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Simmering Hope

Hope is the expectation that something outside of ourselves, something or someone external, is going to come to our rescue and we will live happily ever after. – Dr. Robert Anthony

Mar 16, 2009

“It’s a mob effect” one senior AIG executive said

“Whoever controls the volume of money in our country is absolute master of all industry, and commerce … and when you realize that the system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation, and depression originate.”
-President James Garfield July 2, 1881

It’s late in the evening of March 16, 2009 and by now the outrageous AIG bonuses made headlines all over the world.
$165 million bonuses was payable to executives by Sunday and was part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue.
AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.
Following are some headlines, along with my comments in brackets:
– AIG Execs who ruined company to get $165 million in bonuses
– AIG: $90 billion bailout funds went to foreign, domestic banks, including some bailout recipients
– Treasury will use $30 billion infusion to compel AIG to repay bonuses (That is mind boggling!!!!!! Out of a Kafka scenario)
– Cuomo to AIG: Give me information or face subpoenas, court (So far AIG refused to provide information with regards to recipients of the retention payments)
– AIG London office lost up to half a trillion dollars (as a reminder I want to put here the comment made by AIG’s CEO: Eduard Liddy who said “We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses, which are now being operated principally on behalf of the American taxpayers _ if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury”)

If you don’t know who Liddy is, let me remind you: Liddy (who came from a hedge fund) was handpicked by Paulson (Goldman Sachs) to be the new CEO of AIG. Quid pro quo: The largest recipient of the funds through 12/31/08 was Goldman.

Today AIG needed hired guards, to protect the offices of Financial Products, the division whose derivatives brought the company to the brink of collapse. Senior managers submitted their resignations… too bad they did not do it before forking in the huge bonuses!!
Some employees did not show up. So beside being arrogant and greedy, they are cowards too.
You bet it’s a mob effect; you bet they should be scared for their lives because instead of turning voluntarily down the contractual bonuses, they pushed into getting or accepted them.

OK, let’s say that the payment plan had been no secret. Beginning in the first quarter of 2008, AIG disclosed the plan to offer retention awards at Financial Products. The unit’s executives, fearing they might lose valuable employees successfully negotiated more than $400 million for their workers, to be paid this month and again next year.
But HELLO!!!!! WTF talent they want to retain? Is the $61.7 billion loss something that should be rewarded? Maybe they are better off letting all the executives paid $8000 an hour go and hiring instead new guys willing to work for a fraction of that money. Some of these executives should be probably in jail, to keep company to Bernard Madoff.

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