AIG

The not-rich have their collective panty in a wad over executive bonuses at AIG and other bailed-outed companies. Livid are the rank-and-file over executive greed and taxpayer extortion. Terrible just terrible. Or is it?

First, these multi million dollar bonuses were negotiated long before the market puked. Total compensation contracts were inked in early 2008 and bonuses were tied to 2007 amounts. Regardless of how the employee performed in 2008, at the very least, they would receive bonuses equal to 2007. And 2007 was a very good year.

Part of the umbrage lies in the common understanding of the term 'bonus'. It is generally implied to mean 'performance' bonus. But this is not the kind of bonus AIG and others delivered. The fact they were tied to historic performance and not current performance indicates they were something else.

AIG calls them 'retention' bonuses. Basically their way of saying: 'Thanks for making a billion dollars for us last year and don't get restless, we love you.' Why not just increase their salary? Because it's easier to adjust a bonus. And because of the when and how they are delivered, this above-base-salary compensation is advantageous to both employer and employee.

Call them what you want, you say, they were not deserved. These thieves should be jailed not rewarded with obscene amounts of money swindled from the taxpayer. Especially when so many have lost so much and the former middle class is approaching destitute.

Wrong. AIG is contractually bound to award these bonuses and as it turns out, they have been hard-earned. This sector of the finance world rewards those with the cunning and creativity to navigate the complex financial landscape. This means pushing the envelop and designing ever-more sophisticated financial products and means of delivery. The execs at AIG did what they were paid to do. They did it well. The did it legally. And their work was consistent with best-practices of the industry. They should be compensated per the agreement.

Bear in mind, AIG's collapse was due not to a company-wide irresponsibility as the media has intimated, but to the actions of one rogue operator in the London office who managed to leverage much of the company in a relatively new and unproven speculative product - derivatives.

The rest, who were just doing their jobs, have been unfairly villanized by association. Not only did they have nothing to do with the London rogue, but they were outstanding performers and responsible for what little liquidity remains.

When congress bought 80% of AIG they also bought the existing employee contracts and the obligation to honor them. Obama seems to have forgot this when he said the people should be angry. Way to go Mr. Prez for promoting irresponsibility and non-constructive emotion.

Give anyone their annual salary again in bonus and see if they turn it down. Ironic also the loudest mouths are also the greatest defenders of capitalism and the 'free-market'. Thank goodness the hypocrisy and righteousness in the subtext is drowning out their calls for lynching.

Doeth protesting these bonuses or the compensation of another, regardless the context is protesting way too much. Protesting the fact they are jealous. Protesting the fact they are hypocrites. Protesting the fact they weren't clever, savvy or smart enough to get a master's in business finance and penetrate the fraternity. Protesting the fact they chose NOT to take responsibility. Protesting their ignorance. Protesting the very system they are willing to defend with their lives.

Wait till the story breaks on the bonuses at Citigroup, Wells Fargo, BOA et. al. The AIG execs will look like choirboys by comparison. But before you retie your nooses, see above.

Not My Fault

It's not my fault, I swear! It's Wall Street's fault. And Bush's. And the predatory lenders. And the SEC. And AIG. And my financial advisor. It's all THEIR fault!

Right.

Wall Street. Were the lot of them doing anything illegal? Sure there were anomalies like Madoff, but zillions of transactions, many highly speculative, were occurring every week entirely within the bounds of both law and common practice. The execs making the million dollar performance bonuses were entitled to every penny. The house of cards was constructed and operated per the design.

Bush's fault. One question: who controlled Congress for most of those years?

Predatory lenders: Do you mean the one's with a nine pressed into your brain stem making you believe 1 + 1 = 3?

The SEC. Galbraith nailed it when he said economic forecasting was invented to make astrology look respectable. Regulate the future? That's like trying to regulate gravity.

AIG: AIG was running a shell game that became transparent. They should have been allowed to fail and with it some portion of the worlds banking system. That's called economic Darwinism. Other's know it as capitalism and the free market.

Your financial advisor: At what point while you were plugging money into the 401K slot machine did you not think there was risk? Once again, returns on mason-jar securities far outpaced your diversified portfolio.

You want blame?

How about that guy who borrowed more than he could realistically manage. You know, the guy with all that credit card debt, a 3rd mortgage and living waaaaaaay beyond his means. Think he bears any responsibility? Maybe just a teeney-weensy bit? Now multiply just-a-little by 150 million.

And how about his neighbor, the factory worker. The guy who just can't seem to square his trade-deficit-layoff anger with his union-just-clear-the-bar m.o. Multiply by 60 million.

How 'bout Billy's parents. The one's who believe it's the job of the government to educate and motivate their couch-ridden, plasma-nipple addicted, Ritalin-raped kid. Multiply by 80 million.

How about the fat lady eating herself to death. But not before her gluttony dinged the taxpayer and policy holder a couple hundred thousand clams. Multiply by 100 million.

How about the 'entitled' class. 'Owed' and absolved of their trespasses because they are 'victims'. Multiply by 25 million.

How about those who choose snake-oil over discipline, immediate gratification over intellectual investment. Who find their reality and heroes in the 200,000 violent acts they view on the TV before age 18. Multiply by 35 million.

How about the collective insecure who feel the need to validate their existence or best their neighbor with more raz ma taz. Multiply by 150 million.

Not your fault. Nuh-uhh.

In Sartre's short story 'The Wall', the condemned prisoner is made an offer by his captors: Reveal the location of your comrades and we will spare you. A tough choice: defend the great cause and die or betray your comrades and live. After much internal debate, he chooses to give the authorities a phony story, knowing it will guarantee his execution. But alas, his comrades have moved to the very 'phony' location he reveals. They are ambushed and killed. The prisoner is spared.

Still not your fault?

Try this: It was YOU and YOU ALONE who caused the crash. YOU are solely responsible for derivatives gone bad, massive real estate deflation, 15% unemployment and the fact my kids are hungry. Absurd you say, 'I had nothing to do with it.' Really? Voltaire reminds us there are an infinite number of possible worlds accounting for at least one scenario whereby YOU and YOU ALONE preempted the crash through your acute perception, decisive action, cunning and powers of persuasion. A scenario you didn't chose obviously. And who is responsible for that choice? One guess.

Now imagine a culture with this attitude. An attitude whereby each individual took full responsibility for any and every other action / event in world.

That car crash in Argentina a few moments ago that killed a family of 4. My fault.

Political parties. My fault.

Nuclear weapons. My fault.

HIV. My fault.

Greed. My fault.

Your guilt. My fault.

Your weight problem. My fault.

Gravity...well maybe not my fault.

Do you think a society that took such responsibility could ever blame anyone other than themselves? And what would such a society look like? Hint: Not what we see today.

Not my fault the bubble, despite all my huffing and puffing. Not my fault the burst, despite my pin pricks. Not my fault it's not my fault...