Wednesday, March 18, 2009

Thought of the Day #77

The outrage over the AIG bonuses seems a bit reactionary. Rather than
look at 200 million, which really is a drop in the bucket of
corruption, we should be focusing on why this giant, money sucking
company needed financial support in the first place. Oh, and so many
newsreports and politicians have said that AIG was "too big to fail".
It's insurance, right? Those items that needed insurance (businesses,
airplanes, people, cars, etc.) could buy insurance from somewhere else.
Trust me, in the scam that is insurance coverage, there would have have
been hundreds of companies that would step up to offer coverage for the
potential of making big money off of potential misery. If companies
didn't come forth to sell insurance, items would be uninsured. Would
these items immediately fail because they were uninsured?? No, of
course not. The lapse would certainly impact some, but the majority
would have just continued "life as normal," without the umbrella of so
called security.

3 comments:

vesta44 said...

It's not totally the amount of the bonuses that is causing the outrage so much as it is the fact that the people responsible for AIG failing are the ones getting retention bonuses. AIG wants to keep their best and brightest employees, but with the financial sector in the turmoil it's in, where exactly would these people go if they quit working for AIG? And if the people who caused this mess are the best and brightest, then we're in worse trouble than anyone thinks. Those executives don't deserve bonuses, they deserve to be fired and be replaced with people who aren't as greedy and careless with other peoples' money.

Cat said...

I agree they need to be fired, but I think this issue is only the tip of the iceburg. If we focus solely on this (as it appears we are in the media), we'll lose site of the big picture of why it's failing in the first place.

Thanks for your comment!

bobber said...

Vesta makes a some good points, but for myself, I think that something close to the root of the mess we are in is the mentality of the people who got us into it. I think that until we are able to change that, the future will still be caught in the same way of viewing the world and how the financial sector is "supposed to" work. I don't believe that there is really any "supposed to" factor about it at all, other than it is all that apparently the people in it and especially those directing it seem to know. Time for a paradigm shift, if you were to ask me.

However, that said, much of the "outrage" and verbal and ideological brandishing of pitchforks and torches we have seen paraded before us from the Congress, thru the media, and down to our friends and neighbors, even if well deserved, misses what I consider an essential point. And that point is: Are we in this current effort to correct our situation for BLAME? Or are we a bit more pragmatic and in it to get the work done that truly needs to be done to get our economic cart out of the ditch?? I wish that those who have the power to get things done would GROW UP, be mad, but look at the whole picture and realize that they do not need to legislate punitive taxation, but simply either deduct the $165M from any further payments for bailing out AIG, or exercise their 85% ownership of what's left of it and do what is necessary within AIG's restructuring to capture that money back. This "outrage" and outrageous action within Congress is, to me, a lot of sound and fury, signifying nothing, when, as you say, Cat, there are bigger fish to fry. It's time for our people in authority to GROW UP.