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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » Obama is really starting to scare me (H.R. 1388) (Page 3)

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Author Topic: Obama is really starting to scare me (H.R. 1388)
TomDavidson
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quote:
I'm not too fussed about the AIG bonus thing either way. I can see both sides.
Here's my problem: AIG contracted with some of its employees back when it started restructuring to accept hefty bonuses in lieu of simply leaving the company for greener pastures; they felt this gesture was necessary in order to retain enough staff to transition the company. At the time, they mentioned this to the government agencies working with them. Only when those bonuses became public knowledge in the media did members of the government go "Oh, noes! We cannot be rewarding these bad actors with our tax money!" and start pretending to be powerfully outraged.

As far as I can tell, it's legal for the government to tax something it doesn't like. But I think pretending that AIG was being inappropriately profligate here -- despite the fact that the alternative, i.e. completely replacing their staff with new hires, would probably have been even more detrimental to what remained to the company's assets -- is populist pandering of the worst sort.

I want to see the actual bad guys hung out to dry, too. But freaking out over retention bonuses isn't a good use of limited government resources right now.

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kmbboots
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I don't think that completely replacing their staff was the only alternative. Jobs are not so thick on the ground these days. Would you quit if your company was saved from tanking only by a government bailout and decided it couldn't give bonuses. Would you as an employer hire someone who did?

But I could be wrong and the world of finance might do just that. That could be a big part of what is wrong with the world of finance.

But honestly? Worst case with this is that some already wealthy people may have to go to court to get wealthier. They aren't dying or being imprisoned without trial or tortured. I have spent a lot of energy on outrage against the government in the past several years, and some of that has paid off. This week, though, if we are not starting a shock and awe campaign against a country that didn't attack us, I am not hitting the streets.

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TomDavidson
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quote:
Would you quit if your company was saved from tanking only by a government bailout and decided it couldn't give bonuses.
I wouldn't. But (as you note) I don't think people with my personality or attitude towards money work in the financial sector; if they did, they certainly wouldn't be very good at it. Bear in mind, too, that these people weren't going to quit because their company couldn't give bonuses; they were going to quit because their company was tanking and they could presumably get jobs somewhere that wasn't falling apart. These specific bonuses were only paid to keep them in their positions.

quote:
Worst case with this is that some already wealthy people may have to go to court to get wealthier.
Worst-case scenario is that we create a precedent of using taxation to prevent individuals or companies from satisfying any contractual agreements that congresspeople believe are sufficiently unpopular with the public.
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kmbboots
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quote:
Originally posted by TomDavidson:
quote:
Would you quit if your company was saved from tanking only by a government bailout and decided it couldn't give bonuses.
I wouldn't. But (as you note) I don't think people with my personality or attitude towards money work in the financial sector; if they did, they certainly wouldn't be very good at it.

quote:
Worst case with this is that some already wealthy people may have to go to court to get wealthier.
Worst-case scenario is that we create a precedent of using taxation to prevent individuals or companies from satisfying any contractual agreements that congresspeople believe are sufficiently unpopular with the public.

Yeah, I don't know if greed is necessary to be good at the finance sector.

I see the downside of such a precedent. I do. On the other hand, some of these contractual agreements are pretty outrageous. Maybe bringing them out in the open and exposing them to public scrutiny will have a moderating effect. Maybe people will have to do a good job to make a whole lot of money instead of beiing contractually entitled to an obscene amount of money whether they do a good job or not. And if Congress gets carried away, we can vote them out.

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TomDavidson
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quote:
And if Congress gets carried away, we can vote them out.
On this, I think we disagree. The mechanisms of government support and perpetuate themselves; they will continue grinding unless someone reaches out to stop them.
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kmbboots
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Eh, I have recently renewed faith in our ability to vote people out. [Smile]
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TomDavidson
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Bush wasn't up for re-election, sadly. We voted no one out.
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Lyrhawn
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I would say that she's referring to Congressional elections, in which there really was a relatively large turnover in both houses by recent historical standards, but the party flip happened two years ago, and we don't have much to show for it since.

You could also maybe argue that in voting in a Democrat and not renewing the GOP lease on the White House, a party, if not a man, was voted out of office, but I think there was a stark enough contrast between McCain and Bush to argue against this as well.

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AvidReader
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I know this is a page late, but I did want to address this:

quote:
quote:

When we think of charities, we think only of giving them money, not of giving them our time and attention.

Speak for yourself. My wife and I would prefer to spend our money on ourselves or our relatives and spend our time on others.
From what I unerstand, this largely correlates to age. Young people have a lot of time and energy but not a lot of money so service makes sense. Then they get a little older, have a kid or two, and work a lot of hours chasing that next promotion. My husband is working anywhere from 60 to 80 hours trying to transition from middle to upper management. We've got money but not a lot of time.

When we hit middle age we'll have after school activities and college funds to save for and we probably won't have time or money. Then when the kids are grown, we'll have both.

I wouldn't want every group to have to contribute the way that makes sense for someone else. Let's just say "Hooray, service!" and leave it there. [Smile]

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Scott R
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quote:
Originally posted by Christine:
quote:
Originally posted by Scott R:

How do you feel about a president and a Congress who may be making decidedly unconstitutional laws in order to appease a constituency crying out for JUSTICE, JUSTICE, JUSTICE!

'Cause that's what's happening with the laws taxing AIG's bonuses.

What do you think is unconstitutional about that law?
It's punishment without trial.
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Christine
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quote:
Originally posted by Scott R:
quote:
Originally posted by Christine:
quote:
Originally posted by Scott R:

How do you feel about a president and a Congress who may be making decidedly unconstitutional laws in order to appease a constituency crying out for JUSTICE, JUSTICE, JUSTICE!

'Cause that's what's happening with the laws taxing AIG's bonuses.

What do you think is unconstitutional about that law?
It's punishment without trial.
That seems like a bit of a stretch. No one is claiming that AIG committed any criminal act. And income taxes are constitutional, even specialized ones that target a few people or reward a few people.
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Scott R
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quote:
That seems like a bit of a stretch. No one is claiming that AIG committed any criminal act. And income taxes are constitutional, even specialized ones that target a few people or reward a few people.
This is a law to tax income that has already been paid, Christine.

Here's the section of the Constitution that may pertain:

quote:
Article 1 Section 9:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

It's the "ex post facto Law" that (I think) applies.

People are not claiming AIG committed any criminal act, and yet we're punishing them ANYWAY? That's precisely what this law is-- retribution for perceived slights against the American public.

Come on. You've got to see the irony here. Does it tickle, even a little bit?

Here some commentary from the WSJ, which doesn't necessarily support what I've written:

Link

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Oshki
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Just the fact that there are bonuses causes me to wonder: How many cents or fractions of a cent out of a doller actually goes to health care?

If we give to a charity and find out that only 2 cents out of a dollar goes to the intended cause we say the charity is a rip-off.(non profit)

If the insurance industry is built tier upon tier of bureaucracy for profit then perhaps the actual cost of health care isn't all that much since quite a bit of what doctors charge goes to insurance companies for malpractice insurance.


That is quite the business to be in plus get a bonus.

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Lisa
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quote:
Originally posted by Scott R:
quote:
Originally posted by Christine:
quote:
Originally posted by Scott R:

How do you feel about a president and a Congress who may be making decidedly unconstitutional laws in order to appease a constituency crying out for JUSTICE, JUSTICE, JUSTICE!

'Cause that's what's happening with the laws taxing AIG's bonuses.

What do you think is unconstitutional about that law?
It's punishment without trial.
It's revenge. Hell, Obama said so himself last night on Leno. Leno asked him whether he didn't see a problem with targeting individuals like that, and while Obama mostly dodged the question, he did say that it was "getting back at them".

They aren't raising taxes on people based on some sort of criterion. They're targeting specific individuals. It's creepy, and it's damned dangerous.

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fugu13
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I think AIG's health care insurance business is fairly small, they mostly specialize in other things.

And malpractice insurance would only be a small part of that. While it is easy to attack malpractice insurance, if you accept that someone should pay when there is medical malpractice, it becomes a question of who. Right now, it is the doctors, based upon risk models of malpractice likelihood, who choose to spread risk among themselves (though they of course pass some of that cost on). Eliminating malpractice insurance would not make the need to pay victims go away; either victims must get the money from elsewhere, or victims don't get money. There's certainly some bureaucracy in that, but I'm not aware of any particular inefficiency over, say, car insurance or life insurance, both of which seem to work fairly well.

Our health insurance system, however, is incredibly messed up. This isn't caused by some evil corporate scheme, though, but a screwed up set of incentives that mean health care insurers have little incentive to maximize health (unlike other insurance fields -- car insurance companies have good incentives to minimize car accidents, for instance), and health care providers have disturbingly little incentive to maximize health either. (All subject to the constraints of how much society is willing to pay for health, of course).

I don't think there's much point about commenting on the bonus program directly, but a lot of the problem is almost certainly from AIG's long-term-nationalization. Suddenly every aspect of running the AIG business has become a policy question, and it shouldn't be. The gov't should move AIG into receivership, split off the profitable traditional insurance arm and sell that, spin off any other bits that aren't sucking money, then give partial payments to counterparties in all remaining contracts and close down the other businesses.

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Christine
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quote:
Originally posted by Scott R:
quote:
That seems like a bit of a stretch. No one is claiming that AIG committed any criminal act. And income taxes are constitutional, even specialized ones that target a few people or reward a few people.
This is a law to tax income that has already been paid, Christine.

Here's the section of the Constitution that may pertain:

quote:
Article 1 Section 9:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

It's the "ex post facto Law" that (I think) applies.

People are not claiming AIG committed any criminal act, and yet we're punishing them ANYWAY? That's precisely what this law is-- retribution for perceived slights against the American public.

Come on. You've got to see the irony here. Does it tickle, even a little bit?

Here some commentary from the WSJ, which doesn't necessarily support what I've written:

Link

The ex post facto clause makes more sense and I'll have to give that some thought. Offhand, I would say that the law itself might not be unconstitutional but applying it to 2008/2009 taxes may be. And the question I would have to ask with taxes is what is retroactive? We are currently in 2009 and (I think) these bonuses came this year so is that retroactive? Applying it to 2008 taxes would, IMO, clearly be wrong but I did not think that's what they were doing. I was always under the impression that they could make changes in the current tax year for the current tax year.
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Mucus
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As a note of clarification, doesn't the law apply to a whole bunch of companies?

quote:
To aid those efforts, the House, the lower of the US Congress’ two chambers, voted 328-93 in favour of legislation that will tax 90pc of employee earnings above $250,000 at companies which have received more than $5bn in government bail-out funding.

link

Off-hand, that should cover Fannie Mae and Freddie Mac, cross-referencing TARP that would give Citigroup, BAC, JP Morgan, Wells Fargo, GM, Goldman Sachs, Morgan Stanley, PNC, and US Bancorp.

This seems to be a lot bigger and better than just employees at AIG unless the articles are leaving out some restriction on the law.

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BlackBlade
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I get the feeling that this latest development simply comes on the tail end of a stream of abuses. Banks getting bailout money and sitting on it, Merryl Lynch and the expensive office remodel, the big 3 riding corporate jets, Meryl Lynch paying out huge bonuses just prior to the Bank of America take over, AIG and the expensive corporate retreat. People all over are losing their jobs and there was nothing they could do about it, these guys argue that without bonuses of up to $6 million they won't stick around to clean up the mess as if their annual salaries are not enough to get them through the year.

To me it's sort of akin to being the door guard and after 10 or so people getting out through various forms of trickery and having been chastised because of it, you stop somebody acting suspicious and they yell at you because this time all their documentation seems to be in order.

The government has utterly failed to stop a long succession of events, they seem to have messed up again, I think the attitude is now, "we've got to stop SOMEBODY!"

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Christine
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quote:
Originally posted by BlackBlade:
I get the feeling that this latest development simply comes on the tail end of a stream of abuses. Banks getting bailout money and sitting on it, Merryl Lynch and the expensive office remodel, the big 3 riding corporate jets, Meryl Lynch paying out huge bonuses just prior to the Bank of America take over, AIG and the expensive corporate retreat. People all over are losing their jobs and there was nothing they could do about it, these guys argue that without bonuses of up to $6 million they won't stick around to clean up the mess as if their annual salaries are not enough to get them through the year.

To me it's sort of akin to being the door guard and after 10 or so people getting out through various forms of trickery and having been chastised because of it, you stop somebody acting suspicious and they yell at you because this time all their documentation seems to be in order.

The government has utterly failed to stop a long succession of events, they seem to have messed up again, I think the attitude is now, "we've got to stop SOMEBODY!"

What gets me is that people actually seem surprised that we gave money with no strings attached and businesses are using it in ways that we don't think are appropriate. Hello? We GAVE it to them. Did we honestly think that enlightened self interest would cause companies to work for the good of the American people?
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Mucus
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Sometimes you have to kill a chicken to scare the monkeys
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BlackBlade
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quote:
Originally posted by Mucus:
Sometimes you have to kill a chicken to scare the monkeys

Or giving money to bankers for the purpose of the public good is like pa shu qiu yu "climbing a tree in search of fish."
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SenojRetep
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quote:
Originally posted by Mucus:
As a note of clarification, doesn't the law apply to a whole bunch of companies?

Nate Silver at fivethirtyeight.com (and a linked NYT article) support that; 12 other companies that received bailout funds will be similarly affected. Here's Silver arguing why the proposed bill makes bad economic sense.

Personally, I like Eliot Spitzer's analysis over at Slate, that while the bonuses are a travesty, they are a much smaller issue than the fact that half of the $180 billion AIG has received has been paid out to the same companies that have been receiving their own bailouts. So Citibank, Goldman Sachs, Deutsche Bank, et al get all their insurance against the market downturn (via the AIG laundering of government funds) in addition to the billions in direct government aid. That, in Spitzer's words, is "the real disgrace."

As a side note: I think there's strong evidence that the populist furor over the bonuses is very much of the administration's making. Geithner evidently found out about the bonuses a week ago Tuesday, and by Friday there were pieces in the Washington Post and the New York Times. Lots of people have questioned why the sudden fury, when these bonuses have been guaranteed since last December. The best answer seems to me that in the craziness of transition, no one bothered to mention the bonuses to the new Treasury Secretary, and when he found out he (or his boss) was either 1) angry enough to do something about it or 2) saw it as a way to achieve some desired goal (like providing cover to push through other policy while everyone's distracted by the bonuses, changing an unfavorable news cycle that was focusing on waning support for Obama's budget and agenda, inuring the public to the idea of large marginal income taxes on those making more than $250,000). So they fed the story to some influential media outlets, stoked it with public comments of condemnation, and then watched the story enflame public outrage.

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beleaguered
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So will this be an, "Oops, I might have screwed up,better luck next time" moment for President Obama, or will he just not get any blame at all for the bonuses issue?

All that money given by the government to try and fix the issues, but because there weren't specific instructions accompanying the money, the corporate heads, who are looking out for numero uno, did exactly what they thought was in their best interests- to give themselves as much of the money as they thought possible, then high tail it outta there. Granted, this is purely speculation.

I'm not a fan of spelling every detail out when it comes to instruction or contracts, but when it comes to government and corporate execs, I don't think I would trust any to be completely honest. Trust, once lost is hard to get back. I've worked for the government for years and years, and they have lost my trust when it comes to money and envolvement. Corporate execs, certainly in this situation, are probably seeing this as their final opportunity to contribute to their retirements.

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Mucus
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quote:
Originally posted by SenojRetep:
Personally, I like Eliot Spitzer's analysis over at Slate, that while the bonuses are a travesty, they are a much smaller issue than the fact that half of the $180 billion AIG has received has been paid out to the same companies that have been receiving their own bailouts. So Citibank, Goldman Sachs, Deutsche Bank, et al get all their insurance against the market downturn (via the AIG laundering of government funds) in addition to the billions in direct government aid. That, in Spitzer's words, is "the real disgrace."

Deutsche Bank doesn't get a bailout, at least not an American one. If you cross-reference TARP ( http://projects.nytimes.com/creditcrisis/recipients/table ) with the list of the largest AIG counterparties ( http://www.ritholtz.com/blog/2009/03/the-biggest-aig-counterparties/ ) you'll see that the largest of the AIG counter-parties are foreign firms, not TARP-covered American ones.

Thus, Spitzer's article is kind of misleading. The US government further propping up previously bailed out US firms responsible for this mess *would* be a real disgrace. But the US government taking responsibility for the debts of a state-owned enterprise such as AIG to blameless foreign firms, thats highly admirable.

quote:
... inuring the public to the idea of large marginal income taxes on those making more than $250,000).
If thats really true, that would be awesome.
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Christine
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quote:
Originally posted by beleaguered:
So will this be an, "Oops, I might have screwed up,better luck next time" moment for President Obama, or will he just not get any blame at all for the bonuses issue?

The original stimulus package was signed into law by Bush. His part in it was as part of congress which did a decidedly bad job in forming that law. I very much hope the more recent (and bigger) stimulus package has been formed better.
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SenojRetep
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quote:
Originally posted by Mucus:
But the US government taking responsibility for the debts of a state-owned enterprise such as AIG to blameless foreign firms, thats highly admirable.

Of course, it wasn't a state-owned firm before the bailout. I would say the foreign firms should have chosen their insurance provider with greater care. From a pragmatic perspective, though, I'm glad we're wealthy enough (or expect our children to be) to bribe other countries into confidence in American financial institutions.
quote:
quote:
... inuring the public to the idea of large marginal income taxes on those making more than $250,000).
If thats really true, that would be awesome.
I think it would be pretty hua (to use my new Chinese word of the day). I don't think that's a good thing.
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TomDavidson
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quote:
I've worked for the government for years and years, and they have lost my trust when it comes to money and envolvement.
Are you saying you aren't trustworthy?
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Oshki
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fugu13

I agree, and AIG IS in the process of down sizing. There was a time when insurance was inexpensive and a larger number of busnesses could cover their employees. There are alot of factors other then simple greed or the size of bureaucracy like the illegal aliens that drive without car insurance and use emergancy rooms for treatment. Maybe it took the bonus problem to wake us up to what is happening in all sorts of different areas? The Government is angry because they say they are looking out for taxpayer money but how much less would we have to pay for a deductable if they didn't give out bonuses at all?

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BlackBlade
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quote:
Originally posted by SenojRetep:
[QUOTE]hua (to use my new Chinese word of the day). I don't think that's a good thing.

This says more about me than it does you but what hua are you using. [Smile]
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TomDavidson
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quote:
how much less would we have to pay for a deductable if they didn't give out bonuses at all?
I suppose it depends on the quality of employee they'd be able to retain if they didn't give out bonuses.
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Christine
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quote:
Originally posted by Oshki:
fugu13

I agree, and AIG IS in the process of down sizing. There was a time when insurance was inexpensive and a larger number of busnesses could cover their employees. There are alot of factors other then simple greed or the size of bureaucracy like the illegal aliens that drive without car insurance and use emergancy rooms for treatment. Maybe it took the bonus problem to wake us up to what is happening in all sorts of different areas? The Government is angry because they say they are looking out for taxpayer money but how much less would we have to pay for a deductable if they didn't give out bonuses at all?

Insurance is a business. The owners and employees are in it for the money. If what you're looking for is a system in which profits are minimized or eliminated, and we simply pay into a pool that pays back out when we need it, then that's when the government needs to run the insurance.
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fugu13
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This year? Perhaps $5 per insured person. The size of the bonuses is dwarfed by the size of AIG's insurance revenue. And that's assuming that not giving bonuses results in no lower performance incurring additional costs.

Bonuses like this just aren't a very big factor in that sort of thing.

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Mucus
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quote:
Originally posted by SenojRetep:
Of course, it wasn't a state-owned firm before the bailout.

But the fact that it *was* a bailout and a nationalization makes their debts the responsibility of the government. Let a company go into bankruptcy, then the creditors fight for whats left of the companies assets. But *buy* a company, and you're now responsible for what it owes.

quote:
I think it would be pretty hua (to use my new Chinese word of the day). I don't think that's a good thing.
I do. It cleanly solves the criticism that the administration is unfairly targeting certain individuals at companies that are bailed out.
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fugu13
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No, nationalization is a process that typically involves negotiating down debt levels. Bankruptcy of large companies is essentially a form of nationalization, and the form I would have advocated for AIG (and still do). In a bankruptcy, creditors are given what cash and profitable parts of the company exist, until there is nothing left, and that would be quite quickly with AIG.

AIG did not become part of the federal gov't. Its debts are still shielded within AIG. Once AIG's assets are exhausted, the gov't has no further obligation to sustain the debts. For political reasons I support partial payment, but this idea of sustaining in full when, had normal business taken its course, the people who had mistakenly become involved would have nothing, is not right. It is a transfer from people who had not made horrible financial mistakes to those who did, virtually guaranteeing continued financial mistakes (especially in the near-term) on the assumption they'll just get more money.

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Mucus
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Thats what I said though, the US government *didn't* let AIG go bankrupt normally.

It bailed out and nationalized AIG with the intent of stopping a chain reaction that would occur if AIG fell. And yes, as in your example, I'm fully aware that Americans could probably have found some weaselly legalistic way of not paying AIG's debts (or not paying them in full), but you didn't. You took responsibility for them and thats why I don't only find the US governments actions on this issue satisfactory but as I said before, admirable.

And in this time with US reputation in the gutter, especially in finance, doing right by the world is a good thing and should be applauded.

(However, as long as AIG is owned by the federal government it *is* effectively part of the federal government and all decisions it makes will ultimately be politicized. Thats why the US media quite rightly portrays Chinese SOEs as part of the Chinese government and I expect no less when it comes to American SOEs)

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Blayne Bradley
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I voted for you guys instituting Shock Therapy for the economy, it worked for Russia didn't it?
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fugu13
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There isn't a need for a weaselly legalistic way. The straightforward legalistic way works just fine, and is how it works pretty much the world over.

The US government actions on this issue were stupid and counterproductive. They have sustained harmful situations in the US and international economies.

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swbarnes2
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quote:
Originally posted by TomDavidson:
quote:
Would you quit if your company was saved from tanking only by a government bailout and decided it couldn't give bonuses.
I wouldn't. But (as you note) I don't think people with my personality or attitude towards money work in the financial sector; if they did, they certainly wouldn't be very good at it.
I'm not seeing that the people who have the jobs now were very good at them either. Sure they made money for themselves personally, but their companies are toast.

quote:
Bear in mind, too, that these people weren't going to quit because their company couldn't give bonuses; they were going to quit because their company was tanking and they could presumably get jobs somewhere that wasn't falling apart.
This only makes sense if we aren't talking about the people who made the company fall apart. And I'm not at all sure that's the case.

quote:
These specific bonuses were only paid to keep them in their positions.
I don't see how you can know that. I think it's just as explicable as a "we take care of our own, we're all entitled to big money". And it's not like the guys giving the bonues were taking them out of their own pocket.
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Mucus
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fugu13: I disagree.

And I think the US government finally made a right call for once and I'm glad it took the high road.

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Oshki
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quote:
Christine
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posted March 20, 2009 12:15 PM
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Originally posted by Oshki:
fugu13

I agree, and AIG IS in the process of down sizing. There was a time when insurance was inexpensive and a larger number of busnesses could cover their employees. There are alot of factors other then simple greed or the size of bureaucracy like the illegal aliens that drive without car insurance and use emergancy rooms for treatment. Maybe it took the bonus problem to wake us up to what is happening in all sorts of different areas? The Government is angry because they say they are looking out for taxpayer money but how much less would we have to pay for a deductable if they didn't give out bonuses at all?
--------------------------------------------------------------------------------

quote:
Insurance is a business. The owners and employees are in it for the money. If what you're looking for is a system in which profits are minimized or eliminated, and we simply pay into a pool that pays back out when we need it, then that's when the government needs to run the insurance.

Christine, I think what we need is more competition. I seem to be hearing on the news that AIG is too big to be allowed to fail. Does that mean that the world has most of their insurance nest eggs in one basket? Does AIG have a competitor?

As for government run insurance, I have never heard anyone describe government as efficient. Correct me if I'm wrong but isn't it hard to fire a government worker even if they just do the minimum as long as they show up for work? Or is that a misconseption or myth?

I have been following the arguments of fugu13 and agree. AIG should have been allowed to fail.
Out of the rubble perhaps competitors might form. Competition makes busness more efficient doesn't it, as well as keep down prices? I think that the government could help the insurance industry by addressing the illegal immigration problem.

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Christine
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quote:
Originally posted by Oshki:
Christine, I think what we need is more competition. I seem to be hearing on the news that AIG is too big to be allowed to fail. Does that mean that the world has most of their insurance nest eggs in one basket? Does AIG have a competitor?

As for government run insurance, I have never heard anyone describe government as efficient. Correct me if I'm wrong but isn't it hard to fire a government worker even if they just do the minimum as long as they show up for work? Or is that a misconseption or myth?

I have been following the arguments of fugu13 and agree. AIG should have been allowed to fail.
Out of the rubble perhaps competitors might form. Competition makes busness more efficient doesn't it, as well as keep down prices? I think that the government could help the insurance industry by addressing the illegal immigration problem.

I didn't mean to imply that we should use government run insurance, only that if you want to lower your insurance rates by removing bonuses (which are pure profit motive), then you don't want a private company running insurance.

As it happens, I think the whole "too big to fail" thing is dangerous thinking. As a matter of fact, I think that the thing this country needs more than anything else is to LET some of these big businesses fail. Small businesses breed competition and competition is what makes capitalism work. So basically, I agree with you. [Smile]

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MattP
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quote:
I didn't mean to imply that we should use government run insurance, only that if you want to lower your insurance rates by removing bonuses (which are pure profit motive), then you don't want a private company running insurance.
It's possible to have a tightly regulated private marketplace for commodity goods where profits are developed by developing efficiency and building good relationships with customers to increase marketshare rather high margins. Title companies operate this way. Essentially they are agents of the state, but as private businesses they have a profit motive that drives performance-based improvements in their processes rather than higher margins to increase revenue.
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kmbboots
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quote:
Originally posted by Christine:
quote:
Originally posted by Oshki:
Christine, I think what we need is more competition. I seem to be hearing on the news that AIG is too big to be allowed to fail. Does that mean that the world has most of their insurance nest eggs in one basket? Does AIG have a competitor?

As for government run insurance, I have never heard anyone describe government as efficient. Correct me if I'm wrong but isn't it hard to fire a government worker even if they just do the minimum as long as they show up for work? Or is that a misconseption or myth?

I have been following the arguments of fugu13 and agree. AIG should have been allowed to fail.
Out of the rubble perhaps competitors might form. Competition makes busness more efficient doesn't it, as well as keep down prices? I think that the government could help the insurance industry by addressing the illegal immigration problem.

I didn't mean to imply that we should use government run insurance, only that if you want to lower your insurance rates by removing bonuses (which are pure profit motive), then you don't want a private company running insurance.

As it happens, I think the whole "too big to fail" thing is dangerous thinking. As a matter of fact, I think that the thing this country needs more than anything else is to LET some of these big businesses fail. Small businesses breed competition and competition is what makes capitalism work. So basically, I agree with you. [Smile]

It probably is better for the system to let businesses fail. The problem is the people and businesses they will take down with them. Forest fires are actually good for forests in the long run, but they suck for the individual trees. In this case, the "trees" are human beings.
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fugu13
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The way to handle that is to protect individuals as feasible, at a reasonable level, not to continue stopping the forest fires. Because if you do that, eventually the whole forest is destroyed by the fire you can't stop.

edit: and, just to beat the analogy with a stick, frequent natural forest fires kill very few trees. Instead, they destroy the brush that has grown up around them, but rarely burn long and hot enough to light an adult tree on fire.

edit again: and very much keep in mind that when economists talk about the 'system', they mean the aggregate level of satisfaction of individuals. If the system in that sense is worse off in the long run, the individuals are on the whole worse off.

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BlackBlade
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quote:
Originally posted by fugu13:
The way to handle that is to protect individuals as feasible, at a reasonable level, not to continue stopping the forest fires. Because if you do that, eventually the whole forest is destroyed by the fire you can't stop.

edit: and, just to beat the analogy with a stick, frequent natural forest fires kill very few trees. Instead, they destroy the brush that has grown up around them, but rarely burn long and hot enough to light an adult tree on fire.

edit again: and very much keep in mind that when economists talk about the 'system', they mean the aggregate level of satisfaction of individuals. If the system in that sense is worse off in the long run, the individuals are on the whole worse off.

I'd say you've beaten that analogy into a pulp. Now it can serve no purpose but kindling.
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BandoCommando
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quote:
Originally posted by AvidReader:
I know this is a page late, but I did want to address this:

quote:
quote:

When we think of charities, we think only of giving them money, not of giving them our time and attention.

Speak for yourself. My wife and I would prefer to spend our money on ourselves or our relatives and spend our time on others.
From what I unerstand, this largely correlates to age. Young people have a lot of time and energy but not a lot of money so service makes sense. Then they get a little older, have a kid or two, and work a lot of hours chasing that next promotion. My husband is working anywhere from 60 to 80 hours trying to transition from middle to upper management. We've got money but not a lot of time.

When we hit middle age we'll have after school activities and college funds to save for and we probably won't have time or money. Then when the kids are grown, we'll have both.

I wouldn't want every group to have to contribute the way that makes sense for someone else. Let's just say "Hooray, service!" and leave it there. [Smile]

You've made a valid point. I generally fit the description of young person with no money, and perhaps I fit the description of having extra time and energy.

I would estimate that I spend about 50-60 hours a week working in my job. Actually for the last month or so, I've had work on Saturdays, too, making my total more like 60-70. Since I'm salaried, I'm compensated for 40 of those, according to my contract (but let's not get into a debate about teacher pay & benefits here). I might consider some of my extra hours on behalf of my students to be a form of community service.

But even so, hours remain on the weekend, and my wife and I are happy to volunteer our time at a local cat shelter, at least for an hour or two.

Now, if we had more money, I can see how it would be possible that we would simply write a check, but I couldn't be sure. Someone want to give me money so that I can find out? [Cool]

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Mucus
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quote:
Originally posted by fugu13:
Because if you do that, eventually the whole forest is destroyed by the fire you can't stop.

Viva la revolution
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Samprimary
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I was concerned about this. For a short while, anyway, until I realized whose money they were taxing back into the system.

AIG got the taxpayer monies through a badly drafted bailout plan, and through this it has been reconstituted for other, more appropriate uses, because AIG was baldly wasting our little contribution on bonuses.

quote:
As it happens, I think the whole "too big to fail" thing is dangerous thinking.
Myself, I believe that it is not dangerous thinking, but rather is a sensible and logical approach to a circumstance that is dangerous. It makes sense for a group to analyze the situation and say "The way we structured our markets left us with a number of organizations that became so largely structured into our financial health that we have little option but to save them if we want to save ourselves."

As long as it comes with the caveat "We should never have structured our markets in a way which created this dilemma in the first place"

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Boothby171
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Has anyone actually done the math to realize that the $145 million in bonuses, when considered against the $30 billion in the most recent stage bailout is only about... half a percentage point? Considering that the government has already given AIG something like 60 to 70 billion dollars already in the recent phase of bailouts (correct me if I'm wrong...but it's really not the point), the percentage is even smaller.

If AIG is supposed to be paying back the bailout money, plus a good percentage interest (I think that's suppoed to be how it's being handled), this 1/2% matters even less.

Not that I like either aspect very much...but let's put things in persepctive.

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fugu13
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Boothby: exactly. The bonuses are a rounding error in the amounts that have been funneled into AIG. Here's the most recent xkcd, which comments on the misrepresentations being made in the news that make it sound like the bonuses somehow are what makes it so AIG doesn't have enough to pay creditors: http://xkcd.com/558/
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