Decius wrote:

In the first quarter of 2008, prior management took significant retention steps at AIG Financial Products. ... Some of these payments are coming due on March 15, and, quite frankly, AIG's hands are tied.

They knew the ship was sinking and the rats decided to leave unless millions more were paid to them - and so these millions were offered and now that the government has bailed out the company the millions must still be paid. Basically, they set up the system in advance so that it would continue to enrich them after it failed.

Outside counsel has advised that these are legal, binding obligations of AIG, and there are serious legal, as well as business, consequences for not paying.

Best argument yet for nationalization. Large government bailouts should, at least, require filing some kind of bankruptcy where a court can come in an make contracts void.

I think you have to be very careful how this gets handled. You don't want to swing the pendulum the other way and overshoot. You want the best and brightest to be compensated, with really, no limit. I think everyone would agree on that spirit. It's what motivates the West, and certainly is the American Dream - work hard. reap reward.

It's not that these guys stole (because yes, that's what they did. Unfettered looting. And indictments should be coming. The public should demand it.) but how their incentive packages were structured. Short term gains were overwhelming. So that incited behavior to loot. It's much harder to steal over the long haul, although I'm certain that it can be done and would be. But if you combine proper incentives with transparency, you should be able to squelch out the bad behavior. Which is good, because a smaller pool with a larger pot is far more attractive.

I think the government stepping in and capping things is a recipe for disaster. It doesn't solve the problem. It just moves the ball under the shells without you knowing where it went.

flynn23 wrote:
You want the best and brightest to be compensated, with really, no limit.

In this case I think what is frustrating is that we're not talking about "best" or "brightest" but "closest to the money." We have examples of performance bonuses being paid out by companies that are, for all intents and purposes, bankrupt. I'm all for profit sharing by successful companies, but paying it out when your company is bankrupt and being propped up by the federal government is nonsensical. There are no profits to share, so what, exactly, are you sharing? The argument that "we have to do this or we'll loose talented guys" is a non-starter in this environment. No one in the banking industry is on a hiring binge right now. The last thing anyone in any industry wants at this moment is to be on the street looking for work. Those words are a code for something else - something which becomes clear when you look at how AIG's bonuses are structured.

In the case of AIG we're not talking about profit sharing. These are retention bonuses that were negotiated last January when it ought to have been clear to those close to this disaster what was about to go down. These people demanded more money or they would simply walk away from the mess they had created. They've squirreled away enough money at this point that they don't have to work again for the rest of their lives. They clearly threatened, when the going got sour and it was clear that there weren't going to be profits for performance bonuses, that they were unwilling to work at their salary level, and a substitute bonus must be created - or they'd leave.

AIG was not afraid of loosing talent. They were afraid of loosing money. They had billions wrapped up in this stuff. It was about to explode. Their traders were the only people who understand all of it. If those traders left, it will be more difficult to unravel, and more money would be lost.

Imagine if you had a software developer working a piece of code that was extremely complicated, required daily maintenance, and cost billions every day if it broke. And the guy wanted to quit. The million you'd pay him not to quit would cost you less than what you'd loose while the next guy came up to speed on how to maintain the thing.

Basically, these people have gotten themselves into a position where they are responsible for billions of dollars, and they are blackmailing the management of AIG and the United States Government. We have to pay them millions or they will walk away, and we know that will cost us even more. Thats why the Treasury hems and haws about clawing back the bonuses but doesn't do anything effective. They know they're fucked. The banksters have a gun to their heads.

This isn't a case of rewarding talent. This is blackmail. And I don't think its illegal - I don't think prosecutions are coming unless evidence of book cooking comes to light. In this case these bonuses are intentionally disconnected from profits so there is no benefit to cooking the books.

It speaks to a more fundamental disconnect between our idealistic notions of talent and merit and the actual economy that we have, in that its not really about talent - its about what you control. Account executives are typically far better compensated than engineers, for example, not because what they are doing is objectively more important, but because they directly control access to revenue...

Decius wrote:

flynn23 wrote:
You want the best and brightest to be compensated, with really, no limit.

In this case I think what is frustrating is that we're not talking about "best" or "brightest" but "closest to the money." We have examples of performance bonuses being paid out by companies that are, for all intents and purposes, bankrupt. I'm all for profit sharing by successful companies, but paying it out when your company is bankrupt and being propped up by the federal government is nonsensical. There are no profits to share, so what, exactly, are you sharing? The argument that "we have to do this or we'll loose talented guys" is a non-starter in this environment. No one in the banking industry is on a hiring binge right now. The last thing anyone in any industry wants at this moment is to be on the street looking for work. Those words are a code for something else - something which becomes clear when you look at how AIG's bonuses are structured.

In the case of AIG we're not talking about profit sharing. These are retention bonuses that were negotiated last January when it ought to have been clear to those close to this disaster what was about to go down. These people demanded more money or they would simply walk away from the mess they had created. They've squirreled away enough money at this point that they don't have to work again for the rest of their lives. They clearly threatened, when the going got sour and it was clear that there weren't going to be profits for performance bonuses, that they were unwilling to work at their salary level, and a substitute bonus must be created - or they'd leave.

AIG was not afraid of loosing talent. They were afraid of loosing money. They had billions wrapped up in this stuff. It was about to explode. Their traders were the only people who understand all of it. If those traders left, it will be more difficult to unravel, and more money would be lost.

Imagine if you had a software developer working a piece of code that was extremely complicated, required daily maintenance, and cost billions every day if it broke. And the guy wanted to quit. The million you'd pay him not to quit would cost you less than what you'd loose while the next guy came up to speed on how to maintain the thing.

Basically, these people have gotten themselves into a position where they are responsible for billions of dollars, and they are blackmailing the management of AIG and the United States Government. We have to pay them millions or they will walk away, and we know that will cost us even more. Thats why the Treasury hems and haws about clawing back the bonuses but doesn't do anything effective. They know they're fucked. The banksters have a gun to their heads.

This isn't a case of rewarding talent. This is blackmail. And I don't think its illegal - I don't think prosecutions are coming unless evidence of book cooking comes to l... [ Read More (0.1k in body) ]

flynn23 wrote:
I completely agree with you and as I said, people need to go to jail for this behavior. But it's a slippery slope (I hate that phrase, but what else?) when you intervene like this. The biggest problem we're facing right now is too much dinking with what should be a free flowing market.

Except it's not a free flowing market, it's a river dammed by the giant corpses of gazillion dollar banks and corporations. "Dinking" with it isn't going to do anything, someone needs to grab a corpse or two, engage in a bit of necrophilic bestiality and scare the bejeezus out of the ones standing on the river bank.

The transparency veil needs to be lifted, and more data sharing needs to occur, but that's it. Setting caps on compensation poisons the well and affects other industries where demand is high and supply low. Especially given the fact that other countries have become more competitive in their pay ranges.

Setting caps on compensation for companies operating under bailout does nothing of the sort. It says the people there are too dumb to chew food, and will be paid accordingly. And if you're worried about them getting headhunted by some other company, why would we miss them?

Decius wrote:
This isn't a case of rewarding talent. This is blackmail. And I don't think its illegal - I don't think prosecutions are coming unless evidence of book cooking comes to light. In this case these bonuses are intentionally disconnected from profits so there is no benefit to cooking the books.

Then how would Memestreams solve this? It's reputation. If you can't bring them to trial (and I disagree. blackmail is illegal. as is squandering tax payer money) then publicly shame them. Make it so that they cannot work. Make them OJ Simpson.

flynn23 wrote:

Decius wrote:
This isn't a case of rewarding talent. This is blackmail. And I don't think its illegal - I don't think prosecutions are coming unless evidence of book cooking comes to light. In this case these bonuses are intentionally disconnected from profits so there is no benefit to cooking the books.

Then how would Memestreams solve this? It's reputation. If you can't bring them to trial (and I disagree. blackmail is illegal. as is squandering tax payer money) then publicly shame them. Make it so that they cannot work. Make them OJ Simpson.

I occurs that if AIG simply withheld the bonuses and the parties were forced to sue they'd be forced to show their faces publicly.

flynn23 wrote:
(...blackmail is illegal. as is squandering tax payer money)

In that case, Congress should be arrested.

Stefanie wrote:

flynn23 wrote:
(...blackmail is illegal. as is squandering tax payer money)

In that case, Congress should be arrested.

That's the best idea I've heard all year.

skullaria wrote:

Stefanie wrote:

flynn23 wrote:
(...blackmail is illegal. as is squandering tax payer money)

In that case, Congress should be arrested.

That's the best idea I've heard all year.

Most of what is happening in the "stimulus" is to prevent just that. And by "arrest", I mean "guillotine". Placating the masses.

It could be totally avoidable, but just wait. When the health care system in this country implodes (and it will), and you have dead bodies piling up in the streets, I think this will all be a quaint notion. As I've said, the finance disaster is just a dress rehearsal for the health care and social security meltdowns.

flynn23 wrote:
It could be totally avoidable, but just wait. When the health care system in this country implodes (and it will), and you have dead bodies piling up in the streets, I think this will all be a quaint notion. As I've said, the finance disaster is just a dress rehearsal for the health care and social security meltdowns.

For clarity's sake, are you suggesting that government has done too much, or not enough, in those areas?

Stefanie wrote:

flynn23 wrote:
It could be totally avoidable, but just wait. When the health care system in this country implodes (and it will), and you have dead bodies piling up in the streets, I think this will all be a quaint notion. As I've said, the finance disaster is just a dress rehearsal for the health care and social security meltdowns.

For clarity's sake, are you suggesting that government has done too much, or not enough, in those areas?

The analogy I've been using is that we have a long term problem (that we've waited to long to fix) with short term issues. So our roof is leaking really badly, but we need to renovate the entire house to shore it up or risk losing the entire thing. Gotta fix the leak right now, but gotta do it in a way that allows us to do the entire renovation. With a tight budget.

In a pragmatic sense, that means leveling with the public that we're not all going to get what we want or expect. Sorry honey, but granite counter tops are too expensive. I don't care what you had growing up.

Hard choices need to be made. But the trade off for that is that we're going to put in a system where the long term benefits will be real and felt for generations to come. Instead, what we've done with the financial crisis is allow the future to be robbed to try and keep the walking dead on life support.

At some point, you don't get a second chance because you've blown the budget and not only has the roof leaked, but the entire foundation has crumbled. We're not far off from that, IMO.

Well, you did everything but answer my question. You'd make a great politician. lol

Are you suggesting that we should expect government to make those changes for us by further expanding government's role in our lives, or that we should get government out of our lives and tackle these problems ourselves?

Stefanie wrote:
Well, you did everything but answer my question. You'd make a great politician. lol

Are you suggesting that we should expect government to make those changes for us by further expanding government's role in our lives, or that we should get government out of our lives and tackle these problems ourselves?

That wasn't my intent, but I don't really know how to answer the question based upon what I did say. I don't think government works like we think it does or should. If you can remove the "corruption" that comes from corporate lobbying, then maybe it's a moot point. But I don't see that happening, so there won't be less government. Like any organism that is self-perpetuating, it will grow until it consumes every resource available.

flynn23 wrote:
Like any organism that is self-perpetuating, it will grow until it consumes every resource available.

Or until it's killed.

Stefanie wrote:

flynn23 wrote:
(...blackmail is illegal. as is squandering tax payer money)

In that case, Congress should be arrested.

who put them there?

Stefanie wrote:

flynn23 wrote:
(...blackmail is illegal. as is squandering tax payer money)

In that case, Congress should be arrested.

It's why when people send me this and complain about it, I tell them they are looking at themselves. Congress fails because it apes the populace. It's no different than everyone complaining about "the idiot" at work or on the road. Maybe you should look in the mirror first.

flynn23 wrote:

Stefanie wrote:

flynn23 wrote:
(...blackmail is illegal. as is squandering tax payer money)

In that case, Congress should be arrested.

Maybe you should look in the mirror first.

That's a pretty limp argument. First, I voted against all of those who currently "represent" me in the federal government (see below), so no, when I criticize Congress, I am not looking at myself (politically speaking). Much more often than not, I vote for minor party and independent candidates. Perhaps those currently in Congress represent you more than they do me. Here's your mirror back.

Second, what are you suggesting, that we can't complain about poor decisions made by Congress, just because Senators and House Reps. are members of the general population? Even if I had voted for any of those individuals, I would still be justified in complaining about their actions, without being hypocritical. We're supposed to complain if they screw up... and they have.

Now, if you were to suggest that the people of the U.S.A., on the whole, keep sending back the same representatives that they always complain about, because the people have resigned themselves to a two-party mentality, then I would agree; just don't offer something as intellectually lazy as "look in the mirror." Introspection certainly is healthy, but as citizens, we can't be afraid to criticize our representatives simply because they are us.

2008 TN Ballot
6th Congressional District

President / V.P.
Barack Obama (D)
Joe Biden (D)

Senate
Lamar Alexander (R)
Bob Corker (R)

Congress
Bart Gordon (D)

Stefanie wrote:

flynn23 wrote:

Stefanie wrote:

flynn23 wrote:
(...blackmail is illegal. as is squandering tax payer money)

In that case, Congress should be arrested.

Maybe you should look in the mirror first.

That's a pretty limp argument. First, I voted against all of those who currently "represent" me in the federal government (see below), so no, when I criticize Congress, I am not looking at myself (politically speaking). Much more often than not, I vote for minor party and independent candidates. Perhaps they represent you more than they do me. Here's your mirror back.

Second, what are you suggesting, that we can't complain about poor decisions made by Congress, just because Senators and House Reps. are members of the general population? Even if I had voted for any of those individuals, I would still be justified in complaining about their actions, without being hypocritical. We're supposed to complain if they screw up... and they have.

Now, if you were to suggest that the people of the U.S.A., on the whole, keep sending back the same representatives that they always complain about, because the people have resigned themselves to a two-party mentality, then I would agree; just don't offer something as intellectually lazy as "look in the mirror." Introspection is certainly healthy, but as citizens, we can't be afraid to criticize our representatives simply because they are us.

2008 TN Ballot
6th Congressional District

President / V.P.
Barack Obama (D)
Joe Biden (D)

Senate
Lamar Alexander (R)
Bob Corker (R)

Congress
Bart Gordon (D)

I was saying all of that. I don't think that simply voting alternative or independent candidates solves the problem. I wish it were that simple.

But what I was more trying to say was that the general populace is no different than the people that they put into office. They all seek to line their pockets. Don't think of the long term nor the common good when making important decisions. And lack the critical thinking and analysis necessary to seek and find real solutions to important problems. Replace they with we. Them with us.

I think it's a passtime to complain and whine. It's what we do best as a society. Because it's easier than making actual change. And until you've walked a mile in that person's shoes, you have no business whining or complaining. Until we start to reject this system and find real alternatives, en masse, then the act of complaining just becomes a post-modern way to make someone else rich, not incite change. Maybe voting alternative candidates changes that, but I doubt it. Change happens within, not from your representative.

flynn23 wrote:
I was saying all of that. I don't think that simply voting alternative or independent candidates solves the problem. I wish it were that simple.

But what I was more trying to say was that the general populace is no different than the people that they put into office. They all seek to line their pockets. Don't think of the long term nor the common good when making important decisions. And lack the critical thinking and analysis necessary to seek and find real solutions to important problems. Replace they with we. Them with us.

I think it's a passtime to complain and whine. It's what we do best as a society. Because it's easier than making actual change. And until you've walked a mile in that person's shoes, you have no business whining or complaining. Until we start to reject this system and find real alternatives, en masse, then the act of complaining just becomes a post-modern way to make someone else rich, not incite change. Maybe voting alternative candidates changes that, but I doubt it. Change happens within, not from your representative.

I agree that not all citizens and representatives put their country before themselves, when it comes to voting and policy making at the federal level. But, the more the federal government intrudes in the domain of the states and the people themselves, the more the people associate their personal quality of life with government policy. They vote accordingly.

I disagree about not complaining unless we've "walked a mile in their shoes." They are our representatives in government, and as elected officials, they are supposed to be there to serve the best interests of our country (at the federal level). When they fail to do so, we should call them out on it, and we should also vote them out of office.

As for "real alternatives" and "actual change," what are you suggesting? I'm still trying to get the link to Mother Earth News, given the subject matter. Specifically, what is it about the system that you want us to reject? My problem is not with our system, but with the individuals in it (and, as you've mentioned, the people who put them there). The current system works, because we get out whatever we put in. For the past few decades, it's mostly been garbage in, garbage out. Our system allows us to be as great or pathetic as we, as a people, want to be.

Stefanie wrote:

flynn23 wrote:
I was saying all of that. I don't think that simply voting alternative or independent candidates solves the problem. I wish it were that simple.

But what I was more trying to say was that the general populace is no different than the people that they put into office. They all seek to line their pockets. Don't think of the long term nor the common good when making important decisions. And lack the critical thinking and analysis necessary to seek and find real solutions to important problems. Replace they with we. Them with us.

I think it's a passtime to complain and whine. It's what we do best as a society. Because it's easier than making actual change. And until you've walked a mile in that person's shoes, you have no business whining or complaining. Until we start to reject this system and find real alternatives, en masse, then the act of complaining just becomes a post-modern way to make someone else rich, not incite change. Maybe voting alternative candidates changes that, but I doubt it. Change happens within, not from your representative.

I agree that not all citizens and representatives put their country before themselves, when it comes to voting and policy making at the federal level. But, the more the federal government intrudes in the domain of the states and the people themselves, the more the people associate their personal quality of life with government policy. They vote accordingly.

I disagree about not complaining unless we've "walked a mile in their shoes." They are our representatives in government, and as elected officials, they are supposed to be there to serve the best interests of our country (at the federal level). When they fail to do so, we should call them out on it, and we should also vote them out of office.

As for "real alternatives" and "actual change," what are you suggesting? I'm still trying to get the link to Mother Earth News, given the subject matter. Specifically, what is it about the system that you want us to reject? My problem is not with our system, but with the individuals in it (and, as you've mentioned, the people who put them there). The current system works, because we get out whatever we put in. For the past few decades, it's mostly been garbage in, garbage out. Our system allows us to be as great or pathetic as we, as a people, want to be.

I was suggesting that complaining is useless. Your line of "supposed to be there to serve the best interests of our country" is kinda laughable. Politicians serve the best interests of the people that put them in the job. This has always be... [ Read More (0.2k in body) ]

flynn23 wrote:
I was suggesting that complaining is useless.

Obviously, we disagree on that point. Complaining is what the First Amendment (not to mention half of the posts at Memestreams) is all about. Besides, aren't you, in effect, complaining about complaining?

flynn23 wrote:
Your line of "supposed to be there to serve the best interests of our country" is kinda laughable. Politicians serve the best interests of the people that put them in the job. This has always been the case. The original system assumed that the populace would be that "person" but in the last ~150 years it's really been corporations (defined in the US as a "person") so that is who has been the benefactor. This is not a new problem. This has been going on since before the Civil War. That's not to say that "good" legislation benefiting millions of people hasn't occurred, but I think that's a byproduct, not a direct result. I think the problem is more pronounced at the state level, where it's really down to the guy who contributed to your campaign that you have to see at church every sunday if you screw him over and try to do the "right" thing.

I understand why you might laugh at my idealistic principles, but I'm certainly not naive about the ways in which things actually work. I think the primary reason that the people currently "ask what the country can do for them" (to paraphrase John F. Kennedy) is that we've allowed too much government expansion. Rather than focusing on national and state issues, our federal and state governments are far too involved in our personal lives. They want to provide for our retirement and healthcare; they want to tell us which light bubs to use and how much water we can use in our toilets and washing machines; they want to provide home loans for everyone; etc.

In fact, government wants to do everything but regulate industries the way they're supposed to be regulated. Consider the legislative blunders, such as repealing much of the Glass-Steagall Act in 1999, that helped create this current mess. Anyway, the more government controls our personal lives and gets directly involved (beyond regulation) in our business lives (bailouts), the more politicians will have to serve the specific special interests of the individual constituents (including corporations, which are owned by the people), rather than focus on the primary, Constitutional functions of federal and state government.

flynn23 wrote:
...then we'll continue to be slaves to people who will steal the value that we produce. I know this is starting to sound like commie pinko rhetoric, so I'll stop there, but I think that the current system does not allow for a proper balance. Only more data and transparency will do that, and that means kissing your precious privacy goodbye.

"commie pinko rhetoric" - one of my favorite phrases :-)

We agree about transparenc... [ Read More (0.1k in body) ]

flynn23 wrote:
You want the best and brightest to be compensated, with really, no limit.

In this case I think what is frustrating is that we're not talking about "best" or "brightest" but "closest to the money." We have examples of performance bonuses being paid out by companies that are, for all intents and purposes, bankrupt. I'm all for profit sharing by successful companies, but paying it out when your company is bankrupt and being propped up by the federal government is nonsensical. There are no profits to share, so what, exactly, are you sharing? The argument that "we have to do this or we'll loose talented guys" is a non-starter in this environment. No one in the banking industry is on a hiring binge right now. The last thing anyone in any industry wants at this moment is to be on the street looking for work. Those words are a code for something else - something which becomes clear when you look at how AIG's bonuses are structured.

In the case of AIG we're not talking about profit sharing. These are retention bonuses that were negotiated last January when it ought to have been clear to those close to this disaster what was about to go down. These people demanded more money or they would simply walk away from the mess they had created. They've squirreled away enough money at this point that they don't have to work again for the rest of their lives. They clearly threatened, when the going got sour and it was clear that there weren't going to be profits for performance bonuses, that they were unwilling to work at their salary level, and a substitute bonus must be created - or they'd leave.

AIG was not afraid of loosing talent. They were afraid of loosing money. They had billions wrapped up in this stuff. It was about to explode. Their traders were the only people who understand all of it. If those traders left, it will be more difficult to unravel, and more money would be lost.

Imagine if you had a software developer working a piece of code that was extremely complicated, required daily maintenance, and cost billions every day if it broke. And the guy wanted to quit. The million you'd pay him not to quit would cost you less than what you'd loose while the next guy came up to speed on how to maintain the thing.

Basically, these people have gotten themselves into a position where they are responsible for billions of dollars, and they are blackmailing the management of AIG and the United States Government. We have to pay them millions or they will walk away, and we know that will cost us even more. Thats why the Treasury hems and haws about clawing back the bonuses but doesn't do anything effective. They know they're fucked. The banksters have a gun to their heads.

This isn't a case of rewarding talent. This is blackmail. And I don't think its illegal - I don't think prosecutions are coming unless evidence of book cooking comes to light. In this case these bonuses are intentionally disconnected from profits so there is no benefit to cooking the books.

It speaks to a more fundamental disconnect between our idealistic notions of talent and merit and the actual economy that we have, in that its not really about talent - its about what you control. Account executives are typically far better compensated than engineers, for example, not because what they are doing is objectively more important, but because they directly control access to revenue...