Wednesday, March 18, 2009

Is that a tocsin I hear?

It's a bad time to be an expert at AIG. The public is pissed about having to pay millions of dollars in bonuses to AIG executives, given that they bankrupt AIG. Edward Liddy, the CEO of AIG, testifying live and under oath before Congress, says that those bonuses are necessary to avoid total collapse of the company, the economy, and the baby Jesus.

''I am trying to desperately prevent an uncontrolled collapse of the business," said Liddy, who was brought out of retirement six months ago to run AIG. There is still risk that that could blow up," said Liddy, and it was clear from his expression that the prospect was not a rhetorical exercise.

Liddy didn't need to further connect the dots. If AIG F.P.'s outstanding portfolio of derivative products "blows up" -- the cascade could likely bring down AIG's counterparties. Which would inevitably require the expenditure of further government trillions to prevent a systemic crash.''

However, now Congress doesn't want to give them that money because the public is pissed.

Salon: ''You have to love -- or hate -- the beauty of this showdown. The CEO of AIG tells Congress that giving out bonuses is necessary in order to prevent a financial cascade of destruction that could bring down the economy. And Congress tells the CEO of AIG that giving out the bonuses ensures that Congress will not authorize any more funds to mitigate exactly that disaster.''

Okay, I hate drawing historical parallels, but... As someone who studies French history, it's pretty hard to think of another situation in which an entrenched and corrupted elite went begging a public- that already had a deep and justified hatred for them- for more money to keep them in lifestyles that were no longer sustainable with the excuse that they really needed the money because they'd messed up the nation's economy and now needed to save it...

Oh, wait, no it's not!

4 comments:

bdunbar said...

As someone who studies French history, it's pretty hard to think of another situation

You'd be speaking of Congress, then?

Pro said...

Breaking News: Dodd Says loophole that protects AIG Bonuses added per request of the Obama administration. The video is about a fifth of the way down.


http://www.butasforme.com/2009/03/17/obamas-stimulus-bill-explicitly-grants-aig-the-legal-right-to-hand-out-bonuses/


Obama should take full and direct responsibility for this mess.

Holly said...

So... let me get this straight. AIG is blackmailing a not-inconsequential portion of the global economy, and people are pissed off that the executives are getting bonuses?

They're not pissed off that the world is being blackmailed?

Seriously? Pull the other one, it has got bells on it.

By the way, Greg mentioned the French Revolution conditions as well, but I have to say, Americans are MUCH too fat (literally and figuratively) to muster the kind of motivational rage that would lead to actually doing something about anything. Really, anything.

That was the explicit POINT of fostering a middle class--to prevent a repeat of that particular revolution.

And it works. There has been a persistent and effective campaign to make every person in America to self-identify with the middle class. And, they do. There are dumb bastards below the freaking poverty line who believe they're middle class, and some how just... you know... doing it wrong.

Now, every one thinks they have something to lose, and revolutions happen only when there is nothing to lose, and everything to gain.

Rufus said...

Brian- I was thinking of both the government and companies like AIG as a collective entrenched elite akin to the nobility at this point.

Holly- A lot of what you wrote here I had in the original post, but cut it because I was going on too long. But, yeah, I agree.

Pro- Basically what I said to Brian.