paying-attention

I really think I need to go back to school and take some economics classes. Maybe we all do. I'm having trouble understanding why AIG needs to pay "retention bonuses" to people who bankrupted the company. I understand the idea of fulfilling a legal obligation to avoid a more expensive lawsuit, but I would link the payouts to some quasi-voluntary resignations. If a particular teacher scares off all the students, resulting in no tuition payments and bankruptcy for the school, doesn't it make sense to get rid of that teacher?

In a related story,
The mainstream media isn't always wrong. Sometimes those who are up to no good -- whether in the political, the financial, or any other realm -- use the public's distrust of big media to protect themselves. Because media credibility is so badly damaged (and why that is would be a-whole-nother subject) most of the time they get away with it. This case in point is from the Financial Times' "Alphaville" blog:

Point counter point: AIG, Goldman and the NYT

Posted by Sam Jones on Mar 16 12:17.

Does anyone care to remember this story on AIG, from the New York Times, back in September? More to the point, does anyone remember the trouble it caused?

It was one of a series of articles that appeared in the mainstream press contemporaneous to AIG’s bailout that dissected just what the insurer had been doing that made it so risky, and so systemically important.

We cite the NYT article in particular though, for this paragraph:

Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.

… which caused something of a furore.

Goldman strenuously and very publicly denied the gist of the allegation. So aggressive was their rebuttal, in fact, that the wires even wrote up seperate stories on it. Here’s Reuters:

NEW YORK (Reuters) - Goldman Sachs Group Inc rejected as “seriously misleading” a published report on Sunday that said the Wall Street bank had as much as $20 billion of exposure to the troubled insurance giant American International Group Inc.

Lucas van Praag, a Goldman spokesman, on Sunday said the Times article was wrong to suggest that Goldman had reason to be concerned about AIG’s problems.

“Although we have said many times on the record that our exposure to AIG was, and is, not material, the reporter chose to pursue a story line which suggests, by innuendo, that is not the case,” he said in an e-mailed statement.

“For the avoidance of doubt, our exposure to AIG is offset by collateral and hedges and is not material to Goldman Sachs in any way,” he continued. “The conclusions about our interests that readers of the New York Times article are invited to reach are seriously misleading.”

Now, of course, we have AIG’s counterparty list. And guess who tops it?

Goldman Sachs.

Goldman is the proud recipient of $12.9bn in payments from AIG and AIGFP. (Specifically, $2.5bn from CDS collateral postings, $5.6bn from Maiden Lane III payments for CDS positions, and $4.8bn in payments related to securities lending. The Maiden Lane III portfolio was, of course, created in December specifically help reduce the burden of CDS collateral postings facing AIGFP proper - it bought the underlying CDO tranches from the CDS counterparties)

For the record then, it certainly was not the NYT that was “seriously misleading”.

We wonder whether things might yet get uncomfortable for Goldman. After all, they’re in rather an awkward position: on the one hand, according to their above PR line, they didn’t need AIG’s money at all (it was, to paraphrase, immaterial whether AIG went under or not). And yet, on the other hand Goldman is - gosh - the largest recipient, via AIG, of taxpayers’ money.

Labels: AIG, Alphaville, Goldman Sachs, mainstream media, The Financial Times, The New York Times

Like so many others I am sick to death of the political thievery underway in D.C. Has anyone thought of bailing out the American People? So many crazy ideas and plots in the capitol, how about another? I'm against the $85 BILLION bailout recently approved for AIG. If it isn't too late, a friend of mine came up with the following solution:

Instead giving it to AIG, I'm in favor of giving $85,000,000,000 to America in a "We Deserve It" dividend.

To make the math simple, let's assume there are 200,000,000 bona fide U.S. citizens, aged 18+. Our population is about 301 million counting every man, woman and child. so, 200,000,000 might be a fair stab at adults 18 and up. Now, divide 200 million, 18+ adults into $85 billion - that equals $425,000.00 each!

Yes, my plan is to give that $425,000 to every adult as a "We Deserve It" dividend.

Of course, it would NOT be tax free. So, let's assume a tax rate of 30%. Everyone would pay $127,500.00 in taxes. That sends $25.5 billion right back to Uncle Sam! It also means that every adult 18+ has $297,500.00 in their pocket. A husband and wife would have $595 ,000.00!

What would you do with $297,500.00 to $595,000.00?

· Pay off your mortgage - housing crisis solved
· Repay college loans - what a great boost to new grads
· Put away money for college - it'll really be there
· Save in a bank - create money to loan to entrepreneurs
· Buy a new car - create jobs
· Invest in the market - capital drives growth
· Pay for your parent's medical insurance - health care improves
· Enable Deadbeat Parents to come clean - or else

Remember this is for every adult U.S. citizen, 18 and older (including the folks who lost their jobs at Lehmann Brothers and every other company that is cutting back) and of course, for those serving in our Armed Forces. If we're going to do an $85 billion bailout, let's bail out every adult U.S. citizen!!

As for AIG - liquidate it.

· Sell off its parts.
· Let American General go back to being American General.
· Sell off the real estate.
· Let the private sector bargain hunters cut it up and clean it up.

We deserve the money and AIG doesn't. Sure it's a crazy idea, but can you imagine the coast-to-coast block party?!

How do you spell Economic Boom? W-e D-e-s-e-r-v-e I-t D-i-v-i-d-e-n-d!

I trust my fellow adult Americans to know how to use the $85 Billion "We Deserve It" dividend more than I do the geniuses at AIG or in Washington, D.C.. And remember, The plan only really costs $59.5 billion because $25.5 billion is returned instantly in taxes to Uncle Sam.

Any nuttier than the ones presently being seriously considered?

--commishiv250
9/27/2008 11:57:00 AM

Labels: $700 billion bailout, AIG, US taxpayers