Mercnbeth
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quote:
I would never have seen it coming as it has but, I am not a Wall Street Guru.... SM, I don't doubt that many "saw it coming"; but being a lone voice of reason, or even representing descent in a Board Room full of Capitalists (good intending or evil) is a short term career path. quote:
once again if they are all so damn smart why didn't they cover the issues entirely?... There is a valid reason, but I doubt many will accept it. Regulatory statutes change with the change in political winds. Insurance entities by their very nature, can not change and amend their policy terms as quickly. There is also the 'tail' on existing policies. After the RE market was opened and previously unqualified applicants magically qualified for a loan where payments were projected at a multiple of income instead of a percentage of it, the insurance policy couldn't be retro-fitted or amended. It was already in place and purchased by financial institutions. The 'tail' of liability extended for the entire term of the loan. Although the product could have been 'taken off the shelf'; that would have impeded cash flow and perhaps the same result would have occurred.
When the 'good intending' removal of performance based 'contingency' bonuses were eliminated by insurance companies due to Spritzer's public attacks which he used to achieve the NY Governor's mansion; it was not anticipated that their removal would, down the road, lead to no performance language written into the bonus programs for insurance officers, managers, and producers. When the RE credit markets were expanded by Congressional action to make everyone qualify, do you think if AIG wanted to subsequently eliminate the insurance coverage, since the conditions they predicted a 'flood' changed, they would have been allowed to do so? Where did you expect the voice to come from or be heard? The guy making $500/week, had a 500 credit score who all of a sudden got instant approval for a $400k home in Riverside sent his Congressperson a fruit basket. You want to try an explain to this man; at best still working but more than likely now unemployed, living in the same house being foreclosed and listed at a $200k value why his Congressional representative, now pontificating on TV about the evils of AIG should be the source of his ire and not be supported next election? Good luck trying to have the masses understand that concept. Evil AIG is a better target and doesn't require an upgraded knowledge base.
The autopsy report on AIG would have many such "could of..." or "should of.."scenarios but since it's not dead and goes on infecting others while the cost of its life support increases every day - we may never get to that point. However it could be given as a 'cause' and 'affect' exercise when the collapse of the USA is discussed by future generations.
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both sides fucked this one up!...and We get to pay for it all! There is a old saying that should be hung as a 'sampler' in every business person's office; "Your First Loss Is Your Best Loss". Best case - eliminate the product when the rules changed. Second best, when they didn't do that - let them fail when they can't pay their claims, as would occur when any insurance company insolvency. Granted, the collapse of AIG would have created worldwide ripples, but the solution would have already been in place out of necessity if there was no attempt to 'rescue' the entity through artificial means.
Remove all the emotions and make it a given, that at the time both sides "fucked this one up"; good intending legislators and evil, or good for the shareholders, capitalists. AIG was not and is not asset-less. A bankruptcy and subsequent liquidation would have devalued many assets across the board for all citizens; disproportionate in dollars affecting the 'rich', disproportionate in percentage of value on the 'poor'/'working class'/'middle class'. But it would have been very visible. There would be no bonuses. The insurance payout to financial institutions, foreign and domestic, would have been transparent and a matter of public record. Any expenditure made in the preceding 120 days by a Bankrupt AIG would have been public.
Maybe that's why both sides who "fucked up" prefer this 'bail-out' method. It keeps the special interest money flowing and serves as a perfect distraction to the masses who take as absolute and believe everything they hear, without questioning, on the Sunday talking heads shows. They encourage and point you assigning blame instead of using the same time to draw your own conclusions independent of political agenda. They want, need, and do their best to generate a confused, polarized, scared, and finger pointing 'us' versus 'them' social dynamic. From a tactical standpoint I commend their efforts. Go ahead, take sides; either choice makes you the one paying the check for their Corporate meal at the taxpayer's expense.
To me the 'worst' worse case is this, taking place this morning at a :
quote:
WASHINGTON – President Barack Obama declared Monday that insurance giant American International Group is in financial straits because of "recklessness and greed" and said he intends to stop it from paying out millions in executive bonuses.
"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.
"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said.
Source: I DIDN'T KNOW WHAT I SIGNED
It represents an Administration who either wants to continue the charade of Government ignorance regarding the details of the very economic program they called "necessary", "critical", and the path to "solving" the existing crisis; or worse - they really didn't know. Which do you think?
Senator Frank's daily quote from the same source was hypocrisy at its finest:
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Rep. Barney Frank, chairman of the House Financial Services Committee, earlier Monday charged that the move to pay bonuses amounted to "rewarding incompetence."
Speaking of "rewarding incompetence"; how many times has he been re-elected? Care to wager against him being re-elected again? Then again its not their fault, they just had to do something! quote:
U.S. Rep. David Obey (D-WI), the chairman of the House Appropriations Committee, helped write the bill and says he doesn't like being asked about earmarks.
"We simply made a decision, which took about three seconds, not to have earmarks in the bill," he says. "And with all due respect, that's the least important question facing us on putting together this package." David Walker, a former U.S. comptroller general, the bill appears to have no mechanism for directing spending. Source: DON'T READ - JUST SIGN!
I doubt enough people will appreciate that the same Congressperson who enabled them to live short term in a home they couldn't afford, is the same one wanting their tax money going to bail out the people reponsible for them being removed from it.
< Message edited by Mercnbeth -- 3/16/2009 10:52:23 AM >
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RE: Your tax dollars at work - 
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