Obama on Fiscal Responsibility

[ih8music]

I believe this has already been posted, but given the trajectory of the current discussion, I think it deserves another look.

 

http://www.thedailyshow.com/video/index.jh...inancial-advice

...and Cramer is tonight's guest on the Daily Show. Should be very entertaining.

[MrRain422]

Yeah, CEOs should be expected to do whatever it takes to make as much money as possible. Which is exactly why regulation is necessary; to keep them in check since they can't be expected to do it themselves.

[OOO]

Jon Stewart should get an emmy for this episode.

[explodo]

Jon Stewart should get an emmy for this episode.

Yeah, this is unbelievable. Hats off to him.

[Sir Stewart]

I even started a thread!

[Good Old Neon]

Oh, snap.

 

From Salon:

 

The U.S. economy is freaking China out

 

The story of the hour in global financial circles: China's prime minister, Wen Jiabao, is "worried" about the value of his country's huge investment in United States Treasury bonds.

 

"President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures," Mr. Wen said. "We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried."

 

Of course he's worried. China owns about $1 trillion worth of Treasury bonds, and a collapse in the value of the dollar would be a devastating blow to China's foreign reserve portfolio. If Wen wasn't worried, you'd have to wonder about his acuity. A great deal is riding on whether Obama can steer the U.S. safely out of its current economic turmoil, and we're all pretty worried about it. But the main reason why Wen's comments are making news is that foreign leaders generally tend to be a little more circumspect when discussing such matters. The New York Times Wen's called his remarks a display of "unusually blunt concern."

 

So now the hunt is on to discern the hidden import. What's Wen really trying to say? Is this a shot across the bow, warning against any further attempts to label China a currency "manipulator?" Is it simple chest-beating? China's breakneck pace of growth has slowed and exports have fallen off the proverbial cliff, but the country is still in much better financial position, right now, than most of the industrialized nations in the world, nearly all of which are deep in recession.

 

Tea leaf readers will have a field day, but the only thing clear to me is how Wen's justifiable nervousness exposes the utter bankruptcy of the theory that China would ever be willing to threaten the United States by employing its so-called "nuclear option" of purposefully liquidating its dollar holdings.

 

As Wen's comments reveal, China's great fear is that the value of its holdings will decline. There would be no better way to achieve that than by dumping Treasury bonds on the market. In fact, just displaying tentativeness about buying more bonds in the future may be enough to spook markets. For China's own economic security, it needs the U.S. economy to recover. Which means, whether it spawns heebie-jeebies in the Middle Kingdom or not, China has to keep bankrolling Obama's efforts to end the recession.

 

― Andrew Leonard

 

link - http://www.salon.com/tech/htww/2009/03/13/china_is_worried/

[mfwahl]

Tea leaf readers will have a field day

[Good Old Neon]

A.I.G. Planning Huge Bonuses After $170 Billion Bailout

 

http://www.nytimes.com/2009/03/15/business/15AIG.html?hp

[Moss]

A.I.G. Planning Huge Bonuses After $170 Billion Bailout

 

http://www.nytimes.com/2009/03/15/business/15AIG.html?hp

But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

 

That's an interesting new one. Sorry, our hands our tied, we have to give huge bonuses because our company lawyers say so. Somebody please bring the hammer down on these guys.

[Good Old Neon]

That's an interesting new one. Sorry, our hands our tied, we have to give huge bonuses because our company lawyers say so. Somebody please bring the hammer down on these guys.

 

Agreed. I understand AIG is contractually obligated to dispense the bonuses, however, we

[Sweet Papa Crimbo]

 

 

Does it make me a bad person that I acutally laughed out loud at this photo?

[John Smith]

The AIG people and other banking wall street types are all in favor of taking their bonuses etc. because they are contractually obligated to pay them. I seriously wonder how many of these bonus recipients are in favor of the UAW or pilots union rank and file giving up pay and benefits their companies are contractually obligated to pay? Also I wonder exactly what these

[Good Old Neon]

The AIG people and other banking wall street types are all in favor of taking their bonuses etc. because they are contractually obligated to pay them. I seriously wonder how many of these bonus recipients are in favor of the UAW or pilots union rank and file giving up pay and benefits their companies are contractually obligated to pay? Also I wonder exactly what these

[John Smith]

Maybe the geniuses at the top said

[Good Old Neon]

From Salon:

 

The real scandal of AIG: We're helpless

 

Accountable to nobody, the insurance giant makes public officials look impotent and shows how little Americans can control where our money goes.

 

By Robert Reich

 

March 16, 2009 | The real scandal of AIG isn't just that American taxpayers have so far committed $170 billion to the giant insurer because it is thought to be too big to fail -- the most money ever funneled to a single company by a government since the dawn of capitalism -- nor even that AIG's notoriously failing executives, the very unit responsible for the catastrophic credit-default swaps at the very center of the debacle, are planning to give themselves over $100 million in bonuses. The scandal is that even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money.

 

The administration is said to have been outraged when it heard of the bonus plan last week. Apparently Secretary of the Treasury Tim Geithner told AIG's chairman, Edward Liddy (who was installed at the insistence of the Treasury, in the first place) that the bonuses should not be paid. But it turns out that most will be paid anyway, because, according to AIG, the firm is legally obligated to pay them. The bonuses are part of employee contracts negotiated before the bailouts. And, in any event, Liddy explained, AIG needs to be able to retain talent.

 

AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid (they would have had a lower priority under bankruptcy law that AIG's debts to other creditors); indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if laughing weren't already so expensive.

 

This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. To whom should they be accountable? As long as taxpayers effectively own a large portion of them, they should be accountable to the government.

 

But if our very own Secretary of the Treasury doesn't even learn of the bonuses until months after AIG has decided to pay them, and cannot make stick his decision that they should not be paid, AIG is not even accountable to the government. That means AIG's executives -- using $170 billion of our money, so far -- are accountable to no one.

 

link - http://www.salon.com/opinion/feature/2009/03/16/reich_aig/

[Good Old Neon]

(The totally fucking awesome) Glenn Greenwald weighs in:

 

Monday March 16, 2009 08:59 EDT

The sanctity of AIG's contracts

(updated below - Update II- Update III)

 

Larry Summers, Sunday, on AIG

[Moss]

It seems so obvious. Of course the lawyers could find loopholes or something to not pay these bonuses. Apparently there is no incentive at this point to even try to avoid the bonus payments.

[Good Old Neon]

It gets worse:

 

The Semtex in the AIG Retention Contracts

By: emptywheel Sunday March 15, 2009 1:52 pm

 

Here's how I understand the white paper AIG just used to convince Tim Geithner that, while the US government can force car companies to cut the wages of line workers, the US government cannot force banksters to cut the wages of the thugs who broke the global financial system. There's a lot of mumbo jumbo about contract law, but that's not the real reason AIG is arguing Geithner can't strip the bonuses. It's the "business reasons" that amount to a deliberate threat:

 

[Moss]

Too bad we can't let them fail but the little guy would just get screwed and the bonuses would probably still get paid. Plus they are "too big" apparently.

[Duck-Billed Catechist]

I guess I don't understand bonuses that aren't tied at all to company or individual performance. Retention? So they just get a bonus for keeping their seat warm? Why isn't that just part of the executives' salary? I would think the higher salary would be enough of a retention incentive. What am I missing, here?

[Winston Legthigh]

What am I missing, here?

Could be deferred bonuses? Many shops use deferred bonuses to insure that the employees don't take their entire bonus and leave. Instead, they spread it out over several years. So, we could be looking at bonuses that were promised based on past years performance...

[futureage1]

Larry Summers, Sunday, on AIG

[futureage1]

http://www.dailykos.com/storyonly/2009/3/5...1152/953/704855

 

 

 

"A bankruptcy judge could have carved AIG up into chunks with sound components separated from unsound ones. Other companies would buy assets that had value. Shareholders would likely have emerged in better shape than they have after AIG's stock price fell from over $70 to 43 cents in a two-year period.

 

"Suppose AIG goes bankrupt, it is better that AIG goes bankrupt and we have a horrible two or three years than that the whole US goes bankrupt," legendary investor Jim Rogers, who co-founded the Quantum Fund with George Soros, told CNBC on Tuesday. "AIG has trillions of dollars of obligations, let them fail, let the courts sort it out and start over. Otherwise we'll never start over."

 

One aspect of the repeated AIG bailouts that deserves additional public scrutiny is how they enriched some of the company's counterparties at taxpayer's expense. Those are the bailout's indirect beneficiaries, and they reportedly include Goldman Sachs, Merrill Lynch, UBS AG, and Deutsche Bank AG. They knew there were risks to dealing with AIG; the financial world would not end if AIG defaulted. (As George Mason University economics professor Tyler Cowen put it this week: "No one wants to say it, but essentially the Fed has been bailing out European banks.")

[futureage1]

If Obama would demand some regulation so that the taxpayer could see that there was some benefit to them to help these banks survive, I don't think there would be this much anger. For example, the credit card interest rates these banks continue to charge are going to cause yet another financial disaster.

 

At the very least, they should cap these interest rates to 12%, require a grace period before late charges are assessed, and allow the interest to be deducted from your taxes. This would go a long way to helping the consumer get their debt under control and see some light at the end of the tunnel. These are just common sense actions that should have been addressed a long time ago.

 

This is an urgent matter for consumers. I wish we could appear before congress to explain if they didn't help us and help us immediately, we will be history. The bonuses are absurd and we have a right to be extremely angry about it. I don't think it would be wise to let this continue, because there will be a severe backlash.

 

People are real weary of this fight and can't stomach many more letdowns. It's the incredible waste of money on wars and corruption that is eating at people. It's infuriating to hear that we do not have money for healthcare, education etc. when billions are being siphoned out of our economy by the corrupt. It feels like our country is being liquidated, doesn't it?

[John Smith]

From the very beginning this has been one of my pet peeves with the whole