AIG

[tenthring]

Originally Posted by Incredible Hulctuary

Some parts of the division are profitable ... for now. Then when the price of oil is $X in 20 years, AIG is liable for a bajiliion dollars and begs for another bailout. From Liddy's own testimony it seems like he would get rid of the whole FP division tomorrow if he could.

That FP division is the 1% cancer that is killing the other 99% of the company. And it is a division small enough with misdeeds large enough that anybody in it who was senior enough to collect a million dollar bonus (or whatever you wanna call it) is partially responsible for the mess, even if their part in it was just continuing to work there and looking the other way while the shenanigans were going on. If you're a member of a gang that goes on a killing spree of hundreds of people over a few years, and you remained in that gang all along, you're partially guilty of it even if you didn't pull any triggers or knives or fists.

Once again your just making unsubstantiated guesses. Without knowing what is on their books you have absolutely no clue whether they are profitable or what their risks are. Starting from the POV that everything that everyone at AIGFP does is unprofitable is a ridiculous starting point. You need to go in there and evaluate the business on a case by case basis. You either keep or sell off the good parts and let the bad parts die. That's what should be getting done. That's the whole process that needs to happen if we ever want this resolved. Bankruptcy would have done this (by having private buyers determine what is or isn't valuable), but we didn't go that route because the government thought it could do a better job of breaking up AIG then bankruptcy. So if that analysis isn't getting done it is the shareholder's (government's) failure.

Are executives at AIGFP responsible for what happened in the CDS division? Some of them are. Find out who was and punish them. Don't punish the manager of an unrelated desk that may not have bought or sold a CDS in his whole life.

Your statement about the gang is a little crazy. Is everyone in a company responsible for everything that happens in the company? Hardly. Only at the very top, where people's job description is that they are responsible for everything that goes on in the company.

I'm on my fourth company since graduating. The previous three are either going bankrupt or got bailed out by the government. Do you know how many people were responsible for those companies going under? Very few. Most people were just comming into work and doing thier jobs. I find it utterly rediculous to blame them because the CEO made aggressive pricing assumptions or the CFO levered up too much debt. You might as well blame general infantry for invading Iraq.

[DixieFlyer]

Originally Posted by Katie.

All the comments after that letter are pretty disturbing. Apparently the majority of this country now believes that getting an education and working hard shouldn't result in high pay, at least not if you work in finance. I think they're really just jealous.

that reminds me of this quote from Austrian school economist Henry Hazlitt:
"The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects - his laziness, incompetence, improvidence, or stupidity."

[donny5k]

Originally Posted by DixieFlyer

that reminds me of this quote from Austrian school economist Henry Hazlitt:
"The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects - his laziness, incompetence, improvidence, or stupidity."

The whole gospel of Henry Hazlitt can be summed up in a single sentence: Love the man who is better off than you are. Never under any circumstances suggest that his success may not be due to his own efforts, nor to the productive contribution he has made to the whole community. Never attribute his success to the exploitation, the cheating, the more or less open robbery of others. Always admit that your own failure is owing to your own weakness and that the failure of anyone else is due to his own defects.

[Incredible Hulctuary]

Originally Posted by tenthring

Are executives at AIGFP responsible for what happened in the CDS division? Some of them are.

The FP division is too small and too destructive for any million dollar executive in there to be innocent. Just like you can't be a senior member of Al-Qaeda and expect us to believe your nose is clean because you didn't kill anybody. The FP division is a set of financial terrorists, holding the economy to ransom.

[_BullDog_]

Originally Posted by DixieFlyer

that reminds me of this quote from Austrian school economist Henry Hazlitt:
"The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects - his laziness, incompetence, improvidence, or stupidity."

So Henry doesn't know how to count?

[Aaron Brachowitz]

Originally Posted by tenthring

AIG-FP as a whole may be a bad entity, but its comprised of hundreds of employees working in very different areas. Some of those are profitable. The same will apply to nearly any bank or institution currently on the government dime. Isn't that the entire rational for rescuing them? That we don't want to good parts of these too-big-too-fail institutions dying off with the bad parts.

I would say no, it wasn't the rationale for rescuing them. The rationale was that the counterparties (many of whom were in on the bailout decision) were too vulnerable to an AIG collapse.

[tenthring]

Originally Posted by Incredible Hulctuary

The FP division is too small and too destructive for any million dollar executive in there to be innocent. Just like you can't be a senior member of Al-Qaeda and expect us to believe your nose is clean because you didn't kill anybody. The FP division is a set of financial terrorists, holding the economy to ransom.

If hundreds of people is small, I don't know what to tell you. The trading floor I worked on had fewer people then that, and I couldn't tell you what the person two desks over was doing, let alone was I involved in any way. My MD made millions and he wouldn't know either. He was the MD of his division, and he had no say over how an MD of another division ran his business. A similar structure has existed at nearly every company I've worked for. Only a few people at the top are in charge of managing the business broadly. Find out who they are and go after them. Should be as easy as pulling up an org chart.

If you don't like that any of them make millions, then don't pay them. Saying they would make $0 in bankruptcy is superfluous, because they would have had a year to find another job. Instead they worked a whole year for $1 salary on a promise, they can't go back and get that year back, nor any offers they may have turned down. If you think that the CDS people have a responsibility to stay then go after them, but managers of profitable lines of business that didn't cause this don't have an obligation to work a year as a slave to sell of the businesses they built.

If you disagree go prove it. Show me how every single employee in AIGFP is a crook. Go in there and open the books and see whats wrong. Do an investigation, start running the place, and take responsibility. Half assing it and then throwing out bad legislation is not the solution.

[tenthring]

Originally Posted by Aaron Brachowitz

I would say no, it wasn't the rationale for rescuing them. The rationale was that the counterparties (many of whom were in on the bailout decision) were too vulnerable to an AIG collapse.

The obvious Goldman counter party corruption aside, the general idea behind bailouts as a whole (not just AIG) is that we can't let these institutions stop doing all of their business, because their non-toxic lines are integral to the financial system (economy). I don't buy that, but it is the entire rational behind not letting them just go into bankruptcy.

[Aaron Brachowitz]

The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

This guy was an executive VP -- I think he probably knows where some of the bodies are buried. Or he's a complete idiot.

[DixieFlyer]

Originally Posted by tenthring

/seconded

There is no reason to believe AIG had to make good on all of its obligations to everyone. Should bailout money really be used to pay Goldmen 100 cents on the dollar for thier CDS bets? Is not paying Goldmen CDS going to destroy the financial system? If Goldmen is going to go bankrupt without getting those CDS paid then Goldmen should apply for more TARP funds and pay them back.

This is the same Hank Paulson that was buying these CDS from AIG at the same time he was selling the same mortgage securities he was betting against to his clients. He knew AIG couldn't pay, but when you own the treasury department its all gravy. Why should AIG be the only one paying the government back (or more likely not paying them back, while all of thier counterparties get paid off on CDS but owe the government nothing).

It's becoming obvious to me that this bonus brouhaha is nothing but a smokescreen to deflect attention away from the real issue: AIG is basically a conduit through which the taxpayer funnels money to other financial institutions (Goldman Sachs, BankAmerica, Deutsche Bank, et al)