Friday, March 20, 2009

Because you want to know what I think about AIG, right?

Because you want to know what I think about AIG, right?



And the rest of this financial SNNAFU, (that would be "not-normal") while I'm at it. Note -- I'm not an economist, and gods know, my pension is tanking, but I'm employed (yay) and my consumer debt is relatively low in comparison to the national average, I think. Higher than I like it, and I wish I'd downsized a year before I did. But I'm fairly sure I've got this year's England trip covered (maybe not if I go to St. Andrews, too), and part of me is still hoping to swing WorldCon/Anticipation -- if you are going, feel free to twist my arm -- mostly I am reticent because it's big and expensive, and I don't want to go unless I know I have people to hang out with).

So right -- I'm pretty normal for an employed recently divorced female academic -- If I lost my job tomorrow, I'd make it through another month, but then I'd be totally screwed. I'm worth more dead than alive.

So AIG. As I understand it, the bonuses are in their contract. So to me, that means they get paid. Period. This isn't up for argument. It SHOULD be up for negotiation, but the people receiving bonuses shouldn't have to give them up just because the taxpayer is paying them, rather than the customer. That's why we have contracts. I'd be very pissed if someone tried to not honor my contract.

And this newest attempt to tax the bonuses at 90%?? No, that's wrong, too. Federal laws should not be passed in order to punish/benefit one very small group of people. That's wrong. That's not the purpose of laws, although laws of those types are awfully interesting to historians. They really do provide a 'wtf?' quality to our research. So ... we get a law that taxes these guys 90%, and then there's a precedent to tax any bonus at 90%.

I've worked in sales, and earned commission and bonuses. Had my bonuses been taxed at a higher rate, I'd have made very little more than my base rate. But then, my commissions and bonuses were directly linked to my performance!!!

Having said all that ... I once worked for a company where we all took 10% salary cuts to help keep the company going. I'm wondering why this isn't happening at AIG. Honestly, I'm wondering how any of the AIG execs getting salary PLUS huge bonuses can live with themselves. Are they not ashamed? And I'm NOT sure that there shouldn't be more negotiations over reductions in pay for the execs at all of the companies getting the bailouts.

In the meantime, pay the bastards their money. It's a comparative drop in the bucket. Stop being distracted by this, and think about what is going on with the rest of the money -- where is it going, and what is it doing?? What safeguards are in place? And here's an idea for any of the people taking the cash -- name and shame. Publicize their names and pictures. hell, if you have the time, protest outside their homes and workplaces ...

And then think. Because what the hell allowed them to have contracts like this anyway? Anybody with half a brain should have been able to see that the kind of overextension of credit over the past 8-10 years was going to have some awful consequences. Anyone with half a brain should have noticed that top execs were making far more money than company profits -- real profits, not income -- justified. Hell, anybody could see that, when the people at the top are making hundreds of times what the people at the bottom are making, and there are still people in this country without health insurance and safe homes, that there is something just wrong with the world. Remember when suggestions that those people be taxed at even higher rates were dismissed (mostly by the GOP) were dismissed -- even attacked -- as a plot for socialist redistribution of wealth? You should -- it was happening as recently as ... last month?

The horse has left the barn. Congress, if you want to fix this, then put in lasting measures -- executives in any company or industry that gets a tax break can't get bonuses or compensation above 100 times the pay of the lowest-paid worker in the company, for example. And if a person makes over a million a year? Tax it at 50-60%. Own stock? Exercise your stockholder rights, and don't buy into this idea that you're paying for the best. Because if the best are stupid enough that they bought into the bubble? Maybe we need to redefine the best.


And by the way -- can somebody explain to me how having the federal government buy outstanding mortgages and re-finance them is not a smarter idea than just handing the banks some cash? Seems to me that the lenders would be out the interest, but would still be better off than having to unload property on a foreclosure market, and if the federal government is going to piss away taxpayer money, it might as well be on something that keeps people in their homes. But then, I want to see a new WPA and NRA. Some of my students would be better off working in construction.

7 comments:

Kelly in Kansas said...

Interesting points - esp. that it is a drop in the bucket. And I agree that some of our students would be better off in the construction industry. Or, at least, go work an actual labor job for a year and then come back to school and see if they complain about the "requirements" of going to school versus climbing under a house in the much to fix the plumbing or up on a several-story roof in the August heat and humidity.

Another Damned Medievalist said...

Oh, I think some of mine might be better in the trades and construction, full stop. They're in college for a better paycheck, and they can make far more in the trades than they will in most of the jobs they'll end up getting, unless they start to think that knowledge is good for it's own sake.

Steve Muhlberger said...

Outrageous compensation for CEOs and suchlike was a feature of the system, not a bug, for those who defined and benefitted the system, which might be called, I don't know, the ownership society. This AIG bonus fuss is good if it directs attention to this situation.

AIG contracts should be just as sacred as those that define UAW pensions -- no more.

Also I bet you never got a bonus for creating funny money, or committing fraud.

Another Damned Medievalist said...

Agreed on all points! And if it's found that the people getting bonuses committed a crime, then that would be profits, wouldn't it?

I do hope this really does make people think about the system itself.

Dr. Richard Scott Nokes said...

You wrote: "I once worked for a company where we all took 10% salary cuts to help keep the company going. I'm wondering why this isn't happening at AIG."

Why would they? They didn't need to take a salary cut or forego bonuses to keep their company going. All they needed was to exercise the access their political contributions had given them, and *presto*, they rake in billions.

The best part is that now Congress can pass a bill of attainder that is also ex post facto, practically guaranteeing with an unconstitutional double-whammy that the courts will strike it down long after the public has been distracted with other bread and circuses.

It's win-win-win. AIG wins, because they get billions, and all they have to worry about are these bonuses, less than .1% of what Bush & Obama have pumped into them. Congress wins, because it gets to sell more pitchforks and torches to the mob, knowing full well that it's unlikely the courts will allow their new tax to stand anyway. And finally, Obama wins (never waste a crisis!) because everyone is talking about a few hundred million in bonuses, rather than the billions -- er, make that now trillions -- that he's been passing out. The only losers are you and me, and potentially Geithner, who was involved with the AIG nationalization under both administrations -- but I hardly expect to see him scrounging in an alley soon.

This is rather like finding out someone has robbed our home, and complaining that they also stole the kids piggy banks.

By the way, my word verification was "coneys" -- I know you love it when it produces actual words!

James said...

Montreal in August is really tempting. It's a lovely city and our part of Virginia will be unlivable then. But we overspent last year and will determinedly stay home this summer.

Dance said...

FiveThirtyEight.com has made similar arguments, just by the way (IIRC, re the bad precedent and scaling the highest tax rates more carefully).

I believe there *were* some protests outside the houses of execs, saw an AP headline.

Bring back the Civilian Conservation Corps!