonuses will not be able to keep all of their money," said Senate Majority Leader Harry Reid (D-Nev.). "If you don't return it on your own, we will do it for you," said Senator Chuck Schumer (D-N.Y.).

In the House, Representatives Steve Israel (D-N.Y.), and Tim Ryan (D-Ohio) introduced a bill that would that would tax at 100% bonuses above $100,000 paid by companies that have received federal bailout money. "We will use any means necessary," said Ryan. "It boggles my mind how these executives can be so unaware of what the American people are going through."

'REWARDING INCOMPETENCE': Representative Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said on the Today show that paying the bonuses is "rewarding incompetence." Frank added: "These people may have a right to their bonuses. They don't have a right to their jobs forever."

[vinsanity]

I find it alarmingly ironic that Barney Frank has the audacity to speak out regarding rewarding incompetence. Re-electing him into office is the pinnacle of rewarding incompetence :rolleyes:

[wordsmith]

It's true, though.

It's like this: I work with behaviorally disordered disabled kids. In teaching them life skills, i.e. how to function in the world successfully (as one would assume corporate entities would like to do, hence the crying for bailouts), the system we use to teach them is one of positive reinforcement for demonstrating preferred behaviors, and the absence of that positive reinforcement for demonstrating nonpreferred behaviors. Works like a charm. It's that simple. Negative behavior simply doesn't abate if you reinforce it with a sought-after currency (be that time to put together puzzles, like my autistic student thrives on, or obscene bonuses, like corporate suits thrive on), it increases.

So you have to make sure you're reinforcing the preferred behavior, not the nonpreferred.

[vinsanity]

Good point; giving irresponsible mortgage borrowers a pass while responsible owners continue to stay current on their inflated mortgages is also rewarding negative behavior.

[capella]

I don't see the assumption. Of course working hard doesn't automatically equate to wealth, but I didn't jump to that conclusion from Bsig's post.
I'm not terribly surprised by that. But when someone says "so-and-so worked hard and became wealthy, so good for him/her!".... it is implied that working hard caused the wealthy outcome, which may or may not be the case.

[capella]

Good point; giving irresponsible mortgage borrowers a pass while responsible owners continue to stay current on their inflated mortgages is also rewarding negative behavior.
I completely agree with you here. I'm afraid we won't have any stability in some housing markets until that issue is addressed.

[wordsmith]

Good point; giving irresponsible mortgage borrowers a pass while responsible owners continue to stay current on their inflated mortgages is also rewarding negative behavior.

Exactly the same principle. One could also argue that shortsided banks reinforced negative behavior those they lent money to in the first place when they approved loans for people who had no demonstrated ability to repay the debt.*



*Yes, I know that not everyone being foreclosed on right now was a bad credit risk who should never have been approved for a home loan. But many are.

[vinsanity]

We let WaMu, Wachovia, Countrywide, and Lehman Brothers fail. Similarly, we should let irresponsible borrowers fail if our economic system is to be restored.

[pisces2473]

I find it alarmingly ironic that Barney Frank has the audacity to speak out regarding rewarding incompetence. Re-electing him into office is the pinnacle of rewarding incompetence :rolleyes:
LOL yeah, he's the one that ran a prostitution ring out of his house, right?

[redav]

Much of the credit freeze-up and crash was the result of letting Lehman fail. We would have had a much worse crash if AIG had been allowed to fail. However, they should have pieced AIG. Sell the parts that are necessary and working. Gut the parts that are rotting. It isn't too late to do this.

Far, far to many things govt does rewards the wrong behavior. A solution to the housing issues should either be beneficial to everyone, or they should come with enough strings attached to motivate people to not accept govt help unless they absolutely need it (and preferably deserve it) and then get off it as soon as possible. At first the problems were the result of those who made bad decisions, and I have no problem with letting them fail. However, the trend is towards those who have been laid off defaulting. That is not (generally) the result of their own mistakes. Therefore, helping people with mortgages is fine, but the plans put forth so far are all lacking.

I believe in safety nets. It is the morally right thing to do. But I also believe there can be no forgiveness (and that includes govt aid) without change.

There is a strong correlation between hard work and success. People who throw out valid trends because of exceptions throw out the baby with the bathwater. The vast majority of people who become wealthy do so by initiative, effort, and tenacity. Remember, the typical millionaire lives next door to you, drives an old car, cuts coupons, puts in a full day's work at a business s/he built up, etc.

[Bman120]

This makes the most sense to me, and I really hope it happens.

These points from the Business Week article I posted earlier were interesting to me:

Interesting points in that article. I heard a story on NPR this morning that they were looking at taxing 90% of the bonuses and were threatening to sopenea (sp?) the names of the people who received bonuses if AIG didn't supply them. If they're going for 90, they may as well go for 100% as far as i'm concerned but maybe they need to compromise on 90 to get things moving faster?

Good point; giving irresponsible mortgage borrowers a pass while responsible owners continue to stay current on their inflated mortgages is also rewarding negative behavior.

At this point, I think it goes beyond good and bad behavior and into keeping the system from collapsing alltogether.

I do believe that if the government did nothing, the system would eventually recover all by itself as the free market is an incredible entity. My issue with that option is that it will take many years, cause a lot of people who did nothing wrong to suffer and will erode America's power at a time when we are at war on many fronts. We just can't let those things happen. The government's responsability to the American people demands they not let them happen. So here we are, having to do what we are doing. It's a sad thing, but this mess was decades in the making and will need a big solution to fix it.

[vinsanity]

However, they should have pieced AIG. Sell the parts that are necessary and working. Gut the parts that are rotting. It isn't too late to do this.

Supposedly, that is what they are trying to accomplish, but two things get in the way of that:
1. the depressed credit market means a lack of qualified buyers to acquire the working, profitable parts of AIG
2. these bajillion dollar bailouts are supposed to be covering AIG's ass for the credit default swaps that every institution and their mother are now trying to collect on. Including, of course, Goldman Sachs. The CDS's are so pervasive that they likely ended up in your 401k and mutual funds.

However, the trend is towards those who have been laid off defaulting. That is not (generally) the result of their own mistakes. Therefore, helping people with mortgages is fine, but the plans put forth so far are all lacking.

If someone lost their job during a non-crisis bubble year and couldn't continue to make their mortgage payments, they were SOL and foreclosed upon. So I guess if it happens to everyone, then the rules change?




We just can't let those things happen. The government's responsability to the American people demands they not let them happen. So here we are, having to do what we are doing. It's a sad thing, but this mess was decades in the making and will need a big solution to fix it.

That mentality is a huge part of the problem. The government has no such responsibility to not let institutions as well as individuals fail. What happens to our spirit of independence if we rely on our government to assume the responsibility to save us from ourselves?

[vinsanity]

LOL yeah, he's the one that ran a prostitution ring out of his house, right?

Different senator. Although the thought of it is now going to give me nightmares.

[Bman120]

That mentality is a huge part of the problem. The government has no such responsibility to not let institutions as well as individuals fail. What happens to our spirit of independence if we rely on our government to assume the responsibility to save us from ourselves?

Normally I would agree, but you have to remember, these aren't just American companies anymore, these massive institutions have become global entities whose reach affects a good part of the globe. They've almost become non state entities on the political stage in some cases. When they go down, they do a lot more damage than a small family owned business might.

The effects from several of these massive companies collapsing would ripple through the global financial system like a disease through the body and bring chaos like none of us have seen in our lives. Let's remember that during times of chaos, a lot of bad things can happen that aren't economic events. It was in the great depression of the 30's that Hitler was elected Chancellor of Germany and the Weimar republic fell, during times of danger, the Romans suspended democracy (in times of war the law falls silent?). We don't need to instigate that kind of environment when the tools to stop it are in our hands.

Add to that we really don't need to let America plunge into a depression if it can be avoided, the level of debt out there is so high, a lot of people would suffer. Maybe they should have avoided taking the risks they did but who are we to judge each individual when we don't know their story? If we can help, we should.

[vinsanity]

Add to that we really don't need to let America plunge into a depression if it can be avoided, the level of debt out there is so high, a lot of people would suffer. Maybe they should have avoided taking the risks they did but who are we to judge each individual when we don't know their story? If we can help, we should.

If it involves using tax dollar bailout money that doesn't even exist yet, then yes, I do believe that people should at least be allowed to voice their judgment on the matter.

I want to avoid a massive depression as much as the next guy, but an important lesson in American history is that for every New Deal or Great Society we try to devise, we become weaker and less independent as a result.

[Samwell]

If someone lost their job during a non-crisis bubble year and couldn't continue to make their mortgage payments, they were SOL and foreclosed upon. So I guess if it happens to everyone, then the rules change?

Yes. Exactly. It offends my sense of fairness too, but in this environment your neighbor's foreclosure IS your problem.

I don't think most people understand how off the charts bad this can (and still may) get.

Being critical is fine, myself and many other "liberals" are not happy with aspects of how things are being handled, but realize on a certain level these "tea parties" are criticizing the firemen for wasting water before the fire is even under control...(and, ironically, protesting the largest middle class tax cut in history).

I heard a story on NPR this morning that they were looking at taxing 90% of the bonuses and were threatening to sopenea (sp?) the names of the people who received bonuses if AIG didn't supply them.

Another tax hike? Fucking liberals...

I want to avoid a massive depression as much as the next guy, but an important lesson in American history is that for every New Deal or Great Society we try to devise, we become weaker and less independent as a result.

I reject your premise.

[pisces2473]

Different senator. Although the thought of it is now going to give me nightmares.
I thought Barney Frank was involved in some sex scandal that was going on with male escorts or something?

[vinsanity]

I reject your premise.

http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2009&month=01

You'll want to skip through the Rush Limbaugh article and find the one below it titled "Do We Need a New New Deal?"

But every dollar that went to creating a federal job had to come from taxpayers, who, by sending their cash to Washington, lost the chance to buy hamburgers, movie tickets, or clothes and create new jobs for restaurants, theaters, and tailors.

After farmers took the federal dollars, the U.S. developed shortages of the very crops taxpayers were paying farmers not to produce.

In 1935, Roosevelt decided to raise the marginal tax rate on top incomes to 79 percent. Later he raised it to 90 percent. These confiscatory rates discouraged entrepreneurs from investing, which prolonged the Great Depression.

"We have tried spending money," Morgenthau noted. "We are spending more than we have ever spent before and it does not work. . . . We have never made good on our promises. . . . I say after eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!"
quoted above from Treasury Secretary Henry Morgenthau

under Presidents Hoover and Roosevelt, Illinois lobbied effectively and won $55,443,721 under the first federal welfare grant while Massachusetts received zero federal dollars. Without federal money for welfare needs, Massachusetts valiantly raised its own funds to secure what Illinois extracted from Washington. The Boston Civic Symphony repeatedly gave concerts to benefit the jobless. City officials and teachers raised money and took pay cuts. Massachusetts Governor Joseph Ely believed that no state should receive federal aid and that private charity was the best charity; that federal relief ruined both taxpayers and those in need. "Whatever the justification for relief," Ely said, "the fact remains that the way in which it has been used makes it the greatest political asset on the practical side of party politics ever held by an administration." Ely added that "millions of men and women . . . have come to believe almost that there is no hope for them except upon a government payroll."

Vote Democrat, Guffey and others proclaimed, and the federal faucet will keep running.

In effect, the New Deal set in motion the culture of lobbyists crowding around the trough of Federal funding like a horde of starved swine. Why would anyone follow the 1930's Massachusetts example when you can just whore yourself out and have "someone else" bankroll your pork projects?

[vinsanity]

I thought Barney Frank was involved in some sex scandal that was going on with male escorts or something?

The only one I remember is Mark Foley

[Bman120]

Another tax hike? Fucking liberals...

Heh, you just made me realize this is the first time i've ever really supported a tax increase. Crazy times we live in right? ;):

You'll want to skip through the Rush Limbaugh article and find the one below it titled "Do We Need a New New Deal?"


I don't think we need a new deal per say. But remember, the new deal encompasses many programs and reforms and some of those we do need. I think housing will turn out to be the key to this whole thing. If we can stem the forclosures and begin a huge refinancing campaign, we will begin to detox these mortgage backed securities and other assets that are weighing down the financial sector. At the same time, we will be restoring consumer confidance because they won't be afraid of loosing their homes.

Is it unfair to diligent home owners? Yes, but would it be any better if the economy did sink into a depression and they risked loosing their own homes as a result of that?

[larry52]

Would you rather the corporations and wealthy individuals not be encouraged to give to charities?

Yes. Wealthy people "give" generally so they can pay less taxes, which means they get to sound altruistic while other people like myself actually foot the bill.

I think people should if they actually WANT to give. Why should the federal government (via the IRS) be at all involved if an individual want to give to his local animal shelter for example? They shouldn't.

I don't think mortgage interest should be tax deductible as well.

[vinsanity]

The IRS has charitable contributions in the tax code because they want to encourage people to make charitable donations; it's as simple as that. Anyone who earns taxable income can enjoy the deduction, not just the wealthy. And from a financial standpoint, giving away $100,000 to save $35,000 in tax liability just doesn't make sense if that's the only thing you're after. There are definitely better ways to reduce your tax liability. To think that that's even the main reason people give to charities is extremely dense.

As for the mortgage interest deduction, it personally doesn't matter to me whether it's deductible or not, but the state tax boards will be in an uproar if that is taken away. Reason being that it will cause fewer people to buy homes, which reduces the property tax the states collect for revenue. So even if the Federal gov't manages to collect more money, it will more than cancel out by the states' revenue shortfall. The IRS knows what they are doing.

[redav]

If someone lost their job during a non-crisis bubble year and couldn't continue to make their mortgage payments, they were SOL and foreclosed upon. So I guess if it happens to everyone, then the rules change?
No rules change. I bought my house when employment was hitting a rough spot 5 yrs ago. What was the result? Lower interest rates! When there is wide-spread problems, the govt tweaks the system to give people breaks; hence, I got a great deal. Others refinanced. When times are good, there aren't those tweaks because it isn't as hard to find another job.

The IRS has charitable contributions in the tax code because they want to encourage people to make charitable donations; it's as simple as that.
Exactly. It costs the govt maybe 25-35% what they would have to pay themselves if people didn't volunteer their own money. Tax breaks can be a very efficient method to fund programs.

As for the mortgage interest deduction, it personally doesn't matter to me whether it's deductible or not, but the state tax boards will be in an uproar if that is taken away. Reason being that it will cause fewer people to buy homes, which reduces the property tax the states collect for revenue. So even if the Federal gov't manages to collect more money, it will more than cancel out by the states' revenue shortfall. The IRS knows what they are doing.
All properties are taxed, including rental ones. Even if you live in an apt, you are still paying property taxes. Maybe it would cause a blip on sale prices, but even if there is, as we've learned around here, they can just raise the tax rate. So, the local property tax guys will still get their money. But there would be a public outcry, which is political poison. I support keeping the mortgage interest deduction, but only up to a point. There's no reason for it with jumbos or on second mortgages.

[vinsanity]

Because there's two sides to every story...

http://www.nytimes.com/2009/03/25/opinion/25desantis.html

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.


This illustrates the pitfalls of government takeovers. Because congresspeople first and foremost have to project the impression that they're "getting tough" on executives to claim responsibility for the crisis, a lot of uninvolved people end up having to take the fall, all in the name of saving the economy.

So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.

That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.

[yogaflame13]

I'm glad he donated his bonus. If he really didn't have anything to do with AIG's problems, then that sucks, but he worked for the company while it allowed the crooked (or stupid) people to do what they did, so that's what happens. I'm sure there were people in the Nazi party who didn't have a lot to do with Hitler's day to day plans, but they were still *in* the Nazi party. Not saying AIG = Nazi, but they were definitely not conducting business in a responsible way, and there is no way to avoid the backlash of it.

[wordsmith]

Based on that letter, I have respect for that person.