Sunday, March 22, 2009

The AIG Bonuses

The American public is furious with AIG executive bonuses. They should redirect their anger to where it really belongs. The decisions as to what the bonuses should be at AIG should be made by the bondholders who should be running AIG -- not Mr. Liddy and not the taxpayer.

The grand mistake was providing AIG with $85 billion back in mid-September and then adding another $ 115 billion along the way. The plan was: the government will provide some temporary funding, take over 80 percent ownership in AIG (as a way to make money), and AIG would liquidate its various divisions over time and everyone would walk away happy. The taxpayer would get his money back and the various divisions of AIG, most of whom were very profitable back in September, would go forward toward prosperity. What a joke!

If the bondholders had taken over AIG in a controlled bankruptcy (which is what should have happened), then the bondholder committee would be making these decisions not Tim Geithner or Barney Frank or anyone in AIG's current management. The decision would then be none of our (the taxpayer's) business. That's the way it should have worked, back in the bad old days when capitalism was in vogue.

Now, Obama and the Congress are busily destroying the AIG brand name and franchise (that the taxpayer now owns) by making the AIG name synonomous with greed and corruption. Thanks guys. Now AIG is worth a lot less than it would have been if you had stayed out of all of this.

Why is it Obama's and the Congress's business what AIG pays its employees? Because Bernanke, Obama, and the Gongress poured a ton of money into AIG. That was the stupid decision -- $ 200 billion down a rat hole. The bonuses are less than one-tenth of one percent of that amount. What about the $ 200 billion Mr. Obama and Mr. Congressman? Where's your outrage over that? And how much more is going to be poured down that rathole, before you admit that you have singlehandedly turned a great firm into a worthless shell. Thank you.

By the way Republicans, at least the Republican leadership in the House, is behaving no better than Obama and the Congressional lynch mob. America looks ridiculous when the leadership of both parties behave like Republicans and Democrats are currently behaving. We now have decent folks who received a contractual bonus for their work being villified by a bunch of politicians who are leading the country to fiscal ruin and wrecking our financial institutions.

That's where the outrage ought to be. We should go see where these politicans live. Mr. Obama bought a $ 2 million home in Chicago after his lucrative career as a community organizer. I am surprised that Harvard Business School doesn't actively seek out recruiters within the community organizing profession, since that profession apparently pays top dollar (but not necessarily better than government work). Obama should be ashamed and the Congressional Republicans and Democrats should be ashamed. Leave the AIG bonuses alone. Quit bailing out companies and then proceeding to destroy them through a campaign of villification and vituperation.

How is any of this going to help the economy recovery? Is this the new post partisanship politics -- the politics of hate and anger?

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