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Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: Brumar89 who wrote (6319)	3/19/2009 12:05:25 PM
From: RetiredNow	Respond to of 86355

Yep. I'll tell you, I'm just really conflicted about all of this. Here are my thoughts. I didn't get my bonus, because my company missed its targets. That's the way successful businesses are run. AIG was run by incompetent crooks running a ponzi scheme. The execs prior to Liddy created contracts guaranteeing bonuses, even if those people didn't perform for the company. And I think neither of us would claim they performed. Here's the problem I have with their bonuses. If my company went ahead and paid bonuses even as we drove the company bankrupt, we would certainly outrage the stockholders and our stock price would go down due to increased management risk. However, at the end of the day, the damage would be limited to the our stockholders. That means it would be limited in terms of its size relative to the rest of the economy, and our failure would not cause a systemic economic collapse in the US. Our competitors would just pick up our pieces and the economy would keep humming along. The problem with AIG is that their business is one that impacts the entire economy. If they screw up, they screw up the entire economy, and that's exactly what they did. So not only do I find it wrong that these guys who ran AIG into the ground are getting bonuses, most of whom are no longer even at the company, but I also find it wrong that the taxpayer has had to take 100% of the downside risk of their bad bets, while those jokers participated in 100% of the upside benefits of their ponzi scheme. It's simply a bad joke that we have to bail them out and they are using tax payer money to pay these bonuses. Now having said all that, I have a couple of problems with how Congress is handling the reckoning. First, they can't publish that list of names. This environment is too toxic, and I agree, their lives and the lives of their families might be threatened by something like that. Second, we are a country of laws. I really hate the idea of retroactive nullification of any contracts, because it undermines our system of laws. I think it was absolutely the prerogative of Congress to attach conditions to the bailout money that would limit executive compensation and bonuses. But the time to have done that was PRIOR to the bailouts. That way those companies like AIG would be taking the money with eyes wide open and would have contractually agreed to not pay bonuses or whatever. But retroactive nullification of contracts is anarchy. It's dictatorship. So I'm conflicted. In no rational, well-functioning, free market economy do those AIG people deserve bonuses. If I don't deserve my bonus for us missing targets, those at AIG sure as hell don't deserve bonuses for driving AIG into the ground and tanking our economy as part of their collateral damage. But all of that is not an excuse for trashing contract law in this country. My solution is this. Let's have the Dems and Obama, as well as the GOP and Bush, admit they screwed up in their bailouts and then everyone agree that going forward, we put lawful strings attached to any bailout money. In addition, let's break AIG down into its component parts and create a new system of laws that makes it impossible for any bank, insurance company, or financial institution to be so crucial to our economy that their failure leads to US economic failure. No institution in the US should become so large and intertwined with our economy that they can't be allowed to fail. So we need the equivalent of anti-trust action on these large financial institutions like Fannie, Freddie, AIG, and any others that are so called "too large to fail". If they are too large, break them down. Failure has to be something that we plan for. Free markets demand failure as part of the Darwinian process. And Free Markets demand accountability for failure in the form of not getting compensated for failure.