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A partial defense of AIG bonuses

 
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brian-hansen
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PostPosted: Wed Mar 18, 2009 1:11 am    Post subject: A partial defense of AIG bonuses Reply with quote

I'm tempted to create a forum, "lessons in spinning".

So AIG gave bonuses to various employees and executives
totaling $160+ million, after receiving over $180 billion
in bailout money from the U.S. government.

Both numbers figure prominently in coverage of the seemingly
near universal outrage regarding the news.

I can't be the only one to notice that the bonus money totals
less than one tenth of one percent of the bailout money (<0.1%).
AIG is a big company. I have to imagine that AIG spends more
for parking than for these bonuses. More for bottled water, or
for providing a lunchroom with a working refrigerator at their
workplaces.

Considering that we own this company now, we're going to need
to get our priorities straight. Our time would be better spent
figuring out how to keep AIG as a going concern than in writing
memos about conserving paper clips.

Considering how little thought has been expressed in the mainstream
media about the relationship between these 2 numbers, the
bonuses might've caused the same outrage if they had been
$160,000, and not $160,000,000. That is a sign that we're being
spun.

Of course, as a business owner, I know there are costs of doing
business. A bonus for a job well done is not out of line. A bonus
of 0.1% is not a great expense. If it avoids litigation, well, even
better.

So now we come to the crux of it. Are these bonuses for jobs
done well? At this stage, I find it impossible to know, and the MSM
is not much help. I'm left to rely on the idea that these bonuses
are going to "some of the same people responsible for" AIG's
troubles. But, if getting at responsible parties was what it was
all about, we'd do that. There are other ways to hold people
accountable besides withholding a bonus from "some" of them.

Lets shine the light there. As an owner of AIG, I want that janitor
who figured out how to keep the floors clean at less expense to
get his bonus. I want management to hold the other guys
accountable, the ones that got us in this mess. Some civil
and criminal torts might not be out of line.

What we don't need is 435 members of congress second-guessing
and micro-managing our company. That goes for presidents
and pundits as well.
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PostPosted: Wed Mar 18, 2009 8:35 pm    Post subject: Reply with quote

In the light of reporting since I first posted on this topic,
my conviction is stronger than ever about how counterproductive
this story is.

First, bonuses that were available to AIG employees fell under
two broad categories: retention and performance.

AIG employees did not get performance bonuses because AIG
did not perform well. The retention bonuses were put in place
because AIG management felt that they especially needed some
particular employees to stay on.

The new CEO has said that the people who were offered these
bonuses were not the people that "got us in this mess --
those people are gone".

Assuming he can be believed, and I don't disbelieve him, then
so much for this bonus being given to "some of the same people..."

Ultimately, this is nearly pure BS. It is embarrassing to see.
It reminds me of one reason I hated Republican politicians a
few years back with the Terry Schiavo case. In this instance,
though, it appears to operate all across the political spectrum.
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jabailo



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Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Fri Mar 20, 2009 2:53 pm    Post subject: Reply with quote

It's amazing, but you seem to be part of the "second wave" of pundits who are now apologists for AIG bonuses! I just finished browbeating one of you in the Washington Post yesterday...who'd have thought you'd also be lying around in my own blog!

This is a blunder by Obama and the Democrats and no amount of backpeddling will help. And it exposes the primary fallacy with this administration -- it is not about change, it's about a bunch of rich people trying to preserve their hold on the reins.

Sorry, but I not only question the bonuses, I question the salaries. We Americans are all 80 percent owners of AIG, and as one of the bosses, I want to shave all I can off the bottom line.

And the argument of "it's just a few hundred million" really doesn't sit well with me at all. C'mon, how many billions are about to be blown to every hangeron and toady in the Democrat Entourage!
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PostPosted: Mon Mar 23, 2009 8:05 pm    Post subject: Reply with quote

Its a bit of a struggle to find something you wrote that
I can agree with.

1) I consider myself to be in the first wave. When I heard
the two figures included without an attempt to describe their
ratio, I immediately posted my essay.

2) I'm not laying around, and its not "your own blog", at least
not in an exclusive or ownership sense.

3) I suppose it might be fair to blame Obama and the democrats
to some extent -- maybe I'll come back to this.

4) This is an extreme example of misplaced outrage. How many
amongst the outraged was outraged at bonuses one year ago?
You say Obama is not about change - I translate this as that
Obama should be blamed by Repubs because he didn't protect
us entirely from crony capitalism, a specialty of Republicans
and insider big money players for the last 8 years.

5) I'm glad you question the bonuses, and the salaries.
And I agree that a lot of super-rich people are trying to hang
on. I'm glad enough if we get some turnover in this respect.

6) You want to shave the bottom line. Sounds good. But you and
I also own stock in IBM, say, through mutual funds in our 401(k)s.
Should we be insisting that management make employees pay
for parking, or have them conduct a paper clip audit? IBM
has been around a while, and they've managed to make profits
even without taking these measures. I, for one, imagine that
there may be good reasons why. In particular, management's
job is to focus on the factors that are critical to success.
If I had a lot of IBM stock, I think I'd be going against
my own best interests by criticizing IBM management
about factors that can be made to sound bad, but are not
germane to the actual bottom line. It's called micromanagement.

Take performance-based bonuses. Let's say Ford is selling fewer
cars, but I'm an ace salesman, and I sell twice as many cars
as last year, and twice as many as any other salesman. As
someone coming into management, do you really think its a
good idea to eliminate commissions? Will I be selling as many
cars next year?

But AIG didn't do well, and these bonuses are not performance-
based (as I understand it); they are retention bonuses, as in,
we need this guy to stick around for at least 6 more months.
I don't think that you, the rest of the outraged, or I am
qualified to say it isn't so. Management might've been wrong,
but considering that bonuses given to other people cut into
their own bottom line, I'm inclined to say that they probably
had good reasons.

By not even considering the ratio of bailout to bonus, the MSM
and the outraged are in effect lashing out at AIG in general and
not the bonuses.

I hate AIG as much as anybody, but not because of these bonuses.

Reportedly, these are not bonuses to the "ones that caused the
problem".

7) It seems fairly unbelievable that AIG executives are members
of the "democratic entourage".

8 ) By not considering the ratio, and the facts, you've allowed
yourself to be swept up in an unthinking mob.

9) The "clawback" provisions are clearly illegal and unconstitutional.
They constitute a "bill of attainder" that singles out only a few people,
creating a crime and proposing a punishment, after the fact.
The US (that's us) is not likely to win a lawsuit challenging
punitive clawbacks. How many tens of millions are we going
to be on the hook for when we lawyer up in response to these
lawsuits? That we will lose.

10) Let's definitely be mad at AIG. But lets be mad for the right
reasons. Lets get the names of the people that actually behaved
badly. Let's prosecute them, and besmirch their reputation.
That goes for the rating agencies especially. Let's fix this.
We have to do this (again), because, as a nation, we've let the
regulations (and the regulators) fade in the last 2-3 decades.
We should be mad at AIG because they sold insurance that wasn't
considered insurance, and so didn't need to be regulated as insurance.
If you sell insurance, you are required to keep reserves, which
count against your balance sheet. AIG didn't do this.

My inclination is that AIG should not have been bailed out. But the
fact that they gave retention bonuses amounting to 0.1% of the
bailout to some employees is not the reason to be outraged.
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PostPosted: Mon Mar 23, 2009 10:08 pm    Post subject: Reply with quote

brian-hansen wrote:
You want to shave the bottom line. Sounds good. But you and
I also own stock in IBM, say, through mutual funds in our 401(k)s.
Should we be insisting that management make employees pay
for parking, or have them conduct a paper clip audit? IBM
has been around a while, and they've managed to make profits
even without taking these measures.


Wrong. That's the problem. They haven't made the profits to justify their stock valuations...which is why they -- and the DOW -- fell. So should we be counting the staples everyday? Yeah! We should, because I think that the DOW inflation post 1999 was a lot of malarky. Somehow everything got twisted up. The real growth was and still will be in tech. It has to be. That's where the future is. But Alan Greenspan's tight money policies starved the new for capital and the money went to the old, the non-productive, the landed, the gentry.

brian-hansen wrote:
In particular, management's
job is to focus on the factors that are critical to success.
If I had a lot of IBM stock, I think I'd be going against
my own best interests by criticizing IBM management
about factors that can be made to sound bad, but are not
germane to the actual bottom line. It's called micromanagement.


According to my view, it ain't brain surgery for old tech anymore. So, these guys shouldn't get top dollar.

brian-hansen wrote:
Take performance-based bonuses. Let's say Ford is selling fewer cars, but I'm an ace salesman, and I sell twice as many cars as last year, and twice as many as any other salesman. As someone coming into management, do you really think its a
good idea to eliminate commissions?


The AIG bonuses were not based on anything so prosaic. It was a pyramid bonus (much like the thinking that got the salaries inflated in the first place). As in, hey I'll raise my salary $100,000, but I'll raise yours $65,000 and you can raise your people's...but without the "sales" to back it up.

brian-hansen wrote:
But AIG didn't do well, and these bonuses are not performance-
based (as I understand it); they are retention bonuses, as in,
we need this guy to stick around for at least 6 more months.
I don't think that you, the rest of the outraged, or I am
qualified to say it isn't so. Management might've been wrong,
but considering that bonuses given to other people cut into
their own bottom line, I'm inclined to say that they probably
had good reasons.


Sure, sure...and I have some land in Florida to sell you...

By not even considering the ratio of bailout to bonus, the MSM
and the outraged are in effect lashing out at AIG in general and
not the bonuses.

brian-hansen wrote:

8 ) By not considering the ratio, and the facts, you've allowed
yourself to be swept up in an unthinking mob.


See, there you go again. That phrase "unthinking mob" is being copycatted like wild by the apologists. I call it good business sense. The American people own AIG. We are calling for top work for every dollar. That's capitalism. That's cost consciousness. What's wrong with good old fashioned business sense?

brian-hansen wrote:
The "clawback" provisions are clearly illegal and unconstitutional.They constitute a "bill of attainder" that singles out only a few people,
creating a crime and proposing a punishment, after the fact.
The US (that's us) is not likely to win a lawsuit challenging
punitive clawbacks. How many tens of millions are we going
to be on the hook for when we lawyer up in response to these
lawsuits? That we will lose.


Gee whiz, why don't you just lay down and die already! You're scared that these bozos are going to overwhelm all 300 million taxpayers? Pleeze!!
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PostPosted: Tue Mar 24, 2009 1:34 am    Post subject: Reply with quote

The funny thing is that it doesn't sound like we're very far
apart in our opinions, except perhaps in a few specific areas.

jabailo wrote:
brian-hansen wrote:
You want to shave the bottom line. Sounds good. But you and
I also own stock in IBM, say, through mutual funds in our 401(k)s.
Should we be insisting that management make employees pay
for parking, or have them conduct a paper clip audit? IBM
has been around a while, and they've managed to make profits
even without taking these measures.


Wrong. That's the problem. They haven't made the profits to justify their stock valuations...which is why they -- and the DOW -- fell. So should we be counting the staples everyday? Yeah! We should, because I think that the DOW inflation post 1999 was a lot of malarky. Somehow everything got twisted up. The real growth was and still will be in tech. It has to be. That's where the future is. But Alan Greenspan's tight money policies starved the new for capital and the money went to the old, the non-productive, the landed, the gentry.

That, sir, is a lot to unpack. I've never met this Mr. Greenspan.
Don't know much more than average about him.

I think that I wasn't as clear as I would like to have been. I mentioned
IBM as an example, one I generally supposed, was a relatively well-run
organization. You might substitute whatever company that you imagine
to be well-run and consider the example from that point of view.
I haven't followed IBM's fortunes, but I haven't heard anything bad
about them in the news lately. Come to think of it, they're getting
some good press and they've got a catchy ad campaign.

I suppose that IBM stock is down, but most stocks are down.
Stock prices are highly influenced by overall market risk.
If IBM (or <yourco>) was down, it might not be evidence of
deficiency in that particular company or management.

And, of course, I wasn't referring to AIG at that point, but to
this mythical well-run company.

<WellRunCo> didn't earn enough to justify it's valuations, but
you or I might be content to know that they are developing
new products or expanding markets or streamlining, or whatever
might be a really good idea.

So, "... should we be counting the staples everyday?" At
"WellRunCo"/IBM I don't think we should, as in micromanaging.
Surely you've experienced working for people who focused on
very minor matters while giving insufficient attention to the key
strategic factors that will determine success or failure. Now imagine
working for 435 managers like that in the congress, the president
and countless pundits. How do you think WellRunCo would perform
under those circumstances?

If you follow my reasoning, the earnings not sustaining the valuation
alone does not justify what I'm calling micro- (or perhaps)
poly- or demo- management approach. What you said
after "Wrong" is therefore either irrelevant (you didn't seem to notice
that I wasn't talking about AIG), or refuted (drop in stock valuation
alone does not justify micro-management).

In the context of WellRunCo, 0.1% bonuses are not a source
of outrage, even though you and I may own shares of it in our
mutual funds. It falls under the purview of the 2% rule (see
units of measurement), and is a distraction.

This was the point of my example.


jabailo wrote:

brian-hansen wrote:
In particular, management's
job is to focus on the factors that are critical to success.
If I had a lot of IBM stock, I think I'd be going against
my own best interests by criticizing IBM management
about factors that can be made to sound bad, but are not
germane to the actual bottom line. It's called micromanagement.


According to my view, it ain't brain surgery for old tech anymore. So, these guys shouldn't get top dollar.

This is another densely packed statement, containing multiple
propositions and assumptions. To me, it suggests an image of
people just going through the motions. By the fact that you
discount the competitive nature of the endeavor (as in it's
not to hard to catch a touchdown pass, but its harder if you are
playing against someone who is much better than you),
I sense that you view this milieu as non- or anti-competitive,
a view that is somewhat consistent with mine.

There's a kind of sourness to the view maybe. How do we apportion
the profits of our mutual labors and investments? Embracing
a sour viewpoint, it may not be easy to choose who we dislike
least: the grubby greedy workers, the larcenous greedy management,
or the useless greedy financiers (inheritors and robber barons).

We've made a choice in our society that forms the basis of our
politics: owners decide, subject to the laws of the people overall.
Controlling ownership of large corporations is not available to
any but the wealthiest . Small stake or indirect investors
are, in effect, shut out of the system.

I don't think you want to double the janitor's pay if the company
doubles it's value. You side with shareholders, and rightly so.
That is among, if not the deepest responsibility of a corporation,
to return value to shareholders.

There's a place we're in, in history. I'm not precisely sure how
to describe it, but we've never had so many, or so high a percentage
of the population disappointed and really hurt by drops in stock
prices. Frankly, the combined wealth of a huge majority of people
is barely a blip when compared with the top 1-10%. Even so,
anyone who had a mutual fund of any but the most ultra-conservative
kind has just gotten a 30% +/- haircut. And we want someone to blame.
It is predictable that we might view the targets of our anger
through a veil of red. Should we blame the CEO of AIG?

Well, first of all, he's new to this position. He didn't negotiate or
approve these particular bonuses. Secondly, he's our guy.

Maybe you and I disagree. So far, (paying just average attention to
his behavior), I don't see any reason to believe he is doing a bad job.
I'd be happy to agree his predecessor did, however.



jabailo wrote:

brian-hansen wrote:
Take performance-based bonuses. Let's say Ford is selling fewer cars, but I'm an ace salesman, and I sell twice as many cars as last year, and twice as many as any other salesman. As someone coming into management, do you really think its a
good idea to eliminate commissions?


The AIG bonuses were not based on anything so prosaic. It was a pyramid bonus (much like the thinking that got the salaries inflated in the first place). As in, hey I'll raise my salary $100,000, but I'll raise yours $65,000 and you can raise your people's...but without the "sales" to back it up.

I'm interested to learn this pyramid aspect you mention, but
I would heavily fault the upper management for allowing this to
happen without, as you say, the underlying sales. Doesn't seem
to quite qualify as a pyramid scheme, though. I think this kind
of argument (collusion) would be stronger if you were talking about
interlocking directorates, etc (good old crony capitalism).

The CEO who presided over that is gone. We've got a new
guy. "Our" guy. Maybe he could have found some tricky way
around it all, but I'm glad we (as in the 80% owners of AIG)
had a guy who let the fact that our company had legally binding
contracts influence his decision. I think it may have been his
bad luck to preside over the spark that released a firestorm
of anger over peoples' seemingly stolen futures and ambitions.

OK. So, maybe not him, exactly, but the guys who got the bonuses,
right? Well, do you know who got them, and why? If they did
it without management's knowledge, then it's embezzlement.
Put them in jail. In reality, management knew all about it,
worked it, and did not serve shareholders' interests for reasons
relating to risk and regulation that I mentioned earlier.

I don't know who got bonuses, but I do not assume that the
people who got the biggest bonuses were the most responsible
for the failure. Frankly, I'd expect the "sets to be fairly disjoint"
as in the most toxic guys've been canned.

You seem to be upset about a fireball, and I agree, but I'm telling
you about a spark. This is a highly non-linear situation, because
a 0.1% difference is having an outsize effect.

jabailo wrote:

brian-hansen wrote:
But AIG didn't do well, and these bonuses are not performance-
based (as I understand it); they are retention bonuses, as in,
we need this guy to stick around for at least 6 more months.
I don't think that you, the rest of the outraged, or I am
qualified to say it isn't so. Management might've been wrong,
but considering that bonuses given to other people cut into
their own bottom line, I'm inclined to say that they probably
had good reasons.


Sure, sure...and I have some land in Florida to sell you...


Hey, if it's 10 cents on the dollar, I'd consider it...
jabailo wrote:

brian-hansen wrote:

8 ) By not considering the ratio, and the facts, you've allowed
yourself to be swept up in an unthinking mob.


See, there you go again. That phrase "unthinking mob" is being copycatted like wild by the apologists. I call it good business sense. The American people own AIG. We are calling for top work for every dollar. That's capitalism. That's cost consciousness. What's wrong with good old fashioned business sense?

There I go again? Let's see. I'm seeing what appears to be a spark
being treated as a firestorm by pundits and politicians across the
political spectrum. I see it repeated with barely a question as to
the level of significance that is involved. I see people's rage over
the loss of value of their homes and portfolios and looking for someone
to blame, and so these guys who are getting bonuses look like
a good target, even though, for all we know, many or most of them
had *nothing* to do with the failures of AIG, let alone our lowered
personal wealth. Don't you think that by picking out guys who made
bonuses that we're including some innocents in our sights? Wouldn't
it be better to actually investigate the whole thing and find out who
really did us wrong?

Either one actively disagrees with me in this respect, or one just
allows oneself to be swayed by "firestorm" reporting. In that case,
I would call those who are swayed in this way, to be relatively
"unthinking". That triggered anger could make them a mob.

What's wrong is that is is not "cost-conscious" or good business
sense to unilaterally break contracts with employees. Doing
such would be clear evidence to me of bad management.

jabailo wrote:

brian-hansen wrote:
The "clawback" provisions are clearly illegal and unconstitutional.They constitute a "bill of attainder" that singles out only a few people,
creating a crime and proposing a punishment, after the fact.
The US (that's us) is not likely to win a lawsuit challenging
punitive clawbacks. How many tens of millions are we going
to be on the hook for when we lawyer up in response to these
lawsuits? That we will lose.


Gee whiz, why don't you just lay down and die already! You're scared that these bozos are going to overwhelm all 300 million taxpayers? Pleeze!!


I wonder if you realize that your suggestion is mean and coarse
and well out of the line and mode of discourse that I have indulged
in so far?

In light of this, I will not continue writing now.

Perhaps you will take this as a way to win arguments.
I don't plan on trying to convince you otherwise.
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PostPosted: Tue Mar 24, 2009 5:48 am    Post subject: Reply with quote

Quote:
If you follow my reasoning, the earnings not sustaining the valuation alone does not justify what I'm calling micro- (or perhaps)
poly- or demo- management approach.


We lose a little bit on each sale...but we make up for in volume.

Quote:
Either one actively disagrees with me in this respect, or one just
allows oneself to be swayed by "firestorm" reporting. In that case,
I would call those who are swayed in this way, to be relatively
"unthinking". That triggered anger could make them a mob.


Ok, just stay in the castle then with Marie and Louis and ignore all that shouting below...
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PostPosted: Tue Mar 24, 2009 1:56 pm    Post subject: Reply with quote

Quote:
We lose a little bit on each sale...but we make up for in volume.

Sometimes its hard to figure you out.

It seems as if you think that there is an audience out
there that will be fooled or impressed by a cheap shot,
an appeal to bathos, when the only people who care
about what you and I write -- are you and I.

By your sarcasm, you appear to be supporting the idea
that any time a stock goes down in value, no matter what the
external circumstances (depressed marketplace, Hansen economy,
etc.) we should, following your analogy, do off with their heads.
jabailo wrote:

Quote:
Either one actively disagrees with me in this respect, or one just
allows oneself to be swayed by "firestorm" reporting. In that case,
I would call those who are swayed in this way, to be relatively
"unthinking". That triggered anger could make them a mob.


Ok, just stay in the castle then with Marie and Louis and ignore all that shouting below...


So, then I was right in calling it a mob then? Really, you
twist and squirm. A post or two ago it seemed that you were
belittling me for parroting the "mob" line. Now you seem to
embrace it. Does "there you go again" ring a bell?

And furthermore, you say I'm with them. You call me an apologist.
Does the fact that I say that I hate AIG, and that I want members
of that organization that were responsible for their financial
collapse to be identified, sued, and prosecuted, does that not
sway your opinion at all?

You don't seem to mind that the group receiving bonuses and the
group that is responsible are not the the same group. You'd
miss a lot of guilty people, and include a lot of innocents in your
rage. It would seem that you want something different from
justice.
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PostPosted: Tue Mar 24, 2009 2:38 pm    Post subject: Reply with quote

http://www.marketwatch.com/news/story/ford-ceos-compensation-cut-more/story.aspx?guid={25AD0E18-7740-45AC-A2BE-A3B13BAF6D88}&dist=msr_8

Ford CEO's compensation cut by more than a third in 2008

Quote:
Ford is also eliminating merit increases and incentive bonuses for salaried workers. "We do not view these actions as merely symbolic, but as a necessary step in the restructuring of our business in which all our stakeholders have been asked to participate," Ford said
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PostPosted: Tue Mar 24, 2009 2:52 pm    Post subject: Reply with quote

jabailo wrote:

Ford CEO's compensation cut by more than a third in 2008


Fine by me. Ford's ownership reduced costs. More reason to own
Ford stock.

Apparently they did it without breaking a signed contract.
Sounds like good management. The kind I would want for
AIG, now that I'm an owner.
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PostPosted: Tue Mar 24, 2009 3:09 pm    Post subject: Reply with quote

No wonder I wasn't invited to the Xmas party and you were!!
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brian-hansen
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PostPosted: Tue Mar 24, 2009 3:12 pm    Post subject: Reply with quote

Wrong again. Anything left?
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jabailo



Joined: 20 Mar 2006
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Location: Kent (East Hill), WA

PostPosted: Tue Mar 24, 2009 5:19 pm    Post subject: Reply with quote

Oh, I got plenty.

AIG...what is it? What does it sell?

Who are these people getting the bonuses.

As the boss of AIG, I want names, job positions, titles, salary grades, performance reviews.

I want them online.

All I heard from you Obamabots was "transparency". George Bush was always "hiding secret things" from you. Oooohhh.

Well, what do we have now? Ask a question and get a pre-programmed response by an army of adherents.

Where is the detail? All this money being spent, and all of it is expressed in millions -- not thousands, or hundreds or dollars, but millions.

Has Obama ever heard of a spreadsheet? What kind of business are you Democrats running? Sure, keep shoveling the money to your cronies and hangers on...no one will notice...but soon.
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brian-hansen
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PostPosted: Tue Mar 24, 2009 8:58 pm    Post subject: Reply with quote

I'm not a democrat, and I'm not an "obamabot".
I do not give you pre-programmed answers.

Calling me these names does not advance your argument,
except perhaps within your own mind.

Even though you seem to feel the need to attack
me personally by calling me these names, my
sense is that I have more than adequately defended
my thesis, to wit, the uproar about bonuses is a
distraction, that for AIG to have broken signed contracts
with their employees would've been a sign of bad management,
not good management, and that congress has overplayed
its hand in creating a bill of attainder, punishing the wrong
people for a crime that it made up after the fact, the crime
of receiving a retention bonus from AIG.

The questions you ask now, mirror fairly nicely the questions
I've been asking throughout this discussion. We both want
these answers. Transparency is a big topic, worthy of its
own discussion.

Just for fun, though, I'll try to answer your questions:
1) an insurance company, 2) insurance, 3) I don't know,
4) I don't know, 5) yes, 6) an insurance company.

This YRIHF discussion did not start with a question from you that
returned to you a pre-programmed response from an army
of adherents. If that happened to you elsewhere, then I
can imagine that you would be angry.

Absent the answers that you call for, I was not in favor of
bailing out AIG. Given the bailout, however, I am not in
favor of punishing the bonus recipients, as a group, for
reasons that I have expressed. My views would've been the
same if George Bush just came into office and this same
scandal occurred.

So, anything left? *




* that is relevant to the initial posting and the unfolding argument?
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jabailo



Joined: 20 Mar 2006
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PostPosted: Wed Mar 25, 2009 9:27 am    Post subject: Reply with quote

The "anything left" and "whatca got" statements that have become your trademarks indicate a person with a chip on his shoulder. That fact that you, and many like you, have rushed to defend someone else's bonus should raise suspicions in even the most naive person. Also, once your "logic" falters, you begin to whine about people calling you names, ignoring hundreds of salient arguments along the way.

Your summary argument expressed in the first two sentences of the second to last paragraph are cogent:

Quote:
I was not in favor of bailing out AIG. Given the bailout, however, I am not in favor of punishing the bonus recipients, as a group, for
reasons that I have expressed.


With your high level of defensiveness, it's hard to make an argument without you becoming unglued onstage. However, here goes...

The problem began with too much money flowing to people who just weren't producing real value. That snowballed and snowballed until there were people making super high paper value without real profit or productivity. AIG as a whole fell into this category. Its value, then plummeted to zero. Perhaps this was way below what its "real" value -- based on profit and revenue -- is. But, until we know what that is, you cannot assume that its employees are worth anything. In the same way that they were overvalued, they may be undervalued, or right valued -- or they may continue to be overvalued.

I assume the later until I get the financial details that the Obama Adminstration promised and failed to deliver. The outward appearance of all this is someone calling in chits for a service rendered to a crony. Again, point me to the web page with the balance sheet and I'll happily read it.
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brian-hansen
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PostPosted: Wed Mar 25, 2009 12:45 pm    Post subject: Reply with quote

We certainly have different viewpoints.

From my perspective, I've addressed every point you've made.
So, I don't see how my logic has failed.

As far as name calling goes, I just don't understand why
you do it. It is very troubling to me. Call it whining, if you
like, but I find it offensive and unproductive.

I think I've proved every point in my thesis, but you remain
unconvinced. That is why I ask for what's left. Is that
a "chip"? I'll let you decide.

So, you have suspicions... okay. What are they?

So, I'll try not to become unglued. Your (more) respectful
tone in the latest post makes this easier for me.

You write quite clearly about what value the company and
employees may have. I don't see anything there to disagree
with. As it happens, everything you write there relates to
how we should evaluate them going forward. If you and I,
were to conclude that there is no value, I would seriously
entertain the idea that AIG should be disbanded, bankrupt,
and employees fired. I don't have a dog in that fight.

I don't agree, however, that we, as owners, should insist that
our management should unilaterally break signed contracts.
Of course, a bankruptcy would probably allow this.

I'd like it if the info you want was made available. So far,
the Obama record for transparency is pretty good. I hope it
gets better.

So yes, in the future, by all means, please consider my fragile
psyche and be gentle. If you call Brian names he might get
upset and start whining. What can I say? I'm weak, in a way.
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jabailo



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PostPosted: Wed Mar 25, 2009 2:16 pm    Post subject: Reply with quote

So, is this the reason (see below)? If so, strike all my (un)righteous indignation...it seems to be the usual suspects:

http://seattletimes.nwsource.com/html/businesstechnology/2008922721_webilfc25.html

Quote:
International Lease Finance Corp. (ILFC), a unit of troubled insurance giant AIG and the largest customer of both Airbus and Boeing, warned in a regulatory filing Wednesday that unless it can get additional loans there is a risk to its survival.

"Without additional support from AIG or obtaining secured financing from a third party lender, in the future there could exist doubt concerning our ability to continue as a going concern," the company said in its annual report filed with the Securities and Exchange Commission (SEC).


So the gamesmanship is:

No AIG, No ILFC
No ILFC, No planes
No planes, No Boeing

Therefore, give us the bonuses...or else!
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brian-hansen
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PostPosted: Wed Mar 25, 2009 2:51 pm    Post subject: Reply with quote

I think you miss the point of the gamesmanship in a way
that may reveal one source of our (seeming) disagreement.

It is "give us the bailout or else". I very much doubt
that IFLC is concerned about several dozen AIG employees
getting bonuses.
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jabailo



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PostPosted: Wed Mar 25, 2009 3:24 pm    Post subject: Reply with quote

The concern would be the other way around, since AIG owns IFLC.
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PostPosted: Wed Mar 25, 2009 3:32 pm    Post subject: Reply with quote

In either case, the bonuses (at 0.1%) don't even rise above
the level of noise.


Last edited by brian-hansen on Wed Mar 25, 2009 9:24 pm; edited 1 time in total
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