Banking, AIG issues need bankruptcy settlements…

March 17, 2009

What I wished the government would do is resolve the banking and AIG issues with great speed.

The outcry over the AIG bonus fiasco has been healthy – public pressure is being applied.

And don’t discount public pressure – it got Barack Obama elected president of the United States.

While I personally wished that the government had never sought to bailout anyone, and while I continue to be outraged that on the one hand a financial institution can accept bailouts and on the other hand squander the money in bonuses, apparently given out not for good performance, but poor performance (good performance and there would be no need of bailouts), what I really think needs to be done is resolve the issue.

And from what I am reading and hearing from so many now who are knowledgeable in the financial field is that all the banks, no matter how big they are, and the international financial entity that is AIG need to be essentially allowed to go bankrupt (and let’s don’t get lost in the terminology – bankruptcy in this case may be a generic term).

Definitely any old leadership needs to be let go and not allowed to come back!

And contractual obligations (beyond debts) are often abrogated in bankruptcy.

The important thing for the national and, more importantly, world markets is that the government makes it clear that the bad debts will be settled. This will forestall a panic and collapse of the world-wide financial system.

I think that the actions already taken by Mr. Obama and his administration are having much positive effect.

And while the stock market is a major economic indicator, we always have to remember it is a giant gambling casino whose participants operate on everything from gut reaction of the moment to scientific formulas, to rumors, to all kinds of shenanigans such as short selling or touting something to run its value up and then selling it out. What I am saying is that it represents more of an artificial construct than reality many times.

At any rate, once the markets are assured that bad debts will be honored (and maybe not even for 100 cents on the dollar, but some type of settlement), and once everyone knows what the rules are moving forward, people all over the world have a desire to make money, and things should move ahead.

Unfortunately, While Mr. Obama has much power here in the USA, he can only urge that the other nations cooperate. But we need to move ahead full speed with or without the rest of the world.

American in fact needs to reassert its leadership. If we do, the world will likely follow.


As mad as I am about the AIG fiasco (see my previous blogs), I think moving forward and restoring old rules of conduct in the markets and implementing new safeguards is more important than chasing after people to enact revenge or to put on political show trials (although there may be time for that too eventually).

The blowhard (no pun intended) that is Barney Frank and the blow dried that is Chris Dodd, sometimes embarrass me. At least they’re not Republicans, though.

(Copyright 2009)

AIG extortion of citizens continues unabated…

March 15, 2009

While I applaud so much of what President Barack Obama is doing, I am saddened, upset, and morally outraged to read now that the insurance firm AIG is set to pay out $165 million in bonuses in many cases to the same executives that brought the firm down and forced the situation in which the U.S. government was basically blackmailed into shelling out some $170 billion in taxpayer financed via China borrowed money to bailout their firm lest it go under and take the whole nation and even the whole world’s economy with it.

To all of you apologists, please don’t try to lose me in the semantics of whether bonuses are just part of the salary package (then they would not be called bonuses) or the malarkey that you have to pay million dollar plus salaries (bonuses included) to keep good people. Or then again, fine, but fire the obviously not good people who squandered or stole the money. And as far as hiring the best and brightest, do they not have to prove themselves first by returning the company to profitability (beyond government bailouts)?

Supposedly the Obama administration is outraged and scolded AIG and even said it would have to rescind the bonuses. But AIG lawyers fired back that the company is obligated contractually to pay the bonuses.

Who’s in charge here, the taxpayers who were forced to pay the extortion money, or AIG?

I’ll let you the reader answer that.


It may well be that the government can’t run a mega-financial institution. But it should not be forced to take part then. AIG needs to go bankrupt.

Also, no pun intended, believe me, but I believe that although Mr. Obama would like to step in personally and put a halt to this nonsense, he is in a sense being personally blackmailed. What an uproar would ensue if he could be blamed for causing the fall of AIG.

This is where he needs to be show courage of leadership — and I think he could.

(Copyright 2009)