AIG - Bonuses with the Bailout Money

"Since the federal government now essentially owns that company, maybe it's time to fire some people" -Barney Frank

Now I feel a bit like a hypocrite, considering how I had just posted a piece about too much media focus on executives and their bonuses, but this is a piece of news that is just too interesting to pass up. Apparently, AIG (the "American International Group") has just given several of their top executives seven figure bonuses (read: a whole lotta money), totaling to around 165 million dollars.
(*Apparently, eleven of the people who received a bonus no longer even work for the company?)


Now, a brief history. You may or may not know this, but AIG was one of the companies that the government had spent money bailing out. Actually, the newspaper in front of me tells me that the government had spent 173.3 billion dollars to keep this company afloat. Sure it's less than 1% of the bailout the government allocated for the company, but still...165 million is alot of money.

In a way, this was also a blow to Obama himself as many are beginning to complain about his "apparent inability to block executive bonuses". At the moment, many are calling for these employees to either return the bonuses or else face a "high tax".

So, what do you think needs to be done about this?

**Woops, there was a previous blog post about this that I hadn't noticed...

Today's News

A Fat Cat, but not the kind I'm going to be talking about...














So these days whenever I turn on the news, everything is all focused on our economy. A surprisingly large portion of the news has been dedicated to playing the "blame game" where everyone is pointing their fingers at one corporate fat cat or another. But I'm getting tired of that. It feels as if we're looking for someone to shift the blame on (read: scapegoats) when we should be focusing more on real news and how we can fix our current situation. I'm sure the media is especially focused on executives like Madoff (and how much money he "made-off" with...haha...never mind...) because it's attracting viewers, but I'm sure there's more important things happening in the world then how big a bonus certain "fat cats" were giving themselves. What do you think?

The Recession Will End?

For many Americans this economic downturn has meant utter devastation in their lives. Production is slowing forcing companies to lay-off workers and hardly anyone is pending a penny for their wallets are running dry. We are surrounded by negative media saying "this is the worst economic depression since the great depression", and some economists are saying that it will never end. Is there a sunlight at the end of the dark tunnel? Will we ever get out? We have been constantly running these questions through our minds. But, unlike many who have accepted failure and death, Ben Bernank has an answer. As head of the U.S. Central Bank he says that the tunnel is not much longer and that there will be an end to this crisis in the up and coming year. He says that there have been potential financial meltdowns before the government acted. There is only one questions that remains. Is he right?

Do you believe that he is right?

Obama weakening national defense?

While every senior in an AP Government/Honors Econ. course loves to criticize and laugh at former President Bush, we must step back and realize that there were no more successful terrorist attacks on the United States after 9/11. Was this a product of the War on Terrorism, forcing terrorists onto the defense, was it a product of a step-up in intelligence gathering that allowed the prevention of terrorist attacks before they occurred, or have terrorists simply not tried anything since that date? Either way, the Bush administration stepped up its national defense game after the 9/11 attack so we can assume their policies worked.

Now with President Obama in command, will we see the same success with his recent alterations to the Bush administration's national defense policies? Bush's former Vice President Dick Cheney certainly doesn't believe so.

“He is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack,” Cheney stated.

In regards to the closure of Guantanamo Bay, the suspension of military trials for terrorist suspects, etc., Cheney stated, “I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11."

He also comments on the different strategies necessary when combating terrorist threats as a law enforcement issue and when combating it as a military issue. His accusations of President Obama seem legitimate to an extent, and as much as everyone disliked the Bush administration, these warnings should be taken into account. To what extent do you agree with Cheney's accusations? Do you believe Obama's policies should give us any reason to worry about future threats?

Was this not the point of the super-duper bailout plan?

http://www.nytimes.com/2009/03/15/business/15AIG.html?_r=1&partner=rss&emc=rss

So A.I.G.'s $165 million 'take-what-you-can-before-we-go-under' executive compensation scheme has gone through. But shouldn't we have expected this? The bailout plan wasn't exactly sound to begin with, which was by no means the government's fault as they were pressured for time. But doesn't this 'stimulate the economy' as well? If we give these big spenders more money to spend, that'll stimulate the economy for sure won't it? They can continue to fly in their private jets, taking long vacations in the beaches of Los Angeles while 'stimulating' the tourism economy, simply spend like they usually do.

I don't support limitations on executive pay, but you'd think that when your company's failing as badly as AIG is, you'd spend your bailout money to keep that company afloat past the end of this economic recession. President Obama set a salary cap of $500,000 on executive compensation for companies under the bailout plan, but A.I.G. officials have bypassed that through the excuse that the "bonuses and “retention pay” had been agreed to in early 2008 and were for the most part legally required." Sounds like a familiar excuse doesn't it? Yes, President I-will-end-all-pork-projects, I'm looking at you.

I'm sure most of us have some bit of greed and economic conservatism in us though. But if you were that high paid executive poised to receive a healthy bonus courtesy of the taxpayers, would you take it knowing it would allow you to escape the economic recession and any ill effects should the company fall apart or would you spend it all on your company, hoping that you get by the economic recession and earn your money afterwards? I'm sure not all of us are entirely righteous.

US drops Enemy Combatant term

After 9/11 and the war in Iraq, the department of justice redefined which people can be held for reasons such as terrorism. The new definition requires more precise evidence on why this person can be detained and needs evidence instead of the old policy in which you can hold suspects without criminal justice. Finally something good is happening to those people in Guantanamo Bay. Though some of those people might be terrorists, they still deserve the right to a trial and the right charges before going into a prison. Whether they are US Citizens or not, they all still deserve the right to be treated equally. What do you guys think about this? I think at last justice is pushing the right way.

Worst Case Scenario? 2 for 1 sendoff

With the current state of the economy, the sentiments the government would like to hear would be "the country needs us! Let's go out, spend our money, and stimulate the economy!" But humans are inherently selfish (just accept it because I'm not getting into a philosophical debate) and intelligent for the most part, and selfish intelligence would lead us to withdraw our money from the economy and instead stuff it under our mattresses until the economy gets back on its feet.

Similar to how individual families invest in stocks and hold their money in banks, China has made many investments in the United States economy and holds much of their money in our currency. Beijing recently contacted the federal government searching for assurance that its investments would not whither away with our economic state. Hopefully it doesn't come to this, but let's see where rock bottom is.

It happened to Iceland, so let's assume it can happen to the United States as well. The headline in USA Today (knock on wood): United States of America goes bankrupt. Well if the USA goes bankrupt, China will probably follow closely (assuming they haven't already pulled all their investments in the American economy) with how tied up they are with our economy. Look! It's a 2-for-1 deal. Knock out the United States and you can knock out China as well. From there, with arguably the 2 most powerful nations in the world bankrupt, Russia and India would follow with all of Europe, and then we can all return to being nomadic tribes of hunter gatherers. What to take away from this? As bad as it is right now, just be thankful it's not worse.

What's your worst case scenario for the economy? For all you liberals out there, how about Obama's stimulus failing by 2012, leading to Republican candidate Sarah Palin's election to the presidency accompanied by Vice President Bobby Jindal?

G20 called for an Economic Meeting

The G20 has been called by President Obama because of the current economies all over the world. The G20 is a group leaders of the worlds most powerful countries that together count for 85% of the Global economy. Obama hopes that this meeting will help to "spur economic growth" that will help the world market. Obama had an agenda for the world leaders that included regulatory reform and a spark for the economy that could benefit everyone involved.

Hopefully the teamwork between these powerful leaders will help to revive the global economy. This is a world issue and one country can not make a change. Everyone is in this problem together so we should work together to overcome it.

How do you think other countries should respond?

Is the Bailout plan actually working?

Democrats are starting to be skeptical on if Obama's plan is working. So far it seems like the plan isn't helping the crisis too much at all. Obama said he would give relief as fast as possible but it is starting to seem like it is coming slow. When will people actually see the nearly 800 billion dollars be put to use? How well will that stimulate the economy? No one knows the real answer to these questions. What do you guys think the bailout is doing? I think it will not work and the democrats will have to spend even more money to try and fix it. No more Republican style tax cuts =[.

Choose the Lesser Evil?

JP Morgan Chase is a shining lighthouse in this Dark Age of failing banks. They lead by example, forging the path to success for other banks to follow in their steps. Okay, aside from the 'shining lighthouse' comment, that was essentially true.

JP Morgan Chase is, however, the second largest bank in the United States, recently buying out Washington Mutual and Bear Stearns, for better or worse. Whether it was a humanitarian decision, or merely an economical gain for JP Morgan, they did the country a favor by "bailing out" 2 rapidly declining banks headed for failure. And we didn't even need government intervention for it! Laissez-faire works!

In these slow economic times, JP Morgan has opted to turn to increased outsourcing to keep the company afloat. The company is not only expanding their foreign expenses from $200-$300 million per year to $400 million per year, but is also planning on managing the merging of the companies it has acquired and the merging of IT technology from India. By making this move, JP Morgan puts itself in position to profit as other merging banks, such as Bank of America and Merrill Lynch, look to integrate their IT technology, databases, etc. through outsourcing in order to save 30-40% in costs. These banks will ultimately turn to JP Morgan to help with the process.

By taking its business to India and other countries, JP Morgan is taking potential jobs away from the United States, as is the problem with all outsourcing. But is the sustenance of our banks more important to the American people during these troubled economic times?

Bush's Amazing Reflexes

Just a follow-up on Ryan's post. This is the incident that he discussed. What Bush lacks in the head, he makes up for with his reflexes. Comment on Ryan's post if you actually want to discuss the issue. Just thought a visual would be a nice relief from the walls of text.

Iraqi Man Jailed for Attack on Bush with Shoe

Today journalist Muntadar al-Zaidi was sentenced for 3 years in jail after he threw his shoes at former President Bush in his farewell address in Iraq. This insult was not taken lightly because of the embarrassment that it caused the Iraqi Prime Minister Nouri Maliki.

Although I believe that this was a protest, this qualified Journalist had no reason to throw his shoes at Bush and should be punished. But, I think that his sentence was quite harsh because the attack was not meant to inflict any pain, it was to make a statement. He should be punished but not so harshly.

What do you think should have happened?

Gangs of Mexico... part 2

And the saga continues.. the situation in Mexico has escalated as 4 major drug cartels are now believed to be forming alliances to capture territory and smuggling routes. Mexico has deployed over 50,000 military troops to combat the warring cartels, who have claimed to have over 100,000 readily available men for combat. With drug cartels holding much of the Mexican-U.S. border territory, American involvement in the situation seems inevitable, but to what extent are we willing to intervene? Or should we choose to isolate ourselves from the problem and allow the Mexican government to deal with their civil war alone?

The Department of Homeland Security, as well as other groups, have put in requests for President Obama to deploy National Guard troops to the border in order to prevent drug cartels from crossing into American territory.

Obama stated, "We're going to examine whether and if National Guard deployments would make sense and under what circumstances they would make sense. I don't have a particular tipping point in mind. ... I think it's unacceptable if you've got drug gangs crossing our borders and killing U.S. citizens."

What circumstances do you think would make sense for the National Guard to be deployed and how concerned, if at all, are you about the possibility of a civil war in Mexico, with the possible future government being comprised of drug cartels?

Chinese Harassment of U.S. Ships in International Waters

On Sunday there was a situation in international waters 75 miles off the coast of Hainan between the U.S. intelligence ship Impeccable and a few Chinese Vessels. The Impeccable was on a routine surveillance mission and were harassed by Chinese ships. It is reported that Chinese ships swarmed the boat, and upon engagement the U.S. sprayed water from its cannons to force them away. Despite this effort the Chinese boats kept approcaching. The U.S. boat started to leave when the Chinese fleet dropped two logs in the way trapping the Impeccable and forcing them to make an Emergency stop. But, the Chinsese have declared this situation as harmless and not harrasment. President Obama was meeting with a delegate from China at the White House today to dicuss this issue.

I personally think that this incounter with Chinese ships was quite offensive. International waters have strict rules and they are called "International" for a reason. I think the Chinese fleet had taken it to far.

What do you guys think about this issue?

Congress talked about considering a new Stimulus bill already?

The democrats denied the fact that they were going to start on a new stimulus bill but Nancy Pelosi said that more money might be needed. What is this a sign of? Some people have stated that this might show some weakness in the Democrats in the fact that they realize slowly that the first one is failing. I for one think that the first stimulus was using too much money and putting the future Americans in a huge amount of debt to pay back in the future. I think its wrong and that they should have spent more time on the first one before actually passing it. Some talk of a second one, even though the democrats denied, makes me wonder if the American governmental system is actually working correctly and the people within the positions of the Congress and executive branch are carrying out their duty as representatives of the nation. What do you guys think of it?

Gangs of Mexico - Drug Cartels to take over Mexican government

We're fighting a war in Iraq. We're fighting a war in Afghanistan. We're on the verge of fighting wars in Pakistan and Iran (maybe an overstatement... just slightly). So once we've conquered and established democratic nations with governments favorable to the western world in all of the middle eastern countries, what could possibly be next on the foreign affairs agenda? Taking out Russia before it turns into the communist Soviet Union again? Obliterate China and turn the world into a nuclear waste dump? No. Next on the United States world domination agenda: take over Mexico.

Ok, maybe that was pushing it a bit. However, large drug cartels have shown increasing amounts of violence in Mexico over the past few months, getting up to 6 deaths found per day by authorities and it has been speculated that a civil war or a government coup could be in the the midst of Mexico's future. With the violence being so close to the American border, the U.S. government has thus offered assistance to the Mexican government and is advising Mexico in strategizing to deal with the warring drug cartels. President Obama and Joint Chiefs of Staff chairman Michael Mullen met on Saturday to discuss the involvement of the U.S. military in the ordeal. With our foreign affairs so firmly etched in the Middle East, how much focus should we be placing on the threat to our south. While the drug cartels are not a large threat yet, the potential is there and an unfriendly aggressive government on our border is a far larger threat to our national security than countries half a world a way.

Potential threats ought to be dealt with before they develop into a national security crisis, but the situation brings back memories of lessons in US History last year, i.e. the Bay of Pigs Invasion and other CIA failures. Is the United States handling the situation adequately? Furthermore, how much will this bolster our international budget, which is large enough as it is?

Senate votes for pork!

President Obama has yet to use a veto in his time in office and it seems he will continue to do so for a bit longer. An opportune moment for his first veto presented itself today as the senate passed its $410 billion spending bill, which had been postponed last Friday, March 6, in order to "consider Republican amendments" to the bill. Well, the Republican amendments were considered, and it looks like the Republican amendments were rejected. But no matter! Senator Feingold estimated he had 59... and a half... votes for the spending bill on Friday, and after "consider[ing] Republican amendments," he would have enough to pass the bill. I suppose all he really had to do was consider the amendments, as the bill passed today with a 62-35 vote.

Last week, President Obama pledged to "end pork." Change, he has proposed to the citizens of American. He's the bringer of change! But this bill looks like a whole lot of pork to me. Opponents to the bill have complained about the estimated $8 billion dedicated to pork-barrel projects in the form of over 8000 congressional earmarks. It could be argued that these projects could be "beneficial," but it's pork nonetheless designed to direct money at specific projects to satisfy senators and their constituents, something Obama pledged to end. Well President Obama, you missed your chance to "end pork." This bill should have been sent back with an order to clear the earmarks from the bill. The spending bill is on the right track, but it needs refining. In Senate minority leader Mitch McConnell's words, ""In the midst of a serious economic downturn, the Senate had a chance to show it can impose the same kind of restraint on itself that millions of Americans are being forced to impose on themselves at the moment. ... If the president is looking for a first bill to veto, this is it."

Obama's excuse for not vetoing the bill: The bill fell under last year's jurisdiction, thus he won't be vetoing it. He will however, prevent future earmarks and pork. Weak excuse? Hmm... keep an eye on his actions, or lack thereof, against pork barrel projects in the future.

Tibet and China, Whats your stance?

Tibet and China's tensions has passed the 50year mark just yesterday. I think that Tibet is part of China still and that they should end its peaceful rebellion. Fact: No country in the world supports Tibet independence. And I do not know why people wish to see it be that way. For example during the Civil War, America split in two, and instead of letting the South go free, we went to war to liberate. I do not see anything wrong with China trying to make the Tibetians into submission and keeping the part of the country that is technically still theirs. What do you guys think? I want to know why some of you people support independence for them.

Saving money? Isn't that hurting economy?

With the Recession going on, people are starting to budget themselves and save money where we can. But isn't spending the way to turn the economy around? If people start saving, no money will go to business's and if no money goes to business's more people get laid off or fired. Yes saving some is a good thing, but if people do not start spending how will the consumers start getting more confident into buying products? Just something I put some thought into, what do you guys think?

Obama ends stem cell funding ban

This week, Obama declared that he is going to "vigorously support" stem cell research. He signed an executive order lifting the restrictions on federal funding for stem cells. He believes that this research could lead to medical breakthrough's, and unlike Bush and many religious figures he is excited for its future and what it will bring to the medical field.

I think that it is good that Obama is funding the research of stem cells for medical intentions. What do you think?