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March 25, 2009

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some of the blame--probably, most of the blame--for the current financial mess falls on us. You and I.

bullsh!t.

"You and I. We bought houses we couldn't afford; we expected the bubble never to burst; we took on too much risk; we relied on credit instead of savings (we haven't been saving enough for years). After the shocks in the oil market, a recession was all-but-inevitable."

Sorry, but this is nonsense. A recession may have been inevitable, a catastrophic failure of major banks and being on the brink of economic Armageddon were not. When a company like AIG was literally making hundreds of billions of dollars of bets with their company as collateral, the main problem isn't people who bought houses that turned out to be more expensive than they could afford when the economy went bad.

And I'm saying this despite the fact I agree the issues of bonuses at AIG were largely a side show, and the response at best excessive.

von, isn't part of the US's negative savings rate a correlation between the flat incomes for most Americans and the housing bubble that kept making houses more expensive? Hell, just the flat incomes is enough to explain much of that.

And no, most of the blame does not fall on "you and I" who "bought houses we couldn't afford". Why did people buy houses they couldn't afford? Why were houses that expensive? Why were incomes flat and so savings were vanishing? And WHERE did the money go, that wasn't going into regular people's wages?

The answers for this lie much closer to the "Masters of the Universe" than to "you and I".

As for the guy who resigned? Sorry, when people in his division were setting things up that cost millions of people their jobs, retirement savings, homes, security, health, and yes, even their lives, I'm not gonna be too worried about how hard he's worked and how much he "deserves" his retention bonus. His bonus was about 750K. That's about 15 times the average annual income for Americans.

The credit default swaps wasn't the only funky business at AIGFP.

Von, in all of your retorts, you keep saying that "we" are to blame. And I have to ask: what do you mean "we," kemosabe? I'm a renter--I have been since I left home. All my debt is federal student loans. What did *I* do to cause this mess? What did people who have reasonable mortgages do? Go ahead, blame yourself if you want to take some of the blame off the financial services industry. But leave me out of it.

As for the guy who resigned? Sorry, when people in his division were setting things up that cost millions of people their jobs, retirement savings, homes, security, health, and yes, even their lives, I'm not gonna be too worried about how hard he's worked and how much he "deserves" his retention bonus. His bonus was about 750K. That's about 15 times the average annual income for Americans.

Why does the amount of the bonus affect whether it's right or wrong to demonize Jake DeSanis? And why should we concerned whether Mr. DeSanis makes more than the average worker? If we believe his account, Mr. DeSanis has done things that the average worker has not done: got a degree from MIT, rose impressively through the ranks at AIG, did his job responsibly.

So, if you and I hadn't bought those overpriced houses, we wouldn't be in this fix. Or am I supposed to be demanding that we stop fixating on our mortgages because the percentage involvement of our house loans, like the AIG bonuses, is just a tiny fraction of this mess, so it is making us lose sight of the really really big picture. Confusing stuff.

Sorry, but this is nonsense. A recession may have been inevitable, a catastrophic failure of major banks and being on the brink of economic Armageddon were not.

The catastrophic bank failures were caused by the bursting of the housing bubble (with an assist from various energy shocks and other instabilities). The unregulated derivatives market exacerbated the problem, but wasn't itself the cause.

Von, in all of your retorts, you keep saying that "we" are to blame. And I have to ask: what do you mean "we," kemosabe? I'm a renter--I have been since I left home.

"We" in the general sense: the American public. (My house is cheap, my loans are paid, my savings rate is impressive.)

I would also like to point out that the promised bonuses are comparatively quite small: if AIG had been bailed out for $100.00, the bonuses would amount to about 10 cents of those hundred dollars.

This outrage over a piddling amount is distracting us from the real problem - Geitner's bailout plan, which is a huge giveaway, and will cost as much as 1 trillion in direct costs plus FDIC loan guarantees. The direct costs are somewhat less than the AIG bailout - it's the 850 billion in FDIC guarantees that has me worried; the FDIC doesn't have that kind of money, so we will ultimately be on the hook for it.

jdkbrown, I changed the wording slightly to make the point clearly.

The catastrophic bank failures were caused by the bursting of the housing bubble

we went through this yesterday.

Why does the amount of the bonus affect whether it's right or wrong to demonize Jake DeSanis? And why should we concerned whether Mr. DeSanis makes more than the average worker? If we believe his account, Mr. DeSanis has done things that the average worker has not done: got a degree from MIT, rose impressively through the ranks at AIG, did his job responsibly.

That's debatable. For one, if he was doing his job responsibly and working in the financial products division where the CDSes were, there's a decent argument to be made that he should have known monkey business was up, and told somebody about it.

And the amount matters, because most of those "irresponsible homeowners" you're trying to demonize are already being punished by losing their homes, retirements, savings, jobs, etc. And this guy's going to resign and head home to his wealth he already extracted from AIG, legitimately or otherwise. Boo frickin hoo.

And none of that addresses the fundamental issue, which is that American families have watched their wages stay flat, while housing prices went through the roof, and all that GDP that didn't go to average workers was either imaginary or siphoned off to, say, executives at financial companies who made six figure bonuses over the last decade.

The catastrophic bank failures were caused by the bursting of the housing bubble (with an assist from various energy shocks and other instabilities). The unregulated derivatives market exacerbated the problem, but wasn't itself the cause.

Given that we're up over $10 trillion having been allocated for this, and we probably could have bought every bad mortgage issued in the last five years for 1/10 of that, I'd say you're wrong.

So before I decide whether to feel good or bad about DeSantis, could he tell us exactly how much money he's saved AIG over the last year?

"Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid."

Apparently, that agreement to work for $1 was done knowing he would never have to actually work for $1. All other content in his letter aside, the sanctimonious hypocrisy of this statement is staggering.

some of the blame--probably, most of the blame--for the current financial mess falls on us. You and I. We bought houses we couldn't afford; we expected the bubble never to burst; we took on too much risk; we relied on credit instead of savings (we haven't been saving enough for years). After the shocks in the oil market, a recession was all-but-inevitable.

Let's try a simple analogy: if one electron jumps two feet to the left, that's just the random motion of electrons. But if every electron in your shirt jumps two feet to the left at the same moment, you've got to ask why they all did the same thing at once. Any one of them could do it, but it defies the laws of probability that each of them just happened to take the same bounce at the same time.

Same with people. If one person stops saving, or buys an overly expensive house, or whatever, then that's one person's bad decision. But if a whole society does it, one has to ask what forces are acting on everybody at once, because it's ridiculously unlikely that everybody just happened to make the same set of bad decisions at the same time.

So let's put "personal responsibility" where it belongs - on the people who've done their best to turn us into a society of consumers rather than citizens, who have gone out of their way to hold down our wages, who have gone out of their way to sell us houses we couldn't afford (even though they were supposedly the experts in what we could and couldn't afford), who have pushed for punitive bankruptcy laws to come down on us like a ton of bricks if we can't pay off our credit cards, who have fought, tooth and nail, against reasonable regulations that might've kept this bubble from being such a bubble, and that might've constrained the use of these derivative financial instruments that really blew the game wide open, and so forth.

I'll cheerfully take the responsibility for the bad effects that any of my decisions have had on my own life. But it's those whose political pull and economic clout ruined the lives of thousands and millions of people who have to take the hit for our larger crisis.

DeSanis' letter is really irrelevant to that reality. The only thing I have to say about his letter is that his point that "None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house" is idiotically oblivious to the renegotiations that were forced on, say, auto workers. If he can explain why a contract is a contract if the Masters of the Universe are its beneficiaries, but not if the guys on an assembly line in Detroit are, I'll listen. Until them, screw him too.

It's impressive whining; almost as good as the recent Paterico/Jeffy Goldstein Twister party gone wrong.

Almost.

DeSanis' complaint is similar to those who whine about affirmative action: 'my ancestors never owned slaves...'

While DeSanis may or may not be responsible for AIG's financial misconduct, it cannot be denied DeSanis benefitted from them. Therefore, asking him to share the pain is not just reasonable but quite just.

Who's-to-blame aside, I don't understand DeSanis' excoriation of Liddy. I thought Liddy was highly protective of AIG execs. His only sin that I can see from DeSanis' POV is that he allowed that maybe there were some still around that might have had something to do with AIG's downfall.

He may in fact have been wrong about that, but as he didn't name names or anything (in point of fact, refused to name names even when hard-pressed by one-termer Alan Grayson) I don't see what the big outrage is.

some of the blame--probably, most of the blame--for the current financial mess falls on us. You and I.

I will thank you to speak for yourself from now on.

I get what you're trying to do here, but you and the others pushing this line of bullsh1t need to understand that you're employing an even worse generalization than the one you're complaining people at AIGFP are enduring.

Did you buy a house you knew you couldn't afford? Did you push or mislead someone into doing it? No?

If not, then no, you are not responsible for this mess, and neither am I, so stop using this rhetoric of inclusive guilt as if it contains any substance.

It's worth noting that you could've made the point you seem to be trying to make and pointed out this open letter without trying to make everyone here feel as if they're just as guilty as the unscrupulous lenders, borrowers and financial voodoo artists who actually /did/ materially contribute to this mess.

As for the clarification...

"We" in the general sense: the American public. (My house is cheap, my loans are paid, my savings rate is impressive.)

This is a cop-out for lazy writing. Blaming "the American public" for something is about as useful or meaningful as blaming Ukrainians or space aliens. You may as well just write "some people did bad stuff" and it will contribute about as much to the subject.

von,

We are to blame?

We were to blame when a windfall made I and my wife's dream of a new home possible, to start a new life with the boys we were trying to adopt.

We were to blame when that adoption fell through, keeping us from putting our old house on the market before the housing bubble popped.

We were to blame when we undercut the realtor's suggested selling price by 10% to ensure a quick sale.

We were to blame when we finally, in fits and starts, dropped the price 32% from the starting level without getting any offers in a year and a half.

We were to blame when we kept paying our bills, our taxes, and our mortgages until I lost my job.

We were to blame when our income was too high to qualify for Chapter 7 Bankruptcy, but too low for the repayments required under Chapter 13.

We were to blame when the utilities and the equity loan on our old house kept chasing us even after the foreclosure.

We were to blame when we didn't pursue all of our options to save our home, including, as suggested by the equity bank, the Lottery and Oprah.

We were to blame when, contacting our mortgage companies prior to any missed payments, they stated that they could not help us until we did miss a payment. Or that we did not qualify for higher levels of assistance until we missed more than one (although that could trigger a default and foreclosure proceedings).

In the net, the only mistake we credibly made was when we didn't decide to hold back when we were getting close to the edge, as opposed to at the edge. If we had stopped making payments to our card companies, mortgage companies, and utilities when we had $50K in the bank, as opposed to $10K, we could have negotiated our cards payed off at 40% of balances or less, kept our current mortgage current, and not gone through financial hell while hoping that either of our 8+ year old cars won't fall apart while we struggle to stay in a home that is now worth less than we paid for it, despite a 20% down payment.

Basically, if we had gamed the system, we would not be asking for help. Then you could not blame me.

But then, I would blame myself.

But the ones who sat atop this financial sh!tpile, who aggrandized their earnings, the boards who let them run rampant to keep their options and payouts flowing, I can't blame them?

I think not.

Really, every CEO of the top 10-20 banks/financial institutions (pre mergers, so include Bank One, BofA, Countrywide, etc.) for the past several years should be sat down in a courtroom while they explain what they knew of their company's financial wizardry, and when they knew it.

If they claim they didn't know, then they should be fined equal to their compensation for the past several years and sit in jail for false financial statements for a few years.

If they did know, then they should be wrapped up in fraud suits and charges with the finest public defenders they we can afford to back them up, and locked away for dozens of years.

They knew, but they did it anyway, and got rewarded. That's the value of their position in society.

I didn't knew, but did it anyway, and have been ransacked like an Irish monastery. That is the value of my position in society.

I think the values system needs to be reversed.

"it cannot be denied DeSanis benefitted from them."

In much the same sense as the trash hauler hired to clean up after a fire benefited from arson: He got paid to clean up the mess.

Oh, wait, he got told he'd be paid for cleaning up the mess. Then he got cheated out of his pay.

If "we" are to blame, it's because "we" elected a government that didn't believe in regulation, oversight, or white collar law enforcement, and basically has encouraged widening economic disparity during the last decade. I'm not anxious to blame individual bankers (even though they may have benefited), and certainly don't blame individuals who found themselves overextended. Greed (or desire for comfort and wealth) is a part of human nature, and it has to be regulated.

Brett: And what about the autoworkers' contracts? Are they as sacred as those of highly paid financial execs?

Clearly the ranks of bloggers eager to sing the Songs of Pity for Misunderstood Members of the Ruling Class are thick indeed. I wonder whether von's oh-so-even-handed ascription of responsibility for this debacle to all of us would extend to the folks who played by the rules but got crushed by debt, like FG. I agree with him: what are the values of folks whose hearts bleed for a guy like DeSanis but who want to blame the rest of us for moronic decisions made at the top of the ladder by the financial elite? Not values I recognize or respect. My reaction to DeSanis's article: Boo fing hoo, and go peddle this stuff somewhere else.

Let DeSanis haul trash; perhaps, he'd have a better perspective on the nature of hard work.

DeSanis claims to have worked for AIG for 11 years. During that time, he was (presumably) handsomely compensated via the proceeds AIG reaped during their economic terrorism. Now, we are to feel sympathy because he was asked to give back a bonus from US taxpayer funds AIG was to use to keep them from going under? IOW, the only reason DeSanis has a job to resign from is because the US taxpayer is performing CPR on it.

To paraphrase a Wonkette commenter, the term 'go f#ck yourself' was created for sanctimonious people like DeSanis.


If I'm an "irresponsible homeowner" then that poor executive VP at AIG (Insurance) is "one of those bastards".

How can you have collective blame at the low end and not at the high end?

In any case, to sort this all out we need a good round of floggings - as per my previous suggestion, one lash of the whip per $100,000 blown.

The guilty parties will feel expiated (or dead) and all of us will have a jolly good time!

If he can explain why a contract is a contract if the Masters of the Universe are its beneficiaries, but not if the guys on an assembly line in Detroit are, I'll listen. Until them, screw him too.

Posted by: low-tech cyclist |

You don't come in as new management, wait until the contract has been performed and then say, surprise we're not paying.

To be comparable, suppose Congress does provide more $ for Detroit. Says will honour contract; people work for 6 months, then say you've been overpaid, give us back some of your wages.
Please note the word "bonus", as I understand it, is misleading a dodge to lower corporate taxes (which is a different issue).

The catastrophic bank failures were caused by the bursting of the housing bubble (with an assist from various energy shocks and other instabilities). The unregulated derivatives market exacerbated the problem, but wasn't itself the cause.

Von,

Your argument is terrible. Institutions that are crucial to the functioning of the economy risked 30 times more money than they had, either because they thought housing prices would rise forever, or because they knew that they would be bailed out by the government when housing prices returned to historical levels. In reality there was almost certainly a mix of the deluded and sociopathic running and working in these firms. (And the willfully ignorant, one of whom seems to be the writer of the op-ed: don't think that he didn't profit handsomely during the last five years, whatever division he was working in.)

The financial crisis was precipitated by these excessive risks. Housing bubbles burst all the time, and they cause recessions, as the commenter upthread notes.

Honestly, your reasoning is really poor here.

Why does the amount of the bonus affect whether it's right or wrong to demonize Jake DeSanis? And why should we concerned whether Mr. DeSanis makes more than the average worker? If we believe his account, Mr. DeSanis has done things that the average worker has not done: got a degree from MIT, rose impressively through the ranks at AIG, did his job responsibly.

Posted by: von

You keep saying things like this with absolutely no justification whatsoever. None.

What evidence do you have that this individual was worth being paid even $10K for a year of work?

Anything? Anything at all?

As usual, it's not the truth or falsity of the initial premises that is questioned, it's the internal contradictions.

"I don't understand DeSanis' excoriation of Liddy."
Posted by: Slartibartfast

I do. For 5 months employees have been assured their compensation agreements will be honoured by the Liddy regime. Until hours before his testimony the "bonuses" were OK. Suddenly Liddy decides they are excessive and asks for 50% back.
An honourable man would have maintained his position and offered his resignation to Congress if they insisted on playing these games.

I would apply the same logic to whoever in Federal Reserve sat in on the meetings that approved these bonuses and whoever at Treasury signed off on it.

Here's another thought:

If work in FIRE does not actually add value to the economy, then the money paid to FIRE workers is removing value from somebody else and assigning it to this FIRE worker.

So there's actually a case to be made that Mr. De Santis's previous high salary was theft.

I'm totally not a Marxist, but I can sense the scales falling away from my eyes - I can feel my Overton window moving!

Please note the word "bonus", as I understand it, is misleading a dodge to lower corporate taxes (which is a different issue).

Eh. Live by the tax-dodging semantics, die by the tax-dodging semantics.

And yeah, if he "agreed to work for $1", with the expectation of $750K as a "bonus", then he wasn't really agreeing to work for $1.

What evidence do you have that this individual was worth being paid even $10K for a year of work?

ummm, seriously? The division that he worked in and its profitability are a matter of public record. I think your anger is blinding you.

And can we at least spell his name correctly? It's DeSantis with a t.

Yes, we are to blame. We set up the system. We lauded easy money. We didn't save. We relied too much on credit. We bought too much house. We: "You, me, your neighbors, or the folks down the block."

Overgeneralization? Yes, of course. Similar to the overgeneralization regarding bankers? Yes, of course.

You keep saying things like this with absolutely no justification whatsoever. None.

What evidence do you have that this individual was worth being paid even $10K for a year of work?

Almost-PhD-Scent-of-Violets, do you have a belief that it will be worth paying you even $10K for a year of work? Do you have a sense that there is a labor market, and that we can refer to average salaries without having to write 150,000 pages of definitions for that .001% of readers who seem intent on missing the point entirely?

Your argument is terrible. Institutions that are crucial to the functioning of the economy risked 30 times more money than they had, either because they thought housing prices would rise forever, or because they knew that they would be bailed out by the government when housing prices returned to historical levels.

What? You're going to have to explain your "either/or" proposition more clearly, because it makes no sense.

"What evidence do you have that this individual was worth being paid even $10K for a year of work? Anything? Anything at all?

As usual, it's not the truth or falsity of the initial premises that is questioned, it's the internal contradictions.

Posted by: ScentOfViolets

Assuming one has made the decision to windup the AIG FP division and it has $2.7 trillion dollars of something on its books, you are going to need some people to do that.
You will recall that the problems were in credit default swaps. He was in commodities trading not credit default swaps.

You are angry. Yes Wall Street has been greatly overpaid. But if you are going to take revenge, go after the people who agreed to pay the excessive compensation, not those who accepted it.

The parallel is go after those who made the bad mortgage loans not those who accepted them.

"Brett: And what about the autoworkers' contracts? Are they as sacred as those of highly paid financial execs?"

You mean, should they both be paid what they were promised at the end of each pay period, (For DeSantis it just happened to be 1 year instead of 2 weeks.) and any changes to contract terms should apply only to future renumeration? Absolutely!

If I'm an "irresponsible homeowner" then that poor executive VP at AIG (Insurance) is "one of those bastards".

How can you have collective blame at the low end and not at the high end?

It's collective blame for everyone, not collective blame for those on the law end. Which is to say: If you're going to generalize, do it correctly.

You don't come in as new management, wait until the contract has been performed and then say, surprise we're not paying.

To be comparable, suppose Congress does provide more $ for Detroit. Says will honour contract; people work for 6 months, then say you've been overpaid, give us back some of your wages.
Please note the word "bonus", as I understand it, is misleading a dodge to lower corporate taxes (which is a different issue).

Posted by: Johnny Canuck

But isn't this exactly what happened with the AUW and it's obligations to pensioners who have already fulfilled their obligations? Iow, a contract whose obligations have already been fulfilled was indeed not honored(this happens fairly frequently actually, in this crazy little shack we call 'bankruptcy court').

At this two point then, you can say a contract is a contract, absolute and inviolable, or that some contracts are more equal than others. Which in regards to the facts would tend to put you in alignment with other people posting. Where you disagree then is when it's a bad thing. Not bad for former UAW workers, but bad for AIG workers.

Nate: Eh. Live by the tax-dodging semantics, die by the tax-dodging semantics.

I believe the tax dodgers are the corporations who call salaries bonuses; again not the recipients.

So his salary was $1? I wonder what percentage of the people working there are similarly working for "bonus" only?

It certainly makes the "bonus" payments seem less egregious if in fact that was all people were getting paid.

ummm, seriously? The division that he worked in and its profitability are a matter of public record. I think your anger is blinding you.

And can we at least spell his name correctly? It's DeSantis with a t.

Posted by: A.J.

A.J., I think your absolute stupidity and blind partisanship, not to mention your nasty penchant for slipping in an insult makes you one of the blinder people here.

There.

Now, do you want to continue in this vein, or do you want to talk like an adult? If the former, I'll wipe the floor with you. If the latter - which I hope - then please refrain from gratuitous bashing liking referring to a posters 'anger'.

Fair enough?

Assuming we're going with the latter option, my question is a serious one. And I will say that 'profitability' at this point, in this particular market sector, is not an adequate metric. Do you have something else?

DeSantis (note the 't') got screwed. He and his employer agreed to certain terms, he worked hard, he didn't get what was promised him.

I can understand why he is very pissed off.

In all of this, DeSantis is just like a few million other people.

There are lots and lots and lots of people who are as talented and smart as DeSantis, who work as hard as he has, and who make equally valuable contributions to their companies and the world at large, who will not take home a tenth of what DeSantis has received already, even without his bonus.

Many of them will, in fact, be receiving pink slips, a couple of months of unemployment, and a big fat bill for health insurance.

And no, the fact that DeSantis has a lot of money doesn't mean he should have been denied his bonus. But lots and lots of folks, rich and poor, are being unfairly denied things they worked for and deserved.

He's no different than any of them in that regard.

He works for a bankrupt company, and he had the misfortune to have his payday come due at a politically inopportune time. It sucks. End of story.

If he wants to find a villain, he should look at those of his co-workers who bankrupted his company.

As far as the rest of us go, he can thank us for providing his company with the funds to pay the $750K after taxes that he did get, and which he is in the fortunate position of being able to give away.

It's a sh*tty time, a lot of folks have it a lot tougher than DeSantis. He's got a lot of money, and he's had the opportunity to vent his anger on the Op-Ed page of the NYT.

Things could be a lot worse for him.

some of the blame--probably, most of the blame--for the current financial mess falls on us. You and I.

No, von, not you and I. You maybe, I had nothing to do with it.

And the indebtedness of folks who are maxed out isn't a patch on the leveraged positions of the financial sector.

So please quit trotting this one out.

Scent of Violets,
Your case, Pensioners contracted with the old firm, and when it goes down,they are screwed by the old firm. When new management comes in-whether by appointment of a receiver or the unique AIG situation, it is not the old management that is screwing the workers. The new management has a choice to say renegotiate or leave. This is what autoworkers have been doing in anticipation of govt bailout. But Liddy, effectively the representative of the American taxpayers came in in Sept. Said to the workers, we are going to honour your contracts. Keep working. Workers kept working. Now Americans taxpayers saying not going to honour contracts. I don't quarrel with the anger over the excessive compensation, but such anger should be directed at Liddy, and/or whoever in Federal Reserve, Treasury who authorized it.

Unless pensioners are being called back into work, told they will keep their benefits, work a year, then told sorry, I don't see that your example is parallel.

Yes, we are to blame. We set up the system. We lauded easy money. We didn't save. We relied too much on credit. We bought too much house.

We sold our mortgages to investment banks. We took these mortgages, sliced them up, recombined them, sold them as securities to ourselves. We leveraged them 50:1. We built houses of cards from them. Then We panicked when We failed to live up to the fantasy We had constructed about ourselves.

We suck.

You will recall that the problems were in credit default swaps. He was in commodities trading not credit default swaps.

So isn't this a bit of a contradiction? Particularly when he claims that he had 'no idea' what was going on? When someone tells me that, while simultaneously trying to pass off the notion that he's really qualified to run the division, I really question the gentleman's actual capacity to perform, yes.

You are angry. Yes Wall Street has been greatly overpaid. But if you are going to take revenge, go after the people who agreed to pay the excessive compensation, not those who accepted it.

The parallel is go after those who made the bad mortgage loans not those who accepted them.

Posted by: Johnny Canuck

And you sir, are a dishonest little chiseling weasel who would rather die than admit he made a mistake. Some nasty nonentity who's continual fallback position is 'if you can't make me say I'm wrong I win'. You are scum.

There.

I'll make the same offer I made to aj: we can continue what you started, or you can drop the attitude right now and talk like an adult.

And no, thinking that labor markets are broken, and have been for some time isn't particularly the sign of an angry person. Although the anger on main street now does seem to stem from that.

Thanks for those who noted the missing "t" in DeSantis. I've corrected the error.

A.J., I think your absolute stupidity and blind partisanship, not to mention your nasty penchant for slipping in an insult makes you one of the blinder people here.

There.

Now, do you want to continue in this vein, or do you want to talk like an adult? If the former, I'll wipe the floor with you. If the latter - which I hope - then please refrain from gratuitous bashing liking referring to a posters 'anger'.

ScentofViolets, please tone it down. I don't know which post of AJ's you're referencing, but the only person who I see hurling insults is you (which is not helping your claim that you're approaching all of this will a cool head).

Almost-PhD-Scent-of-Violets, do you have a belief that it will be worth paying you even $10K for a year of work? Do you have a sense that there is a labor market, and that we can refer to average salaries without having to write 150,000 pages of definitions for that .001% of readers who seem intent on missing the point entirely?

Posted by: von

If you can't answer the question, von, then I can only assume that you don't know that he's worth that much.

Which is really what all of this brouha is about.

But, as I've argued, some of the blame--probably, most of the blame--for the current financial mess falls on us.

So "we're" responsible for other people taking out loans "we" knew nothing about while this poor oppressed millionare who can give up $700k in the bat of an eye. Does he feel resposible for what his co-workers did?

"As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings."

Perhaps once these so-called sophisticated traders who have no understanding of counter party risk take some responsibility and face consequences - no bonus just a pink slip - like everyone else then your argument will be more persuasive, Von.

If work in FIRE does not actually add value to the economy, then the money paid to FIRE workers is removing value from somebody else and assigning it to this FIRE worker.

So there's actually a case to be made that Mr. De Santis's previous high salary was theft.

I'm totally not a Marxist, but I can sense the scales falling away from my eyes - I can feel my Overton window moving!

Posted by: TheWesson

This is pretty much correct, though I wouldn't go so far as to call it 'theft'. I, along with many others, are simply pointing out what most people have known in their guts for a long time: there's a lot of people out there who are being paid less than their 'worth', and there's a lot of people out there who's being paid a lot more than their 'worth'.

If I can't see what you bring to the table, something tangible like number of rebounds scored, number units assembled that are at par or above for quality, that sort of thing, I am very naturally going to ask for specifics that make your pay justifiable.

I don't tend to think of 'show me the money' as being particularly angry, particularly partisan, or even particularly intellectual.

Just a matter of pragmatic measurement.

Although I'm fascinated by it, it seems strange to me that people are so fixated on "blaming" either the bankers or the overextended homeowners. We (as a society) had the power to prevent this through regulation. Most of the individual transactions that added up to ruin the economy probably weren't done with malice aforethought (although I'd sure support an investigation into what might have been fraudulent, illegal, etc.).

It's really counterproductive, I think, to go on blaming the greed of this set of individuals, or the irresponsibility of that set of individuals.

I discovered quite early in my working life that a lot of people get paid way more than they seem to be worth, and a lot of people get paid nothing near the value of their services. The only way to mitigate that is through laws "spreading the wealth around".

I just don't really understand how it's helpful to take names.

I see a framing problem here.

If you understand the bonus money as money that AIG actually earned, and was going to pay to DeSantis until Congress stepped in and started complaining, I suppose I could see (but not necessarily agree with) the point that he and those like him are getting a raw deal at the hands of Congress, or the public, or whoever.

But that's not what happened. AIG, as an entity able to pay DeSantis's bonus (and other obligations) out of its own revenues, ceased to exist several months ago. Absent taxpayer intervention, it would exist now only as a bankruptcy proceeding. DeSantis would be way, way down the line as an unsecured creditor. Sucks to be him; he obviously should blame his colleagues.

But the taxpayers did intervene, and saved DeSantis's job. The problem with von's analysis, as far as I'm concerned, is that it assumes DeSantis has a right to the taxpayer-supplied "revenue" of AIG that equals, or approximates, his right to the AIG-generated revenues of AIG. I'm not buying that. The fact that the federal government decided to prop up his firm, rather than allow it to go into bankruptcy, doesn't mean he has a right to be paid as though the firm never collapsed in the first place.

DeSantis is an unsecured creditor to a bankrupt company. Unsecured creditors get screwed. I don't know why we're supposed to make an exception for his case.

'anger'.

ScentofViolets, please tone it down. I don't know which post of AJ's you're referencing, but the only person who I see hurling insults is you (which is not helping your claim that you're approaching all of this will a cool head).

Posted by: von

Really, you mean you didn't even read the part that I quoted in the same post:"I think your anger is blinding you. " The part you oh-so-conveniently deleted? Not on purpose of course?

Given these facts, you of course won't be offended when I think this indicates that you're a blatantly dishonest toady. Nothing personal of course, just an observation. Since you want to be consistent, von, you'll agree you have absolutely zero cause to make any further comments on this issue, correct?

Of course, you could just admit that saying someone's 'anger' is blinding them to the true facts while not at all offering up any evidence to this effect is indeed not the way to hold a discussion.

Do you want to go with the last bit? Or must I try to make my point that this really isn't acceptable commentary again?

SoV,

You might want to take a look at the posting rules. I agree with you on a lot, but I think you're flirting with a banning, and it wouldn't be totally unwarranted. One of the things I love about ObWi is the general level of civility, so please don't f*ck with it.

Really, you mean you didn't even read the part that I quoted in the same post:"I think your anger is blinding you. " The part you oh-so-conveniently deleted? Not on purpose of course?

I figured that it couldn't be that post, SoV, because it provided absolutely no justification for your response.

Of course, you could just admit that saying someone's 'anger' is blinding them to the true facts while not at all offering up any evidence to this effect is indeed not the way to hold a discussion.

Do you want to go with the last bit? Or must I try to make my point that this really isn't acceptable commentary again?

SoV, a suggestion: take a deep breath, walk away from the computer for an hour, and then come back. We'll all still be here when you come back. (You're typing in "grrr, someone is wrong on the internets!" mode, and not making as much sense as you think.)

Vlad: "I see a framing problem here."

You see it:
"AIG, as an entity able to pay DeSantis's bonus (and other obligations) out of its own revenues, ceased to exist several months ago. Absent taxpayer intervention, it would exist now only as a bankruptcy proceeding. DeSantis would be way, way down the line as an unsecured creditor."

But the problem is the US govt sent in new management, working for the new shareholder, the US taxpayer, it was the new management that didn't say you guys are unsecured creditors. They said we'll honour your existing contracts because we want you to do further work for us.

Do you see the difference?

"Absent taxpayer intervention, it would exist now only as a bankruptcy proceeding."

But the taxpayer (Really, the government, we shouldn't confuse the two.) did intervene, didn't it?

"DeSantis is an unsecured creditor to a bankrupt company."

No, he would have been, if not for the bailout.

Hmmmm. AIG wrecks itself, and a huge swath of the banking sector, would cease to exist without our help, gets it, survives. Now the leadership class of AIG complains about not getting its bonuses. If von and other commenters in the "woe is jake" camp don't seem to see the vicious and unswallowable gall involved in that kind of special pleading, in this economic climate, the moral deficit lies with them, not with the "angry" (oh no!) commenters.

We are to blame? Nationally, only 7% of homeowners are behind on their payments. Are you telling me that 7% of the country being behind on a few mortgage payments is responsible for the collapse of the American economy? Do you even know what you're talking about???

you of course won't be offended when I think this indicates that you're a blatantly dishonest toady.

?!?

Perhaps his mother was a hamster. Or his father smelled of elderberries.

Time to dial it back, I think.

Do you see the difference?

I think it's pretty clear that DeSantis got hosed on the bonus deal, and that he has reason to be angry with Liddy and all of the other folks who made it politically impossible for the bonuses to be paid.

I'd be angry if I were him.

But I *also* think that von's comparison of folks in the investment banking industry with people who maxed out their credit cards and took on more house than they ought to have doesn't really pass the smell test.

If you take on too much house, you go broke. You, personally. The bank takes the house and sells it to somebody else, your credit rating sucks for a period of time, and we all move on.

This is *not the same*, either in nature or scope, with folks who bankrupt not only their own companies, but entire industries, economies, and nations, by engaging in the kind of financial three card monte that lies at the heart of this problem.

Other than the fact that both can be described as 'stupid' or 'irresponsible', these two things are not comparable.

Johnny and Brett --

You're not responding to my point, which is that DeSantis's right to demand that his contract be honored fully died at the same time that AIG as a self-sufficient going concern died. If I understand your argument, it's that the government's decision to bailout AIG instead of letting it go under -- which has already benefited the DeSantis's of the world, at considerable taxpayer expense, by keeping them employed -- should further entitle them to receive their pre-collapse compensation as though the collapse had never happened. In other words, AIG and its employees don't just get government help; they get 100% government insurance that they'll never suffer any of the ill consequences that would ordinarily flow from the fact that AIG collapsed under the weight of its own poor decisions.

That strikes me as a perverse result, to say the least. You're going to have to do a lot more than talk about sanctity of contract to sell this idea as a matter of either sound public policy or essential justice.

As to the other claim -- that AIG management made a post-collapse promise that pre-collapse salaries would continue to be paid -- I suppose that gives DeSantis the right to be angry at Liddy. I don't think it gives DeSantis the right to expect full payment, because I don't think it is particularly reasonable for any employee of these bailed-out firms to assume that they're going to make it through unscathed.

By the way, the amount of money being demanded is relevant to all of this. I don't object to DeSantis receiving a healthy wage; I certainly am not demanding that he work for free. But a $700,000 bonus is compensation that is given only when a firm has substantial excess revenue to distribute to its employees. That's obviously no longer the case for AIG, and it's not reasonable for DeSantis to assume that the taxpayers are going to honor a compensation promise that AIG made and couldn't keep.

"If work in FIRE does not actually add value to the economy, then the money paid to FIRE workers is removing value from somebody else and assigning it to this FIRE worker.
So there's actually a case to be made that Mr. De Santis's previous high salary was theft."

And was the salary paid to the construction workers who overbuilt the houses leading up to the housing crisis theft?

Von,

Financial institutions that are crucial to the functioning of the economy were leveraged 30 to 1. Get it? To be leveraged 30 to 1, they would either have to have been deluded as to the risk of the assets they held, or have to have figured they couldn't lose, i.e. the government would bail them out, precisely because of the crucial economic functions they perform. They got to reap huge "profits" for five or so years due to this leverage, but then the assets they held went south, then they became insolvent and stopped lending, then financial crisis, then depression. It's not that complicated. You can argue that imprudent homeowners (which doesn't include me, btw) were responsible for the housing bubble, but not the financial crisis.

i'm all for letting them have their bonuses. that deal is done.

i'll do 'em one better, tho: if the Lords of Leverage can find a way to turn AIG back into a stable company, i'd be happy giving them a $10M bonus, each.

make it so, big brains. that's what you're there for, right?

And why should we concerned whether Mr. DeSanis makes more than the average worker? If we believe his account, Mr. DeSanis has done things that the average worker has not done:

Yes, and if we believe Nixon when he said he is not a crook we could avoid our long national nightmare.

Me, I'm not quite as predisposed to believe him or them. Or perhaps not as gullible.

"Although I'm fascinated by it, it seems strange to me that people are so fixated on "blaming" either the bankers or the overextended homeowners. We (as a society) had the power to prevent this through regulation."

I guess the way I see it is that, at least here on the interwebs, the class of people trying to shift blame onto "us" overlaps extensively with the class of people who argue against tighter regulation of the financial sector, either by arguing against regulation generally, or by paying lip-service to the idea of regulation, but arguing that any specific regulation is a bad one.

Vlad:
I see the bailout as the equivalent of AIG going through bankruptcy and Liddy in the role of the receiver. He's the new management and could have insisted on renegotiating or cancelling the contract. As I understand often happens, receivers sent in to liquidate a business -as was to happen to AIG Financial Products, will hire existing staff to help them sell off the company's assets. When he makes the commitment, this isn't the old bankrupt firm this is the new entity. If a receiver had done it or it was sanctioned by a judge, the contract would obviously be enforceable. This is what I see having happened.

So to your points

" You're not responding to my point, which is that DeSantis's right to demand that his contract be honored fully died at the same time that AIG as a self-sufficient going concern died"

-Contracts voidable at that point. Could have said your just another unsecured creditor. Go stand in line.

"it's that the government's decision to bailout AIG instead of letting it go under -- which has already benefited the DeSantis's of the world, at considerable taxpayer expense, by keeping them employed -- should further entitle them to receive their pre-collapse compensation as though the collapse had never happened."

Not decision to bailout, but telling these employees that if they would continue to work their preexisting contracts would be honoured. This was the time to renegotiate if you don't want to honour the contract.

"that AIG management made a post-collapse promise that pre-collapse salaries would continue to be paid -- I suppose that gives DeSantis the right to be angry at Liddy. I don't think it gives DeSantis the right to expect full payment,"

But this isn't the old AIG management it is new management operating under the supervision of 3 representatives of the Federal Reserve.

"I don't think it is particularly reasonable for any employee of these bailed-out firms to assume that they're going to make it through unscathed."

It was not reasonable until in september Liddy told them they would be unscathed. The Federal Reserve also knew.

Basic principle of contract law: reliance.
The point is the reliance was not on AIG or the old contract but rather on Liddy and the Federal Reserve.

If these people hadn't worked after these assurances given, I'd cut them off at zero.
But after, do you really want a Government whose word you cannot trust?

Vlad: But a $700,000 bonus is compensation that is given only when a firm has substantial excess revenue to distribute to its employees.

From my perspective all the compensation on Wall Street and CEO's is obscene. I remember reading in the 1970's that 20 times was the appropriate ratio between the highest paid and lowest paid worker in a society. So if no one earned over say $400,000 I wouldn't be fussed.

But if you have a system where the sky is the limit, I don't think it is right to arbitrarily treat some people differently. Yes, if Govt had said last September, no one will earn more than $X. but Bush/Paulson didn't.

I think you are also being misled by the word bonus. This was really salary paid at the end of a period not a performance bonus. Calling it a bonus was to make the amount deductible for corporate income taxes.

Calling it a bonus was to make the amount deductible for corporate income taxes.

So we have a fraudulent disbursement, which can be taxed and recovered, yes?

Fraud guy: Have IRS review all corporation's bonuses. If there is fraud it is on the part of corporations, not their employees.

I'm glad that we're finally putting the blame for this debacle where it belongs. But how long will it take for the Iraqi people to get the blame they deserve for the actions of Saddam Hussein?

I think Iraqi Kurds and Shiites deserve particular condemnation here. Hopefully von can devote a post to this crucial subject.

I think DeSantis has a right to be angry at Liddy, to the extent that Liddy did come into AIG and, as a representative of the federal government, insist that these contracts would be honored. Really, the "right" thing for the government to do upon installing Liddy would have been to set up compensation limits. Arguably, the fact that Congress floated and then rejected the idea of compensation limits puts DeSantis and his ilk in an even stronger position -- as far as contracts go, the government could hardly have given more explicit approval of this sort of compensation.

That said, the reason to honor these bonuses falls pretty squarely under the maxim, "Two Wrongs Don't Make a Right." To argue, as DeSantis seems to be, that there was no original wrong -- that the compensation itself wasn't a moral if not legal theft from the public coffers -- is laughable.

FIRE = THEFT

And was the salary paid to the construction workers who overbuilt the houses leading up to the housing crisis theft?

Nope, because they added value to the wood, nails, glue, drywall, insulation by putting them together just as they were hired to do.

Now, a building guy who was supposed to add value by deciding what houses to build where and how, he's on shaky ground with the bubble.

But anyhow I'm not talking about the housing bubble. I'm questioning the idea that anyone at AIG, say, EVER added a hundred million dollars to AIG's contribution to the economy.

The new Marxism: Labor and Capital versus Finance.

Bah!

The signs of a looming real estate bubble were obvious way back in 2000 after the dot-com bubble was exchanged for an asset price bubble, so I chose to keep renting. In 2003 I canceled all of my credit cards save one (for emergencies), and watched my credit score dropped as a reward for my prudence. I started cautioning my friends not to get too crazy with their real-estate investments, because any fool could tell back in 2004 that the eventual collapse would be a bad one, and the longer it was deferred the worse it would get (and no, being a killjoy does not endear you to your friends).

Sorry, but I refuse to accept any portion of blame for this crisis.

von: when you write that "you and I" are responsible for this I, like others, feel like saying: speak for yourself. I also think that while there are (I'm sure) a bunch of people who took out mortgages they knew they couldn't afford, there were also a bunch who took out mortgages they would have been able to afford but for the sudden collapse of the economy, and another bunch who took out mortgages that they didn't understand, and/or that were misrepresented to them.

I'm also not sure what's gained by trying to push one group or another as "the" people who are responsible for this.

Sorry, not buying it, and even with your update, I find the "we" and "us" highly objectionable, and style choice does not excuse its usage in this instance. I'm not as concerned about DeSantis specifically, but even if we accept that he's a swell guy that doesn't begin to address the larger dynamics. I'm also not as concerned about the bonuses compared to AIG's conduct as a whole, and that of other bailout companies. You're right that there were irresponsible borrowers. But some of the loans given out would have been illegal a decade or so ago. The lenders had the position of power, privilege and knowledge. Caveat emptor applies far more to the lenders than the borrowers here. The lenders made irresponsible gambles because of greed and because of callousness – they figured if a deal exploded, someone else would suffer. It's not as if that was ever moral, or that they thought it was. It was never good policy to allow that, and even if that specific scam's consequences came as a surprise, the aggressive fight to roll back regulation and remove consumer protections has been a very conscious campaign. Tom Geoghegan recently wrote a good piece on usury and lending rates. You may have seen the reports on lenders giving subprime loans even when the borrowers qualified for better. Give blame where it's due, and proportionately. Don't ignore the power dynamics. What we're seeing is the consequences of Reaganomics over roughly 30 years – and Dems deserve some of the blame for that (most notably Rubin, Summers and Clinton, although Phil Gramm probably has them beat). We've had class warfare waged by the rich, and it's hurt the country significantly. They've already taken our money, and continue to take it; they're not entitled to our sympathy. The arrogance and sense of entitlement on Wall Street is ridiculous - and very expensive. Where is the change? Has Wall Street as a whole said, 'our preferred way of doing things has been disastrous, and we need to change'…? When Wall Street actually proposes reforms and enacts them rather than setting up a hostage situation with the government and the country, maybe such complaints will have some credibility. Times are tough all over. DeSantis may be the exception, but most of the bailout employees should be grateful they have jobs at all. Several of the execs should probably be in jail, and at least merit investigation, even if there are more pressing concerns right now. If you want to say there should be a complete review of culpability, fine, but it's not as if Wall Street and their proxies are clamoring for that, and it doesn't seem like you're advocating that, either – instead, 'we're all to blame.' No. We are not. Nor are the costs of those mistakes fairly distributed – not even remotely. "Most of the blame" lies with those who profited off this mess, didn't give a damn about creating it, and fought like hell to remove the safeguards that could have prevented it. I'm with Russell, and like Jon Schwarz' analogy. Hilzoy's recent post on execs foot-dragging on stress tests remains a much more pertinent and insightful critique.

But after, do you really want a Government whose word you cannot trust?

We get a choice??? I know we've got the best government money can buy, but unfortunately, for the most part, its not us doing the buying.

TheWesson -- "Now, a building guy who was supposed to add value by deciding what houses to build where and how, he's on shaky ground with the bubble."

Yup. And anyone in that boat who claims that they didn't see this coming is lying. I was working for these people a decade ago and the president of the local division knew back then that the company was overbuilding in the market. He didn't care because the company was in better shape to weather then crash than the local competitors and he thought the corporation could consolidate its market share after the markets crashed. A crash was part of his plans. He just didn't realize how big the crash was going to be when it happened.

That was the mistake. Not that he helped cause a crash and hurt the people he was selling homes to, but rather that the corporation and its shareholders got hurt as well.

Forgot to add to my last comment:

Scent Of Violets: You have been warned before about the posting rules. Since you seem to have left now, I'm hoping that you've thought better of your previous comments. Next time you say anything uncivil to any commenter, however, I will ban you.

I do. For 5 months employees have been assured their compensation agreements will be honoured by the Liddy regime.

"Liddy regime"? Liddy wasn't who brought up taking those bonuses back, I think.

Until hours before his testimony the "bonuses" were OK. Suddenly Liddy decides they are excessive and asks for 50% back.

When the bears are at your door, sometimes you have to throw them one haunch of elk in order to be able to eat the rest.

An honourable man would have maintained his position and offered his resignation to Congress if they insisted on playing these games

An honorable man wouldn't have taken the job to begin with. So says I, with just as much justification.

I would apply the same logic to whoever in Federal Reserve sat in on the meetings that approved these bonuses and whoever at Treasury signed off on it.

I'm sorry, I'm not sure what "the same logic" is pointing to. What logic?

We're to blame for this mess; not some group of faceless folks who aren't "us".

again, bullshit.

the faces in question belong Mr Cassano, Mr Gramm, and Mr Lee: the unholy trinity of bad bookie, bad lawmaker, and bad regulator.

undo what they did over the past ten years, and we aren't here today.

NPR podcast

This is a link to a podcast on NPR discussing Summers, Rubin, and Gramm and the interrelationship amongst them in preventing regulations. It is an interview with Hirst from Newsweek.

Hopefully the link works...it is my first.

Vlad, you're just rationalizing screwing these people over. AIG is NOT bankrupt, in fact the freaking POINT of the bailout money is so that AIG can pay it's creditors, and not declare bankruptcy.

And because they're not bankrupt, they have to pay their freaking debts. Such as the pay they owe for work already done.

I'm really getting sick of people rationalizing what amounts to a bill of attainder. Is this what we've become, a banana republic, where the government can whip up anger against some designated patsies, and then pass laws screwing them over, and the public will applaud?

This is not the country I was born in, anymore. I don't recognize it, and I don't like what it's becoming. I think I'm going to make a point of getting the hell out of here sometime in the next 10-20 years, assuming things hold together even that long: I don't want my children stuck in the hellhole this country's on the path to becoming.

von at 1:53 PM: "Mr. DeSanis has done things that the average worker has not done: ... did his job responsibly."

von at 3:12 PM: "If you're going to generalize, do it correctly."

von at 1:53 PM, your belief that the average worker does an irresponsible job explains a lot about your attitude, toward this and other matters. I find myself very angry here. Don't know what to do about it, except hope you have to listen to innumberable, interminable lectures from von at 3:12 PM.

Brett writes: This is not the country I was born in, anymore

Ah, that perfect golden year of 195X(?), when Eisenhower was President, segregation was law of the land, abortion was largely illegal, feminism unknown, the Big 3 controlled the market for cars and contracts by g*d were Honored!

Have fun going Galt. Let us know where you set up shop, and how it works out for you. Good luck in finding a less socialist industrialized country.

As far as I'm concerned, when you work for a company that's 80% owned by the US taxpayer, you might as well be in bankruptcy. (Congress writes bankruptcy laws; Congress owns the company. There is some distinction in the difference but not much.) So your employment contract got voided. Boo hoo. You took the risk of having a portion of your pay denominated a "bonus" (instead of, say, salary) and now your boss (that's us, the taxpayer, as represented by Congress) is withdrawing your bonus.

Cry me a frackin' river.

Yeah, that's the attitude that's got me disgusted: The government wants to screw somebody over, what's the big deal? It's entitled to!

No, it's not. There are multiple clauses written into the Constitution with the aim of forbidding the government from just screwing over anyone it decides would make a good sacrificial goat. The bill of attainder clause, the double jeopardy clause, the ex post facto clause.

The government isn't supposed to be pulling this sort of shit. And your (terrifyingly common) reaction is the most frightening part: You don't question the justice of it, you just enjoy the smell of blood in the water. It's not you, after all!

Well, I think it will be, eventually.

Next lifetime I'm coming back as an expert in every freaking field for every job on the planet and reading minds too. Plug my head into an information down loader and voila. Who the hell needs to have any expectation of field expertise from someone else with a degree and expertise in their field.

Matrix baby. We'll all be experts in every single field in less than 60 seconds. We can spend all our spare time outside of work just being experts in all fields.

On a more down to earth and realistic level, people require guidelines, rules and accountability in order not behave in a corrupt manner. Seems there is a historical adage to that affect. Absolute power corrupts absolutely.

Financial professionals, namely those in corporate finance were given absolute power by the government they lobbied and had unfettered access to. Permission to keep bad debt off the books and zero accountability.

If DeSantis was serious about his commitment to improving AIG why on earth did he not renegotiate such a bad contract that made the company more vulnerable? He could have negotiated a reasonable salary of say 1 maybe 2 million and no bonus until AIG was stabilized. Once AIG was cleaned up, bailout money repaid, showing a profit then a multimillion dollar bonus would have been warranted. He did not do that.

No way would he lambaste his boss so pubicaly without having another position lined up and this exit strategy approved. Liddy takes it on the chin to back up his "everyone will leave" drama, pays DeSantis a nice severance package and DeStantis gets another position with one of AIGs sub parties. The man is not without contacts.

DeSantis is not going unemployed for the sake of hurt feelings. He is not giving up the "love and devotion" to his company because his emotions overwhelmed him.

This is not the country I was born in, anymore. . . I'm going to make a point of getting the hell out of here sometime in the next 10-20 years.

It sure as hell isn't the same country, Brett. When you were born, the Constitution hadn't yet been shredded by people you love to come on this blog and defend. When you were born, we weren't -- as a matter of policy -- torturers. When you were born, your party was not controlled from head to foot by christianists. When you were born, we had functioning regulatory systems rather than captured agencies. And the list goes on. And on.

But you know what's exactly, exactly the same? Conservatives -- just like you -- screeching "socialism" on a loop for the entire tenure of every democratic president, rending their garments like Cibber and lamenting the demise of their once-great country.

Spare us all the sanctimony and man the hell up. Seriously, this hyperventilating pretense of ruptured innocence is unbecoming. It belongs in a Victorian novel. It's all the more galling because it is so patently fake. You're not going anywhere. You're not. You're not even going to try. You're not even going to take the first tentative step. The most you'll do is mention it around the dinner table, or when you get drunk at Thanksgiving, and your wife and kids will roll their eyes ("Dad's going on about moving to Sierra Leone again") and that will be that. So spare us all having to pretend that you're serious.

Or, better yet, go. Please. Please! Please take your Randian dreams and play with them on Turks and Caicos or someplace else nice and warm, where you can't drag down the entire world down with you into your fantastical hellhole.

Your country will thank you for your brave and noble sacrifice.

The government isn't supposed to be pulling this sort of shit.

the government hasn't actually done the thing you're moaning about. the bill that hasn't even gone through the Senate yet - Reid isn't excited about it, and neither is Obama. this thing you're so agitated about has not happened, and there's a very good chance it never will.

chill.

SoV,

You might want to take a look at the posting rules. I agree with you on a lot, but I think you're flirting with a banning, and it wouldn't be totally unwarranted. One of the things I love about ObWi is the general level of civility, so please don't f*ck with it.

Posted by: Larv

The point here, Larv, is that these people aren't being civil. Attacking the argument is fine. Test it to destruction, that's the way the process works.

Attacking the person? Calling them angry, and irrationally angry, with absolutely no evidence? That's not fine.

Not fine at all.

"This is not the country I was born in, anymore."

Brett,if this were the '60's I'd invite you north. Canada got a lot of good American immigrants then. Unfortunately, our present government is less impressive.

Seriously, you are getting a little overwrought. One of the advantages of having a bicameral legislature is that there is time for sober second thought (Canada actually has a Senate, and that is its only justification for continued existence).

I also expect that at the end of the day either the Executive or judicial branches will do the right thing. Maybe it is good every once in a while to see both that some progress has been made since the days of the lynch mob, and that there is still a way to go.

Oh, the injustice! Oh, the humanity! People who work for a company that would be out of business if The Market had its way with it feel screwed because their poor choice of employer will cost them bonus money.

You know what, Brett? Lots of people get laid off without a golden parachute. Not because they personally did a less-than-stellar job, but because they had the misfortune to be signed up to a losing team. These AIG guys are not free agents getting shafted by a mighty corporation or an oppressive government. They are people who threw their lot in with a mighty corporation rather some humble credit union because no humble credit union could offer adequate scope to their exalted talents. They chose to be part of Team AIG, because they thought they were signing up with a world championship squad. Turns out they were wrong. Life's tough.

If you want to personally make good on their contracts, have at it. But spare me your indignation about "the smell of blood in the water". If I took you seriously, I'd say LET the damned "financial system" collapse, and let's see how much The Masters of the Universe bleed in the water, rather than in a taxpayer-funded liferaft that turns out to be less cushy than the yacht they contracted for.

--TP

The new management has a choice to say renegotiate or leave. This is what autoworkers have been doing in anticipation of govt bailout. But Liddy, effectively the representative of the American taxpayers came in in Sept. Said to the workers, we are going to honour your contracts. Keep working. Workers kept working. Now Americans taxpayers saying not going to honour contracts. I don't quarrel with the anger over the excessive compensation, but such anger should be directed at Liddy, and/or whoever in Federal Reserve, Treasury who authorized it.

This doesn't make any sense to me at all. The claim was that contracts could not be renegotiated after one side had already fulfilled their obligations. But this was also true in the case of the UAW, specifically, the people who had already retired and were expecting their pre-negotiated pensions.

So it is factually false to claim this is the point of difference in the two cases.

I understand that you're rather angry at having to take so many hits on this one, and that this has made you a bit irrational, but surely even you will admit that the 'inviolability of the contract' argument doesn't hold water at this point. Or at any rate, that people pointed out objective facts as the justification for not being convinced by this line of argument.

Really, you mean you didn't even read the part that I quoted in the same post:"I think your anger is blinding you. " The part you oh-so-conveniently deleted? Not on purpose of course?

I figured that it couldn't be that post, SoV, because it provided absolutely no justification for your response.

von, if you weren't so irrationally angry at people knocking your post to flinders, you'd see that this is a legitimate complaint.

Of course, you could just admit that saying someone's 'anger' is blinding them to the true facts while not at all offering up any evidence to this effect is indeed not the way to hold a discussion.

Do you want to go with the last bit? Or must I try to make my point that this really isn't acceptable commentary again?

SoV, a suggestion: take a deep breath, walk away from the computer for an hour, and then come back. We'll all still be here when you come back. (You're typing in "grrr, someone is wrong on the internets!" mode, and not making as much sense as you think.)

Posted by: von

von. Son. I mean this with only your best interests at heart. I think you need to walk away for a while. Stop posting. It's clear that your anger - which I entirely understand and sympathize with - has destroyed your judgment.

Just . . . walk away. It will do you a world of good, and maybe you'll regain some badly needed perspective.

But anyhow I'm not talking about the housing bubble. I'm questioning the idea that anyone at AIG, say, EVER added a hundred million dollars to AIG's contribution to the economy.

The new Marxism: Labor and Capital versus Finance.

Posted by: TheWesson

I wouldn't go so far as to say that Maxism is the new black.

The fact is, a lot of people are not happy with what's going on because they are capitalists. I'm one of them, as a matter of fact. The feeling is, roughly, that the markets should work to accurately price labor, and that there is a class of people who have worked for years to make sure that this isn't the case. That they have labored mightily to pay themselves fantastic sums with the justification that they were 'worth it' when in reality they were some of the least worthy people.

Does anyone recall seeing Brett and several of the other commentators hyperventilating about the "sanctity of contracts" reacting quite with anything approaching the same severity to things like say, torture, indefinite imprisonment, direct lies to start a war, government surveillance, or election theft? I know von has, but not about the others.

But, y'know, when some rich guy might not get his salary he "cleverly" labeled a bonus because his company went down the tubes and blew up the world economy, then watch out!

Also, speaking of DeSantis, for all that he was "working for $1", (not counting three quarters of a million in bonuses), I bet he's got great benefits, especially health insurance. Another thing many regular people are losing because of his company's actions.

But, as I've argued, some of the blame--probably, most of the blame--for the current financial mess falls on us

Us, huh?

"We" in the general sense: the American public. (My house is cheap, my loans are paid, my savings rate is impressive.)

Oh, so by us, you mean a group of people specifically not including yourself. Odd definition of us. Very Clintonian language there.

It's satisfying and comforting to blame someone else; to make a scapegoat out of someone you've never met.

Which is exactly what you're doing here - blaming "us", noting very clearly that it doesn't include "you" (my savings rate is impressive!), but that it includes a bunch of people you've never met.

We bought houses we couldn't afford

That's BS. An illegal immigrant with no job or assets can afford to take out a 105% option ARM on a McMansion because he has nothing whatsoever to lose on the transaction. But a corporation still made him the loan, and that corporation did have something to lose, because it is now bankrupt. And someone bought the MBS that included that loan, and they had something to lose, because they are now bankrupt. And the government allowed those loans to be made, and the government had something to lose because they are now spending trillions of dollars on correcting the damage.

The loans would have been taken out 20 years ago under the same circumstances if they had been offered. What changed? Find that out and you'll be on your way to South Blameistan.

we expected the bubble never to burst

No, I expected the bubble to burst, others denied one existed. Who is to blame? Us? Not so much. You are to blame, because of your ideology that would have led you to argue that we couldn't know it was a bubble when we knew it was a bubble, so we shouldn't take the intrusive regulatory steps needed to keep it from getting bigger. "We" are not to blame. You are to blame, and I am not to blame.

we took on too much risk

What risk did the illegal immigrant living in the 105% option ARM financed McMansion who never made a payment take on? Leverage a corporation 40 times when that corporation will have to be rescued by taxing working class people, that's taking on some risk.

He took no risk, he is not to blame. People who could have argued for regulation but didn't, they're to blame. And opponents of regulation who - even now - will deny knowledge of the explicit deregulatory steps that were taken that allowed this mess to happen - the laws that were changed, the agencies that were left unstaffed, the transgressions that were ignored - they're to blame. That would be "you", not "us".

Unless there is a mouse in your pocket.

Forgot to add to my last comment:

Scent Of Violets: You have been warned before about the posting rules. Since you seem to have left now, I'm hoping that you've thought better of your previous comments. Next time you say anything uncivil to any commenter, however, I will ban you.

Posted by: hilzoy

You really don't feel that denigrating posters by calling them angry, and irrationally angry at that is being uncivil?[1] I disagree, but if that's what you really think . . . I also think, as do a great many other posters that von is really larding on the sanctimony. Presumably, since other posters have made comments to that effect, this is not a criticism that crosses the line, yes? I haven't mentioned this because it's irrelevant to the argument he's trying to make.

[1]It's also extremely poor form in trying to make an argument. That was the other point I was attempting to make.

Of course, I made this point last week. But the stated rationale for paying AIG bonuses, was to keep the knowledgeable people working to wrap up the then $2.7 trillion ($1.6)on their books. Now if staff leaves, we may get to see how irreplaceable they are. Must admit if I had $170 billion at stake, I wouldn't take the risk, but it is your money.
No doubt the same people ranting to cut off the bonuses will be ranting if significant losses are incurred and taxpayers don't get their money back. I assume Hilzoy will remember, but I suspect most will be clueless if populist anger costs taxpayers extra billions.

Now if staff leaves, we may get to see how irreplaceable they are. Must admit if I had $170 billion at stake, I wouldn't take the risk, but it is your money

If it was your money, would you trust it to someone who didn't understand the concept of a sunk cost?

But yes, we must trust these people at AIG, because it was only a few rogue traders in one division that sunk the company, right? Forget, for a moment, that the people in charge of risk management were supposed to be doing risk management...

Bernanke:

In addition, AIG’s insurance subsidiaries had substantial derivatives exposures to AIG-FP that could have weakened them in the event of the parent company’s failure

Knowledgeable bunch of a**holes, were they? Just one office of one division that caused the problem, was it?

We the people are stupid, but we are not that stupid, and we are quickly growing tired of this BS.

This is absurd. If you're going to generalize all-inclusively, you socialize both the profits and the losses. Period.

Fortunately, we know that generalization is an error, and can dismiss von's communist grundwerk for the disingenuous apologia that it is.

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