AIG Thing

Just wanted to say some stuff related to the AIG bonuses. I know, I am one of the late ones into the commentary party concerning this subject.

To me, the biggest disappointment concerning this entire affair has been our federal government. Especially so since they knew about these bonuses months ago. Instead of acting like responsible people and addressing it at that time and managing it, they let it develop into this populist brouhaha. As Jack Welch said, federal government owns 80 percent of AIG and thus they should have acted like the board, worked with the CEO and the executives to find a resolution months ago. Instead we get this (as many commentators put it) kabuki theater of outrage from the very same people that knew about it. The real outrage should be the hundreds of billions that our government will spend on various pet projects that have nothing to do with our current economic situation – I mean, there are various causes for the current downturn in our economy but universal health care, alternative energy or universal higher education are not among them. Compared to the amount government has wasted our tax dollars (and our children’s and grandchildren’s for that matter as we go trillions in debt), this AIG thing is not even big enough to be a rounding error. It makes as much difference as breaking wind in a cat 5 hurricane.

Now we have this stupid punitive bill passed by the house that puts 90 percent tax on executive compensation on income over 250K for those entities that get 5 billion in government bailout money. Stupid since, one, it is barely constitutional (I am iffy on it passes the bill of attainder clause), two it punishes many people that had nothing to do with causing the financial mess and in fact may have been talent, brought in to help resolve it and three, it brings in instability and may undo the purpose of the bailouts. TARP and other actions by the government was done so that it will stabilize the finances of the banks somewhat so that they continue to lend as well as give them some time so that they can untangle the mix of assets to separate the good and bad and restore trust. Now due to the actions by the government (as well as some populist goons), banks are trying to repay the bailout money never-mind if they need it still to do its stated purpose. It’s like I am living in some 3rd world banana republic. I did not know that Zimbabwe was a country we should be emulating.

If this bill ever reaches the president, I hope he vetoes it – that would really be an unexpected move. However, he comes from a political viewpoint that demonizes corporations and people that run them and so I will not be holding my breath. It would be a really cool thing for me if these politicians would start saying how we are all Americans and that the vast majority of executives in our corporations, though flawed as we are all flawed, are in general, good folks who work hard and have a difficult task of balancing the needs and desires of the shareholders, employees and customers. I am not rich money-wise (though I am rich in many other ways) but I am just so tired of politicians dividing us and promising us that they will use the coercive power of government to get back at ‘them’ that have more materially than ‘us’.