Miss Kelly

Minority Opinion on AIG Bonuses, Mixing Politics and Business

The outrage against the AIG bonuses brings to mind Kabuki theatre.  More make-up and masks, please!  Power Line has the minority view, based on the testimony of Edward Liddy, which seems reasonable to me:

* All of these payments, as to AIG's troubled financial products division, are retention bonuses, not performance bonuses.
* The money is not going to anyone responsible for the implosion of AIG--those people, who were in the credit default swap area, are gone.
* These retention bonuses were promised to AIG employees who are responsible for winding down the company's financial products division. At the beginning, this division had a potential exposure of $2.7 trillion. Winding down AIG's book of business in this area was a dead-end job, and there was a great likelihood that the people responsible for the work, who knew the most about the products involved, would take jobs elsewhere.
* In late 2007 or early 2008, AIG made a deal with these employees: if they would stay at AIG until specified conditions were met, i.e., either certain business was wound down or a given period of time had elapsed, they would receive a specified retention bonus.
* As to all of the employees involved, they satisfied the terms of the bonus by wrapping up a portfolio for which they were responsible and/or staying on the job until now. As a result of the efforts of this group, AIG's financial products exposure is down from $2.7 trillion to $1.6 trillion.

I hope AIG takes legal action against Congress to stop the ridiculous 90% taxation of these bonuses.  Talk about scapegoats.  Washington Post has a good article about the situation, and Jonathan Goldberg wrote a good column about mixing politics and business too.

"We should have learned from the government takeover of Fannie Mae and Freddie Mac what dangers lie ahead: The rule of law and political manipulation of the economy don’t mix well...What signal does it send when the president and Congress make it clear that they will revisit legal contracts that run afoul of populist outrage?"

If the AIG staff are forced to return their contractual bonuses, then shouldn't President Obama return the $130,000 he received from AIG in 2008?  From ABC News:

"AIG employees kept doling out donations to politicians, including presidential candidate Barack Obama, after getting bailed out with federal funds last year, raising the question of whether those politicians will now return the money. AIG executives gave more than $630,000 during the 2008 political cycle even as the company was falling apart ."

More than $120,000 was donated after AIG received $85 billion in federal bailout funds in September 2008.  Give it back, President Obama, Senator Dodd and Senator McCain!

Is Obama Trying to Destroy Our Country?

Sure looks that way.

Dick Morris:

"President Lyndon Johnson’s administration was known for his War on Poverty. President Obama’s will become notable for his War on Prosperity."

Removing tax deduxtions for charitable donations:

"President Obama’s tax proposals — including a limit on charitable giving deductions that could be taken by America’s wealthiest people — could cause giving by America’s wealthy to drop by several billion dollars a year, according to estimates released today by the Indiana University Center on Philanthropy."

Stimulus Bill "Worst Bill Since 1930's", Will Lead to "Unmitigated Disaster"

Keep calling your congressmen, this horrible "Stimulus Bill" has to go down in flames, or we will.  Time for resistance! 

Peter Schiff, president of Euro Pacific Capital, predicted the housing bubble and recession back in 2006.  He thinks the stimulus bill is a really bad idea:

"The fiscal stimulus bill being debated in Congress not only won't help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital"

"Schiff scoffs at the notion the economic decline is starting to level off and concedes no government action means a "terrible" recession. But the path of increased government intervention will lead to 'unmitigated disaster,' says Schiff, who gained notoriety in 2007-08 for his prescient calls on the housing bubble and U.S. stocks."

An Idea That Needs to Catch Fire: Taxpayer March on Washington

This idea needs to catch on big-time and super-fast. From dapera:

"Many months into the disastrous financial crisis, I am still waiting for the people of the US to get really mad at their representatives in Congress who share a great deal of the blame for this mess What started with the 1977 Community Reinvestment Act as a way to help some low income families to buy a home soon got blown totally out of shape by members of Congress through several Administrations. It morphed to where it could help almost anybody with a pulse to buy a home whether they were financially qualified or not. No down, low down, interest only, adjustable loans were made assuming that the value of the real estate purchased would only increase in value."

"...Taxpayers are now being forced to foot the bill to the tune of Trillions of dollars to try and fix Congress’s mistakes. If you have been paying attention to the news, you probably have heard that the first $350,000,000,000 that was used to “bail-out” the financial industry, hasn’t accomplished much and much of it hasn’t been used by these financial institutions for the purposes put forward by our wonderful government. As usually, our government’s cure for every problem is to throw more and more TAXPAYER money at the problem..."

"People…. Get mad,,,,,, get angry,,,, get involved!!! They survival of this country may depend on citizen action to regain control of our out-of-control government!!!!"

"Anybody want to join me for a taxpayer march on Washington???"

Yes, I do!  Who's gonna set it up? I'll be there!

This pork-laden Pelosi-Obama-Reid Trillion Dollar Debt Plan needs to be torpedoed.  Don't throw good money  after bad.  Stop spending taxpayers dollars in a futile attempt to stimulate the market.  Lower taxes, cut spending, and the market will right itself.   Contact your congressmen today and keep calling them!

"What Caused Our Economic Crisis?"

This sums it up pretty well:

It's Not A Crisis of Capitalism, It's a Crisis of Easy Credit

David Warren pens an essay on the economic debacles of the past few days:

"Are we witnessing the final crisis of capitalism? (One utters the phrase out of nostalgia for the glory days of Marxism.) I doubt it. The meltdown in stock markets all over the world is painful and distressing, but it will pass. For it is not capitalism that is on trial, but rather the idea of cheap and easy credit."

He's got a great anecdote about this too.  While a small business owner, he was refused a business loan, after going through a lengthy review of his application. After being turned down for a business loan, he applied (at the same bank, different counter) for a personal consumer loan for the same amount. Bingo! Ten minutes later, he was granted the personal loan. No problemo!   In a nutshell, that's behind much of our current crisis, cheap credit given out widely and to folks who are high credit risks. From Warren:

"Over several generations we have rebuilt an economy that once rested on goods, services, and tangible assets. It now depends also on kiting, with wonderfully sophisticated credit instruments -- like a postmodern building, supported as much from above as below. In the longer view, it is well that gravity asserts itself the sooner, and we reacquire the benefit of a solid foundation."

Unemployment Low, Good Jobs Too

**UPDATE BELOW**

Not only is the U.S. unemployment low,  4.7% according to by the U.S. Labor Department last week, but the available jobs are pretty good too, according to this Christian Science Monitor article:

"The new jobs still include plenty at the low end: An analysis by Merrill Lynch finds that some 40 percent of the net gain in March came in two areas known for low pay: retail services and leisure/hospitality, which includes restaurants.  But this is just part of a broader tapestry. Management and professional occupations are employing 1.2 million more people this month than a year ago - or about 1 in 3 new jobs in America. This is the highest-paying of five broad categories tracked by the Labor Department. Not all of them are CEOs or engineers, but the median paycheck for full-time workers in this category is $937 a week, far above the US median of $651."

Could it be that the Bush administration has been right?  That tax cuts and globalization are leading to a stronger economy with more and varied job opportunities? 

UPDATE: I found the April 8 issue of The Economist, and looked into European unemployment for comparison.  The overall jobless rate in Europe is 8.2%, down from 8.8% a year ago.  The lowest unemployment rates are found in Switzerland (3.8%), Austria, Britain, Denmark (all at 5%), and Sweden (5.6%).  Other countries are not doing so well: Belgium (12.4%), France (9.6% yeeks!), Germany (11.4%, double yeeks!), Italy (7.7%), and Spain (8.7%),  Japan's unemployment rate is quite low (4.1%).