NYC Junta

I drop out and leave the country for one week and when I come back everyone is having mass hysteria over some bonuses paid out at AIG. Thankfully, though, I am not the only one asking why we are so mad about $160 million paid to executives when we didn’t approach nearly this level of ire while paying out one thousand times that amount bailing out the company.

When do the pitchforks come out? Felix Salmon wonders over at Portfolio:

As inequality grew in America over the past 30 years, there was always the risk that it would snap back violently and dramatically. That day is not yet here, but it’s closer than it has ever been, and its possibility cannot be discounted. Barack Obama smells the public mood, and is trying to respond to it in a grown-up and non-incendiary way. Congress smells it too, and is being rather less grown-up about things.

But is this really the “public mood,” or are we just watching too much television? Joe Klein at Time points out that there haven’t been any actual riots here, as there have been in places like China, where peasants gather in the streets from time to time and spill blood to show how pissed off they are.

But most of the anger we see and hear comes from people who are paid to be angry, on cue, on cable television–as opposed to people with actual grievances. Suddenly, the White House press corps goes barking mad over the AIG Bonuses. It is said that the bonuses are an aspect of the bust that the “public” can understand; in truth, the bonuses are an aspect of the bust that reporters can understand. Suddenly, the Obama Administration has a “crisis.” The President has to go on television and act as if he’s angry, even though he knows these bonuses are the tiniest outcropping of outrageousness.

One of the best moments of Obama’s press conference last night was when he cut off the breathless CNN hack who wanted to know why it took the President “two days” to get on the teevee and act mad about the AIG bonuses. Obama slapped him down: “It took us a couple of days because I like to know what I’m talking about before I speak.”

Ouch. Still, that’s not really what we’re talking about, is it? Wealth being wiped out or handed out is not the issue. People in the streets, with guns – now that’s something to be worried about. This guy pretty much nails the paranoia:

Civil unrest will break out before the end of the year.  The Military and Guard will be called up to try to stop it.  They won’t be able to.  Big cities are at risk of becoming a free-fire death zone.  If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go “feral”; witness New Orleans after Katrina for how fast, and how bad, it can get.

Yep. There ya go. (Emphasis mine).

To protect ourselves, the Junta is looking for a seriously underground location to meet – like a nuclear bomb shelter in the East Village. Likely date: April 9 (Thursday).

In the News aig, doom, end times, financial crisis, usa

This whole business about the AIG bonuses is really getting out of hand. As outrageous as they are, it is really a distraction from the wider issues and just a quick way to create a scapegoat. One week it’s Richard Fuld, the next it’s John Thain, then Madoff, now the faceless but certainly greedy and mendacious people at AIG’s financial unit who got bonuses despite their unit’s cataclysmic performance.

The bonuses are indefensible and betray both the tin-ear of the politicians in charge of the bail-out and a strong sense of incompetence among the senior executives at AIG (surprise, surprise…). But demonizing these guys is ridiculous. Picture you are one of the men/women working in that unit of AIG that got the bonuses. Are you going to not accept the substantial bonus that they give you, which they were contractually bound to do? We can all get on our high horse about this, but if you quietly got a check for a million dollars that you felt you earned you wouldn’t turn it down. And I knew that there was nuance within the story about the people that were a part of that team that wasn’t out there, and today we had the op-ed in the NY Times that was really a resignation from someone from that very unit that sheds some of the light on the ambiguity I’m talking about.

http://www.nytimes.com/2009/03/25/opinion/25desantis.html?pagewanted=1&_r=1&ref=opinion

Really, the issue isn’t with the people that got the bonuses. It is the people who were supposed to look after their companies and–even more so–the regulatory agencies that were supposed to watch them. I used the baseball analogy when arguing this with a colleague the other day. The baseball steroid scandal is something that I care a lot about. And it’s easy to demonize Barry Bonds, Roger Clemens, etc. And to a large extent those guys deserve it, in particular because of their reactions.  But my beef is with the league for letting the steroid era flourish with the player’s union who fought tooth and nail on any initiative that would have led to testing and greater oversight. It is Bud Selig, Donald Fehr and Gene Orzo that deserve the blame. If you’re a player watching other players at a similar or equal level suddenly bulk up, hit monstrous homers and receive huge contracts that set them up for life, can’t many of us understand the impulse to do that, in particular as they were even testing at the time? I don’t want to digress too far, but that is the same thing with the people on Wall Street being demonized. Our government and regulatory agencies failed us. The villains I want accounted for are the numerous heads of the SEC who refused to take action when a whistle-blower gave them evidence that Maddof’s fund had to be just a scheme. If I was still a journalist I would be working on that night and day.

It is the people that allowed this era of lax regulation, easy credit and predatory lending to flourish that should be held responsible. And the more you think about, the more we as a society are responsible. The people in the midwest who would like to tar and feather anyone from NY who works in finance sure liked getting cheap loans and mortgages and $30 DVD players made in China, purchased at Wal-Mart. We all as a society saved incredibly little and lived above our means for a long time. Now we’re paying for it.  Demonizing a handful of people who got bonuses that seem unfair might make us feel better for a moment in term of venting our rage. But it isn’t going to get us anywhere.

In the News aig, doom, end times, financial crisis, usa